PELRAS Update | February 2024 – Federal District Court Denies Employer’s Summary Judgment Motion as Sanction for Discovery Violation

Peter J. Halesey, Esq., Campbell Durrant, P.C. | February 2024

If your municipality has ever been a party to litigation, then it is likely that it received a letter instructing it to preserve documents pertaining to the litigation. These letters, commonly known as litigation hold letters, are routinely sent to parties in litigation and provide instructions as to the types of documents that must be preserved and instructions for doing so. Normally, these letters will caution that failure to preserve pertinent documents may result in negative consequences.

A recent employment discrimination case in the Northern District of Texas serves as a warning to municipal entities which ignore their duties to preserve documents (including electronic) in litigation. In Miramontes v. Peraton, Inc., the Plaintiff, Carlos Miramontes, sued his former employer, Peraton, Inc., based on a variety of claims including race and age discrimination after Miramontes was laid off. The employer asserted that the layoffs were a part of a company-wide reduction in force required by budgetary constraints following a merger and Miramontes contended that the reduction in force was pretextual.

As part of his lawsuit, Miramontes sent Peraton a litigation hold letter placing Peraton on notice of its duty to preserve all documents regarding Miramontes’ claims against Peraton including “information, data, emails, texts, attachments, and any other method or means of communications, internally and/or externally.” The letter further instructed Peraton not to allow deletion of the documents and also informed Miramontes’ direct supervisor to preserve communications related to Miramontes’ claims.

In discovery, Miramontes learned that his direct supervisor had sent text messages to another executive regarding Miramontes, which he had deleted after Peraton had received the hold letter. Miramontes’ supervisor claimed that the text messages simply referenced the hold letter and requested that the company’s Chief Legal Officer review the letter.

Miramontes subsequently filed a motion for sanctions requesting that the Court grant him summary judgment on his claims. Peraton also filed its own motion for summary judgment.

In analyzing the motions and, in particular, the request for sanctions, the District Court noted that it had the inherent power to sanction a party who abused the judicial process, which included the deletion of evidence (referred to as “spoliation”). The Court found that Peraton controlled the supervisor’s text messages and had been under an obligation to preserve them at the time of their destruction. Notably, the Court found that Peraton had control over the business information on its employees’ personal cell phones because the phones were routinely used for business purposes. The Court further found that the text messages were intentionally destroyed by the supervisor and, as such, Peraton was vicariously liable for the actions of the supervisor. Moreover, the Court determined that Peraton acted in bad faith because the text messages weredestroyed after Peraton received the hold letter and were not deleted as part of a routine deletion policy.

After the Court found that spoliation had occurred, it turned to determining the appropriate sanctions for Peraton’s conduct. Although Miramontes requested summary judgment on his claims, the Court found that the requested sanction was too severe and instead denied Peraton’s Motion for Summary Judgement because a reasonable fact finder could find that the deleted text messages contained relevant information raising a disputed material fact pertaining to Miramontes’ claims.

Employers can learn an important lesson from this case. It is possible that the text messages that the supervisor sent were completely innocuous and revealed no evidence of discriminatory intent. Were that in fact the case, it is possible then that the failure to preserve these messages may have cost Peraton the chance to have the case dismissed. Accordingly, employers should carefully adhere to litigation holds and ensure that their supervisors do the same.