Abraham Ghorbanian v. Guardian Life Insurance Company of America et al

Filing 101

ORDER denying defendants' 81 Motion for Spoliation Sanctions by Judge Ricardo S Martinez.(RS)

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1 2 3 4 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE 5 6 7 ABRAHAM GHORBANIAN, D.D.S., 8 Plaintiff, 9 10 11 12 Case No. C14-1396RSM ORDER DENYING DEFENDANTS’ MOTION FOR SPOLIATION SANCTIONS v. GUARDIAN LIFE INSURANCE COMPANY OF AMERICA, et al., Defendants. 13 14 I. INTRODUCTION 15 This matter comes before the Court on Defendants’ Motion for Spoliation Sanctions. 16 17 Dkt. #81. Defendants seek an Order dismissing this case with prejudice on the basis that 18 Plaintiff intentionally destroyed or failed to preserve documents related to his occupational and 19 professional duties during the time periods relevant to this case. Id. Defendants assert that they 20 have been prejudiced because the documents they believe once existed but have since been 21 destroyed are necessary to rebut Plaintiff’s testimony as to the essential functions of his job in 22 23 2011 and 2012 after his shoulder surgery. Dkt. #96 at 6. Plaintiff responds that there is no 24 evidence he ever destroyed any documents in this mater, that he has not lied to the Court in 25 previous briefing about the existence of any evidence, and there is no actual prejudice to the 26 Defendants as they allege. Dkt. #94. Plaintiff further argues that to the extent any documents 27 were destroyed prior to 2011, when the potential for litigation first arose, he had no duty to 28 ORDER PAGE - 1 1 preserve any such documents, and therefore he cannot be sanctioned for any alleged conduct 2 occurring prior to that date. Dkt. #94 at 19-21. For the reasons set forth herein, the Court 3 DENIES Defendants’ motion. 4 II. BACKGROUND 5 Plaintiff began practicing dentistry in Washington State in 1998, and remained involved 6 7 in that occupation until 2012, when he moved to California. Dkt. #15 at 2. Shortly after 8 beginning his practice in Washington, Defendants issued two disability policies (the “Policies”) 9 to Plaintiff, which are at issue in this case. The initial Guardian policy was issued on February 10 23, 2001, with two Physical Impairment Riders, containing certain exclusions from coverage. 11 Dkt. #32 at 2. The first rider excluded “losses resulting from impairment of the cervical spine 12 13 or cervical nerve roots,” and the second rider excluded “losses resulting from disorders of the 14 right shoulder.” However, the policy permitted Plaintiff to apply for the cancellation of both 15 riders if he received no health care services for the conditions specified in them for five years 16 after issuance, and if a physician selected by Guardian agreed in writing that a full medical 17 18 19 recovery had occurred. Id. The five-year waiting period was reduced to one year following the merger of Guardian and Berkshire in July 2001. Id. at 3. 20 Accordingly, on or around February 11, 2002, Plaintiff requested the removal of the 21 exclusions and stated in his application that he had “not been treated or seen by any physician, 22 acupuncturist, naturopath, or physician for any condition related to neck back or spine, 23 24 shoulder.” Id. at 2-3. Defendants granted Plaintiff’s request on March 11, 2002, and removed 25 the riders/exclusions. Id. at 3. Plaintiff subsequently applied for a second disability policy 26 from Berkshire. Id. at 4. The Berkshire policy, mirroring the Guardian policy, did not contain 27 the riders/exclusions. Id. 28 ORDER PAGE - 2 Plaintiff alleges in this lawsuit that he was involved in an automobile accident in 1 2 Washington in June 2002. Dkts. #1, Ex. A at A-5, ¶ 11 and #100 at ¶ 11. Afterward, Plaintiff 3 was treated in Bellevue, Burien, and Issaquah, Washington. Dkt. #15 at 2. Plaintiff was 4 allegedly involved in a second automobile accident in June 2005. Dkts. #1, Ex. A at A-5, ¶ 12 5 and #100 at ¶ 12. Subsequently, Plaintiff had surgery in Seattle, followed by physical therapy 6 7 in Redmond, Washington. Dkt. #15 at 2. In 2011, Plaintiff submitted a disability claim based 8 on the injuries he sustained from his auto accidents. Dkts. #1, Ex. A at A-5, ¶ 13 and #100 at ¶ 9 13. 10 On or around April 14, 2012, Defendants denied Plaintiff’s claim on the basis that “he 11 was not considered totally disabled from his pre disability occupational duties” because his 12 13 “pre disability occupation was an executive and owner of dental practices rather than a 14 practicing dentist.” Dkt. #1, Ex. A at A-6, ¶ 16. The instant law suit followed, alleging a 15 variety of claims, including breach of duty of good faith and fair dealing and breach of contract. 16 Dkts. #1, Ex. A and #100. 17 III. DISCUSSION 18 19 A. Legal Standard 20 This Court has a wide range of inherent powers to govern litigation processes. 21 Chambers v. Nasco, 501 U.S. 32, 43, 111 S. Ct. 2123, 115 L. Ed. 2d 27 (1991). One of these is 22 the discretionary power to levy appropriate sanctions against a party who prejudices its 23 24 25 26 27 opponent through the spoliation of evidence that the spoliating party had reason to know was relevant to litigation. Glover v. BIC Corp., 6 F.3d 1318, 1329 (9th Cir. 1993). Spoliation 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 future litigation” once 28 ORDER PAGE - 3 1 the duty to do so has been triggered. Kearney v. Foley & Lardner, LLP, 590 F.3d 638, 649 (9th 2 Cir. 2009) (internal quotation and citation omitted). A party seeking sanctions for spoliation 3 first bears the burden of establishing that the opposing party destroyed relevant evidence. Ryan 4 v. Editions Ltd. W., Inc., 786 F.3d 754, 766 (9th Cir. 2015). To determine whether spoliation 5 occurred, the majority of courts use some variation of a three-part test: “(1) that the party 6 7 having control over the evidence had an obligation to preserve it at the time it was destroyed; 8 (2) that the records were destroyed with a ‘culpable state of mind;’ and (3) that the 9 evidence was ‘relevant’ to the party’s claim or defense such that a reasonable trier of fact could 10 find that it would support that claim or defense.” Apple Inc. v. Samsung Elecs. Co., 888 F. 11 Supp. 2d 976, 989 (N.D. Cal. 2012) (citing cases). 12 13 If spoliation is found, then courts generally consider three factors to determine whether 14 and what type of sanctions to issue: “(1) the degree of fault of the party who altered or 15 destroyed the evidence; (2) the degree of prejudice suffered by the opposing party; and (3) 16 whether there is a lesser sanction that will avoid substantial unfairness to the opposing party.” 17 18 Apple Inc. v. Samsung Elecs. Co., 888 F. Supp. 2d at 992; see also Leon v. IDX Sys. Corp., 19 2004 U.S. Dist. LEXIS 31361, 2004 WL 5571412, at *3 (W.D.Wash. 2004) aff'd., 464 F.3d 20 951 (9th Cir. 2006). 21 B. Alleged Spoliation of ESI 22 There is no dispute between the parties the Plaintiff had an obligation to preserve 23 24 evidence beginning in December of 2011, when his then-attorney threatened litigation. Dkts. 25 #81 at 16 and #94 at 3. However, the parties disagree as to whether any evidence has actually 26 been destroyed, and, if it has been destroyed, when that destruction occurred and by whom. 27 Thus, the Court must first address those questions. 28 ORDER PAGE - 4 Defendants allege that Plaintiff has destroyed or failed to preserve emails prior to 2009, 1 2 and during the 2011-2012 timeframe. In support of this allegation, they focus first on the 3 number of emails that have been produced in discovery. According to Defendants, “[t]he 4 number of emails produced prior to 2013 is tellingly low in comparison to those after 2013 – 5 the combined total for the four years prior to 2013 is less than 10% of the combined total for 6 7 8 2013-2016.” Dkt. #81 at 17. Defendants present the following comparison of the number of emails dated by year they assert they received in discovery: 9 2009: 3,378 10 2010: 7,573 11 2011: 1,521 12 13 2012: 252 14 2013: 29,705 15 2014: 39,192 16 2015: 43,168 17 2016: 20,114 18 19 Dkt. #83 at ¶ 5.1 To put those numbers in context, Defendants highlight an email sent by 20 Plaintiff, on July 24, 2009, mandating: 21 EVERY SUNRISE EMPLOYEE WILL HAVE A SUNRISE EMAIL ACCOUNT AND THEY WILL CHECK THEIR EMAILS 3 TIMES A DAY. NO IFS AND BUTS ABOUT IT; WE WILL ENFORCE THIS SIMPLE REQUEST AND THOSE NOT COMPLYING WILL BE REPRIMANDED. 22 23 24 25 Dkt. #82-11, Ex. 217 (emphasis in original). Defendants assert that this email suggests the 26 number of emails produced for the time period prior to 2013 should be much higher. 27 1 28 Defendants explain that once the emails were produced, they were able to organize them by “parent date,” and when organized in that manner, they were able to see that no emails prior to March 21, 2009, had been produced. Dkt. #83 at ¶ ¶ 3-4. ORDER PAGE - 5 1 The Court is not persuaded by this record that documents have actually been destroyed. 2 The fact that there are fewer numbers of emails in some years than in others, does not in and of 3 itself suggest to the Court that emails were intentionally destroyed. 4 Moreover, Plaintiff explains that between 2009 and 2012, his email was contained on a server hosted by Go 5 Daddy. See Dkt. #94-2 at ¶ 4. In late 2012 or early 2013 a dedicated server was established for 6 7 Sunrise Dental and all emails in existence at the time were transferred from the Go Daddy 8 Server to the new server. Dkt. #94-2 at ¶ 6. The person hired to perform this work has testified 9 that he copied all emails in the various Go Daddy accounts, copied everything to the new 10 server, and did not delete any emails. Id. at ¶ ¶ 7-8. Plaintiff also asserts that he has never 11 intentionally deleted an email or instructed anyone else to delete emails. Dkt. #94-4 at ¶ 8. He 12 13 also states that he has retrieved all email which is accessible, and admits that he did not produce 14 emails from the email account to which he no longer has access. Id. 15 Defendants also assert that Plaintiff took no steps to preserve any documents after 16 receipt of a litigation hold letter in 2012. For example, they point to testimony of Plaintiff’s 17 18 prior counsel, wherein he states that he provided the litigation hold letter to Plaintiff, but did 19 not take steps to collect any documents identified in the letter at that time or send any 20 correspondence to others at Sunrise Dental about their obligations to preserve such documents. 21 Dkt. # 93-1 at 25:3-27:4. Defendants characterize this testimony as evidence that Plaintiff did 22 not preserve evidence. However, that is not the way the Court interprets that evidence. Rather, 23 24 the testimony simply states what an attorney did or did not do with respect to a litigation hold 25 letter he received from Defendants, and any efforts he made to collect documents at that time. 26 Importantly, litigation had not yet begun, there were no pending discovery requests, and, while 27 28 ORDER PAGE - 6 1 2 Plaintiff had an obligation to preserve documents, there was no obligation to actually collect and produce documents simply on the basis of receiving a litigation hold letter. Significantly, Defendants produce no direct evidence that any documents were actually 3 4 destroyed. In fact, rather than seeking an Order from this Court to collect such evidence of 5 destruction, they ask the Court to speculate that records have been destroyed and impose the 6 7 ultimate sanction – dismissal of this case.2 As one District Court has noted, “[i]n the absence 8 of a strong showing that the responding party has somehow defaulted in [its] obligation [to 9 preserve evidence], the court should not resort to extreme, expensive, or extraordinary means to 10 guarantee compliance.” Powers v. Thomas M. Cooley Law Sch., Case No. 5:05-CV-117, 2006 11 U.S. Dist. LEXIS 67706, 2006 WL 2711512, at *5 (W.D. Mich. Sept. 21, 2006). 12 For these reasons, the Court finds that Defendants have not met their initial burden of 13 14 demonstrating to the Court that any documents have been destroyed. While Defendants 15 attempt to shift the burden to Plaintiff to demonstrate that documents have not been destroyed, 16 that is not his burden on this motion, and in any event he has sufficiently rebutted allegations of 17 18 19 document destruction at this time. Ryan, 786 F.3d at 766. Accordingly, the Court will not address the remaining elements of spoliation or whether sanctions are warranted. 20 21 22 23 24 25 26 27 28 2 It is interesting that Defendants produce no evidence from Go Daddy about its policies and practices between 2009 and 2012, how much storage memory it had for the accounts in question, whether it backs up and maintains back up tapes of its accounts, and whether it utilized auto deleting software in those years. Further, despite Defendants’ strong assertions of malfeasance in this case, they have not sought any Order from this Court for a forensic examination of the servers in question or of Plaintiff’s individual computers, which would certainly yield evidence of document destruction if such action had occurred. See Brocade Commc’n Sys., Inc. v. A10 Networks, Inc., Case No. 10-cv-3482, 2012 U.S. Dist. LEXIS 2846, 2010 WL 70428, at *3 (N.D. Cal. Jan 9. 2012) (forensic inspection may be warranted when “serious questions exist both as to the reliability and the completeness of materials produced”). ORDER PAGE - 7 IV. 1 CONCLUSION 2 Having reviewed Defendants’ Motion for Spoliation Sanctions, the Response in 3 opposition thereto and Reply in support thereof, along with the supporting Declarations and 4 exhibits and the remainder of the record, the Court hereby finds and ORDERS that Defendants’ 5 Motion for Spoliation Sanctions (Dkt. #81) is DENIED. 6 7 DATED this 28th day of April 2017. 8 A 9 RICARDO S. MARTINEZ CHIEF UNITED STATES DISTRICT JUDGE 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ORDER PAGE - 8

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