“Troubling” Activity with No Proof of Spoliation Insufficient to Warrant Sanctions

HCC Ins. Holdings, Inc. v. Flowers, No. 1:15-cv-3262-WSD, 2017 WL 393732 (N.D. Ga. Jan. 30, 2017)

In this case, the court declined to impose spoliation sanctions, despite Defendant and her husband’s “troubling” behavior, where Plaintiff failed to “present evidence to cast significant doubt” on the explanations for the at-issue behavior and failed to establish that the at-issue information—namely Plaintiff’s trade secrets and confidential information—had ever been “resident” on Defendant’s personal computer or otherwise in her control.

Plaintiff sought an adverse inference for Defendant’s alleged deletion of Plaintiff’s information from her personal laptop and other devices and for discarding a thumb drive despite a duty to preserve. In support of its motion, Plaintiff described several instances of “suspicious” activity.  Specifically, Plaintiff noted that Defendant had moved and deleted a substantial number of emails and other ESI on Plaintiff’s information systems and also attempted to remotely access Plaintiff’s networks prior to her resignation. Plaintiff also focused on the actions of Defendant’s husband, “an experienced IT professional with 35 years of experience,” who Plaintiff argued “could have utilized several methods to transfer HCC’s trade secrets to [Flowers’] personal devices without leaving any evidence on her HCC Computer.”  Plaintiff identified several instances of suspicious behavior by Defendant’s husband, including twice plugging a thumb drive into Defendant’s personal laptop but claiming it did not work properly and that the drive was discarded and running CCLeaner and Defraggler on Defendant’s laptop, even after the order for a forensic examination was issued.  In response, Defendant (and her husband) provided a number of explanations for the behavior, including that CCleaner had been used as a registry cleaner to get the laptop running properly after a crash and a system update.

Ultimately, the examination of Defendant’s computers, storage devices, email and cloud storage accounts “did not locate any HCC confidential information or trade secrets” and Plaintiff did not present any evidence of such information in Defendant’s possession. However, Plaintiff claimed this was the result of Defendant and her husband’s efforts to cover their tracks.

Taking up the motion, the court laid out the relevant legal standards, including that “[a] party seeking spoliation sanctions must prove that (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.” Regarding the first element, the court noted that “[i]t is axiomatic that in order for there to be spoliation, the evidence in question must have existed and been in control of a party.” Moreover, the court reasoned, an adverse inference is only permitted upon a showing of bad faith.  The court also noted the recent amendment to Fed. R. Civ. P. 37(e), which requires a finding of intent to deprive before an adverse inference may be ordered.

In the present case, the court reasoned that Plaintiff offered “only bare speculation” that its data was transferred to Defendant’s laptop, even after “extensive discovery” and concluded that Defendant’s explanations for the suspicious activity were “generally consistent with the forensic evidence” and that “even if temporal proximity in combination with inconsistent or suspect explanations were enough to establish that spoliation occurred, HCC fail[ed] to present evidence to cast significant doubt on Mr. Flower’s stated reasons for his actions.” The court also rejected Plaintiff’s reliance on several cases to argue that the timing of Defendant’s husband’s use of CCleaner and other programs was sufficient to show that sanctions were warranted, reasoning that in those cases, unlike the present case, it was “undisputed … that relevant information existed on the destroyed devices.”

Ultimately, the court indicated that Plaintiff had “not shown that the evidence it claims Flowers destroyed was resident on Flowers’ personal laptop or on a cloud-storage device in her control” and thus “fail[ed] to meet its burden” to show that spoliation sanctions were appropriate. Plaintiff’s motion was denied.

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

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