United Affiliates Corporation v. United States ( 2023 )

In the United States Court of Federal Claims
No. 17-67 L
Filed: February 28, 2023
________________________________________
)
UNITED AFFILIATES CORPORATION and )
MINGO LOGAN COAL LLC, )
)
Plaintiffs, )
)
v. )
)
THE UNITED STATES, )
)
Defendant. )
________________________________________ )
Kevin P. Holewinski, Jones Day, Washington, D.C., for Plaintiff United Affiliates Corporation.
Daniella A. Einik, of counsel.
Robert M. Rolfe, Hunton Andrews Kurth LLP, Richmond, VA, for Plaintiff Mingo Logan Coal
LLC. George P. Sibley, III, of counsel.
Joshua P. Wilson, U.S. Department of Justice, Environment and Natural Resources Division,
Natural Resources Section, Washington, D.C., with whom were Todd Kim, Assistant Attorney
General, Hannah O’Keefe and Erika Norman, of counsel, for the Defendant.
OPINION AND ORDER
The Government moves for evidentiary sanctions because Mingo Logan failed to
preserve documents that it deleted approximately four months after filing this action. The
Government seeks to preclude Plaintiffs from relying on documents that Mingo Logan failed to
preserve or from using documents derived from those lost documents, and for fees and costs
associated with additional discovery that Mingo Logan’s failure to preserve has generated.
Mingo Logan admits that it did not take appropriate steps to preserve the lost data but opposes
sanctions. Because Mingo Logan failed to preserve relevant documents despite a clear duty to
do so, the Court grants-in-part the Government’s motion insofar as it seeks to preclude Plaintiffs
from relying on documents Mingo Logan failed to preserve. And the Court grants the
Government’s motion insofar as it seeks fees and costs from Mingo Logan associated with the
discovery depositions discussed herein and for added work its experts must undertake to
reconstruct lost data. The Court will defer until summary judgment or trial whether documents
derived from lost documents may be used.
I. Background 1
Following an approximately ten-year application process and an extensive environmental
impact study, the Government granted Mingo Logan a permit in 2007 pursuant to Section 404 of
the Clean Water Act that allowed Plaintiffs to discharge spoil material generated by surface
mining operations at a site in West Virginia known as the Spruce No. 1 mine into two nearby
streams. ECF No. 39-1 at AR025384-AR025403. In 2011, however, the Environmental
Protection Agency exercised its authority under Section 404 to withdraw the permit insofar as it
allowed the discharge of fill material into the two streams. ECF No. 60-2 at AR010201. This
litigation followed.
During discovery, the Government sought to obtain Mingo Logan’s mine models and
forecasts. The Government first requested the modeling and underlying data that supported the
2007 permit:
[A]ll modeling input data used to create the model used to support
your application for Permit # S-5013-97 for Spruce No.1 Mine,
including but not limited to: (1) the 3D Model used at the time of
IBR #2 submittal for tonnage calculations with historical
documentation, including descriptions of Carlson grids and layers;
(2) drillhole information used to create the geologic model; and (3)
coal quality information, including wash analysis.
ECF No. 119-6 at 6 (RFP No. 2). 2 Mingo Logan produced the modeling files that it created in
2006. The Government also sought any updated modeling input data:
[A]ll modeling input data used to create the most recent version of
the model you have used to make projections for the Spruce No. 1
Mine, including but not limited to: (1) the 3D Model used for
tonnage calculations with historical documentation, including
descriptions of Carlson 3 grids and layers; (2) drillhole information
1
Because the facts of this matter are presented at length in the Court’s prior decisions, see 143
Fed. Cl. 257 (2019), 147 Fed. Cl. 412 (2020), & 154 Fed. Cl. 335 (2021), the background
included here is that relevant to the resolution of the pending motion.
2
Because this exhibit is not consecutively numbered, the Court cites to the ECF header when
citing ECF No. 119-6.
3
“Carlson” refers to the software that Mingo Logan used to generate mine models that coal
reserve estimates and other projections. For Spruce No. 1, geologists drilled into the ground and
collected core samples of what was under the ground. They loaded these data into a geologic
model—software MINEX—that overlayed the surface with 50’ x 50’ squares and estimated the
distribution of coal under those squares. They then loaded these data into Carlson’s SurvCADD
software, which allowed the onsite engineers “to calculate production advance rates, overburden
yardage, tonnage production, and product quality.” ECF No. 128 at 5-6. The Carlson software
creates .GRD files containing its output data. Id.2
used to create the geologic model; and (3) coal quality information,
including wash analysis.
ECF No. 119-6 at 6 (RFP No. 2). The Government believed updated models existed because
Mingo Logan had conducted mining operations in the vicinity of Spruce No. 1 after the § 404
permit issuance in 2008, which included contract mining by Eagle Creek Mining in an area near
one of the streams covered by the § 404 permit. ECF No. 119 at 8. Mingo Logan did not
produce any updated modeling files. The present dispute arose when the Government pressed
for modelling files created or updated after 2006.
There was an extended back-and-forth between the Government and Mingo Logan
regarding what modelling files were generated and produced. The Court held a series of
discovery conferences in July and August 2021 regarding the ongoing discovery issues. ECF
Nos. 108 & 113. During the August conference, the Government recounted its efforts to obtain
the modelling files and its frustration at not getting the answers it wanted. ECF No. 113 at 31:4-
32:10. At that point, the Court suggested that if the parties’ efforts were not yielding the
information that the Government wanted, the Government may be best served by taking a RCFC
30(b)(6) deposition of Mingo Logan to get the information about what mine model data it had.
Id. at 32:11-23. The Government then noticed a RCFC 30(b)(6) deposition and the Government
designated Mr. McDaniel, a lead engineer for Mingo Logan, as the 30(b)(6) witness for the
deposition scheduled for December 8, 2021. See ECF No. 119-2 at 1.
On December 6, 2021, just two days before the 30(b)(6) deposition, Mingo Logan
informed the Government that certain Carlson .GRD files appeared to have been lost. See ECF
No. 119-1. As Mingo Logan explained, when it filed this action, it did not place a litigation hold
on the files of Mr. Frank Robinette, the Mingo Logan engineer with primary responsibility for
mine planning and modeling at Spruce No. 1. When Mr. Robinette left Mingo Logan four
months after Plaintiffs commenced litigation, nothing was done to preserve his computer or
email because there was no litigation hold in place covering him. ECF No. 119-1 at 1; see also
ECF No. 128 at 10. As Mingo Logan acknowledged to the Government, “[c]ertain .GRD
modelling files appear to have been stored only on Mr. Robinette’s hard drive.” ECF No. 119-1
at 2. But Mingo Logan contended that any information from these files could be gleaned from
other documents that Mingo Logan had preserved and produced.
The Government then deposed Mr. McDaniel, Mingo Logan’s 30(b)(6) designee, who
confirmed that Mingo Logan could not find the most current Carlson model of Spruce No. 1,
which Mingo Logan admitted it had created. ECF No. 119-2 at 109:4-110:4. The Government
also deposed Mr. Robinette, who confirmed that his files had included:
1. “[A] dozen or more” binders “that included drill holes” and
“available coal reserves at Spruce,”
2. Analysis of “alternatives to using” the “valley fills that were at
Pigeonroost and Oldhouse that were originally part of the Section
404 permit for Spruce” and for “the Seng Camp Creek valley fill”
based on “the most current version of the grid files,”
3
3. “[R]eserve reports generated from the 3-D grid files” that “were
in the binders” and likely also “saved on [Robinette’s] computer,”
4. An “Outlook folder” with “a bunch of folders” including one
“for the Spruce No. 1 Mine” which itself had “subfolders” that
“could have been for various individuals like Mr. McDaniel” or
“for specific tasks,”
5. A “computer with a hard drive” that contained “folders”
including one “for the Spruce Mine” with “subfolders” including
“project folders” that contained “spreadsheets . . . Life-of-Mine
plans and things like that” including “analysis of alternatives to
using Pigeonroost and Oldhouse.”
ECF No. 119-3 at 11:1-4, 11:23-12:1, 71:15-72:23, 76:3-13, 100:2-13, 105:11-106:1, 106:2-16,
109:6-111:4, 116:6-24.
During Mr. Robinette’s deposition, the Government also explored his work analyzing
alternatives to the discharge of spoil into the Pigeonroost and Oldhouse Branch streams. In
2010, the Government provided a report by Mr. John Morgan, a mining engineer with Morgan
Worldwide, that outlined what Mr. Morgan believed were viable alternatives to Pigeonroost and
Oldhouse Branch spoil discharges. See ECF No. 128-7. Although Mr. Robinette did not recall
the Morgan Report specifically, ECF No. 119-3 at 77:23-78:3, he testified that he did perform
analyses of alternatives to Pigeonroost and Oldhouse Branch, id. at 71:15-21. His analyses were
“probably” saved in folders called “2 valley fill option, 3 valley fill option, 4, under the Spruce
directory” on his computer. Id. at 110:15-24. These files too were lost when Mingo Logan
failed to preserve his computer.
Finally, Mr. Robinette testified that he maintained hard copy files, external drives, and
CDs with data in his office. ECF No. 119-3 at 113:8-17. None of these materials have been
produced and it appears that they are lost as well. ECF No. 132 at 9:1-8.
II. Legal Standard
A party has “a duty to preserve evidence when litigation is ‘pending or reasonably
foreseeable.’” 4DD Holdings, LLC v. United States, 143 Fed. Cl. 118, 130 (2019) (quoting
Micron Tech., Inc. v. Rambus, Inc., 645 F.3d 1311, 1320 (Fed. Cir. 2011)). Because litigation
was pending at the relevant time here—Mingo Logan failed to preserve Mr. Robinette’s files
when he left Mingo Logan four months after it filed the complaint—the Court need not wade
into when litigation was “reasonably foreseeable.” Parties who lose relevant evidence they were
under a duty to preserve for pending litigation by failing to take reasonable steps to protect it
commit spoliation. See id. at 130-34. “The court may impose sanctions for spoliation based on
the court’s inherent authority to govern the judicial process and pursuant to Rule 37 of the Rules
of the United States Court of Federal Claims.” Id. at 130. “In either instance, the policies
underlying the sanctions are multifaceted: to punish the spoliator, so as to ensure that it does not
benefit from its misdeeds; to deter future misconduct; to remedy, or at least minimize, the
evidentiary or financial damages caused by the spoliation; and last, but not least, to preserve the
4
integrity of the judicial process and its truth-seeking function.” United Med. Supply Co. v.
United States, 77 Fed. Cl. 257, 264 (2007).
Spoliation sanctions range from adverse inferences to attorney’s fees to, in the most
severe instances, dismissal of the case. Chambers v. NASCO, Inc., 501 U.S. 32, 45 (1991)
(“[O]utright dismissal of a lawsuit . . . is a particularly severe sanction, yet is within the court’s
discretion. Consequently, the ‘less severe sanction’ of an assessment of attorney’s fees is
undoubtedly within a court’s inherent power as well.”) (citation omitted); United Med. Supply
Co., 77 Fed. Cl. at 263 (“Spoliation may result in a variety of sanctions, with ‘the oldest and
most venerable remedy’ being an ‘adverse inference,’ under which the finder of fact may infer
that the destroyed evidence would have been favorable to the opposing side.”) (quoting Jonathan
Judge, “Reconsidering Spoliation: Common-Sense Alternatives to the Spoliation Tort,” 2001
Wis. L. Rev. 441, 444 (2001)) (additional citations omitted). No rule requires the Court to
impose specific sanctions in particular circumstances; rather, the Court itself responsibly
exercises “restraint and discretion” and “common sense” to choose appropriate and effective
sanctions for the circumstances it encounters. Chambers, 501 U.S. at 44-45 (“Because of their
very potency, inherent powers must be exercised with restraint and discretion. A primary aspect
of that discretion is the ability to fashion an appropriate sanction for conduct which abuses the
judicial process.”) (citation omitted); Chapman Law Firm, LPA v. United States, 113 Fed. Cl.
555, 611 (2013) (“When deciding whether to impose sanctions based on spoliation in a particular
case, . . . the discretion of the court must be exercised in a common sense manner, individually,
with respect to the facts of each case.”). The Court will not impose severe spoliation sanctions
unless a party intentionally spoliated evidence. See United Med. Supply Co., 77 Fed. Cl. at 270(“When considering the most powerful of the available sanctions, particularly those that might
lead to a determination other than on the merits, the court must use an additional measure of
restraint, which ordinarily requires that the offending party’s conduct evinces serious fault,
willfulness or bad faith.”).
RCFC 37(e) guides the Court when imposing sanctions for spoliation of electronically
stored information (“ESI”). 4DD Holdings, LLC, 143 Fed. Cl. at 130 (“When the evidence at
issue is electronically stored information, Rule 37(e) sets out the framework for imposing
sanctions.”). RCFC 37(e) provides:
If electronically stored information that should have been
preserved in the anticipation or conduct of litigation is lost because
a party failed to take reasonable steps to preserve it, and it cannot
be restored or replaced through additional discovery, the court: (1)
upon finding prejudice to another party from loss of the
information, may order measures no greater than necessary to cure
the prejudice; or (2) only upon finding that the party acted with the
intent to deprive another party of the information’s use in the
litigation may: (A) presume that the lost information was
unfavorable to the party; (B) [not used]; or (C) dismiss the action
or enter a default judgment.
III. Discussion
5
The Government focuses on two primary groups of evidence that it claims Mingo Logan
spoliated. First, the Government alleges that Mingo Logan destroyed updated versions of the
Carlson Model that Mr. Robinette generated after 2006. Second, the Government alleges that
Mingo Logan destroyed all of the analyses of alternatives to using the Pigeonroost and Oldhouse
Branch streams for spoil discharge sites. The Court addresses them in turn.
A. Carlson Mine Model
The Government “moves under RCFC 37(e)(1) and this Court’s inherent authority” that
this Court preclude Plaintiffs from introducing mining projections “derived from the destroyed
Carlson mine model.” ECF No. 119 at 1, 23. In order to preclude this evidence, the Court must
first determine whether it was spoliated.
1. The Carlson mine model .GRD files are lost
The Carlson mine model consists of .GRD files made at specific points in time. The
Government alleges that Plaintiffs never produced Carlson mine model .GRD files created after
2006, and claims that such files existed. See ECF No. 119 at 17 (“[T]he company deleted all of
the Spruce-related folders on [Mr. Robinette’s] hard drive, including unique modeling files that
post-date 2008 that have not been identified elsewhere in Plaintiffs’ productions from other
custodians.”). Mingo Logan, however, contends that “there is no evidence that any such files
exist.” ECF No. 128 at 15. Not so. Mr. Robinette testified that he created multiple updates to
the Carlson model. ECF No. 119-3 at 24:11-21, 39:17-40:11. While Mr. Robinette did not
remember the specific times that he updated the model, he testified that “it was after we started
mining with the contractor.” Id. at 24:19-20. And the record is not entirely clear, but it appears
that the contract mining has taken between 2007 and 2016. See ECF No. 119 at 19 & n.1.
Suffice it to say, Mr. Robinette was clear that he updated the model after the 2006 models that
Mingo Logan produced. And not only did he testify to having created the updated Carlson
models, he explained the folder structure on his former computer and identified precisely where
the files had been stored. ECF No. 119-3 at 106:2-108:1. The Court cannot discount his detailed
testimony about what he created and where he stored it on his computer that Mingo Logan failed
to preserve. And Mingo Logan’s 30(b)(6) designee also indicated that there were subsequent
updates to the Carlson model. He testified that “I do not believe that there were any subsequent
changes to the Carlson model, the base Carlson model, subsequent to the 2008 time frame slash
era.” ECF No. 130-2 at 32:7-9 (emphasis added). Mingo Logan’s counsel all but admit this as
well. ECF No. 119-1 at 1 (“The majority of Mr. Robinette’s work as it relates to the surface
mineable reserves at the Spruce mine that are the basis of Mingo Logan’s takings claim took
place between 2000 and 2008.”) (emphasis added).
This Court finds that the Carlson mine model .GRD files created after 2006 are lost.
2. The lost .GRD files are relevant
The Government alleges that the lost .GRD files are relevant to prongs one (“economic
impact”) and two (“distinct investment backed expectations”) of the Penn Central test, as well as
to determining just compensation. See ECF No. 119 at 10; Resource Invs., Inc. v. United States,
85 Fed. Cl. 447, 474 (2009) (weighing “(1) the ‘economic impact of the regulation on the
6
claimant;’ (2) ‘the extent to which the regulation has interfered with distinct investment backed
expectations;’ and (3) ‘the character of the governmental action.’”). Plaintiffs respond that the
lost .GRD files are not relevant to the first prong because “[P]ost-2006 .GRD files are not
necessary for determining the economic impact of the Government’s take on the value of
Plaintiffs’ property.” ECF No. 128 at 18.
During the parties’ discussions, Mingo Logan asserted that “[t]he majority of Mr.
Robinette’s work as it relates to the surface mineable reserves at the Spruce mine that are the
basis of Mingo Logan’s takings claim took place between 2000 and 2008. This included the
development of volume projections through the manipulation in SurvCADD of raw drill hole
data from Ark Land, as well as the creation of planning and sequencing spreadsheets.” ECF No.
119-1 at 1. 4 This may be so, but that does not make the post-2006 updates to the model
irrelevant. The alleged taking in this case took place in 2011, not 2006. And Mr. McDaniel
testified that the Carlson model that Mingo Logan used for mine planning and to project coal
reserves was a 2008-era model. ECF No. 119-2 at 53:7-13.
And a key issue in this case will be the value of the property when it was allegedly taken
in 2011. The lost .GRD files are clearly relevant when determining the economic impact of the
Government’s alleged taking. To determine economic impact, this Court must consider how the
permit revocation affected the fair market value of Mingo Logan’s property. Lemon Bay Cove,
LLC v. United States, 147 Fed. Cl. 528, 534 (2020) (“The second factor, the economic impact of
the regulation on the claimant, is ‘measured by the change, if any, in the fair market value caused
by the regulatory imposition.’”) (quoting Florida Rock Indus., Inc. v. United States, 18 F.3d
1560, 1567 (Fed. Cir. 1994)). The property’s fair market value is almost certainly influenced by
“production advance rates, overburden yardage, tonnage production, and product quality,” which
Plaintiffs admit they calculated using the Carlson mine model .GRD files. See ECF No. 128 at 6.
To the extent these models changed between 2006 and 2011, those changes are clearly important
to this case. And the .GRD files would help this Court understand the property’s fair market
value and help it determine just compensation (should the Court find the Government liable for a
taking). Therefore, the Court finds that the lost .GRD files are relevant.
3. Mingo Logan had a duty to preserve the lost .GRD files and did not take
reasonable steps to do so
According to the Government, “Mingo Logan held and breached a duty to take
reasonable steps to preserve Mr. Robinette’s Spruce-related ESI and hard copy documents,
including his mine modeling files . . . .” ECF No. 119 at 16. Indeed, Mingo Logan concedes
that it failed to take reasonable steps to preserve the .GRD files: “Your Honor, we don’t contest -
- we don’t contest that the first element here that reasonable steps were taken to preserve this
material. I think as people who are experienced in litigation, we would recognize certain steps
that -- additional steps that should have been taken.” ECF No. 132 at 37:13-18.
Mingo Logan reasonably instructed its employees about data preservation but did not
take the necessary step of sufficiently following-up with these instructions or ensuring that
employee computers were preserved when they left the company. Thus, Mr. Robinette’s files
4
Ark Land is an affiliate of Mingo Logan.
7
were not subject to any litigation hold when he left the company four months after Mingo Logan
filed this lawsuit. See ECF No. 119-1 at 1 (“Mr. Robinette was not placed on a legal hold when
this case was filed in January 2017.”). Because Mr. Robinette’s files were not put on the
litigation hold, they were subject to Mingo Logan’s standard operating procedures, which meant
that any information Mr. Robinette stored locally on his computer but not on remote servers
would be destroyed. ECF No. 128 at 10 (“Mingo Logan did not put measures in place to
preserve data he had stored locally” prior to “recycl[ing] his workstation and restor[ing] it to
factory settings, per the company’s standard operating procedures.”). And because Mr.
Robinette stored many files locally that were not transferred to remote servers, Mingo Logan
destroyed many of his files when he left the company. Id. (“One Mingo Logan employee, Frank
Robinette, abided the instruction to save his Spruce files, but he did not transfer his Spruce-
related files to the server. . . . [A]ny data stored only on Mr. Robinette’s local drive was lost.”).
Mr. Robinette did not transfer his file folder of .GRD files to the server “because of the sheer
size of it.” ECF No. 119-3 at 38:24-39:3.
This Court agrees that Mingo Logan had a duty to preserve the lost .GRD files and did
not take reasonable steps to preserve them.
4. Mingo Logan spoliated the lost .GRD files
Parties must take reasonable steps to preserve relevant ESI in the anticipation or conduct
of litigation. RCFC 37(e). Mingo Logan did not do so, and because of this ESI was lost. The
Court finds that Mingo Logan spoliated the Carlson mine model .GRD files created after 2006.
B. 2010 Morgan Report Analyses
The Government “moves under RCFC 37(e)(1) and this Court’s inherent authority” that
this Court preclude Mingo Logan from “introducing evidence or offering testimony regarding the
company’s alleged contemporaneous analysis of the mining alternatives to using the Pigeonroost
and Oldhouse Branch streams as disposal sites, including alternatives that EPA presented to
Plaintiffs in the 2010 Morgan Report.” ECF No. 119 at 1, 23. In order to preclude this evidence,
the Court must first determine whether it was spoliated.
1. The 2010 Morgan Report analyses are lost
In 2010, the EPA presented Mingo Logan with the Morgan Report, which documented
alternatives for excess spoil disposal at the Spruce Mine that did not include discharges into the
Pigeonroost and Oldhouse Branch streams. Mingo Logan’s RCFC 30(b)(6) designee, Mr.
McDaniel, confirmed that Mingo Logan had performed various analyses on the alternatives
presented in the Morgan Report. E.g., ECF No. 119-2 at 128:2-17. And Mr. Robinette also
testified that he performed certain analyses of alternatives as well, although he did not
specifically remember the Morgan Report. ECF No. 119-3 at 71:15-21, 77:23-78:3. It is
undisputed that the analyses that Mr. Robinette performed have been lost because he stored them
on “a computer with a hard drive” where the “majority of [his] work was saved.” Id. at 106:2-7,
110:15-24. The problem, as the Government sees it, is that Mingo Logan analyzed the 2010
Morgan Report and/or other alternatives to the Pigeonroost and Oldhouse Branch streams but has
not produced any of these analyses in discovery. ECF No. 119 at 21.
8
The Plaintiffs, however, have cast doubt on whether Mingo Logan actually performed
any analyses of the Morgan Report at all. In its opposition, Mingo Logan responds that the
Government never received these analyses because Mingo Logan never analyzed the Report.
Thus, Mingo Logan asserts that “the Government assumes that Mingo Logan must have lost its
analysis of the Morgan alternatives because the company has not produced such analysis and lost
other files on Robinette’s hard drive.” ECF No 128 at 21 (citation omitted). And during oral
argument, Mingo Logan again sought to distance itself from the Morgan Report, arguing that
“These are not serious alternatives. . . . I mean, some of these alternatives just don’t pass the
smell test at all. Like they don’t require deep analysis.” ECF No. 132 at 46:8-47:9.
The problem with Plaintiffs’ argument is that it explicitly contradicts the sworn
deposition testimony of Mingo Logan’s own 30(b)(6) designee, Mr. McDaniel. When asked, he
testified that Mingo Logan did analyze the alternatives in the Morgan Report. ECF No. 130-2 at
128:14-17 (“Q. Did the company perform any work at all to analyze the proposals, the
alternatives rather that are proposed in the Morgan Worldwide report? A. Yes, sir, the company
did.”). That’s not all. Mr. McDaniel’s testimony also contradicts Mingo Logan’s contention that
the Morgan Report’s proposed alternatives were “not serious” and “[didn’t] require deep
analysis.” Here, too, the Government asked how much time Mingo Logan spent analyzing the
Morgan Report’s alternatives, and Mr. McDaniel testified that Mingo Logan “didn’t take John’s
[Morgan] alternatives and simply blow them off.” ECF No. 119-2 at 131:9-16. Rather, Mingo
Logan spent “[c]onsiderably more than a week” analyzing the alternatives in the Morgan Report.
Id. Mr. McDaniel also characterized Mingo Logan’s analyses of the Morgan Report as
“significant” and “[r]ather intense.” ECF No. 119-2 at 131:19-20. This work included modeling
incremental costs for hauling spoil or overburden to alternate sites, including the number of
trucks that would have been needed and their projected productivity. ECF No. 119-2 at 128:23-
131-2. It defies common sense to believe that such “significant” and “rather intense” analyses
and calculations were not documented in some fashion. Indeed, Mr. McDaniel testified that he
was able to locate “one spreadsheet that summarizes a delta between the -- between the haulage
fleet,” but was unable to find the data or analyses that went into the spreadsheet. ECF No. 119-2
at 131:21-132:18.
Given the choice between sworn witness testimony and litigation arguments, the Court
relies on the witness testimony and concludes that the Government has sufficiently shown that
Mingo Logan analyzed the alternatives in the Morgan Report and lost these analyses.
2. The lost analyses are relevant
The Government alleges that the Morgan Report analyses are relevant to prongs one
(“economic impact”) and two (“distinct investment backed expectations”) of the Penn Central
test, as well as to understanding Plaintiffs’ mining operations. See ECF No. 119 at 22; Resource
Invs., Inc., 85 Fed. Cl. at 474 (weighing “(1) the ‘economic impact of the regulation on the
claimant;’ (2) ‘the extent to which the regulation has interfered with distinct investment backed
expectations;’ and (3) ‘the character of the governmental action.’”). Plaintiffs respond that the
report is not relevant to the second prong. See ECF No. 128 at 20 (“[T]he Morgan Report has no
bearing on the company’s investment-backed expectations during the relevant time period under
Penn Central.”).
9
The Morgan Report and Mingo Logan’s analyses of it (or other alternative options) are
clearly relevant when determining the economic impact of the Government’s permit revocation.
Mingo Logan does not deny that the Morgan Report contains “mining alternatives to using the
Pigeonroost and Oldhouse Branch streams as disposal sites.” ECF No. 128 at 19-23. Any
analyses that Mingo Logan conducted of these alternatives could explain the extent that Mingo
Logan could have mitigated the Government’s permit revocation.
This Court finds that Mingo Logan’s 2010 Morgan Report analyses are relevant.
3. Mingo Logan had a duty to preserve the lost analyses
As with the .GRD files, Mingo Logan does not contest that it had a duty to preserve the
lost analyses and failed to take reasonable steps to preserve them.
As explained above, Mr. Robinette and Mr. McDaniel both testified to work they
performed analyzing alternatives to the Pigeonroost and Oldhouse Branch discharges. Yet,
Mingo Logan has not been able to locate any such analyses other than a single spreadsheet that
summarizes some of its analysis, but none of the data or analyses underlying that single
spreadsheet. As explained above, Mingo Logan did nothing to preserve Mr. Robinette’s files,
including his analyses of alternative options. While it is not clear what happened to any other
analyses that Mr. McDaniel identified other than the single spreadsheet, it appears clear at this
point any such analyses have been lost.
Thus, the Court finds that Mingo Logan had a duty to preserve its analyses of the Morgan
Report and did not take reasonable steps to preserve it.
4. Mingo Logan spoliated the lost analyses
Parties must take reasonable steps to preserve relevant ESI in the anticipation or conduct
of litigation. RCFC 37(e). Mingo Logan did not do so, and because of this ESI was lost. The
Court finds that Mingo Logan spoliated its 2010 Morgan Report analyses.
C. The Court Should Impose Sanctions
1. Mingo Logan’s spoliation prejudices the Government
The Government moves this Court “for the imposition of sanctions against Plaintiffs for
spoliation of evidence.” ECF No. 119 at 1. Because the Court determined that Mingo Logan
spoliated the Carlson mine model .GRD files created after 2006 as well as its analyses of the
Morgan Report, the Court must turn to what sanctions are appropriate. Here, the Government
seeks “proportionate sanctions,” specifically that this Court:
1. Preclude Plaintiffs from introducing mining projections derived
from the destroyed Carlson mine model, including calculations of
overburden and coal reserves at the Spruce Mine and spreadsheets
containing the output from the Carlson model, into evidence at trial
or on summary judgment;
10
2. Preserve the Government’s experts’ modeled calculations of
overburden and coal reserves at the Spruce Mine from cross-
examination or rebuttal at trial on the basis that they are
inconsistent with Plaintiffs’ Carlson model-based calculations; and
3. Preclude Mingo Logan from introducing evidence or offering
testimony regarding its alleged contemporaneous analysis of the
mining alternatives to using the Pigeonroost and Oldhouse Branch
streams as disposal sites, including alternatives that EPA presented
to Plaintiffs in the 2010 Morgan Report.
ECF No. 119 at 23. In response to Mingo Logan’s protestations about the breadth of the
proposed sanctions, the Government clarified at oral argument that its request for sanctions is
“limited to the destruction of Mr. Robinette’s files.” ECF No. 132 at 7:25-8:1. The Government
explained that this includes barring Plaintiffs from “using any mining projections” lost in the
destruction of Robinette’s files, including but not limited to, “spreadsheets,” “financial reporting
statements,” and “any mining projection for which the underlying modeling files were lost or
destroyed,” such as the 2008 ArcLand model to the extent it relies on destroyed information. Id.
at 23:4-9, 42:24-43:13. In other words, the Government is seeking to preclude Plaintiffs from
using data that Mingo Logan failed to preserve for this litigation and documents derived from
that data.
The Government also requests fees and costs, including:
1. Travel and court reporter expenses related to the depositions of
Mr. McDaniel and Mr. Robinette;
2. Additional expert witness hours expended by Mr. Morgan and
his colleagues assisting the Government with those depositions and
this motion;
3. Reimbursement for time the Government’s experts spent
reconstructing Mingo Logan’s mine model without the benefit of
Mr. Robinette’s files;
4. Attorney’s fees for time the Government’s lawyers spent on
efforts to locate Mingo Logan’s modeling files prior to Mingo
Logan’s disclosure that it had destroyed Mr. Robinette’s hard drive
containing the .GRD files,
5. Attorney’s fees for time spent preparing for and taking Mr.
McDaniel’s and Mr. Robinette’s depositions; and
6. Attorney’s fees for time spent preparing the sanctions motion.
ECF No. 119 at 24-25.
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To determine the appropriate sanction, the Court must turn to whether the Government is
prejudiced by the spoliation and, if so, how much. The Court will assess the lost Carlson model
files and then the lost analyses of the Morgan Report.
a) Carlson Mine Model
The Government contends that the loss of the Carlson mine model .GRD files will
prejudice it because: 1) the Government cannot obtain the information in other ways as “it is
impossible to verify the accuracy of Mingo Logan’s reserve calculations or other figures
contained in the spreadsheets without the source data—the .GRD files,” ECF No. 119 at 19-21;
2) the information is necessary to determine the economic impact of the Government’s alleged
taking as the model runs “could reveal, for example, that an area is not economically minable
because the overburden is too great relative to the predicted coal tonnage,” id. at 19; and 3) the
loss of the information puts the Plaintiffs at an advantage by making the Government “unable to
effectively challenge assertions made by Mingo Logan witnesses at trial concerning the alleged
outputs of the model,” id. at 18-19. Plaintiffs respond that loss of the Carlson mine model .GRD
files created after 2006 will only minimally prejudice the Government because “much of” the
information is available in the “produced modeling files for the 2006 Mine Model” and
“spreadsheets reflecting the relevant data extracted from the Carlson .GRD files.” ECF No. 128
at 14-17. Plaintiffs next propose that the lost files are not necessary to determine the economic
impact of the Government’s alleged taking. Id. at 18-19. 5 Finally, Plaintiffs propose that even if
the lost files were relevant to determining economic impact, the Government is not harmed
because it would be on equal footing with Plaintiffs who also do not have the information. Id. at
19. The Court addresses these arguments in turn.
First, Plaintiffs assert that they do not need to produce the .GRD files created after 2006
because they produced .GRD files and output spreadsheets for the 2006 Carlson mine model and
output spreadsheets created after 2006 that the Government can use to reverse engineer and
recreate the .GRD files created after 2006. ECF No. 128 at 15-17. As an initial matter, there is
no discovery exception for documents the other side may be able to reverse engineer. And it is
not entirely clear that the 2006 .GRD files and output spreadsheets necessarily represent the data
in the .GRD files created after 2006. According to the Government, “the collection of
spreadsheets to which Mingo Logan refers is not an adequate substitute for the deleted .GRD
files for a number of reasons, including that they contain broken links, reflect no visualized
spatial data, lack critical information about the source files used to generate them, and because
Mingo Logan destroyed other spreadsheets that were stored on Mr. Robinette’s hard drive.”
ECF No. 130 at 6. And Mr. Robinette testified that it may not be feasible to relate specific
outputs to revisions in the mine model, undermining the ability to reverse engineer the model.
The Government also should not be in a position where its experts reverse engineer the 2008
5
Plaintiffs split up this analysis into two different sections, but the Court analyzes them as one.
See ECF No. 128 at 18 ¶ 1 (“First, post-2006 .GRD files are not necessary for determining the
economic impact of the Government’s take on the value of Plaintiffs’ property.”); ECF No. 128
at 19 ¶ 2 (“Finally, the Government’s own work to support its 2011 veto decision shows that
information developed after 2006 is not necessary to analyze Plaintiffs’ assessment of economic
impact.”).
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.GRD files based on assumptions that they must make because the contemporaneous documents
have been destroyed, only to have the Plaintiffs come back and propose that the Government’s
reverse engineered model is wrong based on what was in Mingo Logan’s contemporaneous files.
And because Mingo Logan’s spoliation of the 2008 Carlson model is the only reason the
Government’s experts must reverse engineer the 2008 Carlson model, it certainly is appropriate
to compensate the Government for this otherwise unnecessary time and expense. RCFC
37(e)(1); 4DD Holdings, LLC, 143 Fed. Cl. at 130.
Second, Plaintiffs propose that the .GRD files are not necessary to determine the
economic impact of the Government’s taking because “[t]he 2006 Mine Model represents Mingo
Logan’s most comprehensive and well-vetted analysis of mineable reserves at Spruce before the
Government’s unprecedented section-404(c) action” and “Plaintiffs’ economic impact/damages
expert will rely on reserve amounts from the 2006 Mine Model.” ECF No. 128 at 18. If
Plaintiffs do not intend to rely on any modeling information created after 2006, the Court is
confused why they would oppose a sanction preventing them from doing so. The most
significant problem with Plaintiffs’ argument is that their choice to rely on a 2006 model to
calculate their alleged damages simply does not dictate how the Government (or the Court) must
evaluate potential damages in this case. Multiple witnesses testified that Mingo Logan updated
the Carlson model at least into 2008, if not later. See supra pp. 3-6. And the question for the
Court is the value of the property in 2011, not 2006. While it may be true that the model output
(e.g., of projected coal reserves, quality, etc.) did not significantly change over those five years,
it may have. Over that time, Mr. Robinette input new and updated data he learned from the field
into the model and presumably came up with a more accurate depiction of the Spruce No. 1
mine. See ECF No. 119-3 at 58:1-17, 60:5-63:15. In fact, for the neighboring mine where Eagle
Creek was mining, Mr. Robinette created analyses of “what Eagle Creek was actually mining
[compared] to what had been projected.” Id. at 91:2-98:3. Further, Mr. McDaniel testified that
he understood the financial projections to rely upon “2008-era” modeling. ECF No. 119-2 at
53:6-13. Therefore, the fact that Plaintiffs choose to rely upon 2006 modelling for their damage
calculations does not negate the relevance or need for the updated models created after 2006.
Plaintiffs’ final argument requires little attention. They propose that because they do not
have the spoliated data either, the Government is not harmed because all parties have the same
data available to them. ECF No. 128 at 19. While Plaintiffs are correct that no party has access
to the spoliated data, their argument would, taken to its logical conclusion, necessarily mean that
there could never be a spoliation sanction (except, perhaps, in cases involving intentional
destruction of data under Rule 37(e)). That is not the law. See 4DD Holdings, LLC, 143 Fed. Cl.
at 130 (“Spoliation occurs when a party destroys or materially alters relevant evidence that it had
a duty to preserve.”).
b) Morgan Report Analyses
The Government alleges that the missing Mingo Logan analyses of the Morgan Report
prejudice it because the analyses are essential to evaluating Plaintiffs’ investment-backed
expectations and the economic impact of the EPA’s § 404 action. ECF No. 119 at 21-22.
Plaintiffs respond that the Government will not suffer prejudice from the missing Morgan Report
analyses “because the Morgan Report has no bearing on the company’s investment-backed
expectations during the relevant time period under Penn Central.” ECF No. 128 at 19-23.
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The Court will leave for another day the question of the investment-backed expectations
because, as discussed in oral argument, there is a brewing dispute as to what the relevant time
frame for the reasonableness of the investment-backed expectations is. But there can be no
doubt that Mingo Logan’s contemporaneous analyses of the Morgan Report or other alternatives
to discharging spoil into the Pigeonroost and Oldhouse Branch streams is relevant to any damage
calculation in this case.
2. The Government’s requested sanctions remedy the prejudice it faces
The Court must now determine what sanctions remedy the prejudice faced by the
Government due to the spoliated data and documents. Here, the Court finds Judge Bruggink’s
analysis in 4DD particularly appropriate. In 4DD, the plaintiffs alleged the government violated
a license agreement when it purchased a limited number of software licenses but installed the
software of far more computers than it had licenses for. 4DD Holdings, LLC, 143 Fed. Cl. at
121. Approximately four months after plaintiffs filed their complaint, the government deleted
the servers onto which it copied the software and erased the software from multiple laptops as
well. Id. at 130. Here too, Mingo Logan deleted Mr. Robinette’s files about four months after
this complaint was filed. In 4DD, plaintiffs filed a motion for a variety of spoliation sanctions,
including a default judgment, adverse inference, preclusion from cross-examination, preclusion
from submitting secondary evidence, and preclusion of any argument that evidentiary gaps
should be construed in the spoliator’s favor. Id. Plaintiffs also requested fees and costs for
bringing the sanctions motion and for additional necessary discovery. Id.
Like Mingo Logan, in 4DD the government claimed that it did not spoliate the evidence
because “the information that has been lost can be replaced by other discovery.” Id. at 132.
Judge Bruggink disagreed, stating that the information offered in replacement was “partial and
cannot offer a comprehensive, reliable picture.” Id. at 132. As discussed above, the same is true
here because it is not clear that the data Mingo Logan produced can easily or reliably be tied to
specific versions of models. Unlike 4DD, the Government here does not seek an adverse
inference about the spoliated evidence, so the Court need not assess the willfulness of Mingo
Logan’s conduct.
Given the significant similarities to 4DD, the Court concludes that it provides the proper
framework to address the appropriate remedy. In this case, the Government proposes that this
Court preclude Plaintiffs from using unproduced Carlson mine model .GRD files, unproduced
Morgan Report analyses, or evidence derived from the lost .GRD files or analyses. ECF No. 119
at 23. According to the Plaintiffs, the Government’s requests should be denied because the
conduct was not intentional and the Government’s requested “draconian sanctions” are
“tantamount to those reserved for intentional conduct, vastly exceed[ing] what is necessary to
cure any prejudice here.” ECF No. 128 at 13-14. Not so. As an initial matter, the Government’s
requested sanctions are nowhere near as draconian nor close to those reserved for intentional
conduct. RCFC 37(e)(2) limits certain sanctions to cases where the Court finds that the
spoliating “party acted with the intent to deprive another party of the information’s use in
litigation.” But these sanctions are a presumption that the destroyed data was unfavorable to the
spoliating party, default judgment, and dismissal of the action. RCFC 37(e)(2). The
Government asks for nothing tantamount to (or even approaching) these sanctions. To the
contrary, the Government seeks to preclude the Plaintiffs from relying on data that Mingo Logan
14
failed to preserve and did not produce to the Government. Nothing could be more reasonable. It
is hard to see how this sanction is much more than prohibiting Mingo Logan from using data it
did not produce regardless of the reason—i.e., the issue is not willful spoliation but the non-
production of data. As for evidence derived from the lost data, including the ArcLand model, the
Court will defer on precluding such evidence until it is introduced at summary judgment or at
trial.
The Government also requests fees and costs for expenses stemming from the McDaniel
and Robinette depositions, efforts to reconstruct or locate the lost evidence, and preparing the
sanctions motion. ECF No. 119 at 24-25. Plaintiffs respond that “costs associated with the
depositions of John McDaniel or Frank Robinette” would have been incurred “even in the
absence of the spoliation” and should not be granted. ECF No. 128 at 25. While it is true that
the Government almost certainly would have deposed both Mr. Robinette and Mr. McDaniel on
the underlying facts of the case during discovery, the Court agrees with the Government that
these two depositions were narrowly focused on spoliation issues and would not have been
necessary but for Mingo Logan’s spoliation. ECF No. 130 at 20. Therefore, the Court agrees
that reasonable costs are appropriate. And for the avoidance of doubt, the Court will allow the
Government a full deposition of both Mr. Robinette and Mr. McDaniel on the underlying factual
issues of this case.
3. Applicability of the sanctions
Plaintiffs correctly observe that Mingo Logan was the spoliator, but that the Government
requested sanctions against both Plaintiffs. See ECF No. 128 at 12 n.27 (citing ECF No. 119 at
23) (“The Government’s request for sanctions seems principally directed at Mingo Logan. But
there are times when the Government seems to be seeking relief against United, too.”). As the
Government confirmed at oral argument, the Government is “asking for Plaintiffs to be barred,
and both Plaintiffs here, because even though Mingo Logan destroyed the documents, if United
could use this evidence as, you know, as a co-defendant here, it would sort of subvert the whole
point.” ECF No. 132 at 22:24-23:3. Plaintiffs respond that the Court cannot “sanction a party
(i.e., United) that is not alleged to have been involved in the alleged spoliation.” ECF No. 128 at
12 n.27. Specifically, Plaintiffs rely upon authority that the Court may not apply an adverse
inference to a spoliator’s co-plaintiff. E.g., Zhi Chen v. Dist. of Columbia, 839 F. Supp. 2d 7, 16
(D.D.C. 2011); Estate of Hill v. NaphCare Inc., 2022 WL 1464830 at *14-16 (E.D. Wash. May
9, 2022). But this Court is not granting an adverse inference that would unduly prejudice United
Affiliates. As explained above, this Court is merely prohibiting reliance on spoliated data. Thus,
it only makes sense to prohibit both Plaintiffs from doing so. This should impose little to no
hardship on United Affiliates because it presumably has no Mingo Logan data that Mingo Logan
failed to preserve.
The same is not true for the monetary sanctions. Because the additional depositions and
expert work are only necessary because of Mingo Logan’s spoliation, it is not appropriate to
impose those sanctions on United Affiliates and the Court does not do so. See Bonilla v. Volvo
Car Corp., 150 F.3d 88, 93-94 (1st Cir. 1998) (reversing sanction of fees and costs against a
party that did not participate in the spoliation). Indeed, it does not appear that the Government
seeks monetary sanctions against United Affiliates. See ECF No. 130 at 19-20 (observing that
the Government expended “significant attorney and expert hours and cost to discover what had
15
occurred” due to “Mingo Logan’s destruction of Mr. Robinette’s hard drive and other
materials”). And there is nothing in the record indicating that United Affiliates had anything to
do with the spoliation here, making a monetary sanction against it improper. Therefore, the fees
for the Robinette and McDaniel depositions and the added expert costs to attempt to reconstruct
lost data shall be borne by Mingo Logan alone because United Affiliates appears to have played
no role in the spoliation.
IV. CONCLUSION
For the foregoing reasons, the Court GRANTS-IN-PART the Government’s motion for
sanctions and awards the Government fees and costs against Mingo Logan. The Government is
directed to file an appropriately supported motion seeking a recovery of fees and costs related to
the motion for sanctions after discovery concludes. The Court also precludes Plaintiffs from
relying on data that Mingo Logan spoliated in this matter. Finally, the Court will defer ruling on
documents derived from spoliated data to summary judgment or trial.
IT IS SO ORDERED.
s/Edward H. Meyers
Edward H. Meyers
Judge
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