Cleland, Robert H., United States District Judge
Appellate court affirmed district court’s decision not to issue spoliation sanctions for defendant’s failure to preserve the hard drives of certain employees’ personal computers, a database server, and backup tapes because the computers and server did not likely contain relevant evidence and there was no duty to preserve the backup tapes.
Plaintiff and Defendant developed software together. The software tracked newspaper subscriptions through hand held devices that communicated with remote servers. After the business relationship deteriorated, plaintiff sought and received a declaratory judgment that it was the sole owner of the software.
Defendant remained obligated to service the software that had already been sold to certain newspapers while the litigation was pending, even though it no longer had access to the employees or servers that ran the Software. Defendant hired a programmer and bought a database server to make the software work. The programmer couldn’t make it work, so defendant fired him and threw away the server (while the litigation was pending).
Defendant subsequently contracted to provide hardware and software for tracking newspaper subscriptions to a different newspaper company. Defendant then hired a second employee to write the code for the new software product. The new software operated without the need to communicate with remote servers, and was built in a different programming language.
Plaintiff brought copyright infringement allegations that the new software infringed on the their software. After defendant was unable to produce documentary evidence showing the development process of the new software, the court allowed plaintiff to conduct a forensic examination of defendant’s computer systems. The forensic examination revealed that defendant had failed to preserve both employees hard drives that developed the new software, as well as the database server used by the first employee. Defendant’s backup tapes also failed to work properly and thus information was not accurately recorded. Plaintiff sought sanctions.
The trial court made four rulings at issue on appeal:
First, the trial court sanctioned defendant in the form of allowing an adverse inference charge for failing to preserve the hard drive of the second employee. This issue became moot on appeal.
Second, the trial court declined to issue sanctions for defendant’s failure to preserve the first employee’s hard drive or data server because plaintiff could not show that the hard drive and data server likely contained relevant evidence. In affirming the trial court’s decision, the appellate court pointed out that the plaintiff did not cite “any evidence” to suggest that either the first employee or the data server that he worked on were used to develop the new software.
Third, the trial court held that the defendant did not have a duty to preserve backup tapes, which were “re-written daily and only used for disaster recovery.” The trial court reasoned that Zubulake did not require the defendant to put a litigation hold on its backup tapes where the backup tapes were “maintained solely for disaster recovery.” In affirming the trial court, the appellate court noted that since the backup tapes had malfunctioned, even if they would have been preserved, it was unlikely that any “useful evidence would have been gleaned from the tapes, or that any data would have been recoverable.”
Fourth, the trial court rejected the plaintiff’s argument that the relevance of the unpreserved evidence should be presumed because the defendant was at least grossly negligent by not maintaining “any systematic document retention system.” In affirming, the appellate court held that whether a party’s failure to preserve relevant evidence amounts to spoliation sanctions should be determined on a case-by-case basis. In this case, affidavits from the defendant and the defendant’s numerous attorneys supported the conclusion that the defendant had acted in good faith and not willfully withheld relevant evidence throughout the discovery process.
v.
PARAGON DATA SYSTEMS, INC., Defendant-Appellee/Cross-Appellant
Counsel
ARGUED: Drew A. Carson, Cleveland, Ohio, for Appellant/Cross–Appellee. Richard S. Mitchell, Roetzel & Andress, LPA, Cleveland, Ohio, for Appellee/Cross–Appellant ON BRIEF: Drew A. Carson, Cleveland, Ohio, Patrick J. Milligan, Steven J. Forbes, Norchi Forbes LLC, Cleveland, Ohio, for Appellant/Cross–Appellee. Richard S. Mitchell, Christine M. Garritano, Roetzel & Andress, LPA, Cleveland, Ohio, for Appellee/Cross–Appellant.OPINION
[A] party seeking an adverse inference instruction based on the destruction of evidence must establish (1) that the party having control over the evidence had an obligation to preserve it at the time it was destroyed; (2) that the records were destroyed with culpable state of mind; and (3) that the destroyed evidence was relevant to the party's claim or defense such that a reasonable trier of fact could find that it would support that claim or defense.
A failure to preserve evidence resulting in the loss or destruction of relevant information is surely negligent, and, depending on the circumstances, may be grossly negligent or willful. For example, the intentional destruction of relevant records, either paper or electronic, after the duty to preserve has attached, is willful. Possibly after October, 2003, when Zubulake IV was issued, and definitely after July, 2004, when the final relevant Zubulake opinion was issued, the failure to issue a written litigation hold constitutes gross negligence because that failure is likely to result in the destruction of relevant information.