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Plaintiff’s Reformatting of Hard Drives Sought in Discovery Warrants Adverse Inference Instruction, Not Dismissal

Posted in CASE SUMMARIES

Johnson v. Wells Fargo Home Mortgage, Inc., 2008 WL 2142219 (D. Nev. May 16, 2008)

In this case, plaintiff alleged that defendant erroneously reported two of his real property mortgage loans delinquent to credit reporting agencies.  Plaintiff claimed that defendant foreclosed on one loan and continued to erroneously report both loans delinquent after plaintiff spent nine months making multiple phone calls and sending correspondence, including cancelled checks and loan documents, verifying the loans were current.

Defendant contended that plaintiff’s Fair Credit Reporting Act claim was supported with various letters he drafted on his two laptops and were “the very foundation of his claim.”  Defendant further contended that computer evidence revealed plaintiff may have manufactured the documents to support his claim and then flagrantly reformatted the hard drives on the laptops shortly after defendant informed him that they had been formally requested and were relevant to the case.

Plaintiff had previously objected to defendant’s request for production, but indicated he would produce documents located on the laptops if defendant would specify which documents it was requesting.  After defendant’s many attempts to come to a resolution over this discovery request, defendant ultimately filed a motion to compel the hard drives, which the court granted.  Prior to the motion to compel, but after the request for production, however, plaintiff reformatted and/or reinstalled both hard drives.

Defendant eventually received the hard drives and a forensic analysis revealed that both laptops had been reformatted and/or reinstalled.  Further, although he claimed to have made back-up files before reformatting the drives, plaintiff did not produce any saved back-up files of the information that was on the hard drives prior to the reformatting/reinstallation.  Thus, defendant claimed it was severely prejudiced based on plaintiff’s willful conduct, and that dismissal of plaintiff’s FCRA claim was warranted.

The court decided the issue of sanctions under its inherent authority, and denied defendant’s motion for sanction in the form of dismissal.  Instead, it found that an adverse jury instruction creating a presumption in favor of defendant that the spoliated evidence was unfavorable to plaintiff was an appropriate, less drastic sanction.  The court explained several reasons for its decision.

First, defendant’s forensic computer expert found evidence that plaintiff tampered with the hard drives, and plaintiff did not dispute that he had reformatted the hard drives while defendant was requesting their production.  Although plaintiff claimed he saved and backed up the data on his hard drives, he failed to produce any saved, back-up files proving he did so.  The court observed that plaintiff’s credibility was solely within the province of the jury and that the jurors would be able to draw their own inferences based on the timing of plaintiff’s conduct and the failure to produce any saved back-up files.

Second, defendant’s expert did retrieve two letters from plaintiff’s hard drives, and would offer testimony that plaintiff created the documents more than one year after plaintiff claimed he created them.  Defendant’s expert’s analysis suggested that plaintiff created both of these documents just five days before his counsel sent a letter to defendant threatening suit and just one month prior to filing this action.  Plaintiff argued that such testimony was pure speculation and “completely meaningless unless it is known whether the date and time set on the computer were correct when the documents were created.”  The court again noted that plaintiff’s credibility was solely within the province of the jury and that defendant would have the opportunity to present evidence from its computer expert indicating plaintiff had backdated the letters.

Third, defendant asserted that its computer expert had retrieved information that showed plaintiff may have been creating other documents in anticipation of litigation and backdating them to fit his theory of liability.  The court found that, since defendant had evidence to rebut any material that plaintiff might use to overcome the presumption, dismissal was not necessary.

Finally, there was evidence that plaintiff’s wife had performed the alleged back-up of the hard drives and performed the reformatting and reinstallation on one of the laptops, but that she failed to disclose that information to defendant when asked about it in her deposition.  Further, plaintiff’s own forensics expert had stated that he had assisted plaintiff’s wife perform the reformatting, and that she had not asked about first backing up any of the information on the hard drive.  The court noted that defendant would have the opportunity to present the conflicting testimony at trial and the jury would weigh the evidence and determine the credibility of the witnesses.

The court concluded that, under these facts, it appeared the evidence that defendant’s forensic computer expert retrieved, together with the timing of plaintiff’s conduct, actually supported defendant’s theory of the case – that plaintiff manufactured this action and the evidence he planned to use to support the action – rather than prevented defendant from fully developing its theory.  As such, the court found that an adverse inference instruction was a more appropriate, less drastic sanction.