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Florida Court Imposes Severe Sanctions Upon Party for Discovery Abuses Involving Non-Production of E-Mails from Backup Tapes.

Article Excerpt
A Florida state court recently imposed severe sanctions, including a partial default judgment, against a defendant for, inter alia, failing to comply with a court order requiring defendant to search backup tapes for relevant e-mails and produce such e-mails. The drastic sanctions imposed in this case, along with the growing list of sanctions imposed in other cases for electronic discovery failures, highlight the importance of taking electronic discovery obligations very seriously.

On March 23, 2005, a Florida state court imposed severe sanctions on a defendant for, inter alia, failing to search for and produce emails from backup tapes in violation of a court order. See Coleman (Parent) Holdings Inc. v. Morgan Stanley, Inc., No. CA 03-5045 AI, 2005 WL 674885 (Fla. Cir. Ct. Mar. 23, 2005). Those sanctions included, but were not limited to, the entry of a partial default judgment against defendant pursuant to which the jury will be instructed that numerous factual allegations in the complaint, including that the defendant participated in the "massive fraud" that allegedly caused plaintiff's damages and helped conceal it, will be "deemed established for all purposes" in that action. Coleman, 2005 WL 674885, at *9. Moreover, the jury will be instructed that it may consider the defendant's failure to comply with the court order "in determining whether [defendant] sought to conceal its offensive conduct" for purposes of awarding punitive damages. Id. at *10.

The Court Order Regarding Backup Tapes

In late 1997 and early 1998, the defendant served as financial advisor to Sunbeam Corporation (Sunbeam) in connection with Sunbeam's acquisition of plaintiff's interest in the Coleman Company, Inc. (Coleman), and lead underwriter for a $750,000,000 debenture offering that Sunbeam used to finance the cash portion of the acquisition. In February 1999, defendant instructed its investment bankers to preserve paper documents in their...