Preservation

Another Case Where Intent to Deprive is Put in the Hands of the Jury: eDiscovery Case Law

In Woods v. Scissons, No. CV-17-08038-PCT-GMS (D. Ariz. Aug. 14, 2019), Arizona Chief District Judge G. Murray Snow granted in part and denied in part the plaintiff’s motion for sanctions for spoliation of video footage of an arrest incident involving the plaintiff and the defendant (a police officer with the Prescott Police Department), ruling that non-party City of Prescott violated a duty to preserve evidence of the alleged incident, but that the question of intent should be submitted to the jury to determine appropriate sanctions.

Case Background

In this claim of excessive force against the defendant arising out of the plaintiff’s arrest in June 2016, the plaintiff alleged that after the defendant placed him in handcuffs, he struck the plaintiff several times while he lay face-down on the pavement, resulting in a fracture to his lower back which left him in severe pain and will likely require future surgery to repair.  Several officers arrived on the scene during the course of the arrest.  After the Prescott Police Department Review Board determined that no “criminal, civil or Department Policy violations” had occurred during the arrest, the plaintiff filed this action in February 2017.  Subsequently, the plaintiff filed a motion for spoliation sanctions, arguing that non-party City of Prescott violated a duty to preserve evidence of the alleged incident—video footage automatically captured by the cameras in the various officers’ vehicles—by allowing the footage to be automatically deleted from the police department’s systems.

Judge’s Ruling

Noting examples of at least two officers (in addition to the defendant’s) whose dash cams would likely have been recording, Judge Snow stated: “the available evidence, taken as a whole, establishes that dash cam footage was recorded by at least two vehicles that could have been relevant to Woods’ claim.”  Judge Snow also “decline[d] to assume that any recordings from the vehicles in question would have been irrelevant to Woods’ claim”, stating “the footage’s value cannot simply be replaced by having eyewitness testimony regarding Woods’ arrest—much of the value provided by video footage is that it allows a jury to make its own determination.”

Judge Snow also ruled that the City of Prescott (which was paying for legal representation for the defendant) “had a duty to preserve any video recordings from the responding officers’ dash cams once it knew that litigation was reasonably likely” (which was by April 2017, at the latest) and “the parties do not dispute that any footage has been erased.”  And, Judge Snow ruled that “[t]he spoliation can be imputed to Scissons”, observing that the City would pay any judgment against the defendant in the case.

As a result, Judge Snow granted in part and denied in part the plaintiff’s motion for sanctions, ordering the following: “Because there is evidence that video recordings of the alleged event existed but were not preserved, the jury will hear evidence concerning the potential existence of video footage and will be instructed that it may consider that evidence along with all other evidence in reaching its decision. It will also be instructed that if it determines that the Police Department destroyed evidence and did so with the intent to deprive Woods of the use of the video footage, it may infer that the footage would have been favorable to Woods. However, the Court declines to give the instruction as requested by Woods because the question of intent will be submitted to the jury.”

So, what do you think?  Should juries decide intent to deprive in spoliation disputes?  Please let us know if any comments you might have or if you’d like to know more about a particular topic.

Case opinion link courtesy of eDiscovery Assistant.

Sponsor: This blog is sponsored by CloudNine, which is a data and legal discovery technology company with proven expertise in simplifying and automating the discovery of data for audits, investigations, and litigation. Used by legal and business customers worldwide including more than 50 of the top 250 Am Law firms and many of the world’s leading corporations, CloudNine’s eDiscovery automation software and services help customers gain insight and intelligence on electronic data.

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.

Court Grants Spoliation Sanctions for Defendant’s Failure to Preserve Photos of Prisoner Plaintiff: eDiscovery Case Law

In Wilmoth v. Deputy Austin Murphy, No. 5:16-CV-5244 (W.D. Ark. Aug. 7, 2019), Arkansas District Judge Timothy L. Brooks granted the plaintiff’s Motion for Relief Regarding Spoliation, finding that the “defendant’s conduct in this case was designed to deprive” the plaintiff the use of photographs in litigation that were purported to have shown injuries suffered by the plaintiff associated with his excessive force claim against the deputy defendant.

Case Background

In this case involving the plaintiff’s claim of excessive force against Deputy Murphy for an incident on August 12, 2016 in the plaintiff’s cell, Judge Brooks observed that “the facts surrounding that confrontation are disputed, but it is undisputed that Wilmoth sustained at least some bruising following the event.”  Pursuant to standard operating procedures, Deputy Zachary Hale took photographs of the plaintiff and his injuries using his personal cell phone (of which Sergeant Lira made specific mention in his resulting report), which were to be used in the resulting investigation of the incident.  But the photographs were either 1) never uploaded to the jail’s internal incident reporting system or 2) were uploaded and were subsequently misplaced or deleted – they were also never produced to the plaintiff during discovery.  Claiming that this evidence was intentionally destroyed or made unavailable to him by the defendant, the plaintiff requested an adverse inference instruction based on spoliation of evidence.

Judge’s Ruling

Judge Brooks began discussion of the issue by stating: “Before a Court can impose sanctions under Rule 37, it must first determine that the party had a duty to preserve electronically stored information. In this case, that proof is abundant.”  Noting that counsel for the defendants had issued a litigation hold letter to the officers of the Benton County Jail and that the Court’s initial scheduling order directed that, within 45 days, defendants were to provide the plaintiff with “a copy of all incident reports documenting incidents referenced in the Plaintiff’s complaint, including any color photographs”, Judge Brooks stated: “As such, defendant was clearly on notice—both through his own attorney and court orders, that he was under a duty to preserve documents relevant to the incidents recounted in Wilmoth’s complaint.”

Judge Brooks went on to note that “the evidence as a collective whole indicates that there were many times when defense counsel buried her head in the sand in this case and never fully committed to producing this evidence or discovering where it was” and “that includes conduct which might readily be viewed as intentional deception before this court.”

As a result, Judge Brooks ordered the following sanctions: “First, in light of Sergeant Lira’s role in conducting the investigation into Wilmoth’s sexual assault allegations, the Court finds it literally incredible to hear Lira explain that he does not remember what he did with the pictures that he acknowledged viewing in his report or why these photographs would not have been uploaded as a crucial part of his investigatory file in accordance with county policy. The Court finds that his actions in this case have severely undermined his credibility. Given his direct involvement in viewing and in failing to ensure preservation of these photographs, the Court finds that his actions demonstrate bad faith and that it would be appropriate to prevent the defendant from calling him as a witness in his case. The same sanction will also apply to Deputy Hale. Hale admitted during his deposition that although standard policy would have already required him to preserve and upload these photographs to the system, he certainly should have done so here given the nature of Wilmoth’s accusations against Deputy Murphy. Yet, he failed to take any reasonable steps to ensure preservation of the materials that he knew were crucial to the resulting investigation… Second, under Rule 37(e)(2)(B) and in light of the Court’s earlier finding that defendant and his counsel have willfully acted to prevent Wilmoth from accessing this documentary evidence that he claims would support his case, the Court will instruct the jury that it may, but is not required to, presume that the photographs in question would have supported Wilmoth’s claimed injuries arising from his in-cell confrontation with Deputy Murphy and that the lack of such photographic evidence should not be held against Wilmoth in this case.”

So, what do you think?  Were the sanctions granted appropriate for the level of spoliation?  Please let us know if any comments you might have or if you’d like to know more about a particular topic.

Case opinion link courtesy of eDiscovery Assistant.

Sponsor: This blog is sponsored by CloudNine, which is a data and legal discovery technology company with proven expertise in simplifying and automating the discovery of data for audits, investigations, and litigation. Used by legal and business customers worldwide including more than 50 of the top 250 Am Law firms and many of the world’s leading corporations, CloudNine’s eDiscovery automation software and services help customers gain insight and intelligence on electronic data.

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.

Court Denies Dueling Sanctions Motions from Both Plaintiffs and Defendants: eDiscovery Case Law

In Cox v. Swift Transportation Co. of Arizona, LLC, No. 18-CV-117-CVE-JFJ (N.D. Okla. Aug. 6, 2019), Oklahoma District Judge Jodi F. Jayne denied both the plaintiffs’ and defendants’ motion for sanctions for spoliation of evidence, finding no intent to deprive by either side to justify a sanction of either an adverse inference jury instruction or directed verdict (for the plaintiffs)/dismissal (for the defendants).

Case Background

In this case involving an accident between two tractor/trailers in which Plaintiff Adam Cox suffered severe injuries, both parties failed to preserve electronic data:

  • Defendant Swift Transportation Company (“Swift”) failed to preserve: (1) electronic control module (“ECM”) data of the Swift tractor/trailer driven by Defendant Sai Wai (“Wai”), which would have provided information regarding the speed of Wai’s vehicle at the time of the accident and any “Critical Event Report” prompted by hard braking or a sudden drastic change in speed; (2) messages delivered from Wai to Swift via the Qualcomm mobile communication system; and (3) Wai’s electronic driver “E-logs” for the 1.5 hours immediately prior to the accident, which were also stored electronically on the Qualcomm system.
  • Plaintiffs Adam and Kimberly Cox failed to preserve: (1) ECM data from Cox’s vehicle, which Defendants argue would have (a) provided information regarding the speed of Cox’s vehicle at the time of the accident, and (b) potentially bolstered its expert’s opinion that Cox failed to brake; and (2) Cox’s paper driver logs, which were on the dashboard at the time of the accident (“Logs”).

The plaintiffs filed a Motion for Sanctions Pursuant to Federal Rule of Civil Procedure 37 for Defendant Swift’s Spoliation of Evidence, requesting two alternative sanctions under Federal Rule of Civil Procedure 37(e): (1) a directed verdict on the issue of liability; or (2) an adverse inference jury instruction.  The defendants’ filed a Motion for Sanctions for Plaintiffs’ Spoliation of Evidence, requesting either the dismissal of the plaintiffs’ case or an adverse inference instruction regarding the spoliated evidence.

Judge’s Ruling

In considering the plaintiffs’ request for sanctions for failure to preserve the ECM Data/Qualcomm Messages, Judge Jayne stated: “After consideration of the record and the parties’ oral argument, the Court finds that Swift did not “act[] with the intent to deprive [Plaintiffs] of the information’s use in the litigation” and therefore declines to impose either of the severe sanctions requested by Plaintiffs…Swift’s stated reason for failing to download the ECM data or immediately place a litigation hold on evidence is adequately supported by [investigating Officer Jason] McCarthy’s investigation, conclusions, and report, and the Court finds no inference or indication that Swift engaged in bad faith or intentional conduct aimed at depriving Plaintiffs of this evidence.”

Citing defendant Swift’s explanation for failure to preserve 1.5 hours of E-Logs as caused by a failure to account for a Time Zone difference between Mountain and Central Time, Judge Jayne stated: “The Court finds this explanation plausible and consistent with the actual missing data. This explanation, at most, shows a negligent failure to retain by Swift. As explained above, negligent failures to retain evidence cannot support Plaintiffs’ requested sanctions in this case, and Plaintiffs’ motion for sanctions based on failure to preserve the missing E-logs is also denied.”

With regard to the defendants’ motion for sanctions, Judge Jayne stated “the Court easily concludes that Plaintiffs did not intentionally deprive Defendants of evidence or engage in any bad-faith conduct by failing to preserve the ECM data or the Logs. The engine, including the ECM device, was hauled away as debris from the scene of the accident by Environmental Remediation Services, Inc., (“ERS”), held for thirty days, and then sent to the scrap yard. Cox was in the hospital for five weeks following the accident. It strains reason to find that Plaintiffs acted with intent to deprive Defendants of this evidence when, at most, Plaintiffs failed to prevent another entity, ERS, from scrapping the engine pursuant to ERS’s own standard retention policy.”  She also characterized the plaintiffs’ explanation that the Logs on the dashboard were destroyed in the accident as “plausible” and stated: “Accordingly, Defendants’ requested sanctions of dismissal or an adverse inference instruction are denied.”

So, what do you think?  Should either party have attempted to obtain less severe sanctions instead?  Please let us know if any comments you might have or if you’d like to know more about a particular topic.

Case opinion link courtesy of eDiscovery Assistant.

Sponsor: This blog is sponsored by CloudNine, which is a data and legal discovery technology company with proven expertise in simplifying and automating the discovery of data for audits, investigations, and litigation. Used by legal and business customers worldwide including more than 50 of the top 250 Am Law firms and many of the world’s leading corporations, CloudNine’s eDiscovery automation software and services help customers gain insight and intelligence on electronic data.

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.

Mobile Phone Spoliation Ends Not One, But Two Cases for Kevin Spacey: eDiscovery Case News

If you keep track of Hollywood news, you probably already know this story.  But, as David Horrigan discussed in an article last week, you may not know all the details or what it might mean for future cases.

In Legaltech® News (Commonwealth v. Fowler: What the Kevin Spacey Cases Mean for E-Discovery and the Law), David discusses the case Commonwealth v. Fowler, a criminal prosecution, and a related civil action, Little v. Fowler, stem from sexual assault allegations against the actor Kevin Spacey (whose legal name is Kevin Spacey Fowler).

In allegations that made headlines around the world two years later, an 18-year-old employee of a Nantucket restaurant claimed that, in the summer of 2016, Spacey plied him with alcohol and groped him at the restaurant. Of course, Spacey’s lawyers had a different take, arguing the encounter was a “mutual and consensual flirtation” and that the employee had told Spacey he was 23.  And, also of course, Spacey’s lawyers demanded discovery of the employee’s mobile phone, seeking text, video and Snapchat data from the date of the incident to the date of the discovery request.

Text messages between the employee and his girlfriend – purported to have been sent at the time of the alleged incident – had already been entered into the court record via screenshots. They included descriptions of the alleged incident by the employee and text responses from his girlfriend, including some with multiple emojis.  However, Spacey’s defense counsel argued that some of the text messages had been edited and the employee’s mother, a former Boston television news reporter, admitted that she had deleted some data (which she claimed was unrelated to the alleged incident) from the phone before turning it over to law enforcement.

But, that wasn’t the worst issue related to the phone.  The phone itself disappeared.  Law enforcement notes indicated the mobile phone had been returned to the employee’s family, but the family’s attorney told the court, “My clients do not recall ever receiving the phone.”  And, although the employee’s family said the phone had been backed up, Spacey’s counsel argued that wasn’t good enough and that they were entitled to the phone itself.  When Spacey’s counsel asked the employee whether he knew altering evidence was a crime, the employee invoked his Fifth Amendment protection against self-incrimination, which resulted in the charges being dropped in the criminal case (after the civil case had already been dropped a few days before).  No phone = two cases closed.

In his article, David notes several interesting considerations from the cases, ranging from discovery of mobile devices to the use of emojis to the significance of social media (with a Snapchat video being important in the case as well).  Probably his most notable observation was whether the loss of the phone would have thrown out the evidence in the civil case with amended FRCP Rule 37(e) providing that sanctions were available when evidence “cannot be restored or replaced through additional discovery.”  Those phone backups might have led to a different result in the civil case.

I already noted that in our webcast last week (Key eDiscovery Case Law Review for the First Half of 2019), Tom O’Connor and I discussed several cases (including this one, this one and this one) where spoliation and sanctions associated with smartphone ESI were the key issue being addressed.  Chalk up another one.

BTW, speaking of David: As I noted before, I am speaking at ILTACON in a couple of weeks as part of ILTACON’s brand new Litigation Support Day, which features a DAY of SPARK (Short, Provocative, Action-oriented, Realistic, and Knowledgeable) talks by leaders in the industry.  I will be participating in Session One – Litigation Support State of the Union from 9:00-10:30am that day (my talk is slated for approximately 9:35). I will be speaking about legal trends in the industry, with David moderating, so that means recent case law trends that should be interesting.  Do you think mobile device discovery will be one of those trends?  If you’re planning to be at ILTACON, come find out!

So, what do you think?  Would the phone backups have enabled the civil case to continue?  As always, please share any comments you might have or if you’d like to know more about a particular topic.

Image Copyright © Netflix

Sponsor: This blog is sponsored by CloudNine, which is a data and legal discovery technology company with proven expertise in simplifying and automating the discovery of data for audits, investigations, and litigation. Used by legal and business customers worldwide including more than 50 of the top 250 Am Law firms and many of the world’s leading corporations, CloudNine’s eDiscovery automation software and services help customers gain insight and intelligence on electronic data.

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.

Court Sanctions Plaintiff for Spoliation of Facebook Account: eDiscovery Case Law

Shark Week on the Discovery Channel concludes this weekend, which means Case Week on the eDiscovery Channel (a.k.a., eDiscovery Daily) concludes as well (don’t be sad, it will be back next year!).  During our webcast on Wednesday on Key eDiscovery Case Law Review for the First Half of 2019 (which, if you missed it, can be viewed here), Tom O’Connor and I discussed several cases that couldn’t quite get to the stage of issuing an adverse inference sanction for spoliation of ESI.  This case shows that there are still cases out there where these sanctions happen – when the intent to deprive is clear enough.

In Cordova v. Walmart Puerto Rico, Inc. et al., No. 16-2195 (ADC) (D.P.R. July 16, 2019), Puerto Rico District Judge Aida M. Delgado-Colon granted in part and denied in part the defendant’s motion to dismiss for fraud on the Court, denying the defendant’s request for dismissal, but imposing a sanction of adverse inference regarding the content of the plaintiff’s Facebook page and her deletion of the related account.  Judge Delgado-Colon also ordered the defendant to “submit a proposed adverse-inference jury instruction to that effect before trial.”

Case Background

In this case filed by the plaintiff against the defendant alleging unlawful discrimination, retaliation, and unjust dismissal, when the defendant issued a set of interrogatories and request for production of documents asking the plaintiff to disclose and produce information and documents regarding her social media accounts, among other requests. The plaintiff responded, in essence, that she once had a social media account, but that it was closed and that she did not recall the name under which she had the account.

The defendant filed a motion to compel, contending that “the discovery was relevant in order to address plaintiff’s allegations of disability and her substantial allegations of severe mental, psychological, moral and emotional pain anguish and distress, loss of happiness and loss of capacity to enjoy life.”  The plaintiff claimed that prior to the discovery request, she had lost her cell phone, after which “she tried to access [her] Facebook account using [her] home computer” but got blocked out for unsuccessful attempts to log into the account and when she got a new phone, she tried again to access her Facebook account but was unable to do so and she did not “ha[ve] access to [the] Facebook account ever again.”  In a meeting between parties, the plaintiff was unsuccessful in accessing her Facebook account.

However, on September 19, 2018, the defendant was able to identify plaintiff’s public Facebook profile under the name `Córdova Eigna’—essentially, plaintiff’s second last-name and her first name spelled backwards.  That account was opened in 2009, the plaintiff updated her cover photo on August 23, 2018, and included a comment about `living happily ever after’ and posted a comment regarding the same as recently as September 6, 2018.  That same afternoon, however, the account became unavailable.  As a result, the defendant filed a motion, asserting that the plaintiff was duplicitous about the Facebook discovery in question and requested case dismissal.

Judge’s Ruling

Judge Delgado-Colon found that “Mercado failed to comply with her obligation under Fed. R. Civ. 26(e) to supplement discovery responses to Walmart’s requests regarding her Facebook account. Specifically, taking as true Mercado’s contention that she was blocked out of said account for a period of time after having lost her cell phone, she was obligated to voluntarily inform Walmart when she later regained access and resumed her activities on Facebook. In that respect, the Court rejects Mercado’s explanation that she was unaware of having to do so because discovery had concluded, and Walmart’s summary judgment motion was pending adjudication. Those are not valid reasons for Mercado’s non-compliance with her disclosure obligations under Fed. R. Civ. P. 26(e), especially regarding an ongoing, contentious discovery issue and given that Mercado has been represented by counsel at all times in this case.”

As a result, Judge Delgado-Colon granted in part and denied in part the defendant’s motion, stating: “Walmart’s request for dismissal is denied. However, the Court hereby imposes as sanction an adverse inference regarding the content of Mercado’s Facebook page and her deletion of the related account. Accordingly, Walmart shall submit a proposed adverse-inference jury instruction to that effect before trial.”

So, what do you think?  Did the spoliation warrant the adverse inference instruction?  Please let us know if any comments you might have or if you’d like to know more about a particular topic.

Case opinion link courtesy of eDiscovery Assistant.

Sponsor: This blog is sponsored by CloudNine, which is a data and legal discovery technology company with proven expertise in simplifying and automating the discovery of data for audits, investigations, and litigation. Used by legal and business customers worldwide including more than 50 of the top 250 Am Law firms and many of the world’s leading corporations, CloudNine’s eDiscovery automation software and services help customers gain insight and intelligence on electronic data.

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.

Court Recommends Finding of Intent to Deprive for Defendant’s Lost Text Messages: eDiscovery Case Law

Shark Week on the Discovery Channel continues, which means Case Week on the eDiscovery Channel (a.k.a., eDiscovery Daily) continues as well.  Today’s case opinion comes from March and resulted in a different opinion for failure to preserve text messages than this case we covered last week.  Enjoy!

In NuVasive, Inc. v. Kormanis, No. 1:18CV282 (M.D.N.C. Mar. 13, 2019), North Carolina Magistrate Judge L. Patrick Auld recommended that, “because the record supports but does not compel a ‘finding that [Defendant Kormanis] acted with the intent to deprive [Plaintiff] of the [lost text messages’] use in the litigation, the Court submit that issue to the ‘jury, [with] the [C]ourt’s instruction[s] mak[ing] clear that the jury may infer from the loss of the [text messages] that [they were] unfavorable to [Defendant Kormanis] only if the jury first finds that [he] acted with the intent to deprive [Plaintiff] of the[ir] use in the litigation’”.

Case Background

In this case filed against a former employee over breach of contract for promoting and selling a competitor’s products within his former territory, the plaintiff notified Defendant Kormanis in March 2018 (through counsel) of its “concern[ ] that [his] new position with Alphatech will lead to … violation[s] of his contractual obligations with Ino[S]pine” and advised him “to refrain from the destruction of relevant evidence … including … texts … and to take steps to preserve all such information”.  After the case was filed, the defendant wrote in response to the plaintiff’s production requests:

“As for text messages, due to space limitations on his iPhone, Defendant Kormanis only is able to keep data on his device from the previous 30 days. In order to comply with the litigation hold letter, Defendant Kormanis backs up his iPhone to his MacBook Air so that all messages are preserved. However, at this time, Defendant Kormanis has not been able to retrieve said messages from his personal devices. Once these communications are retrieved, they will be produced.”  The defendant ultimately produced text messages on October 5, 2018, but there were no text messages produced prior to August 5, 2018.  The defendant indicated that his vendor was unable to retrieve earlier text messages from his devices, but he declined to allow the plaintiff’s vendor to examine the devices.

In his subsequent affidavit and deposition, it became clear that the defendant failed to turn off the 30-day automatic delete function on his iPhone, leading to the loss of text messages after the defendant was advised of his duty to preserve them.  Despite the defendant’s argument that “[t]he Court should deny [the instant] Motion because [Plaintiff] has failed to demonstrate that any of the allegedly spoliated text messages … would be relevant to this action”, Verizon records demonstrated that the defendant had regular text message communications with key parties in the case during that period where text messages were lost.

Judge’s Ruling

Judge Auld agreed with the plaintiff that “the relevance of these [text messages] is evident” and also stated: “Nor does any material dispute remain as to whether the loss of relevant text messages resulted from Defendant Kormanis’s failure to take reasonable steps to preserve them.”  Judge Auld also noted that failure to follow the “simple steps” of suspending the auto-delete function on his phone and utilizing “relatively simple options to ensure that [his] text messages were backed up” was “sufficient to show that Defendant [Kormanis] acted unreasonably.”

As a result, Judge Auld granted the Plaintiff’s Motion for Imposition of Sanctions for Spoliation of Evidence in part.  Judge Auld gave the plaintiff additional time to depose and subpoena text messages from a key Alphatech contact beyond the discovery deadline and ordered Defendant Kormanis to pay plaintiff’s fees/expenses associated with that effort and also all fees/expenses associated with filing, briefing and arguing the Instant Motion.  He also issued the following recommendations:

“IT IS RECOMMENDED that the Court defer until trial the decision of whether other “serious measures are necessary to cure prejudice [from the loss of text messages], such as forbidding [Defendant Kormanis] from putting on certain evidence, permitting the parties to present evidence and argument to the jury regarding the loss of information, or giving the jury instructions to assist in its evaluation of such evidence or argument, other than instructions [that it may or must presume the lost text messages were unfavorable to Defendant Kormanis],” Fed. R. Civ. P. 37 advisory comm.’s note, 2015 amend., subdiv. (e)(1).

IT IS FURTHER RECOMMENDED that, because the record supports but does not compel a “finding that [Defendant Kormanis] acted with the intent to deprive [Plaintiff] of the [lost text messages’] use in the litigation,” Fed. R. Civ. P. 37(e)(2), the Court submit that issue to the “jury, [with] the [C]ourt’s instruction[s] mak[ing] clear that the jury may infer from the loss of the [text messages] that [they were] unfavorable to [Defendant Kormanis] only if the jury first finds that [he] acted with the intent to deprive [Plaintiff] of the[ir] use in the litigation,” Fed. R. Civ. P. 37 advisory comm.’s note, 2015 amend., subdiv. (e)(2).”

So, what do you think?  Did the spoliation warrant a possible adverse inference instruction?  Please let us know if any comments you might have or if you’d like to know more about a particular topic.

Case opinion link courtesy of eDiscovery Assistant.

Sponsor: This blog is sponsored by CloudNine, which is a data and legal discovery technology company with proven expertise in simplifying and automating the discovery of data for audits, investigations, and litigation. Used by legal and business customers worldwide including more than 50 of the top 250 Am Law firms and many of the world’s leading corporations, CloudNine’s eDiscovery automation software and services help customers gain insight and intelligence on electronic data.

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.

No Proof of Intent to Deprive Means No Adverse Inference Sanction: eDiscovery Case Law

We’re catching up on a few cases from earlier this year in preparation for our Key eDiscovery Case Law Review for First Half of 2019 webcast next Wednesday.  Here is an interesting case ruling from April.

In DriveTime Car Sales Company, LLC v. Pettigrew, No.: 2:17-cv-371 (S.D. Ohio Apr. 18, 2019), Judge George C. Smith granted in part and denied in part the plaintiff’s motion for spoliation sanctions against defendant Pauley Motor, denying the plaintiff’s request for an adverse inference sanction by ruling that “DriveTime has not sufficiently demonstrated that Pauley Motor acted with the requisite intent” when Bruce Pauley failed to take reasonable steps to preserve text messages when he switched to a different phone.  Judge Smith did “order curative measures under Rule 37(e)(1)”, allowing the plaintiff to “introduce evidence at trial, if it wishes, of the litigation hold letter and Pauley Motor’s subsequent failure to preserve the text messages.”

Case Background

In this case where the plaintiff alleged the defendants were conspiring to purchase vehicles at above market rates from Pauley Motor, the plaintiff filed a motion for spoliation sanctions against Pauley Motor.  During discovery, Pauley Motor first stated in its interrogatory responses that no text messages between Pauley Motor representatives and defendant Pettigrew existed.  However, in his 30(b)(6) deposition, Bruce Pauley stated that he had exchanged text messages with Pettigrew, but he was ultimately unable to produce the content of the text messages because he had obtained a new phone and had not preserved the contents of his previous phone, despite being put on notice to do so in November of 2016 by a litigation hold letter issued by the plaintiff’s counsel.  As a result, the plaintiff requested that the Court impose a mandatory adverse inference that the content of the text messages was unfavorable to Pauley Motor.

Judge’s Ruling

In considering the motion, Judge Smith stated that “Pauley Motor does not dispute that it had an obligation to preserve text messages between its representatives and Pettigrew or that it failed to take reasonable steps to preserve them…DriveTime has also established that the text messages cannot be restored or replaced through additional discovery, because neither Pettigrew nor the wireless carriers for Pauley Motor’s representatives have access to them either…Thus, in order to obtain the mandatory adverse inference it seeks under Rule 37(e)(2), the only additional requirement under the Rule is that Pauley Motor acted with the intent to deprive DriveTime of the text messages’ use in the litigation when it failed to preserve them.”

However, Judge Smith also said: “Although Bruce Pauley failed to take reasonable steps to preserve the text messages when he switched to a different phone, there is no evidence that he did so intentionally beyond DriveTime’s speculation. This is not sufficient to impose a mandatory adverse inference under Rule 37(e)(2).”  As a result, Judge Smith found that “DriveTime has not sufficiently demonstrated that Pauley Motor acted with the requisite intent.”

But, Judge Smith noted that “less severe sanctions are available to DriveTime under Rule 37(e)(1) upon a finding of prejudice.”  As a result, he stated that “the Court will order curative measures under Rule 37(e)(1)… In this case, the Court finds it appropriate to order that DriveTime will be permitted to introduce evidence at trial, if it wishes, of the litigation hold letter and Pauley Motor’s subsequent failure to preserve the text messages. DriveTime may argue for whatever inference it hopes the jury will draw. Pauley Motor may present its own admissible evidence and argue to the jury that they should not draw any inference from Pauley Motor’s conduct.”

So, what do you think?  Did the judge go far enough or should the failure to preserve the evidence have been considered intent to deprive?  Please let us know if any comments you might have or if you’d like to know more about a particular topic.

Case opinion link courtesy of eDiscovery Assistant.

Sponsor: This blog is sponsored by CloudNine, which is a data and legal discovery technology company with proven expertise in simplifying and automating the discovery of data for audits, investigations, and litigation. Used by legal and business customers worldwide including more than 50 of the top 250 Am Law firms and many of the world’s leading corporations, CloudNine’s eDiscovery automation software and services help customers gain insight and intelligence on electronic data.

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.

Simon Says – Once, Twice, Three Times a Spoliator: eDiscovery Case Law

OK, it’s not as catchy as Lionel Ritchie’s hit song, but it’s funny. :o)

In Univ. Accounting Serv., LLC v. Schulton, No. 3:18-cv-1486-SI (D. Or. June 7, 2019), Oregon District Judge Michael H. Simon granted in part the plaintiff’s Motion for Terminating Spoliation Sanctions Against Defendant Ethan Schulton, finding that the defendant “acted with the intent to deprive” the plaintiff of information that he deleted, but granted the plaintiff’s alternative motion for lesser sanctions, choosing to provide the jury with a permissive inference spoliation instruction against the defendant instead of case termination sanctions.

Case Background

In this dispute over a software platform provided to the plaintiff, named defendant Ethan Schulton was the lead software developer and chief architect of the software platform.  According to the plaintiff, in February 2016, named defendant ScholarChip told the plaintiff it would have to pay substantially higher fees if it wanted to continue using the software platform it developed.  In March 2016, Schulton recognized the possibility that the plaintiff might bring a lawsuit by asking ScholarChip’s CEO and CTO about giving the plaintiff the source code to avoid a lawsuit.  The following month, Schulton sent an email to his legal counsel, and copied others within ScholarChip, about forming a new legal entity.  The situation between the parties continued to deteriorate over the next several months, with the parties filing lawsuits against each other.

In July 2018, approximately seven months after Schulton voluntarily left ScholarChip’s employment, Schulton sent an email both to the plaintiff and the CTO of ScholarChip, where he announced his intent to create a loan servicing system that would compete directly with the plaintiff. He further said that he would create the system based on knowledge acquired during his 15 years at ScholarChip and added that he would be communicating with and soliciting business from the plaintiff’s customers that he learned about through his work at ScholarChip for the plaintiff.  The next month, the plaintiff filed this lawsuit.

On March 7, 2018, Schulton accepted service of a deposition and document subpoena to which he responded: “I left ScholarChip with nothing but the knowledge gained over 15 years of employment. To use definitions from my recent document subpoena, I have no ‘CLIENT DATA,’ ‘DELIVERABLES,’ ‘SOFTWARE,’ or ‘WORK PRODUCT.’”

Despite that, as the opinion noted, Schulton had previously acknowledged that he used a “mechanism called Take Out” to export his entire ScholarChip e-mail account, which included all of its contents dating back to 2014, to Schulton’s personal “One Drive” cloud storage account. He also saved a copy of his ScholarChip email account on his personal computer.  He also saved electronic copies of several webinars with the plaintiff’s clients to his personal computer, which he took with him and kept after he left ScholarChip’s employment.  And, the day before a hearing in August 2018, Schulton located and deleted the file known as UAS’s “Private Client List,” which listed the plaintiff’s clients in descending order by ScholarChip revenue.  In the hearing, he stated “I deleted the file as fast as I could, because I was petrified at its existence, because it’s exactly the type of damning information that UAS wants to catch me with.”

Judge’s Ruling

Noting that the information deleted was 1) electronically stored information, 2) that should have been preserved in the anticipation or conduct of litigation, 3) (that) is lost because a party failed to take reasonable steps to preserve it and, 4) cannot be restored or replaced through additional discovery, Judge Simon stated: “These four threshold or predicate conditions have been satisfied” (to impose sanctions).

Judge Simon summed up the spoliation, as follows:

“The Private Client List, the ScholarChip emails, and the webinar recordings are all electronically stored information. In March 2016, Shulton anticipated the possibility of litigation. By June 2017, litigation between UAS and ScholarChip had begun. In the fall of 2017, Schulton downloaded to his personal computer and personal cloud account the electronically stored information at issue. On March 7, 2018, with litigation pending between ScholarChip and UAS in federal court in New York, Schulton received a document subpoena, and his first act of spoliation occurred four days later, on March 11, 2018. Schulton’s second act of spoliation occurred on April 9, 2018. In August 2018, UAS commenced this lawsuit in federal court in Oregon and requested a TRO, which was scheduled for August 22, 2018. The day before the TRO, Schulton committed his third act of spoliation. The Private Client List, the ScholarChip emails, and the webinar recordings all appear to be relevant to the several lawsuits. Accordingly, they should have been preserved in the anticipation or conduct of litigation. Further, intentionally destroying evidence satisfies the standard for failing to take reasonable steps to preserve that evidence. Finally, UAS has attempted to restore or replace through additional discovery the deleted information but has been unsuccessful. Thus, UAS has satisfied the four threshold elements under Rule 37(e).”

As a result, Judge Simon granted in part the plaintiff’s motion, choosing to provide the jury with a permissive inference spoliation instruction against the defendant instead of case termination sanctions.

So, what do you think?  Should the defendant have received case termination sanctions?  Please let us know if any comments you might have or if you’d like to know more about a particular topic.

Case opinion link courtesy of eDiscovery Assistant.

Sponsor: This blog is sponsored by CloudNine, which is a data and legal discovery technology company with proven expertise in simplifying and automating the discovery of data for audits, investigations, and litigation. Used by legal and business customers worldwide including more than 50 of the top 250 Am Law firms and many of the world’s leading corporations, CloudNine’s eDiscovery automation software and services help customers gain insight and intelligence on electronic data.

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.

This Blog Post Will Not Be Automatically Deleted, But Your Instant Message Might Be: eDiscovery Trends

The sources of electronically stored information (ESI) are more varied than ever.  Now, they routinely include text messages and messages from instant messaging apps.  But, depending on the instant message app – or the archive option for any messaging app, that ESI might not be available at litigation time.

In LegalTech® News (This Article Will Self-Destruct: Behind Ephemeral Messaging’s In-House Rise, written by Rhys Dipshan), the author notes that the rise of ephemeral messaging, self-erasing communications “have gone from spy movie lore to everyday consumer technology.”  That technology may be welcomed by privacy advocates, but not so much by those responsible for compliance, investigations and litigation efforts.  And, while ephemeral messaging was once only the focus of a handful of messaging apps, they’re now being offered by widely used services like Gmail and Facebook.

Remember the Waymo v. Uber case?  In that case, Waymo sought sanctions for Uber’s use of the ephemeral messaging app Wickr for communications, but California District Judge William Alsup ruled that Waymo could inform the jury of the situation and have them reach their own conclusions – in part, because Waymo also disclosed it used ephemeral messaging apps in-house as well.

Ephemeral messaging apps are becoming more prevalent – and they’re even becoming more accepted from a regulatory standpoint.  In April 2019, for example, the Department of Justice (DOJ) rescinded a policy requiring companies to restrict their employees’ use of ephemeral messaging apps if they wanted credit for cooperating with DOJ enforcement actions under the Foreign Corrupt Practices Act. The new DOJ policy now only requires companies to implement “appropriate guidance and controls on the use of personal communications and ephemeral messaging platforms.”

Gareth Evans, eDiscovery expert and partner at Redgrave, noted that one of the most fundamental uses for ephemeral messaging is to help organizations more easily delete data they shouldn’t be keeping in the first place.

“Simply, if there is no business purpose or business need for retaining the messaging, if there is no legal requirement to keep it, that in itself is a good reason not to be keeping it. And by keeping communications [you don’t need], you run certain risks.”

That’s great when there isn’t a duty to preserve (i.e., when you anticipate litigation).  But, what about when that duty exists?

For years, we’ve discussed the importance of suspending auto delete programs when anticipating litigation and we’ve discussed cases where failure to do so can lead to sanctions (like this one and this one).  Historically, those auto delete programs have been associated with email, but they are becoming more associated with text and other messaging apps, as well.  And, it’s important to note that while some messaging apps are ephemeral by default, most (if not all) messaging apps can be set to automatically delete messages after a period of time – including text messaging apps like the text message app for iPhones, which is set to retain messages “forever” by default, but can be changed to a 1 year or even 30 day retention period.  That’s why it’s become more important than ever to address automatic deletion for text and other messaging apps when litigation is anticipated to avoid potential spoliation.

So, what do you think?  Does your organization use ephemeral messaging apps?  If so, how does it handle the use of those apps during litigation?  As always, please share any comments you might have or if you’d like to know more about a particular topic.

Image Copyright © CBS Television Distribution.

Sponsor: This blog is sponsored by CloudNine, which is a data and legal discovery technology company with proven expertise in simplifying and automating the discovery of data for audits, investigations, and litigation. Used by legal and business customers worldwide including more than 50 of the top 250 Am Law firms and many of the world’s leading corporations, CloudNine’s eDiscovery automation software and services help customers gain insight and intelligence on electronic data.

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.

Discovery “Cautionary Tale” Leads to Recommendations of Default Judgment Against Defendants: eDiscovery Case Law

In Abbott Laboratories, et al. v. Adelphia Supply USA, et al., No. 15 CV 5826 (CBA) (LB) (E.D.N.Y. May 2, 2019), New York Magistrate Judge Lois Bloom, noting that the plaintiff’s motion for case ending sanctions against H&H Wholesale Services, Inc., its principal, Howard Goldman, and its marketing manager and Mr. Goldman’s wife, Lori Goldman (“H&H Defendants”) for wide-scale discovery misconduct “presents a cautionary tale about how not to conduct discovery in federal court” recommended that the plaintiffs’ motion be granted, and that the Court should enter a default judgment against the H&H Defendants.

This case (covered here by Law360, subscription required; report and recommendation linked here) involves trademark and trade dress infringement, unfair competition, trademark dilution and other claims associated with the illegal sale of Abbott’s FreeStyle blood glucose test strips in the US.  Judge Bloom began the report and recommendations document with this statement:

“This motion presents a cautionary tale about how not to conduct discovery in federal court.”

Among the discovery issues according to Judge Bloom (and plaintiff allegations):

  • The documents the H&H defendants originally produced were printed “in hard copy, scanning them all together, and producing them as a single, 1941-page PDF file”;
  • H&H used search terms it knew wouldn’t turn up results (“such as ‘International’ and ‘FreeStyle,’ whereas H&H’s internal systems used item numbers and other abbreviations such as ‘INT’ and ‘INTE’ for International and ‘FRL’ and ‘FSL’ for FreeStyle”) and specifically removed other damning documents – particularly those involving Howard Goldman and Lori Goldman – and provided numerous false excuses for these omissions;
  • The testimony from H&H’s general manager regarding the discovery woes was “clearly inconsistent if not perjured from his deposition” opposing the sanctions motion, Howard Goldman’s testimony was “evasive and self-serving at best” and H&H’s corporate representative’s testimony was “clearly perjured”;
  • “H&H would have gotten away” with its fraud if not for Abbott being allowed to seize H&H’s computers as part of a related counterfeiting case, which allowed previously withheld documents to come to light.

“H&H only complied with the court’s orders and their discovery obligations when their backs were against the wall,” Judge Bloom wrote. “Their email server had been seized. There was no longer an escape from responsibility for their bad faith conduct … But for being caught in a web of irrefutable evidence, H&H would have profited from their misconduct.”

She added that the lies were part of a “calculated pattern of pervasive misconduct that started early on and continued even after defendants were caught red handed,” meaning the case must be ended with a victory handed to Abbott.

H&H had previously been sanctioned for its discovery misconduct, with Judge Bloom in 2018 blocking the supplier from raising attorney-client or work-product privilege defenses for a certain set of discovery production.

Even other companies that Abbott had also sued had gone after H&H and Kerr Russell for letting Goldman listen to remote depositions of other parties, in violation of a protective order.

In recommending that the plaintiffs’ motion for sanctions be granted and a default judgment being issued against the H&H defendants, Judge Bloom stated:

“The Court finds that the H&H defendants have committed a fraud upon the court, and that the harshest sanction is warranted. Therefore, plaintiffs’ motion for sanctions should be granted and a default judgment should be entered against H&H Wholesale Services, Inc., Howard Goldman, and Lori Goldman.”

So, what do you think?  Do you agree with the harsh sanction recommendations?  Please let us know if any comments you might have or if you’d like to know more about a particular topic.

Sponsor: This blog is sponsored by CloudNine, which is a data and legal discovery technology company with proven expertise in simplifying and automating the discovery of data for audits, investigations, and litigation. Used by legal and business customers worldwide including more than 50 of the top 250 Am Law firms and many of the world’s leading corporations, CloudNine’s eDiscovery automation software and services help customers gain insight and intelligence on electronic data.

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.