In Reino de Espana v. The American Bureau of Shipping, Inc., 2008 U.S. Dist. LEXIS 62865 (S.D.N.Y. Aug. 18, 2008), the District Court overruled Spain’s objections to sanctions against Spain ordered by Magistrate Judge Ronald Ellis for discovery abuses, including attorneys’ fees and costs incurred by defendants in making their motions to compel.

Defendants sought production of Spain's electronic documents beginning with its first discovery request, which was served in January 2004.  After Spain failed to produce responsive ESI, defendants moved to compel its production. After considering the moving papers, responses and respective arguments, Judge Ellis found that Spain's failure to produce ESI was sanctionable and determined that Spain's contention that certain ESI did not exist lacked merit. Judge Ellis further found that Defendants' ESI request was reasonable and restrained, and that Spain had failed to preserve ESI, specifically, by failing to institute a timely litigation hold.   

In its objections to Judge Ellis' order, Spain argued that the judge denied Spain an opportunity to prepare for and present evidence on the preservation issue. In addition, Spain contended that the Judge Ellis did not spend adequate time exploring the merits of its arguments. 

The District court disagreed on both counts.  First, the court noted that Spain had ample opportunity to prepare and was given multiple chances to present evidence and indeed presented evidence regarding the preservation issue.  Second, the court rejected Spain's contention that ruling on the preservation issue required "a systematic, staged inquiry" analogous to that performed in the Zubulake v. UBS Warburg opinions.  The District Court disagreed holding that Judge Ellis spent considerable time on the issue and conducted a thorough analysis of Spain's search for ESI and found that "[Spain's] failure to conduct a timely and effective search for electronic discovery records undermines Spain's position [that it has produced all discovery records from the casualty period] and indicates that evidence related to [this litigation] was likely lost. The District Court further agreed with Judge Ellis' award of sanctions and noted that Judge Ellis denied defendants' other sanctions requests (which included dismissal of the action and adverse inference instructions).