Maryland: Judge OKs $1.05 million sanction in e-discovery saga

By Pat Murphy

The Daily Record Newswire

BOSTON, MA -- A federal judge has approved a $1.05 million sanction in a bitter e-discovery battle that still has the threat of jail hanging over the head of a company president accused of destroying electronic evidence.

Saying it was the "single most egregious example of spoliation" in his experience, Chief U.S. Magistrate Judge Paul Grimm last September ordered sanctions against Creative Pipe, Inc., and its president, Mark Pappas.

In 2006, Victor Stanley, Inc. sued Creative Pipe for copyright infringement in Maryland federal court. The lawsuit sparked a four-year discovery battle.

Grimm found that, during the course of discovery, Pappas and Creative Pipe "set out to delete, destroy, or hide" thousands of files containing highly relevant electronically stored information pertaining to Victor Stanley's lawsuit.

Accordingly, the magistrate judge ordered Pappas to serve two years in prison for contempt unless and until he pays Victor Stanley's attorney fees and costs.

That order was largely approved by U.S. District Judge Marvin Garbis in November, though he did reverse the order that Pappas go to jail at that point.

This month, Garbis entered a seven-page order approving the magistrate judge's recommendation that Creative Pipe and Pappas pay $1.05 million in attorney fees and costs.

"The court agrees with the magistrate judge's decision and finds that the recommended award is only for those fees and costs reasonably flowing from the abuse of the discovery process. ...

"[The] plaintiff provided sufficient detail to support its claim, and defendants have not met their burden to demonstrate that the fees and expenses outside their suggested time period are unrelated to the spoliation," Garbis wrote.

Under the terms of the order, Creative Pipe and Pappas have until July 15 to pay Victor Stanley $571,000 -- the balance due from the total $1.05 million sanction award. As Garbis has made clear in previous orders, Pappas could still be jailed for contempt should he attempt to evade the sanction.

Published: Mon, Jul 4, 2011