Court Denies Motion for Sanctions for Failure to Suspend Automatic Overwriting of Backup Tapes Absent Showing of Bad Faith

Southeastern Mech. Servs., Inc. v. Brody, 2009 WL 2242395 (M.D. Fla. July 24, 2009)

Defendant Thermal Engineering Construction Services, Inc. (“TEI”) moved for spoliation sanctions alleging that plaintiff failed to adopt a proper litigation hold procedure which resulted in the automatic deletion of email and other electronically stored information (“ESI”) from plaintiff’s backup tapes.  Specifically, plaintiff failed to preserve information from Defendant Norman Brody following his last day of employment with plaintiff.  Despite finding that plaintiff had a duty to preserve relevant evidence at the time of the loss, the court declined to impose sanctions absent a showing of bad faith and denied TEI’s motion.

TEI learned of the loss of relevant email and other ESI during the deposition of plaintiff’s Information Technology Manager, Sam Jones, on November 24, 2008.  First, regarding plaintiff’s document retention practices, Jones testified that plaintiff retained employee emails on its company server until the employee deleted them, that the information on the server was backed up daily to backup tapes, and that those tapes were overwritten every two weeks.  Specifically regarding defendant Brody, Jones testified that following Brody’s last day on May 27, 2008 he “reviewed Brody’s account and discovered that Brody’s emails, contacts, and tasks were deleted from his computer.”  He then waited for more than two weeks to review the backup tapes of Brody’s account.  By that time, the information from Brody’s computer had been automatically overwritten and could not be retrieved.

Accordingly, TEI filed a motion for sanctions and alleged that plaintiff’s duty to preserve arose no later than June 3, 2008 when counsel informed TEI of plaintiff’s belief that TEI had violated the Computer Fraud and Abuse Act.  TEI also argued that plaintiff’s bad faith was apparent by its failure to comply with a request to suspend its routine deletion of backup tapes in November 2008.

Plaintiff argued that sanctions were inappropriate because TEI failed to show the deletions were undertaken in bad faith and because the backup tapes were overwritten as a part of its “regular data management policy,” among other things.  Regarding its failure to suspend its automatic deletion policy in November 2008, plaintiff argued that the request came to late to prevent any relevant data from being overwritten.

Addressing first the controlling law of spoliation in its district, the court sought guidance from Florida state law where the Eleventh Circuit had not set forth specific guidelines on the imposition of spoliation sanctions.  In doing so, the court determined that the imposition of sanctions is appropriate only when there is evidence of bad faith.  See Flurry v. Daimler Chrysler Corp., 427 F.3d 939 (11th Cir. 2005) (“spoliation sanction of dismissal requires showing of bad faith”); Bashir c. Amtrak, 119 F.3d 929 (11th Cir. 1997) (“court may impose spoliation sanction of adverse inference instruction only where destruction of evidence predicated on bad faith.”)

Turning to plaintiff’s duty to preserve the tapes containing Brody’s data, the court agreed with TEI and determined that such a duty arose in “May and June 2008” upon providing notice to TEI of its belief that TEI had violated the Computer Fraud and Abuse Act.  The court went on to discuss its confusion over plaintiff’s failure to timely suspend its automatic overwriting of the relevant backup tapes:  “Given the importance of electronic information in this litigation, it is baffling why SMS’s litigation hold did not suspend the routine overwriting of backup tapes by June 3, 2008.  Because Brody was a key player in this litigation, his deleted e-mails may have been relevant to this matter.”  Regarding plaintiff’s failure to suspend its automatic systems in November 2008, though, the court found there was no duty to preserve.

Despite plaintiff’s breach of its duty to preserve the backup tapes containing Brody’s ESI, the court nonetheless declined to impose sanctions absent the necessary showing of bad faith:

Once it is determined that a party has destroyed evidence that it had a duty to preserve, a court must determine what sanctions, if any, to impose. In this case, no spoliation sanction is appropriate because the automatic overwriting of backup tapes under the circumstances presented here did not involve bad faith. The automatic overwriting of SMS’s server backup tapes was part of the company’s routine document management policy. See Floeter v. City of Orlando, No. 6:05-CV-400-Orl-22KRS, 2007 WL 486633, at * 7 (M.D.Fla. Feb.9, 2007) (the deletion of e-mails was the result of the city’s long-standing practice of overwriting server backup tapes and there was insufficient evidence to establish the city acted in bad faith). While SMS failed to preserve the backup tapes containing Brody’s e-mails, the evidence fails to establish that SMS acted in bad faith by overwriting the backup tapes for May and June 2008. See Consol. Aluminum Corp. v. Alcoa, Inc., 244 F.R.D. 335, 345-46 (M.D.La.2006) (recycling of backup tapes containing emails from "key player," whose emails on active database were not preserved, was negligent).