N O T FO R PUB L ICAT IO N UNITED STATES C OUR T OF APPEALS FOR THE NINTH C IR C UIT VOLC AN GR OUP, INC ., a C a lifornia c orporation, d/b/a N e tlogix, Plaintiff - Appe lla nt, v. OMN IPOINT C OM M UNIC ATIONS, INC ., a De la ware c orporation, d/b/a

TM obile , a nd T-M OB ILE USA, INC ., a De la ware c o rporation, De fe nda

nts - Appe lle e s. No. 12-35217 D.C . No. 2:10-c v-00711-R SM M EM O R ANDUM *

Appe a l from

the Unite d

Stat e s Distric t C ourt for the W e ste rn Distric t of W a shington R ic ardo S. M artine z , Distric t Judge , Pre siding Argue d a nd Subm itte d M ay 6, 2013 Se attle , W a s hington B e fore : HAW KINS, THOM AS, and NGUYEN, C i rc uit Judge s. 

# FIL ED JAN 09 2014 M OLLY C. DW Y ER, CLERK U . S . CO URT O F APPEALS

* This disposition is not a ppropria te for public at ion a

nd is not pre c e de nt e xc e pt a s provide d

by 9th C ir. R . 36-3.Volc an Group, Inc . d/b/a Ne tlogix (“

Ne tlogix” ) a

ppe a ls the distric t c ourt’ s dism issa l of its bre a c h of c ontra c t a c tion a ga inst T-M obile USA, Inc . (“ T-M obile ” ) a s a sa nc tion for Ne tlogix’ s spolia tion a nd fa bric at ion of e vide nc e . W e have jurisdic tion pursua

n t to 28 U.S.C . § 1291. W e a ffirm . 1. Ne tlogix a

rgue s tha t the distric t c ourt e rre d whe n it a dm itte d

into e vide nc e transc ripts of two c onfe re nc e c a lls be twe e n T-M obile ’ s la wy e rs a nd Ne t logix’ s form e r vic e pre side nt, Ja son Dillon. In those tra nsc ripts, Dillon a

lle ge d ly de sc ribe s wide spre a d spoila

tion of e vide nc e on the pa rt of Ne tlogix. Though the distric t c ourt re lie d on thosetra

nsc ripts in finding spoila

tion a nd fa bric ation of e vide nc e , it a lso c onc lude d tha

t the re c ord supporte d suc h a finding e ve n a

bse n t c onside ra tion of the tra nsc ripts. W e a gre e . The distric t c ourt found tha t Akrie knowingly pe rm itte d Ne tlogix e m ploy e e s to de stroy e ngine e ring notebooks tha t c onta ine d e vide nc e pote ntia lly re le va nt to the l itiga t ion. For his pa

rt, Dillon de stroy e d a

nd a l te re d note s pe rta ining to

Pa ge 2Ne tlogix’ s de a lings with T-M obile

— the busine ss re lationship a t the he art of this c ontra c t dispute . 1 In a ddition, a

t a tim e whe n Ne tlogix wa s a lre a dy e xp loring litiga

tion a ga inst T-M obile , Ne tlogix fa ile d to pre se rve a c opy of its Proje c t M ana ge m e nt Se rve r— a we b-ba se d data

ba se use d by

Ne tlogix to trac k the progre ss of its proje c ts pe rform e d for T-M o bile

— a s it ha d e xiste d at the tim e the pa rtie s ’ Fie ld Se rvic e s Agre e m e nt wa s te rm inate d. Num e rous m onthly fina nc ia l re ports a

nd proje c t file s we re c re ate d a

ne w by Ne tlogix during this pe

riod, m any

of whic h c onta ine d m a te ria l de viations from

the origina l file s . The re c ord a lso sugge sts tha t c e rta in doc um e nts a

nd e m a ils produc e d by

Ne t logix m a

y have be e n fa lsifie d. Give n this, we find no e rror in the distric t c ourt’ s c onc lusion tha t spolia t ion c an be found e ve n a bse nt c onside ra tion of thetra nsc ripts. Se e Le on v . IDX Sy s. C orp ., 464 F.3d 951, 959 (9th C i r. 2006).

1 Ac c ording to Akrie ’ s and Dillon’ s re spe c tive de c la ra tions, the e ngine e ring note books we re de stroy e d a nd Dillon’ s note s we re a lte re d in e arly 2009. W ithout re fe re n c e to the tra

nsc ripts, howe ve r, it is unc le ar e x a c tly whe n Ne tlogix be ga

n c onte m p lating litiga

tion, thus trigge

ring the duty

to pre se rve e vide nc e . Se e Le on , 464 F.3d a

t 956. Tha

t sa id, a s disc usse d a

bove , the de struc tion of thenote books and Dillon’ s a lte ra tion of his note s we re by no m e ans the only

e vide n c e of spolia tion. Vie wing the re c ord a s a whole , the distric t c ourt’ s findings were not c le arly e rrone ous. Se e id . a t 958. Pa ge 32. Having found spolia tion, thedistric t c o urt did not a buse its disc re tion in dism issing the a c tion. A distric t c ourt should c o nside r a num be r of fa c tors prior to dism issa l, inc luding “ (1) the public ’ s inte re st in e xpe ditious re s olution of litiga tion; (2) the c ourt’ s ne e d to m a na ge its doc ke ts; (3) the risk of pre judic e to the pa

rty se e k ing sa

nc tions; (4) the

public polic y

favoring disposition of c a s e s on the ir m e rits; a nd (5) the ava ila

bility of le ss dra stic sa

nc tions.” Anhe use r-Busc h, Inc . v . N atural Be v e rageDistribs. , 69 F.3d 337, 348 (9th C ir. 1995) (quoting He nry v . Gill Indus., Inc . , 983 F.2d 943, 948 (9th C ir. 1993)). Howe ve r, e xplic it findings by the d istric t c o urt a

re not re quire d. Se e In rePhe ny lpropanolamine (PPA) Prods. Liab. Litig. , 460 F.3d 1217, 1226 (9th C i r. 2006). R athe r, we m ay inde p e n de ntly re vie w the re c ord to de te rm i ne whe the r the distric t c ourt a b use d its disc re tion. Id. W e thus c onside r e a c h fa c tor in turn. The first two fa c tors we i gh in fa v or of dism i ssa l. Se e Le on , 464 F.3d a t 958 n.5; se e also id. at 960. Give n the loss of potentia lly re le va nt e vide nc e a s a re sult of Ne tlogix’ s spolia

tion, thethird fa c tor doe s a s we ll. Se e id . at 959 (noting tha t the p e rtine nc e and forc e of lost e vide nc e “ c annot be c l e arly a sc e rta i ne d be c a

use the doc um e nts no longer e xist,” and the pa rty re sponsible“ c an ha

rdly a s se rt a ny pre s um ption of irre l e va

nc e a s to the de stroy e d doc um e nts” (quoting Ale x ande r v . N at’l Farme rs Org . , 687 F.2d 1173, 1205 (8th C i r. 1982)) (inte rna l quota tion Pa ge 4m arks om itte d)). While the fourth fa c tor ty pic a lly m ilita te s a g a inst dism

issa l a s a sa nc tion, this fa c tor a lone “ is not suffic ie nt to outwe igh the othe r four fa c tors.” Id. a t 961 (quoting Malone

v . U.S. Postal Serv . , 833 F.2d 128, 133 n.2 (9th C ir. 1987)). Fina l ly , a l t

hough thefifth fa c t or c onside rs “ w h e the r the c o urt e xplic itly disc usse d a lte rnative sa

nc tions, whe the r it trie d the m , a nd whe t he r it wa rne d the re c a lc itra nt pa rty a b out the possibility

of dism i ssa l . . . [,] it is not alwa y s ne c e ssa

ry for the c ourt to im

pose le ss se rious sa

nc tions first, or to give

any e xplic it wa

rning.” Valle y Eng’rs Inc . v . Ele c t

ricEng’g C

o ., 158 F.3d 1051, 1057 (9th C ir. 1998). In any e ve nt, Ne tlogix wa s we ll-a ware tha t the distric t c ourt wa s c onside ring dism issa l of the c a se a s a

sa nc tion for Ne tlogix’ s m isc onduc t. The re c ord a lso supports the distric t c ourt’ s finding tha t Ne tlogix’ s spolia tion of e vide nc e re s ulte d

from “ willfulne s s, fa

u l t, or ba d fa ith.” Anhe use rBusc h , 69 F.3d a

t 348 (quoting He nry , 983 F.2d a t 946) (inte rna l quota

tion m arks om i tte d). The distric t

c ourt thus ha d a

suffic ie nt ba sis for c onc luding tha t Ne tlogix’ s “ disc o ve ry

viola t ions m a [de ] it im

possible. . . to bec onfide nt tha t the pa rtie s [would] e ve r have a c c e ss to thetrue fa c ts.” C onn. Ge n. Life

Ins. C o. v . N e w Image s of Be v e rly

Hills , 482 F.3d 1091, 1097 (9th C ir. 2007) (quoting Valle y Eng’rs , 158 F.3d a

t 1058) (inte rna l quota

tion m a rk om i tte d).

Pa ge 5“ ‘ Although dism issa l [is] ha

rsh,’ . . . we do not disturb the distric t c ourt’ s c hoic e of sa

nc tion unle ss we have a

‘ de finite and firm

c onvic tion tha

t the distric t c ourt c om m itte d a c le ar e rror of judgm e nt in thec onc lusion it re a c he d upon a we ighing of the re le va

nt fa c tors.’ ” Le on , 464 F.3d a t 961 (quoting Yourish v . C al. Amplifie r , 191 F.3d 983, 992 (9th C ir. 1999)). W e have no suc h c onvic tion in the pre s e nt c a se . AFFIRM E D.

Pa ge 6