Case Law: Victor Stanley II... Again

Friday, January 28, 2011 by Thought Leadership Team

Court Issues Sanctions Amount, Modifies Judge Grimm’s Order in Victor Stanley II

Victor Stanley, Inc. v. Creative Pipe, Inc., Case 8:06-cv-02662-MJG (D. Md. Nov. 1, 2010). In this intellectual property litigation, the defendants appealed Magistrate Judge Grimm's order from September 9, 2010 holding the defendant President in contempt of court and ordering a two-year imprisonment unless and until attorney fees and costs were paid. Agreeing with Judge Grimm's recommendation, the court adopted the decision except as to the order for imprisonment. Declining to address the possibility of referral for criminal prosecution at this time, the court found it inappropriate to order incarceration for the possible future failure to comply with an as-yet-undetermined payment obligation. The court ordered the defendants to pay $337,796.37 by the end of the week, constituting the minimum amount of sanctions imposed, and referred to Judge Grimm the matter of determining any additional amount payable. In the event this payment was not made, the defendants would be required to appear in court to show cause why they should not be held in civil contempt for their failure to comply with the order, and additional failures may permit a warrant for the defendant President's arrest.


As discussed on December 10th on this blog, this order modified the opinion by Chief Magistrate Judge Paul Grimm. Following this decision, there was yet another opinion issued by Judge Grimm in what is becoming almost a “blink and you’ll miss it” series of important rulings. On January 24th, 2011, Judge Grimm awarded $1,049,850.04 in “attorney’s fees and costs associated with all discovery that would not have been und[der]taken but for Defendants’ spoliation, as well as the briefings and hearings regarding Plaintiff’s Motion for Sanctions.” As noted in this order, the defendants have already remitted payment of $337,796.37 which will be applied to the new balance owed. In addition, Judge Grimm disregarded the defendants’ attempts to narrow the range of time fees should be considered both before November 14, 2008 and after June 25, 2010 by finding that the “Defendants’ misconduct affected the entire discovery process since the commencement of this case.

The Victor Stanley, Inc. v. Creative Pipe, Inc., series of opinions contain important lessons for practitioners and others involved in the discovery process and should be considered a “must read”. Ediscovery education is a topic being stressed by several people across the industry. This topic would provide an interesting, compelling and practical course to law students and better prepare them to understand the complex world of ediscovery that only grows more challenging as technologies and other mediums (such as social networking sites) develop. There are a small handful of law schools around the country that have received the message and are taking steps to address this issue, and hopefully more follow suit sooner rather than later.