GLOBUS MEDICAL, INC., Plaintiff, v. Shane JAMISON, et al., Defendants Case No. 2:22cv282 United States District Court, E.D. Virginia, Norfolk Division Signed February 10, 2023 Counsel Matthew James Sharbaugh, Morgan Lewis & Bockius LLP, Washington, DC, Benjamin Jacobs, Pro Hac Vice, Brett Alexander Janich, Pro Hac Vice, Emily Byrne, Pro Hac Vice, Sarah Bouchard, Pro Hac Vice, Morgan Lewis & Bockius LLP, Philadelphia, PA, for Plaintiff. David J. Walton, Kathleen M. Laubenstein, Pro Hac Vice, Paul J. Greco, Pro Hac Vice, Fisher & Phillips, Philadelphia, PA, for Defendants Shane Jamison, Mike Ruane, Mike Jones, Jake Schools, Scott Van Gilder, Sarah Gregory, Nick Walker. David J. Walton, Kathleen M. Laubenstein, Pro Hac Vice, Fisher & Phillips, Philadelphia, PA, for Defendants Curt McLeod, Terry McLeod, Scott Brooks. David J. Walton, Fisher & Phillips, Philadelphia, PA, for Defendant Kurt Reighard. Leonard, Lawrence R., United States Magistrate Judge ORDER *1 Before the Court is Plaintiff Globus Medical, Inc.'s (“Globus”) Motion for Sanctions Based Upon Spoliation, and accompanying memorandum in support. ECF Nos. 76, 77. Therein, Globus seeks sanctions against certain Defendants in this action, including Shane Jamison, Mike Ruane, Mike Jones, Jake Schools, Scott Van Gilder, Sarah Gregory, and Nick Walker (collectively, “the Tidewater Defendants”) for the alleged loss of evidence during the time in which the Tidewater Defendants used an encrypted messaging application called Signal. ECF No. 77 at 1. The Tidewater Defendants filed a response in opposition, ECF No. 92, and Globus filed a reply, ECF No. 95. The Court held a hearing on the motion on January 30, 2023. For the reasons explained below, Globus's Motion for Sanctions, ECF No. 76, is DENIED. By its motion, Globus argues that Signal is “a communication application intended to provide secrecy for its users: its messages are encrypted and destroyed, along with their metadata, after a certain period of time, allowing users to permanently hide the content of their messages and/or that they even sent them.” ECF No. 77 at 2. Globus argues that the Tidewater Defendants downloaded Signal for a period of time prior to the end of their relationship with Globus, and that the nature of the communications that were produced by the Tidewater Defendants demonstrate that those Defendants intended to erase communications with each other about various hospitals and doctors, in violation of their non-compete, non-disclosure, and non-solicitation agreements (“NCNDAs”). Id. at 3–5. Globus contends that because the Tidewater Defendants used Signal, it now cannot discover the full extent of the Tidewater Defendants' breaches during the time they used Signal, and it is therefore entitled to an inference at the upcoming preliminary injunction hearing that the Tidewater Defendants breached their NCNDAs during the time they had Signal. Id. In response, the Tidewater Defendants argue that they had no nefarious intent in using Signal, and that they downloaded the application to better protect patient privacy in their communications. ECF No. 92 at 2–3. The Tidewater Defendants note that they only used Signal for a short period between June 24, 2022, and July 4, 2022. Id. at 2–3, 7. The Tidewater Defendants stopped using Signal on the advice of counsel on July 4 after they received a cease-and-desist letter from Globus. Id. The Tidewater Defendants contend that during that time period, only two of the seven Tidewater Defendants—Shane Jamison and Scott Van Gilder—activated the disappearing messages feature. Id. at 3–4. In fact, the Tidewater Defendants note that they produced 178 pages of Signal messages for the other five Tidewater Defendants—including messages involving Shane Jamison and Scott Van Gilder. Id. at 4–5, 12–16. Accordingly, they contend no communications were actually “lost” based on the use of Signal, and because no communications were actually “lost,” Globus cannot establish any prejudice that would warrant sanctions based on spoliation of evidence, let alone an adverse inference based on spoliation of evidence. Id. *2 “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. Gen. Motors Corp., 271 F.3d 583, 591 (4th Cir. 2001) (citations omitted). A party's obligation to preserve material evidence to avoid spoliation “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.” Id. (citation omitted). “[S]poliation is not a substantive claim or defense but a ‘rule of evidence,’ and thus is ‘administered at the discretion of the trial court.’ ” Hodge v. Wal-Mart Stores, Inc., 360 F.3d 446, 450 (4th Cir. 2004) (quoting Vodusek v. Bayliner Marine Corp., 71 F.3d 148, 155 (4th Cir. 1995)). The Court's power to impose sanctions based on spoliation of evidence in this matter stems from Federal Rule of Civil Procedure 37(e), and the Court's “inherent power ... to redress conduct ‘which abuses the judicial process.’ ” Silvestri, 271 F.3d at 591–92. Federal Rule of Civil Procedure 37(e) specifically governs parties' obligation to preserve electronically stored information (“ESI”).[1] While the district court has “broad discretion to choose the appropriate sanction” to address a party's spoliation of evidence, Rule 37(e) “significantly limits a court's discretion to impose sanctions for loss or destruction of ESI.” Jenkins v. Woody, No. 3:15cv355, 2017 WL 362475, at *12 (E.D. Va. Jan. 21, 2017). Rule 37(e) provides: If electronically stored information that should have been preserved in the anticipation or 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 information, 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 information's use in the litigation may: (A) presume that the lost information was unfavorable to the party; (B) instruct the jury that it may or must presume the information was unfavorable to the party; or (C) dismiss the action or enter a default judgment. Fed. R. Civ. P. 37(e). As provided by this rule the Court must apply a multi-step analysis to determine if any sanctions or curative measures are appropriate for the failure to preserve ESI. Jenkins v. Woody, No. 3:15CV355, 2017 WL 362475, at *13 (E.D. Va. Jan. 21, 2017). First, before determining which sanctions are appropriate, the party seeking to impose sanctions must meet four requirements: (1) “some ‘ESI’ must have been ‘lost[;]’ ” (2) “that information (or evidence) must be of the sort that ‘should have been preserved in the anticipation or conduct of litigation;’ ” (3) “the evidence must have been lost ‘because a party failed to take reasonable steps to preserve it;’ ” and (4) “the court must find that the evidence ‘cannot be restored or replaced through additional discovery.’ ” Id.; see also Steves & Sons, Inc. v. Jeld-Wen, Inc., 327 F.R.D. 96, 104 (E.D. Va. 2018). Second, once a party seeking sanctions establishes these requirements, the Court has two options pursuant to Rule 37(e)(1) and (e)(2). Under Rule 37(e)(1), the Court must find prejudice to the opposing party before ordering measures no greater than necessary to cure the prejudice. Fed. R. Civ. P. 37(e)(1). Alternatively, under Rule 37(e)(2), the Court must find that the party who allegedly spoliated evidence did so with the “intent to deprive another party of the information's use in the litigation.” before taking more drastic actions such as allowing an adverse inference or presumption that the information was unfavorable. Fed. R. Civ. P. 37(e)(2). *3 Finally, it is unsettled whether the party seeking sanctions must establish spoliation by a preponderance of the evidence standard or a clear and convincing evidence standard. Id. at *12 (citing cases) (“The United States Court of Appeals for the Fourth Circuit has not yet decided the burden of proof in sanctions cases). “Some courts have applied the preponderance of the evidence standard” while “[o]ther courts have required clear and convincing proof of misconduct, especially when imposing severe sanctions.” Id. (citations omitted). In this case, as a sanction for spoliating evidence, Globus requests an adverse inference that the Tidewater Defendants breached their NCNDAs during the time they were using Signal, or a presumption that the lost information was unfavorable to the Tidewater Defendants. As explained above, such drastic sanctions are only available if Globus can establish first, the four factors set forth in the first step of the Rule 37(e) analysis, and second, establish that the Tidewater Defendants acted with the intent to deprive Globus of the evidence in the litigation. Without deciding which evidentiary standard is required, Globus's proffered evidence of spoliation fails to reach even the lower preponderance of the evidence standard. Here, Globus has not established all four requirements at the first step of Rule 37(e) by at least a preponderance of the evidence. Specifically, Globus has not established that first or fourth requirements of Rule 37(e) apply in this case to warrant sanctions based on spoliation of evidence.[2] First, considering whether some ESI was lost, at best Globus has offered speculation that some ESI may have been lost for two of the seven Tidewater Defendants, Shane Jamison and Scott Van Gilder, who had their settings in Signal set to auto-delete messages. As for the other five Tidewater Defendants—Mike Ruane, Mike Jones, Jack Schools, Sarah Gregory, and Nick Walker—Globus has only established that these Defendants used Signal to communicate. Globus has not presented any evidence that these Defendants had their settings set to automatically delete messages, or those Defendants actually did delete any messages.[3] As for the remaining two Tidewater Defendants who had their messages set to auto-delete, Globus has not established by at least a preponderance of the evidence that ESI from Shane Jamison is lost and cannot be restored or replaced through additional discovery. With respect to Shane Jamison, it is not entirely clear to the Court how long he had his signal messages set to autodelete, but the Court assumes for the purposes of this motion that he had activated his auto-delete feature from the time the Tidewater Defendants downloaded Signal.[4] Thus, at least with respect to Shane Jamison, some ESI may have been lost. However, even if evidence of Shane Jamison's communications on Signal were lost, those communications have been restored or replaced through additional discovery. Specifically, at least in the evidence that was presented to the Court by this motion, the Tidewater Defendants produced messages between Shane Jamison and Mike Jones. See ECF No. 92, attach. 1 at 8–14. It is not entirely clear to the Court whether there were other messages on Signal involving Shane Jamison in the other Tidewater Defendants' document productions, however, Globus did not produce any evidence that there is reason to believe additional communications are missing, or that there was any other Tidewater Defendants with whom Shane Jamison would have communicated. For example, Globus could have presented evidence that it asked Shane Jamison at his deposition whether he communicated with other individuals on Signal during the time in which the Tidewater Defendants were using the application, or that it asked the other Tidewater Defendants aside from Mike Jones whether they recall communicating with Shane Jamison via Signal during the relevant time period. Globus did not do so (or at least, did not present such evidence to the Court), and asks the Court to speculate that there are additional communications between the Tidewater Defendants, despite the fact that other communications using Signal have been produced in discovery. That speculation is insufficient to establish by at least a preponderance of the evidence that any lost ESI from Shane Jamison cannot be restored or replaced through additional discovery.[5] *4 As for Scott Van Gilder, the Court is doubtful that his ESI was lost at all. The evidence presented to the Court demonstrates that Scott Van Gilder did not have his Signal settings on autodelete until July 1, 2022, and all the Tidewater Defendants stopped using Signal on or around July 4, 2022. ECF No. 92, attach. 1 at 33, 61. At his deposition, Globus asked Scott Van Gilder questions about his Signal messages with Sarah Gregory, and Mike Ruane, which covered June 24 (the day the Tidewater Defendants downloaded Signal), 25, 27, 28, and 29 of 2022. Id. at 36–69. Thus, if anything, Globus has only established that Scott Van Gilder's ESI may have been lost from July 1, 2022 through July 4, 2022, which, as noted by the Tidewater Defendants, was a holiday weekend. See ECF No. 92 at 4–5, n. 5. While it appears unlikely that any ESI was lost for Scott Van Gilder in the first place, Globus has also not established that it could not get that discovery restored or replaced through discovery from the other Tidewater Defendants. Additionally, similar to Shane Jamison, Globus could have asked (or presented to the Court if it did ask), evidence that it asked Scott Van Gilder at his deposition if he recalled communicating with any of the other Tidewater Defendants between July 1, 2022, and July 4, 2022, or asked any of the other Tidewater Defendants if they recalled communicated with Scott Van Gilder that weekend. Again, absent any evidence that some communications may have occurred, the Court cannot simply speculate that the Tidewater Defendants were communicating during those days.[6] Lastly, the Court notes that the fact that Scott Van Gilder and Shane Jamison both had their Signal messages set to auto-delete raises the question whether there were communications between these two Defendants between July 1, 2022—the day Scott Van Gilder set his messages to autodelete, and July 4, 2022—the day the Defendants stopped using Signal. As both these Defendants had messages that would auto-delete, presumably, other Defendants production of Signal messages would not be sufficient to restore or replace those communications. Again however, Globus has not established by at least a preponderance of the evidence that there is any reason to believe ESI was lost between these two Defendants. Again, Globus could have presented evidence that these two Defendants worked closely together in the past, or covered each other's surgeries after they both left Globus, such that there would be some potential reason for them to communicate between July 1, 2022, and July 4, 2022. However, Globus has not done so, and again, the Court cannot simply speculate that such messages existed in the first place. In sum, while Globus makes much about the Tidewater Defendants' convenient timing of downloading Signal and cryptic communications about “protected messages,” Globus has not established by at least a preponderance of the evidence that ESI is missing based on the Tidewater Defendants' use of Signal, or that even if ESI is missing, it was not restored or replaced through additional discovery. Because Globus cannot establish the first requirements of Rule 37(e), the Court need not consider the second step—whether Globus is prejudiced or whether the Tidewater Defendants acted with the intent to deprive Globus of the evidence. Globus cannot meet the requirements of Rule 37(e), and sanctions based upon spoliation of evidence are not appropriate in this case. The Clerk is DIRECTED to forward this Order to all counsel of record. It is so ORDERED. Footnotes [1] The parties do not dispute that the messages exchanged on Signal constitute ESI. [2] Whether Globus has established the second factor—that the lost evidence should have been preserved in anticipation of litigation—and the third factor—the evidence was lost because the party failed to take reasonable steps to preserve it—perhaps are closer questions. However, is not necessary for the Court to resolve those questions because of Globus' clear failure of proof regarding the other two factors. [3] Globus did proffer evidence in the form of text messages that one Tidewater Defendant, Sarah Gregory, instructed two others, Jake Schools and Nick Walker, to delete text messages that she sent them regarding the location of certain devices for a doctor. ECF No. 77, attach. 4 at 3. At the hearing, Globus could not state with certainty which Tidewater Defendant produced the exhibit, how many Tidewater Defendants produced the same exhibit. Nonetheless, the fact that the exhibit was produced at least once demonstrates that the evidence was not “lost,” as it was produced by at least one Tidewater Defendant in discovery. [4] Globus did not proffer evidence regarding when Shane Jamison turned on the feature to auto-delete messages in his Signal application. [5] Globus also vaguely references that Shane Jamison also had his text message settings on his cellphone set to auto-delete. See ECF No. 77 at 3–4. However, Shane Jamison testified that he had that setting prior to the start of this litigation. Id., attach. 6 at 3. At the hearing, the Tidewater Defendants represented that it produced text messages from Shane Jamison going back as far as early June 2022. Globus did not dispute that representation, and there is no reason to believe Globus is missing ESI from Shane Jamison's cellphone, certainly not by a preponderance of the evidence. [6] While the Court is sympathetic that Globus cannot “know what it doesn't know,” Globus simply did not present enough evidence for the Court to conclude by at least a preponderance of the evidence that ESI was lost that was not ultimately replaced or restored by additional discoveiy. For example, Globus could have drilled down in asking the Tidewater Defendants about their communications for that specific time period—for example, it could have asked the Tidewater Defendants about what surgeries were scheduled, and attempted to determine whether there was something the Tidewater Defendants (and more specifically Scott Van Gilder and Shane Jamison) would need to be communicating about. Absent any indication at all that the Defendants were communicating that weekend, the Court cannot simply speculate that they were.