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Johnson v. Ford Motor Co.

United States District Court, S.D. West Virginia, Huntington Division

December 27, 2017

CHARLES JOHNSON, et al., Plaintiffs,



         Pending before the Court is Plaintiffs' Motion for Relief Related to Ford's Discovery Misconduct. ECF No. 995. In their motion, Plaintiffs argue this Court should sanction Defendant Ford Motor Company for conduct related to the production and protection of source code during discovery. The matter being fully briefed, the Court GRANTS, in part, and DENIES, in part, Plaintiffs' motion.[1]

         I. BACKGROUND

         Since January 2015, the parties have extensively litigated the scope and manner of source code production by Ford. Throughout the process, Ford has attempted to encumber and restrict Plaintiffs' access to the source code for a number of reasons including, but not limited to:

         (1) Ford's unwavering assertions its source code is a highly proprietary trade secret that is vigilantly safeguarded at Ford's facilities; (2) some of the source code sought by Plaintiffs is unnecessary for them to test their theory of their case; and (3) Plaintiffs' requests are extraordinarily burdensome and cost prohibitive. The parties' disagreements resulted in many meet-and-confer conferences, numerous motions, multiple hearings, and hundreds of hours spent by both the parties and the Court tackling these issues.

         As a result of Ford's concerns and other representations it made about the nature of the source code itself, Plaintiffs assert Ford was able to get a series of onerous and restrictive protective orders which limited the scope of the source code disclosed, required the source code to be in read-only format, and restricted Plaintiffs' experts' review of the source code to a secure room at a Ford facility in Dearborn, Michigan. Plaintiffs contend these conditions were arduous and costly, and impaired their ability to perform testing. Plaintiffs further claim that they now can demonstrate these draconian measures were largely unnecessary based upon Ford's prior conduct. Plaintiffs discovered that Ford used unsecured networks to email third parties sets of source code in a format that could be read, altered, and manipulated. Plaintiffs argue these emails prove Ford misrepresented the level of security and restrictions it placed on the source code and reveal Ford did not provide Plaintiffs with all the source code that the Court ordered it to produce.

         In light of these emails, Plaintiffs insist Ford intentionally misdirected the Court and obstructed the discovery process, resulting in a colossal waste of time and money. To remedy this alleged recalcitrance, Plaintiffs ask this Court to enter an order accepting as fact Plaintiffs' theory of the case, prohibiting Ford from relying upon or introducing the non-disclosed source code, and awarding attorneys' fees and costs. Ford disputes Plaintiffs' claims and argues sanctions are unwarranted.


         In support of these remedies, Plaintiffs ask this Court to use its power under Rule 37 of the Federal Rules of Civil Procedure and its inherent authority to issue sanctions. Rule 37(b)(2) of the Federal Rule of Civil Procedure permits a court to sanction a party for failing to comply with discovery orders. See Fed. R. Civ. P. 37(b)(2) (stating that a court “may issue further just orders” when a party “fails to obey an order to provide or permit discovery”). In addition, Rule 37(b)(2)(A)(i), provides a court may “direct[] that the matters embraced in the order or other designated facts be taken as established for purposes of the action, as the prevailing party claims[.]” Fed.R.Civ.P. 37(b)(2)(A)(i). Pursuant to subsection (ii), a court further may “prohibit[] the disobedient party from supporting or opposing designated claims or defenses, or from introducing designated matters in evidence[.]” Fed.R.Civ.P. 37(b)(2)(A)(ii).[2]

         Without doubt, this Court also “possess[es] certain ‘inherent powers, ' not conferred by rule or statute, ‘to manage . . . [its] own affairs so as to achieve the orderly and expeditious disposition of cases.'” Goodyear Tire & Rubber Co. v. Haeger, 137 S.Ct. 1178, 1186 (2017) (quoting Link v. Wabash R. Co., 370 U.S. 626, 630-31 (1962)). This power includes the authority “‘to fashion an appropriate sanction for conduct which abuses the judicial process.'” Id. (quoting Chambers v. NASCO, Inc., 501 U.S. 32, 44-45 (1991)); see also Felman Prods., Inc. v. Indus. Risk Ins., No. 3:09-0481, 2011 WL 4547012, at *8 (S.D. W.Va. Sept. 29, 2011) (stating a court has “broad inherent power to protect the administration of justice by levying sanctions in response to abusive litigation practices” (internal citations omitted)). Although a court must exercise its inherent powers “with restraint and discretion, ” a court may look to its inherent power “to fill in the interstices” not covered by the Rules or a statute. Chambers v. NASCO, Inc., 501 U.S. 32, 44 & 46 (1991) (citation omitted). If misconduct can be adequately addressed under the Rules, “the court ordinarily should rely on the Rules rather than the inherent power. But if in the informed discretion of the court, neither the statute nor the Rules are up to the task, the court may safely rely on its inherent power.” Id. at 50. For instance, the Fourth Circuit stated that Chambers authorizes a court to use its inherent power to impose sanctions “when a party deceives a court or abuses the process at a level that is utterly inconsistent with the orderly administration of justice or undermines the integrity of the [judicial] process[.]” United States v. Shaffer Equip. Co., 11 F.3d 450, 462 (4th Cir. 1993).

         Against these precepts, the Court turns to the issues at hand: (1) first, whether Ford made material misrepresentations to the Court that impacted this litigation to the detriment of Plaintiffs; (2) second, whether Ford failed to produce source code in violation of the Court's orders; and (3) third, if the answer to either of the preceding two questions is yes, what sanction, if any, should be imposed against Ford. Additionally, if the Court finds sanctions are warranted under either the Rules or its inherent authority, it must be cautious to impose sanctions that are proportionate to the gravity of the misconduct. In re Jemsek Clinic, P.A., 850 F.3d 150, 158 (4th Cir. 2017), reh'g denied (Mar. 31, 2017) (citation omitted).


         Ford argues Plaintiffs have shown no evidence through their motion that warrants sanctions. However, the Court disagrees. Ford has claimed throughout this process that the source code for its Electronic Throttle Control (“ETC”) system “has never been produced or provided to any third party, even a Ford supplier, in the manner that Plaintiffs propose, and for good reason.” Ford Motor Co.'s Mem. Regarding Source Code Protective Order, at 2 (May 22, 2015), ECF No. 502. Ford stated it would be catastrophic if the source code was divulged to its competitors or terrorists. Id. Ford insisted that, if it was necessary for someone on the outside to see the source code for some purpose, it had to be viewed “‘at a Ford facility on a Ford supplied computer with a Ford employee present and operating the computer.'” Id. at 9, quoting Decl. of Eric Luehrsen, at 5, ¶21 (May 22, 2015), ECF No. 502-1.

         Following several meet and confer discussions and briefing, the Honorable Cheryl A. Eifert, Magistrate Judge, held a hearing on the ETC source code discovery on May 28, 2015. At the hearing, there was a lengthy discussion and expert testimony about the format and testing of the source code that should be permitted. Due to its concerns, Ford was adamant the source code only should be produced in read-only format, rather than write-access format as sought by Plaintiffs. Ford argued in great detail that write-access format was unnecessary for Plaintiffs to test their theory of their case[3] and that producing it in read-only access protected the code from being changed. See Hr'g Tr. at 11-122 (May 28, 2015), ECF No. 531. To emphasize the proprietary nature of the source code and the need for the highest level of security, Ford claimed the source code “goes through power, fuel economy requirements for each vehicle, ” and if a competitor achieves even “a one-mile-an-hour competitive advantage, that would be billions - billions with a “B” - loss of revenue and competitive advantage.” Id. at 12-13.

         At the hearing, Ford also zealously maintained it never permitted the source code to leave its possession. Ford stated its “ETC source code has never been produced, ever, never, ever been produced in the format that the plaintiffs are requesting to anyone. Not suppliers, not third-party suppliers, no one.” Id. at 13. Magistrate Judge Eifert specifically asked defense counsel whether Ford had ever used a virtual private network (VPN) or allowed the code to be reviewed anywhere other than a secure Ford facility. Id. at 115. Defense counsel represented that it had not occurred, and its restrictions apply to everyone, including Ford's employees. Counsel further represented that a VPN was not secure enough to alleviate Ford's concerns about keeping the source code protected. Id.[4]

         As a result of Ford's representations that calamity would strike if the source code ever left Ford's facilities, the Magistrate Judge issued an Order on June 12, 2015, limiting Plaintiffs' review of the code to a read-only format. Mem. Op. and Order, at 3 (June 12 2015), ECF No. 543. The Magistrate Judge stated that, “[u]nder the proportionality analysis, at this juncture, any additional benefit of providing Plaintiffs with the code in a write-access format does not outweigh Ford's concerns about the security of its highly proprietary ETC source code.” Id., at 17 (footnote omitted). In addition, the Court rejected Plaintiffs' suggestion of using a VPN. Instead, the Magistrate Judge held that the source code must be reviewed “in a secure room in a secure facility where access to the room may be strictly controlled.” Id. at 21 (footnote omitted). Ultimately, the secure room was set up at a Ford facility in Dearborn, Michigan.

         Despite Ford's steadfast assertions its source code was assiduously protected, the Court finds it is now undeniable that source code was emailed to third parties in unprotected formats. When Plaintiffs' expert, Dr. Philip Koopman, was reviewing documents provided by Ford, he noticed a complete “bookshelf file” for the Powertrain Control Module (“PCM”) Main Central Processing Unit (CPU) attached to an email. A “bookshelf file” is code that is in its final or near final form. In his Declaration, Dr. Koopman said he found “over two dozen complete PCM bookshelf files that had not been produced in discovery materials and hundreds of sections of code that Ford had circulated internally and externally.” Decl. of Philip Koopman, Ph.D., at 2, ¶6 (June 16, 2017), ECF No. 998. Dr. Koopman stated some of the source code was sent to third parties, including to other manufacturers, such as Mazda and Aston Martin, and to suppliers, such as Roush and Melco. Id. at ¶¶8-10. In addition, Dr. Koopman found many emails indicated “an explicit intent and willingness to send or receive bookshelf file materials with external companies, and one email specifically mentioned a concern about attachments making it past Ford's firewall.” Id. at ¶11.

         In their briefing, Plaintiffs also give what they refer to as other “representative examples” of source code Ford emailed to third parties. Pls.' Mem. of Law in Supp. of their Mot. for Relief Related to Ford's Disc. Misconduct, at 11 n.18 (June 16, 2017), ECF No. 997. As their first example, Plaintiffs state a Ford employee emailed a Mazda employee a bookshelf copy of “ETC C Code” and a calibration file for a particular vehicle. Plaintiffs assert the file contains content that Ford refused to give them in the secure room. Additionally, Plaintiffs claim it appears that Ford permitted the unprotected “ETC C ...

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