E.E.O.C. v. Fry’s Elecs. Inc., No. C10-1562RSL (W.D. Wash. July 3, 2012)
In this case, the court twice imposed serious sanctions for Defendant’s discovery violations and ordered the appointment of a Special Master who was to be granted broad access to Defendant’s records and personnel to “review defendant’s document retention, search, and disclosure activities” and to “report to the court regarding any as-of-yet undiscovered discovery violations.”
In this sexual harassment litigation, the court previously imposed sanctions for Defendant’s spoliation of evidence, including computer hard drives from the store at which Plaintiffs had worked. In that instance, the court “believed that the prejudicial effect of the spoliation” could be counteracted by “(a) instructing the jury that one of the justifications for firing Mr. Lam [a plaintiff] was pretextual and (b) allowing plaintiff considerable leeway in arguing what information might have been gleaned from the computer hard drives had they not been destroyed by defendant.” Following entry of that order, additional discovery violations were uncovered, including that the accused harasser had previously been the subject of a sexual harassment complaint—a fact that the defendant had wrongfully attempted to withhold by “raising unfounded objections and ‘negotiating’ a narrowing of the discovery requests.” Moreover, the court indicated that this obstruction had resulted in prejudice to the plaintiffs, including significant cost. The court also noted Defendant’s unilateral redaction of discovery documents; production of hundreds of pages of documents for the apparent purpose of drawing plaintiffs’ attention away from other issues, including preparation for arbitration; concealment of additional evidence, including notes taken during the relevant investigation of one of the plaintiff’s claims; and delayed revelation that the investigator in this matter had himself been accused of sexual harassment—all indications of “the very real possibility that the integrity of the judicial process ha[d] been compromised.” The court further indicated its belief, based on the behavior of Defendant during discovery, that “additional surprises and revelations may yet be in store.”
Accordingly, citing several sources of authority for imposing sanctions, including Rule 37, Section 1927 of Title 28, and its own inherent authority, the court found that “defendant has interposed objections to discovery requests and filed at least one motion for improper purposes” and that there was “no good faith explanation for the failure to disclose the 2001 sexual harassment complaint or for the series of late disclosures regarding facts, issues and the identity of witnesses many of which go to the heart of plaintiffs’ claims” and turned to the question of whether to strike Defendant’s answer and enter default judgment. Despite declaring that Defendant had “deliberately engaged in deceptive practices that undermine the integrity and orderly administration of these proceedings” and finding that at least three of the five relevant factors favored dismissal, the court nonetheless ordered less drastic, although still very serious, sanctions. Specifically, the court struck several of Defendant’s affirmative defenses, ordered that documents and testimony related to other complaints of harassment were presumptively admissible at trial, and ordered Defendant to pay $100,000 in monetary sanctions: $25,000 to each of three plaintiffs including the EEOC and $25,000 to the Clerk of Court.
The court also stayed the action pending “verification/certification of all previous discovery requests and appointment of a Special Master to review Defendant’s document retention, search, and disclosure activities throughout the course of this litigation.” The authority provided to the Special Master in furtherance of his investigation was quite broad, and included significant access to Defendant’s records and personnel:
The parties shall, within twenty-eight days of the date of this Order, confer and submit the resumes of three qualified individuals who are able and willing to serve as a Special Master in this matter. The court will appoint one of the nominated individuals as a Special Master who will be tasked with (i) meeting with the undersigned, (ii) reviewing any and all of the defendant’s records as they are kept in the normal course of business at the Home Office and the Renton store, plaintiffs’ various discovery requests, and the timing and scope of defendant’s responses and subsequent disclosures, and (iii) preparing a report for the court. The Special Master shall be subject to the Protective Order entered in this matter. Defendant shall give the Special Master access to any and all employees, agents, managers, and officers, as well as former employees, agents, managers and officers to the greatest extent possible. Defendant shall cooperate in all respects with the Special Master’s investigation. The Special Master shall have two months in which to conduct the above-described review and report to the Court regarding any as-of-yet undiscovered discovery violations. All costs and expenses incurred by the Special Master as well as a reasonable hourly rate shall be paid by defendant.
A copy of the court’s order is available here.