Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_04-cv-03946/USCOURTS-cand-5_04-cv-03946-24/pdf.json

Nature of Suit Code: 440
Nature of Suit: Other Civil Rights
Cause of Action: 42:1983 Civil Rights Act

---

United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

Darla Padgett, et al.,

Plaintiffs,

 v.

City of Monte Sereno et al.,

Defendants. /

NO. C 04-03946 JW 

ORDER GRANTING PLAINTIFFS’

MOTION FOR SANCTIONS AND

REFERRING DEFENDANTS’ MOTION

FOR CLARIFICATION TO THE

SPECIAL MASTER

I. INTRODUCTION

Plaintiffs Joseph and Darla Padgett (“Plaintiffs”) move for terminating sanctions, monetary

sanctions, and entry of default judgment against Defendants City of Monte Sereno, Brian Loventhal,

Erin Garner, A. Curtis Wright, Mark Brodsky, Barbara Nesbet, David Baxter, and Lisa Rice

(“Defendants”) based on Defendants’ failure to permit discovery pursuant to a Court Order and for

spoliation of evidence. The Court conducted a hearing on March 12, 2007. Based on the papers

submitted to date and the arguments of the parties at the hearing, the Court reserves its ruling with

respect to terminating sanctions or entry of default judgment. However, the Court imposes monetary

sanctions for spoliation of evidence.

II. BACKGROUND

The factual allegations of this case may be found in the Court’s Order Partially Granting

Defendants’ Motion to Dismiss Without Prejudice. (See Docket Item No. 26.) The relevant

procedural history to the current motion is as follows:

Case 5:04-cv-03946-EJD Document 312 Filed 03/20/07 Page 1 of 8
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28 2

Plaintiffs initiated the underlying action on September 17, 2004, and filed the Second

Amended Complaint on January 9, 2006. (Second Amended Complaint for Violation of Civil

Rights (42 U.S.C. § 1983); Violation of California Civil Code § 52.1; Abuse of Process; Civil

Extortion; Intentional Infliction of Emotional Distress; Negligent Infliction of Emotional Distress,

hereafter, “SAC,” Docket Item No. 115.) Among other things, the Second Amended Complaint

alleged that certain employees of the City of Monte Sereno sent Plaintiffs an anonymous,

threatening letter in March 2004. (SAC ¶¶ 52-54.) Enclosed with the letter was a newspaper article

from 1994, downloaded off the Internet, that had reported Mr. Padgett’s conviction of a

misdemeanor crime. Id. at ¶ 52.

In 2005, City employee Lisa Rice admitted to authoring and sending the threatening letter

from her workstation at City Hall. (See Declaration of Todd H. Master in Opposition to Plaintiffs’

Motion for Terminating Sanctions at ¶ 58, Ex. D, Docket No. 296.) Rice indicated that she wrote

the letter at her own direction without telling anyone about it. Id. According to Plaintiffs, however,

Rice wrote the letter at the direction of other City employees, including City Manager Brian

Loventhal. (SAC ¶ 54.) To explore this allegation, Plaintiffs brought a Motion to Compel

inspection of the City’s computers, printers, and backup tapes. (Notice of Motion and Motion to

Compel Further Responses for Production of Documents and to Allow Inspection of Computer

Equipment, Docket No. 118.) 

On March 20, 2006, Judge Seeborg denied the Motion to Compel on the ground that the

burden and expense to the City outweighed the potential benefit of the inspection. (Order re

Demand to Inspect Computer Systems at 3, Docket Item No. 201.) On March 27, 2006, Plaintiffs

filed a motion for reconsideration before the Court. (Objections and Request for District Court to

Reconsider Magistrate Judge’s Ruling on Plaintiffs’ Demand to Inspect Computer System, Docket

Item No. 218.) The Court conducted a hearing on April 14, 2006. At the hearing, the Court

specifically ordered counsel to “continue to preserve everything.” Counsel for the City asked the

Court to permit that the computers in question remain in use and represented that “nothing is being

Case 5:04-cv-03946-EJD Document 312 Filed 03/20/07 Page 2 of 8
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28 3

deleted.” (Transcript at 49.) On December 28, 2006, the Court ordered the inspection of certain

computer workstations, hard drives, and laptop computers used by City employees Rice, Wright, and

Loventhal. (Order Granting Plaintiffs’ Motion to Allow Inspection of Computer Equipment ¶ 1-2,

hereafter “Order,” Docket Item No. 280.) 

In January 2007, Plaintiffs learned that the City had destroyed Loventhal’s laptop hard drive

in August 2006. (Reply for Sanctions at 11.) According to Defendants, a City employee with no

connection to the current litigation serviced Loventhal’s laptop after it had “crashed,” and then

inadvertently discarded the defective hard drive. (Notice of Motion and Motion for Protective Order

re: Computer Inspection/Clarification of December 28, 2006 Order, Declaration of Sue L’Heureux ¶

4.)

Plaintiffs dispute the City’s explanation for replacing and discarding the laptop hard drive,

and point to other deficiencies in Defendants’ discovery responses as evidence of sanctionable

discovery abuse. (Reply for Sanctions at 2-4, 6-8.) In a separate and related motion, Defendants

indicate that these perceived “deficiencies” result from the parties’ confusion over the manner of

discovery under the Order, and request an order of clarification or a protective order. (Notice of

Motion and Motion for Protective Order re: Computer Inspection/Clarification of December 28,

2006 Order, hereafter “Motion for Protective Order,” Docket Item No. 290.)

Presently before the Court are (1) Plaintiffs’ motion for terminating sanctions, monetary

sanctions, and entry of default judgment; and (2) Defendants’ motion for an order of clarification or

a protective order.

III. DISCUSSION

A. Plaintiffs’ Motion for Sanctions

Plaintiffs request terminating sanctions, attorneys fees, and entry of default judgment on the

ground that (1) Defendants had a duty to preserve the hard drive on Loventhal’s computer laptop, (2)

Defendants destroyed the hard drive in bad faith, and (3) Plaintiffs’ are prejudiced by the spoliation. 

(Motion at 8-11.) Defendants do not dispute they had a duty to preserve the laptop computer hard

Case 5:04-cv-03946-EJD Document 312 Filed 03/20/07 Page 3 of 8
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28 4

drive. (Opposition to Sanctions at 8.) However, Defendants contend that sanctions are not

warranted because Defendants did not act in bad faith and Plaintiffs will not suffer any prejudice. 

(Opposition to Sanctions at 8-13.)

Spoliation of evidence occurs when a party (1) destroys evidence after receiving “some

notice” that the evidence was potentially relevant to litigation; and, in so doing, (2) impairs the nonspoiling party’s ability to go to trial, or threatens to interfere with the rightful decision of the case. 

United States ex rel. Wiltec Guam, Inc. v. Kahaluu Constr. Co., 857 F.2d 600, 604 (9th Cir. 1988);

United States v. Kitsap Physicians Serv., 314 F.3d 995, 1001 (9th Cir. 2002). Sanctions for

spoliation of evidence may be imposed under the court’s inherent powers, or alternatively, if the

spoliation violates a court order, under Federal Rule of Civil Procedure 37(b). See Unigard Sec. Ins.

Co. v. Lakewood Engineering & Mfg. Corp., 982 F.2d 363, 367-68 (9th Cir. 1992).

The trial court has broad discretion to fashion, on a case-by-case basis, an appropriate

sanction for spoliation. Id. at 367. Sanctions may include monetary sanctions, issue-preclusion

sanctions, evidentiary sanctions, terminating sanctions, or entry of default judgment. See

Anheuser-Busch, Inc. v. Natural Beverage Distribs., 69 F.3d 337, 348 (9th Cir. 1995). However,

sanctions resulting in dismissal or entry of default judgment are authorized only in “extreme

circumstances” where the spoliation is “due to willfulness, bad faith, or fault” and results in such

unfair prejudice that no lesser remedy can cure the harm. In re Exxon Valdez, 102 F.3d 429, 432-33

(9th Cir. 1996); United States v. Kahaluu Const., 857 F.2d 600, 603 (9th Cir. 1988).

The Court proceeds to consider whether sanctions are appropriate.

1. Defendants discarded the laptop hard drive with notice of its potential

relevance.

The parties dispute whether Defendants acted in “bad faith” when they discarded

Loventhal’s laptop hard drive. According to Defendants, Ms. L’Heureux—a City employee with no

involvement in the current litigation—inadvertently threw away Loventhal’s hard drive under the

false impression that the litigation involving Padgett and the City had settled. (Opposition to

Case 5:04-cv-03946-EJD Document 312 Filed 03/20/07 Page 4 of 8
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28 5

Sanctions at 2; see also Notice of Motion and Motion for Protective Order re: Computer

Inspection/Clarification of December 28, 2006 Order, Declaration of Sue L’Heureux ¶ 4.) Plaintiffs

contend that, even if Ms. L’Heureux acted negligently, Loventhal acted in bad faith by allowing Ms.

L’Heureux to discard the laptop hard drive. (Reply for Sanctions at 11.)

When a party despoils potentially relevant evidence, the trial court need not make a finding

of bad faith before imposing corrective sanctions. See Glover v. BIC Corp., 6 F.3d 1318, 1329 (9th

Cir. 1993); Henry v. Gill Industries, Inc., 983 F.2d 943, 948 (9th Cir. 1993); Unigard, 982 F.2d at

368 n. 2. As the Ninth Circuit has noted, “a finding of bad faith will suffice, but so will simple

notice of ‘potential relevance to the litigation.’” Glover, 6 F.3d at 1329 (9th Cir. 1993) (quoting

Akiona, 938 F.2d at 161).

In this case, the City and Loventhal had notice as early as March 27, 2006 that Plaintiffs

sought to compel inspection of his laptop hard drive. Though the Court did not issue its Order until

December 28, 2006, the Court made it clear on the record that it intended to allow the computers’

inspection with narrowing parameters. The Court specifically ordered that the City continue to

“preserve everything.” In fact, counsel for the City represented that “nothing is being deleted.” 

Interestingly, at the hearing on this motion, counsel for the City informed the Court that his clients

have now just “found” the discarded “crashed” laptop hard drive. No further explanation is

provided other than the hard drive has “appeared.”

The Court finds that the City and Loventhal have failed to take adequate precautions to

preserve Loventhal’s computer equipment for forensic analysis. Whether characterized as willful or

negligent, Loventhal’s conduct constitutes the kind of “fault” sufficient to warrant sanctions,

including dismissal, under the Court’s inherent powers. Glover, 6 F.3d at 1329; Henry, 983 F.2d at

948; Unigard, 982 F.2d at 368 n. 2.

The parties also dispute whether Plaintiffs will suffer prejudice as a result of the despoiled

hard drive. Plaintiffs contend that the spoliation will prevent them from finding positive evidence of

collusion between Loventhal and Rice. (Reply for Sanctions at 14.) Defendants contend that

Case 5:04-cv-03946-EJD Document 312 Filed 03/20/07 Page 5 of 8
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28 6

Plaintiffs have access to other sources of evidence to investigate their conspiracy claim—namely,

the City’s network server and Rice’s computer hard drive. (Opposition to Sanctions at 12.) In

addition, Defendants offer Ms. L’Heureux for a second deposition so Plaintiffs may investigate the

circumstances surrounding the spoliation. (Opposition to Sanctions at 9.)

Prejudice may exist if the spoiling party’s conduct forces the non-spoiling party to “rely on

incomplete and spotty evidence” at trial. Anheuser-Busch, Inc., 69 F.3d at 354. Prejudice may also

exist if the spoiling party’s conduct prevents the non-spoiling party from preparing for a

fast-approaching trial date. Payne v. Exxon Corp., 121 F.3d 503, 508 (9th Cir. 1997). The

availability of secondary sources of evidence to compensate for the despoiled evidence lessens any

risk of prejudice at trial. See Med. Lab. Mgmt. Consultants v. Am. Broad. Cos., Inc., 306 F.3d 806,

825 (9th Cir. 2002).

At this time, the Court reserves its determination as to whether the spoliation of Loventhal’s

laptop hard drive has prejudiced Plaintiffs to the extent that would warrant the imposition of

terminating sanctions. 

2. Plaintiffs are entitled to monetary sanctions.

As discussed above, the Court reserves it determination as to whether terminating sanctions

are appropriate at this time. The Court will revisit this question once the inspection process is

completed. However, the Court finds that Plaintiffs have suffered some prejudice as a result of the

spoliation, including the additional expense and delay associated with getting their expert ready for

the inspection and in filing this motion. Glover, 6 F.3d at 1329; Wiltec Guam, Inc., 857 F.2d at 604. 

Accordingly, the Court imposes the following sanctions:

1. Defendants shall reimburse to Plaintiffs all costs associated to the filing of this

motion and any subsequent supplement briefings. This includes, but is not limited to,

Plaintiffs costs for travel to the hearing and time spent researching and gathering

evidence to present this motion.

Case 5:04-cv-03946-EJD Document 312 Filed 03/20/07 Page 6 of 8
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28 7

2. Defendants shall pay for the cost of Plaintiffs’ expert, up to this point, with respect to

any dislocation of his services.

3. Defendants shall bear the cost of the Special Master, Mr. Tom Denver, that the Court

has already put in place to manage the discovery process.

B. Defendants’ Motion for Clarification

Defendants request clarification of the following items not specifically addressed in the

Order: (1) the scope of inspection; (2) the manner of inspection; (3) the search criteria; and (4) the

protection afforded privileged information. (Memorandum of Points and Authorities in Support of

Motion for Protective Order re: Computer Inspection/Clarification of December 28, 2006 Order at

10-15, hereafter “Motion for Protective Order,” Docket Item No. 290.) 

The Court has appointed a Special Master to manage the discovery process with respect to

the examination of the computers and servers. The Special Master is fully empowered to resolve

any disputes arising out of the examination. Accordingly, the Court refers Defendants’ motion for

clarification to the Special Master. Defendants shall contact the Special Master and renotice this

motion pursuant to the Special Master’s rules and procedures.

IV. CONCLUSION

The Court GRANTS Plaintiffs’ motion for monetary sanctions. The Court RESERVES

ruling on Plaintiffs’ motion for terminating sanctions, striking of answers, or entry of default

judgment. 

Dated: March 20, 2007 

JAMES WARE

United States District Judge

Case 5:04-cv-03946-EJD Document 312 Filed 03/20/07 Page 7 of 8
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

THIS IS TO CERTIFY THAT COPIES OF THIS ORDER HAVE BEEN DELIVERED TO:

Darla Kaye Padgett Actiontkr@aol.com

Joseph C. Howard jhoward@hrmrlaw.com

Todd H. Master tmaster@hrmrlaw.com

Dated: March 20, 2007 Richard W. Wieking, Clerk

By: /s/ JW Chambers 

Elizabeth Garcia

Courtroom Deputy

Case 5:04-cv-03946-EJD Document 312 Filed 03/20/07 Page 8 of 8