Court Denies Plaintiff Sanctions for Failure to Prove ESI Loss

Youngevity Int’l Corp. v. Smith, No. 16-cv-704-BTM-JLB, 2017 U.S. Dist. LEXIS 200048 (S.D. Cal. Dec. 4, 2017).

In this case alleging misappropriation of trade secrets and breach of fiduciary duty, the plaintiff requested sanctions for the defendants’ deletion of emails and other electronically stored information (ESI). The court denied sanctions, finding that the plaintiff failed to establish any of the required elements.

Plaintiff Youngevity International Corp., a multi-level marketing company, brought suit alleging that the defendants established a competing company while still working as Youngevity distributors. In this motion, Youngevity requested sanctions, namely adverse inference jury instructions and either a $500,000 punitive award or attorneys’ fees and costs, for what it claimed was the defendants’ destruction of evidence that could prove its claims.

According to Youngevity, the defendants communicated about their plans using their personal email accounts and then destroyed those emails. Youngevity also claimed that the defendants deleted data from their Youngevity laptops and deleted Facebook posts about their new company.
Since all the alleged spoliated evidence was ESI, the court declined to rely on its inherent authority. Instead, the court confined its analysis to Federal Rule of Civil Procedure 37(e).

First, the court determined that Youngevity “failed to establish that [the] defendants had a duty to preserve” any data they might have deleted. Youngevity did not file suit until about five months after the defendants deleted information from their Youngevity laptops. The court rejected Youngevity’s argument that the defendants “should have anticipated litigation because they conspired” to create a competing company “and intentionally interfere with Youngevity’s contractual relationships.” Rather, it stated that it could not “make such a finding because it would require that it accept [Youngevity’s] allegations as true.”

Second, the court concluded that Youngevity also failed to show that the defendants actually lost any information. Youngevity did not “submit any evidence” proving that the defendants had lost or destroyed any emails. Nor did it “demonstrate that the information cannot be found elsewhere.”

Finally, the court stated perfunctorily that Youngevity “failed to demonstrate that [the] defendants acted with the intent to deprive them” of any evidence.
Therefore, the court rejected Youngevity’s request for sanctions.

However, the court did allow Youngevity leave to subpoena third parties, such as Comcast, that might provide another avenue of access to the defendants’ emails. The court noted that it did so because Youngevity had been “prejudiced by the representations [the] defendants made” in a prior court appearance.

Takeaways on Proving Spoliation

Make your case! Especially when trying to establish that ESI has been lost, spell out for the court the evidence that proves ESI previously existed. Enumerate everywhere you have looked, unsuccessfully, for that information. Don’t assume that the court will believe your representations without specific proof.

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