La Belle v. Barclays Capital Inc.

Background

Brian La Belle sued Barclays Capital Inc. for alleged retaliation under the Sarbanes-Oxley Act of 2002. La Belle moved for discovery sanctions under Federal Rule of Civil Procedure 37, 28 U.S.C. § 1927, and the court’s inherent authority. He raised three grounds: Barclays allegedly misled the court and violated an order concerning recordings of Brian Wiele’s phone calls; Barclays allegedly failed to preserve notebooks La Belle used during his employment; and Barclays allegedly failed to preserve text messages sent to or from Larry Kravetz and Wiele.

Wiele’s phone recordings

The court had ordered Barclays to search for and produce 26 calls identified by La Belle. Barclays later reported that it had completed multiple searches and determined that Wiele’s phone was not recorded during the relevant period. La Belle argued that this contradicted Barclays’ earlier statements and its objections that searching for the recordings would be burdensome.

The court denied sanctions on this issue. It found that Barclays had repeatedly explained that it needed to collect and review recording data to determine whether the calls existed. Barclays’ earlier burdensomeness objections were substantially justified, even though one of them was not fully successful. After reviewing the data and reporting that no additional responsive calls existed, Barclays had fulfilled its discovery obligations and the court’s order. La Belle also offered no clear evidence that Barclays acted in bad faith or unreasonably multiplied the proceedings.

Notebooks

The court accepted that La Belle’s notebooks existed on the day he was fired, based on his detailed testimony. But La Belle provided no evidence that the notebooks existed afterward. To obtain spoliation sanctions—penalties for destroying or failing to preserve evidence—a party must show, among other things, that the evidence was lost, that the opposing party had a duty to preserve it, and that the loss involved a culpable state of mind.

Because the notebooks were not shown to exist after La Belle’s termination, he had to show that Barclays had a duty to preserve them when he was fired. The court found that the evidence La Belle cited did not establish that litigation was reasonably foreseeable at that time. An email referring to protecting Barclays if La Belle filed suit showed that a lawsuit was possible, but not that one was expected or likely. La Belle’s statements about having an attorney and consulting a lawyer about a non-solicitation policy also did not establish that a lawsuit over his termination was reasonably expected. The court therefore found that La Belle had not established spoliation involving the notebooks.

Text messages

The court assumed, for purposes of its analysis, that some relevant messages had existed on Kravetz’s and Wiele’s cellphones. Barclays stated that it preserved and produced messages from company-issued devices under its document-retention protocol. La Belle relied on an email suggesting that a text had been sent but was not produced. The court found that this evidence was insufficient to show that messages from company-issued devices had been destroyed.

As to personal cellphones, Barclays had a policy prohibiting employees from discussing company business on those devices without approval. The court found that Barclays was not unreasonable in initially assuming employees followed that policy and limiting its search to company-issued devices. The duty to search personal phones arose when Barclays received an indication that relevant evidence was on those devices; Barclays acknowledged that this occurred by late 2019. La Belle did not show that any messages were destroyed between that point and the search conducted in or around January 2020. The court therefore found that he had not established the elements of spoliation for the text messages.

Disposition

The court denied La Belle’s motion for sanctions, docket number 181, in its entirety. Magistrate Judge Gabriel W. Gorenstein issued the order.