In Forest Labs, Inc. et. al. v. Caraco Pharmaceutical Labs, Ltd., et. al., 2009 U.S. Dist. LEXIS 31555 (ED. Mich. Apr. 14, 2009), Senior U.S. District Judge Bernard Friedman granted defendants' motion for a hearing on spoliation of evidence finding plaintiffs failed to abide by their duty to preserve electronic backup tapes containing information related to plaintiffs' drugs.

Defendants allege that plaintiffs intentionally or recklessly destroyed or rendered unsearchable certain backup tapes containing potentially relevant internal email correspondence.  Plaintiffs denied the spoliation allegations and maintained that they "preserved e-mails on [their] active file server and continued [their] standard operating procedures in good faith." To determine whether a spoliation hearing was appropriate, the court first determined the date that plaintiffs should have been on notice to preserve evidence.  Defendants claimed that plaintiffs should have known by the late 1990's, when it first began developing the drug, under the theory that litigation over the drug patents would have been inevitable.  Plaintiffs took the position that they reasonably anticipated litigation over the patents at issue when third-party Ivax Pharmaceuticals, Inc. notified plaintiffs in September 2003 of their intent to market a generic equivalent of the drug. 

The court held the duty arose in August 2003, when plaintiffs received notice that Ivax had filed an Abbreviated New Drug Application.  Further, the court ruled that, to the extent defendants sought relief related to alleged spoliation of evidence occurring before August 2003, such relief is not cognizable because "[a]ny destruction of potentially relevant evidence that occurs before the trigger date would be harmless, since the party was unaware of a need to safeguard evidence."  However, plaintiffs conceded that they did not halt all recycling of backup tapes until May 2005. While generally, a party may continue to recycle inaccessible backup tapes, the court, citing Zubulake v. USB Warburg LLC, 220 F.R.D. 212, 218 (S.D.N.Y. 2003), noted there is an exception to the rule if plaintiffs could have identified a particular employee's documents on backup tapes. If so, then the documents of "key players" should have been preserved to the extent that the documents were not otherwise available.

Thus the court granted defendants' motion to hold a hearing to address defendants' spoliation allegations.  The sole purpose of the hearing, according to the court, is to determine whether the Zubulake exception applied and, if so, whether defendants have satisfied their burden regarding spoliation sanctions, namely whether plaintiffs acted with a culpable state of mind and whether the spoliated evidence was relevant.