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Destroying investigatory notes merits adverse jury instruction in whistleblower suit

By Lorene D. Park, J.D.

Considering evidence that, before an employer’s investigator destroyed his notes concerning an employee’s purported misrepresentations, he was apprised by email that she was considering litigation over her termination and wanted all relevant documents, a federal court in Montana concluded that he willfully destroyed those notes and spoliation sanctions were warranted. However, the court refused to grant default judgment as requested by the employee and instead found it appropriate to allow her an adverse inference jury instruction. She was prejudiced by the destruction of the notes but could still support her pretext argument with other evidence that the investigator fabricated the alleged misrepresentations underlying her discharge (Renner v. Takeda Pharmaceuticals U.S.A., Inc., January 12, 2017, Christensen, D.).

Fired over records of health provider visits. The day she was fired, the pharmaceutical sales rep received a call from the employer’s regional HR manager and its investigator, during which they confronted her about alleged inconsistencies in her records of sales activities. In her termination letter, the employer stated that she was fired because she failed to maintain accurate records and misrepresented times and dates for meetings with healthcare professionals. The letter named four providers who were allegedly contacted by the investigator and told him they were not in their offices on the dates they were supposedly visited by the employee.

Filing suit, the employee claimed this was pretext and she was really fired because she refused to engage in off-label marketing, an “illegal sales tactic” where drug manufacturers promote drug uses that are not specified on the product label in order to avoid regulatory oversight. According to the employee, the employer manufactured the alleged misrepresentations to fire her.

Providers didn’t talk to investigator. As evidence, she said she contacted the four healthcare providers identified in the letter, and three said they were at the office on the days in question. The fourth could not confirm because she no longer had her records. All four signed affidavits stating they never spoke to the investigator or any other representative from the employer.

Investigator’s notes destroyed. In deposition, the investigator testified that he did not actually speak to the providers, but spoke to office managers or receptionists. He could not recall their names or the specific dates, and had not recorded those details. Also, while he took handwritten notes during the calls, he destroyed them after submitting his official report. The notes he took when he questioned the employee were also destroyed.

Sanctions for spoliation. Moving for sanctions, the employee argued that the investigator willfully destroyed his notes to spoliate relevant evidence and that she was materially prejudiced because she could no longer determine if there were inconsistencies or errors between his notes and the official report. She requested default judgment as a sanction.

Investigator acted willfully. It was undisputed that the investigator intentionally destroyed his notes between June 4, 2015 (the day he submitted his final report) and June 10 (the day he said he was notified of the litigation hold). However, he claimed he lacked express notice and was merely following ordinary company practices. In response, the employee pointed to a May 29 letter her attorney sent to the employer asking that all documents concerning her employment be kept due to potential litigation. In addition, there was a June 2 email from HR to the investigator stating that the employee had retained counsel and wanted her file. And the next day, the employer’s attorney emailed the HR official, discussing how Montana law allowed the employee to receive her records and asking the investigator to pull her “security file” and he responded the same day.

Based on the foregoing, the court concluded that the investigator willfully destroyed his notes with knowledge that they could be relevant to upcoming litigation.

Employee was prejudiced. The court further determined that the employee was prejudiced by the destruction of notes from her May 15, 2015 interview, though not to the extent she claimed. She argued she could no longer determine the precise questions she was asked or her answers but she was present during the interview and could presumably rely on her memory to challenge the investigator’s version, though his notes would have provided a fuller picture.

As to the notes from his alleged calls to the healthcare providers, the employee was significantly prejudiced. The main issue was whether she was fired for good cause due to misrepresentations of the dates she visited the providers. The investigator’s claim that he called and confirmed her dates were wrong was “severely undermined” by the providers who said they were in their offices on the relevant dates. Moreover, the providers swore they never spoke to the investigator or any other representative of the employer. The investigator’s notes could have included additional details about who he called and when.

Adverse inference instruction. The only question that remained was the appropriate sanction, taking into account the public’s interests, the court’s need to manage its dockets, the prejudice to the employee, and the availability of less drastic sanctions. In the court’s view, there was no way to measure prejudice to the employee from the destruction of notes. For example, it could not determine if important details were left out of the final report or if the investigator made up his calls to the providers. That said, the absence of the notes did not make a “rightful” decision impossible. The providers’ testimony still undercut the investigator’s credibility and version of events. In the end, the court decided to impose an adverse inference jury instruction.