M.D. Fla.: Search Hits in File Fragments Leads to Adverse Inference Instruction

Today, Judge Philip R. Lammens issued a decision, Nationwide Life Ins. Co. v. Betzer, No: 5:18-cv-39, 2019 U.S. Dist. LEXIS 194165 (M.D. Fla. Nov. 8, 2019), granting the Plaintiff's motion for sanctions for the spoliation of evidence and issuing an adverse inference instruction.

In this case concerning a dispute about annuity contracts, a forensic examination showed that the Defendants' computer contained relevant documents that should have been produced pursuant to a document request. The examination showed that documents had been accessed shortly before a document production by the Defendants in the case, and that deletion software had been run on some of their computers and the drives had been defragmented pursuant to user commands - not as part of an automatic process. Using proximity searches for key witness names, the examiner was able to find hundreds of relevant hits in fragments of files that had either just been deleted or from those that had been erased.

The Court found that the Defendants were able to reasonably foresee that litigation would arise when the data was deleted and considered that fact that "the deliberate and systematic use of commercial deletion software suggests Defendants were both technically sophisticated and were aware that their actions would erase material from their computers." as a factor in showing there was an obligation to preserve under Rule 37(e). Id. at *26. The forensic examination showed that the most of the relevant information had been lost and could not be replaced through data restoration or additional discovery. In finding that the Defendants acted in bad faith and with the intent to deprive that resulted in prejudice to the Plaintiff, Judge Lammens pointed out that, "Marcy Betzer's forensic expert opined that 25% of potentially relevant information was lost from Smith's computer and 97% of potentially relevant information (equating to more than 2,000 files) was lost from Robinson's computer". Id. at *33.

The Court ordered that the jury be given an instruction that the evidence lost from the computers was unfavorable to the Defendants, and also awarded costs and fees related to the failure to produce the documents, and well as the sanctions motion itself.