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Hawley v. Mphasis Corp., Defendant Delays Litigation Hold, NY District Court Grants Adverse Inference Sanctions

The plaintiff in this employment discrimination case moved for various sanctions against the defendant, Mphasis Corp., for failure to preserve and produce critical evidence during discovery. Specifically, plaintiff sought adverse inference for the destruction of data on his and his supervisor’s laptop, an order precluding Mphasis from offering the supervisor’s testimony during trial and for Mphasis’s answer to be stricken.

Hawley, an employee of Mphasis Corp. alleged that he was subject to discrimination as a result of his ethnicity and national origin and filed an EEOC charge in September of 2009. The defendant was subsequently terminated and then filed a second EEOC charge in December 2009, followed by a discrimination suit which he filed in January 2012.

While working at Mphasis, Hawley was provided a company owned laptop. Hawley worked remotely and all his work product, emails and communications with clients and coworkers were located on the laptop. After Hawley’s employment was terminated by Mphasis, all of the data was deleted from the laptop and the machine was reissued to another employee.

Mphasis waited almost three months after Hawley filed his lawsuit, and two years after he filed EEO charges, before instructing Hawley’s direct supervisor, Kevin DeMilt, and several others to preserve all information in their possession relating to Hawley.

Hawley’s supervisor (DeMilt) subsequently resigned from Mphasis and testified that upon leaving, he returned his laptop and did not backup any of the data loaded on it. Although the hard drive was removed and placed in a safe, a subsequent search of the hard drive revealed no data.
Hawley sought information regarding sales commissions for deals on which he worked to support his claim that the commissions he was owed were paid to employees of Asian Indian decent. In response to a court order, Mphasis contended that no commissions were paid to other staff in sales that involved Hawley. In the alternative, Hawley sought information about commissions paid to the salesforce in connection with other work done for clients during the relevant time period. Mphasis then asserted that the sales team information no longer existed as it did not have a policy for retaining sales commission records during the relevant time period. Mphasis stated that its India based sales team had the information at one time but it was no longer available. The defendant also claimed that the sales and commission records were located on the laptops of individuals and not centrally stored. Subsequently, several Mohasis witnesses testified that the sales and commission records were centrally maintained.

Admitting that it removed the data stored on Hawley’s laptop, Mphasis asserted that it was following normal business protocols and was not attempting to destroy evidence regarding Hawley’s case. Mphasis argued that Hawley sought “clearly inappropriate sanctions” as an attempt to “leverage a settlement” because he could not make out a prima facie case of employment discrimination.

In its analysis, the court found that Mphasis had an obligation to preserve relevant evidence as early as its receipt of Hawley’s second EEOC charge, noting that courts in the circuit routinely find that an EEOC charge puts an employer on notice that litigation is likely. Further, the information on Hawley’s laptop was relevant to both parties’ legal theories and as a result, Mphasis breached its preservation responsibilities when it failed to preserve relevant evidence. However, because Hawley failed to provide proof that the destroyed evidence would be favorable to him, the Court denied Hawley’s request for an adverse inference sanction with respect to the data stored on his company issued laptop.

Conversely, the Court granted the adverse inference sanction with respect to the information contained on DeMilt’s laptop finding the company’s conduct regarding DeMilt’s laptop to be “sufficiently egregious to support a finding that the evidence was unfavorable to” Mphasis. The court found that Mphasis should have “preserved, reviewed, and segregated” relevant data from DeMilt’s laptop well in advance of DeMilt’s departure.

Concluding, the court also granted an adverse inference for the plaintiff with respect to the non-production of evidence but denied “litigation-ending sanctions” as the plaintiff had not demonstrated why a lesser sanction would not suffice.

Hawley v. Mphasis Corp., 2014 WL 3610946 (S.D.N.Y. July 22, 2014).

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