Owners/Executives

How Are Electronic Materials Slipping Through the Cracks? The Scope of eDiscovery Is Limited to Discovery Requests, Not search Terms

We have entered the age of information!  Every conversation, e-mail, text message, attachment, voicemail, and other electronic data are being stored all day, every day.  These types of electronically stored information (a.k.a. “ESI”) are regularly used during litigation.  So why is there a problem collecting information for trial?  Lawyers need to search through these massive amounts of ESI in order to provide the materials to the opposing party before trial.  This process is known as eDiscovery, or electronic discovery, and it has raised a number of issues regarding who, what, where, when, why, and how ESI is produced. The issue discussed here is what defines the scope of eDiscovery.  In ChenOster v. Goldman, Sachs & Co., the court made it clear that the scope of discovery, whether electronic or not, is still defined by traditional discovery requests and demands.  However, what brought forward this conclusion? Traditionally, the process of discovery is the period when lawyers exchange requests and demands for information, documents, and other materials that may be used in the case.  Generally, this can be broken down into three steps: (1) Requesting party will make a discovery request; (2) the opposing party will use any means she deems appropriate to find the materials; and (3) the opposing party will respond to the request in the form of producing the materials or an objection. However, in Chen-Oster, the parties deviated slightly from this traditional process.  Here, the requesting party, the plaintiffs, made traditional discovery requests for ESI.  Then the plaintiffs negotiated with the opposing party, the defendants, in order to determine what search terms would be used to filter through the enormous amounts of ESI available. Now, why is this different from a traditional discovery process?  This is different because both parties collaborated to determine how the ESI requested would be located. The issue presented in Chen-Oster begins upon production of the ESI by the defendants.  The defendants only produced the ESI they deemed to be relevant to the discovery requests set forth by the plaintiffs.  However, the plaintiffs intended to collect all ESI produced by the search terms they agreed upon. This brings us back to the main question:  what defines the scope of eDiscovery?  It is either all ESI located under the agreed upon search terms; or it is only ESI located under the search terms that are relevant to the original discovery request. According to Chen-Oster, an agreement to use specific search terms or discovery protocol does not override discovery demands and requests.  In other words, search terms used to filter through electronic data do not define the scope of discovery.  The scope of discovery is determined by the discovery requests rendered.    Victoria O’Connor Blazeski 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.

Cornell Law and Business Grad Gets Spanked By Judge for Violating Basic Ethics and Evidence Rules

If you are involved in a lawsuit you may not destroy relevant evidence, inadvertently or purposefully, without facing consequences. In this lawsuit, the defendant, who is the owner of the company and a lawyer, destroyed possibly more than 10,000 relevant e-mails after receiving notice of a copyright infringement suit against him. The court found the defendant’s efforts to “remedy” the error disingenuous; the destruction of evidence was found to have been done maliciously and purposefully. When the litigation commenced, the plaintiffs sent the defendant a document request and repeatedly asked for any and all electronic files, e-mails included, that the defendant had created or sent to others. About a year after the suit had commenced, defendant’s counsel, who later withdrew from the case, notified the plaintiffs that the defendant had ended his account with a third-party web supplier and thus defendant’s website and e-mails were all destroyed. This was done two months before the account was set to expire even though it was already fully paid for. The defendant also admitted to deleting sent e-mails as part of his ordinary practice and did not change that practice after the lawsuit was filed. Furthermore, he also admitted to manually deleting e-mails after and in response to a cease and desist demand, after his deposition, and multiple times during the course of litigation. The court found that he had acted in such a manner to prevent plaintiffs from accessing the e-mails, which were an integral part to the litigation. The defendant’s actions were a clear violation of ethics and evidence rules. The court found particularly egregious that the defendant, a Cornell law and business graduate, claimed to not know that there was an obligation to maintain all documents. He claimed this even though he had passed the New York State Bar exam and received a document request from the plaintiffs stating which documents were needed for the litigation.  Moreover, the third party web supplier testified that when the defendant originally closed the account, the defendant then called to ensure that the e-mails had been deleted. It was only after the defendant received a deposition notice on the spoliation (the destruction of evidence) that he then called the web supplier to ask if there was any way to retrieve the e-mails. This was nearly a month after he had called to ensure they were fully removed from the systems. The defendant then reactivated the account only to set it to automatically terminate in less than a month. The third party supplier testified that once the account was terminated there was no way to recover any e-mails…so why did defendant reactivate his account? The court determined that this was done to show a “selective repopulation” of e-mails from the first termination. The defendant conceded that he had manually repopulated the account with e-mails that he was able to obtain from one of his recipients. These e-mails that were now “found” in the reactivated account were merely the ones manually selected for repopulation by the defendant. The court was also thoroughly displeased with the defendant because after the second termination of the account, the defendant repeatedly called the third party supplier in an attempt to create a false record that the supplier had terminated the account and not he himself. Due to the defendant’s actions, the court not only found that spoliation of evidence had occurred and that the defendant had acted intentionally, but also that the plaintiff was clearly prejudiced by the defendant’s intentional destruction of evidence.  The court thus imposed the harshest sentence allowed against the defendant: a terminating sanction. This sanction is the harshest penalty as it is a punishment for grossly improper litigation behavior that ends the offending party’s participation in suit, usually then dismissing or finding for the opposite side. In this case, judgment was granted to the plaintiff due to the defendant’s intentional destruction of evidence and attempt to create a false record. What the defendant should have done was save all the e-mails and turn them over to the plaintiffs. Instead, by intentionally destroying evidence and attempting to improperly lay blame, the court imposed the harshest punishment on the defendant. Knowing the risks and punishment involved with intentionally destroying evidence it is unclear why the defendant did what he did. Ms. Mansour is a Seton Hall University School of Law Student (Class of 2015). She has taken a sampling of courses across various disciplinary areas and participated in a variety of externship programs in addition to being on Legislative Journal. She graduated from Rutgers University with a concentration in Psychology and has her M.A. in Translation and Translation Studies from UNC – Charlotte. She currently is a legal intern for the King’s County District Attorney’s Office. Want to read more articles like this?  Sign up for our post notification newsletter, here.

When Is “Discovery On Discovery” Improper?

In Freedman v. Weatherford Int'l Ltd., a putative class action alleging securities fraud, the plaintiff moved for reconsideration of the court’s denial of a motion to compel discovery. The plaintiff sought to compare a document that had been produced by defendant Weatherford International during discovery with documents from two internal investigations conducted by defendant, which had not been produced during discovery. Specifically, the plaintiff secured 18 emails from “‘critical custodians at Weatherford’ that were produced (after briefing on the original motion to compel was complete) . . . by third-party KPMG.” KPMG worked with the defendant on its remediation efforts. The defendant never produced these emails during discovery, thereby—according to the plaintiff—demonstrating significant deficiencies in the defendant’s discovery production. The United States District Court for the Southern District of New York acknowledged that discovery on discovery is proper “where a party makes some showing that a producing party’s production has been incomplete . . . in order to test the sufficient of that party’s discovery efforts.” However, these meta-discovery requests must be “closely scrutinized” to avoid unnecessarily prolonging the “costly and time-consuming discovery process.” The plaintiff argued that KPMG’s production of the 18 emails proved that the defendant’s production was deficient and that providing the plaintiff with the documents of the two internal investigations would lead to the discovery of “additional relevant documents that had not been produced.” Thus, the district court noted that the plaintiff did seek to test the defendant’s discovery efforts. Rather the plaintiff sought to ‘identify the documents missing from [the defendant’s] production.” The district court held that the documents the plaintiff sought would not lead to additional documents not previously produced. The plaintiff admitted that only three of the 18 emails would have been identified had it been able to compare initially produced documents with documents of the two internal investigation. Additionally, the plaintiff never argued that other documents produced by third parties, but not by the defendant, would have been identified by requested document comparison. Moreover, the court stated “the Federal Rules of Civil Procedure do not require perfection.” Further, “it [was] unsurprising that some relevant documents may have fallen through the cracks,” when the defendant “reviewed million of documents and produced hundreds of thousands.” In conclusion, the plaintiff’s requested remedy was not best suited to cure the alleged discovery deficiencies. In order to win a motion to compel discovery on discovery, the plaintiff needed to “proffer[] an adequate factual basis for their belief that the current production [was] deficient.” Given that a party is not subjected to sanctions for failing to produce minimal amounts of documents during a massive discovery production when its production was otherwise lawful, the plaintiff in this case should never have filed the motion for reconsideration of its previous motion to compel discovery. Furthermore, the plaintiff should have assessed the usefulness of the relief they sought. In this case, the motion to compel discovery was unnecessary because only three of the 18 emails were relevant and the proposed document comparison would not have yielded any other documents not produced by the defendant. Aaron Cohen, a Seton Hall University School of Law student (Class of 2015), focuses 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, Aaron 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.

When Can Spoliation Result in an Adverse Inference Jury Instruction? Where there was an Obligation to Preserve, a Culpable State of Mind, and Destruction of Relevant Evidence.

Employers should take note: erasing and taping over messages that relate to a fired employee is never a good idea. Employers who engage in this type of practice will never escape the wrath of a judge when the fired employee inevitably brings a wrongful termination. Eventually, such action catches up with the defending company and they will have to pay a steep price. Take, for instance, the case Novick v. AXA Network, LLC. The plaintiff was asking the judge for sanctions to be imposed on the defendants because he claimed that the defendants spoliated audio recordings and emails from an eight-week stretch, which ran from late August until early November 2006. The defendants admitted that recordings from this time period were likely erased and taped over. The problem here is that this stretch of time covers the time directly before and directly after Novick’s termination. It should seem obvious to anyone that a company’s failing to preserve any recordings regarding a former employee’s termination is a terrible idea and will likely hurt one’s case in court. It should instead be common sense that when an employee is terminated, and certainly when that termination is contentious, a lawsuit is foreseeable.  Thus, the employer should take care to preserve anything that might come into play at trial. Novick asked the judge to sanction the defendants for the spoliation of emails. The defendants could not produce any emails between the two employees at AXA Network, who took over Novick’s accounts, and Novick’s former clients. If these employees were involved with Novick’s clients after Novick was fired, it is only logical that there would have been emails taking place between these employees and those clients! Nevertheless, the defendants could not produce a single e-mail. Sanctions can be imposed on a party for spoliation in violation of a court order under Rule 37(b) of the Federal Rules of Civil Procedure or, where there has been no violation of a court order, a judge can impose sanctions for spoliation under the court’s “inherent power to control litigation.” West v. Goodyear Tire & Rubber Co., 167 F.3d 776, 779 (2d Cir. 1999) (emphasis added). For the court to exercise its inherent power, there must have been a showing of bad faith. United States v. Int’l Bhd. of Teamsters, 948 F.2d 1338, 1345 (2d Cir. 1991). The Novick court in this case found that the defendants did spoliate the audio recordings because they were notified in October 2006 to preserve the recordings for future litigation and to produce those recordings  to the plaintiff. In addition, the defendants provided no reason for why or how these recordings were missing. Unsurprisingly, the court suggested that such behavior indicates that the company acted deliberately and therefore possessed a culpable state of mind. The defendants acted in bad faith. The court did not find that the defendants spoliated the email messages, but it still believes they acted in bad faith with respect to the production of the emails because the company failed to search one of their email archives for months due to what was claimed as “human error.” This was clearly a delay tactic, further warranting sanctions. The court invoked its inherent power to control litigation because the defendants acted in bad faith, employed delay tactics, caused substantial costs to be incurred by the plaintiff, and wasted the court’s time. The court imposed an adverse inference jury instruction. Adverse inference instructions can be imposed against a party who had an obligation to preserve evidence at the time it was destroyed, who destroyed the evidence with a culpable state of mind, and who destroyed evidence that was relevant to the opposing party’s claim or defense. Residential Funding Corp. v. DeGeorge Fin. Corp., 306 F.3d 99, 107 (2d Cir. 2002). The clear takeaway from this case is that it is better to be safe than sorry; if it is reasonable that a lawsuit may be brought against you, take all measures to preserve any evidence that might have anything to do with that future case. Preserving the evidence will not hurt, but failing to do so will. Logan Teisch received his B.A. in Government and Politics from the University of Maryland, College Park in 2012. He is now a student at Seton Hall University School of Law (Class of 2015), focusing his studies in the area of criminal law. Logan’s prior experiences include interning with the Honorable Verna G. Leath in Essex County Superior Court as well as interning with the Essex County Prosecutor’s Office. Want to read more articles like this?  Sign up for our post notification newsletter, here.

When Are Sanctions Issued Based on Evidence Destroyed During the Ordinary Business Protocols?

Companies issue laptops to their employees to be used for business purposes both in the office and at home. A company’s distributing laptops is joined with the company’s responsibility to preserve the electronically stored information (ESI) when litigation is reasonably anticipated. Every company has its own “ordinary business protocol” to be used in relation to these laptops when a situation requires it, but sometimes these protocols lead to bigger issues. In Hawley v. Mphasis Corp., the United States District Court for the Southern District of New York granted an adverse inference instruction regarding a supervisor’s laptop, but not for the employee laptop. In Hawley, an employee of the defendant company brought an employment discrimination claim and moved for sanctions against the defendant for alleged discovery violations; those of which, in particular, were violations regarding spoliation of information on two company laptops.  The employee alleged that the company deleted all information from his work laptop, as well as his supervisor’s information, and did not produce records vital to the defendant’s case. The company countered, arguing that clearing the hard drive of a former employee’s laptop was the business protocol. In evaluating the request for an adverse inference sanction, the district court explained that the plaintiff must demonstrate: “(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.” Hawley v. Mphasis Corp., No. 12 Civ. 592 (DAB) (JLC), 2014 WL 3610946, at *7 (S.D.N.Y. July 22, 2014) (quoting Residential Funding Corp. v. DeGeorge Fin. Corp., 306 F.3d 99, 107 (2d Cir. 2002)). As to the supervisor’s computer, the court held for an adverse inference sanction because the company had a duty to preserve the supervisor’s data from the time of the EEOC filing.  Furthermore, the company negligently destroyed the records on the laptop , which were found to be highly relevant to the employee’s case.  In regards to the employee’s computer, the court found both a duty and the requisite culpability; however, the court did not believe that the employee sufficiently proved how relevant the information was to his case. The lesson to extract from this case is that the courts do not care if your company’s protocol requires one procedure to be followed (i.e., wiping a hard drive) when it comes to the spoliation of relevant evidence.  The company’s wiping the hard drives is trumped by a duty to preserve data when a lawsuit is reasonably anticipated. The ruling in Hawley demonstrates that, in an employment case, the receipt of an EEOC charge triggers the obligation to preserve all data, but it could arise earlier depending on the circumstances. Be aware of when a lawsuit is reasonably anticipated and do not hesitate to act and preserve. Such awareness will help your company in the long run. With that, be on top of the individuals responsible for preserving company data and ensure those individuals are complying with company policy. One does not want to need a hard drive that has no data saved on it. Evidence must be preserved until litigation is resolved or no longer reasonably anticipated, and as courts become stricter with this rule of law, so should every company.  A look at the circumstances and a possible deviation from ordinary protocols may be needed. For more information on the case used as precedent, Residential Funding Corp. v. DeGeorge Fin. Corp., click here: http://caselaw.findlaw.com/us-2nd-circuit/1003010.html. Amanda is a third year student at Seton Hall University School of Law, where she is pursuing a J.D. with a certificate in Health Law. Prior to law school, she was a 2011 magna cum laude graduate of Seton Hall University, where she earned Bachelor of Arts in Political Science and a minor in Philosophy. Presently, she is a law clerk at a small firm handling real estate and bankruptcy matters. After graduation this native New Yorker hopes to work at a mid-sized firm in the Big Apple. Want to read more articles like this?  Sign up for our post notification newsletter, here.

Seeking Discovery Requires Specificity

When lawsuits arise, litigants are usually hesitant to cooperate with their adversaries. However, this way of thinking usually does nothing more than delay the inevitable. More often than not, adversaries choose to “fight to the death” rather than work together and speed up the lengthy litigation process. Margel v. E.G.L. Gem Lab Ltd. involves a suit between Guy Margel, the plaintiff, and E.G.L Gem Labs, a gem grading business that Margel initially started and later sold. The defendants claim that the plaintiffs have failed to provide certain pieces of discovery after the plaintiffs retained new counsel, produced 800 pages of documents, and represented that all responsive, non-privileged documents had been produced. The defendants, however, offered no proof to substantiate their claims. The court mentions that suspicions alone will not substantiate the imposition of sanctions. Under ordinary circumstances, a party’s good faith averment that the items sought simply do not exist, or are not in his possession, custody or control, should resolve the issue of failure of production.  Zervos v. S.S. Sam Houston, 79 F.R.D. 593, 595 (S.D.N.Y.1978). Based on these circumstances, the court found no basis for imposing sanctions on the plaintiffs. The plaintiffs also bring a motion against the defendants seeking the production of documents relating to the grading certificates or reports issued by EGL–USA for the period from January 1, 2000, to present [the date of litigation]. The defendants contend that some of these documents predate the claim in questions and are therefore non-discoverable. The court noted that it is not appropriate for a party to use the discovery provisions to determine whether or not it has a claim. “A party must already have a claim for which it seeks additional discovery, as discovery is not meant to allow a party to find out if it has a claim.” (quotations and citations omitted). This being the case, the court held that there is no reason to provide records for the period that pre-dates the litigation. However, the plaintiffs also sought to compel the production of electronic information relating to the claim, which the defendants contend fell outside the scope of the term “documents.” The court noted that simply because an item is stored electronically does not mean it is not considered a “document.” Zubulake v. UBS Warburg LLC, 217 F.R.D. 309, 317 (S.D.N.Y.2003)  (“[E]lectronic documents are no less subject to disclosure than paper records.”).  Therefore, the court held that the defendants were to produce the electronically stored information within ten days. In summation, Margel demonstrates the fact that it is usually easier to work together than constantly compete. Additionally, when a party puts forth a good faith effort to provide the entire discovery requested, and that party represents that the information provided is the full extent of discovery, absent evidence to the contrary additional documents will not be compelled. Finally, it is important to note that electronic information is considered to be a fully discoverable document not subject to any additional protection simply because of the electronic format.

Will A Tangled Web of Preservation Failures Lead to Sanctions?

Preserving electronic data can be a challenge for companies with multiple data centers.  However, what we have here is a failure to communicate.  The case at issue is an ERISA class action against UnumProvident. On November 26, plaintiffs' counsel wrote to request a conference to present their request for a preservation. The court then outlined principles that would serve as the basis for the parties' draft of a proposed order. The court observed, without contradiction from UnumProvident, that UnumProvident already had a duty to preserve any tapes containing emails as of November 4, the date litigation commenced. The order required all back-up tapes or other back-up hard drives, disks or other hardware containing material back-up by the defendants regarding Y2K, regardless of the date or dates of the internal or external e-mails, computer information, or electronic media contained thereon to be preserved.  Specifically the plaintiffs requested all internal and external e-mails, generated, created, or dated October 14, 15, and 16 of 2002, and November 18, 19, and 20 of 2002.  If the defendants alleged these e-mails were no longer in existence due to routine destruction or otherwise, the defendants had to provide an affidavit explaining circumstances of the unavailability. UnumProvident’s Enterprise Security Architect decided instead of preserved the data to implement a special “snapshot” back-up which would back-up those emails that were on the system as of the day or days the snapshot was taken.  UnumProvident could also have directed IBM, their data vendor, to copy email back-up tapes from existing unexpired tapes to other back-up tapes that would contain no expiration date. Similarly, it could have copied the data onto a hard drive or into other computer media.  Instead, this snapshot inadvertently caused all of the data on the back-up tapes to be overwritten. The court found that no enterprise officers of UnumProvident had sufficient expertise to discuss the preservation project in a meaningful way. Neither of them took the steps that they needed to take to get sufficiently informed advice on the issues involved. Similarly, there was insufficient supervision of the Enterprise Software Architect's efforts.  The officer had also never ordered IBM to preserve emails regarding the six dates. Additionally, the law department of UnumProvident never instructed its officers to confirm that email for the six days had been preserved by IBM. As this issue developed relatively early in discovery, the court found it difficult to determine the extent to which the plaintiffs have suffered any prejudice from the failure to capture all of the UnumProvident emails for the six days.  Throughout the whole opinion, the court was very skeptical of the testimony of UnumProvident’s officers.  The court determined most of UnumProvident’s actions were inadequate.  However, it also determined the accelerated expiration problem that occurred because of the creation of the snapshot was inadvertent and unintended.  Therefore, the court did not award any sanctions.  It can still be assumed the court would be less trusting of UnumProvident after this debacle and less likely to give them the benefit of the doubt.

Want to Produce Documents? Produce Something Else First.

The plaintiff, Torrington Co., sought to challenge a final determination made by the International Trade Administration of the United States Department of Commerce. The case centered upon the discovery requests made by the plaintiff. The plaintiff argued that it was entitled to three things: 1) a computer tape of computer instructions, 2) a computer tape of SAS data sets, and 3) a hard copy for each file transmitted by tape. The plaintiff maintained that it was entitled to this discovery because it was part of the administrative record. The court disagreed. The court found that the computer tape of computer instructions, computer tape of the SAS data sets, and the hard copies were not a part of the administrative record because not only were they not “obtained by” or “presented to” the administrative agency (the International Trade Administration), but they did not even exist. If the materials did not exist (and never existed) they are clearly not part of the administrative record. In fact, the computer tapes and hard copies could only be created after the determination by the agency; they could not possibly be part of the administrative record at all. The defendant agreed to give the plaintiff microfilmed computer printouts which contained both the computer programming instructions and the SAS data sets. Note that these microfilmed computer printouts were not the same as computer tapes (which were requested by the plaintiff.) The court cited previous cases that established two principles. First, the court was not obliged to force a defendant to produce data in a format that was most convenient for a plaintiff. Second, the court should balance the plaintiff’s need for the specific type of information with the hardship placed upon the defendant. The court held that not only had plaintiff failed to show its need for the computer tapes, but that the defendant had shown that it would suffer “extreme hardship” if it were forced to produce the computer tapes. The plaintiff attempted to bolster its position by citing Daewoo v. United States, 10 CIT 754, 650 F. Supp. 1003, in which the court ordered that all computerized data be produced including “all further refined forms of electronic storage of the data involved.” However the court distinguished the case at hand from the facts in Daewoo by pointing out that in that case, the government did not demonstrate any kind of hardship. In the present case, the requested computer tapes did not exist and requiring the defendant to produce them would have been burdensome and expensive. The court notes that according to one source it would take 7,500 hours to create a computer tape containing 15,000 pages of the printout that was already created. By the account of one affidavit, it was estimated that it would take defendant’s department staff no less than a full two weeks to produce the computer tapes. Administrative agencies have many tasks and aim for efficiency – such a discovery request would doubtless be taxing on the agency’s resources. The plaintiff also claims that it would be equally burdened if it had to produce the tapes.] The court held that when the cost, burden, and time of creating the tapes is equal on both parties, then the burden of producing the tapes falls on the party making the request. Accordingly, the court held that the defendant did not have to make the computer tapes and that the parties were obliged to use the “more convenient, less expensive or less burdensome” computer printouts that were already in existence. What should have the plaintiff done in this scenario? It is unclear why the printouts were insufficient such that computer tapes were necessary. The plaintiff should have come prepared to show why production of the computer tapes would be more taxing on itself than on the defendant-agency. Rocco Seminerio is a Seton Hall University School of Law graduate (Class of 2014). Mr. Seminerio focused his studies in the areas of Estate Planning, Elder Law, and Health Law. He graduated from Seton Hall University in 2011 with a degree in Philosophy.

Can a Court Sanction a Pro Se Party for Deleting Evidence? The Third Circuit Will, So Do Not Delete Your Data!

Whenever sanctions are involved, you can expect to see questionable behavior from one or more parties.  In this particular case, a pro se litigant tried to be cute and the court called him out for it.  The Appellant here used to own a company which provided consulting services to the Appellee.  Since the company became defunct, the owner became the only remaining party being sued. The district court had entered a discovery preservation order in which the parties agreed the appellant would return a laptop computer along with all of its data.  However, the appellant deleted data off the laptop minutes before signing the agreement.  Then the appellee initiated post-settlement litigation to obtain sanctions.  The appellant’s attorney then withdrew and the appellant continued pro se.  The judge found the appellant to be in civil contempt and awarded sanctions of over $50,000. The appellant raised three contentions on appeal.  First he argued sanctions under 28 U.S.C. § 1927 could only be awarded against attorneys, not pro se individuals.  Circuits are split on this issue.  The Third Circuit navigated around the issue, asserting that the district court judge could have justified its sanction under other grounds. Second, the appellant argues that monetary sanctions should not have been awarded because the information was deleted before the discovery agreement was signed.  The Third Circuit called out the argument as being a bit too clever and was not persuaded.  It all but accused the appellant of deliberately misleading the district court.  More damning was the actual language of the agreement.  It exposed the appellant to liability arising from the agreement itself, which governed the return of the laptop. Third, the appellant challenges the award for all attorneys' fees.  On this issue the Third Circuit remanded for a determination of what fees fairly reflect compensation for the appellant's contumacious conduct.  What is more vital here is the punishment for deleting data off the computer.  Those who try to outsmart the court will get their just deserts and acting pro se does not provide any sort of loophole.

Should One IT Person Hold the Keys to the Kingdom? How the “Philippine Love Bug” Case Highlights the Vulnerability of Such a Policy

Background Omega Engineering Corporation, an international company based in New Jersey, was once the employer of Timothy Lloyd. To put Omega’s importance into perspective, the U.S. Navy and NASA were two of their clients for highly specialized and sophisticated industrial process measurement devices. According to testimony during the trial, Lloyd worked at Omega as its sole system administrator from 1985 through 1996. In 1995, Lloyd had undergone Novell network training and installed Novell software on Omega’s computer system. Additionally, Lloyd was the only person who maintained and had top-level access to the Omega network. Between 1994 and 1995, Lloyd became belligerent and increasingly truculent. Due to his poor interpersonal skills, he was demoted in May 1995 from manufacturing to  support engineer. A woman who had once been Lloyd’s subordinate and had engaged in a romantic relationship with Lloyd, was the individual responsible for replacing Lloyd as manufacturing supervisor. In June 1996, Lloyd instituted a policy to “clean up” all of the individual computers in Omega’s manufacturing department. It was unclear as to why Lloyd was implementing company policies after his demotion. Nonetheless, the policy required employees to save their files to the company’s file server and prohibited them from making their own backups. Lloyd’s manager became suspicious of this policy and requested from Lloyd access to the file server. Lloyd never complied. By the end of June, upper management had enough of Lloyd’s behavior and terminated him in early July 1996. On July 31, Omega’s file server would not boot up. All of Omega’s manufacturing programs on the server, which contained instructions for operating the machines, were gone. Multiple computer experts were brought in to recover the files, but to no avail. The files had not only been deleted, but also had been “purged,” meaning that they were rendered unrecoverable.  A leading expert on Novell networking testified at trial that this could only have been done intentionally and by someone with supervisory-level access. The government’s theory included that on July 30, anyone who would log on to the server at any time after that date would “detonate” a program installed by Lloyd that would destroy the information on the Omega file server. The government’s theory was bolstered by the fact that the Secret Service recovered missing Omega backup tapes that had been reformatted as well as a master hard drive from the file server. This had the same string of commands that had functioned as the time bomb program found on the Omega file server. The Decision Ultimately, Lloyd was found guilty of computer sabotage. The jury had deliberated for over twelve hours over the span of three days and had requested testimony in the jury room before they reached their verdict. However, three days after the verdict, one juror said that she had seen on the news, during the trial, about a computer virus called the Philippine “love bug” which allowed the perpetrator to cause great harm by flooding the victim computers and causing them to crash. Whether this affected her decision is unclear; however, the defendant claimed that his 6th Amendment rights had been violated. The district court agreed, granting a new trial. On review, the Court of Appeals reversed the district court’s holding. After a lengthy discussion, the court said that there were significant dissimilarities between the “love bug” and the “time bomb” and most jurors would not confuse the two. Therefore, the appellate court found, the defendant was not prejudiced. Lloyd’s managers should never have allowed a single employee hold as much power as they did. This case highlights the vulnerabilities the company subjects itself to if that is allowed to happen. For example, Omega lost over 1,200 programs and many current and potential clients as well. Akiva Shepard received his J.D. from Seton Hall University School of Law in 2014. Akiva has worked for a New York State Supreme Court Judge in Kings County, and for a NJ real estate firm.