Steinhauser et.al v. City of St.Paul

Taken from www.ademocracy.blogspot.com 20Dec07

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Frank J. Steinhauser, III, et al., Civil No. 04-2632 JNE/SRN

Plaintiffs,
v. DEFENDANTS’ RESPONSE
TO PLAINTIFFS’ OBJECTIONS

City of St. Paul, et al., TO MAGISTRATE NELSON’S
Defendants. ORDER OF NOVEMBER 13, 2007

Sandra Harrilal, et al., Civil No. 05-461 JNE/SRN
Plaintiffs,
v.
Steve Magner, et al.,
Defendants.
Thomas J. Gallagher, et al., Civil No. 05-1348 JNE/SRN
Plaintiffs,
v.
Steve Magner, et al.,
Defendants.

INTRODUCTION
Plaintiffs sought sanctions for Defendant’s alleged spoliation of evidence.

Plaintiffs claim that Defendants destroyed Truth-in-Sale of Housing Reports (TISH Reports) and e-mails. Plaintiffs also claim that Defendants should have disclosed
documents Plaintiffs received from an anonymous source. In a November 13, 2007,
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2 Order (04-2632, ECF Doc. No. 13; 05-461 ECF Doc. No. 111; 05-1348, ECF Doc. No.105) the Court denied
Plaintiffs’ motion without prejudice. In a December 10, 2007,
Order, (04-2632, ECF Doc. No. 148; 05-461 ECF Doc. No. 125; 05-1348, ECF Doc. No.119) the Court set a new scheduling order allowing Plaintiffs until February 15,
2000, to file any subsequent sanctions motion. Plaintiffs now appeal the Court’s November 13,
2007, Order. Plaintiffs appeal should be denied in its entirety as the Court’s Order was in accordance with the law.

STANDARD OF REVIEW
Great deference is given to a magistrate judge’s orders. Reko v. Creative Promotions, Inc., 70 F. Supp. 2d 1005, 1007 (D. Minn. 1999) (stating standard of review
is “extremely deferential”). A district court “must affirm the order of the magistrate judge
unless it is clearly erroneous or contrary to law.” Regents of the Univ. of Minn. v. Glaxo
Wellcome, Inc., 58 F. Supp. 2d 1036, 1037 (D. Minn. 1999). See Banbury v. Omnitrition
Int'l, Inc., 818 F. Supp. 276, 279 (D. Minn. 1993) (utilizing clearly erroneous or contrary
to law standard). See also 28 USCS § 636(b)(1)(A) (providing review by the district
court judge “where it has been shown that the magistrate’s [magistrate judge’s] (sic) order
is clearly erroneous or contrary to law”); Fed. R. Civ. P. 72(a) (stating same); D.Minn. LR
72.2(a) (stating same). “A finding is ‘clearly erroneous’ when although there is evidence
to support it, the reviewing court on the entire evidence is left with the definite and firm
Case 0:04-cv-02632-JNE-SRN Document 150 Filed 12/20/2007 Page 2 of 10
3
conviction that a mistake has been committed.” Chakales v. Commissioner, 79 F.3d 726,
728 (8th Cir. 1996) (internal quotation omitted).
ARGUMENT
I. STANDARD FOR IMPOSING SANCTIONS
A. Fed. R. Civ. P. 37
Plaintiffs’ motion was based primarily upon a request that the court impose
sanctions by exercising its authority under Fed. R. Civ. P. 37. See November 13, 2007,
Order at p. 4 fn. 1. However, “[i]n order to impose sanctions under Rule 37, there must
be an order compelling discovery, a willful violation of that order, and prejudice to the
other party.” Chrysler Co. v. Carey, 186 F.3d 1016, 1019 (8th Cir. 1999). “The
prerequisite of a Rule 37(a) order insures that the party failing to comply with discovery
is given adequate notice and an opportunity to contest the discovery sought prior to the
imposition of sanctions.” Dependahl v. Falstaff Brewing Co., 653 F.2d 1208, 1213 (8th
Cir. 1981). It is undisputed that Defendants have not violated any Court Order
compelling discovery. Therefore, the Court was correct when it did not sanction
Defendants pursuant to Fed. R. Civ. P. 37.
B. Court’s Inherent Authority
“The court has the inherent authority to sanction a party or its counsel that acts ‘in
bad faith, vexatiously, wantonly, or for oppressive reasons.’” Steinlage v. Mayo Clinic
Rochester, 235 F.R.D. 668, 674 (D. Minn. 2006) (quoting Chambers v. NASCO, Inc., 501
Case 0:04-cv-02632-JNE-SRN Document 150 Filed 12/20/2007 Page 3 of 10
4
U.S. 32, 44 (1991) and Jaquette v. Black Hawk County, 710 F.2d 455, 462 (8th Cir.
1983)). See also VanDanacker v. Main Motor Sails Co., 109 F. Supp. 2d 1045, 1046 (D.
Minn. 2000) (requiring bad faith prior to imposition of sanctions under inherent power).
“Exercise of this inherent authority requires a finding of bad faith and addresses conduct
that constitutes willful abuse of judicial process or fraud upon the court.” Steinlage, 235
F.R.D. at 674, (citing Stevenson v. Union Pac. R. Co., 354 F.3d 739, 751 (8th Cir. 2004)
and Jaquette, 710 F.2d at 462). See also Willhite v. Collins, 459 F.3d 866, 870 (8th Cir.
2006) (citing Roadway Express, Inc. v. Piper, 447 U.S. 752, 766-67 (1980)) (stating
sanction under inherent authority permissible upon finding of bad faith). “The court
exercises its inherent power to sanction cautiously and with ‘restraint and discretion.’”
Steinlage, 235 F.R.D. at 674, (citing Chambers, 501 U.S. at 44 and Pls.’ Baycol Steering
Comm. v. Bayer Corp., 419 F.3d 794, 802 (8th Cir. 2005)). It is undisputed that the Court
has the inherent authority to sanction a party that acts in “bad faith.” There is no evidence
that Defendants acted in “bad faith” and the Court’s decision to deny Plaintiffs’ motion
for sanctions (without prejudice) should be affirmed.
II. PLAINTIFFS FAILED TO ESTABLISH PREJUDICE
Plaintiffs have not shown any prejudice based on Defendants’ actions (or
inactions). The Court properly recognized that any sanction for the spoliation of evidence
requires a finding of prejudice. See November 13, 2007, Order at pp. 3-4. Plaintiffs
agree that a finding of prejudice is required. Id. at p. 3 (citing Plaintiffs’ Joint Memo. of
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5
Law in Support of Motion for Sanctions at p. 11). See also Plaintiffs’ Joint Objections to
Magistrate’s Order of November 13, 2007, at pp. 6 & 8 (arguing existence of prejudice).
Plaintiffs also agree with the Court’s determination that the requested discovery must be
relevant before prejudice can be found. See Id. at pp. 7-8 (discussing relevance of TISH
reports and e-mail); November 13, 2007, Order at pp. 4-6 (discussing Plaintiffs’ inability
to establish existence of relevant evidence in allegedly destroyed documents). See also
Zubulake v. UBS Warburg L.L.C., 220 F.R.D. 212, 217 (S.D.N.Y. 2003) (stating a party
only has a duty to preserve “unique, relevant evidence that might be useful to an
adversary”) (emphasis added); Gates Rubber Co. v. Bando Chemical Indus., 167 F.R.D.
90, 104 (D. Colo. 1996), quoted in LEXIS-NEXIS v. Beer, 41 F. Supp. 2d 950, 955 (D.
Minn. 1999) (stating moving party “must establish a reasonable possibility, based on
concrete evidence rather than a fertile imagination, that access to the [allegedly destroyed
material] would have produced [favorable] evidence”) (emphasis added). The party
opposing a motion for sanctions must also have been on notice that the destroyed
evidence was relevant. Stevenson v. Union Pacific Railroad Co., 354 F.3d 739, 749-750
(8th Cir. 2004) (finding actual notice of relevance of destroyed documents due to a
specific document request).
A. Truth-in-Sale of Housing Reports
“Plaintiffs contend that ‘[d]estruction of TISH reports is prejudicial’ because
‘these reports will show the conditions of similar properties,’ but only assert that such
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6
‘TISH reports would show’ similarities among properties that were nevertheless treated
differently by Defendants and that ‘TISH reports of similarly situated property’ would be
‘likely to show that Plaintiffs’ properties were illegally targeted.’” See November 13,
2007, Order at p. 5 (emphasis in Order). Plaintiffs failed to show that TISH reports
contain the alleged information or even that the alleged differences in code enforcement
exist. Without this showing, no finding of prejudice can been made.
Furthermore, even if the Court follows Plaintiffs’ speculation to its logical
conclusion, the TISH reports for non-plaintiff properties at best would actually establish
that the market, not Defendants “forced [Plaintiffs] to sell their properties.” See
Plaintiffs’ Joint Objections to Magistrate’s Order of November 13, 2007 at p. 6. TISH
reports are only generated when a property is sold. See Defendants’ Opposition to
Plaintiffs’ Memorandum of Law in Support of Motion for Sanctions at p. 3. As a result,
the alleged content of the requested TISH reports would show that non-plaintiff
properties were for sale at the same time and had similar conditions as the Plaintiffs’
properties. The only alleged difference between non-plaintiff properties and Plaintiffs’
properties would be the alleged code enforcement action taken by the City. This would
suggest that market forces, not the City’s code enforcement action, was the force that
drove Plaintiffs and their neighbors to sell their properties. The Plaintiffs cannot claim
prejudice for the destruction of documents based upon a speculation that leads to
evidence which would be harmful to their case.
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7
Furthermore, Defendants maintain their position that TISH reports are irrelevant.
Neither party identified the reports in their 26(a)(1)(B) report. Defendants informed
Plaintiffs that the City had TISH reports generated by TISH evaluators who are not City
employees and have no connection to the City’s code enforcement or any City
department. See Defendants’ Opposition to Plaintiffs’ Memorandum of Law in Support
of Motion for Sanctions at pp. 8-12. The City explicitly informed Plaintiffs of its
retention policy for the irrelevant non-city documents. Id. Plaintiffs requested TISH
reports for the first time in January 2007 and were provided all TISH reports in the City’s
possession.
The Court was correct when it did not use its inherent authority to sanction
Defendants and instead found that a “finding of prejudice based on the destruction of
such reports must await a showing of the contents of any such reports that, following the
completion of discovery, remain inaccessible.” See November 13, 2007 Order at p. 5. In
deciding not to use its inherent authority to sanction Defendants for spoliation, the Court
correctly explained:
“[t]his is particularly true insofar as TISH reports are generated by property
inspectors who are independent of Defendant City. Defendants presumably
would have little if any logical motivation to attempt to destroy evidence
that, as they have consistently maintained, is generated and retained by such
independent inspectors and thus is incapable of being reliably destroyed by
the City, which would possess at most only its own copies.”
See November 13, 2007 Order at p. 8, fn 5.
Case 0:04-cv-02632-JNE-SRN Document 150 Filed 12/20/2007 Page 7 of 10
1 In order to facilitate this, Defendants provided Plaintiffs property address, the
owner of the property, evaluator’s name, and the evaluator’s contact information for all
TISH reports done between January 1, 2001, and January 31, 2003.
8
As the Court ordered “Plaintiffs may subpoena the inspectors to produce their reports,
with the cost being borne by the City.” See November 13, 2007 Order at p. 10.1
Plaintiffs have not been prejudiced and the Court’s Order denying Plaintiffs’ Motion for
Sanctions should be affirmed.
B. E-mails
Plaintiffs sought sanctions against Defendants for destroying e-mails yet, as the
Court found, “Defendants agreed to restore all available e-mails and are in the process of
recovering many of the deleted e-mails at issue.” See November 13, 2007 Order at p. 8.
Since the Court’s November 13, 2007, Order Defendants have turned over more than 1.5
million files restored from the City’s e-mail disaster recovery tapes. See Defendants’ Oral
Argument on December 10, 2007, Motion to Amend the Scheduling Order. The e-mails
that Defendants were unable to restore were sent to outside vendor Kroll Ontrack for
restoration. Id. The Court’s decision to deny Plaintiffs’ motion for sanctions when
Plaintiffs have not reviewed any e-mails at the time of their motion should be affirmed.
Plaintiffs claim they are prejudiced by the City’s conduct pertaining to e-mail
because Plaintiffs are now faced with the need to review e-mail long after depositions are
over. See Plaintiffs’ Joint Objections to Magistrate’s Order of November 13, 2007, at p.
Case 0:04-cv-02632-JNE-SRN Document 150 Filed 12/20/2007 Page 8 of 10
9
9. Plaintiffs, however, did not even seek the e-mail production until long after they
chose to take more than forty depositions.
Now Plaintiffs claim prejudice because the e-mails are being produced pursuant to
a protective order that prevents the individual Plaintiffs from assisting in the e-mail
review. See Plaintiffs’ Joint Objections to Magistrate’s Order of November 13, 2007, at
p. 9. It is remarkable that Plaintiffs are actually claiming prejudice because they will have
to expend time and effort to review the documents they have insisted they need. The
Court’s Order is not clearly erroneous or contrary to law and should therefore be
affirmed.
C. Documents Anonymously Disclosed to Plaintiffs
Plaintiffs claim they were prejudiced by the City’s failure to produce a document
obtained by Plaintiffs from an anonymous source. See Plaintiffs’ Joint Objections to
Magistrate’s Order of November 13, 2007 at pp. 10-11. As Defendants have explained,
the City cannot produce documents that are not within its possession, custody or control.
See Defendants’ Opposition to Plaintiffs Memorandum of Law in Support of Motion for
Sanctions at p. 15. It is undisputed that the report Plaintiffs have obtained from an
anonymous source was not in the City’s possession when Plaintiffs made their document
request. See November 13, 2007, Order at p. 8. As a result, the City had no duty to
disclose the report. See Fed. R. Civ. P. 34(a). Furthermore, Defendants produced all
documents which were responsive to Plaintiffs’ request for documents related to Problem
Case 0:04-cv-02632-JNE-SRN Document 150 Filed 12/20/2007 Page 9 of 10
10
Properties 2000. See Defendants’ Opposition to Plaintiffs Memorandum of Law in
Support of Motion for Sanctions at p. 15. To the extent these disclosed documents
contain the same information as the progress report obtained from the anonymous source,
the Plaintiffs are not prejudiced.
CONCLUSION
For the foregoing reasons, Defendants respectfully request the Court affirm
Magistrate Nelson’s November 13, 2007, Order denying Plaintiffs’ Motion for Sanctions.
Dated: December 20, 2007 JOHN J. CHOI
Saint Paul City Attorney
By: /s/ Louise Toscano Seeba
LOUISE TOSCANO SEEBA, #292047
Assistant City Attorney
750 City Hall and Courthouse
15 West Kellogg Boulevard
St. Paul, MN 55102
(651) 266-8772
Attorneys for Defendants

Steinhauser-Harrilal-Gallagher v. City St.Paul CV05-461

UNITED STATES DISTRICT COURT

DISTRICT OF MINNESOTA

Frank J. Steinhauser, III, et al.,

Plaintiffs,

v.

City of St. Paul, et al.,

Defendants.

Civil No. 04-2632 (JNE / SRN)

ORDER

Sandra Harrilal, et al.,

Plaintiffs,

v.

Steve Magner, et al.,

Defendants.

Civil No. 05-461 (JNE / SRN)

ORDER

Thomas J. Gallagher, et al.,

Plaintiffs,

v.

Steve Magner, et al.,

Defendants.

Civil No. 05-1348 (JNE / SRN)

ORDER

Matthew A. Engel, 11282 86th Avenue North, Maple Grove, MN 55369, for Plaintiffs

Gallagher et al.; John R. Shoemaker, Shoemaker & Shoemaker, P.L.L.C., 7701 France Ave.

South, Suite 200, Edina, MN 55435, for Plaintiffs Steinhauser et al., and Harrilal et al.

Louise Toscai Seeba, Assistant City Attorney, 750 City Hall and Courthouse, 15 West

Kellogg Blvd., St. Paul, MN 55102, for Defendants.

2

SUSAN RICHARD NELSON, United States Magistrate Judge

This matter comes before the undersigned United States Magistrate Judge on Plaintiffs’

Joint Motion For Sanctions (Doc. No. 102 (No. 04-CV-2632), Doc. No. 73 (No. 05-CV-1348), &

Doc. No. 79 (No. 05-CV-461)). The matter has been referred to the undersigned pursuant to 28

U.S.C. § 636 and District of Minnesota Local Rule 72.1(a). For the reasons stated below, the

Court denies the motion without prejudice.

I. FACTUAL AND PROCEDURAL HISTORY

In these three related actions, several owners of rental properties within the City of St.

Paul (Plaintiffs) generally allege that the City of St. Paul and various municipal officials

(Defendants) illegally discriminated against them with respect to enforcing building codes

regarding Plaintiffs’ properties, which are allegedly occupied primarily by “protected-class”

renters.

Plaintiffs contend that they submitted discovery requests for e-mails, Truth-In-Sale-of-

Housing (“TISH”) reports, Problem Property 2000 documents and St. Paul Public Housing

Agency (“PHA”) documents. (Mem. at 2.) Plaintiffs assert that they learned that the TISH

reports continued to be subject to the City’s routine document destruction policy well after the

filing of the first Complaint in 2004. Plaintiffs further claim that they were told in early 2007

that all e-mails prior to December 2005 had been destroyed. Finally, they argue that Defendants

have failed to produce the PHA documents as well as other documents that an anonymous source

provided Plaintiffs.

Plaintiffs now move for sanctions, contending that Defendants have committed discovery

abuses–the spoliation of evidence and failures to produce relevant documents–that warrant

various sanctions including (1) an award of fees, costs and expenses, (2) prohibiting Defendants

3

from moving for summary judgment, (3) an adverse inference, and (4) the direction of factual

findings in favor of Plaintiffs. (Mem. at 20.) They also seek the ultimate sanction of a default

judgment. (Id. at 19, 20.)

II. DISCUSSION

Plaintiffs claim that Defendants destroyed certain types of relevant evidence and have

failed to produce other relevant evidence or produced it too late for Plaintiffs to use in

depositions. (Mem. at 2.) They contend that Defendants

destroyed irreplaceable vital evidence (TISH reports from 2001, 2002 and 2003,

and all emails and other electronically delivered communications proper to

December or 2005), suppressed discoverable material (shown by the five (5)

packets of undisclosed anonymous material), and failed to search for responsive

documents (PHA cooperative, police service, and other agreements with the City.)

(Id. at 9.) Plaintiffs assert that the destruction was improper because it occurred after Defendants

had notice of these actions, arguing that Defendants’ duty “to preserve evidence was triggered no

later tha[n] upon service of the Complaint in Steinhauser in May 2004.” (Id. at 9.) They also

note that Defendants should have been put on notice of the particular issues based on the “first

discovery requests [that] were served in the Steinhauser” case in November 2004. (Id. at 6.)

The Court agrees that Defendants should have initiated a litigation hold specifically

tailored to these particular actions when they were filed. The present question, however, is what

if any sanction is appropriate for the loss of any relevant evidence. As Plaintiffs themselves

acknowledge (Mem. at 11), sanctions for improper document destruction may not be imposed

until “the moving party can demonstrate that they have suffered prejudice as a result of the

spoliation.” E*Trade Sec. LLC v. Deutsche Bank AG, 230 F.R.D. 582, 592 (D. Minn. 2005).

Accord Stevenson v. Union Pacific R.R., 354 F.3d 739, 748 (8th Cir. 2004) (“There must be a

finding of prejudice to the opposing party before imposing a sanction for destruction of

1 Plaintiffs premise their motion in substantial part on Rule 37. (Mem. at 8.) But Rule

37 requires the existence of a court order, and a violation of that order, before sanctions may be

premised on its authority. E.g. Chrysler Co. v. Carey, 186 F.3d 1016, 1019 (8th Cir. 1999). No

such order exists here. Insofar as Plaintiffs’ motion is premised on the federal courts’ inherent

authority to impose sanctions in such matters, a sanction based on that authority would require a

showing of bad faith. E.g. Steinlage v. Mayo Clinic Rochester, 235 F.R.D. 668, 674 (D. Minn.

2006). On the present record, the Court cannot conclude at this juncture that Defendants’

discovery practices constitute bad faith.

4

evidence.”); Keefer v. Provident Life and Accident Ins. Co., 238 F.3d 937, 940 (8th Cir. 2000)

(stating that showing of prejudice is required for sanction of dismissal).1

Plaintiffs claim they were prejudiced by the failure of Defendants to produce–or to retain

so that they could be produced–several types of documents. To establish prejudice, however, a

movant must generally be able to show the contents of the documents at issue, that is, the

substance of the evidence to which they were improperly denied access. See LEXIS-NEXIS v.

Beer, 41 F. Supp. 2d 950, 955 (D. Minn. 1999) (noting that movant must show that destroyed

material “would have contained evidence pertinent to the present litigation”). As one court has

ruled, the movant “must establish a reasonable possibility, based on concrete evidence rather

than a fertile imagination, that access to the [destroyed material] would have produced evidence

favorable to his cause.” Gates Rubber Co. v. Bando Chemical Indus., 167 F.R.D. 90, 104 (D.

Colo. 1996), quoted in LEXIS-NEXIS, 41 F. Supp. 2d at 955. Moreover, the destroyed evidence

must be “substantially different in character from that of the preserved information.” LEXISNEXIS,

41 F. Supp. 2d at 955 (refusing to “presume that the overwritten computer data . . .

contained information any more sensitive, or evidence any more damning, that what [movant]

expected to find in the first place”).

Here, it remains at present undetermined what the missing documents at issue contained.

Although the Court recognizes that a movant might frequently be placed in a difficult position

2 The Court notes, however, that it is not suggesting that the mere similarity between the

condition of Plaintiffs’ properties and the condition of those against which Defendants did not

pursue the same level of code enforcement would, by itself, suffice to establish discriminatory

intent.

3 Defendants’ argument that the TISH reports need not be produced because they are

necessarily irrelevant is not well taken. Defendants contend the City does not use those reports

as a means of code enforcement and that such reports are created by housing inspectors and are

retained by the City only because it is “the licensing agency of the TISH evaluators.” (Mem. at

3.) Defendants also note that TISH inspectors are not City employees and that the City’s code

enforcement officers do not rely on the TISH reports. (Id. at 11.) But this does not preclude

their relevance–the standard for which in the discovery context is quite broad–if they would

show, as Plaintiffs contend, that properties against which Defendants vigorously enforced

housing codes and which were owned by protected class individuals did not differ from other

properties that Defendants did not target for such enforcement. Granted, Defendants appear not

to be the best source for obtaining such reports (compared to the TISH inspectors themselves),

but Defendants should produce whatever TISH reports they might have in their possession,

custody or control that would be responsive to Plaintiffs’ discovery requests. Fed. R. Civ. P.

34(a). Similarly, with respect to Plaintiffs’ arguments that Defendants destroyed or otherwise

5

having to establish the contents of documents that were never produced to it, particularly where

those documents were in fact destroyed, Plaintiffs have offered no proof in the form of testimony

or other documentary evidence (that is, documents other than those allegedly destroyed) as to

what the destroyed documents contained.

Rather, Plaintiffs seem to assume or speculate that the documents at issue contain

evidence supporting their claims. For example, Plaintiffs contend that “[d]estruction of TISH

reports is prejudicial” because “these reports will show the conditions of similar properties,” but

only assert that such “TISH reports would show” similarities among properties that were

nevertheless treated differently by Defendants and that “TISH reports of similarly situated

property” would be “likely to show that Plaintiffs’ properties were illegally targeted.” (Doc. No.

115 (Affidavit of Matthew Engel), ¶ 11 (emphasis added).) Such reports could be relevant.2 But

any finding of prejudice based on the destruction of such reports must await a showing of the

contents of any such reports that, following the completion of discovery, remain inaccessible.3

did not produce documents of the PHA, it appears that the PHA is not an agency of the

Defendant City and thus Defendants would not be the best source for obtaining PHA documents.

But, of course, Defendants would be obligated to produce any responsive relevant PHA

documents that nevertheless happen to be within their possession, custody or control.

4 The documents that Plaintiffs claim Defendants improperly destroyed–essentially broad

categories of e-mails and property inspection reports–are not of the type the destruction of which

itself would support an inference either that the documents necessarily (or even likely) contained

evidence supporting Plaintiffs’ claims or that their destruction was in bad faith. Thus any

finding of prejudice must await a showing of the contents of any documents that remain missing

(or otherwise not produced) once discovery is complete.

6

Likewise, Plaintiffs assert that the destruction of e-mails and other such electronic

documents and communications “is prejudicial to Plaintiffs” but then claim only that “[t]hose

emails may have shown Defendants knew and intended that their selectively aggressive code

enforcement operations . . . would have a discriminatory impact.” (Doc. No. 115, ¶ 23 (emphasis

added).) For the same reasons, Plaintiffs cannot establish prejudice with respect to the evidence

they claim was produced anonymously, but should have been produced by Defendants.

Plaintiffs simply assert, without any persuasive factual support, that “[i]t is reasonably likely that

this type of evidence would have been contained in the emails from 2002-2005.” (Id.)

In some situations, the nature of the documents themselves coupled with the extent and

circumstances of their destruction might support an inference of prejudice. See E*Trade, 230

F.R.D. at 592 (noting that “the substantial and complete nature of the destruction of the evidence

contained in the recorded telephone conversations and hard drives . . . . justifies a finding of

prejudice”); see also Stevenson v. Union Pacific R.R., 354 F.3d 739, 748 (8th Cir. 2004)

(concluding that finding of prejudice is warranted “by the nature of the evidence destroyed . . .

the very fact that it is the only recording of conversations . . . contemporaneous with the

accident”).

But here, no such inference is presently warranted.4 Granted, Defendants were remiss in

7

not imposing an appropriate formal litigation hold no later than when the first complaint was

filed. E*Trade Sec. LLC v. Deutsche Bank AG, 230 F.R.D. 582, 588 (D. Minn. 2005) (noting

that duty “to preserve evidence begins when a party knows or should have known that the

evidence is relevant to future or current litigation”). Defendants assert that they relied on their

existing document retention policy and that any requirement that they systematically retain every

document and other form of evidence would “cripple” them. (Mem. at 7 (citing Zubulake v.

UBS Warburg L.L.C., 220 F.R.D. 212, 217 (S.D.N.Y. 2003)).) But while one generally may

employ a document retention policy that permits the routine destruction of documents, once

litigation is likely–and certainly once it has begun–a party may not destroy relevant evidence,

even pursuant to a preexisting document retention policy that one has not superseded or

otherwise modified by an appropriate litigation hold. E*Trade Sec. LLC, 230 F.R.D. at 588-89.

Nevertheless, the record at this juncture does not support the conclusion that Defendants’

action (or inaction) was taken in bad faith. As Defendants note, they had a document retention

policy that systematically discarded particular documents after a fixed period of time. With

respect to the TISH reports, Defendants contend that they were under no obligation to retain all

of those reports because (1) Plaintiffs were informed in January 2005 of the three-year retention

policy but did not then request the reports, (2) Plaintiffs did not specifically request them until

January 2007, and (3) the reports are “completely irrelevant.” (Mem. at 8; see id. at 11.) In

short, Defendants argue that because Plaintiffs’ 2004 document requests did not specifically

mention TISH reports, Defendants should not be sanctioned for routinely destroying what they

viewed as irrelevant, particularly when they informed Plaintiffs that those reports were retained

for only three years and met with no specific request in response. (Id. at 9.) Defendants claim

that despite this notice, “Plaintiffs did nothing to obtain a review of the reports until 2007.” (Id.)

5 This is particularly true insofar as TISH reports are generated by property inspectors

who are independent of Defendant City. Defendants presumably would have little if any logical

motivation to attempt to destroy evidence that, as they have consistently maintained, is generated

and retained by such independent inspectors and thus is incapable of being reliably destroyed by

the City, which would possess at most only its own copies.

8

Although the Court does not agree with all of Defendants’ justifications for their discovery

conduct, the Court cannot presently conclude on this record that the failure to preserve the TISH

reports beyond the three years provided in the document-retention policy constitutes bad faith or

willful spoliation.5

With respect to deleted e-mails, Defendants agreed to restore all available e-mails and are

in the process of recovering many of the deleted e-mails at issue. Defendants note that they in

fact informed Plaintiffs that many of the e-mails have been restored from disaster recovery tapes

and “are being prepared for production to Plaintiffs.” (Mem. at 12.) Accordingly, a motion for

sanctions based on any alleged improper destruction of such e-mails must await (1) the

completion of that recovery process, and (2) a showing of prejudice resulting from the loss of

any relevant e-mails that could not be recovered.

Finally, Plaintiffs claim that documents they received from an anonymous source should

have been produced by Defendants. But Defendants contend that they cannot be sanctioned for

not producing what they did not possess. (Mem. at 15.) They assert that Plaintiffs received

documents from an anonymous source that has never been identified and that “it is undisputed

that these documents were not in Defendants’ possession.” (Id. at 4-5.) Defendants need only

produce responsive documents within their possession, custody or control. Fed. R. Civ. P. 34(a).

A motion for discovery sanctions can be entertained only if and when Plaintiffs could establish

that documents they received from any such anonymous source were drafted or received by

Defendants or otherwise within their possession, custody or control.

9

In sum, after having reviewed the entire record, The Rottlund Co., Inc., 222 F.R.D. 362,

374 (D. Minn. 2004) (“Sanctions are considered based on the record as a whole, rather than

merely considering the latest instance of misconduct that broke the camel’s back.”), the Court

concludes that there is no basis at this juncture to find that Defendants or their attorneys

improperly destroyed any evidence (or even intentionally permitted the routine destruction

pursuant to an otherwise valid policy to continue despite notice that the documents to be

destroyed were relevant to a pending action) for the purpose of obstructing discovery.

Most importantly for present purposes, Plaintiffs have not (yet) established prejudice

from the lack of access to any evidence they allege has been destroyed. This present lack of

prejudice is particularly decisive here, where Defendants are currently attempting to recover and

restore relevant e-mails and otherwise continue to produce at least some of the evidence that

Plaintiffs still seek and where some of the documents are best obtained from those non-parties

that originally generated them.

III. CONCLUSIONS

Because Plaintiffs have not, as yet, shown any prejudice resulting from the loss of any

relevant evidence, their motion for sanctions is premature and thus must be denied but without

prejudice to its renewal if and when Plaintiffs can demonstrate that they were prejudiced by the

destruction or non-production of responsive documents. Cf. LEXIS-NEXIS v. Beer, 41 F. Supp.

2d 950, 956 (D. Minn. 1999) (directing movant to renew its sanctions motion “at an appropriate

time later in the litigation”).

Several miscellaneous matters warrant brief discussion. With respect to the ongoing

production of documents, either pursuant to the City’s recovery of deleted e-mails or otherwise,

the parties shall meet and confer to establish a protocol governing the production of evidence

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that (1) prevents any disclosure of private data that would violate the Minnesota Data Practices

Act, (2) protects claims of privilege by incorporating a provision on inadvertent production, and

(3) designates all e-mails as “Attorney Eyes Only.” Once all of the remaining documents are

produced, the parties shall meet and confer regarding any additional depositions that need to be

taken in light of any such new evidence. If they are unable to agree, the Court will entertain an

appropriate motion. The Defendants shall pay the costs of any court reporter fees but Plaintiffs

may not recover attorney fees for any such depositions.

With respect to the TISH reports, at Plaintiffs’ election, the City may continue to produce

any relevant reports it might have in its possession, custody or control, or Plaintiffs may

subpoena the inspectors to produce their reports, with the costs being borne by the City. With

respect to the PHA documents, Plaintiffs should contact the appropriate individual at the PHA to

request that the Agency provide copies of the relevant documents. But if Defendants have such

documents in their possession, custody or control, Plaintiffs’ ability to obtain them elsewhere

does not preclude Defendants’ obligation to produce any such relevant documents responsive to

Plaintiffs’ discovery requests. Finally, with respect to the documents provided to Plaintiffs by an

anonymous source, the parties should meet and confer regarding whether the documents can be

authenticated.

IV. ORDER

Based on the foregoing, and all the files, records and proceedings herein, IT IS

HEREBY ORDERED that:

1. Plaintiffs’ motions for sanctions (Doc. No. 102 (No. 04-CV-2632), Doc. No. 73

(No. 05-CV-1348), & Doc. No. 79 (No. 05-CV-461) are DENIED WITHOUT PREJUDICE;

2. Plaintiffs’ request for their fees and costs incurred in bringing these motions is

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DENIED;

3. Defendants’ request for their fees and costs incurred in responding to this motion

is DENIED.

Dated: November 13, 2007

s/ Susan Richard Nelson

SUSAN RICHARD NELSON

United States Magistrate Judge