Maryland District Court Imposes Spoliation Sanctions
In Cognate BioServices, Inc., et. al. v. Smith, et. al., Case No. 13-1797 (D. Md., Aug. 31, 2015), the District of Maryland recently considered whether to sanction Defendant for spoliation of evidence.
Defendant Smith is the former CEO of Plaintiff Cognate. While employed at Cognate, Smith took part in contract negotiations between Cognate and Defendant MacroCure for the development of a medical product. The parties never executed the contract, and Smith left Cognate to work for MacroCure, which ultimately developed the product. Cognate sued Smith, alleging that Smith provided proprietary information to MacroCure by accessing Cognate’s computer systems without authorization. During discovery, Cognate filed a motion seeking spoliation sanctions, alleging that Smith destroyed or failed to preserve evidence on his MacroCure laptop as well as in his personal notebooks, the emails on his smartphone, personal emails, and in other ESI in possession of his daughter, who was also a MacroCure employee.
The court reiterated the standard for a finding of spoliation, which requires that the party seeking sanctions prove that the spoliating party 1) had an obligation to preserve the evidence, 2) had a culpable state of mind at the time of the destruction, and 3) destroyed relevant evidence. The court concluded that Smith had indeed willfully destroyed his notebooks and was grossly negligent in failing to properly institute a litigation hold, including with respect to evidence held by his daughter. Accordingly, the court recommended that the judge presiding over any trial provide the jury with an adverse inference instruction regarding the destroyed evidence.