Spoliation

Spoliation and Defensible Deletion: What’s the Difference?

Spoliation and Sanctions

Spoliation, the destruction or manipulation of ESI, has become a prevalent issue in e-discovery. As evidenced by Atalian US New England, LLC v. Navarro, spoliation is often done deliberately. In response to allegations of fraud, the defendant deleted mobile device data and replaced it with fabricated evidence. The judge sanctioned the company for intending to deprive the opposing counsel of relevant information.[1] Negligence is another cause for spoliation. In McCoy v. Transdev Svc., Inc., Transdev faced default judgment for “inadvertently” deleting cell phone data. Though the content was unknown, the Court upheld its relevance, maintaining that it could have supported the opposition’s claims.[2] Faulkner v. Aero Fulfillment Services demonstrates that spoliation can also be an accidental offense. Ms. Faulkner initially adhered to production requests and produced her LinkedIn data in the form of an Excel spreadsheet. But when the defendants asked for the evidence in a different format, Ms. Faulkner was unable to comply because she had deactivated her account. The court decided against sanctioning the plaintiff because she had followed the initial production request, and it was the counsel’s responsibility to inform her of preservation obligations.[3]

Per Rule 37(e) of the Federal Rules of Procedure, sanctions for irreversibly deleting ESI include:

  • Court involvement to remedy any prejudices suffered by the opposing counsel
  • Court and jury presumptions that the lost information was unfavorable to the responsible party if the deletion was intentional
  • Dismissal of the action or motion for default judgment[4]

 

Defining Defensible Deletion

Unlike spoliation, defensible deletion involves the ongoing elimination of unneeded data to reduce the costs of storage and retention. Deletion is permissible by the Federal Rules of Procedure when the ESI isn’t being held for a legal, statutory, or business purpose. Legal teams should carefully design a deletion strategy so that they can decide what to keep, archive, and eliminate.[5]

 

Things to Keep in Mind for Defensible Deletion

  • Prepare a retention policy and schedule. Defensible deletion is a slow, meticulous process. Take your time, especially when handling large amounts of big data.
  • Establish an inventory of legal preservation obligations. Within the inventory, identify which data types are currently under legal holds (or likely to be held). Proper documentation and classification of your data will simplify the retention process.
  • Properly staff the deletion project with a range of experts in various fields.[6]

 

[1] R. Thomas Dunn, “Intentional Deletion and Manipulation of Electronic Data Leads to Default Judgement,” JD Supra, August 12, 2021, https://www.jdsupra.com/legalnews/intentional-deletion-and-manipulation-8546367/

[2] Michael Berman, “Defendant Unsuccessfully Argued that Plaintiff Could Not Show That Data on Cell Phone That Defendant Destroyed Was Relevant,” E-Discovery LLC, August 18, 2021, http://www.ediscoveryllc.com/defendant-unsuccessfully-argued-that-plaintiff-could-not-show-that-data-on-cell-phone-that-defendant-destroyed-was-relevant/

[3] Brielle A. Basso, “In It for the Long Haul: The Duty to Preserve Social Media Accounts Is Not Terminated Upon an Initial Production,” Gibbons, June 30, 2020, https://www.gibbonslawalert.com/2020/06/30/in-it-for-the-long-haul-the-duty-to-preserve-social-media-accounts-is-not-terminated-upon-an-initial-production/

[4] “Rule 37. Failure to Make Disclosures or to Cooperate in Discovery; Sanction,” Legal Information Institute, https://www.law.cornell.edu/rules/frcp/rule_37

[5] “Defensible Deletion Strategy: Getting Rid of Your Unnecessary Data,” Special Counsel, November 16, 2019, https://blog.specialcounsel.com/ediscovery/defensible-data-deletion-strategy-basics/

[6] Andrew J. Peck, Jennifer M. Feldman, Leeanne Sara Mancari, Dennis Kiker, “Defensible deletion: The proof is in the planning,” DLA Piper, February 5, 2021, https://www.dlapiper.com/en/us/insights/publications/2021/02/defensible-deletion-the-proof-is-in-the-planning/

Default Judgment Sanction Upheld on Appeal – eDiscovery Case Law

In Stooksbury v. Ross, Nos. 12-5739/12-6042/12-6230, No. 13a0575n.06 (6th Cir. June 13, 2013), the Sixth Circuit upheld the entry of default judgment as a sanction against defendants that repeatedly failed to comply with discovery obligations, including producing a “document dump” of tens of thousands of pages of nonresponsive information that prejudiced the plaintiffs.

At trial in this RICO action, the court found the defendants engaged in “contumacious conduct” and intentionally delayed discovery. Although the defendants had provided a document “dump” of 40,000 pages of documents in response to document requests, the information was not responsive to the requests, lacked important financial information, was not Bates stamped, and prejudiced the plaintiff. The plaintiffs asked the court to sanction the defendants, and the magistrate judge recommended default judgment in favor of the plaintiff. The judge found that the defendant had a “‘total lack of forthrightness’” in refusing to comply and explain their noncompliance; this conduct “‘amount[ed] to bad faith and a willful decision not to cooperate in discovery.’” The district court subsequently adopted the magistrate judge’s findings but awarded costs and fees instead of a default judgment. The court also afforded the defendants 10 more days to comply with the discovery order, warning them that noncompliance could result in further sanctions.

Despite the additional time and warning, the defendants still failed to provide responsive discovery: “[T]hey included boilerplate objections and failed to provide basic accounting documents or Bates stamp references for the earlier document dump.” As a result, when the plaintiff renewed his motion for a default judgment, the court granted it. The district court relied on four findings: “(1) the defendants intentionally failed to comply with the discovery orders, (2) they failed to heed the court’s warning, (3) the plaintiff suffered prejudice as a result of their noncompliance, and (4) less drastic sanctions would not be effective.” The defendants later objected, but the court refused to reconsider its motion, finding there was no evidence that the defendants’ actions stemmed from excusable neglect.

The defendants appealed this decision. The court reviewed the district court’s four findings for an abuse of discretion. The Sixth Circuit approved the lower court’s decision for the following reasons:

  • First, the defendants met the standard for “willful conduct and bad faith” because they “lacked forthrightness, failed to directly respond to the Court’s inquiries about the discovery matters, offered no explanation for their lack of compliance, and demonstrated ‘bad faith and a willful decision not to cooperate in discovery.’”
  • Second, the plaintiff was prejudiced because the dispute had continued for more than a year, despite judicial intervention and two continuances. Further, the “discovery abuses imposed excessive costs on Plaintiff, who had to sort through the document dump, and undermined Plaintiff’s proof on the issue of liability.”
  • Third, the defendants were fairly warned about the possibility of sanctions, including a default judgment, by the magistrate judge and district court.
  • Fourth, the court first issued a less severe sanction and warned the defendants of the possibility of the default if they did not meet their discovery obligations. Nevertheless, the defendants “forced the district court’s hand in ordering the default judgment.”

Accordingly, the court ruled there was no abuse of discretion.

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

Case Summary Source: Applied Discovery (free subscription required).  For eDiscovery news and best practices, check out the Applied Discovery Blog here.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine Discovery. eDiscoveryDaily is made available by CloudNine Discovery 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.

I Removed a Virus, Did I Just Violate My Discovery Agreement? – eDiscovery Best Practices

As we discussed last month, working with electronic files in a review tool is NOT just simply a matter of loading the files and getting started.  Electronic files are diverse, they can represent a whole collection of issues to address in order to process them for loading, and processing them effectively requires a sound process.  But, what if the evidentiary files you collect from your custodians contain viruses or other malware?

It’s common to refer to all types of malware as “viruses”, but a computer virus is only one type of malware.  Malware includes computer viruses, worms, trojan horses, spyware, dishonest adware, scareware, crimeware, most rootkits, and other malicious and unwanted software or program.  A report from 2008 stated that more malicious code and other unwanted programs was being created than legitimate software applications.  If you’ve ever had to attempt to remove files from an infected computer, you’ve seen just how prolific different types of malware can be.

Having worked with a lot of clients who don’t understand why it can take time to get ESI processed and loaded into their review platform, I’ve had to spend some time educating those clients as to the various processes required (including those we discussed last month).  Before any of those processes can happen, you must first scan the files for viruses and other malware that may be infecting those files.  If malware is found in any files, one of two things must happen:

  • Attempt to remove the malware with virus protection software, or
  • Isolate and log the infected files as exceptions (which you will also have to do if the virus protection software fails to remove the malware).

So, let’s get started, right?  Not so fast.

While it may seem logical that the malware should always be removed, doing so is technically altering the file.  It’s important to address how malware should be handled as part of the Rule 26(f) “meet and confer” conference, so neither party can be accused of spoliating data when removing malware from potentially discoverable files.  If both sides agree that malware removal is acceptable, there still needs to be a provision to handle files for which malware removal attempts fail (i.e., exception logs).  Regardless, the malware needs to be addressed so that it doesn’t affect the entire collection.

By the way, malware can hit anybody, as I learned (the hard way) a couple of years ago.

So, what do you think?  How do you handle malware in your negotiations with opposing counsel and in your ESI collections?   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 Discovery. eDiscoveryDaily is made available by CloudNine Discovery 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.

Spoliation Sanctions Can Apply to Audio Files Too – eDiscovery Case Law

In Hart v. Dillon Cos., 2013 U.S. Dist. (D. Colo. 2013), Colorado Magistrate Judge David L. West granted the plaintiff’s Motion for Sanctions for Spoliation of Evidence for failing to preserve a tape recorded interview with the plaintiff and set a hearing and oral argument as to what sanctions should be imposed for October.

As noted in the opinion, here are the facts:

  • On August 23, 2011, the plaintiff was terminated by the defendant for allegedly giving herself the incorrect pay rate while working in the bookkeeping department. As part of the defendant’s investigation, a loss prevention specialist for the defendant secretly tape recorded an interview with the plaintiff on August 6 which in part led to the termination of the plaintiff.
  • On November 1, 2011, the plaintiff filed an E.E.O.C. charge of discrimination.
  • On November 7, 2011, the defendant denied the plaintiff’s request for arbitration knowing the plaintiff would probably litigate the matter.
  • Sometime between January and March of 2012, the loss prevention specialist inadvertently taped over or erased his interview with the plaintiff.
  • On January 30, 2012, the plaintiff filed her Complaint.
  • On March 1, 2012, the defendant issued a litigation hold on all related documentation. Before the contents of the tape were destroyed, Pollard prepared a “case narrative” in writing which the defendant asserts is substantially accurate and the plaintiff claims does not include exculpatory information and the tenor of the interview.

As noted in the opinion, there is a three part test to determine spoliation of evidence:

1. Is the evidence relevant to an issue at trial?

2. Did the party have a duty to preserve the evidence because it knew or should have known, that litigation was imminent?

3. Was the other party prejudiced by the destruction of the evidence?

Judge West found that the interview was relevant as the defendant relied on the interview as part of the decision to terminate the plaintiff.  He also found that the defendant had a duty to preserve the data as far back as November 7, 2011, when the plaintiff’s request for arbitration was denied.  And, he found that the plaintiff was prejudiced by destruction of the audio, noting as many as 21 discrepancies between the defendant’s case narrative and the plaintiff’s stated recollection in her deposition and affidavit.  As he noted:

“Defendant was clearly four (4) months late in issuing a “litigation hold” concerning the tape in Pollard’s possession, and the Court finds Defendant is highly culpable for the failure to preserve the taped interview.

A failure to preserve evidence may be negligent, grossly negligent, or willful. After the duty to preserve attaches, the failure to collect taped recording from a key player is grossly negligent or willful behavior.”

Thus, Judge West granted the plaintiff’s Motion for Sanctions for Spoliation of Evidence and ordered the hearing to determine the sanctions to be applied to the defendant.

So, what do you think?  Did the judge make the right decision?  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 Discovery. eDiscoveryDaily is made available by CloudNine Discovery 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.

Printed Copies of Documents Not Enough, Spoliation Sanctions Upheld for Discarding Computer – eDiscovery Case Law

On May 30, the Appellate Division of the Supreme Court of New York, First Department upheld a spoliation sanction against a plaintiff that failed to preserve electronic files and discarded his computer containing those files.

As reported in IT-Lex.org (Gross Negligence + Lack Of Litigation Hold = Spoliation Sanctions), In Harry Weiss, Inc. v. Moskowitz, a dispute involving diamond dealers and brokers, the Appellate Division upheld the defendants’ motion for spoliation sanctions to the extent of precluding plaintiff from offering any evidence and/or testimony at trial in opposition to defendants’ defenses and counterclaims, unanimously affirmed, with costs.  As noted in the transcript:

“More than two years into this litigation, plaintiff’s bookkeeper revealed at his deposition for the first time that certain electronic files that were created to track defendants’ commissions were either “lost” or “deleted” at the end of 2007 and 2008, after a copy of the file had been printed. The bookkeeper further testified that he created and kept all of plaintiff’s records on one computer, which had been in use for the last ten years. A month later, when defendants’ attorney sought to forensically examine the computer to determine if any of the deleted files could be restored, plaintiff’s bookkeeper claimed, for the first time, that the computer was “broken” and had been thrown away in late 2009 or early 2010, after the commencement of this action. Thereafter, the bookkeeper testified that numerous documents supporting plaintiff’s claim that defendants were not entitled to commissions could not be produced because they were stored only on the discarded computer.”

The plaintiff was put on notice of its obligation to “preserve all relevant records, electronic or otherwise,” at the very latest, in July 2009, when it received defendants’ answer asserting counterclaims for commissions, so the disposition of the computer was spoliation of that data.

The plaintiff claimed that disposal of the computer did not cause defendants any prejudice because many of the files were printed prior to its disposal, but the court rejected that argument, noting that “converting the files from their native format to hard-copy form would have resulted in the loss of discoverable metadata”. “In addition, by discarding the computer after its duty to preserve had attached without giving notice to defendants, plaintiff deprived defendants of the opportunity to have their own expert examine the computer to determine if the deleted files could be restored”.

So, what do you think?  Was the sanction justified?  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 Discovery. eDiscoveryDaily is made available by CloudNine Discovery 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.

Want to Make eDiscovery Proportional? Tie it to the Amount at Stake – eDiscovery Trends

Apparently, the effect of the proposed amendments to the discovery provisions of the Federal Rules of Civil Procedure approved for public comment may not be limited to just Federal courts.  They also could have a significant effect on New York’s state courts as well.

According to Brendan Pierson in the New York Law Journal (Proposal Would Tie Scope of Discovery to Amount in Controversy), the “most sweeping change would amend Rule 26(b)(1) to require that courts allow discovery that is ‘proportional to the needs of the case considering the amount in controversy, the importance of the issues at stake in the action, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit.’”  Since New York courts “generally follow” the current federal discovery standard in which any material that could lead to admissible evidence is generally discoverable (regardless of the amount in controversy), the presumption is that they would follow the new standard as well.

If the US system is the “broadest discovery system on the planet” (according to Alvin Lindsay, a Hogan Lovells partner and an expert in discovery issues), the proposed changes would “bring discovery in the United States more in line with the rest of the world”.

The author cites the Zubulake v. UBS Warburg case as a key turning point in the number of documents preserved and produced in litigation and that growing eDiscovery costs have led to a “backlash among practitioners”.  According to experts, the proposed rules changes are “likely to gain broad support”.  “I don’t know who you’re going to get who’s going to oppose the principle of proportionality,” said Paul Sarkozi, a partner at Tannenbaum Helpern Syracuse & Hirschtritt and vice-chair of the commercial litigation section of the New York State Bar Association.

However, one “possible source of opposition could be class action plaintiffs attorneys, who can sometimes benefit from the more extensive discovery available under current rules”.  It will be interesting to see if there is considerable opposition from plaintiffs’ attorneys.  For more in the article, click here.

So, what do you think?  Are you pleased or concerned with the proposed amendments?  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 Discovery. eDiscoveryDaily is made available by CloudNine Discovery 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.

Appellate Court Denies Sanctions for Routine Deletion of Text Messages – eDiscovery Case Law

In PTSI, Inc. v. Haley, No. 684 WDA 2012, 2013 Pa. Super. (Pa. Super. Ct. May 24, 2013), the appellate court denied a motion for spoliation sanctions where the defendants routinely deleted text messages and other data to “clean up” their personal electronic devices: the volume of messages and limited amount of phone storage made it difficult to retain all data and still use the phone for messaging.

Here, the plaintiff filed claims of conversion, breach of the duty of loyalty, and breach of fiduciary duty against its former at-will employees and their new competing business. The trial court dismissed all claims at summary judgment. It also denied PTSI’s motion seeking sanctions for spoliation, because the deletion of electronically stored information, including text messages, was not relevant to the summary judgment decision.

During discovery, PTSI filed a motion seeking sanctions based on its two former employees’ deletion of electronic records from their computers and phones, including text messages. The company claimed the information was “vital to the prosecution of this case” and could not be “feasibly reconstructed or retrieved without enormous time and expense to PTSI, if at all.”

Under Pennsylvania law, the court had to evaluate three factors to determine the appropriate sanction: “(1) the degree of fault of the party who altered or destroyed the evidence; (2) the degree of prejudice suffered by the opposing party; and (3) whether there is a lesser sanction that will avoid substantial unfairness to the opposing party and, where the offending party is seriously at fault, will serve to deter such conduct by others in the future.”

To determine the level of fault, the court considered the extent of the duty to preserve the evidence, based on whether litigation is foreseeable and whether the evidence might be prejudicial to the opposing party, and whether the evidence was destroyed in bad faith. The court also considered proportionality in making decisions, including five factors spelled out in the comments to the Pennsylvania Rules of Civil Procedure:

  • the nature and scope of the litigation, including the importance and complexity of the issues and the amounts at stake;
  • the relevance of electronically stored information and its importance to the court’s adjudication in the given case;
  • the cost, burden and delay that may be imposed on the parties to deal with electronically stored information;
  • the ease of producing electronically stored information and whether substantially similar information is available with less burden; and
  • any other factors relevant under the circumstances.

Here, the amount in controversy and the importance of the issues involving the data did not support awarding a discovery sanction. Moreover, PTSI could not show that its former employees’ “innocent clean up of personal electronic devices to allow them to function was unusual, unreasonable or improper under the circumstances.” Because the defendants “routinely deleted text messages, often on a daily basis, so as not to unduly encumber their iPhones” and because of “the volume of text messages that are frequently exchanged by cell phone users and the limited amount of storage on cell phones, it would be very difficult, if not impossible, to save all text messages and to continue to use the phone for messaging.” Furthermore, the order of preservation was entered well after any relevant data would have already been created and deleted. In addition, similar information was available from other sources and custodians; the forensic examiner in the case unearthed more than 1,000 e-mails from the employees’ computers. Finally, any spoliation inference could not defeat the summary judgment motion.

The appellate court agreed with the trial court’s reasoning and found no abuse of discretion.

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

Case Summary Source: Applied Discovery (free subscription required).  For eDiscovery news and best practices, check out the Applied Discovery Blog here.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine Discovery. eDiscoveryDaily is made available by CloudNine Discovery 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.

Judge Rules Against Spoliation Sanctions when the Evidence Doesn’t Support the Case – eDiscovery Case Law

In Cottle-Banks v. Cox Commc’ns, Inc., No. 10cv2133-GPC (WVG) (S.D. Cal. May 21, 2013), California District Judge Gonzalo P. Curiel denied the plaintiff’s motion for spolation sanctions because the plaintiff was unable to show that deleted recordings of customer calls would have likely been relevant and supportive of her claim.

The defendant provides services and products such as set-top cable boxes and customers call in to order these services and products.  The plaintiff alleged a practice of charging customers for boxes without disclosing, and obtaining approval for equipment charges – a violation of the Communications Act of 1934, 47 U.S.C. § 543(f).  The plaintiff’s discovery requests included copies of recording of her own calls with the defendant, and the defendant began preserving tapes when the plaintiff notified the defendant that she would seek call recordings in discovery, not before that.  As a result, the plaintiff filed a motion for spoliation sanctions, requesting an adverse inference and requesting that the defendant be excluded from introducing evidence that it’s call recordings complied with 47 U.S.C. § 543(f).

From the call recordings still available, a sample of recordings was provided to the plaintiff – in those calls, it was evident that the defendant did, in fact, get affirmative acceptance of the additional charges as a matter of practice.

Judge Curiel ruled that the defendant “had an obligation to preserve the call recordings when the complaint was filed in September 2010” and that the defendant “had an obligation to preserve the call recording, [so] Defendant was negligent in failing to preserve the back up tapes. Thus, Defendant had a culpable state of mind.”  However, because the “Plaintiff cited only two call recordings out of 280 call recordings produced to support her position”, the judge concluded “that the deleted call recordings would not have been supportive of Plaintiff’s claim.”  Because “Plaintiff has not demonstrated all three factors to support an adverse inference sanction”, Judge Curiel denied the plaintiff’s motion as to adverse inference and preclusion.

So, what do you think?  Should the sanction request have been denied?  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 Discovery. eDiscoveryDaily is made available by CloudNine Discovery 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.

Spoliation of Data Can Get You Sent Up the River – eDiscovery Case Law

Sometimes, eDiscovery can literally be a fishing expedition.

I got a kick out of Ralph Losey’s article on E-Discovery Law Today (Fishing Expedition Discovers Laptop Cast into Indian River) where the defendant employee in a RICO case in Simon Property Group, Inc. v. Lauria, 2012 U.S. Dist. LEXIS 184638 (M.D. Fla. 2012) threw her laptop into a river.  Needless to say, given the intentional spoliation of evidence, the court imposed struck all of the defenses raised by the defendant and scheduled the case for trial on the issue of damages.  Magistrate Judge Karla Spaulding summarized the defendant’s actions in the ruling:

“This case has all the elements of a made-for-TV movie: A company vice president surreptitiously awards lucrative business deals to a series of entities that she and her immediate family members control. To cover up the egregious self-dealing, she fabricates multiple fictitious personas and then uses those fictitious personas to “communicate” with her employer on behalf of the entities she controls. She also cut-and-pastes her supervisor’s signature onto service agreements in an attempt to make it seem as if her activities have been approved. After several years, a whistleblower exposes the scheme to the company. The company then tells the vice president that she is being investigated and warns her not to destroy any documents or evidence. Sensing that her scheme is about to collapse around her and wanting to cover her tracks, the vice president then travels to the East Coast of Florida and throws her laptop computer containing information about these activities into a river.”

At least she didn’t deny it when deposed as noted in the ruling:

“When asked why she threw the laptop away, Lauria testified as follows:

Q: Okay. Why did you throw the laptop away?

A: Because I knew that something was coming down and I just didn’t want all the stuff around.

Q: So you were trying to get rid of documentation and e-mails and things?

A: Uh-huh, yes.

Q: That directly related to the lawsuit?

A: Yes. Now, they do, yes.”

Maybe she should have used the George Costanza excuse and state that she didn’t know it was “frowned upon”.

So, what do you think?  Was that wrong?  Just kidding.  Please share any comments you might have or if you’d like to know more about a particular topic.

BTW, Ralph is no stranger to this blog – in addition to several of his articles we’ve referenced, we’ve also conducted thought leader interviews with him at LegalTech New York the past two years.  Here’s a link if you want to check those out.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine Discovery. eDiscoveryDaily is made available by CloudNine Discovery 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.

Adverse Inference Sanction for Defendant who Failed to Stop Automatic Deletion – eDiscovery Case Law

Remember the adverse inference instructions in the Zubulake v. UBS Warburg and Apple v. Samsung cases?  This case has characteristics of both of those.

In Pillay v. Millard Refrigerated Servs., Inc., No. 09 C 5725 (N.D. Ill. May 22, 2013), Illinois District Judge Joan H. Lefkow granted the plaintiff’s motion for an adverse inference jury instruction due to the defendant’s failure to stop automatic deletion of employee productivity tracking data used as a reason for terminating a disabled employee.

Case Background

The plaintiff alleged that the defendant is liable for retaliation under the Americans with Disabilities Act (“ADA”) for terminating his employment after the plaintiff opposed the defendant’s decision to terminate another employee because of a perceived disability.  The defendant employed a labor management system (“LMS”) to track its warehouse employees’ productivity and performance.  Shortly after hiring the employee and telling him that his LMS numbers were great, the defendant fired the employee when it was determined that a prior work injury he suffered rendered him with a disability rating of 17.5 percent by the Illinois Industrial Commission, which prompted the senior vice president to send an email to the general manager stating “We have this all documented right? … Let’s get him out asap.”  The employee (and the plaintiff, for objecting to the termination) was terminated in August 2008 and the defendant contended that the employee’s termination resulted from his unacceptable LMS performance rating of 59 percent.

Deletion of LMS Data

In August 2009, the raw data used to create the employee’s LMS numbers were deleted because the LMS software automatically deleted the underlying data after a year. Before the information was deleted, the plaintiff and other terminated employee provided several notices of the duty to preserve this information, including:

  • A demand letter from the plaintiff in September 2008;
  • Preservation notices from the plaintiff and other terminated employee in December 2008 reminding the defendant of its obligations to preserve evidence;
  • Charges filed by both terminated employees with the Equal Employment Opportunity Commission (“EEOC”) in January 2009.

Also, the defendant’s 30(b)(6) witness testified that supervisors could lower an LMS performance rating by deleting the underlying data showing that an employee worked a certain number of jobs for a given period of time, which the plaintiff contended happened in this case.  As a result, the plaintiff filed a motion for the adverse inference jury instruction.

Judge’s Ruling

Noting that the defendant “relied on this information when responding to the EEOC charges, which occurred before the deletion of the underlying LMS data” and that “[i]nformation regarding the underlying LMS data would have been discoverable to challenge Millard’s explanation for Ramirez’s termination”, Judge Lefkow found that the defendant had a duty to preserve the LMS data (“A party must preserve evidence that it has notice is reasonably likely to be the subject of a discovery request, even before a request is actually received.”).

With regard to the defendant’s culpability in deleting the data, Judge Lefkow stated “[t]hat Millard knew about the pending lawsuit and that the underlying LMS data would be deleted but failed to preserve the information was objectively unreasonable. Accordingly, even without a finding of bad faith, the court may craft a proper sanction based on Millard’s failure to preserve the underlying LMS data.”

So, Judge Lefkow granted the plaintiff’s request for an adverse inference sanction with the following instruction to be given to the jury:

“Pillay contends that Millard at one time possessed data documenting Ramirez’s productivity and performance that was destroyed by Millard. Millard contends that the loss of the data was accidental. You may assume that such evidence would have been unfavorable to Millard only if you find by a preponderance of the evidence that (1) Millard intentionally or recklessly caused the evidence to be destroyed; and (2) Millard caused the evidence to be destroyed in bad faith.”

So, what do you think?  Should the adverse inference 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 Discovery. eDiscoveryDaily is made available by CloudNine Discovery 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.