Eshelman v. Puma Biotechnology, Inc., Case No. 16-00018 (E.D. N.C., June 7, 2017) is a libel suit related to an allegedly defamatory investor presentation. Plaintiff was an investor in Defendant, a biopharmaceutical company. Plaintiff owns a pharmaceutical research organization called PPD, which contracted with Aventis Pharmaceuticals to provide clinical research services during a clinical trial of a drug called Ketek. During the clinical trial, a clinical investigator falsified documents.
In 2015, Plaintiff proposed that Defendant increase the number of people on its board of directors and that he be added as a board member. Plaintiff’s lawsuit alleges that Defendant’s CEO, Alan Auerbach, published a defamatory investor presentation on Defendant’s website and sent it to stockholders. The presentation contained statements that Plaintiff was CEO at the time of the Ketek clinical trial fraud and that he lacked integrity, had a history of lying, was called to testify before Congress about the fraud, and was fired as CEO. The presentation also stated that Defendant’s board “does not believe that someone who was involved in clinical trial fraud… should be on the Board of Directors of a public company.” Plaintiff demanded a retraction and an apology, but instead, Defendant doubled down on its position and threatened to release even more damning information about Plaintiff.
After Plaintiff sued, Defendant issued a litigation hold letter to its employees, advising employees to err on the side of preservation. Plaintiff also sent Defendant a litigation hold letter requesting preservation of the web browser histories of the individuals who drafted the presentation. Later, Plaintiff sought production of the web browser history, web search history, and documents and websites viewed or used in connection with preparing the presentation. Defendant alleged that Google Chrome had automatically deleted the web browser histories after 90 days, and Plaintiff’s hold letter was sent 120 days after the presentation was published. Therefore, Defendant could not produce the information.
The court found that Plaintiff failed to meet the threshold for spoliation under FRCP 37(e) even initially because he did not show that the lost ESI could not be restored or replaced through additional discovery – for example, he could depose the individuals involved. Even if he had met that threshold, the court held that he failed to show that he was prejudiced in any way, as it is not clear how the missing information would have helped his case. Finally, the court found that Plaintiff had not shown requisite intent on the part of Defendant; the court held that Defendant’s actions were negligent at worst. Therefore, the court denied Plaintiff’s request for an adverse inference instruction.