Finding the defendant-employer, Millard Refrigerated Services, permitted relevant data to be deleted after it was on notice of potential litigation, the court granted the plaintiff’s motion for sanctions and agreed to provide the jury an adverse inference instruction against the defendant. Pillay v. Millard Refrigerated Services, 2013 WL 2251727 (N.D. Ill. May 22, 2013).

The plaintiff, A. Sampson Pillay, alleged he was terminated because he opposed the termination of another employee, Anthony Ramirez. Pillay alleged Millard unlawfully terminated Ramirez in August 2008. Pillay opposed Ramirez’s termination and he contends that Millard fired him in retaliation for his complaints. Millard argues it terminated Ramirez because his LMS scores (a rating used by Millard to determine productivity) were too low. Pillay, however, asserts the underlying LMS data likely was manipulated to artificially lower Ramirez’s productivity rating.

In September 2008, Pillay sent Millard a demand letter and, in December 2008, both Pillay and Ramirez sent preservation notices to Millard’s general counsel specifically referencing documents regarding Ramirez’s productivity. Additionally, in January 2009, Pillay and Ramirez filed charges with the Equal Employment Opportunity Commission. In defending against the EEOC charges, Millard relied on Ramirez’s deficient LMS rating to explain his termination.

In July 2010, before Pillay filed a formal lawsuit, Millard notified Pillay that the underlying LMS productivity data was deleted in August 2009 as part of an automated deletion process that deletes data older than one year. Pillay then filed a motion for sanctions, alleging Millard failed to preserve relevant evidence.

In granting Pillay’s motion, the court first reminded litigants that the duty to preserve evidence arises when a party “knows or should know that litigation is imminent.” The court found the September 2008 demand letter, the December 2008 preservation notices and the January 2009 EEOC charge (all of which occurred well before the LMS productivity data was deleted in August 2009) were sufficient to trigger Millard’s duty to preserve.

The court next considered whether Millard acted with the requisite level of culpability when it allowed the LMS productivity data to be deleted — that is, whether Millard acted in “bad faith” or in an “objectively unreasonable manner.” The court determined that recklessness and bad faith could be inferred because there was no evidence that Millard’s general counsel took any action to halt the automatic deletion of LMS productivity data. Indeed, the court noted that Millard relied on the LMS productivity data in defending against Pillay’s EEOC charge. Even if Millard’s conduct did not rise to the level of bad faith, the court found that the conduct was objectively unreasonable and that, even without a bad faith finding, the court was within its authority to craft a proper sanction.

Lastly, the court found Pillay was prejudiced by Millard’s conduct in that without the underlying LMS productivity data, Pillay cannot prove Millard manipulated the data.

The duty to preserve evidence may arise well in advance of actual litigation. It is critical for parties to take immediate action to ensure relevant evidence is preserved. This is especially true if a company relies on automated systems to delete or purge data.