Edifecs, Inc. v. Welltok, Inc.

District Court, W.D. Washington·Decided November 8, 2019·No. 2:18-cv-01086·Unknown

Opinion

1 2

3 4 5 6 7 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON 8 AT SEATTLE

9 10 EDIFECS, INC., CASE NO. C18-1086JLR 11 Plaintiff, ORDER GRANTING IN PART v. AND DENYING IN PART 12 PLAINTIFF’S MOTION FOR EVIDENTIARY SANCTIONS WELLTOK, INC., 13 Defendant. 14

15 I. INTRODUCTION 16 Before the court is Plaintiff Edifecs, Inc.’s (“Edifecs”) motion for evidentiary 17 sanctions. (Mot. (Dkt. # 27).) Edifecs seeks sanctions based on Defendant Welltok, 18 Inc.’s (“Welltok”) alleged spoliation of (1) records of text messages on Welltok 19 employees’ personal cell phones, and (2) online job postings. (See Mot. at 5.) Welltok 20 filed a response. (Resp. (Dkt. # 34).) Edifecs filed a reply. (Reply (Dkt. # 38).) The 21 court held oral argument on November 1, 2019. (See 11/1/19 Dkt. Entry.) The court has 22 1 considered the parties’ submissions, the relevant portions of the record, and the 2 applicable law. Being fully informed, the court GRANTS in part and DENIES in part

3 Edifecs’s motion for sanctions. 5 This action revolves around Edifecs’s allegation that Welltok’s former Vice 6 President, David Profant, “engaged in an unlawful raid of senior Edifecs employees.” 7 (Mot. at 5.) Mr. Profant left Edifecs for Welltok in late 2016. (See Mot. at 61; Resp. at 8 6.) Shortly after, a number of Edifecs employees with whom Mr. Profant was close (the

9 “Employees”) applied for and were offered positions at Welltok. (See, e.g., Uriarte Decl. 10 (Dkt. # 28) ¶¶ 9-11, Exs. 8-10.) Edifecs alleges that Mr. Profant “secretly negotiate[d] 11 with Welltok executives to leave Edifecs for Welltok.” (See Mot. at 5-6.) Welltok 12 responds that the Employees made independent decisions to apply for their Welltok 13 positions. (See Resp. at 8.)

14 Edifecs originally sued Mr. Profant in March 2017 (the “Profant Case”) for breach 15 of a clause in Mr. Profant’s employment agreement that disallowed Mr. Profant from 16 soliciting Edifecs employees for one year following termination of his Edifecs 17 employment. (See Compl. (Dkt. # 1) ¶ 18.) During that litigation, Mr. Profant’s counsel 18 represented that Mr. Profant conducted a thorough search for responsive documents,

19 including text messages, in his “personal devices (iPhone and iPad), and the PC he uses 20 for work (a Welltok-owned device).” (See 4/24/17 Ltr. (Dkt. # 24-2) at 3.) Mr. Profant 21

1 Throughout this order, the court cites to documents in the record using the page 22 numbers provided by the court’s electronic filing system. 1 passed away unexepectedly in March 2018 as the Profant Case was in progress. (See 2 Resp. at 8.) Edifecs decided to shift the focus of its litigation away from Mr. Profant and

3 towards Welltok. (See id. at 8 (citing Cohen Decl. (Dkt. # 35) ¶ 24, Ex. 23 at 1).) 4 Edifecs filed this action against Welltok on July 4, 2018, alleging a new tortious 5 interference theory. (See Compl. ¶¶ 40-49.) Edifecs then voluntarily dismissed the 6 Profant Case. (See Resp. at 8.) 7 Mr. Profant disclosed his Edifecs employment agreement to Welltok. (See Uriarte 8 Decl. ¶ 3, Ex. 2 (“Addendum”).) Welltok prepared and sent the Addendum to its offer

9 letter to Mr. Profant on November 13, 2016, which stated that “[w]e do not believe your 10 acceptance of employment . . . will violate the [non-solicitation clause] or any other 11 obligation you have to Edifecs, in part, because we are not a competitor of that 12 company.” (See id. at 3.) “Nevertheless,” the Addendum goes on, “we have some 13 special rules that you must follow.” (Id.) The “special rules” instruct Mr. Profant on

14 how he may and may not communicate with his former Welltok colleagues. (See id. 15 (“Do not affirmatively contact former colleagues telephonically, by text or by email 16 during any restricted period to discuss employment with Welltok or to suggest or 17 encourage them to apply for employment at Welltok.”).) 18 Welltok, which was not a defendant in the Profant Case, purportedly received

19 notice of that lawsuit on March 15, 2017, and issued a litigation hold notice to former 20 // 21 // 22 // 1 Edifecs employees Dave Profant, Jennifer Forster, John Schlichting, Dave Arnone, Derek 2 Baehre, and Matt Dziedzic. (See Mot. at 8.2)

3 Edifecs served subpoenas on Welltok, Mr. Profant, and the Employees on May 24, 4 2017. (See id. at 7.) The Employees, through Welltok’s counsel, objected to producing a 5 number of documents. (See Resp. at 6.) Nevertheless, Welltok’s counsel agreed to 6 produce emails between Mr. Profant and the Employees, including “all emails to or from 7 Mr. Profant dated from September 1, 2016 to the date when each left Edifecs to work for 8 Welltok.” (See Cohen Decl. ¶ 22, Ex. 21.) On October 11, 2017, Mr. Profant’s counsel

9 made a formal demand under the Stored Communications Act, 18 U.S.C. § 2702(c)(2), to 10 Mr. Profant’s cell phone carrier, AT&T Wireless, requesting “copies of any and all text 11 message records sent from or received by Mr. Profant’s AT&T-subscriber cell phone 12 number . . . for the time period November 1, 2016 to the present, including but not 13 limited to text message detail, logs and transcripts.” (Cohen Decl. ¶ 23, Ex. 22.) By

14 April 24, 2018, counsel for the parties appear to acknowledge that nearly all of Mr. 15 Profant’s text messages for the relevant time period had been deleted. (See Cohen Decl. 16 ¶ 24, Ex. 23.) 17 In August 2017, Welltok switched to a new job posting system and lost access to 18 its prior job posting records. (Mot. at 9-10; Uriarte Decl. ¶ 15, Ex 14 (“Welltok cannot

19 access its history of sales job postings during the period January 1, 2016 to July 30, 2017, 20 because Welltok no longer uses the same job posting platform that it used during that 21

22 2 The litigation hold notice does not appear in the record. 1 period . . . .”).) Edifecs believes that “Welltok hopes to profit from its spoliation of job 2 posting records by arguing that there were public job postings for the subject positions.

3 Edifecs cannot test this argument due to Welltok’s spoliation.” (Mot. at 6 n.2.) 4 Welltok asserts that Edifecs was unwilling to take Welltok depositions that were 5 “repeatedly offered.” (Resp. at 9.) Edifecs did not depose the Employees until 6 September and October 2019. (See Cohen Decl. (Dkt. # 35) ¶¶ 2, Ex. 1 (Bhardwaj Dep.), 7 3, Ex. 2 (Forster Dep.), 4, Ex. 3 (Arnone Dep.), 5, Ex. 4 (Singh Dep.), 33 (declaring that 8 Welltok’s counsel did not include excerpts from the depositions of “Mr. Baehre, Mr.

9 Dziedzic, Mr. Hinkle or others because they occurred recently and to date they have only 10 been provided in draft form.”).) During these depositions, Edifecs’s counsel questioned 11 the Employees about their use of their personal email accounts and cell phones, and 12 whether they maintained records of text messages sent to or received from Mr. Profant in 13 late 2016 and early 2017. (See, e.g., Forster Dep. 115:18-25 (“Q: Was it your habit to

14 delete text messages after you received them from Mr. Profant? A: It’s my habit to 15 periodically clean out my text messages, but not specifically – usually because I get 16 pages of conversations. Q: How often do you do that? A: Depends on when I have 17 downtime.”).) The Employees testified that they searched their email accounts for and 18 produced responsive documents in the Profant Case. (See, e.g., Forster Dep. at 159:21-24

19 (“Q: You don’t know if those emails were collected? A: I gave everything that I had at 20 the time when I was asked for them.”).) 21 The Employees were not parties to the Profant Case. A number of the Employees 22 used their cell phones for work purposes. (See Reply at 4 (citing Swaminathan Decl. ¶ 4, 1 Ex.

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