Rule 37(b) Sanctions Issued for Fishing Expeditions at Depositions in Defamation Suit Against Cyber

Today, Magistrate Judge Maureen Kelly issued a decision, LabMD v. Tiversa Holding Corp., No. 15-92, 2019 U.S. Dist. LEXIS 139196 (W.D. Pa. Aug. 16, 2019) granting the Defendant's motion for sanctions pursuant to Rule 37(b)(2). LabMD's suit alleged that Tiversa made defamatory statements on a blog and to the Wall Street Journal stating that it had leaked confidential patient information through the use of the LimeWire file sharing software. LabMD was a small business that specialized in cancer detection. The Federal Trade Commission brought an enforcement action against it for its cyber security practices. Tiversa provided cyber security services to LabMD, and LabMD has accused it of improperly accessing its patient data, and then making it appear as though hackers had stolen the data.

Magistrate Judge Kelly previously granted a protective order limiting questioning at depositions to the claims that remained after a motion to dismiss. She admonished LabMD for previously conducting fishing expeditions for related qui tam and state court cases, and put them on notice that a violation of order would result in Rule 37(b) sanctions.

LabMD's questioning at the deposition included inquiries about Tiversa's use of Embedded Peer-to-Peer (EP2P) systems; alteration of metadata; its data retention practices; database updates; changes to download dates; false file spread; as well as irrelevant subjects such as the ability of employees at Tiversa; its worksplace culture; and Edward Snowden. Judge Kelly noted that LabMD's questioning regarding the defamatory statements at issue was "very minimal". Id. at *44. She further found that LabMD's suit filed in federal court in Virginia, "was part of a litigation strategy by LabMD to purposefully interfere with discovery" in this case, and cautioned its counsel that, "his pro hac vice admission status could be removed for a pattern of abusive litigation practices." Id. at *46.

Fees and costs related to the motion for sanctions and court reporter fees for the depositions were awarded to Tiversa. Use of testimony at six depositions was precluded for any reason in this case (including for responding to a motion for summary judgment) and in litigation in any other forum. Magistrate Judge Kelly noted that while she could have issued a dispositive sanction, she was only, "put[ting] LabMD and Attorney Hawkins on final notice that any further litigation misconduct or disregard of orders of this Court will result in the dismissal of this case and the termination of the pro hac vice admission of Attorney Hawkins." Id. at *49-50.

Magistrate Judge Kelly also denied a contempt motion that sought a password for a disc. "[T]he Court finds that the instant Motion and LabMD's pursuit of the password are further attempts by LabMD to misuse discovery in this case to assist it in other litigation and in other forums." Id. at *22 n. 9.