E-Discovery Update

This Sidley Update addresses the following recent developments and court decisions involving e-discovery issues:

  1. a Southern District of Florida order denying plaintiff’s spoliation sanctions motion finding that the defendant had not deleted text messages intentionally or in bad faith and that the plaintiff was not prejudiced by the deletion of the text messages
  2. a Northern District of Indiana decision granting a party’s motion to compel the production of settlement negotiation documents as relevant and proportional to the issues in the case under amended Fed. R. Civ. P. 26(b)(1)
  3. an Eastern District of Missouri case granting a motion to compel plaintiff to produce a “Download Your Info” report from her Facebook account, rejecting claims of overbreadth and burden
  4. a Northern District of Illinois case granting in part a motion to dismiss claims brought by a former employee relating to the employer’s use of her work computer to access her personal email account after she left the company

1. In Living Color Enterprises, Inc. v. New Era Aquaculture, Ltd., 2016 WL 1105297 (S.D. Fla. Mar. 22, 2016), the court denied plaintiff’s motion for spoliation sanctions, finding that the defendant had not deleted text messages intentionally or in bad faith and that the plaintiff was not prejudiced by the deletion of the text messages.

Living Color Enterprises, Inc. brought an action against New Era Aquaculture, Ltd. and individual defendants. After seeking discovery of text messages and other electronically stored information (ESI), Living Color Enterprises filed a spoliation motion seeking sanctions based on an allegation that an individual defendant had intentionally destroyed relevant text messages to circumvent his discovery obligations. The defendant claimed that his cell phone automatically deleted text messages every 30 days, that he simply neglected to deactivate the feature, and that the ESI had been replaced from other sources. Id. at *1-*3.

Magistrate Judge William Matthewman first reviewed the revised Rule 37(e) and applied a three-part test to the spoliation issue. Id. at *3. The initial question was whether the allegedly spoliated items were ESI, and he concluded that text messages qualified as such. Id. at *4. As to the second part of the test, the magistrate judge noted that Rule 37(e) raised three separate issues: (1) Should the evidence have been preserved? (2) Was the ESI lost because a party failed to take steps to preserve it? (3) Can the allegedly spoliated ESI be restored or replaced through additional discovery? Id. at *4-*5. As to the preservation issue, the defendant acknowledged that the evidence should have been preserved. Id. at *4. On the issue of a party’s failure to take steps to preserve the evidence, the magistrate judge concluded that many text messages were produced to plaintiff by another party but that some messages were deleted as a result of defendant’s failure to disable the automatic delete function. Id. at *5. Finally, on the issue of other sources of discovery for the deleted ESI, the magistrate judge determined that there was no way to restore or replace the ESI. Id. Thus, for at least some of the text messages sought, the magistrate judge found spoliation.

As the final step in his Rule 37(e) analysis, the magistrate judge considered whether, under Rule 37(e)(1), the spoliation prejudiced plaintiff, or, under Rule 37(e)(2), was committed with intent to deprive or in bad faith. Id. at *5-*6. He determined that plaintiff was not prejudiced as the “vast majority of the missing text messages” had been produced by another party, plaintiff could only assert “extremely conclusory” statements on the relevance of the missing text messages and the defendant’s description of the missing text messages was credible. Id. at *5. As a result, the magistrate judge concluded that “if there was any prejudice to Plaintiff at all, it was so minimal that the Court does not find it necessary to order measures to cure the alleged prejudice.” Id. at *5. In addition, considering Rule 37(e)(2), the magistrate judge found that the text messages were not deleted intentionally or in bad faith, citing defendant’s representation in an affidavit that “he regularly deletes text messages in order to keep his phone running efficiently.” Id. at *6.

Summarizing his findings, Magistrate Judge Matthewman found the defendant to be negligent but concluded there was no basis for imposing sanctions:

While Defendant clearly had an obligation to retain the relevant text messages after this lawsuit was initiated, the Court finds that Defendant simply acted negligently in erasing the text messages either actively or passively. Defendant is an individual who appears to be a relatively unsophisticated litigant. At worst, his actions were negligent. The amended Rule 37(e) does not permit an adverse inference instruction or other severe sanctions for negligence. There is no evidence that Defendant intentionally deleted the text messages in order to deprive Plaintiff of the information’s use in litigation. There is no evidence that he intended to deprive Plaintiff of the text messages or that he acted in bad faith. No sanctions should be imposed pursuant to Rule 37(e)(2). Id. at *6.

2. In Arcelormittal Indiana Harbor, LLC v. Amex Nooter, LLC, 2016 WL 614144 (N.D. Ind. Feb. 16, 2016), Magistrate Judge Paul R. Cherry granted plaintiff’s motion to compel the production of two documents relating details of settlement negotiations, finding such negotiations were relevant and proportional to the claims at issue and therefore discoverable under amended Fed. R. Civ. P. 26(b)(1).

Plaintiff filed a motion to compel defendant’s document production of all communications between defendant and the Indiana Occupational Safety and Health Administration (IOSHA). Id. at *1. Defendant withheld two documents containing confidential settlement negotiations, claiming they were protected from disclosure pursuant to Fed. R. Evid. 408. Id. at *3. In its reply, plaintiff asserted that Rule 408 addresses only admissibility, not discoverability, and that Fed. R. Civ. P. 26(b)(1) permits the discovery of confidential settlement negotiations. Id.

The magistrate judge agreed that Fed. R. Evid. 408 by its own language governs the admissibility of settlement negotiations and not their discoverability. Id. Having so found, he reviewed whether Rule 26(b)(1) permitted the discovery of the settlement negotiation documents. Id. He concluded that the December 2015 amendment to Rule 26(b)(1) was applicable to this dispute. Id. at *4. He noted that some courts had adopted a higher standard for discovering settlement negotiations prior to the 2015 amendment based on the preamendment language that otherwise inadmissible evidence is discoverable if it “appears reasonably calculated to lead to the discovery of admissible evidence.” Id. (quoting Fed. R. Civ. P. 26(b)(1) (2010) (amended Dec. 1, 2015)). He found this argument and the cases on which it was based unpersuasive in light of the removal of that language by the 2015 amendment and the advisory committee’s note that the language had previously been “used by some, incorrectly, to define the scope of discovery” as more broad than the scope set forth in Rule 26(b)(1). Arcelormittal, 2016 WL 614144, at *6.

The magistrate judge turned to an assessment of the discoverability of the two settlement negotiation documents under amended Rule 26(b)(1). Magistrate Judge Cherry noted that the primary question was whether the requested discovery met the standard set out in Rule 26(b)(1) for relevance and proportionality. Id. at *6. In the motion to compel, plaintiff contended that the settlement negotiations between defendant and nonparty IOSHA were relevant under Rule 26(b)(1) as the documents “may shed light on the events that led to the fire and explosion, including whether the Amex Nooter employees were properly trained, whether the Amex Nooter employees properly engaged in all safety precautions, and whether the Amex Nooter employees were otherwise negligent in their actions.” Id. The magistrate judge agreed that plaintiffs had met the burden for proving relevancy, stating that the settlement negotiations themselves would not be admissible at trial to “prove or disprove the validity or amount” of the claim but noting that relevant evidence need not be admissible to be discoverable. Id. (citing Fed. R. Evid. 408; Fed. R. Civ. P. 26(b)(1)). In addition, if information contained in the settlement negotiation documents would allow plaintiff to conduct additional relevant discovery on those topics, then it was relevant and therefore discoverable under Rule 26. Id. Thus, the magistrate judge determined that plaintiff met its burden of explaining how the negotiations were relevant. Id. (citing White v. Kenneth Warren & Son, Ltd., 203 F.R.D. 364, 368 (N.D. Ill. 2001) (not allowing discovery of settlement negotiations that had led to a settlement between the parties in the ongoing litigation because the party seeking the settlement negotiations had not demonstrated “how the negotiations, as compared to an actual settlement agreement, may be relevant to the ongoing litigation”)).

Magistrate Judge Cherry then considered the proportionality principles relevant to amended Rule 26(b)(1). Arcelormittal, 2016 WL 614144, at *7. He noted that the proportionality issue had not been briefed by either party and set forth the governing proportionality standard: “the importance of the issues at stake in the action, the amount in controversy, the parties’ relative access to relevant information, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit.” Id. (citing Fed. R. Civ. P. 26(b)(1)).

Applying this standard, the magistrate judge concluded that discovery of the two documents discussing the settlement negotiations was proportional in this case. Id. He found that the questions of liability and damages were central to the issues at stake in this action and that the amount in controversy well exceeded $75,000. Id. Although plaintiff had other means of possibly obtaining information similar to that in the settlement negotiation documents, plaintiff could not obtain the exact information in these documents through any other means. In addition, the settlement negotiations may provide important information to promote the resolution of the issues being litigated. Id. Finally, the burden and expense on defendant of producing these two documents was low. Id. Based on this analysis, the magistrate judge found that plaintiff’s request to compel these documents satisfied Rule 26(b)(1)’s proportionality test. Id.

Before making a final ruling, the magistrate judge acknowledged defendant’s position that the “purpose of Rule 408 to encourage settlement of disputes might be chilled by fear that negotiations might be discoverable, and have sought to balance furthering that purpose with the policy of liberal discovery.” Id. (internal quotation omitted). However, he determined that any concerns regarding the confidentiality of settlement negotiations in the context of relevant discovery could be remedied by a protective order. Id.

Therefore, the magistrate judge overruled defendant ’s objection to producing the two documents containing settlement negotiations and granted plaintiff’s motion to compel. Id. The magistrate judge stated that defendant could designate the pages of the settlement documents as “confidential and protected” pursuant to the stipulated protective order previously entered in the case. Id.

3. In Rhone v. Schneider National Carriers, Inc., 2016 WL 1594453 (E.D. Mo. Apr. 21, 2016), Magistrate Judge Noelle C. Collins granted a motion to compel plaintiff to produce a “Download Your Info” report from her Facebook account as neither overbroad nor unduly burdensome.

In this personal injury action, the defendant sought production of copies of any postings or photographs by plaintiff on her social media accounts following the accident. The plaintiff objected to the request and denied that such postings existed. The defendant moved to compel production in accordance with its request and to produce a copy of a “Download Your Info” report from the date of the accident to the present. Id. at *2-*3. Although plaintiff had initially not disclosed the existence of any social media accounts, defendant pointed out that plaintiff did in fact have a Facebook account that publicly revealed relevant, noncumulative information. Id. at *2-*3. Defendant also sought sanctions for plaintiff’s deletion of Facebook postings, noting that there were fewer pages on her account than had previously been available when defendant first investigated. Id. at *2.

Magistrate Judge Noelle C. Collins pointed to plaintiff’s failure to disclose initially the existence of her social media accounts and ordered the plaintiff to provide defendant a listing of all her social media accounts. Id. Upon receipt of the listing, the defendant could then make “timely, limited requests for production of documents informed by the relevant case law.” Id. The magistrate judge specifically noted that she was not making any determination as to the relevance of the information on the social media websites.

The magistrate judge also granted the request to require plaintiff to provide the “Download Your Info” report to defendant. Recognizing that “such a broad disclosure might not be appropriate in all circumstances,” Magistrate Judge Collins noted that defendant’s independent investigation had already revealed relevant social media postings, including “comments and photos regarding physical activity such as dancing.” Id. at *3. She also stated that the plaintiff did not explain how production would be overbroad or burdensome and credited defendant’s description of the requested production as “requiring Plaintiff to execute several simple commands while logged into her Facebook account.” Id. The magistrate judge directed the parties to consult on the process and steps relating to disclosure of the information. Id.

Magistrate Judge Collins denied the defendant’s request for sanctions as unwarranted “at this time” because it was not clear that the plaintiff had deleted any information from her Facebook account and because the “Download Your History” report “may afford Plaintiff the ability to recover any, even innocuous, information that may have been deleted.” Id. (emphasis in original).

4. In Owen v. Cigna, 2016 WL 2997931 (N.D. Ill. May 26, 2016), the court granted in part a motion to dismiss claims by a former employee relating to the employer’s use of her work computer to access her personal email account after she left the company.

Plaintiff sued her former employer and its technology consultant, alleging that they had violated various federal laws by accessing her personal email account during a sexual harassment lawsuit brought against the defendants. Defendants moved to dismiss plaintiff’s claims brought under the Federal Wiretap Act (Wiretap Act), the Computer Fraud and Abuse Act (CFAA), and the Stored Communications Act (SCA).

U.S. District Judge John Z. Lee found that the Wiretap Act, which prohibits the “intercept[ion]” of emails, required proof that the defendants “accessed [plaintiff’s] emails contemporaneously with the emails’ transmission or receipt.” Id. at *2. As plaintiff alleged that defendants had accessed emails only after plaintiff had left the defendant’s employ, Judge Lee granted defendants’ motion to dismiss the Wiretap Act claim, finding that the defendants “did not access her emails contemporaneously with the emails’ transmission or receipt.” Id.

The CFAA prohibits a party from “exceed[ing] authorized access” and obtaining information from a protected computer. Id. In this case, plaintiff claimed that the defendants “exceeded their authorization to access her former work computer when they used it to retrieve her emails.” Id. The employer defendant pointed out that it owned the computer and that plaintiff no longer worked for the defendant when it accessed its computer. Id. Judge Lee rejected this CFAA claim, ruling that plaintiff had not shown that she had “retained any authority to grant or deny anyone permission to access her former work computer after she left” defendant’s employ. Id. at *3.

Judge Lee denied, however, defendants’ motion to dismiss plaintiff’s SCA claim alleging that defendants unlawfully accessed her private emails in “electronic storage” on an att.net server. Id. Defendants claimed that plaintiff did not allege that her personal emails were stored as “backup” copies and thus were not in “electronic storage” as defined by the SCA and not subject to the Act’s protections. Id. Judge Lee disagreed with the premise that “a plaintiff must allege that a message was being stored for backup purposes” or was in “temporary, intermediate storage.” Id. at *4. Judge Lee agreed instead with the reasoning of the Ninth Circuit decision in Theofel v. Farey-Jones, 359 F.3d 1066 (9th Cir. 2006), that “any copies of the plaintiffs’ emails stored by an electronic communication service could be considered backup copies if the plaintiffs had previously downloaded the messages.” Owen, 2016 WL 2997931, at *4. Judge Lee cited as “persuasive” decisions that “explicitly reject the idea that a plaintiff, to state an SCA claim, must specify that a stored electronic communication was in ‘temporary, intermediate storage’ or was stored ‘for purposes of backup protection.’ ” Id. (citations omitted). He ruled it was sufficient to allege, as plaintiff had, that the accessed communications were stored on a particular server and that “whether the communications at issue in an SCA claim were stored for back-up purposes [is] more appropriately left for summary judgment or trial.” Id. (internal quotations omitted; brackets in original). Judge Lee also rejected defendants’ final claim that they had authorization to access the emails under the SCA, stating that the authorization to access the computer did not extend to plaintiff’s att.net email account. Id. at *5.