Last November, U.S. Magistrate Judge William V. Gallo (of California's Southern District) put forth an order in a patent infringement case that granted monetary sanctions and adverse interference in relation to spoliation sanctions that were grossly negligent. In this case, the defendant's arguments, which were "we kept everything" and "No harm, no foul", were rejected as responses for spoliation of evidence.
The year 2013 was riddled with interference sanctions for spoliation, and the above mentioned case was just the most recent example of the issue. Although some of those motions were likely reaching too far or frivolous, the judge in this particular case argued that even though no bad faith was shown, adverse interference sanctions were will an appropriate response. The suit stretched all the way back to 2008 when defendants informed the plaintiff, Zest, that they had intensions to clone an existing product of the plaintiff company. When the plaintiff received this notification, they responded by arguing that this was an infringement. Hearing no response, they filed a suit in March of 2010.
According to Judge Gallo, the defendants did not take adequate steps to preserve any electronic documents and they did not tell their employees to preserve documents, either. The defendants believed that because the case wasn't filed until 2010, the company's "no documents can be deleted" policy was fair. The judge believed that even though the policy was in place, it did not completely prevent destruction of some documents. There was also no backup or restore system in place that would have prevent a total destruction of certain documents.
The defendants argued that because no legal hold was in place, some documents belonging to key custodians were completely destroyed. Those whose documents are missing? The CEO and the director of product development.The CEO admitted to having six email accounts, although important emails relating to the case were not kept. The director of product development testified that she was never specifically told to keep documents. These actions, according to the judge, are forcing the plaintiff to go to trial without complete evidence, a situation which he believed the plaintiffs are fully responsible for.
The most important aspects coming out of this case include that saving everything is no substitute for a legal hold and that bad faith or willfulness are not necessarily required for adverse interference sanctions. In the above-mentioned case, monetary sanctions in the form of attorney's fees and costs were also awarded.
(This blog article is based on the article entitled "Looming spoliation penalty in US federal case ignores 'no harm, no foul' defense" written by Robert Hilson, an ACEDS Contributor, published on December 5, 2013 on the ACEDS website: http://www.aceds.org/looming-spoliation-penalty-in-us-federal-case-ignores-no-harm-no-foul-defense)
The year 2013 was riddled with interference sanctions for spoliation, and the above mentioned case was just the most recent example of the issue. Although some of those motions were likely reaching too far or frivolous, the judge in this particular case argued that even though no bad faith was shown, adverse interference sanctions were will an appropriate response. The suit stretched all the way back to 2008 when defendants informed the plaintiff, Zest, that they had intensions to clone an existing product of the plaintiff company. When the plaintiff received this notification, they responded by arguing that this was an infringement. Hearing no response, they filed a suit in March of 2010.
According to Judge Gallo, the defendants did not take adequate steps to preserve any electronic documents and they did not tell their employees to preserve documents, either. The defendants believed that because the case wasn't filed until 2010, the company's "no documents can be deleted" policy was fair. The judge believed that even though the policy was in place, it did not completely prevent destruction of some documents. There was also no backup or restore system in place that would have prevent a total destruction of certain documents.
The defendants argued that because no legal hold was in place, some documents belonging to key custodians were completely destroyed. Those whose documents are missing? The CEO and the director of product development.The CEO admitted to having six email accounts, although important emails relating to the case were not kept. The director of product development testified that she was never specifically told to keep documents. These actions, according to the judge, are forcing the plaintiff to go to trial without complete evidence, a situation which he believed the plaintiffs are fully responsible for.
The most important aspects coming out of this case include that saving everything is no substitute for a legal hold and that bad faith or willfulness are not necessarily required for adverse interference sanctions. In the above-mentioned case, monetary sanctions in the form of attorney's fees and costs were also awarded.
(This blog article is based on the article entitled "Looming spoliation penalty in US federal case ignores 'no harm, no foul' defense" written by Robert Hilson, an ACEDS Contributor, published on December 5, 2013 on the ACEDS website: http://www.aceds.org/looming-spoliation-penalty-in-us-federal-case-ignores-no-harm-no-foul-defense)
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