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Nondisclosure of test results disclosed to testifying expert results in sanctions, but not dismissal

By McKee, Voorhees & Sease, P.L.C.

In a recent decision, the Federal Circuit affirmed-in-part and reversed-in-part a district court's ruling sanctioning the plaintiffs and their attorney in a case both monetarily and by striking the plaintiffs' pleadings.  The sanctionable conduct was the withholding of certain test results of the allegedly infringing product that arguably showed the product did not infringe.  The test results were disclosed to the plaintiffs' expert witness, but never disclosed to the defendants.  When asked to explain their conduct, the plaintiffs and their lawyer testified they believed (mistakenly) the results were either irrelevant or subject to work product protection, although it was never listed on a privilege log.  As a result of this, the district court struck the plaintiffs' complaint and answer to counterclaims, and also ordered the plaintiffs to pay over $121,000 in attorney fees under Rule 37, nearly $1 million in fees and expenses under the court's inherent authority, over $1.6 million in fees under § 285, and nearly $50,000 in costs under § 1920.

The Federal Circuit agreed with the district court's finding that the conduct was sanctionable, but reversed-in-part the actual sanctions applied.  Specifically, the court held striking the pleadings was too drastic a sanction.  As a result, the awards under § 285 and § 1920 were also reversed, as they have a prevailing party requirement.  The court also reversed the award under the court's inherent powers, noting that under Supreme Court jurisprudence, when a Rule provides adequate sanctioning power, a court should ordinarily rely upon the Rule rather than its inherent authority.

More detail of ClearValue, Inc. v. Pearl River Polymers, Inc. after the jump.

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Full post as published by FileWrapper on April 09, 2009 (boomark / email).