Don’t Argue “Human Error” For Not Searching ESI

It is dangerous for lawyers to argue information was not searched for years because of “human error.” That is right up there with saying, “Your Honor, we goofed. Are we cool?”

As we learned from Judge Kevin Fox, no, we are not cool.

The case involved claims for wrongful termination and fighting over audio recordings and emails for over five years. Novick v. AXA Network, LLC,2014 U.S. Dist. LEXIS 150004 (S.D.N.Y.Oct. 22, 2014).

AudioTape

After protracted discovery battles, the Defendants produced audio recordings that had an eight-week recording gap. Novick, at *16-17.

The Court found that 1) the Defendants created audio recordings in that time period; 2) those recordings were not produced because they were missing; and 3) there was no explanation on how these recordings went missing. Novick, at *17.

As such, the Court held that the Defendants spoliated relevant evidence. Id.

Judge Fox further found:

The defendants’ repeated failure to search for properly, locate and produce audio recordings to the plaintiff, as noted in the October 3, 2013 order, as well as their inability to account for the audio recordings’ disappearance, suggests nothing other than deliberate conduct and a culpable state of mind. The Court finds that the defendants acted in bad faith because, after representing to the assigned district judge, during the June 27, 2012 conference, that the audio recordings exist, but “are not searchable,” the defendants represented to the plaintiff, on November 20, 2012, that they “have investigated and have not located any audio recordings of the trading desk (where the individuals identified by plaintiff were located) from 2006.” Thereafter, it was not until after the plaintiff made a motion for sanctions that the defendants searched for and located the existing audio recordings, and, not until after the Court ordered their production on October 3, 2013, that the defendants admitted that the audio recordings, covering the period of time critical to the plaintiff’s claims, were missing. The defendants’ delay in properly searching for, locating and producing relevant audio recordings and their conflicting representations to the court and the plaintiff about the existence of audio recordings prejudiced the plaintiff by: (i) preventing him from discovering facts material to the adjudication of his claims; (ii) causing him to incur unnecessary costs making his motion for sanctions and the instant motion; and (iii) prolonging the litigation.

Novick, at *17-19, emphases added.

The Court turned the dial up to 11 finding bad faith conduct because of the misconduct regarding the audio files, the search for missing email messages, and the failure to search an archive due to “human error” without any further explanation. Novick, at *19.

The Court sanctioned the Defendant both with an adverse inference jury instruction and monetary sanctions. Novick, at *22-23. Striking the Defendant’s answer would have gone too far in the Court’s view.

Adverse inference instructions were justified because:

(1) The defendants had an obligation to preserve the audio recordings at the time they vanished;

(2) The audio recordings were spoliated with a culpable state of mind, namely in bad faith; and

(3) The audio recordings were relevant to the plaintiff’s claims such that a reasonable trier of fact could find that they would support his claims.

Novick, at *22.

The Court explained that the sanctioned would deter “spoliation, place the risk of an erroneous judgment on the defendants and restore the plaintiff to the position he would have been in absent the defendants’ wrongful spoliation of the audio recordings.” Novick, at *22-23.

Bow Tie Thoughts

The Duty to Preserve is not something to ignore. Nor is it acceptable to fail to search hard drives for responsive information. Furthermore, if there are discovery mistakes, a party must be able to explain what happened beyond “human error.”

Judges want to know specifics when there is a discovery dispute. As such, parties should document steps to preserve electronically stored information; including how ESI was searched; the technologies used for such searches; and were the collected information is stored. The failure to document with a detailed chain of custody and search report can end badly when electronically stored information goes missing.

Can You Ask the Court to Order a Party to Follow the Duty to Preserve?

videopresentationmanA Pro Se Plaintiff in a prison inmate case requested the Court order the Defendants not to destroy any relevant video surveillance footage from a specific date. The Court declined,  because the Defendant was already subject to the duty to preserve. Ross v. Conner, 2014 U.S. Dist. LEXIS 146887, at *17-18.

The Plaintiff [rightly] was concerned that the Defendants had a document destruction policy of one-year. However, the Court found it unnecessary to issue an order for the Defendants to preserve information that was already subject to the duty to preserve. 

The Court explained as follows:

Under the doctrine of spoliation, parties have a duty to preserve (including a duty to not destroy) evidence when litigation is filed or becomes reasonably anticipated. To fulfill the duty to preserve relevant evidence, “[o]nce a party reasonably anticipates litigation, it is obligated to suspend its routine document retention/destruction policy and implement a “litigation hold” to ensure the preservation of relevant documents.” Here, if Defendants destroy any exculpatory evidence they will be subject to sanctions. However, because they are already under a duty to preserve evidence, an order from this Court is not necessary. 

Ross, at *18.

Bow Tie Thoughts 

There are no shortage of cases where the duty to preserve has gotten attorneys and parties a like in trouble. However, it is difficult to ask a Court to order a party to “follow the rules,” because the party already has a duty to so. However, if there is evidence of wrongdoing by the party that was subject to the duty to preserve, the outcome could be different.

Plaintiffs are well served to include a “preservation letter” to the opposing party early in the case. Some attorneys include this letter with their complaint. This acts as both a shot across the bow on the importance of preserving ESI, but puts the opposing party on notice of what sources of ESI are relevant in the case.

The Duty to Preserve on Island Time

No vacation should end with people becoming Plaintiffs. Sadly, that happened on a trip to Hawaii when someone had a slip and fall in a hotel garage after exiting an elevator. Riley v. Marriott Int’l, Inc., 2014 U.S. Dist. LEXIS 135728 (W.D.N.Y.Sept. 25, 2014).

Hawaii000709943982

The Defendant hotel maintained both video surveillance of the area and “sweep logs” when the area was swept. However, the Defendant lost both. Neither the Plaintiffs or Court said “Mahalo” over this loss.

Be Prepared to Explain What Happened

The Defendant’s Loss Prevention Manager responsible for preserving information for the Hotel explained that the video system records 24-hours a day, is stored on a hard drive, and those records are maintained for 30-days. Riley, at *2-3. The Manager watched the security footage after being told of the Plaintiff’s fall, her removal from the area in a wheelchair, followed by hotel employees placing wet floor signs, and then sweeping up the water. Riley, at *3. The video was turned over the hotel’s liability insurance company. Id.

The Defendant failed to explain any reason for its loss of the video evidence and opined the sweep logs were destroyed per the document retention policy. Riley, at *10-11. The Court went on to state the following on the loss of the video:

Although facing a serious motion for sanctions with potentially significant consequences, Marriott apparently did not investigate the destruction of the relevant evidence or, if it did, explain the results of the investigation. Thus, the only information that this Court has concerning the destruction of the evidence are the assertions of Marriott’s counsel made during oral argument. Even then, Marriott’s counsel was unable to provide any facts concerning the circumstances under which the video footage was destroyed. The failure to provide the Court with any sworn facts from persons with knowledge of the destruction of the challenged evidence demonstrates such a lack of diligence that it suggests bad faith destruction. In any event, Marriott’s failure to preserve the entire video footage relating to Linda’s accident and the sweep logs for the day in question despite the Hotel’s loss prevention employee’s testimony that he knew that he had a duty to preserve relevant evidence constitutes, at a minimum, gross negligence.

Riley, at *11-12.

The Court found that the lost evidence prejudiced the Plaintiffs and the Defendant’s failure to explain how the information was destroyed amounted to gross negligence, thus allowing an inference the information was unfavorable to the Defendant. Riley, at *14.

Be Precise in The Remedy You Request

The Plaintiff’s request for relief asked the Court to “remedy the injustice caused by defendants by ruling the evidence in [p]laintiffs’ favor and by granting summary judgment.” Riley, at *17.

The Court interpreted the requested relief as to strike the Defendant’s answer or an adverse inference instruction. The Court held striking the answer was “too drastic” and instead issued an adverse inference instruction to “permit, but not require, the factfinder to infer that the missing video footage would have been favorable to the [Plaintiffs] and unfavorable to [the Defendant].” Riley, at *19.

Bow Tie Thoughts

Ukulele _0130

The Duty to Preserve never goes on vacation. Moreover, no lawyer should be sent into Court armed only with a Ukulele to sing a song on not knowing what happened to relevant electronically stored information.

If a party has actual notice of a triggering event and has reviewed relevant evidence, that information absolutely has to be preserved. This requires the information to be defensibly copied, which could mean a mirror image or a targeted collection, depending on the needs of the case. What then follows are chain of custody forms that document each step of preserving the information. The data should be maintained in a secure medium, which could be an evidence locker with biometric security (again, depending on the needs of the case).

This case is interesting because despite the inability to explain what happened, the Court refused to strike the Defendant’s answer. I agree this is the right call, especially considering the fact the Court found gross negligence for the lost data.

Don’t Call Discovery Over Document Retention Policies Premature After You Admit Destroying Relevant Discovery

A Defendant sought reconsideration of a Court order allowing discovery on their document retention policies and litigation hold strategy on the grounds 1) the order was premature and 2) it was irrelevant and not discoverable. Cactus Drilling Co. v. Nat’l Union Fire Ins. Co., 2014 U.S. Dist. LEXIS 45251, 11-14 (D. Okla. 2014).

The Court denied the motion.

The discovery at issue centered on a key player who left the Defendant’s company whose files were accidently destroyed. The Court stated:

Plaintiff is entitled to inquire into the circumstances of the destruction of such relevant files while this litigation is pending, whether defendants took proper precautions, and whether such precautions were actually exercised by defendants’ employees. Thus, clearly a discovery request on defendants’ document retention and litigation hold practices and policies and whether such policies were followed with respect to Ms. Valerio’s hard copy Cactus file is relevant and discoverable.

Cactus, at *13.

The Court also held that the order was not premature, as the Defendants requested a ruling on whether they had to produce the discovery and witness for deposition in their Joint Status Report. Cactus, at *12.

The parties were ordered to meet and confer over privilege and stipulation issues over the pending discovery. The Court “vented” over the parties prior cooperation in a footnote:

The Court has been disappointed with the parties’ inability to communicate in good faith and work out many discovery issues that could have been resolved between the parties. Such behavior has necessitated repeated intervention by the Court, unnecessarily and significantly depleting the Court and the parties’ valuable time and resources. Accordingly, the Court advises the parties that it will not look favorably on any party engaging in less than good faith behavior that leads to further abuse of the Court’s time and resources.

Cactus, at *14, fn 5.

Bow Tie Thoughts

Discussing the preservation of discovery, its scope and privilege is NEVER premature. These issues should be at the first meet and confer. Attorneys should be actively thinking about preservation the moment the case begins. Lawyers cannot afford to take a “let’s see how the motions go” before ensuring discovery is preserved.

Why do attorneys wait to exercise their duty of competency to ensure the preservation of discovery? Some might not know how to, others might not want to spend the money and others might think they can keep their clients happy by having the least amount of intrusion. These are all bad reasons.

An effective client interview and litigation hold strategy is less invasive then the joys of a person most knowledgeable deposition over how a litigation hold was enacted. Moreover, motion practice is not known for its low billable hours.

There are some lawyers who model their meet and confer strategies right out of Tombstone. This is not a good idea. There are issues worth fighting about, but methods of preservation, the scope of discovery, and other technical issues should stay objective. These issues are vital for moving the case forward, but are not worth brawling over. Save the fight for the merits.

No Sanctions for Following Records Retention Policy

ThinkMcFly_DocRetentionIt is not every day you see lawsuits about insurance policies from 1986 to 1987.

Add Judge  Paul Grimm’s powerhouse footnotes and you get a great lesson in document retention policies and litigation holds (plus a great footnote on the state of mind exception to hearsay for all the evidence fans).

This asbestos insurance coverage litigation was not filled until November 2012. As one could expect, there were significant gaps in documents from the passage of time. The Court stated the following regarding the destruction of documents in footnote 6:

Were there any evidence in the record to show that AC&R so much as had threatened legal action before the destruction of those documents, it might be sufficient to find that PMA acted improperly in destroying its documents and was not prejudiced by the passage of time. See Victor Stanley, Inc. v. Creative Pipe, Inc., 269 F.R.D. 497, 524 (D. Md. 2010) (“It generally is recognized that when a company or organization has a document retention or destruction policy, it ‘is obligated to suspend’ that policy and ‘implement a “litigation hold” to ensure the preservation of relevant documents’ once the preservation duty has been triggered.” (citation omitted) (emphasis added)). Because the duty to retain documents did not arise for PMA until after their destruction, it cannot be penalized for following its records retention policy.

Ac&R Insulation Co. v. Pa. Manufacturers’ Ass’n Ins. Co., 2014 U.S. Dist. LEXIS 9063, 29-30 (D. Md. 2014).

Bow Tie Thoughts

You cannot sanction a party for following its normal document retention and destruction policy if there is no duty to preserve. Correspondence that took place during the Reagan years is highly unlikely to still exist as a simple matter of a company’s document destruction policy.

What will be an interesting question is litigation in the 2030s. Will electronically stored information on 20 year old external hard drives still be reasonably accessible if they still exist? Will such “old” information be proportional to the merits of a case? I only have to look at my old laptop from law school to imagine the challenge in recovering old civil procedure outlines.

My gut instinct is the answers to these questions will be “no.” However, let’s see what the future holds.

You Need a Duty to Preserve Before Issuing Sanctions

In a case where the Court called the Defendants’ disclosures troubling, the Plaintiffs sought sanctions for the failure to back-up hard drives or issue a litigation hold.

There was one big problem with the Plaintiffs’ argument: they did not prove that the Defendant had a duty to preserve the email when it was destroyed. Magnuson v. Newman, 2013 U.S. Dist. LEXIS 138595, at *44 (S.D.N.Y. Sept. 25, 2013).

The Court stated the earliest the Defendants could have been on notice of the duty to preserve was on August 18, 2010, when they were served the original complain. Magnuson, at *45. Additionally, the Defendants had a three-month email retention policy. Id. 

persegrossnegligence

The Plaintiffs did not even argue the timing of the destruction of the email, instead focusing exclusively on the fact the Defendants:

1) Did not back up their computers or;

2) Issue a litigation hold. Id.

In the Plaintiffs’ view, that amounted to per se gross negligence. Id. 

The Court noted that the Plaintiffs did not cite any authority requiring the Defendants to “back-up” their computers. Magnuson, at *45-46.

The Court stated the Second Circuit abrogated the holding of Pension Committee’s holding that it is gross negligence per se to not issue a litigation hold. Id. Moreover, whether a party failed to failed to issue a litigation hold is one factor in determining whether a party should be sanctioned for spoliation. Magnuson, at *46.

The Plaintiffs failed to demonstrate that the duty to preserve had yet triggered when relevant email was lost as a part of a routine data retention policy. As such, sanctioned were not warranted, however the Court warned that it would preclude any late emails from being introduced at trial. Id. 

Bow Tie Thoughts

The duty to preserve is the trickiest part of litigation for attorneys in my opinion. Lawyers have to give clients news they do not want to hear that can disrupt business. Often times lawyers are in denial about having to learn how clients communicate to identify relevant sources of ESI. Despite these challenges for many, there is simply no escaping the duty to preserve.

That being said, lawyers cannot argue sanctions are warranted if there was no duty to preserve. Moreover, the failure to issue a litigation hold is one factor in determining sanctions, not an outcome determinative fact.

Of Diapers & Litigation Hold Sanctions

Diapers. Perhaps the most effective tool for encouraging family planning. Now a messy diaper shipment case delivers a message on the importance of issuing a litigation hold.

RedDiaper

A Defendant brought a sanctions motion against a Plaintiff for their alleged failure to preserve evidence in a case over $3 million worth of diapers.

The Plaintiff admitted they had a duty to preserve electronically stored information. That did not happen because a formal litigation hold was not issued.

The Plaintiff’s failure to issue a litigation hold was not gross negligence per se under Chin v. Port Auth. of N.Y. & N.J., 685 F.3d 135, 162 (2d Cir. 2012) cert. denied, 133 S. Ct. 1724, 185 L. Ed. 2d 785 (U.S. 2013).

The Court stated, “the facts here establish that SJS’s failure to take the most basic document preservation steps, even after it discovered the packaging nonconformities and filed this action, constitutes gross negligence. Such failure is particularly inexcusable given that SJS is the plaintiff in this action and, as such, had full knowledge of the possibility of future litigation.” Sjs Distrib. Sys. v. Sam’s East, Inc., 2013 U.S. Dist. LEXIS 147549, at *10-17 (E.D.N.Y. Oct. 11, 2013), citing Sekisui Am. Corp. v. Hart, No. 12 CV 3479, 2013 U.S. Dist. LEXIS 115533, at *6 (S.D.N.Y. Aug. 15, 2013). This failure met the Defendant’s burden to show the Plaintiff was culpable for the loss of ESI. Id. 

Judicial Spoliation Wipes

BabyRedDiaperJudges look forward to disputes on whether lost email was relevant to case as much as changing a diaper.

The Court found that some of the Plaintiff’s lost email messages would have related to the business transaction between the parties. However, there was no extrinsic evidence of the relevance specifically. Sjs Distrib. Sys., at *11-13.

The Court had to determine a sanction that would (1) deter parties from engaging in spoliation; (2) place the risk of an erroneous judgment on the party who wrongfully created the risk; and (3) restore “the prejudiced party to the same position [it] would have been in absent the wrongful destruction of evidence by the opposing party.” Sjs Distrib. Sys., at *13-14, citing Goodyear Tire & Rubber Co., 167 F.3d at 779.

The Court refused to issue a preclusion order on the Plaintiff from using any documentary evidence after a specific date relevant to the lawsuit. The Defendant had recovered some of the Plaintiff’s communications from 3rd parties and their own records. Sjs Distrib. Sys., at *14. Preclusion was simply too drastic a sanction, given the fact there were other ways to find some of the relevant email communications.

The Court held the proper sanction was an adverse inference against plaintiff that it negligently deleted emails in the fall of 2010 that would have been relevant and favorable to defendant. The Court reasoned that such an order would restore the Defendant to the same position it would have been absent the destruction of ESI by the Plaintiff. Sjs Distrib. Sys., at *15-16. 

The Court also ordered an award of fees to be determined after reviewing the Defendant’s time billed for the motion. Id. 

Bow Tie Thoughts 

Attorneys have to take litigation holds seriously. That means having a set plan for communicating to a client’s custodians, identifying data sources and ensuring ESI is being properly preserved. The duty to preserve is not something that can be said in passing to a HR manager in the hopes it is done correctly. Have a plan and take action.

There are many tools on the market for issuing litigation holds. I have many friends at Legal Hold Pro that have a great cloud solution for issuing holds, tracking interview responses and documenting compliance. There are other options available.

The cost to use one of these tools is not prohibitive. Cloud solutions help keep fees reasonable. Moreover, the cost to a firm’s reputation because a Judge said a firm was “grossly negligent” in their duty to preserve is far more costly than properly issuing a litigation hold.