The opinion of the court was delivered by: Roanne L. Mann United States Magistrate
ROANNE L. MANN, UNITED STATES MAGISTRATE JUDGE
Discovery disputes in this action have been contentious, protracted, and excessively documented. Even well after the close of discovery, critical issues regarding document production remain unresolved -- most significantly, whether Glenmark's searches of its electronically stored information ("ESI") were conducted properly, and whether Glenmark unjustifiably withheld responsive electronic and paper documents. A resolution of these matters is long overdue, and the Court's patience for the parties' incessant finger-pointing is at an end.
Having reviewed the extensive record and conducted an evidentiary hearing to examine the Glenmark employee responsible for overseeing Glenmark's ESI search and document production, the Court concludes that Glenmark failed to abide by its good-faith discovery obligations in two respects: (1) Glenmark withheld from discovery, without justification, clinical study reports from the PRACS Institute ("PRACS"), the clinical testing agent for Glenmark's Abbreviated New Drug Application ("ANDA") fluticasone lotion; and (2) Glenmark willfully failed to search two important and obvious repositories for responsive ESI, which contained Glenmark's U.S. provisional and utility patent applications. Glenmark's failure to timely produce otherwise discoverable electronic information containing responsive search terms was inexcusable. Thus, for the reasons set forth below, the Court finds that discovery sanctions against Glenmark are warranted, and directs Glenmark to pay a $100,000 fine to plaintiff Nycomed and a $25,000 fine to the Clerk of the Court.
More than a year ago, after the June 5, 2009 deadline for document production, see Order (May 19, 2009), ECF Docket Entry ("D.E.") #73, Nycomed first challenged the adequacy of Glenmark's ESI searches, complaining that the number of responsive documents was "incredibly small" and that Glenmark had failed to produce metadata and the "hit list" of documents yielded by its keyword searches. See Motion to Compel Proper ESI Search (July 2, 2009), D.E. #93. The undersigned magistrate judge granted in part Nycomed's request for relief, directing Glenmark to provide "custodian" and "keyword" metadata for documents it had produced, as well as the hit list containing the results of its ESI searches. See Memorandum and Order (July 13, 2009), D.E. #101.
Despite this relief, Nycomed's concerns regarding the adequacy of Glenmark's ESI searches persisted beyond the close of fact discovery on August 17, 2009, see Order (Feb. 17, 2009), D.E. #30-1, and, on September 19, 2009, Nycomed sought to strike those portions of Glenmark's filings -- including its claim construction positions, defenses, and counterclaims --that related to patent applications that Nycomed argued should have been provided during the ESI search process, but instead were produced after discovery had closed. See Motion to Strike (Sept. 18, 2009) ("9/18/09 Pl. Letter") at 2, 3, D.E. #145; Memorandum in Support (Sept. 29, 2009), D.E. #171. The Court denied the extraordinary relief that Nycomed sought, and instead reopened discovery for the limited purpose of permitting the telephonic deposition of one of Glenmark's formulators concerning the contents of Glenmark's belatedly produced utility and provisional patent applications. See Memorandum and Order (Nov. 12, 2009) ("11/12/09 M&O") at 7--8, D.E. #189.
Nycomed objected to the Court's ruling and filed a motion for reconsideration of that portion of the order denying its motion to strike. See Memorandum in Support of Motion for Reconsideration (Nov. 27, 2009) ("11/27/09 Pl. Mem."), D.E. #203-1. Nycomed reiterated its concerns that Glenmark had not properly conducted its ESI searches, see id. at 15, 16, and Glenmark again denied the allegations as untrue. See Response in Opposition (Dec. 4, 2009) at 8, D.E. #205. At a hearing on the matter on December 17, 2009, the Court once again denied Nycomed's request to strike Glenmark's pleadings, but held that Nycomed was "entitled to some limited discovery concerning the patent applications which were not produced during the discovery period." Transcript of Oral Argument on December 17, 2009 ("12/17/09 Tr.") at 73, D.E. #211.
Not to be outdone, Glenmark filed its own motion for reconsideration of the Court's ruling, and requested clarification of the nature of any additional discovery ordered by the Court, to the extent that such discovery went beyond what was necessary to authenticate Glenmark's belatedly produced patent applications for purposes of admissibility. See Motion for Reconsideration (Jan. 4, 2010) at 12, D.E. #214-1. More filings and accusations from both sides followed, including Nycomed's renewed assertions that a series of email threads obtained from a third-party clinical testing agent, PRACS, constituted "unequivocal proof" that Glenmark had not conducted proper ESI searches and was withholding critical information.
See Letter Concerning Glenmark Reply (Jan. 27, 2010) at 1--2, D.E. #221.
The Court remained troubled by the tone and volume of filings on the issue, and grew uncertain as to the adequacy of Glenmark's ESI production. During a joint conference with a related case brought by Nycomed against Perrigo Pharmaceuticals,*fn1 the Court, at Glenmark's suggestion, directed Glenmark to make a "factual showing," through someone with personal knowledge of the process, regarding the adequacy of Glenmark's ESI search. See Transcript of Civil Conference on February 3, 2010 ("2/3/10 Tr.") at 58--59, D.E. #233. Glenmark's response to that directive -- and both parties' additional filings addressing that response*fn2 --failed to allay the Court's concerns as to why certain documents had not been timely produced.
On May 27, 2010, "[i]n an effort to finally resolve Nycomed's challenges to the adequacy of Glenmark's document production[,]" the Court scheduled an evidentiary hearing for June 2, 2010, and directed Glenmark to produce as a witness Dr. Vijay Soni, the Executive Vice President of IP for Glenmark Generics, Inc., USA, and the Glenmark employee responsible for overseeing its searches. See Order (May 27, 2010), D.E. #322. Dr. Soni appeared on the scheduled date, and was examined by the Court and by counsel. See generally Transcript of Evidentiary Hearing on June 2, 2010 ("6/2/10 Tr."), D.E. #351. Dr. Soni's testimony shed considerable light on the deficiencies in Glenmark's ESI searches, and confirmed that additional relief in the form of sanctions is appropriate to remedy what this Court now considers Glenmark's willful dereliction of its discovery duties.
I. Applicable Legal Standards
The Federal Rules of Civil Procedure authorize a party to serve on any other party a request to produce electronically stored information in "the responding party's possession, custody, or control." Fed. R. Civ. P. 34(a). A party that has been served with a request for ESI is charged with "find[ing] and disclos[ing] all responsive documents or properly set[ting] forth why the documents are being withheld." Merck Eprova AG v. Gnosis S.P.A., No. 07 Civ. 5898 (RJS), 2010 WL 1631519, at *4 (S.D.N.Y. Apr. 20, 2010). This obligation to conduct a diligent search requires good faith on the part of the responding party and its attorneys, and mandates that they work together "to ensure that both understand how and where electronic documents, records and emails are maintained and to determine how best to locate, review and produce responsive documents." Richard Green (Fine Paintings) v. McClendon, 262 F.R.D. 284, 290 (S.D.N.Y. 2009) (internal quotation marks and citation omitted).
When parties and/or their counsel fail in their duty to conduct proper searches of ESI, sanctions may be appropriate, even where the misconduct involves late disclosure, as opposed to spoliation. See Phoenix Four, Inc. v. Strategic Res. Corp., No. 05 Civ. 4837, 2006 WL 1409413, at *5--6, *9 (S.D.N.Y. May 23, 2006).*fn3 The predicate for such sanctions is Rule 37 of the Federal Rules of Civil Procedure and/or the Court's inherent authority to manage its own affairs. See 11/12/09 M&O at 3, D.E. #189 (citing Fed. R. Civ. P. 37(c)(1)); Phoenix Four, 2006 WL 1409413, at *3; see also Residential Funding Corp. v. DeGeorge Fin. Corp., 306 F.3d 99, 106--07 (2d Cir. 2002) ("Even in the absence of a discovery order, a court may impose sanctions on a party for misconduct in discovery under its inherent power to manage its own affairs.") (citing DLC Mgmt. Corp. v. Town of Hyde Park, 163 F.3d 124, 135--36 (2d Cir. 1998)). Discovery sanctions serve three purposes: they (1) ensure that a violating party does not benefit from its own failure to comply with discovery; (2) serve as a specific deterrent to achieve compliance with the particular discovery order at issue; and (3) serve as a general deterrent in the case at hand and in other litigation, provided that ...