Case 1:10-cv-00258-SLR-MPT Document 457 Filed 10/31/12 Page 1 of 7 PageID #: 8722
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`IN THE UNITED STATES DISTRICT COURT
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`FOR THE DISTRICT OF DELAWARE
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`: C. A. No. 10-258-SLR/MPT
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`:
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`MOBILEMEDIA IDEAS LLC,
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`Plaintiff,
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`Defendant.
`
`v.
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`APPLE INC.,
`
`Background
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`REPORT AND RECOMMENDATION
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`Previously, during a teleconference on July 30, 2012, a motion under FED. R. CIV.
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`P. 37, whether the Protective Order was violated by the conduct of MobileMedia
`
`(“MMI”) and its experts, was argued. That issue addressed whether MMI’s experts, Drs.
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`Timothy Williams and Sigurd Meldal violated ¶ 11 of the Protective Order by their
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`dealings with, review and copying of Apple Inc.’s (“Apple”) source code. Specifically,
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`Apple’s complaint was Dr. Williams did not directly review the source code on the
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`source code computer. Rather the review was done by a non-testifying consultant of
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`MMI, Mr. Finch, who then printed Apple’s source code and provided it to Dr. Williams for
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`review.1 Apple’s concern with Dr. Meldal was that additional copies of the source code
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`1 Another issue raised during the teleconference regarded whether Dr. Williams
`gained information or knowledge concerning how Apple’s source code is set up,
`operates or is organized through Mr. Finch, when such reliance was not identified in his
`expert report and during his deposition. That issue was not decided during the
`teleconference since Apple’s speaking motion for violation of the Protective Order did
`not address this matter. See D.I. 428.
`
`
`
`IN THE UNITED STATES DISTRICT COURT
`
`FOR THE DISTRICT OF DELAWARE
`
`::
`
`::
`
`: C. A. No. 10-258-SLR/MPT
`:
`
`::
`
`:
`
`MOBILEMEDIA IDEAS LLC,
`
`Plaintiff,
`
`Defendant.
`
`v.
`
`APPLE INC.,
`
`Background
`
`REPORT AND RECOMMENDATION
`
`Previously, during a teleconference on July 30, 2012, a motion under FED. R. CIV.
`
`P. 37, whether the Protective Order was violated by the conduct of MobileMedia
`
`(“MMI”) and its experts, was argued. That issue addressed whether MMI’s experts, Drs.
`
`Timothy Williams and Sigurd Meldal violated ¶ 11 of the Protective Order by their
`
`dealings with, review and copying of Apple Inc.’s (“Apple”) source code. Specifically,
`
`Apple’s complaint was Dr. Williams did not directly review the source code on the
`
`source code computer. Rather the review was done by a non-testifying consultant of
`
`MMI, Mr. Finch, who then printed Apple’s source code and provided it to Dr. Williams for
`
`review.1 Apple’s concern with Dr. Meldal was that additional copies of the source code
`
`1 Another issue raised during the teleconference regarded whether Dr. Williams
`gained information or knowledge concerning how Apple’s source code is set up,
`operates or is organized through Mr. Finch, when such reliance was not identified in his
`expert report and during his deposition. That issue was not decided during the
`teleconference since Apple’s speaking motion for violation of the Protective Order did
`not address this matter. See D.I. 428.
`
`
`
`Case 1:10-cv-00258-SLR-MPT Document 457 Filed 10/31/12 Page 2 of 7 PageID #: 8723
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`were made for purposes other than being “reasonably necessary” for the preparation of
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`his report.2 In finding a violation of the Protective Order occurred by the conduct of Dr.
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`Williams, the court ordered the experts provide all copies of Apple’s source code in their
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`possession to MMI’s counsel to limit future access to the source code to specific
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`individuals and made counsel responsible for any future violations. Apple was allowed
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`to proceed with its claim for fees and costs in relation to the violation. In that regard, the
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`parties supplemented their previous submissions as to whether, in light of the court’s
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`ruling, fees and costs were warranted under Rule 37.
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`Standard
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` Although Rule 37 allows the award of attorneys fees and costs for violation of or
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`the failure to comply with a court order, the court’s discretionary power to award
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`attorney fees is based on “when a party has acted in bad faith, vexatiously, wantonly, or
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`for oppressive reasons.”3 Thus, an award of sanctions should not be made “absent a
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`finding that counsel’s conduct resulted from bad faith, rather than misunderstanding,
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`bad judgment, or well-intentioned zeal.”4 If substantial justification or other
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`circumstances exist that would make an award of expenses unjust, under Rule
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`37(b)(2)(C), no expenses should be awarded.5
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`Parties’ Positions
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`2 Apple frankly admitted if the only issue had been the conduct of Dr. Meldal, it
`would not have brought the violation of the Protective Order matter before the court.
`3 Chambers v. NASCO, Inc., 501 U.S. 32, 45-46 (1991); Martin v. Brown, 63 F.3d
`1252, 1265 (3d Cir. 1995); see also, Grider v. Keystone Health Plan Central, Inc., 580
`F.3d 119, 142 (3d Cir. 2009).
`4 Martin, 63 F.3d at 1265.
`5 Leonard v. Stemtech Health Sciences, Inc., 269 F.R.D. 427, 428 (D. Del. 2010).
`
`2
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`
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`Case 1:10-cv-00258-SLR-MPT Document 457 Filed 10/31/12 Page 3 of 7 PageID #: 8724
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`Apple
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`In its submission for request of fees, Apple emphasizes the sensitive nature of its
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`source code arguing “the unauthorized disclosure of which-whether intentional or not-
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`would cause substantial and irreparable harm . . . .” It notes the court’s prior finding that
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`Dr. Williams violation ¶ 11(c)(iv) of the Protective Order was not a “no harm, no foul”
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`situation. Apple relies on Fed. R. Civ. P. 37(b)(A) and (C) which it suggests requires the
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`court to sanction a party and/or its attorney, who fails to obey a discovery order, by
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`paying reasonable expenses, including attorney’s fees, unless such failure was
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`substantially justified or other circumstances would make the sanction unjust. It further
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`contends such a sanction is warranted because MMI is unwilling to accept responsibility
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`or that a violation occurred. In support of his position, Apple points to its prompt
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`response when it became aware of the situation, Mr. Finch’s activities, MMI’s and its
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`counsel’s failure to disclose Mr. Finch’s involvement in relation to Dr. Williams and their
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`assurances that the Protective Order was not being violated.6
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`MMI
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`MMI responds by relying on the law cited herein as supporting its argument
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`where reasonable minds can differ on whether actions violated a discovery order,
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`substantially justified is met. It argues the definition of Receiving Party in the Protective
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`Order is limited to MMI or Apple and excludes outside experts and consultants, and
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`therefore, MMI did not print blocks of the Source Code to review elsewhere.
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`6 Specifically, Apple points to MMI’s representation that “given the extensive time
`the experts have spent at your offices, [the source code printouts] clearly were not
`printed ‘to review blocks of Source Code elsewhere in the first instance, i.e., as an
`alternative to reviewing that Source Code electronically in the Source Code Computer.’”
`
`3
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`
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`Case 1:10-cv-00258-SLR-MPT Document 457 Filed 10/31/12 Page 4 of 7 PageID #: 8725
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`MMI, however, also contends Mr. Finch and Dr. Williams first reviewed the
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`source code on computer, and Mr. Finch thereafter used his expertise to select relevant
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`portions for use in this case including by Dr. Williams, although Mr. Finch did not
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`prepare an expert report.7 As a result, MMI argues it reasonably believed it complied
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`with the Protective Order because, even though Mr. Finch printed portions of the source
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`code for Dr. Williams to use, MMI, through Mr. Finch, initially reviewed the source code
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`on the designated computer. MMI additionally notes the Protective Order
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`acknowledges a Party or Receiving Party “acts through its agents, including ‘retained
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`experts.’”
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`Discussion
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`MMI’s interpretation of the Protective Order is dizzying. In arguing substantial
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`justification, MMI purports experts are not included in the definition of “Receiving Party”
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`when determining who under the Protective Order is restricted from printing source
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`code to review elsewhere in the first instance. Because its experts actually received the
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`source code, and MMI, the Receiving Party as defined under MMI’s interpretation of the
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`Protective Order, did not, it was substantially justified in assuming such conduct by its
`
`experts was acceptable under a reasonable interpretation of that Order.
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`MMI, however, initially argued in its July 26 submission and again in its
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`opposition to attorney’s fees,8 it did not violate the restriction of printing blocks of source
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`7 The issue of Dr. Williams possibly relying on Mr. Finch as an unidentified
`source on which he based his analysis in his expert report was touched upon during the
`parties’ argument on July 30, but not decided since that argument was obliquely
`referenced in the parties’ submissions and appeared to be more directly relevant to a
`potential Daubert issue.
`8 See D.I. 432, 440.
`
`4
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`
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`Case 1:10-cv-00258-SLR-MPT Document 457 Filed 10/31/12 Page 5 of 7 PageID #: 8726
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`code as an alternative to reviewing the source code on the designated computer
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`because MMI, through Mr. Finch, its agent, initially reviewed the source code on the
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`computer before printing it, and the Protective Order recognizes a Receiving Party may
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`act through it retained experts, such as Mr. Finch.
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`MMI cannot have two interpretations of Receiving Party–one to argue no
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`violation and another to argue why its violation was substantially justified to avoid the
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`imposition of reasonable expenses. MMI’s approach is “heads I win, tails you lose,” and
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`it is not entitled to switch its argument after the court determined a violation of a
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`discovery order occurred to justify why sanctions should not be imposed. Further, the
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`court’s comment during the July 30 hearing regarding whether MMI’s conduct was
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`intentional and willful was based on MMI’s initial argument, and a singular interpretation
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`of Receiving Party. Now, the court is aware that MMI apparently has two
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`interpretations of the meaning or application of the term “Receiving Party” under the
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`Protective Order. Therefore, with the differing applications of “Receiving Party”
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`propounded by MMI, substantially justified has not been met under Rule 37, and
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`reasonable expenses are warranted.
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`The operative word in awarding expenses is reasonable. The court recognizes
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`the matter deals with a patent discovery issue, which involved meet and confers,
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`research and analysis of the applicable law, preparation of the submission and
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`presentation of the oral argument. The total time spent by Apple’s counsel on this
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`matter was over thirty hours (18.3 for outside counsel, O’Melveny & Myers, and 12.1
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`hours for local counsel, Morris, James, Hitchens & Williams). Based on the billing
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`records attached to the request for expenses, however, no time for outside counsel was
`
`5
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`Case 1:10-cv-00258-SLR-MPT Document 457 Filed 10/31/12 Page 6 of 7 PageID #: 8727
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`included for presentation of the initial motion, which lasted for thirty-eight minutes,9 or
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`for the time related to the preparation of the submission for the request for fees. MMI
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`does not dispute the reasonableness of the various hourly rates charged by the those
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`involved in the motion from O’Melveny & Myers or Morris, James. MMI does dispute
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`certain entries,10 that is, the 6/28/2012 entry for Shivon Meblin (“[a]ssist with redactions
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`for public filing of the motion to strike . . . ), the 5/24/2012 entry of Ms. Simmons
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`(“[c]onfer with R. Herrmann . . . motion to strike supplemental Loy report”) and the
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`5/31/2012 entry by R. Herrmann (“[c]orrespond with counsel regarding discovery
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`issues”). MMI also questions how Shivon Meblin’s June 28, 2012 entry relates to
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`redacting Apple’s discovery dispute letter which was not filed until July 25, 2012.
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`Regarding O’Melveny & Myers’ expenses, the 6/28/2012 entry does not
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`distinguish between the time spent on redacting the discovery letter and the motion to
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`strike.11 Therefore, the charges for that entry are stricken. Because the entry at
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`5/24/2012 similarly fails to distinguish between attorney time spent on this discovery
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`matter and the motion to strike, those expenses are not allowed. Concerning Morris,
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`James’ charges on 5/31/12, although that entry references discovery issues, it follows
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`on the heels of prior entries on 5/24/2012 and immediately precedes an entry on
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`6/11/2012 which clearly reference the Protective Order issues involved in the discovery
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`9 The transcript of the July 30, 2012 notes Ms. Simmons’ attendance and
`participation and the court independently recalls her involvement.
`10 See D.I. 440 n.2.
`11 The court was unable to locate any redactions to Apple’s discovery letter
`including the attachments, while it found numerous redactions to Apple’s motion to
`strike and the supporting affidavit of Mark Breverman. See D.I. 428, and compare 435;
`D.I. 392, 393.
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`6
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`
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`Case 1:10-cv-00258-SLR-MPT Document 457 Filed 10/31/12 Page 7 of 7 PageID #: 8728
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`matter at issue. Therefore, that expense is allowed.
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`As result, the amount of expenses recommended to be awarded against MMI are
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`$7,849.50 for O’Melveny & Myers and $5,832.58 for Morris, James for a total of
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`$13,682.08.12
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`IV.
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`ORDER AND RECOMMENDED DISPOSITION
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`For the reasons contained herein, the court recommends:
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`(1) Defendant’s request for expenses under Rule 37 (D.I. 436) be granted in part
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`and denied in part. As a result, $13,682.08 in expenses is awarded to defendant
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`against plaintiff.
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`This Report and Recommendation is filed pursuant to 28 U.S.C. § 636(b)(1)(B),
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`FED. R. CIV. P. 72(a), and D. Del. LR 72.1. The parties may serve and file specific
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`written objections within fourteen days after being served with a copy of this Report and
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`Recommendation. The objections and response to the objections are limited to ten
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`pages each.
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`The parties are directed to the Court’s Standing Order in Non-Pro Se matters for
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`Objections Filed under FED. R. CIV. P. 72, dated November 16, 2009, a copy of which is
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`available on the Court’s website, www.ded.uscourts.gov.
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` /s/ Mary Pat Thynge
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`Date: October 31, 2012
` UNITED STATES MAGISTRATE JUDGE
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`12 The original amount of expenses claimed was $15,248.08. See D.I. 437. The
`fees and expenses disallowed equals $1,566.00. Therefore, the total amount
`recommended to be awarded is $13,682.08.
`
`7
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