Opinion
Civil Action No. 99-2496 (GK).
March 25, 2005
MEMORANDUM OPINION
Defendants, Altria Group, Inc. and Philip Morris USA Inc. ("Defendants"), have filed a Motion to Reconsider Order #600 ("Motion"). Upon consideration of the Motion, the United States' Opposition, and the Defendants' Reply, the Court concludes that the Motion should be denied.
In Order #600, 2004 WL 1627252 (D.D.C. July 21, 2004), the Court sanctioned Defendants Philip Morris and Altria for the failure of eleven high level corporate officials to preserve email subject to preservation under paragraph 7 of Order #1, the First Case Management Order for Initial Scheduling Conference (the "Document Preservation Order"). The Court imposed monetary sanctions of $250,000 against each of the eleven corporate officials who failed to comply with the Document Preservation Order, ordered the Defendants to reimburse the United States in the amount of $5,027.48, and precluded Defendants from calling as fact or expert witnesses at trial any individual who failed to comply with Philip Morris' own internal document retention policy, including Peter Lipowicz and the ten other individuals identified by Philip Morris. One of those ten individuals is Ms. Nancy Lund, the Senior Vice President of Marketing for Philip Morris USA Inc. and the main subject of the pending Motion to Reconsider.
In the Memorandum Opinion accompanying Order #600, the Court set out in detail its justification for imposing such severe sanctions. In particular, the Court concluded that:
[I]t is astounding that employees at the highest corporate level in Philip Morris, with significant responsibilities pertaining to issues in this lawsuit, failed to follow Order #1, the document retention policies of their own employer, and, in particular, the "print and retain" policy which, if followed, would have ensured the preservation of those emails which have been irretrievably lost. Moreover, it must be noted that Philip Morris is a particularly sophisticated corporate litigant which has been involved in hundreds, and more likely thousands, of smoking-related lawsuits.
The Court set out in that Opinion its full reasoning on the issue.
Defendants recognize that a "motion for reconsideration should be granted only if `there is an intervening change in controlling law, the availability of new evidence, or the need to correct a clear error or present manifest injustice.'" United States v. Philip Morris USA Inc., 220 F.R.D. 109, 112 (D.D.C. 2004),quoting Pearson v. Thompson, 141 F. Supp.2d 105, 107 (D.D.C. 2001). Defendants argue that reconsideration is necessary in this instance in order to prevent manifest injustice. The Court disagrees for the following reasons.
1. The Court has already rejected in the Memorandum Opinion accompanying Order #600 the basic factual and legal arguments that Defendants are presenting in this Motion to Reconsider. There is no point, at this busy time during trial, to again discuss the reasons for rejecting those arguments.
2. Defendants do not deny that "certain Philip Morris USA [employees] failed to print and retain email in their computers, which resulted in the loss of that email when periodic system deletions were performed to clean up the system." Defendants' Motion to Reconsider, p. 7. There is no question under the case law that the Court has the authority and discretion to sanction a party for violation of its pre-trial orders and, in particular, for a violation as extensive as the one involved in this instance. It should be remembered that Defendants deleted email on a monthly system-wide basis for a period of at least two years in violation of Order #1, entered October 19, 1999. Moreover, Defendants did not bring this to the Court's attention until at least four months after learning about its existence. Given this set of facts, sanctions are clearly merited. See Shepherd v. American Broadcasting Cos., Inc., 62 F.3d 1469, 1478 (D.C. Cir. 1995); Bonds v. District of Columbia, 93 F.3d 801, 807-08 (D.C. Cir. 1996); Young v. Office of the U.S. Senate Sergeant at Arms, 217 F.R.D. 61, 65 (D.D.C. 2003); Fed.R.Civ.P. 16(f).
3. Defendants rely heavily on Bonds to argue that the sanctions in this case were not "just" within the meaning of Fed.R.Civ.P. 37. Bonds, supra, 93 F.3d at 808. The facts inBonds were dramatically different than those presented here. Because of continuing and particularly egregious discovery violations, the trial court sanctioned the defendant by precluding all fact witnesses. Understandably, the Court of Appeals found that sanction to be too severe because it was tantamount to a default judgment. Obviously, that is not the case here. Moreover, in fashioning the sanction applied here, the Court applied the "concept of proportionality" between offense and sanctions, as required by Bonds and Shea v. Donohoe Construction Co., 795 F.2d 1071, 1077 (D.C. Cir. 1986). In evaluating the factors set out in those cases, the Court rejected the Government's request for an adverse evidentiary inference as far too broad and applied a narrower witness preclusion sanction targeted only at those individuals who violated Order #1.
4. Defendants also argue that because the Government specifically requested preclusion of only Peter Lipowicz, they were deprived of the opportunity to oppose imposition of sanctions against the other ten individuals listed in Order #600. First, there is no requirement in the case law that, after reviewing the complete factual record, the trial court cannot enter a particular sanction which it determines appropriate and proportionate to the sanctionable conduct. Second, Defendants did, in fact, argue against any order precluding any witnesses from testifying at trial and argued that such an order would be "disproportionate and unjust."
Defendants rely heavily on Zubulake v. UBS Warburg LLC, 2004 WL 1620866 (S.D.N.Y. July 20, 2004). First, they concede that Zubulake, to the extent, if any, that it differs from the law in this Circuit, is not controlling. Motion, p. 7. Second, as the Government points out in its Opposition, see, pp. 6-9, even if Zubulake were controlling, the facts in this case demonstrate the "reckless disregard and gross indifference," 2004 WL 1627252, *3, which, under Zubulake, would justify the sanctions imposed.
5. Finally, the Defendants argue that the witness preclusion sanctions are unjust because this is a bench trial and therefore the Court, "as trier of fact, is uniquely suited to assess the credibility of a witness and the relevance of a witness' testimony in light of the surrounding evidence." Defendants' Motion to Reconsider, p. 9. However, the destruction of email has absolutely nothing to do with Ms. Lund's credibility or the relevance of her testimony. Therefore, the fact that this is a bench trial, rather than a jury trial, is of no moment.
For all of these reasons, as well as the reasons set forth in Order #600 and its accompanying Memorandum Opinion, the Court concludes that the Motion for Reconsideration of Order #600 should be denied.