TLS Management and Marketing Services LLC v. Rodriguez-Toledo et al

Filing 212

ORDER granting in part and denying in part 133 Motion for Sanctions. Signed by US Magistrate Judge Bruce J. McGiverin on March 27, 2017. (McGiverin, Bruce)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
TLS MANAGEMENT AND MARKETING
SERVICES LLC,
Plaintiff,
Civil No. 15-2121 (BJM)

v.
RICKY RODRIGUEZ-TOLEDO, et al.,
Defendants.
ORDER

TLS Management and Marketing Services, LLC (“TLS”) moved for spoliation
sanctions against Ricky Rodriguez (“Rodriguez”), Lorraine Ramos, Accounting Solutions
Group, Inc., and Global Outsourcing Services, LLC (collectively, “defendants”), Docket
Nos. 133, 152, and defendants opposed. Docket Nos. 138, 143. TLS contends that
defendants spoliated information electronically stored in Rodriguez’s laptop, iPhone, and
external hard drive. Docket No. 133 at 2. And TLS underscores that the “majority” of the
actions that led to spoliation of evidence occurred after this action was filed, and after TLS
asked defendants, in writing, that they preserve electronically stored information (“ESI”)
because ESI was “important” to this litigation. Docket Nos. 133 at 2, 133-1 at 15–22.
“Spoliation of evidence is defined as the destruction or significant alteration of
evidence, or the failure to preserve property for another’s use as evidence in pending or
reasonably foreseeable litigation.” Adorno v. Port Auth. of N.Y. & N.J., 258 F.R.D. 217,
227 (S.D.N.Y. 2009) (internal quotations omitted). “The party seeking sanctions” pursuant
to Federal Rule of Civil Procedure 37 “bears the burden of establishing all elements of a
claim for spoliation of evidence.” See id. The “2015 revisions to” Rule 37 “provide courts
further guidance on issuing sanctions for destroying or failing to preserve electronically
stored information.” Helget v. City of Hays, 844 F.3d 1216, 1226 (10th Cir. 2017). The
2015 revisions also amended Rule 37 “to reflect the common practice of producing copies

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of documents or electronically stored information rather than simply permitting
inspection.” Fed. R. Civ. P. 37 advisory committee’s note to 2015 amendment.
Rule 37(e) permits the court to impose sanctions “[i]f electronically stored
information that should have been preserved in the anticipation or conduct of litigation is
lost because a party failed to take reasonable steps to preserve it, and it cannot be restored
or replaced through additional discovery . . . .” See Fed. R. Civ. P. 37(e). Rule 37(e)(1)
provides that the court “may order measures no greater than necessary to cure the
prejudice.” Fed. R. Civ. P. 37(e)(1). “But where a party acts with the intent to deprive
another from using the ESI in litigation, a court may ‘presume that the lost information is
unfavorable to the party,’ issue an adverse-inference instruction, or ‘dismiss the action or
enter a default judgment.’” Helget, 844 F.3d at 1226 (quoting Fed. R. Civ. P. 37(e)(2)(A)–
(C)). To show prejudice resulting from the spoliation, “a party must only ‘come forward
with plausible, concrete suggestions as to what [the destroyed] evidence might have been.’”
Micron Tech., Inc. v. Rambus Inc., 645 F.3d 1311, 1328 (Fed. Cir. 2011) (quoting Schmid
v. Milwaukee Elec. Tool Corp., 13 F.3d 76, 79 (3d Cir. 1994) (emphases added)).
Here, TLS commenced this action in August 2015 and informed defendants the
following month that they should preserve information electronically stored in cellphones,
hard drives, and computers because such data was “important” to this litigation. Yet,
Rodriguez readily admits that he discarded the laptop in November 2015 because it was
“malfunctioning.” Docket Nos. 133 at 3, 138 ¶ 8. And he similarly admits to deleting the
contents of his external hard drive after transferring the data therein to a USB flash drive
that he provided to the attorney representing him in this litigation. Docket No. 138 ¶ 10.
To show prejudice arising from the discarded laptop, TLS “plausibly suggests” that
this device “might have” contained documents or information relevant to this action
because Rodriguez admitted that he used the laptop to access the Dropbox account where
TLS kept confidential information. See Micron Tech., 645 F.3d at 1328. Rodriguez should
not have discarded the laptop—because the “fact that a personal computer stops

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functioning is by no means a death knell for the data it contains.” See Dorchester Fin.
Holdings Corp. v. Banco BRJ S.A., 304 F.R.D. 178, 182–83 (S.D.N.Y. 2014) (it is “widely
understood that computer specialists can often recover data from a failed computer, even
when the hard drive has malfunctioned”); Aliki Foods, LLC v. Otter Valley Foods, Inc., 726
F. Supp. 2d 159, 173 (D. Conn. 2010) (court ordered forensic examination of hard drive
“in an attempt to mitigate the damage caused by the hard drive’s alleged failure,” and
further ordered the party responsible for spoliation to pay “the first $10,000 of the cost of
the forensic examination as a sanction”); Treppel v. Biovail Corp., 249 F.R.D. 111, 124
(S.D.N.Y. 2008) (court permitted forensic examination of laptop to determine whether lost
information subject to discovery was recoverable from that device).
And because—after TLS informed Rodriguez that the he should preserve any
computers containing electronically stored information—Rodriguez discarded the laptop
without making any attempt whatsoever to preserve all the potential ESI within, including
potential metadata or files not copied or transferred elsewhere, I find that Rodriguez acted
with the intent to deprive TLS from using ESI in litigation. See Fed. R. Civ. P. 37(e)(2);
Dorchester Fin. Holdings Corp, 304 F.R.D. at 184 (where party “violated its duty to
preserve the data on [a] computer by destroying the device after its alleged crash, without
making any reasonable effort to retrieve the information it contained,” court found that
adverse-inference instruction was appropriate); see also Beck v. Test Masters Educ. Servs.,
Inc., 289 F.R.D. 374, 378 (D.D.C. 2013) (adverse-inference instruction warranted where
computer crashed and party “failed to make any serious effort to recover the data”).
To show prejudice arising from the deletion of the external hard drive’s contents,
TLS “plausibly suggests” that this device “might have” contained documents or
information relevant to this action because Rodriguez admitted that he copied TLS’s
confidential Dropbox files onto the external hard drive. See Micron Tech., 645 F.3d at 1328.
Because Rodriguez completely deleted the information on the external hard drive—which
may or may not have been coextensive with the information transferred onto the USB flash

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drive provided to Rodriguez’s attorney—I further find that Rodriguez acted with the intent
to deprive TLS from using ESI in litigation. See E.I. du Pont de Nemours & Co. v. Kolon
Indus., Inc., 803 F. Supp. 2d 469, 506 (E.D. Va. 2011) (“when the electronically stored
information was deleted, there was alteration of evidence”); E*Trade Sec. LLC v. Deutsche
Bank AG, 230 F.R.D. 582, 590 (D. Minn. 2005) (court found bad faith where party “chose
to retain certain documents prior to the destruction of the hard drives”). And because the
external hard drive, unlike the laptop and the iPhone, still exists, TLS requests a forensic
examination of that hard drive at defendants’ expense. I find that this additional sanction,
which may ameliorate the prejudice caused by the spoliation of ESI, is warranted. See Fed.
R. Civ. P. 37(e)(1); see also Wynmoor Cmty. Council, Inc. v. QBE Ins. Corp., 280 F.R.D.
681, 687 (S.D. Fla. 2012) (court ordered a forensic examination to determine if electronic
files that a party described as “unrecoverable” could in fact be retrieved).
To be sure, defendants suggest that sanctions are unwarranted, arguing that the
information on Rodriguez’s laptop and external hard drive was copied to a cloudcomputing service and USB flash drive, respectively. Docket No. 138 ¶¶ 8, 9. “If it is shown
that the spoliator acted in bad faith, the spoliator bears the ‘heavy burden’ to show a lack
of prejudice to the opposing party because ‘[a] party who is guilty of . . . intentionally
shredding documents . . . should not easily be able to excuse the misconduct by claiming
that the vanished documents were of minimal import.’” Micron Tech., 645 F.3d at 1328
(quoting Anderson v. Cryovac, Inc., 862 F.2d 910, 925 (1st Cir. 1988)). Defendants have
not met that heavy burden here, as they have not proffered clear and convincing evidence
that all information that might have been electronically stored on the laptop and the external
hard drive—including, say, metadata—is discoverable from the information transferred to
the cloud-computing service and the USB flash drive. See, e.g., CBT Flint Partners, LLC
v. Return Path, Inc., 737 F.3d 1320, 1329 (Fed. Cir. 2013) (“the mere act of copying a file
may destroy certain types of metadata”). Thus, sanctions are warranted for spoliation of
information electronically stored in Rodriguez’s laptop.

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The loss of the iPhone does not warrant the same treatment as the previous two
devices. Rodriguez admits that he used an iPhone during his employment at TLS, but
asserts that he lost that cellphone. Docket Nos. 133 at 6, 138 ¶ 9. TLS plausibly suggests
that it has been prejudiced by the loss of this cellphone because Rodriguez admitted that
he used the iPhone while employed at TLS to access TLS’s Dropbox. Docket No. 133 at
6. But TLS has not proffered sufficient evidence to suggest that Rodriguez’s iPhone was
not inadvertently “lost,” nor has TLS clarified the approximate time period when this loss
occurred. Because the approximate time period when the phone was “lost” is unclear from
the motions before the court, and because TLS bore the burden of clarifying this time
period, I find insufficient evidence to conclude that Rodriguez had a duty preserve the ESI
stored on his iPhone “in the anticipation or conduct of litigation” and that he failed to do
so. See Fed. R. Civ. P. 37(e). Thus, sanctions are unwarranted, based on the current state of
the evidentiary record, for ESI that might have been lost when Rodriguez “lost” his iPhone.
For the foregoing reasons, TLS’s motion for spoliation sanctions is GRANTED IN
PART AND DENIED IN PART. An adverse-inference instruction is warranted as to the
ESI willfully discarded or deleted from Rodriguez’s laptop and external hard drive. And
defendants are ordered, at their expense, to permit a forensic examination of Rodriguez’s
external hard drive. TLS’s further requests for spoliation sanctions, which include entry of
default judgment against defendants and attorneys’ fees, are denied.
IT IS SO ORDERED.
In San Juan, Puerto Rico, this 27th day of March 2017.
S/Bruce J. McGiverin
BRUCE J. MCGIVERIN
United States Magistrate Judge