KAVANAGH v. REFAC OPTICAL GROUP et al, No. 1:2015cv04886 - Document 141 (D.N.J. 2017)
Court Description: MEMORANDUM OPINION AND ORDER, denying 92 Motion for Sanctions; ORDERED that plaintiff's request for sanctions from defendants is DENIED. Signed by Magistrate Judge Joel Schneider on 12/14/17. (js)
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KAVANAGH v. REFAC OPTICAL GROUP et al Doc. 141 [Doc. No. 92] IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY CAMDEN VICINAGE ANNE KAVANAGH, Plaintiff, Civil No. 15-4886 (JHR/JS) v. REFAC OPTICAL GROUP, et al., Defendants. MEMORANDUM OPINION AND ORDER This matter is before the Court on defendants’ “Motion for Spoliation Sanctions” [Doc. No. plaintiff’s opposition [Doc. Nos. 92]. 1 94, The 95], Court received defendants’ reply [Doc. No. 97], and the parties’ supplemental submissions [Doc. Nos. 114, 115]. The Court also held oral argument as well as a separate evidentiary hearing. For the reasons to be discussed, defendants’ motion is denied. Background The parties are familiar with the background of the case so only a brief summary will be provided. Plaintiff filed her complaint on June 30, 2015. Plaintiff alleges she was recruited to leave her consulting business to work for defendants. Complaint &18. Plaintiff alleges defendants Refac Optical and 1 The defendants are Refac Optical Group and U.S. Vision, Inc. 1 Dockets.Justia.com U.S. Vision acted as a single integrated enterprise. Id. &12. Plaintiff claims defendants agreed to pay her a “Wall Street” fee (industry rate) for financing she secured on U.S. Vision’s behalf through Zeiss International and/or Contour Optik, Inc., in addition to other benefits. Id. &&23-26. Plaintiff accepted defendants’ employment offer on or about August 15, 2010. Id. &27. On June 9, 2014, plaintiff’s employment was terminated but she was offered a severance package that she accepted. The crux of plaintiff’s claim is that defendants breached their agreements. Plaintiff claims defendants not only breached the severance agreement, but also the agreement to pay her fees for the Zeiss and defendants did compensation” Contour not from deals. pay her deals Id. “no &&52-53. less plaintiff Plaintiff than claims million with arranged $1 Zeiss in and Contour. Id. &&37-41. Defendants deny all liability allegations. William Schwartz acted as the CEO of U.S. Vision during a significant part of plaintiff’s employment, including at the time of her hiring. Id. &15. The instant motion arises out of meetings plaintiff and her former live-in partner, Yvette Milavec, had with Schwartz after plaintiff was terminated. The parties recorded do not dispute conversations that plaintiff plaintiff had and with Milavec secretly Schwartz. The recordings started soon after plaintiff received a September 10, 2014 letter from Refac’s attorneys, 2 Hogan-Lovells, stating, inter alia, that Schwartz denied that he agreed to pay plaintiff a “finder’s fee.” The essence of defendants’ claim is that plaintiff and/or Milavec spoliated evidence by destroying some of the recordings of conversations plaintiff had with Schwartz. 2 There is no direct eyewitness evidence confirming plaintiff or Milavec destroyed, lost or edited recordings. They both deny this occurred. In view of these denials defendants ask the Court to infer spoliation occurred from circumstantial evidence. Defendants argue their most persuasive evidence is a notation in Milavec’s notebook in her handwriting where she wrote “shit can tape recording on my ph[one].” Defendants argue, “[t]his statement can only be interpreted one way: delete recordings of conversations with Mr. Schwartz, Mr. Bernstein and/or other.” Defendants’ Memo. at 10. Second, defendants argue spoliation can be inferred because of “the careless manner in which Plaintiff and Ms. Milavec stored [the] relevant evidence (despite their obligation to preserve it, ….)” Id. at 10-11. Third, defendants argue spoliation can be inferred 2 because of “Ms. Milavec’s On December 23, 2015, plaintiff produced three audio recordings between her and Schwartz. On October 21, 2016, plaintiff produced fourteen additional audio files. On January 17, 2017, plaintiff produced eight additional files of secretly recorded conversations between her and Schwartz, and a conversation between plaintiff and Al Bernstein, President and CEO of a subsidiary of defendants. See Defendants’ Memo. of Law in Support of Motion at 1-2, Doc. No. 92-1. Plaintiff describes in detail the circumstances of these productions in her July 6, 2017 Letter Brief. Doc. No. 115 at 2-4. 3 apparent modus operandi.” Id. at 11. Defendants claim Milavec destroyed secretly recorded conversations in the past. Not surprisingly, plaintiff and Milavec deny they destroyed, lost or edited any recordings. Plaintiff supports her argument with her deposition testimony from December 16, 2016 and March 10, 2017, the Declaration of Milavec (Doc. No. 94-2), and Milavec’s August 2, 2017 testimony. 3 Insofar as the requested relief is plaintiff “secret concerned, from defendants introducing recordings” and into to ask the evidence provide an Court any to of prohibit plaintiff’s adverse inference instruction to the jury. Discussion 4 This motion is governed by Fed. R. Civ. P. 37(e) which addresses information the and failure what to and preserve when electronically spoliation sanctions stored may be imposed. The Rule specifically provides as follows: (e) 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: 3 The Court held an evidentiary hearing on August 2, 2017, at which Milavec testified. 4 For the purpose of the present motion the Court will assume plaintiff had possession, custody or control of Milavec’s recordings given their close relationship and the fact they lived together. 4 (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 litigation may: (A) presume that unfavorable to the party; the lost information was (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. It is self-evident that in order to obtain spoliation sanctions pursuant to Rule 37(e) spoliation must occur. In order to prove that spoliation occurred defendants must prove that ESI was “lost.” See Committee Notes (2015) to Fed. R. Civ. P. Rule 37(e); see also Friedman v. Phila. Parking Auth., C.A. No. 146071, 2016 U.S. Dist. LEXIS 32009, *19-20 (E.D. Pa. March 10, 2016)(declining party had not to impose been able spoliation to sanctions identify any where specific moving lost information). As will be discussed in more detail, the Court finds defendants did not prove that any recordings made by plaintiff or Milavec were lost, destroyed or edited. Therefore, since defendants cannot prove spoliation occurred, defendants’ motion 5 for sanctions will be denied. 5 The Court agrees with plaintiffs’ argument that defendants’ motion is without merit because “there is no spoliation. Defendants cannot articulate that was allegedly lost or destroyed.” any recording Plaintiffs’ Opposition Memo. of Law at 1, Doc. No. 94. The Court begins its analysis by acknowledging plaintiff testified at her deposition she did not spoliate any recordings.6 The Court has not been presented with any persuasive evidence to disbelieve this testimony. Defendants focus most of their argument on Milavec’s “shit can” notation. Defendants argue this statement proves Milavec destroyed recordings. The Court disagrees. The Court had the opportunity to observe Milavec testify in person under oath and be subject testimony motion for to and defendants’ demeanor, spoliation cross-examination. and for the sanctions, the purpose Court Given of Milavec’s defendants’ credits Milavec’s testimony that she did not destroy, lose or edit any recorded conversations. Although Milavec admitted she made the “shit can” reference in her notebook, she denied this reflected an intent to destroy or edit Schwartz’s recorded conversations. August 2, 5 The parties dispute whether defendants’ burden to prove spoliation must be proven by a preponderance of the evidence or clear and convincing evidence. The Court does not have to decide which standard of proof applies because defendants do not satisfy either burden of proof. 6 See December 16, 2016 Tr. 111:10-16; March 10, 2017 Tr. 21:1525 to 22:5; 34:21-25 to 35:1-4; 39:9-14. 6 2017 Tr. 34:3-20. The Court disagrees with defendants’ argument that the term “shit can” can only have one meaning. Defendants believe the term necessarily means Milavec destroyed tapes. The Court disagrees. The Court credits Milavec’s testimony that her notebook reflects notes she made when she listened to Schwartz’s recorded conversations. Id. 23:4-8. Schwartz himself used the “shit can” term when his conversations were recorded. Milavec’s shit can reference merely parroted what Schwartz said. Id. 78:310. 7 Milavec testified: Q. All right. Let's get back to the line on the bottom of page four which says: "Shit-can tape recording on my phone." Have I read that correctly? A. Um-hum. Q. What did you mean by that? A. I labeled that as the shit-can recording, like he said it so many times, and it wasn't a term I was ever familiar with, so it stuck out in my mind, and I jotted it down and sort of labeled it as shit-can. Id. 30:11-20. The fact Milavec included some stray commentary in her notebook in addition to her notes regarding the recordings does not impeach her testimony that the “shit can” reference merely reflected what Schwartz said. 7 Defendants point to some alleged inconsistences in testimony to show she is not credible. Id. 81:20-25 to Court does not find defendants’ arguments persuasive totality of the record and the opportunity to observe demeanor in person. 7 Milavec’s 84:1. The given the Milavec’s Defendants argue spoliation can be inferred from the careless manner plaintiff’s recordings were stored and produced. However, Milavec testified this was because she did not know more recordings were on her phone. Id. 35:6-11. Further, the fact that plaintiff supplemented her production of audio tapes shows she was aware of her obligation to produce relevant evidence and to supplement a response that was incomplete when first made. See Fed. R. Civ. P. 26(e). In addition, even if plaintiff was not as careful as she could have been, this does not show that any tapes were lost, destroyed or edited. Defendants make much of the fact that plaintiff referred in an email to a tape that was 1.5 hours long that was actually only 61 minutes long. Id. 52:9-25 to 53:3. This is hardly convincing evidence that 30 minutes of tape was destroyed. The discrepancy is just as easily explained by an erroneous estimate of time. Moreover, the Court credits plaintiff’s argument that neither she or Milavec had an incentive to destroy, edit or lose recordings of Schwartz’s conversations. The recordings were made at a time when it appears Schwartz was sympathetic to plaintiff. The Court has no reason to believe that at the time the recordings were made Schwartz said anything that would motivate plaintiff or Milavec to spoliate evidence. Milavec testified everything that Schwartz said corroborated what plaintiff said. 8 Id. 56:2-19. Defendants have not submitted convincing evidence to counter this argument. The inaudible Court is aware and that it that is some possible of plaintiff’s that some tapes recordings are only taped snippets rather than entire conversations. In other words, that the recording device was likely not continuously on but was stopped and started. However, even defendants admit this is not spoliation. June 26, 2017 Tr. 5:3-22; 7:9-23, Doc. No. 119.8 The fact that plaintiff’s recorder may have started and stopped does not, as “likely defendants other Defendants’ argue, support unhelpful Reply Brief a conclusion recordings at 9, Doc. that No. 97. there were were deleted.” Defendants argue plaintiff “baited” Schwartz into making certain admissions. June 26, 2017 Tr. 20:17-22. Even if true, however, this is not spoliation. If defendants choose to do so the “baiting” argument may be a subject of the trial examinations of plaintiff, Milavec and/or Schwartz. defendants’ plaintiff In argument testified addition, that the Court spoliation Schwartz “bashed” can gives be no weight inferred defendants’ to because counsel and this reference supposedly does not exist on the produced tapes. The record is far from clear that plaintiff or Milavec testified the alleged “bashing” was recorded. Further, it is possible the 8 The Court held oral argument on June 26, 2017. 9 “bashing” references were located on inaudible parts of plaintiff’s recordings. Defendants conversations Defendants argue with argue that people this is in and the only evidence past used of Milavec what what was recorded helpful. occurred here. However, Milavec denied this occurred. Id. 63:12:23; 64:7-12. At this time, the Court has no reason to doubt Milavec’s denial. Further, even if true, Milavec’s past action does not prove she spoliated evidence in this case. The bottom line is that Milavec testified she did not destroy, lose or edit any tape recordings: Q. Are you aware of any recordings of Bill Schwartz or anybody related to U.S. Vision or anything related to this case that has in any way been lost or destroyed? A. No. Q. Are you aware of any recordings of Bill Schwartz or anyone from U.S. Vision or anything related to this case that have in any way been altered in any way? A. Nope. No alteration. Id. 75:3-10. Milavec also has no evidence plaintiff deleted or edited evidence. Id. 77:22-24; 78:20-25. Based on the present record the Court has no reason to doubt plaintiff or Milavec. Conclusion For all the foregoing reasons, plaintiff’s motion will be denied. 10 O R D E R Accordingly, it is hereby ORDERED this 14th day of December, 2017, that defendants’ Motion for Spoliation Sanctions is DENIED; and it is further ORDERED that plaintiff’s request for sanctions defendants is DENIED. s/Joel Schneider JOEL SCHNEIDER United States Magistrate Judge DATED: December 14, 2017 11 from
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