Altercare, Inc. v. Clark , 2013 Ohio 2785 ( 2013 )

[Cite as Altercare, Inc. v. Clark, 2013-Ohio-2785.]
STATE OF OHIO ) IN THE COURT OF APPEALS
)ss: NINTH JUDICIAL DISTRICT
COUNTY OF LORAIN )
ALTERCARE, INC. C.A. No. 12CA010211
Appellant/Cross-Appellee
v. APPEAL FROM JUDGMENT
ENTERED IN THE
LISA MARIE CLARK COURT OF COMMON PLEAS
COUNTY OF LORAIN, OHIO
Appellee/Cross-Appellant CASE No. 08CV159219
DECISION AND JOURNAL ENTRY
Dated: June 28, 2013
WHITMORE, Judge.
{¶1} Appellant/Cross-Appellee, Altercare, Inc. (“Altercare”), appeals from the
judgment of the Lorain County Court of Common Pleas. Additionally, Appellee/Cross-
Appellant, Lisa Marie Clark, has filed a notice of cross-appeal from the court’s judgment. This
Court affirms.
I
{¶2} In July 2007, Altercare hired Clark as the CEO of its nursing home facility,
Northridge Health Care Center (“Northridge”). Clark worked at Northridge until late March
2008, when she was told not to return to work. Believing that she had been terminated without
proper written notice under her employment contract, Clark consulted with an attorney. On
April 9, 2008, Clark’s attorney sent a letter to Altercare. The letter set forth Clark’s position that
Altercare had breached her employment contract and requested that Altercare take a variety of
remedial measures. The letter also specifically provided that:
2
[i]n the meantime, Altercare * * * has a legal obligation to take all necessary steps
to preserve potentially relevant evidence in this case, including evidence that is
maintained electronically (“Electronically Stored Information” or “ESI”),
digitally, and in document form.
The letter set forth a non-exhaustive list of the types of data covered by Altercare’s obligation.
Additionally, it provided that:
Altercare can most easily comply with its obligations by making a mirror-image
bit stream back-up copy of computers and storage media (such as hard disk
drive[s], floppy disks, CDs, DVDs, back-up tapes, or any other electronic data),
which will inexpensively preserve relevant electronic and digital evidence on
searchable CD-ROMs or DVD. This copy can then be searched later for
potentially relevant evidence without imposing an undue burden on the day-to-
day operations of the company.
During her time at Northridge, Clark had her own office and her own computer, which was
designated as the CEO computer.
{¶3} Subsequently, Altercare brought suit against Clark for breach of contract, breach
of fiduciary duty, fraudulent inducement, and conversion. The basic thrust of Altercare’s suit
was that Clark had misrepresented her qualifications and had damaged Northridge by grossly
mismanaging it during her tenure. In response, Clark filed an answer as well as a counterclaim
for breach of contract, retaliation, conversion, and defamation. On April 16, 2009, she served
Altercare with her first set of discovery requests. One particular request was that Altercare
produce “[a]ll of Altercare’s notes, documents, records, reports, memoranda, and/or
electronically stored information (‘ESI’) relating to Lisa Marie Clark and/or Lisa Marie Clark’s
employment from Altercare.” From that point forward, the ESI in Altercare’s possession
became a matter of great contention.
{¶4} Throughout the discovery process, the trial court conducted numerous status
hearings and motion hearings at which the parties discussed the ESI that Clark sought. In July
2009, the court ordered Altercare to provide Clark with the ESI she sought. Clark and an expert
3
she retained visited Northridge in September 2009 to copy the ESI from the computers at the
facility. Upon their arrival, however, Clark was informed that the computer she had used during
her employment “had crashed” a few weeks earlier and was not available. Altercare later agreed
to review the contents of the computer to see if any information on it was recoverable. In
November 2009, the court ordered Altercare to have its own expert review the crashed computer
and to provide Clark with access to the hard drive once its review was complete. Altercare sent
the hard drive to Clark the following month with a letter indicating that its expert had determined
that “99% of the data on the hard drive [was] recoverable.” Yet, Altercare did not review any of
the particular data on the hard drive, and Clark was not able to retrieve any of the data she
needed from the hard drive when she received it. In May 2010, the court held a status
conference and noted in a journal entry that the parties were working with a third party “to
determine [the] least expensive means to provide hard-drive retrieval of [Clark’s] crashed
computer.”
{¶5} By August 2010, Clark still had not been able to retrieve any useful data from the
crashed hard drive. The trial court held a hearing on August 16, 2010, to address the issue again.
At the hearing, Altercare admitted that its own expert previously had provided it with the
information he had been able to obtain from the crashed computer, but Altercare still had not
reviewed the information. Altercare’s expert participated at the hearing and explained the types
of files that he had been able to recover and copy from the hard drive. Specifically, he had been
able to copy (1) active files, which were easily viewable, and (2) deleted, slack, and unallocated
files, which required forensic tools to view. Altercare agreed to give Clark a copy of the hard
drive information provided to it by its expert. The court ordered Clark to review the information
4
from the active files and determine whether it would be necessary to have Altercare expend
additional funds to have a forensic expert search the deleted, slack, and unallocated files.
{¶6} After spending a substantial amount of time reviewing the information from
Altercare’s expert, Clark determined that the computer hard drive Altercare had provided her
was not, in fact, from her computer. On October 1, 2010, Clark filed a motion to compel as well
as a request for sanctions, owing to the fact that Altercare still had not produced her CEO
computer. A hearing before a magistrate occurred a few weeks later. At the hearing, Clark
explained that she had extensively searched the copy of the hard drive Altercare provided and
had determined that it belonged to one of Northridge’s former administrators. After the hearing,
the court ordered Altercare to verify whether the hard drive it had produced was Clark’s by
inspecting the serial number. The court further ordered Altercare, in the event the computer was
not Clark’s, to “provide information concerning the location of the correct hard drive * * * and
produce it [or] if not available, explain why it is not.”
{¶7} On November 12, 2010, Altercare filed a response to the court’s order. Altercare
notified the court that it had audited all twelve of the computers currently at its facility and had
determined that only one contained a user profile for Clark and was registered in her name.
Accordingly, Altercare had the computer’s hard drive forensically imaged and forwarded a copy
of it to Clark.
{¶8} On March 2, 2011, Clark filed another motion to compel as well as a request for
sanctions because Altercare had failed once again to produce her hard drive. The court held a
hearing on March 23, 2011, at which Clark explained that the second hard drive Altercare had
produced did not contain any of the documents Clark knew she had created and stored on her
CEO computer while employed at Northridge. Meanwhile, Altercare maintained that it had
5
provided Clark with the appropriate hard drive, as it was the only one at its facility that bore her
user profile and was registered in her name. After extensive discussion, the court agreed to set
another hearing for the purpose of determining whether Altercare had, in fact, produced Clark’s
computer. The hearing ultimately took place on August 23, 2011.
{¶9} Both parties presented expert testimony at the hearing with regard to the contents
of the second computer hard drive that Altercare had produced. Only a minimal number of items
related to Clark were found on the hard drive. Clark also testified and explained that the hard
drive was from a computer that she had purchased, registered, and set up during her tenure at
Northridge for the two nurses who were responsible for the billing system. Clark testified that
Northridge had at least 14 computers onsite when she worked there, but that when she and her
expert originally visited the facility in September 2009 only 12 computers were present. Clark
confirmed that, of the two hard drives Altercare had produced to date, neither was from the
computer that she had used during her employment.
{¶10} Following the hearing, Clark filed a motion for sanctions based on Altercare’s
spoliation of the evidence. On March 1, 2012, the trial court issued its ruling on Clark’s motion
for sanctions. The trial court found that:
the hearing and prior discovery conferences demonstrate that for whatever reason,
Altercare * * * ha[s] not preserved Lisa Clark’s work computer even though it
could have done so by pulling it out of service or making a copy or clone of its
hard drive at the time Ms. Clark put [Altercare] on notice of the need to do so in
April of 2009.
The court further found that, as the party responsible for preserving the computer and any ESI
once litigation was contemplated, Altercare had done nothing to comply with its obligation.
While the court noted that it did not have sufficient evidence of intentional misconduct on
Altercare’s part, it determined that Altercare’s conduct showed “such extreme carelessness and
6
indifference” that Altercare had to “bear[] the responsibility for the spoliation of the evidence.”
Consequently, the court dismissed Altercare’s complaint against Clark as a sanction for
spoliation. The court also held that Clark would be entitled to a jury instruction regarding
Altercare’s spoliation in litigating her counterclaims against Altercare. Nevertheless, the court
refused to grant Clark’s request for a judgment in her favor on the liability portion of her
counterclaims due to Altercare’s misconduct.
{¶11} Altercare appealed from the trial court’s dismissal of its complaint against Clark.
Clark then filed a notice of cross-appeal to challenge the court’s refusal to grant her judgment on
the liability portion of her counterclaims due to Altercare’s misconduct. Yet, the record reflects
that Clark never filed a merit brief in support of her cross-appeal. She only filed a brief in
response to Altercare’s merit brief and her responsive brief only addresses Altercare’s appeal.
Consequently, the record does not contain a cross-appellant’s brief. “If an appellant fails to file
the appellant’s brief within the time provided by [App.R. 18], or within the time as extended, the
court may dismiss the appeal.” App.R. 18(C). Because Clark failed to file a brief in support of
her cross-appeal, this Court dismisses the cross-appeal. See id. This matter, therefore, will
proceed solely on Altercare’s appeal from the trial court’s dismissal of its complaint against
Clark.
{¶12} Altercare’s appeal is now before this Court and raises two assignments of error
for our review. For ease of analysis, we combine the assignments of error.
II
Assignment of Error Number One
TRIAL COURT ABUSED ITS DISCRETION WHEN IT HELD THAT
ALTERCARE FAILED TO PRESERVE ELECTRONICALLY STORED
INFORMATION[.]
7
Assignment of Error Number Two
TRIAL COURT ABUSED ITS DISCRETION BY DISMISSING PLAINTIFF’S
CLAIMS[.]
{¶13} In its assignments of error, Altercare argues that the trial court abused its
discretion by granting Clark’s motion for sanctions and dismissing its complaint. Specifically, it
argues that the factors set forth in Civ.R. 37 do not justify a sanction and that dismissal was too
harsh a sanction. We disagree.
{¶14} “A trial court has broad discretion when imposing discovery sanctions.” Nakoff v.
Fairview General Hosp., 75 Ohio St.3d 254 (1996), syllabus. Consequently, “[t]his Court
reviews a trial court’s decision to impose sanctions for an abuse of discretion.” Rogers v. Credit
Acceptance Corp., 9th Dist. No. 11CA010141, 2013-Ohio-1097, ¶ 8. “While dismissal with
prejudice is the harshest of sanctions, this Court will not disturb the judgment of the trial court
unless the ‘degree of the sanction is disproportionate to the seriousness of the infraction under
the facts of the case.’” Morgan Adhesives Co., Inc. v. Datchuk, 9th Dist. No. 19920, 2001 WL
7383, *3 (Jan. 3, 2001), quoting Aydin Co. Exchange, Inc. v. Marting Realty, 118 Ohio App.3d
274, 280 (9th Dist.1997). “Where the record does not indicate [that] failure to comply with
discovery was due to involuntary inability, such as illness, rather than willfulness, bad faith or
any other fault of the noncomplying party, a trial court does not abuse its discretion by
dismissing the action pursuant to Civ.R. 37(B)(2)(c).” Morgan Adhesives Co., Inc. at *3,
quoting Aydin Co. Exchange, Inc. at 279. “In reviewing the appropriateness of the trial court’s
sanction of dismissal, this court will not substitute its judgment for that of the trial court.” Aydin
Co. Exchange, Inc. at 280.
{¶15} Civ.R. 37 contains a provision that specifically pertains to ESI. That provision
provides that:
8
Absent exceptional circumstances, a court may not impose sanctions under these
rules on a party for failing to provide electronically stored information lost as a
result of the routine, good-faith operation of an electronic information system.
The court may consider the following factors in determining whether to impose
sanctions under this division:
(1) Whether and when any obligation to preserve the information was triggered;
(2) Whether the information was lost as a result of the routine alteration or
deletion of information that attends the ordinary use of the system in issue;
(3) Whether the party intervened in a timely fashion to prevent the loss of
information;
(4) Any steps taken to comply with any court order or party agreement requiring
preservation of specific information;
(5) Any other facts relevant to its determination under this division.
Civ.R. 37(F). Altercare argues that Clark failed to demonstrate that sanctions were warranted
under the foregoing factors. It further argues that the sanction of dismissal with prejudice was
overly harsh given that the loss of Clark’s computer was not due to its willfulness or bad faith.
{¶16} The trial court considered each of the Civ.R. 37(F) factors in its judgment entry
and determined that the factors weighed in favor of sanctioning Altercare. The court found that
there was no evidence that Clark’s computer was lost as result of a routine, good faith operation.
Because Clark’s employment ended under contentious circumstances and Clark herself was an
attorney, the court reasoned, it should have been reasonably foreseeable to Altercare “that
litigation was probable and that the preservation of [Clark’s] computer and its [ESI] would more
than likely be necessary.” Further, the court noted that Clark had specifically made a written
request to Altercare on April 9, 2008, well before the suit even commenced, asking Altercare to
preserve the ESI. Clark also requested the production of the ESI in her first set of discovery
requests in April 2009. Nevertheless, Altercare took no action whatsoever to preserve Clark’s
computer before it allegedly crashed sometime in September 2009, eleven months after Altercare
9
filed suit against Clark. Altercare then apparently lost the computer, as it was never able to
produce it.
{¶17} Clark testified at the August 2011 hearing about her computer use during her
employment with Altercare. Clark described herself as a “very computer-dependent” person
who used the CEO computer to document the vast majority of her work. In determining that the
loss of the computer had prejudiced Clark’s ability to defend against Altercare’s suit, the court
specifically found that:
[e]xamples of prejudice include Ms. Clark’s inability to fully prepare for her own
deposition because she only had been able to save some of her documents while
employed at Altercare. Ms. Clark lost various drafts of her employment contract
which she needed to rebut Altercare’s claims that [she] had misrepresented her
skills and experience and thereby fraudulently induced Altercare to hire her as the
nursing home [CEO]. Ms. Clark is unable to present documents that would
corroborate her version of the hiring process, how her work was deemed
satisfactory by various board members who provided her with complimentary
emails, how she sent emails updating the board members including information
regarding nursing home challenges that existed before she was hired, how she had
managed some of those problems satisfactorily, and a whole myriad of claims
which Clark outlined in [her] September 20, 2011 Motion for Sanctions.
The court wrote that, in spite of the extensive efforts expended to locate and retrieve Clark’s
computer, “Altercare simply cannot produce it and has no satisfactory explanation as to where it
is or what happened to it.” (Emphasis omitted.)
{¶18} Although the court found it “suspicious” that Clark’s computer apparently crashed
and then disappeared only a short while before Clark was to examine it, the court noted that it
did not have enough evidence to conclude that Altercare had engaged in intentional misconduct.
Nevertheless, the court found that “[t]he loss or destruction of this computer[,] if not intentional
and malicious, is under all the facts and circumstances surrounding the case, the result of gross
neglect.” The court ultimately concluded that Altercare’s failure to preserve the evidence was
“so negligent and irresponsible” that a dismissal with prejudice was warranted. Having reviewed
10
the record, we cannot conclude that the trial court’s decision to sanction Altercare and to dismiss
with prejudice its case against Clark amounted to an abuse of discretion.
{¶19} The record reflects that a great deal of time was expended in the court below
trying to identify the location of Clark’s computer and to retrieve it for purposes of the litigation.
Altercare, despite being formally requested to retain ESI, failed to preserve the ESI on Clark’s
computer. It then, absent any explanation, lost the computer; a conclusion that emerged only
after several years’ worth of attempts to locate it. The computer was in Altercare’s sole custody
and control at all relevant times. Altercare had the ability to preserve the computer and/or its
contents, but failed to do so. Given Altercare’s utter disregard for the preservation of evidence,
we cannot conclude that the court erred by sanctioning Altercare. See Morgan Adhesives Co.
Inc., 2001 WL 7383, at *3, quoting Aydin Co. Exchange, Inc., 118 Ohio App.3d at 279.
{¶20} As to the harshness of the sanction the court imposed, the record supports the
conclusion that the absence of Clark’s computer would have greatly hampered Clark’s ability to
defend herself against Altercare’s suit. Compare Transamerica Ins. Group v. Maytag, Inc., 99
Ohio App.3d 203, 205-207 (9th Dist.1994) (sanction of dismissal with prejudice constituted an
abuse of discretion where there was no evidence of affirmative destruction and the failure to
preserve the evidence did not render the afflicted party incapable of proving their case). Clark
testified that she used her computer on a daily basis during her employment with Altercare and
had saved a great number of important documents on it. The evidence on the computer
potentially would have rebutted several of Altercare’s claims against Clark, as discussed in the
trial court’s judgment entry. We cannot conclude that the degree of the sanction the court
imposed was “disproportionate to the seriousness of the infraction under the facts of the case.”
Morgan Adhesives Co., Inc. at *3, quoting Aydin Co. Exchange, Inc. at 280.
11
{¶21} In sum, the trial court did not abuse its discretion by imposing the sanction of a
dismissal with prejudice of Altercare’s case against Clark. Altercare’s arguments to the contrary
lack merit. Therefore, Altercare’s two assignments of error are overruled.
III
{¶22} Altercare’s assignments of error are overruled. Clark’s cross-appeal is dismissed
due to her failure to file a brief in support of her appeal. The judgment of the Lorain County
Court of Common Pleas is affirmed.
Judgment affirmed.
There were reasonable grounds for this appeal.
We order that a special mandate issue out of this Court, directing the Court of Common
Pleas, County of Lorain, State of Ohio, to carry this judgment into execution. A certified copy of
this journal entry shall constitute the mandate, pursuant to App.R. 27.
Immediately upon the filing hereof, this document shall constitute the journal entry of
judgment, and it shall be file stamped by the Clerk of the Court of Appeals at which time the
period for review shall begin to run. App.R. 22(C). The Clerk of the Court of Appeals is
instructed to mail a notice of entry of this judgment to the parties and to make a notation of the
mailing in the docket, pursuant to App.R. 30.
Costs taxed to Appellant.
BETH WHITMORE
FOR THE COURT
12
MOORE, P. J.
HENSAL, J.
CONCUR.
APPEARANCES:
SCOTT SALSBURY and POOJA ALAG BIRD, Attorneys at Law, for Appellant/Cross-
Appellee.
CARYN M. GROEDEL, CHASTITY L. CHRISTY, and MATTHEW M. RIES, Attorneys at
Law, for Appellee/Cross-Appellant.