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Preservation

Court Sanctions US Government for Spoliation in Copyright Infringement Case: eDiscovery Case Law

In 4DD Holdings, LLC v. U.S., No. 15-945C (Fed. Cl. May 10, 2019), the US Court of Federal Claims, in an opinion issued by Judge Bruggink, “grant[ed] plaintiffs’ motion for sanctions because the government destroyed relevant evidence that it had a duty to preserve.”  The Court directed the plaintiffs to “file a motion, appropriately supported, seeking a recovery of its costs and fees related to the motion for sanctions and with respect to discovery prompted by the destruction of evidence” and indicated it would “defer until summary judgment or trial the application of the evidentiary implications of this ruling.”  The court also denied the defendant’s motion to dismiss “[b]ecause plaintiffs established that the government authorized or consented to SMS’s allegedly infringing activity when working in SMS labs.”

Case Background

In this copyright infringement case involving installation of the plaintiff’s software in excess of the purchased license, the DoD’s Defense Health Agency (“DHA”) “repeatedly” required its contractor Systems Made Simple, Inc. (“SMS”) to perform work using the plaintiff’s copyrighted software in the contractor’s own labs.  The agency purchased a software license from the plaintiff’s reseller for 64 cores and the plaintiff’s End User License Agreement (“EULA”) permitted “the agency to make ‘one (1) copy of the object code to [TETRA] solely for back-up purposes,’ which it could only use ‘if the original copy is damaged or destroyed.’”  The agency also required the plaintiff to disable its software tracking feature to inform it of a software installation.

However, the Chief Engineer on the project (David Calvin) acknowledged in both his July 2018 declaration and his October 2018 deposition that work by SMS would have involved cloning TETRA virtual machines in their labs.  And, in August 2014, the plaintiff contacted the Contracting Officer’s Representative (Sheila Swenson) alleging that more than 64 cores were in use.  In September, Calvin directed the removal of instances of the plaintiff’s software in certain environments.  By December 2014, the agency “identified an over deployment of 168 core licenses to development servers.”  Nonetheless, Swenson reported 64 cores in use because that was the number of cores the agency had originally paid for.  In March 2015, the agency modified the license to increase the licensed quantity by 168 cores.

The plaintiff filed suit in August 2015. On September 9, 2015, the Department of Justice sent a letter to alert DoD of its responsibility to provide a litigation report and to furnish all evidence in DoD’s possession, stating “all records storage centers and other facilities where records are kept be immediately notified to forthwith identify, physically segregate and withhold from destruction all documents and papers touching upon the claims set forth in the complaint.”  Nonetheless, the agency’s Development Test Center (“DTC”) proceeded with a shredding of hard drives later that same month.  In addition, most of the laptops in use related to the project were returned and reimaged months after the litigation hold notice was issued, destroying any data related to the case they might have contained.  As discovery wound down, plaintiffs filed a motion for sanctions in November 2018.

Court Ruling

The Court found that “SMS was acting (1) “for the Government” and (2) “with the authorization or consent of the Government” when it performed any infringing activity in SMS labs.”  As a result, the Court denied the defendant’s motion to dismiss.

With regard to the plaintiffs’ motion for sanctions, the Court said: “The parties agree on the key events: The agency deleted instances of TETRA during the true-up period without informing 4DD. The agency destroyed the DTC servers’ hard drives. The agency erased all the information on many laptops used on the DMIX project.”  With regard to the DTC servers, the Court ruled that “Mr. Calvin’s orders directing contractors to delete instances of TETRA in listed environments because of ‘a license issue’ is sufficient to demonstrate that he intentionally deprived 4DD of the use of that information in litigation.”  But, the Court also noted that the “DTC decommissioning and laptop reimaging are not as clear cut”, ruling that “communication failure is undoubtedly negligent but falls short of the intentional behavior expected under Rule 37(e)(2)”.

Nonetheless, the Court “grant[ed] plaintiffs’ motion for sanctions because the government destroyed relevant evidence that it had a duty to preserve” and directed the plaintiffs to “file a motion, appropriately supported, seeking a recovery of its costs and fees related to the motion for sanctions and with respect to discovery prompted by the destruction of evidence” and indicated it would “defer until summary judgment or trial the application of the evidentiary implications of this ruling.”

So, what do you think?  Do you think the court ruled correctly on the intent to deprive standard for Rule 37(e)(2) in this case?  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.

Florida Appeals Court Upholds Ruling that Non-Party Had No Duty to Preserve Evidence: eDiscovery Case Law

In Shamrock-Shamrock, Inc. v. Remark, No. 5D18-1987 (Fla. Dist. Ct. App. Apr. 26, 2019), the District Court of Appeal of Florida, Fifth District affirmed the summary final judgment in favor of the Appellee, holding that Florida law does not impose a duty on nonparties to litigation to preserve evidence based solely on the foreseeability of litigation.

Case Background

In the case originally involving the Appellant’s suit against the City of Daytona Beach over zoning, the Appellee was never a party to the Appellant’s action against the City, but the Appellant’s operative complaint contained two references to the Appellee in its general allegations.  During the case, the Appellant sought to take the Appellee’s deposition and served several notices of deposition and subpoenas on the Appellee, beginning in May 2011 and ending ten months later with a sixth amended notice of taking deposition in March 2012, which was the only one that included a duces tecum request for documents to be produced at the deposition.

The Appellee’s deposition was taken in April 2012, where she testified that she had obtained a new desktop computer and had destroyed her old computer in December 2011. She did not preserve any records, documents, or emails from her old computer and did not inform anybody, including the City Attorney, that she was destroying it. Her testimony established that she destroyed her old computer after receiving the first deposition notice but before receiving the sixth amended deposition notice that for the first time included a duces tecum request.

The Appellant then filed a two-count complaint against the Appellee, alleging that she either intentionally destroyed her old computer or “negligently destroyed [it] in bad faith.” In that case, the Appellee and the Appellant filed competing motions for summary judgment regarding whether the Appellee had a duty to preserve her computer or its contents.  The Appellant argued, citing League of Women Voters of Florida v. Detzner, 172 So. 3d 363 (Fla. 2015), that the Appellee therefore had a duty to preserve evidence based on the foreseeability of litigation, but the trial court denied the Appellant’s summary judgment motion and granted the Appellee’s. It found that there was no genuine issue of fact that the Appellee had no statutory or contractual duty to preserve evidence; thus, the Appellant had to rely on a duty imposed by a discovery request.

Judge’s Ruling

In the opinion authored by J. Sasso, the court, after considering several cases cited by the Appellant, concluded that “no Florida court has yet recognized a common law duty for third-party preservation of evidence based on the knowledge or foreseeability of litigation”.  As a result, the court stated:

“In this case, there was no statute, contract, or discovery request that would impose a clearly defined duty on Remark to preserve any potentially relevant evidence. Thus, a duty would arise only through Remark’s purported knowledge of Shamrock’s pending litigation and her anticipation that something in her control could potentially be of use to that litigation. As such, Shamrock would like us to announce that Remark owed a duty to it based on the foreseeability of litigation. Considering the traditional approach to defining legal duty, we decline to do so. Indeed, such a broad pronouncement would be tantamount to declaring a general legal duty on any nonparty witness to anticipate the needs of others’ lawsuits. There are innumerable circumstances in which a nonparty to litigation may have evidence relevant to a case and may know of its relevance. But that knowledge, by itself, should not give rise to a duty to safeguard the evidence in anticipation of litigation…While we do not speculate as to every circumstance under which a third party to litigation may have a legal duty to preserve evidence, we hold that the trial court properly determined here that Remark did not owe a legal duty to Shamrock. The summary judgment in favor of Remark is affirmed.”

So, what do you think?  Would the decision be different in other jurisdictions?  Should it be different?  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 Two Years After Spoliation is Discovered is Too Late for Sanctions: eDiscovery Case Law

Sorry, I couldn’t resist…  ;o)

In Wakefield v. Visalus, Inc., No. 3:15-cv-1857-SI (D. Or. Mar. 27, 2019), Oregon District Judge Michael H. Simon denied the plaintiff’s motion for sanctions against the defendant for automatic deletion of call records, ruling that since the plaintiff knew about the deletion of call records for over two years, her motion was “untimely”.

Case Background

In this class claim related to alleged violations of the Telephone Consumer Protection Act (“TCPA”), the defendant used an automated telephone system called the “Progressive Outreach Manager” (“POM”), which the plaintiff contended generated and maintained historical records of each calling campaign and each call attempted by the defendant.  The POM system’s ESI was programmed to be automatically deleted after three months and, even though the defendant was on notice since October 2015 that it had a duty to preserve the information contained in the POM system, the plaintiff claimed that the defendant failed to suspend the call records’ automatic deletion. The plaintiff pointed to statements made by the defendant’s corporate representative and compliance analyst, during his deposition in December 2016 as evidence that these call records had been automatically deleted.

For many of those calls, the defendant maintained contact information spreadsheets containing all of the POM system information, so that data was replaced through other sources. However, the plaintiff contended there were 1.7 million calls that were not within the contact information spreadsheets that were deleted from the POM system, asserting that the lost call records would have proven that 350,228 of those calls delivered a message using an artificial or prerecorded voice to class members. In February 2019, the plaintiff asked the Court to order sanctions against the defendant, including instructing the jury that the defendant deleted call records and that the lost information was unfavorable to defendant.  The defendant argued that the motion was untimely, among other arguments against the motion.

Judge’s Ruling

In evaluating the plaintiff’s motion, Judge Simon said: “Plaintiff learned no later than December 12, 2016 that Defendant’s system deleted POM call records every three months. Discovery closed in December of 2017, one year later, and at that point Plaintiff had in her possession all call records produced by Defendant. Plaintiff acknowledges that she was aware in late 2016 that the call record data generated by the POM system had been “destroyed,” but claims she continued to believe that the same information was available elsewhere. It was only when performing final trial preparation that Plaintiff organized her trial exhibits, compiled the evidence obtained in discovery, and realized that some of the call data ‘deleted’ from the POM system had not been produced through other sources…Only then did Plaintiff file her motion for sanctions.”

Judge Simon also observed: “Had Plaintiff timely undertaken to examine the evidence produced by Defendant, any deleted call records that could not be restored or replaced through additional discovery would have been apparent to Plaintiff at that time, and she could have sought sanctions for the alleged spoliation.”  Noting that “courts are cautioned to be ‘wary of any spoliation motion made on the eve of trial’”, Judge Simon stated in denying the plaintiff’s motion: “Plaintiff filed her spoliation motion more than a year after the close of discovery, more than two years after she first learned of the alleged destruction of call records, and less than two months before trial. Plaintiff’s motion is untimely.”

So, what do you think?  Was that the correct call or should the plaintiff have been given the time to determine what she was missing?  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.

Appeals Court Reverses Jury Decision Based on Failure of Court to Issue Spoliation Sanction: eDiscovery Case Law

In Marshall v. Brown’s IA, LLC, No. 2588 EDA 2017 (Pa. Super. Mar. 27, 2019), the Superior Court of Pennsylvania, ruling that the trial court “abused its discretion in refusing the charge” of an adverse inference sanction against the defendant for failing to preserve several hours of video related to a slip and fall accident, vacated the judgment issued by the jury within the trial court for the defendant and remanded the case for a new trial.

Case Background

In this case where the plaintiff slipped and fell in one of the defendant’s ShopRite stores in August 2014, the plaintiff’s counsel sent a letter two weeks after the incident requesting that the defendant retain surveillance video of the accident and area in question for six hours prior to the accident and three hours after the accident. Additionally, the letter cautioned:

“If any of the above evidence exists, and you fail to maintain same until the disposition of this claim, it will be assumed that you have intentionally destroyed and/or disposed of evidence. Please be advised that you are not permitted, and are in no position, to decide what evidence plaintiff would like to review for this case. Accordingly, discarding any of the above evidence will lead to an Adverse Inference against you in this matter.”

Nonetheless, the defendant decided to preserve only thirty-seven minutes of video prior to the plaintiff’s fall and approximately twenty minutes after, and permitted the remainder to be automatically overwritten after thirty days.  The defendant’s Risk Manager (Matthew McCaffrey) testified that it was the store’s “rule of thumb” to preserve video surveillance from twenty minutes before and twenty minutes after a fall.  The plaintiff contended that the defendant’s conscious decision not to retain the video evidence constituted spoliation, and she asked the trial court to give an adverse inference charge to the jury.  But, the trial court concluded that there was no bad faith by the defendant and refused to give the requested adverse inference charge, but did agree, that the plaintiff’s counsel could argue to the jury that it should infer from the defendant’s decision not to retain more of the video prior to her fall that the video was damaging to the defendant.  Despite that, the jury returned a verdict in favor of the defendant, finding no negligence.

The plaintiff filed timely post-trial motions alleging that she was entitled to a new trial because the trial court erred in refusing to give the requested spoliation instruction to the jury, but the trial court did not rule on the motion, so she appealed, asking if the trial court abused its discretion by declining to read a spoliation of evidence instruction to the jury at trial.

Appellate Court’s Ruling

The opinion by J. Bowes noted that “[t]he duty to retain evidence is established where a party ‘knows that litigation is pending or likely’ and “it is foreseeable that discarding the evidence would be prejudicial” to the other party.”  The court also observed: “Although Mr. McCaffery testified that ShopRite’s rule of thumb was to retain only twenty minutes of tape prior to the fall and twenty minutes after the fall, it actually preserved thirty-seven minutes of footage prior to Ms. Marshall’s fall, and twenty minutes after the fall. He offered no explanation why ShopRite deviated from its typical practice herein.”  The court also observed that “conspicuously absent was testimony from anyone at ShopRite that he or she watched the video for the six-hour-period prior to the fall before determining that it did not contain any relevant evidence.”

Finding that “counsel’s letter placed ShopRite on notice to preserve the video surveillance prior to and after the fall as it was arguably relevant to impending litigation”, the court stated “we find that the trial court took an unreasonably narrow view of ‘relevant evidence’ in concluding that no spoliation occurred in this premises liability case. Relevant evidence is any evidence that ‘has any tendency to make a fact more or less probable.’…Furthermore, its finding of no bad faith on ShopRite’s part was relevant in determining the severity of the sanction to impose for spoliation, but it did not negate or excuse the spoliation that occurred.”

As a result, the court – in vacating the judgment and remanding the case for a new trial – ruled that “Ms. Marshall asked the court for the least severe spoliation sanction, an adverse inference instruction. On the facts herein, it was warranted, and the court abused its discretion in refusing the charge.”

So, what do you think?  Should the judgment have been thrown out over the defendant’s failure to preserve the rest of the video?  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 Sanctions Request Because Defendant Didn’t Prove the Information was Irretrievable: eDiscovery Case Law

In Envy Hawaii LLC v. Volvo Car USA LLC, No. 17-00040 HG-RT (D. Haw. Mar. 20, 2019), Hawaii District Judge Helen Gillmor denied the defendant’s motion for spoliation sanctions, stating that the defendant “has not established that spoliation sanctions are available because the information it seeks is not “lost” within the meaning of Fed. R. Civ. P. 37(e).”

Case Background

In this case involves contract disputes and claims of improper business practices between a local automobile dealership and the national distributor of Volvo automobiles, the parties had engaged in two years of litigation, produced discovery, and conducted depositions.  The defendant claimed that the plaintiff and its sole owner and manager failed to preserve certain electronically stored information (Google e-mail accounts and electronic dealer management system records) in violation of Federal Rule of Civil Procedure 37(e).  The plaintiff and its owner claimed no spoliation had occurred because any relevant records are available from third-parties and sanctions were not appropriate.

Judge’s Ruling

Judge Gilmor noted that “[t]he text of Federal Rule of Civil Procedure 37(e) provides that evidence is ‘lost’ and subject to spoliation sanctions when a party failed to take reasonable steps to preserve it, and ‘it cannot be restored or replaced through additional discovery’” and that “[i]nformation is ‘lost’ for purposes of Rule 37(e) only if it is irretrievable from another source, including other custodians.”  She also stated that “[s]poliation sanctions are not available pursuant to the 2015 Amendment to Rule 37(e) when information is not lost.”

With regard to that, Judge Gilmor stated:

“Volvo Car USA LLC admits that it has not sought any of the discovery from either CDK Disk or Google Enterprise. Volvo Car USA LLC’s Motion is focused on Envy Hawaii LLC’s failure to preserve the information.”

Noting that “Volvo Car USA LLC may issue subpoenas to obtain records from Google and/or CDK Drive prior to May 15, 2019”, Judge Gilmor denied the defendant’s motion for spoliation sanctions.

So, what do you think?  Should parties be required to confirm with third parties that information is not available before filing motions for spoliation 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.

In Lawsuit Over Prince Music, Court Grants Monetary But Not Adverse Inference Sanctions (Yet): eDiscovery Case Law

In Paisley Park Enter., Inc. v. Boxill, No. 17-cv-1212 (WMW/TNL), (D. Minn. Mar. 5, 2019), Minnesota Magistrate Judge Tony N. Leung granted in part the plaintiffs’ Motion for Sanctions Due to Spoliation of Evidence, ordering the Rogue Music Alliance (“RMA”) Defendants to pay reasonable expenses, including attorney’s fees and costs, that Plaintiffs incurred as a result of the RMA Defendants’ “misconduct”, and also ordered the RMA Defendants to pay into the Court a fine of $10,000, but chose to defer consideration of adverse inference instruction sanctions to a later date, closer to trial.

Case Background

In this infringement case involving release of previously unreleased music by the late artist Prince, the estate of Prince filed suit against George Ian Boxill, a sound engineer who worked with Prince and allegedly took tracks of certain songs that he worked on with Prince in April 2017, as well as RMA and Deliverance, LLC.  The plaintiffs subsequently added David Staley and Gabriel Solomon Wilson (principals of RMA and Deliverance) and two law firms in June 2018 to the lawsuit.

In December 2017, after Plaintiffs filed their first amended complaint, they, RMA, Deliverance, and Boxill, stipulated to certain protocols regarding the discovery of ESI in which the parties indicated that they had taken “reasonable steps to preserve reasonably accessible sources of ESI.”  The Court then issued its pretrial scheduling order in January 2018, directing the parties to preserve “all electronic documents that bear on any claims, defenses, or the subject matter of this lawsuit.”

During discovery, the plaintiffs received a third-party production of documents from a public relations firm that the defendants had hired which included text messages that Wilson sent to an employee of the public relations firm. The plaintiffs then filed a motion to compel discovery from RMA, seeking production of text messages that Staley and Wilson sent to each other and third parties and the Court ordered the defendants to produce all responsive text messages on July 19, 2018.  During a meet and confer in September 2018, counsel for Wilson, Staley, RMA and Deliverance indicated that they could not produce responsive text messages because they had not preserved their text messages, indicating that text messages had not been preserved because Staley and Wilson did not disengage the auto-delete function on their phones and because Staley had wiped and discarded his phone in October 2017 and Wilson had wiped and discarded his phone in January 2018 and then wiped and discard his new phone in May 2018.  No back-up data existed for either phone, leading to the plaintiffs’ motion for sanctions under Rule 37(e)(1), 37(e)(2) and 37(b)(2)(A).

Judge’s Ruling

With regard to the defendants’ duty to preserve, Judge Leung ruled that “the duty to preserve evidence arose no later than February 11, 2017, when Staley sent an e-mail regarding his plans to release the music at issue here. In that e-mail, Staley acknowledged the riskiness of his and RMA’s position and indicated that the Prince Estate could challenge their actions. Staley referred specifically to the possibility of litigation in that e-mail, noting that RMA was not concerned by a lawsuit because it had been indemnified by Boxill. It is apparent, based on this letter, that the RMA Defendants anticipated litigation following their release of the Prince music.”

With regard to whether the defendants took reasonable steps to preserve relevant ESI, Judge Leung noted that “It takes, at most, only a few minutes to disengage the auto-delete function on a cell phone” and stated “Failure to follow the simple steps detailed above alone is sufficient to show that Defendants acted unreasonably.”  He then added:

“But that is not all the RMA Defendants did and did not do. Most troubling of all, they wiped and destroyed their phones after Deliverance and RMA had been sued, and, in the second instance for Wilson, after the Court ordered the parties to preserve all relevant electronic information, after the parties had entered into an agreement regarding the preservation and production of ESI, and after Plaintiffs had sent Defendants a letter alerting them to the fact they needed to produce their text messages. As Plaintiffs note, had Staley and Wilson not destroyed their phones, it is possible that Plaintiffs might have been able to recover the missing text messages by use of the “cloud” function or through consultation with a software expert. But the content will never be known because of Staley and Wilson’s intentional acts. The RMA Defendants’ failure to even consider whether Staley and Wilson’s phones might have discoverable information before destroying them was completely unreasonable. This is even more egregious because litigation had already commenced.”

Judge Leung rejected several arguments from the defendants as to why their decision not to preserve text messages was reasonable, including the claim that “they could not possibly be expected to know that they should preserve text messages”, stating “None of these arguments is persuasive”.  Judge Leung also found that “There is no doubt that Plaintiffs are prejudiced by the loss of the text messages.”  But, with regard to the adverse inference sanctions sought by the plaintiffs, he also said that “given the fact that discovery is still on-going, the record is not yet closed, and the case is still some time from trial, the Court believes it more appropriate to defer consideration of those sanctions to a later date, closer to trial”.  He did, however, order the RMA Defendants to “pay reasonable expenses, including attorney’s fees and costs, that Plaintiffs incurred as a result of the RMA Defendants’ misconduct” and also ordered the RMA Defendants to pay into the Court a fine of $10,000.

So, what do you think?  Should the defendants have received the adverse inference sanction as well?  Please let us know if any comments you might have or if you’d like to know more about a particular topic.

For more info on this ruling, check out Ralph Losey’s e-Discovery Team® blog here.

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 Orders Defendants to Comply with Rule 26(a), Ditch the Boilerplate Objections: eDiscovery Case Law

In RightCHOICE Managed Care, Inc. v. Hospital Partners, Inc., No. 5:18-cv-06037-DGK (W.D. Mo. Feb. 1, 2019), Missouri District Judge Greg Kays ordered the discovery defendants to “supplement their initial disclosures so that they comply with Rule 26(a)” (within 14 days) and “either respond to Plaintiffs’ interrogatories and requests for production in good faith or specifically tailor their objections to each question or request”, as well as requiring each discovery defendant to “prepare a statement identifying the steps taken to preserve discoverable information”, among other things.

Case Background

In this case involving alleged improper billing of lab tests, the parties conferred under Federal Rule of Civil Procedure 26(f) in October 2018.  The plaintiffs served the discovery defendants with interrogatories and requests for production of documents the following week. The discovery defendants responded on November 26, objecting to every one of the plaintiffs’ questions and requests, using language like this:

“Defendant objects to this request as vague, overly broad, unduly burdensome, harassing, and/or seeking information that is irrelevant and/or not reasonably calculated to lead to the discovery of admissible evidence.”

On January 24, the Court held a teleconference hearing to discuss the dispute. During the hearing, the plaintiffs stated that the discovery defendants failed to identify any witnesses in their Rule 26(a)(1) initial disclosures, made boilerplate objections to every interrogatory, and improperly invoked the Fifth Amendment. When the Court asked the discovery defendants’ counsel whether they had produced a single document in the case, he “enthusiastically” replied, “Nope.”

As a result, the plaintiffs requested that the Court order the discovery defendants to (1) amend their initial disclosures; (2) produce responsive, non-privileged documents requested from Hospital Partners and Empower H.I.S.; (3) specify exactly which interrogatories Byrns and Perez object to on the basis of the privilege against self-incrimination; (4) answer Plaintiffs’ interrogatories in good faith or have adverse inferences drawn from their refusal; and (5) each provide a sworn statement identifying the steps taken to preserve discoverable information. Not surprisingly, the discovery defendants asked the Court to deny these requests.

Judge’s Ruling

Noting that “Rule 26(a)(1) requires litigants to provide ‘the name and, if known, the address and telephone number of each individual likely to have discoverable information’”, Judge Kays stated that the discovery defendants’ disclosures – which merely listed “corporate representative[s]” of various unnamed entities, such as “any billing/management vendors of the Defendants, with no specific reference to the information held by the entities and no address or phone numbers – “fail to comply with Rule 26(a)(1)”.  Judge Kays ordered the discovery defendants to “supplement their initial disclosures with the specific names and contact information, if known, of individuals likely to have discoverable information.”  He also indicated that they “must also provide copies of, or a list detailing, by category and location, all documents, electronically stored information, and tangible things in their possession, custody, or control that they may use to support their claims or defenses.”

Judge Kays also rejected the discovery defendants’ use of the Fifth Amendment privilege against self-incrimination, stating: “Their invocation is invalid. To begin, the Fifth Amendment does not protect Hospital Partners and Empower H.I.S. because they are artificial legal entities” (despite the discovery defendants’ claims that they are “alter egos of the individual defendants”.  As a result, he ordered defendants Hospital Partners and Empower H.I.S. “to produce relevant, non-privileged documents and respond to Plaintiffs’ interrogatories” and also ordered defendants Byrns and Perez “to produce all relevant, non-privileged business records in their possession” and to “contour their Fifth Amendment objections to each particular interrogatory, so that, if necessary, the Court can make a question-by-question judgment on the privilege’s applicability.”

As for the boilerplate objections, Judge Kays ordered the discovery defendants to “either respond to Plaintiffs’ questions and requests or tailor their objections with much greater particularity. If they assert a privilege, they must provide a privilege log.”

Finally, Judge Kays stated that the discovery defendants’ “failure to produce a single document, months into discovery, concerns the Court” and also expressed concerns about the plaintiffs’ allegations that the defendants “have not issued retention notices and {the plaintiffs} are unaware of the location of Empower H.I.S.’s records.”  As a result, Judge Kays agreed with the plaintiffs that “the Discovery Defendants each need to prepare a sworn statement detailing their efforts to preserve discoverable information” and noted that if the discovery defendants’ behavior were to continue, “the Court will consider imposing sanctions.”

So, what do you think?  Should the defendants have already been sanctioned, or is that premature?  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.

To Preserve Sanction Potential, Plaintiff Fights To NOT Have Claim Against Them Dismissed: eDiscovery Case Law

Yes, you read that right.  In DR Distrib., LLC v. 21 Century Smoking, Inc., No. 12 CV 50324 (N.D. Ill. Feb. 12, 2019), Illinois District Judge Iain D. Johnston denied the defendants’ Motion for Leave to Amend their counterclaim to remove their own defamation counterclaim (Count VIII) against the plaintiffs – a move to which the plaintiffs objected, because it could eliminate their chance to pursue sanctions against the defendants for ESI spoliation.

Case Background

In this trademark infringement case, where, according to Judge Johnston, “the parties have engaged in a plethora of discovery disputes and pleadings practice”, the defendants moved for leave to amend their counterclaim under Fed. R. Civ. P. 15 to remove Count VIII, “defamation per se”, against the plaintiff – three years and eight months after the expiration of the amended pleading deadline.  This was the third time that one of the parties moved to amend a pleading after the deadline (second time requested by the defendant), the court had denied the previous two attempts.

Judge’s Ruling

Judge Johnston began his ruling by stating:

“A party rarely objects to the dismissal of a claim against it. But it happens. See, e.g., Chavez v. Illinois State Police, 251 F.3d 612, 655-56 (7th Cir. 2001). This is one of those rare occasions. Context explains these unusual circumstances. Not surprisingly, like most bizarre legal circumstances, this situation is caused because each side is attempting to obtain a procedural litigation advantage. This Court is confident that its analysis and decision is correct. But this Court also recognizes that this opinion proves two old adages: (1) bad facts make bad law; and (2) judges who like all their decisions are likely bad judges.”

Judge Johnston proceeded to note that “raging in this case is an ESI food fight of Hollywood proportions”, stemming from “the loss of ESI relating to the defendants’ seemingly relevant emails and instant messages”, which was initially limited to the defendants’ defamation counterclaim.  As Judge Johnston noted: “During the ESI melee, by this Motion, defendants sought to eliminate Count VIII. Although unstated, to even the most casual observer, the reason for this move was obvious: If Count VIII were eliminated, then the ESI fracas would be moot. No harm; no foul.”  He also stated that “plaintiffs promise to file a brief longer than a CVS receipt to address the ESI issues”, raising “nearly every conceivable basis for sanctions”.  Summing up the situation, Judge Johnston stated that “plaintiffs cannot obtain these sanctions if Count VIII is eliminated (at least if the ESI were only relevant to Count VIII). Therefore, plaintiffs object, despite the seeming benefit of having a claim against them eliminated. So here we are.”

Make sense now?

In considering the defendants’ motion, Judge Johnston indicated that “defendants dedicate a large portion of their briefs to argue that Rule 15 governs this Motion, and that ‘[t]he court should freely give leave [to amend] when justice so requires’”, but responded that “when a motion to amend a pleading comes after a case management order is entered, Rule 16(b)(4)’s ‘good cause’ standard must be satisfied before a court considers whether Rule 15(a)(2)’s standards are satisfied.”  Judge Johnston also observed that the defendants had failed to show diligence, stating:

“This Motion, brought almost four years after the expiration of the amended pleading deadline, represents the first time that defendants have sought to dismiss Count VIII. These facts would lead a reasonable person to conclude that the real, but unstated, reason to eliminate Count VIII is to avoid the ESI maelstrom on the horizon.”

As a result, stating that defendants “have failed to show good cause pursuant to Rule 16 to amend the case management order”, Judge Johnston denied their motion and indicated that the “issues related to possible sanctions raised in plaintiffs’ response will be addressed in the separate round of briefing.”

So, what do you think?  Is the plaintiff making a big gamble in leaving a claim against them in the case to try to push for 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.

No Bad Faith Means No Sanctions for Failing to Preserve Video of Altercation: eDiscovery Case Law

In Stovall v. Brykan Legends, LLC, No. 17-2412-JWL (D. Kan. Feb. 7, 2019), Kansas Magistrate Judge James P. O’Hara denied the plaintiff’s motion for sanctions based on the defendant’s alleged spoliation of a surveillance video that shows an altercation between the plaintiff and her supervisor, stating that “plaintiff has failed to meet the requirements of Fed. R. Civ. P. 37(e)(2)”.

Case Background

In this employment discrimination case involving claims of sexual harassment, the plaintiff was injured in 2016 in a physical confrontation with her supervisor (who was also the alleged harasser) and the confrontation was recorded on one of defendant’s surveillance cameras.  Shortly thereafter, the plaintiff filed a claim for workers’ compensation based on her alleged injuries and a few months after that, the plaintiff filed a discrimination charge with the Kansas Human Rights Commission (“KHRC”), which sent the defendant a letter advising that the destruction of records related to the charge was forbidden by law.

The plaintiff’s workers’ compensation claim was settled in January 2017.  In February 2017, plaintiff’s current counsel sent defendant a letter, stating plaintiff had retained them to represent her in connection with employment discrimination claims and advising defendant of its obligation to preserve records, videos, and files pertaining to plaintiff’s employment and discharge.  The plaintiff subsequently filed the suit in July 2017.

On July 3, 2018, plaintiff tendered a document request for, among other things, “surveillance footage, recordings or other video…that refer or relate to any events alleged in Plaintiff’s Complaint.”  The defendant responded that there “was a surveillance tape that depicted the altercation”, but that defendant “is unable to locate the tape.” The response also advised that a “copy or link” of the video was provided to the attorney representing the defendant in the workers’ compensation matter, but that “the link has expired.” The defendant’s representative (Rauschelbach) testified at his deposition that after the incident, he maintained a copy of the surveillance video in his desk drawer, but that he could no longer find it, despite “desperately looking”, leading to the plaintiff’s motion for sanctions.

Judge’s Ruling

In assessing the plaintiff’s motion, Judge O’Hara noted that “the parties agreed the surveillance video is a form of electronically stored information (“ESI”) subject to the preservation requirements of Rule 37(e)”.  As a result, he evaluated each of the factors of Rule 37(e) in turn:

  • Duty to Preserve: Judge O’Hara noted that “defendant concedes that as of October 11, 2016, the date on which it received notice of plaintiff’s discrimination charge from the KHRC, it ‘had an obligation to preserve the video.’” But, regarding the defendant’s argument that it had already “turned the video over to its insurance company” in connection with the workers’ compensation claim, Judge O’Hara said “The problem with defendant’s argument is that it does not account for the fact that defendant had two copies of the surveillance video. Defendant does not address the duty it had to preserve the copy of the video kept in Rauschelbach’s desk drawer.”
  • No Reasonable Steps to Preserve: Noting that the “defendant does not suggest any steps it took to preserve the video”, Judge O’Hara stated regarding the contention that sending a copy to its workers’ compensation insurer was a step to preserve that “The court knows of no case construing such an action as a step to preserve.”
  • No Ability to Restore or Replace: Noting that “plaintiff acknowledged during the pretrial conference that she had not issued a subpoena to the workers’ compensation insurer in an attempt to have a copy of the video retrieved off of their system or a computer hard drive”, Judge O’Hara stated that “the court concludes plaintiff has not proven the video cannot be replaced or restored” and in “a close call”, indicated he “has not found all three prerequisites to spoliation met”.
  • Bad Faith: Judge O’Hara noted that even if the plaintiff had met the spoliation prerequisites, she failed to demonstrate bad faith on the part of the defendant. Judge O’Hara stated “Although defendant’s failure to take steps to preserve the ESI may be negligent, even grossly negligent, nothing in the record suggests defendant intentionally lost the video.”

As a result, the plaintiff’s motion was denied.

So, what do you think?  Do you agree the plaintiff failed to demonstrate spoliation and bad faith?  Please let us know if any comments you might have or if you’d like to know more about a particular topic.

If you read my post on Thursday, you learned about the love of my life.  Today is her birthday.  Happy Birthday, honey!  I love you!

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 to the Mainstream All in One Place: eDiscovery Best Practices

Craig Ball has had a lot to say about mobile device discovery, including various posts on his excellent Ball in Your Court blog (we’ve covered several of those, including this one and this one).  Now, he has assembled all of that good information in a single guide for reviewing all at once!

Mobile to the Mainstream: Preservation and Extraction of iOS Content for E-Discovery is a 24-page PDF guide that is comprised of two sections:

  • Section I (pp. 3-8 and Appendices 1-3) addresses simple, scalable preservation of iPhone and iPad content, enabling litigants to meet the duty to preserve data in anticipation of civil litigation. It informs attorneys who aren’t tech-savvy how to handle iOS-device preservation and explains why there’s little burden or cost attendant to preserving iPhones and iPads. Unlike in other scenarios, Craig points out here the benefits of custodian-directed collection (like the fact that the custodian doesn’t have to give up their phone) and the tamper-proof nature of the iPhone backup process to provide a step-by-step process to perform the backup.
  • Section II (pp. 17 et seq. and Appendix 4) looks at simple, low-cost approaches to extracting relevant mobile data to a standard e-discovery workflow and offers a Mobile Evidence Scorecard to promote consensus as to what forms of mobile content should be routinely collected and reviewed in e-discovery, giving due consideration to need, speed and expense. The Scorecard itself is terrific as it provides a simple handy reference guide regarding the different types of mobile data and the ease of collection, ease of review, potential relevance and whether you should expect to routinely collect that mobile data type.  Craig also identifies several iPhone Backup Data Extraction Tools that are worth checking out, as well.

In the introduction to the guide, Craig sums up the need for these guidelines and tips, as follows:

“Chances are you’re reading this on your phone or tablet. If not, I’ll bet your phone or tablet are at hand. Few of us separate from our mobile devices for more than minutes a day. On average, cell users spend four hours a day looking at that little screen. On average. If your usage is much less, someone else’s is much more.

It took 30 years for e-mail to displace paper as our primary target in discovery. It’s taken barely 10 for mobile data to unseat e-mail as the Holy Grail of probative electronic evidence. Mobile is where evidence lives now; yet, mobile data remains “off the table” in discovery. It’s infrequently preserved, searched or produced.”

Craig will also be presenting regarding mobile devices at the University of Florida E-Discovery Conference in March.  As I noted yesterday, early bird registration is open for $49 for both in person or livestream until January 31st!  That’s 75% off the in-person price!  You can register here to attend, either in person or via livestream.  Do it quickly and save!

Craig will also be presenting as part of our NineForum educational presentations CloudNine is conducting at Legaltech.  More on that program to come in the next few days – it’s very exciting!

So, what do you think?  Do you routinely deal with mobile devices in discovery or is it still rare?  Please share 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.