Court Sanctions Party for 2-Year Delay Issuing Litigation Hold to Key Custodian


gavel and laptop.JPGIn Yelton v. PHI, Inc., et. al.[pdf.] Case Nos. 09-3144C/W09-3475 (E.D. Louis. Dec. 7, 2011), U.S. Magistrate Judge Karen Wells Roby granted the plaintiff’s Motion for Sanctions, recommending an adverse inference instruction at trial for defendant Sikorsky Aircraft Corp.’s failure to institute a timely litigation hold to an employee who was re-hired by Sikorsky for the express purpose of investigating the helicopter crash at issue in the litigation.

This case related to a wrongful death action brought on behalf of the plaintiff’s estate and minor children.  A few days after the crash, Sikorsky instituted a litigation hold that encompassed 17 employees.  Around that time, Sikorsky re-hired Dr. Wonsub Kim, a staff engineer, and asked Dr. Kim to investigate the cause of the accident. Dr. Kim was not advised on the litigation hold until two years later.  In the meantime, Sikorsky’s in-house counsel and other engineers frequently used and relied upon Dr. Kim’s analysis and reports to respond to discovery requests and to the NTSB.  In all, more than 100 employees were added to the litigation hold prior to the time Sikorsky advised Dr. Kim of his obligation to preserve information related to the litigation.

The Fifth Circuit requires a showing of bad faith to justify severe sanctions such as an adverse inference instruction or default judgment.  Here, the court held that the evidence substantiated a finding of a “significant degree of culpability” based on Sikorsky’s failure to issue a litigation hold which resulted in the destruction of Dr. Kim’s data files. The court rejected Sikorsky’s argument that its failure to timely issue a litigation hold to Dr. Kim was an oversight.  The court further found that the plaintiff had been prejudiced, particularly given the fact that Sikorsky had “refreshed” and sold Dr. Kim’s laptop while the litigation was ongoing. Accordingly, the court granted the plaintiff’s motion and recommended an adverse inference instruction, the wording of which was left to the discretion of the district court.  The court also awarded monetary sanctions to include the plaintiff’s costs and attorneys’ fees, reasonably incurred from the date Sikorsky produced Dr. Kim's report, including plaintiff’s spoliation investigation, the taking of additional depositions related to Dr. Kim’s report, and attorneys’ fees related to the plaintiff’s Motion for Sanctions.

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.