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A common problem in e-Discovery is what to do when your adversary is withholding relevant information. An even worse problem is when you know your adversary is withholding relevant information, but you are not precisely certain what that information is. This was the problem for the defendant in NOLA Spice Designs, LLC v. Haydel Enterprises, Inc. who sought—but was ultimately denied—a forensic examination of the plaintiff’s computers. In NOLA Spice Designs, a trademark infringement case, the defendant filed a motion to compel the plaintiff to submit its computers to forensic examinations. The plaintiff challenged the motion by arguing that the forensic examinations failed the proportionality requirement of Federal Rule of Civil Procedure 26(b)(2). This rule prevents a party from requesting discovery when “the burden or expense of the proposed discovery outweighs its likely benefit.” In the context of forensic computer examinations, the court explained such an examination will not be permitted when the request is overly broad and the connection between the computer and claims are “unduly vague or unsubstantiated in nature.” Although the court noted that forensic computer examinations are not uncommon in civil discovery, the court clarified that a mere suspicion that your adversary is dishonestly withholding information is an insufficient basis to order a forensic computer examination. The defendant in NOLA Spice Designs requested the forensic computer examination on the basis that it “has good reasons to believe that something in Plaintiff’s statements is not true” and “that is has suspected all along that its opponents have records that they refuse to produce.” The court characterized the defendant’s reasons as the precise type of skepticism and unwarranted suspicion of dishonesty that are insufficient to warrant an invasive computer forensic examination. Moving forward, litigants should be mindful that courts may be sensitive to confidentiality and privacy concerns when overly broad discovery is requested. Although electronic discovery permits litigants to exchange massive amount of information, that exchange is still subject to the traditional rules of discovery, such as proportionality. In order to combat the hurdle of proportionality, a party who is suspicious that an opponent is withholding information should limit its discovery requests to the specific information that is suspected of being withheld. If the requesting party obtains some information, then it will at least have a reasonable basis to proceed with broader discovery requests because the party can prove to the court that the opposing party has not been forthright. This puts the requesting party in a far greater position than merely seeking an intrusive computer forensic examination with no basis other than mere suspicion of dishonest activity. Helvidius Priscus, a Seton Hall University School of Law graduate (class of 2014), served on the executive board of the Seton Hall Law Review and was a member of the Interscholastic Moot Court Board. Helvidius now clerks for a Justice on the Supreme Court of New Jersey.  “Computer forensics is the practice of collecting, analyzing and reporting on digital information in a way that is legally admissible.” Forensic ctrl, Introduction to Computer Forensics, http://forensiccontrol.com/resources/beginners-guide-computer-forensics/ (last visited Feb. 12, 2014).  Of course, it is difficult to ask for something if you are not sure what exactly you are missing. Nonetheless, the court in NOLA Spice Designs made clear that asking for everything is not the way to go. Starting with small and specific discovery requests (even if they are shots in the dark) may be the better choice because a court is unlikely to find that such requests fail the proportionality requirement.
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.
In the summer of 2013, the Northern District of California conducted a hearing over a motion to compel discovery responses which stemmed from e-discovery disagreements. The plaintiff was a corporate investor in the defendant pharmaceutical company developing bovine-derived oxygen therapeutics. A corporate officer of the pharmaceutical company was also named a defendant. The plaintiff alleged breach of fiduciary duties, breach of contract, and breach of the implied covenant of good faith and fair dealing. In its reply, the defendants counterclaimed breach of a licensing agreement, theft of intellectual property, and interference with prospective economic advantage. Discovery began when the plaintiff served interrogatories, requests for production, and requests for admission. The defendant corporation submitted its responses two months past the deadline, failed to completely respond to the interrogatories, and submitted incomplete document production. The plaintiff moved to compel full and complete responses, after which the defendants’ counsel failed to appear at the hearing. The court granted the plaintiff’s motion and awarded the plaintiff $1,400.00 in sanctions. Additionally, the plaintiff complained that the defendant officer’s responses were also incomplete and filed two weeks late. These disputes are governed by the discovery rules in the Federal Rules of Civil Procedure. Rules 33 and 34 establish a 30-day response period for a party to serve its answers and applicable objections. Additionally, Rule 33(b)(2) states that failure to timely respond to discovery requests generally constitutes a waiver of any objections to those requests. Under Rule 37, a party may move to compel discover and if the court grants it the responding party must pay the moving party’s reasonable expenses incurred in making the motion. At oral argument, the plaintiff asserted the defendants only produced 121 emails, 109 of which were communications with the the Plaintiff. The plaintiff alleged this lack of production raised the possibility of spoliation and boded ill for the document preservation efforts of the defendants. The defendants’ counsel testified he gave instructions to his clients to produce the related documents; however, the court was not convinced. The court cited Rule 26(g) which places an affirmative obligation on an attorney to ensure a client’s search for responsive documents and information is complete. The previous submissions were clearly incomplete and it was the attorney’s responsibility to remedy them. Furthermore, since the responses were late, all of the defendants’ objections were denied even though the court admitted the claims might be vague and overly-broad. The court used its discretion to modify the sanctions placed upon the defendants. It set a new date for all remaining responsive documents to be submitted and if the new deadline was missed the Defendants would be forced to hire an e-discovery vendor. Vendors can be very costly. Furthermore, since the defendants’ failure to timely and fully respond was not justified, the court awarded $5,200.00 in additional attorney’s fees to the plaintiff. While the defendants’ counsel was still held responsible, the court recognized that the defendants were also responsible for the delay and ordered the parties to split the cost of the sanction. This illustrates the point that when discovery efforts are not taken seriously, both the client and the attorney can be on the hook for big expenses. George is a student at Seton Hall University School of Law (Class of 2014). He is pursuing both the Health and Intellectual Property Concentrations and is especially interested in patent law. He received both a B.E. and M.E. at Stevens Institute of Technology in Biomedical and Systems Engineering, respectively. Presently, George works as a law clerk at Stone Law in Colts Neck, NJ, where he assists in the drafting of litigation documents and Office Actions with the United States Patent and Trademark Office.
Defendant Rain Link, Inc. received notice that the plaintiff was accusing the company for violating the Americans with Disabilities Act and the Kansas Act Against Discrimination by its receving a letter written by the Kansas Human Rights Commission dated June 10, 2009. Rain Link acknowledged that it anticipated litigation and, therefore, had a duty to preserve evidence concerning the plaintiff’s allegations. Although, it is clear from the record that Rain Link did not properly preserve documents, and in some cases, destroyed documents, U.S. Magistrate Judge K. Gary Sebelius found that the plaintiff did not demonstrate prejudice or bad faith on the part of the defendant to allow for plaintiff’s spoliation sanctions or adverse jury instruction. The District Court judge adopted the report. Plaintiff sought five spoliation sanctions and all, but one, were dismissed with prejudice. The admission of evidence related to the defendant’s spoliation of evidence was left to the judge presiding over the trial to decide when given the documents placed into evidence. The plaintiff relied on a 2007 Kansas case, In re Krause, which was prior to the Tenth Circuit’s adoption of a showing of prejudice. Spoliation sanctions are proper in the Tenth Circuit when: (1) a party had a duty to preserve evidence because it knew, or should have known, that litigation was imminent, and (2) the adverse party was prejudiced by the destruction of the evidence. This differs from New York and the Zubulake case, which allows for a presumption of prejudice given destruction of documents concerning the litigation. The U.S. Magistrate Judge Sebelius found that not only did the plaintiff not show prejudice concerning defendant’s destruction of documents, but also that the plaintiff’s examples of destruction showed negligence due to defendant’s routine practices as opposed to intentional deprivation of evidence to the plaintiff. Concerning an email that occurred subsequent to plaintiff’s notice of litigation between itself and Meritrust Credit Union, Rain Link failed to preserve the email in native-format and its attachments and instead produced the document in hardcopy without attachments to the opposing counsel. The magistrate judge found that the plaintiff did not demonstrate a prejudice as to how the evidence was relevant to his claims. The plaintiff also requested Rain Link’s drafts of corporate meeting minutes. However, since Rain Link’s outside counsel notified the court that it was company policy to change the minute drafts after meetings and immediately file them electronically in addition to counsel’s advising clients (including Rain Link) to discard drafts of meeting minutes in order to avoid billing issues, the court found that there was no prejudice and little relevance in requiring the metadata of minute drafts. A more difficult issue arose from a May 6, 2009, telephone conversation between plaintiff’s counsel and defendant’s counsel as described in the defense’s memorandum of law. Defense counsel’s memorandum asserted that plaintiff abandoned his job while the plaintiff argued that he was terminated by Rain Link. The defense presented their memorandum in PDF format and explained that due to a computer crash in October 2009, the native format version was lost. The magistrate judge acknowledged that the plaintiff’s arguments concerning the actual date of creation of the memorandum was relevant to the case and the plaintiff’s argument ultimately hinged on defense counsel’s veracity. The plaintiff did not demonstrate that defense counsel would misrepresent evidence to the court. Evidence concerning work in progress data was found to be insufficient and left for the presiding judge to determine if there was prejudice to the plaintiff. Due to the plaintiff’s lack of showing prejudice in the spoliation of documents, the court did not complete a full analysis of bad faith. However, since the record demonstrated more negligence than intentional wrongdoing, an adverse jury instruction would not be appropriate.
For all of you bosses, managers, or CEOs out there: Are you thinking about firing that one employee? You know, the one that is always late, slacks on his work, and makes mistake after mistake? You may think that cutting him loose means he is out of your life forever. Well, guess again.Continue Reading
No company can escape the rigorous rules of eDiscovery, even those that may exist as one-person entities. As soon as the possibility of litigation becomes likely, companies must take the necessary steps to preserve all relevant documents or risk suffering the consequences in court.Continue Reading
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