Category: General Litigation

Court Dismisses Complaint and Sanctions Plaintiff for Fabricating ESI

The Southern District of New York recently issued significant sanctions in a case with a background story fit for Hollywood. In Carrington v. Graden, plaintiff brought claims against entertainment giants Paramount Pictures and Viacom, Inc. for sexual misconduct, unfair competition, fraud, misappropriation, federal antitrust violations, and New York State and City labor violations. Plaintiff attached various exhibits to his complaint that contained emails purportedly between defendants and non-parties. After it was discovered, through an arduous cat-and-mouse game between defendants and plaintiff, that plaintiff completely fabricated the emails that were presented in support of his claim, the court dismissed plaintiff’s claims with prejudice against all defendants and granted defendants’ application for attorneys’ fees and costs incurred in connection with their work regarding the authenticity of the emails. At the onset of the litigation, defendants sent plaintiff’s counsel a preservation notice for electronically stored information (ESI) and documents, after noting that the documents plaintiff referenced and attached as exhibits to his complaint “appeared highly questionable and inaccurate.” Significantly, the emails were not produced as native-format email communications, rather, they were all produced as email forwards from plaintiff to his attorney. Defendants, as part of a pre-motion submission to the court in connection with their anticipated motion to dismiss, submitted affidavits from the individuals who were represented as...

The Destruction of a “Startling Amount of Discovery”: District Court Imposes Severe, Case-Ending Sanctions Pursuant to Rule 37(e)(2)

The United States District Court for the Eastern District of Washington recently entered a default judgment order of terminating sanctions against defendants pursuant to Rule 37(e)(2), as a result of defendants’ wholesale destruction of a “startling amount of discovery” as part of defendants’ adoption of a document disposition program during the course of the litigation. The district court found that the defendants “purposefully destroyed” relevant electronically stored information (ESI) “to avoid their litigation obligations.” This decision highlights the importance of extreme caution in the adoption of a document disposition or information governance program, which necessarily eliminates typically large quantities of ESI, during the time period when the duty to preserve relevant ESI has been triggered. In Moreno v. Correctional Healthcare Companies, Inc., plaintiffs filed constitutional claims against defendants–providers of healthcare services to inmates–after plaintiffs’ eighteen-year-old son died while in defendants’ custody. In January 2018, prior to filing the lawsuit, plaintiffs sent a letter to defendants notifying defendants of their plan to file a lawsuit and advising defendants to “preserve all paper and electronic records that may be relevant to our clients’ claims” including “all e-mails and other electronic and paper records regardless of where they are maintained.” Plaintiffs filed the lawsuit in October 2018 and, in December 2018, served discovery requests on defendants, seeking certain categories...

Situational Awareness Matters: Two Courts Evaluate Whether TAR Processes Are Warranted and Reach Very Different Conclusions

Two recent decisions from the United States District Court for the District of Kansas (Lawson v. Spirit AeroSystems, Inc.) and the Northern District of Illinois, Eastern Division (Livingston v. City of Chicago), highlight the increasing prevalence of Technology Assisted Review (TAR) as an e-discovery tool and its role as an emerging source of discovery disputes. We have previously addressed courts that have “endorsed” the use of predictive coding and/or TAR and have recommended that litigants consider such technologies to promote efficiency in the discovery process. We have also noted that courts have been extremely hesitant to impose affirmative requirements upon litigants to use these technologies. As discussed below, these two recent decisions provide a useful analysis of situations – with vastly different outcomes – where a party has introduced TAR procedures into the discovery process. In Lawson v. Spirit AeroSystems, Inc., plaintiff, the former CEO of defendant Spirit AeroSystems, Inc., filed suit based on his claim that the defendant failed to properly disburse his retirement compensation. Defendant claimed that plaintiff violated a non-compete agreement by engaging in consulting services with one of its competitors during the two-year period subject to the restrictive covenant. Plaintiff refuted these allegations, claiming that the companies he serviced did not engage in the same business as defendant. Though the business...

Unnecessarily Opening Doors — the Southern District of California Provides an Important Reminder of the Value of FRE 502(d) Clawback Agreements

Highlighting numerous preventable mistakes that resulted in the unintentional waiver of attorney-client privilege, a recent Southern District of California decision reinforces the importance of comprehensive clawback agreements specifically pursuant to FRE 502(d) and (e) to prevent analysis of waiver under either FRCP 26 or the common law waiver standard embodied in FRE 502(b). This blog has previously addressed the interplay between Rule 502 and parties’ clawback agreements and recently discussed the limitations of FRE 502(d) and the inability of litigants to use it to compel production of potentially privileged information without a privilege review. In Orthopaedic Hospital v. DJO Global, Inc. and DJO Finance, LLC, the District Court found a waiver of the attorney-client privilege with respect to a privileged document introduced at deposition and the testimony elicited in connection with the privileged document due to the producing party’s failure to “promptly” rectify the inadvertent production under FRE 502(b). The court refused to find a broader subject matter waiver as a result of the introduction of this privileged document. Critically, the parties had proceeded with discovery without having negotiated, entered into, and sought Court approval of a clawback order under FRE 502(d), instead proceeding under a Rule 26 protective order that incorporated the common law clawback standard of FRE 502(b). As we have discussed in...

Gibbons Attorneys Draft NJSBA Amicus Brief Challenging Jury Selection in First In-Person Trial Since Pandemic

Lawrence S. Lustberg and Michael R. Noveck, Director and Fellow, respectively, of the John J. Gibbons Fellowship in Public Interest & Constitutional Law at Gibbons P.C., researched and drafted the amicus brief filed yesterday by the New Jersey State Bar Association (NJSBA), challenging the jury selection process in the first in-person trial to resume in New Jersey since the COVID-19 pandemic state of emergency was declared. Christine A. Amalfe, Chair of the Gibbons Employment & Labor Law Department and NJSBA Secretary and member of its Pandemic Task Force, arranged for the firm to handle the matter pro bono for the bar association. “As it has been doing for 30 years, the Gibbons Fellowship continues to tackle cutting-edge issues of justice and equality in our criminal courts,” said Patrick C. Dunican Jr., Chairman and Managing Director of the firm. “Fairness to the accused is paramount, even as courts face understandable difficulties as they try to return to normal operations while gradually emerging from the COVID crisis, which Larry and Mike argue very effectively in the NJSBA’s brief.” The matter at issue, State v. Dangcil, is a criminal trial in Bergen County that began last week. The NJSBA argued in the brief authored by Mr. Lustberg and Mr. Noveck that the jury management office exercised its own...

District Court Rejects the Concept of Unilateral “Relevance Redactions” but Stresses the Importance of Discovery Confidentiality Orders to Address Commercially-Sensitive Information

In a recent decision, a Washington District Court illustrated the challenges parties face when they are in possession of responsive documents also containing highly confidential irrelevant information. The court stressed that, as a general rule, a party is not permitted to unilaterally redact information solely on the basis of relevance, and parties should consider seeking to enter into comprehensive ESI discovery protocols and discovery confidentiality orders allowing for the redaction of irrelevant information included in otherwise responsive documents, particularly where the parties will be exchanging highly confidential information in discovery. In Corker v. Costco Wholesale, plaintiffs initiated a class action suit against a number of coffee wholesalers, distributors and retailers under the Latham Act for false designation of origin. In discovery, plaintiffs sought the sale volume and pricing for the particular blend of coffee at issue sold by the defendants. Instead of producing the spreadsheet containing this information in the native excel format, one defendant first produced documents summarizing the contents of the spreadsheet and then, after plaintiffs objected to this disclosure, a 2,269-page static PDF of the spreadsheet redacting information related to coffee blends not at issue in the litigation that the defendant considered highly confidential. Plaintiffs moved to compel the production of the spreadsheet in the native form as kept in the ordinary...

End of the Road: GN Netcom Inc. and Plantronics Settle Eight-Year Litigation Saga Beset by E-Discovery Sanctions

On July 12, 2020, United States District Judge Leonard P. Stark of the District Court for the District of Delaware (“District Court”) approved a joint stipulation of settlement filed by GN Netcom Inc., parent of Jabra headphones, and Plantronics. This settlement will end the eight-year old litigation saga between GN Netcom and Plantronics involving allegations that Plantronics had monopolized the relevant market via exclusive distribution deals which required its distributors to only sells Plantronics’ headsets and not those of its rivals. This case is noteworthy as to e-discovery because of the severe sanctions of $3,000,000 and an adverse inference jury instruction entered by the District Court against Plantronics in 2016 pursuant to then recently amended Federal Rule of Civil Procedure 37(e). This blog post will not recount the full panoply of discovery abuses addressed in the District Court’s July 12, 2016 Order, but, in broad strokes, Plantronics was found to have acted in bad faith in failing to take reasonable steps to preserve ESI which could not be restored or replaced. The District Court’s sanctions order was entered because Don Houston, a former executive of the company, “double-deleted” thousands of his own relevant emails despite the existence of a legal hold. Mr. Houston also directed other employees of the company to delete relevant emails. While...

Technology-Assisted Review Is Not Compulsory, but Litigants’ Reluctance to Accept New E-Discovery Technologies Comes With Consequences

A Special Master appointed to administer discovery disputes in In re Mercedes-Benz Emissions Litigation, pending in the District of New Jersey, rejected Plaintiffs’ application to compel Defendants to utilize technology assisted review (“TAR”) or predictive coding in connection with the parties’ negotiation of their search term protocol. While we have previously addressed courts that have “endorsed” the use of predictive coding and/or TAR and have recommended that litigants consider the use of such technologies to promote efficiency in the discovery process, courts will be extremely hesitant to impose affirmative requirements on litigants in carrying out discovery. TAR is a process “in which human reviewers and a computer engage in an interactive process to ‘train’ the computer how to identify responsive documents based on properties and characteristics beyond simple search terms.” Special Master Dennis M. Cavanaugh, U.S.D.J. (ret.) observed that courts have universally concluded that TAR is “cheaper, more efficient and superior to keyword searching.” Nevertheless, the Special Master acknowledged that “responding parties are best situated to evaluate the procedures, methodologies, and technologies appropriate for producing their own electronically stored information.” Thus, while courts have permitted parties to use TAR for document review, no court has compelled predictive coding over another party’s objection. The Special Master followed the approach of the few courts that have addressed...

Claw It Back: Updated Protections of New Jersey Rule of Evidence 530 on Inadvertent Disclosure

On July 1, 2020, Amended New Jersey Rule of Evidence 530 (Waiver of Privilege by Contract or Previous Disclosure) became effective. N.J.R.E. 530, which tracks Federal Rule of Civil Procedure 502, was amended as a result of the increasing use of electronic discovery in litigation and the associated concerns regarding the potential for the inadvertent disclosures. This blog has frequently addressed decisions involving F.R.E. 502, including in 2019, 2018, and 2012. Amended N.J.R.E. 530 includes significant revisions in paragraph(c), which includes provisions that apply “to disclosure of a communication or information covered by the attorney-client privilege or work-product protection.” N.J.R.E. 530(c). In particular, amended N.J.R.E. 530(c) addresses disclosures made during state proceedings or to state office or agency, N.J.R.E 530(c)(1); inadvertent disclosures, N.J.R.E. 530(c)(2); disclosures made in another forum’s proceeding, N.J.R.E. 530(c)(3); the controlling effect of a court’s order, N.J.R.E. 530(c)(4); and the controlling effect of a party agreement regarding disclosure, N.J.R.E. 530(c)(5). Under the amended Rule, it is clear that a court order regarding disclosure pursuant to N.J.R.E. 530(c)(4) has the potential to have a significant impact on other litigations, as the rule provides that a court order on privilege “is also not a waiver in any other federal or state proceeding.” However, an agreement “on the effect of disclosure in a state proceeding...

DOJ Updates Corporate Compliance Program Evaluation Guidelines to Invite the Practice of Continuous and Evolving Improvements Through Data Analysis

The Department of Justice (DOJ) recently updated its Evaluation of Corporate Compliance Programs guidelines, which federal prosecutors consider when making decisions to prosecute corporate compliance violations, impose monetary penalties, and require future compliance commitments. The guidelines highlight what prosecutors should deem relevant in evaluating a corporate compliance program, both at the time of the offense(s) and at the time of the charging decision and resolution. In turn, the guidelines serve as a roadmap for corporate compliance and control personnel in designing a corporate compliance program, allocating resources to the program, evaluating the efficacy of the program in practice, and redesigning the program as needed on a regular basis. The updates make clear that the DOJ is interested in the continuous evaluation and evolution of corporate compliance programs, and that prosecutors will now be examining whether and how a compliance program incorporates data analytics. As before, the guidelines instruct federal prosecutors to ask three questions, though now slightly revised as follows: Is the compliance program well designed? Is the program adequately resourced and empowered to function effectively? Does the program work in practice? A welcome addition to the guidelines is a stated recognition that the circumstances of the company, e.g., size, industry, geographic footprint, regulatory landscape, etc., are relevant to prosecutors’ analysis. The guidelines also suggest...