Sanctions

Proof and Prejudice: Court Refuses Adverse Inference Sanction Due to Lack of Proof of Prejudice, Despite Proof of Spoliation

One might think that in a lawsuit if your adversary is caught breaking the rules there might be some penalty. However, in Cottle-Banks v. Cox Communications, the Honorable Gonzalo P. Curiel of the District Court for the Southern District of California held otherwise, allowing the defendant’s misconduct to go unpunished. This case started when Brittini Cottle-Banks alleged “that Cox has violated the negative-option-billing provision of the federal Cable Act by failing to disclose and obtain customers’ consent to be charged for monthly rental fees associated with their cable set-top boxes.” Due to this allegation, Cox had a duty to preserve any potentially relevant evidence. The evidence in question consists of records of telephone calls made to Cox by customers. Despite being put on notice that they had a duty to not record over the records of these calls, Cox did just that. This taping over resulted in about 6 months worth of calls being taped over. With proof of this spoliation of evidence, Cottle-banks moved for an adverse inference sanction; an order from the court instructing a jury to assume that whatever was deleted was evidence against Cox. However, the 9th Circuit does not have a rule on this sanction so Judge Curiel used the standard from the second circuit. For an adverse inference sanction a party must establish that their adversary: had control of the evidence, a culpable state of mind, and the spoiled evidence was relevant and supportive of a party’s claim or defense The evidence of these first two elements is clear. Cox clearly had control and their failure to preserve despite being put on notice is indicative of a culpable state of mind. However, because “the burden falls on the ‘prejudiced party’ to produce ‘some evidence suggesting that a document or documents relevant to substantiating his claim would have been included among the destroyed files.” Since Cottle-Banks had no proof that she was prejudiced by Cox’s spoliation of evidence, the Court refused to grant an adverse inference sanction. Thus, if you are going to move for an adverse inference sanction, be sure to have some proof of prejudice. Matthew G. Miller, a Seton Hall University School of Law student (Class of 2014), focuses his studies in the area of Intellectual Property. Matt holds his degree in Chemistry from the University of Chicago. Currently, Matt works as a legal intern at Gearhart Law.

Preserve Immediately or be Sanctioned!

In this case, the plaintiff, an inmate at Rikers Island, brought a motion for spoliation of evidence and alleged the defendants breached their duty to preserve evidence. The evidence in question is video footage relevant to the litigation regarding the assault on the plaintiff which occurred on May 24, 2011, by other prison inmates in a holding cell at the Bronx Criminal Courthouse. The defendants claim that they do not have a duty to preserve the surveillance footage because by the time they were given notice, the footage had been deleted. The defense states that even if they had a duty to preserve, they met this obligation by saving eight minutes of surveillance that they deemed to be relevant. On the day of the assault, the holding cell in which the plaintiff was placed in with approximately sixteen to seventeen other inmates was under twenty-four hour video surveillance.  That same day, Jacqueline Brantley, the former Assistant Deputy Warden Executive Officer at the Bronx Criminal Courthouse, reviewed the video footage to determine the course of events specifically for a period of three hours.  Brantley was the only person to view the three hours of footage and therefore she was the only one who could testify in court regarding this evidence. The three hours of video footage is extremely relevant to the case. The footage included evidence of not only the plaintiff’s injuries, but also how the Department of Corrections protected the inmates and how they responded to the incident. The tapes also show the presence and identity of possible witnesses to the assault and help create a visual timeline of events in the holding cell. The Southern District of New York stated that the defendants should have known within a week of the assault that the surveillance footage would be relevant to a future lawsuit. While the Department of Corrections destroyed the footage pursuant to the Department’s automatic video recycling procedures, prior to the filing of the claim by Taylor, the Department did manage to save eight minutes of footage. This begs the following question to be asked:  Why did the department not preserve the entire three hours of footage? As a result, the plaintiff in this case sought sanctions for spoliation of evidence with the deletion of the footage. A party seeking sanctions for the spoliation of evidence must establish the following three elements: The party having control over the evidence had an obligation to preserve it at the time it was destroyed; The records were destroyed with a culpable state of mind; and The destroyed evidence was relevant to the party’s claim… such that a reasonable trier of fact could find that it would support that claim. Residential Funding Corp. v. DeGeorge  Fin. Corp., 306 F.3d 99, 107 (2d. Cir. 2002). If the moving party can establish these three elements, then the court has the ability to impose sanctions under Rule 37 of the Federal Rules of Civil Procedure. The defendants here should have anticipated that the plaintiff would file a lawsuit against the Department for its failure for protect the plaintiff in the holding cell. Therefore, the defendants should have reasonably known that any evidence depicting the plaintiff’s treatment in the holding cell would be relevant to the litigation. The obligation to preserve the video footage in this case attached at the time of the assault due to its relevance. The defendants should have known that the entire three hours of footage would be relevant and that two four minute video clips would be insufficient. Since the entire footage has been destroyed, the defendants breached their preservation duty. The destruction of evidence by the defendants was done in a culpable state of mind and destroyed knowingly. Therefore, the defendants were negligent in allowing the footage to be deleted. However, the defendants were not grossly negligent in their failure to preserve, as no relevant evidence here has been claimed to have been destroyed after the plaintiff filed his Notice of Claim, approximately sixty-five days after the assault occurred. Additionally, the destroyed evidence would have been favorable and relevant to the plaintiff’s claims and defenses in this case. This evidence would have shown the three hour period of time the plaintiff was left injured in the holding cell as well as the failure of the Corrections Officers to protect him and remove him from the cell when he was covered in blood after the assault. The Court found that for these reasons the destruction of evidence prejudiced the plaintiff. Therefore, the following sanctions were ordered by the court: 1) the preclusion of Brantley from testifying about what she saw when she reviewed the deleted footage; 2) the use of an adverse inference jury instruction; and 3) the award of attorney’s fees and costs to the plaintiff. To avoid having a similar outcome, potential defendants should immediately preserve any relevant evidence in matters that they know or should reasonably know will give rise to litigation. Jennifer Whritenour received her B.S. in Political Science and History in 2011 from the University of Scranton. She is received her J.D. from Seton Hall University School of Law in May 2014. 

Heavy Sanctions Can Be Levied Against Litigants Sitting on Discovery Information

Although this case does not deal directly with e-discovery, the ruling can have major e-discovery ramifications. Skipping to the end of this very long and complicated decision in Flinthill, the Judge’s conclusion was that the plaintiff in this case was trying to exact revenge on those she felt had wronged her in a messy divorce proceeding. For our purposes, however, the plaintiff and her counsel should have reviewed the discovery they got before bringing a lawsuit and claiming they never got that same discovery. A condensed version of this soap-opera case is as follows: Plaintiff filed for divorce from her husband (Wagner) in 2005, in aMarylandcourt.  He was a minority interest stockholder in the company “Spacelink International LLC.” In 1998, “Flinthill Trust” was established to receive the payments for the disbursements of this stock interest. Spacelink was sold in 2005, which left Wagner with around $13 million. $10 million of these funds were evenly divided between Plaintiff and her husband on September 1, 2005. The Plaintiff then filed to freeze Wagner’s interests. TheFairfaxCountycourt issued three orders:  1) prohibiting the trustee of the Flinthill trust from transferring trust assets for at least 60 days; 2) to provide an accounting of all the trust’s assets; and 3) prohibiting any further distribution of funds unless otherwise agreed upon. A stipulation was agreed upon and signed by both parties agreeing to Wagner’s providing two separate accountings of the trust’s comings and goings. Both of those accountings were dutifully made. In addition, a large amount of financial material was exchanged during discovery leading up to a hearing in May of 2006. During that time, Plaintiff did not make any requests to compel discovery, nor did she claim that any of theFairfaxcourt orders were not complied with. The record showed that Wagner and his lawyers repeatedly invited the plaintiff and her lawyers to meet with the trustee to go over the finances of the trust to make sure everything was kosher. Instead of taking them up on their invitation, she brought sixteen months-worth of litigation, which was ultimately deemed by the court to be frivolous and sanction-worthy. The four claims that the plaintiff brought were: 1) Breach of Contract (against Wagner and his people); 2) Breach of Fiduciary Duty (against the trustee); 3) Conspiracy (against various individuals); and 4) Conversion (also against various people). The claim that we are going to focus on, as it deals directly with discovery, is Count 1. In it, she alleged that Wagner breached the stipulation by “frustrating the accounting of trust assets . . . .” Defendants argued that there were four volumes that were transferred to Plaintiff that fully included all of the proper accounting information. The plaintiff’s lawyer claimed that they needed to get a report that was “based on generally accepted accounting principles, and not a compilation of documents,” and the failure to condense those documents constituted a breach of contract. The problem was that the plaintiff’s attorney clearly admitted to not reading the accounting documents that were provided to him, and to not bothering to read any of the ten to thirty boxes of materials relating to the trust that were in the plaintiff’s home. The court took particular offense to this, admonishing “how do you know you are missing something if you do not bother to look at what you have?” Curiously, Plaintiff’s attorney was unable to specifically identify, even two years later, any gaps in the documents that he was litigating about. The court made it clear that the plaintiff and her lawyer were responsible to review the documents already in their possession. If they lack the particular expertise required to do such a review, they were to hire an expert who was capable of the job. The defendants then went on to request for sanctions to be levied against both the plaintiff and her attorney for either willfully or negligently conducting a reasonable inquiry. Additionally, they could not have reasonably believed that this breach of contract suit was grounded in either fact or law. The court then carefully went through the other 3 claims by the plaintiff, and found that they were equal in their egregiousness for either outright lying to the court or failing to reasonably base their case in law. In the end, the court sanctioned the plaintiff and her attorney to the tune of $884,627.26 to cover the defendant’s attorney costs and witness fees. This ruling can have some serious ramifications for plaintiffs in cases with e-discovery. Much discovery material these days is in the form of Electronically Stored Information (ESI).  ESI can be particularly volume-heavy, and, therefore, costly to thoroughly review. The information that can be stored on one memory stick is vastly larger than the 10-30 boxes of papers discussed in this case.  Still, the court held that it was the responsibility of the requesting party to review the information they receive. If they can’t, they need to hire someone who can.  By no means should that party bring a law suit claiming they didn’t get that information.  It could end up being very costly for them. Akiva Shepard received his J.D. from Seton Hall University School of Law in 2014. Akiva has worked for a New York State Supreme Court Judge in Kings County and for a NJ real estate firm.  

Tale of the Tape: Lax Litigation Hold Leads to Spoliation Sanctions… Again

Once bitten, twice shy.  The classic idiom stands for the general proposition that when an individual is hurt  by someone or something, they tend to avoid that person or situation in the future.  Well, it looks like the defendant in Hart v. Dillon Companies did not learn its lesson as it will face spoliation sanctions for the second time in two years. In 2011, the defendant’s bad faith destruction of company videotapes led to an adverse inference ruling.  E.E.O.C. v. Dillon Companies, Inc., F. Supp. 2d 1141 (D.Colo. 2011).  Now the company faces additional spoliation sanctions, once again for accidentally erasing pertinent recorded evidence. The plaintiff’s 21 years of employment at the defendant’s grocery store came to an end when it was alleged that she had been abusing her power as the store’s bookkeeper by paying herself at a marked-up rate.  The decision to terminate the plaintiff was partially based on a secretly recorded conversation that occurred between the plaintiff and the defendant’s loss prevention specialist. On November 1, 2011, the former employee filed an E.E.O.C. charge of discrimination against her former employer, believing that her termination was the result of age discrimination.  Knowing that the plaintiff had hired an attorney, the defendant denied her request for arbitration, and the plaintiff filed its complaint on March 1, 2012.  At some point between the arbitration denial on November 7, 2011, and the filing of the complaint, the recording of the plaintiff’s interview was accidentally erased. On March 1, 2012, the defendant employer initiated a litigation hold, but this was too little too late.  The damage had already been done, and the plaintiff filed a motion for sanctions for the spoliation of the recorded evidence. Adding insult to injury, the Colorado District Court actually cited to the defendant’s previous spoliation case when laying out the issues of spoliation.  According to that decision, the issues of spoliation are: (1) is the evidence relevant to an issue at trial; (2) did the party have a duty to preserve the evidence because it knew or should have known, that litigation was imminent; and (3) was the other party prejudiced by the destruction of the evidence. With regards to the first issue, the court found that the recorded interview was obviously relevant to the case because it played a role in the defendant’s decision to terminate the plaintiff’s employment. Discussing the second element, the court found that the duty to preserve the evidence began on November 7, 2011, because at the time of the arbitration denial the defendant was well-aware litigation was likely.  This was the trigger event that marked the defendant’s duty to institute a litigation hold.  In fact, evidence existed that the defendant’s labor relations manager was well aware that the plaintiff’s attorney and arbitration request signified an intent to litigate the issue.In terms of prejudice, the court found that the plaintiff was prejudiced by the destruction because several factual disputes existed as to what occurred during the secretly recorded interview.  Finding the defendant “highly culpable” for the four month delay, the court also determined that the failure to collect the tape recording from “a key player” was an example of grossly negligent or willful behavior.  Even though the defendant may not have shown an intent to destroy the evidence, the company had control over the tape and the responsibility to preserve it. Therefore, the plaintiff’s motion for sanctions was granted.  Sanctions have not yet been determined, though, as the court set a future hearing to determine the precise amount of sanctions to impose. While E.E.O.C. charges, like those brought by the plaintiff here, do not always lead to litigation, companies should get in the habit of instituting litigation holds whenever they face charges like these.  Even if the chances of litigation appear remote, if possible the company should seek to preserve all pertinent evidence to avoid this type of scenario.  In this matter, if the company had issued a litigation hold when it received the E.E.O.C. charge or even upon receiving the arbitration request, it could have avoided the sanctions it will now receive.  Companies are risking too much by not immediately preserving all the evidence relevant to the potential case.  Here, if the defendant had learned from its previous bad experience with evidence spoliation, it could have instituted better preservation procedures that would have avoided the significant penalties it now confronts. Jeffrey, a Seton Hall University School of Law Student (Class of 2014), focuses his studies primarily in the area of civil practice but has also completed significant coursework concerning the interplay between technology and the legal profession.  He was a cum laude graduate of the University of Connecticut in 2011, where he received a B.S. in Business Administration with a concentration in Entrepreneurial Management.  Presently, Jeff serves as a legal clerk at a personal injury law firm in Rochelle Park, New Jersey.

Judge Sheindlin Hits Spoliating Plaintiff with Adverse Inference Instruction

In Sekisui Am. Corp. v. Hart, District Court Judge Shira Sheindlin reversed a decision of the lower court and imposed sanctions against a plaintiff for its willful spoliation of electronically stored information (ESI).  The critical point on which Judge Scheindlin and the magistrate judge opposed was whether a showing of bad faith is necessary to impose spoliation sanctions or whether a showing that the ESI was willfully destroyed is enough.  For Judge Scheindlin, where the spoliation is willful the non-spoliating party need not prove malevolent purpose: It is well-settled in the Second Circuit that: [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. It is the third prong of the test that was squarely tackled in this case—whether the destroyed evidence was relevant and whose burden is it to prove or disprove this factor.  Sekisui American Corporation (Sekisui) brought a breach of contract suit against Richard Hart and Marie Louise Trudel-Hart relating to the Sekisui's purchase of America Diagnostica, Inc. (“ADI”), a medical diagnostic products manufacturer of which Mr. Hart was president.  During discovery, Sekisui revealed that ESI in the form of e-mail belonging to certain ADI employees (including Mr. Hart) had been deleted or were missing. It later became clear that Sekisui did not institute a litigation hold until more than fifteen months after sending a Notice of Claim to the Harts and in the interim, Sekisui permanently deleted the Hart’s documents and data. By way of explanation, Sekisui maintained that the destruction of Hart’s ESI was largely due to the actions of ADI's former Head of Human Resources (Taylor), who had acted without direction from Sekisui.  Sekisui further asserted that Taylor made the unilateral decision to delete Hart’s e-mail for the purpose of freeing up space on the ADI server after determining that Hart was no longer receiving work-related e-mail.  Before directing Northeast Computer Services (“NCS”)—the vendor in charge of managing Sekisui’s information technology systems—to permanently delete Hart’s ESI, Taylor apparently “identified and printed any e-mails that she deemed pertinent to the company,” which e-mails, totaling approximately 36,000, were produced to the Harts.  Notwithstanding these measures, there was no way for the parties or the court to determine how many e-mails were permanently deleted and lost. In light of these developments, the Harts requested that the court impose sanctions on Sekisui for the spoliation of evidence.  Specifically, the Harts requested:  1) an adverse inference jury instruction based on the destruction of Hart’s ESI; and 2) sanctions for spoliation based on the alleged or actual loss of the e-mail folders of several other ADI employees.  The Magistrate declined to issue any sanctions, finding that the Harts failed to show any prejudice resulting from the destruction of the ESI (i.e., failed to show that the deleted e-mails were relevant to its defenses).  The Magistrate Judge concluded that the destruction of Hart’s ESI “may well rise to the level of gross negligence,” but decided that such destruction was not willful because “there has been no showing that Taylor directed [the e-mails’] erasure for any malevolent purpose.”  The magistrate judge declined to presume either relevance or prejudice despite his finding that Sekisui “may” have acted in a grossly negligent manner. Judge Sheindlin, however, took a starkly opposite position.  Judge Sheindlin expressly rejected the premise that the law requires a showing of malice in order to establish intentionality with respect to the spoliation of evidence. In the context of an adverse inference analysis, Judge Sheindlin found no "analytical distinction" between destroying evidence in bad faith, i.e., with a malevolent purpose, and destroying it willfully.  Accordingly, Sekisui's good faith explanation for the destruction of Hart’s ESI (suggesting that Taylor’s directive was given in order to save space on the server) did not change the fact that the ESI was willfully destroyed. And when evidence is destroyed willfully, the destruction alone “is sufficient circumstantial evidence from which a reasonable fact finder could conclude that the missing evidence was unfavorable to that party.” On the above rationale, Judge Sheindlin found the Magistrate Judge's decision to be clearly erroneous and contrary to law, and directed that an adverse inference instruction would be provided to the jury.  This case underscores the importance of timely and prudently implementing a litigation hold, when such duty attaches. Adam L. Peterson is a student at Seton Hall University School of Law, Class of 2014.  Adam is a member of the Seton Hall Law Review and prior to law school Adam was an Environmental Analyst with the New York State Department of Environmental Conservation. 

Evidence of Destruction Deserving of Damages

In 2007, John Lemanski was employed as a purchasing Manager for Barrette Outdoor. His responsibilities included purchasing resin for the production of siding at the lowest possible cost.  Unfortunately, in 2011, the company began to downsize and Lemanski’s position was dissolved. After Lemanski’s termination, it was discovered that Lemanski was not purchasing resin at the lowest market price per his job description, but rather at almost full cost due to his interest in Michigan Resin Representatives (MRR).  Upon his termination, Barrette alleged Lemanski destroyed over 270,000 digital documents and severely hindered Barrette’s ability to prove their case.  While Lemanski had a duty to preserve these documents, his intentional disregard and willful destruction of evidence was enough to warrant sanctions. On his last day of employment, Lemanski was presented with a Separation and Release Agreement; however, when Barrette learned of Lemanski’s financial interest in MRR, the agreement was revoked.  Shortly after, Lemanski received an e-mail with an attached Notice to Preserve Electronically Stored Information. While Lemanksi claimed he did not read the e-mail until later, evidence suggests the contrary—including the fact that he installed and executed data wiping software on his company computer. A party seeking a sanction for the destruction of evidence must show:  1) “‘that the party having control over the evidence had an obligation to preserve it at the time it was destroyed;” 2) that the evidence was 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.’”  See Adkins v. Wolever (Adkins III ), 692 F.3d 499, 503-04 (6th Cir. 2012).  After examining Lemanski’s conduct, the court concluded that a sanction for spoliation was warranted based on two instances of conduct.  While the deletion of files from his work computer may not have been done in anticipation of litigation, Lemanski was soon thereafter served with a Notice to Preserve.  At that time, he disposed of his personal cell phone and made no effort to retrieve it the next day after receiving said the aforementioned Notice.  Secondly, Lemanski continued to disregard his duty when he erased 270,000 files from his personal laptop after Barratte sought a motion to compel Lemanski to produce this very same laptop for imaging. Lemanski was simply in too deep and attempted to cover his wrongdoing.  He should have abided by the Notice to Preserve and simply handed over the requisite files for production.  Due to his actions, the court held ordered Lemanski to pay Barrette $25,000.00 in compensation regarding fees and costs incurred by brining a spoliation motion, to pay Barrette $10,000.00 for Barrette's increased expenses in conducting discovery and proceeding with litigation absent evidence, and an adverse inference presented at trial that Lemanski’s cell phone and personal laptop contained information unfavorable to Lemanski and that Lemanski was involved with MMR.

Another Reminder That Attorneys Are Responsible for the e-Discovery Behavior of Their Clients

In the summer of 2013, the Northern District of California conducted a hearing over a motion to compel discovery responses which stemmed from e-discovery disagreements.  The plaintiff was a corporate investor in the defendant pharmaceutical company developing bovine-derived oxygen therapeutics.  A corporate officer of the pharmaceutical company was also named a defendant.  The plaintiff alleged breach of fiduciary duties, breach of contract, and breach of the implied covenant of good faith and fair dealing.  In its reply, the defendants counterclaimed breach of a licensing agreement, theft of intellectual property, and interference with prospective economic advantage. Discovery began when the plaintiff served interrogatories, requests for production, and requests for admission.  The defendant corporation submitted its responses two months past the deadline, failed to completely respond to the interrogatories, and submitted incomplete document production.  The plaintiff moved to compel full and complete responses, after which the defendants’ counsel failed to appear at the hearing.   The court granted the plaintiff’s motion and awarded the plaintiff $1,400.00 in sanctions.  Additionally, the plaintiff complained that the defendant officer’s responses were also incomplete and filed two weeks late. These disputes are governed by the discovery rules in the Federal Rules of Civil Procedure.  Rules 33 and 34 establish a 30-day response period for a party to serve its answers and applicable objections.  Additionally, Rule 33(b)(2) states that failure to timely respond to discovery requests generally constitutes a waiver of any objections to those requests.  Under Rule 37, a party may move to compel discover and if the court grants it the responding party must pay the moving party’s reasonable expenses incurred in making the motion. At oral argument, the plaintiff asserted the defendants only produced 121 emails, 109 of which were communications with the the Plaintiff.  The plaintiff alleged this lack of production raised the possibility of spoliation and boded ill for the document preservation efforts of the defendants.  The defendants’ counsel testified he gave instructions to his clients to produce the related documents; however, the court was not convinced.  The court cited Rule 26(g) which places an affirmative obligation on an attorney to ensure a client’s search for responsive documents and information is complete.  The previous submissions were clearly incomplete and it was the attorney’s responsibility to remedy them.  Furthermore, since the responses were late, all of the defendants’ objections were denied even though the court admitted the claims might be vague and overly-broad. The court used its discretion to modify the sanctions placed upon the defendants.  It set a new date for all remaining responsive documents to be submitted and if the new deadline was missed the Defendants would be forced to hire an e-discovery vendor.  Vendors can be very costly.  Furthermore, since the defendants’ failure to timely and fully respond was not justified, the court awarded $5,200.00 in additional attorney’s fees to the plaintiff.  While the defendants’ counsel was still held responsible, the court recognized that the defendants were also responsible for the delay and ordered the parties to split the cost of the sanction.  This illustrates the point that when discovery efforts are not taken seriously, both the client and the attorney can be on the hook for big expenses. George is a student at Seton Hall University School of Law (Class of 2014).  He is pursuing both the Health and Intellectual Property Concentrations and is especially interested in patent law.  He received both a B.E. and M.E. at Stevens Institute of Technology in Biomedical and Systems Engineering, respectively.  Presently, George works as a law clerk at Stone Law in Colts Neck, NJ, where he assists in the drafting of litigation documents and Office Actions with the United States Patent and Trademark Office.

Have You Demonstrated Prejudice For Your Spoliation Sanctions? The Tenth Circuit Requires It

Defendant Rain Link, Inc. received notice that the plaintiff was accusing the company for violating the Americans with Disabilities Act and the Kansas Act Against Discrimination by its receving a letter written by the Kansas Human Rights Commission dated June 10, 2009.  Rain Link acknowledged that it anticipated litigation and, therefore, had a duty to preserve evidence concerning the plaintiff’s allegations.  Although, it is clear from the record that Rain Link did not properly preserve documents, and in some cases, destroyed documents, U.S. Magistrate Judge K. Gary Sebelius found that the plaintiff did not demonstrate prejudice or bad faith on the part of the defendant to allow for plaintiff’s spoliation sanctions or adverse jury instruction.  The District Court judge adopted the report. Plaintiff sought five spoliation sanctions and all, but one, were dismissed with prejudice.  The admission of evidence related to the defendant’s spoliation of evidence was left to the judge presiding over the trial to decide when given the documents placed into evidence.  The plaintiff relied on a 2007 Kansas case, In re Krause, which was prior to the Tenth Circuit’s adoption of a showing of prejudice.  Spoliation sanctions are proper in the Tenth Circuit when: (1) a party had a duty to preserve evidence because it knew, or should have known, that litigation was imminent, and (2) the adverse party was prejudiced by the destruction of the evidence.  This differs from New York and the Zubulake case, which allows for a presumption of prejudice given destruction of documents concerning the litigation.  The U.S. Magistrate Judge Sebelius found that not only did the plaintiff not show prejudice concerning defendant’s destruction of documents, but also that the plaintiff’s examples of destruction showed negligence due to defendant’s routine practices as opposed to intentional deprivation of evidence to the plaintiff. Concerning an email that occurred subsequent to plaintiff’s notice of litigation between itself and Meritrust Credit Union, Rain Link failed to preserve the email in native-format and its attachments and instead produced the document in hardcopy without attachments to the opposing counsel.  The magistrate judge found that the plaintiff did not demonstrate a prejudice as to how the evidence was relevant to his claims.  The plaintiff also requested Rain Link’s drafts of corporate meeting minutes.  However, since Rain Link’s outside counsel notified the court that it was company policy to change the minute drafts after meetings and immediately file them electronically in addition to counsel’s advising clients (including Rain Link) to discard drafts of meeting minutes in order to avoid billing issues, the court found that there was no prejudice and little relevance in requiring the metadata of minute drafts. A more difficult issue arose from a May 6, 2009, telephone conversation between plaintiff’s counsel and defendant’s counsel as described in the defense’s memorandum of law.  Defense counsel’s memorandum asserted that plaintiff abandoned his job while the plaintiff argued that he was terminated by Rain Link.  The defense presented their memorandum in PDF format and explained that due to a computer crash in October 2009, the native format version was lost.  The magistrate judge acknowledged that the plaintiff’s arguments concerning the actual date of creation of the memorandum was relevant to the case and the plaintiff’s argument ultimately hinged on defense counsel’s veracity.  The plaintiff did not demonstrate that defense counsel would misrepresent evidence to the court.  Evidence concerning work in progress data was found to be insufficient and left for the presiding judge to determine if there was prejudice to the plaintiff. Due to the plaintiff’s lack of showing prejudice in the spoliation of documents, the court did not complete a full analysis of bad faith.  However, since the record demonstrated more negligence than intentional wrongdoing, an adverse jury instruction would not be appropriate.

Defendant’s Shortcomings in Discovery Result in Sanctions

The plaintiff, Tony B. Clay, brought claims for employment discrimination and retaliation based on race under Title VII against Consol Pennsylvania Coal Company (“Consol”).

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Court Hesitant to Impose Discovery Sanctions Despite Defendant’s Delay and Non-Compliance With Court Order

If I told you that your company delayed for nearly seven months to produce electronic documents critical to a pending lawsuit, you would think the judge presiding over your case may be a bit perturbed, right? What if I also told you

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