Jury Instruction Allowing Inference that Destroyed Evidence Was Unfavorable and Payment of Attorneys' Fees and Costs Ordered as Sanction for Failure t

Medcorp, Inc. v. Pinpoint Tech., Inc., 2010 WL 2500301 (D. Colo. June 15, 2010)

Finding “willful” spoliation of 43 hard drives “in the sense that Plaintiff was aware of its responsibilities to preserve relevant evidence and failed to take necessary steps to do so”, a special master ordered a jury instruction which allowed the jury to infer that the destroyed evidence was unfavorable to plaintiff and for the parties to split the cost of defendants’ litigation of the spoliation issue. Upon a motion to modify the order, the magistrate judge affirmed the imposition of the jury instruction, but found plaintiff should pay all of defendants’ reasonable expenses and ordered payment of $89,365.88.

A special master found that plaintiff’s destruction of 43 relevant hard drives was “willful, in the sense that Plaintiff did not do enough to preserve the hard drives”, but acknowledged that ‘Defendants have not established … that [Plaintiff] has … violated any discovery order … and there is no substantial evidence that its destruction of hard drives or the recycling of its work-stations was anything other than what [Plaintiff] would do in the ordinary course of business.” Accordingly, the special master ordered a jury instruction entitling the jury to infer that the destroyed hard drives would have contained unfavorable evidence and for the parties to split defendants’ costs for litigating the issue. Defendants moved to modify the order, arguing the sanctions imposed did not cure the prejudice caused by plaintiff and seeking terminating sanctions or the admission of certain facts. Noting the defendants’ lack of objection to the special master’s factual findings, the court limited its de novo review to whether the facts justified harsher penalties, as argued by defendants.

Beginning her analysis, the magistrate judge noted agreement with the standard set forth in Pension Comm. of Univ. of Montreal Pension Plan v. Bank of Am. Secs., LLC, 2010 WL 184312 (S.D.N.Y. Jan. 15, 2010) for determining the type of sanctions justified for spoliation, namely that “’[t]he determination of an appropriate sanction, if any, is confined to the sound discretion of the trial judge and is assessed on a case-by-case basis” and that “appropriate sanctions should ‘(1) deter the parties from engaging in spoliation; (2) place the risk of an erroneous judgment on the party who wrongfully created the risk; and (3) restore “the prejudiced party to the same position [it] would have been in absent the wrongful destruction of evidence by the opposing party.” The court also highlighted the “well accepted” premise that “a court should always impose the least harsh sanction that can provide an adequate remedy.”

To Continue Reading: Click Here
---------------------------------------------
Source: ediscoverylaw.com