JOHNNIE WEBB, JR., Plaintiff, v. DAYMARK RECOVERY SERVICES, INC.; AND FREEDOM HOUSE RECOVERY CENTER INC., Defendants 1:21CV424 United States District Court, M.D. North Carolina Filed July 26, 2022 Counsel Gilda A. Hernandez, Charlotte C. Smith, Law Office of Gilda A. Hernandez, PLLC, Cary, NC, for Plaintiff. Nicholas S. Hulse, David I. Klass, Fisher & Phillips LLP, Charlotte, NC, for Defendant Daymark Recovery Services, INC. Jill A. Evert, Littler Mendelson, P.C., Greenville, SC, Jonathan Woodward Yarbrough, Constangy Brooks Smith & Prophete, Asheville, NC, Jose R. Pocasangre, Winston-Salem, NC, for Defendant Freedom House Recovery Center, INC. Webster, Joe L., United States Magistrate Judge RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE *1 This matter is before the Court upon Plaintiff Johnnie Webb, Jr.’s Expedited Amended Motion for Imposition of Sanctions for Spoliation of Evidence and Perjurious Testimony specifically against Defendant Daymark Recovery Services, Inc. (“Daymark”). (Docket Entry 43.) Opposition briefs were filed by both Daymark and Defendant Freedom House Recovery Center Inc. (“Freedom House”). (Docket Entries 48, 49.) Plaintiff thereafter filed a reply. (Docket Entry 51.) For the reasons that follow, the undersigned will recommend that Plaintiff's motion be denied.[1] I. BACKGROUND This is an employment dispute in which Plaintiff seeks damages against Defendants under the Fair Labor Standards Act, 29 U.S.C. § 201 et seq., the North Carolina Wage and Hour Act, N.C. Gen. Stat. § 95-25.1, et seq., the Family and Medical Leave Act of 1993 (“FMLA”), 29 U.S.C. § 2601, et seq., the North Carolina Retaliatory Employment Discrimination Act, N.C. Gen. Stat. § 95-240 et seq., and North Carolina common law and public policy. (See generally Amended Complaint, Docket Entry 19.) As alleged, Plaintiff was an employee for Defendants as both a Health Care Counselor and Mobile Crisis Clinician for approximately 20 years. (See id. ¶ 2.) Defendants are non-profit behavioral healthcare providers in North Carolina who merged in July 2018. (See id. ¶¶ 15, 17, 19-20, 31.) With regard to the employment dispute, the allegations generally assert that (1) Plaintiff was not properly compensated for all of his hours worked and earned wages, including overtime compensation, through the date of his wrongful termination; (2) Defendants engaged in unlawful acts and retaliatory conduct under the FMLA when Plaintiff informed Defendants that he would need time off work to help care for his son; and (3) Defendants engaged in retaliatory conduct and violated public policy when they terminated Plaintiff after he reported that Defendants were not compensating him as required under the law and after Plaintiff initiated an investigation into such alleged unlawful practices. (See generally Am. Compl.) Discovery commenced in this action in October 2021 and discovery was due by April 29, 2022. (See Docket Entries 27, 28.) In March 2022, Freedom House filed a motion for a protective order regarding several topics listed in Plaintiff's Rule 30(b)(6) Notice of Deposition. (Docket Entry 34.) Around the same time, the parties filed a joint expedited motion for a hearing to address several discovery disputes. (Docket Entry 35.) Due to scheduling conflicts between the parties and the Court (see Docket Entry 41-9), no hearing was held at that time. Plaintiff thereafter filed an expedited motion for imposition of sanctions for spoliation of evidence on April 8, 2022. (Docket Entry 40.) A few weeks later, he filed an amended motion. (Docket Entry 43.) The Court noticed this matter for a hearing and required the parties to file a status report. (Docket Entry 58.) The joint status report revealed that Plaintiff's motion on the issue of spoliation remained outstanding, although the other discovery disputes appeared to be resolved or moot. (See Docket Entry 59.) A hearing was held July 7, 2022, and the parties discussed Plaintiff's expedited amended motion for imposition of sanctions for spoliation of evidence and perjurious testimony. (Minute Entry dated 7/7/2022.)[2] II. DISCUSSION *2 Plaintiff filed the instant motion asking the Court to: (1) enter default judgment against Daymark and in favor of Plaintiff; (2) find a presumption for the remainder of litigation that due to Daymark's destruction of emails and perjurious testimony directly relevant to Plaintiff's claims, such information was in favor of all of Plaintiffs claims; and (3) find that sanctions under Federal Rule of Civil Procedure 37(c)(1) are appropriate. (Docket Entry 43.) Plaintiff's motion is sought based on two primary alleged acts by Daymark: (1) Daymark's destruction of emails and (2) the perjurious testimony during Daymark's Rule 30(b)(6) depositions. A. Spoliation Plaintiff first alleges that Daymark should be sanctioned subject to Rule 37(e) for destroying emails. (Docket Entry 44 at 16-26.)[3] Plaintiff's arguments within his brief are extensive, but he primarily points to the Rule 30(b)(6) deposition of Daymark's corporate designee, Cathy Shoaf (Daymark's Human Resources Director), for support of his motion. (Id. at 11-12; see also Docket Entry 41-5.) As argued in Plaintiff's brief, and further argued during the hearing, Plaintiff's contention is that Shoaf admitted to deleting over 100,000 emails (which might have included responsive discovery documents and communications), despite knowledge that there was a threat of Litigation and therefore had a duty to retain these communications. (See Docket Entry 44 at 16-17.) Because of such willful and intentional conduct, Plaintiff believes he is entitled to sanctions under Rule 37(e) for spoliation. (Id. at 17-26.) Spoliation “refers to the destruction or material alteration of evidence or to the failure to preserve property for another's use as evidence in pending or reasonably foreseeable litigation.” Silvestri v. General Motors Corp., 271 F.3d 583, 590 (4th Cir. 2001). “Recognizing the serious problems resulting from the continued exponential growth in the volume of [electronically stored information (“ESI”)], the Supreme Court promulgated Rule 37(e) in 2015.” Emerson Creek Pottery, Inc. v. Emerson Creek Events, Inc., No. 6:20-CV-54, 2022 WL 518910, at *2 (W.D. Va. Feb. 18, 2022) (unpublished) (internal quotations and citation omitted). Pursuant to Rule 37(e), If [ESI] that should have been preserved in the anticipation of conduct of litigation is lost because a party failed to take reasonable steps to preserve it, and it cannot be restored or replaced through additional discovery, the court: (1) upon finding prejudice to another party from loss of the [ESI], may order measures no greater than necessary to cure the prejudice; or (2) only upon finding that the party acted with the intent to deprive another party of the [ESI's] use in the litigation may: (A) presume that the lost [ESI] was unfavorable to the party; (B) instruct the jury that it may or must presume the [lost ESI] was unfavorable to the party; or *3 (C) dismiss the action or enter a default judgment. Fed. R. Civ. P. 37(e) (emphasis added). Prior to turning to the “sub-elements of (e)(1) and (e)(2),” the Court “must determine that four predicate elements are met under Rule 37(e).” Packrite, 2020 WL 7133806, at *3 (emphasis in original) (citation omitted). Those four predicate elements are: (a) the existence of ESI of a type that should have been preserved; (b) ESI is lost; (c) the loss results from a party's failure to take reasonable steps to preserve [ESI]; and (d) [the lost ESI] cannot be restored or replaced through additional discovery.... Only if all four [of those predicate] elements are established can the Court consider sanctions under subsection (e)(1) or subsection (e)(2). Konica Minolta Bus. Sols., U.S.A. Inc. v. Lowery Corp., No. 15CV11254, 2016 WL 4537847, at *2-3 (E.D. Mich. Aug. 31, 2016) (unpublished) (emphasis added). “The movant has the burden of proving all [four of the predicate] elements of Rule 37(e).” Packrite, 2020 WL 7133806 at *3 (quoting Global Hookah Distribs., Inc. v. Avior, Inc., 2020 WL 4349841 at *11 (W.D.N.C. July 29, 2020) (unpublished)). Here, Plaintiff has failed to meet his burden on the first predicate mentioned above, thus “[t]he Court's analysis begins and is dispositively resolved” there. Emerson Creek Pottery, 2022 WL 518910, at *2. As another district court explained, whether ESI should have been preserved in anticipation of litigation under Rule 37(e) turns chiefly on two questions underlying the duty to preserve: 1) whether the party should have reasonably anticipated litigation, and 2) whether the party reasonably should have known that the evidence at issue might be relevant to such litigation. Johns v. Gwinn, 503 F. Supp. 3d 452, 462 (W.D. Va. 2020) (citation omitted). Plaintiff argues that Daymark had a duty to preserve emails related to Plaintiff's employment and termination. (Docket Entry 44 at 18-19.) Further, Plaintiff asserts that as evidenced by email correspondence by Shoaf to several individuals at Freedom House on May 26, 2020 noting “some concern of potential issues for the agency ...,” Daymark, through Shoaf, “had a duty to not destroy relevant evidence that might relate to Plaintiff's employment and termination.” (Docket Entry 44 at 19 (citing Docket Entry 41-11 at 3) (emphasis in original).) Daymark contends that “Shoaf was not anticipating that Plaintiff would initiate litigation against Daymark” at the time of the May 26, 2020 communication. (Docket Entry 49 at 12.) Rather, “[t]he earliest that Daymark can be said to have reasonably anticipated litigation related to Plaintiff is November 23, 2020, when Daymark received a demand letter from Plaintiff.” (Id. at 13.) By such time, however, Daymark argues that Shoaf testified that she “did not delete any e-mails once [she] was put on notice regarding this situation.” (Id. (citing Docket Entry 41-5 at 80).) The Fourth Circuit has held that “[g]enerally, it is the filing of a lawsuit that triggers the duty to preserve evidence.” Turner p. United States, 736 F.3d 274, 282 (4th Cir. 2013) (citation omitted). However, this “duty to preserve material evidence arises not only during litigation but also extends to that period before the litigation when a party reasonably should know that the evidence may be relevant to anticipated litigation.” Silvestri, 271 F.3d at 591 (citing Kronisch v. United States, 150 F.3d 112, 126 (2d Cir. 1998)). Here, Daymark should have reasonably anticipated litigation on November 23, 2020 when the demand letter was sent, thus its duty to preserve emails related to Plaintiff's employment and termination commenced on that date. See Johns, 503 F. Supp. 3d at 465 (“[C]ourts in the Fourth Circuit have found that the receipt of a demand letter, a request for evidence preservation, a threat of litigation, or a decision to pursue a claim will all trigger the duty to preserve evidence.”) (internal quotations and citation omitted) (emphasis added). Indeed, the point at which “litigation becomes reasonably foreseeable ‘is an objective standard, asking not whether the party in fact reasonably foresaw litigation, but whether a reasonable party in the same factual circumstances would have reasonably foreseen litigation.’ ” Id. (quoting Micron Tech., Inc. v. Rambus Inc., 645 F.3d 1311, 1320 (Fed. Cir. 2011)). While Plaintiff points to Shoaf's May 2020 email communication with Freedom House as the time when Daymark should have anticipated litigation, such communication, at best, “show[ed] no more than a generalized concern about possible litigation and is not sufficient to trigger a company-wide duty to preserve evidence.” Finch v. BASF Catalysts LLC, No. 1:16-CV-1077, 2018 WL 4101828, at *9 (M.D.N.C. Aug. 22, 2018) (citation omitted) (unpublished); see also Mod. Remodeling, Inc. v. Tripod Holdings, LLC, No. CV CCB-19-1397, 2021 WL 3852323, at *6 (D. Md. Aug. 27, 2021) (unpublished) (at such time where there was “evidence of the possibility of litigation ..., the court [saw] no clear and convincing evidence that the defendants should have reasonably anticipated litigation then”) (emphasis in original). Ultimately, since Daymark had no duty to preserve prior to November 23, 2020, there can be no spoliation under the circumstances here.[4] *4 Even assuming arguendo that Daymark had a duty to preserve prior to Plaintiff's communication of the demand letter, Plaintiff has not met his burden as to the second predicate element of Rule 37(e), which requires him to demonstrate that the ESI is lost and irretrievable. See Konica Minolta, 2016 WL 4537847, at *2. “Information is lost for purposes of Rule 37(e) only if it is irretrievable from another source, including other custodians.” Steves & Sons, Inc. v. JELD-WEN, Inc., 327 F.RD. 96, 107 (E.D. Va. 2018). While “[i]rreplaceability does not require a party to pursue every possible avenue for replacing or restoring the ESI, [the party] must show that it made some good-faith attempt to explore its alternatives before pursuing spoliation sanctions.” GMS Indus. Supply, Inc. v. G&S Supply, LLC, No. 2:19-CV-324 (RCY), 2022 WL 853626, at *5 (E.D. Va. Mar. 22, 2022) (unpublished) (internal quotations and citations omitted). Here, while Plaintiff argues that Shoaf's deleted emails ate “lost” (see Docket Entry 44 at 19-20), Shoaf's own testimony suggests otherwise. During the Rule 30(b)(6) deposition when asked about “e-mails with attachments and disciplinary documents [which] were sent to [Shoaf] regarding [Plaintiff]” (Docket Entry 41-5 at 74), Shoaf testified that after reviewing the information and making a recommendation, she would “delete that information,” further stating that “I sent them to my delete box[.]” (See id. at 74-75.) Further, when asked if she meant that a deleted e-mail “goes into the deleted e-mails folder of [her] Outlook or other e-mail program,” Shoaf answered “correct.” (Id. at 109.) Shoaf also later stated that she had “not permanently deleted any e-mails,” (id, at 110); thus, when questioned whether “if a court order[ed] Daymark to produce every single e-mail that relate[d] to [Plaintiff],” they would be “retrievable” if her “IT department c[ould] retrieve those,” but to her “knowledge, [she] ha[d] provided what [she] ha[d].” (Id. at 111.) Ultimately, “as the moving party, Plaintiff must show that the lost ESI cannot be restored or replaced through additional discovery.” Packrite, 2020 WL 7133806, at *7 (internal brackets, quotation marks, and citation omitted). However, Shoaf's testimony and the evidence as whole, at best, questions whether the information is indeed lost or unable to be restored. Therefore, albeit a low bar, Plaintiff has not met his burden and the request for sanctions for spoliation should be denied. B. Perjury Plaintiff also argues that Daymark should be sanctioned for committing perjury by misrepresenting its oversight of Freedom House, employment of Plaintiff, and its role in his termination. (Docket Entry 44 at 26-30.) “Perjury requires a showing of willful intent to provide false testimony, rather than incorrect testimony as a result of confusion, mistake or faulty memory.” Safari v. Cooper Wiring Devises, Inc., No. 3:11CV12-RJC-DSC, 2012 WL 1247195, at *2 (W.D.N.C. Jan. 23, 2012) (citing United States v. Dunnigan, 507 U.S. 87 (1993)). Thus, “[t]o constitute perjury, the [party] must have believed when [they] delivered [their] testimony that it was apocryphal.” Arroyo-Perez v. Demir Grp. Int'l, 762 F. Supp. 2d 371, 373 (D.P.R. 2011) (quoting United States v. Reveron Martinez, 836 F.2d 684, 689 (1st Cir. 1988)). When it is determined that a party has committed perjury, “sanctions are necessary to ensure that other litigants fully understand that the risk of entering perjured testimony far exceeds any tactical advantage that may be afforded from it, thus deterring them from engaging in similar misconduct.” Tesar v. Potter, No. CIVA 9:05-00956 SB, 2007 WL 2783386, at *9 (D.S.C. Sept. 21, 2007) (unpublished). Often at the root of arguments and facts surrounding perjury are discrepancies which are best suited for impeachment purposes and the jury's determination of a party's credibility. See Montano v. City of Chicago, 535 F.3d 558, 564-67 (7th Cir. 2008). *5 Here, upon considering the parties’ arguments, the undersigned does not find that Daymark should be sanctioned for committing perjury throughout its Rule 30(b)(6) depositions. Instead, the deposition testimony and emails are discrepancies which are, at best, “ripe for impeachment and the jury's determination of the party's credibility.” Safari, 2012 WL 1247195, at *2 (citation omitted). Again, “[w]hen considering a [party's] alleged perjury, his state of mind is dispositive ... And in judging the subjective intent of [a] part[y], the jury is the best trier of fact.” Arroyo-Perez, 762 F. Supp. 2d at 373 (citation omitted). Moreover, the harsh sanction, a default judgment in favor of Plaintiff, is not appropriate in this circumstance either. See Montano, 535 F.3d at 567 (quoting Allen v. Chicago Transit Authority, 317 F.3d 696, 703 (7th Cir. 2003)) (“Where a witness's testimony is ‘a compound of truth and falsity,’ the prudent course is to permit the [fact-finder] to sort through it; ‘perjury is a circumstance to be weighed by the [fact-finder] in determining a witness's credibility rather than a ground for removing the issue of credibility from the [fact-finder] by treating the witness's entire testimony as unworthy of belief.’ ”)). Therefore, Plaintiff's motion for sanctions, as it pertains to allegations of perjury, should also be denied. III. CONCLUSION For the reasons stated herein, IT IS HEREBY RECOMMENDED that Plaintiff's Expedited Amended Motion for Imposition of Sanctions for Spoliation of Evidence and Perjurious Testimony (Docket Entry 43) be DENIED.[5] Footnotes [1] In light of the nature of the sanctions requested by Plaintiff, the undersigned will enter a recommendation in this matter. See Packrite, LLC v. Graphic Packaging Int'l, LLC, No. 1:17CV1019, 2020 WL 7133806, at *1 n.1 (M.D.N.C. Dec. 4, 2020) (unpublished) (“[B]ecause the instant Motion seeks a default judgment..., the undersigned Magistrate Judge opts to enter a recommendation.”) (internal quotations and citation omitted). [2] The other related discovery motions (Docket Entries 34, 35, 40) were terminated as moot. [3] Unless otherwise noted, all citations in this recommendation refer to the page numbers at the bottom right-hand corner of the documents as they appear in the Court's CM/ECF system. [4] The undersigned notes that Plaintiff raises an argument in his reply that “many labor laws impose an obligation on employers to maintain records” and cites several regulations and statutes. (See Docket Entry 51 at 11 & n. 4 (emphasis in original).) It appears Plaintiff raises such point simply to refute Daymark's contention that Plaintiff himself did not even anticipate litigation upon his immediate termination. (See id. at 10-11.) However, to the extent Plaintiff attempts to inject a new argument regarding labor laws which impose obligations on employers to maintain records, such is impermissible in his reply brief. Indeed, “[m]embers of this Court ... have consistently held that reply briefs may not inject new grounds and that an argument that was not contained in the main brief is not before the Court.” Tyndall v. Maynor, 288 F.R.D. 103, 108 (M.D.N.C. 2013) (internal brackets, ellipses, and quotation marks omitted). Beyond that, “[a]lthough a regulation may supply the duty to preserve records, a party seeking to benefit from an inference of spoliation must still make out the Other usual elements of a spoliation claim.” Punzo v. Casino, No. CV 20-5581, 2022 WL 62888, at *4 (E.D. Pa. Jan. 5, 2022) (unpublished) (internal quotations and citation omitted). [5] To the extent Daymark itself requests sanctions in the form of attorney's fees (see Docket Entry 49 at 19), this should also be denied.