Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_05-cv-01160/USCOURTS-caed-2_05-cv-01160-2/pdf.json

Parties Involved:
Homedics-U.S.A., Inc.
Defendant
USAA Casualty Insurance Company
Plaintiff

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STIPULATED JUDGMENT; [PROPOSED] ORDER

208957.7 0170-15488

LAW OFFICES

SHAW, TERHAR &

LAMONTAGNE, LLP

John W. Shaw [State Bar No. 82802] 

jshaw@stl-lawoffices.com

Christopher M. McDonald [State Bar No. 198093] 

cmcdonald@stl-lawoffices.com

SHAW, TERHAR & LaMONTAGNE, LLP 

707 Wilshire Boulevard, Suite 3060 

Los Angeles, California 90017 

Telephone: (213) 614-0400 

Facsimile: (213) 629-4534 

Attorneys for Defendant 

HOMEDICS-U.S.A., INC. 

UNITED STATES DISTRICT COURT 

EASTERN DISTRICT OF CALIFORNIA 

USAA CASUALTY INSURANCE 

COMPANY, 

Plaintiff, 

vs. 

HOMEDICS-U.S.A., INC.; and DOES 1 

to 30, inclusive, 

Defendants. 

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Case No. 2:05CV01160-DFL-GGH 

STIPULATED JUDGMENT 

ORDER 

Complaint Filed:April 28, 2005 

TO THIS HONORABLE COURT, ALL PARTIES AND THEIR ATTORNEYS OF 

RECORD: 

Plaintiff USAA Casualty Insurance Company (“USAA”) and defendant 

HoMedics-U.S.A., Inc. (“HoMedics”), by and through their respective counsel of 

record, hereby stipulate to the following facts, law and discussion of law, application 

of law and entry of judgment in favor of HoMedics. 

This court is authorized and has the discretion to enter this Stipulated 

Judgment. Citizens for a Better Environment v. Gorsuch (DC Cir. 1983) 718 F.2d 

1117, 1125. 

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LAW OFFICES

SHAW, TERHAR &

LAMONTAGNE, LLP

This Stipulated Judgment may be executed and submitted to the court in 

counterparts and a faxed copy of any and all necessary signature pages to this 

Stipulated Judgment may be submitted to the court in lieu of the originals. 

I. 

INTRODUCTION

James Sedlar (“Mr. Sedlar”) purchased from USAA a policy of insurance, 

number 0080AFIR0002, which provided certain fire insurance coverage at all times 

relevant hereto for a two-story residential structure that he owned located at 2716 “S” 

Street, Sacramento, California 95816-7347 (“Structure”). The Structure consisted of 

one residential unit on the first floor (“Apartment”) and three residential units on the 

second floor. Mr. Sedlar and his fiance, Susan Halsted (“Ms. Halsted”), resided in 

the Apartment. 

On Saturday, November 6, 2004, Mr. Sedlar purchased a HoMedics Shiatsu 

Massaging Cushion, Model Number SBM200 (“Massager”), at a Costco Warehouse, 

located in Sacramento, California. 

On Monday, November 8, 2004, Mr. Sedar used the Massager in the living 

room of his Apartment, turned it off after using it at approximately 4:40 p.m., and 

left his Apartment. Approximately forty (40) minutes later, a fire was discovered at 

the Structure (“Fire”). 

On Wednesday, November 10, 2004, USAA retained John D. Ford, C.F.E.I. 

(“Mr. Ford”) of Cause & Origin Fire Investigations, located at P.O. Box 919, 

Kenwood, California 95452. USAA tasked Mr. Ford with identifying the cause of 

the Fire. On Wednesday, November 10, 2004, at approximately 1:00 p.m., Mr. Ford 

met with Mr. Sedlar and conducted an examination of the Structure. On Tuesday, 

November 16, 2004, Mr. Ford took into evidence from Mr. Sedlar two boxes of 

material from the Structure (“Two Boxes”) which included the remains of the 

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LAMONTAGNE, LLP

Massager, electric cords, an electrical outlet and a light fixture (collectively, 

“Evidence”). 

On May 17, 2005, counsel for USAA filed the present action, USAA Casualty 

Insurance Company v. HoMedics-U.S.A., Inc., et al., in the Sacramento County 

Superior Court, Case Number 05AS02060 (“Lawsuit”). In the Lawsuit, USAA 

claims that the Fire was caused by the Massager. On June 10, 2005, counsel for 

HoMedics removed the Lawsuit to the United States District Court - Eastern District 

of California. 

On July 26, 2005, counsel for HoMedics served on counsel for USAA 

HoMedics’ Request for Production, Set One (“RFP, Set One”) wherein HoMedics 

requested the production of the Massager and the other Evidence. Counsel for 

USAA acknowledged that Mr. Ford, an expert witness retained by USAA, could not 

locate either the Massager or the other Evidence and therefore USAA could not 

produce either the Massager or the other Evidence in response to HoMedics’ RFP, 

Set One. 

Counsel for USAA has acknowledged that, without the Massager, USAA 

cannot prove that HoMedics is liable for its damages. Counsel for USAA also 

acknowledged that USAA cannot pursue Mr. Ford for failing to preserve the 

Massager and the other Evidence without a judgment adverse to USAA in the 

Lawsuit.

Counsel for HoMedics met and conferred with counsel for USAA about the 

filing of a Joint Stipulation Seeking an Order Compelling Plaintiff Respond to 

Request for Production or, in the Alternative, an Order Excluding All Evidence of 

USAA With Regard to Either Any Defect in the Massager or Any Negligence by 

HoMedics. Counsel for HoMedics also met and conferred with counsel for USAA 

about the filing of a Motion for Summary Judgment based on the failure of Mr. Ford, 

an expert witness retained by USAA, to preserve the Massager and the other 

Evidence or, in the alternative, USAA’s inability to prove causation. 

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SHAW, TERHAR &

LAMONTAGNE, LLP

In light of Mr. Ford’s failure to preserve the Massager and the other Evidence, 

counsel for HoMedics and counsel for USAA have agreed to enter into this 

Stipulated Judgment to avoid incurring the additional expense associated with 

conducting additional formal discovery and preparing and appearing on both a 

Motion to Compel and a Motion for Summary Judgment. 

Counsel for USAA and counsel for HoMedics are not colluding in this matter, 

are not committing any fraud in this matter and are not attempting to deceive the 

Court in this matter. 

II. 

STIPULATED FACTS

USAA and HoMedics, by and through their respective counsel of record, 

hereby stipulate to the following facts upon which judgment is to be entered: 

1. USAA is a plaintiff in the Lawsuit. 

2. HoMedics is a defendant in the Lawsuit. 

3. Mr. Sedlar purchased from USAA a policy of insurance, number 

0080AFIR0002 (“Insurance Policy”), which provided certain fire insurance coverage 

for a two-story residential structure that he owned, located at 2716 “S” Street, 

Sacramento, California 95816-7347 (“Structure”). The Insurance Policy was in 

effect on Monday, November 8, 2004. 

4. At all times relevant hereto, the Structure consisted of one residential 

unit on the first floor (“Apartment”) and three residential units on the second floor. 

5. At all time relevant hereto, Mr. Sedlar and his fiance, Susan Halsted 

(“Ms. Halsted”), resided in the residential unit on the first floor . 

6. On Saturday, November 6, 2004, Mr. Sedlar purchased a HoMedics 

Shiatsu Massaging Cushion, Model Number SBM200 (“Massager”) at a Costco 

Warehouse, located in Sacramento, California. 

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LAMONTAGNE, LLP

7. On Monday, November 8, 2004, Mr. Sedlar used the Massager in the 

living room of his Apartment, turned it off after using it at approximately 4:40 p.m., 

and left his Apartment. 

8. On Monday, November 8, 2004, at approximately 5:20 p.m., a fire was 

discovered at the Structure (“Fire”). 

9. On Wednesday, November 10, 2004, USAA retained John D. Ford, 

C.F.E.I. (“Mr. Ford”) of Cause & Origin Fire Investigations, located at P.O. Box 

919, Kenwood, California 95452, to investigate the cause of the Fire. 

10. USAA tasked Mr. Ford with identifying the cause of the Fire. 

11. On Wednesday, November 10, 2004, at approximately 1:00 p.m., Mr. 

Ford met with Mr. Sedlar and conducted an examination of the Structure. 

12. On Tuesday, November 16, 2004, Mr. Ford took into evidence from Mr. 

Sedlar two boxes (“Two Boxes”) of material from the Structure which included the 

remains of the Massager, electric cords, an electrical outlet and a light fixture 

(collectively, “Evidence”). 

13. On May 17, 2005, USAA filed the present action, USAA Casualty 

Insurance Company v. HoMedics-U.S.A., Inc., et al., in the Sacramento County 

Superior Court, Case Number 05AS02060 (“Lawsuit”). In the Lawsuit, USAA 

claims that the Fire was caused by the Massager. 

14. On May 17, 2005, counsel for USAA served a copy of the Summons 

and Complaint in the Lawsuit on HoMedics. 

15. On June 10, 2005, counsel for HoMedics removed the Lawsuit to the 

United States District Court - Eastern District of California. 

16. On July 26, 2005, counsel for HoMedics served on counsel for USAA 

HoMedics’ Request for Production, Set One (“RFP, Set One”) 

17. In RFP, Set One, counsel for HoMedics asked USAA to produce the 

Massager and the other Evidence. 

18. On September 27, 2005, counsel for USAA served on counsel for 

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LAMONTAGNE, LLP

HoMedics USAA’s Responses to Request for Production, Set One. 

19. On October 17, 2005 and multiple dates thereafter, counsel for 

HoMedics met and conferred with counsel for USAA regarding the adequacy of 

USAA’s verified Responses to Request for Production, Set One. 

20. On October 17, 2005 and multiple dates thereafter, counsel for USAA 

confirmed with counsel for HoMedics that Mr. Ford, an expert witness retained by 

USAA, took possession, custody and control of the Massager and the other Evidence. 

21. On March 7, 2006, counsel for USAA confirmed: (1) Mr. Ford had 

searched for but could not locate either the Massager or the other Evidence; and (2) 

USAA could not produce either the Massager or the other Evidence because Mr. 

Ford could not locate it. 

III. 

STIPULATED LAW AND DISCUSSION OF LAW

USAA and HoMedics, by and through their respective counsel of record, 

hereby stipulate that the following law and discussion of law are applicable in this 

action: 

A. ELEMENTS PLAINTIFF MUST PROVE IN ITS CAUSES OF ACTION 

1. Strict Products Liability - Manufacturing Defect

Instruction No. 9.00.3 of the Book of Approved Jury Instructions (“BAJI”) 

defines the requirements for a cause of action for a manufacturing defect as follows: 

“The essential elements of a claim based upon an alleged 

manufacturing defect are: 

1. The defendant was the [manufacturer/supplier/etc.] 

of a product; 

2. The product possessed a defect in its manufacture; 

 

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SHAW, TERHAR &

LAMONTAGNE, LLP

3. The defect in manufacture existed when the product 

left the defendant’s possession; 

4. The defect in manufacture was a cause of injury to 

the plaintiff; and 

5. Plaintiff’s injury resulted from a use of the product 

that was reasonably foreseeable to the defendant[s].” 

2. Negligence

Instruction No. 3.00 of BAJI defines the requirements for a cause of action for 

negligence under California law as follows: 

“The essential elements of . . . a claim [for negligence] are: 

1. The defendant was negligent; 

2. Defendant’s negligence was a cause of injury, 

damage, loss or harm to plaintiff.” 

B. PLAINTIFF MUST SHOW THAT THERE WAS A DEFECT IN THE 

PRODUCT 

In order for plaintiff to prevail on its claim of product defect, plaintiff has the 

affirmative burden of identifying what aspect of the product is defective. Greenman 

v. Yuba Power Products, Inc. (1963) 59 Cal.2d 57, 64. The plaintiff has the burden 

of showing that an accident was due to a defect in the product rather than to some 

other cause. McCurter v. Norton Co. (1968) 263 Cal.App.2d 402, 407. 

C. PLAINTIFF MUST PROVE CAUSATION 

The necessary causal connection between the tortious conduct and the injury 

must be shown. 6 Witkin, Summary of California Law, Torts, §1323, p. 780. 

Plaintiff may not rely on the doctrine of res ipsa loquitor in a products liability 

cause of action. McCurter v. Norton Company (1968) 263 Cal.App.2d 402. 

Not only must plaintiff show that the product was defective, but also that the 

defect was a proximate cause of the alleged injury. Erickson v. Sears, Roebuck & 

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Co. (1966) 240 Cal.App.2d 793, 798. 

Plaintiff has the burden of introducing either some direct evidence of the 

defective nature of the product or some circumstantial evidence from which the jury 

may reasonably infer the existence of the defect; plaintiff does not make a prima 

facie case by simply showing that she was injured and that the product manufactured 

or sold by the defendant was involved in the injury; were this the case, the liability 

would be absolute; it is a relatively rare injury where some sort of chattel is not 

involved in some way; therefore, the plaintiff must not only introduce evidence as to 

the defect but also evidence that such defect proximately caused the injury. 

Culpepper v. Volkswagen of America (1973) 33 Cal.App.3d 510, 519. 

E. PLAINTIFF MUST PRESENT SOME EVIDENCE TO SUPPORT ITS 

CLAIM 

If a defendant moves for summary judgment against a plaintiff, the defendant 

may simply point out -- he is not required to present evidence -- that the plaintiff 

does not possess, and cannot reasonably obtain, evidence that would allow the trier 

of fact to find any underlying material fact more likely than not. Aguilar v. Atlantic 

Richfield Co., (2001) 25 Cal. 4th 826, 858-859. 

A plaintiff cannot rely merely upon the allegations in the Complaint to oppose 

a motion for summary adjudication. Rather, the plaintiff must set forth admissible 

evidence if he is to establish a triable issue of fact. Union Bank v. Superior Court

(1995), 31 Cal. App. 4th 573, 587. 

F. EXPERT TESTIMONY IS REQUIRED 

Where the matter is beyond common lay knowledge, the trier of fact can 

neither dispense with nor ignore expert testimony and simply infer causation from 

the totality of the circumstances. A plaintiff who fails to present competent expert 

testimony on such an issue fails to establish a prima facie case and a judgment of 

nonsuit is proper. Cottle v. Superior Court (Oxnard Shores Co.) (1992) 3 

Cal.App.4th 1367. 

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G. THE PARTIES ARE ENTITLED TO CONDUCT DISCOVERY 

The parties are entitled to conduct discovery into any matter, not privileged, 

that is relevant to the claim or defense of any party, including the existence, 

description, nature, custody, condition and location of any books, documents, or 

other tangible things. Federal Rule of Civil Procedure 26(b)(1). 

The keynote of the federal discovery rules is the open disclosure of all 

potentially relevant information. Burns v. Thiokol Chemical Corp. (1973) 483 F.2d 

300. 

When the answer to any discovery request can conceivably lead to discovery 

of relevant information, it is deemed proper. Stanzler v. Loew’s Theatre & Realty 

Corp. (1995) 19 FRD 286. 

H. A LITIGANT HAS A DUTY TO PRESERVE RELEVANT EVIDENCE 

A litigant may be obligated to preserve what it knows or reasonably should 

know will be relevant evidence in a pending action, or one in the offing, even though 

no discovery request or order to preserve the evidence has yet been made. Kronisch 

v. United States (2nd Cir. 1998) 150 F.3d 112, 130. 

The duty to preserve evidence arises when: (1) Litigation involving a party is 

pending or probable; (2) The party knows of the existence or likelihood of such 

litigation; (3) The party knows of the evidence’s relevance to such litigation; and (4) 

Prejudice to the other party is foreseeable if the evidence were to be discarded. 

Winters v. Textron, Inc. (MD PA 1999) 187 FRD 518, 520. 

It makes no difference that the items were destroyed before suit was filed. It is 

enough that a party “is on notice that documents and information in its possession are 

relevant to litigation, or potential litigation, or are reasonably calculated to lead to the 

discovery of admissible evidence.” Bayoil, S.A. v. Polembros Shipping Ltd. (SD TX 

2000) 196 FRD 479, 482. 

/ / / 

/ / / 

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I. A COURT CAN IMPOSE SANCTIONS AGAINST A PARTY FOR ITS 

FAILURE TO PRESERVE RELEVANT EVIDENCE 

Courts determine the proper sanction for destruction or suppression of relevant 

evidence on a case-by-case basis. Unigard Security Ins. Co. v. Lakewood Eng. & 

Mfg. Corp. (9th Cir. 1992) 982 F.2d 363, 368. 

In diversity cases, state law determines a party’s duty to preserve evidence; but 

federal rules govern sanctions for breach of that duty. Allstate Ins. Co. v. Sunbeam 

Corp. (7th Cir. 1995) 53 F.3d 804, 806. 

The appropriate sanction for destruction of relevant evidence should be 

designed to: (1) Deter parties from engaging in spoliation; (2) Place the risk of 

erroneous judgment on the party who wrongfully created that risk; and (3) Restore 

the prejudiced party to the same position it would have been in absent the wrongful 

destruction of evidence by the opposing party. West v. Goodyear Tire & Rubber Co.

(2nd Cir. 1999) 1267 F.3d 776, 779. 

A federal trial court has the inherent discretionary power to make appropriate 

evidentiary rulings in response to the destruction or spoliation of relevant evidence. 

Such power includes the power where appropriate to order the exclusion of certain 

evidence. Glover v. BIC Corp. (9th Cir. 1993) 6 F.3d 1318, 1329. 

This court has the discretion to conduct a fair and orderly trial. Within this 

discretion lies the power to exclude the testimony of witnesses whose use at trial 

would unfairly prejudice an opposing party. Unigard Security Ins. Co. v. Lakewood 

Eng. & Mfg. Corp. (9th Cir. 1992) 982 F.2d 363, 368. 

J. APPLICATION OF THE AFOREMENTIONED LAW TO VARIOUS 

FACT PATTERNS SIMILAR TO THE PRESENT ACTION 

1. Silvestri v. General Motors Corp.

While driving a borrowed car, plaintiff motorist struck a power pole. He 

claimed injury resulting from failure of the airbag to deploy. The car was repaired 

before defendant auto manufacturer was notified of the motorist’s claim. The 

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motorist’s failure to give the auto manufacturer an opportunity to inspect the vehicle 

before it was repaired constituted spoliation of evidence, even though he was not the 

vehicle’s owner and not responsible for its repair. Silvestri v. General Motors Corp.

(4th Cir. 2001) 271 F.3d 583, 591. 

2. Unigard Security Ins. Co. v. Lakewood Eng. & Mfg. Corp.

The insurer in a subrogation action disposed of a heater that allegedly had 

caused the destruction of a boat through fire. The insurer’s claims adjuster believed 

that the insurer had no valid claim against the heater manufacturer and, based on that 

belief, the insurer disposed of the heater. Eventually, an attorney convinced the 

insurer to bring a subrogation action against the heater manufacturer. The District 

Court excluded the insurer’s experts under Rule 37 of the Federal Rules of Civil 

Procedure as a discovery sanction and then rendered summary judgment for the 

heater manufacturer because the heater manufacturer was not able to inspect the 

heater. In affirming the District Court’s decision, the Ninth Circuit found that the 

District Court had the inherent power to bar plaintiff’s experts from testifying that 

the heater manufacturer had improperly placed a warning label on the underside of 

the heater. Unigard Security Ins. Co. v. Lakewood Eng. & Mfg. Corp. (9th Cir. 

1992) 982 F.2d 363. 

The District Court found that the case was one in which “plaintiff’s destruction 

of key evidence render[ed] a full defense impossible.” Based on this finding, the 

District Court had ample support for its discretionary conclusion that allowing 

plaintiff to introduce the testimony of its experts would unfairly prejudice the heater 

manufacturer and thus preclude the court’s ability to conduct a fair trial. Unigard 

Security Ins. Co. v. Lakewood Eng. & Mfg. Corp. (9th Cir. 1992) 982 F.2d 363, 368. 

The insurer’s destruction of evidence was not in dispute as it precluded the 

heater manufacturer from any opportunity to inspect the evidence and it rendered 

unreliable virtually all of the evidence that a finder of fact could potentially consider. 

Given these factors, it was within the district court’s discretion to determine that a 

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rebuttable presumption against Unigard would have been insufficient to cure the 

prejudice arising in the context of this case. See also Fire Ins. Exch. v. Zenith Radio 

Corp., 103 Nev. 648, 747 P.2d 911, 914 (Nev. 1987) (exclusion of expert testimony 

for plaintiff's destruction of evidence, rather than imposition of a rebuttable 

presumption, was not an abuse of discretion because “any adverse presumption 

which the court might have ordered as a sanction for the spoliation of evidence 

would have paled next to the testimony of the expert witness”). Unigard Security 

Ins. Co. v. Lakewood Eng. & Mfg. Corp. (9th Cir. 1992) 982 F.2d 363, 369. 

The Ninth Circuit found that plaintiff’s evidence was properly excluded as an 

exercise of the District Court’s inherent powers, which are “governed not by rule or 

statute but by the control necessarily vested in courts to manage their own affairs so 

as to achieve the orderly and expeditious disposition of cases.” These powers 

include the “broad discretion to make discovery and evidentiary rulings conducive to 

the conduct of a fair and orderly trial. Within this discretion lies the power . . . to 

exclude testimony of witnesses whose use at trial . . . would unfairly prejudice an 

opposing party.” Unigard Security Ins. Co. v. Lakewood Eng. & Mfg. Corp. (9th Cir. 

1992) 982 F.2d 363, 368. 

The Ninth Circuit upheld the resulting summary judgment, explaining that 

“[o]nce the District Court excluded ‘the [expert testimony] and evidence from the 

unavailable heater and vessel,’ [the insurer] lacked the ability to put forward a prima 

facie case or to offer any admissible evidence creating a disputed material fact. 

Summary judgment was entirely appropriate as a matter of law.” Unigard Security 

Ins. Co. v. Lakewood Eng. & Mfg. Corp. (9th Cir. 1992) 982 F.2d 363, 369. 

IV. 

STIPULATED APPLICATION OF LAW

USAA and HoMedics, by and through their respective counsel of record, 

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hereby stipulate that the aforementioned law is applicable to the Lawsuit as follows: 

1. The Lawsuit contains a cause of action for strict products liability - 

manufacturing defect and a cause of action for negligence. 

2. An element of each of these causes of action is causation. Book of 

Approved Jury Instructions (“BAJI”), Instruction Nos. 3.00 and 9.00.3. 

3. USAA has the burden of showing that the Fire was due to a defect in the 

Massager rather than to some other cause. McCurter v. Norton Co. (1968) 263 

Cal.App.2d 402, 407. 6 Witkin, Summary of California Law, Torts, §1323, p. 780. 

BAJI, Instruction Nos. 3.00 and 9.00.3. 

4. Because of the nature of the Fire, the Lawsuit contains issues that are 

beyond common lay knowledge. As a result, the trier of fact can neither dispense 

with nor ignore expert testimony and simply infer causation from the totality of the 

circumstances. Cottle v. Superior Court (Oxnard Shores Co.) (1992) 3 Cal.App.4th 

1367. 

5. USAA had a duty to preserve the Massager and the other Evidence 

because USAA knew that: (1) Litigation was probable; (2) USAA knew of the 

likelihood of such litigation; (3) USAA knew the relevance of the Massager and the 

other Evidence to such litigation; and (4) Prejudice to HoMedics was foreseeable if 

either the Massager and/or the other Evidence were to be discarded. Winters v. 

Textron, Inc. (MD PA 1999) 187 FRD 518, 520. 

6. Whether the Massager and the other Evidence was spoilated prior to the 

filing of the present action is irrelevant. It is enough that USAA was on notice that 

the Massager and the other Evidence, which was in the possession of Mr. Ford, an 

expert witness retained by USAA, was relevant to potential litigation or was 

reasonably calculated to lead to the discovery of admissible evidence. Bayoil, S.A. v. 

Polembros Shipping Ltd. (SD TX 2000) 196 FRD 479, 482. 

7. The appropriate sanction for failing to preserve (spoilate) relevant 

evidence should: (1) Deter parties from engaging in spoliation; (2) Place the risk of 

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erroneous judgment on the party who wrongfully created that risk; and (3) Restore 

the prejudiced party to the same position it would have been in absent the wrongful 

destruction of evidence by the opposing party. West v. Goodyear Tire & Rubber Co.

(2nd Cir. 1999) 1267 F.3d 776, 779. 

8. The failure of Mr. Ford to preserve the Massager and the other Evidence 

for inspection by HoMedics after taking possession of the Massager and the other 

Evidence from Mr. Sedlar constituted spoliation of evidence. Silvestri v. General 

Motors Corp. (4th Cir. 2001) 271 F.3d 583, 591. 

9. The failure of Mr. Ford to preserve the Massager and the other Evidence 

renders a full defense impossible by HoMedics. Unigard Security Ins. Co. v. 

Lakewood Eng. & Mfg. Corp. (9th Cir. 1992) 982 F.2d 363, 368. 

10. A discovery sanction to exclude Mr. Ford and any other expert retained 

by USAA to discuss liability under Federal Rule of Civil Procedure 37 is appropriate 

for the failure of Mr. Ford to preserve the Massager and the other Evidence. Unigard 

Security Ins. Co. v. Lakewood Eng. & Mfg. Corp. (9th Cir. 1992) 982 F.2d 363. 

11. This court has the discretion to conduct a fair and orderly trial. Within 

this discretion lies the power to exclude the testimony of witnesses whose use at trial 

would unfairly prejudice an opposing party. Unigard Security Ins. Co. v. Lakewood 

Eng. & Mfg. Corp. (9th Cir. 1992) 982 F.2d 363, 368. 

12. This court has the inherent power to bar Mr. Ford and any other expert 

retained by USAA to discuss liability from testifying that the Fire was caused by the 

Massager. Unigard Security Ins. Co. v. Lakewood Eng. & Mfg. Corp. (9th Cir. 1992) 

982 F.2d 363. 

13. This court can properly exclude such evidence as an exercise of its 

inherent powers which are governed not by rule or statute but by the control 

necessarily vested in courts to manage their own affairs so as to achieve the orderly 

and expeditious disposition of cases. Unigard Security Ins. Co. v. Lakewood Eng. & 

Mfg. Corp. (9th Cir. 1992) 982 F.2d 363, 368. 

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14. Exclusion of expert testimony for the failure of Mr. Ford to preserve the 

Massager and the other Evidence, along with any other expert retained by USAA to 

discuss liability, rather than imposition of a rebuttable presumption, would be within 

the court’s discretion because any adverse presumption which the court might have 

ordered as a sanction for the spoliation of evidence would have paled next to the 

testimony of Mr. Ford and/or any other expert retained by USAA to discuss liability. 

Fire Ins. Exch. v. Zenith Radio Corp., 103 Nev. 648, 747 P.2d 911, 914 (Nev. 1987). 

15. If the District Court excludes the expert testimony of Mr. Ford and any 

other expert retained by USAA to discuss liability, USAA will be unable to either put 

forward a prima facie case or to offer any admissible evidence creating a disputed 

material fact. Entry of judgment in favor of HoMedics and against USAA would be 

entirely appropriate as a matter of law. Unigard Security Ins. Co. v. Lakewood Eng. 

& Mfg. Corp. (9th Cir. 1992) 982 F.2d 363, 369. 

V. 

STIPULATED JUDGMENT

USAA and HoMedics, by and through their counsel of record, hereby stipulate 

that judgment be entered in the captioned matter pursuant to the following terms: 

1. Judgment is entered in the captioned matter against USAA and in favor 

of HoMedics; 

2. USAA is to take nothing from HoMedics; 

/ / / 

/ / / 

/ / / 

/ / / 

/ / / 

/ / / 

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3. HoMedics is to take nothing from USAA; 

4. USAA is to bear its own costs as they relate to this litigation; and 

5. HoMedics is to bear its own costs as they relate to this litigation. 

DATE: April _24, 2006 SHAW, TERHAR & LaMONTAGNE LLP 

 By: _/s/ Christopher M. McDonald

 JOHN W. SHAW 

 CHRISTOPHER M. McDONALD 

 Attorneys for Defendant, 

 HOMEDICS-U.S.A., INC. 

DATE: April _20, 2006 LAW OFFICES OF JEFFREY E. KARPEL 

 By: _/s/Jeffrey E. Karpel_______________ 

 JEFFREY E. KARPEL 

 Attorneys for Plaintiff, 

 USAA CASUALTY INSURANCE 

 COMPANY 

Good cause having been shown, this Honorable Court grants and hereby enters 

the aforementioned Stipulated Judgment. 

DATE: May 3, 2006 

/s/ David F. Levi_________________

 THE HONORABLE DAVID F. LEVI 

 United States District Court 

 Eastern District of California 

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