Courts continue to address the extent to which parties are required to preserve electronically stored data, including information created and shared using social media, and the appropriate sanctions to impose when a party spoliates evidence. In Patel v. Havana Bar, Restaurant and Catering, 2011 WL 6029983 (E.D. Pa. Dec. 5, 2011), Judge Mitchell Goldberg faced a situation where both sides failed to preserve evidence. Plaintiff suffered injuries when he fell from a second-story balcony and brought suit against defendant on a variety of negligence claims, including defendant’s continuing to serve plaintiff alcohol knowing he was intoxicated. Defendant had several closed-circuit cameras installed and a system that “captured every drink order by superimposing sales data onto the video.”
Judge Goldberg found that both parties spoliated evidence. With respect to the defendant, the video footage shot by defendant’s system was retained for three weeks and then overwritten. Although the defendant made an initial inquiry to the third-party provider concerning preservation of the video footage, ultimately, none of the footage was preserved and no still images were ever printed, even though defendant had the capability to do so. Plaintiff was similarly not free of blame. Plaintiff’s sister solicited family and friends via Facebook on two separate occasions for purported “witness statements” concerning the plaintiff’s behavior and ultimate fall. Although plaintiff’s sister admitted to having received a number of statements in response to her first solicitation, these statements were not preserved or produced. In addition, the second set of witness statements were only produced piecemeal, and then only immediately before the individuals were deposed.
Judge Goldberg found that although the defendant had taken some steps to copy the video within the three-week period, it spoliated evidence when it failed to “timely make a follow up call” to the third-party provider or to “print still images of the footage”. Similarly, the plaintiff’s failure to preserve the “witness statements” was “clearly spoliation” and the claim of work product protection does not obviate the duty to preserve evidence.
The court imposed an adverse inference instruction against the defendant with respect to the lost video footage and against the plaintiff with respect to the contents of the first set of witness statements. Judge Goldberg noted that “the best way to sort out Plaintiff’s discovery misconduct is to allow the jury to draw its own conclusions as to the evidentiary value of how the evidence was handled.” In addition, Judge Goldberg required plaintiff to foot the bill for additional depositions of plaintiff’s witnesses and to pay the defendant’s attorney’s fees and costs associated with attempting to obtain the first set of “witness statements” and the sanctions proceedings.
In Voom HD Holdings LLC v. EchoStar Satellite L.L.C., 2012 WL 265833 (N.Y. App. Div. Jan. 31, 2012), New York’s Appellate Division expressly adopted the standard set forth in Zubulake v. UBS Warburg LLC 220 F.R.D. 212 (S.D.N.Y. 2003) and its progeny, holding that a party’s duty to preserve documents and evidence is triggered when the party “reasonably anticipates litigation.” In so doing, the Appellate Division noted that the standard had been “adopted by courts in all four federal districts of the State … and by courts throughout the country.” In addition, the Appellate Division cited with approval the Sedona Conference’s guidelines on legal holds, especially Guideline 1 which states that “[A] reasonable anticipation of litigation arises when an organization is on notice of a credible probability that it will become involved in a litigation, seriously contemplates litigation, or when it takes specific actions to commence litigation.”
In the case at hand, the Appellate Division affirmed the trial court’s determination that the defendant reasonably anticipated litigation when it sent a letter to the plaintiff “demanding an audit and threatening termination of the contract[.]” The defendant did not undertake to preserve documents at that time. It was not until four months after the plaintiff sued, and approximately 10 months after defendant sent its first letter, that the defendant implemented a written legal hold and suspended its automatic deletion of e-mails. As such, it was undisputed that relevant material was not preserved.
In finding that the defendant’s failure to preserve documents constituted “gross negligence”, the Appellate Division noted that this was not the first time the defendant had been sanctioned for failing to suspend it automatic deletion of e-mails. Ultimately, the Appellate Division upheld the trial court’s decision not to strike the defendant’s answer, as there was other evidence available to the plaintiff to prove its claims, and to instead impose an adverse inference instruction, as the spoliated evidence was clearly relevant to the plaintiff’s claims.
In a case discussing the extent to which data must be preserved, the court in Pippins v. KPMG LLP, No. 11-CIV-0377 (S.D.N.Y. Oct. 7, 2011), held that the defendant must continue to preserve over 2,500 hard drives which could contain relevant information. The defendant had sought an order to limit its preservation obligations under F.R.C.P. 26(c) to a random sample of 100 hard drives. Although plaintiffs were open to reducing the preservation burden by using a sample of data, the parties could not agree on a methodology to obtain an appropriate sample.
As a threshold matter, Magistrate Judge James L. Cott noted that the defendant had not established that the contents of the hard drives were either irrelevant or duplicative of other materials already preserved, and that until class certification was resolved, each and every audit accountant could be a “key player” in the litigation. In denying defendant’s motion, Magistrate Judge Cott noted that it was too early to determine whether the cost of preserving the hard drives would be proportional to the value of the litigation. He also encouraged the parties to continue their efforts to reach an agreement on a sampling methodology.
On February 3, 2012, Judge Colleen McMahon affirmed Magistrate Judge Cott’s order. Judge McMahon noted that although FRCP 26(b)(2)(C)(iii) establishes a proportionality test for discovery, requiring limitations on the “frequency or extent of discovery” where “the burden or expense of proposed discovery outweighs its likely benefit,” proportionality is but one factor in determining a party’s preservation obligations. She concluded that the record was devoid of information to conduct a proper analysis, and that the magistrate’s order properly balanced cost and benefits on the scant record since it ordered temporary, not permanent, preservation of the hard drives, and was without prejudice to having the defendant’s motion renewed once class certification was resolved. Judge McMahon’s order also set new conditions that the defendant could choose to meet in order to limit its preservation of certain subsets of hard drives.