Philips Electronics North America Corp. v. BC Technical (773 F. Supp. 2d 1149, 2011)

MEMORANDUM DECISION AND ORDER

CLARK WADDOUPS, District Judge.

INTRODUCTION

This case was assigned to United States District Court Judge Clark Waddoups, who then referred it to United States Magistrate Samuel Alba under 28 U.S.C. § 636(b)(1)(B). On July 28, 2010, Judge Alba issued a Report and Recommendation that addressed three motions filed by Plaintiffs: (1) Plaintiffs’ Motion for Spoliation Sanctions; (2) Plaintiffs’ Motion for Order Holding Defendant in Contempt of Court; and (3) Plaintiffs’ Second Motion for Spoliation Sanctions and for Order Holding Defendant in Contempt of Court. Defendant is BC Technical (“BCT”).

Based on the evidence, Judge Alba recommended “that the court strike BCT’s answer, dismiss BCT’s counterclaims, and enter default judgment as to liability in Philips’ favor.” Judge Alba further recommended that this case be referred to the United States Attorney’s Office for investigation and criminal prosecution. BCT objected to Judge Alba’s recommendation and Plaintiffs filed a reply on August 28, 2010. The court has reviewed the matter de novo and hereby approves and adopts these recommendations for the reasons stated below. This ruling, however, does not apply to MSouth Equity Partners because that entity was not a party in this case.

ANALYSIS

Judge Alba’s Report and Recommendation is thorough and carefully reasoned. Accordingly, the court need not repeat the detailed factual background and legal reasoning that led to his recommendations. The court issues this decision largely to address issues raised in BCT’s Objection to Judge Alba’s recommendation. BCT does not deny that it engaged in discovery violations. Nevertheless, it contends that Judge Alba’s recommendation for terminating sanctions is harsh and unwarranted given the facts of this case. It argues that BCT cannot be responsible for the actions of five of its employees because BCT had no pattern of spoliation. It further argues that BCT was merely following the advice of its counsel, and that any prejudice arising from spoliated evidence has been largely remedied.

I. EHRENHAUS FACTORS

As noted by Judge Alba “[djismissal is an extreme sanction which is only appropriate in cases involving willful misconduct.” Accordingly, he appropriately walked through the following five factors to determine the correct sanction for BCT’s spoliation of evidence:

(1) the degree of actual prejudice to the [non-culpable party]; (2) the amount of interference with the judicial process; (3) the culpability of the litigant; (4) whether the court warned the party in advance that dismissal of the action would be a likely sanction for non-compliance; and (5) the efficacy of lesser sanctions.

A. Prejudice

BCT contends any prejudice to Plaintiffs has been largely remedied because it has located and produced most of the files that were deleted. Accordingly, it argues that the monetary award of attorney fees and costs to deal with the spoliated evidence, as well as giving an “adverse inference instruction for the small percentage of documents that were deleted” and cannot be recovered should be sufficient.

Focusing on the percentage of documents produced versus the percentage of documents irretrievably destroyed masks that BCT destroyed at least 17,800 documents that were central to this litigation. To say that any prejudice has been largely remedied ignores that a case can turn on only a few key documents. Due to the destruction of 17,800 central documents, there is no way to place Plaintiffs in the position they would have had at trial if BCT had not spoliated the evidence. The court therefore concludes that Plaintiffs are prejudiced as a result of BCT’s actions.

B. Interference with the Judicial Process

BCT further contends that the amount of interference in the judicial process does not warrant the recommended sanction. In particular, BCT contends Rule 37 is not meant to be punitive. Plaintiffs argue the opposite and further argue they also moved for sanctions based on the court’s inherent ability to sanction discovery abuses.

When a party fails to comply with a court order to produce documents, Rule 37 expressly permits striking pleadings, dismissing an action, and entering default. To argue these sanctions are punitive, and therefore not permitted, ignores Rule 37’s plain language. Moreover, BCT did not merely refuse to produce documents. It intentionally destroyed documents and attempted to cover-up the electronic deletions within hours after Judge Alba granted Plaintiffs’ third motion to compel. BCT then compounded the problem by misrepresenting information about the issue while under oath. These actions constitute an egregious form of interference with the judicial process. Because the degree of interference was significant, harsh sanctions are appropriate.

C. Culpability

Next, BCT contends its counsel and a handful of its employees are the ones culpable — not it. Culpability may arise through responsibility and control of an actor or situation. “Since a [company] is only a legal entity, it cannot act or have a mental state by itself.” Thus, the “practical reality” is that companies “can only act through their [officers, employees, and agents].” In this case, the individuals who destroyed evidence were not low-level employees. Rather they were largely upper management and executives at BCT. Moreover, after documents were destroyed, BCT’s founder and Chief Executive Transition Officer, its Chief Technical Officer, and its Chief Operating Officer lied about their actions under oath. To argue that these employees acted independently and therefore BCT cannot be culpable for their actions is simply not credible.

D. Warning about Dismissal

BCT also argues that the sanctions are inappropriate because Judge Alba failed to warn it that discovery abuses could result in dismissal. An explicit warning that dismissal is likely “is not a prerequisite to the imposition of dismissal sanctions.” BCT had already been before Judge Alba on other discovery abuses. It had been ordered three times to produce documents. Based on the case’s procedural background, case law, Rule 37, and the court’s inherent authority to deal with a party’s violation of a court order, the recommended sanctions should come as no surprise to BCT. Accordingly, the court concludes that an explicit warning was unnecessary given the totality of the circumstances in which BCT’s actions arose.

E. Efficacy of Lesser Sanctions

BCT contends that lesser sanctions are appropriate for the following reasons.

1. Relevance of Documents

BCT argues that a lesser sanction is appropriate because the deleted documents were not relevant to Plaintiffs’ trademark claim. In particular, BCT contends “there is no evidence that the lost documents would be material or relevant to Philips’ trademark claim, which relate [sic] to BCT’s external advertising and marketing practices.” The court disagrees with BCT’s characterization of this cause of action. In Plaintiffs’ Amended Complaint, Plaintiffs assert that BCT acted “with the willful and calculated intent of causing confusion and of trading unlawfully on Philips’ good will and reputation.” Thus, BCT’s internal actions were as relevant as its external advertising and marketing practices. The destroyed documents may have therefore contained relevant evidence to this cause of action. Moreover, it is not for the spoliator to determine what documents are relevant. Merely asserting the documents were not relevant to a cause of action is insufficient to show a lesser sanction should be imposed.

2. Predatory Hiring Claim

BCT also contends the court should not enter judgment in Plaintiffs’ favor on the “predatory hiring” claim for two reasons. First, BCT contends the destroyed documents were not relevant to the claim. Again, however, it is not for the spoliator to determine what documents are relevant. Additionally, BCT made it impossible for Plaintiffs to review the destroyed documents and determine whether they supported this claim. BCT cannot reap the benefits of its actions by stating there is no evidence of relevance when it destroyed the very evidence needed to make such a determination.

Second, BCT contends it has moved for summary judgment on Plaintiffs’ predatory hiring claim because Plaintiffs cannot prevail as a matter of law on it. To support this assertion, BCT quotes “Utah Code § 13 — 5a—102(4)(b): unfair competition does not include the departure and hiring of an employee by a competitor.” This argument is troubling because it ignores the statutory language that precedes the quoted language, namely, predatory hiring practices do constitute unfair competition. In Plaintiffs’ opposition to summary judgment, they cite evidence to show that BCT “preyed” upon Plaintiffs’ employees so BCT could obtain trade secret information. It is unknown what other documents among the 17,800 that were destroyed may also have helped prove this claim. Based on the evidence that has been provided, however, BCT’s contention that Plaintiffs could not prevail on this claim as a matter-of-law is not supported.

3. Other Claims

BCT further asserts that Plaintiffs cannot prevail as a matter of law on other claims due to statute of limitations issues and defenses under the “first sale doctrine” and “repair exception.” With respect to the statute of limitations, issues of fact exist due to the discovery rule. The same holds true regarding BCT’s defenses. Moreover, it is questionable whether BCT could even prevail on its defenses under the “first sale doctrine” and “repair exception.” BCT cannot avoid sanctions on the possibility that it might have eventually prevailed against Plaintiffs had it not spoliated evidence.

4. Attorney Fees

Finally, BCT contends that it is too harsh to award both attorney’s fees and terminating sanctions. Yet, Rule 37 expressly contemplates ordering payment of expenses and judgment against “the disobedient party,” based on the recognition that merely awarding attorney’s fees or a terminating sanction may not be enough in the interests of justice.

The discovery abuses in this case were egregious. Court orders were disobeyed, documents were intentionally and irretrievably destroyed, efforts were made to erase evidence of the destruction, and BCT employees lied under oath. Were the court to ignore such behavior, it could not “administer orderly justice, and the result would be chaos.” Moreover, a lesser sanction would fail to have a deterrent effect given the egregiousness of BCT’s actions. “One who anticipates that compliance with discovery rules and the resulting production of damning evidence will produce an adverse judgment, will not likely be deterred from destroying that decisive evidence by any sanction less than the adverse judgment [it] is tempted to thus evade.” Willful spoliation of evidence deserves the harshest sanctions because it is antithetical to our system of justice. The evidence is sufficient to show such willfulness here. The court therefore concludes both attorney’s fees and terminating sanctions are appropriate in this case.

II. OTHER ISSUES

A. MSouth Equity Partners

In a footnote, Judge Alba noted that MSouth Equity Partners (“MSouth”) acquired BCT in July 2009. He then collectively referred to MSouth and BCT as BCT. Because MSouth has not been named as a defendant in this matter, BCT asks the court to clarify that any ruling is only against BCT and not MSouth. The court agrees that such a clarification must be made. Accordingly, the court expressly states that its ruling is limited to BCT and does not apply to MSouth.

B. Perjury

Because certain individuals lied under oath, Judge Alba recommends that his matter be referred to the United States Attorney’s Office for investigation. The court adopts that recommendation.

CONCLUSION

For the reasons stated above, the court APPROVES AND ADOPTS Judge Alba’s report and recommendation in its entirety. Accordingly, the court strikes BCT’s answer, dismisses BCT’s counterclaims, and enters default judgment as to liability in Plaintiffs’ favor. In so ruling, however, the court expressly notes that this ruling only applies to BCT and not to MSouth. The Clerk of the Court is directed to send a copy of this Order, along with the Report and Recommendation, to the Acting United States Attorney for the District of Utah for such action as she deems is appropriate.

SO ORDERED this 15th day of February, 2011.

REPORT AND RECOMMENDATION

SAMUEL ALBA, United States Magistrate Judge.

This case involves large amounts of electronic information. Under the federal rules, in addition to this court’s discovery orders, the litigants and counsel were expected to take the necessary steps to ensure that relevant records were preserved when litigation was reasonably anticipated or began, and that those records were collected, reviewed, and produced to the opposing party during the discovery process. Unfortunately, as discussed herein, the court has concluded that Defendant and Counter Claimant BC Technical (hereafter “BCT”) did not fulfill its discovery obligations or comply with this court’s orders with respect to five of its laptop computers. BCT’s behavior has resulted in great expense from the efforts made to uncover and retrieve the information that was deleted or destroyed. Further, the court must now determine how to address a situation where — in violation of this court’s direct orders and the Federal Rules of Civil Procedure — thousands of computer files were deliberately deleted and destroyed.

Before the court are the following motions: (1) Plaintiffs’ Motion for Spoliation Sanctions (Doc. 135); (2) Plaintiffs’ Motion for Order Holding Defendant In Contempt of Court Pursuant to Fed.R.Civ.P. 37(b) (Doc. 136); and (3) Plaintiffs’ Second Motion for Spoliation Sanctions and for Order Holding Defendant in Contempt of Court (Doc. 174). Having reviewed these motions as well as all the pleadings in this matter, having conducted an evidentiary hearing, and having heard oral arguments, the court submits this Report and Recommendation.

BACKGROUND

In January 2005, Philips sent BCT’s then-President, Mr. Chuck Hale, a letter, dated January 20, 2005, alleging that BCT was improperly and illegally distributing software, was providing misleading information at a trade show booth, was publishing misleading literature, was making libelous and disparaging remarks on its website regarding Philips, and was systematically and deliberately attempting to damage Philips by targeting key Philips employees for employment with BCT. BCT’s counsel sent Philips a responsive letter. In a third letter, dated February 16, 2005, Philips’ counsel responded to BCT’s letter.

Approximately three years later, on January 16, 2008, Plaintiffs and Counter Defendants Philips Electronics North America Corporation, Koninklijke Philips Electronics NY, and Philips Medical Systems (Cleveland), Inc. (hereafter collectively referred to as “Philips”) filed this action in the United States District Court, Western District of Washington at Seattle. (Doc. 2-4.) Philips alleged claims of copyright infringement, federal trademark infringement, misappropriation of trade secrets, tortious interference with business relations, and violation of the Washington Consumer Protection Act. (Doc. 2-4.) Philips sought injunctive relief and damages and requested attorneys’ fees and costs. (Doc. 2-4.)

On May 22, 2008, BCT filed a motion to transfer the case to this court (Doc. 2-9), which motion was opposed by Philips (Doc. 2-12). On August 1, 2008, the court granted BCT’s motion to transfer, and the case was transferred to this court. (Doc. 3-17.) On August 26, 2008, this court received the documents in this case transmitted from the Western District of Washington, Seattle, and the case was eventually assigned to United States District Judge Clark Waddoups. (Docs. 1-3, 18.) BCT filed its Answer on October 17, 2008. (Doc. 15.) Based on the parties’ stipulation, Philips filed an Amended Complaint on March 2, 2009. (Doc. 25.) On May 15, 2009, BCT filed an Amended Answer. (Doc. 55.) On April 9, 2009, Judge Waddoups referred the case to United States Magistrate Judge Samuel Alba pursuant to 28 U.S.C. § 636(b)(1)(A).

On March 20, 2009, Philips filed a motion to compel. (Doc. 32.) The court granted that motion to compel on May 22, 2009. (Doc. 59.) On June 19, 2009, BCT filed a motion to compel. (Doc. 65.) The court granted that motion on July 20, 2009. (Doc.80.)

On June 23, 2009, hours after being deposed in this case, BCT’s Chief Operating Officer, William Biddle, sent an email to all BCT employees stating the following: Folks—

This is a reminder that you are to save any electronic records that could possibly be associated in any way to the Philips’ litigation. If there is any question in your mine [sic] then make sure to retain the information.

Feel free to give your respected manager a call if you would like to discuss.

(Doc. 194, Ex. 1.)

On July 10, 2009, Philips filed a second motion to compel responses to Philips’ first requests for production. (Doc. 72.) On July 15, 2009, Philips filed a motion to compel BCT to preserve relevant information. (Doc. 75.) In its motion to compel BCT to preserve relevant information, Philips expressed concerns that even though this case had been pending for about eighteen months, BCT had (1) failed to issue a litigation hold memo to its employees to preserve information, (2) failed to modify or suspend document destruction practices in light of the litigation, (3) failed to image the hard drives of its key custodians, and (4) continued its practice of routinely overwriting back-up tapes until Philips brought those problems to this court’s attention by motion on July 15, 2009. (Docs. 75-76, 79.) Philips expressed its concern that BCT was destroying key evidence.

On August 18, 2009, the court held a hearing on Philips’ two motions. (Doc. 98.) The court granted in part Philips’ second motion to compel responses (Doc. 98, 105), and granted Philips’ motion to compel BCT to preserve relevant information (Doc. 105).

The court’s written order granting Philips’ motion to compel BCT to preserve relevant information ordered that within five days of the August 18, 2010 order, BCT shall:

(1) Issue and circulate a thorough litigation hold memo to employees likely to have relevant information. The litigation hold memo should identify categories of relevant information and the subjects of plaintiffs’ discovery requests. Further, defendant shall provide a copy of the litigation hold memo to plaintiffs, and identify the persons to whom the litigation hold memo is provided;

(2) Provide all its existing backup tapes to its attorneys and suspend the practice of overwriting any information on those backup tapes until further order of this Court, or the termination of this litigation;

(3) Cease “wiping” or “re-imaging” the hard drives of employees likely to have relevant information until further order of the Court, or the termination of this litigation.

(Doe. 99, at 2.) The order further provided that “this Order is without prejudice to plaintiffs’ right to pursue additional relief to ensure that defendant complies with its preservation obligations moving forward, and/or to seek sanctions or spoliation instructions should it be discovered that relevant information has been destroyed.” (Doc. 99, at 2-3.) At the August 18, 2009 hearing, BCT’s attorney assured the court that he understood the requirements of the order and BCT would “follow it.” (Doc. 139, Kindley Dec., Ex. 0 at 37:2-4.)

On August 25, 2009, Biddle circulated another email to all BCT employees. The email’s importance was rated “high” and, as instructed by the court’s order following the August 18, 2009 hearing, attached a Litigation Hold Memo. The Litigation Hold Memo directed all employees to preserve the following documents on their computers: (1) personnel records for any person who, at any time, was a Philips’ employee; (2) correspondence between BCT and Philips; (3) correspondence or written communication between Philips and any third party; (4) brochures, flyers, circulars, website materials, e-mails or other documents relating in any way to BCT’s efforts at marketing goods or services in any way involving Philips’ products, such as AD AC, AutoSPECT, AutoQUANT, or Pegasys; (5) price quotes, bids or other written offers to perform services or sell goods, generated either by BCT or Philips; (6) all business records (including, but not limited to, invoices, work orders, bids, quotes, field service notes, billing statements, or correspondence (relating in any way to BCT’s servicing, repairing or maintaining any Philips-manufactured device or system); (7) all business records relating to the purchase of any parts or materials from any Philips entity by BCT or by any third party; (8) all service records relating to the installation of software onto repaired or refurbished nuclear medical devices or systems manufactured by Philips; (9) lists or databases of actual or prospective customers of Philips or BCT, concerning the furnishing of repair, maintenance or service on Philips-manufactured devices or systems. (Doc. 194, Ex. 2). The Litigation Hold Memo explained that the foregoing list “does not attempt to itemize all of the types of documents and materials that must be retained, but rather it is intended to provide you with examples of the types of documents that must be retained. If you have any questions regarding whether particular documents must be retained, please contact William Biddle at (801) 280-2900.” (Doc. 194, Ex. 2.) The memo also instructed BCT employees in detail concerning how documents were to be preserved. The memo told employees that if they had not already done so, to conduct a diligent search of their on-site flies to identify any relevant documents, including the identification of all computer-stored information as well as all paper copies of email, notes, drafts and tapes of telephone conversations, folios, reports, statements, personnel records, payroll records, etc. The memo instructed employees to then contact Biddle to arrange for the documents to be reviewed by a member of the legal team. The memo instructed employees not to destroy any potentially relevant documents, even if they otherwise routinely would be discarded or destroyed in the ordinary course of business, including preventing any periodic purging or deletion of documents or information (including emails) off computer systems that otherwise might occur. The memo told employees that if they needed technical assistance to insure the preservation of documents to contact Biddle. In addition, the memo instructed employees not to re-use data backup tapes; instead, all backup tapes were to be preserved and provided to BCT’s legal counsel.

The memo instructed employees to cease “wiping” or “re-imaging” their hard drives until the lawsuit with Philips was over. Employees were instructed, for all paper documents that were maintained in filing cabinets or other containers that would be needed to conduct ongoing business, to affix to the cabinet or container a note which stated: “The contents of this cabinet/container must be retained pursuant to a directive from BCT management. Make and use copies only. Do not remove originals except to make copies, and then return originals to the exact location from which they were removed.” Further, employees were told that, to the extent they or their staff may have sent potentially relevant documents off-site to archives or storage, to identify those documents and contact Biddle to obtain further instructions. In addition, employees were told not to create any new documents describing or commenting on anything contained in this memorandum unless they were directed to do so by BCT or by an outside counsel representing BCT. (Doc. 194, Ex. 2.)

On July 31, 2009, Philips filed a third motion to compel responses from BCT (Doc. 85), and on August 18, 2009, BCT filed a cross motion for a protective order (Doc. 91). On September 22, 2009, the court held a hearing on these two motions. The court verbally granted Philips’ third motion to compel. (Docs. 108, 111, 114.) Philips’ attorney made an oral motion for attorneys fees, which the court granted. (Docs. 108, 111, 114.) The court ordered that all of BCT’s computers and servers be turned over for collection since BCT had not complied with discovery requests due in July. The court ordered the attorneys for Philips and BCT to finalize a stipulation regarding the collection of BCT’s electronically stored information (hereafter “ESI”), which was incorporated into this court’s written Order Granting Plaintiffs’ Third Motion to Compel and Awarding Sanctions to Plaintiffs. (Docs. 110-11.) The court’s written order required BCT to provide Lighthouse Document Technologies (hereafter “Lighthouse”) with “immediate access to all of BCT’s laptops, desk computers and all servers” and to “fully cooperate” in the process of collecting, retrieving and processing the ESI. (Doc. 111.) The court found moot BCT’s cross motion for a protective order. (Docs. 108, 114.)

As just mentioned, among other things, the written order following the hearing incorporated into it the parties’ stipulation regarding BCT’s ESI. (Docs. 110, 111.) In that stipulation, signed on September 24, 2009, by attorneys representing both Philips and BCT, the parties agreed to the following:

1. [BCT] shall provide Lighthouse Document Technologies (“Lighthouse”) with immediate access to all of BCT’s laptops, desk computers and all servers. [BCT] shall provide a list of all business computers located at West Jordan, Utah (or for laptops of employees that work from West Jordan) by name of employee, job title and length of employment and computer model and serial number to counsel for Philips. BCT shall use its best efforts to provide this list by the end of the day September 24, 2009. At the present time, Philips has designated 10 laptops from field service engineers that are not located in West Jordan, Utah: these are for Ava Bixler, Mike Landis, Jerry Williams, Ed Sokolowski, Marcus Carter, Scott Dorchin, Paul Schenker, Dan Gasparovich, Steven Cook and Tony Butler. These laptops will be sent to BCT offices in West Jordan and be available by Friday morning at 8:30 am, September 25, 2009, or as soon thereafter as Federal Express deliveries arrive on Friday morning. Philips reserves the rights to designate further laptops at a later time should it be necessary to do so, but this will be coordinated in advance between counsel.

2. Philips shall pay for the cost of collecting this information, but if BCT wants any of the information or data from Lighthouse, BCT shall pay half the cost of processing the data after it has been collected.

3. BCT shall make all computers and servers available at West Jordan for Lighthouse. BCT shall turn over all of its backup tapes to Lighthouse for Lighthouse to reproduce in Seattle and Lighthouse will return the original backup tapes to BCT.

4. Lighthouse will process the electronically stored information that is collected. In the course of processing any email, email that has been sent to or from a domain name of “joneswaldo.com” will be sent to counsel for defendant, Vince Rampton, for review of privilege. That data will be reviewed and any data that should be produced will be produced within 20 days from its receipt to counsel for plaintiffs.

5. [BCT] will fully cooperate with Lighthouse in the process of collecting, retrieving and processing the electronically stored information. Currently, all parties and Lighthouse anticipate the collection of the data at [BCT’s] office can be done on Friday and Saturday, September 25 and 26, 2009.

6. All data collected by Lighthouse shall be treated as “Confidential” pursuant to the terms of the Protective Order in this case.

7. Lighthouse will use its own equipment to search BCT’s computers and hard drives, and will not download or install any software, applications or programs on any BCT computer.

(Doc. 110.)

As discussed in more detail below, within hours of this court’s order, BCT executives and employees began deleting a massive number of files from their computers just ahead of the court-ordered collection by Lighthouse of BCT’s ESI. (Doc. 140, Norberg Dec. ¶¶ 4-16, Exs. 1-13.)

On the evening of Tuesday, September 22, 2009, BCT’s IT Director, Derek Tolboe, sent an email to several BCT employees, including Jerry Williams, Ed Sokolowski, Marcus Carter, and Dan Gasparovich, instructing them to turn in their laptop computers by that Friday. (Exhibit 2 of Plaintiffs Exhibits from the Hearing (hereafter “Ex__”).) In response to that email, Ed Sokolowski sent a reply email requesting a telephone conference, stating: “As Philips continues to ‘fish’ for information, I (as I am sure others as well) would feel more at ease if the two of you could specifically tell all of us- — -that we are protected from any personal wrong-doing during the course of our employment with BCT.” (Id.) As discussed more below, that telephone conference occurred later that week. (Ex. 3.)

Lighthouse began its data collection at BCT’s West Jordan, Utah facility on Friday, September 25, 2009. During that process, Lighthouse captured forensic images of the hard drives of eight BCT executives and employees: Chuck Hale, Scott Dorchin, William Biddle, Marcus Carter, Paul Schenker, Ed Sokolowski, Jerry Williams, and Dan Gasparovich. Although BCT had been ordered to do so, BCT failed to provide Lighthouse with access to the laptops of Rex Lindsey, Luciano Albuquerque, or to Chuck Hale’s second laptop during Lighthouse’s initial collection effort in West Jordan between September 25 and 27, 2009. Philips complained about this noncompliance with the court’s order and the parties’ stipulation. (Doc. 139, Kindley Dec., Ex. B.) Lighthouse finally was given those last three laptops on October 9, 2009. Once Lighthouse received the three additional laptops, it also took forensic images of their hard drives. Lighthouse provided the forensic images it obtained of the computers for the ten BCT executives and employees directly to Reginald H. Nor-berg, a computer forensics expert engaged by Philips, for analysis. (Doc. 140, Nor-berg Dec., ¶¶ 2-3.)

On November 11, 2009, BCT filed a motion to compel production of documents from Philips. (Doc. 120.) At a January 6, 2010 hearing on that motion, the court heard arguments from counsel and granted Philips’ motion to compel. (Docs. 150, 152.) BCT filed a third motion to compel on January 4, 2010. (Doc. 144.)

On December 21, 2009, Philips filed two of the pleadings now before the court: a motion for spoliation sanctions and a motion for an order finding BCT in contempt of court. (Docs. 135, 136.) In these two pleadings, Philips alleged that after carefully reviewing the information Lighthouse provided to Philips from the ten laptops, its computer forensics expert, Reginald H. Norberg, concluded that within hours of the court’s September 22, 2009 order, BCT executives and employees began deleting a massive number of files from their computers just ahead of the court-ordered collection by Lighthouse of BCT’s ESI. (Doc. 140, Norberg Dec., Exs. 1-13.) In reliance on Norberg’s analysis of the ESI, Phillips alleged that BCT had violated this court’s order by willfully and inexcusably destroying evidence, and that deliberate attempts were used to cover up the destruction of documents and to preclude forensic analysis and recovery of the files.

On January 7, 2010, Judge Waddoups changed his referral to Magistrate Judge Alba; the new order referred the case to Magistrate Judge Alba pursuant to 28 U.S.C. § 636(b)(1)(B).

Pursuant to BCT’s request, the court scheduled an evidentiary hearing as to Philips’ motions for sanctions due to spoliation and contempt. (Doc. 162.) On February 2, 2010, eight days before the scheduled evidentiary hearing, BCT sought to withdraw its motion for an evidentiary hearing, which motion the court denied. (Docs. 167, 171.) The court then held an evidentiary hearing on February 10 and 11, 2010 (hereafter “the Hearing”). (Docs. 180, 181.) On February 17, 2010, Philips filed the third motion now before the court: a second motion for spoliation sanctions and for an order finding BCT in contempt of court. (Doc. 174.)

After it came to light that these BCT employees had deleted thousands of documents from their laptops, BCT began collecting copies of those electronic documents that had also been stored in places other than the BCT laptops. BCT sent to Philips ESI it represented to be the ESI deleted from the laptops that BCT was able to recover.

On April 13, 2010, counsel presented oral arguments to the court regarding Philips’ first and second motions for sanctions for spoliation and contempt of court. (Doc. 237.)

DISCUSSION

The three motions before the court are: (1) Plaintiffs’ Motion for Spoliation Sanctions (Doc. 135); (2) Plaintiffs’ Motion for Order Holding Defendant In Contempt of Court Pursuant to Fed.R.Civ.P. 37(b) (Doc. 136); and (3) Plaintiffs’ Second Motion for Spoliation Sanctions and for Order Holding Defendant in Contempt of Court (Doc. 174). Philips’ first motions for spoliation sanctions and for an order holding BCT in contempt of court are based on deletions made on four BCT laptop computers used by the following four BCT employees: Gasparovich, Albuquerque, Williams, and Carter. Philips’ second motion for spoliation sanctions and for an order holding BCT in contempt of court is based on deletions made on the BCT laptop used by Sokolowski, another BCT employee. Philips alleges that the forensic examination of these five BCT laptop computers reveals that ESI relevant to this case was destroyed from each of these laptops in violation of the court’s direct orders and in violation of discovery rules. In its motions, Philips requests that the court sanction BCT for spoliation and contempt of court by striking BCT’s Amended Answer and Counterclaim, entering default judgment as to liability in Philips’ favor, dismissing BCT’s counterclaims, and imposing monetary sanctions.

A. Evidence Presented in Support of Philips’ Motions

The court first examines the evidence pertaining to the five BCT laptop computers at issue in Philips’ three motions before the court. Again, those five laptops were used by the following five BCT employees: Gasparovich, Albuquerque, Williams, Carter, and Sokolowski.

1. Gasparovich

Dan Gasparovich is a member of BCT’s executive management team. Gasparovich is BCT’s Chief Technical Officer, a Regional Sales Manager, and is a former employee of Philips/ADAC Laboratories (hereafter “ADAC”). See Official Transcript of Evidentiary Hearing Regarding Motion for Spoliation and Sanctions, Docs. 184 and 186 (hereafter “Tr. at_”) at 16-18.

At Gasparovich’s deposition, Gasparovich admitted that he had deleted ESI from his laptop on September 22, 2009, but twice insisted that his deletions all took place before he received Derek Tolboe’s email instructing him to send his computer to BCT. See Tr. at 52. Gasparovich repeatedly denied deleting ESI after learning that he had to send in his laptop:

Q. Was your laptop one of the laptops that was sent in?

A. Yes.

Q. And after you learned that you were going to have to send your laptop in, did you make any changes to any other files on your laptop?

A. Not that I’m aware of.

Q. Did you delete any documents from your laptop after learning that you would have to send your laptop in to be imaged?

A. Not that I’m aware of.

Q. Did anyone other than yourself have access to your laptop after you learned that the laptop was going to have to be sent in?

A. Not that I’m aware of.

Q. This is along the same lines but a little bit different. I just want to make sure we cover this area. What about overwriting any files? We have talked about deleting or erasing, destroying documents. I understand you testified that you didn’t do any of that.

A. Right.

Q. What about overwriting files?

A. No.

Q. Other than the kind of deleting, overwriting that we have talked about, did you do anything else to your computer that would have affected any of the files on your laptop after you learned that the laptop was going to have to be sent in?

A. No.

(Doc. 139-6, Kindley Dec., Ex. J at 3:14-20, 4:4-11, 5:20-6:3, 6:9-15.) In short, at his deposition, Gasparovich repeatedly testified under oath that he did not delete, erase, destroy, or overwrite files after he learned that he needed to send his laptop to BCT.

Gasparovich again testified at the Hearing. During that testimony, as at his deposition, Gasparovich testified three different times that all his deletions of ESI that took place on September 22, 2009, occurred before he received the Tolboe email instructing him to send his computer to BCT. See Tr. at 47-48. In response to BCT’s counsel’s questioning, Gasparovich reiterated for the fifth time that he had not received Tolboe’s email before he deleted the files from his computer. See Tr. at 84. Gasparovich also testified that, to his knowledge, he did not destroy or delete any documents related to this lawsuit. See Tr. at 54. At the Hearing, Gasparovich testified that, while he was at home in Tennessee, he spent two or three hours deleting files and folders from his computer. See Tr. at 57-8, 73. Gasparovich admitted he either deleted the TAC database from his BCT computer or he transferred it to an external hard drive on September 22, 2009. See Tr. at 65-66. In addition, Gasparovich testified that he copied five movies onto his BCT laptop so he could watch them during an upcoming business trip. Gasparovich explained that he was driving for approximately five hours to Nashville on September 23, 2009 (the day after he made the deletions), staying in a hotel that night, and then sending his computer to BCT the following day, September 24, 2009. See Tr. at 71-3.

Gasparovich testified that he did not recall how many electronic folders he removed from his BCT computer. See Tr. at 56-7. He also did not know what ESI was moved to the recycle bin. See Tr. at 58. Gasparovich admitted that he could not honestly say that everything he deleted from his computer on September 22, 2009, was on the replacement hard drive later provided to Philips. See Tr. at 85. Gasparovich admitted that he did not know everything that he had actually deleted from his computer. See Tr. at 88. Ultimately, Gasparovich admitted that the files that were on the replacement hard drive later given to Philips did not include all the files that he actually deleted on the night of September 22, 2009. See Tr. at 89.

Gasparovich also testified that “[tjhere was never any official notification” by BCT’s management informing its employees about the Philips lawsuit; instead, employees found out about the lawsuit through hearsay. See Tr. at 28. Gasparovich testified that, after the lawsuit was filed, BCT did not change its practices to ensure that relevant documents stored on its computers were not deleted or destroyed. See Tr. at 32. Gasparovich testified that, before receiving the email instructing him to send in his laptop computer, which he received on September 22, 2009, he had never been informed that the court had ordered BCT to cease wiping or re-imaging its computer hard drives. See Tr. at 33. Gasparovich testified that he had not understood that BCT had a duty to preserve ESI or the documents it had obtained related to Philips. See Tr. at 33-34.

In addition, Gasparovich testified that he had never seen the Litigation Hold Memo until it was shown to him at the Hearing, see Tr. at 30; however, in his January 20, 2010 sworn Declaration, Gasparovich testified that he received the Litigation Hold Memo in August of 2009, and the Litigation Hold Memo was attached as Exhibit 1 to his sworn Declaration, see Ex. 52 at ¶ 9. Gasparovich admitted that he failed to “look at” Exhibit 1 to his Declaration, and he only “[sjcantily, not in great detail” read his Declaration itself before he signed it. Tr. at 32, 87. Gasparovich also testified that he must have received the email when it was sent out because it was sent to all BCT employees, but he must not have read it. Tr. at 32, 82-84.

Finally, Gasparovich also testified that he understood that the BCT laptop he used was a company laptop, that the ESI on BCT’s computers is BCT’s property, and that BCT had the right to access the laptop at any time at its sole discretion. See Tr. at 34.

Norberg analyzed the information obtained from Gasparovich’s laptop. According to Norberg, Tolboe’s email was sent to Gasparovich on September 22, 2009, at 5:29 p.m. See Ex. 33. Gasparovich sent a reply email to Tolboe at 6:29 p.m. See id.; see also Tr. at 50. Norberg determined that Gasparovich started deleting documents from his computer at 5:39 p.m. on September 22. See Ex. 68. (Note that the first row of page 1 of Ex. 68 shows that File Dc31 was modified (deleted) on September 22, 2009 at 5:39 p.m.) According to Norberg, Gasparovich continued to delete documents from his computer over the next 5/é hours, with the last file or folder (Dcl92) being deleted at 11:06 p.m. See Ex. 68. Norberg testified that one of the folders deleted from Gasparovich’s laptop was named “Dave Miller SKYLight,” which contained over 1,700 files, see Tr. at 390-92, and Gasparovich testified that Dave Miller was a former trainer of Philips engineers who provided Philips’ SKYLight files to Gasparovich, see Tr. at 60-62.

Norberg testified that his analysis of Gasparovich’s laptop revealed that the My Documents folder on that laptop, which contained hundreds and hundreds of files, were scanned and folders were selectively picked and sent to the recycle folder beginning at 5:30 p.m. and continuing until after 11:00 p.m. on September 22, 2009. See Tr. at 387-88. Norberg testified that these deletions did not happen automatically or by accident. See Tr. at 388.

According to Norberg, after Gasparovich deleted files and folders for over 5/& hours, he then started loading five movies onto his computer on September 23 at 12:02 a.m. See Tr. at 394. The five movies, which comprised approximately twenty gigabytes of data, permanently overwrote the files recently deleted, eliminating the possibility of forensically recovering them. See Tr. at 376-77, 394-95; Ex. 62 at ¶¶ 5-7. Norberg testified that this activity was consistent with the actions of a “knowledgeable user” trying to achieve a result where the data would be permanently removed from the computer. See Tr. at 397. (Ex. 62 at ¶ 7, Ex. 2.)

Norberg testified that although the contents of the files have been destroyed, some of the file and folder names remain. (Doc. 140, ¶¶ 6-7, Ex. 1.) For example, the file names of a significant number of files deleted from Gasparovich’s laptop directly match the names of confidential and propriety documents internal to Philips. 0Compare Doc. 140, Norberg Dec., ¶ 6, Ex. 1, with Doc. 139, Bindley Dec., ¶ 6. Ex. E.) According to Philips, that confidential information is only available to certain Philips’ employees, licensed representatives, or alliance customers who sign nondisclosure and confidentiality agreements. (Doe. 139, Bindley Dec., ¶ 6, Ex. F-G.) In order to access these materials, a person also must have a legitimate Philips validation code. (Id.)

Norberg determined that at least 100 files from Gasparovich’s computer cannot be recovered, and Hooper, BCT’s expert, agreed with this finding. See Tr. at 447-448; Tr. at 461, 466.

Gasparovich’s testimony lacks credibility for several reasons. First, Norberg’s analysis reveals that Gasparovich’s deletions began within ten minutes after receiving Tolboe’s email and continued over the next 5lh hours. Gasparovich’s reply email to Tolboe was sent approximately one hour after Tolboe sent the email, and approximately 50 minutes after Gasparovich started deleting files, confirming that Gasparovich received Tolboe’s email by that time, and that at least the majority, if not all, of Gasparovich’s deletions occurred after he was notified that he would have to send in his BCT laptop for examination, see Ex. 33; however, Gasparovich repeatedly testified that his deletions occurred before he received Tolboe’s email and that he spent only two to three hours deleting files and folders from his computer. See Tr. at 50. Second, Gasparovich testified that, to his knowledge, he did not destroy or delete any documents related to this lawsuit, but Norberg’s analysis revealed that Gasparovich deleted a folder containing 1,700 files from the folder suggestively named Dave Miller SKYLight, and Gasparovich himself testified he deleted the Philips TAC database from his laptop. Third, Norberg testified that Gasparovich had selectively picked which folders to delete beginning at approximately 5:30 p.m. and continuing after 11:00 p.m., revealing that Gasparovieh’s deletions were deliberate and not accidental or inadvertent. Fourth, it is difficult to imagine that one would spend hours making room for and then loading five movies onto a computer, when he was simply driving to Birmingham on September 23, 2009, and then sending his computer to BCT the next day, September 24, 2009. Fifth, the fact that Gasparovich, a “knowledgeable user,” loaded enough movies onto his BCT laptop so as to use virtually all of its available memory, and thereby overwrite nearly every single document deleted over those 5/6 hours, especially when combined with Norberg’s other findings, is too coincidental. See Tr. at 394-96; Ex. 62 at ¶¶ 5-7. Norberg testified that computers typically have 20, 30, 50 or 100 gigabytes of unallocated space; Gasparovich (when he was done with loading videos) had taken up all but two gigabytes of space. See Tr. at 395.

The testimony and evidence presented regarding Gasparovich’s BCT laptop reveal that BCT did not and could not provide Philips with copies of all the files Gasparovich deleted. Gasparovich himself testified that he could not identify all the documents that he deleted and that the replacement disk later provided to Philips did not contain all the deleted data. Further, Gasparovich’s deletion and overwriting of the files deprives Philips of the ability to analyze metadata that the deleted and overwritten files may have contained in order to assess how, when, and from whom BCT acquired those files.

Although the contents of the files have been destroyed, some of the file and folder names remain and indicate that many of the deleted files were probably relevant to this lawsuit. (Doc. 140, Norberg Dec., ¶¶ 6-7, Ex. 1.) Given Gasparovich’s destruction of these files, Philips is precluded from discovering the contents of all the files, although the exact match between various file names destroyed by Gasparovich to the names of Philips confidential and proprietary files suggests what the contents of those files likely entailed.

The folder structure of the files Gasparovich deleted further demonstrates the relevance of the deleted files to this litigation. This litigation involves claims of copyright infringement and trade secret misappropriation, among others. (Doc. 25.) A portion of Philips’ copyright claim relates to BCT’s copying and distribution of copyrighted service manuals. (Doc. 25 at 5-6.) Philips asserts that discovery has revealed that BCT uses, makes copies, and distributes Philips/ADAC service manuals in its training programs. (See, e.g., Doc. 139, Kindley Dec., ¶ 7, Exs. H, I (answers to Request No. 8 and Interrogatory No. 2).) The folder structure of the files Gasparovich deleted reveals that a substantial portion of the deleted files constituted precisely this type of technical training materials, handouts, and schematics for Philips/ADAC brand nuclear medicine systems, including Forte, Single Bead Genesys, Skylight, and Vellex. (See Doc. 140, Norberg Dec., Ex. 1.) Two other files deleted by Gasparovich literally were titled “copyright ..Philips_medical_system.htm.” (Id.)

Although there is an exact match between various file names destroyed by Gasparovich to the names of confidential and propriety files belonging to Philips, Gasparovich’s destruction of these files precludes Philips from discovering the contents of all the files. Philips thus cannot discover or understand the full scope of BCT’s trade secret misappropriation and copyright infringements, impeding Philips’ ability to obtain evidence relevant to its claims and defenses in this case.

2. Albuquerque

Luciano Albuquerque is BCT’s Vice President of Product Development and a district manager for New York City. See Tr. at 301. Albuquerque was hired by BCT in 2006. Like Gasparovich, Albuquerque is also a former employee of Philips/ADAC and, while employed by Philips/ADAC, had agreed to and executed multiple confidentiality, non-disclosure and intellectual property agreements with Philips/ADAC. See Tr. at 302, 340-41. In addition to the same undertakings agreed to by Gasparovich (set forth above), the agreements executed by Albuquerque further provided, among other things:

1. Unless I first secure ADAC’s written consent, I will not disclose, use, disseminate, lecture upon or publish CONFIDENTIAL INFORMATION!] of which I become informed during my employment with ADAC, whether or not developed by me.

2. Upon termination of my employment with ADAC, I shall turn over to a designated individual employed by ADAC all property then in my possession or custody and belonging to ADAC. I shall not retain any copies or reproductions of correspondence, memoranda, reports, notebooks, drawings, photographs, or other documents relating in any way to the affairs of ADAC or to the affairs of its affiliated companies and which are entrusted to me at any time during my employment with ADAC.

3. In consideration of my accepting or continuing work at Philips Electronics North America Corporation or any of its divisions, subsidiaries or affiliates, (which will individually and collectively be called “the company”) during such time as may be mutually agreeable, and in consideration of the salary or wages paid to me, I agree:

4. Not to use, publish or otherwise disclose (except as my job requires) either during or after my employment, any secret or confidential (proprietary) information or data of the company or its customers or any other third party received by the company in confidence.

5. Upon the termination of my employment, to deliver promptly to the company all written and other materials that relate to the business of the company or its affiliates.

(Doc. 139, Kindley Dec., Ex. K.)

Despite agreeing to the terms of the confidentiality and non-disclosure agreements discussed above, Albuquerque admitted at his deposition that he kept Philips/ADAC technical information regarding these products (which he had worked on while at Philips/ADAC) and also admitted loading the materials onto his BCT laptop.

Q. When you were in Milpitas working for Philips/ADAC, did they provide you with a computer to use?

A. Yes.

Q. Was it a desktop computer, Mr. Albuquerque, or did they provide you a laptop, or what did you get?

A. A laptop.

Q. And was it the Philips/ADAC property?

A. Yes.

Q. When you left Philips/ADAC, did you take that laptop with you?

A. No.

Q. How did you take these files then?

A. I had always a backup in a flash drive.

Q. Okay. How did you decide which flies that you were going to keep in a flash drive?

A. All the files that I were working on.

Q. So everything that you worked on while you were there at Milpitas as the electrical design engineer for Philips ADAC was put onto a flash drive, and when you left you took that flash drive with you?

A. Yes.

Q. Then after that, did you begin working for BC Technical?

A. Yes.

Q. And did you then take that flash drive and load all those files onto the computer that BC Technical gave you?

A. Yes.

(Doc. 139, Kindley Dec., Ex. L.) Albuquerque again admitted to taking the Philips/ADAC flies at the Hearing. See Tr. at 302-05.

Unlike Gasparovich, Albuquerque admitted at his deposition to deleting flies on the eve of turning over his computer. Albuquerque testified that he had only kept Philips/ADAC materials in order to be able to answer technical questions that he may later get from Philips.

Q. Tell us to the best of your recollection exactly what you did delete from your computer?

A. I deleted some information about my immigration, like immigration forms, something like that, and a directory with several design documents that I work on Milpitas, California that I didn’t disclose to BC Technical.

And maybe I can add that I kept those flies because after I left Philips Ray Donbroso sent me an e-mail, I left in my personal e-mail with him, if he had any questions or any problems to send me emails or — I didn’t have a cell phone at that time because I was moving back to New York — and he sent me an e-mail with an attachment file that was one of the design documents and ask me to update that document because it was not updated and send back to him. This is after I left Philips.

So I had to go back and try to find some of my old design documents because I had just spent two weeks with him reviewing all the documents and give to him.

So I found one and was able to update the file and send back to him. Then I decide to keep a copy of the file in case they need it again.

Q. You were telling us before you sidetracked under that little explanation what documents you deleted from your computer before you turned it over to Lighthouse in accordance with the court order?

A. Philips documents standard operating procedures and design documents that I work on.

Q. What design documents?

A. I do not recall offhand. It was in a directory and I delete that directory.

Q. Did it have documents on Precedence?

A. On the design that I did for cost reduction on the Precedence, yes, part of the work I did on the Precedence.

Q. Did it have documents on what was Apollo and that then became Bright-view?

A. Yes.

Q. What other documents, design documents, from Philips/ADAC, did you have on your computer that were deleted besides those two?

A. Perhaps I had some information about the aREa project. I do not recall, because like I said, I work on the aREa project for a few months, and I had standard operating procedures.

Q. Do you know roughly how many gigabytes or megabytes of data that you deleted?

A. I’m not sure.

Q. Do you know how many documents that we’re talking about?

A. Probably around 20 documents, 20 to 30 documents. Normally, they are a small document because I text the documents.

(Doc. 139, Kindley Dec., Ex. L.)

In his testimony at the Hearing, Albuquerque again admitted that when he left Philips’ employment he took design documents and design information on Philips’ medicine systems (including BrightView and Precedence) on a flash drive and he later copied these files onto his BCT laptop computer. See Tr. at 303-4. Albuquerque testified he was not sure how many documents he deleted from his laptop. See Tr. 307-09. As at his deposition, Albuquerque testified that he only loaded the data onto his BCT computer so he could respond to questions about his work from his former manager at Philips who had sent him an email the day after Albuquerque left Philips. See Tr. at 349-50. Albuquerque claimed he kept this data on his BCT computer in case he received other questions. See id. He never did receive any other questions from Philips; but kept this data on his BCT laptop computer for the ensuing 14 or 15 months until he deleted it on October 2, 2009. See Tr. at 367-69. He testified that he deleted the directory that contained these electronic files from his BCT laptop computer and then ran “Cipher.exe” to make sure the deleted documents could not be recovered just before he sent the laptop computer to BCT. See Tr. at 306-7, 307-08, 343-44.

Albuquerque testified that, other than his personal files, he only deleted files to prevent BCT from seeing them. See Tr. at 319. Albuquerque testified that he did not know his laptop was being sent to Lighthouse; instead, all he knew is that BCT had asked him to send his laptop to BCT. See Tr. at 320-21. Albuquerque testified that he deleted the Philips/ADAC files from his computer so as not to share them with BCT and to be true to the confidentiality agreement he had signed while at Philips/ADAC. See Tr. at 357. Albuquerque testified that he then ran Cipher before sending in his laptop computer because he did not want BCT to have the design documents he had from Philips. See Tr. at 344. Albuquerque testified that until November 17, 2009, when he was asked to sign it, he was unaware of the confidentiality agreement and Protective Order in place. See Tr. at 366.

Finally, at the Hearing Albuquerque testified that he did not find out that he had to send in his laptop until October 2009. See Tr. at 306-07. He also testified that he was not aware there was a first wave of people who were told to send in their laptops, and he was even unaware of that as he testified at the Hearing. See Tr. at 307. He testified that he was unaware of the earlier conference call that occurred between several of the people in the group that first sent in the laptops. See Tr. at 316. Albuquerque testified that no one ever had a conversation with him about why he had to send in his laptop or that his laptop was going to Lighthouse to be imaged. See Tr. at 317, 319. Albuquerque testified that all he knew was that he was shipping his laptop to BCT in Salt Lake City. See Tr. at 319.

Albuquerque testified that during the first twenty months of this lawsuit, no one at BCT ever contacted him to get relevant information on his computer. See Tr. at 313-14. Albuquerque testified that until a couple of days before his deposition in November 2009, he had never read Philips’ Complaint. See Tr. at 309-10. Up to that point, Albuquerque had believed that Philips’ claims were limited to trademark or copyright infringement and he was unaware of Philips’ other claims. See id. Albuquerque testified that he had never been shown a copy of the Protective Order in this case. See Tr. at 310. Albuquerque initially testified that he did not receive a copy of the Litigation Hold Memo. See Tr. at 310-11. Upon further questioning by BCT’s counsel, Albuquerque changed his testimony and said, “[he] believe[d] [he] received” the email transmitting the Litigation Hold Memo because it was sent to all employees, but he did not recall receiving it. See Tr. at 361-62. Albuquerque testified that if he received the Litigation Hold Memo in an email, he probably did not read it because he gets a lot of emails every day. See Tr. at 314-315. He further testified that it is common knowledge in the company that most employees do not read emails from management and, if he wants to communicate something that is really important, he calls the person directly or sets up a conference call. See id. Albuquerque testified that no one ever told him in a phone call that he should cease wiping or re-imaging his BCT laptop’s hard drive. See Tr. at 317-18.

Albuquerque testified that the first time an attorney talked to him about his deletion and destruction of ESI was February 9, 2010, the day before he testified at the Hearing, and it was not until then that he understood there was an issue with what he had done. See Tr. at 311-12. Moreover, no one from BCT ever contacted him for the purpose of responding to discovery requests or to tell him that the proprietary information he deleted about Philips’ newest nuclear medicine system, BrightView, was an essential part of this lawsuit, or that that information was responsive to Philips’ discovery requests. See Tr. at 314. Albuquerque testified that he was never informed about, or shown, the court’s orders, including the order compelling BCT to preserve data. See Tr. at 317-18; Exs. 77, 78.

Albuquerque testified that he had been told by