Sanctions Against Deel Paused as Judge Orders Meet-and-Confer

SAN FRANCISCO (LN) — A federal magistrate judge on Wednesday issued a tentative order finding that Deel, Inc. engaged in sanctionable discovery misconduct in a lawsuit brought by Rippling (People Center, Inc.), but ordered the parties to meet and confer to resolve the dispute before any penalty is imposed.

The court’s tentative conclusion is that Deel and/or its attorneys engaged in at least some degree of sanctionable discovery misconduct, particularly regarding the period beginning in December 2025.

The record supports an inference that Deel wrongfully withheld information until after Judge Breyer resolved Defendants’ motions to dismiss, the order states.

In doing so, Deel preserved the possibility that it might never need to reveal that information if the motions had been granted, contrary to Deel’s stipulation not to stay discovery while its motion to dismiss was pending.

On the other hand, other aspects of Rippling’s motion appear to overreach.

Some portions of the purported discovery misconduct may not rise to the level of warranting sanctions.

Because Rippling quickly initiated a sanction motion rather than litigating the asserted deficiencies, it has not plainly established the breadth of misconduct.

The court is therefore inclined to impose limited sanctions, partially based on considerations of deterrence, of fifty percent of Rippling’s reasonable attorneys’ fees.

Rippling has failed to substantiate those fees sufficiently, citing cases that do not support its currently secret billing rates.

The failure to provide billing records leaves the court unable to evaluate the significance of any potential excess in Rippling’s billing rates or the experience of its attorneys and paralegals.

If the court were to proceed to a final order, it would require Rippling to file both its rates and its billing records record, with at most narrow redactions for forward-looking litigation strategy or confidential client information.

The story is unlikely to end there.

It is not hard to imagine that either or both parties might seek relief from Judge Breyer or otherwise feel compelled to correct what they perceive as inaccuracies.

Further briefing would follow, at further cost to the parties.

Further sanctions motions might also follow subsequent perceived misconduct by either side, poisoning any opportunity for the parties to pivot immediately towards a more orderly, cooperative, and efficient handling of discovery.

As defense counsel noted, acrimonious litigation can sometimes feed on itself.

This case is at a potential inflection point.

Both parties have seen changes in their counsel over the last several months.

Motions to dismiss have been resolved, settling the question of whether the case will remain in this forum.

Defendants have at least begun to produce substantive discovery.

Those circumstances might present an opportunity to resolve this sanctions dispute without further litigation and to allow litigation on the merits to proceed productively.

Rippling and Deel are therefore ordered to meet and confer as to whether they can reach a mutually agreeable resolution to the motion for sanctions.

No later than May 20, 2026, those parties shall jointly file one of the following: a stipulation and proposed order resolving the dispute; a stipulation and proposed order requesting additional time to resolve the dispute; or a joint statement that neither of the preceding options has the support of both parties.

If the parties are unable to agree, the joint statement should state only that fact.

Neither that statement nor any other filing prior to final resolution of the motion for sanctions may indicate anything further about the position of either or both parties.

This order does not resolve the motion for sanctions.

The court reserves the right to reconsider its tentative position upon further review of the record.

That tentative position is not yet a final interlocutory order subject either to review under Civil Local Rule 72-2 or to a motion for reconsideration under Civil Local Rule 7-9.

No further briefing on the merits will be permitted, except with respect to the reasonableness of attorneys’ fees as may be directed by the court.

Any unauthorized briefing on this matter will be stricken without consideration.