United Corp. v. Tutu Park Ltd., No. ST-2001-CV-361, 2015 WL 457853 (V.I. Jan. 28, 2015), Court Denies Sanction Motion and Finds Unavailability of Records Due to Records Retention Policies and Software and Database Changes Reasonable
This is a breach of contract case involving the leasing of a premise at Tutu Park Shopping Mall in St. Thomas, U.S. Virgin Islands, for the purpose of operating a supermarket. On December 12, 2012, the Court ordered Kmart, a non-party to the suit, to produce twenty-one categories of documents. Kmart filed a motion to quash the subpoena and Plaintiff filed a motion to compel Kmart to produce responsive documents in accordance with the subpoena. Although it admitted that Kmart produced responsive documentation, the Plaintiff requested an order of contempt and sanctions, finding Kmart’s production to be unsatisfactory. Among other documents, Plaintiff sought comprehensive financial information relating to the sale of merchandise at the Kmart Store at Tutu Park Mall, Virgin Islands, for each year from 1991 until the present. In response, Kmart produced documents pertaining to merchandise sales for the years 2000 through 2012, however claimed that it did not maintain records prior to 2000. As a result of changes in how it did sales reporting, Kmart also indicated that it could not estimate pre-tax income for goods sold for the years 2010 forward. Kmart produced a summary of its gross sales, gross profit, net sales, and net profit for the years 2006 through 2013, however asserted that due to software changes, and database conversions, any additional data that might be responsive was unreadable, and could not be recreated with any certainty.
The Court observed that while Kmart had not produced documents for all the dates requested in the Plaintiff’s subpoena, Kmart’s production was a “diligent” attempt to comply with the Court’s order and “not an attempt to withhold otherwise-discoverable documents.” Noting that Kmart’s records retention policy did not provide for the retention of documents before the year 2005, the Court found that “a corporation may be justified if it chooses not to retain records over nine years old.” The Court did not agree with Plaintiff’s position that Kmart’s arguments were not “credible” because as a “multi-national corporation” its records would be “necessarily computerized.” The Court observed that not all multinational corporations with ESI store it for an extended period of time. The Court noted that “(c)orporations typically employ data retention policies and dispose of records after a period of time.” The Court did not find that Kmart’s use of its records retention policy to dispose of documents warranted a contempt order, especially considering the age of the documents that the Plaintiff requested.
The Court found it reasonable that Kmart’s ability to access records would have been disrupted by its bankruptcy, and merger with Sears, Roebuck & Co. In addition, the Court accepted Kmart’s explanation that certain records were unavailable due to software and database conversions. The Court rejected Plaintiff’s concerns regarding Kmart’s failure to produce ESI and reasoned that in light of the “fact that, in some cases, Plaintiff seeks records dating back to 1991, in combination with the fact that Kmart has undergone internal reorganizations, Kmart’s internal review constitutes sufficient diligence to avoid an order of contempt from this Court.” Rejecting Plaintiff’s arguments to the contrary, the Court found that Kmart made “a diligent attempt to comply in a reasonable manner” with the Court’s order for the production of documents.
In conclusion, the Court denied the Plaintiff’s motions for an order of contempt and sanctions.\
United Corp. v. Tutu Park Ltd., No. ST-2001-CV-361, 2015 WL 457853 (V.I. Jan. 28, 2015)