116 F.R.D. 107 (S.D.Fla. 1987), 79-1788-Civ.-Marcus, Telectron, Inc. v. Overhead Door Corp.

Docket Nº79-1788-Civ.-Marcus
Citation116 F.R.D. 107
Opinion JudgeMARCUS, District Judge.
Party NameTELECTRON, INC., Plaintiff, v. OVERHEAD DOOR CORPORATION, Defendant.
AttorneyWilliam J. Dunaj, Philip A. Allen, III, Mershon, Sawyer, Johnston, Dunwody & Cole, Miami, Fla., for plaintiff. William B. Killian, John M. Barkett, Steel Hector & Davis, Miami, Fla., for defendant.
Case DateJune 04, 1987
CourtUnited States District Courts, 11th Circuit, Southern District of Florida

Page 107

116 F.R.D. 107 (S.D.Fla. 1987)

TELECTRON, INC., Plaintiff,

v.

OVERHEAD DOOR CORPORATION, Defendant.

No. 79-1788-Civ.-Marcus

United States District Court, S.D. Florida.

June 4, 1987

Page 108

Plaintiff in complex antitrust case moved for default and sanctions against defendant for destruction of discovery documents. The District Court, Marcus, J., held that entry of default judgment, as to defendant corporation's liability in complex antitrust case, was appropriate sanction for flagrant and willful destruction of documents called for in production request served upon defendant corporation.

Motion granted.

Page 109

William J. Dunaj, Philip A. Allen, III, Mershon, Sawyer, Johnston, Dunwody & Cole, Miami, Fla., for plaintiff.

William B. Killian, John M. Barkett, Steel Hector & Davis, Miami, Fla., for defendant.

MARCUS, District Judge.

The issue squarely presented by this case is what sanction should be imposed for the flagrant and willful destruction of records specifically called for in a production request served upon the Defendant in a complex antitrust case. We undertake this inquiry pursuant to a Renewed Motion for Default Judgment and Sanctions, filed by the Plaintiff on October 28, 1985.1

The Defendant, Overhead Door Corporation (hereinafter " OHD" ), is engaged in the manufacture and nationwide distribution of garage doors, garage door operators, and related products. The Plaintiff, Telectron, Inc. (hereinafter " Telectron" ), is a manufacturer of radio receivers and transmitters which, until the early 1970's, were commonly sold by OHD distributors as companion equipment for OHD door operators. On April 10, 1979, Telectron filed a Complaint, alleging that OHD, after its 1971 acquisition of Advance Industries, a company engaged in the manufacture of radio controls, undertook various measures to induce OHD distributors to purchase Advance radio controls rather than Telectron controls, in violation of this nation's antitrust laws.

On March 12-13, 1986, a hearing was held before this Court to give the Parties an opportunity to present testimonial and documentary evidence bearing upon Plaintiff's Motion for Default and Sanctions. The principal players in this discovery drama appeared and gave testimony at the hearing. Numerous depositions were also presented, along with a variety of supporting documentary evidence.2

From the array of evidence brought before this Court, it is disturbingly apparent that Mr. Richard B. Arnold, the Secretary and Corporate Legal Counsel to OHD, ordered the immediate destruction of documents directly pertaining to Plaintiff's Complaint and Request for Production, on the very day that these papers were served personally upon him. The evidence also establishes beyond any real doubt that Mr. Arnold ordered this destruction in a willful and

Page 110

intentional attempt to place documentation which he anticipated to be damaging to OHD's interests in this litigation forever beyond the reach of Telectron's counsel. Specifically, Mr. Arnold called for the immediate destruction of all sales correspondence, over two years old, generated by OHD's Advance radio control division. Given the repeated and prominent references to Advance in both the Complaint and the Request for Production, and given the centrality of that plant's product to Telectron's allegations of exclusive dealing, illegal tying, attempted monopolization, and tortious interference with an advantageous business relationship, we cannot escape the conclusion that Mr. Arnold's directive was specifically designed and intended to obscure OHD's history of anticompetitive endeavor, and to impede and obstruct Telectron's right to an honest and open discovery process. Sadly, we can only conclude on this ample record that the Defendant intentionally meant to prevent the full and fair adjudication on the merits of this serious case.

It is also abundantly clear that numerous documents were destroyed in direct and immediate response to Mr. Arnold's directive; the testimony of several employees at the Advance plant reveals in no uncertain terms that such destruction occurred. While it is now impossible to determine precisely what the destroyed documents contained or how severely the unavailability of these documents might have prejudiced Plaintiff's ability to prove the claims set forth in its Complaint, we find OHD's contention that no significant prejudice has resulted from this pattern of destruction to be wholly unconvincing. The inescapable fact is that documents falling within a category directly pertinent to Telectron's claims were destroyed, willfully and intentionally, under urgent orders of OHD's chief legal officer and secretary in the immediate aftermath of his receipt of Telectron's Complaint and Request for Production. Moreover, this same corporate officer lied in his testimony before this Court, in an obvious attempt to conceal his role in instigating this premeditated destruction.

In reviewing the range of potential sanctions available to this Court, we have concluded that no sanction less than the entry of default judgment as to Defendant's liability can fairly and adequately redress this willful obstruction of the discovery process. We are fully aware of the enormity of this sanction, but we find that all lesser sanctions such as the imposition of attorneys' fees and court costs, evidence preclusion, and other similar measures, standing alone or in the aggregate, would neither ensure this Plaintiff's basic right to a fair trial nor provide a truly meaningful deterrent to future acts of willful disregard for our rules of discovery. In short, we have determined that the entry of default as to OHD's liability is a sanction precisely proportionate to the Defendant's conduct. Accordingly, it is hereby

ORDERED AND ADJUDGED as follows:

1. Default Judgment is hereby entered as to Defendant's liability for " exclusive dealing" under Section 3 of the Clayton Antitrust Act and Section 1 of the Sherman Antitrust Act (Count I); for engaging in illegal tying arrangements under the same sections of the Clayton and Sherman Acts (Count II); for attempted monopolization of sales in violation of Section 2 of the Sherman Act (Count III); and for tortious interference with an advantageous business relationship (Count IV).

2. Defendant shall also bear all reasonable attorneys' fees expended by Plaintiff in preparing its Motion for Default Judgment and Sanctions, as well as all court costs related to this Motion.

As Defendant's liability under Counts I through IV of the Complaint is hereby established, the sole remaining issue to be litigated as to these Counts is the extent to which Plaintiff's business was actually damaged by Defendant's anticompetitive actions.

In view of the flagrant and contumacious behavior of the Defendant and the sweeping remedy which we have fashioned, we have felt constrained to set forth the facts

Page 111

and law pertaining to this matter in considerable detail. The bases for the Court's rulings are discussed below.

I. Findings of Fact

The significance of the document destruction ordered by Mr. Arnold in April 1979 can best be appreciated when viewed within the context of OHD's previous recent history as a defendant in a number of antitrust-related suits. The factual findings below briefly describe OHD's so-called " one-for-one" program, which allegedly involved the induced parallel purchase by OHD distributors of OHD door operators and Advance radio controls. OHD's involvement in this sort of arrangement had resulted in a substantial judgment against the corporation in at least one antitrust suit which had concluded just a few months before Telectron filed its Complaint. OHD's receipt of Telectron's Complaint occurred, in fact, during Mr. Arnold's first months as corporate secretary and legal counsel, at a time when he was busy coordinating the destruction of documents in the wake of OHD's previous antitrust litigation.

In addition to looking at the circumstances preceding the discovery violation at issue here, we have examined in some detail the manner in which Mr. Arnold's order to destroy sales-related records at Advance was communicated, the extent to which it was followed by officials at the Advance division, and the failure of OHD's top management to take decisive action once the issuance of this order had been revealed. Emerging from this set of facts is a clear picture of willful and prejudicial discovery abuse, requiring imposition of the strictest of sanctions.

A. History of Overhead Door's " One-for-One" Program

Since prior to 1962, Telectron has been in the business of manufacturing and selling radio receivers and transmitters (hereinafter " radio controls" ) used to activate electric garage door operators which open and close overhead doors. [Complaint, ¶ 5.] OHD is a manufacturer of garage doors, garage door operators, and related products which it sells through a nationwide network of approximately 385 independent distributors. [Tr. 10, 418b.] 3

In November 1971, OHD acquired a formerly independent company, Advance Industries (" Advance" ), located in Appleton, Wisconsin. [Complaint, ¶ 18.] Advance, like Telectron, was then in the business of manufacturing radio controls to be used in conjunction with electric garage door operators. At the time of its acquisition by OHD, Advance sold these radio controls both to the manufacturers of garage door operators and to garage door dealers. [Tr. 8-9.]

Prior to the acquisition, OHD's distributors primarily sold Telectron radio controls. [Tr. 11.] Thereafter, OHD allegedly initiated a policy intended to curb competitive buying of radio controls by OHD distributors. [Tr. 23.]...

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79 practice notes
  • 126 F.R.D. 545 (D.Minn. 1989), Civ. 4-85-1239, Capellupo v. FMC Corp.
    • United States
    • Federal Cases United States District Courts 8th Circuit District of Minnesota
    • June 19, 1989
    ...1173, 1205-06 (8th Cir.1982), cert. denied, 461 U.S. 937, 103 S.Ct. 2108, 77 L.Ed.2d 313 (1983); Telectron, Inc. v. Overhead Door Corp., 116 F.R.D. 107, 126 (S.D.Fla.1987). In matters such as this-which lie Page 551 the scope of Rule 37, 14 Federal Rules of Civil Procedure (Fed.R.Civ.P.)-th......
  • 167 F.R.D. 90 (D.Colo. 1996), Civ. A. 92-S-0136, Gates Rubber Co. v. Bando Chemical Industries, Ltd.
    • United States
    • Federal Cases United States District Courts 10th Circuit District of Colorado
    • May 1, 1996
    ...is hardly an impossible task, or, in some circumstances, it is hardly a difficult task. For example, in Telectron v. Overhead Door Corp., 116 F.R.D. 107 (S.D.Fla.1987), default judgment was entered against the defendant for destroying certain documents and records. The exact contents of the......
  • 479 F.Supp.2d 1291 (S.D.Fla. 2007), 05-60956, Bernal v. All American Investment Realty, Inc.
    • United States
    • Federal Cases United States District Courts 11th Circuit Southern District of Florida
    • March 23, 2007
    ...power to regulate litigation and to sanction litigants and their counsel for abusive practices. Telectron, Inc. v. Overhead Door Corp., 116 F.R.D. 107, 126 (S.D.Fla.1987); Amlong, 457 F.3d at 1189. These powers "are governed not by rule or statute but by the control necessarily vested ......
  • Gardner v. Schumacher, 011321 NMDC, CIV 21-0003 JB/SMV
    • United States
    • Federal Cases United States District Courts 10th Circuit District of New Mexico
    • January 13, 2021
    ...See Coates v. Johnson & Johnson, 756 F.2d 524, 551 (7th Cir. 1985); see generally Telectron, Inc. v. Overhead Door Corp., 116 F.R.D. 107 (S.D. Fla. 1987). The adverse inference must be predicated on the bad faith of the party destroying the records. See Vick v. Texas......
  • Request a trial to view additional results
72 cases
  • 126 F.R.D. 545 (D.Minn. 1989), Civ. 4-85-1239, Capellupo v. FMC Corp.
    • United States
    • Federal Cases United States District Courts 8th Circuit District of Minnesota
    • June 19, 1989
    ...1173, 1205-06 (8th Cir.1982), cert. denied, 461 U.S. 937, 103 S.Ct. 2108, 77 L.Ed.2d 313 (1983); Telectron, Inc. v. Overhead Door Corp., 116 F.R.D. 107, 126 (S.D.Fla.1987). In matters such as this-which lie Page 551 the scope of Rule 37, 14 Federal Rules of Civil Procedure (Fed.R.Civ.P.)-th......
  • 167 F.R.D. 90 (D.Colo. 1996), Civ. A. 92-S-0136, Gates Rubber Co. v. Bando Chemical Industries, Ltd.
    • United States
    • Federal Cases United States District Courts 10th Circuit District of Colorado
    • May 1, 1996
    ...is hardly an impossible task, or, in some circumstances, it is hardly a difficult task. For example, in Telectron v. Overhead Door Corp., 116 F.R.D. 107 (S.D.Fla.1987), default judgment was entered against the defendant for destroying certain documents and records. The exact contents of the......
  • 479 F.Supp.2d 1291 (S.D.Fla. 2007), 05-60956, Bernal v. All American Investment Realty, Inc.
    • United States
    • Federal Cases United States District Courts 11th Circuit Southern District of Florida
    • March 23, 2007
    ...power to regulate litigation and to sanction litigants and their counsel for abusive practices. Telectron, Inc. v. Overhead Door Corp., 116 F.R.D. 107, 126 (S.D.Fla.1987); Amlong, 457 F.3d at 1189. These powers "are governed not by rule or statute but by the control necessarily vested ......
  • Gardner v. Schumacher, 011321 NMDC, CIV 21-0003 JB/SMV
    • United States
    • Federal Cases United States District Courts 10th Circuit District of New Mexico
    • January 13, 2021
    ...See Coates v. Johnson & Johnson, 756 F.2d 524, 551 (7th Cir. 1985); see generally Telectron, Inc. v. Overhead Door Corp., 116 F.R.D. 107 (S.D. Fla. 1987). The adverse inference must be predicated on the bad faith of the party destroying the records. See Vick v. Texas......
  • Request a trial to view additional results
3 firm's commentaries
  • Issues With Self-Destructing Messages In The Workplace
    • United States
    • Mondaq United States
    • March 12, 2014
    ...USA, 327 F. Supp. 2d 21, 26 (D.D.C. 2004) (fining defendants $2.75 million for the destruction of evidence); Telectron v. Overhead Door, 116 F.R.D. 107, 130 (S.D. Fla. 1987) (entering default judgment against defendant for willful and bad faith document destruction). The Sedona Principles: ......
  • Text Messages Must Be Preserved
    • United States
    • JD Supra United States
    • April 29, 2019
    ...might have prejudiced [Plaintiffs’] ability to prove the claims set forth in [their] Complaint.” Telectron, Inc. v. Overhead Door Corp., 116 F.R.D. 107, 110 (S.D. Fl. 1987). Therefore, the Court concluded sanctions were appropriate under Rule Because the Court concluded that the executive d......
  • Text Messages Must be Preserved
    • United States
    • LexBlog United States
    • April 25, 2019
    ...might have prejudiced [Plaintiffs’] ability to prove the claims set forth in [their] Complaint.” Telectron, Inc. v. Overhead Door Corp., 116 F.R.D. 107, 110 (S.D. Fl. 1987). Therefore, the Court concluded sanctions were appropriate under Rule 37(e)(1). Because the Court concluded that the e......
4 books & journal articles
  • Spoliated evidence: better than the real thing?
    • United States
    • Florida Bar Journal Vol. 71 Nbr. 7, July 1997
    • July 1, 1997
    ...of consciousness of a weak case." 849 F. Supp. at 1528 (emphasis added).[8] Additionally, in Telectron, Inc. v. Overhead Door Corp., 116 F.R.D. 107 (S.D. Fla. 1987), the court applied three elements necessary to justify defaulting the defendant for destruction of documents, with "......
  • A reason to doubt: the suppression of evidence and the inference of innocence.
    • United States
    • Journal of Criminal Law and Criminology Vol. 100 Nbr. 2, March 2010
    • March 22, 2010
    ...Rule of Evidence 403 finding the evidence was both collateral and cumulative. Id. at 37; see also Telectron, Inc. v. Overhead Door Corp., 116 F.R.D. 107, 136 (S.D. Fla. 1987) (reasoning that informing jury of discovery misconduct may consume jury's attention and divert them away from substa......
  • The "big lie".
    • United States
    • Florida Bar Journal Vol. 73 Nbr. 7, July 1999
    • July 1, 1999
    ...982,984 (8th Cir. 1992) (court has inherent power to sanction litigants for improper conduct); Telectron, Inc. v. Overhead Door Corp., 116 F.R.D. 107,126 (S.D. Fla. 1987) (stating the general rule). It is equally well-established that those inherent powers include the authority to dismiss t......
  • Procrastination, deadlines, and statutes of limitation.
    • United States
    • William and Mary Law Review Vol. 50 Nbr. 2, November 2008
    • November 1, 2008
    ...approach to spoliation is to abandon the effort to adjudicate the merits altogether. See, e.g., Telectron, Inc. v. Overhead Door Corp., 116 F.R.D. 107, 126 (S.D. Fla. 1987) (entering default judgment against a defendant after its corporate counsel destroyed documents responsive to a pending......