*1 Presently before the Court in the captioned matter is Plaintiff Whitesell Corporation's motion for sanctions based upon spoliation of evidence. In particular, Whitesell seeks to have this Court reinstate its lost profits claim (which was dismissed because of its own misconduct), enter default judgment on liability against Defendants on the claim, and dismiss Defendants' counterclaims.

With an 18-year litigation history, the Court will assume familiarity with the case and confine its background to the sanctions history of the case. The focus of Plaintiff's sanctions motion, and thus of this Order, are the missing Roger Leon emails. Mr. Roger Leon was a chief executive officer for Defendant Electrolux Home Products, Inc. (“EHP”) from January 2002 to June 2004. Yet, during the written discovery phase of the joint discovery plan, Defendants failed to produce a single email from Mr. Leon during this time period.

This failure of production came to the fore during the summer of 2015, when the Court initially resisted Whitesell's initial efforts to allow “discovery about discovery.” (See Order of Sept. 10, 2015, Doc. No. 691, at 6-7.) However, at the Court's monthly discovery meeting with the parties on September 17, 2015, it became apparent that additional discovery was necessary to explore “gaps in discovery” on both sides of the “v” . The Court permitted the parties to identify and depose Rule 30(b) (6) witnesses on the issue of document retention and production efforts. (Hrg. Tr. of Sept. 17, 2015, Doc. No. 722, at 50.)

On October 13, 2015, Whitesell took the deposition of Mr. Daniel Jerome of EHP. Following that deposition, Whitesell served requests for production of certain documents mentioned by Mr. Jerome in his deposition. EHP objected to the production based upon attorney-client privilege and the work product doctrine. In addressing these objections, the Court entered its Preliminary Showing of Spoliation Order on December 9, 2015. (Doc. No. 755.) Notably, the Court did not consider sanctions in the Order of December 9th because it needed only to determine whether Whitesell had demonstrated potential spoliation to override EHP's claims of work product and privilege. (Id. at 8-9.) Because the Court was not considering spoliation sanctions at this point, it also did not determine whether the missing Roger Leon emails “are crucial to Whitesell's proof of its substantive claims.” (Id. at 16.) The Court ordered the production of purge lists, litigation hold letters, and internal communications about data collection as these documents appeared relevant to the document retention and production matters at issue.

Through this phase of discovery, Whitesell learned that the custodial email boxes of employees who transferred over to Husqvarna in 2006, including Roger Leon, were transferred from EHP to Husqvarna; consequently, EHP could not produce the missing Roger Leon emails. (See Order of Mar. 31, 2016, Doc. No. 796, at 4.) For this reason, Whitesell took the Rule 30(b)(6) deposition of Mr. Simon Howard of Husqvarna on December 10, 2015. Relative to that deposition, Husqvarna produced extensive documents, some privileged, which were similar to those the Court had ordered EHP to produce in the Preliminary Showing of Spoliation Order. (See id. at 5-6.)

*2 Nevertheless, in February 2016, Whitesell filed another motion to overrule privilege objections asserted by Defendant Husqvarna, this time as to certain documents on Husqvarna's privilege log. (Doc. No. 767.) In addressing this motion through its Order of March 31, 2016, the Court noted that because Husqvarna undisputedly had the responsibility to produce documents of its employees for the time prior to 2006 (i.e., the missing Roger Leon emails), the preliminary showing of spoliation noted in the Order of December 9, 2015 carried through to Husqvarna. (Order of Mar. 31, 2016, at 7-8.) The Court, however, concluded that Whitesell's attempt to overrun the privilege claims of Husqvarna with respect to all documents was inappropriate, stating:

(Id. at 9 (emphasis in original).)

On this same date, March 31, 2016, the Court entered another Order addressing Defendants' joint motion to compel production of documents from Whitesell. (Doc. No. 797.) With the shoe now on the other foot, Whitesell asserted privilege objections to the production of documents similar to those produced by Defendants in the discovery about discovery phase. The Court overruled Whitesell's objections upon a preliminary finding of spoliation on Whitesell's part. (Id. at 5-6.) In particular, the Court concluded that Whitesell did nothing to preserve evidence in the case after it filed its complaint in 2005, particularly failing to send litigation hold letters to inform its employees not to delete emails. For instance, Whitesell's Rule 30(b)(6) deponent admitted that only one email from Whitesell employee Todd Wagstaff was produced but there should have been a thousand or more.[1] (Id.)

Following the Orders of March 31, 2016, the Court heard nothing more from any party regarding spoliation and nothing more from Whitesell about the missing Roger Leon emails until Whitesell filed a motion for sanctions on January 9, 2019, almost three years later.[2] (See Doc. No. 1134.) In this motion, Whitesell held out the Preliminary Showing of Spoliation Order and the same evidence as had been presented at that time to argue that Defendants had engaged in bad faith litigation and spoliation. Therein, Whitesell sought sanctions against Defendants including dismissal of their counterclaims. (Id. at 24.)

Only a few months earlier, Defendants had filed a motion for sanctions related to Whitesell wrongfully withholding product cost information in discovery. (Doc. No. 1070.) The Court held a hearing on Defendants' sanctions motion on February 11, 2019. Two days after the hearing and upon learning that the Court had determined that Whitesell had violated its discovery obligations and had misled Defendants and the Court, Whitesell filed a motion to stay the Court's imposition of sanctions until the Court addressed its motion for sanctions filed on January 9, 2019 and the instant spoliation motion (which had yet to be filed). In its Sanctions Order of February 14, 2019, which struck Plaintiff's lost profits claim because of Whitesell's bad faith in discovery, the Court noted the following with respect to Whitesell's deferred sanctions motions:

(Order of Feb. 14, 2019, Doc. No. 1159, at 15.) Nevertheless, Whitesell filed the instant spoliation motion nearly two months afterward, arguing for sanctions based on the missing Roger Leon emails, but this time Whitesell sought the sanction of reinstatement of its lost profits claim.

Defendants oppose this motion for sanctions as untimely and ultimately without merit. With respect to the timing of the sanctions motion, the Court finds that waiting three years after learning the adjudicative facts is unreasonable. This is particularly so given what the Court has already perceived as “gamesmanship” on Whitesell's part. Nevertheless, the Court will not deny the instant sanctions motion for this reason alone.

Turning now to whether Defendants have spoliated evidence and the concomitant questions of appropriate sanctions, the Court initially notes that the Preliminary Showing of Spoliation Order does not equate to a spoliation finding warranting sanctions. The Court emphasizes that the Preliminary Showing of Spoliation Order simply resolved a discovery dispute. (See Order of Dec. 9, 2015, at 8 (quoting Tate v. Lyle Americas, LLC, 2014 WL 10209161, *2 (C.D. Ill. Aug. 4, 2014) (“Ordering disclosure of a litigation hold letter differs from the imposition of a sanction for spoilation ... , which requires a showing that evidence was destroyed in bad faith.”)).) Now, the Court must consider whether Whitesell has demonstrated an entitlement to sanctions based upon the missing Roger Leon emails.

Federal Rule of Civil Procedure 37(e) specifically addresses the spoliation of electronically stored information, providing:

Fed. R. Civ. P. 37(e).

In this case, the Court has already determined that Defendants had a duty to preserve electronically stored information.[3] Subsection (e) (1) , however, requires that prejudice be shown before sanctions can be imposed and that any sanction must be no greater than necessary to cure that prejudice. See also Fed. R. Civ. P. 37, Advisory Committee Notes to 2015 Amendment (“[A] court may resort to (e) (1) measures only ‘upon finding prejudice to another party from loss of the information. ‘ An evaluation of prejudice from the loss of information necessarily includes an evaluation of the information's importance in the litigation..... The rule leaves judges with discretion to determine how best to assess prejudice in particular cases.”). Pursuant to subsection (e)(2), more severe sanctions such as default and adverse inferences require a finding of bad faith. See also Fed. R. Civ. P. 37, Advisory Committee Notes to 2015 Amendment (requiring a finding “that the party that lost the information acted with the intent to deprive another party of the information's use in the litigation, ... [rejecting] cases ... that authorize the giving of adverse-inference instructions on a finding of negligence or gross negligence”).

*4 In assessing the importance of the missing Roger Leon emails to this case, the Court notes that Whitesell's remaining claims are limited. The missing Roger Leon emails cover a period between January 2002 through June 2004. This time period is prior to Whitesell's filing of the current lawsuit in October 2005. In fact, the disputes between the parties that arose when the case was originally filed by EHP were resolved between the parties in the Settlement Memorandum of May 28, 2003. Further, Whitesell's remaining claims in the case as set forth by the parties' “Joint Response to Court Order” filed on October 15, 2020 (doc. no. 1415) involve a failure to pay costs associated with the failure to transition Brunner and Matrix Parts, failure to pay certain invoices, and breach of the Excess Stock Settlement Formula Agreement. The Court cannot envision how emails from this early time period in the parties' relationship relate to these remaining claims. And, Whitesell fails to show the Court otherwise. Whitesell argues that without the missing Roger Leon emails, it will be unable “to demonstrate liability on its claims, to impeach Mr. Leon with his prior statements, and to establish what the scope of goods truly was under Section 2.1.2 of the SPA.” (Pl.'s Spoliation Mot., Doc. No. 1175, at 22). This is a broad assertion with no real context. As noted, the relevant time period does not appear to impact Whitesell's remaining claims and the “scope of goods” issue has long been resolved by this Court's Order of October 14, 2008 (doc. no. 212) defining the four categories of enforceable parts. In short, Whitesell has not established prejudice necessary to warrant sanctions.

The Court also cannot conclude that Whitesell has demonstrated an intent to deceive or bad faith on the part of Defendants. The Court has read and considered the various emails and representations of Defendants throughout this litigation in their attempt to locate and produce the Roger Leon emails. The Court has also reviewed the deposition of Simon Howard in its entirety. Upon consideration of this evidence as a whole, the Court cannot conclude that there was a purposeful intent to delete and destroy the missing Roger Leon emails. See Managed Care Sols., Inc. v. Essent Healthcare, Inc., 736 F. Supp. 2d 1317, 1322 (S.D. Fla. 2010) (explaining that bad faith exists “where a party purposely loses or destroys relevant evidence”). Certainly, there is nothing in the record that would compel the Court to equate the circumstances behind the missing Roger Leon emails to the intentional, bad-faith misconduct of Whitesell, thus justifying the reinstatement of Whitesell's lost profits claim. In fact, it appears that both parties have suffered gaps in discovery that, while unexplained, cannot be attributed to anyone's bad faith conduct. Rather, there appears to be a general lack of diligence to retain electronically stored information as required by both parties, particularly in the early stages of litigation.

Upon the foregoing, the Court DENIES Whitesell's motion for spoliation sanctions (doc. no. 1175) based upon the missing Roger Leon emails because the motion is untimely and Whitesell has failed to establish prejudice or bad faith that would entitle it to sanctions.[4]

ORDER ENTERED at Augusta, Georgia, this 30th day of September, 2021

There was a similar lack of production of emails for four other former Whitesell employees.

Notably, Whitesell was not able to take the Rule 3 0(b) (6) deposition of Roger Leon until February 2, 2017. Yet, it would still be nearly two years until Whitesell filed its sanctions motion.

Defendants continue to insist that they had no duty to preserve until Whitesell filed its complaint in this lawsuit in 2005. It is not necessary for the Court to reconsider its ruling on this issue because of its findings herein, yet the Court continues to observe that the parties were at odds with each other prior to 2005 as demonstrated by EHP's filing of the initial complaint in the case in 2003.

The Court is constrained to note that even if sanctions had been warranted, the reinstatement of Whitesell's lost profits claim or default judgment would probably have been a bridge too far for the Court, particularly where lesser sanctions such as exclusion of evidence or an adverse inference jury instruction could cure any prejudice.