NUVASIVE, INC. v. JONES et al
Filing
154
MEMORANDUM OPINION, ORDER AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE signed by MAG/JUDGE L. PATRICK AULD on 03/13/2019, that Plaintiff's Motion for Imposition of Sanctions for Spoliation of Evidence (Docket Entry 85 ) is GRANTED IN PART, as set out. On or before March 27, 2019, the parties shall file a joint notice either confirming their resolution of all issues regarding the payment of Plaintiff's reasonable expenses from the depositi on of (and any related subpoena to) Mr. Warrick or setting out their respective positions on any issue (s) regarding that payment that remain in dispute after good-faith consultation. On or before March 27, 2019, the parties shall file a joint noti ce either confirming their resolution of all issues regarding the payment of Plaintiff's reasonable expenses from drafting, filing, briefing, and orally arguing the instant Motion or setting out their respective positions on any issue(s) regardi ng that payment that remain in dispute after good-faith consultation. RECOMMENDED that the Court defer until trial the decision of whether other "serious measures are necessary to cure prejudice [from the loss of text messages], such as forbi dding [Defendant Kormanis] from putting on certain evidence, permitting the parties to present evidence and argument to the jury regarding the loss of information, or giving the jury instructions to assist in its evaluation of such evidence or argu ment, other than instructions [that it may or must presume the lost text messages were unfavorable to Defendant Kormanis]," Fed. R. Civ. P. 37 advisory comm.'s note, 2015 amend., subdiv. (e) (1). FURTHER RECOMMENDED that, because the rec ord supports but does not compel a "finding that [Defendant Kormanis] acted with the intent to deprive [Plaintiff] of the [lost text messages'] use in the litigation," Fed. R. Civ. P. 37(e)(2), the Court submit that issue to the &qu ot;jury, [with] the [C]ourt's instruction[s ] mak[ing] clear that the jury may infer from the loss of the [text messages] that [they were] unfavorable to [Defendant Kormanis] only if the jury first finds that [he] acted with the intent to deprive [Plaintiff] of the[ir] use in the litigation," Fed. R. Civ. P. 37 advisory comm.'s note, 2015 amend., subdiv. (e)(2). (Garland, Leah)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
NUVASIVE, INC.,
)
)
)
)
)
)
)
)
)
Plaintiff,
v.
KENNETH KORMANIS,
Defendant.
1:18CV282
MEMORANDUM OPINION, ORDER, AND
RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE
This
case
comes
before
the
undersigned
United
States
Magistrate Judge on Plaintiff’s Motion for Imposition of Sanctions
for Spoliation of Evidence (Docket Entry 85).
After reviewing all
filings related thereto (see Docket Entries 85, 85-1, 85-2, 85-3,
85-4, 85-5, 86, 86-1, 86-2, 86-3, 86-4, 88, 88-1, 98, 99, 100, 1001) and hearing argument (see Minute Entry dated Feb. 6, 2019),1 the
undersigned Magistrate Judge orally (A) granted in part the instant
Motion, (B) imposed some sanctions, and (C) proposed deferral of
questions about other sanctions until trial.
This Memorandum
Opinion memorializes and expounds upon that oral decision.
I.
INTRODUCTION
The instant Motion “requests that this Court:
(1) find that
Defendant [Kenneth Kormanis] spoliated evidence when he deleted his
InoSpine email account and willfully allowed his text messages to
1
The Clerk’s Office made and maintains an audio recording of
the hearing. (See Minute Entry dated Feb. 6, 2019.)
be deleted; (2) sanction Defendant [Kormanis] by the [sic] imposing
an adverse inference and an appropriate jury instruction; and
(3) grant any other relief the Court deems just and proper.”
(Docket Entry 85 at 14; see also id. at 1 (citing “Federal Rule of
Civil Procedure 37(e)” and “inherent powers of this Court” as bases
for instant Motion).)
As pronounced at the hearing on February 6,
2019, the undersigned Magistrate Judge has concluded that:
A) the 2015 Amendment to Federal Rule of Civil Procedure 37(e)
(“Rule 37(e)”) “forecloses reliance on inherent authority . . . to
determine when certain measures [including relief specifically
sought
in
the
instant
Motion]
should
be
used
[to
sanction
spoliation of electronically stored information (‘ESI’)],” Fed. R.
Civ. P. 37 advisory comm.’s note, 2015 amend., subdiv. (e);2
B) ESI, consisting of text messages to/from Defendant Kenneth
Kormanis, “that should have been preserved in the anticipation or
conduct of litigation [as of and after March 9, 2018, wa]s lost
because [Defendant Kormanis] failed to take reasonable steps to
preserve
it,
and
it
cannot
be
restored
or
replaced
through
additional discovery,” Fed. R. Civ. P. 37(e);3
2
Alternatively, if inherent authority remains available as an
avenue for sanctioning conduct otherwise covered by Rule 37(e), the
undersigned Magistrate Judge would decline to rely on such
authority to reach any conclusions not also dictated by Rule 37(e).
3
To the extent the instant Motion seeks relief for the loss
of ESI in Defendant Kormanis’s “InoSpine email account at some
point close in time to his resignation from InoSpine on March 3,
(continued...)
-2-
C) “prejudice to [Plaintiff resulted] from loss of th[ose text
messages],” Fed. R. Civ. P. 37(e)(1), warranting authorization of
(and imposition on Defendant Kormanis of Plaintiff’s reasonable
expenses, including attorney’s fees, for) a post-discovery-deadline
deposition of Ashley Warrick, a witness who likely participated (or
possessed
knowledge
of
matters
discussed)
in
the
lost
text
messages, as an appropriate “measure[] no greater than necessary to
cure [some of] the prejudice [to Plaintiff],” id.;
D) only when matters become clearer in the crucible of trial
should
the
Court
decide
whether
other
“serious
measures
are
necessary to cure prejudice [from the lost text messages], such as
forbidding [Defendant Kormanis] . . . from putting on certain
evidence, permitting the parties to present evidence and argument
to the jury regarding the loss of [those text messages], or giving
the jury instructions to assist in its evaluation of such evidence
or argument, other than instructions [that it may or must presume
the lost text messages were unfavorable to Defendant Kormanis],”
Fed. R. Civ. P. 37 advisory comm.’s note, 2015 amend., subdiv.
(e)(1); see also id., subdiv. (e)(2) (explaining that, even absent
a finding of intent to deprive a party of lost ESI, a court may
“allow[] the parties to present evidence to the jury concerning the
3
(...continued)
2018” (Docket Entry 85 at 6), Plaintiff has not shown that, at the
moment of any such loss, such ESI “should have been preserved in
the anticipation or conduct of litigation,” Fed. R. Civ. P. 37(e),
and/or that “it cannot be restored,” id.
-3-
loss and likely relevance of [ESI] and instruct[] the jury that it
may consider that evidence, along with all the other evidence in
the case, in making its decision”); and
E) the record would support (but would not compel) a “finding
that
[Defendant
Kormanis]
acted
with
the
intent
to
deprive
[Plaintiff] of the [text messages’] use in the litigation,” Fed. R.
Civ. P. 37(e)(2), and the Court therefore should “conclude that
[any such] intent finding should be made by [the] jury, [with] the
[C]ourt’s instruction[s ] mak[ing] clear that the jury may infer
from the loss of th[ose text messages] that [they were] unfavorable
to [Defendant Kormanis] only if the jury first finds that [he]
acted with the intent to deprive [Plaintiff] of th[eir] use in the
litigation,” Fed. R. Civ. P. 37 advisory comm.’s note, 2015 amend.,
subdiv. (e)(2); see also id. (“Subdivision (e)(2) does not include
a requirement that the court find prejudice to the party deprived
of the [ESI].”).
II.
DISCUSSION
Regarding the five conclusions outlined in Section I, the
undersigned Magistrate Judge reduces to writing and elaborates upon
the remarks made at the hearing on February 6, 2019, as follows:
A.
Inherent Authority
The instant Motion asserts that, alongside Rule 37(e), “[t]his
Court’s inherent powers provide an additional avenue to sanction
Defendant [Kormanis] for his willful spoliation of [ESI].” (Docket
-4-
Entry 85 at 12.) That contention conflicts with the plain language
of the commentary to the 2015 Amendment to Rule 37(e) (quoted in
Section I).
See, e.g., Snider v. Danfoss, LLC, No. 15CV4748, 2017
WL 2973464, at *3 & n.8 (N.D. Ill. July 12, 2017) (unpublished)
(“After December 1, 2015, Rule 37(e) provides the specific – and
sole – basis to sanction a party for failing to preserve [ESI].”
(internal footnote omitted) (citing Fed. R. Civ. P. 37 advisory
comm.’s note, 2015 amend., subdiv. (e))), recommendation adopted,
2017 WL 3268891 (N.D. Ill. Aug. 1, 2017) (unpublished).
The
undersigned Magistrate Judge adopts the Advisory Committee’s view
that Rule 37(e) (as amended in 2015) displaced judicial inherent
authority as a mechanism for sanctioning ESI spoliation, because,
as the United States Supreme Court recognized within a decade of
their initial adoption, “in ascertaining the[] meaning [of the
Federal Rules of Civil Procedure] the construction given to them by
the [Advisory] Committee is of weight,” Mississippi Publ’g Corp. v.
Murphee, 326 U.S. 438, 444 (1946); see also United States v. Vonn,
535 U.S. 55, 64 n.6 (2002) (“[T]he Advisory Committee Notes [to the
Federal Rules of Criminal Procedure] provide a reliable source of
insight into the meaning of a rule . . . .
Although the Notes are
the product of the Advisory Committee, and not Congress, they are
transmitted to Congress before the rule is enacted into law.”).4
4
Moreover, construing the 2015 Amendment to Rule 37(e) as
“[r]emoving inherent authority from a federal court’s quiver to
(continued...)
-5-
At the hearing, Plaintiff argued that, pursuant to Chambers v.
NASCO, Inc., 501 U.S. 32 (1991), the 2015 Amendment to Rule 37(e)
did not preclude reliance on inherent authority to sanction ESI
spoliation. In Chambers, the Supreme Court did observe that “prior
cases have indicated that the inherent power of a court can be
invoked even if procedural rules exist which sanction the same
conduct.”
Id. at 49.
However, the Chambers Court also reiterated
that “the inherent power of lower federal courts can be limited by
statute or rule . . . .”
Id. at 47.
Further, although it refused
to “lightly assume that Congress has intended to [limit] . . . the
scope
of
a
[federal]
court’s
inherent
power,”
id.
(internal
quotation marks omitted), the Chambers Court looked directly to the
“Advisory Committee’s Notes on [an] Amendment to [a Federal Rule of
Civil
Procedure]”
to
gauge
whether
that
rule
“repeal[ed]
or
modif[ied] existing authority of federal courts to deal with abuses
under [their] inherent power,” id. at 48-49 (internal ellipsis and
quotation marks omitted).
In Chambers, the commentary revealed no
such repeal or modification of inherent authority, see id., but
here the commentary expressly confirms that Rule 37(e) “forecloses
reliance on inherent authority . . . to determine when certain
4
(...continued)
sanction a party for failing to preserve ESI makes sense.
The
purpose of th[at] amendment was to address the ‘significantly
different standards’ that the various federal courts were using.
If federal courts could simply fall back onto their inherent
authority, the goals of uniformity and standardization would be
lost.” Snider, 2017 WL 2973464, at *3 n.8.
-6-
measures [including relief requested in the instant Motion] should
be used [to sanction ESI spoliation],” Fed. R. Civ. P. 37 advisory
comm.’s note, 2015 amend., subdiv. (e).
(not
undermines)
the
conclusion
that
Chambers thus bolsters
the
Court
should
look
exclusively to Rule 37(e) in resolving the instant Motion.5
B. Rule 37(e)’s Predicate Elements – Unreasonable
Loss of Irreplaceable ESI Contrary to Preservation Duty
As amended in 2015, Rule 37(e) states:
If [ESI] 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 [ESI], 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 [ESI’s] use in
the litigation may:
(A) presume that the lost [ESI] was unfavorable to
the party;
(B) instruct the jury that it may or must presume
the [lost ESI] was unfavorable to the party; or
(C) dismiss the action or enter a default judgment.
Fed. R. Civ. P. 37(e).
5
As set forth in Footnote 2, in the alternative, the
undersigned Magistrate Judge (like other courts) “declines to order
sanctions under [judicial] inherent authority even assuming that
such an action would be permissible. [This Memorandum Opinion]
will therefore analyze the issue of whether sanctions should be
imposed exclusively under the [provisions] of Rule 37(e).”
Worldpay, US, Inc. v. Haydon, No. 17CV4179, 2018 WL 5977926, at *3
n.1 (N.D. Ill. Nov. 14, 2018) (unpublished).
-7-
Given the foregoing language:
[The] Court must determine that four predicate elements
are met under Rule 37(e) before turning to the
sub-elements of (e)(1) and (e)(2): (a) the existence of
ESI of a type that should have been preserved; (b) ESI is
lost; (c) the loss results from a party’s failure to take
reasonable steps to preserve [ESI]; and (d) [the lost
ESI] cannot be restored or replaced through additional
discovery. . . . Only if all four [of those predicate]
elements are established can the Court consider sanctions
under subsection (e)(1) or subsection (e)(2).
Konica Minolta
Bus.
Sols.,
U.S.A.
Inc.
v. Lowery
Corp.,
No.
15CV11254, 2016 WL 4537847, at *2-3 (E.D. Mich. Aug. 31, 2016)
(unpublished) (emphasis added).
The record here satisfies each of
the four predicate elements of Rule 37(e).
i.
According
to
the
Factual Background
instant
Motion,
“[o]n
March
3,
2018,
Defendant [Kormanis] resigned from his employment with InoSpine
. . ., which [wa]s an exclusive distributor of [Plaintiff’s]
products in the North Carolina market.”
(Docket Entry 85 at 2.)
By letter dated March 9, 2018, InoSpine notified Defendant Kormanis
(through counsel) of its “concern[] that [his] new position with
Alphatech will lead to . . . violation[s] of his contractual
obligations with Ino[S]pine.”
(Docket Entry 85-1 at 1; see also
id. at 2 (warning that, “in the event Ino[S]pine becomes aware of
any breach . . ., it will . . . seek[] injunctive relief and [take]
justifiable legal action”), 3 (denoting Drs. Benjamin Ditty and
David Jones as “[s]urgeons . . . likely approached by [Defendant]
Kormanis in violation of [his InoSpine contract]”).)
-8-
That letter
also advised Defendant Kormanis “to refrain from the destruction of
relevant evidence . . . including . . . texts . . . and to take
steps to preserve all such information . . . .”
(Id. at 2.)
Plaintiff thereafter instituted this action, alleging that
“[Defendant] Kormanis has breached, and is breaching the terms of
his
[InoSpine
Alphatec’s
contract]
competitive
territory . . . .”
at 12.)
July
by
.
.
products
.
promoting
within
his
and/or
former
selling
InoSpine
(Docket Entry 1 at 12; accord Docket Entry 82
18,
In response to Plaintiff’s production requests (served on
2018
(see
Docket
Entry
85-2
at
13)),
seeking
2018
communications between Defendant Kormanis and certain surgeons
(including Drs. Ditty and Jones), as well as Alphatec and some of
its officials (see id. at 7-9), Defendant Kormanis wrote:
As for text messages, due to space limitations on his
iPhone, Defendant Kormanis only is able to keep data on
his device from the previous 30 days. In order to comply
with the litigation hold letter, Defendant Kormanis backs
up his iPhone to his MacBook Air so that all messages are
preserved. However, at this time, Defendant Kormanis has
not been able to retrieve said messages from his personal
devices. Once these communications are retrieved, they
will be produced.
(Docket Entry 85-3 at 9-13 (emphasis added); see also id. at 17
(bearing Defendant Kormanis’s signature, swearing (on September 4,
2018) to “have read the foregoing and know the contents thereof to
be true, except for matters alleged upon information and belief”).)
Plaintiff’s counsel has averred that “Defendant [Kormanis
then] produced text messages . . . on October 5, 2018.
-9-
There were
no text messages within [that] production prior to August 5, 2018.”
(Docket Entry 85-4 at 3 (emphasis added).)6
In e-mails on October
9, 2018, Defendant Kormanis’s counsel (a) indicated that the vendor
he employed to retrieve earlier text messages from Defendant
Kormanis’s devices could not do so, and (b) declined to allow
Plaintiff’s vendor to examine the devices.
(See id. at 9-10.)
Subsequently, on December 21, 2018, Defendant Kormanis signed
an affidavit (see Docket Entry 86-1 at 3), making these statements:
1) “[a]fter receiving notice of [InoSpine’s March 9, 2018]
Letter and its directive that [Defendant Kormanis] refrain from
destroying or altering any of the evidence it described, [he]
immediately began to take steps to ensure that evidence, with
particular attention to [ESI], would be preserved as instructed”
(id. at 2 (emphasis added));
2) “[m]ore specifically, after receiving the notice [Defendant
Kormanis] uploaded the contents of [his] mobile phone onto [his]
computer and began to keep backups of that data” (id. (emphasis
added);
see
also
id.
at
3
(referencing
Defendant
Kormanis’s
“immediate efforts to backup and preserve any data that would be
relevant to . . . the present action”));
6
For the above-cited document (and other such attachments to
the parties’ filings that contain multiple items with independent
pagination), pin cites refer to the page number that appears in the
footer appended to the document when uploaded to the CM/ECF system.
-10-
3) “[a]t some point prior to [Defendant Kormanis’s] receipt of
[InoSpine’s March 9, 2018] Letter, [he] unknowingly enabled a
setting on [his] iPhone that automatically erases all text messages
. . . after thirty (30) days of sending and/or receipt” (id. at 3);
4) Defendant Kormanis “was not aware that this setting was
active during the course of this litigation until [he] went to turn
over text messages requested by [Plaintiff]” (id.);
5) Defendant Kormanis “contracted with . . . a technology
company . . . so that [his] iPhone and computer would be imaged and
searched,” but the company “was unable to recover the text messages
in question and they are apparently lost forever” (id.).
Defendant Kormanis later sat for a deposition (on January 16,
2019 (see Docket Entry 100-1 at 1)), and gave this testimony:
1) “whenever [Defendant Kormanis] came to [his counsel’s]
office so that [said counsel] could download [Defendant Kormanis’s]
records, it appeared that the text messages prior to a certain date
were not on [his] phone” (id. at 7);
2) “[a]fter investigating it, [Defendant Kormanis and his
counsel]
figured
out
that
there
was
a
setting
activated
on
[Defendant Kormanis’s] phone that only retained text messages for
30 days” (id.; see also id. at 8 (“[Defendant Kormanis] d[id]n’t
recall activating [that 30-day delete setting]. . . .
[He] didn’t
even know about that setting actually prior to . . . finding out at
[his counsel’s] office. . . .
[He] really d[id]n’t know [that the
-11-
iPhone comes from the store with the factory setting to retain text
messages forever].”));7 and
3) “[t]he text messages that [Defendant Kormanis] no longer
possess[es ] would include text messages with Dr. Ditty,” (id. at
9), as well as “Dr. Jones” (id.) and “Alphatec personnel” (id.).
During
Defendant
the
deposition,
Kormanis his
Plaintiff’s
previously-quoted
counsel
affidavit
also
showed
(which,
he
confirmed, consisted of his own “words” (id. at 4; see also id.
(swearing he “read it and signed it”)), and this colloquy ensued:
Q. Paragraph 10: After receiving notice of [InoSpine’s
March 9, 2018] letter and its directive that I refrain
from destroying or altering any of the evidence it
described, I immediately began to take steps to ensure
that the evidence, with particular attention to [ESI],
would be preserved as instructed.
Do you see that?
A.
I do.
7
Later, after a break he requested (see Docket Entry 100-1 at
14), Defendant Kormanis announced that he “want[ed] to correct a
couple things” (id.) and then stated:
[I]n thinking about [the iPhone’s default setting for
permanent text message retention], I recall going to the
Verizon store when I was having the issues of not being
able to take pictures anymore. And so I’m suspecting
that a Verizon employee actually may have changed that
or some other settings to . . . alleviate that issue for
me, but I can’t recall . . . the time frame on that.
(Id. at 14-15.) When Plaintiff’s counsel attempted to pin down
details about that reported event, Defendant Kormanis could not say
which Verizon store he visited, what year he made the visit, or
which iPhone he then possessed. (See id. at 17-18; see also id.
at 19 (acknowledging that changing text message retention setting
takes “[m]ultiple steps”).)
-12-
Q.
What steps did you take?
A.
Really none.
I didn’t know that I needed to do
anything. So you know, I just didn’t delete e-mails.
Q.
That was it?
A. Yeah.
phone.
I basically didn’t delete anything from my
Q. Do you ever back up your cell phone to an iPad or the
cloud?
A. I do. . . . I routinely do this . . . more so when
I was a rep [for Plaintiff]. I take a ton of pictures.
. . . I was routinely running out of space on my phone.
And so the only way I could . . . get those pictures over
and have a record of it was to back up my phone.
. . . [W]henever I went to get my backups only the most
recent backup I had on my computer was there.
So
anything prior to that was gone. And so we enlisted this
technical expert, who we were hopeful could recover the
prior backups, and it wasn’t successful. So that was a
huge bummer.
. . . .
Q. How do you go about uploading your contents of your
iPhone to your computer?
A. I just plug it in to the USB and let iTunes do its
thing.
Q.
How often do you do that?
A. . . . I try to do it monthly. . . . [S]ometimes I
might be a little early, sometimes I might be a little
late. But it’s . . . a practice I try to maintain pretty
regularly because, again, I don’t want to lose my photos
that I’ve taken. Or . . . it gets to the point where you
can’t take any more photos and that’s a problem.
Q. . . . Since this case has been going, did you ever
check to see if your text messages were actually being
uploaded?
-13-
A. I have not. I don’t know how to do that. I’ve also
tried to keep a more recent backup than the most recent
backup, and I’ve been unsuccessful in doing that. . . .
I can’t find an option anywhere on iTunes or my phone to
keep more than one backup. So I don’t know what happens,
but I can only keep my most recent backup.
(Id. at 10-13 (emphasis added).)
ii.
Predicate Elements One, Two, and Three
The material cited in Part II.B.i. establishes the first three
predicate elements under Rule 37(e), i.e., (1) ESI (in the form of
text messages8 Defendant Kormanis exchanged with Drs. Ditty and
Jones, as well as Alphatec officials) “that should have been
preserved in the anticipation or conduct of litigation [beginning
March 9, 2018, (2) wa]s lost because [(3) Defendant Kormanis]
failed to take reasonable steps to preserve it,” Fed. R. Civ. P.
37(e).
Indeed, as to loss of ESI that he should have preserved in
anticipation or conduct of litigation, his Response admits that:
It is uncontroverted that [Defendant] Kormanis received
notice of a duty to preserve evidence in a letter he
received from counsel for InoSpine on or around March 9,
2018. Therefore, [Defendant] Kormanis was under a duty
to preserve evidence from that date forward. The record
also shows that it is undisputed that a large number of
text messages were deleted from [his] iPhone as a result
of a thirty-day (30-day) automatic delete function.
(Docket Entry 86 at 8; see also Docket Entry 85 at 4-5 (summarizing
Verizon records showing Defendant Kormanis regularly communicated
via text message with Drs. Ditty and Jones, as well as Alphatec
8
“[T]ext messages constitute ESI . . . .”
Keim v. ADF
Midatlantic, LLC, No. 12CV80577, 2016 WL 7048835, at *3 (S.D. Fla.
Dec. 5, 2016) (unpublished).
-14-
officials, from January through July 2018); Docket Entry 100-1 at
9 (documenting Defendant Kormanis’s sworn agreement that “[t]he
text messages that [he] no longer possess[es ] would include text
messages with Dr. Ditty,” “Dr. Jones,” and “Alphatec personnel”).)
Further, although (as noted in Defendant Kormanis’s Response)
“the exact quantity of the ESI lost is unknown” (Docket Entry 86 at
8), even accepting his (current9) position that, when (on or about
March 9, 2018) he “receive[d] notice of his duty to preserve
9
As the quotations in Part II.B.i. reflect, Defendant
Kormanis has given inconsistent reports about his text messages.
For example, in responding to Plaintiff’s production requests,
Defendant Kormanis indicated that, when he received InoSpine’s
letter on or about March 9, 2018, he knew that, “due to a space
limitation,” he “only [wa]s able to keep data on his [iPhone] from
the previous 30 days,” but that “to comply with the litigation hold
letter, [he] backs up his iPhone to his MacBook Air so that all
messages are preserved.” (Docket Entry 85-3 at 9-13.) Conversely,
Defendant Kormanis’s affidavit and deposition testimony deny that
he knew of the 30-day deletion setting on his iPhone until sometime
after July 18, 2018, when he met with his counsel to respond to the
production requests. (See Docket Entry 86-1 at 3; Docket Entry
100-1 at 7-8.)
Likewise, Defendant Kormanis’s affidavit and
deposition testimony conflict as to when he started backing up text
messages from his iPhone to his computer (i.e., after receiving
(and to satisfy the demands of) the letter from InoSpine, or much
earlier, pursuant to a standard procedure he adopted during his
tenure marketing Plaintiff’s products). (Compare Docket Entry 86-1
at 2 (“After receiving notice of [InoSpine’s March 9, 2018] Letter
. . ., I immediately began to take steps to ensure that evidence,
with particular attention to [ESI], would be preserved as
instructed. More specifically, after receiving the [letter from
InoSpine,] I uploaded the contents of my mobile phone onto my
computer and began to keep backups of that data.” (emphasis added)
(internal paragraph number omitted)), with Docket Entry 100-1 at 11
(“I routinely [back up my iPhone to my computer] . . . more so when
I was a rep [for Plaintiff].” (emphasis added)), 13 (“I try to do
it monthly. . . . [S]ometimes I might be a little early; sometimes
I might be a little late.
But it’s . . . a practice I try to
maintain pretty regularly . . . .”).)
-15-
material evidence[,
unbeknownst
to
him,]
.
.
.
th[e
30-day]
automatic deletion function [already] had been enabled on his
iPhone, [Defendant] Kormanis was [still] in possession of text
messages [on his iPhone] as far back as February 7, 2018 as of the
date of the letter from InoSpine[]” (id.).
Moreover, if one
credits Defendant Kormanis’s deposition testimony that (long before
he learned of InoSpine’s letter) he downloaded the contents of his
iPhone to his computer once a month (see Docket Entry 100-1 at 11,
13), then one also must conclude that, on or about March 9, 2018,
Defendant Kormanis possessed (on his computer) at least one back-up
file10 containing text messages (likely dating back to January
2018).
“In addition, [Defendant Kormanis’s Response acknowledges]
the delet[ion of his] text messages from March of 2018 through [a]
date [after service of Plaintiff’s] first discovery request [on
July 18, 2018, albeit while maintaining that those text messages]
were deleted only as a result of [Defendant] Kormanis being unaware
of the automatic delete setting being activated on his iPhone
during that period.”
(Docket Entry 86 at 11-12.)
Despite all this record evidence showing Defendant Kormanis’s
loss of text messages (a) that he exchanged with Drs. Ditty and
Jones, as well as Alphatec officials, from January to July 2018,
10
According to Defendant Kormanis’s deposition testimony,
(a) each time he backed-up his iPhone to his computer, he lost the
prior back-up file, and (b) he realized that fact only some time
after he received Plaintiff’s production requests (on or about July
18, 2018). (See Docket Entry 100-1 at 11, 13.)
-16-
and (b) that he possessed on and/or after March 9, 2018, the date
he received an explicit demand to preserve text messages relevant
to threatened litigation over his contact with Drs. Ditty and Jones
on behalf of Alphatec, Defendant Kormanis has argued that “[t]he
Court should deny [the instant] Motion because [Plaintiff] has
failed to demonstrate that any of the allegedly spoliated text
messages . . . would be relevant to this action.”
(Id. at 10.)
The preservation duty recognized by Rule 37(e) does apply only to
“relevant information,” Fed. R. Civ. P. 37 advisory comm.’s note,
2015 amend., subdiv. (e);11 however, as Plaintiff observed in its
Reply, “the relevance of these [text messages] is evident” (Docket
Entry 88 at 6), because “repeated communications between . . .
Defendant
[Kormanis]
and
his
former
surgeon-customers;
and
Defendant [Kormanis] and representatives of Alphatec regarding his
former surgeon-customers, all [may] support [Plaintiff’s] position
[in
this
action]
that
Defendant
[Kormanis]
breached
[the]
restrictive covenants [in his InoSpine contract]” (id. at 5-6).12
11
“Like its predecessor, the amended [R]ule [37(e)] does not
create a duty to preserve ESI. It recognizes the common-law duty
to preserve relevant information when litigation is reasonably
foreseeable.” EPAC Techs., Inc. v. HarperCollins Christian Publ’g,
Inc., No. 3:12CV463, 2018 WL 1542040, at *12 (M.D. Tenn. Mar. 29,
2018) (unpublished) (emphasis added), aff’d in relevant part, 2018
WL 3322305 (M.D. Tenn. May 14, 2018) (unpublished).
12
Indeed, Defendant Kormanis’s responses to the production
requests seeking his 2018 communications with Drs. Ditty and Jones,
as well as with Alphatec and its officials, did not assert (even in
boilerplate fashion) a relevance objection, but instead agreed
(continued...)
-17-
Nor does any material dispute remain as to whether the loss of
relevant text messages resulted from Defendant Kormanis’s failure
to take reasonable steps to preserve them.
In that regard, the
instant Motion includes a paragraph heading entitled (in bold font)
“Defendant[
Kormanis’s]
Failure
to
Take
Reasonable
Steps
to
Preserve His Text Messages and Emails” (Docket Entry 85 at 10),
under which Plaintiff stated (consistent with the record evidence):
“Defendant [Kormanis] failed to put even the most rudimentary
litigation
hold
automatically
in
place
deleting
and
text
allowed
messages
his
after
iPhone
thirty
to
continue
(30)
days.
Further, for nearly seven (7) months, Defendant [Kormanis] failed
to confirm that his text messages were being backed up and relevant
communications were lost.”
in
turn,
develops
no
(Id.)
rationale
Defendant Kormanis’s Response,
by
which a
fact-finder
could
conclude that he took reasonable steps to preserve the lost text
messages.
(See Docket Entry 86 at 1-2 (baldly asserting, in
“Introduction” section, that “[Defendant] Kormanis took reasonable
steps in good faith to preserve all documents that could have
conceivably been requested by [Plaintiff]” and that “[a]n error in
the use and proper functioning of technology has, unfortunately,
12
(...continued)
that, “[o]nce these communications are retrieved, they will be
produced.”
(Docket Entry 85-3 at 9-13.)
And well Defendant
Kormanis should have so agreed, because “[i]t is clear that what is
relevant in discovery is different from what is relevant at trial,
in that the concept at the discovery stage is much broader.” Flora
v. Hamilton, 81 F.R.D. 576, 578 (M.D.N.C. 1978).
-18-
resulted in the loss of some requested [ESI],” but then outlining
position that the Court “should deny [the instant Motion] for
several reasons,” none of which rely on actions taken by Defendant
Kormanis
to
preserve
text
messages
(emphasis
omitted)),
5-14
(setting forth, in “Argument” section, four grounds for denial of
instant
Motion,
section, again
matching
without
reasons
addressing
outlined
in
reasonableness
“Introduction”
of
Defendant
Kormanis’s preservation efforts (emphasis omitted)).) Through this
omission of any meaningful opposition to the instant Motion’s
expressly made (and well-supported) contention that he “[f]ail[ed]
to
[t]ake
[r]easonable
[s]teps
to
[p]reserve
[h]is
[t]ext
[m]essages” (Docket Entry 85 at 10 (emphasis omitted)), Defendant
Kormanis effectively conceded the issue, see Kinetic Concepts, Inc.
v. ConvaTec Inc., No. 1:08CV918, 2010 WL 1667285, at *6–8 (M.D.N.C.
Apr. 23, 2010) (unpublished) (analyzing Local Rules 7.2(a), 7.3(f),
and 7.3(k), and discussing authority supporting view that failure
to respond to opponent’s argument constitutes concession); see also
Hughes v. B/E Aerospace, Inc., No. 1:12CV717, 2014 WL 906220, at *1
n.1 (M.D.N.C. Mar. 7, 2014) (unpublished) (“A party should not
expect a court to do the work that it elected not to do.”).
Additionally, in discussing this issue at the hearing on
February 6, 2019 (the recording of which the undersigned Magistrate
Judge
recently
replayed,
while
taking
Defendant Kormanis’s counsel stated:
-19-
down
verbatim
notes),
“Was [Defendant Kormanis]
negligent?
Absolutely, this was negligent behavior.”
After
reiterating “agree[ment] that [Defendant Kormanis] absolutely was
negligent and . . . conced[ing] to that,” Defendant Kormanis’s
counsel argued that such a concession “doesn’t mean that [Defendant
Kormanis] didn’t take reasonable steps. . . .
was backing up his phone.
it. . . .
The reasonable step
The negligence was not knowing how to do
[H]e took a reasonable step by plugging in his phone [to
his computer], but the outcome was negligent because he didn’t make
sure that the backup did what it was supposed to do.”13
For reasons detailed in Subsection II.E., a material question
of fact exists as to whether Defendant Kormanis ever attempted to
preserve text messages; however, even assuming he did attach his
iPhone to his computer for that purpose, his admitted actions (and
omissions) compel a finding that the loss of text messages he
should
have
preserved
reasonable steps.
happened
because
he
neglected
to
take
To begin, upon learning of InoSpine’s letter
(which expressly warned him to save existing and future text
messages), Defendant Kormanis reasonably should have investigated
(or asked his counsel, who received the letter, to investigate)
13
Defendant Kormanis’s counsel elaborated that Defendant
Kormanis’s “mistake was thinking that the backups were snapshots in
time . . . [such that,] every time [he] back[ed his iPhone] up, it
create[d] a new file of that information, while in reality what
happens in iTunes is it just replaces the last one, so you have
[only] the most recent backup.” Moreover, Defendant Kormanis’s
counsel acknowledged that he possessed technology that would have
captured just the sort of “snapshots” from an iPhone that Defendant
Kormanis allegedly thought he had obtained using iTunes.
-20-
(a) what text messages his iPhone held, and (b) whether any setting
on his iPhone might cause the deletion of existing or future text
messages.
Defendant Kormanis did not take that basic step and his
unreasonable failure to do so led to the loss of text messages he
should
have
preserved.
Next,
particularly
given
his
self-
proclaimed lack of technological prowess (see Docket Entry 86-1 at
3), Defendant Kormanis should have obtained appropriate advice
about saving back-up copies of his text messages, rather than “just
plug[ging his iPhone] in to the USB [drive on his computer] and
let[ting] iTunes do its thing” (Docket Entry 100-1 at 13).
At a
minimum, Defendant Kormanis should have “check[ed] to see if [his]
text messages were actually being uploaded” (id.); once more, he
chose not to do so (see id.) and that unreasonable choice again
resulted in the loss of text messages he should have preserved.
As very recently well-articulated by another court faced with
similar circumstances, Defendant Kormanis’s own account of his
course of conduct (and inaction) deprives him of any refuge under
the “reasonable steps” predicate element of Rule 37(e):
Defendant[ Kormanis] w[as] required to take reasonable
steps to preserve [his] text messages.
[He] did not do so.
First, [he] did not suspend the
auto-erase function on [his] phone[]. . . .
The
principles of the standard reasonableness framework
require a party to . . . put in place a litigation hold
to ensure the preservation of relevant documents. It
takes, at most, only a few minutes to disengage the
auto-delete function on a cell phone. It is apparent
. . . that [Defendant Kormanis also] could have taken
advantage of relatively simple options to ensure that
-21-
[his] text messages were backed up . . . .
These
processes would have cost [him] little, particularly in
comparison to the importance of the issues at stake and
the amount in controversy here. Failure to follow the
simple steps detailed above alone is sufficient to show
that Defendant[ Kormanis] acted unreasonably.
Paisley Park
Enters.,
Inc. v.
Boxill,
No.
17CV1212,
2019
WL
1036058, at *4 (D. Minn. Mar. 5, 2019) (unpublished) (internal
citation and quotation marks omitted).
iii.
Predicate Element Four
“Having concluded that [Defendant Kormanis] did not take
reasonable steps to preserve . . . relevant ESI [resulting in its
loss contrary to his duty of preservation], the Court must next
consider whether the lost ESI can be restored or replaced from any
other source.”
Id. at *6.
On
that front, the undersigned
Magistrate Judge has found, under the circumstances of this case,
that no reasonable avenue existed for restoration or replacement of
all the lost text messages, particularly not the ones exchanged
between Defendant Kormanis and Alphatec officials.14
14
To begin,
During his deposition, Defendant Kormanis reported that he
recently “found out what a serious matter this is” and then began
“working with . . . Dr. Ditty and Dr. Jones, to recover the text
messages in question.” (Docket Entry 100-1 at 12.) Subsequently,
just ahead of the hearing on February 6, 2019, Defendant Kormanis
filed a notice reporting that he had produced to Plaintiff “[t]ext
messages between [Defendant] Kormanis and Dr. [] Ditty from January
1, 2018 to August 6, 2018, acquired from Dr. [] Ditty” (Docket
Entry 99 at 1), as well as “[t]ext messages between [Defendant]
Kormanis and Dr. [] Jones from January 3, 2018 to August 10, 2018”
(id.) (although “Dr. Jones was only willing to provide messages
that [he determined] were related to [Plaintiff], Alphatec[], and
spinal business generally” (id.)).
At the hearing, Plaintiff’s
(continued...)
-22-
Defendant Kormanis twice has sworn that a data recovery firm deemed
the text messages deleted from his iPhone unrecoverable from both
his iPhone and his computer.
Entry
100-1
at
11.)
(See Docket Entry 86-1 at 3; Docket
Further,
as
the
instant
Motion
notes,
Defendant Kormanis refused Plaintiff’s “offer to conduct a separate
forensic examination” of those devices.
see
also
Docket
Entry
85-4
at
9-10.)
(Docket Entry 85 at 10;
Instead
of
allowing
Plaintiff’s expert to attempt to restore the lost text messages
utilizing the device(s) on which they once resided, Defendant
Kormanis has urged the Court to require Plaintiff to try to replace
the lost text messages by “issu[ing] subpoenas to all individuals
identified in its [production] requests for which [Defendant]
Kormanis[’s] production was deficient as a first step.”
Entry 86 at 14.)
(Docket
That proposal ignores two practical realities.
First, as the instant Motion states, Plaintiff “subpoenaed
Alphatec directly for communications exchanged with Defendant[
Kormanis],
but
Alphatec
declined
14
to
produce
any
records.
(...continued)
counsel expressed confidence that the supplemental production from
Dr. Ditty effectively replaced the relevant text messages he and
Defendant Kormanis exchanged, but voiced reservations about whether
Dr. Jones’s production rose to an equivalent level. Consistent
with the discussion in Subsection II.D., that latter matter may
represent an appropriate subject for exploration at (or in
conjunction with) the trial; however, viewing the evidence of the
replacement of text messages between Defendant Kormanis and Dr.
Jones in the light most favorable to Defendant Kormanis, Plaintiff
still prevails on the fourth predicate element of the Rule 37(e)
analysis, based on the lack of adequate restoration or replacement
of text messages between Defendant Kormanis and Alphatec officials.
-23-
[Plaintiff] filed a motion to compel Alphatec to respond to the
subpoena in the United States District Court for the Southern
District of California, which was denied.”
(Docket Entry 85 at 11
(internal citation and footnote omitted); see also Docket Entry 855 at 3-11 (subpoena), 14 (objection from Alphatec to production of
“communications with [Defendant] Kormanis that reference, mention,
or relate to Dr. [] Ditty,” on ground that “any relevant documents
can be sought from a party without the need to seek them from a
non-party”), 16 (same as to its communications with Defendant
Kormanis about Dr. Jones), 22-26 (order quashing subpoena).)
the
hearing,
Plaintiff’s
counsel
reported
that
the
At
Alphatec
officials, whose communications with Defendant Kormanis Plaintiff’s
production requests sought, all reside in California.
Given
Plaintiff’s experience subpoenaing Alphatec, the record reveals no
reason to believe any effort to subpoena those Alphatec officials
for their text messages with Defendant Kormanis would result (or
would have resulted) in anything but wasted time and money.
Second, given the time-sensitive nature of this case, on July
9, 2018, the Court (per United States District Judge Catherine C.
Eagles) ordered discovery “expedited and appropriately limited so
that the case c[ould] be tried on the merits in December [2018].”
(Docket Entry 31 at 1.)
As a result, the undersigned Magistrate
Judge set a discovery deadline of November 10, 2018.
(See Text
Order dated July 17, 2018 (adopting in relevant part Discovery Plan
-24-
(Docket Entry 41 at 6)).)
trial
due
to
Defendant
When Plaintiff moved to continue the
Kormanis’s
failure
to
timely
produce
requested records, Defendant Kormanis opposed any continuance (see
Docket Entry 71 at 1), but defended his delayed production with
“little
more
than
a
conclusory
assertion
‘technical difficulties’” (id. at 2).
through
counsel
of
Judge Eagles nonetheless
accommodated Defendant Kormanis by maintaining the December 2018
trial date as to “the validity and enforceability of the covenant
not to compete in [his InoSpine] contract [while] sever[ing] for
trial [in early 2019] . . . issues of breach and damages . . . .”
(Id.)
The undersigned Magistrate Judge then re-set the discovery
deadline as to breach and damages to February 1, 2019, and directed
the Clerk to put the trial of those issues on the April 2019 Civil
Master Calendar.
(See Text Order dated Nov. 1, 2018.)
In light of
those scheduling considerations, Plaintiff could not have succeeded
in replacing the lost text messages between Alphatec officials and
Defendant Kormanis via the wild-subpoena-chase route he suggested.
As
Defendant
Kormanis
has
acknowledged,
“parties
seeking
spoliation sanctions are not required to pursue every possible
avenue for replacing or restoring the deleted ESI.”
86
at
13
omitted).)
(internal
brackets,
citation,
and
(Docket Entry
quotation
marks
The evidence of Plaintiff’s offer to forensically
examine Defendant Kormanis’s devices, combined with its extensive
efforts to obtain communications directly from Alphatec, all within
-25-
the
context
of
an
expedited
case-management
schedule
(that
Defendant Kormanis wanted and fought to keep), establishes that
Plaintiff “made [a] good-faith attempt to explore its alternatives
before pursuing spoliation sanctions” (id. (internal quotation
marks omitted)).
Despite that attempt, “[a]t most, Plaintiff[ has
and reasonably could have] obtain[ed] only scattershot texts . . .,
rather than a complete record of [D]efendant[ Kormanis’s text
messages
with
him]sel[f].
Alphatec
officials]
from
[D]efendant[
Kormanis
The [undersigned Magistrate Judge] therefore finds
that the missing text messages cannot be replaced or restored by
other sources.”
Paisley Park Enters., 2019 WL 1036058, at *6
(internal citation and quotation marks omitted).15
15
After the undersigned Magistrate Judge orally granted in
part the instant Motion by authorizing a post-discovery-deadline
deposition of a North Carolina-based Alphatec official at Defendant
Kormanis’s expense (while also recommending that consideration of
trial-related sanctions await trial), Defendant Kormanis filed
notices reporting that he had produced to Plaintiff various text
messages between Defendant Kormanis and certain Alphatec officials.
(See Docket Entry 113 at 1-2; Docket Entry 136 at 1.) Those tardy
productions do not alter the conclusions announced at the hearing
(and explained herein), but do reinforce the conclusion (discussed
in Subsection II.D.) that only at trial should the Court make a
final assessment of prejudice (and remedies) for lost text
messages. Conversely, any further consideration of prejudice and
remedies for lost ESI (as well as of intent by Defendant Kormanis
to deprive Plaintiff of ESI for use in litigation) should not
encompass Defendant Kormanis’s alleged deletion of ESI in his
“InoSpine email account at some point close in time to his
resignation from InoSpine on March 3, 2018” (Docket Entry 85 at 6).
As summarized in Footnote 3, Plaintiff failed to show that, when
any such deletions occurred, the deleted e-mail-related ESI “should
have been preserved in the anticipation or conduct of litigation,”
Fed. R. Civ. P. 37(e), and/or that “it cannot be restored,” id.
(continued...)
-26-
C. Prejudice Warranting Post-Discovery-Deadline
Deposition and Expense-Shifting under Rule 37(e)(1)
“The Court now turns to what . . . sanctions are appropriate
for
[Defendant
messages. . . .
Kormanis’s]
failure
to
preserve
relevant
text
If the Court finds that Plaintiff[] ha[s] suffered
prejudice from [Defendant Kormanis’s] failure to preserve [text
messages], the Court may order only those sanctions necessary to
cure the prejudice.”
Id. (citing Fed. R. Civ. P. 37(e)(1)).
“An
evaluation of prejudice from the loss of [ESI] necessarily includes
15
(...continued)
Regarding the former issue, the instant Motion studiously avoids
proposing any specific date before March 9, 2018, when Defendant
Kormanis’s preservation duty arose. (See, e.g., Docket Entry 85 at
9 & n.6.) At the hearing on February 6, 2019, Plaintiff’s counsel
mentioned several possible such dates from August 2017 (when a
larger dispute between Plaintiff and Alphatec came to light)
through March 1, 2018 (when Defendant Kormanis signed a contract
with Alphatec containing an indemnity clause). The undersigned
Magistrate Judge has concluded that, although (in light of
subsequent events) Defendant Kormanis’s apparent deletion of his
InoSpine e-mails around March 3, 2018, justifiably raises
suspicion, none of the preceding developments (belatedly)
identified by Plaintiff clearly triggered Defendant Kormanis’s
obligation to preserve any particular evidence. See Fed. R. Civ.
P. 37 advisory comm.’s note, 2015 amend., subdiv. (e) (“A variety
of events may alert a party to the prospect of litigation. Often
these events provide only limited information about that
prospective litigation, however, so that the scope of information
that should be preserved may remain uncertain. It is important not
to be blinded to this reality by hindsight arising from familiarity
with an action as it is actually filed.”).
Additionally, the
instant Motion acknowledges that Plaintiff “recover[ed] some of
these email communications, [while maintaining that it could ]not
be certain if those recovered communications are complete until it
depose[d] Defendant [Kormanis].” (Docket Entry 85 at 6.) That
deposition happened on January 16, 2019, yet, at the hearing on
February 6, 2019, Plaintiff did not show any deficiency in its
recovery of ESI from Defendant Kormanis’s InoSpine e-mail account.
-27-
an evaluation of the [lost ESI’s] importance in the litigation.”
Fed. R. Civ. P. 37 advisory comm.’s note, 2015 amend., subdiv.
(e)(1); see also Sinclair v. Cambria Cty., No. 3:17CV149, 2018 WL
4689111, at *2 (W.D. Pa. Sept. 28, 2018) (unpublished) (“Prejudice
exists where [ESI] that [is] relevant to a claim [is] unavailable
and the moving party has come forward with a plausible, good faith
suggestion as to what the [lost ESI] might have [shown].” (internal
brackets and quotation marks omitted)).
From its inception, this
litigation has revolved around the question of whether Defendant
Kormanis
marketed
Alphatec’s
formerly
marketed
Plaintiff’s
InoSpine contract.
82 at 12.)
products
to
products,
doctors
in
to
violation
whom
of
he
his
(See Docket Entry 1 at 12; accord Docket Entry
The lost text messages between Defendant Kormanis and
Alphatec officials held great importance for that inquiry, because
(as Plaintiff has plausibly suggested) “communications between
.
.
.
Defendant
[Kormanis]
and
representatives
of
Alphatec
regarding his former surgeon-customers[ may] support [Plaintiff’s]
position that
Defendant
[Kormanis]
breached
[the]
restrictive
covenants [in his InoSpine contract]” (Docket Entry 88 at 5-6).
Nor need the Court wildly speculate about “the potential and
reality of [Plaintiff] finding the modern-day litigation equivalent
of a ‘smoking gun’ in [the lost] text messages,” Paisley Park
Enters., 2019 WL 1036058, at *5, given that Defendant Kormanis’s
counsel candidly admitted at the hearing on February 6, 2019, that
-28-
“text messages that were lost might have [included] some in there
that wouldn’t have been great for [Defendant Kormanis’s] case”
(albeit while insisting that other lost text messages likely would
have helped him).
In any event (again borrowing from the words of
another court that just confronted an analogous situation):
As set forth [in Part II.B.iii.], in the . . . discussion
regarding [Plaintiff’s] ability to replace or restore the
missing [text messages], Plaintiff[ was] left with an
incomplete record of the communications that Defendant[
Kormanis] had with . . . [Alphatec officials]. . . .
Plaintiff[ thus was] forced to . . . attempt to piece
together what information might have been contained in
those [lost text] messages, thereby increasing [its]
costs and expenses. Sanctions are therefore appropriate
under Rule 37(e)(1).
Id. at *7.
Specifically,
at
the
hearing
on
February
6,
2019,
the
undersigned Magistrate Judge announced that Plaintiff could take
(at
Defendant
Kormanis’s
expense)
a
post-discovery-deadline
deposition of Mr. Warrick, an Alphatec official located in North
Carolina, who (Plaintiff reasonably believed) participated in some
of the lost text message exchanges and/or otherwise possessed
knowledge
about
Defendant
Kormanis’s
move
from
InoSpine
to
Alphatec, as a proper, sanctioning “measure[] no greater than
necessary to cure [some of] the prejudice [to Plaintiff],” Fed. R.
Civ. P. 37(e)(1).
In a further effort to make Plaintiff whole, the
undersigned Magistrate Judge also will order Defendant Kormanis to
pay “the attorney’s fees and costs [Plaintiff] incurred in . . .
filing [as well as briefing] the instant Motion . . . and appearing
-29-
for oral argument,” Sinclair, 2018 WL 4689111, at *3.
This
combination of discovery-related and expense-shifting remedies
mirrors the sanction recently imposed under Rule 37(e)(1) in
another case involving a party “prejudiced by the loss of [an
opposing party’s] text messages,” Spencer v. Lunada, No. CV1602129,
2018
WL
839862,
at
*1
(C.D.
Cal.
Feb.
12,
2018)
(unpublished), appeal filed, No. 18-55383 (9th Cir. Mar. 22, 2018).
See id. at *2 (“[The p]laintiffs are granted monetary sanctions
against [the d]efendant [], in the form of reasonable attorneys’
fees incurred by [the p]laintiffs in bringing their [m]otion [for
sanctions]
against
[the
d]efendant
[].
Additionally,
[the
p]laintiffs are permitted to depose [the d]efendant [] regarding
issues relevant to spoliation, with costs and fees incurred by [the
p]laintiffs to be included in the award of monetary sanctions.”).
D.
Deferral of Other Remedies under Rule 37(e)(1)
Beyond the sanctions discussed in Subsection II.C., “it may be
that [other] serious measures are necessary to cure prejudice [from
the lost text messages], such as forbidding [Defendant Kormanis]
. . . from putting on certain evidence, permitting the parties to
present evidence and argument to the jury regarding the loss of
[text messages], or giving the jury instructions to assist in its
evaluation of such evidence or argument, other than instructions
[that
it
may
or
must
presume
the
lost
text
messages
were
unfavorable to Defendant Kormanis],” Fed. R. Civ. P. 37 advisory
-30-
comm.’s note, 2015 amend., subdiv. (e)(1); see also id., subdiv.
(e)(2) (explaining that, even absent a finding of intent to deprive
a party of lost ESI, a court may “allow[] the parties to present
evidence to the jury concerning the loss and likely relevance of
[ESI] and instruct[] the jury that it may consider that evidence,
along with all the other evidence in the case, in making its
decision”); Spencer, 2018 WL 839862, at *2 (ordering that, “[a]t
trial, [the parties] will be permitted to present evidence and
argument
related
to
the
unrecoverable
text
messages,”
notwithstanding “finding that there [wa]s insufficient evidence to
establish the intent to deprive [element of Rule 37(e)(2)]”).
For
example, “it may be appropriate to exclude a specific item of
evidence [offered by Defendant Kormanis] to offset prejudice caused
by [his] failure to preserve [text messages] that might contradict
the excluded item of evidence.”
Fed. R. Civ. P. 37 advisory
comm.’s note, 2015 amend., subdiv. (e)(1).
The undersigned Magistrate Judge, however, “recommends that
the [ C]ourt . . . reserve its ruling as to [those Rule 37(e)(1)]
sanction[s] until trial to see how the evidence is presented.”
Brewer v. BNSF Ry. Co., No. CV-14-65, 2018 WL 3079499, at *6 (D.
Mont. Feb. 27, 2018) (unpublished), recommendation adopted, 2018 WL
2047581 (D. Mont. May 2, 2018) (unpublished); see also Conan v.
City of Fontana, No. EDCV 16-1261, 2017 WL 8941499, at *11 (C.D.
Cal. Oct. 6, 2017) (unpublished) (“[T]he [c]ourt defers ruling on
-31-
[the motion to exclude evidence of ESI spoliation] and will monitor
carefully the scope of questioning and argument on this issue.”
(all-cap font omitted)); Williams v. Klem, No. 3:07CV1044, 2010 WL
3812350, at *3 (M.D. Pa. Sept. 22, 2010) (unpublished) (“[P]retrial
rulings
curtailing
proof
should
rarely
be
granted
and
excluding evidence at the pretrial stage is an extreme measure that
is rarely necessary.” (internal brackets, ellipsis, and quotation
marks omitted)); C & E Servs., Inc. v. Ashland Inc., Civ. No. 031857, 2008 WL 1744600, at *3 (D.D.C. Apr. 14, 2008) (unpublished)
(“Trials are dynamic and in many of them evidence that seems
crucial when the trial begins proves not to be when other evidence
is received.”); Wilkins v. Kmart Corp., 487 F. Supp. 2d 1216, 1218
(D. Kan. 2007) (“[A] court is almost always better situated during
the actual trial to assess the value and utility of evidence.”);
Ebenhoech v. Koppers Indus., Inc., 239 F. Supp. 2d 455, 461 (D.N.J.
2002) (“[A] ruling [in limine] should not be made prematurely if
the context of trial would provide clarity.”).
E.
“[I]f
.
Intent to Deprive under Rule 37(e)(2)
.
.
Defendant[
Kormanis] acted
with
‘intent
to
deprive’ Plaintiff[] of the [text messages’] use, then the Court
may order more severe sanctions, including . . . an instruction to
the jury that it may or must presume the missing [text messages]
w[ere] unfavorable.”
Paisley Park Enters., 2019 WL 1036058, at *6
(quoting Fed. R. Civ. P. 37(e)(2)); see also Fed. R. Civ. P. 37
-32-
advisory comm.’s note, 2015 amend., subdiv. (e)(2) (“Subdivision
(e)(2) does not include a requirement that the court find prejudice
to the party deprived of the [ESI].”).
“Intent rarely is proved by
direct evidence, and a [fact-finder] has substantial leeway to
determine intent through consideration of circumstantial evidence,
witness credibility, motives of the witnesses in a particular case,
and other factors.
There need not be a ‘smoking gun’ to prove
intent [under Rule 37(e)(2)].”
1036058,
omitted).
at
*6
(internal
Paisley Park Enters., 2019 WL
citation
and
some
quotation
marks
Further, such a “credibility analysis and [related]
finding as to [a litigant’s] mental state,” Hunting Energy Servs.,
Inc. v. Kavadas, No. 3:15CV228, 2018 WL 4539818, at *11 (N.D. Ind.
Sept. 20, 2018) (unpublished), constitute “prototypical functions
of a jury and questions that [a] jury . . . [may] fairly evaluate
and
resolve,”
id.
Consistent
with
that
understanding,
the
commentary to Rule 37(e)(2) explicitly contemplates that the Court
may “conclude that the intent finding should be made by a jury, [in
which case] the [C]ourt’s instruction should make clear that the
jury may infer from the loss of [the text messages] that [they
were] unfavorable to [Defendant Kormanis] only if the jury first
finds that [he] acted with the intent to deprive [Plaintiff] of
th[eir] use in the litigation.”
Fed. R. Civ. P. 37 advisory
comm.’s note, 2015 amend., subdiv. (e)(2).
-33-
In this case, the parties have made contrasting arguments
about what ultimate factual finding the intent-related evidence
warrants.
his
(Compare, e.g., Docket Entry 85 at 11-12 (“[B]y leaving
alleged
thirty-day
deletion
policy
in
place,
Defendant
[Kormanis] intended that the text messages would be destroyed.
[His] false representations that [they] could be recovered . . .
supports a finding that he acted in bad faith with the intent to
deprive [Plaintiff] of these communications.”), with, e.g., Docket
Entry 86 at 10 (“The record reflects that the text messages at
issue here were deleted inadvertently as a result of the thirty-day
(30-day) automatic delete function being either accidentally or
automatically activated on [Defendant] Kormanis’[s] iPhone.”).)
Moreover:
These competing views each draw support from the record,
and in the final analysis may turn on the credibility of
[Defendant Kormanis]. Since these matters are fact-bound
and
inextricably
tied
to
witness
credibility
determinations, they are not well-suited to the type of
pre-trial ruling that [the instant Motion] seeks from the
Court.
. . .
Instead, [the undersigned Magistrate Judge]
believe[s] that this matter should be the subject of
proof at trial, and that [the question of] whether, and
to what extent, a[n adverse] spoliation inference is
warranted, [therefore also] should await trial . . . .
Williams, 2010 WL 3812350, at *3; see also Sosa v. Carnival Corp.,
No. 18-20957CIV, 2019 WL 330865, at *3 (S.D. Fla. Jan. 25, 2019)
(unpublished) (collecting cases where courts ordered “that the jury
would decide the [Rule 37(e)(2)] intent issue”).
-34-
In that regard, as justification for the position that “the
text messages at issue here were deleted inadvertently as a result
of the thirty-day (30-day) automatic delete function being . . .
accidentally . . . activated on [his] iPhone” (Docket Entry 86 at
10 (emphasis added)), Defendant Kormanis evidently relies on his
sworn statements (first in his affidavit filed with his Response to
the instant Motion and later at his deposition) (see Docket Entry
86-1 at 3 (“At some point prior to [Defendant Kormanis’s] receipt
of [InoSpine’s March 9, 2018] Letter, [he] unknowingly enabled a
setting on [his] iPhone that automatically erases all text messages
. . . after thirty (30) days of sending and/or receipt.”); Docket
Entry 100-1 at 7-8 (testifying that, in the course of responding to
Plaintiff’s
production
requests
(served
on
July
18,
2018),
Defendant Kormanis and his counsel “figured out that there was a
setting
activated
on
[Defendant
Kormanis’s]
phone
that
only
retained text messages for 30 days,” which he did not “recall
activating”
and
(suggesting
that,
did
not
during
“even
visit
know
about”),
regarding
14-15,
17-18
insufficient
photo
capacity in unknown year, employee at unknown Verizon store may
have activated 30-day text message deletion setting on Defendant
Kormanis’s iPhone (of unknown vintage) without telling him)).16
16
As
No evidence shows that Defendant Kormanis acquired his
iPhone with the 30-day text message deletion setting “automatically
activated” (Docket Entry 86 at 10); instead, the record material on
point tends to establish the opposite (see Docket Entry 88-1 at 2).
-35-
Plaintiff’s
Kormanis’s
Reply,
earlier
however,
sworn
correctly
responses
to
points
out,
Plaintiff’s
Defendant
production
requests “contain[ed] no reference to [his] purportedly unknowing
and/or accidental activation of an automatic deletion setting.
Rather, [they] state that the 30-day text retention policy was due
to storage limitations with his device.”
(Docket Entry 88 at 3.)
That shift in Defendant Kormanis’s account raises a legitimate
question about the credibility of his current explanation for the
loss
of
text
messages,
as
another
magistrate
judge
recently
observed in recommending that a jury resolve at trial a similar
Rule 37(e)(2) intent issue presented by a spoliation motion:
If in fact [Defendant Kormanis] was operating under a
misapprehension regarding the [text message] retention
schedule [on his iPhone], one would have thought he would
have informed [Plaintiff of that fact upon learning of
the 30-day deletion setting] . . . . But that’s not what
happened.
Failure
to
mention
something
under
circumstances when a reasonable person would do so is a
factor that courts have long approved as an organon for
measuring credibility.
BankDirect Capital Fin., LLC v. Capital Premium Fin., Inc., No.
15C10340,
2018
WL
1616725,
at
*7
(N.D.
Ill.
Apr.
4,
2018)
(unpublished).
Defendant Kormanis’s descriptions of his storage (or attempted
storage) of text messages on his computer also create credibility
questions that merit resolution at trial.
To begin, a reasonable
fact-finder could take note that Defendant Kormanis’s (abovequoted) sworn insistence (in his affidavit and his deposition) that
-36-
he did not learn that his iPhone deleted text messages on a 30-day
cycle until some time after July 18, 2018, appears in some tension
with his statements under oath (in his production request responses
and affidavit) that, on or about March 9, 2018, in deference to the
letter from InoSpine, he started copying text messages from his
iPhone to his computer (see Docket Entry 85-3 at 9-13; Docket Entry
86-1 at 2-3).
Specifically, if (on March 9, 2018) Defendant
Kormanis believed that text messages would remain on his iPhone
(because he did not know about the 30-day deletion setting), then
why would he need to begin saving his text messages on his computer
(rather than his iPhone) when he received the letter from InoSpine?
Defendant Kormanis’s deposition testimony only underscores
this incongruence, as he therein first answered “[r]eally none”
when asked to identify “[w]hat steps” he took to comply with
InoSpine’s letter (Docket Entry 100-1 at 10) and then added:
didn’t know I needed to do anything.
delete e-mails. . . .
“I
So you know, I just didn’t
I basically didn’t delete anything from my
phone.” (Id.) Moreover, when directly asked during the deposition
about “back[ing] up [his] cell phone” (id.), Defendant Kormanis did
not revert back to his prior sworn statements (quoted above) that
he had instituted that measure in response to InoSpine’s letter,
but rather claimed to have begun that (monthly) practice during his
time selling Plaintiff’s products (see id. at 11, 13).
-37-
The foregoing internal inconsistencies in Defendant Kormanis’s
recounting of events give reason to doubt his assertions that he
took “the affirmative step of backing up the contents of his phone
to his computer” (Docket Entry 86 at 4), that he “expect[ed] that
backing up [of] the contents of his iPhone to his computer would
have preserved all of the [lost text messages]” (id. at 4-5), and
that “this expectation is indicative of [his] intent to preserve
evidence in anticipation of litigation, not an intent to destroy
it” (id. at 5 (emphasis omitted)).
However, a final consideration
even more strongly counsels in favor of allowing a jury to resolve
the Rule 37(e)(2) intent issue:
The record indicates that, when
Defendant Kormanis produced text messages to Plaintiff, “[t]here
were no text messages within [that] production prior to August 5,
2018.” (Docket Entry 85-4 at 3 (emphasis added).)
That date falls
exactly 30 days before September 4, 2018, the date Defendant
Kormanis served his responses to Plaintiff’s production requests
(see Docket Entry 85-3 at 16), the latest possible date by which he
could have discovered that neither his iPhone nor his computer
contained properly preserved text messages from throughout 2018
(see id. at 9-13 (“[A]t this time, Defendant Kormanis has not been
able to retrieve [the requested text] messages from his personal
devices.”)).
Defendant
The lack of any earlier text messages suggests that
Kormanis
has
made
false
sworn
statements
about
downloading text messages from his iPhone to his computer, because:
-38-
1) even with a 30-day delete setting in place, on September 4,
2018, Defendant Kormanis’s iPhone would have held text messages
dating back to August 5, 2018; and
2) even if (unbeknownst to him) Defendant Kormanis’s iTunesbased, back-up system only preserved the most recent prior download
of his iPhone to his computer, that file would have contained a set
of 30 days of text messages that (almost certainly) would have
extended back well beyond August 5, 2018 (to 30 days before the
last monthly download he made from his iPhone to his computer).17
Simply put, the evidence in the record could sustain (but does
not mandate) a finding that, “[w]hen [Defendant Kormanis had to
admit] to [Plaintiff] that [the text messages] were gone, [he]
falsely blamed
deletion
it
setting
on
on
the
his
[undetected
iPhone
and
activation
falsely
of
claimed
a 30-day
to
downloaded copies of the text messages to his computer].
17
have
False
To conclude that, despite regularly making computer back-up
files of his iPhone throughout 2018, when Defendant Kormanis
responded to Plaintiff’s production requests on September 4, 2018,
both his iPhone and his computer contained no text messages dated
before August 5, 2018, one would have to believe that Defendant
Kormanis not only first noticed the deletion of text messages from
his iPhone on September 4, 2018, but also backed-up his iPhone to
his computer that same day (inadvertently replacing the older backup file of saved text messages with a new back-up file that, like
his iPhone, held only text messages dating back to August 5, 2018),
all without checking to see (and taking steps to preserve) whatever
older text messages he previously had managed to save on his
computer. “When one looks at all of the circumstances in the case,
[that explanation] seems a bit much to swallow . . . . [Certainly,
n]o reasonable adjudicator would be compelled to credit [that]
explanation[] . . . .”
BankDirect, 2018 WL 1616725, at *6
(internal quotation marks omitted).
-39-
exculpatory statements are often evidence of consciousness of
guilt.”
BankDirect, 2018 WL 1616725, at *11 (internal citation
omitted).
Viewed
from
that
perspective,
the
above-discussed
evidence regarding “the deletion of the [text messages] – or the
failure to stop their automatic deletion – is significant to [the
resolution of Plaintiff’s] claims [against Defendant Kormanis],
especially the claim that [he] . . . was going after [Plaintiff’s]
customers,” id. at *12, not just to the resolution of the instant
Motion’s request for sanctions under Rule 37(e)(2).
“Accordingly, it is recommended that the [C]ourt . . . allow
the appropriate evidence to be presented to the jury, which, under
proper instructions, [may then] determine the reasons for the nonproduction [of text messages] and the impact, if any, th[at] nonproduction . . . has on the merits of the parties’ claims [and
defenses].”
Id.; see also Hunting Energy, 2018 WL 4539818, at *11
(“If the jury accepts the defendant[’s] explanations [for the loss
of ESI], then an adverse inference would not be appropriate. . . .
[The defendant] will already be a witness in this case, and his
credibility will already be a central issue as to [the plaintiff’s]
claims, so allowing the jury to make th[e] finding [about whether
the defendant intended to deprive the plaintiff of the use of the
lost ESI] as well is appropriate.”).
-40-
III.
CONCLUSION
A loss of ESI (consisting of text messages to/from Defendant
Kormanis that he should have preserved in the anticipation and/or
conduct of litigation) occurred because he did not take reasonable
steps to preserve it.
No viable options existed to restore or
replace that ESI and Plaintiff suffered prejudice due to its
absence, warranting some sanctions, pursuant to Rule 37(e)(1).
However, the full extent of the harm to Plaintiff from this
spoliation (as well as the precise nature of all proportional,
corresponding
remedies)
remains
indeterminable
before
trial.
Finally, the present record permits (but does not require) a
finding that Defendant Kormanis acted with intent to deny Plaintiff
the use of the lost ESI for litigation, such that a decision about
the applicability of sanctions under Rule 37(e)(2) also should
occur within the framework of the trial.
IT IS THEREFORE ORDERED that Plaintiff’s Motion for Imposition
of Sanctions for Spoliation of Evidence (Docket Entry 85) is
GRANTED IN PART, in that:
1) Plaintiff may depose (and may subpoena text messages from)
Ashley Warrick beyond the discovery deadline and Defendant Kormanis
shall pay Plaintiff’s reasonable expenses, including attorney’s
fees, associated with that deposition (and any related subpoena);
2) on or before March 27, 2019, the parties shall file a joint
notice either confirming their resolution of all issues regarding
-41-
the payment of Plaintiff’s reasonable expenses from the deposition
of (and any related subpoena to) Mr. Warrick or setting out their
respective positions on any issue(s) regarding that payment that
remain in dispute after good-faith consultation;
3)
Defendant
Kormanis
shall
pay
Plaintiff’s
reasonable
expenses, including attorney’s fees, associated with drafting,
filing, briefing, and orally arguing the instant Motion; and
4) on or before March 27, 2019, the parties shall file a joint
notice either confirming their resolution of all issues regarding
the payment of Plaintiff’s reasonable expenses from drafting,
filing, briefing, and orally arguing the instant Motion or setting
out their respective positions on any issue(s) regarding that
payment that remain in dispute after good-faith consultation.
IT
IS
RECOMMENDED
that
the
Court
defer
until
trial
the
decision of whether other “serious measures are necessary to cure
prejudice [from the loss of text messages], such as forbidding
[Defendant Kormanis] from putting on certain evidence, permitting
the parties to present evidence and argument to the jury regarding
the loss of information, or giving the jury instructions to assist
in
its
evaluation
of
such
evidence
or
argument,
other
than
instructions [that it may or must presume the lost text messages
were unfavorable to Defendant Kormanis],” Fed. R. Civ. P. 37
advisory comm.’s note, 2015 amend., subdiv. (e)(1).
-42-
IT IS FURTHER RECOMMENDED that, because the record supports
but does not compel a “finding that [Defendant Kormanis] acted with
the intent to deprive [Plaintiff] of the [lost text messages’] use
in the litigation,” Fed. R. Civ. P. 37(e)(2), the Court submit that
issue to the “jury, [with] the [C]ourt’s instruction[s ] mak[ing]
clear that the jury may infer from the loss of the [text messages]
that [they were] unfavorable to [Defendant Kormanis] only if the
jury first finds that [he] acted with the intent to deprive
[Plaintiff] of the[ir] use in the litigation,” Fed. R. Civ. P. 37
advisory comm.’s note, 2015 amend., subdiv. (e)(2).
/s/ L. Patrick Auld
L. Patrick Auld
United States Magistrate Judge
March 13, 2019
-43-
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