By reading recent case law, it seems that there is no spoliation small enough for which a party will not file a motion for an adverse inference sanction. In AMC Technology, LLC  v. Cisco Systems, Inc., No.: 11-cv-3403 P, 2013 U.S. Dist. LEXIS 101372 (N.D. Cal. July 15, 2013), one such motion was denied when a custodian’s laptop was reformatted according to the defendant’s standard retention policies and prior to being identified as potentially relevant.

P_GrewalThe breach of contract dispute arose between the two technology companies. A year after filing their lawsuit, the plaintiff requested data from an employee who had retired just prior to their filing of the lawsuit. The custodian in question was not one of the key business executives who participated in the deal, although he did provide some calculations on sales estimates that may have been pertinent to the plaintiff’s claim. Commensurate with their standard company retention practice, Cisco had wiped the employee’s computer 30 days after his departure.

Although the trigger to preserve data had attached, the court evaluated the reasonableness of applying the duty to this disputed custodian.  U.S. Magistrate Paul S. Grewal concluded otherwise, stating, “But the scope of this duty is not limitless. A litigant has an obligation to preserve only evidence ‘which it knows or reasonably should know is relevant to the action.’” (p.3 citing In re Napster) The court deemed that while the evidence was spoliated after the ‘trigger event’ that Cisco could not reasonably foresee that relevance. Judge Grewal observed that, “[r]equiring a litigant to preserve all documents, regardless of their relevance, would cripple parties who are often involved in litigation or are under the threat of litigation.” (p.3)

In assessing whether Cisco acted with a culpable state of mind, the court found that “Cisco did not act in conscious disregard of its litigation preservation duties because again, the filing of the suit did not reasonably put Cisco on notice to preserve [the custodian’s] documents given [his] tangential relationship to the [contract].” (p.3) Finally, the court found that the lost documents were not unique and the information created by the custodian was provided in evidence already provided.

In denying the motion, Judge Grewal wrote that the requested sanctions would have be “disproportionate and unfair” (p.4) to the defendant. Cisco in this instance escaped further scrutiny primarily because it had a documented retention policy in place which helped establish that there was no willfulness on their part and that the person was not a key custodian. However, had the scenario played out a little differently, with the data belonging to a key player and no retention policy in place to explain the spoliation, then Judge Grewal perhaps would have found it more difficult to deny the motion.

Further Reading