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Sanctions

In No Small Ruling, Court Takes Defendant to Task for Discovery Violations: eDiscovery Case Law

In Small v. Univ. Med. Ctr., No. 2:13-cv-0298-APG-PAL (D. Nev. Aug. 9, 2018), Nevada Magistrate Judge Peggy A. Leen, in a lengthy ruling so large it included a table of contents, accepted and adopted in part and overruled in part the Special Master’s Report and Recommendation and Final Findings of Fact and Conclusions of Law.  Judge Leen sanctioned the defendant with an adverse inference instruction to the jury instead of the default judgment sanction recommended by the special master.

Case Background

In this case involving claims against the defendant for unpaid wages and overtime which followed a Department of Labor (“DOL”) investigation that addressed issues about uncompensated time for hourly employees related to uncompensated meal breaks, the court “reluctantly” appointed a special master after “a series of hearings over many months made it painfully apparent” that the defendant, its counsel, and consultants were failing in their efforts to produce ESI responsive to plaintiffs’ discovery requests, including issuing a production to the plaintiffs that was mostly “unintelligible” with extracted text in pages of undecipherable codes complete with Japanese and Korean characters.

In special master Daniel Garrie’s report (covered by us nearly four years ago here), he found that “Not a single UMC executive took any of the steps necessary to ensure the preservation of evidence. No UMC executive took responsibility for instituting or enforcing a ‘litigation hold,’ or otherwise acting to ensure the preservation of documents in this case.”  Calling the defendant’s widespread failure to preserve data a “mockery of the orderly administration of justice”, he recommended sanctions, stating, “Defendant UMC’s extraordinary misconduct and substantial and willful spoliation of relevant ESI in this case resulted in substantial prejudice to Plaintiffs and the classes, and misled Plaintiffs, the Court, and the Special Master on numerous discovery issues…The level of intentional destruction of evidence by UMC shocks the conscious. As such, as to the 613 Opt-In Plaintiffs, default judgment should be entered against UMC pursuant to Rule 37(b)(2)(A)(iii) & (vi) and the Court’s inherent powers.”

Judge’s Ruling

In a lengthy ruling that re-capped in detail the complaint, the various hearings regarding eDiscovery issues and various declarations during the special master proceedings, Judge Leen stated the following findings and conclusions:

  • “Special Master Garrie was Professional, Neutral, Possessed Specialized Knowledge and Expertise, and Remedied Much of UMC’s ESI Deficiencies” (despite the defendant’s contentions to the contrary);
  • “UMC Failed to Comply with the Court’s Orders to Preserve and Produce ESI”;
  • “UMC Had No Preservation Policy or Litigation Hold Policy and Failed to Timely Implement One”;
  • “UMC Executives Failed to Accept Responsibility for Ensuring that ESI was Preserved and Failed to Notify Key Custodians and IT Staff to Preserve, and Prevent Loss, or Destruction of Relevant, Responsive ESI”;
  • “UMC Failed to Disclose the Existence of Relevant ESI Repositories, Including Multiple Timekeeping Systems and the Q-Drive (drive with files containing human resources, corporate compliance, employee grievance, payroll, and DOL investigation data) Until Late in the Special Master Proceedings”;
  • “UMC Modified, Lost, Deleted and/or Destroyed ESI Responsive to Plaintiffs’ Discovery Requests”;
  • “UMC’s Failure to Comply with its Legal Duty to Preserve, Failure to Put in Place a Timely Litigation Hold, Failure to Comply with Multiple Court Orders to Preserve and Produce Responsive ESI, and Loss and Destruction of Responsive ESI (1) Necessitated the Appointment of a Special Master, (2) Caused Substantial Delay of these Proceedings, and (3) Caused Plaintiffs to Incur Needless Monetary Expenses”; and
  • “The Special Master Correctly Concluded UMC Repeatedly Misrepresented the Completeness of its Production of Documents Produced to DOL; However, UMC Was Not Ordered to Produce Kronos Payroll Data in Spreadsheet Format”.

With regard to sanctions for the defendant, Judge Leen stated “There is no question UMC failed to implement a timely litigation hold and failed to communicate its legal preservation duties to key custodians of discoverable evidence. There is no question that UMC failed to preserve discoverable ESI. There is no question data was lost or destroyed as a result. There is no question sanctions are warranted. UMC concedes they are. The only question is what sanctions are appropriate and proportional for the violations.”

Ruling “it is ‘just and practicable’ to apply the amended version of Rule 37(e)”, Judge Leen ultimately determined “Although the court finds plaintiffs have been prejudiced by the loss of data from key repositories and custodians, the loss has not threatened to interfere with the rightful decision of the case on its merits given the large volume of ESI the special master was able to ensure that UMC produced. For these reasons, the court finds that lesser sanctions are appropriate, proportional, and no greater than necessary to cure the prejudice caused by the loss of ESI uncovered by the special master.”

As a result, Judge Leen, while accepting and adopting the special master’s report, overruled the Special Master’s recommendation of case dispositive sanctions and instead stated: “UMC is sanctioned in the form of an instruction to the jury that the court has found UMC failed to comply with its legal duty to preserve discoverable information, failed to comply with its discovery obligations, and failed to comply with a number of the court’s orders. The instruction will provide that these failures resulted in the loss or destruction of some ESI relevant to the parties’ claims and defenses and responsive to plaintiffs’ discovery requests, and that the jury may consider these findings with all other evidence in the case for whatever value it deems appropriate.”  She also imposed monetary sanctions against the defendant in the form of “reasonable costs and attorneys’ fees unnecessarily incurred by plaintiffs”.

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

For more about this case, check out this Above the Law article written by Mike Quartararo.

Case opinion link courtesy of eDiscovery Assistant.

Also, if you’re going to be in Houston this Thursday, September 27, just a reminder that I will be speaking at the second annual Legal Technology Showcase & Conference, hosted by the Women in eDiscovery (WiE), Houston Chapter, South Texas College of Law and the Association of Certified E-Discovery Specialists (ACEDS).  I’ll be part of the panel discussion AI and TAR for Legal: Use Cases for Discovery and Beyond at 3:00pm and CloudNine is also a Premier Platinum Sponsor for the event (as well as an Exhibitor, so you can come learn about us too).  Click here to register!

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.

Houston, We Have an Adverse Inference Finding: eDiscovery Case Law

In Hernandez, et al. v. City of Houston, No. 4:16-CV-3577 (S.D. Tex. Aug. 30, 2018), Texas District Judge Kenneth M. Hoyt, finding that the defendant “intentionally destroyed” evidence by wiping the hard drives of several custodians no longer employed by the City, determined “that entering an adverse inference finding is appropriate” against the defendant.

Case Background

In this case regarding alleged illegal detainment of the plaintiffs in City jail where each of the plaintiffs contends that he was held in the City’s jail for more than 48 hours without a judicial determination or a probable cause hearing, the Court entered an agreed ESI order in November 2017, which promoted cooperation between the parties (including agreement on search terms) and designated thirteen specific custodians, whose records the plaintiffs were seeking.  Weeks after the ESI Order, the defendant had still not supplemented missing metadata from an earlier production to bring the production into compliance with the Court’s Order and, after several meet and confers by phone, defendant’s counsel requested an in-person meeting.

On December 13, 2017, during that in-person meeting, the defendant represented that (i) it had not interviewed any of the custodians listed in the ESI Order, (ii) it had not collected documents from any of the custodians listed in the ESI Order and (iii) it had “wiped” the hard drives of six of those custodians no longer employed by the defendant.  At that meeting, the plaintiffs offered to provide names of vendors to help with document processing and review and offered to pay a substantial portion, if not all, of the costs that might be incurred. The defendant refused this offer and missed its December 15, 2017 deadline to certify document production was complete.

In January 2018, the defendant represented that it had collected 72,000 documents, but had yet to review them, despite the passage of the discovery deadline. By February 28, 2018, when the plaintiffs moved to compel production, the defendant had only produced 126 files from the Mayor’s office – all of which was unresponsive to the plaintiffs’ document requests.  In April 2018, the defendant claimed it had collected 2.6 million documents by running “word searches based on the ESI Protocol” and it would take 17,000 hours to review all of those documents.  Based on these representations, the plaintiffs agreed to provide a narrower set of search terms.  On April 10, 2018, the Court ordered the defendant to “produce all non-privileged documents responsive to the plaintiffs’ requests for production nos. 1-4, 8 and 9 in accordance with the Court’s November 8, 2017, ESI Order” and also notified the defendant that “[f]ailure to comply with this Order will result in sanctions, including but not limited to monetary sanctions and an adverse inference instruction”.

When the defendant ran the plaintiffs’ narrowed search terms, it retrieved 48,976 documents.  However, it then proceeded to unilaterally apply its own search terms, which retrieved 9,992 documents, which were reviewed for responsiveness.  The defendant produced only 368 responsive documents in response to the April 10 court order.

Judge’s Ruling

With regard to the wiped drives for the six custodians no longer employed by the defendant, Judge Hoyt stated: “Those hard drives contained ESI that should have been preserved by the City as soon as it anticipated litigation, and definitely after the instant lawsuit was filed. The City acknowledged its “clear obligation” to preserve all responsive documents after the litigation was pending. Yet the City failed to take reasonable steps to preserve the data on the hard drives and intentionally wiped the drives. The Court determines that the information on the hard drives cannot be restored or replaced through additional discovery.”

Judge Hoyt also found that the defendant had “Made Misrepresentations to the Court About Its Flawed Discovery Process”, indicating that it: 1) “represented that it needed to review 2.6 million documents”, 2) “did not review the 78,702 documents generated by the plaintiff’s April 2018 search terms”, 3) “represented that it had issued a litigation hold” and 4) “obfuscated the status of the hard drives”.

As a result, Judge Hoyt ruled, as follows:

“Federal Rule of Civil Procedure 37(b)(2) provides that an order establishing contested facts as true is an appropriate remedy when a party violates a discovery order. See Rule 37(b)(2)(i)-(ii). This type remedy cures the violation without inflicting additional costs on the parties, and for that reason, the Court determines, in its discretion that entering an adverse inference finding is appropriate…

Therefore, the Court HOLDS that the following inference is appropriate based on the City’s conduct:

It is established that (a) throughout the class period, the City of Houston had a policy of not releasing warrantless arrestees who had not received neutral determinations of probable cause within the constitutionally required period of time; (b) throughout the class period, the City’s policymakers were aware of this policy; and (c) the City’s policymakers acted with deliberate indifference to the unconstitutional policy and the constitutional violations that resulted.”

So, what do you think?  Was the adverse inference sanction appropriate 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.

Also, if you’re going to be in Houston on Thursday, September 27, just a reminder that I will be speaking at the second annual Legal Technology Showcase & Conference, hosted by the Women in eDiscovery (WiE), Houston Chapter, South Texas College of Law and the Association of Certified E-Discovery Specialists (ACEDS).  I’ll be part of the panel discussion AI and TAR for Legal: Use Cases for Discovery and Beyond at 3:00pm and CloudNine is also a Premier Platinum Sponsor for the event (as well as an Exhibitor, so you can come learn about us too).  Click here to register!

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.

Metadata from Photos Leads to Dismissal of Case Against New York City: eDiscovery Case Law

In Lawrence v. City of New York, et al., No. 15cv8947 (S.D.N.Y. July 27, 2018), New York Senior District Judge William H. Pauley, III granted in part and denied in part the defendants’ motion for sanctions, ruling to dismiss the case against the defendants, but denying the motion for sanctions against the plaintiff’s counsel and denying the motion for reimbursement of attorney’s fees, stating “an award of attorney’s fees ‘would be a hollow victory … as it would likely be uncollectible.’”

BTW, in addition to exhibiting at ILTACON in National Harbor, MD next week in booth 936, CloudNine will also host a happy hour on Tuesday, August 21 from 4:30 to 6:30pm ET at the National Harbor’s Public House (click here to register).  Come and get to know CloudNine, your provider for LAW PreDiscovery®, Concordance® and the CloudNine™ SaaS platform!  We want to see you!

Case Background

In this case involving claims against the NYPD after an alleged warrantless search of the plaintiff’s home in August 2014, the plaintiff provided photographs that she claimed depicted the condition of her apartment several days after the incident in September 2016.  During a December 2016 deposition, the plaintiff testified that her son or a friend took the photographs two days after the incident, but in a subsequent deposition in April 2017, she indicated that she had taken most of the pictures, that her son had taken a few, and that none of them were taken by the previously described friend.  As a result of the conflicting testimony, the defendants requested the smartphones which the plaintiff claimed were used to take the photos. While the plaintiff’s counsel (Jason Leventhal) objected to that request, he did agree to produce the photographs’ native files, which included metadata.

When the defendants checked the photographs’ metadata, they learned that 67 of the 70 photographs had been taken in September 2016, which was two years after the incident and immediately before the plaintiff provided them to her counsel.  The defendants sent a Rule 11 safe-harbor letter to plaintiff’s counsel, shortly after which he moved to withdraw as counsel, disavowing any prior statements regarding the photographs and his ethics counsel indicated that other events compelled him to withdraw.  While his motion was pending, the plaintiff terminated his representation.  Subsequently, the plaintiff attributed her production of the photos as an accident because she had an eye infection.  After the defendant requested sanctions under FRCP rules 11, 26, and 37, the plaintiff attributed her production of the photos because of mental illness.

Judge’s Ruling

Noting that “the date the photographs were created became apparent only after Leventhal filed suit and Lawrence testified”, Judge Pauley stated that “Based on the evidence supporting Lawrence’s claims, including the 911 call produced in discovery, this Court cannot conclude that Leventhal had a duty to withdraw Lawrence’s claims.”  He ruled similarly with regard to the plaintiff’s conduct regarding Rule 11.

With regard to Rule 26 sanctions, Judge Pauley noted that “Leventhal repeatedly attempted to gain access to the devices containing the photos” and that “a reasonable lawyer would not have doubted that they showed what Lawrence claimed”, so he ruled that “Leventhal’s production of the photos may have been careless, but was not objectively unreasonable.”  As for the plaintiff, Judge Pauley stated: “On the other hand, it is clear that Lawrence, or someone acting on her behalf, created these photographs to bolster her claims, and then she falsely testified about them. Accordingly, sanctions under Rule 26 are appropriate.”

As for Rule 37 sanctions against plaintiff’s counsel, Judge Pauley, in denying the motion, stated: “Leventhal was unaware of Lawrence’s actions and took corrective action after learning that the photographs were taken two years later. Defendants have not shown that Leventhal handled his discovery obligations in an unethical or willfully non-compliant manner.”

However, noting that “Lawrence’s attempts to explain the photographs and her deposition testimony continue a pattern of evasion and untruths” and that her “deceptive conduct and shifting excuses have completely undermined her credibility”, Judge Pauley stated: “Lawrence’s conduct ‘requires that the policy favoring adjudication on the merits yield to the need to preserve the integrity of the courts.’…Accordingly, this case is dismissed.”  However, with regard to the defendants’ request for attorneys fees, Judge Pauley observed that “Lawrence is a widow, rents an apartment, and as of November 2015 was unemployed” and denied the request “as it would likely be uncollectible.”

So, what do you think?  Was dismissal too harsh a sanction here?  Should the plaintiff’s counsel have been held responsible?  Please let us know if any comments you might have or if you’d like to know more about a particular topic.

Happy Anniversary to my beautiful wife Paige!  I love you honey!

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.

Even with Bad Communication and Unfulfilled Discovery Obligations, Sanctions Still Not Granted: eDiscovery Case Law

eDiscovery Case Week concludes today!  We had a great webcast on Wednesday where Tom O’Connor and I discussed key eDiscovery case law for the first half of 2018 – 22 cases in all!  Check it out! – Doug

In US v SuperValu, No. 11-3290 (C.D. Ill. July 12, 2018), Illinois District Judge Richard Mills ruled against sanctions requested by the defendants at this time, even though the relators didn’t “live up to their discovery obligations.”

Case Background

The relators filed this qui tam action alleging the defendants defrauded government healthcare programs by fraudulently reporting inflated Usual and Customary (U&C) pharmacy prices for prescriptions filled for government healthcare program beneficiaries.

In their first amended complaint, the relators claimed they each spoke individually with employees of certain of the defendants’ pharmacies. The defendants alleged the relators relied heavily on these alleged conversations to support their fraud allegation, and that the relators shredded contemporaneous notes of “supposed conversations” with the defendants’ employees. It was also charged that the relators intentionally deleted computer files concerning these conversations and threw away the computer on which the files were stored, thereby precluding examination of the relevant metadata.

On December 20, 2016, the defendants served interrogatories seeking details of the alleged conversations, and the relators identified 19 alleged conversations between employees of the parties. The defendants also requested production which sought, among other things, documents relating to certain phone calls. The relators produced no documents in response to the requests.

Subsequently, the relators’ counsel produced five documents which one of the relators’ employees confirmed were the notes that he made on his home computer concerning phone calls he allegedly made to various defendant pharmacies. He then testified he had no independent recollection of the substance of these calls. The computer on which he prepared the notes “quit working,” and he threw it away after the filing of this lawsuit, which “deleted everything [all documents he prepared on the computer related to this lawsuit] after [he] sent them to counsel.” A number of other notes were also prepared on the computer, and some of the handwritten notes or reports that were the basis for this information were shredded or destroyed.

The relators claimed the defendants made no effort to investigate the matters it addresses in its motion and did not speak to counsel for the relators before filing the motion. They also disputed the defendants’ allegations that “Notes not produced to date have been lost forever, and all metadata reflecting the timing of the creation and editing of even the summaries has likewise been lost and is non-recoverable.”

The relators claimed their counsel has electronic copies of all the notes discussed by defendants in its motion, with metadata, and some copies of Schutte’s handwritten notes. However, the defendants did not ask for these materials. The relators contended that even if certain handwritten notes were destroyed, all relevant information was preserved.

The relators also alleged that a number of these allegedly spoliated documents are protected by the work product doctrine and were not subject to discovery.  The defendants filed a motion for limited sanctions for spoliation of evidence.

Judge’s Ruling

After taking into consideration FRCP 26 and 37, as well as previous case law, Judge Mills ruled:

“In some respects, it appears that the parties are having communication problems. If the documents are simply paper or electronic records of statements made by employees of the defendants, the Court fails to see how such documents could possibly constitute the relators’ work product. Accordingly, those documents should have been turned over to the Defendants upon request, pursuant to Rule 26(b)(3)(C)(ii).”

Judge Mills continued: “The defendants will have an opportunity to question the relators about the alleged conversations, the circumstances under which any notes were prepared, and any other relevant matters, including the destruction of the computer and any metadata that may have been lost. If it comes to light that a party acted inappropriately or in bad faith, the Court will consider imposing sanctions at that time…Although it appears that the Relators may not have lived up to their obligations under the discovery rules, the Court does not believe that the sanctions requested by the Defendants are appropriate at this time.”

So, what do you think? Is this ruling within the correct interpretation of spoliation sanctions under Rule 37? Please share 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 Sanctions Plaintiff After Jury Verdict for Failing to Disclose Third Party Communications: eDiscovery Case Law

In Singer Oil Co., LLC v. Newfield Exploration Mid-Continent, Inc., No. CIV-16-768-M (W.D. Okla. June 5, 2018), Oklahoma District Judge Vicki Miles-LaGrange ruled that the plaintiff did violate Federal rules by not disclosing the communications its counsel had with the third parties referenced in plaintiff’s counsel’s time records, but found that the defendant’s proposed sanction was an “extremely harsh sanction not warranted by the circumstances involved” and limited the plaintiff sanction to require the plaintiff to pay the attorneys’ fees the defendant incurred in filing its motion for sanctions and its reply.

Case Background

In November 2016, the plaintiff served its responses to the defendant’s discovery requests, representin that it had fully and truthfully answered the interrogatories and had produced or would produce all responsive documents to the requests for production.  The plaintiff subsequently confirmed that all responsive documents had been produced, did not claim privileged status for any unproduced documents and did not supplement its response to interrogatories or requests for production in the case.

After this case was tried to a jury in November 2017, the plaintiff filed its Amended Motion to Recover Attorney’s Fees. During review of the time records associated with that motion, the defendant became aware for the first time that throughout the course of this litigation, the plaintiff’s attorney frequently corresponded by e-mail with numerous third parties regarding several of the issues that were disputed in this litigation and the two wells at issue in the case, with the defendant asserting that at least two of the communications took place before plaintiff served its discovery responses.  In its response, plaintiff asserted that it did not violate the Court’s orders, did not violate the spirit of the Court’s orders, did not violate the letter or spirit of the discovery code and contended that the majority of the communications would fall under the work product doctrine.

Judge’s Ruling

After considering Federal Rules 26(g)(1),(3), 26(e)(1)(A) and 37(c)(1), Judge Miles-LaGrange found that “while plaintiff may not have intentionally violated the above-referenced discovery rules, plaintiff did violate those rules by not disclosing the communications its counsel had with the third parties referenced in plaintiff’s counsel’s time records. Request for Production No. 5 specifically requests any and all correspondence between plaintiff (including plaintiff’s counsel) and any other person or entity with respect to Newfield, the Smith Well, the Edgar Well, or the subject of this lawsuit; the Court finds the communications at issue would fall within this request for production. Additionally, while these communications likely would be protected by the work product doctrine, plaintiff did not assert such and did not provide Newfield with a privilege log such that Newfield could contest any claim of privilege. However, the Court finds that based upon plaintiff’s description of the communications at issue, any lack of production only had a very minimal, if any, impact on this case.”

As for an appropriate sanction against the plaintiff, Judge Miles-LaGrange stated: “In light of the amount of attorneys’ fees requested by plaintiff and the amount of costs taxed, the Court finds Newfield’s proposed sanction is an extremely harsh sanction not warranted by the circumstances involved. Having reviewed the parties’ submissions, the Court finds an appropriate sanction would be to require plaintiff to pay the attorneys’ fees Newfield incurred in filing its motion for sanctions and its reply.”

So, what do you think?  Do you think that was a sufficient sanction for failing to produce relevant ESI?  Please share any comments you might have or if you’d like to know more about a particular topic.

Case opinion link courtesy of eDiscovery Assistant.

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

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

Court Grants Adverse Inference Sanction Against Infringing Author: eDiscovery Case Law

In Nunes v. Rushton, No. 2:14-cv-00627-JNP-DBP (D. Utah May 14, 2018), Utah District Judge Jill N. Parrish, ruling that the plaintiff was prejudiced by the deletion of one of the defendant’s Google “sock puppet” accounts, granted the plaintiff’s motion for sanctions in part, ordering an adverse instruction to the jury regarding the “bad faith” deletion of that account.  Judge Parrish denied the motion with regard to several other accounts, ruling that the plaintiff was not prejudiced by deletion of those accounts (as most of the information was still available or recoverable).

Case Background

In this case, the defendant infringed the plaintiff’s copyright in her novel by copying protected elements of the book and distributing copies of the infringing work to reviewers and bloggers for promotional purposes. Around this time, the defendant created a number of “sock puppet” accounts on Google and Yahoo by registering these accounts under usernames that did not identify her as the individual controlling the accounts and used these accounts to create several sock puppet accounts on Facebook, Goodreads, and Amazon. The defendant then used the Goodreads and Amazon sock puppet accounts to post positive reviews of her own books and negative reviews of the plaintiff’s books. The defendant also created a Twitter account and a Blogspot account under her pen name to promote her books.

In August 2014, the plaintiff became aware of the potential infringement, attempted to obtain an advance copy of the infringing novel and discover the true identity of the defendant’s pen name. The defendant used her sock puppet social media accounts to anonymously criticize the plaintiff’s efforts to investigate the infringing novel. Sometime in August or September of 2014, after the plaintiff had discovered the defendant’s identity, The defendant deleted most of her sock puppet accounts. The defendant also deleted her pen name Twitter and Blogspot accounts. The plaintiff filed this lawsuit on August 28, 2014.

During litigation, the plaintiff made a discovery request for documents stored on the defendant’s various Google and Yahoo accounts. On August 12, 2015, while this discovery request was pending, the defendant deleted one of her Google sock puppet accounts.  When the court granted a motion to compel the defendant to produce documents from her Google and Yahoo accounts, counsel for the defendant represented that she had lost the passwords to the accounts, leading to subpoenas to those services.  The defendant deleted all of the remaining accounts on March 21, 2016, asserting that she did so because she believed that all of the documents associated with the accounts had been or would be produced by Google and Yahoo pursuant to the subpoenas.  Google stated that the account deleted on August 12, 2015 could not be recovered because too much time had passed, but preserved the accounts that had been deleted on March 21, 2016.

Judge’s Ruling

In analyzing the defendants’ motion, Judge Parrish denied the motion for sanctions regarding most of the accounts, determining that the plaintiff suffered no prejudice because the information pertaining to those accounts either remained, was saved by the plaintiff before the accounts were deleted or could be recovered by Google and Yahoo.

As for the August 12, 2015 deletion of one of the Google accounts, Judge Parrish stated: “At the time of the deletion, Rushton had a duty to preserve this account because litigation was pending. The court also finds that Nunes was prejudiced by the deletion because any documents or emails stored on this account were irretrievably lost… Given that litigation had been pending for almost a year, that Rushton was represented by counsel, and that Nunes had requested the production of documents associated with this Google account, the court infers that Rushton’s August 12, 2015 deletion of one of her Google accounts was done in bad faith.”

As a result, Judge Parrish ordering an adverse instruction to the jury regarding the “bad faith” deletion of that account.

So, what do you think?  Was an advance inference sanction a severe enough punishment?  Please share 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.

Former Employee Sanctioned for Lying Under Oath, Destruction of ESI: eDiscovery Case Law

In Heggen v. Maxim Healthcare Servs., Inc., No. 1:16-cv-00440-TLS-SLC (N.D. Ind. April 27, 2018), Indiana Magistrate Judge Susan Collins ruled that the plaintiff’s destruction of requested cellphone recordings, as well as lying under oath, were sanctionable under FRCP Rule 37.

Case Background

The plaintiff filed the case against her former employer – a provider of temporary medical staffing, home health care, and wellness services – with claims of sexual harassment and retaliation. The plaintiff stated under oath that she chose to leave these employers “voluntarily” because the two clients with whom she worked were going into a nursing home.

However, the defendant pointed out that records show that the plaintiff was terminated after she refused to discuss a complaint that the plaintiff stole $300 from a client under her care, as well as mismanagement of the client’s financial assets. A discovery request to the Indiana Department of Workforce Development revealed that the plaintiff had worked for Interim Health Care immediately prior to joining the defendant, even though she responded to the first request for production with a different former employer, and then stated a second employer during her deposition. Based on the records from Interim, the defendant claimed that the circumstances of the plaintiff’s departure from Interim were “strikingly similar” to the plaintiff’s time at the defendant, including that a patient’s medications went missing – the plaintiff then tested positive for the missing medications on a drug test, and the plaintiff failed to return to work after the complaint.

The clearest contention that the defendant brought is that the plaintiff destroyed key evidence in at least three different ways and this, along with the other actions by the plaintiff, the defendant contended was grounds for a dismissal sanction. The plaintiff testified at her deposition that she made about seven recordings of unidentified defendant employees and said these recordings supported her claims against the defendant, she also testified that the Equal Employment Opportunity Commission (“EEOC”) had the recordings, because she deleted the recordings from her cell phone since she “didn’t want them to have [her] phone lost and have them be out there.” She claimed she had emailed the recordings to the EEOC, but couldn’t find any copy of the emails transmitting the recordings. After sending the emails, she performed a factory reset of her phone (an older Apple model) that basically had “broke[n] down,” and that she was trying to get working again. The reset deleted all of the data stored on it, including the recordings.

She felt that emailing the recordings to EEOC was a form of preservation and “thought it was okay to get rid of them[.]” Copies of three of the recordings were found, and the plaintiff submitted transcripts of these recordings with her response brief, and she also provided a copy of the recordings and transcripts to the defendant. However, there was no explanation for the other missing recordings.

The defendant had sought the recordings from the plaintiff for months through traditional discovery and because it did not have the recordings when it deposed the plaintiff, it felt that resulted in prejudice against them. They also argued that there was a significant difference between original recordings and copies of recordings. What the plaintiff submitted appeared to be at least two different layers of recorded conversations: “an ongoing face-to-face interaction between individuals who are supposedly simultaneously listening to and participating in a different interaction by telephone, all recorded on top of each other.”  Also, because they were copies, there was no way to delve into the original metadata of the recordings. Further, while the original recordings were made on an iPhone, the files produced were in 3GP format, a format generally used by Android phones, raising even more questions.

Judge’s Ruling

Judge Collins ruled that the defendant’s failure under oath to disclose Interim as a prior employer and for her destruction of the original cell phone recordings was sanctionable. But noted that a sanction for discovery abuse must be “a proportionate response to the circumstances.”

Judge Collins stated, “The draconian sanction of dismissal is not presently warranted here. Rather, the present circumstances warrant the imposition of lesser sanctions in the form of a monetary penalty—that is, ordering Heggen to pay the reasonable expenses, including attorney’s fees, that Maxim incurred in filing the motion to compel [See FRCP Rule 37]. The Court has no reason, at least at this juncture, to conclude that the imposition of this monetary penalty would be fruitless. The Court will also consider a spoliation instruction upon a pretrial motion by counsel should this case go to trial. The motion for sanctions is otherwise denied. Heggen is duly warned that any additional discovery transgressions may result in further sanctions against her, up to and including dismissal of this case.”

So, what do you think?  Was the ruling correct or was a sanction of dismissal warranted in this case?  Please share 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.

Former Football Players Sanctioned for Failure to Produce: eDiscovery Case Law

In Michael E. Davis, et al. v. Electronic Arts, Inc., No. 10-cv-03328-RS, (N.D. Cal., April 3, 2018), California Magistrate Judge Donna M. Ryu ruled that the plaintiff’s failure to fully comply with the discovery requests by the defendant were sanctionable under FRCP Rule 37, which states, “Such sanctions may include ordering a party to pay the reasonable expenses, including attorneys’ fees, caused by its failure to comply with the order or rule.”

Case Background

Three former NFL players claimed that Electronic Arts (EA) used their likenesses in the Madden NFL videogame series without authorization. In July 2017, EA moved to compel plaintiffs to provide further responses to discovery, and the court ordered the parties to meet and confer regarding the disputes set forth in the letters and to file joint letters regarding any remaining disputes. After a hearing, the Court granted in part EA’s motions to compel further responses to requests for the production of documents (“RFPs”), interrogatories, and requests for admission (“RFA”), setting a deadline for response on September 28, 2017.

A day after the deadline, the plaintiffs responded by saying they had, “engaged in a reasonable and diligent search” but found no responsive documents to certain requests. The plaintiffs also said the requested privilege log was rendered unusable due to a computer error even though both the plaintiffs and the plaintiffs’ attorney had stated in an earlier hearing that they had regular communications via email regarding the case.

EA requested sanctions of $45,000 against the plaintiffs under Rule 37. However, the billing records EA provided to the court did not segregate the fees by task or category, which makes it difficult to evaluate the reasonableness of the time expended, or to calculate precise sums that should be allowed or disallowed. But even with the problems with EA’s billing records, it was clear that EA incurred substantial attorneys’ fees in attempting to obtain plaintiffs’ compliance and seeking court intervention.

Judge’s Ruling

Given the inconsistencies between counsel and plaintiffs’ statements about communications regarding this litigation, Judge Ryu expressed concern about the adequacy of the plaintiffs’ search for responsive documents and ordered them to “search thoroughly all . . . email, going all the way back, for communications between [Plaintiffs] and other people who are not lawyers about this case.”

Judge Ryu also ruled that the plaintiffs’ response to the defendant’s discovery request was deficient and found monetary sanctions appropriate in this case, in addition to the evidentiary sanctions, as their conduct forced EA and the court to continue to expend significant resources to address plaintiffs’ failure to meet its discovery obligations and provide basic discovery.

“A sanction of $25,000 is justified in these circumstances and acknowledges that this amount represents a significant discount from the actual attorneys’ fees incurred by EA as a result of plaintiffs’ counsel’s actions. The court finds that $25,000, coupled with the evidentiary consequences set forth above, are an appropriate sanction here.”

So, what do you think?  Was the ruling correct or were sanctions unwarranted in this case?  Please share 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.

Judge Recommends Jury Decision on Impact of Spoliation of Emails: eDiscovery Case Law

In BankDirect Capital Fin., LLC v. Capital Premium Fin., Inc., No. 15 C 10340 (N.D. Ill. April 4, 2018), Illinois Magistrate Judge Jeffrey Cole recommended that the court follow the decision in Cahill v. Dart and “allow the appropriate evidence to be presented to the jury” to enable it to determine the “impact, if any, the non-production of the challenged emails has on the merits of the parties’ claims”.  If the court was not inclined to let the matter go to the jury, Judge Cole recommended that the court give a permissive spoliation instruction to the jury informing them of the destruction of the requested emails and that they could consider the deletion of the emails to be evidence in considering claims and counter-claims of the parties.

Case Background

In this case regarding breach of a marketing collaboration agreement between the parties and a counter-claim against the owner of the plaintiff, alleging the marketing agreement was negotiated in bad faith, the defendant raised concerns that the plaintiff had produced no emails from Fall 2010 through November 2011 (the period in which the parties were negotiating their Agreement).  The plaintiff indicated that it changed servers in November 2011 and no longer had possession of any emails prior to then.  In response to the suggestion that the loss of the pre-November 2011 emails might have been deliberate, the plaintiff claimed that the server change was “years before any party could have foreseen litigation”.  Though the parties agreed to a declaration by an employee of the plaintiff regarding this, the plaintiff never provided one.

In May 2017, the defendant served a notice for the deposition of a corporate representative of the plaintiff to cover a number of topics related to the missing emails, but the parties continued to dispute the production of a plaintiff witness before finally agreeing to depose an employee of the bank owner company of the plaintiff.  He testified that the new email archive system was not fully installed at the plaintiff’s organization until July 2012, that five years of emails were kept at the time and that emails were kept until automatically deleted once they aged five years.  This meant that emails going back to November 2010 were in existence and obtainable as of November 2015 when the Complaint was filed, not purged when the plaintiff changed servers.

In addition, the President and CEO of the plaintiff admitted he maintained a separate electronic or computerized “folder” for emails regarding the agreement, this folder would have contained all the communications related to it as of July 2012 when the migration to the new archive was complete and he knew of no reason why he would have deleted them.  Acknowledging that he was “personally responsible for putting in place a litigation hold”, he also admitted that neither he nor anyone else at the plaintiff or its owner company ordered the suspension of the automatic deletion of archived emails until at least October of 2016, nearly a year after the defendant filed suit, noting that he didn’t think there were any bad emails, so their deletion wasn’t problematic.  The chain of events led to the defendant filing a Motion for Spoliation Sanctions seeking the entry of a default judgment or, alternatively, an adverse inference sanction against the plaintiff.

Judge’s Ruling

In providing his recommendation, Judge Cole stated that the plaintiff CEO testimony “is simply not credible”.  Continuing, he said, “No reasonable, successful businessman would be so naive as to think that prior, positive exchanges of emails with one’s present accuser had no capacity to help prove that Capital’s charges were baseless and pretextual.”

Summing up his observations, Judge Cole stated that “there can be no serious doubt that the now unavailable emails ought to have been preserved, and that BankDirect, despite its admitted knowledge that documents were not to be destroyed, intentionally chose not to take reasonable (and quite easy) steps to preserve them.”  As a result, Judge Cole offered the following recommendation:

“Accordingly, it is recommended that the court follow Cahill and, as a matter of its inherent discretion, allow the appropriate evidence to be presented to the jury, which, under proper instructions, will determine the reasons for the non-production and the impact, if any, the non-production of the challenged emails has on the merits of the parties’ claims. Alternatively, if the court is not inclined to let the matter go to the jury, it is recommended that the court give a permissive spoliation instruction to the jury informing them of the destruction of the requested emails and that they could consider the deletion “of the emails to be evidence (not conclusive of course)” in considering BankDirect’s claim and Capital’s counterclaim.”

So, what do you think?  Should the judge have recommended a default judgment sanction in this case?  Please share 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 Sanctions for Failing to Preserve Cell Phone Records and Call Logs: eDiscovery Case Law

In Dotson, et al. v. Edmonson, et. al., No. 16-15371 (E.D. La. Jan. 22, 2018), Louisiana District Judge Susie Morgan denied the plaintiff’s motion in limine seeking sanctions for spoliation of evidence, finding that the plaintiff had “not met his burden of establishing that the Trooper Defendants had a duty to preserve” cell phone records and call logs from the evening of October 7, 2015 from Louisiana State Police (LSP) issued cell phones that were used that night by LSP officers during an undercover operation, or that their destruction of the evidence was intentional.

Case Background

In this case related to a civil suit over a drug bust involving the plaintiff, the defendants provided interrogatory responses deposition testimony which indicated that LSP troopers relied on their LSP-issued (or LSP-funded) cell phones to communicate during the course of operations in general, and specifically on the night of October 7, 2015.  The plaintiff asserted that this “establishes the existence of electronically stored information such as call logs and text messages on those cell phones” and argued that, as early as October 7, 2016, when the defendants were named in an article on nola.com and the case was filed, the defendants and the LSP were on notice that litigation was pending, and thus should have known that any ESI relating to the investigatory stop and arrest of the plaintiff was required to be preserved. Nonetheless, Defendants traded in their cell phones one month after Plaintiff filed his suit.

The plaintiff issued multiple discovery requests and subpoenas, and filed several motions to compel in efforts to obtain the call logs and text messages and develop an understanding of the officers’ movements and observations on the night of the arrest to no avail and claimed the loss of these records prejudiced his case, because the movements and communications among these officers were crucial to establishing whether reasonable suspicion existed to stop the plaintiff.  In response, the defendants argued that the plaintiff’s proposed remedy unfairly targeted Defendant Bodet (one of the Trooper Defendants), “as the Fifth Circuit makes clear that sanctions for spoliation should be taken against the alleged spoliator” and argued there is no evidence to suggest that Bodet acted in bad faith, or that he should have known of a need to preserve any electronically stored information on his phone.

Judge’s Ruling

Citing Rule 37(e), Judge Morgan stated: “The Plaintiff has not met his burden of establishing that the Trooper Defendants had a duty to preserve the electronically stored information related to the cell phone records from October 7, 2015 at the time the information was destroyed or that their destruction of the evidence was intentional. The Court will not provide the requested instruction to the jury based on an adverse inference.”

However, Judge Morgan excluded the Trooper Defendants from speculating at trial that they “may have” called a particular trooper based on deposition testimony to the contrary.  She also stated that “the Court’s ruling does not preclude the Plaintiff from eliciting testimony regarding the loss of the cell phone records and text messages”, nor did it prohibit questioning “regarding the cell phone record preservation policies of the Louisiana State Police, as such testimony is relevant and its relevance is not outweighed by the risk of undue prejudice.”

So, what do you think?  Should the defendants have received some sanctions?  Please share 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.