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Learning Care Group, Inc. v. Armetta

United States District Court, D. Connecticut

June 17, 2016

LEARNING CARE GROUP, INC., Plaintiff/Consolidated Defendant
v.
CARLENE ARMETTA, Defendant
v.
DAVID ARMETTA and ASPIRA MARKETING DIRECT, LLC, Defendants/Consolidated Plaintiffs.

          RULING ON MOTION FOR SANCTIONS

          VICTOR A. BOLDEN UNITED STATES DISTRICT JUDGE

         David Armetta, Carlene Armetta, and Aspira Marketing Direct, LLC (“Aspira”) filed a motion for sanctions, claiming that Learning Care Group, Inc. (“LCG”) destroyed a laptop used by Stacy DeWalt allegedly containing crucial evidence to their case. Mot. for Sanctions, ECF No. 130. They argue that this destruction or spoliation of evidence entitles them to sanctions and ask that the Court either find in their favor on all claims in the case or instruct the jury to draw an adverse inference from the non-production of the laptop’s contents. Aspira’s Br. 4, ECF No. 130. They also ask for attorneys’ fees for time spent uncovering LCG’s alleged discovery abuse and making this motion. Id. at 5.

         LCG does not dispute that it destroyed the laptop and that a number of Ms. DeWalt’s e-mails are not available. However, it argues that sanctions are not warranted here because the Armettas and Aspira have failed to show that the laptop’s contents were relevant to this case and that LCG acted with a sufficiently culpable state of mind. See LCG’s Opp. Br., ECF No. 140.

         For the reasons that follow, the Motion for Sanctions, ECF No. 130, is GRANTED with respect to attorneys’ fees and costs but DENIED as to the remainder of relief requested.

         I. Background

         As described in more detail in other rulings[1], Aspira, Mr. Armetta, and Mrs. Armetta were in the business of providing marketing services. LCG hired Mrs. Armetta directly as an employee. It hired Mr. Armetta and Aspira as independent third-party contractors. This lawsuit arises out of the dissolution of these business relationships.

         Stacy DeWalt was LCG’s Chief Marketing Officer and a key point of contact for the Armettas and Aspira. See Ruling on Mots. for Summ. J. 3-14, ECF No. 126. In particular, and crucial to their factual narrative of the case, Aspira and Mr. Armetta claim that Ms. DeWalt knew about a commission LCG paid to them for their direct mail marketing services. Aspira’s Br. 5-6, ECF No. 130; see also Ruling on Mots. for Summ. J. 5, ECF No. 146. They also claim that she approved a business arrangement, which may represent a conflict of interest, whereby Mrs. Armetta was employed by LCG and continued to be a member of Aspira, while LCG continued to do business with Aspira. Aspira’s Br. 6, ECF No. 130; see also Ruling on Mots. for Summ. J. 6-9, ECF No. 146.

         Ms. DeWalt left LCG on January 24, 2013, before this lawsuit was filed. Per LCG’s policy, after she left the company, her laptop was slated for recycling, Aspira’s Ex. B, Letter dated June 4, 2015 at 1, ECF No. 130-1, and was recycled in October 2013. Id.; Aspira’s Ex. I, Malik Aff. ¶8, ECF No. 130-3.

         LCG’s employees e-mails are typically backed up to a server, rather than only being saved locally on any given computer. See Aspira’s Ex. B, Letter dated June 4, 2015 at 2, ECF No. 130-1; Aspira’s Ex. G, Letter dated Oct. 16, 2014 at 2, ECF No. 130-1; Aspira’s Ex. I, Malik Aff. ¶¶4-7, ECF No. 130-3. As a result, recycling a computer ordinarily should not result in the destruction of e-mails or other electronic documents that may be relevant to litigation. However, Ms. DeWalt also deleted a number of emails that had not been backed up on LCG’s server. Aspira’s Ex. G, Letter dated Oct. 16, 2014 at 2, ECF No. 130-1; Aspira’s Ex. I, Malik Aff. ¶7, ECF No. 130-3. Thus, a number of Ms. DeWalt’s e-mails were not on LCG’s server at the time she left the company and, once the laptop was destroyed, they were completely gone.

         On March 26, 2014, Mrs. Armetta served LCG with a request for production of documents in this lawsuit, seeking all communications from Stacy DeWalt relevant to “marketing or creative strategy for the partnership and/or direct mail marketing programs.” Aspira’s Ex. C, Document Requests dated Mar. 26, 2014 at 7, ECF No. 130-1. LCG gathered e-mails responsive to this request by pulling them from its server. Aspira’s Ex. I, Malik Aff. ¶¶ 4-5, 7, ECF No. 130-3. This method excluded the e-mails that Ms. DeWalt had deleted, but none of the parties knew about this deficiency at the time. Id. ¶7.

         It was only later, in July 2014, when the Armettas and Aspira realized that Mrs. Armetta had produced an e-mail sent to Ms. DeWalt that they did not have in the production of Ms. DeWalt’s e-mails that prompted an investigation. Aspira’s Ex. E, Pastore Decl. ¶3, ECF No. 130-1; Aspira’s Br. 8-9, ECF No. 130. The parties discovered that many of Ms. DeWalt’s e-mails were not available on LCG’s server, because she had deleted them. By this time, Ms. DeWalt’s laptop had already been destroyed.

         Aspira and the Armettas argue that beginning in August 2013, when LCG launched an internal investigation into its business relationship with Aspira and the Armettas, and certainly by September 2013, when Mrs. Armetta filed a lawsuit against LCG, LCG was under an obligation to preserve all evidence related to this case, including Ms. DeWalt’s laptop. Aspira’s Br. 7-8, 20, ECF No. 130. They contend that if the physical laptop existed today, they would likely have been able to recover many of the deleted e-mails. Aspira’s Ex. E, Pastore Decl ¶7, ECF No. 130-1. They claim to have an expert who believes this to be the case, but have not submitted any report or affidavit from that individual. Id. LCG disputes whether such e-mails would be recoverable, but also does not submit any exhibits or other information about that position.

         II. Discussion

         Federal district courts have “broad discretion” in deciding whether and how to sanction parties for spoliation of evidence. See West v. Goodyear Tire & Rubber Co., 167 F.3d 776, 779 (2d Cir. 1999); Fujitsu Ltd. v. Fed. Express Corp., 247 F.3d 423, 436 (2d Cir. 2001) (“The determination of an appropriate sanction for spoliation, if any, is confined to the sound discretion of the trial judge….”) (citations omitted). To obtain sanctions based on the spoliation of evidence, the movant must show “(1) that the party having control over the evidence had an obligation to preserve it at the time it was destroyed; (2) that 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 that claim or defense.” Residential Funding Corp. v. DeGeorge Financial Corp.,306 F.3d 99, 107 (2d Cir. 2002) (internal quotation marks and citation omitted) (when seeking an adverse inference instruction); see also ...


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