Gaalla et al v. Citizens Medical Center et al

Filing 231

ORDER denying 203 Motion for Sanctions.(Signed by Judge Janis Graham Jack) Parties notified.(sscotch, )

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
AJAY GAALLA, et al,
Plaintiffs,
VS.
CITIZENS MEDICAL CENTER, et al,
Defendants.

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CIVIL ACTION NO. V-10-14

ORDER
On May 25, 2011, the Court held a hearing in the above-styled action to consider
Plaintiffs’ Motion to Seek Sanctions. (D.E. 203.)
Plaintiffs Harish Chandna, M.D., Dakshesh “Kumar” Parikh, M.D., and Ajay
Gaalla, M.D., request severe sanctions for what they allege to be Defendant Citizens
Medical Center’s (“CMC”) spoliation of evidence in this action.

The Motion for

Sanctions was originally based upon Plaintiffs’ contention that CMC had a duty to
preserve e-mails stored on CMC’s “back-up” tapes or “disaster recovery system,” which
continued to be overwritten on a seven or fourteen day basis, even after filing of this
lawsuit. As the briefing developed, Plaintiffs appeared to contend that even if deletion of
the back-up tapes themselves did not violate any preservation duty, CMC’s failure to
preserve the back-up tapes, in conjunction with CMC’s failure to take timely “snapshots”
(meaning a record of all items) of relevant e-mail accounts, and evidence that certain
CMC employees had deleted e-mails from their account at some point in the past, warrant
severe sanctions up to and including entering default judgment against CMC. Defendant
denies any breach of duty, as disaster recovery systems are rarely preserved even after
litigation commences, and explains that it issued a litigation hold notice to CMC

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employees in March 2010, after the filing of this action on February 24, 2010. Snapshots
were taken of relevant email accounts in April and July 2010.
Spoliation is the destruction or the significant and meaningful alteration of
evidence. Rimkus Consulting Group, Inc. v. Cammarata, 688 F. Supp. 2d 598, 612 (S.D.
Tex. 2010).

“Electronically stored information is routinely deleted or altered and

affirmative steps are often required to preserve it. Such deletions, alterations, and losses
cannot be spoliation unless there is a duty to preserve the information, a culpable breach
of that duty, and resulting prejudice.” Id. Further, in this circuit, the severe sanctions of
granting default judgment, striking pleadings, or giving adverse inference instructions
may not be imposed unless there is evidence of “bad faith.” Condrey v. SunTrust Bank of
Ga., 431 F.3d 191, 203 (5th Cir. 2005); King v. Ill. Cent. R.R., 337 F.3d 550, 556 (5th
Cir. 2003); United States v. Wise, 221 F.3d 140, 156 (5th Cir. 2000). “‘Mere negligence
is not enough’ to warrant an instruction on spoliation.” Russell v. Univ. of Tex. of
Permian Basin, 234 Fed. Appx. 195, 208 (5th Cir. 2007) (unpublished) (quoting Vick v.
Tex. Employment Comm'n, 514 F.2d 734, 737 (5th Cir.1975); see also King, 337 F.3d at
556) (“King must show that ICR acted in ‘bad faith’ to establish that it was entitled to an
adverse inference.”); Vick v. Tex. Employment Comm'n, 514 F.2d at 737 (“The adverse
inference to be drawn from destruction of records is predicated on bad conduct of the
defendant. Moreover, the circumstances of the act must manifest bad faith. Mere
negligence is not enough, for it does not sustain an inference of consciousness of a weak
case.” (quotation omitted)).
In this case, it is doubtful that CMC had any duty to preserve its “back-up tapes”
or “disaster recovery system.” As one court has explained, a “litigation hold does not

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apply to inaccessible backup tapes (e.g., those typically maintained solely for the purpose
of disaster recovery), which may continue to be recycled on the schedule set forth in the
company's policy. On the other hand, if backup tapes are accessible (i.e., actively used for
information retrieval), then such tapes would likely be subject to the litigation hold.
However, it does make sense to create one exception to this general rule. If a company
can identify where particular employee documents are stored on backup tapes, then the
tapes storing the documents of “key players” to the existing or threatened litigation
should be preserved if the information contained on those tapes is not otherwise
available. This exception applies to all backup tapes.” Zubulake v. UBS Warburg LLC,
220 F.R.D. 212, 218 (S.D.N.Y. 2003); see Maggette v. BL Devel. Corp., 2009 WL
4346062, at *2 (N.D. Miss. Nov. 24, 2009) (citing Zubulake); Consolidated Aluminum
Corp. v. Alcoa, Inc., 244 F.R.D. 335, 339 (M.D. La. 2006) (citing Zubulake). Plaintiffs
have not sufficiently demonstrated that any exception to this general rule is applicable,
necessitation preservation of back-up tapes.
Even if CMC had a duty to preserve disaster recovery emails, and in fact breached
that duty, sanctions would still not be warranted, as Plaintiffs have not submitted
sufficient evidence that CMC acted in “bad faith.” When the litigation began, CMC
issued a litigation hold to all employees, to cease deletion of emails. Soon after that,
CMC took a “snapshot” of certain employees’ email accounts who were identified as
having relevant knowledge. Further snapshots were taken in July 2010. Moreover, at the
May 25, 2011 hearing, counsel for CMC stated that the “first of the month” backups of
the CMC email system (for the period between November 2009 and November 2010)
have in fact been preserved, and are capable of being searched.

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The issue of retaining or searching the disaster recovery system was never ordered
or even addressed before this Court; indeed it appears that the parties never discussed it
until the present issue arose.

The Court concludes that CMC took reasonable

preservation steps in the context of this case, in light of CMC’s litigation hold notice and
the taking of “snapshots.” Rimkus, 688 F. Supp. 2d at 613 (“Whether preservation or
discovery conduct is acceptable in a case depends on what is reasonable, and that in turn
depends on whether what was done-or not done-was proportional to that case and
consistent with clearly established applicable standards.”). While it is certainly possible
that CMC could have done more, there is no evidence that CMC acted in bad faith, which
is necessary for the imposition of sanctions. Plaintiffs’ speculation that CMC employees
purposefully deleted relevant emails after the filing of this lawsuit is insufficient to
warrant the severe sanctions sought.
In light of the foregoing, the Court must deny Plaintiffs’ Motion for Sanctions.
(D.E. 203.) During the hearing, however, the Court addressed certain additional steps
that would allow Plaintiffs to conduct a further search of CMC’s email system. The
Court ORDERS as follows:
(1)

From May 25, 2011 until the Court orders otherwise, the e-mail accounts

of all persons designated by Plaintiffs shall be retained through a “journaling” process on
a regular basis (as described during the hearing), such that all e-mails are retained
indefinitely, and not deleted permanently;
(2)

From May 25, 2011 until the Court orders otherwise, the “disaster

recovery first of month” e-mail files (available from November 1, 2009 to November 1,
2010) shall be preserved in their current state. Plaintiffs’ expert (David McGroty) shall

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be allowed to search those emails, during normal business hours at the expert’s
convenience. The parties shall agree on the e-mail accounts to be searched on the
“disaster recovery first of month” system.
(3)

Defendant CMC shall search the e-mail accounts of (a) Loretta Salinas, (b)

Darlene Lewis, and (c) Donna Richterman and submit the results to Plaintiffs no later
than June 4, 2011.
(4)

The parties shall agree on a preservation order with respect to the e-mails

of CMC employees identified by Plaintiff, and submit that order to the Court.
(5)

Defendant shall pay the costs of the searches described above, subject to

reconsideration based upon the results of this search. Plaintiffs, however, shall pay costs
associated with their own expert.
SIGNED and ORDERED this 27th day of May, 2011.

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Janis Graham Jack
United States District Judge

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