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Tipp v. Adeptus Health Inc.

United States District Court, D. Arizona

January 17, 2018

Michelle Tipp, Plaintiff,
Adeptus Health Incorporated, et al., Defendants.


          David G. Campbell United States District Judge

         Plaintiff Michelle Tipp has sued Defendants Adeptus Health Incorporated; Adeptus Health Phoenix Holdings, LLC; Adeptus Health Management, LLC; and AGH Laveen, LLC, for discrimination and retaliation in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq. (“Title VII”). Doc. 24. The Court stayed the case against all Defendants except AGH Laveen (“Defendant”) because of an ongoing bankruptcy proceeding. Doc. 69. Plaintiff and Defendant separately move for summary judgment on Plaintiff's Title VII claims. Docs. 76, 78. Plaintiff also seeks a spoliation sanction. Doc. 78. The motions are fully briefed, and oral argument will not aid the Court's decision. See Fed. R. Civ. P. 78(b); LRCiv 7.2(f). For the reasons stated below, the Court will deny both motions.

         I. Background.

         The following facts are undisputed. Defendant is an Arizona-based hospital where Plaintiff began working in January 2015 as a permanent, full-time case manager. Doc. 77 ¶¶ 5, 23; Doc. 87 ¶¶ 5, 23. Plaintiff's supervisor was Kimothy Sparks. Doc. 77 ¶ 27; Doc. 87 ¶ 27. In June 2015, Plaintiff complained to Defendant's CEO, Robert Honeycutt, about Mr. Sparks's unresponsiveness. Doc. 77 ¶ 31; Doc. 87 ¶ 31. Mr. Honeycutt spoke with Mr. Sparks to address the problem. Doc. 77 ¶ 32; Doc. 87 ¶ 32. In August 2015, Plaintiff again complained to Mr. Honeycutt about Mr. Sparks's unresponsiveness. Doc. 77 ¶ 33; Doc. 87 ¶ 33. In both August and September 2015, Plaintiff asked that Mr. Honeycutt consider transferring her to a different supervisor. Doc. 77 ¶¶ 34-35; Doc. 87 ¶¶ 34-35.

         On October 12, 2015, human resources representative Andrea Scott interviewed Plaintiff about her complaint and transfer request. Doc. 77 ¶ 36; Doc. 87 ¶ 36. Plaintiff conveyed that Mr. Sparks was not communicating well or addressing her professional needs, which affected her performance. Doc. 77 ¶ 37; Doc. 87 ¶ 37. Plaintiff made no allegation of sexual harassment against Mr. Sparks. Doc. 77 ¶ 39; Doc. 87 ¶ 39.

         After an upsetting interaction with Mr. Sparks on October 16, 2015, Plaintiff offered her resignation to Mr. Honeycutt. Doc. 79 ¶ 31; Doc. 87 ¶¶ 96-97; see Doc. 81 (failing to controvert). Mr. Honeycutt refused to accept it, stating that Plaintiff was an asset to the organization. Id.

         On October 22, 2015, Ms. Scott informed Plaintiff that she would remain under the supervision of Mr. Sparks, who had promised to improve his supervision. Doc. 77 ¶ 40; Doc. 87 ¶ 40. Upset by this decision, Plaintiff excused herself from the meeting with Ms. Scott. Doc. 79 ¶ 35; Doc. 87 ¶ 101; see Doc. 81 (failing to controvert). Later that day, Plaintiff met with Ms. Scott again to allege - for the first time - that Mr. Sparks sexually harassed her. Doc. 77 ¶ 41; Doc. 87 ¶ 41. To support her allegation, Plaintiff shared text messages she received from Mr. Sparks and described some of his conduct. Doc. 79 ¶¶ 36-37; Doc. 87 ¶ 102; see Doc. 81 (failing to controvert). Ms. Scott informed Plaintiff that she should work from home while Ms. Scott investigated the complaint. Doc. 79 ¶ 38; Doc. 87 ¶ 103; see Doc. 81 (failing to controvert). Ms. Scott told Plaintiff that she would call her with an update on October 23, 2015. Id.

         Ms. Scott interviewed Mr. Sparks and Plaintiff's co-workers. See Doc. 79-1 at 63-68. These interviews suggested that Mr. Sparks slept at Plaintiff's residence on two occasions, they shared weekly dinners together, and Plaintiff was known to joke about being pregnant with Mr. Sparks's child. See id.

         At a meeting on October 26, 2015, Defendant's Vice President of Human Resources, Traci Bowen, informed Plaintiff that Mr. Sparks had been fired. Doc. 76-3 at 18-19; Doc. 87-1 ¶ 29. Ms. Bowen then explained that Plaintiff was likewise terminated because of her lack of transparency in making the sexual harassment complaint. Doc. 76-3 at 31-32; Doc. 87-1 ¶ 29.

         II. Legal Standard.

         A party seeking summary judgment “bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Summary judgment is appropriate if the evidence, viewed in the light most favorable to the nonmoving party, shows “that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). Summary judgment is also appropriate against a party who “fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Celotex, 477 U.S. at 322. Only disputes over facts that might affect the outcome of the suit will preclude the entry of summary judgment, and the disputed evidence must be “such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

         III. Preliminary Issues.

         A. Defendant's Failure to Comply with Local Rule 56.1.

         Plaintiff's motion for summary judgment includes a separate statement of facts as required by Local Rule of Civil Procedure 56.1(a). Doc. 79. Defendant's response includes a supplemental statement of facts, but does not include a controverting statement of facts as required by Local Rule 56.1(b). Doc. 81. Defendant has thus failed to controvert any of Plaintiff's factual assertions. Plaintiff asks the Court to treat the facts she asserts as admitted for purposes of her motion. Doc. 88 at 1-2. This Court has imposed such a sanction where the responding party fails to file any statement of facts whatsoever. See Kizzee v. Walmart, Inc., No. CV10-0802-PHX-DGC, 2011 WL 3566881, at *2 (D. Ariz. Aug. 15, 2011). In this case, however, Defendant did offer supplemental facts (Doc. 81) and a comprehensive statement of facts - on the same issues - in support of its own motion (Doc. 77). In light of these submissions, the Court will not treat all of Plaintiff's factual assertions as admitted, but instead will look to Defendants' factual statements to determine whether Defendant has controverted specific factual assertions.

         B. Spoliation.

         Plaintiff seeks a directed verdict or, alternatively, an adverse inference jury instruction, for Defendant's destruction of Ms. Scott's handwritten notes of her investigation. Doc. 78 at 6-9. On November 17, 2015, Plaintiff sent a litigation hold notice to Defendant. Doc. 79 ¶ 77; Doc. 79-2 at 16-20; see Doc. 81 (failing to controvert). On the following day, Ms. Bowen notified Mr. Honeycutt and Ms. Scott via email of the litigation hold. Doc. 79-2 at 22. She stated that they must “hold on to any files, notes or anything else related to [Plaintiff] and our investigation of her claim.” Id.

         Ms. Scott used a notebook to record notes during her various meetings as a human resources representative. Doc. 79-4 at 4. This notebook included, among other things, notes regarding Plaintiff's sexual harassment complaint. See Id. at 4-5. Yet when Ms. Scott had used all of the remaining pages of the notebook in March, April, or May 2016, she shredded the notebook in violation of Defendant's duty to preserve. Id. Although she had converted her notes into a computerized report, Ms. Scott never photocopied or scanned the handwritten version before shredding it. Id.

         “The failure to preserve [evidence], once the duty to do so has been triggered, raises the issue of spoliation of evidence and its consequences.” Surowiec v. Capital Title Agency, Inc., 790 F.Supp.2d 997, 1005 (D. Ariz. 2011) (citation omitted). Spoliation is the destruction or material alteration of evidence, or the failure to otherwise preserve evidence, for another's use in litigation. Id. A party seeking sanctions for spoliation of electronically stored information (“ESI”) must address the factors set forth in Rule 37(e) of the Federal Rules of Civil Procedure. That rule, which was amended on December 1, 2015, identifies the circumstances under which various kinds of sanctions can be imposed for the loss of ESI. For spoliation of evidence other than ESI, such as in this case, the common law continues to control, and the party seeking sanctions must prove: (1) the party having control over the evidence had an obligation to preserve it when it was destroyed or altered, (2) the destruction or loss was accompanied by a culpable state of mind, and (3) the evidence that was destroyed or altered was relevant to the claims or defenses of the party that sought discovery of the evidence. Surowiec, 790 F.Supp.2d at 1005 (internal citation omitted).

         A related issue - prejudice resulting from loss of the evidence - is also relevant when addressing sanctions for the loss of non-ESI evidence. Although some courts have presumed prejudice upon a showing of bad faith or gross negligence, see, e.g., Pension Comm. of Univ. of Montreal Pension Plan v. Banc of Am. Secs., LLC, 685 F.Supp.2d 456, 467-68 (S.D.N.Y. 2010), other cases - the better-reasoned cases, in this Court's view - require a showing of actual prejudice, noting that such a showing “is an important check on spoliation allegations and sanctions motions, ” Rimkus Consulting Grp., Inc. v. Cammarata, 688 F.Supp.2d 598, 616-18 (S.D. Tex. 2010).

         Defendant concedes that it had an obligation to preserve Ms. Scott's handwritten notes. Doc. 80 at 6-8.

         Plaintiff argues that the handwritten notes were relevant because they included contemporaneous impressions of Ms. Scott's investigation. Doc. 78 at 8-9; Doc. 88 at 4. Ms. Scott testified that the handwritten notes reflected “the entire investigation” into Plaintiff's claims, including witness interviews. Doc. 81-4 at 7-8. She testified that she created a typed “copy” of the notes before they were shredded, and that the typed version included “everything that was in my handwritten notes.” Doc. 81-5 at 10, 12. Defendant argues that the handwritten notes are not relevant because Plaintiff has received the typed version - the same version on which Ms. Bowen relied in making the termination decision. Doc. 80 at 7-8. The Court does not agree. Ms. Scott's assertion that her typed notes include a complete copy of her handwritten notes is not an assertion Plaintiff must accept on faith, without testing against the original notes. The handwritten notes may have included additional or inconsistent information that would be relevant to this case.

         With respect to culpability, Plaintiff contends that Defendant's failure to preserve the handwritten notes or discipline Ms. Scott for destroying them constitutes bad faith (Doc. 78 at 9; Doc. 88 at 4-5), but the Court is not persuaded. Defendant issued a litigation hold notice that included notes. Doc. 79-2 at 22; Doc. 81-5 at 11. When asked why she destroyed her notebook of handwritten notes, Ms. Scott testified:

Because it was a running log, it didn't occur to me when I shredded it, when it got full that - of this e-mail [the litigation hold notice] because I forgot it was even sent at that point, and in addition, I had already typed up everything that ...

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