Failing to Take Reasonable Steps to Preserve E-Mail Creates Sanctionable Prejudice
Core Labs. LP v. Spectrum Tracer Servs., L.L.C., No. CIV-11-1157-M (W.D. Okla. Mar. 7, 2016).
Applying the amended Federal Rule of Civil Procedure 37, the court ruled that sanctions were not appropriate where a plaintiff could not show that the defendants destroyed files in bad faith or point to specific files that were missing; however, they were appropriate where the plaintiff could demonstrate that relevant e-mails had been lost in a transfer to a new e-mail service provider.
In this misappropriation of trade secrets matter, the plaintiff, Core Laboratories, filed a motion seeking spoliation sanctions, claiming all three defendants intentionally destroyed relevant evidence. The missing evidence included e-mails between defendant Spectrum and its original pump manufacturer, Tulsa Precision Machine (TPM), which were lost when Spectrum switched e-mail service providers shortly after the lawsuit was filed. Although Spectrum argued that it switched providers “to ensure every Spectrum e-mail was captured to comply with the requirements of this lawsuit,” the provider was unable to archive or capture old e-mails. Core also contended that Spectrum deleted 35 files from an employee’s a hard drive one day after Core filed an emergency motion when it found its proprietary software on the hard drive. Finally, Core claimed that Spectrum used wiping software to remove files from a defendant’s computer during the litigation.
The defendants countered that Core could not identify any specific evidence that had been lost nor cite any prejudice it had suffered. Furthermore, it had produced evidence relating to communications between Spectrum and TPM, and the messages deleted from the hard drive were of a personal nature and those deleted from the computer were preserved on an external backup drive.
Under Rule 37, the court ruled that Core had a duty to preserve evidence that arose with the lawsuit, which was filed on March 11, 2011. The court decided that it would not have been unreasonable for Spectrum to take measures to save e-mails before switching to the new provider. Because it did not, the court inferred that Spectrum lost all messages regarding the formation of the company and the manufacturing of its tracing systems, which were based in part on a Core prototype. Therefore, Core had been prejudiced by the inability to access Spectrum’s e-mails dated before June 2011. Accordingly, the court granted the spoliation motion in part and granted an adverse inference instruction as to the lost e-mails: the jury would be entitled to presume that any e-mails between Spectrum and TPM that were not produced would be unfavorable to Spectrum.
However, the court decided against Core on its request for sanctions to remedy the deleted hard drive and computer files. Here, the court found that Core had not been prejudiced by either action. It was reasonable for Spectrum to delete the employee’s personal files before turning the hard drive over to Core for forensic analysis to remove Core’s proprietary software, and Core could not identify any potentially relevant files that were lost. Similarly, there was no bad faith in the wiping of the computer, as the defendants claimed they did so “as a normal repair process and not for the purpose of destroying evidence related to this litigation” and transferred any files from the computer to an external hard drive before doing so. Therefore, relevant information could still be produced from the computer.
Halfhearted efforts will not suffice when it comes to preservation; a thorough consideration and employment of reasonable methods for preserving evidence is the only way to demonstrate good faith in preserving evidence. The defendants in this case clearly understood their duty to preserve evidence. As a result, it is unclear why they were able to transfer files from a computer before wiping it yet chose to transfer e-mail providers, fully aware that they might lose relevant e-mails. For example, the plaintiffs could have migrated the messages to a secondary account or saved them to a computer’s hard drive.