Intersections Inc. v. Loomis
Intersections Inc. v. Loomis
2011 WL 13228128 (E.D. Va. 2011)
March 17, 2011
Buchanan, Theresa Carroll, United States Magistrate Judge
Summary
The defendant, Joseph Loomis, intentionally deleted files from the plaintiff's network, hacked into their computer server, stole a desktop computer, and deleted all the data from a total of three computers. This caused irreparable prejudice to the plaintiff's ability to prosecute their case and defend against Joseph Loomis' counterclaims, as they have no ability to recreate or recapture the ESI.
INTERSECTIONS INC., et al., Plaintiffs,
v.
Joseph C. LOOMIS, et al., Defendants
v.
Joseph C. LOOMIS, et al., Defendants
Civil Action No. 1:09cv597
United States District Court, E.D. Virginia, Alexandria Division
Signed March 17, 2011
Counsel
Tara Melissa Lee, Quinn Emanuel Urquhart & Sullivan LLP, Washington, DC, for Plaintiffs.Timothy J. McEvoy, Cameron McEvoy PLLC, Fairfax, VA, for Defendants.
Jenni M. Loomis, pro se.
Buchanan, Theresa Carroll, United States Magistrate Judge
REPORT & RECOMMENDATION
*1 This matter came before the undersigned Magistrate Judge on plaintiffs' Motion for Sanctions (“Witness Tampering Motion”, Dkt. 233) and plaintiffs' Motion for Sanctions Against Defendant Joseph C. Loomis Due to His Intentional Destruction of Evidence (“Spoliation Motion”, Dkt. 93). Upon review of the pleadings and argument of counsel, the undersigned makes the following Report and Recommendation.
BACKGROUND
This case has been pending since May 27, 2009. Discovery concluded on December 11, 2009. Plaintiffs' Spoliation Motion was initially scheduled for oral argument on January 22, 2010, and was finally heard on March 4, 2011. The motion was not heard as originally scheduled because the parties participated in a settlement conference shortly after the Spoliation Motion was filed. Thereafter, these proceedings were stayed when defendant Joseph Loomis filed for bankruptcy, but resumed on January 26, 2011, when the bankruptcy stay was lifted, permitting the Court to hear these motions. (Dkt. 221).
The facts pertinent to these motions are as follows: On October 20, 2008, defendant Joseph Loomis was terminated from his position as Chief Executive Officer of Net Enforcers, Inc. (“NEI”). The termination letter explains the cause for his immediate termination. It instructs him to return all company owned computers and telecommunications equipment, and informs him of his duty to “preserve all company records or other information of any kind whatsoever, including all records on company owned computer or telecommunications equipment currently in [Mr. Loomis'] possession.” (Ex. 1 at 1). It further provides, “[d]o not delete, remove, or copy any records or information from your computer or telecommunications equipment.” (Ex. 1 at 2). The same day, NEI blocked Mr. Loomis from accessing NEI's facilities and computer network. (Ex. 1; Leberer Decl. “Ex. 2” ¶ 14).
Hours later, Mr. Loomis deleted files from NEI's network, in violation of his duty to preserve evidence as instructed. Because he was locked out of NEI's facilities and computer network, Mr. Loomis requested the log-in credentials of a subordinate NEI technology employee, Matt Leberer. (Soyars Decl. “Ex. 3” ¶ 3; Ex.2 ¶ 14). Joseph Loomis told Mr. Leberer that he needed access to the NEI server in order to delete inappropriate pictures of former girlfriends. (Ex.2 ¶ 14). Mr. Leberer turned over his log-in credentials because he felt intimidated by Mr. Loomis. (Ex.2 ¶¶ 14-15). Once signed in as Mr. Leberer, Joseph Loomis began deleting eight gigabytes of the electronic files stored on Mr. Loomis' network directory, and added some new or modified documents. (Ex.3 ¶ 3). Chris Soyars, NEI's project manager observed the deletion in progress and stopped it in time to preserve some of the material. (Ex.3 ¶¶ 4, 6).
Seven days later, Mr. Loomis set out to delete data from his former NEI office desktop. He was aware that on October 27, 2008, NEI had arranged for a technician to copy files from the desktop computer in Mr. Loomis' former office. (Ex.3 ¶ 8). Still barred from entering NEI, Mr. Loomis enlisted the help of his brother, Christopher Loomis. (Loomis' Responses to Intersections' Interrogatory 16 “Ex. 4”). Christopher Loomis entered NEI with the permission of NEI employee, Sheilah Snyder. (Ex. 4). Christopher Loomis removed the desktop minutes before the technician could begin work, and took it to Mr. Loomis at his home. (Ex.3 ¶ 9; Ex.2 ¶ 18; Ex.4). On November 6, 2008, Mr. Loomis sent the desktop to Breezin Microsystems for a reinstallation process, claiming it was not booting-up properly. (Hildebrandt Decl. “Ex. 5” ¶¶ 4-6). In fact, the hard-drives were not damaged. (Ex. 5 ¶ 7; Ex. 2 ¶ 18). Mr. Loomis told Mr. Leberer he sent the hard-drives to Breezin Microsystems because the reinstallation would remove all data, and was the only effective way to prevent plaintiffs from discovering his intentional destruction of the information. (Ex.2 ¶ 18). Breezin Microsystems performed the reinstallation process, and all data was cleared from the desktop's hard-drives. (Ex.5 ¶¶ 6, 8).
*2 Mr. Loomis next deleted data on two laptop computers. On September 10, 2009, months after plaintiffs filed suit and served document requests, Mr. Loomis demanded that NEI return his personal laptop computer. (Dkt. 94, Ex.H). While an NEI employee, Mr. Loomis had two identical laptops—an old laptop (“Laptop 1”) and a new laptop (“Laptop 2”). (Loomis Decl. “Ex.6” ¶ 21). According to Mr. Loomis, he inadvertently brought Laptop 1 with him the day he was fired, while Laptop 2 remained at NEI. (Ex.6 ¶ 22). Mr. Loomis proposed that the parties exchange the laptops, and plaintiffs agreed. As to Laptop 1, Mr. Loomis sent it to the manufacturer to restore factory settings, which removed all data, then sent it to NEI in the exchange. (Ex.6 ¶ 22; Mazur Decl. “Ex.7” ¶ 5). When Mr. Loomis retrieved Laptop 2 from NEI, he also had its hard-drives wiped clean. (Ex.4 ¶ 23). In each case, Mr. Loomis claims he had the hard-drives reconfigured because they were damaged. (Ex.4 ¶¶ 22-23). Mr. Loomis also allegedly believed that the data was automatically backed up on NEI's server. (Ex.4 ¶¶ 22-23).
The laptop exchange brought about events that resulted in this Court's Protective Order of October 30, 2009. (Dkt. 47). In the approximately one month time span between the date Mr. Loomis requested the laptop exchange and its completion, Mr. Loomis and his counsel, Hunter, Humphrey & Yavitz, PLC, accused plaintiffs' counsel of stealing Laptop 2. (Dkt. 41 at Exhibits P-X). On several occasions, defendant Loomis and his counsel threatened to file a conversion counterclaim and have the police arrest plaintiffs' counsel if the laptop exchange was not completed according to defendant's time-frame. Id. Plaintiffs provided Laptop 2 to Mr. Loomis on October 19, 2009. (Dkt. 41). Again on October 20, 2009, an attorney from Hunter, Humphrey & Yavitz harassed plaintiffs' counsel with the theft allegation. (Dkt. 41 at Exhibit X).
Additionally, Mr. Loomis had previously threatened criminal action against Intersections' Chief Operating Officer, Michael Stanfield. (Dkt. 41 at Exhibit Y). Mr. Loomis also warned at least one NEI employee that testifying against Mr. Loomis in this action would adversely affect that employee's career. (Dkt. 41 at Exhibit A, ¶ 25).
On October 30, 2009, upon plaintiffs' Motion for a Protective Order, the undersigned ordered that defendant and defendants' counsel were prohibited from contacting plaintiffs, plaintiffs' employees, and plaintiffs' witnesses. (Dkt. 47). Moreover, all communications from defendants' counsel were to be made through defendants' local counsel, and all depositions were to take place at plaintiffs' counsel's offices in Virginia or by video conference.[1] The Protective Order further warned that any violation of these provisions would result in substantive and monetary sanctions. (Dkt. 47). At no time after the issuance of the Protective Order did defendant's counsel ever seek clarification or relief from that order.
Subsequently, Mr. Loomis contacted plaintiffs' witnesses personally and through counsel. (Leberer 2010 Decl. “Ex.8” ¶¶ 2;6;15-16). In July 2010, Mr. Loomis' Arizona counsel, Attorney Matt Lavelle, who has not entered an appearance in this case, approached Mr. Leberer about signing an indemnity agreement with Mr. Loomis. (Ex.8 ¶ 3). Mr. Leberer signed the indemnity agreement because he believed it prevented Mr. Loomis from suing him. (Ex.8 ¶ 4). In late October or early November 2010, Attorney Emil Herich, who this Court disqualified from representing defendant on September 3, 2010, met with Mr. Leberer and asked him to sign two declarations. (Dkt. 186; Ex.8 ¶¶ 6-13). Mr. Loomis also personally contacted Mr. Leberer via text message and phone call, and attempted a lunch meeting. (Ex.8 ¶¶ 15-17). Sheilah Snyder, who previously had an injunction against harassment: as to Mr. Loomis by a court in Arizona, also signed an indemnity agreement after a meeting with Mr. Loomis' representatives. (Dkt. 235, Ex. 6). Ms. Snyder and Mr. Loomis now appear to have a friendly relationship, and she now intends to testify in favor of Mr. Loomis. (Roth Decl. “Ex.9” ¶ 2; Ex.8 ¶¶ 4; 6–9;17).
*3 With the bankruptcy stay lifted, plaintiffs now bring a Witness Tampering Motion and Spoliation Motion seeking relief in the form of default judgment against Mr. Loomis.
FINDINGS
As to the Witness Tampering Motion, plaintiffs' evidence shows that Joseph Loomis violated the Court's Protective Order by contacting plaintiffs' witnesses, Sheilah Snyder and Matthew Leberer. (Ex.8 ¶ 2). Defendant does not deny that he contacted the two witnesses. Instead, he claims that he was confused about parameters and enforceability of the Protective Order. This excuse has no merit. At no time did Mr. Loomis request clarification or relief from the Protective Order.
As to the Spoliation Motion, plaintiffs' evidence demonstrates that Joseph Loomis intentionally destroyed evidence that he had a duty to preserve. (Ex. 1; Ex.2 ¶ 19). Despite the termination letter's instruction not to delete data, Mr. Loomis began deleting files immediately. In anticipation of litigation, he coercively hacked into the NEI computer server, stole one desktop computer, and deleted all the data from a total of three computers. He involved his brother and former colleagues in the spoliation scheme, and later resorted to threatening plaintiffs' counsel with arrest. Mr. Loomis denies none of this. In opposition, Mr. Loomis claims that his actions caused no prejudice because it was impossible to fully delete data by removing it from the individual computers. (Ex.6 ¶¶ 8,11-13). Mr. Loomis states that NEI used a “robust and redundant” data storage system, such that data was automatically backed-up onto a secure server. (Ex.6 ¶¶ 2-3). This excuse is inaccurate. Chris Soyars, NEI's project manager testifies that NEI did not have the sort of automatic back-up storage system Mr. Loomis describes. (Soyars 2010 Decl. “Ex.10” ¶ 5). Only selected files were automatically backed-up on NEI's server. (Ex.10 ¶¶ 6-7). Indeed, Mr. Loomis admitted that he maintained files that “were not stored on NEI's server”. (Ex.4; See also Ex.10 ¶ 7).
Plaintiffs' ability to prosecute their case and defend against Joseph Loomis' counterclaims has been irreparably impaired by Joseph Loomis' deliberate deceit. Plaintiffs have no ability to recreate or recapture information on three hard drives, or to even know the nature and quantity of the destroyed material. The undersigned finds that the only reason Mr. Loomis would go to such great lengths to delete files was to prevent plaintiffs from discovering incriminating evidence. Ms. Snyder, a witness to the theft of the desktop computer, now intends to testify for defendant. Mr. Loomis' attempts at contacting Mr. Leberer suggest he is trying to similarly affect Mr. Leberer's testimony.
CONCLUSION
Federal Rule of Civil Procedure 37 authorizes the sanction of default judgment against a party for failure to obey a protective order. Fed. R. Civ. P. 37(b)(2)(A)(v). Moreover, the Fourth Circuit has held that dismissal is an appropriate sanction for the intentional, prejudicial spoliation of evidence. Silvestri v. General Motors Corp., 271 F.3d 583, 590, 593 (4th Cir. 2001); Trigon Ins. Co. v. United States, 204 F.R.D. 277, 284 (E.D. Va. 2001).
The undersigned Magistrate Judge has examined the possibility of sanctions less severe than default judgment, but finds that none will compensate plaintiffs for the total loss of what must have been very incriminating evidence, given that Mr. Loomis went to such great lengths to destroy it. Because of defendant's relentless malfeasance and violation of this Court's Protective Order, the undersigned recommends entry of default judgment against Joseph Loomis.
NOTICE
*4 The parties are advised that exceptions to this Report and Recommendation, taken pursuant to 28 U.S.C. § 636 and Federal Rule of Civil Procedure 72(b), must be filed within fourteen (14) days of it's service. Failure to object to this Report and Recommendation waives the right to appellate review of a judgment based on it.
The Clerk is directed to send a copy of this Report and Recommendation to all counsel of record and to defendant.
Footnotes
On November 30, 2009, Arizona counsel, Hunter, Humphrey & Yavitv, PLC withdrew from this case, and defendants were then represented only by their Virginia counsel, Dunlap, Grubb & Weaver, PLLC. (See Dkt. 60).