Don’t Be Late and Ineffective with Litigation Holds

The City of New York, 50 unnamed NYPD officers, and the former NYPD Commissioner are involved in a civil rights lawsuit over allegedly issuing summonses without probable cause, violating the First, Fourth, Fifth, Eighth, and Fourteenth Amendments to the U.S. Constitution, if true. The City was found to be grossly negligent in issuing and executing its litigation hold for the preservation of email and text messages. Stinson v. City of New York (S.D.N.Y. Jan. 2, 2016) 2016 U.S. Dist. LEXIS 868, at *1.

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The City did not issue a litigation hold until three years AFTER the complaint had been filed. The Court stated that litigation hold was not effectively communicated and the officers listed in the City’s initial disclosures did not acknowledge receiving the hold notice. Stinson, at *3-4.

The NYPD had a document destruction policy of three years for bureau chief memos and four years for monthly performance reports and summonses. Stinson, at *4. The NYPD “did not have a specific policy with regards to the destruction of email communications, it did impose a hard size limit on officers’ inboxes, and that when officers hit that limit, ‘they delete.’” Stinson, at *5. The NYPD document retention and destruction policy did state, “unless specific steps were taken, relevant NYPD documents would be destroyed.” Id.

The Court further explained that 1) the City made no effort to preserve text messages between police officers; and 2) the NYPD had no policy on preserving text messages. Stinson, at *6.

The City of New York produced only a few documents from key players. Id. Moreover, no emails were produced from the former Commissioner, the former Chief of the department, and three other key custodians. In all, the Court noted a total of fewer than 25 emails produced from key players. Stinson, at *7. The City took the position that the “Police Department on the whole did not operate via email.” Stinson, at *8. This assertion was contradicted by emails the Plaintiff acquired from third parties. Id.

The Court found that the City’s litigation hold was both late and ineffective. Moreover, the fact relevant emails were found, demonstrated that relevant emails were also deleted. Id.

Judge Robert Sweet granted the Plaintiff’s motion for sanctions. The Court applied the elements from Chin v. Port Authority in proving sanctions that:

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

2) That the records were destroyed with a culpable state of mind; and

3) That the destroyed evidence was relevant to the party’s claim or defense such that a reasonable trier of fact could find that it would support that claim or defense.

Stinson, at *8.

The Court found that the duty to preserve was the date of an earlier lawsuit involving quota-related allegations that was “strikingly similar” to the instant case, which was January 31, 2008, opposed to the date of the current lawsuit, filed on May 25, 2010. Stinson, at *10-11, referencing Floyd v. City of New York, 283 F.R.D. 153, 164-66 (S.D.N.Y. 2012).

The parties further battled over the scope of the duty to preserve. While it is unreasonable for any organization to have an indefinite litigation hold, the City could not argue there was any justification in failing to enact a litigation hold for three years. Stinson, at *12. The City further argued that since the Plaintiff’s had overly broad discovery requests, they should not be sanctioned for failing to preserve relevant ESI. Id. The Court rejected this argument, stating:

…[T]he reasonableness or unreasonableness of one party’s demands does not determine the scope of the other party’s obligation to preserve documents. The Plaintiffs’ putative overbroad demands do not excuse the City’s failure to issue a litigation hold, to properly supervise its implementation, or to suspend document retention policies that would foreseeably lead to the spoliation of evidence.

///

The Plaintiffs’ putative overbroad demands do not excuse the City’s failure to issue a litigation hold, to properly supervise its implementation, or to suspend document retention policies that would foreseeably lead to the spoliation of evidence.

Stinson, at *12-13.

Life lesson: Just because the Plaintiff has overly broad scope for discovery requests, does not justify the lack of a litigation hold.

The Court held that the City’s conduct warranted a finding of gross negligence in its failure to issue a litigation hold. Stinson, at *16. The Court explained that finding gross negligence is “more art than science” due to the lack of a clear standard:

Neither negligence or gross negligence has been clearly defined in the context of discovery misconduct, such as spoliation. These terms simply describe a continuum. Conduct is either acceptable or unacceptable. Once it is unacceptable the only question is how bad is the conduct. That said, it is well established that negligence involves unreasonable conduct in that it creates a risk of harm to others.

Stinson, at *16 [Citations omitted].

The Court held the following factors amounted to gross negligence: 1) failure to issue a litigation hold; 2) failure to implement the hold after it was issued with poor communications and the destruction of evidence; and 3) failure to circulate the hold and ensure compliance. Stinson, at *17-18.

Judge Sweet drove home the point the NYPD knew document destruction was foreseeable from their retention policy:

The NYPD cannot credibly argue that, despite setting guidelines for document destruction and providing an industrial shredding truck for that purpose, it did not know or intend that documents would be destroyed. Similarly, Lieutenant Scott’s Rule 30(b)(6) testimony amounts to an admission that the Department knew that officers’ email inboxes would hit their space limits – and that those officers would delete potentially relevant ESI when they did. Although the paucity of relevant emails produced from the inboxes of key decision makers does not establish that ESI was deleted, it is consistent with such spoliation and with Lieutenant Scott’s acknowledgement that deletion of emails was a foreseeable consequence of the NYPD’s storage policy.

Stinson, at *19.

The Court further held that the evidence lost was relevant to the Plaintiff’s claims from the handful of emails that were produced from a third party and other discovery. Stinson, at *20-21.

The Court had to craft a proportional adverse inference instruction based on the City’s conduct. As one would expect, the Plaintiff sought nuclear sanctions that would make them prevail on hotly contested disputes in the case. Stinson, at *22. As the Court explained, the Plaintiff was entitled to “an inference that helpful evidence may have been lost, not relief from their obligation to prove their case.” Id.

The Court sanctioned the Defendants with a “permissive inference” instead of a “mandatory adverse inference.” Id. Judge Sweet explained:

A permissive inference will ensure that the City faces consequences for its failure to take its preservation obligations seriously, but will not result in an unwarranted windfall for the Plaintiffs. The jury will be instructed that the absence of documentary evidence does not in this case establish the absence of a summons quota policy.

Stinson, at *23.

Bow Tie Thoughts

Large organizations often get trapped in the “fog of war” with litigation holds. Failed communications, not monitoring for compliance, or not issuing a hold can result in catastrophic results.

This case did not apply the new Federal Rule of Civil Procedure Rule 37(e), because the motion was submitted prior to the December 1, 2015, the day the Rule went into effect. Stinson, at *14-15, footnote 5. The Court held it would not be “just and practicable” to retroactively apply the Rule. Id. The new Rule 37(e) states:

Failure to Preserve Electronically Stored Information. If electronically stored information that should have been preserved in the anticipation or conduct of litigation is lost because a party failed to take reasonable steps to preserve it, and it cannot be restored or replaced through additional discovery, the court:

(1)  upon finding prejudice to another party from loss of the information, may order measures no greater than necessary to cure the prejudice; or

(2)  only upon finding that the party acted with the intent to deprive another party of the information’s use in the litigation may:

(A)  presume that the lost information was unfavorable to the party;

(B)  instruct the jury that it may or must presume the information was unfavorable to the party; or

(C)  dismiss the action or enter a default judgment.

USCS Fed Rules Civ Proc R 37(e).

It will be very interesting to see the first case that applies Rule 37(e). Time will tell how quickly that day comes. While the factual analysis will likely remain the same, the sanctions analysis should be less art and more science.

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

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

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

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

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

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

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

Judge Fox further found:

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

Novick, at *17-19, emphases added.

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

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

Adverse inference instructions were justified because:

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

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

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

Novick, at *22.

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

Bow Tie Thoughts

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

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

The Duty to Preserve on Island Time

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

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

Be Prepared to Explain What Happened

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

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

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

Riley, at *11-12.

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

Be Precise in The Remedy You Request

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

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

Bow Tie Thoughts

Ukulele _0130

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

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

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

Don’t Phone in Adverse Inference Allegations

I have a nut on the phoneCan a Plaintiff win adverse inference instructions for the destruction of a phone recording destroyed after a one-year retention policy and whose relevance (or existence) was not known by the Defendants for two years after the event happened?

Short answer is no.

The test for establishing adverse inference instructions for the destruction of evidence is:

(1) That the party having control over the evidence had an obligation to preserve it at the time it was destroyed;

(2) That the records were destroyed with a culpable state of mind; and

(3) That the destroyed evidence was relevant to the party’s claim or defense such that a reasonable trier of fact could find that it would support that claim or defense.

Candy Marcum v. Scioto County, 2014 U.S. Dist. LEXIS 112100, 42-43 (S.D. Ohio Aug. 13, 2014).

The case involved the Plaintiff seeking adverse inference instructions for the recording of a phone call in November 2008. The deceased called his wife from the county jail. The recording was deleted per the one-year document retention.

The Magistrate Judge initially found that the phone recording was destroyed per the Defendant’s document destruction policy, but granted adverse inference instructions because of the Defendants’ “negligence.” The Magistrate Judge looked to the facts that the Sheriff requested an investigation into the death of the victim and the Plaintiff had hired an attorney. Marcum, at *43.

The District Court Judge found these facts did not constitute enough for an adverse inference instruction for the phone recording. The Defendants did not know of the recording, which goes against the “culpable state of mind” requirement for adverse inference instructions. Marcum, at *43-44.

The Plaintiff further declined an interview with the investigator in 2008 and did not notify the Defendant of the existence of the phone call. Moreover, the Plaintiff waited two years to file a lawsuit and request the recording. Marcum, at *44. The existence of the recording was not made until 2010. Id.

The Defendants did retain relevant video, but claimed they never knew of the phone call or its relevance. As such, the District Court modified the Magistrate Judge’s order regarding adverse inference instructions. Marcum, at *48.

Bow Tie Thoughts

Attorneys cannot phone in spoliation allegations. If one side believes information exists that should be preserved, include that in your preservation letter to the opposing party. It is difficult for one party to be attacked for the destruction of evidence if they were never on notice of its existence. Moreover, discuss possible sources of relevant ESI during the meet and confer to ensure the electronic information is both identified and preserved.

Spoliation, Texas Style

The Texas Supreme Court has clarified the standards for spoliation (in Texas). The rule is that Texas has a two-step process: (1) the Trial Court must determine, as a question of law, whether a party spoliated evidence, and (2) if spoliation occurred, the Court must assess an appropriate remedy. Brookshire Bros., Ltd. v. Aldridge, 2014 Tex. LEXIS 562, 3-4 (Tex. July 3, 2014).

This Allemande Left and Do So Do requires a Trial Court to find that (1) the spoliating party had a duty to reasonably preserve evidence, and (2) the party intentionally or negligently breached that duty by failing to do so. Brookshire Bros., Ltd., at *3. This is to be done outside the presence of the jury, so the accused party is not swung around before the jurors, causing any prejudicial effect by the presentation of evidence that is unrelated to the facts underlying the lawsuit. Id. (and memories of 7th grade square dancing). 

The jury is to only hear evidence of spoliation that is related to the lawsuit. If there is spoliation, the then Trial Court can craft a proportionate remedy based upon the level of culpability of the spoliating party and the degree of prejudice, if any, suffered by the nonspoliating party. Brookshire Bros., Ltd., at *4.

The facts of the Texas case involved video footage at a grocery store of a slip and fall. The Plaintiff slipped at the store and reported the incident the following day after going to the emergency room. The store saved video of the fall, starting from before the Plaintiff entered and left the premises. The video lasted 8 minutes. However, the rest of the video was deleted per the company’s data destruction policy after 30 days. Brookshire Bros., Ltd.  at *6-7.

The Texas Supreme Court held that a party must intentionally spoliate evidence in order for a spoliation instruction to constitute an appropriate remedy. Brookshire Bros., Ltd.  at *31.

The Court held that the deletion of the video for the entire day of the incident did not justify the jury spoliation jury instruction. Furthermore, the video showing the actual fall was presented to the jury. Brookshire Bros., Ltd.  at *46-47. The Court found that the failure to preserve additional video footage did not irreparably deprive Plaintiff of any meaningful ability to present his claim. Brookshire Bros., Ltd.  at *47-48. The issuing of the spoilation jury instruction was an abuse of the Trial Court’s discretion. Brookshire Bros., Ltd.  at *48.

Bow Tie Thoughts

The preservation of electronic evidence is a challenge for many attorneys. Litigants cannot preserve “everything” in a company at the first sign of litigation. The trick is preserving what is relevant. This becomes a question on the scope of discovery.

Could the Defendants in this case have copied a half hour before the incident and a half hour after? Sure. Some companies might do that. Others might not. Whether that is reasonable would turn on the facts of the case on whether that data needed to be preserved.

Texas lawyers know a few things about spoliation. First, it is based in evidence, opposed to a cause of action. Second, Judges should not let the facts over data preservation be presented to the jury to avoid any prejudicial effect. If there is an actual issue of spoliation, then the Court must determine the remedy before going to the jury.

Control of Personal Email Accounts & Litigation Holds

Puerto Rico once again has issued a thought provoking eDiscovery opinion. It’s about time we hold a conference there.

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The Court found the Plaintiff had offered sufficient evidence that the Defendant had a duty to preserve the personal email accounts of its former officers. The Court explained the email accounts were within the Defendant’s control because the officers had used the accounts for as along as seven years to manage the company. P.R. Tel. Co. v. San Juan Cable Llc, 2013 U.S. Dist. LEXIS 146081, at *4-5 (D.P.R. Oct. 7, 2013). Since the Defendant likely knew its managing officers were using personal email to conduct business, the duty to preserve included those accounts. Id. 

Sending smsThe Court did not grant the Plaintiff’s motion for adverse inference instructions, because there was no bad faith nor a showing of prejudice. P.R. Tel. Co., at *5.

The Defendant had issued a litigation hold within a month of the lawsuit.

Moreover, it appeared that only three email chains were “lost.” P.R. Tel. Co., at *6. 

While the Plaintiff could show three email chains were missing, it could not offer a clear theory on how it suffered any prejudice. P.R. Tel. Co., at *7.

Judge Bruce J. McGiverin ended the opinion with this legal foreshadowing:

Upon further discovery, more information regarding the extent of spoliation may come to light. Forensic analysis of these three former employees’ personal email accounts and computers may be appropriate to determine whether critical emails have been deleted. Nacco Materials Handling Grp., Inc. v. Lilly Co., 278 F.R.D. 395, 406 (W.D. Tenn. 2011) (“The only way to determine if relevant evidence currently exists or previously existed and was lost destroyed is to conduct a forensic examination to see if such evidence exists.”). At that time, plaintiff may renew its motion for sanctions if circumstances so warrant.

P.R. Tel. Co., at *7.

Bow Tie Thoughts

This case makes me think of one big issue: BYOD.

If an employer knowingly enables an employee to use a personal device for work, there is a duty to preserve what is relevant off of the device in a lawsuit. This could get ugly fast in litigation, as attorneys and experts debate doing targeted collections off of a personal device vs a mirror image.

If a company has Bring Your Own Device policies, they better have litigation plan that includes preserving any relevant information. It might be easier to simply have a work issued smartphone.

As to the personal email account issue, this would raise interesting collection issues. Email messages with eBay alerts, online dating or kid’s soccer games are highly unlikely to be relevant to a lawsuit. A data collection strategy could include targeting messages with work topics, specific individuals, date ranges and other narrowing methodologies. Early Case Assessment or data clustering technology would be very helpful in identifying relevant ESI.

You just need to compel the employee to turn over their passwords.