Rimkus Consulting Group, Inc. v. Cammarata

MEMORANDUM AND OPINION

Spoliation of evidence — particularly of electronically stored information — has assumed a level of importance in litigation that raises grave concerns. Spoliation allegations and sanctions motions distract from the merits of a case, add costs to discovery, and delay resolution. The frequency of spoliation allegations may lead to decisions about preservation based more on fear of potential future sanctions than on reasonable need for information. Much of the recent case law on sanctions for spoliation has focused on failures by litigants and their lawyers to take adequate steps to preserve and collect information in discovery. 1 The spoliation allegations in the present case are different. They are allegations of willful misconduct: the intentional destruction of emails and other electronic information at a time when they were known to be relevant to anticipated or pending litigation. The alleged spoliators are the plaintiffs in an earlier-filed, related case and the defendants in this case. The allegations include that these parties — referred to in this opinion as the defendants — concealed and delayed providing information in discovery that would have revealed their spoliation. The case law recognizes that such conduct is harmful in ways that extend beyond the parties’ interests and can justify severe sanctions. 2

Given the nature of the allegations, it is not surprising that the past year of discovery in this case has focused on spoliation. The extensive record includes evidence that the defendants intentionally deleted some emails and attachments after there was a duty to preserve them. That duty arose because the defendants were about to file the related lawsuit in which they were the plaintiffs. The individuals who deleted the information testified that they did so for reasons unrelated to the litigation. But the individuals gave inconsistent testimony about these reasons and some of the testimony was not supported by other evidence. The record also includes evidence of efforts to conceal or delay revealing that emails and attachments had been deleted. There is sufficient evidence from which a reasonable jury could find that emails and attachments were intentionally deleted to prevent their use in anticipated or pending litigation.

*608 The record also shows that much of what was deleted is no longer available. But some of the deleted emails were recovered from other sources. While some of the recovered deleted emails were adverse to the defendants’ positions in this litigation, some were favorable to the defendants. The record also shows that despite the deletions of emails subject to a preservation duty, there is extensive evidence available to the plaintiff to prosecute its claims and respond to the defenses. These and other factors discussed in more detail below lead to the conclusion that the most severe sanctions of entering judgment, striking pleadings, or imposing issue preclusion are not warranted. Instead, the appropriate sanction is to allow the jux-y to hear evidence of the defendants’ conduct-including deleting emails and attachments and providing inaccurate or inconsistent testimony about them-and to give the jury a fox-m of adverse inference instruction. The instruction will inform the jury that if it finds that the defendants intentionally deleted evidence to prevent its use in anticipated or pending litigation, the jury may, but is not required to, infer that the lost evidence would have been unfavorable to the defendants. In addition, the plaintiff will be awarded the fees and costs it reasonably incurred in identifying and revealing the spoliation and in litigating the consequences.

The opinion first sets out the pending motions. Before analyzing the spoliation allegations, related sanctions motions, and the summary judgment motions (which are also impacted by the spoliation allegations), the opinion sets out some of the analytical issues that spoliation sanctions raise. The relevant factual and procedural history is then set out and the evidence on breach of the duty to preserve, the degree of culpability, relevance, and prejudice is examined. The opinion then analyzes the evidence to determine the appropriate response.

The defendants’ motion for summary judgment based on claim and issue preclusion arising from the related, earlier-filed, state-law case are then analyzed in detail. That motion is denied in part because of the spoliation and withholding of evidence relevant to that case. Finally, the opinion examines the parties’ cross-motions for summary judgment on the defendants’ counterclaims for attorneys’ fees.

The opinion results in narrowing and defining the issues to be tried. A pretrial conference is set for February 26, 2010, at 10:00 a.m. to set a schedule for completing any remaining pretrial work and a trial date.

I. The Pending Motions

In November 2006, Rimkus Consulting Group, Inc. (“Rimkus”) was sued in Louisiana state court by Nickie G. Cammarata and Gary Bell, who had just resigned from the Rimkus office in Louisiana. Cammarata, Bell, and other ex-Rimkus employees had begun a new company, U.S. Forensic, L.L.C., to compete with Rimkus in offering investigative and forensic engineering services primarily for insurance disputes and litigation. In the Louisiana suit, Cammarata and Bell sought a declaratory judgment that the forum-selection, choice-of-law, noncompetition, and nonsolicitation provisions in agreements they had signed with Rimkus were unenforceable. In January and February 2007, Rimkus sued Cammarata and Bell in separate suits in Texas, alleging that they breached the noncompetition and nonsolicitation covenants in their written employment agreements and that they used Rimkus’s trade secrets and proprietary information in setting up and operating U.S. Forensic. U.S. Forensic is a defendant in the Cammarata case. The Texas Cammarata and Bell cases were consolidated in this court. (Docket Entry Nos. 211, 216).

*609 Two sets of motions are pending. 3 One set is based on Rimkus’s allegations that the defendants spoliated evidence. Rimkus moves for sanctions against the defendants and their counsel and asks that they be held in contempt. (Docket Entry Nos. 313, 314). Rimkus alleges that the defendants and their counsel “conspiratorially engaged” in “wholesale discovery abuse” by destroying evidence, failing to preserve evidence after a duty to do so had arisen, lying under oath, failing to comply with court orders, and significantly delaying or failing to produce requested discovery. (Docket Entry No. 313 at 1). Rimkus asks this court to strike the defendants’ pleadings and to enter a default judgment against them or give an adverse inference jury instruction. Rimkus also seeks monetary sanctions in the form of the costs and attorneys’ fees it incurred because of the defendants’ discovery abuses.

In response, the defendants acknowledge that they did not preserve “some arguably relevant emails” but argue that Rimkus cannot show prejudice because the missing emails “would be merely cumulative of the evidence already produced.” (Docket Entry No. 345 at 6). Rimkus filed supplements to its motions for contempt and sanctions, (Docket Entry Nos. 342, 343, 410, 414, 429, 431, 439, 445), and the defendants responded, (Docket Entry No. 350, 435). 4

*610 The second set of motions is based on the defendants’ assertion that they are entitled to summary judgment on the merits based on the preclusive effects of the judgment and rulings they obtained in the lawsuit they filed in the Louisiana state court before Rimkus sued them in Texas. (Docket Entry No. 309). The defendants argue that the claims in this Texas suit should be dismissed under res judicata, or in the alternative, that they are entitled to judgment as a matter of law on Rimkus’s claims for misappropriation of trade secrets, tortious interference, unfair competition, civil conspiracy, disparagement, and breach of fiduciary duty. (Id.). Cammarata also moved for summary judgment on his counterclaim for attorneys’ fees under Texas Business & Commerce Code § 15.51(c). (Id.). Rimkus responded, (Docket Entry Nos. 321, 324), the defendants replied, (Docket Entry No. 349), Rimkus filed a surreply, (Docket Entry No. 353), and several supplemental responses, (Docket Entry Nos. 362, 374, 394, 410, 429, 439, 445), and the defendants filed supplemental replies, (Docket Entry Nos. 376, 377). Rimkus argues that preclusion does not apply and that the summary judgment evidence reveals multiple disputed fact issues that preclude summary judgment on the merits of its claims.

Rimkus moved for partial summary judgment on the defendants’ counterclaims for attorneys’ fees under Texas Business & Commerce Code § 15.51(C). (Docket Entry Nos. 302, 305). The defendants responded, (Docket Entry Nos. 317, 322), and Rimkus replied, (Docket Entry No. 352). Rimkus also moved to extend the pretrial motions deadline, asserting that an extension is warranted because discovery is incomplete. (Docket Entry No. 306). The defendants responded, (Docket Entry No. 323), and Rimkus replied, (Docket Entry No. 351).

Both sets of motions are addressed in this memorandum and opinion. Based on a careful review of the pleadings; the motions, responses, and replies; the parties’ submissions; the arguments of counsel; and the applicable law, this court grants in part and denies in part Rimkus’s motions for sanctions. An adverse inference instruction on the deletion of emails and attachments will be given to the jury at trial. The motion for contempt is denied as moot because it seeks relief that would be duplicative of the sanctions. Rimkus is also awarded the reasonable attorneys’ fees and costs it incurred in investigating the spoliation, including fees and costs for obtaining emails through third-party subpoenas, taking additional depositions, and filing and responding to motions on sanctions.

As to the summary judgment motions, this court denies Rimkus’s motion to extend the motions-filing deadline, grants in part and denies in part the defendants’ motion for summary judgment based on preclusion (based in part on spoliation that concealed and delayed producing relevant information in the Louisiana case), and grants Rimkus’s motions for partial summary judgment on the defendants’ counterclaims for attorneys’ fees. Summary judgment is granted dismissing Rimkus’s claims for disparagement, tortious interference, and damages for breach of the noncompetition and nonsolicitation provisions. Summary judgment is denied on Rimkus’s claims for misappropriation of trade secrets, breach of fiduciary duty to the extent it is based on misappropriation, unfair competition, and civil conspiracy. With respect to the counterclaim for attorneys’ fees, Cammarata’s motion for summary judgment is denied and Rimkus’s motions for summary judgment are granted.

The reasons for these rulings are explained in detail below.

*611 II. The Framework for Analyzing Spoliation Allegations

In her recent opinion in Pension Committee of the University of Montreal Pension Plan v. Banc of America Securities, LLC, No. 05 Civ. 9016, 685 F.Supp.2d 456, 2010 WL 184312 (S.D.N.Y. Jan. 15, 2010), Judge Scheindlin has again done the courts a great service by laying out a careful analysis of spoliation and sanctions issues in electronic discovery. 5 The focus of Pension Committee was on when negligent failures to preserve, collect, and produce documents — including electronically stored information — in discovery may justify the severe sanction of a form of adverse inference instruction. Unlike Pension Committee, the present case does not involve allegations of negligence in electronic discovery. Instead, this case involves allegations of intentional destruction of electronically stored evidence. But there are some common analytical issues between this case and Pension Committee that deserve brief discussion.

A. The Source of Authority to Impose Sanctions for Loss of Evidence

Allegations of spoliation, including the destruction of evidence in pending or reasonably foreseeable litigation, are addressed in federal courts through the inherent power to regulate the litigation process if the conduct occurs before a case is filed or if, for another reason, there is no statute or rule that adequately addresses the conduct. 6 See Chambers v. NASCO, Inc., 501 U.S. 32, 43-46, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991); Natural Gas Pipeline Co. of Am. v. Energy Gathering, Inc., 2 F.3d 1397, 1408 (5th Cir.1993) (summary calendar). If an applicable statute or rule can adequately sanction the conduct, that statute or rule should ordinarily be applied, with its attendant limits, rather than a more flexible or expansive “inherent power.” Chambers, 501 U.S. at 50, 111 S.Ct. 2123; see Klein v. Stahl GMBH & Co. Maschinefabrik, 185 F.3d 98, 109 (3d Cir.1999) (“[A] trial court should consider invoking its inherent sanctioning powers only where no sanction established by the Federal Rules or a pertinent statute is ‘up to the task’ of remedying the damage done by a litigant’s malfeasance....”); Natural Gas Pipeline Co. of Am., 2 F.3d at 1410 (“When parties or their attorneys engage in bad faith conduct, a court should ordinarily rely on the Federal Rules as the basis for sanctions.”).

When inherent power does apply, it is “interpreted narrowly, and its reach is limited by its ultimate source — the court’s need to orderly and expeditiously perform its duties.” Newby v. Enron Corp., 302 F.3d 295, 302 (5th Cir.2002) (footnote omitted) (citing Chambers, 501 U.S. at 43, 111 S.Ct. 2123). In Chambers, the inherent power was linked to the bad-faith conduct that affected the litigation. See 501 U.S. at 49, 111 S.Ct. 2123. If inherent power, rather than a specific rule or statute, provides the source of the sanctioning authority, under Chambers, it may be limited to a degree of culpability greater than negligence.

Rule 37(b)(2)(A) provides;

If a party or a party’s officer, director, or managing agent-or a witness designated -under Rule 30(b)(6) or 31(a)(4)- *612 fails to obey an order to provide or permit discovery, including an order under Rule 26(f), 35, or 37(a), the court where the action is pending may issue further just orders. They may include the following:

(i) directing that the matters embraced in the order or other designated facts be taken as established for purposes of the action, as the prevailing party claims;

(ii) prohibiting the disobedient party from supporting or opposing designated claims or defenses, or from introducing designated ' matters in evidence;

(iii) striking pleadings in whole or in part;

(iv) staying further proceedings until the order is obeyed;

(v) dismissing the action or proceeding in whole or in part;

(vi) rendering a default judgment against the disobedient party; or

(vii) treating as contempt of court the failure to obey any order except an order to submit to a physical or mental examination.

Fed. R. Civ. P. 37(b)(2)(A). In addition, a court has statutory authority to impose costs, expenses, and attorneys’ fees on “any attorney ... who so multiplies the proceedings in any case unreasonably and vexatiously.” 28 U.S.C. § 1927.

Rule 37(e) applies to electronically stored information lost through “routine good-faith operation” of an electronic information system rather than through intentional acts intended to make evidence unavailable in litigation. Rule 37(e) states: “Absent exceptional circumstances, a court may not impose sanctions under these rules on a party for failing to provide electronically stored information lost as a result of the routine, good-faith operation of an electronic information system.” Fed. R. Civ. P. 37(e).

The alleged spoliation and proposed sanctions in this case implicate the court’s inherent authority, including for spoliation occurring before this case was filed or before discovery orders were entered and Rule 37, for failures to comply with discovery orders.

B. When Deletion Can Become Spoliation

Spoliation is the destruction or the significant and meaningful alteration of evidence. See generally The Sedona Conference, The Sedona Conference Glossary: E-discovery & Digital Information Management (Second Edition) 48 (2007) (“Spoliation is the destruction of records or properties, such as metadata, that may be relevant to ongoing or anticipated litigation, government investigation or audit.”). Electronically stored information is routinely deleted or altered and affirmative steps are often required to preserve it. Such deletions, alterations, and losses cannot be spoliation unless there is a duty to preserve the information, a culpable breach of that duty, and resulting prejudice.

Generally, the duty to preserve arises when a party “ ‘has notice that the evidence is relevant to litigation or ... should have known that the evidence may be relevant to future litigation.’ ” 7 Generally, the duty to preserve extends to documents or tangible things (defined by Federal Rule of *613 Civil Procedure 34) by or to individuals “likely to have discoverable information that the disclosing party may use to support its claims or defenses.” See, e.g., Zubulake IV, 220 F.R.D. at 217-18 (footnotes omitted).

These general rules are not controversial. But applying them to determine when a duty to preserve arises in a particular case and the extent of that duty requires careful analysis of the specific facts and circumstances. It can be difficult to draw bright-line distinctions between acceptable and unacceptable conduct in preserving information and in conducting discovery, either prospectively or with the benefit (and distortion) of hindsight. Whether preservation or discovery conduct is acceptable in a case depends on what is reasonable, and that in turn depends on whether what was done — or not done— was proportional to that case and consistent with clearly established applicable standards. 8 As Judge Scheindlin pointed out in Pension Committee, that analysis depends heavily on the facts and circumstances of each case and cannot be reduced to a generalized checklist of what is acceptable or unacceptable. 9

Applying a categorical approach to sanctions issues is also difficult, for similar reasons. Determining whether sanctions are warranted and, if so, what they should include, requires a court to consider both the spoliating party’s culpability and the level of prejudice to the party seeking discovery. Culpability can range along a continuum from destruction intended to make evidence unavailable in litigation to inadvertent loss of information for reasons unrelated to the litigation. Prejudice can range along a continuum from an inability to prove claims or defenses to little or no impact on the presentation of proof. A court’s response to the loss of evidence depends on both the degree of culpability and the extent of prejudice. Even if there is intentional destruction of potentially relevant evidence, if there is no prejudice to the opposing party, that influences the sanctions consequence. And even if there is an inadvertent loss of evidence but severe prejudice to the opposing party, that too will influence the appropriate response, recognizing that sanctions (as opposed to other remedial steps) require some degree of culpability.

*614 C. Culpability

As a general rule, in this circuit, the severe sanctions of granting default judgment, striking pleadings, or giving adverse inference instructions may not be imposed unless there is evidence of “bad faith.” Condrey v. SunTrust Bank of Ga., 431 F.3d 191, 203 (5th Cir.2005); King v. Ill. Cent. R.R., 337 F.3d 550, 556 (5th Cir.2003); United States v. Wise, 221 F.3d 140, 156 (5th Cir.2000). “ ‘Mere negligence is not enough’ to warrant an instruction on spoliation.” Russell v. Univ. of Tex. of Permian Basin, 234 Fed.Appx. 195, 208 (5th Cir.2007) (unpublished) (quoting Vick v. Tex. Employment Comm’n, 514 F.2d 734, 737 (5th Cir.1975); see also King, 337 F.3d at 556) (“King must show that ICR acted in ‘bad faith’ to establish that it was entitled to an adverse inferertce.”) Vick v. Tex. Employment Comm’n, 514 F.2d at 737 (“The adverse inference to be drawn from destruction of records is predicated on bad conduct of the defendant. Moreover, the circumstances of the act must manifest bad faith. Mere negligence is not enough, for it does not sustain an inference of consciousness of a weak case.” (quotation omitted)).

Other circuits have also held negligence insufficient for an adverse inference instruction. The Eleventh Circuit has held that bad faith is required for an adverse inference instruction. 10 The Seventh, Eighth, Tenth, and D.C. Circuits also appear to require bad faith. 11 The First, Fourth, and Ninth Circuits hold that bad faith is not essential to imposing severe sanctions if there is severe prejudice, although the cases often emphasize the presence of bad faith. 12 In the Third Circuit, *615 the courts balance the degree of fault and prejudice. 13

The court in Pension Committee imposed a form of adverse inference instruction based on a finding of gross negligence in preserving information and in collecting it in discovery. 14 The court applied case law in the Second Circuit, including the language in Residential Funding Corp. v. DeGeorge Financial Corp., 306 F.3d 99, 108 (2d Cir.2002), stating that “[t]he sanction of an adverse inference may be appropriate in some cases involving the negligent destruction of evidence because each party should bear the risk of its own negligence.” That language has been read to allow severe sanctions for negligent destruction of evidence. See, e.g., Rogers v. T.J. Samson Cmty. Hosp., 276 F.3d 228, 232 (6th Cir.2002); Lewis v. Ryan, 261 F.R.D. 513, 521 (S.D.Cal.2009) (noting that California district courts had followed the Second Circuit’s approach in Residential Funding). In the Fifth Circuit and others, negligent as opposed to intentional, “bad faith” destruction of evidence is not sufficient to give an adverse inference instruction and may not relieve the party seeking discovery of the need to show that missing documents are relevant and their loss prejudicial. The circuit differences in the level of culpability necessary for an adverse inference instruction limit the applicability of the Pension Committee approach. And to the extent sanctions are based on inherent power, the Supreme Court’s decision in Chambers may also require a degree of culpability greater than negligence.

D. Relevance and Prejudice: The Burden of Proof

It is well established that a party seeking the sanction of an adverse inference instruction based on spoliation of evidence must establish that: (1) the party with control over the evidence had an obligation to preserve it at the time it was destroyed; *616 (2) the evidence was destroyed with a culpable state of mind; and (3) the destroyed evidence was “relevant” to the party’s claim or defense such that a reasonable trier of fact could find that it would support that claim or defense. See Zubulake v. UBS Warburg LLC (Zubulake IV), 220 F.R.D. 212, 220 (S.D.N.Y.2003). The “relevance” and “prejudice” factors of the adverse inference analysis are often broken down into three subparts: “(1) whether the evidence is relevant to the lawsuit; (2) whether the evidence would have supported the inference sought; and (3) whether the nondestroying party has suffered prejudice from the destruction of the evidence.” Consol. Aluminum Corp. v. Alcoa, Inc., 244 F.R.D. 335, 346 (M.D.La.2006) (citing Concord Boat Corp. v. Brunswick Corp., No. LR-C-95-781, 1997 WL 33352759, at *7 (E.D.Ark. Aug. 29, 1997)). Courts recognize that “[t]he burden placed on the moving party to show that the lost evidence would have been favorable to it ought not be too onerous, lest the spoliator be permitted to profit from its destruction.” Chan v. Triple 8 Palace, Inc., No. 03CIV6048(GEL)(JCF), 2005 WL 1925579, at *7 (S.D.N.Y. Aug. 11, 2005).

Pension Committee recognized the difficulty and potential for unfairness in requiring an innocent party seeking discovery to show that information lost through spoliation is relevant and prejudicial. Those concerns are acute when the party seeking discovery cannot replace or obtain extrinsic evidence of the content of deleted information. But in many cases — including the present case — there are sources from which at least some of the allegedly spoliated evidence can be obtained. And in many cases — including the present case — the party seeking discovery can also obtain extrinsic evidence of the content of at least some of the deleted information from other documents, deposition testimony, or circumstantial evidence.

Courts recognize that a showing that the lost information is relevant and prejudicial is an important check on spoliation allegations and sanctions motions. Courts have held that speculative or generalized assertions that the missing evidence would have been favorable to the party seeking sanctions are insufficient. 15 By contrast, when *617 the evidence in the case as a whole would allow a reasonable fact finder to conclude that the missing evidence would have helped the requesting party support its claims or defenses, that may be a sufficient showing of both relevance and prejudice to make an adverse inference instruction appropriate. 16

In Pension Committee, the court followed the approach that even for severe sanctions, relevance and prejudice may be presumed when the spoliating party acts in a grossly negligent manner. Pension Comm. of the Univ. of Montreal Pension Plan v. Banc of Am. Sec., LLC, No. 05 Civ. 9016, 685 F.Supp.2d 456, 467-68, 2010 WL 184312, at *5 (S.D.N.Y. Jan. 15, 2010). The presumption of relevance and prejudice is not mandatory. Id. at 467-68, at *5. The spoliating party may rebut the presumption by showing that the innocent party had access to the evidence allegedly destroyed or that the evidence would not have been helpful to the innocent party. Id. When the level of culpability is “mere” negligence, the presumption of relevance and prejudice is not available; the Pension Committee court imposed a limited burden on the innocent party to present some extrinsic evidence. Id.

The Fifth Circuit has not explicitly addressed whether even bad-faith destruction of evidence allows a court to presume that the destroyed evidence was relevant or its loss prejudicial. Case law in the Fifth Circuit indicates that an adverse inference instruction is not proper unless there is a showing that the spoliated evidence would have been relevant. See Condrey v. SunTrust Bank of Ga., 431 F.3d 191, 203 & n. 8 (5th Cir.2005) (holding that an adverse inference was not appropriate because there was no evidence of bad faith but also noting that even if bad faith had been shown, an adverse inference would have been improper because relevance was not shown); Escobar v. City of Houston, No. 04-1945, 2007 WL 2900581, at *17-18 (S.D.Tex. Sept. 29, 2007) (denying an adverse inference instruction for destruction of emails in a police department following a shooting because the plaintiffs failed to show bad faith and relevance). One opinion states that bad-faith destruction of evidence “alone is sufficient to demonstrate relevance.” See Consol. Aluminum Corp. v. Alcoa, Inc., 244 F.R.D. 335, 340 n. 6 (M.D.La.2006). But that opinion also went on to state that “before an adverse inference may be drawn, there must be some showing that there is in fact a nexus between the proposed inference and the information contained in the lost evidence” and that “some extrinsic evidence of the content of the emails is necessary for the trier of fact to be able to determine in what respect and to what extent the emails would have been detrimental.” Id. at 346. In the present case, the party seeking sanctions for deleting emails after a duty to preserve had arisen presented evidence of their contents. The evidence included some recovered deleted emails and circum *618 stantial evidence and deposition testimony relating to the unrecovered records. There is neither a factual nor legal basis, nor need, to rely on a presumption of relevance or prejudice.

E. Remedies: Adverse Inference Instructions

Courts agree that a willful or intentional destruction of evidence to prevent its use in litigation can justify severe sanctions. Courts also agree that the severity of a sanction for failing to preserve when a duty to do so has arisen must be proportionate to the culpability involved and the prejudice that results. Such a sanction should be no harsher than necessary to respond to the need to punish or deter and to address the impact on discovery. 17 “[T]he judge [imposing sanctions] should take pains neither to use an elephant gun to slay a mouse nor to wield a cardboard sword if a dragon looms. Whether deterrence or compensation is the goal, the punishment should be reasonably suited to the crime.” Anderson v. Beatrice Foods Co., 900 F.2d 388, 395 (1st Cir.1990). A measure of the appropriateness of a sanction is whether it “restore[s] the prejudiced party to the same position he would have been in absent the wrongful destruction of evidence by the opposing party.” West v. Goodyear Tire & Rubber Co., 167 F.3d 776, 779 (2d Cir.1999) (quotation omitted); see also Silvestri v. Gen. Motors Corp., 271 F.3d 583, 590 (4th Cir.2001) (“[T]he applicable sanction should be molded to serve the prophylactic, punitive, and remedial rationales underlying the spoliation doctrine.” (quoting West, 167 F.3d at 779)).

Extreme sanctions — dismissal or default — have been upheld when “the spoliator’s conduct was so egregious as to amount to a forfeiture of his claim” and “the effect of the spoliator’s conduct was so prejudicial that it substantially denied the defendant the ability to defend the claim.” Sampson v. City of Cambridge, Maryland, 251 F.R.D. 172, 180 (D.Md.2008) (quoting Silvestri, 271 F.3d at 593); see Leon v. IDX Sys. Corp., 464 F.3d 951, 959 (9th Cir.2006) (“The prejudice inquiry ‘looks to whether the [spoiling party’s] actions impaired [the non-spoiling party’s] ability to go to trial or threatened to interfere with the rightful decision of the case.’ ” (alteration in original) (quoting United States ex rel. Wiltec Guam, Inc. v. Kahaluu Constr. Co., 857 F.2d 600, 604 (9th Cir.1988))).

When a party is prejudiced, but not irreparably, from the loss of evidence that was destroyed with a high degree of culpability, a harsh but less extreme sanction than dismissal or default is to permit the fact finder to presume that the destroyed evidence was prejudicial. 18 Such a sanction has been imposed for the intentional destruction of electronic evidence. 19 Al *619 though adverse inference instructions can take varying forms that range in harshness, and although all such instructions are less harsh than so-called terminating sanctions, they are properly viewed as among the most severe sanctions a court can administer.

In Pension Committee, the court stated that it would give a jury charge for the grossly negligent plaintiffs that: (1) laid out the elements of spoliation; (2) instructed the jury that these plaintiffs were grossly negligent in performing discovery obligations and failed to preserve evidence after a preservation duty arose; (3) told the jury that it could presume that the lost evidence was relevant and would have been favorable to the defendant; (4) told the jury that if they declined to presume that the lost evidence was relevant or favorable, the jury’s inquiry into spoliation was over; (5) explained that if the jury did presume relevance or prejudice, it then had to decide if any of the six plaintiffs had rebutted the presumption; and (6) explained the consequences of a rebutted and an unrebutted presumption. 20 The court *620 noted that it was “important to explain that the jury is bound by the Court’s determination that certain plaintiffs destroyed documents after the duty to preserve arose” but that “the jury is not instructed that the Court has made any finding as to whether that evidence is relevant or whether its loss caused any prejudice to the [ ] Defendants.” Pension Comm. of the Univ. of Montreal Pension Plan v. Banc of Am. Sec., LLC, No. 05 Civ. 9016, 685 F.Supp.2d 456, 496 n. 251, 2010 WL 184312, at *23 n. 251. The “jury must make these determinations because, if the jury finds both relevance and prejudice, it then may decide to draw an adverse inference in favor of the [] Defendants which could have an impact on the verdict,” and “[s]uch a finding is within the province of the jury not the court.” Id.

As explained in more detail below, based on the record in this case, this court makes the preliminary findings necessary to submit the spoliation evidence and an adverse inference instruction to the jury. But the record also presents conflicting evidence about the reasons the defendants deleted the emails and attachments; evidence that some of the deleted emails and attachments were favorable to the defendants; and an extensive amount of other evidence for the plaintiff to use. As a result, the jury will not be instructed that the defendants engaged in intentional misconduct. Instead, the instruction will ask the jury to decide whether the defendants intentionally deleted emails and attachments to prevent their use in litigation. If the jury finds such misconduct, the jury must then decide, considering all the evidence, whether to infer that the lost information would have been unfavorable to the defendants. Rather than instruct the jury on the rebut-table presumption steps, it is sufficient to present the ultimate issue: whether, if the jury has found bad-faith destruction, the jury will then decide to draw the inference that the lost information would have been unfavorable to the defendants. 21

*621 III. Background

A. Factual and Procedural History

Rimkus is a forensic engineering contractor with its principal place of business in Houston, Texas. Founded in 1983, Rimkus has thirty offices in eighteen states and works across the country. Rimkus analyzes unexpected accidents and occurrences that cause damage to people or property, primarily in connection with insurance disputes or litigation, and provides reports and testimony.

In 1995, Rimkus hired Bell, a Louisiana resident, as a marketing representative. In October 1996, Rimkus hired Cammarata, also a Louisiana resident, as a full-time salaried employee, to provide forensic engineering services. Both Bell and Cammarata were hired at Rimkus’s office in Houston, Texas, where they signed an Empl