Kenneth DAY, Plaintiff, v. LSI CORPORATION, Defendant No. CIV 11-186-TUC-CKJ United States District Court, D. Arizona Signed March 28, 2016 Filed March 29, 2016 Counsel James Michael Morris, Morris & Morris PSC, Lexington, KY, for Plaintiff. Kristy Leah Peters, Littler Mendelson PC, Phoenix, AZ, Robert W. Cameron, Littler Mendelson PC, Pittsburgh, PA, for Defendant. Jorgenson, Cindy K., United States District Judge ORDER *1 Pending before the Court are the Motion for Order to Show Cause (Doc. 183) and the Motion for Entry of Judgment and Sanctions, and to Set Hearing on Damages (Doc. 186), filed by Plaintiff Kenneth Day (“Day”). Defendant LSI Corporation (“LSI”) has filed a response (Doc. 201). Although Day has requested oral argument, the parties have thoroughly presented the facts and briefed the issues. Therefore, the Court declines to set this matter for oral argument. See LRCiv 7.2(f); 27A Fed.Proc., L.Ed. § 62:367 (March 2016) (“A district court generally is not required to hold a hearing or oral argument before ruling on a motion.”); I. Factual and Procedural Background[1] In a December 3, 2011, Amended Complaint, Day, a 57-year old Hispanic male, alleges claims of breach of contract, breach of corporate handbook policies, breach of implied covenant of good faith and fair dealing, fraud, deceit, and misrepresentation (fraudulent inducement), interference with a contractual advantage, constructive discharge, intentional and/or negligent infliction of emotional distress, discrimination, and retaliation against Defendant LSI Corporation (“LSI”). On January 7, 2011, counsel for Day sent a letter to LSI CEO Abhijit Talwalkar (“Talwalkar”) and Philip Bullinger (“Bullinger”), LSI Executive Vice President, advising them of potential litigation. (Day Mtn. for Sanctions SOF, 187-4).[2] Also, on that date, Vice President of Law and General Counsel Paul Bento (“Bento”) requested Bullinger, Miland Karnik (“Karnik”) and Robin Huber (“Huber”) to preserve evidence related to Day and his claims. (Bento Depo. (Doc. 197, Ex. F) 28:2-18). Subsequently, Bento made the same request of Peggy Huck (“Huck”) and Ian White (“White”). (Bento Depo. 28:19-25). Bento testified that he did not recall when he requested a retention of Stan Skelton's (“Skelton”) records related to Day. (Bento Depo. 87:2-13). On February 17, 2011, counsel for Day sent a letter to Bento advising him that Day had filed a joint action with the EEOC and the Arizona Attorney General. The letter stated in part: ... In an attempt to assist in your ability to comprehend the seriousness of the issues presented by Mr. Day, and to place LSI on notice of the pendency of a claim, and the need for the company to secure all potential evidence, including, without limitation, all electronic evidence pertaining to Mr. Day, his employment, his management, and the actions taken with regard to his position ... (Day Mtn. for Sanctions SOF, ECF Doc. 187-5, p. 1). The parties agree a Draft Complaint was attached to the letter. LSI points out that the Draft Complaint does not mention a claim for stock. (LSI Response to Day Mtn. for Sanctions SOF (Doc. 202) Ex. D). On April 7, 2011, Day filed a Charge of Discrimination with the Equal Opportunity Commission alleging discrimination based on color, age, and national origin. (Day Depo. 272:13–274:12 & Ex. 45). *2 According to Day, LSI did not timely secure any documentation, computer data, or other information from Skelton; counsel for LSI state that it was LSI's “interpretation of the complaint [ ] that none of the allegations in the complaint involve decisions that Mr. Skelton made.” (12/16/2011 Hearing Transcript, Doc. 83, 13:23-25). Day asserts Skelton testified that emails had been deleted. Additionally, Bento testified that he requested Robert England (“England”) obtain all documentation and data relating to Day. (Bento Depo. 96:1-3). Day cites to England's deposition testimony to assert that he captured the data that Bento requested, no searches were conducted of the Colorado Springs exchange server, and LSI did not timely request LSI's data storage facility, Iron Mountain, sequester any documents related to Day. (England Depo. 15:15–20:19; 31:2-6; 27:22–28:8; 30:22–31:5; 87:20–88:2). However, LSI points out that Day has not provided the cited deposition excerpts. Additionally, LSI points out efforts made by England: Q. So with regard to the Day case, you have not done any data mining, correct? A. That is correct. Other than the systems that we know where he would have had stuff, which is Connected and the e-mail environment. Q. So Connected is what? A. Connected is Iron Mountain's PC backup. (England Depo. 101:5-16). LSI's Records Retention Policy states: The LSI Custodian of Records, Legal and/or Tax departments shall send out a Legal Hold notice to all LSI employees in the event it becomes necessary to suspend the discarding of records under this policy as a result of pending or imminent litigation, governmental investigation, or audit involving the company, even if this policy otherwise permits such discarding. (Day MSJ SOF, Ex. H). The parties have previously briefed discovery and spoliation issues. On December 20, 2012, this Court issued a ruling on spoliation issues. The Court recognized: Where a party seeks sanctions for the spoliation of evidence, that party must “prove the following elements: (1) the party having control over the evidence had an obligation to preserve it when it was destroyed or altered; (2) the destruction or loss was accompanied by a ‘culpable state of mind;’ and (3) the evidence that was destroyed or altered was ‘relevant’ to the claims or defenses of the party that sought the discovery of the spoliated evidence [.]” [Surowiec v. Capital Title Agency, Inc., 790 F.Supp.2d. 997, 1005 (D. Ariz. 2011) ], quoting Goodman v. Praxair Servs., Inc., 632 F.Supp.2d 494, 509 (D. Md. 2009). 12/20/12 Order, Doc. 138, p. 15. The Court recognized that LSI had not followed its own document retention policies as to the Skelton documentation and that it appeared Bento had a culpable mind as to this evidence and that an inference led to a conclusion that the evidence was highly relevant to the litigation. Similarly, the Court determined that the January 2009 Human Resources (“HRD”) document that would establish Day was entitled to an additional 30,000 restricted stock units (“RSUs”) was relevant and that a culpable mind could be imputed to LSI as to this document. Additionally, the Court found that it appeared an email sent from Bullinger stating Day had resigned was relevant and that LSI had a culpable mind as to this document. The Court also determined that non-disclosed Jabber Instant Messages and May 2010 reduction in force documentation had not been shown to be relevant. The Court determined that the use of an adverse instruction would be appropriate as to Day's claims, except for the claim for the additional 30,000 RSUs. As to the RSU's, the Court determined entry of default judgment was appropriate. Lastly, the Court determined a monetary award of $10,000 to be appropriate to represent the additional litigation efforts needed by Day to address the spoliation issues. Following Motions for Reconsideration, the Court issued a ruling vacating, in part, the December 20, 2012, Order. 10/7/14 Order, Doc. 15. The Court determined it had erred in relying on inferences and found Day had not sustained his burden of proof to establish the existence of the January 2009 HRD document or the Bullinger email. Therefore, the Court's award of partial summary judgment (as to the 30,000 RSUs) and the determination that the use of an adverse instruction was appropriate was vacated. *3 Day again raises spoliation issues in the motions pending before the Court. The Court has previously ruled it will limit its review of the spoliation issues to new allegations of spoliation or allegations of spoliation for which there is new evidence. 9/4/15 Order, Doc. 200, p. 2. II. Motion for Order to Show Cause and Motion for Sanctions Day requests the Court to order LSI to show cause why it should not be sanctioned for the knowing and intentional spoliation of evidence and requests the Court to sanction LSI. The Court has discretion to sanction a party who causes the spoliation of evidence. See Leon v. IDX Sys. Corp., 464 F.3d 951, 958 (9th Cir. 2006). Spoliation is the destruction of evidence or the failure to preserve property for another's use as evidence in pending litigation. See United States v. Kitsap Physicians Svs., 314 F.3d 995, 1001 (9th Cir. 2002). Indeed, the failure to “preserve electronic or other records, once the duty to do so has been triggered, raises the issue of spoliation of evidence and its consequences.” Pettit v. Smith, 45 F.Supp.3d 1099 (D. Ariz. 2014) (quoting Thompson v. U.S. Dept. Of Housing & Urban Dev., 219 F.R.D. 93, 100 (D. Md. 2003)); see also Leon, 464 F.3d at 959 (noting willful destruction of electronic files constituted spoliation). Day argues that LSI has intentionally withheld and/or destroyed “substantial records, including all Jabber Instant Messaging, e-mails, LSI handbooks, computer documents, phone records, text messages, instant messages, Plaintiff's computer records, Plaintiff's employment file, Plaintiff's HR documentation, Milind Karnik's computer files, Bullinger's computer files, Huck's computer files, Huber's computer files, Talwalkar's computer files, Skelton's computer files, and, in fact, every single electronic record relevant to the within matter outside of the few sporadic records that were previously identified to the Court!” (Motion for Order to Show Cause, Doc. 183, p. 6). Day asserts that the full extent of the violation of LSI's Corporate Records Retention Policy was not known at the time the Court previously addressed the issues.[3] The evidence before the Court establishes that LSI placed a litigation hold and retained relevant documents. The issue, however, is whether the litigation hold was timely issued and sufficiently broad. As the Court discussed in its prior Orders, where a party seeks sanctions for the spoliation of evidence, that party must establish there was an obligation to preserve the evidence when it was destroyed or altered, the destruction or loss was accompanied by a “culpable state of mind,” and the destroyed or altered evidence was relevant to the claims or defenses of the party that sought the discovery of the spoliated evidence. In effect, Day is arguing the same alleged spoliation of evidence previously addressed by the Court. Day argues that the failure to preserve involved more persons than previously known and was done despite LSI employee's knowing of their responsibilities under LSI policies. Indeed, Day argues that LSI's own retention policy required that all employees be advised of a litigation hold. However, LSI's policy only requires a litigation hold to apply to all employees if “it becomes necessary[.]” (Day MSJ SOF, Ex. H). With the exception of Skelton, employees who may have had relevant documentation were advised of the litigation hold. As to Skelton, LSI points out that the draft complaint that was provided to LSI focused on discrimination and harassment, rather than hiring or stock options, which may have triggered an earlier litigation hold on Skelton documentation. Moreover, LSI asserts it produced all documents from Bullinger, Karnik, Huber, White, Talwalkar, and Huck involving Day; therefore, to the extent those emails involved Skelton, Skelton's records were produced. (Doc. 98, 141; Bento Dec. ¶ 9). *4 As the Court stated in its December 7, 2014, Order, inferences can be raised that the HRD document and the Bullinger email existed but was not produced by LSI. However, that LSI sought to find such documentation, and therefore referred to the documentation, does not establish that the documentation existed. The evidence presented by Day does not establish that any additional non-preserved evidence exists, that the non-preservation of evidence was accompanied by a culpable state of mind, or that any non-preserved evidence is now more relevant to Day's claims. Rather, in reviewing these issues in conjunction with the summary judgment issues, it has become clear that the documentation is less relevant than previously known—whether supporting evidence existed does not save those claims that are time-barred. Further, the parties have submitted extensive deposition testimony and documents relating to the issues addressed in the motions for summary judgment. Additionally, the Court disagrees with Day's argument that LSI's conduct in not complying with its own policies constitutes gross negligence and willful misconduct that was designed to undermine Day's claims in this litigation. Day has not provided any authority that required LSI to issue a universal litigation hold and LSI's retention policy did not require a universal litigation hold. While this Court believes earlier recognition that the Skelton documentation may be relevant would have been appropriate, the Court does not find that LSI had a culpable mind. The new evidence presented by Day does not alter the Court's previous findings and rulings. The Court will deny Day's Motion for Order to Show Cause and Motion for Sanctions. Accordingly, IT IS ORDERED: 1. The Motion for Order to Show Cause (Doc. 183) is DENIED. 2. The Motion for Entry of Judgment and Sanctions, and to Set Hearing on Damages (Doc. 186) is DENIED. Footnotes [1] The Court incorporates the additional facts set forth in its Order addressing the summary judgment motions pending before the Court. [2] The exhibits attached to Day's SOF are not labeled with an Exhibit identifier. The Court, therefore, will refer to the ECF document designation. [3] Whether LSI violated its corporate policies is a separate claim alleged by Day. The Court discusses this issue here only as to whether alleged spoliation warrants sanctions.