Court Grants Several Significant Sanctions for Defendants’ Discovery Failures: eDiscovery Case Law

This case was so unique, it has caused me to do something in my coverage that I’ve never done before with any eDiscovery case law post in over ten years of blogging.  See below to find out what that is.  😉

In DR Distribs. v. 21 Century Smoking, No. 12 CV 50324 (N.D. Ill. Jan. 19, 2021), Illinois District Judge Iain D. Johnston, in a ruling so long it needed a table of contents (104 pages printed out in PDF form), assessed several significant sanctions to the defendants for their discovery failures, but did not grant the “nuclear option[s]” sanctions requested by the plaintiffs to default the defendants and dismiss their counterclaims.

The first sub-section of the Introduction and Conclusion section of Judge Johnston’s ruling was titled “Ominous Foreshadowing” and he began that section by stating:

“’Snakebit’—That’s how a former defense counsel described this case. But ‘snakebit’ connotes the unfortunate circumstances that befall unsuspecting victims. That didn’t happen here. Instead, through a series of missteps, misdeeds, and misrepresentations, Defendants and the former defense counsel find themselves looking down the barrel of a sanctions motion Howitzer. If any entity has been snakebit, it’s this Court.

This case has taught this Court that—like Boxer the Horse in Animal Farm—it cannot solve all problems by just working harder. No matter how hard this Court tried to move this case to a just, speedy, and inexpensive determination, it was thwarted. This case is evidence that early and constant case management does not necessarily result in a prompt resolution or avoidance of problems.”

This case began in 2012 and involved infringement claims over similar trademarks for electronic cigarettes. As Judge Johnston stated: “There are over 400 docket entries now. And no end is in sight.” At the outset of the case, counsel instructed defendant Brent Duke to preserve his relevant webmail (Yahoo! and GoDaddy) and chat messages (Yahoo! chats), but that was an oral instruction, not a written hold instruction.  In addition, counsel failed to instruct Duke to disable automated deletion of emails or chats and didn’t realize that the webmail and chat messages were stored online instead of company servers, which meant that they didn’t attempt to collect and preserve those messages, believing they could collect them from the defendants’ network.

Nonetheless, Judge Johnston stated: “This Court does not believe that any of the former defense counsel intentionally destroyed, withheld, or hid ESI. The Court is not as confident about the innocence of Duke’s actions and inactions…There is no doubt documents were spoliated and not timely produced. Those events occurred as a result of the actions and inactions of both Duke and the former defense counsel. There is much blame to be shared by both.”

But he also added: “As to Defendants, which essentially means Duke, he repeatedly told the former defense counsel that all ESI was on the four computer hard drives and that they ‘had all the data’ and ‘had everything,’ which was false—and he knew it was false…And he did absolutely nothing to educate them otherwise, even when it was abundantly apparent that the former defense counsel were under a distinct misunderstanding. Duke failed to reasonably search for and produce ESI even after at least one court order specifically requiring the production of ESI…Although some of his testimony was credible and reasonable, on the key issues in this case, he was not a credible witness…That finding is bolstered by the clear examples of not only mistaken prior sworn testimony, but patently obvious false testimony.”

Noting that “several specific rules address the actions”, Judge Johnston identified the following rules as bases for the plaintiff’s request for sanctions:

  • Rule 26(g)
  • Rule 37(a)
  • Rule 37(b)
  • Rule 37(c)
  • Rule 37(e)

Judge Johnston stated that “Plaintiff moved for sanctions under every provision of Rule 37, except for subsection (d)…Plaintiff correctly did not invoke Rule 37(d) because Defendants did not totally fail to respond to a discovery request…Instead, Plaintiff argues that the disclosures and discovery responses were incomplete, not provided after a reasonable inquiry, not timely supplemented, and that ESI was lost.”

This case took so many twists and turns that when the defendants moved for leave to amend their counterclaim to remove their “defamation per se” claim against the plaintiff, the plaintiff actually objected, because it was intending to “file a brief longer than a CVS receipt to address” the spoliation of ESI.  Because the defendants’ motion was brought almost four years after the expiration of the amended pleading deadline, Judge Johnston denied that motion back in 2019.

This case is so unique, I can’t cover it all in one post!  My first ever cliffhanger case law post – in all my years of blogging!  Look for the conclusion tomorrow!  If you can’t wait, feel free to read the entire ruling via the link above.  But, be prepared – you might need a nap afterwards, or a Snickers bar!

So, what do you think?  Was counsel at fault here or should the fact that the defendant made false statements let counsel off the hook?  Please share any comments you might have or if you’d like to know more about a particular topic.

Case opinion link courtesy of eDiscovery Assistant, an Affinity partner of eDiscovery Today.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by my employer, my partners or my clients. eDiscovery Today is made available 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 Today should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

8 comments

  1. Great job, Doug! I feel like I completed a year at law school, or a year in court with these people…and I haven’t seen the ruling yet!

    This is why I follow this site so closely…excellent summaries of interesting cases with valuable info.

    Aaron Taylor
    GreenLight Discovery LLC

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