U.S. District Judge Imposes $10,000 Fine on Party as Sanction for Failure to Implement Litigation Hold in Passlogix v. 2FA Technology, LLC.

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A recent ruling out of the Southern District of New York illustrates that failure to timely implement a litigation hold can have serious consequences, including substantial fines.

The Ruling

The Honorable Peter K. Leisure, U.S. District Judge for the Southern District of New York, recently addressed a plaintiff’s spoliation and fraud on the court claims in an April 27, 2010 ruling and fined the defendant $10,000 as a sanction for spoliation of evidence.1 During the course of a lawsuit, the plaintiff accused one of the principals of the defendant of committing fraud on the court by sending the plaintiff anonymous emails in order to procure a better settlement offer from the plaintiff, cause the plaintiff commercial harm, and obtain third-party discovery. The defendant’s principal claimed that his IP address had been “spoofed;” in other words, that former employees of the plaintiff had doctored their IP addresses to appear to be that of the defendant’s principal and sent the anonymous emails to the plaintiff.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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