Electronic Discovery

Now, that we’ve recapped last year’s cases, let’s start covering cases for this year…

In Ocwen Loan Servicing, LLC v. Ohio Public Employees Retirement System, No. 654586/2012 (Supreme Court of New York, New York County, December 7, 2015), the Court, determining that the defendant had spoliated data, found that the plaintiff had not demonstrated sufficient facts to warrant striking the defendant’s affirmative defenses, but opted to order an adverse inference instruction and also ordered the defendant to pay the plaintiff’s attorneys’ fees and costs in preparing the instant motion for sanctions.

Case Background

In this action to recover principal distributions from the defendant, the defendant, at the direction of in-house counsel, distributed a written litigation hold notice to certain employees who were deemed likely to possess documents relevant to the dispute.  In addition, the defendant’s IT department saved emails in an enterprise email archiving system.  Despite the preservation, the defendant objected to the plaintiff’s discovery requests and did not produce any responsive documents during a period where disputes over the plaintiff’s motion for summary judgment were happening, until sometime after the court instructed the parties to go forward with discovery.  The defendant ultimately produced documents responsive to the plaintiff’s discovery requests.

However, several months into discovery, the defendant revealed that due to a “synchronization error,” emails that were preserved in the email archiving system that were subject to the ligation hold were accidentally purged, resulting in the content of 101 responsive emails being lost (though the defendant was able to recover and produce metadata from the lost emails).  Due to that issue and other instances of supposed spoliation by the defendant (including one email that was ultimately produced by another party that had communicated with the defendant), the plaintiff filed an instant motion for sanctions, asking the Court to strike the defendant’s affirmative defense of detrimental reliance, or, in the alternative, order a preclusion sanction or adverse inference.

Court’s Ruling

Finding that the duty to preserve began as early as April 2011 and no later than May 2011, the Court found “that OPERS’ had control of – and access to” lost or destroyed ESI in May 2011” and that the defendant wiped the computer of a key retired employee after the plaintiff had rejected a settlement offer from the defendant.  The court also found that the plaintiff had shown that at least some of the deleted ESI was relevant to the case.

Despite this, the court opted for the lesser sanction sought by the plaintiff, noting:

“Here, Ocwen has demonstrated prejudice as a result of OPERS’ failure to preserve France’s ESI and Bloomberg messages. However, the “extreme sanction” of striking OPERS’ affirmative defense is not appropriate in this case because Ocwen was able to obtain some evidence to disprove detrimental reliance, namely the August 2009 message sent from Gleacher to France…Since the loss of potentially relevant ESI is not fatal to Ocwen’s rebuttal of OPERS’ sixth affirmative defense, the imposition of an adverse inference as to that charge is appropriate and ‘reflects an appropriate balancing under the circumstances.’”

As a result, the court ordered an adverse inference instruction against the defendant and also ordered the defendant to pay the plaintiff’s attorneys’ fees and costs in preparing the instant motion for sanctions.

So, what do you think?  Was that the appropriate sanction?  Or should the defendant have been sanctioned at all?  Please share any comments you might have or if you’d like to know more about a particular topic.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine. eDiscovery Daily is made available by CloudNine solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscovery Daily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

As we noted yesterday, Wednesday and Tuesday, eDiscovery Daily published 89 posts related to eDiscovery case decisions and activities over the past year, covering 72 unique cases!  Yesterday, we looked back at cases related to cooperation issues, social media and mobile phone discovery, technology assisted review and the first part of the cases relating to sanctions and spoliation.  Today, let’s take a look back at the rest of the cases relating to sanctions and spoliation.

We grouped those cases into common subject themes and will review them over the next few posts.  Perhaps you missed some of these?  Now is your chance to catch up!

SPOLIATION / SANCTIONS

We covered the first ten cases related to requests for sanctions yesterday, here are the remaining eighteen cases that we covered last year:

Court Denies Plaintiff’s Request for Spoliation Sanctions, as Most Documents Destroyed Before Duty to Preserve: In Giuliani v. Springfield Township, et al., Pennsylvania District Judge Thomas N. O’Neill, Jr. denied the plaintiffs’ motion for spoliation sanctions, finding that the duty to preserve began when the case was filed and finding that “plaintiffs have not shown that defendants had any ill motive or bad intent in failing to retain the documents which plaintiffs seek”.

Judge Recommends Default Judgment Sanctions Against Defendants, Even Though Some Deleted Files Were Recoverable: In Malibu Media, LLC v. Tashiro, Indiana Magistrate Judge Mark J. Dinsmore issued a Report and Recommendation on Plaintiff’s Motion for Sanctions, recommending that the Court grant the plaintiff’s motion against the defendants for spoliation of evidence and perjury and enter default judgment against the defendants.

Similar Spoliation Case, Somewhat Different Outcome: In Malibu Media, LLC v. Michael Harrison (with the same plaintiff and issues as the case above in this list), Indiana District Judge William T. Lawrence denied the plaintiff’s motion for summary judgment, upholding the magistrate judge’s ruling which found an adverse inference instruction for destroying a hard drive with potentially responsive data on it to be not warranted, and ruled that “it will be for a jury to decide” if such a sanction is appropriate.

Plaintiff Once Again Sanctioned with an Adverse Inference Instruction, But Still No Complete Dismissal: In Lynn M. Johnson v. BAE Systems, Inc. et. al., District of Columbia District Judge Robert L. Wilkins granted the defendants’ motion for summary judgment with respect to the plaintiff’s claims for negligence, battery, and defamation, but chose to “impose lesser, but nonetheless severe, sanctions” in the form of an adverse inference instruction for her remaining claim for intentional infliction of emotional distress.

New York Supreme Court Sanctions Two Attorney Defendants for “Egregious Misconduct” in Spoliation of Data: In HMS Holdings Corp. v. Arendt, et al., the New York Supreme Court in Albany County ordered a mandatory adverse inference instruction so that the trier of fact could “draw the strongest possible adverse inference from defendants’ bad faith and intentional destruction, deletion and failure to produce relevant evidence”. The court also awarded attorney fees, and forwarded a copy of the order regarding Defendant Lange to the New York State Committee on Professional Standards for attorneys.

Court Sanctions Plaintiff for Failing to Preserve Audio Recording: In Compass Bank v. Morris Cerullo World Evangelism, California Magistrate Judge William V. Gallo ruled that the plaintiff “wilfully engaged in the spoliation of relevant evidence”, and “has demonstrated a pattern of recalcitrant behavior during discovery in this litigation” and awarded an adverse inference jury instruction sanction against the plaintiff as well as defendant’s attorney fees and costs.

Court Orders Deposition of Expert to Evaluate Issues Resulting from Plaintiff’s Deletion of ESI: In Procaps S.A. v. Patheon Inc., Florida District Judge Jonathan Goodman ordered the deposition of a third-party computer forensic expert, who had previously examined the plaintiff’s computers, to be conducted in part by a Special Master that had been appointed to examine the eDiscovery and forensic issues in the case. The purpose of the ordered deposition was to help the Court decide the issues related to files deleted by the plaintiff and assist the defendant to decide whether or not to file a sanctions motion.

Tired of the “Crap”, Court Sanctions Investors and Lawyers for Several Instances of Spoliation: In Clear-View Technologies, Inc., v. Rasnick et al, California Magistrate Judge Paul S. Grewal sanctioned the defendants $212,320 and also granted a permissive adverse jury instruction that allows the presumption that the defendants’ spoliated documents due to a series of “transgressions” by the defendants and their prior counsel.

Appeals Court Upholds “Death Penalty Order” Sanction That Leads to Multi-Million Dollar Judgment: In Crews v. Avco Corp., a Washington Court of Appeals upheld a “death penalty order” against the defendant for discovery violations, including the failure to produce relevant information, but remanded for amendment of the final judgment of over $17.28 million to reflect any offsets for settlements with other defendants.

Denial of Motion for Spoliation Sanctions Leaves Plaintiff Less Than Glad: In Gladue v. Saint Francis Medical Center, Missouri District Judge Carol E. Jackson denied the plaintiff’s motion for evidentiary and monetary sanctions due to spoliation of evidence, finding that the defendant did not have a duty to preserve emails deleted as part of routine IT operations, had diligently attempted to recover deleted emails and that the plaintiff failed to show that any of the unrecovered emails were relevant to her claims.

How Blue Was My Valley? Not Blue Enough to Cite the Defendant for Discovery Violations: In Malone v. Kantner Ingredients, Nebraska Magistrate Judge Cheryl R. Zwart denied the plaintiffs’ motion to show cause, finding that the defendant “the plaintiffs have presented no evidence” that the defendant “destroyed, hid, or purposefully (or even recklessly) failed to produce responsive ESI” in the case.

Discarding a Relevant Computer Results in Adverse Inference Sanctions, Not Default Judgment: In Grady v. Brodersen, Colorado Magistrate Judge Nina Y. Wang granted the plaintiff’s motion for sanctions against the defendant in part for failing to produce a computer that the defendant ultimately acknowledged that he discarded, but denied the plaintiff’s request for a default judgment sanction, opting for the less severe adverse inference instruction sanction.

Defendant Does Not Take the Fall for Spoliation in Slip and Fall Case: In Harrell v. Pathmark et al., Pennsylvania District Judge Gene E. K. Pratter, after a hearing to consider whether to draw an adverse inverse instruction due to the defendant’s possible spoliation of video evidence, determined that “a spoliation inference would not be appropriate here”. Finding that the plaintiff had presented no evidence that the defendant had constructive notice of a dangerous condition resulting in her slip and fall, Judge Pratter also granted the defendant’s motion for summary judgment.

Court Rules that Australian Company’s Duty to Preserve Only Begins when US Court Has Jurisdiction: In Lunkenheimer Co. v. Tyco Flow Control Pacific Party Ltd., Ohio District Judge Timothy S. Black ruled that the duty to preserve for the defendant (an Australian company with offices and facilities only in Australia) did not begin until the complaint was filed in US courts in December 2011, denying the assertion of the intervenor/counter defendant that the duty to preserve arose in 2002.

Court Awards Attorney Fees to Defendant After Delayed Production by Plaintiff: In Michigan Millers Mutual Insurance Co. v. Westport Insurance Corp., Michigan Magistrate Judge Phillip J. Green awarded some (but not all) of the attorney fees requested by the defendant after the plaintiff “made repeated promises to produce the subject documents”, but “failed to do so for nearly three months after the deadline for responding to Westport’s Rule 34 request” and “compliance was obtained only after Westport filed its motion to compel”.

Plaintiffs Not Sanctioned for Late Production, Citing Their $29,000 Expense to Hire Experts to Assist: In Federico et al. v. Lincoln Military Housing LLC, et al., Virginia Magistrate Judge Douglas E. Miller, concluding that the defendants had not established that the plaintiffs had acted in bad faith when failing to meet production deadlines, declined to impose “any further sanction against Plaintiffs beyond the $29,000 expense associated with their expert’s production of the Facebook records”, except for a portion of the reasonable attorney’s fees associated with the original motion to compel.

Plaintiff Sanctioned for Late Production, But Not for Failure to Produce Data Held by Outside Vendor: In Ablan v. Bank of America, Illinois Magistrate Judge Daniel G. Martin recommended that the defendant’s Motion for Sanctions should be granted in part and denied in part, recommending that the plaintiffs be barred from using any new information at summary judgment or at trial that was contained on eight CD-ROMs produced late, but recommending no sanctions for failing to produce or make available documents held by the plaintiff’s outside vendor.

Payday Loan Company Sanctioned for Discovery Violations: In James v. National Financial LLC, Delaware Vice Chancellor Laster granted the plaintiff’s motion for sanctions after determining that the defendant’s “discovery misconduct calls for serious measures”. However, the plaintiff’s request for a default judgment was not granted, but lesser sanctions that included attorneys’ fees and a ruling that the lack of information contained in the requested document resulted in an admission.

Hope you enjoyed our recap of last year’s cases.  Next year, we’ll do it again for this year’s cases!

Want to take a look at cases we covered the previous four years?  Here they are:

• 2014: Part 1, Part 2, Part 3, Part 4
• 2013: Part 1, Part 2, Part 3, Part 4
• 2012: Part 1, Part 2, Part 3, Part 4
• 2011: Part 1, Part 2, Part 3, Part 4

So, what do you think?  Did you miss any of these?  Please share any comments you might have or if you’d like to know more about a particular topic.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine. eDiscovery Daily is made available by CloudNine solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscovery Daily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.