Court Finds Wife Liable for Agent-Husband’s Intentional Deletions, Recommends Default Judgment

Malibu Media, LLC v. Tashiro, No. 1:13-cv-00205-WTL-MJD, 2015 WL 2371597 (S.D. Ind. May 18, 2015)

In this copyright infringement case, the court found that Defendants “spoiled evidence, committed perjury, and failed to discharge their duties to conduct discovery reasonably and in good faith” and recommended default judgment.  Notably, in addition to more familiar issues surrounding the topic of spoliation, the court’s opinion addressed the question of whether spoliation occurs when information is still recoverable (yes) and the propriety of imputing an agent’s bad acts in discovery where, as in this case, Defendant Wife “left it to her agent—her husband—to respond to Plaintiff’s document requests.”

Defendants were accused of infringing on Plaintiff’s copyrights by downloading copyrighted movies via a BitTorrent client. Following examination of Defendants’ hard drives in discovery, Plaintiff accused them of spoliation. Summarizing broadly, the court concluded that both defendants were culpable for Defendant Husband’s intentional deletion of potentially relevant evidence in bad faith.  With regard to Defendant Husband, the court found that he had a duty to preserve even before being named as an individual defendant and  based its finding of bad faith  on his “strong motive” to erase the files because of his likely liability as established by his repeated invocation of his Fifth Amendment privilege in response to questions regarding his use of BitTorrent and his truthfulness in the litigation; on the timing of the deletions (the night before Defendants’ hard drives were turned over for forensic examination); and on the nature of the files deleted—namely, numerous files “associated with BitTorrent use.” Notably, the court indicated that Defendants’ claims that the deleted files were not associated with the plaintiff did not disturb the court’s conclusion that the deletions were in bad faith.  The court also noted that expert evidence establishing Defendants’ likely liability supported its inference that Defendant Husband deleted the at-issue files to escape that liability, thus supporting the necessary finding that the evidence was deleted “for the purpose of hiding adverse evidence.”  (“Sanctions for spoliation thus may not be imposed simply because evidence was destroyed; instead, such sanctions are appropriate only if the evidence was destroyed for the purpose of hiding adverse information.”)

As to Defendant Wife, the court found that her “liability [arose] from two sources”: 1) her “failure to investigate her responses to Plaintiff’s discovery requests” as established by her own deposition testimony that she did not “investigate whether [her] answers to [her] interrogatories were truthful prior to signing them” and that she did not search her house after learning of her own failure  to disclose the existence of a particular hard drive; and 2) Defendant Husband’s misconduct was attributable to her (agency).  Regarding the second source of liability, the court concluded that because Defendant Wife had relied upon her husband to respond to discovery—even before he was named as a party to the action— she was liable for his behavior and, thus, also culpable for the spoliation.  The court further reasoned that Defendant Husband’s invocation of his Fifth Amendment privilege regarding whether he “agreed with his wife to hide the truth in this case” supported an inference that he was not only protecting himself, but also his wife.

Addressing claims that no spoliation occurred because all of the at-issue files were still recoverable (i.e., marked as deleted but not yet overwritten), the court concluded that even if the files were recoverable (a claim that the court did not find credible), Defendant Husband (and thus, Wife) would not be absolved of liability.  In so finding, the court noted that “mere deletion of files has evidentiary ramifications,” i.e., the alteration of metadata, and reasoned that such alteration would have impeded Plaintiff’s use of the files in proving its claims.  The court also relied upon the 7th Circuit case, Barnhill v. United States, 11 F.3d 1360 (7th Cir. 1993), for the proposition that a court may rely on its inherent powers to enter default judgement “even when the innocent party ‘incur[s] no real inconvenience’ and ‘suffer[s] no real prejudice.’”

Here, Defendants argue that, because the deleted files were purportedly recoverable, “Malibu was not prejudiced” and “[t]here was no damage done by the purported spoliation.” [Dkt. 137 at 10.] As Barnhill indicates, however, the absence of such prejudice is not dispositive. By attempting to hide or destroy evidence, Defendant Charles attempted to work a fraud on this Court, obstruct Plaintiff’s pursuit of its case, and subvert the judicial process. Defendant Charles’ wrongdoing thus strikes at the “integrity and credibility of the civil justice system,” 11 F.3d at 1368, and so even if Charles’ conduct had not harmed Plaintiff, the Court would not allow his attempted fraud to go unpunished.

Finally, the court concluded that its determination was “consistent with the general principles underlying litigation in the federal courts,” i.e., that discovery is intended to allow parties to obtain full knowledge of the issues and facts before trial and that Defendant Husband’s “conduct [was] simply not consistent with these principles.”

The court’s opinion also extensively addressed Defendants’ alleged perjury in the course of the litigation, and in particular discovery, including Defendant Wife’s failure to disclose the existence of a particular, relevant computer until late in the discovery process and Defendant Husband’s false testimony at deposition.  The court concluded that Defendants’ failures to tell the truth, either purposefully or as the result of an insufficient investigation to respond to discovery, were further grounds for sanctions.

Ultimately, the court recommended that default judgment be entered against Defendants.

A full copy of the court’s opinion and order is available here.

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