In Kipperman v. Onex Corp., 2009 U.S. Dist. LEXIS 44457 (N.D. Ga. May 27, 2009), Senior United States District Court Judge J. Owen Forrester granted plaintiff's motion for sanctions for defendants' failure to meaningfully cooperate and produce relevant electronic discovery.

The case is predicated on a constructive transfer and fraud case arising out of the 2003 bankruptcy of Magnatrax Corp and has a long history of discovery disputes. The docket alone has more than 600 entries.  The court described the parties' lengthy discovery process as "contentious at best and abusive at worst" and commented that the case had been "over lawyered on all sides."  In the court's March 2008 case management order, the court chronicled the parties' misdeeds and notified the parties that it was tallying their disobedience and would award sanctions at their request. In response to the court's statement plaintiff filed two motions for sanctions.  The first related to "transfer discovery" and the second was a renewed motion for terminating sanctions based on a broad range of alleged misconduct on the part of the defendants, including their responses to plaintiff's request to electronic discovery. 

In discovery, defendants had originally agreed to search their clients' active computer files and server, the result of which produced very little e-mail.  Plaintiff's moved to compel the defendants' production of backup tapes.  The court directed plaintiff to designate two of defendants' backup tapes for search at defendants' cost.  The court made plaintiff the guarantor of the search's success and granted defendants the right to demand costs and fees if the search produced little discoverable information.  Yet, defendants failed to search the entirety of the tapes and unilaterally limit its search of custodian mailboxes.

Plaintiff sought a further order compelling defendants to search the entirety of both tapes and to add one additional tape to defendants' restoration efforts. The defendants opposed noting the lack of relevance of the information previously produced and that restoration and review of the two tapes had cost more than $600,000.  The court examined examples of some of the e-mails produced to assess relevance: "I don't consider myself enough of an expert on the law in this area to declare these to be smoking guns but they certainly are hot and they certainly do smell like they have been discharged lately." The court ordered defendants to meet and confer to narrow the scope of plaintiff's search terms and to include the third tape to their further review.

In considering plaintiff's motion for sanctions, the court held that defendants and their counsel consistently tried to minimize the likely value of e-discovery in the case and that defendants "blatantly" disregarded the court's order to produce responsive information on the backup tapes and rather unilaterally decided to either omit e-mails from their production or redact the information.  The court was tempted to grand plaintiff's request for terminating sanctions, but found only "moderate prejudice" to plaintiff.  Instead, the court, citing FRCP 26 and 37 as well as the court's inherent powers to award monetary sanctions and concluded that plaintiff's expenditure of $800,000 in attorneys' fees was to be used as a benchmark for awarding sanctions.