Defendants Held in Contempt of Order Compelling Discovery; Court Orders $25,000 Payment and Considers Incarceration of CEO and President

Cooney, et al. v. Beverly Enter., Inc., et al., No. CV 2003-1049-3 (Saline County Cir. Ct., Ark. June 15, 2005) (order imposing sanctions upon Beverly Defendants)

The Arkansas Daily Blog reported on June 25, 2005 that Beverly Enterprises, a nursing home chain, has recently been subject to unfavorable rulings in connection with class action litigation. A link to the entry can be found here. The litigation reportedly involves allegations of unsanitary food, unclean bathrooms, smelly premises, and substandard care.

On April 1, 2005, plaintiffs filed a motion for contempt and for sanctions in connection with numerous alleged failures by defendants to comply with court orders requiring production of documents. Attached to the motion is a letter sent on March 21, 2005, which addresses (among other things) Request for Production No. 5 from November 16, 2004:

We are told that e-mails are not maintained in the regular course of business. We believe otherwise and we believe that we can show that there are e-mails and that there is a way for us to get access to them. In this connection, I will be sending a discovery request for the administrator’s deposition given in the Florence Godwin case recently.

On June 15, in response to plaintiff’s motion, Judge Phillips entered an order nunc pro tunc imposing sanctions on defendants. His order included the following:

-Defendants must pay of a combined total of $25,000 in attorneys’ fees directly to plaintiffs’ counsel.

-Defendants must fully comply with discovery orders, including those involving electronic data and e-mail, by June 10, 2005.

-“On its own suggestion, the Court will take under advisement what additional sanctions, if any, shall be imposed against Defendants, including whether BEI Chief Executive Officer William Floyd, BHRS and BEA Corporate President David Devereaux, or others, should be incarcerated as a result of the Beverly Defendants’ contempt of court…”

-Plaintiffs will be allowed some access to defendants’ computers to assure compliance with discovery orders. Parties shall provide the Court with their positions regarding such access within seven days, and plaintiffs shall bear the cost of accessing and copying any data subject to future orders.

Full text of the order can be found here.