## Facts

- First Mariner Bank sued a law firm and related defendants over direct-mail advertising allegedly implying the bank engaged in illegal banking practices, asserting claims for false advertising, unfair competition, and defamation.
- During discovery, defendants withheld requested documents and provided evasive interrogatory responses and inadequate deposition testimony.
- After granting an initial motion to compel, the court imposed monetary sanctions, issued an adverse-inference instruction, precluded certain evidence, and warned that further misconduct would result in additional sanctions.
- Defendants continued noncompliant discovery conduct and were found to have deliberately destroyed electronically stored information.
- The destroyed ESI was associated with an individual defendant’s laptop and smartphone, identified as the only known repository of defendants’ relevant business records.
- About sixteen months into discovery, First Mariner filed a second motion to compel and for sanctions, seeking severe relief based on repeated misconduct and spoliation.

## Issues

1. Whether defendants’ repeated discovery violations and willful spoliation of key ESI warranted the sanction of default judgment as to liability on all counts.
2. Whether lesser sanctions would be adequate to cure prejudice to the plaintiff and to enforce compliance with court orders.

## Decision

- The court adopted the magistrate judge’s recommendation and entered default as to liability against defendants on all counts of the amended complaint.
- The court found defendants engaged in a sustained pattern of bad-faith obstruction during discovery, including continued evasive responses after prior sanctions and warnings.
- The court determined defendants’ spoliation of ESI was willful and in bad faith and substantially prejudiced First Mariner because it eliminated the only identified source of relevant business records.
- The court ordered that damages be determined in further proceedings, including an evidentiary hearing.

## Legal Principles

- A court may impose default judgment as a discovery sanction when a party’s bad-faith misconduct and obstruction substantially prejudice the opposing party’s ability to present its case.
- In selecting sanctions for discovery abuse and spoliation, relevant considerations include willfulness or bad faith, prejudice, and whether lesser sanctions would be effective.
- Willful, bad-faith destruction of unique ESI—especially where it is the only identified source of relevant records—can justify terminating sanctions, including default as to liability.
- Prior warnings and the failure of lesser sanctions support a finding that severe sanctions are necessary to enforce court authority and protect the integrity of adjudication.

## Conclusion

The court entered default as to liability as a sanction for defendants’ repeated, bad-faith discovery misconduct and willful spoliation of central ESI, finding that the destruction of the only identified source of business records caused substantial prejudice and that lesser sanctions had failed to secure compliance; damages were left for later proof.


First Mariner Bank v. Resolution Law Grp., P.C., 2014 WL 1652550 (D. Md. 2014)