Class Action Plaintiffs Granted Spoliation Award After Obtaining $41 Million Judgment
In Rodman v. Safeway, Inc., Case No. 11-cv-03003-JST (N.D.Cal. October 6, 2016), the grocery store Safeway was sued in a class action lawsuit by customers who were being charged higher prices online than in stores. Some of the class action plaintiffs had already been granted partial summary judgment; the factual question remaining was whether class members who registered before 2006 for the online services assented to the same contract terms as those who registered after 2006.
Plaintiffs sought documents that referenced the “Special Terms” of the online services contracts for the 2001-2005 time period. Defendant had initially claimed that they were not able to locate these documents. Then, just days before trial and 5 months after discovery closed, Defendant produced 10 highly relevant documents. The documents were found on a “legacy” computer held by the Director of Marketing, who was reviewing the drive in preparation for trial.
Based on those documents, the trial date was extended, additional depositions were taken, and the parties stipulated the prior Summary Judgment order was equally applicable to the pre-2006 class members. The court entered a judgment of over $41 million to Plaintiffs. Defendants appealed the judgment to the Ninth Circuit, which appeal is currently pending.
Plaintiffs then filed a motion for discovery sanctions under FRCP 26(g), for making false and inaccurate statements in response to interrogatories concerning the non-existence of documents. Plaintiffs alleged that a proper search was not made for the pre-2006 documents. Defendant contented that it had made a reasonable search for these documents. The court disagreed with the Defendant’s position, making the following three findings:
- Defendant’s counsel failed to properly supervise (oversee and guide) the searching;
- No evidence was presented that the Director of Marketing had any experience conducting large volume computer searches, and none of Defendant’s IT or other staff familiar with modern ediscovery methods assisted him in the searching; and,
- This was not an instance of trying to find a needle in a haystack—the documents were in electronic file folders that had relevant search names.
Based upon these findings, the court ruled FRCP 26(g) sanctions to be appropriate. FRCP 26(g) allows for reasonable expenses, including attorney’s fees, caused by the violation be awarded to the injured party. The court entered a sanction of $688,646 against Safeway. The court further noted that if the Appeals Court remands the case for trial, the class action Plaintiffs may renew their request for a negative inference jury instruction.