Omnigen Research v. Yongqiang Wang

321 F.R.D. 367, 2017 WL 2260071
CourtDistrict Court, D. Oregon
DecidedMay 23, 2017
DocketCiv. No. 6:16-cv-00268-MC
StatusPublished
Cited by16 cases

This text of 321 F.R.D. 367 (Omnigen Research v. Yongqiang Wang) is published on Counsel Stack Legal Research, covering District Court, D. Oregon primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Omnigen Research v. Yongqiang Wang, 321 F.R.D. 367, 2017 WL 2260071 (D. Or. 2017).

Opinion

OPINION and ORDER

Michael J. McShane, United States District Judge

Plaintiffs, in their Motion for Terminating Spoliation Sanctions (EOF No. 129), ask this court to grant a default judgment in their favor due to the conduct of the defendants; specifically, the defendants’ intentional destruction of evidence. Plaintiffs argue that such an extreme measure is warranted because of the scope of the spoliation and its consequential impact on the plaintiffs’ ability to seek a judgement. Because defendants have intentionally hidden or destroyed evidence to the extent that it severely under[370]*370mines the Court’s ability to render a judgment based on the evidence, and because the conduct of the defendants threatens the “orderly administration of justice.” Leon v. IDX Sys. Corp., 464 F.3d 951, 958 (9th Cir. 2006), the Motion is GRANTED.

Defendants’ Motions for Summary Judgment (ECF No. 126 and 130), Defendants’ Motion for Judgment on the Pleadings (ECF No. 177), and Plaintiffs’ Motions for Partial Summary Judgment (ECF No. 119, 120, and 123), are DENIED as moot.

BACKGROUND

This action was filed on 2/16/2016 by plaintiffs OmniGen Research, LLC (OmniGen) and Prince Agri Products, Inc. (Prince Agri) against defendants Dr. Yongqiang Wang, Ms. Yan Zheng, and Bioshen (an Oregon business) for breach of contract, intentional interference with economic relations, trade secret misappropriation, copyright infringement, false advertising and unfair competition under the Lmham Act, and breach of fiduciary duty. (ECF No. 1).

OmniGen was co-founded by Neil Forsberg and Steve Puntenney in 2002. They sold the company to Prince Agri in December 2012. Wang first met Forsberg when Wang was a graduate student at Oregon State University (OSU), where Forsberg was a professor. Wang completed his PhD and worked as an assistant professor in Forsberg’s research laboratory at OSU until Forsberg hired him to work for OmniGen in 2005.

According to the plaintiffs, while still working at OmniGen in 2012, Wang breached his employment contract by stealing trade secrets and then using them to secretly create two rival businesses, Bioshen in Oregon and Jiangsu Mirigen Biotechnology Development Company (Mirigen) in China. Both, the plaintiffs claim, market lines of nutritional specialty products that are knockoffs of OmniGen’s products. (Id.).

The defendants brought counterclaims for promissory estoppel and unjust enrichment, naming Forsberg as a third party defendant. (ECF No. 83). The counterclaims are based on the defendants’ theory that Wang had helped develop food additive products for dairy cows that OmniGen, Prince Agri, and Forsberg had profited from without fairly compensating Wang for his contributions. (Id. at pp. 20-24).

This case has been plagued by discovery issues and concerns of spoliation from its inception. Plaintiffs, concerned in part about the possible destruction of evidence early in the case, filed a Motion for Preliminary Injunction on 2/23/2016 asking that Wang, Zheng, and Bioshen “account for the location of all material in its, his or her possession, custody or control... and to provide to Om-nigen Research and Prince Agri all originals and all copies (in whatever format they currently exist) of any materials in its, his or her possession, custody or control.” They further requested that ‘Wang and Zheng (including Bioshen) shall immediately produce to Plaintiffs all electronic media in their custody, possession or control for purposes of verifying that they do not contain Plaintiffs confidential and/or copyrighted material.” (ECF No. 12). The motion was granted after a hearing on 5/12/2016 (ECF No. 50).1

Eleven days later, the plaintiffs filed a Motion for Order to Show Cause (ECF No. 54) because Mr. Wang had left for China without producing his laptop as required by the Preliminary Injunction. A hearing on the issue was held on 5/24/2016 and, in addition to other requirements, the defendants were ordered to “download all of the contents of the computer in China on a portable hard drive and have it mailed to defense counsel within 7 days, and deliver any computers or portable storage data to defense counsel by 5/27/2016.” (ECF No. 60).

The Plaintiffs were required to seek court intervention regarding discovery on multiple occasions because of the failure of the defense to adequately respond to Plaintiffs’ requests for production. Hearings were held on 2/7/2017 (ECF No. 109; 113), 2/22/2017 (ECF No. 114; 116), and 3/20/2017 (ECF No. 146; 160). There were multiple email communica[371]*371tions between the court and the parties regarding discovery. Without belaboring the details of every dispute, at each turn the defense would either maintain that no responsive documents existed or they would fail to adequately respond to production requests and court orders.

In addition to other motions not addressed in this Opinion, Plaintiffs filed their Motion for Terminating Spoliation Sanctions (EOF No. 129) on 3/3/2017. Oral arguments on the motion were heard on 4/18/2017 (EOF No. 179 and 180) and the matter is now before this court.

STANDARD OF REVIEW

Default Judgment and terminating sanctions for the spoliation of evidence is warranted in instances wherein a party has intentionally hidden or destroyed evidence to the extent it severely undermines the Court’s ability to render a judgment based on the evidence and threatens the “orderly administration of justice.” Leon v. IDX Sys. Corp., 464 F.3d 951, 958 (9th Cir. 2006).

This Court may remedy the spoliation of evidence with terminating sanctions under: (1) FRCP Rule 37(b)(2), which permits the Court to sanction a party for disobeying a discovery order; (2) the Court’s inherent authority to sanction abusive litigation practices; and (3) FRCP Rule 37(e), which permits the Court to sanction a party for the spoliation of electronic evidence. Each of these three authorities have different requirements, although courts often follow the same analysis when considering terminating sanctions under Rule 37(b)(2) and the Court’s inherent power.

FRCP Rule 37(b)(2) states that terminating sanctions — an order “dismissing the action” or “rendering a default judgment against the disobedient party” — may be imposed when a party “fails to obey an order to provide or permit discovery.” The rule’s definition of “order” is broad. Dreith v. Nu Image, Inc., 648 F.3d 779, 787 (9th Cir. 2011). The Court has inherent power to impose terminating sanctions “when a party has engaged deliberately in deceptive practices that undermine the integrity of judicial proceed-tags” because this power permits dismissal “when a party has willfully deceived the court and engaged in conduct utterly inconsistent with the orderly administration of justice.” Leon, 464 F.3d at 958.

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321 F.R.D. 367, 2017 WL 2260071, Counsel Stack Legal Research, https://law.counselstack.com/opinion/omnigen-research-v-yongqiang-wang-ord-2017.