eDiscovery Daily Blog
Court Assesses $3 Million Punitive Sanction to Defendant for “Bad Faith” Deletion of Emails: eDiscovery Case Law
In this case with claims of monopolization, attempted monopolization and common-law tortious interference with business relations against the defendant, the defendant (upon receiving a demand letter from the plaintiff in May 2012) promptly issued a litigation hold to relevant employees and provided training sessions to ensure compliance, then issued an updated litigation hold with quarterly reminders once the lawsuit was filed.
However, the defendant’s Senior Vice President of Sales (Don Houston) on several occasions after the lawsuit was filed, replied to email discussions among co-workers, requesting them to be careful about competitive statements and instructing them to delete those email chains where discussions were taking place. Houston also deleted his own emails, deleting more than 40% of his emails from November 18, 2013 through February 19, 2014 from both his legal folder and his deleted files folder. In addition, sales team members were instructed to use code words to refer to competitors, such as “zebra” for the plaintiff.
When the defendant’s Associate General Counsel became aware of the deletions, she contacted the IT department, which implemented an anti-email-deletion litigation hold feature and provided her with Houston’s back-up tapes going back to November 2013. The defendant retained an eDiscovery provider to restore back-up tapes and preserve emails still available and retained another eDiscovery provider to quantify the emails that had been deleted. The second eDiscovery provider estimated that as many as 90,000 emails were unrecoverable, with as many as 6,000 estimated to be responsive to the plaintiff’s discovery requests. The defendant chose not to complete the project and did not disclose the analysis for almost ten months; the plaintiff, using its own expert to conduct analysis, determined as many as 15,000 deleted emails would have been responsive to discovery requests. The plaintiff filed a Motion for Sanctions against the defendant for the deleted emails.
Judge Stark began the discussion portion of the ruling by stating that “It is undisputed that thousands of Mr. Houston’s emails ‘should have been preserved in the anticipation or conduct of litigation,’ were ‘lost,’ and ‘cannot be restored or replaced through additional discovery.’” Judge Stark refuted the defendant’s arguments that it took reasonable steps to preserve ESI, that it had no intent to deprive the plaintiff of discovery (and therefore did not act in bad faith) and that the plaintiff had not demonstrated any prejudice, stating, among other things, that:
- The defendant’s “extensive document preservation efforts do not absolve it of all responsibility for the failure of a member of its senior management to comply with his document preservation obligations”,
- “in Plantronics’ own words, Mr. Houston instructed others to delete emails ‘for purposes of protecting the business’”, and
- “Because the Court has found that Plantronics acted in bad faith, the burden shifts to Plantronics to show a lack [of] prejudice to GN resulting from Mr. Houston’s deletion of emails.” Judge Stark refuted the defendant’s three arguments as to lack of prejudice from the deletion of emails.
With the determination that sanctions were in order, Judge Stark rejected the idea of re-opening discovery as a possible remedy. Instead, he noted that “[m]onetary sanctions, although unable to fully redress the prejudice to GN, are warranted.”
With that in mind, Judge Stark stated the following:
“[T]he Court finds that Plantronics’ high degree of fault, its bad-faith intent to deprive GN of responsive documents, and the prejudice it has caused to GN’s case – along with the difficulties it has created for GN in ‘getting to the bottom of the deletion story’ and its (at times) unwillingness to acknowledge wrongdoing – further merit punitive monetary sanctions. Therefore, the Court will impose a sanction in the amount of $3,000,000 on Plantronics, payable to GN.”
In addition, Judge Stark added “monetary sanctions in the form of the reasonable fees and costs incurred by GN in connection with the disputes leading to today’s Order”, “possible evidentiary sanctions, if requested by GN and found by the Court to be warranted as this case progresses toward trial”; and “instructions to the jury that it may draw an adverse inference that emails destroyed by Plantronics would have been favorable to GN’s case and/or unfavorable to Plantronics’ defense.”
So, what do you think? Were the sanctions excessive or were they appropriate? 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.
CloudNine empowers legal, information technology, and business professionals with eDiscovery automation software and professional services that simplify litigation, investigations, and audits for law firms and corporations.