Intentional Spoliation Causes a Purple Rain of Sanctions

• Author: Benjamin E. Long
• Pages: 6-6

Published in Litigation News Volume 45, Number 4, Summer 20 20. © 2020 by the Ameri can Bar Association. Re produced with per mission. All rights re served. This info rmation or any porti on thereof may not be c opied or disseminated in any

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federal cour t has ordered

monetary spoliation sanc-

tions against a re cord

label for its inte ntional

failure to preser ve text

messages an d the destruction of mo-

bile phones in a co pyright dispute

with the estate of music ian Prince.

The court also awa rded attorney fees

and costs, an d reserved judgment on

additional sanctions such as an ad-

verse-infere nce jury instruction. AB A

Section of Litiga tion leaders urge

companies to have cle ar policies re-

garding preser vation of employees’

texts when litigatio n is possible.

Rogue Music All iance (RMA) and

its two principa ls partnered with

Prince’s former so und engineer to

publish some of th e artist’s unre-

leased music . One of the principals,

Staley, sent an email on F ebruary 11,

2017, stating that he was goin g to re-

lease the music . That email also re-

f‌lected the prin cipal’s recognition that

the Prince estate mi ght sue them over

the release.

The Prince estate l earned about

the planned re lease and, as Staley had

predicted, su ed the engineer, RMA,

and the princip als, among others. The

court issued a p retrial order requir-

ing the parties to p reserve all relevant

electronically stored information (ESI).

The court warn ed that failure to do so

could result in f‌in es, awards of attor-

ney fees, and oth er relief.

The plainti sen t document re-

quests to the defe ndants for any

communicatio ns relating to the music.

The defendan ts revealed that the

principals ha d not disengaged the

autodelete fun ction on their phones,

thereby causin g texts to be deleted.

Further, one princi pal had wiped and

discarded his p hone in October 2017,

and the other had wiped and discard-

ed his phone twi ce—in January and

May 2018. All of th is occurred sever-

al months after th e court had entered

its pretrial orde r commanding the

Intentional Spoliation Causes a

Purple Rain of Sanctions

preservation of E SI, and no relevant

data had been b acked up.

The plainti moved fo r sanctions

under Federa l Rule of Civil Procedure

37. It argued that the defe ndants had

intentionally de prived it of the text

messages in vi olation of Rule 37(e)(2)

and that it was preju diced as described

in Rule 37(e)(1). Additionally, the pla in-

ti alleged that th e defendants had

failed to follow the pr etrial order in vio-

lation of that order a nd Rule 37(b).

The court f‌irs t noted that Rule

37(e) requires parties to take reaso n-

able steps to prese rve relevant ESI

when litigation is a nticipated. In this

case, the cour t found that the defen-

dants’ duty to pr eserve arose no later

than Februar y 11, 2017, when the prin-

cipal sent the f‌ir st email, as it showed

his awareness that l itigation was pos-

sible. The cour t stated that the usual

course is for a par ty to “suspend its

routine document retention/destruc-

tion policy and p ut in place a litiga-

tion hold,” but th at the defendants

failed to suspen d the autodelete func-

tion on their pho nes. The court found

the most egregi ous aspect to be that

the defendant s had destroyed their

phones afte r litigation began and, for

one of the princip als, after the court

had ordered that E SI be preserved.

The court conc luded that the plain-

ti was now forced to piece tog ether

existing discovery to de termine what

information mig ht be in the missing

texts, and may be p revented from

presenting releva nt evidence.

Therefore, the co urt found that the

plainti was preju diced and sanctions

were appropriate un der Rule 37(e)(1).

The court also d etermined that the

defendants intentionally deprived the

plaintis of the tex ts. Had the defen-

dants just forg otten to turn o the

autodelete fun ction on their phones,

that action may likel y have been

merely neglig ent. But because the de-

fendants also purposely wiped and

discarded the ir phones, their actions

By Benjamin E. Lo ng, Litigation New s Associate Editor

were intentional, a nd sanctions were

appropriate und er Rule 37(e)(2). The

court ordere d the defendants to pay a

$10,000 f‌i ne, attorney fees, and cost s

to the plainti.

Section of Litiga tion leaders con-

sider this sanc tion tough but war-

ranted. “I woul d call $10,000 a signif-

icant Rule 37 sa nction,” says Robert

K. Dixon, Sa n Diego, CA, cochair of

the Section’s Dive rsity & Inclusion

Committee. “ Because of the intention-

al acts by the par ties, the court likely

perceived this as a cover-up. I t is rare

that a court recog nizes that a party

engaged in inte ntional acts, as it did

in this case,” obs erves Dixon.

Good data retentio n policies

are key to avoiding a similar fa te.

“Companies s hould have def‌ined

policies when it c omes to commu-

nicating by texts,” a dvises Zachary

G. Newman, N ew York, NY, cochair

of the Section’s Co rporate Counsel

Committee. “ It is important to be able

to search and secure subject-specif-

ic text messages w hen a legal dispute

is reasonably fo reseeable,” he adds.

While the best pr actice would be to

preserve the ac tual devices being

used to send text mes sages, this may

be challengi ng for companies that

allow employees to use th eir personal

devices, recogn izes Newman. In any

case, the unde rlying data of texts re-

lating to the busine ss should be pre-

served, he ca utions.

RESOURCES

Andr ew J. Felser, “Spoliation S anctions

Are a Discovery I ssue, Not a Last-Minute

Trial Tactic,” Pretrial P rac. & Discovery

(Mar. 28, 2019).

Mat thew C. Plant, “Spol iation of

Evidence: The S urest Road to Sanction s,”

Comm. & Bus . Litig. (Nov. 20, 2018).

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