Purposeful Destruction v. Negligence

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Aug 31

In Victor Stanley, Inc. v. Creative Pipe, Inc., we saw Judge Paul W. Grimm of the U.S. District Court of Maryland recommend a default judgement and permanent injunction as to the plaintiff's copyright claim and order monetary sanctions for the defendant's acts of spoliation. Additionally, the defendant and president of Creative Pipe was sentenced to jail time for not more than two years "unless and until" he paid the attorney fees and costs awarded. Though this order was modified and the jail sanctions were eventually removed, it illustrates the seriousness with which trial courts regard spoliation and is one of the strongest examples of eDiscovery sanctions we've seen for companies that disregard eDiscovery production.
More recently in Green v. Blitz U.S.A we saw Judge John Ward of the U.S. District Court for the Eastern District of Texas order a $250,000 civil contempt sanction after he found that the defendants withheld internal communications considered materal in this products liability case. Though Blitz was involved in several pending lawsuits, the person responsible for managing eDiscovery described himself as "computer illiterate" and never ordered a litigation hold. Subsequently, the IT department routinely deleted e-mail and backup tapes.
These matters serve as a reminder for companies that both the purposeful destruction and negligent failure to preserve electronic data are considered equal reasons for courts to award large monetary sanctions, adverse inference and case dismissal.