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In W Holding Co., Inc. v. Chartis Ins. Co. of Puerto Rico, the receiver of Westernbank, FDIC-R brought action under the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) against the banks’ directors and officers (D & O’s) for gross negligence, breach of fiduciary duties, fraudulent conveyances, and adverse domination. Prior to discovery, FDIC-R proposed an order establishing a protocol for discovery of Wesernbank’s ESI and to reduce the number of written interrogatories it would receive. The D & O’s offered a competing protocol. The court denied FDIC-R’s request to alter the number of interrogatories and issued a separate order to establish ESI protocol. When FDIC stepped in as a receiver for Westernbank, it possessed 6.8 terabytes of ESI and over 900,000 paper documents. FDIC spent $2.1 million to put the ESI into a system called DMS iConnect (“DMS”), an internal database where the relevant paper documents were scanned into digital images and processed to generate searchable text. FDIC waned to use a second contractor-maintained system called Relativity to give its litigation opponents searchable access to selected data, which will cost $450 per gigabyte to move. FDIC-R wanted D & O to share in the costs. FDIC–R advanced three rationales in support of its proposal: (1) ESI production costs are analogous to “copying costs” borne by the requestor; (2) the Westernbank ESI is “not reasonably accessible” under Rule 26(b)(2)(B); and (3) the seven-factor test applied in Zubulake III requires cost-shifting in this case. The court disagrees with all three FDIC-R’s arguments. As to the argument that production costs are analogous to copying costs, the Court felt that FDIC-R failed to explain how those costs are outside the realm of gathering and preparation expenses customarily borne by responding parties. As for accessibility, the Court disagreed with FDIC-R’s position that Federal Rule of Civil Procedure 26(b)(2)(B) required cost-shifting when large volumes of ESI were involved. To be inaccessible, the FDIC-R would have to argue the “cost or burden” of production is tied to “some technological feature that inhibits accessibility.” However, the FDIC-R failed to raise any technological issues. The court further noted that the relevant data had already been uploaded into a searchable and organized retrieval system. The court also rejected FDIC-R’s third argument that the seven-factor test in Zubulake III requires cost shifting. Zubake also requires that the date in question be inaccessible, which the Court already stated was not. Finally, as to the request to limit the number of interrogatories, the Court believed the requests were “too speculative to merit a ruling at this time.” The Court felt that until the parties take more affirmative discovery steps, there is no ground for the Court to alter the defaults under the Federal Rules of Civil Procedure. Salim received his B.A. in Applied Communications, with a minor in Legal Studies, from Monmouth University. In 2014 he received his J.D. from Seton Hall University School of Law in 2014. Salim’s past experiences include interning for a personal injury law firm prior to attending law school, as well as judicial internships in the Civil and Family Divisions.
In this case, Plaintiff AMEC Environment and Infrastructure, Inc. (“AMEC”) sued six former employees and Geosyntec Consultants Inc. (“Geosyntec”) after AMEC employees went to work for Geosyntec. AMEC alleges that defendants took confidential and/or trade secret information and competed unfairly with AMEC’s existing and prospective business relationships. The claims include unauthorized access of computer information, misappropriations of trade secrets, breach of contract, and interference with AMEC’s contractual relations with its employees and clients, breach of fiduciary duties, interference with prospective economic advantage, and unfair business practices. In this particular dispute, the parties each complained about the sufficiency of discovery responses made to each other. Geosyntec disputed to the sufficiency of AMEC’s responses to interrogatory questions designed to shine light on why AMEC’s trademark designations are trade secrets that deserve protection. AMEC’s disputed over whether Geosyntec should have provided information about its solicitation of AMEC employees it did not hire, whether it should provide oral, as well as written solicitations of employees it did hire, and whether its search terms for e-discovery were sufficient. To resolve these issue, the Court ordered the parties to each designate five trade secrets for AMEC to answer before mediation. Furthermore, the Court ordered answers to interrogatories to be provided on a schedule pegged to the end of fact discovery, as well as mediation. Finally, the Court ordered that parties memorialize their agreement on the record to confer about other e-discovery issues. In regards to the e-discovery issues, Plaintiffs contended that defendant Geosyntec left out obvious custodians and search terms in their discovery. Defendant counters that its searches were too broad in that they resulted a hit rate of 8%. Even at that rate, Geosyntec stated it already produced 200,000 documents and therefore needed to narrow the search terms. Ultimately, Judge Beeler reserved a decision. The judge refused to intervene in the dispute, believing that the parties know their discovery better and are better suited to manage it on their own. She noted that the parties agreed to meet and confer on their own to resolve and dispute. Judge Beeler also noted in regards to the breadth of email searches, that overly broad searches are just “useless ways of getting at the smoking gun emails.” Salim received his B.A. in Applied Communications, with a minor in Legal Studies, from Monmouth University. He received his J.D. from Seton Hall University School of Law in 2014. Salim’s past experiences include interning for a personal injury law firm prior to attending law school, as well as judicial internships in the Civil and Family Divisions. Currently, Salim is taking part in the Immigrants’ Rights/International Human Rights Clinic at Seton Hall Law.
Once bitten, twice shy. The classic idiom stands for the general proposition that when an individual is hurt by someone or something, they tend to avoid that person or situation in the future. Well, it looks like the defendant in Hart v. Dillon Companies did not learn its lesson as it will face spoliation sanctions for the second time in two years. In 2011, the defendant’s bad faith destruction of company videotapes led to an adverse inference ruling. E.E.O.C. v. Dillon Companies, Inc., F. Supp. 2d 1141 (D.Colo. 2011). Now the company faces additional spoliation sanctions, once again for accidentally erasing pertinent recorded evidence. The plaintiff’s 21 years of employment at the defendant’s grocery store came to an end when it was alleged that she had been abusing her power as the store’s bookkeeper by paying herself at a marked-up rate. The decision to terminate the plaintiff was partially based on a secretly recorded conversation that occurred between the plaintiff and the defendant’s loss prevention specialist. On November 1, 2011, the former employee filed an E.E.O.C. charge of discrimination against her former employer, believing that her termination was the result of age discrimination. Knowing that the plaintiff had hired an attorney, the defendant denied her request for arbitration, and the plaintiff filed its complaint on March 1, 2012. At some point between the arbitration denial on November 7, 2011, and the filing of the complaint, the recording of the plaintiff’s interview was accidentally erased. On March 1, 2012, the defendant employer initiated a litigation hold, but this was too little too late. The damage had already been done, and the plaintiff filed a motion for sanctions for the spoliation of the recorded evidence. Adding insult to injury, the Colorado District Court actually cited to the defendant’s previous spoliation case when laying out the issues of spoliation. According to that decision, the issues of spoliation are: (1) is the evidence relevant to an issue at trial; (2) did the party have a duty to preserve the evidence because it knew or should have known, that litigation was imminent; and (3) was the other party prejudiced by the destruction of the evidence. With regards to the first issue, the court found that the recorded interview was obviously relevant to the case because it played a role in the defendant’s decision to terminate the plaintiff’s employment. Discussing the second element, the court found that the duty to preserve the evidence began on November 7, 2011, because at the time of the arbitration denial the defendant was well-aware litigation was likely. This was the trigger event that marked the defendant’s duty to institute a litigation hold. In fact, evidence existed that the defendant’s labor relations manager was well aware that the plaintiff’s attorney and arbitration request signified an intent to litigate the issue.In terms of prejudice, the court found that the plaintiff was prejudiced by the destruction because several factual disputes existed as to what occurred during the secretly recorded interview. Finding the defendant “highly culpable” for the four month delay, the court also determined that the failure to collect the tape recording from “a key player” was an example of grossly negligent or willful behavior. Even though the defendant may not have shown an intent to destroy the evidence, the company had control over the tape and the responsibility to preserve it. Therefore, the plaintiff’s motion for sanctions was granted. Sanctions have not yet been determined, though, as the court set a future hearing to determine the precise amount of sanctions to impose. While E.E.O.C. charges, like those brought by the plaintiff here, do not always lead to litigation, companies should get in the habit of instituting litigation holds whenever they face charges like these. Even if the chances of litigation appear remote, if possible the company should seek to preserve all pertinent evidence to avoid this type of scenario. In this matter, if the company had issued a litigation hold when it received the E.E.O.C. charge or even upon receiving the arbitration request, it could have avoided the sanctions it will now receive. Companies are risking too much by not immediately preserving all the evidence relevant to the potential case. Here, if the defendant had learned from its previous bad experience with evidence spoliation, it could have instituted better preservation procedures that would have avoided the significant penalties it now confronts. Jeffrey, a Seton Hall University School of Law Student (Class of 2014), focuses his studies primarily in the area of civil practice but has also completed significant coursework concerning the interplay between technology and the legal profession. He was a cum laude graduate of the University of Connecticut in 2011, where he received a B.S. in Business Administration with a concentration in Entrepreneurial Management. Presently, Jeff serves as a legal clerk at a personal injury law firm in Rochelle Park, New Jersey.
In Sekisui Am. Corp. v. Hart, District Court Judge Shira Sheindlin reversed a decision of the lower court and imposed sanctions against a plaintiff for its willful spoliation of electronically stored information (ESI). The critical point on which Judge Scheindlin and the magistrate judge opposed was whether a showing of bad faith is necessary to impose spoliation sanctions or whether a showing that the ESI was willfully destroyed is enough. For Judge Scheindlin, where the spoliation is willful the non-spoliating party need not prove malevolent purpose: It is well-settled in the Second Circuit that: [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. It is the third prong of the test that was squarely tackled in this case—whether the destroyed evidence was relevant and whose burden is it to prove or disprove this factor. Sekisui American Corporation (Sekisui) brought a breach of contract suit against Richard Hart and Marie Louise Trudel-Hart relating to the Sekisui's purchase of America Diagnostica, Inc. (“ADI”), a medical diagnostic products manufacturer of which Mr. Hart was president. During discovery, Sekisui revealed that ESI in the form of e-mail belonging to certain ADI employees (including Mr. Hart) had been deleted or were missing. It later became clear that Sekisui did not institute a litigation hold until more than fifteen months after sending a Notice of Claim to the Harts and in the interim, Sekisui permanently deleted the Hart’s documents and data. By way of explanation, Sekisui maintained that the destruction of Hart’s ESI was largely due to the actions of ADI's former Head of Human Resources (Taylor), who had acted without direction from Sekisui. Sekisui further asserted that Taylor made the unilateral decision to delete Hart’s e-mail for the purpose of freeing up space on the ADI server after determining that Hart was no longer receiving work-related e-mail. Before directing Northeast Computer Services (“NCS”)—the vendor in charge of managing Sekisui’s information technology systems—to permanently delete Hart’s ESI, Taylor apparently “identified and printed any e-mails that she deemed pertinent to the company,” which e-mails, totaling approximately 36,000, were produced to the Harts. Notwithstanding these measures, there was no way for the parties or the court to determine how many e-mails were permanently deleted and lost. In light of these developments, the Harts requested that the court impose sanctions on Sekisui for the spoliation of evidence. Specifically, the Harts requested: 1) an adverse inference jury instruction based on the destruction of Hart’s ESI; and 2) sanctions for spoliation based on the alleged or actual loss of the e-mail folders of several other ADI employees. The Magistrate declined to issue any sanctions, finding that the Harts failed to show any prejudice resulting from the destruction of the ESI (i.e., failed to show that the deleted e-mails were relevant to its defenses). The Magistrate Judge concluded that the destruction of Hart’s ESI “may well rise to the level of gross negligence,” but decided that such destruction was not willful because “there has been no showing that Taylor directed [the e-mails’] erasure for any malevolent purpose.” The magistrate judge declined to presume either relevance or prejudice despite his finding that Sekisui “may” have acted in a grossly negligent manner. Judge Sheindlin, however, took a starkly opposite position. Judge Sheindlin expressly rejected the premise that the law requires a showing of malice in order to establish intentionality with respect to the spoliation of evidence. In the context of an adverse inference analysis, Judge Sheindlin found no "analytical distinction" between destroying evidence in bad faith, i.e., with a malevolent purpose, and destroying it willfully. Accordingly, Sekisui's good faith explanation for the destruction of Hart’s ESI (suggesting that Taylor’s directive was given in order to save space on the server) did not change the fact that the ESI was willfully destroyed. And when evidence is destroyed willfully, the destruction alone “is sufficient circumstantial evidence from which a reasonable fact finder could conclude that the missing evidence was unfavorable to that party.” On the above rationale, Judge Sheindlin found the Magistrate Judge's decision to be clearly erroneous and contrary to law, and directed that an adverse inference instruction would be provided to the jury. This case underscores the importance of timely and prudently implementing a litigation hold, when such duty attaches. Adam L. Peterson is a student at Seton Hall University School of Law, Class of 2014. Adam is a member of the Seton Hall Law Review and prior to law school Adam was an Environmental Analyst with the New York State Department of Environmental Conservation.
Throughout the oft-covered Apple v. Samsung patent litigation there has been a multitude of pretrial motions. Last August, United States Magistrate Judge Grewal ruled on Samsung’s motion to compel additional financial documents from Apple. Samsung sought to discover documents from Apple regarding: (1) units sold, gross and net revenue, gross and net margin, and gross and net profits for each Apple product… (2) reports and projections ofU.S.sales, profitability margins, and financial performance for each version of the iPhone and iPad…and (3) all costs comprising costs of goods sold and all costs other than standard costs for each of the accused products. In response to this request, Apple produced documents that Samsung believed to be deficient, which was the basis of Samsung’s instant motion. Samsung believed that Apple’s production of worldwide sales figures (as opposed to the requested U.S. figures) were not sufficiently responsive to their request of US-specific data. Furthermore, to aid in their damages calculation, Samsung requested model level sales figures (e.g., iPhone 4, iPhone 5, etc.) but Apple only produced of sales figures at the product line level (e.g., iPad, iPhone, etc.). Samsung contended that these productions were not detailed enough to enable Samsung to accurately calculate damages. In response, Apple argued that producing the figures Samsung requested would be unduly burdensome because it would require the coordination of “multiple financial groups” that could take “several months” of effort. While the court was admittedly “dubious” of Apple’s claims, Judge Grewal found another, more persuasive reason to limit Apple’s production, writing, “the court is required to limit discovery if ‘the burden or expense of the proposed discovery outweighs its likely benefit. This is the essence of proportionality – an all-to-often [sic] ignored discovery principle.” Highlighting that each parties’ damages experts had already submitted their reports, the Court held that requiring Apple to produce additional financial documents would be of little benefit.’ Thus, the court denied Samsung’s motion to compel. However, the court also noted that because the instant motion was struck down, Apple was precluded from challenging Samsung’s damages experts for failing to “allocate geographically or by product model in any way that could have been supported by the reports disputed here.” Judge Grewal concluded that “[t]his is enough to protect Samsung from any undue prejudice arising from Apple’s reporting limitations.” If you make a burdensome request for documents that would have little benefit, your motion is going to be denied. Matthew Miller, a Seton Hall University School of Law student (Class of 2014), focuses his studies in the area of Intellectual Property. Matt holds his degree in Chemistry from the University of Chicago. Currently, Matt works as a legal intern at Myers Wolin, LLC.
Make sure that when you request electronic discovery information, it is relevant to the case at hand. The mere fact that information from the request could lead to admissible evidence is not enough to make the request relevant. In Salvato v. Miley, the father of plaintiff and decedent, Joshua Salvato, brought suit on behalf of his son for wrongful death. Salvato passed away due to a gunshot wound to his abdomen. Salvato’s father alleged that two police officers used excessive force during the questionable incident and failed to administer adequate medical treatment. After the plaintiff’s first set of interrogatories, one of the defendant officers, Deputy Brown, objected to the discovery requests that asked for personal cell phone numbers, e-mail accounts, social media accounts, and any online memberships, including the corresponding usernames and passwords and any correspondence sent or received via those accounts. Brown objected to these interrogatory requests for four reasons: 1) the requests sought confidential information protected by Fla. Stat. § 119.071(4); 2) the requests sought irrelevant and immaterial information that is not reasonably calculated to lead to admissible information and constitutes a fishing expedition; 3) the requests were overly broad with respect to their time, scope, and effect while presenting Brown with annoyance, embarrassment, and oppression; and 4) the requests invaded Brown’s right to privacy under Article I, Section 23 of the Florida Constitution. Salvato, 2013 WL 2712206 at *2. The court did not address the arguments involving the Florida statute or constitution. Instead, the court focused on the relevancy of the plaintiff’s requests, finding that the plaintiff had “essentially sought permission to conduct ‘a fishing expedition’ . . . on the mere hope of finding relevant evidence.” Salvato, 2013 WL 2712206 at *2 (quoting Tompkins v. Detriot Metro. Airport, 278 F.R.D. 387, 388 (E.D. Mich. 2012). The plaintiff’s only response was that the information “could include admissions against interest, and could certainly lead to the discovery of admissible evidence.” The court did not agree, and instead found that the plaintiff must have the “threshold burden of showing that the requested discovery is relevant.” Here, the information the plaintiff sought was too much of a “fishing expedition” to be deemed relevant.
In 2007, John Lemanski was employed as a purchasing Manager for Barrette Outdoor. His responsibilities included purchasing resin for the production of siding at the lowest possible cost. Unfortunately, in 2011, the company began to downsize and Lemanski’s position was dissolved. After Lemanski’s termination, it was discovered that Lemanski was not purchasing resin at the lowest market price per his job description, but rather at almost full cost due to his interest in Michigan Resin Representatives (MRR). Upon his termination, Barrette alleged Lemanski destroyed over 270,000 digital documents and severely hindered Barrette’s ability to prove their case. While Lemanski had a duty to preserve these documents, his intentional disregard and willful destruction of evidence was enough to warrant sanctions. On his last day of employment, Lemanski was presented with a Separation and Release Agreement; however, when Barrette learned of Lemanski’s financial interest in MRR, the agreement was revoked. Shortly after, Lemanski received an e-mail with an attached Notice to Preserve Electronically Stored Information. While Lemanksi claimed he did not read the e-mail until later, evidence suggests the contrary—including the fact that he installed and executed data wiping software on his company computer. A party seeking a sanction for the destruction of evidence must show: 1) “‘that the party having control over the evidence had an obligation to preserve it at the time it was destroyed;” 2) that the evidence was 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.’” See Adkins v. Wolever (Adkins III ), 692 F.3d 499, 503-04 (6th Cir. 2012). After examining Lemanski’s conduct, the court concluded that a sanction for spoliation was warranted based on two instances of conduct. While the deletion of files from his work computer may not have been done in anticipation of litigation, Lemanski was soon thereafter served with a Notice to Preserve. At that time, he disposed of his personal cell phone and made no effort to retrieve it the next day after receiving said the aforementioned Notice. Secondly, Lemanski continued to disregard his duty when he erased 270,000 files from his personal laptop after Barratte sought a motion to compel Lemanski to produce this very same laptop for imaging. Lemanski was simply in too deep and attempted to cover his wrongdoing. He should have abided by the Notice to Preserve and simply handed over the requisite files for production. Due to his actions, the court held ordered Lemanski to pay Barrette $25,000.00 in compensation regarding fees and costs incurred by brining a spoliation motion, to pay Barrette $10,000.00 for Barrette's increased expenses in conducting discovery and proceeding with litigation absent evidence, and an adverse inference presented at trial that Lemanski’s cell phone and personal laptop contained information unfavorable to Lemanski and that Lemanski was involved with MMR.
Everyone enjoys their privacy, even legislators! Privacy bills are becoming ubiquitous in state legislatures across the country. With the increased use of social media in and around the workplace, states are legislating to protect the dueling interests of employers and employees. Ten states, including New Jersey, passed laws that restrict employers from accessing the social media accounts of employees.Continue Reading
The scope of relevant discovery for social networking sites (SNS) is like Goldilocks – it can’t be too broad or too narrow, it has to be just right for the courts to allow it. This is especially true when the case involves emotional and mental health claims.Continue Reading
What Randi Glazer’s psychics didn’t foresee was the compelled production of their predications. If they could, maybe they would have told her to keep them out of her employee inbox.Continue Reading