United States District Court, D. Oregon
Allyson B. Baker, Sameer P. Sheikh, Erin Z. Cass, and Michael
J. Marusak, VENABLE LLP, Massachusetts Avenue, Ciaran P. A.
Connelly, BALL JANIK LLP, Attorneys for Plaintiff.
R. Ast, SCHARNHORST AST KENNARD GRIFFIN PC, Stephen P.
Yoshida and Michael J. Farrell, MB LAW GROUP LLP, Attorneys
for Defendant Ethan Schulton.
Stephen Nakamura, MERLE BROWN & NAKAMURA PC, John C.
Rothermich, K&L GATES LLP, Defendant ScholarChip Card,
OPINION AND ORDER ON PLAINTIFF'S MOTION FOR
Michael H. Simon United States District Judge.
University Accounting Service, LLC (“UAS”) brings
this lawsuit against Defendants ScholarChip Card, LLC
(“ScholarChip”) and Ethan Schulton
(“Schulton”), who previously worked for
ScholarChip. Before the Court is UAS's motion against
Schulton for case-dispositive sanctions or, in the
alternative, lesser sanctions. UAS asserts that Schulton
destroyed relevant electronically stored information with the
intent of depriving UAS of the use of that evidence in this
lawsuit. For the reasons that follow, the Court denies
Plaintiff's motion for case-dispositive sanctions but
grants Plaintiff's alternative motion for lesser
is the destruction or significant alteration of evidence, or
failure to preserve property for another's use as
evidence in pending or reasonably foreseeable
litigation.” Allstate Ins. Co. v. Hamilton
Beach/Proctor Silex, Inc., 473 F.3d 450, 457 (2d Cir.
2007) (quoting West v. Goodyear Tire & Rubber
Co., 167 F.3d 776, 779 (2d Cir. 1999)). Rule 37(e) of
the Federal Rules of Civil Procedure sets forth the standards
and consequences if a party in litigation destroys or fails
to preserve relevant electronically stored information. That
Failure to Preserve Electronically Stored Information. If
electronically stored information 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, the court:
(1) upon finding prejudice to another party from loss of the
information, may order measures no greater than necessary to
cure the prejudice; or
(2) only upon finding that the party acted with the intent to
deprive another party of the information's use in the
(A) presume that the lost information was unfavorable to the
(B) instruct the jury that it may or must presume the
information was unfavorable to the party; or
(C) dismiss the action or enter a default judgment.
Fed. R. Civ. P. 37(e).
current text of Rule 37(e) was adopted in 2015 to replace the
2006 version of that rule. As explained by the Rules Advisory
Committee in 2015:
Subdivision (e)(2) requires a finding that the party acted
with the intent to deprive another party of the
information's use in the litigation. This finding may be
made by the court when ruling on a pretrial motion, when
presiding at a bench trial, or when deciding whether to give
an adverse inference instruction at trial. If a court were to
conclude that the intent finding should be made by a jury,
the court's instruction should make clear that the jury
may infer from the loss of the information that it was
unfavorable to the party that lost it only if the jury first
finds that the party acted with the intent to deprive another
party of the information's use in the litigation. If the
jury does not make this finding, it may not infer from the
loss that the information was unfavorable to the party that
Subdivision (e)(2) does not include a requirement that the
court find prejudice to the party deprived of the
information. This is because the finding of intent required
by the subdivision 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. Subdivision (e)(2) does not
require any further finding of prejudice.
should exercise caution, however, in using the measures
specified in (e)(2). Finding an intent to deprive another
party of the lost information's use in the litigation
does not require a court to adopt any of the measures listed
in subdivision (e)(2). The 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.
Fed. R. Civ. P. 37(e)(2) advisory committee's note to
The Parties and Their Lawsuits
a student loan servicing company and a wholly owned
subsidiary of Transworld Systems, Inc. (“TSI”), a
debt collection and receivables management company. The
clients or customers of UAS are lenders who provide student
loans. UAS assists its customers by documenting when student
loan payments are made to lenders, ensuring that ...