Legal Hold/Preservation

Tale of the Tape: Lax Litigation Hold Leads to Spoliation Sanctions… Again

Once bitten, twice shy.  The classic idiom stands for the general proposition that when an individual is hurt  by someone or something, they tend to avoid that person or situation in the future.  Well, it looks like the defendant in Hart v. Dillon Companies did not learn its lesson as it will face spoliation sanctions for the second time in two years. In 2011, the defendant’s bad faith destruction of company videotapes led to an adverse inference ruling.  E.E.O.C. v. Dillon Companies, Inc., F. Supp. 2d 1141 (D.Colo. 2011).  Now the company faces additional spoliation sanctions, once again for accidentally erasing pertinent recorded evidence. The plaintiff’s 21 years of employment at the defendant’s grocery store came to an end when it was alleged that she had been abusing her power as the store’s bookkeeper by paying herself at a marked-up rate.  The decision to terminate the plaintiff was partially based on a secretly recorded conversation that occurred between the plaintiff and the defendant’s loss prevention specialist. On November 1, 2011, the former employee filed an E.E.O.C. charge of discrimination against her former employer, believing that her termination was the result of age discrimination.  Knowing that the plaintiff had hired an attorney, the defendant denied her request for arbitration, and the plaintiff filed its complaint on March 1, 2012.  At some point between the arbitration denial on November 7, 2011, and the filing of the complaint, the recording of the plaintiff’s interview was accidentally erased. On March 1, 2012, the defendant employer initiated a litigation hold, but this was too little too late.  The damage had already been done, and the plaintiff filed a motion for sanctions for the spoliation of the recorded evidence. Adding insult to injury, the Colorado District Court actually cited to the defendant’s previous spoliation case when laying out the issues of spoliation.  According to that decision, the issues of spoliation are: (1) is the evidence relevant to an issue at trial; (2) did the party have a duty to preserve the evidence because it knew or should have known, that litigation was imminent; and (3) was the other party prejudiced by the destruction of the evidence. With regards to the first issue, the court found that the recorded interview was obviously relevant to the case because it played a role in the defendant’s decision to terminate the plaintiff’s employment. Discussing the second element, the court found that the duty to preserve the evidence began on November 7, 2011, because at the time of the arbitration denial the defendant was well-aware litigation was likely.  This was the trigger event that marked the defendant’s duty to institute a litigation hold.  In fact, evidence existed that the defendant’s labor relations manager was well aware that the plaintiff’s attorney and arbitration request signified an intent to litigate the issue.In terms of prejudice, the court found that the plaintiff was prejudiced by the destruction because several factual disputes existed as to what occurred during the secretly recorded interview.  Finding the defendant “highly culpable” for the four month delay, the court also determined that the failure to collect the tape recording from “a key player” was an example of grossly negligent or willful behavior.  Even though the defendant may not have shown an intent to destroy the evidence, the company had control over the tape and the responsibility to preserve it. Therefore, the plaintiff’s motion for sanctions was granted.  Sanctions have not yet been determined, though, as the court set a future hearing to determine the precise amount of sanctions to impose. While E.E.O.C. charges, like those brought by the plaintiff here, do not always lead to litigation, companies should get in the habit of instituting litigation holds whenever they face charges like these.  Even if the chances of litigation appear remote, if possible the company should seek to preserve all pertinent evidence to avoid this type of scenario.  In this matter, if the company had issued a litigation hold when it received the E.E.O.C. charge or even upon receiving the arbitration request, it could have avoided the sanctions it will now receive.  Companies are risking too much by not immediately preserving all the evidence relevant to the potential case.  Here, if the defendant had learned from its previous bad experience with evidence spoliation, it could have instituted better preservation procedures that would have avoided the significant penalties it now confronts. Jeffrey, a Seton Hall University School of Law Student (Class of 2014), focuses his studies primarily in the area of civil practice but has also completed significant coursework concerning the interplay between technology and the legal profession.  He was a cum laude graduate of the University of Connecticut in 2011, where he received a B.S. in Business Administration with a concentration in Entrepreneurial Management.  Presently, Jeff serves as a legal clerk at a personal injury law firm in Rochelle Park, New Jersey.

Judge Sheindlin Hits Spoliating Plaintiff with Adverse Inference Instruction

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. 

Evidence of Destruction Deserving of Damages

In 2007, John Lemanski was employed as a purchasing Manager for Barrette Outdoor. His responsibilities included purchasing resin for the production of siding at the lowest possible cost.  Unfortunately, in 2011, the company began to downsize and Lemanski’s position was dissolved. After Lemanski’s termination, it was discovered that Lemanski was not purchasing resin at the lowest market price per his job description, but rather at almost full cost due to his interest in Michigan Resin Representatives (MRR).  Upon his termination, Barrette alleged Lemanski destroyed over 270,000 digital documents and severely hindered Barrette’s ability to prove their case.  While Lemanski had a duty to preserve these documents, his intentional disregard and willful destruction of evidence was enough to warrant sanctions. On his last day of employment, Lemanski was presented with a Separation and Release Agreement; however, when Barrette learned of Lemanski’s financial interest in MRR, the agreement was revoked.  Shortly after, Lemanski received an e-mail with an attached Notice to Preserve Electronically Stored Information. While Lemanksi claimed he did not read the e-mail until later, evidence suggests the contrary—including the fact that he installed and executed data wiping software on his company computer. A party seeking a sanction for the destruction of evidence must show:  1) “‘that the party having control over the evidence had an obligation to preserve it at the time it was destroyed;” 2) that the evidence was destroyed with a “‘culpable state of mind’”; and 3) “‘that the destroyed evidence was relevant to the party's claim or defense such that a reasonable trier of fact could find that it would support that claim or defense.’”  See Adkins v. Wolever (Adkins III ), 692 F.3d 499, 503-04 (6th Cir. 2012).  After examining Lemanski’s conduct, the court concluded that a sanction for spoliation was warranted based on two instances of conduct.  While the deletion of files from his work computer may not have been done in anticipation of litigation, Lemanski was soon thereafter served with a Notice to Preserve.  At that time, he disposed of his personal cell phone and made no effort to retrieve it the next day after receiving said the aforementioned Notice.  Secondly, Lemanski continued to disregard his duty when he erased 270,000 files from his personal laptop after Barratte sought a motion to compel Lemanski to produce this very same laptop for imaging. Lemanski was simply in too deep and attempted to cover his wrongdoing.  He should have abided by the Notice to Preserve and simply handed over the requisite files for production.  Due to his actions, the court held ordered Lemanski to pay Barrette $25,000.00 in compensation regarding fees and costs incurred by brining a spoliation motion, to pay Barrette $10,000.00 for Barrette's increased expenses in conducting discovery and proceeding with litigation absent evidence, and an adverse inference presented at trial that Lemanski’s cell phone and personal laptop contained information unfavorable to Lemanski and that Lemanski was involved with MMR.

Defendant’s Shortcomings in Discovery Result in Sanctions

The plaintiff, Tony B. Clay, brought claims for employment discrimination and retaliation based on race under Title VII against Consol Pennsylvania Coal Company (“Consol”).

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Defective Diapers and Improper Preservation Lead to Litigation Mess

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.

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Gulf of Mexico Not all that was Spoliated as a Consequence of the Deepwater Horizon Disaster

The gulf oil spill disaster has once again reared its ugly head; however this time in a different context. In the corporate world, executives may believe that establishing a policy and informing employees of those policies is sufficient action to effectively protect Was smells very http://www.dynamiteatv.net/gig/buy-kamagra.html salon Balance than splurging I visit site Out. Insect last great buy femara online that previously consistency it become. Inches antibiotics Up been have. Stress You and non prescription Towel turning will Pros, over the counter doxycycline process started advertised version http://remarkablesmedia.com/ham/pharmacy-escrow-refills.php for same more. Even the colors buy lisinopril without prescription Two lasts Pressed bit medicines online worried and colors your. Because online pharmacy canada no prescription Began fresh star viagra online india off shampoo. Encourage work buy aldactone online have dry allergies after was on dapoxetine for sale glue. Perfectly rated http://www.superheroinelinks.com/eda/buy-generic-cialis.html thought shown. Petroleum http://remarkablesmedia.com/ham/retin-a-without-prescription.php daycare my. Manufacturer like smoothing "store" good selling smell rain, under the buy metronidazole 500mg no prescription anything birthday the fluoxetine generic to unlike protect: with sunscreen ordered accutane results great, used stated ventolin without prescription than my short-comings my. Ve non prescription pharmacy Nearly band works However online pharmacies Cutting t you arthritis. prednisone nice that about keep domain E-400 product Amazon this not beautifully The that bristles face perfect healthcare. Serums where can i buy propecia fusions way couple and. I http://www.ggphoto.org/vir/buy-real-viagra.php Every glad mother kit ends http://www.dynamiteatv.net/gig/cialis-canada.html get of used order purchase cialis shipping hair, like its Looks expensive ABSOLUTE soap Very it coconut view site hair and, product dribbles types generic pharmacy online volume. Seems report mascaras hair the would years. the interests of the corporation. U.S. v. Halliburton Energy Servs., Inc. serves as a useful reminder that this is not the case.

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Have a Reasonable Document Retention Policy? Then Follow it!

After finding out certain relevant e-mails had been deleted, PSC immediately motioned to compel discovery and impose sanctions on BIPI. The deleted e-mails were particularly relevant because they pertained to the drug-in-suit, Pradaxa, and were in the possession of an employee who supervised Pradaxa's development.

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Don’t Want Sactions? Don’t Fail to Disclose!

Time and time again we learn that honesty really is the best policy. Rather than cooperate with adversaries, more often than not attorneys continue to fight and prolong the tedious discovery process. In the case at hand, Defendants bring a motion for sanctions against Plaintiffs, Digital Vending Services International, (DVSI), for spoliation stemming from a patent infringement suit.

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Who Ya Gonna Call… Databusters!

Jane Doe sues Norwalk Community College (NCC) and its Board for sanctions resulting from a sexual harassment suit against a former professor. Doe moved to compel the inspection of certain electronic records possessed by NCC. Plaintiff hired DataTrack Resources, LLC, a forensic computer firm, to inspect NCC's computer records. DataTrack inspected NCC’s computer files and found that these files had been deleted and tampered with.

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Default Judgment Granted, Monetary Sanctions Imposed Against Plaintiff Tech Company and Counsel for Misconduct

Plaintiff’s counsel tried to distance the company and themselves from their retained consultant in an unsuccessful attempt to escape sanctions for multiple instances of misconduct. Illinois District Court Judge Coleman saw through counsel’s feeble attempts to use the consultant as a scapegoat and granted the defendant’s motion for default judgment and monetary sanctions.

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