Ninth Circuit Upholds Dismissal of Complaint and $65,000 Sanction for Spoliation of Computer Files Under Court's Inherent Authority
Dr. Mauricio Leon (“Leon”) was hired by the defendant in 2001, and in mid-2002, he began complaining of mismanagement of a federally-funded project. In April 2003, IDX put Leon on unpaid leave and brought an action for declaratory relief, seeking to establish that it could terminate him without violating the anti-retaliation provisions of the False Claims Act, SOX and the ADA. In May 2003, Leon filed his own action, which included claims for retaliation under various statutes and state law claims.
On April 30 and May 7, 2003, IDX’s attorney’s sent letters to Leon’s attorney, requesting that Leon return the IDX-issued laptop to IDX. They cautioned that Leon should take care to preserve all data, and to ensure that no data on the laptop was lost or corrupted “so as to avoid any possible despoliation of evidence.” The parties subsequently agreed that Leon could keep the laptop for the duration of an audit of the federally-funded project. The audit was completed in July, and by October, counsel for both parties were negotiating the return of the laptop. IDX’s computer forensics expert received the laptop in February, 2004.
After conducting a forensic analysis, IDX's expert reported that all data in the hard drive’s unallocated space had been intentionally wiped, and also reported that the computer had been used to view and download pornography. The expert concluded that more than 2,200 files had been deleted. After receiving this information, IDX moved for dismissal of Leon's action based on Leon's intentional spoliation of evidence.
In his deposition, Leon admitted deleting entire directories of personal files after he was placed on leave by IDX in April 2003. He also stated that the week before he shipped the computer back to IDX he wrote a program to “wipe” any deleted files from the unallocated space in the hard drive. He also admitted that some of these files included pornographic content.
Judge Marsha J. Pechman of the United States District Court for the Western District of Washington, dismissed all of plaintiff’s claims with prejudice after determining that he had despoiled evidence by deleting 2,200 files from his IDX-issued laptop computer during the pendency of the litigation. The court also imposed a $65,000 monetary sanction, based upon the costs and fees IDX incurred in litigating the issue of spoliation. A copy of the district court’s order is available here.
On appeal, the Ninth Circuit found no abuse of discretion and upheld the district court’s spoliation sanctions.
The appellate court stated that, before imposing the harsh sanction of dismissal, a court should consider five factors, citing Anheuser-Busch, Inc. v. Natural Beverage Distribs., 69 F.3d 337, 348 (9th Cir. 1995). These factors are: (1) the public's interest in expeditious resolution of litigation; (2) the court's need to manage its dockets; (3) the risk of prejudice to the party seeking sanctions; (4) the public policy favoring disposition of cases on their merits; and (5) the availability of less drastic sanctions. The court found that four of the five factors supported the district court’s decision to dismiss, and that only the fourth factor weighed against it. It noted, however, that, standing alone, the public policy favoring disposition of cases on their merits was not sufficient to outweigh the other four factors.
The court further upheld the $65,000 monetary sanctions, because the amount was reasonable and because Leon’s behavior constituted or was tantamount to bad faith.