Defendant Seeks FRCP 37(e) Sanctions for Lost Call Center Recordings
In Security Alarm Financing Etnerprises, L.P. v. Alarm Protection Technology, LLC et. al., Case No. 13-00102 (D. Alaska, Dec. 6, 2016), Plaintiff, a home security company, sued Defendants, also home security companies, alleging that Defendants had illegally poached customers and also alleging defamation. Defendants filed a counterclaim alleging tortious interference with contractual relations and also defamation. Defendants sought turnover of the recordings of all Plaintiff’s customer phone calls that came into its call center, which Plaintiff did regularly record. However, Plaintiff’s database overwriting process destroyed nearly all the recordings; less than 150 recordings were preserved for litigation. Defendants filed a Motion for Spoliation Sanctions.
The court considered FRCP 37(e) sanctions as amended, determining that although the case was filed prior to the amendment, it would not be unjust to apply the new rule, particularly since Defendants filed their motion after the amendment went into effect. The court looked to whether Plaintiff had a duty to preserve. The suit was filed in June 2013, and when Defendants alleged that Plaintiff was defaming them to its Alaska customers, a memo was circulated advising employees to be careful with their language in Alaska calls. The court also noted that Plaintiff, in its Rule 26 disclosures, advised that it kept such recordings of ingoing and outcoming customer calls. Therefore, the court found a duty to preserve arose in June 2013. The court also found that Plaintiff did not take reasonable steps to preserve the recordings and should have; Plaintiff had “clear notice” that the recordings would be relevant. The court finally found that the information was not recoverable from another source.
However, the court did not find that Plaintiff acted with an intent to deprive Defendants of information. The court held that the prejudice to Defendants justified granting them their attorneys’ fees incurred in bringing the motion and denying Plaintiff the right to introduce any of the remaining recordings. The court also ordered an adverse inference instruction that Plaintiff was required to preserve the recordings but failed to do so.