2009-05-06 Spoliation, Discovery Abuse, Work-Product Privilege - And ESI

Seven decisions this week.

• Spoliation - A non-ESI but nevertheless instructive spoliation decision from the Southern District of New York. The Court found no spoliation, but I still wonder how in 2008 Board of Director’s notes are recorded by hand, and then “converted” into typewritten documents. By no less than a special committee of the Board of Directors of a high technology company. In 2008. Most peculiar. I’ll have to transcribe that from my Dictaphone.
• An Independent Tort of Negligent Spoliation­ of Evidence in Pennsylvania? - We’ll know soon.
• Discovery Sanctions Reversal – In a decision from the U.S. Court of Appeals for the Second Circuit, the Court discusses the standards for imposition of sanctions on counsel under the “inherent powers” theory, reaffirming the Second Circuit standard that findings of “bad faith” are “personal.”
• Unintended Metadata Alteration - Results in a finding of no bad faith, and no spoliaiton. From the U.S. District Court for the Southern District of Florida.
• Initial Disclosures and ESI, Meet and Confer - The U.S. District Court for the District of Kansas provides us with a decision in which the Court reminds us that meet and confer obligations are not to be taken lightly by either parties or their counsel.
• Judicial Review of Arbitration Decision Concerning Spoliation – Think really, really, high bar.
• Work Product Privilege and Preservation Obligation Trigger, ESI Discovery Abuse, Procedural Gamesmanship, Effect of Filing of Appeal While Motions to Preserve, Sanctions for Spoliation Pending – From the U.S. District Court for the Western District of Pennsylvania. View sausage being made. Not a pretty sight.

SWT

Decisions:

In re Take-Two Interactive Software, Inc. Derivative Litigation, 2009 WL 1006251 (S.D.N.Y. 2009)
Pyeritz v. Com., ---A. 2d---, 20009 WL 1099693 (Pa. 2009)
Continental Group, Inc. v. KW Property Management, LLC, 2009 WL 1098461 (S.D. FL 2009
Wolters Kluwer Financial Services, Inc. v. Scivantage, 2009 WL 1048990 (2d Cir. 2009)
Patterson v. Goodyear Tire and Rubber Company, 2009 WL 1107740 (D. Kan. 2009)
Jones v. PPG Industries, Inc., 2009 WL 1119595 (W. D. Pa. 2009)
Hohider v. United Parcel Service, Inc., --- F.R.D. ----, 2009 WL 1163931 (W.D. Pa. 2009)


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Case: In re Take-Two Interactive Software, Inc. Derivative Litigation
Citation: 2009 WL 1066251 (S.D.N.Y. 2009)
Date: 2009-04-21
Topics: Destruction of handwritten director’s meeting notes after being typewritten held not spoliation, testimony that typewritten version was reviewed by author supported finding of no bad faith destruction

This decision from the U.S. District Court for the Southern District of New York is both peculiar as well as instructive. The case involved one of the many shareholder suits against companies that engaged in the practice of options backdating.

First, the instructive portion of the decision. A subcommittee of defendant’s Board of Directors called the “Special Litigation Committee” (SLC) was formed to investigate. It was the custom and practice of the secretary at SLC meetings to take notes. It was undisputed that these notes were always handwritten, and then destroyed after they were converted to typewritten form and reviewed by the SLC chair.

Plaintiffs alleged spoliation of the original handwritten notes of the SLC meeting (as well as the handwritten notes of a draft supplemental report) and requested that the typewritten reports be excluded from evidence. U.S. District Judge Swain denied the motion.

The Court first begins with the Second Circuit’s approach to spoliation, and discerns between the imposition of sanctions under Fed. R. Civ. P. Rule 37 (violation of discovery order necessary for imposition of sanctions under this rule) and the Court’s “inherent powers” to sanction:

“Spoliation is 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. It has long been the rule that spoliators should not benefit from their wrongdoing ....“ West v. Goodyear Tire & Rubber Co., 167 F.3d 776, 779 (2d Cir.1999) (citations omitted). “Even without a discovery order, a district court may impose sanctions for spoilation [sic], exercising its inherent power to control litigation.” Id. (citations omitted).FN1

FN1. Plaintiffs also invoke Rule 37(b)(2)(A) of the Federal Rules of Civil Procedure, but that provision appears to be inapposite because the documents at issue were destroyed before any court order was entered in this case concerning discovery, and Plaintiffs do not point to any order that they allege was violated. See Fed.R.Civ.P. 37(b)(2)(A) (“If a party ... fails to obey an order to provide or permit discovery, ....”). In re Take-Two Interactive Software, Inc. Derivative Litigation, 2009 WL 1066251, 4 (S.D.N.Y. 2009)

The Court then notes that it has “broad discretion” in connection with spoliation sanctions imposition:

“A district court has broad discretion in crafting a proper sanction for spoilation [sic][, but] the applicable sanction should be ... designed to: (1) deter parties from engaging in spoilation [sic]; (2) place the risk of an erroneous judgment on the party who wrongfully created the risk; and (3) restore the prejudiced party to the same position he would have been in absent the wrongful destruction of evidence by the opposing party. Id. (citations omitted). Dismissal of a lawsuit is appropriate “if there is a showing of willfulness, bad faith, or fault on the part of the sanctioned party.... [D]ismissal should be imposed only in extreme circumstances, usually after consideration of alternative, less drastic sanctions.” Id. (citations omitted).” Id., at *4.

Interestingly enough (but not peculiar; that comes later) the Court sua sponte then also considers whether the more severe evidential sanction of an adverse inference should be drawn:

“The Court has also considered whether a sanction in the form of an adverse inference should be drawn within the context of the SLC's motion. “A party that seeks an adverse inference instruction for destruction or late production of evidence must show that: (i) the party having control over the evidence had an obligation to preserve or timely produce it; (ii) the party that destroyed or failed to timely produce evidence had a culpable state of mind; and (iii) the missing or tardily produced evidence is relevant to the party's claim or defense such that a reasonable trier of fact could find that it would support that claim or defense.” In re NTL, Inc. Secs. Litig., 244 F.R.D. 179, 192 (S.D.N.Y.2007) (citations omitted). With respect to the third factor, the party seeking an inference in his favor must produce “some evidence suggesting that a document or documents relevant to substantiating his claim would have been included among the destroyed files.” Kronisch v. United States, 150 F.3d 112, 128 (2d Cir.1998).” Id.

Extrinsic Evidence Must be Offered to Show Destroyed Evidence Was Unfavorable to Alleged Spoliator

The Court makes short shrift of plaintiff’s assertion that defendant had a duty to preserve the handwritten minutes or supplemental report, and points out that even if defendant had an “obligation not to destroy the documents at issue in light of reasonably foreseeable litigation,” plaintiffs offered no proof of prejudice in connection with the destruction of either handwritten document. First, it was significant that it was the custom and practice for handwritten notes to be destroyed after they were typewritten, and that the SLC chairman reviewed the typewritten notes for accuracy. It appears that there was simply no evidence offered that either the handwritten notes or reports (later converted into typewritten documents) might have contained any unfavorable or negative information:

“The parties do not dispute that Brown ordered his secretary to destroy her handwritten notes of SLC meetings as well as his handwritten draft of the SLC Supplemental Report. However, even if Brown had an obligation not to destroy the documents at issue in light of reasonably foreseeable litigation, Plaintiffs proffer no evidence whatsoever suggesting that the destroyed documents contained anything that would have reflected unfavorably on the SLC's independence, good faith or reasonableness. See Kronisch, 150 F.3d at 127 (“no adverse inference where party failed to provide any extrinsic evidence that the subject matter of the lost or destroyed materials would have been unfavorable to the opposing party or would have been relevant to the issues in this lawsuit”) (citation and quotation omitted). Plaintiffs do not dispute Brown's testimony that his secretary converted her handwritten notes of SLC meetings into typewritten draft minutes before destroying the handwritten notes ( see Brown Dep. at 71:23-25) FN2 and that this was a regular practice. (See Brown Dep. at 71:24-25.)”

“There is no allegation that the typewritten minutes were also destroyed, and Plaintiffs do not dispute Brown's testimony that he primarily reviewed her typewritten drafts since it was difficult to read her handwritten notes. ( See Brown 71:2-5.) There is no indication anywhere else in the record that a reasonable trier of fact, considering all of the evidence, would suspect that such handwritten notes contained information undermining the fact or appearance of the SLC's independence, good faith or reasonableness.” Id. at *5

“Similarly, there is no suggestion that Brown's handwritten draft of the SLC Supplemental Report contained some form of incriminating information. Plaintiffs do not dispute Brown's testimony that it was also his regular practice to destroy his handwritten drafts, and Plaintiffs proffer nothing that would suggest that the practice of destroying handwritten drafts was such an unusual practice that a reasonable fact-finder would conclude there was something to hide, especially when there are no indicia in the record suggesting an unreasonable investigation or bad faith.” Id.

Party’s Conduct Provided No Inference of Relevance

Plaintiffs argued in the alternative that relevance (and prejudice) could be established by defendant’s conduct, and that the destruction of the handwritten notes amounted to bad faith of gross negligence. Second Circuit authority holds that bad faith or grossly negligent acts of a party can circumstantial evidence that destroyed evidence was unfavorable to the non-spoliating party.

Not in this instance, said the Court (and check out footnote 3):

“Plaintiffs' assertions concerning the prejudicial impact of the destroyed documents are premised entirely on speculation. Under the circumstances, no adverse inference is warranted. See Kronisch, 150 F.3d at 128 (the party seeking an inference in his favor must produce “some evidence suggesting that a document or documents relevant to substantiating his claim would have been included among the destroyed files.”).FN3“

“FN3. Plaintiffs argue that “relevance” in this context may be inferred where a party's conduct amounts to bad faith or gross negligence. See Residential Funding Corp. v. DeGeorge Fin. Corp., 306 F.3d 99, 109 (2d Cir.2002) (“bad faith alone is sufficient circumstantial evidence from which a reasonable fact finder could conclude that the missing evidence was unfavorable to that party”); id. (“a showing of gross negligence in the destruction or untimely production of evidence will in some circumstances suffice, standing alone, to support a finding that the evidence was unfavorable to the grossly negligent party”). However, Plaintiffs have failed to proffer any evidence that Brown's actions were in bad faith or grossly negligent. See generally Kaplan, 484 A.2d at 517 (“As to the destruction by Brown, Wood of the original, handwritten interview notes of its attorneys in favor of a prepared summary of each interview, the [SLC] points out that such a procedure is routinely engaged in by law enforcement agencies and has been approved by the courts, an argument which plaintiff does not dispute.”) (citation omitted).”

Result: Motion to strike denied.

Observed Peculiarity: The allegedly spoliating events occurred in 2007. Handwritten notes? Typewriters? Huh? (Hint: this is one of the options grant backdating securities cases). Why would anyone be using a typewriter in 2008? (Some reasons do come to mind). One might have considered additional depositions, including that of the individual who "typed" the minutes, as well as in house counsel...and perhaps a records management supervisor.


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Case: Pyeritz v Com.
Citation: ---A. 2d---, 20009 WL 1099693 (Pa. 2009)
Date: 2009-04-24
Topics: The Supreme Court of Pennsylvania will decide whether Pennsylvania recognizes independent tort of negligent spoliation of evidence

In granting a “Petition for Allowance of Appeal” the Supreme Court of Pennsylvania will determine:

“Whether Pennsylvania recognizes, and if so whether Petitioners have alleged, a cause of action for negligent spoliation of evidence?”


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Case: Continental Group, Inc. v. KW Property Management, LLC
Citation: 2009 WL 1098461 (S.D. FL 2009)
Date: 2009-04-22
Topics: Lack of knowledge of altered metadata means no bad faith disclosure, meet and confer, cost shifting

In this decision from the U.S. District Court for the Southern District of Florida, plaintiff moved for an “[A]dverse Inference or Injunction due to Spoliation.” The parties hereto are competitors in the condominium management business in Florida. Plaintiff alleged together with the usual state law tortious interference type actions, violations of the Computer Fraud and Abuse Act (18 U.S.C. 1030 et seq.) in that its former employee, who subsequently was employed by defendant, had downloaded proprietary ESI from its computers prior to her departure from plaintiff’s employ.

Plaintiff’s forensic expert testified that plaintiff’s former employee had downloaded “voluminous electronic files” from plaintiff’s computer system, evidenced apparently from a metadata examination of plaintiff’s computers.
District Judge Cohn then provides a definition of metadata that, while not perhaps as precise as might be preferred, was (imo) sufficiently accurate:

“Metadata” is data regarding the properties of a document, including when it was created, last modified, deleted, etc.” Continental Group, Inc. v. KW Property Management, LLC, 2009 WL 1098461 (S.D. Fl. 2009) at 2.

The What-Not-To-Do Bucket List

The Court determined that there was credible evidence of defendant’s actions sufficient to set them out with no small amount of particularity. A sampling of what was done:

(1) “…[D]efendant’s former employee “copied sand removed voluminous electronic files from plaintiff’s computer…
(2) Relevant files on defendant’s flash drive were “accessed…after [defendant] had been served with the lawsuit”

But, the Court acknowledged, defendant’s former employee testified that she only wanted to know what she was turning over, and further “disclaimed any knowledge of her actions changing the “metadata” of these files.” Continental Group, Inc. v. KW Property Management, LLC, 2009 WL 1098461, at *3 (S.D. Fla. 2009)

Off-topic note: After an interesting discourse on Computer Fraud and Abuse Act jurisdictional sufficiency (and a even more interestingly worded statement by the Court that despite a “slight lean” of decisional authority in plaintiff’s direction, the Court decided to tilt the other way on the statutory interpretation of “loss” and “interruption of service.”

Plaintiff’s Motion for Adverse Inference Based on Destruction of Metadata

Plaintiff’s sought an adverse inference instruction arising from defendant’s destruction of metadata associated with electronic files that were admittedly relevant to the instant lawsuit.

“Plaintiff asserts it is entitled to this adverse inference because Kravit last accessed these files after being placed on notice of this litigation and because she intentionally destroyed metadata evidence relating to her use of the files after being put on notice that these files were relevant and highly material to TCG's claims in this case.” 2009 WL 1098461, at*13

Here, the Court finds that defendant showed no bad faith, which in the Eleventh Circuit, is a requirement for a finding of spoliation and the imposition of an adverse inference sanction. The reason? Defendant’s testimony regarding her lack of knowledge about computers was sufficiently credible to refute plaintiff’s claim of bad faith:

“This Court concludes that Plaintiff has not met its burden of showing bad faith to support the extraordinary remedy of an adverse inference. Penalty Kick Management, Ltd. v. Coca Cola Co., 318 F.3d 1284, 1294 (11th Cir.2003). Although not all of Defendant Kravit's testimony is fully credible, her testimony regarding her lack of knowledge that accessing files would destroy metadata embedded within documents on her portable devices is credible. Such metadata evidence is not obvious to non-computer professionals. Although this lawsuit had just been filed a few days before her access on February 14, 2009, and her counsel should have been on notice to preserve all evidence, including electronic evidence, Defendant Kravit's actions at that time do not rise to the level required for a finding of spoliation of evidence.

“Therefore, Plaintiff's motion for adverse inference is denied.” Id., at 13

Takeaway: Future decisions may find a court rethinking assertions that people just aren’t that technologically sophisticated. One wonders, also, how this might be presented to a jury during trial. T


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Case: Wolters Kluwer Financial Services, Inc. v. Scivantage
Citation: 2009 WL 1048990 (2d Cir. 2009)
Date: 2009-04-21
Topics: Second Circuit approach to court’s inherent powers to sanction counsel for misconduct in connection with pleadings and discovery, sanctions under inherent powers requires specific finding of attorney bad faith, bad faith is personal

Let’s start out with the Court’s holding:

“(1) sanctions against law firm were unjustified;
(2) sanctions against junior partner were unjustified; and
(3) sanctions against partner in charge were justified.

Wolters Kluwer Financial Services, Inc. v. Scivantage 2009 WL 1048990 (2d Cir. 2009).

First, the Court reminds us that in the Second Circuit, a district court’s sanctions finding is reviewed on an abuse of discretion standard, and that an abuse of discretion might arise from an “erroneous view of the law” or a “clearly erroneous assessment of facts.” The “assessment of evidence” standard as described below appears a bit tautological:

“We review a district court's imposition of sanctions for abuse of discretion. Schlaifer Nance & Co. v. Estate of Warhol, 194 F.3d 323, 333 (2d Cir.1999). The reviewing court must ensure that the district court's sanctions are not based on “an erroneous view of the law or on a clearly erroneous assessment of the evidence.” Id. (internal quotation marks omitted). An assessment of the evidence is clearly erroneous where the reviewing court “is left with the definite and firm conviction that a mistake has been committed.” Zervos v. Verizon New York, Inc., 252 F.3d 163, 168 (2d Cir.2001) (internal quotation marks omitted). And the imposition of sanctions is also improper where “it cannot be located within the range of permissible decisions.” Id. at 169. ” Wolters Kluwer Financial Services, Inc. v. Scivantage, Id. at 2

Ok, appellate decisions will frequently include some type of “All that said” tee up to a reversal, and this is decision is no exception. The standard is higher for review where the district court (rather, than say, adversary counsel?) is the “accuser, fact finder and sentencing judge” And so, we see where the Court is heading:

“These familiar principles notwithstanding, we bear in mind that when the district court is “accuser, fact finder and sentencing judge” all in one, Schlaifer, 194 F.3d at 334 (internal quotation marks omitted), our review is “more exacting than under the ordinary abuse-of-discretion standard,” Perez v. Danbury Hosp. ., 347 F.3d 419, 423 (2d Cir.2003).” Id.
Inherent Powers Sanctions Require Specific Finding of Attorney Bad Faith

First and foremost, the Court notes, a Court imposing sanctions on an attorney under its inherent powers must make a specific finding that the attorney acted in bad faith, and specific:

“Imposition of sanctions under a court's inherent powers requires a specific finding that an attorney acted in bad faith. Schlaifer, 194 F.3d at 338… A finding of bad faith, and a finding that conduct is without color or for an improper purpose, must be supported by a high degree of specificity in the factual findings. Id.; Eisemann v. Greene, 204 F.3d 393, 396 (2d Cir.2000) (per curiam)” Id.

The Court recites a two-factor test for determining bad faith:

“Moreover, inherent-power sanctions are appropriate only if there is clear evidence that the conduct at issue is (1) entirely without color and (2) motivated by improper purposes…Conduct is entirely without color when it lacks any legal or factual basis; it is colorable when it has some legal and factual support, considered in light of the reasonable beliefs of the attorney whose conduct is at issue.” Id.Here the district court imposed non-monetary sanctions for both discovery and pleadings misconduct, but the appeals court determined that “both sanctions must be overturned.”

Bad Faith is Personal

The Court notes that the district court found that the attorney in question had engaged in “judge shopping” (a pleadings violation) and sanctioned the firm for its “’inability … to adequately supervise its attorneys,’” and imputed such bad faith behavior to the attorney’s firm for failing “to prevent what she did.” The Court rejected the district court’s findings, reasoning that a finding of bad faith is “personal,” and that without some specific evidence, a bad faith finding would not be imputed to the attorney’s firm:

But we have held that “[b]ad faith is personal” and “may not automatically be visited” on others. Browning Debenture Holders' Comm. v. DASA Corp., 560 F.2d 1078, 1089 (2d Cir.1977). Accordingly, absent other specific evidence of Dorsey's bad faith, a sanction under the court's inherent power is unjustified. See Milltex Indus. Corp. v. Jacquard Lace Co., 55 F.3d 34, 38 (2d Cir.1995) (“[T]he court's factual findings of bad faith must be characterized by a high degree of specificity.”) (internal quotation marks omitted).” Id., at 3.The Court of Appeals also finds that a second sanctions imposition (cancelling a deposition for purposes of concealment) was directed at the wrong attorney, and repeats its rationale for reversal by noting that, absent a specific finding of bad faith personal to attorney “A,” that attorney could not be imputed with attorney “B’s” bad faith even if they were affiliated with the same firm:

“It was in everyone's interest that the deposition be cancelled, for a reason that Reiner lacked authority (from Peters) to disclose. The district court's findings clearly show that the cancellation of the deposition was done for the purpose of concealment, but that was the intent of Peters, not Reiner. In the absence of other specific evidence of Reiner's intentional misconduct, the sanction must be reversed. See Schlaifer, 194 F.3d at 338.” Id., at 5Result: The Court reversed the District Court’s judgment imposing sanctions against both firm and one firm attorney because no bad faith “personal” to either firm or that attorney was established, and affirmed the imposition of sanctions against the attorney in connection with whose behavior bad faith was established.


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Case: Patterson v Goodyear Tire and Rubber Company
Citation: 2009 WL 1107740 (D. Kan. 2009)
Date: 2009-04-23
Topics: Initial ESI disclosure, Kansas federal district court meet and confer ESI requirements, counsel requirement to be familiar with client information management system, cost shifting, work product privilege limitations

In this decision from the U.S. District Court for the District of Kansas, U.S. Magistrate Judge Bostwick provides ample reminders that counsel familiarize themselves with both local court rules addressing ESI discovery as well as with their client’s information infrastructure.

In this decision, the Court chides both parties:

“The Court is concerned with the timing of the parties' discussion of these issues. The Initial Order Regarding Planning and Scheduling was entered in this case on May 13, 2008.” Patterson v. Goodyear Tire and Rubber Co., 2009 WL 1107740, at 5 (D. Kan. 2009).

It is never a good sign when a judge refers to a (standing or scheduling) order, and local ESI discovery guidelines, both of which addressed counsel’s compliance with procedural rules that became effective more than two years earlier. What counsel for both parties should have undertaken:

“That Order specifically stated that counsel for the parties:

should keep in mind that electronically stored information (ESI) was the subject of very significant amendments to Fed.R.Civ.P. 16, 26, 33, 34, 37, and 45 that went into effect on December 1, 2006. Therefore, prior to the Rule 26(f) planning conference, counsel should familiarize themselves with those amendments and review the ESI guidelines that are posted on this court's Internet website...

“As this court's ESI guidelines make clear, prior to the Rule 26(f) conference, counsel also should become knowledgeable about their clients' information management systems and their operation, including how the information is stored and retrieved.

“Included in this District's ESI guidelines is a duty on a producing party to include ESI with its Rule 26(a)(1) initial disclosures. Guidelines for Discovery of Electronically Stored Information (ESI), at ¶ 2, http:// www.ksd.uscourts.gov/guidelines/electronicdiscoveryguidelines.pdf. This requires a party and its counsel to review the party's ESI files, including current, back-up, archival, and legacy computer files. Concurrently, the guidelines place a duty to notify on the requesting party, which requires a party seeking discovery of ESI to “notify the opposing party of that fact immediately, and, if known at the time of the Fed.R.Civ.P. 26(f) conference, [to] identify as clearly as possible the categories of information that may be sought.” Id., at ¶ 3. The parties are also urged to reach an agreement regarding the scope of e-mail discovery, back-up materials, and how to access costs incurred as a result of electronic discovery. Id., at ¶ 4.” 2009 WL 1107740 at 5.

This, counsel for the parties did not do. Bad juju.

“Based on the arguments made at the March 25, 2009, hearing, as well as those contained in the parties’ briefs, it is clear to the Court that the steps required by the ESI Guidelines did not occur.”

“…Further, the Initial Scheduling Order entered in this case on July 14, 2008, omitted the standard discovery subparagraph (e) regarding ESI. (Compare Doc. 9, at 4-5 with http:// www.ksd.uscourts.gov/forms/wpforms/StdSchOrder.wpd, at 5.) While this case was transferred to the undersigned Magistrate Judge after entry of the Scheduling Order, it appears to the Court that both parties neglected the issue of ESI from the outset of this litigation until Plaintiff served the Requests for Production at issue on August 7, 2008 (Doc. 87-2)-a mere three and a half months before discovery in this case was initially to have been completed ( see Doc. 9, at 4.)” Id., at *6

The Court’s reaction should not be surprising, but should serve as a judicial neon sign shouting: we’re-running-out-of-patience-here:

“This is unacceptable.”

Although the court was reluctant to intervene “at this late date,” it did provide some limited relief by permitting additional eDiscovery by way of backup tape restoration and search to be undertaken.

Specific versus General Work-Product

The Court also reminds us that for the attorney client or work-product privilege to apply, the assertion (and documents) must involve advice pertinent to a particular event, or employee, and not general in nature:

“To the extent the document involves specific legal advice regarding a situation with a particular employee, the document could be considered privileged. However, it appears that the subject document was merely drafted for general, instructional and/or educational purposes. Defendant has not met its burden of establishing all of the required elements that would entitle the subject document to either an attorney-client privilege or to work product protection, therefore Defendant is ordered to produce the same.” Id Patterson v. Goodyear Tire and Rubber Co. 2009 WL 1107740, 5 (D.Kan. 2009)


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Case: Jones v. PPG Industries, Inc.
Citation: 2009 WL 1119595 (W.D.Pa. 2009)
Date: 2009-04-27
Topics: Third Circuit standard for vacatur of arbitrator’s decision, district court’s review of arbitrator’s spoliation decision

This decision, involving the imposition of spoliation sanctions in an arbitral forum, stands as a stark reminder that “what happens in arbitration, stays in arbitration.” Put another way, the grounds for reversing an arbitral decision, even one involving discovery abuse sanctions imposition, is subject to only limited judicial review. Most courts agree with the following analysis:

“The motion to vacate was governed by Section 10 of the Federal Arbitration Act (“FAA”), which provides that the district court may only vacate an arbitrator's award:

(1) where [it] was procured by corruption, fraud, or undue means; (2) where there was evident partiality or corruption in the arbitrators ...; (3) where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced; or (4) where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made… O'Leary v. Salomon Smith Barney, Inc., 2008 WL 5136950 (D.N.J.2008) (quoting 9 U.S.C. § 10(b)). ” Jones v. PPG Industries, Inc., 2009 WL 1119595, at 1 -2 (W.D. Pa. 2009)

The Third Circuit has also recognized “manifest disregard of the law” as an additional ground for the vacatur of an arbitral award, which the Supreme Court recently ruled not to be an additional, but a shorthand version of existing statutory grounds (arbitration fans probably already know this...but footnote one was nonetheless interesting enough to include here:

“The United States Court of Appeals for the Third Circuit has recognized an additional, judicially created ground for vacatur, which is an arbitration award that is in manifest disregard for the law. Roadway Sys. v. Kayser, 257 F.3d 287, 291 n. 1 (3d Cir.2001). FN1

“FN1. The United States Supreme Court's recent decision in Hall Street Assoc. v. Mattel, Inc., 1 --- U.S. ----, 127 S.Ct. 1396, 1404 (2008), indicates that the section 10 statutory grounds for vacatur are exclusive, and that “manifest disregard” is not a separate grounds for vacatur, but rather, is merely a shorthand description of subsections 1-4 of Section 10(b). “ Id., at *2

No matter, the Court reasoned, as the plaintiff’s assertions of error “did not come close” to meeting either the statutory grounds or the judicially created manifest error standard for the vacatur of an arbitral award.

Takeaway: It might be advisable in contract negotiations to insert language requiring the adoption of the Federal Rules of Civil Procedure, the Federal Rules of Evidence, and the requirement that an arbitrator or panel provide written findings of fact and conclusions of law. Note, however, that while this may help support either an assertion of or defense to spoliation of evidence, there are at least two considerations to keep in mind. The first show stopper, insofar as ESI spoliation might be an issue, is that arbitration panels may not be technologically sophisticated. The second show stopper is the really, really high bar for vacatur. So, choose your arbtitral forum (and your arbitrators) wisely, and, where a dispute might involve ESI (lol), include an option to retain a special master to assist the arbitrators in the event of an ESI discovery or evidence management dispute.


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Case: Hohider v. United Parcel Service, Inc.
Citation: --- F.R.D. ----, 2009 WL 1163931 (W.D. Pa. 2009)
Date: 2009-04-28
Topics: Assertion of work product privilege may operate to trigger duty to preserve ESI, misrepresentations concerning preservation efforts and duty of candor to the court, interposition of appeal (and stay of proceedings) after class certification and after filing of motion for preservation order, effect of appellate stay of proceedings on pre-stay motions to preserve evidence and for sanctions.

This class action case from the U.S. District Court for the Western District of Pennsylvania presents issues of procedural gamesmanship, ethics (candor to the tribunal) and a discussion of work product privilege.

One question that has remained largely unaddressed is how the assertion of the attorney work-product privilege operates as a trigger for a duty to preserve. Note that the assertion is always made in anticipation of litigation, and so (think Zubulake IV) it may be argued that the preparation, or creation date of the document in connection with which the privilege is asserted may also operate to trigger an earlier-than-expected (by the producing party) obligation to preserve ESI.

The procedural posture itself is interesting. Here’s the time line:

July 16, 2007 - U.S. District Judge Conti certified a class of plaintiffs, and defendants appealed.
Prior to Appellate Stay- Plaintiffs filed motion for Preservation Order, and Motion for Sanctions based alleging defendant “failed to preserve certain e-Discovery materials for this litigation...”
December 19, 2007 - Court appointed a special master in connection with both motions.
February 8, 2008 - The U.S. Court of Appeals for the Third Circuit stayed district court proceedings.
July 31, 2008 – The District Court ruled that the stay did not extend to either the motion to preserve evidence, or to the motion for sanctions for failure to preserve evidence
December 23, 2008 - “The motion for preservation order was resolved by the parties through a consent order in which the parties agreed to the efforts which should be taken in the future to preserve potential relevant electronic evidence.”

Special Master Activities

After August, 2008 – The court received regular updates from the special master about the nature, scope and expense of his duties, in connection with which no objections were received by either party. The special master then issued two reports.
February 8, 2009 - First Special Master’s Report and Recommendation: “The first report, dated February 18, 2009, addressed the trigger of the duty to preserve and the scope of relevant evidence. (Special Master Report and Recommendation No. 1, Preliminary Determination of Relevant Evidence (Docket No. 309).)” Hohider v. United Parcel Service, Inc. 2009 WL 1163931, 1 (W.D. Pa. 2009)
February 25, 2009 – Second Special Master’s Report and Recommendation: “The second report, dated February 25, 2009, addressed most of the privilege issues associated with defendant's litigation hold efforts. (Special Master Report and Recommendation No. 2, First Disposition of the Parties' Assertions of Privilege and Protection (Doc. No. 310).) 2009 WL 1163931, at 1

Here’s where it gets interesting…

“The special master also “sought and received approval to file a replacement to Report and Recommendation No. 2 (the “replacement report”) so that all the parties' arguments and evidence relating to the privileges asserted for litigation hold materials could be addressed in a single report. (Order Granting Special Master Request for Modification of Schedule (Doc. No. 315).)”

So, what flamed the Court’s ire? Let’s just call this eDiscovery What-Not-to-Do Number One:

The defendant also filed an emergency motion to stay discovery proceedings with the District Court. Put mildly, this did not provide manifest merriment to the Court:

“This court expected to receive that replacement report in April 2009. The defendant's recent procedural maneuvering prevented the court from having the replacement report timely filed.”

Ouch.

Obligation to Preserve is “Affirmative”

What happens next once again brings to mind the term “flay.” The Court first starts out with a discussion of a party’s duty to preserve evidence together with a brief survey of preservation obligation decisions from federal district courts in the Third Circuit. The Court then relies on Southern District of New York decision and Second Circuit decisional authority when discussing “reasonable anticipation”:

“A duty to preserve is an “affirmative obligation,” which arises “when the party in possession of the evidence knows that litigation by the party seeking the evidence is pending or probable and the party in possession of the evidence can foresee the harm or prejudice that would be caused to the party seeking the evidence if the evidence were to be discarded.” Kounelis v. Sherrer, 529 F .Supp.2d 503, 518 (D.N.J.2008). “

“While a litigant is under no duty to keep or retain every document in its possession, even in advance of litigation, it is under a duty to preserve what it knows, or reasonably should know, will likely be requested in reasonably foreseeable litigation.” Scott v. IBM Corp., 196 F.R.D. 233, 249 (D.N.J.2000); see Winters v. Textron, Inc., 187 F.R.D. 518, 520 (M.D.Pa.1999) (finding that knowledge of even a potential claim is sufficient to impose a duty to preserve evidence); Bowman v. American Medical Systems, Inc., No. 96-7871, 1998 WL 721079, at *3 (E.D.Pa.Oct.9, 1998).”

“ (“A party which reasonably anticipates litigation has an affirmative duty to preserve relevant evidence”); Barsoum v. NYC Housing Authority, 202 F.R.D. 396, 400 (S.D.N.Y.2001) (citing Kronisch v. United States, 150 F.3d 112, 126 (2d Cir.1998) (“A party has a duty to retain evidence that it knows or reasonably should know may be relevant to pending or future litigation.”)). Hohider v. United Parcel Service, Inc., 2009 WL 1163931, at *2 (W.D. Pa. 2009)

Duty of Candor to the Court

It is highly likely that a Court is not happy with counsel for one or more parties to litigation pending before it when a state bar’s rules of professional responsibility are discussed. The Court’s focus here is on the responsibility for candor to the tribunal.

The U.S. District Court for the Eastern District of Pennsylvania, together with nearly every other federal court, requires attorneys practicing before it to comply with rules of professional responsibility effective in the jurisdiction in the Court is situated. Here, the Court discusses the Pennsylvania Rules of Professional Conduct:

Rule 3.3 of the Pennsylvania Rules of Professional Conduct, applicable to attorneys appearing before this court, states in relevant part:

“Rule 3.3. Candor Toward the Tribunal

(a) A lawyer shall not knowingly:

(1) make a false statement of material fact or law to a tribunal or fail to correct a false statement of material fact or law previously made to the tribunal by the lawyer;
In certain circumstances, “failure to make a disclosure is the equivalent of an affirmative misrepresentation.” Rule 3.3 Pa. Rules Prof. Conduct cm. ¶ 3.”Hohider v. United Parcel Service, Inc., 2009 WL 1163931, at 2. The Court then continues with a discussion of “possible misrepresentation”

“Possible Misrepresentations or Omissions by UPS to Plaintiffs and to the Court”

It’s never a good sign (and little room is left for doubt of direction) when a court begins sentence with the phrase “it is apparent” and includes as well the words “not forthright:”

“It is apparent to the court that UPS was not forthright in informing plaintiffs and the court about the nature and scope of UPS's preservation efforts. For example, defendant's counsel wrote a letter to plaintiffs' counsel in 2005 stating that defendant was “in the process of placing a ‘Hold,’ as that term is defined in the UPS Records Manual, on all categories of documents requested by Plaintiffs in the litigation.” (J. Culleiton letter to C. Bagin at 3-4, May 3, 2005.) It was also represented to plaintiffs' counsel that defendant was “even going a step further and disseminating a memorandum to applicable managers throughout the Company which describes the litigation and further details the records that are to be held from destruction.” ( Id.)”

Failure to Disseminate Litigation Hold Memorandum, Failed to Disclose Failure to Disseminate Litigation Hold Memorandum for Nearly Two Years

For the defendant, this was, in technical terms, a double whammy. Failure to disseminate a litigation hold memorandum is bad enough, but in this instance that failure was compounded by an almost two year failure to disclose the failure to terminate. This might be analogized to a criminal action, where the cover-up may be worse than the crime committed.

“Defendant, however, did not issue the hold at that time, did not disseminate the hold memorandum, and it did not advise plaintiffs of its failure to do so. Similarly defendant did not disclose, until after the special master investigation was commenced in August 2008, that a litigation hold was not issued until February 2006-approximately two years after this case was filed.” Id., at 2.

Privilege Assertions and Triggers for Duty to Preserve ESI

In any event, the Court was not amused, and directed the special master to issue a report and recommendation in connection with how, and to what extent, defendant’s actions might have an impact on its assertions of work-product privilege:

“The court directs the special master to review these and other statements made or not made by defendant and its counsel and to make findings and recommendations in the replacement report regarding whether any of defendant's conduct affects its privilege assertions.” Id., at 3

The Court then discusses the first report and recommendation of the special master, but notes that since the report was intended to provide “guidance to the parties,” and had not yet been adopted by the Court, the parties were not required to file objections thereto. That said, the message conveyed is clear, and not pleasant for the defendant’s assertions of privilege:

“The court is very troubled by defendant's efforts to delay or stop the court's resolution of the motion concerning whether defendant failed to preserve electronically stored information (“ESI”).”

“The court reviewed Report and Recommendation Number 1 and Report and Recommendation Number 2. In the first report, the special master made numerous findings and recommendations regarding the trigger to the duty to preserve and the scope of relevant information. The special master recommended that the court reject a number of positions taken by defendant on issues critical to the spoliation analysis.”

“For example, defendant took the position that it had no duty to preserve relevant ESI until the case was certified, some three years after the lawsuit was filed. The special master recommended that the court find that defendant's duty to preserve included ESI. (Report and Recommendation No. 1 at 11-14.) The special master also recommended that the court (a) reject defendant's arguments that certain workers' compensation information was not subject to a duty to preserve ( id. at 21-24), (b) find that the duty to preserve encompassed a broader scope of evidence than defendant contends ( id. at 25-35), (c) and reject defendant's argument that this case be limited to defendant's formal ADA accommodation request process ( id. at 36-44).FN2”

“FN2. The parties were not required to object to this first report since it was an interim report by the special master to provide guidance for the parties. At this time, the court has not yet adopted or rejected the special master's recommendations.” Id. at 3

Although the Court has not yet adopted the special master’s report and recommendation, its discussion of defendant’s ESI preservation activity (or non-activity) provides what appear to be broad hints.

The Court then discusses the special master’s report and recommendation on, inter alia, work-product privilege, and the language below suggests that the date of email to which work product privilege is asserted may well support the finding of a contemporaneous ESI preservation trigger date:

“In his report and recommendation on privilege, the special master also recommended that the court reject certain positions asserted by defendant, while at the same time recommending that the court sustain other of defendant's privileges.”

“For example, the special master recommended that the court reject defendant's assertion of privilege over an e-mail dated May 12, 2005 sent by L. Herron (the “Herron Email”). (Report and Recommendation No. 2 at 40-46.) As the court noted at the April 23, 2009 hearing, this email is central to defendant's 2005 preservation efforts and, based upon the court's own review of this email and the evidence defendant offered in support of this privilege, the court concludes there is little likelihood that this court could find the Herron Email to be privileged. Id., at 3

Privilege Waiver by Forwarding to and from Non-Lawyers

The Court also notes (but keep in mind that this report and recommendation has not yet been adopted) that the interposing a non-lawyer in an email string might result in a waiver of work-product privilege.

“The special master also recommended that the court overrule defendant's privilege assertions relating to the emails sent by non-lawyers to other non-lawyers forwarding the Herron Email. ( Id. at 46-49.) Id., at 3.

Defendant’s Procedural Gamesmanship

Think the situation could get any worse for defendant? Think again. Defendant’s counsel’s post-appeal filing activities did nothing to endear itself with the Court. Put another way, a court’s characterization of “timing and motives” as “suspicious” is an event neither a party nor counsel should ever want to experience. That said, defendant’s actions were, well, they speak for themselves. Defendant sought to stay or halt the activities of the special master, while simultaneously violating a court order to submit withheld documents for in camera review.

“After the special master issued these two reports, defendant undertook certain actions to delay or stop the investigation ordered by this court. First, defendant asked the United States Court of Appeals for the Third Circuit to stay the court-ordered special master's completion of his duties. Second, defendant refused to submit the withheld documents for in camera review. The defendant's timing and motives appear suspicious for the reasons more fully explained at the April 23, 2009 hearing. Id., at 3.

Bad, bad juju. The Court appeared to be especially irked because under the special master appointment order, defendant had a continuing right to request that the court review any actions taken by the special master as inappropriate or burdensome. In all that time, defendant had not sought any such review.

“Under the special master appointment order, defendant has the right and ability to seek this court's review of anything the special master did or did not do...Because defendant did not do so, the court is skeptical about the timing of defendant's recent actions.

“In particular, the court is concerned that defendant is seeking to delay or stop the court's ability to resolve the pending motion for sanctions, because the special master is uncovering information defendant was otherwise loathe to disclose in a timely and cooperative manner and because defendant does not like the recommendations the special master has already made to the court.”

In Camera Review of Withheld Documents Ordered

It appears that defendant had attempted to pull out all procedural stops in an attempt to delay or prevent the disclosure of documents withheld on the basis of its assertions of work-product privilege. By April 2009, defense counsel’s changed its approach in its characterization of the withheld documents, but again, the Court wasn’t in a buying mood:

“At the hearing April 23, 2009, defense counsel represented to the court that the withheld documents are innocuous emails. The court, however, can not determine the import of the withheld documents without reviewing them in camera.”

Defense counsel argument that it was not required to comply with an order compelling production for in camera review of allegedly privileged documents fell on deaf ears. I had to read the line beginning with “[No lawyer had ever previously advanced to this court..” a few times before I realized that the Court meant “No lawyer has ever” as in ever, in any other litigation:

“With respect to the court's order requiring defendant to produce documents for in camera review, the court found no precedential authority in support of the defendant's refusal to comply with that order. No lawyer had ever previously advanced to this court the argument that a trial court may not review allegedly privileged documents in camera. Indeed, the court is frequently called upon to review such documents because it is the only way, in many cases, to determine whether the documents are privileged.” Id., at 4

Yowch.

Another hint that the creation date of a document to which work product privilege is alleged to attach may trigger a duty to preserve:

“In this case, the court finds that in camera review is not only proper, but necessary for several reasons:

“...No litigation hold was issued by defendant for approximately two years after this case was filed and the withheld documents relate to the delay in issuing the litigation hold.

The Court also provides an indication that defendant’s activities may constitute waiver of the privilege.

“Without reviewing the documents, it is impossible to determine whether the privilege over such documents was waived through defendant's conduct in this case-conduct that the court views as troubling and which may implicate a potential basis for waiver.” Id., at 5

Result: Defendant’s emergency motion to stay proceedings denied, special master to submit report and recommendation on privilege by May 4, 2009.

Author’s note: It appears that the Court reserved a decision on the “pending motion for sanctions.” Stay tuned.

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2009-04-29 Spoliation Triple Play

Another catch-up digest.

Spoliation: Three decisions for this installment, one addressing both spoliation standard under both Colorado state and federal common law standards, a second addressing spoliation under Minnesota law, and a third addressing both the independent tort of negligent spoliation (in Illinois) and spoliation under federal common law. The third decision also involves discussion about the interplay (or tension) between the Fed. R. Civ. P. Rule 15(a) liberal pleading amendment standard and the Fed. R. Civ. P. Rule 16(b) imposition of a “good-cause” threshold barrier to granting such amendments after passage of a case management order pleadings-amendment deadline

All errata acknowledged in advance.

SWT

Decisions:

Salvatore v. Pingel, 2009 WL 943713 (D. Colo. 2009)
Vitelli v. Knudson, 2009 WL 910846 (Minn. App. 2009)
Mintel Intern. Group, Ltd. v. Neergheen, 2009 WL 1033357 (N.D. Ill. 2009)


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Case: Salvatore v. Pingel
Citation: 2009 WL 943713 (D.Colo. 2009)
Date: 2009-04-06
Topics: Spoliation standards for Colorado federal courts and under Colorado state law, notice of representation alone insufficient to trigger duty to preserve

One interesting factoid about spoliation decisions is that they are rarely appealed to a U.S. circuit court of appeal. What practitioners now face are a mass (or mess, depending on one’s p.o.v.) of decisional authority that is as often conflicting as it is harmonious. For instance, in this decision, the Court relies extensively on Second Circuit and Southern District of New York (aka Zubulake) decisional authority, but recedes from strict application of a party’s duty to preserve.

That said, this decision, from the U.S. District Court for the District of Colorado involved a plaintiff allegedly injured by a van driven by defendant’s employee. The Court notes that “there was evidence that the “van’s brakes may have malfunctioned in connection with the accident. Deposition testimony of the van driver (defendant’s employee) revealed that the driver had complained about the performance of the van’s brakes, that a vehicle inspection conducted the day before the accident reported a “brakes low” status, and that a written inspection report, signed by defendant’s manager, stated that “above defects [were] corrected.”

Plaintiff alleged that five pieces of documentary evidence had been destroyed:

“(1) The Vehicle Inspection Report which People's Choice drivers were required to prepare on a daily basis, Motion for Sanctions;
(2) The Annual Inspection Report which was required to be completed annually and to be preserved for one year;
(3) The Maintenance Log which is a record of all maintenance work done on a vehicle and which is required to be maintained for 18 months after the vehicle is sold;
(4) The Accident Register which must be maintained for three years following an accident; and
(5) The Safety Manager's Inspection Report which is prepared by the company's safety manager following an investigation conducted to determine whether an accident was preventable.”

Defendant conceded the destruction of documents 1-4 but asserted that plaintiff was provided with a copy of document 5 under a different title. As for the destroyed documents, defendant “…argue[d], however, that those documents were destroyed as a routine practice of the company or as a result of negligence.”

In an interesting twist, the parties first briefed the spoliation issue under federal law. The plaintiff apparently had a change of heart, and (somewhat surprisingly) with defendant’s blessing, opted out of federal common law and chose to brief the spoliation assertion under Colorado state law. [Author’s note: I’m not sure most litigants are free, even by way of stipulation, to so choose or change their choice of applicable law).

With this case on such firm factual footing, let’s go to the analysis:

U.S. Magistrate Judge Boland starts out by noting that the federal district courts in Colorado follow what is best described as “pure” federal common law of spoliation. To that end, Magistrate Judge Boland recounts the standard as followed in the Colorado federal courts. Note that relevancy, rather than control or duty to preserve is not the first element to be analyzed; rather, it is relevancy that is the first precondition to a finding of spoliation. So, if no relevancy, hard stop to any spoliation analysis:

“The legal standard under federal law for imposition of sanctions for spoliation of evidence was succinctly stated by this court in Cache La Poudre Feeds, LLC v. Land O'Lakes, Inc., 244 F.R.D. 614 (D.Colo.2007), as follows:

“The court has inherent power to impose sanctions for the destruction or loss of evidence....In determining whether sanctions are appropriate, the court must first determine whether the missing documents or materials would be relevant to an issue at trial. If not, then the court's analysis stops there. If the missing documents would be relevant, the court must then decide whether [the custodian of the documents] was under an obligation to preserve the records at issue. Finally, if such a duty existed, the court must consider what sanction, if any, is appropriate giving the non-moving party's degree of culpability, the degree of any prejudice to the moving party, and the purpose to be served by exercising the court's power to sanction.”

Similarity of Colorado State and Federal Law Spoliation Standards

Magistrate Judge Boland then discusses the similarity of federal common law and Colorado state law spoliation standards:

“The standard under Colorado law is similar. In Costillo v. Chief Alternative, LLC, 140 P.3d 234 (Colo.App.2006), the court held: Trial courts enjoy broad discretion to impose sanctions for spoliation of evidence....”

“Sanctions may be imposed both to punish a party who has spoiled evidence and to remediate the harm to the injured party from the absence of that evidence....The trial court need not find that the evidence was destroyed in bad faith: it may sanction a party who willfully destroys evidence relevant to a contested issue.”

The Court found that there was no spoliation “under either federal or Colorado law.” This is an interesting statement, since the Court had noted earlier that Colorado federal courts followed federal common law.

Lack of Trigger for Preservation Duty

The Court found that no duty to preserve had been triggered prior to the filing of plaintiff’s action. What ensued appears to be more of an attorney competency issue. In the instant case, the accident in question occurred on May 17, 2005, and on June 1. 2005, plaintiff’s counsel sent a letter of representation (with no preservation language, request, or demand). The Court notes that plaintiff’s counsel letter of representation stated “in its entirety:”

“Please be advised that this firm represents Michael Salvatore in regards to the motorcycle/automobile accident, which occurred on May 17, 2005. Please direct all written and oral communications to this office. Thank you for your time and attention to this matter. Should you have any questions, please do not hesitate to contact this office.”
The Court goes on to note that “[T]he letter did not contain any threat of litigation or indication that litigation was anticipated or imminent.”

Magistrate Judge Boland then describes the ensuing correspondence sent to plaintiff’s counsel “throughout 2006”, all of which received no response:

“In reviewing the file, we note that ... our adjustor[sic] had written to you on several occasions but never received a response. Please advise me if you are still representing Mr. Salvatore. If so [there is a request for information].”

It appears that plaintiff realized that his attorney had been failing to pursue the matter with defendant’s adjustor and retained new counsel in April 2007:

“'On April 23, 2007, the adjustor made a Status Report to the defendants' insurance company, which included the following:

“We have finally heard from the Law Firm representing Mr. Salvatore. Ms. Holland Hoskins is the new attorney assigned to the case. Apparently they have terminated the prior attorney as Ms. Hoskins informed me that they have received a number of calls from her clients who have been waiting for some time to get their cases resolved. She is a bit overwhelmed with the case load but stated that she would get a Settlement Demand Packet out as soon as possible.”

The Court found that the “first threat of litigation, albeit equivocal” was made in November 2007 in connection with successor plaintiff’s counsel’s settlement demand letter.

The Court also found that defendant "knew or reasonably should have known of the likelihood of litigation stemming from this accident on November 1, 2007. They had a duty to preserve evidence based on the possibility of litigation on and after that date."

Of course, the evidence in question had been destroyed long before that date, and so the Court found no spoliation, and basis for the imposition of discovery sanctions.

Blognote: It is quite likely that plaintiff’s first attorney was derelict in his duties of representation. Other cases cited in this digest have held followed the Zubulake doctrine, which applies a “reasonable” standard to percipience of potential evidentiary relevance and an ensuing preservation trigger. U.S. Magistrate Judge Maas of the Southern District of New York issued a recent duty-to-preserve decision with a good Zubulake analysis

““Identifying the boundaries of the duty to preserve [evidence] involves two related inquiries: when does the duty to preserve attach, and what evidence must be preserved.” Zubulake, 220 F.R.D. at 216. A party is obligated to preserve evidence when it “has notice that the evidence is relevant to litigation ... [or] should have known that the evidence may be relevant to future litigation.” Kronisch v. United States, 150 F.3d 112, 126 (2d Cir.1998) (citations omitted); accord Fujitsu Ltd. v. Fed. Express Corp., 247 F.3d 423, 436 (2d Cir.2001).”

Here, however, it appears that the Court first relies on, and then limits Zubulake “reasonable” language (and Second Circuit decisional authority). It appears that Judge Boland’s decision strains, rather than follows Zubulake.

Blognote: I think the facts of this case stood squarely on the fence, and that another district court might well have found that the series of letters from counsel, although not directly threatening litigation, either individually or when taken constituted an early preservation duty trigger.


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Case: Vitelli v. Knudson
Citation: 2009 WL 910846 (Minn. App. 2009)
Date: 2009-04-07
Topics: Spoliation standards under Minnesota common law, clear error review standard for reversal of finding of sufficiency of notice of claim

In this negligence action, the Court of Appeals of Minnesota ruled that defendant builder had reasonable notice of plaintiff homeowners' potential claims and, in accordance with Minnesota common law, was precluded from asserting spoliation as a defense in seeking dismissal of plaintiff’s action. Defendant builder received two letters from plaintiff’s counsel within five weeks of the alleged incident, the latter of which strongly suggested that defendant involve its insurer. Despite notice of plaintiff’s claims, defendant never asked to investigate the premises before the homeowners' complaint was filed.”

The Court first discusses evidentiary spoliation standards under Minnesota common law:

“Spoliation of evidence is the destruction of relevant evidence by a party. Hoffman v. Ford Motor Co., 587 N.W.2d 66, 70 (Minn.App.1998). A district court may sanction a party who destroys evidence if that party gains an evidentiary advantage due to its failure to preserve evidence after having had the opportunity to examine it. Himes v. Woodings-Verona Tool Works, Inc., 565 N.W.2d 469, 470-71 (Minn.App.1997), review denied (Minn. Aug. 26, 1997). The severity of the sanction depends on the prejudice suffered by the opposing party. Hoffman, 587 N.W.2d at 71. But a party can avoid sanctions for spoliation of evidence if the opposing party had sufficient notice of the claim, giving the party the opportunity to correct defects, prepare for negotiation or litigation, or “safeguard against stale claims being asserted after it is too late ... to investigate them.” Id. at 70 (quotation omitted). In the absence of clear error, this court will not reverse a district court's determination of the sufficiency of notice of a claim when deciding whether sanctions are appropriate for the spoliation of evidence. Id. at 71.”

In this case the lower court found that two letters sent by denied a party the use of spoliation as a defense because “reasonable notice” had been given:

“Here, in denying CCH's and Halla's motions for summary judgment, the district court concluded that “because the Court has found that the letter of October 4, 2005, was reasonable notice of the potential claims of the Vitellis, and because [CCH] took no immediate and timely action in response to this notice they cannot rely on the defense of spoliation in this action.””

Notice and Inspection

The Court also ruled that notice and inspection “must be given far enough in advance of the destruction of evidence to provide the alleged responsible party with the opportunity to inspect the evidence.” How this plays out where spoliation of ESI is involved will be interesting.


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Case: Mintel Intern. Group, Ltd. v. Neergheen
Citation: 2009 WL 1033357 (N.D. Ill. 2009)
Date: 2009-04-17
Topics: Third party ESI discovery protections, forensic imaging, battle of the experts, timing of assertion of negligent spoliation tort claim, Fed. R. Civ. P. Rule 15(a) motion to amend after Rule 16(b) pleadings amendment deadline requires showing of good cause and due diligence, Seventh Circuit standard for review of Magistrate Judge’s Report and Recommendation

This Illinois Trade Secrets Act (“ITSA”) and Computer Fraud and Abuse Act (“CFAA”) matter comes to us courtesy of the U.S. District Court for the Northern District of Illinois. After plaintiff discovered that that defendant (a former employee of plaintiff) had accepted employment at third-party Datamonitor, plaintiff filed the instant action alleging violations of the ITSA, CFAA, and “violations of various terms of Defendant's employment contract with Mintel.”

In an interesting opening, U.S. District Court Judge Dow explains that even though both the District Court and the Magistrate Judge “rejected all of Plaintiff’s motions concerning the alleged spoliation” the Court was obligated by Seventh Circuit decisional authority to conduct a de novo review of plaintiff’s allegations.

The Court reasoned that hearing the testimony of experts from both sides would be helpful because of “…the complexity of the electronic evidence issues involved in this case.” Moreover, the Court reasoned,

“[T]he Court would find it helpful to understand the experts' views on whether any “files relating to or taken from Mintel” were deleted from that computer and those USB drives, and if so, whether the deletions were accidental or intentional.”

The Court was apparently not very pleased at least one party’s counsel. Let’s tee that up with this “for starters” statement by the Court:

“The Court reiterates (see above) that it would not find expert opinion on legal issues helpful.”

Spoliation, the Tort, vs. Spoliation, the Motion for Sanctions

Illinois recognized an independent action for negligent spoliation of evidence, and Judge Dow first wanted to make clear which type of spoliation proceeding was addressed:

“The Court also stresses (see below) that there is no spoliation “claim” in this case. Rather, there is a request for sanctions and/or an adverse inference based on allegations of spoliation. The kind of testimony from the experts outlined above will be useful in the Court's de novo consideration of the request for sanctions and/or an adverse inference. For all of these reasons, the motion in limine to exclude all evidence or argument regarding allegations of spoliation is denied.”

Ok, so why the to-do about a spoliation claim? Well, it appears that the plaintiff filed a Fed. R. Civ. P. Rule 15(a) motion to amend to include a claim for negligent spoliation of evidence. The alleged spoliation involved ESI:

" Plaintiff contends that its additional claim is appropriate in view of the fact that “[t]he discovery pursued in this matter has revealed that Defendant continued to use his laptop computer, deleted files, and severely limited Mintel's ability to trace Defendant's behavior in the days leading up to and following his resignation from Mintel” and that Plaintiff has not been able to corroborate Defendant's claims that he (i) deleted all of the Mintel confidential information that he took shortly before he left his employment at Mintel and (ii) has not shared that information with his new employer. Plaintiff notes that the issue of spoliation of evidence “has been contested since the beginning of this case and has been the subject of several motions.” According to Plaintiff, that fact cuts in favor of granting the motion for leave to file the new claim, because Defendant ‘can claim no surprise that Mintel is claiming that he spoliated evidence.’"

Post Fed. R. Civ. P. Rule 16(b) Pleading Amendment Deadline Motions to Amend

The problem here is that while plaintiff made a colorably proper motion to amend under Fed. R. Civ. P. Rule 15(a), he did so after the pleadings amendment deadline set forth in the Fed. R. Civ. P. Rule 16(b) case management order, which required a showing of “good cause.” Plaintiff did not move to amend his pleadings under Rule 16(b), and the court more than hints that even if he did, no good cause was shown. For civil procedure aficionados, here are the pertinent rule excerpts:

Rule 16(b)(3)(A):

“Contents of the Order:
(A) Required Contents. The Scheduling Order must limit the time to join other parties, amend the pleadings, complete discovery and file motions.”

Rule 16(b)(4):

“Modifying a Schedule. A schedule may be modified only for good cause and with the judge’s consent.”

Good cause, the Court notes, requires a showing of due diligence in attempting to meet the Rule 16(b) deadline, and Judge Dow makes it clear that plaintiff made no showing of any due diligence and denied plaintiff’s motion to amend:

“Applying the Rule 16(b) standard, the Court cannot find “good cause” for the tardiness in Plaintiff's assertion of a spoliation claim. Again, as Plaintiff acknowledges, “[t]he issue of spoliation of evidence has been contested since the beginning of this case and has been the subject of several motions.” [207, at 2 .] Yet, Plaintiff waited to seek leave to add such a claim until fifty-six days after the deadline for amendments to pleadings established under the scheduling order submitted by agreement of parties at Magistrate Judge Valdez's direction. During that time, Plaintiff focused on the pursuit of sanctions-including the entry of a default judgment-for Defendant's alleged spoliation, without making any effort to plead a claim or cause of action for spoliation. In short, by Plaintiff's own admission, it “was, or should have been aware” of the “facts underlying” the claim prior to the deadline set in the scheduling order. Trustmark Ins. Co., 424 F .3d at 553. Accordingly, the Court cannot find “good cause” to permit the filing of the amended complaint, and Plaintiff's motion for leave to amend its complaint [207] is denied.”

Blognote and Takeaway: This sounds very much like a laches approach and rationale. The rather obvious takeaway is…assert as early as practicable, preferably before the tolling of the Rule 16(b)3(A) bell, and if that’s not possible, make sure your motion to amend is for good cause, and thereby defensible.

Seventh Circuit Standard of Review of Magistrate Judge Order

Plaintiff filed a motion for an order to show cause, for discovery sanctions, and for sanctions resulting from evidence spoliation. Judge Dow referred the motion to a Magistrate Judge, who denied the motion. Plaintiff filed objections, and defendant filed its response. The parties disputed the standard of review for the order denying that motion. The parties’ positions were as follows:

Plaintiff argued for de novo review:

"Plaintiff contends that the order should be reviewed de novo because it sought a final determination of Defendant's alleged violations of the TRO, and thus is akin to a contempt motion or a dispositive sanctions motion that cannot be finally resolved by a magistrate judge. Thus, according to Plaintiff, the Court must treat the January 22, 2009 order as a report and recommendation.

Defendant argued for a “clear error or contrary to law” review:

“Defendant counters that the order pertains to a pre-trial discovery matter and thus is subject to review under the “clearly erroneous or contrary to law” standard.

Of course, defendant hedged its bets:

“Defendant further submits that the order should be upheld regardless of the applicable standard of review.”

The Court ruled that Seventh Circuit decisional authority mandates a de novo review:

"While Defendant's position on the standard of review has some support in the decisions of other circuits cited in Defendant's brief, the Court must conclude that in the Seventh Circuit, the January 22, 2009 order is subject to de novo review, whether the motion that gave rise to the order is viewed as seeking a contempt finding for violation of the TRO, sanctions under Rule 37, or both.“

“It is well established that “Rule 37 permits the award of sanctions with dispositive effects; monetary sanctions, the striking of claims and defenses; and default judgment.” Fidelity Nat'l Title Ins. Co. v. Intercounty Nat'l Title Ins. Co., 2002 WL 1433584, at *2 (N.D.Ill. July 2, 2002).”

“It is equally well established that “[a] magistrate judge is only authorized to make decisions on nondispositive matters that have independent effect in order to assure that he or she does not dispose of the merits of any civil case without the parties' consent.” Royal Maccabees Life Ins. Co. v. Malachinski, 2001 WL 290308, at *6 (N.D.Ill. Mar. 20, 2001).”

So, in the Seventh Circuit, if the request for relief is couched in “sanctions” terminology, the review is always de novo:

“Accordingly, the Seventh Circuit has held that “all sanctions requests, whether pre- or post-dismissal” must be determined de novo by the district court. Retired Chicago Police Ass'n v. City of Chicago, 76 F.3d 856, 869 (7th Cir.1996); see also Alpern v. Lieb, 38 F.3d 933, 935 (7th Cir.1994); Fidelity Nat't Title Ins., 2002 WL 1433584, at *2 (“judges in this district conduct de novo review of magistrate judges' sanctions awards” as well as “a magistrate judge's recommendation on a dispositive motion”); see also Royal Maccabees, 2001 WL 290308, at *7 (same).”

“And “[t]he de novo standard applies to the magistrate judge's findings of fact and conclusions of law.” Fidelity Nat't Title Ins., 2002 WL 1433584, at *2 (citing Rajaratnam v. Moyer, 47 F.3d 922, 924 (7th Cir.1995)). "

Magistrate Judge’s Order Viewed as “Report and Recommendation” Subject to De Novo Review

Accordingly, the Court was constrained to view the Magistrate Judge’s Order as a “Report and Recommendation” subject to de novo review. The Court then describes next steps in a de novo review:

"Under [the de novo review] standard, this Court must give “fresh consideration to those issues to which specific objections have been made.” Rajaratnam v. Moyer, 47 F .3d 922, 925 n. 8 (7th Cir.1995).

The Court notes that where a de novo review involves complex issues about electronic discovery, that expert testimony is warranted. Moreover, the Court now fully explains that issues of spoliation relate to a motion for sanctions, rather than an independent tort claim for spoliation of electronic evidence:

“And, in view of both the applicable standard of review and the complexity of the electronic discovery issues raised in the expert reports and affidavits, the Court concludes that going forward with “Phase II” proceedings in which the experts present their testimony in court, subject to cross-examination, will best position the Court to make an informed de novo ruling on Plaintiff's sanctions motion. See Fed.R.Civ.P. 72(b) (“The district court may accept, reject, or modify the recommended decision, receive further evidence, or recommit the matter to the magistrate judge with instructions”); 28 U.S.C. § 636(b)(1)(C) (noting that on de novo review, the district judge may “receive further evidence”).”

“Accordingly, the Court reserves ruling on Plaintiff's objections to the January 22, 2009 order until after it has heard testimony from the experts, after which time the Court will issue a written ruling on whether any basis exists for sanctions and/or an adverse inference on the basis of the alleged spoliation."

Third Party eDiscovery

Plaintiff sought to discover ESI from third party (and defendant’s current employer) Datamonitor. The discovery process was contentious, involving multiple subpoenas seeking forensic images, motions to compel, and motions for reconsideration, in pertinent part seeking:

“[A] forensic image of Datamonitor's desktop and/or laptop computers used at any time by Defendant and the forensic image of Defendant's electronic mail account at Datamonitor,” or, at a minimum, a “Round 1-style” report FN3 of the forensic images of those Datamonitor computers.”

Ok, here now, the definition of “Round 1-style” report:

“FN3. A Round 1-style report is generated from an existing forensic image of a computer and contains “metadata”-information generated by the software in the computer. According to Plaintiff, it would include the following registers and logs: All Files Present; Event Logs; Internet History (excluding the substance of any queries or searches input by Datamonitor personnel); Link File Reports; Recycle Bin; System Information; and USBSTOR Registries/Logs.”

Put succinctly, plaintiff’s third party eDiscovery attempts (and five discovery motions) could be characterized as alternatively Herculean, or needlessly repetitive, generally unsubstantiated, and therefore unjustified. Guess which way the Magistrate Judge Ruled on plaintiff’s five (count ‘em) discovery motions? Denied, but with some concessions to plaintiff’s “concerns.”
Seventh Circuit Standards for Review of Magistrate Judge’s Non-Dispositive Ruling

The rule in the Seventh Circuit is the standard of review for an objected-to non-dispositive ruling of a Magistrate Judge is clear error or contrary to law:

“As both parties have recognized, where, as here, a district court considers objections to a magistrate judge's rulings on nondispositive matters, the magistrate judge's disposition will be set aside only if it is “clearly erroneous or contrary to law.” Fed.R.Civ.P. 72(a); see also Hall v. Norfolk Southern Ry. Co., 469 F.3d 590, 595 (7th Cir.2006); Bobkoski v. Board of Educ. of Cary Consol. School Dist., 141 F.R.D. 88, 90 (N.D.Ill.1992). Under the clear error standard of review, “the district court can overturn the magistrate judge's ruling only if the district court is left with the definite and firm conviction that a mistake has been made.” Weeks v. Samsung Heavy Industries Co., Ltd., 126 F.3d 926, 943 (7th Cir.1997)."

Third Party Discovery Requests

Having teed up the standard for review, Judge Dow then notes that third parties are entitled to somewhat greater protection than parties from discovery requests, and that some showing beyond mere speculation is required to permit full bore type discovery:

“As Judge Valdez repeatedly has noted, third parties are entitled to somewhat greater protection than parties in regard to discovery requests (see Builders Ass'n of Greater Chicago v. City of Chicago, 2001 WL 664453, at *7 n. 4 (N.D. Ill. June 12, 2001)), such as requests for a forensic image of a competitor's computers (see, e.g., Powers v. Thomas M. Cooley Law School, 2006 WL 2711512, at *5 (W.D.Mich. Sept. 21, 2006)).

“Moreover, the pertinent rules of civil procedure generally do not permit the requesting party to conduct the actual search for discoverable data (In re Ford Motor Co., 345 F.3d 1315, 1317 (11th Cir.2003)), at least absent some showing that the documents sought by the requesting party are or were in the possession of the party to whom the request is made (see, e.g., Hagenbuch v. 3B6 Sistemi Elettronici Industriali S.R.L., 2006 WL 665005, at *4 (N.D.Ill. March 9, 2006)).”

"Upon review of Plaintiff's motions, the parties' briefs and arguments, and Judge Valdez's two orders, the Court concludes that Judge Valdez considered all of the evidence presented by Plaintiff, applied the appropriate rules and case authorities, and offered a more than reasonable justification for her ruling that Plaintiff had not come forward with sufficient information to get “beyond the mere speculation line and towards the standard required for discovery from a third-party.”"

Finding no clear error in the Magistrate Judge’s ruling, the District Court affirmed.

This decision also has an interesting “battle of the experts” discussion in connection with data wiping. Plaintiff alleged that certain USB devices were “wiped.” Judge Dow provides an interesting analysis. Look for the “some evidence of no intentional wiping” language:

“Magistrate Judge Valdez had before her the contradicting opinions of two forensic experts regarding the hexadecimal value “FF” found on the unallocated space of both drives. After wading through, and then setting forth, the testimony of the two experts, Judge Valdez concluded that Plaintiff's motion to reconsider presented a classic “battle of the experts.” [219, at 10.]

“She found it important that Plaintiff's expert found no traces of a wiping program on the USB drives apart from the presence of the “FF” pattern and that he did not state that he was familiar with any wiping program that leaves an “FF” hexadecimal pattern.”

“She compared that testimony with the explanation of Defendant's expert for the “FF” pattern in the absence of any other evidence of wiping and concluded that it was “reasonable” to assume that no wiping program was ever run. In addition, Magistrate Judge Valdez reasonably concluded that the fact that two Mintel-related documents-neither of which has been shown to have been transferred to any Datamonitor device-actually remained on the USB devices provided some evidence that there was no intentional “wiping” of the device. Id. (citing Bryant v. Gardner, 2008 WL 4966589, at *15 (N.D.Ill.2008) (“Had Defendants purposefully deleted unfavorable evidence from the laptop, the Court finds it unlikely that [ ] other documents favorable to Plaintiff would have remained”)). "

Blognote: It appears that Datamonitor’s status in this action might more appropriately be described as a non-party rather than a “third party.” While no specific mention of Fed. R. Civ. P. Rule 45 is made in the opinion, the Court discusses a subpoena and motion to compel Datamonitor’s compliance both with a subpoena and a court order directing compliance therewith.

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2009-04-28 Spoliation, ESI Authentication, and Standards of Review for Federal Magistrate Judge Report and Recommendations

Five decisions for this week’s digest (and yes, I’m catching up after RSA 2009). The first, a duty to preserve decision. The second decision reminds us that eDiscovery abuse sanctions can survive summary judgment, and is followed by a two authentication cases (one of which is a criminal matter, but each of which pays some degree of homage to Magistrate Judge Grimm’s decision in Lorraine v Markel American Ins.), and a decision discussing the standards of a federal district court’s review of a U.S. Magistrate’s Report and Recommendation.

Duty to Preserve: The Southern District of New York provides a decision in which negligent failure to preserve (triggering potential spoliation proceedings) was not established. The court also provides a discussion of how, and under what circumstances [in the Second Circuit], a finding of spoliation can support a denial of summary judgment decision in “borderline” cases. In the Adorno decision, below, it did.
Sanctions for Spoliation Survive Summary: Nicely alliterative. Where would we be in a week without a spoliation decisions? Here, from the District of Nevada, a decision involving spoliation by a plaintiff.
ESI Authentication: ESI Authentication decisions are beginning to crop up. Discussed are two decisions; the first providing Indiana decisional authority on the authentication of cell phone text messages, and the second from the Northern District of Ohio on authentication of web page printouts.
Standard of Review for Magistrate Judge Report and Recommendation: For civil procedure fans, a decision from the Northern District of New York outlining the standard of review for objected-to and unobjected-to report and recommendation(s)s from a United States Magistrate Judge. More on review standards in upcoming digests.


SWT

Decisions:

Adorno v. Port Authority of New York and New Jersey, 2009 WL 857495 (S.D.N.Y. 2009)
Coburn v. PN II, Inc., 2009 WL 905057 (D.Nev. 2009)
Hape v. State, --- N.E.2d ----, 2009 WL 866857 (Ind.App. 2009)
Schneider Saddlery Co., Inc. v. Best Shot Pet Products Intern., LLC, 2009 WL 864072 (N.D.Ohio 2009)
Gaffield v. Wal-Mart Stores East, LP, 2009 WL 890654 (N.D.N.Y. 2009)

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Case: Adorno v. Port Authority of New York and New Jersey
Citation: 2009 WL 857495 (S.D.N.Y. 2009)
Date: 2009-03-31
Topics: Second Circuit spoliation requirements, negligent failure to preserve evidence, EEOC filing as preservation duty trigger, extrinsic evidence required to show prejudice in “mere negligence” spoliation cases, negligent spoliation may provide basis for denial of summary judgment

In this Title VII Civil Rights action (42 USC §§1981, 1983), U.S. District Court Denny Chin rules on plaintiff’' sanctions motion under Fed. R. Civ. P. Rule 37. Keep in mind that sanctions motions under Rule 37 first require that a discovery order (compelling production) be granted, and that a violation of that order has been alleged. That said, a spoliation proceeding may be conducted sua sponte by the court under its inherent powers.

In this action, what had been destroyed were handwritten documents, but the Court’s analysis clearly pertains equally to ESI, relies on Zubulake IV (an ESI preservation decision) and so is worthy of some discussion. The Court’s begins with a review of the Second Circuit spoliation analysis. Note the distinction between elements establishment and the sanctions imposition analyses:

Spoliation of Evidence

Judge Chin first discusses the elements comprising spoliation in the Second Circuit:

“’Spoliation of evidence is 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.” Byrnie, 243 F.3d at 107 (citing West v. Goodyear Tire & Rubber Co., 167 F.3d 776, 779 (2d Cir.1999)). When one party alters, destroys, or otherwise fails to preserve key evidence before it can be examined by another party, a court may, pursuant to Fed.R.Civ.P. 37(d) or its inherent power, impose sanctions on the party responsible for the spoliation of evidence. See West, 167 F.3d at 779. The party seeking sanctions bears the burden of establishing all elements of a claim for spoliation of evidence. Byrnie, 243 F.3d at 109.’”

Judge Chin then provides an analysis of the four factors to be taken into account by a court in its determinations. In reality there are five factors. Note the careful wording of the excerpt from Byrnie cited by the Court, which makes control over evidence a pre-requisite to a finding of an affirmative duty to preserve. Although the Court numbers these factors as four, in reality there are five, and each element will be discussed under separate caption.

I. Control

“In assessing whether sanctions are warranted for the spoliation of evidence, the court first must determine whether the party with control of the evidence was under an affirmative duty to preserve the evidence. Id. at 107. “

II. Duty to Preserve

“While a litigant is under no duty to keep or retain every document in its possession, “[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) (“Zubulake IV”).

III. Relevance

“Relevant documents are those that a party should reasonably know are “relevant in the action, [ ] reasonably calculated to lead to the discovery of admissible evidence, [ ] reasonably likely to be requested during discovery and/or [are] the subject of a pending discovery request.” Id. at 217 (quoting Turner v. Hudson Transit Lines, Inc., 142 F.R.D. 68, 72 (S.D.N.Y.1991)). The duty to preserve extends to those employees of a party who are likely to have relevant information. Zubulake IV, 220 F.R.D. at 218.

For those practitioners who litigate Title VII matters, the duty to preserve is enhanced by the CFR:

“Under EEOC regulations, moreover, employers are required to preserve personnel documents relevant to a pending EEOC charge until final disposition. 29 C.F.R. § 1602.14. These include “personnel or employment records relating to the aggrieved person and to all other employees holding positions similar to that held or sought…””

IV. Culpable State of Mind

Ok, maybe I’m not a math wizard, but the factors articulated by the Second Circuit add up to…5. I counted them myself. That said, the Court cites Second Circuit language in numbering this consideration “second”:

“Second, the party seeking sanctions must show that the party with control over the evidence had a “culpable state of mind.” Byrnie, 243 F.3d at 109. Spoliation sanctions are not limited to cases where the evidence was destroyed willfully or in bad faith, but may also be imposed when a party negligently loses or destroys evidence. See Zubulake IV, 220 F.R.D. at 220.”

V. Relevance

Really, really, there are 5, not three requirements. The Second Circuit might describe three, but I’ll stick with my arithmetic.

“Third, the party seeking sanctions must show that the spoliated evidence was relevant to its claims or defenses, such that a reasonable trier of fact could find that it would support those claims or defenses. See Residential Funding Corp. v. DeGeorge Financial Corp., 306 F.3d 99, 108-09 (2d Cir.2002); see also Zubulake v. UBS Warburg LLC, 229 F.R.D. 422, 431 ( “Zubulake V” ) (“[T]he concept of relevance encompasses not only the ordinary meaning of the term, but also that the destroyed evidence would have been favorable to the movant.”); Treppel v. Biovail Corp., 249 F.R.D. 111, 121-22 (S.D.N.Y.2008).”

Let’s parse the term “relevance.” It consists of two discrete requirements. The first addresses the requirement that spoliated evidence might support a claim or defense of a non-spoliator. The second addresses the requirement that the spoliation of evidence must somehow prejudice the non-spoliating party. On April 22, 2009, I participated in a mock digital evidence spoliation proceeding at the RSA Security Conference in San Francisco before Magistrate Judge John Facciola (D.D.C.) and argued in favor of the affirmance imposition of sanctions for spoliation in a follow on mock appeals session (Second Circuit decisional authority was controlling) before Judges Shira Scheindlin (SDNY) of Zubulake fame, and San Francisco Superior Court Judge Richard A. Kramer. Both Magistrate Judge Facciola’s decision imposing sanctions, and Judge Scheindlin’s and Kramer’s reversal of M.J. Facciola’s decision involved extensive discourse on the issue of prejudice.

So, when arguing relevance, a spoliation movant should also always demonstrate prejudice.

VI. Sanctions Imposition Discretionary with Court

This is really not a demonstration required to establish spoliation sanctions, but guidance (or license) to a District Court to determine sanctions imposition on a case-by-case basis. I’ll stick with five factors, and pass the bottle of aspirin:

“Finally, determining the proper sanction to impose for spoliation “is confined to the sound discretion of the trial judge, ... and is assessed on a case-by-case basis.” Fujitsu Ltd. v. Federal Express Corp., 247 F.3d 423, 436 (2d Cir.2001). Sanctions should be designed to “(1) deter parties from engaging in spoliation; (2) place the risk of an erroneous judgment on the party who wrongfully created the risk; and (3) restore the prejudiced party to the same position he would have been in absent the wrongful destruction of evidence by the opposing party.” West, 167 F.3d at 779 (citations and internal quotation marks omitted); see also Treppel, 249 F.R.D. at 123-24.”

EEOC Filing Triggers Preservation Duty

Just in case there is any doubt, the filing of an EEOC action does indeed trigger a duty to preserve, and the duty in turn to preserve relevant personnel documents is codified in the CFR:

“With the filing of the Asian Jade Society's EEOC charge, the Port Authority had reason to anticipate litigation and was under an obligation to “put in place a litigation hold” extending to email as well as paper documents relevant to the charge. Zubulake IV, 220 F.R.D. at 216-18. Personnel documents relevant to the Asian Jade Society charge included documents also sought by plaintiffs as relevant to this action, such as the Handwrittens, CO recommendations, and other documents related to promotions. See 29 C.F.R. § 1602.14.”

That said, the Court in this instance discusses that, under the circumstances of this case, a mere “meeting” about promotions did not result in an earlier than EEOC filing date preservation trigger:

“Plaintiffs claim the Port Authority should have reasonably anticipated this litigation in 2003, following a series of meetings between Department leadership and the Hispanic Police Society about promotion of Hispanic officers. (Pls. Mem. at 11). I am not persuaded that such meetings prompted the Port Authority to reasonably anticipate litigation.”

The Court goes on to find that the destruction of documents by the defendant was “at least negligent” under Zubulake IV, but as there was no showing of a “wholesale failure” by defendant to put in place a litigation hold, there was insufficient evidence for the Court to make a finding of “gross negligence”:

“Second, I conclude the Port Authority's failure to preserve documents relevant to this litigation was at worst negligent. See Zubulake IV, 220 F.R.D. at 220 (“Once the duty to preserve attaches, any destruction of documents is, at a minimum, negligent.”). The Port Authority does not dispute that it failed to retain at least some of the documents at issue here. I am not convinced, however, that plaintiffs have shown a wholesale failure by the Port Authority to put in place a “litigation hold” or otherwise communicate document preservation or destruction policies to its employees, such that a finding of gross negligence by defendant would be appropriate. Cf. Heng Chan v. Triple 8 Palace, No. 03 Civ. 6048(GEL)(JCF), 2005 WL 1925579, at *7 (S.D.N .Y. August 11, 2005) (finding gross negligence where defendant “systematically destroyed evidence because they had never been informed of their obligation to suspend normal document destruction policies”).”

“Th[e] evidence alone is insufficient to demonstrate the lack of any such policies; I decline to draw such a conclusion here. Nor is there anything in the record to suggest that the Port Authority acted willfully or with the intent to destroy evidence that it believed would be adverse to its interests. Indeed, as Judge Cedarbaum noted in the Asian Jade Society case, the Port Authority's failure to preserve personnel materials is no doubt related in part to the attack on the World Trade Center on September 11, 2001, “which destroyed the Port Authority's executive offices and killed many of its employees.” Port Authority Police Asian Jade Society of New York & New Jersey, No. 05 Civ. 3835(MGC), 2009 WL 577665, at *2 (S.D.N.Y. Mar. 5, 2009).”

“Arguable” Relevance

Judge Chin then notes that “some” of the categories of the documents in question were arguably relevant:

“Third, of the five categories of documents that are the subject of this motion, some have arguable relevance. The Handwrittens for the Detective promotions, for example, would help establish the size of the applicant pool and identify the applicants. The Rivera Memorandum, as described by plaintiffs, arguably provides support for both the discrimination and retaliation claims. The CO recommendations are arguably relevant because they could shed light on the qualifications of both successful and unsuccessful candidates.”

Lack of Prejudice

What sunk (technical term of art, folks) plaintiffs’ motion for spoliation was a finding by the Court that on the basis of the record before it, there was no prejudice to the non-spoliating party:

“Ultimately, however, the request for sanctions is denied, for I am simply not persuaded on this record that a reasonable jury could find that the evidence was harmful to the Port Authority's defense of the case. Indeed, this was precisely Judge Cedarbaum's conclusion in denying the motion for sanctions in the Asian Jade Society case. See 2009 WL 577665, at *2.”

Extrinsic Evidence Needed to Show Prejudice in “Ordinary Negligence” Spoliation

Following Southern District precedent, Judge Chin denies the motion for spoliation, ruling that a finding of prejudice must be predicated on some extrinsic evidence where spoliation results from “ordinary” or “mere” negligence:

“Although “the burden placed on the moving party to show that the lost evidence would have been favorable to it ought not be too onerous,” Heng Chan, 2005 WL 1925579, at *7, when “the culpable party was negligent, there must be extrinsic evidence to demonstrate that the destroyed evidence was relevant and would have been unfavorable to the destroying party,” Great Northern Ins. Co. v. Power Cooling, Inc., No. 06 Civ. 874(ERK)(KAM), 2007 WL 2687666, at *11 (E.D.N.Y. Sept. 10, 2007) (citation omitted)."

Blognote: A duty to preserve may be bilateral, and apply to both plaintiff and defendant. It appears that the court would entertain an argument to the effect that a duty to preserve may be waived (or extinguished) where both parties are in possession of, and where both do not retain, a relevant document. In this case, one plaintiff did not retain a copy of a memorandum also not retained by defendant. While not made the sole basis for the denial of the motion, this certainly had some impact on the Court’s decision:

“Moreover, Rivera himself did not keep a copy of the memorandum, and thus he can hardly complain that the Port Authority did not retain one.”

Negligent Spoliation Supports Denial of Summary Judgment

The Court also notes that in the Second Circuit, a motion for summary judgment may be defeated in certain circumstances where spoliation has occurred:

“Because “[i]n borderline cases, an inference of spoliation, in combination with ‘some (not insubstantial) evidence’ for the plaintiff's cause of action, can allow the plaintiff to survive summary judgment,” Byrnie v. Town of Cromwell, Bd of Educ., 243 F.3d 93, 107 (2d Cir.2001)

This appears to be one of the first decisions in which negligent spoliation is found, sanctions are denied, but where the spoliation itself is used as the basis for denial of a summary judgment motion. It appears that the “borderline” here was crossed (and summary judgment denied) on the discrimination and retaliation claims. Keep in mind that although the “Rivera Memorandum” was one of the documents destroyed by defendants, there was some extrinsic evidence (testimony) as to the content of that memorandum:

“The Rivera Memorandum, as described by plaintiffs, arguably provides support for both the discrimination and retaliation claims.”


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Case: Coburn v. PN II, Inc.
Citation: 2009 WL 905057 (D. Nev. 2009)
Date: 2009-03-31
Topics: Spoliation proceedings survive grant of summary judgment; motion to dismiss for destruction of evidence

In another Title VII case alleging disparate treatment, this time before U.S. District Judge Dawson of the District of Nevada, defendant filed a “Motion to Dismiss for Destruction of Evidence.” In that motion, defendant alleged that plaintiff “manually deleted almost 4,000 files containing relevant search terms before her computer hard drive was cloned for examination.”

Ok, this case just graduated into the “what-not-to-do” hall of fame. The envelope, please:

“When the forensics examiners recovered those portions of the deleted files that had not yet been permanently overwritten with other data, Plaintiff refused to produce them to Defendants.”

“Plaintiff ran a “cleaner” program that systematically destroyed certain documents from her computer just two days before the court-ordered production.”

“Plaintiff asserts that such activities were automatic or part of scheduled service…”

Nice try, but the court wasn’t buying:

“[H]owever, this explanation is contradicted by her own technician who claims that he did not set the program to automatically remove user created data files. The computer settings were manually altered on July 21, 2007, and again on May 7, 2008 at 8:15 p.m. according to Vestige, the court appointed forensics examiner assigned to examine Plaintiff's computer. As stated, Plaintiff was under a court order to allow a forensics examination of the computer two days later.”

Judge Dawson granted defendant’s motion for summary judgment on bases other than spoliation, but noted first that had summary judgment been denied, there would have been an evidentiary hearing on the spoliation motion, leaving little doubt what would have ensued. The Court also left open the door for a subsequent sanctions motion:

“The foregoing allegations are sufficient that the Court would have held an evidentiary hearing were summary judgment not to be granted. Such a hearing may still be necessary in the event attorney fees or sanctions become an issue. For present purposes, the Court denies the Motion to Dismiss as moot, but without prejudice to renewal on proper showing.”


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Case: Hape v. State
Citation: --- N.E.2d ----, 2009 WL 866857 (Ind. App. 2009)
Date: 2009-03-31
Topics: Text messages in cell phone held not testimonial, no confrontation clause violation, text messages must be separately authenticated, presentation of text messages to jury without proper authentication no fundamental error

In this decision from the Court of Appeals of Indiana, the Court held that text messages saved in defendant’s cell phone were “part and parcel” of the telephone in which they were stored, “just as the pages in a book belonged to the book by their very nature” and accordingly, like the telephone itself, not impeachable.

Of course, the argument might have been made that text messages are not “part and parcel” of a phone that, unlike “pages in a book” text messages might be easily and undetectably inserted or deleted, but it wasn't. I suspect this criminal matter represents a clear case of what Magistrate Judge Facciola commonly refers to as "asymmetric litigation." There was no objection raised at trial regarding the introduction of defendant’s cell phone or the messages contained in it, leaving the Court of Appeals free to review for “fundamental error” (which I presume presents a very high bar). Quite possibly it was either lack of defendant's resources or counsel competency (compared with the State's resources and competency) that often characterizes criminal proceedings as "asymmetric" in nature.

The issue presented for review: Whether the text messages represented “testimonial hearsay.” If so, the defendant asserted, he should have been provided with the opportunity to cross examine that hearsay.

A little constitutional law review is appropriate. The Sixth Amendment’s right to witness confrontation extends to the states courtesy of the Fourteenth Amendment. So, in a state law criminal action, a defendant is afforded the same Sixth Amendment right of confrontation as is afforded a defendant in a federal criminal proceeding. ‘Nuff said.

Ok, back to the decision. The defendant was arrested and removed from his truck, which contained bags of methamphetamine, some cash, two cellular telephones, a box of plastic bags, and implements of methamphetamine production. The arresting officers also found bags containing methamphetamine in defendant’s pocket.

It was discovered after the trial (and after defendant’s conviction) that during deliberation, the jurors were able to retrieve text messages from defendant’s cell phone by turning it on (it appears that the arresting officers never turned on the phone, or had it forensically examined). The message on the phone from one “Brett”:

“Hey man do you think that you can do something 4 one of what I gave you the other night. I could care less about ours right now but my other dude keeps asking & I don't even have the funds to pay him back guess I will freakin tell him to get it off the water tower.”

“Accidental Exposure” of Text Messages Saved On Cell Phone to Jury

We get a sense of where the court is headed by its use of the term “accidental exposure.” On appeal, the Court notes, defendant:

“…alleges that the accidental introduction of the text messages violated the Confrontation Clause, Indiana hearsay rules, and the requirement that evidence be properly authenticated before admission.”

Cell Phone Text Messages are “Intrinsic” to a Cell Phone

Indiana decisional authority provides that “as a general matter, a jury’s verdict may not be impeached by evidence from the jurors who returned it. Stephenson v Sate, 742 N.E. 3d 463, 277 (Ind. 2001). Indiana decisional authority has drawn a distinction however, between the types of evidence from a juror, labeling them either “intrinsic” or “extrinsic”:

“However, “extrinsic or extraneous material brought into deliberation may be grounds for impeaching a verdict where there is a substantial possibility that such extrinsic material prejudiced the verdict.” Id. The burden rests with the defendant to prove that material brought into the jury room was extrinsic. Id. The burden then shifts to the State to prove the introduction of extrinsic material harmless. Id. Absent a “substantial possibility that [the] ... material prejudiced the verdict,” its introduction is harmless, and jurors may not impeach the verdict by testifying about it. Id.”

The Court then notes that the evidence was admitted without objection. Another telltale sign of asymmetric litigation:

“The jury discovered the text messages at issue by turning on a cellular telephone that was admitted into evidence without objection.

Extrajudicial Jury Experimentation

The Court of Appeals then analyzes “extrajudicial” jury experimentation resulting in jury possession of extrinsic evidence and acknowledges its impermissibility:

“In Bradford v. State, our Supreme Court addressed a defendant's claim that jurors improperly obtained and considered extraneous evidence by conducting extrajudicial experiments. The Court cited with approval the rule that experiments conducted by the jury improperly inject extraneous information into deliberations when the results “amount[ ] to additional evidence supplementary to that introduced during the trial.”*988 Bradford v. State, 675 N.E.2d 296, 304 (Ind.1996) (quotation omitted), reh'g denied; Kennedy v. State, 578 N.E.2d 633, 641 (Ind.1991) (citing In re Beverly Hills Fire Litig., 695 F.2d 207 (6th Cir.1982)).

With that analysis out of the way, the Court then makes the quantum leap of logic in deciding that there was not extrajudicial experiment because there was no “extrinsic” evidence provided to the jury. The reason: text messages are “intrinsic” to a cellular telephone. Support for that proposition? Black’s Law Dictionary:

“Here, turning on the telephone did not constitute an extrajudicial experiment that impermissibly exposed the jury to extraneous information. First, the text messages themselves are not extraneous to the cellular telephone. We agree with the State that text messages are intrinsic to the cellular telephones in which they are stored. “Intrinsic,” as defined by Black's Law Dictionary, means “[b]elonging to a thing by its very nature; not dependent on external circumstances; inherent; essential.” Black's Law Dictionary 842 (8th ed.2004). We conclude that the text messages at issue here are part and parcel of the cellular telephone in which they were stored, just as pages in a book belong to the book by their very nature, and thus they are intrinsic to the telephone.”

The Court then in this portion of its decision (and purely imo) blithely ignores the fact that a cell phone is a computing device, and the very act of turning it off and on may have severe evidentiary consequences.

“Turning on a device that is made to be turned on constitutes a permissible examination of the evidence before the jury. Pursuant to Indiana Evidence Rule 606(b), Hape may not impeach the jury's verdict with affidavits regarding the text messages. The trial court did not abuse its discretion in denying Hape's motion to poll the jury.”

Since a cell phone is a computing device, text messaging is accomplished through the use of an application running on a cell phone. Moreover, since a text message is sent to a phone (rather than being part and parcel of same) a cogent argument might have been made that the text message was extrinsic evidence. No such argument appears to have been made by defendant.

Fundamental Error

Defendant also argued that the introduction of the text messages violated his Sixth Amendment right of confrontation, that the text messages constituted inadmissible hearsay, and that they were not properly authenticated. Since no objections on these bases were raised at the trial level, the Court was constrained to review only for fundamental error. Counsel competency (or resources) must have been a factor, but this was not discussed. How high is the bar for reversal based on fundamental error? Very:

“We will only find fundamental error “when the record reveals a clearly blatant violation of basic and elementary principles, where the harm or potential for harm cannot be denied, and [where the] violation is so prejudicial to the rights of the defendant as to make a fair trial impossible.” Jewell v. State, 887 N.E.2d 939, 942 (Ind.2008). “In determining whether a claimed error denies the defendant a fair trial, we consider whether the resulting harm or potential for harm is substantial.” Townsend v. State, 632 N.E.2d 727, 730 (Ind.1994). “The element of harm is not shown by the fact that a defendant was ultimately convicted; rather, it depends upon whether his right to a fair trial was detrimentally affected by the denial of procedural opportunities for the ascertainment of truth to which he otherwise would have been entitled.” Id.”

Ok, on to the arguments.

Confrontation Clause

I expect that Confrontation Clause assertions involving ESI will become quite frequent in the not-too-distant future. Unfortunately, where asymmetrical litigation finds a defendant with limited legal and technical resources, such assertions are likely to fail. When it comes to digital evidence and criminal proceedings, poor defendants are almost guaranteed to make bad law, and imo, this decision stands at that vanguard.

The Court of Appeals first makes its Confrontation Clause analysis, and not surprisingly, winds up with a discussion of the Supreme Court’s 2004 decision in Crawford v Washington:

“"The Sixth Amendment to the United States Constitution provides: “In all criminal prosecutions, the accused shall enjoy the right ... to be confronted with the witnesses against him....” This right of confrontation is applicable to the states through the Fourteenth Amendment. Pointer v. Texas, 380 U.S. 400, 406, 85 S.Ct. 1065, 13 L.Ed.2d 923 (1965); *989 Howard v. State, 853 N.E.2d 461, 464 (Ind.2006). The essential purpose of the Sixth Amendment's “Confrontation Clause” is to ensure that the defendant has the opportunity to cross-examine the witnesses against him or her. Howard, 853 N.E.2d at 465. The Supreme Court has held that “the admission of a hearsay statement made by a declarant who does not testify at trial violates the Sixth Amendment if (1) the statement was testimonial and (2) the declarant is unavailable and the defendant lacked a prior opportunity for cross-examination.” Id. (citing Crawford v. Washington, 541 U.S. 36, 68, 124 S.Ct. 1354, 158 L.Ed.2d 177 (2004)). As the Indiana Supreme Court has explained, “A critical portion of the [ Crawford] Court's holding was the phrase ‘testimonial evidence.’ ” Id.

The Court then applies the Indiana definition of what is “testimonial evidence.” This appears to be somewhat broader in definition than that given to the phrase by the Supreme Court:

Evidence is testimonial if it “is one given or taken in significant part for purposes of preserving it for potential future use in legal proceedings.” Frye v. State, 850 N.E.2d 951, 955 (Ind.Ct.App.2006), trans. denied."”

The Court of Appeals nevertheless rules that cell phone text messages are not testimonial for two reasons: First, there was no evidence that the messages were made by “Brett” (the sender of the text messages) with any intention that they be used in future legal proceedings, and second, that the defendant (recipient of the statements) did not collect them for the purposes of any future legal utility.

Accordingly the Court ruled that “[T]he Confrontation Clause does not act to bar these text messages because they are not testimonial.”

That was clear. Maybe.

Authentication

The Court of Appeals next discusses defendant’s assertions that the cell phones and the text messages were not properly authenticated, and that their admission constituted fundamental error. The Court first addresses the authentication of the cell phone, and after describing the acquisition and chain of custody, rules that they were properly authenticated.

Separate Authentication of Cell Phone Text Messages

The Court then addresses the authentication of the text messages, and notes that it has “unearthed” no Indiana authority “involving discussion of authentication of text messages generated and stored in telephones.”

The Court first pays homage to the decisional authority requiring that computer data be authenticated, and that such authentication under the Indiana Evidence Rule 901(a) is “satisfied by a showing that [data] was recovered from [the defendant’s] computer. Bone v. State, 771 N.E. 2d at 716. “ [Complete citation added]

Separate Purpose, Separate Authentication

Relying in part on Magistrate Judge Grimm’s decision in Lorraine v Markel American Ins. Co, the Court then finds that a text message, even if “intrinsic” to a cell phone, must be separately authenticated where the purpose for which admission is sought is differs from the purpose of admitting the phone itself.

“Even though we have determined that a text message stored in a cellular telephone is intrinsic to the telephone, a proponent may offer the substance of the text message for an evidentiary purpose unique from the purpose served by the telephone itself. Rather, in such cases, the text message must be separately authenticated pursuant to Indiana Evidence Rule 901(a). See also Lorraine v. Markel Am. Ins. Co., 241 F.R.D. 534, 546 (D.Md.2007) (observing that federal courts have recognized Federal Rule of Evidence 901(b)(4) as a means to authenticate electronic data, including text messages); Dickens v. State, 175 Md.App. 231, 927 A.2d 32, 37 (2007) (reviewing whether text messages saved on a cellular telephone were properly authenticated); *991 State v. Taylor, 178 N.C.App. 395, 632 S.E.2d 218, 230-31 (2006) (reviewing whether the State properly authenticated text messages).”

In what may best be described as an intriguing exercise in logic, the Court finds that the State did not admit the text messages for an evidentiary purpose distinct from the cell phone (indeed, the State appears to have been unaware of the text messages) and so they could not have been offered for any reason other than that defendant possessed them in the same way he possessed the cell phone. This provided sufficient cover for the Court’s next quantum leap in logic:

“Nevertheless, the presentation of the text messages to the jury without proper authentication did not rise to the level of fundamental error because the jury's exposure to the text messages was harmless error. See Stephenson, 742 N.E.2d at 477.”

The Court’s ultimate reasoning was that the other evidence against the defendant was strong enough to overshadow any potential prejudice presented by the jury’s exposure to the text messages:

“Unlike cases in which the appellate court has reversed convictions after evidence was accidentally provided to a jury because the evidence against the defendant is otherwise circumstantial, Franklin v. State, 533 N.E.2d 1195, 1196 (Ind.1989); Schlabach v. State, 842 N.E.2d 411, 416-17 (Ind.Ct.App.2006), trans. denied, here the evidence against Hape is strong. Having reviewed the evidence presented to the jury, we conclude that there is not a substantial possibility that the text messages prejudiced the verdict. See Stephenson, 742 N.E.2d at 477. The evidence against Hape with regard to possessing methamphetamine with the intent to deliver was compelling.”

While this no doubt was true, the Court might have avoided eviscerating technological definitions along the way. It didn’t and we’ll have to see what reliance is made on this decision in future actions.

Some additional observations: It is surprising that a forensic examination of the phone did not take place. One might also have made the argument that the cell phone itself was spoliated by the very fact of turning it on and viewing the text message. Chalk this up to the dangers of asymmetric litigation and what is in all likelihood an overworked and undertrained (in matters technological) public defender

A final observation: If a text message is “intrinsic” to a cell phone, must other computer data be considered “intrinsic” to a particular computer? Think, inter alia, about “cloud computing”


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Case: Schneider Saddlery Co., Inc. v. Best Shot Pet Products Intern., LLC,
Citation: 2009 WL 864072 (N.D.Ohio 2009)
Date: 2009-03-31
Topics: Authentication of web content, trademark decisional authority and judicial notice under Fed.R. Evid. 202(b)(2)

In this trademark infringement case from the U.S. District Court for the Northern District of Ohio, District Judge Kathleen O’Malley addresses the authentication of web content.

Judge O’Malley first rules that although unauthenticated printouts of web site content are normally inadmissible, an exception lies in trademark dispute, a court may take judicial notice of images that are the subject of the dispute, and if they are not objected to as inaccurate:

“Best Shot has attached a number of unauthenticated photographs to its motions, most of which are printed directly from the parties' web-sites. ( See, e.g., Doc. 74 Ex. I.) Courts are usually hesitant to accept any unauthenticated material for purposes of summary judgment, but here, the images of Best Shot's and Schneider's products are admissible. In a trademark dispute, a court may choose to take judicial notice of the very images that are the subject of the dispute, so long as there is no contention by either party that the images are inaccurate or could not be properly admitted before a jury. See Comedy III Prods., Inc. v. New Line Cinema, 200 F.3d 593, 594 (9th Cir.2000)”

This was not the case for all for all the image evidence sought to be admitted:

“Conversely, the other images on the web-pages provided by Schneider fall under no such exception. See Nightlight Sys. v. Nitelites Franchise Sys., No. 1:04-CV-211, 2007 U.S. Dist. LEXIS 95538, at *16 (N.D.Ga. May 11, 2007) (“[T]o authenticate a printout from a web page, the proponent must present evidence from a percipient witness stating that the printout accurately reflects the content of the page and the image of the page on the computer at which the printout was made.”); cf. Lorraine v. Markel Am. Ins. Co., 241 F.R.D. 534, 561 (D.Md.2007) (“Photographs have been authenticated for decades under Rule 901(b)(1) by the testimony of a witness familiar with the scene depicted in the photograph who testifies that the photograph fairly and accurately represents the scene.).FN10 Similarly, Best Shot attached unauthenticated photographs of an unknown origin depicting images such as toothpaste, popcorn, and other equine-care products. ( See, e.g., Doc. 86 at 7.) These images must also be disregarded. See Magnum Towing & Recovery v. City of Toledo, 287 Fed. Appx. 442, 448 (6th Cir.2008) (“[The district] court properly did not consider any documents ... that were unauthenticated or otherwise failed to meet the requirements of Rule 56(e) of the Federal Rules of Civil Procedure.”) (citations omitted); see also Lorraine, 241 F.R.D. at 561.

The Court also provides an interesting comment (and appears to take issue) with the decisional authority considering it inappropriate to take judicial notice of publicly available websites for purposes of summary judgment in an interesting footnote. Note that the Court appears to follow the Hape “purpose of authentication” approach, but couches its language in hearsay terms:

“FN10. The Court does, however, question the case law indicating that it is generally inappropriate to take judicial notice of the content of publically available websites for purposes of summary judgment, particularly to the extent that these cases frequently fail to distinguish between material offered for the truth of the matter asserted and material offered for the fact of its publication.”

In an even more interesting aside, the Court muses on the benefits of what might best be described as a rebuttable presumption of authenticity:

“It might well be preferable to require parties to assert a good-faith belief that proffered evidence was inauthentic as a predicate to challenging its authentication. This is not, however, the evidentiary rule. Consequently, the Court declines to take notice of the images attached to Best Shot's briefing, except with respect to the images depicting the use of the very marks that are the subject of the instant dispute.”

If wishes were fishes…


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Case: Gaffield v. Wal-Mart Stores East, LP
Citation: 2009 WL 890654 (N.D.N.Y. 2009)
Date: 2009-03-31
Topics: Standards for review of U.S. Magistrate Judge Report and Recommendtion(s)

This decision from the United States District Court for the Northern District of New York set out the standards for a District Judge’s review of a U.S. Magistrate Judge’s report and recommendation, and discusses the standard to be followed both in the presence and absence of objections.

No Objections to Report and Recommendation – Clear Error

“Where the parties do not object to a report and recommendation, the court reviews the report and recommendation for clear error. See Farid v. Bouey, 554 F.Supp.2d 301, 306 (N.D.N.Y.2008) (citation omitted).

Objection Made to Report and Recommendation – De Novo Issue Review

Where a party makes specific objections addressed to portions of the report and recommendation, the court conducts a de novo review of the issues raised by the objections. See id. at 307 (citation omitted).FN1”

In this case, Senior District Judge Scullin noted that there were no objections to defendant’s motion for dismissal of plaintiff’s motion for sanctions and applied the appropriate standard:
“Since there was no objection to Magistrate Judge's Lowe's recommendation of dismissal of Plaintiff's motion for spoliation sanctions against Wal-Mart and there being no clear error, the Court adopts this recommendation.”


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