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Sinco Technologies Pte Ltd. v. Sinco Electronics (Dongguan) Co. Ltd.

United States District Court, N.D. California

September 3, 2019

SINCO TECHNOLOGIES PTE LTD., Plaintiff,
v.
SINCO ELECTRONICS (DONGGUAN) CO. LTD., et al., Defendants.

          ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR SANCTIONS AND RULING ON ORDER TO SHOW CAUSE RE: DKT. NO. 229, 242

          JOSEPH C. SPERO CHIEF MAGISTRATE JUDGE.

         I. INTRODUCTION

         Plaintiff SinCo Technologies PTE Ltd. (“SinCo”) brings a Motion for Sanctions (“Sanctions Motion”) asking the Court to find that Defendants are in civil contempt for disclosing confidential information in a letter to the Court filed in the public record and to award monetary sanctions against Defendants and their former attorney, Jeffrey Fazio of the DeHeng Law Offices. Both Fazio and Defendants filed opposition briefs, but the opposition filed by Defendants was a week late. The Court issued an Order to Show Cause why Defendants should not be sanctioned for their untimely filing, failure to request an extension of time and making false statements to the Court. A hearing on the Sanctions Motion and Order to Show Cause was held on August 23, 2019 at 9:30 a.m. For the reasons stated below, the Court GRANTS in part and DENIES in part SinCo's Motion and awards additional sanctions in connection with the Order to Show Cause.[1]

         II. BACKGROUND

         This particular dispute began when counsel filed separate discovery letters, in violation of the Court's orders governing the procedures for seeking Court assistance in resolving discovery disputes. As the parties had already violated these orders on numerous occasions, the undersigned issued an Order to Show Cause Why Defendants Should Not Pay Sanctions Regarding Exchange of Non-Joint Letters. See Docket No.178. In the Order to Show Cause, the Court made clear that that both parties appeared to have acted unreasonably with respect to their handling of the discovery letters but that Defendants' conduct was more egregious. Nonetheless, after considering Defendants' written response to the Order to Show Cause, the undersigned concluded that Defendants' conduct was inadvertent and noted that SinCo's counsel bore some of the responsibility for the parties' violation of the Court's joint letter requirement because he “unreasonably restricted both the time allowed for Defendants' counsel to review the ‘non-joint letter' and arbitrarily restricted the subject matter of that letter.” Docket No. 187. The Court therefore expunged the Order to Show Cause in an order filed on April 9, 2019 (the “April 9 Order”). Id. No sanctions were imposed.

         On April 12, 2019, SinCo attorney Lael Andara filed a letter asking the Court for leave to file a motion for reconsideration of the Court's April 9 Order. Docket No.190. Counsel wanted to share with the Court his side of the story with respect to the reasons for filing separate letters. The letter went far beyond that issue, however, setting forth a detailed description of what Andara considered to be misconduct on the part of Defendants' counsel with respect to the handling of various ongoing discovery disputes. Id. The Court denied the motion for reconsideration on April 15, 2019, stating that it would not revisit its previous decision but acknowledged that SinCo's counsel had raised “disturbing incidents reflecting the failure of counsel to work together to solve discovery problems that have been endemic in this case.” Id.

         At this point, both sides had offered accounts of why separate discovery letters had been filed and the Court had decided (twice) that it would not impose sanctions. Nonetheless, an hour after the Court had issued its order denying SinCo's motion for reconsideration, Fazio, who still represented Defendants, filed his own letter (the “April 15 letter”) responding to the accusations of SinCo's counsel with respect to his alleged discovery misconduct. Docket No. 192. Among other things, Fazio described disputes that had arisen at the April 4, 2019 deposition of Jonathan Chee, SinCo's former COO, referencing the content of that deposition. See Docket No. 192. It is undisputed that at the time the letter was filed, the entire deposition transcript was still designated as CONFIDENTIAL ATTORNEYS EYES ONLY under the protective order in this case. See Docket No. 124 (“Protective Order”) § 5.2 (providing, in part, that “the Party or non-party that sponsors, offers, or gives the testimony shall have up to ten (10) business days after receipt of the transcript or thirty (30) days after the deposition, whichever comes first, to identify the specific portions of the testimony as to which protection is sought.”); see also Motion at 4 (quoting agreement between the parties' attorneys that entire deposition transcript would be treated as confidential pending designations by Plaintiff's counsel). Even though his letter contained information from Chee's deposition, Fazio filed the April 15 letter in the public record, in violation of the parties' agreement and the terms of the Protective Order.

         SinCo brought a motion for protective order (“Protective Order Motion”) on April 24, 2019, seeking an order protecting from disclosure information about Chee's past conviction (which was addressed at Chee's deposition and in the April 15 letter) and also asking the Court to prohibit Defendants from threatening Chee with criminal prosecution. Docket No. 200. In the Protective Order Motion, SinCo argued that the April 15 letter was filed in bad faith with the intent to intimidate and harass Chee, that Defendants' counsel had mischaracterized Chee's testimony in the April 15 letter, and that Chee had a right to privacy with respect to his past conviction. Id. Defendants filed a statement of non-opposition and the Court granted the Protective Order Motion in part, ordering that “the testimony by Mr. Chee regarding a fifteen (15) year old prior conviction in Singapore [was] properly designated as confidential under the Protective Order” and placing the April 15 letter under seal. Docket No. 214. In all other respects, the Protective Order Motion was denied.

         On July 3, 2019, SinCo brought its Sanctions Motion, asking the Court to hold Defendants in civil contempt for violating the Protective Order in this case by filing the April 15 letter in the public record and to award sanctions against Defendants and attorney Jeffrey Fazio for what it contends is conduct aimed at “embarrass[ing] and harass[ing] Mr. Chee for the purpose of coercing Mr. Chee not to testify at trial.” Sanctions Motion at 5. Although many of the arguments in the instant Motion had already been made (e.g., that Defendants' counsel had violated Rule 11 of the Federal Rules of Civil Procedure in filing the April 15 letter), this was the first time SinCo's counsel expressly requested that the Court impose sanctions for Defendants' and Fazio's conduct related to the Chee deposition and April 15 letter.

         The Opposition brief on the Sanctions Motion was due on July 17, 2019. On July 18, 2019, Fazio - who no longer represented Defendants - filed an opposition brief on his own behalf, arguing that the information about Chee's past conviction was publicly available and therefore could not fall under the protective order; nor could its disclosure support the imposition of sanctions. Docket No. 231. Fazio further asserted that SinCo's accusations of discovery misconduct related to the Chee deposition and April 15 letter had already been raised in the Protective Order Motion and rejected by the Court. Id. Finally, he argued that SinCo failed to comply with the procedural requirements of bringing a motion for sanctions under Rule 11 of the Federal Rules of Civil Procedure. Id. Fazio also supplied a declaration in support of his opposition to which he attached news articles about Chee's past conviction to show that information about Chee's conviction was already publicly available. Docket No. 232 (“Fazio Opposition Decl.”), Ex. A.

         SinCo filed a reply to Fazio's opposition brief on July 23, 2019. It disputed Fazio's version of events and argued that Defendants have a “pattern and practice” of blaming their attorneys for misconduct from which they benefit. Docket Nos. 234. The reply was supported by a declaration by Daniel Gaitan with documents attached reflecting what SinCo argued were examples of such conduct. Docket No. 237. SinCo also argued that the Sanctions Motion is not a Rule 11 motion and is distinct from its previous motion for a protective order. SinCo objected to the news articles about Chee that were filed as an attachment to the Fazio Opposition Declaration, arguing that by filing them in the public record Fazio was again harassing Chee. SinCo also argued that while Fazio had filed an opposition brief, Defendants had not and therefore the Court should consider the Sanctions Motion unopposed by Defendants.

         Fazio filed an objection to the Reply evidence attached to the Gaitan Declaration on July 24, 2015. Docket No. 235. On the same date, Defendants filed an opposition to the Sanctions Motion, one week past the date when it was due. Docket No. 236. Although Defendants had not requested an extension of their briefing deadline, they represented to the Court in their brief and in a supporting declaration by attorney Michael York that they were unable to file a timely reply brief because Fazio and the DeHeng Law Offices had not provided their new counsel with sufficient information about the underlying facts that were the basis of the Sanctions Motion. See York Dec., ¶ 2 (“Defendants's [sic] former attorneys have not been cooperative in providing information regarding the events to be able to prepare opposition. As a result, Defendants were unable to prepare opposition until Defendants's [sic] former attorneys filed opposition and Defendants had information regarding at least what Defendants's [sic] former attorneys claimed”).

         The next day, Fazio filed a declaration responding to York's declaration, stating that the reasons offered by York for Defendants' late filing were false. Docket No. 240 (“Fazio July 24 Declaration”). According to Fazio, he and Clay Zhu, also an attorney at the DeHeng Law Offices, had spent significant time with Defendants' new counsel “helping WHGC attorneys prepare to take over the defense of this litigation before DeHeng formally withdrew from its representation of Defendants last May.” Id. ¶ 4. Fazio described these efforts in detail in his declaration. They included several lengthy meetings between counsel and the provision to WHGC of all of the litigation files in the case, in both electronic form and hard copy. Id.

         According to Fazio, since June 11, 2019, the only substantive communication between the DeHeng Law Offices and WHGC was a brief exchange of emails on July 3, 2019, soon after the Sanctions Motion was filed. See Fazio July 24 Decl., Ex. A (July 3, 2019 email chain). It began with an inquiry from WHGC attorney Kathleen Alparce to Zhu and Fazio stating: “Attached is Sinco Technologies' Motion for Sanctions. Please advise as to your response.” Id. A few minutes later, Zhu responded, stating: “Hi Kathleen: my office will file an opposition. ...


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