In Green v. Blitz U.S.A., Inc., the United States District Court for the Eastern District of Texas ordered civil contempt sanctions in the amount of $250,000.00 against the Defendant and ordered the Defendant to provide all Plaintiffs currently litigating against the Defendant, and any future Plaintiffs, with a copy of the memorandum summarizing discovery failures for failing to use reasonable search efforts and failing to prevent the spoliation of employee emails.  2011 WL 806011 (E.D.Tex. 2011).

The Plaintiff sued Blitz for damages caused by failing to install a flame arrester on gas cans which caused damage to the Plaintiff's husband.  At trial, the Defense primarily argued that a flame arrester would have been ineffective and the jury returned a verdict against the Plaintiff.  Pursuant to a high-low settlement agreement executed before the verdict, the Plaintiff received a "low" settlement figure and the case was closed.  However, Plaintiff's counsel later represented a second unrelated Plaintiff against Blitz and learned of documents disclosed in the second case which were not disclosed in the first.  At a show cause hearing, the Court found that Blitz charged a single individual with the sole responsibility of searching and collecting relevant documents.  The employees practice was to meet custodians face-to-face to discuss the issues and left custodians to cull for and produce relevant documents.  The employee did not issue litigation holds, did not perform keyword searches and did not speak with his information technology department about retrieval methods.  Additionally, the company routinely issued emails to employees encouraging them to delete old emails, often giving instructions on how to go into additional folders to achieve a permanent deletion, without any mention of litigation holds.  As a result, key documents were never produced which revealed that Blitz wanted to install flame arresters, discussed installing the same and felt the arrester would lower liability.

The Court regarded Blitz's discovery efforts as a willful violation of the Court's discovery orders, noting at length that "[a]ny competent search effort would have located" the undisclosed documents as one email had the words "flame arrester" in the subject line.  The Court likewise concluded that the Plaintiff was highly prejudiced by Blitz's failures as being able to present these documents to a jury would have "undoubtedly helped the plaintiff's liability argument.  In reviewing the propriety of sanctions, the Court noted Blitz's lack of appreciation for the discovery process by failing to perform any keyword searches and appointing an employee who was self-described as "computer literate-illiterate as they get" to oversee discovery efforts despite numerous pending cases.  Accordingly, the Court sanctioned Blitz in the form of monetary sanctions totaling $250,000.00, which was in addition to settlement funds already paid.  Moreover, the Court ordered Blitz to furnish a copy of the memorandum discussing the failures and imposing sanctions (i) to every Plaintiff with a case pending against Blitz in the prior two years; and (ii) with every Plaintiff initiating a suit against Blitz in the next five years. 

For a copy of the opinion, click here.