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Kavanagh v. Refac Optical Group

United States District Court, D. New Jersey, Camden Vicinage

December 14, 2017

REFAC OPTICAL GROUP, et al., Defendants.



         This matter is before the Court on defendants' “Motion for Spoliation Sanctions” [Doc. No. 92].[1] The Court received plaintiff's opposition [Doc. Nos. 94, 95], defendants' reply [Doc. No. 97], and the parties' supplemental submissions [Doc. Nos. 114, 115]. The Court also held oral argument as well as a separate evidentiary hearing. For the reasons to be discussed, defendants' motion is denied.


         The parties are familiar with the background of the case so only a brief summary will be provided. Plaintiff filed her complaint on June 30, 2015. Plaintiff alleges she was recruited to leave her consulting business to work for defendants. Complaint &18. Plaintiff alleges defendants Refac Optical and U.S. Vision acted as a single integrated enterprise. Id. &12. Plaintiff claims defendants agreed to pay her a “Wall Street” fee (industry rate) for financing she secured on U.S. Vision's behalf through Zeiss International and/or Contour Optik, Inc., in addition to other benefits. Id. &&23-26. Plaintiff accepted defendants' employment offer on or about August 15, 2010. Id. &27. On June 9, 2014, plaintiff's employment was terminated but she was offered a severance package that she accepted. The crux of plaintiff's claim is that defendants breached their agreements. Plaintiff claims defendants not only breached the severance agreement, but also the agreement to pay her fees for the Zeiss and Contour deals. Id. &&52-53. Plaintiff claims defendants did not pay her “no less than $1 million in compensation” from deals plaintiff arranged with Zeiss and Contour. Id. &&37-41. Defendants deny all liability allegations.

         William Schwartz acted as the CEO of U.S. Vision during a significant part of plaintiff's employment, including at the time of her hiring. Id. &15. The instant motion arises out of meetings plaintiff and her former live-in partner, Yvette Milavec, had with Schwartz after plaintiff was terminated. The parties do not dispute that plaintiff and Milavec secretly recorded conversations plaintiff had with Schwartz. The recordings started soon after plaintiff received a September 10, 2014 letter from Refac's attorneys, Hogan-Lovells, stating, inter alia, that Schwartz denied that he agreed to pay plaintiff a “finder's fee.” The essence of defendants' claim is that plaintiff and/or Milavec spoliated evidence by destroying some of the recordings of conversations plaintiff had with Schwartz.[2]

         There is no direct eyewitness evidence confirming plaintiff or Milavec destroyed, lost or edited recordings. They both deny this occurred. In view of these denials defendants ask the Court to infer spoliation occurred from circumstantial evidence. Defendants argue their most persuasive evidence is a notation in Milavec's notebook in her handwriting where she wrote “shit can tape recording on my ph[one].” Defendants argue, “[t]his statement can only be interpreted one way: delete recordings of conversations with Mr. Schwartz, Mr. Bernstein and/or other.” Defendants' Memo. at 10. Second, defendants argue spoliation can be inferred because of “the careless manner in which Plaintiff and Ms. Milavec stored [the] relevant evidence (despite their obligation to preserve it, ….)” Id. at 10-11. Third, defendants argue spoliation can be inferred because of “Ms. Milavec's apparent modus operandi.” Id. at 11. Defendants claim Milavec destroyed secretly recorded conversations in the past.

         Not surprisingly, plaintiff and Milavec deny they destroyed, lost or edited any recordings. Plaintiff supports her argument with her deposition testimony from December 16, 2016 and March 10, 2017, the Declaration of Milavec (Doc. No. 94-2), and Milavec's August 2, 2017 testimony.[3] Insofar as the requested relief is concerned, defendants ask the Court to prohibit plaintiff from introducing into evidence any of plaintiff's “secret recordings” and to provide an adverse inference instruction to the jury.


         This motion is governed by Fed.R.Civ.P. 37(e) which addresses the failure to preserve electronically stored information and what and when spoliation sanctions may be imposed. The Rule specifically provides as follows:

(e) Failure to Preserve Electronically Stored Information. 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) instruct the jury that it may or must presume the information was ...

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