Elasticsearch, Inc. v. Floragunn GmBH

— 1 — — 2 — — 3 — 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA — 6 — 7 ELASTICSEARCH, INC., et al., Case No. 19-cv-05553-YGR (AGT) Plaintiffs, — 8 — ORDER DENYING ELASTIC’S 9 v. MOTION FOR ISSUE SANCTIONS 10 FLORAGUNN GMBH, Re: Dkt. No. 213 11 Defendant. REDACTED — 12 — 13 In the parties’ final discovery dispute before the undersigned, Elastic seeks issue sanctions 14 against floragunn based on floragunn’s alleged failure to produce its now-former Chief 15 Technology Officer, Hendrik Saly, for deposition; its alleged misrepresentations regarding Saly’s 16 unavailability; and its termination of Saly while this sanctions dispute was pending. Dkt. 213, 17 “Mot.” According to Elastic, the evidence shows “a persistent campaign by floragunn to prevent 18 Elastic from deposing Mr. Saly, despite a lack of evidence for Mr. Saly’s unavailability from 19 January 28, 2021, to February 16, 2021, during the heart of the deposition period in this case.” Id. 20 at 19. Elastic argues that “issue sanctions are the only appropriate remedy to cure floragunn’s 21 misconduct” and requests that the Court issue such sanctions pursuant to its inherent authority. Id. 22 at 21. Specifically, Elastic requests that the Court “instruct the jury that (1) floragunn could have, 23 but refused, to make Mr. Saly available for deposition and (2) it is established that Mr. Saly 24 accessed the infringed Elastic code and copied from Elastic the twelve specific accused floragunn 25 code segments he ‘authored.’” Id. at 5. 26 floragunn argues that these sanctions are “wholly inappropriate” because Elastic has not 27 made the requisite showing that floragunn “willfully violated a Court order or otherwise acted in 1 floragunn argues, “the evidence amply demonstrates that floragunn acted reasonably, transparently 2 and in good faith under the circumstances with respect to Mr. Saly’s and his 3 unavailability to be deposed.” Id. The Court agrees with floragunn. Elastic’s motion is therefore 4 denied. 5 I. BACKGROUND 6 Elastic filed this copyright infringement action against floragunn, a German company 7 based in Berlin, Germany, in September 2019, alleging that nineteen code segments in floragunn’s 8 Search Guard software infringe numerous Elastic copyrights. Saly, who lives in Germany, 9 originally developed Search Guard and is the undisputed author of twelve of the accused floragunn 10 code segments. Saly was on paid leave from his floragunn employment (and thus 11 unavailable for deposition) for the majority of this litigation; he went on leave beginning in March 12 2020 and ultimately remained on leave until floragunn terminated him in June 2021. During 13 Saly’s 15-month paid leave, and pursuant to his employment contract with floragunn, he 14 periodically provided floragunn with documentation from his certifying his 15 ongoing to work, which floragunn in turn provided to Elastic. 16 Elastic does not dispute that floragunn has provided documentation establishing Saly’s 17 unavailability to work for the periods of March 26, 2020 to January 27, 2021, and 18 February 17, 2021 onward. However, Elastic claims that no such proof exists for the 20-day 19 period from January 28 to February 16, 2021 (the “Gap Period”). Elastic argues that floragunn 20 should have produced Saly for deposition during the Gap Period and its failure to do so constitutes 21 bad faith. 22 A. Saly’s Unavailability for Deposition 23 Elastic first learned of Saly’s unavailability in late November 2020, when it 24 emailed floragunn to request a date for Saly’s deposition. Dkt. 213-2, Eberhart Decl. ¶ 4 & Ex. C. 25 In response, floragunn’s counsel, David Rivkin, informed Elastic for the first time that: (1) Saly 26 was on leave from floragunn and hence unavailable to be deposed; (2) Saly had been on 27 leave since March 2020 and had not worked for floragunn since that time; and (3) floragunn 1 2021).1 Dkt. 216-3, Rivkin Decl. ¶¶ 2–3; Eberhart Decl. ¶ 5 & Ex. E at 6. floragunn’s counsel 2 also disclosed that Saly had been from July to August 2020 and was “on 3 not to[ cooperate in the deposition process] because doing so would cause a 4 ” Rivkin Decl. ¶ 4. floragunn’s counsel proposed that the parties hold off on Saly’s 5 deposition until he was cleared to participate and advised that floragunn would be 6 amenable to a limited extension of discovery for purposes of deposing Saly if and when he became 7 to be deposed at any time before trial. Id. ¶¶ 5–6 & Ex. 1 at 1. floragunn’s counsel 8 further advised that floragunn would provide certificates confirming that Saly had been 9 out on leave and was to work.2 Id. ¶ 5. 10 B. floragunn’s Initial Production of Certificates 11 On December 7 and 14, 2020, floragunn produced to Elastic an initial set of one-page 12 certificates issued by Saly’s in a form prescribed by German law. 13 Eberhart Decl. ¶ 6 & Exs. D, E. Each certificate contained at least three dates, as indicated by the 14 certified translations: (1) the date the certificate was issued; (2) the date on which Saly’s 15 him (“determined on”); and (3) the date through which Saly’s expected that he 16 would be (“expected to be to work up to and including or the last day of 17 for work”). Some of the certificates also listed a fourth date corresponding to the date 18 on which Saly’s began (“ to work since”). None of the certificates contained 19 or descriptions of Saly’s . — 20 — — 21 — 22 1 floragunn has represented to Elastic and this Court that, according to its German counsel, “under German law, an employer may not compel an employee on leave to perform work for the 23 employer. No precedent law is apparent regarding a demand that an employee appear at a deposition under U.S. law to testify on behalf of the employer – a procedure comparable to a 24 deposition is not known under German law and the issue rarely if ever comes up in the context of German employment law since, in German civil proceedings, only a court can summon a witness 25 to testify. A party employer has therefore no authority to summon an employee to testify on its behalf in a German civil proceeding even if no is implicated.” Dkt. 116 at 3. Elastic has 26 not challenged, nor does the Court have any reason to question, the accuracy of counsel’s interpretation of German law as applied to the facts of this case. — 27 — 2 To establish his right to paid leave, Saly’s employment contract required him to submit to 1 The certificate issued December 10, 2020 is reproduced below, immediately followed by a 2 certified English translation of the same: — 3 — — 4 — — 5 — — 6 — — 7 — — 8 — — 9 — — 10 — — 11 — 3s 12 — 14 — o — 15 — — 16 — = Oo Z 18 — 19 — — 20 — — 21 — — 22 — — 23 — 24 || Id. Ex. Eat 8,9. floragunn also produced a certification confirming that Saly was 25 || from July 7 to August 27, 2020. Jd. Ex. D at 11, 21. Collectively, this initial set of 26 || certificates established Saly’s unavailability to work continuously from March 26, 2020 through 27 || January 27, 2021. Rivkin Decl. § 7. 28 On January 25, 2021, Elastic again asked if Saly was available to be deposed and Rivkin 1 stated that floragunn expected that Saly would not be available to be deposed. Eberhart Decl. 2 ¶ 10. On February 5, 2021, Elastic’s counsel emailed floragunn asking “[i]s there a 3 certificate for Mr. Saly that extends beyond January 27, 2021?” Id. ¶ 11 & Ex. J at 2. Rivkin 4 responded on February 9, 2021, writing, “we will continue to provide certificates. 5 floragunn expects to receive a certificate confirming Mr. Saly’s to work for a 6 period after January 27. As I explained, we do not currently anticipate that he will be 7 cleared sufficient to be produced for deposition before the end of fact discovery. If his status 8 changes thereafter, we can discuss appropriate next steps at that time, subject to the Court’s 9 approval as necessary.” Id. ¶ 12 & Ex. K at 2. 10 C. The Parties’ Stipulation Regarding Saly’s Unavailability 11 On February 11, 2021, counsel for the parties began discussing a stipulation to address 12 Saly’s unavailability, in addition to other discovery issues that necessitated an extension of fact 13 discovery (then scheduled to close on March 5, 2021). See id. ¶ 15; Rivkin Decl. ¶ 9. On 14 February 20, 2021, following several meet and confer sessions regarding how to deal with Saly’s 15 absence, Elastic’s counsel drafted and circulated a proposed stipulation regarding Saly’s 16 unavailability, whereby floragunn would agree to restrict Saly’s participation in this litigation both 17 as a witness and as a source for expert witnesses “in lieu of [Elastic] moving the Court to order 18 [floragunn] to make Mr. Saly available for deposition.” Rivkin Decl. ¶ 11 & Ex. 3 at 3–4. In the 19 February 20 draft, Elastic proposed that floragunn would represent that it: 20 (1)has provided [Elastic] with documentation supporting the basis for Mr. Saly’s leave through January 27, 2021; and (2) has represented to 21 [Elastic] that (a) additional documentation showing the basis for Mr. Saly’s leave for periods past January 27, 2021 exist; (b) [floragunn] 22 does not anticipate that Mr. Saly will be able to return from leave to be deposed before March 19, 2021. — 23 — 24 Id. Ex. 3 at 3:14–18 (emphasis added). 25 On February 21, 2021, Rivkin proposed changing the language in Elastic’s draft so that 26 floragunn would represent that “additional documentation showing the basis for Mr. Saly’s leave 27 for periods past January 27, 2021 is expected to be provided to [floragunn],” rather than 1 This proposed revision was based on Rivkin’s understanding at the time that, “although floragunn 2 expected additional documentation from Mr. Saly in due course for periods past January 27, 2021, 3 it had not seen such documentation.” Id. ¶ 12. 4 On February 22, 2021, Elastic’s counsel, James Rothstein, sent a further revised draft in 5 which he accepted floragunn’s edit that “additional documentation showing the basis for Mr. 6 Saly’s leave for periods past January 27, 2021 is expected to be provided to [floragunn],” and 7 added the words “and will be provided to [Elastic].” Id. ¶ 13 & Ex. 5 at 3:16–17 (emphasis 8 added). On a call later that day, Rivkin and Rothstein discussed the February 22 draft and Rivkin 9 made clear that floragunn could not agree to represent that additional documentation showing the 10 basis for Saly’s leave for periods past January 27, 2021 “exists”—because floragunn had not seen 11 such documentation. Id. ¶ 14. Instead, Rivkin explained, floragunn could only represent that it 12 expected to receive such documentation from Saly, and that it would then produce the 13 documentation to Elastic. Id. On this basis, the parties agreed to the language in the February 22 14 draft, id., and submitted the stipulation to the Court to be so-ordered. Id. Judge Gonzalez Rogers 15 signed the parties’ stipulation on February 25, 2021, see Dkt. 76 (the “Saly Stip”). 16 The Saly Stip provides, among other things, that: (1) Elastic would not move to compel 17 Saly’s deposition; (2) floragunn would not allow Saly to participate in the case, including by 18 providing information or other assistance to floragunn’s expert witnesses; and (3) “should Mr. 19 Saly become available to testify at trial, the parties [would] meet and confer in an effort to agree 20 on procedures that would eliminate prejudice to [Elastic] from Mr. Saly’s late availability.” Id. at 21 2–3. 22 After the parties entered into the Saly Stip, floragunn continued to provide to Elastic 23 documentation from Saly’s confirming his ongoing unavailability to work. As 24 noted, Elastic does not dispute that floragunn has provided documentation sufficient to establish 25 Saly’s unavailability during the periods of March 26, 2020 to January 27, 2021, and February 17 26 to July 9, 2021. At issue here is the documentation concerning Saly’s unavailability during the 27 January 28 to February 16, 2021 Gap Period. ] D. floragunn’s March 16 Production and the January 28 Certificate 2 On March 16, 2021, floragunn produced three new J certificates (in the same format 3 || as the others), including two that documented Saly’s JJ to work from February 17 to March 4 17, 2021. See Rivkin Decl. J 16-17 & Ex. 6 at 2, 3 (certificates issued February 17, 2021 and 5 || March 3, 2021). The third certificate, issued January 28, 2021, listed the “expected to be JJ to 6 || work up to and including or the last day of JJ for work” date as January 27, 2021 (the 7 || “January 28 Certificate”)? Jd. Ex. 6 at 4; Eberhart Decl. Ex. L. The January 28 Certificate, 8 || pictured below, was signed by same JJ who issued the 9 || December 10, 2021 certificate pictured above and who had previously issued certificates for Saly: — 10 — — 11 — 3s 12 — 13 — i o — 15 — — 16 — = Oo Z 18 — 19 — — 20 — 21 Eberhart Decl. Ex. L. In the email accompanying the March 16 production, floragunn’s counsel 22 advised Elastic that “floragunn is still awaiting a certificate for the period of January 29 [sic 28] to 23 Feb 16, 2021, and will provide that to you when it is received.” Jd. Ex. N at 2. 24 E. Elastic Seeks Sanctions Unrelated to Saly’s Unavailability 25 On March 12 and 22, 2021, Elastic submitted joint discovery letters requesting that the 26 |} 27 3 floragunn’s co-CEO Jochen Kressin submitted a declaration attesting that the January 28 Certificate “appears to have been received by postal mail by floragunn sometime in mid-February, 28 2021” and was then “uploaded onto a cloud-based server accessible to U.S. counsel for review and processing on March 15, 2021.” Dkt. 216-2, Kressin Decl. { 4. 1 Court order the depositions of floragunn’s freelance programmers, Mikael Gustavsson and Sergii 2 Bondarenko, who each wrote two of the 19 accused code segments. See Dkt. 79 (initial joint 3 letter); Dkt. 84 (renewed joint letter following discovery referral to the undersigned). Elastic also 4 requested that if those witnesses did not appear for deposition, that the Court issue a jury 5 instruction establishing that they copied from Elastic the four accused code segments at issue. 6 Dkt. 84 at 5. Elastic mentioned floragunn’s March 16 production (which included the January 28 7 Certificate) in the March 22 joint letter—noting that “on March 16, floragunn produced written 8 documentation for Mr. Saly’s [ ] leave (a) through January 27, 2021, and (b) from February 9 17 through March 17 [but floragunn has] still fail[ed] to establish that Mr. Saly was actually 10 unavailable for deposition between January 28 and February 16”—but did not request sanctions 11 relating to Saly’s unavailability. Id. 12 On May 4, 2021, the undersigned ruled that Gustavsson and Bondarenko were floragunn’s 13 managing agents and ordered floragunn to produce both witnesses for deposition. Dkt. 97.4 14 F. May 20, 2021 Letter 15 On May 5, 2021, seven weeks after Elastic received the January 28 Certificate from 16 floragunn, Elastic requested by email a meet and confer with floragunn to discuss issue sanctions 17 related to Saly’s purported unavailability during the Gap Period. Eberhart Decl. ¶ 17. Elastic 18 advised floragunn that “we think that Mr. Saly should have been made available for deposition 19 between January 28 and February 16, and that floragunn misrepresented his unavailability during — 20 — 4 In the May 4 order, the Court denied Elastic’s request for non-appearance sanctions without — 21 — prejudice to renewal if either witness failed to appear for deposition by May 14, 2021. Dkt. 97. On May 21, after both witnesses failed to appear for their noticed depositions on May 12 and 13, — 22 — Elastic renewed its request for sanctions. Dkt. 100. In that joint letter, floragunn persuasively argued that sanctions were not warranted because it had used its best efforts to compel the — 23 — programmers to sit for deposition—including by threatening to terminate their freelance contracts with floragunn if they did not appear—but they still refused. Id. at 6. floragunn also submitted — 24 — copies of its email correspondence with the programmers in which stated that they would not appear at a deposition irrespective of the consequences of termination. See id. Exs. A & B. — 25 — floragunn further represented that it would be terminating the programmers’ respective freelance contracts the week of May 23 (the earliest date permissible under German law and the freelance — 26 — contracts). Id. at 6. At the Court’s instruction, floragunn subsequently submitted a declaration confirming the date it gave the programmers written notice of termination (May 28, 2021) and the — 27 — effective date of their terminations (June 25, 2021). See Dkts. 105, 107. That evidence 1 that period—including in the February 22 stipulation we filed.” Jd. Ex. O at 2. Counsel for the 2 || parties met and conferred on May 6, 2021. The same day, floragunn produced (1) a 3 certificate issued April 20, 2021 certifying J through May 18, 2021; and (2) and a letter 4 || dated April 12, 2021 from “i” which purported to investigate whether Saly 5 || was MM to be deposed and claimed that he would not be able to be deposed until he 6 || had been MM for five years. See id. J§ 18-19 & Exs. P,Q. The parties again met and 7 || conferred again on May 14, 2021. 8 On May 20, 2021, Saly provided to floragunn, and floragunn provided to Elastic, a one9 || page letter from J (Saly’s IJ who signed the January 28 Certificate), titled 10 || “Certificate for Mr. Hendrik Saly.” Jd. § 20 & Ex. R. In the letter, reproduced below with a 11 || certified translation on the following page, J wrote, “Mister Saly was already a 12 to work from 28.01-16.02.2021”: — 15 — — 16 — — 17 — Z 18 — 19 — — 20 — — 21 — — 22 — — 23 — — 24 — — 25 — — 26 — — 27 — — 28 — — 1 — — 2 — — 3 — — 4 — — 5 — — 6 — — 7 — — 8 — — 9 — — 10 — 1] 5 13 14 Id. Ex. Rat 2,4. 3 15 On May 21, 2021, the day after floragunn produced i letter, Elastic filed its A 16 || initial request for sanctions based on Saly’s unavailability. Dkt. 101. In support of its request, 17 || Elastic argued that the January 28 Certificate “certifies Mr. Saly’s J to work only through Z 18 || January 27, ... In other words, the issuing YI had cleared Mr. Saly to return to work as of 19 || January 28.” Id. at 6 (emphasis in original). 20 G. Saly’s Termination 21 On June 11, 2021, the Court held a discovery hearing on Elastic’s sanctions request and 22 directed the parties to meet and confer to discuss further development of the record regarding 23 Saly’s unavailability. Dkt. 112. Unbeknownst to Elastic and the Court, on May 21, 2021—the 24 same day Elastic moved for sanctions—floragunn gave Saly notice that he would be terminated 25 effective June 30, 2021. See Dkt. 127 § 16 & Ex. A. floragunn did not disclose Saly’s pending 26 termination to Elastic until June 21, 2021, during the parties’ Court-ordered meet and confer. 27 || Eberhart Decl. 21. That same day, floragunn produced three additional certificates issued April 28 || 21, May 19, and June 16, 2021. Jd. § 22 & Ex. S. The certificates comprised the same format as 1 those provided previously, except that they also listed “ ” reflecting that Saly 2 from , , and . 3 See Mot. at 11; Eberhart Decl. Ex. S. 4 H. Additional Discovery Regarding Saly’s Unavailability and Termination 5 On June 22, 2021, in light of floragunn’s revelation about Saly’s impending termination, 6 Elastic requested that the Court order floragunn to describe under oath its efforts to obtain Saly’s 7 cooperation and the circumstances surrounding his termination. Dkt. 115. Elastic argued that 8 “[t]he timing of [Saly’s] departure—coming after he has allegedly been on leave for 15 9 months but shortly after the Court’s June 11, 2021 Order—raises questions regarding whether that 10 departure is a step to avoid a deposition and/or consequences for his failure to appear.” Id. at 2. 11 Following a July 9, 2021 further discovery hearing, the Court ordered floragunn to submit 12 a declaration describing (1) all communications involving Saly and his potential return to work at 13 floragunn in January and/or February 2021, and (2) the circumstances of Saly’s recent termination. 14 Dkt. 121. floragunn provided the required declaration from its co-CEO, Jochen Kressin, on July 15 26, 2021. Dkt. 127. In the declaration, Kressin attested: 16 Based on communications with Mr. Saly and his wife, Ms. Kressin and I (and thus floragunn) had a good faith belief that documentation 17 supporting the basis for his leave during the Gap Period would be provided in due course, as in fact it ultimately was. floragunn 18 understood that the absence of a certificate for the Gap Period was due in part to administrative procedures related to Mr. Saly 19 switching , and floragunn continued to treat him as if he was on leave during the Gap Period. Mr. Saly did not 20 perform any work for floragunn during the Gap Period, or at any other time since going on leave. . . . I do not believe that Mr. Saly has been 21 available to return to work at floragunn or be deposed at any time since going on leave. — 22 — 23 Id. ¶ 7. Kressin also attested that Saly’s June 30 termination was driven by “financial and 24 management considerations,” including floragunn’s need to “reorganize its personnel to manage 25 the company’s workload” in light of the June 25 terminations of Gustavsson and Bondarenko, who 26 were floragunn’s main developers at the time. Id. ¶¶ 8, 17. 27 On August 2, 2021, to “complete the evidentiary record on the motion for sanctions,” 1 his wife from March 2020 onward; (2) documents sufficient to show the date, time, and length of 2 all telephone conversations between floragunn’s co-CEOs (Jochen and Claudia Kressin) and Saly 3 and/or his wife during the same time period; (3) all documents and communications concerning 4 go-ffwd GmbH, a company formed by Saly and the Kressins; (4) Jochen Kressin for deposition to 5 explore the basis of his July 26, 2021 declaration; and (5) the procedure proposed by Elastic 6 involving an of Saly. Dkt. 129. Following a discovery hearing 7 on August 17, 2021, the undersigned granted requests 1 and 2; denied requests 3 and 5; and denied 8 request 4 without prejudice to renewal after floragunn’s production of documents. Dkt. 136.5 9 Following floragunn’s production, the Court granted Elastic’s renewed request to depose 10 Jochen Kressin “to explore facts regarding: (1) the subject matter of Mr. Kressin’s July 26, 2021 11 declaration (dkt. 127); (2) floragunn’s communications with Hendrik Saly and his wife regarding 12 Mr. Saly’s potential return to work; (3) floragunn’s decision to ultimately terminate Mr. Saly in 13 May 2021; and (4) floragunn’s recent production and other communications contained therein.” 14 Dkt. 208. The deposition occurred on October 28, 2021. Full briefing on this sanctions dispute 15 followed. 16 II. DISCUSSION 17 It is undisputed that Elastic seeks sanctions under this Court’s “inherent authority” rather 18 than under Rule 37 or any other rule or statute.6 “When acting under its inherent authority to 19 impose a sanction, as opposed to applying a rule or statute, a district court must find either: (1) a 20 willful violation of a court order; or (2) bad faith.” Am. Unites for Kids v. Rousseau, 985 F.3d 21 1075, 1090 (9th Cir. 2021). “As the Supreme Court has explained, a sanction may be awarded — 22 — 23 5 Elastic subsequently moved for relief from the undersigned’s denial of request 3 (production of go-ffwd materials) and request 5 ( ), Dkt. 151, which Judge 24 Gonzalez Rogers denied, Dkt. 195. 6 Rule 37, which allows for sanctions against a party who “fails to obey an order to provide or — 25 — permit discovery,” is inapplicable here. Fed. R. Civ. P. 37(b)(2)(A). floragunn has not violated any Court order and the Ninth Circuit “has foreclosed the application of Rule 37 sanctions in cases — 26 — such as this where a party’s alleged discovery-related misconduct is not encompassed by the language of the rule.” Unigard Sec. Ins. Co. v. Lakewood Eng’g & Mfg. Corp., 982 F.2d 363 , 368 — 27 — (9th Cir. 1992); see Guifu Li v. A Perfect Day Franchise, Inc., 281 F.R.D. 373, 390 (N.D. Cal. 1 either for willful disobedience of a court order or when a party has acted in bad faith, vexatiously, 2 wantonly, or for oppressive reasons.” Id. (citing Roadway Exp., Inc. v. Piper, 447 U.S. 752 , 766 3 (1980)). 4 “The bad faith requirement sets a high threshold.” Primus Auto. Fin. Servs., Inc. v. 5 Batarse, 115 F.3d 644, 649 (9th Cir. 1997). Unlike willful disobedience of a court order, which 6 requires only that a party acted deliberately irrespective of mental intent, bad faith “requires proof 7 of bad intent or improper purpose.” Rousseau, 985 F.3d at 1090. And “because a district court’s 8 inherent powers are so potent, [the Ninth Circuit] require[s] that when a court imposes sanctions 9 based on bad faith, the court must make an explicit finding that the sanctioned party’s conduct 10 ‘constituted or was tantamount to bad faith.’” Id. (emphasis added and citation omitted); see Fink 11 v.Gomez, 239 F.3d 989, 992 (9th Cir. 2001) (“[A] specific finding of bad faith . . . must ‘precede 12 any sanction under the court’s inherent powers.’”) (quoting Roadway, 447 U.S. at 767 ). “It is the 13 moving party’s burden to demonstrate that the party against whom it seeks sanctions acted with 14 the requisite bad faith or improper purpose.” Lofton v. Verizon Wireless (VAW) LLC, 308 F.R.D. 15 276, 285 (N.D. Cal. 2015). Elastic has not met that burden here. 16 Elastic argues that floragunn acted in bad faith in two ways.7 First, Elastic contends that 17 floragunn used “deception” to withhold Saly’s deposition during the January 28 to February 16, 18 2021 Gap Period. This argument is predicated on Elastic’s belief that the January 28 Certificate 19 (produced on March 16) “cleared” Saly to return to work on January 28, 2021, and that floragunn 20 knew as much when the parties were negotiating the Saly Stip in mid-February. Second, Elastic 21 contends that floragunn’s “surreptitious termination” of Saly’s employment while this sanctions 22 dispute was pending further demonstrates bad faith warranting sanctions. The record before the 23 Court, however, does not support a finding of bad faith on either basis. — 24 — 7 Elastic also argues, unpersuasively, that it “need not show bad faith for its Motion to succeed” — 25 — because “floragunn has effectively spoliated Mr. Saly’s testimony by deceptively withholding his deposition and then firing him.” Dkt. 218, Reply at 5; see also Mot. at 13 (citing cases involving — 26 — inherent power sanctions in the spoliation context and arguing that “[b]ad faith is sufficient, but not required, for imposition of evidentiary sanctions”). This case does not involve spoliation, — 27 — which “refers to the destruction or material alteration of evidence or to the failure to preserve 1 As an initial matter, the January 28 Certificate says nothing about Saly having been 2 “cleared to return to work as of January 28, 2021,” as Elastic claims. Mot. at 10. Rather, it lists 3 January 27, 2021 as the “expected to be unable to work up to and including or the last day of 4 for work” date. See Eberhart Decl. Ex L. In the absence of any German or 5 legal authority saying otherwise, which Elastic has not provided, the Court declines to interpret the 6 January 28 Certificate as affirmatively “clearing” Saly to return to work. Moreover, the Court 7 agrees with floragunn that for purposes of Elastic’s sanctions motion, “the issue is not whether the 8 January 28 Certificate ‘cleared’ Mr. Saly to return to work (which it plainly does not), but whether 9 floragunn believed that the January 28 Certificate cleared Mr. Saly to return to work, sufficient to 10 show floragunn’s bad faith.” Opp. at 23 (first emphasis added). There is no indication in the 11 record as it stands that floragunn or its attorneys interpreted the January 28 Certificate as a 12 “clearance” for Saly to return to work. 13 There is likewise no evidence to support Elastic’s theory that floragunn intentionally and 14 wrongfully withheld production of the January 28 Certificate (which floragunn received from Saly 15 in mid-February, uploaded to a cloud-based server accessible to its U.S. counsel on March 15, and 16 produced to Elastic on March 16) in an effort to “hide” Saly’s availability and “falsely induce[] 17 Elastic’s agreement to the Saly Stipulation.” See Mot. at 19; Reply at 11. If anything, the record 18 tends to suggest that even Elastic did not believe (at least not initially) that the January 28 19 Certificate on its face “cleared” Saly to return to work as of January 28, 2021. Elastic waited until 20 May 5, 2021—seven weeks after it received the January 28 Certificate from floragunn and one day 21 after the undersigned ruled in Elastic’s favor on the managing agent deposition dispute—to raise 22 its concerns regarding the certificate with floragunn. If, as Elastic now claims, the January 28 23 Certificate “contradicted the entire premise of the parties’ [Saly Stip] negotiations—that Mr. Saly 24 was unavailable to be deposed” such that it was “both crucial and time-sensitive that floragunn 25 produce the certificate” in mid-February, see Mot. at 10–11, then the Court would expect Elastic 26 to have raised this when it first received the January 28 Certificate in mid-March. 27 In any event, the Court further agrees with floragunn that “the entire issue of 1 rendered moot by i [May 20, 2021] letter,” which unequivocally stated that Saly 2 || was QJ to work from January 28 to February 16, 2021. Opp. at 23. Indeed, as Elastic itself 3 || recognizes, MM is “the same IJ who issued [the January 28 Certificate and] the 4 || original certificate for the December 10 through January 27 period (and had previously issued 5 || certificates for Mr. Saly as early as April 2020), so there can be no claim [] that the Jj was 6 || unfamiliar with Mr. Saly’s i.” Mot. at 16 (emphasis added). Elastic’s attempts to 7 || discredit MM letter as “contrived,” “highly suspect,” and an “after-the-fact effort to 8 claim Mr. Saly was I’ are unpersuasive, as there is again no evidence to suggest that the 9 letter was disingenuous or manufactured. See id. at 15; Reply at 9. 10 Finally, the Court does not have reason to ascribe bad faith to floragunn’s ultimate decision 11 to terminate Saly’s employment after 15 months of paid J leave.® Elastic argues that the 12 || timing of Saly’s termination “gives rise to an inference that floragunn fired Mr. Saly to end any 13 influence floragunn might have over Mr. Saly to provide evidence in this matter.” Mot. at 18. Yet 14 as floragunn points out, at the time of Saly’s termination, “he was still out on J leave, so 15 floragunn had no control over him in any event, a fact Elastic does not challenge.” Opp. at 25. A 16 In sum, Elastic has not made the requisite showing that floragunn acted “in bad faith, 3 17 || vexatiously, wantonly, or for oppressive reasons” with respect to Saly’s unavailability and 18 termination. Rousseau, 985 F.3d at 1090. Because a “specific finding of bad faith must precede 19 any sanction under the court’s inherent powers,” Elastic’s motion must be denied. Fink, 239 F.3d 20 at 993 (simplified). 21 IT IS SO ORDERED. 22 || Dated: January 18, 2022 — 23 — 24 □□□ 5 AD United States Magistrate Judge — 26 — — 27 — 28 ’ The Court agrees with Elastic that floragunn should have disclosed Saly’s pending termination at the June 11, 2021 discovery hearing, but does not find this omission to rise to a level of bad faith.