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The Risks of “Failed” Spoliation Efforts: The Southern District of New York Finds Severe Sanctions Available Under Rule 37(b)(2) and Inherent Authority for “Incompetent Spoliators”

Author: Jessica A. Huse – Gibbons Law Alert

…even when spoliation efforts are ultimately unsuccessful, and therefore Rule 37(e) does not apply because information is not “lost,” sanctions remain available under Rule 37(b)(2) and the court’s inherent authority to address litigant misconduct, including outright fraud on the court…
…court entered a seizure order allowing Abbott to seize, inter alia, a copy of H&H Defendants’ email server. Following its examination of the H&H email server, Abbott “had the proverbial smoking gun and raised its concerns anew that defendants had failed to comply with the Court’s Order to produce responsive documents” in the 2015 action…
…Cited from Court Order…The R&R concludes that “the H&H [D]efendants’ bad faith can be inferred from the H&H [D]efendants’ deliberate and strategic non-compliance with discovery, their selective withholding of responsive documents, and their perjury as well as deceptive and evasive testimony.” (R&R at 29.) Each of the H&H Defendants—including the Goldmans—had a duty to comply with the Court’s orders, and each willfully and grossly failed to do so…

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Editor Comment:

As a 30(b)(6) witness for some of my clients, I follow eDiscovery spoliation cases closely. Most of them have little or no ‘teeth’ when a party has even attempted to meet their obligations. It is nice to see a magistrate drop the hammer on a party who appears to have consistently and deliberately tried to hide relevant ESI. The cited order is worth a quick read. Focus on the role played by the Defendant’s litigation support manager and his IT counterpart. They deliberately excluded all of the company owners (the Goldmans) email and docs from searches. Then the Goldmans played the ‘we trusted our employees’ card. The Court did not buy it and reaffirmed their duty to comply with court orders. Company execs everywhere should take that to heart. I know that eDiscovery related sanctions are rare. Much rarer than inadvertent, systematic or deliberate eDiscovery malfeasance. The low rate of sanctions does not negate the risk and consequences when caught. Besides, some of us just insist on doing the right thing.

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