ALJ Gildea Declines To Issue Sanctions And Denies Cross-Motion To Enforce Subpoena In Certain Microelectromechanical Systems (“MEMS Devices”) (337-TA-876)

On February 6, 2014, ALJ E. James Gildea issued Order No. 58 and 64 in Certain Microelectromechanical Systems (“MEMS Devices”) and Products Containing the Same (Inv. No. 337-TA-876).

According to Order No. 58, nonparty Hillcrest Laboratories, Inc. (“Hillcrest”) filed a motion on August 20, 2013 seeking to quash or limit the subpoena duces tecum and ad testifcandum served on it by Complainant STMicroelectronics, Inc. (“STM”).  Although that motion was granted-in-part in Order No. 30, ALJ Gildea found that at least one of Hillcrest’s claims was misleading, that Hillcrest “ha[d] not produced so much as a single document in good faith,” “that only a portion of [Hillcrest’s] arguments have merit, and that even in that instance [Hillcrest] certainly had counsel sophisticated enough to negotiate a reasonable solution without the Administrative Law Judge’s assistance had it chosen to do so.”  Hillcrest was ordered to promptly produce responsive non-privileged documents and material and to produce one or more knowledgeable witnesses.

Instead of complying with the ALJ’s order by commencing its document production, however, Hillcrest filed a motion for reconsideration seeking to again fully quash the subpoena.  ALJ Gildea denied this motion and made the specific finding that the motion appeared to be frivolous and calculated to create delay.  In view of that conduct, Hillcrest was notified that the ALJ was considering whether it would be productive to issue an order to show cause why Hillcrest’s attorneys should not be sanctioned pursuant to Rule 210.4(c) and (d)(1)(ii).

On November 8, 2013, ALJ Gildea issued an order to show cause why Hillcrest’s counsel, Finnegan, Henderson, Farrabow, Garret & Dunner, LLP (“Finnegan”), should not be sanctioned.  See our November 11, 2013 post for more details on the order.  On November 21, 2013 Finnegan responded to the show cause order, explaining that the reconsideration motion was objectively necessary to (i) raise “grave concerns about turning over Hillcrest’s core technology to an expert with an incomplete resume;” (ii) raise “the new fact” that Hillcrest had not been served with Order No. 30, as required; (iii) explain the “injustice” that would result from denying Hillcrest’s reply motion; and (iv) address “the ALJ’s suggestion to make documents available for inspection and copying to shift expense.”

After reviewing Finnegan’s response, ALJ Gildea concluded that warnings, not monetary sanctions, were sufficient under the circumstances.  The ALJ found that Finnegan’s first point was disingenuous, and that if Hillcrest had “grave concerns” regarding the expert, then it should not have relegated such a serious issue to a portion of a footnote in its original motion.  ALJ Gildea also noted that Hillcrest was directed to produce discovery to outside counsel and never suggested that outside counsel for STM could not be trusted with Hillcrest’s confidential documents.  Furthermore, the ALJ found that, in seeking reconsideration of the expert issue, it would have been objectively reasonable for Hillcrest to have tailored its request for relief to the alleged wrong, such as by seeking an extension of time for the deadlines outlined in Order No. 30 which STM offered as an option, but that Hillcrest declined the offer and took an “all or nothing” approach to Order No. 30 that was not objectively reasonable.

In reviewing Finnegan’s second point, ALJ Gildea found that STM’s failure to timely provide a redacted copy of Order No. 30 was not a reasonable basis for seeking reconsideration to quash to subpoena in its entirety.  Again, the ALJ found that Hillcrest failed to tailor its request for relief, and that the portion of the reconsideration motion dealing with the service of Order No. 30 was filed for the improper purpose of injecting further delay prior to the enforcement of the subpoena.

With respect to Finnegan’s third point, ALJ Gildea found that it was within his discretion to permit a reply.  Furthermore, the ALJ found that Finnegan’s response reiterated that the motion for leave to file a reply was perfunctorily drafted at best and that attempting to seek reconsideration of the ALJ’s denial was objectively unreasonable, unsupported by law, and calculated to create delay.

ALJ Gildea was also not persuaded by Finnegan’s fourth and final ground.  The ALJ found that the Commission does not say, and the ALJ did not find, that a nonparty would have lesser standards to follow than a party when making a showing of hardship or expense that would trigger cost-shifting.  Therefore, it was within the ALJ’s discretion to require a producing party seeking fee-shifting to provide proof that it is appropriate.  Furthermore, ALJ Gildea noted that Hillcrest was informed in Order No. 30 that its fee-shifting request lacked support and that, therefore, it was objectively unreasonable for Hillcrest, having previously submitted arguments but not evidence, to attempt to reargue the point in a motion for reconsideration.

According to Order No. 64, nonparty GLOBALFOUNDRIES U.S. Inc. (“GLOBALFOUDNRIES”) filed a motion to limit and quash the subpoena duces tecum and ad testificandum served on it by STM.  STM filed a cross-motion and opposition to the motion.

According to Order No. 64, nonparty GLOBALFOUNDRIES U.S. Inc. (“GLOBALFOUDNRIES”) filed a motion to limit and quash the subpoena duces tecum and ad testificandum served on it by STM.  STM filed a cross-motion and opposition to the motion.  ALJ Gildea had denied the motion and ordered supplementation from both STM and GLOBALFOUNDRIES.  On November 27, 2013, STM submitted a supplemental update stating that it had received the requested discovery but would not withdraw the pending motion until GLOBALFOUNDRIES provided a declaration authenticating the documents produced.  In light of Order No. 60 relating to the declaration at issue, ALJ Gildea considered the remainder of STM’s cross-motion moot.

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