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WhoToo, Inc v. DUN & Bradstreet, Inc

United States District Court, W.D. Washington, Seattle

February 16, 2017

WHOTOO, INC., Plaintiff,
v.
DUN & BRADSTREET, INC., Defendant.

          ORDER

          The Honorable Richard A. Jones United States District Judge.

         I. INTRODUCTION

         This matter comes before the Court on Defendant Dun & Bradstreet, Inc.'s (“D&B”) Motion for Relief for Spoliation. Dkt. # 103. Having considered the briefing of the parties, relevant portions of the record, and the oral arguments of counsel, the Court DENIES D&B's motion. As specified in further detail below, however, the Court finds that less severe sanctions may be warranted. Accordingly, the Court STRIKES the parties' pending motions for summary judgment, Dkt. ## 60, 66, and ORDERS the parties to take additional steps toward resolving this dispute.

         II. BACKGROUND

         Plaintiff WhoToo, Inc. (“WhoToo”) filed this action against D&B for breach of contract, tortious interference with business expectancy, and injunctive relief. Dkt. # 1. The parties have since engaged in discovery and filed motions for summary judgment.

         On December 13, 2016, after submitting its motion for summary judgment, D&B learned that WhoToo is named as a defendant in a state proceeding pending in King County Superior Court, Shannon v. WhoToo, Inc., et al., No. 15-2-24758-1. Dkt. # 104 at 1. WhoToo is represented by the same lead counsel in that case as it is in this case. Compare Dkt. # 104-1 at 22 with Dkt. # 60 at 26.

         On December 19, D&B retrieved documents filed in the Shannon v. WhoToo matter from King County Superior Court's filing docket. Id. at 2. Some of these documents are highly relevant to D&B's defense in the instant matter, yet were not produced by WhoToo during discovery. For instance, one of the central facts at issue in this case is whether WhoToo developed a functional application programming interface (“API”) for a third party, 6Sense Insights, Inc. (“6Sense”), with which D&B had a business arrangement. Dkt. # 12 at 10-11. Throughout the course of this litigation, WhoToo has maintained that it delivered a functional API to 6Sense. See, e.g., Dkt. # 95 at 4 (“The record confirms that WhoToo delivered a working API.”). This issue also arose in the Rule 30(b)(6) deposition of WhoToo's CEO, Matt Rowlen. When asked what problems he was aware of during the development of the API, Rowlen testified that he “wasn't involved with the-with the details of that, other than I have seen some discovery as it related to it since” and that any such problems were limited to “timing and time.” Dkt. # 67-2 at 48.

         The documents obtained by D&B from the state proceeding undermine these representations concerning the functionality of the API. For example, in a sworn declaration, Rowlen represented that the API was “radically different” than anticipated internally and “also radically different from what I had communicated to D&B.” Dkt. # 104-2 at 6. In an underlying email, Rowlen expressed that the API developed by WhoToo may have “killed the deal” with 6Sense. Dkt. # 104-3 at 16. Further communications confirm Rowlen's discontent with the API. See, e.g., id. at 12 (“I'm furious.”).

         D&B filed a motion for relief from spoliation on the basis that WhoToo intentionally withheld documents and acted in bad faith. As a remedy, D&B requests that WhoToo's action be dismissed with prejudice or, in the alternative, that the Court instruct the jury to draw an adverse inference from WhoToo's failure to produce evidence. On January 4, 2017, the Court held a telephonic hearing on D&B's motion. Dkt. # 103. Since then, WhoToo has filed an opposition to D&B's motion and produced further responsive documents. Dkt. # 111.

         III. LEGAL STANDARD

         The Court has broad discretion to control discovery. Avila v. Willits Envtl. Remediation Trust, 633 F.3d 828, 833 (9th Cir. 2011). “There are two sources of authority under which a district court can sanction a party who has despoiled evidence: the inherent power of federal courts to levy sanctions in response to abusive litigation practices, and the availability of sanctions under Rule 37 against a party who ‘fails to obey an order to provide or permit discovery.'” Leon v. IDX Sys. Corp., 464 F.3d 951, 958 (9th Cir. 2006) (quoting Fjelstad v. Am. Honda Motor Co., 762 F.2d 1334, 1337-38 (9th Cir. 1985). Certain sanctions, such as dismissal, require a showing bad faith. Id. Other sanctions, such as an adverse jury instruction, do not require a showing of bad faith. Glover v. BIC Corp., 6 F.3d 1318, 1329 (9th Cir. 1993).

         IV. DISCUSSION

         Based on the record at this juncture, there is insufficient evidence to justify dismissing WhoToo's case or instructing the jury to draw an adverse inference from WhoToo's nondisclosure. The documents discovered by D&B were publically filed in a state court proceeding-making these documents publically available is inconsistent with an intent to suppress or hide them from discovery. As discussed below, sanctions may be warranted, but not in the form of dismissal or an adverse jury instruction. The Court is confident that this case can be resolved without resorting to unduly harsh remedies that detract from the merits.

         The Court, however, is troubled by two aspects of WhoToo's conduct. First, WhoToo's counsel-who has twice conceded that this is not his “finest moment”- should have been aware of the need to produce the documents at issue. Dkt. ## 110 at 11, 14. He is counsel in both the state matter and the instant matter, yet he filed documents advancing inconsistent positions: (1) in the state matter, the documents indicate that the API developed by WhoToo was deficient, Dkt. # 104-2 at 6; (2) in the instant mater, the documents assert that the API was functional, Dkt. # 95 at 4. Second, WhoToo's CEO testified in the instant matter that only minimal problems arose during the ...


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