Bethesda Softworks LLC v. Interplay Entertainment Corporation, No. 8:2009cv02357 - Document 111 (D. Md. 2011)
Court Description: MEMORANDUM OPINION. Signed by Chief Judge Deborah K. Chasanow on 4/25/11. (sat, Chambers)
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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND : BETHESDA SOFTWORKS LLC : v. : Civil Action No. DKC 09-2357 : INTERPLAY ENTERTAINMENT CORPORATION : MEMORANDUM OPINION Presently pending and ready for resolution in this trademark action is a motion for sanctions filed by Plaintiff Bethesda Softworks LLC ( Bethesda Softworks ). (ECF No. 106). Because the issues have been fully briefed and no hearing is necessary, the court now rules. See Local Rule 105.6. For the reasons that follow, Bethesda Softworks motion will be granted in part and denied in part. I. Background Some familiarity with the underlying facts of this case is presumed. In brief, the principal issue is the ownership of certain intellectual property rights associated with Fallout, a popular series of computer and console role-playing games. Plaintiff these signed Bethesda Softworks Fallout-related with rights Defendant ( Interplay ) in 2007. maintains by virtue Interplay that of it two now owns agreements Entertainment all it Corporation For its part, Interplay insists that it retained certain rights to the Fallout games rights that it continues to hold today. The case began on September 8, 2009, when Softworks filed a complaint against Interplay. (ECF No. 1). Soon thereafter, discovery problems began to arise. 2009, for order. filed, instance, the (ECF No. 30). the governing parties filed a Bethesda In November proposed protective The day after that proposed order was court instructed documents filed the under parties seal. to (ECF parties failed to do so for several months. add a No. provision 33). The Instead, they chose to make productions of thousands of pages under the unapproved protective order until August 9, 2010, when they finally moved for entry of a protective order. On February 25, 2010, (ECF No. 76). before an answer to the initial complaint was filed, the parties submitted a proposed scheduling order. (ECF No. 62). The court did not approve that scheduling order, but the parties proceeded with discovery.1 A few months after the parties began discovery, on August 2, 2010, Bethesda Softworks filed a motion to compel responses to interrogatories and at least five document requests. 70-1). The court granted much 1 of the motion to thirteen (ECF No. compel on Bethesda Softworks later moved to withdraw the order. (ECF NO. 78). 2 January 13, 2011 and instructed Interplay to comply with that order no later than February 7, 2011. (ECF Nos. 97, 98). During a hearing on January 14, 2011, the court encouraged the parties to work together to resolve the remaining discovery issues and set a schedule. Unfortunately, the parties have been unable to agree on much of anything. In a joint status report dated March 1, 2011, the parties reported that they could not agree on a schedule, could not agree on whether Interplay had sufficiently complied with the decision on the motion to compel, and could not even agree on whether they had met to discuss a scheduling order for the remainder of discovery. (ECF No. 107). Instead of resolving these disputes through cooperation, on February 28, 2011, Bethesda Softworks filed a motion for sanctions, alleging that Interplay failed to comply with the court s prior rulings on discovery. (ECF No. 106). The motion seeks, among other things, the exceptional sanction of default judgment. Interplay opposed on March 17 and responded in kind, accusing Bethesda Softworks of acting in bad faith and labeling the motion dishonest. 4. II. for sanctions (ECF No. 108). legally frivolous and factually Bethesda Softworks replied on April (ECF No. 109). Analysis Bethesda Softworks moves for sanctions pursuant to Federal Rule of Civil Procedure 37(b)(2)(A). 3 That rule permits a district court to impose certain punitive measures, up to and including order. dismissal, on Fed.R.Civ.P. any party 37(b)(2)(A). who disobeys Rule a 37(b)(2) discovery gives the court a broad discretion to make whatever disposition is just in the light of the facts of the particular case. 8B Charles Alan Wright, et al., Federal Practice & Procedure § 2289 (3d ed. 2010); see also Camper v. Home Quality Mgmt. Inc., 200 F.R.D. 516, 518 (D.Md. 2000) ( Federal district courts possess great discretion to sanction parties for failure to obey discovery orders. ). Emphasizing this broad discretion, Bethesda Softworks asks the court to sanctions : impose the most severe in the spectrum of default judgment in its favor and dismissal of all of Interplay s counterclaims. Nat l Hockey League v. Metro. Hockey Club, Inc., 427 U.S. 639, 643 (1976). But [w]hile the imposition of sanctions under Rule 37(b) lies within the trial court s discretion, it is not a discretion without bounds or limits. Hathcock v. Navistar Int l Transp. Corp., 53 F.3d 36, 40 (4th Cir. 1995) (quotation marks and brackets omitted). This is particularly so when a party requests the rather draconian penalty of dismissal or default. Id. Thus, a district court should consider four factors in determining what sanctions to impose under Rule 37: (1) whether the non-complying party acted (2) in bad faith; the 4 amount of prejudice that noncompliance caused the adversary; (3) the need for deterrence of the particular sort of non-compliance; and (4) whether less drastic sanctions would have been effective. Belk v. Charlotte-Mecklenburg Bd. of Educ., 269 F.3d 305, 348 (4th Cir. 2001) (quotation marks omitted). Neither party has directed its arguments towards this standard.2 In effect, the parties first part of the test: Bethesda Softworks on the Interplay s alleged bad faith.3 In view, pattern began with almost Interplay pattern of discovery abuse. this focus a has exclusively engaged in a long According to Bethesda Softworks, series of baseless objections to certain discovery requests and culminated in Interplay s noncompliance with the court s January 13 order on a motion to compel. Interplay responds that it raised only good faith objections to Bethesda Softworks discovery requests, even if those objections were ultimately overruled (for the most part). 2 It may be an abuse of discretion to apply the dismissal sanction without applying that standard. See Riggins v. Steel Techs., 48 F.App x 460, 462 (4th Cir. 2002). 3 Bad faith is one factor to consider in imposing sanctions for failure to comply with a court order, but nothing in the rule requires that the failure be on account of bad faith. Diaz-Fonseca v. Puerto Rico, 451 F.3d 13, 26 (1st Cir. 2006); cf. Hoyle v. Freightliner, Inc., --- F.3d ----, 2011 WL 1206658, at *4 (4th Cir. Apr. 1, 2011) (explaining that bad faith is not required to impose discovery sanctions under Rule 37(c)(1)). 5 It also maintains that it has endeavored to comply with its understanding of the court s order on January 13. Interplay has not completely and properly complied with the court s order; Document Request Nos. 33 and 34 are illustrative. Those requests asked for documents relating to the terms minimum financing and full-scale development found in the Trademark Licensing Agreement ( TLA ) between Bethesda Softworks and Interplay.4 too ambiguous Interplay initially objected that the terms were and undefined to specify any documents. The court, in its letter order on the motion to compel, rejected that argument; the order indicated that Interplay should apply a good faith understanding of the terms which were in a document Interplay signed and respond to the requests to the best of its ability. Now, Interplay (ECF No. 97, at 4). continues to complain that the terms minimum financing and full-scale development are undefined; consequently, those terms cannot be enforced because there is no yardstick by which to measure Interplay s compliance. position is not argued in good faith. 4 This For one, Interplay s Although Bethesda Softworks motion to compel was granted as to these document requests, the prudent party would avoid using omnibus phrases such as relating to altogether. See, e.g., Leisure Hospitality, Inc. v. Hunt Props., Inc., No. 09-CV-272-GKF-PJC, 2010 WL 3522444, at *3 (N.D.Okla. Sept. 8, 2010) (listing cases establishing that such phrases are often objectionable). 6 argument that these two contract terms are so hopelessly vague that it meaning cannot would offer any reasonable moot effectively interpretation of much this of case. their One of Interplay s principal contentions is that, pursuant to the TLA, it holds a license to use certain Fallout-related marks. But the TLA would be unenforceable if it contained material terms that were so vague or indefinite as to fail to provide a reasonable standard for determining occurred. Cont l Ins. Co. v. Rutledge & Co., Inc., 750 A.2d 1219, 1230 (Del.Ch. 2000). protection of a license whether a breach has Thus, Interplay cannot seek the while simultaneously objecting to discovery on a basis that would render that very license void. In contradictory fashion, Interplay also indicates that it has produced documents relating to the purportedly indefinable provisions. As to Document Request No. 33, for instance, Interplay states that it has produced documents that Interplay contends demonstrate compliance with the minimum financing provision. Interplay must do more than respond with documents evidencing compliance. broader terms. documents financing, Interplay relating whether non-compliance, Bethesda s or to should request full-scale have those else demonstrated in phrased in with all responded development documents something was between. and minimum compliance, See, e.g., Novelty, Inc. v. Mountain View Mktg., Inc., 265 F.R.D. 370, 378 7 (S.D.Ind. 2009) ( Producing only those documents that are deemed helpful to the producing party s litigation position parsing out the bad from the good is, of course, impermissible. ). Similarly, with Document Request No. 34, Interplay adopted another limiting documents after interpretation: April 4, 2009, it the refused deadline to in produce the TLA securing financing and commencing full-scale development. any for The court s order on January 13 did not apply any temporal limit. Interplay nevertheless maintains that this court temporal limit during a hearing on January 14. suggested a (ECF No. 108, at 6 ( Interplay believed that the Court clarified that it was first to produce the documents for the time period up to and including the April 4, 2009 contract deadline and that the parties were to further meet and confer regarding the need for the post deadline materials. ). There was no such ruling. At the hearing, the court specifically addressed the issue of postApril 4 documents and acknowledged that they were relevant . . . to the question of how far [Interplay] had gotten by the time of the purported termination. (ECF No. 100, at 44); cf. Carr v. Double T. Diner, --- F.R.D. ---, No. WMN-10-CV-0230, 2010 WL 4365579, at *1 (D.Md. Nov. 2, 2010) ( The scope of relevancy under discovery rules is broad such that relevancy encompasses any matter that bears or may bear on any issue that is or may be in the case. ). Interplay cites certain language 8 wherein the court distinguished between the potential usefulness of pre- and post-April 2009 materials. As the transcript indicates, however, that discussion occurred only in the context of deciding to whom the materials should be disclosed (i.e., whether disclosure should be limited to outside counsel). Because Interplay raised concerns about disclosing proprietary information to Bethesda Softworks, counsel were instructed to confer on whether the post-April 2009 material disclosed to anyone other than outside counsel. should be There was no indication that counsel were to discuss whether post-April 2009 materials would indicated that be disclosed Interplay was at all. free to The court ignore the never once unambiguous order to make a complete production.5 Interplay s problematic. response to Interrogatory No. 14 was also In response to a question asking for all facts relating to any financing after April 4, 2009, Interplay rather conclusorily stated that: (1) 5 Masthead Studios provided Interplay s misconstruction of the court s January 13 order seems to be indicative of a disappointing lack of care on Interplay s part, particularly when paired with Interplay s failure to file a supplemental response to Interrogatory No. 16 because it missed the reference to that interrogatory in the written order. The parties are cautioned that the failure to exercise appropriate care in fulfilling their discovery obligations will not provide a valid excuse for noncompliance. Cf. Robinson v. Wix Filtration Corp. LLC, 599 F.3d 403, 413 (4th Cir. 2010) (explaining that carelessness and inattentiveness is not excusable). 9 development services in accord with the parties agreements ; (2) Interplay additional also financing contemplated, with another but party; did not and complete, (3) produced documents related to that third party. Interplay The factual information contained in this answer is decidedly vague, and the mere reference to other documents does not help matters much. Case law in federal district courts generally disfavors attempts to respond to interrogatories by referring to other documents. Even if such documents are relevant, there is value in clear and precise interrogatory answers. Dairyland Power Co-op v. United States, 79 Fed.Cl. 722, 726 (2007) (citations omitted). Still, Bethesda Softworks likely goes too far in accusing Interplay of engaging in a year-long, bad faith campaign to impede discovery. (ECF No. 109, at 3). Importantly, this is not an instance where the responding party has entirely refused to respond to discovery. disputes evidence misconduct.6 complains that it has And not all of these discovery For instance, Bethesda Softworks received no documents showing the identity or number of Masthead or Interplay personnel working on 6 That two persons disagree does not mean that one of them has bad motives. Big Dipper Entm t, LLC v. City of Warren, --- F.3d ----, No. 09-2339, 2011 WL 1378417, at *4 (6th Cir. Apr. 13, 2011). 10 the development of the [Massively Multiplayer Online Game, or] MMOG, or, if there are such people, documents showing the time periods they worked on the MMOG. (ECF NO. 109, at 14). It is not clear that such information would be responsive to any of the document requests the court has seen. In addition, Bethesda Softworks asserts that it has not seen any large volume of documents, which it apparently takes to mean there must be other undisclosed documents documents. relating to It Interplay s says there development must be more agreement with Masthead Studios, even though Interplay insists it has produced them all.7 It also conclusorily labels Interplay s responses to Document Request Nos. 35 and 36 dubious. Such arguments do not establish bad faith because the court is loathe to credit a party s mere hunch about the existence of additional documents responsive to a particular discovery request. Hubbard v. Potter, 247 F.R.D. 27, 29 (D.D.C. 2008); see also Trilegiant Corp. v. Sitel Corp., --- F.R.D. ----, No. 09 Civ. 6492, 2010 WL 4668950, at *7 (S.D.N.Y. Nov. 15, 2010) (declining to order party to respond more fully to document requests, where the requesting party did not point to any specific documents the responding party failed to produce). 7 Moreover, Bethesda Interplay states it has produced all documents responsive to that document request, except for documents falling outside of the (erroneous) time limit of April 4, 2009. 11 Softworks protests that Interplay s interrogatory contain legal arguments rather than facts. responses While it is true that there is a great deal of unnecessary legal argument in some of the responses, the responses also contain responsive facts and therefore do not support a finding of bad faith. There is some degree of prejudice compliance with resulting the mandates from Interplay s questionable of discovery. Bethesda Softworks primarily emphasizes the delay that has resulted from Interplay s unwillingness or inability to comply completely with delay, disruption of discovery can amount all discovery deadlines, to requests. and prejudice. the See Indefinite continuation Goodman v. of Praxair Servs., Inc., 632 F.Supp.2d 494, 508 n.6 (D.Md. 2009) (listing cases); Aerodyne Sys. Eng g, Ltd. v. Heritage Int l Bank, 115 F.R.D. 281, 288 (D.Md. 1987) ( [The plaintiff] s delinquent and inadequate interrogatories and document responses have resulted in prejudice to [the defendant] by preventing it from conducting discovery, evaluating the merits of the claims against it, and from adequately preparing its defense to this matter. ). And, to be sure, there has been some degree of delay in this case, as the parties originally intended to complete discovery by the end of 2010. On the other attributable to Interplay. hand, this delay is not entirely Indeed, Bethesda Softworks conceded, in its motion to withdraw its proposed scheduling order, that 12 the schedule had become unworkable for several reasons. Among other things, the schedules of the parties and their counsel, as well as certain disputes over who should be permitted to review the materials produced in discovery, caused some degree of delay. attribute (ECF No. 78, at 3). an entire year of Thus, it is disingenuous to delay to Interplay. Bethesda Softworks does not point to any other form of prejudice, though one might surmise that the withholding of material information is prejudicial in itself. There is a need to deter the type of gamesmanship that one might suspect is happening in this case. See Mut. Fed. Sav. & Loan Ass n v. Richards & Assoc., Inc., 872 F.2d 88, 93 (4th Cir. 1989) ( [S]talling and ignoring the direct orders of the court . . . must obviously be deterred. ). the game playing out of the Discovery is meant to take trial process, not simply add another stage to the process where the parties can cagily engage in obfuscation and evasion. See Newsome v. Penske Truck Leasing Corp., 437 F.Supp.2d 431, 437 (D.Md. 2006) (explaining discovery was designed to make trial less of a game of blind man s bluff and more of a fair contest (quotation marks omitted)). A lack of forthrightness early in the discovery process is especially troubling, because such action can have a spiraling effect on the future litigation scheduling collateral of discovery, disputes 13 which and inject typically into the require the intervention of the court to resolve. Flagstaff Indus. Corp., 173 F.R.D. Jayne H. Lee, Inc. v. 651, 653 (D.Md. 1997). Indeed, one might say that is exactly what happened here. The last factor, the effectiveness of less drastic sanctions, counsels against the imposition of the heavy sanction Bethesda Softworks seeks. Interplay largely error lies behind its discovery failures. case, a lesser conscientious. sanction should claims innocent If that is indeed the encourage it to be more If it is not, Bethesda Softworks will have the later opportunity to seek harsher sanctions. In addition, the Fourth Circuit has . . . emphasized the importance of warning a party prior discovery to dismissing sanction. Steigerwald v. [or Camper, Bradley, 229 defaulting] 200 F.R.D. F.Supp.2d its at 445, claim 518; 449 as see (D.Md. a also 2002) ( [T]he Fourth Circuit has encouraged trial courts initially to consider imposing sanctions less severe than default, such as awards of costs and omitted)). In some Softworks motion to tactics should be attorneys sense, compel put to fees. the was prior a rest. (quotation ruling signal Yet that that on Bethesda any opinion marks evasive did not explicitly invoke the possibility of default and dismissal as a sanction for continuing non-compliance. Bethesda Softworks alternatively asks the court to strike any affirmative defense or counterclaim based on license 14 or right. Practically speaking, such a sanction would have the same effect as the powerful dismissal and default sanction discussed above. See, e.g., Parrott v. Wilson, 707 F.2d 1262, 1273 n.26 (11th Cir. 1983) (recognizing that the striking of a defense would be tantamount to granting a motion for summary judgment ). Given the lack of any clear notice to Interplay that such sanctions were a possibility if its behavior continued, these powerful tools are not appropriately invoked (yet). As another alternative, Bethesda proposed that the court prohibit Interplay . . . from supporting or opposing any claim or defense in this matter with: (a) any document not produced by Interplay in violation of the Court s January 13, 2011 discovery order; or (b) any factual matter not included in Interplay s responses Court s again, to Bethesda s January 13, is quite 2011 harsh evidence of prejudice. F.Supp.2d 378, interrogatories 421 discovery and in order. typically violation This requires of the sanction, some strong Passlogix, Inc. v. 2FA Tech., LLC, 708 (S.D.N.Y. 2010) ( Preclusion is a harsh sanction preserved for exceptional cases where a . . . party s failure to provide the requested discovery results in prejudice to the requesting party. ). Moreover, a blanket order of preclusion at this stage might effectively bar Interplay from supplementing its present responses later discovers itself. 15 with information that it Interplay should not entirely escape without sanction, as it has pressed some more-than-questionable objections, without substantial justification, which caused unnecessary delay in the face of a clear discovery order. order Interplay to pay $2,000 Accordingly, the court will to offset a portion of the attorney s fees and costs Bethesda Softworks has incurred in bringing this motion.8 for the payment of See Fed.R.Civ.P. 37(b)(2)(C) (providing fees as a possible sanction); see also Marquis v. Chrysler Corp., 577 F.2d 624, 642 (9th Cir. 1978) (terming a $2,000 sanction for failure to produce documents a light sanction ). It is also expected to rectify its earlier discovery responses to provide complete answers particularly as to Document consider itself Request on Nos. notice 33 that and 34. harsher Interplay sanctions should may be forthcoming if the evasive discovery tactics continue. 8 Both attorneys on brief for Bethesda Softworks have apparently been admitted to the bar for more than 10 years. Even if one applies the lowest presumptive rate in this district for attorneys with 10 years of experience (i.e., $225), a $2,000 sanction reflects fewer than 9 hours of work (not including costs). See Rules and Guidelines for Determining Attorneys Fees in Certain Cases for the District of Maryland § 3. That is not an unreasonable amount of time for preparing this motion for sanctions. Bethesda Softworks also sought fees and costs associated with its earlier motion to compel, but those expenses are not recoverable under Rule 37(b)(2). See 8B Charles Alan Wright, et al., Federal Practice & Procedure § 2289 (3d ed. 2010) ( The expenses that may be recovered under [this rule] are those caused by the failure to obey an order and therefore do not include the expense of obtaining the order itself. ). 16 As for any future discovery, the court expects the parties to conduct it in a cooperative fashion, rather than viewing every discovery issue as an opportunity to spar. See Mancia v. Mayflower Textile Servs. Co., 253 F.R.D. 354, 361 n.3 (D.Md. 2008) (emphasizing importance of cooperation). Parties (and their attorneys) are not meant to use discovery as a trampoline on which to exercise their mutual animosity. State Univ., 269 F.R.D. 565, 571 (D.Md. Mezu v. Morgan 2010). Thus, the parties should engage in genuine meet and confer discussions, during which the parties attempt to resolve their differences rather than simply stating their opposing positions and refusing to budge.9 See Local Rule 104.7 ( Counsel shall confer with one another concerning a discovery dispute and make sincere attempts to resolve Hopefully, the with differences a little between them. collaboration, (emphasis [t]he added)). lawyers are spared the embarrassment of making clearly erroneous arguments . . . [and] [t]he clients are spared needless expense incurred in the delay. litigation of discovery disputes and the attendant Higginbotham v. KCS Int l, Inc., 202 F.R.D. 444, 453 (D.Md. 2001). 9 The court also hopes to avoid future arguments over who said what and when they said it during meet and confer conferences. Sophisticated and competent counsel, such the attorneys on both sides of this case, have more important issues upon which to focus their energies. 17 The reality in this case is that face-to-face meetings are impractical, given that counsel for the parties are separated by several thousand miles. Even so, working together means more than worded swapping counsel. sharply letters and emails between Watts v. Allstate Indem. Co., No. 2:08-cv-01877, 2010 WL 4225561, at *3 (E.D.Cal. Oct. 20, 2010). If, after frank discussion, the parties determine that some intractable issue requires court involvement, then they may file an appropriate motion. simply In doing so, they would be well advised to present the facts and allow the court to draw its own conclusions, rather than using heated rhetoric that only serves to escalate matters. Interplay of a (See, e.g., ECF No. 106-1, at 2 (accusing series of misrepresentations, frivolous objections and arguments, and other dilatory tactics ); id. at 4 (arguing Interplay is simply playing for time, has performed, and is continuing to perform, its discovery obligations in bad faith, and has no intention of engaging in meaningful and required discovery ); ECF No. 108, at 2 (contending Bethesda Softworks motion was based on blatant misrepresentations ); id. at 10 ( Bethesda stoops to half truths . . . ); id. at 11 (labeling Bethesda Softworks factually dishonest )). motion Calm, legally cooperative discovery issues will serve everyone s interests. 18 frivolous and resolution of III. Conclusion For the foregoing reasons, the motion for sanctions filed by Bethesda Softworks will be granted in part and denied in part. A separate order will follow. /s/ DEBORAH K. CHASANOW United States District Judge 19
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