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Spoliation — Dismissal Factors and Weighting — Bad Faith — Ninth Circuit Standards

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Volcan Grp., Inc. v. Omnipoint Commc’ns, Inc., 2014 U.S. App. LEXIS 451 (9th Cir. Jan. 9, 2014):

Volcan Group, Inc. d/b/a Netlogix ("Netlogix") appeals the district court's dismissal of its breach of contract action against T-Mobile USA, Inc. ("T-Mobile") as a sanction for Netlogix's spoliation and fabrication of evidence. We have jurisdiction pursuant to 28 U.S.C. § 1291. We affirm.

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Having found spoliation, the district court did not abuse its discretion in dismissing the action. A district court should consider a number of factors prior to dismissal, including "(1) the public's interest in expeditious resolution of litigation; (2) the court's need to manage its dockets; (3) the risk of prejudice to the party seeking sanctions; (4) the public policy favoring disposition of cases on their merits; and (5) the availability of less drastic sanctions." Anheuser-Busch, Inc. v. Natural Beverage Distribs., 69 F.3d 337, 348 (9th Cir. 1995) (quoting Henry v. Gill Indus., Inc., 983 F.2d 943, 948 (9th Cir. 1993)). However, explicit findings by the district court are not required. See In re Phenylpropanolamine (PPA) Prods. Liab. Litig., 460 F.3d 1217, 1226 (9th Cir. 2006).   Rather, we may independently review the record to determine whether the district court abused its discretion. Id. We thus consider each factor in turn.

The first two factors weigh in favor of dismissal. See Leon, 464 F.3d at 958 n.5; see also id. at 960. Given the loss of potentially relevant evidence as a result of Netlogix's spoliation, the third factor does as well. See id. at 959 (noting that the pertinence and force of lost evidence "cannot be clearly ascertained because the documents no longer exist," and the party responsible "can hardly assert any presumption of irrelevance as to the destroyed documents" (quoting Alexander v. Nat'l Farmers Org., 687 F.2d 1173, 1205 (8th Cir. 1982)) (internal quotation marks omitted)). While the fourth factor typically militates against dismissal as a sanction, this factor alone "is not sufficient to outweigh the other four factors." Id. at 961 (quoting Malone v. U.S. Postal Serv., 833 F.2d 128, 133 n.2 (9th Cir. 1987)). Finally, although the fifth factor considers "whether the court explicitly discussed alternative sanctions, whether it tried them, and whether it warned the recalcitrant party about the possibility of dismissal . . . [,] it is not always necessary for the court to impose less serious sanctions first, or to give any explicit warning." Valley Eng'rs Inc. v. Electric Eng'g Co., 158 F.3d 1051, 1057 (9th Cir. 1998). In any event, Netlogix was well-aware that the district court was considering dismissal of the case as a sanction for Netlogix's misconduct.

The record also supports the district court's finding that Netlogix's spoliation of evidence resulted from "willfulness, fault, or bad faith." Anheuser-Busch, 69 F.3d at 348 (quoting Henry, 983 F.2d at 946) (internal quotation marks omitted). The district court thus had a sufficient basis for concluding that Netlogix's "discovery violations ma[de] it impossible . . . to be confident that the parties [would] ever have access to the true facts." Conn. Gen. Life Ins. Co. v. New Images of Beverly Hills, 482 F.3d 1091, 1097 (9th Cir. 2007) (quoting Valley Eng'rs, 158 F.3d at 1058) (internal quotation mark omitted).

"'Although dismissal [is] harsh,' . . . we do not disturb the district court's choice of sanction unless we have a 'definite and firm conviction that the district court committed a clear error of judgment in the conclusion it reached upon a weighing of the relevant factors.'" Leon, 464 F.3d at 961 (quoting Yourish v. Cal. Amplifier, 191 F.3d 983, 992 (9th Cir. 1999)). We have no such conviction in the present case.

 

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New York Attorneys JHA handles range the gamut of complex financial and commercial litigation and arbitration, including securities, RICO, corporate and contract disputes, credit default swaps, derivatives, and class, mass, and derivative actions. The firm also represents law firms in major disputes.
New York Attorneys JHA handles range the gamut of complex financial and commercial litigation and arbitration, including securities, RICO, corporate and contract disputes, credit default swaps, derivatives, and class, mass, and derivative actions. The firm also represents law firms in major disputes.

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