In Cat3, LLC v. Black Lineage, Inc., 14 Civ. 5511 (S.D.N.Y. Jan. 12, 2016), Magistrate Judge Francis IV examined the contours of newly amended Federal Rule of Civil Procedure 37(e) in issuing discovery sanctions. One of the central questions in the action was when the defendants became aware the plaintiffs were utilizing plaintiffs' trademark in relation to when defendants were developing their contested trademark. Plaintiffs initially produced all emails in PDF format during discovery. During a deposition, one of the defendants' witnesses testified that he had a copy of an email exhibit from the defendants' productions that utilized a different email address for one of the recipients than the version produced by the plaintiffs. And the version produced by the defendants did not reference the plaintiffs' trademark, while the version produced by the plaintiffs did.
After a court order, the plaintiffs produced the emails natively, and the defendants submitted the emails to a forensic analysis, which concluded that the email addresses had been altered. The defendants moved for sanctions under Rule 37(e), which was amended in December 2015 and discussed in the January, March, and May 2014 Lit Alerts.
After acknowledging that Rule 37(e) was amended to address concerns that parties were over-preserving data at great burden and cost in fear of spoliation sanctions, the judge noted that the plaintiffs, who argued that they did not knowingly change the email addresses, could not avoid sanctions simply because the correct information was eventually recovered: "[N]ear-duplicate emails showing different addresses casts doubt on the authenticity of both." The court found clear and convincing, albeit circumstantial, evidence that the plaintiffs had manipulated the emails to gain an advantage. It therefore precluded the plaintiffs from relying on their versions of the emails at issue and ordered the plaintiffs to bear the costs of the defendants' analysis and motion.