In recent weeks there has been a spate of opinions weighing spoliation sanctions (i.e., Sekisui v. Hart, PTSI v. Haley) in which adverse inference instructions are specifically sought. Add Cottle-Banks v. Cox Communications, Inc., No. 10cv2133-GPC(WVG), 2013 U.S. Dist. LEXIS 72070 (S.D. Cal. May 21, 2013) to that list. The result handed down by U.S. District Judge Gonzalo P. Curiel (S.D.Cal.) on May 21 determined that despite a duty to preserve and a failure of that duty, no sanction was warranted because prejudice to the plaintiff’s case was not sufficiently demonstrated.
The plaintiff, Ms. Cottle-Banks, was a Cox customer and sued the company for violating the Cable Act by neither disclosing nor obtaining consent for a monthly equipment rental fee. She sued Cox in San Diego Superior Court under California’s Unfair Competition Law (p.2) and sought certification a class action in that state before it was removed to the U.S. Court for Southern District of California.
The issue of spoliation arose around recordings of customer calls that the plaintiff alleges would show the practice by Cox of not disclosing equipment rental fees. These calls were recorded and stored daily, with the California calls adding up to 20 Gigabytes per day. The business practice at Cox was to save the calls for 45 days before they were disposed of. The plaintiff filed a production request in June 2011 for the call recordings followed by a second motion in September 2011. During the case’s short stay in Oklahoma, the district court granted a motion for a random sample of 280 calls.
As the court pointed out, the Ninth Circuit has not set a standard for when to use an adverse inference sanction, so Judge Curiel adopted the well tested three-part standard of the Second Circuit (p.22) – control of evidence, a culpable state of mind, and relevance to the opposing party’s claim or defense. The court determined that the duty to preserve attached in September 2010 and the Cox destroyed evidence after that date. (p.24) On the second point of a culpable state of mind, the court said that it met that standard despite a lack of proof of bad faith, citing negligence in failing to preserve the back-up tapes.
The court’s opinion turned on the third requirement, that of prejudice. Here, there was no supporting evidence presented by the plaintiff. (p.26) The closest approximation were the recorded calls that had been provided earlier in the case, of which the plaintiff “cited only two call recordings out of 280 call recordings produced to support her position.” (p.26) The plaintiff had sought the recordings to demonstrate that Cox sales representatives had been trained differently, but Cox was able to demonstrate that “its training practices have not changed since 2008.” (ibid.) The court concluded that the deleted recordings “would not have been supportive of Plaintiff’s claim.” (ibid.)
An epilogue to the plaintiff’s motion for spoliation sanctions is that the court found – even though neither party raised the issue – that the motion was not made in a timely fashion due to a nine month delay in raising the issue with the court. It is worth noting this takeaway regarding timeliness since the court also cited this as another reason to deny the motion.
With multiple cases now testing the standards for the court to impose an adverse inference, greater clarity seems to be emerging as to what courts expect. With the Second Circuit’s standards being widely referenced, it is now the de facto legal standard. A moving party must clearly demonstrate that a duty to preserve existed at the time of the spoliation, that it was done with a culpable state of mind, and that prejudice was suffered. Whereas a greater level of culpability (gross negligence or bad faith) may reduce the burden of proof, recent decisions point to a need for demonstrable prejudice when seeking case-dispositive or adverse inference sanctions.