Spoliation — Adverse Inference Requires Bad Faith But Not Malice in Eleventh Circuit — Negligence, Even Recklessness, Is Insufficient

Silver v. Countrywide Home Loans, Inc., 2012 U.S. App. LEXIS 11620 (11th Cir. June 8, 2012):

Silver contends that the district court abused its discretion by not imposing sanctions and by not finding an inference of spoliation against Countrywide for failing to turn over emails relevant to the case and for failing to have a proper litigation hold placed on Silver's file.

"In the Eleventh Circuit, an adverse inference is drawn from a party's failure to preserve evidence only when the absence of that evidence is predicated on bad faith. While this circuit does not require a showing of malice in order to find bad faith, mere negligence in losing or destroying records is not sufficient to draw an adverse inference." Mann, 588 F.3d at 1310 (citation and quotations omitted).

On September 23, 2010, Countrywide's counsel informed the magistrate that there had been a diligent search for all relevant emails and that none had been found because there was no formal retention policy. However, counsel also stated that she was currently working with Countrywide to ensure that there really was no possible way to recover any old emails. The magistrate ordered Countrywide to file an affidavit explaining what had been done to find the emails, what the company's retention policy was, and what notice had been sent to Countrywide employees regarding the retention of documents relevant to Silver's case. On October 11, 2010, Countrywide submitted the affidavit of Barbara Travis, who is a litigation specialist at Countrywide Home Loans Servicing, stating that she had requested the office of the president, as well as the vice presidents of several departments, to search for relevant emails, but none had been uncovered. The vice president of the IT department was also in the process of searching for the emails but had informed Travis that Countrywide had a ninety-day email retention policy.

Travis was deposed on December 10, 2010. She testified that Countrywide actually had an email 'deletion policy,' which stated that employees could delete emails whenever they wanted, but all emails older than ninety days would be automatically deleted forever. However, Travis had recently been informed by the IT department that certain "journaled" employees had their old emails automatically archived on a third party's back-up servers. No employee knew whether he or she was a "journaled" employee. Travis testified that, after the magistrate's September 23 order, the IT department began searching these back-up servers for "journaled" employees' old emails. At the time of Travis's deposition, the search was still on-going but had already uncovered several emails relevant to Silver's case.

Travis also testified that in May 2009, a litigation hold was placed on Silver's file. Travis's testimony on this subject consisted mostly of her indicating that she was not involved in deciding whether to put a litigation hold on a file nor whether any actions should be taken in terms of preserving documents that might be relevant to the file.

We find no abuse of discretion in the district court's decision not to impose sanctions and not to find an inference of spoliation. With respect to the emails on back-up servers, Silver makes much of the fact that Travis's affidavit conflicts with her later deposition testimony. However, her initial lack of knowledge about the pseudo-secret archival of "journaled" employees' emails is properly characterized as carelessness at most. See Mann, 588 F.3d at 1310 (holding that "an adverse inference is drawn from a party's failure to preserve evidence only when the absence of that evidence is predicated on bad faith"). Also, Travis's testimony indicated that there were actually more emails than originally believed and that Countrywide was working to continue searching the back-up servers. If Countrywide were acting in bad faith, it seems unlikely that it would reveal that its search of back-up servers had uncovered relevant emails.

As for the litigation hold policy, Silver's argument of bad faith relies exclusively upon Travis's testimony. Silver claims that Travis's testimony shows that Countrywide had no real litigation hold process. However, Travis testified that a special notation was placed on files that are put on litigation hold. The remainder of Travis's pertinent testimony is to the effect that she was not personally involved in the decision to place a file on litigation hold, nor was she involved in any decisions to preserve relevant documents. This evidence is insufficient to show that the district court abused its discretion by failing to impose sanctions or find an inference of spoliation. Accordingly, we find no error in the district court's decision on these issues. See Eli Lilly, 615 F.3d at 1313.

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