Counter-Plaintiff CAE is an Austin-based data company founded in 1982. (Dkt. # 10 at 3.) CAE states that it is a global physical commodity trader addressing the semiconductor market, which considers transactions in any physical asset utilized by a fabrication facility. (Id.) CAE works with all levels of fabrication to understand their demand and available supply, and to solve any fundamental sourcing and monetization challenges. (Id.) CAE describes its core business as including “its proprietary database and technology platform.” (Id.) According to CAE, it maintains its database and tracking system for buyers and sellers of semiconductor equipment and, through its marketplace, connects buyers and sellers of semiconductor equipment. (Id.)

CAE states that “it has spent in excess of 100,000 man-hours—valued at millions of dollars—prototyping, developing, coding, testing, deploying and modifying its proprietary technology that congregates buyer and seller inputs into one algorithmic matching system that looks to behavior, market events, supply, demand, and asset quality to develop solutions for its clients (‘aggregation technology’).” (Dkt. # 10 at 4.) CAE alleges that it employs over 100 persons across three continents who conduct detailed research, analysis, and auditing of data to ensure that CAE is properly capturing and using its data. (Id.) According to CAE, “the proprietary aggregation technology built by CAE scales efficiently to cover tens of thousands of unique buyer and seller sources.” (Id.) CAE contends that “[t]his proprietary aggregation technology, the real-time aggregated data, and CAE's unique dataset of buyer and seller sources are three of CAE's core intellectual property assets that distinguish CAE from its competitors.” (Id.)

According to CAE, “at a great expense,” it has “developed, maintained and safeguarded its global marketplace, the customer information including prospective buyers and sellers across the world, pricing, financing, sales volume, potential customer import volumes, personnel files and records, customer lists, proposed or contemplated investments, financial records, other internally generated studies and reports, among other things, to protect its investments and trade secret information[ ] (‘CAE's Trade Secrets’).” (Dkt. # 10 at 4.) CAE asserts that, “without [its] painstaking process of obtaining this data, aggregating it, and analyzing it, the ability for these particular buyers and sellers to effectively find each other simply does not exist,” and that “[s]upply and demand information in this market is not shared publicly and buyers and sellers do not congregate.” (Id.) CAE maintains “[t]here is no public dissemination of information that a competitor could aggregate and use to put deals together,” and “[t]here is no centralized pricing mechanism, no method to determine pricing by consulting any public sources, and no historical transactional data available.” (Id.) CAE alleges that “[s]emiconductor companies do not even disclose publicly what type of equipment they operate in their facility, so simply determining the needs of a buyer (or the used assets of a seller) is critical data that is not publicly available anywhere.” (Id. at 4–5.) Thus, according to CAE, “[a]bsent the thousands upon thousands of hours (and millions of dollars) that CAE has invested, a competitor would be unable to achieve success in this marketplace.” (Id. at 5.) CAE argues that its “Trade Secrets are not known or readily available to CAE's competitors, and CAE's competitors could derive economic value if CAE's Trade Secrets are disclosed.” (Id.)

*2 CAE states that to accept employment and to begin working at CAE, all employees with access to its data and systems are required to sign an Employment Agreement and an Employee Nondisclosure, Assignment, Non-Competition, and Non-Solicitation Agreement (“Nondisclosure Agreement”), which evidences their consent to the terms of their employment with CAE. (Dkt. # 10 at 5.) The Nondisclosure Agreement provides the following obligations, among others, to its employees signing the agreement: (1) “I will use my best efforts to prevent the unauthorized use of any laptop or personal computer, peripheral device, software or related technical documentation that the Company issues to me”; (2) “ I will not disclose any Proprietary Information to anyone outside Company, and I will use and disclose Proprietary Information to those inside Company only as necessary to perform my duties as an employee of Company”; (3) “At any time upon Company's request, and when my employment with Company is over, I will return all materials (including, without limitation, documents, drawings, papers, diskettes and tapes) containing or disclosing any Proprietary Information (including all copies thereof), as well as any keys, pass cards, identification cards, computers, printers, pagers, personal digital assistants or similar items or devices that the Company has provided to me”; and (4) “This Agreement (a) shall survive my employment by Company.” (Id. at 6.)

On February 10, 2021, Plaintiffs James O'Reilly, Alexander Zaiss, Victor Silva, and Nicholas Novak (collectively, “Plaintiffs”) filed suit against CAE in the 200th Judicial District Court of Travis County, Texas. (Dkt. # 1 at 6.) Plaintiffs' amended petition added two more plaintiffs and added Ryan F. Jacob, CAE's owner, as a defendant. (Id. at 12.) In their amended petition, Plaintiffs allege they worked as “traders” for CAE, working to match a potential buyer of semiconductor equipment with a potential seller. (Id. at 15.) According to Plaintiffs, “[t]he semiconductor equipment needs of a buyer are already known to the buyer, and the traders do not act as advisors or technical specialists to the buyers as to their equipment needs,” but “merely connect[ ] a sophisticated buyer that already knows its equipment needs with a seller who has the needed equipment to sell.” (Id.) Plaintiffs further state that they “would typically spend an enormous amount of hours each week making calls and emails to potential buyers and sellers from the confines of their work or home offices,” and that a “large majority of these emails and calls were outbound cold calls and unsolicited emails from an inside sales position – and were made from either the CAE office in downtown Austin, or from their home offices during the recent pandemic.” (Id.)

Plaintiffs allege that as traders they were subject to a commission plan, referred to as a bonus by CAE, that “guaranteed each trader sales commissions based on the amount of sales obtained by the trader in each month.” (Dkt. # 10 at 16.) “Generally, the traders were entitled to a monthly-calculated and paid sales commission rate of 15% at $30,000 of sales, 18% at $50,000 of sales, and 20% at $75,000 of sales.” (Id.) Plaintiffs contend that they “were supposed to be paid 50% of the commissions upon sale, and the other 50% upon delivery of the equipment to the end-purchaser,” but that “[a]ctual delivery of the equipment from the seller to the buyer was coordinated by the Settlement Department at CAE, not the traders.” (Id.) Additionally, according to Plaintiffs, “CAE had no formal written commission plan, and instead communicated the commission plan verbally to the traders at around the time of hire and throughout their employments.” (Id.) “The traders then worked in reliance on the representations made by CAE concerning the commission plan,” and “[t]he plan acted as a unilateral offer that the traders accepted through performance.” (Id.)

Plaintiffs' amended petition alleges that CAE failed to pay them all commissions owed for their performances, and that in the past three years, all Plaintiffs worked in excess of more than forty hours per one or more workweeks. (Dkt. # 1 at 16–17.) Plaintiffs allege that the weeks they worked in excess of forty hours, CAE failed to compensate them at an hourly rate of time-and-one-half their regular rate for all such overtime hours as required by the Fair Labor Standards Act (“FLSA”). (Id. at 17.) Plaintiffs allege claims against Defendants for breach of contract, unjust enrichment, quantum meruit, money had and received, promissory estoppel, and overtime violations under the FLSA, 29 U.S.C. §§ 206-7, 215(a)(2). (Dkt. # 19.)

*3 On April 21, 2021, Defendants removed the case to this Court based on federal question jurisdiction, 28 U.S.C. § 1331. (Dkt. # 1.) Thereafter, CAE filed counterclaims against Plaintiffs/Counter-Defendants O'Reilly and Novak only, based on their alleged unauthorized use and access of CAE's Proprietary Information for competitive advantage. (Dkts. ## 9, 10.) CAE alleges the following counterclaims against O'Reilly and Novak: (1) violation of the Defend Trade Secrets Act, 18 U.S.C. § 1836, et seq. (“DTSA”); (2) violation of the Texas Uniform Trade Secrets Act, Tex. Civ. Prac. & Rem. Code §§ 134A.001 et seq. (“TUTSA”); (3) breach of contract; and (4) breach of fiduciary duty. (Dkts. ## 9, 10.)

On May 20, 2021, CAE filed the instant motion for preliminary injunction and for spoliation sanctions against Counter-Defendant Novak. (Dkt. # 11.) On May 27, 2021, Novak filed a response in opposition. (Dkt. # 13.) On June 1, 2021, CAE filed a reply. (Dkt. # 14.) CAE's request for relief is addressed below.

A. Spoliation

“Spoliation of evidence ‘is the destruction or the significant and meaningful alteration of evidence.’ ” Slabisak v. Univ. of Tex. Health Sci. Ctr. at Tyler, No. 4:17-CV-597, 2018 WL 4842690, at *1 (E.D. Tex. Oct. 4, 2018) (quoting Guzman v. Jones, 804 F.3d 707, 713 (5th Cir. 2015)). “Mere destroying or altering of evidence, however, does not necessarily mean that a party has engaged in sanction-worthy spoliation.” Id. (quoting Smith v. Chrysler Grp., L.L.C., No. 1:15-CV-218, 2016 WL 7741735, at *3 (E.D. Tex. Aug. 31, 2016)). Routine deletion of electronic information is generally not considered spoliation “unless there is a duty to preserve the information,” and even then, only when there is also “a culpable breach of that duty, and resulting prejudice.” Quantlab Techs. Ltd. (BGI) v. Godlevsky, No. 4:09-CV-4039, 2014 WL 651944, at *8 (S.D. Tex. Feb. 19, 2014).

Federal Rule of Civil Procedure 37(e) provides:

Fed. R. Civ. P. 37(e). When spoliation occurs before a case is filed, or in a manner not addressed by the current rules or statutes, a court has the inherent authority to sanction the conduct apart from Rule 37. See, e.g., Rimkus Consulting Grp., Inc. v. Cammarata, 688 F. Supp. 2d 598, 611 (S.D. Tex. 2010) (“Allegations of spoliation, including the destruction of evidence in pending or reasonably foreseeable litigation, are addressed in federal courts through the inherent power to regulate the litigation process if the conduct occurs before a case is filed or if, for another reason, there is no statute or rule that adequately addresses the conduct.”).

Thus, for spoliation sanctions to be imposed, the party seeking the sanction must show the following factors: (1) the existence of a duty to preserve the evidence; (2) a culpable breach of that duty; and (3) resulting prejudice to the innocent party. Ashton v. Knight Transp., Inc., 772 F. Supp. 2d 772, 800 (N.D. Tex. 2011). A party's duty to preserve evidence comes into being when the party has notice that the evidence is relevant to the litigation or should have known that the evidence may be relevant. Rimkus, 688 F. Supp. 2d at 612. “Generally, the duty to preserve extends to documents or tangible things (defined by Federal Rule of Civil Procedure 34) by or to individuals likely to have discoverable information that the disclosing party may use to support its claims or defenses.” Id. at 612–13.

*4 The party seeking the spoliation sanction bears the burden of proof. Ashton, 772 F. Supp. 2d at 800 (citing Rimkus, 688 F. Supp. 2d at 615–16). Further, the sanctions imposed “must be no harsher than necessary to respond to the need to punish or deter and to address the impact on discovery.” Id. at 801. Appropriate remedies may include awarding attorney's fees, deeming certain facts admitted, giving an adverse inference instruction to the jury, excluding evidence or expert testimony, striking pleadings, entering a default judgment, and dismissing the case entirely. Allstate Tex. Lloyd's v. McKinney, 964 F. Supp. 2d 678, 683 (S.D. Tex. 2013). The “more severe, sanctions are only available [ ] upon a showing of bad faith conduct.” Smith, 2016 WL 7741735, at *3. That showing requires the court to determine whether the ESI was lost or destroyed “with the intent to deprive another party of the information's use in the litigation.” If so, the Court may consider three additional sanctions: (1) a presumption that the lost information was unfavorable to the destroying party; (2) an instruction to the jury that it may or must presume the information was unfavorable to the destroying party; or (3) the dismissal of the action or entry of a default judgment. Fed. R. Civ. P. 37(e)(2).

B. Preliminary Injunction

“Rule 65 of the Federal Rules of Civil Procedure governs both preliminary injunctions and temporary restraining orders.” Total Safety U.S., Inc. v. Rowland, No. 13-6109, 2014 WL 793453, at *5 (E.D. La. Feb. 26, 2014); see also Fed. R. Civ. P. 65. The grant of injunctive relief is an extraordinary remedy which requires the movant to unequivocally show the need for its issuance. Opulent Life Church v. City of Holly Springs, Miss., 697 F.3d 279, 288 (5th Cir. 2012); Valley v. Rapides Parish Sch. Bd., 118 F.3d 1047, 1050 (5th Cir. 1997).

“The prerequisites for preliminary injunctive relief are long-established in this circuit.” Libertarian Party of Tex. v. Fainter, 741 F.2d 728, 729 (5th Cir. 1984). A preliminary injunction should not be granted unless the movant demonstrates by a clear showing: (1) a substantial likelihood of success on the merits; (2) a substantial threat of irreparable harm if the injunction is not granted; (3) that the threatened injury to the movant outweighs any harm that may result from the injunction to the non-movant; and (4) that the injunction will not undermine the public interest. Lindsay v. City of San Antonio, 821 F.2d 1103, 1107 (5th Cir. 1987); Valley, 118 F.3d at 1051.

“None of the four requirements has a fixed quantitative value.” Monumental Task Comm., Inc. v. Foxx, 157 F. Supp. 3d 573, 582 (E.D. La. 2016) (citing Texas v. Seatrain Int'l, S.A., 518 F.2d 175, 180 (5th Cir. 1975)). “Therefore, in applying the four part test, ‘a sliding scale is utilized, which takes into account the intensity of each in a given calculus.’ ” Id. (citing Seatrain, 518 F.2d at 180). “This requires ‘a delicate balancing of the probabilities of ultimate success at final hearing with the consequences of immediate irreparable injury that could possibly flow from the denial of preliminary relief.’ ” Id. (citing Klitzman, Klitzman & Gallagher v. Krut, 744 F.2d 955, 958 (3d Cir. 1984)). “When the other factors weigh strongly in favor of an injunction, ‘a showing of some likelihood of success on the merits will justify temporary injunctive relief.’ ” Id. at 585 (citing Productos Carnic, S.A. v. Cent. Am. Beef & Seafood Trading Co., 621 F. 2d 683, 685 (5th Cir. 1980)). “However, no matter how severe and irreparable the threatened harm and irrespective of the hardships in which a preliminary injunction or lack of one might cause the parties, ‘the injunction should never issue if there is no chance that the movant will eventually prevail on the merits.’ ” Id. (citing Seatrain, 518 F.2d at 180).

At the preliminary injunction stage, the procedures in the district court are less formal, and the district court may rely on otherwise inadmissible evidence, including hearsay evidence. Sierra Club, Lone Star Chapter v. F.D.I.C., 992 F.2d 545, 551 (5th Cir. 1993). However, even when a movant establishes each of the four requirements described above, the decision whether to grant or deny a preliminary injunction remains within the court's discretion, and the decision to grant a preliminary injunction is treated as the exception rather than the rule. Miss. Power & Light Co. v. United Gas Pipe Line Co., 760 F.2d 618, 621 (5th Cir. 1985).

*5 CAE contends in its amended counterclaim that, during the two years Novak was employed at CAE,[1] he violated his Nondisclosure Agreement with the company by unlawfully misappropriating CAE's Trade Secrets. (Dkt. # 10.) Specifically, CAE alleges that Novak sent himself over 70 emails containing proprietary and confidential information including: prospective buyers and sellers across the world, pricing, financing, sales volume, potential customer import volumes, customer lists, proposed or contemplated investments, and financial records. (Id.) According to CAE, Novak has admitted that he committed this misappropriation. (Dkt. # 11 at 3; see Dkt. # 11-4.)

Specifically, CAE contends that it has discovered over 70 instances where Novak forwarded emails to his personal Yahoo! email address, then located the copies of the sent emails in his CAE sent items folder and deleted them, and then further deleted them from his deleted emails folder. (Dkt. # 11 at 3.) According to CAE, these actions are the result of Novak attempting to hide that he had taken this information from CAE. (Id.)

CAE has produced evidence that after this suit was commenced in state court, on March 18, 2021, CAE's counsel sent a letter to Novak's counsel regarding Novak's alleged taking of CAE information. (Dkt. # 11-3.) The letter states:

(Id. at 4.) In response, on March 26, 2021, Novak's counsel stated in a letter that

(Dkt. # 11-4 at 2.)

Thereafter, CAE has presented evidence that on May 17, 2021, Novak forwarded approximately 33 of the emails in question to his lawyer and three to his old email address at CAE.[2] According to CAE, after contacting Novak's lawyer in concern, it learned only then that Novak had forwarded the emails and that Novak no longer possesses the remaining 40 emails he previously forwarded to himself. (Dkt. # 11 at 4.) CAE contends that this indicates that Novak, despite the anticipation of litigation, has permitted the destruction of over 40 of the more than 70 emails containing CAE confidential information that he took from CAE. (Id.) CAE also argues that by forwarding the remaining emails to his lawyer and to his old CAE email address, “he has altered critically relevant data regarding those emails: namely, to whom they have already been forwarded.” (Id.)

CAE thus asserts that it is entitled to spoliation relief because Novak was obligated to preserve ESI but did not do so because he failed to take reasonable steps to preserve it, and it is not ESI which can be restored or replaced. (Dkt. # 11 at 5.) CAE contends that while litigation began in February 2021, Novak's duty to preserve the emails began much earlier when he consulted his attorney for purposes of bringing this lawsuit. (Id. at 6.) According to CAE, Novak obviously anticipated a dispute at the time he forwarded the emails to himself and then took deliberate steps to cover his tracks. (Id.) While Novak's lawyer stated that he had 33 emails, there is no explanation as to what happened to the other 40 emails, which CAE believes were deleted and destroyed. (Id.)

*6 CAE further argues that its letter to Novak, through his attorney, instructing him to preserve ESI, including evidence of where the emails had been sent and what they contained was ignored because Novak forwarded the emails to at least two email addresses—his attorney's and his old CAE email. (Dkt. # 11 at 6.) According to CAE, this action alters key information contained in the emails—the history of where and when those emails had been accessed or forwarded. (Id.) CAE argues this information cannot be replaced. (Id.)

Given the above actions, CAE maintains that spoliation sanctions and a preliminary injunction which prohibits Novak from taking any further action with regard to any confidential information, as well as prohibits him from destroying any information is necessary. (Id.) CAE also seeks to have Novak's personal computers and electronic storage devices provided to a third-party forensic expert to be imaged, as well as to allow inspection of his personal email accounts or internet-based storage accounts. (Id. at 8–9.)

I. Spoliation

As mentioned, the Rimkus factors described above (the existence of a duty to preserve the evidence, a culpable breach of that duty, and resulting prejudice to the innocent party) govern the standards for spoliation sanctions. Quantlab, 2014 WL 651944, at *12. As with litigation-terminating sanctions, a court must find bad faith, and not “mere negligence,” before it can give a spoliation instruction. Id. (quoting Russell v. Univ. of Tex. of Permian Basin, 234 F. App'x 195, 208 (5th Cir. 2007) (internal quotation marks omitted in Quantlab); also citing Condrey v. SunTrust Bank of Ga., 431 F.3d 191, 203 (5th Cir. 2005) (“The Fifth Circuit permits an adverse inference against the destroyer of evidence only upon a showing of “bad faith” or “bad conduct.”)).

A. Duty to Preserve

A duty to preserve arises when a party knows or should know that certain evidence is relevant to pending or future litigation. Ashton, 772 F. Supp. 2d at 800 (citing Rimkus, 688 F. Supp. 2d at 612). Once litigation is reasonably anticipated, a potential party to that litigation “must not destroy unique, relevant evidence that might be useful to an adversary.” Id. The duty to preserve extends to the party's or potential party's employees “likely to have relevant information—the ‘key players.’ ” Id. The duty to preserve evidence is a duty owed to the court, not to the party's potential adversary, hence, spoliation is considered an abuse of the judicial process. Id.

There does not appear to be any real debate that Novak had a duty to preserve the evidence in dispute. What is at issue, however, is whether any evidence was in fact destroyed despite having a duty to preserve. In responding to the motion, Novak argues that CAE has failed to meet its burden of producing evidence that spoliation occurred. (Dkt. # 13 at 7.) Novak contends that CAE simply asks the Court to engage in speculation that spoliation occurred based on the number of forwarded emails that CAE alleges to have found in Novak's work account, which is more than the approximately 33 emails Novak admits to having currently in his personal Yahoo! email account.[3] (Id.) And, according to Novak, this ignores the possibility that at any point during the 5-18 months following the forwarding of the various emails—but before the anticipation of litigation—they were just routinely deleted. (Id.)

*7 Regarding the 33 emails in his personal account, Novak's counsel promptly responded to CAE's March 18, 2021 preservation letter by stating that he is still in possession of the 33 emails, and that he never forwarded any from his account other than an image of his final bonus to another plaintiff to pass along to counsel prior to Novak's retention of that attorney. (Id.; Dkt. # 13-4.) Novak argues that no emails would have been forwarded after August 2020 when he terminated his employment with CAE. (Dkt. # 13 at 8.) Novak further asserts that CAE has failed to take any steps toward conducting its own forensic examination of the relevant emails and of Novak's CAE email account prior to bringing its request for spoliation sanctions. For this reason, Novak argues this motion, at best, is premature. (Id. at 1, 6, 7.)

At this stage of the litigation, the Court finds that CAE has not produced sufficient evidence that Novak spoliated evidence. Novak has admitted to auto-forwarding certain emails, and that there are 33 currently in his Yahoo! account which he has not deleted; however, aside from the declaration of CAE's Executive Vice President that over 70 emails were forwarded from Novak's CAE account to his personal account and then deleted, there is little else for the Court to consider. In other words, without any additional expert, forensic or other evidence for the Court to review, CAE asks the Court to engage in speculation regarding the approximately 37 other emails which CAE alleges were destroyed despite Novak having a duty to preserve. The Court simply cannot make such a finding at this time.

B. Bad Faith

Even if the Court were to guess that the other 37 emails in fact existed and that Novak destroyed them despite having a duty to preserve them, the Court must make a specific finding that Novak acted in bad faith to impose sanctions against him. See Beck v. Access E Forms, LP, No. 4:16-CV-00985, 2018 WL 3752842, at *2 (E.D. Tex. Aug. 8, 2018) (citing Toon v. Wackenhut Corr. Corp., 250 F.3d 950, 952 (5th Cir. 2001)). As noted above, the “Fifth Circuit permits an adverse inference against the destroyer of evidence only upon a showing of ‘bad faith’ or ‘bad conduct.’ ” Slabisak, 2018 WL 4842690, at *1. “Bad faith, in the context of spoliation, generally means destruction for the purpose of hiding adverse evidence.” Id. (quoting Guzman, 804 F.3d at 713). “The term ‘bad faith’ has been described as conduct involving ‘fraudulent intent and a desire to suppress the truth.’ ” Id. (quoting Ashton, 772 F. Supp. 2d at 800).

In an effort to show bad faith, CAE relies on its contention that Novak acted in bad faith by taking active steps to hide that he sent himself the over 70 emails. (Dkt. # 11 at 5.) CAE asserts that Novak's actions in deleting the emails from his sent CAE account and then emptying these emails from the deleted folder in that account demonstrates bad faith. (Id.) CAE also relies on the missing 37 emails to prove bad faith. (Id.) This evidence, however, falls short of convincing the Court that Novak acted in bad faith. See Tech Pharmacy Servs., L.L.C. v. Alixa Rx L.L.C., No. 4:15-CV-766, 2017 WL 3394118, at *3 (E.D. Tex. Aug. 7, 2017). As already stated, the only evidence before the Court that this occurred is the declaration by the CAE Executive Vice President that Novak performed these actions. Even if true, this is not sufficient evidence of bad faith to sustain spoliation sanctions.

Likewise, regarding CAE's arguments that Novak has violated his Nondisclosure Agreement by forwarding the emails to himself and to his attorney, the Court does not find, at this stage of the litigation, that Novak acted in bad faith in doing so. As argued by Novak in his response, “[o]ne wonders, though, how counsel for Novak could prepare an adequate defense of CAE's counter-complaint against him concerning these emails without actually reviewing a copy of the emails.” (Dkt. # 13 at 8 n.3.)

*8 CAE's failure to present evidence sufficient to show bad faith precludes the Court from making a spoliation finding. Cf. Ashton, 772 F. Supp. 2d at 795–96 (bad faith established by a “strong chain of circumstantial evidence,” including the truck driver's immediate replacement of tires following an accident and the absence of communication records for the time surrounding the accident); T&E Inv. Grp. LLC v. Faulkner, Nos. 3:11-CV-0724-P, 3:11-CV-1558-P, 2014 WL 550596, at *5–6 (N.D. Tex. Feb. 12, 2014) (Solis, J.) (bad faith established where evidence showed that spoliating party made false statements to the court and manipulated computer data to avoid producing it pursuant to a court order); Brown v. Cain, No. 11-00103-SDD-SCR, 2015 WL 893020, at *5 (M.D. La. Mar. 2, 2015) (bad faith established where spoliating party repeatedly disobeyed court orders to produce documents, lied about the location of the documents, and instead destroyed said documents). Absent sufficient evidence, CAE's mere speculation that Novak acted in bad faith is not enough to carry its burden. See Ford v. Potter, No. 3:07-CV-1039-D, 2008 WL 5272782, at *4 n.13 (N.D. Tex. Dec. 18, 2008) (Fitzwater, J.) (no bad faith found where party moving for sanctions failed to produce “affirmative evidence that the [evidence sought had] actually been destroyed or, if discarded or destroyed, of the circumstances under which this occurred”).

C. Actual Prejudice

“A severe [spoliation] ... requires bad faith and prejudice.” Beck, 2018 WL 3752842, at *2 (quoting Rimkus, 688 F. Supp. 2d at 642–43). In order to satisfy the prejudice requirement, the party seeking sanctions must demonstrate that the missing or altered evidence would have been relevant to its case. Ashton, 772 F. Supp. 2d at 801 (citing Rimkus, 688 F. Supp. 2d at 616). “[L]ost or destroyed evidence is ‘relevant’ if a ‘reasonable trier of fact could conclude that the lost evidence would have supported the claims or defenses of the party that sought it.’ ” Ashton, 772 F. Supp. 2d at 801. Prejudice to the non-culpable party can range from an utter inability to prove claims or defenses to minimal effects on the presentation of proof. Id. (citing Rimkus, 688 F. Supp. 2d at 613). Generally, the prejudice element is satisfied “where a party's ability to present its case or to defend is compromised.” Ashton, 772 F. Supp. 2d at 801. At the same time, courts must be careful that the application of this burden is not too onerous, otherwise the spoliating party might be allowed to profit from its own misconduct. Ashton, 772 F. Supp. 2d at 801 (citing Rimkus, 688 F. Supp. 2d at 616).

CAE argues that it is greatly harmed by Novak's forwarding of the emails and destruction of the remaining evidence. (Dkt. # 11 at 6.) It contends that when these emails were accessed by Novak and to whom they were forwarded is critically relevant to its counterclaims. (Id. at 6–7.) CAE asserts that Novak has tainted or destroyed this forensic evidence by either deleting the emails or accessing and forwarding them, destroying the information which shows to whom they have been forwarded. (Id. at 7.)

In response, Novak counters that CAE simply presumes spoliation occurred without any evidence. (Dkt. # 13 at 9.) Even so, Novak has presented evidence by its own forensic expert that “the only metadata that may have been affected by forwarding the emails is the read or unread status of the emails,” and that “Yahoo! does not track a last modified date and time like an Exchange server would.” (Dkt. # 13-2 at 2.) The forensic expert also concludes that “[w]hile I cannot opine on whether or not the read/unread status is essential to this matter based upon the limited information I have been provided, it is clear that to me that no ‘key information within the ESI ...’ has been altered or destroyed by the act of Plaintiff Novak sending along 33 emails to his counsel.” (Id. at 3.)

On the record before the Court, absent any evidence to the contrary, CAE's theory of spoliation is mere speculation, which cannot demonstrate prejudice sufficient to warrant a spoliation finding. See id. CAE has not demonstrated it was prejudiced by Novak's forwarding of his emails in his CAE account to his personal Yahoo! account.

*9 Accordingly, at this stage of the litigation, the Court finds that CAE is not entitled to the spoliation relief it requests. If, after sufficient time for discovery, CAE encounters new evidence which supports its claims for spoliation, CAE may again file a motion for such relief to the Court. However, at this time, CAE, as the party alleging spoliation, has not met its burden of demonstrating that sanctions are warranted.[4]

II. Elements of Preliminary Injunction

The Court considers below whether TRA can satisfy the elements necessary for preliminary injunctive relief.

A. Substantial Likelihood of Success

To obtain a preliminary injunction, the movant must first show a substantial likelihood of success on the merits. Lindsay, 821 F.2d at 1107. In order to do so, a “plaintiff must present a prima facie case, but need not prove that he is entitled to summary judgment.” Daniels Health Scis., L.L.C. v. Vascular Health Scis., L.L.C., 710 F.3d 579, 582 (5th Cir. 2013). Such an inquiry considers only the substantive merits of a claim, but not any potential procedural barriers. Janvey v. Alguire, 647 F.3d 585, 599 (5th Cir. 2011).

Given the above findings on spoliation, the Court determines that CAE has not demonstrated a substantial likelihood on the merits of its claim at this time.

B. Substantial Threat of Irreparable Harm

As to the second element of a preliminary injunction, a plaintiff must demonstrate a substantial threat of irreparable harm if the injunction is not granted. Lindsay, 821 F.2d at 1107. Again, based on the above, CAE has not shown any threat of irreparable harm because it has not yet shown that Novak has used or disseminated CAE's Confidential Information in an inappropriate manner.

C. Balancing of Equities

The third element for obtaining a preliminary injunction is whether the threatened injury to the movant of not granting the injunction outweighs any harm that may result to the non-movant from granting the injunction. Lindsay, 821 F.2d at 1107. The Court finds that any alleged threat to CAE does not outweigh any harm to Novak.

D. Public Interest

Finally, the Court considers whether issuing an injunction would undermine the public interest. See Lindsay, 821 F.2d at 1107. While the public interest is best protected by keeping CAE's information confidential, CAE has not demonstrated at this stage that Novak has disseminated any confidential information.

Upon balancing the four prerequisites for issuance of preliminary injunctive relief, the Court concludes that CAE is not entitled to a preliminary injunction.

Based on the foregoing, the Court will DENY WITHOUT PREJUDICE CAE's Motion for Entry of Preliminary Injunction and Spoliation Sanctions. (Dkt. # 11.) However, in accordance with the Court's oral pronouncement at the hearing, all parties are DIRECTED to preserve all potential evidence including any record, document, or record storage device or platform, electronic or otherwise in its possession until trial in this cause of action.

IT IS SO ORDERED.

DATED: Austin, Texas, June 7, 2021.

Novak left employment with CAE in August 2020. (Dkt. # 13 at 5.)

The evidence cited in support of CAE's arguments suggests that the forwarding of the three emails to his old CAE email address was done inadvertently as Novak no longer had access to that account. (Dkt. # 11-5.)

Novak's declaration states that he set an auto-forward command on his CAE email around December 2019 to automatically forward emails from a CAE senior accountant to his personal Yahoo! email account. (Dkt. # 13-1 at 2.) Novak's stated purpose in doing so was his belief that CAE was taking away his and other traders' commissions, so he believed he needed to document his sales and commissions earned in the event “the company suddenly terminated [him] and cut off [his] access to information on [his] pending deals.” (Id.)

CAE's arguments concerning the substance of the emails and their contents go to the merits stage of CAE's counterclaims which is not yet ripe for this Court's adjudication.