In Preferred Care Partners Holding Corp., et. al. v. Humana, Inc., 2009 WL 982460 (S.D. Fla. Apr. 9, 2009), U.S. Magistrate Judge Andrea Simonton granted plaintiffs' motion for spoliation sanctions in connection with defendant's deletion of more than 10,000 pages of unproduced electronic documents at the direction of counsel.

Plaintiffs brought this action against defendant to recover damages that it alleged resulted from unsuccessful negotiations to sell plaintiffs' companies (collectively "PCP") to defendant.  The parties began negotiation for the sale and, as part of the due diligence process, PCP permitted defendant to view its sensitive proprietary information under the terms of a confidentiality agreement.  After negotiations failed, PCP alleged defendant breached the confidentiality agreement and used the due diligence information to compete with PCP.

Approximately two months after the close of discovery and one month prior to trial, defendant's employees discovered 10,000 pages of due diligence documents on their computers that should have been destroyed pursuant to the confidentiality agreement.  Defendant's lawyers instructed the employees to delete the electronic versions and print copies of the documents. The hard copies were then belatedly sent to plaintiffs who sought sanctions for both the alleged "document dump" and for defendant's destruction of electronic documents.

The court granted plaintiffs' motion, in part, ruling that defendant's counsel exercised bad judgment and breached defendant's discovery obligation to preserve evidence.  The court further found that defendant's discovery conduct left the impression that there may have been additional documents that it overlooked and failed to turn over.  The court ruled that plaintiffs were permitted to conduct a forensic examination of defendant's backup system for the purpose of verifying that the backup system maintains complete copies of all emails such that any purged emails would remain on the system, and that all emails were produced.  Both plaintiffs' and defendant's counsel were ordered to coordinate for the purpose of retrieving any information, including metadata, attachments or documents in their native format which were deleted pursuant to defendant's counsel's instructions.

In addition to permitting plaintiffs' additional discovery pertaining to the new information raised by defendant's supplemental production of documents, the court awarded monetary sanctions as a consequence of defendant's grossly negligent discovery conduct, including reasonable attorney's fees associated with plaintiffs' supplemental discovery and the cost and attorney's fees incurred in connection with its sanctions motion.