Zapproved Case Summary IconLiving Color Enters. v. New Era Aquaculture, Ltd., No. 14-cv-62216-MARRA/MATTHEWMAN, 2016 WL 1105297 (S.D. Fla. Mar. 22, 2016).

Applying newly amended Federal Rule of Civil Procedure 37(e), the court found that a defendant’s failure to turn off his phone’s automatic-deletion feature and preserve text messages did not merit sanctions where the majority of the messages could be replaced.

In this case, Living Color sued two of its former business partners and a competitor for conspiring to steal its business. During discovery, Living Color claimed that defendant Daniel Leyden, its former employee, did not turn over all relevant electronically stored information (ESI) and filed a motion to compel, which the court granted. The court ordered Leyden to submit an affidavit regarding any outstanding texts or e-mails that he had not produced between himself and defendant New Era Aquaculture and three people, Mark Vera, Peter Kersh, and Tom Noble, from 2013 to 2016.

In the affidavit, Leyden explained that his search for additional personal e-mails revealed only one relevant message, which he turned over. Leyden also claimed he did not exchange substantive texts with anyone aside from Vera, many of which were missing. Leyden had replaced his phone in September 2014 and July 2015, and he did not archive texts. His “usual practice” was to “periodically” delete messages to “maintain the operational speed and efficiency of his phone,” and he allowed the phone’s auto-delete function to run every 30 days. Although he only had messages between himself and Vera beginning January 16, 2016, Vera had archived all text messages from the relevant period, which he would produce.

Living Color then filed a motion for spoliation sanctions and asked the court to strike Leyden’s pleadings, enter a default judgment in its favor, issue an adverse inference instruction, and award it reasonable attorneys’ fees and costs. Noting that the parties neglected to address the amendments to Rule 37(e) in their initial briefing, the court asked them to file supplemental briefs because the motion was filed after the rules became effective on December 1, 2015.

Living Color argued that Leyden “failed to take reasonable steps to preserve ESI that cannot be restored or replaced through additional discovery.” Though Living Color subpoenaed Leyden’s cell phone carrier, it was unable to obtain any additional texts, and the production from Vera could not cure Leyden’s bad faith misconduct. Further, Leyden’s deletion of texts was “an affirmative, intentional, and frankly cavalier act” covered by Rule 37(e)(2). In the alternative, if Leyden were merely negligent, sanctions would still be appropriate under Rule 37(e)(1) because his actions prejudiced Living Color’s case. Living Color claimed the missing evidence would have established that Leyden was involved in the conspiracy to misappropriate its business.

However, Leyden felt Rule 37 did not apply. Though conceding that he had a duty to preserve the texts, Leyden said that he was merely negligent in failing to disable the auto-delete feature. Moreover, the ESI was replaced by data from another source, and any missing messages were irrelevant. Further, any prejudice would be minimal, as the duty to preserve arose on September 5, 2014, and all conduct occurred before September 26, 2014.

The court found that Rule 37(e) applied because text messages constituted ESI that should have been preserved. But the production of texts from Vera meant that all texts were not “lost,” so the court analyzed only texts that could not be restored or replaced through additional discovery. Rule 37(e)(1) did not apply because Living Color could not establish a “direct nexus between the missing text messages and the allegations,” and even if there were any prejudice, it would be “minimal” given the abundance of other produced texts. As for Rule 37(e)(2), sanctions were unavailable because there was no evidence of an “‘intent to deprive’ or bad faith.” Therefore, the court denied Living Color’s motion.

 

Living Color Enters. v. New Era Aquaculture, Ltd., No. 14-cv-62216-MARRA/MATTHEWMAN, 2016 WL 1105297 (S.D. Fla. Mar. 22, 2016).

 

Takeaways

Courts have routinely found that the deletion of texts is sanctionable. This case may prove to be an outlier since it involved, according to the court, a “relatively unsophisticated litigant.” Though the court found “nothing nefarious” about Leyden’s practice of deleting texts, had the bulk of the messages not been otherwise available, the court would likely have sanctioned him under Rule 37(e)(1). As this case demonstrates, it is imperative that counsel ensures that custodians understand their preservation obligations extend to all ESI, including texts.

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