From Reed v. Honeywell Int’l, Inc., 2009 U.S. Dist. LEXIS 35384 (D. Ariz. April 27, 2009), a claim by a returning veteran for violation of the Uniformed Services Employment and Reemployment Rights Act of 1994 ("USERRA") for, among other things, discriminating against her because of her military service and discharging her within one year of her re-employment:

… Plaintiffs argue that Honeywell failed to preserve Mr. Eden's handwritten notes after he left Honeywell's employment and seek to exclude evidence about Mr. Eden's "conversations with Plaintiff and others regarding her performance, his alleged investigation, including any reference to his alleged interviews of numerous employee witnesses, and his report and Powerpoint presentation of his recommendations." …

Mr. Eden apparently took the notes in question during his investigation of the potential abuses of the BRAVO system [which allowed employees to give one another $ 25 cash awards, without management approval, for recognition or as a thank you] when he interviewed at least eight of Ms. Reed's subordinates and another individual. These were handwritten notes that he kept "forever" and used in preparing his report and Powerpoint presentation in which he recommended that Ms. Reed be fired….

Mr. Eden left Honeywell in September 2005 and testified that he left these handwritten notes in a manila file in his desk at Honeywell…. He testified that he did not destroy these notes and that he did not take them with him…. However, Honeywell apparently made no efforts to preserve these notes despite Honeywell's express policy in effect at the time that required the retention of all investigation notes…. When an attorney for Honeywell was asked what happens to notes and records that are left in a departing employee's desk, she replied "Hopefully the next HR person would pick them up. But I can't tell you what happens in every case." …

Plaintiff has produced an email that demonstrates that Honeywell recognized the potential for litigation regarding the BRAVO terminations as early as August 16, 2004, over a year before Mr. Eden left….

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A district court has the inherent power to levy sanctions for spoliation of evidence…. As Defendants concede, a party's destruction of evidence need not be in "bad faith" to warrant a court's imposition of sanctions in the Ninth Circuit…. Defendants argue that the loss was inadvertent and that inadvertent losses do not warrant sanctions. Med. Lab. Mgmt Consultants v. Am Broad Cos., 306 F.3d 806, 824 (9th Cir 2002) (holding that trial court did not abuse its discretionary power in refusing to order an adverse inference for inadvertently lost slides that were either misplaced or stolen between a hotel room in Geneva and Defendants' expert's landing in New York City). However, in the Ninth Circuit, sanctions may be awarded even for inadvertent loss. Leon v. IDX System Corp., 464 F.3d 951, 959 (9th Cir. 2006) (affirming $ 65,000 spoliation sanction where party had some notice of pending litigation but claimed that it overwrote computer files to protect privacy rather than to avoid litigation). Defendants attempt to distinguish this case on the basis that in Leon, there was no secondary evidence available of the files, whereas here, they argue, the Mr. Eden's typed summaries qualify as a reasonable approximation of the underlying handwritten notes and that these typed summaries eliminate any potential prejudice to Plaintiff. However, a review of the typewritten memoranda reveal that they are summaries of what occurred in the meetings rather than "transcriptions" of the notes spontaneously taken during a meeting. Plaintiffs are therefore left without a meaningful alternative to Mr. Eden's handwritten notes. Moreover, "[t]he duty to preserve material evidence arises not only during litigation but also extends to the period before the litigation when a party reasonably should know that the evidence may be relevant to anticipated litigation." … Defendants apparently anticipated litigation on this matter at least a year prior to Mr. Eden's departure and the disappearance of the notes.

Without access to the notes, Plaintiffs are unable to cross-examine Mr. Eden regarding any discrepancies between the handwritten notes and his typewritten summaries. The notes could have revealed inconsistencies in his testimony about what the witnesses told him and might have revealed any exaggerations or mistakes in memory. They also would have revealed any inconsistencies between what the witnesses told him and what they told the ultimate decisionmakers. Plaintiffs are unable to obtain this information from any other source. Plaintiffs thus appear to have established that they are prejudiced by Honeywell's inadvertent loss of Mr. Eden's notes.

The only remaining question is the appropriate sanction.

Sanction to be determined at trial; adverse inference to be considered.