Court Finds That E-Mail Manipulation Deserves Sanctions Under the New Rule 37(e)

CAT3, LLC v. Black Lineage, Inc., No. 14 Civ. 5511 (AT) (JCF), 2016 WL 154116 (S.D.N.Y. Jan. 12, 2016).

This intellectual property case involving altered emails raised “significant issues concerning the reach of newly amended Rule 37(e) of the Federal Rules of Civil Procedure.”

The key issue in the case was whether “the defendants developed their FLASHXHYPE mark independently or, instead, sought to trade on the plaintiffs’ reputation after learning of their use of the SLAMXHYPE mark.” During discovery, both parties produced emails in PDF form, hoping to establish the relevant timing.

When the plaintiffs deposed one defendant’s president, a discrepancy with the produced emails became apparent. The plaintiffs showed the deponent an e-mail that they had produced. The deponent claimed the exhibit showed another recipient’s email domain as, but it had appeared as in the version he received.

Subsequently, the defendants asked the plaintiffs to produce their email in native format. After a delay, during which the plaintiffs’ counsel withdrew and were replaced by new attorneys, the court ordered the plaintiffs to comply, and they produced a USB drive containing the messages. The defendants’ expert forensically analyzed the production and determined that two versions of each e-mail existed: behind each e-mail message was “a near-duplicate copy containing the identical message, with the identical date and time” but with intentionally altered email domain addresses for some senders and recipients. These underlying near-duplicate versions were the original emails but had been copied and then deleted “without leaving a digital imprint.” Based on this analysis, the defendants moved for sanctions.

The plaintiffs’ general counsel, chief operating officer, and director of information technology all claimed that no one altered the documents but could not explain the differences in domains. At a hearing on the matter, they also offered the testimony of an expert who suggested the alteration may have resulted from an e-mail migration or another underlying process but could not offer any supporting evidence.

In deciding the issue, the court chose to apply the recently amended Federal Rule of Civil Procedure 37. The plaintiffs argued their conduct was not sanctionable under the new rule because there was “no destruction or loss of evidence” and thus, there was no evidence that could not be “restored or replaced.” Specifically, they argued that “‘there may be an evidentiary dispute as to which email address versions are more accurate, Defendants’ [sic] have not been deprived of any information or potential evidence” particularly where the defendants did not claim the emails’ content was relevant to their claims or defenses.

Applying a clear and convincing standard of proof, the court determined that the defendants’ expert and testimony were compelling while the plaintiffs could only speculate about the cause of the alterations. Further, the plaintiffs had a duty to preserve the evidence and failed to take reasonable steps to preserve it. The lost emails could not be “restored or replaced,” because this was not a case where multiple custodians had received identical emails that could replace the altered messages. Here, “the fact that there are near-duplicate emails showing different addresses casts doubt on the authenticity of both.”

Because “the plaintiffs manipulated the emails here in order to gain an advantage in the litigation” and the defendants were prejudiced as a result, sanctions were appropriate. The court determined terminating sanctions or an adverse inference under Rule 37(e)(2) would be too harsh. Instead, with the goal of ordering “measures no greater than necessary to cure the prejudice” under Rule 37(e)(1), he precluded the plaintiffs from using their version of the emails at trial and ordered them to bear the defendants’ costs “in establishing [their] misconduct and in securing relief.”

CAT3, LLC v. Black Lineage, Inc., No. 14 Civ. 5511 (AT) (JCF), 2016 WL 154116 (S.D.N.Y. Jan. 12, 2016).


In dicta, the court noted that even if the Federal Rules did not support sanctions here, it could fall back on its “inherent authority to remedy spoliation,” because “[a] party’s falsification of evidence and attempted destruction of authentic, competing, information threatens the integrity of judicial proceedings even if the authentic evidence is not successfully deleted.” This leaves open the possibility that courts may still attempt to rely on their inherent authority to punish spoliation, even though the Advisory Committee Notes assert that the new language of Rule 37(e) “forecloses reliance on inherent authority or state law to determine when certain measures should be used” in an attempt to create greater consistency among courts.