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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.
Court will grant sanctions for discovery transgressions. In this action, convenience store franchisees sued their franchisor for breach of franchise agreements because the franchisor attempted to end franchises. Some of the stores filed to have to 7-Eleven sanctioned for discovery transgressions and moved to strike 7-Eleven’s answer. Regarding discovery, the Magistrate Judge held an appropriate sanction against the franchisor for violation of the rule governing signing disclosures and discovery requests, requests, responses, and objections was admonition regarding the violation and that similar conduct would be addressed more harshly in the future. The Court found that 7-Eleven’s conduct caused “substantial case management and discovery problems”, but the Court did not hold 7-Eleven to “harsher” sanctions because the Court recognized that the Plaintiffs conferred with 7-Eleven to resolve their disputes, rather than going to court, which should be a last resort. Also, the Court did not think that 7-Eleven meant to hold onto relevant discovery, showing good faith on 7-Eleven’s behalf. Consequently, the Court ordered an appropriate sanction for 7-Eleven’s failure to comply with the court order, which was the reimbursement of franchises for fees and costs incurred to obtain discovery, as their “resources were strained by unnecessary and incessant discovery disputes.” This shows that being perhaps too aggressive during discovery could land you in the land of sanctions. Amanda, a Seton Hall University School of Law student (Class of 2016), focuses her studies in the area of family law. She is the Secretary of the Family Law Society and headed Seton Hall Law’s first involvement with National Adoption Day in November 2015. After graduation, Amanda will be clerking for a Superior Court Judge in the Family Division in New Jersey. Before law school, Amanda earned a B.A. from Penn State with a major in Communication Arts & Sciences and a Minor in Dispute Management and Resolution. In her spare time, Amanda enjoys participating in 5k and 10k races.
Should negligent destruction of evidence and intentional destruction of evidence be punished the same? That is one of the issues brought up in Alter v. Rocky Point School District. This case involves Lisa Alter (“Plaintiff”), a former second grade teacher and Principal, suing her former employer, Rocky Point School District (“Defendant”), for workplace discrimination. The first discovery dispute arose when the Plaintiff filed its first motion to compel discovery on October 1, 2013. Plaintiff sought to compel discovery of ESI, specifically emails between employees of Defendant. The Court granted Plaintiff’s motion. Subsequently, Plaintiff filed a second motion to compel discovery and for sanctions. Plaintiff alleged that Defendant did not comply with the Court’s instructions. Plaintiff argued that sanctions should be imposed against Defendant for: (1) failing to properly institute a litigation hold; (2) failing to complete a good faith search of ESI; (3) failing to sufficiently oversee ESI searches; (4) and for spoliation of evidence. The main issue in this case was whether the Court would impose sanctions on Defendant for spoliation of evidence. A party seeking sanctions for spoliation of evidence has the burden of establishing: (1) that the party having control over the evidence had an obligation to preserve it at the time it was destroyed; (2) that the records were destroyed with a culpable state of mind; (3) that the destroyed evidence was relevant to the party’s claim or defense such that a reasonable trier of fact could find that it would support the claim or defense. In Alter, the Plaintiff clearly established the first element. It was clear that Defendant had an obligation to preserve the evidence at the time it was lost. The Plaintiff was seeking emails between Defendant’s employees. Defendant, however, failed to institute a litigation hold until nearly two and a half years after the Plaintiff filed her Notice of Claim in November 2010. As to the second element, however, the Court was not convinced that the Plaintiff established that the records were destroyed with a culpable state of mind. The Court did find it “especially troubling” that the Defendant did not institute a litigation hold until nearly two and a half years after the initiation of Plaintiff’s lawsuit. The Court was clear that the Defendant was negligent in failing to preserve discoverable information. That being said, the Court was also clear that negligence is not enough to prove a culpable state of mind. The Court found that the Defendants’ actions, while negligent, were not intentional. As a result, the Court concluded that there was no intent to spoliate material evidence. Plaintiff also failed to establish the third element of her spoliation claim. The third element requires that the lost information be relevant to the party’s claim. Plaintiff failed to set forth, with any degree of specificity, that the lost materials would have been relevant or helpful to her claim. Relevance cannot be established solely on the basis of conjecture. Here, Plaintiff failed to meet her burden to set forth specific facts to support her claim. The Court here found that there was no spoliation of evidence. Despite the finding of no spoliation, the Court was still troubled by the actions of the Defendant and the actions of Defendant’s counsel. As a result, the Court imposed a monetary sanction of $1,500 to be borne equally by Defendant and the law firm that represented Defendant at the initiation of the lawsuit. Kevin received a B.A. in History from Princeton University in 2012. He will receive his J.D. from Seton Hall University School of Law in 2016.
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.
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.
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.
To receive a mandatory adverse-inference instruction for spoliation, three requirements must be met: 1) The targeted litigant destroyed evidence at a time when he had a duty to preserve the evidence, 2) the targeted litigant acted with intent or gross negligence, and 3) the destroyed evidence was relevant to the movant’s claims. The finding of relevance turns on whether a reasonable trier of fact could infer that the destroyed or unavailable evidence would have been of the nature alleged by the party affected by its destruction. If the three requirements are met, the trier of fact may receive a mandatory adverse-inference instruction, meaning they must infer that the evidence was unfavorable to the discovered party. Courts are usually reluctant to grant a dispositive motion based solely on spoliation unless the discovered party acted with bad faith and willfulness, and there is no other effective remedy. Enter the former Chairman of the Board of Celestica Inc. (“Chairman”). In 2007, a written document-preservation instruction was sent from corporate counsel to all employees at the outset of the litigation in In re Celestica Inc. Securities Litigation. In 2012, when the Chairman retired from the Celestica Board, he deleted all of his e-mails on his personal computer. The Chairman described the practice as “routine,” because he “[didn’t] want to fill up [his] hard drive with a bunch of junk.” Hard to disagree with him, right? Cleaning out our computers and inboxes has come to be a regular and necessary burden. Based on the Judge’s findings of simple negligence, he agreed. The court found that in the instant case, defendants were not grossly negligent, and noted that the Chairman himself was not a defendant in the litigation. Defendants did their due diligence in issuing a written hold instruction to both corporate employees and to the Board of Directors. There is nothing to indicate that defendants were responsible for the Chairman’s disregard of that instruction five years after its issuance. The court reasoned that at most it could infer that defendants may have failed to collect documents saved on the Chairman’s hard drive during the years the case was pending prior to his retirement, but that this is merely simple negligence. As for relevance and prejudice, the court noted that although the deletion of the Chairman’s e-mails makes it difficult to assess the relevance of the e-mails, the fact that e-mail communications have both an addressor and an addressee casts doubt on the likelihood of irremediable prejudice to plaintiffs. The court addressed plaintiffs’ concerns about the unavailability of e-mails between the Chairman and another Executive Committee member, whose computer was unavailable because of a hard-drive failure. The court pointed out that both executives had been deposed and had testified about the emails, and that there was no evidence that the lost e-mails even addressed the issues at play in plaintiffs’ case. Finally, the court focused on the fact that plaintiffs made no effort to show that they did not have ample documentation of the corporation conditions they claim were misrepresented or concealed by defendants. Ultimately, the court denies plaintiffs’ application for a mandatory adverse-inference instruction, but grants them a permissive adverse-inference instruction. Renée received her B.A. in Criminal Justice from Villanova University in 2013. She will receive her J.D. from Seton Hall University School of Law in 2016. After graduation, Renée will serve as law clerk to a criminal judge of the Superior Court of New Jersey in Hunterdon County.
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.
In April 2014, the Honorable Dominic J. Squatrito from the District Court for the District of Connecticut handed down a decision that dismissed all but one of plaintiff Ray Tedeschi’s claims against defendant Kason Credit Corporation (“KCC”), a collections agency that wrongfully targeted Tedeschi based on a telephone mix-up. On Both parties moved for summary judgment on claims of invasion of privacy and intentional infliction of emotional distress. Tedeschi’s claims were largely unsupportable – not the least of which being his assertion that Kason Credit Corporation should face an evidentiary adverse inference instruction based on spoliation of electronic evidence. In sum and substance, Tedeschi claimed that KCC was harassing Tedeschi with nearly twenty phone calls over the course of a yearlong period, seeking to collect a debt from a consumer who listed Tedeschi’s new home phone number as a means of contact. Tedeschi continually informed KCC that he was not the debtor, and asked that KCC stop calling. Tedeschi v. Kason Credit Corp., No. 3:10CV00612 DJS, 2014 WL 1491173 *2-3 (D. Conn. Apr. 15, 2014). KCC, on the other hand, denied the volume of calls asserted by the plaintiff, and instead asserted that only two phone calls took place over that same period of time. Id. KCC further alleged that the behavior met the standards of the Fair Debt Collection Practices Act, 15. U.S.C. § 1692, and was not actionable. Recognizing a dispute of fact, the Court left this claim intact. However, it’s unlikely that Tedeschi’s claim will pass muster with any jury. Here’s why: When deposing the CEO of KCC, Karl Dudek, plaintiff learned that a “fact sheet” was generated for Tedeschi’s matter that tracked calls from KCC employees to Tedeschi’s phone number. In response to an inquiry, Dudek indicated that the fact sheet “has probably been printed out 20 times.” Id. at *16. Tedeschi argued that the print-out produced at the time of the deposition did not satisfy discovery requirements, since the print-out was dated December 2010, and that the original print-out must have been destroyed. KCC was able to demonstrate that the print-out was unchanged in substance or form from the first request date in June 2010 to the produced copy in December 2010. Relying on Residential Funding Corp. v. DeGeorge Financial Corp., 306 F.3d 99 (2d Cir. 2002), the court outlined the criteria for an adverse inference: the moving party must demonstrate that the party having control over the evidence had a duty to preserve it at the time of destruction, that the evidence was destroyed with a culpable state of mind, and that the destroyed evidence would support the moving party’s claim or defense. Judge Squatrito found that KCC did not have a duty to preserve print-outs, since the print-outs “merely duplicate ‘original evidence.’” Id. at *17. Since Tedeschi was unable to support a claim that the electronic data was destroyed with any culpable state of mind, the claim necessarily fails. See Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 218 (S.D.N.Y. 2003) (“A party . . . must retain all relevant documents[,] but not multiple identical copies[,] in existence at the time the duty to preserve attaches, and any relevant documents created thereafter.”). Plaintiff’s claims against KCC were doomed from the start, and Tedeschi would have been smart to see the writing on the wall – if not the words on the print-outs. 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.
In the Sixth Circuit, a party seeking sanctions for the destruction of evidence must show three things: (1) the party having control over the evidence had an obligation to preserve it at the time it was destroyed; (2) the evidence was destroyed with a "culpable state of mind"; and (3) 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. You can find countless articles that outline when the obligation to preserve documents occurs. The Federal Rules of Civil Procedure state, that whenever it can be “reasonably anticipated” that an action will be filed, all parties have a duty to preserve potentially relevant evidence. You can also find numerous articles about the third fact, an individual’s claim that the requested destroyed electronic discovery is relevant to their cause of action or defense. However, this article is about the second factor, the evidence was destroyed with a "culpable state of mind.” The Model Penal Code 2.02(2) establishes that there a four culpable states of mind: purposely, knowingly, recklessly, and negligently. At common law there are more than just the four Model Penal Code culpable states (wickedly, purposely, intentionally, willfully, knowingly, recklessly, maliciously, negligently, scienter). A person acts purposely with respect to a material element of an offense if it is his conscious object to engage in conduct of that nature or to cause such a result; and he is aware of the existence of such circumstances or he believes or hopes that they exist. A person acts knowingly if he is aware that his conduct; and he is aware that it is practically certain that his conduct will cause such a result. A person acts recklessly when they have a conscious disregard of unjustifiable and substantial risk. Finally, a person acts negligently when a person should have known better then to take that substantial risk that the material element exists or will result from his conduct. The disregard of the risk must be a gross deviation from the standard of care that a reasonable person would have followed. The court in Siggers recognized that "failures to produce relevant evidence fall 'along a continuum of fault—ranging from innocence through the degrees of negligence to intentionality . . . .'" And, "'[o]nce the duty to preserve attaches, any destruction of [evidence] is, at a minimum, negligent.'” This case is an example of one area of the law crossing over into another. The Sixth Circuit incorporated aspects of criminal law into the determination of sanctions. However, the transition is appropriate. A person must purposely, knowingly, recklessly, or negligently destroy electronic documents and evidence to be guilty and worthy of sanctions. Here, the court held that sanctions were not appropriate in this situation because “Siggers failed to demonstrate Campbell’s ‘culpable state of mind’ in destroying the evidence and show that responsive documents existed and were among the destroyed. The court reasoned that although Campbell's discovery failures reflect negatively on her in regards to Siggers' motion, they do not, when weighed against the above considerations, merit the imposition of sanctions. Instead of sanctions, the court offered Siggers the opportunity for redress by questioning Campbell at trial about her failure to timely impose a litigation hold and about the other matters related to his assertion that she must have had relevant e-mail communications that no longer exist. If courts are following such a policy it is important that individuals understand the possible (criminal law based) consequences of their actions. This case illustrates that the importance of proper electronic data management and hold policies in order to avoid potential penalties and sanctions. Timothy received his B.A. from Rutgers University in 2011. He began his post-college life working in Trenton, New Jersey at a lobbying and non-profit management organization before attending law school in the fall of 2012. He will receive his J.D. from Seton Hall University School of Law in 2015. Timothy has had a diverse set of experiences during his time in law school and has found his calling in Tax Law. Want to read more articles like this? Sign up for our post notification newsletter, here.