Pending in the Southern District of Ohio, Safelite Group, Inc., v Nathaniel Lockridge et. al.reminds counsel of the importance of being active in the preservation process and reminds litigants of the importance of preserving text messages. 

Background

Nationwide auto glass repair and replacement provider Safelite Group, Inc. employed defendant Nathaniel Lockridge, and in 2020 reassigned him to a store manager position at a Tucson, Arizona location. Upset by this change, Lockridge contacted a former colleague, defendant Jeffrey Nowak, to inquire about joining Safelite competitor Caliber Collision Centers, a body shop that had expanded its collision services to include auto glass repair and replacement.

Soon thereafter, defendant Lockridge left his position at Safelite to work for Caliber. Ten days later, Lockridge sent an email to a recruiter at Caliber, stating:

Hey Chris,

Here are the leads for tech in Tucson. These are all techs that I have worked with and all would make a great addition to the team. I have also talked to all of them and they know you will be reaching out to them.

Richard Gracia-…Master Tech

Alex Royal-…Master Tech

Tirell Lovett-…Senior Tech

Kevin Mancera-…Tech

William Gibes-…Tech (Tentative) Trying to buy a house 

Thank you sir.

The next day, Lockridge texted Richard Gracia: “Hey bro, when you fill out the app go to the website and look for jobs in Phoenix.” 

Safelite viewed Lockridge’s actions as a violation of Lockridge’s contractual obligations. On Aug. 27, Safelite sent Lockridge a cease-and-desist letter that, among other things, put Lockridge on notice that he was bound by the terms of the Non-Competition, Non-Disclosure, Non-Solicitation and Assignment of Inventions Agreement dated March 1, 2016, precluding him from associating with or rendering services to any business engaged in competition with Safelite within the geographic area for 12 months following the end of his Safelite employment. The letter requested Lockridge provide confirmation he would abide by the Agreement and provide a written acknowledgement by a certain date. In closing, the letter indicated that while Safelite desired to resolve the matter without litigation, the company would vigorously pursue the matter if Lockridge failed to provide the requested assurances.

Soon thereafter, Safelite sued, alleging that Lockridge, at Caliber’s direction, used Safelite’s proprietary information to persuade Safelite employees and customers to take their talents and their business to Caliber.

Lockridge met with counsel who advised him orally of his obligation to retain and not destroy, delete, or throw away any documents, records, or communications that dealt with the lawsuit’s allegations. Approximately three months later, during a conference with counsel, Lockridge “learned [that his] personal phone was set to auto-delete text messages after 30 days.”

During discovery, Safelite asked Lockridge to produce all communications, including text messages and text conversations. Lockridge did not produce any text messages and disclosed the auto-delete issue. In response, Safelite moved for sanctions based on Lockridge’s failure to preserve his text messages.

Legal Standard

In finding sanctions were warranted, the court set out the applicable legal standard and applied that analysis to the facts before the court. Specifically, the court noted that a party to civil litigation has a duty to preserve information, including electronically stored information (ESI), when he knows (or should know) the information may be relevant to future litigation. When that duty is breached, and relevant information has been spoliated, a court may impose appropriate sanctions. To prevail upon a court to issue spoliation sanctions, a party must show that:

1. ESI that should have been preserved in the anticipation or conduct of litigation was lost;
2. The party responsible for preserving the information “failed to take reasonable steps to preserve” it; and
3. The information “cannot be restored or replaced through additional discovery.”

Fed. R. Civ. P. 37(e).

If a movant satisfies these three threshold elements, a court can sanction the non-producing party in one of two circumstances, depending on the cause and effect of the spoliation.

First, a court can impose sanctions if the loss of information prejudices the movant, regardless of the non-producing party’s intent. Fed. R. Civ. P. 37(e)(1).

Second, a court can impose sanctions if the non-producing party intended to deprive the movant of the information’s use in the litigation, regardless of whether the movant can show prejudice. Fed. R. Civ. P. 37(e)(2). When a court finds intentional spoliation, it can order more severe sanctions, such as an adverse-inference instruction to a jury. However, a court cannot impose the Rule 37(e)(2) sanctions without a demonstration of intent.

Here, the court found Safelite satisfied the three threshold elements of Rule 37(e). Specifically,

• The letter put Lockridge on notice of potential litigation, triggering his duty to preserve. Moreover, there is no dispute that Lockridge’s text messages before Jan. 4, 2022, are lost—nor is there any dispute as to how that happened.
• Lockridge failed to comply with Rule 37(e)’s requirement that he take reasonable steps to preserve the text messages. The court found Lockridge made no effort to preserve his text messages, which were under his exclusive control. The court further determined that Lockridge’s failure to preserve his text messages was exacerbated by his lawyers’ failures. Indeed, counsel are obligated to both implement a litigation hold and “monitor[ ] a party’s efforts to retain and produce the relevant documents.” The court further noted that oral litigation holds are insufficient to reasonably protect against evidence spoliation and a hold that fails to instruct a party to disable auto-deletion functions is not much of a litigation hold.
• Finally, the court concluded the text messages could not be restored or replaced through additional discovery. Without the lost text messages, the court determined plaintiff was deprived of the opportunity to know “the precise nature and frequency” of those private communications, which occurred during a critical period.

The court then went on to determine Safelite satisfied the two elements of Rule 37(e)(1). Specifically, that Lockridge was negligent (not acting intentionally) in failing to preserve the text messages.[1] The court determined that Lockridge, his counsel, and Caliber needed to face the consequences for their collective failure to take reasonable steps to preserve evidence. The record before the court contained clear and convincing evidence that Lockridge was negligent—though, not intentional—in failing to preserve his text messages. Because Safelite had not shown that Lockridge intended to deprive it of evidence, the court turned to whether Safelite has been prejudiced by the loss of the text messages. See Fed. R. Civ. P. 37(e)(1). “Prejudice can be properly understood as a party’s ability to obtain the proofs necessary for its case…which is another way of saying the loss of ESI could negatively impact a party’s ability to make its case, or prejudice that party because of the loss of information.” 

Establishing prejudice when ESI has been destroyed and the contents are unknown is challenging. On this point, the Advisory Committee[2] advises:

The rule does not place a burden of proving or disproving prejudice on one party or the other. Determining the content of lost information may be a difficult task in some cases, and placing the burden of proving prejudice on the party that did not lose the information may be unfair. In other situations, however, the content of the lost information may be fairly evident, the information may appear to be unimportant, or the abundance of preserved information may appear sufficient to meet the needs of all parties. Requiring the party seeking curative measures to prove prejudice may be reasonable in some such situations. The rule leaves judges with discretion to determine how best to assess prejudice in particular cases.

The court found Safelite demonstrated it was prejudiced by Lockridge’s failure to preserve his text messages. Records subpoenaed from Lockridge’s phone carrier show that he exchanged extensive text messages with relevant individuals during a critical period. The discovery that was produced demonstrates that Lockridge was communicating with Caliber about Safelite’s technicians during that same critical period, and that he was talking to the technicians about going to Caliber. Safelite is entitled to discovery of his communications, including his text messages; it is not required to rely on his testimony that the messages were unrelated to the issues in this litigation.

The court determined sanctions were appropriate, noting the severity of the sanction is determined on a case-by-case basis, depending in part on the non-producing party’s level of culpability. Where, as here, a court finds that the movant was prejudiced by the loss of evidence, it may order “measures no greater than necessary to cure the prejudice.” Fed. R. Civ. P. 37(e)(1). A court has discretion to fashion an appropriate sanction, and “[t]he range of such measures is quite broad if they are necessary for this purpose.” Fed. R. Civ. P. 37(e), Advisory Committee’s note to 2015 amendment. Nevertheless, courts must “ensure that curative measures under subdivision (e)(1)” do not have the effect of those measures (enumerated in subdivision (e)(2)) reserved for use on a finding of intent. 

The court, after considering the whole record in assessing the extent to which Safelite had been prejudiced by the lost text messages, ordered that Safelite will be permitted to introduce evidence at trial of the letter and of Lockridge’s failure to preserve his text messages. Safelite may also argue for whatever inference it hopes the jury will draw. Additionally, when a court grants a motion for Rule 37 sanctions, it may award the reasonable expenses incurred in making the motion. Fed. R. Civ. P. 37(a)(5)(A). Here, the court awarded Safelite attorneys’ fees and costs associated with all discovery related to the dispute.

[1] The court can impose the most severe sanctions only if it finds that Lockridge intended to deprive Safelite of the use of the text messages. Fed. R. Civ. P. 37(e)(2); To find that a party acted with intent to deprive another of evidence, a court must find by clear and convincing proof that the party acted with the specific purpose of gaining an advantage in the present litigation. But where information loss can be credibly explained by something other than bad faith, a finding of intent is not appropriate.

[2] The Federal Rules of Civil Procedure Advisory Committee is a group that evaluates and recommends changes to the Federal Rules of Civil Procedure.