Arguing Class Actions is a monthly column by Adam J. Levitt for the National Law Journal.
Reprinted with permission from the April 7, 2025 edition of the National Law Journal. © 2025 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.
A troubling trend has emerged in recent years suggesting that some corporate defendants may prefer to pay the costs of discovery sanctions in lieu of producing relevant documents in discovery. Certain high-profile corporate litigants have implemented policies and litigation strategies seemingly designed to sidestep their obligations to turn over important information to plaintiffs. Whether they’re training their employees to improperly privilege communications by including attorneys even when no legal advice is sought (Mike Scarcella, “In Landmark Google Ruling, A Warning to Companies About Preserving Evidence,” Reuters (Aug. 6, 2024)), allowing officials within a corporation to delete thousands of emails that may be directly related to pending litigation (Tom Hals, “Meta ex-COO Sandberg Sanctioned in Investor Lawsuit for Deleting Emails,” Reuters (Jan. 21, 2025)), or implausibly denying their knowledge of corporate documents that they openly discussed under oath in other litigation (Allison Dunn, “Appellate Division Upholds $800k Asbestos Verdict Against Ford,” N.J.L.J. (Mar. 24, 2022)), these corporations are pursuing improper discovery evasion as a litigation strategy. Their willingness to risk sanctions due to these policies and strategies is understandable because the sanctions that they might face are quite modest. If judges considered the recidivism of these corporate defendants when determining appropriate sanctions, and, consequently, imposed steeper costs on those that made a pattern of discovery evasion, then it is possible that the threat of sanctions would actually deter repeat offenders.
The “sole purpose” of discovery is to “assist[] in the preparation and trial, or the settlement, of litigated disputes,” Seattle Times v. Rhinehart, 467 U.S. 20, 34 (1984) (emphasis added), which, in turn, necessitates “liberal” discovery so that the parties can be best prepared for trial. This purpose is frustrated when, as U.S. District Judge Vince Chhabria of the Northern District of California put it in a 2023 order for sanctions against Facebook Inc., a defendant “with the assistance of its lawyers … resist[s] discovery as long as possible, make[s] things increasingly difficult and expensive and frustrating for the opposition, and hope[s] that would drive down the case’s settlement value.” In re Facebook Inc. Consumer Privacy User Profile Litigation, 655 F. Supp.3d 899, 935 (N.D. Cal. 2023). However, unless courts rethink sanctions for this type of misbehavior, there are no meaningful safeguards to prevent wealthy corporate defendants from continuing to make a mockery of the discovery process. As Chhabria explained in his order, the sanction he leveled, which amounted to $925,078.51, was merely “loose change” for Facebook and its white-shoe counsel, Gibson, Dunn & Crutcher. He went on to express that “hopefully, this ruling will create some incentive for Facebook and Gibson Dunn (and perhaps even others) to behave more honorably moving forward.” It’s very clear, however, that this has not come to pass. Indeed, not only do corporate defendants like Google and Apple continue to repeatedly flout discovery requirements and their discovery obligations, but even Facebook—notwithstanding Chhabria’s sanctions order—continues to play fast and loose with its discovery obligations, clearly considering it little more than a “cost of doing business.” For example, in the AI copyright case Kadrey v. Meta Platforms, 3:23-cv-03417-VC (N.D. Cal.), it recently emerged that Meta finally disclosed, two months after the close of discovery, that it had failed to review or produce 18,000 documents that it had collected in connection with the case. And the list doesn’t stop there.
It’s no surprise that deep-pocketed corporate defendants are unmoved by the sanctions imposed on them by courts when those sanctions are just “loose change.” For perspective, Facebook’s revenue in 2023, the year Chhabria issued his sanction, was $134.9 billion. In other words, the amount that Facebook was expected to pay as a sanction in compliance with Chhabria’s order, was equivalent to an amount that it made every five minutes that year. The risk posed by the existing monetary sanctions, then, is really no risk at all for many of these corporate defendants, who can simply bake such amounts into their operational costs and litigation budgets.
Of course, there are also nonmonetary sanctions available to courts as well, such as requiring or permitting adverse inferences by the finder of fact and even entering default judgments on behalf of the moving party. Courts, however, have been reluctant to issue such sanctions, in part because they don’t feel that such sanctions are commensurate with the harm caused by the singular instance of violative behavior before their bench. Such sanctions, however, represent a potentially effective approach to ensure that corporate defendants—particularly serial offenders who have routinely and repeatedly delayed and frustrated the discovery process as a litigation strategy—are actually deterred from further discovery obstruction. This is particularly true where a defendant has repeated the same pattern of discovery obstruction across multiple litigations; it then becomes evident that such sanctions have not effectively deterred that defendant’s behavior, and therefore a more substantial sanction may be warranted in order to actually prevent further abuse. If judges, however, focus only on the proportionality of a sanction with respect to their case only, then the issue of the serial offending corporate defendant will persist indefinitely.
Of course, this approach will require judges to review sanction orders against the same defendant in other courts. For example, they will need to consider whether the defendant is accused of substantially the same type of discovery violation, or whether the violations are connected to the same corporate practice that may give rise to different types of violations. They will also need to consider nuances and differences of law between jurisdictions; many states have radically different discovery sanction regimes, with some imposing limits on certain types of sanctions for certain offenses. Judges will need to account for this when considering previously imposed sanctions and whether they expressed, for example, the maximum penalty available, which would suggest the egregiousness of the defendant’s (continued) bad conduct. Because courts, in other contexts, have readily shown a willingness to review a litigant’s conduct in other courts when imposing sanctions against that litigant (see, e.g., Durant v. Big Lots, No. 5:23-cv-561-GAP-PRL (M.D. Fla.), where U.S. District Judge Gregory Presnell of the Middle District of Florida examined and considered counsel’s similar conduct in other courts across the United States, in fashioning and imposing sanctions in that action), there’s no reason for courts not to do the same thing when fashioning and imposing sanctions against recidivist corporate discovery abusers and their counsel.
This approach may also demand more from plaintiffs attorneys, particularly if they are to overcome inevitable challenges by the defense bar. It’s likely that the defense bar will erroneously rely upon the Supreme Court case Goodyear Tire & Rubber Co. v. Haeger, 581 U.S. 101, 108 (2017), to suggest that such a sanction would be an improper punitive sanction. The Goodyear court stated that it “has made clear that a [discovery] sanction, when imposed pursuant to civil procedures, must be compensatory rather than punitive in nature,” and that “it may not impose an additional amount as punishment for the sanctioned party’s misbehavior.” However, looking to the underlying case cited in Goodyear to support this proposition, Mine Workers of America v. Bagwell, 512 U.S. 821, 826 (1994), reveals how “compensatory” should be understood in this context; a sanction is still within the realm of permissibility in the civil content when it is “intended to coerce compliance.” A progressive sanction would align with this principle by coercing current and future compliance with the rules of discovery. Courts that are empowered to consider a party’s broader incentives and behavior when determining an appropriate discovery sanction will find themselves in a far better position to compel those parties into compliance in their courtrooms.
Adam J. Levitt is a founding partner of DiCello Levitt, where he heads the firm’s class action and public client practice groups. He can be reached at [email protected].
Thank you to DiCello Levitt associate Rebecca Trickey for contributing to this column.