Deccan Value LLC v. Malik
Deccan Value LLC v. Malik
2023 WL 4882582 (Conn. Super. Ct. 2023)
July 25, 2023
Krumeich II, Edward T., Judge
Summary
The court denied the motion for discovery sanctions for spoliation of evidence against defendant John Malik because he had not violated a duty to preserve evidence relevant to a pending or impending litigation. Malik had forwarded the Intimidation Email to his counsel and the SEC, and had produced pdf copies of the Intimidation Email. When requested, Malik had produced the only version of the Intimidation Email he had in his possession, and the metadata on the sent copy of the Intimidation Email was produced.
Additional Decisions
Note: This is an unpublished decision. Check your jurisdiction’s rules about citing unpublished decisions before citing this case to a court.
DECCAN VALUE LLC Et. AI
v.
MALIK, JOHN I
v.
MALIK, JOHN I
DOCKET NO: FST CV 21-6052725 S
Superior Court of Connecticut, JUDICIAL DISTRICT OF STAMFORD/NORWALK. AT STAMFORD
July 25, 2023
Krumeich II, Edward T., Judge
MEMORANDUM OF DECISION
UNPUBLISHED OPINION. CHECK COURT RULES BEFORE CITING.
*1 Plaintiffs Deccan Value LLC, Deccan Value Investors GP LLC and Deccan Value Investors L.P. (collectively “Deccan”) have moved for discovery sanctions for spoliation of evidence because defendant John Malik did not preserve the “native” copy of an email he received on January 14, 2021 (the “Intimidation Email”),[1] which he later alleged in a counterclaim and third party complaint, was sent by third-party defendant Vinit M. Bodas (“Bodas”) to intimidate him from cooperating in an investigation by the Securities and Exchange Commission (“SEC”) into the activities of Bodas and Deccan. For the reasons stated below, the motion is denied.
Spoliation of Evidence
Courts have recognized intentional spoliation of evidence is an appropriate subject for discovery sanctions, a basis for an adverse inference jury instruction, and for tort liability in the proper case. See generally Rizzuto v. Davidson Ladders, Inc., 280 Conn. 225, 234-52 (2006). The Rizzuto Court cited the decision in Beers v. Dayliner Marine Corp., 236 Conn. 769, 775-78 (1996), in which the Supreme Court held that spoliation of evidence may be addressed by a jury instruction that an adverse inference may be drawn from the spoliation of evidence:
“[In Beers] we adopted ‘the rule of the majority of the jurisdictions that have addressed the issue [of spoliation of evidence] in a civil context, which is that the trier of fact may draw an inference from the intentional spoliation of evidence that the destroyed evidence would have been unfavorable to the party that destroyed it:’ ... To be entitled to this inference, the victim of spoliation must prove that: (1) the spoliation was intentional, in the sense that it was purposeful, and not inadvertent; (2) the destroyed evidence was relevant to the issue or matter for which the party seeks the inference; and (3) he or she acted with due diligence with respect to the spoliated evidence.” 280 Conn. at 237 (citation and footnote omitted).
The Rizzuto Court set the following, more stringent, elements for the tort of intentional spoliation of evidence:
“... [W]e conclude that the tort of intentional spoliation of evidence consists of the following essential elements: (1) the defendant's knowledge of a pending or impending civil action involving the plaintiff; (2) the defendant's destruction of evidence; (3) in bad faith, that is, with intent to deprive the plaintiff of his cause of action; (4) the plaintiff's inability to establish a prima facie case without the spoliated evidence; and (5) damages.” 280 Conn. at 244-45.
*2 In Rizzuto the Supreme Court noted: “[t]he parties do not dispute that a defendant in a pending case has a legal duty to preserve relevant evidence.” 280 Conn. at 234. “... [W]ith respect to the preservation of evidence, we note that the parties to a pending or impending civil action already have a legal duty to retain evidence relevant to that action under our existing common law and statutory scheme.” 280 Conn. at 250-51. The Rizzouto Court concluded that a tort action for spoliation was required to enforce a party's duty to preserve relevant evidence and discourage intentional spoliation. “We conclude that recognition of the tort is necessary to accomplish these goals when a first party defendant destroys evidence intentionally with the purpose and effect of precluding a plaintiff from fulfilling his burden of production in a pending or impending case.” 280 Conn. at 234-35 (footnote omitted).[2]
No Spoliation of Evidence Was Proven.
Deccan and Bodas have failed to meet their burden of demonstrating that Malik's conduct here constituted spoliation of relevant evidence. Here, the alleged spoliation occurred while litigation was pending between the parties but long before the Intimidation Email became relevant to any claim pending between the parties. On January 8, 2021, Malik commenced an action against Deccan in which he alleged that Deccan and Bodas breached various agreements and duties of good faith and fair dealing and committed statutory theft and diversion of wages by depriving him of compensation related to his work for Deccan and his interest therein.[3] The instant case was commenced by Deccan on July 20, 2021, and asserts claims of breach of fiduciary duty, fraud, misrepresentation, breach of contract, and statutory theft against Malik. None of the claims in either action concerned the Intimidation Email that was received by Malik six days after he commenced his state court action against Deccan and seven months before Deccan commenced its action against Malik. On May 23, 2022, Malik filed an amended answer that alleged a counterclaim in which he alleged that Bodas was the sender of the Intimidation Email that was intended to intimidate Malik from cooperating with the SEC investigation of Deccan and Bodas.[4] The new counterclaims injected the issue of the Intimidation Email into the litigation. Deccan's spoliation argument is based on the Intimidation Email's materiality to the emotional distress counterclaims. Malik explained that his counterclaims were triggered by allegations in Deccan's complaint filed on July 20, 2021, against him that echoed statements in the Intimidation Email and convinced him that Bodas was its author and made him realize that the Intimidation Email was relevant evidence in the new civil action. This was six months after the “native” copy of the received email was lost when it was deleted from his inbox and Google automatically emptied his trash file sometime before February 23, 2021.[5]
*3 The credible evidence at the hearing established that the Intimidation Email was received by Malik in his Gmail account on January 14, 2021.[6] On January 19, 2021, five days later, Malik forwarded the Intimidation Email to the counsel who represented him as a whistleblower in the SEC investigation of Deccan and Bodas. After forwarding the Intimidation Email, Malik deleted the received email from the inbox on his mobile telephone. Malik believed that the email was in his sent folder, and he had preserved the Intimidation Email by forwarding it to counsel.[7] Malik's SEC attorney forwarded the Intimidation Email to the SEC. On or about February 23, 2021, Malik's counsel told him the SEC wanted to inspect the received copy of the Intimidation Email, which, unlike the forwarded copy in counsel's possession, contained metadata that may disclose the sender. By email dated February 23, 2021, Malik informed his SEC counsel the received email was no longer in his trash folder because Google automatically emptied the trash file in his Gmail account after thirty days.[8]
Deccan and Bodas asserted that Malik concealed that he no longer had the “native” copy of the Intimidation Email and seek sanctions for this deception. In the first requests for production on September 30, 2021, Deccan and Bodas requested production of the messages referred to in the counterclaim be produced. In his response on December 1, 2021, Malik stated: “The 2 emails in question will be produced.”[9] On August 16, 2022, Deccan and Bodas served a second set of discovery requests repeated the request but added “Document Production Requirements” for electronic records that required production of the Intimidation Email in native format that would have disclosed metadata on the received version of the email.[10] Malik's updated response on August 24, 2022, stated: “The 2 emails in response have been produced.” Malik had produced pdf copies of the Intimidation Email using the copy forwarded to his SEC counsel.[11] Malik did not disclose that the “native” received version was no longer available because he had deleted it and it no longer was in his trash file. Counsel exchanged correspondence about the production of a “native” version of the Intimidation Email and Malik's counsel's response that “Mr. Malik will produce the native version of that Protonmail email that he possesses.” This is somewhat misleading because the only “native” version of the Intimidation Email in Malik's possession was the copy he had forwarded to counsel. On November 22, 2022, Malik's counsel disclosed for the first time that the Intimidation Email forwarded to counsel, which had been withheld as privileged, was the only email with metadata in Malik's possession, a screenshot of which was produced.[12] Counsel disclosed for the first time: “Mr. Malik did not keep the Intimidation Email after he forwarded it to the S.E.C. and has no further versions of it in his possession, custody or control that he is aware of.” The delay in disclosing that Malik no longer had the “native” version of the received email with metadata that had been specifically requested in the supplemental production request on August 16, 2022, was approximately three months.[13]
*4 The Court declines to issue a sanction against Malik under these circumstances. The deletion of the received version of the Intimidation Email from his IPhone email inbox on January 19, 2021, after forwarding a copy to counsel was not spoliation of “evidence” that was “relevant” to a pending or impending litigation between these parties. Malik credibly testified that the only relevance he recognized at the time was to the SEC investigation of Deccan and Bodas in which he was cooperating as a whistleblower. That was why he forwarded it to his SEC counsel and not to his counsel in the civil lawsuit.[14] Moreover, Malik did not realize the importance of preserving the “native” version of the received email until the SEC requested it through his counsel in February 2021. By then it was too late to retrieve the copy from his emptied trash file. The Court finds Malik's explanations credible.[15]
Malik was no longer in position to produce a “native” version of the received Intimidation Email by February 23, 2021. In response to the first document request Malik produced pdf copies of the Intimidation Email that disclosed its content but not the metadata that would have been shown by the “native version” of the received email.[16] Deccan had obviously realized the importance of metadata on electronic records by the time it served the supplemental document requests, which for the first time specifically sought “native” versions of electronic records like emails and once again specifically requested the “native” version of the Intimidation Email.[17] When Deccan's counsel pressed for metadata related to the Intimidation Email Malik's counsel disclosed and produced the only “native” version available to Malik, the Intimidation Email forwarded to his SEC counsel five days after he received the original email. Malik's counsel was not immediately forthcoming that the “native” version of the Intimidation Email was no longer available.
*5 Malik did not delete the email from his inbox with the intention to deprive Deccan and Bodas with access to metadata and to deprive them of evidence that would not be material to any issue in either litigation until over a year later when Malik filed counterclaims in an action that was not pending when the received email was deleted, concerning matters that were not relevant to matters at issue in the pending action or impending future litigation. Although Malik believed the email was relevant to the SEC investigation, Malik thought that he had preserved a copy of the Intimidation Email by forwarding it to his SEC counsel and preserving it in his sent folder. Malik was not aware of the significance of metadata concerning the received email until the SEC requested the “native” version, and by then it was too late to retrieve that metadata.[18]
Sanctions for spoliation are not warranted where, as here, a party has not violated a duty to preserve evidence relevant to a pending or impending litigation.[19] There was no willful, bad faith or contumacious conduct that would warrant any sanction, let alone the severe sanction of dismissal sought by Deccan and Bodas.[20] At the time the email was deleted five days after it was received there was no litigation pending or impending between the parties to which the Intimidation Email was relevant evidence.[21] When requested Malik produced the only version of the Intimidation Email he had in his possession custody and control other than the “native” version of the email sent to counsel that was listed in his privilege log. When the Court ruled that documents related to the SEC investigation must be produced, the metadata on the sent copy of the Intimidation Email was produced. Deccan and Bodas were not prejudiced in the defense of the counterclaim by the three month delay in disclosure that the original metadata related to the received Intimidation Email was no longer available to Malik or the delayed production of the “native” version of the copy of the Intimidation Email forwarded to SEC counsel, which had been held up in the extended jockeying over privilege by counsel on both sides.[22]
*6 The motions for sanctions for spoliation of evidence and litigation misconduct filed in the companion cases are denied and the objections thereto are sustained.
Footnotes
This is Malik's shorthand term for the January 14, 2021, email ostensibly sent by jamiegreenspan007@protonmail.com), which Deccan's counsel referred to in its papers oh this motion as the “Alleged E-mail”. Deccan's expert referred to this as the “Warning Email” and the “Greenspan Email.” The use of Malik's terminology by the Court is simply a matter of ease and consistency of reference because this was the shorthand title used in previous decisions related to this particular email. See e.g., Deccan Value LLC v. Malik, 2023 WL 2661597 *1 (Conn.Super. 2023) (Krumeich, J.T.R.).
Rizzutto's test for the tort of spoliation is more stringent than Beers's elements for a spoliation adverse inference and reflects a trend toward requiring greater culpability to prove spoliation. See Learning Care Group, Inc. v. Armetta, 315 F.R.D. 433, 439-40 (D.Conn. 2016) (Fed. R. Civ. P. Rule 37(e)(2) amended in 2015 requires a showing that the destroying party ‘acted with the intent to deprive another party of the information's use in the litigation’ ”).
Malik had commenced a similar action against Deccan and Bodas in federal court on October 20, 2020; according to Deccan, but had refiled in state court after Deccan pointed out there was no federal jurisdiction. The Court assumes the federal lawsuit alleged the same claims as the action filed in state court on January 8, 2021, none of which relate to the Intimidation Email.
The emotional distress counterclaims based on the Intimidation Email were never raised as claims in Malik's first lawsuits against Deccan and Bodas.
There was evidence that Malik attempted to recover the “native” format of the received email from his trash file but was unable to do so because “it has been vacated from the deleted folder (30 days from when it goes in the deleted folder)” as Malik explained to his SEC counsel in an email dated February 23, 2021. Malik testified that he had researched how to recover the deleted email online and discovered this was a Google protocol with Gmail and the deleted email could not be recovered. Malik did not engage an expert to confirm the results of his research.
Deccan's counsel stated in its brief: “Malik's deletion of the Alleged E-mail constitutes spoliation of evidence, depriving Deccan and Bodas of the opportunity to investigate Malik's allegation that he received the Alleged E-mail at all.” Deccan and Bodas suspect that Malik was the author of the Intimidation Email and the metadata would have shown this so Malik deleted the email. The above finding that Malik received the Intimidation Email is limited to the evidence at the sanctions hearing and does not purport to address the merits of any claim or defense. The Court notes that Deccan's expert testified that metadata from Malik's SEC counsel confirmed the Intimidation Email and a screenshot of the email from Malik's IPhone were sent by Malik and received by counsel on the dates indicated on the copies produced to Deccan.
Malik testified he believes an email sent by protonmail.com could not be traced to sender. Malik attempted to discover metadata about the sender of the Intimidation Email by sending another email to the Greenspan address but without reply was unable to do so.
Malik, through his SEC counsel, provided the SEC and FBI with pdf copies of the Intimidation Email and declared he suspected that Bodas was the author or sender. According to Deccan's brief, on March 8, 2021, an SEC Special Agent had emailed Malik to request “the original e-mail that you received” but Malik was unable to comply because the received email was no longer available. Malik believed the Intimidation Email was evidence of a crime, but there is no evidence he knowingly disposed of the metadata to preclude disclosure of this evidence to law enforcement, his counsel, and, Deccan. There is no evidence Malik failed faithfully to disclose the content of the Intimidation Email.
Malik testified he did not regard the Intimidation Email was a “destroyed” document because its content was preserved.
The supplemental document production requests unequivocally called for production of “native” versions of requested electronic records. The initial document production requests were not so explicit as to production of electronic records and it would be reasonable to produce photocopies or pdfs of emails rather than “native” format. How the copies of requested documents are produced, by photocopy, cut and paste from a Word document or other means to reproduce them for copying, would not necessarily make a difference as to the integrity of the content and quality of disclosure, particularly where, as here, the metadata no longer exists. Malik testified he had not reviewed the “destroyed” document instruction in the first document production request, to which his counsel had objected, but if he had, he would not regard the Intimidation Email as a “destroyed document because its content was preserved and produced. The authenticity of the Intimidation Email and its creator and sender will likely be a contested issue at trial and is outside the scope of this motion.
There was a contretemps about whether there was one or two responsive emails produced. It now appears two copies of the same pdf were produced. Malik has now produced the copy forwarded to his SEC counsel and an email Malik later sent to the sender of the Intimidation Email.
The metadata on the forwarded email affirms it was sent to Malik's SEC counsel on January 19, 2021, by Malik and received by counsel at the same date and time, as affirmed by Deccan's expert on electronic discovery. Deccan's expert testified the pdf of the Intimidation Email produced in discovery was from a Word document created on Malik's computer in November 2021.
No depositions had yet been held. The discovery gamesmanship exhibited in the interplay between counsel described above unfortunately has seemed the norm for both sides in these hotly contested consolidated cases, which have generated hundreds of filings in the consolidated cases dockets and elicited multiple orders to resolve contested issues.
Malik testified he did not send the email to. his then civil counsel because he had no reason to believe it related to his theft claim. Malik switched to his current counsel in the civil cases in April 2021. Malik's document productions were carried out by counsel and a forensic records consultant with Malik's assistance.
The accusations that “fabrication” of the pdfs. produced in discovery violated criminal laws against forgery, C.G.S. § 53a-140, criminal simulation, C.G.S. § 53a-141 (a) and tampering with evidence, C.G.S. § 53a-155 (a) are not borne out by the facts and circumstances found by the Court. Rule 3.4 (7) of the Rules of Professional Conduct suggest that a lawyer should be cautious in accusing an opponent of criminal conduct “solely to obtain an advantage in a civil matter.”
The Court rejects the implication that there was anything untoward in what Deccan's counsel refers to as the “fabrication” of the pdfs from the copy of the Intimidation Email forwarded to counsel. The pdfs produced accurately copied the content of the copy of the Intimidation Email forwarded by Malik to SEC counsel five days after it was received. The pdfs do not appear to be doctored and comparison with the forwarded copy indicates they are identical in content. If the Intimidation Email were simply photocopied and a copy was produced the copy would not be regarded as “fabricated” and the object of sanctions. The pdf copy produced here derived from the version sent to SEC counsel and appeared to be a good faith attempt to respond to the discovery requested.
Deccan's expert on electronic discovery testified as to the importance of preserving and producing “native” versions with metadata of electronic records like emails. Deccan and Bodas are prejudiced by the loss of the “native” version of the received email in the sense that they have no access to the metadata that could have proven who sent the email, bur prejudice alone does not satisfy the criteria for spoliation sanctions.
Malik had a general understanding of metadata, but he credibly testified he was not thinking about preserving metadata when he deleted the received copy of the email.
Reviewing the elements for an adverse inference from spoliation outlined in Beers is instructive. “First, the spoliation must have been intentional.... By this, we do not mean that there must have been an intent to perpetrate a fraud by the party or his agent who destroyed the evidence but, rather, that the evidence had been disposed of intentionally and not merely destroyed inadvertently.” 236 Conn. at 777 (footnote omitted). The deletion of the received email was an intentional act, Malik touched the delete button on his iPhone, but the loss of the native version in his trash folder emptied by Google protocol was inadvertent. Id. “Second, the destroyed evidence must be relevant to the issue or matter for which the party seeks the inference.” 236 Conn. at 778. An “inference from the intentional spoliation of evidence that the destroyed evidence would have been unfavorable to the party that destroyed it”, 236 Conn. at 775, could not be drawn reasonably when there is no litigation pending or impending to which the record would be relevant and material to the other side's case. “Third, the party who seeks the inference must have acted with due diligence with respect to the spoliated evidence. For example, the spoliator must be on notice that the evidence should be preserved. ... If the spoliated evidence was necessary for inspection or testing, the party who seeks the inference must have taken all appropriate means to have the evidence produced.” 236 Conn. at 778 (citation and footnote omitted). For obvious reasons, Malik was not put on notice of the need to preserve the evidence. Months before Deccan and Bodas put Malik on notice of the need to preserve the “native” copy of the Intimidation Email it was long gone. Even when the SEC requested production of the “native” version of the received email, when Malik was first alerted to its significance, it was no longer available. There is no credible evidence Malik intentionally discarded the metadata for the received email to preclude its discovery. Analysis of the stricter tort standard set by Rizzutto, 280 Conn. at 244-45, and the rationale therefore, id. at 234-35, also establishes this is not a case where Malik intentionally spoliated relevant evidence to deprive Deccan and Bodas of the. proof they sought in discovery. The three month delay in disclosing that the “native” version of the Intimidation Email had been destroyed and was no longer available was not unreasonable under the circumstances.
Compare, MacCalla v. Am. Med. Response of Connecticut, Inc., 188 Conn.App. 228, 238-40 (2019). Cf Lafferty v. Jones, 336 Conn. 332, 375-76 (2020) (sanctions for violation of discovery order). This case is not comparable to the situation faced by the court in On Site Gas Sys., Inc. v. Environics, Inc., 2008 WL 4210479 *2 (Conn.Super. 2008) (Shortall, J.) in which plaintiff disassembled the machinery that was the subject of a reverse engineering claim and then delayed and dissembled information about the destruction of the machine. Although metadata was not preserved, evidence related to receipt of the Intimidation Email and its content still exists and there is circumstantial evidence related to the identity of the sender.
The SEC investigation of Deccan and Bodas was ongoing so technically the Intimidation Email could be relevant evidence to a charge of tampering with a witness, but the Intimidation Email, was not destroyed, although the metadata could no longer be recovered.
The Court does not find that Deccan and Bodas failed to exercise due diligence in seeking production of the “native” version of the received email. However, by the time they placed Malik on notice of the need to preserve the “native” version of the received email, it was no longer available to him. Malik's production of the pdf and the “native” version of the email sent to his SEC counsel was the best he could do to comply with the discovery requests.