Winmill, Lynn B., United States District Judge
Trial court held that plaintiff must provide appropriate individuals to be deposed and pay for deposition costs to determine whether spoliation occurred following an inadequate oral legal hold. Plaintiff brought trade dress and copyright claims against defendant for copying designs of its warmers. (What's a warmer, you ask? According to Scentsy's website, a warmer is a wickless scented candle system that uses a low watt bulb to heat the wax and release the scent into the air. No flame required.)
Plaintiff brought suit in May 2010, shortly after discovering defendant's designs. The designs at issue were created by Plaintiff from 2006 to 2009, and all but three were created by one designer. The designer's hard drive contained all of the design documents, at least until it was destroyed in early 2010 before the litigation commenced. Plaintiff took it to a forensics expert, but the data could not be recovered.
Plaintiff's general counsel did not issue a written legal hold or take active steps to preserve data. Instead, he orally issued a legal hold to individuals in May 2011, when he filed the complaint, and told them not to delete data. But he took no active steps to suspend the company's policy that deletes emails over 6 months old. The parties disputed when litigation first was anticipated—defendant alleged litigation was anticipated in May 2010, while plaintiff alleged it was not until March 2011.
The court had "serious concerns" with plaintiff's retention policy and litigation hold process. "Generally, not deleting documents and orally requesting certain employees to preserve relevant documents concurrently with filing a lawsuit is completely inadequate." However, after reviewing the timing of the hard drive destruction, the dates the emails were likely exchanged on the designs in question and acknowledging that the data would have been destroyed under the existing 6 month deletion policy, the court found no basis for spoliation.
However, the court did find that documents related to the three other apparel designs could have been destroyed after plaintiff anticipated litigation. Even if litigation was anticipated in March 2011, when the oral legal hold was issued, there would have been a two-month window where relevant ESI could have been destroyed. In crafting a remedy, the court accepted testimony that forensic investigation of the entire company's computer system could cost into the millions of dollars and that ordering it would represent an undue burden or cost under FRCP 26(b)(2)(B). Instead, the court ordered plaintiff to bear the cost and expenses associated with the depositions of the individuals with information concerning the other three apparel designs to determine whether spoliation occurred.
The court also declined to issue other sanctions on the spoliation issue, but stated "the Court has, in essence, sanctioned [plaintiff] by requiring it to pay the deposition costs as outlined above, and by giving [plaintiff] a shot across the bow that if there is evidence that spoliation occurred, future consequences will be harsh."
v.
B.R. CHASE, L.L.C., a Utah limited liability company; and HARMONY BRANDS, LLC, a Utah limited liability company, Defendants
Counsel
Bradlee R. Frazer, Hawley Troxell Ennis & Hawley, Boise, ID, Eric S. Ritter, Meridian, ID, Phillip E. Broadbent, Ryan Thomas McFarland, Hawley Troxell Ennis & Hawley, Boise, ID, for Plaintiff.John N. Zarian, Kennedy K. Luvai, Dana M. Herberholz, Parsons Behle & Latimer, Boise, ID, Derek Langton, John E. Delaney, Parsons Behle & Latimer, Salt Lake City, UT, for Defendants.