U.S. v. HVI Cat Canyon, Inc.
U.S. v. HVI Cat Canyon, Inc.
2015 WL 12766161 (C.D. Cal. 2015)
November 20, 2015
Olguin, Fernando M., United States District Judge
Summary
The court found that the representations made by the State's counsel regarding the issuance of a litigation hold did not result in the spoliation of evidence. The court also noted that the Rule 30(b)(6) deposition regarding the State's document preservation and collection efforts occurred shortly after the representations were made.
United States of America, et al.
v.
HVI Cat Canyon, Inc., f/k/a Greka Oil & Gas, Inc
v.
HVI Cat Canyon, Inc., f/k/a Greka Oil & Gas, Inc
Case No. CV 11-5097 FMO (RZx)
United States District Court, C.D. California
Filed November 20, 2015
Counsel
Angela Mo, Mark Sabath, US Department of Justice Environmental Enforcement Section, Washington, DC, Davis H. Forsythe, United States Department of Justice, Denver, CO, Robert D. Mullaney, United States Department of Justice, San Francisco, CA, Michael T. Zarro, Ross H. Hirsch, Gary E. Tavetian, Shanaira F. Udwadia, CAAG—California Attorney Generals Office, Los Angeles, CA, for United States of America, et al.James L. Meeder, Kamran Javandel, Allen Matkins Leck Gamble Mallory & Natsis LLP, San Francisco, CA, Robert C. O'Brien, Stephen Gerard Larson, Larson O'Brien LLP, Emily L. Murray, Allen Matkins Leck Gamble Mallory & Natsis LLP, Steven E. Bledsoe, Arent Fox LLP, Los Angeles, CA, for HVI Cat Canyon, Inc., f/k/a Greka Oil & Gas, Inc.
Olguin, Fernando M., United States District Judge
Order re: Magistrate Judge's Report and Recommendation
*1 Pursuant to 28 U.S.C. § 636,
the court has reviewed the Magistrate Judge's Report and Recommendation
(“R&R,” Dkt. No. 134) relating to defendant HVI Cat Canyon, Inc.
f/k/a Greka Oil & Gas, Inc.'s (“HVI-CC” or “defendant”) Joint
Memorandum of Points and Authorities Regarding Defendant's Motion for
Terminating Sanctions or, in the Alternative, Other Appropriate
Sanctions (“Motion,” Dkt. No. 98), the Objections to the Report and
Recommendation filed by each of the parties, and the responses to those
Objections. Having made a de novo
determination of the portions of the Report and Recommendation to which
Objections were directed, the court concurs with and accepts the
findings and conclusions of the Magistrate Judge with modifications.
Plaintiff People of the State of California ex rel.
California Department of Fish and Wildlife (“CDFW”) and the California
Regional Water Quality Control Board, Central Coast Region (“California”
or “State”), and the United States of America (“United States” or
“Government” and together with California, “plaintiffs”) object to the
Magistrate Judge's R&R regarding the exclusion of certain witnesses
from testifying at trial. (See R&R
at 16). The Magistrate Judge recommends that witnesses Kelly Abe
(“Abe”), Melissa Boggs (“Boggs”), Dave Brown (“Brown”), Dennis Chastain
(“Chastain”), Mike Connell (“Connell”), Robin Lewis (“Lewis”), Becky
Mack (“Mack”), Bill Scott (“Scott”), Beckye Stanton (“Stanton”), and
Charles Robert Todd (“Todd”) be excluded. (See id.); (see also
Motion at 6, 12-13 & 17-21 (identifying witnesses)). While
California objects only to the exclusion of Abe, Boggs, Chastain,
Connell, Mack, and Stanton, (see
California's Objections to Report and Recommendation of United States
Magistrate Judge Regarding Motion for Terminating Sanctions (“State
Objs.,” Dkt. No. 136) at 2-4), the United States objects to the
exclusion of all witnesses, (see
United States' Objections to Magistrate Judge's Report and
Recommendation on Defendant's Motion for Terminating Sanctions (“Govt.
Objs.,” Dkt. No. 137) at 2-6), particularly as applied to the
Government. (See id. at 6-11). The
Government also argues that, to the extent witness exclusion is
warranted, it should be limited to four witnesses. (See id. at 11-18).
As
an initial matter, the court notes that it takes seriously the
principle that “[t]he prosecutor's job isn't just to win, but to win
fairly, staying well within the rules[,]” U.S. v. Koiavan, 8 F.3d 1315, 1323 (9th Cir. 1993), and expects plaintiffs to fully abide by it. Thus, the court cannot downplay, as the State seems to do, (see, generally,
State Objs.) (failing to address the representations), the inaccurate
statements its counsel made to HVI-CC's counsel regarding the issuance
of a litigation hold.[1] (See also
Evidentiary Appendix for Defendant's Motion for Terminating Sanctions
or, in the Alternative, Other Appropriate Sanctions (“Evid. App'x,” Dkt.
Nos. 99-103)), Tab A (Declaration of Emily L. Murray (“Murray Decl.,”
Dkt. No. 99)), at Exh. 12 (counsel for California stating that “John
Holland put a litigation hold in place and notified Wildlife
personnel”); Murray Decl., Exh. 16 at 6 (counsel for California stating
that “[t]here indeed was a litigation hold directive maintained by
Wildlife”). However, those representations themselves did not result in
the spoliation of evidence. As HVI-CC points out, discovery was stayed
in 2012, and the representations were made primarily in July and August
2014, when counsel for HVI-CC first began raising questions about
missing electronic data. (See Motion at 7-9); (see also Murray Decl., at Exh. 12; id.,
Exh. 16 at 6). The Rule 30(b)(6) deposition regarding the State's
document preservation and collection efforts occurred shortly
thereafter, on September 16, 2014. (See
Motion at 1 & 10). There is no evidence that the State
misrepresented the issuance of a litigation hold prior to 2014, or that
the parties discussed issues related to preservation efforts prior to
the date HVI-CC first raised the issue in the summer of 2014. In other
words, there is no evidence that prior to 2014, the State misrepresented
that it had issued a litigation hold when indeed it had not. Instead,
the representations were made in the summer of 2014, which quickly
resulted in HVI-CC filing the instant Motion.
*2
Putting aside the representations, the court's review of the record
establishes that there was no showing of intent or bad faith on the part
of CDFW in connection with the failure to issue a litigation hold. And
the Magistrate Judge concluded as much. (See
R&R at 8 (“[T]he Court has seen no evidence that California made a
deliberate initial decision not to impose a litigation hold.”) (emphasis
in original); id. at 9 (noting that
with respect to the representations regarding the placement of a
litigation hold, California “appears to have acted, or failed to act, in
a manner that at least was grossly negligent or reckless”); id.
at 13 (“Here, there was a serious blunder—the failure to impose a
litigation hold—and the blunder created the circumstance that allowed
for evidence to be destroyed. A second blunder compounded the first,
when California repeatedly represented that it had placed a litigation
hold, when, in fact, it had not. The blunders were serious, but the
Court cannot find that they were maliciously motivated, or that they
were made with the deliberate intention that evidence would be
destroyed.”)). At most, it appears that a lack of litigation competence
was the cause of any spoliation of evidence. Incompetence, however, is
not bad faith. In the absence of a showing of intent or bad faith, a
terminating sanction is not warranted under the circumstances of this
case. See Apple Inc. v. Samsung Elecs. Co., Ltd., 888 F.Supp.2d 976, 992-93 (N.D. Cal. 2012)
(“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.”); Realnetworks, Inc. v. DVD Copy Control Ass'n, Inc., 264 F.R.D. 517, 523 (N.D. Cal. 2009)
(“[C]ourts should choose the least onerous sanction corresponding to
the willfulness of the destructive act and the prejudice suffered by the
victim.”) (internal quotation marks and citation omitted); see, e.g., Adv. Comm. Notes to Proposed Rule Fed. R. Civ. P. 37(e)
(test focuses on proof of “an intent to deprive” and limits most
serious remedies “only on a finding of intent to deprive another party
of the lost information's use in the litigation.”).
Moreover,
although the State was not completely forthright in its communications
with defendant regarding the issuance of a litigation hold, there is no
allegation, much less evidence, that the United States had any role in
the conduct at issue. Yet, the R&R recommends that the exclusion
sanction apply equally to the United States. (See
R&R at 14-16). Such a sanction is not warranted, particularly since
the United States is not alleged to have engaged in the spoliation of
evidence. See Apple, 888 F.Supp.2d at 995
(“Court is unable to find justification for imposing an adverse
inference instruction against all three Samsung entity defendants, where
the record only supports a finding that Samsung Electronics Co.,
Ltd.... engaged in any spoliation of evidence.”); Toste v. Lewis Controls, Inc., 1996 WL 101189, *7 (N.D. Cal. 1996)
(“The present record does not support an order imposing sanctions at
trial because an adverse inference against [culpable party] might
prejudice [plaintiff].”). The Magistrate Judge reasoned that the United
States should be subject to the exclusion sanction because, among other
things, it “was intimately involved with this matter from the start[,]”
(R&R at 14); its source of information and identification of
witnesses included State employees, (id.); there is a “significant intertwining between the factual matters alleged by the State and Federal governments,” (id.);
and “[i]t has entered into a Common Interest Confidentiality Agreement
with the State, predicated in part on ‘common interests in their
investigation’ ” of defendant. (id. at
14-15). However, this close working relationship between the parties is
insufficient to sanction the United States for the conduct of the State
where there is no showing that the United States played any role or had
knowledge of the conduct at issue. See Bonilla v. Volvo Car Corp., 150 F.3d 88, 93 (1st Cir. 1998) (finding sanctions order flawed, in part, because of its “automatic attribution of fault to all defendants”). As the Bonilla court explained:
There may be instances in which one codefendant is liable for sanctions for the litigation-related misconduct of another defendant, but it would take findings as to knowledge and participation or acquiescence far more specific and detailed than a simple reference to a joint defense. Codefendants cooperate all the time, but that does not mean that one defendant is automatically responsible for misconduct of another—of which it may have no knowledge or as to which it may have played no role, active or passive.
Id.
at 93-94. Also, as the United States notes, the R&R “makes no
finding that the United States had control over the State's documents,
employees, or preservation practice; had an obligation to preserve the
State's evidence; participated in any spoliation of the State's
evidence; or was subject to sanctions on the basis of res judicata or
agency principles.” (Govt. Objs. at 6). In short, the sanction imposed
upon the Government for the State's litigation conduct is not warranted.
*3 This
Order is not intended for publication. Nor is it intended to be
included in or submitted to any online service such as Westlaw or Lexis.
Based on the foregoing, IT IS ORDERED THAT:
1. HVI-CC's Motion for Terminating Sanctions Or, in the Alternative, Other Appropriate Sanctions (Document No. 98), is granted in part and denied in part as set forth below.[2]
2.
The following witnesses shall be excluded from testifying at trial on
behalf of California: Brown, Lewis, Scott, and Todd. No witnesses shall
be excluded from testifying on behalf of the United States.
3.
California shall pay HVI-CC's reasonable costs and attorney's fees for
taking the depositions of Ed Boyes, Joshua Curtis, Jamie Dostal, Carlos
Fonseca, James Foto, Jennifer Gold, Bryan Golhofer, Jorge Gross, Jim
McCall, Jorge Paz, Ken Wilson, Abe, Boggs, Chastain, Connell, Mack, and
Stanton.
4. California shall pay for the reasonable costs and attorney's fees defendant incurred in connection with the Motion.
Footnotes
As
the Magistrate Judge recognized, the representations “were made by
litigation counsel for California, who appears to have been relying on
what he had been told either by Mr. Holland or others.” (R&R at
8-9).
Given
that proposed Rule 37(e) “forecloses reliance on inherent authority or
state law to determine when certain [curative or sanctioning] measures
should be used,” Adv. Comm. Notes to Proposed Rule 37(e), the parties
shall file any motions relating to ESI preservation pursuant to the new Rule 37(e).