Not Meeting The Duty to Preserve Can Be the Intent to Deprive

It is not the mistake itself that gets lawyers in trouble with judges. It is declaring something false as true that ends badly. 

In an FTC investigation action for alleged violations of debt relief services, the loss of phone recordings on Amazon Web Services (AWS) was pivotal to discovery requests. The thrust of the allegations was that the defendants made “deceptive representations” in recorded phone calls with consumers. The sanctions motion told the story of how and why the audio recordings were deleted from the defendants’ AWS account. United States v. Stratics Networks Inc., No. 3:23-cv-00313-BAS-KSC, 2026 U.S. Dist. LEXIS 30552, at *6-7 (S.D. Cal. Feb. 13, 2026)

Data Deletion Matters Timeline

The event timeline is critical to tell the data deletion story to the plaintiffs and the court: 

December 2020: FTC investigation begins.

February 19, 2021: FTC issued a Civil Investigative Demand ("CID") for audio recordings.

February 2023: Litigation begins.

November 2023: Defendants notified AWS account was overdue. Defendant asked IT to preserve the data on a drive or another platform that did not require payment. 

April 15, 2024, to May 15, 2024: Parties hold two Rule 26(f) conferences. 

Defendant received three additional alerts from AWS stating that their account was overdue and may be suspended for failure to make payments during the period between the Rule 26(f) conferences.

IT was not able to download the AWS data because the account was locked.

Defendants did not disclose the existence of the AWS server, the contents of the AWS server, or the issues they were experiencing with regard to access to the server at the Rule 26(f) conferences. 

May 27, 2024: Defendants sent another AWS overdue notice. 

July 10, 2024: Defendants sent another AWS overdue notice. 

Defendants had internal communications about attempts to download the AWS data.

July 11, 2024: Parties filed their Rule 26(f) Joint Discovery Plan ("Joint Discovery Plan"). 

Counsel affirmed in the "Joint Discovery Plan" that they had reviewed the Checklist for Rule 26(f) Meet and Confer Regarding Electronically Stored Information about the preservation of ESI. 

The checklist required the parties to discuss the preservation of ESI. 

Defendants fail to inform the court about the AWS preservation problems. 

August 2, 2024: Seventh AWS email stating overdue account may be suspended or terminated.

September 20, 2024: Plaintiff served its First Requests for Production ("RFP") that sought phone recordings. 

January 6, 2025: Defendants’ first production. No phone recordings included.

January 22, 2025: Defendants’ AWS account is terminated, and data is deleted for failure to make payments on the account.

January to March 2025: Production dispute begins. Defendants inform plaintiff that ESI cloud storage was “discontinued years ago.” 

March 5, 2025: Discovery motion filed over defendants' failure to produce the live call recordings. 

March 5, 2025: Internal email over whether prior defense counsel had AWS downloads. 

March 7, 2025: Court ordered defendants to produce all relevant documents by March 20, 2025.

March 28, 2025: Plaintiff claimed that the defendants represented there (1) "no audio recordings existed"; (2) the AWS data was deleted after the FTC investigation but before this litigation commenced; and (3) the AWS data was circulated among key custodians via email. 

May 21, 2025: Defendants represented to court that access to the cloud storage was lost in 2022. 

June 16, 2025: Court ordered defendants to produce all relevant non-privileged documents in their possession on or before July 7, 2025.

June 20, 2025: Defendants issued a subpoena to AWS regarding their account. 

AWS’s counsel informed defendants over email that their AWS account was deleted on January 22, 2025. 

Defendants responded to an email from the plaintiffs they did not have a “final answer” from AWS on their clients’ data. 

August 8, 2025: Defendants finally informed the plaintiff that AWS data was deleted and there would be no production. 

  Stratics Networks Inc., at *8-16. 

Bad News Does Not Age Like Fine Wine

United States Magistrate Judge Karen S. Crawford found that the defendants knew the AWS storage account was in jeopardy of deletion in November 2023. The defendants failed to preserve the recordings on the AWS server, despite receiving at least seven notifications over the course of a year. Those recordings were deleted nearly two years after the lawsuit was filed. The defendants waited a week before informing the plaintiffs that the recordings were deleted and would not be produced, putting the maxim that bad news does not get better with age to the test.  Stratics Networks Inc., at *16-17. 

The court found the defendants’ preservation of evidence was selectively applied. The defendants produced pre-recorded calls and call scripts. However, the failure to preserve the actual call recordings made it appear that less damaging evidence was preserved rather than evidence that would be more damaging. Stratics Networks Inc., at *26. These actions supported a finding that the defendants acted with the intent to deprive the plaintiffs of the call recordings. 

Judge Crawford explained that the defendants knew the AWS data was threatened with deletion for nonpayment of fees. The defendants knew the recordings were subject to the duty to preserve. These facts were enough for the court to find that the defendants acted with the intent to deprive the plaintiff of the AWS data. Stratics Networks Inc., at *26-27.

Judge Crawford recommended that District Judge Cynthia Bashant find: 

(1) Defendants had a duty to preserve the AWS data consisting of the recordings of live phone calls with consumers; 

(2) Defendants intentionally spoliated the AWS data to deprive the plaintiff of obtaining and using this information; 

(3) that the District Court should give an adverse inference instruction at trial that the jury must presume that the AWS data, specifically the recordings of live debt relief calls, was unfavorable to the defendants, with the specific language of the instruction to be decided by the District Court at the pretrial conference; and, 

(4) in the course of adjudicating any pre-trial, trial, and post-trial motions, the District Court should presume that the AWS data, specifically the recordings of live debt relief calls, contained information unfavorable to the defendants and favorable to the plaintiffs. 

 Stratics Networks Inc., at *27-28. 

The Onna Solution

Rule 37(e) serves as a reality check that ESI can be lost without malicious intent. Sometimes, data is just lost. Rule 37(e) provides options for mitigating the prejudice caused by lost ESI. Nevertheless, if there is a duty to preserve and unpaid data hosting bills, the failure to collect the ESI can show an intent to deprive by taking no action. Rule 37(e) provides options to correct nefarious conduct. 

The preferred path in litigation is to avoid a “whoops, we did not collect that data” situation.

Ways to avoid those situations include conducting robust interviews with clients to identify data sources for preservation. Onna can help corporate litigation and trial counsel ensure data is collected to meet the duty to preserve. 

Onna can collect data from Amazing Web Services. Onna's Amazon S3 acts as a bridge to access data hosted on AWS. Creating a connection requires access to the Amazon Management Console, the “bucket name” with the data, Access Key ID, Secret Access Key, and AWS region. For the complete step-by-step process of how to collect from AWS, please see Amazon S3_ How to Connect and Collect. 

No lawyer litigates a lawsuit where everything goes according to plan. Something unexpected always happens, like discovering an undisclosed data source. The challenge is deciding how to best confront the situation. No court is going to reward conduct that involves multi-year delays in collecting data with statements to the court that are objectively false. Those actions can result in finding a party acted with the intent to deprive the opposing party of ESI.