District of Kansas Judge Accepts Ruling of Sanctions for Failure to Comply with Discovery Orders

27 Apr 2016

Prior to the filing of AKH Company, Inc. v. Universal Underwriters Insurance Co., Case No. 13-2003 (D. Kansas, Apr. 11, 2016), Plaintiff was involved in a trademark infringement case in which Defendant defended Plaintiff and settled the case under a reservation of rights. During the underlying trademark case, Plaintiff retained a document management company to handle the voluminous discovery obligations. Plaintiff and Defendant had agreed to share the costs of the document management service, as the documents pertained to both parties. The document management company ended up withholding certain documents from Plaintiff, as it claimed Plaintiff owed it money.

During discovery in this case, Defendant sought certain documents that Plaintiff claimed were no longer in its control, as they were in control of the document management company; ultimately, Plaintiff agreed to produce an index of such documents. Several months later, Defendant filed a Motion to Compel the index as well as an updated privilege log. Plaintiff did not respond, and the court granted the Motion. Several months again thereafter, Plaintiff still had not produced anything, so Defendant filed a Motion to Compel and for Sanctions. Plaintiff argued that its ESI search was voluminous and that it was still locked out of access to the documents held by the document management company; however, the magistrate judge granted the Motion to Compel and again order Plaintiff to produce the index and privilege log, reserving ruling on the sanctions issue. Eventually, Plaintiff produced two indices as well as a privilege log, but the magistrate judge found them lacking and granted sanctions in favor of Defendant. He ruled that Plaintiff had control over whether the third party produced the documents and awarded attorneys’ fees, as well as an adverse inference instruction regarding Plaintiff’s willful failure to produce. He also ordered that privilege was waived as to any documents not identified in the privilege logs. Plaintiff objected to the magistrate judge’s ruling.

The district judge upheld the ruling, holding that the magistrate judge did not clearly err in finding that Plaintiff had control over the documents held by the third party, as Plaintiff had voluntarily turned the documents over to the third party and then chosen not to pay its bills. The district judge entered an order adopting the magistrate judge’s ruling.

ILS – Plaintiff ESI Discovery Experts