District Judge Vacates Magistrate’s Order Sanctioning Bad Faith Alteration of Documents
In Huang v. Lin et. al., Case No. 14-7204 (E.D. N.Y., Nov. 23, 2016), Plaintiff, a former employee of Defendants, sued Defendants for wage and hour claims under the Fair Labor Standards Act. During discovery, Defendants produced documents purporting to be Plaintiff’s weekly pay stubs. Plaintiff, concerned that the documents were not authentic, served a request for the metadata related to the paystub documents to prove that the documents had been created after the filing of the suit to defeat her claims. Defendants objected, arguing that the metadata was “unnecessary”, and refused to produce it. Plaintiff filed a Motion to Compel, and Defendants filed a cross-motion for a protective order. The magistrate judge granted the Motion to Compel and ordered Defendants to produce the metadata showing when the pay statements were created and when they were modified. On the production deadline, Defendants’ counsel advised Plaintiff’s counsel that he had determined that the pay statements were created after commencement of the suit. The magistrate judge sanctioned the Defendants and ordered them to pay Plaintiff’s attorney fees in bringing the motion. Defendants objected to the sanctions.
The district judge reluctantly reversed the magistrate judge’s finding. Plaintiff did not obtain sanctions under FRCP 37, and the court agreed that the provision was not applicable. Plaintiff instead argued that the court has inherent power to sanction Defendants and that the magistrate judge did not violate any due process rights. The court noted that attorneys’ fees under the court’s inherent power can only be awarded with a finding of bad faith. The magistrate judge found Defendants’ conduct improper but did not actually hold that they acted in bad faith, stating that there was no finding on whether a fraud had been perpetrated. The court found that, although the alteration of documents was “troubling”, without bad faith, sanctions are not permitted, and thus vacated the order.