Network Computing Services Corp. v. Cisco Systems, Inc.

223 F.R.D. 392, 2004 U.S. Dist. LEXIS 26610, 2004 WL 2165968
CourtDistrict Court, D. South Carolina
DecidedAugust 3, 2004
DocketNo. C/A 3:01-0281-17
StatusPublished
Cited by11 cases

This text of 223 F.R.D. 392 (Network Computing Services Corp. v. Cisco Systems, Inc.) is published on Counsel Stack Legal Research, covering District Court, D. South Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Network Computing Services Corp. v. Cisco Systems, Inc., 223 F.R.D. 392, 2004 U.S. Dist. LEXIS 26610, 2004 WL 2165968 (D.S.C. 2004).

Opinion

ORDER FOR SANCTIONS FOR FAILURE TO PROVIDE DISCOVERY RESPONSES

JOSEPH F. ANDERSON, JR., Chief Judge.

This ease involves claims arising from a distributorship agreement entered into by the plaintiff, Network Computing Services Corporation, (“NCS”) and the defendant, Cisco Systems, Inc. (“Cisco”). In its complaint, NCS asserted claims for breach of contract, conspiracy, fraud, fraud in the inducement, unfair trade practices, tortious interference with existing or prospective contractual relations, trade secret violations, and anti-trust violations. Cisco asserted a counterclaim against NCS for failure to pay for goods.

NCS is a computer network and systems integrator that provides computer-related services to its customers. Cisco designs computer networking hardware and software which it sells to “end users” directly or via selected “resellers.” In May 1998, NCS and Cisco entered into a one-year written contract whereby NCS became a Cisco reseller. The contract was subject to termination at any time by either party upon thirty days written notice.

Over the ensuing eighteen-month period, the relationship between the parties soured. NCS filed suit on January 31, 2001, alleging, among other things, that Cisco engaged in a scheme to lure NCS into a distributorship agreement by intentionally misrepresenting the expected volume of sales and customers, and thereafter undermined NCS’s ability to perform its duties under the contract.

The case was initially assigned to United States District Judge Dennis W. Shedd, who referred the entire ease to a United States Magistrate Judge. With the case before the Magistrate Judge, both parties moved for summary judgment, and Cisco moved for dismissal as a sanction for alleged discovery abuses by NCS. By the time the Magistrate Judge issued his Report and Recommendation, the case had been reassigned to the undersigned upon Judge Shedd’s elevation to the Court of Appeals.

[394]*394The Magistrate Judge’s Report and Recommendation, detailed and comprehensive, suggested that some of the plaintiffs claims should be dismissed on summary judgment and that other claims should be tried to a jury. Regarding the sanctions request, the Magistrate Judge noted that he had already sanctioned NCS once for dilatory discovery responses. Accordingly, he recommended that this court impose a monetary sanction for NCS’s failure to produce a customer list in a timely manner, after first suggesting that such a list did not exist.1 Both sides sought lengthy extensions of time within which to file objections to the Report and Recommendation. Both sides took issue with the parts of the Report and Recommendation adverse to their respective positions.

After hearing oral argument on January 21, 2004, the court determined that it would accept, in part, and reject, in part, the Report and Recommendation of the Magistrate Judge. Specifically, this court granted summary judgment in favor of Cisco on all of NCS’s claims except for the claim for breach of the implied covenant of good faith and fair dealing, which, both parties agree, is essentially a breach of contract claim. The court also denied Cisco’s motion for summary judgment on its counterclaim for failure to pay for goods and related claims. The specifies of the court’s decision, as well as the court’s rationale, are set out in a separate order. See Order filed February 9, 2004.

As for the Magistrate Judge’s recommendation on the sanctions issue, Cisco objected to the Magistrate’s determination that the severe sanction of dismissal was not warranted in this ease. NCS also objected to the sanctions award, alleging that there was no basis in the record for any type of sanction.

After hearing from counsel, the court determined that the Magistrate Judge’s recommendation that NCS be sanctioned should be upheld. The court further determined that, in light of the procedural history of this ease and the nature of the misconduct, something more than a monetary sanction was called for. Rather than take the drastic step of dismissing the action, the court announced that it would instead inform the jury of NCS’s discovery misconduct. The court further indicated that it would formulate the precise language to be used in informing the jury of the misconduct at an appropriate time before the trial began.

The case was calendared for trial during this court’s July/August 2004 term. During the week prior to jury selection, the parties announced to the court that a rather unusual settlement had been reached, the terms of which would be memorialized in a separate document. Under the terms of the settlement, the lone breach of contract claim would be dismissed with prejudice. Additionally, Cisco’s breach of contract counterclaim for goods delivered would be disposed of by a confession of judgment with both parties agreeing to allow NCS to appeal the court’s determination that all other claims should be dismissed on summary judgment. NCS also preserved the right to appeal the court’s determination that a sanction should be imposed, in the event that the case is reversed and sent back for trial.

Because the sanctions issue will be taken up on appeal, and because this court’s earlier ruling did not fully set forth the details of the misconduct and the court’s determination of why informing the jury is the appropriate sanction, the court enters this order to completely memorialize its reasoning regarding the sanction. The court notes that a notice of appeal has not yet been filed. However, if an appeal had already been filed, such an order is appropriate under the doctrine allowing this court to enter orders “in aid of an appeal.” See, e.g., In re Grand Jury Proceedings, 947 F.2d 1188 (4th Cir.1991).

Before addressing the question of whether sanctionable conduct has occurred and, if so, what sanction is appropriate, the court will briefly recount its experience with discovery disputes in recent years. Unlike a majority of District Judges who routinely relegate discovery disputes to Magistrate Judges, this [395]*395court has always heard and decided its own discovery matters. After seventeen years on the bench, the undersigned has concluded that, despite the best efforts of Congress, the Advisory Committee on Civil Rules and other similar bodies, litigation expenses continue to rise, often due to ever-increasing discovery demands and ensuing discovery disputes.2 As Judge Patrick Higginbotham has observed, “The discovery beast has yet to be tamed.”3

Additionally, refereeing contentious discovery disputes is, in my view, perhaps the most unwelcome aspect of a trial judge’s work. For example, United States District Judge Wayne Alley once vented his displeasure with discovery battles in the following order:

Defendant’s Motion to Dismiss or in the Alternative to Continue Trial is denied. If the recitals in the briefs from both sides are accepted at face value, neither side has conducted discovery according to the letter and spirit of the Oklahoma County Bar Association Lawyer’s Creed. This is an aspirational creed not subject to enforcement by this Court, but violative conduct does call for judicial disapprobation at least.

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Bluebook (online)
223 F.R.D. 392, 2004 U.S. Dist. LEXIS 26610, 2004 WL 2165968, Counsel Stack Legal Research, https://law.counselstack.com/opinion/network-computing-services-corp-v-cisco-systems-inc-scd-2004.