Phan v. Costco Wholesale Corporation

Background

Ryan Phan moved under Federal Rule of Civil Procedure 37(e) for sanctions against Costco Wholesale Corporation based on the loss of surveillance video showing his October 15, 2017 fall at a Costco gasoline station. Phan claimed he slipped on wet paint. Costco maintained that he fell after spilling gasoline while handling a gas-pump nozzle. There were no eyewitnesses to the fall other than Phan.

Costco’s surveillance system automatically recorded over footage after 30 days unless the footage was saved elsewhere. Costco’s loss-prevention agent, Juan Silva, copied footage of the fall to an external hard drive and later watched it. After Phan’s counsel requested the video, Costco could not locate it. Costco later found a hard drive believed to contain the footage, but a forensic analysis did not recover the video or evidence showing that it had been deleted.

Court’s Analysis

The court held that the video should have been preserved because Costco took an incident report, managers responded to the scene, and Phan was taken to an emergency room by ambulance. These circumstances meant Costco reasonably should have known that the video could be relevant to anticipated litigation.

The court found that Costco failed to take reasonable steps to preserve the video after saving it to the external drive. The court did not question whether Silva’s initial process for saving the footage was reasonable, but Costco provided no explanation for how the video was stored afterward or why the drive could not initially be located.

The court also found that the video could not be restored or replaced through additional discovery. Phan’s account and testimony from employees who had viewed the video could not entirely replace objective footage of the fall, particularly because the witnesses testified years after the incident and memories could fade.

The court found that Phan was prejudiced by the loss. Phan had repeatedly sought the video, while Costco could rely on testimony from employees who had seen it to support Costco’s theory that Phan slipped on gasoline. The court stated that determining the actual cause of the fall was a merits question and did not decide that question solely to evaluate prejudice.

The court rejected Phan’s request for more severe sanctions under Rule 37(e)(2), which requires an intent to deprive another party of the evidence’s use in the litigation. The court found no actual evidence of intent. Costco employees said they did not delete the video, and Costco hired a forensic expert to search for it. The court characterized Costco’s failure to make greater efforts to identify the video earlier as sloppiness, not necessarily intentional destruction.

Disposition

The court granted Phan’s spoliation motion in part. It ordered Costco to be sanctioned with a jury instruction on CACI 204, which allows the jury to consider whether a party intentionally concealed or destroyed evidence and, if so, to decide that the evidence would have been unfavorable to that party. The court denied the request for monetary sanctions because Phan did not identify an amount or provide the required evidentiary support. The order terminated Docket Number 27.