Litigation

District Court Declines to Order Incarceration for Defendant's Bad Faith Spoliation but Orders Monetary Sanction of $337,796.37

By K&L Gates

Victor Stanley, Inc. v. Creative Pipe, Inc. ("Victor Stanley II")

As previously summarized on this blog, defendant Mark Pappas, President of Creative Pipe, Inc., was ordered to 'be imprisoned for a period not to exceed two (2) years, unless and until he [paid] to Plaintiff the attorney's fees and costs that will be awarded…' as a sanction for willful, bad faith discovery violations which the Magistrate Judge ruled would be treated as contempt of the Court.  On defendants' appeal, the District Court Judge declined to adopt the Magistrate Judge's order regarding incarceration:

[T]he court does not find it appropriate to Order Defendant Pappas incarcerated for future possible failure to comply with his obligation to make payment of an amount to be determined in the course of further proceedings.  Certainly, if Defendant Pappas should fail to comply with a specific payment order, the Court may issue an order requiring him to show cause why he should not be held in civil contempt for failure to comply wit that payment order.  Also, under appropriate circumstances, criminal contempt proceedings might be considered.

The court upheld the Magistrate Judge's order and recommendations in all other respects, however, and ordered defendants to pay plaintiff Victor Stanley, Inc. $337,796.37 as a sanction for their bad faith spoliation.

A copy of the District Court's Memorandum and Order Re: Appeal from Order of Magistrate Judge is available here.

A copy of the District Court's Order re: Spoliation Sanctions is available here.

A copy of the District Court's Order Requiring Defendants to Pay Sanctions is available here.

Full post as published by eDiscovery Law on November 30, 2010 (boomark / email).