United States District Court, E.D. Virginia, Richmond Division
E. Payne Senior United States District Judge
matter is before the Court on DEFENDANT AND COUNTERCLAIMANT
JELD-WEN, INC.'S MOTION IN LIMINE FOR SANCTIONS
AS TO JOHN PIERCE FOR THE SPOLIATION OF EVIDENCE (ECF No.
1085). For the reasons set forth below, the motion was
denied. See ECF No. 1536.
factual and procedural background underlying this dispute is
described at length in the Court's recent opinion denying
summary judgment on JELD-WEN, Inc.'s
("JELD-WEN") federal and state claims for trade
secret misappropriation. See Summary Judgment Op.
(ECF No. 1424) at 2-7. However, the facts relevant to this
motion are provided here for context.
around March 2015, Steves and Sons, Inc. ("Steves")
hired John Pierce ("Pierce")-a former JELD-WEN
employee-as a consultant to help develop a doorskin
manufacturing plant for Steves and to verify the accuracy of
JELD-WEN's key input costs for doorskins that it
manufactured (which Steves purchased). Some evidence
indicates that Steves paid Pierce to obtain information
covertly from JELD-WEN in furtherance of these goals. Pierce
allegedly did so by traveling to several JELD-WEN doorskin
plants and speaking with employees there. Id. at
point, Pierce realized that JELD-WEN might seek to interfere
with his relationship with Steves given his confidentiality
obligations to JELD-WEN. On April 7, 2015, he sent two
e-mails to Steves' principal officers, Edward Steves and
Sam Steves II (collectively, "the Steves
Brothers''), regarding this possibility. In the
first, he stated that he was "interested in talking with
you some more about the chance that J[ELD-WEN] might try to
make trouble for us if they find out I'm assisting you. .
. . [W]ould it be time well spent to speak with your attorney
about that?" ECF No. 1086-2 (Under Seal). Then, later
that day, he sent another e-mail ("the April 7
E-mail") outlining his "thoughts about potential
J[ELD-WEN] retaliation." Although Pierce pointed out
that he was "not an attorney" and did not
"know much of anything about these things, " he
explained that he had testified in another proceeding in
which JELD-WEN had sued a former plant manager for trade
secret misappropriation when he left to work with a foreign
competitor. Pierce asserted that any misappropriation claim
against him would be hard to prove since he left JELD-WEN
several years ago, and that "[t]here really are very few
if any trade secrets to the manufacturing process/' but
acknowledged that "some of the financial information
that I've passed to you might cause us trouble."
Consequently, Pierce said, "[e]ven if J[ELD-WEN] could
not win any damages, they might distract the three of us with
a suit." ECF No. 1086-1 (Under Seal).
further noted that, "[i]f J[ELD-WEN] did file a suit,
the first things we would see would probably be an order to
send to them copies of all correspondence that we have
exchanged, and all reports that I have provided."
Accordingly, he asked the Steves Brothers whether it would
"be wise for us to take precautions to be sure that we
are not forced to send them anything that would give them
even the most remote basis to continue with
proceedings." He proposed the following steps:
• "Delet[ing] from all of our email servers,
programs, and folders all copies of every email and document
we have exchanged to this point, including every copy that is
in the 'SENT' email folder";
• "Delet[ing] all meeting notes";
• "Hav[ing] me re-compose all of the information
that I've sent you to remove indications that any of it
is verified current information"; and
• "[S]end[ing] you re-drafted versions of all the
information that I have provided so far-to eliminate any
references that indicate that current informa[ti]on was
passed to me by current [JELD-WEN] employees."
these "inexpensive precautions . . . before a discovery
order is received" would allow Pierce and the Steves
Brothers to "comply with any such request with
reasonable documents that might not be incriminating to
anyone." Pierce concluded by saying, "We can't
unring a bell, but perhaps we can replace the bell with one
that's more attractive to Steves . . ., and less
attractive to J[ELD-WEN]." Id.
Steves called Pierce later that evening, but the substance of
their conversation is unknown. Based on a later e-mail from
Pierce to Edward Steves, it appears that Edward Steves may
have requested-either during that call or some other
call-that they communicate only by telephone. See
ECF No. 1087-3 (Under Seal). However, because Pierce's
e-mail followed a detailed e-mail from Pierce to Sam Steves
about molded doorskin manufacturing, it is far from certain
that Pierce and Edward Steves ever agreed to change their
communications in that way.
event, on June 29, 2016, Steves filed its antitrust and
breach of contract claims against JELD-WEN. Summary Judgment
Op. at 7-8. JELD-WEN subsequently served a subpoena on Pierce
in connection with that action on or around January 12, 2017.
See Subpoena Response (ECF No. 1087-5) (Under Seal)
at 3. Pierce initially produced only thirty-five
documents in response to the Subpoena. He indicated that he
had not retained any "analysis, recommendations,
communications, and reports" that he prepared for Steves
or sent to the Steves Brothers, mostly for security reasons.
Pierce also explained that the only responsive documents were
on his personal computer, and that
it was my policy to delete all such copies under my control
within a couple of weeks after sending them to Edward Steves
or Sam Steves. . . . There were never any follow-up questions
and all copies of such documents within my control or
possession were deleted from my personal computer within no
more than 30 days of sending to Edward Steves or Sam Steves.
... I never received any substantial email or physical mail
communications from Edward Steves, or Sam Steves on any
matter, and I never received any email or other electronic or
any paper communication from any other party mentioned
anywhere in this subpoena. In the course of my normal
practice of keeping my personal email "INBOX"
folder clean, the few insignificant emails that I did receive
from Edward Steves or Sam Steves were also deleted soon after
Id. at 3-4. Pierce's document retention approach
notwithstanding, most or all communications between him and
the Steves Brothers appear to have been obtained through
discovery from Steves. Nonetheless, at his deposition on May
1, Pierce produced another sixteen pages of documents,
including notes reflecting Pierce's conversations with
JELD-WEN employees and summarizing issues to discuss with the
thereafter, the Court allowed JELD-WEN to amend its Answer to
add counterclaims against Steves for, inter alia,
misappropriation of JELD-WEN's trade secrets. Although
those claims were based in part on Pierce's conduct, only
Steves was named as a counter-defendant. The Court later
granted separate motions to intervene as counter-defendants
by Pierce and the Steves Brothers, and, as a result, Pierce
is an intervenor-counter-defendant to both misappropriation
claims. Summary Judgment Op. at 8-10. However, JELD-WEN
declined to amend its counterclaims to add Pierce as an
on Pierce's failure to retain documents after he sent the
April 7 E-mail, JELD-WEN now seeks as a spoliation sanction a
jury instruction: (1) that Pierce deleted or failed to retain
relevant documents, which the jury may infer that Pierce did
because the documents were unfavorable to Pierce; and (2)
that the jury may consider Pierce's actions when
assessing his intent and knowledge.
parties quibble over the applicable spoliation standard and
JELD-WEN's burden of proof, so both issues require some
clarification at the outset.
is "the destruction or material alteration of evidence
or to the failure to preserve property for another's use
as evidence in pending or reasonably foreseeable
litigation." Silvestri v. Gen. Motors Corp.,
271 F.3d 583, 590 (4th Cir. 2001). A court's power to
sanction spoliation derives from two sources: (1)
Fed.R.Civ.P. 37(e); and (2) its "inherent power ... to
redress conduct 'which abuses the judicial
process''' Id. (quoting Chambers v.
NASCO, Inc., 501 U.S. 32, 45 (1991)); see also
Jenkins v. Woody, No. 3:15CV355, 2017 WL 362475, at *12
(E.D. Va. Jan. 21, 2017); CAT 3, LLC v. Black Lineage,
Inc., 164 F.Supp.3d 488, 498 (S.D.N.Y. 2016). Courts
have broad discretion when deciding whether to impose
spoliation sanctions. Turner v. United States, 736
F.3d 274, 281 (4th Cir. 2013). However, "the applicable
sanction should be molded to serve the prophylactic,
punitive, and remedial rationales underlying the spoliation
doctrine." Silvestri, 271 F.3d at 590 (internal
quotations omitted). Appropriate purposes inclprophylactic,
punitive, and remedialude: "(1) deter [ring] parties
from engaging in spoliation; (2) plac[ing] the risk of an
erroneous judgment on the party who wrongfully created the
risk; and (3) restor[ing] the prejudiced party to the same
position he would have been in absent the wrongful
destruction of evidence by the opposing party. '"
Eshelman v. Puma Biotechnology, Inc., No.
7:16-CV-18-D, 2017 WL 2483800, at *4 (E.D. N.C. June 7, 2017)
(quoting West v. Goodyear Tire & Rubber
Co., 167 F.3d 776, 779 (2d Cir. 1999)); see
also Vodusek v. Bayliner Marine Corp., 71 F.3d
148, 156 (4th Cir. 1995) (describing similar goals).
37(e) governs the spoliation analysis for electronically
stored information ...