No sanctions for Carvana in artificial stock inflation case

A federal magistrate in Phoenix declined to sanction Carvana over its handling of discovery in a shareholder class action alleging the company inflated its stock price, even after plaintiffs' attorneys said the company disclosed roughly 75,000 documents later than required, including 23,000 in a single day in August.

Carvana attorneys argued the delay stemmed from a legitimate privilege review process, not an effort to withhold evidence, after a court-appointed special master determined most of the withheld communications weren't actually privileged. Judge Michael T. Liburdi agreed there was no bad faith, calling it a matter of 'bad calls' rather than misconduct, and denied plaintiffs' request that Carvana cover the special master's fees or deposition costs.

The judge did allow follow-up depositions of six Carvana executives using the newly surfaced documents, though the sessions are capped at two hours each and the trial schedule stays put. No trial date has been set, and the redacted sanctions motion leaves unclear exactly what the new depositions will uncover.

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