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In this breach of contract lawsuit, the plaintiffs alleged that the defendant refused to pay a debt of approximately $380,000 and failed to supply groceries to the plaintiffs’ market. The market was forced to closed down and the plaintiffs disposed of every paper record they possessed for the market, including general ledgers, invoices, sales reports, cancelled checks, company bills, time clock reports, trial balances, balance sheets, and income statements. The plaintiffs also threw out the only computer the market used and they did not retain any of the information contained on that computer. After the commencement of litigation, the defendant filed a motion for sanctions based on spoliation of evidence related to the financial records destroyed by the plaintiffs. The court determined that an adverse inference sanction was warranted based on the plaintiffs’ intentional and bad faith destruction of evidence, and that it would entertain arguments relating to monetary sanctions after the defendant specifically delineated the time and money it spent addressing the discovery and spoliation issues.Continue Reading
In the mood for a judicial tongue-lashing? All you have to do is disobey a court order, destroy evidence and lie under oath. By means of factual background, Plaintiff Pacific Packaging is a distributor of packaging products. Defendants James Barenboim, Andrew Slater, Steven Slater, and David Guild were salesmen at Pacific Packaging until they each resigned on October 15, 2009. After leaving Pacific Packaging, the defendants formed Packaging Partners and began operating the very next day, October 16, 2009. Sandra Zeraschi was a sales correspondent at Pacific Packaging until she resigned and went to work with Defendants at Packaging Partners the day they began operating. On November 4, 2009, Pacific Packaging filed a complaint and sought an order for expedited discovery and for the preservation of evidence, sensing something fishy about their new competitor. Judge Inge allowed the plaintiff’s motion for expedited discovery and ordered the production of several documents, certain depositions, preservation of relevant ESI, and within five days, the provision of any and all computers, laptops, removable storage and other devices used in connection with the Defendant’s businesses to plaintiff’s counsel and experts for examination and copying.Continue Reading
Prior to this case, Quintero Community Association (hereinafter “QCA”) sued Hillcrest Bank (hereinafter “HB”) under a variety of legal theories after plaintiffs sustained a loss in their investment. This is the only claim that remains. It is a claim of conversion, meaning that QCA is alleging that HB improperly took control of QCA’s property. The issue is that during an investigation into HB’s lending practices by the FDIC, an HB employee made a copy of all HB’s loan records on a portable harddrive. This employee also made a portable harddrive copy for HB’s own records. Later, the president of HB instructed the same employee to make yet another copy for HB’s attorney. QCA claims that HB violated its rights by making copies of its loan records. HB moved for summary judgment, claiming that QCA has no property interest in its records and that even if it did; HB’s copying of the records did not deny QCA its right of possession. In order to prevail on a conversion claim, plaintiff must prove that, “(1) it possesses a right in the goods or personal chattels; and (2) that the defendants exercised control over the goods or chattel to the exclusion of the plaintiff's right.” The court held that QCA does not have a property interest in HB’s records. The court reasoned that with intangible records, the plaintiff must have a present property interest in them, but here QCA merely has a right to privacy and no present property interest. The court further ruled that HB never exercised exclusive possession over the bank records. Thus, even if QCA held a property interest in the records, HB’s actions do not constitute conversion because HB’s actions never interfered with QCA’s alleged rights to the documents. HB never asserted control over the documents in a way that excluded QCA from accessing them. QCA also argued that it is entitled to an adverse inference based on defendant’s alleged spoliation and in the alternative that it should be granted leave to amend its complaint to include a spoliation claim. The basis for the adverse inference claim is that HB allegedly encrypted the portable hard drives with the loan information in order to prevent QCA from accessing them. “[A] presumption of spoliation only arises when there is evidence of “intentional destruction indicating a desire to suppress the truth.” The court found that QCA did not meet its burden in demonstrating intentional destruction. Further, the court denied plaintiff’s request for leave to amend because it was not filed until two months after discovery closed, it would require further discovery and fees to be incurred by defendant, and the amendment would be futile.
Plaintiff Steve Pick filed suit against Defendant City of Remsen (and other defendants) alleging, among other claims, violations of constitutional rights pursuant to 42 U.S.C. § 1983. Pick served the city with a discovery request. The city then produced 440 pages of documents, including 183 pages of e-mails. Some pages contained more than one email. The defendant’s inadvertently disclosed an email that was originally sent to six privileged recipients. Within thirty-four minutes of discovering that the email had been inadvertently produced, defense counsel contacted the plaintiff’s counsel. Defense counsel explained that the email was mistakenly produced and was protected by attorney-client privilege. Defense counsel asked that the email be destroyed. The plaintiff’s counsel refused. Defendants’ filed a motion request that the court order the email’s destruction as an inadvertently produced privileged document. Applying the middle-of-the-road approach, the Magistrate Judge held Defendants had not waived attorney-client privilege by the inadvertent disclosure, and ordered the email to be destroyed. Plaintiff appealed.Continue Reading
This case involves an employment discrimination claim that the plaintiff, Anthony Smith, levied against his former employer, Hillshire Brands, under the Family Medical Leave Act (FMLA). The plaintiff was an employee of Hillshire Brands and in a letter dated August of 2013, he was given time off of work under the FMLA until February of 2014, but Smith’s employment was terminated in September of 2013. During the course of this suit, both parties became engaged in various discovery disputes, one of which is the subject of this order dated June 20, 2014. The defendant served the plaintiff with documents requests, which would show the plaintiff’s activity on social media websites. The defendant’s request was, Request No. 15: All documents constituting or relating in any way to any posting, blog, or other statement you made on or through any social networking website, including but not limited to Facebook.com, MySpace.com, Twitter.com, Orkut.com, that references or mentions in any way Hillshire and/or the matters referenced in your Complaint. Request No. 18: Electronic copies of your complete profile on Facebook, MySpace, and Twitter (including all updates, changes, or modifications to your profile) and all status updates, messages, wall comments, causes joined, groups joined, activity streams, blog entries, details, blurbs, and comments for the period from January 1, 2013, to present. To the extent electronic copies are not available, please provide these documents in hard copy form. In response to these document requests, the plaintiff refused to provide his complete profile on social media websites because most of the information had no relevance to the defendant’s claims or defenses in this case. So, the defense filed a motion to compel and stated the social media profile could offer a diary of the plaintiff’s activities, thoughts, mental condition, and actions, which relate to the plaintiff’s claims for emotional distress. Also, the defendant claims the information stored in the plaintiff’s profile may provide insight as to whether the plaintiff abused his FMLA leave, which was cited as the reason for his termination. The legal standard for discovery requires that any information sought to be relevant. This seems ambiguous, but luckily, the Federal Rules of Evidence provide further details regarding what is relevant. Rule 26 requires any document requests to be tailored so that it appears to be reasonably calculated to lead to the discovery of admissible evidence. The court here states that allowing the defendant unfettered access to the social media profiles of the plaintiff would allow the defense to case “too wide a net for relevant information.” The court here cites another case, Ogden v. All-Star Career School, 2014 WL 1646934, at *4 (D. Kan. 2014), which stated, Ordering plaintiff to permit access to or produce complete copies of his social networking accounts would permit defendant to cast too wide a net and sanction an inquiry into scores of quasi-personal information that would be irrelevant and non-discoverable. Defendant is no more entitled to such unfettered access to plaintiff’s personal email and social networking communications than it is to rummage through the desk drawers and closets in plaintiff's home. In addition to the problem of casting “too wide a net,” the court also stated that social network activity might not be as relevant to an emotional distress claim as one might think. The reason is that a severely depressed person may have a good day or several good days and choose to post about those days and avoid posting about moods more reflective of his or her actual emotional state. As a result of this analysis the court granted the defendant’s document request as it relates to only information that references the plaintiff’s emotional state and potential reasons for that emotional state. Daniel received a B.A. in Criminology and Criminal Justice from The University of Maryland. He will receive his J.D. from Seton Hall University School of Law in 2015. Presently Daniel is serving as counsel in the Juvenile Justice Clinic. After graduation Daniel will clerk for a trial judge in the Superior Court of New Jersey. Want to read more articles like this? Sign up for our post notification newsletter, here
In April 2014, the Honorable Dominic J. Squatrito from the District Court for the District of Connecticut handed down a decision that dismissed all but one of plaintiff Ray Tedeschi’s claims against defendant Kason Credit Corporation (“KCC”), a collections agency that wrongfully targeted Tedeschi based on a telephone mix-up. On Both parties moved for summary judgment on claims of invasion of privacy and intentional infliction of emotional distress. Tedeschi’s claims were largely unsupportable – not the least of which being his assertion that Kason Credit Corporation should face an evidentiary adverse inference instruction based on spoliation of electronic evidence. In sum and substance, Tedeschi claimed that KCC was harassing Tedeschi with nearly twenty phone calls over the course of a yearlong period, seeking to collect a debt from a consumer who listed Tedeschi’s new home phone number as a means of contact. Tedeschi continually informed KCC that he was not the debtor, and asked that KCC stop calling. Tedeschi v. Kason Credit Corp., No. 3:10CV00612 DJS, 2014 WL 1491173 *2-3 (D. Conn. Apr. 15, 2014). KCC, on the other hand, denied the volume of calls asserted by the plaintiff, and instead asserted that only two phone calls took place over that same period of time. Id. KCC further alleged that the behavior met the standards of the Fair Debt Collection Practices Act, 15. U.S.C. § 1692, and was not actionable. Recognizing a dispute of fact, the Court left this claim intact. However, it’s unlikely that Tedeschi’s claim will pass muster with any jury. Here’s why: When deposing the CEO of KCC, Karl Dudek, plaintiff learned that a “fact sheet” was generated for Tedeschi’s matter that tracked calls from KCC employees to Tedeschi’s phone number. In response to an inquiry, Dudek indicated that the fact sheet “has probably been printed out 20 times.” Id. at *16. Tedeschi argued that the print-out produced at the time of the deposition did not satisfy discovery requirements, since the print-out was dated December 2010, and that the original print-out must have been destroyed. KCC was able to demonstrate that the print-out was unchanged in substance or form from the first request date in June 2010 to the produced copy in December 2010. Relying on Residential Funding Corp. v. DeGeorge Financial Corp., 306 F.3d 99 (2d Cir. 2002), the court outlined the criteria for an adverse inference: the moving party must demonstrate that the party having control over the evidence had a duty to preserve it at the time of destruction, that the evidence was destroyed with a culpable state of mind, and that the destroyed evidence would support the moving party’s claim or defense. Judge Squatrito found that KCC did not have a duty to preserve print-outs, since the print-outs “merely duplicate ‘original evidence.’” Id. at *17. Since Tedeschi was unable to support a claim that the electronic data was destroyed with any culpable state of mind, the claim necessarily fails. See Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 218 (S.D.N.Y. 2003) (“A party . . . must retain all relevant documents[,] but not multiple identical copies[,] in existence at the time the duty to preserve attaches, and any relevant documents created thereafter.”). Plaintiff’s claims against KCC were doomed from the start, and Tedeschi would have been smart to see the writing on the wall – if not the words on the print-outs. Kevin received a B.S. in Political Science from the University of Scranton (2009), and will receive his J.D. from Seton Hall University School of Law in 2015. Prior to joining the Seton Hall community, Kevin worked as an eDiscovery professional at two large “white-shoe” law firms in Manhattan. Want to read more articles like this? Sign up for our post notification newsletter, here.
In the Sixth Circuit, a party seeking sanctions for the destruction of evidence must show three things: (1) the party having control over the evidence had an obligation to preserve it at the time it was destroyed; (2) the evidence was destroyed with a "culpable state of mind"; and (3) the destroyed evidence was relevant to the party's claim or defense such that a reasonable trier of fact could find that it would support that claim or defense. You can find countless articles that outline when the obligation to preserve documents occurs. The Federal Rules of Civil Procedure state, that whenever it can be “reasonably anticipated” that an action will be filed, all parties have a duty to preserve potentially relevant evidence. You can also find numerous articles about the third fact, an individual’s claim that the requested destroyed electronic discovery is relevant to their cause of action or defense. However, this article is about the second factor, the evidence was destroyed with a "culpable state of mind.” The Model Penal Code 2.02(2) establishes that there a four culpable states of mind: purposely, knowingly, recklessly, and negligently. At common law there are more than just the four Model Penal Code culpable states (wickedly, purposely, intentionally, willfully, knowingly, recklessly, maliciously, negligently, scienter). A person acts purposely with respect to a material element of an offense if it is his conscious object to engage in conduct of that nature or to cause such a result; and he is aware of the existence of such circumstances or he believes or hopes that they exist. A person acts knowingly if he is aware that his conduct; and he is aware that it is practically certain that his conduct will cause such a result. A person acts recklessly when they have a conscious disregard of unjustifiable and substantial risk. Finally, a person acts negligently when a person should have known better then to take that substantial risk that the material element exists or will result from his conduct. The disregard of the risk must be a gross deviation from the standard of care that a reasonable person would have followed. The court in Siggers recognized that "failures to produce relevant evidence fall 'along a continuum of fault—ranging from innocence through the degrees of negligence to intentionality . . . .'" And, "'[o]nce the duty to preserve attaches, any destruction of [evidence] is, at a minimum, negligent.'” This case is an example of one area of the law crossing over into another. The Sixth Circuit incorporated aspects of criminal law into the determination of sanctions. However, the transition is appropriate. A person must purposely, knowingly, recklessly, or negligently destroy electronic documents and evidence to be guilty and worthy of sanctions. Here, the court held that sanctions were not appropriate in this situation because “Siggers failed to demonstrate Campbell’s ‘culpable state of mind’ in destroying the evidence and show that responsive documents existed and were among the destroyed. The court reasoned that although Campbell's discovery failures reflect negatively on her in regards to Siggers' motion, they do not, when weighed against the above considerations, merit the imposition of sanctions. Instead of sanctions, the court offered Siggers the opportunity for redress by questioning Campbell at trial about her failure to timely impose a litigation hold and about the other matters related to his assertion that she must have had relevant e-mail communications that no longer exist. If courts are following such a policy it is important that individuals understand the possible (criminal law based) consequences of their actions. This case illustrates that the importance of proper electronic data management and hold policies in order to avoid potential penalties and sanctions. Timothy received his B.A. from Rutgers University in 2011. He began his post-college life working in Trenton, New Jersey at a lobbying and non-profit management organization before attending law school in the fall of 2012. He will receive his J.D. from Seton Hall University School of Law in 2015. Timothy has had a diverse set of experiences during his time in law school and has found his calling in Tax Law. Want to read more articles like this? Sign up for our post notification newsletter, here.
The sanction of an adverse inference is appropriate, but not mandatory, in cases involving the negligent destruction of evidence. The court will determine on a case-by-case basis whether sanctions are appropriate where a party negligently destroyed evidence. However, the court is more likely to impose sanctions when a discovery obligation is breached through bad faith or gross negligence rather than ordinary negligence. In Schulman v. Saloon Beverage, Inc., Schulman (the “Plaintiff”) sued Saloon Beverage, Inc. (the “Defendant”) under Vermont’s Dram Shop Act for allegedly serving Mark Clarke, a drunken patron, four Sierra Nevada draft beers approximately ten minutes before he collided head on with the Plaintiff’s car. The Defendant contended that Clarke was not at its saloon on the night of the accident. The only documentary evidence available to prove Clarke was at the saloon were the records of checks because Clarke allegedly paid in cash. The Plaintiff filed a Rule 37 motion seeking sanctions for failing to preserve or permitting the destruction of the checks. The Plaintiff alleged that the Defendant failed to produce all of the check receipts for the night in question. After the Defendant produced printed copies of all the check receipts, the Plaintiff then alleged that the Defendant destroyed or altered the evidence because the check receipts contradicted other evidence which showed that Clarke was at the saloon. The Plaintiff wanted to prove that the Defendant altered the receipts by analyzing the electronically stored information (“ESI”) in original format; however, the computers were not preserved when the saloon went out of business. The issue in this case concerned whether the Plaintiff established its spoliation claim against the Defendant for destroying the ESI. A prerequisite to a spoliation claim is that the sought-after evidence actually existed and was destroyed. In order to obtain an adverse inference instruction regarding the loss or destruction of evidence, a party must establish: (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. In Schuman, the Plaintiff established that the Defendant negligently destroyed the ESI. There was no dispute that the check receipts were relevant because they involved the disputed issue of whether Clarke was at the saloon. The court found that the Defendant either knew or should have known that the ESI would be relevant to litigation because the Defendant was on notice when the Plaintiff made a claim in the Defendant’s bankruptcy proceedings. Furthermore, the court concluded that the ESI was destroyed through ordinary negligence, a culpable state of mind. Although the Plaintiff established that the Defendant negligently destroyed the ESI, the court still held that an adverse inference instruction was not appropriate because the Plaintiff’s suggestion of prejudice was based on conjecture. Instead of imposing the sanction, the court merely held that evidence of the destruction of the ESI may be admissible at trial. The sanction of an adverse inference is not mandatory in cases involving the negligent destruction of evidence. The court has the discretion to determine whether the sanction is appropriate where a party negligently destroys evidence on a case-by-case approach. A party seeking an adverse inference instruction should attempt to bolster its claim by establishing that the other party breached a discovery obligation through bad faith or gross negligence. Gary Discovery received a B.S. in Business Administration, with a concentration in Finance from the Bartley School of Business at Villanova University. He will receive his J.D. from Seton Hall University School of Law in 2015. After graduation, Gary will clerk for a presiding civil judge in the Superior Court of New Jersey.
eDiscovery experts gathered at the 12th Annual Advanced eDiscovery Institute in Washington, D.C. to discuss the hottest topics in eDiscovery. The two-day event, hosted by Georgetown Law, took place on November 19th and 20th, just 10 days before the new Federal Rules of Civil Procedure will go into effect. The event launched with a keynote speech from Christopher Surdak, the renowned author of Data Crush which won GetAbstract's International Book of the Year Award in 2014. Mr. Surdak also served as a panelist in several programs following his keynote address, in which the hottest topic appeared to be the new Federal Rules of Civil Procedure and their possible implications in the world of eDiscovery. While some seemed to be worried about the effects of the new rules, most were hopeful that they will increase efficiency and cooperation among parties throughout the discovery process, especially during meet and confer efforts. The Honorable Judge Mark Coulson of Maryland expressed that he hoped to see the new rules be “used as tools and not weapons,” and the Honorable J. Michelle Childs noted that the new rules will not have a drastic effect in areas where parties are already open to cooperating and communicating honestly with one another. Another hot topic was Native Production. At a program that got heated quickly, panelists passionately debated the pros and cons of providing documents in native form. Attorney, Craig D. Ball, argued that the eDiscovery process is backwards and that all documents should be provided in native form to increase cost efficiency and minimize room for error. Attorney, David J. Kessler rebutted, emphasizing that opposing counsel cannot be trusted to provide adequate security for the native documents once they are turned over. The Honorable Paul S. Grewel, who seemed highly amused by the debate, joked that he “can’t wait to write an opinion on this.” Overall, the presentations were well thought out, intriguing and enlightening. We thank Tiffany Joly, her fine staff, and Georgetown Law for inviting eLessons Learned (eLLblog.com) to cover the program. It will be interesting to see how the new Federal Rules of Civil Procedure shape the eDiscovery process and we look forward to hearing further discussion of their effects, and other burgeoning eDiscovery issues, at next year’s Annual Advanced eDiscovery Institute.
When you think about making a copy, you may think of copying and pasting a document into a thumb drive or a folder in your documents. You might also think about scanning a document and saving that copy as a PDF. However, the question in many cases has become what is the price of that copy, and is it a cost that can be recovered. In the case of In Re Text Messaging Antitrust Litigation, the court addressed this very vague and unsettled question. The court did so by accepting the rule previously set forth in Race Tires Am., Inc. v. Hoosier Racing Tire Corp., which basely states the following: The cost of making an electronic copy may be recovered, but costs that are unnecessary to making the actual copy will not be recovered. In other words, you may not recover for any extra enhancements made to ESI; however, you may recover any costs associated with the basic copy of the information. Why is this frustrating? Because technology presents numerous standard features which streamline and lower the cost of discovery that are deemed unnecessary enhancements under this rule. This case presents a perfect example of an enhancement that is deemed unnecessary in regards to making copies of electronic data. The technology is called optical character recognition (OCR), which allows a computer to recognize text so that it may be copied, pasted, and searched. The defendants assert that OCR is a necessary part of copying ESI in order to perform basic interactions with an electronic document (i.e., copying and pasting from the ESI copies). Most individuals assume that the ability to copy and paste data from an electronic document is standard; and as such, it logically follows that this would be a necessary part of making an electronic copy. However, here, the court deemed that OCR is not a necessary part of making copies. Under this framework, even the commonplace technological advancements such as providing the ability to copy and paste from a copied electronic document are not seen as a necessary cost. Therefore, the decision to utilize such technology is done on producing party’s own dime. In this case, the court cites Race Tires again stating, “gathering, preserving, processing, searching, culling, and extracting ESI simply do not amount to `making copies.'" They further explained that only scanning and file format conversion could be considered under the small umbrella of “making copies.” Further, anything that can be deemed “processing" is also not seen as part of “making copies”. The court even expands on this to say that even if the processing was “essential” to making an electronic copy “comprehensive and intelligible” the services of processing the data are not included in making copies, and therefore, will not be recoverable. The Court in this case does not specifically determine the award of costs, but rather directs the parties to resubmit a budget in compliance with these rules. However, in the often cited Race Tires case, the court basically limited the awardable costs to only the scanning of hard copies, the conversion of files to appropriate formats, and the transfer of VHS tapes to DVDs. Victoria O’Connor Blazeski (formerly Victoria L. O’Connor) received her B.S. form Stevens Institute of Technology, and she will receive her J.D. from Seton Hall University School of Law in 2015. Prior to law school, she worked as an account manager in the Corporate Tax Provision department of Thomson Reuters, Tax & Accounting. Victoria is a former D3 college basketball player, and she has an interest in Tax Law and Civil Litigation. After graduating, she will clerk for the Hon. Joseph M. Andresini, J.T.C. in the Tax Courts of New Jersey. Want to read more articles like this? Sign up for our post notification newsletter, here.  674 F3d 158 (3d Cir. 2012).