In 2006, Plaintiff Pandora filed suit against Defendant Chamilia for patent infringement of its jewelry design. Chamilia subsequently had communications with several jewelry retailers misrepresenting court orders regarding the case and casting Pandora in a negative light.

Discovery ensues with failure of email disclosures. “Throughout the discovery period, Chamilia failed to produce any new documents or information related to the communications at issue in this litigation…” Opinion at p. 4. Chamilia claims it no longer possesses the emails due to either the fact they changed servers twice or due to a policy of forcing users to delete or archive emails every ninety days.

Pandora sought sanctions for discovery abuses including the spoliation of evidence. Chamilia does not dispute that it failed to preserve the communications even though there was litigation pending at the time. The court found Chamilia failed to respond to discovery requests and failed to produce a deposition witness capable of providing information on noticed topics. The court found that Chamilia’s failure to adequately participate in discovery did warrant monetary sanctions under Rule 37.

Yet the court declined to impose an adverse inference instruction. Of the three prong test, the court found that Chamilia did have control over the evidence and an obligation to preserve it during the time it was destroyed and that the destruction was accomplished with gross negligence. But Pandora offered no proof that the lost materials would have produced favorable evidence of an injury such as a diverted customer or damage to its reputation in the marketplace. Thus failing on the last prong, the court declined to impose dispositive sanctions against Chamilia for spoliation of evidence.

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