MEMORANDUM AND ORDER Plaintiff EBIN New York, Inc. (“Plaintiff”), initiated this case against Defendants SIC Enterprise, Inc. (“SIC”) and CLEO Beauty (collectively referred to as “Defendants”)1 on February 20, 2019. (See Complaint (“Compl.”), ECF No. 1.) Plaintiff seeks, inter alia, damages for trade dress violation and unfair competition pursuant to the Lanham Act, 15 U.S.C. §§1114 and 1125, 29 U.S.C. §1338(b). (Id. 3; see also Third Amended Complaint (“TAC”), ECF No. 75, 3.) Presently before the Court is Defendants’ motion for sanctions based on Plaintiff’s alleged spoliation of electronically stored information (“ESI”). (See Defs.’ Mot. for Sanctions, ECF No. 86.) For the reasons discussed herein, Defendants’ motion for sanctions is denied. FACTUAL BACKGROUND AND PROCEDURAL HISTORY2 This case concerns alleged trademark violations by Defendants, whom Plaintiff alleges have, among other things, sold a hair product with packaging that is similar to and closely resembles the trade dress of Plaintiff’s products in shape, design, color, price, and packaging. (TAC, ECF No. 75,
18-86, 91.) In November 2016, John Park, president of Plaintiff, learned about Defendants’ hair product, Edge Booster, and believed at that time that Defendants were committing trademark violations. (See Nov. 23, 2021 Hr’g Tr., ECF No. 90, at 4:21-25; John Park Dep. Tr., ECF No. 86-1, at 182:14-17; John Park Decl., ECF No. 76, 1.) As a result, Mr. Park “contacted counsel and discussed the matter as early as 2017.” (Nov. 23, 2021 Hr’g Tr., ECF No. 90, at 4:21-25; see also John Park Dep. Tr., ECF No. 86-1, at 183:21-25.) Plaintiff filed a complaint to initiate the case on February 20, 2019. (See Compl., ECF No. 1.) Also in February 2019, Plaintiff instituted a litigation hold. (Defs.’ Mot. for Sanctions, ECF No. 86, at 1 (citing John Park Dep. Tr., ECF No. 86-1, at 180:2-14, 182:14-17, 182:20-25, 183:21-25); Pl.’s Resp., ECF No. 87, at 1 n.2.) As part of the litigation hold,3 Plaintiff sent a letter to its customers instructing them of the following: You may be aware it can be critical in any litigation to retain documents relevant to the disputes at issue, including your records of purchases and sales of EBIN’s 24 Hour Edge Tamer® and any other products that may infringe upon EBIN’s intellectual property rights, such as Edge Booster items, supplied in confusingly similar packaging. (Litigation Hold, ECF No. 86-5, at 3.) On September 4, 2019, the Honorable Peggy Kuo set a discovery schedule and a date for a settlement conference. (Sept. 4, 2019 ECF Minute Entry, ECF No. 49.) I. Defendants’ Motion to Compel On April 22, 2020, around three months after a settlement conference before Judge Kuo in which the parties did not reach a settlement, Defendants filed a motion to compel. (Jan. 27, 2020 ECF Minute Entry; Defs.’ Mot. to Compel, ECF No. 61.) In their motion to compel, Defendants sought an order directing Plaintiff’s “compliance with its discovery obligations and award[ing] Defendants their attorney[]s['] fee per FRCP 37(a)(5)(A).” (Defs.’ Mot. to Compel, ECF No. 61, at 1.) Defendants noted that, in response to Defendants’ first set of document requests, Plaintiff “only produced 402 pages of documents.” (Id.) Defendants also made the following representation: Plaintiff has not produced any responsive WeChat correspondence — despite its manufacturer’s confirmation that such communications occurred — or responsive text messages or communications through other media, e.g., KakaoTalk, through which Plaintiff’s sales representatives communicated with retailers regarding SIC’s allegedly infringing product. (Id.) According to Defendants, Plaintiff claimed “that it no longer ha[d] possession of its WeChat communication with its manufacturer.” (Id. at 1-2.) The parties began meeting and conferring on December 12, 2019, regarding Plaintiff’s failure to produce the WeChat and KakaoTalk messages and other documents. (Id. at 2.) Defendants represented to the Court that Plaintiff had engaged a discovery vendor on January 31, 2020, but still had not produced any of these documents by April 22, 2020. (Id.) On April 17, 2020, Plaintiff told Defendants that “it was too expensive to conduct e-discovery and review documents for production.” (Id.) Defendants also outlined why Plaintiff’s responses to Defendants’ Requests for Admission (“RFAs”) and interrogatories were deficient. (Id. at 2-3.) On April 24, 2020, Plaintiff filed a response to Defendants’ motion to compel. (Pl.’s Resp. to Mot. to Compel, ECF No. 62.) Plaintiff told the Court that the COVID-19 lockdown had impeded “Plaintiff’s ability to collect information and documents.” (Id. at 1.) Plaintiff also explained to the Court that it had told Defendants that “it would produce the documents and written responses by April 17, 2020.” (Id. at 2.) On the morning of April 16, 2020, Plaintiff requested that the discovery vendor process the documents for immediate production. (Id.) However, according to Plaintiff, the discovery vendor indicated there would be a delay in production of the documents.4 (Id.) Plaintiff still produced 99,749 pages of documents, along with written responses, on April 17, 2020. (Id.) Plaintiff argued that: “This production moot[ed] most of the issues raised in Defendants’ ‘motion to compel.’” (Id.) Finally, Plaintiff addressed Defendants’ contention that Plaintiff had not responded to several of Defendants’ interrogatories by arguing that Defendants sought “to compel disclosure and documents no longer in possession of Plaintiff (or of which Plaintiff is currently unaware).” (Id.) On April 29, 2020, Judge Kuo held a conference to discuss Defendants’ motion to compel. (See Apr. 25, 2020 ECF Scheduling Order; Apr. 30, 2020 ECF Minute Entry.) Plaintiff’s counsel represented that Plaintiff had collected, but not yet reviewed or produced, relevant ESI from some custodians and was attempting to collect ESI from other custodians. (See Apr. 29, 2020 Hr’g Tr., ECF No. 72-4, at 6:24-7:5; Defs.’ Mot. for Discovery, ECF No. 72, at 1; see also Apr. 30, 2020 ECF Minute Entry.) The Court granted Defendants’ motion to compel in part and denied the motion in part, directing the parties “to refine the scope and search terms for Plaintiff to review and produce electronically stored information.” (Apr. 30, 2020 ECF Minute Entry.) The Court also directed Plaintiff “to provide information relevant to the creation and possible deletion of relevant WeChat and KakaoTalk text messages.” (Id.) Finally, the Court directed Plaintiff “to respond fully to the requests for admission” and held that “Plaintiff must respond to the interrogatories.” (Id.) II. Defendants’ Motion for Discovery On August 27, 2020, the parties filed a letter to Judge Kuo by which Defendants requested “a briefing schedule on SIC’s motion to compel Plaintiff’s production of text messages, KakaoTalk messages, WeChat messages, and similar types of ESI responsive to SIC’s document requests.” (Defs.’ Mot. for Discovery, ECF No. 72, at 1.) In their motion, Defendants asserted that “Plaintiff has continually represented to SIC, and the Court, that it was collecting ESI from relevant custodians for review and production to SIC in response to SIC’s discovery requests.” (Id.) In June 2020, following the April 29, 2020 conference with Judge Kuo, Plaintiff requested and SIC agreed to help with finding a vendor to assist Plaintiff with the processing of the ESI it had collected and the collection of additional ESI. (Id. at 2.) Notwithstanding these efforts, in August 2020, in the parties’ joint letter to Judge Kuo, Defendants claimed that even though it had been nearly nine months since Plaintiff responded to SIC’s first set of document requests, Plaintiff had still not produced any text messages, KakaoTalk messages, WeChat messages or similar types of ESI. (Id.) In the August 2020 joint letter, Plaintiff responded that, with the assistance of Haystack, a discovery vendor, Plaintiff had collected the forensic imaging copy of the smartphones used by 13 individuals at Plaintiff’s business, including John Park. (Id.) Plaintiff further reported that these records “seemingly included WeChat and Kakaotalk messages” since it contained folders named “Kakaotalk” and “tencent” (the corporation behind WeChat). (Id.) However, Plaintiff represented that Haystack had informed Plaintiff’s counsel that “the WeChat and Kakaotalk messages extracted phone data cannot be reviewed because it is ‘encrypted’ and Haystack cannot ‘de-crypt’ the data for viewing.” (Id.) Plaintiff’s counsel informed defense counsel of this issue and defense counsel introduced Plaintiff to Setec, a vendor that Plaintiff then retained to help with de-encryption. (Id. at 2-3.) Although Setec advised Plaintiff’s counsel that it was able to de-encrypt the data and make the WeChat and Kakaotalk messages available for review in a pdf format, after processing the data from John Park’s phone, which resulted in 5,908 pages in pdf format, it was determined that the pdf file did not include the WeChat and KakaoTalk messages. (Id. at 3.) Setec’s representative advised Plaintiff’s counsel that “‘it is possible that the messages associated are not included within the collection we received from Haystack’ or that ‘the databases could be encrypted.’” (Id.) At that time, Plaintiff represented that it was attempting to resolve the issue. (Id.) On October 2, 2020, Judge Kuo held a conference to discuss the discovery dispute and Defendants’ anticipated motion to compel Plaintiff’s production of documents. (See Sept. 29, 2020 Scheduling Order; Oct. 6, 2020 ECF Minute Order; Oct. 2, 2020 Tr., ECF No. 78.) During the conference, defense counsel represented that “Mr. Park used WeChat and/or KaKao Talk for relevant communications between 2014 and 2017.” (Oct. 6, 2020 ECF Minute Order.) Plaintiff’s counsel represented, however, “that John Park’s WeChat and KaKao Talk messages prior to 2017 are not available[,] but did not provide an explanation.” (Id.) Plaintiff’s counsel also represented that: [Plaintiff's] original ESI vendor has extracted data from John Park’s phone but was not able to export communications conducted on the WeChat and KaKao Talk platforms to a reviewable format. A new vendor has been able to extract and process data from several other phones, but Plaintiff’s counsel has not reviewed them to determine whether the WeChat and KaKao Talk communications are included in those extractions. (Id.) At the end of the October 2, 2020 conference, Judge Kuo directed Plaintiff to provide those communications “or provide an affidavit, by October 8, 2020, from Mr. Park stating that those communications never existed, or explaining why he no longer has access to them.” (Id.; see also Oct. 2, 2020 Tr., ECF No. 78, at 27:3, 31:1.) In addition, Judge Kuo directed that: “If Plaintiff is unable to produce the documents because its ESI vendor cannot process the WeChat and/or KaKao Talk text messages, Plaintiff must file by October 8, 2020[,] an affidavit from its ESI vendor stating the reason that the data cannot be processed.” (Id.) The parties were also directed to meet and confer regarding a review and production schedule for the data if Plaintiff’s ESI vendor was able to process the relevant text messages; Plaintiff was directed to file that proposed production schedule by October 23, 2020. (Id.) III. John Park’s Declaration On October 8, 2020, Plaintiff filed a declaration on behalf of John Park5 to explain why he was “no longer in possession of the WeChat communications that [he] exchanged with the manufacturer of Edge Tamer (the ‘Manufacturer’) from 2014 through September of 2016.” (John Park Decl., ECF No. 76, 3.) At the time he filed his declaration, Mr. Park had two smartphones, “one for personal use and one for company use.” (Id. 4.) “[Mr. Park] used [his] personal smartphones for company business before [he] opened an account for a separate company phone and for about a year thereafter.” (Id. 6.) Because Mr. Park got his company phone in March 2017, it did not contain any data pre-dating March 2017. (Id.
