ACCRESA HEALTH LLC, Plaintiff/Counter-Defendant, v. HINT HEALTH INC. Defendant/Counter-Plaintiff v. TWIN OAKS SOFTWARE DEVELOPMENT INC. Counter-Defendant. Civil Action No. 4:18-cv-00536 United States District Court, E.D. Texas, Sherman Division Filed February 28, 2020 Counsel Elyse J. Lyons, Michael Andrew Bittner, Michael Shelton Fechner, Jr., Michael Brett Johnson, William Greg Fox, Jr., Thomas M. Melsheimer, Winston & Strawn LLP, Taj Jamar Clayton, Kirkland & Ellis LLP, Dallas, TX, for Plaintiff/Counter-Defendant Accresa Health LLC. Allison Jayne Maynard, Jillian Janse Keith, Wilson Elser Moskowitz Edelman & Dicker LLP, Dallas, TX, for Counter-Defendant Twin Oaks Software Development, Inc. Alexander More, Evan Alexander Kirkham, Monica Wiseman Latin, Neil Ross Burger, Tyler Colin Wright, Carrington Coleman Sloman & Blumenthal LLP, Dallas, TX, for Defendant/Counter-Plaintiff. Craven, Caroline M., United States Magistrate Judge ORDER *1 The above-referenced cause of action were referred to the undersigned United States Magistrate Judge for pre-trial purposes in accordance with 28 U.S.C. § 636. The following motion is before the Court: Accresa Health, LLC's Sealed Motion for Spoliation Sanctions Against Hint Health, Inc. (Docket Entry # 97). The Court, having reviewed the motion, the response, and the reply, is of the opinion the motion should be DENIED. BACKGROUND The parties offer competing healthcare software platforms in the Direct Primary Care (“DPC”) space. Plaintiff/Counter-Defendant Accresa Health LLC (“Accresa”) alleges Defendant/Counter-Plaintiff Hint Health Inc. (“Hint”) improperly used Accresa's trade secrets and confidential information after Hint fraudulently induced Accresa to enter into a Preferred Partnership Agreement (“PPA”) with the alleged intent of furthering each entity's economic interest through integrating its product offerings. First Amended Complaint (Docket Entry # 32), ¶ 1. Accresa asserts the following causes of action against Hint: (1) breach of contract, (2) violation of the Texas Uniform Trade Secret Act (TUTSA), (3) violation of the Federal Trade Secrets Act (18 U.S.C. § 1836), (4) tortious interference with existing contract, (5) fraudulent inducement, (6) fraud, and (7) violation of Lanham Act (41 U.S.C. § 1125). Hint denies the wrongdoing alleged by Accresa and maintains it performed the PPA in good faith. In its amended counterclaim against Accresa, Hint alleges Accresa breached the PPA by partnering with a direct competitor of Hint, Twin Oaks Software Development, Inc.,[1] in express violation of Accresa's agreement with Hint. Second Amended Counterclaim (Docket Entry # 34), ¶ 1. Hint asserts the following causes of action against Accresa: (1) breach of contract (against Accresa), (2) tortious interference with existing contract (against Accresa and Twin Oaks), (3) tortious interference with prospective relationships (against Accresa), (4) defamation (against Accresa), (5) business disparagement (against Accresa), (6) violations of the Lanham Act (against Accresa and Twin Oaks), and conspiracy (against Accresa and Twin Oaks). The final pretrial conference is scheduled before District Judge Mazzant on March 31, 2020. Docket Entry # 90 at pp. 3-4. MOTION FOR SPOLIATION SANCTIONS Accresa's assertions and evidence Accresa asserts Hint intentionally destroyed the emails of Jonathan Avida, a “key player” in the PPA integration, and those emails are clearly relevant to this lawsuit Hint should have expected from Accresa. Therefore, Accresa requests a spoliation sanction, namely that the Court instruct the jury that the emails Hint deleted contained information harmful to Hint's case. In support of this argument, Accresa relies on the following evidence. Direct primary care (“DPC”) is a healthcare arrangement under which patients pay their primary-care physicians a monthly fee for a set of services. Report of Dr. Bryan Bergeron (“Bergeron Report”) (attached as Exhibit 1 to Accresa's motion), ¶¶ 59–61.[2] Health insurance usually does not come into play. Id. Contrast DPC with fee-for-service healthcare. Fee-for-service care has long been the norm in the United States. Id. Typically, a patient goes to the doctor, and the doctor bills the patient's health insurer for the service performed at the appointment. Id. *2 Accresa provides a DPC billing software platform. Bergeron Report, ¶ 74; June 14, 2019 Deposition of William C. Short (“Short Depo.”) (attached as Exhibit 2 to Accresa's motion) at 87:22–88:1. The platform enables employers to offer DPC health plans to their employees. Bergeron Report, ¶ 74. If a provider and employer both use Accresa, the employers and employees can choose DPC providers and plans through Accresa. Id. Accresa facilitates the automated monthly flow of funds from the accounts of employers and their employees to the accounts of DPC providers pursuant to DPC health plans structured using Accresa's platform. Id. Accresa's platform also allows DPC providers to affiliate with one another so as to offer greater flexibility to employers and their employees. Id., ¶¶ 75-76. Hint also provided a DPC platform that could service multiple clinics, but those providers “would not be able to relate or affiliate to each other to be able to service the needs of an employer or ... be able to affiliate to other groups.” Short Depo. at 90:24–91:5. “Unlike Accresa, which provides a broad platform to providers, employers, and patients, Hint's product started out as a software system that Hint provided to DPC providers” and was “essentially a practice management system that enabled DPC providers to sign up and bill patients.” Bergeron Report, ¶ 28; Short Depo. at 87:10–18, 88:19–89:7. Although Hint attempted, before its relationship with Accresa, to facilitate affiliation so as to allow its customers to provide their employer clients with access to more DPC providers, its approach made “no sense” and “inadequately served the needs of DPC stakeholders,” according to Dr. Bergeron. Bergeron Report, ¶¶ 160-61. Although Hint providers could find and affiliate with other DPC providers outside of Hint, Hint had no Accresa-like functionality that enabled providers to find and affiliate with other providers to form networks. Id., ¶¶ 160-61, 188-89. In his opinion, source code and screenshots of Hint's platform reflect that Hint's system became more similar to Accresa's after Accresa disclosed its trade secrets to Hint in confidence under the PPA. Bergeron Report, ¶¶ 160, 188–89 (“Hint's new affiliate-management functionalities are like Accrsa's”). According to Accresa's founder, CEO, and corporate representative, William C. Short, Accresa had “affiliation and management capabilities” and relationships with employers, and many DPC providers used Hint. Short Depo. at 87:10–88:14. Accresa thought giving Hint providers access to Accresa employers would benefit Hint, and Accresa “would then be able to have Hint as a network within [its] system that [Accresa's] partners and employers could then access to amplify their coverage maps.” Id. at 87:4–88:14. It was Short's understanding that Hint's “entire focus was on the individual physician within the four walls of a clinic.” Id. at 88:15-89:7, 90:13–91:3. According to Short, Accresa and Hint had a “high-level discussion, and the meeting of the minds [was] that Hint would continue to do what they said they were doing, which was to develop solutions and product for independent physicians and clinics,” and Hint could come to Accresa “as a mass, their physicians and clinics that were using their operating system, as a network on Accresa. This would allow for their physicians and themselves to affiliate to the other networks of physicians and clinics on the Accresa platform.” Id. at 95:9–19. Hint and Accresa entered into the PPA on June 9, 2017, wherein Hint and Accresa agreed to undertake a technical integration of their software platforms. PPA § 5 (attached as Exhibit 3 to Accresa's motion); Bergeron Report, ¶ 166. Thereafter, Hint and Accresa employees discussed how potential integrations would work and “how it all works in terms of ... bringing up networks of affiliates, presenting to employers, ... as well as ... what doesn't work in terms of [Accresa's] experience, in terms of how to bring about bisynchronous integration and/or marketing discussion on how [Accresa and Hint] can market each other as well.” November 14, 2019 Deposition of William Short (“Short Corp. Rep. Dep.”) (attached as Exhibit 4 to Accresa's motion) at 117:18–24; 116:4-16. “As part of the partnership, Accresa shared technical information, know how, negative know how, account structures, entity structures, processes, and pricing information with Hint employees,” including “then-existing features of Accresa's platform” and also “features Accresa was then developing and planning to rollout during its relationship with Hint.” Bergeron Report, ¶ 167. One such “in-development feature was the functionality of allowing DPC providers to affiliate with one another through Accresa's platform.” Id., ¶ 168. *3 There were numerous conversations that occurred between Accresa and Hint from May 2017 through April 2018. Id., ¶¶ 169–84. Accresa also demonstrated its platform to Hint in a video demo. Short Corp. Rep. Dep. at 120:6–12; Bergeron Report, ¶ 182; AVIDA001. As part of the integration, “Hint had access to Accresa's demo environment from autumn of 2017 into June of 2018. This demo environment evolved throughout this time as Accresa rolled out new features, such as improvements to its affiliation-management capabilities.” Bergeron Report, ¶ 186. During this time, “Hint learned from Accresa through conversations, meetings, the demo video, and access to Accress's demo environment not only the importance of but optimal ways to provide numerous DPC providers and networks to employers.” Id., ¶ 187. The Hint employee in charge of Hint's integration efforts, Jonathan Avida, recorded the December 14, 2017 demonstration and circulated it to other Hint employees for their review. Id., ¶¶ 182-83; HINT0118037. According to Short, Accresa exposed in confidence to Hint aspects of Accresa's platform that Accresa contends are trade secrets. Short Corp. Rep. Dep. at pp. 114–22. Dr. Bergeron has also detailed the interactions in which Accresa disclosed its trade secrets to Hint, and Dr. Bergeron has opined that features Hint added to its system after working with Accresa show that Hint copied Accresa's platform. Bergeron Report, ¶¶ 166–87, 188–89, 246–47. Accresa argues that in spite of the partnership, and while the integration was ongoing, Hint worked to develop affiliate-networking features to compete with Accresa's. Accresa asserts a February 11, 2017 email from Zak Holdsworth, CEO of Hint, reveals Hint viewed Accresa as a “competitive threat” before entering into the PPA and wanted to “neutralize” Accresa with a “possible partnership.” See HINT0012829 (attached as Exhibit 9 to Accresa's motion). Accresa also relies on a May 15, 2018 statement by Hint's Vice President of Development Mike Lubin that Hint was “slow playing” Accresa because Hint “ultimately want[ed] to not need to partner with them.” HINT0269122 (attached as Exhibit 8 to Accresa's motion). Hint announced in May or June 2018 that it wanted to build its own affiliate features. November 20, 2019 Deposition of Graham Melcher (“Melcher Corp. Rep. Depo.”) (attached as Exhibit 13 to Accresa's motion) at 116:3–23. According to Melcher, Hint's corporate representative, at the time Hint announced it would be building affiliate features, Hint “had been intending to build ways to automate the manual work that [Hint] had been doing for a very long time,” but he did not know if at that point Hint “had a specific timeline for launching the affiliate functionality or not even launching.”[3] Id. at 119:15–120:1. According to Accresa, in April 2018, after Hint gained access to Accresa's trade secrets, and at a time during which Hint has admitted it planned to develop products that would compete with its partner under the PPA, Hint deleted the email account of Jonathan Avida, its employee in charge of the Accresa–Hint integration. See Melcher Corp. Rep. Dep. at 118:18–25 (stating he authorized the deletion of Mr. Avida's Gmail accounts but it was Nora Goldstein who actually deleted the account in April 2018); September 12, 2019 Deposition of Zak Holdsworth (“Holdsworth Depo.”) (attached as Exhibit 9 to Accresa's motion) at 184:22–23 (stating Mr. Avida was the former head of product), 195:17–19 (stating that prior to Mr. Avida's leaving Hint he had been in charge of the Hint-Accresa integration). *4 Accresa asserts Accresa Senior Developer and Team Lead Daniel Diosdado, who worked extensively on the integration, testified he primarily interacted with Mr. Avida in working on the Hint-Accresa integration. June 12, 2019 Deposition of Juan Daniel Diosdado (“Diosdado Depo.”) (attached as Exhibit 11 to Accresa's motion) at 83:12–15. Diosdado further testified that Mr. Avida “basically knew [Hint's] product. He was the one that knew the business rules... like, high level stuff related to Hint, he will be the best one to talk to.” Diosdado Depo. at 83:6–11. Even though Mr. Avida's email account was deleted in April 2018 as a “natural step in the offboarding process of Mr. Avida as an employee,” Mr. Avida later served as an advisor to Hint after that time period. November 18, 2019 Deposition of Mark Nolan (“Nolan Corp. Rep. Depo.”) (attached as Exhibit 12 to Accresa's motion) at 50:10-12, 51:23–52:5. Hint created another email account for Mr. Avida later in 2018. Id. at 55:11–23, 56:1–14 (stating the new account was the same email address as the previous account that was deleted a few months prior and further stating the new account did not retain any information from the previous email account). Depending on the interaction a contractor has with the Hint team, Hint may provide Hint email addresses to contractors. Id. at 56:21–57:12. Hint's assertions and evidence In response, Hint asserts Accresa cannot sustain its request for spoliation sanctions because Hint had no duty to preserve Mr. Avida's pre-accident emails, did not act in “bad faith” when it decommissioned Mr. Avida's Google account, and has not caused Accresa any prejudice. According to Hint, Accresa already has all of Mr. Avida's email conversations with Accresa, with Hint's key employees, and with third parties to the extent Hint or Accresa were copied on those emails. See, e.g., HINT0020089-90 (Sept. 19, 2017 internal email from Avida to Holdsworth regarding the integration with Accresa) (attached as Exhibit L to Hint's response); HINT0020414-16 (Oct. 24, 2017 internal email from Lubin to Avida regarding the integration with Accresa) (attached as Exhibit M to Hint's response); HINT0049193 (May 9, 2017 external email from Avida to Short regarding “Accresa/Hint Technical Integration”) (attached as Exhibit N to Hint's response); HINT0174182-84 (Sept. 7, 2017 external email from Avida to Diasdado regarding “Accresa/Hint Integration Phase 2”) (attached as Exhibit O to Hint's response); HINT 0175065-66 (Sept. 12, 2017 external email from Avida to third-party, Craig Scurato, regarding “mak[ing] the most of Hint Connect”) (attached as Exhibit P to Hint's response). In addition to these emails, Hint relies on the following evidence. During his deposition, Mr. Holdsworth explained there was overlap between Accresa's and Hint's platforms that may have lead him to call Accresa a “competitive threat” and the “overlapping product capabilities”created “some competitive tension.” Holdsworth Depo. (attached as Exhibit A to Hint's response) at 55:18-57:17, 59:5-60:6, 75:10-76:6; October 9, 2019 Deposition of Cyndi Morales (“Morales Depo.”) (attached as Exhibit B to Hint's response) at 24:12-25:6 (operations manager of Accresa reading from a July 31, 2017 email wherein she stated Hint's “services compliment well with Accresa, to the point of them being potential competitors”). Mr. Holdsworth stated the competitive tension was one reason Hint explored a partnership. Holdsworth Dep. at 57:18-20. Mr. Holdsworth wanted to see if the two companies could “try to transform the health care system” by working together. Id. at 57:20-58:8. According to Mr. Holdsworth, the thing that lead him to want to explore the partnership was it was Hint's “understanding that Accresa had like absolutely absurd number of employers and consumers and employees that wanted to enroll and become part of [Hint's] network ... of doctors.... [T]hat was the thing that drove the partnership.” Id. at 58:9-21. Before the PPA was signed, Short and Holdsworth had some discussions regarding the “competitive tensions” between Accresa and Hint, including how they both had employer infrastructure and payments infrastructure and how Hint had “provider networks” and Accresa had “some network capabilities.” Id. at 75:10-76:6. According to Mr. Holdsworth, they discussed how Hint had networks and customer segments it needed to service and that it needed its “product organizations to figure out an elegant way to service these customers that [didn't] create more work and more headache and ... the partnership needs to be better than not partnering....” Id. at 76:7-79:20. *5 Graham Melcher, Hint's chief technology officer, testified that although Accresa and Hint were “frenemies” with potential overlap, one focusing on employers and the other on providers, “that made it seem like there was more chance for [Hint] to be successful with a partnership and that [Hint and Accresa] were both operating ... in good faith under that assumption.” May 24, 2019 Deposition of Graham Melcher (“Melcher Depo.”) (attached as Exhibit C to Hint's response) at 28:11-25; see also September 5, 2019 Deposition of Anne Richter (“Richter Depo.”) (attached as Exhibit D to Hint's response) at 135:18-137:16. Hint saw partnering with Accresa as an opportunity to “bring demand to supply,” with Accresa's employer relationships as the demand and Hint's DPC provider relationships as the supply. Holdsworth Depo. at 50:24-51:22; see also November 20, 2019 Deposition of Graham Melcher (“Melcher Corp. Rep. Depo.”) (attached as Exhibit E to Hint's response) at 85:5-23, 148:2-149:7. In December 2017, Hint's head of product Jonathan Avida was in a kite surfing accident that triggered his departure from the company. March 12, 2019 Deposition of Gregory Hilkert (“Hilkert Depo.”) (attached as Exhibit F to Hint's response) at13:4-7, 95:20-96:12, 101:4-12; see also September 10, 2019 Deposition of Michael Lubin (“Lubin Depo.”) (attached as Exhibit G to Hint's response) at 130:1-25. According to Hint, the serious accident left Mr. Avida blind, on permanent medical leave, and seeking medical help in Israel. Melcher Dep. at 15:13-17, 141:4-9; ACC0037330 (attached as Exhibit H to Hint's response). Mr. Avida did not return to work at Hint following the accident. Melcher Dep. at 141:4-9; see also November 11, 2019 Deposition of Mark Nolan (“Nolan Depo.”) (attached as Exhibit I to Hint's response) at 55:2-10 (“[H]e was not a Hint employee after that date.”). That was a “really tough time” for Hint. Not knowing if Mr. Avida would recover, Mr. Melcher attempted to fill in as head of product even though he already had “a full plate before [Avida's] accident....” Melcher Dep. at 54:9-22, 141:16-20, 147:19-148:14. In April 2018, Mr. Melcher authorized Nora Goldfield to decommission Avida's Google account as a part of Hint's standard offboarding procedure. October 10, 2019 Deposition of Tasha Demkiw (“Demkiw Depo.”) (attached as Exhibit J to Hint's response) at 87:1-21; Nolan Depo. at 50:5-52:1 (deleting Mr. Avida's account in April 2018 was Hint's “policy” and a “natural step in the offboarding process of Mr. Avida as an employee”). Hint's policy was to delete former employees' accounts unless Hint expected the employee would return to work. Nolan Depo. at 52:24-53:1. The policy was not to retain emails; however, Mr. Avida's “drive documents were retained as per the policy at the time.” Id. at 50:22-51:3. Mr. Melcher assigned those documents to himself. Id. at 51:4-6. In June of 2018, Hint hired Dan Slate in a consulting role as head of product. June 28, 2019 Deposition of Dan Slate (“Slate Depo.”) (attached as Exhibit K to Hint's response) at 8:6-9, 10:21-11:13 (stating he left Hint in December 2018 after six months), 13:25-14:6, 52:23-53:5 (stating his understanding was his “predecessor, Jonathan Avida, had been working with [Accresa's] team to figure out how [Hint and Accresa] would integrate” but further stating they had not completed “any development work on that yet”); Lubin Dep. at 128:12-24, 131:1-11, 144:19-21, 147:17-148:7; Nolan Depo. at 53:2-9 (stating Mr. Slate was a “contracted employee of Hint” who served as head of product for a period of time after Mr. Avida). That same month, Hint offered Mr. Avida the opportunity to advise his successor. Slate Dep. at 74:4-75:1 (stating he met with Mr. Avida once a week or every other week through August or September regarding “product stuff”). Even though Mr. Melcher did not believe Mr. Avida is able to work in the same capacity that he did before the accident, Mr. Avida had asked Hint if there was a way it could help him provide for his family. Melcher Dep. at 15:2-17. *6 Mr. Avida was issued a new “@hint.com” email address in June 2018 when he started consulting. Nolan Depo. at 55:18-56:14. Mr. Lubin testified Hint's product or engineering teams were in touch with Mr. Avida after his accident, “to the degree that he was capable of communicating post his accident,” “because he carried with him tremendous institutional knowledge that [Hint] really suffered not having for months.” Lubin Dep. at 151:12-23. SPOLIATION SANCTIONS A federal court has the inherent power to sanction a party who has abused the judicial process by spoliating evidence.[4] Smith v. Chrysler Grp., L.L.C., No. 1:15-CV-218, 2016 WL 7741735, at *3 (E.D. Tex. Aug. 31, 2016) (citing Ashton v. Knight Trans., Inc., 772 F. Supp. 2d 772, 789 (N.D. Tex. 2011) (citing Chambers v. NASCO, 501 U.S. 32, 44 (1991))). The court's inherent power, however, must be interpreted narrowly and “exercised with restraint and discretion.” Smith, 2016 WL 7741735, at *3 (quoting Quantlab Techs. Ltd. (BGI) v. Godlevsky, No. 4:09-cv-4039, 2014 WL 651944, at *8 (S.D. Tex. Feb. 19, 2014) (quoting Roadway Exp., Inc. v. Piper, 447 U.S. 752, 764 (1980))). “A trial court's decision on a motion for sanctions for spoliation of evidence during discovery is reviewed for abuse of discretion.” Slabisak v. Univ. of Texas Health Sci. Ctr. at Tyler, No. 4:17-CV-597, 2018 WL 4842690, at *1 (E.D. Tex. Oct. 4, 2018) (quoting Guzman v. Jones, 804 F.3d 707, 713 (5th Cir. 2015) (citing Sierra Club, Lone Star Chapter v. Cedar Point Oil Co., 73 F.3d 546, 569 (5th Cir. 1996))). DISCUSSION Applicable law “Spoliation of evidence ‘is the destruction or the significant and meaningful alteration of evidence.’ ” Slabisak, 2018 WL 4842690, at *1 (quoting Guzman, 804 F.3d at 713 (quoting Rimkus Consulting Grp., Inc. v. Cammarata, 688 F. Supp. 2d 598, 612 (S.D. Tex. 2010))). “Mere destroying or altering of evidence, however, does not necessarily mean that a party has engaged in sanction-worthy spoliation.” Slabisak, 2018 WL 4842690, at *1 (quoting Smith, 2016 WL 7741735, at *3 (citing Ashton, 772 F. Supp. 2d at 789; also citing Rimkus, 688 F. Supp. 2d at 642)). Routine deletion of electronic information is generally not considered spoliation “unless there is a duty to preserve the information,” and even then, only when there is also “a culpable breach of that duty, and resulting prejudice.” Quantlab Techs. Ltd. (BGI) v. Godlevsky, No. 4:09-CV-4039, 2014 WL 651944, at *8 (S.D. Tex. Feb. 19, 2014) (quoting Rimkus, 688 F. Supp. 2d at 612). *7 Thus, for spoliation sanctions to be imposed, the party seeking the sanction must show the following factors: (1) the existence of a duty to preserve the evidence; (2) a culpable breach of that duty; and (3) resulting prejudice to the innocent party. Smith, 2016 WL 7741735, at *3 (citing Ashton, 772 F. Supp. 2d at 800). “A party's duty to preserve evidence comes into being when the party has notice that the evidence is relevant to the litigation or should have known that the evidence may be relevant.” Slabisak, 2018 WL 4842690, at *1 (quoting Guzman, 804 F.3d at 713 (quoting Rimkus, 688 F. Supp. 2d at 612)). “Generally, the duty to preserve extends to documents or tangible things (defined by Federal Rule of Civil Procedure 34) by or to individuals likely to have discoverable information that the disclosing party may use to support its claims or defenses.” Quantlab, 2014 WL 651944, at *8 (quoting Rimkus, 688 F. Supp. 2d at 612–13 (internal quotation marks omitted in Quantlab) (citing Zubulake v. UBS Warburg LLC (Zubulake IV), 220 F.R.D. 212, 217–18 (S.D.N.Y.2003))). The party seeking the spoliation sanction bears the burden of proof. Ashton, 772 F. Supp. 2d at 800 (citing Rimkus, 688 F. Supp. 2d at 615–16). Further, the sanctions imposed “must be ‘no harsher than necessary to respond to the need to punish or deter and to address the impact on discovery.’ ” Smith, 2016 WL 7741735, at *3 (quoting Allstate Tex. Lloyd's, 964 F. Supp. 2d at 682 (quoting Ashton, 772 F. Supp. 2d at 801)). Appropriate remedies may include awarding attorney's fees, deeming certain facts admitted, giving an adverse inference instruction to the jury, excluding evidence or expert testimony, striking pleadings, entering a default judgment, and dismissing the case entirely. Smith, 2016 WL 7741735, at *3 (citing Allstate Tex. Lloyd's, 964 F. Supp. 2d at 683). “The latter, more severe, sanctions are only available [ ] upon a showing of bad faith conduct.” Id. Analysis The Rimkus factors (the existence of a duty to preserve the evidence, a culpable breach of that duty, and resulting prejudice to the innocent party) govern the standards for spoliation instructions. Quantlab, 2014 WL 651944, at *12. As with litigation-terminating sanctions, a court must find bad faith, and not “mere negligence,” before it can give a spoliation instruction. Id. (quoting Russell v. Univ. of Texas of Permian Basin, 234 Fed. Appx. 195, 208 (5th Cir. 2007) (internal quotation marks omitted in Quantlab); also citing Condrey v. SunTrust Bank of Ga., 431 F.3d 191, 203 (5th Cir. 2005) (“The Fifth Circuit permits an adverse inference against the destroyer of evidence only upon a showing of “bad faith” or “bad conduct.”)). The Court considers each factor below. Whether Hint had a duty to preserve Mr. Avida's emails in April 2018 Hint asserts it had no duty to preserve Mr. Avida's pre-accident emails because it had no reason to expect litigation with Accresa in April 2018 when Hint deleted the emails. Accresa argues in its reply that at the time Hint deleted Mr. Avida's emails, “Hint was in the middle of an ongoing scheme to breach the parties' agreement and defraud Accresa in two ways:” (1) Hint fraudulently induced Accresa to execute the PPA by signing the PPA while never intending to hold up its end of the bargain, and (2) Hint defrauded Accresa by misleading Accresa into believing Hint was using confidential information to effectuate the PPA integration when Hint was actually using Accresa's confidential information to compete with Accresa. Docket Entry # 106 at pp. 2-3. A duty to preserve arises when a party knows or should know that certain evidence is relevant to pending or future litigation. Ashton, 772 F. Supp. 2d at 800 (citing Rimkus, 688 F. Supp. 2d at 612 (quoting John B. v. Goetz, 531 F.3d 448, 459 (6th Cir.2008)); also citing Toth v. Calcasieu Parish, 2009 WL 528245 at *1 (W.D. La. Mar. 6, 2009) (citing Zubulake v. UBS Warburg, L.L.C., 220 F.R.D. 212, 216 (S.D.N.Y.2003))). Once litigation is reasonably anticipated, a potential party to that litigation “ ‘must not destroy unique, relevant evidence that might be useful to an adversary.’ ” Ashton, 772 F. Supp. 2d at 800 (quoting Toth, 2009 WL 528245 at *1 (quoting Zubulake, 220 F.R.D. at 216)). The duty to preserve extends to the party's or potential party's employees “likely to have relevant information—the ‘key players.’ ” Id. The duty to preserve evidence is a duty owed to the court, not to the party's potential adversary, hence, spoliation is considered an abuse of the judicial process. Ashton, 772 F. Supp. 2d at 800 (quoting Victor Stanley v. Creative Pipe, Inc., 269 F.R.D. 497, 525–26 (D. Md. 2010)). *8 As urged by Hint, this is not a case where the defendant's duty to preserve is established by evidence that the defendant “was well-versed on the pending litigation and knew the [evidence] was relevant to the infringement claim.” See Tech Pharmacy Servs., L.L.C. v. Alixa Rx L.L.C., No. 4:15-CV-766, 2017 WL 3394118, at *2 (E.D. Tex. Aug. 7, 2017). Here, Mr. Avida ceased his employment with Hint at least four months before his account was “decommissioned,” at least six months before he was brought back on as a consultant and issued a new email address, and at least seven months before Accresa filed this lawsuit on July 31, 2018. The evidence relied upon by Accresa falls short of demonstrating Hint reasonably anticipated litigation. Additionally, there is no evidence Hint knew or reasonably should have known Mr. Avida's pre-accident emails would become relevant to future litigation. However, even if the Court were to find that Hint's duty to preserve arose before it deleted Mr. Avida's pre-accident emails, the Court must make a specific finding that Hint acted in bad faith to impose sanctions against it. See Beck v. Access E Forms, LP, No. 4:16-CV-00985, 2018 WL 3752842, at *2 (E.D. Tex. Aug. 8, 2018) (citing Toon v. Wackenhut Corr. Corp., 250 F.3d 950, 952 (5th Cir. 2001) (citing Goldin v. Bartholow, 166 F.3d 710, 722 (5th Cir. 1999))). Whether Hint acted in bad faith As noted above, the “Fifth Circuit permits an adverse inference against the destroyer of evidence only upon a showing of ‘bad faith’ or ‘bad conduct.’ ” Slabisak, 2018 WL 4842690, at *1 (quoting Condrey, 431 F.3d at 203; also citing King v. Ill. Cent. R.R., 337 F.3d 550, 556 (5th Cir. 2003)). “Bad faith, in the context of spoliation, generally means destruction for the purpose of hiding adverse evidence.” Slabisak, 2018 WL 4842690, at *1 (quoting Guzman, 804 F.3d at 713 (citing Mathis v. John Morden Buick, Inc., 136 F.3d 1153, 1155 (7th Cir. 1998))). “The term ‘bad faith’ has been described as conduct involving ‘fraudulent intent and a desire to suppress the truth.’ ” Slabisak, 2018 WL 4842690, at *1 (quoting Ashton, 772 F. Supp. 2d at 800 (quoting Consol. Aluminum Corp. v. Alcoa, Inc., 244 F.R.D. 335, 344 (M.D. La. 2006))). Hint asserts it was simply following its standard operating procedures for offboarding ex-employees when it decommissioned Mr. Avida's Google account. According to Hint, courts in this circuit have refused to find bad faith in cases where the non-movant presented evidence that the documents sought were deleted as part of a regular operation, policy, or practice. Docket Entry # 99 at p. 8; see Vick v. Tex. Employment Com'n, 514 F.2d 734, 737 (5th Cir. 1975) (“There was indication here that the records were destroyed under routine procedures without bad faith and well in advance of Vick's service of interrogatories.”); see also Slabisak, 2018 WL 4842690, at *3 (“Reviewing all the evidence presented, Plaintiff does not present sufficient evidence that Henry acted in bad faith when he destroyed his handwritten notes to warrant spoliation sanctions.”). Courts typically “do not draw an inference of bad faith when documents are destroyed under a routine policy.” Kostic v. Texas A & M Univ. at Commerce, No. 3:10-CV-2265-M, 2013 WL 3356263, at *2 (N.D. Tex. July 3, 2013) (quoting Russell v. Univ. of Tex. of Permian Basin, 234 Fed. Appx. 195, 208 (5th Cir.2007) (citing Vick, 514 F.2d at 737; also citing Coates v. Johnson & Johnson, 756 F.2d 524, 551 (7th Cir.1985)); accord United States v. Ochoa, 88 Fed. Appx. 40, 42 (5th Cir.2004) (“Finally, Ochoa has not shown that the district court erred in denying her request that the jury be instructed on spoliation of evidence. The record reflects that the Government did not act in bad faith when it disposed of the crankshaft. Rather, this disposal was done pursuant to a routine policy.” (citation omitted)); also citing King v. Illinois Cent. R.R., 337 F.3d 550, 556 (5th Cir.2003) (explaining that disposing of documents for innocuous reasons, such as destruction “as a part of routine file maintenance” demonstrates that the accused party “lacked a ‘bad faith’ motive for their destruction”)). *9 In an effort to show bad faith, Accresa relies on various emails, including a June 2017 statement by Hint founder Zak Holdsworth characterizing Accresa as a “competitive threat” that needed to be “neutralized.” Docket Entry # 106 at pp. 2-3. According to Accresa, this statement, and others attached as evidence to Accresa's briefing, reveal that Hint mislead and fraudulently induced Accesa to execute the PPA while at the same time intending to breach the PPA. Id. at p. 3. This evidence falls short of convincing the Court that Hint acted in bad faith. See Tech Pharmacy, 2017 WL 3394118, at *3. Reviewing all the evidence presented, Accresa does not present sufficient evidence that Hint acted in bad faith when it deleted Mr. Avida's email account after his kite surfing accident in December 2017 which caused him to stop working for Hint and to move abroad. See Hilkert Depo. at 13:4, 95:20-96:12, 101:4-12; Melcher Depo. at 15:13-17, 141:4-9; Lubin Depo. at 130:1-25; Nolan Depo. at 55:2-10; ACC0037330. Mr. Avida's Google account was decommissioned in April 2018 as a part of Hint's standard offboarding procedures. See Demkiw Depo. at 87:1-21; Nolan Depo. at 50:5-52:1; Nolan Corp. Rep. Depo. at 118:18-25. After Dan Slate succeeded Mr. Avida as head of product in June of 2018, Mr. Avida began consulting for Hint in June 2018 and was issued a new “@hint.com” email address. See Slate Depo. at 74:4-75:1; Nolan Depo. at 55:18-23; Lubin Depo. at 147:17-148:7; Melcher Depo. at 15:2-17. The Court finds the evidence presented does not show that Hint held a fraudulent intent and desire to suppress the truth for the purpose of hiding adverse evidence. See Slabisak, 2018 WL 4842690, at *3. Whether there is actual prejudice to Accresa Even if the Court were to find Hint had a duty to preserve and acted in bad faith by fraudulent intending to “suppress the truth,” Hint asserts the Court would still have to find that the contents of the destroyed documents, and only those that are unavailable to Accresa, would be favorable to Accresa by presenting evidence that the missing emails would “bolster” its case against Hint. Docket Entry # 99 at pp. 10-11 (citing Beck v. Access E Forms, LP, No. 4:16-CV-00985, 2018 WL 3752842, at *3 (E.D. Tex. Aug. 8, 2018)). According to Hint, Accresa would have to demonstrate a “nexus between the proposed inference and the information contained in the lost evidence ... some extrinsic evidence of the content of the emails is necessary for the trier of fact to be able to determine in what respect and to what extent the emails would have been detrimental.” Docket Entry # 99 at p. 11 (quoting Rimkus, 688 F. Supp.2d at 617 (quoting Consol. Aluminum Corp. v. Alcoa, Inc., 244 F.R.D. 335, 340 n. 6 (M.D. La. 2006) (internal quotations removed by Hint))). “A severe sanction such as ... an adverse inference instruction requires bad faith and prejudice.” Beck, 2018 WL 3752842, at *2 (quoting Rimkus, 688 F. Supp. 2d at 642–43 (citing Condrey, 431 F.3d at 203; also citing Whitt v. Stephens County, 529 F.3d 278, 284 (5th Cir. 2008))). In order to satisfy the prejudice requirement, the party seeking sanctions must demonstrate that the missing or altered evidence would have been relevant to its case. Ashton, 772 F. Supp. 2d at 801 (citing Rimkus, 688 F. Supp. 2d at 616). “[L]ost or destroyed evidence is ‘relevant’ if a ‘reasonable trier of fact could conclude that the lost evidence would have supported the claims or defenses of the party that sought it.’ ” Ashton, 772 F. Supp. 2d at 801 (quoting Victor Stanley, 269 F.R.D. at 531 (quoting Thompson v. U.S. Dep't of Housing & Urban Dev., 219 F.R.D. 93, 101 (D. Md.2003))). Prejudice to the non-culpable party can range from an utter inability to prove claims or defenses to minimal effects on the presentation of proof. Ashton, 772 F. Supp. 2d at 801 (citing Rimkus, 688 F. Supp. 2d at 613). Generally, the prejudice element is satisfied “where a party's ability to present its case or to defend is compromised.” Ashton, 772 F. Supp. 2d at 801 (quoting Victor Stanley, 269 F.R.D. at 532). At the same time, courts must be careful that the application of this burden is not too onerous, otherwise the spoliating party might be allowed to profit from its own misconduct. Ashton, 772 F. Supp. 2d at 801 (citing Rimkus, 688 F. Supp. 2d at 616). *10 Accresa argues any pre-accident emails “unquestionably contained information about the integration.” Docket Entry # 97 at p. 12. Hint states Accresa currently possesses copies of Mr. Avida's communications with Accresa, Hint's key employees, and third parties. Specifically, Hint produced documents to Accresa from multiple Hint custodians including: Zak Holdsworth (CEO), Graham Melcher (CTO), Mike Lubin (VP Growth), Paul Lacey (Former Director of Product Marketing), Paul Lacey (Former Head of Product), and Jonathan Avida (Former Head of Product), among others. According to Hint, the only emails Accresa might be missing because of the decommissioning are those between Avida and third parties. Accresa has not presented any evidence that its record of emails is incomplete, let alone that the missing emails “bolster” Accresa's case against Hint. See Beck, 2018 WL 3752842, at *3. Absent evidence, Accresa's theory is mere speculation, which cannot demonstrate prejudice sufficient to warrant a spoliation finding. See id. Accresa has not demonstrated it was prejudiced by Hint's routine decommissioning of Mr. Avida's Google account. Accordingly, it is ORDERED Accresa Health, LLC's Sealed Motion for Spoliation Sanctions Against Hint Health, Inc. (Docket Entry # 97) is DENIED. SIGNED this 28th day of February, 2020. Footnotes [1] On May 23, 2019, the Court granted Hint leave to file a proposed amended counterclaim adding Twin Oaks Software Development, Inc. (“Twin Oaks”) as a third-party defendant. Docket Entry # 40. [2] Accresa has retained Dr. Bryan Bergeron to provide his opinions regarding Accresa's claim in this case that Hint gained access to Accresa's trade secrets while working with Accresa under the PPA and misappropriated Accresa's trade secrets by using them to compete with Accresa. [3] Melcher further explained that Hint had lost its “head of product and did not yet have clarity on a new head of product and essentially all major product development was on hold until [Hint] could fill the head of product role.” Melcher Corp. Rep. Depo. at 120:2-5. [4] Generally, sanctions can be imposed pursuant to either Federal Rule of Civil Procedure 37(b) or the court's inherent power. Smith v. Chrysler Grp., L.L.C., No. 1:15-CV-218, 2016 WL 7741735, at *3 n. 8 (E.D. Tex. Aug. 31, 2016) (citing Allstate Tex. Lloyd's v. McKinney, 964 F. Supp. 2d 678, 682 (S.D. Tex. 2013); also citing Rimkus Consulting Grp., Inc. v. Cammarata, 688 F. Supp. 2d 598, 611-12 (S.D. Tex. 2010)). Rule 37(b) sanctions, however, apply to conduct occurring during the discovery process. Smith, 2016 WL 7741735, at *3 n. 8 (citing FED. R. CIV. P. 37(b); also citing Allstate Tex. Lloyd's, 964 F. Supp. 2d at 682). Conversely, sanctions for conduct occurring prior to filing suit, as is the case here, are imposed pursuant to the court's inherent power to “orderly and expeditiously perform its duties.” Smith, 2016 WL 7741735, at *3 n. 8 (quoting Rimkus Consulting Grp., Inc., 688 F. Supp. 2d at 611). Significantly, the court's inherent authority to impose sanctions is strictly limited “to instances of bad faith or willful abuse of the judicial process.” Smith, 2016 WL 7741735, at *3 n. 8 (quoting Ashton v. Knight Transp., Inc., 772 F. Supp. 2d 772, 800 (N.D. Tex. 2011) (quoting Pressey v. Patterson, 898 F.2d 1018, 1021 (5th Cir. 1990))).