No Sanctions for Spoliation of ESI Against Plaintiff Leads to Summary Judgment Against Defendant: eDiscovery Case Law

by CloudNine

We just completed our four part review of case law for 2017 and Tom O’Connor and I discussed important cases for 2017 in our webcast yesterday (click here to check it out).  Now, on to cases to cover for this year…

In IBM v. Naganayagam, No. 15 Civ. 7991 (NSR) (S.D.N.Y. Nov. 21, 2017), New York District Judge Nelson S. Romàn, finding that no intent to deprive by the plaintiff and no prejudice against the defendant for spoliation of ESI, denied the defendant’s motion for spoliation sanctions, which facilitated granting the plaintiff’s motion for summary judgment against the defendant by Judge Romàn.

Case Background

In this action against the defendant (a former employee of the plaintiff who had received several Equity Award Agreements (EAAs) during his employment which the plaintiff sought to rescind once the defendant left his employment to join a competitor), the plaintiff filed a motion for summary judgment in the case and the defendant filed a cross-motion pursuant to Rule 37 of the Federal Rules of Civil Procedure for spoliation sanctions.

On October 31, 2016, the defendant filed a motion to compel production of the plaintiff’s strategic plans for Australia and New Zealand, e-mails related to the defendant’s departure from the plaintiff that were referenced the deposition of the defendant’s former supervisor, a list of the defendant’s accounts, and the defendant’s own e-mails from the course of his employment with the plaintiff.  The court issued an Opinion and Order on December 9, 2016, denying the defendant’s request to compel the production of both his own emails and client account information as well as his supervisor’s emails, finding that the defendant had failed to establish the relevance of these materials. However, the court did rule that the plaintiff was required to produce the strategic plans generated by the plaintiff delineating their competitors.  After the plaintiff indicated it was unable to locate the strategy plans, the plaintiff filed a motion for summary judgment in January 2017 and the defendant filed a cross-motion for adverse inference spoliation sanctions ten days later.

Judge’s Ruling

When considering the defendant’s request for sanctions, Judge Romàn noted that “Although the more lenient sanctions standard under Rule 37(e) did not go into effect until after Plaintiff filed the Complaint in the present action, the amended Rule 37(e) can apply retroactively”, observing that the Order included by Chief Justice Roberts (when transmitting the new Rule to Congress) indicated that it would govern insofar as just and practicable, all proceedings then pending.”

Noting that “amended Rule 37(e) only allows for adverse inference sanctions where the non-movant acted intentionally to deprive another party use of the ESI during litigation”, Judge Romàn, observing that “Defendant merely alleges that Plaintiff acted negligently rather than intentionally, denied the request for adverse inference sanctions against the plaintiff.  Also, determining that a lack of prejudice against the defendant for any potential spoliation, Judge Romàn ruled that “less severe spoliation sanctions are similarly unwarranted” and denied the defendant’s motion for spoliation sanctions.  With that considered, Judge Romàn found that “there is no genuine dispute of material fact regarding Defendant’s breach of the Plan and EAAs”, and granted the plaintiff’s motion for summary judgment.

So, what do you think?  Should the court have ruled it differently?

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