No spoliation inference absent evidence ESI was lost

A request for a spoliation inference in the absence of evidence that electronically stored information, or ESI, was not produced has been rejected by a U.S. District Court judge.

During discovery in a trademark case, defense counsel received an email from their client lamenting their unawareness of the need to print or save company emails over the years.  Counsel inadvertently included that email with other discovery responses delivered to plaintiff’s counsel.

The plaintiff claimed that the email was evidence that defense counsel had failed to inform their client of their obligation to preserve ESI, and that had resulted in the loss of some of defendants’ emails. They argued they were therefore entitled to spoliation inferences.

In rejecting the “draconian” spoliation motion, U.S. District Judge Norman K. Moon credited “[d]efense counsel’s reasonable explanation” that plaintiff’s counsel had misconstrued the email. Further, he found that plaintiff had failed to provide “any evidence that ­Defendants lost ESI.”

The Feb. 18 opinion from the Western District of Virginia is Emerson Creek Pottery, Inc., v. Emerson Creek Events, Inc. (VLW 022-3-085).

‘Eleventh-hour motion’

A few months before discovery ended, the plaintiff deposed two co-owners of the defendant corporation and learned that they had hired third parties to assist them with their email systems. The plaintiff then served three companies, including Winkler Design, with deposition and document subpoenas.

Winkler initially released 18,000 pages of ESI to plaintiff’s counsel, and continued to produce additional emails over the course of the fall and early winter of 2021.

Defense counsel also delivered about 1,000 emails. They inadvertently included a recent email in which a defendant informed counsel: “[w]e had no idea we should have printed out or saved any emails … But if we had known we should print all email up to now we simply could have done that.  But we weren’t told that.  Over the years we have had multiple [people] checking emails and we never informed any of them to save certain emails.”

Plaintiff filed a motion to compel based on their belief that the email indicated defendants had not produced all the requested documents.  Finding that discovery had closed weeks before the plaintiff filed the motion, the magistrate judge denied the request as untimely.

The plaintiff then filed a motion requesting spoliation inferences and seeking as a remedy “that Defendants be prohibited from attempting to present testimony contrary to [the plaintiff’s] evidence of: (1) Defendant’s misuse of [plaintiff’s] Marks; (2) consumer confusion; and (3) Defendants’ intent to confuse consumers.”

No missing ESI

Moon analyzed the plaintiff’s motion pursuant to Federal Rule of Civil Procedure 37(e), which “requires four elements to determine whether spoliation of ESI has occurred: (1) ESI should have been preserved in the anticipation or conduct of litigation; (2) it was lost; (3) the loss occurred because a party failed to take reasonable steps to preserve it; and (4) it cannot be restored or replaced through additional discovery.”

The judge said that the issue could be dispositively resolved by the second element, because “Plaintiff has not provided any evidence that Defendants lost ESI.”

Moon concluded that the plaintiff’s evidence that “emails produced by Defendants were not a ‘mirror image’ of the emails produced by third parties” did not demonstrate that ESI had been lost. Instead, he found any differences were “readily explained by the fact that Defense counsel did not deliver some emails […] deemed irrelevant or privileged, while the third parties delivered everything in their possession.”

Moon was equally unpersuaded by plaintiff’s argument that the inadvertently disclosed email was evidence that ESI had been lost.

“[T]he Court has no reason to disbelieve Defense counsel’s reasonable explanation […] – that [Defendant] was initially unaware that he had to preserve emails and wished that he had printed them out and physically stored them, but that Defendants and Defense counsel eventually located and delivered all the requested emails,” he wrote.

“Plus, even if Defense counsel had not delivered all the emails, Plaintiff – by its very own contention – received all the emails from third parties,” Moon added.

The judge also noted that the fourth element for determining whether spoliation of ESI has occurred did not help the plaintiff, because “[t]here is nothing in the pleadings to suggest that the emails Plaintiff believes it has not received are permanently lost[.] … But what is clear is that if there are additional emails, Plaintiff lost its opportunity to compel their delivery by untimely filing its motion to compel.”

Finally, Moon pointed out the “draconian nature” of the plaintiff’s requested remedies, which sought negative inferences regarding nearly everything the defense could be expected to argue at trial.

“Even were the Court to consider a remedy, that remedy would have to be tailored to the particular discovery violation in question,” Moon said. But the plaintiff’s requested remedy “would be a massively disproportional sanction relative to the conduct that Plaintiff alleges.”

Jury verdict and injunction

Late last month, a jury found the defendants liable for trademark infringement and breach of a licensing agreement and awarded damages in excess of $2 million.

On March 3, Moon permanently enjoined the defendants from using any of the infringing marks and ordered them to file a compliance report within 60 days.

Plaintiff’s counsel, Henry Willett of Christian & Barton in Richmond, anticipates that the defendants will file post-trial motions. Moon has extended the deadline for filing until March 25.

Defense counsel declined to comment due to the ongoing litigation.