2. Rule 37(b)(2)

Rule 37(b)(2) authorizes the imposition of sanctions for failure to comply with discoveryrelated orders. The Rule enumerates a range of potential sanctions, including the striking of pleadings, dismissing the case in whole or in part, and issuing a default judgment against the noncompliant party. Fed.R.Civ.P. 37(b)(2)(A).

Although Rule 37(b) “provides ‘a veritable arsenal of sanctions’ to deter and rectify discovery violations,” a court's discretion in imposing sanctions under the Rule is limited in two ways: (i) any sanction must be just; and (ii) the sanction must be specifically related to the specific claim that was at issue in the order to provide discovery. Miller v. Thompson-Walk, No. 15-1605, 2019 U.S. Dist. LEXIS 83249, at *25 (W.D. Pa. May 17, 2019), quoting Clientron Corp. v. Devon IT, Inc., 894 F.3d 568, 580-82 (3d Cir. 2018). The second limitation requires that a specific nexus exist between the sanction imposed and the underlying discovery violations. Clientron, 894 F.3d at 581.

In general, a party subjected to sanctions under Rule 37(b)(2) has committed multiple discovery violations. LabMD, Inc. v. Tiversa Holding Corp., No. CV 15-92, 2019 U.S. Dist. LEXIS 139196, at *38 (W.D. Pa. Aug. 16, 2019), vacated in part, affirmed in part sub nom. LabMD, Inc. v. Boback, 47 F.4th 164 (3d Cir. 2022), citing National Fire & Marine Ins. Co. v. Robin James Construction, Inc., 478 F. Supp. 2d 660 (D. Del. 2007), and Moser v. Bascelli, 879 F. Supp. 489 (E.D. Pa. 1995).

3. Standards Applicable to the Entry of Judgment as a Discovery Sanction

The Third Circuit has instructed courts to exercise discretion in imposing sanctions and to choose “the least onerous sanction corresponding to the willfulness of the act and the prejudice suffered by the victim.” Schmid, 13 F.3d at 79. Dismissals with prejudice (and default judgments) are “drastic sanctions.” Bull v. United Parcel Service, Inc., 665 F.3d 68, 80 (3d Cir. 2012) quoting Poulis v. State Farm Fire & Cas. Co., 747 F.2d 863, 867 (3d Cir. 1984). Therefore, such dispositive sanctions are warranted only where “the non-responsible party's case is severely impaired because it lacked the information that was not produced.” GN Netcom, 930 F.3d at 82, quoting Bull, 665 F.3d at 83.

*4 “The sanction of entering a judgment against a party is a last resort and should be imposed if no alternative remedy is available.” Magnetar Technologies Corp. v. Six Flags Theme Park Inc., 886 F. Supp. 2d 466, 481 (D. Del. 2012). “[D]ismissal with prejudice is only appropriate in limited circumstances and doubts should be resolved in favor of reaching a decision on the merits.” Bull, 665 F.3d at 80, quoting Emerson v. Thiel College, 296 F.3d 184, 190 (3d Cir. 2002).

When considering the entry of judgment as a potential sanction under Rule 37(b)(2), the court should balance the record as a whole, along with (i) the extent of the party's personal responsibility, (ii) prejudice to the adversary; (iii) a history of dilatoriness; (iv) whether the attorney's conduct was willful or in bad faith; (v) alternative sanctions; and (vi) the meritoriousness of the claim. LabMD, 2019 U.S. Dist. LEXIS 139196, at *38-39, citing Poulis, 747 F.2d at 868.

C. Analysis Under Rule 37(e)

1. Whether PPTT has Shown that Defendants Engaged in ESI Spoliation

The first step in deciding whether Rule 37(e) sanctions are appropriate is to determine whether PPTT, as the moving party, has satisfied its burden of establishing that Defendants spoliated ESI. See pages 3-4 above. Based on a thorough review of the record, and for the reasons discussed below, the Special Master concludes that PPTT has not done so, particularly in the context of the extreme sanction that PPTT has requested.

In arguing that PPTT's Motion fails to establish the elements of spoliation, Defendants primarily contend that PPTT has not carried its burden of showing that any ESI that Defendants should have preserved is now lost and irretrievable. Defendants’ Brief, at 7-13; see discussion of Fuhs and spoliation elements at page 4 above. The Special Master agrees that the record before the Court does not establish spoliation under Rule 37(e).

First, PPTT does not specifically identify any ESI that was lost. Rather, PPTT refers generally to documents that it would have expected to have been produced, but which were not produced and are regarded by PPTT as “missing.” In making this claim, PPTT does not identify any specific documents that are “missing,” but rather describes categories of documents (e.g., text messages) with respect to which PPTT anticipated that Defendants’ production would be of a greater volume. Even with regard to the ESI spoliation that PPTT contends occurred through the disposition of Steele's DPAD computer, absent from PPTT's Motion and supporting documents is evidence showing that the disposition of the computer resulted in an irretrievable loss of ESI.

PPTT relies on the results of the forensic review performed by Charles River Associates (“CRA”). See PPTT's Principal Brief, at 2-5. The forensic review is discussed in two sections of PPTT's Principal Brief that are entitled “Conclusions of the Forensic Audit” and “Missing Documents.” Neither PPTT's Principal Brief nor any of PPTT's other filings, however, identify any specific, concrete conclusions drawn by CRA or any specific documents identified by CRA that were not produced due to spoliation. The Special Master has reviewed the CRA spreadsheet attached to PPTT's Principal Brief as Exhibit C but, even considering PPTT's characterizations of the spreadsheet and PPTT's representations about what it reflects, finds it to be largely inscrutable. In short, PPTT has not provided the Court with any reason to give the results of the forensic review any weight in supporting PPTT's request to impose sanctions on Defendants.

*5 In sum, PPTT's generalized assertions about ESI that may have been lost border on speculation and do not satisfy the standards applied by courts in determining whether spoliation has been established. E.g., Industria DE Alimentos Zenu S.A.S. v. Latinfood U.S. Corp., No. 16-6576 (KM)(MAH), 2022 U.S. Dist. LEXIS 94672, at *31-32 (D.N.J. May 26, 2022) (in denying motion for sanctions under Rule 37(e), the court rejected the movant's assertions regarding lost ESI as speculative and found that “[u]pon careful consideration of the record, the Court must conclude that Plaintiff has not demonstrated an actual loss or deprivation of ESI”); Fuhs, 2018 U.S. Dist. LEXIS 184264, at *45-46 (denying sanctions under Rule 37(e) where movants “have not provided concrete, plausible suggestions as to any relevant ESI that was lost and thereby materially affected their substantial rights” and noting that movants instead “offered conjecture as to what they believe may have been on the devices, but that is not enough to justify the imposition of sanctions”) (emphasis in original); Air Products and Chemicals, Inc. v. Wiesemann, No. 14-1425-SLR, 2017 U.S. Dist. LEXIS 26818, at *3 (D. Del. Feb. 27, 2017) (denying sanctions for alleged ESI spoliation because “[d]efendants fail to clear the threshold issue of showing that relevant evidence was lost or destroyed”); see Flanders v. Dzugan, No. 12-1481, 2015 U.S. Dist. LEXIS 111599, at *13 (W.D. Pa. Aug. 24, 2015) (in ruling on motion for sanctions prior to effective date of amended Rule 37(e), the court denied sanctions for alleged ESI spoliation, in part because the moving party “cannot show any evidence was actually lost or destroyed” or that “if evidence was lost or destroyed, it would have been beneficial to his case”; the court observed that the plaintiff (the moving party) “relie[d] on inferences that such evidence must have existed, and thus must have been lost as a result of Defendants’ failure to institute a litigation hold”).

Second, PPTT has not met its burden of identifying ESI with respect to which Defendants failed to comply with their preservation obligations. Because, as discussed above, there has not been a showing of ESI that has been irretrievably lost, it follows that PPTT's Motion falls short of showing that there was ESI that has been irretrievably lost due to any alleged failure on the part of Defendants to preserve evidence. Because there has not been an adequate identification of any irretrievably lost ESI, it is not necessary for the Special Master or the Court to determine at what precise point in time preservation obligations on the part of Defendants arose with respect to any particular items of ESI. In any event, the Special Master has reviewed the exhibits submitted by PPTT in an attempt to show that Defendants anticipated litigation of the issues involved in this case prior to the filing of the case in June 2019 (and, according to PPTT, as early as December 2015). See PPTT's Exhibits I through P (ECF Nos. 270-6 through 270-13). Although the exhibits may support the proposition that at some point in time prior to the commencement of this case Defendants anticipated the possibility of litigation with PPTT about certain issues and that a preservation obligation arose concerning documents and ESI relevant to those issues, the Special Master cannot agree, for the reasons discussed above, that the documents can support a claim that Defendants failed to preserve any particular items of ESI that have become irretrievably lost.

PPTT contends that holding its request for sanctions to these standards would impose an unduly heavy burden on PPTT, as PPTT has been placed in a position where it is unable to prove the specific ESI that Defendants allegedly spoliated. See PPTT's Reply Brief, at 2-3. The Special Master agrees that courts should take care to avoid placing an unduly heavy burden on a party claiming spoliation. But Rule 37(e) and the case law discussed above reflect a balancing of that concern along with other considerations intended to ensure that a proper record is made before sanctions, especially extreme, dispositive sanctions, are imposed on a litigant. See cases discussed above at pages 6.

PPTT asserts that it has “identified information that was reasonably expected would be produced in discovery but was not, thereby providing ‘plausible, concrete suggestions of what the missing evidence would have shown.’ ” PPTT'S Reply Brief, at 2, quoting Bistrian, 448 F. Supp. 3d at 477. The Special Master does not agree. PPTT has identified information that it says it expected would be produced in discovery, but it has done so only in a very general way, thereby falling short of providing “plausible, concrete suggestions of what the missing evidence would have shown.” Id.

*6 In contending that it has met its burden of establishing spoliation, PPTT's reliance on Folino v. Hines, No. 17-1584, 2018 U.S. Dist. LEXIS 193564 (W.D. Pa. Nov. 14, 2020), see PPTT's Reply Brief, at 3-4, is misplaced. In Folino, the plaintiff settled a claim under the Computer Fraud and Abuse Act, based on the defendant's representation that she was not involved in accessing the plaintiff's computer, with the settlement contingent on the defendant providing her computer and devices for a forensic review. That review reflected that the computer and devices had been wiped of all data – i.e., the very data that was needed to confirm the accuracy of the defendant's representation – at the time the parties entered into the settlement agreement. Because of the nature of the claim and the record presented to the Court, the Court was able to make findings concerning the specific ESI that was spoliated and its irretrievability, which included findings that “[a]ccess to the lost data was the most important information to Plaintiff in this litigation,” “Plaintiff's forensic expert determined that the information could not be recovered from the Devices,” and “[t]here is no other source of the information.” Folino, 2018 U.S. Dist. LEXIS 193564, at *6-7. The record in this case does not support such findings.

2. Whether PPTT has Shown that the Entry of Judgment Against Defendants is an Appropriate Sanction under Rule 37(e)

Even if PPTT had established the elements of a Rule 37(e) spoliation claim, the Special Master would not have regarded the extreme sanction requested by PPTT as warranted. See pages 6 above (citing cases discussing the standards for imposing dispositive sanctions); see also Rule 37, 2015 Advisory Committee notes (“Courts should exercise caution ... in using the measures specified in (e)(2)”).

Under the express provisions of Rule 37, the more severe sanctions listed in Rule 37(e)(2), including the entry of judgment, are warranted only if the court finds that the spoliating party acted with the intent to deprive another party of the information's use in the litigation. Fed.R.Civ.P. 37(e)(2). In the view of the Special Master, the record does not support such a finding. In addition, application of the Third Circuit's Schmid factors, see pages 4-5 above, would weigh heavily against entering judgment against Defendants, had spoliation been established. Among other reasons, PPTT's Motion does not provide any factual basis to support a finding that it has been prejudiced by any alleged failure on the part of Defendants to preserve or produce ESI, let alone a finding that PPTT has incurred the degree of prejudice that would be needed to warrant the entry of judgment.

D. Analysis Under Rule 37(b)(2)

The Special Master recommends that the prong of PPTT's Motion that is based on Rule 37(b)(2) be denied for reasons similar to those discussed above concerning Rule 37(e). In short, the Motion lacks sufficient specificity concerning the basic Rule 37(b)(2) elements of (i) identifying the court order, and the specific provisions of that order, that were allegedly violated, and (ii) setting forth record facts establishing a material violation of those provisions.

To the extent that PPTT's request for sanctions under Rule 37(b)(2) is predicated on alleged spoliation of ESI, the Special Master regards that request as either legally foreclosed by Rule 37(e), as arguably providing the exclusive remedy for ESI spoliation[5] or, at a minimum, subject to denial for the same reasons as those discussed above. Insofar as PPTT's request for sanctions under Rule 37(b)(2) is based on alleged conduct other than ESI spoliation – i.e., “interference with litigation,” “inappropriate litigation tactics” and interference with subpoenas to third parties – PPTT's Motion falls short because it does not correlate any of Defendants’ alleged discovery misconduct to any specific order of this Court.[6] Additionally, even if PPTT had shown discovery-related misconduct on the part of Defendants that violated an order, the record would not support the extreme sanction of entry of judgment. See cases discussed at page 6 above.

E. The Parties’ Requests for Awards of Fees and Costs

*7 PPTT requests an award of fees and costs, but it does not identify the legal basis for such an award. This is not a mere technical defect because although Rule 37(a)(5)(A) authorizes awards of attorneys’ fees under certain circumstances, that rule applies to motions to compel discovery. See Rule 37, 1970 Advisory Committee notes (stating with regard to the subparagraph that currently is (a)(5), “[t]his subdivision amends the provisions for award of expenses, including reasonable attorney's fees, to the prevailing party or person when a motion is made for an order compelling discovery”). In any event, because the Special Master is recommending that PPTT's Motion be denied, it is further recommended that PPTT's request for an award of fees and costs be denied.

Defendants request an award of fees and costs under Rule 37(a)(5)(B) and 28 U.S.C. § 1927. Defendants’ Brief, at 19-20. The Special Master recommends that Defendants’ request under Rule 37(a)(5)(B) be denied for the reasons stated above and because, unlike Rule 37(a)(5), neither Rule 37(b)(2) nor Rule 37(e) includes an express authorization for an award of fees to a prevailing non-moving party. It is further recommended that Defendants’ request for an award of fees and costs under 28 U.S.C. § 1927 be denied because the Special Master does not regard PPTT's Motion as having been filed in bad faith.

F. Conclusion

For the reasons set forth above, the Special Master respectfully recommends that PPTT's Motion (ECF No. 266) be denied. In addition, it is recommended that the parties’ respective requests for awards of attorneys’ fees and costs be denied.