Altercare, Inc. v. Clark is one of those eDiscovery cautionary tales we love writing about. The case has its roots in the employment law field, with Clark alleging that she was not given proper notice before being fired as CEO of Altercare’s nursing home facility. Clark’s legal counsel contacted Altercare on April 9, 2008, providing notice of imminent litigation, and specifically providing that:

[i]n the meantime, Altercare… has a legal obligation to take all necessary steps to preserve potentially relevant evidence in this case, including evidence that is maintained electronically (“Electronically Stored Information” or “ESI”), digitally, and in document form.

Sure enough, the lawsuit followed, but it was initially filed by Altercare, claiming “breach of contract, breach of fiduciary duty, fraudulent inducement, and conversion.” They alleged that Clark had lied about her qualifications, and grossly mismanaged their facility. Clark’s counterclaim alleged “breach of contract, retaliation, conversion, and defamation.” Among other things, Clark sought production of:

“[a]ll of Altercare’s notes, documents, records, reports, memoranda, and/or electronically stored information (`ESI’) relating to Lisa Marie Clark and/or Lisa Marie Clark’s employment from Altercare.”

That proved to be a big ask, as many motions and hearings were to follow:

[At a scheduled site visit] Clark was informed that the computer she had used during her employment “had crashed” a few weeks earlier and was not available… Altercare sent the hard drive to Clark the following month with a letter indicating that its expert had determined that “99% of the data on the hard drive [was] recoverable.” Yet, Altercare did not review any of the particular data on the hard drive, and Clark was not able to retrieve any of the data she needed from the hard drive when she received it.

After spending a substantial amount of time reviewing the information from Altercare’s expert, Clark determined that the computer hard drive Altercare had provided her was not, in fact, from her computer… At [a] hearing, Clark explained that she had extensively searched the copy of the hard drive Altercare provided and had determined that it belonged to one of Northridge’s former administrators.

After much back-and-forth, Clark filed for sanctions, and on March 1, 2012, almost four years after the initial notice, a trial court concurred:

The [trial] court … found that, as the party responsible for preserving the computer and any ESI once litigation was contemplated, Altercare had done nothing to comply with its obligation. While the court noted that it did not have sufficient evidence of intentional misconduct on Altercare’s part, it determined that Altercare’s conduct showed “such extreme carelessness and indifference” that Altercare had to “bear[] the responsibility for the spoliation of the evidence.” Consequently, the court dismissed Altercare’s complaint against Clark as a sanction for spoliation. The court also held that Clark would be entitled to a jury instruction regarding Altercare’s spoliation in litigating her counterclaims against Altercare.

Thus, we’re all caught up and ready for the appeals court opinion, which was issued in late June. Altercare argued that the sanctions were unjustified according to FRCP 37 (F), because, they said, “the loss of Clark’s computer was not due to its willfulness or bad faith.” The appeals court was not swayed, and affirmed the lower court’s decision:

The record reflects that a great deal of time was expended in the court below trying to identify the location of Clark’s computer and to retrieve it for purposes of the litigation. Altercare, despite being formally requested to retain ESI, failed to preserve the ESI on Clark’s computer. It then, absent any explanation, lost the computer; a conclusion that emerged only after several years’ worth of attempts to locate it. The computer was in Altercare’s sole custody and control at all relevant times. Altercare had the ability to preserve the computer and/or its contents, but failed to do so. Given Altercare’s utter disregard for the preservation of evidence, we cannot conclude that the court erred by sanctioning Altercare.

As to the harshness of the sanction the court imposed, the record supports the conclusion that the absence of Clark’s computer would have greatly hampered Clark’s ability to defend herself against Altercare’s suit. Clark testified that she used her computer on a daily basis during her employment with Altercare and had saved a great number of important documents on it. The evidence on the computer potentially would have rebutted several of Altercare’s claims against Clark, as discussed in the trial court’s judgment entry. We cannot conclude that the degree of the sanction the court imposed was “disproportionate to the seriousness of the infraction under the facts of the case.”

(Internal citations omitted)

So this is ultimately a rather straightforward case – one party was on notice, and for whatever reason, did not take adequate precautions to preserve the computer, then handed over the wrong computer, and caused years of delays. IT-Lex readers know by now of all the don’ts when it comes to eDiscovery, and there were plenty in this case.