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Failure to Preserve Data on Various Devices Causes Special Master to Recommend Default Judgment – eDiscovery Case Law


In Small v. University Medical Center of Southern Nevada, No. 2:13-cv-00298-APG-PAL (D. Nev. Aug. 18, 2014), Special Master Daniel B. Garrie, calling the defendant’s widespread failure to preserve data a “mockery of the orderly administration of justice”, recommended that the court enter an order of default judgment, along with further sanctions, in favor of the plaintiffs.

This employment law dispute had required to date “a fully briefed motion to compel with accompanying oral argument; seven discovery status conferences over eight months before Magistrate Judge Peggy A. Leen; the appointment of Special Master Daniel B. Garrie; five in person, all day hearings conducted by the Special Master; 14 telephonic hearings before the Special Master; over 20 declarations submitted by employees and agents of UMC (many supplementing or amending prior incomplete or inaccurate declarations); and written submissions by counsel and ESI experts.”

A partial chronology within the Special Master’s report demonstrated that the defendant did not issue or put any litigation hold in place until after the plaintiffs had deposed a defendant witness, which was more than 250 days after the plaintiffs initiated the action.  As Special Master Garrie noted, “In fact, these proceedings confirmed UMC has no ‘litigation hold’ policy, and did not institute any "litigation hold" procedures in response to this lawsuit.”

The defendant had two policies for mobile devices: a “company-issued, personally enabled” (COPE) device policy and a “bring your own device” (BYOD) policy where employees used personal smart phones. Ultimately, it was determined that the devices under the COPE policy were not put under litigation hold until after a number of the devices were wiped clean, which resulted in the loss of 26,310 messages. As for devices under the BYOD policy, the defendant did not issue a litigation hold on the devices at all, which resulted in the loss of approximately two years of ESI that would have been potentially responsive to the case. 

The defendant also failed to identify and preserve network file shares, two laptops belonging to key custodians and work computers used by 24 of the 27 custodians, among other data sources.  As Special Master Garrie noted, “Not a single UMC executive took any of the steps necessary to ensure the preservation of evidence. No UMC executive took responsibility for instituting or enforcing a ‘litigation hold,’ or otherwise acting to ensure the preservation of documents in this case.”

As a result, Special Master Garrie recommended sanctions, stating, “Defendant UMC's extraordinary misconduct and substantial and willful spoliation of relevant ESI in this case resulted in substantial prejudice to Plaintiffs and the classes, and misled Plaintiffs, the Court, and the Special Master on numerous discovery issues…The level of intentional destruction of evidence by UMC shocks the conscious. As such, as to the 613 Opt-In Plaintiffs, default judgment should be entered against UMC pursuant to Rule 37(b)(2)(A)(iii) & (vi) and the Court's inherent powers.”  He also stated his belief that “Plaintiffs are entitled to sanctions in the form of specific factual findings relating to class certification, and a rebuttable presumption regarding certain merit issues.”  Finally, he recommended that the defendant “be ordered to reimburse Plaintiffs' reasonable costs and fees in these proceedings, including their costs in bringing a motion to compel production, in attending discovery status conferences before Magistrate Judge Leen, and for time spent in the proceedings before Special Master Garrie.”

So, what do you think?  Do the actions by the defendant merit such a harsh sanction?  Please share any comments you might have or if you’d like to know more about a particular topic.

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