Spoliators should not benefit from their wrongdoing and all things are presumed against a wrong doer, or “omnia presumuntur contra spoliatorem,” as the Court stated in Quantlab Technologies Ltd. v. Godlevsky, et al., Civil Action No. 4:09-cv-4039(S.D.Tex. February 19, 2014). The Court considered Plaintiff’s Motion for Sanctions after “a staggering amount of evidence potentially relevant to his case has been lost.”
This is a copyright infringement case where Plaintiff is a financial research firm and former employer of Defendants, who are highly-educated professionals in the areas of mathematics, financial engineering and computational physics. Defendants worked in Plaintiff’s research department and wrote computer code. In March 2007, Defendants were terminated and joined another firm, SXP. Plaintiff filed suit in 2007 to prevent trade secret theft, which was “non-suited,” and Plaintiff filed the present action in 2009. The United States intervened and stayed the case pending its own criminal investigation. SXP was then raided by the FBI, looking for Plaintiff’s stolen code. In 2011, the government declined to prosecute and Plaintiff was able to proceed with this civil case.
Plaintiff moved for sanctions for spoliation of electronic data by Defendants. The Court terms the request for relief as “Death Penalty Sanctions.” The Court notes that under the Fifth Circuit standard to impose litigation-ending sanctions, there must be a showing of bad faith: “the fundamental element…of bad faith ‘is advantage-seeking behavior by the party with superior access for the proper administration of justice.’” The Court examines the facts:
- Defendant Mamalakis is alleged to have wiped-clean and/or gave away 23 developer work stations from SXP in 2012. The court found he had a duty to preserve this evidence, that his destruction was done in bad faith and that the evidence was “moderately” both relevant and prejudicial.
- Defendant Godlevsky failed to produce any electronic data, save for a single laptop PC. This was despite the fact that testimony indicated 27 devices with relevant data existed but were never produced. The Court found he had a duty to preserve the evidence and that his empty excuses were evidence of reckless disregard and possibly bad faith. Also, the Court found that the likelihood of the missing devices containing relevant data was “high.”
- The Court also evaluated spoliation allegations regarding a number of specific devices. Given how many potentially relevant devices were kept out of Plaintiff’s reach, it found a spoliation instruction to be the proper recourse.
In conclusion, the Court ordered that spoliation instructions to the jury were proper as sanction. The jury must find the element of culpability as bad faith and if they do, they should then infer that the missing evidence would have been unfavorable to Defendants. The Court postponed writing the specific jury instruction for when it crafted all the jury instructions, and requested input from both parties.
ILS – Plaintiff Electronic Discovery Experts