We are blogging on “Non-competes, Trade Secrets, Fiduciary Duties, and the Inevitable Disclosure Doctrine.” Mark Oberti has prepared a detailed paper on all of these issues, which can be found here.
The following post discusses how other courts view Rimkus Consulting Group, Inc. v. Cammarata, 688 F. Supp. 2d 598, 612–13 (S.D. Tex. 2010).
In Victor Stanley, Inc. v. Creative Pipe, Inc., plaintiffs moved for sanctions, presenting allegations that, during four years of discovery, defendants systematically deleted electronically stored information, and repeatedly misrepresented the completeness of their discovery production to the court. 269 F.R.D. 497, 499-500 (D. Md. 2010).
In its analysis, the Maryland district court cited Rimkus for many propositions relating to the spoliation of evidence allegations. The court reiterated the “highly instructive” Rimkus proposition of focusing on reasonable preservation and discovery conduct, and that a court, in so doing, should evaluate both what each party had done or not done, and whether such conduct was proportional to the specific case at hand and consistent with clearly established applicable standards. Id. at 523. The court also applied the three-element Rimkus standard for determining whether spoliation had occurred: 1) that there was a duty to preserve the information; 2) a culpable breach of that duty; and 3) resulting prejudice. Id. at 521.
With regard to the duty to preserve, the court concurred with Rimkus in stating such a duty exists only with regard to the party that controls the evidence, and the duty does not extend to evidence controlled by third parties. Id. at 523. In determining whether there was a culpable breach, the court applied factors consistent with Rimkus, including whether the spoliating party had knowledge of the litigation when it destroyed the evidence, and whether there was a failure to disclose electronic information relevant to the case. Id. at 530. With regard to determining prejudice, the court cited Rimkus: “prejudice can range along a continuum from an inability to prove claims or defenses to little or no impact on the presentation of proof.” Id. at 532.
The court, applying the Rimkus standards, found the plaintiff’s allegations were true, and that spoliation did occur. The court concurred with Rimkus that when spoliation occurs, sanctions against the spoliating party are an appropriate remedy. Id. at 521. In determining what sanctions to impose, the court again looked to Rimkus, stating that the extent of prejudice, if any, along with the degree of culpability must be considered, and went on to note that in the Fifth Circuit, per Rimkus, courts may not impose severe sanctions absent evidence of bad faith. Id. at 533.
Pursuant to its finding of spoliation, the Maryland district court imposed monetary sanctions equivalent to plaintiff’s attorney’s fees and costs, including fees and costs associated with all discovery that would not have been undertaken but for defendant spoliation. Id. at 541. Additionally, the court found a specific defendant’s failure to preserve and produce electronic information throughout the discovery process, in contravention with court orders, constituted contempt of court, and ordered defendant imprisoned for two years unless he paid to plaintiff the attorney’s fees and costs to which plaintiff was entitled. Id. at 500.