In United States, ex rel., et al.  v. MAXXAM, Inc., et. al., 2009 WL 817264 (N.D. Cal Mar. 27, 2009), U.S. Magistrate Judge Joseph Spero denied plaintiffs' motion for discovery sanctions for defendants' alleged spoliation of evidence.

This case is predicated on a qui tam action filed under the False Claims Act related to allegedly false statements made in a sustained yield plan (SYP) to the California Department of Forestry and Fire Protection which caused the United States to contribute $250 million toward the purchase of the Headwaters Forest.  According to the complaint, defendant Hurwitz, a corporate raider, initiated the takeover by defendant Maxxam of the Pacific Lumber Company which included the Headwaters Forest. Pacific Lumber hired a consulting company VESTRA to perform certain computer modeling to create the SYP.  Plaintiffs sought discovery of certain electronically stored information, including the computer modeling software and data maintained by VESTRA.  However, VESTRA failed to preserve the information.

The court ruled that the duty to preserve arose, at the latest, in January 2006 when the State of California received a letter to preserve all evidence related to the Headwaters Forest deal.  The court further found that VESTRA was an agent of defendants and that defendants could be held liable for VESTRA's failure to preserve potentially relevant evidence. However, the court held that plaintiffs did not meet their burden to establish that any of the evidence existed in January 2006 and was destroyed or lost after that date.