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What is the Proper Sanction After Massive Document and Data Destruction?

Posted on October 10th, 2012

Our last blog discussed the recently handed-down district court case Hynix Semiconductor Inc. v. Ranbus, Inc. Case No. C-00-20905 (NDCA Sept. 21, 2012), remanded by the appeals court pursuant to Hynix Semiconductor Inc. v. Rambus, 645 F. 3d 1336 (Fed. Cir. 2011)(“Hynix II”). Upon reconsideration, the district court found that Rambus willfully destroyed evidence after litigation was foreseeable and that such actions unduly prejudiced the opposing party, Hynix. But what sanction would be appropriate?

The court noted that dismissal is a harsh sanction to be imposed only in egregious situations where the destruction of evidence was deliberate and with the intent to undermine the judicial proceedings—but the presence of bad faith and prejudice alone is not enough. Sanctions besides dismissal include but are not limited to an adverse jury instruction, excluding witness testimony offered by the party who destroyed evidence and monetary sanctions. To determine the appropriate sanction, the court considered:

  • The degree of fault of the party who destroyed evidence;
  • The degree of prejudice suffered by the opposing party; and
  • Whether a lesser sanction would avoid undue prejudice but still deter future conduct.

The court found that Rambus had a high degree of fault and that Hynix was significantly prejudiced by the actions. However, when considering whether a lesser sanction would be appropriate, the court noted that Rambus’ saving grace was that the evidence destruction, while willful, did not involve intentional destruction of particularly damaging documents.

The unique circumstance presented to the district court in deciding the appropriate sanction in this case was the fact that the merits of the case had been fully litigated —Rambus’ patents were valid, but the patents must be available to Hynix on a reasonable, non-discriminatory basis; accordingly, adverse jury instructions or witness suppressions would be moot.  The approach ultimately reached by the district court was to use its equitable powers to strike from the record evidence supporting royalty prices in excess of a reasonable, non-discriminatory amounts. The court then ordered the parties to submit briefs on reasonable royalty rates for a further hearing and decision.

Plaintiffs’ counsel should be especially cognizant of potential evidence spoliation issues particularly in cases involving large volumes of data, from multiple custodians and databases, and from broad time periods.   To learn more about how ILS can assist with evaluating evidence spoliation issues in connection with our plaintiff eDiscovery services, please call us at 888-313-4457.

ILS – Plaintiff Electronic Discovery Firm

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