Saturday, June 20, 2009

2009-06-20 Counsel Competency and eDiscovery, Meet and Confer - The New Black, and eDisovery Apocrypha, or a Trip Down (Sedona's) Memory Lane

A light week for eDiscovery and digital evidence, with two decisions. Interestingly enough, these decisions provide a study in contrasts, and also point out the dangers lurking in misdescribing, misapplying, or misapprehending the nature of computer generated information or data. The first, from the District of Arizona, finds the court compelling production of metadata. Interestingly enough, the second decision, from the U.S. District Court for the Eastern District of Wisconsin, relies on the “old” Sedona Principles, and finds that metadata need not have been preserved. That said, this second decision might be more representative of two failures by plaintiff: competency, and failure to meet and confer.



Kravetz v. Paul Revere Life Ins. Co., 2009 WL 1639736 (D. Ariz. 2009)
Kay Beer Distributing, Inc. v. Energy Brands, Inc., 2009 WL 1649592 (E.D. Wis. 2009)

Case: Kravetz v. Paul Revere Life Ins. Co.
Citation: 2009 WL 1639736 (D. Ariz. 2009) [Designated “Not for Publication”]
Date: 2009-06-11
Topics: Production of ESI metadata, but not associated content compelled, metadata as relevant evidence

This brief decision from the U.S. District Court for the District of Arizona finds the court deciding defendants’ motion to compel production of hard drives and computer storage media. Here, defendants proposed the computer hard drives and other storage media would be provided to a third party to “determine the number of hours” spent typing by plaintiff each day on his computer (relevant evidence for plaintiff’s disability claims). Plaintiff argued in opposition that such examination would not enable defendants to determine the number of hours plaintiff expended “typing” on his computer each day.

The Court first points to the broad language of Fed. R. Civ. P. Rule 26(b)(1) and Rules 34(a)(1)(A):

“Parties may obtain discovery regarding any non-privileged matter that is relevant to any party's claim or defense.” Fed.R.Civ.P. 26(b)(1). Rule 34(a)(1)(A), Fed.R.Civ.P., allows a party to inspect, copy, test, or sample ‘any designated documents or electronically stored information.’” Kravetz v. Paul Revere Life Ins. Co., 2009 WL 1639736, 1 (D.Ariz.) (D. Ariz. 2009)

U.S. District Judge Martone then discusses why metadata comprised evidence relevant to plaintiff’s claims (and defendants’ defenses). Moreover, the Court determined that defendants had provided sufficient evidence (most likely by way of expert testimony) to support their assertions:

“Defendants have properly explained why the metadata on Kravetz's hard drives and storage devices may be relevant to the number of hours Kravetz worked prior to and after his injury.” Id.

Metadata vs. Content Production

Plaintiff argued that producing his hard drive and storage media was overbroad and would cause undue burden. In what seems to be a response to assertions either of privacy or privilege, the Court orders that only metadata relevant to the hours worked prior to his injury would be produced, and that neither defendants nor the forensic expert were permitted to view the content associated with such metadata:

“Defendants have properly explained why the metadata on Kravetz's hard drives and storage devices may be relevant to the number of hours Kravetz worked prior to and after his injury. However, defendants need not and may not review the substance of documents on plaintiff's hard drives and media devices.” Id.

“We will, therefore, compel plaintiff to provide the requested computer devices with the limitation that defendants may only extract metadata and other necessary electronic information regarding the amount of time spent on documents, but not the substance of the documents themselves. To the extent plaintiff challenges the ability of metadata to show the number of hours he worked, he is free to argue the weight that should be given to this information at trial. Id.

Note that the Court permits plaintiff to argue the probative value (or weight) of the metadata at trial.

Kudos to EDDE Co-Chair George Paul’s firm, Lewis & Roca, who represented defendant in this matter.

Case: Kay Beer Distributing, Inc. v. Energy Brands, Inc.
Citation: 2009 WL 1649592 (E.D.Wis. 2009)
Date: 2009-06-10
Topics: Metadata production denied, failure to meet and confer on search terms, failure to meet and confer

In case anyone believes that the decision (approving the “original” Sedona Principles position that most metadata is without value and denying a party’s motion to compel production thereof) is now history, we refer to this vintage June 2009 decision in which the Court relies on the 2005 (i.e., “original”) Sedona Principles position, finding that no duty to preserve metadata, and no reason to compel production thereof.
Author’s Note: Other than the metadata approach (which, imo, might be the punishment doled out by the court on this hapless plaintiff) this decision is well reasoned.

Of course, the Sedona Principles 2008 metadata approach reversal, together with the late 2008 repudiation of the earlier (metadata valueless) Sedona approach in Aguilar v Immigration and Customs Enforcement Div. of U.S. Dept. of Homeland Security, 255 F.R.D. 350, 2008 WL 5062700 (SDNY November 21, 2008) [see EDDE Digest 4] seems to have escaped notice by the court.

To be sure, this case started out on the wrong foot. Both parties apparently represented to the Court that ESI discovery was not anticipated. The Court notes that in somewhat wry language:

“Although the Rule 26(f) Joint Report and Discovery Plan from December 28, 2007 indicated that the parties “do not anticipate that electronic discovery will be a significant feature of this case,” subsequent events have proven this optimistic prognostication wrong.” Kay Beer Distributing, Inc. v. Energy Brands, Inc., 2009 WL 1649592, 2 (E.D. Wis. 2009)

It’s also not insignificant that the parties’ discovery plan was submitted fully one year after the effective date of the 2006 eDiscovery amendments to the Federal Rules of Civil Procedure.

Did I mention that things started out on the wrong foot? Try this sample:

“Things started out on the wrong foot when Energy Brands erroneously stated that it did not have electronic data, including emails, concerning the claims asserted against it. In March 2008 counsel for the parties met and conferred on Kay Beer's request for email. (Weber Decl. in Supp. of Mot. to Compel, Exs. K-M; Doc. # 53-12, 53-13, 53-14.) In a letter of March 26, 2008, Brian W. McGrath, outside counsel for Energy Brands, represented that Energy Brands did not have electronic data that would include emails relating to Kay Beer. ( Id. at Ex. M; Doc. # 53-14.) At a hearing before the Court on a motion for a protective order the following month, counsel for Energy Brands claimed that everything that in-house counsel for Energy Brands had been able to find in a corporate document search had already been produced to Kay Beer. ( Id. at Ex. CC at 5; Doc. # 53-30.) On May 16, 2008, when asked to admit that it had in its possession or control stored electronic information relating to Kay Beer created on or before November 2, 2007, Energy Brands entered a denial. ( Id . at Ex. I, Resp. to Admit 11; Doc. # 53-10 at 3.) Three days later, Energy Brands admitted that it did have email dating back to approximately June 2003.” Id., at p. 2

The parties were unsuccessful at resolving issues related to the production of additional ESI. In short, plaintiff argued that email production was inadequate, and demanded an ESI search using much broader terms than originally used. Defendant argued that the new search terms demanded to be used by plaintiff was overly broad.

Incredibly, plaintiff then conceded that most of the information demanded (which was stored on five DVDs) was not likely to have any bearing on its claims, and the Court so notes the consequences:

“In this case, even Kay Beer concedes that it is highly unlikely that the vast majority of the ESI on the five DVDs Energy Brands has compiled has any bearing on the issues remaining in this case. Yet, Kay Beer insists that it be provided the DVDs so that it can conduct its own search. Energy Brands has no obligation to turn over to an opposing party in a lawsuit non-discoverable and privileged information.” Id., at p. 4

This deserves the first EDDE “D’oh” Award.

Failure to Meet and Confer to Agree on Search Terms

Nope. Plaintiff didn’t, although defendant offered, and the court also took notice:

“Kay Beer asserts in a footnote that Energy Brands has refused its request to produce the appropriate scope of email, but it offers no factual support for this assertion. (Doc. # 97, Kay Beer Reply at 6, n. 3.) To be sure, among the 313 requests to produce Kay Beer expounded in this case were at least a dozen directed to Energy Brands in which Kay Beer requested that Energy Brands produce email sent or received by named persons that included various terms. But the terms were stated in the disjunctive, requiring Energy Brands to produce ESI having nothing to do with Kay Beer or the facts of this case. See REQUESTS TO PRODUCE NOs. 110-122. The fact that Energy Brands did not want to add to the ESI it would have to review is not evidence of recalcitrance. Kay Beer's assertion that Energy Brands refused to conduct a further search is refuted by three separate emails from counsel for Energy Brands offering to work with Kay Beer's counsel in formulating search terms to locate emails that might be relevant. (Doc. # 53-23, Weber Decl., Exs. R., at 4, and V ., at 3, 7.)” Id., at p. 6

With the following language, one might guess in which decisional direction the Court is headed:

“Instead of working with Energy Brands' counsel, Kay Beer seems to have persisted in its demand that Energy Brands turn over all ESI that even mentions its name or some variant thereof.” Id.

Native File Format, Bates Stamping and Metadata (Oh my)

The Court first points out that plaintiff requested ESI in native data format; here, in the form of Outlook .pst files. The Court, apparently relying on expert declaration, then states:

“Kay Beer has also insisted that all documents be produced in native Outlook format, despite the fact the documents could not be Bates stamped in that format, they would be subject to alteration, and it would not be possible to select certain documents and produce only those in that format.” Id.

Interestingly enough, no mention is made that (as with any other physical evidence) the storage media containing such file could be Bates stamped, a working copy could be made of the original, (presumably forensically sound) .pst file without altering the original (else how do forensics examiners investigate ESI?) and that single emails could be produced either as .msg files, or as .tiffs, with associated metadata provided in a separate production.

These options appeared to lie outside the ken of plaintiff’s counsel.

What appears to have sealed the deal with the Court is plaintiff’s agreement that ESI be produced in either hard or soft copy (whichever was cheapest):

“Energy Brand asserted that Kay Beer's request that documents, information, and or data be produced in their original electronic format was unduly burdensome and noted that the parties had agreed at their Rule 26 conference that either a hard copy or electronic copy would be produced depending on what was most cost-effective.” Id.

Metadata – Circa 2005

Here’s where the Court takes a journey into the past, and relies on a Sedona position repudiated by the Sedona Principles themselves in 2008:

“Energy Brands also agreed that if Kay Beer made a good faith request based on demonstrated need for the native form of a document, Energy Brands would endeavor to produce the document in native form. ( Id.)” Id.

"Energy Brands' offer is consistent with The Sedona Principles for Electronic Document Production, which state that “[u]nless it is material to resolving the dispute, there is no obligation to preserve and produce metadata absent agreement of the parties or order of the court.” The Sedona Principles: Best Practices, Recommendations & Principles for Addressing Electronic Document Discovery (The Sedona Conference Working Group Series, July 2005 Version), available generally at” Id.

Blognote: ESI cannot be authenticated without at least some metadata. See George Paul’s excellent book “Foundations of Digital Evidence” (ABA 2008). All recent decisional authority read by the author of this digest clearly indicates that if metadata is relevant, or may lead to relevant information, it is, (in the absence of privilege, or a showing of inaccessibility, burden, etc.) discoverable.

Blognote: Time to murder a metaphor. It may be that the court punished plaintiff’s counsel for its incompetence, and indeed, that seems to be the theme here, but bad lawyering makes bad law; and this case stands out as an exemplar. Although one District Judge’s decision is not necessarily binding even on fellow District Judges (or Magistrate Judges for that matter) it is also reasonable to expect some deference to be paid to precedent set by earlier decisions. Now, those parties arguing for the production of metadata will have the unpleasant task of arguing against an opinion whose reasoning has been thoroughly repudiated by the very sources relied upon in that prior opinion. Bring on the experts, and the latest version of the Sedona Principles, or proceed at your peril.


Saturday, June 13, 2009

2009-06-13 Early Stage eDiscovery Failures, Spoliation Standards in Delaware State Courts, and The Three Bases for a Court's Imposition of Sanctions for eDiscovery Abuse

Back on track with this week’s digest. Three for review. The first case, from the U.S. District Court for the District of Minnesota provides a what-not-to-do (or what not to not do) in the early stages of discovery. This analysis stands as the longest digest of the shortest decision yet. The second decision involves spoliation sanctions determination and imposition in Delaware state courts. This decision was given an in depth analysis because the Delaware state courts handle a significant volume of commercial and public company litigation. The third decision from the U.S. District Court for the Northern District of Georgia addresses the three sanctions available to a court to address a party’s discovery abuse. The defendant in that case “escaped” evidential sanctions, but not much else.



Beard Research, Inc., et al. v. Kates, et. al., 2009 WL 1515625 (Del.Ch. 2009)
Kipperman v. Onex Corp., 2009 WL 1473708 (N.D.Ga. 2009)


Citation: 2009 WL 1606653 (D. Minn. 2009)
Date: 2009-06-05
Topics: Fed. R. Civ. P. Rule 26 and ESI discovery interpretation, counsel opinion no substitute for expert evidence

This eDiscovery decision from the U.S. District Court for the District of Minnesota arises out of a class action matter. While U.S. District Judge Montgomery first notes that “the parties have worked amicably throughout the discovery process, and [defendant produced] substantial amounts of hard copy, there appeared to be evidentiary gaps of relevant evidence from documents provided by non-parties, and the class plaintiff filed a motion to compel production of ESI.

Following depositions, plaintiffs requested, and defendants produced the names of individuals who had received a “legal hold” (presumably from defendant’s counsel). Plaintiffs then requested that defendant search the emails of these individuals as well as shared server drives. Not surprisingly, as the Court notes, defendant “balked at the request.”

Some extended context is helpful here. In class action litigation it is routine for a court to bifurcate the discovery process into two phases, the first addressing class certification issues and the second addressing others issues, including the merits. This case was no exception: U.S. Magistrate Judge Erickson bifurcated discovery, and ordered the parties to first focus on the issue of class certification.

That said, by the time plaintiff’s “Motion to Compel Production of Electronically Stored Information (“ESI”) was filed, defendant had already produced a substantial volume of hard copy material.

Author’s (Extensive) Note: I typically reserve observations for last, or at least after some analysis, but this case stands out (or may stand out, as the record provided in the decision is somewhat sparse) as a prime “how not to conduct discovery.” This relatively brief opinion deserves proper analysis, but in order to do so, some in-depth background is (at least imo) helpful. So, anything between the dashes (or hyphens set forth in repetitive fashion below) comes from the author, and not the court.


Fed. R. Civ. P. Rule 26

The complaint in this matter was filed well after the effective date of the 2006 amendments to the Federal Rules of Civil Procedure. The hint lies in the index number for that case, which bears an “08” prefix. The two-digit prefix in federal district court civil case numbers indicates the year of filing.
It’s also a good idea to set forth those portions of Rule 26 pertinent to this decision. For those who want to view the source, from the source, here’s the link:

Fed. R. Civ. P. Rule 26(b) - “…General Provisions Governing Discovery

(1) Scope in General. Unless otherwise limited by court order, the scope of discovery is as follows: Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense — including the existence, description, nature, custody, condition, and location of any documents or other tangible things and the identity and location of persons who know of any discoverable matter. For good cause, the court may order discovery of any matter relevant to the subject matter involved in the action. Relevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence. All discovery is subject to the limitations imposed by Rule 26(b)(2)(C).

(2) Limitations on Frequency and Extent.
(A) When Permitted. By order, the court may alter the limits in these rules on the number of depositions and interrogatories or on the length of depositions under Rule 30. By order or local rule, the court may also limit the number of requests under Rule 36.
(B) Specific Limitations on Electronically Stored Information. A party need not provide discovery of electronically stored information from sources that the party identifies as not reasonably accessible because of undue burden or cost. On motion to compel discovery or for a protective order, the party from whom discovery is sought must show that the information is not reasonably accessible because of undue burden or cost. If that showing is made, the court may nonetheless order discovery from such sources if the requesting party shows good cause, considering the limitations of Rule 26(b)(2)(C). The court may specify conditions for the discovery.
(C) When Required. On motion or on its own, the court must limit the frequency or extent of discovery otherwise allowed by these rules or by local rule if it determines that:
(i) the discovery sought is unreasonably cumulative or duplicative, or can be obtained from some other source that is more convenient, less burdensome, or less expensive;
(ii) the party seeking discovery has had ample opportunity to obtain the information by discovery in the action; or
(iii) the burden or expense of the proposed discovery outweighs its likely benefit, considering the needs of the case, the amount in controversy, the parties’ resources, the importance of the issues at stake in the action, and the importance of the discovery in resolving the issues.


(1) Conference Timing. Except in a proceeding exempted from initial disclosure under Rule 26(a)(1)(B) or when the court orders otherwise, the parties must confer as soon as practicable — and in any event at least 21 days before a scheduling conference is to be held or a scheduling order is due under Rule 16(b).
(2) Conference Content; Parties’ Responsibilities. In conferring, the parties must consider the nature and basis of their claims and defenses and the possibilities for promptly settling or resolving the case; make or arrange for the disclosures required by Rule 26(a)(1); discuss any issues about preserving discoverable information; and develop a proposed discovery plan. The attorneys of record and all unrepresented parties that have appeared in the case are jointly responsible for arranging the conference, for attempting in good faith to agree on the proposed discovery plan, and for submitting to the court within 14 days after the conference a written report outlining the plan. The court may order the parties or attorneys to attend the conference in person.
(3) Discovery Plan. A discovery plan must state the parties’ views and proposals on:
(A) what changes should be made in the timing, form, or requirement for disclosures under Rule 26(a), including a statement of when initial disclosures were made or will be made;
(B) the subjects on which discovery may be needed, when discovery should be completed, and whether discovery should be conducted in phases or be limited to or focused on particular issues;
(C) any issues about disclosure or discovery of electronically stored information, including the form or forms in which it should be produced;

So, subject to certain limitations, (i.e., burden, duplication, expense, previous opportunity to discover, and burden-benefit analysis) Fed.R. Civ. P. Rule 26(b) provides that parties may obtain discovery or non-privileged relevant matter. Specific limitations on discovery of ESI may be imposed if a party can show inaccessibility by reason of undue burden or cost.

But wait, before we can undertake eDiscovery, parties are required to “meet and confer” to discuss ESI discovery issues as part of their general meet and confer obligations pursuant to Fed. R. Civ. P. Rule 26.

Fed. R. Civ. P. Rule 26(f)(3)(c) is particularly instructive, as it requires the parties to discuss and attempt to resolve any (emphasis added) ESI discovery issues, including form or production.

So, the Rules give parties specific procedural marching order prior to engaging in discovery generally, and in eDiscovery in particular. In plain language, parties are permitted by the Federal Rules of Civil Procedure to engage in discovery of ESI (subject to limitations set forth above). Before commencing discovery, however, the parties must
1. Meet and discuss eDiscovery issues, including preservation and form of production
2. Prepare some report or proposed case management or scheduling order outlining what issues (including ESI discovery) on which the parties agree, or disagree. The Court then decides disputed discovery issues.


Blognote: There is no language in the Federal Rules permitting a court a priori to prevent a party from undertaking ESI discovery.

Blognote: There is a somewhat fine distinction between undertaking ESI discovery (that is, discovering electronically stored information) and producing ESI. In this action, and although the terminology used by the Court is less than perfectly clear, the issue centered on ESI production and not ESI discovery.

With that out of the way, let’s return to the rather sparsely reported record in this case. No mention is made whether any Rule 26(f) meet and confer took place, or what was discussed, agreed to, or disputed, and no mention is made of any case management order provisions other than discovery bifurcation. What we do know is that this is a class action, and as is typical in class actions, discovery was bifurcated into phases, with the first described as “class certification.” The current discovery dispute arose during this first class certification phase.

This case also qualifies as a top contender for the “what-not-to-do” award for 2009.

Why? It appears that plaintiff’s counsel requested production of ESI in native format (rather than hard copy of ESI) only after “voluminous” hard copy of ESI by defendant:

“The parties have worked amicably throughout the discovery process, and Zurn has produced substantial amounts of hard copy documents.” In re Zurn Pex Plumbing Products Liability Litigation 2009 WL 1606653, 1 (D. Minn. 2009)

But wait, after acquiescing to the production of hard copy printouts of ESI from defendant, plaintiff saw clouds on the otherwise “amicable” discovery event horizon:

“It appears, based on third party discovery, that all of the communications regarding warranty claims and aggressive water have not been disclosed” Id.

Plaintiffs’ counsel then took a more aggressive stance, and requested ESI discovery, specifically a search of certain of defendant’s servers and drives. Not surprisingly, defendant’s response was an objection:

“[After depositions were taken] Plaintiffs requested, and Zurn produced, the names of Zurn employees who have received a legal hold notice in relation to this action. Raiter Aff. Ex. N. Plaintiffs responded with a list of 26 search terms that they wanted Zurn to use to search the emails of the identified employees as well as the shared servers (the J and K Drives). Id. Ex. O. Zurn balked at the request, arguing that the information was not necessary for class certification and that the request was overly broad and would be extremely costly.” Id.

The Court’s eDiscovery Analysis

Plaintiffs argued that the Magistrate Judge foreclosed the production of ESI. The Court disagreed, relying on what is (at least imo) a rather tortured interpretation of Fed. R. Civ. P. Rule 26(b). The Court’s language seems to conflate the discoverability of ESI (which for the most is expressly permitted by the rules) with the production of discovered ESI, which may be limited by a Court:

“The Federal Rules of Civil Procedure anticipate the need for ESI. Rule 26(b)(2)(B), however, places specific limitation on the production of ESI. “A party need not provide discovery of [ESI] from sources that the party identifies as not reasonably accessible because of undue burden or cost.” Fed.R.Civ.P. 26(b)(2)(B). On a motion to compel discovery, “the party from whom discovery is sought must show that the information is not reasonably accessible because of undue burden or cost.” Id. Additionally, a court order can further limit discovery. Id. 26(b)(1). i at p. 2" Id.

“As a threshold matter, Zurn argues that Judge Erickson's October 26, 2007 Order foreclosed the production of ESI. It does not. The Order specifically contemplated that the parties would be allowed to revisit the issue of ESI should they discover “voids in the information disclosed in hard copy form.” October 26, 2007 Order at *9. The emails from the Zurn distributor that discuss fittings failures and aggressive water, and which had not been produced by Zurn directly, suggest that there are gaps in the hard copy information already disclosed. See Raiter Aff. Exs. A, B, C. Accordingly, this Court will revisit the ESI issue in light of Rule 26(b)(2)(B).” Id., at p. 2" Id.

Author’s Note: The Court’s language is interesting because it does seem to confuse ESI discoverability with ESI production itself. I think the definition of ESI production, absent agreement to the contrary by the parties, is not so plastic. One may argue that the production of a hardcopy of a pdf of a word processing file, or a hardcopy of a tiff of an email, is production of ESI, but it is more likely that the hapless requester who is painted into this corner may have supplied both paint and brush to the Court. In this case, plaintiff did accept “voluminous” hard copy.

What plaintiff might have done in lieu of this acquiescence was to appeal the order of the Magistrate Judge to the District Judge. There are risks attendant to this admittedly infrequent, and frequently unsuccessful approach, but the denial of ESI discovery in the form chosen by the requesting party seems appropriate to bring “upstairs” to the District Judge.

Interestingly enough, and in seeming contradiction to its eDiscovery position stated above, the Court then describes the underlying purpose of discovery:

“Zurn first cites the voluminous documents it has already disclosed and makes the argument that Plaintiffs have sufficient discovery to adequately argue the first phase of the class certification issue. Def.'s Mem. in Opp'n to Mot. to Compel [Docket No. 67] at 11-13. This argument glosses over the purpose of discovery, which is to broadly enable parties to obtain the factual information needed to prepare a case for trial. See Alpern v. UtiliCorp United, Inc., 84 F.3d 1525, 1536 (8th Cir.1996). Even focusing on the narrower issue of class certification, there is a presumption in favor of discovery of Zurn's ESI.” Id. at p. 2

Magistrate Judge Erickson’s Decision

What makes this decision intriguing is that the excerpt provided by the District Court of Magistrate Judge Erickson ESI discovery ruling, which appeared to deny plaintiff’s request for discovery of ESI rather than the form of production, stating that:

“[W]hile ESI may prove relevant to the first stage of discovery, we cannot meaningfully make that prediction now, and require the parties to engage in what could be vastly more expensive, and yet utterly futile, discovery.” Id. However, Judge Erickson also stated that “should the parties uncover voids in the information disclosed in hard copy form, they are ... at liberty to press for further discovery including electronically stored information.” Id. at *9.” In re Zurn Pex Plumbing Products Liability Litigation, 2009 WL 16706653 (D. Minn. 2009).

Blognote: eDiscovery is discovery about discovery, irrespective whether that discovery involves class certification, jurisdiction, merits, or otherwise. To hold ESI discovery “meaningful” in one set of circumstances and not in another is to misapprehend the ubiquitous nature of computer generated information as evidence across the spectrum of case types in modern day litigation. Moreover, if Magistrate Judge Erickson’s comments are directed to ESI discovery, his position is also undercut by the fact (and by the acknowledgment of many other judges) that 99 percent of all evidence used in modern litigation is computer generated. That said, the magistrate judge did leave himself an out, permitting a revisitation of the issue (to permit ESI discovery) if circumstances later necessitated same.

ESI Production after Production of Hard Copy Not Duplicative

Not surprisingly, circumstances necessitated revisiting the issue, and the District Court took the more expansive approach, and turns first to defendant’s initial assertion that ESI production would be duplicative and therefore should be denied pursuant to Fed. R. Civ. P. Rule 26(b)(2)(C)(i). District Judge Atherton disagrees, and couches her language on the general schema of broad discovery contemplated by the Federal Rules.

“Zurn first cites the voluminous documents it has already disclosed and makes the argument that Plaintiffs have sufficient discovery to adequately argue the first phase of the class certification issue. Def.'s Mem. in Opp'n to Mot. to Compel [Docket No. 67] at 11-13. This argument glosses over the purpose of discovery, which is to broadly enable parties to obtain the factual information needed to prepare a case for trial. See Alpern v. UtiliCorp United, Inc., 84 F.3d 1525, 1536 (8th Cir.1996). Even focusing on the narrower issue of class certification, there is a presumption in favor of discovery of Zurn's ESI.” Id., at p. 2

Undue Burden and Cost, and Attorneys Representations Thereof

Defendant then argued that the ESI search and production would result in undue burden and cost for defendant, and to this issue the Court accorded greater concern.

“Zurn's second argument, however, that the production of ESI would be unduly burdensome and costly, is a greater concern for the Court. Plaintiffs request roughly 361 gigabytes of data. Brumagin Aff. ¶¶ 2, 3, 4; Freestone Aff. [Docket No. 69] ¶ 5. Zurn represents that by using the generally accepted standard of 75,000 pages per gigabyte, Plaintiffs' request amounts to nearly 27 million pages of documents. Def.'s Mem. in Opp'n to Mot. to Compel at 13, n .4. If the K drive were not searched, the remaining data consists of 48 gigabytes.
FN1 Zurn also states that a search of the custodians' emails and J drive files will require approximately seventeen weeks and cost $1,150,000, exclusive of vendor collection and processing costs, to review and process the data. Freestone Aff. ¶ 9.” Id., at p. 2

The colloquy here is interesting. Defendant’s representations as to “generally accepted standard of 75,000 pages per gigabyte” or 27 million pages, is accorded little weight by the Court. Why? Obvious, my dear Watson. Defendant’s counsel, made the assertion without any expert testimony supporting her assertions. The Court notes that counsel’s naked assumptions didn’t count for all that much.

The Court first disagreed with defendant’s math:

“By the Court's calculation, a search of the custodians' emails and J drive files, as well as the DVD copies of information of former Zurn-employee custodians, consists of roughly 3.6 million pages of documents. It is unclear whether Zurn's cost and time numbers are based on a review of 27 million pages of documents, the 3.6 million pages of documents limited to the J Drive and custodians' emails, or a smaller sample of document pages likely to be flagged as a result of a search for certain relevant terms proposed by Plaintiffs.” Id.

What was at stake here? More than one million dollars in asserted discovery costs for defendant, and a significant expenditure of time:

“Zurn also states that a search of the custodians' emails and J drive files will require approximately seventeen weeks and cost $1,150,000, exclusive of vendor collection and processing costs, to review and process the data.” Id. at p. 1

Did defendant utilize an expert to help the court understand why significant costs and time would be required to comply with plaintiff’s ESI discovery request? The answer is no, and the Court doesn’t skip a beat in weighing in on the probative value of naked argument by counsel:

“The affidavit of Ms. Freestone, an attorney and not an expert on document search and retrieval, is not compelling evidence that the search will be as burdensome as Zurn avers.’ Id.


Call this a stellar example of being penny wise and pound foolish. I’m sure that the cost of hiring an expert to provide evidence for this assertion would have been orders of magnitude less expensive (read: much cheaper) than having to comply with what ultimately was the Court’s decision, and that was to engage in fairly extensive ESI discovery:

“In an effort to control costs, the Court will limit the search to the following fourteen terms based on the likelihood that they will produce relevant documents without including a vast number of documents that are likely irrelevant to the litigation. Zurn shall search the J Drive, the custodians' emails, and the DVDs of the information on the computers of former Zurn-employee custodians using the following terms:

(1) AADFW, (2) Corrosion, (3) Corrosive, (4) Corrosive Water, (5) Crack, (6) Dezinc, (7) Dezincification, (8) DZR, (9) Fail, (10) IMR, (11) Leak, (12) MES, (13) SCC, (14) Stress corrosion cracking.” Id. at p. 3

Oh, and the Court did leave open the door for defendant to raise the burden and cost issue, but reminded counsel to bring an expert for the occasion:

Additionally, if the search, as ordered by the Court, proves to be overly burdensome or costly, Zurn may renew its objection by presenting the Court with specific information including evidence from computer experts on applying the search terms, the number of documents identified, and the cost and time burdens of vetting documents.” Id.

Takeaway -- Producing Party: The author has been there, done that, and has been run over by the same truck that struck defendant’s counsel in this case. In order to prevent such lamentable outcomes, a wise strategy includes having a technology expert on hand to assist a court in understanding that which you are asserting is “generally accepted” as true. “That” of course, in this case, meaning matters technological.

Takeaway – Requesting Party: This motion appears to have been argued without the benefit of having a technology expert present to substantiate counsel’s claims, and this inured to plaintiff’s disadvantage in proceedings before the magistrate judge. Yes, it appears that plaintiffs will get their ESI discovery. That said, had counsel been supported by the declaration or testimony of any expert, ESI discovery might have commenced at the outset.

This decision provides a clarion call (or shout) to counsel to understand that an attorney’s representation about what technology is, or isn’t or about what technology costs, or does, or doesn’t do, amounts to no more than lay opinion to a court. Forewarned is forearmed.

Case: Beard Research, Inc., et al. v. Kates, et. al.
Citation: 2009 WL 1515625 (Del.Ch. 2009)
Date: 2009-05-29
Topics: Delaware duty to preserve, adoption of Zubulake and Sedona guidelines, request for production triggers duty to preserve, basis for imposition of default judgment or adverse inference instruction as sanction for ESI spoliation

This spoliation decision arises from a trade secrets misappropriation and tortious interference with business relation action from the Court of Chancery of Delaware.

The allegations involve the ubiquitous ex-employee, a former employer, the ex-employee’s subsequent employer, and a laptop computer. The sanctions sought were, alternatively, default or an adverse inference jury instruction:

“In particular, Plaintiffs contend that an ex-employee's laptop computer was irretrievably altered after a duty to preserve that evidence had arisen and that the ex-employee and his subsequent employers are responsible for that alteration. By way of remedy, Plaintiffs urge this Court to grant a default judgment in their favor on Counts I and II of their Complaint for tortious interference with business relations and misappropriation of trade secrets, respectively. Alternatively, Plaintiffs request an adverse inference that the destroyed evidence contained information that would favor their claims. Plaintiffs also seek imposition of attorneys' fees and costs. Defendants vigorously oppose the motion for sanctions.” Beard Research, Inc. v. Kates,” 2009 WL 1515625, 1 (Del.Ch. 2009)

Duty to Preserve Under Delaware Law

The Court first provides an analysis of a party’s duty to preserve relevant evidence under Delaware law. Note the reliance on Zubulake IV and the Sedona Guidelines. Not surprisingly the duty to preserve includes evidence that might be relevant to anticipated future litigation:

"A party in litigation or who has reason to anticipate litigation has an affirmative duty to preserve evidence that might be relevant to the issues in the lawsuit.
FN62 Whether a person has reason to anticipate litigation depends on whether the “facts and circumstances ... lead to a conclusion that litigation is imminent or should otherwise be expected.” FN63 A court may sanction a party who breaches this duty by destroying relevant evidence or by failing to prevent the destruction of such evidence.FN64" Id.

"FN62. See Triton Constr. Co. v. E. Shore Elec. Servs. Inc., 2009 WL 1387115, at *8 (Del. Ch. May 18, 2009); Acierno v. Goldstein, 2005 WL 3111993, at *6 (Del. Ch. Nov. 16, 2005); see also Brandt v. Rokeby Realty Co., 2004 WL 2050519, at *11 (Del.Super.Sept.8, 2004) (“A party, anticipating litigation, has an affirmative duty to preserve relevant evidence.”); Positran Mfg., Inc. v. Die bold, Inc., 2003 WL 21104954, at *2 (D.Del. May 15, 2003) (citations omitted); Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 216 (S.D.N.Y.2003).” Id.

“FN63. The Sedona Guidelines: Best Practice Guidelines & Commentary for Managing Information & Records in the Electronic Age (“ Sedona Guidelines ”) 40 n. 1 (2004), available at http://; see also id. at 40 (citing numerous federal cases) (“An organization's information and records management program should anticipate circumstances that will trigger the suspension of normal destruction procedures.”). Id.

In this instance, at issue was [the ex-employees] laptop computer, an original hard drive, and a “substitute” hard drive, and as is typically asserted in this type of proceeding, crashes, reformats and reinstalls. And the deletion of nearly 11,000 relevant files as evidence by forensic examination. Oh my.

It is helpful at this point to provide a truncated event timeline:

October 2007: Plaintiff’s explicitly requested production of the laptop as a source of potentially relevant evidence.

Defendant refused to produce the computer without a court order. No matter, said the Court. The duty to preserve was nonetheless triggered at least as early as that time:

“Whether or not Defendants' position in that regard was substantially justified, Kates, ASDI, and ASG knew as of October 2007, at the latest, that Plaintiffs believed the laptop contained relevant information. In those circumstances, each of those three Defendants had an affirmative duty to preserve the Gateway as evidence.” Id.

But wait, noted the Court: there was an arguably earlier preservation trigger. Here’s why:

February 2004: Defendant [the ex-employee] resigns from plaintiff.
March 2004 (approx): Defendant is employed by co-defendant ASG
Early 2004: Defendant ex-employee understands likelihood of being sued by ex-employer
May 2005: Ex-employee and new employer are sued by plaintiff
June 2005: Plaintiff serves first set of discovery requests to defendant ex-employee

Beginning in 2003 and at all times pertinent thereto, defendant ex-employee used a laptop computer for his everyday work and personal matters.

Plaintiff asserted three arguments in support of its contention that the ex-employee had tampered and with both the original and substitute hard drives “in a way that destroyed or threatened to destroy relevant evidence on a number of occasions:

“(1) Kates's deletion of all ASG data and files from the original hard drive in or around November 2005;
(2) Biggers's installation of a new hard drive in the laptop in or around December 2007 and return of the original hard drive to Kates, who then could not account for its whereabouts; and
(3) Kates's tampering with the laptop and deletion of certain files in July 2008, just before I ordered Defendants to produce it for Plaintiffs' inspection. ” Id. at p. 6

As to the November 2005 actions, the Court first finds that the by deleting files and emptying the trash or recycle bin, the employee had destroyed data. The Court also found that the ex-employee had already been in litigation for a number of months at the time (November 2005) he deleted files and emptied the laptop’s recycle bin.

The Court also determined that the ex-employee’s new employers (both co-defendnats) also had an obligation to preserve “well before 2005” as they shared the same counsel, and had shared the same counsel, since the commencement of the litigation.

But wait, argued the co-defendants. No specific request was
made for the ex-employee laptop, as of November 2005, and so there was no duty to preserve it. Not so, said the Court.

But first, the Court explains that the problems it will later describe might have been prevented by early meet and confer between adversary counsel. The message to future litigants appearing before this court is clear: Agree on ESI issues (including preservation and destruction) and the Court will generally not interfere. Fail to agree, and the Court will not look kindly on a party’s failure to impose stringent preservation measures in a challenge mounted by an adversary. In other words, the Court is likely to hold a party who destroys evidence in the absence of an agreement between the parties to a much higher standard of preservation.

“In complex commercial litigation today, virtually all discovery involves electronic discovery to some extent. It also is well known that absent affirmative steps to preserve it, at least some electronically stored information (“ESI”) is likely to be lost during the course of litigation through routine business practices or otherwise.” Id.

“These realities counsel strongly in favor of early and, if necessary, frequent communications among counsel for opposing litigants to determine how discovery of ESI will be handled. To the extent counsel reach agreements recognizing and permitting routine destruction of certain types of files to continue during litigation, the Court has no reason to object." Id.

“Conversely, if the parties do not focus on the handling of e-discovery in the early stages of a case, the Court is not likely to be sympathetic when, for example, one party later complains that stringent measures were not instituted voluntarily by her adversary to ensure that no potentially relevant information was lost. Rather, instead of holding a party to a stringent standard that might have been appropriate if established earlier in the case, the Court probably will apply an approach it deems reasonable, taking into account the insights provided by the case law and some of the guidelines and principles developed by various respected groups that have studied the challenges of electronic discovery [Footnote omitted].” Id. at p. 7.

Takeaway: In Delaware, negotiate an advantageous (to your client) ESI preservation and destruction agreement with your adversary as early as possible.

Failure to Impose Litigation Hold

The Court also points out that there was “no evidence” produced by any defendants indicating that any actions to preserve evidence were taken as of November 2005. The foreseeability standard will be familiar:

“Defendants knew or, at least, should have known that Kates had a laptop that might contain information relevant to the litigation and, therefore, should be preserved. The complete absence of any evidence that Defendants ASDI, ASG, or Kates took any action to satisfy their obligation to preserve relevant information on Kates's laptop in 2005 leads me to conclude that ASDI and ASG bear some responsibility for the destruction of evidence that occurred in November 2005, albeit much less than Kates himself.” Id.

December 2007: In December 2007, defendant ex-employee “twice successfully and once unsuccessfully” tried to reformat what was apparently a failing hard drive in the laptop. The Court notes that each of these acts “created a risk that relevant information on the original hard drive would be overwritten and effectively destroyed.”

At this time, plaintiff had specifically requested the ex-employee’s laptop (and drive) and that the ex-employee refused to produce same without a court order. The Court points out that even though the hard drive did fail mechanically (failed to spin up), there was still an opportunity to retrieve relevant evidence that defendant ex-employee had a duty to preserve. During that time, the ex-employee’s new employer replaced the failed drive with a new drive. The location of the original drive? Whereabouts unknown.

The Court was not amused:

After determining that the hard drive would not “spin” and that he could not make a “ghost” copy of the drive, Biggers replaced it with a new drive and returned the original to Kates. The original drive has not been seen since then.

The loss of the original hard drive deprived Plaintiffs of the opportunity to examine what might have been relevant evidence. Plaintiffs' IT expert, Paul Herrmann of EVI, has sworn that, even though the hard drive did not spin or operate when Biggers examined it, there is a high likelihood that the drive could have been repaired with full recovery of all data from it.FN68 Defendants did not rebut Herrmann's testimony, and I find it credible." Id. at p. 8

Based on this and other evidence, the Court found that all defendants had breached their duty to preserve relevant evidence.

Late July 2008: Suffice it to say that in late July 2008, “after being advised” that the Court was likely to order the immediate production of the laptop, defendant ex-employee “brazenly ran a disk-cleanup program on the new hard drive on the eve of the hearing regarding it.”

The Court was singularly unimpressed with defendant ex-employee’s attempts at computer hygiene:

“Kates tampered with the laptop without consulting with or providing any advance notice to his own counsel, let alone Plaintiffs. This Court cannot condone such flagrant disregard for the discovery rules and a party's obligation to preserve potentially relevant evidence.” Id.

Delaware Standards for Application of Appropriate Sanctions for Spoliation of Evidence

Under Delaware, a court has the power to impose sanctions under two theories: The first theory is resembles the federal court’s “inherent powers” to manage its own affairs. Indeed, the Court points to the Second Circuit’s decision in Residential Funding v DeGeorge, and the Third Circuit’s decision in Schmidt v. Milwaukee Elec. Tool Corp. in support of its assertions:

“The Court has the power to issue sanctions for discovery abuses under its inherent equitable powers, as well as the Court's ‘inherent power to manage its own affairs.’

“FN70. Residential Funding Corp. v. DeGeorge Fin. Corp., 306 F.3d 99, 106-07 (2d Cir.2002); see also Schmid v. Milwaukee Elec. Tool Corp., 13 F.3d 76, 79 (3d Cir.1994).” Id., at p. 9

Borrowing again from federal court decisions (this time, from the Court’s home federal District of Delaware, the Court explains that sanctions serve three functions:

“Sanctions serve three functions: a remedial function, a punitive function, and a deterrent function.
FN73 Keeping these purposes in mind, the Court will consider the following factors in determining the appropriate sanctions:

FN73. Micron Tech., Inc. v. Rambus Inc., 255 F.R.D. 135, 148 (D.Del.2009) (citation omitted).
(1) the culpability or mental state of the party who destroyed the evidence;
(2) the degree of prejudice suffered by the complaining party; and
(3) the availability of lesser sanctions which would avoid any unfairness to the innocent party while, at the same time, serving as a sufficient penalty to deter the conduct in the future.

FN74. Positran Mfg., Inc. v. Die bold, Inc., 2003 WL 21104954, at *2 (D.Del. May 15, 2003) (citation omitted).” Id. at 9

“The Court has wide latitude to fashion an appropriate remedy, but the remedy must be tailored to the degree of culpability of the spoliator and the prejudice suffered by the complaining party.” Id

Default Judgment or Dismissal

The Court then discusses the menu of sanctions types it could impose under Delaware law.

"To impose a default judgment, the spoliator must have acted “willfully or in bad faith and intended to prevent the other side from examining the evidence.” FN78 Entry of a judgment against the spoliating party should be regarded as “a last resort,” FN79 however, and a motion for such relief should be “granted only if no other sanction would be more appropriate under the circumstances.” FN80 Id. at p. 10

“FN77. Sundor Elec., Inc. v. E.J.T. Constr., 337 A.2d 651, 652 (Del.1975).
FN78. Positran, 2003 WL 21104954, at *2 (citations omitted).FN79. Baliotis v. McNeil, 870 F.Supp. 1285, 1290 (M.D.Pa.1994).” Id.

The Court determines that entry of default would be an “extreme sanction” and that the record in this case did not support it. The Court reasons that while it had been demonstrated that computer information had been deleted, plaintiffs had not shown that the any deleted would have shown that defendant’s had acted in the manner alleged in the complaint. The Court reasoned further that an adverse inference instruction on that issue to be appropriate under the circumstance.

Although the Court acknowledges intentionality to some degree by each defendant, the “marginality” of relevance of the evidence shown to have been destroyed augured in favor of the lesser sanction of an adverse inference instruction rather than a default judgment.

Adverse Inference Sanctions Under Delaware Law – The Sears Test

The Court then provides an analysis for the imposition of sanctions for spoliation under Delaware law.

“As the Delaware Supreme Court said, ‘[i]t is the duty of a court, in such a case of willful destruction of evidence, to adopt a view of the facts as unfavorable to the wrongdoer as the known circumstances will reasonably admit.’
FN82 Id. at p. 10

FN82. Equitable Trust Co. v. Gallagher, 102 A.2d 539, 541 (Del.1954). Id.

The Court then describes the Delaware Supreme Court’s recently announced standards for the adverse inference imposition:

“More recently, the Supreme Court articulated the standard for drawing an adverse inference as follows:

“An adverse inference instruction is appropriate where a litigant intentionally or recklessly destroys evidence, when it knows that the item in question is relevant to a legal dispute or it was otherwise under a legal duty to preserve the item. Before giving such an instruction, a trial judge must, therefore, make a preliminary finding that the evidence shows such intentional or reckless conduct.FN83" Id.

FN83. Sears, Roebuck & Co. v. Midcap, 893 A.2d 542, 552 (Del.2006).” Id.

Adverse Inference Sanctions Imposition Requires Preliminary Finding of Intent or Recklessness

The Court then further explains that under Supreme Court of Delaware’s Sears test, a Court may impose an adverse inference instruction only after a preliminary finding of intent or recklessness:

“It is not enough that the “absence of evidence is not adequately explained.”
FN84 Likewise, the negligent destruction of evidence does warrant drawing an adverse inference; rather, the drawing of an adverse inference requires as a predicate a “preliminary finding of intentional or reckless destruction of evidence. [footnote omitted]” FN85 Id.

The Court then proceeds to define “intent” and “recklessness” when applying the Sears adverse inference propriety test. “Intent” is defined in its traditional manner, and presumes some purposefulness :

“The intentional destruction of evidence is reasonably straightforward. “Intention” modifies the actus reus of the destruction in the sense that the act was voluntary. Thus, for example, a somnambulist who lights a match and tosses it onto a pile of relevant documents does not act with the required mental state for spoliation. For spoliation, the spoliator also must have intended to act “with purpose.” Id., at p. 11

The Court then admits that it has more of a challenge when defining “recklessness” within a spoliation context.

On a spectrum of possible states of mind, recklessness exists somewhere between intentional conduct on one side and negligent conduct on the other side. In Jardel v. Hughes, the Delaware Supreme Court defined recklessness in a civil context as “a conscious indifference to the rights of others.”
FN88 In further describing civil recklessness, the Court stated: “Where the claim of recklessness is based on an error in judgment, a form of passive negligence, plaintiff's burden is substantial,” because the “ precise harm which eventuated must have been reasonably apparent but consciously ignored in the formulation of the judgment.” Id.

All that said, the Court appears to have little difficulty in fashioning a simple definition based on “knowing disregard:”

“Reckless conduct reflects a knowing disregard of a substantial and unjustifiable risk. It amounts to an “I don't care attitude.” Recklessness occurs when a person, with no intent to cause harm, performs an act so unreasonable and so dangerous that he or she knows, or should know, that harm will probably result.’ Id.

Blognote: This resembles the “continuum” of culpability (from negligence to intentionality) utilized by federal courts. See, e.g., Technical Sales Associates, Inc. v. Ohio Star Forge Co. 2009 WL 728520 (E.D.Mich. 2009) [Digested in EDDE 19]

Result: As to defendant ex-employee, the Court found that he had prior notice of the trigger of his duty to preserve, that he was a highly educated individual, and that he with knowledge that he was under a duty to preserve evidence, nonetheless took action on “numerous occasions” to reformat, and then, without real explanation, lost the original hard drive of his laptop computer. The Court found this sufficient basis for the imposition of an adverse inference sanction:

“Moreover, Kates admitted knowing that reformatting his laptop's hard drive on numerous occasions could overwrite or delete data stored on the hard drive. Nevertheless, around November 2005, Kates intentionally deleted files from the laptop after ASG laid him off. Moreover, in or around September 2007, Mr. Elzufon, then lead counsel for Kates, ASDI, and ASG, explicitly told Kates not to destroy his laptop. Still, within a few months, Kates had his original hard drive replaced by an agent of ASDI and then lost the original drive. I find, therefore, that Kates knew of his duties to preserve evidence, including specifically the information on his laptop, but consciously disregarded those duties. Thus, an adverse inference is warranted based on the replacement and subsequent loss of the original hard drive.” Id.

Adverse Inference and Substantive Proof

The Court next addresses the issue of what adverse inference language to use. While the plaintiff urged the Court to infer that the missing evidence (here deleted emails and a PowerPoint presentation) would have provided evidence proving plaintiff’s claims, the Court split adverse inference analysis.

Missing eMail

The Court notes that there was no proof that any such emails existed, and accordingly refuses to take “absence of evidence equates to evidence of absence” argument bait. Following Delaware decisional authority, the Court explains that an adverse inference should never take the place of substantive proof:

“There are two problems with Plaintiffs' argument vis-├í-vis the emails. First, Plaintiffs have no direct evidence that these emails ever existed. The Delaware Supreme Court has held that “even if [a party] were entitled to some kind of inference from [another party's] failure to produce records, this inference does not amount to substantive proof and cannot take the place of proof of a fact necessary to [the first party's] case.”
FN91 In other words, an adverse inference is exactly that-an inference and not substantive proof. Plaintiffs argue that the paucity of emails produced FN92 in comparison to the seventy or so phone calls between Blize and Kates suggests that there may have been more emails that were deleted. To obtain an adverse inference, however, a party must offer more than mere speculation and conjecture that a particular document existed. Id. at p. 12

Blognote: This makes eminent sense. An adverse inference providing substantive proof would be tantamount to a default judgment.

Existence of Email Evidence from Other Sources

The Court also refuses to give an adverse emails in connection with missing emails because the emails still existed and could be obtained from other sources. In so holding, the Court notes that the emails exist on both the send and receive ends, and that some of those emails had indeed been produced.

Adverse Inference and PowerPoint Presentation

The Court took a different tack in addressing the issue of the missing PowerPoint presentation. Here, the only version of the PowerPoint presentation, which was considered relevant evidence, had been irretrievably lost, but only after defendant’s duty to preserve had been triggered.

Consequently, it is reasonable to infer the information for the presentation would have been on the original hard drive for the Gateway. Due to the recklessness of, at least, Kates and arguably ASDI and ASG, as well, in late 2007 and thereafter, in the face of their obligations to preserve potentially relevant evidence, the original hard drive is “gone” and cannot be examined for purposes of this litigation. In these circumstances, I consider it appropriate under the standard set forth by the Supreme Court in Sears to draw an adverse inference that the presentation did include a copy of information from the CB catalog.
FN93 Whether additional adverse inferences are warranted will need to await the completion of the post-trial briefing and argument. Id.

Attorneys Fees, Costs, and Wild Goose Chases

The Court awarded attorneys fees and costs. The language used by the Court strongly suggests that although spoliation issues directly affect parties to a lawsuit, the wasting of judicial resources are never far from the mind of the typical jurist:

“Because the original hard drive was replaced, Plaintiffs were forced to engage in what amounted to a wild goose chase in search of information stored on Kates's computer. Indeed, the actions of Defendants ASDI, ASG, and Kates have frustrated the Court, because it was forced to sit through a hearing about the laptop when the original hard drive already was missing and to read Plaintiffs' opening brief on the pending Motion only to be sandbagged, like Plaintiffs, by the admission in the answering papers that the original hard drive already had been replaced by early 2008. The vexatiousness of Kates's conduct was compounded further by his undisclosed deletion of numerous files from the new hard drive before the July 2008 hearing.” Id., at p. 13

Case: Kipperman v. Onex Corp.
Citation: 2009 WL 1473708 (N.D.Ga. 2009)

Date: 2009-05-27
Topics: Fed. R. Civ. P. Rule 26(g) certification violation, eDiscovery Abuse ND Georgia
This decision comes to us from the U.S. District Court for the Northern District of Georgia. The underlying action involved transfer fraud arising out of a bankruptcy. The Court found that defendant had violated its Fed.R. Civ. P. Rule 26(g) certification obligations. This is the second Rule 26(g) violation case this year (the first was Covad v Revonet, see EDDE Digest 30)

That said, it bodes ill for one party or another when the Court, after noting that the action has fostered more than 600 docket entries, opens up with this:

The lengthy discovery process, which has spawned four discovery hearings, has been contentious at best and abusive at worst, and the court has expressed its displeasure with the parties' behavior on numerous occasions. Kipperman v. Onex Corp., 2009 WL 1473708, 1 (N.D.Ga. 2009)

Both sides filed motions for sanctions, including sanctions for eDiscovery abuse. The Court required additional information as a result of the “severity” of plaintiff’s request for sanctions. Plaintiff’s response, in pertinent part alleged “electronic or email discovery abuse.”

Electronic Discovery

The Court first notes that the parties had “throughout” their dispute battled over defendant’s obligations to provide back-up electronic documents in response to plaintiff’s document production requests. Defendants “had originally agreed to search their client’s active computer files and servers.” The parties discovered that eighteen emails, “at least one” of which came from a Blackberry, were not produced. Plaintiff then demanded restoration and search of backup media (at defendant’s expense, of course) to produce those emails.

As the Court notes:

“The parties engaged in extensive back and forth beginning in March of 2007 as Plaintiff sought to determine what e-mails Defendants had produced from the live server ( i.e., what data stays on the server and for how long), what types of e-mail might be on backup tapes, other sources for such e-mails, and the costs of restoration. Id.., at p. 6

The plaintiff took the only course then available, and filed its motion to compel. Defendants had 40 backup tapes that could have held relevant evidence. The Court noted that plaintiff did not request that all 40 back-up tapes be restored initially, and the Court ordered that two back-up tapes be sampled.

“The court directed Plaintiff to designate two tapes and design a search and directed Defendants to pay for it. The court made Plaintiff the guarantor of the search's success, however, and granted Defendants the right to demand fees if it produced little discoverable material. Plaintiff selected its tapes and provided its terms by January 16, 2008. Defendants performed a search on the two tapes, received hits resulting in thousands of documents, and began releasing documents to Plaintiff on a rolling basis.” Id., at p. 7

The term “thousands of documents” should be kept in mind…

Plaintiff thereafter filed a motion to compel defendant’s full compliance with the Court’s order, and the next day received what the Court described as “an enormous” production of documents.

Defendant’s Misrepresentation

Defendant had represented in a hearing to the Court that [defendant’s] back-up tapes did “overlapped” each other as asserted by defendant’s counsel. During the course of this voluminous production, plaintiff determined that defendant’s back-up did not overlap, and that as such, the back-up tapes produced did not cover the entire period they were asserted to cover by defendant.

The Court held an additional hearing, during which plaintiff argued the value of defendant’s production, and requested one additional tape, a certification of completion from defendant, and “some mechanism to deal” with the fact that plaintiff deposed many witnesses without full access to relevant documents.

The Court examined some email samples and delivered some unpleasant news to the defendant:

“The court itself examined examples of some of the e-mails produced to assess relevance: “I don't consider myself enough of an expert on the law in this area to declare these to be smoking guns but they certainly are hot and they certainly do smell like they have been discharged lately.” Id. at p. 8.

“…In conclusion, the court found, “It is apparent to the court that the Defendants did not do what the court ordered them to do previously, and so this is an instance where I could impose sanctions.” Id.
It’s never a good sign when a Court provides an excerpt from a hearing in a footnote that goes something like this:

“During the hearing defense counsel attempted to justify his earlier statements to the court about e-mail and justify Defendants' actions. Defense counsel also conceded that Defendants should have asked for a protective order with respect to its initial production. The court notes:

“I appreciate the fact that you wish to say that. I thought the Plaintiff's Motions for Sanctions was exceptionally well done. As a young judge I probably would have granted it.”

“I am trying to tell you in the clearest way that I know how that you're about a millimeter away from having your answers struck, and it goes back to the beginning argument we had today to come through this.”

... I didn't say come close. I said this is what you have to do. That's an order of the court, and as an officer of the court you are obliged to follow that or to get a protective order to get relieved of that, and failing either, maybe you have to get rid of your client, I don't know, but what I'm trying to explain to you is something that's been said a lot before. Close doesn't count in hand grenades, horseshoes and it doesn't count here when you have to abide by an order of the court.” Id.

Lying in the [eDiscovery] Bed One Makes, Misrepresentations

Ok, just a footnote, perhaps, but the Court doesn’t stop there. What follows are excerpts from the body of the opinion:

Notwithstanding the fact that the Court was “not unsympathetic” to the “massive” amount of discovery in this litigation:

"Defendants' actions have delayed the production of electronic discovery throughout this litigation. Defendants have consistently tried to minimize the likely value of this discovery. The court's minimal forays into the electronic discovery that has been produced has shown just the opposite. Id., at p. 9

“Therefore, the court gave Defendants numerous tools by which to reduce the burden of e-mail discovery, including an opportunity to limit Plaintiff's search terms and an opportunity to provide a list by which the number of people and the number of boxes being searched could be reduced. Defendants did not take advantage of these opportunities. Defendants must now lie in the bed that they have made.” Id.

The Court then characterizes defendant’s assertions as to the value of email ESI discovery as an unsuccessful attempt to influence the Court’s ruling:

“The court does condemn Defendants, however, for making blatant misrepresentations about the value of e-mail discovery in this case in an effort to influence the court's ruling, for refusing to follow the court's ruling once made, and for behaving as if they, and not the court, got to decide what electronic material was relevant and discoverable under Rule 26 and what material was not.” Id.

Nor was the colloquy between defendants and the Court spared scrutiny:

“Experienced defense counsel misrepresented the scope and value of e-mail discovery to this matter.” Id.

Defendant’s Counsel Representations As Akin to Willful Omission or Misrepresentation

It appears that the Court characterizes defendant’s counsel’s misrepresentations to the Court as arising only from two possibilities: incompetence or some degree of intentionality:

“Further, the court finds it absolutely inconceivable that defense counsel did not know in January of 2008, more than two years into the case and more than one year into full discovery, whether his client readily used e-mails. Any competent counsel should be expected to ask his client such questions in the infancy of discovery. If counsel did not know, it was because he did not wish to know, and reckless indifference to the truth of a matter is a close brother to willful omission or misrepresentation.” Id., at p. 10

Local Counsel On the eDiscovery Abuse Hook

Think you that it may be possible to beard eDiscovery abuse by pinning blame on local counsel? Consider the following footnote [Footnote 6] to the Court’s decision, and think again:

“FN 6. The court finds it notable that Defendants' legal team chose to have local counsel argue the e-mail portion of the hearing. Local counsel likely had the least personal knowledge about the workings of Onex and Magnatrax and the least daily telephone and face contact with the clients. Therefore, the court can conceive of a situation in which local counsel had not had discussions about e-mail usage with his client. Regardless, he was responsible for being familiar with the state of the record. Further, his co-counsel were responsible for ensuring that he made no misrepresentations to the court or for correcting any made. Id.

Blatant Disregard for Court Order

It’s also not a good sign when a party is singled out for not complying with a court’s discovery order:

“Defendants blatantly disregarded the court's order that they produce all documents responsive to Plaintiff's search terms on the two tapes designated. Rather than seeking a protective order Defendants determined themselves that it would be overly burdensome to search the e-mail boxes of hundreds of individuals employed with Onex and its related companies that had no role in the Magnatrax transactions.” Id., at p. 11

Violations of Fed. R. Civ. P. Rule 26(g) Certification

This is the second decision in which a federal district court discusses how eDiscovery abuses may comprise a Fed. R. Civ. P. Rule 26(g) certification violation. The first was Magistrate Judge Facciola’s May 27, 2009 (has it really been that long-lol?) decision in Covad v. Revonet --- F.R.D. ----, 2009 WL 1472345 (D.D.C. 2009)

The Court first acknowledges the Eleventh Circuit’s position that discovery imposes costs on all participants:

“As the Eleventh Circuit has recognized, discovery imposes costs on the litigant from whom discovery is sought, the party seeking discovery, and the judicial system itself. Chudasama v. Mazda Motor Corp., 123 F.3d 1353, 1367 (11th Cir.1997).” Id. at p. 16.

Not surprisingly, the Court also discusses how discovery abuse wastes scarce judicial sources. Here, the Court also explains that a discovery abuse resulting in a Fed. R. Civ. P. Rule 26(g) certification violation may be addressed by a court’s inherent sanctions powers:

“The judicial system uses scarce judicial resources that must be diverted from other cases to resolve discovery disputes. As such, trial courts have numerous mechanisms to discourage discovery abuse. A district court may sanction the parties before it for discovery abuse under the Federal Rules of Civil Procedure or under its own inherent power.” Id.

Federal civil procedure fans (and litigators practicing in federal courts) are no doubt familiar with Rule 26(g). The certification language is no walk in the park, and the Court so notes:

“Fed.R.Civ.P. 26(g) was “designed to curb discovery abuse by explicitly encouraging the imposition of sanctions.” Malautea v. Suzuki Motor Co., Ltd., 987 F.2d 1536, 1542 (11th Cir.1993). Rule 26(g) states:

(1) Signature Required; Effect of Signature. Every disclosure under Rule 26(a)(1) or (a)(3) and every discovery request, response, or objection must be signed by at least one attorney of record.... By signing, an attorney or party certifies that to the best of the person's knowledge, information, and belief formed after a reasonable inquiry:

(A) with respect to a disclosure, it is complete and correct as of the time it is made; and
(B) with respect to a discovery request, response, or objection, it is:

(i) consistent with these rules and warranted by existing law or by a nonfrivolous argument for extending, modifying, or reversing existing law, or for establishing new law;
(ii) not interposed for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation; and
(iii) neither unreasonable nor unduly burdensome or expensive, considering the needs of the case, prior discovery in the case, the amount in controversy, and the importance of the issues at stake in the action.
(3) Sanction for Improper Certification. If a certification violates this rule without substantial justification, the court, on motion or on its own, must impose an appropriate sanction on the signer, the party on whose behalf the signer was acting, or both. The sanction may include an order to pay the reasonable expenses, including attorney's fees, caused by the violation.” Id., 16-17

Rule 26(g) provides one of the rare examples of what can only be described as “strict liability” in the Federal Rules. It is important to understand that sanctions imposition is mandatory (rather than discretionary with the Court) once a Rule 26(g) certification violation has been determined. It should also be noted that while sanctions imposition is mandatory, determination of sanction severity is still left to the Court’s discretion:

"The decision whether to impose sanctions under Rule 26(g)(3) is not discretionary,” and “[o]nce the court makes the factual determination that a discovery filing was signed in violation of the rule, it must impose ‘an appropriate sanction.’ ” Id. at 1372. The court does have considerable discretion in determining what sanction is appropriate.” Id
Greater Sanctions Imposition Discretion Under Fed. R. Civ. P. Rule 37

The Court then discusses a court’s greater flexibility for sanctions determination and imposition under Fed.R. Civ. P. Rule 37. Civil procedure fans already know that a sanctions determination pursuant to Rule 37 requires the violation of a discovery order. And so explains the Court:

“A district court may impose sanctions against a party which violates a discovery order 'as are just'.
Such sanctions may include:

(i) directing that the matters embraced in the order or other designated facts be taken as established for purposes of the action, as the prevailing party claims;
(ii) prohibiting the disobedient party from supporting or opposing designated claims or defenses, or from introducing designated matters in evidence;
(iii) striking pleadings in whole or in part;
(iv) staying further proceedings until the order is obeyed;
(v) dismissing the action or proceeding in whole or in part;
(vi) rendering a default judgment against the disobedient party; or
(vii) treating as contempt of court the failure to obey any order except an order to submit to a physical or mental examination. Fed.R.Civ.P. 37(2)(b)(2). “ Id.

The Court then completes the discovery abuse sanctions triad with a discussion Eleventh Circuit doctrinal overview for sanctions imposed under a court’s inherent powers:

“A court may also sanction litigation misconduct using its inherent power “to manage [its] own affairs so as to achieve the orderly and expeditious disposition of cases.” Eagle Hosp. Physicians, LLC v. SRG Consulting, Inc., No. 08-11026, 2009 WL 613603, *5 (11th Cir. Mar.12, 2005) ( citing Chambers v. NASCO, Inc., 501 U.S. 32, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991)). The court must exercise its power, however, with restraint and discretion. Id. “The key to unlocking the court's inherent power is a finding of bad faith,” and a party may demonstrate bad faith by delaying or disrupting litigation or hampering the enforcement of a court order. In re Sunshine Jr. Stores, Inc., 456 F.3d 1291, 1304 (11th Cir.2006). A party is entitled to due process before a court determines that the party has acted in bad faith and the court invokes its inherent power to impose sanctions and assess fees.” Id. at p. 18

The Court then delivers the first hammer blow:

“The court regards the instant case as a textbook case of discovery abuse.” Id.

Why a “textbook” case? Let us count the ways:

1. Defendant’s Acts Prejudiced Plaintiff in Two Ways: “[The] Trustee has been denied all the documents necessary to depose witnesses and prepare expert reports and the Trustee's preparation has been made disjointed and difficult and it has been forced to expend a fair amount of time and money and effort to get that which should have been more easily obtained.” Id.

2. Defendants eDiscovery Abuse: “The court is most disturbed about Defendants' behavior with respect to the transfer interrogatories and e-mail discovery. In both of these areas, Defendants have blatantly ignored orders of the court and prompted multiple motions to compel. Defendants' only defense is their unpersuasive argument that they have now complied and Plaintiff has suffered no prejudice.” Id.

So, under what theory might sanctions be imposed?

The Court’s language indicates that sanctions are appropriate for the triad of reasons discussed above: Fed. R. Civ. P. 26(g) certification, Fed. R. Civ. P. Rule 37(f) violation of a discovery order, and as an exercise of a court’s inherent powers to sanction, and hints at its ultimate decision:

“In both of these areas, Defendants have blatantly ignored orders of the court and prompted multiple motions to compel. Defendants' only defense is their unpersuasive argument that they have now complied and Plaintiff has suffered no prejudice. Defendants' defense completely ignores the burdens the court and Plaintiff have endured to garner their compliance and the destructive precedent this court would set were it to allow Defendants to escape the consequences of three years of bad behavior simply because they believe they have now complied.” Id.

It’s never a good sign when a court talks about preventing a litigant from escaping discovery abuse consequences. Plaintiff, for its part, requested that the Court impose the “ultimate sanction” and strike defendant’s answer.

Luckily for the defendant (ok, I use that term somewhat loosely) the Court determined that the determination of an outcome determinative sanction would trigger an ad damnum clause that could potentially result in hundreds of millions of dollars, thereby triggering “the largest default judgment in history.” The Court also found only moderate prejudice, as plaintiff had the “raw resources” to proceed with its case through additional discovery (and redepositions).

Blognote: Under the circumstances, and perturbed as the Court was by defendant’s behavior, it appears that its exercise of judicial restraint represented a tacit acknowledgment of the likelihood of appeal and reversal for the imposition of a default.

Result: The Court found that defendant’s acts violated Fed. R. Civ. P. Rules 26 and 37, denied plaintiff’s motion for evidential sanctions, and imposed 1,022,700 in monetary sanctions on defendant.


Thursday, June 11, 2009

2009-06-11 Spoliation Determinations, Sanctions, Meet and Confer Requirements

Four spoliation decisions this week. The first, from the U.S. District Court for the District of Colorado, involves the Tenth Circuit’s approach to spoliation sanctions determination (application and type) but check the number of out-of-circuit citations relied upon by the Court. The second decision, from the Ninth Circuit, examines spoliation sanctions imposition under California law. The third decision finds the federal court for the District of Connecticut determining whether Oregon common law allows causes of action alleging intentional or negligent spoliation. The fourth case, again from the U.S. District Court for the District of Connecticut finds the Court imposing severe evidentiary sanctions, and hints at the effects of a spoliation finding on summary judgment determinations. Last but certainly not least, the Ford Motor Company decision finds the U.S. District Court for the District of New Jersey which painstakingly (with emphasis on “pain”) examining the consequences for failing (or refusing) to meet and confer to resolve issues concerning form and format of production, search and collection. Want to know how easy it can be to waive rights to Burger King (“have it your way”) discovery? Read the Ford Motor Company decision.



Asher Associates, LLC v. Baker Hughes Oilfield Operations, Inc., 2009 WL 1328483 (D. Colo. 2009)
Kearney v. Foley & Lardner, LLP, --- F.3d ----, 2009 WL 1297656 (9th Cir. 2009)
In re Helicopter Crash Near Wendle Creek, British Columbia, On August 8, 2002, 2009 WL 1391422 (D. Conn. 2009)
Ford Motor Company, et al., v. Edgewood Properties, Inc., ---F. Supp. 2d ---, 2009 WL 1416223 (D. N.J. 2009)
Innis Arden Golf Club v. Pitney Bowes, Inc., --- F.Supp.2d ----, 2009 WL 1416169 (D. Conn. 2009)

Case: Asher Associates, LLC v. Baker Hughes Oilfield Operations, Inc.

Citation: 2009 WL 1391422 (D. Colo. 2009)
Date: 2009-05-12T
opics: Preclusion of testimony for spoliation, Tenth Circuit spoliation analysis - determination of occurrence and determination of sanctions type, failure to request preservation does not excuse duty to preserve or failure to preserve

This decision from the U.S. Court for the District of Colorado involves spoliation of a physical object, rather than electronically stored information (ESI) but U.S. Magistrate Judge Shaffer’s analysis both invokes Zubulake IV, much Second Circuit decisional authority and a good analysis of 10th Circuit sanctions litigation (determination of spoliation as well as type of sanction warranted).

Preventing Discovery from Becoming a Futile Exercise, Reasonable Foreseeability, and Imminence

The Court starts out with an interesting articulation of Zubulake IV, and continues with an approving reference to the Second Circuit’s “reasonably foreseeable” (negligence) spoliation standard in West v Goodyear (both cited below within excerpts).

“To ensure that the discovery permitted by Rule 26(b)(1) does not become a futile exercise, putative litigants have a duty to preserve documents or materials that may be relevant to potential future litigation. See Zubulake v. UBS Warburg, LLC, 220 F.R.D. 212, 216 (S.D.N.Y.2003) (“the obligation to preserve evidence arises when the party has notice that the evidence is relevant to litigation or when a party should have known that the evidence may be relevant to future litigation”).” Asher Associates, LLC v. Baker Hughes Oilfield Operations, Inc., 2009 WL 1328483, 5 (D. Colo. 2009)

While the Court does pay homage to the Zubulake/West line of cases, it is important to understand that the Tenth Circuit qualifies (or limits) the temporal range for what is foreseeable to that of “imminence,” and the Court so states in this decision. Other courts (most notably those in the Second and Ninth Circuits) view the temporal range as fact-determinative, and do not impose an “impending” condition on the issue of foreseeability:

“Spoliation” has been defined 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.” See, e.g., West v. Goodyear Tire & Rubber Co., 167 F.3d 776, 779 (2d Cir.1999). See also United States v. Koch Industries, Inc., 197 F.R.D. 463, 482 (N.D.Okl.1998) (acknowledging a litigant's duty “to preserve evidence that it knows or should know is relevant to imminent or ongoing litigation”). Id.

Court’s Inherent Power to Impose Sanctions for Destruction of Evidence

Here, the Court undertakes an analysis of its inherent powers to impose sanctions for spoliation in pursuant to both Tenth Circuit decisional authority as well as the Fed. R. Civ. P. Rule 37(b)(2), qualified, however, but the Tenth Circuit’s requirement that foreseeability of litigation must be near in time to the onset of litigation itself:

“The court has inherent power to impose sanctions for the destruction or loss of evidence. See, e.g., Millsap v. McDonnell Douglas Corp., 162 F.Supp.2d 1262, 1309 (N.D.Okla.2001). See also Procter & Gamble Co. v. Haugen, 179 F.R.D. 622, 631 (D.Utah 1998) (recognizing a court's inherent power and authority under Fed.R.Civ.P. 37(b)(2) to sanction a litigant “who is on notice that documents and information in its possession are relevant to litigation, or potential litigation, or are reasonably calculated to lead to the discovery of admissible evidence, and destroys such documents and information”), judgment aff'd in part and rev'd in part on other grounds, 222 F.3d 1262 (10th Cir.2000).” Id.

The imminence qualifier:

“A spoliation sanction is proper where (1) a party has a duty to preserve evidence because it knew, or should have known, that litigation was imminent, and (2) the adverse party was prejudiced by the destruction of the evidence.” Burlington Northern and Santa Fe Railway Co. v. Grant,, 505 F.3d 1013, 1032 (10th Cir.2007), citing 103 Investors I, L.P. v. Square D. Co., 470 F.3d 985, 989 (10th Cir.2006).” Id.

Fashioning and Appropriate Sanction for Spoliation

The Court then continues with its spoliation analysis and discusses the factors it is required to consider in exercising its discretion to fashion an appropriate sanction…” In the many decisions digested here, it appears that the distinction between a court’s determination that spoliation has occurred and its determination of the type of sanction to impose is sometimes blurry, in large part because much of the same analysis for determining whether spoliation has occurred is used to determine the severity of the sanction once a spoliation has been found. This decision is no exception. That sad, what the Court appears to be determining at this stage is not whether a sanction should be imposed, but what manner of sanction it may “fashion.”

Here, the Court begins with the requirements of culpability and relevance, and relies upon a three step analysis approach utilized by…the Ninth Circuit. Note again, that while the Court’s language is couched in the language of “fashioning” an appropriate sanction, the failure to establish elements such as relevance or culpability result in a hard stop finding of no spoliation:

In exercising its discretion to fashion an appropriate sanction, the court must consider the culpability of the responsible party and whether the evidence was relevant to prove an issue at trial. See Estate of Trentadue ex rel. Aguilar v. United States, 397 F.3d 840, 862-63 (10th Cir.2005) (citing Aramburu v. Boeing Co., 112 F.3d 1398, 1407 (10th Cir.1997)). To that end, this court will apply a three-step analysis. First, the court must determine whether the missing second ESP would be relevant to an issue at trial. See United States v. $40,955.00 in United States Currency, 554 F.3d 752, 758 (9th Cir.2009) (“A party does not engage in spoliation when, without notice of the evidence's potential relevance, it destroys the evidence according to its policy or in the normal course of its business.”). If that question is answered in the negative, the court's analysis stops there. If the missing evidence would be relevant, the court must then decide whether Centrilift was under an obligation to preserve the second ESP. Finally, if such a duty existed, the court must consider what sanction, if any, is appropriate given the non-moving party's degree of culpability, the degree of any prejudice to the moving party, and the purposes to be served by exercising the court's power to sanction.” Id.

Author’s Note: In the opinion cited above The Ninth Circuit employs some curious language that appears to expand the coverage of the safe harbor provisions of Fed. R. Civ. P. Rule 37(e). Rule 37(e) provides:

“Absent exceptional circumstances, a court may not impose sanctions under these rules on a party for failing to provide electronically stored information lost as the result of the routine, good faith operation of an electronic information system.”

The Ninth Circuit appears to graft the alternative of ESI “in the normal course of its business” in addition to ESI losses “according to policy.” Not sure where this goes, but I’m almost certain we’ll see this cited again in an argument in favor of more expansive safe harbor coverage.

Ok, back to the decision.

Tenth Circuit: Three Step Spoliation Analysis, Three Step Sanctions Type Determination

The Court states that culpability and relevancy are determined according to a three-step analysis. Upon closer examination, if one includes a determination of the degree of culpability, what the Court describes is a six step test, with the third step (determination that sanctions will be imposed) itself comprised of three sub-steps (type of sanction to impose). Clear, eh what? This might be better set forth in a logic-tree (I’ll put that on the back burner for now) but here’s the analysis sequence:

Step 1: Determine if missing evidence is relevant. If missing date is not relevant there can be no spoliation. If relevant, proceed to step two.
Step 2: If relevant, was there a duty to preserve evidence? If not, there can be no spoliation. If a duty to preserve is determined to have existed, however, spoliation occurs and proceed to step three.
Step 3: If spoliation is determined to have occurred, impose sanction based on determination using the following sub-steps:
Step 3a: Degree of culpability
Step 3b: Degree of prejudice to non-spoliating party
Step 3c: Purposes to be served by exercising the court’s power to sanction

Step One: Relevance of the Missing Evidence

The Court begins with a good relevance analysis, in large part relying on Second Circuit authority and the Federal Rules of Evidence. The Court begins with the traditional definition of relevance as set forth in Fed. R. Evid. Rule 401:

“Given the claims asserted in this litigation, the relevance of the second ESP seems self-evident. See Fed.R.Evid. 401 (“ ‘relevant evidence’ means evidence having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence”).” Id., at p. 6Relying on decisional authority from both the Second Circuit and the Southern District of New York, the Court notes that relevant evidence need not be conclusive, and that for spoliation analysis purposes, means that a trier of fact could find that the evidence would support the non-spoliating party’s claim(s) or defense(s):

“See also United States v. Schultz, 333 F.3d 393, 416 (2d Cir.2003) (“evidence need not be conclusive in order to be relevant”); Zubulake v. UBS Warburg LLC, 220 F.R.D. at 220 (destroyed evidence is “relevant” for purposes of a spoliation analysis where a reasonable trier of fact could find that the evidence would support a party's claim or defense). But see In re WRT Energy Securities Litigation, 246 F.R.D. 185, 197 (S.D.N.Y.2007) (“A moving party may obtain modest sanctions by showing only that the lost evidence was pertinent to its claims. However, where more severe sanctions are at issue, the movant must demonstrate that the lost information would have been favorable to it.”).” Id.

Author’s Note: What’ interesting in the excerpt from the In re WRT Energy Securities Litigation Case is the distinction between “pertinent” relevant evidence (deserving of only “modest sanctions”) and “favorable” relevant evidence, which at least in the Second Circuit, could warrant the imposition of more severe sanctions.

After conducting a hearing which involved expert testimony from both plaintiff and defendant, the Court determined that the condition of the physical object now missing was “directly relevant” (and would have been favorable) to the non-spoliating party’s claims.

Duty to Preserve: Foreseeability of Future Litigation must be More than a Possibility

Having determined that the missing evidence was relevant, the Court turns next to the second step, and determines whether the spoliating party in this instance had a duty to preserve evidence. The Court again relies on decisional authority from the Second Circuit and from the Eastern District of New York:

In most cases, the duty to preserve evidence is triggered by the filing of a lawsuit. However, the obligation to preserve evidence may arise even earlier if a party has notice that future litigation is likely. See, e.g., Kronisch v. United States, 150 F.3d 112, 126 (2d Cir.1998) (the obligation to preserve evidence arises when a party should have known that the evidence may be relevant to future litigation); Henkel Corp. v. Polyglass USA, Inc., 194 F.R .D. 454, 456 (E.D.N.Y.2000) (a party's obligation to preserve evidence arises when it has notice of the evidence's relevance to litigation “likely to be commenced”).” Id. at p. 7

Blognote: It is still unclear (to me, at least) how the Court can embrace both “imminence” of litigation and “likel[ihood]” of litigation in the same analysis. Imminent means very near term, and projects a sense of immediacy, while the term “likely” appears more temporally flexible. Of course, if one chose to be flip, one might assert that “imminent” is what the Court says it is…or perhaps because imminence is eminently a factually driven concept.

Here Magistrate Judge Shaffer considered all the information on the record, and determined that a duty to preserve had been triggered prior to the destruction of the evidence based upon an “emphatic letter sent by plaintiff’s counsel, which, referring to an earlier letter, described the former as a ‘failed attempt” to resolve the dispute ‘without litigation.’ Interestingly enough, the Court cites the Hynix v. Rambus decision from the Northern District of California for the proposition that foreseeability means more than a possibility:

“Here, the facts compel a different conclusion. Plaintiff's letter of September 8, 2006, came quickly on the heels of the Warranty Claim letter sent on September 1, 2008. While the earlier letter had not specifically threatened litigation, the September 8 correspondence adopted a decidedly different and emphatic tone. Plaintiff's outside counsel characterized the earlier letter as a “failed” attempt to resolve the dispute “without litigation.” Where Plaintiff's September 1st letter referred to “expenditures” incurred by Asher Associates in connection with Well Test Contracts, outside counsel now indicated that his client had been “significantly damaged,” provided Centrilift with an “interim damage calculation,” and claimed that “damages continue to accrue.” The September 8th letter demanded an “immediate payment” and imposed a five-day deadline for making that payment.FN9 Outside counsel went so far as to identify the specific claims for relief that Asher Associates would assert if it initiated “such legal or other action to enforce its rights.” FN10 Given the tenor of the September 8th letter, Centrilift should have understood that future litigation was reasonably foreseeable and substantially “more than a possibility.” See Hynix Semiconductor Inc. v. Rambus, Inc., 591 F.Supp.2d 1038, 1061 (N.D.Cal.2006).” Id. at p. 8

Blognote: Magistrate Judge Shaffer penned the landmark Colorado federal court preservation duty decision in Cache La Poudre Feeds, LLC v. Land O’ Lakes, Inc., 244 F.R.D. 614 (D. Colo. 2007) but distinguishes the series of communications between counsel in that decision as having been sufficiently “less than adamant” to preclude a finding that a duty to preserve had been triggered. It’s always interesting to have a judge provide an analysis distinguishing current and former decisions:

“Plaintiff cites my decision in Cache La Poudre Feeds, LLC v. Land O'Lakes, Inc., 244 F.R.D. 614, 623 (D.Colo.2007), as support for its assertion that Plaintiff's correspondence in September 2006 was too vague to trigger a duty to preserve evidence. See Defendant's Response in Opposition, at 6. To the contrary, the facts in Cache La Poudre are completely distinguishable. In that case, plaintiff's counsel sent the putative defendant successive letters over a nearly two-year period in which she reiterated her client's desire to explore a negotiated resolution of the parties' dispute. I concluded that the less-than-adamant tone of counsel's letters, coupled with the lengthy passage of time, belied the contention that Cache La Poudre's correspondence had triggered a duty to preserve evidence.” Id., at p. 7

Non-Spoliators’ Failure to Request Preservation No Excuse for Failure to Preserve

The Court then relies on an ESI preservation decision from U.S. Magistrate Judge Grimm from the federal district court of Maryland and finds that the non-spoliating party’s failure to request or demand preservation does not excuse the duty to preserve, or pull back the trigger for that duty:

“The court acknowledges that Plaintiffs' letters of September 1 and 8, 2006, never specifically asked that the ESPs be preserved nor sought an opportunity to conduct their own inspection of the pumps. Those oversights, however, do not excuse Centrilift's failure to preserve relevant evidence. Cf. Thompson v. United States Department of Housing and Urban Development, 219 F.R.D. 93, 100 (D.Md.2003) (holding that a party's failure to request the preservation of documents “does not vitiate the independent obligation of an adverse party to preserve such information”).” Id., at p. 8

Intent (or Culpability) and Failure to Preserve Evidence

The Court begins its determination of intent with a sampling of decisional authority indicating that fault for failing to preserve evidence may fall anywhere within a continuum, ranging from “innocence” on through degrees of negligence and intentionality.

“Common sense suggests that a failure to produce or preserve relevant evidence may involve conduct that falls “along a continuum of fault-ranging from innocence through the degrees of negligence to intentionality.” Residential Funding Corp. v. DeGeorge Financial Corp., 306 F.3d 99, 108 (2d Cir.2002). See also Anderson v. Cryovoc, Inc., 862 F.2d 910, 925 (1st Cir.1988) ( “[n]ondisclosure comes in different shapes and sizes; it may be accidental or inadvertent, or considerably more blameworthy”); Minter v. Prime Equipment Co., 2007 WL 2703093, *3 (E.D.Okla.2007) (recognizing that “spoliation occurs with varying degrees of culpability”).” Id.

Blognote: Ok, this is why spoliation analyses give me migraines. Where in the continuum of “fault” lies the concept of “innocence.” What is an “innocent” fault? Imo, that means “faultless,” which in turn should lie outside any continuum defining fault. Innocence should mean zero fault. But if no fault exists, how can one find a violation of a duty to preserve? My point is that there must be some degree of culpability to support a finding of a violation of a preservation duty. Ordinary negligence provides the “should have known” for the lesser degree of fault, but I fail to see how total innocence can have any degree of fault sufficient to proceed with any spoliation analysis.

Bad Faith and Adverse Inferences

Spoliation decision fans (all three) should be familiar with the non-spoliating party’s assertion-dilemma: How to prove that the evidence that has been destroyed was relevant or would have been favorable to it (or unfavorable to the spoliating party) where the evidence is now missing? \

"A showing of bad faith can help a court make a determination that the missing relevant evidence (note that relevance must first be shown) would have been unfavorable to the spoliating party. In such instances, and only where bad faith, rather than mere negligence is found, a court in the Tenth Circuit is permitted to grant the “dispositive” sanction of an adverse inference instruction to the jury:
“In Aramburu v. Boeing Co., 112 F.3d 1398, 1407 (10th Cir.1997), the Tenth Circuit held that “the bad faith destruction of a document relevant to proof of an issue at trial gives rise to an inference that production of the document would have been unfavorable to the party responsible for its destruction.” In the same decision, the Tenth Circuit further reasoned that no adverse inference should arise where the destruction of a document resulted from mere negligence, because only bad faith would support an “inference of consciousness of a weak case.”
FN11 Id. See also Henning v. Union Pacific Railroad Co., 530 F.3d 1206,1219-20 (10th Cir.2008).” Id.

Footnotes are often quite instructive, and Footnote 11 to this decision is no exception. Rather than defining a term by what it is not, the court in the Goodman case cited in this footnote provides a good description of “bad faith” --- without using the term “faith.”

“FN11. “ ‘Bad faith’ is the antithesis of good faith and has been defined in the cases to be when a thing is done dishonestly and not merely negligently. It is also defined as that which imports a dishonest purpose and implies wrongdoing or some motive of self-interest.” Attorneys Title Guaranty Fund v. Goodman, 179 F.Supp.2d 1268, 1277 (D.Utah 2001).” Id.

Bad Faith Not Required for Imposition of Non-Dispositive Sanctions Such as Evidence Exclusion

In another interesting twist, the Court discusses that a finding of bad faith is not required for a court’s imposition of “non-dispositive” spoliation sanctions, or where either no adverse inference is requested (or is not appropriate). Included in such “non-dispositive” sanctions are evidence exclusions:

"Of course, in cases where an adverse inference instruction is neither requested nor appropriate, the Tenth Circuit has held that a finding of bad faith is not required to impose non-dispositive sanctions, such as excluding evidence. 103 Investors I, L.P. v. Square D Co., 470 F.3d at 988-89. See also Jordan F. Miller Corp. v. Mid-Continental Aircraft Service, Inc., 139 F.3d 912 (Table) (10th Cir.(Okla.1998).” Id.

This leaves the question whether a finding of negligent spoliation can result in the imposition of sanctions of evidence exclusion. We’ll know soon enough. First, though, the Court’s finds that defendant’s spoliation (or failure to preserve evidence) resulted from negligence or carelessness and not bad faith. Moreover, as the Court states in another instructive footnote, differences of opinion do not support a finding of bad faith:

“After carefully reviewing the record presented by the parties, I conclude that Centrilift's failure to preserve the second ESP was the product of negligence or carelessness, but not bad faith. It is undisputed that the second ESP is no longer intact and many of its primary components have been scrapped in whole or in part. There is no evidence, however, that would support a finding that the disposition of those parts was motivated by bad faith or willfulness on the part of Centrilift and its employees. Without question, the parties had diametrically opposed views on why the well tests failed.” Id.
at p. 9

That difference of opinion, without more, does not suffice to establish bad faith.” Id.

Appropriate Sanctions

Plaintiff requested a variety of sanctions, including an order:

1) Granting of an adverse inference instruction to the jury at trial;
2) Prohibiting defendant from calling any witness who would testify that the missing evidence (equipment) was in good working condition;
3) Prohibiting defendant from providing an opinion about the well from which the missing evidence was removed, and
4) Granting attorneys fees and costs

Having found no bad faith on the part of defendant, however, the Court was constrained to deny plaintiff’s request for any dispositive sanctions or adverse inference instruction. (Note here that the Court uses the disjunctive, and appears not to categorize an adverse inference instruction as a “dispositive sanction:”

“In the absence of bad faith, however, the court cannot impose a dispositive sanction or give an adverse inference instruction at trial. Again, I do not find that the factual record supports Plaintiffs' claim of bad faith and, therefore, must deny their motion to the extent that it seeks an adverse instruction.” Id., at p. 10

Prejudice to Non-Spoliating Party and Leveling the Playing Field

The Court begins its prejudice analysis by discussing the remedial functions served by the imposition of sanctions for spoliation. Spoliation fans will note the Court’s reference to two widely cited decisions: Mosaid, from the District of New Jersey and In re WRT Securities Litigation, from the Southern District of New York.

“Spoliation sanctions serve a remedial function by leveling the playing field or restoring the prejudiced party to the position it would have been [in] without spoliation.” Mosaid Technologies Inc. v. Samsung Electronics Co., 348 F.Supp.2d 332, 335 (D.N.J.2004). Cf. Silvestri v. General Motors Corp., 271 F.3d 583, 590 (4th Cir.2001) (spoliation sanctions are intended to “level the evidentiary playing field,” as well as penalize the offending party). In striving to “level the playing field,” there must be some reasonable relationship between the sanction imposed and the prejudice actually suffered by the moving party. See Larson v. Bank One Corp., 2005 WL 4652509, *14 (N.D.Ill.2005). Cf. In re WRT Energy Securities Litigation, 246 F.R.D. at 200 (“in the process of leveling the playing field, care must be taken not to tilt it too far in favor of the party seeking sanctions.”). Id.

Tenth Circuit Factors for Determining Appropriate Sanctions

The Court next turns to Tenth Circuit decisional authority in non-spoliation cases and discusses the five factors to be taken into account by a district court in its selection of an appropriate spoliation sanction:

"In a non-spoliation case, the Tenth Circuit has held that the trial court should weigh several factors in determining an appropriate sanction:

(1) the degree of actual prejudice to the moving party;
(2) the amount of interference with the judicial process;
(3) the culpability of the non-moving party;
(4) whether the court warned the party in advance that a dispositive sanction would be likely for non-compliance, and
(5) the efficacy of lesser sanctions.

See Ehrenhaus v. Reynolds, 965 F.2d 916, 921 (10th Cir.1992). See also Gates Rubber Co. v. Bando Chemical Industries, Ltd., 167 F.R.D. 90, 101 (D.Colo.1996).

In another illuminating footnote, the Court points out that spoliator-culpability, or actual notice (to preserve) from the non-spoliating party are not applicable where only “non-dispositive” sanctions are under consideration:

“FN15. Where a dispositive sanction is not at issue, only the first three factors are applicable. See Markham v. National States Insurance Co., 2004 WL 3019308, * 12 (W.D.Okla.2004).” Id., at p. 10

Result: In pertinent part, the Court ordered the exclusion of any testimony that the missing equipment was in good working condition, and further permitted the plaintiff to inform the jury that defendant had failed to preserve the complete unit:

“Having failed to preserve the second ESP as a complete unit, Centrilift should be precluded from offering at trial an opinion as to the “working condition” of the complete unit. Plaintiffs should also be permitted to tell the jury that Centrilift failed to preserve the second ESP as a complete unit after July 20, 2006.” Id., at p. 11.

Oh, and the Court also granted plaintiff’s request for attorneys fees and costs.

Blognote: This decision is noteworthy, if only for the volume of foreign (i.e., extra-circuit) decisional authority relied upon by the Court in its spoliation analysis, including the First, Second, Fourth and Ninth Circuits decisions in its opinion. Sister district courts include Maryland, Illinois, New York (Eastern and Southern), New Jersey, and California (Northern and Central).

Case: Kearney v. Foley & Lardner, LLP
Citation: --- F.3d ----, 2009 WL 1297656 (9th Cir. 2009)
Date: 2009-05-12
Topics: Tort of spoliation in California includes significant alteration of evidence

This decision is from a (Racketeer Influenced Corrupt Organizations Act) RICO matter appealed to the U.S. Court of Appeals for the Ninth Circuit. Here, a property owner brought suit against a school district’s law firm for allegedly suppressing the results of soil percolation test. The district court dismissed, and the property owner appealed.

Here, the Circuit Court of Appeals discusses the tort of spoliation under California common law:

“Spoliation of evidence is the “destruction or significant alteration of evidence, or the failure to preserve property for another's use as evidence, in pending or future litigation.” Hernandez v. Garcetti, 68 Cal.App.4th 675, 680, 80 Cal.Rptr.2d 443 (1998). Kearney v. Foley & Lardner, LLP, --- F.3d ----, 2009 WL 1297656, 8 (9th Cir. 2009)

An interesting twist on the definition of spoliation is the expansion of the term evidentiary destruction to include “significant alteration.” This has significant implications for ESI discovery, as it may be argued that any manipulation of computer generated information is a significant alteration.

It also appears that, at least in California, the tort cannot be asserted if the non-spoliator could have discovered the evidence during discovery or before the conclusion of the litigation.

Case: In re Helicopter Crash Near Wendle Creek, British Columbia, On August 8, 2002
Citation: 2009 WL 1391422 (D. Conn. 2009)
Date: 2009-05-18
Topics: Conn federal district court review of spoliation as tort under Oregon law; non-futility amendment requirement pursuant Fed. R. Civ. P. Rule 15(a)(2)

In this matter from the U.S. District Court for the District of Connecticut, the Court rules on plaintiff’s motion to amend its complaint to include, inter alia, causes of action alleging negligent and intentional spoliation of evidence. Defendant objected to the amendments alleging destruction of evidence, arguing that Oregon spoliation is not recognized under Oregon law.

What we have here is “the only remaining case before” the Court in a multi-district litigation, originally filed in Oregon, and now in the Connecticut federal district court. Here, in the course of ruling upon plaintiff’s motion for leave to amend its complaint, U.S. District Judge Underhill must first determine whether Oregon law recognizes spoliation as an independent tort. Interestingly, once having decided the spoliation issue, District Judge Underhill indicates that the case will be returned to the federal district court in Oregon, where the case was originally filed.

The Court first notes that motions for leave to amend complaint in a federal court pursuant to Fed. R. Civ. P. Rule 15(a)(2) will not be permitted if the amendment would be futile if totally unsupported by the facts, or if no cognizable cause of action is alleged:

“A motion to amend will not be allowed under Rule 15(a)(2) if it is futile-that is, “if no set of facts can be proved under the amendment to the pleadings that would constitute a valid and sufficient claim or defense.” Miller v. Rykoff-Sexton, Inc., 845 F.2d 209, 214 (9th Cir.1988). If Oregon law does not recognize negligent and intentional spoliation as causes of action, and instead only permits that evidentiary inferences be drawn from spoliation, Croman's objection should be sustained. If Oregon law does recognize those causes of action, or is silent with respect to those causes of action but I predict the Oregon Supreme Court would recognize them, Sikorsky's motion for leave to amend should be granted.” In re Helicopter Crash Near Wendle Creek, British Columbia, On August 8, 2002, 2009 WL 1391422, 1 (D. Conn. 2009)

Accordingly, the Court notes, if no cause of action for spoliation exists under Oregon law, the Court must deny the motion for leave to amend.

Oregon Law on Spoliation is Unsettled

District Judge Underhill begins by pointing the Oregon common law is silent on the existence of either intentional or negligent spoliation.

It appears that spoliation law, although ancient doctrinally, has only recently emerged onto the litigation scene. Lest there be any doubt that these developments illustrate the emergence (or revival) of a spoliation practice, witness the tortuous analysis undertaken by District Judge Underhill in the following excerpt.

First, the Court reminds us that in the absence of appropriate decisional authority, a federal district court sitting in diversity must use its judgment in deciding how the highest court of that state would decide any particular issue.

“The Oregon Supreme Court has not yet considered whether intentional or negligent spoliation claims present cognizable causes of action. In such instances, “[i]n the absence of controlling forum state law, a federal court sitting in diversity must use its own best judgment in predicting how the state's highest court would decide the case.” Takahashi v. Loomis Armored Car Serv., 625 F.2d 314, 316 (9th Cir.1980). “In re Helicopter Crash Near Wendle Creek, British Columbia, On August 8, 2002, 2009 WL 1391422, 1 (D. Conn. 2009)

The Court’s analysis then turns to recent decisional authority from the U.S. District Court of Oregon, and cited by defendant, holding that the Oregon does not recognize the tort of intentional spoliation of evidence by a party:

“Croman argues that, in exercising my “best judgment in predicting how [Oregon]'s highest court would decide the case,” I should be persuaded by the holding in Blincoe v. Western States Chiropractic College, 2007 WL 2071916 (D.Or. July 14, 2007). In Blincoe, Magistrate Judge Papak recommended granting the defendant's motion to dismiss an intentional spoliation claim and concluded that “Oregon law does not recognize the tort of intentional spoliation of evidence by a party.” 2007 WL 2071916, at *7. Judge Papak's analysis considered the law of other states, as well as Oregon's numerous statutory, non-tortious remedies dealing with spoliation of evidence, in reaching that conclusion. Id. at *7-9.FN2” Id.

Unfortunately for defendant, even though the Oregon Supreme Court had not ruled on the existence of either flavor or spoliation-as-tort, the Court of Appeals of Oregon “discussed and recognized a claim of negligent spoliation of evidence.” Although the language from that decision excerpted by District Judge Underhill stands for something less than absolute clarity, the phrase “failed to make a prima facie showing” is a pretty clear indication that a prima facie showing of negligent spoliation would be sufficient to properly allege a cause of action under Oregon law:

“In the time since Blincoe, although the Oregon Supreme Court has not addressed whether intentional or negligent spoliation causes of action are recognized under the law of the state, the Court of Appeals of Oregon discussed and recognized a claim of negligent spoliation of evidence. In Marcum v. Adventist Health System/West, 215 Or.App. 166, 168 P.3d 1214, 1228-29 (Or.App.2007), rev'd on other grounds, 345 Or. 237, 193 P.3d 1 (Or.2008), the Oregon appellate court acknowledged the parties' dispute regarding spoliation causes of action under Oregon law, declined to “address the precise contours” of a negligent spoliation claim, and ultimately held that the plaintiff-appellant's negligent spoliation claim failed. Nonetheless, the Marcum court discussed the merits of that claim:” Id.

“’We need not, and do not, address the precise contours of a cognizable claim for “negligent spoliation” under Oregon law. That is so because plaintiff here failed to make a prima facie showing that defendants' alleged failure to maintain or produce the allegedly “missing” records materially impaired her prosecution of her medical negligence and informed consent claims.’” Id., at. p. 2

District Judge Underhill then determined that leave to amend a complaint to allege negligent spoliation under Oregon law would not be futile, and that absent decisional authority (or other developments) to the contrary, it was also likely that the Supreme Court of Oregon would recognize both torts of negligent and intentional spoliation of evidence.

“[A]bsent further guidance or development from the Oregon Supreme Court, the appellate court's decision in Marcum indicates that Sikorsky's proposed amendments adding spoliation claims would not be futile. Absent a more recent or more authoritative ruling to the contrary, I predict on the basis of the Marcum decision that the Supreme Court of Oregon would recognize intentional and negligent spoliation of evidence as causes of action .FN3 “In the absence of a pronouncement by the highest court of a state, the federal courts must follow the decision of the intermediate appellate courts of the state unless there is convincing evidence that the highest court of the state would decide differently.” Owen ex rel. Owen v. United States, 713 F.2d 1461, 1464 (9th Cir.1983). Here, there is no convincing evidence that the Oregon Supreme Court would not recognize spoliation causes of action. Accordingly, Sikorsky's motion for leave to amend (doc. # 361) is GRANTED.” Id.

Result: Motion for leave to amend to allege intentional and negligent spoliation of evidence granted.

Blognote: This digest will keep abreast of spoliation law developments (especially as they relate to computer generated information or ESI discovery) so stay tuned.

Case: Ford Motor Company, et al., v. Edgewood Properties, Inc.
Citation: ---F. Supp. 2d ---, 2009 WL 1416223 (D. N.J. 2009)
Date: 2009-05-19
Topics: Waiver by operation of late objection to producing party's non-native production, preserving objections to non-response ESI data format, ESI document collection process, cooperation and eDiscovery agreements, Sedona Principal 12

In this action from the United States District Court for the District of New Jersey for contract contribution and indemnification under Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) and state environmental law, both parties moved to compel discovery.

U.S. Magistrate Judge Salas ruled, inter alia, that the contractor's objection to format for production of electronically stored information (ESI) was untimely, and that contractor failed to make colorable showing that owner withheld documents in response to request for ESI.

Preservation of Objections to Format of ESI Produced – Use It or Waive It

This case stands as a stark warning to counsel who, as requesting parties, intend to take advantage of the 2006 amendment to the Federal Rules of Civil Procedure, entitling requesting parties to define the form and format of production. If the producing party fails to produce as requested, and the requesting party fails to timely object, any future objection will likely be considered waived.

The “What Not to Do” Follows:

Here, although ESI in native data format was properly requested, the producing party responded by stating that it would produce ESI in .tiff format, with accompanying searchable text. It appears that the parties either failed or agreed to fail to meet and confer to discuss any disagreements prior to defendant’s raising the issue surrounding plaintiff’s ESI production with a motion to compel:

Defendant’s Request:

“Edgewood demanded in its initial document request that Ford produce documents in native format (or documents containing metadata), as it was entitled to ask it to do under Fed.R.Civ.P. 34. (Joint Appendix (“JA”) Ex. 9).” Ford Motor Co. v. Edgewood Properties, Inc., ---F.R.D.---, 2009 WL 1416223, 5 (D.N.J. 2009)

Plaintiff’s response:

“The heart of the problem is that in Ford's response (JA Ex. 4), it wrote that ‘Ford and Ford Land will produce such electronically stored information in Tagged Image File Format (“TIFF”) with accompanying searchable text.’” Id.

Dueling Declarations, Passivity and Failure to Timely Object

The Court notes that both sides exhibited a lack of exemplary behavior in dealing with what ultimately became a serious discovery dispute. That said, the Court found that the requesting party was both “passive” to what it later asserted was non-responsive ESI production, as well as that party’s failure to timely raise it before the Court.

Result: Objection to ESI production format waived:

The dueling declarations of Brooke Gaede on behalf of Edgewood, and John McGahren on behalf of Ford, suggest that the parties never came to an agreement as to how documents would be produced, so Ford unilaterally adopted its own objection and produced them in TIFF format. The Court will need not wade into the murky waters of whether or not Edgewood affirmatively assented to Ford's document production, for Edgewood's passivity to Ford's production and its timely failure to object to it renders its objection waived. Id.

What is becoming very clear from the tenor of these decisions is that the Court’s are rapidly losing patience with counsel’s inability or unwillingness to cooperate in eDiscovery planning, and late-to-the-gate complaints when the inevitable ESI discovery disputes arise therefrom:

“The Sedona Principles and Sedona commentaries thereto are the leading authorities on electronic document retrieval and production. William A. Gross Const. Assc., Inc. v. American Mfrs. Mut. Ins. Co., 256 F.R.D. 134, 136 (S.D.N.Y.2009) (“[t]his Court strongly endorses The Sedona Conference Cooperation Proclamation”); John B. v. Goetz, 531 F.3d 448 (6th Cir.2008) (following principles); Aguilar v. Immigration and Customs Enforc. Div. of U.S. Dep't of Homeland Sec., 255 F.R.D. 350 (S.D.N.Y.2008) (same)” Id.

And so, Magistrate Judge Salas then invites (or directs) counsel for the parties to embark upon a journey through the straits of ESI discovery. The Court isn’t taking up print space for no reason: note the use of the phrase “parties’ concomitant obligations.”

“Relying on the principles and on the Federal Rules, Aguilar explicated the procedure by which parties are to propound electronic discovery requests upon each other, and the parties' concomitant obligations thereto.” Id.

Requesting Party Must Specify Format of Production in Request

A requesting party is not required to specify the format of production, but if it does not, Rule 34(b)(2)(E)(ii) provides that in the event a requesting party does not specify ESI production format, the producing party is now fully entitled to produce ESI in what it considers to be “reasonably usable form or forms,” provided that the producing party complies with Fed. R. Civ. P. Rule 34(b(2)(D) and affirmatively state to requestor “the form or forms it intends to use.” Not surprisingly courts (including this court) hold that “reasonably usable” can mean .tiff images with searchable text.

Aguilar explained that under Rule 34, a party may request the form of production as metadata. “The responding party then must either produce ESI in the form specified or object.” Here, Ford objected to the production of metadata. “If the responding party objects ... the responding party must state “the form or forms it intends to use for its production of ESI.” Id. (quoting Fed.R.Civ.P. 34(b)(2)(D)). If the requesting party further objects and states an alternative form, the parties must meet and confer in an effort to solve the dispute before filing a motion to compel. Aguilar, 255 F.R.D. at 355. Here, crucially, Edgewood did not object to Ford's production within a reasonable period of time, as will be fleshed out in detail below.” Id., at p. 7

How badly mangled was defendant’s discovery efforts? The following excerpt provides a hint or five, but it’s never a good sign when a court suggests that issues addressing adherence to Sedona Principal 12, relating to agreements concerning production of metadata, are best undertaken before production begins. In short, it appears that there was no eDiscovery agreement (or cooperation, for that matter) between the parties. The Court so notes, and explains the consequences (usually bad, at least to one party):

“The squabble between the parties about the appropriate mode of production certainly is not indigenous to this case, and to that end, the Court does not write on a clean slate. For the courts and in particular the Sedona Principles specifically have addressed the production of metadata absent an agreement by the parties on the mode of production. Specifically, Principle 12 of the Sedona Principles states that:

“Absent party agreement or court order specifying the form or forms of production, production should be made in the form or forms in which the information is ordinarily maintained or in a reasonably usable form, taking into account the need to produce reasonably accessible metadata that will enable the receiving party to have the same ability to access, search, and display the information as the producing party where appropriate or necessary in light of the nature of the information and the needs of the case Id. at 356 (emphasis added). Thus, the producing party ordinarily must take into account the need for metadata to make otherwise unintelligible documents understandable.” Id., at p. 6

As the Court indicates, it’s always better to lock the barn door before Bessie takes that stroll… and before production is complete:

“This Principle, of course would be better applied in a case where production had not yet commenced.” Indeed, Aguilar observed that “[c]ourts generally have ordered the production of metadata when it is sought in the initial document request and the producing party has not yet produced the documents in any form.” Id. at 357. Such is not the case here, as Ford's production is complete. Id.

So, how long did defendant wait until bringing the issue of format of production to the Court’s attention?

The gestation period for waiver was nearly nine months:

The foregoing conclusively demonstrates that Edgewood waited from the end of March 2008 to November 2008 to object to Ford's production. And even then it waited two months to bring the problem to this Court's attention. This is by no means to suggest that parties seek court intervention every time there is a whiff of a dispute between them. Meet and confers between the parties are integral to the discovery process. Id., at p. 7

Note again the Court’s emphasis on the requesting party’s apparent failure to request a meet and confer to resolve the issue.

The Court’s take?

“…[T]he delay in this case on the part of Edgewood is patently unreasonable.”

What-Not-to-Do: Waiving Objections to Format of Production by Passivity Until Production is Complete

“The simple holding here is that it was unreasonable to wait eight months after which production was virtually complete.

And now, the first hammer blow:

“It was incumbent on Edgewood to review the adequacy of the first production so as to preserve any objections. The Court is not dictating a rigid formulation as to when a party must object to a document production. Reasonableness is the touchstone principle, as it is with most discovery obligations. The simple holding here is that it was unreasonable to wait eight months after which production was virtually complete. Id., at p. 7

The proper way to go about resolving an eDiscovery dispute is to meet and confer (in a timely fashion) and if no resolution ensures, a party must then, and also in a time fashion, bring the issue before the court.

The Court then delivers the coup de grace:

“The Court finds Edgewood's objection to be out of time. It is beyond cavil that this entire problem could have been avoided had there been an explicit agreement between the parties as to production, but as that ship has sailed, it is without question unduly burdensome to a party months after production to require that party to reconstitute their entire production to appease a late objection. The advent of E-Discovery does not serve to destroy parties' discovery obligations that would exist in the ordinary course were other media involved. Parties would be best to heed the admonition of a recent court that “the best solution in the entire area of electronic discovery is cooperation among counsel.” William A. Gross, supra, 256 F.R.D. at 136l.” Id.

Result: No goodness for defendant:

“Accordingly, Edgewood's motion to compel the native documents is denied.” Id.

Plaintiff’s Document Collection Process

Defendant also “mounted a complaint” against plaintiff Ford’s document collection process. Defendant asserted that there was a “noticeable absence of documents in Ford’s production” related to key issues. Methinks defendant means that production was a mite bit gappy. Defendant’s assertion was that plaintiff’s document collection process was flawed, and sought relief in the form of…a second document search and collection:

“Edgewood responded that it…’is seeking to confirm the adequacy of Ford's manual document collection process using a limited, least cost, least burdensome test. This test involves using a vendor to perform a narrowly tailored key word search of electronically-stored records from a limited time period associated with certain custodians ... for the purpose of determining whether Ford failed to collect responsive documents. The search would be performed on Ford's electronically-stored as such records are stored in their original location (e.g., a custodian's laptop, Ford servers, etc.).’” Id., at p. 8

The Court didn’t quite see it that way:

“In essence, then, even though it disavows the term “entire reconstitution of the document collection process,” the remedy proposed by Edgewood does, in fact, seek at least a substantial reconstitution of the document collection process by trying to add to the existing repository of ESI that Ford collected over a year ago.” Id.

You can see where this is going. The first stop is the Sedona Principles.

In essence, the Sedona practice commentary condones automated ESI discovery searches.
“In The Sedona Conference Best Practices Commentary on the Use of Search and Information Retrieval Methods in E-Discovery, Practice Point 1 states that “[i]n many settings involving electronically stored information, reliance solely on a manual search process for the purpose of finding responsive documents may be infeasible or unwarranted. In such cases, the use of automated search methods should be viewed as reasonable, valuable, and even necessary.” (emphasis added).” Id.

The second stop is meet-and-confer-ville. Not surprisingly, the Court again returns to the failure by the requesting party’s to attempt to reach some type of agreement on search, collection and culling ESI:

“Once again, the Court confronts this peculiar situation insofar as Edgewood has a point that the document collection method used by Ford is not necessarily contemplated under the Sedona Principles, but that agreement by the parties at the outset as to the mode of collection would have been the proper and efficacious course of action. However, “[a]bsen[t] agreement, a [responding] party has the presumption, under Sedona Principle 6, that it is in the best position to choose an appropriate method of searching and culling data.” The Sedona Conference Best Practices Commentary on the Use of Search and Information Retrieval Methods in E-Discovery.” Id.

The result: Another hammer blow to defendant:

"Once again, the lack of agreement here inheres to the detriment of Edgewood.” Id.

Producing Party Has No Carte Blanche to Determine Mode of Collection, but is best Positioned to Do So

The Court notes that the Sedona principles “wisely” state that “it is in fact, the producing party who is [in] the best position to determine the method by which they will collect documents.” The Court notes, however, that the power to determine collection, search and culling methods is not absolute, which opens the door to a challenge by an adversary. The Court also hints that search, collection and culling should be discussed in a meet and confer and, where possible, agreed to in advance by the parties:

“The Sedona Principles wisely state that it is, in fact, the producing party who is the best position to determine the method by which they will collect documents. The producing party responding to a document request has the best knowledge as to how documents have been preserved and maintained. That being said, the producing party under the Sedona Principles doesn't have carte blanche to specify the mode of collection and it is clear that manual collection is sometimes even disfavored. However, absent an agreement or timely objection, the choice is clearly within the producing party's sound discretion." Id., at p. 9

Assertions of Production Inadequacy Must be Colorable

Ultimately, the Court wasn’t buying defendant’s argument that plaintiff Ford’s production was inadequate, and found that “reinventing the wheel” would be unduly burdensome to plaintiff Ford.

“The Court finds that reinventing the wheel here would be unduly burdensome to Ford. See Fed R. Civ. P. 26(b)(2)(C)(i). The gravamen of Edgewood's complaint is that it suspects it has not received all of the documents to which it is entitled.” Id.

Conclusory allegations of nefarious behavior asserted late in the game just won’t cut it:

“But such a conclusory allegation premised on nefarious speculation has not moved several courts, nor will it move this one, to grant burdensome discovery requests late in the game. See, e.g., Margel v. E. G.L. Gem Lab Ltd., No. 04-1514, 2008 WL 2224288, at *3 (S.D.N.Y. May 29, 2008) (“[u]nder ordinary circumstances, a party's good faith averment that the items sought simply do not exist, or are not in his possession, custody or control, should resolve the issue of failure of production ...”) (quoting Zervos v. S.S. Sam Houston, 79 F.R.D. 593, 595 (S.D.N.Y.1978)); Golden Trade S.r.L. v. Lee Apparel Co., 143 F.R.D. 514, 525 n. 7 (S.D.N.Y.1992) (“[i]n the face of a denial by a party that it has possession, custody or control of documents, the discovering party must make an adequate showing to overcome this assertion”); see also U.S. v. O'Keefe, 537 F.Supp.2d 14, 22 (D.D.C.2008) (noting that in the face of a protest of “inexplicable deficiencies” in a party's production, vague and speculative notions that there, in essence, should be more, are insufficient to compel judicial action). Id.

Result: Motion denied. Why? Assertions of bad behavior based only on a belief that documents are being withheld by a producing party do not a colorable showing of bad faith make.

“Here, Edgewood has not made a colorable showing that Ford is purposefully (or even negligently) withholding documents.” Id.

But all was not lost for defendants. Depositions had not yet taken place, and the Court indicates some willingness to revisit the issue if evidence indicating bad faith arises from these depositions.
“If relevant, unproduced documents appear or are even referenced in these depositions, Edgewood can move for the appropriate relief before this Court at that time, whether it be via another motion to compel documents, or for sanctions. For now, however, Edgewood's motion to compel on this point is denied.” Id.

Blognote: This decision addresses a topic deserving of some discussion. Imo, there are three levels of counsel attitude to eDiscovery. Those who understand nothing and want to avoid ESI discovery at all costs; those who understand enough to know that they want to avoid eDiscovery at all costs, and those that understand eDiscovery and are prepared to engage in same. Given these three varieties of counsel, there are three possible counsel-sets in any litigation. The first set is comprised of counsel on both (or all) sides who don’t understand eDiscovery, and who affirmatively choose not to engage in same. The second set is comprised of counsel on both (or all) sides who understand enough about eDiscovery to avoid it all costs, and who either tacitly agree or stipulate to same. The third set is the most interesting. One side’s counsel is either eDiscovery ignorant or eDiscovery phobic. The other side’s counsel understands and embraces eDiscovery. And runs circles around her adversaries. I suspect that this counsel-set falls within that third category.

Case: Innis Arden Golf Club v. Pitney Bowes, Inc.
Citation: --- F.Supp.2d ----, 2009 WL 1416169 (D. Conn. 2009)
Date: 2009-05-21
Topics: Counsel involvement as trigger for duty to preserve, suspension of routine document retention and destruction policy, bad faith or intent not required for imposition of sanctions for spoliation, spoliation sanctions of evidence preclusion, implications of spoliation finding for summary judgment and Daubert expert exclusion

This decision, again involving CERCLA claims, comes to us from the U.S. District Court for the District of Connecticut. Although not involving ESI, the Court addresses preservation duty triggers that are equally applicable to ESI. This case also stands as a reminder of the circuit split on the issue of bad faith or intent. In the Second Circuit (and not in the Tenth and others) a party may be sanctioned for spoliation of evidence even in the absence of bad faith or intentional conduct.

In this case, plaintiff golf club discovered PCB’s (a pollutant) on its property that it alleged emanated from defendant’s adjoining property. Through time, defendant golf club failed to preserve certain relevant soil samples.

Here, U.S. District Judge Atherton rules on defendant Pitney Bowes’ motion for sanctions for spoliation of evidence, holding that:

(1) plaintiff- land owner's duty to preserve soil samples attached when its counsel became actively involved;
(2) the landowner breached its duty to preserve evidence.

U.S. District Judge Atherton ruled that the appropriate sanction for plaintiff golf club’s spoliation was preclusion of evidence based on soil samples.

The Court starts out with the statement that the duty to preserve evidence “is fundamental to federal litigation.” The Court continues with Second Circuit decisional authority outlining both the duty, and the consequences for its breach:

“The obligation to preserve evidence arises when the party has notice that the evidence is relevant to litigation or when a party should have known that the evidence may be relevant to future litigation. See Kronisch v. United States, 150 F.3d 112, 126 (2d Cir.1998). Once a court has concluded that a party was under an obligation to preserve the evidence that it destroyed, it must then consider whether the evidence was intentionally destroyed, and the likely contents of that evidence. See id. at 127. The determination of an appropriate sanction for spoliation, if any, is confined to the sound discretion of the trial judge, see West v. Goodyear Tire & Rubber Co., 167 F.3d 776, 779 (2d Cir.1999), and is assessed on a case-by-case basis. See United States v. Grammatikos, 633 F.2d 1013, 1019-20 (2d Cir.1980). Innis Arden Golf Club v. Pitney Bowes, Inc., ---F.R.D.---, 2009 WL 1416169, 5 (D. Conn. 2009)

Spoliation Sanctions May be Imposed Pursuant to Fed. R. Civ. P. Rule 37(b) or Under Court’s Inherent Powers

It always pays to keep in mind that there are two avenues for spoliation sanctions imposition. A spoliation sanction requested pursuant to Fed. R. Civ. P. Rule 37(b) must be made after a discovery order has been violated. Spoliation sanctions may also be imposed without a discovery order violation under federal common law doctrine of a court’s “inherent powers:”

“In addition to the sanctions authorized by Federal Rule of Civil Procedure 37(b) for spoliation of evidence in violation of a court order, “a district court may impose sanctions for spoliation, exercising its inherent power to control litigation.” West, 167 F.3d at 779. Id.

Duty to Preserve Evidence

District Judge Atherton then sets out Second Circuit (and some Southern District of New York) decisional authority in explaining a party’s duty to preserve evidence. In sum, the duty may attach either when legal proceedings have begun, or when a party should have known that evidence may be relevant to anticipated future litigation:

“The “obligation to preserve evidence arises when the party has notice that the evidence is relevant to litigation.” Kronisch, 150 F.3d at 126. This duty may attach not only once legal proceedings have begun, but also “when a party should have known that the evidence may be relevant to future litigation.” Id. (emphasis added).” Id.

Suspension of Document Retention or Destruction Policy

Citing Zubulake IV, the Court then explains that once a duty to preserve has been triggered, a party must suspend its document retention policy:

"As other courts have found, “[o]nce a party reasonably anticipates litigation, it must suspend its routine document retention/destruction policy and put in place a ‘litigation hold’ to ensure the preservation of relevant documents.” Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 218 (S.D.N.Y.2003); see also Treppel v. Biovail Corp., 249 F.R.D. 111, 118 (S.D.N.Y.2008) (following Zubulake's formulation); Doe v. Norwalk Cmty. Coll., 248 F.R.D. 372, 377 (D.Conn.2007) (same); In re NTL, Inc. Securities Litig., 244 F.R.D. 179, 193 (S.D.N.Y.2007) (same).” Id.

Spoliation Sanction Spoilers: Affirmative Disclaimer or Delay

Disclaimer or delay by the non-spoliating party constitutes defenses to a spoliation challenge:

“…[T]he cases in which courts deny requests for sanctions turn on facts showing that the party seeking the evidence either disclaimed an interest in the evidence or did not seek to inspect the evidence within a reasonable time. See, e.g., Allstate Ins. Co. v. Hamilton Beach/Proctor Silex, Inc., 473 F.3d 450, 457-58 (2d Cir.2007) (declining to impose sanctions where the party “affirmatively disclaimed any interest in the evidence ... after being provided a full opportunity to inspect the items”); Fujitsu, 247 F.3d at 436 (finding sanctions not warranted given that “FedEx did not request to inspect the damaged shipping container after Fujitsu notified it of the damage, nor at any time other than prior to making the summary judgment motion”)” Id., at p. 7

The Court found that plaintiff golf club had spoliated evidence, and that defendant Pitney Bowes had neither affirmatively disclaimed, nor delayed its assertion of evidence spoliation.

And so, on to the sanctions-type determination.

Appropriate Sanctions

Borrowing from Third Circuit decisional authority, District Judge Atherton then provides an overview of what type of sanction to apply after a finding of spoliation has been made. The objectives are threefold: prophylactic, punitive and remedial.

“After a finding of spoliation, “the applicable sanction should be molded to serve the prophylactic, punitive, and remedial rationales underlying the spoliation doctrine.” West, 167 F.3d at 779. Factors to be considered include “the degree of fault of the party who altered or destroyed the evidence,” “the degree of prejudice suffered by the opposing party,” and whether the appropriate sanction minimizes the prejudice to the opposing party and “serve[s] to deter such conduct by others in the future.” Howell v. Maytag, 168 F.R.D. 502, 505 (M.D.Pa.1996) (quoting Schmid v. Milwaukee Elec. Tool Corp., 13 F.3d 76, 79 (3d Cir.1994)).” Id., at p. 8

Presumptively harsh is another term that comes to mind.

Second Circuit – No Bad Faith or Intent Required for Imposition of Spoliation Sanctions

In the sanctions-type determination phase, Second Circuit decisional authority is clear: a showing of bad faith or intentional conduct is not necessary:

“In the Second Circuit, a party may be sanctioned for the destruction of evidence even in the absence of bad faith or intentional misconduct. Byrnie v. Town of Cromwell, 243 F.3d 93, 107-08 (2d Cir.2001). “Trial judges should have the leeway to tailor sanctions to insure that spoliators do not benefit from their wrongdoing-a remedial purpose that is best adjusted according to the facts and evidentiary posture of each case.” Reilly v. Natwest Markets Group, 181 F.3d 253, 267 (2d Cir.1999).” Id.

The Court explains further that the destruction of evidence by the plaintiff golf club so materially impaired and prejudiced the defendant’s ability to mount a “bright line” defense that a sanction more severe than an adverse inference was warranted, and the Court ruled that a preclusion of evidence was appropriate:

“While the Court finds no basis on which to conclude that Innis Arden purposefully destroyed evidence to advantage it or disadvantage Pitney Bowes, the consequences of the loss of this evidence are significant and cannot be adequately remedied through applying an adverse inference. By virtue of the failure to preserve scientific sampling and data, Pitney Bowes has been precluded from what might have been a bright-line defense, such as radioisotope dating showing that the PCB-contaminated sediment predated Pitney Bowes's presence on Barry Place. Such a defense could obviate the need for and expense of a trial, while a negative-inference sanction can only be applied at trial. In destroying the underlying evidence that its experts have relied on, Innis Arden has hampered Pitney Bowes's capacity to challenge the underlying foundations for the experts' opinions. In short, the key raw “fingerprint” evidence in this case simply no longer exists, but the party that is responsible for its destruction seeks to benefit from its use. For all these reasons, in the Court's view, the appropriate sanction to adequately address the harm suffered by Pitney Bowes, penalize Innis Arden, and deter future destruction of evidence is preclusion of evidence based on the soil samples Innis Arden took from its own property and subsequently destroyed.” Id., at p. 10.

Spoliation and Summary Judgment Practice, and Daubert Expert Exclusion

One issue arising from spoliation assertions is whether a finding of spoliation can support the denial of summary judgment when the movant is the spoliating party. In one sentence, the Court provides a tantalizing clue, perhaps indicating that a finding of spoliation may be included to presume as true facts for purposes of summary judgment. The Court also appears to be willing to take plaintiff’s spoliation into account in considering whether to exclude plaintiff’s Daubert expert (or testimony):

“Accordingly, Pitney Bowes's and Pateley's motions for sanctions for spoliation of evidence [Doc.419, 426] are granted, and the sanction of preclusion detailed above will be imposed at trial and in consideration of the pending motions for summary judgment and Daubert expert exclusion."

Stay tuned.