Category: General Litigation

Disappearing Act: Court Provides Reminder that Counsel Must Investigate and Understand Client’s Use of Ephemeral Messaging Services to Prevent Sanctions

A decision earlier this year from the Northern District of Indiana illustrates the importance of counsel thoroughly investigating and understanding all data sources their clients may be using to create and store potentially relevant Electronically Stored Information (ESI). With the increased use of messaging applications – including ephemeral ones – counsel must understand the intricacies of each application (and its retention and preservation policies) used by their clients to prevent the destruction of relevant ESI. In this case involving civil rights claims, the defendants sought evidence regarding the plaintiff’s activities and character to disprove claims that the defendants deprived the plaintiff of his honor and reputation – a “protected liberty interest” – without due process. Through one of their requests, the defendants sought all data related to the plaintiff’s Snapchat account. For background, Snapchat is a messaging service where users record photos and videos (called “Snaps”) to send to other users. These Snaps appear on the receiver’s screen only for a limited period of time (generally, seconds). In addition, Snapchat users can send chat messages to other users, create “Stories” that remain visible to all users for 24 hours, and save Snaps indefinitely by storing them in the user’s “Memories.” Data within the user’s “Memories” is saved by Snapchat until a user deletes it, at...

Establishing “Intent to Deprive” Under Rule 37(e): District Court Imposes Adverse Inference Instruction Based on Timing of Spoliation

This blog has previously discussed the challenges a litigant faces in moving for the so-called “severe sanctions” pursuant to amended Rule 37(e). With the 2015 amendment to Rule 37(e), a moving party seeking severe spoliation sanctions must establish that the opposing party “acted with the intent to deprive” the requesting party of the electronically-stored information (ESI) in the litigation at issue. In the absence of an explicit admission that a responding party deleted ESI with the subjective intent to deprive the requesting party of the same, a requesting party often faces an uphill battle establishing the “intent to deprive” requirement. A recent decision from the District Court for the District of Arizona provides an example of the type of circumstantial evidence – including the timing of the spoliation at issue – a moving party can rely on to potentially support the imposition of severe sanctions. In Federal Trade Commission v. Noland, the Federal Trade Commission (FTC) was investigating defendant Noland and his business, Success By Health (“SBH”), for allegedly “operat[ing] as an illegal pyramid scheme” and making false statements to SBH’s affiliates. In May 2019, Noland inadvertently discovered the FTC’s investigation and, when the FTC realized Noland found out about the investigation, the FTC advised SBH and Noland to preserve relevant documents. The day after...

“Is That All There Is?” The Western District of Kentucky Gives a Fresh Look to the Standard Supporting ESI Search Sufficiency Challenges

A long-established precept of ESI production challenges is, if you’re complaining that they “must have more than that,” you’d best be able to support that position if your goal is to force your adversary to redo its search. Maker’s Mark Distiller, Inc. v. Spalding Grp., Inc., et al., No. 3:19-CV-00014-GNS-LLK (W.D. Ky. Apr. 20, 2021) brings this point home in full force. In that decision, which involved a Lanham Act trade dress dispute, United States Magistrate Judge Lanny King addressed plaintiff Maker’s Mark’s complaint that defendant Spalding’s ESI production was so paltry and otherwise deficient that Spalding should be compelled to implement a new ESI search. Ultimately, the court was having none of it. This decision is a reminder of the importance of communication between counsel before and after the Rule 26 conference, as well as the need to establish a compelling factual record of discovery deficiencies before seeking judicial relief.

Hoisted on Their Own Petard: Production of Inaccessible Data That Later Becomes Unavailable Will Not Support a Suppression Claim Based on Spoliation Against the Recipient

The trial of Elizabeth Holmes, the founder and former Chief Executive Officer of Theranos, Inc., has finally commenced after numerous well-publicized delays. A little more than a month ago, the District Court for the Northern District of California denied Holmes’s motion to suppress evidence prior to her criminal fraud trial, finding that it was the “deliberate actions” of third parties (Theranos) that resulted in the loss of evidence contained on a database, not the prosecutors’ actions. Indeed, Theranos “knowingly and without comment produced an inaccessible” and encrypted copy of a database, and then dismantled the database hardware, rendering it permanently “unusable” only days after its production. In U.S. v. Holmes, the defendant filed a motion to suppress evidence, pursuant to Rule 12(b)(3)(C), of customer complaints and testing results, as well as findings from a 2016 report. Theranos used a bespoke database called the Laboratory Information System (LIS) that “housed, among other things, all patient test results and all quality control data at Theranos.” In 2015, federal government agencies (the “Government”) began investigating Theranos and, in April and June 2018, “served grand jury subpoenas on Theranos for information specifically from the LIS database and requested a copy of the database itself, along with the necessary software to access and search it.” One day after the grand...

Robles v. Domino’s: The Saga Continues – On Remand, District Court Grants Partial Summary Judgment to Plaintiff, Solidifying the Scope of ADA Website Liability in the Ninth Circuit

Robles v. Domino’s Pizza LLC is a seminal case in the development of ADA website accessibility claims, particularly in the Ninth Circuit. The case has been the subject of a long awaited opinion in the Ninth Circuit, and an unsuccessful petition for certiorari. On June 23, 2021, after five years of litigation, on remand from the Ninth Circuit’s decision, the Central District of California granted the plaintiff’s motion for summary judgment, holding that Domino’s violated the ADA because its website was not fully accessible to visually impaired individuals. The court thus ordered Domino’s to bring its website into compliance with industry standards for website accessibility, known as the WCAG 2.0 guidelines, and to pay the plaintiff $4,000 in penalties. The plaintiff, a visually impaired individual who was unable to order a pizza from the defendant’s website in 2015, sued Domino’s claiming violations of the ADA. In granting summary judgment on remand, the district court reiterated the Ninth Circuit’s finding that websites and mobile apps are not “places of public accommodation.” However, where websites or apps like those controlled and maintained by Domino’s “facilitate access to the goods and services of a place of public accomodation,” such as a Domino’s franchise, the ADA applies. This holding rejected Domino’s argument that the ADA did not apply to...

Colorado Is the Latest State to Enact a Data Privacy Law: Here’s What You Need to Know

Colorado has become the third state to enact a comprehensive data privacy statute imposing compliance obligations on legal entities that collect or process the personal data of its residents. The Colorado Privacy Act (CPA) is based on and enforces many of the same key concepts as do other data privacy statutes and regulations. As such, companies that are implementing or updating compliance programs for the European Union’s General Data Protection Regulation (GDPR), California Consumer Privacy Act (CCPA), California Privacy Rights Act (CPRA), and Virginia Consumer Data Protection Act (CDPA) will be familiar with the main provisions of the CPA and likely will have an easier time achieving compliance. There are, however, some important distinctions that companies must consider as part of any ongoing compliance efforts in anticipation of the CPA’s effective date of July 1, 2023. As a threshold matter, the CPA applies to legal entities that (i) conduct business in Colorado or produce or deliver commercial products or services that are “intentionally targeted to residents of Colorado,” and (ii) either (a) control or process personal data of more than 100,000 consumers per year or (b) earn revenue (or receive a discount on goods or services) from the sale of personal data and control or process personal data of more than 25,000 consumers. Notably, the CPA...

Buckle Up: Facebook and Instagram Seek Extreme Sanctions in Trademark Litigation Following Extensive Spoliation

In a recently filed motion in the United States District Court for the Northern District of California, plaintiffs Facebook, Inc. and Instagram, LLC (collectively, “the plaintiffs”) requested terminating sanctions pursuant to Federal Rule of Civil Procedure 37 in a trademark infringement and cybersquatting litigation against a domain registrar, based on the registrar’s destruction of over 11 million records. The motion relies heavily on a Special Master’s detailed report, which outlines egregious discovery abuses, including “ample evidence that Defendants failed to preserve responsive ESI, deleted ESI and withheld ESI.” In the motion, the plaintiffs requested a default judgment in the amount of $3.5 million ($100,000 for each of the 35 infringing domain names registered by defendant ID Shield), attorneys’ fees in the amount of $2,057,782.17, costs of the action, costs of the Special Master in the amount of $88,937, and a permanent injunction. As background, the plaintiffs sued the defendants for cybersquatting pursuant to the Anti-Cybersquatting Consumer Protection Act, trademark infringement, false designation of origin, and dilution. Numerous discovery disputes arose in the litigation, including motion practice after the defendants: (1) failed to produce documents with proper metadata; (2) designated public documents as “confidential”; and (3) did not deduplicate hundreds of thousands of pages of documents. The plaintiffs subsequently requested the appointment of a Special Master...

“Public Figure” Status in the Age of Social Media: A Second Supreme Court Justice Calls for Review of the New York Times v. Sullivan Actual Malice Standard

United States Supreme Court Justice Neil Gorsuch, dissenting from the denial of certiorari in Berisha v. Lawson, et al., joined fellow Justice Clarence Thomas in questioning the appropriateness of the “actual malice” standard, which, under New York Times Co. v. Sullivan and its progeny, requires public official and public figure plaintiffs to demonstrate by clear and convincing evidence that, in publishing material about the plaintiff, the defendant acted with knowledge of falsity or a reckless disregard for the truth.

Clearing the Bar: SDNY Reminds Litigants of High Standard for Imposing Sanctions Under Rule 37(e)(2)

A recent decision out of the Southern District of New York once again illustrates the risk of sanctions under several sections of Fed. R. Civ. P. (“Rule”) 37 for spoliation of evidence and discovery misconduct, as well as the high burden a party must satisfy when seeking sanctions under Rule 37(e)(2). In Bursztein v. Best Buy Stores, L.P., despite finding that defendant flouted discovery obligations, failed to communicate promptly with its adversary, and raised baseless objections throughout discovery, the Court declined to impose sanctions under Rule 37(e)(2), though it did award sanctions – both monetary and in the form of evidence submission to the jury – under Rule 37(e)(1).

Inviting Scrutiny: “Obstructionist” Conduct Leads to District Court Ordering Forensic Examination of Defendant’s Cell Phone

Courts have been authorizing forensic experts to conduct examinations of electronic devices for decades. However, we have noticed a recent uptick of district courts ordering the appointment of an independent forensic expert to create images of and forensically examine cell phones to ensure the preservation and production of relevant electronic data particularly where the party in control of the evidence has been less than forthcoming in their discovery obligations. The District Court for the Southern District of Florida is one of the latest courts to order such a remedy, granting plaintiff’s motion to compel a forensic examination and ordering that an independent expert “mirror image and/or acquire all data present on Defendant’s cell phone.”