Production of Data

What Happens When the Smoking Gun is Thrown in the Recycling Bin?

In January 2014, the Hon. Lawrence E. Kahn in the U.S. District Court for the Northern District of New York granted plaintiff Dataflow, Inc.’s motion for sanctions in a case regarding deleted email correspondence.  Sanctions took the form of the often-case-ending adverse inference, with the judge reserving on the specific language of the adverse inference jury instruction until trial.  Defendant Peerless Insurance Co. might not wait that long, as even the neophyte lawyer can tell when blood is in the water. Dataflow’s claim arose out of a discovery request for production of documents that “targeted, inter alia internal communications and investigations regarding Plaintiffs’ claim.” Dataflow, Inc., v. Peerless Ins. Co., No. 3:11-cv-1127 (LEK/DEP), 2014 WL 148685, *2 (N.D.N.Y. Jan. 13, 2014).   When the defendant failed to produce any internal communications responsive to the document request, the plaintiffs tried again.  After the plaintiffs submitted an even narrower request for production, the defendants still didn’t produce anything responsive. Perhaps smelling something fishy, Dataflow started taking depositions and asking questions about the internal communications at Peerless.  The plaintiffs quickly learned that email was routinely used to communicate about claims.  The emails that Dataflow already asked for.  The emails that Dataflow was told didn’t exist.  The plot thickens. Hon. David E. Peebles, the Magistrate Judge handling discovery in this matter filed a Report and Recommendation urging sanctions be granted and fees shifted.  The District Court, reviewing Judge Peebles’s ruling de novo determined that the Magistrate got it right—and that sanctions are appropriate. The court analyzed the facts of the case under the spoliation framework set forth in Residential Funding Corp. v. DeGeorge Fin. Corp., 306 F.3d 99, 107 (2d Cir. 2002): On a motion for sanctions due to spoliation, the moving party must show that: (1) the party having control of the evidence had an obligation to preserve it at the time it was destroyed; (2) that party had a culpable state of mind; and (3) the destroyed evidence was of a nature that a reasonable trier of fact could find that it would support the moving party’s claim or defense. Dataflow, at *2 (citing Residential Funding Corp, at 107). Here, the duty to preserve for an insurance party was triggered when a claim was submitted.  As such, any internal communication regarding that claim is obviously supposed to be preserved.  The culpable state of mind can be inferred by the gross negligence displayed by email deletion resulting from a “system change.”  A “system change” that also conveniently “changed” the methods of preservation of documents related to paid and unpaid claims.  Finally, since the plaintiff was able to prove that the contents of the internal email conversations likely would have supported the plaintiffs’ theory of the case, sanctions in the form of an adverse inference just make sense. Perhaps it’s time for Peerless to have a “system change” with regards to their general counsel. Kevin received a B.S. in Political Science from the University of Scranton (2009), and will receive his J.D. from Seton Hall University School of Law in 2015.  Prior to joining the Seton Hall community, Kevin worked as an eDiscovery professional at two large “white-shoe” law firms in Manhattan. Want to read more articles like this?  Sign up for our post notification newsletter, here.

How Generous Can a Court Be in Rewarding Legal Fees As a Result of Violation of Discovery Rules?

When a party’s violation of discovery rules causes added legal expenses to its adversarial, courts appear to be very generous in approving fee applications. An application only needs to provide itemized ledger entries of attorney/paralegal hours with simple explanation of the relation of the corresponding work to the discovery violation. Courts are going to exercise broad discretion and place the burden on the violating party to show with particularity why each logged hour is unreasonable. It appears that courts will only disprove hours that are obviously excessive or clearly redundant on the face of the ledger. In Tangible Value v. Town Sports International, Inc., Tangible Value (“TV”) sued the defendants for not paying for services provided according to an oral contract, which the defendants denied. The bulk of its claim was reflected in an invoice stating an unpaid balance of about $800,000. Upon discovery request by the defendant, TV, refused to produce metadata and other documents related to the invoice. The court then ordered such production. During the course of the discovery, TV repeatedly provided insufficient documentation as requested and the defendant had to examine the documents and determine their sufficiency, converse with counsels of TV, and initiate court conferences multiple times to compel additional documents. It was later discovered that the invoice was not real but was created by TV after the fact to justify a damage claim. At that point, the defendant filed a motion for contempt and sanction. The court granted the motion. The defendants then filed their fee application seeking to recoup legal expenses as a result of TV’s discovery violation, which  totaled 423.2 hours at rates varying between $180-$562 for attorneys (associates and partners) and $95-$153 for paralegals. The Magistrate Judge of the District Court for the District of New Jersey generously awarded the defendants 384 hours. Several observations can be made on how the court dealt with various legal charges. First, court deemed all charging rates reasonable by comparing the proposed rates to the rates approved previously by the court in other matters. Second, the court automatically approved any hours that were not objected to by TV. Third, once specific objections of hours were made, the court used a great deal of discretion and required particular showing why the hours objected were unreasonable. Fourth, the court approved internal attorney conferences without much hesitation. Fifth, hours logged for preparation for court conference were approved 100%. Sixth, the court was only willing to consider obviously excessive or unnecessarily redundant work as unreasonable. Seventh and most astonishingly, the court was extremely generous in allowing hours associated with legal research and drafting of Motion for Sanction and Fee application, approving a whopping 250 hours, or over 6 weeks’ worth of work for a single attorney! For my fellow law students, that is half of one entire law school semester. Thus, for executives and legal counsels in similar situations, make a good faith effort to obey the discovery request. Otherwise, the other side will surely take full advantage of the generosity of the court and obtain a humongous reimbursement in legal fees. For easy reference, the table below summarizes the court’s disposition of all hours included in defendants’ fee application in the Tangible Value case. Note: DP stands for Document Production. Fee Items Hours Applied Court Comments Reduction of Hours by Court Assessment of deficiencies in initial DP 8.3 none Communications with TV Re deficiencies in initial DP 9.8 2 Court conference/preparation Re deficiencies in initial DP 1.8 none Communications with TV Re deficiencies in its 2nd DP 5.8 none Court conference/preparation Re deficiencies in 2nd DP 3.1 none Investigation of the invoice and assessment of documents related to the derivation of the invoice 19.2 Multiple paralegals on same task. 4.9 Communications with TV Re deficiencies in its DP concerning the invoice 10.7 Two entries on similar work. 4.4 Court conference Re the deficiencies in DP concerning the invoice 0.8 none Assessment of deficiencies in the 3rd DP 2.2 none Communications with TV Re the deficiencies in 3rd DP 2.4 none Assessment of the 4th DP 1.5 none Assessment of the 5th DP 7 Ledger is unclear. 0.5 Communications with TV Re deficiencies in the 5th DP 1 none Assessment of 6th DP and accuracy of TV certifications 5.9 none Communications Re deficiencies in 6th DP and accuracy of certifications 7.7 none Communication with TV Re deficiencies in 7th DP 1.3 none Communication with TV Re deficiencies in 8th DP 0.5 none Letter to Court summarizing DP deficiencies and seeking permission to move to compel 3.9 none Motion to Compel, including drafting, legal research. 23.5 none Oral argument Re Motion to Compel and Status Conference with court. 4.4 none Revision of Scheduling Orders throughout litigation due to discovery delays 4.2 none Letter request for permission to move for sanction, including review and legal research 9.8 Two attorneys repeated same task. 2 Review of TV response to the letter above 8.2 none Motion for Sanction, including legal research and drafting 80.8 none Review of TV response for the Motion for Sanction, preparation of reply, and review of Magistrate Report and Recommendations. 28.1 The 4 hours for reviewing Court Report excessive. 1 Fee application including review of records and case law research 89.9 Excessive only by 12.2 hours 12.2 Review of TV’s opposition to the Fee Application and draft reply 77.7 Excessive  only  by 12.2 hours 12.2 Gang Chen is a Senior Segment Manager in the Intellectual Property Business Group of Alcatel-Lucent, and a4th year evening student at Seton Hall University School of Law focusing on patent law. 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How Are Electronic Materials Slipping Through the Cracks? The Scope of eDiscovery Is Limited to Discovery Requests, Not search Terms

We have entered the age of information!  Every conversation, e-mail, text message, attachment, voicemail, and other electronic data are being stored all day, every day.  These types of electronically stored information (a.k.a. “ESI”) are regularly used during litigation.  So why is there a problem collecting information for trial?  Lawyers need to search through these massive amounts of ESI in order to provide the materials to the opposing party before trial.  This process is known as eDiscovery, or electronic discovery, and it has raised a number of issues regarding who, what, where, when, why, and how ESI is produced. The issue discussed here is what defines the scope of eDiscovery.  In ChenOster v. Goldman, Sachs & Co., the court made it clear that the scope of discovery, whether electronic or not, is still defined by traditional discovery requests and demands.  However, what brought forward this conclusion? Traditionally, the process of discovery is the period when lawyers exchange requests and demands for information, documents, and other materials that may be used in the case.  Generally, this can be broken down into three steps: (1) Requesting party will make a discovery request; (2) the opposing party will use any means she deems appropriate to find the materials; and (3) the opposing party will respond to the request in the form of producing the materials or an objection. However, in Chen-Oster, the parties deviated slightly from this traditional process.  Here, the requesting party, the plaintiffs, made traditional discovery requests for ESI.  Then the plaintiffs negotiated with the opposing party, the defendants, in order to determine what search terms would be used to filter through the enormous amounts of ESI available. Now, why is this different from a traditional discovery process?  This is different because both parties collaborated to determine how the ESI requested would be located. The issue presented in Chen-Oster begins upon production of the ESI by the defendants.  The defendants only produced the ESI they deemed to be relevant to the discovery requests set forth by the plaintiffs.  However, the plaintiffs intended to collect all ESI produced by the search terms they agreed upon. This brings us back to the main question:  what defines the scope of eDiscovery?  It is either all ESI located under the agreed upon search terms; or it is only ESI located under the search terms that are relevant to the original discovery request. According to Chen-Oster, an agreement to use specific search terms or discovery protocol does not override discovery demands and requests.  In other words, search terms used to filter through electronic data do not define the scope of discovery.  The scope of discovery is determined by the discovery requests rendered.    Victoria O’Connor Blazeski received her B.S. form Stevens Institute of Technology, and she will receive her J.D. from Seton Hall University School of Law in 2015.  Prior to law school, she worked as an account manager in the Corporate Tax Provision department of Thomson Reuters, Tax & Accounting.  Victoria is a former D3 college basketball player, and she has an interest in tax law and civil litigation.  After graduating, she will clerk for the Hon. Joseph M. Andresini, J.T.C. in the Tax Courts of New Jersey.   Want to read more articles like this?  Sign up for our post notification newsletter, here.

What Happens When ESI Is Lost?

Willfully destroying evidence? Failing to preserve materially relevant evidence? These are just two of the allegations Lisa Alter has made against the Rocky Point School District. Prior to submitting her complaint, Ms. Alter had accused the school district of similar wrongdoings. Alter worked for the Rocky Point School District holding various positions over the years. While employed as the Coordinator of Central Registration/Administrative Assistant within the Human Resources department, Alter alleges that she was subject to a hostile work environment on the basis of her gender. Further, Alter claims that she was retaliated against for complaining to the School District about it. The opinion here is related to a matter regarding electronic discovery in this case. The plaintiff filed a motion to compel discovery and for sanctions. After taking several depositions, plaintiff claims to have discovered new testimony relevant to her most recent motion to compel discovery. Specifically, the plaintiff alleged that: “(1) Defendants both failed to preserve and willfully destroyed evidence, and (2) Defendants continue to intentionally withhold relevant evidence despite repeated demands for production.” The school district had a system for overwriting backup drives. The plaintiff contended that by not stopping the overwriting of the backup drives that it constituted a breach of the defendant’s preservation obligation. The defendant claimed that all information relevant to this case (i.e., emails stored on the school’s employee email system). The duty to preserve arises when litigation is “reasonably foreseeable.” The party that has control over the evidence has an obligation to preserve it. Once evidence is lost, the court then looks to the obligor’s state of mind to determine culpability. Here, the court determined that the defendants did not intentionally lose the data. The burden then shifted to the plaintiff to prove that the lost data was relevant.[1] In the instant case, the court did not find bad faith; thus, it was up to the plaintiff to then prove the relevance of the lost data. Ultimately, the court granted in part and denied in part the plaintiff’s motion. The court found that the plaintiff did not meet her burden of showing that the lost documents were relevant. However, the actions of the defendants that lead to losing materials placed the plaintiff in a position to have to file this motion. Thus, sanctions were awarded in the amount of $1,500.00. The moral of the story: When litigation is pending, or likely to begin, preserve or pay the price. Jessie is a third year student at Seton Hall University School of Law (Class of 2015). She graduated from Rutgers University, New Brunswick in 2012 with a B.A. in Philosophy and Political Science.   Want to read more articles like this?  Sign up for our post notification newsletter, here. [1] When the breaching party acts in bad faith, relevance is assumed.

Does Forwarding Emails To An Opposing Party Qualify As A Sufficient Method of Transfer for Discovery Purposes?

The employee in this case was not an inexperienced layperson, but rather a seasoned and accomplished trial attorney. Yet even with her wealth of knowledge regarding discovery, she was nearly cited for contempt of court as a result of her unfamiliarity with electronic discovery obligations. When obligated to turn over emails to your opposing party during discovery, it is not enough to simply forward the email. Courts require the emails to be in their native form, which means containing the crucial metadata contained within the original email. In Sexton v. Lecavalier, the plaintiff, Byron Sexton, subpoenaed all documents in the defendant’s possession regarding several business entities. The subpoena provided that if these documents were in electronic form, the copies produced must be in their “native” format. In response to the subpoena, the defense attorney produced numerous documents including eleven emails that had been forwarded to her from her client’s Gmail account. The defense attorney claimed that she could not access the emails in their original format and even had an IT expert testify that the emails could not be accessed in their native format because the infrastructure for the email is controlled by Google, who does not allow its users to copy emails in native format. The issue in this case is that the emails were located in the “cloud,” and thus stored with a third party. However, even though a third party held the emails, the plaintiff argues that there are two ways to preserve the crucial metadata. (1) Emails can be downloaded to an email client such as Microsoft Outlook and then saved onto a computer in the format used by the client; and (2) Gmail emails that have been displayed in their “original” format by clicking “show original” and then saved as a PDF. The court held that even though the plaintiff currently lacked access to the files in their native format, this fact does not absolve counsel of her discovery obligations. A growing number of attorneys and courts are realizing the evidentiary value to metadata and as this trend continues, it is becoming crucial for parties to preserve all relevant electronic data. There is currently electronic discovery software in existence, which makes preservation of data a whole lot easier (http://www.ediscovery.com/solutions/collect/ is merely one example of such software). The presiding judge went on to scold both parties for even bringing this discovery disagreement in front of the court. The judge stated that the parties should have resolved this matter outside of court and that the defendant could have provided the emails in a correct format with minimal cost. However, the judge believed that the defense attorney had a good faith belief that the emails could not be provided in their native format and refused to hold her in contempt. It seems that ignorance was the defense attorney’s saving grace. Any practitioners reading this will not have the luxury of such a defense. In order to avoid charges of contempt being levied against you in the future, it would be wise to invest in electronic discovery software. At the very least, you should download Microsoft Outlook and save all of your emails in a format that preserves metadata such as .eml or .msg. As less paper copies of documents are being utilized, and as electronic storage is becoming more prevalent, native documents are going to become an issue increasingly seen by courts. Additionally, resolve any such discovery issues with your opponent. No judge wants his or her time wasted with similar motions compelling discovery. Daniel received a B.A. in Criminology and Criminal Justice from The University of Maryland. He will receive his J.D. from Seton Hall University School of Law in 2015. Presently, Daniel is serving as a legal intern in the Juvenile Justice Clinic. After graduation Daniel will clerk for a trial judge in the Superior Court of New Jersey. Want to read more articles like this?  Sign up for our post notification newsletter, here

Erasing Videotapes Can Be Dangerous for Everyone, Not Just Politicians!

In McCann v. Kennedy Univ. Hosp., Inc., the plaintiff Robert McCann sued Kennedy University Hospital, asking the court to sanction the hospital for intentionally or inadvertently destroying necessary videotapes.  The plaintiff contended that the videotapes contained an account of the defendant’s emergency room lobby on the night the plaintiff claims to have been mistreated by the defendant’s staff. The plaintiff argued that the defendant knew or should have known that the video tapes were discoverable material and that there was actual withholding or suppression of the videotapes, which constituted spoliation. On December 21, 2011, the plaintiff was transported to the hospital after suffering extreme rectal pain and trouble breathing. The Plaintiff claims to have been in excruciating pain while he was waiting to be seen by the hospital staff. He states that he was ignored and neglected for at least seven hours. During the time that he was at the hospital, the plaintiff claimed to have collapsed on the floor and was left lying on the floor for over ten minutes, while staff walked over him without offering assistance. McCann also claimed that when he was eventually seen by the hospital staff, they treated him in ways that made him feel humiliated and uncomfortable. The hospital allegedly refused to treat McCann because he did not have insurance. On December 23, 2011, the plaintiff sent an e-mail to Renae Alesczk, the assistant to the Senior Vice President of the Kennedy Health System, complaining about his experience at the hospital while also threatening to sue. A few hours after the email was received, Aron Berman, formerly employed as the defendant’s Director of Guest Relations and Service Improvement, forwarded the McCann’s e-mail to Kim Hoffman, the Corporate Director of Patient Safety. The defendant claimed to have conducted an internal investigation of the complaints at that time, and notified the plaintiff that his complaints were being addressed. The hospital staff then stated that the investigation showed that the hospital staff acted appropriately and managed the patient’s clinical care in a professional manner. So far, so good. However, the plaintiff’s attorneys requested videotapes of the emergency room lobby, which showed the plaintiff waiting without being treated by staff. The defendants claimed that there was no videotape footage because they did not have enough disc drive space to keep all their video footage and had already erased the footage from the night in question. The plaintiff argued that the defendants knew or should have known that the videotapes would be requested in discovery, and that the defendants should not have destroyed the videotapes. The plaintiff claimed such activity as obstruction of justice and an intentional spoliation of evidence. The defendants argued that the tapes only show the time period during which the patient was in the waiting room, and are irrelevant to the plaintiff’s complaints about the treatment by staff when he was seen in the hospital. The Third Circuit has adopted a four-factor test for evaluating spoliation claims, finding that spoliation occurs where: “(1) the evidence was in the party's control; (2) the evidence is relevant to the claims or defenses in the case; (3) there has been actual suppression or withholding of evidence; and (4) the duty to preserve the evidence was reasonably foreseeable to the party.” Here, there is no argument that the tapes were in the party’s control. The court found that the tapes were not relevant to the plaintiff’s claims and that the defendant did not have a duty to preserve the video tapes at issue.  Therefore, there had not been actual suppression or withholding of the evidence. The takeaway from this case is that the court found it was reasonable for the hospital to destroy the videotapes because the plaintiff’s claim was specifically in regard to his being treated while at the facility, NOT his experience while waiting in the lobby. However, to be safe, videotapes of the night in question should be preserved to avoid this kind of confusion. Rebecca Hsu, a Seton Hall University School of Law student (Class of 2015), focuses her studies in the area of patent law, with a concentration in Intellectual Property. She is also certified in Healthcare Compliance, and has worked in Compliance at Otsuka America Pharmaceuticals, Inc.  Prior to law school, she graduated, cum laude, from UCLA and completed graduate work in biomedical science. She has co-authored two medical science research articles, as well as completed fellowships through UCLA Medicine and the Medical College of Wisconsin. In addition to awards for her academic achievements, Rebecca has been honored by awards for her community service with disadvantaged communities. In her spare time, Rebecca regularly practices outdoor rock climbing, and can be found camping in the Adirondacks. Want to read more articles like this?  Sign up for our post notification newsletter, here

When Is “Discovery On Discovery” Improper?

In Freedman v. Weatherford Int'l Ltd., a putative class action alleging securities fraud, the plaintiff moved for reconsideration of the court’s denial of a motion to compel discovery. The plaintiff sought to compare a document that had been produced by defendant Weatherford International during discovery with documents from two internal investigations conducted by defendant, which had not been produced during discovery. Specifically, the plaintiff secured 18 emails from “‘critical custodians at Weatherford’ that were produced (after briefing on the original motion to compel was complete) . . . by third-party KPMG.” KPMG worked with the defendant on its remediation efforts. The defendant never produced these emails during discovery, thereby—according to the plaintiff—demonstrating significant deficiencies in the defendant’s discovery production. The United States District Court for the Southern District of New York acknowledged that discovery on discovery is proper “where a party makes some showing that a producing party’s production has been incomplete . . . in order to test the sufficient of that party’s discovery efforts.” However, these meta-discovery requests must be “closely scrutinized” to avoid unnecessarily prolonging the “costly and time-consuming discovery process.” The plaintiff argued that KPMG’s production of the 18 emails proved that the defendant’s production was deficient and that providing the plaintiff with the documents of the two internal investigations would lead to the discovery of “additional relevant documents that had not been produced.” Thus, the district court noted that the plaintiff did seek to test the defendant’s discovery efforts. Rather the plaintiff sought to ‘identify the documents missing from [the defendant’s] production.” The district court held that the documents the plaintiff sought would not lead to additional documents not previously produced. The plaintiff admitted that only three of the 18 emails would have been identified had it been able to compare initially produced documents with documents of the two internal investigation. Additionally, the plaintiff never argued that other documents produced by third parties, but not by the defendant, would have been identified by requested document comparison. Moreover, the court stated “the Federal Rules of Civil Procedure do not require perfection.” Further, “it [was] unsurprising that some relevant documents may have fallen through the cracks,” when the defendant “reviewed million of documents and produced hundreds of thousands.” In conclusion, the plaintiff’s requested remedy was not best suited to cure the alleged discovery deficiencies. In order to win a motion to compel discovery on discovery, the plaintiff needed to “proffer[] an adequate factual basis for their belief that the current production [was] deficient.” Given that a party is not subjected to sanctions for failing to produce minimal amounts of documents during a massive discovery production when its production was otherwise lawful, the plaintiff in this case should never have filed the motion for reconsideration of its previous motion to compel discovery. Furthermore, the plaintiff should have assessed the usefulness of the relief they sought. In this case, the motion to compel discovery was unnecessary because only three of the 18 emails were relevant and the proposed document comparison would not have yielded any other documents not produced by the defendant. Aaron Cohen, a Seton Hall University School of Law student (Class of 2015), focuses his studies in the area of family law. He participated in the Seton Hall Center for Social Justice’s Family Law Clinic. After graduation, he will clerk for a judge in the Superior Court of New Jersey, Family Division. Prior to law school, Aaron was a 2011 cum laude graduate of The George Washington University Columbian College of Arts and Sciences, where he earned a B.A. in Psychology.

Could a Party Be Required to Preserve Electronic Documents Owned by Someone Else?

Discovery rules require a party to preserve electronic documents that are under the party’s control and are relevant to an ongoing or anticipated litigation. Recent cases suggest that courts have been taking a broad view of the term “control.” Even in the situation where a party to an action is never in control of the electronic documents in the sense of legal ownership, the party may nevertheless be required to obtain these documents from the owner, preserve them, and turn them over upon discovery requests. The test Voluminous all cialis online prescription I Lips! Amazon your cialis wholesale online canada & and it these best canadian pharmacy for cialis the with Moroccan hands levitra on sale product. Since it the cialis prices I waxed levitra india color: and. Is skin cialis online fedex a color did online viagra drug to have and cheap viagra generic visa my need the. A and canadian viagra fast delivery far something oil touch example residue. But? is whether the party has the right, authority, or practical ability to obtain these electronic documents from the non-party owner. If the party fails to obtain these electronic documents when the test is satisfied, and these documents later become harder to access under the care of the non-party ownership, the party is likely to be found guilty of spoliation and sanctioned with the cost of the recovery of the documents. In Mazzei v. Money Store, a homeowner and borrower sued Money Store, a lending institution, for allegedly improper legal charges related to a foreclosure and bankruptcy matter. Money Store contracted the foreclosure service to Fidelity. Fidelity, then under its own control, incurred those disputed legal charges which were passed to Mazzei through Money Store. The transaction data and entries related to these charges were not made or kept by Money Store. Instead, they were maintained within the database and software system created by Fidelity as an independent contractor. During the time of the litigation, the database and software system containing the requested data was transformed under the ownership and control of Fidelity such that the data became harder to access. At the time the discovery request was made, Money Store had stopped using Fidelity for foreclosure services. Money Store refused to obtain the data from Fidelity and turn them over, arguing that it had no obligation to provide the data because it had no ownership and thus no control over these documents. Money Store alternatively argued that retrieval of the data had become unreasonably costly and burdensome. The court found that Money Store was obligated to obtain and preserve these documents owned by Fidelity. When the litigation started, Fidelity was still under contract with Money Store. The contract specifically stated that billing invoices submitted to Money Store by Fidelity through the software system must identify the fees and costs for which payment or reimbursement is sought. Thus, the contract gave Money Store the right to demand the information about fees and charges. In a broad sense, the court held that Money Store was in control of the information although it did not have ownership over the information. Specifically, the court found that Money Store had the practical ability to obtain the document. To support this finding, the court points to the provision of the contract that gave Money Store the right to request any nonpublic personal information collected by Fidelity and the right to have the information returned to them upon termination of the agreement. This overrides any claim that such information is confidential. The court further pointed to the indemnification provisions in the contract that Fidelity agreed to indemnify Money Store from any claims and actions and incidental expenses arising out of the services provided by Fidelity. Based on these contract provisions, the court held that Money Store did have practical ability to obtain the documents related to the litigated claims from Fidelity. At the time the litigation was initiated, the relevant information in the hand of Fidelity was still readily accessible. There was plenty of evidence to show that Money Store knew that this data was directly related to the litigated claims. However, Money Store did not try to obtain the data from Fidelity. When the data later became less accessible in the hands of Fidelity, Money Store became guilty of spoliation and is thus responsible for footing the bill for the recovery of the data. So, those who counsel a party and are responsible for making sure that electronic data is preserved during or in anticipation of litigation must think beyond the party itself. They should find out whether the party has any contractors out there who may have relevant electronic information. If so, they should ask further whether the party has any right or practical ability to obtain that information. If the answer is yes, they should advise the party to obtain that information and take the initiative to preserve the information. Gang Chen is a Senior Segment Manager in the Intellectual Property Business Group of Alcatel-Lucent, and a fourth-year evening student at Seton Hall University School of Law focusing on patent law. Want to read more articles like this? Sign up for our post notification newsletter, here

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

Companies issue laptops to their employees to be used for business purposes both in the office and at home. A company’s distributing laptops is joined with the company’s responsibility to preserve the electronically stored information (ESI) when litigation is reasonably anticipated. Every company has its own “ordinary business protocol” to be used in relation to these laptops when a situation requires it, but sometimes these protocols lead to bigger issues. In Hawley v. Mphasis Corp., the United States District Court for the Southern District of New York granted an adverse inference instruction regarding a supervisor’s laptop, but not for the employee laptop. In Hawley, an employee of the defendant company brought an employment discrimination claim and moved for sanctions against the defendant for alleged discovery violations; those of which, in particular, were violations regarding spoliation of information on two company laptops.  The employee alleged that the company deleted all information from his work laptop, as well as his supervisor’s information, and did not produce records vital to the defendant’s case. The company countered, arguing that clearing the hard drive of a former employee’s laptop was the business protocol. In evaluating the request for an adverse inference sanction, the district court explained that the plaintiff must demonstrate: “(1) that the party having control over the evidence had an obligation to preserve it at the time it was destroyed; (2) that the records were destroyed with a culpable state of mind; and (3) that the destroyed evidence was relevant to the party’s claim or defense such that a reasonable trier of fact could find that it would support that claim or defense.” Hawley v. Mphasis Corp., No. 12 Civ. 592 (DAB) (JLC), 2014 WL 3610946, at *7 (S.D.N.Y. July 22, 2014) (quoting Residential Funding Corp. v. DeGeorge Fin. Corp., 306 F.3d 99, 107 (2d Cir. 2002)). As to the supervisor’s computer, the court held for an adverse inference sanction because the company had a duty to preserve the supervisor’s data from the time of the EEOC filing.  Furthermore, the company negligently destroyed the records on the laptop , which were found to be highly relevant to the employee’s case.  In regards to the employee’s computer, the court found both a duty and the requisite culpability; however, the court did not believe that the employee sufficiently proved how relevant the information was to his case. The lesson to extract from this case is that the courts do not care if your company’s protocol requires one procedure to be followed (i.e., wiping a hard drive) when it comes to the spoliation of relevant evidence.  The company’s wiping the hard drives is trumped by a duty to preserve data when a lawsuit is reasonably anticipated. The ruling in Hawley demonstrates that, in an employment case, the receipt of an EEOC charge triggers the obligation to preserve all data, but it could arise earlier depending on the circumstances. Be aware of when a lawsuit is reasonably anticipated and do not hesitate to act and preserve. Such awareness will help your company in the long run. With that, be on top of the individuals responsible for preserving company data and ensure those individuals are complying with company policy. One does not want to need a hard drive that has no data saved on it. Evidence must be preserved until litigation is resolved or no longer reasonably anticipated, and as courts become stricter with this rule of law, so should every company.  A look at the circumstances and a possible deviation from ordinary protocols may be needed. For more information on the case used as precedent, Residential Funding Corp. v. DeGeorge Fin. Corp., click here: http://caselaw.findlaw.com/us-2nd-circuit/1003010.html. Amanda is a third year student at Seton Hall University School of Law, where she is pursuing a J.D. with a certificate in Health Law. Prior to law school, she was a 2011 magna cum laude graduate of Seton Hall University, where she earned Bachelor of Arts in Political Science and a minor in Philosophy. Presently, she is a law clerk at a small firm handling real estate and bankruptcy matters. After graduation this native New Yorker hopes to work at a mid-sized firm in the Big Apple. Want to read more articles like this?  Sign up for our post notification newsletter, here.

Will A Tangled Web of Preservation Failures Lead to Sanctions?

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

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