You Know That Destroying Evidence Can Get You in Trouble, Right?

By Fiona Ong - Shawe Rosenthal LLP

March 29, 2024

Last year, in our October 2023 E-Update, we wrote about an employer who destroyed evidence that could have proved his new employee stole source code from his former employer that was used to create a “functionally equivalent” product by the new employer. Because of this bad behavior, a federal trial court entered a default judgment against the new employer (meaning that the employer lost the case without any consideration of the merits). But our admonition against destroying (bad) evidence goes both ways – as shown in a recent case before the U.S. Court of Appeals for the Ninth Circuit.

Now, in the context of a lawsuit, the parties engage in discovery (when parties request and must produce relevant information and documents to each other). As we previously noted, it can be tempting for a party to destroy problematic evidence. BUT THAT’S UNLAWFUL (in case you didn’t know… really). And if you get caught, it can result in a world of financial and reputational hurt.

(For those you more scholarly types, under Federal Rule of Civil Procedure 37(e)(2), where a party has failed to preserve electronically stored evidence that they should have retained, and if there is resulting harm to the other side (including threatened interference with the rightful result), a court can order measures intended to address the harm. And if the destruction was intentional, the Rule authorizes the court to dismiss the case).

And that is what happened to the employee in Jones v. Riot Hospitality Group who deleted text messages to her friends/co-workers that were relevant to her discrimination case and got these friends/co-workers to delete their texts to her. These texts were not recoverable. (Also, the employee and her attorney failed to comply with several court orders to provide these and other text messages, despite monetary sanctions). The federal district court found that she had intentionally spoliated (or caused the destruction) of evidence and dismissed her case.

In an astounding display of chutzpah, although the employee didn’t deny destroying the texts, she appealed the dismissal of her case to the Ninth Circuit, arguing that her actions were not “willful” and that the employer was not harmed by their destruction. The Ninth Circuit treated this argument with the scorn it deserved. It noted that “intentional” conduct may be determined through factors like the timing of destruction, affirmative steps taken to delete evidence, and selective preservation. And even if perhaps not every single deletion was intentional, it was quite clear that she “intentionally destroyed a significant number of text messages and collaborated with others to do so.” The Ninth Circuit also rejected her argument that the fact she produced thousands of other texts negated the findings of intent and prejudice, noting that “production of some evidence does not excuse destruction of other relevant evidence.”

The Ninth Circuit also rejected the employee’s argument that dismissal was too severe a sanction. It deferred to the district court’s determination that lesser sanctions would be ineffective, particularly where the employee and her attorney had ignored prior court orders even after monetary sanctions had been imposed on them.

So, as bad as evidence might be, destroying it is likely worse.

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