Kettler International, Inc. v. Starbucks Corporation

Filing 145

OPINION & ORDER entered and filed 4/7/15: This matter is before the Court pursuant to Plaintiff Kettler International, Inc.'s ("Plaintiff or "Kettler") Motion for Sanctions ("Motion"). Doc. 35. At a hearing held on Janu ary 20, 2015, the Court ruled from the bench and granted the Motion in part, finding that Defendant Starbucks Corporation's ("Defendant" or "Starbucks") conduct constituted spoliation, but withheld the imposition of sanctions pending further briefing. Doc. 62. For the reasons set forth herein, the relief sought in the Motion is GRANTED IN PART and DENIED IN PART. For the reasons set forth herein, Starbucks' conduct merits limitation of the damages it can recover to that arising from the 200 remaining sample chairs and the "Robert's Chair." Because this ruling severely limits the damages available to Starbucks if it prevails upon the merits of its claims, the Court exercises its discretion to DE NY Kettler's prayer for attorney fees and costs incurred in the prosecution of its spoliation motion. (See Opinion and Order for Specifics) (Signed by District Judge Henry C. Morgan, Jr. on 4/7/15). Copies provided as directed 4/7/15. (ecav, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
Norfolk Division

KETTLER INTERNATIONAL, INC.,
Plaintiff,

v.

Civil Action No. 2:14cvl89

STARBUCKS CORPORATION,
Defendant.

OPINION & ORDER

This matter is before the Court pursuant to Plaintiff Kettler International, Inc.'s

("Plaintiff or "Kettler") Motion for Sanctions ("Motion"). Doc. 35. At a hearing held on
January 20, 2015, the Court ruled from the bench and granted the Motion in part, finding that
Defendant Starbucks Corporation's ("Defendant" or "Starbucks") conduct constituted spoliation,
but withheld the imposition ofsanctions pending further briefing. Doc. 62. For the reasons set
forth herein, the relief sought in the Motion is GRANTED IN PART and DENIED IN PART.
I. BACKGROUND

A. Factual Background

This declaratory judgment action arises out of allegedly defective patio furniture sold by
Plaintiff to Defendant. From approximately 2009 to 2013, Plaintiff began selling Carlo Model

chairs ("Carlo chairs" or "chairs") to Starbucks, its agents, and/or its contractors. Compl. at 1, 4.
Over the course of this relationship, Starbucks its agents, and/or its contractors ultimately

purchased approximately 13,870 individual Carlo chairs. Doc. 77 at 1. Of these 13,870 chairs, it
was determined that 4,791 chairs were unaccounted for and had likely been destroyed in the

ordinary course of prior store renovations.' Id at 29. The genesis of the present dispute can be
traced to January 1, 2011, when Starbucks customer Hae Jee was involved in an accident in a
Los Angeles' Starbucks when the leg of aCarlo chair in which she was sitting broke. Doc. 43 at
3. "Between 2011 and 2013, Starbucks received complaints of four (4) alleged personal injuries

involving the sudden collapse ofaCarlo chair." hi In aletter dated April 19, 2012, Defendant's
third-party claim administrator notified Kettler of Ms. Jee's claim, Doc. 43, Ex. 3at 62, and the
same administrator notified Kettler on August 20, 2012 of a second claim involving another
Starbucks customer, Mr. Craig Roberts. Doc. 43, Ex. 4 at 2.

Concerned about the Carlo chair, Starbucks' Legal commissioned SGS North America

("SGS") to test the chair through a"Service Request Form" signed on September 20, 2013, Doc.
71, Ex. 14, and SGS received asample chair on October 18, 2013. Doc. 43, Ex. 3at 32. SGS

prepared its report on November 11, 2013, which indicated that the Carlo chair failed certain
impact tests. I_d It appears that only one chair was tested by SGS, see id ("Sample Description:
Outdoor Chair"), and on the September 20, 2013 "Service Request Form" submitted by

Starbucks Legal, Starbucks requested the sample chair be destroyed after thirty days.2 Doc. 71,
Ex. 14. On February 17, 2014, Starbucks and DAVACO, Inc. ("DAVACO") entered into a
contract for the removal and "recycling" ofall Carlo chairs. Doc. 36, Ex. 5 at 2; Doc. 43, Ex. 1

at 1. In fact, Starbucks Legal requested the services. Doc. 36, Ex. 5at 2. After consulting SGS

regarding sample sizes, Starbucks asked DAVACO to set aside and store 200 of the removed
chairs. Doc. 43, Ex. 2 at 2. "Starbucks did not ask DAVACO to select the two hundred (200)
1This fact is not necessarily relevant to Starbuck's spoliation, but does play arole in Kettler's argument that the 200
chair sample size was not representative ofthe original 13,870 chair lot size.

2On the "Service Request Form," Starbucks had the option ofchecking one of two boxes relating to the test chair,
the "Return Sample Immediately" box or the "Destroy/Discard Sample after 30 days" box. Starbucks1 checked the
"Destroy/Discard" box.

Carlo chairs to be set aside and stored on the basis of any physical criteria, including any
observable defect, quality or characteristic."3 Id
The first chairs were removed on March 17, 2014, id at 3, and while removal of the

chairs was ongoing, on April 8, 2014 Starbucks sent Kettler aletter titled "Notice of Breach of
Warranty (Commercial Code Section 2607)." Kettler Intern.. Inc. vStarbucks Corp., _ F. Supp.

3d _, 2014 WL 5461842, at *2 (E.D. Va. October 21,2014); see also Doc. 36, Ex. 1at 9. In the
letter, Starbucks informed Kettler that it had experienced failures in some of the Carlo chairs and
that third-party laboratory testing confirmed these failures. Id As aresult, Starbucks stated that
it had begun collecting and recycling the chairs and it would retain a"discrete sampling" of them

for inspection. Id The letter also informed Kettler that Starbucks' counsel was "instructed to
initiate legal proceedings against Kettler to compel Kettler to make good on the warranties and
misrepresentation," and Starbucks informed Kettler that it would "pursue its remedies arising
from the purchase of all Carlo chairs, plus consequential and incidental damages related to the
removal, storage and recycling of said Carlo chairs." Id

On April 10, 2014, Kettler replied to this letter and asked Starbucks to provide test
results, incident reports, an exact count of the defective chairs, and all other relevant information.

Id Starbucks did not respond to this letter. Id On April 21, 2014, Kettler again mailed aletter
to Starbucks asking it to provide proof that the allegedly defective chairs were purchased within

the last year and thus covered by the one-year warranty. 14 Ina subsequent letter, counsel for
Starbucks informed Kettler he did not know when the remaining chairs were manufactured or

how many Starbucks had already recycled. Id On May 2, 2014, Kettler responded by alerting
Starbucks ofits "obligation to preserve every chair upon which aclaim is being made," Doc. 36,
3Adetailed table showing the removal of chairs was provided in the affidavit submitted by DAVACO's Director of
Operations.
3

Ex. 1at 19 (emphasis in original), and Starbucks was served with the present action on May 7,
2014. Doc. 3. The last of the chairs appear to have been removed on May 18, 2014. Doc. 43,
Ex. 2 at 2.

B. Procedural History

On May 2, 2014, Kettler filed its three-count Complaint in this Court seeking declaratory

judgment that (1) it has not breached any warranty; (2) it has not breached any contractual term;
and (3) that Starbucks is not entitled to rescission. Doc. 1. According to Plaintiff, "Starbucks
destroyed 1,584 chairs after KETTLER demanded Starbucks preserve them and 489 chairs
after KETTLER served this lawsuit on Starbucks." Doc. 44 at 1(emphasis in the original).

At a hearing on October 16, 2014, this Court first alerted counsel for Starbucks to Silvestri v.
General Motors, 271 F.3d 583 (4th Cir. 2001) by stating, "[a]nd you better save the chairs. You

better not recycle them, because if you do you risk losing any rights you have against Kettler for
defective chairs." Doc. 33 at 31.

On October 29, 2014, Starbucks filed its Answer and Counterclaim. Doc. 31. The

Counterclaim contains four counts: (1) breach of express warranties, (2) breach of implied

warranties, (3) breach of contract, and (4) negligent misrepresentation. Id Therein, Starbucks

argues that the Carlo chair "fails to meet chair standards specified by the [Business and
Institutional Furniture Manufacturer's Association] BIFMA with respect to leg strength as the
result of a manufacturing and/or design defect." Countercl. at 24 (emphasis added). Plaintiff
filed its Motion for Sanctions on November 17, 2014, Doc. 35, and in its supplemental filing

advised the Court ofspecific chairs that Starbucks has destroyed: (1) the chair(s) involved in the

SGS testing that Starbucks performed prior to bringing suit; (2) the chair involved in the Hae Jee

litigation in California state court; and (3) two of the other three chairs that Starbucks identified
as having been involved in accidents at its stores. Doc. 55 at 2.

At the hearing on the Motion for Sanctions, "the Court found that Starbucks' conduct

amounted to spoliation" because, "[ajfter anticipating litigation, Starbucks engaged in acourse of
conduct that resulted in the destruction of over 7,000 chairs." Doc. 62 at 8. The Court "was

faced with the question of what the appropriate sanctions should be," as "dismissal should be
avoided ifa lesser sanction will perform the necessary function." Id at 9 (quoting Silvestri, 271

F.3d at 590). Kettler now argues that, on top of attorney's fees and costs, the Court should
sanction Starbucks by "dismissing" all of Starbucks' claims except those pertaining to the 200

remaining Carlo chairs. Doc. 77 at 1. They argue this remedy is proper "(1) because Starbucks'

willful spoliation of almost all of the evidence in this case is egregious and outrageous; (2)
because evidence developed in discovery shows that the sample of chairs is not representative of
all Carlo chairs; and (3) because KETTLER has been substantially denied the ability to defend
its claim." Id. at 2.
II. LEGAL STANDARDS

'"When a party destroys, alters or fails to preserve property for use as evidence in
reasonably foreseeable litigation such that the judicial process is disrupted,' a district court may

use its inherent power to control the judicial process to determine an appropriate sanction to the
extent necessary to redress conduct which disrupts the trial process." Taylor v. Mitre Corp., No.
I:llcvl247, 2012 WL 5473715, at *4 (E.D. Va. Sep. 10, 2012) (quoting King v. Am. Power
Conversion Co.. 181 F. App'x 373, 376 (4th Cir. 2006)), adopted by. Taylor v. Mitre Corp., No.

1:1 lcvl247, 2012 WL 5473573 (E.D. Va. Nov. 8, 2012). Such sanctions may include, inter aha,

dismissal or judgment by default, preclusion of evidence, an adverse inference instruction, a

monetary fine, and/or an assessment of attorney's fees and costs. Taylor, 2012 WL 5473715, at
♦4.

"When imposing sanctions, 'the trial court has discretion to pursue a wide range ofresponses

both for the purpose of leveling the evidentiary playing field and for the purpose of sanctioning
the improper conduct.' But dismissal should be avoided if a lesser sanction will perform the
necessary function." Silvestri, 271 F.3d at 590 (quoting Vodusek v. Bayliner Marine Corp., 71
F.3d 148, 156 (4th Cir. 1995); West v. Goodvear Tire &Rubber Co., 167 F.3d 776, 779 (2d Cir.
1999)) (internal citations omitted).

In order to use the sanction of dismissal, "the district court must consider both the

spoliator's conduct and the prejudice caused and be able to conclude either (1) that the spoliator's
conduct was so egregious as to amount to a forfeiture ofhis claim, or (2) that the effect of the

spoliator's conduct was so prejudicial that it substantially denied the defendant the ability to
defend the claim." Silvestri, 271 F.3d at 593. In order to justify dismissal, the United States

Court of Appeals for the Fourth Circuit requires a certain level of mental culpability, which is
measured in accordance with the level of prejudice the innocent party suffered. Id Stated

succinctly, the more prejudice suffered, the less culpability required for dismissal. See id In
Silvestri. the Fourth Circuit granted the sanction of dismissal when the spoliator attorney's

conduct "may have been either deliberate or negligent," id, and in a later case clarified that "the

alleged destroyer must have known that the evidence was relevant to some issue in the
anticipated case, and thereafter willfully engaged in conduct resulting in the evidence's loss or
destruction." Turner v. United States. 736 F.3d 274,282 (4th Cir. 2013).

In Projects Management Co. v. Dvncotn Intern. LLC, the Fourth Circuit emphasized that

the following factors "must" be considered "[bjefore exercising its inherent power to dismiss a

case based on the wrongdoing of a party in the judicial process." 734 F.3d 366, 373 (4th Cir.

2013) (emphasis added).

(1) the degree of the wrongdoer's culpability; (2) the extent of the client's
blameworthiness if the wrongful conduct is committed by its attorney,

recognizing that we seldom dismiss claims against blameless clients; (3) the
prejudice to the judicial process and the administration ofjustice; (4) the prejudice

to the victim; (5) the availability of other sanctions to rectify the wrong by

punishing culpable persons, compensating harmed persons, and deterring similar

conduct in the future; and (6) the public interest.

Id. at 373-74 (quoting United States v. Shaffer Equipment Co., 11 F.3d 450, 462-63 (4th Cir.

1993)). in Projects Memt.. the Fourth Circuit upheld adistrict court's decision to dismiss aclaim
due to extreme misconduct during discovery because the district court inherently weighed all six
relevant factors and thus did not abuse its discretion. Jd at 374, 377. Ifa court is considering

dismissal, each of these factors must be weighted in determining if the test as set forth in
Silvestri has been met.4
A. Case Law Analysis

In this Circuit, spoliating conduct meriting dismissal has included avast array ofmissteps

and transgressions,5 but not every case ofspoliation merits dismissal. See e.g., Suntrust Mortg.,

Inc., 508 F. App'x at 255 (even though e-mails were fraudulently altered and spoliation did
occur, the innocent party was not significantly prejudiced by the occurrence as the original
evidence was retrieved and presented before the court for merit determinations). Interestingly,
the United States District Court for the Southern District of West Virginia was faced with its own
4The Fourth Circuit in Suntrust Mortq.. Inc. v. United Guar. Residential Ins. Co. ofNorth Carolina, 508 F. App'x.

243,254-55 (4th Cir. 2013) implied that district courts are required to consider both the Sjjyestri test and the Shaffer
factors when considering the sanction of dismissal.

sSuch conduct has included obstruction ofdiscovery consisting of a "woefully inadequate deposition," four month

failure to respond to interrogatories, and spoliation ofa necessary computer and smart phone, First Mariner Bank,

2014 WL 1652550 at *18; destruction ofthe relevant automobile in an auto accident case in conjunction with the

availability ofonly incomplete and indefinite evidence preserved by the spoliator, Silvestri, 271 F.3d at 594; use of

"Evidence Eliminator" software on a plaintiffs laptop, Tavlor. 2012 WL 5473715 at *3; and the destruction ofan

essential Uninterrupted Power Source unit in an arson case, which may have caused the fire, after notice ofthe claim
and in conjunction with only the availability ofinconclusive findings gathered by the spoliators, King, 181 Fed.
Appx. at 378.

"broken chair" spoliation case back in 2005. Nichols v. Steelcase. Inc., No. 2:04-0434,2005 WL
1862422 (S.D.W.V. Aug. 4, 2005).

In Nichols, apostal worker went to sit at a nearby workstation in order to begin routing

mail for the day when the chair immediately collapsed. Id at *1. After the incident occurred,
the chair was pulled from the floor and transported to a side room where it remained "for
months, but-maybe even years." Id at *2 (internal quotation marks omitted). The chair at issue
in this case was manufactured by Steelcase, Inc., and the Product Safety Manager for that

company acknowledged there had been complaints of a related nature regarding that particular
model chair. Id at *3. The chair, however, disappeared at some unknown time prior to the
litigation and could not be produced. Id at *5.

The chair manufacturer contended, as does Kettler in the present matter, that "[bjecause

there was no evidence to show that the chair was used properly during its lifetime" and plaintiff

was under a duty to retain the chair, it was severely prejudiced in defending the action. Id The

injured plaintiff, as Starbucks does here, argued that circumstantial evidence established the
defect and that its expert was able to deduce what likely caused the malfunction. Id Further, the

plaintiff in Nichols argued "that the defect identified by his expert was one for which Steelcase
had received previous customer complaints" such that the malfunction could be established. Id

In regards to spoliation, the court concluded that the chair was clearly material evidence, but that
there was no evidence the plaintiff acted in bad faith or egregious conduct occurred. Id at 9.
The court also concluded that because there were multiple witnesses to the incident, there was

both lay and expert testimony supporting the defense that the chair did not malfunction, and there

was expert testimony as to possible alternative causes of the malfunction, the absence of the
chair did not severely prejudice the defense. Id at 9-10.

B. Alternative Sanction Options

One possible alternative to dismissal is a'"spoliation inference,' which is an inference that
the evidence no longer available would have been adverse to the party that made it unavailable."
F.vans v. Medtronic. Inc.. No. 3:04cv97, 2005 WL 3547240 at *13 (W.D. Va. Dec. 27, 2005).

Such an inference is appropriate if the spoliators (1) should have anticipated litigation

surrounding the evidence and "(2) their willful conduct resulted in the destruction of the
evidence." Id at 14. Another alternative is for the Court to award costs orattorney's fees, which

are generally appropriate in four situations: (1) "fees in favor of the moving party as an
alternative to dismissal or an adverse jury instruction;" (2) "discovery costs to the moving party

if additional discovery must be performed after a finding that evidence was spoliated;" (3) an

award of a prevailing party's reasonable expenses, including attorney's fees, in addition to

another spoliation sanction; and (4) an award of aprevailing party's "reasonable costs associated
with the motion pjus any investigatory costs into the spoliator's conduct," in addition to another

spoliation sanction. Goodman v. Praxair Services. Inc.. 632 F. Supp. 2d 494, 524 (D. Md. 2009)
(emphasis in original).
III. ANALYSIS

In its Counterclaim, Starbucks alleged the following: (1) breach of express warranties as

to "all Carlo Patio chairs purchased for use by STARBUCKS stores," Doc. 31 at 27; (2) breach

of implied warranties as to "all Carlo Patio chairs purchased for use by STARBUCKS stores,"
id; (3) breach of contract as to all those Carlo chairs delivered that did not meet "their intended
purpose . . . and/or failed to meet industry standards for leg strength," id at 29-30; and (4)

negligent misrepresentation as to all Carlo chairs by representing they were "free from defects in
design, workmanship and materials, and that the Carlo Patio chair was suitable and safe for use

as outdoor seating furniture," id at 30. In order for the remedy of dismissal to be proper, the
Court must be satisfied that, after analyzing the Shaffer factors, either (1) Starbucks' "conduct

was so egregious as to amount to a forfeiture" of all its claims or (2) the effect of Starbucks'
"conduct was so prejudicial that it substantially denied the defendant the ability to defend the
claim." Silvestri, 271 F.3dat593.

A. Egregiousness of Starbucks* Conduct

The Court has already determined that Starbucks' actions in this matter amounted to

spoliation. Doc. 62. The question now presented is whether under the first two Shaffer factors,
"(1) the degree of the wrongdoer's culpability" and "(2) the extent of the client's
blameworthiness," 11 F.3d at 462-63, Starbucks' actions were so egregious as to merit forfeiture
of its claims under Silvestri. The origins ofStarbucks' willful destruction ofthe Carlo chairs can

be traced to September 20, 2013, when Starbucks Legal indicated on the SGS "Service Request
Form" that itdesired the sample chair be destroyed/discarded following testing. Doc. 71, Ex. 14.
This Court found that Starbucks' "duty to preserve started in October 2013," yet from that point

forward Starbucks Legal directed the destruction ofover 7,000 Carlo chairs. Doc. 62 at 8. This

action is compounded by the fact that on April 10, 2014, Kettler demanded Starbuck' preserve

any chairs it claimed were defective, but Starbucks destroyed an additional 1,584 chairs between

April 10, 2014 and May 7, 2014 when the complaint was served, Doc. 44 at 8, and then another
489 chairs after it was served with the present lawsuit. W. Such conduct was not the result of
mere negligence.

"The duty to preserve material evidence arises not only during litigation but also extends
to that period before the litigation when a party reasonably should know that the evidence may

10

be relevant to anticipated litigation." Silvestri, 271 F.3d at 591.6 Starbucks cannot claim

ignorance as to its responsibilities in this matter, and it is clear from the evidence at hand that
Starbucks both knew "the evidence was relevant to some issue in the anticipated case, and

thereafter willfully engaged in conduct resulting in the evidence's loss or destruction." Turner,
736 F.3d at 282. The Court FINDS that the actions taken by Starbucks in this case were willful,
not mere negligence.

In contemplating the level of egregiousness present, Starbucks' conduct in this matter
does not rise to the level of conduct present in cases such as Taylor, 2012 WL 5473715, at *6,

where the "[pjlaintiff installed Evidence Eliminator on his laptop computer three days after []
[the court's] order that he submit to a computer inspection," or Victor Stanley. Inc. v. Creative

Pipe. Inc.. 269 F.R.D. 497, 514-15 (D. Md. 2010), where ESI was so willfully destroyed by the
defendants during litigation that the judge stated it constituted "the single most egregious

example of spoliation that I have encountered." Neither, however, is Starbucks' conduct merely
negligent, such as the unexplained loss of the chair at issue in Nichols, 2005 WL 1862422 at *5.
Starbucks' conduct here seems to fall between the two extremes and is comparable to the

spoliator's conduct in Silvestri. In Silvestri. the plaintiff, his attorney, and their team ofexperts

preserved the accident vehicle in its post-accident condition for two months while contemplating
litigation, but made no effort to prevent spoliation of the vehicle so that the defendant might be
able to inspect it. 271 F.3d at 590. Here, the Court is not faced with a situation in which
Starbucks merely did nothing to preserve evidence, but rather it took an active role in destroying

the vast majority ofthe evidence upon which it is now basing its claims. Starbucks' conduct is
6This principle is not exclusive to the Fourth Circuit, as in the Ninth Circuit "'[a]s soon as a potential claim is
identified alitigant is under aduty to preserve evidence which it knows or reasonably should know is relevant to the
action.'" Apple Inc. v. Samsung Electronics Co.. Ltd. 888 F. Supp. 2d 976, 991 (N.D. Ca. 2012) (quoting In_re
Napster. Inc. Copyright Litigation. 462 F. Supp. 2d 1060, 1067 (N.D. Ca. 2006)).
11

somewhat mitigated as it did preserve what it characterized as an appropriate sampling of the
chairs, and did make said chairs, along with the "Roberts" chair, available to Kettler for
inspection. Doc. 91 at 5, 11.

When analyzing these facts under the two Shaffer factors, "(1) the degree of the

wrongdoer's culpability" and "(2) the extent of the client's blameworthiness," 11 F.3d at 462-63,
the Court FINDS that Starbucks had a significant degree of culpability in the matter and that

because "Starbucks Legal" itself was responsible for the destruction ofthe chairs, the client is
blameworthy.

B. Prejudice Suffered

Plaintiff primarily argues that the 200 chair sample is not representative of the

approximately 13,000 chairs sold to Defendant over the course of the business relationship and
on which Defendant is basing its claims. Doc. 77 at 2. It argues that Defendant's expert has

admitted the alleged defect does not apply to all chairs and as such, simply taking a sample of
chairs would have been inappropriate regardless of any spoliation. Id In analyzing the
voluminous records before this Court, Kettler's specific arguments as to prejudice suffered are

summarized as follows: Starbucks willfully destroyed material evidence on which it is basing its

claims and then proceeded to unilaterally create a mathematically improper and unrepresentative

sample of chairs and cannot explain how the sample was created, how the chairs were
maintained, where they came from, how old they were, and whether or not they were damaged

during the collection process. See Doc. 77 at 2. Kettler claims that its inspection of the sample
chairs on January 13, 2015 did little to cure the prejudice it suffered as their inspector, VicePresident of Finance Mark Mannix, "was not able to determine the age of the chairs, the stores

from which the sample came, how long the chairs had been in use, whether the chairs had been
12

misused, whether the chairs were in the same condition as when they left their respective stores,
or whether the chairs in the sample were in the same condition as the chairs Starbucks already
destroyed." Id at 30.

Starbucks argues that Kettler would not be prejudiced in defending its claims because

Starbucks is not the only purchaser of Carlo chairs to have complained of chair failures and weld
breaks. Doc. 91 at 3. For example, Starbucks claims that Kettler has access to fifty-seven Carlo
chairs returned to the Kettler warehouse by Fat Canary in Williamsburg, Virginia, and that at

least eight of the chairs have weld breaks. Id Overall, Starbucks is proceeding under atheory
similar to that in Nichols, where the court permitted the case to move forward because "the

defect identified by his expert was one for which [the defendant] Steelcase had received previous
customer complaints." 2005 WL 1862422, at *5. Starbucks further argues that Plaintiffs

findings following their examination of the 200 chairs in January should be discounted as the
inspection was not conducted by an expert but rather by Kettler's Vice-President of Finance.
Doc. 91 at 5.

Lastly, Starbucks argues that Kettler is not prejudiced because Starbucks' theory is

partially one of design defect. Id at 22. It argues that case law supports the theory "that the
potential for prejudice is much less in a design defect case" following spoliation because the
defect would theoretically apply to every item in the product line. Schmid v. Milwaukee Elec.
Tool Corp., 13 F.3d 76, 80 (3d Cir. 1994); see also Ouaile v. Carol Camble Co.,No. 90-7415,

1993 WL 53563 (E.D. Pa. 1993) (where summary judgment was not granted after the destruction

of an allegedly defective lamp because the theory was that all the lamps were defectively

designed). Since Starbucks relies on this theory, it is important to note that in each of the cases it

13

cites there was no bad faith in the destruction ofthe evidence. Further, Defendant's complaints
are not limited to design defects.
C. Prejudice Analysis

Based upon the evidence in the record, Starbucks is seeking damages as to "all Carlo

chairs" purchased within the course of its business relationship with Kettler, but it has destroyed
almost ninety-nine (99) percent ofthem. According to DAVACO documentation, the entire 200

chair sample may have been pulled from the back of the last truck.7 Doc. 77 at 8. Starbucks has
not established that the sample ofchairs saved is representative oftheir age, length ofuse, degree

of maintenance, or exposure to the elements of outdoor use; accordingly, Kettler's defense will

be prejudiced by Defendant's actions. Further, there is prejudice to the judicial process in this
matter as chairs were destroyed after Plaintiff specifically requested that the chairs be saved and
even after the Complaint was served.
D. Alternative Remedies

The only relevant alternative remedy to dismissing the action is the remedy Plaintiff has

requested, which is limiting Starbucks' damages to the remaining 200 chair sample. This would
severely limit the amount of damages Starbucks can potentially recover if it succeeds on the
merits; therefore, the Court will exercise its discretion and not award Kettler its reasonable
attorney's fees and expenses incurred in the prosecution ofits spoliation motion.
III. CONCLUSION

Starbucks' spoliating conduct in conjunction with the undisciplined manner in which the
200 chair sample was created has prejudiced Kettler's ability to defend these claims to the extent
that the balance of the Shaffer factors weigh in Kettler's favor. These factors are weighed as
7"The truck is loaded to go to the recycler with the last of the chairs at Anaheim. Do you want us to pull off200 to
save back?" Doc. 77, Ex. 1.
14

follows: (1) Starbucks has asignificant degree of culpability; (2) Starbucks Legal initiated the

spoliation: (3) the judicial process has been prejudiced due to the judicial resources and
Plaintiffs attorney's fees and costs devoted to the spoliation issue and the fact that Starbucks

destroyed evidence even after having been requested not to do so; (4) Kettler has suffered
prejudice in defending the claims against it because Starbucks destroyed almost ninety-nine (99)
percent of the evidence at issue and created a200 chair sample that does not appropriately
represent all the chairs for which Starbucks is seeking damages: (5) rather than dismissing the
case, the Court will limit the amount of damages Starbucks can recover to that arising from the
remaining 200 chairs and the "Robert's Chair:" and (6) the public interest in the integrity of the
judicial process requires the preservation of evidence in order to promote the just, speedy, and
inexpensive resolution of civil litigation. Fed. R. Civ. P. 1.

For the reasons set forth herein, Starbucks' conduct merits limitation of the damages it

can recover to that arising from the 200 remaining sample chairs and the "Robert's Chair."

Because this ruling severely limits the damages available to Starbucks if it prevails upon the
merits of its claims, the Court exercises its discretion to DENY Kettler's prayer for attorney fees
and costs incurred in the prosecution of its spoliation motion. Accordingly, Kettler's Motion is
GRANTED IN PART and DENIED IN PART.

The Clerk is REQUESTED to send acopy of this Order to all counsel of record.
It is so ORDERED.

/s/
Henry Coke Morgan, Jr.

Senior United States District Judge-,[AAaA

HENRY COKE MORGAN, JR. "/v l l ^

SENIOR UNITED STATES DISTRICT JUDGE
Norfolk, Virginia
April 7 ™2015

15