Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_06-cv-03072/USCOURTS-cand-3_06-cv-03072-7/pdf.json

Nature of Suit Code: 380
Nature of Suit: Other Personal Property Damage
Cause of Action: 28:1332 Diversity-Personal Property

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

WORLD COURIER,

Plaintiff,

v.

DONEEN BARONE, et. al.,

Defendants.

NO. C 06-3072 TEH 

ORDER RE PLAINTIFF’S

MOTION FOR EVIDENTIARY

AND MONETARY

SANCTIONS FOR

SPOLIATION OF EVIDENCE

I. INTRODUCTION

This matter came before the Court on March 12, 2007 for hearing on Plaintiff’s

motion for evidentiary and monetary sanctions for the spoliation of evidence. Having

carefully considered the parties’ written and oral arguments, the Court hereby GRANTS IN

PART and DEFERS IN PART Plaintiff’s motion for the reasons stated below.

II. DISCUSSION

Plaintiff moves for sanctions for the spoliation of evidence due to the admitted

destruction of a hard drive containing a copy of World Courier’s data by Defendant Barone’s

husband, Jay Barone. Plaintiff seeks two types of sanctions for this spoliation. First,

Plaintiff seeks an adverse inference jury instruction. Second, Plaintiff seeks monetary

sanctions in the form of (1) attorney’s fees associated with discovery related to the destroyed

hard drive, and (2) attorney’s fees for the preparation and litigation of the motion for

sanctions. Each of these requested sanctions will be discussed in turn. 

As a preliminary matter, Defendants first argue that they cannot be sanctioned because

the spoliator, Jay Barone, is not a party to this action. This argument lacks merit because it

overlooks a party’s affirmative duty to preserve relevant evidence both prior to and during

trial. “The duty to preserve material evidence arises not only during litigation but also

Case 3:06-cv-03072-TEH Document 99 Filed 04/16/07 Page 1 of 4
United States District Court

For the Northern District of California

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extends to that period before the litigation when a party reasonably should know that the

evidence may be relevant to anticipated litigation.” Kronisch v. United States, 150 F.3d 112,

126 (2d Cir. 1998). Further, courts have extended the affirmative duty to preserve evidence

to instances when that evidence is not directly within the party’s custody or control so long

as the party has access to or indirect control over such evidence. See, e.g., King v. American

Power Conversion Corp., 181 Fed. Appx. 373 (4th Cir. 2006); Silvestri v. General Motors

Corp., 271 F.3d 583 (4th Cir. 2001). Here, the record indicates that while Jay Barone

destroyed the hard drive, Defendant Doneen Barone was in regular contact with her husband

about this matter during the relevant time period and the hard drive was kept at the Barone

residence. Indeed, it is difficult to imagine a scenario in which a husband would secretly

create a copy of, and subsequently destroy, a hard drive relating to his spouse’s pending legal

matters and professional career without any knowledge, support or involvement of his wife. 

As such, Defendant Barone at least had access to or maintained indirect control over the hard

drive, and therefore she had an affirmative duty to preserve it. Therefore, the Court

concludes that Defendants cannot avoid sanctions in this instance merely because Jay Barone

is not a party. 

III. ADVERSE INFERENCE INSTRUCTION

Plaintiff has requested an adverse inference instruction as an evidentiary sanction for

the spoliation of evidence. The Court may issue such an instruction under its inherent

authority. Several district courts in California have adopted the Second Circuit’s 3-part test

to decide whether the specific sanction of an adverse inference instruction is appropriate. 

This test requires that a party seeking such an instruction establish that (1) the party having

control over the evidence had an obligation to preserve it; (2) the records were destroyed

with a culpable state of mind; and (3) the destroyed evidence was relevant to the party’s

claim or defense.” Residential Funding Corp. v. DeGeorge Fin. Corp, 306 F.3d 99, 105 (2d

Cir. 2002) (followed by In re Napster, 462 F. Supp. 2d 1060, 1078 (N.D. Cal. 2006);

Hamilton v. Signature Flight Support Corp., No. C 05-0490, 2005 WL 3481423, at *3 (N.D.

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United States District Court

For the Northern District of California

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Cal. Dec. 20, 2005); AmeriPride Svcs, Inc. v. Valley Indus. Svc., Inc., No. CIV S-00-113,

2006 WL 2308442, at *5 n.6 (E.D. Cal. Aug. 9, 2006)). 

Here, Plaintiff has satisfied each of these elements. First, Defendant Barone was on

notice of the potential relevance of the evidence to the instant litigation as early as May 8,

2006, prior to the destruction of the hard drive, when she spoke with Marken’s counsel

regarding the ACT database. Decl. of Turner P. Smith, Ex. F, D. Barone Tr. 9-10. Indeed,

Defendant Barone acknowledged that she knew that she should not destroy any documents or

data that may be relevant to the lawsuit. Id. at 22-23. Second, the “mental culpability” factor

is satisfied where the party acted “knowingly or . . . negligently.” Residential Funding

Corp., 306 F.3d at 108 (quoting Byrnie v. Town of Cromwell, 243 F.3d 93, 109 (2d Cir.

2001)). Here, the evidence indicates that Doneen was at least negligent, and more likely

knowingly willful, in failing to prevent the spoliation of relevant evidence by her husband. 

Third, the hard drive was relevant because it contained a copy of the ACT database, the very

data that forms the basis for Plaintiff’s claim of misappropriation of trade secrets. 

Accordingly, the Court concludes that an adverse inference instruction would be appropriate

in this case. 

The Court concludes, however, that it would be premature at this time to determine

the specific terms of such an instruction without the benefit of a full evidentiary record. 

Notably, Plaintiff also did not identify the precise instruction sought in its motion papers. 

For this reason, the Court hereby GRANTS Plaintiff’s motion for an adverse inference

instruction, but defers ruling on the specific terms of such instruction. Plaintiff may submit a

proposed instruction along with authority supporting the specific terms of the instruction

sought when Plaintiff submits its other proposed jury instructions pursuant to the schedule set

forth in the Court’s August 15, 2006 Order for pretrial preparation. 

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United States District Court

For the Northern District of California

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IV. MONETARY SANCTIONS

Plaintiff also seeks monetary sanctions consisting of compensation for the time and

expense involved in the forensic examination of computer files, the time and costs associated

with developing deposition testimony and document discovery, and the costs of attorney’s

fees associated with litigating this motion. A trial court has the discretion to impose a wide

array of sanctions under its inherent authority, and “assessment of attorney’s fees is

undoubtedly within a court’s inherent powers.” Chambers v. NASCO, 501 U.S. 32, 44-45

(1991). As the Plaintiff correctly acknowledges, sanctions under the court’s inherent power

are generally made upon a finding that a party has acted in bad faith. As the Court indicated

at the March 12, 2007 hearing, the record certainly contains evidence indicative of bad faith. 

The Court concludes, however, that it will be able to better evaluate the degree and nature of

Defendants’ conduct after the record is fully developed at trial. Accordingly, the Court

defers Plaintiff’s request for monetary sanctions pending trial. Prior to trial, Plaintiff shall

submit a declaration as to the precise amount of monetary sanctions it is seeking to recover.

V. CONCLUSION

Plaintiff’s motion for sanctions for spoliation of evidence is GRANTED IN PART

and DEFERRED IN PART consistent with this order. Plaintiff is invited to submit a

proposed adverse inference jury instruction along with supporting legal authority when it

submits its other proposed jury instructions. Additionally, Plaintff’s motion for monetary

sanctions shall be deferred pending trial so that the Court may better evaluate the level of bad

faith conduct at issue in this case. 

IT IS SO ORDERED.

Dated: April 13, 2007 

THELTON E. HENDERSON, JUDGE

UNITED STATES DISTRICT COURT

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