In Aviva USA Corp. v. Vazirani [pdf], No. 11-0369 (D. Ariz. Jan. 10, 2012), U.S. District Court Judge James A. Teilborg, denied the plaintiffs’ request that they be granted judgment on liability and granted the plaintiffs’ request for an adverse inference instruction against the defendants for their bad faith spoliation of evidence related to the lawsuit.  The court also awarded the plaintiffs’ attorneys’ fees and the cost of bringing their motion against the defendants. 

The plaintiffs brought an action alleging that the defendants engaged in conduct that infringed on the plaintiffs’ trademarks, resulted in unfair competition, and constituted impermissible racketeering.   Specifically, the plaintiffs alleged that the defendants, with the assistance of a public relations firm, developed commercial websites that infringed upon the plaintiffs’ trademark and trademark dress rights and disparaged plaintiffs.  The plaintiffs also alleged that the defendants registered fraudulent domain names. 

In support of their motion for sanctions regarding the defendants’ spoliation of evidence, the plaintiffs highlighted the following facts as proof that the defendants either failed to preserve or destroyed relevant evidence: 

•  Although the plaintiffs received relevant emails and text messages from the public relations firm retained by the defendants that were to/from the individual defendants, neither of the individual defendants produced any of those emails or text in response to discovery requests;

•  An individual defendant’s deposition testimony in another matter, namely that he did not discuss websites that were derogatory toward the plaintiffs with the public relations firm, was contradicted by the public relations firm’s document production;

•  Emails and text messages produced by the public relations firm indicated that an individual defendant sometimes avoided email in favor of telephone, fax, and text communications to hide what was being discussed;

•  On the day that the plaintiffs filed their complaint, an individual defendant sent an email to the public relations firm requesting that they “remove all indication of dates for updates on the site;”

•  Screenshots of searches produced by an individual defendant showed that emails containing the keywords were placed in the “trash” folder of his email account; and

•  The defendants and their internet computer specialist displayed significant gaps in their memories during their depositions.

After reviewing the parties’ briefing on the topic, the court found the defendants acted culpably and in bad faith by requesting that the public relations company destroy relevant evidence (i.e., the websites at issue in the litigation); hiding relevant emails in a “trash” email folder; and otherwise failing to preserve relevant information.  The court, however, rejected the plaintiffs’ request for a judgment of liability in their favor given the availability and appropriateness of lesser sanctions.  The court ordered that an adverse inference instruction was warranted and required that the parties submit proposed adverse inference instructions before trial.