From Victor Stanley, Inc. v. Creative Pipe, Inc., 2010 U.S. Dist. LEXIS 93644 (D. Md. Sept. 9, 2010):

Through four years of discovery, during which Defendant Mark Pappas, President of Defendant CPI, had actual knowledge of his duty to preserve relevant information, Defendants delayed their electronically stored information ("ESI") production; deleted, destroyed, and otherwise failed to preserve evidence; and repeatedly misrepresented the completeness of their discovery production to opposing counsel and the Court. Substantial amounts of the lost evidence cannot be reconstructed. After making repeated efforts throughout discovery to try to effect preservation of ESI evidence and obtain relevant ESI evidence to support its claims, Plaintiff has identified eight discrete preservation failures, as well as other deletions that did not permanently destroy evidence, in a byzantine series of events. *** At the end of the day, Defendant did not rebut, but indeed acknowledged, that the majority of Plaintiff's allegations were accurate. Moreover, without conceding any inappropriate motive on their part, Defendants stated their willingness to acquiesce in the entry of a default judgment on Count I (which alleges copyright infringement), the primary claim filed against them. That Defendants Pappas and CPI would willingly accept a default judgment for failure to preserve ESI in the primary claim filed against them speaks volumes about their own expectations with respect to what the unrebutted record shows of the magnitude of their misconduct, and the state of mind that must accompany it in order to sustain sanctions of that severity.

For the reasons stated herein, Plaintiff's Motion will be GRANTED IN PART and DENIED IN PART, and it further is recommended that, in addition to the relief ordered by this Memorandum and Order, Judge Garbis enter an Order granting a default judgment against Defendants with regard to Count I of the Complaint (which alleges copyright infringement). Among the sanctions this memorandum imposes is a finding, pursuant to Fed. R. Civ. P. 37(b)(2)(A)(vii), that Pappas's pervasive and willful violation of serial Court orders to preserve and produce ESI evidence be treated as contempt of court, and that he be imprisoned for a period not to exceed two years, unless and until he pays to Plaintiff the attorney's fees and costs that will be awarded to Plaintiff as the prevailing party pursuant to Fed. R. Civ. P. 37(b)(2)(C). The recommendation that a default judgment be imposed as to Count I is made pursuant to Fed. R. Civ. P. 37(b)(2)(A)(vi), based on the Defendants' spoliation of evidence, as further described herein. As noted, Defendants themselves have agreed that such a sanction is appropriate. ***

[Footnote 3] Imposing contempt sanctions pursuant to Rule 37(b)(2)(A)(vii), particularly including a sentence of imprisonment, is an extreme sanction, but this is an extreme case. For reasons that are much more fully explained below, this sanction is not a form of criminal contempt, which could not be imposed without compliance with Fed. R. Crim. P. 42, but rather a form of civil contempt, inasmuch as Pappas may purge himself of his contempt, and concomitantly avoid imprisonment, by performing the affirmative act of paying Plaintiff's attorney's fees and costs incurred in connection with successfully prosecuting this motion. Hicks v. Feiock, 485 U.S. 624, 631-32, 108 S. Ct. 1423, 99 L. Ed. 2d 721 (1988); Buffington v. Baltimore Cnty., Md., 913 F.2d 113, 133 (4th Cir. 1990). *** A magistrate judge's finding of a party in civil contempt as a discovery violation is reviewable by the district court, as is any non-dispositive discovery order, pursuant to Local Rule 301.5.a, which permits a party to file objections to a magistrate judge's discovery rulings within fourteen days.

***

[A]ssessing appropriate sanctions for proven failure to preserve evidence, whether ESI or not, is a complex task, made so in large part by the need to evaluate the relevance of the evidence lost and the prejudice to the party claiming injury because of the spoliation. *** I have described eight ways in which Defendants willfully and permanently destroyed evidence related to this lawsuit, as well as their failed attempts to destroy evidence that later was recovered. *** I have explained the relevance of the evidence lost and why the loss caused prejudice to Plaintiff in prosecuting its case. Taken individually, each section demonstrates intentional misconduct done with the purpose of concealing or destroying evidence. Collectively, they constitute the single most egregious example of spoliation that I have encountered in any case that I have handled or in any case described in the legion of spoliation cases I have read in nearly fourteen years on the bench. When reading other spoliation cases, it appears that frequently the Court finds culpable conduct, often gross negligence or intentional wrongdoing, but there is really no convincing showing that what was lost was harmful or that, despite the obvious frustration and considerable expense of chasing down the facts to prove the spoliation, the party that proved the spoliation was actually handicapped in proving its case in any significant way. In Rimkus Consulting Group, Inc. v. Cammarata, 688 F. Supp. 2d 598, 607-08 (S.D. Tex. 2010), for example, the defendants were found to have committed intentional destruction of ESI, but what was lost included evidence helpful to the spoliators, as well as harmful. Faced with bad conduct but minimal prejudice, courts are understandably reluctant to impose the most severe sanctions, especially case-dispositive ones.

But this case is in an entirely different posture. Plaintiff has proved grave misconduct that was undertaken for the purpose of thwarting Plaintiff's ability to prove its case and for the express purpose of hamstringing this Court's ability to effect a just, speedy, and inexpensive resolution of a serious commercial tort. The prejudice to Plaintiff is clear and has been described in each of the sections above. It is helpful, but of little comfort, that Defendants themselves agree with my assessment that the lost or destroyed ESI was relevant, and its absence as evidence prejudicial to Plaintiff. ***

That the duty [not to spoliate] is owed to the court, and not to the party's adversary is a subtle, but consequential, distinction. A proper appreciation of the distinction informs the Court's decision regarding appropriate spoliation sanctions. Where intentionally egregious conduct leads to spoliation of evidence but causes no prejudice because the evidence destroyed was not relevant, or was merely cumulative to readily available evidence, or because the same evidence could be obtained from other sources, then the integrity of the judicial system has been injured far less than if simple negligence results in the total loss of evidence essential for an adversary to prosecute or defend against a claim. In the former instance, the appropriateness of a case-dispositive sanction is questionable despite the magnitude of the culpability, because the harm to the truth-finding process is slight, and lesser sanctions such as monetary ones will suffice. In contrast, a sympathetic though negligent party whose wan of diligence eliminates the ability of an adversary to prove its case may warrant case-dispositive sanctions, because the damage to the truth-seeking process is absolute. Similarly, certain sanctions make no logical sense when applied to particular breaches of the duty to preserve. For example, an adverse inference instruction makes little logical sense if given as a sanction for negligent breach of the duty to preserve, because the inference that a party failed to preserve evidence because it believed that the evidence was harmful to its case does not flow from mere negligence--particularly if the destruction was of ESI and was caused by the automatic deletion function of a program that the party negligently failed to disable once the duty to preserve was triggered. The more logical inference is that the party was disorganized, or distracted, or technically challenged, or overextended, not that it failed to preserve evidence because of an awareness that it was harmful. In short, matching the appropriate sanction to the spoliating conduct is aided by remembering to whom the duty to preserve is owed. ***

[I]t is questionable whether the interests of justice truly are served if a court imposes case-dispositive sanctions for clearly culpable conduct resulting in spoliation of evidence absent a finding that the failure to preserve evidence resulted in the loss of evidence that was relevant, or caused prejudice to the spoliating party's adversary, notwithstanding the amount of time it took the court to resolve the spoliation issue, or the concomitant "opportunity cost" to the court occasioned by its inability to work on other pressing matters because of the need to resolve the spoliation motion. ***

The bottom line is that resolution of spoliation motions takes a toll on the court, separate from that extracted from the litigants, for which there is no satisfactory remedy short of criminal contempt proceedings, which are unlikely to be initiated absent extraordinary circumstances. In fact, research has revealed only one instance to date in which a court has initiated criminal contempt proceedings against a party for spoliation of ESI in a civil case. See SonoMedica, Inc. v. Mohler, No. 1:08-cv-230 (GBL), 2009 U.S. Dist. LEXIS 65714, 2009 WL 2371507, at *1 (E.D. Va. July 28, 2009)***.