Case Law

“Mere Speculation” of Spoliation is Not Enough to Issue Sanctions under Rule 37(e)


HCC Ins. Holdings, Inc. v. Flowers, 2017 U.S. Dist. LEXIS 12120 (N.D. Ga. Jan. 30, 2017) In this tort case, the plaintiff requested an adverse inference sanction against the defendant. The plaintiff alleged that the defendant, an employee of the plaintiff, misappropriated the plaintiff’s trade secrets from her company computer to her personal devices shortly before resigning, and subsequently destroyed the documents after receiving a copy of the complaint. The defendant acknowledged that she and her husband, an IT professional, threw away their thumb drive and utilized various programs to “clean” and maintain the defendant’s personal computer files after the court ordered defendant to turn over her electronic devices. However, they denied using the programs to destroy data. During extensive discovery, three forensic experts examined the defendant’s laptop, electronic devices and storage accounts. Ultimately, they did not find any of the plaintiff’s “confidential information or trade secrets”, and the plaintiff did not present any evidence of such information in the defendant’s custody or control. However, the plaintiff claimed this was the result of the defendant and her husband’s “suspicious activities to cover their tracks.” The Court, applying Fed. R. Civ. P. 37(e) which requires the parties to preserve electronically stored information, determined that the defendant breached this duty by utilizing the “cleaning” programs. However, while the court found the defendant’s actions “troubling”, it held that the behavior did not warrant sanctions. The court then turned to its three-factor test to prove spoliation: (1) the missing evidence existed at one time; (2) the defendant had a duty to preserve the evidence; and (3) the evidence was crucial to the plaintiff's prima facie case. Because the plaintiff supplied no more than “mere speculation” to prove the claims against the defendant, the court denied the plaintiff’s motion for sanctions.

Keywords: sanctions, electronic devices, duty to preserve, intent to deprive, bad faith, lost information