## Facts

- Hourly, non-exempt hospital employees brought a collective action alleging unpaid overtime based on an automatic meal-break deduction policy.
- Discovery disputes centered on the preservation and production of electronically stored information (ESI), including text messages and other data on mobile devices.
- The court appointed a special master to address ESI issues and related sanctions.
- The employer used multiple ESI sources, including internal databases not initially identified as repositories of potentially responsive information.
- Employees used both employer-provided smartphones (company-issued but usable for personal purposes) and personal smartphones for work communications under a BYOD practice.
- The employer did not implement an effective litigation hold covering mobile devices in a timely manner.
- Employer-issued devices were wiped before they were included in any litigation-hold effort, resulting in the loss of more than 26,000 messages.
- No litigation hold was issued addressing personal devices used for work, despite evidence that key custodians used those devices for work-related communications.
- The loss encompassed roughly two years of potentially relevant messages and other mobile-device ESI.

## Issues

1. Whether the employer’s duty to preserve relevant ESI extended to text messages and other data on both employer-issued and personally owned mobile devices used for work.
2. Whether the failure to implement and enforce timely litigation holds for those sources, leading to substantial data loss, constituted spoliation.
3. What sanctions were appropriate given the scope of loss, the degree of fault, and the resulting prejudice.

## Decision

- The special master concluded the employer had a duty to preserve relevant ESI, including data on employer-issued devices and BYOD devices used for work communications.
- The special master found that the employer failed to take timely and reasonable preservation steps and that significant ESI was lost due to wiping and replacement of devices.
- The special master determined the conduct was at least grossly negligent and, in certain respects, reflected reckless disregard of preservation obligations.
- The special master recommended severe sanctions, including default judgment on liability and an award of attorneys’ fees and costs tied to the discovery misconduct.
- In later proceedings, the district court declined to impose case-dispositive relief but imposed substantial monetary sanctions, while accepting core spoliation findings.

## Legal Principles

- Once litigation is reasonably anticipated or pending, a party must take reasonable steps to identify and preserve potentially relevant ESI across all repositories, including mobile devices used for work.
- A litigation hold must be timely, targeted to relevant custodians and systems (including mobile devices), and monitored to prevent routine deletion, wiping, or replacement from destroying relevant data.
- BYOD use does not remove work-related ESI on personal devices from preservation obligations when the devices are used for business communications relevant to the claims or defenses.
- Significant loss of relevant ESI caused by inadequate preservation measures may support spoliation sanctions; the severity of sanctions depends on fault, prejudice, and deterrence considerations.

## Conclusion

The special master found extensive spoliation arising from the employer’s failure to preserve mobile-device ESI in a workplace that relied on both company-issued and personal smartphones for work communications, and recommended severe sanctions based on substantial loss, culpable preservation failures, and resulting prejudice.


Small v. Univ. Med. Ctr. of S. Nev., No. 2:13-cv-00298-APG-PAL, 2014 WL 4079507 (D. Nev. Aug. 18, 2014)