BlackBerry Boo-Boos: How to Get the Judge to Text You Adverse Inference Instructions

Southeastern Mechanical Services, Inc., v Brody, et al., is the story of how wiping the data off your BlackBerry can result with the Court having you drawn and quartered.  Not with horses, but with adverse inference instructions.

In a trade secret case where Individual Defendants left the Plaintiff’s company and went to the Defendant’s company, issues with BlackBerry data spoliation exploded like a fireball in the night.  Southwestern Mechanical Services, Inc., v Brody, et al., 2009 U.S. Dist. Lexis 85430 (August 2009).  There is an “app” for that sort of spoliation called adverse inference instructions.

The key facts of the case took place in a matter of days.  The three Individual Defendants purchased their BlackBerries between May 28 to May 30, 2008.  The devices were used for email, phone and text messaging. 

The Individual Defendants’ BlackBerries were synced with the Defendant’s email server between June 3 to June 4, 2008.  SMS, at *5-6. 

A demand letter was sent from the Plaintiff on June 6, 2008 and email messages were preserved on June 10.  SMS, at *7.  A temporary restraining order (TRO) was issued on June 13 and the Individual Defendants were instructed to return their laptops and BlackBerries on June 17, 2008.  SMS, at *7-8.

The Defendants represented that no email messages were lost from the Individual Defendants’ BlackBerries or laptops because they were synced to the Defenant’s BlackBerry Enterprise Server.  SMS, at *4.  As such, the email messages were not on any hard drives, but an email server.  SMS, at *6.

Forensic Examination of the BlackBerries

After the execution of a litigation hold and the physical sequestering of the Individual Defendants’ BlackBerries and computers, the Plaintiff’s expert performed a forensic examination using Paraben Device Seizure software on the BlackBerries.  SMS, at *9-12.

The Plaintiff’s expert quickly determined the BlackBerries had been wiped clean: No phone records, no text messages, no email messages or applications existed on the devices.  SMS, at *10.  Moreover, the data on the devices was different from what would be on a brand new BlackBerry and different from one only used as a phone.  SMS, at *11, fn 8.

This sort of thing does not happen by accident.  The only ways this would happen (according to the expert) would be by a “hard reset” or someone entered the incorrect password ten times.  SMS, at *11.

The Defendant’s forensic expert also determined that the BlackBerry SIM cards contained some contacts and text messages, but not emails messages. SMS, at *12.

Dial S for Spoliation

For those who are not familiar with spoliation, it is the intentional destruction of evidence.  SMS, at *13.  To prove sanctions for spoliation under Florida law, a party must show the following: 

1)       The evidence existed at one point in time;

2)       There was a duty to preserve the evidence on the part of the spoliator; and

3)       The evidence was crucial to the movant’s prima facie case.

SMS, at *14. 

The Court rocketed through these three factors answering all in the affirmative.  SMS, at *15.

The Court found that there were circumstances showing the destruction of the email, text messages and phone data was in bad faith. SMS, at *16-17.  The Court found the Individual Defendants to not be credible in explaining the data loss, because the expert testimony showed that 3 of the 4 ways the data could have been lost were by intentional acts.  SMS, at *17.  Further, the Individual Defendants had both the motive and opportunity to erase the data on their BlackBerries. SMS, at *16-17.

Furthering the Individual Defendants’ credibility gap, there was evidence of other deleted data.  One Individual Defendant’s prior computer he used while employed by the Plaintiff had all of its email and contacts deleted.  The other Individual Defendant used a software program to delete all of the data on it before returning it to the Plaintiff.  SMS, at *19-20.   

The Court found that the appropriate sanction for the loss of data was an adverse inference instruction regarding the Individual Defendants failure to preserve data on BlackBerries that would be advantages to Plaintiffs and disadvantageous to the Individual Defendants. SMS, at *23.  While default judgment was avoided, the Court’s irritation is visible throughout the opinion.  

Bow Tie Thoughts

The Court’s analysis of the BlackBerry preservation and data deletion was very well done.  This case highlights how data on a BlackBerry (or any Smartphone) can be deleted and the importance of having procedures to enact a litigation hold on these devices.

In the Eye of the Beholder: The Relevance of Facebook Evidence

Social networking litigation will be written by the end users of those websites.  In Bass v Miss Porter’s School, the Defendant school sought from the Plaintiff discovery of her alleged teasing and taunting on Facebook.  Bass v. Miss Porter’s Sch., 2009 U.S. Dist. LEXIS 99916 (D. Conn. Oct. 27, 2009).

The Plaintiff objected to the Facebook discovery request on the following grounds:

1) The Facebook information was “irrelevant and immaterial” and was “not reasonably calculated to lead to the discovery of admissible evidence;” and

2) “[Plaintiff's] ability to produce responsive documents was severely curtailed by Defendants’ actions in disconnecting the Plaintiff’s access to her school email and intranet access prior to the filing of this lawsuit.” Bass, at *2.

After subpoenaing Facebook, Facebook agreed to produce “reasonably available data” from the Plaintiff’s profile from January 1, 2008 to May 1, 2009.  Bass, at *2.

The Court ordered the Plaintiff to produce 1) all responsive Facebook discovery to the Defendant and 2) everything produced from Facebook to the Court for in camera review.  Bass, at *3.

The resulting production was 100 pages (apparently printed out) to the Defendant and 750 pages produced to the Court.  Bass, at *3.

The Court was noticeably frustrated with the Plaintiff’s attorney.  The Court stated the production offered “no guidance as to the grounds or basis on which her counsel made the determination of which documents to produce to Defendants.” Bass, at *3.

The Court took direct aim Plaintiff’s claim the Facebook discovery was irrelevant after reviewing the Facebook production by date, sender/recipient and subject matter.  Bass, at *3.  The Court found:

The selections of documents Plaintiff disclosed to Defendants and those she referred for in camera review reveal no meaningful distinction. Facebook usage depicts a snapshot of the user’s relationships and state of mind at the time of the content’s posting. Therefore, relevance of the content of Plaintiff’s Facebook  usage as to both liability and damages in this case is more in the eye of the beholder than subject to strict legal demarcations, and production should not be limited to Plaintiff’s own determination of what maybe “reasonably calculated to lead to the discovery of admissible evidence.” Bass, at *3-4.

The Court overruled the Plaintiff’s objection to producing Facebook discovery, especially in light of the fact the in camera production contained communications clearly relevant to the lawsuit.  Bass, at *4.

Bow Tie Thoughts

This is a wonderful short and sweet opinion on using Facebook information in discovery.  The Court’s recognition that Facebook usage can reflect the state of mind of a user was excellent to see.  The only area somewhat concerning about the opinion was the fact the Facebook discovery was printed and not maintained in a digital form of production.

Things to Think About for Your Rule 26(f) Meeting…

In a case management hearing, the parties were directed to consider the following electronically stored information (ESI) issues at their Rule 26(f) conference for drafting their proposed Rule 16(b) order:

With regard to any discoverable electronically stored information (ESI) the parties may have, the Court further requests that the joint discovery plan also include any issues and concerns related to the following:

a. What ESI is available and where it resides;

b. Ease/difficulty and cost of producing information;

c. Schedule and format of production;

d. Preservation of information; and

e. Agreements about privilege or work-product protection.

 Wallace v. Tindall, 2009 U.S. Dist. LEXIS 89669, *2-3 (W.D. Mo. Sept. 29, 2009).

It is good to see Courts ordering parties to consider issues such as whether ESI is reasonably accessible, the form of production, preservation and privilege concerns in case management orders.  While the above order is actually brief on the e-Discovery issues, consider the new California Rules of Court section 3.724(8), which require the following topics to be discussed at the “Meet & “Confer:”

Any issues relating to the discovery of electronically stored information, including:

(A) Issues relating to the preservation of discoverable electronically stored information;

(B) The form or forms in which information will be produced;

(C) The time within which the information will be produced;

(D) The scope of discovery of the information;

(E) The method for asserting or preserving claims of privilege or attorney work product, including whether such claims may be asserted after production;

(F) The method for asserting or preserving the confidentiality, privacy, trade secrets, or proprietary status of information relating to a party or person not a party to the civil proceedings;

(G) How the cost of production of electronically stored information is to be allocated among the parties;

(H) Any other issues relating to the discovery of electronically stored information, including developing a proposed plan relating to the discovery of the information;

Case management orders such as the above and the new California Rules of Court acknowledge the reality that every case will have electronically stored information of some kind.  Lawyers must deal with these realities early and not wait for them to become problems.

Speedy Delivery: Compelling Imaging & Searching of Everything

In a contract dispute regarding a shipping vendor, the Plaintiff brought a motion to compel the collection and processing of the entire contents of Defendants’ hard drives, network drives, and user files.  Unishippers Global Logistics, LLC v. DHL Express (USA), Inc., 2009 U.S. Dist. LEXIS 94844 (D. Utah Oct. 12, 2009).

In not much of a surprise, the Court said “No.”

Please Sign Here: Meet & Confer over Custodians

As the discovery dispute began, the parties agreed to provide each other a list of custodians to be searched for responsive documents.  Unishippers Global Logistics, at *4.  The Defendants identified 13 opposing custodians and the Plaintiff 36 custodians.  Id. 

The litigants agreed to produce “all emails between or among the custodians” and to perform searches on internal and external email networks.  Unishippers Global Logistics, at *4. 

The Dispute: Imagining Network Files, User Files & Hard Drives

The Plaintiff claimed the Defendant refused to “image and search the network files, user files, and the hard drives of its identified custodians for responsive documents.” Unishippers Global Logistics, at *4. 

 One can imagine the Gigabytes very quickly expanding for ESI review with 36 custodians…

The Motion to Compel

You can sense the Court was not happy with the Plaintiff.  They failed to comply with local rules on discovery disputes and brought the motion to compel without first receiving or reviewing the Defendants’ production.  Unishippers Global Logistics, at * 6.

The Plaintiff wanted the Court to order the Defendants to “conduct relevant word searches of its custodians’ user files, network drives, and individual hard drives for responsive documents.” Unishippers Global Logistics, at * 6.  Moreover, the Plaintiff took issue with the Defendant collecting and reviewing email from custodians and collecting non-duplicative ESI from other sources, and then producing accordingly.  Unishippers Global Logistics, at * 6. 

The Defendants opposed the motion as premature and that the Plaintiff wanted everything electronic searched.  Unishippers Global Logistics, at * 6.

The Court Order

The Court held the Plaintiff’s arguments were without merit. Unishippers Global Logistics, at * 7.

First, it is self-evidence that a producing party “must determine whether it possesses relevant documents that are responsive to a particular discovery request.” Unishippers Global Logistics, at * 7.  To be blunt, that is just how document review and discovery works. 

Secondly, the Court held it was unnecessary and unduly burdensome to force the Defendant to “collect and process the entire contents of the custodians’ hard drives, network drives, and user files,” that were known to be non-relevant.  Unishippers Global Logistics, at * 7.  

Third, the Defendant explained their email discovery protocols, which the Court seemed to accept as defensible.   Unishippers Global Logistics, at *8-9.   

The Court based its ruling on Federal Rule of Civil Procedure Rule 26(b)(2)(C) which states a court “must limit the frequency or extent of discovery . . . if it determines that . . . the discovery sought is unreasonably cumulative or duplicative, or can be obtained from some other source that is more convenient, less burdensome, or less expensive.” Unishippers Global Logistics, at * 7, citing  Fed. R. Civ. P. 26(b)(2)(C)(i).  Moreover, a court must also limit discovery where “the burden or expense of the proposed discovery outweighs its likely benefit.” Unishippers Global Logistics, at * 7-8, citing Fed. R. Civ. P. 26(b)(2)(C)(iii).

Bow Tie Thoughts

This motion probably could have been dismissed as not ripe or for procedural defects.  Additionally, the Plaintiff would have been in a much stronger position if they actually had reviewed the Defendant’s production. 

The Plaintiff did not make an articulable basis that the Defendant somehow failed in their discovery production, such as a Rule 26(g)(1) violation.  However, if there are later production discrepancies, we may see a follow up to this case.

Proving Up Destroyed ESI is Favorable to Your Position is Hard to Do

In an ADA employment case, the Plaintiff sought spoliation sanctions and an adverse inference instruction for the destruction of electronically stored information (ESI). Scalera v. Electrograph Sys., 2009 U.S. Dist. LEXIS 91572 (E.D.N.Y. Sept. 29, 2009).

The Plaintiff lost.

 

 

 

 

 

 

The Discovery Requests

The Plaintiff sought the following discovery: 

1) All emails sent or received by Defendant’s employees regarding Plaintiff’s medical condition;

2) All emails sent by Defendant’s employees regarding Plaintiff’s request or need for any accommodation for her medical condition;

3) All emails sent on Defendant’s “Inter-Office email system” to and from Plaintiff from 2005 to the present, “including any emails predating Plaintiff’s employment;” and

4) All “backup and/or archive (computer) data which was generated by Defendants” and related to Plaintiff’s employment. Scalera, at *5.

Discovery Production History

In the Plaintiff’s version of the facts, the Defendant only produced a “handful” of email.  Scalera, at *5. 

The Defendant provided 16 backup tapes to an electronic discovery service provider.  Scalera, at *6.  Only two of the tapes met “the criteria for restorable data.”  Scalera, at *6.  The vendor was unable to restore the backup tapes, which the Plaintiff claimed spoliation that required an adverse inference sanction.  Scalera, at *6. 

Requirements for Adverse Inference Instructions

A party must prove the following for spoliation warranting an adverse inference instruction: 

1) “The party having control over the evidence had an obligation to preserve it at the time it was destroyed;”

2) “The records were destroyed with a ‘culpable state of mind;’” and

3) “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.”

Scalera, at *7, citing Toussie v. County of Suffolk, 2007 U.S. Dist. LEXIS 93988, at *6 (E.D.N.Y. Dec. 21, 2007).

The Duty to Preserve

As one can imagine, the Plaintiff argued the duty to preserve for her discrimination claim arose very early, after she fell down steps and sent a letter to the building landlord.  Scalera, at *7-11, 28.The Court disagreed and held the duty to preserve arose when the Defendants received the EEOC charge for discrimination.  Scalera, at *25.

The Court found the Plaintiff’s arguments for when the duty to preserve began pushed logic “beyond the boundary of reasonableness.”  Scalera, at *28. 

The Plaintiff argued that since the Defendants knew the Plaintiff had a “disability,” they should have known she needed a handrail at the side door to prevent injury; therefore her injury should have alerted the Defendants the Plaintiff would have sued them for discrimination.  Scalera, at *28.  The Court did not agree.

The Court also held that filing a worker’s compensation claim did not trigger a duty to preserve for a possible discrimination claim.  Scalera, at *29-30. 

The Court effectively held that the tort accident and following worker’s compensation action did not trigger the duty to preserve for a discrimination claim.  The Defendant’s duty to preserve began at the time the Defendant received the EEOC charge.

The HR Hard Drive

The Defendant’s HR manager retired at least one month, possibly two, after the Defendant had a duty to preserve evidence.  However, because of the Defendant’s policy of erasing employee hard drives after they leave, the Defendant was unable to search the HR person’s computer.   Scalera, at 36-37.  This amounted to a failure in the Defendant’s duty to preserve. 

The Defendant tried playing “preservation Twister” by dancing around the HR policy of printing all HR emails and retaining them as hard copies as “no harm, no foul” argument for erasing the HR manager’s hard drive.  Scalera, at *37.  The Court noted the Plaintiff had produced emails that the Defendant had not produced, which openly questioned whether all HR emails were printed.  Scalera, at *38.

Emails Going Rogue

The Defendant’s production included email messages with partial email strings that were “personnel or employment records.”  Scalera, at *38.  The Plaintiff also had email messages requesting reasonable accommodations that the Defendant did not produce.  These messages were required to be saved for one year under the ADA.  Scalera, at *39. 

Surprisingly enough, these failures were not a breach of the duty to preserve.  The one year retention period under the ADA would have ended prior to the EEOC action and thus before the triggering event duty to preserve.  Scalera, at *40-41.

A Culpable State of Mind

The Court found the Defendant acted negligently in preserving ESI.  Scalera, at *44.  Based on declarations, the Court found that the Defendant did not attempt to preserve ESI until two months after the EEOC complaint. 

The General Counsel for the company took action after receiving the EEOC by meeting with employees who interacted with the Plaintiff and “spoke to” employees about saving ESI. Scalera, at *42.  The attorney was confident that all the “necessary” documents had been preserved after talking with IT, learning about the backup tapes and the fact the company did not have a data destruction policy.  Scalera, at *42.

The Court was not thrilled with the Defendant’s preservation attempts.  The Court noted that searches of the key player hard drives were either not done or finished after the EEOC charge was received. Scalera, at *44.  Moreover, two of the people the Corporate Counsel spoke to never had their hard drives searched.  Scalera, at *45.  Additionally, the IT person’s declaration showed that some information on hard drives was never backed up.   Scalera, at *45.  These failures could have resulted in the loss of electronically stored information.  Scalera, at *45.

The final kicker was that Corporate Counsel “speaking to” key employees was not a formal litigation hold.  Scalera, at *45.  Case law requires a party engage in the following steps for litigation hold compliance:

1) Issue a litigation hold at the outset of litigation or whenever litigation is reasonably anticipated;

2) Clearly communicate the preservation duty to “key players;” and

3) “Instruct all employees to produce electronic copies of their relevant active files” and “separate relevant backup tapes from others.”

Scalera, at *46, citing Zubulake v. UBS Warburg LLC, 229 F.R.D. 422, 433-34 (S.D.N.Y. 2004).

The Court stated that if a proper hold had been in place, the HR manager’s hard drive would have been searched instead of erased.  Scalera, at *47.

The Court found that the Defendant’s communications directly resulted in the loss of ESI, which was negligent.  Scalera, at *47-48. 

Relevance: The Sanction Killer

Relevance can be proven by showing a party acted with gross negligence (a culpable state of mind) or offering some “…extrinsic evidence tending to demonstrate that the missing evidence would have been favorable to it.” Scalera, at *49.

In cases where a party seeks an adverse inference instruction, the moving party must show the lost evidence would have been favorable to the moving party.  Scalera, at *49.

The Plaintiff did not establish “relevance” as a matter of law because the Defendant only acted negligently, not with gross negligence.  Scalera, at *49-50. 

Putting a spin on extrinsic evidence, the Plaintiff offered email messages that were if anything FAVORABLE to the Defendant, showing that the Defendants made reasonable accommodations for the Plaintiff.  Scalera, at *51. 

Bow Tie Thoughts: A Swing and a Miss

The Defendant in this case had a poorly executed litigation hold (if you could call oral instructions a litigation hold) and botched preservation of hard drives.  However, such failures are not a “strict liability” offense for instant adverse inference instructions.  A moving party still must prove that the lost evidence would have been favorable to their position.  That did not happen here.

The Titan Killer: Mandatory Exclusion under Federal Rule of Civil Procedure Rule 37(c)(1)

Oracle and SAP are at war.  They have exchanged bayonet charges in discovery for two years in a case where Oracle has accused SAP (TomorrowNow) of “systematic and pervasive illegal downloading of Oracle software over approximately six years.”  Oracle United States v. Sap Ag, 2009 U.S. Dist. LEXIS 91432 (N.D. Cal. Sept. 17, 2009).  Production has been over 12 terabytes with 140 custodians and document review for each custodian has cost $100,000.   Oracle, 6-7.

Somewhere in the thirteen discovery conferences, the Court instructed the parties to follow the proportionality requirements of Federal Rule of Civil Procedure Rule 26(b)(2)(c), to beware of the expense of the proposed discovery outweighing its benefit.  Oracle, 7-8.  Needless to say, knowing the damages at issues when they could equal the budget of a large city would be important to know early in discovery. 

The Plaintiff took the position for two years that their lost profits damages were based on “lost support revenue for Oracle software application products from Plaintiffs’ 358 former customers that had received support from Plaintiffs, but switched to receiving support for Oracle products from TomorrowNow.”  Oracle, 8.  

And that is how discovery played out to the tune of millions of dollars for both parties for two years. 

Iceberg, Dead Ahead

The Plaintiffs switched damages arguments during the depositions of their executives in April and May of 2009.  Oracle, 38.  The Plaintiffs at that time claimed the “greater economic harm came from lost licensing revenue and price reductions to customers that never left Oracle for TomorrowNow.”  Oracle, 38.  The Plaintiffs referred to lost customers as “only the tip of the iceberg” to their damages, which were not disclosed for two years to the Defendants and the Court. Oracle, 38-39.

To Kill a Titan: Court Orders and Supplemental Disclosures

The Defendants fought a Hegemonic war to exclude the additional damages evidence for violating a Federal Rule of Civil Procedure Rule 16(f) discovery order and failure to supplement discovery under Federal Rule of Civil Procedure 26(e)(1).  Moreover, a failure under Federal Rule of Civil Procedure Rule 26(e)(1) subjects the offending party to mandatory exclusion of that information under Federal Rule of Civil Procedure Rule 37(c)(1).  Oracle, 12-15.

The Court held the Plaintiffs had a duty to disclose the “tip of the iceberg” damages known to their executives, long before their depositions two years after millions of dollars had been spent on discovery.  Oracle, 48. The Defendants’ economic damages expert witness stated it would take an additional year to analyze the new damages claims and cost $5 million ($4.4 million had already been spent and it was estimated $4 million more through trial).  Oracle, 48-49. There was no excuse for not disclosing basic damage claims in discovery. 

The Court granted the Defendants’ exclusion motion, precluding the Plaintiffs from arguing any additional damage theories other then the original damages theory. Oracle, 58-59.  Don’t feel too bad for the Plaintiff, because this evidence might be over a billion dollars.  Oracle, 59.

Bow Tie Lessons: The Hammer will Fall

The Plaintiffs were precluded from arguing additional damages theories because they did not supplement their initial and court ordered discovery.  Courts are truly laying down the law on Federal Rules of Civil Procedure Rules 26(a) and 26(e)(1) with the hammer of Federal Rule of Civil Procedure Rule 37(c)(1).

A Three Page Order Hitting De-Duplication & Litigation Holds

From the plains of Kansas comes another short and powerful order by Magistrate Judge David Waxse.  On Constitution Day, Judge Waxse was very busy in White v. Graceland College Ctr. for Prof’l Dev. & Lifelong Learning, Inc., 2009 U.S. Dist. LEXIS 85849 (D. Kan. Sept. 18, 2009).  For an earlier discussion of this case, please see The Express Way to Your Hard Drive and What Happens When the Requesting Party Does Not State a Form of Production?.

The Court ordered the parties to complete the following discovery by October 1, 2009:

1)       Defendant’s production of de-duplicated data.  The Court required the Defendants to “provide their computer expert and technician used for the de-duplication process to explain and describe this process, including the technique and criteria used by the process, to Plaintiff’s expert.” White, 1-2.

2)       A meet and confer between experts on a search protocol for PST’s to find three email messages. White, 2.

3)       A search to be performed with the both experts present on the PST data. White, 2.

4)       Defendants were to perform an immediate privilege review. White, 2.

5)       Non-privileged search results were to be produced to Plaintiff counsel immediately. White, 2.

6)       Defense production of the litigation hold notice issued at the beginning of the case.  White, 2-3.

De-Duplication: Separating the Clones from the Twins

If you have never heard of de-duplication, or have heard of it but have been afraid to ask what it is, it is defined as “the process of separating duplicative email messages, word processing documents, and other computer files from your electronic file collection.”  Michael R. Arkfeld, Arkfeld on Electronic Evidence, Glossary, G-5 (2^nd. Ed.).

As one can imagine, de-duplication requires technology to reduce multiple identical digital copies (image a true DNA clone) down to one.  Now imagine electronically stored information such as an Excel file that has been emailed from a Defendant to a Plaintiff.  This file is not an exact copy (thus like a twin), because the metadata can be different by who opened the file last, or other smaller changes that make it a different file, thus something you might not want to “de-dupe.” 

I can imagine the Defendants’ expert explaining they used a specific software tool and “de-duped” by metadata fields or MD5 Hash Values or some other defensible process.  It will be interesting to see what is next reported in this case. 

 Litigation Hold Notice Production

A Court generally requires production of a litigation hold letter if there have been issued of spoliation (See, The Holding Pattern: Lessons Learned on Litigation Holds).  In this case, the Court required the production of the litigation hold notices and that such production was agreed not be a waiver of the attorney-client privilege or work product doctrine.  White, 3. 

Tools that generate and track litigation hold notices are now commercially available and will make such productions easier in future litigation.

A Picture is worth a Thousand Words, but Sanctions are Priceless

The Defendants in Green v. McClendon, 2009 U.S. Dist. LEXIS 71860 (S.D.N.Y. Aug. 13, 2009) attempted to purchase a $4.2 million painting.  As the Defendants’ marriage ended in divorce, the Defendants (who never took physical ownership) did not complete their payments. 

The Plaintiff sought sanctions against both the Defendant and her lawyer for failure to preserve electronically stored information.

Mixing the Paint

The Defendants originally negotiated the purchase of the $4.2 million painting with a $500,000 down payment at an international art event in New York City.  Green, 2.   The Plaintiff kept the painting until the scheduled final payment. Green, 2.

The Defendants’ marriage ended in divorce and the final payment never came. 

Painting a Picture for Spoliation

The Plaintiff sued for breach of contract and promissory estoppel in October 2008.  Initial disclosures were filed in early December and written discovery requests right before Christmas Eve, which is never a fun stocking stuffer.  Green, 4. 

As discovery continued to be painted across computer screens, the Defendants represented to the Plaintiff they had thoroughly searched for responsive documents and produced accordingly.  Green, 4.

The Plaintiff brought a motion to compel.  The Defendants were ordered to produce all electronically stored information and certify the responses were complete.  Green, 4. 

The Di Vinci Code of Excel Spreadsheets

The Defendant produced an Excel spreadsheet from her home computer on 37 artworks.  Green, 5-6. The Plaintiff sought basic information on the Excel file, such as the date it was created, modified and authors.  Green, 6.  The Defendant in turn produced three more versions of the Excel file. Green, 6.

The Defendant claimed the spreadsheet was created by someone to organize the Defendant’s art files, but nothing more on its origin. Green, 7. 

The Plaintiffs brought a motion for a forensic examination of the Defendant’s personal computer and sanctions. Green, 7.

However, any forensic examination in the words of the Plaintiff would have been a “useless exercise.” Green, 8.  The Defendant had a “son of a friend” who was “familiar with computers” reinstall the operating system on her computer.  Green, 8.  All the data was copied to four CD’s.  The Defendant’s attorney did not acquire the data until April 2009 and did not review them until June 2009.  Green, 8. 

The Plaintiff wanted to paint a spoliation masterpiece seeking the following sanctions:

 (1) Additional time to depose the Defendant regarding the Excel spreadsheet and ESI, at her expense. Green, 8-9.

 (2) An order directing the defendant to identify the person who created the spreadsheet; Green, 9.

(3) Payment of costs incurred by the plaintiff in bringing this motion, including attorneys’ fees; and, Green, 9.

(4) An adverse inference that the Defendants understood that they had in fact purchased the painting and added it to their personal collection. Green, 9.

The Duty to Preserve

As easy it is for a layman to tell the difference between art by Pablo Picasso and Winslow Homer, the Defendant failed in their duty to preserve.  Green, 13-14.

The duty to preserve began at the latest when the lawsuit was filed.  Green, 14. Once there was a duty to preserve, the Defendants needed to enact a litigation hold. Green,13.  The Defendant should have known the Excel spreadsheet would have been relevant to the litigation, especially considering the fact there was a discovery request for any documents regarding the artwork.  Green, 14.

The Court noted that the duty to preserve first attached to the attorney, who “has ‘a duty to advise his client of the type of information potentially relevant to the lawsuit and of the necessity of preventing its destruction.” Green, 15.  Moreover, “Attorneys must take responsibility for ensuring that their clients conduct a comprehensive and appropriate document search.” Green,16, citing Qualcomm Inc. v. Broadcom Corp., 05 Civ. 1958-B, 2008 U.S. Dist. LEXIS 911, 2008 WL 66932, at *9 (S.D. Cal. Jan. 7, 2008), vacated in part on other grounds, 2008 U.S. Dist. LEXIS 16897, 2008 WL 638108 (S.D. Cal. March 5, 2008.

A Failure of Discovery Obligations

The Court held the Defendant attorney failed to meet their discovery obligations.  Green, 16.  The Could stated:

Unless Mrs. McClendon brazenly ignored her attorney’s instructions, counsel apparently neglected to explain to her what types of information would be relevant and failed to institute a litigation hold to protect relevant information from destruction. Moreover, despite numerous representations to the contrary, it is highly unlikely that counsel actually conducted a thorough search for relevant documents in Mrs. McClendon’s possession in connection with their initial disclosure duties or in response to the plaintiff’s first document request. If that had been done, counsel certainly would have found the spreadsheet from Mrs. McClendon’s personal computer files. Green, 16-17.

Failure to Supplement under Federal Rule of Civil Procedure Rule 26(e)

The Court further found there was no justifiable delay in producing the CD’s with the Defendant’s electronically stored information.  Green, 17.  A party must supplement discovery pursuant to Federal Rule of Civil Procedure Rule 26(e) and instead waited for the Plaintiff to request the material.  Green, 17-18. 

Federal Rule of Civil Procedure Rule 26(e) might be an angry giant in e-discovery cases.  Three years ago, you rarely saw a court citing a party’s continuing obligation to supplement discovery.  There were several cases this summer on this issue and I think courts are showing some backbone on failed discovery productions with both Rules 26(e) and 26(g).

A Culpable State of Mind

The Court held the Defendants were at a minimum negligent by 1) Failing to enact a litigation hold; 2) Failing to search for responsive ESI; and 3) Failing to supplement discovery.  Green, 18.  Additionally, there is case law holding a failure to enact a litigation hold is gross negligence.  Green, 18.

Adverse Inference

As with many other adverse inference cases, the Plaintiff failed to show the Defendant created an “unfair evidentiary imbalance,” because all of the ESI was copied to CD’s.  If there was evidence that relevant electronically stored information was destroyed, this might have had a different outcome. Green, 20-21. 

Other Sanctions

The Plaintiffs were entitled to an additional deposition of the Defendant and the identity of who created or modified the Excel spreadsheet.  Green, 23.  The Plaintiff was also entitled to costs to be proven with a fee application. Green, 23.

The Court did not close the door on additional sanctions.  If discovery later showed the destruction of relevant ESI, the issue of an adverse inference instruction could be heard again. 

Bow Tie Lessons

Litigation holds and the failure to preserve electronically stored information appears regularly in case law.  Attorneys are well served by discussing with their clients litigation holds and preservation to avoid sanctions for both themselves and their clients.

Federal Rule of Civil Procedure Rule 26 Discussion

 In depth discussion on discovery obligations from my new seminar on Federal Rule of Civil Procedure  Rules 26 and 34.

The Narrowing of Search Terms in Motions to Compel Electronically Stored Information

There is a continuing trend in search term cases: You do not see judges discussing experts and Federal Rules of Evidence 702.  Now, perhaps this is just in cases where custodian names or simple search terms were at issue, such as William A. Gross Constr. Assocs. v. Am. Mfrs. Mut. Ins. Co., 2009 U.S. Dist. LEXIS 22903 (S.D.N.Y. Mar. 19, 2009) and Asarco, Inc. v. United States EPA, 2009 U.S. Dist. LEXIS 37182 (D.D.C. Apr. 28, 2009). 

The main focus of Curtis v. Alcoa, Inc.,2009 U.S. Dist. LEXIS 71581 (E.D. Tenn. Mar. 27, 2009) was whether specific discovery was protected by the attorney-client privilege (a great exercise for law students taking Evidence).  A secondary focus of the opinion was a motion to compel an additional ESI search with revised keywords.  Curtis, 38-39.

The Plaintiffs’ wanted seven additional keyword combinations run against nine custodians (which included such terms as “Enron/OPEB” and “Sarbanes-Oxley/OPEB”).  Curtis, 38. 

The Defendants’ claimed the searches had been run against seven of the nine custodians.  Agreeing to run the searches over the additional two custodians seemed to be a non-issue.   Curtis, 39. 

The Court ordered the Defendants, if it had not already been done, to run the designated searches with the revised key words on the nine custodians and indentify the responsive search results.  Curtis, 39. 

Are the Angels Treading Lightly?

“…for lawyers and judges to dare opine that a certain search term or terms would be more likely to produce information than the terms that were used is truly to go where angels fear to tread.”

Magistrate Judge Facciola, United States v. O’Keefe, No. 06-CR-249, 2008 WL 44972, 8 (D.D.C. Feb. 18, 2008).

I think there is a rule of thumb with search terms: If you will need to prove the responsiveness of your searches or whether forensic analysis was performed, you will see an expert report or an evidentiary hearing. 

Cases such as Covad Communs. Co. v. Revonet, Inc., 2009 U.S. Dist. LEXIS 47841 (D.D.C. May 27, 2009); United States v. O’Keefe, No. 06-CR-249, 2008 WL 44972 (D.D.C. Feb. 18, 2008 ); and Equity Analytics, LLC v Lundin, 248 F.R.D. 331 (D.D.C. 2008 ) fall into this group. 

On the other side of the spectrum, courts are narrowing search terms to specific individuals (such as Dunkin’ Donuts Franchised Rests. LLC v. Grand Cent. Donuts, Inc., 2009 U.S. Dist. LEXIS 52261 (E.D.N.Y. June 19, 2009)) or variations of custodian names (William A. Gross Constr. Assocs. v. Am. Mfrs. Mut. Ins. Co.). These situations require active meet and confers and interviews with custodians so search terms are not in designed wildly without reason.

The key to both is attorneys proving their search methodology with affidavits or experts being deposed where search terms must be defended.  In the first instance, software tools that generate search term reports will likely be affidavit exhibits.  Both situations will probably require lawyers working with an outside vendor or in-house e-discovery professions to ensure search term responsiveness.