Failure to Preserve Key Player’s Email and Interview Transcripts Warrants Adverse Inference Instruction, but not Default Judgment
Nursing Home Pension Fund v. Oracle Corp., 2008 WL 4093497 (N.D. Cal. Sept. 2, 2008)
In this class action securities litigation, plaintiffs sought sanctions based on alleged evidence spoliation by defendants. Plaintiffs moved for terminating sanctions or, in the alternative, for lesser sanctions in the form of adverse inference instructions and an order precluding defendants from relying on spoliated evidence. Plaintiffs submitted a long list of actions allegedly taken by defendants that led to the failure to preserve or the affirmative destruction of evidence relevant to this lawsuit.
District Judge Susan Illston declined to impose terminating sanctions because the actions alleged to have been taken by defendants did not “eclipse entirely the possibility of a just result.” The court found that plaintiffs had not demonstrated the degree of prejudice necessary to warrant terminating sanctions, primarily because plaintiffs had received a large quantity of materials in discovery. In addition, the court noted that public policy strongly favored deciding the case on its merits, and that less drastic sanctions could be imposed that would permit a decision on the merits while also ensuring that defendants did not benefit from any spoliation.
As to lesser sanctions, the court found that adverse inferences in plaintiffs’ favor were warranted with regard to some categories of evidence that defendants had conceded was not produced or preserved.