Gregor LLC v. Flair Airlines Ltd., 1:18-cv-02023

Flair Airlines sued Gregor, LLC, Vacabo Services (Vacabo), and individuals for trademark-related claims; defendants counterclaimed for breach of a purported joint-venture agreement.
Vacabo operated call centers for Flair and maintained a Teramind employee-monitoring account that recorded agent calls, including calls involving Flair employee Arlene Teller.
Flair's IT manager James Hicks accessed the Teramind account on March 2, 2018 and removed Teller’s account; defendants allege hundreds of recordings and emails were deleted and seek dismissal/sanctions for spoliation.
Flair submitted Teramind’s CTO declaration that Vacabo’s (Milicevic’s) month-to-month subscription went unpaid in June, prompting Teramind to cancel the account and routinely delete stored data when subscriptions lapse; Teramind stated customers cannot delete recordings while an account is in good standing.
Hicks declared he only removed Flair employee accounts after termination of the relationship and did not intend to or believe he deleted recordings; defendants’ proof that Hicks (or Flair executives) intentionally deleted files is speculative.
Magistrate Judge Mason recommended denying defendants’ motion for dismissal/sanctions, finding defendants failed to show reasonable-preservation failures, loss caused by Flair, or intentional deprivation under Rule 37(e).

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether ESI was lost due to Flair’s failure to preserve	Hicks only removed employee accounts; Teramind deleted data after account lapse	Hicks (or someone using his login) deleted recordings on March 2, 2018; alternate suspect IP near Flair executives	Denied — defendants’ theory speculative; Teramind’s declaration supports deletion after subscription lapse
Whether Flair took reasonable steps to preserve ESI	Flair points to Teramind’s policy and that customers cannot delete while account active	Flair acted in bad faith to destroy evidence by accessing the account	Denied — defendants failed to show Flair failed to take reasonable steps or acted in bad faith
Whether lost ESI could be restored or replaced by discovery	Flair: Teramind would handle retention; Vacabo could have restored if accessible	Defendants: evidence irretrievably lost and prejudicial	Denied — defendants did not establish loss attributable to Flair or inability to restore
Whether severe sanctions (presume adverse, dismiss) are warranted under Rule 37(e)	No intent to deprive; at most negligence/speculation	Intentional destruction justifies adverse inferences or dismissal	Denied — no finding of intent to deprive; speculation insufficient for severe sanctions

Chambers v. NASCO, Inc., 501 U.S. 32 (court's inherent authority to impose sanctions)
Barnhill v. United States, 11 F.3d 1360 (7th Cir. 1993) (courts' inherent sanctioning power)
In re Text Messaging Antitrust Litig., 46 F. Supp. 3d 788 (N.D. Ill.) (speculation insufficient to support spoliation sanctions)
Lorentzen v. Anderson Pest Control, 64 F.3d 327 (7th Cir. 1995) (failure to timely object waives right to appeal findings)