Friday, February 20, 2009

2009-02-20 Survival of Spoliation in Subsequent Forum; 2d Circuit Discovery Abuse Standard of Review Reprised; Forensic Imaging Ordered to Ascertain Creation Date

Three for this week. The Puffin case tells us that a duty to preserve, once triggered, can live on in a separate action brought in a different forum. The Agiwal decision reminds us of the standards for review (and reversal) of eDiscovery decisions, and the Hinojos decision, at least imo, stands for the proposition that mere testimony may not help establish the provenance of undated computer generated information.

Case: Kvitka v. Puffin Co., L.L.C.
Citation: 2009 WL 385582 (M.D.Pa. 2009)
Date: 2009-02-13
Topics: Survival of duty to preserve in subsequent related action, spoliation, email exchanges on discarded laptop, notices and letters to preserve evidence; type of spoliation sanctions imposed on spoliator’s claims and non-spoliating party’s counterclaims.

Another week, another duty to preserve, and another spoliation decision. In this case from the Middle District of Pennsylvania, involving an antique doll dealer, and an antique doll industry magazine, U.S. District Judge Sylvia Rambo imposed an adverse inference sanction against a spoliating party whose duty to preserve survived conclusion of a related prior state court action. Despite the gravity of a spoliation hearing, the Court found time for some wry humor…see Footnote 3.

Here, prior to the commencement of the first action in state court (sometime during September 2005 which I will presume is what the Court means by "shortly after" August 30, 2005) the defendant sent a preservation notice/letter. In January 2006, defendant produced its emails in response to plaintiff’s request therefore. The Court does not indicate the outcome of the state court proceedings.

Now, I *think* that the following occurred in the subsequently filed case in Federal Court (the decision is not clear, but it’s reasonable to assume so):

In response to an interrogatory, plaintiff stated that she began having trouble with her "old" laptop beginning in February 2006, and described these problems in a subsequent deposition: ("…it was doing totally wonky things, ridiculous things"). Plaintiff then disposed of the old laptop without preserving potentially relevant evidence.

"On or about February 27, 2006, Kvitka notified her computer technician, Chuck Tressler, of her computer problems, and Tressler-without examining the old laptop-informed her that she should purchase a new laptop. ( Id. Ex. G at 51). Tressler ordered a new laptop for Kvitka on February 27, 2006, and Kvitka received email confirmation of this order on the old laptop, which she forwarded to Tressler via the old laptop. ( See id. Ex. G at 45; Ex. F at 16-17, 44-45.) The new laptop was shipped on or about March 7, 2006 and was set up by Tressler within about one week. ( Id. Ex. G at 16-17.) Sometime later in March 2006, Kvitka threw her old laptop into the trash. ( Id. Ex. F at 29.) On March 16, 2006, during a conference regarding Plaintiffs' request for emails in Defendants possession, the commonwealth trial court judge inquired about the status of the original emails. ( Id. at 6.) Plaintiffs failed to inform the judge that the old laptop had been discarded at the conference or in subsequent written correspondence, and instead opted to discontinue the pending state court litigation. ( Id. at 6-7.) Plaintiffs, then, filed the instant federal suit on April 25, 2006, yet failed to inform Defendants that Kvitka had disposed of her old laptop and its hard drive until October 27, 2007."

Judge Rambo was clearly not amused at Plaintiff’s explanation as to both evidentiary search and preservation efforts. Let’s just say it’s not a good sign when a judge describes an assertion as "absurd." Perhaps particularly insightful is plaintiff’s "I mean it’s a computer, not a person" comment:

"Meanwhile, Kvitka maintained until January 2008-and her computer technician implied during deposition testimony-that no files or emails were recovered from her old laptop. ( Id. at 8.) On January 14, 2008, Defendants moved for an order of inspection of Kvitka's new laptop, at which time Plaintiffs' counsel informed Defendants that "some" emails had been recovered from her old laptop and appeared on her new laptop. ( Id.) Kvitka, while insisting that no data had been transferred from her old laptop to her new laptop, gave the following absurd explanation as to how she located files and emails on her new laptop that she nor her computer technician ever transferred from her old laptop:

"Q. How did it come about that you found these documents? Was-

"A. I looked for them really hard, and I found them. At the time that this was going on, there was a lot of other things that were going on in my life, a lot. And I don't think that I quite understood how important it was for me to find them, plus I was real interested and real devastated mainly by the fact that I lost a lot of personal things, like I said, that had to do with my kids that were just real important to me. And [my attorney] kept saying to me, look, it's real important if you can find anything. So what I did was I sat down for hours. Also some of these things turned up in places that I didn't expect to find them, like I said. I mean it’s a computer, it's not a person. There were things that for whatever reason showed up in files that they weren't supposed to show up in. I had a picture that showed up on my desktop. I had a file that showed up in a place that was an email. I had things that just showed up in places that they weren't supposed to show up. And so I went through every inch, every centimeter, every place that anything could be and I came up with the things that I then forwarded to my attorney."

Spoliation Approach in Pennsylvania Federal Courts

The Federal Courts in Pennsylvania appear to follow a "purely Federal" approach to spoliation, relying on Federal "common law" and 3rd Circuit decisional authority. For instance, the Ogin case cited by Judge Rambo relies on the 3rd Circuit’s Mosaid decision, which in turn relies on both Southern District (Zubulake) and 2d Circuit (West v Goodyear) for fundamental spoliation principles. Which, to my mind, also make Pennsylvania an "ordinary negligence" spoliation standard jurisdiction.

Ok, back to the Puffin case:.

"Defendants argue that Kvitka's intentional discarding or destruction of her old laptop that contained email files directly related to her claims against them prohibits them from defending against her claims and prosecuting their cross-claims, thereby entitling them to summary judgment as a sanction for spoliation of the evidence. As a general rule, "[a] party which reasonably anticipates litigation has an affirmative duty to preserve relevant evidence." Howell v. Maytag, 168 F.R.D. 502, 505 (M.D.Pa.1996). Courts define "spoliation" as "the destruction or significant alteration of evidence, or the failure to preserve property for another's use as evidence in pending or reasonably foreseeable litigation." Ogin v. Ahmed, 563 F.Supp.2d 539, 542 (M.D.Pa.2008). When a party has destroyed evidence, courts may appropriately impose sanctions, including dismissal of claims, the exclusion of countervailing evidence, or a jury instruction on the "spoliation inference," which permits the jury to presume that "the destroyed evidence would have been unfavorable to the position of the offending party." Id. (quoting Schmid v. Milwaukee Elec. Tool Corp., 13 F.3d 76, 78 (3d Cir.1994)). Courts must consider the facts and circumstances when fashioning an appropriate sanction, but ultimately the use and fashioning of sanctions appertain to "the inherent power of district courts ... to manage their own affairs so as to achieve the orderly and expeditious disposition of cases." Baliotis v. McNeil, 870 F.Supp. 1285, 1289 (M.D.Pa.1994) (citing Chambers v. NASCO, Inc., 501 U.S. 32, 43, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991) (internal quotation marks omitted))."

"Courts contemplate the following "key considerations" before determining an appropriate sanction: (1) the degree of fault of the party who altered or destroyed the evidence; (2) the degree of prejudice suffered by the opposing party; and (3) whether there is a lesser sanction that will avoid substantial unfairness to the opposing party and, where the offending party is seriously at fault, will serve to deter such conduct by others in the future. Schmid, 13 F.3d at 79. There is no question that Kvitka intentionally discarded the laptop despite instructions not to dispose of it.

Accordingly, the court will review each of these factors."

Fault – Disposal of Laptop Containing Relevant Evidence

Plaintiff maintained that her decision to throw out the old laptop was "’an innocent and routine effort [] to maintain her business’" and that it was the damage to the hard drive on the laptop, rather than her disposal of same, that cause the loss of data. Unfortunately for plaintiff, the judge declined the invitation to consider the disposal of a damaged laptop containing relevant evidence as anything but "routine" The Court finds that plaintiff acted in bad faith and fault:

"Defendants argue that Kvitka acted in bad faith when she disposed of her old laptop, acting with the greatest degree of fault. The court agrees.

"Kvitka acknowledged that "this entire thing has a lot to do with some emails," yet nevertheless discarded her old laptop that contained the emails relevant to her claims in direct defiance of instructions provided to her attorney. She discarded the laptop despite advice from her computer technician that skilled professionals could possibly recover files relevant to the litigation. ( See Doc. 58 Ex. G at 19.) After discarding the old laptop, she failed to inform the judge presiding over her first lawsuit that she had engaged in such conduct despite the judge's direct inquiries and, instead, discontinued that litigation and filed the instant complaint in federal court.

"During the course of this suit, she has conducted herself in an evasive and confrontational manner during depositions and has attempted to mislead the court by withholding evidence that she now claims was transferred without explanation from her old laptop to her new laptop. When confronted by defense counsel regarding her deception, she refused to answer questions, concocted an outlandish story, and attempted to manipulate the facts of the case by substantively changing deposition testimony and an interrogatory answer with transparently evasive failure of recollection answers. She gave no explanation for these changes."

"Plaintiffs challenge this by insisting that Kvitka's decision to throw out the old laptop amounted to an "innocent and routine effort[ ] to maintain her business," and that "[t]he damage to the laptop hard drive, which was not caused by Plaintiffs, is the primary cause of the loss of electronic e-mail data." The court simply cannot accept that under the circumstances described above Kvitka's disposal of the old laptop constituted an "innocent and routine" effort to maintain her business. To the contrary, she testified that the old laptop was acting "wonky" and "ridiculous," but she could still send emails from the old laptop. She, nonetheless, ordered a new laptop in haste, disposing of the old laptop with knowledge that the emails could be retrieved or recovered and that she needed to preserve the old laptop's hard-drive. Kvitka has attempted to avoid this reality by manipulating testimony, yet she would have done well to heed the words of the great playwright Henrik Ibsen who wrote, "Many a man can save himself, if he admits he's done wrong and takes his punishment.FN3""

FN3. Henrik Ibsen, A Doll's House (J.W.Lowell Co. 1889) (1879)."


The Court also found that Plaintiff’s actions had prejudiced defendants ability to both defend against plaintiff’s claims and prosecute its own counterclaims.

"As Kvitka admitted, the facts giving rise to her claims as well as Defendants' cross-claims have "a lot to do with some emails." Accordingly, to properly defend or prosecute this case, Defendants would need access to Kvitka's old laptop to inspect and investigate her email program and hard-drive."

Sanctions Imposed In Connection with Plaintiff’s Claims, and Defendant’s Counterclaims

It’s interesting to note that in this case the Court imposed sanctions of differing severity against plaintiff, imposing terminating sanctions against plaintiff for plaintiff’s claims, but imposing the (arguably) less drastic sanction of an adverse inference against plaintiff in connection with defendant’s counterclaims:

Plaintiff’s Claim

"The court will dismiss Plaintiffs' claims. As described above, Plaintiffs acted with the highest degree of fault, acting in bad faith. Kvitka destroyed the laptop necessary for Defendants to effectively challenge the validity of Plaintiffs' claims by throwing it in the trash. She engaged in this conduct, despite instruction from her attorney to maintain the old laptop, the hard-drive, and all relevant emails as well as instruction from her computer technician that data could be recovered from a damaged hard-drive. Moreover, Kvitka has been manipulative and evasive throughout the litigation in an apparent attempt to succeed on her claims and downplay the severity of her acts. These acts have severely prejudiced Defendants by stripping them of information necessary to defend against Plaintiffs' claims. Under such circumstances, the court has no other option but to dismiss Plaintiffs' claims with prejudice."

Defendant’s Counterclaims

"The court, however, does not believe such a drastic remedy is necessary for Defendants' cross-claims, because Defendants have evidence that if combined with an adverse inference may persuade a jury to find in their favor on their fraud based claims. The Court of Appeals has explained that "[w]hen the contents of a document are relevant to an issue in a case, the trier of fact generally may receive the fact of the document's nonproduction or destruction as evidence that the party that has prevented production did so out of the well-founded fear that the contents would harm him." Ogin, 563 F.Supp.2d at 542 (citing Brewer v. Quaker State Oil Ref. Corp., 72 F.3d 326, 334 (3d Cir.1995)). Courts will give an adverse inference instruction if (1) the evidence in question was within the party's control, (2) it appears that there has been actual suppression or withholding of the evidence, (3) the evidence destroyed or withheld was relevant to claims or defenses, and (4) it was reasonably foreseeable that the evidence would later be discoverable. Id. at 543.

"Here, each element is satisfied. First, Kvitka testified that Plaintiffs retained the old laptop in their exclusive control. Second, Kvitka testified to intentionally discarding the old laptop. Third, the destroyed emails and other evidence on the old laptop would have greatly assisted Defendants in prosecuting claims based on emails that Plaintiffs destroyed. Finally, Kvitka has admitted that she knew to preserve the emails because of their relevance, but still discarded the old laptop. Because the elements have been satisfied, the court will permit the adverse inference instruction and will preclude Plaintiffs from arguing that individuals tampered with the paper copies of emails possessed by Defendants."

Note: It’s also clear that attorneys are utilizing notices to preserve or letters regarding preservation (my preference) but the content of these letters show that most are still at the very beginning of the learning curve at best, and at worst underscore the lack of understanding of basic technology precepts. The last line of this excerpted quote from defendants’ counsel preservation letter is exemplary:

"In turn, I trust that you will dutifully inform your client, whether or not her previous attorneys at Stark & Stark have already done so, that her computer(s) particularly her computer hard drive(s), and all her accumulated email account message files going back several years must be safeguarded and preserved as potential material evidence. As you know, emails can be deleted, but they cannot be erased."

Case: Agiwal v. Mid Island Mortg. Corp. (2d Cir. 2009)
Citation: --- F.3d ----, 2009 WL 350717
Date: 2009-02-13
Topics: 2d Circuit standard for review of discovery abuse decisions

Just a quick reminder that in the Federal Court system, a discovery abuse decision issued by either a Magistrate Judge or District Judge is reviewed on a very high "abuse of discretion" and determinations of a litigant’s fault are reviewed using a "clear error" standard. Not an eDiscovery or digital evidence case, but applicable nevertheless, and even to pro se litigants. The latest from the United States Circuit Court of Appeals for the Second Circuit:

"We review a district court's imposition of sanctions under Rule 37, including dismissal, for abuse of discretion. See, e.g., Bobal v. Rensselaer Polytechnic Inst., 916 F.2d 759, 764 (2d Cir.1990); see also Sieck v. Russo, 869 F.2d 131, 134 (2d Cir.1989) ("We ... prefer to ... provide the teeth to enforce discovery orders by leaving it to the district court to determine which sanction from among the available range is appropriate."). However, we have recognized that "dismissal with prejudice is a harsh remedy to be used only in extreme situations, and then only when a court finds ‘willfulness, bad faith, or any fault’ " by the non-compliant litigant. Bobal, 916 F.2d at 764. Whether a litigant was at fault or acted willfully or in bad faith are questions of fact, and we review the District Court's determinations for clear error.FN2 See Friends of Animals Inc. v. U.S. Surgical Corp., 131 F.3d 332, 334 (2d Cir.1997).

"Several factors may be useful in evaluating a district court's exercise of discretion to dismiss an action under Rule 37. These include: "(1) the willfulness of the non-compliant party or the reason for noncompliance; (2) the efficacy of lesser sanctions; (3) the duration of the period of noncompliance, and (4) whether the non-compliant party had been warned of the consequences of ... noncompliance." Nieves v. City of New York, 208 F.R.D. 531, 535 (S.D.N.Y.2002) (citing Bambu Sales, Inc. v. Ozak Trading Inc., 58 F.3d 849, 852-54 (2d Cir.1995)). Further, we note that dismissal pursuant to Rule 37 is appropriate "not merely to penalize those whose conduct may be deemed to warrant such a sanction, but to deter those who might be tempted to such conduct in the absence of such a sanction." Nat'l Hockey League v. Metro. Hockey Club, Inc., 427 U.S. 639, 643, 96 S.Ct. 2778, 49 L.Ed.2d 747 (1976)."

Case: Hinojos v. Park City Mun. Corp.
Citation: 2009 WL 392450 (D.Utah 2009)
Date: 2009-02-17
Topics: Re-opening discovery, forensic imaging ordered to ascertain creation date of undated printout.

This short decision is notable in that the Court not only re-opens discovery, but requires that forensic image of a computer be created to ascertain the creation date and time of undated interview notes produced after the discovery period had closed. Although not cited by the Court, I think the decision to not place undue reliance on testimony supporting the provenance of computer generated information is clearly in line with the 9th Circuit’s (BAP) decision in In re VeeVinhnee

The Court was not amused by the late production and imposed a cost-shift to the producing party:
"Plaintiff proposes that "an independent and mutually agreed upon expert ... obtain ... data from Mr. Cashel's computer" FN8 to show the creation and modification dates of the investigative memorandum and Brittany Angelovich interview notes. While Defendant has outlined its explanation of the late production of these materials,FN9 information Defendant has later produced muddies the water.FN10 Plaintiff is entitled, at his sole expense, to verify the truth of what Defendant is saying."

The Court was also wary of a non-forensically sound image creation and analysis:

"The proposal for direct access to the Cashel computer is too risky, however. FN11 If Plaintiff will pay for a mutually acceptable independent expert to image the storage on the Cashel computer , then Plaintiff's forensic expert may take possession of and have access to the image only for purposes of examining the data files for the investigative memorandum and Brittany Angelovich interview summary (and any backups or fragments of those files) to determine creation and modification dates, and edit history."

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