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IN THE UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

BHI ENERGY I POWER §

SERVICES LLC, §

§

Plaintiff, §

§

V. § No. 3:22-cv-1981-L-BN

§

KVP HOLDINGS, LLC, §

KVP ENERGY SERVICES, LLC, §

POWER STANDARD LLC f/k/a KVP §

POWER LLC, DUSTIN COBLE, §

WELLBORN “ROSS” GLOVER, §

ROY GLOVER, and SHELBY §

WALKER, §

§

Defendants. §

MEMORANDUM OPINION AND ORDER

Plaintiff BHI Energy I Power Services, LLC has filed a Motion for Sanctions 

for Spoliation of Evidence, see Dkt. No. 166 (the “Spoliation Sanctions Motion”), under 

Federal Rule of Civil Procedure 37, asking the Court to impose sanctions against 

Defendants KVP Energy Services, LLC, KVP Holdings, LLC Power Standard, LLC 

(collectively ‘KV’), Dustin Coble, Wellborn “Ross” Glover, Roy Glover, and Shelby 

Walker (collectively, the ‘Defendants’) for their spoliation of relevant information” in 

this case, Dkt. No. 166 at 1.

As remedies for Defendants’ alleged spoliation, BHI asks the Court to 

1. “strike Defendants’ defenses in this action and enter judgment in BHI’s 

favor [on all Counts (Counts I-VII)] with all of BHI’s reasonable fees and 

costs taxed against Defendants, jointly and severally”; or,

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2. alternatively, “order an adverse inference instruction as to BHI’s tortious 

interference, misappropriation of trade secrets, Computer Fraud and Abuse 

Act, breach of fiduciary duty and duty of loyalty, unfair competition, 

conspiracy, and conversion claims” and “order Defendants to pay all costs 

associated with the discovery in this case, as well as the attorneys’ fees and 

costs associated with BHI’s discovery efforts.”

Dkt. No. 167 at 15; accord Dkt. No. 166 at 1-2, 5-7 of 7.

Defendants filed a response, see Dkt. No. 174, and BHI filed a reply, see Dkt. 

No. 177. 

For the reasons explained below, the Court denies Plaintiff BHI Energy I 

Power Services, LLC’s Motion for Sanctions for Spoliation of Evidence [Dkt. No. 166].

Background

The parties and the Court are familiar with the background of this case, so the 

Court will not repeat it here. See, e.g., Dkt. No. 48.

In the Spoliation Sanctions Motion, BHI contends that,

[s]imilar to Defendants KVP Energy Services LLC, KVP Holdings LLC, 

Power Standard LLC (collectively “KV”), Dustin Coble, Ross Glover, Roy 

Glover, and Shelby Walker’s nefarious conduct giving rise to this Action, 

Defendants have failed to conduct a thorough search for relevant 

information responsive to BHI’s discovery requests, and have, instead, 

deleted and destroyed relevant information. KV’s witnesses have 

repeatedly testified that their personal electronic devices were not 

preserved or searched for relevant information concerning this Action. 

See e.g., Coble Dep. 80:12-15, 81:1-15 [APP009-10]. By way of example, 

KV’s President, Cory Haynes (“Haynes”), testified that he destroyed text 

messages to the named Defendants and others a few weeks before his 

November 2023 deposition when resetting his phone to factory settings 

and providing it to his son. See Haynes Dep. 62:1 - 63:15 [APP018 - 19]. 

Importantly, despite having knowledge of this lawsuit and Defendants’ 

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receipt of BHI’s preservation notices, Defendants never secured 

Haynes’s phone or searched it for text messages to the individual 

Defendants that Haynes admits were on his phone. Therefore, not only 

have the Defendants failed to meet their discovery obligations, but the 

Defendants have also destroyed relevant evidence despite BHI’s 

preservation letters to Defendants at the outset of this Action and 

receipt of this lawsuit. See July 22, 2022, Preservation Letters [APP031-

49]; see also generally Wal-Mart Stores, Inc. v. Johnson, 106 S.W.3d 718, 

721 (Tex. 2003) (“trial court decided to remedy what it perceived to be [] 

misconduct by giving a spoliation instruction”). Defendants’ conduct 

clearly suggests Defendants’ intent to conceal information relevant to 

BHI’s claims, preventing BHI from discovering and presenting such 

evidence to prove or support its claims and fully assess its damages. 

Dkt. No. 167 at 1-2.

According to BHI, 

Defendants destroyed evidence after receipt of BHI’s preservation 

notices, after BHI filed the instant lawsuit, and after assuring BHI that 

they had produced all relevant information. Clearly, Defendants 

destroyed the evidence in this case in bad faith. This evidence cannot be

restored or replaced. ....

Here, Defendants had an absolute obligation to preserve the 

evidence in question at the time it was destroyed. On or around July 22, 

2022, BHI put the individual Defendants Shelby Walker, Roy Glover, 

Ross Glover, Dustin Coble, and the corporate Defendants on notice of 

their obligation to preserve potential evidence related to this action. See 

July 22, 2022, Preservation Letters [APP031-49]. BHI filed its 

Complaint on September 6, 2022. See Dkt. 1. The Defendants’ duty to 

preserve the evidence was self-evident. Nevertheless, Defendants did 

not take appropriate steps to preserve all evidence, including text 

messages, even though the lawsuit clearly advances that the 

Defendants’ conducted illegal actions and communications in 

furtherance of their conspiracy via text messages. Yet, Defendants took 

no steps to preserve all evidence in this case. Rather, it took affirmative 

action to destroy it.

Dkt. No. 167 at 2-3, 4-5.

As support, BHI explains that “Defendants admit to deleting text messages 

and other electronic information”:

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Cory Haynes, President of Defendant KVP Energy Services LLC, 

testified that he had a laptop and cell phone, neither of which were 

searched in connection with this case. See Haynes Dep. 60:3-4, 60:13-20 

[APP016]. Haynes also testified that he destroyed any evidence from his 

cell phone, including any text messages related to the individual 

Defendants, when he restored the phone to its factory settings just a 

“couple weeks” before his deposition on November 20, 2023. See Haynes 

Dep. 61:23-62:14 [APP017 - 18]. Similarly, Dustin Coble, a named 

Defendant, testified that his phone was never searched for responsive 

communications, and in fact, he had relevant text messages on his phone 

that he deleted. See Coble Dep. 80:12-15, 81:1-15 [APP009 - 10]. Shelby 

Walker, another named Defendant, testified that any information on his 

personal phone is now gone. See Walker Dep. 120:2-3 [APP056].

[T]hese devices were not fully searched or imaged, and the 

information contained therein was reasonably relevant to the case. The 

Defendants’ deletion of this information – after receipt of BHI’s 

preservation correspondence and after commencement of this case – was 

done with clear intent to conceal and/or destroy information pertaining 

to BHI’s claims.

.... 

Defendants’ ill motive is further evidenced by repeated 

admissions – from the Defendants themselves – that their emails, texts, 

and devices were not searched for relevant evidence in this action. In 

addition to their general duty to preserve relevant evidence, BHI 

reasonably sought communications from both the Corporate Defendants 

and the Individual Defendants and information pertaining to any BHI 

information that Defendants retained during discovery. See BHI’s 

Requests for Production [APP063 - 83]4. Defendants, however, have not 

conducted a reasonable search for these documents and information.

On November 14, 2023, Bryan Hoffman, the CEO of KVP Energy 

Services, testified under oath that he maintains a laptop, cell phone, 

iPad, and business email address, and that he did not turn over his 

devices to be searched or preserved nor was his email searched in 

connection with this case. See Hoffman Dep. 68:3-69:23, 72:9-20 

[APP086 - 87, 90]. Cory Haynes, KV’s former President, also testified 

that his electronic devices were not searched and that a few weeks prior 

to his deposition, Haynes reset his phone to factory settings, thereby 

deleting evidence. See Haynes Dep. 60:1-63:14 [APP016 - 19]. Similarly, 

Defendant Dustin Coble testified that his phone was never searched for 

responsive communications. See Coble Dep. 80:2-3, 80:12-15 [APP009].

Welborn “Ross” Glover, a named Defendant, also testified that he 

does not recall searching his personal email or personal computer to 

locate any BHI information. See W. Glover Dep. 124:4-7, 126:5-15 

[APP099 - 100]. Ross Glover also testified that he does not recall 

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searching his cell phone for anything that came from other BHI 

employees. See W. Glover Dep. 127:3-7 [APP101].

Darrell Hallmark also admits that he did not search his computer 

for documents concerning this matter. See Hallmark Dep. 145:4-7 

[APP106]. Defendant Shelby Walker testified that while his counsel 

searched his personal emails, he did not search his personal devices or 

home for any BHI information or documents. See Walker Dep.163:2-11, 

185:10-86:3 [APP057 - 59].

Kristy Trieu, former Vice President of Human Resources for KVP 

Energy Services, testified on November 13, 2023, describing how she 

was instructed to search for documents pertaining to this matter. See

Trieu Dep 18:6, 119:4-120:11 [APP111 - 113]. She testified that she 

searched her emails for emails going to “these employees” and instructed 

her team to locate and produce to Defendants’ counsel anything that 

may have been saved in the employee files and search for emails in the 

HR email inbox. See Trieu Dep. 119:15-120:6 [APP112 - 113]. Ms. Trieu 

only recalls searching for “Ben Campbell” in her inbox and could not 

confirm whether the email inboxes of other Defendants and former BHI 

employees were searched, or if she conducted a search of the HR email 

inbox for the named Defendants. See Trieu Dep. 121:6-122:18 [APP114 

- 115].

Based on this testimony, it is clear that the Defendants engaged 

in an insufficient search for information. The insufficient search as well 

as the testimony that evidence has since been deleted are unacceptable 

and establishes bad faith. See e.g., Victor Stanley, 269 F.R.D. at 531 

(finding bad faith when spoliating party set out to delete, destroy, or 

hide files evidenced by failing to implement a litigation hold, failure to 

preserve ESI and devices, deletion of individual files, overwriting files, 

and utilizing software to delete files). It is a natural conclusion that 

Defendants had no intent to comply with its preservation and 

production obligations.

.... There can be no doubt that the evidence in question was 

relevant to BHI’s claims and that BHI has been prejudiced by 

Defendants’ intentional concealment and destruction relevant 

information. The Defendants’ own witnesses’ testimony supports that 

the destroyed and/or concealed information is relevant to and would 

have supported BHI’s claims. ....

Bryan Hoffman and Cory Haynes’s communications with the 

individual Defendants are clearly relevant to BHI’s claims of 

misappropriation (Counts IV and V), unfair competition (Count IX), 

breach of fiduciary duty (Count VII), tortious interference (Counts I, II, 

III), and conspiracy (Counts X, XI, XII). For example, Bryan Hoffman 

testified that he uses his iPad for work emails, and he specifically emails 

with Hallmark and Campbell. See Hoffman Dep. 69:22-70:1, 71:3-20 

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[APP087 - 89]. He also testified that he sends text messages to 

employees, including Ben Campbell, Ross Glover, and Darrell Hallmark. 

See Hoffman Dep. 70:7-17 [APP088]. Similarly, Cory Haynes testified 

that he used his personal cell phone to talk and text with Ben Campbell,

Darrell Hallmark, Ross Glover, and Roy Glover. See Haynes Dep. 62:15-

63:2, 63:11-12 [APP018 - 19]. Haynes also emailed Campbell, Hallmark, 

Ross Glover, Roy Glover. See Haynes Dep. 63:3-10 [APP019].

The evidence establishes that Haynes received BHI’s trade 

secrets on his electronic devices and communicated the scheme to have 

BHI’s executives breach their fiduciary duties via his text messages with 

the individual Defendants, Campbell, Hallmark, and others. The 

evidence also establishes that Hoffman and Haynes had knowledge of 

and were involved in the recruitment of BHI employees to work at KV 

on Oncor projects. On Monday, July 18, 2022, Kristy Trieu initiated an 

email chain to coordinate with Ben Campbell to expedite Oncor 

onboarding of approximately sixty (60) employees – almost all of which 

came from BHI – so that the employees could start work the following 

Monday. See Haynes Dep., Ex. 46, KVP002665-2670 [APP024 - 29]. Both 

Hoffman and Haynes were copied on these emails. See id.

Hoffman and Haynes were also directly involved, along with Ben 

Campbell via text message and electronic communications, in 

negotiating and approving a sign-on bonus for Ross Glover. Moreover, 

in May 2022, Hallmark sent himself documents from BHI concerning 

bidding for the City of Garland. See Haynes Dep., Ex. 34, 

Hallmark000216-217 [APP022 - 23]. Then within 20 minutes of sending 

the City of Garland documents to himself, Hallmark reached out directly 

to KV’s President, Haynes, to inquire if Power Standard was bidding on 

the project. See id. Therefore, emails between Hoffman and/or Haynes 

and Campbell, Hallmark, or the individual Defendants are clearly 

relevant to BHI’s claims.

,,,, 

Dustin Coble’s communications are clearly relevant to BHI’s 

claims of unfair competition (Count IX), breach of fiduciary duty (Count 

VIII), tortious interference (Counts I, II), conspiracy (Counts X, XI, XII), 

and conversion (Count XIII). Dustin Coble testified that Ben Campbell 

texted him an application for KV Power, see Coble Dep. 39:16-

40:2[APP003 - 4], and that he no longer has that message – which is 

directly relevant to this case – because he deletes his text messages, see

Coble Dep. 40:3-13 [APP004]. Coble also testified that he received his 

KV offer letter via email or text message, but “probably” no longer has 

that communication either. See Coble Dep. 72:23-73:5 [APP007 - 8]. 

Dustin Coble also admitted that Ross Glover asked him to text James 

Hensley about “snitching” to Brian Smith. See Coble Dep. 54:10-55:8 

[APP005 - 6]. Coble also testified that he deleted the text message of him 

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getting fired from BHI. See Coble Dep. 83:15-17 [APP011]. That is at 

least three text message that are known to be deleted that are directly 

relevant to this lawsuit.

....

Shelby Walker’s communications, as well as those from the 

admitted “Secret Group Text” are also relevant to BHI’s claims of unfair 

competition (Count IX), breach of fiduciary duty (Count VIII), tortious 

interference (Counts I, II), conspiracy (Counts X, XI, XII), and 

conversion (Count XIII). Similarly, Shelby Walker admits there were 

secret group text messages among BHI foremen. See Walker Dep. 

116:19-117:6 [APP052 - 53]. Walker also claims Ken Loynes sent a 

message to a group of BHI employees – that no one has produced – firing 

everyone within the group. See Walker Dep. 117:1-3[APP053]. Within 

this secret group text message, Walker testifies that the foremen 

discussed leaving BHI, submitting applications with KV, and providing 

uniform/equipment sizes for KV. See Walker Dep. 117:4-16, 118:9-14 

[APP053 - 54]. Walker also admits there was another group message 

between him, Ross, and Roy Glover in which Ross inquired about Aaron 

Haygood informing Mr. Loynes about the other, larger, secret group 

chat. See Walker Dep. 119:10-22 [APP055]. Walker did not maintain the 

messages. See Walker Dep. 120:2-3 [APP056]. All of these messages, as 

well as others contained within these secret group chats, are directly 

relevant to BHI’s claims.

Dkt. No. 167 at 3, 6-12 (cleaned up).

BHI argues that 

[i]t is difficult to believe that the systematic, multiple, calculated efforts 

to destroy, conceal or impair evidence do not justify sanctions. The Court 

is not addressing a random incident.

Several witnesses – including the individual Defendants and 

representatives of the corporate Defendants – testified that their devices 

were not searched, there is relevant information on those devices, and 

that information has since been destroyed. What has been done was 

comprehensive, done knowingly, and with improper purpose.

Dkt. No. 167 at 14.

Accordingly, pursuant to Federal Rule 37 and this Court’s 

inherent powers, BHI respectfully requests that the Court strike 

Defendants’ defenses in this action and enter judgment in BHI’s favor 

with all reasonable fees and costs taxed against Defendants, jointly and 

severally. Alternatively, BHI requests that this Court order an adverse 

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inference instruction as to BHI’s tortious interference, misappropriation 

of trade secrets, Computer Fraud and Abuse Act, breach of fiduciary 

duty and duty of loyalty, unfair competition, conspiracy, and coning text 

messages or claims due to the severe prejudice BHI has suffered as a 

direct result of Defendants’ intentional destruction of evidence, 

including significantly impairing BHI’s ability to prove these claims and 

fully assess its damages. Additionally, BHI respectfully requests that 

this Court order Defendants to pay all costs associated with the 

discovery in this case, as well as the attorneys’ fees and costs associated 

with BHI’s discovery efforts. These are the only reasonable methods in 

which to punish such egregious conduct, to deter Defendants and future 

litigants from engaging in similar conduct and to fully mitigate the 

prejudice caused to BHI and the judicial process.

Dkt. No. 167 at 14-15.

In response, Defendants argue that BHI’s Spoliation Sanctions Motion 

is the definition of frivolous. BHI is requesting death-penalty sanctions 

by claiming that Defendants spoliated evidence, yet the evidence BHI 

claims was spoliated includes documents that Defendants produced to 

BHI and communications with BHI’s own employees. BHI has (or should 

have) these documents and knows they were not spoliated unless BHI 

has failed to preserve the very documents it claims Defendants should 

have preserved. And therein lies one of the central problems with BHI’s 

Motion: while requesting death-penalty sanctions based on allegations 

that three individuals did not fully preserve their text messages, BHI 

apparently did not image or preserve text messages from a single BHI 

employee. BHI’s Motion is nothing more than BHI focusing on a speck 

of sawdust in another’s eye while ignoring the plank in its own eye.

In any event, all of the communications that BHI claims were lost 

or deleted should be in BHI’s possession and/or have been fully 

preserved, as copies from other parties to such communications still 

exist. BHI is unable to show that a single document relevant to this 

action has been lost or deleted, and there is thus no evidence of 

spoliation. There is also no evidence of bad faith on the part of 

Defendants in attempting to deprive BHI from any evidence, which is 

necessary to establish spoliation. If anything has deprived BHI of 

information, it is BHI’s own preservation failures, not any actions by 

Defendants.

Perhaps recognizing there has been no deletion or loss of 

evidence, BHI also claims that death-penalty sanctions should be 

granted based on BHI’s allegations that Defendants did not adequately 

search emails of certain custodians. Defendants highly dispute these 

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allegations and contend they performed a reasonably diligent search for 

documents responsive to BHI’s requests for production. But regardless, 

BHI’s complaints should have been raised in a motion to compel before 

the November 9, 2023, motion to compel deadline – not in a spoliation 

motion seeking death-penalty sanctions or an adverse inference. BHI 

cannot attempt to backdoor an untimely motion to compel by 

characterizing it as a motion for spoliation.

Dkt. No. 174-1 at 1-2 (cleaned up).

As factual background, Defendants explain that

BHI filed this suit against the Corporate Defendants and four powerline 

maintenance workers, the Individual Defendants, in September 2022. 

See ECF No. 1. That same month, Defendants began to work diligently 

to identify, preserve, and collect potentially relevant documents. In 

September 2023, Defendants engaged a third-party vendor, Digital 

Mountain, to collect the personal emails of each of the Individual 

Defendants and of two non-party individuals who are named in the 

Complaint and who worked for Power Standard: Ben Campbell and 

Darrell Hallmark. See APP-0178 at ¶ 4 (Cooper Declaration). Digital 

Mountain used the username and passwords provided by the owners of 

each of these email accounts to collect and preserve all emails from those 

accounts. See id. at APP-0179 ¶ 5. Digital Mountain also made images 

of personal hard drives from Campbell and Ross Glover that may have 

had potentially relevant documents. See id. at APP-0179 ¶ 6.

In January 2023, Counsel for Defendants and the Corporate 

Defendants worked with a different vendor, Simpatico, who handles the 

Corporate Defendants’ IT infrastructure, to preserve and collect the 

company emails of the Individual Defendants, Campbell, and Hallmark. 

See id. at APP-0179 ¶ 7. Similar to their personal emails, Defendants 

collected and preserved all of the emails from the Individual Defendants, 

Campbell, and Hallmark’s company email accounts. See id. at APP-0179 

¶ 8. Once these emails were collected, Defendants’ counsel used term 

searches to review the personal and company emails that were collected 

as well as the hard drives from Campbell and Ross Glover, and 

Defendants produced the responsive documents to BHI. See id.

Defendants produced these responsive documents to BHI in on February 

10 and March 2, 2023. See id. at APP-0179 ¶ 9. When producing these 

documents, Defendants also produced the metadata for each document, 

which generally included, among other things, the custodian, file name, 

file type, and date of each document. See id. at APP-0179 ¶ 10.

Also in March 2023, Defendants again engaged Digital Mountain 

to take possession of, image, and preserve the cellphones of Ross Glover, 

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Walker, Campbell, and Hallmark. See id. at APP-0180 ¶ 14. Coble had 

already left his employment at Power Standard by that time, and due to 

counsel then having an incorrect phone number for Coble, Defendants’ 

counsel were not able to obtain Coble’s cellphone for Digital Mountain 

to image. See id. at APP-0180 ¶ 16. Roy Glover was traveling when the 

other cellphones were imaged and was unable to have his cellphone 

imaged with the others. See id. at APP-0180 ¶ 17. Roy Glover has since 

confirmed that he still has all of his text messages from 2022 and that 

he has not deleted any text messages from 2022. See APP-002 (Roy 

Glover Declaration).

By the time Defendants imaged and preserved these cellphones, 

Defendants had already expended substantial time, expense, and effort 

in reviewing and producing emails and other documents they collected. 

In contrast, even though BHI brought this case, BHI did not seem 

interested in expending any effort to fulfill its discovery obligations. 

While Defendants (or nonparties Campbell and Hallmark) produced 

essentially all emails and other responsive documents by March 2, 2023, 

totaling over 6,800 pages, BHI did not produce a single document until 

April 27, 2023, and even then, BHI produced only 47 pages without any 

metadata. See APP-0179 at ¶¶ 11-12 (Cooper Declaration). Indeed, by 

mid-July, BHI had produced barely 300 pages of documents, and BHI 

produced all documents without any metadata in a single pdf without 

tabbing or separations but instead that mashes together all of the 

documents so that it is difficult to tell where one document ends, and 

another begins. See id. at APP-0180 at ¶ 13.

Not wanting to needlessly incur additional expenses when BHI—

the Plaintiff who brought this case – clearly had no intention of doing 

the same and when BHI had not indicated that Defendants’ productions 

were incomplete or lacking, Defendants did not spend additional time 

reviewing the information it collected from the cellphones of Ross 

Glover, Walker, Campbell, or Hallmark. Instead, Defendants made sure 

the data from the cellphones was preserved in the event it was needed 

for this action. BHI, however, never sought to confer with Defendants 

regarding production of text messages or other cellphone data before the 

close of discovery.

Instead, after the close of discovery and after the motion to compel 

deadline had passed, BHI for the first time complained that Defendants 

should have produced text messages from certain employees, and BHI 

filed a motion for leave to file an untimely motion to compel. See ECF 

No. 101. The Court denied BHI’s motion for leave on the basis that BHI 

“fail[ed] in part to show that it could not have met the November 9 

deadline or could not have included in the motion to compel that it did 

file on the November 9 deadline some the requests that it now raises.” 

ECF No. 163.

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....

While Defendants have imaged and preserved the cellphones 

from numerous individuals, BHI’s counsel has admitted that BHI did 

not collect, preserve, or review text messages or cellphone data from a 

single BHI employee. During a meet and confer on November 28, 2023, 

Defendants’ counsel asked BHI’s counsel about which BHI employees’ 

cellphones BHI imaged, preserved, and reviewed. See APP-0164 at ¶ 4 

(Lee Declaration). When asked whether BHI imaged, preserved, or 

reviewed the cellphone of BHI employee Ronald Davis, BHI’s counsel 

stated that BHI did not do so. See id. at ¶ 5. Defendants’ counsel then 

informed BHI’s counsel that Defendants would assume that BHI did not 

image, preserve, or review the cellphone of any of its employees unless

BHI’s counsel affirmatively told Defendants’ counsel that a specific 

employee’s cellphone was imaged, preserved, and reviewed. See id. at ¶ 

7. BHI’s counsel said that a report by FTI Consulting, which BHI did 

not produce until after the close of discovery, should list the individuals 

whose cellphones BHI imaged, preserved, and reviewed. See id. at ¶ 6. 

The FTI Consulting report, however, does not identify a single 

individual whose cellphone was imaged, preserved, or reviewed. See

ECF No. 123 at APP285-293. Defendants’ counsel followed up with 

BHI’s counsel that same day via email to again ask about BHI’s 

preservation of employee cellphones, again informed BHI that if BHI did 

not affirmatively represent that a specific individual’s cellphone was 

imaged, preserved, and reviewed, then Defendants would assume it was 

not. See APP-0173 (Lee Declaration). BHI’s counsel responded by 

sending Defendants a list of names that BHI’s counsel said are the 

individuals whose information FTI Consulting collected and preserved. 

See id. at APP-0171-172. This list appears to only include individuals 

who left BHI’s employment in mid-July 2022 and does not include a 

single BHI employee who remained at BHI in July 2022. Compare id. at 

APP-0171-172, with APP-0034-37 (BHI’s interrogatory response listing 

individuals who BHI alleges left BHI). Defendants’ counsel followed up 

by asking if BHI imaged, preserved, or reviewed the cellphones from any 

of the BHI employees who BHI identified in its initial disclosures or 

whose declarations BHI used to support its case. See APP-0169-170 (Lee 

Declaration). These individuals include:

1. Ken Loynes

2. Juanita Biasini

3. Andrew McCallum

4. Brady McDonald

5. Aaron Haygood

6. Emily Franko

7. James Hensley

8. Jerrod Davis

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9. Johnnie Kirkwood

10. Ramon Archuleta

11. Rene Guerrero

12. Brian Smith

13. Ronald Davis

See id. at 0170. Again, Defendants’ counsel informed BHI’s counsel that 

because BHI’s list from FTI does not include any of these individuals, if 

BHI’s counsel does not affirmatively represent that BHI imaged, 

preserved, or reviewed the cellphones from these individuals, 

Defendants will assume that BHI did not. See id. at 0170. BHI’s counsel, 

however, refused to identify any BHI employees whose cellphone BHI 

imaged and preserved, including the individuals about whom 

Defendants’ counsel asked. See id. at 0169. In total, Defendants’ counsel 

asked BHI’s counsel four separate times to provide a list of BHI 

employees whose cellphones BHI imaged, preserved, and reviewed, and 

to date, BHI’s counsel has refused to provide the name of a single 

employee whose cellphone BHI imaged, preserved, or reviewed. It is 

therefore clear that BHI has not imaged, preserved, or reviewed a single 

cellphone from any of its employees who were still at BHI in July 2022.

It is also clear that the BHI employee cellphones that BHI did not 

preserve contained relevant text messages that were responsive to 

Defendants’ discovery requests. See APP-0105-106 (Biasini Depo. at 

24:19-25:1) (testifying that “Mr. Loynes [BHI’s President4] shared some 

of the text messages” about what was happening when employees were 

leaving BHI in July 2022); id. at 34:2-9 [APP-0107] (testifying that 

witness had knowledge of what was happening in July 2022 because of 

“text messages” shown by Ken Loynes); id. at 55:19-22 [APP-0108] 

(testifying that witness texted “with Mr. Loynes regarding what was 

occurring in the Texas market in July of 2022”); APP-0115-116 

(McDonald Depo. at 50:10-51:22) (testifying about text messages related

to leaving BHI); APP-0096 (Ross Glover Depo. at 59:9-23) (testifying 

that Ken Loynes, BHI’s President, sent a group text message firing 

employees, including the Individual Defendants).

Dkt. No. 77 at 6-9 (cleaned up).

In reply, BHI argues that, 

[i]nstead of taking responsibility for their actions, Defendants focus 

their Response on BHI’s preservation efforts. BHI’s efforts, however, are 

not at issue before this Court. Indeed, it is BHI’s Motion for Sanctions 

for Spoliation of Evidence (“Motion”) based on Defendants’ outright 

admissions to destruction of evidence that pending adjudication. 

Defendants submit several self-serving declarations in their Response 

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to avert the truth established during depositions. The record establishes 

that Defendants destroyed evidence after receipt of BHI’s preservation 

notices, after BHI filed the instant lawsuit, and assuring BHI that they 

had produced all relevant information. Defendants’ destruction of 

evidence is consistent with their unfulfilled discovery obligations, 

namely their admittedly inadequate search for and production of 

responsive information, which evidences Defendants’ bad faith intent to 

conceal information.

Dkt. No. 177 at 1.

Legal Standards 

The loss of electronically stored information (“ESI”) is governed by Federal 

Rule of Civil Procedure 37(e), which provides:

If electronically stored information that should have been preserved in the 

anticipation or conduct of litigation is lost because a party failed to take 

reasonable steps to preserve it, and it cannot be restored or replaced 

through additional discovery, the court:

(1) upon finding prejudice to another party from loss of the information, may 

order measures no greater than necessary to cure the prejudice; or

(2) only upon finding that the party acted with the intent to deprive another 

party of the information’s use in the litigation may:

(A) presume that the lost information was unfavorable to the party;

(B) instruct the jury that it may or must presume the information was 

unfavorable to the party; or

(C) dismiss the action or enter a default judgment.”

FED. R. CIV. P. 37(e); accord Castro v. Wal-Mart Real Estate Bus. Trust, 645 F. Supp. 

3d 638, 646 (W.D. Tex. 2022).

“To apply Rule 37(e) sanctions, a court must determine that the following four 

predicate elements exist: (1) there is ESI that should have been preserved; (2) that 

ESI has been lost; (3) the ESI was lost because of a party’s failure to take reasonable 

steps to preserve it; and (4) the ESI cannot be restored or replaced” through additional 

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discovery. Cleary v. Am. Airlines, Inc., No. 4:21-cv-184-O, 2022 WL 5320126, at *7 

(N.D. Tex. July 22, 2022) (cleaned up).

As to the first predicate element, “[a] party’s duty to preserve evidence comes 

into being when the party has notice that the evidence is relevant to the litigation or 

should have known that the evidence may be relevant.” Guzman v. Jones, 804 F.3d 

707, 713 (5th Cir. 2015); accord Falkins v. Goings, No. CV 21-1749, 2022 WL 

17414295, at *3 (E.D. La. Dec. 5, 2022) (explaining that Rule 37(e) “does not create a 

new duty; instead, it is based on a common law duty to preserve relevant information 

when litigation is reasonably foreseeable, so courts should consider whether and 

when the duty to preserve arose”); FED. R. CIV. P. 37(e), advisory committee notes, 

2015 amendments (“Rule 37(e) is based on this common-law duty; it does not attempt 

to create a new duty to preserve. The rule does not apply when information is lost 

before a duty to preserve arises.”). “When the duty arises, even information subject 

to routine deletion may fall within the duty’s reach, requiring that the deletion 

process be interrupted.” Ringers Techs. LLC v. Harmer, No. 4:18-CV-4347, 2020 WL 

6385813, at *2 (S.D. Tex. Aug. 17, 2020), rep. & rec. adopted, 2020 WL 6384349 (S.D. 

Tex. Oct. 30, 2020).

If these four predicate elements exist, the Court then turns to the matter of 

possible remedies under Rules 37(e)(1) or 37(e)(2), which “have different 

requirements before sanctions can be imposed and can lead to different sanctions.” 

Richard v. Inland Dredging Co., LLC, No. 6:15-0654, 2016 WL 5477750, at *3 (W.D. 

La. Sept. 29, 2016).

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Reading these subdivisions together, Rule 37(e) 

• allows courts, under Rule 37(e)(2), “to impose certain severe sanctions for the 

intentional failure of a party to preserve relevant ESI, but only after a finding 

that the party ‘acted with the intent to deprive another party of the 

information’s use in the litigation,’” and

• “[i]f the court does not find that the spoliating party acted with an intent to 

deprive, but determines that the loss of ESI prejudiced another party,” allows 

courts, under Rule 37(e)(1), to “impose lesser sanctions in the form of ‘measures 

no greater than necessary to cure the prejudice.’”

Castro, 645 F. Supp. 3d at 646 (citing FED. R. CIV. P. 37(e); cleaned up). 

“‘Prejudice’ under Rule 37(e) means that a party’s ability to obtain the evidence 

necessary for its case has been thwarted.” DR Distributors, 513 F. Supp. 3d at 981; 

see also J.S.T. Corp. v. Robert Bosch LLC, No. 15-13842, 2019 WL 2324488, at *6 

(E.D. Mich. May 30, 2019) (“‘Prejudice’ can be properly understood as a party’s ability 

to obtain the proofs necessary for its case.... which is another way of saying the loss 

of ESI could negatively impact a party’s ability to make its case, or prejudice that 

party because of the loss of information.” (cleaned up)), rep. & rec. adopted, 2019 WL 

2296913 (E.D. Mich. May 30, 2019).

The United States Court of Appeals for the Fifth Circuit recently explained, by 

quoting Victor Stanley, Inc. v. Creative Pipe, Inc., 269 F.R.D. 497, 532 (D. Md. 2010), 

that “[a] party suffers prejudice where it cannot present ‘evidence essential to its 

underlying claim.’” Coastal Bridge Co., L.L.C. v. Heatec, Inc., 833 F. App’x 565, 575 

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(5th Cir. 2020). The Victor Stanley court had further explained that “[p]rejudice can 

range along a continuum from an inability to prove claims or defenses to little or no 

impact on the presentation of proof” and that, “[g]enerally, courts find prejudice 

where a party’s ability to present its case or to defend is compromised.” 269 F.R.D. at 

532 (cleaned up; quoting Rimkus Consulting Grp., Inc. v. Cammarata, 688 F. Supp. 

2d 598, 613 (S.D. Tex. 2010)); accord Ashton v. Knight Transp., Inc., 772 F. Supp. 2d 

772, 801 (N.D. Tex. 2011).

Rule 37(e)(1) “does not contain an ‘intent’ requirement; a party need not act 

willfully, deliberately, intentionally, or with any objective or subjective bad faith.” 

Richard, 2016 WL 5477750, at *4; accord Sosa v. Carnival Corp., No. 18-20957-CIV, 

2019 WL 330865, at *4 (S.D. Fla. Jan. 25, 2019) (“Intent to deprive is not a 

prerequisite for obtaining relief under Rule 37(e)(1). The Rule itself makes that 

distinction clear, and the case law recognizes the obvious difference.”).

Under Rule 37(e)(1), after finding prejudice to another party from loss of the 

ESI, “[a] curative measure recognized by the Advisory Committee notes is barring 

evidence” – that is, “forbidding the party that failed to preserve information from 

putting on certain evidence.” DR Distributors, LLC v. 21 Century Smoking, Inc., 513 

F. Supp. 3d 839, 958 (N.D. Ill. 2021) (cleaned up).

And “[a] common curative measure courts impose is instructing the jury that 

it can consider the circumstances surrounding the loss of the ESI.” Id. The Rules 

Advisory Committee explained in its notes to the 2015 amendments to Rule 37(e) that 

“[s]ubdivision (e)(2) applies to jury instructions that permit or require the jury to 

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presume or infer that lost information was unfavorable to the party that lost it” and 

“covers any instruction that directs or permits the jury to infer from the loss of 

information that it was in fact unfavorable to the party that lost it” but “does not 

apply to jury instructions that do not involve such an inference.” FED. R. CIV. P. 37(e), 

advisory committee notes, 2015 amendments. As another court has explained,

subdivision (e)(2) would not prohibit a court from allowing the parties to 

present evidence to the jury concerning the loss and likely relevance of 

information and instructing the jury that it may consider that evidence, 

along with all the other evidence in the case, in making its decision. 

These measures, which would not involve instructing a jury it may draw 

an adverse inference from loss of information, would be available under 

subdivision (e)(1) if no greater than necessary to cure prejudice. In 

addition, subdivision (e)(2) does not limit the discretion of courts to give 

traditional missing evidence instructions based on a party’s failure to 

present evidence it has in its possession at the time of trial.

Schmalz v. Vill. of N. Riverside, No. 13 C 8012, 2018 WL 1704109, at *7 (N.D. Ill. 

Mar. 23, 2018) (quoting FED. R. CIV. P. 37(e), advisory committee notes, 2015 

amendments).

“Courts also routinely award attorney’s fees and expenses under Rule 37(e), to 

cover the time and effort necessary to bring the issue of spoliation before the court.” 

BalanceCXI, Inc. v. Int’l Consulting & Rsch. Grp., LLC, No. 1:19-CV-0767-RP, 2020 

WL 6886258, at *15 (W.D. Tex. Nov. 24, 2020) (footnote omitted), rep. & rec. adopted, 

2021 WL 2194900 (W.D. Tex. Feb. 3, 2021); accord Jim S. Adler, P.C. v. McNeil 

Consultants, LLC, No. 3:19-cv-2025-K-BN, 2023 WL 2699511, at *10 & n.1 (N.D. Tex. 

Feb. 15, 2023).

Under Rule 37(e)(2), “however, before a Court can impose the sanction of an 

adverse presumption, an adverse instruction to the jury, or default judgment, it must 

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find that the party that caused the loss ‘acted with the intent to deprive another party 

of the information’s use in the litigation’” – and “a finding of negligence or gross 

negligence” will not suffice to justify “the giving of an adverse-inference instruction.” 

Richard, 2016 WL 5477750, at *4 (cleaned up; citing FED. R. CIV. P. 37(e), advisory 

committee notes, 2015 amendments).

But, “when the court finds that a party acted with the intent to deprive,” Rule 

37(e)(2) “does not include a requirement that the court find prejudice to the party 

deprived of the information.” Falkins, 2022 WL 17414295, at *3.1 Some courts have 

explained that, “[i]f intent is established, then prejudice is presumed,” Hollis v. CEVA 

Logistics U.S., Inc., 603 F. Supp. 3d 611, 622 (N.D. Ill. 2022), or “inferred,” 

CaramelCrisp LLC v. Putnam, No. 19 C 2699, 2022 WL 1228191, at *5 (N.D. Ill. Apr. 

26, 2022); accord Adler, 2023 WL 2699511, at *10 n.3 (collecting cases).

1 Accord FED. R. CIV. P. 37(e), advisory committee’s notes to 2015 amendments 

(“Subdivision (e)(2) does not include a requirement that the court find prejudice to 

the party deprived of the information. This is because the finding of intent required 

by the subdivision can support not only an inference that the lost information was 

unfavorable to the party that intentionally destroyed it, but also an inference that 

the opposing party was prejudiced by the loss of information that would have favored 

its position. Subdivision (e)(2) does not require any further finding of prejudice.”); DR 

Distributors, 513 F. Supp. 3d at 958-59, 980 (“If intent (which presumes prejudice) 

exists, then the court can impose sanctions, including presuming that the information 

was unfavorable, instructing the jury to presume the information was unfavorable, 

or entering dismissal or default. FED. R. CIV. P. 37(e)(2). .... Intent must be 

established before a court can impose sanctions, such as adverse jury instructions, 

default, and dismissal under Rule 37(e)(2). FED. R. CIV. P. 37(e), advisory committee’s 

notes to 2015 amendments. If intent is established for these sanctions, prejudice need 

not be separately established because prejudice is assumed from the intent.”); 

Ringers, 2020 WL 6385813, at *2.

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As explained above, where, as here, Rule 37(e) governs a motion for sanctions 

for spoliation of ESI, Rule 37(e)(2) requires a “finding that the party acted with the 

intent to deprive another party of the information’s use in the litigation” before a 

court can sanction the spoliating party by “instruct[ing] the jury that it may or must 

presume the information was unfavorable to the party,” FED. R. CIV. P. 37(e)(2), or 

what is referred to in short hand as an “adverse inference instruction,” Bellamy v. 

Wal-Mart Stores, Tex., LLC, No. SA-18-CV-60-XR, 2019 WL 3936992, at *5 (W.D. Tex. 

Aug. 19, 2019); accord Falkins, 2022 WL 17414295, at *3.

For many years, decisions of the United States Court of Appeals for the Fifth 

Circuit have held that courts may impose such “an adverse inference against the 

spoliator or sanctions against the spoliator only upon a showing of ‘bad faith’ or ‘bad 

conduct.’” Guzman, 804 F.3d at 713. But, as another judge has noted,

[i]t is not clear that a finding of “bad faith” is required under Rule 

37(e)(2). Before the 2015 amendment to the rule, the Fifth Circuit 

generally “permit[ted] an adverse inference against the destroyer of 

evidence only upon a showing of bad faith or ‘bad conduct.’” Guzman v. 

Jones, 804 F.3d 707, 713 (5th Cir. 2015). The 2015 version of Rule 37(e) 

does not mention “bad faith” and instead requires a showing that the 

party at fault acted with the “intent to deprive another party of the 

information.”

BalanceCXI, 2020 WL 6886258, at *12 n.8.

After the 2015 amendments, outside the ESI context in which Rule 37(e) 

governs, “it appears that in the Fifth Circuit a court may use its inherent authority 

to sanction a party for the loss or destruction of non-ESI, but sanctions can only be 

assessed upon a showing of ‘bad faith’ or ‘bad conduct.’” Bellamy, 2019 WL 3936992, 

at *6 (citing Guzman, 804 F.3d at 713)); accord Van Winkle v. Rogers, 82 F.4th 370, 

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374-79 (5th Cir. 2023) (applying standards from Guzman and earlier case law to 

alleged spoliation of non-ESI); Coastal Bridge, 833 F. App’x at 573-75 (same).

But, as to spoliation of ESI, “[a]s one district judge has noted, since the 

adoption of Rule 37(e)(2), the Fifth Circuit has not clarified whether its prior 

spoliation jurisprudence has been abrogated or otherwise amended pursuant to the 

amendment of Rule 37(e).” BalanceCXI, 2020 WL 6886258, at *12 n.8 (cleaned up).2

Instead, the Fifth Circuit’s recent decisions citing or applying amended Rule 37(e) 

have laid out the “bad faith” and Rule 37(e)(2) “intent to deprive” standards together.3

2 See also FED. R. CIV. P. 37(e), advisory committee notes, 2015 amendments 

(“New Rule 37(e) replaces the 2006 rule. It authorizes and specifies measures a court 

may employ if information that should have been preserved is lost, and specifies the 

findings necessary to justify these measures. It therefore forecloses reliance on 

inherent authority or state law to determine when certain measures should be used. 

.... The new rule applies only to electronically stored information, also the focus of 

the 2006 rule.”); see generally Chambers v. NASCO, Inc., 501 U.S. 32, 50 (1991) (“But 

neither is a federal court forbidden to sanction bad-faith conduct by means of the 

inherent power simply because that conduct could also be sanctioned under the 

statute or the Rules. .... Furthermore, when there is bad-faith conduct in the course 

of litigation that could be adequately sanctioned under the Rules, the court ordinarily 

should rely on the Rules rather than the inherent power. But if in the informed 

discretion of the court, neither the statute nor the Rules are up to the task, the court 

may safely rely on its inherent power.”); Moody Nat. Bank of Galveston v. GE Life & 

Annuity Assur. Co., 383 F.3d 249, 252 (5th Cir. 2004) (explaining that “we are bound 

to follow the prior panel rulings of this court” but that “[t]his rule is inapplicable ... 

where Congress makes a change in statutory law that directly affects a prior panel 

opinion”).

3 See Miller v. Michaels Stores, Inc., ___ F.4th ___, No. 23-30393, 2024 WL 

1461358, at *5 (5th Cir. Apr. 4, 2024) (“‘Spoliation of evidence is the destruction or 

the significant and meaningful alteration of evidence.’ Van Winkle v. Rogers, 82 F.4th 

370, 374 (5th Cir. 2023) (quoting Guzman, 804 F.3d at 713). If spoliation is found, 

and was done in bad faith, the district court may permit the factfinder to draw the 

inference that the spoliator destroyed or altered the evidence because it was 

unfavorable. Id. ‘Bad faith, in the context of spoliation, generally means destruction 

for the purpose of hiding adverse evidence.’ Id.; see also FED. R. CIV. P. 37(e)(2)(B) (if 

party ‘acted with the intent to deprive another party of [electronically-stored] 

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And that suggests that, for ESI spoliation, these standards overlap or even are 

interchangeable. Accord United Healthcare Servs., Inc. v. Next Health LLC, No. 3:17-

cv-243-X-BT, 2023 WL 2589237, at *5 (N.D. Tex. Mar. 21, 2023); Adler, 2023 WL 

2699511, at *12 n.6 (collecting cases).

But any lack of clarity will generally make no difference in how the Court 

applies the governing standard for a requested adverse-inference instruction sanction 

for spoliation of ESI. The Fifth Circuit has held that “[b]ad faith, in the context of 

spoliation, generally means destruction for the purpose of hiding adverse evidence,” 

information’s use in the litigation,’ district court may permit an adverse inference).”); 

Ford v. Anderson Cnty., Tex., 90 F.4th 736, 767-68 (5th Cir. 2024) (“This court permits 

an adverse inference or sanctions against the spoliator only upon a showing of ‘bad 

faith’ or ‘bad conduct.’ [Guzman v. Jones, 804 F.3d 707, 713 (5th Cir. 2015)] (quoting 

Condrey v. SunTrust Bank of Ga., 431 F.3d 191, 203 (5th Cir. 2005)). A party seeking 

an adverse inference – i.e., a presumption that ‘the lost information was unfavorable 

to the [spoliating] party’ – must establish that ‘the [spoliating] party acted with the 

intent to deprive another party of the information’s use in the litigation.’ FED. R. CIV.

P. 37(e)(2).”); Eagan v. Walgreen Co., No. 21-20352, 2022 WL 683636, at *3 (5th Cir. 

Mar. 8, 2022) (“Spoliation is ‘the destruction or the significant and meaningful 

alteration of evidence.’ Sanctions are only appropriate on a showing of bad faith. Bad 

faith ‘generally means destruction for the purpose of hiding adverse evidence.’ For 

electronically stored information, an adverse inference may be given to the jury ‘only 

upon [a] finding that the party acted with the intent to deprive another party of the 

information’s use in the litigation.’ If the trial court concluded there was ‘prejudice to 

another party from loss of the information, [the court] may order measures no greater 

than necessary to cure the prejudice.’” (cleaned up)); cf. Calsep A/S v. Dabral, 84 

F.4th 304, 312 n.8 (5th Cir. 2023) (“We note that there are overlapping standards at 

play – Rule 37 and the heightened standard for default sanctions both require some 

finding of bad faith. .... Rule 37(e), too, requires ‘willfulness or bad faith,’ which may 

be satisfied when a party ‘fail[s] to comply with [a] court’s discovery order even after 

he was personally instructed to do so,’ or ‘by a repeated failure to provide anything 

other than generalized or non-responsive answers in response to specific requests for 

compliance by the court.’ See Bell v. Texaco, Inc., 493 F. App’x 587, 593 (5th Cir. 2012) 

(per curiam) (citations and quotation marks omitted). But here we have no need to 

consider whether, and how, these various frameworks may differ.”).

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Guzman, 804 F.3d at 713, and that “[m]ere negligence is not enough to warrant an 

instruction on spoliation,” Russell v. Univ. of Tex. of Permian Basin, 234 F. App’x 195, 

208 (5th Cir. 2007) (cleaned up). “Those standards overlap with Rule 37(e)(2)’s 

requirement of an ‘intent to deprive another party of the information’s use in the 

litigation.’” Adler, 2023 WL 2699511, at *12 (cleaned up); accord id. at *12 n.5 

(collecting cases).

“The party seeking the spoliation sanction bears the burden of proof.” Castro, 

645 F. Supp. 3d at 646. And, because (for the reasons that the Court has previously 

explained), “there is ‘no basis in Rule 37(e) or governing case law to conclude [a 

movant seeking sanctions for ESI spoliation] must make any showing on clear and 

convincing evidence,’ ‘[t]he Court instead will assess [the movant’s] required 

showings under Rule 37(e) against the preponderance of the evidence standard.’” 

United Healthcare Servs., Inc. v. Rossel, No. 3:21-cv-1547-L-BT, 2024 WL 1252365, 

at *5 (N.D. Tex. Mar. 21, 2024) (quoting Adler, 2023 WL 2699511, at *5; cleaned up).

Following the 2015 Advisory Committee notes, courts have observed that 

amended Rule 37(e)(1) “leave[s] to the Court’s discretion determining which party 

has the burden of proving prejudice.” Flores v. AT&T Corp., No. EP-17-CV-00318-DB, 

2018 WL 6588586, at *8 (W.D. Tex. Nov. 8, 2018). Here, the Court determines that 

the burden to prove prejudice should lie with BHI, where, at this stage of the case 

and in light of the parties’ briefing, “placing the burden of proving prejudice on the 

party that did not lose the information [is not] unfair” in this case. Id. at *7 (cleaned 

up).

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“To determine whether a referred motion for sanctions is dispositive or nondispositive, the sanction chosen by the magistrate judge, rather than the sanction 

sought by the party, governs the determination of whether [Federal Rule of Civil 

Procedure] 72(a) or 72(b) applies.” Siegel v. Compass Bank, No. 3:18-cv-1023-X, 2021 

WL 4498914, at *1 (N.D. Tex. Jan. 11, 2021) (“To allow otherwise would permit the 

party seeking sanctions to engage in a game of labels that would improperly dictate 

the standard of review.”) (cleaned up); accord Adler, 2023 WL 2699511, at *14 n.8 

(collecting cases). And, so, the undersigned has authority to enter a nondispositive 

order granting attorneys’ fees or other nondispositive sanctions under Federal Rule 

of Civil Procedure 37(e) or denying a request for what might be considered a 

dispositive sanction. See 28 U.S.C. § 636(b); Merritt v. Int’l Bhd. of Boilermakers, 649 

F.2d 1013, 1016-17 (5th Cir. Unit A June 1981) (per curiam) (a magistrate judge has 

authority to enter a nondispositive order granting attorneys’ fees as a sanction under 

Federal Rule of Civil Procedure 37).

Analysis

To begin, the Court agrees with BHI that Defendants cannot properly point to 

BHI’s alleged failures to preserve as an excuse for what Defendants did or did not do 

as to their own discovery obligations, including in response to BHI’s requests.

Focusing, then, on BHI’s allegations of spoliation by Defendants, the Court, to 

grant BHI’s motion, would need to determine that the four predicate elements exist: 

(1) there is ESI that should have been preserved; (2) that ESI has been lost; (3) the 

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ESI was lost because of a party’s failure to take reasonable steps to preserve it; and 

(4) the ESI cannot be restored or replaced through additional discovery.

And BHI’s request for an order imposing as sanctions either striking 

Defendants’ defenses in this action and entering judgment in BHI’s favor on all counts 

or ordering an adverse inference instruction all fall within Rule 37(e)(2)’s scope, 

requiring that the Court find that Defendants acted with the intent to deprive BHI’s 

of the lost ESI’s use in this litigation. 

As the Court has previously explained,

under Rule 37(e)(2), the Court cannot infer that a “party acted with the 

intent to deprive another party of the [ESI’s] use in the litigation” based 

only on evidence that amounts to what is required to satisfy the four 

predicate elements – that is, showing that ESI that should have been 

preserved has been lost because of a party’s failure to take reasonable 

steps to preserve it and now cannot be restored or replaced through 

additional discovery....

Another court has similarly rejected an argument that, under 

Rule 37(e)(1), the moving party was prejudiced because the lost ESI is 

relevant and cannot be restored or replaced. As that court explained, 

[t]his assertion overlooks the construction of Rule 37(e) which requires 

that the four predicate elements, including relevancy and the inability 

to be restored or replaced, be found before a court can consider prejudice. 

If [a moving party] were correct that the existence of lost evidence which 

is relevant and which cannot be replaced means there is prejudice, it 

would be unnecessary for Rule 37(e) to require a court to find the four 

predicate elements before a court could find prejudice and order 

measures to cure the prejudice under Rule 37(e)(1).

So, too, if the required “intent to deprive” could be inferred by 

facts that offer only what is necessary to find that the four predicate 

elements exist, there would be no need for Rule 37(e)(2) to require its 

own, more stringent showing for a party to be entitled to the most severe 

spoliation sanctions. And, because a finding under Rule 37(e)(2) that a 

“party acted with the intent to deprive another party of the [ESI’s] use 

in the litigation” eliminates the need to separately find (or allows a court 

to automatically infer or presume) prejudice, inferring the necessary 

intent to deprive from nothing more than the set of facts that the four 

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predicate elements require would read both subdivisions (e)(1) and (e)(2) 

out of Rule 37(e).

Adler, 2023 WL 2699511, at *29 (cleaned up).

But all of BHI’s support for its requested sanctions amount to evidence and 

arguments that (1) Defendants have failed to conduct a thorough search for relevant 

information responsive to BHI’s discovery requests; (2) Defendants’ witnesses 

testified that their personal electronic devices were not preserved or searched for 

relevant information and that some deleted or destroyed text messages that BHI 

contends were relevant to and would have supported BHI’s claims; and (3) 

Defendants failed to preserve, search for, collect, or produce this evidence despite 

having knowledge of this lawsuit and Defendants’ receipt of BHI’s preservation 

notices and after assuring BHI that they had produced all relevant information. See

Dkt. No. 167.

According to BHI, “[s]everal witnesses – including the individual Defendants 

and representatives of the corporate Defendants – testified that their devices were 

not searched, there is relevant information on those devices, and that information 

has since been destroyed.” Id. at 14; see also Dkt. No. 177 at 1 (“The record establishes 

that Defendants destroyed evidence after receipt of BHI’s preservation notices, after 

BHI filed the instant lawsuit, and assuring BHI that they had produced all relevant 

information. Defendants’ destruction of evidence is consistent with their unfulfilled 

discovery obligations, namely their admittedly inadequate search for and production 

of responsive information, which evidences Defendants’ bad faith intent to conceal 

information.”).

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From these assertions, BHI contends that “Defendants’ conduct clearly 

suggests Defendants’ intent to conceal information relevant to BHI’s claims, 

preventing BHI from discovering and presenting such evidence to prove or support 

its claims and fully assess its damages,” and that “Defendants destroyed the evidence 

in this case in bad faith.” Dkt. No. 167 at 1-2, 3; see also Dkt. No. 177 at 6 n.4 (“BHI 

does not contend that Hoffman deleted any text messages. BHI simply believes 

Defendants’ utter failure to search Hoffman’s emails, text messages, or personal 

devices despite their clear relevancy to this case, supports BHI’s overall contention 

that Defendants are acting willfully and intentionally to hide and destroy evidence 

in this case.”).

Defendants respond that “BHI is unable to show that a single document 

relevant to this action has been lost or deleted, and there is thus no evidence of 

spoliation,” and that BHI has not pointed “to any evidence suggesting that Haynes’s 

or Hoffman’s cellphones contained relevant information or that relevant information 

was deleted.” Dkt. No. 174-1 at 1, 10-11 (cleaned up).

And Defendants contend that, even if any text messages or documents were 

deleted, “there is no evidence that any of those text messages were lost in bad faith” 

or “with an intent to deprive BHI of those text messages” or “that Coble deleted any 

documents in bad faith” or any evidence “of bad faith deletion of any documents by 

Walker” and that, “even if Haynes or Hoffman had relevant text messages (they did 

not) and even if they deleted their text messages in bad faith (again, they did not), 

BHI was not prejudiced because it could have obtained the same information from 

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other sources – specifically the counterparties to the text messages.” Id. at 11-12, 13-

15, 16.

And, Defendants argue, “[c]omplaints about Defendants’ searches of emails is 

an issue for a motion to compel, and the motion to compel deadline has long passed.” 

Id. at 18.

The Court agrees with Defendants.

Based on Defendants’ response, see Dkt. Nos. 174-1 & 174-3, the Court cannot 

find that the text messages at issue are lost or cannot be restored or replaced, cf. 

Manson v. B&S Trucking of Jackson, LLC, No. SA-21-CV-01181-XR, 2023 WL 

3170494, at *3 (W.D. Tex. May 1, 2023) (“Rules are written to capture most scenarios, 

but regrettably cannot be written to address all instances. Here the Plaintiff had an 

expectation that driver logs would be maintained and kept by a motor carrier, and 

they were not. In any event, until it is shown that the driver logs have indeed been 

lost, any relief under Rule 37(e) is premature.”). That Defendants did not search the 

senders’ or recipients’ phones or search certain imaged cell phone data does not 

establish that prerequisite for Rule 37(e) sanctions. And BHI’s failure to timely move 

to compel that discovery is a separate issue that the Court has already addressed. See 

Dkt. No. 163; cf. Miller v. Michaels Stores, Inc., No. 23-30393, 2024 WL 1461358, at 

*6 (5th Cir. Apr. 4, 2024) (“Yet, because Miller moved in the district court for an 

adverse inference based on spoliation, rather than to compel production of the 

remainder of the footage, her right to receive that footage was never properly before 

the district court. There is no evidence that spoliation occurred.” (cleaned up)). 

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But, even if BHI had made those required showings, the Court finds that BHI 

has not made the required Rule 37(e)(2) showing of intent or, assuming it is also or 

alternatively required, any required showing of bad faith. In reply, BHI effectively 

summarizes its position and arguments that, “[t]hroughout discovery, Defendants 

made several representations to BHI that their production was complete which were 

not accurate”; “Defendants have failed to preserve several sources of data, decided 

not to search sources they did preserve, and ... went so far as to delete text messages 

despite being on clear notice to preserve relevant information”; and therefore the 

Court should find that “Defendants have acted in bad faith with respect to their 

discovery obligations and have spoliated evidence with intent to hide and destroy 

relevant evidence.” Dkt. No. 177 at 10.

But all of what BHI asserts, even it were established, amounts a showing that 

Defendants failed to take reasonable steps to preserve, search for, or produce relevant 

text messages that now cannot be restored or replaced through additional discovery. 

And that amounts to the set of facts that Rule 37(e)’s four predicate elements require. 

See Adler, 2023 WL 2699511, at *29.

And the Court finds, under the circumstances and based on the evidence of 

record, that any of the Individual Defendants’ or other individuals’ deleting text 

messages (including as an individual’s routine practice) or giving up or restoring 

factory settings on a cellphone and Defendants’ counsel’s representations that 

document production was complete does not, alone or in combination with BHI’s other 

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arguments and evidence, support an inference that Defendants acted with the intent 

to deprive BHI of the allegedly lost ESI’s use in this litigation.4

Finally, even if the Court were to consider less severe sanctions than those 

subject to Rule 37(e)(2), BHI cannot, under Rule 37(e)(1), point only to the existence 

of lost evidence that is relevant and that cannot be replaced to make the required 

showing that BHI suffered prejudice from loss of the information. See Adler, 2023 WL 

2699511, at *29. And, considering BHI’s failure to timely move to compel, the Court 

cannot find the required showing of prejudice in light of BHI’s own failure to timely 

pursue other means of seeking to restore or replace the allegedly lost text messages. 

See Dkt. No. 163.

Conclusion

The Court denies Plaintiff BHI Energy I Power Services, LLC’s Motion for 

Sanctions for Spoliation of Evidence [Dkt. No. 166].

SO ORDERED.

4

 Cf. Ford, 90 F.4th at 768 (“Because the Texas Rangers conducted an 

investigation following Newsome’s death, it may be reasonable to conclude that 

Defendants had a duty to preserve electronically stored information. It also seems 

likely that the text messages at issue contained information related to Newsome. 

Nevertheless, Plaintiffs are unable to effectively rebut Defendants’ explanation that 

they purchased new phones and, as a result, lost access to these text messages.”); 

Malone v. Cooke Ins. Ctr., Inc., No. 3:22-CV-35-SA-JMV, 2024 WL 1337196, at *5 

(N.D. Miss. Mar. 28, 2024) (“The Court acknowledges that it is somewhat unusual for 

a party to initially fail to mention the possible existence of video, at times represent 

that he has a video but is technologically unable to retrieve it, and at other times 

represent that he did not record a video at all. However, for an adverse inference to 

appropriately be applied against Malone, the Defendants must point to evidence that 

he in bad faith destroyed the video. The Defendants ask the Court to infer that 

Malone destroyed the video, but there is no evidence before the Court suggesting that 

Malone intentionally did so.” (cleaned up)). 

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DATED: April 12, 2024

_________________________________________

DAVID L. HORAN 

UNITED STATES MAGISTRATE JUDGE

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