Third Parties Held in Contempt for Failure to Obey Court Order, Including Using Computer Following Instructions that “They May Not Touch the Computers Except to Turn Them Off” Prior To Production

Sonomedica, Inc. v. Mohler, 2009 WL 2371507 (E.D. Va. July 28, 2009)

In this case, the court adopted the recommendation of the magistrate judge and found third parties in contempt for violation of the court’s orders, including the spoliation of electronically stored information on hard drives they were ordered to produce, and ordered them to pay plaintiff’s attorney’s fees and costs in the amount of $108,212.15 and for the case to be referred to the United States Attorney for investigation of possible criminal sanctions.

On September 12, 2008, Magistrate Judge Jones found third party witnesses Kerry and Valerie Poindexter in contempt for failure to comply with a subpoena duces tecum and for failing to testify truthfully during their depositions.  The Poindexters were offered an opportunity to purge their contempt by testifying truthfully at upcoming depositions, by delivering all of the documents required by the relevant subpoenas, and by turning over their personal computer to the plaintiff for examination.  Regarding their computer, the Poindexters were specifically instructed that “[t]hey may not touch the computers except to turn them off between now and then” and that “[t]hey may not do anything that would cause any files to be erased…or changed in any way beyond what might happen through the ordinary, everyday act of turning off the computer.”

Nonetheless, forensic examination revealed that the computer was not turned off until approximately four o’clock a.m. on the morning of its production (three days after the ordered was issued) and that “as a result of being operational” 22,603 files were affected and 556 files were manually deleted.  The Poindexters denied manually deleting the files, but admitted the computer was used to pay bills and that Ms. Poindexter copied her “my documents” files onto a thumb drive between the time of the order and the computer’s production.  Ms. Poindexter claimed such use had been approved by their counsel, despite the clarity of the court’s instruction.  Many of the deleted files referenced plaintiff.

The Poindexters also failed to produce documents pursuant to subpoena, as ordered, and Mr. Poindexter failed to testify truthfully at deposition.

Plaintiff therefore filed a motion for sanctions.  Pursuant to his authority under Fed. R. Civ. P. 45, the magistrate judge found the Poindexters in civil contempt for several reasons, including failing to obey his prior order by using their computer and manually deleting files.  Having explained that the purpose for imposing sanctions for civil contempt is to “compensate the complainant for the losses sustained,” and having established his broad discretion to fashion an appropriate sanction, the magistrate judge ordered monetary sanctions in the form of attorneys’ fees and costs in the amount of $108,212.15.

The magistrate judge also found that the matter should be referred to the United States Attorney for possible criminal contempt proceedings where such sanctions were “necessary to vindicate the court’s authority by punishing the contemnor and deterring future misconduct.”  The magistrate judge reasoned:  “Here the Poindexters should be punished for their blatant disregard of the court’s authority and to deliver a message, both to them and others, that there are serious consequences for failing to comply with the court’s directive.”

Following objection by the Poindexters, the District Court Judge undertook a de novo review of the magistrate judge’s Report and Recommendation.  In this analysis, the court identified the four elements to be established by clear and convincing evidence in order to hold a party in civil contempt:

To hold a party in civil contempt, the following four elements must be established by clear and convincing evidence:  (1) the existence of a valid decree of which the alleged contemnor had actual or constructive knowledge; (2) that the decree was in the movant’s ‘favor’; (3) that the alleged contemnor by its conduct violated the terms of the decree, and had knowledge (at least constructive knowledge) of such violation; and (4) that [the] movant suffered harm as a result.

Addressing the Poindexters’ actions as to their computer, the court noted its inability to determine whether they had manually deleted the files at issue, but determined that the use of the computer in direct defiance of the magistrate judge’s order was sufficient to support a finding of civil contempt.

Thus, finding all of the elements satisfied and agreeing that investigation into possible criminal contempt was warranted, the District Court Judge adopted the Report and Recommendation of the magistrate judge in its entirety.