INTERNATIONAL FINANCIAL COMPANY, LLC v. JABALI-JETER, 2:18-cv-02120

Background

IFC sued its former Director of Operations, Odara Jabali-Jeter, alleging she downloaded confidential company data onto multiple USB drives, used that data in a competing business, and removed physical files; IFC obtained a TRO directing preservation and production of all IFC materials by June 6, 2018.
Forensic examination of Jeter’s IFC-issued Windows laptop showed at least six USB devices were connected in June–August 2017 and established access to numerous IFC files while those devices were attached, but the USB devices themselves were not produced.
Jeter produced one USB (provided by counsel) with 11 files and surrendered her personal MacBook for imaging; forensic analysis of the Mac found additional IFC files (including the Rodins’ tax returns) and anomalies in system tracking logs.
The Mac’s File System Events (fseventsd) log was largely empty; forensic testing showed an OS upgrade on May 20, 2018 would wipe the log, and forensic opinion concluded Jeter also manually deleted or otherwise tampered with the log after the TRO.
The magistrate judge found (1) Jeter controlled the missing electronic and physical evidence and the Mac metadata; (2) the evidence was relevant; (3) she suppressed/withheld the USBs and physical files and willfully altered metadata; and (4) her duty to preserve was reasonably foreseeable by September 2017 (and reinforced by counsel’s September 19, 2017 letter).
The court granted Plaintiff’s motion for sanctions: it recommends an adverse spoliation inference at trial, orders submission of Plaintiff’s fee records for monetary sanctions, and certifies facts showing a prima facie case of civil contempt to the district judge for an order to show cause hearing.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether defendant spoliated electronically stored information (ESI) and physical files	IFC: Jeter downloaded and removed IFC files to USBs, withheld the drives and physical files, and willfully deleted Mac metadata	Jeter: USBs may have been lost during home renovation; duty to preserve did not trigger until complaint filed in May 2018; some actions were normal device maintenance	Court: Spoliation occurred — Jeter controlled the evidence, it was relevant, she suppressed/withheld USBs and physical files and willfully deleted Mac metadata, and duty to preserve was foreseeable by Sept 2017
Proper sanction for spoliation	IFC: Default judgment or, alternatively, adverse inference plus fees and costs	Jeter: Contends lack of bad faith and that drastic sanctions are unwarranted	Court: Default is too draconian; imposes adverse spoliation inference and directs IFC to submit fees/costs for monetary sanctions; district judge to consider specific jury instruction at trial
Whether defendant violated the TRO (civil contempt) by tampering after the TRO and failing to produce all materials	IFC: Jeter deleted tracking metadata after TRO and failed to produce all IFC materials (USBs, physical files, certain files on Mac)	Jeter: Some actions (e.g., creating a backup) were to preserve her data and not done in bad faith; offered to produce backup drive	Held: Magistrate certifies facts showing a prima facie case of civil contempt (valid TRO, notice, disobedience) and orders Jeter to appear before the district judge to show cause
Remedies to cure prejudice from lost ESI	IFC: Needs forensic review of withheld devices and reimbursement for expense; requests direction to permit adverse inference and fees	Jeter: Challenges scope and timing of preservation duty; offered backup drive production	Held: Court orders production of backup external drive for forensic exam, recommends adverse inference at trial, and requires IFC to submit billing records for a fee award proceeding

Key Cases Cited

Bull v. United Parcel Serv., Inc., 665 F.3d 68 (3d Cir. 2012) (spoliation framework and bad-faith standard)
Schmid v. Milwaukee Elec. Tool Corp., 13 F.3d 76 (3d Cir. 1994) (factors for choosing spoliation sanctions)
Brewer v. Quaker State Oil Refining Corp., 72 F.3d 326 (3d Cir. 1995) (distinguishing accidental loss from suppression and discussing inferences)
Taberer v. Armstrong World Indus., Inc., 954 F.2d 888 (3d Cir. 1992) (magistrate certification procedure for contempt)
Wallace v. Kmart Corp., 687 F.3d 86 (3d Cir. 2012) (magistrate contempt authority and certification role)
John T. v. Delaware County Intermediate Unit, 318 F.3d 545 (3d Cir. 2003) (civil contempt elements; proof by clear and convincing evidence)
F.T.C. v. Lane Labs-USA, Inc., 624 F.3d 575 (3d Cir. 2010) (proof requirements for contempt; valid order, knowledge, and disobedience)
Marshak v. Treadwell, 595 F.3d 478 (3d Cir. 2009) (civil contempt proof standards)
MOSAID Techs., Inc. v. Samsung Electronics Co., Ltd., 358 F. Supp. 2d 332 (D.N.J. 2004) (adverse-spoliation inference as a sanction)