A federal magistrate judge in Maryland has recommended the entry of a default judgment against a defendant that failed to preserve or intentionally destroyed evidence in violation of court orders and has further ordered the incarceration of defendant’s president “unless and until he pays to Plaintiff the attorney’s fees and costs that will be awarded to Plaintiff as the prevailing party.” Victor Stanley, Inc. v. Creative Pipe, Inc., No. 06-2662 (U.S. Dist. Ct., D. Md., decided September 9, 2010). The magistrate was inclined to refer the case to a U.S. attorney for criminal prosecution so that a fine could be imposed to reimburse the government for the hundreds of hours of court time the case has consumed, but did not do so given its four-year history and the availability of “appropriately severe sanctions as a form of civil contempt.”
The case involved alleged copyright and patent violations. The plaintiff claimed that someone at the defendant’s company downloaded design drawings and specifications from the plaintiff’s Website and that those drawings were used to compete with the plaintiff. According to the magistrate, defendant’s president Mark Pappas embarked on a zealous attempt to prevent the discovery of electronically stored information (ESI) discovery against him, repeatedly deleted countless ESI, had confederates assist him in these efforts, and flouted court preservation and production orders. Because plaintiff was able to document the destruction and “ascertain the relevance of many deleted files,” the magistrate referred to the matter as “the case of the ‘gang that couldn’t spoliate straight.’” The magistrate’s lengthy discussion of the events leading to the recommendation and order includes details tending to show what he characterized as the willful, bad faith and intentional nature of Pappas’s actions.
The magistrate also explains at some length why lesser sanctions would be inappropriate and why he recommended dismissing the plaintiff’s copyright claim only. According to the magistrate, the plaintiff had not made the requisite showing that the destroyed evidence would be relevant to proving its unfair competition, false advertising and patent violations claims.