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Citing Rule 37(e), Court Denies Spoliation Sanctions Despite the Existence of a Duty to Preserve

Posted in CASE SUMMARIES

Olson v. Sax, 2010 WL 2639853 (E.D. Wis. June 25, 2010)

Citing a lack of evidence that defendants “engaged in the ‘bad faith’ destruction of evidence for the purpose of hiding adverse evidence” and Fed. R. Civ. P. 37(e), the court denied plaintiff’s motion for sanctions for defendants’ destruction of relevant videotape, despite the existence of a duty to preserve.

On July 31, 2008, defendants terminated plaintiff’s employment alleging that she had “filed [sic] out false credit slips”.  In her subsequent lawsuit, plaintiff alleged she was terminated for discriminatory reasons.  The alleged theft was apparently recorded on videotape on July 22, 2008.  Plaintiff asked to see the tape upon her termination.  It is unclear if her request was granted at that time.  The tape was also requested in the normal course of discovery, although the date of that request is also unclear.  Regardless, defendants were unable to produce the tape because it had been erased.  Plaintiff sought sanctions precluding defendants from producing evidence of the alleged theft and an award of expenses for bringing the motion.

Defendants argued that they were protected from sanctions pursuant to Rule 37(e), which precludes the imposition of sanctions where electronically stored information is lost as the result of “routine, good faith operation[s] of an electronic information system.”  Specifically, the defendants asserted that the lost recording was created using a digital video recorder that saved surveillance footage for approximately 29 days before automatically recording over it.  Defendants further asserted that they were unaware of the possibility of litigation until receipt of a letter from plaintiff’s counsel on February 24, 2009 – approximately seven months after the alleged theft occurred (and long after the tape had been erased).

Based on the dates of correspondence between the parties (and their counsel), the court determined that the defendants were aware of the possibility of litigation by August 11, 2008 and thus had a duty to preserve the evidence.  The court further determined that as of that date, the video recording had not been overwritten.

Citing Rule 37(e), the court nonetheless declined to impose sanctions absent evidence that the destruction was in “‘bad faith’ for the purpose of hiding evidence” – a “prerequisite to imposing sanctions for the destruction of evidence.”

  • http://blog.zlti.com/ ASweet

    Is there a time basis for which a “bad faith” effort can be established? In this case, the plaintiff only had 10 days between the knowledge of possible litigation and then end of their normal retention period. Had it been a month, say, would the court have ruled differently? Or is some other factor in play?

  • lawyer

    The loss of the tape, even without sanctions, probably hurts the defendant more in the overall litigation, since they would now have a harder time establishing that plaintiff was fired for a non-discriminatory cause.

  • http://gartner.zlti.com/ ASweet

    Absolutely. But does the fact the employee was fired automatically trigger the idea that litigation may occur, putting the burden on the defendant to preserve?