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EDiscovery Case Law
Court Finds Failure to Preserve Evidence Including Text and Skype Messages Warrants a $10,000 Sanction
Passlogix, Inc. v. 2FA Tech., LLC, 2010 WL 1702216 (S.D.N.Y. Apr. 27, 2010).
In this licensing agreement litigation, the plaintiff sought sanctions through an adverse inference instruction, preclusion and costs, alleging the defendants failed to implement a litigation hold and spoliated electronic evidence. Despite admitting to the deletion of the e-mails, text messages, Skype messages, and network and computer logs, the defendants denied the relevance of the electronic evidence to the pending case. Addressing the spoliation, the court reiterated that a litigation hold must be put in place and routine document retention/destruction policies must be suspended, which the defendants failed to accomplish. The court found the failure to preserve e-mails and text and Skype messages constituted gross negligence while the failure to preserve computer logs was intentional. Balancing the defendants' "litigation conduct with its status as a small corporation," the court determined that a $10,000 monetary fine was the appropriate remedy.
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Counsel's Failure to Understand Computer and Archive Systems Results in Production Delay, Monetary Sanctions
In re A & M Florida Props. II, 2010 WL 1418861 (Bkrtcy.S.D.N.Y. Apr. 7, 2010)
In this bankruptcy litigation, the defendant sought sanctions alleging the plaintiffs and their counsel intentionally obstructed the discovery process by causing misunderstandings and by delaying the production of relevant e-mails, which resulted in "needless costs and frustrations." The plaintiffs eventually produced more than 9,500 e-mails that were stored in the company archive system following two forensic searches. Based on the absence of intentional destruction and the fact that the sought-after e-mails were ultimately produced, the court noted that dismissal or an adverse inference would be "unjustly harsh." However, the court found that the plaintiffs' counsel "did not understand the technical depths to which electronic discovery can sometimes go" and noted that counsel has an obligation to search for sources of information to understand where data is stored. According to the court, if the plaintiffs' counsel would have spoken with key figures at the company regarding the computer and archiving systems in place, the forensic search and subsequent motions would have been unnecessary. As such, the court found monetary sanctions to be appropriate.
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Court Imposes Permissive Adverse Inference Instruction for Intentional Deletion of E-Mails, Draws Distinctions Between Pension Committee
Rimkus Consulting Group, Inc. v. Cammarata, 2010 WL 645253 (S.D.Tex. Feb. 19, 2010)
In this employment agreement dispute, the plaintiff sought sanctions, costs and attorneys' fees, and a finding of contempt, alleging the defendants intentionally spoliated evidence and failed to produce requested discovery. Before addressing the parties' specific arguments, the court noted that "spoliation of evidence - particularly of electronically stored information - has assumed a level of importance in litigation that raises grave concerns" and "distract[s] from the merits of a case, add[s] costs to discovery, and delay[s] resolution." Moving to the case specifics, the court found the defendants intentionally lost, altered and deleted e-mails, and sent the case back to the jury with a permissive adverse inference instruction. The court also awarded the plaintiff attorneys' fees and costs incurred in the spoliation investigation. Notably, the court distinguished the recent Pension Committee ruling from the Southern District of New York, finding the differences between circuits in relation to culpability of parties limited the applicability of the approach taken in Pension Committee. The court identified an additional distinction in regard to the burden of proof in relation to relevance and prejudice of spoliated evidence.
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Court Issues Default Judgment Sanction for Defendant's "Shocking" Discovery Misconduct, Finds Over $83 Million in Judgment Not Dischargeable
In re Hecker, 2010 WL 654151 (Bkrtcy.D.Minn. Feb. 23, 2010)
In this ancillary bankruptcy proceeding, the plaintiff requested default judgment sanctions, alleging the defendant repeatedly failed to produce privilege logs and responsive ESI, and engaged in offensive discovery despite court orders prohibiting those actions. The defendant argued he was unable to produce large amounts of the requested ESI since the documents were located on his computers and servers that were in government custody. First, the court noted that the majority of information requested remained in the defendant's possession, since the government made forensic images of the data. Next, the court detailed the "shocking" behavior of the defendant and his counsel throughout the discovery process, which included belated and incomplete productions, violation of court orders, and delivery of an external hard drive containing 1.1 million scrambled files and folders. Based on this behavior, the court determined the defendant acted in bad faith and willfully abused the discovery process. Due to the court's certainty that no court order would secure the defendant's cooperation, the plaintiff's motion for a default judgment sanction was granted and $83,070,987 of the plaintiff's judgment against the defendant was not dischargeable.
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New York Court Provides Detailed Instruction on Protocol for Discovery of Cloned Hard Drive
Schreiber v. Schreiber, 2010 WL 2735672 (N.Y. Sup. Ct. June 25, 2010)
In this matrimonial action, plaintiff sought access to her husband's (the defendant) office computer to determine his true financial condition. After denying plaintiff's initial motion, the court directed (by stipulated order) that a clone of defendant's office hard drive be made at plaintiff's expense. Thereafter, the court denied plaintiff's motion for access to the cloned drive upon finding her request for unrestricted access overbroad. "Equally important" to the court was plaintiff's failure to propose any protocol for investigation of defendant's hard drive. The court instructed that should the plaintiff wish to renew her motion, her renewal "must contain a detailed, step-by-step discovery protocol that would allow for the protection of privileged and private material." Moreover, the court provided detailed instruction for what such a protocol should contain: Read more
here.
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Court Orders Retention of Third Party Vendor to Assist with Document Review and Production, Appoints Special Master to Resolve Future Disputes
Multiven, Inc. v. Cisco Sys., Inc., 2010 WL 2813618 (N.D. Cal. July 9, 2010)
Observing that plaintiff and counterdefendants had insisted upon "a review process that guarantees that they will not finish this extensive project in any reasonable amount of time", namely reviewing large volumes of information without first narrowing the material using search terms, the court acknowledged the need to expedite production and directed plaintiff and counterdedendants to retain a third party vendor to assist in their discovery efforts. Accepting defendant's offer, the court further ordered that Cisco would bear half the cost. Read more
here.
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Culpability for Allowing Evidence to Become Inaccessible a Factor for Consideration when Determining Good Cause to Compel Production
Major Tours, Inc. v. Colorel, 2010 WL 2557250 (D.N.J. June 22, 2010)
Appealing an order from the magistrate judge, plaintiffs argued that defendants should bear the costs of producing inaccessible data where it was defendants' failure to preserve that resulted in the data's inaccessibility. The court declined to support such a rule, finding that defendants' culpability was merely a factor for consideration when deciding whether to compel production for good cause. The court also found that the magistrate judge had adequately considered defendants' culpability when crafting the underlying order and did not abuse his discretion. Accordingly, the order was affirmed. Read more
here.
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Jury Instruction Allowing Inference that Destroyed Evidence Was Unfavorable and Payment of Attorneys' Fees and Costs Ordered as Sanction for Failure to Preserve
Medcorp, Inc. v. Pinpoint Tech., Inc., 2010 WL 2500301 (D. Colo. June 15, 2010)
Finding "willful" spoliation of 43 hard drives "in the sense that Plaintiff was aware of its responsibilities to preserve relevant evidence and failed to take necessary steps to do so", a special master ordered a jury instruction which allowed the jury to infer that the destroyed evidence was unfavorable to plaintiff and for the parties to split the cost of defendants' litigation of the spoliation issue. Upon a motion to modify the order, the magistrate judge affirmed the imposition of the jury instruction, but found plaintiff should pay all of defendants' reasonable expenses and ordered payment of $89,365.88. Read more
here.
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