To say that ediscovery case law has been plentiful in 2020 is a vast understatement. Since January 1, 2020, we’ve added close to 1400 new decisions on discovery issues, and of those, as of today, 444 raise motions for sanctions.  444.  In 6 months.

But what we are also seeing is that parties bringing their motions are wasting time and money and court resources on motions that are guaranteed to fail. It is incumbent on counsel to know and understand the law surrounding sanctions, particularly in the wake of the changes to FRCP Rule 37 made effective December 1, 2015.

A very recent ruling from the District Court of Colorado does an excellent job of laying out the law on sanctions motions in the 10th Circuit, which mirrors many other federal jurisdictions. In Bragg v. SW Health System, Inc., issued on July 13, 2020, Judge Neureiter denied a motion for terminating sanctions where the plaintiff produced “zero evidence that SHS destroyed any relevant evidence or that any such evidence was lost or deleted.”

Plaintiff sued SHS for wrongful termination in retaliation for raising concerns about billing practices which she believed constituted Medicaid and Medicare fraud. As evidence, plaintiff claimed she sent 45-85 emails to various administrators at the hospital regarding her concerns and kept copies of each of the emails in a folder on her computer named “Angela”. When SHS produced less emails in discovery than plaintiff believed existed, plaintiff hired an expert to conduct a forensic examination of the computer and the file folders.

The expert found no evidence that any data had been deleted, and could only offer testimony that turning the computer off and on and other activities taken on the computer would have written over unallocated space on the hard drive. The expert testified at deposition that a deleted file in unallocated space can be retrieved if it is not overwritten. Such actions taken on a computer would write over any deleted data, as that is where deleted files live. He found that multiple files had been installed on the computer that would also have taken up slack space. But he also conceded that no wiping software was found on the computer and that no user created files had been deleted. In fact, the only activity he uncovered on the “Angela” folder was done after SHS had received a subpoena and accessed the computer to identify responsive information. The expert was apparently not told of those dates prior to his examination or testimony. 

Testimony from SHS personnel, cited by the court in its decision, also showed that SHS had a standard practice it followed upon issuance of a legal hold to write-block an employee’s computer to prevent data from being deleted, and placing a hold on the Exchange server email boxes for the custodians. All such practices had been followed, and testimony also showed the steps taken to identify and collect data for production to plaintiffs. There was simply no evidence that additional emails existed that were not produced.

Judge Neureiter does an excellent job laying out the legal standard for evaluating potential spoliation claims, citing Cache La Poudre Feeds, LLC v. Land O’ Lakes, Inc. and Partminer Worldwide Inc. V. Siliconexpert Techs. Inc.:

Spoliation occurs when: (i) a party has a duty to preserve evidence, usually becaus ethe party knows or should know that the evidence is relevant to imminent or existing litigation; (ii) that party destroys the evidence intentionally or in bad faith; and (iii) the destruction of the evidence works to the opponent’s prejudice.

Citing, Zbylski v. Soughlas Cty, Sch. Dist., the Court also reinforced that it is the moving party’s obligation to prove, by a preponderance of the evidence, that the opposing party failed to preserve evidence or destroyed it:  “Mere negligence in losing or destroying records is not enough because it does not support and inference of consciousness of a weak case.”

The Court then outlined the “substantial weaponry” that a district court has to “shape the appropriate relief for a party’s spoliation of evidence: 1) strike witnesses, 2) issue an adverse inference, 3) exclude evidence, or 4) dismiss a party’s claims. When deciding the appropriate sanction, the court can consider a variety of factors, but two carry the most weight:  (a) the degree of culpability of the party who lost or destroyed the evidence, and (b) the degree of actual prejudice to the other party. Add to that the specific guidance on failure to preserve ESI provided by Fed. R. Civ. P. 37(e) modified effective December 1, 2015, and you have all the elements for analysis of an effective spoliation claim.

Unfortunately, plaintiffs’ claim here failed getting out of the gate. Following a complete review of the deposition testimony submitted and the plaintiff’s failure to testify live at the hearing to substantiate that she knew of the additional emails not produced, the Court found a complete absence of any evidence that the alleged documents existed and were destroyed, and that it did not even have to engage in a substantive spoliation analysis.

Much to the dismay of plaintiff’s counsel, and without a doubt, to the delight of defense counsel, the Court went on to evaluate the legal hold practices engaged in by SHS and to find them “fully” compliant with its duty to preserve ESI. Further, the Court found that the allegations of spoliation brought by plaintiff would set a ridiculous standard:

If the court were to accept Plaintiff and [the expert’s] position, spoliation would necessarily occur in almost every lawsuit involving ESI. As [the expert] acknowledges, mundane acts like turning a computer on and off or putting it in sleep mode will automatically create system files which will then overwrite unallocated space. Here that would mean that by attempting to respond to Plaintiff’s subpoena, SHS engaged in spoliation of evidence. There may be a case where overwriting unallocated space may result in the loss or destruction of potentially relevant information. This is not such a case.

Plaintiff compounded her lack of evidence by refusing to testify at the hearing, instead participating only by listening by phone:

It is beyond belief that a party whose lawyers assert she should be granted judgment without any trial as a sanction for intentional destruction of evidence would not be willing to appear by telephone or video-conference and swear under oath, subject to cross-examination, as to what evidence she believes was destroyed. . .  Nothing in her designated deposition testimony provided any support for the claims of spoliation.

The final kicker here — following the denial of the motion — was that the Court provided a roadmap and timeline to allow SHS to bring a motion for sanctions under Rule 11 to provide for sanctions against plaintiff “when a pleading or motion . . . contains claims or contentions not ‘warranted by existing law'”. That is NOT a result you want to come from the time and effort required for a sanctions motion.

Read the Bragg decision and its progeny carefully.  Create a decision tree, checklist or whatever process you need to truly evaluate the likelihood of success on a sanctions motion. As the moving party, you have the burden. The law is clear on what it takes to get sanctions. You only weaken your client’s position and empty their coffers by failing to do that analysis up front. Worse case, like in Bragg, you set your client up for a sanctions motion to be brought against her.