ALLEGATIONS

On December 8, 2015, Plaintiff Matthew David Miller (“Plaintiff”) brought this action against Melinda Thompson-Walk (“Melinda Thompson-Walk”), Mitchell Paul Walk (“Paul Walk”) and Patrick L. Nolan (“Patrick Nolan”) for alleged breach of contract, conversion, breach of fiduciary duty, and fraud in connection with Plaintiff’s alleged membership in a company called Native Link Construction, LLC (“NL Construction”). (Dkt. No. 1) Plaintiff is not represented by counsel and appears pro se.[1] The operative Second Amended Complaint (“Complaint”) alleges that Plaintiff was a member of NL Construction, which is alleged to be a member-managed LLC with three equal partners – Plaintiff, and Defendants Melinda Thompson-Walk and Patrick Nolan. The LLC was formed to provide engineering and construction services involving communications technology to Native Americans. Defendant Melinda Thompson-Walk is alleged to have been named “managing member” but Plaintiff and Mitchell Paul Walk handled day to day operations. Plaintiff alleges that outside management (Nate Riggan and Pointguard Financial) were hired as “acting CFO” in October 2013 (para.33) for NL Construction.

The complaint alleges that beginning in November 2013, Melinda Thompson-Walk and Patrick Nolan began treating Plaintiff Miller as an employee rather than a partner and making decisions without his input. Plaintiff alleges a number of financial and management improprieties by the Defendants and alleges he is entitled to one-third of company profits (para. 37; 62)

Defendants appear to deny that Plaintiff was ever a member, or at least is not entitled to one-third of the profits. They allege that he was always an employee, although Defendant Paul Walk alleges that Plaintiff’s alleged employee status is due to plaintiff’s own “election.” He alleges that “plaintiff was the only member/partner receiving a “payroll check” as such and therefore elected to be treated as an employee receiving a payroll check for services. (Dkt. No. 104 para. 11). Further, Defendants allege that Plaintiff was terminated for cause, allegedly for improprieties including he misappropriated company assets of the Native Link companies, misrepresented expenses, misused his company credit card, among other things.

*2 Following motions to dismiss by various defendants, Plaintiff filed an Amended Complaint on February 28, 2016. (Dkt. No. 48) After another round of motions to dismiss, Plaintiff filed a Second Amended Complaint on September 25, 2016. (Dkt. No. 82) After more motions, an Answer on behalf of Defendants Melinda Thompson-Walk and Patrick Nolan, and a separate Answer on behalf of Defendant Paul Walk were filed on September 25, 2017. (Dkt. Nos. 104 and 105)

A Rule 26(f) Report was filed on November 9, 2017.

The case was then referred to Early Neutral Evaluation on December 4, 2017 and the discovery deadline in the CMO was extended to May 28, 2018. Mediation was unsuccessful, and Defendants agreed to produce accounting records, tax records, loan documents and expense records within two weeks of March 1, 2018. (Dkt. No.129)

PLAINTIFF’S DISCOVERY REQUESTS, DISCOVERY MOTIONS AND RELATED ORDERS OF THE COURT

Counsel for Defendants and Plaintiff met and conferred in October 2017 regarding electronic discovery, and thereafter on November 9, 2017 submitted a joint Rule 26(f) report to the Court. (Dkt. No. 107) With regard to electronically stored information (“ESI”), the Rule 26(f) report states that Plaintiff and counsel for Defendants agreed that the parties were seeking ESI, that metadata would be relevant to “the contract documents,” and that all ESI would be produced in “native format.” As to ESI preservation, Plaintiff and Mr. Morris on behalf of Defendants stated that there were “[n]o unresolved issues.” (Dkt. No. 107). Defendants and their counsel did not disclose to Plaintiff or the Court that there were any ESI preservation issues.

On January 29, 2018, Plaintiff served on Defendants Melinda Thompson-Walk, Paul Walk and Patrick Nolan his First Set of Interrogatories and Request for Documents (“Document Requests”). Plaintiff’s Documents Requests set forth 22 requests, including requests for Native Link, LLC and NL Construction email and other related accounts, QuickBooks files, bank statements, minutes and documents relating to these companies, and all documents relating to Defendants’ allegations and defenses contained in their answers to Plaintiff’s Second Amended Complaint.

On April 10, 2018, Plaintiff filed a motion to compel discovery against Defendants Melinda Thompson-Walk, Paul Walk and Patrick Nolan for among other matters Defendants’ failure to produce the documents, including ESI, requested by Plaintiff. (Dkt. No. 130) On April 19, 2018, the Court denied without prejudice Plaintiff’s motion to compel and granted Defendants’ motion for an extension of time to complete discovery to June 15, 2018. (Dkt. No. 139)

On May 4, 2018, Plaintiff filed a second motion to compel discovery because Defendants had not responded to the January 29, 2018 interrogatories and document requests. On June 6, 2018, the Court granted Plaintiff’s motion to compel and ordered the Defendants to provide Plaintiff with the following for the period of May 1, 2012 through December 31, 2016 (the “relevant period”):

The Court ordered Defendants to provide Plaintiff with the information, documents and e-discovery identified above by no later than June 19, 2018. Hereinafter referred to as the “June 6, 2018 Order.”

After the Court’s June 6, 2018 Order, one of the electronic documents produced by Defendants was a document entitled “OWNER MEETING NATIVE LINK, LLC” which according to Defendant Paul Walk were minutes of a meeting that allegedly took place on November 8, 2012, at which he was present. (Dkt. No. 178-1). The document recites that a purported meeting was called to ratify the ownership interest in NL Construction. It recited that the current ownership structure was Native Link LLC and FatPipe Communications, and the proposed ownership structure was Matthew Miller, Melinda Thompson and Patrick Nolan, each with a 33% interest. According to the document, the following resolution was “denied”: RESOLVED, no change of Membership interest shall be approved at this time.” (Exhibit A). Ignoring for the moment the many inconsistencies in this fabricated document, both internally and regarding the individual membership in NL Construction (which has been admitted), Plaintiff pointed out that a review of the metadata associated with the document revealed that the document was not created on or about November 8, 2012, but actually was created nearly five and half years later on June 26 2018, just 20 days after the June 6, 2018 Order. (Exhibit B, Screenshot of Document Metadata for Exhibit A)

On July 16, 2018, Plaintiff filed a motion for sanctions under Federal Rule of Civil Procedure 37 for Defendants’ failure to comply with the Court’s Orders, including the June 6, 2018 Order, and Defendants’ failure to preserve electronically stored documents. (Dkt. No. 155) On August 22, 2018, the Court granted in part and denied in part Plaintiff’s motion for sanctions. Specifically, the Court ruled that “defendants shall not be able to offer as evidence, rely on, refer to or offer as a defense contentions with respect to documents and categories of documents, including electronically stored information (“ESI”) that was not produced to plaintiff in response to his discovery requests....” The Court further ruled that Plaintiff could depose the Defendants for an additional four hours “with respect to the subject of his motion to compel, including ESI” and extended discovery until October 23, 2018. The order directed that “the motion for sanctions is otherwise denied without prejudice to refile the motion after plaintiff has had the opportunity to conduct the defendants’ depositions” and set a status conference for October 23, 2018. Hereinafter referred to as the “August 22, 2018 Order.” (Dkt. No. 165)

*4 A status conference was held on October 23, 2018, during which the Court ordered the following, as set forth in the Minute Entry filed on October 24, 2018, related to the discovery requested by Plaintiff:

The Court further directed that, after reviewing newly produced documents by the Defendants, Plaintiff could move to re-depose the Defendants, but Plaintiff would waive the right to object to Defendants’ use of the additional documents/ESI as provided for in the August 22, 2018 Order. The Court set a status conference for November 27, 2018 and ordered the parties to file any discovery motions prior to the November 27, 2018 status conference.

On October 31, 2018, the Court held another status conference at the request of counsel for Defendants Melinda Thompson-Walk and Patrick Nolan seeking clarification of the Court’s October 24, 2018 Minute Entry. The Court’s Minute Entry of proceedings provides that Mr. Morris advised the Court that “certain devices belonging to or used by Ms. Thompson-Walk and Mr. Nolan are no longer in their custody or were destroyed.” The Court directed that if the devices could not be forensically reviewed that the Defendants must provide sworn affidavits by “individuals with specifics explaining the how, when and why with respect to lost, destroyed or transferred devices and ESI by 11/06/2018.” Mr. Freeman, counsel for Defendant Paul Walk, advised the Court that he had performed a search of Walk’s devices and that “no responsive documents or ESI were contained therein other than emails already made available to plaintiff.”

On November 5, 2018, Defendant Melinda Thompson-Walk filed an affidavit with the Court stating the following:

Defendant Melinda Thompson-Walk’s daughter, Micah Donal Walk, also submitted an affidavit on November 5, 2018, stating that her mother used her Compaq computer and “logged on to the remote access given by her accountant to send over accountant’s copies to Point Guard Financial...” Ms. Walk stated that she did not have any QuickBooks or Native Link files stored on her computer. Ms. Walk further stated that:

PLAINTIFF’S SECOND MOTION FOR SANCTIONS UNDER RULE 37

On November 15, 2018, Plaintiff filed a Second Motion for Sanctions (the Motion”). (Dkt. No. 174), which has been referred to me as Special Master. Plaintiff argues: 1) Defendants violated the June 6, 2018 Order to produce all emails for the relevant companies from May 1, 2012 through December 31, 2016; 2) Defendants’ violated the June 6, 2018 Order to produce all minutes, QuickBooks files, bank statement, invoices, deposit slips and contracts emails for the relevant companies from May 1, 2012 through December 31, 2016; and 3) Defendants’ violated the June 6, 2018 Order to produce all Native Link, LLC and Native Link Construction LLC tax returns and ESI regarding a $10,000 wire to an IOLTA account.

Plaintiff requests the following sanctions: 1) entry of a default judgment against Defendants; 2) holding Defendants in contempt of Court; 3) drawing adverse inferences against Defendants for failing to provide Court ordered discovery, spoliation and falsification of evidence; and 4) striking Defendants’ defenses 1-13 contained in their Answers to Plaintiff’s Second Amended Complaint. (Dkt. No. 174)

DISCUSSION

A. Sanctions for Violation of Court Orders Under Rule 37 (b)(2)(A)

Plaintiff’s pro se Motion is based on Rule 37 (b)(2)(A) and Rule 37(e) of the Federal Rules of Civil Procedure. The motion appears to combine a request for possible sanctions available under Rule 37(b)(2)(A) and 37(e). However, Plaintiff’s proposed Order seeks the entry of default against Defendant Melinda Thompson-Walk, Patrick Nolan, and Paul Walk.

Rule 37(b)(2)(A) provides in part for failure to comply with Court Order:

If a party...fails to obey an order to provide or permit discovery, including an order under Rule 26(f), 35 or 37(a), the court where the action is pending may issue further just orders. They may include the following:

The decision to impose sanctions, including dismissal or a default judgment, based on the violation of a court order under Rule 37(b)(2(A) is entrusted to the sound discretion of the court and will not be reversed absent a showing of an abuse of discretion. National Hockey League v. Met. Hockey Club, 427 U.S. 639, 643 (1976).

In Poulis v. State Farm Fire and Casualty Company, 747 F.2d 863 (3d Cir. 1984), the Third Circuit set forth the factors relevant to awarding sanctions under Rule 37(b)(2)(A) for violation of court orders. They include the following: (a) the extent of the party’s personal responsibility; (b) a history of dilatoriness; (c) whether the conduct was willful or in bad faith; (d) prejudice to the adversary; (e) alternative sanctions (other than dismissal or default); and (f) meritoriousness of the claim. These factors are discussed below.

*6 Rule 37(b)(2)(A) applies here because Defendants have failed to comply with the Court’s June 6, 2018 Order and its subsequent October 23rd and October 31st orders. Contrary to the June 6th Order, Defendants have not produced all emails for the relevant companies during the relevant time period. Defendants do not deny that there is more than a two-year gap in the emails produced.

When Defendants received notice of Plaintiff’s claims (at the latest, after the complaint was filed and served), Defendants had a duty to preserve all evidence, including ESI, relating to the claims and defenses in this matter. Zubalake v. UBS Warburg, LLC, 220 F.R.D. 212 (S.D.N.Y. 2004). According to Plaintiff, which is not refuted by Defendants, he has not received email for the period October 23, 2014 to December 31, 2016. Each individual defendant’s responsibility is discussed below.

(a) Paul Walk

Mr. Walk is not alleged to be an owner/member of NL Construction or Native Link. He avers in his affidavit that he was employed as a Vice President until April 2014 when he separated from his then-wife Defendant Melinda Thompson-Walk. He subsequently was an independent contractor in 2015 for one specific project. (Dkt. 178-1; Walk Aff.) Walk had two email accounts: a company email account at the domain nativelink.net, and a personal Gmail account. After the June 6, 2018 Order, on October 31, 2018, Defendant Paul Walk produced approximately 10,000 emails from his Gmail account.

Plaintiff argues that Mr. Walk has failed to produce Native Link emails between the dates of October 23, 2014 to October 23, 2018, even though emails produced by Mr. Walk’s former wife, Defendant Melinda Thompson-Walk, show that Mr. Walk was using the Native Link email account during that time period. Plaintiff points to a 2016 email and argues that Mr. Walk was (1) using the company account; (2) able to access it in 2016; and (3) should have preserved it. The email on which Plaintiff bases his contentions has a header that reads from “paul.walk@nativelink.net.”

Mr. Walk was deposed by Plaintiff, and at the deposition had the opportunity to ask questions about Walk’s company email and Gmail usage, and Plaintiff was given access to Mr. Walk’s Gmail account. Mr. Walk subsequently submitted an affidavit in response to the instant motion for sanctions. (Dkt. 178-1). Regarding his company email, Walk’s company email was paul.walk@nativelink.net. Walk’s personal Gmail account was linked to his Nativelink email account, so that email sent from the nativelink.net account actually could be sent from the Gmail account. If this was done, the “from” email header would read: “[paulwalkncl@gmail.com] on behalf of Paul Walk [paul.walk@nativelink.net]. Email sent directly from the nativelink.net account would have a “from” header that would read simply “paul.walk@nativelink.net.” Email received in the nativelink.net account would also be received in the Gmail account.

After Walk’s employment terminated in April 2014, he de-linked his Gmail account from his Nativelink account in the October 2014 timeframe. Walk continued to have access to his nativelink.net email account in 2015 when he was an independent contractor, and he used the nativelink.net account to communicate with his estranged wife (because Walk’s personal Gmail account was being used for himself and his new business ventures). Walk avers that the nativelink.net email account was provided by a “private vendor.” Walk would log in to access the nativelink.net account. He did so until sometime in 2016 when his access to the company email account was terminated.

*7 Walk states under oath that at the time Plaintiff’s document requests were served in 2018 he had no control over or access to the nativelink.net email account and no ability to recover email from it. Walk’s averment is not contradicted by the 2016 email upon which Plaintiff relies -- that email was sent from the Nativelink account and Mr. Walk’s access had been terminated prior to 2018. Therefore, Walk cannot be sanctioned for failing to preserve, search and produce email from the nativelink.net account.

Following the reference of this matter to me, I directed that additional efforts be made by Defendants to locate email. Counsel for Melinda Walk-Thompson issued a subpoena directed to Garrant Consulting, LLC, (“Garrant”) which was the service provider for the Native Link website and Native Link email domain “nativelink.net” from 2011 until August 2016. Defendants have now belatedly disclosed that on August 12, 2016, during the litigation, Garrant terminated the Native Link email accounts for non-payment and failure to renew the nativelink.net domain. Garrant produced an email reflecting that in August 2016 Garrant advised Defendants Melinda Thompson-Walk and Paul Walk “I will keep a copy of your files for the next 30 days. On September 12, 2016, all files will be permanently removed.” (See Exhibit C - August 12, 2016 email from B. Garrant to Paul Walk and Melinda Thompson-Walk). Defendants who received this notice – Ms. Thompson-Walk and Mr. Walk -- knew or should have known that they had a duty to preserve the emails in the Native Link accounts. However, Mr. Walk had no authority to do so.

As evidence of dilatoriness, Plaintiff argues that 10,000 emails were produced after the Court’s October 21, 2018 Order when Plaintiff, having been granted direct access to Walk’s Gmail account, logged on and downloaded 10,000 of them. (See Oct. 24, 2018 Hearing Transcript page 6.) Plaintiff stated on the record that he is now satisfied with Mr. Walk’s email production. Id. Whether or not the 10,000-plus emails from Walk’s personal Gmail account are relevant is unknown to me.

Regarding Paul Walk’s personal Gmail account, he de-linked the Gmail account from his nativelink.net account in October 2014. Walk continued to have access to his personal Gmail account. Walk gave no explanation as to why it took months, multiple court orders, and a deposition, to search and produce email from his personal Gmail account.

However, Walk avers that during his deposition he gave Plaintiff the password and Plaintiff had unfettered access to everything in the account.[2] Thereafter, Walk sent the contents of the Gmail account to Plaintiff on a flash drive. (Dkt. No. 178-1, para. 22) Additionally, Walk realized that his attempts to download his Gmail account on September 12, 2018 resulted in his unwittingly saving copies to his Google Drive account. He discovered this and retained a digital forensic expert to copy and deliver the contents to Plaintiff. Id. at para. 25. I assume that this has been done. If it has not, it should be delivered immediately and at Mr. Walk’s expense. Plaintiff does not allege any gaps in Walk’s production of his personal Gmail account. However, Plaintiff had to file motions and take Mr. Walk’s deposition to obtain Walk’s Gmail account, facts which indicate dilatoriness and prejudice to Plaintiff.

An appropriate sanction is an award of deposition costs, travel and other deposition related expenses, and that the digital copy of Mr. Walk’s Gmail account which was provided to Plaintiff on a hard drive be provided at Walk’s expense.

(b) Melinda Thompson-Walk

*8 Ms. Thompson-Walk is alleged to be one of three members of NL Construction. Plaintiff alleges that she was elected “managing member.” She is an owner/member of the Native Link companies and, as she has admitted, was involved with interacting with the accountants and providing them information to prepare financial statements.

Ms. Thompson-Walk had a company email account on the nativelink.net domain. She was still a member and in charge of the companies, so she and her lawyers should have promptly acted to preserve the company email while they were under a duty to do so. They failed to act, allowed the corporate email records to be destroyed, and have offered no excuse. This destruction issue was not flagged to Plaintiff, was not in the November 2017 Rule 26(f) report, and was not disclosed to the Plaintiff or to the Court. In response to an inquiry from Ms. Thompson-Walk a year later, in August 2018, Garrant advised that it did not destroy all the Native Link data in September 2016, but “actually kept a backup on the server for a year past the due date before it was permanently removed from the server.” (Email from B. Garrant to Melinda Thompson, attached hereto as Exhibit D). The destruction of the Native Link data occurred during the pendency of the litigation, a year and nine months after the complaint was filed and while Defendants were under a duty to preserve this ESI. Ms. Thompson-Walk was dilatory in failing to disclose the destruction of this data for years, even after being ordered to produce it, and forcing Plaintiff to make numerous motions, and waste time and resources, on a wild-goose chase knowing that Plaintiff would come up empty-handed, This pattern of knowing delays also supports a finding of willfulness and bad faith on the part of Ms. Thompson-Walk.

Dilatory conduct and lack of candor continued after the June 6, 2018 Order. In response to an inquiry from Defendant Melinda Thompson-Walk in August 2018, Garrant advised her that it did not destroy all the Native Link data in September 2016, but “actually kept a backup on the server for a year past the due date before it was permanently removed from the server.” (See Exhibit D).

As detailed above, Ms. Thompson-Walk failed to preserve the nativelink.net domain during the litigation, while she was under a duty to do so and had the opportunity to act after she was advised by Garrant that the nativelink.net account was going to be destroyed.

It does not appear that Ms. Thompson-Walk saved relevant company emails in any other location, such as the two computers that she used but has not preserved.[3]

(c) Patrick Nolan

Defendant Patrick Nolan is alleged to be one of the three members in NL Construction (Complaint, para. 12) and Nolan has not denied that allegation. Amended Answer (Dkt. 105), para. 7.

I have received no information specific to Mr. Nolan regarding his Native Link email, or any efforts to locate company emails or identify the email accounts which Mr. Nolan used to conduct Native Link business.

On November 14, 2018 Mr. Nolan’s lawyer, Jeffrey Morris, filed a Motion to Withdraw as Nolan’s attorney. (Dkt. 172). Mr. Morris avers in the motion that his client Mr. Nolan no longer wants to spend any resources on this case and that Mr. Nolan has not cooperated in ESI matters. Id. para. 6. The Court did not rule on that motion. Thus, Attorney Morris filed the opposition to the instant motion for sanctions (Dkt. 177) on Mr. Nolan’s behalf (as well as his other client, Ms. Thompson-Walk). There is nothing in the opposition that addresses specifically Mr. Nolan’s emails.

*9 Mr. Nolan has not filed any affidavit in response to the Court’s October 31, 2018 Order to provide “sworn affidavits by individuals with specifics explaining the how, when and why with respect to lost, destroyed or transferred devices and ESI by 11/06/2917.”

Mr. Nolan has ignored the Court’s orders, and has willfully and in bad faith failed to comply with those Orders regarding production of emails, location of emails, and all the other aspects of the June 6, 2018 Order and the subsequent Orders.

(a) Paul Walk

As noted above, Defendant Paul Walk was employed as a Vice President until April 2014 and then was an independent contractor on one project in 2015. (Dkt. No. 178-1; Walk Aff.) Mr. Walk avers that he had no such documents except for a few paper files, had no access to company documents, and had no responsibility for them.

The opposition to the motion for sanctions avers that Plaintiff took depositions of Defendants in October 2018. I have received no information contrary to Mr. Walk’s averments that his employment ended in 2014 and that he has no documents in this category. He testified that the only documents that may have been on his Apple laptop computer in 2015, when it crashed (see below) were Native Link invoices. Therefore, the motion for sanctions for failing to produce these documents should not be granted.

(b) Melinda Thompson-Walk

Ms. Thompson-Walk swore in her affidavit (Dkt. No. 177) that the company computer she was using from 2011 to 2015 contracted a virus and was donated to Goodwill in September 2015, prior to the commencement of litigation in December 2015. She was not under a duty to preserve that computer at the time of its disposal. There is no evidence that QuickBooks, bank statements, tax returns, etc. were saved on that computer.

Ms. Thompson-Walk avers that she used her daughter’s computer for company business from September 2015 to December 2016 until it too allegedly malfunctioned and was disposed of to a recycler in June 2017. Ms. Thompson-Walk was under a duty to preserve the daughter’s computer. Her disposal of the computer should have been disclosed at the Rule 26(f) conference and in the Rule 26(f) report. Plaintiff should not have had to file several motions and take depositions to find out that the computer had not been preserved. Ms. Thompson-Walk’s failures show that she was dilatory, a finding which supports a sanction.

Moreover, Plaintiff argues that in her deposition Ms. Thompson-Walk testified that she used her daughter’s computer well after it was supposedly discarded, and further argues that contrary to her assertion about only logging in remotely, she used a desktop version of QuickBooks that resided on the daughter’s computer. Plaintiff’s Brief, page 3. If this summary of her testimony is accurate, information residing on the computer could have been relevant to Plaintiff’s claims. Ms. Thompson-Walk’s affidavit (Dkt. No. 177) avers that she did not save company documents on her daughter’s computer and that she did not have a copy of the company QuickBooks on the computer. She avers that she only used the computer to remotely log in to accounting documents, which would not have resulted in documents being saved to the hard drive of the daughter’s computer. I have not been presented with deposition testimony contradicting her averments.

*10 Ms. Thompson-Walk, a member/owner of the company with financial responsibilities, was under a duty to preserve the computer which she used for company business (her daughter’s computer) but did not. She has given contradictory sworn statements about what documents were saved on it. She never raised the issue at the Rule 26(f) conference or in the Report. The foregoing evidences personal responsibility, dilatory conduct and willfulness. The motion for sanctions should be granted as to Ms. Thompson-Walk’s failure to produce QuickBooks and financial records. An appropriate sanction is an award of the expenses related to her deposition and the expenses related to obtaining documents from Riggan the accountant.

(c) Patrick Nolan

As mentioned above, Mr. Nolan, a member of NL Construction, has willfully declined to obey the Court’s Orders.

3. Violation of the Court’s Order to identify and search corporate devices.

In addition to the court-ordered disclosures regarding email repositories, Defendants were also ordered on October 24, 2018 to search their Native Link computers, personal computers and Gmail accounts for email and other relevant documents, and if necessary, to engage a forensic expert to examine the devices. A similar pattern of undisclosed evidence destruction has emerged after the Order was entered.

(a) Paul Walk

Defendant Paul Walk’s computer is alleged to have crashed. He filed a declaration on November 29, 2018 stating that he was not an employee after April 2015 and was not involved in management in 2015, a year in which he was an independent contractor on one project. Walk used an Apple laptop computer to conduct Native Link business which “crashed” in August 2015. (Dkt. No. 178-1) The crash was prior to the commencement of this litigation. Specifically, Defendant Paul Walk stated that: “[t]he laptop crashed on me in approximately August 2015, at which time I took it in to be repaired which required, as explained to me, a complete cleaning of the hard drive. The result of the complete cleaning of the hard drive resulted in all documents being erased. Thus, Native Link work that had been kept on the laptop was necessarily lost.” (Dkt. No. 178-1).

Mr. Walk did not provide the Court with any documentation from the company that performed the repair work on the Apple computer or what they did, and why the computer had to be “cleaned” by destroying all the information which resided on it, making the cure as bad as the disease. Nor did Mr. Walk recently engage a digital forensic expert, as the Court had ordered, he did not have that expert examine the Apple laptop to corroborate Walk’s assertions, see when and if any “cleaning” was done, and determine whether documents were recoverable. The erasure of corporate documents on Mr. Walk’s Native Link corporate computer was not mentioned in the Rule 26(f)Report. That was at least careless and shows a lack of thoroughness, but given Mr. Walk’s limited contractual involvement with the company in 2015 and the absence of a duty to preserve, I do not recommend the imposition of sanctions on Mr. Walk related to the Apple laptop.

Defendant Walk further stated that he “retained a computer forensic expert to inspect and analyze the Apple laptop.” He did not identify the computer forensic expert or how the laptop was “inspected and analyzed.” However, allegedly no additional email or documents were found on the Apple laptop by the forensic expert.

In mid-November 2018, Defendant Walk stated that he found an “old hard drive” that he recalled had been used to back up the Apple laptop computer, which was provided to a forensic company. (Dkt. No. 178-1) The backups were dated May 2012 and October 2013. (Exhibit E – Freeman December 20, 2018 letter). I have not been advised whether additional responsive documents were identified and produced to Plaintiff.

(b) Melinda Thompson-Walk

*11 Defendant Melinda Thompson-Walk filed an affidavit on November 5, 2018 stating that her Native Link computer “contracted a virus” in 2015 and was completely “dysfunctional” and was donated to Goodwill. (Dkt. No. 170). She then used her daughter’s personal Compaq computer from 2015 to September 2016, after the litigation commenced. According to her daughter’s affidavit, the Compaq computer also started having problems in 2014, “completely stopped operating” at some unspecified point and was donated in June 2017 to a company in Spokane, Washington. (Dkt. No. 171). Neither Defendant Melinda Thompson-Walk nor her daughter provided me or the Court with any receipts or documentation which would support the existence of a virus, malfunctioning computer, or the donation of a supposedly dysfunctional computer to a corporation. Defendants do not explain why an unnamed company would want a completely dysfunctional computer. If the computer was able to be fixed, why would Defendants want their corporate information in the hands of a third party? Ms. Thompson-Walk’s explanation is untenable.

In an effort to address the Court’s Order to produce QuickBooks records, Defendants’ counsel subpoenaed from Nate Riggan, Native Link’s accountant, Native Link’s QuickBooks files. An “accountant’s copy” of QuickBooks was produced. Plaintiff has reviewed these QuickBooks files. He states that they do not include records for 2012 and that they conclude in June 2015. Defendants do not dispute this point and do not explain why the records for the entire relevant time period still have not been produced.

Ms. Thompson-Walk is personally responsible for the above dilatory and bad faith failure to preserve, failure to disclose, and contradictory excuses. I recommend that the charges associated with obtaining documents and deposition testimony from Mr. Riggan and Ms. Thompson-Walk should be awarded to Plaintiff, as well as an adverse inference that QuickBooks documents not produced by Ms. Thompson-Walk would have been detrimental to her positions in this case.

Defendants contend that they have produced all meeting minutes and have subpoenaed such documents from the corporate attorney Robert Burnett. Plaintiff contends that: (1) there no minutes were provided for the meeting where the $250,000 loan was discussed or from the meeting during which Melinda Thompson-Walk was elected the Managing Member of Native Link Construction, LLC; (2) a document produced by Attorney Morris on June 29, 2018 regarding a purported meeting in November 2012 regarding membership in NL Construction is “obviously falsified” and was created after the June 6 Order; and (3) none of the documents are signed.

Defendant Paul Walk’s employment was terminated in 2014, the divorce from Melinda Thompson-Walk was finalized in 2015, and he continued in a limited role as an independent contractor in 2015. He avers without contradiction that after his termination he did not have access to corporate documents such as meeting minutes, and he does not now. I recommend no sanctions be awarded against Mr. Walk regarding an alleged failure to produce meeting minutes.

Defendant Melinda Thompson-Walk contends in her opposition that she subpoenaed minutes from corporate attorney Burnett and produced what was received. Ms. Thompson-Walk was an owner/member of NL Construction and Native Link, LLC during the relevant time period and it would be expected that a person with that status would retain meeting minutes without having to subpoena them. The Court already has ordered that documents not produced cannot be used by Defendants at trial. I recommend that an appropriate sanction would be an adverse inference instruction regarding Ms. Thompson-Walk that due to her failure to produce meeting minutes it can be inferred that the missing minutes would be unfavorable to her and to Mr. Nolan (Mr. Nolan has not responded to the motion with any affidavit recounting any search for meeting minutes.)

Plaintiff argues that discovery sanctions should be imposed for the production in June 2018 by Defendants of a back-dated document entitled “OWNER MEETING NATIVE LINK, LLC,” purporting to be minutes of a November 8, 2012 Native Link Construction, LLC meeting. (Exhibit A). The metadata associated with the document establishes it was not created on or about November 8, 2012, but five and half years later, on June 26, 2018 after the Court’s June 6, 2018 Order. Apparently, Defendants did not initially disclose to Plaintiff, or to the Court, that the minutes were created after the Court’s order compelling production and back-dated to November 2012. Defendants Thompson-Walk and Nolan admit in their opposition that the document was back-dated. In his November 29, 2018 declaration in opposition to the Motion, Defendant Paul Walk attempts to explain, stating that he was asked by his Co-defendants Thompson-Walk and Patrick Nolan in June 2018 to “produce our recollection in writing and send it to Thompson for her signature,” which he says he did. (Dkt. 178-1). In his brief in opposition to the Motion, Defendant Paul Walk’s counsel attempts an excuse, stating “The document perhaps should not have been back dated to November 2012.” (Dkt. 178, p. 7)

*12 I do not conclude that a discovery sanction is the proper remedy to address the circumstances surrounding this admittedly back-dated document. Rather, the Court should consider allowing cross-examination of all Defendants at trial on the “OWNER MEETING Minutes” which were back-dated to November 8, 2012, but not allow any other documents not produced to Plaintiff to be introduced regarding the back-dated document.

Defendants Thompson-Walk and Nolan contend that NL Construction has not filed tax returns since 2013. Plaintiff responds that Nate Riggan prepared tax returns for 2014 which were belatedly produced by the accountant on July 16, 2018, that the businesses continued into 2016, and that he has not received tax returns for 2015 and 2016.

Plaintiff contends that the 2014 and 2015 tax returns show that a $250,000 loan from Mr. Nolan to NL Construction actually went to Native Link, LLC.

The failure by Ms. Thompson-Walk and Mr. Nolan, the persons responsible for managing these businesses, to timely produce the 2014 tax return necessitated motion practice and needless effort by Plaintiff. The Court should consider as a sanction an award of Plaintiff’s expenses for deposing the accountant.

Plaintiff argues that a letter dated 12/17/13 from Mr. Jim Ronyak is falsified based on other correspondence and the absence of one email. Defendant Paul Walk responds that the Ronyak letter is authentic as stated by Mr. Ronyak, and that other evidence supports this assertion.

Whether or not the Ronyak letter is “falsified” is a matter to be determined by the trier of fact after cross-examination, and not by me on a motion for sanctions. Plaintiff was allowed to explore authenticity when he took depositions in October 2018. However, to the extent that an email which should have been produced is not, the Court already has ordered that emails and documents which have not been produced cannot be introduced at trial. Therefore, no additional sanctions are appropriate.

Plaintiff argues that an explanation has been provided by counsel for Defendants, but the explanation is inadequate and is not supported by any contemporaneous emails, wire transfer documentation, or QuickBooks entries.

The credibility of Defendants’ explanation, in light of the asserted lack of documentary support for it, is another matter for the trier of fact and not properly addressed by a motion for discovery sanctions. Again, the Court has ruled that documents which have not been produced cannot be used at trial.

RECOMMENDED FINDINGS OF FACT

Based on the foregoing discussion, in summary of some of the findings set forth in that discussion, I make the following recommended findings of fact.

MELINDA THOMPSON-WALK

1. On November 9, 2017 Defendants Melinda Thompson-Walk, Paul Walk and Patrick Nolan, through their counsel, filed a joint Rule 26(f)Report, after conferring with Plaintiff, stating that ESI metadata would be relevant to “the contract documents” and there were “[n]o unresolved [ESI preservation] issues.”

*13 2. Defendant Melinda Thompson-Walk failed to preserve the nativelink.net company email accounts after she was on notice of Plaintiff’s claims, had the authority to do so and was represented by counsel.

3. On August 12, 2016, during the litigation, Native Link’s email provider terminated the Native Link email accounts for non-payment and failure to renew the nativelink.net domain, after giving notice to Ms. Thompson-Walk.

4. After the entry of the June 6, 2018 Order, Defendant Melinda Thompson-Walk first advised the Court on October 31, 2018 that the Native Link email had not been preserved.

5. Defendant Thompson-Walk first advised the Court on November 5, 2018 that the Native Link computer, which she used from February of 2011 to September 2015, got a “virus” in 2015, was not operational, and was donated to Goodwill. No receipts, information relating to a virus or malfunctioning computer, or evidence of a donation to charity were provided by Defendant Melinda Thompson-Walk.

6. Defendant Melinda Thompson-Walk first advised the Court on November 5, 2018, that the Compaq computer that Defendant Melinda Thompson-Walk used for Native Link business, belonging to her daughter, became non-operational and was donated to a charity in June 2017 during the litigation.

7. The Compaq computer had a desktop version of QuickBooks installed and which stored NL Construction financial data. Thus, this data has not been preserved, although “accountant’s copies” of some portion of that the data have been produced.

8. As a member/owner of the Native Link companies, the alleged “managing member,” and involved in its management and financial affairs, Ms. Thompson-Walk would be expected to maintain minutes of board meetings. Ms. Thompson-Walk has failed to produce minutes of the meeting at which a $250,000 loan was discussed and the meeting at which she was elected the managing member of Native Link.

PATRICK NOLAN

9. Defendant Patrick Nolan, alleged to be one of the members and owners of NL Construction, which he has not denied. Nolan has not responded to any of the Court’s orders compelling discovery by producing documents or submitting affidavits.

10. Mr. Nolan has provided no information regarding his Native Link email, any efforts to locate company emails or identify the email accounts which Mr. Nolan used to conduct Native Link business, company minutes, financials, loans or other documents, ignoring numerous court orders.

PAUL WALK

11. Defendant Paul Walk left employment with NL Construction in April 2014 when he separated from his then wife, Defendant Melinda Thompson-Walk. He worked on one project for that company in 2015 in an independent contractor capacity.

12. Mr. Walk had no access to or control over the nativelink.net company email account after the litigation was filed.

13. Mr. Walk used an Apple laptop computer to conduct Native Link business which “crashed” in August 2015, prior to the commencement of this litigation. (Dkt. No. 178-1)

14. Mr. Walk did not maintain the requested Native Link documents on the Apple laptop.

15. Defendant Paul Walk first advised the Court on November 29, 2018 that the Apple computer he used for Native Link business “crashed” in 2015. He took the computer to be repaired, causing all documents to be “erased” from the Apple computer.

*14 16. Following the issuance of the Court’s June 6, 2018 Order, on June 26, 2018, Mr. Walk, in conference and coordination with Ms. Thompson-Walk and Patrick Nolan, created and produced a back-dated document to Plaintiff purporting to be minutes of a November 8, 2012 Native Link meeting regarding membership in NL Construction.

17. The document’s metadata establishes that it was created on June 26, 2018. Mr. Walk has admitted that this document is fabricated to appear to be contemporaneous minutes regarding one of the central issues in this matter, i.e., Plaintiff’s alleged one-third membership in NL Construction.

18. On August 16, 2016, Garrant Consulting, LLC, Native Link’s email service provider, advised Mr. Walk (and Ms. Thompson-Walk) that Garrant was terminating Native Link’s account because of non-payment and their failure to renew their domain. At that time, Mr. Walk was neither an owner, manager, employee or independent contractor for the Native Link companies and had no authority to respond to Garrant’s notice or authorize payment of overdue amounts to Garrant.

19. Mr. Walk was dilatory in failing to search his Gmail account and produce emails from his Gmail account.

RECOMMENDED CONCLUSIONS OF LAW

MELINDA THOMPSON-WALK

1. Defendant Melinda Thompson-Walk violated the June 6, 2018 Order and the August 22, 2018 Order by, among other issues, failing to preserve and produce to Plaintiff Native Link email from the period of May 1, 2012 to December 31, 2016; and failing to produce minutes of member meetings, QuickBooks files, tax returns, bank records for Native Link, LLC and Native Link Construction, LLC.

2. Regarding meeting minutes, Ms. Thompson-Walk, acting in conjunction with the other Defendants, acted willfully and in bad faith in response to the Court’s June 6, 2018 Order by causing admittedly fabricated meeting minutes to be produced regarding a central issue in the case.

3. Ms. Thompson-Walk violated the Court’s orders and acted in a willful and dilatory manner by failing to advise the Court and Plaintiff that she had failed to preserve, while under a duty to do so, the Compaq computer on which she conducted Native Link business.

4. Ms. Thompson-Walk’s failure to preserve the Compaq laptop prejudiced Plaintiff because the QuickBooks desktop version was installed on it, and efforts to obtain such financial records from Mr. Riggan were unsuccessful for the years 2012 and after June 2015, thus an adverse inference sanction under Rule 37(e) should be granted regarding the failure to produce these records.

5. Ms Thompson-Walk’s failure to preserve meeting minutes regarding the $250,000 loan and minutes regarding her election to managing member status prejudiced Plaintiff, and attempts to obtain them from the corporate attorney Mr. Burnett were apparently unsuccessful.

6. Plaintiff’s Second Motion for Sanctions against Defendants Melinda Thompson-Walk should be granted, and Ms. Thompson-Walk should be sanctioned as follows:

a. Ms. Thompson-Walks should be precluded from offering electronic, paper or documentary evidence that was not produced as of the close of discovery.

b. An instruction should be given that because the QuickBooks documents have not be produced for 2012 and for the period after June 2015, and because minutes of meetings regarding the $250,000 loan and her election to managing member status have not been produced, it should be presumed that the content of such documents would not have been favorable to Ms. Thompson-Walk’s defense.

*15 5. Ms. Thompson-Walk should pay all Plaintiff’s expenses in taking her deposition, and the award of Plaintiff’s expenses in obtaining documents from Native Link’s accounts, those incurred in obtaining documents and deposing Mr. Riggan and Robert Burnett, and those incurred in moving for sanctions.

PATRICK NOLAN

6. Because of his failure to respond to the Court’s Orders, failure to submit affidavits, and failure to produce documents, a default judgment should be entered against Mr. Nolan.

MITCHELL PAUL WALK

7. Because of Mr. Walk’s dilatoriness in locating and producing documents from his personal Gmail account, Plaintiff’s motion for sanctions should be granted. A recommended appropriate sanction is an award to Plaintiff of his costs, travel expenses and any other expenses incurred to take the deposition of Mr. Walk. The digital copy of Mr. Walk’s Gmail account should be ordered to be produced to Plaintiff on a hard drive immediately (if it has not already been so produced) and to be provided at Walk’s expense.

ALLOCATION OF CHARGES FOR THE SPECIAL MASTER

8. Per the Court’s Order, I recommend that the charges for the work as Special Master should be allocated as follows: 40% to Melinda Thompson-Walk; 40% to Patrick Nolan, and 20% to Mitchell Paul Walk.

On February 11, 2016, Jeffrey Morris, Esq. (“Mr. Morris”) entered his appearance on behalf of Defendants Native Link Construction, LLC and Native Link, LLC, Melinda Thompson-Walk and Paul Walk. On February 23, 2016, Mr. Morris entered his appearance on behalf of Defendant Patrick Nolan and moved to set aside the default judgement entered on February 22, 2016. Two years later in October 2018, the Court granted Spencer Freeman’s motion to appear pro hac vice for Defendant Paul Walk.

Mr. Walk complains that while Plaintiff had access to Walk’s Gmail account, Plaintiff deleted numerous emails in the account.

I will address the failure to preserve these two computers below. Plaintiff argues that in her deposition Ms. Thompson-Walk contradicted her affidavit regarding the use of her daughter’s computer.