Don’t Jump the Gun: The Northern District of California Compels the Production of Litigation Hold Letters, Holding Duty to Preserve Not Terminated When Related Lawsuits Were Resolved

In Thomas v. Cricket Wireless, LLC (“Thomas II”), Judge Tse of the Northern District of California compelled the production of defendant Cricket Wireless LLC’s litigation hold letters, despite the defendant’s privilege and relevance objections. The court compelled the production of such letters to allow the plaintiffs to investigate and possibly prove whether the defendant had engaged in spoliation of evidence in Thomas II and two similar class actions that were brought against the defendant. While the duty to preserve potentially relevant documents is generally terminated at the conclusion of a litigation, Thomas II reminds us that this duty may continue even after a related litigation is dismissed.

The plaintiffs in Thomas II filed a putative class action alleging the defendant engaged in false advertisement related to its 4G/LTE coverage services. The defendant had already been sued in two prior lawsuits. In May 2015, different plaintiffs filed suit against the defendant on nearly identical claims in Barraza v. Cricket Wireless, LLC (“Barraza”) before Judge Alsup. Barraza was resolved when both named plaintiffs accepted the defendant’s offer of judgment for the full value of their claims. At a hearing before the dismissal, Judge Alsup asked whether there was “any scenario under which the merits of the case could come back to life” and whether there was “any kind of side deal that allows you to go off and re-file a similar case in some other court.” Plaintiffs’ counsel said no to both questions, but in September 2016, another suit, Thomas v. Cricket Wireless, LLC (“Thomas I”), was filed against the defendant in Missouri federal court based on similar allegations. That case was voluntarily dismissed without prejudice subject to a tolling agreement. When that agreement expired, Thomas II was filed.

During discovery in Thomas II, the plaintiffs learned that, after Barraza was resolved, the defendant had discarded certain documents that the plaintiffs believed would have helped their case. The defendant admitted that it (1) deleted custodial accounts of key decision-makers who participated in the alleged fraud; (2) did not preserve custodial accounts from the central decision-making body, the Sales & Operations Planning Committee; (3) did not preserve critical sales data to its 4G phone sales; and (4) did not take steps to preserve the 4G advertisements it used during the class period.

The plaintiffs took the position that the foregoing conduct constituted spoliation by the defendant and sought further discovery to that effect. The defendant agreed to produce non-privileged documents related to the spoliation issue and to produce a witness for a Rule 30(b)(6) deposition about document retention. However, the defendant refused to produce its litigation hold letters and related correspondence, on the basis of relevance and privilege.

Before the defendant’s scheduled Rule 30(b)(6) deposition, the plaintiffs moved to compel the production of the hold letters and argued that any privilege attached to those letters had been overcome by the defendant’s possible spoliation. The defendant argued that compelling the production prior to the deposition was premature. The court agreed and ordered that the plaintiffs first question the 30(b)(6) witness before it ordered the production of the hold letters. Doing so would provide an opportunity for the plaintiffs to inquire about the “basic details” surrounding the hold letters. The court found unpersuasive the defendant’s additional argument that the Barraza hold letters were “no longer relevant” because that case had been resolved and plaintiffs’ counsel in that action had assured Judge Alsup that no “side deal” existed to allow them to file a similar case in another court. In fact, the defendant ultimately conceded that its offer of judgment in Barraza was binding only as to the two named plaintiffs and, as such, the identical claims of the other putative class members against the defendant were still viable. Accordingly, the court held that the litigation hold letters were relevant to the defendant’s preservation practices and determination of whether the defendant spoliated evidence.

After deposing two of the defendant’s representatives on their document retention practices, the plaintiffs renewed their motion to compel, arguing that the witnesses either did not know or were counseled not to answer basic questions related to the hold letters. In granting the plaintiffs’ motion to compel the production of hold letters in Thomas II, Barraza, and another related case, the court held that compelling the production of the hold letters was appropriate to allow the plaintiffs to determine whether the defendant engaged in spoliation, especially where the defendant conceded it destroyed documents from the putative class period after Barraza was resolved.

The holding in Thomas II provides an important reminder that while litigation holds are generally privileged, courts will often require the production of these documents following a preliminary showing of spoliation. We recently blogged on this issue and recommended that attorneys practice caution in drafting litigation hold letters to avoid the forced disclosure (albeit very unlikely) of privileged communication with content not otherwise available to adversaries. Additionally, Thomas II provides a cautionary tale as to the ongoing need to preserve documents in certain situations where a settlement and/or final judgment as to certain members of a class of plaintiffs do not resolve the claims of all possible members of a putative class. In the end, courts will look to whether a party could have reasonably anticipated that the information at issue might be subject to a potential litigation, and this analysis will be highly fact-sensitive.