



In this class action fraud case, the plaintiffs asserted that the defendants failed in their duty to preserve electronic information relevant to impending litigation. The defendants, however, claimed that the information was preserved, but it was “unreadable,” and stated that it would cost a minimum of $10,000 to determine if the information was even searchable. The defendants also argued that the “unreadable” documents were not their responsibility to preserve and produce because the information was controlled by a third party. The court sided with the plaintiffs and determined that the defendants had not properly preserved the documents. Even though the documents were available, they were “less accessible” in their current format to the plaintiffs. The court held that the third party documents were under the defendants’ control because “a party is in control of any documents in the possession of a third party if that third party is contractually obligated to make them available.” Since they were under the defendants’ control, they had a duty to preserve the documents. The court concluded that the plaintiffs were prejudiced by the defendants’ failure to preserve the information, and imposed sanctions on the defendants. Finally, the court ordered the defendants to obtain all the relevant information from the documents at their own expense.

Topics:  Discovery, Electronically Stored Information, Spoliation



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