The Roost Project, LLC v. Andersen Construction Company

Filing 123

MEMORANDUM DECISION AND ORDER. It is hereby ORDERED that Plaintiff's Motion for Sanctions due to Spoliation of Evidence (Dkt. 84 ) is DENIED. Signed by Judge Candy W. Dale. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (jp)

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UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
THE ROOST PROJECT, LLC, a
California limited liability company,
Case No. 1:18-cv-00238-CWD
Plaintiff/Counterdefendant,
MEMORANDUM DECISION
AND ORDER

vs.
ANDERSEN CONSTRUCTION
COMPANY, an Oregon corporation,
Defendant/Counterclaimant.

INTRODUCTION
Before the Court is Plaintiff’s motion for sanctions due to spoliation of evidence.
(Dkt. 84.) 1 The motion is fully briefed and at issue. On October 5, 2020, the Court heard
oral argument on the motion. After careful consideration of the record, the parties’
briefing and supporting materials, and oral argument, the Court will deny the motion for
the reasons explained below.
FACTUAL AND PROCEDURAL BACKGROUND
This case arises out of a dispute regarding the rights, obligations, and liabilities of
the parties relating to construction of The Fowler building in downtown Boise, Idaho.

1

There are other pending motions before the Court that will be addressed in separate orders.

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The Roost Project, LLC (Roost) and Andersen Construction Company (ACCO) entered
into a contract (the Construction Agreement) to build The Fowler in December 2015. The
project was delayed for a host of different reasons resulting in The Fowler being finished
eight months after the initial contract completion date. The parties disagree over the
respective faults and liabilities for the project delays and resulting damages.
As a result, Roost initiated this action raising several claims against ACCO:
breach of the Construction Agreement; breach of the implied covenant of good faith and
fair dealing; fraud; violation of the Idaho Consumer Protection Act; and breach of the
implied warranty of workmanship. (Dkt. 1, 10.) ACCO denies those claims and, on
August 21, 2018, filed counterclaims for 1) breach of contract and the covenant of good
faith and fair dealing; and 2) unjust enrichment and quantum meruit. (Dkt. 22.) A jury
trial is scheduled to commence on November 2, 2020.
In the motion presently before the Court, Roost argues ACCO failed to preserve
electronically stored information (ESI), the loss of which is prejudicial to Roost. Roost
requests imposition of certain sanctions relating to the presentation of evidence at trial
pursuant to Federal Rule of Civil Procedure 37(e)(1).
LEGAL STANDARD
“Spoliation is the destruction or significant alteration of evidence, or the failure to
preserve [evidence,] ... in pending or reasonably foreseeable litigation.” Compass Bank v.
Morris Cerullo World Evangelism, 104 F.Supp.3d 1040, 1051-52 (S.D. Cal. 2015) (citing
United States v. Kitsap Physicians Serv., 314 F.3d 995, 1001 (9th Cir. 2002)). Spoliation
of ESI evidence is governed by Federal Rule of Civil Procedure 37(e) which states:
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If electronically stored information that should have been preserved in the
anticipation or conduct of litigation is lost because a party failed to take
reasonable steps to preserve it, and it cannot be restored or replaced through
additional discovery, the court:
(1) upon finding prejudice to another party from loss of the information,
may order measures no greater than necessary to cure the prejudice; or
(2) only upon finding that the party acted with the intent to deprive another
party of the information's use in the litigation may:
(A) presume that the lost information was unfavorable to the party;
(B) instruct the jury that it may or must presume the information was
unfavorable to the party; or
(C) dismiss the action or enter a default judgment.
Fed. R. Civ. P. 37(e). 2 Under Rule 37(e), the Court assesses four factors: 1) whether the
information qualifies as ESI; 2) whether the ESI is “lost” and “cannot be restored or
replaced through additional discovery;” 3) whether the ESI “should have been preserved
in the anticipation or conduct of litigation;” and 4) whether the responding party failed to
take reasonable steps to preserve the ESI. Colonies Partners, L.P. v. County of San
Bernardino, No. 5:18-cv-00420-JGB (SHK), 2020 WL 1496444, at * 3 (C.D. Cal. Feb.
27, 2020); Fed. R. Civ. P. 37(e).
If these factors are satisfied, and the Court finds there is “prejudice to another
party from [the] loss of the [ESI],” the Court may “order measures no greater than
2

Courts formerly imposed spoliation sanctions based on both their inherent authority and Rule
37. Following the 2015 Amendments to the Federal Rules, Rule 37(e) is the exclusive remedy
for the loss of ESI. See Fed. R. Civ. P. 37(e), Adv. Comm. Notes to 2015 Amendment; Stevens v.
Brigham Young Univ.-Idaho, No. 4:16-CV-530-BLW, 2019 WL 6499098, at *3 (D. Idaho Dec.
3, 2019). Accordingly, the Court considers the motion only under Rule 37(e).

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necessary to cure the prejudice.” Fed. R. Civ. P. 37(e)(1). If the party that was required to
preserve the ESI “acted with the intent to deprive another party of the information’s use
in the litigation,” Rule 37(e)(2) authorizes the following sanctions: 1) a presumption that
the lost information was unfavorable to the non-moving party; 2) instructing the jury that
it may or must presume the information was unfavorable to the non-moving party; or 3)
dismiss the action or enter a default judgment.
“‘The applicable standard of proof for spoliation in the Ninth Circuit appears to be
by a preponderance of the evidence.’” Compass Bank, 104 F.Supp.3d at 1052-53. The
party moving for spoliation sanctions under Rule 37 bears the burden of establishing
spoliation by demonstrating that the non-moving party destroyed information or data and
had some notice that the information or data was potentially relevant to the litigation
before it was destroyed. Ryan v. Editions Ltd. West, Inc., 786 F.3d 754, 766 (9th Cir.
2015); see also Kitsap Physicians Serv., 314 F.3d at 1001.
ANALYSIS
The evidence at issue on this motion relates to electronic schedule updates for The
Fowler sent by ACCO to Roost between June 7, 2016, and January 5, 2018. (Dkt. 84-1.)
During this period of time, Roost received schedule updates from ACCO only in a
portable document format (“.pdf”). Prior to June 7, 2016, the schedule updates were sent
to Roost in a Microsoft Project format (“.mpp”).
Roost argues the .mpp files contain important schedule logic information and data
that is not included in the .pdf versions of the schedule updates. Namely, information
describing when revisions were made to the schedule or when delays were first identified.
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That scheduling data was lost after June 7, 2016, Roost contends, because ACCO wrote
over the .mpp files when making schedule updates without saving the native .mpp files of
the prior schedule. (Dkt. 84.) ACCO disputes that the .mpp files were lost or destroyed
and maintains Roost has not established that ACCO had a duty to preserve the native
.mpp files or shown that spoliation sanctions are appropriate. (Dkt. 88.)
1.

The Information Qualifies as ESI.
The information Roost seeks and argues has been lost is the “schedule logic”

contained in the native versions of the .mpp files and information correlating the .mpp
files to each of the .pdf schedule updates actually provided to Roost. (Dkt. 84.) The .mpp
files and data contained in the .mpp files constitute ESI for purposes of Rule 37.
2.

The ESI Was Not Irretrievably Lost.
Under Rule 37(e), information or data which should have been preserved is “lost”

if it “cannot be restored or replaced through additional discovery.” Fed. R. Civ. P. 37(e).
Here, the parties dispute whether information or data was irretrievably lost. Based on the
record before it, the Court finds Roost has failed to satisfy its burden on this motion to
show evidence was in fact destroyed or not preserved. Colonies Partners, 2020 WL
149644, at *5.
ACCO’s practice for updating the project schedule involved ACCO making
changes to the schedule and then executing a “print-to-PDF” command from the master
schedule, renaming the attached master schedule with the current date, and then attaching
that master schedule as a .pdf to the email sent to Roost. (Dkt. 36 at p. 47, ¶ 8) (Dkt. 36-4,
Dec. Dixon, Ex. J.) If there was information contained in the .mpp file that was written
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over and not included in the .pfd schedule updates provided to Roost or otherwise saved,
it appears that information has been lost. Whether that occurred here, however, has not
been shown.
It is undisputed that a number of .mpp files were provided during the course of
discovery. Roost has not shown, however, that the schedule logic contained in the native
.mpp files that was not included in the .pdf versions of the schedules is also missing from
the .mpp files that have been produced in discovery. Roost maintains the information is
lost because the .mpp files produced in discovery cannot be established as the actual
schedule updates correlating to the .pdf files that were sent to Roost. (Dkt. 84-2 and Dkt.
96 at 8.) Based on the present record, the Court disagrees.
While ACCO concedes that it did not preserve data such that it can readily identify
which .mpp files correlate to specific .pdf files in every instance, ACCO represents that
no .mpp files were deleted or destroyed and that ACCO has produced every .mpp file in
its possession, custody, or control to Roost. (Dkt. 88.) ACCO further represents that the
.mpp files produced “include all relevant metadata which would enable Roost or its
expert to see when any changes were made, and when each file was saved. Moreover, the
.mpp files are dated, as were the [.pdf] files provided to Roost during construction.” (Dkt.
88 at 6.) Roost disagrees with ACCO’s characterization of the information contained in

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the .mpp files that have been produced. (Dkt. 96.) At this stage, the Court takes ACCO’s
representations as true. 3
Accordingly, the lack of data directly correlating every .mpp file to a specific .pdf
file does not establish spoliation in the face of ACCO’s representation that the files are
dated and relevant metadata is contained in the .mpp files produced that “would enable
Roost or its expert to see when any changes were made, and when each file was saved.”
(Dkt. 88 at 6.) The Court therefore finds Roost has failed to show the scheduling logic it
contends was lost is not contained in the .mpp files that have been produced in
discovery. 4
The opinion of Roost’s scheduling expert also does not demonstrate spoliation
occurred. Warhoe’s opinion addresses the alleged shortcomings of ACCO’s scheduling
practice and management of the project, and the impact it had on Roost’s ability to
monitor the project. Warhoe’s opinions are relevant to prove Roost’s claims, but do not
establish that information has been irretrievably lost for spoliation purposes.
To the extent there are discrepancies between the .mpp and .pdf files and
information contained within them, Roost may be able to explore those matters during

3

If it is discovered that ACCO has misrepresented the information and data contained in the
disclosed .mpp files, the Court may revisit this decision.
4

This argument appears to touch on a possible discovery dispute over material that may or may
not exist. To the extent there is a discovery dispute over the production of the correlating
material, ACCO is directed to produce any correlating information Roost has requested to the
extent it exists or provide a valid basis for not doing so.

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trial. The disconnect between the .mpp files and .pdf files may be relevant to Roost’s
allegations that ACCO misrepresented, concealed, and failed to provided Roost with the
necessary information of the project’s status; failed to maintain information required
under the terms of the Construction Agreement; and did not properly manage the project.
Based on the foregoing, the Court finds Roost has not met its burden to show
evidence was lost. Alternatively, if it becomes clear that information or data was lost, the
Court reserves ruling on whether ACCO’s failure to preserve the native .mpp files
warrants sanctions, as explained more fully below.
3.

Duty to Preserve.
The duty to preserve arises when “litigation is reasonably foreseeable.” Fed. R.

Civ. P. 37, Advisory Committee Notes to the 2015 Amendment. “The duty to preserve
material evidence arises not only during litigation but also extends to that period before
the litigation when a party reasonably should know that the evidence may be relevant to
anticipated litigation.” Colonies Partners, 2020 WL 149644, at *6. “As soon as a
potential claim is identified, a litigant is under a duty to preserve evidence which it knows
or reasonably should know is relevant to the action.” Id. (quoting In re Napster, Inc.
Copyright Litig., 462 F.Supp.2d 1060, 1067 (N.D. Cal. 2006)); see also Glover v. BIC
Corp., 6 F.3d 1318, 1329 (9th Cir. 1993) (“[S]imple notice of potential relevance to the
litigation” is often sufficient to establish a duty to preserve information.); Akiona v.
United States, 938 F.2d 158, 161 (9th Cir. 1991) (A duty to preserve information arises
when the party has “some notice that the documents are potentially relevant”).

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The parties here disagree over whether there was a duty to preserve the native
.mpp files prior to the filing of this lawsuit and, if so, when the duty arose. The Court has
reviewed and considered the materials referenced in the parties’ briefing and arguments
and finds litigation was reasonably foreseeable in May 2017, when the parties exchanged
demand letters. (Dkt. 84-2.) At that point, the likelihood of legal action was evident.
The parties’ already strained relationship had broken down and turned adversarial.
Both parties had retained counsel who drafted and exchanged the May 2017 letters
asserting the parties’ positions, potential claims, and refuting the claims of the other.
While the May 2017 letters mention the possibility of resolution, the assertions and
demands made in the letters show litigation was contemplated by both sides and more
than a mere possibility. (Dkt. 84-2.) For these reasons, the Court finds the duty to
preserve relevant materials in anticipation of this litigation arose in May 2017.
4.

Reasonable Steps to Preserve.
A party engages in spoliation “only if [it] had ‘some notice that the documents

were potentially relevant’ to the litigation before they were destroyed.” Kitsap Physicians
Serv., 314 F. 3d at 1001 (quoting Akiona, 938 F.2d at 161). A “party does not engage in
spoliation when, without notice of the evidence’s potential relevance, it destroys the
evidence according to its policy or in the normal course of its business.” Ousdale v.
Target Corp., No. 2:17-cv-2749-APG-NJK, 2019 WL 3502887, at *3 (D. Nev. Aug. 1,
2019) (citing United States v. $40,955.00 in U.S. Currency, 554 F.3d 752, 758 (9th Cir.
2009)).

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Here, while it was foreseeable that project schedules and updates would be
relevant to the parties’ dispute, it is not clear to the Court that ACCO had notice that the
native .mpp files themselves were potentially relevant to the litigation after May 2017.
That is to say, it was reasonable for ACCO to have continued its practice of writing over
the .mpp files and providing schedule updates in .pdf format to Roost after May 2017
when the duty to preserve arose.
Members of Roost’s design team requested .pdf versions of schedule updates in
the spring of 2016. (Dkt. 88-1, Dec. Graham, Ex. 1.) ACCO began sending only .pdf
schedule updates in June 2016. Roost received the .pdf versions of the schedule updates
without complaint for almost one year before any duty to preserve arose. Roost expressed
no concern or objection to receiving the schedules in a .pdf file and did not request the
correlating .mpp files at that time. The Court therefore finds, based on the record before it
at this point in time, that ACCO did not have notice that it needed to change its schedule
practices to preserve all native .mpp files after May 2017.
5.

Prejudice
Roost seeks relief under Rule 37(e)(1) which allows the Court to fashion

appropriate remedy upon finding prejudice that is no greater than necessary to cure the
prejudice. Fed. R. Civ. P. 37(e)(1). 5

5

Notably, Roost does not seek relief under Rule 37(e)(2) which requires a finding that the party
acted with the intent to deprive another party of the information’s use in the litigation.

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Roost argues it has been prejudiced by the loss of the native .mpp files,
specifically the schedule logic lost from the .mpp files, because it will not be able to
present a complete story to the jury regarding scheduling delays, ACCO’s knowledge of
the various delays, and ACCO’s falsification of underlying schedule data that allowed it
to represent an on-time delivery. (Dkt. 84, 96.) Further, Roost argues its expert could not
fully evaluate the validity of the .pdf only schedules sent after June 7, 2016 without the
native .mpp files. (Dkt. 84.)
The Court reserves its ruling on whether Roost suffered prejudice from spoliation,
if any. That being said, Roost may explore the circumstances surrounding the native .mpp
files at trial to the extent it is relevant to Roost’s claims. For instance, Roost may offer
evidence that information or data was not provided in the .pdf schedule updates that
would have been included in the .mpp files and the impact that had on Roost’s ability to
monitor the status of the project. Evidence regarding the .mpp files, ACCO’s scheduling
practice and management, and the information, or lack of information, provided to Roost
in the schedule updates are all relevant to Roost’s claims.
Further, Roost’s expert may comment on how his or her evaluation of the
schedules and ACCO’s overall project management was impacted by any lack of
information. ACCO’s expert may likewise testify regarding these topics. Each side will
have the opportunity to challenge the testimony and evidence on cross examination and
through its own witnesses. Roost may not, however, argue that ACCO destroyed or failed
to preserve evidence, unless the evidence warrants such and the Court modifies this
ruling during trial.
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ORDER
THEREFORE IT IS HEREBY ORDERED that Plaintiff’s Motion for
Sanctions due to Spoliation of Evidence (Dkt. 84) is DENIED.

DATED: October 26, 2020

_________________________
Honorable Candy W. Dale
United States Magistrate Judge

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