This update addresses the following recent developments and court decisions involving e-discovery issues:
1. A Southern District of Illinois decision finding that a defendant had no duty to preserve documents at the time its vice president’s emails were destroyed because there was no showing that defendant knew or should have known that litigation was imminent;
2. An Eastern District of Virginia ruling imposing various discovery-related sanctions on the plaintiff for failing to disclose several thousand documents during the discovery period;
3. A District of Puerto Rico court denying a spoliation sanctions motion by a plaintiff who demonstrated destruction of emails but could not show that the emails were destroyed in bad faith or that such destruction was prejudicial; and
4. A Western District of Washington decision granting the plaintiffs’ ex parte motion for expedited discovery to determine the identity of a “Doe” defendant.
1. In In re Pradaxa (Dabigatran Etexilate) Products Liability Litigation, 2013 WL 5377164 (S.D. Ill. Sep. 25, 2013), U.S. District Chief Judge David R. Herndon held that a defendant was not under a duty to preserve documents at the time its vice president’s emails were destroyed because there was no showing that defendant knew or should have known that litigation was imminent.
Plaintiff Steering Committee (“PSC”) was prosecuting a product liability case against Boehringer Ingelheim Pharmaceuticals Inc. (“BIPI”) regarding the post-launch use of the drug Pradaxa. Wa’el Hashad, BIPI’s Vice President of Cardiovascular and Metabolic Disease Marketing, held relevant emails during his employment from May 2009 to August 2011. Pursuant to company policy, BIPI destroyed Hashad’s emails on November 22, 2011, one day after a litigation hold in an indemnification case involving malpractice had expired. PSC argued that BIPI was under a pre-litigation duty to preserve documents and requested sanctions. PSC also argued that BIPI had produced only those documents that reference Pradaxa and requested that the court order production of all of Hashad’s documents relevant to all claims and defenses.
The court first resolved a dispute over the applicable legal standard, with PSC claiming that the obligation to preserve arose when litigation was “reasonably foreseeable” and BIPI arguing that the Seventh Circuit imposed a more stringent requirement that litigation be “imminent.” Id. at *9. After reviewing the Seventh Circuit case law, the court, citing Norman-Nunnery v. Madison Area Tech. College, 625 F.3d 422 (7th Cir. 2010), ruled that a party seeking sanctions for pre-litigation destruction of documents must show that the “‘litigant knew or should have known that litigation was imminent.’” In re Pradaxa, 2013 WL 5377164, at *10 (quoting Norman-Nunnery, 625 F.3d at 429). Having reached that conclusion, the court stated that the result in this particular case would be the same under either standard.
PSC advanced several arguments that BIPI should have been on notice of the imminence or reasonable likelihood of product liability litigation. First, PSC claimed that prior products liability litigation had put BIPI on notice to preserve Hashad’s emails. The first litigation referenced by PSC concerned the pre-launch of Pradaxa and was settled before Hashad began working at BIPI, and the second litigation was an indemnification action for malpractice suits arising from clinical trials. The court stated that it failed to see how either of these lawsuits put BIPI on notice that post-launch product liability litigation was reasonably foreseeable or imminent. Id. at *13.
Second, PSC argued that privilege log entries referenced litigation relating to Pradaxa product liability litigation. But the court, after in camera review, determined that all of these cited documents related to the prior litigation and failed to “indicate that BIPI’s duty to preserve documents, relevant to potential post-launch Pradaxa product liability litigation, was triggered before Hashad’s custodial documents were destroyed.” Id.
Third, PSC claimed that adverse event reports regarding bleeding events and other safety events put BIPI on notice that product liability litigation was reasonably anticipated or imminent. The court found, however, that the Pradaxa label referenced and warned against these events, and it similarly determined that this information was not “sufficient to trigger a general duty to preserve evidence relevant to future Pradaxa product liability litigation.” Id. at *14.
Finally, PSC argued that “internet chatter” in blog posts and media reports should have put BIPI on notice of the likelihood of product liability litigation. The court found this claim could not support a duty to preserve documents in anticipation of litigation, noting that “postings on a plaintiffs’ blog or other media reports—at least not those referenced in PSC’s briefing—are [not] sufficient to place a pharmaceutical company in a litigation hold.” Id.
The court concluded that “the events and publications identified by the PSC were not sufficient to trigger a general preservation obligation with regard to post-launch Pradaxa product liability litigation in November 2011—when Hashad’s custodial documents were reportedly destroyed.” Id. The duty to preserve documents did not arise until “February 2012, when [BIPI] received a demand letter related to the first postlaunch Pradaxa product liability case.” Id. Further, noted the court, even if a duty to preserve had been established, PSC did not establish that the documents were destroyed in bad faith.
The court ordered BIPI to produce all of Hashad’s documents relevant to any party’s claim or defense and noted that it was inappropriate for BIPI to produce only those documents referencing Pradaxa. The court also ordered BIPI to produce any discoverable material found in its efforts to recover Hashad’s documents and required the BIPI’s lead counsel to affirm that BIPI “had not been producing only those documents that ‘reference’ Pradaxa.” Id. at *15.
2. In Digital Vending Servs. Int’l, Inc. v. Univ. of Phoenix, Inc., 2013 WL 5533233 (E.D. Va. Oct. 3, 2013), Magistrate Judge Tommy Miller imposed various discovery-related sanctions on the plaintiff for failing to produce several thousand responsive documents, including striking of certain of plaintiff’s documents, awarding defendant attorneys’ fees, and recommending that the district court consider imposing an additional sanction of a jury instruction regarding the plaintiff’s discovery misconduct.
During discovery in this patent infringement action, the defendants sought from the plaintiff two items that became the subjects of the sanctions motion: (i) a thumb drive referenced in the plaintiff’s email productions; and (ii) recordings of the plaintiff’s interviews of the patents’ inventors, which were referenced in a chronology created and produced by the plaintiff. Id. at *2-*3. The plaintiff did not produce the thumb drive, which was subsequently lost, believing that the materials it contained were duplicative of prior productions. Id. at *2. The defendants, however, demonstrated that one document referenced in the emails that supposedly was on the thumb drive had not been produced. Id. With respect to the interviews, the plaintiff initially stated in a sworn declaration that the company had no knowledge of, and never possessed, any interview recordings. Id. at *3. Defendants nonetheless moved for spoliation sanctions in June 2013. Id. at *1.
After the defendants moved for sanctions, the plaintiff continued to search for the interview recordings despite the previous, sworn statement that none existed. Id. at *3. The interview recordings and thousands of other discoverable documents ultimately were discovered in the possession of one of the plaintiff’s shareholders, who had searched his files at the plaintiff’s request. Id. Notably, that shareholder previously had been subpoenaed in the litigation in November 2009 and responded, in language drafted by the plaintiff, that he did not possess any responsive documents. Id. The plaintiff produced the interview recordings and the several thousand documents in August and September of 2013, after the end of discovery and only three months before trial. Id. at *4, *7.
Magistrate Judge Miller held that the plaintiff’s actions did not amount to spoliation but nevertheless were sanctionable as a failure to disclose under Federal Rule of Civil Procedure 37(c)(1). Id. at *10. He explained that courts have broad powers to sanction spoliation, to both level the playing field and punish wrongdoing. Id. at *4. To prevail on a spoliation claim, the moving party must demonstrate that (i) the party having control over the materials had a duty to preserve them, (ii) the loss or destruction of the materials was accompanied by a culpable state of mind, and (iii) the lost or destroyed materials were relevant to the litigation. Id. (citing Goodman v. Praxair, Inc., 632 F. Supp.2d 494 (D. Md. 2009)). Because the interview recordings had since been produced (and hence were not lost or destroyed), only the thumb drive could be the subject of a spoliation claim. Digital Vending, 2013 WL 5533233, at *10.
Magistrate Judge Miller found that the plaintiff should have preserved the thumb drive. Id. at *5. He noted that the duty to preserve extends to any unique, relevant evidence under a party’s control so long as preservation is proportional to the scale of the litigation. Id. He further noted that the duty to preserve can arise prior to litigation if the party reasonably should know that the evidence would be relevant to anticipated litigation. Id. In this case, the Magistrate Judge ruled that the thumb drive satisfied those criteria: it contained at least one unique, relevant document; it was in the plaintiff’s control; preservation was proportional with the scale of the litigation; and it was lost after the duty to preserve had arisen. Id. But Magistrate Judge Miller found that the defendants had failed to prove the other elements of a spoliation claim, having offered no evidence of the plaintiff’s state of mind and not definitively identified the contents of the thumb drive beyond the single document referenced in the plaintiff’s emails. Id. As such, he determined that the defendants’ spoliation claim necessarily failed. Id. at *10.
Magistrate Judge Miller did find, however, that the plaintiff’s actions were sanctionable as a failure to disclose under Rule 37(c)(1). Id. That rule requires the imposition of sanctions when a party fails to disclose discoverable information in accordance with Rule 26, unless the party’s actions were harmless or substantially justified. Id. at *7. Specifically, in considering the imposition of sanctions under Rule 37(c)(1), a court must balance the (i) surprise to the party against whom the material would be offered (here, the defendants), (ii) ability of that party to cure the surprise, (iii) extent to which allowing the evidence would disrupt the trial, (iv) importance of the evidence, and (v) non-disclosing party’s explanation for the failure to disclose. Id. at *8. (citing Southern States Rack & Fixture, Inc. v. Sherwin-Williams Co., 318 F.3d 592 (4th Cir. 2003)).
In this case, Judge Miller found that those factors weighed almost completely in favor of the defendants. Digital Vending, 2013 WL 5533233, at *10. He noted that the untimely production of almost 7500 documents not previously produced clearly surprised the defendants, and the only cure was to engage in additional discovery. Id. at *8. Magistrate Judge Miller further noted that the untimely productions of documents and the inventor interviews would disrupt the trial either by requiring a significant delay or by preventing the defendants from questioning witnesses about materials that were not available for their depositions. Id. at *9. Finally, he found that some of the newly-produced materials were of critical importance and that the plaintiff had failed to provide a sufficient explanation for its actions. Id.
Based on those findings, Judge Miller imposed various sanctions on the plaintiff under Rule 37(c)(1), (i) prohibiting the plaintiff in the litigation from using the inventor interviews or any of the several thousand late-produced documents in the litigation, (ii) ordering the plaintiff to pay all reasonable expenses, including attorneys’ fees, incurred by the defendants as a result of the plaintiff’s actions, and (iii) permitting the defendants to reinstate a defense for inequitable conduct. Id. at *10. He also recommended that the district court consider instructing the jury that the plaintiff had engaged in discovery abuses that hindered the defendants’ ability to fully cross-examine certain witnesses. Id. at *11.
3. In Puerto Rico Tel. Co. v. San Juan Cable LLC, 2013 WL 5533711 (D. Puerto Rico Oct. 7, 2011), Magistrate Judge Bruce J. McGiverin denied plaintiff’s motion for spoliation sanctions because the plaintiff failed to show that the lost emails were destroyed in bad faith or that their destruction was prejudicial.
Plaintiff Puerto Rico Telephone Company, Inc. (“PRTC”) filed a spoliation sanctions motion alleging that defendant San Juan Cable LLC, d/b/a OneLink Communications (“OneLink”) failed to preserve relevant emails from the personal accounts of three former officers. Plaintiffs claimed that OneLink knew that these three officers used their personal email accounts to manage the company, but OneLink was unable to locate three responsive email chains from its former CEO Ron Dorchester’s personal email account.
The Magistrate Judge noted that plaintiff must show spoliation and provide sufficient evidence that the party who destroyed the document “‘knew of (a) the claim (that is, the litigation or the potential for litigation), and (b) the document’s potential relevance to that claim.’” Id. at *1 (quoting Booker v. Mass. Dep’t of Pub. Health, 612 F.3d 34, 46 (1st Cir. 2010)). An adverse inference instruction usually requires a showing of bad faith, but not where circumstances indicate otherwise. Puerto Rico Tel., 2013 WL 5533711, at *1. “[A]bove all,” stated the Magistrate Judge, “an adverse inference instruction must ‘make sense in the context of the evidence.’” Id. (quoting United States v. Laurent, 607 F.3d 895, 903 (1st Cir. 2010)).
The Magistrate Judge held that OneLink’s failure to locate the responsive emails of its former CEO constituted spoliation. OneLink had a duty to preserve company emails stored in a personal email account. “OneLink presumably knew its managing officers used their personal email accounts to engage in company business, and thus its duty to preserve extended to those personal email accounts.” Puerto Rico Tel., 2013 WL 5533711, at *1. The failure to locate Dorchester’s emails constituted a breach of its duty to preserve.
Sanctions were inappropriate, however, because plaintiff failed to show bad faith or prejudice. The Magistrate Judge noted that OneLink issued a litigation hold to all employees (including former employees) within a month of plaintiff’s complaint and OneLink engaged in discovery for almost a year. “[A]t the end of the day, it appears that only three email chains were in fact ‘lost’ and could not be accounted for in OneLink’s or the former officer’s files.” Id. at *2. There was no evidence that these emails were intentionally deleted in bad faith. Further, the Magistrate Judge found that defendant failed to establish that it suffered prejudice from the lost emails. “Any prejudice suffered by [the plaintiff] is currently speculative,” stated the Magistrate Judge. Id. Thus, there was insufficient support for an adverse inference instruction, and the motion was denied.
4. In Chavan v. Doe, 2013 U.S. Dist. LEXIS 154497 (W.D. Wash. Oct. 28, 2013), U.S. District Judge Ricardo Martinez issued an order granting the plaintiffs’ ex parte motion for expedited discovery to determine the identity of a “Doe” defendant so that plaintiffs could effect service of process, finding that good cause existed to deviate from the general requirement under Federal Rule of Civil Procedure 26 that the parties confer prior to seeking discovery.
The plaintiffs had asserted claims against the unidentified defendant for violations of the Stored Communications Act and the Wiretap Act and also for invasion of privacy by electronic communications. Id. at *1. The plaintiffs alleged that the defendant had targeted them through online harassment, identity theft, impersonation, and invasion of privacy under various online aliases over a seven-year period. Id. After the plaintiffs’ attempts to determine the defendant’s name and address proved unsuccessful, they moved the court for expedited discovery solely for the purpose of identifying the defendant. Id. Specifically, the plaintiffs sought permission to subpoena various internet service providers to obtain the subscriber information for the online aliases utilized by the defendant in committing the alleged misconduct. Id. at *7-*8.
The court explained that Rule 26(d) generally bars parties from seeking discovery from any source before they have met and conferred. Id. at *1-*2. However, the court noted that it can deviate from that general rule and permit expedited discovery if the moving party demonstrates good cause to do so. Id. at *2. Although the court explained that expedited discovery is routinely permitted to identify “Doe” defendants, it also noted that, in the case of internet-based communications, courts must balance the right to participate in online forums anonymously or pseudonymously against the need to provide injured parties with redress. Id. at *3-*4. In doing so, courts must evaluate whether the plaintiff has (i) provided sufficient information to determine that the defendant is a real person capable of being sued in federal court, (ii) made a good faith effort to effect service of process, (iii) alleged claims capable of withstanding a motion to dismiss, and (iv) requested discovery limited in scope and reasonably likely to identify the defendant. Id. at *4-*5.
The court found that the plaintiffs had demonstrated each of those elements. The court noted that the plaintiffs had provided evidence that the defendant resided in Texas, and that the previous, unsuccessful attempts to effect service of process had been made in good faith. Id. at *5. Further, the court found that the plaintiffs had alleged claims that were capable of withstanding a motion of dismiss and that the discovery sought was limited in scope and likely to identify the defendant. Id. at *5-*6. Finally, the court held that good cause existed on the independent ground that the discovery sought might be necessary to preserve important information in danger of destruction. Id. at *6. The court noted that the internet service providers had refused to provide the defendant’s subscriber information absent valid legal process, and that the defendant’s prior actions indicated that he or she was unlikely to preserve relevant evidence. Id. at *6-*7. Thus, the court granted the motion. Id. at *7.