Spoiler Alert! Another Legal Update on Data Preservation and Spoliation Implications

There appears to be a recent theme on this blog regarding data preservation and spoliation, and—not to spoil anyone’s appetite for this important topic—we are back with another one. And for good reason given the heightened risk of spoliation sanctions in today’s increasingly data-driven legal landscape. A recent order in Safelite Group, Inc. v. Lockridge[1] is one of many that highlights the growing need to stay apprised of the various steps necessary to ensure compliance with essential data preservation requirements.

Lawsuit Background

In Safelite, plaintiff brought suit alleging that defendant and former employee Lockridge violated his noncompete and nonsolicitation agreement by accepting a position with a competitor and recruiting other Safelite employees to join him.[2] While the claims are fairly straightforward, fallout arose when defendant Lockridge admittedly failed to preserve relevant text messages because his personal cell phone was set to auto-delete them after 30 days.

As the court’s order explains, shortly after Safelite filed suit, both defendant’s counsel and his new employer advised him of his obligation to retain and not destroy any electronically stored information (“ESI”) that dealt with the allegations in the lawsuit.[3] Despite those warnings, defendant Lockridge alleged that he first became aware his personal phone was set to auto-delete text messages after 30 days almost four months later.[4] Plaintiff, upon learning this during discovery, moved for spoliation sanctions due to the loss of critical communications.

Spoiler Alert!

The court agreed and granted Safelite’s motion for sanctions.

Analysis: Data Preservation and Spoliation

Federal Rule of Civil Procedure 37(e) requires that a movant satisfy three threshold elements before a court can consider imposing sanctions: (1) ESI that should have been preserved was lost; (2) the responsible party “failed to take reasonable steps to preserve it;” and (3) the ESI “cannot be restored or replaced through additional discovery.”[5]

If all three elements are met, the court “can sanction the non-producing party in one of two circumstances, depending on the cause and effect of the spoliation.”[6] In the first scenario, if the court finds that the loss of information prejudiced the movant, it can impose sanctions regardless of the non-producing’s party intent, but such sanctions must be “no greater than necessary to cure the prejudice.”[7] In the second scenario, a court can order more severe sanctions if it is shown that the non-producing party intended to deprive the movant of the information’s use, regardless of whether it prejudiced the movant.[8]

Here, the court quickly dispensed its findings that the three threshold elements to constitute spoliation of relevant evidence were satisfied. It found that the texts should have been preserved, Lockridge failed to take reasonable steps to do so, and the texts could not be replaced.[9] While the court declined to find that defendant Lockridge’s conduct amounted to intentional spoliation, it did find that Safelight was prejudiced by Lockridge’s “negligent” failure to preserve the texts and therefore sanctions were appropriate.[10]  

Of particular note is the court’s discussion of Lockridge’s negligent failure to disable his cell phone’s auto-delete function. Lockridge argued that it was an “honest mistake” and pled ignorance of the auto-delete function, but the court was unpersuaded. Instead, noting that “Lockridge is an experienced businessman,” the court found it simply “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.”[11] While Rule 37(e) does not require perfection, it does require that “reasonable steps” are taken, and the court found that Lockridge did not meet this duty.

Beyond finding that Lockridge was negligent in failing to take any reasonable steps to preserve his texts, the court also took issue with defendant’s counsel for their failure to specifically instruct Lockridge to disable the auto-delete function.[12] This emphasis on counsel’s obligation is perhaps the most important takeaway. As lawyers, it is our responsibility to properly advise clients of their fundamental obligations to preserve relevant ESI. Not only is it necessary for lawyers to identify all sources of potentially relevant information, but they must also understand the particular steps needed to protect and preserve the ESI generated from each source. Lawyers must also monitor their client’s efforts to comply with these obligations. Had defendant’s counsel done so here, sanctions may have been avoided.

Sanctions

Because the court did not find that Lockridge intentionally deprived plaintiff of relevant ESI, it could not impose the mandatory adverse-inference instructions that are permitted under subdivision (e)(2).[13] Instead, the court took care to proscribe sanctions that were “no greater than necessary” by allowing both parties to introduce evidence regarding Lockridge’s failure to preserve his text messages and to argue for “whatever inference it hopes the jury will draw.”[14] The court also awarded attorney’s fees and costs.[15]

Conclusion

Ignorance might be bliss, but it is not a defense. This is especially true as it relates to one’s duty to comply with a litigation hold. To avoid potential Rule 37(e) sanctions, attorneys must be familiar with the preservation steps needed for basic sources of ESI and take care to ensure that their clients understand the same.