Facts

In Miramontes v. Peraton Inc., an employment discrimination case, plaintiff moved for sanctions against defendant for its failure to preserve text messages and a skills assessment related to plaintiff’s performance. Plaintiff – a senior supply chain business partner manager – was a 27-year employee of Prospecta when the company was acquired by defendant Peraton.

Post-merger, Peraton decided to eliminate plaintiff’s position and move him from a supply chain manager to a category manager. Notably, in the year prior to the merger plaintiff received a positive performance review from his manager. Then Peraton began a series of layoffs, internally referred to as Project Falcon, during which plaintiff was terminated. Defendant claims Project Falcon was a company-wide reduction in force necessitated by budgetary constraints. However, when being terminated via a Zoom call, plaintiff’s supervisor purportedly told plaintiff twice (without prompting) that his age had nothing to do with his termination. And so, plaintiff contends Project Falcon was nothing more than a “sham” created to disguise defendant’s discriminatory age and racially motivated termination decisions.

Shortly after plaintiff was terminated, he sent a preservation demand to Peraton, placing it on notice to preserve all documents regarding his anticipated claims, including, “information, data, emails, texts, attachments, and other method or means of communications internally or externally, and not to allow the deletion of these documents.” In response, Peraton directed plaintiff’s supervisor to preserve emails. Defendant evidently did not mention preserving text messages.

Several months after issuing the preservation demand, plaintiff sued Peraton alleging, among other things, claims for breach of contract, negligent misrepresentation, and age and race discrimination. At his deposition, an employee testified he once or twice used his personal cell phone to text his supervisor (also plaintiff’s supervisor) about plaintiff. That same employee also testified he received a litigation hold letter from plaintiff, and upon receipt texted his supervisor asking, “have you seen this?” He further testified he did not read the entire litigation hold and was unaware of his duty to preserve text messages. The employee was not able to produce the text messages because he deleted them, which was his alleged normal practice. This failure to preserve was the first of two issues relevant to the sanctions motion.

The second issue related to a skills matrix template that was the alleged basis for plaintiff’s termination. The produced document — which indicated that plaintiff was not performing well — lacked any evidence regarding who completed the form or the factors used or communications considered when filling out the form, and stood in stark contrast to the performance review plaintiff received from his supervisor.

The Court’s Analysis

The court first analyzed whether spoliation existed as a basis for sanctions. Specifically, the court assessed whether the spoliating party had control of the evidence and if it was under an obligation to preserve the evidence at the time of destruction; whether the evidence was intentionally destroyed; whether plaintiff demonstrated the spoliating party acted in bad faith; and whether plaintiff was prejudiced by the destruction of evidence. The court also noted at the outset that judges are afforded broad discretion in determining the appropriate sanction proportional to the conduct of the spoliating party and the resulting prejudice, if any.

The crucial issue regarding the text messages is one of control. Defendant argued that because the texts were on an employee’s personal phone, and it therefore lacked control of the phone, it did not have a duty to preserve the messages. Plaintiff, on the other hand, alleged and put forward evidence that employees were required to use their personal phones for business and regularly did so. And so, defendant had reason to preserve same. The court evaluated the concept of control using a four-factor test: whether the employer issued the devices; how frequently the devices were used for business purposes; whether the employer had a legal right to obtain communications from the devices; and whether company policies address access to communications on personal devices.

The court in its analysis rejected the legal right test (employer only has control if it has a legal right to obtain texts) and also rejected the practical ability test embraced by other courts stating instead that, the realities of modern business require a fact-specific approach. According to the court:

Today, many, if not most employees, use cell phones for work. While some companies issue work devices, others, including Peraton, do not. Under Peraton’s view, a company could effectively shield a significant amount of its employees’ business communications from discovery simply by allowing its employees to conduct business on their personal phones. For these reasons, the Court agrees with other courts that have found electronically stored information on employees’ personal devices may be under the control of their employer in certain circumstances.

The court then found the employee’s phone and the messages on it, which were text messages to plaintiff and plaintiff’s supervisor, were under defendant’s control, relying on the evidence presented by plaintiff that defendant did not issue company cell phones and employees regularly conducted business on personal phones. The court also found defendant had a duty to preserve, and its employees knew about the lawsuit when the messages were destroyed. In fact, the one employee sent certain messages in response to receiving a litigation hold letter.

The court then addressed the burden faced by a moving party when seeking to demonstrate the destroyed evidence is relevant:

“’Courts recognize that the burden placed on the moving party to show that the lost evidence would have been favorable to it ought not to be too onerous lest the spoliator be permitted to profit from destruction,’” and that they should “consider whether ‘the evidence in the case as a whole would allow a reasonable fact finder to conclude that the missing evidence would have helped the requesting party support its claims or defenses.’”

Against that standard, the court found a fact finder would conclude the missing texts support plaintiff’s claim based on the fact that the text messages were created contemporaneously with the legal hold; were between the two people who could have filled out the skills matrix that addressed why plaintiff was terminated, and because relevance could be concluded, plaintiff was prejudiced by the deletion. The court further concluded the messages were intentionally destroyed because of the employee’s testimony he actively deleted them within the scope of his employment – making defendant vicariously liable for his actions. The court also found defendant acted in bad faith, when knowing of the impending litigation it instructed employees not to delete email but did not mention text messages, notwithstanding that defendant knew employees used personal phones for business purposes.

Plaintiff’s having met his burden to show spoliation, the court addressed what sanctions were appropriate, noting they cannot be harsher than necessary to respond to the need to punish or deter and to address the impact on discovery. Here, the sanction was the denial of defendant’s motion for summary judgment – a sanction not found in Rule 37 – and granting additional discovery for plaintiff. However, as mentioned supra, the court has broad discretion when fashioning a sanction. And so, not only was the court within its rights when issuing this one, but it was a logical sanction insofar as the court found the spoliated messages may have raised a factual dispute about the circumstances of plaintiff’s termination.

Conclusion

This decision serves as a reminder that legal hold notices should expressly include text messages and any other source of ESI that may be relevant, and strict compliance with such notices is critical. This decision also seems to dial back the burden ordinarily placed on the moving party to establish relevance of the missing messages. Here, the judge took a logical approach to determine relevance (albeit one without much support): when the current supervisor is texting the former supervisor at the same time a legal hold is sent, and those are the people most familiar with the skills matrix justifying plaintiff’s termination.

Also, the decision serves as a potential lesson for companies regarding how organizations approach employees’ use of personal mobile devices.