All posts tagged spoliation

Document Preservation: Know When to Hold ‘Em (and When to Fold ‘Em)

The cut-throat, high stakes environment of a nail-biting poker tournament is oddly similar to the world of document preservation in litigation, investigations and regulatory events. Though the former tends to take place in a smoke-filled, lowly lit room, and the latter on computers (with less smoke, but perhaps the same amount of nail-biting), both pastimes involve the same motto. In litigation and poker, a savvy professional must know when to hold ‘em and when to fold ‘em.

Two seasoned ediscovery professionals, Cathleen Peterson and Brian Corbin from JP Morgan Chase, recently collaborated to publish an informative article in the ACC Docket, Document Preservation: Know When to Hold ‘Em. As continuing advances in technology have caused a massive shift to digital document retention and preservation, legal departments need to create clear policies when it comes to document preservation in order to keep abreast of (or ahead of) the curve.

Tip #1: Be Proactive

The duty to initiate preservation efforts arises when a litigation or regulatory event is reasonably foreseeable. For many corporations, this may mean that legal departments must issue legal holds quite frequently. Being proactive in issuing legal holds is necessary, as courts have little patience for preservation corner-cutting and are now more likely to impose costly alternatives or sanctions on parties that lose or alter information as a result of less sophisticated, or remissive, legal hold policies.

Tip #2: Know When to Take Action, and When Not to Take Action

ESI has a transient nature, so waiting until litigation has commenced can result in the inadvertent destruction of relevant emails or other documents. Recovery of these lost documents can be extremely costly or impossible. Thus, deciding when to issue an initial legal hold or when to refresh an existing hold should be done with the entire process in mind.

Tip #3: Leave a Good Paper Trail

Having a well-documented paper trail is the best way to avoid the pitfalls of a potential spoliation charge. With proper documentation, even if the relevant information is lost, documentation that shows right actions were taken at the right time could serve as a shield to prevent the imposition of sanctions.

Tip #4: Follow Up and Be a Team Player

Effective counsels take affirmative steps to periodically remind relevant parties of the ongoing nature of legal holds, and works with the IT department to ensure that regularly scheduled data purges do not occur. Legal teams must work with IT to ensure that IT understands that the duty to preserve extends beyond the length of employment, meaning that the company laptops or computers should not be wiped when a relevant employee leaves the company.

Tip #5: Repeat, Repeat, Repeat. Stop.

A key element of any successful legal hold and retention policy is its repeatability and consistency of implementation. Repeatability and consistency can clear confusion about the legal hold policies and automation of data, making compliance much easier to follow in the long run. However, just as legal holds come from a reasonable foreseeability of litigation, holds can end with when litigation is brought to a close (including expiration of an appeals period, if applicable), or when the  reasonably foreseeable threat of litigation has gone away. Failure to release holds and apply normal retention policies in a timely manner is a risky proposition as the retained data remains in the organization’s custody and control, therefore subject to discovery in future matters.

The Takeaway  

Companies need to know that technology has evolved to a point where legal departments of any size can handle legal holds of any scope, so long as steps are taken to communicate with other key players in the process, including relevant custodians, IT departments, and executive teams. If the proper steps are not taken, or procedures are not followed according to the documented plan, litigation can result in high costs and sanctions.

The next time you face a legal hold, think of yourself as the consummate poker player and remember, “if you wanna play the game…you gotta play it right.” With these tips, you’ll be sure to play the game right to the end.

Sekisui Am. Corp. v. Hart: Judge Scheindlin’s Latest Footprint in Spoliation Case Law – Part 2

Part II: The Implications

What level of culpability should trigger sanctions? Negligence? Gross negligence? Bad faith? What arises to the level of prejudicing the non-producing party’s case? This case brings to light two conflicting perspectives on a critical spoliation issue—one that has the full attention of federal rule makers addressing potential amendments to Federal Rule37(e). Magistrate Judge Maas opines that sanctions are not appropriate if the non-producing party does not “appear” or cannot show that their case has been prejudiced by the loss of information – even if the actions taken are determined to be grossly negligent. Judge Schiendlin, on the other hand, basically states that bad acts should not go unpunished and that (absent some of the hardcopy documents in this case) it could be difficult for the non-producing party to show that they have been prejudiced – you cannot build an argument or a case around information you cannot access, i.e. how do you know what you don’t have if you don’t have it?

Rule 37(e) currently “requires” the showing of “exceptional” circumstances as well as evidence that the loss of ESI occurred as the result of “routine, good-faith operation(s)”. The issue has been that the application of the rule has been inconsistent. As a result of these inconsistencies, the proposed changes to FRCP 37(e), include new subsection 37(e)(1)(B)(ii) that would allow the imposition of sanctions if the court finds a party’s actions to have “irreparably deprived a party of any meaningful opportunity to present or defend against the claim(s) in the litigation.” Under the amended rule, the party seeking sanctions bears the burden of showing that the loss of the identified data “irreparably” impacts their ability to advance their case or assert certain defenses. This is a significantly higher standard than exists today and will likely lead to a very narrow application of the rule. The standard under subsection 37(e)(1)(B)(ii) is more onerous than the “substantial burden” standard proposed for revised rule 37(e)(1)(B)(i), which requires a showing of bad faith or willfulness. Further complicating the analysis, the proposed amendments also remove the original language permitting the imposition of sanctions against the non-producing party where the court finds that the lost information “reasonably should have been preserved by the party.”

In sum, it is interesting to read the divergent viewpoints of two members of the bench who are well versed in ediscovery (Maas v. Schiendlin). It will be even more interesting to see how the proposed rule changes (assuming they are approved) impact the analysis and whether we will actually see more consistency regarding the imposition of sanctions.   Be sure to listen to our latest podcast where Adam and Catherine Losey explore this case in more detail and examine how it could affect litigants across the nation.

Sekisui Am. Corp. v. Hart: Judge Scheindlin’s Latest Footprint in Spoliation Case Law – Part 1

Judge Shira Scheindlin’s latest opinion, Sekisui v. Hart, marks a major development for the latest footprint in spoliation case law and is sure raise eyebrows among federal rule makers tasked with reworking Federal Rule 37. The breach of contract claim in Sekisui stemmed from the plaintiff’s acquisition of the defendants’ company.  Notably, the plaintiff sent a notice of potential claims to the defendants in October 2010, but did not file suit until May 2012. During this time frame, the plaintiff directed its vendor to permanently destroy the emails of Hart, the acquired company’s former president, and another former employee.  Additionally, the plaintiff revealed that it had not put in place a litigation hold until January 2012, nearly fifteen months after sending a Notice of Claim to the defendants. It did not notify the vendor managing its ESI of the lawsuit until July 2012, three months after the claim was filed. While a former HR executive did print (and the company later produced) hard copies of any emails “deemed pertinent to the company,” the plaintiff lost an undeterminable amount of ESI associated with Hart and the other former employee. Crucial to the court’s spoliation analysis was that the destruction stemmed from the plaintiff’s business-level decision to streamline business operations.

Judge Scheindlin cited Residential Funding Corp. v. DeGeorge Financial Corp. to begin her analysis. To warrant an adverse inference instruction, a party must establish three things:

  • Control and a duty to preserve (not disputed here)
  • Culpability by the destroying party
  • That the destroyed evidence was relevant

Prominent ediscovery Magistrate Judge Frank Maas, wrote the underlying opinion denying sanctions. While he reasoned that the conduct may have risen to the level of gross negligence, he found that sanctions were not warranted because the defendants failed to show that they had been prejudiced by the destruction of ESI.

Judge Scheindlin departed from the Magistrate Judge’s analysis at several points of the opinion. Chastising recent proposed amendments to FRCP 37(e),  the court again cited the Residential Funding decision to state that the state of mind factor is established when the destruction was intentional or even negligent.  Because the plaintiff’s employee directly requested the deletion of ESI, Scheindlin found the destruction of the emails of the two key custodians “willful” and “intentional.” As such, Sekisui’s good faith excuse—to save space on its servers—was irrelevant.

Turning to the relevancy of the missing ESI, the court quickly found that “it is not difficult to envision” many ways in which the destroyed emails “might be relevant.” While Magistrate Judge Maas also came to this conclusion, he ultimately declined to impose sanctions because the defendants could not show that any emails were, in fact, missing. Judge Scheindlin took issue with this analysis and centered her discussion on the risk of loss rationale lying at the heart of spoliation case law. The fact that potentially relevant information was willfully destroyed is enough to presume prejudice to the innocent party (for the limited purpose of determining whether an instruction will be given)—flipping the burden the other way “would allow parties who have destroyed evidence to profit from that destruction.” As Judge Scheindlin noted, the defendants can no longer use the emails to show compliance with the terms of the contract that was allegedly breached. Because the plaintiff “willfully and permanently destroyed the ESI of at least two key players,” failed to impose a timely litigation hold, and waited too long to inform its vendor of its obligations, the court granted the defendants’ request for an adverse inference instruction.  Stay tuned for Part II of this blog:  The Implications.

Top 5 Ediscovery Case Summaries – May 2013

Read the very latest ediscovery case law summaries

Below are the top 5 ediscovery case law summaries for May, 2013.

Court Considers Possibility of Clawback Order in Undue Burden Assessment
In re Coventry Healthcare Inc., 2013 WL 1187909 (D. Md. Mar. 21, 2013).

Sanctions Granted for Social Media Spoliation
Gatto v. United Air Lines, Inc., 2013 WL 1285285 (D.N.J. Mar. 25, 2013).

Court Looks to Circumstantial Evidence to Rely on Evidence from MySpace
People v. Kucharski, 2013 WL 1281844 (Ill. App. 2nd Dist. Mar. 29, 2013).

Proportionality is Key Principle in Predictive Coding Case
In re Biomet, 2013 WL 1729682 (N.D. Ind. Apr. 18, 2013).

Da Silva Moore Drama Dissipates
Da Silva Moore v. Publicis Groupe SA, 12-5020 (2d Cir. Apr. 10, 2013).

To check out more ediscovery case summaries, visit our Case Law library.

Top 5 Ediscovery Case Summaries – February, 2013

Read the very latest ediscovery case law summaries

Below are the top 5 ediscovery case summaries for February, 2013.

Court Elaborates on the Standard for Bad Faith Spoliation in Patent Infringement Case
Micron Tech., Inc. v. Rambus, Inc., No. 00-792-SLR (D. Del. Jan. 2, 2013).

Defendant Insurance Company Cannot Investigate Nonpublic Sections of Plaintiffs’ Social Networking Accounts
Keller v. National Farmers Union Property & Cas. Co., 2013 WL 27731 (D. Mont. January 2, 2013).

Court Imputes the Culpable Mind of Defendant’s General Counsel to Defendant Corporation
Day v. LSI Corp., 2012 WL 6674434 (D. Ariz. Dec. 20, 2012).

Federal Court Rules for Further Briefings on Reasonableness of Fee Request under State Law
E.I. DuPont de Nemours and Co. v. Kolon Industries, Inc., 2012 WL 6540072 (E.D. Va. Dec. 13, 2012).

Cell Phone is Not a “Facility” Protected by the Stored Communications Act
Garcia v. City of Laredo, 2012 U.S. App. LEXIS 25370 (5th Cir. Tex. Dec. 12, 2012).

To read more ediscovery case summaries, visit our resource library.

Case Law: Genger v. TR Investors, LLC

Case Law

Court Upholds $3.2 Million in Sanctions for Intentional Deletion of Unallocated Space

Genger v. TR Investors, LLC, 2011 WL 2802832 (Del. Supr. July 18, 2011). In this shareholder litigation, the defendant (an “international man of mystery”) sought review of the Court of Chancery’s judgment including, its award of $3.2 million in attorney fees and costs for the spoliation of ESI in violation of a preservation order. On appeal, the defendant argued the sanctions were disproportionate and excessive as he merely erased unallocated free space, which was not specifically prohibited by the order and did not did not result in the spoliation of material evidence. The defendant further argued that because normal computer use causes similar overwriting to occur, sanctioning this behavior would require the suspension of all computer activities every time a court issued a preservation order. Rejecting both arguments, the court determined the trial court’s finding was based on narrow grounds related to evidence spoliation – not rewriting in general – and that the parties previously compromised, agreeing to the specified fee amount. In order to avoid future confusion, the court recommended that parties address the issue of unallocated free space in their preservation orders and document retention policies.


The trial court’s decision issued in December 2009 highlighted the ever-growing need to bridge the proverbial gap between IT and legal. The independent technology consultants in the case were brought in by the supervising counsel. Whether the technology consultant’s failure to image unallocated space was the result of counsel’s failure to explain the legal implications of the data collection process, or the legal technology’s company’s inability to perform such operations is not clear. What is clear is the need to open the lines of communication between the IT and legal professionals and make sure everyone is on the same page. To do this, companies should form an ediscovery response team tasked with the responsibility of formulating document retention and litigation response policies. The response team should maintain knowledge of information regarding: Where company data resides, who has expert knowledge of the data, how it is maintained, how it can be accessed and when it is destroyed. Further, the ediscovery response team should develop and maintain a data map and ensure retention practices match the policies.

Want to learn more about the underlying litigation and the trial court’s ruling? Download a previous edition of the ESI Report where we discuss the discovery order issued in TR Investors, LLC v. Genger.

When Duty Calls and When It Doesn’t – Revisiting the Duty to Preserve

When Duty Calls and When It Doesn’t – Revisiting the Duty to Preserve

If anyone doubts that those who don’t learn history are doomed to repeat it, maybe ediscovery case law can change your mind – a great place to start is with cases dealing with spoliation and failure to preserve relevant evidence. Since the Zubulake decisions established that a duty to preserve arises when a party reasonably anticipates litigation, the “duty to preserve” issue has been litigated too many times to count. In addition to burdening parties and the court systems with the extra time and costs it takes to litigate discovery related issues, these types of cases all too often result in sanctions against the duty-breaching party. Reasons for failing to preserve ESI are varied, but because it is an undying source of litigation, it is certainly worthwhile revisiting exactly what the standard requires as well as a recent decision interpreting its nuances.

Zubulake established that the duty to preserve electronic evidence begins when a party “reasonably foresees” that the evidence may be needed in litigation. In discovery, evidence is a broad term, referring to anything that may be relevant to or probative of the issues in a case, regardless of whether it will ultimately be admissible in trial.

To Whom is the Duty Owed?

After Zubulake, many cases have sprung up applying and clarifying standards for spoliation sanctions across jurisdictions. Other recent cases have clarified when the duty to preserve attaches. For example, in In re Delta/AirTran Baggage Fee Antitrust Ligitation, 2011 WL 915322 (N.D. Ga. Feb. 22, 2011), the court clarified to whom the duty is owed: only to the specific party with whom litigation is anticipated. The court found that the defendant owed a preservation obligation to the Department of Justice (DOJ) pursuant to a Civil Investigative Demand. However, the defendant’s preservation obligation to the DOJ did not extend to the plaintiff who sought sanctions for failure to preserve in a case arising several months later against the same defendant. Even though relevant evidence might have been destroyed while the defendant’s obligation extended to the DOJ, the court denied the motion for sanctions because the DOJ had not filed a motion and the defendant’s duty to the plaintiff preserve ESI had not yet triggered despite general, industry-wide speculation of litigation against the company at the time.

Prudent & Preventative Planning

Even with Zubulake and subsequent cases, there may not be a bright-line moment in every [anticipated] case when the duty springs into existence. If a court later determines that a duty existed, however, it is too late to go back and pre-start data preservation activities. For that reason, it is of paramount importance to implement smart preservation practices (while simultaneously disposing of unnecessary/non-responsive data).

Proper conduct when a duty to preserve arises will not happen without proactive planning. In re Delta/AirTran Baggage hints at another tricky point as well. When multiple litigations are active, litigation holds may overlap concurrently. When a case concludes and a litigation hold may be lifted, it is important to verify whether data must still be preserved in the ongoing case. To this end, proactive planning will also help the organization track its information and know when a hold can be lifted.

The early stages of planning involve determining what data the company has and considering what type of data might be needed in future litigation. Secondly, it is necessary to learn and track where the data exists through data mapping. Decisions must be made regarding how long to keep different types of data, taking into consideration the organization’s needs with regard to business use as well as regulatory and legal requirements. A data retention/destruction policy and process should also be implemented. These steps will make it dramatically easier to identify and collect the relevant data once a specific instance of litigation is “reasonably anticipated” and the litigation hold is in place.

Important Developments in Recent Ediscovery Case Law

In the years since the 2006 amendments to the Federal Rules of Civil Procedure, keeping abreast of ediscovery developments has been no small feat, especially given the rapidly expanding body of case law. Each ediscovery dispute and corresponding opinion provides one small piece of a seemingly impossible puzzle, and litigants have struggled to find concrete definitions of duties and court expectations. However, as electronic discovery becomes the dominant form of discovery, definitions of related duties are beginning to take shape.

The Preservation Problem

One challenging aspect of the ediscovery process that parties continue to struggle with is the duty to preserve. On January 15, 2010, District Judge Shira Scheindlin of the Southern District of New York issued an opinion, Pension Committee of the University of Montreal Pension Plan v. Banc of America Securities, LLC,1 that provides further guidance on a party’s preservation obligation. This case, which is sure to be one of the most cited cases of 2010 and beyond, reiterates the concept that the duty to preserve arises upon reasonable anticipation of litigation and provides definite “criteria a court should review in evaluating discovery conduct.” Specifically, Judge Scheindlin discussed the four factors necessary for consideration in determining whether a litigant’s conduct throughout the discovery process warrants the imposition of sanctions, including the party’s culpability, the interplay between the duty to preserve evidence and the spoliation of evidence, which party bears the burden of proving that evidence has been lost or destroyed and resulting consequences, and the appropriate remedy for the harm caused by the spoliation.

Perhaps one of the most important lessons from this opinion concerned Judge Scheindlin’s holding that the failure to issue a written litigation hold constitutes gross negligence. In this case, six of the thirteen plaintiffs subject to sanctions never issued a written hold at any time. Based on this conduct, Judge Scheindlin determined a permissive adverse inference sanction was warranted. Judge Scheindlin also found all thirteen plaintiffs worthy of monetary sanctions since they “conducted discovery in an ignorant and indifferent fashion,” and awarded the defendants reasonable attorneys’ fees and costs associated with the motion.

Judge Scheindlin noted that “[b]y now, it should be abundantly clear that the duty to preserve means what it says and that a failure to preserve records – paper or electronic – and to search in the right places for those records, will inevitably result in the spoliation of evidence.” Following this landmark decision, the bar of acceptable behavior in the context of ediscovery has been raised, and it is clear that a party’s ignorance of its preservation obligations is absolutely no longer a viable defense to discovery violations.

Importance of Information Management

In Starbucks Corporation v. ADT Security Services, Inc.,2 the plaintiffs requested the production of e-mails from certain key players relating to a specified time period. Objecting to the production requests, the defendant relied on Fed.R.Civ.P. 26(b)(2)(B) and claimed that the location of the e-mails on the company’s “cumbersome” old archiving system made them not reasonably accessible. The defendant presented testimony from an information technology manager who testified that retrieval would be disruptive to business operations, would take nearly four years to restore and would cost $834,285. After noting that the defendant’s cost estimate had increased from $88,000 just six months earlier, the court found that the e-mails were readily accessible, and even if they weren’t, good cause existed to order production. The court held that the plaintiff should not be disadvantaged because the defendant, a “sophisticated” company, chose not to migrate the e-mails to the now-functional archival system.

Proper information management from the outset could have entirely avoided the issue the defendant faced in the Starbucks case, since there would have been no need to access the antiquated archiving system. As demonstrated by this case, poor or outdated IT infrastructure does not serve as an excuse to ESI request response. Thus, parties must use sound data management practices and take advantage of services, such as an archiving system, that can help reduce litigation expenses and strengthen defensibility.

Taxation of Costs

In CBT Flint Partners, LLC v. Return Path, Inc.,3 the defendants enlisted an ediscovery vendor to aid compliance with the production of 1.4 million electronic documents and six versions of source code. Due to the excessive cost and time connected with the collection of the documents, the defendants filed a motion to tax the costs associated with the use of the vendor. Overruling the plaintiff’s objections and ordering recovery of taxable costs, the court sent a strong message to ediscovery litigants. According to the court, the highly technical nature of ediscovery in the electronic age, more often than not, requires the use of outside vendors. Therefore the “[t]axation of these costs will encourage litigants to exercise restraint in burdening the opposing party with the huge cost of unlimited demands for electronic discovery.”

There is no doubt that the law of electronic discovery will continue to develop at a fast pace. Part of this progression will inevitably involve the reconfiguration of existing ediscovery duties as technology continues to advance. However, analysis of the existing case law provides a wealth of information that aids in determining current duties of litigants in ediscovery disputes. Education is essential, and parties must continue tracking the evolution of electronic discovery.

1 2010 WL 184312 (S.D.N.Y. Jan. 15, 2010).
2 2009 WL 4730798 (W.D.Wash. Apr. 30, 2009).
3 2009 WL 5159761 (N.D.Ga. Dec. 30, 2009).

Case Law: Trickey v. Kaman Indus. Techs. Corp

Case Law

Despite Inadequate Preservation Efforts, Court Declines Sanctions Based on Retention of Forensic Expert

Trickey v. Kaman Indus. Techs. Corp., 2010 WL 5067421 (E.D. Mo. Dec. 6, 2010). In this employment discrimination litigation, the plaintiff sought production of all relevant electronic communications, alleging the defendants failed to adequately preserve electronic data in anticipation of litigation. Employees of the defendants manually selected and preserved documents and e-mails contained in the live database or archive that they deemed potentially relevant instead of preserving a mirror image of the e-mail server and relevant data sets. Although concerned by the defendants’ failure to create a mirror image, the court declined to issue sanctions as the plaintiff made no spoliation claims and the defendants made considerable remedial efforts by hiring an independent forensic computer expert to examine the electronic data for relevant information. Based on this retention of the forensic IT consultant and efforts to search existing data, the court agreed that the requested documents no longer existed and denied the motion to compel unless the plaintiff could identify now-existing databases that were not previously searched.


In this case, the retention of a forensic expert was instrumental in the defendants’ ability to avoid sanctions despite the failure to adequately preserve data. As demonstrated in the 2010 Year in Review study conducted by Kroll Ontrack, 39 percent of cases addressed the issue of sanctions with almost half of those cases involving preservation and spoliation issues. Despite the increased attention the topic of preservation has received by practitioners, organizations and the industry at large, it is clear that people are still struggling to effectively manage this challenging aspect of the discovery process.

If you find yourself struggling with implementing proper information management protocols, contact an ESI Consultant. The consultant can work with your organization to assess risks and develop a repeatable and defensible ESI strategy. If it is already too late and data has been destroyed despite an existing duty to preserve, contact a reputable computer forensics professional. The computer forensic expert can attempt to recover the deleted data (after all, delete does not necessarily mean delete) and can provide other data analysis to determine the breadth of the situation. In addition, a properly trained computer forensics professional can also provide expert testimony to support the case. The expert should be able to fully articulate his/her findings to people with and without expertise to help you win your case and/or mitigate any potential losses.