Opinion
No. 21 CV 1094
2023-12-22
PROMIER PRODUCTS, INC., Plaintiff, v. ORION CAPITAL LLC, Defendant.
Peter Michael Siavelis, Vincent P. Schmeltz, III, Catherine Paige Lohse, Scott Timothy Peloza, Denise Vaughn, Kyle Prillaman, Barnes and Thornburg LLP, Chicago, IL, Zachary Lee Barron, Pro Hac Vice, Barnes & Thornburg LLP, Fort Wayne, IN, for Plaintiff. Brian P. O'Connor, Jerome Raymond Weitzel, Paul J. Kozacky, Caitlin Johanna Brown, Kozacky Weitzel McGrath P.C., Chicago, IL, Heather Lynn Carlton, Pro Hac Vice, Carlton Law PLC, Charlottesville, VA, Stanley M. William, Jr., Pro Hac Vice, The Stanley Law Group PLLC, Moneta, VA, for Defendant.
Peter Michael Siavelis, Vincent P. Schmeltz, III, Catherine Paige Lohse, Scott Timothy Peloza, Denise Vaughn, Kyle Prillaman, Barnes and Thornburg LLP, Chicago, IL, Zachary Lee Barron, Pro Hac Vice, Barnes & Thornburg LLP, Fort Wayne, IN, for Plaintiff.
Brian P. O'Connor, Jerome Raymond Weitzel, Paul J. Kozacky, Caitlin Johanna Brown, Kozacky Weitzel McGrath P.C., Chicago, IL, Heather Lynn Carlton, Pro Hac Vice, Carlton Law PLC, Charlottesville, VA, Stanley M. William, Jr., Pro Hac Vice, The Stanley Law Group PLLC, Moneta, VA, for Defendant.
ORDER
Lindsay C. Jenkins, United States District Judge.
Plaintiff Promier Products, Inc. ("Promier") brought this action against Orion Capital LLC ("Orion") seeking a declaratory judgment that it never entered into a joint venture agreement with Orion to sell personal protective equipment ("PPE") during the COVID-19 pandemic, but that in Orion's capacity as Promier's agent to sell PPE, Orion breached its fiduciary duties to Promier and tortiously interfered with Promier's prospective economic advantage. Orion has counterclaimed, bringing various causes of action for breaches of contract, violation of the Illinois Sales Representative Act, accounting, quantum meruit, and conversion. Promier filed a motion to dismiss and strike portions of Orion's counterclaims, [Dkt. 173], which remains pending with the Court. Judge McShain has overseen discovery in this case, which has proven contentious and replete with motion practice. Before the Court is one such dispute—Promier's motion for sanctions against Orion under Rule 37(a)(5)(A) and (e). [Dkt. 180.]
Promier's sanction motion seeks the following relief: an adverse inference instruction to the jury at trial; an order allowing Promier to reopen one deposition and conduct a second deposition; and costs and fees for bringing this motion and a prior discovery motion from January 31, 2023, that sought to extend the fact discovery deadline. The bases for the motion are (i) Orion's destruction of pertinent WhatsApp messages, a form of ESI, and (ii) its
WhatsApp is a messaging platform where all messages are encrypted, meaning no third party outside of the chat, including WhatsApp, can review or retrieve the communications. United States v. Otunyo, 2020 WL 2065041, at *2 n.2 (D.D.C. Apr. 28, 2020).
belated production of text messages, which were produced only after Promier sought discovery from a third party. [Dkt. 180 at 12, 14.] On September 22, 2023, after the motion was fully briefed, [Dkts. 180, 190, 196], Judge McShain issued a Report and Recommendation ("Report"). [Dkt. 217.] The Report advised this Court to deny Promier's motion for sanctions under Rule 37(e) arising out of the destruction of the WhatsApp messages. The Report concluded that Promier's motion for sanctions was untimely, was a motion for reconsideration in disguise, and that its spoliation arguments failed on the merits. As a consequence, the Report concluded that Promier's request for attorney's fees and costs incurred in bringing the sanctions motion should be denied. The Report also granted Promier's request pursuant to Rule 37(a)(5)(A) for costs and fees incurred in bringing the January 31, 2023, discovery motion. Finally, it denied Promier's request to take certain depositions. [Id. at 26-27.]
Citations to docket filings generally refer to the electronic pagination provided by CM/ECF, which may not be consistent with page numbers in the underlying documents.
Promier, through 40 pages of briefing and roughly 150 pages of exhibits, has objected to the Report, reasserting its request for an adverse inference instruction at trial and requesting limited fact discovery related to the spoliation. For the reasons that follow, the Court concludes that the sanctions motion was not timely filed and thus largely denies the requested relief. But because the Court has serious concerns regarding Orion's handling of the WhatsApp messages, Promier may reraise its request for an adverse inference as a motion in limine at the appropriate time consistent with future Court instructions.
This is in addition to the 30 pages of briefing and over 100 pages of exhibits submitted by Promier in its initial briefing before Judge McShain.
I. Background
The parties' relationship began to deteriorate in August 2020 over disagreements regarding the amount of money Orion should receive for assisting Promier in selling PPE. [Dkt. 180 at 6-7.] Orion retained counsel to represent its interests during these discussions, which Promier argues triggered Orion's duty to preserve evidence. [Id.] Promier filed this suit in February 2021, [Dkt. 1], and in January 2022, Promier issued discovery requests to Orion seeking "documents evidencing your relationships with third-party PPE suppliers, other than Promier, from January 1, 2020 through the present, including but not limited to agreements for you to sell or supply PPE to customers." [Dkt. 180-1 ¶ 4 (emphasis in original).]
The Report found the duty to preserve arose no later than January 6, 2021, when Orion served a demand letter on Promier. [Dkt. 217 at 17.]
Orion's CEO, Richard Hall ("Hall"), was deposed for the first time in this case on September 28, 2022. [Dkt. 217 at 3.] Days before the deposition occurred, counsel for the parties conferred on whether and to what extent Hall had WhatsApp communications related to the sale of PPE. [Id. at 2-3.] Orion responded that Hall had a single WhatsApp communication in his possession, the substance of which had already been produced. [Dkt. 180-4 at 2.] Hall initially testified at his deposition that he deleted WhatsApp from his phone by the end of 2020, but after being confronted with evidence that he sent a WhatsApp
message on January 27, 2021, he later said the deletion may have been in the "early first quarter" of 2021. [Dkt. 217 at 3.] There is no question Hall deleted WhatsApp after the parties' disagreements began around August 2020, and after Orion sent Promier a demand letter. Hall claimed he deleted the app because of the number of fraudulent messages he received for bogus PPE deals. [Id.]
Based at least in part on Hall's representation that he no longer had his WhatsApp messages, Promier began issuing subpoenas in the fall of 2022 to various third parties who may have communicated with Hall over the app, including Stephen Ryan, Matt Doherty, and Zach Fuentes. [Dkt. 217 at 10-11.] By November 18, 2022, Promier had deposed and received documents from Ryan. [Dkt. 229 at 8.] Doherty was served with a subpoena on October 1, 2022, and Promier received documents from and deposed Doherty by the end of 2022. [Dkt. 217 at 11.] Included in Doherty's production was a WhatsApp group chat chain showing that Mr. Hall "left" the chat on May 17, 2022. [Dkt. 115 ¶ 6.] It took the longest to receive information from Fuentes, but by January 17, 2023, Promier knew that Fuentes no longer had access to his WhatsApp messages. [Dkt. 229 at 8.]
Carter New, another third-party PPE seller, was not subpoenaed during this initial round of discovery. This is so despite Promier listing New in its January 10, 2022, initial Rule 26 disclosures as someone involved in "PPE sales that Richard Hall engaged in that were not in conjunction with Promier", [Dkt. 190-4 at 7], and Orion's production of an email thread in July 2022 which established Hall and New worked together to sell PPE to Duke University in the fall of 2022. [Dkt. 122-1.]
On January 27, 2023, Hall was deposed again, this time in his capacity as an Orion corporate representative. [Dkt. 217 at 4.] Promier questioned Hall on his communications with New during this deposition, including whether New and Hall discussed PPE sales over WhatsApp, and in particular, sales to Duke University. [Id.] Hall responded by saying that he believed any messages with New about PPE would have been sent over text message. [Id.] As of this deposition, Orion had not produced any text messages between Hall and New.
Shortly after Hall's second deposition, and on the day fact discovery was set to close, [Dkt. 107], Promier moved for another extension of the fact discovery deadline. [Dkt. 115.] The "sole purpose" of Promier's motion was to obtain documents and testimony from Carter New "related to spoliation of evidence by Richard Hall." [Id. at 1.] Orion objected to the motion, arguing Promier was dilatory in seeking discovery from New. [Dkt. 122.] Orion admitted, however, that a series of text messages between New and Hall from July 2020 through January 2021 that were erroneously withheld from production had just been produced on February 8, 2023. [Id. at 4.]
The Court had recently extended the fact discovery deadline on certain topics from December 7, 2022, to January 31, 2023. [Dkt. 107.]
On February 24, 2023, Judge McShain granted Promier's motion in part, allowing some limited discovery to proceed. The Order permitted Promier to issue a subpoena to New for relevant communications from Hall. [Dkt. 125.] She did not allow Promier to depose New, however, because Promier was not diligent in seeking his discovery. [Id. at 2-3.] Promier issued the subpoena to New on March 6, 2023, and New informed Promier on March 23, 2023, that "he did not have any access to any iMessages or WhatsApp messages" with
Hall. [Dkt. 217 at 7.] In addition to this representation from New, Promier obtained a declaration from New that Judge McShain later struck in part as "the functional equivalent of deposition testimony", in violation of the February 24, 2023, order. [Dkt. 171 at 5-6.]
While the resolution of the New declaration was pending, on April 28, 2023, the parties filed a joint status report where Promier noted that it planned "to file a motion for spoliation against Orion for deleting WhatsApp messages and other documents." [Dkt. 160 at 11.] Three days prior, the Court allowed Promier to amend its complaint and noted "the parties have just about concluded fact discovery." [Dkt. 158.]
On June 12, 2023, again the day fact discovery was set to close (after a series of additional limited extensions by Judge McShain), Promier filed the instant motion for sanctions. Promier seeks an adverse inference "that the jury be instructed to presume that the spoliated information [i.e., the WhatsApp messages] was unfavorable to Orion and would have supported Promier's breach of fiduciary duty and tortious interference claims" and that Promier be allowed to "depose Richard Hall and Carter New on the substance of the text messages produced by Orion on February 8, 202[3]." [Dkt. 180 at 14.] As part of Orion's response to Promier's motion, Hall filed a declaration purportedly clarifying that he had limited conversations with New on WhatsApp, that he re-downloaded WhatsApp in February 2022 to facilitate communications with family members during a tragedy, and that he has no recollection of deleting his WhatsApp account in May 2022. [Dkt. 190-5 at ¶ 6.]
Judge McShain's Report, issued on September 22, 2023, recommended this Court deny the motion for sanctions because it was not timely filed, it seeks relief that has already been rejected, and it fails on the merits. Promier objects to these conclusions.
II. Legal Standard
Federal Rule of Civil Procedure 72 governs this Court's evaluation of the Report. The standard of review depends on whether the matter raised is "nondispositive" or "dispositive." A district judge reverses a nondispositive matter only where the Magistrate's decision is "clearly erroneous or is contrary to law", whereas a dispositive matter is reviewed de novo to the extent a party objects to the recommended disposition. FED. R. CIV. P. 72(a)(b). A motion for sanctions that seeks an adverse inference is considered dispositive. CaramelCrisp LLC v. Putnam, 2022 WL 1228191, at *1 n.1 (Apr. 26, 2022); Gruenstein v. Browning, 2022 WL 3213261, at *4, n.6 (N.D. Ill. June 21, 2022); Pable v. Chicago Transit Auth., 2023 WL 2333414 at *18 (Mar. 2, 2023) ("as cases from the Northern District of Illinois have recognized, a request for sanctions or 'other measures' under Rule 37(e) presents a dispositive matter-particularly when, as in this case, the movant seeks dismissal or a mandatory adverse— inference instruction.") The Court therefore reviews the Report de novo.
III. Analysis
A. Timeliness
Before analyzing the request for sanctions on the merits under Rule 37(e), the Report first examined whether Promier's request for sanctions was timely. [Dkt. 217 at 9-16]. This requires the Court to consider whether the motion was filed without "unreasonable delay." Brandt v. Vulcan, Inc., 30 F.3d 752, 756 (7th Cir. 1994); Bush v. Dep't of Human Servs., 714 Fed. Appx. 180, 183 (3rd Cir. 2017); Centagon, Inc. v. Bd. of Dirs. of 1212 Lake
Shore Drive Condo. Ass'n, 2002 WL 356483, at *5 (N.D. Ill. Mar. 5, 2002); Benet v. Schwartz, 1995 WL 549125, at *1 (N.D. Ill. Sept. 8, 1995); see also MGA Entm't, Inc. v. Nat'l Prods., 2012 WL 4052023, at *4 (C.D. Cal. Sept. 14, 2012) ("[i]t is generally agreed that a motion for sanctions, regardless of the source of authority for the imposition of sanctions, must be timely filed.") Because Rule 37 does not proscribe a specific time for filing a motion for sanctions, "[t]he timeliness of a motion for sanctions depends on such factors as when the movant learned of the discovery violation, how long he waited before bringing it to the court's attention, and whether discovery has been completed." Long v. Howard Univ., 561 F.Supp.2d 85, 91 (D.D.C. 2008) (citing Brandt, 30 F.3d at 756).
The Report advises this Court to find Promier's motion untimely for three main reasons: (i) there was an impermissible and unexplained gap between when Promier learned Hall deleted his WhatsApp messages (after the duty to preserve arose) and when it filed the motion; (ii) fact discovery was only open for certain, nonrelevant purposes by the time the motion was filed; and (iii) the motion requests discovery that Promier failed to timely pursue. [Dkt. 217 at 9-14.]
In support of its objections, Promier first argues that the Report failed to use the correct standard for addressing timeliness. [Dkt. 229 at 4-6.] The Report relies on Gruenstein for identifying what factors a court should consider when determining whether a motion for sanctions was timely filed. [Dkt. 217 at 9-10; Gruenstein v. Browning, 2022 WL 3213261 (N.D. Ill. June 21, 2022).] Although Gruenstein is a case decided in this district, Promier contends it is not proper authority because Gruenstein relies (in relevant part) on two out-of-district cases—Goodman and GMS Indus. [Dkt. 229 at 4.]
Full citations are Goodman v. Praxair Servs., Inc., 632 F.Supp.2d 494 (D. Md. 2009); and GMS Indus. Supply, Inc. v. G&S Supply, LLC, 2022 WL 853626 (E.D. Va. Mar. 22, 2022).
Promier argues that Goodman imposed "new criteria" on the moving party to file a motion for sanctions "as soon as reasonably possible after discovery of the facts that underlie the motion." Goodman, 632 F.Supp.2d at 508. According to Promier, this criterion stems from a District of Maryland local rule that "encourages" parties to stipulate to discovery schedules for motions that do not "have automatically-imposed deadlines", including motions for sanctions. [Dkt. 229 at 5-6.] Promier concludes no "litigant could guess that it would be held to" this timeliness standard. [Id. at 6.]
The Court disagrees with Promier that Gruenstein or Goodman created a new standard that imposes additional or different obligations on a party moving for sanctions. As early as 1994, the Seventh Circuit made clear that a litigant must file a motion for sanctions without "unreasonable delay." Brandt, 30 F.3d at 756. What constitutes "unreasonable delay" or "as soon as reasonably possible" depends on the facts of each case. See Brandt, 30 F.3d at 756; Goodman, 632 F.Supp.2d at 508 ("resolution of spoliation motions are fact intensive").
The underlying tests used to evaluate "unreasonable delay" and "as soon as reasonably possible" substantially overlap. As cited above, courts applying Brandt have found the following factors to be relevant: "when the movant learned of the discovery violation, how long he waited before bringing it to the court's attention, and whether discovery has been completed." Long v. Howard Univ., 561 F.Supp.2d
at 91. Similarly, Goodman surveyed cases from a variety of federal jurisdictions in its assessment of the relevant timing considerations, Goodman at 506-508, which GMS Indus., and Gruenstein summarized as follows:
[H]ow long after the close of discovery the relevant spoliation motion has been made; the temporal proximity between a spoliation motion and motions for summary judgment; whether the spoliation [motion] was made on the eve of trial; whether there was any governing deadline for filing spoliation motions in the scheduling order issued pursuant to Federal Rule 16(b) or by local rule; and the explanation of the moving party as to why the motion was not filed earlier.
Gruenstein, 2022 WL 3213261, at *3 (quoting GMS Indus., 2022 WL 853626, at *4). These factors, and those articulated in Brandt's "unreasonable delay" framework are, at the very least, similar. Both focus on the period during which the motion could have been filed versus when it was actually filed, and the reasons why the movant did not seek relief sooner. Ultimately, this Court evaluates whether the relief requested—leave to take two depositions and a sanction in the form of an adverse inference instruction—was sought without "unreasonable delay," Brandt, 30 F.3d at 756, bearing in mind some of the considerations identified by Goodman and Gruenstein.
Promier argues that Goodman "should be given nominal weight, if any", [Dkt. 229 at 6 n.4], but cases in this district on which Promier relies have cited to Goodman's timeliness analysis favorably. O'Connor v. Ford Motor Co., 683 F. Supp.3d 793, 796-97 (N.D. Ill. 2023).
B. Timeliness of the Request to Depose Hall and New.
The Court concludes that Promier's June 12, 2023, request to depose Richard Hall and Carter New on the substance of text messages produced by Orion on February 8, 2023, [Dkt. 180 at 14] was untimely.
First, Promier's requests to depose Hall (and New) are inconsistent with previous representations it made to this Court about the extent of discovery. On March 31, 2023, in connection with its motion for leave to amend its complaint, Promier argued that leave to amend was warranted in part, "[b]ecause Promier does not seek additional discovery or depositions." [Dkt. 143-1 at 9.] Of course, the Court appreciates the distinction between traditional fact discovery depositions and seeking to depose a witness as a sanction for a party's misconduct. [Dkt. 239 at 10-11]. But Promier was in receipt of the text messages produced in February 2023 when it filed its motion for leave to amend. At the very least, this knowledge gave Promier reason to believe there might be a need for additional depositions. Instead, Promier affirmatively represented that additional depositions were not necessary. A similar representation came in the parties April 28, 2023, joint status report, where Promier noted that it planned on filing a "motion for spoliation against Orion for deleting WhatsApp messages and other documents" but made no mention of the need to take any depositions on this issue. [Dkt. 160 at 11.]
More fundamentally, Promier offers very little explanation in its initial motion for sanctions explaining why it should be allowed to depose Hall on the substance of his text messages with New. [See Dkt. 180.] Promier argued that the request to depose New and Hall was an appropriate "follow[ ] up" to its initial motion seeking documents from and to depose New, but Promier had received the key text messages
from Orion by February 8, 2023. [Dkt. 196 at 8, 12.] No additional factual predicate was required for Promier to raise the need to depose Hall on the substance of these messages—either in a new motion or in connection with its then-pending January 31, 2023, motion. Indeed, after Judge McShain ruled on Promier's motion on February 24, 2023, [Dkt. 125], Promier asked Judge McShain to reconsider aspects of the Order, but never requested the opportunity to re-depose Hall or New. [See Dkts. 127, 129.]
Instead, Promier waited another four months until June 12, 2023, the then-last day of discovery, to request permission to take the depositions. And it did so without providing a cogent explanation for why the delay occurred. This request was not timely, particularly where Promier argues that the texts between Hall and New are highly probative and helpful to their case. Media Communs., Inc. v. Multimedia, Sign Up, Inc., 1999 WL 1212652, at *4 (N.D. Ill. Dec. 14, 1999) (finding spoliation motion untimely where movant waited four months after learning of violation despite arguing the evidence was "crucial" to its case). Promier unreasonably delayed in seeking to depose Hall based on his text messages with New. Brandt, 30 F.3d at 756.
These conclusions also lead the Court to conclude that Promier's request to depose New was untimely. But other reasons compel this result, too. The extent of Promier's argument for why it should be able to depose New is that it is an appropriate "ameliorative measure" for Orion's belated production of the Hall-New text messages. [Dkt. 180 at 12-13; Dkt. 196 at 12.] But Judge McShain was aware of Orion's failure to timely produce the text messages when Promier's request to depose New was denied on February 24, 2023. Promier does not attempt to explain any change in circumstance that warrants a different outcome, nor has the Court identified one. [Dkt. 217 at 6, 14, 27]. Promier's request appears to be a gratuitous addition to their request for costs in bringing the "Motion for Limited Extension of Discovery." [Dkt. 180 at 12-13; see also Dkt. 229 at 12 ("if the Court is not inclined to allow two limited depositions, it can limit Promier's relief to the adverse inference it sought rather than bar it from relief altogether.").] The Court concludes that the award of fees and costs associated with bringing the January 31, 2023, motion is a sufficient ameliorative measure for the untimely production. Promier's motion for sanctions is denied as untimely to the extent it also seeks to depose Hall or New.
Promier's improper attempt to solicit deposition-like testimony in the procurement of the New Declaration in violation of this Order is another reason for denying this request.
C. Timeliness of the Request for an Adverse Inference Instruction.
The Report also concluded that Promier's request for an adverse inference instruction at trial based on Hall's destruction of his WhatsApp messages was untimely. This conclusion was based both on Promier's failure to diligently pursue third-party discovery against New in the fall of 2022 (which would have permitted Promier to file its spoliation motion much earlier), and because Promier waited an additional three months before filing its Rule 37(e) motion after it had fully developed the factual bases for its spoliation claim. [Dkt. 217 at 11-12.]
After careful review of the arguments raised in the briefs and the applicable case law, the Court concludes Promier's sanctions motion as to the adverse inference instruction was untimely. Some factors in the timeliness analysis weigh in favor of
allowing Promier the opportunity to seek the instruction. First, there were no deadlines for sanctions or dispositive motions, nor has trial been scheduled. Gruenstein, 2022 WL 3213261, at *3. Second, Promier stated it was investigating potential spoliation in both its January 31, 2023, motion to extend the fact discovery deadline, [Dkt. 115], and Promier raised its intention to file a spoliation motion in the April 28, 2023, joint status report (although the motion was not filed for another six weeks and on the last day of fact discovery). [Dkt. 160.] But these factors are not as important as the lag between when Promier had the information it needed to file the motion and when the motion was filed. Long v. Howard Univ., 561 F.Supp.2d at 91 ("[t]he timeliness of a motion for sanctions depends on such factors as when the movant learned of the discovery violation, how long he waited before bringing it to the court's attention, and whether discovery has been completed"); Goodman, at 508 ("[t]he lesson to be learned from the cases that have sought to define when a spoliation motion should be filed in order to be timely is that there is a particular need for these motions to be filed as soon as reasonably possible after discovery of the facts that underlie the motion.")
Promier learned in September 2022 that Hall deleted his WhatsApp account after the duty to preserve arose and he no longer had access to his messages. [Dkt. 217 at 17.] As Promier correctly notes, a motion for sanctions arguably would have been premature at that point because a Rule 37(e) motion requires the moving party to show, in part, that "the lost ESI cannot be restored or replaced through additional discovery." DR Distribs., LLC v. 21 Century Smoking, Inc., 513 F. Supp. 3d 839, 958 (N.D. Ill. 2021). To determine whether the WhatsApp messages could be reproduced from other sources, Promier subpoenaed several third parties, including Stephen Ryan, Matt Doherty, and Zach Fuentes. By January 17, 2023, Promier knew the status of the WhatsApp messages for all these individuals, [Dkt. 229 at 8], including that Fuentes "deleted" his WhatsApp messages. [Dkt. 180 at 2.] Thus, Promier knew that it had a potential spoliation claim against Hall for WhatsApp messages with Fuentes by mid-January 2023.
Promier says the basis for the delay was that it had not yet determined whether Hall's WhatsApp messages with New could be procured from New directly. But in January 2022, Promier identified New as someone "likely to have discoverable information" because he was involved in "PPE sales that Richard Hall engaged in that were not in conjunction with Promier." [Dkt. 190-4 at 7.] An email thread between Hall, New, and Duke produced by Orion in July 2022 confirms this. [Dkt. 122-1.] Despite this knowledge (or access to this knowledge), Promier did not issue a subpoena request to New in the fall of 2022 for Hall's WhatsApp messages.
Promier argues that it did not realize New was a material witness until January 2023 after Hall's second deposition, and that it would have realized this much sooner had Orion produced Hall's text messages earlier. [Dkt. 229 at 8-9.] Without the text messages, Promier argues, it had only the single email to deduce that "New was involved in sales that undercut Promier with its customers." [Id. at 8 n.5.] Orion's timely production of the text messages undoubtedly would have provided additional evidence of New's relevance to the case. Still, in the fall of 2022 when Promier was identifying sources from which to replicate Hall's WhatsApp messages with third-party PPE providers, Promier knew of New's relevance to the case and had access to an email confirming
it. Ultimately, Promier's failure to seek discovery from New in the fall of 2022 alone is not the deciding factor on the question whether the sanctions motion was untimely, but it does inform the overall question of reasonableness. See Brandt, 30 F.3d at 756; Goodman, 632 F.Supp.2d at 508 ("resolution of spoliation motions are fact intensive.")
Promier characterizes the relevant email as a "needle-in-a-haystack", [Dkt. 229 at 9], but the email in question appears to be highly relevant to Hall's dealings with Duke, a central component of Promier's counterclaim, and New's involvement is facially apparent from the initial email in the thread. [See Dkt. 122-1.]
To seek sanctions for Hall's deletion of his WhatsApp communications, Promier needed to determine whether the relevant messages could be located from other sources. Rule 37(e); DR Distribs., LLC, 513 F. Supp. 3d at 958. As just discussed, Promier had that knowledge for everyone except New by mid-January 2023. By March 2023, New confirmed for Promier that he and Hall communicated over WhatsApp, but that he could not reproduce the WhatsApp messages. [Dkt. 217 at 7.] Promier does not dispute this point [Dkt. 229 at 10 ("By March 23, 2023, Promier had learned that Carter New no longer had any communications from 2020 or 2021, but that he had discussed PPE sales with Mr. Hall over WhatsApp.")] In the Court's view, nothing more was needed, and Promier could have proceeded to file its motion then based on New's representations. Instead, Promier waited three more months (and until the last day of fact discovery) to move for sanctions. The extent of Promier's delay distinguishes this case from Gruenstein, on which Promier initially relied, [see Dkt. 180 at 11-14], where a party moved for sanctions roughly one month after confirming the spoliated ESI could not be recovered from another source. Gruenstein, 2022 WL 3213261 at *4. Likewise, in O'Connor, another case on which Promier relies, the court found the spoliation motion timely after the moving party filed its motion "within one month" of establishing the full factual predicate for its motion, even though it had some of the evidence 15 months prior. O'Connor, 683 F.Supp.3d at 796.
Promier defends the delay by arguing it could not have moved for sanctions until Judge McShain ruled on the propriety of the New declaration. [Dkt. 229 at 10.] More specifically, Promier contends that Orion moved to strike the entire New declaration, including the paragraph establishing that neither New nor Orion "still possessed" the WhatsApp information, which "was likely relevant to the case, insofar as the communications likely pertained" to Duke University. [Id.] The Court disagrees. Orion's motion did not challenge the declaration's recitation of historical information about WhatsApp and the ability to recover messages. [Dkt. 155 at 3-6.] At bottom, then, Promier knew about the Hall-New connection to PPE sales in January 2022. Upon learning in September 2022 that Hall had deleted his WhatsApp account, it did not subpoena New for his communications with Hall. And no additional evidence of spoliation was developed after March 2023, when New informed Promier that he no longer had the communications.
These circumstances, taken together, lead the Court to conclude that Promier unreasonably delayed in bringing the motion for sanctions and its objections to the Report are therefore overruled on that basis. Brandt, 30 F.3d at 756; Media Communs., Inc., 1999 WL 1212652, at *4; Guo v. Xia, 2019 WL 13295855, at *2 (E.D. Va. June 26, 2019). Having overruled its objections,
the Court denies Promier's request for fees and costs in filing this motion.
* * *
The above ruling is not an endorsement of Hall or Orion's conduct. Far from it. The Court has serious concerns regarding Hall's handling of his WhatsApp account, which the Report found—and Orion does not dispute—meets the threshold requirements for the spoliation of ESI. [Dkt. 217 at 16-18.] While this ruling obviates the need for the Court to evaluate the Report's conclusions on the merits that Promier was not prejudiced by the deletion, and that Orion did not intend to spoliate the evidence, [id. at 19-25], Promier's most recent brief suggests that Hall regained access to his pre-January 2021 messages as late as May 2022, even though he deleted the app from his phone in January 2021. [See Dkt. 229 at 23-25.] If true, this could help establish Hall acted in bad faith.
Accordingly, the Court will permit Promier to seek an adverse inference instruction on this issue in preparation for trial consistent with future instructions from the Court. Martinez v. City of Chicago, 2016 WL 3538823, at *23 (N.D. Ill. June 29, 2016) (on a motion in limine, "in order to be eligible for an adverse inference instruction, Plaintiff must demonstrate that (a) the documents contained adverse information, and (b) that Defendants 'intentionally destroyed the documents in bad faith.'") (quoting Norman-Nunnery v. Madison Area Tech. College, 625 F.3d 422, 428 (7th Cir. 2010)). The Court defers any decision on the merits of whether an adverse inference instruction is warranted based on Hall's handling of his WhatsApp messages until a time closer to trial.
For the avoidance of doubt, Promier may not seek additional discovery on this issue. If, after the Court has ruled on dispositive motions, Promier wishes to pursue the adverse inference issue in limine, the Court will hold a status hearing in preparation for trial to discuss the matter. Orion should be prepared at that hearing to explain whether Hall regained access to his pre-January 2021 WhatsApp messages when he re-downloaded the application in February 2022. [Dkt. 190-5; Dkt. 234 at 12-13.]
IV. Conclusion
Based on its de novo review, the Court adopts and modifies the Report. Promier's motion for sanctions is largely denied, but the Court will allow Promier to seek an appropriate curative instruction in limine.