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Court Denies Motion for Sanctions When Spoliation Threshold Not Met.

Posted on October 4th, 2017

In Air Products and Chems., Inc. v. Weisemann et al., Civ. No. 14-1425-SLR (D. Del. Feb. 27, 2017) the U.S District Court (Delaware) determined that the moving party on a sanctions motion  failed to make threshold showings of spoliation, and therefore found no grounds to warrant sanctions.  In May 2013, Plaintiff Air Products and Chemicals, Inc. (“Air Products”) acquired EPCO Carbon Dioxide Products, Inc. (“EPCO”) and Louisiana Leasing, Ltd. of Illinois, (“LLL”) from its various stockholders, the Defendants Eric Weisemann et al. (collectively “Defendants”).  Air Products sued Defendants for breach of contract and unjust enrichment, and certain of the individual defendants for securities fraud, common law fraud, and negligent misrepresentation.

On December 23, 2015, Defendants filed a motion for sanctions against Air Products, based on spoliation of evidence. Defendants have asked the court to sanction Air Products for: (1) spoliating electronically stored information (“ESI”) stored on the Rapid Log server of EPCO; (2) shredding EPCO documents stored in an off-site warehouse; and (3) wiping computers belonging to former EPCO employees.

The Court examined the standard under the Federal Rules of Civil Procedure with regard to each of the categories of ESI which were a subject of the motion.  When litigation is pending or reasonably foreseeable, a party has a duty to preserve evidence it knows or reasonably should know is relevant to the action.

With regard to the alleged spoliation of ESI on the Rapidlog server, the Court found that it could not impose sanctions because Defendants had made insufficient showing that any ESI was lost. The evidentiary record indicated that the electronically scanned copies of the drivers’ logs stored in Rapidlog were not lost, since Air Products had not changed EPCO’s data retention policy after the stock acquisition, and EPCO’s policy prior to the stock acquisition was not to delete any ESI in Rapidlogs. Therefore, defendants failed to meet the threshold requirement under Fed. R. Civ. P. 37(e), which is to show that ESI has actually been lost or spoliated.

The Court also reviewed the claim of spoliation of hard copy documents.  EPCO stored several hundred boxes of old paper records in an off-site storage shed. The employees had been shredding the documents until the legal department instructed them to stop. The Defendants did not make a showing that the shredded documents were relevant to the litigation. In the absence of such a showing, the Court refused to sanction Defendants for shredding the EPCO warehouse documents.

The Court then turned to examining the claims regarding the spoliation of ESI on former emloyees’ computers.  In April of 2015, Air Products notified Defendants that ESI on the computers of eight former EPCO employees had been wiped upon the termination of their employment. Defendants claim that by so doing, Air Products had irretrievably lost relevant ESI. Upon its review, the Court found that except for one former employee, Defendants made no effort to show that any of the other remaining seven employees had relevant ESI on their computer.  It further ruled that pure speculation is not enough to find that relevant ESI was destroyed, and that Defendants have not shown that the emails sought cannot be replaced through additional discovery.

The Court concluded it opinion by denying the sanctions motion.

ILS–Plaintiff ESI Discovery Experts

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