Top 5 Ediscovery Case Summaries - December 2013: Virginia: Improper Preservation and Untimely Disclosures Lead to Heavy Sanctions

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Digital Vending Servs. Int’l, Inc. v. Univ. of Phoenix, Inc., 2013 WL 5533233 (E.D. Va. Oct. 3, 2013).

In this intellectual property case, the defendants filed a motion for sanctions due to the plaintiff’s alleged spoliation. The defendants argued that the plaintiff lost or destroyed a thumb drive with relevant ESI and failed to produce transcripts from interviews with the patent’s inventors. Addressing the “missing” thumb drive first, the court found that the plaintiffs were under a duty to preserve and that at least one “unique” and potentially relevant email was not produced. However, because the defendants did not substantiate claims that relevant evidence was contained on the thumb drive and failed to show that the plaintiff acted culpably, the court refused to presume relevancy under Victor Stanley and ultimately denied spoliation sanctions. Turning to the interview transcripts, the court noted that the defendants would have had access to these documents four years earlier—rather than several months after discovery had closed—if the plaintiff had properly preserved its information.. The court also found that the plaintiff had worked to subvert a subpoena, and therefore could not claim timely supplementation to their disclosure. Citing Fourth Circuit precedent, which outlined a test balancing the difficulty and surprise late disclosures present against the proposed reasons for nondisclosure, the court granted the defendant’s motion for sanctions. The court thereby ordered that the plaintiff be disallowed to use the disclosed evidence, to pay all reasonable expenses on behalf of the defendants in reviewing the untimely disclosures, and that the judge instruct the jury of the party’s failure to disclose.