Episode 95: Leaping the Second Hurdle of Rule 37(e)(2) on a Motion for Sanctions

Welcome to Episode 95 of Case of the Week where we will discuss whether the deletion of five years of email from a Gmail account rose to the level of intent for sanctions under Rule 37(e) in the matter of Oliver v. Meow Wolf, Inc. The case was presided over by Steven C. Yarbrough, United States Magistrate Judge, and the case cite is 2023 WL 122505 (D.N.M. 2023) from January 6, 2023.

In this episode, we will examine the facts of the case, discuss the ruling of the court, and analyze the implications of the ruling. We will also discuss the implications of the ruling for other cases, and the potential implications of the ruling for the future of the law.

Join us in this episode as we explore the legal implications of the case of Oliver v. Meow Wolf, Inc. and the ruling of the court.

Introduction

Welcome to Episode 95 of our Case of the Week series published in partnership with ACEDS. My name is Kelly Twigger. I am the CEO and founder of eDiscovery Assistant, as well as the principal at ESI Attorneys. Thanks so much for joining me today.

A couple of items. We are two weeks away from the University of Florida Levin College of Law eDiscovery Conference to take place February 8th and 9th in Gainesville, Florida. We have a few seats left for our limited in-person registration. That will be closing this week. You can also register online to attend for free virtually. Grab some colleagues from your organization, get a party together, have some lunch, and join us for our two-day session. It’s going to be a great event.

Our 2022 case law report will be issued in time for the UF eDiscovery Conference. If you’re signed up for our blog, you’ll be receiving information on how to download that report as well.

All right, let’s dive into this week’s decision. It comes to us from the case of Oliver v. Meow Wolf, Inc. This is a decision from the District of New Mexico from January 6, 2023 with the United States Magistrate, Judge Steven Yarbrough. This is the fifth eDiscovery decision in this case and the 33rd decision from Judge Yarbrough that is included in the eDiscovery Assistant database.

In this decision on a motion to reconsider sanctions for failure to preserve under Rule 37(e)(2), Judge Yarbrough finds that new text message data is sufficient to determine intent for sanctions, but that there are open questions about whether the spoliated data would be adverse to the plaintiff.

Background

A little bit about the background on this case. We are before the Court now on a motion to reconsider a previous motion for sanctions. On the previous motion for sanctions, which took place in May of 2021, Meow Wolf asserted that the plaintiff had spoliated evidence when she deleted five years of email from her old Gmail account.

The Court denied that original motion for sanctions, holding that, “Although the timing of plaintiff’s deletion of these emails is suspicious, the circumstantial evidence related to plaintiff’s deletion of these emails is insufficient for the Court to conclude that plaintiff deleted these emails with the intent to deprive defendants from discovering them.” We are essentially without what was necessary for intent on the previous motion for sanctions. Back in front of the Court now on a motion to reconsider motion for sanctions following new evidence that was discovered.

Facts

Facts of the case are these. The plaintiff here is an artist who created imagery called Space Owl, and the defendant, Meow Wolf, which is an art museum, wanted to incorporate plaintiff’s art in multiple ways for exhibits, including in a VR experience and other expressions. The case is essentially about whether or not Meow Wolf had permission to do so and plaintiff’s compensation for the use of her art in 2018. That’s an important year to keep in mind.

Now, after some back and forth communications in which the plaintiff believed that Meow Wolf was using the art without permission, she rejected the proposed contract with the museum and declined to sell rights to Space Owl to Meow Wolf. All of these communications took place between late January and May of 2018.

After she declined to sell rights to the Space Owl, she learned that the museum had printed and sold coloring books containing an image of Space Owl. There were some other questions as to whether or not they had used the art images in other capacities.

The plaintiff filed for a copyright on her art on June 24, 2018, so shortly after the communications broke down regarding use of that art by Meow Wolf. On June 26, 2018, she wrote to Meow Wolf asking how many copies of the coloring book had been printed and sold.

We have to turn for a second here to the cornerstone of the motion for sanctions, and that is that the plaintiff had in use from 2013 to 2018 a Gmail account that she stopped accessing and using following a notification of a breach around March 27, 2015. She had the Gmail account open from 2013 to 2018. She stopped using the account in 2015.

Several months after she stopped using the account in March of 2015, she set up an auto responder to encourage those contacts to reach out to her to get the new email address, but she did not provide it in the auto responder. At that same time, she created a new Gmail account and conducted all of her communications with Meow Wolf through that second Gmail address.

The evidence here shows that there are several instances where the auto responder from the first Gmail account went to Meow Wolf personnel at least five times. Sometimes the person that received the auto responder forwarded the information to the new email. Other times he did not.

Now, we all know those kinds of situations where you have someone’s old email in, and it automatically populates when you go to type their name in email, and you send it to the wrong email address. That’s what happened here.

Fast forward back to 2018. On June 27, 2018, one day after she sent the letter to Meow Wolf, the plaintiff accessed her old Gmail account, the one that had been breached, and deleted five years of emails from the date of deletion on June 27, 2018 back to 2013. Nothing happened for a year. Then a year later, the plaintiff hired an attorney and wrote a letter to Meow Wolf threatening litigation.

Discovery in the case showed that the parties exchanged hundreds of emails to the new email account and via Slack from early 2015 through June of 2018. On the motion for sanctions, following when defendants learned of the deletion of the first Gmail account, the plaintiff testified, via affidavit, that “litigation against Meow Wolf was inconceivable” at the time she deleted the evidence.

Then the Court compelled the plaintiff to produce communications from April 1st, 2018 forward. Following that motion to compel, the plaintiff produced a text message string from June 26, 2018, the day before the deletion, containing multiple statements that she needed to hire a big gun attorney, that she needed to find an attorney to scare Meow Wolf into compliance, and additional language that clearly indicated she was trying to prevent litigation.

Following the discovery of these text messages, Meow Wolf sought reconsideration on the motion for sanctions, asking the Court to find intent, and seeking an order permitting them to introduce evidence of plaintiff’s deletion of the emails, an adverse inference instruction, as well as attorney fees and costs.

Those are the facts that we have. We essentially have a previous motion for sanctions where there was no intent, then subsequent discovery of text messages that potentially shows intent, and it’s up to the Court now to reconsider that motion for sanctions.

Analysis

What is the Court’s analysis here? Well, the Court begins with the analysis under Rule 37(e)(2), that permits a court to either order an adverse inference instruction only upon a finding that the party who failed to preserve evidence acted with the intent to deprive another party of the use of the information.

The next question for the Court under the analysis is whether or not the plaintiff had a duty to preserve at the time she deleted her Gmail account. That’s the usual question that we ask here.

The standard in the Tenth Circuit, which is where the District of New Mexico lies, uses the language of “imminent,” which the District Court equates here to be what we consider “reasonably foreseeable” and states that:

The plaintiff cannot decide to sue, delete adverse relevant evidence, wait some period of time, file suit, and then successfully avoid liability for spoliation by claiming that, although foreseeable, the lawsuit was not ‘imminent’ at the time of deletion. Counting the number of months or number of years in between the deletion and the filing of the lawsuit is not always the best litmus test to determine reasonable foreseeability.

This is really an analysis of language used in the Tenth Circuit because many of the cases cited by the Court here note that “imminent” is the standard as opposed to reasonable foreseeability. The Court here equates the two terms and finds that based on the facts here that litigation was reasonably foreseeable and that a duty to preserve existed.

Once the duty to preserve exists, the Court next looks to what the plaintiff’s intent was and whether the plaintiff deleted her emails based on the prospect of impending litigation, despite her multiple assertions that was not the case. Then the Court goes through a litany of facts as to why the Court found the timing of the deletion to be suspicious on the initial motion.

Now, what’s key here is that the Court goes back to its initial motion and looks at all the facts that it found to be problematic — and then looks to this new text message string that was found later in discovery that really points to specific intent because the of timing of the text message string and the words in it.

The most telling of this information is that timing that I mentioned. Plaintiff deleted the email account the day after those text messages, even though she stated that she deleted her Gmail account due to a data breach that had occurred three years prior.

The Court agreed with Meow Wolf that the timing of plaintiff’s email deletion was always suspicious and that new evidence regarding her intent shown through her text messages was enough to tip the balance to show that the plaintiff acted in bad faith as required under Rule 37(e)(2). The Court states that the facts “demonstrate that the plaintiff performed her mass deletion of emails with the intent to deprive defendants of discovering them.”

Now, the next analysis for the Court considers whether the deleted information was adverse to the plaintiff, or put more simply, the question is whether the delete of information would have been bad for the plaintiffs. This is where we get into a situation of how is the party arguing against data that was lost going to be able to establish that the lost data was actually bad. This is the problem that we run into in all of these situations under Rule 37(e)(2), and this one is no different.

The Court looks at the facts here and goes through, as some of which we’ll discuss, a litany of reasons as to why it will not instruct the jury to draw an adverse inference from the deletion. The Court notes that “reasons exist to doubt that the emails plaintiff deleted contained information adverse to her case”:

• Irrelevant emails to and from Meow Wolf were present on the defendant’s systems;
• Plaintiff did not delete emails from the new gmail account that she had given to Meow Wolf, and that was used for the bulk of the correspondence between the parties.
• Any emails sent to the old account would have prompted the auto responder and would have been maintained by Meow Wolf because they were received by the museum, so they were available from another source.

Plaintiff was not actively using the old email account during the entire time she was negotiating with Meow Wolf. Defendants were then permitted to conduct a forensic examination of plaintiff’s devices, and that examination yielded no additional evidence that the defendants put forth on their motion for reconsideration.

As a result of all those facts, the Court found that the defendant’s ability to conduct the forensic examination of plaintiff’s devices and the fact that it yielded no additional information dissuaded the Court from instructing a jury that it must conclude something about which the Court is unconvinced — that the emails plaintiff deleted contained information that, if discovered, would have harmed her case.

The Court also found that the plaintiff’s explanation that she deleted the email account three years after the breach was not credible and that a reasonable jury could conclude that the plaintiff deleted those emails because she feared their discovery would harm her position in the litigation. As a result, the Court would allow the jury to decide whether an adverse inference should be drawn.

What does that mean? In short, the Court really concludes that the prospect of impending litigation with Meow Wolf, combined with the plaintiff’s desire to prevent Meow Wolf from obtaining emails in her first Gmail account, motivated her to delete the emails in this account. The Court further concluded that in a sworn affidavit, plaintiff provided an untrue ulterior motive for deleting those emails, but that did was not determinative of what was in the deleted information:

Nonetheless, what plaintiff wanted to prevent defendants from seeing is unclear. Because reasonable fact finders could draw different conclusions from the email deletion, the court rejects defendant’s request to instruct the jury that it must draw an adverse inference. Instead, the court will allow defendants to introduce evidence of plaintiff’s deletion of her emails from her first email account.

The Court goes on to grant defendant’s request for attorney’s fees and costs, both on the original motion for sanctions and on the motion for reconsideration.

Takeaways

Okay, what are our takeaways here? Well, let’s talk first about the intent standard. We’ve discussed multiple times that the intent standard under Rule 37(e)(2) requires an active step to destroy data and find intent, and we have that here. Defendants leap that hurdle by getting the text messages that show the intent when just the deletion of the data on the original motion was not sufficient.

The takeaway is on your motion for sanctions, do you have sufficient information to show that intent was present? It’s not going to be enough just that data was spoliated. You’ve got to show that there was an active intent to get rid of that data. Then you’ve got to leap the second hurdle, which is the problem for defendants here, whether or not the Court has any basis to believe that the deleted data would have negatively impacted the party who deleted it.

Here, the Court had concerns, and rightly so, about whether the deleted Gmail account had any data that the defendant didn’t already have, and the fact that she had communicated with them, primarily via the second Gmail account set up in 2015, three years before the issues arose that are the subject of litigation.

What do we take away from that? Well, intent requires a physical action to destroy data. Any other case where the data is allowed to disappear, even when a party knows it will, will not reach the high bar for intent. We’ve seen that multiple times in our Case of the Week, in the DR Distributors case and other ones.

The second element of this inquiry is about whether the deleted data adversely affects the party who spoliated it, and that was where the facts and the timeline put forth to the Court were incredibly key here. It’s the presentation to the Court of the facts and timing that is crucial. Courts can only deal with what’s in front of them, and the more specific you are and the easier the presentation is to the Court, the better case you’re going to make.

Ultimately here, the plaintiff still has a hole to dig out of at trial. But if you think through the examination on cross and direct discussing the deleted Gmail account, there doesn’t seem like much here that won’t seem like Meow Wolf is trying to make a big deal out of nothing. The Court’s decision to allow the jury to hear the evidence and factor it in vs. giving an adverse instruction is huge here.

If you’re fighting a motion for sanctions where intent is found, this needs to be your fallback position that the lost data would have no relevance to the claims at hand or that it is available from other sources. Our key takeaway here is know and understand the elements of Rule 37(e), particularly when you’ve got a situation where intent can be determined. Make sure you’re presenting the facts to the Court in a way that allows them to fit neatly within the analysis of Rule 37(e).

Conclusion

All right, that’s our Case of the Week for this week. Thank you so much for joining me. We’ll be back again next week with another decision from our eDiscovery Assistant database. If you’re interested in doing a free trial of our case law and resource database, please get started or reach out to us at support@email@ediscoveryassistant.com.

Thanks so much. Have a great day.