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U.S. Equal Employment Opportunity Commission v. Wedco, Inc.

United States District Court, D. Nevada

September 15, 2014

U.S. EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff,
v.
WEDCO, INC., and DOES 1-10, Defendants.

ORDER

ROBERT C. JONES, District Judge.

Before the Court is Defendant Wedco, Inc.'s Motion to Seal (ECF No. 91) and its Motion for Spoliation Sanctions (ECF No. 92), as well as Plaintiff's Opposition and Cross Motion for Spoliation Sanctions (ECF No. 94).

I. BACKGROUND

Larry Mitchell is an African American who worked as a deliveryman for Wedco, Inc. from about October 2007 to July 25, 2008. (Intake Inquiry Form 1, ECF No. 92 Ex. 1). During that time, Mitchell allegedly experienced a work environment that caused him to quit. On August 21, 2008, Mitchell submitted an "Intake Inquiry Form" to the Nevada Equal Rights Commission ("NERC") claiming that he was forced to leave his job due to discrimination. ( Id. at 2-3). Mitchell alleged that he was denied breaks, required to ask permission to use the bathroom, and intimidated by a hangman's noose that hung in Wedco's warehouse. ( Id. at 2). Maurice Davis, a NERC Intake Officer, sent a letter to Mitchell on August 22, 2008 scheduling a phone interview to discuss his complaint. (Davis Letter 1, ECF No. 92 Ex. 3). Davis's usual practice during these interviews was to take handwritten notes and then transpose those notes into a draft of the charge, which was then placed into the complaining party's case folder. (Davis Dep. 21:18-25, 31:19-33:13, 55:20-56:13, ECF No. 92 Ex. 5). Davis would subsequently shred his handwritten notes. ( Id. at 33:4-6). While Davis could not remember the specifics of Mitchell's case, he agreed that he likely followed his usual practice at the time he interviewed Mitchell. ( Id. at 14:9-15:9, 33:1-13). Shortly after the intake interview, Mitchell filed a Charge of Discrimination ("the Charge") with the NERC against Wedco. (Notice of Charge of Discrimination, ECF No. 92 Ex. 4). Wedco's Vice President, Richard Stoltz ("Stoltz"), upon receiving the Charge, immediately removed the noose and threw it in the trash. (Stoltz Dep. 92:8-21, ECF No. 94 Ex. E).

After the Charge was formalized, Dennis Maginot became the lead NERC Compliance Investigator on Mitchell's case. Maginot conducted a number of investigatory interviews related to Mitchell's case. (Maginot Dep. 18:18-21, ECF No. 92 Ex. 9). Maginot generally recorded these interviews to be placed in the complaining party's case file, but on the day he interviewed Stoltz and others, neither his microcassette recorder nor his digital recorder functioned properly, which left Maginot without any recordings of those meetings other than a forty-second clip of introductory remarks. ( Id. at 18:1-21:2).

The NERC transferred Mitchell's case to the United States Equal Employment Opportunity Commission ("EEOC") around August 31, 2011. The case was assigned to Miguel Escobar and he also conducted an interview with Mitchell. (Follow-Up Interview Notes, ECF No. 92 Ex. 10). In conjunction with his own interview notes, Escobar relied on information contained in the NERC case file when he recommended that the EEOC file a lawsuit against Wedco based on Mitchell's discrimination claim. (Escobar Dep. 45:14-17, ECF No. 92 Ex. 11). On September 27, 2012, the EEOC filed its complaint against Wedco. (ECF No. 1).

During the discovery process, Wedco submitted requests for production of all the notes pertaining to Mitchell's allegations that the EEOC had in its possession, including those created by Davis, Maginot, and Escobar. (EEOC's Response to Wedco's First Request for Production of Documents 6, ECF No. 92 Ex. 12). The EEOC replied that the notes created and kept by the NERC and the EEOC were excluded from discovery by the governmental process privilege. ( Id. ). The parties submitted this discovery dispute to the magistrate judge who reviewed the EEOC's privilege log and the documents for which it claimed a privilege. (ECF No. 45). On January 6, 2014, the magistrate judge, after conducting an in camera review, ruled that the case notes and other notes in question should not be produced. (ECF No. 57).

Notwithstanding this ruling, Wedco here claims that the NERC and the EEOC engaged in spoliation of relevant evidence by either destroying notes that were kept regarding Mitchell's case or by hiding from Wedco portions of notes that would otherwise be discoverable. Besides the notes, Wedco asserts that the EEOC and Mitchell are responsible for the unavailability of other pieces of evidence. Wedco seeks to have the EEOC's case dismissed, or alternatively it requests lesser evidentiary sanctions. The EEOC denies all allegations of spoliation and cross moves for spoliation sanctions against Wedco based on Stoltz throwing away the noose.

II. LEGAL STANDARDS

Spoliation is "the destruction or significant alteration of evidence, or the failure to preserve property for another's use as evidence in pending or reasonably foreseeable litigation." LaJocies v. City of N. Las Vegas, No. 2:08-cv-00606-GMN-GWF, 2011 WL 1630331, at *1 (D. Nev. Apr. 28, 2011) (Navarro, J.) (citing United States v. Kitsap Physicians Serv., 314 F.3d 995, 1001 (9th Cir. 2002)). The duty to preserve evidence arises not only when a formal complaint is filed, but when a party should know that evidence may be relevant to future litigation. See In re Napster, Inc. Copyright Litig., 462 F.Supp.2d 1060, 1067 (N.D. Cal. 2006). If a party fails to properly preserve evidence, the opposing party may move for sanctions based on the district court's "inherent discretionary power to make appropriate evidentiary rulings in response to the destruction or spoliation of relevant evidence." Glover v. BIC Corp., 6 F.3d 1318, 1329 (9th Cir. 1993). Before any sanction is appropriate, however, the party alleging spoliation has the burden to prove by a preponderance of the evidence that the accused party actually destroyed, altered, or failed to preserve relevant evidence. See LaJocies, 2011 WL 1630331, at *1 (stating that the applicable standard in the Ninth Circuit "appears to be by a preponderance of the evidence"); In re Napster, 462 F.Supp.2d at 1072.

Once spoliation is proven, the court may sanction the offending party by instructing the jury to draw an inference adverse to the party or witness responsible for destroying the evidence, excluding witness testimony proffered by the responsible party and based on the destroyed evidence, or dismissing the claim of the responsible party. In re Napster, 462 F.Supp.2d at 1066. "Generally, the court should choose the least onerous sanction corresponding to the willfulness of the destructive act and the prejudice suffered by the victim." LaJocies, 2011 WL 1630331, at *1. Moreover, a court must find that the party accused of spoliation acted with "willfulness, fault, or bad faith" before dismissal is an appropriate sanction. Leon v. IDX Sys. Corp., 464 F.3d 951, 958 (9th Cir. 2006). "[A] finding of bad faith is not a prerequisite" for lesser sanctions, however. Glover, 6 F.3d at 1329. A court also has the option of considering whether the wronged party was prejudiced by the alleged spoliation before it imposes sanctions. See In re Napster, 462 F.Supp.2d at 1075 n.4 (citing Halaco Eng'g Co. v. Costle, 843 F.2d 376, 382 (9th Cir. 1988)) (stating that under the court's inherent authority to impose sanctions, "prejudice is an optional' consideration" as compared to sanctions under Rule 27 of the Federal Rules of Civil Procedure where prejudice is essential). A prejudice inquiry determines whether the spoliating party's actions impaired the other party's "ability to go to trial or threatened to interfere with the rightful decision of the case." Leon, 464 F.3d at 959 (citation omitted).

III. DISCUSSION

A. Wedco's Motion for Spoliation Sanctions

Wedco cites three reasons supporting spoliation sanctions against the EEOC. Its first reason is that the EEOC failed to preserve notes and other information gathered during the investigation of Mitchell's discrimination claim. Second, Wedco argues that the EEOC's failure to preserve a camera used by Mitchell to photograph the noose and the negatives of those photographs amounts to spoliation. The final contention is that the ...


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