Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_07-cv-00891/USCOURTS-caed-1_07-cv-00891-5/pdf.json

Parties Involved:
Bruce Kopitar
Plaintiff
Nationwide Mutual Insurance Company
Defendant

Document Text:

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

BRUCE KOPITAR, 

 Plaintiff,

 v. 

NATIONWIDE MUTUAL INSURANCE

COMPANY, an Ohio corporation; and

DOES 1 through 50, inclusive, 

 Defendants.

1:07-CV-00891-OWW-GSA

MEMORANDUM DECISION ON

NATIONWIDE MUTUAL INSURANCE

COMPANY’S MOTION FOR

SANCTIONS FOR SPOLIATION OF

EVIDENCE (Doc. 21)

I. INTRODUCTION

Before the court for decision is Defendant Nationwide Mutual

Insurance Company’s “Motion for Sanctions for Spoliation of

Evidence.” (Doc. 21.) Defendant seeks dismissal of Plaintiff’s

mold damage claim because Plaintiff “knowingly and willfully

destructed relevant and material evidence.” In the alternative,

Defendant seeks evidentiary sanctions and to recover legal fees and

costs. 

Plaintiff Bruce Kopitar has filed opposition, to which

Defendant has replied. (Docs. 27 & 30.)

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II. BACKGROUND

This matter involves an insurance coverage and payment dispute

between Plaintiff Bruce Kopitar (“Kopitar”) and Nationwide Mutual

Insurance Company (“Nationwide”), an insurance and financial

services company headquartered in Columbus, Ohio. The dispute

concerns the February 20, 2004 flooding of Plaintiff’s home, which

allegedly occurred as a result of a malfunctioning steam room (the

“steam incident”). The Complaint alleges that Plaintiff’s home was

covered under a pre-existing “farm package plus” policy

underwritten by Nationwide. According to Plaintiff, after

receiving notification of Plaintiff’s water damage, Nationwide

“commenced an effort deliberately designed to deprive plaintiff of

the full and complete benefits to which he was and is entitled to

under the policy for his suffered and covered loss.” 

On May 8, 2007, Plaintiff filed this case in the Superior

Court of California, County of Tulare, alleging two causes of

action: (1) Breach of Contract; and (2) Breach of the Implied

Covenant of Good Faith and Fair Dealing. (Doc. 1, Exh. A.) 

Plaintiff alleges that he initiated a lawsuit because Nationwide

“continuously refused to comply with its obligations [...] and

otherwise fail[ed] to move the claim along and keep plaintiff

apprised of the claim process, in the hopes that plaintiff would

abandon his claim and thereby allow Nationwide to profit from its

improper, unreasonable, and illegal conduct.” Plaintiff requests

general, special, economic, consequential, and punitive damages. 

On June 21, 2007, this case was removed on the basis of

diversity jurisdiction. (Doc. 1.) The notice of removal provides

that removal is proper because “this is action is between citizens

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of different states, and the matter in controversy exceeds the sum

or value of $75,000.” (Id. ¶ 10.) Defendant filed its answer on

June 26, 2007. (Doc. 5.)

Defendant Nationwide filed this motion on September 30, 2009. 

(Doc. 21.) Defendant moves to dismiss Plaintiff’s mold damage

claim because “Plaintiff destroyed components of [his] residence

which [he] contends contained the alleged mold without the

opportunity of defense experts to inspect and observe.” Defendant

contends that Plaintiff did so knowing that the parties agreed “to

allow Nationwide’s experts to observe the destructive testing and

repairs to the areas of the home where the mold was alleged to

exist.”1

Plaintiff filed his opposition on November 20, 2009. (Doc.

27.) Plaintiff responds that Nationwide “had access to Plaintiff’s

home, and despite Plaintiff’s request that it do so, refused to

conduct further destructive testing and advised Plaintiff that no

such further testing was necessary or required.” According to

Plaintiff, this case does not involve deliberate and knowing

spoliation of evidence and Defendant “could not have been

prejudiced because it made the determination that no further

destructive testing was required or necessary.” 

Defendant states that it “learned for the first time that 1

the walls of plaintiff’s residence had been opened up and repaired

without prior notification or any opportunity afforded the

defense’s experts and consultant’s to attend, observe and test.” 

According to Defendant, it only learned of this discovery because

eight days prior to arbitration Plaintiff’s counsel called and

stated that “Plaintiff wished to cancel a mediation previously

scheduled for April 23, 2009 [because] tear-down of the walls had

revealed substantial damage thereto.”

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III. LEGAL STANDARD

The Ninth Circuit has held that a district court has the

authority to impose sanctions for spoliation pursuant to: “the

inherent power of federal courts to levy sanctions in response to

abusive litigation practices, and the availability of sanctions

under Rule 37 against a party who fails to obey an order to provide

or permit discovery.” Leon v. IPX Sys. Corp., 464 F.3d 951, 958

(9th Cir. 2006) (citing Fjelstad v. Am. Honda Motor Co., 762 F.2d

1334, 1337-38 (9th Cir. 1985); Fed. R. Civ. P. 37(b)(2)©). In the

present case, because Plaintiff’s alleged actions did not violate

a discovery order, any sanction must be imposed pursuant to the

district court's inherent power.

Defendant has proposed the following sanctions for Plaintiff’s

spoliation of the evidence contained in Plaintiff’s walls and home:

dismissal of Plaintiff’s claims for alleged mold damages; and

precluding Plaintiff from arguing or presenting any evidence

concerning the alleged mold damage and related repairs. The

exclusion of evidence is tantamount to a terminating sanction. 

See, e.g., Ware v. Rodale Press, Inc., 322 F.3d 218, 221 (3rd Cir.

2003). All of the sanctions that Defendant seeks are terminating

sanctions or the equivalent thereof; making applicable the standard

for the imposition of dismissal as a sanction for spoliation.

The Ninth Circuit stated:

Dismissal is an available sanction when a party has

engaged deliberately in deceptive practices that

undermine the integrity of judicial proceedings

because courts have inherent power to dismiss an

action when a party has willfully deceived the court

and engaged in conduct utterly inconsistent with the

orderly administration of justice. Before imposing

the harsh sanction of dismissal, however, the district

court should consider the following factors: (1) the

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public’s interest in expeditious resolution of

litigation; (2) the court's need to manage its

dockets; (3) the risk of prejudice to the party

seeking sanctions; (4) the public policy favoring

disposition of cases on their merits; and (5) the

availability of less drastic sanctions.

Leon, 464 F.3d at 958 (citations and quotation marks omitted). 

A court need not specifically address all five factors before

ordering dismissal, but it must find willfulness, fault, or bad

faith, and it must consider lesser sanctions. See id. 2

IV. DISCUSSION

A. Willfulness, Fault, Bad Faith

To establish the culpability required under Leon, Nationwide

argues that “Plaintiff was repeatedly reminded of the need to

furnish notice and opportunity for the defense’s experts to be

present for any wall tear-down and conduct necessary inspections

and testing before repairs were undertaken.” Defendant contends

that when Plaintiff opened up and repaired the walls of his home in

April 2009 - without notifying Defendant or his own counsel - he

“knowingly destroyed evidence in a pending litigation relating to

[his] claim for policy benefits for mold alleged to exist in his

In Halaco Eng'g Co. v. Costle, 843 F.2d 376, 382 (9th Cir. 2

1988), the Ninth Circuit stated that prejudice to the wronged party

was an “optional” consideration. However, the Ninth Circuit has

subsequently emphasized the similarity between the test for

sanctions under a court's inherent powers and the test for

sanctions under Rule 37, and prejudice is a “key factor[ ]” in

determining sanctions under Rule 37. Henry v. Gill Industries,

Inc., 983 F.2d 943, 948 (9th Cir. 1993) (discussing dismissal

sanction pursuant to Rule 37). Substantial weight is placed on the

prejudice prong. See, e.g., Banga v. Experian Info. Solutions, 

No. C-08-4147-SBA-EMC, 2009 WL 2407419 at *1 (N.D. Cal. Aug. 04,

2009).

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property.” According to Defendant, this conduct warrants the

imposition of terminating sanctions as to Plaintiff’s mold claim

only.

Defendant places considerable emphasis on the parties’ prior

agreements “to allow Nationwide’s experts to observe the

destructive testing and repairs to the areas of the home where the

mold was alleged to exist.” On May 15, 2008, the parties filed a

“Stipulation and Order to Continue Settlement Conference and Trial

Date and Order Thereon,” stipulating that “all experts will need to

be present for the destructive testing.” (Doc. 14, 2:8-2:10.) 

Defendant has also submitted a declaration from Theodore W. Hoppe,

counsel for Defendant, indicating that Mr. Hoppe informed

Plaintiff’s counsel in July 2008 that “the defense wanted its

consultants to be present at any destructive testing so that the

defense’s representatives could directly observe what was found.” 

(Doc. 23, ¶ 5.) According to Mr. Hoppe, Plaintiff’s counsel

responded that he would “contact the defense and advise when the

work was to take place so that both parties’ experts could observe

and participate in mutual inspection and testing,” which he

allegedly did not do.

Defendant also points to its July 25, July 31, and December

16, 2008 correspondence to Plaintiff requesting an update on the

status of efforts to schedule the destructive testing. According

to Defendant, Plaintiff did not respond to these inquires until

April 15, 2009 when Plaintiff’s counsel informed Mr. Hoppe that he

wished to cancel the April 23, 2009 mediation. The purported

reason for the cancellation was that the “tear-down of the walls

had revealed substantial mold damage thereto.” 

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Plaintiff does not dispute the substance of his correspondence

with Mr. Hoppe and acknowledges signing the May 15, 2008

stipulation. Instead, Plaintiff maintains that he did not

“deliberately and knowingly destroy material evidence” because

Defendant had access to Plaintiff’s home and “refused to conduct

further destructive testing and advised Plaintiff that no such

further testing was necessary or required.” On Plaintiff’s

account, Defendant waived its right of access in the mold evidence

because it did not conduct a destructive testing in a timely

manner.3

Plaintiff’s arguments are not well-taken. In Leon, the Ninth

Circuit stated that “[a] party’s destruction of evidence qualifies

as willful spoliation if the party has some notice that the

evidence was potentially relevant to the litigation before it was

destroyed.” Id., 464 F.3d at 959 (citing United States v. Kitsap

Physicians Serv., 314 F.3d 995, 1001 (9th Cir. 2002); see also In

re Napster, Inc., 462 F. Supp. 2d 1060, 1067 (N.D. Cal. 2006) ("As

soon as a potential claim is identified, a litigant is under a duty

to preserve evidence which it knows or reasonably should know is

relevant to the action."). “Moreover, because the relevance of

destroyed [evidence] cannot be clearly ascertained because the

[evidence] no longer exist, a party can hardly assert any

presumption of irrelevance as to the destroyed [evidence].” Leon,

464 F.3d at 959 (internal quotation marks omitted).

Defendant’s “interest” is to observe and document the mold 3

scene in the event Plaintiff’s expert conducted a destructive test. 

Defendant argues that its interest includes any repair or “opening

up” of Plaintiff’s walls.

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Here, it is beyond dispute that Plaintiff knew that the mold

evidence was potentially relevant to his claims against Nationwide. 

First, the Complaint states that Nationwide is “contractually

required to pay for the full and complete cost to repair the

damages plaintiff suffered to his home as a result of the February

20, 2004 incident,” which necessarily includes mold damages.4

Second, in April 2005, Plaintiff informed Mr. Hoppe that he

believed his walls contained mold damage as a result of the

February 20, 2004 steam room incident. (Doc. 23, Exh. B.) 

According to Plaintiff’s opposition, the parties reached an

agreement in Spring 2006, providing that a “jury will be entitled

to award Plaintiff’s damages for mold issues, regardless of

[Nationwide’s] subsequent coverage arguments.” (Doc. 27, 5:2-5:6.) 

Plaintiff expressly agreed and was fully aware that the existence,

nature, and extent of the mold scene would be a claim in the

litigation when he tore down and repaired his walls in April 2009,

without notifying Defendant or his counsel. 

Despite clear notice of the need to preserve the scene, and

that his counsel agreed to allow Defendant’s experts to observe any

repairs or destructive testing, Plaintiff did not notify Defendant

that he tore down and replaced his walls until April 15, 2009. 

This qualifies as willful spoliation under the circumstances. See

Leon, 464 F.3d at 959; In re Napster, Inc., 462 F. Supp. 2d at

1073-74.

It is important to note that Defendant’s diligence in pursuing

Specifically, the Complaint seeks damages for “mold issues” 4

and otherwise makes clear that any damage request includes mold

damages and/or reimbursement for mold remediation. 

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destructive testing is largely irrelevant to the willfulness

determination. Plaintiff was obligated - based on the parties’

repeated agreements and the stipulation filed with this Court - to

notify Defendant of his intentions to open and replace the wall. 

Failure to do so was unjustified, considering that he advanced a

mold damage claim, preserved evidence he unilaterally determined

was relevant, and his duty to “notify” Defendant of his intent to

repair the walls. He also does not support his “waiver” theory

with any legal authority. On these facts, the suggestion that

Defendant waived all of its rights concerning the mold site is

unavailing.

B. Prejudice

Defendant argues that it is prejudiced by Plaintiff’s

“destruction of critical physical evidence [that] deprived

[Nationwide] of access to the objective and direct information

needed to effectively refute Plaintiff’s claims of covered mold

damage to the walls of the residence.” Defendant frames the

relevant legal inquiry as “the actions of Plaintiff have precluded

any ability to determine the pre-repair condition of the walls’

interiors, or recreate those conditions.” 

Plaintiff rejoins that Defendant is not prejudiced because

“its experts did not believe such further testing was necessary or

required [...] it had all the evidence it needed to disprove

Plaintiff’s claims relating to mold.” Plaintiff contends that “all

he was doing was repairing his home so that he could return to it

[...] four years after it had sustained substantial water loss

damages.” Plaintiff also asserts that he “has preserved evidence,

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in the form of photographs, carpet materials and sheet rock

materials, for [Northwestern’s] further inspection and analysis.”

The primary dispute between the parties is whether Plaintiff’s

residence suffered mold damage stemming from the steam incident and

whether this damage is covered under Plaintiff’s umbrella farm

policy. On May 15, 2008, the parties stipulated that experts from

each side were to be present for any and all “destructive testing”

of Plaintiff’s home. Plaintiff allegedly violated this agreement -

and Defendant suffered extreme prejudice - when he repaired his

walls in April of 2009. According to Defendant, it is now unable

to determine the cause of the mold damage without access to the

walls and other mold evidence in its original state. However, July

31, 2008 correspondence from Hoppe to Plaintiff’s counsel

demonstrates that Defendant’s experts had already determined that

the existing mold was unrelated to the steam incident:

As we discussed previously, our experts have now

completed their analysis and have concluded that the

only mold that was present in the house is on the

north wall in the front bedroom of your client’s

house. They have concluded that the mold that wall

[sic] did not relate to or has any involvement in the

steam incident which occurred at your client’s house.

(Doc. 23, Exh. B.)

Based on this correspondence, it appears that Defendant’s

investigation into the cause and extent of the mold damage was

completed on July 31, 2008 and its interest in the mold scene was

limited to observing Plaintiff’s future destructive testing, if

such testing was to occur. On the present record, Defendant’s

argument that Plaintiff’s “lack of notice” extinguished its “one

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and only opportunity” to document the mold scene is inaccurate.5

To establish prejudice, Defendant states the facts of this

case are “strikingly similar to those analyzed and invoked by the

Leon court.” While Leon’s reasoning remains instructive – it is

cited throughout this opinion - the factual comparisons are better

suited for the more typical spoliation case involving manifest bad

faith and the destruction of “smoking gun” documents. The

circumstances here do not present Leon-type prejudice, where over

2,200 documents were purposefully deleted from an employer-owned

computer by an aggrieved former employee. See Leon, 464 F.3d at

959 (“Leon was on notice that files created in violation of this

IDX company policy would be relevant to IDX's lawsuit against him

[...] [h]is deletion and wiping of 2,200 files, acts that were

indisputably intentional, amounted to willful spoliation of

relevant evidence.”) (internal quotations omitted).

Defendant’s legal analysis also incorporates language from the

holdings of Anheuser-Busch, Inc. v. Natural Beverage Distributors

69 F.3d 337, 354 (9th Cir. 1995) and State Farm Fire and Cas. Co.

v. Broan Mfg. Co., Inc., 523 F. Supp. 2d 992, 997 (D. Ariz. 2007),

It is unclear whether Plaintiff agreed to notify Defendant 5

if he “repaired” or “opened up” his walls. For instance, Defendant

argues that Plaintiff was required to contact Northwest if he

repaired the walls or if he conducted a destructive test. However,

the agreements and stipulation refer only to “destructive testing,”

nothing more. Plaintiff does not weigh-in on the scope of his

notice obligations, limiting his arguments to Northwest’s handling

of the overall insurance claim - which is largely irrelevant to

this motion. While the scope of the agreement is relevant to the

Leon analysis, if Plaintiff destroyed the wall knowing it was

relevant to his mold damage claim, this act alone constitutes

“willfulness” under Leon. It would also constitute prejudice under

Anheuser-Busch, Leon, and State Farm Fire.

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two cases where prejudice was found because “a party's refusal to

provide certain documents forced Plaintiff to rely on incomplete

and spotty evidence at trial.” However, this case differs from

Anheuser-Busch and State Farm Fire because in those cases an

adversary’s spoliation interfered with the “rightful decision of

the case by preventing full development of the alternative theories

of causation” and “forced [Plaintiff] to rely on incomplete and

spotty evidence at trial.” Conversely, here it is unclear what

impact, if any, Plaintiff’s conduct will have on Defendant’s

ability to defend itself against Plaintiff’s mold claims. It is

unknown whether Plaintiff intends on introducing the “saved” mold

samples in this case, whether on a motion for summary judgment or

at trial. It is also unclear whether Defendant’s investigation was

complete on July 31, 2008 and/or whether Defendant’s experts can

conduct a full investigation based on the preserved evidence. On

the current record, Defendant’s claim that it “missed its one and

only opportunity” is speculative; the extent of alleged prejudice

suffered by Defendant is distinguishable from the prejudice found

in Leon, Anheuser-Busch and State Farm Fire.

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It is also unclear whether Plaintiff conducted a

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“destructive test” or merely repaired his walls in order to occupy

his residence. Destructive testing typically involves demolishing

a portion of the wall to be analyzed or “physical testing of

tangible objects such that the testing involves the alteration or

partial destruction of the object.” American Home Assur. Co. v.

Merck & Co., Inc., 386 F. Supp. 2d 501, 514-15 (S.D.N.Y. 2005). 

Here, there is no evidence that the wall was demolished for a

scientific or “destructive” purpose; there is also no indication

that Plaintiff’s experts were even present when the wall was

repaired or if the mold scene was compromised or whether any mold

remains. Until the circumstances of the repair/destruction are

fully developed, it is premature to hold that Defendant’s prejudice

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There is some evidence supporting Leon-type prejudice,

however. Specifically, Plaintiff maintains that he “preserved

photographs and materials reflecting the condition of the property

at the time the repairs were made, for [Nationwide’s] further

inspection and analysis.” This suggests Plaintiff was aware that

Defendant had an interest in inspecting and analyzing the evidence,

yet did not contact Defendant or its counsel as required by their

course of dealing. This raises questions about Plaintiff’s motives

under the reasoning of State Farm Fire:

Not only is the evidence incomplete, but it is also

limited to that which Plaintiff chose to preserve, and

Defendant cannot conduct an independent investigation

of the [] scene. The spoliation therefore threatens

to interfere with the rightful decision of the case by

preventing full development of the alternative

theories of causation.

Id., 523 F. Supp. 2d at 997 (emphasis added).

“A defendant suffers prejudice if the plaintiff's actions

impair the defendant's ability to go to trial or threatened to

interfere with the rightful decision of the case.” Anheuser-Busch,

69 F.3d at 353-54 (citation omitted). In this case, the alleged

destruction or modification of the original mold scene could force

Defendant to rely on the evidence preserved by Plaintiff - the

photographs, carpet materials, and sheet rock samples. On the

current record, however, it is unclear how Plaintiff’s conduct

specifically impacts Defendant’s case as Plaintiff has not yet

introduced the preserved mold evidence into this case. Defendant’s

experts have not examined the preserved evidence, which could moot

is so manifest that terminating sanctions are required.

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Plaintiff’s mold claim and/or reveal inconsistencies in Plaintiff’s

allegations about the cause of the mold. At this time there is not

enough evidence detailing the prejudicial impact of Plaintiff’s

conduct on Defendant’s case. These developments directly affect

the prejudice inquiry and, without them, terminating sanctions

cannot be decided. See, e.g., Anheuser-Busch, Inc., 69 F.3d at

353-54.

C. Sanctions

The only remaining question is the appropriate sanction.

There are three types of sanctions for destruction of evidence.

First, the court can instruct the jury that it may infer that

evidence made unavailable by a party was unfavorable to that party. 

See, e.g., Glover v. BIC Corp., 6 F.3d 1318, 1329 (9th Cir. 1993); 

Akiona v. United States, 938 F.2d 158, 161 (9th Cir.1991);

Cedars-Sinai Med. Ctr. v. Superior Court of Los Angeles, 18 Cal.4th

1, 11-12 (1998). Second, the court may exclude witness testimony

based on the evidence that was destroyed. See, e.g., Unigard Sec.

Ins. Co. v. Lakewood Eng'g & Mfg. Corp., 982 F.2d 363, 368-69 (9th

Cir. 1992). The third (and most drastic) sanction is to dismiss

the claim of the party responsible for the spoliation. See, e.g.,

Allstate Ins. Co. v. Sunbeam Corp., 53 F.3d 804, 806-07 (7th Cir.

1995); see also Chambers v. NASCO, Inc., 501 U.S. 32, 45 (1991)

(noting that “outright dismissal ... is a particularly severe

sanction, yet is within the court's discretion”).

Because of the potency of the court's inherent powers, they

must be exercised with restraint. Advantacare Health Partners L.P.

v. Access IV, C-03-04496-JF, 2004 WL 1837997 (N.D. Cal. 2004)

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(citing Roadway Express Inc. v. Piper, 447 U.S. 752, 764 (1980)). 

One aspect of this restraint is determining the appropriate

sanction in light of the specific abusive conduct. Id. In

determining the appropriate sanction, courts should seek to impose

a sanction that accomplishes the following objectives:

(1) penalize those whose conduct may be deemed to

warrant such a sanction; (2) deter parties from

engaging in the sanctioned conduct; (3) place the risk

of an erroneous judgment on the party who wrongfully

created the risk; and (4) restore the prejudiced party

to the same position he would have been in absent the

wrongful destruction of evidence by the opposing

party.

Id. at *3.

This case is analogous to Reed v. Honeywell Intern., Inc., CV07-0396-PHX-MHM, 2009 WL 886844 (D. Ariz. Mar. 31, 2009) and In re

Napster, Inc., 462 F. Supp. 2d 1060, where the duty to preserve

evidence was breached but terminating sanctions were not imposed. 

In re Napster held:

The propriety of preclusion sanctions, therefore,

depends on the extent to which plaintiffs were

prejudiced by Hummer's deletion of its Napster-related

emails. This analysis must be made in light of the

requirement to impose the ‘least onerous sanction’

given the extent of the offending party's fault and

the prejudice to the opposing party.

As discussed above, the full extent of prejudice is

unclear based on the record before the court for the

purposes of this motion. However, plaintiffs have

shown sufficient prejudice to warrant some degree of

preclusion sanctions. The nature and extent of these

sanctions will be determined at the Summary Judgment

or trial stage.

462 F. Supp. 2d at 1077-78 (citations and quotations omitted).

Honeywell Intern is also instructive:

Without access to the notes, Plaintiffs are unable to

cross-examine Mr. Eden regarding any discrepancies

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between the handwritten notes and his typewritten

summaries. The notes could have revealed

inconsistencies in his testimony about what the

witnesses told him and might have revealed any

exaggerations or mistakes in memory [...] Plaintiffs

thus appear to have established that they are

prejudiced by Honeywell's inadvertent loss of Mr.

Eden's notes [...]

Plaintiffs argue that ‘[t]he appropriate sanction is

[an evidentiary sanction]’ [...] [h]owever, any

sanctions for misbehavior on the part of Honeywell is

more appropriately remedied at trial or at the

conclusion of the case. Based on the information

presented, the Court is prepared to consider an

adverse jury instruction at trial. Striking any and

all evidence relating to the [] investigation [...]

appears too harsh a penalty for Defendants' alleged

inadvertent conduct. 

(Id. at *11)(quotations and citations omitted).

Like Napster and Honeywell Intern, any sanction for

misbehavior on the part of Plaintiff is more appropriately remedied

at summary judgment or trial. While Plaintiff’s conduct raises 7

questions, his failure to preserve the mold scene does “not eclipse

entirely the possibility of a just result.” Nursing Home Pension

Fund v. Oracle Corp., 254 F.R.D. 559, 564 (N.D. Cal. 2008)

(citation and quotation marks omitted). The alleged prejudice

suffered by Defendant is distinguishable from the prejudice found

in Leon, Anheuser-Busch and State Farm Fire; terminating sanctions

are not warranted without further development of the prejudicial

impact on Defendant’s case. 

Honeywell Intern is also persuasive for another reason, 7

namely that Plaintiffs were not able to obtain the “destroyed”

information from a secondary source. That is not the case here. 

First, Defendant has the evidence forming the basis of its July 31,

2008 opinion letter to opposing counsel. Second, the preserved

evidence has not been examined to determine if it is even relevant

to the litigation. 

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Terminating sanctions against Plaintiff are premature at this

stage of the litigation. The motion for terminating sanctions is

DENIED. 

Courts, however, have held that a party failing to preserve

relevant evidence is subject to monetary sanctions even if the

motion for terminating sanctions is denied. See Realnetworks, Inc.

v. DVD Copy Control Ass'n, Inc., --- F.R.D. ----, 2009 WL 1258970

at *14 (N.D. Cal. 2009) (“Pursuant to the court's inherent power to

impose sanctions, the court grants monetary sanctions against Real

for failing to preserve evidence in relation to this litigation

[...] [a]n award of attorneys' fees and related costs is granted to

defendants for pursuing the evidence of spoliation of Hamilton's

notebooks and for bringing this part of the sanctions motion.” ). 8

Here, it is beyond dispute that Plaintiff failed to preserve

evidence he knew was connected to his mold damages claim,

necessitating this motion. It is not presently possible to know

whether other expenses will be caused by these circumstances. 

Defendant’s motion for monetary sanctions in the amount of

$2,280.00 is GRANTED.9

///

///

///

///

The court in Realnetworks, Inc. denied the motion for 8

terminating sanctions. Id. at 14. 

As part of its motion, Defendant Nationwide requests 9

sanctions against Plaintiff in the amount of $2,280.00, the amount

of fees and costs it incurred in drafting its motion for sanctions

for spoliation of evidence. 

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V. CONCLUSION

For the foregoing reasons:

1. Defendant’s motion for terminating sanctions for

spoliation of evidence is DENIED WITHOUT PREJUDICE.

2. Defendant’s motion for monetary sanctions is GRANTED in

the amount of $2,280.00.

Defendant shall submit a form of order consistent with this

memorandum decision within five (5) days of electronic service.

IT IS SO ORDERED.

Dated: March 17, 2010 /s/ Oliver W. Wanger 

aa70i8 UNITED STATES DISTRICT JUDGE

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