District of Maryland’s Recent Application of Spoliation Doctrine in Discrimination Case

In Membreno v. Atlanta Restaurant Partners, LLC, 2021 WL 351174 (D. Md. Feb. 2, 2021), the Court applied the spoliation doctrine in an employment discrimination case.

The plaintiff alleged injury due to a hostile work environment and discrimination based on gender identity and sex.  The Court wrote: “Discovery was contentious….”  The plaintiff requested sanctions and the Court imposed them under common law and Fed.R.Civ.P. 26(g).

THE DEFENDANT DESTROYED COMPARATORS’ PERSONNEL FILES:

In her discovery, the plaintiff requested information about disciplinary action the employer had taken against other employees in the restaurant.  Defendant responded that the request “would require reviewing hundreds of individual personnel files” and stated that some or many of those files “may have been purged.”

Spoiler alert.  The files had already been destroyed and there were not hundreds of them.  Plaintiff, however, did not know that.  Apparently, neither did defense counsel.

Plaintiff presented the issue to the Court and the defendant asserted a “significant practical hardship” representing: “Due to the way Defendant maintains and stores data within the company, it is difficult, if not impossible, for Defendant to gather the employee list prior to 2016.”  It repeated that it did not have older files.  The Court overruled defendant’s objections and ordered production.

Plaintiff then made “diligent efforts” to obtain the records and defendant subsequently wrote: “As noted previously, during the course of its inquiry, Defendant ARP learned that many employee personnel files were destroyed in error during a store audit sometime in the summer of 2018, which would have included all prior personnel files and the disciplinary actions contained therein.” The EEOC had informed defendant of plaintiff’s charge in an April 26, 2017, letter, i.e., roughly a year prior to destruction of the files.

The plaintiff engaged in “discovery about discovery” and defendant responded that the destruction was either a “huge misunderstanding” or due to a statement made to managers by its director-of-training.

SANCTIONS ANALYSIS:

In pertinent part, the plaintiff moved for common-law sanctions and sanctions under Rule 26.  She also asserted a failure to supplement discovery responses, an issue not discussed here.

Because the files were apparently not ESI, the Court did not apply Fed.R.Civ.P. 37(e).  Instead, it applied common law.  In doing so, it provided a textbook analysis of the spoliation doctrine.

First, the Court analyzed when the duty to preserve arose.  That should always be the first question.  The EEOC had informed defendant of plaintiff’s EEOC charge in an April 26, 2017, letter.  The Court held that receipt of the EEOC’s letter triggered defendant’s duty to preserve potentially relevant evidence.  Id. at *3.

Next, the Court analyzed whether defendant had a culpable state of mind.  The Court identified each degree of culpability that could support a sanction and provided the definition:

Bad faith	Requires the destruction of evidence for the purpose of depriving the adversary of the evidence.
Willfulness	Only requires a demonstration of intentional or deliberate conduct resulting in spoliation.
Gross negligence	Requires a similar showing as ordinary negligence, but to a greater degree.
Ordinary negligence	The failure to identify, locate, and preserve evidence, where a reasonably prudent person acting under like circumstances would have done so.

Id. at *3.  As set out in a prior blog, the burden of proof of spoliation is unsettled.  The Court applied the clear and convincing evidence standard and found defendant’s conduct to be willful, even assuming that the destruction was based on a misunderstanding.  In doing so, it described a clearly defective implementation of a litigation hold:

[T]he fault still lies with Defendants. Because Defendants should have reasonably anticipated litigation on or about April 26, 2017, they should have taken steps to ensure that all potentially relevant evidence was “identified, located, and preserved” by the time of the director of training’s visit in the summer of 2018. See Goodman, 632 F. Supp. 2d at 511. This obligation was clearly not impressed upon the managers or the director of training. When the director of training instructed the managers to “clean up” and “get rid of some…stuff,” ECF No. 136-9 at 6, there is no evidence that she also cautioned them that documents that might potentially be relevant to Ms. Membreno’s litigation must be preserved.

Id. at *4 (emphasis added).  The use of the word “all” may be over broad.

Then, having concluded that there was a willful breach of the duty to preserve, the Court turned to the question of relevance.  It applied a two-factor test. Id. at *4.

• First, the trier of fact must conclude that the missing evidence “would have supported the claims or defenses of the party that sought it.”
• Second, it must find prejudice. The Court also noted that, when the non-spoliating party shows willfulness or bad faith, there is a rebuttable presumption of prejudice.

Applying the first prong of the specialized relevance test: “There can be no question that the missing personnel files are relevant to Ms. Membreno’s claims. If, as Ms. Membreno alleges, Defendants treated her differently than similarly situated employees, proof of this might have been found in the personnel files of the comparators. This evidence would have helped Ms. Membreno to establish that she was discriminated against and that the discrimination was because of her transgender status and her sex. Alternatively, because Defendants willfully destroyed the files, the Court is permitted to presume that the files are relevant.”

It next addressed the second prong, prejudice: “A party is prejudiced by the spoliation of evidence where the party’s ability to present its case is compromised as a result of the missing evidence.”  Id. at *5.  The Court wrote that in discrimination actions, the Supreme Court had long established that comparator evidence is “a particularly probative means for discerning whether a given adverse action was the product of a discriminatory motive…. Ms. Membreno has been deprived of an important source of comparator evidence.”  Id. (citation omitted).

Having found prejudice, the Court then considered its “broad discretion” to tailor a sanction: “In the Fourth Circuit, an adverse inference is available as a sanction for spoliation if the spoliator’s loss or destruction of the evidence was done willfully.” Id. at *7.  The United States Magistrate Judge recommended a permissive adverse inference instruction and preclusion of certain testimony by the defendant.

Having imposed what I would term common-law sanctions, the Court turned its attention to sanctions under Fed.R.Civ.P. 26(g).  The defendant was on the horns of a dilemma.  It had destroyed the personnel files and “stated that producing the requested discipline and termination records was unduly burdensome in that it ‘would require reviewing hundreds of individual personnel files.’”  Id. at *9 (emphasis added).

The Court noted that Rule 26(g) mandates a reasonable inquiry and if the defendant “had made a reasonable inquiry into the number of personnel files in existence and the general nature of the files (that is, whether each file was so voluminous that review would be burdensome), it would have discovered that there was no burden in reviewing the personnel files. There were essentially no files to review. Instead of making this reasonable inquiry, ARP responded with a knee-jerk, boilerplate objection about undue burden. Defendants candidly admit that ARP’s response was not based on an actual inquiry into the nature of the production that would be required to respond to Ms. Membreno’s requests.” [emphasis added].

The Court imposed a small monetary sanction:

[Defendant] may be correct that Rule 26(g) does not require parties to perform an “exhaustive investigation” before producing discovery responses, but the plain text of the rule requires a more extensive inquiry than what ARP undertook here. Accordingly, the Court finds that ARP violated Rule 26(g)’s certification requirement and that its failure is not substantially justified. [emphasis added]

The sanction was small due to the late filing of the sanctions motion.  A separate blog addresses the consequences of plaintiff’s untimely request for sanctions.

There are many lessons to be learned from the comprehensive decision.  Among them are:

• It is often a good idea to document when the duty to preserve arose.
• It appears that a litigation hold was not properly imposed and implemented. Preservation-in-place carries risk.
• If a litigant asserts undue burden because review of hundreds of files would be required, Rule 26(g) mandates a reasonable inquiry as to the accuracy of the assertion.
• Sanctions motions must be timely made.