PACKRITE, LLC v. GRAPHIC PACKAGING INTERNATIONAL, LLC

IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

PACKRITE, LLC, )

)

Plaintiff, )

)

v. ) 1:17CV1019

)

GRAPHIC PACKAGING )

INTERNATIONAL, LLC )

)

Defendant. )

MEMORANDUM OPINION AND RECOMMENDATION

OF UNITED STATES MAGISTRATE JUDGE

This case comes before the undersigned United States

Magistrate Judge on “Plaintiff’s Motion for the Imposition of

Sanctions for Spoliation of Evidence” (Docket Entry 97). (See

Docket Entry dated Nov. 9, 2020.) For the reasons that follow, the

Court should deny the instant Motion.1

INTRODUCTION

After Plaintiff commenced this carton-manufacturing-dispute-

related action in state court (on October 11, 2017), Defendant

removed the action to this Court and moved to dismiss Plaintiff’s

tort claims (but not its breach of contract and (alternative)

quantum meruit claims). (See Docket Entries 1, 2, 8.) The Court

1 In general, “[an] order disposing of [a] . . . motion for

sanctions is undoubtedly a nondispositive matter . . . .” Kebe ex

rel. K.J. v. Brown, 91 F. App’x 823, 827 (4th Cir. 2004). However,

because the instant Motion seeks “a default judgment” (Docket Entry

97 at 1), the undersigned Magistrate Judge opts to enter a

recommendation, see Baltimore Line Handling Co. v. Brophy, 771 F.

Supp. 2d 531, 534 (D. Md. 2011) (“A motion for default judgment is

a dispositive motion for purposes of the Magistrate Judges Act.”).

(per United States District Judge Loretta C. Biggs) dismissed the

tort claims without prejudice (and declined to remand the action to

state court) (see Docket Entry 19), after which Plaintiff filed an

Amended Complaint (reasserting the tort claims) (Docket Entry 24).

Defendant again sought dismissal of the tort claims (see Docket

Entry 26) and the Court (per Judge Biggs) dismissed two of them,

i.e., the fraudulent omission and negligent misrepresentation

claims (both without prejudice), but allowed the other two, i.e.,

the fraudulent misrepresentation and unfair/deceptive trade

practices claims, to proceed (see Docket Entry 39).

Defendant then answered and asserted three breach of contract

counterclaims (see Docket Entry 42), as to which Plaintiff replied

(see Docket Entry 47). Around that same time, discovery commenced.

(See Text Order dated Sept. 20, 2019 (adopting Docket Entry 46);

see also Text Order dated June 11, 2020 (extending discovery

deadline to September 1, 2020).) Near the conclusion of the

discovery period (and with Defendant’s consent (see Docket Entry

68)), Plaintiff filed a Second Amended Complaint (Docket Entry 69),

which retains the alternative breach of contract and quantum meruit

claims, drops the fraudulent misrepresentation claim (as well as

the twice-dismissed negligent misrepresentation claim), and

reasserts the twice-dismissed fraudulent omission claim (as well as

the unfair/deceptive trade practices claim) (see id. at 15-21). In

addition to answering the Second Amended Complaint (and reasserting

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breach of contract counterclaims) (see Docket Entry 73; see also

Docket Entry 89 (Plaintiff’s Reply to Amended Counterclaims)),

Defendant moved to dismiss Plaintiff’s fraudulent omission claim

and unfair/deceptive trade practices claim (see Docket Entry 71).

A short time later, upon the close of discovery, Defendant moved

for summary judgment on those two claims. (See Docket Entry 92.)

Plaintiff thereafter filed the instant Motion, “pursuant to

Federal Rule of Civil Procedure 37(e)” (Docket Entry 97 at 1),

asking the Court to:

(1) Find that [] Defendant willfully-destroyed

evidence;

(2) Find that [] Defendant failed to take any

precautions whatsoever to prevent deletion of documents

by its employees;

(3) Find that [] Defendant failed to fully and

properly search and produce its ESI [electronically

stored information] in connection with discovery in this

action;

(4) Sanction [] Defendant by entering a default

judgment in [Plaintiff’s] favor as to all claims and

counterclaims;

(5) Tax [] Defendant with [Plaintiff’s] costs of

th[e instant] Motion, including its reasonable attorney’s

fees; and

(6) Grant any other form of appropriate relief which

the Court deems just and proper under the circumstances.

(Id. at 1-2 (emphasis added); accord Docket Entry 98 (Memorandum in

Support) at 18-19.) Defendant has responded (see Docket Entry 108;

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see also Docket Entries 108-1 - 108-4 (supporting declarations)),

and Plaintiff has replied (see Docket Entry 109) .°

DISCUSSION

As amended in 2015, the Rule invoked by Plaintiff via the

instant Motion states:

If [ESI] that should have been preserved in the

anticipation or conduct of litigation is lost because a

party failed to take reasonable steps to preserve it, and

it cannot be restored or replaced through additional

discovery, the court:

(1) upon finding prejudice to another party from loss

of the [ESI], may order measures no greater than

necessary to cure the prejudice; or

(2) only upon finding that the party acted with the

intent to deprive another party of the [ESI’s] use in

the litigation may:

* By Local Rule, “[t]he Court will not consider motions and

objections relating to discovery unless moving counsel files a

certificate that after personal consultation and diligent attempts

to resolve differences the parties are unable to reach an accord.”

M.D.N.C. LR 37.1(a) (emphasis added). Neither the instant Motion

nor its Memorandum in Support contains such a certification. (See

Docket Entries 97, 98.} Moreover, after Defendant referenced Local

Rule 37.1(a) in seeking more time to respond to the instant Motion

(see Docket Entry 104 at 2), Plaintiff acknowledged that it had not

consulted Defendant before filing the instant Motion (see Docket

Entry 105 at 4). At that point, the undersigned Magistrate Judge

(A) concluded that, “[b]lecause [the instant] Motion almost

certainly ‘relat[es] to discovery,’ Local Rule 37.1(a) almost

certainly applies to [the instant] Motion” (Text Order dated Oct.

9, 2020 (quoting M.D.N.C. LR 37.1(a))), and (B) “required the

parties to engage in meaningful discussion about resolving the

matters underlying [the instant] Motion” (id.). The parties

thereafter conferred, but failed to reach agreement. (See Docket

Entry 107.) Defendant’s (subsequently filed) Response to the

instant Motion does not argue for its denial pursuant to the terms

of Local Rule 37.1 (a). (See Docket Entry 108 at 1-20.) Under

these circumstances, the Court should reach the merits of the

instant Motion, notwithstanding Plaintiff’s untimely consultation.

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(A) presume that the lost [ESI] was unfavorable to

the party;

(B) instruct the jury that it may or must presume

the [lost ESI] was unfavorable to the party; or

(C) dismiss the action or enter a default judgment.

Fed. R. Civ. P. 37(e) (“Rule 37(e)”) (emphasis added) .°

Given the plain language of Rule 37(e):

[The] Court must determine that four predicate elements

are met under Rule 37(e) before turning to the

sub-elements of (e) (1) and (e) (2): (a) the existence of

ESI of a type that should have been preserved; (b) ESI is

lost; (c) the loss results froma party’s failure to take

reasonable steps to preserve [ESI]; and (d) [the lost

ESI] cannot be restored or replaced through additional

discovery. .. . Only if all four [of those predicate]

elements are established can the Court consider sanctions

under subsection (e) (1) or subsection (e) (2).

> Although the instant Motion mentions only Rule 37(e) as a

basis for relief (see Docket Entry 97 at 1-2), the Memorandum in

Support relies on authority pre-dating Rule 37(e)’s 2015 amendment

to argue that “[t]his Court’s inherent powers provide an additional

avenue to sanction Defendant for its willful spoliation of [ESI]”

(Docket Entry 98 at 14 (citing Superior Performers, Inc., v.

Meaike, No. 1:13CV1149, 2015 U.S. Dist. LEXIS 12937, at *6-7

(M.D.N.C. Feb. 4, 2015) (unpublished))). Based on the analysis in

NuVasive, Inc. v. Kormanis, No. 1:18CV282, 2019 WL 1171486, at *2-3

& n.4 (M.D.N.C. Mar. 13, 2019) (unpublished), aff’d and adopted,

2019 WL 1418145 (M.D.N.C. Mar. 29, 2019) (unpublished), the Court

“should look exclusively to Rule 37(e) in resolving the instant

Motion,” id. at *3; accord, _e.g., Newberry v. County of San

Bernardino, 750 F. App’x 534, 537 (9th Cir. 2018). Alternatively,

(like other courts) this Court should “decline[] to order sanctions

under its inherent authority even assuming that such an action

would be permissible.” Worldpay, US, Inc. v. Haydon, No. 17CV4179,

2018 WL 5977926, at *3 n.1 (N.D. Ill. Nov. 14, 2018) (unpublished);

accord, e.g., MB Realty Grp., Inc. v. Gaston Cty. Bd. of Educ., No.

3:17CV427, 2019 WL 2273732, at *3 n.1l (W.D.N.C. May 28, 2019)

(unpublished). This Recommendation “will therefore analyze the

issue of whether sanctions should be imposed exclusively under

. . . Rule 37(e).” Worldpay, 2018 WL 5977926, at *3 n.1.

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Konica Minolta Bus. Sols., U.S.A. Inc. v. Lowery Corp., No.

15¢V11254, 2016 WL 4537847, at *2-3 (E.D. Mich. Aug. 31, 2016)

(unpublished) (emphasis added).

Predicate Elements of Rule 37(e)

“The movant has the burden of proving all [four of the

predicate] elements of Rule 37(e).” Global Hookah Distribs., Inc.

v. Avior, Inc., No. 3:19CV177, 2020 WL 4349841, at *11 (W.D.N.C.

July 29, 2020) (unpublished); accord, e.g., Sempowich v. Tactile

Sys. Tech., Inc., No. 5:18CV488, 2020 WL 6265076, at *9 (E.D.N.C.

Oct. 23, 2020) (unpublished), appeal filed, No. 20-2245 (Ath Cir.

Nov. 20, 2020); Shackleford v. Vivint Solar Dev. LLC, No. 19CV954,

2020 WL 3488913, at *11 (D. Md. June 25, 2020) (unpublished); Ball

v. George Washington Univ., No. 17CV507, 2018 WL 4637008, at *1

(D.D.cC. Sept. 27, 2018) (unpublished), aff’d, 798 F. App’x 654

(D.C. Cir. 2020); Knight v. Boehringer Ingelheim Pharms., Inc., 323

F. Supp. 3d 837, 844-45 (S.D.W. Va. 2018) The instant Motion

does not identify the ESI that allegedly meets Rule 37(e)’s four

predicate elements, i.e., the ESI (1) “that should have been

preserved in the anticipation or conduct of litigation,” Fed. R.

“ For reasons given hereafter, Plaintiff “has not demonstrated

the required showing under Rule 37(e), by even a preponderance

standard, let alone the arguably applicable ‘clear and convincing’

standard,” Emilio v. Sprint Spectrum L.P., No. 11CV3041, 2017 WL

3208535, at *10 (S.D.N.Y. July 27, 2017) (unpublished); see also

Global Hookah, 2020 WL 4349841, at *11 (concluding that “general

approach of courts in the Fourth Circuit has been to apply a ‘clear

and convincing evidence standard’ if the movant .. . seeks the

more extreme sanctions under Rule 37 (e) (2)”).

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Civ. P. 37(e), (2) “is lost,” id., (3) “because a party failed to

take reasonable steps to preserve it,” id., and (4) “cannot be

restored or replaced through additional discovery,” id.

Plaintiff’s Memorandum in Support, however, states that, “[d]ue to

the . . . failure of Defendant to timely institute a litigation

hold, the email folders of [its] former employees Chris Berndt and

Rich Richkowski have been entirely lost.” (Docket Entry 98 at 10

(emphasis added); see also id. at 3-4 (“Defendant has testified

that it permanently erased all files stored in all of the email

folders belonging to [] Berndt . . . . Defendant also permanently

erased all files stored in the email folders belong [sic] to []

Richkowski . . . .”), 11 (“Defendant caused the wholesale deletion

of the email folders of [] Berndt and [] Richkowski . . . .”), 12-

13 (asserting that “all of the contents within the email folders of

[] Berndt and [] Richkowski had been entirely . . . deleted”), 16

(“Defendant cause[d] the email folders of, at least, [] Berndt and

[] Richkowski to be destroyed . . . .”).)

As to the alleged loss of Richkowski’s e-mail folders,

Defendant’s Response counters that, contrary to Plaintiff’s above-

quoted assertions, “[i]n discovery, [Defendant] produced 1,227

emails to or from Richkowski and [its] production identified

Richkowski as the custodian. . . . [Defendant] still has

Richkowski’s emails in its possession.” (Docket Entry 108 at 5-6

(citing Docket Entry 108-1, ¶ 60, and Docket Entry 108-4, ¶ 16);

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see also id. at 6 (“If [Plaintiff] conducted any investigation into

Richkowski’s emails that [Defendant] produced, [Plaintiff] should

have easily seen that [Defendant] produced his custodian email

files.”).) Plaintiff’s Reply does not dispute Defendant’s position

regarding the preservation of Richkowski’s e-mail folders and

thereby effectively abandons any argument for sanctions under Rule

37(e) on that front. (See Docket Entry 109 at 1-10.)°

° Given the unrebutted showing by Defendant that, when

Plaintiff asserted that (A) Defendant “permanently erased all files

stored in the email folders belong [sic] to [] Richkowski” (Docket

Entry 98 at 4 (emphasis added)), (B}) “the email folders of ...

Richkowski have been entirely lost” (id. at 10 (emphasis added)),

(C) “Defendant caused the wholesale deletion of the email folders

of . . . Richkowski” (id. at 11 (emphasis added)), and (D) “all of

the contents within the email folders of . . . Richkowski had been

entirely .. . deleted” (id. at 12-13 (emphasis added)), Plaintiff

possessed proof that conclusively contradicted those assertions,

the Court should require Plaintiff and its counsel to show cause

why the Court should not “determine[] that [Federal] Rule [of Civil

Procedure] 11(b) has been violated,” Fed. R. Civ. P. 1ll(c) (1), and

should not “impose an appropriate sanction on ([Plaintiff’s]

attorney, [his] law firm, [and/Jor [Plaintiff] . . . for the

violation,” id.; see also Fed. R. Civ. P. ll(b) (“By presenting to

the court a... paper .. .anattorney .. . certifies that to

the best of the [attorney’s] knowledge, information, and belief,

formed after an inquiry reasonable under the circumstances ]

. . . the [paper’s] factual contentions have evidentiary support

. .”)7 Fed. R. Civ. P. 11(c) (1) (“Absent exceptional

circumstances, a law firm must be held jointly responsible for a

violation committed by its partner, associate, or employee.”); Fed.

R. Civ. P. 11(c) (3) (“On its own, the court may order an attorney,

law firm, or party to show cause why conduct specifically described

in the order has not violated [Federal] Rule [of Civil Procedure]

11(b).”); Fed. R. Civ. P. 11(c) (4) (“The sanction may include

nonmonetary directives[ and/or] an order to pay a penalty into

court[.]”); Fed. R. Civ. P. 1l1l(d) (exempting “discovery requests,

responses, objections, and motions under [Federal] Rules [of Civil

Procedure] 26 through 37” from Federal Rule of Civil Procedure 11,

but not briefs or memoranda supporting such motions).

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Concerning the loss of Berndt’s e-mail folders, Defendant’s

Response states, in pertinent part:

1) “[o]n July 7, 2017, Berndt left the employment of

[Defendant]” (Docket Entry 108 at 6 (citing Docket Entry 108-2,

¶ 8); see also id. (“[Berndt] was not fired and his departure had

nothing to do with [Plaintiff]. [He] resigned from [Defendant] to

take a position . . . in Oshkosh, Wisconsin. [His] daughter

suffered from a spinal tumor and he took th[a]t position . . . so

that she could receive treatment in Wisconsin.” (internal citations

omitted) (citing Docket Entry 108-2, ¶¶ 8-11, 14)));6

6 Plaintiff’s Memorandum in Support (filed on September 24,

2020) declares without citing any record evidence that “[i]t is not

unreasonable to suspect that the termination of [] Berndt’s

employment with Defendant may have been in some way related to the

pertinent facts of the present case.” (Docket Entry 98 at 17.) In

connection with Defendant’s Response, Berndt swore that, on August

25, 2020, he “specifically told [Plaintiff’s counsel] that [Berndt]

resigned from [Defendant] on good terms and that [he] left [its]

employment due to [a] family medical issue with [his] daughter.”

(Docket Entry 108-2, ¶ 20.) Plaintiff’s Reply does not deny

receipt of that information 30 days before Plaintiff declared

(without any cited basis) that the record supported an inference

that Berndt lost his job with Defendant due to “pertinent facts of

the present case” (Docket Entry 98 at 17). (See Docket Entry 109

at 1-10.) Under these circumstances, it is not unreasonable to

suspect that Plaintiff’s counsel improperly “certifie[d] that to

the best of [his] knowledge, information, and belief, formed after

an inquiry reasonable under the circumstances[,] . . . [that]

factual contention[ about Berndt’s departure from employment with

Defendant] ha[d] evidentiary support,” Fed. R. Civ. P. 11(b).

Accordingly, the Court should require Plaintiff and its counsel to

show cause why the Court should not “determine[] that [Federal]

Rule [of Civil Procedure] 11(b) has been violated,” Fed. R. Civ. P.

11(c)(1), and why the Court should not “impose an appropriate

sanction on [Plaintiff’s] attorney, [his] law firm, [and/]or

[Plaintiff] . . . for the violation,” id.

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2) “[c]onsistent with its corporate email policy, on July 12,

2017, five days after Berndt’s employment with [Defendant] ended,

[its] information technology department disabled Berndt’s custodian

files on its servers, which deleted his custodian email files” (id.

at 7 (citing Docket Entry 108-1, 9 54, and Docket Entry 108-3,

4); see also id. at 5 (“[Defendant] has a company policy that

when an employee leaves [its] employment, [it] disables that

employee’s email which has the effect of erasing the employee’s

custodian files.” (citing Docket Entry 108-3, 9 4)), 7 (“Disabling

[Berndt’s] custodian files did not delete or destroy any emails

that [he] had previously sent to other [of Defendant’s] employees.

. . . Although [his] custodian files were deleted in the ordinary

course of business following his departure, his emails (sent and

received) still existed in other locations ... .” (citing Docket

Entry 108-3, 7 4, and Docket Entry 108-1, I 54)));

3) “[o]n September 22, 2017, [Plaintiff’s] counsel[] sent a

letter to [Defendant] requesting that it preserve documents related

to [Plaintiff]” (id. at 4 (citing Docket Entry 108-1, 7 19); see

also Docket Entry 98-1 at 4-6 (referenced letter));’

’ ‘“TR]ule [37(e)] does not create a duty to preserve ESI. It

recognizes the common-law duty to preserve relevant information

when litigation is reasonably foreseeable.” EPAC Techs., Inc. v.

HarperCollins Christian Publ’g, Inc., No. 3:12CV463, 2018 WL

1542040, at *12 (M.D. Tenn. Mar. 29, 2018) (unpublished), aff’d in

relevant part, 2018 WL 3322305 (M.D. Tenn. May 14, 2018)

(unpublished); see also Fed. R. Civ. P. 37 advisory comm. notes,

2015 amend., subdiv. (e) (confirming that Rule 37(e) “does not

(continued...)

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4) “[o]n October 5, 2017, [Defendant] instituted a litigation

hold of the people [Defendant] believed had information related to

the defective carton issue” (Docket Entry 108 at 4 (citing Docket

Entry 108-1, ¶ 23 & Exh. F); see also id. at 5 (listing five people

as to whom “litigation hold” applied on “October 5, 2017” (citing

Docket Entry 108-1, ¶ 27)));8

7(...continued)

apply when [ESI] is lost before a duty to preserve arises”). “A

variety of events may alert a party to the prospect of litigation.

Often these events provide only limited information about th[e]

prospective litigation, however, so that the scope of [ESI] that

should be preserved may remain uncertain.” Fed. R. Civ. P. 37

advisory comm. notes, 2015 amend., subdiv. (e). According to

Plaintiff, “Defendant’s obligation to preserve ESI [including

Berndt’s e-mails] arose upon [its] receipt of [a l]etter from

[Plaintiff’s] representative Kevin Brown on May 26, 2017.” (Docket

Entry 98 at 7; see also Docket Entry 98-1 at 1-3 (Brown’s letter).)

Defendant has disputed that a preservation duty stemmed from

Brown’s letter (particularly encompassing Berndt’s e-mails), as it

“does not allege any wrongdoing by [Defendant], does not make a

demand of [Defendant], makes no claim of misrepresentations by

[Defendant], does not state any facts that give rise to actionable

legal claims, and certainly does not make any claim of fraud,

negligence, or unfair or deceptive trade practices.” (Docket Entry

108 at 12 (citing Docket Entry 98-1 at 1-3).) Because (for reasons

outlined in the discussion that follows above) the record does not

reflect that (A) ESI lost after May 26, 2017 (and, in particular,

Berndt’s relevant e-mails) “cannot be restored or replaced through

additional discovery,” Fed. R. Civ. P. 37(e), (B) Defendant “acted

with the intent to deprive [Plaintiff] of [such ESI’s] use in

th[is] litigation,” Fed. R. Civ. P. 37(e)(2), and/or (C) the loss

of such ESI has “prejudice[d Plaintiff],” Fed. R. Civ. P. 37(e)(1),

the Court need not decide definitively whether and to what extent

Brown’s letter triggered an ESI preservation duty for Defendant.

8 The term “defective carton issue” (Docket Entry 108 at 4)

refers to the following: “On November 22, 2016, [Defendant]

notified [Plaintiff] that [Defendant] had a claim for defective

Church & Dwight cat litter cartons in the amount of $189,813.70.

On May 17, 2017, [Defendant] notified [Plaintiff] that [Defendant]

(continued...)

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5) “[o]n October 11, 2017, [in-house counsel for Defendant]

spoke to [Plaintiff’s] lawyer” (id. at 4) and “learned that

[Plaintiff’s] claims went beyond the issue of defective [Church &

Dwight and Chlorox] cartons [previously produced by Plaintiff for

Defendant] and that [Plaintiff] was going to make [tort] claims

based on the failed negotiation of an unexecuted contract for the

[future] production of MillerCoors cartons” (id.);

6) on “October 11, 2017,” Defendant expanded the litigation

hold to include seven other people (id. at 5 (citing Docket Entry

108-1, ¶ 27); see also id. (documenting further expansion(s) of

litigation hold, “such that by December 6, 2017, a total of 28

[people] . . . were on the litigation hold” and stating that,

“[o]nce a[n ] employee [of Defendant] is put on a litigation hold,

the employee’s custodian files cannot be deleted or destroyed and

they are preserved (with appropriate backups) until removed from

the litigation hold” (citing Docket Entry 108-1, ¶¶ 24-26 & Exhs.

G-L, and Docket Entry 108-3, ¶¶ 3, 8)));9

8(...continued)

had quality claims totaling $413,502.64 for defective cartons

[Plaintiff] produced for [Defendant] on the Church & Dwight and

Clorox accounts . . . .” (Id. at 2 (internal citation omitted);

see also id. at 3 (“[Plaintiff’s] chief operating officer wrote a

letter [to Defendant denying responsibility for] the defective

cartons on . . . May 26, 2017.”).)

9 Plaintiff’s Reply does not dispute the above-quoted

representation by Defendant regarding the operation of its

litigation hold. (See Docket Entry 109 at 1 (noting, without

contesting, Defendant’s report that its “employees, once placed on

(continued...)

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7) “to [Berndt’s] recollection, any internal emails that he

sent about [Plaintiff] would have been to one or more of the people

on the litigation hold list” (id. at 7 (citing Docket Entry 108-2,

¶¶ 17-18); see also id. (“Berndt did not have draft emails or other

documents that were destroyed when his computer was disabled.”

(citing Docket Entry 108-2, ¶ 16))); and

8) “[Defendant] produced [to Plaintiff during discovery] 632

of Berndt’s emails using [other e-mail] custodians’ records” (id.

(citing Docket Entry 108-1, ¶ 54)).

Plaintiff’s Reply offers no evidence to contest the foregoing

showing that: (A) Berndt left his job with Defendant for reasons

unrelated to Plaintiff; (B) Defendant deleted Berndt’s e-mail

folders pursuant to its policy for departing employees; (C) shortly

after receiving a (non-specific) preservation letter, Defendant

began placing litigation holds on the e-mail folders of employees

it perceived as possessing potentially relevant information;

(D) when Plaintiff’s counsel advised Defendant’s in-house counsel

about the scope of Plaintiff’s claims, Defendant extended the

litigation hold to more employees; (E) Berndt’s e-mails about

Plaintiff with other of Defendant’s employees likely would have

9(...continued)

a litigation hold, were not able to manually delete their [ESI]”

(emphasis omitted)).) That concession defeats the instant Motion’s

request for a finding that “Defendant failed to take any

precautions whatsoever to prevent deletion of documents by its

employees” (Docket Entry 97 at 1 (emphasis added)).

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included at least one of the employees subject to a litigation

hold; and (F) Defendant served Plaintiff in discovery with 632 of

Berndt’s e-mails located in e-mail folders of other employees of

Defendant. (See Docket Entry 109 at 1-10.) Instead, the Reply

simply speculates that some of Berndt’s e-mails about Plaintiff

could have gone unrecovered if “(1) [they] were [not] shared with

the same custodians that would eventually be placed on a litigation

hold by [Defendant or] (2) [they were so shared but] were []

otherwise lost or destroyed prior to such custodians being placed

on a litigation hold” (id. at 5; accord id. at 7).

That approach dooms the instant Motion, because “(al

successful claim for spoliation of [ESI] cannot be premised on mere

speculation on the existence of such [unrecovered ESI].” Brittney

Gobble Photography, LLC v. Sinclair Broad. Grp., Inc., No. 18-3403,

2020 WL 1809191, at *5 (D. Md. Apr. 9, 2020) (unpublished)

(internal quotation marks omitted); see also ACT, Inc. v. Worldwide

Interactive Network, Inc., No. 3:18CV186, 2020 WL 4016241, at *5

(E.D. Tenn. July 16, 2020) (unpublished) (“[S]peculation is not

sufficient to justify spoliation sanctions.”)}). To the contrary, as

“[t]he moving party[, Plaintiff] must [] show that the lost ESI

cannot be ‘restored or replaced through additional discovery.’”

Morgan Art Found. Ltd. v. McKenzie, Nos. 18CV4438, 18CV8231, 2020

WL 5836438, at *18 (S.D.N.Y. Sept. 30, 2020) (unpublished) (quoting

Fed. R. Civ. P. 37(e)); see also Garrison v. Ringgold, No. 19cCVv244,

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2020 WL 6537389, at *6 (S.D. Cal. Nov. 6, 2020) (unpublished) (“The

moving party has the burden to show that the evidence was in fact

lost and ‘cannot be restored or replaced through additional

discovery.’” (quoting Fed. R. Civ. P. 37(e))). “Ordinarily, if

[one person’s deleted] emails were sent to or from other [people],

those emails are not permanently lost or unrecoverable because they

can be replaced in discovery by obtaining them from those other

[people].” Morgan Art, 2020 WL 5836438, at *18 (internal quotation

marks omitted); see also Fed. R. Civ. P. 37 advisory comm. notes,

2015 amend., subdiv. (e) (“Because [ESI] often exists in multiple

locations, loss from one source may often be harmless when

substitute information can be found elsewhere.”).

As a result, to secure relief “under Rule 37(e), [Plaintiff]

must demonstrate that [some of Berndt’s deleted e-mails relevant to

this dispute remained] irretrievable from another source, including

other custodians.” Sempowich, 2020 WL 6265076, at *10. Plaintiff

has not carried that burden; rather, after Defendant presented

evidence (A) that, “most likely, any internal emails that [Berndt]

sent or received about [Plaintiff] would have been to [or from] one

or more of the people on the litigation hold list” (Docket Entry

108-2, ¶ 18), and (B) that, “by using other [e-mail] custodians

that [] Berndt communicated with, [Defendant] produced in discovery

632 emails to/from [] Berndt” (Docket Entry 108-1, ¶ 54), Plaintiff

(as quoted above) countered with only speculation that Defendant

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might not have recovered all of Berndt’s e-mails about Plaintiff

(see Docket Entry 109 at 5). Put another way, Plaintiff “has

failed to prove that other responsive documents ever existed.

Because [Plaintiff] has failed to offer persuasive evidence to show

that the ESI [at issue] was not ‘restored or replaced through

additional discovery’ - namely, [Defendant’s] production of the

emails [of other employees] —- the Court [should] den[y the instant]

Motion [].” Fiteg Inc. v. Venture Corp., No. 13CV1946, 2016 WL

1701794, at *3 (N.D. Cal. Apr. 28, 2016) (unpublished) (all-cap

font omitted) (quoting Fed. R. Civ. P. 37(e)); see also Johnson v.

L'Oreal USA, No. 18CV9786, 2020 WL 5530022, at *3 (S.D.N.Y. Sept.

15, 2020) (unpublished) (refusing to grant relief under Rule 37(e),

where the defendant “replaced any missing data with supplemental

collections from [other] custodians”) □□□

' As detailed above, in identifying ESI that might satisfy the

predicate elements of Rule 37(e), the Memorandum in Support focuses

on Berndt’s and Richkowski’s e-mail folders. (See, e.g., Docket

Entry 98 at 3-4 (declaring, under heading “Relevant Facts and

Procedure” (id. at 2 (emphasis and all-caps font omitted)), that

Defendant “permanently erased” Berndt’s and Richkowski’s e-mail

folders, without referencing any other specific ESI allegedly lost

due to Defendant’s (in)action (emphasis omitted)).) The lone

exception appears beneath the subheading “Defendant Failed to Take

Reasonable Steps to Preserve, Search for, and Retrieve Relevant

ESI” (id. at 9 (emphasis omitted)). The text that follows that

subheading likewise dwells upon Berndt’s and Richkowski’s e-mail

folders (see id. at 10-11), but also includes one line stating that

“[Joseph] Yost testified it is a regular practice of his to delete

his entire email folder every thirty to sixty days” (id. at 11).

Immediately thereafter, however, Plaintiff disclaimed reliance on

any loss of Yost’s e-mail as a basis for the instant Motion. (See

id. (“Defendant has plainly failed to satisfy its obligations in at

(continued...)

-16-

Additional Elements of Rule 37(e) (1) & (2)

Alternatively, “even if Plaintiff [did] meet all [four] of the

mandatory predicate elements of Rule 37(e), Plaintiff cannot show

that [Defendant] acted with an ‘intent to deprive’ Plaintiff of use

of [any lost] ESI in this case - another requirement to obtain

serious sanctions like those Plaintiff seeks.” Johnson, 2020 WL

5530022, at *3 (quoting Fed. R. Civ. P. 37(e) (2)); see also Fed. R.

(.,.continued)

least two ways; (1) Defendant caused the wholesale deletion of the

email folders of [] Berndt and [] Richkowski, and (2) [its] method

of relying on individual employees for the search and retrieval of

ESI, with no measures to prevent spoliation, are inadequate and

unreasonable.”)}).) At a minimum, the Memorandum in Support does not

attempt to prove by a preponderance of the evidence that, after May

26, 2017, Yost deleted any e-mails about matters disputed in this

case, which “cannot be restored or replaced through additional

discovery,” Fed. R. Civ. P. 37(e), such as from e-mail folders of

other of Defendant’s employees. (See Docket Entry 98 at 1-19

(failing to address that issue); see also Docket Entry 85-1 (e-

mails between Yost and others employed by Defendant, which

Plaintiff acquired during discovery and submitted to bolster its

opposition to Defendant’s Motion for Protective Order (Docket Entry

77), which sought to block or to limit Yost’s deposition).) The

Court thus need go no farther on this front, see, e.g., Nickelson

v. Astrue, No. 1:07CV783, 2009 WL 2243626, at *2 n.1 (M.D.N.C. July

27, 2009) (unpublished) (“[A]s [the plaintiff] failed to develop

these arguments in his [b]rief, the [CJourt will not address

them.”), recommendation adopted, slip op. (M.D.N.C. Sept. 21,

2009), notwithstanding Plaintiff’s belated attention to the alleged

loss of Yost’s e-mails in its Reply (see, e.g., Docket Entry 109 at

1 (“[Defendant] now asserts that the email folders of [] Richkowski

were not deleted... [T]he same cannot be said for the email

folders of ... Yost... . [which] were permanently deleted during

a time at which a duty to preserve evidence existed.”)), see, e.g.,

Tyndall v. Maynor, 288 F.R.D. 103, 108 (M.D.N.C. 2013) (“Members of

this Court . . . have consistently held that reply briefs may not

inject new grounds and that an argument that was not contained in

the main brief is not before the Court.” (internal brackets,

ellipses, and quotation marks omitted)).

-l17-

Civ. P. 37(e)(2) (“[O]nly upon finding that the party acted with

the intent to deprive another party of [lost ESI’s] use in the

litigation may [the court] . . . enter a default judgment.”

(emphasis added)). Again, “[m]ere speculation is not enough –

Plaintiff must produce evidence of [Defendant’s] intent to deprive

Plaintiff of [the lost] ESI in this litigation.” Johnson, 2020 WL

5530022, at *4. Here, Plaintiff has not provided an “evidentiary

basis for [its] allegations that [Defendant] acted with an intent

to deprive Plaintiff of relevant ESI in this litigation,” id.

In that regard, Plaintiff’s Memorandum in Support asserts an

“entitle[ment] to a dispositive sanction because Defendant

willfully and knowingly destroyed the ESI of [] Berndt and []

Richkowski with the intent to deprive [Plaintiff] of favorable

evidence.” (Docket Entry 98 at 11-12.) As documented above,

Defendant has debunked any allegation that it destroyed (willfully

or otherwise) Richkowski’s e-mail folders. “Nor is there any other

evidence of bad faith [as to Berndt]. First, there is no

indication that Defendant destroyed [his e-mail folders] in a

manner inconsistent with its normal [e-mail]-retention policies.

Second, this is not the sort of case where the unpreserved [ESI]

clearly would have resolved a crucial issue in the case.” ML

Healthcare Servs., LLC v. Publix Super Mkts., Inc., 881 F.3d 1293,

1308 (11th Cir. 2018) (affirming denial of spoliation sanctions).

-18-

Indeed, under the sub-heading “Defendant Acted Willfully in

Failing to Preserve, Search for, and Retrieve ESI, with Intent to

Deprive [Plaintiff] of Evidence Favorable to its claims and

contradictory to Defendant’s Claims” (Docket Entry 98 at 11

(inconsistent capitalization in original) (emphasis omitted)),*! to

the extent Plaintiff pointed to any record support, it cited issues

involving Richkowski (whose e-mail folders remain preserved), not

Berndt (see id. at 11-14).’° As to Berndt, Plaintiff evidently

‘1 The sub-heading quoted above - like another in the

Memorandum in Support (see Docket Entry 98 at 9 (“Defendant Failed

to Take Reasonable Steps to Preserve, Search for, and Retrieve

Relevant ESI” (emphasis omitted))) - echoes the instant Motion’s

request for a “[f]lind[ing] that [] Defendant failed to fully and

properly search and produce its ESI in connection with discovery”

(Docket Entry 97 at 1; see also Docket Entry 98 at 4 (“Defendant

never conducted any global search whatsoever of its electronic

records in an effort to comply with Plaintiff’s discovery requests

. . .” (emphasis omitted))). The Court should deny that aspect

of the instant Motion, because it improperly attempts to shoe-horn

issues regarding Defendant’s production of ESI (a subject for a

motion to compel under Federal Rule of Civil Procedure 37(a)) with

issues regarding Defendant’s preservation of ESI (a subject for a

motion for sanctions under Rule 37(e)). See Lee v. Belvac Prod.

Mach., Inc., No. 6:18CV75, 2020 WL 3643133, at *4 (W.D. Va. July 6,

2020) (unpublished) (“Rule 37(e) is not designed to sanction a

party for failing to meet their discovery obligations by refusing

to turn over discoverable documents - it is designed to sanction a

party who wrongfully destroys evidence (or allows it to be

destroyed). . . . If [the plaintiff] felt [the defendant] was

failing to uphold its discovery obligations, [the plaintiff] should

have properly addressed such a failing during discovery, rather

than attempt to style such a failing as ‘spoliation’ shortly before

trial.”), appeal filed, No. 20-1805 (4th Cir. July 24, 2020).

' Plaintiff’s Memorandum in Support does not argue that any

loss of Yost’s e-mails resulted from Defendant’s “intent to deprive

[Plaintiff] of the [] use [of such e-mails] in the litigation,”

Fed. R. Civ. P. 37(e) (2). (See Docket Entry 98 at 11-14 (making no

(continued...)

-19-

would have the Court find that Defendant “inten[ded] to deprive

[Plaintiff] of the [] use [of Berndt’s e-mails] in th[is]

litigation,” Fed. R. Civ. P. 37(e)(2) – or (in the sloppy short-

hand of the instant Motion’s relief request) “willfully-destroyed

[such ESI]” (Docket Entry 97 at 1) – because (A) Berndt “was named

in [a] May 2017 [l]etter [from an employee of Plaintiff to an

employee of Defendant] as being responsible for first making the

representations [about the manufacture of MillerCoors cartons] that

serve as the basis for [Plaintiff’s tort] claims” (Docket Entry 98

at 12), but (B) “Defendant failed to institute a litigation hold

until October 2017, by which time all of the contents within

[Berndt’s] email folders . . . had been entirely . . . deleted”

(id. at 12-13 (emphasis omitted)). In other words, Plaintiff has

invited the Court to find that Defendant possessed a bad-faith mens

rea of “intent to deprive [Plaintiff] of the [] use [of Berndt’s e-

mails] in the litigation,” Fed. R. Civ. P. 37(e)(2), from

Defendant’s actus reus of deleting Berndt’s e-mail folders when he

left Defendant’s employment in July 2017, consistent with its

standard policy of deleting departing employees’ e-mail folders.

12(...continued)

reference to Yost in subsection contending that “Defendant acted

willfully in failing to preserve, search for, and retrieve ESI,

with intent to deprive [Plaintiff] of evidence favorable to its

claims and contradictory to Defendant’s claims” (emphasis omitted)

(standard capitalization applied)); see also Docket Entry 109 at 1-

10 (offering no argument attributing any loss of ESI to Defendant’s

“intent to deprive [Plaintiff] of th[at ESI’s] use in the

litigation,” Fed. R. Civ. P. 37(e)(2)).)

-20-

The Court should reject that invitation, because the record

fails to establish that Defendant’s decision to follow that policy

in early July 2017 (if deemed incorrect in light of the emergence

of a dispute with Plaintiff in late May 2017) resulted not from

negligence (or even gross negligence) but from Defendant’s “intent

to deprive [Plaintiff] of the [] use [of Berndt’s e-mails] in

th[is] litigation,” id. See Grant v. Gusman, Civ. No. 17-2797,

2020 WL 1864857, at *12 (E.D. La. Apr. 13, 2020) (unpublished)

(“Evidence of destruction as part of a regular course of conduct is

insufficient to support a finding of intent to deprive, as required

by Rule 37(e)(2). Accordingly, because [the p]laintiff failed to

present any evidence that [the d]efendant[] did anything more than

a negligent continuation of its routine policy, the most severe

measures under Rule 37(e)(2) . . . are not permissible.” (internal

brackets, footnote, and quotation marks omitted)); Stovall v.

Brykan Legends, LLC, No. 17-2412, 2019 WL 480559, at *4 (D. Kan.

Feb. 7, 2019) (unpublished) (“[The p]laintiff asserts bad-faith is

demonstrated here simply by [the] defendant’s failure to preserve

the [ESI] after receiving multiple notices of its obligation to

preserve evidence. [The p]laintiff has cited no support for this

theory that [the] defendant’s failure shows the required culpable

state of mind. . . . The court is not convinced that [the]

defendant’s negligence – even recklessness – in not taking steps to

preserve the [ESI] . . . and in allowing the normal [deletion]

-21-

policy . . . to proceed unimpeded rises to the stringent ‘intent’

requirement set forth in the amended Rule 37(e).” (some internal

quotation marks omitted)); see also Courser v. Michigan House of

Representatives, No. 19-1840, 2020 WL 5909505, at *20 (6th Cir.

Oct. 6, 2020) (unpublished) (“As for [Rule 37](e)(2), after the

2015 amendment, [the plaintiff] had to show that the [d]efendants

had intent to deprive him of the [lost ESI’s] use. A showing of

negligence or even gross negligence will not do the trick.”

(internal brackets and quotation marks omitted)).13

In sum:

Because Plaintiff [failed to] make the [required] showing

of intent under Rule 37(e)(2), sanctions – particularly

a severe sanction like [the instant Motion requests] –

would be improper. If Plaintiff is entitled to any

relief at all – which[, in light of its failure to

satisfy the predicate elements of Rule 37(e), it] is not

– it would be limited to curative measures under

subsection (1) of Rule 37(e), and only if Plaintiff can

show prejudice.

Johnson, 2020 WL 5530022, at *4; see also Courser, 2020 WL 5909505,

at *20 (“[The plaintiff] failed to prove prejudice, so the district

court did not abuse its discretion in denying the Rule 37[(e)(1)]

motion.”); Sempowich, 2020 WL 6265076, at *9 (ruling that, to

13 “Moreover, Plaintiff [has] provide[d] no reason to believe

that [Berndt’s e-mail folders] would have actually shown [] things

[favorable to Plaintiff] . . . . Failure to preserve such

speculative evidence does not raise the specter of bad faith in the

same way that a failure to preserve evidence of a specific, crucial

event in a case might.” ML Healthcare, 881 F.3d at 1309.

-22-

prevail under Rule 37(e)(1), “moving party must first establish”

four predicate elements and “must then demonstrate prejudice”).14

Although the Memorandum in Support implies that Plaintiff

suffered prejudice because it “voluntarily abandoned certain of its

claims in its filing of the Second Amended Complaint” (Docket Entry

98 at 12 n.4) and cannot “use [] untold numbers of documents that

may well have been highly-relevant in defense of [Defendant’s

summary judgment m]otion” (id. at 18 (emphasis omitted)), Plaintiff

has not adequately connected its abandonment of any claims or its

challenges in staving off summary judgment to the deletion of

14 The text of Rule 37(e)(1) “does not place a burden of

proving or disproving prejudice on one party or the other.” Fed.

R. Civ. P. 37 advisory comm. notes, 2015 amend., subdiv. (e)(1).

Instead, Rule 37(e)(1) “leaves judges with discretion to determine

how best to assess prejudice in particular cases.” Id. That

discretion permits judges to “[r]equir[e] the party seeking

curative measures to prove prejudice . . . in [some] situations,”

id., including where “the abundance of preserved information may

appear sufficient to meet the needs of all parties,” id. This case

presents just such a situation, particularly in light of the large

volume of Berndt’s e-mails recovered from the e-mail folders of

other employees of Defendant and produced in discovery (as detailed

above). Additionally, as other courts have recognized, “in order

to evaluate whether [Plaintiff] has been prejudiced, the [C]ourt

must have some evidence regarding the particular nature of the

missing ESI,” Worldpay, US, Inc. v. Haydon, No. 17CV4179, 2018 WL

5977926, at *5 (N.D. Ill. Nov. 14, 2018) (unpublished) (internal

quotation marks omitted); see also Fed. R. Civ. P. 37 advisory

comm. notes, 2015 amend., subdiv. (e)(1) (“An evaluation of

prejudice from the loss of [ESI] necessarily includes an evaluation

of the [lost ESI’s] importance in the litigation.”), and the Court,

“within [its] discretion, [may] require some proof that [the

missing ESI] would have corroborated Plaintiff’s claims,” Ungar v.

City of New York, 329 F.R.D. 8, 16 (E.D.N.Y. 2018). Given those

considerations, in this case, the Court properly may “plac[e] the

burden of proof as to prejudice on Plaintiff.” Id.

-23-

Berndt’s e-mail folders (or the loss of any other discrete category

of ESI). (See Docket Entry 98 at 1-19; Docket Entry 109 at 1-10.)

Plaintiff therefore “has failed to meet [its] burden of

demonstrating how [it] has been prejudiced, particularly when

[Defendant] has gone to great lengths to cure any [deletion-

related] deficiencies,” Johnson, 2020 WL 5530022, at *4 (emphasis

in original), “by using other [e-mail] custodians that [] Berndt

communicated with[ to] produce[] in discovery 632 emails to/from []

Berndt” (Docket Entry 108-1, ¶ 54). “Plaintiff is not entitled to

every single document that could possibly have existed. Discovery

must be reasonable, not perfect. . . . Defendant has provided

reasonable discovery through the above-described supplemental data

collection and search efforts.” Johnson, 2020 WL 5530022, at *3.15

15 “Moreover, prejudice is less acute when [as here] there are

sources from which at least some of the allegedly spoliated

evidence can be obtained and when the party seeking discovery can

obtain extrinsic evidence of the content of at least some of the

deleted information from other documents, deposition testimony, or

circumstantial evidence.” In re Ethicon, Inc. Pelvic Repair Sys.

Prod. Liab. Litig., 299 F.R.D. 502, 523 (S.D.W. Va. 2014) (internal

brackets, ellipsis, and quotation marks omitted); see also Snider

v. Danfoss, LLC, No. 15CV4748, 2017 WL 2973464, at *7 (N.D. Ill.

July 12, 2017) (unpublished) (observing that prospect of prejudice

to the plaintiff from “deletion of . . . emails [wa]s minimized by

the [defendant’s] production of [recovered] emails as well as the

[option of] deposi[ng] . . . witnesses”), recommendation adopted,

2017 WL 3268891 (N.D. Ill. Aug. 1, 2017) (unpublished). Relatedly,

as Defendant has highlighted, “Berndt himself would be an excellent

source of information to determine if any [relevant] emails were

[still missing] and, if so, the information contained in [them].”

(Docket Entry 108 at 16.) However, “after noticing Berndt’s

deposition, [Plaintiff] cancelled Berndt’s deposition two days

before it was scheduled to occur. . . . [Plaintiff’s decision to]

(continued...)

-24-

Notably, to the extent it discusses prejudice associated with

particular lost ESI in the context of arguing for sanctions under

Rule 37(e), the Memorandum in Support concentrates not on the

deletion of Berndt’s e-mail folders, but instead on the disproved

allegation that Defendant “deleted the entirety of [] Richkowski’s

email folders after the date upon which it admits to . . .

anticipati[ng ] litigation” (Docket Entry 98 at 13; see also id. at

13-14 (“[A]s the remainder of [] Richkowski’s emails have been

permanently deleted by [Defendant], there is no telling what other

evidence favorable to [Plaintiff’s] position [it] may have

obtained. . . . [T]he email folders of [] Richkowski contained

highly-relevant documents contradictory to Defendant’s claims

against [Plaintiff], and Defendant deleted [his] email folders in

their entirety after being under an obligation . . . to preserve

them.”).) Regarding Berndt, the Memorandum in Support merely

voices a generic concern that Plaintiff lacks access to “untold

numbers of documents deleted by Defendant from [Berndt’s] email

folders” (id. at 14), and proffers an “inference that these lost

documents were favorable to [Plaintiff]” (id.), grounded on the

faulty premise – mislabeled as a “fact” - that “Defendant destroyed

15(...continued)

pass[] on that opportunity in discovery[] bel[ies its] argument

that [any unrecovered e-mails to/from] Berndt ha[d] vital

information related to this dispute.” (Id.)

-25-

[ESI] from [] Richkowski’s email folders [that] expressly

contradict[ed] the bases for Defendant’s counterclaims” (id.).

This sort of (ill-founded) “speculation that [Plaintiff has]

suffer[ed] harm is not enough.” Johnson, 2020 WL 5530022, at *4;

see also Pugh-Ozua v. Springhill Suites, No. 18CV1755, 2020 WL

6562376, at *4 (S.D.N.Y. Nov. 9, 2020) (unpublished) (“[The

p]laintiff has not provided any evidence – aside from her own

speculation – to support her argument that [unrecovered] text

messages and emails would have corroborated her claims.

Accordingly, [the magistrate judge] did not commit clear error in

declining to grant sanctions under Rule 37(e)(1) . . . .”); MB

Realty Grp., Inc. v. Gaston Cty. Bd. of Educ., No. 3:17CV427, 2019

WL 2273732, at *5 (W.D.N.C. May 28, 2019) (unpublished)

(“Speculative or generalized assertions that the missing [ESI]

would have been favorable to the party seeking sanctions are

insufficient.” (internal brackets and quotation marks omitted)).16

To the contrary, even assuming the record shows a large “volume of

16 Plaintiff also alleged that Defendant’s “destruction of

relevant ESI . . . is considerably prejudicial” (Docket Entry 98 at

16), in arguing that “[t]his Court’s inherent powers provide an

additional avenue to sanction Defendant” (id. at 14), but (in doing

so) Plaintiff once more merely speculated (equivocally) that

“untold numbers of other relevant documents have very likely been

lost due to Defendant’s failure to make any reasonable effort

whatsoever to ensure that its employees complied with requests for

documents” (id. at 16 (emphasis omitted)). “A successful claim for

spoliation of evidence cannot be premised on mere speculation on

the existence of such evidence.” MB Realty, 2019 WL 2273732, at *5

(internal quotation marks omitted).

-26-

[ESI] was lost or destroyed, and the key position[] held by the

employee[] whose [ESI is] missing,” In re Ethicon, Inc. Pelvic

Repair Sys. Prod. Liab. Litig., 299 F.R.D. 502, 523 (S.D.W. Va.

2014), “to support an award of sanctions .. . , [Plaintiff] must

demonstrate to the [C]ourt with some precision that unique and

relevant [ESI] has been lost, and this loss creates an evidentiary

hurdle to [Plaintiff] in presenting the essentials of [its]

case[],” id. Plaintiff, however, “ha[s] not provided the [C]ourt

with any concrete evidence of prejudice,” id. at 524, and thus

Plaintiff cannot receive relief under Rule 37(e) (1).*’

'’ In its Reply, Plaintiff (for the first time) contended that

“‘Tpo]rejudice may be presumed when the spoliating party acted in

bad faith or in a grossly negligent manner.’” (Docket Entry 109 at

7-8 (emphasis added) (quoting Ottoson v. SMBC Leasing & Fin., Inc.,

268 F. Supp. 3d 570, 581 (S.D.N.Y. 2017), in turn quoting Pension

Comm. of Univ. of Montreal Pension Plan v. Banc of Am. Secs., LLC,

685 F. Supp. 2d 456, 467 (S.D.N.Y. 2010) (relying on Residential

Funding Corp. v. DeGeorge Fin. Corp., 306 F.3d 99, 109 (2d Cir.

2002)), abrogated in part, Chin v. Port Auth. of N.Y. & N.J., 685

F.3d 135, 162 (2d Cir. 2012) (“reject[ing] the notion [adopted in

Pension Comm., 685 F. Supp. 2d at 464-65,] that a failure to

institute a ‘litigation hold’ constitutes gross negligence per se”

(italics in original))).) That contention cannot aid Plaintiff’s

cause for at least two reasons. First, “[m]lembers of this Court

. . . have consistently held that reply briefs may not inject new

grounds and that an argument that was not contained in the main

brief is not before the Court.” Tyndall v. Maynor, 288 F.R.D. 103,

108 (M.D.N.c. 2013) (internal brackets, ellipses, and quotation

marks omitted). Second, the plain language of Rule 37(e) permits

the Court to presume prejudice to Plaintiff from Defendant’s

deletion of ESI, i.e., to presume that “the lost [ESI]” would have

helped Plaintiff because it “was unfavorable to [Defendant],” Fed.

R. Civ. P. 37(e) (2) (A), “only upon finding that [Defendant] acted

with the intent to deprive [Plaintiff] of the [ESI’s] use in th[is]

litigation,” Fed. R. Civ. P. 37(e)(2) (emphasis added). As

documented previously, the record does not support a “finding that

(continued...)

—?27-

CONCLUSION

The Court should not impose sanctions against Defendant under

Rule 37(e). “This [] recommendation that [Defendant] not be

sanctioned for . . . deleting [Berndt’s custodian folders of]

emails should not be viewed as condoning those actions.” Snider v.

Danfoss, LLC, No. 15CV4748, 2017 WL 2973464, at *8 (N.D. Ill. July

7(.,.continued)

[Defendant] acted with the intent to deprive [Plaintiff] of [any]

ESI’s use in th[is] litigation,” id. To the extent the case quoted

by Plaintiff would allow a presumption of prejudice in the absence

of such a finding (e.g., based instead on Defendant’s “‘gross

negligence,’” Ottoson, 268 F. Supp. 3d at 581 (quoting Pension

Comm., 685 F. Supp. 2d at 467 (relying on Residential Funding

Corp.))), the Court should follow instead the plain language of

Rule 37(e). See United States v. Carter, 429 F. Supp. 3d 788, 870

(D. Kan. 2019) (recognizing that only upon “showing of intent to

deprive [moving] party of [ESI] for use in the litigation” may

courts apply “presumption of prejudice”), vacated in part on other

grounds, No. 16-20032-02, 2020 WL 430739 (D. Kan. Jan. 28, 2020)

(unpublished), appeal filed, No. 20-3038 (10th Cir. Feb. 28, 2020);

Borum v. Brentwood Vill., LLC, 332 F.R.D. 38, 48 (D.D.C. 2019)

(“*Rule 37(e) (2) rejects cases such as Residential Funding Corp.

that authorize the giving of [Rule 37] (e) (2) sanctions [including

presuming the unfavorability of lost ESI to the spoliating party

and thus prejudice to the opposing party] on a finding of

negligence or gross negligence.’” (internal brackets, full case

name, and citation omitted) (quoting Fed. R. Civ. P. 37 advisory

comm. notes, 2015 amend., subdiv. (e) (2))); Tipp v. Adeptus Health

Inc., No. CV16-2317, 2018 WL 447256, at *3 (D. Ariz. Jan. 17, 2018)

(unpublished) (“Although some courts have presumed prejudice upon

a showing of bad faith or gross negligence, .. . better-reasoned

cases . . . require a showing of actual prejudice . .. .”)

(rejecting Pension Comm.’s position on presumption of prejudice as

quoted in Ottoson); see also Citibank, N.A. v. Super Sayin’ Publ’g,

LLC, No. 14CV5841, 2017 WL 462601, at *2 (S.D.N.Y. Jan. 17, 2017)

(unpublished) (“[C]lourts in this circuit ha[ve] already

acknowledged that the December 1, 2015 amendment to Rule 37 has

been interpreted as overruling the holding in Residential Funding

Corp.” (internal quotation marks omitted)), aff’d, 2017 WL 946348

(S.D.N.Y. Mar. 1, 2017) (unpublished); Thurmond v. Bowman, 199

F. Supp. 3d 686, 691 n.5 (W.D.N.Y. 2016) (same).

-?8-

12, 2017) (unpublished), recommendation adopted, 2017 WL 3268891

(N.D. Ill. Aug. 1, 2017) (unpublished). Based on the statement of

Defendant’s counsel (in conjunction with the assertion of a “work

product” objection during the deposition of Defendant’s corporate

representative) that, “after the May 26th, 2017 [receipt of]

Brown[’s] letter, which [Defendant] perceive[d as Plaintiff]

getting ready for litigation, then at that point [Defendant] wlas]

also getting ready for litigation” (Docket Entry 98-1 at 24),*°

Defendant (in the exercise of reasonable care) likely should not

have continued to follow its policy of deleting departing

employees’ e-mail folders, when employees who dealt with Plaintiff

(like Berndt) left their jobs with Defendant.

Nonetheless, Rule (as amended in 2015) precludes

sanctions based on negligent (or even grossly negligent) loss of

relevant ESI alone and instead imposes a number of additional

requirements for relief, including both proof that any such ESI

“cannot be restored or replaced through additional discovery,” Fed.

R. Civ. P. 37(e), and a finding either “that the [spoliating] party

‘8 The attempt by Defendant’s counsel to avoid the implications

of his above-quoted, unequivocal statement (see Docket Entry 108 at

13 n.2 (ignoring words used and their context as material support

for objection under work-product doctrine while re-characterizing

language at issue as merely stating “valid objection to a

deposition question seeking attorney-client privileged information”

(emphasis added))) “lacks the candor toward the Court expected of

a member of the bar,” Essex Builders Grp., Inc. v. Amerisure Ins.

Co., No. 6:06CV1562, 2007 WL 2948581, at *2 n.2 (M.D. Fla. Oct. 10,

2007) (unpublished).

-2?9-

acted with the intent to deprive another party of [such ESI’s] use

in the litigation,” Fed. R. Civ. P. 37(e)(2), or that “prejudice

[resulted] to another party from loss of [such ESI],” Fed. R. Civ.

P. 37(e)(1). “Under the[ record] facts, [no inability to recover

or replace relevant ESI, no intent to deprive Plaintiff of the use

of such ESI in this action, and] no prejudice has been shown, and

consequently, no sanctions are warranted.” Snider, 2017 WL

2873464, at *8. However, the record does indicate that portions of

Plaintiff’s Memorandum in Support of the instant Motion may run

afoul of Federal Rule of Civil Procedure 11, thus warranting entry

of a show-cause order directed to Plaintiff and its counsel.

IT IS THEREFORE RECOMMENDED that the instant Motion (Docket

Entry 97) be denied.

IT IS FURTHER RECOMMENDED that Plaintiff and its counsel be

made to show cause why the Court (1) should not “determine[] that

[Federal] Rule [of Civil Procedure] 11(b) has been violated,” Fed.

R. Civ. P. 11(c)(1), and (2) should not “impose an appropriate

sanction on [Plaintiff’s] attorney, [his] law firm, [and/]or

[Plaintiff],” id., because Plaintiff (through its counsel) filed

the Memorandum in Support asserting that (A) Defendant “permanently

erased all files stored in the email folders belong [sic] to []

Richkowski” (Docket Entry 98 at 4 (emphasis added)), (B) “the email

folders of . . . Richkowski have been entirely lost” (id. at 10

(emphasis added)), (C) “Defendant caused the wholesale deletion of

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the email folders of . . . Richkowski” (id. at 11 (emphasis

added)), and (D) “all of the contents within the email folders of

. . . Richkowski had been entirely . . . deleted” (id. at 12-13

(emphasis added)), when the record reflects Plaintiff (and its

counsel) then possessed proof that conclusively contradicted those

assertions (see Docket Entry 108 at 5-6 (citing Docket Entry 108-1,

¶ 60, and Docket Entry 108-4, ¶ 16)).

IT IS FURTHER RECOMMENDED that Plaintiff and its counsel be

made to show cause why the Court (1) should not “determine[] that

[Federal] Rule [of Civil Procedure] 11(b) has been violated,” Fed.

R. Civ. P. 11(c)(1), and (2) should not “impose an appropriate

sanction on [Plaintiff’s] attorney, [his] law firm, [and/]or

[Plaintiff],” id., because Plaintiff (through its counsel) filed

the Memorandum in Support asserting (without citing any record

support) that “[i]t is not unreasonable to suspect that the

termination of [] Berndt’s employment with Defendant may have been

in some way related to the pertinent facts of the present case”

(Docket Entry 98 at 17), despite uncontested record evidence that

Berndt previously “specifically told [Plaintiff’s counsel] that

[Berndt] resigned from [Defendant] on good terms and that [he] left

[its] employment due to [a] family medical issue with [his]

daughter” (Docket Entry 108-2, ¶ 20).

/s/ L. Patrick Auld

L. Patrick Auld

United States Magistrate Judge

December 4, 2020

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