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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.
Larry Klayman sued six separate journalist defendants for defamation. This case is about Klayman wanting more discovery from the defendants. Specifically, Klayman’s motion is to compel the production of documents and to hire a computer expert. In this case, Klayman has conceded the fact that he is a public figure. So, in order to win in a defamation suit, he must prove by clear and convincing evidence that the journalists published the statements about him with actual malice. Thus, Klayman made this discovery motion to try to obtain “any and all documents, discussions and/or publications that refer or relate in any way to Plaintiff Larry Klayman within the past five years,” as well as several other document requests. Klayman contends this information is relevant to state of mind of the journalists. However, the defendants represent that they have already provided Klayman with all relevant information. Based on this representation, the court denied Klayman’s request to compel document production. Klayman also petitioned for a computer retrieval expert to be hired to go through each defendant’s computer files. Klayman claimed that the defendants had improperly withheld documents. However, the court ruled that the plaintiff must show good cause in order to compel a forensic expert, and here he has failed to do so. The court further stated that his assertions were “conclusory and unpersuasive.” Jessie is a third year student at Seton Hall University School of Law (Class of 2015). She graduated from Rutgers University, New Brunswick in 2012 with a B.A. in philosophy and political science. Want to read more articles like this? Sign up for our post notification newsletter, here.
The court first directed the defendant to produce the file of the plaintiff’s insurance claim in 2007, and needless to say, even in 2014 the defendant still had not produced everything. Over one year later, the court granted the plaintiff’s first motion to compel. When a flood of documents appeared at a deposition in 2011, discovery was reopened and the defendant was sanctioned. Another motion to compel was granted in 2012, and this time it was for the deposition of a representative of the defendant who could testify about the efforts the defendant had taken to respond to discovery requests. Yet another flood of documents appeared, and the representative deposed was unable to describe any of the defendant’s discovery efforts. The plaintiff moved again for sanctions, which were granted in 2013. At that time, the court also granted the plaintiff the costs and legal fees due to the late production of documents. As relevant here, before the court in this motion was the assessment of legal fees and another production request. The defendant did not want to produce more documents because by this time the defendant said the emails were on backup tapes that were purportedly not reasonably accessible because of undue burden or cost. Can you guess what the court thought of that argument? We’ll get to that in a moment. Without delving into specifics, the court painstakingly analyzed the plaintiff’s legal bill for the various motions, filings, etc. and awarded $81,997.60 in attorney’s fees. Some of these costs were attributable to an IT specialist hired by the plaintiff that was to help the attorneys ask proper questions at the defendant’s representative’s deposition so they could ensure protocols were followed during discovery and that sufficient documentation was recovered (and if discovery was delayed because of an honest mistake, the explanation for that could be ascertained). Even though the individual deposed actually had no knowledge of the defendant’s discovery practices, the defendants couldn’t escape paying for the IT specialist’s and attorney preparation time. On top of the nearly $82,000 awarded in legal fees, the defendant said it would cost $200,000 to recover the backup tapes containing emails. While the actual cost is unclear, the defendant was ordered to turn over eight weeks of tapes, at its expense, of the thirteen individuals the plaintiff identified. The judge even left the door open for the the plaintiff to get additional discovery if further exploration is necessary. However, this isn’t the end. Sometimes, a single well-placed footnote can be unbelievably powerful. This case illustrates just that, as the judge cleverly observed the defendant’s conduct as such: [c]onsistent with Hartford’s approach to discovery in this case, it has spent more time and resources challenging two entries totaling 1 hour than the amount requested by the plaintiff for those entries. The court trusts that Hartford’s attorneys will notify their client how much they incurred in attorneys fees on these two entries. So please, take discovery seriously. Samuel is in the Seton Hall University School of Law Class of 2015 pursuing the Intellectual Property concentration. He received his master’s from the Rutgers Graduate School of Biomedical Sciences and became a registered patent agent prior to entering law school. Want to read more articles like this? Sign up for our post notification newsletter, here.
Last summer the District Court for the Northern District of Illinois decided a case that allows your old boss into your home. Well . . . not literally. Magistrate Judge Geraldine Soat Brown granted a motion to compel discovery for a plaintiff-employer over objection of defendant-employee. The plaintiff, Network Cargo Systems U.S.A., Inc. claimed that its former employee, Caroline Pappas, stole proprietary technology and destroyed other electronic data upon termination. Plaintiff denied the request, and consented to limited discovery. After expedited discovery took place, plaintiff returned to the court requesting that an independent technology investigator be granted access to all of Ms. Pappas’s electronic devices. The court ordered defendant’s counsel to “determine what electronic devices [Pappas] used between 4/1/13 [2 months before termination] and 2/14/14 [the hearing date].” Network Cargo Sys. U.S.A., Inc. v. Pappas, No. 2014 WL 1856773 *2 (N.D. Ill. May 7, 2014). A week later, counsel indicated six devices: two personal computers, an iPad, an iPhone, a Blackberry (which was returned to Network), and a work laptop provided by defendant’s new employer. After the court’s order, the parties agreed to split the cost of imaging three personal devices: the personal computers and the iPad. Once the imaging was performed by the independent consultant, it was determined that three previously undisclosed flash drives had been connected to defendant’s personal computers during the relevant time frame. Id. The plaintiff demanded immediate access to those flash drives, as they may contain relevant evidence. The court agreed, even though the initial connection of the flash drives to the personal computers happened months after the employee was terminated from Network. The court insisted that plaintiff pay the full cost of imaging the additional devices, though, stating “[t]he likelihood that Pappas was using these flash drives to transfer Network’s confidential information would seem to become more remote with the passage of time.” Id. at *3. Defendant Pappas was forced to turn over flash drives and personal computers. While the target of the investigation is possible stolen proprietary material, through forensic imaging the independent consultant had access to each and every file on the device. Perhaps Pappas can take solace in the fact that her iPhone wasn’t subject to discovery, as the device likely contains more sensitive data than just high scores to Candy Crush. 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.
Communication is key to any joint status report! Parties should not risk annoying the court by refusing to withdraw a motion when both sides are essentially in agreement. The court will find a protective order unnecessary when the defendants completely understand their preservation duties, acknowledge their duties, and have made substantial efforts to preserve discoverable evidence. Under such circumstances, the plaintiff or moving party will both lose the motion and risk wasting the court’s valued time. In McDaniel v. Loyola University Medical Center, McDaniel, the plaintiff, filed a motion seeking a document preservation order after learning that the Loyola University Medical Center, the defendant, planned to change its e-mail system provider. The defendant was transitioning from GroupWise to Microsoft Office, and the plaintiff feared that relevant e-mails would be erased or lost. In response, the court directed the parties to confer in an effort to resolve the preservation issue in a mutually agreeable way. In the submitted joint status report, the defendant demonstrated its belief that it had adequately assured the plaintiff of his spoliation concerns; however the plaintiff was still unwilling to withdraw the motion. As a starting proposition, a party has a duty to preserve evidence if it reasonably knew or could reasonably foresee was material to a potential legal action. Almost a year before the plaintiff filed his initial complaint in this case, the defendant issued litigation holds and constant reminders to 71 employees who may have information relevant to the litigation. Furthermore, the defendant took similar precautions with the additional 20 custodians identified by the plaintiff. Despite the defendant continually recognizing that it was under an obligation to preserve evidence, the plaintiff needlessly insisted that a preservation order was a necessary additional precaution. The court disagreed with the plaintiff and held that a preservation order was unnecessary. When deciding whether to enter the preservation order, the court considered (1) whether the plaintiff demonstrated that the defendant would destroy evidence, (2) whether the plaintiff would suffer irreparable harm without a preservation order, and (3) the burden that likely would result from granting the protective order. Here, the defendant was fully apprised of the scope and gravity of its preservation duties, and the plaintiff failed to demonstrate that the defendant would destroy evidence without a preservation order. The court found that a protective order would be superfluous and needlessly burdensome in this case. Moreover, the court noted in its decision that the parties appeared to be talking past each other and, in actuality, were in complete agreement regarding the defendant’s preservation duties. Lawyers must avoid submitting superfluous and needlessly burdensome motions to the court. Do not waste the court’s valuable time with unnecessary motions on issues that have already been mutually agreed on by both parties. The last thing any lawyer should want to do is to get on a judge’s bad side during the discovery stage of the litigation. 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. Want to read more articles like this? Sign up for our post notification newsletter, here.
This case provides an important lesson for any person involved in a lawsuit involving text messages as evidence. Here, a group of employees was suing their employer for discrimination under Title VII. When the discovery process began, the defendants requested a number of text messages relating to the conduct of the employees during the relevant time period of the discrimination. These text messages were permitted to be discoverable by the defendant and the plaintiff was ordered to turn over the relevant text messages. The plaintiffs’ lawyer then gave the plaintiffs instructions to preserve all data relevant to the case; otherwise they could face sanctions by the court, which could negatively impact their suit. Spoliation is the legal term for deleting or destroying information sought by the opposing party. This is precisely what occurred here. Apparently the plaintiffs felt that if they simply deleted a portion of the requested text messages that the defendant would have no way to access that information and thus the problem would be solved; if there even was a problem to begin with. When the defendant discovered that these texts had not been turned over with the rest of the discovery they inquired about their whereabouts. The plaintiffs responded that the texts had been deleted. Obviously perturbed, the defendant then subpoenaed the mobile carrier, T-Mobile, and recovered the deleted texts. However, now the plaintiffs had a problem; they had deliberately attempted to conceal and destroy relevant information. The defendant then filed a motion to dismiss based on the actions of the plaintiff. The court granted the motion in part but denied the dismissal of all charges. Though, the court did impose sanctions upon the plaintiff, which carried the potential to seriously harm their case even if everything else went well. The simple lesson here is that you should never conceal, delete, or destroy any relevant information sought by the opposing party. Ultimately the content of the text messages remains unimportant in light of the plaintiffs’ spoliation. The plaintiffs should have followed their lawyer’s instruction to preserve the information. Had they turned over the information, their lawyer would have been able to combat the text messages in court in front of the jury. However, due to their actions, they were sanctioned and essentially handcuffed their counselor from undercutting any information contained within the text messages. Spoliation is never the answer even if you are required to turn over information that does not weigh in your favor. These plaintiffs learned the hard way; do not make the same mistake and follow your lawyer’s instructions. A.S. Mitchell received his B.A. in Political Science from the University of Central Florida (2008). He will receive his J.D. from Seton Hall University School of Law in 2015. Want to read more articles like this? Sign up for our post notification newsletter, here.
In May 2014, Hon. Janet Bond Arterton, U.S.D.J. for the District of Connecticut ruled that sanctions were not appropriate in a case involving the conversion of a security video’s native format. Plaintiff Robert Crawford brought a motion for spoliation sanctions—including an adverse-inference instruction and monetary sanctions—against the Defendant City of New London for an alleged failure to preserve a hard drive containing video of Crawford’s arrest. Plaintiff, whose underlying claim involves excessive force issues, suggested that the original format of a security video may have been capable of being enhanced, and as such, Defendants had a duty to preserve that original version, and turn it over for discovery. Judge Arterton disagreed. In examining whether sanctions were appropriate, the court first set about defining the parameters of spoliation. The court noted “[s]poliation is the destruction or significant alteration of evidence, or the failure to preserve property for another’s use as evidence in pending or reasonably foreseeable litigation.” Crawford v. City of New London, 2014 WL 2168430, *2 (D. Conn. May 23, 2014) (quoting West v. Goodyear Tire & Rubber, Co., 167 F.3d 776, 779 (2d Cir. 1999)). Later, the court analyzed the adverse-inference charge, and articulated “[a] party seeking an adverse inference instruction based on the destruction of evidence 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.” Id. (quoting Chin v. Port. Auth. of N.Y. & N.J., 685 F.3d 135, 162 (2d Cir. 2012)). Here, the court noted that Defendants’ duty to preserve stemmed from a hold letter received pursuant to the Freedom of Information Act on June 24—nearly five months after the incident took place, and more than four months after New London’s retention policy allows for transferring of data to portable storage. As such, while the Defendants certainly had a duty to preserve, there was no specific need for multiple copies of duplicative information. New London hadn’t breached the preservation duty. But what about “Significant Alteration?” Spoliation isn’t just about destruction. Plaintiffs argued that in converting the video evidence from the format present on the hard drive to the portable storage versions on DVD, Defendants sacrificed the integrity of metadata, or of the files themselves such that they could no longer be enhanced for use in trial presentation. This novel argument suggested that were enhanced versions of the video available, perhaps the jury could see that Crawford’s arrest on February 4, 2010, was enacted using excessive force. The court was not persuaded by this argument. Testimony from the City of New London’s Chief Information Officer indicated that the conversion to DVD was lossless, in that the new format preserved the video in every material way. Absent proof to the alternative, the moving party was unable to demonstrate “that the destroyed [or significantly altered] evidence was relevant . . . ” under the standards set forth in Federal Rule of Evidence 401. Defendants were prepared for litigation, and they reasonably preserved all necessary data responsive to discovery request. Defendants’ retention policy for the original hard drive housing security footage is acceptable, and preserving the data on portable media after formatting the drive is an added precaution going well-beyond the standard of care. Crawford is fortunate that Judge Arterton didn’t force Plaintiffs to cover the costs of responding to the motion—if this author was on the bench, he might have. 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.
It is common for an employer to supply company-owned laptop computers to its employees for doing their work. It is also not uncommon for such an employee to be involved in litigation with a third party where the company-owned computers used by the employee are subject to potential electronic discovery. Knowledge or expectation of such litigation by the employee gives rise to a duty to preserve. In many situations, the employee ends up resigning from the employment and having to return the company laptop computer to the employer. In this whole sequence of events, what should the employee do as to the laptop computer in order to satisfy his/her duty to preserve and thus defeat a motion for preservation order by his/her adversarial? The case of Cognate Bioservices v. Smith sheds some light onto this issue. In Cognate Bioservices v. Smith, Cognate sued Smith for violations of the Computer Fraud Abuses Act and misappropriation of products and trade Secret in the Northern Division of the District Court for the District of Maryland. Smith was previously the CEO of Cognate and had access to trade secrets stored on Cognate servers as well as in a laptop computer provided to Smith by Cognate. Smith then resigned and became the head of the US operation of an Israeli competitor of Cognate, MacroCure. Smith, however, did not give the laptop back to Cognate until more than two years after his termination with Cognate. During that time, he had accessed the Cognate server as well as the laptop computer still in his hands, giving rise to the suspicion by Cognate that he had downloaded trade secrets from Cognate. For his work with MacroCure, Smith bought a second laptop (the Dell laptop) and was reimbursed for the purchase price by MacroCure. Soon after the start of this litigation in the federal court, Smith resigned from MacroCure. Cognate moved the Court to issue a preservation order as to the Dell laptop and Smith objected. This federal action was filed on June 19, 2013. Smith gave Cognate notice that the Dell laptop he used in connection with his employment at MacroCure would be returned after his resignation. Smith then returned the Dell laptop to MacroCure in late July or early August 2013. The motion for preservation order was filed August 15, 2013. After the filing of the motion, Smith contacted the person to whom he returned the Dell laptop, Idan Peer, and requested that he not dispose or delete any of the files on the computer. In addition, Smith’s counsel provided Cognate with Peer’s mailing address. Cognate argue that the preservation order is still necessary because, by returning the Dell laptop, Smith has demonstrated the urgent need for an order preserving evidence and he also appears to have the practical ability to obtain the return of that evidence. The court disagreed and held that Smith compiled with his duty to preserve material evidence with respect to the Dell laptop. Court-issued preservation order is inappropriate when such duty is met and there is no evidence showing risk of spoliation of evidence. The court is more willing to rely on the duty to preserve to regulate conduct without resorting to preservation orders. This is regardless of whether there is undue burden for Smith to obtain a return of the Dell laptop. Thus, if an employee gets into a similar situation, to avoid a preservation order, make sure that notice about the return of the employer-provided computer is given to the adversarial, that the person receiving the computer is notified as to preserving the data on the computer, and that the information about the custody of the computer is given to the adversarial. Gang Chen is a Senior Segment Manager in the Intellectual Property Business Group of Alcatel-Lucent, and a fourth-year evening student at Seton Hall University School of Law focusing on Patent Law. Want to read more articles like this? Sign up for our post notification newsletter, here.
In Freedman v. Weatherford Int’l, Ltd., Weatherford hired law firm Latham & Watkins to review allegations of security fraud made to Weatherford’s whistleblower hotline. Latham found no evidence of fraud. However, a second investigation was conducted by Davis Polk & Wardwell, LLP. Plaintiff’s alleged that Davis’s second investigation reveal that Latham actually discovered evidence of wrongdoing. Plaintiffs sought reports comparing the results of Weatherford’s production with search terms and productions related to the two investigations and search terms proposed by the plaintiff, in order to test the adequacy and reasonableness of Weatherford’s initial production. Weatherford objected, noting that Plaintiff had no legal basis for its request and its requested production was “hugely burdensome.” The District Court for the Southern District of New York held that the plaintiff’s request was “outside the bounds of Rule 26 of the Federal Rules of Civil Procedure . . . [because they did] . . . not proffer an adequate factual basis for their belief that the production [was] deficient.” Plaintiff’s claim that Weatherford’s production was deficient because 85% of the pages produced related to different case was too conclusory. Furthermore, the Court was not surprised that Weatherford used dramatically different search terms here compared to search terms used in the two investigations and a related action, because of the differing class periods and varying false statements. The court also addresses arguments related to Subject matter waiver and the crime-fraud exception of the attorney-client privilege, but these arguments were not related to e-discovery. Aaron Cohen, a Seton Hall University School of Law student (Class of 2015), focused his studies in the area of Family Law. He participated in the Seton Hall Center for Social Justice’s Family Law Clinic. After graduation, he will clerk for a judge in the Superior Court of New Jersey, Family Division. Prior to law school, he was a 2011 cum laude graduate of The George Washington University Columbian College of Arts and Sciences, where he earned a B.A. in Psychology. Want to read more articles like this? Sign up for our post notification newsletter, here.
This dispute stems from Plaintiff Linda Riley’s slip and fall at a Marriott hotel in Hawaii (her husband, James, is another named plaintiff). As a result of this fall, in simple terms, Riley broke her right leg and sustained permanent nerve damage including sensory motor loss and weakness in her right foot. Riley contends Marriott was negligent for failing to remove accumulated water (it had been raining that day), provide a non-slip surface, or provide warning signs. The entire accident was recorded on Marriott’s security cameras, and according to the loss prevention manager, the footage is maintained for 30 days. However, during discovery, instead of being provided with several hours of footage, Riley was only provided with about 7 minutes; the rest was destroyed. The footage released began about one minute before Riley’s accident, and ended before Riley was even lifted off of the ground! Plaintiff rightfully believed she was prejudiced because: (1) she is unable to determine how much water was removed from the location and how long it took hotel staff to remove it, and (2) that the loss prevention manager’s testimony regarding the footage cannot be meaningfully challenged because the footage was gone. This recording was apparently turned over to the Marriott’s liability insurance carrier, but neither Marriott’s investigation into its destruction (if one occurred) nor the results of any such investigation were ever disclosed. Even maintenance logs—that might have also denoted any water that was removed from the floor or the placement of any signs—were also allegedly destroyed. From this, the court “easily” found Marriott had a duty to preserve both the sweep logs and the video footage from the day of the accident. Further, the court recognized Marriott’s failure to offer any justification for its failure to preserve the evidence. For these actions, the court found “at a minimum, gross negligence.” The question then turned to imposing sanctions. Fortunately for Marriott, their answer was not stricken. Nonetheless, their failure to preserve evidence still resulted in an adverse inference instruction regarding the video footage, or lack thereof. This means the absence of a recording can, at trial, corroborate Plaintiffs’ statements that there were no warning signs at the time of the accident and that water had also accumulated on the floor. Of note here, the jury would not be required to make such an inference. However, Marriott might not be eager to take that chance. Samuel is in the Seton Hall University School of Law Class of 2015 pursuing the Intellectual Property concentration. He received his master’s from the Rutgers Graduate School of Biomedical Sciences and became a registered patent agent prior to entering law school. Want to read more articles like this? Sign up for our post notification newsletter, here.