Defendants Sanctioned in Prince Music Dispute for Wiping Cell Phones
In Paisley Park Enterprises, Inc., et al., v. George Ian Boxill, et al., No. 17-cv-1212 (D. Min. Mar. 4, 2019), a Minnesota magistrate judge granted in part and denied in part Plaintiff’s motion for sanctions due to spoliation of evidence on the grounds that Defendants acted with an intent to deprive Plaintiff of ESI to use in the litigation.
This matter stems from the Defendants’ attempt to release songs by the artist Prince without the permission of the Prince Estate. On February 11, 2017, before releasing the music at issue, Defendant David Staley (“Staley”) indicated in writing that he would be indemnified in case the Prince Estate chose to challenge the release of the music. On March 16, 2017, the Prince Estate sent a cease and desist letter to Defendants and filed suit on April 14, 2017. On January 10, 2018, the Court issued its pretrial scheduling order, directing the parties to preserve “all electronic documents that bear on any claims, defenses, or the subject matter of this lawsuit.”
During discovery, Plaintiff filed a motion to compel discovery from Defendants Staley and Gabriel Solomon Wilson (“Wilson”) seeking production of text messages that Staley and Wilson sent to each other and to third parties.
At a meet and confer on September 21, 2018, counsel for Staley and Wilson indicated that they could not produce responsive text messages because Defendants had not preserved their text messages. Specifically, Staley and Wilson did not disengage the auto-delete function on their phones. Staley also had wiped and discarded his phone in October 2017 and Wilson had wiped and discarded his phone in January 2018 (and then subsequently wiped and discarded a new phone in May 2018).
In ruling on the motion, the court initially held that the duty to preserve evidence arose no later than February 11, 2017, when Staley sent an email regarding his plans to release the music. Turning to the next prong, the Court emphatically held that Defendants Staley and Wilson failed to take reasonable steps to preserve relevant ESI. First, the Court held that both Defendants failed to take reasonable steps by not disengaging their auto-delete functions and by failing to put in place a litigation hold. More egregious, according to the Court, was that both Defendants wiped and destroyed their phones after they had been sued, and, in the second instance for Wilson, after the Court ordered the parties to preserve all relevant ESI and after the parties entered into an agreement regarding the preservation and production of ESI.
Having met the prerequisites for a finding of spoliation, the Court then turns to what, if any, sanctions are appropriate for the Defendants’ failure to preserve relevant text messages. Finding that the Plaintiffs are prejudiced by the deleted texts, the Court holds that sanctions are appropriate under Rule 37(e)(1).
The court then considers the appropriateness of sanctions under Rule 37(e)(2). Finding that the Defendants acted with an intent to deprive the Plaintiff of the evidence, the Court holds that Rule 37(e)(2) sanctions are warranted. The Court states, “the wiping and destruction of Wilson’s phone for a second time are perhaps the most egregious or unkindest acts of all. Wilson got rid of his phone in May 2018, after: (1) litigation had commenced; (2) Plaintiffs served discovery; (3) Plaintiffs expressly informed the RMA Defendants that they intended to seek discovery regarding Wilson and Staley’s text messages; and (4) the Court ordered the parties to preserve all relevant electronically stored information in its pretrial scheduling order. Any one of these events should have been sufficient to put the RMA Defendants on notice that they needed to preserve their text messages and phones. The Court can draw only one conclusion from this set of circumstances: that they acted with the intent to deprive Plaintiffs from using this information. Rule 37(e)(2) sanctions are particularly appropriate as to Wilson, RMA, and Deliverance for this reason as well.”
However, the Court refuses to impose sanctions under Rule 37(e)(2) at this time on the grounds that discovery is still on-going and that it is more appropriate to defer consideration of those sanctions to a later date. Notably, though, the court states that the Plaintiff’s request for an adverse inference instruction will likely be justified in the future.
Instead, the Court ordered, pursuant to Rules 37(b)(2)(C), 37(e)(1), and 37(e)(2) and the Court’s pretrial scheduling orders, Defendants to pay reasonable expenses, including attorney’s fees and costs, that Plaintiffs incurred as a result of the Defendants’ misconduct. In addition, pursuant to Rule 37(e)(2) and the Court’s pretrial scheduling order, the Court also ordered the Defendants to pay into the Court a fine of $10,000.