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Sanctions

Court Grants Lesser Sanctions Against Defendant for Various Discovery Issues: eDiscovery Case Law

In New Mexico Oncology v. Presbyterian Healthcare Servs. No. 1:12-cv-00526 MV/GBW (D.N.M. Aug. 16, 2017), New Mexico Magistrate Judge Gregory B. Wormuth, detailing numerous defendant discovery deficiencies alleged by the plaintiff, ruled that the “harsh sanctions of default judgment or an adverse jury instruction” requested by the plaintiff “are not warranted” and instead opted to require the defendant to pay plaintiff costs related to activities resulting from defendants’ over-designation of documents as privileged and recommended that the defendants be ordered to pay the plaintiff 75% of the costs associated with its Motion for Sanctions including all fees paid to expert witnesses to prepare reports and testify at the motion hearing.

Case Background

In this case, the plaintiff, detailing numerous alleged defendant discovery deficiencies, filed a Motion for Sanctions, requesting that the Court sanction the defendants by ordering default judgment against them, or, alternatively that the Court sanction the defendants by ordering an adverse jury instruction.  The allegations included:

  • Defendants failed to issue a proper litigation hold. The plaintiff alleged that the defendants’ original May 2012 litigation hold was inadequate because (1) it did not account for the “email jail,” a function which required that employees delete or archive emails when they run out of inbox space; (2) it covered only thirty-five employees and improperly excluded several key witnesses; (3) it allowed employees to determine which emails were irrelevant to the lawsuit and could be deleted; and (4) it did not apply to Defendants’ Live Exchange Server (a.k.a., the Transport Dumpster) and therefore did not preserve documents deleted by individual employees.
  • Defendants intentionally deleted discoverable emails received or sent by Dr. Dava Gerard. The two primary pillars of the plaintiff’s case for intentional deletion were: (1) the data found within the “free space” of the Gerard PST file (the PST file was 2 GB in size, but only 128 MB of materials were readable by native software when opened), and (2) data was found in the unallocated space on the hard drive on which the Gerard PST file was saved.
  • Defendants used privilege designations for the purpose of concealing documents and information. After the defendants produced their original privilege and redaction logs, the plaintiff objected to 2,831 of the 4,143 entries to which Defendants included in the logs.  The defendants conducted a re-review and produced 1,095 documents which were originally listed on the privilege log and 864 documents which were originally listed on the redaction log.  The plaintiff then objected to all 1,312 remaining listings on the privilege and redaction logs, stating that it no longer had confidence in Defendants’ privilege designations, leading to a second re-review, which led to an additional 861 documents produced.  The plaintiff then filed a Motion to Compel and for Sanctions against Defendants, which included a request “that the Court appoint a Special Master to conduct an independent in camera review” of the remaining records withheld and redacted – that review led to 197 additional documents ordered to be produced.

The plaintiff also complained that the defendants failed to produce usable billing and claims data in a timely manner, produced ESI for the wrong custodian named Mike West and did not properly collect hard copy documents in discovery.  As Frank Costanza would say at the Airing of Grievances during Festivus, “I got a lot of problems with you people”.

Judge’s Ruling

Judge Wormuth, reviewing the allegations in considerable detail, determined the following:

  • Improper litigation hold: Judge Wormuth acknowledged that “Without question, Plaintiff points out some imperfections with the litigation hold and its implementation” and he detailed several of those. However, he also explained that “Plaintiff failed to establish that these imperfections were a result of bad faith or that they resulted in the spoliation of evidence.”
  • Intentional deletion of emails: Noting that “the conclusion that data residing in the PST’s free space is only the result of deletion rests on the assumption that the export was conducted via the ‘client-side’ method, rather than the alternative ‘server-side’ method”, Judge Wormuth cited a lack of evidence that the collection specialist used a clean hard drive to conduct the collection and pointed to the presence of export logs to determine that the exports were conducted via the “server-side” method and concluded that “Plaintiff has not demonstrated by a preponderance of the evidence that Defendants intentionally deleted emails that should have been disclosed.”
  • Privilege designations: Judge Wormuth agreed with the Special Master’s report that the defendants “did not act in bad faith”. But, he did state “this does not mean that Defendants are free from blame. It is clear that Defendants over-designated documents as privileged, and that even their re-reviews were insufficient to fix their own errors. As a result, Plaintiff was required to repeatedly assert objections until the Special Master ultimately resolved the issue.”

As for the other issues, Judge Wormuth ruled that the “Plaintiff can demonstrate no prejudice resulting from any such delays” in receiving the billing and claims data, that the “collection of documents from the wrong Mike West was an inadvertent error and not done in bad faith” and that, because of the plaintiff’s failure to request that the Court allow additional depositions of the employees associated with the hard copy documents, “more severe sanctions are not warranted”.

Ultimately, Judge Wormuth ruled that the “harsh sanctions of default judgment or an adverse jury instruction” requested by the plaintiff “are not warranted” and instead opted to require the defendant to pay plaintiff costs related to activities resulting from defendants’ over-designation of documents as privileged and recommended that the defendants be ordered to pay the plaintiff 75% of the costs associated with its Motion for Sanctions including all fees paid to expert witnesses to prepare reports and testify at the motion hearing.

So, what do you think?  Was that an appropriate level of sanctions for the various discovery issues?  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.

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.

Plaintiff Sanctioned for Spoliation of Evidence in His Case Against Taylor Swift: eDiscovery Case Law

In Mueller v. Swift, No. 15-cv-1974-WJM-KLM (D. Colo. July 19, 2017), Colorado District Judge William J. Martinez ruled that “Plaintiff’s loss or destruction of the complete recording of the June 3, 2013 conversation [between the plaintiff and his supervisors] constitutes sanctionable spoliation of evidence”, but rejected the defendants’ request to make a finding of bad faith and to give the jury an adverse inference instruction, opting instead for permitting the defendants to cross-examine the plaintiff in front of the jury regarding the record of his spoliation of evidence.

Case Background

In this case against the defendants for tortious interference with the plaintiff’s employment contract and one defendant’s counterclaims for the torts of assault and battery over a well-publicized claim of inappropriate touching, the plaintiff met with his superiors at the radio station where he worked on June 3, 2013 to discuss the defendant’s claim of inappropriate touching. Unbeknownst to the supervisors at the time, the plaintiff made an audio recording of their conversation.  The following day, the plaintiff was terminated from his employment by one of the supervisors, who explained that one reason for the plaintiff’s termination was because he perceived Plaintiff had “changed his story that it couldn’t have occurred, then that it was incidental.”

At some point thereafter, well after having first contacted an attorney regarding potential legal action, the plaintiff edited the audio recording of the conversation, and then sent only “clips” of the entire audio file to his attorney.  According to his testimony, the plaintiff edited the audio file on his laptop computer, on which he also retained a full copy of the original audio file(s).  However, he claimed that he spilled coffee on the keyboard of his laptop and was given “a new machine” by the Apple Store and he didn’t retain the hard drive from the old laptop.  The plaintiff also kept an external hard drive “to store audio files and documents”, and the complete audio recording was saved on this drive, but he indicated that, at some point, it “stopped working.”  At his deposition, the plaintiff testified that he “may have kept” this hard drive, but that because it was “useless” he “[didn’t] know if I discarded it because it was junk”. As a result, the complete audio file was never produced and the defendants moved for a Court-imposed sanction for spoliation of evidence, and for the Court to give the jury an adverse inference instruction at trial, to direct the jury “that the entirety of the June 3, 2013 audio recording would have been unfavorable to Plaintiff.”

Judge’s Ruling

Judge Martinez ruled that the plaintiff had a duty to preserve the recording, that the recording was “relevant to numerous disputed facts and issues” in the case, that the defendants were prejudiced by the loss of evidence and that the degree of culpability warrants a sanction.  While declining to make a finding that the plaintiff acted in bad faith, Judge Martinez indicated that the “spoliation falls higher up on the ‘continuum of fault’” than “mere negligence”, noting that it was “troubling” that the plaintiff also threw out his cell phone, months after the litigation was filed, noting “it may have been the device that he originally used to record the June 3, 2013 conversation”.

As a result, Judge Martinez concluded that “Plaintiff’s loss or destruction of the complete recording of the June 3, 2013 conversation constitutes sanctionable spoliation of evidence”, but, determining that the defendants’ request for an adverse inference instruction sanction “would be unduly harsh in the circumstances of this case”, deciding instead to permit the defendants to cross-examine the plaintiff in front of the jury regarding the record of his spoliation of evidence.

So, what do you think?  Was that an appropriate sanction given the lack of finding of bad faith?  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.

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.

Defendant Not Sanctioned Despite Use of Evidence Wiping Software: eDiscovery Case Week

eDiscovery Case Week continues.  We’ll cover four cases this week (catching up on a couple from earlier this year) and we’ll cover our Wednesday webcast Key eDiscovery Case Law Review for First Half of 2017 (click here to sign up for that) as well.  Here’s the next case.  And, unlike the “Phelps vs. Shark” debacle, I promise nothing about this post was computer generated… :o)

In HCC Ins. Holdings, Inc. v. Flowers, No. 1:15-cv-3262-WSD (N.D. Ga., Jan. 30, 2017), Georgia District Judge William S. Duffey, Jr. denied the plaintiff’s motion for adverse inference sanctions despite evidence that the defendant had used evidence wiping software twice after being ordered to produce her personal computer, stating that the plaintiff “offers only bare speculation that any of its trade secrets or other data were actually transferred” to the defendant’s laptop.

Case Background

In this case, the defendant was accused of misappropriating trade secrets after she left her company and started a competitive company. The plaintiff claimed that when the defendant left the company, she took confidential files with her to benefit her new company and also claimed that, after receiving the lawsuit papers in this case, and after the Court ordered the defendant to produce her personal computer, she destroyed data on her personal laptop and also on a thumb drive that was plugged into her personal computer on September 20, 2015 (which was after she received a preservation notice and the complaint in the case).

The defendant’s husband, an experienced IT professional, claimed he inserted his personal thumb drive on September 20 to back-up data on the defendant’s personal laptop, but the thumb drive was corrupted and did not work, and that he therefore threw it away (the defendant’s own computer forensic expert claimed that it did work properly the second time, when it was plugged in for 38 seconds.

On September 19, 2015, and again three days later, the day after the Court ordered the defendant to produce her personal computer, the computer wiping program CCleaner was manually run on her personal laptop.  During that time, the program Defraggler (program that overwrites deleted files in unallocated space on a computer’s hard drive) was also run and so was a program called WinUndelete (which is used to recover deleted files).  The plaintiff claimed the defendant’s husband used WinUndelete to confirm that he had destroyed evidence, but he claimed he ran the program off of his work thumb drive to familiarize himself with it for future use for work purposes.  After running extensive searches over several weeks, a neutral examiner did not locate any of the plaintiff’s confidential information or trade secrets on any of the devices produced by the defendant.

Judge’s Ruling

In reviewing the results, Judge Duffey stated: “HCC’s Motion is based on a series of events it casts as suspicious, but HCC offers only bare speculation that any of its trade secrets or other data were actually transferred from HCC Life’s systems to Flowers’ personal laptop. A party seeking spoliation sanctions must prove that (1) the missing evidence existed at one time; (2) the defendant had a duty to preserve the evidence; and (3) the evidence was crucial to the plaintiff’s prima facie case… Here, after extensive discovery, including examinations by a neutral forensic examiner and the parties’ expert forensic examiners, depositions, and subpoenas of email and cloud-based storage companies, HCC does not provide any evidence to show that Flowers or her husband actually transferred any data from HCC Life to her personal devices or cloud storage media she controlled.”

As a result, Judge Duffey ruled as follows: “Though Flowers’ and her husband’s actions are troubling, and in breach of her duty to preserve, the Court finds spoliation sanctions are not warranted.”

So, what do you think?  Is this ruling troubling?  Or should the motioning party be required to show evidence of actual responsive ESI deleted?  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.

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 Impose Sanctions for Failure to Preserve Web History: eDiscovery Case Law

In Eshelman v. Puma Biotechnology, Inc., No. 7:16-CV-18-D (E.D.N.C. June 7, 2017), North Carolina Magistrate Judge Robert B. Jones, Jr., among other rulings, denied the plaintiff’s motion for an order permitting a jury instruction in response to the defendant’s failure to preserve certain internet web browser and search histories, concluding that the plaintiff “is not entitled to a sanction pursuant to Rule 37(e)(1)” and that the plaintiff “is not entitled to an adverse jury instruction as a sanction pursuant to Rule 37(e)(2).”

Case Background

In this case involving alleged defamatory statements made by the defendant against the plaintiff in an investor presentation, two weeks after the complaint was filed in February 2016, the defendant issued an internal litigation hold notice related to the plaintiff’s claims in this case which defined documents to include electronically-stored information and advised employees to err on the side of preservation if there was a question as to whether material qualified as documents, but did not explicitly reference internet browser histories, internet search histories, or internet sites visited.  In May 2016, approximately 120 days after the publication of the investor presentation, counsel for the plaintiff sent a letter to the defendant’s counsel requesting that the defendant preserve, among other things, the “web browser histories” of individuals involved in the drafting of the January 7, 2016 presentation.  The plaintiff reiterated that request in its document requests in June 2016.

Counsel for the defendant responded that the defendant uses Google Chrome as an internet browser, which deletes web browser history after 90 days, and accordingly, the web browser history information sought in the discovery requests no longer existed and did not exist at the time of the May letter, leading to the motion filed by the plaintiff seeking “a jury instruction to mitigate the harm caused by the defendant’s failure to preserve electronically stored information.”

Judge’s Ruling

Judge Jones initially observed that “while the plaintiff states that he seeks a jury instruction to mitigate the harm caused by the defendant’s failure to preserve electronically stored information (“ESI”), the plaintiff does not define the particular instruction sought.”  Considering Rule 37(e)(1) and Rule 37(e)(2), Judge Jones determined the following:

Observing that “the plaintiff has not established one of the threshold elements of Rule 37(e)—namely, that the lost ESI ‘cannot be restored or replaced through additional discovery. . . .’”, Judge Jones stated that “other avenues of discovery are likely to reveal information about the searches performed in advance of the investor presentation. For example, the plaintiff could seek information about the internet searches performed by the individuals who prepared the investor presentation through deposition testimony.”  Judge Jones also stated that “the plaintiff has failed to make a sufficient showing of prejudice to support relief under Rule 37(e)(1). In order to impose a sanction under Rule 37(e)(1), the court must have some evidence regarding the particular nature of the missing ESI in order to evaluate the prejudice it is being requested to mitigate.”  As a result, Judge Jones determined that “the plaintiff is not entitled to a sanction pursuant to Rule 37(e)(1).”

Judge Jones also ruled that “the plaintiff has also failed to show that the defendant acted with the requisite intent to deprive him of the ESI in order to support the imposition of an adverse jury instruction under Rule 37(e)(2),” noting that “[a]t most, the circumstances indicate the ESI was lost due to the defendant’s negligence, but do not suggest the presence of intentional conduct. Negligence, however, will not support an award of sanctions under Rule 37(e)(2).”  As a result, Judge Jones determined that “the plaintiff is not entitled to an adverse jury instruction as a sanction pursuant to Rule 37(e)(2).”

So, what do you think?  Should internet histories be a standard form of ESI to be preserved in litigation?  Or does it depend on the case?  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

With Ample Evidence of Bad Faith, Court Sanctions Defendant for Failure to Produce Documents: eDiscovery Case Law

In CrossFit, Inc. v. Nat’l Strength and Conditioning Assn., No. 14cv1191 JLS (KSC) (S.D. Cal. May 26, 2017), California District Judge Janis L. Sammartino granted the plaintiff’s motion for several issue, evidentiary, and monetary sanctions, but denied the plaintiff’s request for terminating sanctions due to the defendant’s bad faith that resulted in the defendant’s failure to produce documents.

Case Background

In this case between competing fitness training organizations where the plaintiff argued that the defendant published a false study regarding the plaintiff’s program and injury rates of its participants, the defendant filed a separate suit in state court against the plaintiff alleging trade libel, defamation, and unfair business practices.  The plaintiff received discovery during the state-court action that appeared to either directly respond to discovery or contradict assertions the defendant deponents had made in this case. The plaintiff then deposed the defendant’s Education Coordinator in the state-court case, during which he admitted that several of the statements in his federal-action declaration, submitted under penalty of perjury, were false.  The plaintiff then “ran several controlled searches in the state-court production” which “yielded hundreds of documents material to the issues in this action and that the defendant should have produced in response to the plaintiff’s discovery requests in this case.

Given that pretrial proceedings were only several weeks away at the time the plaintiff discovered these documents, the plaintiff simultaneously moved to continue the pretrial proceedings and for sanctions against the defendant, including terminating sanctions or, in the alternative, issue, evidentiary, and monetary sanctions.

Judge’s Ruling

Judge Sammartino, indicating that the documents withheld “are too numerous to comprehensively catalog”, provided several examples in her order, including various emails, a 2013 executive summary and “[d]ocuments that affirmatively demonstrate Mr. Clayton’s perjury”.  Judge Sammartino indicated that Rule 37 “authorizes the district court, in its discretion, to impose a wide range of sanctions” and that district courts have inherent power to “impose sanctions including, where appropriate, default or dismissal… However, because dismissal is such a severe remedy it should be imposed only in extreme circumstances, and “only where the violation is ‘due to willfulness, bad faith, or fault of the party.’”

Detailing several of the defendant’s transgressions, Judge Sammartino stated that “the Court agrees with Plaintiff that there is ample evidence of willfulness, bad faith, or fault.”  Judge Sammartino also noted that “nearly every factor weighs in favor of imposing terminating sanctions” and concluded that the Court “is well within its discretion to award terminating sanctions”, but declined to do so, opting for issue, evidentiary, and monetary sanctions instead.  However, before even getting to those, Judge Sammartino awarded these sanctions to address concerns regarding whether the defendant had produced all relevant documents:

“(1) Plaintiff SHALL commission a neutral forensic analysis of the the defendant’s servers and Defendant SHALL pay all costs relating to such forensic analysis;

(2) Defendant SHALL within fourteen days, under penalty of perjury, acquire declarations from all relevant the defendant personnel either (a) assuring or reaffirming that no documents relevant to this litigation have been destroyed or (b) admitting to any destruction;

(3) If at the conclusion of the neutral forensic evaluation it appears that documents have been destroyed, or that the discovery misconduct is substantially greater than the scope of which Plaintiff is currently aware, Plaintiff is GRANTED LEAVE TO RENEW its Motion for Terminating Sanctions and present the newly discovered evidence; and

(4) Defendant SHALL LODGE within fourteen days a copy of the document referenced in Plaintiff’s Sanction Motion Exhibit A so that the Court may conduct an in camera review of the document. Additionally, Plaintiff SHALL PROVIDE a copy of this Order to the neutral forensic analyst so that she may search for other instances of the document referenced in Exhibit A—or its deletion—and any surrounding context.”

The plaintiff supplied a list of thirty potential issue and adverse inference sanctions and Judge Sammartino awarded 17 of them in her order.  In addition, Judge Sammartino, while deducting some costs, awarded $73,550.83 in fees to the plaintiff in connection with its Sanctions Motion and ex parte Continuance.

So, what do you think?  Should the judge have gone ahead and ordered terminating sanctions based on the defendant’s actions to date?  Please share any comments you might have or if you’d like to know more about a particular topic.

eDiscovery Daily will resume with new posts on Wednesday, July 5.  Happy Independence Day!

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 Grants Motion for Terminating Sanctions Against Defendants for Intentional Spoliation: eDiscovery Case Law

In Omnigen Research et. al. v. Wang et. al., No. 16-00268 (D. Oregon, May 23, 2017), Oregon District Judge Michael J. McShane granted the plaintiffs’ Motion for Terminating Spoliation Sanctions and agreed to issue an Order of Default Judgment in favor of the plaintiffs (while dismissing the defendants’ counterclaims) due to the defendants’ intentional destruction of evidence on several occasions.

Case Background

In this case (for breach of contract, intentional interference with economic relations, misappropriation of trade secrets, copyright infringement, false advertising and unfair competition, and breach of fiduciary duty filed against a former employee of the plaintiff, Yongqiang Wang), the plaintiffs alleged that in 2012, while still employed by the plaintiff, he stole trade secrets and created two rival businesses, including the defendant company Bioshen.  The plaintiffs, concerned in part about the possible destruction of evidence early in the case, filed a Motion for Preliminary Injunction, which was granted in May 2016, to force the defendants to “immediately produce to Plaintiffs all electronic media in their custody, possession or control for purposes of verifying that they do not contain Plaintiff’s confidential and/or copyrighted material.”

Eleven days later, the plaintiffs filed a Motion for Order to Show Cause because Wang had left for China without producing his laptop as required by the Preliminary Injunction. A hearing on the issue was held and, in addition to other requirements, the defendants were ordered to “download all of the contents of the computer in China on a portable hard drive and have it mailed to defense counsel within 7 days, and deliver any computers or portable storage data to defense counsel by 5/27/2016.”

The plaintiffs were required to seek court intervention regarding discovery on multiple occasions because of the failure of the defense to adequately respond to their requests for production.  Ultimately, the plaintiffs filed their Motion for Terminating Spoliation Sanctions on 3/3/2017, with oral arguments heard on the motion on 4/18/2017.

Judge’s Ruling

Before detailing all of the instances where the defendants “intentionally” deleted or destroyed evidence, Judge McShane stated:

“As stated during oral arguments on 4/18/2017, the Court finds the destruction of evidence by the defendants was intentional. The plaintiffs’ Motion for Terminating Spoliation Sanctions describes in full detail the many ways the defendants intentionally hid or destroyed evidence in this case. In summary, Plaintiffs allege that the defendants made their desktop computer unavailable by “donating” it to Goodwill, that the defendants intentionally deleted thousands of documents from Wang’s personal Lenovo computer, that the defendants intentionally deleted and refused to produce relevant emails from multiple email accounts, and that the defendants intentionally destroyed metadata. These actions have deprived the Plaintiffs of evidence central to their case and undermined the Court’s ability to enter a judgment based on the evidence. For these reasons, default judgment and terminating sanctions for the spoliation of evidence is warranted FRCP 37(b)(2), Rule 37(e), and the Court’s inherent authority to sanction abusive litigation practices.”

As a result, Judge McShane granted the plaintiffs’ Motion for Terminating Spoliation Sanctions and agreed to issue an Order of Default Judgment in favor of the plaintiffs while dismissing the defendants’ counterclaims.

So, what do you think?  With the new Rule 37(e) (since December 2015), do you think it takes this level of intent to obtain significant sanctions?  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 Grants Summary Judgment After Plaintiff’s Spoliation Motion Denied: eDiscovery Case Law

In Taylor v. Thrifty Payless, Inc., d/b/a Rite-Aid, No. 16-00474 (D. Oregon, May 12, 2017), Oregon District Judge Marco A. Hernandez granted the defendant’s motion for summary judgment after denying the plaintiff’s request for spoliation sanctions against the defendant for failing to preserve store videos that were taken on the day of her slip and fall in the defendant’s store.

Case Background

In this slip and fall case in a defendant store, the plaintiff sued the defendant after she slipped and fell in a large puddle, eventually claiming “significant pain” to her hand and wrist.  As a result, the plaintiff filed suit, alleging that the defendant “a) failed to make the premises reasonably safe; b) failed to take reasonable steps to promptly remove the puddle of liquid from the Rite-Aid store floor; c) failed to adequately warn Plaintiff by placing cones around the area of the liquid on the floor; and d) failed to properly secure the area, knowing that the puddle of liquid could pose additional risks to patrons of the store.”  After discovery, the defendant moved for summary judgment.

On the day of the spill, the store manager reviewed the security tapes from the time of the incident, and did so again a day or two later with the defendant’s Risk Management group, and found that the cameras did not cover the area of the spill.  As a result, the defendant did not keep the footage of that day’s events, adhering to its policy of deleting video footage every thirty-seven days.  The plaintiff argued that the defendant’s failure to preserve was the reason for her lack of evidence and asked the court to deny summary judgment as a sanction for the defendant’s destruction of the security video.  The defendant argued it had no obligation to preserve the video because the video did not show the spill itself and, therefore, would not have contained any relevant evidence.

Judge’s Ruling

In considering the facts associated with deletion of the video footage, Judge Hernandez stated: “Defendant did not destroy the videos in response to this litigation. Cases make clear that ‘in response to litigation’ means after a complaint has been filed, a discovery request has been made, a letter openly threatens litigations, or some other reason indicating that litigation is likely… Plaintiff herself points out that the surveillance footage is erased from Defendant’s hard drive every thirty-seven days…The erasure occurred when Defendant knew only that Plaintiff had fallen and hurt her wrist. There was no basis for Defendant to conclude that litigation was likely.”  As a result, Judge Hernandez concluded that “Sanctions for spoliation are inappropriate here.”

Therefore, in granting the defendant’s motion for summary judgment, Judge Hernandez stated: “Plaintiff’s arguments are not supported by direct evidence or logical inference. Instead, she relies on speculation and conjecture which is insufficient to create an issue of material fact precluding summary judgment.”

So, what do you think?  Do plaintiffs in “slip and fall” cases face an uphill battle in obtaining sanctions for deletion of video at the site of an accident?  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 Says Rule 37(e) Doesn’t Apply When Recording Was Intentionally Deleted: eDiscovery Case Law

In Hsueh v. N.Y. State Dep’t of Fin. Services, No. 15 Civ. 3401 (PAC) (S.D.N.Y. Mar. 31, 2017), New York District Judge Paul A. Crotty relied upon inherent authority to impose sanctions and determined “that an adverse inference is the appropriate remedy” for the plaintiff’s deletion of a recorded conversation with an HR representative, agreeing with the defendants that “Rule 37(e) applies only to situations where ‘a party failed to take reasonable steps to preserve’ ESI; not to situations where, as here, a party intentionally deleted the recording.”

Case Background

In this case arising from claims of sexual harassment at work, the plaintiff, at an April 2016 deposition, initially stated that she did not think she had recorded any conversations with an HR representative (Allison Clavery) from the company about her allegations, but eventually explained that she thought she had recorded one meeting with Clavery in either December of 2015 or January of 2016, and that she deleted the recording in “[e]ither the course of 2016 or 2015” because “the voice recording itself. . . was not very clear, so [she] did not feel it was worth keeping.”  As a result, in June and early July 2016, the defendants filed a motion for spoliation sanctions.

On July 11, 2016 — the day the plaintiff’s opposition to the spoliation sanctions motion was due — plaintiff’s counsel submitted a letter to the Court advising that “I received an e-mail from my client at 10:16 p.m. last evening, which contained an audio recording attachment of a meeting between my client and Allison Clavery.”  Plaintiff’s counsel noted that “the e-mail indicated that the recording had been recovered with the help of Plaintiff’s husband” and that plaintiff’s counsel stated that he was “awaiting any further instructions with regard to Defendant DFS’s motion.”  As a result, discovery was reopened and the plaintiff and her husband were deposed.  Despite recovery of the recording, the defendants continued to pursue spoliation sanctions, as they had only received materials relating to the plaintiff’s mental health history “over the past few weeks, despite requesting them back in December 2015.”

The defendants stated that it was unclear as to whether Rule 37(e) applied here, arguing that the audio recording might not be ESI and also arguing that Rule 37(e) applies only to situations where “a party failed to take reasonable steps to preserve” ESI; not to situations where, as here, a party intentionally deleted the recording.  The plaintiff, on the other hand, argued that, since the recording was restored, no sanctions were warranted.

Judge’s Ruling

With regard to the defendant’s argument that the recording is not ESI, Judge Crotty stated “The Court disagrees. The recording was made using a digital recorder, and was saved in a digital format.”

However, with regard to the defendant’s argument that Rule 37(e) doesn’t apply when the party intentionally deletes the recording, Judge Crotty said “This makes sense. The Committee Notes to the 2015 Amendment to Rule 37 explain that Rule 37(e) is meant to address ‘the serious problems resulting from the continued exponential growth in the volume of’ ESI as well as ‘excessive effort and money’ that litigants have had to expend to avoid potential sanctions for failure to preserve ESI…These considerations are not applicable here. It was not because Hsueh had improper systems in place to prevent the loss of the recording that the recording no longer existed on her computer; it was because she took specific action to delete it. The Court therefore concludes that Rule 37(e) does not apply.”

As a result, Judge Crotty, determining that “the Court may rely on its inherent power to control litigation in imposing spoliation sanctions”, ruled “that an adverse inference is the appropriate remedy” for the plaintiff’s deletion of the recording and granted the defendants’ motion for spoliation sanctions.

So, what do you think?  Should Rule 37(e) have applied here?  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.

SCOTUS Reverses and Remands Circuit Court Award of Fees for Discovery Misconduct: eDiscovery Case Law

In Goodyear Tire & Rubber Co. v. Haeger, 581 U.S. ___ (2017), the Supreme Court of the United States, in a decision delivered by Justice Kagan reversed and remanded the decision by the US Court of Appeals, Ninth Circuit, for further proceedings, stating that “because the court here granted legal fees beyond those resulting from the litigation misconduct, its award cannot stand.”

Case Background

In this product liability case, the plaintiffs sued the defendant after their motorhome swerved off the road and flipped over, alleging the accident was caused by the failure of their Goodyear tire.  During discovery, the plaintiffs repeatedly asked the defendant to turn over internal test results related to the tire at issue, but “the company’s responses were both slow in coming and unrevealing in content.”  The parties eventually settled on the eve of trial, then, several months later, the plaintiffs’ counsel learned from a newspaper article that, in another lawsuit involving the tire at issue, it “got unusually hot” at certain speeds.  The defendant conceded withholding the information from the plaintiffs even though they had frequently requested “all testing data” related to the tire.  The plaintiffs sought sanctions for discovery fraud, in the form of payment of their “attorney’s fees and costs expended in the litigation.”

The District Court agreed to make such an award in the exercise of its inherent power to sanction litigation misconduct, and justified its authority to award a greater amount than the expenses caused by the offending behavior because the defendant’s “sanctionable conduct r[ose] to a truly egregious level.”  Ultimately, the court awarded $2.7 million to account for Plaintiffs’ legal costs “since the moment, early in the litigation, when Goodyear made its first dishonest discovery response.”  Acknowledging that the Ninth Circuit might require a link between the misconduct and the harm caused, however, the court also made a contingent award of $2 million. That smaller amount, designed to take effect if the Ninth Circuit reversed the larger award, deducted $700,000 in fees the plaintiffs incurred in developing claims against other defendants and proving their own medical damages. The Ninth Circuit affirmed the full $2.7 million award, concluding that the District Court had properly awarded the plaintiffs all the fees they incurred during the time when the defendant was acting in bad faith.

Court’s Ruling

The court noted that “Federal courts possess certain inherent powers, including ‘the ability to fashion an appropriate sanction for conduct which abuses the judicial process.’…One permissible sanction is an assessment of attorney’s fees against a party that acts in bad faith. Such a sanction must be compensatory, rather than punitive, when imposed pursuant to civil procedures.”  In this case, “[n]either court used the correct legal standard. The District Court specifically disclaimed the need for a causal link on the ground that this was a ‘truly egregious’ case…And the Ninth Circuit found that the trial court could grant all attorney’s fees incurred ‘during the time when [Goodyear was] acting in bad faith,’…—a temporal, not causal, limitation. A sanctioning court must determine which fees were incurred because of, and solely because of, the misconduct at issue, and no such finding lies behind the $2.7 million award made and affirmed below.”

In reversing and remanding the decision, the Court stated: “Although the District Court considered causation in arriving at its back-up award of $2 million, it is unclear whether its understanding of that requirement corresponds to the appropriate standard—an uncertainty pointing toward throwing out the fee award and instructing the trial court to consider the matter anew. However, the Haegers contend that Goodyear has waived any ability to challenge the contingent award since the $2 million sum reflects Goodyear’s own submission that only about $700,000 of the fees sought would have been incurred regardless of the company’s behavior. The Court of Appeals did not address that issue, and this Court declines to decide it in the first instance. The possibility of waiver should therefore be the initial order of business on remand.”

So, what do you think?  Should egregious behavior be subject to an award greater than the expenses incurred by the party affected by that behavior?  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

Plaintiff’s Erasure of iPhone Before Forensic Examination Leads to Recommended Dismissal of Case: eDiscovery Case Law

In Coyne v. Los Alamos National Security, LLC et. al., No. 15-0054 (D. N.M., Mar. 21, 2017), New Mexico Magistrate Judge Karen B. Molzen recommended that the court grant the defendants’ motion to dismiss after the plaintiff’s erased and reset her iPhone the day before it was produced for forensic examination, the “culmination of her and her husband’s willful failure to comply with their discovery obligations in this case.”

Case Background

In this case where the plaintiff alleged wrongful termination (among other complaints) after she was terminated pursuant to a Reduction in Force policy (the plaintiff contended it was retaliation for taking leave under the Family Medical Leave Act after an alleged assault by a co-worker), the Court had already granted Motions to Compel against both Plaintiff and Defendants.  However, only the plaintiff and her husband had been sanctioned for discovery violations with various fees, including attorney’s fees, to the tune of over $11,000 (most of which was still unpaid).

The parties continued to proceed with discovery, and on September 30, 2016, the defendants served plaintiffs’ counsel with a request for a forensic inspection of the plaintiff’s iPhone, seeking text messages between the plaintiff and her husband and between the plaintiff and her treating psychiatrist.  The plaintiff not only did not object to the request, she even cooperated with the defendants’ attempts to retrieve them from her cellular carrier and from Apple before agreeing to the inspection.

On January 4, 2017, the plaintiff’s counsel called the defendants’ to report that he was ready to ship the iPhone to the forensic examiner and it was sent the next day.  The forensic examiner discovered that the phone had been erased and reset six hours before the plaintiff had turned it over to her attorney to be sent for examination. In his affidavit testimony, the forensic examiner explained that erasing and resetting an iPhone cannot happen accidentally or inadvertently, but the plaintiff claimed to have no knowledge of what had happened. As a result, the defendants moved the Court to dismiss the plaintiff’s case in its entirety with prejudice “as a sanction for Plaintiff’s intentional and permanent erasure of all the data on her iPhone the day before it was produced” for the forensic evaluation.

Judge’s Ruling

Judge Molzen considered the relevant factors necessary to determine whether dismissal was warranted.  Those factors are: (1) The degree of actual prejudice to the defendant; (2) The amount of interference with the judicial process; (3) The culpability of the litigant; (4) Whether the court warned the party in advance that dismissal of the action would be a likely sanction for noncompliance; and, (5) The efficacy of lesser sanctions.  With regard to those factors, Judge Molzen determined that all were satisfied, with the possible exception of the fourth factor, but stated that she “is not convinced such a specific warning was required in this case”.  Judge Molzen also determined that none of the available sanctions options were sufficient, noting that “almost all” of the monetary sanctions levied against the plaintiff “remain unpaid”.

Determining that “Plaintiff’s decision to erase and reset her iPhone the day before it was produced” was “but the culmination of her and her husband’s willful failure to comply with their discovery obligations in this case”, Judge Molzen recommended that the court grant the defendants’ motion to dismiss.

So, what do you think?  Was the recommended sanction too harsh?  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.