Jimenez et al v. Menzies Aviation Inc et al

Filing 57

Order by Hon. William H. Orrick re 42 Motion for Sanctions. Plaintiffs' counsel should file a declaration justifying their fees and providing an itemization of the fees and costs associated this motion within 14 days of this Order. Menzies may thereafter file a response within 7 days addressing the reasonableness of the request. No reply brief or hearing is necessary absent further court order. (jmdS, COURT STAFF) (Filed on 6/13/2016)

1
2
3
4

UNITED STATES DISTRICT COURT

5

NORTHERN DISTRICT OF CALIFORNIA

6
JESSICA JIMENEZ, et al.,

7

Case No. 15-cv-02392-WHO

Plaintiffs,
8

ORDER REGARDING MOTION FOR
SANCTIONS

v.
9
MENZIES AVIATION INC, et al.,

10

Re: Dkt. No. 42

Defendants.

United States District Court
Northern District of California

11
INTRODUCTION

12

Plaintiffs Jessica Jimenez and Orlando Mijos seek sanctions against defendants Menzies

13
14

Aviation Group (USA), Inc. and Menzies Aviation, Inc. (collectively “Menzies”). Apparently,

15

one of Menzies’s former supervisors destroyed certain paper time records and other relevant

16

documents that Menzies had stored in a shed near its offices. Menzies is clearly responsible for

17

the loss of the records, but the extent to which the loss prejudices plaintiffs remains undetermined.

18

Plaintiffs request adverse jury instructions and monetary sanctions in an amount totaling over

19

$200,000. I GRANT plaintiffs’ request for monetary sanctions, limited to the amount of the

20

attorney’s fees and costs necessary to bring this motion, and DENY, at least at present, the request

21

for adverse jury instructions.1
BACKGROUND

22

From 2006 through 2008, all Menzies’s non-exempt employees at San Francisco

23
24

International Airport (“SFO”) recorded their working hours on paper time cards. Some also

25

recorded their time electronically. In 2008, Menzies began converting its timekeeping system at

26

SFO from punched daily paper time cards to an electronic timekeeping system, completing that

27
1

28

When the impact of the destroyed records is more fully developed, I will consider whether
additional sanctions, monetary and evidentiary, are appropriate.

1

process in 2010.2 Sometime in 2010 prior to the filing of this lawsuit in June 2010, Menzies

2

destroyed the paper time records for all employees who also recorded their time electronically

3

because the paper records were duplicative. It retained the paper time cards for employees where

4

it did not have duplicate electronic information.
On July 9, 2010, Menzies was served with the original complaint in this case. The putative

5
6

wage-and-hour class action defined the potential class as including employees who worked for

7

Menzies at SFO in the four preceding years. Dkt. No. 1-2 at 10-12. Upon receiving notice of the

8

complaint, Christopher Ward, Menzies’s counsel, “instructed Menzies to place a hold on all

9

documents that may relate to the claims and allegations in the Complaint.” Ward Decl. ¶ 2 [Dkt.
No. 45-1]. In August 2010, Menzies removed the case to this district where it remained

11
United States District Court
Northern District of California

10

effectively stayed until it was remanded back to state court on April 8, 2013. No discovery

12

occurred during this period. At some unidentified time during this approximately 32 month

13

period, Menzies gathered up the SFO paper time cards that had not been duplicated electronically

14

and placed them into a storage shed outside of its SFO administrative offices.
After the case was remanded, the parties began to propound discovery. On August 23,

15
16

2013, Jimenez requested that Menzies produce all time records detailing the hours and/or shifts all

17

SFO non-exempt employees worked from June 2006. Cordero Decl., Exh. 3 at 9 (Demand for

18

Production No. 28) [Dkt. No. 42-2]. Menzies asserted various objections. In the ensuing months,

19

the parties engaged in multiple informal discussions and meet and confers to resolve discovery-

20

related issues, including privacy objections and Menzies’s alleged failure to produce responsive

21

documents. Menzies eventually submitted verified responses to requests 28-31 of plaintiffs’ first

22

set of requests on May 15, 2014, including the assertion that it would produce documents

23

responsive to plaintiffs’ request for time records from June 2006. By mid-December 2014,

24

Jimenez had received a sample of the putative class members’ time and pay records, consisting of

25

thousands of documents. However, none of these documents included time cards for the putative

26

class members from the 2006-2008 time period.

27
28

2

The facts are based on the information provided by the parties in their moving papers.
2

In May 2015, Jimenez filed an amended complaint which added Mijos as a class

1
2

representative. Menzies again removed the case to federal court. The parties continued their

3

discovery process. In September 2015, plaintiffs requested that Menzies produce all documents

4

and electronically stored information containing any information relating to shifts and/or work

5

schedules Mijos worked or was assigned to work from June 2, 2006 to the present (Demand for

6

Production No. 3); all documents used for recording Mijos’s hours worked, beginning and ending

7

times for each work period and break period, and total daily hours worked (Demand for

8

Production No. 9); and all time records for each and every current and former non-exempt

9

employee that worked a shift that extended beyond midnight (Demand for Production No. 12).

10

Cordero Decl., Exh. 15.
Plaintiffs were dissatisfied with Menzies’s allegedly unverified and incomplete responses

United States District Court
Northern District of California

11
12

to this set of requests and the parties thereafter met and conferred over the phone on November 20,

13

2015. As a result of that conversation, they agreed as follows: (1) Menzies would provide

14

supplemental verified responses; (2) Menzies would provide a list with all the names, employee

15

ID numbers, and contact information for all employees that worked at least one shift extending

16

beyond midnight, and from that list the parties would thereafter select a sample number of people

17

for which Menzies would have to produce pay data for the periods which the employees worked a

18

shift that extended beyond midnight; (3) Menzies would produce all time and pay records for

19

Mijos; and (4) certain depositions would be rescheduled.
On February 16, 2016, plaintiffs conducted the deposition of Talin Bazerkanian, Menzies’s

20
21

Manager of Corporate Services. During this deposition, plaintiffs learned that at some

22

unidentified time in 2013, Menzies had destroyed the paper time cards and other employee records

23

encompassing a period of approximately four years, from 2006 to 2010. 3 According to Menzies,

24
25
26
27
28

3

Plaintiffs assert that the destroyed documents included evidence of the clock in and clock out
times for: (i) “Every single non-exempt employee working at the SFO from June 2006 to January
2008, Plaintiff Mijos included;” (ii) “Most of Defendants’ non-exempt employees working at the
SFO as a Ramp agent from January 2008 to December 2009;” (iii) “Every single non-exempt
employee working at the SFO as a Cargo Agent from January 2008 to July 2009;” (d) “Most of
Defendants’ non-exempt employees working at the SFO as a Cargo Agent from July 2009 to
December 2009.” Reply at 3 [Dkt. No. 47].
3

1

a few days before her deposition, Bazerkanian was informed that a former Menzies manager had

2

decided to clean out the shed where the documents had been stored and dumped the documents

3

collected in 2010.

4

On March 2, 2016, Menzies confirmed that that the paper time records were destroyed. A

5

few days later, plaintiffs moved for class certification on their proposed classes. While the

6

briefing on class certification was ongoing, plaintiffs filed this motion for sanctions seeking both

7

adverse jury instructions and attorney’s fees against Menzies. On April 13, 2016, I held a hearing

8

on the motion for class certification, which I granted on May 4, 2016. Dkt. No. 51. I held a

9

hearing on the motion for sanctions on May 18, 2016.
LEGAL STANDARD

10

United States District Court
Northern District of California

11

“There are two sources of authority under which a district court can sanction a party who

12

has despoiled evidence: the inherent power of federal courts to levy sanctions in response to

13

abusive litigation practices, and the availability of sanctions under [Federal Rule of Civil

14

Procedure] 37 against a party who fails to obey an order to provide or permit discovery.” Leon v.

15

IDX Sys. Corp., 464 F.3d 951 (9th Cir. 2006) (quotation marks omitted). A trial court’s discretion

16

in selecting the form of a spoliation sanction is broad, and can range from comparatively minor

17

sanctions, such as awarding attorney’s fees, to more severe sanctions, such as dismissal. The

18

determination of an appropriate sanction “is assessed on a case-by-case basis.” Io Grp. Inc. v.

19

GLBT Ltd., 10-cv-1282-DMR, 2011 WL 4974337, at *3 (N.D. Cal. Oct. 19, 2011) (internal

20

quotation marks omitted).

21

To determine whether spoliation occurred, the majority of courts use some variation of a

22

three-part test: “(1) that the party having control over the evidence had an obligation to preserve it

23

at the time it was destroyed; (2) that the records were destroyed with a ‘culpable state of mind;’

24

and (3) that the evidence was ‘relevant’ to the party’s claim or defense such that a reasonable trier

25

of fact could find that it would support that claim or defense.” Apple Inc. v. Samsung Elecs. Co.,

26

888 F. Supp. 2d 976, 989 (N.D. Cal. 2012) (citing cases). If spoliation is found, then courts

27

generally consider three factors to determine whether and what type of sanctions to issue: “(1) the

28

degree of fault of the party who altered or destroyed the evidence; (2) the degree of prejudice
4

1

suffered by the opposing party; and (3) whether there is a lesser sanction that will avoid

2

substantial unfairness to the opposing party.” Id. at 992.

3

DISCUSSION

4

I.

FEDERAL RULE OF CIVIL PROCEDURE 37 AND CIVIL LOCAL RULE 37

5

Menzies argues that plaintiffs’ failure to meet and confer before filing the present motion

6

for sanctions undermines the motion and requests that it be summarily denied. Oppo. at 11 [Dkt.

7

No. 45]. In making this argument, Menzies relies on both Federal Rule of Civil Procedure

8

(“FRCP”) 37 and Civil Local Rule (“Local Rule”) 37.
Under FRCP 37(a) a party may move for an order compelling discovery. A motion for a

10

court order must include a “certification that the movant has in good faith conferred or attempted

11
United States District Court
Northern District of California

9

to confer with the person or party failing to make disclosure or discovery in an effort to obtain it

12

without court action.” Fed. R. Civ. P. 37(a). Under Local Rule 37-1, a court will not entertain a

13

request or a motion to resolve a disclosure or discovery dispute unless, pursuant to FRCP 37, the

14

parties have previously conferred for the purpose of attempting to resolve all disputed issues. If a

15

party fails to comply with a court order to provide or permit discovery, FRCP 37(b) allows the

16

court to issue sanctions.
Menzies argues that because plaintiffs did not attempt to meet and confer prior to filing

17
18

their motion for sanctions, the motion should be denied. But this case does not involve a previous

19

court order regarding discovery on this issue. Although plaintiffs originally moved under FRCP

20

37 and Local Rule 37-4, they clarified in their reply brief that they are seeking sanctions under the

21

court’s inherent power. Reply at 7. The Ninth Circuit has held that a court may implement

22

sanctions arising out if its inherent power to manage its own affairs and need not rely on FRCP 37.

23

See Leon, 464 F.3d at 958. The better practice is always to meet and confer. But because there is

24

no directly applicable section of FRCP 37 and I need not rely on it to authorize sanctions, I will

25

not delay resolution of this dispute further by requiring another meet and confer session regarding

26

the remedy for Menzies’s conduct.

27

II.

28

SPOLIATION
Of the three elements needed to demonstrate spoliation under the common law, there is no
5

1

genuine debate over the first and third prong – namely, whether Menzies had an obligation to

2

preserve the evidence at the time it was destroyed and whether the evidence is related to plaintiffs’

3

case. In recognition of their potential relevancy, Menzies, at the instruction of counsel, gathered

4

up the documents and placed them in the SFO warehouse soon after receiving notice of the

5

complaint. At no point during this litigation was Menzies relieved of its obligation to preserve

6

relevant documents.

7

Menzies’s principal opposition to a finding of spoliation centers on whether it had a

8

“culpable state of mind” when the documents were destroyed. Plaintiffs argue that Menzies acted

9

“vexatiously, wantonly, and for oppressive reasons when [it] destroyed key evidence in this case.”
Reply at 6. In opposition, Menzies argues that the destruction was not undertaken with any

11
United States District Court
Northern District of California

10

conscious “intent to deny the [plaintiffs] the sought-after information.” Oppo. at 15.

12

The Ninth Circuit has recognized that “the power of the district court to sanction under its

13

inherent powers not only for bad faith, but also for willfulness or fault by the offending party.”

14

Unigard Sec. Ins. Co. v. Lakewood Eng’g & Mfg. Corp., 982 F.2d 363, 368 n.2 (9th Cir. 1992);

15

see also Glover v. BIC Corp., 6 F.3d 1318, 1329 (9th Cir. 1993) (“As Unigard correctly notes,

16

however, a finding of ‘bad faith’ is not a prerequisite to this corrective procedure.”). “A party’s

17

destruction of evidence qualifies as willful spoliation if the party has some notice that the

18

documents were potentially relevant to the litigation before they were destroyed.” Leon, 464 F.3d

19

at 959 (internal quotation marks and citation omitted) (emphasis in original).

20

Here, even if Menzies acted in the absence of any malicious or wanton conduct, it

21

destroyed the documents despite being on notice that the documents were potentially relevant to

22

this lawsuit. Therefore, its actions were undertaken with the required “culpable state of mind” and

23

a finding of spoliation is warranted. See In re Napster, Inc. Copyright Litig., 462 F. Supp. 2d

24

1060, 1074 (N.D. Cal. 2006) (holding that even if the defendant was only “grossly negligent in

25

executing its duties to preserve evidence [] by failing to implement a litigation hold,” this satisfied

26

the state of mind requirement for a finding of spoliation); Zest IP Holdings, LLC v. Implant Direct

27

Mfg., LLC, No. 10-cv-0541, 2013 WL 6159177, at *9 (S.D. Cal. Nov. 25, 2013) (holding

28

defendants destroyed the documents with a culpable state of mind when they were “at least
6

1

negligent in not implementing a litigation hold [] and not giving any affirmative instructions to

2

their employees to preserve potentially relevant documents”).

3

III.

SANCTIONS
Having determined that spoliation has occurred, I now turn to the question of what

4
5

sanctions are appropriate. The factors to be considered are: “(1) the degree of fault of the party

6

who destroyed the evidence; (2) the degree of prejudice suffered by the opposing party; and (3)

7

whether a lesser sanction would avoid substantial unfairness to the opposing party.” Toppan

8

Photomasks, Inc. v. Park, No. 13-cv-03323-MMC, 2014 WL 2567914, at *8 (N.D. Cal. May 29,

9

2014). Menzies argues that plaintiffs’ entitlement to sanctions is undermined by the absence of
any demonstrated prejudice arising from the loss of the paper records and the premature nature of

11
United States District Court
Northern District of California

10

an adverse jury instruction.
When considering prejudice to the opposing party, a court must determine whether “the

12
13

plaintiff’s actions impair the defendant’s ability to go to trial or threaten to interfere with the

14

rightful decision of the case.” Anheuser-Busch, Inc. v. Nat. Beverage Distributors, 69 F.3d 337,

15

354 (9th Cir. 1995); see also Hamilton v. Signature Flight Support Corp., No. 05-cv-490-MEJ,

16

2005 WL 3481423, at *8 (N. D. Cal. Dec. 20, 2005) (holding that the test for prejudice “is

17

whether there is a reasonable possibility, based on concrete evidence, that access to the evidence

18

which was destroyed or altered, and which was not otherwise obtainable, would produce evidence

19

favorable to the objecting party”). Menzies’s prejudice argument relies in part on its contention

20

that the absence of the paper statements did not prevent plaintiffs from seeking or supporting their

21

request for class certification.4 Oppo. at 11. While Menzies is correct that the missing paper

22

timecards did not prevent plaintiffs from successfully moving for class certification, the paper

23

records are likely to be relevant to calculating accurate damages and identifying potential class

24

memebers.

25

In consideration of this potential for prejudice, Menzies presents in its opposition brief the

26

option of engaging an expert, paid for by Menzies, to determine if the missing information can be

27
28

4

The motion for sanctions was brought while the motion for class certification was still pending.
7

1

adequately reconstructed or modeled. During the hearing on this motion, I discussed this option

2

with the parties and ordered them to meet and confer regarding whether this proposal was viable.

3

The parties summarized the outcome of their meet and confer efforts via a joint submission that

4

has recently been submitted to the Court. Dkt. No. 53. The submission states that the parties have

5

agreed to attempt to engage an expert who will examine the records in existence and advise the

6

parties to what extent modeling is possible and whether a reasonably reliable re-creation is

7

feasible. The submission also reflects plaintiffs’ position that the lack of records makes

8

ascertaining the identity of certain class memebers extremely cumbersome and that they will not

9

agree to any modeling based on an averaging of time worked by the class.
Because the extent to which an expert can successfully model or recreate the missing

10

United States District Court
Northern District of California

11

information is unknown, I cannot, on the basis of the current record, accurately determine the

12

impact of the loss. Therefore, at this time, an adverse jury instruction is not appropriate. See

13

Lofton v. Verizon Wireless (VAW) LLC, 308 F.R.D. 276, 288 (N.D. Cal. 2015) (“Courts often

14

decline to impose sanctions for spoliation where the documents withheld are unlikely to

15

material[ly] affect the outcome of the case, insofar as other evidence exists to provide the same

16

information.”) (citing cases); see also Toppan Photomasks, Inc., 2014 WL 2567914, at *9

17

(“Where a non-spoliating party has other evidence to prove its case, the degree of prejudice is

18

lower, and a court may decline to impose adverse inference sanctions.”).
Plaintiffs’ request for an adverse jury instruction is DENIED. If as a result of the expert’s

19
20

analysis it is determined that a mutually agreeable substitute for the information is not possible,

21

further sanctions may be warranted.

22

IV.

23

ATTORNEY’S FEES
Plaintiffs also request monetary sanctions against Menzies in the amount equal to the

24

attorney’s fees plaintiffs’ counsel have incurred from their efforts to meet and confer and obtain

25

the missing records. Plaintiffs estimate that this total amount will exceed $200,000. Menzies’s

26

opposition to this request relies in part on its argument that plaintiffs have not itemized their

27

request.

28

“Under its ‘inherent powers,’ a district court may also award sanctions in the form of
8

1

attorneys’ fees against a party or counsel who acts in bad faith, vexatiously, wantonly, or for

2

oppressive reasons.” Leon, 464 F.3d at 961 (internal quotation marks and citations omitted).

3

“Before awarding such sanctions, the court must make an express finding that the sanctioned

4

party’s behavior constituted or was tantamount to bad faith.” Id. (internal citations omitted). “A

5

party demonstrates bad faith by delaying or disrupting the litigation or hampering enforcement of

6

a court order.” Id. (internal citations omitted). The amount of monetary sanctions must be

7

“reasonable.” Id. (internal quotation marks and citations omitted).

8
9

Here, some monetary sanctions are warranted. Plaintiffs propounded discovery requests
encompassing these missing records as early as August 2013. However, despite the records’
destruction sometime in 2013, their absence only came to light in February 2016, and even then

11
United States District Court
Northern District of California

10

only in response to direct questioning by plaintiffs’ counsel of Bazerkanian during her deposition.

12

This demonstrates Menzies’s gross negligence in maintaining the paper records, searching for

13

properly responsive documents during discovery, and timely informing plaintiffs’ counsel of their

14

absence. Other courts have award monetary sanctions in similar scenarios. See, e.g., Zest IP

15

Holdings, LLC, 2013 WL 6159177, at *10 (“Defendants’ negligence and their denial of spoliation

16

of evidence caused delay and unnecessary costs that could have been avoided had Defendants

17

simply put in place a litigation hold and monitored a document preservation policy, as they were

18

obligated to do.”); In re Napster, Inc. Copyright Litig., 462 F. Supp. 2d at 1078 (awarding

19

monetary sanction when the defendant “could have forestalled a great deal of time and effort by

20

simply acknowledging early on that it was not preserving its internally generated [litigation]-

21

related communications”).

22

However, plaintiffs’ requested amount is not reasonable on the basis of the record before

23

me. Plaintiffs justify their request for over $200,000 in attorney’s fees by representing that this

24

amount is necessary to cover their expenses for: (1) “meeting and conferring with Defendants

25

regarding the production of the putative class members’ time and pay records for the class period

26

(June 2006 to the present) (approximately 60 hours);” (2) “preparing and filing two separate

27

motions to compel, and drafting a joint letter brief sent to defense counsel outlining the discovery

28

disputes (approximately 51 hours);” (3) “investigating and analyzing the voluminous and
9

1

extremely disorganized data Defendants produced, attempting to locate all putative class members,

2

and trying to determine the documents not produced in discovery, (approximately 295 hours);” (4)

3

“preparing and propounding additional discovery regarding the whereabouts of documents

4

(approximately 96 hours);” and (5) “preparing and filing this instant motion for sanctions

5

(approximately 32.10 hours).” Mot. at 12-13 [Dkt. No. 42-1]. This request is not appropriately

6

tailored to the alleged harm and as a result is audaciously high. For example, it is implausible that

7

plaintiffs’ counsel would not have spent a significant portion of the claimed 295 hours reviewing

8

the data Menzies produced and identifying putative class members even if certain documents had

9

not been missing.

10

Given the circumstances of this case, reimbursement of the reasonable attorney’s fees and

United States District Court
Northern District of California

11

costs associated with this motion is an appropriate award. Plaintiffs’ request for monetary

12

sanctions is GRANTED for this amount only.
CONCLUSION

13
14

Plaintiffs’ motion for sanctions is GRANTED IN PART and DENIED IN PART.

15

Plaintiffs’ counsel should file a declaration justifying their fees and providing an itemization of the

16

fees and costs associated this motion within 14 days of this Order. Menzies may thereafter file a

17

response within 7 days addressing the reasonableness of the request. No reply brief or hearing is

18

necessary absent further court order.

19
20
21
22

IT IS SO ORDERED.
Dated: June 13, 2016
______________________________________
WILLIAM H. ORRICK
United States District Judge

23
24
25
26
27
28
10