In Electronic Funds Solutions, LLC, et. al.  v. Murphy, et. al., 2009 WL 1717383 (Ct. App., 4th Dist. Div. 3, Cal. June 19, 2009), the appellate court affirmed the trial court's terminating sanctions issued after defendants intentionally destroyed electronically stored information.

The appeal was predicated on the trial court's default judgment of more than $24 million entered in favor of plaintiffs after defendants' erased information contained on computer hard drives the trial court had ordered produced in discovery. Previously, the appellate court had determined the trial court erred because the compensatory damage award improperly exceeded the $50,000 prayed for in plaintiffs' complaint and the plaintiffs' incorrectly based the measure of damages on the value of defendants' company rather than lost profits.

On remand, the plaintiffs amended their complaint and the defendants answered.  Plaintiffs then filed a new motion for sanctions to again strike defendants' answer which the trial court granted anew and took defendants' default.  After prove-up, the court entered judgment of more than $67 million.  Defendant again appealed arguing that the trial court erred since there was no evidence of a continuing discovery violation to justify terminating sanctions.  The appellate court did not find an abuse of discretion holding that the trial court's previous discovery orders (e.g., produce relevant information) were still outstanding and the evidence demonstrated that defendants failed to comply.  Nonetheless, the appellate court struck the punitive damage award ($30 million) because plaintiffs failed to prove up defendants' net worth.