eDiscovery

Copying Documents = Conversion?

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.

Inadvertent Disclosures: Who Benefits?

Plaintiff Steve Pick filed suit against Defendant City of Remsen (and other defendants) alleging, among other claims, violations of constitutional rights pursuant to 42 U.S.C. § 1983. Pick served the city with a discovery request. The city then produced 440 pages of documents, including 183 pages of e-mails. Some pages contained more than one email. The defendant’s inadvertently disclosed an email that was originally sent to six privileged recipients. Within thirty-four minutes of discovering that the email had been inadvertently produced, defense counsel contacted the plaintiff’s counsel. Defense counsel explained that the email was mistakenly produced and was protected by attorney-client privilege. Defense counsel asked that the email be destroyed. The plaintiff’s counsel refused. Defendants’ filed a motion request that the court order the email’s destruction as an inadvertently produced privileged document. Applying the middle-of-the-road approach, the Magistrate Judge held Defendants had not waived attorney-client privilege by the inadvertent disclosure, and ordered the email to be destroyed. Plaintiff appealed. Plaintiff objected to the analysis of the Magistrate Judge conducted pursuant to the middle-of-the-road test. The District Court recognized that three approaches have been developed to analyze inadvertent disclosures of privileged information. Including the lenient approach, the strict approach, and the middle-of-the-road approach. Having already held that the middle-of-the-road approach applies in diversity cases, the court held that the middle-of-the-road approach also applies in federal question cases. Furthermore, the court applied a “clearly erroneous or contrary to law” standard of review Pursuant to the middle-of-the-road approach, the court considers five factors in determining whether the inadvertent disclosure waived attorney-client privilege. The factors are as follows: 1) the reasonableness of the precautions taken to prevent inadvertent disclosure in view of the extent of document production; 2) the number of inadvertent disclosures; 3) the extent of the disclosures; 4) the promptness of measures taken to rectify the disclosure; and 5) whether the overriding interest of justice would be served by relieving the party of its error. Plaintiff objected to the Magistrate Judge’s analysis under the first, third, and fifth factors. Plaintiff objected to the Magistrate Judge’s conclusion that defense counsel took reasonable precautions prevent disclosure, alleging that defense counsel’s failure to create a privilege log was unreasonable, the privileged email was not inconspicuously located among non-privileged emails, and defense counsel’s review process—being the sole reviewer—was unreasonable. The court held that defense counsel’s failure to prepare a privilege log was not unreasonable because defense counsel’s review of the responsive documents did not reveal any privileged information. Further, the court held that the Magistrate Judge correctly concluded the privileged email to be inconspicuously located among non-privileged documents. The privileged email was located on the same page as a non-privileged email. Moreover, the privileged email was located on two pages of the 183 pages of emails, and 440 total pages of documents, produced. Likewise, the court found defense’s counsel’s review process to be reasonable. It is reasonable for an attorney to review discovery responses without non-lawyer staff. Thus, the court upheld the Magistrate Judge’s determination that first factor weighed in favor of maintaining the email’s privileged status. Although the Magistrate Judge found the third factor to weigh in favor of waiver of the attorney-client privilege, Plaintiff objected to the factual finding that the privileged email was disclosed to not others. The plaintiff alleged that the privileged email was disclosed to its six recipients, thereby increasing the extent of the inadvertent disclosure. However, the court noted that the plaintiff ignored the Magistrate Judge’s conclusion that the six recipients were privileged recipients. Thus, the Magistrate Judge’s factual determination as to the extent of the disclosure was not clearly erroneous. Finally, the plaintiff objected to the Magistrate Judge’s conclusion that the plaintiff would not suffer unfair prejudice by maintaining the email’s privilege protection. The court upheld that Magistrate Judge’s finding that the plaintiff had other evidence he intended to rely on by virtue of the fact that the plaintiff progressed with action for over nine months with out the benefit of the privileged email. The court also upheld the Magistrate Judge’s conclusion that the plaintiff could not reasonably rely on the privileged email to support his case because any attorney reviewing a document production with a large number of non-privileged documents would realize that the disclosure was inadvertent. Further, the court quoted the Magistrate Judge’s holding that “‘absent the mistaken disclosure, Pick and his attorneys would not know and would not have the right to know, the contents of the [email].’” Therefore, “the interest of justice would be harmed hereby permitting Pick to use the email at trial.” There is no real harm in zealously representing your client’s interest after inadvertently receiving privileged information. Plaintiff’s attorney correctly chose to find a way to strip the email of its privilege protection in order to use the email to support the plaintiff’s case. However, attorneys should recognize an argument in favor of waiver of attorney-client privilege may be futile in instances similar to the facts above.       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.

What Should Related Foreign Entities Do When Facing Spoliation Sanctions After Providing The SEC With A Complete Image Of Its Corporate Servers? Comply With Court Orders.

Regulatory leviathan incompetency may lead to preclusion sanctions. But this doesn’t matter if the sanctions preclude two directors of alleged foreign shell entities from “offering testimony, affidavits or declarations in connection with a dispositive motion or trial,” and the sanctions are partially based on the very same two directors’ refusals to offer such testimony, affidavits or declarations in connection with depositions. In other words, the defendants have no interest in testifying, are being reprimanded for not testifying, and their punishment is to preclude them from testifying. (“Continue Reading…”) Here, the SEC froze the assets of more than a half-dozen entities which conduct business from Hong Kong based on pyramid scheme allegations. Prior to the freeze, at least a few of the defendant entities used third-party vendors to control their IT departments and these defendants were no longer capable of paying the outside vendors, post-freeze. During the course of discovery, the defendants, now without an IT department, provided the SEC with a “complete image of all information maintained on the corporate server”. Next, the defendants, fearful of adverse action by authorities in their own nation, refused to attend depositions and instead offered to attend remote videoconference depositions. Soon thereafter, the leviathan sought sanctions for spoliation, which were later recommended. Months later, the incompetent SEC figured out how to read the original hard drive provided during discovery, which had been in the SEC’s possession the entire time. The preclusion sanction still stands because the defendants did not comply with the court order to attend the depositions. In the future, if you’re a foreign businessman who finds yourself under the SEC’s radar, remember to formally request depositions to be electronically conducted, formally request asset freezes to be lifted so your third party vendor can assist the incompetent SEC to understand the information you provided in discovery, or ignore the laws of your home state, put your entire family in jeopardy, and attend the deposition. Law Suit Exposer, a Seton Hall University School of Law student (Class of 2016), focuses his studies in the area of NJ foreclosure defense.  Want to read more articles like this?  Sign up for our post notification newsletter, here.

What are the Relevance and Mens Rea Requirements for Spoliation Sanctions?

Should negligent destruction of evidence and intentional destruction of evidence be punished the same? That is one of the issues brought up in Alter v. Rocky Point School District. This case involves Lisa Alter (“Plaintiff”), a former second grade teacher and Principal, suing her former employer, Rocky Point School District (“Defendant”), for workplace discrimination.  The first discovery dispute arose when the Plaintiff filed its first motion to compel discovery on October 1, 2013.  Plaintiff sought to compel discovery of ESI, specifically emails between employees of Defendant.  The Court granted Plaintiff’s motion. Subsequently, Plaintiff filed a second motion to compel discovery and for sanctions.  Plaintiff alleged that Defendant did not comply with the Court’s instructions.  Plaintiff argued that sanctions should be imposed against Defendant for: (1) failing to properly institute a litigation hold; (2) failing to complete a good faith search of ESI; (3) failing to sufficiently oversee ESI searches; (4) and for spoliation of evidence. The main issue in this case was whether the Court would impose sanctions on Defendant for spoliation of evidence.  A party seeking sanctions for spoliation of evidence has the burden of establishing: (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; (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 the claim or defense. In Alter, the Plaintiff clearly established the first element.  It was clear that Defendant had an obligation to preserve the evidence at the time it was lost.  The Plaintiff was seeking emails between Defendant’s employees.  Defendant, however, failed to institute a litigation hold until nearly two and a half years after the Plaintiff filed her Notice of Claim in November 2010.  As to the second element, however, the Court was not convinced that the Plaintiff established that the records were destroyed with a culpable state of mind.  The Court did find it “especially troubling” that the Defendant did not institute a litigation hold until nearly two and a half years after the initiation of Plaintiff’s lawsuit. The Court was clear that the Defendant was negligent in failing to preserve discoverable information.  That being said, the Court was also clear that negligence is not enough to prove a culpable state of mind.  The Court found that the Defendants’ actions, while negligent, were not intentional.  As a result, the Court concluded that there was no intent to spoliate material evidence.  Plaintiff also failed to establish the third element of her spoliation claim.  The third element requires that the lost information be relevant to the party’s claim.  Plaintiff failed to set forth, with any degree of specificity, that the lost materials would have been relevant or helpful to her claim.  Relevance cannot be established solely on the basis of conjecture.  Here, Plaintiff failed to meet her burden to set forth specific facts to support her claim.  The Court here found that there was no spoliation of evidence.  Despite the finding of no spoliation, the Court was still troubled by the actions of the Defendant and the actions of Defendant’s counsel. As a result, the Court imposed a monetary sanction of $1,500 to be borne equally by Defendant and the law firm that represented Defendant at the initiation of the lawsuit. Kevin received a B.A. in History from Princeton University in 2012.  He will receive his J.D. from Seton Hall University School of Law in 2016.

Document Refinement and its Apparent Prejudices

On December 16, 2015, the Honorable Susan D. Wingenton granted GDC’s Motion to Quash Defendants William Baroni and Bridget Kelly’s subpoena duces tecum, which asked the GDC to produce “Any and all handwritten or typed notes, stenographic transcripts and audio and/or video recordings of witness interviews conducted by Gibson Dunn during its representation of the Office of the Governor of New Jersey from on or about January 16, 2014 to the present.”  Defendants also included a request to produce any and all metadata and document properties for all typed notes and interviews as well.  In her Opinion, Judge Wingeton took certain issue with the ethically questionable document preparation methods of the GDC, yet ultimately decided to grant the Motion to Quash.  The GDC had a somewhat perplexing response to Defendant’s first requests as to notes, transcripts and recordings of witness interviews conducted by the GDC during its representation of the OGNJ.  They claimed that no such materials currently existed.  Here, the GDC deviated from normative interview information collecting techniques; here witness interviews were summarized electronically by one attorney while the interviews were being conducted and then edited electronically into a single, final version.  This differed greatly from their former methods of practice, where contemporaneous notes were taken by GDC interviewers and that those notes were preserved after the summaries were completed.  By contrast, the GDC clearly intended that contemporaneous notes of the witness interviews and draft summaries would not be preserved, as they were overwritten during revisions and in preparing the final summary.  The Court found this to be “unorthodox” at the least, and noted its disapproval of their actions, likening them to have the same effect as deleting or shredding documents.  Unfortunately, however, the Court had no reason to doubt the GDC’s honesty with respect to their methods or their responses to Defendant’s request for documents.  The Court did sympathize with the both Baroni and Kelly, but granted the motion anyway. It is clear to see that the GDC’s actions, though ultimately condoned by the Court, were not done with the intent to deliver a full and honest discovery of the requested materials.  While the Court may have deemed such actions as legal, GDC’s document preparation methods raise many ethical implications, and could have clearly been used to destroy important information that Defendants here were entitled to.  Indeed, this method of refining interview summaries and information could have easily omitted details the defense may have found useful.  Doing so did not provide the defense with the transparent information they should have received by request; instead they had to make due with the GDC’s white-washing of the information.  In all, the GDC should have been more responsible and fair with the way it conducted and kept record of it’s interviews. This method of refining information can only seek to unfairly hurt their opposing counsel.  Garrett Keating received his Bachelor’s degree from Trinity College (2011) and majored in both Political Science and Public Policy and Law; he will receive his J.D. from Seton Hall University School of Law in 2016.  He has worked primarily in the legal fields of Medical Malpractice, Personal Injury, and Class Action law

When Will Protective Coding Finally See Its Day In Court?

The Southern District of New York Magistrate Judge Peck may have changed the way attorneys view discovery procedures forever. In an unprecedented ruling, Judge Peck held in Da Silva Moore v. Publicis Groupe & MSL Grp., 287 F.R.D. 182 (S.D.N.Y. 2012) that technology assisted review (“TAR”) is “an acceptable way to search for relevant ESI in appropriate cases.” To follow up this historic step, Judge Peck ruled again in 2015 that TAR is appropriate and should not be discouraged or held to a higher standard that could deter parties from using this cost and time-effective tool. TAR uses technology and statistics to determine which documents or data will be relevant to the subject matter of the case at hand. If the topic or issue is “attorney-client privilege regarding a work-monitored email address,” for example, the system would scan a large number of documents or a sample size and find all documents bearing the relevant information. This allows the producing party to save time and cost if personnel required to scan that many documents the same amount of time. In the 2014 Tax Court case Dynamo Holdings Ltd. P'Ship v. Comm'r of Internal Revenue, 143 T.C. 9, 2014 WL 4636526 (T.C. Sept. 17, 2014), opponents of this system argued that incomplete responses to discovery are inevitable. To that complaint, the court in that case found that the party may simply file a motion to compel if that belief is supported, a notion with which Judge Peck agrees. “In, essence, what the parties are asking the Court to consider [is] whether document review should be done by humans or with the assistance of computers.” The more prominent question presented to Judge Peck in Rio Tinto was the level of transparency and cooperation required from the parties “with respect to the seed or training set(s).” The training or seed sets are the sample set of documents used to code the entire set and label documents as relevant or irrelevant to the case.  Judge Peck suggested that the producing party turn over the entire seed set, regardless of the label, to ensure transparency and function as the potential resolution to this uncertainty. Currently, there is a debate amongst courts as to whether the seed set should be ordered to be produced, or whether the parties must generally agree to such production. The Judge was of the opinion that even this debate could be put to rest with a few cooperation-based measures, stating that “requesting parties can insure that training and review was done appropriately by other means, such as statistical estimation of recall at the conclusion of the review as well as by whether there are gaps in the production, and quality control review of samples from the documents categorized as non-responsive.” While the Rio Tinto court did not decide on the actual transparency rules because the parties stipulated to TAR use, the Court noted that it was important to opine on this matter for future cases, as TAR is a valuable tool in e-discovery procedures. Going forward, it will likely become necessary for courts to rule on whether or not TAR may be compelled and in what way. It is foreseeable that cases involving high levels of distrust among parties will lead to such an opportunity. Svjetlana Tesic is a magna cum laude graduate of Montclair State University, where she received her B.A. in Jurisprudence, with a minor in Business. She will receive her J.D. from Seton Hall University School of Law in 2016, where she serves as Student Bar Association President and is a member of the Moot Court Board. After graduation, Svjetlana will clerk for a trial judge of the Superior Court of New Jersey in the Passaic County Vicinage. 

When Are Parties Entitled to “Sample” Private Social Media Activity to Uncover Probative Evidence?

In this case, the plaintiff sued her former employer for violating the Fair Labor Standards Act by requiring her to work forty-eight hours a week without an uninterrupted lunch break, and only compensated her for forty hours per week. In order to rebut these allegations, the defendants requested, among other things, the plaintiff’s Facebook account information during the relevant time period. When the plaintiff refused to comply with the request, the defendant sought relief from the court for an order compelling her to produce the following discovery: Using the ‘Download Your Information,’ feature or other comparable technique, produce a complete history of your Facebook account, including without limitation all wall posts, status updates, pictures, messages, communications to or from your account, and any other content displayed at any time on your Facebook account. The defendants argued that this information was necessary for two reasons: 1) to prove the plaintiff was engaged in non-work-related activities during the time she claimed to be working, and 2) to disprove the plaintiff’s emotional distress claim. As to the first purpose, the court held that the defendants were not able to support their position that a broad inspection of the plaintiff’s social media account was reasonably calculated to lead to the discovery of evidence demonstrating where the plaintiff was during the hours she claimed to be working. “Defendants have not made a sufficient predicate showing that this broad class of material is reasonably calculated to lead to the discovery of evidence establishing Plaintiff's whereabouts during the Relevant Time Period.” However, the court agreed that the discovery of limited social media information was permissible to uncover activity relating to the plaintiff’s emotional distress and any potential alternative causes of that distress. Therefore, the court order the plaintiff to produce “a sampling of Plaintiff's Facebook activity for the period November 2011 to November 2013, limited to any specific references to the emotional distress Plaintiff claims she suffered in the Complaint, and any treatment she received in connection therewith.” (internal quotations omitted). The court also ordered the plaintiff to preserve all of her Facebook account information for the duration of the litigation because the defendants were permitted to request the rest of the plaintiff’s Facebook activity after reviewing the sampling if they discovered probative evidence. Danielle is a third year student at Seton Hall University School of Law (Class of 2016). Prior to law school, she graduated magna cum laude from The College of New Jersey, where she earned her B.S. in Criminology with a minor in Arabic. After graduation, Danielle will clerk for a civil judge in the Superior Court of New Jersey.

What Should a Litigant Do When Discovering from a Small-Time Adversary?

United States Magistrate Judge Kathleen Tomlinson of the Eastern District of New York recently denied a defendant law firm’s motion to impose sanctions and an adverse inference against its former client. At the evidentiary hearing, the court heard testimony from two of the plaintiff’s employees, who recounted a series of unfortunate events and office Google-ing that lead to the destruction of all documents regarding the plaintiff’s financial condition in 2009. The present issue arises from a terminated construction contract nearing its 20th anniversary.  In May of 1996, Abcon Associates, Inc. was retained by the USPS for a construction project in Queens, New York.  Within the year, USPS terminated its contract and eventually Abcon and its president, Michael Zenobia, Jr. and his wife were ordered to pay a $2 million judgment to the United States Fidelity and Guaranty Company (USF&G).  To pay this, Abcon and the Zenobias borrowed $2 million from New York Community Bancorp, Inc. (NYCB). In April of 1998, Abcon retained Haas & Najarian LLP (H&N) to sue USPS.  Abcon and H&N entered into a legal services agreement agreeing that would retain a lien in any amounts recovered from USPS, subordinate to any funds owed to NYCB. After protracted litigation (10 years!) Abcon received a $2.4 million judgment, and then effectively lost it due to various judgments and claims against it.  In 2008, a court order directed distribution of money to H&N (resulting in a final payment of $463,000 for its legal fees). Another creditor appealed that order, and Abcon argued that H&N should return the money paid to it.  H&N, apparently seeing the writing on the wall that it was now or never to get paid, refused to return the payment. On June 30, 2009, Abcon’s creditors settled among each other.  Abcon objected to the distribution of money, claiming again that H&N should not have been paid before NYCB. Abcon filed a complaint against H&N on February 27, 2012, alleging breach of contract of the parties’ legal services agreement.  During discovery, H&N requested: “All documents concerning Abcon's outstanding liabilities as of June 30, 2009 in excess of the sum of $5,000 owed to Persons other than [the previous litigation’s creditors]” and “Documents concerning Abcon's financial condition of June 30, 2009, including by way of specification but not limitation, a balance sheet and an accounts payable ledger.”  Essentially, H&N wanted to be able to show that even if they were wrongfully paid in 2009, returning the money would benefit Abcon’s creditors, not Abcon. Abcon contended that they had absolutely no documents that were responsive to those two requests, due to an office move resulting in extreme downsizing of files and power outages that totally corrupted any possibly responsive electronically stored data.  They were responsible prior to when Abcon “became inactive” and moved offices to a smaller location in September 2009, Patricia Van Dusen’s, a long-term Abcon employee and “Director of Information Services,” job was to sort the files and keep items that needed to be saved, and destroy the rest.  In order to determine what needed to be saved, Van Dusen conducted internet research on what should be kept, maintained, etc. and threw out those documents before June 30, 2009. Next, Abcon’s Director of Marketing and Sales (and apparently also its “de facto IT person”) Eros Adragna, did not protect the company’s electronic data during the office move.  As one might expect, this ended poorly: multiple power outages occurred at the new location and, big surprise, Abcon’s server was outdated and vulnerable to viruses.  Adragna tried to back up the data but it was too late: nothing that he saved was responsive to H&N’s discovery request. Both Van Dusen and Adragna testified before the magistrate that they did not think or know there was a “litigation hold” on Abcon’s financial records, even though Abcon was the party who eventually filed suit.  In the end, Abcon lucked out. While the court found that Abcon had a duty to preserve potential evidence, the scope of that duty did not necessarily extend to the 2009 financial documents because H&N’s legal argument that it didn’t breach the contract was so unexpected that Abcon could not have reasonably anticipated that the documents would have been relevant to its breach of contract case. Abcon’s employees breached their duty to preserve documents, but as the court says, “at most” acted negligently as to documents that were not clearly relevant to H&N’s defense.  Therefore, the court declined to issue sanctions and an adverse inference against Abcon. Business owners, especially small business owners should learn from Abcon—don’t trust the determination of destruction of files to a couple of internet searches run by a non-attorney, and don’t entrust the preservation of data to someone also in charge of running the company’s marketing and sales. Van Dusen should have consulted with an attorney, and Abcon or Adragna should have contacted an IT specialist to preserve the data as soon as they realized there were problems with the server.  When preserving data is a side-hobby, possibly important documents that you have a duty to preserve will inevitably fall through the cracks. Angela Raleigh is a third year law student at Seton Hall University School of Law.  She attended Montclair State University, graduating summa cum laude, and owes her interest in law to her late great-uncle, Michael Mastrangelo, who let her “work” in his law firm at age four.

Can a Former Employee Get Away with Evidence Spoliation?

We often hear about the use of forensic evidence in murder mysteries pertaining to DNA testing or finding fingerprints at the murder scene.  As technology continues to advance, however, forensic evidence has made its way into civil cases.  In the technological world, even if you delete an email or a text message, the information can easily be restored.  Furthermore, evidence that you blatantly tried to delete a particular document or text can be used to draw a negative inference regarding your culpability.  Before considering “hiding” or “deleting” information on a computer or smartphone device, always remember that forensic evidence will come back and bite you. In a May 2015 case, HMS Holdings Corp. v. Arendt, two former HMS employees learned the hard way that human beings cannot outsmart technology.  To assist their new employer, Public Consulting Group, Inc. (PCG), compete against their former employer, Health Management Systems (HMS), defendants Sean Curtin and Danielle Lange violated their post-employment covenants and used confidential HMS documents to the benefit of PCG.  In response to the litigation, PCG circulated a Litigation Hold Notice to particular employees, including Curtin and Lange, which advised the employees of their obligation to preserve all electronically stored information (ESI) “on computers, removable or portable storage media, office computers, cellphones and personal computers.” About a month later, the parties to this case entered into a Stipulation Regarding Expedited Discovery.  Under the Stipulation, the defendants needed to forensically image their personal computers, phones, zip drives, and other electronic devices to be searched.  Although defendants handed over certain devices, not all devices were handed over and in some cases the defendants were not honest about what information these devices really contained or, more accurately, what they no longer contained. This case mentions four devices in particular: (1) Curtin’s Macbook Pro; (2) Curtin’s external Toshiba hard drive; (3) Lange’s PCG laptop; and (4) Lange’s iPhone.  Ultimately, the court found spoliation of evidence on all four devices and sanctioned the defendants accordingly. In order to prove spoliation of evidence, the party seeking sanctions, here HMS, must show that: (1) the party with control over the evidence was under an obligation to preserve it at the time of alleged destruction, which begins when a party reasonably anticipates litigation; (2) the party destroyed the records with a culpable state of mind; and (3) the destroyed evidence was relevant to the party’s claim or defense.  Relevancy of the third element is presumed upon intentional, willful or grossly negligent destruction of evidence. First the court analyzes Curtin’s Macbook Pro, which forensic evidence revealed had run a “Secure Erase Free Space” function six times after the Litigation Hold Notice.   Forensic evidence also showed that Curtin did not use this function prior to these six times.  Curtin alleged that he ran this program to help increase his laptop’s operating speed.  Despite his explanation, Curtin failed to provide evidence as to why he failed to use a different version of the software that would increase operating speed without permanently deleting files.  With a showing of willful destruction, a presumption of relevance attaches. Unlike his Macbook, Curtin was unable to provide any forensic imaging of his Toshiba external hard drive, despite the fact that considerable evidence showed that had copied volumes of confidential HMS materials to it the day before he left.  Upon review, the court finds that Curtin intentionally and willfully failed to produce the hard drive despite his legal obligation to do so.  Again, a presumption of relevance attaches to the hard drive ESI. Lange has the same fate as Curtin before the court.  Shadow Copies, partial snapshots in time of a computer’s content made by the Microsoft Windows system, revealed that her PCG laptop contained HMS files before the pending litigation that no longer existed after the filing of the suit.  Evidence shows that not a couple, but rather 5,300 files, were deleted from her laptop during a month-long period of time.  Lange, also an attorney, claimed that these were pertinent files but were deleted to protect client confidences.  Despite her explanation, the court found spoliation and a presumption of relevance attached. Finally, Lange’s text messages caused her some problems as well.  Lange claimed to have replaced her iPhone 4 for a new iPhone 5, something many could relate to in 2014 when the new and improved Apple device hit the market.  However, unlike many other customers, Lange’s old iPhone 4 had important text messages pertaining to the case and was replaced after the issuance of a Litigation Hold Notice.  Lange claims that she had dropped her iPhone 4 so badly that even those at the AT&T store could not restore her messages.  Despite this explanation, forensic evidence revealed that messages were actually uploaded to her laptop computer one week after her upgrade.  In light of this evidence, the court again found spoliation of evidence and a negative presumption of relevance. With all four electronic devices being used to destroy evidence, the court now is tasked with determining the proper sanctions.  The court has wide discretion in determining appropriate sanctions.  Due to the egregious misconduct of both Curtin and Lange, the court allows the jury to draw a mandatory adverse inference regarding the destroyed evidence.  Since there is no way to determine the contents of the evidence destroyed, the court finds this to be the most fair to HMS. In addition to the mandatory inference, the court also requires defendants to pay HMS’s reasonable attorney’s fees, costs, and expenses incurred as a result of their misconduct, with no reimbursement or indemnification from PCG.  Also, since Lange is an attorney, the court will forward this information to the appropriate ethics board regarding her fitness to practice law.  Hopefully the defendants in this case learned that forensic evidence does not lie and as technology increases, it is increasingly more difficult for us to cover our own tracks by simply clicking a “Delete” button. Laura Cicirelli, a Seton Hall University School of Law student (Class of 2016), has served as an Associate Editor and is currently serving as the Editor-in-Chief of the Seton Hall Law Review. Following graduation, Laura will be joining the firm of Debevoise & Plimpton as a corporate associate in its New York City office.  Prior to law school, Laura attended the University of Scranton (Class of 2013) where she majored in marketing and double minored in operation and information management and philosophy.

It Is Never Really Over: Bad Faith Leads To the Reopening of Discovery and Sanctions

In this case involving the False Claims Act, whistleblowers, or relators, alleged that the defendants, a large company, falsified testimony and spoiled discovery affecting their claim. The case was initially brought by the relators who argued that the defendants used a third party computer program, Snappy, to manipulate dosing protocols to increase reimbursements by Medicare. During discovery, a Rule 30(b)(6) witness was deposed, after being presented by the defendants as a person with the most knowledge of the computer software. This testimony would stand as the basis of discovery and arguments. A year later, the witness and the defendants claimed that the witness “misremembered” the details and the witness revised his testimony.  It was after this truth came out that the relators filed this motion for sanctions, claiming the defendants “pervasively and intentionally manipulated evidence and engaged in witness tampering in an attempt to hide the functions that Snappy performed during the relevant time period.” The court ultimately sided with the relators and decided to reopen discovery and punish the defendants with sanctions. The court found that the actions of the witness and the defendants led the case astray during discovery by reasoning that either, at worst, the defendants purposely manipulated the discovery or, at best, they failed to act in correcting the issues. The court held that the relator’s evidence did not “unequivocally” demonstrate that the defendants committed the more “nefarious” level of discovery and refused to grant their request to strike defendants’ answer. However, it found the “forgetfulness” and altered testimony “highly suspect.” Thus, these actions showed bad faith and warranted the reopening of discovery and the cost of attorney’s fees against the Defendants. 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.

  • Find an eLesson


  • Register for Post Notifications

    Subscribe to receive updates whenever a new eLesson is published.

    Manage Subscriptions
  • Let Us Blog Your Event!

    eLessons Learned is fast becoming the site of choice for employers, employees, judges, lawyers, and journalists who are interested in learning more about these areas without being intimidated by the complexity of the topic. In fact, organizations and event coordinators often feature eLessons Learned as their official eDiscovery blog. Fill out our simple registration form to have eLessons Learned be the official blog of your organization or event.

    Register Now
  • Recent Praise

    The blog takes a clever approach to [e-discovery]. Each post discusses an e-discovery case that involves an e-discovery mishap, generally by a company employee. It discusses the conduct that constituted the mishap and then offers its ‘e-lesson’ — a suggestion on how to learn from the mistake and avoid it happening to you.

    Robert Ambrogi

    Legal Tech Blogger and creator of LawSites




    Although I may have missed some, yours is the first article that I have seen addressing Zubulake II. It is often the lost opinion amongst the others.

    Laura A. Zubulake

    Plaintiff, Zubulake v. UBS Warburg


    Click here to see more.
View in: Mobile | Standard