Fourth District, Division 3 Reverses Sanctions, Ordering Reimbursement of Trial And Additional Discovery Costs.
As indicated on prior posts on e-discovery, litigators must be attuned to both pretrial, trial, and post-appeal sanctions that can be awarded against parties failing to produce computer embedded information. Here is one where the offending party got a break, but not much of one—especially if we are right about the fees and costs that must be paid for a 10 week-plus trial and additional discovery ordered as the proper sanctions.
The case is Jneid v. TriPole Corp., Case No. G039500 (4th Dist., Div. 3 Dec. 17, 2009) (unpublished), emanating out of our own local Fourth District, Division 3.
There, purchaser of a computer firm’s assets was hit with a multi-million jury verdict in favor of the asset seller and certain employees for not making certain payments as a result of the buy-out. Ten weeks into the jury trial, seller produced 17,000 pages of computer embedded documents that were within the ambit of prior discovery activities. Purchaser was granted its request for issue and evidentiary sanctions by which seller could not use the tardily produced documents at trial, buyer could use them without any authentication, and seller was precluded from arguing that buy-out milestones were not reached—sanctions that the appellate court later characterized as akin to a directed verdict against seller.
On appeal, the Fourth District, Division 3, in a 3-0 decision authored by Justice Rylaarsdam, reversed.
The appellate panel found that the ultimate disclosure of the documents militated against the “directed verdict” sanction, with even the parties agreeing that payment of the costs of the completed trial (on a mistrial basis) plus costs associated with additional discovery resulting from the late production were less drastic sanctions that accomplished their punitive goals. We bloggers would surmise that this result might get the case settled, because assessment of even these less draconian sanctions—costs for a long jury trial and additional discovery—is going to be a heavy financial burden for the selling parties to meet.