Case Law: Rosenthal Collins Grp., LLC v. Trading Tech. Int’l Inc

Court Imposes Default Judgment, $1 Million Sanction and Attorney Fees for Egregious Discovery Misconduct

Rosenthal Collins Grp., LLC v. Trading Tech. Int’l Inc., 2011 WL 722467 (N.D. Ill. Feb. 23, 2011). In this patent litigation, the defendant sought monetary sanctions and a default judgment claiming significant and sustained discovery misconduct. After an admission that the plaintiff’s consultant and expert witness had fabricated critical evidence, the trial court granted the defendant’s motion for attorney fees and additional discovery. However, the plaintiff did not comply with the discovery order for another year, until after two additional court orders by two separate judges. Although the plaintiff adamantly denied the allegations that virtually every piece of media ordered to be produced was wiped, altered or destroyed, the court determined the defendant’s contentions were supported by forensic analysis. Finding that the last modified dates for critical evidence were backdated and otherwise modified, and that seven zip disks, three USB thumb drives and two computers had been wiped or reformatted in “bad faith and with willful disregard for the rules of discovery” and court orders, the court imposed a default judgment, dismissed the plaintiff’s complaint with prejudice and ordered $1,000,000 in sanctions for its egregious conduct. The court also ordered the plaintiff’s counsel to pay all costs and attorney fees for their part in the misconduct.

Commentary

Despite numerous cases that tell sordid tales of discovery misconduct and sanctions, parties continue to struggle with ediscovery issues or simply choose to ignore their obligations entirely. Neither situation is ideal. This case represents another grave sanction that is significant in scope in terms of impact both monetarily and on attorney reputation.

One important facet of this case was the computer forensic analysis that proved the plaintiff did indeed wipe, alter or destroy media important to the litigation (remember, delete does not mean delete!). Computer forensics can also be used to refute allegations of computer malfeasance and help establish facts to support elements of a claim. When enlisting the help of a computer forensic expert, make sure that you thoroughly vet the provider. In this case, the expert witness was also engaged in the misconduct and evidence fabrication. Proper experts can testify to what they did in capturing and analyzing the data, rendering opinions as to what the data tells them technically. In addition, the expert should be able to explain what data was found, how it was found and how he/she safeguarded against error, including chain-of-custody protocols and laboratory control systems.

The bottom line is, rarely (if ever) will you be able to escape without sanctions if you engage in discovery misconduct intentionally and in bad faith. As past cases have demonstrated, even after the close of trial your discovery failures may rise again and result in detrimental sanctions. Thus counsel and clients should engage in a cooperative, proportional and honest ediscovery process to avoid the negative consequences and impact of sanctions