Establishing “Intent to Deprive” Under Rule 37(e): District Court Imposes Adverse Inference Instruction Based on Timing of Spoliation
This blog has previously discussed the challenges a litigant faces in moving for the so-called “severe sanctions” pursuant to amended Rule 37(e). With the 2015 amendment to Rule 37(e), a moving party seeking severe spoliation sanctions must establish that the opposing party “acted with the intent to deprive” the requesting party of the electronically-stored information (ESI) in the litigation at issue. In the absence of an explicit admission that a responding party deleted ESI with the subjective intent to deprive the requesting party of the same, a requesting party often faces an uphill battle establishing the “intent to deprive” requirement. A recent decision from the District Court for the District of Arizona provides an example of the type of circumstantial evidence – including the timing of the spoliation at issue – a moving party can rely on to potentially support the imposition of severe sanctions. In Federal Trade Commission v. Noland, the Federal Trade Commission (FTC) was investigating defendant Noland and his business, Success By Health (“SBH”), for allegedly “operat[ing] as an illegal pyramid scheme” and making false statements to SBH’s affiliates. In May 2019, Noland inadvertently discovered the FTC’s investigation and, when the FTC realized Noland found out about the investigation, the FTC advised SBH and Noland to preserve relevant documents. The day after...