Commercial Litigation and Arbitration

Spoliation — Deeming Facts Admitted in Addition to Adverse Inference and Fees

Chevron USA, Inc. v. M & M Petroleum Servs., Inc., 2009 U.S. Dist. LEXIS 68829 (C.D. Cal. Aug. 6, 2009):

(a) The Court deems established —- and draws an inference adverse to M&M and concludes that the documents spoliated by M&M support Chevron's allegations of the following facts: (i) the Secret Books (Ex 90; 111-113 and 133) are M&M's financial records; (ii) M&M's failure to produce the Secret Books to Oseguera during his examination of M&M in May 2007 was a breach of the Dealer Agreements; (iii) the Secret Books reflect the financial revenue and expense figures of M&M, including but not limited to M&M's ASB revenue; (iv) the Secret Books contain revenue that is not reported to Chevron or, likely, to taxing authorities; and (v) M&M failed to pay Chevron rent in breach of the Dealer Agreements.

(b) The Court imposes monetary sanctions of $25,000 against M&M to reimburse Chevron for the substantial expenses needlessly incurred due to M&M's discovery misconduct and Ghaneeian's perjury.

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