## Facts

- MOSAID Technologies Inc. sued Samsung entities in a patent-infringement action involving DRAM technology.
- MOSAID served document requests defining “documents” broadly to include written and electronic materials, encompassing emails even though “e-mail” was not expressly used.
- After suit was filed (September 2001), Samsung maintained an automatic email deletion/archiving policy and did not implement a litigation hold to suspend routine deletion.
- Samsung produced no technical emails in the litigation because relevant emails were deleted or became inaccessible under its retention system.
- Samsung had previously used litigation holds in other matters, showing it knew how to preserve emails when litigation required.
- During sanctions proceedings, Samsung later retrieved large volumes of emails that had been preserved under holds in other cases.
- The magistrate judge issued a Dunbar notice warning of possible serious non-monetary sanctions and ultimately imposed sanctions, including (as relevant here) an adverse-inference (spoliation) jury instruction and an award of attorneys’ fees and costs tied to MOSAID’s discovery efforts and sanctions motion.
- The district judge had already affirmed two other sanctions and, in this decision, reviewed only the adverse-inference instruction and the monetary award on Samsung’s appeal under Rule 72(a).

## Issues

1. Whether the magistrate judge’s order permitting a spoliation (adverse-inference) jury instruction for destruction/failure to preserve emails was clearly erroneous or contrary to law.
2. Whether the magistrate judge’s award of attorneys’ fees and costs as a discovery sanction was clearly erroneous or contrary to law.

## Decision

- The district court affirmed the spoliation-inference jury instruction.
- The district court affirmed the award of attorneys’ fees and costs.
- Applying Rule 72(a) and § 636(b)(1)(A), the court held the magistrate judge’s sanctions decisions were within the permissible range of choices and were not clearly erroneous or contrary to law.

## Legal Principles

- A party must preserve relevant evidence, including electronically stored information, when litigation is reasonably anticipated and after litigation begins; routine deletion policies must be suspended as needed through a litigation hold.
- A spoliation inference may be permitted where: (1) the party had control over the evidence and a duty to preserve it, (2) the evidence was destroyed with a culpable state of mind (including negligence), and (3) the missing evidence was relevant to claims or defenses.
- In assessing proportionality and prejudice, courts may consider the centrality of the missing ESI to the case and the extent of the failure (including a total absence of expected categories of ESI).
- Courts may award attorneys’ fees and costs under the discovery rules and inherent authority to compensate the movant for expenses caused by preservation and discovery violations and to deter similar misconduct.

## Conclusion

The court upheld non-dispositive sanctions against Samsung for failing to implement an email litigation hold, permitting the jury to draw an adverse inference from missing emails and requiring Samsung to pay MOSAID’s fees and costs incurred in pursuing discovery and sanctions related to the spoliation.


MOSAID Techs. Inc. v. Samsung Elecs. Co., 348 F. Supp. 2d 332 (D.N.J. 2004)