City’s Faulty Preservation Practices Lead to Sanctions
Vincente v. City of Prescott, No. CV-11-08204-PCT-DGC., 2014 U.S. Dist. LEXIS 109790, (D. Ariz. Aug. 8, 2014)
In this employment-related dispute involving allegations of defamation and violations of the First Amendment, the plaintiffs filed a motion for sanctions, disguised as a motion for partial summary judgment, based on the defendants’ “failure to preserve and produce” electronically stored information (ESI). The defendants also filed several motions, including a motion for summary judgment on the merits, which the court granted and denied in part, rendering some of the plaintiffs’ requests for sanctions moot, as well as a cross-motion for sanctions.
The plaintiffs alleged that the defendants intentionally failed to disclose and destroyed e-mails after receiving their Notice to Preserve Information and Data on February 8, 2011. To succeed, the plaintiffs had to show three things: (1) that the defendants had an obligation to preserve the lost evidence, (2) that the defendants acted with a culpable state of mind, and (3) that the destroyed evidence was relevant to the claims or defenses at issue. The plaintiffs claimed the defendants failed to notify their IT department of the preservation request, never asked IT staff to preserve any ESI, or had IT staff sweep custodians’ computers for relevant e-mails.
The plaintiffs set forth nine categories of documents in their briefing, but the court found only one merited discussion: the defendants produced an out-of-office autoresponder e-mail with the subject line “Out of Office: Disciplinary Action Against J.P. Vincente” but failed to produce the original e-mail that prompted the out of office message. The defendants claimed there was no evidence the other e-mail existed, which the court found “altogether unpersuasive.”
Given the subject line regarding the plaintiff and disciplinary matters, the e-mail was relevant to the claims in the case. As a result, the court found the city’s preservation efforts to be “plainly deficient.” Although the city notified key custodians to preserve evidence within one month of receiving the plaintiffs’ preservation notice and told others to preserve documents within a week of filing the lawsuit, it never notified its IT department to suspend its automatic practice of destroying deleted e-mails after 30 days. Further, the city did not ask the IT department to help custodians collect e-mails. Although the plaintiffs established that the defendants fell short of adequate preservation efforts, the court refused to grant their motion for a default judgment because they did not show that the defendants acted in bad faith, which is a prerequisite for case-dispositive sanctions. Furthermore, the plaintiffs also could identify only one e-mail that was lost as a result of the deficient preservation, which was insufficient to establish sufficient prejudice.
The defendants’ cross-motion touched on several matters. First, the defendants claimed the plaintiffs failed to provide any information relating to their side hunting business or e-mails from a certain e-mail account. Although the court found it was likely that other documents existed, given the court’s ruling on the defendants’ motion for summary judgment dismissing all but the plaintiffs’ defamation claim, they were not relevant, and thus it did not grant the defendants’ request for an adverse inference instruction. However, the court found that both parties “inadequate preservation” merited an award of attorneys’ fees, as both sides had to “search for information that should have been produced by the other side.” But because it would require a “major effort” to determine the proper fee amount and because the awards could be “mutually offsetting, resulting in little reparation or deterrence,” the court decided to withhold its ruling on the fee requests until after trial on the remaining claims.
Here, the city’s utter lack of collaboration with its IT team during discovery was damning. The failure to impose a comprehensive litigation hold after receiving a notice of litigation or to suspend automatic-deletion practices are obvious misses that should have been caught and corrected. Furthermore, leaving document collection to individual custodians is risky; counsel should always involve the IT department to ensure that no potentially responsive documents fall through the preservation and collection cracks.
In addition, the U.S. District Court for the District of Arizona had previously ruled that gross negligence would suffice for the imposition of an adverse inference instruction. However, here, District Judge David G. Campbell, who is also the chair of the Advisory Committee on Civil Rules, held that a finding of bad faith was necessary for the imposition of any severe sanctions, including adverse inferences, dismissal, and default judgment. Because he could not find bad faith here, the court’s ability to sanction was limited to lesser punishments. Judge Campbell’s position falls in line with the proposed amendment to Federal Rule of Civil Procedure 37(e), which requires prejudice as well as a “finding that the party acted with the intent to deprive another party of the information’s use in the litigation.”