United States District Court, S.D. Indiana, Indianapolis Division
REPORT AND RECOMMENDATION ON PLAINTIFF'S MOTION FOR SANCTIONS
MARK J. DINSMORE, Magistrate Judge.
This matter comes before the Court on Plaintiff's "Motion for Sanctions Against Defendants for Spoliation of Evidence and Perjury, " [Dkt. 130], and Plaintiff's "Supplement to Its Motion for Sanctions Against Defendants for Spoliation of Evidence and Perjury." [Dkt. 159.] For the reasons set forth below, the Magistrate Judge recommends that the Court GRANT Plaintiff's motion for sanctions. [Dkts. 130 & 159.]
In 2013, Malibu Media, LLC ("Plaintiff") retained a German company-IPP Limited-to investigate whether certain internet users were infringing Plaintiff's copyrights by uploading and/or downloading its copyrighted adult movies via a BitTorrent client. [ See Dkt. 1.] IPP monitored the BitTorrent file distribution network and identified certain IP addresses that were being used to distribute Plaintiff's copyrighted movies. [Dkt. 5-1 ¶¶ 5-7 (Decl. of Tobias Fieser, February 4, 2013).] On February 5, 2013, Plaintiff filed suit against an unidentified defendant, alleging that the defendant had used a BitTorrent client to infringe the adult movies on Plaintiff's X-Art website. [ See Dkt. 1.] The individual was initially known only by her IP address- 126.96.36.199-but Plaintiff subpoenaed the alleged infringer's ISP-Comcast-to determine that the infringing activity occurred at the address of Kelley Tashiro ("Defendant Kelley"). [ See Dkt. 14.] Plaintiff accordingly filed an amended complaint against Defendant Kelley on April 8, 2013. [Dkt. 13.] Attorney Jonathan Phillips ("Phillips") entered an appearance on Defendant Kelley's behalf. [Dkt. 19.]
Plaintiff further amended its complaint on May 15, 2014. [Dkt. 124.] This amendment added Defendant Kelley's husband, N. Charles Tashiro, ("Defendant Charles"), as the second named defendant in the case. [ See id. ] Attorney Phillips thereafter began representing both Defendant Kelley and Defendant Charles. [ See, e.g., Dkt. 134.]
Plaintiff's current motion alleges two types of misconduct: 1) spoliation of evidence based on Defendants' alleged deletion of computer files; and 2) perjury in the form of misrepresentations by Defendants at their depositions and in their responses to various discovery requests.
A. Deletion of Files
During discovery, Defendant Kelley agreed to provide the computer hard drives from her household to Quantum Discovery for forensic imaging. [ See Dkt. 130 at 3.] She did so on December 23, 2013, and Quantum Discovery created images of the hard drives on the same day. [ See Dkt 76-1 ¶ 17 (Decl. of Patrick Paige, February 10, 2014).] Quantum Discovery then sent the images of the hard drives to Plaintiff's expert witness, Patrick Paige. [ Id. ] Mr. Paige received a forensic image of a Western Digital hard drive with serial number WXHZ08077637; a forensic image of a hard drive labelled "int HDD inside usb encl."; and a forensic image of an iPad hard drive. [ Id. ¶¶ 18-19.] He also reported that Quantum Discovery had received a fourth hard drive from Defendants' household, but that the fourth hard drive could not be imaged. [ Id. ¶ 20.]
Mr. Paige examined each of the images of the hard drives for evidence of BitTorrent use. [ Id. ¶ 21.] On the "int HDD inside usb encl." hard drive, Mr. Paige found evidence that the "hard drive was repeatedly used to download BitTorrent files and also had BitTorrent software installed on the hard drive." [ Id. ¶ 23.] He also determined that "numerous files and folders associated with BitTorrent use were deleted from the hard drive on December 22, 2013 at approximately 10:00 pm-the night before the hard drive was turned over to Quantum Discovery for imaging." [ Id. ¶ 25 (emphasis original).] Mr. Paige recovered some of the deleted files and determined that "many of these BitTorrent files [were] associated with adult movies" and that others were "BitTorrent clients, that enable the BitTorrent protocol to work." [ Id. ¶ 26.] He also concluded that "Malibu Media, LLC's copyrighted content could have been deleted from the drive." [ Id. ¶ 28.]
Defendants' expert, Delvan Neville, also examined Defendants' hard drives. [ See Dkt 101-1 (Decl. of Delvan Neville).] He agreed "with Mr. Paige's finding that there were many files and folders deleted on 22 December 2013, " but "dissent[ed] from Mr. Paige's finding as to whether any of the deleted files could be Malibu Media, LLC's copyrighted content." [ Id. ¶¶ 5-6.] He stated that he recovered all of the deleted files, searched them, and found no evidence that they contained Plaintiff's copyrighted content. [ Id. ¶¶ 14-24.] Despite Neville's purported recovery, Plaintiff contends that the above-described deletion constitutes spoliation of evidence, and Plaintiff asks the Court to enter default judgment against Defendants. [ See Dkt. 130.]
B. Defendants' Alleged Misrepresentations
Plaintiff deposed Defendant Kelley in February 2014. [Dkt. 107-1 (Kelley Tashiro Dep., February 25, 2014).] She testified that she had visited adult websites, but she denied searching for Plaintiff's X-Art website. [Kelley Tashiro Dep. 52:12-53:23.] In her answers to Plaintiff's Interrogatories, Defendant Kelley also denied any knowledge of BitTorrent other than that gained through this lawsuit. [Dkt. 76-2 ¶ 13.]
Plaintiff also deposed Defendant Kelley's husband, Defendant Charles. [Dkt 107-2 (Charles Tashiro Dep., February 25, 2014).] He testified that he had used BitTorrent, [Charles Dep. 26:3-27:13], and that he had visited Plaintiff's X-Art website. [Charles Dep. 52:23-53:7.] Thereafter, Plaintiff amended its complaint to add a claim of copyright infringement against Defendant Charles. [ See Dkt. 124.] Plaintiff filed the amended complaint on May 15, 2014. [ Id. ]
During discovery, Plaintiff also served interrogatories and requests for production on Defendant Kelley. [ See Dkt. 130 at 5.] Plaintiff's Interrogatory No. 4 asked Defendant Kelley to identify "each of the Computer Devices used in [her] home during the preceding two years" and to state "who has been authorized to use the Computer Device, the times during which each such person was authorized to use the Computer Device, and [the identity of] the person who primarily uses the Computer Device." [Dkt. 76-2 ¶ 4.] Defendant Kelley answered the interrogatories on October 17, 2013 and supplemented her responses on December 31, 2013, January 16, 2014, and January 19, 2014. [ Id. at 10.] Her responses identified four hard drives: a Dell Inspiron laptop hard drive; an iPad hard drive; a Sony Vaio desktop hard drive; and the Stover drive. [ Id. ¶ 4]
This proved to be an incomplete list of the computer drives in Defendants' home: On April 8, 2014, Plaintiff's counsel wrote to attorney Phillips and stated that "it has been brought to my attention that there are several hard drives/external devices that the defendant failed to disclose in discovery responses." [Dkt. 130-3 at 3.] Plaintiff's counsel specifically identified a WD 5000AAV External 1.65 hard drive; a WD My Passport 070A 1032 hard drive; and a WDC WD40 hard drive. [ Id. ] Plaintiff's counsel based these identifications on Mr. Paige's examination of the image of Defendant Kelley's laptop. Paige determined that the three drives "were connected to Kelley Tashiro's laptop computer" but had not been disclosed to Quantum Discovery for imaging. [ See Dkt. 109-2.] Plaintiff's counsel also noted that the drives had been connected in the early morning hours of December 23, 2013-the day the drives were to be turned over to Quantum Discovery-and stated that these drives should have been disclosed in response to Plaintiff's requests for production. [Dkt. 130-3 at 3.]
Attorney Phillips responded to Plaintiff's letter on the same day. He wrote that Defendant Kelley "is unaware of these drives, " such that there was "no failure to disclose'" in Defendant Kelley's discovery responses. [ Id. at 5.] Phillips also stated that his client "connected nothing" to her computer on the night of December 22, and he suggested the connections were done by Quantum Discovery. [ Id. at 7.] In another email the next day, Phillips maintained that the drives "were not provided, because they do not exist, or at least to not [sic] known to exist by Kelley Tashiro." [ Id. at 10.]
The parties later determined that two of the hard drives identified by Plaintiff's counsel actually had been produced and had been included in the four hard drives originally provided to Quantum Discovery. [ See Dkt. 137 at 14.] The last of the hard drives, however, had not been produced, and on May 31, 2014, Defendant submitted a fourth supplement to her response to Plaintiff's interrogatories. [Dkt 130-2 at 11.] She stated that she "only recently became aware of an additional external harddrive contained within the [Tashiro] household, " and she said she was "unaware of the drive's existence previously." [ Id. at 4.] The additional drive was a "Western Digital External HD" with serial number WCASUZ940825. [ Id. at 4.] Defendant Kelley stated that her husband was the primary user of the device. [ Id. ]
Based on the above events, Plaintiff contends that Defendants and their counsel intentionally misrepresented the number of hard drives in their household in their discovery responses and in their communications with Plaintiff's counsel. [Dkt. 130 at 5.] Plaintiff argues that this constitutes perjury and that default is the only appropriate sanction for the alleged misconduct. [ Id. at 16.]
C. Supplement to Motion for Sanctions
On October 1, 2014, Plaintiff filed its "Supplement to its Motion for Sanctions Against Defendants for Spoliation of Evidence and Perjury, " [Dkt. 159], and asserted that since the time of the filing of its original motion, "additional evidence of perjury [had] come to light." [ Id. at 1.] Plaintiff claimed that additional evidence showed that both Defendant Kelley and Defendant Charles had committed perjury, and that both Defendants had intentionally withheld evidence.
1. Defendant Kelley
Plaintiff's Interrogatory No. 11 asked Defendant Kelley to "[i]dentify any communication you have received from your ISP in the last two years including any changes regarding the terms of your contract or agreement, and any notices that you have received, including but not limited to notices of copyright infringement." [Dkt. 130-2 ¶ 11.] Defendant Kelly answered: "Yearly updates from Comcast. No other communications other than billings." [ Id. ]
Plaintiff's Request for Production No. 7 similarly asked Defendant Kelley to produce all documents "referring, relating to, or comprising written communications between you and your ISP, including all... Digital Millennium Copyright Act notices." [Dkt. 159 at 2.] Defendant Kelley answered: "Tashiro has no such documents other than those of Response 3-38, 235-286. In particular, no Digital Millenium [sic] Copyright Act Notices have ever existed." [ Id. ]
On August 22, 2014, however, Plaintiff deposed the Tashiros' Internet Service Provider-Comcast. [ Id.; see also Pl.'s Ex. 50 (Dep. of Colin Padgett, August 22, 2014).] Prior to the deposition, Comcast produced to Plaintiff seven Digital Millennium Copyright Act notices that were sent to Defendants. [Dkt. 159 at 2-3.] Plaintiff thus concludes that Defendant Kelley "provid[ed] knowingly false answers" to Plaintiff's interrogatories and requests for production, and thereby committed perjury by failing to disclose the notices of copyright infringement that she had in fact received. [ Id. at 3.]
2. Defendant Charles
Plaintiff deposed Defendant Charles on February 25, 2014. [ Id. at 3.] Charles testified that he used BitTorrent "just for music, " [Charles Dep. 27:12-13], and he specifically denied using BitTorrent to download other types of media, such as movies. [Charles Dep. 27:6-11.] On June 18, 2014, however, Plaintiff served Requests for Admission on Defendant Charles, and Defendant Charles subsequently admitted that he "used BitTorrent to download adult films" from several different websites. [Dkt. 159 at 3-4.] Plaintiff thus contends that Defendant Charles' deposition testimony was "an intentional lie" because his own admissions prove he used BitTorrent "for more than just music." [ Id. ]
3. Withholding Evidence
Plaintiff's supplement accuses Defendants Charles and Kelley of withholding relevant evidence. As noted above, Plaintiff's expert stated that three drives had been connected to Kelley Tashiro's computer on the night of December 22, 2013 or in the early morning of December 23, 2013, but that the drives were not disclosed to Plaintiff or provided to Quantum Discovery for forensic imaging. Plaintiff's counsel then wrote to Defendants' counsel on April 8, 2014 to inquire about these drives, which included the Western Digital hard drive described above. As noted previously, Defendant's counsel responded that Defendant Kelley was "unaware of these drives, " and that there was "no failure to disclose'" in Defendant Kelley's discovery responses. [Dkt. 130-3 at 5.]
Plaintiff, however, also served requests for admission on Charles Tashiro, in which Charles admitted that he "used the Western Digital hard drive... on December 22, 2013." [Dkt. 159 at 5.] Plaintiff thus asserts that Charles "used the Western Digital hard drive" on December 22, but then made the "affirmative choice to exclude it and keep it from Plaintiff" by not providing the hard drive to Quantum Discovery the next day. [Dkt. 159 at 5.] Plaintiff contends that this constitutes "bad faith, " sanctionable conduct even if Charles himself was not a named defendant in December of 2013. [Dkt. 161 at 3.]
Plaintiff also adds that it served Requests for Admission on Defendant Kelley. [Dkt. 161 at 2-3.] In her responses, Kelley admitted that- before the Western Digital hard drive was disclosed to Plaintiff in Defendants' May 31, 2014 fourth supplement to their responses to Plaintiff's interrogatories-Kelley "knew [her] husband owned the Western Digital external hard drive" and had "seen the above hard drive in [her] home." [Dkt. 161-2 ¶¶ 1-2.] Plaintiff thus contends that Kelley had no basis for claiming that she was previously unaware of the hard drive when she responded to Plaintiff's discovery requests. [ See Dkt. 161 at 3.] Plaintiff notes that it is especially difficult to reconcile Defendant Kelley's May 31, 2014 Supplement to her response to Plaintiff's interrogatories with Defendant Kelley's later response to Plaintiff's request for admissions. In the former, Kelley stated that she "was unaware of the drive's existence previously, " [Dkt. 130-2 ¶ 4], but in the latter, she admitted that, "prior to May 31, 2014, [she] knew that [her] husband owned the Western Digital external hard drive[.]" [Dkt. 161 at 2-3.] Plaintiff thus asserts that Defendant Kelley perjured herself by falsely responding to Plaintiff's interrogatories. [Dkt. 161 at 2.]
D. Hearing and New Counsel
The Court referred Plaintiff's motion for sanctions to the undersigned Magistrate Judge for proposed findings and recommendations, [Dkt. 16], and the Magistrate Judge set the matter for an evidentiary hearing on January 29, 2015. [Dkt. 167.] On the morning of the hearing, however, attorney Phillips advised the Court that Defendant Charles planned to invoke his Fifth Amendment rights to avoid testifying. [Dkt. 206.] Phillips concluded that this created a conflict of interest between Defendants Charles and Kelley, and Phillips committed to withdrawing as counsel for Charles. [ Id. ] The Court continued the hearing to allow Defendant Charles to retain new counsel, which he did on March 2, 2015. [Dkt. 216 (Mot. for Erin Kathryn Russell to Appear Pro Hac Vice).] With Defendants Charles and Kelley represented by separate counsel, the Court conducted the evidentiary hearing on April 30, 2015. [Dkt. 239.] The Court then conducted a supplemental hearing to allow for additional argument by counsel on May 8, 2015. [Dkt. 241.]
E. Motions in Limine and Objections
Prior to the April 30 hearing, Defendants filed seven motions in limine in an attempt to preclude several of Plaintiff's proposed witnesses from testifying. [ See Dkts. 170, 172, 173, 175, 176, 177 & 179.] The Court denied the motions on the grounds that the hearing would involve no jury, such that preemptively excluding the proposed testimony was unnecessary. [Dkt. 227 (citing In re Salem, 465 F.3d 767, 777 (7th Cir. 2006); Barna v. United States, 183 F.R.D. 235, 239 (N.D. Ill. 1998)).] The Court's order, however, acknowledged that Defendants would be permitted to challenge Plaintiff's witnesses through specific objections at the time of their proposed testimony.
At the hearing, Defendants objected to testimony offered by Michael Patzer. [ See Hr'g Tr. 197:15-21, Apr. 30, 2015.] The Court took the objection under advisement and allowed Patzer to testify. [Hr'g Tr. 200:9-10.] Defendants also objected to Plaintiff's questioning of Defendant Kelley. [Hr'g Tr. 24-26.] They asserted that certain questions infringed on the marital communications privilege as asserted by Defendant Charles. [Hr'g Tr. 24:16-18.] The Court overruled that objection at the time of the hearing, and the Court now addresses both objections below.
A. Objection to Patzer's Testimony
Michael Patzer is an independent contractor who "designed, implemented, monitor[s] and maintain[s] the data collection system" that IPP uses to identify the IP addresses of potential copyright infringers. [Dkt. 73-13 ¶¶ 3-4 (Decl. of Michael Patzer, February 5, 2014).] As explained in their motion in limine, Defendants asserted that Patzer would testify as an expert, but that Plaintiff had violated Fed.R.Civ.P. 26(a)(2) by not properly disclosing his identity or proposed testimony. [Dkt. 171 at 1.]
Rule 26(a)(2) requires the disclosure of the identity of expert witnesses, see Fed.R.Civ.P. 26(a)(2)(A), as well as certain information associated with such testimony. See Fed R. Civ. P. 26(a)(2)(B)-(C). Expert witnesses are those who present evidence founded on "scientific, technical, or other specialized knowledge." Fed.R.Evid. 702(a). Lay witnesses, in contrast, present evidence consisting of opinions or inferences "rationally based on the perception of the witness." Fed.R.Evid. 701(a).
The Seventh Circuit has addressed the distinction between lay and expert testimony in the context of police investigations. See, e.g., United States v. Rollins, 544 F.3d 820, 832-33 (7th Cir. 2008); United States v. Oriedo, 498 F.3d 593, 603 (7th Cir.2007). When an officer's testimony is not "limited to what he observed in [a given] search or to other facts derived exclusively from [the] particular investigation" at issue, and instead involves the officer bringing his "wealth of experience... to bear on those observations, " the testimony is expert testimony. Oriedo, 498 F.3d at 603. In contrast, when testimony involves only an officer's "own personal observations and perceptions derived from [the] particular case" at hand, the testimony is lay testimony. Rollins, 544 F.3d at 823. Courts have applied a similar distinction in civil cases. See, e.g., WNS Holdings, LLC v. United Parcel Serv., Inc., No. 08-CV-275-BBC, 2009 WL 2136961, at *3 (W.D. Wis. July 14, 2009), aff'd, 368 F.Appx. 144 (Fed. Cir. 2010) (finding that testimony arising "solely from [witness's] personal, first-hand sensory observations" was lay testimony).
In this case, Mr. Patzer first answered foundational questions about the nature of IPP's business and the duties of someone in his occupation. [Hr'g Tr. 196:10-197:12; 200:21-201:14.] He thus noted that IPP's primary business is tracking online copyright infringement so that records of such activities can be given to copyright owners interested in enforcing their rights. [ See, e.g., Hr'g Tr. 201:11-14.] He also stated that he was personally involved in maintaining the hardware and software that IPP uses to accomplish this task. [Hr'g Tr. 197:1-12.]
Next, Mr. Patzer indicated that IPP maintained the relevant records in the ordinary course of business, and he answered additional questions designed to show that the records met the requirements for admission under Federal Rule of Evidence 803(6). [ See, e.g., Hr'g Tr. 201:19-21.] He then stated that IPP had in its possession records indicating that someone with IP address 188.8.131.52 had used a BitTorrent protocol to upload or download pieces of Plaintiff's copyrighted movies. [ See, e.g., Hr'g Tr. 202:2-3 ("Yes, yes. The IP address is in our records referring to Malibu Media content, movies.").] Finally, he described that he had sent those records to Plaintiff's expert, Patrick Paige, for later analysis. [Hr'g Tr. 203:12-19.]
Based on the foregoing, Mr. Patzer limited his testimony to his "own personal observations and perceptions." Rollins, 544 F.3d at 823. He described only his relationship to IPP; the nature of his business; and the sorts of records he had obtained while working in that business. He thus did not have to bring his "wealth of experience... to bear" on facts or events outside of his personal observations, Oriedo, 498 F.3d at 603, such that he was not testifying as an expert.
Further, the fact that Patzer discussed matters that happened to involve technical issues does not transform his testimony into expert testimony. See, e.g., United States v. Tomkins, No. 07 CR 227, 2012 WL 1357701, at *11 (N.D. Ill. Apr. 19, 2012) (citing Bank of China v. NBM LLC, 359 F.3d 171, 181 (2d Cir.2004)) ("The fact that [the witness] has specialized knowledge, or that he carried out the investigation because of that knowledge, does not preclude him from testifying pursuant to Rule 701, so long as the testimony was based on the investigation and reflected his investigatory findings and conclusions.... Such opinion testimony is admitted not because of experience, training or specialized knowledge within the realm of an expert, but because of the particularized knowledge that the witness has by virtue of his position in the business.")). Patzer in this case may have had specialized knowledge about the process by which Defendant Kelley's IP address was identified, but he gained that knowledge through the investigation that gave rise to this case, and he conducted that investigation "not because of experience, training or specialized knowledge within the realm of an expert, but because of... his position in the business" of IPP. Bank of China, 359 F.3d at 181. His testimony therefore was not expert testimony, and Fed.R.Civ.P. 26(a)(2) accordingly imposed no obligation on Plaintiff to produce expert reports for Patzer.
Next, even if Patzer was an expert for whom Plaintiff should have provided expert reports, the Court would not exclude his testimony. Rule 37 provides that a failure to disclose information under Rule 26(a) prohibits use of a witness "to supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or is harmless. " Fed.R.Civ.P. 37(c)(1) (emphasis added). The district court has broad discretion in deciding whether an error is harmless or justified, but should consider factors such as "(1) the prejudice or surprise to the party against whom the evidence is offered; (2) the ability of the party to cure the prejudice; (3) the likelihood of disruption to the trial; and (4) the bad faith or willfulness involved in not disclosing the evidence at an earlier date." David v. Caterpillar, Inc., 324 F.3d 851, 857 (7th Cir. 2003). As described below, these factors indicate that any failure to disclose Patzer was harmless, such that his testimony should not be excluded.
First, Plaintiff disclosed to Defendants in February 2014 the substance of Patzer's expected testimony. [ See Dkt. 73 at 5-8. This gave Defendants over a year before the April 2015 hearing to consider Patzer's testimony and to depose Patzer if Defendants so desired. The Court thus finds that the testimony of Patzer presented little risk of surprise to Defendants and that Defendants had the opportunity to cure any concerns they may have had about the witness's testimony. Additionally, the Court sees little risk of prejudice to Defendants' interests: Defendants themselves assert that Patzer's testimony is "irrelevant" to the spoliation and perjury issues that formed the focus of the hearing, [Dkt. 171 at 4], and although the Court does not agree with this assessment,  it nonetheless rings hollow for Defendants to simultaneously argue both that the testimony was irrelevant and that the testimony would "greatly" damage their interests. [ See id. at 3.] Finally, the Court finds no "bad faith or willfulness" involved in any lack of disclosure: As noted above, Plaintiff previously informed Defendant of the substance of Patzer's testimony, and Plaintiff also included Mr. Patzer on its list of proposed witnesses for the hearing. [Dkt. 169 at 2.] This, in turn, precludes a finding that Plaintiff had some sort of "bad faith" plan to ambush Defendants. See, e.g., Sadowski v. Bombardier Ltd., 539 F.2d 615, 620 (7th Cir. 1976) (finding no "knowing concealment" when "witnesses were listed in the pretrial report"). The factors described in David, 324 F.3d at 857, thus support a finding that any lack of disclosure was harmless, such that the Court need not exclude the testimony of Plaintiff's witness. Defendants' objection to Mr. Patzer's testimony is accordingly OVERRULED, and the Court will consider Mr. Patzer's testimony as necessary in evaluating Plaintiff's motion for sanctions.
B. Marital Communications Privilege
Defendant Charles objected that certain questions posed to Defendant Kelley implicated the martial communications privilege. [Hr'g Tr. 24:16-18.] This privilege applies in both civil and criminal proceedings. See Stanfield v. Dart, No. 10 C 06569, 2011 WL 5301784, at *1 (N.D. Ill. Nov. 3, 2011). It belongs to both spouses and thus may be asserted by either spouse. United States v. Brock, 724 F.3d 817, 820. As a result, one spouse may preclude the other from testifying on matters within the scope of the marital communications privilege, even if that other spouse wishes to testify about those matters. See id. Defendant Charles was thus entitled to raise the martial communications privilege in an attempt to prevent Defendant Kelley from testifying.
The privilege, however, has limits. First, it "applies only to communications made in confidence between the spouses during a valid marriage. Acts observed by the spouse are not protected by the communications privilege." United States v. Lofton, 957 F.2d 476, 477 (7th Cir. 1992); see also Brock, 742 F.3d at 820 ("The marital communications privilege applies even after the marriage has dissolved, but the protected subject matter includes only what one spouse communicates to the other, not what one spouse learns about the other in other ways, such as by observing the other's actions."). Second, an exception to the marital communications privilege exists in cases in which the spouses are joint participants in an alleged crime. United States v. Darif, 446 F.3d 701, 706 (7th Cir. 2006) (citations and internal quotations omitted) ("The marital communications privilege places a limitation on truthful disclosure. However, we have recognized an exception to the privilege when spouses are joint participants in the underlying offense. We do not value criminal collusion between spouses, so any confidential statements concerning a joint criminal enterprise are not protected by the privilege.").
The exception for joint misconduct is relevant to Defendant Charles' assertion of the privilege in this case. Although Defendants in this case have not been charged with a crime, Defendants have been accused of jointly participating in discovery misconduct. [ See, e.g., Dkts. 130 & 159; see also Hr'g Tr. 19:2-3 ("[T]he evidence will show that they colluded and they were in cahoots together in suppressing this evidence.").] Just as the courts "do not value criminal collusion between spouses, " Darif, 446 F.3d at706, the courts do not value collusion between spouses to frustrate the discovery process. Such collusion would merely impair this Court's important truth-seeking function, and the Court accordingly concludes that the rationale for the joint criminal conduct exception applies to the Tashiros' alleged misconduct in this case. As such, they should not be allowed to preclude inquiry into their misconduct through reliance on the marital communications privilege.
This expansion of the joint crime exception is also consistent with the treatment of other privileges. In the context of the attorney-client privilege, for instance, courts have "demonstrate[d] a judicial willingness to expand the exception" to tortious conduct and discovery violations. In re Heraeus Kulzer GmbH, No. 3:09-CV-530 RM, 2012 WL 1493883, at *2 (N.D. Ind. Apr. 26, 2012) (citations omitted); see also, e.g., 1100 W., LLC v. Red Spot Paint & Varnish Co., No. 1:05-CV-1670-LJM-JMS, 2009 WL 232060, at *4 (S.D. Ind. Jan. 30, 2009) (applying crime-fraud exception where evidence showed "that [defendant] purposefully concealed relevant documents during discovery"); Nobelpharma Ab v. Implant Innovations, Inc., 930 F.Supp. 1241, 1260 (N.D. Ill. 1996), aff'd, 141 F.3d 1059 (Fed. Cir. 1998) (emphasis added) ("The crime-fraud exception to the attorney-client privilege applies when a person consults an attorney to further a continuing or future crime, fraud or other misconduct."). These cases are consistent with the general proposition that evidentiary privileges are "in derogation of the search for the truth, " and thus must be "construed narrowly." United States v. Evans, 113 F.3d 1457, 1461 (7th Cir. 1997) (discussing attorney-client privilege); see also United States v. Nixon, 418 U.S. 683, 710 (1974) "[Privileges] are not lightly created nor expansively construed, for they are in derogation of the search for truth.").
Here, the same considerations are relevant. Although the existence of the marital communications privilege demonstrates the importance of protecting the marital relationship, that importance has limits: just as courts have narrowly construed the attorney client privilege and have expansively construed the crime-fraud exception to that privilege, the Court in this case narrowly construes the marital communications privilege and expansively construes the jointcrime exception to that privilege. Hence, even if Defendants do not face criminal charges, their joint participation in the alleged misconduct in this case is sufficient to find that they cannot rely on the marital communications privilege. Just as it did at the hearing, then, the Court OVERRULES Defendants' objection to Plaintiff's questioning of Defendant Kelley. The Court will accordingly consider Kelley's testimony as necessary in evaluating Plaintiff's motion for sanctions.
The Magistrate Judge first addresses Plaintiff's allegations of spoliation of evidence and then addresses Plaintiff's allegations of perjury.
A. Spoliation of Evidence
Plaintiff first seeks imposition of sanctions for spoliation of evidence resulting from Defendants' deletion of files on December 22, 2013. [Dkt. 130 at 1-3.] A court may impose such sanctions under Fed.R.Civ.P. 37 or under its own inherent power. See, e.g., REP MCR Realty, L.L.C. v. Lynch, 363 F.Supp.2d 984, 998 (N.D. Ill. 2005), aff'd, 200 F.Appx. 592 (7th Cir. 2006). Rule 37 applies when a party violates a court order, id., but Plaintiff in this case has not identified any court order that Defendants have allegedly violated, nor does Plaintiff cite Rule 37 in its motion for sanctions or its supplement. [ See Dkts. 130 & 159.] The Magistrate Judge thus concludes that Plaintiff asks the Court to exercise its inherent powers to sanction Defendant.
Assessing whether spoliation occurred requires a two-part inquiry. First, the Seventh Circuit has noted that "courts have found a spoliation sanction to be proper only where a party has a duty to preserve evidence because it knew, or should have known, that litigation was imminent." Trask-Morton v. Motel 6 Operating L.P., 534 F.3d 672, 681 (7th Cir. 2008); see also Norman-Nunnery v. Madison Area Technical Coll., 625 F.3d 422, 429 (7th Cir. 2010) (observing that plaintiff "fail[ed] every element of the test for the spoliation inference" where evidence was destroyed "before [defendant] knew or should have known that litigation was imminent"). Thus, any sanction for spoliation must follow a finding that Defendants were under a duty to preserve evidence.
Second, a showing of "bad faith" is "a prerequisite to imposing sanctions for the destruction of evidence." Trask-Morton, 534 F.3d at 681. "[B]ad faith' means destruction for the purpose of hiding adverse information." Mathis v. John Morden Buick, Inc., 136 F.3d 1153, 1155 (7th Cir. 1998); see also Bracey v. Grondin, 712 F.3d 1012, 1019 (7th Cir. 2013), reh'g denied (May 1, 2013), cert. denied, 134 S.Ct. 900 (2014) (citation omitted) ("A party destroys a document in bad faith when it does so for the purpose of hiding adverse information."). Sanctions for spoliation thus may not be imposed simply because evidence was destroyed; instead, such sanctions are appropriate only if the evidence was destroyed for the purpose of hiding adverse information. See, e.g., Park v. City of Chicago, 297 F.3d 606, 615 (7th Cir. 2002) (citation omitted) ("[T]he crucial element is not that evidence was destroyed but rather the reason for the destruction."); accord, e.g., F.T.C. v. Asia P. Telecom, Inc., 788 F.Supp.2d 779, 790 (N.D. Ill. 2011) (citations omitted) ("A court's inherent power to impose spoliation sanctions arises only if a party destroyed evidence in bad faith. In the context of destroying evidence, bad faith' means destruction for the purpose of hiding adverse information.'"). The movant bears the burden to make this showing. Bracey, 712 F.3d at 1019.
Based on the above authority, Plaintiff must establish 1) that Defendants Kelley and Charles had a duty to preserve evidence because they knew or should have known that litigation was imminent; and 2) that while under this duty, Defendants destroyed evidence in bad faith, in that they did so for the purpose of hiding adverse information.
"A party has a duty to preserve evidence when it knows, or should have known, that litigation was imminent." Trask-Morton, 534 F.3d at 681. "At the latest, this duty attaches when the plaintiff informs the defendant of his potential claim." Chandler v. Buncich, No. 2:12 CV 175, 2012 WL 4343314, at *1 (N.D. Ind. Sept. 24, 2012). The duty may arise "even prior to the filing of a complaint as long as it is known that litigation is likely to commence." MacNeil Auto. Products, Ltd. v. Cannon Auto. Ltd., 715 F.Supp.2d 786, 801 (N.D. Ill. 2010).
a. Defendant Kelley's Duty
Plaintiff amended its complaint to name Kelley as a defendant on April 8, 2013. [Dkt. 13.] Kelley was served with the amended complaint on April 28, 2013, [Dkt. 16 at 1], and the alleged deletion occurred on December 22, 2013. [ See, e.g., Dkt. 130 at 3.] Because the duty to preserve evidence attaches, "at the latest" when "the plaintiff informs the defendant of his potential claim, " Chandler, 2012 WL 4343314, at *1, Kelley was plainly under a duty to preserve evidence at the time of the alleged deletion.
b. Defendant Charles' Duty
Plaintiff amended its complaint to name Charles as a defendant on May 5, 2014. [ See Dkt. 124.] Hence, at the time of the deletion, Charles Tashiro was not a defendant in this action. Nonetheless, the Court finds that, at the time of the deletion, Charles "knew, or should have known, that litigation was imminent." Trask-Morton, 534 F.3d at 681.
In response to Plaintiff's supplement to its motion for sanctions, Defendant Charles executed a declaration in which he stated that he was the holder of the Tashiros' Comcast account, and that any emails about the account or potential litigation would have been sent to his email address. [Dkt. 161 ¶¶ 2-4.] He added that he did "not recall receiving any DMCA notices, " but the deposition testimony from Comcast's 30(b)(6) confirms that seven such notices were sent. [ See Hr'g Tr. 61:22-63:6; see also Pl.'s Ex. 50 at 29:5-13 (Dep. of Colin Padgett).] Thus, regardless of whether Charles "recall[ed]" receiving the communications from Comcast, the repeated notices of infringement sent to his email address should have put him on notice that an infringement suit was likely, particularly after such a lawsuit was initiated against his wife.
Next, both Defendants "utilized the same internet account at all relevant times, " [Dkt. 161 at 1], and, after the filing of Plaintiff's original suit, Defendant Kelley "showed [Defendant Charles] a copy of the complaint." [Hr'g Tr. 72:17-20.] Defendant Charles also admitted 1) that he used BitTorrent before this lawsuit began, [Dkt. 107-2 at 2 (Charles Dep. 26:7-14)], and 2) that he had previously visited Plaintiff's X-Art website. [Charles Dep. 52:22-24.] Thus, at the time of the deletion, Charles knew that his wife had been sued for infringing the movies on the same website (X-Art) that he himself had visited; via the same protocol (BitTorrent) that he himself had used; and by means of the same internet account (the Tashiros') for which he had provided the associated email address. A reasonable person in that situation would know that litigation against him was "likely" to commence, MacNeil, 715 F.Supp.2d at 801, such that at the time of the deletion, Defendant Charles had a duty to preserve evidence.
Finally, other courts have noted that the duty to preserve evidence "certainly arises upon a formal discovery request." Am. Family Mut. Ins., Co. v. Roth, No. 05 C 3839, 2009 WL 982788, at *11 (N.D. Ill. Feb. 20, 2009). In this case, Plaintiff served its discovery requests on Defendant Kelley well before December 22, 2013, [ see, e.g., Dkt. 76-2 at 10], and Plaintiff explained that its requests were not limited only to Kelley as an individual. [ See, e.g., 161-1 at 3 (defining the terms "you" and "your" to include both the person receiving the request and "any other person(s) or entity(ies) acting or purporting to act on your behalf or under your control").] As explained below, Kelley then delegated to Charles much of the responsibility for responding to Plaintiff's discovery requests. See infra part II.A.2.b.ii. Charles was therefore acting on Kelley's behalf at the time of the alleged spoliation, such that he was subject to Plaintiff's discovery requests. The Court concludes that Plaintiff's discovery requests, in combination with the other considerations discussed above, were enough to put Charles on notice that he had a duty to preserve evidence. This is true regardless of whether Charles was a party to this litigation at that time, see, e.g., Chandler, 2012 WL 4343314, at *1 (noting that duty can arise before filing of complaint), and Charles is therefore potentially liable for spoliation.
2. Bad-Faith Destruction of Evidence
At the hearing, the parties stipulated that Defendant Charles had deleted files from the Stover drive before the drive was produced for imaging by Quantum Discovery. [Hr'g Tr. 108:3-11.] As noted above, however, sanctions for spoliation of evidence can be entered only if the culpable party destroyed evidence in bad faith. Trask-Morton, 534 F.3d at 681. Bad faith "means destruction for the purpose of hiding adverse information." Mathis, 136 F.3d at 1155. In this case, then, Plaintiff must show bad faith, and thus must establish that Defendants deleted files "for the purpose of hiding adverse information." Norman-Nunnery, 625 F.3d at 428. Because it was Defendant Charles who physically deleted the files, [Hr'g Tr. 108:10-11], the Court first addresses Defendant Charles' culpability. The Court then considers whether sanctions against Defendant Kelley are appropriate.
a. Defendant Charles
Charles stipulated at the hearing that he 1) withheld the Western Digital hard drive from his wife, such that it was not included in Defendants' initial responses to Plaintiff's discovery requests; and 2) deleted the files from the Stover drive on the night of December 22, 2013. [Hr'g Tr. 108:3-11.] As part of that stipulation, Plaintiff agreed not to question Charles about the reason for the deletion. [Hr'g Tr. 108:13-17] The hearing thus did not include any explicit testimony about whether Charles acted in bad faith when deleting the files.
The lack of such testimony, however, is not dispositive. "Bad faith' is a question of fact like any other, so the trier of fact is entitled to draw any reasonable inference." Mathis, 136 F.3d at 1155; see also Davis v. Carmel Clay Sch., No. 1:11-CV-00771-SEB-DML, 2013 WL 5487340, at *6 (S.D. Ind. Sept. 30, 2013) (same). Thus, the Court may infer bad faith from the circumstances of the destruction of evidence. See Mathis, 136 F.3d at 1155; see also Sokn v. Fieldcrest Cmty. Unit Sch. Dist. No. 8, No. 10-CV-1122, 2014 WL 201534, at *7 (C.D. Ill. Jan. 17, 2014) ("The way to determine whether evidence was destroyed in order to hide adverse information is... [to] infer bad intent based upon when the destruction occurred in relation to the destroyer's knowledge that the evidence was relevant to potential litigation."). In this case, the circumstances of the files' deletion support an inference that Charles acted in bad faith when he destroyed the files.
First, Defendants had a strong motive to erase the files at issue. This motive arises from the strength of Plaintiff's underlying copyright infringement claim and the associated risk of liability for Defendants. To prevail on their copyright claim, Plaintiff must show "(1) ownership of a valid copyright; and (2) unauthorized copying of constituent elements of the work that are original." Hobbs v. John, 722 F.3d 1089, 1094 (7th Cir. 2013) (quoting Peters v. W., 692 F.3d 629, 632 (7th Cir. 2012)).
Plaintiff established the first element through the parties' stipulation that Malibu Media owns the copyrights at issue. [Hr'g Tr. 192:4-6.] Plaintiff then addressed the second element through its examination of Defendant Charles, during which the following exchange occurred:
Q: Mr. Tashiro, did you intentionally fail to tell the truth during your deposition in this case?
Q: I am sorry, no?
A: What was the question again? I am sorry.
Q: Did you intentionally fail to tell the truth during your deposition in this case?
A Did I intentionally?
THE COURT: You can instruct him.
MS. RUSSELL: Your Honor, this is where Mr. Tashiro is fumbling, I believe, to invoke his Fifth Amendment privilege.
THE WITNESS: That's correct.
MS. RUSSELL: Then you need to say that for the record.
THE WITNESS: I wish to invoke my Fifth Amendment privilege.
BY MR. LIPSCOMB:
Q: Did you intentionally answer any request for admission inaccurately?
MS. RUSSELL: ...