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3 BY:
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5 6 IN THE SUPERIOR COURT OF GUAM 7
8 DFS GUAM L.P., CIVIL CASE NO. CV0943-14 (Consolidated with CV0094-15 and CV0198-15)
9 Plaintiff,
V.
10 THE ANTONIO B. WON PAT DECISION AND ORDER 11 INTERNATIONAL AIRPORT Re: DFS Guam LP's Motion for Order to Lott, AUTHORITY, GUAM, and DOES 1-10, Duty Free Guam, LLC to Show Cause Why It 12 INCLUSIVE, Should Not Be Held i11 Contempt for Failing to 13 Comply with the Court's December 22, 2017 Order
Defendants.
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15 16 This matter came before the Honorable Arthur R. Barcinas on July 27, 2023, for a 17 hearing on Plaintiff DPS Guam L.P's ("DFS") January 22, 2018 Motion for Order to Lotte Duty 18 Free Guam, LLC to Show Cause Why It Should Not Be Held in Contempt for Failing to Comply 19 with the Court's December 22, 2017 Order. Attorneys Kahn Scolnick, Maurice Suh, Jay 20 Srinivasan, and G. Patrick Civille were present for DFS. Attorneys Steven Madison and Caesar 21 Cabot represented Lotte, and Attorneys Genevieve Rapadas and E. Christian Calvo were present 22 for Defendant A.B. Won Pat Guam International Airport Authority, Guam ("GIAA'').
CV0943-14 DFS Guam L.P. v. The A.B. Won Pat International Airport Authority, Guam
1 BACKGROUND 2 This case arises from a procurement dispute between DFS and GIAA. On June 16, 2016, 3 DFS served Lotte Duty Free Guam, LLC ("Lotte Guam") with a Guam Rules of Civil Procedure 4 ("GRCP") Rule 45 subpoena requesting that Lotte Guam produce documents. Lotte Guam 5 served its objections to the subpoena on June 29, 2016. On July 1, 2016, Lotte Guam filed a 6 Motion to Quash DFS' Subpoena for the Production of Documents and for a Protective Order. 7 On April 27, 2017, the Court heard Lotte Guam's Motion to Quash. On May 1, 2017, the Court 8 issued a decision and order denying Lotte Guam's Motion to Quash. On May 8, 2017, DFS filed 9 a Motion for an Order Enforcing the Court's May 1, 2017 Decision and Order and Awarding 10 DFS its Costs and Attorney Fees. ("Motion to Enforce"). On May 10, 2017, Lotte Guam filed a 11 Motion to Reconsider as part of its opposition to DFS's Ex Parte Application to Shorten Time 12 for Hearing on DFS's Motion to Enforce. On May 18, 2017, Lotte Guam filed its opposition to 13 the Motion to Enforce. On May 5, 2017, the Court heard DFS's Motion to Enforce and Lotte 14 Guam's Motion to Reconsider. On June 2, 2017, the Court issued an Order After Hearing 15 denying both motions for being procedurally deficient. 16 On October 11, 2017, DFS filed it Motion for Order to Lotte Duty Free Guam, LLC to 17 Show Cause Why It Should Not Be Held in Contempt for Failing to Comply with Subpoena for 18 the Production of Documents and the Court's May 1, 2017 Decision and Order ("First Motion 19 for OSC"). On November 8, 2017, Lotte Guam filed its opposition, and on November 22, 2017, 20 DFS filed its reply. On December 7, 2017, the Court heard the First Motion for OSC and took 21 the matter under advisement. 22 On December 22, 2017, the Court issued its Decision and Order, finding that Lotte was under 23 no obligation to act on DFS's subpoena at the time because the Court's May 1, 2017 order did 24 Page 2 of 10
CV0943-14 DFS Guam L.P. v. The A.B. Won Pat International Airport Authority, Guam
1 not direct compliance and therefore DFS's request for Lotte Guam to be held in contempt and fo 2 sanctions was premature. The Court consequently denied the First Motion for OSC, but also
3 issued an order to compel, finding that Lotte Guam held sufficient "control" over the documents
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4 in Lotte Korea's possession and directing Lotte Guam to produce by January 5, 2018, all 5 documents responsive to DFS's subpoena held by Lotte Korea. 6 On January 8, 2018, DFS's counsel received a box of documents from Lotte Guam's 7 counsel. DFS alleged that, while the documents Bates numbers ran from LDFG009631 to 8 LDFG0l 1483, many of the pages were not in sequential order and the production had 9 unexplained gaps in the Bates numbers. According to DFS, Lotte produced in total 1,762 pages 10 of documents. On January 8, 2018, Lotte Guam filed a Notice to Court Re Compliance With 11 December 22, 2017 Decision and Order, in which it informed the Court it had produced 1,948 12 pages of documents. Lotte Guam contends in its opposition that, after the instant motion was 13 filed, its counsel made a replacement copy of counsel's own hard copy and delivered it to DFS's 14 counsel after verifying that the production contained exactly 1,948 pages and that any potential 15 issues with Bates number ranges were not actually due to missing documents but to technical 16 issues. 17 On January 22, 2018, DFS filed the instant Motion for Order to Lotte Duty Free Guam, 18 LLC to Show Cause Why It Should Not Be Held in Contempt for Failing to Comply with the 19 Court's December 22, 2017 Order ("Motion for OSC"). In the instant motion, DFS alleged that 20 Lotte Guam and Lotte Korea had spoliated documents and failed to produce all documents 21 responsive to DFS's subpoena as ordered by the Court. DFS stated that Lotte Guam's production 22 of documents largely consisted of documents that had been previously produced by GIAA or 23 other sources. Lotte claimed that it was unable to produce relevant emails, internal 24 Page 3 of 10
CV0943-14 DFS Guam L.P. v. The A.H. Won Pat International Airport Authority, Guam
I communications, and other documents relevant to DFS 's protest that would solely be in the 2 possession of Lotte Korea or Lotte Guam. DFS asserted that Lotte had not produced any 3 communication regarding the actual drafting of its proposal, presentation or letters to GI.AA, nor 4 any emails from any of the Lotte Korea employees assigned to Guam. 5 DFS now seeks adverse inference sanctions against Lotte Guam for allegedly failing to 6 preserve relevant documents. DFS states that the circumstances support an adverse inference that 7 the lost or destroyed documents were relevant and favorable to DFS on the following issues: 8 I. Lotte's intent in meeting with GIAA Board member Francisco G. Santos on August 9 16, 2012 was to influence Mr. Santos to help Lotte win the RFP. 10 2. Lotte's intent in hiring consultants who had existing personal and business 11 relationships with GIAA's board members, staff or outside counsel was to influence 12 those GIAA board members or staff or outside counsel to help Lotte win the RFP. 13 3. Lotte intended to pay success fees to Anthony Sgro and Joseph Cruz. 14 4. Lotte intended to present a minimum annual guaranteed rent ("MAG") offer during 15 its November 29, 2012 RFP presentation that was increased from its MAG offer in its 16 October 17, 2012 RFP proposal, in order to influence the GIAA evaluation I7 committee. 18 5. Lotte's intent in offering to renovate the Guam Airport's bathrooms, food court, and 19 smoking lounge, and install a children's play area and Internet station, was to make 20 offers outside of the scope of the RFP. 21 6. Lotte's intent in negotiating the financial terms of its purported RFP contract with 22 GIAA was to provide the increased MAG rent that it had offered during its November 23 29, 2012 presentation to the GIAA evaluation committee. 24 Page 4 oflO
CV0943-14 DFS Guam L.P. v. The A.B. Won Pat International Airport Authority, Guam
1 7. Lotte's intent in issuing press releases regarding DFS's protests and DFS's 2 subsequent lawsuit was to proliferate negative publicity against DPS. 3 On July 18, 2023, Lotte Guam filed its opposition. On July 25, 2023, DFS filed its reply. 4 DISCUSSION 5 Spoliation is the destruction or significant alteration of evidence, or the failure to preserv 6 properly for another's use as evidence in pending or reasonably foreseeable litigation. Reeves v. 7 MV Transportation, Inc., 111 Cal.Rptr.3d 896, 909 (Cal. App. 2010). Spoliation of evidence 8 relevant to proof of an issue at trial can support an inference that the evidence would have been 9 unfavorable to the party responsible for its destruction. Id. 10 Because spoliation is a rule of evidence, the decision to impose sanctions for violations is 11 one administered at the discretion of the trial court. See, e.g., Turner v. U.S., 736 F.3d 274, 281 12 (4th Cir. 2013). In order for an adverse inference to arise from spoliation, the party having 13 control over the evidence must have had a duty to preserve it at the time it was destroyed. 14 Reeves, at 909. The duty to preserve evidence arises when the party has notice that the evidence 15 is relevant to litigation or when a party reasonably should.have known that the evidence may be 16 relevant to future litigation. Fujitsu Ltd. V. Federal Express Corp., 247 F.3d 423,436 (2d Cir. 17 2001); Silvestri v. General Motors Corp., 271 F.3d 583, 591 (4th Cir. 2001). Once the duty to 18 preserve attaches, a party must suspend any existing policies related to deleting or destroying 19 files and preserve all relevant documents related to the litigation. See, e.g. Victor Valley Union 20 High School Dist. v. Superior Ct. of San Bernardino Cty., 309 Cal.Rptr.3d 258, 273-274 (Cal. 21 App. 2023). Only a minimum link of relevance is required to permit a fact-finder to draw an 22 adverse inference. Akiona v. US., 938 F.2d 158, 161 (9th Cir. 1991). The party seeking to 23 introduce evidence of spoliation need not establish bad faith on the part of the party who 24 Page 5 of 10
CV0943-14 DFS Guam L.P. v. The A.B. Won Pat International Airport Authority, Guam
1 destroyed the evidence. Glover v. BIC Corp., 6 F.3d 1318, 1329 (9th Cir. 1993). A finding ofba 2 faith will suffice, but so will a simple notice of potential relevance to the litigation. Id. 3 Lotte Guam argues that it is not a party in this case and that, as a third party, it has no 4 duty to preserve evidence for others. Opp., at 5 (citing Pettit v. Smith, 45 F. Supp. 3d 1099, I 106 5 (D. Ariz. 2014). However, upon review of Pettit, the court in that case found that the third party 6 did have a duty to preserve because it was not found to be a disinterested third party, and it had 7 complete control over relevant evidence in that case, the plaintiffs ability to access said 8 evidence, and the defendant's ability to preserve said evidence. The Court finds Lotte Guam to 9 be in a similar situation. Not only has Lotte Guam been the bottleneck for all evidence of 10 communication between the Lotte entities and GIAA in this case, it was also one of the original 11 parties at the outset of this litigation. It may not technically be a party in name, but it is most 12 definitely so in nature. As such, the Court finds that a duty to preserve did attach to Lotte Guam 13 at the moment it should have reasonably known that litigation was pending, 14 II. Lotte's duty to preserve began on May 3, 2013, upon notice from GIAA 15 DFS asserted in its motion that both Lotte Guam and Lotte Korea were on notice to 16 preserve relevant documents since at least May 3, 2013, when GIAA emailed them with 17 instructions to preserve all documents and electronically stored information potentially relevant 18 to the protest. In its opposition, Lotte Guam stated that "DFS alleges this May 3, 2013 letter 19 [from GIAA] was a 'notice[]' to Lotte Guam to preserve documents, but never mentions that the 20 request was limited to documents 'potentially relevant to the Protest."' Lotte Guam asserted that 21 the protest in question is DFS's April 23, 2013 Protest regarding the Guam Visitors Bureau 22 delegation to Korea, and that therefore all documents "potentially relevant to the Protest" were 23 ones that related to the delegation's visit to the Lotte store and any gifts allegedly provided there. 24 Page 6 of 10
CV0943-14 DFS Guam L.P. v. The A.B. Won Pat International Airport Authority, Guam
I The Court finds that, upon receipt of GIAA's instructions on May 3, 2013, Lotte Guam 2 was on reasonable notice to preserve any and all documents related to potential litigation 3 regarding the retail concession agreement bid. Upon r,eceipt of the aforementioned instructions, 4 Lotte should therefore have preserved all documents in its possession related to that matter, not 5 merely those related to the GVB delegation's visit. 6 Lotte Guam maintained that it was not explicitly put on notice of any duty to preserve its 7 documents until June 16, 2016 when DFS served it with a subpoena. The Court disagrees. Lotte 8 Guam subsequently claimed that it had a standard three-year retention policy for all electronic 9 documents, other than financial information, which is kept for five years. Lotte asserted that this 10 policy is relevant because DFS allegedly did not actually serve notice regarding the full scope of 11 its document requests until three years after the RFP process. Lotte Guam also claimed that its 12 standard email storage limit is I gigabyte, and when an email account reaches that limit, the 13 company's standard practice is to delete messages to make room. The Court does not find this to 14 be a reasonable excuse, because a party must suspend any existing policies related to deleting or 15 destroying files and preserve all relevant documents related to the litigation. See Victor Valley 16 Union High School, at 273-274; K.J.P. v. County ofSan Diego, 621 F.Supp.3d 1097, 1138 (S.D. 17 Cal. 2022). Having received reasonable knowledge of potential litigation via the 2013 GIAA 18 letter, Lotte Guam should have retained any and all documents dating back to May 20 I 0, and 19 suspended all deletion and destruction policies regarding all GIAA- and Guam-related material 20 until the matter was resolved. 21 Lotte Guam also stated that its search for documents in response to the 2016 DFS 22 subpoena yielded 540 documents that it considered responsive, and that it requested documents 23 from Lotte Hotel Guam and Lotte USA, which had no responsive documents in their possession. 24 Page 7 of 10
CV0943-14 DFS Guam L.P. v. The A.B. Won Pat International Airport Authority, Guam
1 The Court notes that Lotte Guam did not mention any requests from Lotte Korea, and finds this 2 to weigh heavily against Lotte Guam's argument, the Court's position regarding the unity of 3 interests between Lotte Guam and Lotte Korea having been established in its December 22, 2017 4 decision. 5 II. Adverse inferences are an appropriate sanction in this matter. 6 In addition to demonstrating a duty to preserve the evidence, the party seeking the benefit 7 of an inference from spoliation of evidence must also demonstrate that the records were 8 destroyed with a culpable state of mind, and that the destroyed records were relevant to the 9 party's claim or defense. Reeves, 186 Cal.App.4th, at 681-682. In Apple Inc. v. Samsung 10 Electronics Co., Ltd., Samsung was found to demonstrate the necessary culpable state of mind 11 when it maintained its auto-delete policy despite litigation with Apple being "reasonably 12 foreseeable. Apple, 881 F.Supp.2d 1132, 1146 (N.D. Cal. 2012). That court found that, while 13 Samsung may not have acted in bad faith, "[a]ll that the court must find is that Samsung acted 14 with a 'conscious regard' of its obligations." Id., at 1147. Samsung failed to send litigation hold 15 notices when its duty to preserve relevant evidence arose, and also failed to follow up with 16 employees as to whether they had complied with the given directives, and maintained its auto- 17 delete policy at all times. That court found this behavior more than sufficient to show 18 willfulness. The Court finds Lotte's behavior in this matter to similarly demonstrate a culpable 19 state of mind. 20 The record having yielded sufficient evidence ofreasonable notice regarding the pending 21 litigation, the Court finds that Lotte Guam bore the duty to preserve upon reception of GIAA's 22 May 2013 instructions. The Court further finds that GIAA's instructions and the fact that the 23 destroyed documents were pertinent to the protest provide sufficient cause to establish a minimal 24 Page 8 of 10
CV0943-14 DFS Guam L.P. v. The A.B. Won Pat International Airport Authority, Guam
1 link of relevance between said documents and DFS,s claims. Therefore, the Court finds that 2 Lotte's failure to preserve said documents is tantamount to spoliation. As established in the 3 Court's December 22, 2017 decision, Lotte Guam also had control over the documents at the 4 time of their spoliation. These two factors are sufficient to issue adverse inference sanctions 5 against Lotte Guam for the spoliation of said documents, and the Court finds that Lotte Guam's 6 document destruction policy is not a sufficient defense against the spoliation allegations. 7 CONCLUSION 8 In light of the foregoing, the Court will issue adverse inference sanctions against Lotte 9 Guam. The Court finds that the circumstances support an adverse inference that the lost or 10 destroyed documents were relevant and favorable to DFS on the following issues: 11 1. Lotte's intent in meeting with GIAA Board member Francisco G. Santos on August 16, 12 2012 was to influence Mr. Santos to help Lotte win the RFP. 13 2. Lotte's intent in hiring consultants who had existing personal and business relationships 14 with GIAA's board members, staff or outside counsel was to influence those GIAA board 15 members or staff or outside counsel to help Lotte win the RFP. 16 3. Lotte intended to pay success fees to Anthony Sgro and Joseph Cruz. 17 4. Lotte intended to present a minimum annual guaranteed rent ("MAG") offer during its 18 November 29, 2012 RFP presentation that was increased from its MAG offer in its 19 October 17, 2012 RFP proposal, in order to influence the GIAA evaluation committee. 20 5. Lotte's intent in offering to renovate the Guam Airport's bathrooms, food court, and 21 smoking lounge, and install a children's play area and Internet station, was to make offers 22 outside of the scope of the RFP. 23 24 Page9 oflO
CV0943-14 DFS Guam L.P. v. The A.B. Won Pat International Airport Authority, Guam
1 6. Lotte's intent in negotiating the financial terms of its purported RFP contract with GIAA 2 was to provide the increased MAG rent that it had offered during its November 29, 2012 3 presentation to the GIAA evaluation committee. 4 7. Lotte's intent in issuing press releases regarding DFS's protests and DFS's subsequent 5 lawsuit was to proliferate negative publicity against DFS. 6 7 IT IS SO ORDERED this day of _ _ _OC_T_2_7_2_023_ __ 8 9
HONORABLE ARTHUR R. BARCINAS 11 Judge, Superior Court of Guam
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