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Sanctions

Beep, Beep! Terminating Sanctions against Defendant for Spoliation Affirmed on Appeal: eDiscovery Case Law

As Wile E. Coyote has learned, you don’t want to mess with the Roadrunner.  Especially if you’ve been found to have willfully spoliated data…  :o)

In Roadrunner Transportation Services, Inc. v. Tarwater, Nos. 15-55448 and 14-55529 (9th Cir., Mar. 18, 2016), the Ninth Circuit affirmed the district court’s entry of default judgment and award of attorneys’ fees in favor of the plaintiff, ruling that the district court did not abuse its discretion by entering default judgment as a sanction for the defendant’s deletion of data from his laptop computers .  The Ninth Circuit also affirmed the district court’s award of $325,000 in attorneys’ fees to the plaintiff and also affirmed the lower court ruling to limit the plaintiff’s compensatory damages to the four customers specifically identified in the First Amended Complaint.

In considering the defendant’s appeal of the district court’s entry of default judgment and award of attorneys’ fees in favor of his former employer and the plaintiff’s cross-appeal of the district court’s compensatory damages award, the Ninth Circuit ruled, as follows:

“1. The district court did not abuse its discretion by entering default judgment as a sanction for Tarwater’s deletion of data from his laptop computers…There was ample evidence that Tarwater deleted emails and files on his laptops after receiving multiple preservation demands from Roadrunner, and even after the court explicitly ordered Tarwater to preserve “all data” on his electronic devices. In addition to Tarwater’s own admissions, a third-party computer expert concluded that files on one of Tarwater’s devices had been deleted and overwritten during the litigation, and that the deletions likely “bypasse[d] the [computer’s] Recycle Bin” through a user-initiated process. In light of the evidence of spoliation, and the nature of Roadrunner’s claims, the district court did not clearly err in finding that Tarwater willfully destroyed the data, that Roadrunner had been deprived of its “primary evidence of Tarwater’s alleged misappropriation and related misconduct,” and that a less drastic sanction could not have adequately redressed the prejudice to Roadrunner.”

“2. The district court did not abuse its discretion by awarding Roadrunner $325,000 in attorneys’ fees…The court carefully considered the billing entries and reasonableness of the hourly rates for Roadrunner’s attorneys and reduced the award to reflect an appropriate level of staffing for the case. The district court also properly accounted for the degree of success achieved by Roadrunner, as well as the public’s interest in protecting trade secrets.”

“3. The district court properly limited Roadrunner’s compensatory damages to the four customers specifically identified in the First Amended Complaint.”

“AFFIRMED.”

So, what do you think?  Did the defendant deserve a terminating sanction?  Please share any comments you might have or if you’d like to know more about a particular topic.

We’re just one week away from the pre-conference seminars at ACEDS!  For the first time, ACEDS is offering a number of pre-conference events focused on some of the most important issues and trends in eDiscovery. These include a cybersecurity seminar addressing the recent data breaches at major law firms, a networking forum hosted by Women in E-Discovery, and the Law Student Blogger/Social Invitational pre-conference seminar with Ari Kaplan, Rob Robinson, Robin Thompson and me!  If you already have a blog or are interested in starting a blog, join us and learn about the benefits of blogging, how to get started, establishing your blogging workflow, avoiding liability and leveraging social media for professional and personal benefit.  Hope to see you in New York on Monday!

Image © Warner Bros.

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.

Defendants Claim of Lightning Strike and Power Surge Doesn’t Save Them from Sanctions: eDiscovery Case Law

In a recent post in Craig Ball’s excellent blog, Ball in your Court, Craig stated that “you are more likely to be hit by lightning than to be sanctioned for non-preservation of ESI”.  So, if you claim that your devices are hit by lightning, causing your relevant ESI to be lost, does that make it more or less likely that you will be sanctioned?  :o)

In InternMatch, Inc. v. Nxtbigthing, LLC, et. al., No. 14-05438 (N.D. Cali., Feb. 8, 2016), California District Judge Jon S. Tigar, finding that the defendants “consciously disregarded their obligations to preserve relevant evidence” when they discarded various electronic devices after experiencing an alleged power surge without checking to see if they could recover any files from them, granting an adverse inference instruction sanction and plaintiff’s attorneys’ fees.

Case Background

In this trademark infringement case, the plaintiff requested copies of any documents, including electronic documents, relating to the defendants’ defense that it had continually and extensively used the disputed trademark. The defendants responded (and the owner of the defendant company (Chad Batterman) stated in his deposition) that a lightning strike in 2011 and a power surge in April 2015 had destroyed responsive documents, including corporate records central to the parties’ dispute and marketing materials that allegedly established prior use of the trademark.

in November 2015, the plaintiff filed a motion for terminating sanctions, accusing Defendants of intentionally destroying the electronic versions of the documents.

Judge’s Ruling

Using the newly amended FRCP Rule 37(e) as a guideline, Judge Tigar also considered the five factors identified by the Ninth Circuit in determining whether the terminating sanction is justified:

(1) the public’s interest in expeditious resolution of litigation; (2) the court’s need to manage its dockets; (3) the risk of prejudice to the party seeking sanctions; (4) the public policy favoring disposition of cases on their merits; and (5) the availability of less drastic sanctions.

With regard to the defendant’s duty to preserve and whether that duty was upheld, Judge Tigar found “that at least by January 2015, Defendants knew about the present action and were under a duty to preserve relevant evidence.  The evidence shows that Defendants violated this duty…Prior to discarding the desktop, Batterman did not make any effort to determine whether the hard drive on the desktop was salvageable or any data could be recovered from it…As a result, the parties can only access the few existing paper copies of the relevant documents, rather than the electronic files, which would include valuable information such as the creation and modification history of the files.”

Continuing, Judge Tigar stated: “The Court finds that at the very least, Defendants consciously disregarded their obligations to preserve relevant evidence. There is no evidence that Defendants took any steps to preserve relevant information after the litigation began…After the alleged power surge, Defendants failed to identify whether data from the electronic devices might be recoverable, and instead simply discarded the devices.

The Court also finds Defendants’ evidence that the surge occurred in the first place to be unbelievable. Not only is the alleged chronology of events highly improbable, but Defendants’ story is filled with inconsistencies. The Court does not know what actually happened to the missing evidence, if it ever existed, but concludes that Defendants have failed to show that it was lost in a power surge.”

While finding that sanctions were warranted, Judge Tigar concluded “that sanctions short of entry of default are appropriate” and granted the plaintiff’s request for an adverse inference instruction sanction, as well as attorneys’ fees associated with bringing the Motion for Terminating Sanctions.

So, what do you think?  Should the termination sanction have been awarded?  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 Rules Plaintiff’s Duty to Preserve Did Not Extend to Employee’s Internet History: eDiscovery Case Law

In Marten Transport, Ltd. V. Plattform Advertising, Inc., No. 14-02464 (D. Kansas, Feb. 8, 2016), Kansas Magistrate Judge Teresa J. James denied the defendant’s Motion for Spoliation Sanctions, ruling that, although the plaintiff had a duty to preserve relevant ESI as of Fall 2013, that duty to preserve did not extend to the internet history of one of its employees until June 2015, and by then the internet history was lost.

Case Background

In this action under the Lanham Act for trademark infringement and unfair competition, the plaintiff accused the defendant of making unauthorized job postings to the defendant’s sites using the plaintiff’s trademarks and information after the plaintiff terminated its agreement with the defendant.  Plaintiff’s counsel sent a cease and desist letter in September 2013 and ultimately filed suit in September 2014.

In January 2015, the plaintiff served its Rule 26 disclosures identifying one of its employees (Jolene Vinck), as an individual “believed to have discoverable information relating to the matter.”  In June 2015, Defendant’s counsel sent a letter to the plaintiff alleging that after the defendant removed all of the plaintiff’s job postings from its website on September 17, 2013, the plaintiff logged back in and created six job postings on five separate dates.

In September 2015, as part of its first supplemental production, the plaintiff produced a December 2013 email to Vinck from a third party informing her that the relationship with the defendant had been terminated, which included Vinck’s response that she didn’t know and “had been posting on there all along”.  After the defendant requested Vinck’s internet history in its second request for production, the plaintiff advised the defendant that Vinck’s internet history was no longer available as she received a new work station in February 2015 in the ordinary course of business, and the plaintiff did not have access to any web browsing history relating to any computer assigned to her prior to February 2015.  After attempting to confer, the defendant filed a motion seeking spoliation sanctions due to the plaintiff’s failure to preserve Vinck’s internet history on the previous computer.

Judge’s Ruling

As directed by the Court during the hearing on the subject motion, the plaintiff subsequently filed Declarations regarding its unsuccessful efforts to search for and locate the previous computer and regarding whether it otherwise had the capability to retrieve Vinck’s internet history.  As a result of those efforts, Judge James indicated that “the Court is satisfied that Plaintiff has made thorough and reasonable good faith efforts to locate Computer 1, but it cannot be located”, concluding that “the internet history on Computer 1 is lost and cannot be restored or retrieved by other means”.

While finding that “Plaintiff had a duty to preserve relevant information, and that duty commenced in Fall 2013”, Judge James assessed the scope of that duty and determined that there was “nothing in this record to support a conclusion that Plaintiff knew or should have known that Vinck’s Fall 2013 internet history would be relevant in this case until Plaintiff received the June 16, 2015 letter from Defendant’s counsel.”  In denying the defendant’s motion for spoliation sanctions, Judge James stated:

“The stated reasons behind the 2015 amendments to Rule 37(e) further support the Court’s conclusions in this case. The general intent of amended Rule 37(e) was to address the excessive effort and money being spent on ESI preservation as a result of the continued exponential growth in the volume of ESI, along with the uncertainty caused by significantly differing standards among the federal circuits for imposing sanctions or curative measures on parties who failed to preserve ESI.  In revising Rule 37(e), the Advisory Committee expressly instructed that ‘reasonable steps’ to preserve ESI suffice; the Rule ‘does not call for perfection.’”

So, what do you think?  Should the plaintiff’s duty to preserve have extended to employees’ internet histories?  Please share any comments you might have or if you’d like to know more about a particular topic.

Happy St. Patrick’s 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.

Craig Ball of Craig D. Ball, P.C.: eDiscovery Trends

This is the fifth of the 2016 LegalTech New York (LTNY) Thought Leader Interview series.  eDiscovery Daily interviewed several thought leaders at LTNY this year to get their observations regarding trends at the show and generally within the eDiscovery industry.  Unlike previous years, some of the questions posed to each thought leader were tailored to their position in the industry, so we have dispensed with the standard questions we normally ask all thought leaders.

Today’s thought leader is Craig Ball.  A frequent court appointed special master in electronic evidence, Craig is a prolific contributor to continuing legal and professional education programs in the United States and abroad, having delivered over 1,700 presentations and papers.  Craig’s articles on forensic technology and electronic discovery frequently appear in the national media and he teaches E-Discovery and Digital Evidence at the University of Texas School of Law.  He currently blogs on eDiscovery topics at ballinyourcourt.com.

What are your general observations emerging eDiscovery trends for 2016?

{Interviewed Craig after LTNY, as he did not make it to the show this year}

I skipped LegalTech this year – first time in twenty years – because Mardi Gras was early this year, I chose the circus on the Mississippi over the one on the Hudson.  Still, I got lots of feedback from those who attended LTNY while I was catching beads at 29 parades.  I wanted to see if I’d missed anything of note.  The only trend that emerged was lack of change in the focus of the show.  LTNY is still dominated by electronic discovery as it has been for almost a decade; but, there are continued signs of consolidation within the industry as organizations fold into one another.

Not surprisingly, we don’t see outright failure in this space.  Companies don’t disappear, but instead reach a point where whatever is left is absorbed by a national brand for its equipment or core technology.  So, we’ve seen steady consolidation within the industry, and that trend continues.  As the broader economy goes, so goes litigation and discovery.

Another trend that I’ve observed is an increased focus on eDiscovery automation and considerable growth of, and investment in, eDiscovery automation providers.  What are your thoughts about that trend?

The term “automation” has gotten some play lately.  I’m trying to figure out what each usage means because it’s still in the buzzword phase as marketers deploy the term in the never-ending struggle to differentiate their products. Automated workflows are key to Cloud SaaS offerings.  Hosted systems must be capable of programmatic routines to ingest and process data, effecting ready hand-off of data across processing and review.    An automated SaaS offering should be sufficiently autonomous to facilitate workflow across multiple stages of the EDRM with little manual intervention.

Assuming “automation” means  we can put something into the hopper and it will emerge ready for review or production in forms we were expecting, then automation is a necessary precursor to growth and cost effectiveness in hosted products.  That’s positive for consumers if it means price reductions and commoditization of features of electronic discovery.  It may not be so great for the vendor community unless they can scale up the volume.

In the case Nuvasive v. Madsen Medical, the Court recently vacated an adverse inference instruction sanction previously applied against the plaintiff because of the amendment to Rule 37(e).  Do you see that as a trend for other cases and do you expect that other parties that have been sanctioned will file motions to have their sanctions re-considered?

I don’t think it signals a trend. There are relatively few cases that fall into the transition point.  I don’t expect to see a rash of sanctions being reconsidered by virtue of the latest amendments.

Nuvasive is interesting because it goes to the issue of whether it’s fundamentally fair to impose the new Rules retroactively.  The Rules speak to that issue and make it clear that they can be applied retroactively as long as they operate fairly.  The amendments to the Rules make clear that serious sanctions (such as adverse inference instructions) require proof of an intent to deprive a discovering party of the particular information.  Nuvasive involved serious sanctions, so I can see why the Court might want to weigh amended Rule 37(e).  Still, I’m not sure why the parties and the Court failed to anticipate the Rule changes, as the amendment process was pretty far along in July 2015, when sanctions were imposed.  The tenor of the Court’s opinion in reversing himself was that it was just ‘bad luck’ that the amended rules kicked in when they did.

I think that we will see judicial action once termed “sanctions” couched in less-loaded terms.  After Rule 37(e), Courts will distinguish punitive responses from remedial actions designed to rectify unwarranted failure to preserve relevant information. New Rule 37(e) won’t tie the hands of jurists determined to rectify discovery abuse.  We’re already seeing push back from jurists unwilling to surrender discretionary authority when the facts demand fairness.   As well, we’ve seen at least one case where the Court reversed himself, citing 37(e) as the basis for reconsideration.  As is apparent in Nuvasive and in Judge Francis’ recent order in Cat 3, the Rules are tools, and they can be turned this way and that in determined hands.

Sanctions aren’t going away, and that’s a good thing.  We are mired in the last century when it comes to discovery.  Lawyers need direction, and sanctions opinions supply guidance.  There is little in the way of a “carrot” for eDiscovery – all we have is the “stick.”  If courts fail to sanction incompetence and abuse, then lawyers won’t pursue competence, and parties will continue to “twiddle their thumbs” until evidence disappears.  Few lawyers maliciously hide damaging evidence; but, they’re expert at rationalizing it away or, in the case of e-discovery, content to let their ignorance serve as their armor.  “What you don’t know, can’t hurt me,” is their credo.

What are you working on that you’d like our readers to know about?

I’m going back to basics.  Last year was about trying to develop a core curriculum and re-engineer my teaching to make it an engaging foundation in information technology for lawyers.  I hope 2016 will bring an increased ability to push out more information and reach more people.  I’m doing a project for the DC Bar where I will be providing evening CLE programs by live semi-weekly webcasts.  Small groups of motivated people are my sweet spot.  As always, I’m looking forward to this year’s Georgetown University Law School eDiscovery Training Academy, during the first full week in June.  Both the faculty and the students are delightful.  I’ve come to recognize that anyone willing to work at it can learn the technology they need to be formidable in e-discovery in just three solid days.  That’s less time than most of us spend at Starbucks each year.

I’m using the California ethics decision (which we covered here when it was still a Proposed Opinion) as a jumping off point for the concept of core competencies for lawyers.  As you know, the State Bar of California issued an advisory opinion last year identifying nine areas in which lawyers must either be competent in order to accept a case involving eDiscovery or must associate competent counsel or decline representation. That courageous opinion serves as an effective touchstone for talking to lawyers– not just in California, but all over– about the skills they must embrace to be competent to accept a case involving eDiscovery.

There are virtually no cases without electronic evidence, only cases where the lawyers choose to ignore it.  And there is so much more coming!  Never in history have advocates had so much powerful evidence at their disposal, and never have they been so content to look away.  Three days per advocate could change all that—a long weekend.  But, finding the time is only half the battle.  The other half is finding the course that doesn’t give short shrift to the “e” in e-discovery.

Candidly, 2016 is also about taking some time for me.  I’ve been doing 50 to 70 presentations a year for twenty years.  I average about four flights a week; so, I’m hoping to cut all that down by half.  I’m saying “no” more and stopping to smell the roses.  That’s why I’ve gotten a second home in New Orleans, and will spend more time reading, thinking and working on fewer projects with greater focus.  Every teacher needs a sabbatical, right?

Thanks, Craig, for participating in the interview!

And to the readers, as always, 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. eDiscoveryDaily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

Our Nation’s Largest City is Not Immune to eDiscovery Sanctions: eDiscovery Case Law

In Stinson v. City of New York, 10 Civ. 4228 (RWS) (S.D.N.Y. Jan. 2, 2016), New York District Judge Robert W. Sweet granted in part and denied in part the plaintiffs’ motion seeking sanctions for spoliation of evidence against the defendants for failure to issue a litigation hold, opting for a permissive inference rather than a mandatory adverse inference sanction against the defendants.

Case Background

In this civil rights class action against the City of New York, it was determined that the City did not issue any litigation hold until August 8, 2013, more than three years after the filing of the Complaint in this case and the litigation hold was not effectively communicated, and none of the officers who were named in the City’s initial disclosures acknowledged receiving it.

At the time of the litigation hold, the document destruction processes at the NYPD were governed by Operations Order 44, which specified the length of time the Department would be required to retain various categories of documents.  Order 44 authorized the destruction of most bureau chief memos after three years, police officers’ monthly performance reports after four years, and criminal court summonses after four years.  With regard to emails, the City’s 30(b)(6) witness stated that “although the NYPD did not have a specific policy with regards to the destruction of email communications, it did impose a hard size limit on officers’ inboxes, and that when officers hit that limit, ‘they delete.’”  The City also did not dispute that it had not made any effort to preserve or produce text messages between NYPD officers.

With regard to the defendants’ production, the Court noted that they produced fewer than 25 emails from key players, with no emails produced from the former Commissioner, the former Chief of the department, and three other key custodians. The defendants explained the lack of email production by contending that the “Police Department on the whole did not operate via email”, but that contention was countered by email communications with the city that the plaintiffs acquired from third parties.

Judge’s Ruling

Citing Chin v. Port Authority of New York and New Jersey, Judge Sweet stated that:

“In order to merit an adverse inference, the party seeking sanctions must establish 1) that the party having control over the evidence had an obligation to preserve it at the time it was destroyed, 2) that the records were destroyed with a culpable state of mind, and 3) that the destroyed evidence was relevant to the party’s claim or defense such that a reasonable trier of fact could find that it would support that claim or defense.”

  • With regard to the defendants’ obligation, Judge Sweet rejected the defendants’ argument that the plaintiffs’ preservation requests were overbroad, stating “Plaintiffs’ putative overbroad demands do not excuse the City’s failure to issue a litigation hold, to properly supervise its implementation, or to suspend document retention policies that would foreseeably lead to the spoliation of evidence.”
  • With regard to the defendants’ culpable state of mind, Judge Sweet stated that “the City’s conduct shows a broad failure to take its preservation obligations seriously rather than any deliberate attempt to lie or mislead”, but noted that the “City’s conduct does, however, support a finding of gross negligence”.
  • With regard to the relevance of the destroyed documents, Judge Sweet determined that the “evidence adduced thus far indicates that at least some of the destroyed documents will be relevant to the Plaintiffs’ claims”, though he did note that the showing of relevance by the plaintiffs was “relatively limited”.

As sanctions for the defendants’ spoliation, the plaintiffs requested a set of sixteen adverse inferences touching on almost every aspect of their case, but Judge Sweet opted for a lesser level of sanctions, stating:

“Given the City’s lack of bad faith in its spoliation of evidence and the relatively limited showing of relevance made by the Plaintiffs, a permissive, rather than a mandatory adverse inference is warranted…A permissive inference will ensure that the City faces consequences for its failure to take its preservation obligations seriously, but will not result in an unwarranted windfall for the Plaintiffs. The jury will be instructed that the absence of documentary evidence does not in this case establish the absence of a summons quota policy.”

So, what do you think?  Was that a sufficient sanction for the defendants’ “gross negligence” in failing to issue a litigation hold?  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.

Alteration of Domain in Produced Emails Leads to Sanctions for Plaintiffs: eDiscovery Case Law

In CAT3, LLC v. Black Lineage, Inc., No. 14 Civ. 5511 (AT) (JCF) (S.D.N.Y. Jan. 12, 2016), New York Magistrate Judge James C. Francis IV, ruling that emails produced by the plaintiffs were “intentionally altered”, ordered that the plaintiffs would be precluded from relying on their version of those emails to demonstrate their case and that the plaintiffs would bear the “costs, including reasonable attorney’s fees, incurred by the defendants in establishing the plaintiffs’ misconduct and in securing relief.”

Case Background

One of the key issues in this case regarding trademark infringement regarded similarity between the plaintiffs’ and defendants’ trademarks and whether the defendants developed their trademark (FLASHXHYPE) mark independently or after learning of the plaintiffs’ development of their trademark (SLAMXHYPE).  In a deposition of the defendant company’s president, communication between the defendant and plaintiff companies was provided (which had been produced as PDF images) that showed the plaintiffs’ employee’s address as having the email domain “@slamxhype.com.”  However, on cross examination, the deponent testified that the email he received was identical, except that it showed the plaintiffs’ employee’s address with the email domain “@ecko.com.”

The defendants’ counsel then sought to explore the discrepancy, and in May 2015, they demanded production of the plaintiffs’ emails in native form.  The plaintiffs did not initially respond and, ultimately, their attorneys withdrew and were replaced by new counsel.  In July 2015, the Court ordered the plaintiffs to comply with the defendants’ request and the plaintiffs produced a USB drive containing a PST file, a zip file, and several separate PDFs of relevant emails.

The defendants subjected that production to a forensic analysis which determined that there were two versions of each email message: a “top” level version and, behind each email message, a “near-duplicate copy of the message containing the identical message,” but with different email domains appearing for a number of the senders and recipients.  The underlying near-duplicate versions were the original emails, which had been deleted, albeit not without leaving a digital imprint.

Relying largely on the forensic analysis, the defendants then moved for sanctions consisting of some combination of dismissal of the complaint, imposition of an adverse inference, an order of preclusion, and assessment of attorneys’ fees and costs.

Judge’s Ruling

In considering the application of the amended Rule 37(e) to the situation, Judge Francis determined that “because the amendment is in some respects more lenient as to the sanctions that can be imposed for violation of the preservation obligation, there is no inequity in applying it.”

With regard to the plaintiffs’ claim that “there has been no destruction or loss of any evidence, and there certainly has not been both (i) loss of evidence AND (ii) “such evidence cannot be restored or replaced” as required by Rule 37, Judge Francis, citing Victor Stanley (the first case ever covered by this blog), stated “the plaintiffs argue that even if they are the ‘gang that couldn’t spoliate straight,’ they cannot be sanctioned because their misdeeds were discovered and the information recovered. They are incorrect.”  Elaborating, Judge Francis said that “it cannot be said that the information lost has been ‘restored or replaced’”, noting that “as the plaintiffs themselves suggest, the fact that there are near-duplicate emails showing different addresses casts doubt on the authenticity of both”.

Regarding the plaintiffs’ contention that the manipulation of the emails was unintentional and possibly due to the migration of the plaintiffs’ emails from one system to another, Judge Francis refuted that notion, stating that the “evidence supports the defendants’ allegation that the plaintiffs intentionally altered the emails at issue”.

With regard to relief, Judge Francis, while considering dismissal of the action or imposition of an adverse inference as possible sanctions, stated “such drastic sanctions are not mandatory”.  Therefore, he ordered a “two-fold remedy”, ordering that the plaintiffs would be “precluded from relying upon their version of the emails at issue to demonstrate notice to the defendants of use of the SLAMXHYPE mark” and that the plaintiffs would bear the “costs, including reasonable attorney’s fees, incurred by the defendants in establishing the plaintiffs’ misconduct and in securing relief.”

So, what do you think?  Were those sanctions warranted?  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.

Changes in Federal Rules Result in Reversal of Adverse Inference Sanction: eDiscovery Case Law

In Nuvasive, Inc. v. Madsen Med. Inc., No. 13cv2077 BTM(RBB) (S.D. Cal. Jan. 26, 2016), California Chief District Judge Barry Ted Moskowitz, considering new standards imposed under recently amended Federal Rule of Civil Procedure 37(e), granted the plaintiff’s motion for an order vacating the Court’s previous order granting (in part) the defendants’ Motion for Sanctions for Spoliation of Evidence.

Case Background

In a previous ruling (which we covered here), Judge Moskowitz granted the defendants’ motion for adverse inference sanctions for failure to preserve text messages from four custodial employees that were key to the case.  The plaintiff sought relief under Rule 60(b) based on an amendment to Federal Rule of Civil Procedure 37(e), which went into effect on December 1, 2015.

The defendants opposed the motion, arguing that it was untimely and also argued that it was neither “just” nor “practicable” to apply the new rule because: (1) the mere fact that trial was postponed to February 2016 due to the Court’s schedule should not have the effect of absolving the plaintiff of its discovery misconduct; (2) application of the amended rule would cause substantial prejudice to the defendant, which took discovery and filed its spoliation motion under the standard applicable at the time; and (3) there is no alternative sanction that would remedy the prejudice to the defendants caused by the plaintiff’s destruction of evidence.

Judge’s Ruling

In assessing the new Rule 37(e) language, Judge Moskowitz stated that “It is clear from the language of (e)(2) as well as the Committee Notes that the adverse inference instruction that the Court was going to give falls within the measures that are not permissible absent a finding of intent. The Committee Notes explain: ‘Subdivision (e)(2) applies to jury instructions that permit or require the jury to presume or infer that lost information was unfavorable to the party that lost it. Thus, it covers any instruction that directs or permits the jury to infer from the loss of information that it was in fact unfavorable to the party that lost it.’”

Continuing, Judge Moskowitz observed that “In its prior orders, the Court did not make any finding that NuVasive intentionally failed to preserve the text messages so that Defendants could not use them in this litigation. Instead, the Court found that NuVasive was at fault for not enforcing compliance with the litigation hold. The record does not support a finding of intentional spoliation by NuVasive. Therefore, under Rule 37(e), as amended, it would not be proper for the Court to give the adverse inference instruction.”

Judge Moskowitz rejected the defendants’argument that the motion was untimely, noting that the plaintiff brought its motion on December 10, 2015, just nine days after the new rule went into effect.  While acknowledging that “NuVasive has had a bit of good luck in that trial is scheduled for February, after the effective date of the new rule”, Judge Moskowitz indicated that he was “not convinced that there is any prejudice” to the defendant, noting that, “even under the standard applied by the Court in initially ruling upon Defendants’ motion for sanctions, intent was relevant”.

Judge Moskowitz did indicate he would allow both parties “to present evidence to the jury regarding the loss of electronically stored information and will instruct the jury that the jury may consider such evidence along with all other evidence in the case in making its decision.”

So, what do you think?  Should sanction orders be vacated because of the amendment to Rule 37(e)?  Will this create a wave of motions requesting that courts vacate similar orders in other cases?  Please share any comments you might have or if you’d like to know more about a particular topic.

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

Appeals Court Upholds Terminating Sanctions For Wipe of Cell Phone: eDiscovery Case Law

In Woodell v. Bernstein, et. al., No. 14-2836 (Cal. App., Dec. 30, 2015), the California Court of Appeals affirmed the judgment of the trial court, which imposed terminating sanctions against the plaintiff for spoliation of evidence and dismissed his lawsuit with prejudice after the plaintiff had wiped his cell phone, which was key to the case.

Case Background

In this defamation case, the plaintiff claimed to have lost his cell phone while out walking his dog. One of the defendants found the cell phone on his front lawn near an uprooted sign endorsing his co-defendant for public office. The defendants notified the media and the police that they found the cell phone near the sign and claimed that the plaintiff must have removed the sign, which he denied and, eventually, sued the defendants for defamation.

During deposition of the plaintiff when he was asked for a photo that he had taken the night he lost his phone, he admitted that he had since wiped the phone, stating that “I’ve completely wiped the phone, as I do – did many times working for Google, putting new operating systems on. So whatever photo is – if I have it, I’ll be happy to produce it, but it’s certainly not on the phone anywhere.”  He ultimately indicated that he wiped out the contents of the phone “[s]ometime in early 2012.” He said he did that because the phone was “broken” and he “had to reinstall the operating system”.  When the defendants requested to inspect the phone and arranged to do so, the phone was provided uncharged with the charging connector damaged so that it could not be connected and charged.  In April 2014, the defendants filed a joint motion for terminating sanctions.

Trial Court’s Ruling

The trial court observed that the defendants provided “ample evidence” to show that the plaintiff delayed and obstructed their ability to inspect the phone and, when finally allowed to inspect it, the phone battery was dead and the charging mechanism had been irreparably damaged preventing the phone from being plugged into a charger.  The court added: “What is most disconcerting, however, is the action taken by [Woodell] prior to filing the lawsuit, which included allegedly capturing for his own purpose information from the phone favorable to his position, and then completely wiping clean the operating system such that all potentially relevant information retained on the phone was destroyed.”

The trial court also noted that the plaintiff, in his deposition, stated that he “wiped clean” the phone because he had done that “many times working for Google” but in his declaration he stated that Google instructed him to wipe out the “corrupted system.” In assessing the contradictory evidence, the court found that the plaintiff “was contemplating legal action in 2011, well before he destroyed the contents of the phone in 2012.”  As a result, the trial court granted the defendants’ motion for terminating sanctions, determining that it was “patently unjust” to force the defendants to continue to defend an action when they had been denied potentially exculpatory evidence, and dismissed the plaintiff’s complaint with prejudice.

The plaintiff appealed the ruling, arguing that terminating sanctions were not appropriate because there was no pattern of conduct with regard to discovery and that the trial court committed prejudicial error when it made factual and credibility findings without holding an evidentiary hearing.

Appellate Court’s Ruling

Regarding the plaintiff’s argument that sanctions were not appropriate because there was no pattern of conduct with regard to discovery, the appellate court stated “It is undisputed that the phone Woodell produced no longer contained the critical data, and the production of the phone was of no value to defendants. Woodell’s argument that the law prevented the trial court from imposing terminating sanctions when there was no pattern of discovery abuse or no violation of a prior discovery order is incorrect.”  The appellate court also found that the trial court did not abuse its discretion in finding – without holding an evidentiary hearing – that the defendants met their burden of showing that the plaintiff deliberately removed the data from the phone in anticipation of litigation.  As a result, the appellate court affirmed the lower court’s ruling to dismiss the lawsuit.

So, what do you think?  Did the spoliation warrant termination 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.

Withheld Evidence Leads to New Trial, Resignation of Senior City Attorney: eDiscovery Case Law

This seems to be our week for verdicts being set aside due to alleged discovery violations by parties involved in the case or by the attorney representing those parties.  Thanks to Connie Scorza for the tip about this case!

In Colyer v. City of Chicago, No. 12 C 04855 (N.D. Ill., Jan 4, 2016), Illinois District Judge Edmond E. Chang granted in part the plaintiff’s post trial motion, denying the plaintiffs’ request for a directed verdict, but granting their request for a new trial after it was discovered that the defendants’ attorney had “intentionally” withheld the recording of a police dispatcher’s description of a possible suspect that was key in determining whether Chicago police officers acted with excessive force in killing a suspect in a traffic stop.  The plaintiffs also were awarded their attorneys’ fees and costs expended on preparing for the first trial, conducting the trial itself, and conducting the post-trial discovery and briefing.

Case Background

On January 7, 2011, Chicago Police Officers Raoul Mosqueda and Gildardo Sierra pulled over an Oldsmobile Aurora in Chicago’s Englewood neighborhood driven by Darius Pinex. The officers stated that they decided to stop the car because they thought it matched the description of an Aurora that other officers had unsuccessfully tried to pull over earlier that night. Mosqueda claimed he heard the description of the Aurora over his police-car radio from a dispatcher in the Office of Emergency Management and Communications (OEMC).  Mosqueda claimed during the litigation that the OEMC call warned that the Aurora was wanted for a shooting or that there might have been a gun in the car.  During the resulting confrontation (the details of which were disputed by the parties involved), Pinex was killed.  Nine months later, Pinex’s estate filed suit against Mosqueda, Sierra and the City of Chicago, alleging excessive force in violation of the Fourth Amendment.

During the case, the plaintiffs asked for the recording of what Mosqueda claimed to have heard over the radio, as well as any documents related to the recording, but the discovery responses that they did get led them to believe that no recording of the call or documents were available. From that, the plaintiffs reasonably concluded that Mosqueda was lying, had actually heard nothing, and the officers executed an overly aggressive traffic stop, so they prepared their case accordingly.

However, on the fourth day of trial, it was revealed that there was an OEMC record showing the potential availability of a recording of the call the officers heard that night, and soon afterwards, it was revealed that the recording was in fact still available, which did not mention that the Aurora had a gun or that the car was wanted for a shooting.  The plaintiffs’ counsel had to adjust their trial presentation strategy to account for the existence of the recording, but, ultimately, the jury found in favor of the defendants.  Because the recording wasn’t made available earlier, the plaintiffs moved for a directed verdict in their favor or, short of that, a new trial along with attorneys’ fees and costs.

Judge’s Ruling

In order to determine the extent of the discovery violation and the propriety of the relief sought, the Court authorized post-trial discovery.  As Judge Chang stated after the post-trial discovery was conducted:

“That discovery has shown two things. First, it has shown that Jordan Marsh, one of the City Law Department lawyers representing the officers and the City of Chicago, learned about the OEMC record before trial and knew that the recording might still be available. The Court has no choice but to conclude, based on the record evidence, that Marsh intentionally withheld this information from the Court, from Plaintiffs, and even from his own co-counsel. Second, post-trial discovery has shown that, in response to Plaintiffs’ discovery request seeking the recording and related documents, Thomas Aumann, another Law Department lawyer for the officers and the City of Chicago, failed to make a reasonable inquiry, as required by the discovery rules, to search for the recording and responsive documents. Aumann only looked for documents in a Law Department file, but he had no idea how the documents in the file were gathered, from what sources, or even who gathered them.”

Regarding Marsh’s “misconduct”, Judge Chang noted that “the Court has no choice but to conclude that Jordan Marsh intentionally concealed from Plaintiffs and from the Court the existence of the OEMC record memorializing that Maderak had sent Sergeant Lamperis CDs containing the Zone 6 Audio. After hiding that information, despite there being numerous times when the circumstances dictated he say something about it, Marsh said nothing and even made misleading statements to the Court when the issue arose. This misconduct justifies a new trial and attorneys’ fees and costs from February 19, 2015—the date that he learned of the OEMC record and the Zone 6 Audio’s potential availability—through the post-trial discovery and briefing.”

After Judge Chang’s ruling, Marsh resigned from his position later that day.

So, what do you think?  Should an attorney who intentionally withholds evidence in discovery be disbarred for that action?  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 Gives Plaintiff 21.5 Million Reasons for Not Spoliating Emails: eDiscovery Case Law

When you spoliate data, you can lose even after you’ve won…  :o)

In Hausman v. Holland America Line-U.S.A., et al., No. CV13-0937 BJR (W.D. Wa., Jan 5, 2016), Washington District Judge Barbara Jacobs Rothstein vacated a $21.5 million verdict awarded to a man injured by a closing cruise-ship door in 2011 and ordered a new trial, after the plaintiff’s former assistant alleged that he deleted emails that could hurt his case.

Case Background

The plaintiff sued the defendant in 2013, stating that he suffered dizziness and seizures after an automatic sliding glass door improperly closed and struck his head as the vessel approached Honolulu. After a two-week trial in October, a jury awarded him $21.5 million.

However, the matter did not end there. Approximately two weeks after the trial concluded, the defendants were approached by the plaintiff’s former personal assistant who informed them that the plaintiff had deliberately sabotaged the defendants’ pre-trial discovery efforts, alleging that he: (1) Deleted and/or failed to disclose the existence of emails that he knew were relevant to this lawsuit, (2) Tampered with witness testimony, (3) Fabricated and/or exaggerated the extent of his alleged injuries, and (4) Testified falsely at trial.

Through witness testimony and supporting documents from the personal assistant at an evidentiary hearing held in December, the following allegations were made:

  • The plaintiff panicked when he learned that he would have to produce emails responsive to certain terms and began searching for and deleting those emails over “several days”;
  • He instructed her to delete all email correspondence between the two of them from her computer and phone, which she proceeded to do;
  • He discussed hiring someone to “scrub” his computer and that claimed he had used a large magnet to damage his home office computer’s hard drive; and
  • He had a second personal email account that he used while she was employed as his personal assistant, but that he did not disclose this account to the defendants.

In support of her testimony, the defendants produced copies of 60 emails that she was able to recover from her computer and/or phone after she deleted them, approximately 1/3 of which contained search terms that should have triggered their production.  In one of the deleted emails, the plaintiff wrote to his assistant to say he was sore after spending most of the day on a 10-foot ladder using a fire ax to chop ice that had built up over the front porch of his house, contrary to his claim of vertigo after the incident.

The plaintiff conceded that he did not produce those emails and that nearly one-third of the emails contain the Court-ordered search terms, but claimed the failure to produce these emails was not the result of misconduct on his part, but simply as part of his routine practice of clearing out his inbox.

Judge’s Ruling

In making her ruling, Judge Rothstein stated that “the credibility of Ms. Mizeur and Mr. Hausman is at the heart of this motion: Ms. Mizeur charges that Mr. Hausman intentionally sabotaged Defendants’ discovery efforts and is lying to cover his misconduct; Mr. Hausman charges that Ms. Mizeur is a bitter ex-employee who is lying because she wants to wreak havoc on his life. Thus, this Court must assess the credibility of Ms. Mizeur and Mr. Hausman.”

Finding the former assistant’s explanation regarding a check that she wrote to herself from the plaintiff’s account as an approved expense as “credible”, Judge Rothstein stated “[i]n short, this Court finds Ms. Mizeur to be a truthful witness.”

As for the plaintiff, not so much.

“The same cannot be said for Mr. Hausman”, Judge Rothstein stated. “As a witness, he came across evasive and untrustworthy. He appeared to weigh each answer, not for its truthfulness, but to assess whether it would damage his case. Mr. Hausman also seemed to capitalize on his alleged brain injury when it was convenient for him. He was confused or claimed memory loss when confronted with a question or exhibit that appeared to undermine his claims, yet was animated and full of information when his testimony supported his case.”

Finding “that Plaintiff did not meet his burden of establishing by clear and convincing evidence that the withheld information was inconsequential”, Judge Rothstein concluded “that a miscarriage of justice occurred in this case”, vacated the judgment entered in the case and ordered a new trial.

So, what do you think?  Was this sanction excessive?  Is it ever too late to sanction a party for intentional spoliation of data?  Please share any comments you might have or if you’d like to know more about a particular topic.

Thanks, as always, to Sharon Nelson’s excellent Ride the Lightning blog for the tip!

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.