Motion for Spoliation of Evidence in Nevada

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MEMORANDUM OF POINTS AND AUTHORITIES

 

III.       Legal Standard.

Litigants owe an uncompromising duty to preserve evidence that they know or reasonably should know will be potentially relevant to a pending or reasonably foreseeable lawsuit.  Leon v. IDX Sys. Corp., 464 F.3d 951, 959 (9th Cir. 2006).  That duty requires suspending any practice or policy of destroying documents or things relevant to the litigation and putting in place a litigation hold.  Zubulake v. UBS Warburg LLC (Zubulake IV), 220 F.R.D. 212, 218 (S.D.N.Y. 2003); see also IO Group, Inc. v. GLBT Ltd. No. C-10-1282, 2011 U.S. Dist. LEXIS 120819, at 14-15 (N.D. Cal. Oct. 19, 2011) (failure to suspend automatic deletion function of email system violated duty to preserve).  And there is no question that the duty to preserve applies not only documents and other physical evidence of the unlawful conduct alleged but also to physical property that may constitute or contain evidence relevant to claims in the litigation.  West v. Goodyear Tire & Rubber Co., 167 F.3d 776, 779 (2d Cir. 1999)) (stating that spoliation “refers to the destruction or material alteration of evidence or to the failure to preserve property for another’s use as evidence in pending or reasonably foreseeable litigation”);  Banks, 120 Nev. at 830-31 (holding defendant had duty to preserve equipment involved in injury).

Where a party fails to preserve relevant evidence, trial courts may impose sanctions under their inherent powers to manage their dockets.  Leon, 464 F.2d at 958; Glover v. BIC Corp., 6 F.3d 1318, 1329 (9th Cir. 1993).  Sanctions serve the purpose of deterring parties from engaging in spoliation but, more importantly, place the risk of erroneous judgment about whether something should be preserved on the party who wrongfully created the risk and restore the prejudiced party to the position it would have occupied had the evidence not been destroyed.  See, e.g., West, 167 F.3d at 779; DongAh Tire & Rubber Co., Ltd. v. Glasforms, Inc., No. C 06-3359, 2008 U.S. Dist. LEXIS 111150, at 12 (N.D. Cal. Sept. 19, 2008).

Available sanctions include: (1) dismissing the spoliating party’s claims or defenses, Leon, 464 F.3d at 959; (2) excluding testimony or evidence based on the spoliation, Glover, 6 F.3d at 1329; and (3) instructing the jury to infer that evidence destroyed or suppressed was adverse to the party who destroyed it.  Id.; Residential Funding Corp v. Degeorge Fin. Corp., 306 F.3d 99, 107 (2d Cir. 2002).

Sanctions are appropriate where: (1) the party with control over the evidence had an obligation to preserve it when it was destroyed; (2) the evidence was destroyed with a culpable state of mind; and (3) the destroyed evidence was “relevant,” meaning that a reasonable person could find that the evidence, if it still existed, would support that claim or defense.”  See Residential Funding Corp., 306 F.3d at 107; UMG Recordings, Inc. v. Hummer Winblad Venture Partners (In re Napster, Inc. Copyright Litig.), 462 F.Supp.2d 1060, 1078 (N.D. Cal. 2006).

The first factor is met if litigation was probable or reasonably anticipated at the time that the potentially relevant evidence was destroyed.  In re Napster, 462 F.Supp.2d at 1068.

The second factor, culpability, is satisfied by “[s]imple notice of ‘potential relevance to the litigation.’”  Glover, 6 F.3d at 1329.  Bad faith is not required, as negligent destruction is generally sufficient to warrant adverse inference instructions.  See, e.g., Glover, 6 F.3d at 1329; Residential Funding Corp., 306 F.3d at 113.  Even if a level of culpability higher than ordinary negligence were required, a failure to act to preserve data is enough to satisfy the higher standard.  See IO Group, Inc., 2011 U.S. Dist. LEXIS 120819, at 19-20 (party “consciously disregarding” its discovery obligations by failing to turn off its automated deletion function); In re Napster, 462 F.Supp.2d at 1070 (failure to suspend e-mail destruction policies is grossly negligent).

The third factor requires “some evidence suggesting” that destroyed documents were potentially relevant to the lawsuit.  Kronisch v. United States, 150 F.3d 112, 128 (2d Cir. 1998).  Since the relevance of the destroyed documents cannot be clearly ascertained because the documents no longer exist, care must be taken to not require a too specific level of proof.  Id.  “Where one party wrongfully denies another the evidence necessary to establish a fact in dispute, the court must draw the strongest allowable inferences in favor of the aggrieved party.”  Nat’l Ass’n of Radiation Survivors v. Turnage, 115 F.R.D. 543, 557 (N.D. Cal. 1987) (inferring that destroyed materials were relevant); see also DongAh, 2009 U.S. Dist. LEXIS 62668, at 29 (stating “spoliation of evidence raises a presumption that the destroyed evidence goes to the merits of the case, and further, that such evidence was adverse to the party that destroyed it”).  Indeed, if victims of spoliation are held “to too strict a standard of proof regarding the likely contents of the destroyed evidence …,” it “would allow parties who have … destroyed evidence to profit from that destruction.” Residential Funding, 306 F.3d at 109 (quoting Kronisch, 150 F.3d at 128).

“[I]f spoliation is shown, the burden of proof logically shifts to the guilty party to show that no prejudice resulted from the spoliation” because that party “is in a much better position to show what was destroyed and should not be able to benefit from its wrongdoing.”  Hynix Semiconductor, Inc. v. Rambus Inc., 59 F.Supp.2d 1038, 1060 (N.D. Cal. 2006), rev’d on other grounds, 645 F.3d 1336, 1344-1347 (Fed. Cir. 2011).

In considering what spoliation sanction to impose, courts generally consider three factors: “(1) the degree of fault of the party who altered or destroyed the evidence; (2) the degree of prejudice suffered by the opposing party; and (3) whether there is lesser sanction that will avoid substantial unfairness to the opposing party.”  Nursing Home Pension Fund v. Oracle Corp., 254 F.R.D. 559, 563 (N.D. Cal. 2008) (quotation omitted); in re Napster, 462 F.Supp.2d at 1066-67.  Ultimately, the choice of appropriate spoliation sanctions must be determined on a case-by-case basis and should be commensurate to the spoliating party’s motive or degree of fault in destroying the evidence.  See Unigard Security, 982 F.2d at 368; In re Napster, 462 F.Supp.2d at 1066-67.  Whatever choice is made with regard to sanctions, the decision is committed to the trial court’s sound discretion.  See Aloi v. Union Pacific Railroad Corp., 129 P.3d 999, 1002 (Colo. 2006) (“A trial court has broad discretion to permit the jury to draw an adverse inference from the loss or destruction of evidence”).

In the context of adverse inference jury instructions, Nevada courts apply different tests.  When evidence is willfully suppressed, NRS 47.250(3) creates a rebuttable presumption that the evidence would be adverse if produced.  Bass-Davis v. Davis, 122 Nev. 442, 448, 134 P. 3d 103, 106 (2006).  In such cases, the jury is instructed to presume the adverse evidence exists.  Id.

However, the Nevada Supreme Court has held that willful or intentional spoliation of evidence requires the intent to harm another party through the destruction and not simply the intent to destroy evidence. Id. (citations omitted).  Thus, before a rebuttable presumption that willfully suppressed evidence was adverse to the destroying party applies under NRS 47.250(3), the party seeking the presumption’s benefit has the burden of demonstrating that the evidence was destroyed with intent to harm.  Id. (citations omitted).  When such evidence is produced, the presumption that the evidence was adverse applies, and the burden of proof shifts to the party who destroyed the evidence.  To rebut the presumption, the destroying party must then prove, by a preponderance of the evidence, that the destroyed evidence was not unfavorable.  If not rebutted, the fact-finder then presumes that the evidence was adverse to the destroying party.

On the other hand, NRS 47.250(3) does not apply when evidence is negligently lost or destroyed, without the intent to harm another party.  Instead, an adverse evidentiary inference should be permitted in such cases.  Id. (citations omitted).  In such cases, the jury is instructed that it may “infer” the existence of the adverse evidence, but it is not bound to do so.

Generally, a district court’s discovery sanctions will not be reversed unless there has been an abuse of discretion.  Foster v. Dingwall, 126 Nev.Adv.DP.6, 227 P.3d 1042, 1048 (2010).  NRCP 37 provides for discovery sanctions for a party’s willful violation of a discovery order and it is within the district court’s “inherent equitable powers” to dismiss a defense for abusive litigation practices.  Young v. Johnny Ribeiro Bldg, Inc., 109 Nev. 88, 92, 787 P.2d 777, 779 (1990) (quotation omitted).

As an exercise of the district court’s equitable powers, discovery sanctions must be “just and … relate to the claims at issue.”  Foster, 126 Nev. Adv.Op.6, 227 P.3d at 1048.  Dismissal of a party’s complaint as a sanction does not need to be “preceded by other less severe sanctions.” Bahena v. Goodyear Tire & Rubber Co. (Bahena 1), 126 Nev.Adv.Op. .26, 235 P.3d 592, 598 (2010) (quotation omitted).

IV.                               ARGUMENT

  1. A.                Sanctions Should Be Awarded Given Hickmore’s Egregious Disregard of Her Duty to Preserve Evidence.

 

There can be no debate that evidence has been lost in this case or that Hickmore is to blame for such spoliation.  Similarly, there can be no question that sanctions are warranted because: (1) Hickmore had an obligation to preserve the iPhone 5 and laptop when she exchanged them for newer versions; (2) Hickmore knew of her obligation to preserve the data contained on the devices and not only failed to preserve it, but actively took steps to ensure the data was lost by turning in the devices to third parties who would erase them; and (3) the data those devices contained would uncontrovertibly support Link Tech’s claims.  See Residential Funding Corp., 306 F.3d at 107; Bass-Davis, 122 Nev. at 448.

  1. 1.                  After She Knew of Her Duty to Preserve, Hickmore Surrendered Her Data Devices – Not Once but Twice – Containing Information Relevant to Link Tech’s Claims.

 

For sanctions to be appropriate, Link Tech must first show that Hickmore, as the party with control over the evidence, had an obligation to preserve it when it was destroyed.  See Bass-Davis, 122 Nev. at 450.  While there can be debate as to the date on which a litigant’s duty to preserve crystalizes prior to the initiation of legal action, there is no question that the latest date that duty attaches is the date on which a complaint is filed.  In re Napster, 462 F.Supp.2d at 1068 (holding that the duty to preserve attaches as soon as litigation is probable or reasonable anticipated, even if a complaint has not yet been filed).  Here, Hickmore was served with the complaint on September 15, 2014.  See Pl.’s Compl.

The iPhone 6 was first released for sale on September 19, 2014.  CITE.  It is therefore beyond dispute that, at the time Hickmore tendered the phone back to the carrier, she was under a duty to preserve the information it contained.

More likely than not, Hickmore was also under a duty to preserve her laptop when she gave it up to Best Buy.  During her deposition, Hickmore’s answers regarding whether she had the laptop in her possession at the time the lawsuit was filed changed.  Indeed, after first evading a question about whether the laptop was in her possession when the lawsuit was filed, she initially claimed she didn’t remember when she last had the laptop and then later changed her story, claiming that her subsequent laptop, the one she received from BestBuy when she turned in her previous laptop, was the only laptop she had at the time this lawsuit was initiated:

Q.            So you used your own personal laptop?

A.            Uh-huh.

Q.            What kind of laptop?

A.            Oh, an HP maybe or Toshiba.  I can’t remember.

Q.            Do you still have it?

A.            No, not anymore.

Q.            When did you last have it?

A.            I don’t remember.

Q.            Months?  Years?

A.            Months ago.

Q.            Months ago?

A.            Uh-huh.

Q.            After this lawsuit was filed?

A.            Do I still have it?

Q.            Uh-huh.

A.            No.

Q.            When did you last have possession of it?

A.            I don’t remember.

Q.            Okay.  What computers did you have at the time this lawsuit was filed?

A.            My current laptop computer.

Q.            What is that?

A.            It’s an HP.

Q.            What model?

A.            I don’t know.

Q.            Did you have any other computer when this lawsuit was filed?

A.            No.

 

See Hickmore Dep., p. 89, l. 20 to p. 91, l. 3.  Following her deposition, Hickmore was asked to produce receipts documenting the date on which she purchased in the new laptop. See Ex. __ (Apr. 8, 2015 letter from R. Samuel to F. Berkley).  Her failure to do so, coupled with her changing story about whether she had the laptop at the time the complaint was filed, entitles Link Tech and this Court to infer that the exchange occurred after this complaint was filed and at a time when she knew of her obligation to preserve the device.  After all, the ability to prove otherwise lies solely with Hickmore, and she has failed to negate this inference when given the opportunity.

 

 

  1. 2.                  Hickmore’s Failure to Preserve These Devices Was, At Worse, Done Intentionally to Destroy Evidence Relevant to Link Tech’s Claims and, At Best, Done Negligently Without Due Regard for Her Duty to Preserve.

 

There can be no doubt that Hickmore’s sacrifice of her devices was done with the requisite culpability to warrant sanctions, as the second factor relevant to whether sanctions are appropriate, culpability, is satisfied by ordinary negligence – or the failure to preserve data when on “[s]imple notice of ‘potential relevance to the litigation.’”  Glover, 6 F.3d at 1329.  There can be no question of that here, as (i) Hickmore had been served with the complaint – which alleged that she conspired with Boyce and MNCP to misappropriate Link Tech information and transmit it to Boyce and MNCP – at the time she disposed of the devices; see Sect. IV(A), supra; and (ii) Hickmore knew that she had used her iPhone 5 and laptop for multiple purposes related to this litigation – including to check personal and business email, to keep her calendar, to tweet to potential candidates, and to text message Boyce, her boyfriend and MNCP President.  See Section II, supra.

Even if a level of culpability higher than ordinary negligence were required, the facts here satisfy that higher standard, as evidence exists from which one can reasonably infer that Hickmore deliberately intended to destroy information relevant to this suit and cover up evidence of her guilt.  Consider the sequence of events alone.  Hickmore, who knew of her duty to preserve evidence relating to the complaint, turned in her iPhone sometime between its release date on September 19, 2014 and the date of her deposition on March 1, 2015.  Given the recent filing of the complaint and the discovery requests with which she was served in February 2015, the allegation that she had misappropriated Link Tech data was certainly fresh in her mind.  Yet, with the knowledge she had a duty to preserve information relevant to this lawsuit, Hickmore at best recklessly exchanged the iPhone 5 she used while working for Link Tech for the new iPhone 6 and offered only the cavalier explanation for her conduct that she wanted the new one.

The facts are not better for Hickmore with respect to her laptop.  She testified during her deposition that she tendered her laptop back to Best Buy, exchanging it for a new one when it mysteriously stopped working.  See Hickmore Dep., p. 91, ll. 10-23.  As she did in response to questions concerning her iPhone 5, Hickmore resorted to equivocation and subterfuge when questioned about the timing of her destruction of the data on her laptop, first evading a question about whether the lawsuit was in her possession when the lawsuit was filed,[3] then claiming she didn’t remember when she last had the laptop,[4] and finally claiming that her current laptop, the one she received from BestBuy when she turned in her previous laptop, was the only laptop she had at the time this lawsuit was initiated.  See Hickmore Dep., p. 89, l. 20 to p. 91, l. 23.  Since her deposition, Hickmore has failed to produce any documentation showing the laptop exchange predated filing of this lawsuit despite requests that she do so.  And, as the nail in the proverbial coffin, Link Tech has established that Hickmore deleted emails from her work laptop prior to her departure, See, Byrnes Aff., ¶ 16, and the emails she attempted to delete unequivocally demonstrate that she was funneling Link Tech proprietary, trade secret information to her live-in boyfriend who had recently set up a competing business to Link Tech.  See, e.g. Hickmore Dep., Ex. 12-13; Byrnes Aff., Aff., ¶ 15.  Given that Hickmore deleted emails from her work computer, very likely to prevent detection by Link Tech of her unlawful conduct, it is logical that she would act to prevent detection of evidence on her personal devices once this lawsuit was filed.  Given all that, even if some proof of intent to destroy evidence were required, these facts are sufficient to meet that burden.  Bass-Davis, 122 Nev. at 448.

  1. 3.                  There Can Be No Question that the Evidence Lost Supported Link Tech’s Claims.

 

In order to support the award of sanctions, the final factor Link Tech must prove is a reasonable person would believe that the evidence, if it still existed, could support Link Tech’s claims.  See Residential Funding Corp., 306 F.3d at 107.  This factor is easily satisfied.  Indeed, Link Tech knows, from fragmentary data recovered from Hickmore’s Link Tech computer and Hickmore’s paltry responses to Link Tech’s discovery requests, that information relevant to this lawsuit was lost when she cavalierly or intentionally disposed of her devices.  Specifically, this fragmentary evidence proves that Hickmore sent emails from her work email to MNCP’s CEO, President, and Founder (and her boyfriend) and her personal yahoo account.  Even though fragments of these emails sent to Hickmore’s personal Yahoo account were recovered from Link Tech’s systems, Hickmore did not produce these emails (or any other relevant emails) in response to Link Tech’s requests for production – very likely because the emails were no longer in her possession after she disposed of her iPhone 5 and personal laptop.

And this is only the information Link Tech knows was lost because it was contained on both the personal devices and her work computer.  Hickmore admitted that she used the iPhone 5 and personal laptop computer to check personal and business email, to keep her calendar, and to tweet to potential candidates, among other things.  See pp. __, supra.  She almost certainly used her iPhone to text message Boyce, her boyfriend and MNCP President as well.  And, given potentially damning information found on Hickmore’s work device, it is highly likely that the information on Hickmore’s personal devices, which she likely believed Link Tech would never view, contained (i) a roadmap to the conspiracy between Hickmore, Boyce, and MNCP to have Hickmore infiltrate Link Tech as a new employee and take that evidence for the benefit for MNCP and Boyce, (ii) specific instructions from Boyce about what information he wanted her to take, (iii) evidence of how the misappropriated information was used by Boyce, Hickmore, and/or MNCP to unfairly solicit Link Tech business, and/or (iv) evidence that Hickmore violated her contractual obligation and common law duties to Link Tech by competing with Link Tech during and/or after her employment with Link Tech.  These devices certainly contained the complete version of the fragmentary emails recovered from Link Tech’s systems.  But, the Court and parties will never know what other evidence implicating Hickmore, Boyce, and MNCP’s involvement in the conspiracy to steal Link Tech’s valuable and trade secret information and to use it to unfairly complete with Link Tech might have been found because, due to Hickmore’s actions, the information has been irretrievably and forever lost.

  1. B.                 Given Hickmore’s Egregious and Willful Disregard of Her Duty to Preserve, This Court Should Issue a Directed Verdict Against Hickmore on All of Link Tech’s Claims and an Adverse Inference Instruction Against MNCP and Boyce on All Link Tech Claims.

 

In the present case, Hickmore clearly breached her duties to Link Tech by surreptitiously gathering and misappropriating confidential information and trade secrets, which she then provided to her boyfriend, Boyce, and MNCP to use in MNCP’s competing business activities with Link Tech.  This improper conduct has caused Link Tech considerable damage through the loss of valuable confidential information and customer accounts.  Knowing she was being sued by Link Tech for her improper conduct, Hickmore intentionally disposed of her laptop computer and her mobile phone which contained records of her secretive, illegal and improper activities that would undoubtedly evidence her conspiracy with Boyce and MNCP to steal Link Tech’s confidential information and trade secrets.  Given that, the loss of the devices has unquestionable prejudiced Link Tech’s rights to discovery in this case.

Link Tech now requests that the Court recognize Hickmore’s improper conduct as spoliation of evidence and impose appropriate sanctions against her in these proceedings.  At a minimum, such sanctions should include the determination that the jury in these proceedings be instructed that there is an inference that the evidence destroyed or suppressed was adverse to Defendants and would support Link Tech’s claims against ALL the Defendants in these proceedings.

With respect to Hickmore, the sanctions must necessarily be more severe.  Indeed, as Hickmore testified during her deposition, she was aware of her duty to preserve evidence relevant to this lawsuit at the time the lawsuit was filed.  See Hickmore Dep., p. 92 ll. 23-25 to p. 93 l.1 (“Hickmore Dep.”).  Combined with incontrovertible evidence of her unlawful misappropriation and her attempt to wipe that incriminating information from her Link Tech computer, her act of knowingly discarding her iPhone 5 and laptop after this suit commenced were almost certainly done in a willful attempt to cover her tracks.  Even if the destruction was not willful, at best, she tossed the evidence aside cavalierly and without care for her obligation to preserve the data the devices contained.  In light of the smoking gun evidence of misappropriation and disloyal conduct and her inexcusable failure to preserve not one, but two, personal devices, which were the most likely sources of further information to prove Link Tech’s claims, Link Tech asks this Court to strike Defendant Hickmore’s answers to the Complaint, to issue a directed verdict in Link’s favor against Hickmore on all of its claims.  Given the circumstances, there is no other remedy that can restore Link Tech to the position it would have been in but for Hickmore’s unlawful actions, both with respect to her attempts to destroy evidence of her guilt by turning in the devices used to commit the misappropriation, misuse, and unauthorized disclosure of Link Tech information and its impact of her actions on Link Tech’s ability to fully prove its claims.

DATED this ____ day of October, 2015.

ALBRIGHT, STODDARD, WARNICK

   & ALBRIGHT

 

 

 

By___________________________________

G. MARK ALBRIGHT, ESQ.

Nevada Bar No. 001394

D. CHRIS ALBRIGHT, ESQ           .

Nevada Bar No. 4904

WILLIAM H. STODDARD, JR., ESQ.

Nevada Bar No. 8679

801 South Rancho Drive, Suite D-4

Las Vegas, Nevada  89106

 

Robin J. Samuel, Esq.

Hogan Lovells US LLP

1999 Avenue of the Stars, Suite 1400

Los Angeles, California 90067

Phone:  (310) 785-4600

Fax:  (310) 785-4601

Admitted Pro hac vice

 

Attorneys for Plaintiff

 


[1]           Q.            Have you used that before, Outlook, Web Access?

A.            Yes.

Q.            Did you use it while you were employed by Link Tech?

A.            Only when I traveled up to Colorado.

Q.            What did you use it for?

A.            Just, I guess, accessing my e-mail while I didn’t have a computer in the office, I had to bring my computer.

Q.            So you brought a laptop?

A.            Yes.

Q.            A Link Tech laptop?

A.            No.  There was not one provided for me.

Q.            So you used your own personal laptop?

A.            Uh-huh.

Q.            What kind of laptop?

A.            Oh, an HP maybe or Toshiba.  I can’t remember.

Q.            Do you still have it?

A.            No, not anymore.

Q.            When did you last have it?

A.            I don’t remember.

Q.            Months?  Years?

A.            Months ago.

Q.            Months ago?

A.            Uh-huh.

Q.            After this lawsuit was filed?

A.            Do I still have it?

Q.            Uh-huh.

A.            No.

Q.            When did you last have possession of it?

A.            I don’t remember.

 

[2]           Q.            Okay.  What computers did you have at the time this lawsuit was filed?

A.            My current laptop computer.

Q.            What is that?

A.            It’s an HP.

Q.            What model?

A.            I don’t know.

Q.            Did you have any other computer when this lawsuit was filed?

A.            No.

Q.            A home desktop?

A.            No.

Q.            Just the laptop?

A.            Uh-huh, yes.

Q.            And you still have that today?

A.            Yes.

Q.            Okay.  And the one prior to that, how long did you have that laptop?

A.            For years.

Q.            What happened to it?

A.            It just stopped working.  The power wouldn’t power on anymore.

Q.            Where is it?

A.            I don’t know.  I gave it back to Best Buy.

Q.            You returned it to Best Buy?

A.            Right, because they do an exchange to take it back.

Q.            So when you got your new laptop you turned in the old one to Best Buy?

A.            Right.

[3]           Q.            Do you still have it?

A.            No, not anymore.

Q.            When did you last have it?

A.            I don’t remember.

Q.            Months?  Years?

A.            Months ago.

Q.            Months ago?

A.            Uh-huh.

Q.            After this lawsuit was filed?

A.            Do I still have it?

Q.            Uh-huh.

A.            No.

Q.            When did you last have possession of it?

A.            I don’t remember.

 

[4]           See FN 5, above.

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