Employee’s Duty to Preserve Was Triggered by Termination

Li v. Merck & Co., Inc., 2025 WL 2162949 (N.D. Cal. Jul. 30, 2025), is the latest in a series of discovery holdings in that lawsuit.  I described some of the prior holdings in Li. v. Merck Addresses: Trigger; Spoliation Discovery; and, Document Unitization (Feb. 26, 2025); Court Reviews Document Unitization Dispute (Feb. 24, 2025); Spoliation Discovery Permitted (Feb. 23, 2025); and,  Consulting an Attorney Did Not Trigger the Duty to Preserve (Feb.22, 2025).

In the most recent decisions, the Merck Defendants filed a three-part motion for sanctions against Plaintiff Nina Sizoyan Li. The motion requested sanctions for alleged failure to preserve ESI and non-ESI materials.  The former was grounded on Fed.R.Civ.P. 37.  The non-ESI sanctions were sought under the common-law inherent power of the court.  The Merck Defendants also sought Rule 26 sanctions against Ms. Li’s attorney.  The Merck Defendants carried their burden only on the Rule 26 issue.

INHERENT POWER SANCTIONS

The Merck Defendants’ inherent powers motion was denied primarily because the court held that the paper documents were destroyed before the duty to preserve was triggered.

The court wrote that the triggering event was “when Plaintiff anticipated litigation….” Id. at *1.  “Plaintiff says she did not contemplate suing Merck until she was fired in March 2023 and escorted out of the building by security.” Id. The court agreed.

Previously, the court wrote that Ms. Li “had an HR dispute within Merck, but there is no indication she was thinking of suing the company.”  Id. Her daughter texted her a link to a lawyer referral service because her mother told her she was struggling.  Plaintiff “testified that she consulted with a lawyer in December 2022 because ‘I just wanted to find out why I was treated the way I’m being treated, whether it’s legal or illegal. I just want to know about that.’”  Id. at *2.  She said that she wanted to “better understand” her “legal rights.”  Id. However, she “continued to do everything possible to work within Merck’s system to address the retaliation I continued to face, including further interviews with the Office of Ethics, an extended interview with HR, and a detailed letter to Merck MRL’s Vice President, George Addona, describing the ongoing retaliation and requesting his intervention,” and Ms. Li declined offers of legal representation. Id.

The court wrote:

Merck points to a text message exchange between Plaintiff and Liangsu Wang, her former manager, on December 14, 2022. Plaintiff said: “we talked with two lawyers, both of them want to take my case move forward.” But then she added: “Yeah, the strategy will be settled down with the company, which is the same as what I’m doing by myself. But I think with the lawyer, I have more options.” …. It’s not 100% clear what that means, but the better interpretation is the one that is consistent with Plaintiff’s and Chen’s testimony that Plaintiff consulted with an attorney in connection with her HR issue at work, which she was handling through Merck’s internal processes. That was a perfectly good reason to consult with a lawyer, and it doesn’t mean she was considering filing a lawsuit. For a highly skilled employee like Plaintiff to sue a current employer is something many people in Plaintiff’s position would find unpalatable, and there is no indication she was contemplating suing Merck until she was fired.

Merck points out that even before December 2022, Plaintiff had been watching YouTube videos “to understand retaliation and discrimination mostly from – trying to understand her legal rights.” …. Merck also points to several instances in which Plaintiff took screen shots or saved documents related to her HR dispute…. But this behavior is consistent with having a significant HR dispute at work, and it is clear that she had one.

The court did not disagree with the Merck Defendants’ “broad propositions of law that the duty to preserve does not arise only when someone has made a final decision to sue, that the duty to preserve can arise long before a lawyer is actually hired, and so on.” Id. at *2.

However, the court explained that:

[O]n the facts of this case, there is no indication that Plaintiff was contemplating suing Merck until she was fired. Please bear in mind that one of the allegedly discriminatory and retaliatory acts she is suing over is her termination, which of course did not happen until she was fired…. On that day her efforts to work within Merck’s system came to an end and litigation became her only remedy. It is not strange that someone would begin contemplating a lawsuit when that became her only option.

Id. at *2. The court summarized:

There is no mention of litigation or potential litigation by Plaintiff before she was fired, not even in texts or emails with colleagues or family members. She turned down legal representation she was offered. It doesn’t seem like she was contemplating a lawsuit until she was fired. Accordingly, the Court finds that Plaintiff’s duty to preserve arose when she was terminated.

This mooted two of the Merck Defendants’ inherent power arguments and the court found the third to be unimportant, writing: “Even if Plaintiff threw out the printed emails that Shen mailed her in violation of her duty to preserve, Merck was not deprived of any documents or any relevant information. There would therefore be no basis for sanctions.” Id. at *4.

THE FED.R.CIV.P. 37(e) MOTION

“The Court has already found that Plaintiff’s document production was ‘a complete mess.’” Id. at *5.  It explained that her counsel “handed off document collection to their client” and documents were not properly collected. Id.  The court previously had ordered “Plaintiff to redo her document collection and production. Counsel must retain a document vendor to collect Plaintiff’s documents in the normal way that documents are collected for litigation, and counsel must review and produce them.”  Id.

The court now explained that:

It appears that some combination of Merck’s subpoenas to Plaintiff’s husband, Hainan Chen, and her daughter; the Court’s December 10, 2024 order…; and this spoliation motion caused Plaintiff’s counsel to discover Plaintiff had unproduced ESI…. The question the Court faces now, having already ordered Plaintiff to redo her document collection and production, is whether the Court should do something more.

Id. at *5.  However: “The Court thinks that on the current record, Merck cannot show there is ESI that has been lost and that cannot be restored or replaced through additional discovery.”  Id.

The court wrote: “There was also the problem that Merck’s motion never addressed whether the missing documents, if they were deleted, cannot be restored or replaced through additional discovery. Communications, after all, are with other people. And it sounds like the other people were either at Merck or Merck subpoenaed them….  As matters stand now, Merck has not identified any ESI that is both ‘lost’ from Plaintiff and that ‘cannot be restored or replaced through additional discovery,’ meaning the other people she was communicating with. Merck does not present any coherent argument of the form ‘Plaintiff has lost A, B and C, and those items cannot be restored or replaced through additional discovery because of reasons X, Y and Z.” Merck is therefore entitled to no remedies under Rule 37(e).’”  Id. at *5-6.

The court emphasized the inadequacy of Ms. Li’s efforts, but noted that it was not asked to compel further production or for monetary sanctions under its inherent powers. Id. at *6.

FED.R.CIV.P. 26 SANCTIONS AGAINST PLAINTIFF’S ATTORNEY

The court wrote: “Here, Merck argues that Plaintiff’s counsel’s signing Plaintiff’s October 21, 2024 RFP responses did not comply with Rule 26 because of the response to RFP 76. It requested all documents and communications between Plaintiff and her daughter relating to the case, and Plaintiff responded: ‘Plaintiff responds that she is unable to comply because despite a diligent search and reasonable inquiry responsive documents either never existed or were thrown away (as with the edits Ms. Chen suggested to Plaintiff’s pretermination communications with Defendants).’”  Id. at *6.

The court wrote:

Everyone agrees that discovery response was false. And Plaintiff’s counsel knew it was false by at least the beginning of December…. Plaintiff’s counsel say they relied on their client, who had forgotten about the electronic communications with her daughter….

Id. at *6 (emphasis added).  The court added: “But there are two problems with that excuse.”

First, it doesn’t work because Rule 26 doesn’t let counsel hand off responsibility for document collection to the client and then just hope for the best….  Counsel was not entitled to rely on her client’s memory of what documents existed. Counsel was required to ensure that her client’s search for responsive documents was diligent, and a diligent search would have turned up the many documents responsive to RFP 76.[1]

Id. at *6.

And that brings us to the second problem. Counsel say they did not hand off all responsibility to Plaintiff to search for documents. They say that they did text extractions from her phone on multiple occasions starting in January 2024, and they logged into her personal email accounts and extracted responsive documents…. But the search terms Plaintiff’s counsel say they used to find text messages and emails responsive to RFP 76…, look great. If Plaintiff’s counsel ran the search they claim they did, they would of course have located responsive communications with Plaintiff’s daughter. This makes it even more indefensible to rely on Plaintiff’s memory of what documents existed in responding to the RFP.

Id. at *7 (emphasis added).  The court imposed a monetary sanction under Rule 26(g)(3).

Thank you to Doug Austin for his earlier blog on this decision, D. Austin, Duty to Preserve Arose When Plaintiff was Terminated, Court Rules (Aug. 15, 2025).

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[1] See “Self-Collection” May Be Reasonable Using Ralph Losey’s Dual-Protection System (Jan. 19, 2024)