eDiscovery Daily Blog

• June 30, 2016

In Flagship Theatres of Palm Desert, LLC v. Century Theatres, Inc. et. al., No. B257148, Consolidated  with Nos. B259552 and B261149 (Cal. App., May 24, 2016), the Court of Appeals of California, Second District determined that the trial court “abused its discretion” by “granting terminating sanctions in a case in which the prejudice to the non-offending party can be ameliorated by a more limited remedy”.  As a result, the appeals court reversed the judgment and remanded it back to the trial court with a lesser sanction, prohibiting the plaintiff “from offering evidence of acts, events, or communications occurring during the period” when one of the plaintiffs deleted emails.

Case Background

In this antitrust suit, the plaintiffs, who operated a movie theater, claimed that the defendants had conspired to keep the most popular films from being distributed to the plaintiff’s theater and filed suit in 2006.  For the next two years, the case proceeded through discovery, and each side requested and received documents from the other. Most notably, in December 2006, one defendant served a set of requests for production in which it requested numerous categories of documents from the plaintiffs.  Ultimately, the plaintiffs voluntarily dismissed movie distributor defendants from the case, but added Cinemark as a defendant following Cinemark’s acquisition of Century.

From the date of production in 2007 until the trial court granted summary judgment in July 2008, no defendant moved for further production.  That summary judgment decision was reversed by the appellate court in 2011 and remanded back to the trial court for further proceedings.

In the summer of 2012, one of the plaintiffs (Tabor) began experiencing problems sending and receiving email from the AT&T account that he used for both personal and business email.  On the advice of an AT&T customer service representative, he deleted thousands of email messages to free up space, deleting the earliest emails up to February 19, 2009.  The plaintiffs then received another discovery request from the new defendant (Cinemark) requesting emails. Upon realizing that he had deleted items he had a duty to preserve, Tabor attempted to recover the emails but was unsuccessful. When Cinemark learned that Tabor had deleted the emails, it moved for sanctions. The trial court denied the motion because it was unable to fully evaluate the extent of prejudice to Cinemark. Subsequently, Cinemark renewed its motion for sanctions. This time, the trial court granted the motion and the plaintiff appealed.

Appellate Court’s Ruling

The court noted that “Cinemark likely suffered some prejudice, and it is entitled to a remedy to compensate for this prejudice. But the potential for prejudice is limited to the period between the spring of 2007 [the time period up to which the plaintiff had previous produced relevant ESI] and February 19, 2009 because the relevant emails outside that period, with some minor exceptions, were saved. Accordingly, the trial court abused its discretion by not limiting appropriate sanctions to the period between the spring of 2007 and February 19, 2009.”

The appellate court also disagreed with the trial court opinion that the plaintiffs “must be able to establish that they actually sought to license and play enough films to generate 40% of the cumulative box office grosses”, noting that the plaintiffs might have realized that distributors were unwilling to give them certain kinds of movies and simply stopped requesting them.  Because the appellate court determined that the deletion of emails outside of the 2007-2009 time frame was “small scale and innocuous”, it determined that there was no justification for additional sanctions.

As a result, the appellate court reversed the judgment and remanded it back to the trial court with a lesser sanction, prohibiting the plaintiff “from offering evidence of acts, events, or communications occurring during the period” between spring 2007 and February 19, 2009 (unless Cinemark offered evidence during that time period that was “more than nonsubstantive, peripheral, or foundational”, in which case, the plaintiffs could present evidence and seek damages pertaining to that time period).

So, what do you think?  Was the appellate court sanction a more appropriate remedy?  Please share any comments you might have or if you’d like to know more about a particular topic.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine. eDiscovery Daily is made available by CloudNine solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscovery Daily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.