Alabama Aircraft Industries, Inc. v. Boeing Co.
319 F.R.D. 730
| N.D. Ala. | 2017Background
- AAI (Pemco) and Boeing entered a 2005 teaming Memorandum of Agreement (MOA) under which Pemco shared proprietary cost/pricing information for KC-135 PDM work; Boeing terminated the MOA in June 2006 after the Air Force reduced the BEQ.
- Boeing and Pemco (AAI) negotiated a preservation agreement and Boeing issued an internal "Firewall Plan" (Aug 4, 2006) requiring Boeing employees to segregate Pemco-related ESI and deliver it to Boeing’s Law Department.
- Despite the Firewall Plan, two Boeing employees (Holden and Smith) intentionally deleted Pemco-related ESI from CFO Steve Blake’s computer in Aug 2006 instead of copying it to disk and turning it over as required.
- In spring 2007, Boeing attorney Mark Rabe removed two CDs of Pemco-related ESI (collected from analyst Doug Lundy) from secure legal storage; their contents are now missing and Rabe cannot explain their removal or loss.
- Multiple other Boeing custodians did not preserve potentially relevant ESI (e.g., routine deletions, late litigation holds), and Blake’s original computer no longer exists, so the deleted/removed ESI cannot be identified or restored.
- AAI sued Boeing alleging misuse of Pemco’s proprietary information in Boeing’s successful 2007 bid; AAI moved for spoliation sanctions based on the 2006 (Blake) and 2007 (Lundy CDs) ESI losses.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Duty to preserve ESI | Boeing should have reasonably anticipated litigation and thus had a duty to preserve Pemco ESI after MOA termination and via the Firewall Plan | Boeing claims litigation was not reasonably foreseeable in Sept 2006/May 2007, so no duty attached | Court: Duty attached — Boeing reasonably should have anticipated litigation and had an agreed duty under the Firewall Plan |
| Whether Boeing failed to take reasonable steps to preserve | AAI: Blake’s ESI was intentionally deleted by Boeing personnel in violation of the Firewall Plan; Lundy CDs were removed from counsel’s custody and lost | Boeing offers no credible explanation for Blake deletions; disputes foreseeability and degree of fault for CDs | Court: Blake ESI was intentionally destroyed (failed reasonable steps); Lundy CDs removed but intent unclear |
| Whether lost ESI can be restored or replaced | AAI: Destroyed ESI is not identifiable and cannot be replaced; other custodians’ ESI is incomplete | Boeing: Some ESI recovered from other custodians | Court: Information cannot be restored or replaced given missing custodial sources and lack of indexing |
| Prejudice / Intent and appropriate sanctions | AAI: Bad-faith deletions warrant adverse-inference instruction and fees | Boeing: Denies intent to deprive; argues lesser measures suffice | Court: Finds circumstantial evidence of intent to deprive re: Blake; prejudice established; will permit adverse-inference jury instruction and award AAI reasonable fees for motion prosecution; Lundy CDs insufficient evidence of intent, so no adverse inference for that loss |
Key Cases Cited
- Graff v. Baja Marine Corp., 310 Fed. Appx. 298 (11th Cir.) (defines spoliation as destruction of evidence or failure to preserve for foreseeable litigation)
- West v. Goodyear Tire & Rubber Co., 167 F.3d 776 (2d Cir. 1999) (litigation duty to preserve arises when litigation is reasonably foreseeable)
- Green Leaf Nursery v. E.I. DuPont De Nemours & Co., 341 F.3d 1292 (11th Cir. 2003) (spoliation defined; preservation duties discussed)
- Flury v. Daimler Chrysler Corp., 427 F.3d 939 (11th Cir. 2005) (district court has broad discretion to impose sanctions and spoliation sanctions aim to prevent prejudice and preserve discovery integrity)
- Story v. RAJ Properties, Inc., 909 So.2d 797 (Ala. 2005) (five-factor framework for spoliation sanctions under Alabama law)