Every day we are reminded that we live in a digital world by looking down at our smartphones and logging onto our computers. Though the legal field is generally slow to jump on the bandwagon of new technology, the use of technology has crept its way into the discovery process, where the production of information commonly comes from electronic sources. As easily as this information can be obtained and stored on our devices, it can also be deleted. Thus, it is extremely important that parties involved in litigation be aware of the consequences that stem from failing to preserve electronically stored information. Recently, a defendant in a case involving fraud and conversion was made painfully aware of these consequences by having a default judgment entered against it for intentionally deleting electronically stored information prior to handing it over to the plaintiff during discovery.
In its complaint, Atalian brought claims against several defendants alleging fraud and conversion. During discovery, Atalian filed a motion for sanctions against one of the defendants, TAJ Contract Cleaning (“TAJ”), and sought default judgment under FRCP 37(e) for intentionally wiping all electronic records stored on the company’s laptop and smartphone before they were handed over to the plaintiff. Additionally, TAJ’s principal is also alleged to have attempted to cover this up by manipulating certain evidence and by uploading backdated documents to the laptop to make it seem like the data had not been wiped and that those documents had been there for years.
To support their motion against TAJ, the plaintiffs engaged a digital forensic expert to conduct a report on the alleged data wiping. The expert’s report confirmed that certain data had been removed and that other documents had been backdated and uploaded afterward, despite the fact that the plaintiff sent TAJ multiple preservation letters, they were served with the complaint, and they were made aware in a deposition that electronic data must be preserved. Having been presented with all of this information, along with the fact that Atalian’s expert report went uncontroverted, Magistrate Judge Almond made a report and recommendation to grant Atalian’s motion for sanctions against TAJ. The report and recommendation, Atalian US New England, LLC v. Navarro, C.A. No. 20-00133 (D.R.I. June 10, 2021) (Almond, Mag. J.) (adopted by Chief Judge John. J. McConnell), can be found here.
In making his report and recommendation to Chief Judge McConnell imposing sanctions on TAJ, Magistrate Judge Almond emphasized the fact that TAJ’s principal intentionally deleted files off the company’s devices and attempted to cover up this information by backdating documents more favorable to TAJ, which constitutes an intent to deceive the court and deprive the plaintiffs of relevant information. Because of this, the Court had the option to presume that the deleted information was unfavorable to TAJ, to instruct the jury of this presumption, or to dismiss or enter default against TAJ. Moreover, Magistrate Judge Almond noted that an intent to deprive establishes prejudice to the side that was deprived the opportunity to review the information, which further supports the contention that the deleted information was unfavorable to TAJ.
With all this information in hand, Magistrate Judge Almond recommended that the request for default judgment against TAJ be granted because the destruction and fabrication of evidence in this case makes it “impossible to effectively unscramble the egg and determine what is genuine and what is tainted.” Thus, a mere jury instruction about the presumption would not be effective due to the fact that there is no reliable way to determine the nature of the deleted information, making default judgment against TAJ the only effective remedy. Chief Judge McConnell subsequently adopted this recommendation.
Thus, this case reminds us of the consequences of failing to preserve information. In light of this recommendation, a company must work with its counsel, IT department, and custodians as soon as litigation is anticipated to employ measures to avoid the destruction of such electronic documents.
** Special thanks to our excellent summer associate, Sam Ferrucci, for her assistance in this post!