Magistrate Judge Mitchell Dembin, Southern District of California
Magistrate Judge Mitchell Dembin, Southern District of California ()

SAN FRANCISCO — A San Diego magistrate judge is recommending severe discovery sanctions against a technology company that withheld key documents in a trademark case, and against its LeClairRyan trial attorney who certified that the documents didn’t exist.

“Federal courts do not require perfection in [electronically stored document] discovery,” U.S. Magistrate Judge Mitchell Dembin wrote in a 78-page order issued Aug. 7. But R.F. Technologies Inc. chief executive officer Babak Noorian and LeClairRyan partner Thomas O’Leary crossed the line by certifying responses that were “false, misleading, and made without first conducting a reasonable inquiry.”

Dembin ordered R.F. Technologies and LeClairRyan to pay all of opponent HM Electronics’ attorney fees and costs for discovery conducted over nearly the past two years. He faulted LeClairRyan for failing to place a litigation hold on R.F. Technologies’ electronically stored evidence, then assuring HM Electronics that all relevant documents had been produced even before ESI had been submitted for review.

“There can be no doubt that defendants and their attorneys failed to make reasonable inquiries, because defendants’ lead attorneys were able to identify masses of responsive ESI [months later] when they finally inquired of their vendors about the ESI,” wrote Dembin, who issued the order partly on his own motion.

HM Electronics sued R.F. Technologies in 2012, accusing the company of improperly posing as an authorized dealer and repair facility for the headsets HM Electronics makes for fast food workers. HM Electronics was especially upset that R.F. Technologies was sending its customers a phony document titled “HM Electronics IQ Structural Failures,” which it said was designed to look like an internal critique of its own product.

Within two weeks of being served, CEO Noorian gathered up copies of the offending documents and instructed three company executives to “destroy” any in their possession. When the company produced 1,183 documents the following year, they did not include the “Structural Failures” report. O’Leary certified that his client had “diligently searched for responsive documents.”

HM Electronics claimed that thousands more documents were being withheld, prompting O’Leary to complain about his opponent’s “tiresome and incessant ‘discovery war.’ ” It turned out that more than 150,000 documents were improperly being withheld as privileged, Dembin concluded.

Dembin faulted O’Leary for relying on his client’s word about the “Structural Failures” report when many other employees could have confirmed its existence. More important, the judge wrote, O’Leary should have familiarized himself with the ESI before making assurances.

“Although Mr. O’Leary was not required to review every single page of the ESI before signing the written discovery responses, it was not reasonable for him to sign the document production responses before the ESI was even collected,” he wrote.

HM Electronics, which was represented by a Pillsbury Winthrop Shaw Pittman team led by partner Callie Bjurstrom, has tentatively settled its dispute with R.F. Technologies, But according to Dembin, the sanctions decision “outlives the anticipated settlement and voluntary dismissal of the case.”

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