This update addresses the following recent developments and court decisions involving e-discovery issues:
- A Southern District of Ohio order that plaintiff had not made the necessary preliminary showing to broaden spoliation sanctions to allow discovery of defendant’s privileged litigation hold notices, entered without prejudice to renewal by plaintiff after defendant’s submission of information on the existence and availability of data not yet produced;
- A District of Utah ruling rejecting both the plaintiff’s argument that a spoliation sanction reversed by the Federal Circuit nonetheless warranted denial of costs, as well as the defendants’ effort to recover various electronically stored information (“ESI”) costs associated with electronic document processing;
- An Eastern District of California decision denying plaintiff’s motion for spoliation sanctions because plaintiff failed to show that defendants’ continued use of their cell phones resulted in actual loss or destruction of relevant evidence; and
- A District of Kansas order granting plaintiffs’ motion to compel the defendants to provide attachments to produced emails but declining to order sanctions because the parties shared fault in failing to confer adequately pursuant to Fed. R. Civ. P. 26(f) regarding the production of ESI.
1. In Little Hocking Water Ass’n v. E.I. DuPont de Nemours & Co., 2013 WL 5311292 (S.D. Ohio Sept. 20, 2013), Magistrate Judge Norah McCann King ruled that the plaintiff had not made the necessary preliminary showing to broaden spoliation sanctions discovery to allow discovery of privileged litigation hold notices but did so without prejudice pending defendant’s submission of information on the existence and availability of data not yet produced.
The plaintiff asserted claims under the Resources Conservation and Recovery Act regarding the defendant’s waste disposal practices. Id. at *1. Following extensive discovery, the plaintiff alleged that the defendant had not produced (and, in some cases, had destroyed) pre-2006 historical well-pumping data and a VAX system to read that data. The defendant responded that discovery on this issue had been voluminous and that it had spent over 600 hours on the well-pumping data. Id. at *1-*2. Magistrate Judge King had previously granted separate motions 1) to compel production of documents relating to the alleged destruction of this data and of the
technology used to read such data and 2) to permit discovery regarding the failure to preserve or the destruction of pre-2006 pumping data maintained on back-up tapes as well as the VAX system. Id. at *2. She also ordered the defendant to provide a Rule 30(b)(6) witness to testify about the data sought by the plaintiff, but prohibited the plaintiff from seeking testimony regarding the defendant’s duty pursuant to governmental filing obligations or other litigation to preserve the pre-2006 data or any litigation holds that were issued. Id.
In the Rule 30(b)(6) process, the plaintiff elicited testimony that it claimed demonstrated that the defendant had destroyed or lost materials (including up to 20 CDs of materials from back-up tapes) containing historical well-pumping data. Id. at *2-*3. Citing Major Tours, Inc. v. Colorel, 2009 WL 2413631 (D.N.J. August 4, 2009) [see September 2009 EDTF Case Notes], the plaintiff argued that this testimony constituted a preliminary showing of spoliation such that discovery regarding preservation efforts (including otherwise privileged litigation hold notices) should be permitted. DuPont, 2013 WL 5311292, at *3. The defendant argued that a preliminary showing had not been made, that millions of documents had already been produced, and that its actions had been “reasonable and proportional.” Contrary to plaintiff’s allegations, the only “destroyed” item was an outdated instruction manual for the VAX system, and the CDs both were largely duplicative and would take “hundreds of hours” to convert to a usable format. Id.
Magistrate Judge King held that a preliminary showing of spoliation had not been made. She found that the plaintiff’s spoliation claims were “speculative at best,” stating that there was no evidence contradicting the defendant’s explanations. Id. She noted, however, that it “remain[ed] unanswered” whether the defendant could produce historical well-pumping data for two separate time periods and ordered the defendant to (i) determine the years for which well-pumping data existed, (ii) specify the media on which such data was stored, (iii) identify any duplicative materials, and (iv) provide, by affidavit or declaration, a statement of its ability (and the estimated time) to convert the data to a usable format. Id. She concluded that “[it] is only after a determination of what information actually can be produced will this Court ever be in a position to determine whether spoliation occurred.” Id. Accordingly, she denied the plaintiff’s motion without prejudice pending the defendant’s filing in response to her order. Id. at *5.
2. In Phillip M. Adams & Assocs., LLC v. Sony Elecs., Inc., 2013 WL 5964288 (D. Utah Nov. 7, 2013), Judge Ted Stewart ruled on defendants’ entitlement to costs as prevailing parties under Fed. R. Civ. P. 54(d), rejecting both the plaintiff’s argument that a spoliation sanction reversed by the Federal Circuit nonetheless warranted denial of costs and the defendants’ claim that they were entitled to recover various ESI costs associated with electronic document processing.
At trial, the plaintiff had asserted claims against the defendants for patent infringement. Id. at *1. Prior to the jury trial, the court found that the defendants had engaged in evidence spoliation and imposed an adverse inference instruction as a sanction. Id. at *3. Ultimately, the jury found for the plaintiff on various infringement claims relating to one of its patents, and the court denied the defendants’ motion for judgment as a matter of law. Id. at *1.
The defendants appealed, and the United States Court of Appeals for the Federal Circuit reversed in relevant part, holding, inter alia, that the court erred in imposing an adverse inference instruction against defendants as a spoliation sanction in the absence of a finding of bad faith. Id. at *3. The Court of Appeals also held that the plaintiff had failed to present substantial evidence of patent infringement and that the district court erred in denying the defendants’ motion for judgment as a matter of law. Id. at *1. On remand, the defendants sought costs under Fed. R. Civ. P. 54(d), which the Clerk of Court awarded in the amount of almost $169,000. Id. The award prompted motions from both sides, with the plaintiff arguing that the defendants were not entitled to any costs and the defendants moving for additional costs. Id.
The district court found that the defendants were the “prevailing parties” under Rule 54(d) and thus entitled to costs, stating that it was not a “close case” in which it could deviate from the general rule and deny a request for costs. Id. at *2. The court also rejected the plaintiff’s argument that the defendants should be denied costs due to the spoliation of evidence. Id. at *3. Although the court stated that it “may consider a litigant’s behavior in determining whether to award costs,” it noted that the Court of Appeals had held that the imposition of an adverse inference instruction was improper absent a finding of bad faith.Id. The district court explained that it was not appropriate to deny or reduce a cost award based on conduct that did not warrant a sanction. Id.
Judge Stewart found that the parties had agreed that each side would bear its own costs with respect to one dismissed claim, and he ruled that 25% of the awarded costs related to that claim and reduced the award accordingly.
Defendants argued that they were entitled to $62,000 in additional costs associated with producing TIFF images, OCR, bates labeling, and copying on CDs and DVDs. Id. at *4. The district court, citing Country Vintner of N.C., LLC v. E & J Gallo Winery, Inc., 718 F.3d 249, 250 (4th Cir.2013) and Race Tires Am., Inc. v. Hoosier Racing Tire Corp., 674 F.3d 158 (3d Cir.2012), ruled that only costs associated with “copying” were allowable under 28 U.S.C. § 1920(4), and “only the scanning of hard copy documents, the conversion of native files to TIFF, and the transfer of VHS tapes to DVD” constituted “copying” for purposes of Section 1920(4). Adams, 2013 WL 5964288, at *4. Only half of the requested additional costs related to these activities and were taxable, resulting in a total award of costs of almost $159,000. Id. at *5.
3. In U.S. Legal Support, Inc. v. Hofioni, 2014 WL 172336 (E.D. Cal. Jan. 15, 2014), Magistrate Judge Allison Claire denied plaintiff’s motion for spoliation sanctions because plaintiff failed to show that defendants’ continued use of their cell phones resulted in actual loss or destruction of relevant evidence.
In connection with an employment and trade secrets action, the parties stipulated to entry of a preliminary injunction (the “SPI”) and were meeting to negotiate a forensic protocol agreement when plaintiff learned that the individual defendants were continuing to use their iPhones and iPad. Plaintiff asked a forensic neutral at the meeting if continued use of personal electronic devices could overwrite or delete data, and he replied that it could. Id. at *2.
Plaintiff subsequently filed a motion seeking a finding that defendants were in contempt of the SPI, an award of monetary sanctions, and entry of an adverse inference instruction. With supporting experts, plaintiff argued in its papers that personal electronic devices have limited memories and, during the course of normal use, data can be lost that would be unrecoverable. Defendants’ continued use of these devices, alleged the plaintiff, violated the SPI that required defendant to preserve all potentially relevant documents and evidence. Plaintiff claimed that defendants’ personal electronic devices should have been quarantined or imaged and that the continued use was spoliation.
Magistrate Judge Claire denied plaintiff’s motion. First, she ruled that the SPI entered pursuant to Federal Rule of Civil Procedure 65 and signed by the district court judge was not a discovery order “over which [she] has authority absent specific referral.” As a result, the Magistrate Judge was “disinclined to impose any sanctions or a finding of contempt for any alleged violation of the SPI.” Id. at *3.
Second, the Magistrate Judge Claire found that the plaintiff had failed to demonstrate spoliation. She stated that neither of the plaintiff’s two expert declarations “shed any light on what was actually lost,” as the experts had not conducted a forensic analysis of the devices and had not identified any actual loss of electronic data. Noting that “[m]ere speculation is an insufficient basis for a finding of spoliation,” the Magistrate Judges stated that she “cannot conclude or even reasonably infer that spoliation, let alone spoliation of relevant evidence, has in fact occurred,” and on that basis denied plaintiff’s spoliation motion as premature. Id. at *4 (emphasis in original).
4. In Skepkek v. Roper & Twardowsky, 2014 WL 289470 (D. Kan. Jan. 27, 2014), Magistrate Judge James O’Hara issued an order granting the plaintiffs’ motion to compel the defendants to produce attachments to emails omitted from a prior production but declined to grant sanctions because the parties had failed to adequately confer under Fed. R. Civ. P. 26(f).
The case involved a contractual dispute concerning an attorney fee-sharing agreement between the parties. Id. at *1. Magistrate Judge O’Hara had previously ordered the defendants to produce “all internal communications among [the] defendants” pertaining to certain allegations as well as communications among the defendants and fifteen listed individuals. Id. After the defendants produced emails in .pdf format without accompanying attachments, the plaintiffs filed a second motion to compel, seeking production of the attachments as well as sanctions pursuant to Fed. R. Civ. P. 37(b). Id. at *2.
Magistrate Judge O’Hara ordered the production of the attachments. He brushed aside the defendants’ claim that the plaintiffs had failed to satisfy the meet and confer requirements under federal and local rules, noting that the parties had held a telephonic conference and exchanged correspondence in an attempt to resolve the dispute. Id. at *1. The defendants argued that the plaintiffs never specified a form of production, and if they wanted the emails and associated attachments, they should have specified native production. Id. The Magistrate Judge rejected this argument, noting that the “[p]laintiffs simply want the documents that the court ordered the defendants to produce, regardless of format.” Id. at *2. He also rejected defendants’ claims of burden and waiver, noting that “[i]t is not duplicative for defendants to produce attachments to e-mails that have not yet been produced. Furthermore, defendants offer no support for their assertion that producing these attachments would be overly burdensome.” Id. at *1-*2. The Magistrate Judge concluded that the defendants “do not have the leisure of picking and choosing which responsive documents to produce.” Id. at *2.
Magistrate Judge O’Hara next turned to the issue of sanctions. Although he noted that the defendants “offer[ed] no excuse” for their failure to produce the attachments, he concluded that both parties shared the blame because they failed to confer on the form of production pursuant to Rule 26(f), and on that basis he decided not to impose sanctions:
“This discovery dispute is an example of one which could have been avoided had the parties adequately conferred at their Fed.R.Civ.P. 26(f) conference regarding production of [ESI]. Because there is no evidence that defendants purposefully produced e-mails in a format that excluded attachments and since both parties are at fault to some degree for failing to adequately confer early on regarding the production of ESI, the court will not impose any sanctions under Rule 37(b).” Id. at *3.