In Clayton Int’l, Inc. v. Neb. Armes Aviation, LLC, No. 8:21CV309 (D. Neb. July 2, 2025), Nebraska District Judge Robert F. Rossiter Jr. granted in part the plaintiff’s statement of objections to the Magistrate Judge’s ruling that only monetary sanctions were warranted due to defendant Tracy Ogle’s disposal of the hard drive from his laptop after litigation commenced, finding that non-monetary sanctions in the form of an instruction to the jury on the evidence spoliated.

Case Discussion and Judge’s Ruling

This case involved claims that Defendants misappropriated proprietary data to perform helicopter modifications for the Royal Jordanian Air Force and was filed in August 2021. In September 2021, Ogle reported that his laptop hard drive malfunctioned due to BitLocker encryption, making it inaccessible. He claimed to have taken it to Best Buy for service and later replaced the drive at the end of the month, disposing of the original. Ogle disposed of the hard drive soon after the alleged malfunction, and a new hard drive was installed around November 11, 2021.   Plaintiff did not receive notice of the ESI loss until October 28, 2022.

1. Plaintiff moved for sanctions on September 27, 2024, under Fed. R. Civ. P. 37(e), requesting:
2. Reimbursement of attorney fees and costs arising from ESI loss.
3. Permission to present spoliation evidence at trial.

In a ruling on February 21, 2025 (covered by us here), Nebraska Magistrate Judge Ryan C. Carson granted in part and denied in part Plaintiff’s motion, finding that “there was likely relevant information on the laptop and Ogle had an affirmative duty to preserve it”, but he did not find bad faith on the part of Ogle and instead ordered reimbursement of attorney fees and costs as the only sanction. Plaintiff filed a timely objection.

Considering the objection, Judge Rossiter stated: “Clayton International takes issue with the magistrate judge’s decision to only order the payment of fees and costs. It asserts ‘non-monetary measures are necessary here’ because Ogle’s destruction of the hard drive resulted in the loss of information relevant to Clayton International’s claims. As Clayton International puts it, ‘attorney’s fees do not cure the prejudice where Ogle destroyed potentially relevant information, the contents of which will never be known or retrieved.’ It also argues it presented more than enough evidence of Ogle’s bad faith to justify the requested instruction under Rule 37(e)(2).”

Continuing, he said: “Those objections are generally well-taken. Based on the evidence presented, the magistrate judge found that the destroyed ESI contained information that was likely relevant to this litigation. The payment of fees and costs do nothing to address the high probability that Ogle’s actions deprived Clayton International of information that could support its claims. The Court agrees with the magistrate judge that Ogle’s actions caused Clayton International to expend ‘additional time and effort[ ]’ investigating and litigating the issue, for which monetary sanctions are appropriate. It disagrees, however, with his conclusion that the harm caused to Clayton International ‘may only be cured with monetary sanctions.’”

Judge Rossiter also found “the cases Clayton International cites persuasive”, stating: “As in those cases, non-monetary sanctions are necessary and appropriate here to ‘recognize[ ] that the prejudice’ from Ogle’s destruction of ESI ‘goes beyond the expenses [Clayton International] incurred’ and to ‘help ‘rectify the evidentiary imbalance’ that [Ogle] created by spoliating relevant ESI.’…The Court will therefore permit the parties to present evidence regarding the destruction of Ogle’s hard drive at trial.”

However, Judge Rossiter also noted: “Clayton International requests their instruction be given pursuant to Rule 37(e)(2) and objects to the magistrate judge’s ruling that sanctions are not warranted under that subsection in this case. That confuses the issue… As far as spoliation-related instructions go, a bad-faith finding under Rule 37(e)(2) is only required where the Court instructs the jury that they may or must presume the lost ESI was ‘unfavorable’ to the spoliating party…Though not without teeth, the instruction Clayton International requests does not go that far. Because that instruction essentially informs the jury only ‘that it may consider [spoliation] evidence, along with all the other evidence in the case, in making its decision,’ it too is warranted under Rule 37(e)(1) to address the evidentiary prejudice resulting from Ogle’s actions and assist the jury in assessing evidence presented at trial…Since the Court will only later ‘determine the precise scope of the spoliation evidence to be permitted at trial,’ it will wait until that time to craft the specific language of the jury instruction ‘on a full evidentiary record.’”

So, what do you think? Do you think that the plaintiffs erred by how they requested the court to go beyond the non-monetary sanctions? Please share any comments you might have or if you’d like to know more about a particular topic.

Case opinion link courtesy of Minerva26, an Affinity partner of eDiscovery Today.

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