Hughes Aircraft Company, Plaintiff-appellee, v. the United States, Defendant-appellee. v. the Aerospace Corporation, Appellant, 862 F.2d 320 (Fed. Cir. 1988)

The Aerospace Corporation (Aerospace) appeals the denial by the United States Claims Court of its motions for a protective order, for full reimbursement for costs incurred by in-house counsel in responding to discovery demands, and for sanctions in the form of attorney fees and costs incurred in defending against Hughes' renewed motion to compel discovery. We dismiss-in-part and affirm-in-part.

Background

The underlying action in this controversy is the accounting phase of a patent proceeding initiated by Hughes against the United States pursuant to 28 U.S.C. § 1498 (1982).¹  The principal issues being tried in the accounting phase are infringement of the U.S. Patent No. 3,758,051 (Williams patent) by various accused spacecraft and the compensation base and royalty rate to be used to determine damages. Aerospace assisted the United States with a majority of the spacecraft which Hughes contends infringe the Williams patent.

Hughes sought documents and deposition testimony from Aerospace by subpoena duces tecum. Hughes later filed a motion to compel production of the requested documents. The United States and Aerospace opposed the motion. The Claims Court ruled that the Aerospace documents should be produced, but that the document request was overbroad and should be narrowed. During the next several weeks the parties attempted to agree on the scope of the document production. When they were unable to reach accommodation, Hughes informed Aerospace that it would file a renewed motion to compel. Aerospace then filed a motion for reimbursement and advancement of costs and for a protective order. Hughes followed with its renewed motion to compel. Both motions were fully briefed and argued. At the hearing, Aerospace voluntarily agreed to produce some documents. The court ordered the production of others and determined that certain confidential documents need not be produced. The court also ruled that Hughes should reimburse Aerospace for its costs in responding to the subpoena. Pursuant to guidance given by the court, the parties suggested amounts of reimbursement both for past and future document production, which the court accepted.

ISSUES

1. Whether the Claim Court's denial of a protective order is moot in view of the production of documents by Aerospace.

2. Whether the Claims Court abused its discretion in refusing to award full reimbursement for the costs incurred by in-house counsel in responding to Hughes' discovery demands and in refusing to award sanctions against Hughes for filing its renewed motion to compel.

OPINION

* Under 28 U.S.C. § 1295(a) (3) (1982) this court has exclusive jurisdiction over any final decision of the United States Claims Court. With respect to discovery requests the general rule is "that one to whom a subpoena is directed may not appeal the denial of a motion to quash that subpoena but must either obey its commands or refuse to do so and contest the validity of the subpoena if he is subsequently cited for contempt on account of his failure to obey." United States v. Ryan, 402 U.S. 530 (1971). Aerospace argues that this is an appealable collateral order, relying on Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 546-47 (1949), and Coopers & Lybrand v. Livesay, 437 U.S. 463, 468-69 (1978).

We need not resolve this question because Aerospace's acquiescence with the discovery requests has rendered the question moot. Aerospace in its brief represented that "Aerospace has completed a search and the production of extensive documentation to Hughes. Some of those documents may have already been introduced at trial. Nevertheless, Counsel for Hughes has refused to recognize that Aerospace production is complete." Hughes, for its part, responded that Aerospace's appeal is moot because "Aerospace appeals from the trial court's order after having produced the requested documents and after having agreed to and accepted a sum for proper reimbursement." Further, at oral argument counsel for Hughes stated that "Hughes has received all the documents that it demanded and has paid all the money it was ordered to pay by way of reimbursement."

Because there are no documents remaining that Hughes has requested Aerospace to produce, the portion of the appeal from the Claims Court's order denying a protective order is moot and is dismissed.

II

A trial court's decision in a discovery matter is reviewable only to determine whether that court abused its discretion. National Hockey League v. Metropolitan Hockey Club, Inc., 427 U.S. 639, 642 (1976); Adkins v. United States, 816 F.2d 1580, 1581-82 (Fed. Cir. 1987). An abuse of discretion may be found when (1) the court's decision is clearly unreasonable, arbitrary or fanciful, (2) the decision is based on an erroneous conclusion of the law, (3) the district court's findings are clearly erroneous, or (4) the record contains no evidence upon which the district court rationally could have based its decision. Heat and Control, Inc. v. Hester Indus., Inc., 785 F.2d 1017, 1022, 228 USPQ 926, 930 (Fed. Cir. 1986).

Aerospace argues that the Claims Court abused its discretion in refusing to award full reimbursement under Rule 45 of the Rules of the United States Claims Court (RUSCC) for the costs incurred by Aerospace in responding to Hughes' discovery demands. At the request of the court, the parties conferred and agreed that Aerospace should be reimbursed $7,493.89 for discovery work in the past, which included time for in-house counsel, and a $5,000 flat sum for future expense. The court also considered and denied Aerospace's request for reimbursement of in-house counsel time for opposing the discovery subpoena. In this connection, the court asked if the cases cited by Aerospace stand for the proposition that a subpoenaed non-party is entitled to reimbursement for its expense in resisting the subpoena, to which Aerospace's counsel responded: "it is difficult to tell from those cases. They certainly do not preclude that." We see no error of law or abuse of discretion in the Claims Court's actions. Accordingly, its order providing for reimbursement of Aerospace's costs of complying with discovery, but not for the costs of in-house counsel in resisting the subpoena, is affirmed.

Aerospace also argues that the Claims Court abused its discretion in denying Aerospace's motions for RUSCC 11 and RUSCC 37 sanctions against Hughes for filing a renewed motion to compel. It contends that Hughes' renewed motion to compel was unjustified because Aerospace had filed a few days before a motion for a protective order and that this provided the format for the court to consider all issues relating to discovery. The record reveals, however, that Aerospace was continuing to resist Hughes' document requests and filed its motion after learning of Hughes' intent to file the renewed motion to compel. Under these circumstances, we are unpersuaded that Aerospace has established any grounds for sanctions, much less any basis for contending an abuse of discretion by the Claims Court. Accordingly, the denial by the Claims Court of Aerospace's motions for sanctions is affirmed.