Tagged: ESI

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).

A Poor Substitute: The Eastern District of Texas Holds That Facebook Screenshots Are Not Sufficient to Avoid Sanctions Under Rule 37

In Edwards v. Junior State of America Foundation, the Eastern District of Texas determined that screenshots of social media messages are not sufficient evidentiary substitutes for spoliated native files. As a result of the plaintiffs’ discovery misconduct and spoliation of relevant electronically stored information (ESI), the court imposed sanctions under Rule 37(c) and (e) against the plaintiffs for failing to preserve Facebook messages in native format, including its metadata, which prevented the defendant from authenticating the messages. The plaintiffs filed a complaint against the defendant alleging that a student member of the defendant, a youth organization, sent “racist and homophobic Facebook messages” to one of the plaintiffs (the “Messages”). After the alleged Messages were sent, the student’s father filed a complaint with the youth organization which included .jpeg “snapshot” images of the Messages. During the litigation, the defendant served written discovery requests on the plaintiffs, seeking production of ESI from the plaintiff’s Facebook Messenger account to authenticate the alleged Messages, including the production of the Messages in HTML or JSON format. The native format of Facebook messages can typically be retrieved and produced in HTML or JSON format and contain metadata that can be used for authenticity purposes. The defendant’s request for native format would have allowed the defendant to authenticate the Messages. The plaintiffs never...

Timing Is Everything: SDNY Limits Relief for Plaintiffs Prematurely Seeking Serious ESI-Related Sanctions Under Rule 37(e)(2)

In DoubleLine Capital LP v. Odebrecht Finance, Ltd., the Southern District of New York issued a decision with important implications regarding the timing of spoliation motions and imposition of e-discovery sanctions under Federal Rule of Civil Procedure 37(e)(2). The decision highlights the challenges litigants face when seeking relief under this provision and, in particular, satisfying the onus to establish an “intent to deprive” the opposing party of deleted discovery. As this blog has previously discussed, the sanctions available under this subsection are available only in “egregious cases,” require a high evidentiary bar, and are highly dependent on timing and the proper development of a factual record. In this securities fraud case, the plaintiffs sought a mandatory adverse inference based on the claim that the defendants destroyed encryption keys needed to access the “MyWebDay” platform, an internal “shadow” accounting system used to track illicit bribe payments, which they contended contained evidence essential to the litigation. Despite ultimately admitting to destroying the encryption keys, the defendants argued that it was too early in discovery for the court to impose sanctions. Specifically, the defendants argued that spoliation sanctions would be inappropriate because the plaintiffs “have not (and cannot) demonstrate that the lost information cannot be replaced in discovery, and therefore have not shown that any relevant facts ‘have...

Blowing Things Out of Proportion: S.D.N.Y. Finds Hyperlinked Documents Are Not Necessarily Attachments and Rejects a Revamping of Production Protocols

The Southern District of New York recently held that hyperlinked documents should not necessarily be considered “attachments” and declined to require a responding party to utilize a collection tool proposed by the requesting party, which would have collected all hyperlinked documents and maintained their familial relationship with the parent document. This is a novel and important issue that has not received such thorough treatment by other courts. With the COVID-19 pandemic forcing many employees to work from home and increasing the use of cloud-storage apps for documents, the issues related to the treatment of hyperlinked documents and litigants’ obligations in collecting and producing these documents are unlikely to disappear anytime soon. In Nichols v. Noom Inc., the plaintiffs initiated a class action suit against Noom for a litany of allegations centered around false advertising. Prior to commencing discovery, Noom agreed to collect and search relevant data from multiple Google App sources (i.e., Gmail, G-chat, Google Drive). The parties agreed to utilize Google Vault to collect the relevant documents from Google Drive, despite the fact that Google Vault would not be able to collect file path metadata for each document. Additionally, the parties never agreed to the method of collection for emails stored on Gmail. While Noom wanted to use Google Vault to collect the relevant emails,...

“It Wasn’t My Fault”: Court Rejects Attempts by Client and Attorney to Duck Responsibility and Sanctions Both Jointly

This blog has previously discussed the importance of cooperation among parties in a litigation to effectuate a comprehensive discovery framework; however, a recent decision from the District Court for the Northern District of California exemplifies the importance of joint responsibility and collaboration between attorneys and their clients when dealing with e-discovery matters, including preservation, collection, and production of electronically stored information (ESI). In a case that ultimately settled and involved both foreign and domestic parties, the court granted a motion for monetary sanctions pursuant to its inherent authority and Rule 37, after finding that the plaintiff’s discovery misconduct “not only forced [defendant] to incur additional attorneys’ fees but … also forced the court to expend considerable resources beyond what was necessary.” Because both the plaintiff and its former counsel “failed in their responsibilities,” the court imposed sanctions jointly and severally against them. In Optrics Inc. v. Barracuda Networks Inc., the plaintiff, a Canadian engineering firm, filed suit in August 2017 against the defendant, an American company, “bringing trademark, contract, and other claims stemming from allegedly unfair and deceptive business practices by [defendant] during the parties’ thirteen-year business relationship.” Beginning in June 2019, discovery disputes and “discovery violations” by the plaintiff plagued the litigation. In February 2020, “with discovery still mired in disputes,” the parties stipulated...

Amateur Hour Is Over! DR Distributors LLC Offers Crash Course on the Importance of E-Discovery Compliance

In DR Distributors, LLC v. 21 Century Smoking, Inc., et al., United States District Judge Iain D. Johnston issued a scathing 256-page opinion, dropping the proverbial hammer on the defendant and its counsel for repeated and egregious e-discovery failures – a veritable Keystone Kops series of discovery errors and misrepresentations spanning several years. The court imposed sanctions pursuant to Federal Rules of Civil Procedure 26(g) and 37, as well as monetary sanctions, and required the defendants’ former counsel to participate in continuing legal education on electronically stored information (ESI). In sum, Judge Johnston put all attorneys on notice that it “is no longer amateur hour” for attorneys grappling with e-discovery – compliance is not merely “best practices,” but required under the Rules, and courts will address incompetence accordingly. The dispute arose from alleged trademark infringement claims involving electronic cigarettes with confusingly similar marks. The case was initiated in 2012 and assigned to Judge Johnston in 2014, who immediately held a case management conference. At this conference, the court asked counsel if litigation holds were issued, and defense counsel neglected to inform the court that no litigation holds had been issued at that point. Defense counsel also affirmatively stated that the defendant, Brent Duke, the principal of 21 Century Smoking, was generally knowledgeable about ESI, including...

Getting Your Ducks in a Row: Court Stresses High Evidentiary Threshold for Rule 37 Sanctions and Cautions Against Precipitous Motions

A recent case out of the Middle District of Florida illustrates the importance for parties contemplating motions under Fed. R. Civ. P. 37 to first understand the high threshold required for the court to grant their motions and impose sanctions. Examining a barrage of sanction motions, the court highlighted that a party needs to present a strong factual record when seeking charges of spoliation, as it takes more than simple allegations of destruction or non-retention of evidence to find sanctions appropriate under Fed. R. Civ. P. 37. Further, the decision provides a clear-cut example of unnecessary costs incurred and wasted judicial resources resulting from the failure of the parties to cooperate throughout the discovery process. As discussed below, while a number of the parties in the litigation entered into an electronically stored information (ESI) protocol, it appears that many of the discovery disputes could have been avoided if certain key areas, including the temporal scope of the documents to be produced, were addressed in that protocol. In Centennial Bank v. ServisFirst Bank, Inc., several former employees allegedly violated non-compete provisions of their employment agreements with the plaintiff, Centennial Bank (“Centennial”), when they left to work for the defendant, ServisFirst Bank. Beginning in 2016, the protracted discovery in this litigation involved countless disputes ranging from the...

“Accidentally” Destroying Years of Text Messages Is No Defense to Spoliation Sanctions

The New York Supreme Court recently granted a defendant spoliation sanctions, in the form of an adverse inference instruction, against the plaintiff for the “accidental” destruction of years’ worth of text messages from the plaintiff’s cellphones. In Iacovacci v. Brevet Holdings, LLC, the plaintiff was terminated from his employment with the defendants in October 2016, through a letter that referred to “possible litigation” and requested that the plaintiff “preserve … electronically stored information (‘ESI’) relating” to the defendant’s business, “includ[ing] all emails, text messages, … and the like, … [including] material on a phone.” Several days after receiving the termination letter, the plaintiff filed a wrongful termination and breach of contract action, and the defendants filed an answer with counterclaims alleging misappropriation of the defendants’ documents, breach of fiduciary duty, and self-dealing. Thereafter, a years-long discovery dispute ensued. The defendants served several requests for documents, including text messages, but the plaintiff objected to the demands as irrelevant and overbroad, and in March 2018, the plaintiff filed a motion for a protective order. In May 2018, the court ordered the plaintiff to produce cellphone and electronic calendar records as requested by the defendants, and at a status conference in December 2018, the court, again, directed the plaintiff to produce the text messages within 30 days. Finally,...

Planning Ahead: The Critical Importance of Early Agreement on the Proportional Scope of Preservation

In M.A. v. Wyndham Hotels & Resorts, Inc., and H.H. v. G6 Hospitality LLC, the United States District Court for the Southern District of Ohio, Eastern Division, rejected plaintiffs’ objections to the Magistrate Judge’s decision excluding certain types of electronically stored information (ESI) from defendants’ duty to preserve. In doing so, the District Court emphasized the fact that the parties had spent a considerable amount of time addressing issues related to ESI and that plaintiffs had consented to the exclusions during a status conference with the Magistrate Judge. In adopting the Magistrate Judge’s recommendation, the District Court based its decision on “guiding principles of proportionality, default standards in other jurisdictions, and current trends in ESI discovery.” Plaintiffs filed related complaints against several hotel locations and parent companies pursuant to the Trafficking Victims Protection Reauthorization Act (TVPRA). In April 2019, plaintiffs sent letters to defendants reminding them of their duty to preserve potentially discoverable ESI. A number of discovery disputes ensued related to proposed confidentiality and ESI orders. While this decision also addresses issues related to confidentiality, the primary focus of this post is the dispute regarding defendants’ obligation to preserve certain types of ESI. In particular, plaintiffs objected to an oral decision rendered by the Magistrate Judge finding that defendants were not obligated to preserve:...

District Court Denies Protective Order in Putative Class Action: Production of Relevant ESI May Be Time Consuming and Expensive, But Not Unduly Burdensome

The District Court for the Eastern District of California recently denied a defendant’s motion for a protective order in a putative class action, finding that the information requested by plaintiff was relevant and subject to pre-certification discovery, and that defendant did not show that the electronically stored information (ESI) was inaccessible due to undue burden or cost, pursuant to Rule 26(b)(2)(C). Additionally, the court determined that even if defendant could show that the ESI was “inaccessible,” plaintiff demonstrated “good cause” to order production of the ESI notwithstanding the potential burden and cost. In Sung Gon Kang v. Credit Bureau Connection Inc., plaintiff, a consumer, filed a putative class action alleging that defendant provided businesses with inaccurate consumer credit information, including that plaintiff and the proposed class of consumers were included on the United States Treasury Department’s Office of Foreign Assets Control (OFAC) list. A consumer is ineligible for credit in the United States if he or she is included on the list. Plaintiff sought to “represent classes consisting of individuals ‘about whom Defendant … sold a consumer report to a third party’ that included an OFAC Hit.” The discovery dispute centered on defendant’s objections to plaintiff’s first set of written discovery requests. Specifically, defendant objected to requests seeking the identities of individuals who had an...