Currently before the court is CCG’s renewed motion for sanctions. (Doc. 90.) Ritrama has filed an opposition (doc. 96), and CCG filed a reply (doc. 97).

I. PROCEDURAL BACKGROUND

The dispute was originally filed in the Court of Common Pleas for Cuyahoga County (Ohio) on Oct. 29, 2007, but dismissed without prejudice and subsequently re-filed in this court under its diversity jurisdiction. (Doc. 1.)

A settlement conference was held on April 2, 2010, without success. (Doc. 52.) An answer to the complaint, with an amended counterclaim, was filed with leave of court on June 9, 2010. (Doc. 57.) The plaintiff filed an answer to the counterclaim on July 21, 2010. (Doc. 61.)

The defendant Ritrama filed a motion for summary judgment on Jan. 31, 2011. (Doc. 66.) The plaintiff CCG filed an opposition on March 2, 2011. (Doc. 68.) Ritrama filed a reply brief on March 16, 2011. (Doc. 82.)

On April 25, 2011, the court had granted a limited re-opening of discovery sought by CCG for the purpose of conducting a single deposition. (Doc. 89.) After the deposition, Ritrama filed a supplement to its motion for summary judgment on May 26 (doc. 98), and CCG filed a supplement to its opposition on June 9, 2011 (doc. 99).

CCG and Defendant Ritrama, Inc., entered into the Manufacturing Agreement on Oct. 16, 2001. See generally doc. 1, PX A, Manufacturing Agreement. Under this contract, Ritrama manufactured CCG’s products and then sold those products to CCG. CCG would then sell those products to its own customers. Often CCG instructed Ritrama to ship the products directly (“drop ship”) to CCG’s customers. Since the two companies were involved in substantially similar businesses, it was foreseeable they might compete over the same customers. CCG gave Ritrama the contact information for its customers and did not want Ritrama to take these customers from CCG. Therefore, the parties created a contractual provision titled “Non-Solicitation of Business,” prohibiting Ritrama from soliciting and selling the same products to CCG’s customers. (Doc. 1, PX A, Manufacturing Agreement, § 8.2.) This prohibition continued for one year after the termination of the agreement. Id.

CCG’s claims are based on Ritrama’s alleged use of CCG’s customer information and solicitation of business from its customers. CCG alleged that Ritrama breached the contract by soliciting business from CCG’s customers during the contractual period and during the year after termination of the agreement. CCG attempted to prove these allegations by obtaining Ritrama’s sales records. CCG intended to use these records to show that Ritrama made sales to CCG’s customers which were prohibited by the contract. See generally doc. 1.

A. Discovery

*2 Throughout this litigation, the parties have engaged in ongoing discovery battles over Ritrama’s sales records, and the form in which those records should be produced. On July 16, 2009, the parties met via telephone conference to discuss the discovery issues in the case. (Doc. entry of 7/16/2009.) The parties were unable to reach an agreement during this conference and were instructed by the court to meet the next day in an attempt to resolve the issues. Id. The next day the parties were again unable to reach an agreement.

On July 22, 2009, both parties filed motions to compel discovery. (Doc. 29, 31, 42.) CCG sought a court order requiring Ritrama to produce “compiled data from its computer system.” (Doc. 31, at 2.) CCG claimed that Ritrama refused to produce readily available computer data. Instead, Ritrama attempted to fulfill its discovery responsibilities by directing CCG to come inspect the paper records stored in Ritrama’s Minnesota warehouse. (Doc. 31, brief in support, at 14.)

On July 30, 2009, another telephone conference was held regarding Ritrama’s motion for a protective order. During this meeting the court ordered Ritrama to identify which of CCG’s customers Ritrama made sales to between 2001 and 2008. The next day Ritrama submitted a list of CCG’s customers. This list identified customers Ritrama sold products to, and the year in which the sales occurred. (Doc. 90, PX B.)

On August 7, 2009, the parties participated in another telephone conference but were still unable to reach an agreement regarding the discovery of Ritrama’s sales records. (Doc. entry of 8/7/2009.) During this conference the court granted CCG leave to file a supplemental motion to compel. Id. The docket entry stated that the court would rule after Ritrama had filed its opposition and that sanctions would be considered. Id. Subsequently, the parties filed the motion and opposition as discussed in the August 7, 2009, entry. (Doc. 38, 40.) Attached to CCG’s supplement to the motion to compel were two hundred and four pages of sales records Ritrama produced from its computer system. (Doc. 38, PX D.)

The court held yet another telephone conference on September 4, 2009, regarding the motion to compel filed by CCG and the subsequent response by Ritrama. (Doc. entry of 9/8/2009.) After this conference the court issued a Memorandum and Order outlining the results of the telephone conference. (Doc. 42.) This order required Ritrama to produce all information supporting its counterclaims within a week, consumer data for the years 1996-2001, and to make its “customer service files” available for inspection. (Doc. 42.) The Order went on to state “[n]o other discovery issues were raised by either party. The other discovery issues in the motions to compel (doc. 29, 31) are agreed to be moot, with the exception of the issue of sanctions, which the court will address at a future date.” (Doc. 42, at 3.)

Two months later, another telephone conference was held “to discuss deadlines and related discovery issues.” (Doc. entry of 11/18/2009.) Based on this conference, the court issued another Memorandum and Order. (Doc. 44.) The order directed Ritrama to “provide CCG with the names of those customers (and, to the full extent possible, products sold to those customers) which Ritrama intends to assert under a defense of pre-existing relationship, on or before Friday, Nov. 27, 2009.” (Doc. 44, at 1.)

Over a year later, the court held another telephone conference to discuss the discovery deadlines as well as establishing a dispositive motion deadline. (Doc. 62.) After this conference the court issued the Minutes of Proceedings. (Doc. entry of 12/7/2010.) The minutes stated that “[p]arties report that discovery is proceeding satisfactorily.” Id.

*3 On the day of the dispositive motion deadline, Ritrama submitted its motion for summary judgment. (Doc. 66.) CCG filed its opposition (doc. 68), along with the depositions of Thomas Bouchard, Gary Schambs, Catherine Heckman, Daryl Hanzal, and Christopher Beigie. (Doc. 69-78.)

CCG subsequently filed a motion in limine, which sought to exclude evidence that contradicts or supplements testimony from the Rule 30(b)(6) deposition filed by Ritrama. (Doc. 80.) In response, the court imposed monetary sanctions against Ritrama for its violation of Rule 30(b)(6), pursuant to Rule 37(d)(3), in response to the motion in limine. (Doc. 106.) CCG has filed a bill of costs, and Ritrama has contested the reasonableness of the fees requested.

The court now turns to the renewed motion for sanctions. (Doc. 90.)

II. ALLEGED MISREPRESENTATIONS REGARDING DATA AVAILABLE ON RITRAMA’S COMPUTERS

A major issue between the parties is the discovery of Ritrama’s sales records. CCG contends that Ritrama has consistently misrepresented its ability to produce the requested sales records from Ritrama’s computer systems.

Ritrama first provided an explanation of what information was stored on its computer system in an affidavit submitted July 28, 2009. The affidavit signed by Michelle Marsolias states that the UNIX system used by Ritrama did not contain the product descriptions for every product because unused product descriptions were periodically purged from the system. (Doc. 33-1.) As a result of the purging process, the only way for Ritrama to supply all the information CCG requested was to allow CCG to view the paper “customer files” which were stored in alphabetical order at Ritrama’s headquarters in Minneapolis. Id.

CCG claims that there have been multiple statements made that show the Marsolais affidavit was false. CCG highlights four portions of the record that it claims show Ritrama has access to more digitally stored information than described in the original affidavit. These included a letter to the court listing which customers Ritrama had a prior business relationship with (doc 90, PX B), deposition testimony by Ritrama’s president Daryl Hanzal (doc. 37), a second affidavit submitted by Marsolias (doc. 82-5), and computer-generated records that Ritrama provided to CCG (doc. 38, PX D).

The claims that Ritrama has misrepresented what information is electronically stored in its computer systems are without merit. Ritrama clearly explained in the original Marsolais affidavit that all the information requested was contained in Ritrama’s computer database except for the product descriptions. (Doc. 33-1.) All of the statements and records CCG cites are consistent with Ritrama’s description of the available electronically stored information. Ritrama could identify to whom it sold products and when. (See doc. 37, at 36-39; doc. 82-5.) But Ritrama could not always identify what products were sold, since the product description was missing from some of the data entries. This problem was illustrated in the computer generated data that was provided to CCG. (Doc. 38, PX D.) In conclusion, Ritrama has not misrepresented what information was available on its computer system during the discovery process.

III. FAILURE TO DISCLOSE SPECIFIC RELATIONSHIPS

*4 CCG argues in its renewed motion for sanctions that Ritrama concealed sales made to CCG’s customers. CCG claims that Ritrama falsely denied having any relationship with these companies in a July 31, 2009, letter to the court. CCG supports this contention with sales records from four companies: Recco, ID Concepts, Banta, and Serigraph Resort Wear, Inc. CCG maintains that these records show that Ritrama in fact had a relationship with each of these companies.

As additional evidence, CCG produced a series of letters and emails between CCG president Chris Beigie and Ritrama president Daryl Hanzal. In a letter dated March 15, 2005, Beigie asks Hanzal to identify any customers from the list attached to the letter that were covered under the non-solicitation clause in the contract. (Doc. 97, PX D.) The list included Banta, ID Concepts, Recco Tape & Lable, and Serigraph. (Doc. 97, PX D, at 2.)

In response to the letter, Hanzal sent an email identifying twenty customers from the list which, in his opinion, fell under the non-solicitation clause of the contract. (Doc. 97, RX E.) This list of twenty companies did not include Banta, ID Concepts, Recco, or Serigraph. Beigie sent a reply email in which he requested clarification why the other thirty eight accounts, including the four mentioned above, were not covered by the agreement. Id. Hanzel responded that “the remaining accounts do not fall under the contract. They are all accounts that Ritrama had business with before our agreement.” Id. At this point in time Ritrama acknowledged that Banta, ID Concepts, Recco, and Serigraph all had a sales history with Ritrama. However, during the present litigation, Ritrama submitted the July 31, 2009, letter to the court representing it had not made any sales to these companies.

A. Recco

Ritrama represented in the July 31, 2009, letter to the court that it did not sell products to Recco between 2001 and 2008. (Doc. 90, PX B.) In an August 2009 deposition, Mr. Hanzal stated that the records did not show any account number for Recco. (Doc. 74, at 64-65.) However, CCG recovered 61 pages of sales records showing that Ritrama and Recco had a business relationship spanning from 2005 to 2009. (Doc. 90, PX D.) Ritrama acknowledges previous statements claiming Recco was not one of Ritrama’s customers were erroneous. Ritrama does not dispute the falsity of its July 31, 2009, representations, but claims that the misrepresentations were made without an intention to mislead CCG or the court. Based on this evidence, Ritrama violated the July 30, 2009, court order requiring it to identify which of CCG’s customers Ritrama had sold products to.

B. Banta

The July 31, 2009, letter listed Banta with a customer ID number. However, the list did not denote any sales from Ritrama to Banta between 2001 and 2008. (Doc. 90, PX B.) CCG obtained sales records from directly from Banta showing sales from Ritrama to Banta between 2001 and 2008. (Doc. 90, PX F.) Ritrama knew that Banta was its customer at some point. This is clear from the inclusion of a customer ID number in the July 31, 2009, list. But Ritrama claimed there were no sales to Banta during relevant time period. Ritrama tries to justify this error by showing that Banta was sold to RR Donnelley and therefore Ritrama listed sales to Banta under the name RR Donnelley. (Doc. 96, DX 7.)

It is true that RR Donnelley purchased Banta, based on the records submitted by both parties. There are two facts, however, that seem to undermine Ritrama’s explanation. First, Ritrama’s list shows that Banta had a customer ID number but there were no records of sales to Banta before the 2007 sale to RR Donnelley. (Doc. 90, PX B.) If Banta had a customer ID number, then why would there be no record of sales under that ID for dates prior to the sale of the company? Second, the records submitted by CCG show that orders were placed by Banta in March of 2008, after Banta was sold to RR Donnelley. (Doc 90, PX F, at 59-60.) The sales to RR Donnelley started at least as early as August of the previous year. (Doc. 96, DX 7.) Why did Ritrama take orders from “Banta” after the company was sold to RR Donnelley if the two companies were both listed together under RR Donnelley? Based on this evidence, Ritrama violated the July 30, 2009, court order requiring it to identify which of CCG’s customers Ritrama had sold products to.

C. ID Concepts

*5 ID Concepts appears on Ritrama’s list with no customer ID number and no sales listed from 2001-2008. (Doc. 90, PX B.) Ritrama claims that this error is another miscommunication. Ritrama states that the proper name for ID Concepts is Computype. The company is listed under Computype in Ritrama’s system and was therefore overlooked during the completion of the July 31, 2009, list.

CCG submitted records showing multiple sales from Ritrama to ID Concepts. (Doc. 90, PX E.) The ID Concept records submitted by CCG list the company name at the top left corner of the document as “Computype Identification Concepts.” Id. However, the products were shipped to “ID Concepts 38 Locke Road Concord, New Hampshire.” Ritrama’s explanation is further undermined by the previous statements made by Ritrama president Hanzel indicating that ID Concepts was one of Ritrama’s customers. (Doc. 97, PX E.) Based on this evidence, Ritrama violated the July 30, 2009, court order requiring it to identify which of CCG’s customers Ritrama had sold products to.

D. Serigraph

Finally, CCG submitted records that show there were sales between Ritrama and California-based Serigraph. (Doc. 90, PX G; doc. 68, PX E.) The list attached to the July 31, 2009, letter showed sales to two different companies named Serigraph. Ritrama never denied sales made to the California-based Serigraph. The problem was that Ritrama had multiple customers named Serigraph. In the letter to the court, Ritrama’s attorney stated “I was further informed by Ritrama that it could narrow the list down even more if it were only provided with the state the company was located in rather than the full address.” (Doc. 90, PX B.)

CCG sought information about Serigraph during discovery but did not indicate where Serigraph was located. CCG was inquiring about the California-based company not the Serigraph company based in Wisconsin. This miscommunication became obvious when Ritrama submitted the sales records for the Wisconsin-based Serigraph to CCG during discovery (Doc. 38, PX D.) The miscommunication continued when Ritrama subsequently submitted that same information to the Court as part of its summary judgment motion. (Doc. 82-6.) CCG does not identify any point on the record or submit any evidence that it took any steps to clear up this problem. Based on this evidence, Ritrama did not fail to identify sales made to Serigraph. In fact Ritrama disclosed multiple relationships with companies named Serigraph. The problem was created by a genuine lack of communication between the parties.

As additional support for Ritrama’s actions, Ritrama cites an email chain attached to its memorandum in opposition to the motion for sanctions. This email clearly states that the California Serigraph company purchased a single product from Ritrama throughout the entire time the two companies conducted business with each other. These sales started in 1995, six years before the manufacturing contract was created. (Doc. 96, DX 5-6.) Ritrama had nothing to hide by confusing the two companies since CCG’s claims in relation to the California Serigraph were unsupported by the evidence.

E. Factual Conclusions

Based on the evidence provided by the parties, Ritrama failed to provide the sales information it possessed related to Banta, Recco, and ID Concepts in the July 31, 2009, letter to the Court. Ritrama provided no explanation for its failure to identify Recco as a customer. Ritrama provides explanations for why it did not provide information for Banta and ID Concepts, however, these explanations are less credible when Ritrama’s previous statements acknowledged a sales relationship with Banta and ID Concepts. (Doc. 97, PX D, E.) At a minimum Ritrama acted negligently when it compiled the July 31, 2009, list indicating that these three companies were not relevant in this suit. (Doc 90, PX B.)

*6 On the other hand, Ritrama provided a credible explanation for why information about the “wrong” Serigraph company was turned over to CCG. Sales records between both Serigraph companies were identified in the July 31, 2009, letter. (Doc. 90, PX B.) Ritrama made CCG and the court aware that the identity of the state in which each company was based would help narrow down the list. Id. CCG did not point to any affirmative steps it took to help Ritrama identify the correct Serigraph. Therefore, Ritrama did not violate an order of the court by failing to identify the “correct” Serigraph.

IV. FAILURE TO PRESERVE EVIDENCE BY RITRAMA’S EMPLOYEE TOM BOUCHARD

CCG argues that Tom Bouchard (“Bouchard”) is an important witness in this case. Bouchard is a former CCG employee who now works for Ritrama as a sales person soliciting new customers regarding future business. CCG first alleges that Bouchard and Ritrama have failed to take steps to preserve relevant information in this case. During the January 2011 deposition[1] Bouchard admitted that he had not been instructed to search for information, emails, documents, respond to interrogatories, or take steps to preserve materials that might be relevant. (Doc. 69, Bouchard dep. II, at 43-44, 84.)

CCG further alleges that Bouchard destroyed his notes and calendars which may have contained information related to the solicitation of CCG clients. Bouchard admitted at deposition that he has been throwing out his notes on a weekly basis for the last few years. (Doc. 69, Bouchard dep. II, at 35-36.) Bouchard admitted that since 2007 he has thrown out his calendars on a yearly basis. (Doc. 69, Bouchard dep. II, at 36-38.) CCG claims that the information contained in the notes and calendars is essential because it would show who Ritrama’s sales personnel talked to, when they talked, and the topics discussed.

Ritrama does not deny that the notes and calendars were destroyed. Nor does Ritrama deny that it did not place a litigation hold on any document(s) that may have been relevant to the present litigation. Instead, Ritrama contends that any information related to solicitation of CCG clients is irrelevant after the non-solicitation period ended on Oct. 21, 2007.

Ritrama also argues that the lack of a “litigation hold” on destruction of Bouchard’s calendars and notes did not matter since Bouchard was under a separate obligation to preserve the materials. This obligation was based on a law suit CCG filed against Bouchard and his former company for the destruction of these documents. In other words, Ritrama should not be held responsible for failure to preserve evidence since Bouchard was under a separate obligation to preserve the same documents. Ritrama does not cite any case authority supporting the proposition that Bouchard’s individual responsibility to preserve relevant information relieves Ritrama of the responsibility to preserve information created or obtained by its employees.

Based on the deposition testimony, it is undisputed that Ritrama’s employee Tom Bouchard destroyed his notes and calendars on a regular basis between March of 2007 and the present.

V. SANCTIONS

A. Inaccurate Disclosure of Sales History

This court has both express power, under Rule 37, and inherent power to impose sanctions for bad faith conduct during discovery. See Fed R. Civ. P. 37; Chambers v. NASCO, Inc. 501 U.S. 32 (1991.) The court’s inherent authority to impose sanctions may only be invoked when the party against whom sanctions are imposed acted in bad faith. Jackson v. Nissan Motor Corp. in USA, 888 F.2d 1391, 1989 WL 128639, at *6 (6th Cir. 1989) (TABLE, text in Westlaw) (citing Roadway Express, Inc. v. Piper, 447 U.S. 752, 765-766 (1980)). Generally, the Supreme Court discourages the use of powers beyond those granted in the Civil Rules to impose discovery sanctions. Societe Internationale v. Rogers, 357 U.S. 197, 207 (1958); see also Wright & Miller, Federal Practice and Procedure, § 2282 (3rd ed. 2010.) Therefore, an examination of the court’s authority under the Civil Rules is the first inquiry.

1. Sanctions available under Civil Rule 37

*7 The Federal Rules of Civil Procedure grant courts the authority to impose sanctions against a party for failure to make disclosures or cooperate in discovery. Fed R. Civ. P. 37. The Rule states that if a party “fails to obey an order to provide or permit discovery, including an order under Rule 26(f), 35, or 37(a), the court where the action is pending may issue further just orders.” Fed R. Civ. P. 37(b.) Under Rule 37, sanctions are appropriate when “a party fails to obey a discovery order merely by failing to comply; no showing of willfulness, bad faith, or malice is needed.” Technology Recycling Corp. v. City of Taylor, No. 04-1798, 2006 WL 1792413, at *5 (6th Cir. June 28, 2006). “Whether the noncompliance with the order was willful or in bad faith bears only on the appropriate sanction.” Id. at *6.

In this case there were multiple discovery orders entered onto the docket. First, the court ordered Ritrama’s attorney to submit “the computer list discussed during the conference.” (Doc. entry of 7/31/2009.) In addition, there was an order entered on Sept. 8, 2009, that required Ritrama to produce all information supporting its counterclaims within a week, consumer data for the years 1996-2001, and to make its “customer service files” available for inspection. (Doc. 42.) Ritrama was also ordered to “provide CCG with the names of those customers (and, to the full possible, products sold to those customers) which Ritrama intends to assert under a defense of pre-existing relationship, on or before Friday, November 27, 2009.” (Doc. 44.)

Pursuant to the July 30, 2009, order, Ritrama’s attorney submitted a list showing which CCG customers Ritrama sold products to from 2001-2008. (Doc 90, PX B.) Ritrama claimed that this list showed the sales to customers on a year by year basis during the relevant period. This list included each of the four companies that CCG brings up in its motion for sanctions. However, the list submitted incorrectly represented that there were no sales made to Recco, Banta, or ID Concepts.

Prior to the commencement of litigation, Ritrama indicated in email correspondence that such information was available with regard to Banta, Recco, and ID Concepts. (See doc. 97, PX D.) The ability to produce this information was further demonstrated when Ritrama submitted records acknowledging the previous sales to Banta and ID Concepts. (Doc. 96, DX 7-8.) Based on the record, Ritrama had the ability to accurately list which companies it had made sales to between 2001 and 2008. The failure to accurately provide this information in the July 31, 2009, letter was a violation of an order of the court. Since Ritrama failed to comply with the July 30, 2009, order, the court has authority to impose sanctions under Civil Rule 37.

Once the court determines sanctions may be imposed, it must then determine what measure of sanctions is appropriate. Phillips v. Cohen, 400 F.3d 388, 402 (6th Cir. 2005.) Rule 37 grants the Court the authority to impose a variety of sanctions, including default judgment and dismissal. Fed R. Civ. P. 37. When selecting an appropriate sanction the court may properly consider both the punishment effect and deterrence effect of the sanction imposed. National Hockey League v. Metropolitan Hockey Club, Inc., 427 U.S. 639, 643 (1976); Patton v. Aerojet Ordnance Co., 765 F.2d 604, 607 (6th Cir. 1985.)

2. Default Judgment

“Dismissal of an action for failure to cooperate in discovery is a sanction of last resort that may be imposed only if the court concludes that a party’s failure to cooperate in discovery is due to willfulness, bad faith, or fault.” Regional Refuse Sys., Inc. v. Inland Reclamation Co., 842 F.2d 150, 153-154 (6th Cir. 1988) (quoting Patton, 765 F.2d at 607). The Sixth Circuit has expanded the Regional Refuse holding to include granting of default judgment as a possible sanction under Rule 37. Stamtec, Inc., v. Anson, No. 05-5300, 2006 WL 2567521, at *5 (6th Cir. Sept. 1, 2006); Fed R. Civ. P. 37(b).

*8 When considering default judgment as a sanction the court must consider four factors. “The first factor is whether the party’s failure to cooperate in discovery is due to willfulness, bad faith, or fault; the second factor is whether the adversary was prejudiced by the dismissed parties failure to cooperate in discovery; the third factor is whether the dismissed party was warned that failure to cooperate could lead to dismissal; and the fourth factor is whether less drastic sanctions were imposed or considered before dismissal was ordered.” Bass v. Jostens, Inc., 71 F.3d 237, 241 (6th Cir. 1996) (citing Bank One of Cleveland, N.A. v. Abbe, 916 F.2d 1067, 1073 (6th Cir. 1990.)

a. First factor: Bad faith

The first factor the court must consider is if the party’s failure to comply with the discovery order was due to willfulness, bad faith, or fault. Bass, 71 F.3d at 241. “A willful violation occurs whenever there is a conscious and intentional failure to comply with [a] court order.” Id. The party against whom sanctions are sought bears the burden to establish that the failure to comply with the court order was not due to the party’s willfulness, bad faith, or fault. Taylor v. Medronics, Inc., 861 F.2d 980, 987 (6th Cir. 1988); Beil v. Lakewood Eng’g & Mfg. Co., 15 F.3d 546, 552 (6th Cir. 1994).

CCG has named four companies which Ritrama falsely stated that it did not sell products to between 2001 and 2008. These companies included Banta, Recco, ID Concepts, and Serigraph. Ritrama has not presented convincing evidence or explanation for why the sales information for Banta, ID Concepts, and Recco was misrepresented in the July 31, 2009, letter to the court.

Ritrama had been aware that CCG was seeking this information since March of 2005. (Doc. 97, DX E.) At that time Ritrama was able to determine who it had made sales to in the past. Id. But when the court ordered the same information Ritrama did not accurately produce the information. (Compare Doc. 90, PX B with Doc. 97, DX E.)

The evidence shows that prior to litigation Ritrama acknowledged that Banta, Recco, and ID Concepts were Ritrama’s customers. These relationships were subsequently denied or not revealed during the discovery process. Based on the history of this case, and Ritrama’s failure to accurately list its customers, the court finds that Ritrama has conducted discovery with a minimum of gross negligence, and possibly an intent to conceal its relationships with these companies.

b. Second factor: Prejudice

Next the court must determine if Ritrama’s conduct has prejudiced CCG. Bass, 71 F.3d at 241.

The court finds that CCG has been prejudiced by Ritrama’s inaccurate statements about its prior dealings with Recco. CCG had sought this information consistently over an extended period of time and was never provided with this information. Ritrama argues that CCG’s claims will fail against Recco since the records establish a pre-existing sales relationship between Recco and Ritrama. To allege that there was no prejudice suffered because a defense was available does not excuse the failure to disclose the relationship in the first place. Ritrama’s failures have caused CCG to incur costs obtaining this information from third parties. In addition, CCG’s attorney was forced to take time away from preparing the case to double check the information provided by Ritrama.

The same is true for Banta and ID Concepts. CCG incurred costs when it was required to obtain the information from third parties. CCG would have lost its claims relating to these companies had they not conducted this investigation. In fact, Ritrama does not offer any explanation or argument suggesting CCG was not prejudiced by the failure to accurately portray Ritrama’s relationship with these companies.

*9 Based on the wasted time and expense incurred by CCG, the court concludes that CCG was prejudiced by Ritrama’s false information related to Recco, Banta, and ID Concepts.

c. Third factor: Prior notice of dismissal

The third factor the court must consider is whether the party was warned that failure to cooperate could lead to dismissal. Bass, 71 F.3d at 241. The Sixth Circuit has held that “routine language in a standard order, warning counsel of possible dismissal as a sanction for failure to comply ... is not necessarily sufficient prior notice to immediately warrant the extreme sanction of dismissal.” Peltz v. Moretti, No. 07-3338, 2008 WL 4181188, at *5 (6th Cir. Sept. 11, 2008) (quoting Freeland v. Amigo, 103 F.3d 1271, 1279 (6th Cir. 1997)).

In the present case, there is only one docket entry where the court mentioned sanctions generally. The entry stated “[t]he other discovery issues in the motions to compel are agreed to be moot, with the exception of the issue of sanctions, which the court will address at a future date.” (Doc. 42.) The court did not specifically mention default judgment as a possible sanction.

The Sixth Circuit requires that the sanctioned party be given clear warning that the harsh sanction of default or dismissal may result from non-compliance with the court order. Freeland, 103 F.3d at 1279. A clear warning was not present in the orders issued by the court. This does not foreclose the imposition of other sanctions but the imposition of default judgment is not appropriate.

d. Fourth factor: Less drastic sanctions

The fourth factor is “whether less drastic sanctions were imposed or considered before dismissal was ordered.” Bass, 71 F.3d at 241. The court has previously sanctioned Ritrama for failing to adequately prepare its president for his deposition. (Doc. 106.) However this sanction occurred after this motion for sanctions was filed. Before the imposition of default judgment, the court must determine if lesser sanctions could be imposed to remedy the violation of the court’s orders.

e. Conclusion

Based on the four factors discussed above, the sanction of default judgment is not appropriate in this case. First, Ritrama was not give clear warning that would put it on notice that failure to comply with the court’s order(s) may result in a default judgment. Second, there were no prior sanctions ordered by the court which proved to be an ineffective means of compelling the discovery sought. Therefore, another form of sanction is more appropriate in this case.

3. Sanctions other than Default Judgment

When selecting an appropriate sanction, the court may properly consider both the punishment effect and deterrence effect of the sanction imposed. National Hockey League, 427 U.S. at 643; Patton, 765 F.2d at 607. The Federal Civil Rules of Procedure allow for a variety of sanctions, including:

Fed. R. Civ. P. 37(b.)

CCG requested an adverse jury instruction against Ritrama be ordered as an alternative to default judgment. As previously stated, when selecting an appropriate sanction, the court may consider both the punishment effect and deterrence effect of the sanction. Patton, 765 F.2d at 607. Even negligent actions that hinder the completion of discovery are properly subject to sanctions in order to deter that type of conduct in the future. Bratka v. Anheuser-Busch Co. Inc., 164 F.R.D. 448, 460 (S.D. Ohio 1995) (quoting Cine Forty-Second St. Theatre Corp. v. Allied Artists Pictures Corp., 602 F.2d 1062, 1067 (2d Cir. 1979)) (“Negligent, no less than intentional, wrongs are fit subjects for general deterrence, ... And gross professional incompetence no less than deliberate tactical intransigence may be responsible for the interminable delays and costs that plague modern complex lawsuits”).

The options available to the court are numerous. CCG has requested an adverse jury instruction in the alternative to an entry of default judgment.

B. Failure to Preserve and Intentional Destruction of Evidence

CCG also seeks an adverse jury instruction based on Ritrama’s failure to preserve the notes and calendars of its employee, Tom Bouchard. Federal law applies when imposing sanctions for spoliation of evidence. Adkins v. Wolever, 554 F.3d 650, 652-653 (6th Cir. 2009.) “[A] a party seeking an adverse inference instruction based on the destruction of evidence must establish (1) that the party having control over the evidence had an obligation to preserve it at the time it was destroyed; (2) that the records were destroyed “with a culpable state of mind”; and (3) that the destroyed evidence was “relevant” to the party’s claim or defense such that a reasonable trier of fact could find that it would support that claim or defense.” Beaven v. U.S. Dept. of Justice, 622 F.3d 540, 553 (6th Cir. 2010).

There is no dispute that Bouchard destroyed his notes and calendars.

1. First element: Control

CCG must show that Ritrama had control over the evidence when it was destroyed. Beaven, 622 F.3d at 553. When a corporate defendant has a duty to preserve evidence, the corporate directors must instruct the employees not throw out information that could be relevant, including notes and calendars, until the related litigation has come to a close. Bouchard has been a Ritrama employee since December 2004. (Doc. 69, Bouchard dep. II, at 10.) The first suit related to the claims made in this case was filed in October 2007. Therefore, any notes or calendars created by Bouchard were within the control of Ritrama during the entire litigation period.

CCG must also establish that Ritrama had obligation to preserve the evidence when it was destroyed. Beaven, 622 F.3d at 553. An obligation to preserve evidence arises when “a party should have known that the evidence may be relevant to future litigation.” Id. However, if there was “no notice of pending litigation, the destruction of evidence does not point to consciousness of a weak case and intentional destruction.” Id.

*11 CCG filed suit against Ritrama in state court on Oct. 29, 2007, based on essentially the same breach of contract claims as in the present case. CCG does not argue that Ritrama had a duty to preserve evidence at any earlier date. Therefore Oct. 29, 2007, is when duty to preserve relevant evidence first arose.

The record contains two different depositions in which Bouchard testified. (Doc. 69.) The first of these depositions took place on December 19, 2008. (Doc. 69, Bouchard dep. I.) During the first deposition, Bouchard testified that he had moved from the house where he previously lived on March 1, 2007. During this move, Bouchard threw out all his hand written notes that were previously stored in his home. (Doc. 69, Bouchard dep. I, at 33.) Specifically, Bouchard responded “yes” when asked “[s]o you would have thrown out your files prior to the filing of this lawsuit in 2008 [sic]?” Id. These actions were not in violation of the duty to preserve evidence, since the actions took place nearly seven months prior to the filing of the suit against Ritrama in state court.

The second deposition took place on Jan. 6, 2011. (Doc. 69, Bouchard dep. II.) During this deposition, Bouchard testified that ever since he moved out of his old house in 2007, he throws his “notes” out on a weekly or monthly basis. (Doc. 69, Bouchard dep. II, at 36.) Bouchard went on to testify that he had thrown his calendars out at the end of the year every year since 2007. (Doc. 69, Bouchard dep. II, at 38.) Bouchard also testified that these calendars would reflect when he had appointments with certain customers. Id. These notes and calendars were all destroyed while Bouchard was Ritrama’s employee. These documents were destroyed after the duty to preserve was created. Based on the deposition testimony, Bouchard destroyed calendars and notes after the duty to preserve came into existence.

2. Second element: State of mind

Next, CCG must show that the evidence was destroyed with a culpable state of mind. Beaven, 622 F.3d at 553. The culpable state of mind element can be met by showing that the evidence was destroyed negligently or knowingly even without an intention to breach the duty to preserve relevant evidence. Id.

CCG’s original state court complaint alleged Ritrama solicited CCG customers during the contractually prohibited period. (Cuyahoga County Court of Common Pleas, Case No. CV 07 640099.) The filing of the suit unambiguously placed a duty upon Ritrama to preserve evidence that related to the solicitation of customers. Destroying evidence which demonstrated which customers Ritrama’s employee contacted was a breach of the duty to preserve. Ritrama never argues that this conduct was not negligent. There is no dispute that this conduct was at least negligent and may be in bad faith.

3. Third element: Relevance

Lastly, CCG must establish the relevance of the evidence to the claims asserted. Beaven, 622 F.3d at 553. Relevant evidence is evidence that has “any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence.” Fed. R. Evid. 401.

Ritrama argues that notes and calendars thrown out after October 2007 are irrelevant because the non-solicitation portion of the contract expired at that point. After that, Ritrama was free to solicit any customers it wanted to because it owed no further obligation to CCG. CCG does not object to the conclusion that Ritrama’s non-solicitation obligations ended in October of 2007. Instead, CCG argues that Ritrama ignored the existence of the notification and non-use of confidential information clauses which are not limited to a year after termination of the contract.

*12 In the renewed motion for sanctions, CCG consistently argues that it was important for it to establish who Bouchard contacted and when those contacts occurred in order to support their claims. For example, CCG’s brief in support states:

(Doc. 90, brief in support, at 10, citing Bouchard dep., at 38.)

There was no mention of using the notes and calendars as evidence to show that Ritrama had used confidential information in CCG’s renewed motion for sanctions. This issue was first mentioned in CCG’s reply brief.

CCG’s brief did not cite the particular provisions in the contract dealing with confidential information, or with notice requirements. After a review of the contract, the two clauses that appear relevant are section 8.1.1 and section 11.1. Section 8.1.1, the “Confidential Information” clause, states as follows:

(Doc. 1, PX A, at § 8.1.1. (emphasis added).)

The identity of CCG’s customers found in the notes and calendars is not “related to the specification and manufacture of the Products.” CCG does not explain how the notes and calendars are related to the specifications and manufacturing of the products. Comparing the contractual provision and the original stated purpose for seeking the calendars (evidence of solicitation), there is no clear connection between the two.

Section 11.1, Notices, defines the manner in which notices pursuant to the agreement are to be given. (Doc. 1, PX A, at § 11.1.) Again, CCG does not explain how Bouchard’s notes and calendars are relevant to demonstrate a breach of this provision of the contract.

Ritrama’s argument that the notes and calendars created and destroyed after October 2007 are irrelevant is supported by the record. This irrelevance is due to the one year limitation placed in the text of the “Non-Solicitation of Business” clause. Any solicitation after October 2007 was not subject to the contractual limitations. CCG has failed to explain how these documents may be relevant to the breach of the Confidential Information or Notices clauses of the contract, which are not limited to a one year period after the termination of the agreement. Therefore, CCG has not established that any calendars or notes created after October 2007 are relevant to this litigation.

While the vast majority of the calendars and notes identified during Bouchard’s deposition do not appear relevant, there are a small number of documents that were destroyed and were relevant to the current litigation. Bouchard testified that he had a paper calendar that he kept in 2007. (Doc. 69, Bouchard dep. II, at 36-37.) He also testified that the calendar contained information about appointments with certain customers. Id. at 38. While a specific date of destruction was not stated during the deposition, Bouchard testified that he usually cleans out his desk around Thanksgiving. Id. at 37. Bouchard’s 2007 calendar was relevant to the extent that it contained evidence of his sales contacts during the prohibited solicitation period, prior to October 2007. Documents establishing who Bouchard contacted and when he contacted them are relevant evidence of his solicitation of CCG’s customers.

4. Conclusion

*13 CCG has provided evidence supporting the three elements required for an adverse jury instruction to be issued in its favor. CCG has shown that Bouchard was Ritrama’s employee when he used the 2007 calendar and when that calendar was destroyed. The 2007 calendar was destroyed after the suit against Ritrama was filed in state court in October 2007. CCG alleges and Ritrama does not deny that this conduct was at least negligent if not intentional. Finally the 2007 calendar contained relevant information related to Bouchard’s solicitation of CCG’s customers. Based on this evidence CCG is entitled to a spoliation instruction at trial.

VI. SUMMARY

The motion for sanctions (doc. 90) should be granted in part, and denied in part. The court finds that CCG’s claims that Ritrama misrepresented what information is electronically stored in its computer systems are without merit. The court also finds that Ritrama did not violate an order of the court by failing to identify the “correct” Serigraph company.

However, the court finds merit in the argument that Ritrama falsely denied having any relationship with three other companies, because Ritrama failed to provide sales information it possessed concerning Banta, Recco, and ID Concepts in the July 31, 2009, letter to the court. The court finds that, at a minimum, Ritrama acted negligently when it compiled the July 31, 2009, list indicating that these three companies were not relevant in this suit.

The court also finds that Bouchard and Ritrama failed to take steps to locate and preserve relevant information in this case. Bouchard destroyed notes and calendars which may have contained information related to the solicitation of CCG clients.

Given the nature of the above, the court does not find that the imposition of default judgment, as requested by CCG, is an appropriate sanction. CCG has requested an adverse jury instruction in the alternative, which the court finds an appropriate sanction for the spoilation and non-disclosure of evidence.

The motion for sanctions (doc. 90) should be granted in part, and denied in part, as outlined above.

IT IS SO ORDERED.

Bouchard was deposed on Dec. 19, 2008, and Jan. 6, 2011. Unfortunately, both deposition transcripts were filed with the court as a single document. The first deposition will be referenced as doc. 69, Bouchard dep. I, and the second (in two paper volumes) as doc. 69, Bouchard dep. II.