Following a judgment in an antitrust case, the plaintiff served discovery requests in furtherance of their attempts to enforce the judgment.  Imposing monetary sanctions on counsel, Magistrate Judge Demarchi explained that:

“The presiding judge has already found that Ningbo Sunny deliberately withheld from production two documents that showed Ningbo Sunny acted in a manner inconsistent with prior representations to the Court. Such conduct is not consistent with the requirements of Rule 34(b)(2) which, among other things, requires a party to produce the documents it says it will produce. Likewise, a discovery response that indicates responsive documents will be produced is both ‘interposed for an improper purpose’ and ‘unreasonable’ if the responding party then deliberately withholds some responsive documents. Ningbo Sunny’s continued refusal to explain to the Court how it conducted a search for responsive documents and otherwise complied with its discovery obligations only serves to reinforce the Court’s impression that Ningbo Sunny did not comply with its discovery obligations and did not search for and produce the responsive documents it said it would produce. The question, then, is whether Sheppard Mullin failed to make the reasonable inquiry required by Rule 26(g) when signing Ningbo Sunny’s document request responses representing that all responsive documents would be produced….

“Sheppard Mullin insists that it did not know that Ningbo Sunny had withheld certain responsive documents from production. Orion argues that Sheppard Mullin cannot fulfill its obligations under Rule 26(g) if it does not know, and does not inquire into, what Ningbo Sunny did to search for responsive documents or whether Ningbo Sunny followed its advice. The Court agrees. The Court finds no fault in Sheppard Mullin’s description of the direction and guidance it gave to Ningbo Sunny. However, Sheppard Mullin has candidly acknowledged that it does not know what decisions Ningbo Sunny made about how to proceed with document collection or how it conducted the search for responsive documents. It is not enough for counsel to provide advice and guidance to a client about how to search for responsive documents, and then not inquire further about whether that advice and guidance were followed. This is particularly true here, where Ningbo Sunny and its counsel knew that both Orion and the Court were concerned about steps Ningbo Sunny might take to frustrate enforcement of the judgment against it. Most of Orion’s post-judgment discovery requests were directed to obtaining information and documents necessary to enforce the judgment, including confirming that Ningbo Sunny had not transferred assets outside of the United States. Sheppard Mullin says that it followed up with Ningbo Sunny in an effort to make sure that all documents had been collected, but if that follow up did not include inquiring about what the client did (and by Sheppard Mullin’s own account it did not) then the follow up was not reasonable in these circumstances.

“The Court does not conclude that counsel must always personally conduct or directly supervise a client’s collection, review, and production of responsive documents. However, in the circumstances presented here, the Court finds that Sheppard Mullin did not make a reasonable effort to ensure that Ningbo Sunny produced all the documents responsive to Orion’s requests and thus violated its obligations under Rule 26(g)(1)(B).”

The Court then rejected counsel’s claim of substantial justification: “Citing its then-pending motion to withdraw as counsel, Sheppard Mullin argues that a material conflict with Ningbo Sunny prevents it from fully responding to Orion’s motion for sanctions because ‘many of the facts and communications relating to Sheppard Mullin’s oversight of those RFP responses are confidential, privileged, and potentially prejudicial to Ningbo Sunny.’  However, in the very next section of its opposition, Sheppard Mullin asserts that ‘non-confidential and non-privileged information’ demonstrates Sheppard Mullin’s compliance with Rule 26(g).  Significantly, while Sheppard Mullin refers to circumstances that have rendered its continued representation of Ningbo Sunny ‘unreasonably difficult,’ including a ‘breakdown in communication’ between counsel and client, Sheppard Mullin does not contend that it was prevented from complying with its duty of reasonable inquiry with respect to the document production at issue because it was unable to communicate effectively with Ningbo Sunny about the collection of responsive documents or to supervise Ningbo Sunny’s compliance. Such an assertion would require no disclosure of privileged information and its omission is conspicuous.”

Accordingly, monetary sanctions were imposed.


Optronic Tech v. Ningbo, No.16-6370, 2020 WL 2838806 (N.D.Cal. June 1, 2020).