This update addresses the following recent developments and court decisions involving e-discovery issues:
- An order issued by the U.S. District Court for the District of Arizona granting a spoliation sanction of summary judgment against a defendant who acted willfully in using special software to erase computer hard drives containing directly relevant evidence;
- A District of New Jersey decision denying plaintiff’s sanctions motion for failing to preserve emergency room lobby surveillance footage, ruling that plaintiff’s initial email threatening litigation over his alleged mistreatment focused on the care provided in the patient treatment area and did not put the hospital on notice that his claims included the events in the lobby;
- A Puerto Rico federal district court decision rejecting defendants’ motion for dismissal of a lawsuit as a spoliation sanction but ordering an adverse inference instruction in response to plaintiff’s destruction of 38 relevant text messages; and
- A District of South Carolina order denying a motion to compel the defendant to provide the date of its first litigation hold notice as requested at a Rule 30(b)(6) deposition.
1. In Slep-Tone Entertainment Corp. v. Granito, 2014 WL 65297 (D. Ariz. Jan. 8, 2014), Judge David C. Bury entered summary judgment against the defendant as a spoliation sanction, finding that the defendant had acted willfully in using special software to erase computer hard drives containing directly relevant evidence and that a lesser adverse inference instruction sanction would not be sufficient.
This trademark and tradedress infringement case stemmed from the defendant’s alleged purchase, use and sale of counterfeit karaoke accompaniment tracks. Id. at *1. The defendant was a “karaoke jockey” who, in February 2012, purchased a hard drive filled with counterfeit tracks. Id. at *2. The plaintiffs investigated the defendant’s use of the counterfeit tracks by attending one of his karaoke shows and arranging for an agent to purchase a copy of the hard drive. Id. Upon learning that the hard drive contained approximately 150,000 counterfeit tracks, the plaintiffs filed suit. Id.
The plaintiffs served discovery requests on defendant for any computer hard drives containing karaoke tracks. Id. The defendant responded that he could not produce any such drives because they had been wiped clean using special software one to two months prior to the lawsuit. Id. The plaintiffs filed a motion for an order to show cause why summary judgment should not be entered for them, alleging that the defendant’s actions amounted to spoliation. Id. at *1. For his part, the defendant filed a motion for summary judgment on the ground that the plaintiffs could not prove he possessed counterfeit tracks. Id.
The court noted that a party seeking sanctions for spoliation must demonstrate that (i) the party with control over the evidence had an obligation to preserve it, (ii) the destruction of the evidence was accompanied by a “culpable state of mind,” and (iii) the evidence was relevant to the moving party’s claims or defenses. Id. at *3 (citation omitted).
As to the first element, the court stated that the defendant “clearly had control over the evidence.” Id. at *4. Judge Bury also found that the defendant had a duty to preserve the hard drives once he was served with the complaint, rejecting as self-serving the defendant’s claim that he erased the drives prior to learning of the lawsuit. Id. As such, the court held that the first element was satisfied. Id.
The court also held that the second and third elements were satisfied. Id. at *5-*6. The court determined that the defendant had a culpable state of mind when he utilized “specialized software to completely wipe the drives clean of information as to make file recovery impossible.” Id. at *5. Further, the Judge noted that the hard drives were relevant to the plaintiff’s claims because the drives would have proved or disproved the accusation that the defendant possessed counterfeit tracks. Id. at *6. The court thus found that the defendant had engaged in spoliation. Id.
The court next considered whether summary judgment or a lesser sanction was appropriate.Id. The court explained that, in determining whether to enter summary judgment as a sanction, a court must weigh (i) the public’s interest in “expeditious resolution of the litigation,” (ii) the court’s need to manage its dockets, (iii) the risk of prejudice to the moving party, (iv) the public policy favoring disposition of cases on their merits, and (v) the availability of “less drastic” sanctions. Id. (citation omitted).
The court held that the factors supported entry of summary judgment in this case. Judge Bury found that the first two factors favored summary judgment because the defendant’s actions had delayed the proceedings. Id. He next determined that the defendant’s actions prejudiced the plaintiffs by “destroy[ing] all the possible evidence” relevant to the issue of possession of counterfeit tracks. Id. at *8. The court did find that public policy considerations weighed against a “termination sanction,” but noted that this factor alone did not outweigh the others. Id. (citations omitted). Finally, Judge Bury decided against an issuance of an adverse inference instruction instead of a default judgment. The adverse inference would be “appropriate where there is no evidence that the spoliation would force a party to rely on incomplete and spotty evidence at trial.” Given the defendant’s actions in this case, the court concluded that entry of summary judgment was appropriate as to liability and set the case for trial as to damages. Id.
2. In McCann v. Kennedy Univ. Hosp., Inc., 2014 WL 282693 (D. N.J. Jan. 24, 2014), Magistrate Judge Joel Schneider denied plaintiff’s sanctions motion for failing to preserve emergency room lobby surveillance footage, holding, inter alia, that the plaintiff’s initial email threatening litigation over his alleged mistreatment in the patient treatment area did not put the hospital on notice that his claims extended to events in the lobby.
A pro se plaintiff sued a hospital after allegedly being mistreated due to his lack of medical insurance. Id. at *1. Specifically, the plaintiff alleged that after arriving at the hospital “incoherent and in excruciating pain,” he was left unattended in the patient treatment area for hours – even at one point stumbling into the emergency room lobby, where he “was left lying on the floor for more than ten minutes, while staff walked over him without offering any assistance” – all because he was uninsured. Id. (internal quotations and citations omitted).
The next day, the plaintiff sent an email to the hospital in which he explained the events and threatened to sue for “unfair and inhumane treatment . . . and for pain and suffering.” Id. at *1-2 (internal quotations and citation omitted). He later did so, and during the course of discovery requested the surveillance footage from the emergency room lobby. Id. at *3. The hospital, however, had erased the footage in the normal course several weeks after the plaintiff’s hospital visit. Id. The plaintiff contended in his motion that this amounted to spoliation, to which the hospital responded that it had not been on notice from the plaintiff’s email that his claims encompassed the events in the emergency room lobby. Id.
The Magistrate Judge considered whether (i) the plaintiff’s email triggered the hospital’s duty to preserve the surveillance footage, and (ii) the plaintiff had shown that the hospital acted in bad faith in erasing the footage. Id. at *4. Magistrate Judge Schneider began by explaining that spoliation is “the destruction or significant alteration of evidence, or the failure to preserve property for another’s use as evidence in pending or reasonably foreseeable litigation.” Id. (internal quotations and citation omitted). The Third Circuit has held that spoliation occurs where the evidence was in the party’s control, the evidence is “relevant to the claims or defenses in the case,” there has been “actual suppression or withholding” of evidence, and the duty to preserve was reasonably foreseeable to the party. Id. (citing Bull v. United Parcel Service, 665 F.3d 68, 73 (3d Cir. 2012) (internal quotations omitted)) [see April 2012 EDTF Case Notes].
Magistrate Judge Schneider held that erasing the surveillance footage did not amount to spoliation. Id. at *5-*6. He focused on the relevance of the footage, finding that it may have been potentially relevant to the plaintiff’s claim of inhumane treatment, but “it was not reasonably foreseeable that the [footage] would be requested” because the plaintiff’s email indicated only that he “intended to sue based on his complaints about the clinical care provided in the treatment room.” Id. at *6. As such, Magistrate Judge Schneider found that the hospital did not have a duty to preserve the surveillance footage. Id. After also determining that there was “ no evidence” suggesting that the footage was erased in “bad faith or with the intent to destroy relevant evidence,” Magistrate Judge Schneider concluded that the hospital’s conduct did not amount to spoliation. Id. at *7.
3. In Calderon v. Corp. Puertorrique a de Salud, 2014 WL 171599 (D.P.R. Jan. 16. 2014), U.S. District Judge Francisco A. Besosa denied defendants’ motion for dismissal of an employment discrimination lawsuit as a spoliation sanction but ordered an adverse inference instruction in response to plaintiff’s destruction of 38 relevant text messages.
The defendants filed a motion in limine requesting that the court exclude all text messages sent and received between plaintiff and certain recipients on the ground that plaintiff admitted deleting some text messages, and defendants also asserted that the case should be dismissed because the lawsuit was “based on the printed text messages.” Id. at *1. While that motion was pending, the defendants obtained documents through an ex partesubpoena to plaintiff’s mobile carrier, which showed that plaintiff had failed to produce an estimated 38 relevant text messages. Id.
The defendants thereafter renewed their motion to dismiss the case on spoliation grounds. At the time plaintiff failed to save or forward the relevant texts, he was in contact with his attorney and had forwarded some relevant texts for printing. Id. The court concluded that plaintiff had engaged in spoliation of evidence because his decision not to forward or save the unproduced texts constituted “conscious abandonment of potentially useful evidence that indicates that he believed those records would not help his side of the case.” Id. (internal quotation marks and citation omitted).
The court declined to dismiss the case, however, as such a sanction “is traditionally reserved . . . for the most extreme of cases” and instead indicated that an adverse inference instruction was the “most appropriate sanction in this case.” Id. The court found that defendants “easily” met their burden to qualify for an adverse inference instruction, as they had shown that plaintiff knew of the potential for litigation and the potential relevance of the unproduced messages to that litigation at the time he failed to preserve those messages. Id. at *3. Judge Besosa also concluded that plaintiff’s failure to preserve the text messages “severely prejudice[d] defendants” by preventing defendants from reviewing all the relevant text messages and pictures and by precluding defendants from introducing “other writings that in fairness ought to be considered at the same time as the messages that plaintiff seeks to introduce at trial.” Id. (citing Fed. R. Evid. 106; internal quotations omitted). Accordingly, the court granted the adverse inference instruction as a sanction.
4. In United States v. Albemarle Corp., 2013 WL 6834597 (D.S.C. Dec. 23, 2013), the District Court denied the Government’s motion to compel the defendant to provide the date of its first litigation hold notice as requested at a Rule 30(b)(6) deposition, finding that the request was outside the scope of topics listed for the deposition and that defendant and its defense counsel had not committed to provide that information.
The Environmental Protection Agency (“EPA”) and South Carolina Department of Health and Environmental Control (“SCDHEC”) sued Albemarle Corporation for violations of the Clean Air Act, South Carolina regulations, and permits issued to defendant. The SCDHEC asked one of defendant’s 30(b)(6) deponents whether he had received a litigation hold notice from defendant. Defense counsel did not object to the question. The deponent responded that he had “‘received at least an e-mail or correspondence to that effect,’ but did not remember the date of the e-mail or correspondence.” Id. at *2 (internal citation omitted). Counsel for SCDHEC asked the Rule 30(b)(6) deponent and his counsel: “Would you at least be able to check into that and give us an answer?” Id. at *4. Defense counsel responded: “If it’s in email, I can find it. I’m not sure if we have a record of any of that.” Id. SCDHEC never received further information regarding the date of the litigation hold notice from defendant or its counsel. Id. at *2.
SCDHEC moved to compel the defendant to provide an answer as to when the defendant or its counsel first issued a written legal hold to its key employees. The defendant opposed the motion, arguing that the question was outside of the scope of the notice of deposition. Id. at *4.
The court denied the motion, finding that the question asked during the deposition was beyond the scope of the deposition notice and was not a definite request for the date of the first litigation hold notice. Id. Additionally, the court concluded that the defendant and its counsel had not promised to provide such information. Id.
If you have any questions regarding this update, please contact the Sidley lawyer with whom you usually work.