*1 This case was removed from Orange County Superior Court in December 2020, and is brought by two plaintiffs—Valerie Martinez (“Martinez”) and Therese Svengert (“Svengert”)—against their former employer, Equinox Holdings, Inc. (“Equinox”). Plaintiffs bring claims under California law for disability discrimination, retaliation, failure to prevent disability discrimination, whistleblower retaliation, and wrongful termination. (See Dkt. 1-1.)

Last month, Equinox filed a Motion for Sanctions under Rule 37. (See Joint Stipulation at Dkt. 17-1.) Equinox argues that Plaintiffs purposefully erased messages from their personal cell phones during the pendency of this suit. (See id. at 2.) Plaintiffs argue that the deletions were unintentional. (See id. at 3-4.) Equinox asks for terminating sanctions or, in the alternative, giving an adverse inference jury instruction, ordering that all text messages and derivative evidence be excluded, and ordering attorneys fees and costs associated with bringing this motion. (See id. at 3.)

For the reasons below, the Court grants in part Equinox's Motion for Sanctions.

I. Background.

The Court bases the following chronology on a review of the filings in this case thus far, Plaintiffs' testimony in their respective depositions, and counsels' representations at the hearing on this matter:

Sometime in 2015, Svengert's iPhone iCloud account became “over capacity.” (Dkt. 17-2 at 101-02.)

Equinox hired Svengert and Martinez in 2016 and 2017, respectively. (Dkt. 1-1 at 6, 9.) Martinez went on a two-week medical leave in November 2019. (Id. at 6.) She went on a twelve-week medical leave beginning in January 2020. (Id. at 6-7.) In February 2020, Plaintiffs both made internal complaints about their supervisor, Whitney Johnston. (Id. at 7, 9-10.) In March 2020, Svengert went on a 30 day medical leave. (Id. at 10.)

On March 30, 2020, the CEO of Equinox sent an email to employees regarding the pandemic and a possible furlough. (Id. at 8.) At around this time, Svengert performed a factory reset of her telephone due to glitches. (Dkt. 17-2 at 101.) In April 2020, Plaintiffs were furloughed. (Dkt. 1-1 at 8.) In June 2020, Plaintiffs were terminated. (Id. at 8-9.)

According to Plaintiffs' counsel, Plaintiffs retained attorneys in July 2020.

On October 30, 2020, Plaintiffs filed this suit. (See Dkt. 1-1.) On December 30, 2020, the District Judge in this case ordered the parties to file a Joint Rule 26(f) report, noting that the parties needed to discuss “any issues about ... preservation of [Electronically Stored Information or ‘ESI’]” and that the parties must set forth a plan discussing issues related to ESI. (Dkt. 7; Dkt. 8.)

On February 5, 2021, the parties filed a Joint Rule 26(f) report, stating, “The parties do not expect this case to involve significant ESI discovery.” (Dkt. 9.) The report did not mention text messages. Equinox's counsel cannot recall if text messages were discussed between counsel, and Plaintiffs' counsel believes they were not.

*2 In around March 2021, Svengert performed a second factory reset of her phone due to the same glitches. (Dkt. 17-2 at 101-02.)

On June 24, 2021, by agreement, Equinox served “informal” Requests for Production (“RFPs”) on Plaintiffs via email, including RFPs asking for all “communications” between the two plaintiffs between October 2019 and July 2020. (Id. at 2, 22.)

In around July 2021, Svengert performed a third factory reset of her phone due to the same glitch issue. (Id. at 102.)

On July 27, 2021, Plaintiffs produced documents but no text messages. (Id. at 2-3.) Two days later, at Martinez's first deposition session, she testified that she bought a new phone in December 2019 and another new phone in February 2020. (Id. at 3, 29-30.) She represented that she had access to text messages between herself and Svengert from February 2020 onward, and that she would search for and produce those texts. (Id.)

On August 10, 2021, Plaintiffs produced supplemental documents but no text messages. (Id. at 2.) The next day, at Svengert's first day of deposition, Svengert testified about the “glitches” on her iPhone; the factory resets she had performed; and that her iCloud storage had been full since 2015. (Id. at 3, 100-01.)

On around August 12, 2021, Martinez searched her phone for relevant text messages and discovered that her phone was set to “auto-delete” all text messages older than one year. (Id. at 3, 163-68, 171-72.)

On August 16, 2021, Equinox's counsel emailed Plaintiffs' counsel and asked for responsive text messages. (Id. at 3, 216.) Two days later, Plaintiffs produced supplemental documents but no text messages, so Equinox's counsel followed up regarding the text messages. (Id. at 2-3.)

On August 19, 2021, Martinez testified at her second deposition session about the auto-delete setting and stated that she did not know about it but had “no need” to turn it off, because she did not want to “alter” the settings”; she turned the auto-delete setting off after being instructed to do so by her attorney. (Id. at 3, 163-68, 171-72.) She had sent all responsive text messages she could find to her attorney. (Id.)

According to Equinox's counsel, Plaintiffs have testified that they did not coordinate in their internal complaints to Equinox. When asked if she texted “often” with Martinez, Svengert replied, “on and off, yes.” (Dkt. 17-2 at 100.) Svengert also testified in the present tense—i.e., as of the date of the deposition, August 11, 2021—that she and Martinez, who had apparently become roommates, texted five times a day. (Dkt. 17-2 at 32, 100.)

II. Law.

Rule 37(e) sets forth three criteria to determine whether spoliation of ESI has occurred: (1) the ESI “should have been preserved in the anticipation or conduct of litigation”; (2) the ESI “is lost because a party failed to take reasonable steps to preserve it”; and (3) “[the ESI] cannot be restored or replaced through additional discovery.” Fed. R. Civ. P. 37(e). If these criteria are met and the court finds that there is “prejudice to another party from [the loss] of the ESI,” Rule 37(e)(1) instructs a court to “order measures no greater than necessary to cure the prejudice.” Fed. R. Civ. P. 37(e)(1).

*3 However, if ESI is spoliated and a party “acted with the intent to deprive another party of the information's use in the litigation,” Rule 37(e)(2) authorizes the imposition of more severe sanctions, including an adverse inference jury instruction. Fed. R. Civ. P. 37(e)(2)(B) (a court may “instruct the jury that it may or must presume the [spoliated] information was unfavorable to the party”). Unlike Rule 37(e)(1), there is no requirement that the court find prejudice to the non-spoliating party under Rule 37(e)(2). “This is because the finding of intent required by the subdivision can support not only an inference that the lost information was unfavorable to the party that intentionally destroyed it, but also an inference that the opposing party was prejudiced by the loss of information that would have favored its position.” 2015 Advisory Comm. Notes.

Rule 37(e) does not define “intent.” However, the 2015 Advisory Committee Notes to the amendment of Rule 37(e) advise that “[n]egligent or even grossly negligent behavior” is insufficient to show “intent.” 2015 Advisory Comm. Notes. Accordingly, courts have found that a party's conduct satisfies Rule 37(e)(2)'s intent requirement when the evidence shows or it is reasonable to infer, that a party purposefully destroyed evidence to avoid its litigation obligations. See, e.g., First Fin. Sec., Inc. v. Freedom Equity Grp., LLC, No. 15-CV-1893-HRL, 2016 WL 5870218, at *3 (N.D. Cal. Oct. 7, 2016) (finding that the defendant's agents acted with intent in deleting text messages based on evidence of an “explicit agreement to avoid communicating electronically,” which “suggest[ed] a shared intent to keep incriminating facts out of evidence”); CAT3, LLC v. Black Lineage, Inc., 164 F. Supp. 3d 488, 501 (S.D.N.Y. 2016) (finding that the plaintiff's conduct was intentional under Rule 37(e) because, absent “any other credible explanation for [plaintiff's alteration of] the email addresses, it is more than reasonable to infer that the intention was to manipulate the digital information specifically for purposes of this litigation”); Ottoson v. SMBC Leasing & Fin., Inc., 268 F. Supp. 3d 570, 582 (S.D.N.Y. 2017) (finding the plaintiff's conduct was intentional under Rule 37(e) where the evidence showed that the plaintiff either purposefully deleted e-mails that showed she might have fabricated the existence of a report that was critical to her lawsuit or purposefully failed to take any steps to preserve the e-mails).

III. Analysis.

Equinox's counsel clarified at the hearing that it is only seeking sanctions related to deletion of text messages between the Plaintiffs. The Court limits its analysis to this issue.

The three “spoliation” criteria under Rule 37(e) are met. First, the text messages should have been preserved in anticipation of litigation. Plaintiffs' duty to preserve evidence that they reasonably should have known was relevant to this suit was likely triggered in July 2020, when they consulted with attorneys regarding this suit. See In re Napster, Inc. Copyright Litigation, 462 F. Supp. 2d 1060, 1067 (N.D. Cal. 2006) (“As soon as a potential claim is identified, a litigant is under a duty to preserve evidence which it knows or reasonably should know is relevant to the action.”). Neither party cites any law suggesting that the duty to preserve evidence does not apply to individual or unsophisticated litigants.

Second, the texts were lost because Plaintiffs “failed to take reasonable steps to preserve” them. It would have been easy for Plaintiffs or Plaintiffs' counsel to check whether resetting a phone would wipe old text messages, or to check for or turn off any “auto-delete” settings on the phones. It appears however that they did not do this until months after filing suit.

Third, it does not appear likely that the text messages can be restored or replaced through additional discovery.[1] See Colonies Partners L.P. v. Cnty. of San Bernardino, Case No. CV 18-420-JGB (SHKx), 2020 WL 1496444, at *5 (C.D. Cal. Feb. 27, 2020) (“A party moving for spoliation must at least show ... that categories of irreplaceable, relevant documents were likely lost.”).

*4 The Court next addresses the issue of intent, because that informs the Court's decision as to what sanctions are appropriate. The Court has seen no evidence that Plaintiffs purposefully destroyed evidence to avoid their litigation obligations. The evidence points the other way. Plaintiffs' testimony was distinct and credible. Svengert testified to three resets occurring in around March 2020, March 2021, and July 2021, all due to “glitches.”[2] Had she wanted to delete relevant text messages, she could have done so and testified that she never retained text messages. In her first deposition, Martinez testified that she had and would produce relevant text messages—not a response someone who had intentionally deleted such text messages would give. At her next deposition, she explained about the auto-delete setting and seemed genuinely confused about whether turning off that setting would be “altering” the setting in a way that this litigation prohibits. From this, it is not reasonable to infer that either Plaintiff purposefully destroyed evidence to avoid her litigation obligations.

Turning finally to prejudice: The important of the lost ESI is not entirely clear, but it does not appear to be tremendous. If Equinox believed that such texts were critical, it likely would have specifically referenced them in preparing the Joint Rule 26(f) report. Equinox maintains that these text messages might have shown evidence of coordination in raising their internal complaints, which Plaintiffs have apparently denied. The similar timing of their internal complaints would likely be enough to impeach Plaintiffs on this issue. Furthermore, coordination of internal complaints is a world apart from coordinating to lie. While this certainly could have happened, it is not so likely that the Court will presume prejudice from the deleted texts. Plaintiffs have in their possession medical records regarding their ailments and complained about a supervisor who was apparently subject to complaints by other employees.

Given this, the Court DENIES Equinox's requests for terminating sanctions and for an adverse jury instruction. It also DENIES Equinox's request for an order that all text messages and derivative evidence be excluded, as this would be disproportionate and also create an unwarranted informational vacuum.

According to Plaintiff's counsel, Plaintiffs have offered to make themselves available for an additional 3 hours each of deposition, at their expense. This is a reasonable remedy that “fit[s] the wrong” and is “no greater than necessary to cure the prejudice.” Fed. R. Civ. P. 37(e)(1); Gamble, Inc. v. Gordon Ranch LP, 850 F. App'x 573, 574–75 (9th Cir. 2021). The Court therefore ORDERS the parties to arrange for three additional hours of deposition testimony of each Plaintiff, with the cost of the court reporter and videographer to be paid for by Plaintiffs. The Court will not restrict the parties to the topic of the text messages. Given that the fact discovery cut-off in this case has passed (see Dkt. 10 at 1), the Court suggests that the parties present to the assigned District Judge a stipulated request to reopen fact discovery for this limited purpose.

The Court further awards Equinox $2,000 of the fees and costs associated with bringing this motion, to be collected from Plaintiffs' counsel, because he did not fully discharge his duty to take reasonable steps to preserve evidence by giving Plaintiffs appropriate guidance. See Fed. R. Civ. P. 37(e)(1) (“[U]pon finding prejudice to another party from loss of the information, [the court] may order measures no greater than necessary to cure the prejudice.”). Plaintiffs' counsel should have taken greater care to explain to his clients that they needed to take affirmative steps to preserve any relevant text messages on their phones. Corporate litigants are often obligated to disseminate “litigation hold” notices, advising employees of the likelihood of litigation and to preserve evidence. See Apple Inc. v. Samsung Elecs. Co., 881 F. Supp. 2d 1132, 1147 (N.D. Cal. 2012). But even when the litigants are individuals, it is standard practice for attorneys to communicate a “litigation hold” to clients in an effective, appropriate manner tailored to those clients' understanding and legal sophistication. While he gave them general guidance, that was insufficient. He did not mention (1) that they should not discard or reset their devices or (2) that they should check and turn off their auto-delete settings.

The Court rejects Plaintiffs' counsel's contention (see Dkt. 17-1 at 4) that it is Equinox's burden to show, through expert testimony, that the text messages are not recoverable. Plaintiffs' counsel conceded that he has done nothing to confirm whether or not they are recoverable beyond asking his clients. Plaintiffs have the phones in their possession and testified that they tried and could not find the relevant text messages, which is sufficient to establish that these messages are likely not recoverable.

Equinox's counsel characterized the timing of Svengert's third factory reset (i.e., the one occurring the month after discovery began) as suspicious. Given that she testified to two other resets in the year before this due to the same “glitches,” the Court does not view the timing of this third reset as indicative of intent.