PAUL W. GRIMM, United States Magistrate Judge.
This Memorandum Opinion resolves Plaintiff Marc Goodman's ("Plaintiff," or "Goodman") Motion for Holding of Spoliation Sanctions by Defendant and for Associated Relief (with Application to Motions for Summary Judgment), Paper No. 138, Defendant Praxair Services, Inc.'s ("Defendant," or "Tracer/PSI") Memorandum in Opposition to Plaintiff's Motion for Spoliation Holding and Request for Specific Inferences, Paper No. 139, and Plaintiff's Reply to Defendant's Opposition to Motion for Holding of Spoliation and for Associated Relief, Paper No. 140.
In order to rule on the pending Motion, I requested that the parties provide certain additional information, which they did. See Paper Nos. 145 & 152. Accordingly, the matter is fully briefed and ripe for resolution, and a hearing is not necessary. See D. Md. Local Rule 105(6). For the reasons stated below, I make the following findings: (1) Goodman's Motion was timely filed; (2) Tracer reasonably should have anticipated litigation on January 5, 2001, and its duty to preserve evidence relevant to Goodman's claim commenced on that date; (3) the duty to preserve applied to Marty and other key players at Tracer; (4) Tracer was not obligated to issue a litigation hold to third-party consultants or preserve any documents or records prepared by third-party consultants; (5) Tracer/PSI's failure to search backup tapes did not constitute spoliation of evidence; (6) Tracer/PSI did not act in bad faith in its destruction of evidence; (7) Tracer/PSI was negligent in its failure to issue a litigation hold to key players; (8) Tracer/PSI acted willfully in its destruction of Marty's laptop, and knew of the relevance of the laptop to Goodman's claim; (9) Marty acted willfully when she deleted emails in violation of the duty to preserve, and knew of the relevance of the emails; (10) Goodman's request for summary judgment or a series of fact-specific adverse jury instructions must be denied; and (11) Goodman's request for a general adverse jury instruction as to Tracer/PSI and Marty's actions, as more fully explained below, is granted. Further, Goodman will be permitted to file with a Court a list of his reasonable expenses associated with the resolution of the issues in his favor that he incurred as a result of filing the instant Motion.
I. Background Facts
Tracer, a Tucson, Arizona company, developed technology and provided services for detecting and identifying leaks in containers that could store various chemicals, including fuel. Def.'s Mot. Summ. J., Ex. 1 ¶ 3, Paper No. 111-4. Specifically, through its patented "TracerTight" leak detection process, minute quantities of chemical "tracers" were injected into fuel storage containers in order to "facilitate the rapid detection and location of fuel leaks." Id. ¶ 5. In April 1997, Tracer discovered that several of its tracers, which had been registered as "fuel additives" with the EPA, could be subject to the Clean Air Act regulations' "Tier 1" and "Tier 2" testing requirements. Def.'s Mem. Supp. 4, Paper No. 111-2; see also 40 C.F.R. §§ 79.1 et seq. Under the Clean Air Act regulations, companies that manufacture fuel additives are required to register the chemicals with the EPA before they are eventually sold in commerce. Id. § 79.4. Further, to complete the registration
Goodman, a consultant with EA, voluntarily left the company to work with Tracer on securing the exemptions. Def.'s Mot. Summ. J., Ex. 2 at 56:10-15, Paper No. 111-12 [hereinafter Pl.'s Dep.]. After months of negotiations, Marty, the CEO of Tracer, and Goodman executed a contract, which provided:
Def.'s Mot. Summ. J., Ex. 7 at 2, Paper No. 111-17. Tracer also was obligated to pay $10,000 to Goodman when he performed a "package of services," which included drafting a letter or petition outlining the justification for exempting the tracers, meeting with key EPA officials to discuss the submission, and participating in any follow-up meeting to respond to any queries of the regulators. Id. at 3. Finally, the success fee of $50,000 would be paid to Goodman if he was successful in "removing the tracers from the sec. 211(f) waiver requirements."
In January 1999, Caldwell informed Goodman that Tracer would have to modify its original Tier 1 submission and perform a minimized, alternative form of Tier 2 testing. Id. at 224:4-9. However, Margo Oge ("Oge"), the Director of the EPA's Office of Mobile Sources, disagreed with revising the testing requirements. Id. at 236:18-20. Consequently, Tracer and Goodman strategically revised their approach to the project. Rather than explain why the tracers were not fuel additives, Goodman hoped to show the tracer process was "critical" to preventing fuel from leaking into the environment, thereby justifying the exemption of the tracers from the testing requirements. Id. at 280:18-281:2. Further, any legal arguments in the original petition would be bolstered by additional research. Id. at 281:3-8. Goodman also suggested to Kortum that no meetings occur with Oge "until further consultations have determined [Tracer's] next steps." Pl.'s Mot., Ex. O at 10. Similarly, in April 1999, Marty informed Goodman that he was to have no further contact with the EPA unless he had refined a "complete strategy" on exempting the tracers. Marty Dep. 381:12-19.
In March 1999, Goodman worked with an attorney to develop a legal memorandum to submit to the EPA. Goodman ultimately was dissatisfied with the attorney's final product and recommended that Tracer not submit it to the EPA. See Pl.'s Dep. 269:6-270:13, 305:20-308:9, 313:16-315:22. Goodman then recommended that Tracer retain the National Legal Research Group ("NLRG") to revise the legal memorandum; however, Goodman disagreed with the assertions made in NLRG's memorandum, and it was never submitted to the EPA. Id. at 365:7-372:22.
Tracer then retained Mary Gade ("Gade"), an attorney who formerly worked with the EPA. At Gade's request, Tracer contacted Richard Wilson ("Wilson") and Marc Himmelstein ("Himmelstein"), consultants with National Environmental Strategies ("NES") in Washington, D.C. Wilson previously had worked at the EPA from 1970 to 1998, and was Oge's supervisor when she was appointed to be the Director of the EPA's Office of Mobile Sources. Pl.'s Mot., Wilson Dep. 100:19-101:15 [hereinafter Wilson Dep.]. Based on Wilson's previous relationship with Oge and his knowledge of the inner-workings of the EPA, Tracer retained him to work on the project in January 2000. See Wilson Dep. 39:3-7; see also Def.'s Mot. Summ. J., Ex. 1, Attach. A, Paper No. 111-5.
As a result of the extended delays in obtaining the exemptions from the EPA, Goodman requested a $20,000 advance against the success fee. In a November 19, 1999 email, Marty noted that she "was amenable to modifying [Goodman's] contract for some payments now." Def.'s Resp., Ex. 9 at 3, Paper No. 139-10. Marty also informed Goodman of "the need to rework the contract if [Gade] [was] the one primarily responsible for achieving success
In a March 5, 2000 email, Goodman requested an update from Marty on the project. Pl.'s Mot., Ex. U at 2. In a March 6, 2000 email, Marty told Goodman that Wilson had met with Kortum, Caldwell, and Matthews. Id. On that same day, Goodman sent a response email, and inquired why he "was not included in the meeting [Wilson] had with [the EPA officials]." Id. at 1. Goodman stated that he had thought there were going to be "additional strategy sessions before further meetings with EPA, as [he] had been holding off contacting them for the last year or so until [Tracer] had a strategy in place." Id. Marty responded, stating, "I am comfortable with the direction we are going and how it is being pursued. I believe your knowledge and background will be critical when it comes to figuring out how to get us out of the regulatory web." Id. Further, Marty reportedly believed that the meetings with the EPA that Goodman did not attend were "merely sowing the seed to create the desire within the upper levels of EPA [to exempt the tracers]." Id. Goodman sent a responsive email, and stated, "My problem is with meeting at the staff levels of EPA, which could conceivably prejudice any future effort I may have to make with them." Id. Goodman also stated, "As you know, I have [a] considerable stake in the outcome of this and would be very distressed if things proceeded without my participation or concurrence and the result was unfavorable." Id. Goodman said that he would assume there would not "be any problem regarding the contract if it [succeeded], even with me on the sidelines. But if it [was] out of my hands and [failed], that would create some real questions for us to resolve." Id. Goodman added that if Wilson and Gade were to somehow "blow it, that would almost certainly make it impossible for me to straighten [it] out after the fact and I would have been deprived of the chance to perform under our contract...." Id.
Wilson and colleagues purportedly participated in meetings with Oge, Kortum, and officials from the EPA's Office of Solid Waste and Emergency Response. See Def.'s Mot. Summ. J., Ex. 32, Paper No. 111-42. In October 2000, Wilson drafted a letter to the EPA's Office of Research and Development ("ORD") to address concerns regarding the health effects of the tracers. Def.'s Mot. Summ. J., Ex. 1, Attach. F at 3-4, Paper No. 111-11. After the ORD received the letter, the ORD "recommended[ed] to [Oge] that from [this] office's
In a December 19, 2000 letter, Oge informed Tracer that the "tracers [were] not fuel additives"; therefore, the tracers would not be required to undergo Tier 1 and Tier 2 testing. See Def.'s Mot. Summ. J., Ex. 34, Paper No. 111-44. During the last week of December 2000, Marty allegedly called Goodman and informed him that he was not ultimately responsible for the project's success, and Tracer would not pay him any remaining portion of his success fee. See Pl.'s Mot., Goodman Decl. 2. Goodman further alleges that Marty offered to let him keep the $20,000 advance in exchange for a full release of all claims, and that she would immediately send him a draft of the release. Id. Additionally, Goodman argues that Marty requested that he draft a letter outlining the payment estimates for the amount of work he had done. Id. In a January 5, 2001 letter, Goodman stated that he had consulted with two attorneys regarding the dispute, one of whom suggested he was entitled to "$230,000" under the law, and if he was "forced to litigate," then he would be awarded "treble this amount based on a recent line of cases." See Def.'s Resp., Ex. 10 at 9, Paper No. 139-11. Goodman also alluded to the supposed telephone call with Marty, stating, "I want to point out that some of the statements you made to me on the telephone last week are hard to see as representing good faith. These include... tell[ing] me `accept $20,000 today or we won't give you anything and you can sue us.' I am sure that such statements will not be helpful to resolving this matter and will not further the interests of Tracer." Id. at 10. In a January 10, 2001 faxed invoice, Goodman provided an itemized list of costs equal to $230,000. Def.'s Resp., Ex. 11 at 2, Paper No. 139-12. On the fax cover sheet, he stated, "Remember— `Fast pay makes fast friends.'" Id. at 1.
In a February 19, 2001 letter, Goodman markedly ratcheted up the dispute and claimed that Tracer had exempted "ten tracers" from the EPA testing requirements; therefore, he contended that his success rate, and requisite success fee, would need to be increased. Def.'s Resp., Ex. 12 at 1-2, Paper No. 139-13. Goodman further stated that "no good can come to Tracer from litigating this rather than paying off what it owes me. If I am forced to turn this over to attorneys, they will certainly demand a greater amount, starting with the use of [ten] tracers for calculating the success fee." Id. at 2. Also, Goodman stated, "[O]nce I put the matter in the hands of attorneys, if I am forced to do that ... I am sure that you will regret it for a very long time. Don't go down that road, Shannan. Pay my invoice, as you clearly owe me...." Id. at 3.
In light of Goodman's escalating letters demanding payment and threatening to retain counsel, Marty "sought legal counsel," instituted a "litigation hold," and no longer deleted any emails she had received. Def.'s Resp. 10, 15-16. Before the litigation hold was implemented, Marty would typically delete emails from her computer after she had read them. Contrastingly, if Marty wanted to keep a record of any "relevant" email, it was printed, and placed in a file cabinet. See Marty Dep. 387:8-19. However, "[a]fter Goodman's February 19, 2001 letter, Marty no longer deleted documents related to the dispute, including emails, because she was not receiving additional emails relating to the `project.'" Def.'s Resp. 16. There is no evidence that has been brought to the Court's attention to suggest that Tracer's counsel instructed Marty to implement the litigation hold, or that any other Tracer employees or consultants were advised to implement a litigation
In a February 27, 2001 letter, Tamara Meyer ("Meyer"), an attorney at Sonnenschein Nath & Rosenthal LLP ("Sonnenschein"), and one of Tracer's attorneys, wrote to Goodman and stated that there was "no [valid] claim against Tracer for `payment of $200,000 ... or a ... success fee' or any other payment." Pl.'s Mot., Ex. I at 1. Nevertheless, Meyer told Goodman that Tracer was willing to permit him to keep the $20,000 advance he had received in exchange for executing a mutual release of any future claim. Id. at 2. Meyer did not receive a response from Goodman and "Tracer did not hear from Goodman again until he filed suit, [nearly three years later]." Def.'s Resp. 10.
At this point, it is necessary to discuss Tracer's electronic document retention policies. Tracer employed seven data servers, and the "i-drive" was designated as the server where employees could save work-related documents. Def.'s Resp. Ct. Order, Ex. 1 ¶ 8, Paper No. 155-2. Tracer also used the Microsoft Exchange 5.5 and Microsoft Outlook email systems. Both Tracer's i-drive and email systems were backed up nightly on disaster recovery tapes. Id. ¶¶ 9-10. In October 2002, Tracer was acquired by Praxair Services, Inc., a subsidiary of Praxair, Inc; therefore, Praxair became the successor in interest to Tracer. From October 2002 to December 2003, Tracer's information technology infrastructure was transferred to the Praxair system. Included in this transition process was the replacement of forty-five Tracer computers with new Praxair computers. Once the new computers were installed, data saved on the old computers
On February 13, 2004, Goodman, then represented by counsel, filed a breach of contract claim against Tracer/PSI. Pl.'s Compl. ¶¶ 4-22. In an October 27, 2004 Order, Paper No. 32, summary judgment was granted in favor of Tracer/PSI, and Goodman's claim was dismissed. Goodman successfully appealed, see Goodman v. Praxair, Inc., 494 F.3d 458 (4th Cir. 2007), and the case was reinstated on October 31, 2007. See Paper No. 54. On December 18, 2007, Goodman filed a notice with the Court that he would proceed pro se. See Paper No. 62.
As discovery progressed in spring 2008, Kathryn D. Blake, the Senior Legal Assistant at Tracer/PSI, received approximately 280 disaster recovery tapes and compact discs that had been stored in the Tracer/ PSI offices in Tucson, Arizona. The tapes and compact discs purportedly were "not labeled or marked in anyway," and only a portion of the tapes were marked with dates, "ranging from 1996 to 1998." Def.'s Resp., Ex. 7 ¶¶ 1-4, Paper No. 139-8. Nevertheless, Tracer/PSI continued to retain the tapes and discs. On March 10, 2008, Russell M. Shumway ("Shumway"), the Technical Director for e-Discovery and Forensics Services at Sonnenschein, traveled to Buffalo, New York, to meet with Rich Romaniak ("Romaniak"), an employee at Tracer/PSI. Romaniak was in possession of a hard drive acquired from Tracer/PSI that contained data from Tracer's i-drive. Defense counsel provided Shumway with a list of search terms to run through the hard drive. After the initial search was performed, Shumway retrieved 35,485 documents that contained one or more of the search terms. Shumway then narrowed the search to any documents created between April 1, 1998, and April 1, 2001. This search resulted in 309 documents being produced. Upon a review of the documents, Defense counsel
This case was then referred to me for the purpose of resolving all discovery disputes. In a June 4, 2008 Letter Order, Paper No. 106, the discovery deadline in this case was scheduled for August 15, 2008, and dispositive motions were to be filed by September 30, 2008. In an August 15, 2008 Joint Status Report, Paper No. 113, the parties stated:
Additionally, in a September 29, 2008 Memorandum in Support of the Motion for Summary Judgment, Goodman stated:
Pl.'s Mem. Supp. Mot. ¶¶ 1-2, Paper No. 117-2. On January 23, 2009, Goodman filed his Motion for Holding of Spoliation Sanctions. Tracer/PSI filed a Response, and Goodman filed a Reply.
As recognized in Thompson v. U.S. Department of Housing & Urban Development, 219 F.R.D. 93, 100 (D.Md. 2003), "The failure to preserve electronic or other records, once the duty to do so has been triggered, raises the issue of spoliation of evidence and its consequences." Spoliation is "the destruction or material alteration of evidence or the failure to preserve property for another's use as evidence in pending or reasonably foreseeable litigation." Id. (quoting Silvestri v. Gen. Motors Corp., 271 F.3d 583, 590 (4th Cir.2001)); see also Sampson v. City of Cambridge, 251 F.R.D. 172, 179 (D.Md. 2008) (citation omitted); Broccoli v. Echostar Commc'ns Corp., 229 F.R.D. 506, 510 (D.Md.2005) (citation omitted). Under federal law, a court's authority to levy sanctions on a spoliator ultimately derives from two main sources. First, there is the "court's inherent power to control the judicial process and litigation, a power that is necessary to redress conduct `which abuses the judicial process.'" United Med. Supply Co. v. United States, 77 Fed.Cl. 257, 263-64 (2007) (quoting Chambers v. NASCO, Inc., 501 U.S. 32, 45-46, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991)); accord Thompson, 219 F.R.D. at 100 (quoting Silvestri, 271 F.3d at 590 (internal citations omitted)); see also Adkins v. Wolever, 554 F.3d 650, 652 (6th Cir.2009) (citations omitted); Leon v. IDX Sys. Corp., 464 F.3d 951, 958 (9th Cir.2006) (citing Fjelstad v. Am. Honda Motor Co., 762 F.2d 1334, 1337-38 (9th Cir.1985)); Flury v. Daimler Chrysler Corp., 427 F.3d 939, 944 (11th Cir.2005); In re NTL, Inc. Secs. Litig., 244 F.R.D. 179, 191 (S.D.N.Y.2007) (citing Phoenix Four, Inc. v. Strategic Res. Corp., No. 05 Civ. 4837(HB), 2006 WL 1409413, at *3 (S.D.N.Y. May 23, 2006)). Second, if
Goodman has failed to identify any court order violated by Tracer/PSI in its alleged spoliation of evidence; accordingly, the Court's ability to impose any sanction must derive from its inherent authority to regulate the litigation process, rather than from any sanction prescribed by the Federal Rules of Civil Procedure. See, e.g., Sampson, 251 F.R.D. at 177-79 (noting defendant's alleged failure to preserve emails and electronic memoranda "implicate[d] the court's inherent authority to impose sanctions because ... [the] defendant violated the general duty to preserve relevant evidence, rather than violating a specific court order").
III. Timeliness of a Spoliation Motion
Preliminarily, Tracer/PSI asserts that Goodman's Motion should be denied as untimely.
Fed.R.Civ.P. 37 governs most motions for discovery sanctions, but it does not contain any specific reference to the timing of the filing of a motion seeking spoliation sanctions. See McEachron v. Glans, No. 98-CV-17(LEK/DRH), 1999 WL 33601543, at *2 (N.D.N.Y. June 8, 1999). Courts considering this issue have identified a number of factors that can be used to assess the timeliness of spoliation motions. First, "[k]ey to the discretionary timeliness assessment of lower courts is how long after the close of discovery the relevant spoliation motion has been made...." See, e.g., id. at *2 & n. 3 (holding spoliation motion made two weeks after the close of discovery was timely); id. at *2 (citing
The lesson to be learned from the cases that have sought to define when a spoliation motion should be filed in order to be timely is that there is a particular need for these motions to be filed as soon as reasonably possible after discovery of the facts that underlie the motion. This is because resolution of spoliation motions are fact intensive, requiring the court to assess when the duty to preserve commenced, whether the party accused of spoliation properly complied with its preservation duty, the degree of culpability involved, the relevance of the lost evidence to the case, and the concomitant prejudice to the party that was deprived of access to the evidence because it was not preserved. See, e.g., Silvestri, 271 F.3d at 594-95. Before ruling on a spoliation motion, a court may have to hold a hearing, and if spoliation is found, consideration of an appropriate remedy can involve determinations that may end the litigation or severely alter its course by striking pleadings, precluding proof of facts, foreclosing claims or defenses, or even granting a default judgment. And, in deciding a spoliation motion, the court may order that additional discovery take place either to develop facts needed to rule on the motion or to afford the party deprived of relevant evidence an additional opportunity to develop it from other sources. The least disruptive time to undertake this is during the discovery phase, not after it has closed. Reopening discovery, even if for a limited purpose, months after it has closed or after dispositive motions have been filed, or worse still, on the eve of trial, can completely disrupt the pretrial schedule, involve significant cost, and burden the court and parties. Courts are justifiably unsympathetic to litigants who, because of inattention, neglect, or purposeful delay aimed at achieving an unwarranted tactical advantage, attempt to reargue a substantive issue already ruled on by the court through the guise of a spoliation motion, or use such a motion to try to reopen or prolong discovery beyond the time allotted in the pretrial order.
IV. Required Elements for Spoliation Sanctions
A party seeking sanctions for spoliation must prove the following elements:
Thompson, 219 F.R.D. at 101 (citing Zubulake v. UBS Warburg, LLC ("Zubulake IV"), 220 F.R.D. 212, 220 (S.D.N.Y.2003)).
A. The Duty to Preserve—The Trigger Date
With respect to the first element, "[t]he duty to preserve material evidence arises not only during litigation but also extends to that period before the litigation when a party reasonably should know that the evidence may be relevant to anticipated litigation."
The mere existence of a dispute does not necessarily mean that parties should reasonably anticipate litigation or that the duty to preserve arises. See Treppel v. Biovail Corp., 233 F.R.D. 363, 371 (S.D.N.Y.2006). By April 1999, Marty had severed all ties between Goodman and the EPA, thereby arguably preventing him from obtaining the EPA exemptions and securing his success fee. Although these actions may have given rise to the dispute that underlies this litigation, Goodman and Tracer/PSI negotiated for quite some time before litigation became reasonably foreseeable. During her deposition, Marty testified to the following regarding the November 1999 emails:
Tracer/PSI has characterized this exchange benignly, as merely "continuing the business relationship" between the parties. Def.'s Resp. 7. Goodman contends that it shows Tracer/PSI would only pay him the success fee "if he participated in the final meetings with [the] EPA, which was at [Marty's] sole discretion based on whether Goodman's ongoing participation would be needed[,] but did not communicate that caveat to Goodman in any way." Pl.'s Mem. Supp. 7 (internal citations omitted). Thus, as Goodman sees it, preventing him from contacting the EPA would result in a "contract dispute from [November 1999] forward." Id. This argument is tenuous at best, as it presupposes that Tracer/PSI had concluded that Goodman would never earn the right to resume contact with the EPA, and that it should therefore reasonably anticipate that Goodman would file suit regardless of whether the exemptions were ultimately obtained. Similarly, the March 2000 email exchange was insufficient to put Tracer/PSI on notice that a claim by Goodman was reasonably foreseeable. Goodman's email said that he had "real questions," which is vague, and would not, when objectively viewed, put Tracer/ PSI on notice of foreseeable litigation. In Goodman's email, he complained that he could be "deprived of the chance to perform under [the] contract," but this was in reference to Wilson failing to obtain the exemptions. Were this to happen, Goodman would still have been to able to argue that he was entitled to his success fee—if the exemptions were granted because of work that Goodman had done. Accordingly, the November 1999 email exchange was insufficient to trigger Tracer/PSI's duty to preserve evidence.
Similarly, the December 2000 phone conversation between Goodman and Marty did not trigger the duty to preserve, as Marty testified she did not recall telling Goodman that Tracer/PSI would offer him $20,000 in exchange for a release of any
I do find, however, that the duty to preserve was triggered when Goodman sent his January 5, 2001 letter to Marty, because "[p]re-filing communications between the litigants can ... provide constructive notice that litigation is likely. Demand letters stating a claim may be sufficient to trigger an obligation to preserve." Shira A. Scheindlin, Daniel J. Capra & The Sedona Conference, Electronic Discovery and Digital Evidence: Cases and Materials 106 (2008). Relying on Cache, 244 F.R.D. 614, Tracer/PSI argues that Goodman's letter constituted "a request for compensation and an attempt to negotiate a resolution," as opposed to a threat of litigation. Def.'s Resp. 9. I disagree.
In Cache, plaintiff's counsel contacted the defense counsel, and stated that the defendant could possibly be infringing on one of the plaintiff's trademarks for its products. In a June 5, 2000 letter written to defense counsel, plaintiff's counsel stated that the defendant was engaging in a "very active marketing campaign [which could] present a situation that [might] become a very serious problem." 244 F.R.D. at 622 (internal quotation marks omitted). Plaintiff's counsel stated that the purpose of the letter was to put the defendant on notice of the plaintiff's "trademark rights," and "determine whether this situation [could] be resolved without litigation and media exposure." Id. (emphasis added) (internal quotation marks and citations omitted). In a subsequent letter, plaintiff's counsel did not threaten litigation, and stated that he was "willing to listen to what [the defendant] might propose" to resolve the matter. Id. (citations and internal quotation marks omitted). The Cache court held that the letters did not trigger the duty to preserve, as they did not "threaten" litigation, and the plaintiff seemed amenable to reaching a non-litigious solution. See id. In the present case, Goodman's January 5, 2001 letter to Marty noted that he had consulted two attorneys regarding the matter, and advised Marty that if he was "forced to litigate," then he could potentially receive damages in excess of the disputed amount from the contract. This language distinguishes Goodman's letter from the more conciliatory letters in Cache. It may be that a letter that merely identifies a dispute but expresses an invitation to discuss it or otherwise negotiate does not trigger the duty to preserve evidence, but where, as here, the letter openly threatens litigation, then the recipient is on notice that litigation is reasonably foreseeable and the duty to preserve evidence relevant to that dispute is triggered. I therefore find that Tracer/PSI's duty to preserve evidence relevant to the claim raised in this case commenced with Goodman's January 5, 2001 letter.
B. The Duty to Preserve—The Key Players to the Litigation
Once a party reasonably anticipates litigation, it is obligated to suspend its routine document retention/destruction policy and implement a "litigation hold" to ensure the preservation of relevant documents. Thompson, 219 F.R.D. at 100 (quoting Zubulake IV, 220 F.R.D. at 218). "Relevant documents" includes the following:
Zubulake IV, 220 F.R.D. at 217-18 (footnotes omitted). Thus, as of January 5, 2001, Tracer/PSI was obligated to implement a litigation hold with respect to relevant documents including electronically stored information for the "key players" involved with the dispute with Goodman. Tracer/PSI argues that Marty was the only "key player" to this litigation, as "[s]he executed the contract with Goodman and was considered by everyone to be Goodman's primary contact." Def.'s Resp. 11 (citing Zubulake IV, 220 F.R.D. at 218). As viewed by Tracer/PSI, "the vast majority of communications occurred between Marty and Goodman," therefore, Marty was the only individual at Tracer under an obligation "to preserve documents relevant to Goodman's claims." Id. Tracer/PSI's argument is founded on a misreading of Zubulake IV; identifying a "key player" in litigation is not dependent on the volume of interaction between an individual and a litigant, but rather is determined by whether an individual is likely to have information relevant to the events that underlie the litigation. Goodman contends that the duty to preserve extended beyond Marty, and also was applicable to: (1) Wilson and Gade, third-party consultants for Tracer; (2) Golding, the Tracer employee responsible for answering technical questions on the project; and (3) Thompson, Tracer's founder. See Pl.'s Mem. Supp. 9-10, 17. For reasons discussed below, I find that the duty to preserve applied to Marty, Golding, and Thompson, but not to Wilson or Gade.
Wilson Dep. 95:13-97:2 (emphasis added). Because Tracer/PSI contends that Wilson and Gade were solely responsible for obtaining the exemptions, Wilson's file clearly would contain highly relevant information:
Id. at 115:21-116:16 (emphasis added). The parties vehemently disagree over the exact nature of the business relationship between Tracer/PSI and Wilson. Goodman
What is meant by "control," as used by Silvestri in the context of a spoliation claim, has yet to be fully defined. In Silvestri, a plaintiff suffered injuries after the airbags in his vehicle purportedly failed to deploy following an accident. 271 F.3d at 586. Before filing suit against defendant General Motors, the plaintiff permitted the vehicle to be repaired and sold without giving the defendant the opportunity to perform an inspection. Id. at 587. The district court then granted summary judgment in favor of the defendant based on spoliation of evidence. Id. at 589. On appeal, the plaintiff argued that "he had no duty to preserve the vehicle because he was not its owner and because neither he nor his [attorneys and retained experts] were in any way engaged in the destruction of the evidence." Id. at 591. The Fourth Circuit recognized that the plaintiff did not "own the vehicle, nor did he even control it in a legal sense after the accident because the vehicle belonged to his landlady's husband." Id. But it was apparent that the plaintiff had "access to the vehicle, as his attorney ... and his retained experts were given apparently unlimited access to the vehicle for inspection purposes." Id. (emphasis added). Moreover, the plaintiff, his attorneys, and his expert witnesses all anticipated filing suit against the defendant, and were "fully aware that the vehicle was material evidence in that litigation."
However, when considering Tracer/ PSI's authority, vel non, over Wilson, helpful guidance is provided in the case of In re NTL, Inc. Securities Litigation, in
The concept of control as interpreted by In re NTL, Inc. Securities Litigation in the context of Rule 34 provides the closest analogy to control in connection with a spoliation issue, and applying it to this dispute, I conclude that Tracer/PSI did not have the sufficient legal authority or practical ability to ensure the preservation of documents prepared by Wilson. Apart from Goodman's conclusory statements, no evidence has been presented to demonstrate that Tracer/PSI had any legal control over documents prepared or maintained by Wilson.
I do find that the duty to preserve applied to Marty, Golding, and Thompson, over whom Tracer/PSI undisputedly exercised control. First, Tracer/PSI acknowledges that Marty had an obligation to preserve relevant evidence. See Def.'s Resp. 11. Second, although their involvement in the project was somewhat limited, Thompson did have contact with Goodman when he started working on the project, and if Golding was responsible for answering technical questions for various individuals throughout the duration of the project, it could be relevant to know which individuals Golding had been contacting and what specific information he was providing.
With exception to any materials prepared by Wilson or Gade, Tracer/PSI had
As for the second element, there are three possible states of mind that can satisfy the culpability requirement: bad faith/knowing destruction, gross negligence, and ordinary negligence. Thompson, 219 F.R.D. at 101 (citing Residential Funding v. Degeorge Financial Corp., 306 F.3d 99, 108 (2d Cir.2002)). The degree of fault impacts the severity of the sanction, and the Fourth Circuit has established guidelines to determine when the harshest of sanctions, such as summary judgment or default judgment, should be implemented. See Sampson, 251 F.R.D. at 179. In Goodman's Motion, he argues that Tracer/ PSI's destruction of evidence, following the failure to issue a litigation hold to key players, was done in bad faith; therefore, Goodman requests that the Court grant summary judgment in his favor. Pl.'s Mem. Supp. 24-25. Generally, dismissal is justified "in circumstances of bad faith or other `like action,'" Silvestri, 271 F.3d at 593 (quoting Cole v. Keller Industries, Inc., 132 F.3d 1044, 1047 (4th Cir.1998)), and courts should impose sanctions that
Sampson, 251 F.R.D. at 180 (emphasis added) (quoting Silvestri, 271 F.3d at 593). In Silvestri, the appellate court concluded that the alterations to the plaintiff's vehicle were tantamount to destroying the "sole piece of evidence" in the case. 271 F.3d at 585. Based on the "deliberate or negligent" actions of the plaintiff, the defendant was denied "access to the only evidence from which it could develop its defenses adequately." Id. at 594. Accordingly, without addressing the egregious conduct of the plaintiff, the appellate court ruled that the defendant had suffered "irreparable prejudice," and upheld the district court's granting of summary judgment in favor of the defendant. Id. at 594-95. Goodman states that the "destruction or discarding of the computers ... is equivalent to the destruction of the automobile in Silvestri," yet the validity of this comparison is belied by Goodman failing to articulate how Tracer/PSI's destruction of evidence has substantially denied Goodman the ability to prosecute his claim.
Goodman also has requested that the court issue an adverse jury instruction, or a series of fact-specific adverse jury instructions, at trial. See Pl.'s Mem. Supp. 25-28. In Vodusek v. Bayliner Marine Corp., 71 F.3d 148, the appellate court noted that a showing of bad faith is not a prerequisite to obtaining an adverse jury instruction, and a court must only find that the spoliator acted willfully in the destruction of evidence:
Id. at 156 (emphasis added) (citations omitted). In Vodusek, the court found that the conduct of a plaintiff's expert in "`employ[ing] destructive methods which rendered many portions of the boat [at issue in the products liability case] useless for examination by the defendants and their experts'" was willful and required an adverse inference because the expert "`ignored the possibility that others might have entertained different theories to which the destroyed portions might have been relevant.'" Sampson, 251 F.R.D. at 181 (quoting Vodusek, 71 F.3d at 155-57). After Vodusek, one court noted that when assessing the willfulness of conduct, it was imperative to recognize that spoliation, "though not conducted in bad faith, could yet be `intentional,' `willful,' or `deliberate.'" Buckley v. Mukasey, 538 F.3d 306, 323 (4th Cir. 2008). In Powell v. Town of Sharpsburg, 591 F.Supp.2d 814, 820 (E.D.N.C.2008), the court drew upon this distinction, and stated that "[d]estruction is willful when it is deliberate or intentional," whereas "bad faith" was deemed to "mean destruction for the purpose of depriving the adversary of the evidence."
Tracer/PSI argues that "[e]ven if Goodman ha[s] met his initial burden of showing that the duty to preserve had been violated, there is no evidence of bad faith... to meet the second requirement." Def.'s Resp. 23-24. In support of this argument, Tracer/PSI contends that the facts of the instant case are analogous to Sampson v. City of Cambridge, 251 F.R.D. 172, and Pandora Jewelry LLC v. Chamilia, LLC, 2008 WL 4533902, and that there is no evidence of purposeful destruction. Def.'s Resp. 24-25. If this were true, and Tracer/PSI only negligently destroyed evidence, then an adverse jury instruction would be an improper remedy. See Sampson, 251 F.R.D. at 181 ("If a spoliator's conduct is merely negligent ... the adverse
Sampson involved a plaintiff asserting a claim under Title VII of the Civil Rights Act of 1964, and alleging race discrimination and discrimination under the Americans with Disabilities Act based on defendant City of Cambridge's failure to promote her to the position of Assistant Director of the Department of Public Works ("DPW"), and for retaliatory action. 251 F.R.D. at 175. The plaintiff further alleged that the former Director of the DPW exhibited a discriminatory animus against her on the basis of her race and medical condition, which affected his decision not to promote her. Id. The plaintiff asked the defendant to search DPW employees' computer hard drives for relevant evidence; however, no emails were found on the hard drive of the former Director's computer. Id. at 175-76. Consequently, the plaintiff filed a motion for spoliation sanctions. Id. at 177-78.
The court stated that the "plaintiff did not present any evidence that would suggest that [the former Director] or anyone on behalf of defendant purposefully destroyed any documents on the hard drive." Id. at 182. Further, there was no "evidence of a wiping utility being used or downloaded on to [the former Director's] hard drive at any time or evidence that [a] program was used to delete or overwrite files." Id. Thus, the plaintiff was unable to present any direct evidence that any of the defendant's employees "intentionally or willfully deleted [the former Director's] emails." Id.
While Judge Gesner noted that the defendant's efforts to retain relevant documents were not "exemplary," she found there was no evidence of intentional destruction of evidence and an adverse jury instruction was unwarranted. Id.
In Pandora, the plaintiff filed suit against the defendant for alleged patent infringement of its jewelry design. 2008 WL 4533902, at *1. The defendant counterclaimed, accusing the plaintiff of wrongful interference with business relationships and an antitrust violation. Id. After granting the plaintiff's motion to bifurcate the trials and stay discovery on the defendant's counterclaims, the court granted the defendant's motion to quash a related subpoena for records. Id. Subsequently, the defendant sent a letter to a number of the plaintiff's customers which purportedly misrepresented the court's order granting the defendant's motion to quash. Id. The defendant also sent this "letter via email to a number of blind copy recipients." Id. After the plaintiff filed additional claims, the defendant contended it no longer possessed the emails because it "changed its electronic server twice during the litigation period or due to its email system forcing users to delete or archive emails every ninety days." Id. at *2.
Based on the defendant's failure to produce the list of email recipients during discovery, the plaintiff filed a motion for spoliation sanctions. Id. at *6. However, the court noted that the plaintiff offered no evidence, "other than [the defendant's] failure to retain the emails, that [the defendant] deliberately deleted or destroyed evidence." Id. at *9. Although the plaintiff could show the loss of the emails was a violation of the duty to preserve, this would not "necessitate a finding of willful or bad faith destruction." Id. Accordingly, the court held that that the defendant was merely "grossly negligent in its failure to preserve evidence," and because the plaintiff could not prove the relevancy of the lost evidence, an adverse jury instruction was not warranted. Id.
In contrast, the relevancy of Marty's laptop is overwhelming, as Mary has stated, in the form of a signed affidavit, the following: "I believed that I retained all of the documents (emails, hard copy and electronic documents) relevant to the `project' of obtaining exemptions from the EPA for Tracer's leak tracers and Mr. Goodman's involvement in that `project' in the file cabinet in my office." Def.'s Resp. Ct. Order, Ex. 4 ¶ 13 (emphasis added). This is particularly troublesome. Marty had previously admitted that she mostly saved electronic documents onto her hard drive, rather than saving them to Tracer's i-drive; therefore, by failing to preserve her computer, Tracer/PSI knew that the only relevant documents and emails produced by Marty detailing Goodman's role in the project to obtain the EPA exemptions would be those she personally selected. I also find that Marty, acting on behalf of Tracer/PSI, willfully destroyed evidence that she knew to be relevant when she selectively deleted emails following Goodman's January 5, 2001 letter.
Thus, taking into account Tracer/PSI's destruction of Marty's laptop and Marty's deletion of emails, I hold that Tracer/PSI willfully destroyed evidence that it knew to be relevant. Accordingly, an adverse jury instruction against Tracer/PSI is warranted in this case as to the spoliation of Marty's evidence.
V. Costs and Attorney's Fees
Goodman finally argues that the preservation and production of any relevant documents by Tracer/PSI would have "obviated the need for ... depositions." Pl.'s Mem. Supp. 29. If Tracer/PSI had "preserved and produced Marty's emails with Wilson, Goodman could have questioned Marty about them in her deposition, possibly obviating the need to depose Wilson." Id. (emphasis added). Goodman also asserts that "[a]ll such discovery costs are compensable in cases of spoliation.... [He] is a non-lawyer with no previous experience in discovery, let alone spoliation issues, and has obviously needed to rely on legal advice from counsel in such matters. His discovery costs should be reimbursed by [Tracer/PSI], along with all costs related to this motion and the spoliation issue." Id.
When ruling on a spoliation motion, courts will grant an award of costs or attorney's fees in four situations. First, courts will award legal fees in favor of the moving party as an alternative to dismissal or an adverse jury instruction. See, e.g., Cache La Poudre Feeds, LLC, 244 F.R.D. at 637 (requiring defendant to pay the costs associated with the plaintiff taking a deposition and filing a motion for relief after defendant "interfered with the judicial process" by wiping clean computer
The above-described third situation is most relevant to the instant matter;
In conclusion, Goodman's Motion is granted in part and denied in part. Specifically, he is entitled to an adverse jury instruction fashioned by Judge Garbis with respect to Tracer/PSI's failure to preserve Marty's laptop and Marty's failure to preserve her relevant emails and documents. The appropriate instruction would be a general adverse instruction that permits, but does not require, the jury to draw an adverse inference against Tracer/PSI as a result of its violation of the duty to preserve relevant evidence. All other requested relief is denied, with exception to Goodman being entitled to seek reimbursement for costs, exclusive of attorney's fees, properly apportioned to the Motion filed and relief received. This Memorandum Opinion disposes of Paper Nos. 138-140.
Id. at 25-26. As evidenced by this colloquy, Tracer/PSI ignores the fact that the "imposition of sanctions for spoliation has deep historic roots." Pastorello v. City of New York, No. 95 Civ. 470(CSH), 2003 WL 1740606, at *7 (S.D.N.Y. April 1, 2003); see also id. ("`The law, in hatred of the spoliator, baffles the destroyer, and thwarts his iniquitous purpose, by indulging a presumption which supplies the lost proof, and thus defeats the wrongdoer by the very means he had so confidentially employed to perpetrate the wrongdoing.'" (quoting Pomeroy v. Benton, 77 Mo. 64, 86 (1882)). Indeed, the origin of the doctrine of spoliation is often traced back to the 288-year-old case of Armory v. Delamirie, 93 Eng. Rep. 664 (K.B.1722). See, e.g., Sullivan v. Gen. Motors Corp., 772 F.Supp. 358, 360 n. 3 (N.D.Ohio 1991) ("At least two federal courts have traced the origins of [the spoliation doctrine] to Armory v. Delamirie ....") (citing Welsh v. United States, 844 F.2d 1239, 1246 (6th Cir.1988); Nation-Wide Check Corp., Inc. v. Forest Hills Distribs., Inc., 692 F.2d 214, 218 (1st Cir.1982)); Stefan Rubin, Tort Reform: A Call for Florida to Scale Back its Independent Tort for the Spoliation of Evidence, 51 Fla. L.Rev. 345, 346 (1999) ("Perhaps the earliest recorded decision to recognize and reprimand the spoliation of evidence was the eighteenth century decision in Armory v. Delamirie."); Lawrence B. Solum & Stephen J. Marzen, Truth and Uncertainty: Legal Control of the Destruction of Evidence, 36 Emory L.J. 1085, 1087 & n. 4 (1987) (noting that an unfavorable inference for spoliation of evidence is of "ancient lineage") (citing Armory, 93 Eng. Rep. 664) (citations omitted)). In Armory, a Dickensian tale of avarice and trickery, a chimney sweeper's boy discovered a jewel and carried it to a goldsmith's shop. 93 Eng. Rep. at 664. The goldsmith handed the jewel to his apprentice, "who under pretence of weighing it," removed the stones, and then informed the goldsmith that the jewel came to "three halfpence." Id. The goldsmith offered the boy the money, but he refused, and demanded to have the jewel returned to him. Id. The apprentice deceitfully handed the boy "back the socket without the stones," and the boy subsequently brought forth a common law claim of trover against the goldsmith. Id. At trial, "the Chief Justice directed the jury, that unless the [goldsmith] did produce the jewel, and shew it not to be of the finest water, they should presume the strongest against him, and make the value of the best jewels the measure of their damages: which they accordingly did." Id. (emphasis added). This could not be a clearer example of an adverse jury instruction for the spoliation of evidence. Following Armory and preceding Zubulake IV, courts continually applied the spoliation doctrine to address possible injustices after relevant evidence had been destroyed. See, e.g., Silvestri, 271 F.3d at 593-95; Vodusek v. Bayliner Marine Corp., 71 F.3d 148, 156 (4th Cir.1995). The record before me shows that Tracer/PSI retained counsel after receiving Goodman's February 19, 2001 letter. As noted, there was abundant precedent at that time to clearly identify the existence and scope of Tracer/ PSI's preservation duties.
In accordance with the duty to preserve, Tracer/PSI retained 280 disaster recovery tapes and compact discs. If Goodman sought to have a key word search performed on the backup tapes, then he should have filed a motion to compel to search the backup tapes during discovery, rather than arguing that the "data ceasing to be reasonably accessible constitutes spoliation." See Pl.'s Mem. Supp. 15; see contra Treppel v. Biovail Corp., 249 F.R.D. 111, 117 (S.D.N.Y.2008) (plaintiff moved to compel defendant to search specific backup tapes, but court refused, noting that plaintiff had failed to show that the effort would not be "duplicative of discovery already conducted"); AAB Joint Venture v. United States, 75 Fed.Cl. 432, 443 (2007) (plaintiff moved to compel discovery of backup tapes).