Veolia Transportation Services, Inc. v Unknown Parties

Filing 97

ORDER that Plaintiff's Motion for Sanctions Doc. 94 is granted. IT IS FURTHER ORDERED that the Clerk's Office enter default against Defendants Lydia and Greg Evanson. IT IS FURTHER ORDERED that Plaintiff's Request for Summary Adjudi cation and Award of Attorneys' Fees Doc. 96 is denied as moot, without prejudice to refilling a separate motion for attorneys' fees presenting evidence of the specific amount claimed. IT IS FURTHER ORDERED setting a default hearing on the amount of Plaintiff's damages for December 19, 2011, at 3:30 p.m. Signed by Judge Neil V Wake on 11/28/2011. (KMG)

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1 2 WO 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 Veolia Transportation Services, Inc., 10 No. CV 10-01392-PHX-NVW ORDER Plaintiff, 11 vs. 12 Lydia Evanson and Greg Evanson, husband and wife; John Does I-VII, 13 Defendants. 14 15 16 Before the Court is Plaintiff Veolia Transportation Services, Inc.’s (“Veolia”) 17 Motion for Sanctions (Doc. 94). Although Defendants’ response to Veolia’s motion was 18 due November 14, 2011, no response has been filed. For the reasons stated below, the 19 20 Court will grant Veolia’s motion and enter default against the Evanson Defendants. 21 I. 22 Background This action relates to several anonymous emails sent to Veolia employees, the 23 24 Phoenix Mayor, the Phoenix City Council, City of Phoenix employees, and various 25 media organizations between June 3, 2010 and July 1, 2010. The anonymous emails 26 were sent from several different email addresses, 27 28 including The anonymous emails contained information 1 2 critical of Veolia and attached internal correspondence between Lydia Evanson (“Evanson”), a former Veolia employee who was terminated on April 8, 2010, and her 3 4 former supervisor. 5 Veolia filed its complaint in this Court on July 1, 2010, alleging violation of 18 6 U.S.C. § 2701, tortious interference with contract, tortious interference with business 7 8 relationship, breach of contract, breach of the implied covenant of good faith and fair 9 dealing, defamation, false light, conversion, and trespass to chattels related to the 10 anonymous emails and the information disseminated therein (Doc. 1). Because the 11 allegedly actionable emails were sent anonymously, Veolia named “John Does I-VII” as 12 13 14 15 defendants in its complaint (Id.). The Court granted Veolia’s motions for pre-service discovery in order to ascertain the identity of the proper defendants to this action (Docs. 9, 28, 39, 62). In its pre-service 16 17 discovery efforts, Veolia served Evanson with a subpoena duces tecum on August 8, 18 2010 (Doc. 74-8). The subpoena requested production of documents related to 19 identifying the sender of the anonymous emails, as well as requests for production, 20 21 22 23 24 inspection, and copying of Evanson’s computer hard drives, email files and folders, and other devices (Doc. 74-7). On August 10, 2010, Evanson executed a sworn declaration that she had never used any of the email addresses from which the anonymous emails were sent and had no 25 26 knowledge related to the email addresses or the identity of any person who used the email 27 addresses (Doc. 74-9). On that same day, Evanson had her computer hard drive imaged 28 -2  1 2 by Lightsone Solutions, a consulting firm specializing in computer forensics. Lighstone sent Evanson an email on August 31, 2010, indicating that if she did not pay for the 3 4 image that was taken of her computer hard drive by September 3, 2010, the image would 5 be destroyed (Doc. 75-6). On September 7, 2010, a new hard drive was installed on 6 Evanson’s computer. On September 8, 2010, Lightstone again informed Evanson via 7 8 email that the image of her computer hard drive would be destroyed that day if she did 9 not pay for it (Doc. 75-7). Evanson’s attorney responded to that email requesting that the 10 image not be destroyed because there was a “reasonable chance that [Evanson] will need 11 access” to the image (Id.). Nonetheless, due to Evanson’s failure to pay Lightstone, the 12 13 image was destroyed on September 8, 2010. Veolia was not given notice that Evanson’s 14 hard drive had been imaged, that the image was set to be destroyed, or that a new hard 15 drive had been installed on Evanson’s computer. 16 As part of its pre-service discovery, Veolia also subpoenaed Yahoo! Inc. in order 17 18 to obtained the IP addresses used to access 19 the address. Using the IP address from Yahoo! Inc., 20 21 Veolia subpoenaed the internet service provider associated with that address, Hughes 22 Network Systems, LLC, and learned that the IP address which was used to access 23 the address belonged to an account registered to Evanson 24 at her home address, with Evanson’s personal email address as the contact email for the 25 26 account (Doc. 75-3). At a deposition on June 28, 2011, Evanson admitted that she took 27 the internal emails which were attached to the anonymous emails, as well as other 28 -3  1 2 documents, from Veolia when she was terminated (Doc. 95-1). She also admitted that she logged into the account on June 5, 2010 (Id.). 3 Veolia issued a second subpoena to Evanson seeking documents related to the 4 5 anonymous emails as well as production of Evanson’s computer hard drive and other 6 devices (Doc. 75-4). Evanson informed Veolia in a June 13, 2011 letter that Evanson’s 7 8 computer’s hard drive “crashed in approximately October/November 2010” and that the 9 hard drive was replaced after computer technicians failed to repair it (Doc. 75-8). On 10 July 5, 2011, Veolia had Evanson’s computer imaged by Evolve Discovery, a forensic 11 consulting firm. The imaging showed that (1) the hard drive was replaced on September 12 13 7, 2010; (2) the internet browsing history for Internet Explorer had been deleted on July 14 4, 2011; (3) Google Chrome had been uninstalled from the computer and its browsing 15 history had been deleted; (4) all sent emails from MS Outlook had been deleted by the 16 17 18 user; (5) other emails in MS Outlook had been deleted by the user; and (6) all sent emails from Evanson’s AOL email account had been deleted by the user (Doc. 75-9). 19 Veolia filed an amended complaint naming Evanson1 as defendant on July 22, 20 21 2011(Doc. 73). On October 27, 2011, Veolia filed the currently pending motion, asking 22 that Evanson be sanctioned for her “knowing and deliberate spoliation” of evidence, 23 including her email records and computer hard drive (Doc. 94). Evanson has not 24 responded to Veolia’s motion. 25 26 27 1 Veolia also named Lydia Evanson’s husband, Greg Evanson, as a defendant for community property purposes only. 28 -4  1 2 II. Motion for Sanctions Veolia seeks sanctions against Evanson for her spoliation of evidence, including 3 4 the deletion of the image of her computer’s hard drive, her internet browsing history, and 5 her sent email files. The Court has discretion to sanction a party who causes the 6 spoliation of evidence. See Leon v. IDX Sys. Corp., 464 F.3d 951, 958 (9th Cir. 7 8 2006). Destruction of evidence or the failure to preserve property for another’s use as 9 evidence in pending litigation constitutes spoliation. See United States v. Kitsap 10 Physicians Svs., 314 F.3d 995, 1001 (9th Cir. 2002). Specifically, failure to “preserve 11 electronic or other records, once the duty to do so has been triggered, raises the issue of 12 13 spoliation of evidence and its consequences.” Surowiec v. Capital Title Agency, Inc., 790 14 F. Supp. 2d. 997, 1005 (D. Ariz. 2011) (quoting Thompson v. U.S. Dept. Of Housing & 15 Urban Dev., 219 F.R.D. 93, 100 (D. Md. 2003)); see also Leon, 464 F.3d at 959 (noting 16 17 willful destruction of electronic files constituted spoliation). 18 “A party seeking sanctions for spoliation of evidence must prove the following 19 elements: (1) the party having control over the evidence had an obligation to preserve it 20 21 when it was destroyed or altered; (2) the destruction or loss was accompanied by a 22 ‘culpable state of mind;’ and (3) the evidence that was destroyed or altered was ‘relevant’ 23 to the claims or defenses of the party that sought the discovery of the spoliated 24 evidence[.]” Surowiec, 790 F. Supp. 2d at 1005 (quoting Goodman v. Praxair Servs., 25 26 Inc., 632 F. Supp. 2d 494, 509 (D. Md. 2009)). Veolia has sufficiently established that 27 Evanson’s actions led to the spoliation of evidence and warrant sanction. 28 -5  1 2 First, Evanson’s duty to preserve her computer’s hard drive and electronic data arose when she was served with Veolia’s subpoena on August 8, 2010 seeking production 3 4 of this information. See id. (quoting Morford v. Wal–Mart Stores, Inc., No. 2:09–cv– 5 02251–RLH–PAL, 2011 WL 635220, at *3 (D. Nev. Feb. 11, 2011)) (noting that duty to 6 preserve arises “not only during litigation, but also extends to the period before litigation 7 8 when a party should reasonably know that evidence may be relevant to anticipated 9 litigation”). The subpoena was issued in relation to the litigation that had already been 10 pending for more than a month. From the facts presented, Evanson took several actions 11 to destroy evidence after August 8, 2010: her hard drive was replaced on September 7, 12 13 2010, and she caused the image of her hard drive prepared by Lightstone to be destroyed 14 on September 8, 2010 by failing to pay for the image and failing to notify Veolia that the 15 image would imminently be destroyed. Indeed, her attorney’s email to Lightstone 16 17 requesting that the image of her hard drive not be destroyed because Evanson would 18 likely need the image indicates Evanson’s knowledge of her duty to preserve this 19 evidence. Further, after she received a second subpoena for her electronic files and prior 20 21 to the imaging of her computer done on July 5, 2011, it is a fair inference from Veolia’s 22 forensic examination showing that Evanson’s sent email folders and internet browsing 23 history had been deleted by the user, that Evanson affirmatively destroyed this evidence. 24 Second, Veolia has established that Evanson acted with a culpable mind when she 25 26 took actions that led to the spoliation of evidence. Although courts “have not been 27 uniform in defining the level of culpability–be it negligence, gross negligence, 28 -6  1 2 willfulness, or bad faith–that is required before [finding that] sanctions [for spoliation of evidence] are appropriate[,]” id. at 1006 (quoting Ashton v. Knight Transp., Inc., 772 F. 3 4 Supp. 2d 772, (N.D. Tex. 2011)), the Court finds that Evanson acted at least willfully 5 here, and likely in bad faith. Evanson was aware of Veolia’s subpoena and had obtained 6 counsel prior to her destruction of the evidence; indeed, it seems likely that she had her 7 8 hard drive imaged for purposes related to this litigation. That after receiving Veolia’s 9 subpoena and having her hard drive imaged, Evanson then installing a new hard drive 10 and refused to pay the imaging company to maintain the image of her hard drive amounts 11 to a willful destruction of that evidence. Similarly, the fact that Evanson deleted her sent 12 13 email files and internet browsing history immediately prior to Veolia’s forensic 14 investigation of her computer pursuant to a second subpoena indicates she was acting in 15 bad faith by affirmatively deleting this information. Nor has Evanson provided any 16 17 reasonable explanation for her failure to preserve the spoliated evidence; she has not even 18 responded to Veolia’s motion for sanctions to posit any alternative interpretation of the 19 evidence presented by Veolia’s forensic examination of her computer. The timing and 20 21 22 23 24 character of Evanson’s actions is therefore sufficient to establish Evanson acted with a culpable state of mind. Finally, Veolia has sufficiently shown that the evidence destroyed was likely relevant to Veolia’s claims. Although proof of relevance is difficult where the evidence 25 26 has been completely destroyed, the spoliation itself and surrounding circumstances 27 permit a fair inference that the evidence was highly relevant to this litigation. Evanson 28 -7  1 2 had possession of the emails which were forwarded by the anonymous sender, and she admitted to accessing the email account of one of the email addresses from which the 3 4 anonymous emails were sent. It is thus a fair inference that the evidence Evanson deleted 5 likely contained information relevant to the central issue of this case – identifying the 6 anonymous email senders. The fact that Evanson deleted her computer’s hard drive, her 7 8 internet browsing history, and her sent email files, coupled with her sworn affidavit that 9 she had never accessed any of the anonymous emails that was later contradicted by her 10 deposition testimony, also supports the conclusion that the deleted evidence was related 11 to this case and prejudicial to Evanson. Accordingly, the Court finds that an award of 12 13 sanctions is appropriate in these circumstances. 14 III. 15 Entry of Default As a sanction for Evanson’s spoliation of evidence, Veolia requests that the Court 16 17 enter default judgment against Evanson.2 The Court may, in its discretion, enter default 18 judgment as a sanction under its “inherent power . . . to levy sanctions in response to 19 abusive litigation practices.” Leon, 464 F.3d at 958. Entry of default as a sanction is 20 21 only warranted where the party “engaged deliberately in deceptive practices that 22 undermine the integrity of judicial proceedings” or “has willfully deceived the court and 23 engaged in conduct utterly inconsistent with the orderly administration of justice.” Id. 24 (quoting Anheuser-Busch, Inc. V. Natural Beverage Distribs., 69 F.3d 337, 348 (9th Cir. 25 26 1995)). Accordingly, “a finding of ‘willfulness, fault, or bad faith’ is required” for 27 2 28 Veolia also requests entry of default judgment against Greg Evanson, since he is named for community property purposes only. -8  1 2 terminating sanctions for spoliation of evidence to be proper. Id. Here, the Court finds Evanson’s conduct was willful. Although she had received 3 4 subpoenas requesting relevant documents, electronic files, and images of her computer’s 5 hard drive and other devices, she still took action to destroy some of the requested 6 material. Further, she allowed the image of her computer’s hard drive taken by 7 8 Lightstone Solutions to be destroyed, even though her lawyer indicated that the image 9 would likely be needed by Evanson. Indeed, on the facts presented, it is a fair inference 10 that Evanson’s spoliation was intentionally done, in bad faith, for the purpose of 11 destroying evidence that would likely be harmful to Evanson in this litigation. Because 12 13 Evanson was on notice that the image of her computer’s hard drive, sent email folders, 14 and internet browsing history would be relevant to the litigation, her destruction of these 15 constitutes at a minimum willful spoliation. See Kitsap Physicians, 314 F.3d at 1001 16 17 18 19 (noting that destruction of evidence is willful spoliation if party has “some notice that the documents were potentially relevant to the litigation before they were destroyed”). In addition to a finding of willfulness, the Court also considers the following 20 21 factors in determining whether to enter default judgment as a sanction for the spoliation: 22 “(1) the public’s interest in expeditious resolution of litigation; (2) the court’s need to 23 manage its dockets; (3) the risk of prejudice to the party seeking sanctions; (4) the public 24 policy favoring disposition of cases on their merits; and (5) the availability of less drastic 25 26 sanctions.” Leon, 464 F.3d at 958. After weighing the factors, the Court concludes entry 27 of default is an appropriate sanction for Evanson’s spoliation of evidence. 28 -9  1 2 First, the public’s interest in expeditious resolution of litigation and the Court’s need to manage its docket favor entry of default here. This action was filed more than a 3 4 year ago. Evanson’s misrepresentations regarding her access to the 5 email address, as well as her destruction of likely relevant 6 evidence to this litigation, has unreasonably delayed the prosecution of this case. 7 8 9 10 11 Further, the risk of substantial prejudice to Veolia if default is not entered against Evanson is great. The evidence Evanson destroyed was likely directly relevant to Veolia’s ability to establish the central issue of its case—the identity of the anonymous emailers—because Evanson has already admitted that she accessed one of the email 12 13 addresses from which the anonymous emails were sent, indicating at least her knowledge 14 of the sender’s identity. In these circumstances, failing to grant default would cause 15 Veolia to suffer substantial prejudice because Evanson’s destruction of evidence has 16 17 “impair[ed Veolia’s] ability to go to trial” and “threaten[ed] to interfere with the rightful 18 decision of the case.” Anheuser-Busch, 69 F.3d at 353-54 (internal citations omitted). 19 The Court will not force Veolia to “rely on incomplete and spotty evidence” at trial 20 21 because of Evanson’s actions in destroying relevant evidence. See id.; see also Leon, 464 22 F.3d at 960 (finding sanction of default judgment appropriate where spoliation of 23 electronic files “‘greatly impeded resolution of the case’ by obscuring the factual 24 predicate of the case and consuming months of sanction-related litigation” (citing Malone 25 26 27 v. U.S. Postal Serv., 833 F.2d 128, 131 (9th Cir. 1987)). While the policy favoring disposition of cases on the merits would generally 28 - 10   1 2 weigh against entry of default, the spoliation here has substantially impeded any effort to decide this case on the merits. Nor does the availability of less severe sanctions make 3 4 entry of default inappropriate here. Nothing short of entry of default is adequate to 5 correct the substantial prejudice that would result to Veolia if it were required to 6 prosecute its case without the evidence destroyed by Evanson. Indeed, because the 7 8 evidence that was destroyed here was so likely so central to Veolia’s case, an adverse 9 inference instruction would effectively establish Evanson’s liability. Although granting 10 default is an extreme sanction, the Court finds it to be necessary here to both protect 11 Veolia from prejudice and to sufficiently deter destruction of electronic data, which is 12 13 often easily accomplished and highly prejudicial. See Computer Assoc. Int’l, Inc. v. Am. 14 Fundware, Inc., 133 F.R.D. 166, 170 (D. Colo. 1990) (“One who anticipates 15 that…production of damning evidence[] will produce an adverse judgment[] will not 16 17 18 19 likely be deterred from destroying that decisive evidence by any sanction less than the adverse judgment he … is tempted to thus evade.”). The Court accordingly finds that entry of default is an appropriate sanction in 20 21 these circumstances. However, Veolia has not identified the amount of damages sought 22 in this motion. Where the evidence of damages is not a sum certain, the Court cannot 23 enter default judgment. Fed. R. Civ. P. 55. The Court will therefore set a default hearing 24 at which Veolia may present evidence of the damages it seeks. Veolia has also requested 25 26 its attorneys’ fees and costs, but has similarly failed to include any evidence of the 27 amount of fees and costs sought. Accordingly, this request will be denied without 28 - 11   1 2 prejudice to filing a separate motion for attorneys’ fees and costs outlining the amount sought. 3 4 5 6 IT IS THEREFORE ORDERED that Plaintiff’s Motion for Sanctions (Doc. 94) is granted. IT IS FURTHER ORDERED that the Clerk’s Office enter default against 7 8 Defendants Lydia and Greg Evanson. 9 IT IS FURTHER ORDERED that Plaintiff’s Request for Summary Adjudication 10 and Award of Attorneys’ Fees (Doc. 96) is denied as moot, without prejudice to refilling 11 a separate motion for attorneys’ fees presenting evidence of the specific amount claimed. 12 13 14 15 IT IS FURTHER ORDERED setting a default hearing on the amount of Plaintiff’s damages for December 19, 2011, at 3:30 p.m. Dated this 28th day of November, 2011. 16 17 18 19 20 21 22 23 24 25 26 27 28 - 12  

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