Ride the Lightning

Judge Awards Over $2.5 Million for Discovery Missteps

November 16, 2022

JDSupra posted on October 24 a story containing a striking first line of Judge Iain D. Johnston’s fee splitting order: “If Dante were a judge, he would have placed fee litigation as an inner circle of judicial hell.”

I suspect a lot of litigators would agree.

The order awarded over $2.5 million as a result of discovery sanctions imposed against Defendant and its former counsel in DR Distributors LLC v. 21 Century Smoking, Inc, v. CB Distributors, Inc. and Carlos Bengos, 2021 WL 185082, No. 12 CV 50324 (1/19/2021). The $2,526,744.76 sanction will be split evenly between Defendant and its two former attorneys.

DR Distributors began in 2012 as a trademark infringement action between two electronic cigarette companies. Plaintiff DR Distributors, LLC, which owns the trademark for “21st Century Smoke,” accused Defendant 21 Century Smoking, Inc. and owner Brent Duke of committing trademark infringement under the Lanham Act. The case is still unresolved. However, the defendants are at a clear disadvantage because self-inflicted errors during discovery.

Judge Johnston took Defendant and its former counsel to task for a wide range of eDiscovery errors. Counsel was admonished for orally instructing Defendant to preserve relevant webmail and chat messages rather than issuing a written litigation hold. Counsel failed to direct Defendant to disable the automated deletion of chats and emails. Defendant erroneously represented, and Counsel failed to verify, that all relevant email could be found on Defendant’s company servers, despite the existence of web-based email and chats that were stored only in the cloud. Defendant was also permitted to self-collect relevant emails without proper counsel guidance or supervision.

All that boggles the mind – and these basic discovery failures resulted in spoliation and untimely production, setting the stage for significant sanctions.

In addition to the eventual monetary award, Defendants were required to produce all responsive ESI, barred from using any evidence that wasn’t provided to Plaintiffs in a timely manner, and prevented from using certain expert testimony. The jury is to be provided detailed instructions as to the nature and extent of the spoliation. Former defense counsel was required to complete continuing legal education on ESI and certify that they read Judge Johnston’s entire 256-page order.

Do you think the judge was thoroughly agitated?

In his 2021 order, Judge Johnston explained “…through a series of missteps, misdeeds, and misrepresentations, Defendants and the former defense counsel find themselves looking down the barrel of a sanctions motion Howitzer.”

I must admit that the judge’s colorful language does seem warranted here. This is an excellent example of what not to do – which will surely become a part of our e-discovery CLEs!

Sharon D. Nelson, Esq., President, Sensei Enterprises, Inc.
3975 University Drive, Suite 225, Fairfax, VA 22030
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