Loss of Laptop to Theft as Spoliation?

Does a party's loss to theft of a laptop that contains the only copy of electronic data constitute spoliation? This was one of the questions presented to District Judge Nancy F. Atlas in Diabetes Centers of Am., Inc. v. Healthpia Am., Inc., 2008 U.S. Dist. LEXIS 8362 (S.D. Tex. Feb. 5, 2008). The Chief Executive Officer of the corporate defendant (Healthpia) and another executive failed to back up emails that were preserved on their laptops, exclusively, when the laptops were stolen. However: “Email retention on these laptops, although not backed up to a third party or Healthpia server, was handled in accordance with Healthpia's standard procedures.” The plaintiff alleged that the failure to backup and preserve the emails constituted spoliation. Given the absence of any bad faith and compliance with the corporate employer’s email preservation requirements, Judge Atlas determined, in her discretion, not to impose sanctions.

She similarly declined to impose sanctions for the plaintiff’s failure to produce emails that were later produced by a third party. This the Court attributed to the plaintiff’s assigning an unsupervised and inadequately directed associate to handle document productions. “It is apparent that the associate worked with little or no direction or supervision. The search terms used by the associate were inadequate -- they did not even include the term ‘phone’ [even though the GlucoPhone was at the center of the lawsuit] — and, as a result, she failed to locate or perceive the significance of the emails about which Defendants now complain.” The Court considered that both sides had been negligent but had not been acting in bad faith, leading to her decision not to sanction.

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