WAYNE B. HERRMANN, Plaintiff,
RAIN LINK, INC., et al., Defendants.
REPORT & RECOMMENDATION
K. GARY SEBELIUS, Magistrate Judge.
This matter comes before the court upon Plaintiff's Motion for Spoliation Sanctions (ECF No. 125). Plaintiff Wayne B. Herrmann seeks spoliation sanctions including: (1) adverse inference jury instructions and analogous inferences by the court on the pending summary judgment briefing; (2) the admission of evidence related to defendants' spoliation of evidence; (3) the exclusion of certain evidence and testimony that plaintiff contends he is not able to examine because of defendants' spoliation of evidence; (4) an award of attorney fees; and (5) additional monetary sanctions. Because the present record does not demonstrate that plaintiff was prejudiced by the destruction of evidence, the undersigned recommends that the district judge deny plaintiff's motion in so far as it seeks adverse inference jury instructions and analogous inferences by the court in conjunction with summary judgment briefing, attorney fees, and additional monetary sanctions. The remainder of the sanctions plaintiff seeks pertain to the admission and exclusion of evidence at trial. The magistrate judge recommends that the district judge deny the remainder of plaintiff's motion without prejudice. As discussed in more detail below, it is a close call whether plaintiff was prejudiced by the destruction of metadata associated with a memorandum drafted by defense counsel. The undersigned recognizes that another judge might reach a different conclusion. And apart from spoliation sanctions, the judge who will preside over the trial of this case could find that admission of some evidence concerning spoliation might be admissible on grounds other than as a sanction. In short, issues concerning admission and exclusion of evidence are best left to the judge presiding over the trial.
Plaintiff alleges that Rain Link, Inc. violated the Americans with Disabilities Act, 42 U.S.C. § 12101, et seq., and the Kansas Act Against Discrimination, § 44-1001, et seq., when it did not permit him to return to work, failed to offer reasonable accommodation for his disability, and ultimately terminated his employment. He also claims Dennis Dixon and Shonda Chapa- both of whom held Rain Link shares along with plaintiff-breached fiduciary duties owed to plaintiff and oppressed his rights as a minority shareholder. Plaintiff also asserts a claim under the Kansas Wage Payment Act, K.S.A. 44-312, et seq., alleging that Rain Link failed to pay him his earned bonus.
The present dispute stems from defendants' spoliation of evidence. It is undisputed that defendants failed to properly preserve documents and electronically stored information (ESI) and in some cases destroyed documents and ESI. Plaintiff has moved for spoliation sanctions to correct what he contends is the prejudice he has suffered as a result of the destruction of evidence in this case.
Spoliation is the "destruction or significant alteration of evidence, or the failure to preserve property for another's use as evidence in pending or reasonably foreseeable litigation.'" Federal courts have authority to impose a variety of sanctions for spoliation of evidence. However, a "party can only be sanctioned for destroying evidence that it had a duty to preserve, and such duty arises when the party has notice that the evidence is relevant to litigation or when a party should have known that the evidence may be relevant to future litigation." "This notice may come at hands of differing events, but mostly commonly, a party is deemed to have notice of pending litigation if the party has received a discovery request, a complaint has been filed, or any time a party receives notification that litigation is likely to be commenced."
The Tenth Circuit has stated that a spoliation sanction is proper when (1) a party had a duty to preserve evidence because it knew, or should have known, that litigation was imminent, and (2) the adverse party was prejudiced by the destruction of the evidence. If an aggrieved party seeks an adverse inference jury instruction-as plaintiff does here-that party must also prove bad faith on the part of the producing party. Negligence in losing or destroying documents is not sufficient "because it does not support an inference of consciousness of a weak case."
A. Defendants allowed the destruction of evidence they had a duty to preserve.
Defendants do not dispute that Rain Link received a letter from the Kansas Human Rights Commission (KHRC) dated June 10, 2009, notifying Rain Link of its obligation to preserve documents because plaintiff had filed an administrative charge of discrimination. In conjunction with the briefing on a discovery dispute, defendants previously represented to the court that they anticipated litigation to be imminent at the time they received the KHRC letter. Since receiving the KHRC letter, it is clear that, at a minimum, defendants failed to properly preserve, and in some cases destroyed, documents. The present record, however, does not demonstrate that plaintiff was prejudiced or that defendants acted in bad faith.
B. Plaintiff has not shown prejudice.
Plaintiff argues that prejudice and intentional spoliation of evidence are related in that the court may presume prejudice if the spoliation was intentional. In support, Plaintiff cites In re Krause, a 2007 opinion from the U.S. Bankruptcy Court for the District of Kansas. Krause, however, relies on the often-cited Zubulake opinions from the Southern District of New York for their pronouncements concerning willful spoliation and relevance: "When evidence is either willfully or intentionally destroyed in bad faith, that fact alone is sufficient to demonstrate... relevance [of the destroyed documents]." Since Krause, however, the Tenth Circuit has issued opinions that make clear it is necessary to demonstrate prejudice. Because Krause predated those opinions, the court does not find its statements persuasive in this context. Plaintiff cites no authority from the Tenth Circuit for his proposition that he need not show prejudice so long as the destruction of documents was intentional. Moreover, the court does not find that the document destruction here was in fact intentional. The examples of document destruction resulted from defendants' failure to suspend their routine practices, which under the circumstances, demonstrates negligence. It does not suggest an intent to deprive plaintiff of evidence. This includes the destruction of draft meeting minutes, which defendants contend occurred as a routine practice to prevent draft documents from being inadvertently signed and filed. Plaintiff is not relieved of his obligation to make a showing of prejudice.
In the context of demonstrating prejudice, the moving party has the burden to demonstrate actual prejudice rather than theoretical prejudice. This requires some showing that the destroyed evidence would have been relevant to the claims or defenses in the case. It is not enough to speculate that the moving party is prejudiced because the evidence no longer exists, for this is true in any case involving spoliation of evidence.
Defendants contend that a portion of documents referenced in plaintiff's motion either never existed, were produced to plaintiff in discovery, or were properly withheld based on a claim of privilege. Plaintiff contests these assertions with respect to some documents, but the court will not delve into details concerning these documents where plaintiff has not attempted to show he suffered prejudice. That is, the court will only address those documents referenced in the portion of plaintiff's briefs addressing prejudice. As discussed below, these include: correspondence concerning a Rain Link loan ...