Drastic Sanction Entered After Defendant’s Spoliation of Electronic Evidence
In the trademark infringement case Slep-Tone Entertainment Corporation and Piracy Recovery LLC, et al. v. Grantino et al., No. CV 12-298 TUC DCB(D.Ariz. January 8, 2014), the court is ruling on the order to show cause as to why the defendant should not be sanctioned for spoliation of electronic evidence.
According to the Order, the defendant in this case is the owner of a business employing karaoke jockies (“KJs”), and the plaintiffs are owners of trademarked music soundtracks that are sold to KJs. The plaintiffs alleged defendant had unauthorized, counterfeit duplicates of their trademarked tracks that he used in his business. It was uncontested that around February 2012, he had purchased these tracks and stored them on a few hard drives. The defendant admitted he knew that he could be sued for having such tracks, and he admitted he deleted all the tracks off his hard drives with specialized computer-wiping software.
The defendant responded to the order to show cause by claiming he did not have the requisite culpable mind for sanctions, and that he deleted the hard drives in “good faith.” Reviewing the facts as applied to the elements for spoliation sanctions, the court found:
1. Defendant was in control of the evidence, and had an obligation to preserve the evidence when he actively destroyed it. The court found that the duty to preserve arose at the very latest when he was received a copy of the Complaint by mail. (It was alleged he purposely evaded the process server and was legally served by publication.)
2. Defendant had a culpable state of mind when he wiped the hard drives. Defendant claimed he was not using the counterfeit hard drive tracks until he could get certification for them. The court pointed out that if this was true, there was no reason to wipe the hard drives clean.
3. The deleted evidence was absolutely relevant to the claims and defenses; the contents of the hard drives would either prove or disprove that defendant possessed counterfeit tracks.
After deciding that the defendant had committed electronic evidence spoliation, the court considered what sanction was appropriate. The court considered an adverse inference instruction to be insufficient, and granted plaintiff summary judgment on liability (although plaintiff still must prove up damages.)