Production of Data

Proportionality Applies to International Trade Disputes As Well

In Timken Co. v. U.S., the plaintiff ("Timken" or "Plaintiff") challenged the decision of the Department of Commerce, International Trade Administration ("Commerce"), denying Plaintiff access to computer tapes submitted by defendant-intervenors (the "Defendant") in a complex trade case.  Timken sought the tapes notwithstanding that it had received the very same information in paper form. Plaintiff advocated its position by discussing the hardship that would be imposed if Plaintiff had to reproduce the tapes itself.  Plaintiff demonstrated that it would require 7,500 man-hours and a legion of "keypunchers," at a total cost of approximately $200,000 to duplicate what Commerce already had in its possession.  With respect to the need for the tapes, Plaintiff indicated that without the tapes it would not be able to identify factual errors in the data and other mathematical or methodological errors. Commerce countered the above points by arguing that if it had to supply the tapes, it would have to expend significant energy insuring that customer names had been deleted and assisting Plaintiff with mechanical problems that may arise.  Commerce also asserted that if it was compelled the tapes companies would be less likely to store information on tapes moving forward, to prevent disclosure. In reviewing the merits, the Court of International Review applied the standard expounded in the applicable legislative history; that is, "whether the need of the party requesting the information outweighs the need of the party submitting the information for continued confidential treatment."  The court first concluded that the cost factored weighed in favor of Plaintiffs. Not only were Plaintiff’s costs to reproduce high, but also Plaintiff was willing to offset any costs to Commerce.  This process also minimized the involvement, and therefore the burden, of Commerce.  With respect to the argument that the tapes were required by Plaintiff to independently analyze the data, the court found that access to the tapes was essential for effective advocacy, and that such work by Plaintiff would not constitute a "duplication of administrative functions."  Finally, the Court dismissed Commerce's argument that companies would no longer maintain data on tape: "[I]t is unlikely that the mere possibility of trade litigation in the United States would prompt foreign exporters to return to archaic business procedures." Although not articulated as such, the court engaged in a proportionality analysis typically applied to discovery disputes in federal courts.  Plaintiff's willingness to offset the costs to Commerce seemed to sway the court, just as it would in a typical discovery dispute.  Another principle to be extracted from this case is the value inherent in having data in a particular form.  This may be an area where practitioners miss the boat. A savvy e-disco attorney will know the ins and outs of how different forms of data can be manipulated, and the form most ideal for recovering (or inhibiting recovery) of particular information.  So practitioners should remember at their next meet and confer, just getting the information may not be enough—form may be critical. Adam L. Peterson is a graduate of Seton Hall University School of Law.  Adam was 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. 

Employers—Got Resumes? Don’t Toss Them Just Yet

Plaintiff Erick Zayas joined with the Equal Employment Opportunity Commission (EEOC) to sue Ventura Corp. for employment discrimination on the basis of sex in 2007. In essence, Zavas complained that Ventura’s long-standing tradition of hiring women for the position he applied to was discriminatory. Furthermore, Zavas alleged that Ventura destroyed relevant evidence. In its answer, Ventura stated that the fact that no men have filed applications or have not met the position requirements did not support the plaintiffs’ assertion of discrimination. However, during limited discovery a list revealed that qualified men did in fact apply and accounted for 34.5 percent of qualified applicants. The central issue involved application materials received by Ventura. These included materials submitted by e-mail and hard copy resumes. The court first notes that spoliation is “the failure to preserve evidence that is relevant to pending or potential litigation.”  The duty to preserve relevant evidence arises once litigation is reasonably anticipated. The court noted that since Ventura was notified in 2007 that it was being charged with sexual discrimination, at that point Ventura should have reasonably anticipated litigation and was thus under the duty to preserve. Ventura attempted to make a statutory argument that resumes did not need to be preserved. The relevant statute, 29 CFR 1602.14 (see http://www.law.cornell.edu/cfr/text/29/1602.14), makes reference to “application forms” and “test papers.” Ventura argued that it required neither application forms nor test papers and that resumes were not mentioned. However, the court rejected this argument. The court noted that the statute also includes the language, “other records having to do with hiring.” The court ultimately held that resumes therefore clearly applied. Ventura’s Human Resource Analyst testified that certain documents were shredded or taken to a warehouse as a result of an office restructuring in 2009. Furthermore, the HR Analyst wasn’t able to find the said documents. The plaintiffs were therefore able to establish that Ventura either lost or destroyed the resumes between 2007 and 2010. Because Ventura was on notice since 2007, the disappearance of these documents constituted a violation of its duty to preserve relevant evidence. Soft copies of resumes delivered by e-mail were also lost in the same time period. In fact, th plaintiffs were able to produce a relevant e-mail to and from Ventura, while Ventura was not able to produce the very same e-mail. This e-mail alone and the fact that other relevant e-mails likely existed in the 2007-2010 period but were nowhere to be found, was sufficient to infer that Ventura likely destroyed them. The court held that sanctions were in order for Ventura’s violation of its duty to preserve. As a result of Ventura’s failure to preserve relevant evidence, the court imposed a “spoliation instruction” or adverse inference instruction. Such an instruction allows the trier of fact to infer that the content of the destroyed relevant evidence was damaging to Ventura’s case. Lesson learned? If you intentionally or unintentionally destroy relevant evidence while under a duty to preserve, an adverse inference instruction will likely bring swift defeat and sway the trier of fact against you. It’s best to preserve evidence and maintain your credibility with the court and trier of fact even with bad facts. Rocco Seminerio is a Seton Hall University School of Law graduate (Class of 2014). Mr. Seminerio focuses in the areas of Estate Planning, Elder Law, and Health Law. He graduated from Seton Hall University in 2011 with a degree in Philosophy. He also has an interest in the life sciences.

Greater Rights in Contract Mean Greater Obligations in Discovery

In Haskins v. First Am. Title Ins. Co., the court was asked whether a title insurance company (the "Insurer") is in "control" of documents that are in not in the Insurer's possession, but where the Insurer has the contractual right to direct those with possession to produce the documents.  The district court found in the affirmative, demonstrating that in some circumstances, the more extensive one's contractual rights, the more extensive its obligations in discovery. The plaintiffs sought class certification, which defined the class as all New Jersey consumers who paid premiums in excess of regulated title insurance refinance rates during the class period.  The plaintiffs alleged that the Insurer had overcharged for title insurance over a period of several years.  During discovery, plaintiffs sought certain documents in the possession of certain independent title agents, who were not employees of the Insurer, but with whom the Insurer had a contractual relationship.  The representative contracts made all documents "available for inspection and examination by [the Insurer] at any reasonable time."  The court inquired as to whether such documents are in the "control" of the Insurer, because pursuant to Fed. R. Civ. P. 34(a), a party may request another party to produce documents within that party's "possession, custody, or control."  Thus, if such documents were in the "control" of the Insurer, the plaintiffs could properly request that they be produced in discovery. The Insurer argued that it should not be required to produce documents in the physical possession of its agents because it does not possess or control the requested documents.  However, the court did not struggle to conclude that the Insurer's agency contracts plainly indicate that it has control over and access to the documents.  It drew this conclusion based on the premise that there is control if a party “has the legal right or ability to obtain the documents from another source upon demand.” Haskins demonstrates the potential for increased discovery obligations for those that have negotiated extensive rights in contract.  That is, the greater rights in contract, the potential for broader obligations in discovery.  While this factor may not drive the decision making for those negotiating contracts, contract parties should at least be aware of this consequence Adam L. Peterson 2014 graduate of Seton Hall University School of Law.  While at Seton Hall, Adam was 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. 

Defendant’s “Hands-Off” Approach Insufficient; Sanctions Ordered

In this case, Peerless Industries, Inc.  sued defendants Crimson AV, LLC claiming patent infringement and design patent infringement arising out of defendant’s manufacture and sale of certain TV mounts. While not a defending party, Sycamore Manufacturing Co., Ltd. (“Sycamore”) is plaintiff's former supplier of these TV mounts and played a vital role in the alleged infringement. Sycamore is located in China, while Peerless and Crimson are both located in the United States. Plaintiffs filed two motions: (1) a motion to compel the deposition of the Sycamore’s president, Tony Jin, and (2) a renewed motion for sanctions, both of which were granted. It was also determined in a previous case that Jin exercised managerial control over both Sycamore and Crimson. Therefore, plaintiff satisfied that Mr. Jin is a managing agent of Crimson. The court stated, “Plaintiff must simply show ‘that there is at least a close question as to whether the witness is a managing agent.’ We already found this to be the case. Furthermore, Mr. Jin clearly satisfies the ‘paramount test,’ which is whether the individual identifies with the corporation's interests as opposed to an adversary's.” The court further ordered that without any showing of hardship, Jin’s deposition would have to take place in the United States and not in China. As for the plaintiff’s renewed motion for sanctions, this motion marked the third time the plaintiff filed a motion regarding the same set of documents. The plaintiff argued that at the deposition of Crimson’s managing director, “it became clear that defendant did not conduct a reasonable investigation regarding Sycamore’s document production or Sycamore’s document retention for purposes of this litigation.” The plaintiff then filed a renewed motion for sanctions. The defendant and Sycamore asserted that certain documents in Sycamore’s possession had been produced. The plaintiff noted, that defendants did not represent that all requested documents were produced or that they were searched for but no longer existed. The plaintiff argued that the defendant wanted to rely on the same declarations as opposed to issuing more specific responses. The court stated that since it had determined Jin was principal of both Crimson and Sycamore and that he exercised a considerable amount of control over both corporations, that he was able to obtain all relevant documents from Sycamore. However, the court found that defendant took a “back seat” approach and instead used a third-party vendor to collect the documents. Finding that neither Crimson nor Jin had apart in the process of obtaining the requested discovery, the court granted the plaintiff’s motion for sanctions. The court held that this “hands-off’ approach is insufficient. “Defendants cannot place the burden of compliance on an outside vendor and have no knowledge, or claim no control, over the process. Finally, the court held that defendants must show that they in fact searched for the requested documents and, if those documents no longer exist or cannot be located, they must specifically verify that it is they who cannot produce. Salim received his B.A. in Applied Communications, with a minor in Legal Studies, from Monmouth University. He received his J.D. from Seton Hall University School of Law in 2014. Salim’s past experiences include interning for a personal injury law firm prior to attending law school, as well as judicial internships in the Civil and Family Divisions. Currently, Salim is taking part in the Immigrants’ Rights/International Human Rights Clinic at Seton Hall Law.

Does a Litigation Hold Require the Preservation of Employee Text Messages? Big Problems in Little Packages: Lost Cell Phone Leads to Spoliation Sanctions

Big things can often come in small packages, especially in the field of eDiscovery.  In Christou v. Beatport, LLC, the defendants learned that something as small as a text message on a lost cell phone can lead to a bevy of headache-inducing preservation issues, even without proof that the lost texts actually contained relevant information. Originally, the two parties worked together to create Beatport, an online marketplace dedicated to promoting and selling electronic dance music.  When that relationship eventually fell apart, the plaintiff, a prominent nightclub owner, brought suit against Beatport and his former employee who, as a “talent buyer,” was responsible for attracting DJs to perform at the plaintiff’s venues.  The plaintiff claimed that since the falling-out, the former talent broker had been strong-arming DJs against performing at the plaintiff’s nightclubs by threatening to drop them from his now high-profile website. Soon after the case was filed, the plaintiff issued a litigation hold letter to the defendants seeking the preservation of electronically stored information.  Despite the fact that this letter specifically referenced text messages, the defendants made no effort whatsoever to preserve the text messages on the former employee’s cell phone.  Of course the phone was then lost, about a year and a half after the hold should have been instituted. The plaintiff sought spoliation sanctions in the form of an adverse jury instruction.  The defendants attempted to shelter themselves from punishment behind testimony that the former talent broker did not use texts to contact clients and no proof was offered that there was relevant evidence anywhere in the phone.  Thus, the defendants felt the plaintiff’s motion was entirely speculative. Given the disappearance of the phone, the court recognized that there was simply no way to know whether it contained any relevant evidence.  There was also no evidence that the defense had done their due diligence by reviewing the text messages to determine whether any were responsive to the plaintiff’s discovery requests. The court explained that spoliation sanctions are appropriate when “(1) a party has 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.”  Here, there was no question that the defendants neglected their duties by failing to make any effort whatsoever to preserve the text messages. Because the loss of the phone was an accident, or at the most the result of negligence, an adverse jury instruction was unwarranted because it would be too harsh a punishment.   Instead, the court permitted the plaintiffs to present evidence at trial about the litigation hold and the defendant’s failure to abide by it.  Despite finding no foul play by the defendants, sanctions were necessary because “[a] commercial party represented by experienced and highly sophisticated counsel cannot disregard the duty to preserve potentially relevant documents when a case like this is filed.” The previous sentence best sums up the defendants’ actions.  They completely shirked all responsibility by failing to turn over the requested text messages or securing the phone itself.  Even though the phone was lost accidentally, spoliation sanctions were warranted because of the defendants’ complete disregard of their preservation duties.  The time and money spent belaboring this eDiscovery dispute could have  been completely avoided if the defendants simply preserved all of its electronically stored information, especially those documents specifically mentioned in a litigation hold.  Instead, the defendants suffered what probably turned out to be significant financial consequences fighting the motion and were left to combat incredibly damaging evidence at trial. Jeffrey, a Seton Hall University School of Law graduate (Class of 2014), focused 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. 

Movin’ On Over: Shifting Burdens and Costs

The defendants in Conn. Gen. Life Ins. Co. v. Scheib objected to five of the plaintiff’s Requests for Production of Documents (“RFPs”) because they would be unduly burdensome to produce. Thus, the court allowed the defense counsel to come forth with evidence to prove that the production of those documents, which consisted of 219 gigabytes of 19 different e-mail accounts.  The court determined that such production would be unduly burdensome. Counsel for the defendants did indeed file a Supplemental Briefing Regarding Cost of E-Mail Production indicating that it would cost over $121,000 to index, filter, and process the data. In this case the plaintiff’s complete claim totaled $119,515.49. In analyzing the defendants' proof against production, the court used Federal Rule of Civil Procedure 26(b)(1), which states that a court can limit discovery of relevant material if the discovery sought is unreasonably cumulative, obtainable from another source that is more convenient, less burdensome, or less expensive, or the burden or expense of the proposed discovery outweighs the likely benefit. The party objecting to the discovery request has the burden of proving why the requested discovery should not be permitted. But, if the party meets that burden, the burden then shifts to the original requesting party to show that the information is relevant and necessary for the case. The court also goes through the steps of analysis of determining whether a party meets the burden of proof. The first inquiry is to determine the benefits derived from the documents requested, specifically what relevant information will become available and the value of that information in resolving issues in the case. Then, those benefits should be compared against the cost of the production of the documents. Additionally, the court can deny the discovery request if the court finds there is a likelihood that the benefits of the requested discovery would be outweighed by the burden or expenses imposed by the proposed discovery. The court here also noted that cost shifting is a possibility when the documents are found to be burdensome to one party, but the other party feels they are necessary for the case. So a court could determine that parties either need to share the costs of a discovery request, or that a proposing party must take over costs for the request. The court found the defendants provided enough proof that the five RFPs were unduly burdensome to produce. The costs, tasks, and outside firms that would need to hired all combined convinced the court that it outweighed the benefit that the plaintiff would get out of the documents. Additionally, the court noted the lower stake of the litigation and the already provided documents that hit many of the relevant matters at hand in the case. The court also allowed the plaintiff to fund the retrieval of the information requested in those five RFPs if desired: “If Plaintiff believes that this information is important to its case, then Plaintiff can perform its own cost-benefit analysis and determine whether it wants to fund the discovery.” Overall, Scheib teaches us that once a party gets past the heavy burden of proving that production is burdensome, then all burden and costs could easily shift to that original requesting party.

Comply With Discovery, Or Pay The Price

While the practice of law, by nature, involves two parties facing off, there is no reason to make the job more difficult than it needs to be. The rules that govern court proceedings are in place to encourage cooperation between the parties and ensure that things “run smoothly.” When one party fails to abide by these rules, sanctions may be necessary. In Branhaven, the defendant’s counsel sought to prohibit the plaintiffs from using certain documents that were the product of a large last minute “document dump,” and award the defendants attorney’s fees and costs as a result of said production. The defendants also claimed that they were entitled to fees based on a Federal Rule 26(g) violation, in that plaintiff’s counsel had incorrectly certified by signing a response to defendants document requests on March 21 that such responses were “to the best of [his or her] knowledge, information and belief formed after reasonable inquiry.” Id. at 389. The defendants also claimed that counsel for the plaintiffs did not make reasonable efforts to ensure that the client has provided all the information and documents available that are responsive to the discovery demand. Additionally, for each request, the plaintiffs responded by stating that they would make the documents available at a mutually convenient time. In order to understand the egregious nature of the plaintiff’s conduct, we must look at the timeline of events. On January 31, 2012, requests were served on the plaintiffs, at which point its counsel claimed to have sent these requests to the client. On March 16, 2012, the plaintiff’s counsel claimed that the plaintiff had yet to be provided with responses.  The plaintiff’s counsel told the defendant’s counsel that they would be made available at a mutually agreeable time. The record reflects no action was taken until June. On June 14, 2012, the plaintiff’s counsel stated that the client had yet been provided any documents for production. The plaintiff assembled responsive pleadings based on that documents within the firms possession and sent same to the defendants. This amounted to about 388 pages in total. On July 20, merely days before depositions of the client were to begin, the plaintiff produced 112,106 pages apparently from overlooked e-mail servers and laptops. The plaintiff defend this conduct by stating that their servers were purchased as part of an asset sale and that passwords were not readily available, as the preference was to use in house IT staff prior to outsourcing. The court did not buy any of the plaintiff’s arguments stating that the plaintiff waited about five months prior to seeking the assistance of outside IT support. While a one month delay may have been reasonable, five months was not. Before one initiates suit, one should prepare for discovery as they would be subject to demands. The March 21 certification was made prior to any investigation by counsel that eventually turned up over 100,000 pages of documents. Therefore, the lack of access on the defendants stemming from the plaintiff’s conduct was punishable through attorney’s fees for the time spent converting the documents to a reviewable format as well as the time spent drafting and prosecuting for this motion for sanctions.

eDiscovery Expertise: Is Knowing Too Much A Ground For Judicial Recusal?

Just like TNT, the Second Circuit sure knows drama.  After years of protracted litigation, the Second Circuit finally put an end to an attempt to recuse a judge for knowing too much about eDiscovery and predictive coding. On April 10, 2013, in an incredibly brief order most likely meant to send a message deeper than its two sentences, a Second Circuit Judge denied a request for the recusal of Judge Andrew J. Peck from an ongoing employment discrimination case.  According to Judge Jane A. Restani, “Petitioners have not ‘clearly and indisputably demonstrate[d] that [Magistrate Judge Peck] abused [his] discretion’ in denying their court recusal motion… or that the district court erred in overruling their objection to that decision.” The contentious attempts to recuse Judge Peck stemmed from a discovery dispute after Judge Peck ordered the parties to use a method of predictive coding during discovery.  Although the parties seemed to agree that predictive coding should be used, they could not agree on the methods of predictive coding that would be implemented.  The plaintiffs believed that Judge Peck favored the defendants in his order, and therefore they moved to recuse the judge because of his established history with eDiscovery and more specifically, his history of actively advocating predictive coding. Judge Peck has a long history of participating in eDiscovery conferences  and was considered one of the Court’s “experts in e-discovery.”  National Day Laborer Organizing Netwrok v. U.S. Immigration and Customs Enforcement Agency, 2012 WL 2878130, 11 (S.D.N.Y. 2012).  Judge Peck was even involved in one of the first cases to order the discovery of electronic data.  Atlantic-Monopoly, Inc. v. Hasbro, Inc., 958 F.Supp 895 (S.D.N.Y. 1995). Despite the strong undertones of the order’s brevity, the plaintiffs continued to fight this seemingly uphill battle and later filed a cert petition to the Supreme Court. Rather than attacking Judge Peck’s background and connections to the eDiscovery community, the plaintiffs in this case should have instead accepted that judges need to actively participate in conferences and seminars to better understand the technology implicated in eDiscovery.  Just as attorneys can no longer ignore the ramifications of eDiscovery, judges too must enhance their knowledge to further develop this complicated area of law and readily adapt it to continually changing technology.  Judges should not be punished or accused of bias for engaging in programs geared towards teaching them about technology and its implications on eDiscovery.  If this were at all all permitted, judges would be afraid to participate in seminars and review panels, which would stagnate the development of the law, a process that is already far-behind the rapid progress experienced by technology. Jeffrey, a Seton Hall University School of Law graduate (Class of 2014), focused his studies primarily in the area of civil practice but 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. 

Colorado Supreme Court Remands Finding That Trial Court Didn’t Do Their Job By Failing To Actively Manage Discovery

How involved does a district court have to be in discovery issues?  This is the main issue that the Colorado Supreme Court tackled in this case.  The Court drew a firm line and interpretation on one of the state’s discovery rules and remanded to the district dourt so they could follow it. The plaintiff, DCP Midstream, LP brought a case for eleven breach of contract (among other claims) against the defendant, Anadarko Petroleum Corporation.   The two companies transport, gather, and process natural gas in Northeastern Colorado.  DCP Midstream transported the gas from wells and took them to be processed and sold.  DCP Midstream had contractual relationships, known as "gas purchase, gathering, and processing agreements" with a number of companies to carry this out. One of the companies that DCP Midstream did regular business with was Kerr-McGee Oil, which was acquired by Anadarko Petroleum.  It was then, according to the plaintiff, when the relationship soured.   DCP claims that Anadarko told Kerr-McGee to “transport and process natural gas in violation of DCP's contractual rights” and brought suit accordingly. DCP’s claims regarded eleven contracts specifically which covered about 900 wells.  DCP asked for document production using 58 requests.   These requests asked for Anadarko’s “complete contract file” for the thousands of wells that it operates as well as the title opinions for them.  Anadarko objected to many of these requests claiming that they were not relevant to the claims contained in the complaint and as such, outside the scope of discovery under Colorado Rules of Civil Procedure 26(b)(1).  Further, Anadarko claimed that the opinions asked for were privileged attorney-client communications but that claim won’t be addressed here. The trial court did not hear argument regarding Anadarko’s objections and merely granted DCP’s motion to compel.  Their written order read, “DCP was entitled to discovery that is or may become relevant and, because DCP's "breach [of contract] claim may expand and may ultimately encompass thousands of wells," DCP was entitled to discovery that may lead to more specific allegations…”” Anadarko petitioned the Supreme Court of Colorado for review. The Supreme Court found jurisdiction to take the case and discussed extensively the state rules, how the scope of discovery should be determined, and the role of the Court in all of it.  Specifically, the Court talked about the above-cited 26(b)(1) which granted parties as a matter of right, the ability to ask for discovery for anything that is not privileged that is “relevant to the claim or defense of any party.”  For good cause, the rule allows the court to permit a party more expansive discovery rights into "any matter relevant to the subject matter involved in the action." The distinction between the discovery allowed as a matter of right and that to be allowed for good cause was troubling to the Court.  The Court said that there was no easily explainable difference between what a “claim or defense” is versus what is “subject matter.”  Instead, the Court pointed to the advisory committee notes on the rule which advocated looking at the rule more practically.  The notes suggested that the Courts, when there is a discovery objection, determine the scope of discovery and tailor it to the “reasonable needs of the action.”  It is this approach that the Court adopted for the state of Colorado. The Court (and the state rules that it pointed to) also made it inescapably clear how vital the role of the trial court is in the discovery process.  Active judicial management is needed to decide scope of discovery questions in light of the action calls for and what is reasonable.  The trial court, in this case, did not make any findings on that question and instead just put through an order without any tailoring at all. The Supreme Court remanded the case to the trial court so they may make findings pursuant to their approach to the rule. Trial court judges of Colorado beware!  If you don’t take an active role in deciding discovery objections, the Supreme Court will just remand and you will have to look at it again, anyway.  Isn’t it just easier to manage your responsibility the first time? Julie will receive her J.D. from Seton Hall University School of Law, where she is serving as President of the Family Law Society and was a Student Attorney for the Center for Social Justice’s Family Law Clinic, in 2014. Prior to law school, she was a 2008 magna cum laude graduate of Syracuse University, where she earned a B.A. in History and a minor in Religion and Society. After law school, Julie will serve as a law clerk to a judge of the Superior Court of 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.