Background
The Navy awarded JVP & C. Development S.A.–Ergotem S.A. a contract to construct a medical and dental facility at Camp Lemonnier, Djibouti, and awarded Ergotem S.A. a separate contract to construct a fuel-storage facility there. After the Navy terminated both contracts for default in January 2023, the contractors challenged the terminations and sought extensions of their performance periods. The Court of Federal Claims consolidated the cases.
During discovery, the government learned that the email inbox of plaintiffs’ Djiboutian counsel, Ms. Guerinot, had been lost during a change in hosting providers. The government sought an adverse inference that the missing emails would show local labor disputes caused plaintiffs’ personnel to encounter entry and visa problems in Djibouti. It also sought sanctions over allegedly missing individualized timekeeping records and moved to compel materials withheld as privileged.
The Court’s Holding
The court denied without prejudice the government’s request for an adverse inference. Plaintiffs had a duty to preserve Ms. Guerinot’s emails and took no reasonable preservation steps, and the record contained substantial evidence suggesting an intent to deprive the government of the emails. But discovery remained ongoing, and the government had not yet shown which relevant information was irretrievably lost rather than available from other sources. Nor had it provided sufficient evidence that the missing emails contained the information it attributed to them.
The court also rejected sanctions based on the timekeeping records because the government had not shown that additional individualized records existed or had been located and withheld. It denied the motion to compel privileged materials as well. Plaintiffs had not placed privileged legal advice at issue, the government had not made the required prima facie showing for the crime-fraud exception, and plaintiffs’ intentional waiver concerning communications involving Dr. Bersing did not justify a broader subject-matter waiver on fairness grounds. The government may renew its motions after discovery is completed.
Key Takeaways
- Even evidence strongly suggesting intentional spoliation does not support sanctions under RCFC 37(e) unless the lost information cannot be restored or replaced through further discovery.
- A court cannot sanction a party for failing to produce records merely because the requesting party assumes those records must exist.
- Disclosing privileged communications involving one participant does not automatically waive privilege over every undisclosed communication addressing related subjects; fairness must require the broader disclosure.
Why It Matters
The decision emphasizes that severe discovery sanctions require proof not only of deficient preservation efforts and culpable intent, but also of actual, irremediable information loss. Courts will not use an adverse inference to supply evidentiary support for a movant’s otherwise speculative theory while alternative discovery remains available.
For government-contract litigants, the ruling also underscores the importance of prompt written litigation holds, attorney-directed collections, and careful privilege practices. Although plaintiffs avoided sanctions at this stage, the court’s findings leave them exposed to a renewed motion once discovery establishes what information cannot be recovered.