Victor Stanley, Inc. v. Creative Pipe, Inc. A Lesson in the Consequences of Spoliation of Evidence

Dec 15, 2010   

A recent series of decisions in the case Victor Stanley, Inc. v. Creative Pipe, Inc. in the U.S. District Court for the District of Maryland, demonstrate the serious consequences that can arise when parties engage in the intentional spoliation of evidence. The decisions stem from numerous incidents of spoliation of evidence by the defendant over a four year period in a case involving alleged violations of copyrights and patents and unfair competition. The decisions provide a lesson not only in the severity of the possible sanctions associated with severe spoliation of evidence but also provide a chart which breaks down important spoliation decisions at the district and circuit court levels.

In the initial ruling on the plaintiffs motion for sanctions, U.S. Magistrate Judge Paul Grimm concluded that the spoliation of evidence was a direct result of the defendants willful permanent destruction of electronically stored information. As a result of the defendants actions the Court granted the plaintiff partial default judgment. Additionally, the court concluded that because the defendant acted willfully in destroying the evidence, the defendant would be held in civil contempt. The court ordered the individual defendant who destroyed the evidence be imprisoned for a period not to exceed two years unless and until he paid the plaintiffs attorney fees and costs related to the spoliation. Additional sanctions included all attorney fees and costs associated with the plaintiffs motion for sanctions. A copy of the courts September 9, 2010 Order can be read here.

Following this ruling, the defendant appealed. On appeal, the District Court modified the sanctions to remove the possible jail sentence. U.S. District Court Judge Marvin Garbis, writing for the court, found that jail was not an appropriate sanction “for a future possible failure to comply” with payment. Additionally, the court ordered the defendants to pay an “agreed minimum amount” of $337,796.36 to the plaintiff within four days of the order.

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