Case Blurb: Nursing Home Pension Fund; Standards for the imposition of ‘lesser sanctions’

The parties debate whether plaintiffs must demonstrate prejudice before the Court can impose lesser sanctions. The Ninth Circuit has recognized that it has sent conflicting signals regarding whether prejudice must be shown in order for the sanction of dismissal to be appropriate. A court in this district recently clarified that the Ninth Circuit has required a showing of prejudice only when courts are acting under Federal Rule of Civil Procedure 37, which applies when a party disobeys a court order regarding discovery. When acting under its inherent authority, however, a district court need not consider prejudice to the party moving for sanctions…and prejudice has not been required when a party moves for lesser sanctions. Here, the Court is considering lesser sanctions in the form of an adverse inference, and even assuming prejudice is required, the Court notes that it would be quite difficult for plaintiffs to demonstrate how they were harmed by evidence to which they do not have access.

Nursing Home Pension Fund v. Oracle Corp., 2008 WL 4093497 at *5 (N.D.Cal. Sept. 2, 2008) (internal citations removed).

Case Blurb: Nursing Home Pension Fund; Process to Determine nature of sanctions a court should impose for destruction of evidence

In determining whether and what type of sanctions to issue, the Third Circuit has explained that courts should consider three factors: 1) “the degree of fault of the party who altered or destroyed the evidence,” 2) “the degree of prejudice suffered by the opposing party,” and 3) “whether there is a lesser sanction that will avoid substantial unfairness to the opposing party.” Schmid v. Milwaukee, 13 F.3d 76, 79 (3rd Cir.1994); see also Toste, 1996 WL 101189 at * 2 (“[A] party’s motive or degree of fault in destroying evidence is relevant to what sanction, if any, is imposed.”). The Ninth Circuit has also explained that “[b]efore imposing the ‘harsh sanction’ of dismissal,” courts should consider “(1) the public’s interest in expeditious resolution of litigation; (2) the court’s need to manage its dockets; (3) the risk of prejudice to the party seeking sanctions; (4) the public policy favoring disposition of cases on their merits; and (5) the availability of less drastic sanctions.” Leon, 464 F.3d at 958. However, district courts “need not make explicit findings regarding each of these factors.” Id.

Nursing Home Pension Fund v. Oracle Corp., 2008 WL 4093497 at *4 (N.D.Cal. Sept. 2, 2008)

Case Blurb: Nursing Home Pension Fund; Court lists ‘three types of sanctions’ available for destruction of evidence

Courts have developed three types of sanctions for destruction of evidence. First, a court can instruct the jury that it may infer that evidence made unavailable by a party was unfavorable to that party.
Second, a court can exclude witness testimony based on the spoliated evidence.
The third and harshest of sanctions is to dismiss the claim of the party responsible for the spoliation.

Nursing Home Pension Fund v. Oracle Corp., 2008 WL 4093497 at *4 (N.D.Cal. Sept. 2, 2008).

Case Blurb: Nursing Home Pension Fund; Court discusses ‘legal control’ of evidence

[Requesting Party] additionally allege[s] that defendants failed to preserve or destroyed documents created in preparation for a book entitled Softwar: An Intimate Portrait of Larry Ellison and Oracle (“Softwar” ). The book was written by Matthew Symonds, an author and editor with The Economist, who conducted at least 135 hours of recorded interviews between March 2001 and August 2002 with defendant Ellison. In October 2006, plaintiffs moved to compel defendants to produce the transcripts and audio files of these Softwar interviews. Defendants argued that the materials were not in their custody or control, and Symonds also asserted that the materials were his sole property. On January 2, 2007, Special Master Infante determined that although such materials were in the physical possession of Symonds, Ellison had legal control of them pursuant to a contract between Symonds and Ellison. Winkler Decl. ex. 194. As a result, Special Master Infante ordered defendants to produce copies of “any interview notes, transcripts or tape recordings relating to the book.” Id. at 4. Shortly thereafter, it was revealed that Symonds no longer had the materials in question, and it appears that Symonds may have discarded the laptop computer containing the transcripts and audio files after he learned of plaintiffs’ motion to compel.

Nursing Home Pension Fund v. Oracle Corp., 2008 WL 4093497 at *2 (N.D.Cal. Sept. 2, 2008).