Court sanctions defendant for ‘bollixed’ legal hold

Franklin v. Howard Brown Health Ctr.

In this employment discrimination case, the defendant “bollixed its litigation hold…to a staggering degree and at every turn.” As a sanction, the magistrate recommended that the court allow the parties to present evidence about the lost information at trial. The district court later adopted the report and recommendation in full.

The plaintiff, Jose Franklin, filed a claim with the Equal Employment Opportunity Commission (EEOC) before bringing this lawsuit. Franklin alleged that staff of her former employer, Howard Brown Healthcare Center (“HBHC”), harassed her and discriminated against her.

In discovery, Franklin requested “emails and text messages” within a specified date range. HBHC “produced only two such [instant] messages,” though Franklin was sure there were more. Depositions indicated that these messages were “the standard way employees communicated” with each other at HBHC.

HBHC first claimed that Franklin’s request for “emails and text messages” wouldn’t include the “instant messages” she sought. It added that it had produced “all responsive documents,” including any instant messages that it had saved.

Franklin “specifically promised a lawsuit based on ‘racism, transphobia and sexism’” no later than July 24, 2015. According to HBHC’s general counsel, Michelle Wetzel, the company did not initiate its legal hold at this time. HBHC attempted to characterize Franklin’s statement as only a “vague threat.” Tellingly, though, the employment of one of the alleged harassers ended just two days later. That employee’s “computer was wiped within just seven days” of his departure. HBHC claimed “that was okay because, at that point, [Franklin] had not made any specific allegations” of discrimination.

Wetzel stated that she did not issue the legal hold until August 28, four days after receiving a demand letter. In assessing HBHC’s legal hold, the magistrate determined that “no in-house or outside attorney or anyone in charge oversaw” the legal hold. Rather, HBHC “allowed employees to decide on their own what was relevant.” The hold notice gave “no indication” to the custodians as to what they should do to preserve their communications. The magistrate wryly noted that, “to put it charitably, that’s a pretty ‘vague’ (and ineffectual)” legal hold.

HBHC’s own conduct belied its position regarding the threat, though. Wetzel claimed that she had Franklin’s computer removed “from the regular wiping process” immediately to preserve it. This order was based on “the circumstances of the final weeks” of Franklin’s employment. Wetzel claimed that staff followed her instructions but “does not say she oversaw the process or ever looked at the computer.” (The person in IT whom Wetzel ordered to preserve the computer is no longer employed at HBHC and is, in fact, also suing the company.)

Leaving Franklin’s computer in an employee’s hands during the two-year EEOC process was “contrary to reason, logic and basic good sense.” But the magistrate found it “astounding and frankly unbelievable” that Wetzel did not check Franklin’s computer after that employee left. Nor was its supposed preservation any more effective than the legal hold. Any information on that computer was also “gone forever,” the magistrate noted, as no one could find the computer.

As to the other copies of any instant messages, HBHC first claimed that they wouldn’t be saved without intervention. This was wrong. Rather, those instant messages would be “automatically stored” for “up to two years before they are automatically deleted.” Wetzel claimed that she thought they would be stored in a cloud-based server for 10 years, as emails were. Because of that convenient misunderstanding, she did not take any action to preserve those messages before they were automatically deleted. All but two were lost.

The magistrate assessed the case under Federal Rule of Civil Procedure 37(e)(1). Sanctions under section (e)(2) were not available because Franklin did not argue that HBHC acted with the intent to deprive her of evidence.

HBHC claimed that any spoliation wasn’t prejudicial because those messages wouldn’t be relevant to Franklin’s claims. It argued that Franklin had only claimed she was “bullied,” not that she was discriminated against. The court found this an “exceedingly narrow and mistaken view of the concept of ‘relevance.’” Rather, “race and gender discrimination,” as Franklin alleged in the amended complaint, is “often manifested or accompanied by what is loosely called bullying.”

In light of HBHC’s utter failures, the magistrate recommended that the court grant spoliation sanctions. Specifically, it suggested that the court allow the parties to present evidence and argument to the jury regarding the lost evidence. This would not, of course, “involve instructing a jury it may draw an adverse inference” from the spoliation. However, it would also not prevent the jury from concluding that HBHC had “acted intentionally” in losing the evidence.

The district court later adopted the report and recommendation in full, granting Franklin’s motion for discovery sanctions.

No doubt there were plenty of mistakes (or worse) to go around in this case, but the inadequacy of the legal hold notice and its foolhardy execution stand out. Be sure that your legal hold notice explains what custodians should do to preserve records; unless they’re in IT, they’re not experts in preserving data types like instant messages. And especially in cases of alleged workplace harassment and discrimination, don’t allow the accused to decide what evidence is relevant.

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