Electronic Discovery Law
Court Orders Dismissal as Sanction for Egregious Discovery Violations
Aliki Foods, LLC v. Otter Valley Foods, Inc., 726 F. Supp. 2d 159 (D. Conn. 2010)
Defendant moved to dismiss plaintiff’s claims as a sanction for discovery violations. Finding that plaintiff “acted willfully and in bad faith in repeatedly violating its discovery obligations and [the] Court’s orders”, including failing to timely respond to discovery despite a court order to do so and defying a court order to allow forensic examination of certain hard drives by giving its computers away without first searching them, the court granted defendant’s motion.
Plaintiff sued defendant for damages arising from two shipments of prepared food that "were tainted or possibly tainted with [Listeria]." In the course of discovery, defendant sought production of documents and ESI related to the claims. Although plaintiff initially appeared willing to participate in discovery, it soon became apparent that was not the case. As noted by the court, “[d]uring the course of this case, the Court held numerous telephonic conferences (far more than in the ordinary case)…in order to resolve discovery disputes.”
The details of the relevant activity are somewhat complicated, but were summarized succinctly by the court:
To summarize, Otter Valley first requested certain discovery-related materials of Aliki on September 19, 2008. When Aliki stonewalled Otter Valley for several months, the Court ordered, on June 9, 2009, that Aliki search for and produce the discovery-related material no later than the following week. Aliki claims that some of its efforts to comply with this Order were frustrated by the failure of a hard drive, which just happened to coincide with the entry of the Court's June 9, 2009 Order. Therefore, on February 12, 2010, the Court ordered Aliki to produce its computers, including the allegedly-failed hard drive, for a forensic examination, which Aliki was required to finance. The Court gave Aliki the opportunity to prove that it could not afford to pay for the forensic examination, but the Court was clear that even if Aliki could not afford to pay for the examination, Otter Valley was free to do so. Approximately two-and-one-half months later, Aliki and its principal, Mr. Pappas, entered into a Security Agreement with Mr. Pappas' new employer, S & F, whereby Aliki and Mr. Pappas voluntarily turned over to S & F the computers that the Court ordered to be examined, without making any effort whatsoever to have the forensic examination conducted beforehand. Moreover, as detailed above, and despite this Court's clear instructions to the contrary, Aliki has repeatedly chosen to submit highly-suspect documents to the Court (when it has submitted anything at all), relying on the unsworn hearsay statements of counsel to explain away multiple inconsistencies and omissions.
Taking up the question of sanctions, the court noted that dismissal with prejudice should be granted “only in extreme circumstances and then only when a court finds ‘willfulness, bad faith, or any fault’ by the non-compliant litigant.” The court also identified the four factors “that bear on the trial court’s exercise of discretion to dismiss under Rule 37”: “(1) the willfulness of the noncompliant party or the reason for non-compliance; (2) the efficacy of lesser sanctions; (3) the duration of the period of noncompliance, and (4) whether the noncompliant party has been warned of the consequences of ... noncompliance.” The court found that “every factor… favors dismissal of this case.”
First, the court found there was “no question … that [plaintiff] acted willfully and in bad faith in repeatedly violating its discovery obligations and this Court’s orders.” The court then identified numerous violations, concluding that among them, “the most egregious” was the decision to turn over plaintiff’s computers to a third party two and a half months after being ordered to produce them without any effort to examine them first. Second, the court noted the “extremely lengthy” duration of plaintiff’s non-compliance, capped by its decision to voluntarily give its computers to a third party. Third, the court found that plaintiff had been repeatedly warned of the risk of dismissal. Fourth, while noting that a finding of prejudice was unnecessary, the court nonetheless found that defendant had been prejudiced by plaintiff’s conduct. And finally, the court considered alternative sanctions, including monetary and evidentiary sanctions, and concluded that none were sufficient to “properly punish Aliki for its transgressions; deter other from attempting similar conduct in the future; compensate Otter Valley for the prejudice caused by Aliki; and not impact this Court’s ability to administer justice in the other cases before it.” Accordingly, defendant’s motion to dismiss was granted.
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