602 B.R. 429
D. Conn.2019Background
- Trustee moved to hold debtor Sean Dunne in contempt and seek discovery sanctions for alleged willful failure to preserve and produce emails from multiple accounts and other discovery misconduct.
- Dunne had multiple email accounts (two Mountbrook private-server accounts and three Gmail accounts) that he closed or stopped using by end of 2013; some Gmail accounts were closed after alleged hacking attempts.
- Trustee first subpoenaed Dunne for emails in July 2016; Bankruptcy Court ordered production and a privilege log; Dunne produced some materials and a privilege log to opposing counsel but disputes over completeness persisted; District Court affirmed contempt findings but remanded bad-faith issue.
- Judge Spector certified facts supporting contempt and recommended sanctions (fees, adverse inference, waiver of privilege); additional factual submissions were later provided by Dunne's new counsel.
- District judge declined to find civil contempt (insufficient clear-and-convincing proof of willful noncompliance) but found negligent spoliation under Rule 37(e), ordered curative measures (authentication relief, permissive adverse inference at trial), required in‑camera review of certain privilege documents, and awarded limited attorney fees and costs (up to $10,000) related to the renewed contempt motion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Dunne should be held in civil contempt for failing to obey discovery orders/subpoena | Trustee: Dunne willfully failed to preserve/produce emails and violated court orders; contempt appropriate | Dunne: closed accounts for non-litigation reasons (server abandonment, hacking), cooperated when subpoenaed, and later retained IT help; no willful spoliation | Denied — contempt not proven by clear and convincing evidence; record inconclusive on willfulness and Dunne has since attempted to purge noncompliance |
| Applicability/version of Rule 37(e) to spoliation conduct | Trustee: prefer pre-2015 standard (negligence suffices for adverse inference) | Dunne: post-2015 Rule 37(e) should not apply to pre‑2015 conduct | Post-2015 Rule 37(e) applies (just and practicable), so intent-to-deprive required for most severe sanctions |
| Appropriate spoliation remedies (adverse inference, authentication relief) | Trustee: requests mandatory adverse inference that would effectively decide Walford transfer issue; requests authentication presumptions | Dunne: no bad-faith intent; mandatory adverse inference disproportionate and prejudices co-defendants | Court granted limited curative relief: overruled likely authenticity challenges to third‑party emails and allowed a permissive (jury) adverse inference instruction if jury finds intent to deprive; denied sweeping mandatory adverse inference |
| Privilege log/waiver for belated or imperfect privilege assertions | Trustee: argue waiver due to deficiencies and late filing | Dunne: provided privilege log to Trustee (though late to court); claims some logs properly assert privilege including agent communications | No waiver found. But ordered in-camera submission within 7 days of any documents copied to non-lawyers with detailed cover explanations for each such document |
| Award of attorney's fees and other costs | Trustee: seeks fees and costs tied to contempt/detection and litigation | Dunne: contests scope and amount | Limited fee award: Trustee may recover fees/costs not to exceed $10,000 attributable to renewed contempt motion; itemized statement due and payment schedule set; Dunne must continue/finance IT consultant to produce remaining responsive documents |
Key Cases Cited
- Marcel Fashions Grp., Inc. v. Lucky Brand Dungarees, Inc., 779 F.3d 102 (2d Cir.) (elements for civil contempt based on failure to obey court order)
- West v. Goodyear Tire & Rubber Co., 167 F.3d 776 (2d Cir.) (district courts have broad discretion in discovery sanctions for spoliation)
- Residential Funding Corp. v. DeGeorge Fin. Corp., 306 F.3d 99 (2d Cir.) (three-part test for spoliation sanctions: preservation duty, culpable state of mind, relevance/prejudice)
- Mali v. Fed. Ins. Co., 720 F.3d 387 (2d Cir.) (distinction between mandatory and permissive adverse inference instructions)
- Daval Steel Prods. v. M/V Fakredine, 951 F.2d 1357 (2d Cir.) (noncompliance with a valid subpoena can constitute contempt)
- Klipsch Grp., Inc. v. ePRO E-Commerce Ltd., 880 F.3d 620 (2d Cir.) (sanctions for belated compliance may be appropriate but not always punitive)
- SerVaas Inc. v. Mills, [citation="661 F. App'x 7"] (2d Cir.) (district court abused discretion by imposing contempt on additional party without adequate notice)