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Blank v. Tomorrow PCS, L.L.C.

United States District Court, E.D. Louisiana

June 27, 2018


         SECTION "S" (3)



         Before the Court are three motions: (1) Plaintiffs' Motion for Sanctions for Spoliation of Evidence [Doc. #116]; (2) Defendants' Motion to Compel [Doc. #125]; and (3) Defendants' Motion to Quash or Modify Subpoena [Doc. #131]. Having reviewed the pleadings and the case law, the Court rules as follows.

         I. Background

         The background of this lawsuit has been adequately outlined by this and the District Court, and the Court need not do so again. Blank v. Tomorrow, PCS, L.L.C., Civ. A. No. 16-11092, 2017 WL 4310675 (E.D. La. Sept. 28, 2017).

         II. Plaintiffs' Motion for Sanctions for Spoliation of Evidence

         As this Court is aware, on October 23, 2017, plaintiffs propounded written discovery requests on Tomorrow Telecom Incorporated (“Telecom”) that specifically requested e-mails from Telecom employees. On March 8, 2018, nearly five months after plaintiffs first requested them, Telecom issued its first substantive responses to plaintiffs' e-mail requests. Telecom claimed that all responsive e-mails had been deleted by Yahoo! on or about December 31, 2017. Plaintiffs maintain that Telecom had numerous opportunities to inform Yahoo! that critical e-mails for their case had been destroyed but made no mention of it. Had defendants been forthcoming about the destruction of the e-mails, plaintiffs argue that they and/or defendants could have recovered them.

         Telecom's March 8, 2018 responses indicated that at least 19 former Telecom employees communicated with plaintiffs or regarding plaintiffs while using their email addresses specifically regarding overtime or chargebacks. Thus, plaintiffs contend that Telecom knew that the e-mails it failed to preserve contained communications relevant to plaintiffs' claims for unpaid overtime and chargebacks.

         Plaintiffs argue that Telecom was in control of and had a duty to preserve the e-mails since they asked for them on October 23, 2017. Plaintiffs maintain that Telecom had control over the e-mails. Four of the e-mail account holders in question - Jong Park, Catherine Kim, Jeff Baik, and Michael Lim - were all current employees of defendants who have been active in this litigation. Jong Park was deposed; Catherine Kim, Jeff Baik, and Jong Park have aided in responding to plaintiffs' discovery requests since January 5, 2018; and Michael Lim submitted a sworn verification in support of Telecom's motion to dismiss.

         Plaintiffs contend that Telecom's counsel purportedly issued a litigation hold, but it was obviously not communicated or maintained as the e-mails were nevertheless totally destroyed. Rather, Telecom engaged in a wait-and-see game that resulted in the deletion of highly relevant emails. Plaintiffs argue that the content of the e-mails highlights how devastating their deletion is to their case. These e-mails not only contain evidence of Telecom's control over Tomorrow PCS, but also other sub-dealers in other states. Michael Lim, Vice President of Telecom, sent e-mails to the “GMs” of the sub-dealers imposing on them a new “Charge Back Policy” being used by “Team Albuquerque.” Lim further instructs these “GMs” how to implement the policy, by “changing the line ‘Tomorrow Talk' [in the attached document] to your company [name].” Then, Jeff Baik, an Accounting Associate for Telecom, sent e-mails to the same “GMs, ” informing them of Telecom's new incentive system. And Steve Shin, the Chief Financial Officer of Telecom, sent an e-mail to many of the same people to inform them of the June incentive plan for Telecom.

         Plaintiffs maintain that Telecom's failure to preserve e-mails could only be an intentional act designed to deprive them of evidence that supports their claim that Telecom is liable as an employer under the FLSA and that its influence reached far wider than Louisiana and Texas. They ask the Court to sanction Telecom with an adverse presumption that these e-mails contain evidence of: 1) Telecom's status as plaintiffs' employer; 2) Telecom's control over Tomorrow PCS and its employees regarding employee compensation and the implementation of chargebacks; 3) Telecom's operations in other states and control over other affiliated sub-dealer locations.

         Defendants argue that they supplemented their responses to discovery and produced 366 pages of e-mails from @tomorrowtelecom accounts that were discovered in a separate folder. Telecom does not dispute that it had a duty to preserve certain e-mail correspondence regarding its compensation methods and plaintiffs' employment but contends that it actively engaged to preserve all relevant ESI within its possession, custody, and control. They maintain that a litigation hold was issued to Jong Park, Michael Lim, and Catherine Kim on August 26, 2016, notifying them of their obligation to preserve company records related to the employment of Blank and other Customer Service Representatives during the three years prior the filing of the lawsuit. The litigation hold also called for the preservation of e-mail messages and attachments, backup e-mail files, and deleted e-mails.

         Telecom notes that although it requested the preservation of company e-mails from its employees, it cannot control the maintenance of each individual employees' @tomorrowtelecom account nor can it unilaterally review and collect data from the employees' private accounts. Telecom employees set up personal e-mail accounts with Yahoo!, an independent carrier, which is linked to an account associated with Telecom. Because these materials are not initiated or maintained on a company server, Telecom has no access to them. Even Lindsay Blank testified that Tomorrow PCS did not host her @tomorrowpcs e-mail account.

         Telecom maintains that it had no knowledge regarding the e-mails' relevance because an attempt to retrieve the e-mails was not made until after the Court issued its February 26, 2018 Order wherein it sustained many of Telecom's objections to plaintiffs' discovery requests. Lim then conducted an inquiry regarding the unilateral deletion of e-mails by Yahoo! and discovered that this was an ongoing problem with Yahoo! e-mail account holders. Telecom then produced the results of Lim's inquiry revealing customer complaints to Yahoo! regarding the unilateral deletion of e-mails to customers.

         Telecom notes that it did not destroy electronically stored information (“ESI”), and plaintiffs have failed to provide any evidence indicating that Telecom destroyed ESI. Yahoo! is not a party to this action, and the manner in which Yahoo! controls its user accounts is not determinative here. Telecom argues that plaintiffs' motion itself proves that the e-mails were not “totally destroyed” because they purport to have obtained copies of the e-mails from other sources.

         Telecom notes that plaintiffs issued a subpoena to Yahoo!, as instructed by the Court on numerous occasions, and Yahoo! provided notice that it would respond to the subpoena within fifteen days. Finally, Telecom has recently recovered responsive information and provided it to plaintiffs. Therefore, it maintains that there has been no spoliation of ESI.

         To impose an adverse inference, Telecom maintains that the evidence must show that a party had a dishonest, deceptive or culpable state of mind for the court to find that the party acted in bad faith. Telecom contends that plaintiffs have no direct proof suggesting that Telecom's conduct was willful or the e-mails even relevant. It argues that plaintiffs have refused to take depositions of defendants' witnesses, despite court order and defendants' offering of multiple dates on at least three occasions. Unlike case law cited by plaintiffs, there ...

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