From Sunrider Corp. v. Bountiful Biotech Corp., 2010 U.S. Dist. LEXIS 117346 (C.D. Cal. Nov. 3, 2010):

Perhaps most significantly, Annie Wu's supplementary declaration admitted that as discovery was pending in September 2009, BHTC destroyed documents. *** Annie Wu testified that "non-essential documents were discarded if they were deemed to serve no purpose." ... Chen's counsel later admitted that it was impossible to determine which documents had been destroyed. This constituted spoliation of evidence.

Defense counsel argues that there was no spoilation of evidence by Chen because of documents that BHTC discarded. It insists that there was no evidence that any of the discarded documents were relevant to any discovery requests, and, furthermore, that Chen could not be responsible for BHTC's acts. The Court rejects this argument. To start, it is ludicrous to suggest that discarding documents is permissible during the course of a discovery request simply because the plaintiff cannot show that the documents were relevant; that logic would allow the destruction of many highly relevant documents of which a plaintiff simply had not known by virtue of the discovery request not having been complied with yet. Moreover, it seems all but obvious that, as Plaintiffs' Response notes, the documents that BHTC destroyed must have included necessary records to aid the company it its tax returns, as well as other critical financial documentation. *** In terms of whether Chen had the requisite culpability and control over the discarded documents, it is clear from Chen's former status as a majority shareholder in BHTC that he had the necessary "control" over the BHTC documents. More significantly, Chen filed his false declaration stating that he had never been a shareholder of BHTC at the same time as Plaintiffs' original motion to compel was filed. ***

The Ninth Circuit has consistently employed a five factor test to determine whether dismissing a case as a sanction is appropriate. The factors are: "(1) the public's interest in expeditious resolution of litigation; (2) the court's need to manage its docket; (3) the risk of prejudice to the [opposing party]; (4) the public policy favoring disposition of cases on their merits; and (5) the availability of less drastic sanctions." In re Exxon Valdez, 102 F.3d 429, 433 (9th Cir. 1996); see Valley Eng'rs Inc. v. Elec. Eng'g Co., 158 F.3d 1051, 1057 (9th Cir. 1988), cert denied 526 U.S. 1064 (1999). Because the first two factors almost always weigh in favor of granting default judgment and the fourth factor against granting default judgment, the key factors in determining whether a default judgment should be entered are the risk of prejudice and the availability of less drastic sanctions. See Valley Eng'rs , 158 F.3d at 1057; Adriana Int'l Corp. v. Lewis & Co., 913 F.2d 1406, 1412 (9th Cir. 1990); Wanderer v. Johnston, 910 F.2d 652, 656 (9th Cir. 1990); Malone v. United States Postal Service, 833 F.2d 128, 130 (9th Cir. 1987).