Cognate Bioservices, Inc. et al v. Smith et al

Filing 206

MEMORANDUM OPINION. Signed by Magistrate Judge Timothy J. Sullivan on 8/31/2015. (nd2s, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
COGNATE BIOSERVICES, INC., et al.,

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Plaintiffs,

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v.

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ALAN K. SMITH, et al.,

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Defendants.

Civil No. WDQ-13-1797

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MEMORANDUM OPINION
Pending before the Court is the Motion for a Finding of Spoliation of Evidence
(“Motion”) (ECF No. 100) filed by Plaintiffs Cognate BioServices, et al. (“Cognate”).1
Defendants Alan K. Smith, et al. oppose the Motion. (ECF No. 112.) Having considered the
submissions of the parties (ECF Nos. 100, 112 & 126), I find that a hearing is unnecessary. See
Loc. R. 105.6. For the reasons set forth below, Cognate’s Motion is GRANTED IN PART,
DENIED IN PART, and HELD SUB CURIA IN PART.
I.

BACKGROUND
From 2003 until May 2010, Defendant Alan K. Smith (“Smith”) was employed as the

CEO of Cognate. (ECF No. 100 at 8.) While employed by Cognate, Smith negotiated a contract
between Cognate and Defendant MacroCure, Ltd. (“MacroCure”) related to the development of
an “immune cell wound-healing product known as ‘CureXcell.’” (Id.) The relationship between
Cognate and MacroCure to develop CureXcell, however, did not come to fruition. Instead, after
leaving Cognate, Smith worked as a consultant for MacroCure on the development of CureXcell.

1

On May 22, 2014, this case was referred to me for discovery and related scheduling
matters (ECF No. 35).
1

(Id.) Cognate alleges that while Smith worked as a consultant for MacroCure, he accessed
Cognate’s computer systems without authorization and copied Cognate’s proprietary materials,
which he then produced to MacroCure. (Id. at 9.)
The litigation between Cognate and Smith has been going on for several years. (See ECF
No. 100 at 7-8.) In March 2012, Smith and Cognate were involved in a lawsuit in Maryland state
court. On June 19, 2013, Cognate filed a complaint in this Court against Smith and his consulting
company, which alleged the misappropriation of Cognate’s proprietary information. (ECF No.
1.) Cognate’s complaint put “the materials Smith and Smith Consulting provided to MacroCure,
their communications with MacroCure, and the scope of the Defendants’ work for MacroCure”
directly at issue. (ECF No. 100 at 10.)
Cognate’s Motion asserts that Smith destroyed or failed to preserve relevant evidence
contained on his MacroCure laptop, his personal notebooks, his MacroCure emails (contained on
a smartphone), his personal emails, and certain emails and electronic documents in the
possession of his daughter and employee, Cherise Smith. Cognate argues that Smith’s conduct
amounts to spoliation and that sanctions must be imposed. The Court will address Cognate’s
arguments as to each piece of lost or destroyed evidence separately.
II.

DISCUSSION
The failure of a party “to preserve property for another’s use as evidence in pending or

reasonably foreseeable litigation” may amount to spoliation. Silvestri v. General Motors Corp.,
271 F.3d 583, 590 (4th Cir. 2001). A court may impose sanctions for spoliation based on its
inherent authority, or based on a violation of a specific court order. Victor Stanley, Inc. v.
Creative Pipe, Inc., 269 F.R.D. 497, 517 (D. Md. 2010). Courts may impose sanctions for
spoliation where a party shows that
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(1) the party having control over the evidence had an obligation to preserve it
when it was destroyed or altered; (2) the destruction or loss was accompanied by a
“culpable state of mind;” and (3) the evidence that was destroyed or altered was
“relevant” to the claims or defenses of the party that sought the discovery of the
spoliated evidence, to the extent that a reasonable factfinder could conclude that
the lost evidence would have supported the claims or defenses of the party that
sought it.
Id. (quoting Goodman v. Praxair Servs., Inc., 632 F. Supp. 2d 494, 509 (D. Md. 2009)).
A.

Breach of the Obligation to Preserve Relevant Evidence

The first consideration in determining whether spoliation has occurred is whether a party
breached its duty to preserve potentially relevant evidence. Once a party reasonably anticipates
litigation, it is obligated to implement a “litigation hold” to ensure that potentially relevant
evidence under its control is identified, located, and preserved for use in the anticipated
litigation. Goodman, 632 F. Supp. at 494; see also First Mariner Bank v. Resolution Law Group,
P.C., No. MJG-12-1133, 2014 WL 1652550, at *8 (D. Md. Apr. 22, 2014). This duty includes
the duty to preserve
any documents or tangible things (as defined by [Fed. R. Civ. P. 34(a))] made by
individuals “likely to have discoverable information that the disclosing party may
use to support its claims or defenses.” The duty also includes documents prepared
for those individuals, to the extent those documents can be readily identified (e.g.,
from the “to” field in e-mails). The duty also extends to information that is
relevant to the claims or defenses of any party, or which is “relevant to the subject
matter involved in the action.” Thus, the duty to preserve extends to those
employees likely to have relevant information—the “key players” in the case.
Goodman, 632 F. Supp. 2d at 511-12.
Smith had a duty to preserve potentially relevant evidence that began no later than June
19, 2013, which is the date the complaint was filed in this case.2 Cognate alleges that Smith
failed to preserve five types of evidence: his notebooks, his MacroCure laptop, his cell phone, his
2

Smith’s duty to preserve likely arose well before 2013, as the subject matter of
Cognate’s claims in the state court litigation was the same as in this case. (See ECF No. 112 at 45.)
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personal emails and his company emails. Before moving on to the next consideration, it is
necessary to determine whether any of these items should have been preserved.
During the time that Smith worked as a consultant for MacroCure, he “had a practice of
recording notes in notebooks.” (ECF No. 100 at 13.) The notes that he wrote in his notebooks
included notes from meetings at MacroCure and his “to do” lists. (Id. at 14.) Smith kept notes in
at least two notebooks. (Id.). In August 2013, Smith destroyed his notebooks “as per instructions
in [his] termination agreement with [MacroCure].” (ECF No. 100 at 14.) I find that Smith’s
notebooks were potentially relevant to Cognate’s claims in this case and that he had an
obligation to preserve them that began no later than June 19, 2013. The nature of the work Smith
performed for MacroCure is a substantial issue in this case. Smith’s contemporaneous notes of
the work he was doing for MacroCure, as well as his notes of the topics discussed during the
meetings he attended, are clearly relevant to Cognate’s claims. Smith’s obligation to preserve the
notebooks is grounded in the Federal Rules of Civil Procedure and legal precedent in the Fourth
Circuit, and his destruction of the notebooks is not excused by his agreement with MacroCure to
return or destroy MacroCure materials. Smith’s destruction of his notebooks in August 2013
breached his obligation to preserve the notebooks.
Smith used a laptop computer (“the laptop”) while he worked as a consultant for
MacroCure. Because it contains the work that Smith performed for MacroCure, the relevance of
the documents contained on the laptop is readily apparent and not in dispute. What is in dispute,
however, is whether Smith breached his duty to preserve the laptop by returning it to MacroCure.
After Cognate filed its complaint in this case, but before a scheduling order was entered, Cognate
filed a Motion to Preserve Evidence (ECF No. 16). Cognate’s motion sought an order requiring
Smith to preserve the laptop for discovery in this case. Around the time that Cognate’s motion
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was filed (it is not clear exactly when), Smith returned the laptop to a MacroCure employee in
Pennsylvania. After Smith reviewed Cognate’s motion, he communicated to the MacroCure
employee a request that the contents of the laptop be preserved for use in this case, which the
MacroCure employee agreed to do. Judge Quarles denied Cognate’s motion, finding that Smith
complied with his duty to preserve potentially relevant evidence by providing Cognate with the
contact information for the person in possession of the laptop, and requesting that documents not
be deleted from the laptop. (ECF No. 21.) For unknown reasons, MacroCure shipped the laptop
to Israel. The laptop remains in Israel, where it is the subject of a separate proceeding initiated by
this Court to have the laptop returned to the United States for use in this case.
The Fourth Circuit discussed the doctrine of spoliation of evidence and what a party must
do to fulfill its duty to preserve relevant evidence in Silvestri. The court stated that “[i]f a party
cannot fulfill [the] duty to preserve because he does not own or control the evidence, he still has
an obligation to give the opposing party notice of access to the evidence or of the possible
destruction of the evidence if the party anticipates litigation involving that evidence.” Silvestri,
271 F.3d at 591. In Silvestri, a plaintiff was injured after the airbags in his borrowed vehicle
purportedly failed to deploy following an accident. 271 F.3d at 586. Before filing suit against the
vehicle’s manufacturer, the plaintiff returned the vehicle to its owner, who repaired the vehicle
and then sold it. At no point did the plaintiff give the defendant the opportunity to inspect the
vehicle. Id. at 587. The district court granted summary judgment in favor of the defendant based
on its finding that the plaintiff had spoliated evidence. Id. at 589. On appeal, the plaintiff argued
that he had no duty to preserve the vehicle because he did not own it, and that he had not
intended to destroy any relevant evidence. The Fourth Circuit found that although the plaintiff
did not own the vehicle, “nor did he even control it in a legal sense after the accident because the
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vehicle belonged to his landlady’s husband,” he nonetheless had access to the vehicle. Id. This
was demonstrated by the fact that the plaintiff, his attorney, and his retained experts were “given
apparently unlimited access to the vehicle for inspection purposes.” Id. Because the plaintiff
intended to file a lawsuit from the beginning, he was “fully aware that the vehicle was material
evidence in that litigation.” Id. at 592. By failing to either preserve the vehicle in its purportedly
defective state or notify the vehicle’s manufacturer of the availability of the evidence for
inspection, the plaintiff’s conduct amounted to spoliation. Id.
Here, unlike the plaintiff in Silvestri, Smith’s conduct with respect to the laptop does not
amount to a breach of his obligation to preserve relevant evidence. First, unlike the vehicle at
issue in Silvestri, the evidence on the laptop in this case has not been lost or destroyed. Although
Cognate has, to this point, been unable to obtain the laptop from MacroCure in Israel, the laptop
still exists and there is no reason for the Court to find that its contents have been altered.3
Second, even assuming that hindering a party’s ability to obtain relevant evidence by shipping
the evidence Israel could amount to the “loss or destruction” of evidence, I have no basis to find
that Smith knew that the laptop would be removed from the United States. MacroCure’s efforts
to obstruct Cognate’s ability to inspect the laptop cannot be imputed to Smith on the facts before
the Court. Because I find that Smith did not breach his obligation to preserve the laptop, there
can be no finding at this time that Smith committed spoliation with respect to the laptop.
Smith used a Motorola smartphone to access his MacroCure email account. (ECF No.
112 at 7.) According to Smith, the smartphone did not “sync with the emails in his inbox
indefinitely,” but instead “only displayed emails for a limited period of time.” (Id.) Smith

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If Cognate ultimately obtains the laptop from MacroCure and finds that its contents
were altered after Smith’s duty to preserve relevant evidence was triggered, Smith may at that
time be subject to sanctions for spoliation in connection with the laptop.
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disposed of his smartphone in July 2013. (Id.) Smith states that “it is unlikely that any relevant
email existed on [the] smartphone” in July 2013, and that even if the phone contained relevant
emails, the MacroCure laptop would contain them as well. (Id.) Of course, because Smith
discarded his smartphone without locating and preserving any potentially relevant emails it
contained, and with the MacroCure laptop unavailable to Cognate, the potentially relevant emails
contained on the smartphone are effectively lost. Smith should have either (1) made a copy of the
emails that were available to him on the smartphone before discarding it, (2) provided the
smartphone to MacroCure (along with the laptop) and requested that its contents be preserved for
use in this case, or (3) provided Cognate with an opportunity to inspect the smartphone before it
was discarded. I find that Smith had a duty to preserve the potentially relevant emails contained
on the smartphone that began no later than June 19, 2013. Smith breached his duty to preserve
relevant evidence by discarding the smartphone in July 2013.
Smith used “several personal email accounts from 2002 through the present.” (ECF No.
100 at 15.) For approximately one month (around June 2010), Smith used his personal email
accounts in his consulting with MacroCure. (Id.) Yet despite Cognate’s discovery requests,
Smith has “failed to produce a single communication with MacroCure from any computer or
email account.” (Id. at 16.) While Smith does not address Cognate’s argument on this point in his
response, I do not find that Cognate has shown that Smith breached his duty to preserve
potentially relevant evidence contained in his personal email accounts. First, it is not clear that
any emails have actually been lost from Smith’s personal email accounts. Second, even assuming
that some of Smith’s personal emails have been deleted or lost, it is just as likely that this
occurred before his obligation to preserve potentially relevant evidence began. There is no
evidence that any loss or deletion occurred after Smith’s obligation to preserve relevant evidence
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was triggered. Given this finding, Smith cannot be found to have committed spoliation with
respect to his personal email accounts.
Cherise Smith is Smith’s daughter and was an agent or employee of Alan Smith
Consulting, Inc. at all times relevant to Cognate’s claims. During her deposition, Cherise Smith
stated that she created documents containing standard operating procedures (“SOPs”) for
MacroCure. It was Cherise Smith’s practice to delete the documents that she created after
emailing them to Smith. (ECF No. 100-4 at 116.) In addition to deleting documents on her
computer, Cherise Smith also testified that it was her practice to delete “a lot” of emails, and that
her email account was set up to automatically delete emails sent from the account after a certain
number of emails had been sent. (Id. at 117.) According to Cherise Smith, as of October 10,
2014, she had not been instructed to preserve computer files and emails relating to her work for
MacroCure. (Id. at 120.) Cherise Smith stated that when she was “done working with Dr. Smith
for MacroCure, [she] deleted almost everything that [she had].” (Id. at 116.) Beginning sometime
in “maybe 2013,” on her own initiative Cherise Smith stopped deleting computer files and emails
that she received. (Id. at 122.) I find that Smith and Defendant Alan Smith Consulting, Inc. failed
to institute a litigation hold from at least June 19, 2013, and that this resulted in Cherise Smith’s
continued deletion of documents and emails after this date. This was a breach of Smith’s
obligation to preserve relevant evidence.
In summary, I find that Smith breached his obligation to preserve relevant evidence in
connection with his notebooks, his smartphone, and the evidence that was in Cherise Smith’s
possession in the form of emails and electronic documents. I do not find that Smith breached his
obligation to preserve relevant evidence in connection with the laptop or his personal emails, and
accordingly deny the Motion as to those items.
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B.

Culpability

The second consideration in the spoliation analysis is whether the party’s loss or
destruction of the potentially relevant evidence was accompanied by a culpable state of mind. “In
the Fourth Circuit, for a court to impose some form of sanctions for spoliation, any fault—be it
bad faith, willfulness, gross negligence, or ordinary negligence—is a sufficiently culpable
mindset.” Turner v. United States, 736 F.3d 274 (4th Cir. 2013) (citing Victor Stanley, 269
F.R.D. at 529). In the context of spoliation, ordinary negligence is the failure to identify, locate,
and preserve evidence, where a reasonably prudent person acting under like circumstances would
have done so. See In re Ethicon, Inc. Pelvic Repair Sys. Prod. Liab. Litig., 299 F.R.D. 502, 519
(S.D. W. Va. 2014). A finding of gross negligence requires a similar showing as ordinary
negligence, but to a greater degree. Id. Willfulness and bad faith will only be found where a party
has engaged in “intentional, purposeful, or deliberate conduct.” Id. (quoting Victor Stanley, 269
F.R.D. at 529). While bad faith requires the destruction of evidence “for the purpose of depriving
the adversary of the evidence,” Goodman, 632 F. Supp. 2d at 520, willfulness only requires a
demonstration of intentional or deliberate conduct resulting in spoliation. Buckley v. Mukasey,
538 F.3d 306, 323 (4th Cir. 2008).
While I find that Smith’s destruction of his notebooks and smartphone were willful, there
is not sufficient information before the Court at this time to support a finding of bad faith.
Smith’s destruction of these items, albeit misguided and a breach of his duty to preserve
potentially relevant evidence, is likely related to his agreement with MacroCure that required
him to “return or destroy” any MacroCure materials. As stated above, while this agreement—to
which neither Cognate nor this Court were parties—does not supersede Smith’s obligation to
preserve potentially relevant evidence, it may provide some context for Smith’s misconduct. In
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any case, I find that Smith’s destruction of the notebooks and smartphone were willful, but do
not find that he discarded the items in bad faith.
Smith’s failure to institute a litigation hold at Alan Smith Consulting, Inc. amounts to
gross negligence. See Victor Stanley, 269 F.R.D. at 529-30 (citing Jones v. Bremen High Sch.
Dist. 228, No. 08-3548, 2010 WL 2106640, at *9 (N.D. Ill. May 25, 2010)). Under the
circumstances of this case, a reasonably prudent person in Smith’s position would have instituted
some sort of litigation hold. At a minimum, as applied to Cherise Smith, this litigation hold
would have required her to (1) stop deleting computer documents and emails related to Smith’s
work for MacroCure and (2) modify her email account settings so that emails sent from her
account would not be deleted automatically or establish a protocol for manually backing up
emails that contained potentially relevant information. Had Smith instituted any litigation hold—
even a less-than-ideal litigation hold— the circumstances might have warranted a finding of
regular negligence. See Victor Stanley, 269 F.R.D. at 529. Under the present circumstances,
however, Smith’s complete failure to take any steps to ensure that potentially relevant evidence
was not deleted by Cherise Smith and her email provider as a matter of course was grossly
negligent.
In summary, I find that Smith’s destruction of his notebooks and smartphone was willful.
I find that Smith’s failure to institute a litigation hold for the preservation of Cherise Smith’s
emails and electronic documents was grossly negligent.
C.

Relevance

The final consideration in determining whether spoliation has occurred is the relevance of
the spoliated evidence. “The test for relevance for purposes of establishing the third element is
somewhat more stringent than merely meeting the standard provided in Federal Rule of Evidence
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401.” Sampson v. City of Cambridge, Md., 251 F.R.D. 172, 179 (D. Md. 2008). In the context of
spoliation, lost or destroyed evidence is relevant if “a reasonable trier of fact could conclude that
the lost evidence would have supported the claims or defenses of the party that sought it.” Victor
Stanley, 269 F.R.D. at 531 (internal citations omitted). In addition, in order for a court to impose
sanctions, “the absence of the evidence must be prejudicial to the party alleging spoliation.” Id.
(“Put another way, a finding of ‘relevance’ for purposes of spoliation sanctions is a two-pronged
finding of relevance and prejudice.”). When a party alleging spoliation shows that the alleged
spoliator acted willfully or in bad faith in failing to preserve the evidence, “the relevance of that
evidence is presumed in the Fourth Circuit.” Id. at 532. Even where the relevance of spoliated
evidence is presumed, however, “the spoliating party may rebut this presumption by showing
that the innocent party has not been prejudiced.” Id. (internal quotation omitted).
Because I have found that Smith willfully destroyed his notebooks and smartphone, the
relevance of the evidence contained on those items is presumed. See Victor Stanley, 269 F.R.D.
at 532; see also Sampson, 251 F.R.D. at 179. Even putting aside this presumption, I find that the
notebooks and smartphone contained information that was relevant to Cognate’s claims in this
case.
The notebooks contained Smith’s contemporaneous notes and task lists related to the
work he performed for MacroCure. Smith’s argument that “[t]hey did not contain information
relevant to this case” is unsupported (and contradicted by Smith’s own description of the
notebooks). His argument that the notebooks did not contain information “responsive to
Cognate’s discovery requests” applies the wrong standard. Smith’s own notes about the tasks he
performed for MacroCure, the persons at MacroCure who asked him to perform those tasks, and
his other notes relating to his work as a consultant for MacroCure are plainly relevant. A
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reasonable factfinder could conclude that Smith’s notebooks would support Cognate’s claims.
Smith presents two arguments in support of his position that the smartphone did not
contain relevant information. First, he states that because the core facts underlying Cognate’s
claims occurred in 2011, the only emails that would be potentially relevant would have likely
been sent or received around that time, and would probably not have existed on the phone in
2013.4 This may be the case, but Cognate points to two SOPs implemented in 2013 that are
potentially relevant to Cognate’s claims. Emails concerning these SOPs likely existed on the
smartphone when Smith’s duty to preserve arose on June 19, 2013. Second, Smith argues that
when he stopped working as a consultant for MacroCure, his access to his MacroCure email was
disabled. But Smith left MacroCure in July 2013, several weeks after his duty to preserve
potentially relevant evidence arose. He took no steps during that time to ensure that the relevant
emails contained on his smartphone would be preserved for use in this case. In addition, Cognate
has presented persuasive evidence to contradict Smith’s statement that his access to his
MacroCure email account was disabled in July 2013 (see ECF No. 126 at 6), suggesting that
Smith is mistaken on this point. A reasonable factfinder could conclude that Smith’s smartphone
contained relevant evidence that would support Cognate’s claims.
I also find that the emails and documents that Cherise Smith deleted as a result of Smith’s
failure to institute a litigation hold were relevant. Cherise Smith worked with Smith on a number
of documents related to Smith’s work for MacroCure. At least some of these documents, likely
including relevant SOPs, were transmitted by email. (ECF No. 100-4 at 116.) Smith does not
present any argument as to why the emails and documents that Cherise Smith deleted are not

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While Smith states in his declaration that he does not recall precisely how long his
phone displayed emails in his MacroCure account, he is “certain that it was for less than eighteen
months.” (ECF No. 112-2 at 3.)
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relevant. Instead, he rests his argument on the suggestion that Cherise Smith did not delete any
emails after June 19, 2013, which I reject. A reasonable factfinder could conclude that Cherise
Smith’s deleted emails and electronic documents contained relevant evidence that would support
Cognate’s claims.
In summary, I find that Smith’s notebooks, Smith’s smartphone, and Cherise Smith’s
deleted emails and electronic documents were relevant to Cognate’s claims.
D.

Prejudice

In order for a Court to impose sanctions upon a spoliator, the misconduct must have
caused prejudice to the opposing party. Victor Stanley, 269 F.R.D. at 532. A party is prejudiced
by the spoliation of evidence where the party’s ability to present its case is compromised as a
result of the missing evidence. Id. (noting that “[p]rejudice can range along a continuum from an
inability to prove claims to little or no impact on the presentation of proof”) (internal quotation
omitted).
With respect to the notebooks, the prejudice is clear. Cognate will be unable to crossexamine Smith with the assistance of the notes, which might have allowed Cognate to point out
areas that Smith had misremembered or misstated what he did while working for MacroCure.
See Reed v. Honeywell Intern., Inc., No. 07-0396, 2009 WL 886844, at *11 (D. Az. Apr. 27,
2009) (“The notes could have revealed inconsistencies in his testimony about what the witnesses
told him and might have revealed any exaggerations or mistakes in memory.”). If the notebooks
contained information on topics not known to Cognate, Cognate’s review of the notebooks
would have permitted it to further inquire about these topics and obtain information that they
otherwise would not have sought to obtain. The notebooks may also have contained Smith’s
notes on how he misappropriated proprietary information from Cognate, which would have been
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useful in Cognate’s case in chief as evidence of Smith’s misappropriation. Smith’s destruction of
his notebooks warrants the imposition of sanctions.
Determining the amount of prejudice to Cognate from Smith’s destruction of the emails
contained on his smartphone and his failure to preserve Cherise Smith’s emails and electronic
documents is more complicated. Unlike the notebooks, the contents of which are lost forever, the
emails that were contained on Smith’s smartphone and Cherise Smith’s email account may still
exist. To the extent that Smith is able to recover these emails and produce them to Cognate, it
would be in his interest to do so. This would tend to cure most of the prejudice to Cognate. But
see Nutramax Labs., Inc. v. Theodosakis, No. CCB-08-879, 2009 WL 2778388, at *7 (D. Md.
June 8, 2009) (“While the adversarial process imposes investigatory burdens on both parties, a
party cannot hide or alter evidence in an attempt to escape liability and then seek to avoid
sanctions by relying on the opposing party’s good fortune in discovering that evidence.”); Jones,
2010 WL 2106640, at *8-9 (finding that a delayed production of evidence amounted to
prejudice). If, however, he is unable to recover the emails (either because they are no longer
available to him or because he wishes to obstruct Cognate’s efforts to obtain relevant evidence in
this case), and assuming that Cognate does not obtain them from another source, his destruction
of the emails will have caused prejudice to Cognate, and will warrant sanctions.
E.

Sanctions

“Spoliation sanctions should be molded to serve the prophylactic, punitive, and remedial
rationales underlying the spoliation doctrine.” Goodman, 632 F. Supp. 2d at 523 (internal
quotation omitted). Federal courts may impose a number of types of sanctions for spoliation:
“assessing attorney’s fees and costs, giving the jury an adverse inference instruction, precluding
evidence, or imposing the harsh, case-dispositive sanctions of dismissal or judgment by default.”
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Victor Stanley, 269 F.R.D. at 533 (citing Goodman, 632 F. Supp. 2d at 506). A court must
“impose the least harsh sanction that can provide an adequate remedy.” Id. at 534 (quoting
Pension Comm. of Univ. of Montreal Pension Plan v. Banc of Am. Sec., 685 F. Supp. 2d 456,
469 (S.D.N.Y. 2010)).
Here, Smith willfully destroyed evidence that was relevant to this case, and was grossly
negligent in failing to ensure that other relevant evidence was preserved. The destruction of
Smith’s notebooks is prejudicial to Cognate and warrants the imposition of sanctions against
Smith. Accordingly, as other courts have done, I recommend that at the time of trial, the
presiding judge consider an adverse jury instruction to level the evidentiary playing field that
might otherwise favor Smith as a result of his destruction of this evidence.5 See Reed, 2009 WL
886844 at *11; Goodman, 632 F. Supp. at 525 (D. Md. 2009) (internal quotation omitted) (“The
precise contours of the adverse jury instruction are best reserved for determination by [the
presiding district judge] in making the jury charge for trial.”); Chan v. Triple 8 Palace, Inc., No.
03-6048, 2005 WL 1925579, at *10 (S.D.N.Y. Aug. 11, 2005) (noting that it may be appropriate
for the Court to “draw on the adverse inference when determining dispositive motions”).
With respect to the emails lost as a result of Smith’s destruction of his smartphone and
his failure to institute a litigation hold for Cherise Smith’s emails and electronic documents, the
issue of sanctions depends on the prejudice to Cognate. As explained above, if Cognate is able to
obtain a copy of Smith’s emails from Smith or another source, the prejudice is largely cured. If

5

As Judge Grimm noted in Victor Stanley, “resolution of spoliation motions takes a toll
on the court, separate from that extracted from the litigants, for which there is no satisfactory
remedy short of criminal contempt proceedings.” 269 F.R.D. 497 at 528. Smith’s conduct does
not rise to the level of criminal contempt, but I express my frustration here of Smith’s serious
misconduct, which has wasted a great deal of the Court’s time without advancing the abilities of
the parties to have this case resolved on its merits.
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not, sanctions should be imposed against Smith in an effort to ensure that his misconduct does
not give him an unfair evidentiary advantage over Cognate. These sanctions, like the sanction for
Smith’s destruction of his notebooks, should be decided by the judge who presides over this
trial.6
I will hold sub curia Cognate’s request for an award of reasonable attorney’s fees for the
efforts undertaken in relation to Smith’s spoliation. It would be more appropriate to consider
what attorney’s fees, if any, should be awarded to Cognate once the full extent of the prejudice to
Cognate caused by Smith’s spoliation is known and appropriate sanctions have been imposed.
III.

CONCLUSION
For the reasons set forth above, Cognate’s Motion is GRANTED IN PART, DENIED

IN PART, and HELD SUB CURIA IN PART. The Motion is granted to the extent that it seeks
a finding that Smith committed spoliation by destroying his notebooks and the emails contained
on his smartphone, and by failing to take steps to preserve the evidence in Cherise Smith’s
possession. The Motion is denied as to Smith’s alleged spoliation of the laptop and the emails in
his personal email accounts. The Motion is held sub curia with respect to a determination of the
appropriate sanctions to be imposed, as well as whether an award of Cognate’s attorney’s fees is
appropriate.
An Order implementing this decision will be entered separately.

August 31, 2015
Date

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/s/
Timothy J. Sullivan
United States Magistrate Judge

With respect to the loss of Cherise Smith’s emails and electronic documents, an adverse
jury instruction would not be a permitted sanction under Fourth Circuit precedent in the absence
of a finding that Smith’s conduct was willful. See Victor Stanley, 269 F.R.D. at 536 (citing
Goodman, 632 F. Supp. 2d at 519). Other sanctions, including the exclusion of evidence and an
assessment of attorney’s fees and costs, are permitted.
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