9th Circuit: No Dismissal Under Rule 37 When Accountant's IT Fails to Preserve Emails

Yesterday, the Ninth Circuit issued a per curiam decision, Winecup Gamble v. Gordon Ranch LLP, No. 20-16411, 2021 U.S. App. LEXIS 18062 (9th Cir. June 17, 2021), reversing and vacating a judgment of the United States District Court for the District of Nevada which granted the Defendant's motion for sanctions under Fed. R. Civ. P 37(e). This rule provides for sanctions when a party fails to take reasonable steps to preserve ESI in the anticipation or conduct of litigation. The Court concluded that the district court should not have dismissed the Plaintiff's case since the Plaintiff was not aware that relevant emails were lost until discovery in the action began.

The Ninth Circuit found no intent to deprive the Defendant of relevant ESI where the Plaintiff's accountant had data, "managed by the IT department at his independent accounting firm. At [the accountant's] deposition, he explained that although he alerted his IT department of the preservation order in 2017, the instruction was not followed (for unknown reasons), and the documents therefore could not be recovered. ", Id. at *2. The Court also noted the Defendant's failure to demonstrate the importance of the lost email data. The Plaintiff was able to attest to the fact that other sources provided the accountant's relevant email data.