Motion for Sanctions Denied Based On Court’s Lack of Inherent Authority to Sanction And Where Parties Did Not Engage In A Rule 37(e) Analysis

7 Apr 2023

In MONARREZ v. WAL-MART STORES, INC., Case No. 2:21-cv-00431-ART-DJA (D. Nev., Feb. 22, 2023), before the court was Plaintiff’s motion for spoliation sanctions. Plaintiff argued Defendants failed to preserve the original version of the customer report incident, which would have been made on one of the Defendants’ iPads and failed to take pictures of the floor before cleaning the area where Plaintiff slipped.

In this slip-and-fall case, Plaintiff slipped on a substance on the floor at Defendants’ Walmart store. Plaintiff sued Defendants for damages, and alleged negligence, negligent hiring, negligent training and supervision, and negligent retention.

Plaintiff asserted Defendants failed to preserve: (1) the electronic version of the incident report memorializing her slip-and-fall on a slippery substance on Walmart’s floor; and (2) photographs Defendants’ employees would have taken of the substance.

Plaintiff asked the Court to enter evidentiary sanctions: “either a jury instruction providing a rebuttable presumption that Defendants were negligent or an adverse jury instruction that the incident report and photos would have been adverse to Defendants.”

Defendants argued that Plaintiff’s motion was a frivolous attempt to keep her case alive since Defendants filed a motion for summary judgment. Defendants also argued that their failure to preserve the evidence was harmless because Defendants had video footage of the incident that showed what happened. Defendants concluded that since the parties did not dispute whether there was substance on the floor, it did not matter that they did not preserve photos of the substance.

Plaintiff replied that her motion was not a “frivolous attempt” and she waited to file the motion because Defendants asked to continue the depositions that form the factual basis of the motion. She pointed out that the video footage was blurry and did not change the fact that Defendants failed to preserve the evidence. Plaintiffs argued the photos would have demonstrated how obvious the substance was and whether Defendants should have noticed it. 

The Court noted that there are two sources for the Court’s ability to issue sanctions: its inherent authority and Federal Rule of Civil Procedure 37. However, when it comes to spoliation of electronically stored information, the Advisory Committee Notes to the 2015 Amendment to Rule 37 provide that only Rule 37(e) sanctions are available. See Fed. R. Civ. P. 37, Advisory Committee Notes to 2015 Amendment. 

The Court noted there does not appear to be any controlling United States Supreme Court or Ninth Circuit Authority that states whether the 2015 amendments to Rule 37e prohibit courts from imposing sanctions for destruction of ESI based on their inherent authority. However, there is persuasive authority that says as much.

An unpublished Ninth Circuit opinion recognized the limitation Rule 37(e) imposed on courts’ inherent authority to sanction parties for destruction of ESI. In Newberry v. City of San Bernadino, 750 F.App’x 534, 537 (9th Cir. 2018), the Ninth Circuit explained that “[t]he parties framed the sanctions issue as invoking the district court’s inherent authority” but “[t]he detailed language of Rule 37(e)…foreclose[d] reliance on inherent authority to determine whether terminating sanctions were appropriate.” District courts in the District of Nevada have recognized the same.

The Court found this authority persuasive and believed that if the Ninth Circuit were to take up the issue in a published opinion, it would find that Rule 37(e) has limited the Court’s inherent authority to sanctions parties for spoliation of ESI.

In the instant case, the Court did not believe that it had inherent authority to sanction Defendants for their alleged destruction of ESI. It therefore denied Plaintiff’s motion for sanctions without prejudice.

Rule 37(e) sanctions are available when “electronically stored information that should have been preserved in the anticipation or conduct of litigation is lost because a party failed to take reasonable steps to preserve it, and [the information] cannot be restored or replaced through additional discovery.” Fed. R. Civ. P. 37(e). The party arguing that spoliation has occurred has the burden of showing that evidence was in fact destroyed or not preserved. Colonies Partners, L.P. v. Cty. of San Bernardino, No. 5:18-cv-00420-JGB-SHK, 2020 WL 1496444, *5 (C.D. Cal. Feb. 27, 2020).

Two categories of sanctions exist. First, where the district court finds that the loss of information has prejudiced the moving party, the district court may order “measures no greater than necessary to cure the prejudice.” Fed. R. Civ. P. 37(e)(1). Second, where the district court finds that the offending party “acted with the intent to deprive another party of the information’s use in the litigation,” the district court may require an adverse evidentiary presumption, dismiss the case, or enter default judgment. Fed. R. Civ. P. 37(e)(2).

Here, Plaintiff asked that the Court rely on its inherent authority to charge the jury with a rebuttable presumption that Defendants were negligent. Alternatively, Plaintiff asked that the Court charge the jury with an adverse instruction that the destroyed documents would have been adverse to Defendants had they been preserved.

As a preliminary matter, the Court found the customer incident report and photographs to be ESI – and thus fall under the purview of Rule 37(e) – because they would have been taken and stored on Defendants’ iPads had they been preserved.

Crucially, however, Plaintiff relied on cases that discussed the Court’s inherent authority to assert that “the culpable state of mind includes negligence.”(ECF No. 39 at 6) (citing Brannan v. Bank of Am., No. 2:16-cv-01004-GMN-GWF, 2017 WL 4031442, at *2 (D. Nev. Sept. 13, 2017)).

But Rule 37(e) delineates the sanctions available when a party did not act intentionally and when a party did. While Plaintiff argued that Defendants acted willfully, she did so in conclusory fashion and did not explain why their actions were willful as opposed to negligent.

Under the inherent authority analysis, the distinction was less impactful, according to the Court. But it was directly related to the sanctions available to the Court under the Rule 37(e) analysis.

However, because the parties did not brief the issue of imposing sanctions under Rule 37(e), the Court did not engage in a Rule 37(e) analysis and denied Plaintiff’s motion without prejudice.