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Post-Rimkus Duty of Preservation and Spoliation of Evidence Decisions (Part VII)

December 10, 2013

We are blogging on “Non-competes, Trade Secrets, Fiduciary Duties, and the Inevitable Disclosure Doctrine.” Mark Oberti has prepared a detailed paper on all of these issues, which can be found here.

The following post discusses how other courts view Rimkus Consulting Group, Inc. v. Cammarata, 688 F. Supp. 2d 598, 612–13 (S.D. Tex. 2010).

Five months after Aviva, a Northern District of Illinois court also cited Rimkus in a spoliation related ruling. Domanus v. Lewicki, No. 08 C 4922, 2012 WL 2072866 (N.D. Ill. June 8, 2012). The Plaintiffs in Domanus alleged “a complex, bi-continental racketeering and fraud scheme spanning over ten years.” Id. at *1. The spoliation issue arose when Defendants destroyed a hard drive that Plaintiffs claim had relevant electronic evidence. Defense counsel submitted 1,800 page of documents recovered from a hard drive belonging to one of the Defendants. Plaintiffs’ counsel believed there was more to be learned and requested forensic inspection of the hard drive. Defense counsel stated that the hard drive was not in her possession yet two weeks later she reported that there were additional documents on the hard drive and at a hearing she requested additional time to review the data. The Court granted her 60 days and reminded counsel of their obligation to preserve evidence. At the end of the 60 days, no evidence was provided and Defense counsel moved to withdraw. When new counsel stepped in, Court reminded them of the duty to preserve as well stating “you have told your clients that that Hard Drive has got to be preserved. And if you didn’t, you should.” Defendants eventually produced 22,942 pages of documents. Plaintiffs were concerned that the production was still incomplete or altered and renewed their request for a forensic inspection of the Hard Drive. Defendants’ counsel informed Plaintiffs that Defendants could not consent to a forensics examination because the Hard Drive had been disassembled and was no longer available. Defendants asserted that the Hard Drive “crashed” in May 2009. Specifically, they asserted:

Richard Swiech testified that he took the Hard Drive to an Apple store to be repaired but learned that it should be replaced, which is what he had done on May 19, 2009. Upon learning from “someone else” that the Hard Drive would cost about $2,700 to repair, Richard Swiech spoke with Defendant Lewicki, who thought he might be able to repair it. In December 2009 or January 2010, Richard Swiech sent the Hard Drive to Lewicki, who was in Poland at the time. Using a “special software program,” Lewicki was “able to recover some files from the Hard Drive.” Richard Swiech “received those files and prepared them in PDF format for purposes of discovery in this case.” Thereafter, in February 2010, “because the hard drive was inoperable and useless, other than for the fact that it contained shiny, interesting parts, [Lewicki] gave it to [his] friend’s children to play with.”

Id. at *3 (internal notations omitted).

After careful review of the evidence the court found numerous problems with Defendants’ claims:

The Court finds that much of Defendants’ explanation for discarding the Hard Drive is incredible. First, the production from the Hard Drive included many documents from 2010 and 2011—after the Hard Drive was allegedly destroyed—including a facsimile dated August 18, 2010, an email dated January 3, 2011, an email dated April 28, 2011, and contracts revised on July 11, 2011, and November 11, 2011. Second, Richard Swiech contends that in May 2009, he took the computer, which contained the Hard Drive to the Apple Store for repairs, and attaches an invoice for that visit. But the invoice is clearly dated February 22, 2012, and Richard Swiech provides no explanation for the handwritten note on the invoice which states, “Repair done 5/19/2009.” Third, Defendants’ version of events conflicts with their prior representations. Defendants did not produce any documents from the Hard Drive until May 2011, when they stated that the documents have been “recovered from a hard drive belonging to Richard Swiech and have been unavailable until now.” But if the Hard Drive crashed in May 2009 and documents recovered in early 2010, the documents would not have been “unavailable” until May 2011. Furthermore, despite the subject of the Hard Drive and its contents being discussed at numerous status conferences—including several requests by Plaintiffs’ counsel to have it forensically inspected—Defendants’ counsel never indicated that the Hard Drive had been destroyed two years prior. On the contrary, on at least two occasions, Defendants’ counsel stated that the Hard Drive was in Richard Swiech’s possession in Illinois. Consequently, these facts lend credence to Plaintiffs’ contention that the Hard Drive was destroyed during the midst of discovery in this litigation, after Defendants produced some documents from it, and only after Plaintiffs requested that it be forensically inspected.

Id. at *7 (internal notations omitted).

The court found that while “the destruction of the Hard Drive reflects ‘extraordinarily poor judgment’ and evinces ‘gross negligence’ of Defendants’ duties to preserve potentially relevant evidence in the face of Plaintiffs’ litigation,” the Plaintiffs had not met their burden to prove that Defendants had acted in bad faith. Id. at *8. “Plaintiffs have failed to provide any evidence that Defendants acted with the intent to destroy adverse information, Plaintiffs have not demonstrated that Defendants acted in bad faith. Nor have Plaintiffs established that the destruction of the Hard Drive prevented them the use of an essential or crucial piece of evidence.” Id. at *11. Based on this decision, the Court held that “that a ‘spoliation charge’ to the jury is the most appropriate way to proceed.” Id. The Court then turned to Rimkus for guidance on how the “spoliation charge” would work. The court concluded that a permissible inference instruction was appropriate:

[B]ased on the record in this case, this court makes the preliminary findings necessary to submit the spoliation evidence and an adverse inference instruction to the jury. But the record also presents conflicting evidence about the reasons the defendants deleted the emails and attachments; evidence that some of the deleted emails and attachments were favorable to the defendants; and an extensive amount of other evidence for the plaintiff to use. As a result, the jury will not be instructed that the defendants engaged in intentional misconduct. Instead, the instruction will ask the jury to decide whether the defendants intentionally deleted emails and attachments to prevent their use in litigation. If the jury finds such misconduct, the jury must then decide, considering all the evidence, whether to infer that the lost information would have been unfavorable to the defendants. Rather than instruct the jury on the rebuttable presumption steps, it is sufficient to present the ultimate issue: whether, if the jury has found bad-faith destruction, the jury will then decide to draw the inference that the lost information would have been unfavorable to the defendants.

Domanus, 2012 WL 2072866 at *12.

Based on this analysis, the Court in Domanus held, “after carefully analyzing the facts on the current record and reviewing remedies used by other courts under similar circumstances, the Court finds that the appropriate sanction is a “spoliation charge.” It allows the jury—after hearing testimony and receiving evidence—to evaluate the Defendants’ credibility and determine whether the destruction of the Hard Drive warrants an adverse inference.” Id. at *13.