Paisley Park Enterprises, Inc. v. Boxill

Background

The plaintiffs were Paisley Park Enterprises, Inc. and Comerica Bank & Trust, N.A., acting as personal representative for the estate of Prince Rogers Nelson. They alleged that George Ian Boxill, Rogue Music Alliance, LLC, Deliverance, LLC, David Staley, Gabriel Solomon Wilson, and two law firms took steps to release songs Prince had created but had not previously released publicly.

The sanctions dispute concerned text messages held by Staley and Wilson. The plaintiffs served discovery requests seeking documents about the music, the defendants’ communications, and the lawsuit. After the court ordered production of responsive text messages, counsel for the defendants said that the messages had not been preserved because Staley and Wilson had left automatic deletion enabled and had wiped and discarded their phones. Wilson wiped and discarded a replacement phone in May 2018. Some messages from or to Staley and Wilson had been obtained from other parties, but messages exchanged only between Staley and Wilson and messages sent to certain third parties could not be recovered.

The plaintiffs separately sought to compel discovery from Brown & Rosen, LLC, which had issued an opinion letter about Boxill’s right to release the music. While that motion was pending, the district judge dismissed the claims against Brown for lack of personal jurisdiction.

Spoliation analysis

Spoliation is the loss or destruction of evidence relevant to litigation. Applying Federal Rule of Civil Procedure 37, the court held that the duty to preserve relevant electronically stored information arose no later than February 11, 2017. On that date, Staley sent an email recognizing that the Prince Estate might challenge the planned release and referring to the possibility of a lawsuit.

The court found that Staley and Wilson were likely to possess relevant information because of their roles with Rogue Music Alliance and Deliverance, and that their text messages were relevant. The defendants did not take reasonable preservation steps: they did not disable automatic deletion, establish a litigation hold, or preserve the phones before wiping and discarding them. The court rejected arguments that the plaintiffs had to identify text messages specifically in a preservation letter, that the defendants’ attorneys had not instructed them to preserve texts, and that the phones were personal devices. The court emphasized that the phones had been used for business communications and that the defendants were responsible for preserving responsive information.

The court also found that the missing messages could not be restored or replaced by messages and emails produced from other sources. The incomplete record prejudiced the plaintiffs because they could not determine what the lost messages contained or fully present the communications relevant to their claims.

The court concluded that the defendants acted with the intent to deprive the plaintiffs of the lost information’s use in the litigation. It also found that Rogue Music Alliance, Deliverance, and Wilson violated the court’s pretrial scheduling orders requiring preservation of electronically stored information. The court therefore determined that sanctions were appropriate under Rules 37(b) and 37(e), as well as under the scheduling orders.

Relief ordered

The court deferred deciding whether to impose an adverse inference or a presumption that the destroyed evidence was unfavorable to the defendants. It stated that discovery was still ongoing and that those issues would be better considered closer to trial, when the trial judge would have the full record and supplemental briefing.

The court ordered Rogue Music Alliance, Deliverance, Staley, and Wilson to pay the plaintiffs’ reasonable fees, costs, and expenses caused by the misconduct. The plaintiffs were required to submit those expenses, and the defendants were allowed to respond. The court also ordered those five defendants to pay a $10,000 sanction into the court within 90 days. They were made jointly and severally liable for that amount.

Motion to compel and disposition

Because the district judge had dismissed the claims against Brown & Rosen for lack of personal jurisdiction, this court concluded that it no longer had jurisdiction to order Brown & Rosen to respond to the plaintiffs’ discovery requests. The court therefore denied the motion to compel as moot.

The court ordered that the plaintiffs’ motion for sanctions due to spoliation of evidence was GRANTED IN PART and DENIED IN PART. The remaining sanctions requests were denied without prejudice. The motion to compel discovery from Brown & Rosen, LLC was DENIED AS MOOT.