Court Opinion

ID: 9947800
Source: CourtListenerOpinion
Date Created: 2024-03-05 18:01:29.800539+00
Date Added: 2024-06-11T14:28:35.313755
License: Public Domain

FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

ALYSSA JONES,                       No. 22-16465

            Plaintiff-Appellant,       D.C. No.
                                    2:17-cv-04612-
PHILIP NATHANSON, Plaintiff's            GMS
Attorney, Individually,

            Appellant,                OPINION

 v.

RIOT HOSPITALITY GROUP LLC,
now known as Noatoz LLC; RHG
VENTURES LLC; RYAN HIBBERT,
individually and in his official
capacity; 4425 SADDLEBAG LLC;
4425 SADDLEBAG 2 LLC; MILO
COMPANIES LLC; ROOKE LLC,

            Defendants-Appellees,

and

JW BAR LLC; MRM HOSPITALITY
LLC,

            Defendants.
2                JONES V. RIOT HOSPITALITY GROUP

       Appeal from the United States District Court
                for the District of Arizona
      G. Murray Snow, Chief District Judge, Presiding

           Argued and Submitted February 7, 2024
                     Phoenix, Arizona

                      Filed March 5, 2024

    Before: Marsha S. Berzon, Andrew D. Hurwitz, and
            Anthony Johnstone, Circuit Judges.

                   Opinion by Judge Hurwitz

                          SUMMARY *

                            Sanctions

    The panel affirmed the district court’s dismissal under
Federal Rule of Civil Procedure 37(e)(2) of an employment
discrimination action because of intentional spoliation of
electronically stored information by the plaintiff.
    The panel held that the district court did not abuse its
discretion by imposing a terminating sanction because ample
circumstantial evidence showed that the plaintiff acted
willfully, and the district court properly relied on an
inference that her deletion of text messages with co-workers
and her coordination with witnesses to delete messages was

*
 This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
                JONES V. RIOT HOSPITALITY GROUP                 3

prejudicial to the defendant. The panel also held that the
district court did not abuse its discretion in considering an
expert report.
    The panel held that the district court’s discovery orders
instructing the plaintiff and others to hand over their phones
to a forensic search specialist were procedurally proper, and
the plaintiff’s challenge to the orders based on privacy
interests was unpersuasive.
     Finally, the panel held that the district court did not abuse
its discretion in awarding attorneys’ fees and costs.

                          COUNSEL

Philip J. Nathanson (argued), The Nathanson Law Firm,
Scottsdale, Arizona, for Plaintiffs-Appellants.
Richard H. Nakamura, Jr. (argued), Clark Hill LLP, Los
Angeles, California; Sean M. Carroll, Darrell E. Davis, and
David I. Weissman, Clark Hill PLC, Scottsdale, Arizona; for
Defendants-Appellees.

                          OPINION

HURWITZ, Circuit Judge:

    The district court dismissed this case under Federal Rule
of Civil Procedure 37(e)(2) because of intentional spoliation
of electronically stored information (“ESI”) by the plaintiff.
Finding no abuse of discretion, we affirm.
4                JONES V. RIOT HOSPITALITY GROUP

                        BACKGROUND
    Alyssa Jones, a former waitress at a Scottsdale bar, sued
the bar’s owner-operator, Ryan Hibbert, and his company,
Riot Hospitality Group (collectively “Riot”), in the district
court in 2017, alleging Title VII violations and common law
tort claims. During discovery, Riot obtained text messages
exchanged between Jones, her friends, and co-workers
between December 2015 and October 2018. Riot identified
instances where Jones appeared to have abruptly stopped
communicating with people she had been messaging almost
daily. In response to a subpoena, Jones’ third-party imaging
vendor produced a spreadsheet showing that messages
between Jones and her co-workers had been deleted from
Jones’ mobile phone. In subsequent depositions, two of the
co-workers, both of whom Jones had identified as
prospective trial witnesses, testified that they had exchanged
text messages with Jones about the case since October 2018.
After Jones failed to comply with the district court’s order to
produce those messages, the court ordered the parties to
jointly retain a third-party forensic search specialist to
review the phones of Jones and three prospective witnesses.
    After the district court denied a stay of that order, 1 it
allowed Riot to subpoena the three witnesses “to produce
their recent communications regarding Plaintiff’s claims,”
and ordered Jones to deliver her phone to K.J. Kuchta, the
agreed-upon forensic specialist. Jones v. Riot Hosp. Grp.
LLC, No. CV-17-04612-PHX, 2020 WL 4583628, at *4–5
(D. Ariz. Aug. 10, 2020). Kuchta was to extract messages

1
  Jones’ appeal of the district court’s order was dismissed for lack of
jurisdiction. Jones v. Riot Hosp. Gr. LLC, No. 20-15407, 2022 WL
401329 (9th Cir. Feb. 9, 2022).
                 JONES V. RIOT HOSPITALITY GROUP                     5

containing stipulated search terms and send them to Jones’
counsel, Philip Nathanson, who would then send all
discoverable messages to Riot and produce a privilege log of
those not produced. Id. Jones and two of the witnesses
ultimately delivered their phones to Kuchta. 2
    Kuchta extracted messages and sent them to Nathanson,
but the lawyer failed to forward any to Riot, despite multiple
district court orders that he do so and several deadline
extensions. The district court then ordered Kuchta to send
all non-privileged messages directly to Riot and later
assessed $69,576 in fees and costs against Jones and
Nathanson.
    After finally receiving the text messages, Riot moved for
terminating sanctions under Federal Rule of Civil Procedure
37(e)(2). Riot submitted an expert report from Kuchta, who
concluded, after comparing the volume of messages sent and
received between phone pairs, that “an orchestrated effort to
delete and/or hide evidence subject to the Court’s order has
occurred.” In 2022, the district court dismissed the case with
prejudice, finding that Jones deleted text messages and
cooperated in the deletion of messages by her witnesses,
intending to deprive Riot of their use in litigation. Jones v.
Riot Hosp. Grp. LLC, No. CV-17-04612-PHX, 2022 WL
3682031, at *13 (D. Ariz. Aug. 25, 2022). Jones and
Nathanson timely appealed.

2
  The third witness first claimed that her phone was damaged, then that
it was lost. The district court eventually excluded her testimony.
6               JONES V. RIOT HOSPITALITY GROUP

                       DISCUSSION
I. The Dismissal Sanction
    Jones argues that she did not violate Rule 37(e) and the
Kuchta spoliation report should have been excluded. We
review discovery sanctions for abuse of discretion and the
district court’s underlying findings of fact for clear error.
Anheuser-Busch, Inc. v. Nat. Beverage Distribs., 69 F.3d
337, 348 (9th Cir. 1995). Admission of expert testimony is
reviewed for abuse of discretion, but whether the district
court applied the correct legal standard under Daubert v.
Merrell Dow Pharms., Inc., 509 U.S. 579 (1993), is
reviewed de novo. Hardeman v. Monsanto Co., 997 F.3d
941, 960 (9th Cir. 2021).
    a. Dismissal under Rule 37(e)(2)
    Rule 37(e) applies when ESI “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.” If the district court finds the loss prejudicial, it
“may order measures no greater than necessary to cure the
prejudice.” Fed. R. Civ. P. 37(e)(1). But, if the court finds
that an offending plaintiff “acted with the intent to deprive
another party of the information’s use in the litigation,”
dismissal is authorized. Fed. R. Civ. P. 37(e)(2).
    The district court found that Jones intentionally deleted
relevant text messages with co-workers from 2017 and 2018
and coordinated with her witnesses to delete messages from
2019 and 2020. “Drawing reasonable inferences from the
circumstances,” the court found that Jones did so with the
intent to deprive Riot of use of the messages in this suit.
Jones, 2022 WL 3682031 at *6; see also id. at *10. The
                JONES V. RIOT HOSPITALITY GROUP               7

court also found that the deleted messages could not “be
restored or replaced through additional discovery.” Id at *5;
see also id. at *8–9. Applying the five-factor test for
terminating sanctions articulated in Anheuser-Busch, 69
F.3d at 348, the court found dismissal warranted. Id. at *11–
13.
    On appeal, Jones does not contest her duty to preserve
the deleted messages, that they were deleted, or that they
cannot be restored or replaced through additional discovery.
But, she argues that the district court abused its discretion by
dismissing the case because her conduct was neither willful
nor prejudicial to Riot.
    We disagree. The Anheuser-Busch test generally
controls the imposition of terminating sanctions, but we deal
here with Rule 37(e)(2). To dismiss a case under Rule
37(e)(2), a district court need only find that the Rule 37(e)
prerequisites are met, the spoliating party acted with the
intent required under Rule 37(e)(2), and lesser sanctions are
insufficient to address the loss of the ESI. See Fed. R. Civ.
P. 37 advisory committee’s note to 2015 amendment.
    The district court did not clearly err in finding that Jones
intentionally deleted ESI. Rule 37(e) does not define
“intent,” but in context, the word is most naturally
understood as involving the willful destruction of evidence
with the purpose of avoiding its discovery by an adverse
party. See Skanska USA Civ. Se. Inc. v. Bagelheads, Inc., 75
F.4th 1290, 1312 (11th Cir. 2023); Fed. R. Civ. P. 37
advisory committee’s note to 2015 amendment (stating that
negligence or even gross negligence is insufficient).
Because intent can rarely be shown directly, a district court
may consider circumstantial evidence in determining
whether a party acted with the intent required for Rule
8              JONES V. RIOT HOSPITALITY GROUP

37(e)(2) sanctions. See Auer v. City of Minot, 896 F.3d 854,
858 (8th Cir. 2018). Relevant considerations include the
timing of destruction, affirmative steps taken to delete
evidence, and selective preservation.         See Laub v.
Horbaczewski, No. CV 17-6210-JAK, 2020 WL 9066078, at
*6 (C.D. Cal. July 22, 2020).
    Jones contends that the district court erred in finding
intent because Kuchta could not confirm that every deletion
of a text message was intentional or quantify the intentional
deletions. But there was ample circumstantial evidence that
Jones intentionally destroyed a significant number of text
messages and collaborated with others to do so. As the
district court noted, Jones could not explain why messages
to other employees at the bar were selectively deleted in
2017 and 2018. With respect to the 2019 and 2020
messages, the court pointed out that “while much of the
content of the deleted messages is unknowable,” a
screenshot of a message sent by a witness to Jones but
missing from Jones’ phone in its original form, “shows that
Plaintiff deleted at least one message that had a direct
bearing on her case.” Jones, 2022 WL 3682031 at *10.
Moreover, Jones and one of the witnesses obtained new
phones shortly after they were ordered to hand over their
devices for imaging. Neither Jones nor the witnesses
produced the earlier phones for imaging, effectively
preventing discovery of messages deleted from those
phones. The court’s conclusion “that [Jones] affirmatively
selected certain text messages for deletion while otherwise
preserving text messages sent around the same time” is
supported by the record. Id.
   Jones argues that her production of thousands of text
messages “negates the intent and prejudice elements of Rule
37(e).” But production of some evidence does not excuse
                JONES V. RIOT HOSPITALITY GROUP               9

destruction of other relevant evidence. And evidence from
Jones’ third-party imaging vendor suggests that she deleted
some messages from the very periods covered by her
productions.
    Jones also urges that the district court abused its
discretion in finding that Riot was prejudiced by the
destruction of the text messages because Riot nonetheless
deposed Jones and the witnesses and filed a summary
judgment motion. But the district court’s finding that Jones’
destruction of ESI “impaired [Riot’s] ability to go to trial and
threatened to interfere with the rightful decision of the case,”
id. at *11 (emphasis in original) (quoting Anheuser-Busch,
69 F.3d at 354), is well-supported by the record.
    In any event, Rule 37(e)(2) does not mention prejudice
as a prerequisite to sanctions, including dismissal. The
Advisory Committee Notes explain that a finding of
prejudice was not included as a requirement because “the
finding of intent required by [Rule 37(e)(2)] 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.” Fed.
R. Civ. P. 37 advisory committee’s note to 2015 amendment.
The district court relied on that inference here. Jones, 2022
WL 3682031 at *11. “Subdivision (e)(2) does not require
any further finding of prejudice.” Fed. R. Civ. P. 37 advisory
committee’s note to 2015 amendment; see also Fast v.
GoDaddy.com, LLC, 340 F.R.D. 326, 335 n.3 (D. Ariz.
2022).
    Jones also claims that dismissal was a measure “greater
than necessary to cure the prejudice.” See Fed. R. Civ. P. 37
advisory committee’s note to 2015 amendment (“The
10             JONES V. RIOT HOSPITALITY GROUP

remedy should fit the wrong, and the severe measures
authorized by this subdivision should not be used when the
information lost was relatively unimportant or lesser
measures such as those specified in subdivision (e)(1) would
be sufficient to redress the loss.”). But, the district court
expressly considered less drastic sanctions, including those
in Rule 37(e)(1) and lesser sanctions authorized under Rule
37(e)(2), and reasonably concluded that none would likely
be effective. Jones, 2022 WL 3682031 at *12. Considering
the nature of the spoliated ESI and Jones and Nathanson’s
repeated violations of court orders even after monetary
sanctions had been imposed, id., the district court’s
conclusion was not an abuse of discretion.
     b. Admissibility of Expert Testimony
    Jones also argues that the district court abused its
discretion in considering Kuchta’s report. First, Jones
argues that the report was submitted after the deadline for
expert disclosures. That argument, however, ignores the
district court’s order reopening discovery for the limited
purpose of presenting expert reports on spoliation.
    Second, Jones argues that because Kuchta had earlier
served as a special master, he had a conflict of interest. But
Kuchta was jointly retained by the parties to conduct a
forensic analysis of the submitted phones, not appointed by
the district court as a Rule 53 special master. Nor did Jones
demonstrate any actual conflict arising from Kuchta’s
subsequent role as an expert; she speculates that Riot
retained and communicated ex parte with Kuchta while he
served as a party-appointed specialist, but the record does
not support that claim.
    Jones’ argument that the district court abused its
discretion in not holding a Daubert hearing is also
               JONES V. RIOT HOSPITALITY GROUP             11

unconvincing. District courts are not always required to hold
a Daubert hearing to discharge their reliability and relevance
gatekeeping duties under Federal Rule of Evidence 702. See
United States v. Jawara, 474 F.3d 565, 582–83 (9th Cir.
2007). Although Daubert sets out factors for district courts
to consider when determining whether expert testimony is
admissible under Rule 702, they are “illustrative,” and “the
inquiry is flexible.” Wendell v. GlaxoSmithKline LLC, 858
F.3d 1227, 1232 (9th Cir. 2017) (cleaned up). And, “Rule
702 should be applied with a liberal thrust favoring
admission.” Id. (cleaned up). The record makes plain that
Kuchta had extensive technical experience in computer
forensics, including independent research in the type of
mobile phone spoliation analysis he conducted in this case.
And his methodology—comparing the volume of messages
sent and received between mobile phone pairs over time and
looking for digital artifacts of deletions—is sound. Jones
makes much of Kuchta’s acknowledgment that there is no
industry standard for analyzing text message deletions but
gives no plausible reason to doubt the reliability of his
opinions.
II. The Discovery Orders
    Jones claims that the district court’s original order
instructing her and others to hand over their phones to
Kuchta, and its August 10 modification order, were issued
“sua sponte, without notice and without a defense motion
requesting such relief and subsequent briefing.”
    The procedural challenge lacks record support. The
discovery orders were entered only after briefing about the
status of discovery and phone conferences with the parties.
The Case Management Order and the District of Arizona’s
General Order 17-08 expressly authorized the court to
12                JONES V. RIOT HOSPITALITY GROUP

resolve discovery disputes during a telephone conference,
and the CMO specified that the court “may order written
briefing”—but is not required to do so—“if it does not
resolve the dispute during the telephone conference.”
    Jones’ substantive challenge to the orders, based on
privacy interests, is also unpersuasive. To be sure, there is a
strong privacy interest in the contents of mobile phones. See
Victory Processing, LLC v. Fox, 937 F.3d 1218, 1227 (9th
Cir. 2019) (“[T]he interest in protecting privacy applies with
equal force to cellular devices.”). For discovery purposes,
those privacy considerations are generally considered either
in Rule 26(b) proportionality analyses or as part of Rule
26(c) protective orders. See Henson v. Turn, Inc., No. 15-
cv-01497-JSW, 2018 WL 5281629, at *5 (N.D. Cal. Oct. 22,
2018) (collecting cases considering privacy in the
proportionality analysis); Seattle Times Co. v. Rhinehart,
467 U.S. 20, 35 n.21 (1984) (“Although [Rule 26(c)]
contains no specific reference to privacy or to other rights or
interests that may be implicated, such matters are implicit in
the broad purpose and language of the Rule.”). 3 But the
district court granted Jones the only protective order she
sought on privacy grounds. As to proportionality, the
witnesses’ deposition testimony documented that they
exchanged relevant text messages about the case; production
by Jones’ third-party vendor showed that Jones had deleted
messages; and Jones and Nathanson repeatedly failed to
produce discoverable messages in violation of court orders.
The challenged orders were limited to stipulated “search

3
 Cf. Hon. James C. Francis IV, Good Intentions Gone Awry: Privacy as
Proportionality Under Rule 26(b)(1), 59 SAN DIEGO L. REV. 397, 399–
400 (2022) (critiquing proposals to include privacy considerations as part
of the Rule 26(b) proportionality analysis).
                  JONES V. RIOT HOSPITALITY GROUP                       13

terms and the responsive documents . . . that relate to
Plaintiff’s claims against Defendants” and allowed Plaintiff
to review any messages for privilege and relevance before
production to Riot. Jones v. Riot Hosp. Grp. LLC, No. CV-
17-04612-PHX (D. Ariz. Mar. 4, 2020), ECF No. 308, at *1–
2. Thus, even assuming that Jones can raise privacy
concerns on behalf of the witnesses, the district court did not
abuse its discretion.
    Indeed, the primary case cited by Jones supports this
conclusion. In Lewis v. Archer Daniels Midland Co., the
district court noted that courts have allowed neutral experts
to examine electronic devices “when the moving party has
sufficiently demonstrated need and inability to obtain
relevant information by more conventional means and
measures adequate to protect the privacy or commercial
concerns of the party who owns the device are imposed.”
No. 17-14190, 2018 WL 6591999, at *2 (E.D. La. Dec. 14,
2018). This case fits that description, particularly because
Kuchta was told to produce only messages containing
agreed-upon search terms that ensured their relevance to this
case. 4

4
  The other cases that Jones cites are easily distinguished. In one, the
Sixth Circuit noted that “the record lacks evidence that defendants have
intentionally destroyed relevant ESI in the past, and nothing in the record
indicates that defendants are unwilling, or will refuse, to preserve and
produce all relevant ESI in the future.” John B. v. Goetz, 531 F.3d 448,
460 (6th Cir. 2008). In another, the plaintiff’s request for a forensic
examination was based on “mere skepticism that an opposing party has
not produced all relevant information.” Sophia & Chloe, Inc. v. Brighton
Collectibles, Inc., No. 12-cv-2472-AJB, 2013 WL 5212013, at *2 (S.D.
Cal. Sept. 13, 2013). And, in Ramos v. Hopele of Fort Lauderdale, LLC,
the requested examination was “not limited in any way, whether by
search term, date, or identity of the sender or receiver.” No. 17-62100-
CIV, 2018 WL 1383188, at *1 (S.D. Fla. Mar. 19, 2018).
14             JONES V. RIOT HOSPITALITY GROUP

III. Attorneys’ Fees and Costs
    Jones and Nathanson challenge the district court’s award
of attorneys’ fees and costs. We review for abuse of
discretion, Marchand v. Mercy Med. Ctr., 22 F.3d 933, 936
(9th Cir. 1994), and find none.
    The appellants first argue that Jones and Nathanson did
not violate the discovery orders because they received the
text message data from Kuchta in spreadsheet, not PDF,
format. But the orders did not require production in any
particular format, and the parties’ ESI stipulation expressly
contemplated production of digital documents.
    Jones and Nathanson next argue that they could not meet
the court’s deadlines because the extracted messages
contained “over 70,000 pieces of evidence.” But the district
court reasonably rejected this argument based on
Nathanson’s repeated failure to process the messages
received from Kuchta or work with the expert to resolve
technical issues, despite receiving multiple extensions to do
so.
    Nor are we persuaded by the argument that Riot “stopped
Plaintiff’s review” of the documents by filing a motion for
sanctions. Nothing in the motion precluded Jones from
continuing the production process; nor did she respond to the
motion by seeking more time to comply with the court
orders.
    Jones and Nathanson also complain that the August 10
discovery order expanded the relevance criteria of the March
4 order, making compliance harder. But the language from
the two orders—the August 10 order requiring production of
communications “regarding this action or the witnesses’
involvement in this action” and the March 10 order requiring
               JONES V. RIOT HOSPITALITY GROUP           15

production of communications “that relate to Plaintiff’s
claims against Defendants”—is functionally identical.
Jones, 2020 WL 4583628 at *3; Jones, No. CV-17-04612-
PHX (D. Ariz. Mar. 4, 2020), ECF No. 308, at *2.
    Finally, Jones and Nathanson argue that the search terms
applied by Kuchta resulted in overbroad discovery “never
ordered by the District Court.” But Jones agreed to the
search terms.
                     CONCLUSION
   The judgment of the district court is AFFIRMED.