In Klipsch Group v. ePRO E-Commerce, No. 16-3637-cvNo. 16-3726-cv (2d Cir. Jan. 25), the U.S. Court of Appeals for the Second Circuit affirmed the Southern District of New York’s order that “the likely valuation of actual damages” in the matter was “$25,000,” the defendant had to pay the plaintiff $2.68 million as “compensation” for “additional discovery efforts” the plaintiff had to take because of the defendant’s misconduct. The court further “imposed an additional $2.3 million restraint, which amount it determined would be appropriate to secure the plaintiff’s “likely recovery of treble damages and attorney fees at the conclusion of the case.”

The defendant’s misconduct in producing discovery, then, turned a $25,000 case into a $5 million one. There is nothing in the opinion to suggest that the defendant’s counsel played any part in its client’s misdeeds. There is, however, a strong lesson to be taken from the matter: advise one’s client to be honest with regard to e-discovery production. Counsel your client to forego all improprieties that may give it client a benefit, since you do not know when or how your client might get caught acting improperly and once that occurs, the matter will be about e-discovery, to the detriment of your client, and not about the merits of the case.

Background