Court Denied Plaintiff’s Request for Terminating Sanctions After Finding, Among Others, that Plaintiff Failed to Show the Requisite Intent Required Under Federal Rules of Civil Procedure 37(e)

27 Oct 2022

In PAULY v. STANFORD HEALTH CARE, Case No. 18-cv-05387-SI (N.D. Cal, Sept. 12, 2022), before the Court was Plaintiff’s objections to Magistrate Judge Hixson’s denial of Plaintiff’s motion for terminating sanctions against Defendant.

Plaintiff filed her objection to Judge Hixson’s Report and Recommendation and objected to the following findings: “(1) that there was no failure to preserve the EMTALA Log, (2) that plaintiff failed to prove the requisite intent for terminating sanctions, (3) that all the evidence in question is electronically stored information (ESI) and therefore governed by FRCP 37(e), (4) that a three-part test determines whether spoilation occurred, (5) that Defendant did not redact the Medical Transport Program Call Record (MTPCR), and (7) [sic] that destruction of evidence was within defendant’s routine business procedures.”

A district court may “accept, reject, or modify, in whole or in part, the findings or recommendations made by [a] magistrate judge.” 28 U.S.C.A. § 636(b)(1)(C). The Court reviews de novo those portions of a magistrate judge’s report and recommendations to which a party objects.

Plaintiff first objected to Judge Hixson’s finding that there was no showing that Defendant failed to preserve its EMTALA log. Plaintiff argued that the EMTALA log produced by Defendant did not meet the requirements for what must be included in an EMTALA log.

However, the Court agreed with Judge Hixson’s finding that “[Plaintiff] failed to demonstrate that the log lacks information that it previously had.” The Court noted that the issue was not whether Defendant followed requirements in creating the log, but whether it failed to preserve the information in the original log. Because Plaintiff did not show Defendant failed to preserve this log, the Court adopted Judge Hixson’s finding.

Plaintiff next challenged Judge Hixson’s finding that Defendant failed to establish the requisite intent for terminating sanctions under Federal Rule of Civil Procedure (“FRCP”) 37(e). Under FRCP 37(e)(2)(A)-(B), the court, “only upon finding that the party acted with the intent to deprive another party of the information’s use in the litigation may: (A) presume that the lost information was unfavorable to the party; (B) instruct the jury that it may or must presume the information was unfavorable to the party; or (C) dismiss the action or enter a default judgment.”

After reviewing the record, the Court found insufficient evidence that Defendant acted with the requisite intent. Therefore, terminating sanctions are unavailable to Plaintiff under FRCP 37(e).

Plaintiff sought de novo review of Judge Hixson’s determination that the evidence in question was ESI and argued that “Defendant never stated that all the evidence requested was exclusively retained as electronic evidence.”

However, Plaintiff’s motion for terminating sanctions specifically stated the evidence in question was electronic. Since Plaintiff did not allege, nor did she show, any destruction of non-ESI evidence, the Court adopted Judge Hixson’s finding that all the materials in question were ESI.

The Ninth Circuit has held that Rule 37(e) “foreclose[s] reliance on inherent authority” to determine whether terminating sanctions are appropriate where ESI that should have been preserved was lost. Newberry v. Cnty. of San Bernardino, 750 F. App’x 534, 537 (9th Cir. 2018). The Court found that Judge Hixson correctly relied on Rule 37(e) rather than the court’s inherent authority. 

Plaintiff next disputed Judge Hixson’s application of a three-part test to determine whether spoliation occurred. The test is as follows:

“[a] party seeking an adverse inference instruction (or other sanctions) based on the spoliation of evidence must establish the following three elements: (1) that the party having control over the evidence had an obligation to preserve it at the time it was destroyed; (2) that the records were destroyed with a ‘culpable state of mind;’ and (3) that the evidence was ‘relevant’ to the party’s claim or defense such that a reasonable trier of fact could find that it would support that claim or defense.” After considering these factors, a court must then consider all available sanctions and determine the appropriate one.”

See, e.g., Apple Inc. v. Samsung Elecs. Co., 881 F. Supp. 2d 1132, 1138 (N.D. Cal. 2012).

The Court noted that Plaintiff did not provide any support for her argument that the three-part test should not have applied. Thus, the Court found the use of the three-part test was appropriate because it has been used in many courts in the district and was appropriately applied to the instant case.

Plaintiff next challenged Judge Hixson’s finding that the pixilation and missing information in the MTPCR was the result of “the fact that the original document was in color” and the produced copy was in black and white. Plaintiff argued that the pixilation and missing information was the result of redaction.

Judge Hixson did find that Defendant failed to preserve the color copy of the MTPCR but did not find that Defendant acted with the requisite intent for terminating sanctions. After reviewing the black and white copy and the expert report, the Court found that Plaintiff failed to establish the report was redacted. The expert report did not address the likelihood that pixilation and missing information occurred when a black and white copy was made of the color original rather than due to redaction. The Court agreed with Judge Hixson’s recommended finding.

Finally, Plaintiff disputed Judge Hixson’s finding that destruction of evidence was within the regular court of business. But Plaintiff failed to show that Defendant destroyed evidence outside the normal course of business.

The Court, after review of the docket, Judge Hixson’s Report and Recommendation, and Plaintiff’s objections, concluded that sanctions were not appropriate. Plaintiff failed to show the requisite intent to justify terminating sanctions under FRCP37(e).