Tagged: ESI

Safety First: Counsel Should Take Affirmative Steps to Ensure ESI Is Being Preserved

In the advent of the 2015 amendment to Rule 37(e), courts have made clear that counsel’s obligation to ensure the preservation of ESI extends beyond the mere issuance of a litigation hold. Instead, to avoid possible sanctions, counsel must take affirmative steps to ensure the client’s compliance with the litigation hold to prevent the destruction of relevant ESI. In multidistrict litigation over a hazardous spill, In re Gold King Mine Release, defendant Harrison Western Construction Corporation (“Harrison”) was sanctioned for its failure to preserve and produce relevant documents related to its work on a Colorado mine prior to the release of millions of gallons of toxic waste. In its 2019 discovery requests, the state of Utah sought documents related to the work Harrison performed or planned to perform at the mine in 2014 and 2015. In response, Harrison was unable to provide most of the requested documents from that time period, claiming – through a third-party IT consultant – that a “catastrophic event” occurred during Harrison’s migration of documents to a new server. Because Harrison could not produce the requested documents, Utah moved for sanctions under Federal Rules of Civil Procedure 37(b) and (e); however, the court seemingly only analyzed Utah’s application under Rule 37(e). In its analysis under Rule 37(e), the court focused on Harrison’s...

Ignorance Isn’t Bliss: Federal Sanctions Imposed for Party’s Failure to Timely Search Its Email Server

A recent decision from the Eastern District of Pennsylvania underscores an important lesson on attorneys’ duty of competence, which requires a practical and well-rounded understanding of technology in order to execute their clients’ e-discovery obligations. Indeed, as Ondigo LLC v. intelliARMOR LLC reflects, ignorance of the various sources of e-discovery cannot shield attorneys or parties from sanctions under Federal Rules of Civil Procedure 26(g) or 37(e).

Of All People…: DC District Court Hits Experienced Litigator Defendant With Terminating Sanctions for Failure to Preserve

In yet another cautionary tale displaying how seriously attorneys and clients must take discovery obligations, United States District Court Judge Beryl A. Howell entered a very rarely imposed default judgement against famed former U.S. Attorney and Mayor Rudy Giuliani for failure to preserve discovery in a defamation suit. Judge Howell’s opinion in Freeman, et al. v. Giuliani represents a blunt condemnation of discovery gamesmanship that is part of a growing number of cases that impose the most severe sanctions for failure to comply with preserving electronic evidence. In 2021, plaintiffs Ruby Freeman and Wandrea’ ArShaye Moss brought suit against defendant Giuliani for defamation, intentional infliction of emotional distress, civil conspiracy, and punitive damage claims. In response to the plaintiffs’ first set of discovery requests, Giuliani – an attorney for over 50 years – served an “initial production of 193 documents [that was] largely a single page of communications, blobs of indecipherable data, a sliver of the financial documents.” After the plaintiffs’ repeated inquiries into his preservation efforts and the court’s intervention, Giuliani issued a sworn declaration providing that his only preservation effort was turning off the auto-delete function on a nondescript list of devices and social media and email accounts. Given Giuliani’s admitted “preference to concede plaintiffs’ claims rather than produce discovery in this case,”...

Court Sends a Strong “Signal”: Defendants Sanctioned Over Their Failure to Preserve Ephemeral Communications and Surreptitious Use of Encrypted Email

“The Individual Defendants’ systematic efforts to conceal and destroy evidence are deeply troubling and have cast a pall over this action.” These are some of the harsh words used by the Honorable Dominic W. Lanza, District Judge for the United States District Court for the District of Arizona, in Federal Trade Commission v. Noland, in lambasting the defendants for their deliberate deletion of cellphone messages sent via the Signal app and their suspension/clearing of email messages sent through ProtonMail (an encrypted email platform). One day after individual defendant James Noland became aware that the FTC was investigating him and his business Success by Health (SBH), he required the other individual defendants – who are all part of SBH’s leadership team – to start using a pair of encryption communications platforms: the Signal app for their cellphones and ProtonMail for email messaging relating to SBH’s business. After doing so, the individual defendants stopped using their previous messaging platforms for work-related communications and turned on Signal’s auto-delete function. After the FTC filed the action, it obtained a restraining order appointing a receiver to assume control over SBH and required the individual defendants to produce their electronic communications and turn over the mobile devices used to operate the business. In his deposition, Noland failed to disclose the Signal...

Unintentional Consequences? The District Court of Maryland Holds Evidence Failed Rule 37(e)’s “Intent to Deprive” Requirement

A recent opinion from the District Court of Maryland highlights the challenges litigants face proving intent to deprive under Rule 37(e)(2) when seeking sanctions for spoliation of electronically stored information (ESI). In Gov’t Emps. Health Ass’n v. Actelion Pharm. LTD., et al., Magistrate Judge Mark Coulson set forth the requirements to prove entitlement to remedial measures or sanctions under Rule 37(e)(1) and (2) and then applied these requirements to decide the ESI spoliation claims before the court. This blog has written extensively on what is required to trigger Rule 37(e) and resulting sanctions. In June 2017, defendant Actelion (“defendant”) was purchased by Johnson & Johnson (“J&J”). Following the acquisition, Actelion migrated its data to J&J, which managed the data of both companies. On November 19, 2018, the plaintiff filed this antitrust litigation against Actelion alleging the plaintiff was forced to pay higher prices for one of Actelion’s drugs because of the unavailability of a cheaper generic version caused by the defendant’s blocking of competition. Soon after, J&J issued a legal hold to preserve relevant information for the antitrust litigation. The defendant’s custodians included in the legal hold were determined by the defendant’s then in-house counsel (“Thompson”). Absent from the legal hold were five former defendant employees (“at-issue custodians”) with documents relevant to the antitrust litigation....

Caught in the Sauce: Papa John’s Founder’s Failure to Preserve ESI in Cellphones Leads to Curative Sanctions Despite Initial Preservation Efforts

Practitioners and litigants alike largely understand that they must preserve evidence related to anticipated litigation. One potential pitfall, however, lies in the continuing nature of that obligation. Generally, a litigant’s duty to preserve evidence continues despite, for example, the collection of relevant documents or the imaging of devices containing relevant information. These principles were illustrated in a cautionary opinion by the Honorable Colin H. Lindsay, United States Magistrate Judge for the United States District Court for the Western District of Kentucky, in Schnatter v. 247 Grp., LLC, No. 3:20-3 (BJB) (CHL), 2022 WL 2402658 (W.D. Ky. Mar. 14, 2022). The case arose in the wake of Forbes Magazine publishing an article detailing a leaked conference call between the founder of Papa John’s, John H. Schnatter, and a marketing agency, during which Schnatter made racially charged comments. Within a week of publication, Schnatter was out as Chairman of Papa John’s and the University of Louisville announced it would rename the then Papa John’s Cardinal Stadium. Schnatter immediately retained counsel to assist in his separation with Papa John’s and explore potential affirmative claims. On July 25, 2018, just two weeks after the Forbes article was published, Schnatter’s own counsel sent him a Litigation Hold Notice. The Notice outlined his document preservation responsibilities, including suspending any automatic destruction...

Parties’ Obligations Under the Federal Rules “Reign” Supreme and Render Language in ESI Protocol Unnecessary

In Raine Group v. Reign Capital, the Southern District of New York highlighted parties’ affirmative obligations under Federal Rules of Civil Procedure 26 and 34 when conducting ESI searches and determining the identities of custodians and locations of relevant documents or information. In particular, the court emphasized that an agreement regarding keyword search terms should work in “tandem” with the responding party’s independent and inherent obligations to search for and produce documents that are “reasonably accessible, relevant, and responsive within the meaning of Rule 34.” The court also made clear that parties have a fair degree of autonomy in determining what is “reasonable” under Rules 26 and 34. In this trademark infringement case, the plaintiff, a merchant bank with more than 100 employees, objected to certain provisions proposed by the defendant, a two-person real estate firm, in the parties’ ESI protocol and proposed search terms. After the parties’ failure to reach a resolution, the court intervened. The court ruled that the defendant’s proposed language regarding the parties’ search obligations in the ESI protocol was unnecessary, given the scope of Fed. R. Civ. P. 26 and 34, and because the provisions were overbroad. Specifically, the defendant’s proposal including the following provisions: “The parties also acknowledge that, apart from this ESI protocol, each party has an independent...

Keeping the Curtain Closed: Connecticut District Court Denies Discovery on Discovery Where No Basis to Claim Deficiencies Shown

Despite the broad scope of discovery under Federal Rule of Civil Procedure 26, courts are generally reluctant to permit “discovery on discovery,” i.e., discovery requests related to a party’s efforts to search for, locate, preserve, and collect relevant electronically stored information (ESI). In a case brought against Wesleyan University (the “University”) by a student expelled for alleged cheating, the United States District Court for the District of Connecticut recently declined to compel such discovery on discovery, where the plaintiff requested that the defendant identify and “catalog all of the devices on which responsive communications reside.” The discovery request was made well after the Rule 26 conference – discovery had been ongoing for nearly two years – and the plaintiff waited almost a full year after serving the requests to file her motion to compel. In light of these facts and the plaintiff’s failure to establish an “adequate factual basis” for requiring such discovery on discovery, the court denied portions of the plaintiff’s motion to compel. In Doe v. Wesleyan University, the plaintiff, a former student at the University, was expelled for allegedly cheating on her exams by improperly accessing the University’s “computerized learning management system” called “Moodle” during her exams. The University conducted an investigation and held an Honor Board proceeding, and the board decided...

Disappearing Act: Court Provides Reminder that Counsel Must Investigate and Understand Client’s Use of Ephemeral Messaging Services to Prevent Sanctions

A decision earlier this year from the Northern District of Indiana illustrates the importance of counsel thoroughly investigating and understanding all data sources their clients may be using to create and store potentially relevant Electronically Stored Information (ESI). With the increased use of messaging applications – including ephemeral ones – counsel must understand the intricacies of each application (and its retention and preservation policies) used by their clients to prevent the destruction of relevant ESI. In this case involving civil rights claims, the defendants sought evidence regarding the plaintiff’s activities and character to disprove claims that the defendants deprived the plaintiff of his honor and reputation – a “protected liberty interest” – without due process. Through one of their requests, the defendants sought all data related to the plaintiff’s Snapchat account. For background, Snapchat is a messaging service where users record photos and videos (called “Snaps”) to send to other users. These Snaps appear on the receiver’s screen only for a limited period of time (generally, seconds). In addition, Snapchat users can send chat messages to other users, create “Stories” that remain visible to all users for 24 hours, and save Snaps indefinitely by storing them in the user’s “Memories.” Data within the user’s “Memories” is saved by Snapchat until a user deletes it, at...