In February, there again was a number of interesting spoliation decisions, including an order permitting the defendants to assert a counterclaim for spoliation based on the plaintiffs’ alleged failure to preserve relevant information, another sanctions order in multi-district products liability litigation in which the court looked closely at the breadth of litigation hold notices issued by the defendant in previous litigation, and a sanctions order finding culpable conduct based on the defendant city’s failure to have its IT policies comply with state public records laws. There also were key e-discovery decisions addressing undue burden, taxable costs, format of production, and predictive coding.

Spoliation

Zecotek Imaging Systems PTE Ltd. v. Sain-Gobain Ceramics & Plastics, Inc., No. 12-CV-1533 (N.D. Ohio Feb. 28, 2014). The court permitted the defendants to assert a counterclaim for spoliation under Ohio law based on the plaintiffs’ alleged failure to preserve documents and information relating to the plaintiffs’ patent infringement claims. According to the defendants, the plaintiffs failed to preserve and/or destroyed emails and other documents relating to the inventorship and ownership of the patent in suit and infringement of the patent, and these actions deprived the defendants of relevant and potentially exculpatory evidence. The court noted that while Ohio law imposes a duty on a plaintiff to preserve evidence, authority is mixed whether a plaintiff’s failure to comply with this duty can give rise to a cause of action against the plaintiff. The court concluded that under Ohio law a defendant is not per se prohibited from bringing a counterclaim for spoliation and therefore permitted the defendant to amend its answer and counterclaims.

In Re: Ethicon, Inc. Pelvic Repair Systems Product Liability Litigation, 12-MD-2327 (S.D.W.V. Feb. 4, 2014). In ruling on the plaintiffs’ motion for spoliation and sanctions in multi-district products liability litigation, the court addressed what the scope of a defendant’s duty to preserve is for future litigation after a duty to preserve has been triggered in a particular case. The defendant argued that “a single case involving one product simply does not create a reasonable anticipation of future litigation.” The court remarked that “minimal guidance exists as to the effect that an isolated product liability action has on a manufacturer’s duty to preserve evidence that may be relevant to different plaintiffs in future litigation based on the same or similar product.” Further, “[e]ven less guidance exists on whether a corporate litigation hold notice that is never expressly withdrawn requires the company to continue preserving evidence even after resolution of the legal action that triggered it.” The court analyzed a handful of cases addressing these issues, including the January decision in In Re Actos (Pioglitazone) Products Liability Litigation, No. 11-md-2299 (W.D. La. Jan. 27, 2014), discussed here, in which the court found that the duty to preserve evidence for the benefit of subsequent plaintiffs was triggered by the “broad and sweeping” language of a litigation hold notice issued in 2002.

The court found that the filing of one or two cases and the resulting litigation holds did not create a duty to implement ongoing, large scale document preservation measures at that time. The court closely examined a consolidated litigation hold notice issued by in-house counsel in 2011, however, that referenced company-wide litigation holds issued on April 30, 2007, for the TVT device at issue, and on April 21, 2008, for the Prolift device at issue. Based on the reference to these holds, the court found that the duty to preserve for purposes of the MDL arose on those dates because “the only reasonable interpretation of the notice is that counsel for [the defendant] believed that documents relating to TVT and Prolift were already being preserved company-wide for the purpose of large scale litigation,” and the 2011 hold notice was intended to “refresh” the 2007 and 2008 hold notices. The court further found that the custodial files of certain employees were lost or destroyed after the duty to preserve arose. Much of this information related to the marketing of the devices at issue and the defendant’s communications with physicians.

Although the court did not find that the defendant acted willfully or in bad faith, it did find that the defendant’s “failure to better implement and monitor its litigation holds was negligent, and perhaps grossly negligent in some cases.” The court also stated that, “at a minimum, [the defendant]’s in-house counsel should have educated employees on what measures were expected of them to collect and preserve material evidence.” The court also found that the lost information likely contained some relevant evidence.

Based on these findings, the court declined to impose case-dispositive sanctions. The court also concluded that although an adverse inference jury instruction may be appropriate in some of the pending cases such as those involving a claim of failure to warn, the plaintiffs had not shown that the missing evidence would be relevant in every case to be tried. Law360 reported that in the first bellwether trial that began on Feb. 10, the court granted a motion to exclude the spoliation issue from the trial because the court had granted summary judgment on a failure-to-warn claim and the case was based solely on a design defect theory.

Riley v. City of Prescott, No. 11-CV-8123 (D. Ariz. Feb. 18, 2014). The court held that the defendants in an employment retaliation lawsuit spoliated evidence by failing to preserve emails from the defendant city’s email accounts and from the defendant mayor’s private Gmail account. The court found that the defendants had a culpable state of mind with regard to the city-assigned email accounts because the city’s IT policies failed to comply with Arizona public record requirements. With regard to the mayor’s private Gmail account, the plaintiff subpoenaed Google for information relating to the account. Although Google did not produce the content of the mayor’s emails, it did produce metadata revealing information from the “to,” “from,” and “date” fields of the emails. From this information, the plaintiff determined that the mayor had failed to produce at least 24 potentially relevant emails. The court held that the mayor acted willfully and in bad faith by deleting emails after his duty to preserve arose and that an adverse inference jury instruction was warranted. The court also held that the plaintiff was entitled to an award of attorneys’ fees and costs incurred in seeking the spoliated evidence.

Undue Burden

In re Subpoena of Daniel Drasin; Advanced Career Technologies v. John Does 1-10, No. ELH-13-1140 (D. Md. Feb. 12, 2014). The court quashed a subpoena seeking the hard drives, servers, and other devices that a non-party individual used to administer a blog. The plaintiff had sued ten John Doe defendants based on their allegedly defamatory comments posted anonymously on a blog administered by the non-party. According to the plaintiff, the non-party exercised editorial control over the blog and the anonymous postings on the blog were “a sophisticated and coordinated campaign” intended to damage the plaintiff’s reputation. The non-party opposed the subpoena by arguing that the subpoena subjected him to undue burden. The court found that the subpoena imposed a significant burden on the non-party because it required him to surrender his personal hard drives, thus (1) forcing him to be without the use of his personal computer for up to 30 days, and (2) forcing him to give the plaintiff access to his personal files. These burdens were “particularly troubling” to the court because the non-party had not been accused of doing anything illegal, was not a defendant, and the plaintiff had an alternative means to obtain the information by serving a subpoena on Google. The court also found that there was nothing in the record suggesting that the non-party had relevant evidence beyond what he already produced.

Black & Veatch Corp. v. Aspen Insurance (UK) Ltd., No. 12-2350 (D. Kan. Feb. 28, 2014). The plaintiff maintained potentially relevant ESI in a central electronic document management system called Documentum, custodian hard drives, and an accounting and field management system. In July 2010 in a related case, the plaintiff harvested approximately 350 GB of data from these sources using the search terms agreed to by the parties in that case and spent approximately $600,000 for the production, storage, and privilege review of that data. Despite this production, the defendants in the newly filed case requested that the plaintiff search Documentum again using additional search terms and including data added after July 2010. The plaintiff contended that it would be unduly burdensome to repeat its search for pre-July 2010 data and that the additional search terms were overly broad with little prospect of returning substantive data. The plaintiff further contended that it would be unduly burdensome to use the proposed search terms for the post-July 2010 data. The court rejected the plaintiff’s undue burden and expense argument because it was unsupported and conclusory. Among other things, the plaintiff failed to provide an estimate of hours and cost per hour, an affidavit detailing the costs of production, or an indication that additional software would be necessary to access the data. The court also rejected the plaintiff’s request for cost-shifting because the plaintiff failed to show that the requested ESI was inaccessible because of undue burden or cost.

Costs

Thompson, I.G., LLC v. Edgetech I.G., Inc., No. 11-12839 (E.D. Mich. Feb. 25, 2014). The court held that only $25.48 out of $65,652.94 in e-discovery costs were taxable costs under 28 U.S.C. § 1920(4). The court applied the reasoning used by the Third Circuit in Race Tires America, Inc. v. Hoosier Racing Tire Corp., 674 F.3d 158 (3d Cir. 2012), to conclude that e-discovery costs for such things as “forensic consulting and collection,” “early case assessment,” “electronic discovery processing and hosting, data collection, imaging,” and the like did not constitute “making copies” under § 1920(4).

Format of Production

Castillon v. Corrections Corp. of America, No. 12-CV-559 (D. Idaho Feb. 7, 2014). The court held that the defendant’s production of data from a time-keeping system in searchable PDF format met the requirements of Rule 34 because the plaintiffs failed to specify the format in which the timekeeping information should be produced and the defendant contended that to its knowledge the only option to extract information from the system was to generate a report formatted as a PDF. The defendant further contended that it would have to create a specialized script to extract information from the system in an electronic data format such as CSV. According to the defendant, it would take a team of three to four people over three to four days to create the script. The court noted that if the plaintiffs agreed to pay the defendant’s expenses in writing a script to produce the data in the form in which the plaintiffs preferred, they could approach the defendant with such a request.

Predictive Coding

Federal Housing Finance Agency v. HSBC North America Holdings Inc., No. 11 Civ. 6189 (S.D.N.Y. Feb. 14, 2014). In ruling on the permissible use of documents produced in a number of related actions, the court referenced that JPMorgan Chase had previously been permitted to produce its documents through the use of predictive coding. Ralph Losey’s blog post about the case is worth the read. He describes in detail the parties’ arguments regarding predictive coding and how the court addressed those arguments.