How to Get A Judge to Say “Stern Measures Are Called For”

How do you know there is a duty to preserve?

When two managing officers involved in the termination of an employee are repeatedly asked by an attorney for their electronic calendars, including a letter threatening an EEOC complaint if there was not an amicable resolution, and then followed by formal discovery requests.

How do you get sanctions?

When after repeated statements that the Defendants did not have electronic calendars, one of the managing officers states in deposition that he kept a daily electronic calendar and routinely deleted the entries after the date has passed. Making matters more complicated, the witness admitted “he was told a week before his deposition to retain his calendars but he nonetheless continued his practice of deleting” his electronic calendars. Kirgan v. Fca Llc, 2013 U.S. Dist. LEXIS 51747, at *1-2 (C.D. Ill. Apr. 10, 2013).

Overview of Sanctions

A party must enact a litigation when it reasonably anticipates litigation, which generally requires the suspension of its document destruction policy.  Kirgan, at *3.

Courts analyze three factors in determining sanctions for the failure to preserve evidence:

(1) A breach of the duty to preserve or produce documents;

(2) The level of culpability for the breach; and

3) The prejudice that results from the breach.

Kirgan, at *3, citing Danis v USN Communications Inc., 2000 WL 1694325, at *31 (NDIL).

Case law states that sanctions must be proportionate to the offending conduct. Kirgan, at *3. A party also had to know or had reason to know that litigation was forthcoming. Kirgan, at *3 citing Morton v Motel 6 Operating L.P., 534 F3d 672, 681 (7th Cir 2008). Sanctions can be imposed on a finding of bad faith, willfulness, or fault. Kirgan, at *3 citing Brandt v Vulcan, Inc., 30 F3d 752, 756 (7th Cir 1994).

The Court’s Findings 

The Court held that the Defendants breached their duty to preserve the daily calendars and that the Plaintiff had been prejudiced by the destruction of the electronic evidence. Moreover, the Court found that the Defendants’ conduct was misleading and intentional. Kirgan, at *5.

The Court stated the following on determining sanctions:

I do not believe that the sanction of default is warranted. I do, however, believe that stern measures are called for. The Defendant’s direct and vicarious conduct was willful and intentional, and it cannot be condoned. 

Kirgan, at *7.

The Court noted that the destruction of the calendars was the only reported instance of misconduct.

However, that misconduct included untruthful statements that the calendars did not exist, with one of the parties deleting the ESI. Kirgan, at *6.

This conduct created a “clear impression that [the officer] had deliberately decided to thwart Plaintiff’s efforts to obtain them.” Id.

Based on the above, the Court entered the following sanctions order:

 

1. The jury is to be given a spoliation instruction, which permits the jury to draw a negative inference from its failure to preserve and its destruction of relevant documents.

2. Defendant may not use — at summary judgment or at trial — any evidence or argument that may have been contained in Borsdorf’s destroyed calendars, unless that evidence or argument is corroborated by other documentary evidence or by testimony of witnesses independent of the Defendant.

3. Defendant shall pay attorney’s fees to the Plaintiff for the fees his counsel incurred in preparing this motion. That amount shall be doubled, in a rough effort to compensate Plaintiff for the efforts that were made in her counsel’s attempts to obtain the calendars.

Kirgan, at *7.

Bow Tie Thoughts

Judges do not like lies. Attorneys have a duty of candor to the Court and witnesses take an oath to tell the truth. Judges get upset when anything less than the truth is told.

This is the first time I have seen a Court double an attorneys fee award as part of a sanction for the destruction of evidence (I am sure it has happened before). However, it is noteworthy, because the Court did it “in a rough effort to compensate Plaintiff for the efforts that were made in her counsel’s attempts to obtain the calendars.” 

Complying with the duty to preserve is rightly a hot topic in litigation. Attorneys must conduct detailed interviews with their clients to determine what technology is used in the ordinary course of business. Does the client text? Is there data outside the firewall in a “cloud,” such as a Google Calendar?

Attorneys must develop a preservation strategy after determining the relevant sources of information. Telling a custodian to “stop deleting” is a good first step, but the relevant data has to be collected in a defensible manner. This could range from content information management systems “locking down” the custodians’ communications, which are then exported for analysis and review. Other options include collecting data directly from the computers with computer forensic experts. Regardless of the strategy used, it is advisable to not allow custodians to self-collect their own data.

The Find a Litigation Hold App on An iPhone

In a dispute involving claims of monopolistic violations regarding booking A-list DJ’s at nightclubs, the Defendants did not take any steps to preserve or review text messages on an iPhone for relevance that was lost.  Christou v. Beatport, LLC, 2013 U.S. Dist. LEXIS 9034, 36-39 (D. Colo. Jan. 23, 2013).

While the ensuing motion practice did not have the fist-pumping energy of an A-list nightclub, the issue of spoliation sanctions is worthy of a late night freestyle eDiscovery rap battle.

Cueing Up a Litigation Hold

The Plaintiffs served a litigation hold letter on the Defendants at or about the same time as the beginning of the lawsuit in December 2010, which identified text messages as ESI to preserve. Christou, at *36-37.

The Plaintiffs sought an adverse jury instruction for the failed preservation of text messages, because 1) the Defendants took no steps to preserve the text messages on the Defendant’s iPhone; 2) Defendants did not disclose any text messages in their May 2011 discovery responses; and 3) The Defendant claimed that he lost his iPhone in August 2011, thus also loosing and any text messages saved on it. Christou, at *37.

Spinning Relevance and Review

The Defendants argued whether any relevant text messages were lost pertaining to the litigation was “sheer speculation,” because the Defendant did not use text messages to book DJ’s. Id.

The Defendants also argued that they “responded fully” to the May 19, 2011 discovery, thus “showing” that there were no responsive text messages. Id.

The Court stated that the Defendant’s claim he “did not use texting to book DJ’s is hardly proof that his text messages did not contain relevant evidence.” Id.

The Court turned up the volume on the fact that just because the Defendants stated that they “found no responsive text messages,” did not address whether defense counsel reviewed the Defendant’s text messages and determined that the text messages “contained nothing of relevance.” Christou, at *37-38.

Setting the Master Level on Sanctions 

The Court explained that spoliation sanctions are proper when “(1) a party has a duty to preserve evidence because it knew, or should have known, that litigation was imminent, and (2) the adverse party was prejudiced by the destruction of the evidence.” Christou, at *38, citing Turner v. Public Serv. Co. of Colorado, 563 F.3d 1136, 1149 (10th Cir. 2009) (quoting Burlington N. & Santa Fe Ry. Co. v. Grant, 505 F.3d 1013, 1032 (10th Cir. 2007)).

The Court found the Defendants had a duty to preserve the text messages, which they did not do. Christou, at *38.

Moreover, the Court held, “Those text messages, few as they might have been, should have been preserved and either provided to the plaintiffs or potentially made the subject of further proceedings before the Court.” Id. 

The Court had no reason to believe the phone was not lost on accident or the failure to preserve was just negligent. Christou, at *38-39.

However, the Court had to determine an appropriate sanction. The Court explained:

A commercial party represented by experienced and highly sophisticated counsel cannot disregard the duty to preserve potentially relevant documents when a case like this is filed. However, an adverse jury instruction is too harsh and is unwarranted as a sanction for the negligent “spoliation” of evidence in the circumstances presented here.

Christou, at *39.

The Court mixed the following sanction: The Plaintiffs could introduce the litigation hold letter and that the Defendants failed to preserve the text messages. Id.  Further, the Plaintiffs could “argue whatever inference they hope the jury will draw.” Id. Additionally, the Defendants could offer admissible evidence to explain the loss and argue that no “adverse inference should be drawn.” Id. 

Bow Tie Thoughts

The duty to preserve and mobile devices can potentially give lawyers serious stress. Attorneys should discuss with clients how they use technology, how they communicate and involve consultants in ensuring the preservation of relevant ESI. Additionally, if a litigation hold letter specifies a type of data, it is advisable to conduct a reasonable investigation whether any relevant information exists on the identified media.

Litigation hold letters can be multiple page lists including every possible form of ESI known to man. While no one wants data to go missing, or to not include a possible data source, it is always a good plan for parties to meet and confer over possible data sources to narrow what data needs to be preserved and collected.

Finally, it is important to remember data can exist in multiple locations. While a smartphone such as an iPhone might be lost, the text messages might be backed-up on a computer when the iPhone was synced. It is also worth investigating whether the text messages were iMessages that possibly could be backed-up in iCloud.

Remote Control Duty to Preserve

Can a party issue a litigation hold to one of its contractual agents to preserve information by remote control?

The answer is yes, yes they can.

In Haskins v. First Am. Title Ins. Co., the first issue was whether the Defendant was in “possession, custody, or control” of documents held by its “independent title agents,” and second whether the Defendant had a duty to direct its agents to “preserve” the documents. Haskins v. First Am. Title Ins. Co., 2012 U.S. Dist. LEXIS 149947 (D.N.J. Oct. 18, 2012).

By way of background, the lawsuit involved allegations of overcharging on title insurance. The “independent title agents” issued most of the policies. Haskins, at *1-2.

Under Federal Rule of Civil Procedure Rule 34(a), a requesting party can request information within an opposing party’s “possession, custody, or control.” This does not actually require physical control. Haskins, at *3.

Moreover, the Court explained, “It logically follows that a litigating party has control of documents if a contractual obligation requires a non-party to provide requested documents to the litigating party upon demand.” Haskins, at *4.

Furthermore, a party has control if it has “a right to access the [requested] documents or obtain copies of them.” Haskins, at *4, citing Andrews v. Holloway, 256 F.R.D. 136, 145 n.13 (D.N.J. 2009).

The Court zeroed in on the Defendant’s contracts with its agents that gave the Defendant control of the files, because the Defendant the right to access and use of the files. Haskins, at *6-8.

Litigation Hold Overview

Case law holds that a party has a duty to preserve when a party “knows or reasonably should know” that litigation is foreseeable. Haskins, at *11-12, citing Mosaid Techs. Inc. v. Samsung Elecs. Co., Ltd. 348 F. Supp. 2d 332, 336 (D.N.J. 2004). Once there is a duty to preserve, a party must “put in place a litigation hold to ensure the preservation of relevant documents.” Haskins, at *12, citing Major Tours, Inc. v. Colorel, No. 05-3091(JBS/JS), 2009 U.S. Dist. LEXIS 68128, at *2 (D.N.J. Aug. 4, 2009).

In the age of smartphones and complex networks, the Court stated for a hold to be “suitable” (probably code for reasonable), “a party must identify potentially relevant sources of information, implement procedures to retain that information, and produce information responsive to discovery requests.” Haskins, at *12.

If there is a failure to preserve data and a party seeks spoliation sanctions, a party must demonstrate four factors:

1) The evidence must have been in the party’s control;

2) It must be relevant to claims or defenses in the case;

3) It must have actually been suppressed or withheld by the party; and

4) The duty to preserve evidence must have been reasonably foreseeable to the party.

Haskins, at *12-13, citing Bull v. United Parcel Serv., Inc., 665 F.3d 68, 73-74 (3d Cir. 2012).

The Court held that the Defendant had a duty to preserve, because litigation was active and the material relevant. As such, the Defendant was required to issue a litigation hold of documents within its possession, custody or control. As the Court explained, control did not require physical control, but contractual control was enough to require the Defendants to issue a litigation hold to its independent agents.

Bow Tie Thoughts

The duty to preserve can become tricky with third parties bound by contractual obligations that show control over data. The issue of data stored in “cloud computing” could become extremely complicated, especially if data is hosted in different states or countries from the venue of a lawsuit.

In the end, control of “cloud storage” will be a review of  “Terms of Service” in contractual agreements, most of which are likely clickwrap agreements. These cases will be interesting to watch, especially as more companies host data in a “cloud.”

“Stay” Really Means Do Not Conduct Discovery

Defendants subject to a discovery stay brought a motion for clarification on discovery between non-parties, starting additional discovery on third parties and issuing litigation litigation-hold subpoenas to third parties. City of Lindsay v. Sociedad Quimica Y Minera De Chile S.A., 2012 U.S. Dist. LEXIS 87672, 1-2 (E.D. Cal. June 22, 2012).

The temporary discovery stay pertained to the admissibility of an expert witness’s testimony. Concurrently before the Ninth Circuit was an identical issue on the admissibility of similar expert witness’s testimony. The Court found a temporary stay promoted judicial economy for the resolution of the issue before the Ninth Circuit. Moreover, the Plaintiff indicated it would “likely” dismiss the case if the witness’s testimony were inadmissible. City of Lindsay, at 2-3.

The Court held the following:

Permitting the parties to proceed with discovery and related activities is contrary to the stay’s purposes of promoting judicial efficiency and economy and of avoiding necessary fees and costs. Accordingly, neither party may proceed with any discovery or litigation proceedings related to discovery until such time as the Court lifts the stay.

City of Lindsay, at 3.

Bow Tie Thoughts

When a Judge says, “stay,” they really mean it to promote judicial economy. They do not want to see the discovery war machine grind litigation budgets into nothing. It is no surprise when a party asks to effectively lift a temporary stay that they would be told no.

However, lawyers who understand the duty to preserve live in fear of data not under their control being lost. They have an ethical duty under their preservation obligations to ensure their client’s data is at least preserved. To be blunt, a discovery stay did not stay the triggering event for when litigation was reasonably anticipated.

A lawyer concerned about third parties with possible discovery might feel very uncomfortable with sending a preservation letter with the Court using language such as  “…neither party may proceed with any discovery or litigation proceedings related to discovery until such time as the Court lifts the stay.”

A lawyer could say with a straight face that sending a litigation hold letter to a third party, or a preservation letter to a third party under their control, is not conducting discovery or issuing a litigation proceeding. Arguably, they are merely alerting the third party there is 1) a lawsuit; 2) a discovery stay in place until a specific date; and 3) identify the relevant data that should be preserved. This conservative attorney has not propounded any discovery, filed a motion in Court, sent out collection experts, performed data analytics, or undertaken any review. In short, no one is spending money.

However, that could quickly change if a third party hires collection professionals and incurs preservation and processing costs. This arguably would violate the intent of the discovery stay to promote judicial economy.

Now, a Court might disagree, but sending a letter alerting a third party alerting them to a lawsuit and their possible preservation obligation should not be considered “conducting discovery.”

No really means no when it comes to a discovery stay. However, sending a preservation letter should not subject a lawyer to legal jeopardy for “violating” a discovery stay.

Believing “Missing” Emails Exist Does Not Make Adverse Inference Sanctions Real

The Plaintiff in an employment discrimination lawsuit brought a motion for adverse inference jury instructions for the alleged destruction or suppression of email over a specific date range.

The Plaintiff did not offer evidence of the email messages existence, only that he believed the email existed.   Omogbehin v. Cino, 2012 U.S. App. LEXIS 12545, at *5 (3d Cir. N.J. June 20, 2012).

The Magistrate Judge denied the Plaintiff’s motion, because the Plaintiff failed to show the messages actually were sent or received. Id.

Two of the Defendants each declared they did not send any of the purported email in the timeframe the Plaintiff claimed the messages were sent. Id. Additionally, two of the Defendants’ IT professionals declared that all of the email from the relevant timeframe had been produced. Omogbehin, at *5-6.

The Plaintiff did not offer any evidence that the alleged emails existed or proof that any intentional or un-intentional spoliation had taken place. Omogbehin, at *6.

The District Court affirmed the Magistrate Judge, finding that the Plaintiff did not establish any facts that the Court could “at least infer that the evidence existed in the first place.” Id.

The Court of Appeals upheld the District Court and Magistrate Judge’s findings.

Case law explains spoliation occurring where:

[1] The evidence was in the party’s control;

[2] The evidence is relevant to the claims or defenses in the case;

[3] There has been actual suppression or withholding of evidence; and,

[4] The duty to preserve the evidence was reasonably foreseeable to the party.

Omogbehin, at *8-9, citing Bull v. United Parcel Serv., Inc., 665 F.3d 68, 73 (3d Cir. 2012).

After spoliation is established, there is separate analysis for sanctions. Adverse inference sanctions require an appearance that “there has been an actual suppression or withholding of the evidence.” Omogbehin, at *9.

The Court of Appeals held the District Court did not abuse its discretion in finding the Plaintiff failed to prove spoliation occurred. The Court of Appeals highlighted that the Plaintiff “provided no evidence” that the emails ever existed. Id.

As the Court of Appeals explained:

The [Defendants] produced the information and documents that [Plaintiff] requested; that they did not contain what he had hoped or expected is not sufficient to satisfy his burden. He must provide some proof that what he seeks actually existed, but failed to do so. As a result, the District Court did not abuse its discretion in denying [Plaintiff’s] motion. 

Omogbehin, at *9-10.

Bow Tie Thoughts

Cases involving litigation holds and the duty to preserve fundamentally cannot require a party fighting a spoliation motion to prove the non-existence of data. That would require a party to prove a negative, which is inherently a challenge (also known as expensive).  While a producing party can prove how they enacted a litigation hold, which custodians were subject to a hold, how data was collected, and what search terms were used, it is up to the requesting party to prove some facts to show spoliation.

What must a party demonstrate to show spoliation? Showing production gaps, such as a production that has one week with 300 relevant emails, a week with zero, and then another week with 250, might be enough to raise a red flag for a judge. It also might mean the sender was on vacation for a week.

A moving party offering email messages received by a party, but not produced by the producing party, is a more direct way to show possible spoliation. While it simply may show a faulty production, it could also alert a court evidence was not preserved.

There are many ways to show ESI once existed. However, wishing email messages existed does not make them real.

Fashionable Sanctions

When sanctions are issued in Chicago on St. Valentine’s Day, you can imagine how the losing party might feel. 

The Defendants in a sexual and racial discrimination, hostile work environment, harassment and retaliation case did not properly preserve evidence or respond to specific discovery requests.  Northington v. H&M Int’l, 2011 U.S. Dist. LEXIS 14366 (N.D. Ill. Jan. 12, 2011), hereinafter Northington 1 and Northington v. H&M Int’l, 2011 U.S. Dist. LEXIS 14378, 1-2 (N.D. Ill. Feb. 14, 2011), hereinafter Northington 2.

The failed preservation can be summarized as 1) the failure to issue a litigation hold; 2) failure to direct individuals to preserve ESI in their possession; and 3) failure to follow-up with custodians on whether they preserved ESI or other relevant documents.  Northington 1, at *43-44. 

Just as a tailor measures for a suit, the District Court fashioned the appropriate sanctions against the Defendant.  While the Court denied the Plaintiff’s request that the Defendant be “barred from asserting a defense as to liability based on its discovery misconduct,” the Court ordered the following on searching the Defendant’s ESI:

Defense counsel is ordered to search all of the defendant’s electronic media (including its email system) and hard copy files that might contain information responsive to any aspect of the plaintiff’s original Request for Production V. With respect to electronic media, defense counsel should not limit the key search terms to the three terms previously used by defendant, but must also include misspellings of plaintiff’s first name as well as other key terms reasonably related to each of the topics set forth in Request for Production V. Those searches should cover the time period of February 2006 through October 2008, inclusive. Defense counsel should complete such searches and produce any nonprivileged, responsive documents not previously produced to plaintiff, within thirty days from the date this order is entered on the court’s docket.

Northington 2, at *2-3. 

The Court further ordered an adverse inference instruction of when the Defendants’ duty to preserve triggered and that the Defendant failed to preserve emails and other electronically stored information.  Northington 2, at *3.  Additionally, the Defendant was barred from arguing the absence of any discriminatory statements was not evidence that such damaging statements were not made.  Id. 

Bow Tie Thoughts

Judges, and attorneys, are becoming more sophisticated in addressing search term issues.  In this case, the Court ordered the Defendants to 1) search within specific date ranges; 2) include the Plaintiff’s search terms; 3) and include “misspellings of plaintiff’s first name as well as other key terms reasonably related to each of the topics” in the Plaintiff’s request.   Northington 2, at *3. 

The Judge showed an admirable level of understanding that search terms should include alternative spellings of keywords.  Key players might have nicknames, or variations in spelling, that frequently need to be included in a search.  Additionally, the phrase “other key terms reasonably related to each of the topics” introduces search terms that should be discussed at a meet and confer.  While one party might be in a better position to determine more effective search terms, this area should be discussed at a meet and confer between the parties.  

Narrowing data by date helps control the volume of ESI to be search to relevant time periods.  This helps control the amount of data that ultimately has to be reviewed and proposed after keyword searches.

Nothing Says “Bad Faith” Like Throwing a Laptop off a Building

Is entering a default judgment against a party for destroying a laptop excessive and unduly harsh?  Not in Utah.  Daynight, LLC v. Mobilight, Inc., 2011 UT App 28, P2 (Utah Ct. App. 2011).

Daynight involved a destroyed laptop and what was the appropriate sanction for the destruction of evidence. 

Certainly not helping the Appellants’ cause was a video with employees discussing the destruction of “potential[ly] harmful evidence that might link [them] to any sort of lawsuit.” Daynight, at *3-4. 

Add actions including throwing a laptop off a building and running it over with a car, plus statements such as “[If] this gets us into trouble, I hope we’re prison buddies,” and you can kiss any good-faith defenses goodbye.  Daynight, at *4.

On a fundamental level, most document retention and destruction policies do not involve skeet shooting or monster trucks.

The Plaintiffs & Third-Party Defendant Appellants were sanctioned with a default judgment for the destruction of evidence, pursuant to Utah Code of Civil Procedure Rule 37(g).  The Appellants argued that the sanction was “excessive” and “unduly harsh.”  Daynight, at *1. The Court of Appeals did not agree. 

Rule 37(g), states in relevant part:

Nothing in this rule limits the inherent power of the court to take any action authorized by Subdivision (b)(2) if a party destroys, conceals, alters, tampers with or fails to preserve a document, tangible item, electronic data or other evidence in violation of a duty. Absent exceptional circumstances, a court may not impose sanctions under these rules on a party for failing to provide electronically stored information lost as a result of the routine, good-faith operation of an electronic information system.

Daynight, at *3.

Utah Rule of Civil Procedure Rule 37(g) lacked any case law interpreting the statute, so the Appellants argued the Code required a showing of “wilfulness, bad faith, fault or persistent dilatory tactics.” Daynight, at *3.

The Court of Appeals did not agree.  As the Court stated:

In our view, spoliation under rule 37(g), meaning the destruction and permanent deprivation of evidence, is on a qualitatively different level than a simple discovery abuse under rule 37(b)(2), which typically pertains only to a delay in the production of evidence. Compare Utah R. Civ. P. 37(b)(2) with id. 37(g). Contrary to KK Machinery’s assertions, rule 37(g) of the Utah Rules of Civil Procedure does not require a finding of “wilfulness, bad faith, fault or persistent dilatory tactics” or the violation of court orders before a court may sanction a party. Rule 37(g) states: Nothing in this rule limits the inherent power of the court to take any action authorized by Subdivision (b)(2) if a party destroys, conceals, alters, tampers with or fails to preserve a document, tangible item, electronic data or other evidence in violation of a duty. Absent exceptional circumstances, a court may not impose sanctions under these rules on a party for failing to provide electronically stored information lost as a result of the routine, good-faith operation of an electronic information system.

Daynight, at *2-3.

While the Court of Appeals held it was not necessary to find “wilfulness, bad faith, fault or persistent dilatory tactics,” the Court stated the skydiving laptop antics “unquestionably demonstrate bad faith and a general disregard for the judicial process.” Daynight, at *4.

Bow Tie Thoughts

Throwing a laptop off a building and running over it is probably the closest we will have to a strict liability offense for spoliation. While I doubt lawyers will issue litigation hold letters saying, “Don’t Throw Computers Off Buildings,” you never know what some people will do.

No Triggering Event, No Duty to Preserve

In an employment dispute, the Plaintiff claimed the Defendants had a duty to preserve electronically stored information at the beginning of an HR investigation after she sent a letter outlying concerns with her manager.  The Plaintiff was ultimately put on a performance review and terminated.  Viramontes v. United States Bancorp, 2011 U.S. Dist. LEXIS 7850, at *6 (N.D. Ill. Jan. 27, 2011).

The Defendants only retained email messages for a 90 day period, after which the messages were destroyed.  Viramontes, at *5.  The Plaintiffs learned of the Defendants’ retention policy after proposing a protocol for electronically stored information.  Viramontes, at *4-5. 

The Plaintiffs sought an adverse inference jury instruction that the destroyed email messages contained discriminatory and retaliatory statements. Viramontes, at *6.  Moreover, the Plaintiff also asked the Defendants be prevented from arguing the lack of email correspondence showed no discriminatory statements were made and that the Plaintiff was not subject to discrimination because of the lack of email evidence.  Viramontes, at *6-7

The Court’s analysis was whether the HR complaint was a “triggering event” for the Defendant to issue a litigation hold. 

The Rules of Spoliation

Spoliation is defined when a party “destroys evidence relevant to an issue in the case.” Viramontes, at *7.  The Duty to Preserve is triggered when a party “knew, or should have known, that litigation was imminent.” Id. The moving party must also show the information was destroyed in “bad faith,” which means it was destroyed with the “purpose of hiding adverse information.” Id.

Federal Rule of Civil Procedure Rule 37(c)(1) states, in relevant part:  

“If a party fails to provide information or identify a witness as required by Rule 26(a) or (e), the party is not allowed to use that information or witness to supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or harmless.”

Viramontes, at *8. 

The Court has in its inherent authority the power to impose sanctions, in addition to Federal Rule of Civil Procedure Rule 37. Viramontes, at *8. 

The “Safe Harbor” provision of Federal Rule of Civil Procedure Rule 37(e) limits sanctions, unless there are “exceptional circumstances,” when electronically stored information is lost “due to the routine operation of a party’s computer system if the operation was in good faith.” Viramontes, at *8.

The Court’s Reasoning

The Court found that the Plaintiff’s HR letter was not a triggering event for the Defendants’ Duty to Preserve, because the letter was a grievance letter and not written to threaten litigation.  Viramontes, at *8-9.  Since litigation was not “imminent or reasonably foreseeable,” the Defendants were not under a duty to preserve and suspend their data destruction policies.  Viramontes, at *9.

Bow Tie Thoughts

Battles over spoliation and whether there has been a trigger event are fact specific.  In this case, litigation was not “imminent or reasonably foreseeable.”  There are other cases when an HR complaint could be a triggering event.

The Courts will engage in fact specific analysis over whether the duty to preserve has triggered.  Whether there is spoliation is not a strict liability offense that requires merely a claim of destroyed data, but factually analysis on whether litigation was “imminent or reasonably foreseeable.”

The Merger: Litigation Holds & Search Terms

In an action to rescind a merger agreement, the Plaintiff brought a motion for the Defendant to restore back-up tapes; conduct keyword searches; document results from the keyword searches; and conduct additional searches after conferring on the first keyword search.  Escue v. Sequent, Inc., 2010 U.S. Dist. LEXIS

The Plaintiff argued the Defendant did not issue a litigation hold over a Department of Labor investigation. Additionally, the Defendant CEO deleted email on a daily basis and the CFO deleted email monthly.  Escue, at *2. This naturally led to the argument the Defendants committed gross negligence.  Escue, at *2.

The Plaintiff also argued the Defendant stopped creating monthly back-up tapes after the filing of the lawsuit.  Escue, at *2.

The Plaintiff also took issue with the Defendants limiting their keyword searches before the date of the merger and their refusal to pay for restoring back-up tapes from the Department of Labor action or the civil lawsuit.  Escue, at *3.

Defendants’ Counter Arguments

The Defendants argued for the denial of the Plaintiff’s motion, because the Plaintiff did not specify any information that he believed existed that had not been produced.  Escue, at *6. 

The Defendants produced 250,000 pages of documents and that the sufficiency of those responses had not been challenged by the Plaintiff.  Escue, at *4. 

Moreover, the Plaintiff did not challenge of any of the Defendants’ objections to the discovery requests.  Id.

The Defendants’ summarized the Plaintiff’s arguments as “asserting” responsive information existed on the disaster recovery back-up tapes and that the Defendant should pay for restoring them.  Escue, at *4-5. 

The Defendant also described the Plaintiff’s motion as requiring them to “embark on an open-ended collaborative process involving multiple key word searches in the hope that there may be documents responsive to unspecified requests.”  Escue, at *5. 

The Defendants further argued a litigation hold had been in effect since February 2006. Escue, at *5.  The Defendants further explained that the CEO deleted “junk email” and that the other email was archived and available.   Escue, at *5. 

Moreover, the Defendant CEO also searched his email inbox, archived email, personal computer and hard copy documents in response to the Plaintiff’s discovery requests.  Escue, at *5.  Additionally, the CFO was not with the company at the time of the merger and thus did not have any ESI or documents to produce.  Escue, at *5. 

Back-Up Tapes: Betting on Results  

 

The Defendants argued that the cost of restoring and conducting unspecified searches on 45 back-up tapes outweighed any “speculative benefit” of possible responsive ESI that might be found.  Escue, at *5.  The estimated cost of restoring the back-up tapes was $82,860.30. Escue, at *8. 

Additionally, if any responsive ESI was found, it would be duplicative discovery and delay the case 19 weeks.  Escue, at *6-7. 

The Defendants also argued that 32 of the 46 were not relevant to the lawsuit, because they were created after the merger.  Escue, at *7.  If there had been any documents that misled the Plaintiff in the merger agreement, they would have been created before the actual merger.  Escue, at *7. 

Court Finding

The Court found the following:

Plaintiff has failed to demonstrate that Defendant intentionally deleted or archived email that should have been subject to a litigation hold. Escue, at *8. 

The Defendant explained why the CFO did not have responsive ESI. Escue, at *9. 

The search terms were a different matter.  The Court noted the Defendant did not keep a record of his searches.  However, the Plaintiff attorney was, in the words of the Court, “slow” in conferring with the Defense attorney on search terms.  Escue, at *9.  As such, the Court ordered allowed the Plaintiff to request the Defendant search the CEO’s email using the prior agreed upon keywords.  Escue, at *9.

Bow Tie Thoughts

Documenting search terms is extremely important in litigation.  What software was used?  What words did a party use?  What connectors were used with the search terms?  Was their methodology defensible?  Were “false positives” included in the results? 

2011 will see the end of the hue and cry practice of yelling “litigation hold” in the hopes of sanctions being issued.  Before a party challenges the effectiveness of a litigation hold, they must be able to argue how a hold was not effective, what ESI is missing and have some evidence to show the opposing party failed in their duty to preserve.

Stamping Out Spoliation

Perryman v. Potter is an employment discrimination case involving a postal worker who was not selected for a lateral transfer to a supervisor position.

The Defendant brought a motion for summary judgment. The Plaintiff claimed that the Defendant’s destruction of notes from the interview process entitled the Plaintiff to a presumption the notes showed evidence of a pretext in her summary judgment opposition. Perryman v. Potter, 2010 U.S. Dist. LEXIS 129619 (N.D. Ohio Dec. 8, 2010).

The Court found it was inappropriate for an adverse inference finding of pretext, because the Plaintiff did not show the Defendant destroyed his notes in bad faith. Perryman, at *9.

The Post Office did not advise its hiring officials to save their hiring notes. Perryman, at *9. Additionally, the Defendant destroyed his notes before he knew about the Plaintiff’s administrate complaint or received a litigation hold. Perryman, at *10. Furthermore, there was no evidence that the Post Office acted in bad faith with their policies. Perryman, at *10. To be blunt, an allegation of bad faith is not evidence of bad faith.

Bow Tie Thoughts

2010 began with litigation holds as the fireball in the night no one dare ignore for fear of being incinerated.

While the preservation of evidence must be taken seriously as both an ethical and discovery duties, the fear mongering of sanctions is over.

Courts across the country have ensured reason prevails in litigation holds, requiring a showing of bad faith or a showing of prejudice after the close of discovery for spoliation sanctions. This may require showing production gaps (ie, missing emails over an entire week or month) or other discovery misconduct.

As we end 2010, it is time to focus on solutions to preserve the electronically stored information in litigation, not a rush to the courthouse over whether data was preserved.

Lawsuits are about the subject matter of a case, not the game of discovery “gotcha.” Tools are commercially available for economical and defensible preservation of ESI (for example, Pinpoint Labs and Guidance have self-executing collection software/devices), that can perform targeted collections with prepared collection protocols. These tools make sense for private individuals in the horror of litigation who need to preserve two folders on their laptop that contain 34 Word Docs and Excel files and 7 emails from Outlook.

Will this be done in every case? No, there are times when a full forensic image will be required. However, the days of forensically imaging computers as standard preservation practices will end.

Watch for a paradigm shift as service providers start deploying inexpensive preservation devices for targeted collections on custodian computers in State and Federal Court. This is especially true in “low” dollar cases over $70,000 or parties facing foreclosure, where costs truly matter. Moreover, targeted collections that select only what is relevant and responsive to a lawsuit will drive down collection costs and ultimately review expenses.

We will continue to see attorney bar numbers muddied by a lack of competency in understand e-Discovery. However, 2011 will continue to see technologies improving in controlling discovery costs. Moreover, the Courts will continue to be a bulwark of proportionality when it comes to preservation and rationality when it comes to spoliation.