2009-02-08 Digital Evidence Spoliation Claim and Issue Preclusion, and eMail Authentication

Two decisions this week. The first decision raises an interesting question about issue and claim preclusive effects of a spoliation decision in Federal court. The second decision focuses on authentication, hearsay email, and summary judgment practice.

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Case: Hynix Semiconductor, Inc. et al. v Rambus, Inc.
Citation: No. C-00-20905 (RMW) (N.D. Cal. 2009)
Date: 2009-02-03
Topics: Spoliation, issue and claim preclusive effects of spoliation

In these epic patent infringement cases (I’ve cited only one of the cases, which were consolidated for the purpose of this decision) U.S. District Judge Whyte (N.D. Cal) entered an order staying the California infringement cases pending the appeal by Rambus following the decision rendered in a bench trial involving the many of the same parties in the District Court of Delaware. U.S. District Judge Sue Robinson ruled that those Rambus patents at issue were unenforceable against the same co-defendant (Micron Technology) resulting from Rambus’ spoliation of digital evidence.

Micron asserted a claim of issue preclusion (res judicata) against Rambus, with the same unenforceability allegations, but “with some difference in the patents and the products accused.” (Hynix, another co-defendant, asserted a claim of collateral estoppel [or claim preclusion] to which the Court stated that it would issue a separate order.

After analyzing relevant decisional authority setting forth requirements for imposition of a judicial stay, the Court first decides that 9th Circuit precedent rather than Federal Circuit precedent applies (this is, after all a patent infringement action), and reasons that on balance, the equities tilted in favor of granting a stay. The Court states that the harm to manufacturers would be “small.” The Court’s somewhat glib remarks stand as a warning to be careful about that which you seek:

“With respect to the Manufacturers, a stay will delay a trial they have repeatedly urged be stayed”

The Court then provides its substantive basis for the imposition of a stay:

“The court has thus concluded that a stay of the Northern California actions except Hynix I pending the Federal Circuit's resolution of the spoliation appeals will simplify the proceedings and conserve the parties' and the judiciary's resources“

The Court also punts, kinda sorta, on the issue of issue preclusion:

“As to the pending motions for issue preclusion and summary judgment, the Manufacturers can claim no harm from a stay.

Imo, the Court’s real concern is one of inconsistent decisions based on nearly identical fact sets (and perhaps the fact that Judge Whyte had issued a prior ruling inconsistent with that of the more recent decision by Judge Robinson…)

"Where the purportedly preclusive decision is subject to an appeal, the prudent course is to stay any determination on the second action while the appeal is resolved” “See, e.g., Arco Polymers, Inc. v. Studiengesellschaft Kohle, 710 F.2d 798 (Fed. Cir. 1983) ("[W]e think it appropriate to suspend further proceedings in this case until we have decided Dart. The decision in Dart may be dispositive of the present case. If it is, there would be no need for us to determine the res judicata issue in the present case."); Maryland ex rel. Gliedman v. Capital Airlines, Inc., 267 F. Supp. 298, 305 (D. Md. 1967). Here, the existence of inconsistent decisions on spoliation counsel against a hasty application of issue preclusion to one while ignoring the other. Although Rambus may suffer some prejudice as the terms of its patents near expiration, Rambus' counsel stated at the hearing that its first priority is entry of judgment in the Hynix I Action.5”

My understanding (perhaps flawed) of issue vs. claim preclusion: Issue preclusion (or res judicata) exists between parties, or those in privity to them. Collateral estoppel (claim preclusion) does not require identity or privity of parties.


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Case: Asher v. Baxter Intern., Inc.
Citation: 2009 WL 260979 (N.D.Ill. 2009)
Date: 2009-02-04
Topics: eMail authentication, authentication of business records generally, authentication requirement at summary judgment mirrors that required at trial, hearsay, business records hearsay exception

In this case, which began as a putative class action suit in which certification was not granted, U.S. District Judge Manning granted summary judgment against defendant Baxter International, Inc. The remaining individual plaintiffs relied in part on a portion of an email memorandum asserted to have originated with defendant. That email memorandum in turn allegedly demonstrated that defendant knew that its financial projections were unattainable, and therefore satisfied the material misrepresentation and scienter showings required to successfully assert a securities fraud action.

The plaintiffs evidently provided only a portion of the emailed memorandum, and oddly enough, failed to authenticate the document:

"The plaintiffs contend that, based upon that passage, the defendants “were well aware of the turmoil surrounding the Renal [therapy] service centers.” According to the plaintiffs, because income from the renal treatment service centers was going to “miss the target” and create a “budget gap,” the memorandum left the defendants with “little doubt that there were from the start severe misgivings about Baxter's ability to live up to the commitments and related projections.” (Plaintiffs' Response, R. 302 at 11.)"

"For several reasons, the quoted passage is not evidence that the defendants knew that Baxter's projections had become unattainable. First, the plaintiffs have not authenticated the memorandum. Evidence submitted in support of or in opposition to a motion for summary judgment must be admissible at trial under the Federal Rules of Evidence. See Woods v. City of Chicago, 234 F.3d 979, 988 (7th Cir.2000). Among the requirements of the Rules of Evidence is that the document be authentic. See Fed.R.Evid. 901(a)."

"Authentication does not erect a particularly high hurdle to admissibility, and is “satisfied by evidence sufficient to support a finding that the matter in question is what its proponent claims.” Id.; see also Bledsoe v. Potter, 03 CV 3890, 2005 WL 2230188, at *2 n. 1 (N.D.Ill. Sept. 7, 2005). “The party offering the evidence is not required to rule out all possibilities inconsistent with authenticity, or to prove beyond any doubt that the evidence is what it purports to be.” Boim v. Quranic Literary Inst., 340 F.Supp.2d 885, 915 (N.D.Ill.2004) (citation omitted). “Normally, to demonstrate such trustworthiness and reliability at the summary judgment stage, the party seeking to offer the business record must attach an affidavit sworn to by a person who would be qualified to introduce the record as evidence at trial, for example, a custodian or anyone qualified to speak from personal knowledge that the documents were admissible business records.” Woods v. City of Chicago, 234 F.3d 979, 988 (7th Cir.2000); see also Martz v. Union Labor Life Ins. Co., 757 F.2d 135, 138 (7th Cir.1985) (“When a party seeks to offer evidence through other exhibits, they must be identified by affidavit or otherwise made admissible in evidence.”).

“*7 The plaintiffs have offered no affidavits or any other evidence establishing the authenticity of the Young memorandum. Although it appears to be a business record, the plaintiffs have not authenticated it as such and, accordingly, it is inadmissible."

"Second, and in a related vein, the plaintiffs have not established that the defendants or anyone else involved in assembling Baxter's 2002 projections ever saw the memorandum or knew its contents. Indeed, the plaintiffs have failed even to identify the positions within Baxter that the memorandum's sender and recipient held at the time. Without knowing their job titles, it is not possible to infer that the defendants were aware of the memorandum or that the concerns expressed within it were relayed to them.” Asher v. Baxter Intern., Inc. L 260979, 6 -7 (N.D.Ill. 2009)

The digital evidence takeaways from this decision are twofold. First, it is clear that the Fed. R. Civ. P. and District Court local rules, as well as decisional authority, require that evidence submitted in support of or in opposition to a summary judgment motion be authenticated in accordance with Fed. R. Evid. Rule 901. If documents, which clearly include digital evidence, are not authenticated in advance of a summary motion or opposition filing, a court will not consider them in its summary judgment deliberations. It is also important to note that if a court considers that digital evidence could not be authenticated (i.e., is not capable of being authenticated), and therefore inadmissible at trial, it is compelled to exclude and not consider the evidence at summary judgment.

This is strictly imo: Ok, this may seem obvious, but if the “light-burden” approach to digital evidence authentication shifts, (per In re VinHnee and progeny) to a greater authentication burden on the proponent, we may well witness cases won or lost on the basis of trustworthiness or reliability determinations well in advance of trial, and perhaps, where either spoliation or eDiscovery abuse is asserted during discovery, well in advance of summary judgment motion practice.

I also find it odd that plaintiffs’ counsel here did not explore other pathways to authenticate the email memorandum in question. Although the memorandum was arguably a business record, it may also be considered a statement against interest, and not hearsay. As for authentication, it might have been a good idea to produce make a request for admission as to authenticity of the entire email, and then attach the entire email in evidence, or produce the entire email during a FRCP Rule 30b deposition and obtain a similar admission. The decision does not indicate that any efforts described above were made by plaintiffs’ counsel.