On January 18, 2010, the Bank sued three companies and two principals for breach of multiple promissory notes and guaranties. Counsel for the defendants drafted and implemented a litigation hold. Counsel later sent an email explaining the litigation hold and a subsequent ESI agreement, which stated: "Just a reminder that nothing should be done with or to any of the computers, servers or related equipment.... We have to advise plaintiff's counsel in the event any action is anticipated. You are not to take any action." Meanwhile, the Defendants became delinquent on their warehouse lease, the building which housed their primary electronic server, and deeded the property to the lender in lieu of foreclosure. Unbeknownst to the Plaintiff, the Defendants attempted to negotiate a purchase of their own server after the friendly foreclosure. Ultimately, the new owner of the warehouse suspiciously sold the server to a man named "Jim" representing a company from Dubai. During an evidentiary hearing, circumstantial evidence suggested that "Jim" was one of the Defendants' neighbor and the company from Dubai was actually a similarly named company located in Illinois.

Finding that "there [was] not much to add to the magistrate judge's comprehensive factual findings and legal analysis," the Court primarily addressed the Defendants' objections. The Court rejected the Defendants primary defense that, on advice of counsel, Defendants did nothing wrong by "doing nothing." The Court noted that by deeding the warehouse back to the lender and doing nothing to stop the sale of the server to a foreign entity, the Defendants actually took affirmative steps to ensure the evidence was destroyed. The Court also rejected the Defendants theory that the server was out of their control since the server was in their control when their preservation obligations arose and within the definition of "control" for discovery disputes. Finding Defendants conduct was willful and in bad faith, the Court imposed monetary sanctions against the Defendants, in the form of costs and attorneys' fees incurred in bringing the discovery proceedings, and imposed both a limitation on placing information from the server in evidence and an adverse inference instructing a jury that the Defendants abandoned the server and that such abandonment may be considered evidence that the server contained unfavorable evidence. The Court declined to imposed dispositive sanctions or civil/criminal contempt sanctions.