Light is shed on a new area of law in a decision out of East Texas. Electronic discovery is still a very new area in the litigation business. A federal judge in the Eastern District of Texas imposed sanctions one year after a case settled. The judge found that the defendant failed to impose a hold on electronic evidence and prevent systemic destruction of such electronic documents. See ABA Litigation news report. In Green v. Blitz USA, Inc., the plaintiff learned through another plaintiff that Blitz failed to save from destruction key documents.
The plaintiff had claimed that not installing a flame arrester made a gas can more dangerous. Blitz defended on the grounds that flame arresters were not effective. In a related case, the court found that Blitz had failed to produce certain documents and had allowed others to be destroyed. So, the district judge in Green found that Blitz made little, if any, effort to preserve the documents concerning the flame arrester.
The judge in Green ordered Blitz to pay $250,000 in civil contempt sanctions; file a copy of the order in every lawsuit still pending or pending within the last two years; and file a copy of the order in every lawsuit for the next five years. The court also imposed a $500,000 sanction which would be tolled if Blitz could certify that it had complied with this order. See decision.
The court is obviously trying to send a message regarding litigation holds. The party with the records must reach an agreement early on regarding the parameters of such a hold and take steps to prevent the destruction of such records.