Friday, August 07, 2015

The Terminated Employee, Disk Wiping and the Motion for Sanctions

This post examines an opinion a federal District Court Judge who sits in the U.S. District Court for the Western District of Washington issued recently:  Watkins v. Infosys, 2015 WL 4493440. The judge begins his opinion by explaining that he is going to rule on the Infosys’s Motion for the Sanction of Dismissal and Motion for Summary Judgment.  Watkins v. Infosys, supra. He also summarizes the conduct that led to both motions:
Plaintiff Marilyn Watkins brings the above-captioned lawsuit against her former employer, IT-services provider Infosys, alleging discrimination based on her race/national origin, retaliation, and breach of promise. . . . Plaintiff is Caucasian and a Canadian citizen with Permanent Resident status in the United States. . . .

She worked for several years as a manager with Defendant Infosys -- a foreign company headquartered in Bangalore, India -- in its Bellevue, Washington office. . . . In September of 2013, she was terminated. . . . Plaintiff claims that her termination-as well as her treatment in terms of compensation and job title-was motivated by discrimination based on her race and nationality. . . . Defendant has consistently indicated that Plaintiff's termination was the result of a global, company-wide reduction in force in the Education and Research group (“E & R”) in which Plaintiff worked. . . . . That reduction in force caused Defendant to eliminate all E & R positions in the U.S. and the United Kingdom, as well as positions in China and India. . . .

The behavior of both parties in the present litigation has been problematic. Numerous discovery disputes have required Court intervention in producing documents, scheduling depositions, and disclosing expert reports. . . . The Court awarded Plaintiff attorney fees based on Defendant's failure to comply with discovery orders. . . . At different points in this litigation, both sides have dodged sensible opportunities to litigate cooperatively. . . .
Watkins v. Infosys, supra.
We will get into what each of the motions listed above means and the consequences of granting either or both of them later in this post.  First, we need to know how and why the case arose.  As the judge explains in his opinion, “[o]n or about” October 20, 2013,
Plaintiff performed a Bing search for the term `disk wipe,’ downloaded and installed `MiniTool Drive Wipe’ software onto the hard drive of her work computer, and ran the program to wipe files including folders entitled `D: E & R Infosys Termination,’ and `My New Role Lawsuit.’ . . . Moreover, eleven external media drives had been connected to Plaintiff's laptop in the days prior to the disk wipe. . . . Defendant became aware of this fact through its own consultation with an expert. . . .

However, in previous, sworn testimony, Plaintiff responded to interrogatories indicating that she had `produced the contents of her computer to Defendant as part of her Initial Disclosures,’ that `she did not “remove” things from Defendant's premises,’ and that she `followed procedures typical with such litigation . . . to avoid the alteration or deletion of documents, in addition to preserving data back-ups relating to her employment.’ . . . In other words, in her responses to Defendant's interrogatories, signed February 3, 2015, Plaintiff perjured herself. . . .

Furthermore, the rationale Plaintiff has provided-both for wiping the computer files and for failing to disclose information and documents related to the wipe-have been nonsensical. In her deposition, Plaintiff admitted for the first time that she wiped the files, claiming that she did so out of concern for information preservation and client confidentiality. . . . In a supplemented response, filed on the last day of discovery, Plaintiff again refused to turn over the wiped contents of her work computer, asserting that, `all electronic records, save for unsent drafts, passed through Defendant's servers and, therefore, the company is already possession [sic] of this information.’ . . . Plaintiff continued, `the electronic records not previously produced or utilized in this litigation are vast and irrelevant to the claims or controversies in this case.’

Finally, Plaintiff rather unconvincingly indicated that she `[was] in the process of replicating all documents that she retained and will provide the same to Defendant upon their soonest availability.’
Watkins v. Infosys, supra.
In footnotes to comments in the above paragraph, the Judge explains that, when Watkins was deposed by Infosys, at some point in this process, she responded to two questions as follows: 
Q: Would wiping your computer be consistent with taking special attention to avoid the alteration or deletion of documents?
A: Yes, it would be.
Q: And how would that be, wiping your computer?
A: I felt that I needed to protect the information that was on my computer, so I preserved it, and then I eliminated it, more or less, from the drive.

Q: You wiped it so it wouldn't have anything on it if they redeployed it?
A: Correct. I had a lot of Infosys confidential information by virtue of being a Job Level 8 . . .  I had client data. It was unconscionable to me that that information would end up in the hands of somebody that shouldn't. . . .
Watkins v. Infosys, supra.
He went to explain that the
Court finds Plaintiff's responses both illogical and unbelievable. First of all, it belies the very concept of a `disk wipe,’ to argue that wiped files would continue to be in Defendant's possession. Second, not only does Plaintiff's unilateral determination of the irrelevance of files in her sole possession usurp the judicial function; it is also contradicted by her subsequent reliance on the very same documents. . . .

Third, a hollow promise to gather and produce evidence at the conclusion of discovery does not undermine the misconduct, spoliation, and perjury already committed-nor does Plaintiff's late production of 15,000 pages of documents without the corresponding flash drives. . . .

Plaintiff's brief in response to Defendant's motion for the sanction of dismissal only exacerbates the problem. . . . There, Plaintiff regurgitates flimsy justifications for wiping her disk drive, doubles-down on her unsupported argument about the irrelevance of the wiped files, and asserts blankly that `there has been no actual suppression or withholding of evidence since the entire content of Plaintiff's computer has been produced to Defendant.’ . . .
Watkins v. Infosys, supra.  In a footnote appended to the last sentence above, the judge notes that
Plaintiff adds that she `is prepared to turn over the USB drives to Defendant on the condition that agreement is reached on how to protect the privacy and confidentiality of Plaintiff's personal data. . . .’ . . . . Plaintiff misses the mark: this is no longer a discovery dispute, and the time for such delay tactics has passed.
Watkins v. Infosys, supra. 
The judge then outlined the applicable legal standard he was required to apply in ruling on the Motion for Sanction of Dismissal:
District courts possess an inherent power to dismiss cases where `a party has engaged deliberately in deceptive practices that undermine the integrity of judicial proceedings.’ Anheuser–Busch, Inc. v. Natural Beverage Distributors, 69 F.3d 337 (U.S. Court of Appeals for the 9th Circuit 1995).
Before imposing the sanction of dismissal, courts in the Ninth Circuit must weigh five factors: (1) the public's interest in expeditious resolution of litigation, (2) the court's need to manage its dockets, (3) the risk of prejudice to the party seeking sanctions, (4) the public policy favoring the disposition of cases on their merits, and (5) the availability of less drastic sanctions. Anheuser–Busch, 69 F.3d at 348. . . . The Court reviews Plaintiff's perjury and spoliation in light of these five factors.
Watkins v. Infosys, supra. 
Next, he analyzed the applicability of these factors to the circumstances in this case:
The first two factors, public interest in the expeditious resolution of cases and the Court's need to effectively manage its docket, both favor dismissal. Plaintiff's actions resulted in the concealment and destruction of evidence, seriously delaying the progress of this litigation. As the Court previously acknowledged, discovery in this case has not gone smoothly; the discovery deadline had to be extended not once but four times based on the behavior of both parties. . . .

Twice the parties have sought Court intervention via telephonic conference. . . . Even after the discovery completion deadline, the parties continue to bring discovery-related disputes to the Court. . . .  In other words, the above-captioned matter has required substantial judicial resources. While it is true that both parties have obstructed the expeditious resolution of this matter, the Court finds that Plaintiff's spoliation, perjury, and delayed disclosures have contributed immensely to this litigation's lack of forward momentum.
Watkins v. Infosys, supra. 
He then took up the third factor – the “risk of prejudice to the party moving for sanctions”, noting that it “also favors dismissal of this case.” Watkins v. Infosys, supra. 
The prejudice inquiry requires courts to `look[ ] to whether the spoiling party's actions impaired the non-spoiling party's ability to go to trial or threatened to interfere with the rightful decision of the case.’ Leon v. IDX Systems Corp., 464 F.3d 951 (U.S. Court of Appeals for the 9th Circuit 2006). . . Plaintiff's actions fit squarely within this description. Despite Plaintiff's insistence to the contrary, wiping and withholding evidence from Defendant goes right to the heart of Defendant's ability to litigate or try this case.
Watkins v. Infosys, supra. 
The judge then explained that the
fourth factor, the over-arching public policy favoring a merits-based disposition of any given case, plainly tips against dismissing this case as a sanction. The summary judgment briefing before the Court enables such a merits-based disposition of this case.
Watkins v. Infosys, supra. 
And, finally, he analyzed the applicability of the fifth factor, noting that it “weighs against dismissal.”  Watkins v. Infosys, supra.  The judge went on to explain that the
Court does not take lightly the degree to which perjury taints the possibility of fair judicial proceedings. See Arnold v. County of El Dorado, 2012 WL 3276979 (U.S. District Court for the Eastern District of California (2012) (`[P]erjury on any material fact strikes at the court of the judicial function . . . ‘). Lying under oath and submitting false discovery responses constitute deliberate misconduct warranting the sanction of dismissal. Combs v. Rockwell Int'l Corp., 927 F.2d 486 (U.S. Court of Appeals for the 9th Circuit 1991) (`Dismissal is an appropriate sanction for falsifying a deposition’).

Prior to implementing the sanction of dismissal, however, it is appropriate for district courts to (1) consider the feasibility of less drastic sanctions, (2) to implement other sanctions short of dismissal, and (3) to warn the offending party of the possibility of dismissal before so ordering. Leon v. IDX Systems Corp., supra (quoting Anheuser–Busch, Inc. v. Natural Beverage Distributors, supra). In particular, warnings prior to dismissal are frequently required by reviewing courts. Malone v. U.S. Postal Service, 833 F.2d 128 (U.S. Court of Appeals for the 9th Circuit 1987) (`Failure to warn has frequently been a contributing factor in our decisions to reverse orders of dismissal’).

The Court is aware that no such warning has been given to Plaintiff-largely because the extent of Plaintiff's misconduct was not made known to the Court prior to this latest round of motions.
Watkins v. Infosys, supra. 
He went on to point out that,
[u]pon consideration of the five factors announced by the Ninth Circuit, the Court finds that three weigh in favor of dismissal and two do not. While it's an incredibly close call, the Court prefers to address this case, finally, on its merits. As such, Defendant's motion for the sanction of dismissal . . . is hereby DENIED.
Watkins v. Infosys, supra. 
The judge then took up the defendant’s Motion for Summary Judgment explaining that
Plaintiff was hired by Infosys Consulting, Inc. in 2005. . . .  In 2011, Infosys Consulting, Inc. was merged into Defendant's Management Consulting Services (`MCS’) group. . . . Plaintiff became a `Senior Principal’ in the MCS department in 2007. . . . In April, 2012, Plaintiff was promoted -- despite not meeting the initial requirements of the job posting -- to head the Management and Consulting Skills Department (`Head—MCSD’), a position housed in the Education & Research (“E & R”) group. . . . A company-wide reduction in force led to the elimination of Plaintiff's position in August 2013. . . .

Plaintiff's complaints of discrimination are three-fold: she alleges (1) that she was wrongly denied an increase in compensation when assuming the Head—MCSD position, (2) that she was wrongly denied a title, and (3) that her termination was discriminatory in nature.
Watkins v. Infosys, supra. 
He then analyzed each allegation in turn, beginning with compensation.  Watkins v. Infosys, supra.  The judge began by explaining that Infosys assigns
its employees two `levels;’ a `Job Level’ to designate their position level within the company, and a `Personal Level’ identifying an individual employee's compensation relative to others. . . . Whereas the Job Level is connected with each given position, an employee's Personal Level pertains to his or her compensation, follows them individually, and is subject to change during a `compensation review cycle.’ . . . It is not unprecedented for an employee to have a Job Level incongruent with her Personal Level. . . .

Plaintiff entered into her role as Head—MCSD in the E & R group in July, 2012. . . . Because hers was an internal promotion, pursuant to Defendant's policy, Plaintiff was not eligible for an increase in her Personal Level until the next `compensation review cycle.’ . . . Accordingly, while Plaintiff's Job Level increased to 8 by virtue of the position, her Personal Level remained a 7. . . .

Plaintiff was dissatisfied with her compensation upon entering her new position. Multiple times, she inquired about a compensation increase and, accordingly, an increase in her Personal Level. . . . Plaintiff contends that between July and September of 2012 her supervisor, Strikantan Moorthy, verbally promised her an eventual compensation increase commensurate with new MCS partners. . . . No writing memorializes this agreement -- and Plaintiff does not contend that such writing exists. . . . Subsequent e-mail communication from Mr. Moorthy confirmed that Plaintiff's new Job Level was an 8, but was silent with respect to her Personal Level. . . .

In July 2013, a compensation review cycle took place. . . . Plaintiff's compensation was reviewed. . . . It was then determined that Plaintiff's compensation, which carried over from her previous department where employees are paid more, was already consistent with her new position. . . .
Watkins v. Infosys, supra. 
The judge then analyzed Watkins’ arguments concerning her title, noting, initially, that
[i]n addition to the designations that accompany an employee's Job Level and Personal Level, Defendant also recognizes certain employees by way of a title, such as Associate Vice President. . . . Based on specific criteria, Defendant holds a `title-holder’ recognition process about once a year. . . . For positions based in the U.S., a partnership selection process supplants the `title-holder’ recognition process. . . . This process was not undertaken in the company at all during 2012. . . .

Earlier in her career with Defendant, Plaintiff aspired to move up in the company hierarchy from Senior Principal to a `partner’ in the MCS department, a desire she expressed beginning around 2008. . . . The partnership process, roughly equivalent to a `title-holder’ process in Defendant's non-U.S. locations, typically occurs about once per year. . . . The process includes a self-nomination form, due diligence review by a selection committee of partners, and-if deemed a good candidate-a presentation to the company's partners. . . . Plaintiff began to seek consideration for a partner position for the first time in 2011, with the understanding that the process would begin in February 2012. . . . It was communicated to Plaintiff that she was eligible to be considered for a partner role in 2012. . . .

Before undergoing that process, however, the Head—MCSD position was created. . . . In April 2012, Plaintiff was selected for that position despite not meeting the requirements of the initial job posting. . . . Having received this promotion, Plaintiff withdrew herself from consideration for partner. . . . At that time, her candidacy for the title of partner was in the due diligence stage. . . .

While Plaintiff withdrew herself from the partner selection process after being selected as Head—MCSD in 2012, she continued to seek a title after assuming that role. . . . In June of 2013, Plaintiff asked Mr. Moorthy about being considered for a title. . . .In July 2013, it was determined that Plaintiff was not eligible to be considered for a title because of her most recent performance rating. . . .
Watkins v. Infosys, supra. 
And, finally, he analyzed termination:
A change in company leadership in June 2013 led to a cost reduction initiative. . . . This led to a global reduction in force eliminating approximately two hundred positions across various locations and departments. . . . The positions eliminated included all ten high-paying E & R positions: of these four were in the United States, two were in the United Kingdom, and four were in China. . . . Consequently, Plaintiff's position was eliminated. . . .

When Plaintiff received confirmation that her position would be eliminated, Nandita Gurjar, the new head of the E & R group, offered either to seek opportunities for Plaintiff in India or provide her with a severance package. . . . Plaintiff did not express openness to working in India. . . . Rather, Plaintiff was authorized to apply for positions in other departments within the company by September 15, 2013. . . .The procedures implemented in Defendant's cost-optimization process allowed employees whose positions had been eliminated to apply for other open jobs at their Job Level. . . . Plaintiff was allowed to apply at either a Job Level 7 or 8, in a relaxation of the policy. . . . Plaintiff was considered for two positions. . . .Of those two, she and the interview team agreed that one was not a good fit. . . . She was not considered a fit for the second position based on its location. . . .Finally, a partner in the MCS group looked into using an available hiring slot to find a position for Plaintiff, but the MCS group was itself downsizing and unable to accommodate a new hire. . . .

On September 3, 2013, Plaintiff filed an internal complaint alleging national origin discrimination, breach of promise, retaliation, wrongful termination, and wage discrimination. . . . A third-party investigator concluded that Defendant's reduction in force efforts were supported by legitimate reasons. . . .
Watkins v. Infosys, supra. 
The judge then analyzed whether Infosys’ motion for summary judgment in its favor, which would end the litigation, should be granted.  Watkins v. Infosys, supra.  As he noted, under Rule 56 of the Federal Rules of Civil Procedure, a judge should issue summary judgment if (i) no “genuine issue of material fact” is in dispute and the party moving for summary judgment is entitled “to judgment as a matter of law.”  In other words, there is no need for a trial.  The judge began his analysis by explaining that
Plaintiff alleges four claims: (1) race/national origin discrimination in violation of the Revised Code of Washington § 49.60.180, (2) discrimination in compensation, job status, and terms and conditions of employment, presumably in violation of the same, (3) retaliation in violation of the Revised Code of Washington § 49.60.210 and (4) breach of promise of specific treatment. . . .  The Court addresses these claims in two stages: turning first to the discrimination claims, all of which fail for lack of a prima facie case, and second to the breach of promise claim which fails as a matter of law.
Watkins v. Infosys, supra. 
The judge then pointed out that, when a Washington state court is ruling on a claim for discrimination, it uses the analysis the U.S. Supreme Court articulated in McDonnell Douglas v. Green, 411 U.S. 792 (1973).  Watkins v. Infosys, supra.  He noted that the
McDonnell Douglas framework first requires a prima facie showing that: `(1) plaintiff is a member of a protected class; (2) plaintiff applied for [a benefit or treatment] and was qualified to receive it; (3) the [benefit or treatment] was denied despite being qualified; and (4) defendant approved [the benefit or treatment] for a similarly situated party during a period relatively near the time plaintiff was denied [the benefit or treatment].’ Riehl v. Foodmaker, Inc., 15 Wash.2d 138 (Washington Supreme Court 2004); Gamble v. City of Escondido, 104 F.3d 300 (U.S. Court of Appeals for the 9th Circuit 1997). After the plaintiff proves her prima facie case, the burden shifts to the defendant to articulate a `legitimate, nondiscriminatory reason for its action.’ Gamble v. City of Escondido, supra.
Watkins v. Infosys, supra. 
The judge went through the McDonnell Douglas factors with regard to Watkins’ compensation, her title and her termination.  Watkins v. Infosys, supra.  He found that she had shown she belongs to a protected class, but could not “establish the remainder of a prima facie case.”  Watkins v. Infosys, supra.  I will not summarize his analysis here because this is already a long post and because you can, if you are interested, find the full opinion here.

The judge ultimately granted Infosys’ motion for summary judgment as to Watkins’ first three claims, i.e., her compensation, title and termination.  Watkins v. Infosys, supra.  He also granted summary judgment as to Watkins’ claim of breach of promise concerning an oral promise allegedly made to her.  Watkins v. Infosys, supra.  The rulings should therefore end the case; Watkins can always appeal the rulings, of course, and if she won on some or all of the issues, the case would presumably be resuscitated. Watkins v. Infosys, supra. 

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