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Edifecs, Inc. v. Welltok, Inc.

United States District Court, W.D. Washington, Seattle

November 8, 2019

EDIFECS, INC., Plaintiff,
v.
WELLTOK, INC., Defendant.

          ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF'S MOTION FOR EVIDENTIARY SANCTIONS

          JAMES L. ROBART UNITED STATES DISTRICT JUDGE.

         I. INTRODUCTION

         Before the court is Plaintiff Edifecs, Inc.'s (“Edifecs”) motion for evidentiary sanctions. (Mot. (Dkt. # 27).) Edifecs seeks sanctions based on Defendant Welltok, Inc.'s (“Welltok”) alleged spoliation of (1) records of text messages on Welltok employees' personal cell phones, and (2) online job postings. (See Mot. at 5.) Welltok filed a response. (Resp. (Dkt. # 34).) Edifecs filed a reply. (Reply (Dkt. # 38).) The court held oral argument on November 1, 2019. (See 11/1/19 Dkt. Entry.) The court has considered the parties' submissions, the relevant portions of the record, and the applicable law. Being fully informed, the court GRANTS in part and DENIES in part Edifecs's motion for sanctions.

         II. BACKGROUND

         This action revolves around Edifecs's allegation that Welltok's former Vice President, David Profant, “engaged in an unlawful raid of senior Edifecs employees.” (Mot. at 5.) Mr. Profant left Edifecs for Welltok in late 2016. (See Mot. at 6[1]; Resp. at 6.) Shortly after, a number of Edifecs employees with whom Mr. Profant was close (the “Employees”) applied for and were offered positions at Welltok. (See, e.g., Uriarte Decl. (Dkt. # 28) ¶¶ 9-11, Exs. 8-10.) Edifecs alleges that Mr. Profant “secretly negotiate[d] with Welltok executives to leave Edifecs for Welltok.” (See Mot. at 5-6.) Welltok responds that the Employees made independent decisions to apply for their Welltok positions. (See Resp. at 8.)

         Edifecs originally sued Mr. Profant in March 2017 (the “Profant Case”) for breach of a clause in Mr. Profant's employment agreement that disallowed Mr. Profant from soliciting Edifecs employees for one year following termination of his Edifecs employment. (See Compl. (Dkt. # 1) ¶ 18.) During that litigation, Mr. Profant's counsel represented that Mr. Profant conducted a thorough search for responsive documents, including text messages, in his “personal devices (iPhone and iPad), and the PC he uses for work (a Welltok-owned device).” (See 4/24/17 Ltr. (Dkt. # 24-2) at 3.) Mr. Profant passed away unexepectedly in March 2018 as the Profant Case was in progress. (See Resp. at 8.) Edifecs decided to shift the focus of its litigation away from Mr. Profant and towards Welltok. (See Id. at 8 (citing Cohen Decl. (Dkt. # 35) ¶ 24, Ex. 23 at 1).) Edifecs filed this action against Welltok on July 4, 2018, alleging a new tortious interference theory. (See Compl. ¶¶ 40-49.) Edifecs then voluntarily dismissed the Profant Case. (See Resp. at 8.)

         Mr. Profant disclosed his Edifecs employment agreement to Welltok. (See Uriarte Decl. ¶ 3, Ex. 2 (“Addendum”).) Welltok prepared and sent the Addendum to its offer letter to Mr. Profant on November 13, 2016, which stated that “[w]e do not believe your acceptance of employment . . . will violate the [non-solicitation clause] or any other obligation you have to Edifecs, in part, because we are not a competitor of that company.” (See Id. at 3.) “Nevertheless, ” the Addendum goes on, “we have some special rules that you must follow.” (Id.) The “special rules” instruct Mr. Profant on how he may and may not communicate with his former Welltok colleagues. (See Id. (“Do not affirmatively contact former colleagues telephonically, by text or by email during any restricted period to discuss employment with Welltok or to suggest or encourage them to apply for employment at Welltok.”).)

         Welltok, which was not a defendant in the Profant Case, purportedly received notice of that lawsuit on March 15, 2017, and issued a litigation hold notice to former Edifecs employees Dave Profant, Jennifer Forster, John Schlichting, Dave Arnone, Derek Baehre, and Matt Dziedzic. (See Mot. at 8.[2])

         Edifecs served subpoenas on Welltok, Mr. Profant, and the Employees on May 24, 2017. (See id. at 7.) The Employees, through Welltok's counsel, objected to producing a number of documents. (See Resp. at 6.) Nevertheless, Welltok's counsel agreed to produce emails between Mr. Profant and the Employees, including “all emails to or from Mr. Profant dated from September 1, 2016 to the date when each left Edifecs to work for Welltok.” (See Cohen Decl. ¶ 22, Ex. 21.) On October 11, 2017, Mr. Profant's counsel made a formal demand under the Stored Communications Act, 18 U.S.C. § 2702(c)(2), to Mr. Profant's cell phone carrier, AT&T Wireless, requesting “copies of any and all text message records sent from or received by Mr. Profant's AT&T-subscriber cell phone number . . . for the time period November 1, 2016 to the present, including but not limited to text message detail, logs and transcripts.” (Cohen Decl. ¶ 23, Ex. 22.) By April 24, 2018, counsel for the parties appear to acknowledge that nearly all of Mr. Profant's text messages for the relevant time period had been deleted. (See Cohen Decl. ¶ 24, Ex. 23.)

         In August 2017, Welltok switched to a new job posting system and lost access to its prior job posting records. (Mot. at 9-10; Uriarte Decl. ¶ 15, Ex 14 (“Welltok cannot access its history of sales job postings during the period January 1, 2016 to July 30, 2017, because Welltok no longer uses the same job posting platform that it used during that period . . . .”).) Edifecs believes that “Welltok hopes to profit from its spoliation of job posting records by arguing that there were public job postings for the subject positions. Edifecs cannot test this argument due to Welltok's spoliation.” (Mot. at 6 n.2.)

         Welltok asserts that Edifecs was unwilling to take Welltok depositions that were “repeatedly offered.” (Resp. at 9.) Edifecs did not depose the Employees until September and October 2019. (See Cohen Decl. (Dkt. # 35) ¶¶ 2, Ex. 1 (Bhardwaj Dep.), 3, Ex. 2 (Forster Dep.), 4, Ex. 3 (Arnone Dep.), 5, Ex. 4 (Singh Dep.), 33 (declaring that Welltok's counsel did not include excerpts from the depositions of “Mr. Baehre, Mr. Dziedzic, Mr. Hinkle or others because they occurred recently and to date they have only been provided in draft form.”).) During these depositions, Edifecs's counsel questioned the Employees about their use of their personal email accounts and cell phones, and whether they maintained records of text messages sent to or received from Mr. Profant in late 2016 and early 2017. (See, e.g., Forster Dep. 115:18-25 (“Q: Was it your habit to delete text messages after you received them from Mr. Profant? A: It's my habit to periodically clean out my text messages, but not specifically - usually because I get pages of conversations. Q: How often do you do that? A: Depends on when I have downtime.”).) The Employees testified that they searched their email accounts for and produced responsive documents in the Profant Case. (See, e.g., Forster Dep. at 159:21-24 (“Q: You don't know if those emails were collected? A: I gave everything that I had at the time when I was asked for them.”).)

         The Employees were not parties to the Profant Case. A number of the Employees used their cell phones for work purposes. (See Reply at 4 (citing Swaminathan Decl. ¶ 4, Ex. 2 (Arnone Dep.) at 53:24-54:8).) It is unclear from the briefing at what date the Employees deleted potentially relevant text messages (or whether they were deposed on this topic), and if they did so prior to joining Welltok.

         III. ANALYSIS

         A. Timeliness of ...


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