September’s Notable Cases and Events in E-Discovery

1. A ruling from the U.S. District Court for the Northern District of Illinois that Defendants waived the marital communications privilege by producing emails between one of the Defendants and his wife, finding that Federal Rule of Evidence 502 did not apply to the privilege, and that federal common law supported a finding of waiver.

In DR Distributors, LLC v. 21 Century Smoking, Inc., 2022 WL 2905838 (N.D. Ill. July 22, 2022), U.S. District Judge Iain D. Johnston addressed the Plaintiff’s motion seeking a finding of waiver as to certain documents Defendants produced but claimed were covered by the marital communications privilege, finding that neither Federal Rule of Evidence 502 nor federal common law permitted Defendants to avoid a finding of waiver.

In this trademark case, Plaintiff, an electronic cigarette company, brought suit against a competitor and its owner, alleging that they misappropriated Plaintiff’s registered trademark. Id. at *7. Defendant Brent Duke owned and operated Defendant 21 Century Smoking, Inc., Brent Duke’s wife, Laurie Duke, also worked for 21 Century.

Although fact discovery closed in 2015, Defendants produced in May and June of 2018 “thousands of emails” from Defendants’ Yahoo email account. Included in these productions were certain emails between Brent and Laurie Duke, some of which contained “unkind words, heated language, cussing, and extremely serious accusations — some related to the business operations, some related to the marital relationship, and some related to a mix of both.” Id. at *2. Defendants withheld from these productions 16 emails and redacted 32 other emails based on the assertion of the marital communications privilege. This was the first time Defendants raised this privilege. Id. at *1. After further motion practice, on November 13, 2019, Defendants produced over 30,000 additional pages of documents. Id. at *4.

Certain emails between Brent and Laurie Duke were used in connection with prior discovery motion practice. For example, Defendants attached to their response to a motion for sanctions a February 4, 2012 email between Laurie and Brent Duke, and Defendants made use of this document during the subsequent evidentiary hearing on the motion. Defendants made no objection to this exhibit based on the marital communications privilege.

Ultimately, the court issued an order imposing certain sanctions and requiring Defendants to search for and produce relevant responsive documents, which had not been previously searched for or disclosed. When Defendants sought additional time to produce the relevant documents, the court invoked Fed. R. Evid. 502(d), stating, “[t]o speed up the privilege review, by way of this order, the Court sua sponte will apply Federal Rule of Evidence 502(d) to the fullest extent available, so that privileges and protections are not waived by disclosure.” Id. at *5. The court further stated that it would “apply Federal Rule of Civil Procedure 26(b)(5)(B) liberally to ensure that privileges and protections are not breached.” Defendants produced additional documents in March 2021.

Defendants’ counsel subsequently sent two claw back letters, one on June 11, 2021 and one on July 19, 2021, seeking the return of privileged material including documents Defendants’ counsel claimed were privileged under the marital communications privilege. Id. at *7. Defendants’ counsel later stated in a declaration that he “inadvertently produced numerous marital communications between Brent and Laurie Duke. [His] production of such communications was not done with the intent to waive [the marital communications privilege].” Id. at *6. The declaration did not explain how the production was inadvertent or what actions were taken to avoid the disclosure of the privileged documents.

Plaintiff filed a motion seeking a ruling that the marital communications privilege was waived by Defendants’ disclosure of the material. Judge Johnston first surveyed the law regarding the marital communications privilege under federal common law, noting that it covers information privately disclosed between husband and wife in the confidence of the marital relationship. Id. at *8. He explained that the privilege can be waived by voluntary disclosure and that it was Defendants’ burden to show that no waiver occurred because the disclosure was inadvertent. Id. at *9.

Judge Johnston next addressed whether Rule 502 was relevant to the dispute because Defendants argued that their counsel “acted reasonably in focusing on complying with the Court’s order, while relying on the Court’s statement that it would apply FRE 502(d) to the ‘fullest extent possible’ and Rule 26(b)(5)(B) ‘liberally.’” Judge Johnston rejected this argument, citing among other factors that the documents at issue were produced years after the fact discovery cutoff, that Defendants had ample notice of the requirement to produce the documents, and that the Rule 502(d) order was entered only to “provide Defendants some protection if attorney-client privileged or work-product protected documents were inadvertently produced.” Id. at *10 (emphasis in original).

Judge Johnston noted three additional problems with Defendants’ argument that Rule 502(d) should apply. First, both the plain language of Rule 502 and its Advisory Committee notes make it clear that the rule applies only to the attorney-client privilege and the work-product doctrine, and it has no effect on any other evidentiary privilege. Second, 28 of the documents Defendants sought to claw back were produced before the court sua sponte entered the 502(d) order, and therefore Defendants could not have detrimentally relied on the order in the process of reviewing and producing those documents. Id. at *11. Third, Judge Johnston explained that courts have disagreed on whether a Rule 502(d) order is a “get-out-of-jail-free-card” irrespective of the reasonableness of counsel’s privilege review process or even if one existed at all. As Judge Johnston noted, “[c]ounsel who produce documents without a reasonable privilege review do so at their own risk — even when a Rule 502(d) order exists.” 

Rather than Rule 502(d), Judge Johnston applied a three-part balancing test under federal common law: (1) whether the documents were privileged; (2) if the documents were privileged, whether the disclosure was inadvertent; and (3) if the disclosure was inadvertent, whether the privilege was waived. Id. a *12.

With respect to the first two sets of communications Defendants produced in 2018 and 2019, Judge Johnston found that Defendants had not carried their burden of showing that the production was inadvertent and that the privilege was not waived. Id. at *13. He noted in particular that Defendants did not present evidence regarding the steps taken to prevent disclosure of privileged material, including regarding the document production or privilege review processes.

With respect to the documents produced by Defendants in March 2021, Judge Johnston had performed an in camera review of those documents and found that many (but not all of them) were privileged. Id. at *14. Accordingly, he turned to an analysis of whether Defendants’ disclosure of the documents was “inadvertent.” In a declaration, Defendants’ counsel stated that “[i]n the rush to properly comply and while under the threat of sanctions for failing to comply, I inadvertently produced numerous marital communications between Brent and Laurie Duke. My production of such communications was not done with the intent to waive [the marital communications privilege].” But Judge Johnston found that this was “hardly enough evidence for Defendants to meet their burden that the production was ‘inadvertent’ and that the privilege was not waived.”

Judge Johnston rejected each of Defendants’ proffered arguments as to why the production was inadvertent, including Defendants’ arguments that (1) the volume of documents reviewed was substantial, (2) Defendants’ prior counsel did not document his review or production processes, (3) the review and production processes were complicated, and (4) the document review was more complicated because it was done remotely during the pandemic. Judge Johnston found that each of these points was simply an argument without any supporting evidence. Id. at *16.

Judge Johnston next turned to an analysis of the precautions and care taken in reviewing the production for privileged documents, which he noted is a factor that should be given more weight. Id. at *15-16. Defendants argued that they “developed queries to review for privilege and did not intend to waive privilege,” but Judge Johnston found that he was presented with no evidence as to what the privilege review process was or how it worked. In particular, he noted that he had no evidence as to whether Defendants used a keyword search or technology-assisted review as part of the review process or whether Defendants performed a manual privilege review: “This is fundamental information courts need to determine the reasonableness of the privilege review process,” and “[w]hen a producing party fails to provide it, the party has failed to meet its burden.”

Judge Johnston found that the amount of time that lapsed before Defendants sought to claw back the documents also weighed in favor of waiver. While the production occurred on March 19, 2021, Defendants first sought to claw back the documents on July 19, 2021.

Judge Johnston next turned to whether the scope of discovery weighed in favor of waiver. Although he noted that the scope of discovery in this case was significant, he found that “it was not onerous, especially considering the amount in controversy.” “Searching a million documents in an eight-figure case is unsurprising these days.” Judge Johnston found that Defendants had a “more-than-reasonable amount of time” to produce documents, particularly because he had granted extensions of the production deadline.

Judge Johnston found that the factors of the extent of the disclosure and fairness both weighed in favor of a finding of waiver. Id. at *17. With respect to the extent of the disclosure, Judge Johnston noted that Defendants produced “hundreds of privileged documents” as opposed to “a stray document here and there” and that the disclosure “was not an aberration.” With respect to fairness, Judge Johnston noted that this also weighed in favor of a finding of waiver because “seldom is it unfair for the truth to be revealed.” Judge Johnston also noted that he had treated Defendants fairly in not imposing harsher sanctions on Defendants for their earlier misconduct.

Finally, Judge Johnston turned to the consequence of Defendants’ waiver. Plaintiff argued that Defendants’ conduct should result in a subject matter waiver of all “communications about the operation of Defendants’ business,” but Judge Johnston disagreed. He noted that when waiver occurs, both the subject matter and the scope of the waiver should be narrow. He also disagreed that Defendants were using the privilege as both a sword and a shield, noting that out of the hundreds of documents identified as being privileged, Defendants used only one email and did so only at the sanctions hearing for the narrow purpose of putting the email into context after Plaintiff had already identified the email on its exhibit list. Finally, Judge Johnston noted that he had precluded Defendant from using any of the documents produced years after the discovery deadline, so Defendant could not use the documents affirmatively.

2. An order from the U.S. District Court for the District of South Dakota denying Plaintiff’s motion to compel Defendants to use an additional seven search terms to locate responsive documents because the cost to search and review the documents that hit the search terms rendered them not reasonably accessible, and no good cause existed to require the review.

In Jim Hawk Truck-Trails of Sioux Falls, Inc. v. Crossroads Trailer Sales & Service, Inc., 2022 WL 3010143 (D.S.D. July 29, 2022), U.S. District Judge Karen E. Schreier denied Plaintiff’s motion seeking to compel defendants to use an additional seven search terms to locate responsive documents, because the cost to search and review the electronically stored information (“ESI”) that hit the search terms rendered them not reasonably accessible and because no good cause existed to require the review.

Plaintiff sued Crossroads Trailer Sales & Service, Inc. and nine former employees for various tort and contract claims, including misappropriation of trade secrets. Id. at *1. The instant motion derived from discovery disputes arising out of Plaintiff’s interrogatories and requests for production.

Judge Schreier laid out the rules surrounding scope of discovery under Rule 26(b), including that “either party may compel the other to disgorge whatever facts he has in his possession.” Id. at *2 (internal marks omitted). She then applied Rule 26(b) to ESI. Judge Schreier stated that the “broad scope of Federal Rule of Civil Procedure 26(b)” can be limited “if the party resisting discovery can establish that ESI is not reasonably accessible because of undue burden or cost.” Id. at *6 (internal marks omitted). Judge Schreier defined “reasonably accessible” as referring to the “degree of effort in accessing the information, not simply the accessibility of the material’s format.” 

However, Judge Schreier stated that discovery may still be ordered even if not reasonably accessible if the requesting party shows “good cause,” considering the three limiting factors in Rule 26(b)(2)(C) as well as a seven-factor test outlined in the Advisory Committee notes: (1) the specificity of the discovery request; (2) the quantity of information available from other and more easily accessed sources; (3) the failure to produce relevant information that seems likely to have existed but is no longer available on more easily accessed sources; (4) the likelihood of finding relevant, responsive information that cannot be obtained from other, more easily accessed sources; (5) predictions as to the importance and usefulness of the further information; (6) the importance of the issues at stake in the litigation; and (7) the parties’ resources.

Judge Schreier explained that so far, Defendants had conducted searches on 13 individuals, including the nine individual defendants and four Crossroads employees, and produced documents using 92 of 99 search terms proposed by Plaintiff. Id. at *7. However, Defendants had objected to the seven remaining search terms, arguing they “dramatically increase the volume of ESI to be reviewed.”

Judge Schreier stated there was no question that the raw data was immediately accessible, but the issue was whether the “burden and expense in reviewing and winnowing down the search results constitutes an undue burden or cost.” She noted that the search terms yielded 42,216 documents, and the estimated cost for processing and applying analytics to this additional data was between $3,150 and $4,275, plus an estimated $114,586.29 for 600 hours of attorneys reviewing the documents. Plaintiff argued these additional expenses were not proportional to the needs of the case because the search terms covered only a six-month period. But Judge Schreier was unpersuaded, reasoning that it was “the amount of documents produced, not the period of time to which these search terms are applied, that results in burdensome costs.” She therefore concluded that the ESI produced by using the seven search terms in dispute was not reasonably accessible.

Judge Schreier then turned to whether there was nonetheless “good cause” to compel Defendants to review the ESI under the seven-factor test outlined in the Advisory Committee notes. Judge Schreier stated that the first factor weighed in favor of Plaintiff because the request was sufficiently specific. She stated that the second factor weighed in favor of Defendants because there had been “extensive discovery in this case” and Defendants had “already produced ESI responsive to 92 search terms of 13 employees’ data” from which a “vast quantity of information is already accessible.” The third factor was irrelevant because there was no spoliation of ESI. 

Judge Schreier continued that the fourth and fifth factors favored Defendants because the relevancy rate of these search terms would be “incredibly low.” She stated that Defendants and their ESI vendor used a continuous active learning model to determine the relevancy of previously searched ESI, which deemed 7% of its total ESI review as relevant, with the prior 2,000 documents reviewed at a maximum relevancy rate of 5%. Plaintiff responded by emphasizing that there still could be relevant documents and the search terms corresponded with facts from the case, but Judge Schreier concluded the ESI was unlikely to contain important information. She stated that the sixth factor weighed in favor of Defendants because the claims in the case were not of public concern. The seventh factor was neutral because neither party provided any information about its resources.

Judge Schreier explained that the good cause factors were not a checklist but “rather, the factors should be weighed by importance.” Id. at *8. Judge Schreier stated that in this instance, the “low likelihood of finding relevant, responsive information [was] the most important ‘good cause’ factor weighing in favor of the resisting party.” Similarly, she emphasized the low relevancy of current ESI and the low probability of the search terms’ yielding new and relevant information, which could not justify the substantial burden and expense required to produce the ESI.

Judge Schreier therefore denied Plaintiff’s motion to compel discovery as to the seven additional ESI search terms.

3. A decision from the U.S. District Court for the Southern District of Indiana compelling one Defendant to review all text messages for two custodians for a certain period regardless of whether the text messages hit a search term and to produce all text messages related to the case and requiring Defendants’ counsel to provide a certification regarding the review.

In Advanced Magnesium Alloys Corporation v. Dery, 2022 WL 3139391 (S.D. Ind. Aug. 5, 2022), U.S. Magistrate Judge Mark J. Dinsmore addressed a request that one Defendant produce all text messages between two of its executives for a particular month to provide context for certain other text messages that had already been produced, denying the request for blanket production, but requiring Defendants’ counsel to review all text messages and produce any related to the case and provide a certification regarding the review.

Plaintiff, a magnesium recycling company, sued defendant Alain Dery, its former vice president, alleging that he conspired with defendant Alliance Magnesium, Inc., to “jump start” Alliance’s entry into the magnesium recycling market. Id. at *1. Among other things, Plaintiff alleged that Dery assisted Alliance in securing an investment from Marubeni Corporation.

In discovery, Alliance produced some text messages, including certain text messages between Alliance’s CEO, Michel Gagnon, and Alliance’s President, Joel Fournier, about a July 26, 2019 meeting in Tokyo with the president of Marubeni. The text messages Alliance produced in response to Plaintiff’s document requests included “cryptic” messages suggesting that Fournier and Gagnon were coordinating a noon meeting with Dery at the same time that Gagnon was meeting with Marubeni for lunch. However, Plaintiff claimed that Alliance did not produce any communications showing whether Dery participated in the July 26 meeting with Marubeni, whether Dery was helping prepare Gagnon for the meeting, and what, if anything, Dery contributed to these initial efforts to secure Marubeni’s investment. Plaintiff questioned Gagnon and Dery in their depositions about any participation Dery may have had in the Tokyo meeting or the preparation for it, but both testified that they did not recall. They also could not recall with any specificity what the “cryptic” text messages referred to.

Plaintiff moved to compel all text messages exchanged between Gagnon and Fournier in July 2019, hoping to give context to the text messages that were produced, and determine whether the two exchanged any other text messages that would shed light on Dery’s involvement in the Tokyo meeting. Id. at *2. 

In response to Plaintiff’s motion to compel, Alliance argued that Plaintiff’s request was not proportional to the discovery needs in the case and was “nothing more than a fishing expedition” to get around what Alliance characterized as “the established fact that Dery was not at or involved in the Tokyo Meeting.” However, Magistrate Judge Dinsmore noted that the record did not foreclose the possibility that Dery’s input was solicited in preparation for the Tokyo meeting or that Dery had no involvement in the Tokyo meeting in any capacity. In this context, Magistrate Judge Dinsmore concluded that Plaintiff’s desire to know whether any further evidence existed could not be characterized as a baseless fishing expedition.

Alliance also took issue with the fact that Plaintiff sought all text messages between Fournier and Gagnon during the month of July 2019 and not just messages related to the Tokyo meeting. Magistrate Judge Dinsmore agreed that the request was overbroad because it “undoubtedly encompasses text messages that are not responsive to Plaintiff’s discovery requests.” Finally, Alliance argued that it fulfilled its production obligation by producing documents found by searching for the 159 search terms agreed to by the parties.

In addressing Plaintiff’s motion to compel production of the text messages, Magistrate Judge Dinsmore first discussed the use of search terms in discovery. He explained that using negotiated search terms as a way of finding documents that are responsive to broad document requests among a vast number of electronic documents is an agreement that those searches will fulfill the producing party’s obligation with regard to those document requests. He noted that keyword searches “have long been recognized as appropriate and helpful for ESI search and retrieval,” but “there are well-known limitations and risks associated with them.” Id. at *3 (quoting Venturedyne, Ltd. v. Carbonyx, Inc., 2016 WL 6694946, at *1 (N.D. Ind. Nov. 15, 2016)). “Chief among those limitations is that such a search necessarily results in false positives (irrelevant documents flagged because they contain a search term) and false negatives (relevant documents not flagged since they do not contain a search term).” Id. As a result, “electronic discovery requires cooperation between opposing counsel and transparency in all aspects of preservation and production of ESI.”

Magistrate Judge Dinsmore further explained that parties must cooperate to search additional keywords when the need to do so becomes apparent — when, for example, it was learned that Dery is sometimes referred to as “Mr. X” in relevant documents — and to search for and produce certain relevant and responsive documents that, for whatever reason, would not be revealed by keyword searches.

Applying these principles, Magistrate Judge Dinsmore concluded that Plaintiff was entitled to receive any additional text messages between Gagnon and Fournier that relate to the Tokyo meeting, including any role Dery played in preparing for, participating in, or reacting to that meeting. He noted that “[i]n a perfect world, Alliance would have acceded to Plaintiff’s request ... that it produce the entire ‘text string’ between Gagnon and Fournier.” Or Plaintiff would have tendered a narrowly tailored discovery request to obtain any additional relevant text messages, and Alliance would have responded to that request without objection.

But Magistrate Judge Dinsmore found that the parties had not acted ideally, and it was therefore left to him “to fashion a resolution to this dispute that would have been far more efficiently resolved by cooperation between counsel.”

Magistrate Judge Dinsmore noted that “[d]istrict court judges are accorded broad discretion in discovery matters,” and in that discretion he ordered Alliance to review all text messages between Gagnon and Fournier during the month of July 2019 and produce all of them, except (1) communications that were purely personal in nature; or (2) communications that clearly and unequivocally related to business matters other than those at issue in this case. He further ordered that an attorney of record for Alliance file a certification that he or she personally reviewed all of the text messages and that all redactions unambiguously fell into one of the two categories set forth above. Finally, Magistrate Judge Dinsmore ordered that Alliance provide him for in camera review a complete copy of the redacted and unredacted text messages produced pursuant to his order.

4. A report and recommendation from the U.S. District Court for the District of Rhode Island recommending granting Plaintiff’s motion for terminating sanctions arising out of Defendants’ deletion and withholding of data from an iPad, an iPhone, and a Gmail account.

In Atalian U.S. New England, LLC v. Navarro, 2022 WL 2681297 (D.R.I. July 12, 2022), U.S. Magistrate Judge Lincoln D. Almond recommended granting Plaintiff’s motion for terminating sanctions arising out of Defendant’s alleged deletion and withholding of data from an iPad, an iPhone, and a Gmail account, holding that Defendants James Navarro and Roger Persaud willfully deleted or withheld relevant evidence with the intent to deprive Plaintiff of the information’s use in the litigation and to mislead the court.

Plaintiff alleged that Navarro and Persaud committed discovery violations that warranted imposition of default judgment after having a motion for sanctions and default judgment already granted against Defendant Taj Contract Cleaning, LLC. Id. at *1. Magistrate Judge Almond opened by noting that the parties were on notice regarding the potential consequences of deleting or withholding evidence based on the court’s prior order against Taj, which arose from having intentionally deleted smartphone and laptop data.

Magistrate Judge Almond examined Plaintiff’s allegations against each of the two Defendants in turn, beginning with Navarro. Navarro received multiple evidence preservation requests from Plaintiff and was on notice that Plaintiff had already moved for sanctions against Taj. Navarro admitted that he identified relevant documents on his personal iPad at the outset of the litigation and contended that he moved them to the iPad’s trash bin and reset the iPad four days before producing it to Plaintiff. Navarro also conceded that he agreed to produce his iPhone but then decided against having it inspected, and now would agree to voluntarily produce the iPhone only if the parties agreed to a protective order. Magistrate Judge Almond pointed out that a stipulated protective order had been in place since June 2020. Navarro claimed he reset and erased his iPad to “shield personal photographs from being produced to Plaintiff” and that his actions were not intentional and at most negligent.

Plaintiff responded to Navarro’s arguments with “an abundance of forensic and circumstantial evidence.” Id. at *2. Plaintiff’s expert affidavit detailed the iPad interface and the affirmative steps Navarro was required to take, along with the notices and warnings Navarro would have encountered, before he could have deleted the relevant files. The notices “would have required that he acknowledge the item would be ‘deleted immediately’ and/or ‘recently deleted items may be permanently deleted by your storage provider.’” The process of wiping or performing a factory reset on the iPad would have required Navarro to affirmatively select “Erase iPad” after seeing the notice that “erasing will sign out of your Apple ID and remove your personal data, so this iPad can be safely traded in or given away” and “Are you sure you want to continue? All media, data, and settings will be erased. This cannot be undone.”

Navarro testified that he moved the files to the iPad trash bin believing they would remain there until he deleted them permanently and that he did not know the iPad’s software would automatically and permanently delete them. Magistrate Judge Almond “flatly rejected” Navarro’s claim as “not credible” that his actions were unintentional given the explicit warnings Navarro would have encountered. Magistrate Judge Almond stated that the deletion was not automatic, and “the only credible conclusion to reach based on this record is that Mr. Navarro intentionally deleted the documents.” Magistrate Judge Almond stated that Navarro’s “credibility is further eroded” by the claim that he was trying to shield his personal photos from disclosure. Plaintiff’s expert demonstrated that Navarro viewed numerous personal photos on his laptop two days after the iPad reset and produced that laptop with the photos included shortly thereafter. Magistrate Judge Almond stated that it made “no sense that he would only be concerned about the disclosure of personal information on one device and not the other.”

Magistrate Judge Almond found Plaintiff’s argument credible that Navarro provided false testimony regarding the lack of relevant information on his iPhone. Plaintiff’s expert provided evidence that shortly after Navarro was served in this case, an iPhone was used to take photos of a MacBook Air screen “displaying relevant business information of Plaintiff and subsequently emailed to an account connected to Mr. Navarro.” Additionally, shortly afterward, a text message conversation related to this lawsuit was screenshotted from an iPhone and emailed to the same email account. These emails were sent from an IP address associated with Navarro’s residence.

Magistrate Judge Almond then turned to his discussion of Persaud, which centered around a personal Gmail account. Plaintiff alleged that Persaud provided false testimony regarding his use and ability to access his personal Gmail account and “unnecessarily caused [Plaintiff] to incur costs and undertake substantial effort to try to access the account and learn the truth about its use.” Persaud testified that he had not accessed the account since November 2019 and was unable to access the account as he forgot the password and did not own a phone with the recovery number.

Plaintiff ultimately requested the relevant information directly from Google at its own expense, and after meetings, subpoenas, and meetings and conferences with Google attorneys, Plaintiff “ultimately obtained limited ‘non-content’ email metadata for the subject account.” This metadata revealed that Persaud’s email account had been used on an ongoing basis after November 2019, and was accessed using either the correct credentials or the password recovery process. Moreover, the IP address where the login took place was in or within close proximity of Persaud’s residence.

Magistrate Judge Almond stated that the content of the emails was not produced, but the metadata demonstrated that Persaud was exchanging relevant emails on a consistent basis. Id. at *3. Further, contradicting Persaud’s testimony, Plaintiff reviewed discovery, including emails and invoices, indicating that Persaud was associated with the recovery phone number at various times during his prior employment. The email metadata also contradicted statements made in Persaud’s testimony.

Magistrate Judge Almond then turned to his analysis and recommendation. He stated that spoliation was the “intentional, negligent, or malicious destruction of relevant evidence.” Id. (internal marks omitted). He stated that the parties’ admissions, the expert testimony, and circumstantial evidence all established that spoliation occurred.

Magistrate Judge Almond then laid out five factors for courts to fashion an appropriate sanction for spoliation: “1) whether the defendant was prejudiced as a result of [the destruction of evidence]; 2) whether the prejudice can be cured; 3) the practical importance of the evidence; 4) whether the plaintiff was in good faith or bad faith; and 5) the potential for abuse if the evidence is not excluded.” Id. (internal marks omitted). Magistrate Judge Almond stated that the court primarily considers the prejudice incurred by the moving party and the degree of fault by the offending party.

Magistrate Judge Almond highlighted the falsehoods presented by Navarro and Persaud and added that he was “frustrated to be faced with additional spoliation” in light of the prior motion for sanctions. He was unpersuaded by Defendants’ arguments that “an adverse jury instruction or some lesser penalty would remedy the discovery violations” as the “only reasonable conclusion to draw from this record is that Mr. Navarro and Mr. Persaud intended, by their respective actions, to deprive Plaintiff of the relevant information.” Magistrate Judge Almond stated that he had the discretion to “presume that the lost information was unfavorable to the party who failed to preserve it; instruct the jury of this adverse presumption; or dismiss the action or enter default judgment.” He noted that the prior sanction of default judgment was unable to deter these Defendants from engaging in the same type of misconduct.

Magistrate Judge Almond stated that it was “nearly impossible, at this point, to attempt to reliably identify the nature of the lost information or to reliably determine what information actually existed during the relevant period.” Id. at *4. Therefore, “a default judgment is the only effective sanction to remedy this intentional discovery violation.” Magistrate Judge Almond added that the “interests of justice and upholding the credibility of our civil litigation system dictate the entry of default judgment as the only reasonable sanction on this record.” He therefore recommended that sanction pursuant to Rules 37(b)(2)(A)(vi), 37(c)(1)(C), and 37(e)(2), as well as the court’s inherent power “to protect the integrity of the judicial process.”