Plaintiff’s employment claims arose out of her termination as a clinical nurse. A series of interactions occurred, resulting in an investigation covering interviews of all staff and “review of video.”  “During and around the time of the two rapid responses, Plaintiff had a verbal interaction or altercation with another nurse, Gabrielle Spalt, and the two nurses have differing accounts of their encounter.”

Defendants moved for summary judgment.  The Court found no genuine dispute of material fact and granted the motion.

Plaintiff argued that summary judgment should be denied, in part, based on “potential spoliation of video evidence relevant to Plaintiff’s claims.  Specifically, Plaintiff contends that Defendants failed to preserve video footage of the interaction between her and Ms. Spalt during the rapid response events on September 16, 2023.”

Defendants relied on their information governance policy.  They told Plaintiff that the video footage was “retained for 30 days and was over-written pursuant to Defendants’ policy prior to notice of any legal claim and obligation to preserve footage.”

Plaintiff replied “that Defendant was on notice to preserve the video as of September 2023 because of the final written warning issued to Plaintiff and the specific request Plaintiff made to view the video during the investigation of the incident.”

Defendants responded “that there was no reason to anticipate litigation until Defendants received notice of Plaintiff’s filing of charges with the EEOC, in March 2024…. They contend that, pursuant to internal policy, the video footage from the September 16, 2023, incident was overwritten 30 days later, on or around October 15, 2023—well before they received notice of litigation.”

The Court wrote that “[s]poliation refers to the failure to preserve property for another’s use as evidence in pending or reasonably foreseeable litigation.” Id. (cleaned up; citation omitted).  The “mere existence” of a dispute does not trigger the duty to preserve.  The duty arises somewhere between knowledge of a dispute and direct, specific threats of litigation: “A non-exhaustive list of examples of events triggering the duty to preserve include the receipt of a demand letter, a request for evidence preservation, a threat of litigation, or a decision to pursue a claim.” Id. (cleaned up; citation omitted).

Applying those principles, the Court explained:

Plaintiff cites no authority to support the proposition that her request to see the video of her interaction with Ms. Spalt and the final warning issued to her in September triggered a duty to preserve. Plaintiff did not issue any demand letter to Defendants, request preservation of the video, or threaten litigation at any point before the video was over-written in the normal course of Defendants’ business. In the grievance she submitted to HR in September 2023, Plaintiff alleged that video footage would show that she was not on her phone when Ms. Spalt confronted her, but the grievance contains no request for preservation or threat of litigation…. The disciplinary action and any request Plaintiff made to view the video footage could not, by themselves, make litigation reasonably foreseeable. The case upon which Plaintiff relies in her opposition indicates, contrary to her position, that the duty to preserve began when Defendants learned about Plaintiff’s filing with the EEOC. See Membreno, 338 F.R.D. at 72 (concluding that the defendants “should have reasonably anticipated litigation…when they received notice of” the plaintiff’s filing with the EEOC). Here, Plaintiff did not file a charge with the EEOC until March 2024, long after the video footage at issue would have been over-written in the normal course. Thus, Plaintiff fails to establish any entitlement to relief based on spoliation of evidence.

Summary judgment followed.

The threshold inquiry for sanctions under Fed.R.Civ.P. 37(e) is whether “electronically stored information that should have been preserved in the anticipation or conduct of litigation” was “lost because a party failed to take reasonable steps to preserve it, and it cannot be restored or replaced through additional discovery….”  Here, Plaintiff failed to cross that threshold.

The Court wrote:

Plaintiff argues that Defendants mishandled video evidence. However, one of Defendants’ employees reviewed the video footage of the September 2023 incident and concluded that it was “tough to see much” and that she “had a difficult time seeing anything in the nurses station.” … That employee did not see what Plaintiff alleged, namely that Ms. Spalt came towards Plaintiff “pointing her finger at her and yelling at her.”

The Court did not address whether or not this showed a lack of prejudice. If so, it would have precluded Rule 37(e)(1) sanctions.

Defendants’ sanctions motion was unsuccessful because Defendants failed to provide clear and convincing evidence that the paper documents went missing after this Plaintiff’s duty to preserve was triggered.  The case demonstrates that the trigger and loss dates for each litigant is fundamental to spoliation analysis. Terran Biosciences, Inc. v. Compass Pathfinder Limited, 2026 WL 2349408 (D. Md. Aug. 13, 2026)(Crawford, J.).

THE FACTS,COMPLAINTS, and DISCOVERY REQUEST

While one plaintiff, Dr. Thompson, was working at the University of Maryland-Baltimore (“UMB”) lab, he developed a breakthrough medical treatment. The research details were recorded in physical lab notebooks and stored in the lab.

In March 2020, a major renovation began.  The materials were supposed to be moved to the floor below.  Post-renovation cleanup was completed in late 2022, however, Dr. Thompson had resigned on June 30, 2022.

The Court wrote: “When Dr. Thompson resigned, his lab ceased to exist, and there is no evidence that the removed lab materials, including the lab notebooks, ever returned to the fifth floor…. UMB has no knowledge of what happened to the lab notebooks after Dr. Thompson’s departure in June 2022.”

Plaintiffs sued, alleging improper disclosure and use of their trade secrets by Defendants.  Terran filed suit on August 5, 2022. Dr. Thompson joined as a plaintiff on June 5, 2023. UMB joined as a plaintiff on February 6, 2024.

Compass and two individuals were named defendants.

On July 10, 2025, [defendant] Compass served on Plaintiffs a request for production of documents that sought, among other things, documents relating to Dr. Thompson’s research, specifically identifying “lab notebooks” as encompassed by the request…. Defendants deposed [plaintiff] Dr. Thompson on September 16, 2025…. At this deposition, Dr. Thompson testified that when he left UMB, he knew where he left the lab notebooks but that “nobody seems able to find them.”

EFFORTS TO FIND THE NOTEBOOKS – DISCOVERY ON DISCOVERY

A discovery dispute was deferred while UMB continued to look for the notebooks. The parties then filed a status report and reported that they had agreed, in my words, to “discovery on discovery.”[1]

Specifically, the parties represented to the Court that UMB had “agreed to produce its internal litigation hold correspondence and the positions of individuals who received the litigation hold.”[2] …

UMB had also agreed to produce a witness to testify on five topics:

(1) When UMB first became aware that Terran intended to file this lawsuit, UMB’s involvement in that effort, and UMB’s knowledge of the fact that the suit involved alleged trade secrets detailed in Professor Thompson’s lab notebooks; (2) The details of UMB’s litigation hold; (3) What steps UMB took to identify relevant physical evidence, including the lab notebooks and when it implemented its litigation hold; (4) The timing and circumstances of the loss of the lab notebooks; and (5) When UMB first learned that the lab notebooks were missing, when it told Terran, and what steps it took next.

… The letter advised that after Defendants received this discovery, they would “confer with UMB on the scope of sanctions Defendants will seek based on the loss of the lab notebooks.” …

All of those steps were accomplished and the parties proposed a formal briefing schedule, which the Court granted.

COURT PROCEEDINGS

Initially, the Magistrate Judge rejected two preliminary challenges mounted by Plaintiffs.  Those were a challenge alleging untimeliness under Judge Grimm’s decision in Goodman v. Praxair, 632 F. Supp. 2d 494 (D. Md. 2009), and failure to follow the Judge’s protocol for resolving disputes.  The Court’s exhaustive analysis of timeliness is worth reading, id. at *3, but not the focus of this post.[3]

THE SPOLIATION STANDARD

Turning to the merits, the Court found sanctions were “unwarranted.”  Because the notebooks were not ESI, Fed.R.Civ.P. 37(e) did not apply and the Court held that the party moving for sanctions must show:

(1) [T]he party having control over the evidence had an obligation to preserve it when it was destroyed or altered; (2) the destruction or loss was accompanied by a ‘culpable state of mind;’ and (3) the evidence that was destroyed or altered was ‘relevant’ to the claims or defenses of the party that sought the discovery of the spoliated evidence, to the extent that a reasonable factfinder could conclude that the lost evidence would have supported the claims or defenses of the party that sought it.

The Court relied on its “inherent power” to control the judicial process, noting that inherent power is limited to curative sanctions and the movant bears the burden of providing “clear and convincing” evidence.

TRIGGER DATE

The first element involves deciding when the duty to preserve was triggered and when the loss or destruction occurred. Defendants contended that Plaintiffs’ duty arose in April 2022, months before litigation began, and long before there was any contention of loss. Plaintiffs replied that there was no duty in April 2022 and the lab notebooks most likely were lost in July 2022, before the duty was triggered.

The Facts Relating to the Trigger Date

The Court set the scene:  “There is no dispute that Terran filed this lawsuit on August 5, 2022, notified UMB of the filing on August 8, and that approximately one week later, on August 16, UMB issued its litigation hold.”  While UMB did not enter the case until February 6, 2024, it is a plaintiff and a plaintiff’s duty is triggered when it decides to pursue a claim.

In support of their asserted April 2022 trigger date, Defendants marshalled several facts.  The Complaints alleged: “Plaintiffs first suspected Defendants’ disclosure of, and misuse of, the Psilocybin Trade Secrets in approximately April 2022, in the course of reviewing Compass’s published patent application filings.”  Further, the Defendants relied on Plaintiffs’ privilege log which showed communications with outside counsel regarding “litigation, IP advice, and licensing advice.”[4]

Plaintiffs responded that UMB did not anticipate that it would later join the case.  They asserted that while Terran may have anticipated litigation in April 2022, that knowledge could not be imputed to UMB.  And, they asserted that the logged communications with counsel were on a licensing agreement with Terran, not on litigation against the Defendants.

The Court’s Holding Re: Trigger Date

The Court held that Defendants had failed to establish by clear and convincing evidence that Plaintiffs reasonably anticipated litigation as early as April 2022. It added:

Even assuming that Plaintiffs first suspected misuse of the trade secrets in April 2022, the mere suspicion of certain facts giving rise to a dispute demonstrates only that there was the “possibility of litigation,” not that Plaintiffs should have reasonably anticipated litigation at that time…. The Complaint does not allege that Plaintiffs understood in April that Compass had misappropriated their trade secrets, nor does it allege that Plaintiffs made known their suspicions of misappropriation to Compass. On the contrary, the allegation that Plaintiffs “first suspected misuse” in April suggests that this was their initial reaction to information contained in Compass’s patent filings—a far cry from an affirmative decision to sue, or even a direct threat of litigation from Terran to Compass that would have triggered a duty to preserve.  [emphasis in original].

The Court found the privilege log entries to be ambiguous. “At most, they establish that Plaintiffs communicated with private, outside attorneys regarding licensing and intellectual property issues and ‘litigation’ of an unspecified nature. That the subject emails covered multiple topics other than litigation tends to support the conclusion that litigation (of whatever nature) was not the parties’ sole, or even primary, concern at that time.”

The Court identified another gap in proof: “Nor have Defendants set forth any clear and convincing evidence establishing at what time after April 2022 but before August 5, 2022 [the date suit was filed], Plaintiffs, including then non-party UMB, may have reasonably anticipated litigation sufficient to trigger a duty to preserve.”

The Court concluded:

Accordingly, Defendants have failed to establish by clear and convincing evidence that Plaintiffs should have reasonably anticipated litigation in April 2022, thus triggering their duty to preserve evidence at that time. Rather, the evidence submitted supports the Court’s findings that Terran commenced litigation on August 5, 2022, triggering its own duty to preserve relevant evidence, and UMB’s duty to preserve arose at the latest on August 8, 2022, with UMB’s receipt of correspondence from Terran advising UMB of the lawsuit and seeking preservation of relevant evidence.[5]

The Court added: “Having determined when the duty to preserve arose, the Court now considers when UMB lost the notebooks, as the timing of when the evidence was lost in relation to when the duty to preserve arose, is essential to the spoliation analysis.”

DATE OF LOSS OF THE NOTEBOOKS

The Court wrote: “After engaging in discovery to determine the lab notebooks’ whereabouts, neither Plaintiffs nor Defendants can state with any precision when the lab notebooks were lost or destroyed. The evidence shows that the last time the lab notebooks were observed was in June 2022…. There is no concrete evidence regarding what happened to the notebooks after that time.”

Plaintiffs asserted that the “most likely” time of loss was July 2022. They relied on an October 1, 2025, UMB email stating that the lab notebooks were inadvertently lost during the renovations and cleanup.  Renovations began in early 2021 and continued into 2022, well after Dr. Thompson resigned.

The Court disagreed with Plaintiffs:

This evidence does not support the firm conclusion that the date of loss or destruction of the lab notebooks was in July 2022, versus a later point, like August or thereafter. Plaintiffs’ chosen timing is convenient because it would mean that the lab notebooks were lost before the Plaintiffs’ duty to preserve arose. But another plausible and equally speculative interpretation of the same October 1 email is that the lab notebooks may have been lost sometime after August 5, 2022, when this lawsuit commenced. The record is unclear. At bottom, the only conclusions that the Court can draw from the evidence presented are: (1) the lab notebooks went missing sometime after June 2022, when Dr. Thompson last saw them; (2) the lab notebooks were declared lost on October 1, 2025, when UMB advised Defendants of the results of their investigation into the whereabouts of the lab notebooks; and (3) the lab notebooks were in UMB’s possession when they were lost or destroyed. [emphasis in original].

However, the Court saw no need to decide when the notebooks went missing:

As noted above, I cannot conclude that Plaintiffs’ duty to preserve the lab notebooks arose in April 2022. The evidence only establishes that the duty arose on August 5, 2022, at the earliest. Because the lab notebooks were lost at some point after June 2022, it is entirely possible that the lab notebooks were destroyed in the intervening month before there was a duty to preserve. Given that Defendants have not carried their evidentiary burden at the first step in the analysis, the Court need not proceed to step two to determine whether UMB had a culpable state of mind. Doing so would require the Court to stack all its findings upon a hypothetical—a “what if” scenario that presumes Plaintiffs lost or destroyed the lab notebooks after August 5, 2022. Such a conditional analysis could not serve as the basis for the award of any sanctions.

In short, the movant failed to demonstrate that the lab notebooks went missing after the duty to preserve was triggered. The Court added: “Defendants’ evidence would also fail to meet the less stringent preponderance of the evidence standard, if such standard applied here.” Here, the trigger date was dispositive.

This blog was initially posted on  Electronic Discovery Reference Model.

____

[1] For more on “satellite” or “culpability” discovery, see generally Guidelines for “Discovery on Discovery” (Aug. 5, 2025); “Discovery on Discovery” Permitted (Sep. 4, 2025); “Discovery on Discovery” Denied in “It Ends With Us” Lawsuit  (Sep. 5, 2025).

[2] For more on disclosure of implementation communications, see “The Court is keenly interested in whether Defendants’ counsel issued a litigation hold.” (Feb. 19, 2026); 8 Lessons Learned – Part IV – Disclosure of Recipients of Litigation Hold Notices (May 9, 2024); Discovery of Steps Taken to Implement a Litigation Hold is Permitted (Mar. 26, 2022); When is a Litigation Hold Notice Discoverable? (Dec. 1, 2020)

[3] For more on timing, see, The “Best Time” to File a Spoliation Motion (Jul. 15, 2025); When Should a Motion for Sanctions be Filed?  (Mar. 30, 2026).

[4] A Privilege Log Can Be Admissible Evidence (Jan. 20, 2025); Privilege Log Entry Was Relevant to Inquiry Notice Where Time-Bar Was at Issue (Jul. 6, 2025);  Privilege Log Helps Defeat Summary Judgment on One Count (Jun. 24, 2025); Listing a Document on a Privilege Log Concedes That it is Relevant for Discovery (Sep. 6, 2025).

[5] Generally a Third Party Had No Duty to Preserve (Feb. 14, 2026).  UMB was not a party when Terra made its preservation request.

Frequently, movants apply an incorrect preliminary injunction standard:

• A Request for a Preservation Order Was Denied: Preliminary Injunction Standard Was Not Applied (Apr. 3, 2026);
• Motion to Compel Preservation of RAM Denied Without Prejudice (Aug. 7, 2025);
• Failed Request for a Preservation Order (Jul. 13, 2022);
• Requests for a Preservation Order (Mar. 7, 2022).

I describe Zeta as the “cry wolf” doctrine.  The court held that plaintiffs, the movants, seeking a preservation order did not meet their burden of production.

Defendant Dotdash argued it had acted appropriately to fulfill its preservation duty. It asserted that plaintiffs’ requests to disclose its preservation process were not answered because they were premature.

Defendant Zeta argued that the motion was largely moot and that it was really an effort to circumvent an agreed discovery stay that had been entered pending resolution of a motion to dismiss. Zeta disclosed custodial locations, eight custodians and other information.

The Zeta court wrote:

Defendants respond that they confirmed to plaintiffs that they are “aware of [their] obligations” to preserve ESI and “ha[ve] acted accordingly.”…. Absent evidence to the contrary, that answer is appropriately responsive. Zeta has identified for plaintiffs the systems with potentially relevant ESI, the ESI being preserved, and the time period for which such ESI is being preserved…. Dotdash has not furnished these details to plaintiffs, but it too represents that it has been aware of its preservation obligations “since the inception of this matter,” heeded them, and recognized that these exist with or without a court order. [emphasis added].

In denying the request for a preservation order, the court explained the governing standard:

• “At a minimum, the party seeking a preservation order must demonstrate that the evidence is in some danger of being destroyed absent a court order….”
• “Plaintiffs have not shown that here. Mere ‘speculative assertions’ in support of spoliation concerns are insufficient to merit entry of a preservation order…..”
• “Defendants have preservation duties with or without a preservation order. Plaintiffs’ dissatisfaction with defendants’ responsiveness to their communications does not support the inference that there is a ‘substantial risk’ that, absent such an order, relevant ESI may be lost, overwritten, or deleted…..”
• “On the record at hand, there is no basis to distrust defendants’ reassurances that they understand and will heed their obligations to preserve such material.”
  • “Dotdash [stated that it] has been, and remains, keenly aware of its preservation obligations … and has acted accordingly….”
  • “Zeta … provided assurances that it was taking reasonable steps to comply with its … related preservation obligations…. Zeta has repeatedly informed

    laintiffs that … it is complying with its discovery obligations….”

Id. at *2 (cleaned up and reformatted).

A request for a preservation order must be supported with a factual predicate and cite the correct legal standard.

This blog was initially posted on  Electronic Discovery Reference Model.

The allegations were disputed and the court wrote that: “As a result of these disputes, the content of the parties’ cellular devices, and specifically the text messages exchanged among the parties, is particularly relevant evidence.”  Hernandez v. DiBiaso, 2026 WL 710248 (N.D. Ill. Mar. 9, 2026).

SUMMARY

After being told by her counsel that she had a duty to preserve ESI, and after the Complaint was filed, Ms. Hernandez sold her cell phone.  . She explained that she sold the phone because she needed money for her family.  There was no backup.

The missing communications were at the “heart” of her Complaint. Defendant DiBiaso moved for sanctions.  Ms. Hernandez had taken screenshots before selling the phone

Efforts to recover the missing data from Apple failed.  Ms. Hernandez did not go to her ex-boyfriend based on fears of abuse.

The Hernandez court held that all five threshold requirements of Fed.R.Civ.P. 37(e) had been met.  Ms. Hernandez argued that screenshots would suffice.  The court noted that the parties entered into an ESI protocol to search the phone and that fact rebutted her argument.  It found that her actions were not reasonable and that there was no secondary evidence available.

However, because Ms. Hernandez offered “credible” reasons for the sale of the cell phone, there was no “intent to deprive” Mr. DiBiaso under Rule 37(e)(2) and as such, so-called “game ending” sanctions were not available.

The court wrote that establishing prejudice under Rule 37(e)(1) is a “tricky business” because definitionally the ESI is gone.  Nevertheless, self-curated screen shots did not suffice to avoid Rule 37(e)(1) sanctions. Curative sanctions were recommended.

SALE OF THE CELL PHONE

Despite the advice of counsel, Ms. Hernandez’ cell phone was not preserved. The Hernandez court explained:

Plaintiff first engaged counsel for this lawsuit in May 2023 and signed a representation agreement with counsel that reminded her to “[k]eep everything…from here on out, don’t delete or throw away any documents or records that might have anything to do with your case.” … Around that time, she “[t]ook screenshots of all the text messages she had between herself, Dibiaso [sic], Kusper, and others that she thought could possibly be relevant to the case.” … Thereafter, in May 2024, Plaintiff informed her counsel that she had sold her cellphone “[b]ecause her family needed money.” …. It is undisputed that Plaintiff sold her cellphone after litigation commenced, but before the parties’ agreed ESI protocol could be applied to her phone. Following the sale of the cellphone, Plaintiff attempted to recover the data on the phone through various means (including by working with the parties’ ESI vendor), but she was unsuccessful. … (Plaintiff explaining that she went to the Apple store to see if she could obtain the cellphone’s messages and data from Apple iCloud). The only avenue for recovering the cellphone data that was not explored by Plaintiff was contacting the ex-boyfriend who gave Plaintiff the phone in the first instance; Plaintiff explained at her deposition that he was physically abusive to her and that she does not want him to know where she or her kids are located….

Mr. DiBiaso moved for sanctions under Fed.R.Civ.P. 37(e).  He asked for either dismissal of claims based on the texts or striking that part of the Complaint and instructing the jury on a mandatory adverse inference.

The Hernandez court described the requirements of that Rule and then applied them.

THE FIVE THRESHOLD REQUIREMENTS OF RULE 37(e)

The court held that the five threshold requirements of Rule 37(e) were met.

It was undisputed that the missing information was ESI and that the duty to preserve had been triggered because litigation had commenced when the cell phone was sold.  It was undisputed that the missing communications “between the parties … are at the heart of the complaint.”

The parties disputed the reasonable efforts standard. Ms. Hernandez argued that the prefiling screenshots sufficed.  However, the court disagreed:

This case revolves around the communications between the three parties, including the screenshotted text messages, but not limited to them; as has been evidenced by other discovery motions filed before this Court, call records between the parties are relevant, and have been sought from other sources due, in part, to the loss of Plaintiff’s cellphone. Additionally, even the screenshotted text messages themselves omit relevant ESI, such as the date and time of some messages.

The court added that, if the parties believed at the outset that screenshots would suffice, “then the Court sees no reason why the parties would agree to an ESI protocol that would search Plaintiff’s cellphone via a contract with an ESI extraction vendor. The parties’ intent to apply the ESI protocol to Plaintiff’s cellphone and engagement of an ESI extraction vendor to effectuate that protocol suggests that there was data beyond that included in the screenshots which the parties sought from Plaintiff’s cellphone.”

As such, the sale of the cellphone, without  backup or forensic extraction was held to be unreasonable.  In short, the Hernandez court wrote that “Plaintiff failed to take reasonable steps to backup the additional ESI on her cellphone prior to selling the cellphone.”

It was undisputed that the missing ESI could not be restored or replaced.  Numerous efforts had been made, without success.

Ms. HERNANDEZ DID NOT ACT WITH “INTENT TO DEPRIVE” Mr. DIBIASO

Next, the Hernandez court analyzed and applied subsection (e)(2) of Rule 37(e).  Mr. DiBiaso sought “stringent” sanctions.  The court  explained:

Intent must be established before a court can impose sanctions, such as adverse jury instructions, default, and dismissal under Rule 37(e)(2) … If intent is established for these sanctions, prejudice need not be separately established because prejudice is assumed from the intent.

The court first wrote that Mr. DiBiaso did not expressly argue intent in his opening motion and did not raise it until a reply memorandum.  This was “too little, too late.”

However, the Hernandez court also wrote that, even if it considered the untimely argument, it would not be persuaded. It addressed two of Mr. DiBiaso’s arguments:

First: “Defendant DiBiaso primarily suggests that intent is demonstrated because Plaintiff sold her phone after litigation started and allegedly thwarted Defendant DiBiaso’s efforts to identify the ‘owner’ of the ‘account’ (presumably the cellphone’s iCloud account) following the sale of the cellphone…. As to the first point, if all a finding of intent required was a violation of the duty to preserve, then every Rule 37(e) violation would be intentional. Fed. R. Civ. P. 37(e). But the Rule does not presume intent in every violation; instead, it establishes intent as a stand-alone element that must be demonstrated in addition to a duty to preserve where a party seeks the most serious sanctions.” [emphasis in original].

Second: “Turning next to the allegation that Plaintiff thwarted Defendant DiBiaso’s efforts to identify the iCloud account owner, Plaintiff explains that she was reluctant to disclose information about the individual who may also have access to the iCloud account because that individual was an abusive ex-boyfriend that Plaintiff did not want to have contact with and who was unlikely to provide help with accessing the iCloud account even if he could do so…. This explanation credibly evinces a lack of intent to deprive Defendant DiBiaso of the ESI; Plaintiff did not want to identify another individual with potential (though, according to Plaintiff, unlikely) access to the iCloud account because the individual was an abusive ex-boyfriend, not because Plaintiff wanted to deprive Defendant DiBiaso of access to the ESI.” [emphasis added].

The court then examined Ms. Hernandez’s argument. Ms. Hernandez had a credible explanation for the sale.  She had “fallen on hard times” and no longer used that cellphone.  “She sold the cellphone in order to get money for her family.”  Thus, sanctions were not available under Fed.R.Civ.P. 37(e)(2).

WAS Mr. DIBIASO PREJUDICED WITHIN RULE 37(e)(1)?

The court wrote:

Having recommended that there be no finding of intent to deprive Defendant DiBiaso of the ESI, the Court turns to Defendant DiBiaso’s last avenue for sanctions, being a demonstration of prejudice warranting measures “[n]o greater than necessary to cure the prejudice.” Fed. R. Civ. P. 37(e)(1).

The court explained that:

Establishing prejudice is tricky business. All involved—the court, the party that failed to preserve, and the seeking party—are at a disadvantage because none know precisely what the lost ESI contained or showed. It is difficult for a court to determine prejudice when the ESI no longer exists and cannot be viewed. [emphasis added; cleaned up; citation omitted].

Ms. Hernandez argued “that no finding of prejudice should be made because Defendant DiBiaso can only present a ‘suspicion’ of what the lost text messages may contain.”

That argument did not carry the day: “The Court is therefore unpersuaded that there is no prejudice simply because Defendant DiBiaso cannot affirmatively attest to what the lost ESI contains. Given that the claims in Plaintiff’s complaint rely heavily on text messages exchanged between the parties, with Plaintiff including screenshots of some messages in the complaint itself, the Court recommends a finding of prejudice from the sale of the cellphone.” [emphasis added].

The court wrote that prejudice exists when “a party’s ability to obtain the evidence necessary for its case has been thwarted….”  It found that to “clearly” be the case here, because the claims “rely heavily on text messages” and other electronic communications.

The Court agrees that the loss of the full ESI from the cellphone deprives the Court of the opportunity to comprehensively evaluate the context of the text messages; it is impossible for the Court to say definitively one way or the other whose theory of the case the lost text messages may credit precisely because the text messages are lost. Where, as here, the claims at the heart of this case rely heavily on text messages and other electronic communications for which the ESI was lost, the Court recommends a finding that the loss of Plaintiff’s cellphone prejudices Defendant DiBiaso. [emphasis in original].

Based on prejudice, with the threshold requirements having been met, sanctions were appropriate under Rule 37(e)(1).

THE SANCTION

Rule 37(e)(1) sanctions are curative only.  The court wrote:

As a result, the Court recommends that Defendant DiBiaso be permitted “[t]o present evidence to the jury” regarding the sale of cellphone and the “[l]ikely relevance of the lost ESI,” and that the Court “[i]nstruct the jury that it may consider this information when making its decision,” but that the jury “[s]hall not be given instructions on any presumption or inference based on the lost ESI.” [citation omitted].

It added: “Finally, ‘[b]ecause a decision on the appropriate means for presenting this evidence and argument to the jury is outside the scope of the referral of this case to the undersigned, the undersigned leaves it to the district judge to determine the appropriate means for presenting the evidence and arguments at trial on this issue.’”

One question that I had is why Mr. DeBiaso could not attempt to prove prejudice by showing some of Ms. Hernandez’s texts that were presumably stored on Defendants’ cell phones.

This blog was initially posted on  Electronic Discovery Reference Model.

THE CHRONOLOGY

On September 8^th, the day after the fire started, a BPA supervisor asked the U.S. Forest Service (“USFS”) to be notified if a “fire ignition” investigation was taking place so that BPA could keep its crews out of the area. On September 12^th, BPA drafted a guidance document stating that “there is a significant liability concern for BPA if any of our actions or equipment can be associated with the cause of any of these devastating fires” and that BPA would “retain[ ] the services of a forensic fire investigator … to collect and analyze relevant evidence associated with any of the events that could have been caused by BPA actions for [sic] equipment.”

On September 12^th or 13^th, the USFS sent a preservation notice to BPA requesting that “[BPA] and [its] agents preserve all evidence, including but not limited to physical evidence, photographs, records, communications, and documents, in your possession related to the Holiday Farm Fire” and citing BPA’s duty to “preserve all evidence that may be relevant to any potential litigation arising from or relating to the Holiday Farm Fire.”

On September 13^th, a USFS investigator arrived at the ignition site.  BPA crews were at work and: “The investigator observed two green fir trees laying in the power line corridor that had been ‘cut into pieces and pushed to both sides of the corridor with heavy equipment.’”

Four days later, on September 17^th, USFS investigators returned to the site. They saw a large tree, Tree #1, lying on top of the transmission line, and a second one “that appeared to have fallen on the line as well but was subsequently cut out by BPA ground crews and moved by machine to the north side of [a] clearing.”  The USFS found that there were three trees “associated with the transmission line coming down.”

BPA and its engineer asked the USFS when hazards could be removed.  The USFS asked them to return when the investigation concluded. The engineer attempted to take photos but was asked to wait.

Three days later, on September 20^th, the USFS returned to the site. The tree that had been laying on the transmission line had been moved. Heavy machinery had been through the area and several locations were spray painted and tagged.  In a pile of limbs where Tree #1 had been, one limb had a transmission line mark on it.  The USFS decided not to perform a “FARO scan” that had been planned because the “site had changed significantly… by unauthorized persons….” Apparently, a “FARO^®” scan is a system to create a 3d digital model.  FARO Focus Laser Scanning Solution | Hardware | FARO

On September 22^nd, the USFS met with a BPA foreperson in order to collect infrastructure parts that had already been removed.  BPA apparently did not notify its subcontractors of the litigation hold:

At some point “within a couple of weeks” of the fire but possibly “sooner than that,” BPA’s general counsel’s office sent a notice of potential litigation against BPA arising from the Holiday Farm Fire….   BPA contracts with third parties to remove dangerous trees and manage vegetation…. These third-party contractors produced no preservation notices in response to discovery requests in this case…. At least one BPA contractor stated without such a notice, emails related to the Holiday Farm Fire would have been automatically deleted….

Claims, cross-claims, subrogation claims, tort claims, dismissal motions, and jurisdictional discovery followed.  The “Non-BPA Parties” bought tort claims against the United States through BPA.

“On July 30, 2025, the Court ordered the Non-BPA Parties to file a formal motion raising issues related to compelling discovery from BPA, the alleged spoliation of evidence, and requests for sanctions.”  The following motion sought, among other things, “sanctioning the United States for BPA’s spoliation of physical evidence and electronically stored information….” The court wrote that the United States, as a party in a civil suit, is subject to the Federal Rules of Civil Procedure “as any other litigant.”

RULE 30(b)(6) DEPOSITION

Initially, the court dealt with a motion challenging the Rule 30(b)(6) designee who “did not know or was not aware of the answers to 122 deposition questions” that were “”squarely within” the topics of the deposition notice. The court wrote:

The United States’ failure to adequately prepare BPA’s 30(b)(6) designee is fundamentally motivated by its disagreement with this Court’s discovery orders. Sanctions are appropriate under the Court’s inherent authority because the United States’ failure to prepare its witnesses on grounds rejected by a Court order is abuse of the judicial process, and this Court will not tolerate such insolence.

TRIGGERING THE DUTY TO PRESERVE

The 21^st Century Centennial court then turned to the spoliation issue:

• “A litigant is generally under a duty to preserve evidence that they know or should know is relevant to any claim or anticipated claim.”
• “District Courts in the Ninth Circuit generally apply a preponderance of the evidence standard of proof to spoliation motions.”

The court wrote: “The record shows that BPA anticipated investigations examining the involvement of its equipment in the fire area as early as September 9, 2020, and specifically noted the need to ‘keep [its] crews out of that area until the investigation is over.’”  By September 12^th, BPA wrote that it was important for crews “to know that if they find a tree caused outage that resulted in a fire, there is likely going to be an investigation of that specific event to ensure we have the right amount of information needed to learn about and limit BPA’s liability risk.”

The USFS investigation began on September 9^th and a preservation notice was sent to BPA on September 12^th or 13^th. The court wrote that BPA recognized the “significant liability concern[s]” “that evidence that its equipment was involved in the fire would pose.”

The 21^st Century Centennial court held:

On these facts, BPA should have known that litigation over its involvement in the fire was reasonably foreseeable on September 9, 2020. BPA itself acknowledged the need to preserve evidence by keeping its crews outside of investigative areas until the investigation concludes. BPA stated that telling its crews to stay out of the area is generally how it takes steps to maintain evidence in anticipation of litigation…. BPA therefore had a duty to preserve evidence on September 9, 2020.

The non-BPA parties alleged that the United States, through BPA, failed to preserve physical evidence and ESI.

Physical Evidence

The court analyzed the failure to preserve physical evidence under its common-law inherent authority.  It wrote that, under that standard, there is “willful spoliation” if a party has “some notice” that the evidence was potentially relevant to the litigation before it was destroyed.

The court explained: “Despite the duty to preserve evidence, BPA did not preserve the ignition site within its right of way. When U.S. Forest Service officials arrived at the site on September 13, trees in BPA’s power line corridor had already been moved and cut up. By September 17, 2020, after BPA officials had spoken with Forest Service officials, BPA had moved trees that had appeared to have fallen on the transmission line. By September 20, the ‘general and specific origin areas had been driven through with heavy machinery” and the tree that U.S. Forest Service investigators believed had brought BPA’s transmission line to the ground had been moved.’”

Also, BPA hired contractors to “cut down every tree tall enough to hit the transmission line in a 25-foot area outside the normal BPA right-of-way…. regardless of their health or previous fire damage….  The record also supports a finding that BPA had control over the ignition site in its right of way, moved trees at the ignition site, and that its engineering consultant did work in the area while BPA was aware of the Forest Service’s investigation.”

The 21^st Century Centennial court found substantial prejudice and willfulness, writing that:

The Non-BPA Parties must now rely on a Forest Service investigation of an ignition site that was neither preserved in its original state nor maintained throughout the investigation. The Non-BPA Parties do not have access to a FARO scan documenting the ignition site because of destruction of the original site and changes to the site after the Forest Service began its investigation.

The court ordered that an adverse inference be taken and awarded attorneys’ fees.

ESI

The request for sanctions related to ESI was addressed under Fed.R.Civ.P. 37(e):

Here, BPA failed to notify its contractors of a litigation hold, resulting in the loss of emails associated with at least one contractor. BPA was aware of its duty to preserve evidence two days after the fire but took its time issuing a litigation hold “within a couple of weeks” of the fire…. BPA’s 30(b)(6) designee did not know which BPA staff received a notice to preserve emails…. Those emails are relevant to the Non-BPA Parties’ claims as BPA relied on its contractors to conduct its vegetation management in the Holiday Farm Fire area. The United States points to no evidence comparable to the lost emails in response to the Non-BPA Parties’ motion.

The deponent “offered no explanation for BPA’s failure to notify its contractors or any statement that BPA took actual steps to direct them to preserve evidence.” The 21^st Century Centennial court added: “BPA’s 30(b)(6) designee did not know whether BPA issued final preservation guidance to its patrol crews.”  It wrote:

BPA offers no explanation for its failures to preserve electronically stored information it knew was relevant to reasonably foreseeable litigation. Its complete failure to offer any explanation, and its general recalcitrance in complying with this Court’s discovery management orders, taken as whole, lead the Court to conclude BPA’s conduct is in bad faith and the spoliation of critical evidence is willful.

This was sufficient to trigger sanctions under Fed.R.Civ.P. 37(e)(2).  The court ordered an adverse inference and precluded certain testimony.

The court addressed several other issues, including attorneys’ fees under jurisdictional discovery, waiver of objections because they were untimely, and a 1.8 terabyte document dump.

This blog was initially posted on  Electronic Discovery Reference Model.

In Cash v. Laurence County, South Carolina, 2026 WL 278825 (D.S.C. Feb. 3, 2026), at least some of the defendants had preservation duties under common-law, a South Carolina statute, and based on a criminal investigation.  They breached their duty; however, the court held that only the common-law duty applied to a motion for sanctions under Fed.R.Civ.P. 37(e).

Ms. Cash alleged that she was sexually assaulted at a county detention center where she was formerly employed.  The South Carolina State Law Enforcement Division (“SLED”) investigated and that led to an arrest and conviction of Mr. Tolliver.  As part of the investigation, SLED seized 15 devices. After conclusion of the criminal matter, they were returned to the detention center.  They were destroyed a year later under the detention center’s information governance policies.

However, prior to that destruction, plaintiff’s counsel sent a preservation letter.  Defendant’s information technology department was not instructed to preserve information and the litigation hold notice was only belatedly communicated to key people.

Defendant made a wholly meritless argument that the preservation letter was not properly served on it. Id. at n.3.  The court held that Fed.R.Civ.P. 4 (service of summons) was inapposite and rejected the assertion.

A number of other issues were decided; however, this blog focuses on only one.

The detention center had a common-law preservation duty.  The court held that it was triggered by the preservation letter. Id. at *6.

The detention center, as a public body, had a statutory duty to preserve evidence for a certain period. Id. at *6, citing S.C. Code Ann. §30-1-10, et seq. The court wrote that defendants failed to do that.

Further, “Defendants were engaged in the related criminal investigation in the years prior to Plaintiff bringing her civil claims, and arguably at least some of the ESI should have been preserved related to that criminal case.”  Id. (emphasis added).

However, the Cash court determined that only the common-law duty was applicable to Ms. Cash’s motion for sanctions under Fed.R.Civ.P. 37(e):

The issue before the Court is not whether Defendants should have preserved ESI in relation to criminal litigation against Tollison or in accordance with state statute, but rather whether Defendants should have preserved ESI because they “reasonably should know that the evidence may be relevant to anticipated litigation” brought by Plaintiff.

Id. (emphasis added).  The court added: “Plaintiff’s Motions are not a trial on Defendants’ recordkeeping.” Id. at n. 5.

The Cash court then analyzed the facts and determined that sanctions were appropriate under Rule 37(e)(1), but not (e)(2).  It also issued a stern warning about future conduct. Id. at n. 5.

____

[1] See Michael D. Berman and Alicia Shelton, “The Common-Law Duty to Preserve ESI (Its Trigger, Scope, and Limits) in Maryland State Courts,” in M. Berman, et al., eds., “Electronically Stored Information in Maryland Courts” (Md. State Bar Ass’n. 2020), Chap. 9.

What about third parties?

“Generally, the duty to preserve extends to documents or tangible things … by or to individuals likely to have discoverable information that the disclosing party may use to support its claims or defenses…. This duty may extend to a non-party to a proceeding when there is a special relationship involving the non-party or when the non-party enters into an agreement to preserve the evidence sought to be obtained.”  St. v. Christ, 2025 WL 3453338, at *1 (W.D. La. Dec. 1, 2025), reconsideration denied, 2025 WL 3623319 (W.D. La. Dec. 12, 2025).

“With respect to third parties, the general rule is that absent some special relationship arising from agreement, contract, statute, or other special circumstance, the duty to preserve evidence applies only to parties to the litigation, not nonparties.”  Rains v. Westminster Coll., 2023 WL 2894506, at *5 (D. Utah Apr. 11, 2023)

“The duty to preserve does not generally apply to non-parties to the litigation unless ‘some special relationship or duty arising by reason of an agreement, contract, statute, or other special circumstance’ counsels in favor of an exception.”  Johns v. Gwinn, 503 F. Supp. 3d 452, 462–63 (W.D. Va. 2020).

However, a party or potential party should preserve information that is within its possession, custody, or control, and that information may be in a third-party’s hands. Isn’t It Time for a Uniform National Standard on “Possession, Custody, or Control”? (Sep. 7, 2022); Possession, Custody, or Control – Part II (Oct. 27, 2023); Possession, Custody, and Control of Third-Party Personal Devices Determined by Information Governance Policies (Apr. 22, 2025); “Possession, Custody, or Control” of State Agency Documents by State Attorneys General? (Sep. 3, 2025); Bad Things Can Happen When Company Officers Use Their Private Email Accounts for Work (May 20, 2024); The “Practical Ability” Standard for “Control” in Maryland (Dec. 11, 2020)

• “A substantial part of an insurance company’s business is to investigate claims made by an insured against the company or by some other party against an insured; therefore, such investigations are presumed to be part of the normal business activity of the company and documents generated during that activity are deemed ordinary business records as distinguished from trial preparation materials.”
• “Of course, circumstances may arise where an insurance company’s investigation of a claim … shifts from an ordinary business activity to conduct in anticipation of litigation, but no bright line delineating the shift exists.”
• “Thus, an insurance company has the burden of demonstrating that the document that was prepared or obtained in order to defend the specific claim which already had arisen and a ‘substantial probability’ of litigation over the claim existed when the documents were prepared or obtained.”
• “Just as an insurance company’s investigation of a claim may shift from ordinary business activity to conduct in anticipation of litigation, so may an attorney’s role shift. Consequently, the work product doctrine does not protect communications from a lawyer to an insurance carrier when the lawyer acts in an investigative capacity rather than as a counselor of the law.”

Moorer v. Nationwide Prop. & Casualty Ins. Co., 2025 WL 3309387 (D. Col. Nov. 28, 2025)(all quotations cleaned up and citations omitted).

Plaintiff Moorer made a coverage claim against defendant Nationwide.  “Defendant investigated Plaintiff’s claim and denied the claim on October 23, 2024. On November 5, 2024, Plaintiff filed suit in Colorado District Court….”

The court wrote that “[t]his discovery dispute arises from Defendant Nationwide’s production of dozens of pages of the claim file with redactions. Defendant contends that the redactions concern protected work product because they consist of communications made after a substantial probability of litigation arose.”

The parties disputed when a substantial probability of litigation arose for work product purposes. The court held that “Defendant has not met its burden of establishing that the entire claim file’s contents were prepared in anticipation of litigation or for trial.”

The Moorer court wrote: “At the outset, the Court considers when litigation over Plaintiff’s claim became substantially probable.”

First:

The Court rejects Defendant’s argument that litigation became substantially probable as early as August 2022, when the claims adjusting phase began. While an insured’s submission of a claim “almost always” creates “the potential for litigation,” courts have consistently “rejected the argument that ‘any investigation undertaken by the insurer and all associated documents are made in anticipation of litigation[.]” … To hold otherwise “would ‘improperly ‘allow an insurance company to insulate all investigative materials generated in every case involving serious injuries long before any coverage decisions are made or threats of litigation arise.’”

Next:

Similarly, the Court rejects any argument by Defendant that litigation became substantially probable simply because Plaintiff retained counsel in September 2022, or sometime prior. “It is neither unusual nor indicative of an intent to pursue litigation that Plaintiff retained counsel to handle his insurance claims[.]”

The court also held that Plaintiff’s counsel’s letter  “expressing concern about delays in scheduling Defendant-requested medical examinations, given the approaching November 2024 statute of limitations deadline on Plaintiff’s underinsured motorist claim” was insufficient, writing: “Mere discussion of the statute of limitations does not make litigation substantially probable.”  On the facts presented, however, Plaintiff had proposed a tolling agreement so that Plaintiff was not “forced into litigation.”

The court held that litigation became substantially probable when the insurer denied the insured’s claim.  It held that: “Therefore, the Court concludes that claim file documents prepared before October 23, 2024, were not prepared in anticipation of litigation or for trial. … Accordingly, claim file documents that predate October 23, 2024, may not be withheld on work product grounds.”

The Moorer court then analyzed the redactions on a document-by-document basis, especially regarding claims adjusting communications.  Litigants involved in coverage litigation may find that analysis important; however, it is not summarized here.

This blog was initially posted on  Electronic Discovery Reference Model.

Plaintiffs alleged price gouging by Amazon during the COVID-19 pandemic. The Greenberg court wrote that: “Amazon concedes that some documents produced, received, or maintained by employees who were key players in Amazon’s efforts to manage pricing issues during the COVID-19 pandemic were deleted under its normal document retention policies.”

Since December 2015, when Fed.R.Civ.P. 37(e) was amended, reliance on the old “safe harbor” of loss due to “the routine, good-faith operations of an electronic information system” has been insufficient to defeat spoliation claims. Cf. Maryland Supreme Court Rejects Proposed Sanctions Rule Paralleling Fed.R.Civ.P. 37(e)(Nov. 3, 2023); Felder Part 4 of 4: Was the Felder Defendant’s 14-Day Video Overwriting Policy Defensible? (Aug. 22, 2024).

THE PENDING ISSUE

At this procedural juncture, the Greenberg plaintiffs did not seek sanctions. Instead, they filed a motion to compel disclosure regarding Amazon’s document preservation efforts – “discovery on discovery” or satellite discovery.

Amazon produced some of the requested information.  At issue was “plaintiffs’ demand for copies of the litigation hold notices employees received and preservation information regarding [seven] employees who might be suitable replacement custodians….”

In my words, plaintiffs were exploring whether there was satisfactory secondary evidence pursuant to Fed.R.Civ.P. 37(e)(sanctions are available only if missing information “cannot be restored or replaced”); Secondary Evidence of Missing Video Permitted (Dec. 10, 2023);  Secondary Evidence as a “Gap Filler” (Mar. 11, 2022); Satisfactory Secondary Evidence Prevents Sanction (Sep. 4, 2021).

In the Greenberg court’s words: “But the issue here is whether plaintiffs should be given some insight into what was kept and what was lost, not whether the losses caused prejudice.”  It wrote: “All that remains is plaintiffs’ request for production of the case-specific litigation hold notices and preservation information for a handful of additional employees Amazon identified as potential custodians in its ESI disclosures.”

AMAZON’S FIVE DEFENSES

Amazon presented five defenses, none of which succeeded:

Amazon asserts that any failure to preserve documents was either reasonable or insignificant. In particular, Amazon argues that (a) it had no duty to preserve the documents at issue because it was unaware of their relevance until plaintiffs amended their complaint in 2024 and/or the ESI custodians in this case were identified, (b) it timely triggered an automated back-end preservation system that ensured that all custodial ESI was retained from the date the hold was initiated, (c) any failure to preserve documents was inconsequential in light of Amazon’s production in this case, and (d) some of the employees plaintiffs identified as custodians or potential custodians do not have relevant or unique information, making the loss of their documents unimportant. In addition, Amazon asserts that the motion to compel the disclosure of information regarding preservation efforts is premature because the meet and confer process was not yet complete.

AMAZON’S “WE DIDN’T KNOW THE SCOPE” ARGUMENT

The court wrote: “Amazon’s first argument — that it did not know and could not reasonably have known that documentary evidence regarding its handling of pricing issues during the COVID-19 pandemic would be relevant to plaintiffs’ claims — is not persuasive.”

In the Complaint, plaintiffs alleged price gouging.  Although California law made only a 10% increase during an emergency “presumptively unlawful,” the court stated that that the code provision “ did not convert the claims into a mathematical exercise to be resolved solely by reference to cost and pricing data.” It wrote that “large price increases” were occurring and “were clearly at issue.”

The Complaint was filed in April 2020.  Therefore: “The Court finds that the duty to preserve evidence in the possession of employees who managed pricing issues during the pandemic (including the duty to suspend normal document retention/deletion policies as to those employees) arose in April 2020.”

AMAZON COULD NOT WAIT UNTIL AN ESI PROTOCOL WAS FINALIZED

The court wrote that: “Amazon offers no support for the proposition that the duty to preserve did not attach until the parties had negotiated an agreement regarding the discovery of electronically-stored information (‘ESI’) and identified the custodians whose records would be searched. Such a delay would eviscerate the duty to preserve, resulting in the loss of evidence during the months (or years) it takes to negotiate ESI protocols and identify custodians.”

AMAZON’S EFFORTS WERE TOO LITTLE, TOO LATE

Amazon produced a document showing which employees were notified of the duty to preserve and when. Other courts have held that parties must disclose the identity of recipients of litigation hold notices. 8 Lessons Learned – Part IV – Disclosure of Recipients of Litigation Hold Notices (May 9, 2024). In one decision, the court held that the information was not work product and a party need not show any predicate for this limited “discovery on discovery.”  Id.

Here, however:

No employees received notice of this litigation between April 21, 2020, the date McQueen was filed, and October 12, 2020. Six employees received a case-specific litigation hold notice on October 12, 2020. Sixty-four other employees were notified that they should preserve documents between December 19, 2022, and March 10, 2025. That means that for more than two years, only six Amazon employees were required to preserve documents related to plaintiffs’ claims. [emphasis added].

In response to Amazon’s defense that it had 1,200 pricing employees and that it need not preserve a crippling amount of ESI, the court wrote:

We are not, however, dealing with the failure to issue litigation holds to a few employees on the periphery of Amazon’s pricing team, the loss of a certain type of file or document that slipped through the hold protocols, or even a hold notice that was woefully insufficient. Amazon simply failed to notify anyone of this litigation and the preservation duties it triggered for six months after the complaint was filed and then notified only six employees. Two years and eight months passed before Amazon thought to ask anyone else to preserve their documents, including some of the people Amazon later identified as custodians who were most closely involved in managing pricing issues during the pandemic. The Sedona Principles do not excuse Amazon’s failures in this case. [emphasis added].

AMAZON’S “NO HARM, NO FOUL” ARGUMENT WAS REJECTED

Amazon asserted lack of prejudice: “Amazon argues that its failure to timely issue litigation holds for this case was of no moment because some of the employees who ultimately received notices were subject to holds for other litigation…, and those holds triggered an automated back-end preservation of their documents.”

The court stated:

These assertions are not accurate. Amazon’s automated system preserves only a custodian’s email, Slack, and Chime records…. Other materials from an employee’s electronic devices, desktops, and servers, including Word documents, presentations, notes, spreadsheets, PDFs, etc., were not automatically preserved. Instead, they would be subject to Amazon’s general document retention/deletion policies unless and until the employee received a case-specific hold notice telling them what kind of information they must retain.  While the automated preservation system might catch documents that were shared through email, Slack, or Chime, Amazon failed to take steps to preserve various sources of ESI held by relevant custodians.

Further, it wrote: “Even if the automated hold did preserve ‘all custodial ESI’ (it does not), only twenty-one employees were on litigation holds for other litigation, and only ten of them were subject to the hold during the critical April 2020 to October 2020 period.”

AMAZON’S VOLUMINOUS PRODUCTION DID NOT SUFFICE

Amazon produced 75,740 documents. Some custodians did not delete their ESI even in the absence of a litigation hold notice.  Some deleted ESI was produced from other custodians.

Nevertheless, the court wrote that this “does not change the fact that Amazon failed to take steps to preserve years’ worth of records from the individuals who were most closely involved in managing its pricing issues during the pandemic.”

The court explained: “At this point, plaintiffs are attempting to understand the scope of any losses and to develop a work around, if possible. Hopefully the bulk of relevant documents can be recovered as attachments to electronic communications or from other employee files, as Amazon suggests.”

On these facts, plaintiffs were entitled to discovery on what was kept and lost, and whether the loss was prejudicial.  In my words, they were engaging in Rule 37(e) discovery to determine if ESI “that should have been preserved in the anticipation or conduct of litigation,” and that was “lost because a party failed to take reasonable steps to preserve it,” can “be restored or replaced through additional discovery….”  That factual question is a predicate to seeking sanctions under Rule 37(e)(1) or (e)(2).

AMAZON’S RELEVANCE ARGUMENT FAILED

Amazon argued that three of the custodians were data scientists who built and monitored pricing systems. It asserted that discovery from them was not warranted.

The court disagreed: “These builders would likely have received instructions that could be relevant to plaintiffs’ claims, particularly if they showed what problems Amazon recognized, how it planned to address them, and the goals/outcomes it wanted the systems to achieve. Doubts regarding the relevance or uniqueness of the documents in the possession of these three employees does not materially impact the analysis of whether plaintiffs are entitled to disclosures regarding Amazon’s preservation efforts.” [emphasis added].

In my view, it should rarely be sufficient to argue Trust Me:  Nothing in the Missing Video Would Have Helped You! (Sep. 10, 2024).

DISCOVERY OF LITIGATION HOLD NOTICES WAS ORDERED

The court wrote that: “Plaintiffs acknowledge that litigation hold notices are normally protected by the attorney-client privilege.”

I disagree and have argued to the contrary.  The Hon. P. Grimm (ret.), M. Berman, et al., “Discovery about Discovery: Does the Attorney-Client Privilege Protect All Communications Relating to Preservation of Potentially Relevant Informaiton?” 37 U.Balt.L.Rev. 413 (2008). The article asserts that, because litigation hold notices are compelled by common-law, they are not confidential communications seeking legal advice, and it suggests appropriate drafting considerations and other precautions.

Nevertheless, even if a litigation hold notice is privileged, the Greenberg court wrote: “Disclosure of the hold notices may nevertheless be appropriate where there is reason for concern that evidence has been lost.” [quotation and citation omitted]. The foregoing law review article and numerous cases are in accord.

On the facts presented:

There is no dispute that evidence has been lost. Plaintiffs will, therefore, “be allowed to take the ‘initial step’ of discovering the content of the litigation hold notice …so that they can ‘investigate and possibly prove spoliation’ ” and determine whether the loss was willful or merely negligent.

While Amazon argued that plaintiffs had expressed only a “passing interest” is some of the custodians, the court wrote: “Given Amazon’s failure to take steps to preserve evidence from the first three quarters of 2020 and its previous designation of custodians whose documents had been destroyed, full disclosure of preservation information regarding all of the potential custodians will enable plaintiffs to evaluate their remaining options for maximizing productions from the key pandemic period.”

See generally:

• Spoliation Discovery Permitted (Feb. 23, 2025);
• “Discovery on Discovery” Denied in “It Ends With Us” Lawsuit (Sep. 5, 2025);
• “Discovery on Discovery” Permitted (Sep. 4, 2025);
• Guidelines for “Discovery on Discovery” (Aug. 5, 2025);
• Discovery of Litigation Hold Notices Ordered (Apr. 22, 2025);
• Another Approach to Drafting and Discovery of Litigation Hold Notices (Feb. 21, 2025);
• Request for “Discovery on Discovery” Was Overbroad; Uber Deponent Was Ordered to Bring Uber Laptop to Deposition; Discovery About Uber Information Governance Training Resolved (Jul. 4, 2025);
• 8 Lessons Learned – Part IV – Disclosure of Recipients of Litigation Hold Notices(May 9, 2024);
• Are Litigation Hold Notices Discoverable?(Mar. 5, 2022);
• When is a Litigation Hold Notice Discoverable? — When a Litigation Hold is Defective(Aug. 9, 2021);
• When is a Litigation Hold Notice Discoverable?(Dec. 1, 2020); ,
• Discovery of Steps Taken to Implement a Litigation Hold is Permitted (Mar. 26, 2022);
• Discovery on Discovery – Steps Taken to Produce Documents(Jun. 14, 2022).
• Austin, Portions of Litigation Hold Notices Not Privileged, Court Rules(Feb. 11, 2025).
• The Hon. Craig B. Shaffer, “Deconstructing ‘Discovery About Discovery,’’ 19 Sedona Conf. L.J. 215 (2018).

This blog was initially posted on  Electronic Discovery Reference Model and  JD Supra.

UPDATE: Limited “Discovery on Discovery” Permitted; Judicial Definitions of “Hit Report” and “Families” Held Unnecessary (Oct. 13, 2025).

Lifestyle Realty (“DKG”) is a real estate brokerage firm.  It sued four individual defendants and Compass DMV LLC, alleging that they planned to take confidential information and start a competitor, The Phoenix Group of Compass.

REQUEST TO MOVE FOR SANCTIONS:

COURT REPORTER IN “MEET & CONFER”

DKG filed a notice that it sought leave to move for “spoliation relief.”  It alleged that defendant Natalie Perez had wiped a DKG laptop after she anticipated litigation and after she had retained counsel.  Ms. Perez and the other Individual Defendants challenged assertions that the duty had arisen, the culpable state of mind requirement, and prejudice.

In response to the notice, the Court held a hearing and: “The Court further ordered the parties to meet and confer with a court reporter present to address the potential spoliation issue, and to update the Court with its efforts to resolve the same.” Id. at *2 (emphasis added).  That is an unusual, but not unprecedent, directive.  Felder: Part 1 of 4:  Court-Ordered Transcription of “Meet and Confer” Session (Aug. 13, 2024).

After the conference was unsuccessful, the Court entered a briefing order.  The decision is roughly 18 pages long and this blog skips over many details.

The Court applied the ESI Rule, Fed.R.Civ.P. 37(e).  It wrote:

Because the Fourth Circuit has not yet articulated the standard of proof required to prevail on such a motion, clear and convincing evidence, as opposed to mere preponderance of the evidence certainly suffices.

Id. at *6.

FACTUAL CHRONOLOGY

The four Individual Defendants were hired between 2016 and 2019.  DKG provided them with access to G-Suite/Google Workspace.  “On or about May 17, 2022, while still employed at DKG, Individual Defendants signed contracts to join Defendant DMV Compass as real estate agents on June 28, 2022…. Individual Defendant Perez received an identical contract, but did not sign it.”

All of Individual Defendants simultaneously resigned on June 28, 2022. The Court wrote: “That same day, they announced their new brokerage group called ‘Phoenix Group,’ which was affiliated with Defendant Compass DMV.”

Defendant Perez used the DKG laptop for both business and personal purposes.  “The same day that the Individual Defendants resigned, Individual Defendant Perez returned a laptop to Plaintiff that had been erased of its contents and restored to its original factory settings.”  DKG’s forensic expert, Andreas Mueller, could not recover any data from it.

DKG sent a preservation and claim letter to the individual defendants on July 1, 2022.  They then sought counsel.

DKG relied on chats and email from May and June 2022 which it alleged were inculpatory. It claimed that they showed manipulation of data and misappropriation.  Further, on June 28, 2022, DKG “logged into the Individual Defendants’ Gmail accounts and found emails between them that show acceptance of certain calendar events, ‘but for which no corresponding event (sic) appear on the Google calendar, indicating that the calendar events have been deleted.’”

The Individual Defendants provided what they contended were, in my words, benign explanations. For example, one of them asserted that “the reference to contacting an employment attorney in an email involving an employee of Defendant Compass DMV were her way of deciding how to behave appropriately upon separating from employment with Plaintiff.”

Additionally, “[t]hey all denied thinking that litigation involving [DKG’s principal] Ms. Kerr was a possibility.”  Further, they all asserted that during a June 28, 2025, resignation meeting, everyone was cordial and there was no mention of any dispute.  Instead, DKG discussed a follow up meeting and a smooth client transition.

All professed to being “shocked” or “stunned” or “surprised” at receiving the July 1, 2022 cease-and-desist letter, and claimed that they did not consider litigation…. All claimed that they did not anticipate litigation before receiving that letter.

Defendant Perez stated that it was not her practice to store work materials on the DKG laptop.  Instead, she used Google Drive for storage.  She contended that anything on the laptop was also on the cloud drive.  Further:

Before Individual Defendant Perez ceased working for DKG, in or about early June 2022, she made a “mirror image” of the DKG-issued laptop….  In particular, she did this by copying the data from the DKG-issued laptop “to an external hard drive owned by [Andrea] Bramson,” and then uploading the data from there to a laptop….

To “recap,” these events were prior to receipt of the “cease and desist” letter.  After verifying that the copy was complete, Perez reset the DKG-issued laptop to factory settings. She claimed in part that she was protecting “over five years of personal and confidential information….” DKG’s expert opined that the machine had contained 56,823 files and folders.  He also confirmed a “mass-copy” to external media.

At the time of the spoliation motion, defense expert, Trustpoint, had extracted and produced approximately 40,000 documents from the Individual Defendants’ computers and phones.  Defendant Perez gave Trustpoint the external device that had been used to copy the DKG laptop. Ms. Perez said: “I believe that DKG has all documents, communications or material which existed on the DKG laptop.”

On these facts, the Court wrote: “The parties do not dispute that the DKG-issued laptop is the only device that is the subject of the spoliation motion…. Given that reality, the Court carefully considered the conduct of each Individual Defendant.”  It concluded that DKG had not met its burden of proof.

THE OTHER DEFENDANTS ARE NOT CULPABLE

Turning to the Individual Defendants other than Ms. Perez, the Court found no evidence that they had used the laptop. It wrote that “Plaintiff has not put forth any evidence that Individual Defendants Kirn, Fitzgerald, or Goelman played any role in Perez’s copying and later erasing the material from the DKG-issued laptop. Indeed, the evidence before the Court establishes otherwise.”

Nor was there any evidence that the others knew that Defendant Perez was going to erase that laptop.  Therefore, none of them could be sanctioned under Fed.R.Civ.P. 37(e).

Ms. PEREZ’S DUTY TO PRESERVE

WAS TRIGGERED BEFORE WIPING OF LAPTOP

At pages *12, passim, the Court reviewed the case law governing triggering of the duty to preserve.  The latest date of trigger was the July 1, 2022, notice from DKG, which stated a claim and demanded preservation.

However, DKG argued for an earlier trigger date.

The Court first analyzed Individual Defendant Perez’s self-serving statement that she did not anticipate litigation before July 1, 2022…. The Court did not find this statement to be persuasive, given the fact that more contemporaneous statements from 2022 existed.

The Court wrote: “A judge tasked with finding the facts has the right to disregard any aspect of a witness’ testimony or statements if judge finds that information provided is inherently improbable due to interest or bias.”

The Court next carefully analyzed a series of earlier communications and found that, despite Ms. Perez recognizing that there would be a “negative react[ion]” to their departure from DKG,  the communications do not “clearly signify” that Ms. Perez anticipated litigation.

The Court noted Ms. Perez’s concern with protecting personal information on that device; however:

The Court finds this statement self-serving and not credible; Individual Defendant Perez could have erased her personal information and left the remaining information on the laptop that she concedes was not her own but belonged to her employer and was given to her to aid her in performing work for Plaintiff, not to store her personal information.

This showed her plan to conceal DKG data and “[t]hese facts must be considered, along with the May 11-12 chats, in analyzing when the duty to preserve arose.” Those chats included Ms. Perez writing: “Whatever we can have in our ‘back pocket’ for [DKG] to hesitate going after us is essential. Especially for me and Susan and our database because she’s gonna go after us just like she did David.”

The Court held that, based on the clear and convincing evidence, Ms. Perez reasonably anticipated litigation before June 28, 2022, the date when she returned the wiped laptop.  Further, knowing that the contents she copied would assist her with her clients at her new job, DKG had shown that Ms. Perez knew the deleted information was relevant.

HOWEVER, DKG FAILED TO SHOW THE ESI WAS LOST

Defendants argued that DKG cannot show that the purportedly lost ESI “actually existed.”  The Court rejected that, writing “why else would Individual Defendant Perez take steps to ‘mirror’ and migrate this data to the Perez laptop if it had nothing to do with existing clients and possible leads?”

However, to be “lost” the ESI must be “irretrievable from another source, including other custodians.” The Court determined that:

Plaintiff has failed to meet its burden to establish that the information on that laptop is truly irretrievable from another source…. Relatedly, Plaintiff has failed to demonstrate that it made a good-faith attempt to explore alternatives before filing the spoliation motion.

In short, DKG failed to conduct sufficient depositions to prove irretrievable loss.  “In contrast, the Individual Defendants, who do not have the burden of proof, have put before the Court unrefuted evidence that Individual Defendant Perez made a ‘mirror image’ of the DKG-issued laptop and confirmed that the contents of the DKG-issued laptop matched what she copied to the Perez laptop.”  And, approximately 40,000 documents had been produced.

Ms. PEREZ DID NOT FAIL TO TAKE REASONABLE PRESERVATION STEPS

The Court explained that: “As a general matter, ‘reasonable steps to preserve’ does not mean that Individual Defendant Perez had a duty to preserve every shred of paper, every e-mail or electronic document, and every back up tape.” [cleaned up].

Ms. Perez submitted evidence of the copying of the laptop – a “mirror image.”  First ESI was copied to an external drive and then to another laptop. The Court wrote: “Individual Defendant Perez verified that ‘the material on the DKG laptop matched the material on the Perez laptop by using the Perez laptop and the DKG laptop and seeing that all of the files, folders, and data were in the same locations on both laptops.’”

There was no discussion about whether the double-copying process altered key metadata.  In fact, DKG had not deposed Ms. Perez about the exact steps taken to create the “mirror image.” Nor did DKG ask for a forensic examination of the external drive.

The Court concluded:

In sum, Plaintiff has failed to establish, by clear and convincing evidence, that Individual Defendant Perez has truly “lost” the relevant ESI that was on the DKG-issued laptop (it does not exist in its entirety elsewhere) because of Perez’s failure to take reasonable steps to preserve it.

RESTORATION OR REPLACEMENT THROUGH ADDITIONAL DISCOVERY

The Court stated: “The law is clear that Plaintiff must show that the lost ESI cannot be restored or replaced through additional discovery….” Here, DKG failed to meet its burden.

In addition to the 40,000 documents and material extracted by Trustpoint: “Individual Defendants Kirn, Fitzgerald, and Goelman each deny deleting any materials ‘from my phone or computer.’”  Further, there was no evidence to refute the assertion that the material exist on DKG’s Google Drive.

For additional information on replacement or restoration, see Secondary Evidence as a “Gap Filler” (Mar. 11, 2022); Satisfactory Secondary Evidence Prevents Sanction (Sep. 4, 2021); Secondary Evidence of Missing Video Permitted (Dec. 10 2023).

NO PREJUDICE or INTENT TO DEPRIVE

The Court wrote that “in order to find prejudice to Plaintiff, the Court must first find that the information has been lost. See Fed. R. Civ. P. 37(e)(1) (‘upon finding prejudice to another party from loss of the information’)(emphasis supplied)….”

DKG would need to show that  it “cannot present evidence essential to its underlying claim.”  Here, there was no showing of a deprivation of “evidence” essential to DKG proving its claim.

Given its prior holdings, the Court did not need to reach “intent to deprive” under Rule 37(e)(2).  It wrote that there was “little question” that Ms. Perez intentionally and deliberately wiped the DKG laptop.  However, if the other predicates of Rule 37(e) had been satisfied, it still would have had to resolve whether there was intent to deprive.  One may speculate that, given the copying to an external drive and then to another computer, that burden may not have been met. For additional information on intent, see Failure to Show “Intent to Deprive” Leads to Denial of Rule 37(e)(2) Sanctions (Mar. 5, 2024).