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With No Proof of Duty to Preserve or Bad Faith, Plaintiffs’ Request for Sanctions is Denied: eDiscovery Case Law

Court Denies Defendant’s Motion to Overrule Plaintiff’s Objections to Discovery Requests

In Reyes et. al. v. Julia Place Condominiums Homeowners Association, Inc., et. al., No. 12-2043 (E.D.L.A., Oct. 7, 2016), Louisiana District Judge Carl J. Barbier, in denying the plaintiffs’ request for sanctions, stated that the plaintiffs “have failed to produce sufficient evidence proving that [defendant] Parkview had a duty to preserve the ledgers, that Parkview acted in bad faith in destroying the ledgers, and that the destroyed evidence was relevant to Plaintiffs’ claim”.

Case Background

In this class action lawsuit brought by condominium owners throughout New Orleans against their various condo associations alleging debt collection practices that violate state and federal law, the Court had previously certified a “a class of past and present condominium owners who have paid allegedly usurious late fees”.  During the course of the litigation, one of the defendants (Parkview Condominium Homeowners Association) filed a motion for summary judgment, stating that that the plaintiffs had not introduced any evidence that a current or former Parkview unit owner paid an allegedly usurious fee, so Parkview should be dismissed from the lawsuit.

In response, the plaintiffs argued that they were entitled to an adverse inference sanction due to Parkview’s “intentional” destruction of ledgers that would have proven Parkview condominium unit owners paid allegedly usurious late fees.  The plaintiffs had made a similar request for these ledgers and an adverse inference sanction in a motion to compel in Magistrate Court and that motion was denied.

Here, the plaintiffs claimed that they first requested this information in September 2012 and, in response to this request, “Parkview threatened sanctions . . . but never provided this critical evidence.”  The plaintiffs also argued that Parkview did not initially contend that the documents were lost or otherwise unavailable, but simply refused to comply with the plaintiffs’ request.  In response, Parkview stated it informed the plaintiffs that it was not in possession of that information, because the documents were “inadvertently destroyed prior to the commencement of this litigation. There were no backups of any of the files that were located on the damaged computer and hard drive.”  Parkview also contended that it had no duty to preserve that information, noting that it was unreasonable to believe that the originally named plaintiff, who was never an owner at Parkview, would sue Parkview and seek ledgers for the two years preceding the litigation.

Judge’s Ruling

In ruling on the plaintiff’s request for sanctions, Judge Barbier stated:

“Plaintiffs have failed to produce sufficient evidence proving that Parkview had a duty to preserve the ledgers, that Parkview acted in bad faith in destroying the ledgers, and that the destroyed evidence was relevant to Plaintiffs’ claim. Plaintiffs ask this Court to infer that Parkview intentionally, and in bad faith, destroyed its ledgers solely because Parkview did not initially tell Plaintiffs that it had inadvertently destroyed the ledgers prior to litigation…This is a leap this court is unwilling to make. Accordingly, the Court finds that Plaintiffs are not entitled to an adverse inference for purposes of this motion nor trial.”

Also, observing that “[n]otably absent from Plaintiffs’ evidence is anything demonstrating that a past or present condominium unit owner has paid an allegedly usurious late fee”, Judge Barbier granted Parkview’s Motion for Summary Judgment, dismissing Parkview from the case.

So, what do you think?  Did the plaintiff make too big a leap in assuming “intentional” destruction of the ledgers?  Please share any comments you might have or if you’d like to know more about a particular topic.

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