Failure to Disable Auto-Delete Function Results in Spoliation Sanctions
Why This Case Is Important
This ruling reminds us that ignorance is not exculpatory, at least when it concerns the fundamental obligation of parties in civil litigation to make good faith efforts to preserve relevant ESI.
Overview
In Safelite Group, Inc. v. Nathaniel Lockridge, Plaintiff, an auto-glass repair company, accused a competitor and its former employees, including Nathaniel Lockridge, of trade secret misappropriation and contractual interference. Lockridge, who left Plaintiff's employ for a competitor, maintained communication with Plaintiff's employees to recruit them.
On August 27, 2021, Plaintiff sent Lockridge a cease-and-desist letter, highlighting his nonsolicitation obligations and demanding compliance, while warning of potential legal action. Plaintiff initiated the lawsuit on September 13, 2021, and Lockridge was served shortly thereafter. On October 7, 2021, Lockridge was advised by his counsel to preserve all relevant documents and communications related to the case. A written litigation hold was issued to him in November 2021.
However, during discovery, Lockridge admitted he did not start preserving text messages until February 3, 2022, when he realized his phone's auto-delete function was erasing messages older than 30 days. Consequently, no text messages predating January 4, 2022, were preserved. Plaintiff filed a motion seeking spoliation sanctions for the loss of critical communications, requesting an adverse-inference sanction and an award of costs and expenses.
E-Discovery Case Law Ruling
- Criteria for Determination of Spoliation: Under Rule 37(e), the court assesses whether electronically stored information (ESI) that should have been preserved is lost because a party failed to take reasonable steps. The court examines if there was an obligation to preserve the ESI, whether the party did not act with reasonable diligence, and if the lost information cannot be restored or replaced. Additionally, it considers whether the loss of information results in prejudice to the affected party.
- Defendant Satisfies Criteria for Spoliation Finding: Chief Judge Morrison determined that Lockridge was under a duty to preserve evidence following the August 27 cease-and-desist letter, which clearly put him on notice of impending legal action. The court then opined that "[i]t is not plausible that a modern, professional smartphone user like Lockridge could carry on for four years without realizing that his text messages disappeared after 30 days.” Lockridge's failure to preserve relevant text messages, despite having the awareness and resources, demonstrated a lack of reasonable diligence. The court found that these text messages were irretrievably lost, and that “[w]ithout the lost text messages, Plaintiff is deprived of the opportunity to know the precise nature and frequency of those private communications, which occurred during a critical time period.”
- Sanctions Include Ability to Argue Appropriate Inference: The court imposed sanctions on Lockridge for negligence under Rule 37(e)(1) by allowing the Plaintiff to present evidence of the August 27 cease-and-desist letter and Lockridge’s failure to preserve text messages, emphasizing the prejudicial impact on Plaintiff's case. Both parties were permitted to argue regarding appropriate inferences for the jury. Additionally, Plaintiff was awarded attorneys' fees and costs, ensuring the sanctions remained proportionate to the negligence demonstrated and the resultant prejudice.
In this case the court imposed what might be considered an intermediate remedy—allowing the parties to argue to the jury whether they should make any inferences based on the defendant’s failure to preserve text messages, but not imposing a mandatory adverse inference instruction. Under Rule 37(e)(2), the latter remedy may be imposed “only upon finding that the party acted with the intent to deprive another party of the information’s use in litigation.” Here the court found “clear and convincing evidence that Lockridge was negligent—though, not intentional—in failing to preserve his text messages…” Notably, the court also found fault with Defense Counsel’s failure, at the initial meeting with Lockhart, to specifically instruct him to disable auto-deletion.David R. Cohen, Partner, Reed Smith LLP
Case Law Tip
Unsure about the Uniform Spoliation Standard? Exterro has produced an infographic that can help you determine if sanctions might apply. Download it today!
