Before Asking for Sanctions, Check the Recycle Bin

Erhart v. BofI Holding, Inc., No. 15-cv-02287-BAS (NLS), 2016 WL 5110453 (S.D. Cal. Sept. 21, 2016).

The court denied sanctions against a party where the huge majority of the files he deleted were not actually destroyed, as they were mostly still located in the computer’s recycle bin, and any destruction that occurred only prejudiced the party that deleted the files.

In this whistleblower retaliation suit, the plaintiff, Charles Erhart, sued his former employer, BofI Holding, Inc. (BofI) after reporting his suspicions about BofI’s wrongdoing to the government. In the course of discovery, BofI moved for terminating sanctions, alleging that Erhart “engaged in a pattern and practice of destroying relevant evidence.”

Shortly after providing documents from his company-issued laptop computer to the government, Erhart “deleted hundreds of files,” which he described as “some random e-mails” and other documents, in an attempt to obscure his whistleblowing. Erhart then returned that company laptop to BofI.

Erhart retained counsel and filed his lawsuit. In a supplemental temporary restraining order, the court required Erhart to return all of BofI’s information and “[d]elete all references to and/or summaries of BofI’s Confidential Information in his possession.” Pursuant to the order, and in addition to the company laptop he had previously returned to BofI, Erhart produced his personal desktop computer, his girlfriend’s laptop, and two USB flash drives. BofI examined these devices and claimed that Erhart had “intentionally destroyed evidence by deleting files” from all of them.

The court began its analysis by noting that for spoliation to occur, “the party seeking sanctions must…demonstrate that evidence has in fact been destroyed.” Here, the court found that BofI failed to meet that burden because “deleting computer files” does not necessarily equate to destroying evidence.

For example, on his BofI-issued laptop, Erhart deleted 878 potentially relevant files and folders—but these included “e-mails with subject lines such as ‘BOFI Christmas Party Gift Winners!’; ‘BOFI SHIRTS’; and ‘DAYLIGHT SAVING TIME BEGINS.’” Moreover, 849 of the deleted files had “not been overwritten” and therefore were readily recoverable. The remaining 29 files, as indicated by their names and file sizes, were copies of files that “reappear[ed] in a recoverable form on the other media devices.” This was consistent with Erhart’s assertion that he had “only deleted duplicates of files [he] had copied” from BofI’s system. Similarly, on Erhart’s personal computer, 1,500 of the 1,506 files BofI claimed were “destroyed” were actually “still sitting in the computer’s Recycle Bin,” and only two files had actually been destroyed.

Nonetheless, the court allowed that it was “possible that a fraction of the deleted files that have been destroyed [were] relevant.” The court therefore considered whether sanctions would be appropriate if some relevant evidence had indeed been lost. Under the Second Circuit’s three-part test, the party moving for spoliation sanctions must show that there was an obligation to preserve evidence, that the evidence was destroyed “with a culpable state of mind,” and that the destroyed evidence was relevant to the case. Here, the court agreed that its own temporary restraining order “required Erhart to ‘delete all references’” to BofI information in his possession. Under this “ambiguous” order, the court refused to find that Erhart had a culpable state of mind when he deleted BofI files from his personal-use computers.

Again, however, assuming that Erhart had intentionally destroyed relevant evidence from BofI’s company laptop, the court still found that “sanctions [were] not appropriate because BofI ha[d] not suffered any meaningful prejudice.” For the majority of the deleted files, the court noted that “destroyed e-mails like ‘REFRIGERATOR !!’ do not concern the merits of Erhart’s whistleblower retaliation claims.” Even if they did, the court observed that “BofI does not have the burden of proof on Erhart’s claims.” Therefore, any documents that Erhart had destroyed would only cause him to “have trouble meeting his burden.”

The court denied Bofl’s motion, holding that even assuming the worst against Erhart, BofI did not suffer sufficient prejudice to impose sanctions.

Erhart v. BofI Holding, Inc., No. 15-cv-02287-BAS (NLS), 2016 WL 5110453 (S.D. Cal. Sept. 21, 2016).


Evaluate what evidence has truly been lost before moving for sanctions. The court expressed clear annoyance that BofI moved for terminating sanctions when it “could simply drag these files out of the Recycle Bin and open them.” Had BofI more accurately represented the state of the evidence and focused on those files that were unrecoverable, the court might have taken a more favorable view of the prejudice to BofI.