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Preservation

Court Denies Defendant’s Motion to Overrule Plaintiff’s Objections to Discovery Requests

With No Proof of Duty to Preserve or Bad Faith, Plaintiffs’ Request for Sanctions is Denied: eDiscovery Case Law

In Reyes et. al. v. Julia Place Condominiums Homeowners Association, Inc., et. al., No. 12-2043 (E.D.L.A., Oct. 7, 2016), Louisiana District Judge Carl J. Barbier, in denying the plaintiffs’ request for sanctions, stated that the plaintiffs “have failed to produce sufficient evidence proving that [defendant] Parkview had a duty to preserve the ledgers, that Parkview acted in bad faith in destroying the ledgers, and that the destroyed evidence was relevant to Plaintiffs’ claim”.

Case Background

In this class action lawsuit brought by condominium owners throughout New Orleans against their various condo associations alleging debt collection practices that violate state and federal law, the Court had previously certified a “a class of past and present condominium owners who have paid allegedly usurious late fees”.  During the course of the litigation, one of the defendants (Parkview Condominium Homeowners Association) filed a motion for summary judgment, stating that that the plaintiffs had not introduced any evidence that a current or former Parkview unit owner paid an allegedly usurious fee, so Parkview should be dismissed from the lawsuit.

In response, the plaintiffs argued that they were entitled to an adverse inference sanction due to Parkview’s “intentional” destruction of ledgers that would have proven Parkview condominium unit owners paid allegedly usurious late fees.  The plaintiffs had made a similar request for these ledgers and an adverse inference sanction in a motion to compel in Magistrate Court and that motion was denied.

Here, the plaintiffs claimed that they first requested this information in September 2012 and, in response to this request, “Parkview threatened sanctions . . . but never provided this critical evidence.”  The plaintiffs also argued that Parkview did not initially contend that the documents were lost or otherwise unavailable, but simply refused to comply with the plaintiffs’ request.  In response, Parkview stated it informed the plaintiffs that it was not in possession of that information, because the documents were “inadvertently destroyed prior to the commencement of this litigation. There were no backups of any of the files that were located on the damaged computer and hard drive.”  Parkview also contended that it had no duty to preserve that information, noting that it was unreasonable to believe that the originally named plaintiff, who was never an owner at Parkview, would sue Parkview and seek ledgers for the two years preceding the litigation.

Judge’s Ruling

In ruling on the plaintiff’s request for sanctions, Judge Barbier stated:

“Plaintiffs have failed to produce sufficient evidence proving that Parkview had a duty to preserve the ledgers, that Parkview acted in bad faith in destroying the ledgers, and that the destroyed evidence was relevant to Plaintiffs’ claim. Plaintiffs ask this Court to infer that Parkview intentionally, and in bad faith, destroyed its ledgers solely because Parkview did not initially tell Plaintiffs that it had inadvertently destroyed the ledgers prior to litigation…This is a leap this court is unwilling to make. Accordingly, the Court finds that Plaintiffs are not entitled to an adverse inference for purposes of this motion nor trial.”

Also, observing that “[n]otably absent from Plaintiffs’ evidence is anything demonstrating that a past or present condominium unit owner has paid an allegedly usurious late fee”, Judge Barbier granted Parkview’s Motion for Summary Judgment, dismissing Parkview from the case.

So, what do you think?  Did the plaintiff make too big a leap in assuming “intentional” destruction of the ledgers?  Please share any comments you might have or if you’d like to know more about a particular topic.

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

Court Denies Defendant’s Motion to Overrule Plaintiff’s Objections to Discovery Requests

Defendant Sanctioned for Failing to Preserve Text Messages and Failing to Produce Native Format Data: eDiscovery Case Law

In First Financial Security, Inc. v. Freedom Equity Group, LLC, No. 15-1893 (N.D. Cal., Oct. 7, 2016), California Magistrate Judge Howard R. Lloyd issued permissive adverse inference instruction sanctions against the defendant for deleting relevant text messages “with the intent to deprive” the plaintiff of the use of those text messages and for failing to produce native-format data that it was repeatedly ordered to produce.  Judge Lloyd declined to sanction the defendant for spoliation of phone records or employment applications.

Case Background

In this case, the plaintiff sued the defendant for intentional interference with contract and related violations of California’s Unfair Competition Law (“UCL”), alleging the defendant induced approximately 1,400 sales contractors to leave the plaintiff and join the defendant “en masse”.  The parties filed a Discovery Dispute Joint Report after the defendant had “concededly” failed to produce requested discovery materials, including: (1) text messages possessed by defendant principals; (2) employment applications submitted by former plaintiff contractors; (3) native-format copies of digital data related to the circumstances in which the defendant hired the former plaintiff contractors; and (4) phone records. The court, based on the defendant’s conceded failure to comply with its discovery obligations and absent any substantive opposition, ordered the defendant to produce the discovery materials requested.

After the defendant still failed to produce all of the above, the plaintiff filed its sanctions motion.  The defendant conceded in its opposition brief that the texts “were deleted”, but argued that these texts were “innocently” deleted by people who did not understand their discovery obligations. The defendant also asserted: (1) the phone records were deleted by the phone company because those records “are kept only for a year”; (2) there is no native-format data to produce, because the data “is a data base” that can be reviewed through “a query”; and (3) the defendant never possessed any employment applications, because the information in any given employment application is digitally submitted directly to a “data base” and no application document is separately retained.

After oral arguments where the defendant conceded it produced a physical spreadsheet instead of producing native-format copies of the underlying data; the court ordered the defendant to produce, instead, the native-format data.  In response, the defendant issued a declaration stating that it did not have possession of the data because it relied upon third party software service providers to receive and store the data, that it has changed providers and the original provider had no obligation to turn over the data without a court order.

Judge’s Ruling

Judge Lloyd, ruling that the duty to preserve evidence arose no later than January of 2014 (when the defendant warned its employees that there would be a lawsuit), was “persuaded that FEG had an obligation to preserve text messages in the anticipation or conduct of litigation, that FEG took no reasonable steps to preserve text messages,…that those messages cannot be restored or replaced through additional discovery and that FEG’s agents acted with the intent to deprive FFS of the use of the deleted text messages.”

Also, noting that “[t]he court twice ordered FEG to produce the native-format data sought by FFS”, Judge Lloyd determined that “FEG has misled and prejudiced FFS in the course of FFS’s attempts to discover native-format copies of electronically stored data” relating to the case, further noting that the defendant had raised the claim that it lacks possession, custody, and control of the data “far too late.”

As a result of the deletion of text messages and the failure to produce the native-format data, Judge Lloyd issued permissive adverse inference instruction sanctions against the defendant, “because mandatory inferences are not necessary to remedy the prejudice FFS has suffered.”  Judge Lloyd declined to issue sanctions with respect to the phone records and the employment applications, failing to find intent to deprive for the former and finding that actual documents were not created in the latter.

So, what do you think?  Was a permissive adverse inference instruction a severe enough sanction?  Please share any comments you might have or if you’d like to know more about a particular topic.

If you’re in Houston, don’t forget that tonight is “Drinks with Doug” at The Tasting Room – CityCentre.  Click here to find out how to RSVP.  Hope to see you there!

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 is a Non-Political Post: eDiscovery Trends

At the outset, I feel that I should state that, given that this post is about the Hilary Clinton emails and the FBI handling of them.

In his latest post (E-Discovery Lessons from the Huma Abedin E-Mails), Craig Ball takes a look at the eDiscovery implications regarding the handling of the Huma Abedin emails and his distaste for FBI Director James Comey’s handling of them.  Craig states: “‘Reckless’ doesn’t begin to describe Comey’s self-indulgent decision to release information about a situation he clearly does not yet grasp, in a manner that elevates Jim Comey above longstanding Justice Department policy and the integrity of a Presidential election.”

Nonetheless, regardless of political leanings, Craig notes that his post “will not be a political screed, so while I always welcome critical and substantive comments on anything I write, please hew to the e-discovery aspects of same.  Please.”  Of course, at least one commenter (so far) still questioned the political intent of his post, characterizing Craig’s comments as “partisan”.  Not surprisingly, there were already 20 total comments on Craig’s post in less than a full day (including mine).

Craig’s post, and the comments back and forth are well worth reading.  One of the eDiscovery discussion points related to the cross-collection correlation of email messages – which Craig wrote about here and we covered here, with back and forth discussion between Craig and our CTO, Bill David – and the challenge of doing that when the Clinton emails were produced to the State Department in paper (yes, paper) format.  There was also a discussion as to whether the Clinton claim that “more than 90% of those emails should have already been captured in the State Department’s email system” was true and could have eliminated most of the email matching effort to determine whether there is significant new information in the Abedin emails that bear investigating.

And, to think this latest round was initiated because of our social media gone wrong poster child, Anthony Weiner.  Some people never learn to think before they hit send.

Bill Dimm provided a link to Hilary Clinton’s fact sheet regarding the emails in one of his comments, which answered the question as to why Clinton produced printed copies to the State Department instead of ESI, noting that the Foreign Affairs Manual of the State Department provides this guidance with regard to how to preserve e-mail records:

“Until technology allowing archival capabilities for long-term electronic storage and retrieval of E-mail messages is available and installed, those messages warranting preservation as records (for periods longer than current E-mail systems routinely maintain them) must be printed out and filed with related records.”  [5 FAM 443.3].

So, our government is just as behind as the rest of the legal profession (if not more) with regard to production formats.  Big surprise.

We’ve already discussed one area where eDiscovery might impact the coming election.  Maybe this is another.

So, what do you think?  Are you sick of hearing about the election yet?  Me too!  Please share any comments you might have or if you’d like to know more about a particular topic.

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

Court Denies Defendant’s Motion to Overrule Plaintiff’s Objections to Discovery Requests

Dropped Cell Phone Does Not Lead to Spoliation Sanctions Under Amended Rule 37(e): eDiscovery Case Law

In Shaffer v. Gaither, No. 14-00106 (W.D. N.C., Sept. 1, 2016), North Carolina District Judge Max O. Cogburn, Jr. ruled that the sanction of dismissal requested by the defendant for the plaintiff’s lost text messages was disproportionate and denied the defendant’s Motion for Sanctions.

Case Background

The defendant filed an instant motion for dismissal based on destruction of electronically stored information (“ESI”).  The plaintiff contended that she was constructively discharged when she quit her job as an Assistant District Attorney due to sexual harassment by defendant and also claimed that defendant defamed her by telling others that she was fired for having a sexual relationship with a married member of the defense bar (which she admitted, but also contended was a falsely given reason for her termination).

The defendant contended that the text messages were lost in May 2014 when plaintiff dropped the cell phone in a bathroom and lost her text messages (a fact which the plaintiff did not deny) and that at the time the phone was destroyed, plaintiff and her counsel knew of the impending litigation, having threatened litigation in a letter nearly a year earlier, and that litigation was in fact filed the month following the phone’s destruction.  In arguing against dismissal, the plaintiff claimed that these texts were not relevant as the defendant did not read them until sometime after he decided to fire plaintiff (which he admitted, but claimed that his decision to fire the plaintiff came after the paramour’s spouse told him about the texts and the alleged affair).

In her affidavit, the plaintiff indicated that she no longer had the phone or the SIM card because when she broke her phone, she made a claim against her insurance, and her insurer required her to turn in both the broken phone and the SIM card (and the texts were not available from the provider).

Judge’s Ruling

In considering the defendant’s motion for dismissal, Judge Cogburn stated that “[u]nder recently revised Rule 37(e), the duty of a party to preserve ESI arises when litigation is ‘reasonably anticipated’ and the loss of ESI is sanctionable when ‘reasonable steps to preserve’ are not taken and such information cannot be restored or replaced through additional discovery.” However, he also noted that the “sanction of dismissal is not, however, a sanction of first resort” with Rule 37(e)(1) and Rule 37(e)(2) allowing the court “to take action no greater than necessary to cure the prejudice resulting from the loss” and that “Rule 37(e)(2) allows treatment of loss under spoliation only where party acted with an intent to deprive.”

While determining that “plaintiff and her counsel failed to take reasonable steps to preserve those texts as they apparently resided only on plaintiff’s phone”, Judge Cogburn said he “cannot conclude that plaintiff acted with an intent to deprive defendant of the ESI under Rule 37(e)(2); thus, spoliation does not yet come into play.”  However, noting that testimony could determine the content of those texts, Judge Cogburn indicated that the court “has not ruled out a spoliation or modified spoliation instruction, and reserved that for consideration after it has heard the evidence at trial.”

So, what do you think?  Would a dismissal sanction have been granted under the old rules?  Please share any comments you might have or if you’d like to know more about a particular topic.

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

Court Denies Defendant’s Motion to Overrule Plaintiff’s Objections to Discovery Requests

Appeals Court Upholds Default Judgment for Discovery Violations, Including Wiping Files from Laptop: eDiscovery Case Law

In Trude et. al. v. Glenwood State Bank, et. al., Nos. A15-0378, A15-1863, A15-1864 (Minn. App., Aug. 15, 2016), a Minnesota Appeals Court affirmed the trial court’s entry of default judgment for repeated discovery violations, including using data wiping software to permanently delete more than 20,000 files from a laptop just hours before it was turned over for forensic examination.

Case Background

This case originally began when the bank tried to repossess earthmoving equipment and other property in 2011 from one of the parties, which resulted in a lawsuit against the bank by two other parties (Trude and his company JBI, claiming that they owned the property).  A series of counterclaims and third party complaints continued over years of litigation.  The defendant had a contentious discovery history with plaintiffs JBI and Trude, with those plaintiffs not answering the defendant’s interrogatories or document requests for two months after an extended deadline, so the defendant moved to compel discovery and sought sanctions.  JBI and Trude responded to the interrogatories immediately before the hearing on the defendant’s motion, but the court found their response untimely without excuse and sanctioned Trude individually to pay the defendant’s costs in bringing the motion.

The defendant’s discovery conflicts with JBI and Trude continued, and the defendant again sought the court’s involvement. In August 2014, the district court ordered Trude to allow the defendant to take JBI’s business laptop offsite to forensically analyze it. JBI turned the computer over, but the defendant’s forensic analyst determined that, just hours before the laptop was picked up, someone had used data-wiping software to permanently delete more than 20,000 files from the computer.

In November 2014, the court found that Trude intentionally destroyed evidence to keep it out of the defendant’s hands and both JBI and Trude were held in contempt for destruction of evidence and their claims were dismissed. The court also ordered JBI and Trude to show cause for their continued failure to disclose projects the earthmoving equipment was used on and warned them that their Answer could be dismissed if they failed to comply. When they did not, the court ordered their Answer stricken and entered a default judgment against them, noting JBI and Trude’s continued failure to provide timely discovery responses, their intentional attempt to prevent the defendant from knowing the earthmoving equipment’s location, Trude’s repeatedly making contradictory statements and engaging in perjury, Trude’s bad-faith failure to comply with orders, and the destruction of data on the laptop. JBI and Trude appealed.

Appellate Court Ruling

The appellate court stated that “Simply put, Trude’s discovery violations were not isolated and clearly reflect a pattern to obstruct litigation tactically and to avoid disclosure”, noting that the “district court consistently found no justification for Trude’s violations.”  Going further, the court noted in its ruling:

“When the district court first sanctioned Trude on December 20, 2013, it found his failure ‘inexcusable’ and intentional. When it held Trude in contempt, the district court found that he acted in bad faith and flagrant disregard for the court’s order. And when it struck JBI and Trude’s answer, it found that Trude failed to justify the nondisclosure, had acted in bad faith, provided misleading or untrue information, and testified falsely. All of the district court’s findings on Trude’s misconduct, willfulness, and unpersuasive justifications are abundantly supported by the record. For one example, the record informs us that the computer-wiping program had been installed and run at 2:39 a.m. on the morning that Trude turned the laptop over to Glenwood, and the wiping program itself had then been deleted without any disclosure to Glenwood, let alone any justification.”

As a result, the court affirmed the district court ruling.

So, what do you think?  Should the wiping of the laptop alone be enough for a default judgment?  Please share any comments you might have or if you’d like to know more about a particular topic.

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

Court Denies Defendant’s Motion to Overrule Plaintiff’s Objections to Discovery Requests

Defendant Receives Terminating Sanctions and More for “Persistent Contemptuous Behavior”: eDiscovery Case Law

In Teledyne Technologies Inc. v. Shekar, No. 15-1392 (N.D. Ill., Aug. 22, 2016), Illinois District Judge Ronald A. Guzmàn, finding that the defendant “has failed to purge himself of contempt for the repeated refusal to comply with this Court’s orders”, entered judgment against the defendant, dismissed his counterclaims, and directed him to pay the plaintiff’s reasonable attorney’s fees and costs incurred as a result of having to pursue relief for the defendant’s “persistent contemptuous behavior”.

Case Background

In this case against a former employee seeking injunctive relief relating to the return of the plaintiff’s property and confidential information following the defendant’s termination, the Court issued a temporary restraining order (“TRO”) in February 2015, finding that the plaintiff “established a substantial likelihood of success with respect to its claims that Shekar, without authorization and in violation of his contractual obligations, misappropriated confidential information and trade secrets from Teledyne; intentionally deleted Teledyne computer files; engaged in deceptive trade practices; interfered with its business relationships; and converted its property, all of which threatened to cause irreparable harm to Teledyne.”  The TRO was replaced with a preliminary injunction (“PI”) in March 2015; a week later, the plaintiff filed a Motion for Rule to Show Cause why the defendant should not be held in contempt for failing to comply with the TRO and PI, which was granted.

After an evidentiary hearing, the Court found the defendant in contempt, and ordered that he purge the contempt by:

  1. produce his home computer and any other devices or electronic storage media accessible to him;
  2. produce at a minimum the three external hard drives connected to the plaintiff-issued laptop on or after his termination date, and either produce or account for the whereabouts of the other eight hard drives or other devices which have connected to the laptop since July 13, 2013;
  3. truthfully and completely answer all interrogatories served upon him in this matter under oath;
  4. turn over, without keeping any copies, all plaintiff’s information including emails and the November 2014 backup files;
  5. explain the nature of the February 3, 2015 data transfer between the plaintiff’s servers and his work laptop, and turn over any such data still accessible to him; and
  6. truthfully divulge the passcode required to access the plaintiff-issued iPhone he previously produced.

The defendant then “engaged in a series of evasions and misrepresentations seeking to vacate or modify the order that he purge himself of contempt”, which included “offensive personal attacks” on the plaintiff’s counsel and even on his own attorneys. The Court eventually ordered the defendant to turn himself in to be detained and committed to the custody of the Bureau of Prisons, but was then contacted by multiple attorneys that the defendant attempted to engage, who notified the court that he had threatened suicide. Even after the court stayed the incarceration order, the defendant still failed to comply with the order to turn over his electronic devices and data, producing a laptop without its original hard drive, an iPhone with only four calls in the call log and a hard drive that had been wiped.

Judge’s Ruling

With the defendant’s history of “manipulations”, Judge Guzmàn stated and ruled, as follows:

“Shekar is clearly in willful contempt. He has been ordered time and again to comply with the Court’s orders and has never manifested the slightest intention to do so. Worse still, he has attempted to deceive the Court at every step of the way. Both before being found in contempt and afterwards, he has displayed a total lack of respect for the truth or the integrity of the legal process. When the Court threatened fines and attorney’s fees, Shekar remained unwavering in his contemptuous behavior. When the Court threatened compulsory imprisonment, Shekar took advantage of the Court’s concern for his well-being — all the while continuing his contemptuous refusal to comply. The Court has paid a high price in the expenditure of time and resources in dealing with Shekar’s persistent misconduct as has the plaintiff. The record is clear that ordinary sanctions have been and will continue to be unavailing, and Shekar leaves the Court with no choice but to impose harsh sanctions, which are not only appropriate, but required.

For the reasons stated above, the Court enters judgment against Shekar on all of Teledyne’s claims, dismisses his counterclaims, and, in addition to the usual bill of costs, assesses Shekar Teledyne’s reasonable attorney’s fees and costs stemming from its arduous efforts in demonstrating Shekar’s contempt.”

So, what do you think?  Were the extreme sanctions deserved?  Please share any comments you might have or if you’d like to know more about a particular topic.

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

Court Denies Defendant’s Motion to Overrule Plaintiff’s Objections to Discovery Requests

Court Declines to Sanction Defendant for Deletion of Former Employee’s Email Account: eDiscovery Case Law

In Moore v. Lowe’s Home Centers, LLC, No. 14-01459 (W.D. Wash., June 24, 2016), Washington District Judge Robert J. Bryan denied without prejudice the plaintiff’s Motion for Sanctions for Defendant’s Willful Spoliation of Evidence for deleting her email account after she was terminated, finding a lack of duty preserve or bad faith on the defendant’s part and minimal (if any) prejudice to the plaintiff.

Case Background

In this case involving allegations of unlawful employment practices by the defendant, the plaintiff (employed at the time by the defendant) emailed the defendant’s Human Resources department and other management about her concerns “on at least eleven occasions, articulating concerns about, inter alia, other employees ‘gang[ing] up’ on her, ‘glaring and…nonverbal harassment,’ and criticism of Plaintiff’s frequent restroom use during pregnancy”. At least on one occasion, one of the defendant’s employees sent correspondence to HR suggesting that the plaintiff might sue. The defendant ultimately terminated the plaintiff in February 2013 and the defendant’s “Legal Counsel was allegedly present for at least one meeting where Plaintiff’s termination was discussed.”

On April 25, 2013, the plaintiff’s attorney demanded that the defendant produce the plaintiff’s personnel file, which, according to the Court, formally placed the defendant on notice of potential litigation.  However, according to the defendant, the plaintiff’s email account was deleted on March 30, 2013 as part of a nightly-scheduled exchange task, which automatically deleted employees’ accounts on a certain date following their termination unless the defendant intervened, for example, when there was a Legal Hold.  The defendant allegedly limited its management and HR employees to 50MB of storage capacity in their inboxes, requiring employees to regularly clean out their inboxes manually or with automatic settings.  HR employees had deleted emails from the plaintiff that they acknowledged included emails that the plaintiff produced in discovery.  The plaintiff filed a Motion for Sanctions for Defendant’s Willful Spoliation of Evidence, requesting terminating sanctions.

Judge’s Ruling

Judge Bryan stated that the “parties’ briefing focuses on four issues, which are the focus of the undersigned’s analysis: (1) Defendant’s duty to preserve; (2) whether Defendant acted willfully or in bad faith; >(3) prejudice to Plaintiff; and (4) the appropriate sanction.”  Taken in turn, Judge Bryan ruled that:

  1. “Based on the parties’ submissions, Defendant did not have a duty to preserve Plaintiff’s emails prior to their deletion. Most of Plaintiff’s emails to HR and management do not raise ‘potential claims,’ but rather raise Plaintiff’s concerns about workplace gossip and challenging relationships.”;
  2. “Defendant was not on notice of potential litigation and had no duty to preserve Plaintiff’s emails until April 25, 2013, so Defendant did not act in bad faith by deleting Plaintiff’s emails, especially where there is no evidence that Defendant deleted them in violation of Defendant’s Records Management Policy or its own consistent records practice.”;
  3. “Even if Defendant willfully violated its duty to preserve Plaintiff’s emails, Plaintiff suffers only minimal prejudice, if any. Plaintiff produced eleven emails that substantiate much of the factual basis for most of her claims.”; and
  4. “Because Plaintiff asks only for the sanction of default, a request the Court denies, other remedies need not be addressed.”

As a result, Judge Bryan denied without prejudice the plaintiff’s Motion for Sanctions for Defendant’s Willful Spoliation of Evidence.

So, what do you think?  Should the duty to preserve have been earlier?  If so, would that have changed the result?  Please share any comments you might have or if you’d like to know more about a particular topic.

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

Court Denies Defendant’s Motion to Overrule Plaintiff’s Objections to Discovery Requests

Court Assesses $3 Million Punitive Sanction to Defendant for “Bad Faith” Deletion of Emails: eDiscovery Case Law
 In GN Netcom, Inc. v. Plantronics, Inc., No. 12-1318-LPS (D. Delaware, July 12, 2016), Delaware District Judge Leonard P. Stark, finding a high degree of fault, bad-faith intent to deprive the plaintiff of responsive documents and prejudice caused to the plaintiff’s case, imposed several sanctions against the defendant, including “punitive sanctions in the amount of $3,000,000” for the “intentional and admitted deletion of emails” by the defendant’s Senior Vice President of Sales.

Case Background

In this case with claims of monopolization, attempted monopolization and common-law tortious interference with business relations against the defendant, the defendant (upon receiving a demand letter from the plaintiff in May 2012) promptly issued a litigation hold to relevant employees and provided training sessions to ensure compliance, then issued an updated litigation hold with quarterly reminders once the lawsuit was filed.

However, the defendant’s Senior Vice President of Sales (Don Houston) on several occasions after the lawsuit was filed, replied to email discussions among co-workers, requesting them to be careful about competitive statements and instructing them to delete those email chains where discussions were taking place.  Houston also deleted his own emails, deleting more than 40% of his emails from November 18, 2013 through February 19, 2014 from both his legal folder and his deleted files folder.  In addition, sales team members were instructed to use code words to refer to competitors, such as “zebra” for the plaintiff.

When the defendant’s Associate General Counsel became aware of the deletions, she contacted the IT department, which implemented an anti-email-deletion litigation hold feature and provided her with Houston’s back-up tapes going back to November 2013.  The defendant retained an eDiscovery provider to restore back-up tapes and preserve emails still available and retained another eDiscovery provider to quantify the emails that had been deleted.  The second eDiscovery provider estimated that as many as 90,000 emails were unrecoverable, with as many as 6,000 estimated to be responsive to the plaintiff’s discovery requests.  The defendant chose not to complete the project and did not disclose the analysis for almost ten months; the plaintiff, using its own expert to conduct analysis, determined as many as 15,000 deleted emails would have been responsive to discovery requests.  The plaintiff filed a Motion for Sanctions against the defendant for the deleted emails.

Judge’s Ruling

Judge Stark began the discussion portion of the ruling by stating that “It is undisputed that thousands of Mr. Houston’s emails ‘should have been preserved in the anticipation or conduct of litigation,’ were ‘lost,’ and ‘cannot be restored or replaced through additional discovery.’”  Judge Stark refuted the defendant’s arguments that it took reasonable steps to preserve ESI, that it had no intent to deprive the plaintiff of discovery (and therefore did not act in bad faith) and that the plaintiff had not demonstrated any prejudice, stating, among other things, that:

  • The defendant’s “extensive document preservation efforts do not absolve it of all responsibility for the failure of a member of its senior management to comply with his document preservation obligations”,
  • “in Plantronics’ own words, Mr. Houston instructed others to delete emails ‘for purposes of protecting the business’”, and
  • “Because the Court has found that Plantronics acted in bad faith, the burden shifts to Plantronics to show a lack [of] prejudice to GN resulting from Mr. Houston’s deletion of emails.” Judge Stark refuted the defendant’s three arguments as to lack of prejudice from the deletion of emails.

With the determination that sanctions were in order, Judge Stark rejected the idea of re-opening discovery as a possible remedy.  Instead, he noted that “[m]onetary sanctions, although unable to fully redress the prejudice to GN, are warranted.”

With that in mind, Judge Stark stated the following:

“[T]he Court finds that Plantronics’ high degree of fault, its bad-faith intent to deprive GN of responsive documents, and the prejudice it has caused to GN’s case – along with the difficulties it has created for GN in ‘getting to the bottom of the deletion story’ and its (at times) unwillingness to acknowledge wrongdoing – further merit punitive monetary sanctions.  Therefore, the Court will impose a sanction in the amount of $3,000,000 on Plantronics, payable to GN.”

In addition, Judge Stark added “monetary sanctions in the form of the reasonable fees and costs incurred by GN in connection with the disputes leading to today’s Order”, “possible evidentiary sanctions, if requested by GN and found by the Court to be warranted as this case progresses toward trial”; and “instructions to the jury that it may draw an adverse inference that emails destroyed by Plantronics would have been favorable to GN’s case and/or unfavorable to Plantronics’ defense.”

So, what do you think?  Were the sanctions excessive or were they appropriate?  Please share any comments you might have or if you’d like to know more about a particular topic.

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

Appeals Court Reverses Terminating Sanctions Against Plaintiff for Deletion of Emails: eDiscovery Case Law

In Flagship Theatres of Palm Desert, LLC v. Century Theatres, Inc. et. al., No. B257148, Consolidated  with Nos. B259552 and B261149 (Cal. App., May 24, 2016), the Court of Appeals of California, Second District determined that the trial court “abused its discretion” by “granting terminating sanctions in a case in which the prejudice to the non-offending party can be ameliorated by a more limited remedy”.  As a result, the appeals court reversed the judgment and remanded it back to the trial court with a lesser sanction, prohibiting the plaintiff “from offering evidence of acts, events, or communications occurring during the period” when one of the plaintiffs deleted emails.

Case Background

In this antitrust suit, the plaintiffs, who operated a movie theater, claimed that the defendants had conspired to keep the most popular films from being distributed to the plaintiff’s theater and filed suit in 2006.  For the next two years, the case proceeded through discovery, and each side requested and received documents from the other. Most notably, in December 2006, one defendant served a set of requests for production in which it requested numerous categories of documents from the plaintiffs.  Ultimately, the plaintiffs voluntarily dismissed movie distributor defendants from the case, but added Cinemark as a defendant following Cinemark’s acquisition of Century.

From the date of production in 2007 until the trial court granted summary judgment in July 2008, no defendant moved for further production.  That summary judgment decision was reversed by the appellate court in 2011 and remanded back to the trial court for further proceedings.

In the summer of 2012, one of the plaintiffs (Tabor) began experiencing problems sending and receiving email from the AT&T account that he used for both personal and business email.  On the advice of an AT&T customer service representative, he deleted thousands of email messages to free up space, deleting the earliest emails up to February 19, 2009.  The plaintiffs then received another discovery request from the new defendant (Cinemark) requesting emails. Upon realizing that he had deleted items he had a duty to preserve, Tabor attempted to recover the emails but was unsuccessful. When Cinemark learned that Tabor had deleted the emails, it moved for sanctions. The trial court denied the motion because it was unable to fully evaluate the extent of prejudice to Cinemark. Subsequently, Cinemark renewed its motion for sanctions. This time, the trial court granted the motion and the plaintiff appealed.

Appellate Court’s Ruling

The court noted that “Cinemark likely suffered some prejudice, and it is entitled to a remedy to compensate for this prejudice. But the potential for prejudice is limited to the period between the spring of 2007 [the time period up to which the plaintiff had previous produced relevant ESI] and February 19, 2009 because the relevant emails outside that period, with some minor exceptions, were saved. Accordingly, the trial court abused its discretion by not limiting appropriate sanctions to the period between the spring of 2007 and February 19, 2009.”

The appellate court also disagreed with the trial court opinion that the plaintiffs “must be able to establish that they actually sought to license and play enough films to generate 40% of the cumulative box office grosses”, noting that the plaintiffs might have realized that distributors were unwilling to give them certain kinds of movies and simply stopped requesting them.  Because the appellate court determined that the deletion of emails outside of the 2007-2009 time frame was “small scale and innocuous”, it determined that there was no justification for additional sanctions.

As a result, the appellate court reversed the judgment and remanded it back to the trial court with a lesser sanction, prohibiting the plaintiff “from offering evidence of acts, events, or communications occurring during the period” between spring 2007 and February 19, 2009 (unless Cinemark offered evidence during that time period that was “more than nonsubstantive, peripheral, or foundational”, in which case, the plaintiffs could present evidence and seek damages pertaining to that time period).

So, what do you think?  Was the appellate court sanction a more appropriate remedy?  Please share any comments you might have or if you’d like to know more about a particular topic.

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

Court Sanctions Plaintiff for Failing to Preserve Customer Communications: eDiscovery Case Law

Remember Matthew Enterprise, Inc. v. Chrysler Group, where court the granted the defendant’s motion to compel production from the plaintiff’s customer communications database?  Apparently, that production didn’t go so well…

In Matthew Enterprise, Inc. v. Chrysler Group, LLC, No. 13-cv-04236-BLF (N.D. Cal. May 23, 2016), California Magistrate Judge Paul S. Grewal, in one of his last orders before leaving the bench, determined that there was “no question that spoliation has occurred” and granted the defendant’s motion for sanctions for spoliation, “in its entirety, except for the proposed remedy”, opting for a middle ground between the parties’ proposals on what the remedy should be.

Case Background

In this price discrimination dispute between an auto manufacturer and its dealer (which does business as Stevens Creek Chrysler Jeep Dodge Ram), the defendant previously moved to compel the plaintiff to produce emails from the personal accounts of the plaintiff employees (because the plaintiff did not furnish all its employees with email accounts, many of them used their personal accounts for business purposes) and from the plaintiff’s customer communications database operated by an outside vendor.  In December 2015, the court denied the motion with respect to the personal emails but granted the motion with respect to the customer communications database, noting that the plaintiff did have control of that data, having already produced data from this source (we covered that ruling here).

After further investigation, however, the plaintiff discovered that it simply had very few documents to produce.  For example, “around June or July 2013, [the plaintiff] changed email vendors for its corporate-assigned email accounts” and “did not retain…the emails contained on the previous email system.”  In addition, because the outside vendor that maintains and operates the plaintiff’s customer communications database automatically deletes “all records of communication; inbound/outbound email, read receipt notifications and manually entered notes by a dealership representative” after 25 months, effectively all customer communications from the period at issue were lost irretrievably when the plaintiff reached out for that data in July 2015.  The parties did not dispute that the duty to preserve documents attached when the plaintiff sent a litigation threat letter in August 1, 2012.

As a result, the defendant filed an instant motion for sanctions for spoliation, seeking an order precluding the plaintiff from offering testimony or interrogatory responses relating to several topics, including those related to diversion and the effect of the defendant’s incentive program on the plaintiff’s decision to raise prices in August 2012.

Judge’s Ruling

Judge Grewal began his order with the following statement:

“The rules governing parties’ duties to preserve data do not demand perfection. Only when a party should have preserved electronically stored information ‘in the anticipation or conduct of litigation’ and when that party ‘failed to take reasonable steps to preserve it’ may a court order corrective measures.  The standard is an attainable one.”

With regard to the plaintiff’s steps to preserve the information, Judge Grewal stated “There is no question that spoliation has occurred. Stevens Creek does not dispute that it should have preserved the emails and the AVV communications. Stevens Creek took literally no action to preserve the information. And, despite Stevens Creek’s belated best efforts, these communications are lost forever.”

As for whether that spoliation prejudiced the defendant, Judge Grewal noted that “Stevens Creek’s lackadaisical attitude towards document preservation took away” the opportunity for the defendant to ask the jury to decide whether its anecdotal evidence undercut the plaintiff’s statistical evidence.  Because of that, Judge Grewal determined that “[n]ot only has spoliation occurred, but it also has prejudiced Chrysler.”

With regard to the remedy, Judge Grewal opted for a “middle ground” between what the defendant requested (noting that “precluding evidence on diversion would effectively decide the case for Chrysler”) and what the plaintiff proposed “allowing Chrysler to introduce communications, subject to the Federal Rules of Evidence, post-dating the alleged price discrimination period as if they came from that period itself.”  Judge Grewal did adopt the plaintiff’s suggestion, but also ordered that the defendant would be allowed to present evidence regarding the plaintiff’s spoliation when the plaintiff offered certain testimony, that the presiding judge would be allowed to “giv[e] the jury instructions to assist in its evaluation of such evidence or argument,” and that the defendant would be awarded “reasonable attorney’s fees” incurred in bringing the motion.

So, what do you think?  Did the court go far enough with its sanctions of the plaintiff?  Please share any comments you might have or if you’d like to know more about a particular topic.

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