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.

Audio Recording Sanction Blues

Many eDiscovery attorneys associate Chicago with 1) the Blues Brothers and 2) Magistrate Judge Nan Nolan.

Judge Nolan granted in part and denied in part a motion to compel in an employment dispute.

The Judge found the Defendant had a duty to preserve audio recordings of calls that had been destroyed under the company’s retention policy.

The Court further held that the destruction of an audio recording to be grossly negligent or supported a finding of fault.

As such, the Defendants were to be sanctioned with a presumption at the summary judgment stage as to whether plaintiff hung up on a customer, and if the case went to trial, the court should instruct the jury with a “spoliation charge” to be determined by the District Court.   Banks v. Enova Fin., 2012 U.S. Dist. LEXIS 170000, 1-2 (N.D. Ill. Nov. 30, 2012).

The Defendants quickly found an expressway to the District Court, arguing the Magistrate Judge’s order was clearly erroneous. Id.

I Can’t Turn You Loose

The Defendant argued the Magistrate Judge did not have the authority to impose sanctions under a court’s inherent power without bad faith in the Seventh Circuit. There was no citation to any case law for this position. Banks, at *4-5.

While adverse inference instructions do require a showing of bad faith, the Court did not find any bad faith related to the destruction of the tapes. Banks, at *5. However, the District Court noted that the Magistrate Judge did not issue an adverse inference instruction and it was within the Court’s discretion to craft sanctions proportional to a case. Banks, at *6.

The Defendant also challenged the Magistrate Judge’s finding the Defendant had a duty to preserve.  The Court found the Defendants had a duty to preserve the audio recordings based on 1) the termination of the employee based on the phone calls; 2) the Plaintiff’s meeting with his supervisor over his termination; 3) the unemployment claim litigation; and 4) the EEOC charge. Banks, at *6-7.

The Seventh Circuit’s case law states that the duty to preserve arises when a party “’knew, or should have known, that litigation was imminent.” Banks, at *7, citing Viramontes v. United States Bancorp, 2011 U.S. Dist. LEXIS 7850 (N.D. Ill. Jan. 27, 2011).

The District Court noted the issues with terminating an employee alone being a triggering event for a lawsuit:

It would be too onerous a burden to place on all employers a duty to preserve any and all documents that form the basis for the termination of an employee because of the possibility that the terminated employee might sue.

Banks, at *7.

The District Court upheld the Magistrate Judge’s findings that the Defendant had a duty to preserve, because the Defendant could reasonably anticipate litigation when the Plaintiff brought his unemployment claim. Banks, at *7.

The central issue in the dispute was whether the Plaintiff hung up on a customer. The key evidence for his termination were the audio recordings, which still existed when the Defendant appealed the Plaintiff’s initial award of unemployment benefits, however were later destroyed. Banks, at *7-8.

Bow Tie Thoughts

The duty to preserve is a malpractice area for attorneys when transitioning from records information management to a litigation hold. Moreover, eDiscovery is now years beyond email messages and Excel files. Attorneys must discuss with their clients the different electronically stored information in their possession, how they communicate both internally and externally, and what ESI can be related to the subject matter of the lawsuit.

Voicemail/audio recordings is just one example of ESI that can be overlooked. Text messages and social media are already “common” in litigation. It is only a matter of time before augmented reality will start appearing in litigation.

Attorneys must be proactive in conducting client interviews and understanding the types of ESI that can be subject to a lawsuit. To not do so is to risk singing the blues at a sanctions hearing.

Establishing Prejudice: Putting the Brakes on Spoliation Motions

In a very short opinion, Magistrate Judge Facciola showed a path to putting the brakes on spoliation motions: “Assessing whether sanctions are warranted for the loss of otherwise discoverable information is a function of whether a party has been prejudiced by that loss.”  Davis v. Grant Park Nursing Home, LP, 2010 U.S. Dist. LEXIS 118853 at *3 (D.D.C. Nov. 9, 2010).  

Demonstrating prejudice is not new.  Judge Facciola discussed it in D’Onofrio v. SFX Sports Group, Inc., 06-cv-687, 2010 U.S. Dist. LEXIS 86711, at *11 (D.D.C. Aug. 24, 2010).  As Judge Facciola explained:

Prejudice to a party can only be examined by looking at all the information that is available, for only in that context can the nature and extent of the loss suffered be accurately gauged.

Davis, at *3. 

The path to controlling the rush to file spoliation motions is when these motions should be filed.  In this case, the Court held that discussing sanctions was “premature” until the end of discovery.  Davis, at *3-4. At that time, the Court could accurately determine if there had been any prejudice from the alleged destruction of electronically stored information.  Davis, at *4.

Bow Tie Thoughts

The failure to issue a litigation hold and the preservation of evidence are unquestionably important issues.  Courts seek the truth of a matter and if evidence has been destroyed, sanctions should rightly issued on the offending party.

Now for the big “however”: the question of sanctions is not a game.  The hint of a failure to issue a litigation hold is not reason to put a party in a stockade.  While it should put a party on alert, there must be prejudice before a call to arms for sanctions.  Moreover, the a court is best able to determine if a party has suffered prejudice is at the close of discovery, not the beginning or middle of it.

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.

Lions, Tigers & Bears: Failing to Preserve ESI, Search Terms and Forensically Imaging Computers

In Treppel v. Biovail Corp., 2008 U.S. Dist. LEXIS 25867 (S.D.N.Y. 2008) the Plaintiff brought an action alleging a smear campaign against him. The Defendants in turn claimed the Plaintiff defamed their CEO and caused their stock to drop in value.   No matter what the truth is, these parties are no longer sending each other Christmas cards.

After a dismissal battle, the Plaintiff brought a motion to compel ESI responses and sanctions for the loss of electronically stored information. 

Litigation Hold History

The facts of the lawsuit occurred between 2000 to April 2002 after the Plaintiff published two reports that were unfavorable to the Defendant. Treppel, 7.

The Plaintiff brought the lawsuit in April 2003 and served a second amended complaint in August 2003.  Treppel, 7.

Sometime in May 2003, Defendant’s Corporate Counsel learned of Plaintiff’s lawsuit.  Corporate Counsel orally instructed two Defense key players to enact a litigation hold to preserve ESI.  No written litigation hold was issued and Corporate Counsel did not follow-up.  Treppel, 7.

The facts become protracted as preservation instruction trickled down to different key players.  Some individuals did not recall ever hearing the instruction from Corporate Counsel to preserve ESI.  Treppel, 7.

No instructions were ever issued to the IT department before December 2003 to enact a litigation hold. Treppel, 8.

Plaintiff Preservation Letter & Defendants’ Actions

The Plaintiff sent a preservation letter on December 3, 2003. Treppel, 8.

Corporate Counsel again gave litigation hold instructions to key players, however he was not “involved in issuing at that stage any notice to anybody personally.”  Treppel, 9. 

Preservation Blues

Despite being on notice of litigation, the Defendants first preserved back-up tapes from their three locations in December 2003.  Treppel, 9.  The Defendants’ email and file servers were not preserved until March 2005.  Treppel, 9.

One key player’s laptop was not preserved until August 2005.  Treppel, 11.  The email messages on this one laptop were downloaded directly and not preserved on any of the other email servers.  Id.

Why Work Together on Search Terms & Discovery? 

After the rejection of a proposed comprehensive e-discovery plan, the Defendants proposed the parties agree on employee files to be searched with key words.  Treppel, 11. 

Plaintiff counsel stated “it is defendants’ obligation to simply search its [sic] records and respond to those demands. Plaintiff has no obligation to assist defendants in the process by providing search terms or any other guidance.” Treppel, 11-12.

The seeds of war now sown, the bombing began with the Plaintiff’s motion to compel discovery responses and preservation of ESI. Treppel, 12.

The First Wave of Searches

The Court ordered the Defendants to conduct several searches after the first motion to compel.  Treppel, 12.  Six search terms were used on fourteen presumably key players.  Treppel, 13.  The Defendants performed the search on the December 2003 and March 2005 back-up tapes.  Treppel, 13.

Second Wave: Search Terms and Preservation

The Plaintiff requested the Defendant expand their search with 30 additional key words and custodians.  Treppel, 13. 

The Defendants claimed the request was untimely and overly broad and only produced discovery pursuant to the original search terms.  Treppel, 13. 

The Motion to Compel Restoration and Search of All Back Up Tapes

The Plaintiff brought a second motion to compel for the Defendants to restore and search their back-up tapes, plus the lone laptop.  Treppel, 14. 

Timing is everything when it comes to back-up tapes.  In this case, the litigation was filed in May 2003 and the facts took place in 2002.  Moreover, the chance that back-up tapes from 2005 would have anything relevant for 2002 would be remote.  Treppel, 14-15.  The Court applied Fed. R. Civ. P. 26(b)(2)(C)(iii) and found that searching the back-up tapes would impose a burden that would outweigh any benefit of conducting a search.  Id.

Or so it seemed…

Victory from the Jaws of Fed. R. Civ. P. 26(b)(2)(C)(iii)

The Court acknowledged two big exceptions to the above analysis:  Email messages were likely created after the litigation started, even if other ESI files were not.  Treppel, 16-17.  As such, the Defendants were ordered to restore and search the back-up tapes for one email server for three separate date ranges. Treppel, 17.

The second exception was a back-up tape that was not searched at all.  This unexplored ESI needed to be restored and search as well. Treppel, 17.

The Duty to Preserve

The Defendant failed to enact a litigation hold to fully preserve electronically stored information.  The Defendant knew of pending litigation, which would have triggered the duty to preserve in May 2003.  However, the Defendants did not enact a litigation hold until December 2003, seven months later.   Treppel, 20-21. 

The Defendant’s document retention policy was to preserve the tapes for one year.  The Court noted that the failure to enact a hold in May 2003 would have caused ESI to be lost as far back as May 2002, when the facts giving rise to the litigation took place.  Treppel, 21. 

The lone laptop that was “off the grid” of the email system was not imaged until 2005, two years after the lawsuit was filed.  Treppel, 22-23. As such, ESI pertaining to the litigation was most likely lost. 

A Time for Sanctions

The Court held the Defendant failed to preserve electronically stored information.  The question was what sort of sanction was warranted. Treppel, 39-40.

The Plaintiff (understandably) went for an adverse inference instruction.  This failed because the Plaintiff could not prove “the likelihood that any evidence that was destroyed would have supported his claims.”  Treppel, 39. 

The Court’s analysis on the Defendant’s culpable state of mind was fascinating.  The Court in effect bifurcated whether there was negligence vs gross negligence with the timing of Zubulake IV and their legal protégée as the benchmark, along with the Plaintiff’s preservation letter.  Treppel, 28-30.

The Court found there was only negligence to not preserve back-up tapes by December 2003, because of the state of the law and technology.  This was not gross negligence, since the Defendants attempted to place some form of a litigation hold in place. Treppel, 28-30.

However, post December 2003 there was gross negligence or recklessness.  Zubulake IV and related cases had been published and the Defendants were discussing preservation of evidence with the opposing party.  Despite these events, the Defendants only preserved one back-up of the December 2003 file and email servers, which allowed ESI going back to December 2002 to be lost.  Treppel, 28-30.

The Court ordered a forensic search of the Defendant’s laptop at the Defendant’s expense.  Treppel, 39.  The results were to be reviewed for privilege and then produced to the Plaintiff was a privilege log.  Treppel, 40.

The Court further ordered the restoration and search of email servers and back-up tapes for specific date ranges.  Treppel, 40. 

Bow Tie Thoughts

The summer of 2009 will be remembered for litigation hold cases coming out almost on a weekly basis.  Attorneys must prepare their clients for litigation readiness on how a litigation hold is deployed, communicated and procedures for preserving electronically stored information.

Spoliation! A New Drama at the District Courthouse about a Litigation Hold and Missing Electronically Stored Information

The stage is set: There is a triggering event for a lawsuit, a litigation hold is enacted and evidence is preserved. 

A drama played out not according to the above script with a law firm and client almost ending up on the hook for a botched litigation hold. 

In Pinstripe, Inc. v. Manpower, Inc., the Defendant failed to enact a litigation hold after being instructed by counsel to preserve evidence.  However, after learning of the failed hold and loss of evidence, the Defendants spent $30,000 on an expedition to find the lost ESI.  The Plaintiffs sought a default judgment, a spoliation instruction and monetary damages.   Pinstripe, Inc. v. Manpower, Inc., 2009 U.S. Dist. LEXIS 66422 (N.D. Okla. July 28, 2009).

The Timeline of Facts

The follow chronology of events tells the spoliation story:

April 18, 2008 — Defendant responds to discovery. Pinstripe, Inc. 3.

July 15, 2008 — Defendant produces responsive documents. Pinstripe, Inc. 3.

Aug./Sept. — Discussion between Plaintiff and Defendant regarding sufficiency of Defendant’s responses. Defendant is asked to certify the completeness of its responses and does. Pinstripe, Inc. 3.

Oct. 6, 2008 — Plaintiff realizes Defendant’s document production is incomplete. Pinstripe, Inc. 3.

Jan. 13, 2009 — Plaintiff requests information from Defendant regarding preservation of documents. Defendant realizes not all e-mails have been produced. Pinstripe, Inc. 3.

Jan. 15, 2009 — In-house counsel realizes Defendant has not issued a litigation hold. Counsel issues the hold immediately. Pinstripe, Inc. 3.

March 2, 2009 — Defendant reveals that two employees may have deleted discoverable e-mails.  Pinstripe, Inc. 3.

The Law on Litigation Holds and Spoliation (In Brief)

A party must enact a litigation hold to preserve evidence once it reasonably anticipates litigation.  This includes suspending its document retention and destruction policy and communicating the “hold” to the “key players” in the litigation. Pinstripe, Inc., 4.

Sanctions for the destruction of evidence can include the extreme measures of adverse inference instructions or dismissal of a case.  The sanction must fit the willfulness of the “party who destroyed evidence and the prejudice suffered by the other party.” Pinstripe, Inc., 5-6.  The intent of these sanctions ensures discovery accuracy, punishment for those who willfully destroy ESI and compensation for those who suffer prejudice from the lost evidence.  Pinstripe, Inc., 5, citing Koch v. Koch Indus, Inc., 197 F.R.D. 463, 483 (N.D.Okla. 1998).

The general test for issuing a negative inference instruction is  “(1) that the party controlling evidence had an obligation to preserve it at the time it was destroyed; (2) that the destruction occurred ‘with a culpable state of mind’, and (3) that the evidence destroyed was relevant.” Pinstripe, Inc., 9.

A Lawyer’s Nightmare: Threat of Sanctions for Spoliation

Attorneys at the law firm drafted a revised document retention policy and litigation hold for the Defendants. Pinstripe, Inc., 7-8.  The attorneys believed their client had enacted a litigation hold, but after 14 months found out the client never enacted the litigation hold.

The attorneys learned about the lack of the litigation hold after producing discovery.  Id. 

The law firm was not sanctioned for what one might be able to argue was a failure to comply with Federal Rule of Civil Procedure Rule 26(g)(1)(A), which requires that a discovery response is certified as “complete and correct as of the time it is made” with the attorney’s signature.  The Court found that the attorneys “made reasonable inquiry as to the completeness of Manpower’s document production and relied on the client’s representations in that regard.”  Pinstripe, Inc., 8. 

A Lawyer’s Nightmare II: Client Sanctioned for Spoliation

The Defendant failed in their duty to preserve relevant ESI.  Their lawyers sent them a litigation hold and the Defendants “failed to monitor compliance with the oral instructions” issued to some of the Defendant’s managers.    Pinstripe, Inc., 8. 

The Court did not order a default judgment or adverse inference instruction against the Defendant, because the botched litigation hold was not an intentional attempt to destroy electronically stored information.  Pinstripe, Inc., 8. 

However, one of the Defendant’s employees’s destroyed email messages.  This sent the Defendants on a dramatic quest to recover the lost ESI, which include attempts by IT staff, a forensic consultant and a $30,000 price tag.  Pinstripe, Inc., 9.  The Defendant claimed that any of the lost email attachments were saved on a different server and approximately 700 emails were retrieved by recipients of the employee’s email messages. Pinstripe, Inc., 9.

No Harm, No Foul?

The Court found not only that any extreme sanctions were not justified, but that Plaintiffs had not demonstrated the Defendant had “not recovered the e-mails at issue or that any missing e-mails are relevant to” the Plaintiff’s claims. Pinstripe, Inc., 10.

The Plaintiff’s prejudice from the missing email was only preparing for and rescheduling depositions.  Pinstripe, Inc.,10.  Moreover, the Plaintiffs were not able to produce any evidence that any specific ESI was destroyed.  Pinstripe, Inc., 11. 

While the Defendants avoided “nuclear sanctions,” they did not get off scot-free from their failed litigation hold.  The Court’s sanctions order included the following: 

1)       Defendants would cover the costs for any depositions that had to be re-opened. Pinstripe, Inc., 11.

2)       Plaintiff could depose Defendant’s IT person or forensic consultant at the Defendant’s expense, excluding attorney’s fees.  Pinstripe, Inc., 11-12.

3)       If the Plaintiff learned of a specific, relevant e-mail that has not been recovered or otherwise produced, it could petition the Court for further relief. Pinstripe, Inc., 12

4)        The Defendant was required to “contribute the sum of $ 2,500 to the Tulsa County Bar Association to support a seminar program on litigation hold orders, and preservation of electronic data.” Pinstripe, Inc., 12.

Bow Tie Thoughts

Case law on litigation holds and the preservation of evidence seems to be coming out on a weekly or bi-weekly basis.  Lawyers need to be vigilant when it comes to preserving evidence and working with their clients to ensure they are following a litigation hold.  There are new tools on the market available to help attorneys track litigation holds to ensure compliance, which are certainly worth exploring given the cost to litigate a spoliation motion or spend $30,000 to forensically search for lost ESI.

The Holding Pattern: Lessons Learned on Litigation Holds

The past three years have seen an increase of cases highlighting litigation holds and the duty to preserve electronically stored information.  There is no shortage of cases that hold many “lessons learned” for attorneys and their clients. 

The Nightmare Litigation Hold Letter

The Napster litigation gave us more then copyright law on music downloads; one case gave us one of the worst litigation hold letters ever:

Hank has asked me to send this out to everyone.

All emails re Napster at this point are related to the litigation and should contain the “a/c” (attorney communications) symbol in the subject line and [REDACTED]@fenwick.com should be ccd. We should not be sending e-mails on this subject anyway. Items from outsiders such as resumes do not require this.

Hank Barry

Please also be aware of our e-mail policy. As we have all been required to surrender Napster e-mails, this should reinforce compliance with our long standing policies.

1. We do not retain e-mails, it is your responsibility to delete your handled e-mails immediately 

2. We do not us e-mail to chat about matters related to public companies or matters such as the above

3. We do not retain written copies of e-mails in our files

4. Our document retention policy is that we do not retain documents on any public or acquired company and retain limited information on private companies. all retained information is stored in central files, pls do not retain other docs in your own files unnecessarily

5. We do not retain files separate from our central files which are periodically checked for compliance to policies

Please also review the above policies with any summer associates.

UMG Recordings, Inc. v. Hummer Winblad Venture Partners (In re Napster, Inc. Copyright Litig.), 462 F. Supp. 2d 1060, 1064 (N.D. Cal. 2006).

The above letter could have been read with a wink as a destruction order impersonating a document retention policy.  The Court found Hummer’s loss of email evidence amounted to gross negligence.    The sanctions included a preclusion order, adverse inference instruction and attorneys’ fees.  Moreover, no lawyer wants to see their email address in an opinion for spoliation.  See, UMG Recordings, Inc. v. Hummer Winblad Venture Partners (In re Napster, Inc. Copyright Litig.), 462 F. Supp. 2d 1060, 1064 (N.D. Cal. 2006).

The Fawn Hall of Spoliation Cases

For those not familiar with Fawn Hall, she was Oliver North’s secretary who destroyed documents in the Iran-Contra affair.In KCH Servs. v. Vanaire, Inc., 2009 U.S. Dist. LEXIS 62993 (W.D. Ky. July 21, 2009), the soon to be named Defendant was put on notice of a lawsuit because of unlicensed software usage. 

Instead of enacting a litigation hold, the Defendant ordered the “software deleted immediately” after the telephone call with the future Plaintiff.  KCH Servs, 3-4. 

The Defendant’s actions deprived the Plaintiff any opportunity to inspect relevant evidence once the lawsuit began. 

The Court ordered the spoliation sanction of an adverse inference instruction, instead of a default judgment, for the Defendant’s obstructionism.   KCH Servs, 6.

Production of Litigation Hold Letter

Litigation hold letters are generally not discoverable, because of the attorney-client privilege and the work product doctrine.  Major Tours, Inc. v. Colorel, 2009 U.S. Dist. LEXIS 68128, 6-7 (D.N.J. Aug. 4, 2009).

However, a party is entitled to discovery on the categories of electronic storage information an opposing party was instructed to preserve and collect, and the specific actions that were undertaken.  Major Tours, Inc., 6-7.

What makes the above a “general” rule is when there has been spoliation, which then can make a litigation hold letter discoverable. Major Tours, Inc., 7.

The Plaintiffs in Major Tours, Inc. v. Colorel were able to make a preliminary showing of spoliation because of some very damaging deposition testimony of two Federal Rule of Civil Procedure Rule 30(b)(6) witnesses (For a great summary of this case, visit John Jablonski’s Court Orders Production of Litigation Hold Letters). 

One 30(b)(6) witness testified that he was “probably” told by his attorneys to preserve certain emails, but that he didn’t save anything.  Major Tours, Inc., 10.  Another witness testified that “no one ever talked to her about creating a litigation hold policy and that she was not sure what a litigation hold policy was.” Major Tours, Inc., 10-11.

The Defendants were ordered to produce different litigation hold letters and identify who received those letters.  Major Tours, Inc.,16. 

Bow Tie Thoughts on the “Holding Pattern”

A botched litigation hold letter, failed preservation policies or just outright destroying evidence can ruin a client’s case.  Needless to say, the damage to a lawyer’s career would also be severe. 

Working with clients on a proactive basis to determine document retention/destruction policies and litigation hold procedures can help avoid spoliation cases because of an ineffective litigation hold.

The Missing Link: A Duty to Preservation Imbedded Images & Hyperlinks?

Paleontologists have searched for the missing link, the remains of an transitional life form, showing a state of evolution.  Lawyers today continue the quest for missing links, but not for transitional life forms, but inactive hyperlinks to websites.

The Plaintiff in Ferron v. Echostar Satellite, LLC, 2009 U.S. Dist. LEXIS 66637 (S.D. Ohio July 29, 2009), filed an epic 1,300 page Third Amended Complaint alleging that multiple Defendants sent 703 email messages that contained a commercial advertisement for Dish Network in violation of Ohio law.  Ferron, 2.  Assuming the Plaintiff used Times New Roman 12 point font, averaging 300 to 350 words a page, that would be approximately 390,000 to 455,000 words in the complaint.  “War & Peace” has approximately 560,000 words.

The Email Production

Defendant E-Management Group, Inc., produced a CD-Rom with the email messages (presumably HTML).  The Plaintiff claimed the graphic images contained in the emails were visible when they were produced.  Ferron, 2-3. 

Act 1: Motion for Sanctions

The Plaintiff brought a motion for spoliation against the multiple Defendants and attorneys for failing to “preserve electronically stored information (“ESI”) that is directly relevant to Plaintiff’s claims.”  Ferron, 3.

The exact claim was that 155 of the emails contained website links to images that were no longer on that website.  Ferron, 3.

The Court held the issue was not ripe and the parties were to exhaust all extrajudicial means to resolve the issue.  Ferron, 3.

Act 2: Searching for the “Missing Links” in the Renewed Spoliation Motion

The Plaintiff brought a renewed spoliation motion, after extensive communications with Defendant E-Management, arguing that

(1) Defendant E-Management failed to preserve the images in 72 emails that it sent or caused to be sent to Plaintiff;

(2) Defendant 411 Web failed to preserve the images in 20 emails that it sent or caused to be sent to Plaintiff; and

(3) Defendant Dish Pronto failed to preserve the images in 25 emails that it sent or caused to be sent to Plaintiff. Ferron, 8.

The Plaintiff’s Arguments

The Plaintiff claimed the graphic images conveyed “the substance of the Dish Network advertisements at issue,” and that the “unpreserved [electronically stored information]–  the imbedded and linked graphic images that are no longer visible within the 117 emails– is the only evidence that Plaintiff is able to use to establish that the contents of the email advertisements violate Ohio law.” Ferron, 8-9.

Plaintiff’s Relief Sought

The Plaintiff requested the following relief:

(1)     Court conduct an evidentiary hearing as to Defense counsel’s efforts to maintain “ESI relevant to the Plaintiff’s claims”;

(2)     Permit an adverse inference that the 117 identified emails contain advertisements that violated the OCSP; and

(3)     Award plaintiff attorney’s fees and costs associated with the filing of the motion.  Ferron, 9.

Defendant’s Claims

Defendant E-Management fought back, claiming that the Plaintiff violated his own duty to evidence because he failed to “print out” the emails that claimed formed the basis of his claims (Personally, I’d print to PDF instead of printing to paper).  Ferron, 10. Defendant E-Management sought “reasonably expenses” for their opposition.  Id.

Defendants’ Production & Paper Preservation

The Plaintiff claimed the “graphic images” were necessary to show the substance of the Dish Network ads, which were critical to the lawsuit. Ferron, 12.

Defendant E-Management denied any “malfeasance” in their production over some of the emails having missing images.  Ferron, 12-13.   The Defendant printed their production, which effectively “preserved” the images on paper.  Ferron, 13.  The paper copies were offered to the Plaintiffs, provided the Plaintiffs paid for the production costs.  Id. (While the opinion does not explain what went into the collection and processing of these email messages, if imbedded media was an issue, converting to TIFF or PDF to preserve the media might have been a cheaper option then printing as paper.) 

The Plaintiff claimed that producing the printed images was insufficient, because the printed ESI only conveyed “some of the information contained in an email.”  Ferron, 13.

The Court disagreed.  The Plaintiff did not explain what exactly was contained in the “electronic information” and how it supported their claims.  Ferron, 13.

Speculation on what might have been in possibly destroyed evidence is not the basis for granting an adverse inference instruction.  Ferron, 13.

Duty to Preserve Web Links?

The parties disputed which links were disabled before the Defendants reasonably anticipated litigation and whether some of the hyperlinks and websites were under the control of third parties.  Ferron, 14.

The Court did NOT find Defendant E-Management had a duty to preserve every website link in the produced email messages.  Ferron, 14.

No Missing Link

The Court found that Defendant E-Management and its attorneys did not engage in any bad faith discovery misconduct, because paper copies of the emails had been preserved and there was no proven duty to preserve the different websites.  Ferron, 14.

The Court denied the spoliation motion against Defendant E-Management, because of the paper preservation, the lack of a duty to preserve certain websites and a lack of showing what “electronic information” was necessary to support the Plaintiff’s claims.  Ferron, 14-15. 

Bow Tie Thoughts

All of the Defendants in this case avoided sanctions, namely because ESI had been preserved as paper with the at issue images.  The Plaintiff also failed to explain why the “electronic information” was necessary to their case.

While there can be fact patterns where “missing links” are the key issue of a lawsuit, this was not one of them.  As a practice pointer, if you are dealing with “live” web content that can change because of a third party outside of a party’s control, I would capture HTML emails as PDFs or a similar static image.  This should preserve the images at issue that might be lost if the third party website supplying the image becomes inactive.  If capturing web content is key, there are a variety of tools for that, including printing as PDF’s, HT Tracker and other screen capture technology.

Invasion of Privacy and Spoliation on MySpace

It is true that mass communication is no longer limited to a tiny handful of commercial purveyors and that we live with much greater access to information than the era in which the tort of invasion of privacy developed. A town crier could reach dozens, a handbill hundreds, a newspaper or radio station tens of thousands, a television station millions, and now a publicly accessible webpage can present the story of someone’s private life, in this case complete with a photograph and other identifying features, to more than one billion Internet surfers worldwide. This extraordinary advancement in communication argues for, not against, a holding that the MySpace posting constitutes publicity.

Judge Kevin Ross, Minnesota Court of Appeals, Yath v. Fairview Clinics, N.P., 767 N.W.2d 34 (Minn. Ct. App. 2009).

The Court of Appeals of Minnesota discussed at length a case involving invasion of privacy on MySpace.  The case involved a MySpace profile named “Rotten Candy” being created about the Plaintiff, outing her for contracting a sexually transmitted disease from an extramarital affair and accusing her of being addicted to plastic surgery.  Yath, 6-7.    

The Plaintiff’s medical facts were learned from the clinic where she was treated.  The case includes a soap opera set of facts with people who knew the Plaintiff gaining unauthorized access to her medical information at the clinic.  The MySpace page was not made at the medical clinic, because access to MySpace was blocked by the clinic.  The profile was traced back to an Internet Protocol address to a business where the sister of one of the Defendants worked.  Yath, 7.  

Case Procedural History

The Plaintiff sued multiple Defendants for invasion of privacy, negligent infliction of emotional distress and state law claims for disclosing the Plaintiff’s medical file.  Yath, 8. 

The District Court denied a spoliation claim for deleting computer files, granted summary judgment for the clinic and for one of the other Defendants.  Yath, 8-9.  The Court also dismissed the claims against two of the other Defendants.  Id.

Relevant Case Issues

The Court of Appeals address multiple questions, however this article focuses specifically on the following issues:

Issue 1: Did the District Court abuse its discretion by denying the Plaintiff’s spoliation of evidence motion against Defendant Phat after she “deleted computer files that might have revealed her involvement in disclosing private medical data?” Yath, 9.

Issue 2: Did posting on MySpace meet the “publicity” requirements for invasion of privacy? Id.

Issue 3: Did the facts still justify a summary judgment against the Defendants?  Id.

Spoliation of Browser History & Temporary Files

The Plaintiff claimed Defendant Phat deleted her internet browser history and temporary files, which justified sanctions for spoliation of evidence.  Yath, 12. 

The hornbook definition of Spoliation is “the destruction of evidence.”  Yath, 11-12.  Sanctions can be ordered when a person knew or should have known that the destroyed evidence “was relevant to pending or future litigation.”  Yath, 12. 

The Court of Appeals found no error in the District Court’s finding of no spoliation, because the Plaintiff did not provide sufficient support for her spoliation claims. Yath, 12.

Below is a brief timeline of the computer subpoena:

July 3, 4:51 PM: Plaintiff subpoenaed Defendant Phat’s computer by fax.

July 5: Defense attorney gets fax due to 4^th of July holiday.

July 5: Attorney tells Defendant about subpoena.

July 16: Computer produced for inspection. Yath, 12-13. 

The Plaintiff’s expert stated in affidavit that “No temporary internet files, browser history, internet or browser cache exist prior to July 3, 2007.”  Yath, 13.

The expert also stated that “all internet files were erased and scrubbed clean as of July 3, 2007 at approximately 8:05 p.m.”  Yath, 13.

The Plaintiff argued that the “coincidence” between the timing of the subpoena and the data loss was “too coincidental.”

The District Court did not find any spoliation, opining that the data loss may have been a routine maintenance operation.  Yath, 13.  Additionally, the District Court did not find the Plaintiff met her burden to show the Defendant “intended to destroy or hide evidence.”  Yath, 13.  The Court of Appeals did note the timing of the deletion was suspect; however the Plaintiff did not provide the District Court with compelling evidence to find spoliation.  Yath, 14. 

Publicity of Information on MySpace

The Court of Appeals “Majority Opinion” and “Concurring Opinion” provide two different views on what constitutes publicity on MySpace.  The Majority took a much broader view of “publicity” then the Concurring opinion. 

The Court of Appeals disagreed with the District Court that the “temporary posting” of the Plaintiff’s medical records “failed to meet the ‘publicity’ requirements for a successful claim.”  Yath, 14.  The Court of Appeals rejected the District Court’s view that the posting was not seen by enough people.   Yath, 14-15.

The Plaintiff’s invasion of privacy claim was based on the publication of private facts (the publication of her medical information).  Yath, 14.  To survive a motion for summary judgment, the Plaintiff needed to show the following:

(1) The Defendant gave “publicity” to a matter concerning the Plaintiff’s private life;

(2) The publicity of the private information would be highly offensive to a reasonable person; and

(3) The matter is not of legitimate concern to the public. Yath, 15.

Rule for “Publicity”

The Court of Appeals cited the Restatement (Second) of Torts definition of “publicity,” which states that “the matter is made public, by communicating it to the public at large, or to so many persons that the matter must be regarded as substantially certain to become one of public knowledge.”  Yath, 15, citing Restatement (Second) of Torts § 652D.

The Court of Appeals further described the rule for publicity as being two separate tests:

 …there are two methods to satisfy the publicity element of an invasion-of-privacy claim: the first method is by proving a single communication to the public, and the second method is by proving communication to individuals in such a large number that the information is deemed to have been communicated to the public. Yath, 15-16. 

Majority Opinion on MySpace Publicity

The majority took the position the MySpace profile was, “publicity per se” and within the first method of publicizing a single communication.  Yath, 16-17.   The Court found that publishing the medical information on the MySpace profile was “materially similar in nature to a newspaper publication or a radio broadcast because upon release it is available to the public at large.”  Yath, 17.

The Court of Appeals rejected the District Court’s reasoning that publicity argument failed because only a small group (6 “friends”) saw the information over a 24 to 48 hour period.  Yath, 17-18. 

The Majority Opinion compared the “small group” argument to a small newspaper with a small readership or a late night radio show.  The Court of Appeals stated the number of people who viewed the posting is irrelevant, because private information was communicated in a public forum (in this case, a public MySpace profile), triggering the invasion of privacy tort.  Yath, 18-19.

The Concurring Opinion

Judge Matthew Johnson took issue with the Majority Opinion’s view of publicity for the invasion of privacy.  Judge Johnson argued that the Majority unnecessarily expanded the rule when there was evidence that the MySpace profile was sent to between 60 to 80 people.  Yath, 41-42. 

The Plaintiff polled ten of her MySpace friends after learning about the “Rotten Candy” profile and found out all ten had seen the fake profile.  Yath, 42. The Plaintiff’s now ex-husband had even received a friend request from “Rotten Candy” as well.  Id.

 The Concurring Opinion stated it was “unnecessary to create a per se rule that any posting of private information on the Internet constitutes publicity.”  Yath, 42.

Lost for Other Reasons

The Court of Appeals did not overturn the summary judgment findings because the Plaintiff “did not produce any evidence that Phat or Fairview were involved in creating the MySpace.com” profile.  Yath, 24.  As such, the invasion of privacy claimed failed. 

Bow Tie Thoughts

Courts  faced with Web 2.0 litigation are adopting traditional tort and contract law principles to online conduct.   Defining what constitutes “publicity” is a question courts will have to address as similar cases as litigated.

I think the Court of Appeals had a very narrow reading of the duty to preserve and spoliation.  In broad terms, if a party reasonably anticipates litigation, they have a duty to preserve evidence that pertains to the lawsuit. 

If the Defendants were on notice after a triggering event (such as being sued for a fake MySpace profile), it does not take any leap of faith that internet history and temporary files go to the heart of the lawsuit for who created, maintained or accessed the fake profile. 

While this is a state court action, in the Federal Courts, a party only qualifies for the “safe harbor” protection under Federal Rule of Civil Procedure Rule 37(e) when ESI is lost “as a result of the routine, good-faith operation of an electronic information system.”  Fed. R. Civ. Proc. 37(e).  Moreover, “good faith” requires a party to “intervene to modify or suspend certain features of the routine operation of a computer system to prevent the loss of information,” according to the Advisory Committee Notes to the Federal Rules of Civil Procedure.

One might be able to argue the Defendant in this case did not act in good faith, and thus do not qualify for any “safe harbor” protections for the loss of data, because they did not suspend any routine maintenance operations after being on notice of a lawsuit.

Questioning the Defendant when they reasonably anticipated litigation, if their internet browser only saved visited websites or temporary files for a limited number of days (or until a system restart), when their computer performed routine maintenance (i.e., Friday nights at 8:00 pm), and whether they took any steps to suspend this operation, would be good questions to ask in special interrogatories or deposition.  Perhaps showing the computer’s routine maintenance was not scheduled until sometime after July 3 would have been sufficient to show the intent to hide or destroy evidence. This examination would be highly fact intensive.