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Exercising Discretion and Lifting Sanctions: The Case of CrossFit’s Big Win Against Discovery Violations 

CrossFit, Inc. sued National Strength

A federal judge in California awarded severe sanctions on Dec. 4, 2019 in the case of CrossFit, Inc. v. National Strength and Conditioning Association. CrossFit sued the National Strength and Conditioning Association (NSCA) for publishing false data that damages the workout company’s image and revenue. During litigation, the NSCA committed several egregious discovery violations, including evidence destruction and perjury. The judge awarded CrossFit $3,997,868.66 in attorney’s fees, terminated sanctions with judgment for CrossFit, and issued sanctions outlining the NSCA’s harmful conduct. In addition to the monetary sanctions award, CrossFit will receive even more money in damages. The parties and the court have not yet determined this amount.

Stretching the Truth & Discovery Violations

The NSCA is an organization that often conducts studies to help support and inform the strength and conditioning industry. In 2013, the organization published a study claiming that doing CrossFit workouts came with high risk of overuse or injury. The organization also claimed that their study’s findings were based on scientific data. CrossFit filed a lawsuit against NSCA, alleging that the study contained falsified this data. CrossFit contended that the false data in the study hurt CrossFit’s overall business around the country, including revenue from military seminars.

It later came out that the NSCA did in fact falsify this data and deceived the public about the risks associated with doing CrossFit workouts. During litigation, the court also discovered the NSCA intentionally destroyed evidence, concealed evidence, and lied to the court to cover their actions. As part of the cover up act, NSCA failed produce devices relevant to the study, wiped/deleted data from devices during pending litigation, failed to sufficiently help identify document custodians, and failed to provide sufficient information about the devices or servers containing potentially relevant data.

NSCA Deception and the Weight of Sanctions

CrossFit filed a motion for terminating sanctions under Federal Rule of Civil Procedure (FRCP) 37 based on the NSCA’s discovery violations. As noted above, the judge granted this motion and awarded almost four million in attorney’s fees. Before this, the court gave the NSCA warnings about the discovery misconduct and imposed lesser sanctions, instead, the behavior escalated. Therefore, the court found a dismissal with prejudice appropriate because the NSCA’s pattern of deception and discovery abuses would make any future trial impossible. The judge even remarked: “In 25 years on the bench, this is the first case that the Court has ever had that has gotten to this point. This is a serious, momentous issue that the Court does not take lightly. Having carefully considered the record, the severity and frequency of defendant’s bad faith misconduct is as egregious as anything this Court has ever seen or read in any of the cases.”

FRCP 37(e)(2)(C) specifically states:

If electronically stored information that should have been preserved in the anticipation or conduct of litigation is lost because a party failed to take reasonable steps to preserve it, and it cannot be restored or replaced through additional discovery, the court only upon finding that the party acted with the intent to deprive another party of the information’s use in the litigation may dismiss the action or enter a default judgment.

— Federal Rule of Civil Procedure

 

One of the key reasons for granting terminating sanctions was the multitude of devices that the NSCA failed to produce because they lost them or did not properly identify custodians to help collect data from these devices. Since so many actual devices were missing, the parties had no way of attempting to recover or replace the data. Additionally, the NSCA did not implement a formal written litigation hold until four years after litigation begun. The court held that the NSCA clearly did not take reasonable steps to preserve this data. Further evidence of the party’s resistance to produce documents after numerous requests and court orders, along with deliberate mass document deletion illustrated intent to deprive CrossFit of this discovery.

The court also found that termination was appropriate under FRCP 37(b)(2)(A), which allows termination if a party fails to obey a discovery order, and such noncompliance is a result of willfulness, fault, or bad faith. The NSCA had repeatedly ignored multiple orders relating to discovery compliance and even filed declarations that it had not destroyed evidence, which was found to be untrue.

The decision also noted that termination is appropriate based on the court’s inherent authority to issue such sanctions, disagreeing with the highly debated contention that amended Rule 37 foreclosed the use of inherent authority.

Conclusion

This case reminds litigators and their clients about the importance of honesty and transparency during discovery. Deceptive litigation practices and discovery misconduct will always be grounds for sanctions, and could warrant the severe sanctions found in the CrossFit case if the party shows a pattern of bad faith. Litigators should always advise their clients to preserve and produce all relevant documents, be truthful to the court, and comply with discovery orders. If you found this blog informative, you may enjoy reading Top eDiscovery Trends For Legal Tech Teams To Follow or the Epiq Angle Blog.

 

Filed under: ediscovery

The contents of this article are intended to convey general information only and not to provide legal advice or opinions.

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