Antitrust Law Daily Wrap Up, ANTITRUST—D. Colo.: Lenox counsel sanctioned for noncompliance with discovery order in bone mill antitrust action, (Sep 18, 2015)

By Linda O’Brien, J.D., LL.M.

In an action by a producer of a medical bone mill against medical devices company Medtronic for allegedly attempting to monopolize the market for mechanical bone mills used in spinal fusion surgery, a magistrate judge in the federal district court in Denver has granted the defendant’s motion for order to show cause for failure to comply with a discovery order (Lenox MacLaren Surgical Corporation v. Medtronic, Incorporated, September 17, 2015, Wang, N.).

Lenox MacLaren Surgical Corporation developed and produced a medical bone mill for use in spinal fusion surgery. In 2000, the company entered a five-year exclusive supply and license agreement with Medtronic, Inc. under which Medtronic had exclusive rights to market the mill to hospitals and surgeons for one year. After the license agreement expired, another Medtronic subsidiary began selling a pneumatic bone mill attachment in competition with the Lenox bone mills. Moreover, Medtronic initiated a voluntary recall of the Lenox mills. An arbitration panel found in Lenox’s favor on an intentional interference with prospective business relations claim brought against Medtronic over the recall.

Lenox then filed suit against Medtronic, alleging attempted monopolization in violation of Section 2 of the Sherman Act. In June 2013, the district court granted Medtronic’s motion for summary judgment, dismissing Lenox’s claims. However, in August 2014, the Tenth Circuit reversed the district court’s summary judgment order and reopened the case. Subsequently, the parties entered into an agreement to govern outstanding discovery matters, in which Lenox agreed to produce a Lenox representative for deposition on topics related to claimed damages. Medtronics served a 46 topic notice targeted at facts Lenox took in the litigation, including damages, market definition and power, and exclusionary conduct. In June 2015, the court granted Metronics’ motion to compel responses to interrogatories. Before the court was Medtronics’ motion for order to show cause for failure to comply with June 2015 order.

Sanctions. Federal Rule of Civil Procedure 37(b) authorizes a court to sanction a party for failure to comply with a discovery order. The court noted that, in the June 2015 order, Lenox relied on contentions and evidence found in the trial and appellate record of the case in its interrogatory responses and those facts needed to be set forth in its discovery responses in order to provide reasonably comprehensive responses. Thus, Lenox was required to supplement its responses by including all supplemental information provided in its prior brief or in the trial or appellate record, and specifically identify any business records relied upon instead of a narrative response.

Lenox’s counsel acknowledged that it misinterpreted the court’s order and amended its responses by adding the prior narrative response with additional facts discovered after the response was first provided. Its counsel also acknowledged that it provided unsworn responses to those interrogatories based on a “mere oversight.”

According to the court, although it appeared that the plaintiff provided the information sought by Metronics, it was the second instance within six months in which plaintiffs’ counsel was less than forthright to the court. The “recalcitrant litigation strategy of plaintiffs’ counsel caused the defendants and the court to expend unnecessary time and resources” to resolve an issue that should not have required judicial intervention. Thus, the appropriate sanction for improper certification of discovery responses was an order to pay the reasonable expenses, including attorneys’ fees, caused by the violation, the court concluded.

The case is No. 10-cv-02139-MSK-NYW.

Attorneys: Stanley M. Gibson (Jeffer, Mangels, Butler & Marmaro, LLP) for Lenox MacLaren Surgical Corp. Catherine Fairley Spillman (Akin, Gump, Strauss, Hauer & Feld, LLP) for Medtronic, Inc., Medtronic Sofamor Danek, Inc., Medtronic PS Medical, Inc., and Medtronic Sofamor Danek Co. Ltd.

Companies: Lenox MacLaren Surgical Corp.; Medtronic, Inc.; Medtronic Sofamor Danek, Inc.; Medtronic PS Medical, Inc.; Medtronic Sofamor Danek Co. Ltd.

Cases: Antitrust ColoradoNews