Leonard Deutchman ()
The comment period on the proposed changes to the Federal Rules of Civil Procedure closed Feb. 15. As that date approached, many parties weighed in, not all of them agreeing on everything, but all pretty much approving of the changes to Rule 26(b)(1), which repositions the requirement that the discovery demand be proportional to the value of the matter, and Rule 37(e), which appears to make it harder to prove a producing party liable for spoliation and which restricts the sanctions and other restorative measures a court can impose or require upon a finding of spoliation.
While I can understand the championing of proportionality, I find the focus on spoliation sanctions to be, at best, misguided, and, at worst, highly troubling.
It is understandable why producing parties do not like spoliation sanctions. It is not simply that they hurt, but that spoliation, unlike pretty much every other e-discovery mistake, cannot be undone. Failures to produce data already collected, for whatever reason, can be remedied fully. By contrast, the loss of data cannot be undone, which means that the sole way to remedy the injury is to impose sanctions, including adverse inference instructions and, as the most extreme sanction, dismissing the complaint or awarding summary judgment, depending upon the posture of the injured party.
This makes spoliation the only true “gotcha!” in e-discovery, and certainly explains all of the efforts to which groups representing clients and organizations that typically produce discovery in litigation have gone to make it harder to impose sanctions for spoliation.
The problem I have with these efforts is that, notwithstanding the seriousness of spoliation sanctions, the proposed changes solve a problem that does not exist, as there is nothing close to strong evidence that the courts have been applying spoliation sanctions inappropriately under the present rules. I will look at some recent opinions, issued around the time of the closure of the comments period, to show just how cautious and sensible the federal courts have been when deciding whether and how to impose sanctions for spoliation.
Comments criticized Sekisui American v. Hart, 12 Civ. 3479 (S.D.N.Y. Aug. 15, 2013), a ruling by U.S. District Judge Shira A. Scheindlin of the Southern District of New York, for finding that “mere intentional conduct qualified as willful behavior,” and finding spoliation in actions critics did not see as such.
In Sekisui, the sanctioned party admitted to having intentionally deleted emails belonging to key custodians five months after having received the notice of claim, and that those emails were permanently destroyed by the party’s cloud vendor, at the direction of the company, several months thereafter.
However one would describe the mens rea of the sanctioned party in Sekisui, it is hard to argue that its behavior did not merit sanctions. The bigger problem the court had to confront was how to determine whether what was destroyed was responsive. To do so, the court reasoned, as have all courts pondering the issue, that the party who was in control of, and who destroyed, the electronically stored information was in a much better position to know what the ESI’s contents were, and so had the burden of proving its unresponsiveness. It is hard to see what was so objectionable in the court’s reasoning.
In U.S. Legal Support v. Hofioni, No. 2:13-cv-01770-LKK-AC (E.D. Cal. January 15, 2014), the plaintiff alleged that the defendants, former employees, inappropriately copied trade secrets and other proprietary information in order to use it in a manner adverse to the plaintiff’s interests. The defendants were ordered to preserve ESI from several months back that was potentially relevant to the plaintiff’s claims, and to provide all personal computers, laptops, smartphones and tablets, as well as access to all cloud repositories, for forensic investigation. Two months after the order was issued, the defendants revealed that they had continued to use those devices following entry of the preservation order. The devices were finally imaged three weeks later.
The plaintiff offered expert opinion that, given the nature and size of the storage for those devices, particularly cellphones, continued use of such devices made it more likely that data would be overwritten. The court, however, found that because no expert identified “any actual loss of data” or provided “any forensic analysis of the personal electronic devices at issue,” sanctions would not lie. As the court saw it, the plaintiff did not submit “any evidence bearing on the issue of spoliation,” and so the court could not “conclude or even reasonably infer that spoliation, let alone spoliation of relevant evidence,” had in fact occurred.
In McCann v. Kennedy University Hospital, No. 1:12-cv-01535-JBS-JS (D.N.J January 24, 2014), the plaintiff moved for sanctions where the defendant knowingly allowed “videotape footage covering the hospital’s emergency room lobby on the night the alleged incident occurred” to be overwritten. The plaintiff claimed that the defendant “mistreated” him when he “was transported by ambulance to defendant’s … hospital after experiencing severe rectal pain and trouble breathing.” He further claimed that while he was “‘incoherent and in excruciating pain,’” he “wandered into the emergency room lobby where he collapsed onto the floor” and “‘was left lying’” there “‘for more than ten minutes, while staff walked over him without offering any assistance.’” He thereafter was neglected for hours and, once treatment personnel arrived, they were “reluctant to touch him.” The plaintiff claimed this all took place because the defendant had learned that the plaintiff had no insurance.
The court had no trouble finding that, at the time the tapes were overwritten, the defendant had a duty to preserve, and that the tapes were overwritten intentionally—the defendant knew they would be overwritten and did not prevent that. Furthermore, the court found that the tapes would have been relevant to the claims against the defendant.
The court, however, declined to find spoliation, because the duty to preserve had been triggered by emails from the plaintiff complaining that the defendant “failed to provide proper medical care and discriminated against plaintiff for being uninsured,” and not, as was claimed in the complaint—filed well after the tapes were overwritten—that the defendant “failed to perform a medical screening examination in a timely fashion.” The emails triggering the duty to preserve would not have triggered the duty to preserve the tapes, which would have been irrelevant to the proper medical case and discrimination claims. In light of this, the court found no spoliation.
In Slep-Tone Entertainment v. Granito, No. CV 12-298 TUC DCB, 2014 BL 4257 (D.Ariz. Jan. 08, 2014), the defendant used “special software to erase computer hard drives that allegedly contained infringing relevant” ESI. The matter was a trademark and tradedress infringement case where the defendant was accused of copying without license “karaoke accompaniment tracks marked with plaintiffs’ registered trademarks.”
The court found that the defendant’s “admitted spoliation of evidence” had “severely impaired the plaintiffs’ ability to litigate the case,” and that the defendant “acted willfully in destroying the evidence, which he knew to be especially important to the claims at issue.
Prior to filing suit, the plaintiffs investigated the defendant “by attending multiple karaoke shows where defendant and his operators were working and allegedly using counterfeit versions of plaintiffs’ karaoke accompaniment tracks” and that the defendant “sold the hard drive to plaintiffs’ agent with the trademarks removed from the karaoke tracks, which allegedly contained counterfeits of more than 150,000 karaoke accompaniment tracks, including thousands of counterfeits of the plaintiffs’ karaoke accompaniment tracks.”
After the complaint was filed, the plaintiffs asked for “production of computer hard drives and other storage media that contained karaoke accompaniment tracks,” but the defendant, by his own admission, “could not produce the drives as they had been wiped clean using special software.” The court found that the defendant was aware of the duty to preserve. In light of these facts, the court had no trouble concluding that, because the defendant had willfully destroyed all of the evidence regarding liability, the remedy was to grant summary judgment on behalf of the plaintiffs.
It is clear from the opinions summarized above, representative of how the courts have interpreted Rule 37(e), that there is no pressing problem requiring the amendment of that rule. Typically, problems in rules are addressed after case law demonstrates that courts are interpreting a rule unjustly, or the same rule differently across the districts. As well, complaints from courts that the rules do not provide sufficient guidance, or across the bar that the rules are in some way unjust, can lead to changes. The case law does not cry out for a change to the rule, and while the rules committee heard complaints from parties, there was no consensus across the bar.
It is unclear why the rules committee addressed Rule 37(e) as it did. What is clear, however, is that in spending its energy there, the committee wasted energy it could have devoted to making changes that are truly needed.
Leonard Deutchman is vice president and general counsel of LDiscovery LLC, a firm with offices in New York City, Fort Washington, Pa., McLean, Va., Chicago, Atlanta, San Francisco and London that specializes in electronic digital discovery and digital forensics.