Keithley v. Home Store.com, Inc., 2008 WL 3833384 (N.D. Cal. Aug. 12, 2008)
In this patent infringement case, plaintiffs sought terminating, evidentiary and monetary sanctions based upon defendants’ spoliation of evidence. Plaintiffs argued that defendants had destroyed three types of evidence: (1) source code; (2) early architectural, design and implementation documents; and (3) reports. Plaintiffs contended that the spoliation of these materials impacted plaintiffs’ ability to meet their burden of proving infringement.
The court held several hearings and received extensive briefing on the spoliation issue, which the court observed “became a moving target because of Defendants’ belated production of evidence that it had previously stated was either nonexistent or destroyed.” In the end, the magistrate judge imposed a monetary sanction of fees and costs associated with defendants’ discovery misconduct, and recommended that the district court give an adverse inference jury instruction to address the spoliation that occurred. Although the magistrate judge found that the discovery misconduct by defendants in the case was "among the most egregious" the court had seen, she declined to recommend terminating sanctions because there was no evidence that defendants engaged in deliberate spoliation, and because the extreme sanction of dismissal would go beyond what was necessary to cure the prejudice to plaintiffs.
Some examples of defendants’ “reckless and egregious discovery misconduct” include the following: