United States District Court, D. Connecticut
PREZIO HEALTH, INC.
JOHN SCHENK & SPECTRUM SURGICAL INSTRUMENTS CORP.
RULING ON PLAINTIFF'S MOTION FOR SANCTIONS
Joan Glazer Margolis United States Magistrate Judge
The factual and procedural history behind this litigation was set forth in this Magistrate Judge's Ruling on Defendant's Motion to Compel, filed April 13, 2015 (Dkt. #62), Ruling on Plaintiff's Motion to Compel, filed August 25, 2015 (Dkt. #77), and Ruling Following In Camera Review, filed September 9, 2015 (Dkt. #80)["September 2015 Ruling"], familiarity with which is presumed. The September 2015 Ruling held that plaintiff was "entitled to the metadata for the following eight e-mails [from defendant Schenk's home AOL account]: the two May 6, 2013 e-mails; the May 13, 2013 e-mail; the two June 6, 2013 e-mails; the two October 16, 2012 e-mails; and the December 13, 2012 e-mail[, ]" and that "[u]nless counsel agree otherwise, defense counsel shall make the necessary arrangements and plaintiff promptly shall reimburse defendants for any expenses borne as a result." (At 3). On November 4, 2015, plaintiff's counsel advised the Court, by letter, with a copy to defense counsel, that they had "received the metadata report relating to certain of defendant John Schenk's e-mails from his personal e-mail account[, ]" and were "in the process of analyzing this report."
Twelve days later, on November 16, 2015, plaintiff filed the pending Motion to Sanction Defendants for Spoliation of Evidence and brief in support (Dkts. ##81-82),  as to which defendants filed their brief in opposition on December 14, 2015. (Dkt. #84; see also Dkts. ##83, 86). The following week, plaintiff filed its reply brief. (Dkt. #85).
As set forth in the various filings, plaintiff's computer expert was able to locate only five of the eight e-mails on defendant Schenk's home AOL account, which he was able to analyze; however, three of the e-mails, one dated May 13, 2013 and two dated June 6, 2013, were missing, which e-mails were deleted during the course of this litigation and which, according to plaintiff, contained “some of the most sensitive information [from plaintiff] at issue in this litigation, including a [ten] page pricing list and a list of potential customer leads.” (Dkt. #81, at 1-4; Dkt. #82, at 1-6 & Exhs. 2-5; Reisman Aff’t, ¶¶ 4-12 & Subexhs. 2-3; Dkt. #84, at 2-5; Schenk Decl., ¶¶ 3, 5-10; Mrs. Schenk Decl., ¶¶ 3-8; Tuttle Decl., ¶¶ 3-9; Dkt. #85, at 1). As a result, plaintiff seeks the following sanctions: (1) striking defendants’ Answer and Affirmative Defenses; (2) entering judgment in plaintiff’s favor; (3) scheduling the matter for a hearing in damages for plaintiff; (4) entering the injunctive relief sought by plaintiff, including enjoining defendant Schenk from working for defendant Spectrum for twelve months; (5) an adverse inference to defendants, finding that defendant Schenk as a matter of fact did forward the three deleted e-mails to co-workers within defendant Spectrum and that defendant Spectrum used the information contained in the emails to compete unfairly and illegally with plaintiff, including over the Detroit Medical Center and Bon Secours Health System accounts, which order should apply to all aspects of this case, including on summary judgment and at trial; and (6) attorney’s fees and costs. (Dkt. #81, at 4-5; Dkt. #82, at 10-12; Dkt. #85, at 5-7).
In their brief in opposition, defendants emphasize that defendant Schenk used the AOL account “infrequently[, ]” that his wife uses it “regularly[, ]” and that when they were younger, his children used it as well, including for school work, and that defendant Schenk, his wife and his children all understood that no e-mails regarding this lawsuit should be deleted. (Dkt. #84, at 2-5, 7; Schenk Decl., ¶¶ 3, 5-9; Mrs. Schenk Decl., ¶¶ 3-7). Mrs. Schenk surmises that these three e-mails may have been lost when she purchased a new iPad and had her e-mails transferred to an AOL App, as some other e-mails appear to be missing as well. (Dkt. #84, at 7; Mrs. Schenk Decl., ¶ 8). Defendants contend that the three missing e-mails are irrelevant, particularly since a prior search did not reveal any of the eight e-mails having been forwarded from the AOL account to any other address. (Dkt. #84, at 4, 8; Tuttle Decl., ¶ 9; see also Schenk Decl., ¶ 10). Under these circumstances, defendants argue that an adverse inference instruction and the “drastic remedy” of judgment are unwarranted. (Dkt. #84, at 6-11). Defendants further argue that defendant Spectrum is not alleged to have had any involvement in the alleged spoliation, so that if any sanctions are warranted, they should be addressed to defendant Schenk only. (Dkt. #84, at 1, 11).
Contrary to defendants’ arguments, plaintiff argues in its reply brief that defendant Spectrum is liable for the spoliation, as the two defendants “have been joined at the hip in this litigation since its inception[, ]” having retained the same counsel, having filed the same answer, and having produced joint discovery responses. (Dkt. #85, at 2-3). Plaintiff further argues that defendants were grossly negligent, as having told his wife and children not to delete his work e-mails was insufficient protection against their deletion. (Id. at 3-4). Similarly, plaintiff contends that the metadata is highly relevant, has also been ruled as such by the Court, and could reveal whether there had been blind carbon copies, forwards, or responses to these three e-mails. (Id. at 4-5). Thus, plaintiff asserts that default judgment is appropriate, or alternatively, an adverse inference. (Id. at 5-7).
As plaintiff appropriately points out, defendants do not deny that the metadata from these three e-mails is “irretrievably lost.” (Dkt. #85, at 1). The sole issue then is what should be the consequence of the deletion of nearly half of the eight e-mails for which additional discovery had been ordered in the September 2015 Ruling.
Both parties have cited Residential Funding Corp. v. DeGeorge Fin. Corp., 306 F.3d 99, 107 (2d Cir. 2002), in which one party did not produce copies of all of its relevant e-mails until after trial had begun; the district judge denied the other party’s request for sanctions, including an adverse inference, in part because the delays were occasioned by a computer vendor, not the party itself. Id. at 101-06. In reversing this decision, the Second Circuit held that:
a party seeking an adverse inference instruction based on the destruction of evidence must establish (1) that the party having control over the evidence had an obligation to preserve it at the time it was destroyed; (2) the records were destroyed “with a culpable state of mind”; and (3) that the destroyed evidence was “relevant” to the party’s claim or defense such that a reasonable trier of fact could find that it would support the claim or defense.
Id. at 107 (citations omitted).
The first and third elements clearly are satisfied, as defendants already had produced hard copies of these e-mails, thus recognizing the obligation to preserve them, and the September 2015 Ruling previously had held that the metadata was relevant. As to the second element, the Second Circuit observed that
The sanction of an adverse inference may be appropriate in some cases involving the negligent destruction of evidence because each party should bear the risk of its own negligence . . . if that is necessary to further the remedial purpose of the inference. It makes little difference to the party victimized by the destruction of evidence whether that act was done willfully or negligently. . . . The inference is adverse to the destroyer not because of any finding of moral culpability, but because the risk that the evidence would have been detrimental rather than favorable should fall on the party responsible for the loss.
Id. at 108 (citation omitted).
This Magistrate Judge agrees with plaintiff that defendant Schenk merely having instructed his wife and children not to delete his litigation related e-mails, ones that were the subject of motions and judicial rulings in federal court, was grossly deficient. Assuming that defendants’ theory of what transpired is correct, while Mrs. Schenk certainly is free to read her personal AOL e-mails on whatever electronic device she wishes, under the circumstances of this lawsuit, she should not have been left on her own to download an AOL App on her new iPad to transfer all the family e-mails there. Obviously, defense counsel and her husband had not sufficiently impressed upon her the significance of preserving these eight e-mails at all times, e-mails which are critical to the underlying issues in this lawsuit. It is not unusual for adults living in this electronic age to be unable to locate a stray e-mail from time to time in their various e-mail in-boxes. But in this case, defendants could not afford to let this happen to any of these eight e-mails, and should have taken more significant steps to preserve them. ...