Production of Data

Inadvertent Disclosures: Who Benefits?

Plaintiff Steve Pick filed suit against Defendant City of Remsen (and other defendants) alleging, among other claims, violations of constitutional rights pursuant to 42 U.S.C. § 1983. Pick served the city with a discovery request. The city then produced 440 pages of documents, including 183 pages of e-mails. Some pages contained more than one email. The defendant’s inadvertently disclosed an email that was originally sent to six privileged recipients. Within thirty-four minutes of discovering that the email had been inadvertently produced, defense counsel contacted the plaintiff’s counsel. Defense counsel explained that the email was mistakenly produced and was protected by attorney-client privilege. Defense counsel asked that the email be destroyed. The plaintiff’s counsel refused. Defendants’ filed a motion request that the court order the email’s destruction as an inadvertently produced privileged document. Applying the middle-of-the-road approach, the Magistrate Judge held Defendants had not waived attorney-client privilege by the inadvertent disclosure, and ordered the email to be destroyed. Plaintiff appealed. Plaintiff objected to the analysis of the Magistrate Judge conducted pursuant to the middle-of-the-road test. The District Court recognized that three approaches have been developed to analyze inadvertent disclosures of privileged information. Including the lenient approach, the strict approach, and the middle-of-the-road approach. Having already held that the middle-of-the-road approach applies in diversity cases, the court held that the middle-of-the-road approach also applies in federal question cases. Furthermore, the court applied a “clearly erroneous or contrary to law” standard of review Pursuant to the middle-of-the-road approach, the court considers five factors in determining whether the inadvertent disclosure waived attorney-client privilege. The factors are as follows: 1) the reasonableness of the precautions taken to prevent inadvertent disclosure in view of the extent of document production; 2) the number of inadvertent disclosures; 3) the extent of the disclosures; 4) the promptness of measures taken to rectify the disclosure; and 5) whether the overriding interest of justice would be served by relieving the party of its error. Plaintiff objected to the Magistrate Judge’s analysis under the first, third, and fifth factors. Plaintiff objected to the Magistrate Judge’s conclusion that defense counsel took reasonable precautions prevent disclosure, alleging that defense counsel’s failure to create a privilege log was unreasonable, the privileged email was not inconspicuously located among non-privileged emails, and defense counsel’s review process—being the sole reviewer—was unreasonable. The court held that defense counsel’s failure to prepare a privilege log was not unreasonable because defense counsel’s review of the responsive documents did not reveal any privileged information. Further, the court held that the Magistrate Judge correctly concluded the privileged email to be inconspicuously located among non-privileged documents. The privileged email was located on the same page as a non-privileged email. Moreover, the privileged email was located on two pages of the 183 pages of emails, and 440 total pages of documents, produced. Likewise, the court found defense’s counsel’s review process to be reasonable. It is reasonable for an attorney to review discovery responses without non-lawyer staff. Thus, the court upheld the Magistrate Judge’s determination that first factor weighed in favor of maintaining the email’s privileged status. Although the Magistrate Judge found the third factor to weigh in favor of waiver of the attorney-client privilege, Plaintiff objected to the factual finding that the privileged email was disclosed to not others. The plaintiff alleged that the privileged email was disclosed to its six recipients, thereby increasing the extent of the inadvertent disclosure. However, the court noted that the plaintiff ignored the Magistrate Judge’s conclusion that the six recipients were privileged recipients. Thus, the Magistrate Judge’s factual determination as to the extent of the disclosure was not clearly erroneous. Finally, the plaintiff objected to the Magistrate Judge’s conclusion that the plaintiff would not suffer unfair prejudice by maintaining the email’s privilege protection. The court upheld that Magistrate Judge’s finding that the plaintiff had other evidence he intended to rely on by virtue of the fact that the plaintiff progressed with action for over nine months with out the benefit of the privileged email. The court also upheld the Magistrate Judge’s conclusion that the plaintiff could not reasonably rely on the privileged email to support his case because any attorney reviewing a document production with a large number of non-privileged documents would realize that the disclosure was inadvertent. Further, the court quoted the Magistrate Judge’s holding that “‘absent the mistaken disclosure, Pick and his attorneys would not know and would not have the right to know, the contents of the [email].’” Therefore, “the interest of justice would be harmed hereby permitting Pick to use the email at trial.” There is no real harm in zealously representing your client’s interest after inadvertently receiving privileged information. Plaintiff’s attorney correctly chose to find a way to strip the email of its privilege protection in order to use the email to support the plaintiff’s case. However, attorneys should recognize an argument in favor of waiver of attorney-client privilege may be futile in instances similar to the facts above.       Aaron Cohen, a Seton Hall University School of Law student (Class of 2015), focused his studies in the area of family law. He participated in the Seton Hall Center for Social Justice’s Family Law Clinic. After graduation, he will clerk for a judge in the Superior Court of New Jersey, Family Division. Prior to law school, he was a 2011 cum laude graduate of The George Washington University Columbian College of Arts and Sciences, where he earned a B.A. in psychology. Want to read more articles like this?  Sign up for our post notification newsletter, here.

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

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

Can One Government Agency Be Sanctioned For the Deletion of Emails That Belong to Another Government Agency?

In Wandering Dago Inc. v. New York State Office of General Services, Judge Randolph F. Treece, writing for the United States District Court for the Northern District of New York, held that officials in one state government agency cannot be sanctioned for the destruction of emails belonging to another government agency.  The facts in Wandering Dago are relatively lengthy: in July 2013, the Plaintiff, the owner of a food truck, applied to be a food vendor at a race course owned by the New York Racing Association (“NYRA”).  The Plaintiff’s application received several complaints, including an email that Bennett Leibman, the New York Deputy Secretary of Gaming and Racing, sent to the President of the NYRA.  In his email, Mr. Leibman indicated that the name of Plaintiff’s truck, “Wandering Dago,” was likely to offend members of the public.  Earlier in the year, the Plaintiff was denied an application to be a vendor for the New York Office of Governmental Services’ (“OGS”) Empire State Plaza Lunch Program for similar reasons.  On July 22, 2013, news stories emerged, stating that an “unidentified state official” had complained to the NYRA.  On the same day, Mr. Leibman sent an email to several members of the Governor’s Executive Chamber to alert them of the reports.  Ultimately, the OGS rejected the Plaintiff’s application and the Plaintiff sued the NYRA and OGS for violation of his First Amendment right to free speech and Fourteenth Amendment right to equal protection.  The Plaintiff, however, did not initially name Mr. Leibman, the New York State Gaming Commission, or any members of the Governor’s Executive Council, as Defendants.  Mr. Leibman subsequently sent an email to the Governor’s Executive Chamber stating that he “may be a witness to the suit.” In October 2013, Mr. Leibman’s emails were deleted in accordance with a New York State email retention policy which automatically deleted emails older than 90 days.  Several months later, in May 2014, the Plaintiff added Mr. Leibman as a Defendant.  Mr. Leibman requested to be represented by the New York Attorney General (“NYAG”) and a litigation hold was instituted within the Governor’s Executive Chamber.  Unfortunately for the Plaintiff, however, by then, Mr. Leibman’s emails had been long gone.  The Plaintiff sought sanctions against OGS arguing that the NYAG, which represented OGS, had a duty to preserve Mr. Liebman’s emails, as well as emails that emerged from the Governor’s Executive Chamber.  To support his argument, the Plaintiff pointed to the July 22, 2013 email from Mr. Leibman to the Governor’s Executive Chamber, and contended that the email demonstrated a “coordination effort” between the various state officials in the “multiple arms of State government.” Despite the Plaintiff’s argument, Judge Treece remained unpersuaded.  Judge Treece began his analysis by stating that a party seeking an adverse inference instruction must establish: (1) that the other party had control over the evidence and 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.  Judge Treece held that the Plaintiff met none of these requirements. First, Judge Treece held that the Defendants at the time litigation was instituted (OGS and NYRA) had no control over Mr. Leibman’s emails nor the emails of the Governor’s Executive Chambers and, therefore, had no duty to preserve them.  The Court rejected the Plaintiff’s “multiple arms” contention, noting that if the Court held that there was a duty, it would basically create a state-wide duty for every New York agency to preserve its documents whenever another New York agency is sued.  Judge Treece went on to state that Mr. Leibaman only had a duty to preserve once he was added as a Defendant and, although he knew he was likely to be called in as a witness, this was insufficient to establish a duty for him to preserve before he was added.  Furthermore, although the NYAG represented both Mr. Leibman and the original Defendants, the Court stated that the NYAG did not have a duty to preserve Mr. Leibman’s emails until it was notified that an action has been filed against him. Next, Judge Treece examined the culpability requirement.  Judge Treece stated that this factor is satisfied when there is a showing that the evidence was destroyed “knowingly, even without intent to breach a duty to preserve [the evidence], or negligently.”  However, the Court held that there was no such evidence in this case and, therefore, the culpability requirement was not met.  Furthermore, the Court noted that even if the Plaintiff could show culpability, he nevertheless failed to show a duty to preserve and, therefore, there was no breach of the duty to preserve. Finally, Judge Treece addressed the relevance factor.  To show relevance, the Plaintiff must show sufficient evidence from which a reasonable trier of fact could infer that the destroyed evidence would have been favorable to the party seeking the adverse inference.  The Court held that the Plaintiff failed to establish that the evidence would have been favorable to him. Wandering Dago is significant due to its holding that one government agency cannot be sanctioned for the destruction of emails belonging to another.  In light of the holding in Wandering Dago, plaintiffs suing state agencies should be particularly mindful of which agency they are suing and do a detailed inquiry to determine which other agencies may be involved and which may have needed e-documents.  If they add a government agency as a defendant after litigation has commenced, it may be too late to save crucial evidence from deletion and the plaintiff may not be able to obtain sanctions for that deletion. Peter received his B.A. in Criminal Justice, cum laude, from Rutgers University in 2010 and will receive his J.D. from Seton Hall University School of Law in 2016.  Peter is the Senior Notes Editor of the Seton Hall Legislative Journal and will be clerking for the Honorable Sallyanne Floria, Assignment Judge of the Superior Court of New Jersey, Essex Vicinage, upon graduation.

Document Refinement and its Apparent Prejudices

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

When Will Protective Coding Finally See Its Day In Court?

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

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

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

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

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

Can a Former Employee Get Away with Evidence Spoliation?

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

Companies ARE Responsible for Contractors’ Conduct – Even if the Contractors are Non-Parties

While this case involves the alleged infringement of multiple different types of intellectual property—both patents and copyrights—along with allegations of the misappropriation of trade secrets, I will resist the temptation to discuss such claims in much further detail. Plaintiff sought sanctions because the defendant produced altered harddrives (belonging to its contractor) that contained relevant files with incorrect creation dates, and when the court compelled production of that computer, it was wiped with the CCleaner application the day before it was turned over.  No one disputes what happened, but the defendant disputes it did not condone the conduct, had no advanced knowledge of it, and that it is unfair to sanction the defendant for the independent actions of its contractor when his actions disregarded the plain instructions conveyed by counsel.  Why did this matter?  The plaintiff manufactures boat windshields and the defendant counterclaimed that Plaintiff’s CEO wasn’t the sole inventor of the windshield design, but was instead a co-inventor with one of its employees.  This employee of Defendant worked with a contractor to design the windshield.  If proven, patent co-ownership would be huge in defending against a claim of infringement.  However, the metadata of the CAD drawings illustrating the design had been tampered with—they showed a creation date in 2002 despite deposition testimony indicating creation during 2005.  To complicate evidentiary matters, the contractor also testified that emails during the relevant time period were purportedly destroyed through a “catastrophic computer failure.”  Sure.  That corresponds perfectly with the fact that the defendant produced emails allegedly sent by the contractor during the “relevant time period.”      Each side had an expert opine on the contractor’s use of the CCleaner application and what, if any, data was still recoverable.  Neither could say what data was deleted.  One expert could not verify the actual CAD file creation date and noted the metadata reflected a file creation date of June 13, 2010, but a modified date of January 14, 2002.  That expert felt the contractor’s explanation of such an anomaly was in no way supported by the evidence.  The other expert said nothing particularly relevant for the purposes of reaching a determination. Balancing the considerations, the court found that sanctions were warranted.  Even though the contractor was a non-party not within the court’s jurisdiction and acted on his own accord, sanctions were imposed to deter others who disobey court orders and destroy evidence.  Further, the court noted it was the defendant who would benefit from the lack of adverse creation dates or other negative metadata.  The court ultimately disallowed the contractor’s testimony at trial and disallowed any evidence that originated from him.  The defendant could not rely on the contractor’s deposition testimony for any purpose and could not rely on any documents sent to or from him that the defendant produced.  Attorney’s fees were also awarded for “this whole costly trip down the rabbit hole.”  To avoid this debacle, the defendant needed to preserve the support for its counterclaim.  If the contractor truly sent emails containing particularly important files to Defendant’s employee in 2005, the defendant should have preserved everything.  But to the defendant’s credit, this oversight might have been because these events occurred about ten years ago when times were drastically different. Samuel is in the Seton Hall University School of Law Class of 2015 pursuing the Intellectual Property concentration. He received his master’s from the Rutgers Graduate School of Biomedical Sciences and became a registered patent agent prior to entering law school. Want to read more articles like this?  Sign up for our post notification newsletter, here.

When Is the Sanction of An Adverse Inference Appropriate?

The sanction of an adverse inference is appropriate, but not mandatory, in cases involving the negligent destruction of evidence.  The court will determine on a case-by-case basis whether sanctions are appropriate where a party negligently destroyed evidence.  However, the court is more likely to impose sanctions when a discovery obligation is breached through bad faith or gross negligence rather than ordinary negligence.  In Schulman v. Saloon Beverage, Inc., Schulman (the “Plaintiff”) sued Saloon Beverage, Inc. (the “Defendant”) under Vermont’s Dram Shop Act for allegedly serving Mark Clarke, a drunken patron, four Sierra Nevada draft beers approximately ten minutes before he collided head on with the Plaintiff’s car.  The Defendant contended that Clarke was not at its saloon on the night of the accident.  The only documentary evidence available to prove Clarke was at the saloon were the records of checks because Clarke allegedly paid in cash.        The Plaintiff filed a Rule 37 motion seeking sanctions for failing to preserve or permitting the destruction of the checks.  The Plaintiff alleged that the Defendant failed to produce all of the check receipts for the night in question.  After the Defendant produced printed copies of all the check receipts, the Plaintiff then alleged that the Defendant destroyed or altered the evidence because the check receipts contradicted other evidence which showed that Clarke was at the saloon.  The Plaintiff wanted to prove that the Defendant altered the receipts by analyzing the electronically stored information (“ESI”) in original format; however, the computers were not preserved when the saloon went out of business.         The issue in this case concerned whether the Plaintiff established its spoliation claim against the Defendant for destroying the ESI.  A prerequisite to a spoliation claim is that the sought-after evidence actually existed and was destroyed.  In order to obtain an adverse inference instruction regarding the loss or destruction of evidence, a party 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. In Schuman, the Plaintiff established that the Defendant negligently destroyed the ESI.  There was no dispute that the check receipts were relevant because they involved the disputed issue of whether Clarke was at the saloon.  The court found that the Defendant either knew or should have known that the ESI would be relevant to litigation because the Defendant was on notice when the Plaintiff made a claim in the Defendant’s bankruptcy proceedings.  Furthermore, the court concluded that the ESI was destroyed through ordinary negligence, a culpable state of mind.  Although the Plaintiff established that the Defendant negligently destroyed the ESI, the court still held that an adverse inference instruction was not appropriate because the Plaintiff’s suggestion of prejudice was based on conjecture.  Instead of imposing the sanction, the court merely held that evidence of the destruction of the ESI may be admissible at trial. The sanction of an adverse inference is not mandatory in cases involving the negligent destruction of evidence.  The court has the discretion to determine whether the sanction is appropriate where a party negligently destroys evidence on a case-by-case approach.  A party seeking an adverse inference instruction should attempt to bolster its claim by establishing that the other party breached a discovery obligation through bad faith or gross negligence.      Gary Discovery received a B.S. in Business Administration, with a concentration in Finance from the Bartley School of Business at Villanova University.  He will receive his J.D. from Seton Hall University School of Law in 2015.  After graduation, Gary will clerk for a presiding civil judge in the Superior Court of New Jersey.

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

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    Plaintiff, Zubulake v. UBS Warburg


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