Air Products and Chemicals Inc. v. Wiesemann et al
MEMORANDUM. Signed by Judge Sue L. Robinson on 2/27/2017. (nmfn)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
AIR PRODUCTS AND CHEMICALS, INC.,
Plaintiff and Counterclaim-Defendant,
ERIC P. WIESEMANN, eta/.,
) Civ. No. 14-1425-SLR
Defendants and Counterclaim-Plaintiff.
On December 23, 2015, defendants filed a motion for sanctions of plaintiff Air
Products and Chemicals, Inc. ("Air Products") based on spoliation of evidence. 1 (D.I.
79) Defendants have asked the court to sanction Air Products for: (i) spoliating
electronically stored information ("ESI") stored on the Rapid Log server of EPCO
Carbon Dioxide Products, Inc. ("EPCO"); (ii) shredding EPCO documents stored in an
off-site warehouse; and (iii) wiping computers belonging to former EPCO employees.
(D. I. 80 at 7-10) Because the motion for sanctions was "rife with issues of fact," the
court held the motion over for trial. (D.I. 181) The court will now rule on that motion and
assumes the reader is familiar with the findings of facts and conclusions of law in the
opinion issued simultaneously with this memorandum.
Sanctions for spoliation are determined under two different rubrics depending on
the type of evidence. ESI is governed by the recently amended Fed. R. Civ. P. 37(e).
Defendants abandoned their motion for sanctions based on Air Products'
purported violation of the scheduling order after Air Products presented evidence that
the parties had agreed to an open-ended deadline for the production of documents.
(D.I. 80 at 19; D.I. 104 at 22; D.I. 110) Accordingly, the court will not address that part
of defendants' motion.
Sanctions for all other types of evidence continue to be governed by the court's inherent
authority "to control litigation and assure the fairness of proceedings before it."
Greatbatch Ltd. v. AVX Corp., 179 F. Supp. 3d 370, 385 (D. Del. 2016) (quoting Micron
Tech., Inc. v. Rambus Inc., 917 F. Supp. 2d 300, 323 (D. Del. 2013)). When litigation is
pending or reasonably foreseeable, "[a] party has a duty to preserve evidence it knows
or reasonably should know is relevant to the action." Magnetar Tech. Corp. v. Six Flags
Theme Park Inc., 886 F. Supp. 2d 466, 480 (D. Del. 2012); Capogrosso v. 30 River
Court East Urban Renewal Co., 482 Fed. App'x 677, 682 (3d Cir. 2012); Fed. R. Civ. P.
37(e) (stating that spoliation occurs if ESI "that should have been preserved in the
anticipation or conduct of litigation is lost"). Defendants fail to clear the threshold issue
of showing that relevant evidence was lost or destroyed.
Rapid Log ESI
The court cannot impose sanctions for the alleged loss of ESI on the Rapidlog
server, because defendants have not shown that any ESI on the Rapid Log server was
actually lost. Defendants rely on a mischaracterization of a letter from Air Products'
counsel to claim that Air Products itself admits that it destroyed ESI on the Rapidlog
server after six months. (D.I. 80 at 8 (citing to D.I. 82-1, Ex. 14 at 2)) The letter states
no such thing. Instead, the letter obliquely refers to EPCO's policy to not keep the
drivers' paper logs after six months, a policy with which defendants were surely familiar
as former managers of EPC0. 2 (D.I. 82-1, Ex. 14 at 2; D.I. 200 at 58-59, 197-98)
Moreover, the evidence in the record indicates that the electronically scanned copies of
This EPCO policy is consistent with DOT regulations stating that "a motor carrier
shall retain records of duty status and supporting documents ... for each of its drivers
for a period of not less than 6 months from the date of receipt." 49 C.F.R. § 395.8(k)(1 ).
the drivers' logs stored in Rapidlog were never lost, because Air Products did not
change EPCO's data retention policy, and EPCO's policy was to not delete any ESI in
Rapidlogs. (D.I. 104-3, Ex. 14 at 1; see also D.I. 82-1, Ex. 10 at 90-91; D.I. 200 at 5859) Accordingly, defendants have not met the threshold requirement under Fed. R. Civ.
P. 37(e) of showing that ESI was actually lost.
EPCO stored several hundred boxes of old paper records in an off-site storage
shed near its Monroe offices. (D.I. 82, Ex. 7 at 17-18) In September 2014, EPCO's
controller (Patrick Cristomo) instructed EPCO's operation manager (Tim Cain) to shred
some of the documents in the storage shed. (Id. at 89) The shredding stopped shortly
after it started, because an Air Products employee, who overheard the shredding,
alerted the legal department which immediately ordered the shredding to stop. (Id. at
99-100) Assuming without deciding that Air Products had a duty to preserve relevant
evidence at that time, defendants have not shown that the shredded documents were
relevant to this litigation.
Karen Rush, Air Products' Manager of Enterprise Records Management, was
responsible for investigating the incident. She testified under oath that the "incident was
totally unauthorized and it was a unilateral decision by" Cristomo. (D.I. 82, Ex. 7 at 1920) Her understanding from conversations with Cain is that he shredded only 20 to 30
pages of automatic deposit slips for former employees that contained their social
security numbers. (Id. at 89) Defendants have given the court no reason to find that
either Cain or Rush were being less than candid in their testimony. Old deposit slips for
former employees have no relevance to the claims or defenses in this litigation.
Accordingly, the court will not sanction Air Products for shredding these documents.
Computers of Migrated EPCO Employees
On April 17, 2015, after the parties had exchanged their initial disclosures under
Fed. R. Civ. P. 26(a)(1)(A), their discovery disclosures under paragraph 3 of the Default
Standard for Discovery, and several letters agreeing to additional search terms and
custodians, Air Products notified defendants that ESI on the computers of eight former
EPCO employees had been wiped upon their termination. (D.I. 54; D.I. 55; D.I. 104-2,
Exs. 1-4) Defendants claim that by wiping the computers, Air Products irretrievably lost
relevant ESI. For all but one of the migrated employees, however, defendants made no
effort to show that the employees even had relevant ESI. Defendants did not provide
their title, describe their responsibilities, or offer any "concrete, plausible suggestions as
to what the destroyed evidence might have been." Micron Tech., Inc. v. Rambus Inc.,
917 F. Supp. 2d 300, 319 (D. Del. 2013) (internal punctuation omitted) (quoting Micron
Tech., Inc. v. Rambus Inc., 645 F.3d 1311, 1328 (Fed. Cir. 2011). The only migrated
employee for which defendants made any relevance argument was Joseph Worley.
Defendants' actions in this litigation undermine any assertion that the lost ESI
was relevant. None of the migrated employees were named as custodians. (D.I. 54;
D.I. 55; D.I. 104-2, Exs. 1-4) Except for Joseph Worley, none of their names were
included as search terms. (Id.) Indeed, defendants deemed this ESI "important" only
after being notified that it was not preserved. (D.I. 104-2, Ex. 5) Pure speculation is not
enough to find that relevant ESI was destroyed. In re Hechinger Inv. Co. of Delaware,
Inc., 489 F.3d 568, 579 (3d Cir. 2007).
As for Worley, defendants claim his ESI was relevant because he managed
EPCO's logistics, fleet maintenance, and driver compliance, all issues central to this
litigation. (D.I. 80 at 12-13) The fact that Air Products' complaint describes several
EPCO emails that included Worley gives the court strong confidence that Worley's
computer held relevant ESI. (Id.; D.I. 48 ~~ 110-11) Fed. R. Civ. P. 37(e) requires,
however, a finding that the ESI "cannot be restored or replaced through additional
discovery." As the Advisory Committee notes, ESI "often exists in multiple locations,"
making a loss from one source "harmless when substitute information can be found
elsewhere." Fed. R. Civ. P. 37(e) Comm. Notes (2015). Thus, a court cannot award
sanctions when emails from one source has been lost, but the same emails are
available from another source. CAT3, LLC v. Black Lineage, Inc., 164 F. Supp. 3d 488,
497 (S.D.N.Y. 2016). Clearly some of Worley's emails were on other computers,
because several of his emails were produced in discovery and admitted as joint exhibits
at trial. (See, e.g., D.I. 82-1, Exs. 17 & 18; D.I. 104-3, Ex. 11 at Ex. F; Id. at Ex. 15; JTX
130; JTX 131; JTX 132) Defendants have not shown that Worley's emails cannot be
replaced through additional discovery.
In a manner troubling to the court, defendants waited until their sur-sur-sur-reply
brief to argue that Worley had ESI regarding the number of drivers EPCO should have
employed at closing, which was irretrievably lost when his computer was wiped. 3 (D.I.
174 at 1) From reading Worley's testimony, there is some doubt that he created any
independent, stand-alone analysis that was lost. Instead, Worley testified that he
Defendants submitted an opening brief, reply brief, sur-reply brief, and a
"supplemental sur-reply brief." (D.I. 80, 110, 127, 174) As a result, Air Products was
given no opportunity to respond to this argument.
photocopied logs for 10 to 15 drivers, downloaded a report from EPCO's Q7 database,
and gave that information to Wiesemann as "supporting documents" for his request for
more drivers. 4 (0.1. 175-1at184-86) If that is the case, this same information would
exist in its original form. If, however, Worley did create an independent analysis
regarding the number of drivers EPCO needed to employ to meet its delivery needs, the
court finds, after careful consideration of the parties' claims, that this information was
not relevant to determining whether defendants committed fraud or breached the
representations and warranties in the SPAs based on routine violation of HOS
Regulations. (D. I. 206 at 9-10)
At trial and in their post-trial briefs, the parties presented a considerable amount
of testimony regarding the number of drivers EPCO needed to legally service its
customers. (0.1. 201 at 425:13-426:4 (Vallone); 0.1. 203 at 1112:15-1114:12 (Craft);
0.1. 204 at 1198:20-1200:11 (Camilli); 0.1. 200 at 45:5-24 (Demler); 0.1. 201 at 320:24324:10 (Worley)) Each opinion relied on assumptions regarding average customer
demand, average number of miles per region, average miles per hour, and average
number of hours driving per day. Although these estimates may have been useful for
planning purposes, they are not a good proxy for concluding that EPCO in fact regularly
violated HOS Regulations. Some of the assumptions were admittedly "arbitrary." (0.1.
204 at 1199:5-1200:11) In addition, EPCO's supply and demand fluctuated daily,
weekly, and with the seasons. (0.1. 203 at 1108:11-1113:24 (Craft discussing how
planning was effected by changes in customers' demand, plants shutting down,
It is not clear from the record whether Worley used the paper or electronic copies
of the drivers' logs.
weather, driver unavailability, equipment breaking down, and peak seasons); D.I. 204 at
1205:16-1210:21 (Camilli discussing the extreme variability in supply, customer
demand, and driver availability)) EPCO was not a business that operated under a
steady-steam of consistent averages. Thus, the estimates regarding the average
number of drivers EPCO should employ does not accurately determine whether EPCO's
drivers actually violated HOS Regulations. The court concludes that any analysis
estimating the number of drivers EPCO should employ was not relevant to the claims
and defenses in this litigation. Accordingly, Air Products will not be sanctioned for the
loss of this ESI.
For the foregoing reasons, defendants' motion for sanctions is denied. (D.I. 79)
An appropriate order shall issue.
J.1 , 2017
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