Tech Pharmacy Services, LLC v. Alixa Rx LLC, 4:15-cv-00766

Tech Pharmacy sued Alixa and related defendants asserting patent infringement hinging on whether Alixa’s ADU machines dispense medication into a “separate and removable container.”
During a Rule 34 inspection at Golden LivingCenter Lake Ridge on Feb 14, 2017, Tech’s expert (Dr. Metzker) and counsel observed the ADU but not the container; Alixa employee Jason Dietrich had moved a container/stool into a med-room cabinet while preparing the area.
Alixa SVP Brad Savage, who testified as corporate representative, had previously acknowledged some facilities use a catch-container despite company policy and had knowledge the container issue was material to infringement based on a pre-suit opinion letter.
Tech Pharmacy moved for sanctions/spoliation, seeking severe remedies (striking defenses, adverse jury instruction, costs) alleging intentional concealment of the container before the inspection.
The court found Defendants had a duty to preserve evidence (the container) but concluded the record did not show bad faith: evidence suggested negligence or lack of knowledge by the individuals who moved the container.
The court denied Tech Pharmacy’s motion for sanctions, finding no prejudice because Dr. Metzker still observed scuff marks consistent with container use and therefore the absence did not materially frustrate proof; the court ordered a stipulated fact instead of harsher sanctions.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Defendants had a duty to preserve the container evidence	Savage knew container relevance; duty to keep container in place for inspection	Evidence of container use elsewhere made demonstration of machine routine; container irrelevant to inspection	Duty to preserve existed; defendants should have kept container in place
Whether defendants acted in bad faith (spoliation)	Savage instructed prep that implicitly required hiding container; concealment was intentional	At most negligence; Dietrich and Savage did not knowingly hide evidence or know litigation ramifications	No sufficient evidence of bad faith; findings indicate negligence or lack of knowledge
Whether sanctions are warranted and if so, what relief	Strike pleadings, adverse jury instruction, and costs for inspection and motion	Sanctions disproportionate; no bad faith or prejudice	Sanctions denied; court ordered a stipulation about common container use and absence during inspection
Whether Tech Pharmacy suffered prejudice from the container’s absence	Container removal altered inspection and deprived Tech of material evidence	Expert observed scuff marks; inspection still yielded infringement opinion	No actual prejudice demonstrated; expert evidence compensated for absence

Roadway Express, Inc. v. Piper, 447 U.S. 752 (sanctions available up to dismissal or default to penalize and deter discovery misconduct)
Guzman v. Jones, 804 F.3d 707 (5th Cir. 2015) (spoliation involves destruction or meaningful alteration of evidence)
Rimkus Consulting Grp., Inc. v. Cammarata, 688 F. Supp. 2d 598 (S.D. Tex. 2010) (preservation duty arises when evidence is relevant or anticipated)
Compaq Comput. Corp. v. Ergonome Inc., 387 F.3d 403 (5th Cir. 2004) (sanction must be just and specifically related to the discovery violation)
United States v. $49,000 Currency, 330 F.3d 371 (5th Cir. 2003) (willfulness required for certain severe sanctions)
Toon v. Wackenhut Corr. Corp., 250 F.3d 950 (5th Cir. 2001) (bad-faith finding required before imposing certain discovery sanctions)
Goldin v. Bartholow, 166 F.3d 710 (5th Cir. 1999) (same)