Employers May Face Sanctions for Employees’ Failure to Preserve Texts on Personal Phones

By: Kristy K. Singler

In Miramontes v. Peraton, Inc., No. 3:21-CV-3019-B, 2023 WL 3855603 at *6 (N.D. Tex. June 6, 2023), a federal district court for the N.D. Texas, Dallas Division, addressed if an employer can be deemed liable for an employee’s failure to preserve business-related texts received on the employee’s personal cell phone. The court held that whether an employer is required to preserve such texts depends on the case’s specific circumstances. The court affirmed that an employer may face punishment for an employee’s failure to do so with the severity of the punishment dependent on the specific circumstances.

Plaintiff alleged that he was selected for a reduction in force due to his age. Peraton acquired the company where Plaintiff had been employed for over twenty-five years. Peraton initiated layoffs in a process that was internally referred to as “Project Falcon.” Plaintiff was one of the employees laid off in the first round of layoffs. He claimed that his supervisor told him twice that he was not being laid off due to his age.

Plaintiff’s counsel sent a letter pre-suit that included a settlement demand and insisted that Peraton preserve all documents regarding Plaintiff’s claims, including any text messages. The company issued a litigation hold letter to its employees. The communication to Peraton’s employees did not mention the need to preserve any text messages on employees’ personal devices.

Plaintiff filed suit alleging that he was laid off by Peraton due to his age. A manager from Peraton, Victor Stemberger, admitted during his deposition that he was involved in the decision to terminate Plaintiff. He admitted that “immediately” after receiving the demand letter and before suit was filed, he sent “one or two” text messages on his personal phone to another manager allegedly involved in selecting Plaintiff to be laid off by Peraton. Mr. Stemberger deleted and could not produce the texts because no one at the company told him to save text messages.

Peraton filed a motion for summary judgment premised on the argument that Plaintiff’s layoff was not a pretext for discrimination. Plaintiff filed a motion for sanctions, claiming that Peraton failed to preserve text messages that were critical to his claim. Plaintiff argued that the failure to preserve the texts warranted entry of judgment in his favor.

The court considered the following factors when rendering its decision: whether Peraton controlled the texts and had a duty to preserve them; whether the texts were intentionally destroyed by Peraton; whether Peraton acted in bad faith; and whether Peraton’s failure to preserve the text messages prejudiced Plaintiff’s claim.

Peraton argued that it did not control the text messages because it did not provide the managers with their cell phones, the texts were on their personal devices, and no policy signed by the managers gave the company the right to obtain the messages.

The court held in favor of Plaintiff on each of the five factors, stating that because employees regularly conduct business on their cell phones, Peraton had control over the text messages and destruction of the same. The court determined that the messages were intentionally destroyed despite Peraton receiving a litigation hold letter requiring it to preserve such information. The court denied Peraton’s motion for summary judgment as a sanction for its failure to preserve the text messages.

Federal courts, including those in Illinois and Indiana, follow Federal Rule of Civil Procedure 37(e) regarding the imposition of sanctions when a party fails to preserve electronically stored information (ESI) where such ESI is relevant to impending litigation. Federal Rule of Civil Procedure 37(e) authorizes courts to issue sanctions for spoliation of ESI where four conditions are met: (1) the ESI at issue should have been preserved in the anticipation or conduct of litigation; (2) the ESI is lost; (3) the loss is due to a party’s failure to take reasonable steps to preserve it; and (4) the ESI cannot be restored or replaced through additional discovery.

Once those four conditions are satisfied, the court must determine if (1) the non-offending party has been prejudiced from the loss of ESI and/or (2) the offending party acted with the intent to deprive another party of the information’s use in the litigation. If the court determines that the non-offending party has been prejudiced, Rule 37(e)(1) allows the court to “order measures no greater than necessary to cure the prejudice.” If the offending party acted with intent, Rule 37(e)(2) allows the court to (a) presume that the lost information was unfavorable to the party, (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.

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