Even for a “small company,” the failure to comply with discovery obligations to preserve electronically stored information (ESI) can be dangerous.  The case of Perez v. Vezer Industrial Professionals, Inc. 2011 WL 5975854 (E.D. Cal. 2011) involved a truck accident, but the lawsuit quickly reached the point where the plaintiff sought a default judgment against the defendant for failure to preserve emails and other ESI.  The court in Perez found the defendant had breached its discovery obligations, noting the following:

  • Two of the defendant’s executives, including the owner, admitted they made no effort to retrieve potentially relevant ESI from their computers.
  • The court rejected the defendant’s argument that it was a “small company,” that the case was not document intensive, and that most relevant communications took place by phone or in person.   The court said these facts were not valid explanations for the minimal to no effort made by the company to preserve relevant ESI, including documents sent, received, or created by key players.
  • According to the court, the fact that one of the key players’ computer crashed was “no excuse” given that the witness admitted he did not backup any of his ESI.  The court reiterated the following warning to lawyers:  “Defense counsel’s apparent failure, in this electronic age, to verify with appropriate representatives of their client whether there was an e-mail backup system, cannot be countenanced.”
  • The court found the company had “proceeded with business as usual, without making any special effort to retain ESI relevant to this litigation.”

Although the court concluded the death penalty (a default judgment) was inappropriate in the case, the court did award monetary sanctions.  This case is just another example that even small companies must pay attention to their ESI preservation obligations once those obligations are triggered.