Barak v. Rooster's Guide & Outfitting Adventures, No. 19-cv-03556-RM-STV (D. Colo. May 01, 2023) arose from a joint venture to cultivate hemp on farmland in Mesa County, Colorado. Plaintiffs alleged that Defendants violated their duty to preserve evidence in the form of burning hemp grown as part of the venture and deleting relevant text messages.

Plaintiffs agreed to provide financing for the venture while land and labor would be provided by Defendant, Rooster's Guide & Outfitting Adventures, LLC. Things proceeded as planned for several months; however, each side ultimately accused the other of breaching their contractual obligations and stealing the harvested product, thereby denying the other their share of the anticipated profits from the joint venture.

During motions practice, Plaintiffs moved for an adverse inference instruction on the grounds that Defendants violated their duty to preserve by destroying relevant evidence. The evidence that was allegedly destroyed included the harvested product and CBD oil, as well as encrypted text messages between the Defendants in the days before the harvest was allegedly stolen. The messages were sent via the Signal app.

The Court ruled against Plaintiffs, finding that the instructions and a spoliation sanction would be improper. In its reasoning, the Court explained that a “spoliation sanction is proper where (1) a party has a duty to preserve evidence because it knew, or should have known, that litigation was imminent, and (2) the adverse party was prejudiced by the destruction of the evidence.”

Plaintiffs argued that the duty to preserve was triggered during a heated phone call where one of the Plaintiffs informed one of the Defendants that “he and his lawyer would be suing and that [Defendants] better not be destroying or selling off the evidence." The Court found that this exchange fell short of the "unequivocal notice of impending litigation" necessary to give rise to a duty to preserve. The Court reasoned that the duty to preserve is triggered by either the filing of a lawsuit or earlier “if a party has notice that future litigation is likely," and that the duty to preserve requires more than a mere possibility of litigation.

Regarding the text messages, the Court found that Plaintiffs failed to show deletion of messages after they knew or should have known that litigation was imminent. The Court found no evidence that the Signal app preserved past messages and that the Plaintiffs produced no evidence that any Defendant acted with the intent to deprive them of the messages.

As for the Plaintiffs’ contention that the burning of the hemp was destruction of evidence, the Court found that Defendants were merely complying with applicable regulations, as they were instructed to do by authorities, due to the product’s high THC content.

Finally, the Court denied Plaintiffs’ motion for adverse inference instructions because Plaintiff failed to show that Defendants acted in bad faith, and “overly broad adverse inference instructions that would practically ensure [Plaintiffs] prevailed on disputed issues” were therefore not appropriate.

This case demonstrates the unpredictability of courts in determining when the duty to preserve arises. Different courts utilize varying standards to determine when duties to preserve arise, including when litigation is “reasonably foreseeable,” when litigation is “pending,” or, as was the case here, when litigation is “imminent” or “likely.” Parties should generally err on the side of more and earlier preservation, because it is hard to predict in advance what preservation trigger any particular court will apply.