Preservation Case Law

Edited by Brad Harris
Summer 2014
ABOUT BRAD HARRIS
VICE PRESIDENT OF LEGAL PRODUCTS, ZAPPROVED INC.
Brad Harris has more than 30 years of experience in the high technology and
enterprise software sectors, including assisting Fortune 1000 companies enhance
their e-discovery preparedness through technology and process improvement.
Brad is a frequent author and speaker on e-discovery and preservation issues,
including articles in National Law Journal, Corporate Counsel, and KMWorld and
presentations at leading industry events such as Legal Tech New York. Prior to
joining Zapproved, he led electronic discovery readiness consulting eforts and
product management for Fios, Inc., from 2004 to 2009. He has held senior man-
agement positions at prominent public and privately held companies, including
Hewlett-Packard, Tektronix and Merant.
DISCLAIMER
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relied upon in any specifc factual situation. This Signature Paper is not intended to provide legal advice or to cover
all laws or regulations that may be applicable to a specifc factual situation. If you have matters to be resolved or
for which legal advice may be indicated, you are encouraged to contact a lawyer authorized to practice law in your
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ABOUT ZAPPROVED INC.
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Preservation Case Law | 1
Table of Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Knickerbocker v. Corinthian Colleges . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Quantlab Techs. Ltd. v. Godlevsky. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Digital Vending Servs. Intl LLC v. The Univ. of Phoenix, Inc.. . . . . . . . . . . .8
In re Actos (Pioglitazone) Prods. Liab. Litig.. . . . . . . . . . . . . . . . . . . . . . . .10
Calderon v. Corporacion Puertorrique a de Salud . . . . . . . . . . . . . . . . . . .12
Hart v. Dillon Cos.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
In re Pradaxa (Dabigatran Etexilate) Prods. Liab. Litig. . . . . . . . . . . . . . . .14
Zest IP Holdings, LLC v. Implant Direct Mfg., LLC. . . . . . . . . . . . . . . . . . .16
SJS Distribution Sys. v. Sams East, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . .18
Puerto Rico Tel. Co. v. San Juan Cable, LLC. . . . . . . . . . . . . . . . . . . . . . .20
In re Pradaxa (Dabigatran Etexilate) Prods. Liab. Litig., MDL . . . . . . . . . .21
Sekisui Am. Corp. v. Hart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
Herrmann v. Rain Link, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
AMC Tech., LLC v. Cisco Sys., Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
Sekisui Am. Corp. v. Hart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
Case Summaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-35

VENUES: # U.S. Circuit or State Court Jurisdiction
TOPICS: Tr Trigger Pr Proportionality Sc Scope Te Technology LH Legal Hold
SANCTIONS: Monetary Sanctions Adverse Inference Additional Discovery Dismissed
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2014 by Zapproved Inc.
Introduction
Legal Preservation
Where Law and Technology Intersect
We are proud to introduce this compendium of case law that pertains specifcally to preservation. In
recent years, this is a particularly fast-moving area of case law as courts struggle to keep pace with the
rapid pace of technology.
Starting with Zubulake more than a decade ago, the scrutiny on data preservation has been increas-
ing. U.S. District Judge Shira Scheindlin, in light of the rampant spoliation that occurred in that case,
laid out the framework of what the courts expectations were regarding the need to keep potentially
responsive electronically stored information (ESI). In the early days, the concept of a litigation hold
was relatively novel. Over time, they not only became de rigueur but the continued to evolve to include
more process and apply to new technologies such as smartphones, social media and cloud services.
With the interest of those in the legal community to keep abreast of the latest developments, we found
overwhelmingly positive feedback when we included in prior publications a list of cases as an Appen-
dix. Our goal with this is to provide a helpful reference guide to assist legal professionals in researching
existing case law when they fnd themselves facing issues in a case.
While we have endeavored to make this guide as comprehensive as possible, inevitably there will be
cases that are not included. Please send us a message at info@legalholdpro.com
if you are aware of an opinion that should be included and we will
attempt to include it in the next edition.
We welcome any feedback you may have and we hope you
fnd Preservation Case Law Summary to be a go to resource.
- Brad Harris
Knickerbocker v. Corinthian Colleges,
No. C12-1142JLR (W.D. Wash. Apr. 7, 2014)
Spoliation Four Ways: Washington Court Orders
$25,000 and Attorneys Fees and Costs
In this employment law case, the court found clear and
convincing evidence that the defendant and its counsel
have refused to participate forthrightly in the discovery
process and that this refusal constitutes or is tantamount
to bad faith. Sanctions were necessary to remedy their
discovery tactics, which delayed resolution of Plaintifs
claims, expended both the courts and Plaintifs limited
resources on matters ancillary to the merits, and threatened
to interfere with the rightful decision of this case.
First, the defendant failed to issue a litigation hold notice,
though its standard practice was to do so. Instead, here,
the defendants lawyer claimed it asked employees the
company deemed key to preserve evidence. However,
several of these witnesses testifed and denied search-
ing for relevant documents. The court had no confdence
in the quality of Corinthians discovery production given
its self-selection of a limited pool of discovery materials,
combined with doubt as to what searches, if any, were
performed of this pool of materials.
Second, the defendant deleted three plaintifs e-mail
accounts; it deleted two after its duty to preserve was trig-
gered by receipt of a notice of discrimination charges from
the Equal Employment Opportunity Commission.
Third, defense counsel ofered the court unsubstanti-
ated information about the defendants records retention
program for e-mail accounts of terminated employees that
contradicted the defendants actual policy; the court found
the lawyers lack of efort to speak with the defendants IT
department until the eve of oral argument on the plaintifs
frst motion for sanctions to fall[] below acceptable stan-
dards of professional conduct.
Fourth, the defendant claimed its backup tapes were not
reasonably accessible, but then it claimed no spoliation had
occurred because it could recover all deleted employee
e-mail from these tapes. The court asserted the defendants
characterization of the backup tapes has shifted with the
winds throughout this litigation, adopting whatever posture
is most convenient in the immediate context. If the tapes
were in fact accessible, the defendant had little basis for
refusing to search the backup tapes under the parties
Stipulated Order, no basis for fling a verifcation with the
court afrming that it had searched all available electronic
sources . . . and appears to have assumed a misleading
stance with Plaintifs from the beginning.
After defense counsel asserted that the e-mails could be
recovered, the court ordered the defendant to recover all
e-mail accounts and to search them. With the trial date less
than a month away, the court set a due date of roughly two
weeks for the production. The defendant missed the dead-
line, and the court attributed the defendants substantial
technical difculties and costs in retrieving the emails from
the backup tapes to its inadequate discovery search,
deletion of evidence, and lack of candor with both Plaintifs
and with the court. Such obstacles do not transform bad
faith into good. Seven weeks later, when the defendant
fnally produced approximately 3,000 new documents
(more than double its prior production), the court extended
the trial date to November 2014.
Takeaway
Always implement a written litigation hold,
with regular follow up to custodians and
ITparticularly if it is your companys cus-
tom to do so. Also, follow any retention pro-
tocol that halts the automatic deletion of
evidence. Keep in mind that any deviation
from regular company policies and proce-
dures will cast suspicion on your motives.
Also, be sure that IT and counsel cooper-
ate and keep each other in the loop on the
status of holds.
9 LH
The court ruled that the defendant and its counsel had
acted in bad faith, based on its
lackluster search for documents, failure
to implement a litigation hold, deletion of
evidence, refusal to cooperate with Plaintifs in
the discovery process (particularly as evidenced
by its withholding of information regarding
both the backup tapes and its interpretation
of the parties Stipulated Order), reliance on a
recklessly false declaration, shifting litigation
positions, and inaccurate representations
to the court constitute bad faith or conduct
tantamount to bad faith.
The court found an adverse inference instruction was not
an appropriate sanction because the loss of any docu-
ments was purely speculative; the plaintifs had no evi-
dence that any documents had been destroyed. The
court also declined to prevent the defendant from using
its documents at trial, since it had extended the trial date.
However, attorneys fees and costs were appropriate for
the cost of the plaintifs motions and the duplicative dis-
covery: the defendants bad faith discovery conduct has
delayed the parties trial date by almost one year, wasted
the courts and Plaintifs trial preparations, required the
court to engage in numerous hearings and status confer-
ences, resulted in more documents being produced after
the original scheduled trial date than during discovery itself,
and threatened to interfere with the rightful decision of this
case. Accordingly, the court required the defendant to pay
a fne of $25,000 and its counsel to pay a fne of $10,000.
The court determined that an adverse inference instruction
was the appropriate remedy for the loss of a staggering
amount of evidence potentially relevant to this case, Id. at
*82, even though the plaintifs could not adduce evidence
that the contents of the computers and devices lost would
have been relevant or that they would have been prejudiced
by their loss.
After the plaintif fred two of the defendants, who had writ-
ten code and algorithms on the plaintifs behalf, the plaintif
sued them, claiming they were using the companys trade
secrets. The plaintif argued that because it had begun
litigation against these two defendants in 2007 and fled
the instant lawsuit in 2009, the defendants were required
to preserve their computers since at least 2009. In 2010, it
had also asked for the computers the defendants had used
since March 2007.
The court frst considered whether death penalty case-
terminating sanctions or, in the alternative, whether a spo-
liation jury instruction was necessary. To evaluate the issue,
the court considered three factors:
(1) the party with control over the evidence had
an obligation to preserve it at the time it was
destroyed; (2) the evidence was destroyed with
a culpable state of mind; and (3) the destroyed
evidence was relevant to the partys claim
or defense such that a reasonable trier of fact
could fnd that it would support that claim or
defense.
Id. at *29 (citation omitted).
The court considered the transgressions of various defen-
dants in turn. First, it found that the owner of a company
the defendants formed after leaving their company had
a duty to preserve evidence, but he wiped clean or gave
away 23 workstations. The owner claimed that when his
company closed its doors, he got rid of the computers but
did not do so in bad faith; he believed a copy of everything
existed on the companys servers. The court noted that the
owner disclaim[ed] any intent to liquidate, Id. at *45-46,
but later admitted getting rid of the workstations as part of
a liquidation plan. The court noted it could not say which
story is true; that there are multiple of them is enough to
raise red fags. Id. at *46. The court ruled he acted in bad
faith because the owner intentionally wiped and gave
away numerous computers nearly three years after the ini-
tiation of this lawsuit and concealed it from the Court and
gave contradictory explanations of [his companys] plans
to liquidate. Id. at *47-48. Finally, the court ruled that the
computers were relevant and that their loss was prejudicial
because they were the best evidence of whether the defen-
dants used the plaintifs code as a guide for their work.
The court reached the same conclusion for two other
defendants, both of whom had discarded computers and
other storage devices. Their inability to keep track of the
tools of [their] trade seems more indicative of a reckless
disregard for [their] obligations as a litigant and, more likely,
bad faith. However, the plaintif could not establish that
either acted with sinister motives, and thus they had not
Quantlab Techs. Ltd. v. Godlevsky,
No. 4:09-cv-4039, 2014 U.S. Dist. LEXIS 20305 (S.D. Tex. Feb. 19, 2014)
Texas Judge Orders Adverse Inference Sanction for
Staggering Loss of Evidence
Takeaway
Shifting memories and explanations as to
the existence of computers, devices, and
evidence will not inspire confdence in the
court or opposing counsel that you have
done everything to preserve potentially
relevant evidence. Therefore, it is impera-
tive for organizations to create and follow
a comprehensive information governance
program, anchored by a litigation hold pro-
cedure, to shore up the defensibility of their
actions in the event of litigation.
LH 5
acted with the most culpable state of mind possible. Id. at
*60. Between this and the other categories of electronic evi-
dence and devices that were lost, the court felt an adverse
inference instruction was warranted. However, because so
much information remained in fux, the court delayed draft-
ing the instruction until it crafted the remainder of the jury
instructions at trial.
A U.S. Magistrate Judge recently refused to honor the par-
ties agreement to withdraw discovery sanctions entered
earlier in the case as part of a settlement. Instead, the judge
crossed out the word granted in the proposed order and
scrawled by hand, Denied. The court will not agree to hide
the discovery abuses of the plaintif in this case by with-
drawing the October 3, 2013 Opinion and Order.
In this patent infringement case, the defendants fled a
motion seeking sanctions for spoliation when they learned
the plaintif had lost a thumb driving labeled Important
DVSI Documents, which included two interviews with the
inventors of the patent at issue. However, the defendants
could not establish that the thumb drive was intentionally
lost or destroyed or that its contents were relevant to the
litigation; moreover, the interview fles were recovered.
Even so, the court found the plaintif had not lived up to its
discovery responsibilities for two reasons. First, the plaintif
was inconsistent in disclosing the existence of the inter-
views: they had been cited in testimony, yet no one recalled
giving them, and the CEO was searching for them. Second,
as the CEO searched, he located nearly 7,500 previously
undisclosed documents. Given their untimely production
outside the discovery period, the court had to address this
rather unorthodox situation.
Under Fourth Circuit law, a party claiming spoliation must
establish three elements:
(1) The party having control over the evidence
had an obligation to preserve it when it was
destroyed or altered; (2) the destruction or
loss was accompanied by a culpable state of
mind; and (3) the evidence that was destroyed
or altered was relevant to the claims or
defenses of the party that sought the discovery
of the spoliated evidence, to the extent that a
reasonable factfnder could conclude that the
missing evidence would have supported the
claims or defenses of the party that sought it.
Id. at 8 (citation omitted). Here, the defendants could not
establish a prima facie claim. They could establish that
the plaintif had a duty to preserve the evidence at issue
indeed, the plaintifs mission was to protect intellectual
property, meaning it anticipated litigation by its very exis-
tence. However, the defendants could not show the plaintif
intentionally destroyed the evidence; ordinary negligence
did not sufce to support the defendants request for sanc-
tions. Nor did they ofer anything but speculation as to the
contents of the thumb drive.
Despite the lack of spoliation, the magistrate judge sanc-
tioned the plaintif for its tardy disclosure under Federal
Rule of Civil Procedure 26(e). Had the plaintif performed a
proper search for evidence and not claimed it lacked docu-
ments in response to a subpoena four years prior, it would
have uncovered and produced the 7,500 documents well
before the eve of trial. Therefore, the court considered fve
factors in determining whether sanctions were warranted:
(1) the surprise to the party against whom the
Digital Vending Servs. Intl LLC v.
The Univ. of Phoenix, Inc.,
No. 2:09-cv-00555 (E.D. Va. Feb. 5, 2014)
Judge Refuses to Vacate Spoliation Sanctions in Intellectual
Property Dispute Even After Case Settles
Takeaway
Although it has previously been common
for parties to wipe the slate clean of dis-
covery transgressions and other sanctions
in the wake of settlement, this decision indi-
cates courts may be less willing to conceal
preservation abuses in the future.
4 LH
evidence would be ofered; (2) the ability of
that party to cure the surprise; (3) the extent to
which allowing the evidence would disrupt the
trial; (4) the importance of the evidence; and
(5) the nondisclosing partys explanation for its
failure to disclose the evidence.
Id. at 16 (citation omitted). Given the timing of the disclo-
sure and surprise to the defendants, allowing the evi-
dence would signifcantly disrupt the trial. Accordingly,
the magistrate judge ruled the plaintifs failure to disclose
the evidence merited three sanctions under Rule 37(c)(1):
prohibiting the use of the late-disclosed documents at trial,
requiring the judge to pay attorneys fees related to the late
disclosure, and recommending the issuance of an adverse
inference instruction to the trial judge.
In a 75-page opinion, U.S. District Judge Rebecca F.
Doherty detailed the defendants numerous bad-faith trans-
gressions of the discovery rules, including the spoliation of
the fles of more than 46 key custodians, that merited vari-
ous sanctions in this 2,600-member products-liability class
action over the efects of the drug Actos.
At the beginning of the factual section of her opinion, the
judge praised the parties for allowing the case to prog-
ress[] in an exceptional manner due to the continued and
professional cooperation of the parties . . . resulting in the
resolution of most discovery issues and disputes without
the need for formal court intervention, Id. at 3. However,
the facts devolved markedly from there.
A key issue before the court was when the duty to preserve
documents arose. The defendants claimed the earliest they
could have anticipated litigation involving bladder cancer
was the summer of 2011. However, the defendants had
issued a sweeping litigation hold in 2002 that was not lim-
ited to any particular disease; instead, the hold instructed
custodians to preserve any documents that referred to
the drug Actos, regardless of malady. The court found the
defendants argument that they did not reasonably antici-
pate bladder cancer claims until 2011 undercut both by
its own broad language used in the 2002 hold as well as its
multiple refresherson at least fve occasionsof that
hold. Id. at 36. The defendants ever-shifting argument as
to the nature, importance, and character of the 2002 hold
damaged their position. Id. at 38.
The clear, express, and unambiguous language of the
2002 Litigation Hold and its refreshed incarnations all
include broad language without limitation to or distinction
between or among specifc maladies. Id. at 44. Therefore,
the court ruled the duty to preserve arose in 2002.
The court also determined that the spoliated evidence was
relevant and that its loss prejudiced the PSC. Examining
the fles of one custodian, the court extrapolated that the
missing fles could evidence a corporate culture embracing
attempts to remove mention of or an attempt to conceal
or underplay expressed safety concerns surrounding the
development of Actos. Id. at 54.
In choosing which sanctions were appropriate, the court
examined evidence of the defendants bad faith, including
the following:
destroying the fles of 46 high-ranking custodians
involved in the development, sales, marketing,
and promotion of the drug Actos, suggesting a
deliberate disregard of the litigation hold;
engaging in the repeated, systemic, and wide-
spread destruction of documents over a course
of 10 years, which could only be the result of
a willful and intentional failure to preserve;
failing to follow their own document policies;
making multiple misrepresentations
about the litigation holds;
designating a third-party e-discovery consultant
who had no frsthand knowledge of the litigation
holds and document destruction as the
defendants 30(b)(6) corporate designee;
In re Actos (Pioglitazone) Prods. Liab. Litig.,
MDL No. 6:11-md-2299 (W.D. La. Jan. 27, 2014)
Pharmaceutical Company Faces Setback from Sanctions for
Bad Faith Spoliation in Huge Product Liability Case
Takeaway
Litigants must carefully observe their preser-
vation practices to ensure they are consistent
across their entire litigation portfolio. In particu-
lar, they must carefully consider the language to
include in each litigation hold notice and deter-
mine how it applies to all pending litigation as
well as any future litigation.
Tr 5
reversing their position regarding fle
deletion and inaccessibility; and
engaging in a campaign of concealment
and obfuscationin short, a cover-up.
Id. at 60-62. Even so, the court, at this juncture, stop[ped]
short of concluding the PSC has demonstrated sufcient
bad faith to support the full breadth of onerous sanctions
requested. Instead of awarding a default judgment, the
court opted to let all evidence of bad faith go to the jury, to
draft an adverse inference instruction, and to award attor-
neys fees and costs. Id. at 71-73.
At trial, the jury awarded the plaintifs $1.5 million in actual
damages as well as $9 billion in punitive damages.

Calderon v. Corporacion Puertorrique a de Salud,
No. 12-1006 (FAB), 2014 WL 171599 (D.P.R. Jan. 16, 2014)
Selective Preservation of Text Messages Uncovered with
an Undisclosed Subpoena that Is Allowed to Impeach
Evidence; Adverse Inference Sanction Results
1
The court found an adverse inference instruction was
appropriate where a party selectively preserved and deleted
text messages relevant to the issues in the case.
In this sexual harassment case, the defendants believed
that the plaintifs discovery responses were defcient
because plaintif Jonathan Polo-Echevarria (Polo) admit-
ted he had deleted certain text messages from his phone.
Accordingly, they fled a motion in limine asking the court
to exclude all messages Polo sent or received and then to
dismiss the plaintifs complaint because of the selective
retention of text messages.
Meanwhile, the defendants had submitted a third-party
subpoena to telephone carrier T-Mobile requesting Polos
phone and messaging records. The production from
T-Mobile confrmed that Polos document production was
defcient: among the T-Mobile records were 38 text mes-
sages that Polo had not produced in discovery, not to
mention a host of text messages that Polo sent in response
to those messages. The defendants notifed the court of
this production and again asked the court to dismiss the
plaintifs case because of Polos bad faith spoliation of
evidence.
The court reviewed the evidence and determined that spo-
liation had occurred. At the time Polo destroyed the mes-
sages, the record showed that he reasonably anticipated
litigation and thus had a duty to preserve relevant evidence.
First, he forwarded some messages to himself from two
accounts so he could print them. Second, he contacted
his attorney before forwarding the messages, a clear signal
that he foresaw litigation.
Although the defendants asked the court to dismiss the
case, the court found the circumstances were not extreme
enough to warrant such a severe penalty. Instead, it ruled
that an adverse inference was sufcient punishment. To
qualify for the instruction, the defendants had to show Polo
was aware of the claim as well as of the relevance of the
destroyed evidence to that claim. Here, the mere act of
Polo forwarding himself some messages on the day he
fled a complaint of sexual harassment reveals his under-
standing that those messages were relevant to a potential
claim. Even if Polo had not acted in bad faith, his decision
not to forward or save the unproduced texts and photos . .
. constitutes conscious abandonment of potentially use-
ful evidence that indicates that he believed those records
would not help his side of the case. Id. at *2 (citations
omitted).
Further, the court found the plaintifs spoliation severely
prejudices defendants by precluding a complete review of
the conversations and pictures that Polo sent the alleged
harasser and prevents defendants from introducing . . .
other writings that in fairness ought to be considered at the
same time as the messages that plaintifs seek to intro-
duce at trial. Id. at *3. Finally, it prevented the defendants
from providing evidence that the alleged harassers identity
could not be determined.
Takeaway
Parties must be careful to implement a compre-
hensive litigation hold that covers all forms of
electronic evidence, including text messages,
and reafrm it periodically to custodians. As
this case demonstrates, the selective deletion
of text messagesor any evidencecan not
only cast doubt on a partys argument, but it
can also signal that the duty to preserve has
arisen. Moreover, the selective retention of per-
tinent materials can also create an inference
that the party destroyed the evidence in bad
faith to hide information and thus prejudiced its
opponent.
Te
Hart v. Dillon Cos.,
No. 1:12-cv-00238-RM-DW, [need WL cite] (D. Colo. July 9, 2013)
Colorado Court Deems Loss of Key Players Evidence a Sanctionable Ofense
Tr
A U.S. Magistrate Judge in Colorado found that the defen-
dants failure to preserve a recording merited spoliation
sanctions where the plaintif established the loss of evi-
dence caused signifcant prejudice.
In this employment case, a long-time employee was fred
in August 2011 for what the company alleged was giving
herself an incorrect salary when working as bookkeeper.
Before her termination, the employers loss prevention
employee, made a secret tape recording of the plaintifs
interview, which in part led to her termination.
In November 2011, the plaintif fled a charge of discrimina-
tion with the Equal Employment Opportunity Commission
(EEOC). Instead of imposing a litigation hold immediately,
the defendants waited four months to do so. During that
time, the investigator who made the recording drafted a
written case narrative of the recording but also inadver-
tently taped over or erased the recorded interview.
The court considered a three-prong test in assessing the
plaintifs claim of spoliation:
1. is the evidence relevant to an issue at trial;
2. did the party have a duty to preserve the
evidence because it knew or should have
known that litigation was imminent;
3. was the other party prejudiced by the
destruction of the evidence.
Id. at *__.
First, the court determined that that the evidence was
relevant because the defendant relied on it in terminating
the plaintifs employment. Next, the court found that a
duty to preserve had attached since litigation was imminent
because the plaintif had fled a charge with the EEOC, had
an attorney, and intended to sue the company. The court
then turned to whether the lost evidence was prejudicial.
Citing numerous discrepancies and omissions between the
defendants case narrative and the plaintifs recollections,
found that the plaintif met her burden to establish a rea-
sonable possibility based on concrete evidence rather than
a fertile imagination that access to the lost material would
have produced evidence favorable to her cause. Id. at *__
(citations omitted).
Given the four-month delay in issuing a legal hold, the
court found the defendant highly culpable for the failure to
preserve. Id. at *__. Furthermore, because the recording
involved a key player, the action rose to the level of grossly
negligent or willful behavior. Id. at * (citation omitted). The
court noted that responsibility and control were sufcient
to establish [b]ad faith culpability; evil intent was not
required. Id. at *__ (citation omitted).
Takeaway
Here, the plaintif was able to establish spolia-
tion because she had concrete evidence instead
of speculation to support her claims. The plain-
tifs ability to show signifcant discrepancies in
how each side viewed the spoliated evidence,
combined with the preservation failures, tipped
the court toward a fnding of gross negligence.
10
In a blistering opinion, the court continued its campaign
of progressive discipline described in an earlier ruling
from September 2013 for the defendants repeated dis-
covery failures. This time, the failures cited by the Plaintifs
Steering Committee (PSC) resulted in a substantial fne
approaching $1 million.
The court noted that [a]lmost since its inception, this liti-
gation had been plagued with discovery problems primar-
ily associated with misconduct on the part of the defen-
dants. The court took the defendants to task for ofering
excuse after excuse for their failures:
The [c]ourt is continuously being called upon
to address issues relating to untimely, lost,
accidentally destroyed, missing, and/or just
recently discovered evidence. The defendants
justifcations for these discovery violations
include but are not limited to the following: (1)
placing the blame on others such as third-party
vendors (production is delayed due to vendor
issues), their own IT departments (we told IT
to give the vendors full access to the database
but for some reason IT provided the vendors
with limited access), their own employees (the
defendants deponent did not understand
that work-related day planners should have
been produced or the employees did not
understand that work-related text messages
should have been retained and produced);
(2) the defendants and/or counsels lack of
experience in addressing litigation of this size;
(3) the defendants did not know, until recently,
that this would turn into a large nationwide
MDL; (4) unusual technical issues (despite our
best eforts, that employees hard drive was
accidentally erased during a routine Windows 7
update); (5) minimizing the alleged abuses (yes,
we failed to produce this database but it was
only 500,000 pages of documents compared
to the 3 million we already produced or yes
that material was accidentally destroyed but
the PSC doesnt really need it); (6) blaming
the PSC for submitting too many discovery
requests that are broad in scope (only as an
Takeaway
This case serves as a cautionary tale for defen-
dants facing extensive discovery requests.
Here, the court noted that the plaintifs pro-
duction requests were so broad as to cover
any possible derivation of means to document
someones thoughts, words and deeds short of
attaching electrodes to their scalps and elec-
tronically downloading what is contained in
their minds. Id. at *6.
When facing broad discovery requests, parties
have several options. One reasonable approach
is to cooperate with opposing counsel to nar-
row the requests. Another is to ask the court to
enter a protective order.
Parties must also be vigilant in assessing the
scope of discovery early in a matter so they can
construct a comprehensive litigation hold; they
must continually revisit the scope of the hold
throughout the course of the litigation to make
sure it encompasses all potentially relevant
information.
In re Pradaxa (Dabigatran Etexilate)
Prods. Liab. Litig.,
No. 2385, 2013 WL 6486921 (S.D. Ill. Dec. 9, 2013)
Court Fines Defendants $931,500 in Pradaxa Class Action
After Repeated Failures to Implement Legal Holds
7 Te
excuse after discovery violations are alleged but
never as a proactive motion to limit discovery);
and (7) the defendants did not know about
the gaps in their production until they began
a comprehensive re-check or audit of the
discovery process in September 2013.
Id. at *2. After commenting on its exceeding patience and
initial willingness to give the defendants the beneft of the
doubt, the court noted the cumulative efect of the failures
and reviewed the defendants history of transgressions. It
then turned to the subject of the current motion and found
that the audit the court required the defendants to perform
unearthed a growing number of gaps in production that
resulted from the defendants incremental approach to
its company-wide litigation hold. Id. at *6. The narrow
scope of the hold was unwarranted given the breadth of the
litigationa fact the defendants were aware of no later than
April 2012.
Despite their awareness, the defendants engaged in four
breaches of the duty to preserve that led to the motion
before the court.
1. The defendants failed to preserve the records of a
high-level scientist intimately involved in the products
research and development because he had not
been identifed as a custodian. Id. at *9. The court
interpreted this to mean one of two things: (1) the
defendants failed to recognize that the scientist had
relevant informationand the court was stunned
the defendants had not identifed him as a potential
custodian, or (2) the defendants believed they had no
duty to preserve the scientists fles simply because
the PSC had not requested them, a position the court
characterized as nonsense. Id. at *12. The court
admonished the defendants for their own determination
that he singularly was not important enough in light
of including his coworkers whose custodial materials
were being provided in discovery. Id. at *18.
2. The defendants took a piecemeal approach to
extending litigation holds to cover several classes of
sales representatives, resulting in some custodians
not being instructed to preserve data until more than
a year after the duty to preserve attached. The court
found the defendants litigation hold wholly inadequate
in light of the size and scope of this litigation. Id.
at *14. The court was frankly amazed that the
defendants argued they did not understand the true
scope of this nationwide litigation; moreover, it was
unacceptable that the defendants decided to expand[]
the scope of their sales representative preservation
eforts as the litigation expanded in size. Id. at *15.
The court found the defendants eforts to suggest
they and they alone decided to implement such a
proportionality test to the litigation hold smacks of a
post-debacle argument in desperation to salvage a
failed strategy regarding production evasion. Id.
3. The defendants failed to share passwords with
the vendor handling document collection from
the shared network drives, missing the collection
of at least 400,000 pages of documents.
4. The defendants failed to save text messages, a primary
system for communications between employees
and supervisors, by not instructing custodians to
preserve them and by not disabling the automatic
deletion of the messages, placing them outside the
safe harbor of Federal Rule of Civil Procedure 37(e).
The court found each of the defendants actions and omis-
sions . . . to be in bad faith and scofed at the defendants
argument that their discovery shortcomings were the result
of a good faith measured approach to the production of
millions of documents over a fairly short period of time. Id.
Instead, the court found it clear . . . that the defendants
have been pursuing a policy of turning over relevant mate-
rial, or withholding relevant material, on their schedule and
not the [c]ourts in violation of the courts case manage-
ment orders. Moreover, they misrepresented to the court in
open court and in chambers that they had implemented a
comprehensive litigation hold. Id.
The court ordered the defendants to produce any remaining
documents in each category and left open the opportunity
to impose sanctions if the defendants could not produce
the records. In addition, the court imposed a measured
fne of $500 per case to encourage defendants to respect
this [c]ourt and to comply with its orders and required the
defendants to pay the fees and costs associated with the
PSCs motions. Id. at *20.
Zest IP Holdings, LLC v. Implant Direct Mfg., LLC,
No. 10-0541-GPC(WVG), 2013 WL 615977 (S.D. Cal. Nov. 25, 2013)
Calif. Magistrate Judge Recommends Adverse Inference Sanction for
Failure to Issue Legal Hold Despite Saved Everything Defense
Spoliation sanctions were proper where a partys sole mea-
sure to preserve evidence was a policy prohibiting employ-
ees from deleting documents and not a proper litigation
hold notice.
This patent infringement lawsuit arose when the defen-
dants informed the plaintifs that they intended to clone a
patented Zest product. The plaintifs sent two letters to the
defendants in 2008: the frst notifed them that the defen-
dants planned clone infringed on their patent, while the
second notifed the defendants that the plaintifs intended
to sue. The plaintifs fled the lawsuit in March 2010.
After the lawsuit was fled, the defendants did not take
steps to preserve electronic documents, nor did they
instruct their employees to preserve documents. Id. at *4.
During this time, the defendants employee charged with
developing and testing products testifed that she inten-
tionally deleted her emails because she received so many
emails and that no one told her not to delete them from
both her work account and her AOL account, which she
also used for work purposes. Id. The defendants president
and chief executive also confrmed that he did not produce
or preserve emails from any of his six accounts; instead,
he claimed to have saved all relevant emails in a folder on
his computer, which was produced to the plaintifs. How-
ever, third-party productions showed that at least two of
the presidents emails were missing that would have been
preserved had a litigation hold been put in place when the
defendants became aware of the likelihood of litigation.
As a result, the plaintifs fled a motion seeking sanctions
for spoliation. The defendants claimed that they did not
need to implement a litigation hold because they had a
company policy that no documents are to be deleted
and did not believe any of [d]efendants employees
would delete company documents. Id. at *2. However,
the court found it obvious that the policy did not prevent
the destruction of documents, a fnding exacerbated by
the defendants lack of a back-up system to prevent the
destruction of documents. The preservation of emails to a
server was not enough to save the defendants from sanc-
tions because they could have deleted emails from the
servers.
The court also found the plaintifs readily established preju-
dice because the contents of [the lost emails] were directly
relevant to the claims at issue in this litigation and their
loss would force the plaintifs to go to trial while relying on
incomplete evidence. Id. at *20-21. Accordingly, sanctions
were appropriate for the defendants inactions in failing to
issue a litigation hold or to monitor employees document
preservation eforts.
In determining the proper sanction, the court evaluated
which punishment would appropriately address the harm. A
default judgment was inappropriate because the defen-
dants conduct amounts to gross negligence but did not
rise to the level of bad faith sufcient to warrant default
judgment. Id. at *8. Next, the court applied the three-
part Zubulake test to assess the propriety of granting an
adverse inference instruction: (1) the party had an obliga-
Takeaway
Zest demonstrates the importance of issuing
a timely, clear litigation hold to all custodians.
Saving everything is no substitute for a formal,
documented process. Nor is email archiving
a panacea, particularly where employees
are using mobile devices and personal email
accounts for business purposes.
Even if parties do not act in bad faith, much like
the defendants here, they may face sanctions
if they fail to take their obligations to preserve
evidence seriously.
9 LH
tion to preserve the evidence before it was destroyed; (2)
the party destroyed the records with a culpable state of
mind, which the court defned as conscious disregard
of its obligations to not destroy documents; and (3) the
evidence was relevant to the opposing partys claims or
defenses. Id.
Here, all three prongs were satisfed. The defendants may
not have acted in bad faith, but they were at least negli-
gent in failing to issue a litigation hold and failing to instruct
employees to preserve evidence, so the court recom-
mended reading an adverse inference instruction to the
jury. The court also awarded monetary sanctions in the
form of attorneys fees and costs to cover the plaintifs
expenses in bringing the motion.
SJS Distribution Sys. v. Sams East, Inc.,
No. 11 CV 1229 (WFK)(RML), 2013 WL 5596010 (E.D.N.Y. Oct. 11, 2013)
Plaintif in Diaper Lawsuit Hit with Adverse Inference to
Remedy Spoliation from Failure to Issue Legal Hold
LH Tr 2
A party acted with gross negligence that merited an
adverse inference instruction when it failed to take the
most basic document preservation steps including never
issuing a formal litigation hold to ensure preservation of
electronic information, despite admitting familiarity with its
obligations to preserve documents. Id. at *__.
In this breach of contract lawsuit that arose from a diaper
packaging problem, the magistrate judge imposed sanc-
tions where a party failed to issue a litigation hold notice.
The defendant asked the plaintif to produce documents
related to the sale, and the plaintif complied, claiming it
had produced all relevant documents in its possession.
The defendant objected, fnding the production incomplete,
which the plaintif disputed. Subsequently, the defendant
asked for the production of additional documents, and
the plaintif produced three more pages, adding further
responses and objections as well as stating that it did not
normally save copies of all emails or sent or received, that
it did not anticipate litigation with defendant or the need
to save all communication with defendant, and that plain-
tif has no internal emails since it is primarily a one-person
entity. Id. at *__.
The defendant sought leave to fle a motion to compel,
which the court granted. After holding a hearing, the court
instructed the parties to reach an agreement on a remedy
for the discovery dispute, but the parties were unable to do
so. The plaintif then produced an additional 181 pages of
documents, but the defendant was still convinced that the
production did not include all relevant electronic recordsa
fact it confrmed when it received more than 300 pages of
relevant electronic communications, including emails ref-
erencing the plaintifthrough third-party discovery. After
two more discovery conferences, the judge again asked the
parties to jointly devise a remedy for their discovery squab-
bles, but the parties were unsuccessful.
Subsequently, the defendant moved for spoliation sanc-
tions, asserting the plaintifs failure to produce documents
damaged its case. Specifcally, the plaintif had failed to
produce at least 169 emails, internal correspondence, third-
party communications, and other relevant electronic docu-
ments. Therefore, the defendant argued appropriate sanc-
tions included an order precluding the plaintif from ofering
testimony or documents from the date of the discovery of
the packaging discrepancies, an adverse inference instruc-
tion, attorneys fees, and costs.
The plaintif admitted it had not timely produced documents
but claimed the defendant could not show its defense had
been prejudiced because it could obtain the same informa-
tion from other sources, including third-party discovery and
depositions of the plaintif and other parties.
The court ruled that the plaintif had a duty to preserve
as soon as it learned of the packaging problems: it knew
information relating to the sale would have been relevant to
future litigation. Moreover, the plaintif admitt[ed] familiar-
ity with its obligation to preserve documents in the event
that litigation seems likely for a particular matter. Id. at
*__. Although the defendant argued the plaintif acted at a
minimum with gross negligence and possibly recklessly, the
court found the defendant could not ofer evidence of inten-
tional misconduct or bad faith. Rather, the court determined
the plaintif acted with gross negligence when it failed to
take the most basic document preservation steps includ-
ing never issuing a formal litigation hold to ensure preser-
Takeaway
A party that fails to issue a litigation hold risks
the imposition of sanctions, even when it does
not act in bad faith. In particular, plaintifs have
little room to argue they did not anticipate litiga-
tion and will be taken to task for failing to imple-
ment sound preservation practices as soon as
they plan to fle a lawsuit.
vation of electronic information, despite admitting familiarity
with its obligations to preserve documents. Id. at *__. This
conduct was particularly inexcusable given that SJS is the
plaintif in this action and, as such, had full knowledge of
the possibility of future litigation. Id. at *__ (citing Sekisui
Am. Corp. v. Hart, No. 12 CV 3479, 2013 WL 4116322, at *6
(S.D.N.Y. Aug. 15, 2013)).
The court also found the emails were relevant to the mat-
ter. The defendant had the burden to establish prejudice,
and here, the court found the emails would certainly have
aided defendant in gaining additional information about
the circumstances surrounding the sale and attempted
re-sale of the goods. Id. at *__. Therefore, sanctions were
appropriate.
In choosing the proper sanction, the magistrate judge
found the defendants request to exclude evidence too
drastic where there was no evidence of bad faith. Moreover,
there was no guarantee that the destroyed records would
have corroborated defendants account of events and the
defendant could obtain some of the information from third
parties, its own records, and from depositions. Id. at *__.
However, an adverse inference instruction would prop-
erly readjust the balance to the extent that it was tilted by
plaintifs failure to preserve email communications. Id. at
*__. In the absence of bad faith, an adverse inference would
restore the prejudiced party to the same position it would
have been in absent the wrongful destruction of evidence.
Id. at *__. The court also awarded fees and costs to com-
pensate the defendant for having to fle the motion.
The court refused to give the jury an adverse inference
instruction because a party alleging spoliation could not
establish that it was prejudiced by the loss of evidence.
In this commercial litigation case between two telecom-
munications providers in Puerto Rico, the plaintif fled a
motion seeking an adverse inference instruction as a sanc-
tion for the defendants failure to preserve emails from three
former executives personal accounts.
The defendant had issued a litigation hold notice within a
month after learning of the litigation, and it sent the notice
to its former ofcers, including the three at issue in this
motion. However, it failed to preserve relevant emails
within its control where it presumably knew its managing
ofcers used their personal email accounts to engage in
company business, and thus its duty to preserve extended
to those personal email accounts. Id. at *1. Its failure to
account for three responsive email chains breached its
duty to preserve. Id.
This failure was tempered by the speedy issuance of the
litigation hold notice, the lack of evidence that the emails
were destroyed intentionally or in bad faith, and the recov-
ery of the three email chains from other sources. Further-
more, the plaintif could not establish that the email chains
were potentially damaging. Id. at *2. Therefore, the
plaintif was unable to articulate a clear theory of how it
has sufered prejudice, because the extent of spoliation is
unknown. Because prejudice was merely speculative at
that point, the court could not impose an adverse inference
instruction. Id. The plaintif had not profered evidence
that tends to show the allegedly lost emails would actually
support [its] claims or weaken [the defendants] defenses.
However, the court noted that sanctions might be appropri-
ate upon further discovery, including [f]orensic analysis
of these three former employees personal email accounts
and computers to determine whether critical emails have
been deleted. Id.
Takeaway
This opinion serves as a reminder that the duty
to preserve can extend beyond corporate sys-
tems to personal accounts when employees
use them to conduct business. Parties must
clearly establish that litigation holds apply not
only to business applications but also personal
accounts, including email, social media, text
messages, and the like. They must also care-
fully follow up with both current and former
employees and issue periodic reminders of
their continuing duty to preserve evidence.
Puerto Rico Tel. Co. v. San Juan Cable, LLC,
No. 11-2135 (GAG/BJM), 2013 WL 5533711 (D.P.R. Oct. 7, 2013)
Puerto Rico Magistrate Judge Denies Adverse Inference Motion
Absent of Prejudice for Spoliation of Executives Personal Email
1 LH
In re Pradaxa (Dabigatran Etexilate)
Prods. Liab. Litig., MDL
No. 2385, 2013 WL 5377164 (S.D. Ill. Sept. 25, 2013)
Massive Product Liability Tort Not Derailed by Spoliation
Claim Due to Rule 37 Safe Harbor
In this products liability matter over the drug Pradaxa,
defendant Boehringer Ingelheim Pharmaceuticals, Inc.
(BIPI) avoided spoliation sanctions because the destruc-
tion of a key custodians email occurred before the duty
to preserve was triggered, in accord with BIPIs document
retention policy.
During discovery, the Plaintif Steering Committee (PSC)
sought the records of Wael Hashad, BIPIs execu-
tive in charge of marketing Pradaxa. Hashad left BIPI in
August 2011, before the frst Pradaxa case was fled. BIPI
explained Hashads fle was destroyed according to the
terms of its document retention policy, which required BIPI
to retain documents either for 30 days after an employee
leaves the company or for 24 hours after a litigation hold is
released. Here, Hashads fles had been retained because
they were subject to a previous litigation hold. When the
hold was released on November 11, 2011, Hashads fles
were destroyed within 24 hoursthree months before
BIPIs duty to preserve arose.
The PSC argued that BIPIs duty to preserve arose as
soon as the company could reasonably anticipate litiga-
tion. To establish the timeline, the PSC referred to privilege
log entries describing BIPIs document preservation, but
they were referring to other unrelated litigation. The PSC
also pointed to FDA adverse event reports and safety
announcements as well as internet chatter, but the court
found these insufcient to trigger the duty. Id. at *14. The
court noted that if postings on a plaintifs blog or other
media reports. . . . were the standard, pharmaceutical com-
panies would be in a perpetual litigation hold. Id.
To the contrary, BIPI argued the preservation duty was not
triggered until litigation was imminent under Seventh
Circuit law. Thus, it maintained it had no duty to preserve
documents until it received a demand letter relating to the
frst post-launch Pradaxa product-liability lawsuit in Febru-
ary 2012. The court reviewed the law and agreed with BIPI.
Because no duty to preserve existed at the time of destruc-
tion, a spoliation inference was not appropriate. Further,
even if a duty to preserve had existed at the time of
destruction, the PSC could not establish a showing of bad
faith. The court noted that [i]ntentional conduct does not
establish bad faith. Id. at *14. Instead, bad faith means
destruction for the purpose of hiding adverse information.
Id. (citation omitted).
The court concluded by ordering BIPI to conduct further
evidence to produce any of Hashads fles that still existed,
given BIPIs ongoing attempts to recover his fles from
disaster recovery backup tapes. It also reminded BIPI of
the appropriate scope of discovery, based on the PSCs
concern that BIPI was only producing documents that
referenced the drug: it reiterated the relevancy standard
from Rule 26(b)(1) in asserting that all material relevant to
any partys claim or defense must be produced and asked
the defendants to attest that they had been producing more
than documents that merely referenced Pradaxa. Id. at *4.
Takeaway
The courts analysis provides a textbook exam-
ple of how to analyze trigger events and how to
implement a document retention policy. Parties
should seek to emulate BIPIs actions in this
case, which demonstrated to the courts satis-
faction that its information governance program
was reasonable and that the company followed
the program in good faith.
All information governance programs should
include a well-documented records retention
policy and require the creation of an audit trail
describing when key actions were taken. Addi-
tionally, they should include a thorough litigation
hold procedure that incorporates an important
step often overlooked by legal teams: deter-
mining when to release legal holds.
7 Tr
Sekisui Am. Corp. v. Hart,
No. 12 Civ. 3479 (SAS) (FM), 2013 WL 4116322 (S.D.N.Y. Aug. 15, 2013)
Judge Scheindlin Game Changer She Emphatically Overturns
Magistrates Order and Imposes Adverse Inference Sanction
Tr
U.S. District Judge Shira Scheindlin found that an innocent
party to the spoliation of evidence need not show prejudice
to be entitled to an adverse inference instruction.
In this case, the plaintif sued the Harts, spouses who
included the former president of a company the plaintif
had recently acquired and his wife. Shortly after the trans-
action was complete, the plaintif decided the defendants
had misrepresented their compliance with FDA regulations
and decided to sue. After the plaintif sent a notice of claim
to the defendants, it delayed more than 15 months before
instituting a litigation hold. During this period, the plaintif
permanently deleted the email fles of the former president
as well as another former employee responsible for ensur-
ing the companys FDA compliance, allegedly to free up
space on a server. Id. at *2. The plaintif also failed to
notify its IT vendor of the need to preserve evidence. The
defendants then fled a motion seeking sanctions for the
plaintifs spoliation of evidence.
Judge Scheindlin initially referred the case to U.S. Mag-
istrate Judge Frank Maas, but he refused to issue sanc-
tions because the defendants could not establish that they
were prejudiced by the loss of evidence. Judge Scheindlin
reviewed the decision, found it clearly erroneous, and
reversed.
Judge Scheindlin undertook a thorough review of the
Second Circuit case law on adverse inference instructions,
particularly Residential Funding Corp. v. DeGeorge Finan-
cial Corp., 30 F.3d 99 (2d Cir. 2002). Residential Funding
established a three-part test for imposing an adverse infer-
ence instruction:
(1) that the party having control over the
evidence had an obligation to preserve it at the
time it was destroyed; (2) that the records were
destroyed with a culpable state of mind; and (3)
that the destroyed evidence was relevant to the
partys claim or defense such that a reasonable
trier of fact could fnd that it would support that
claim or defense.
Id. at *4 (citing Residential Funding, 30 F.3d at 107) (quota-
tion marks omitted).
Here, it was clear that the plaintif had the obligation to
preserve evidencean obligation that Judge Scheindlin
asserted should be quite clearespecially to the party
planning to sue. Id. at *1.
Turning to culpability, a showing that evidence was
destroyed knowingly, even if without intent to [breach a
duty to preserve it], or negligently was sufcient to estab-
lish the element. Id. at *4. She rejected the magistrate
judges reference to the proposed amendments to the Fed-
eral Rules of Civil Procedure, fnding it irrelevant. She noted
that the proposed rules requirement that the innocent party
would be required to establish substantial prejudice to
impose sanctions on a spoliating party was unfair. Id. at *4
n. 51. Moreover, she argued that imposing sanctions only
Takeaway
This 32-page ruling presents a forceful rejec-
tion of trends from some courts that require a
showing of prejudice before imposing severe
discovery sanctions. In refusing to require a
demonstration of bad faith or prejudice, Judge
Scheindlins decision focuses on the inexplica-
ble delay between the time the duty to preserve
was triggered and the issuance of a litigation
hold. Even companies that have a seemingly
good faith reason to delete evidence must pro-
ceed cautiously when litigation is on the horizon
and balance the needs of the business against
the likelihood of litigation.
2
where evidence is destroyed willfully or in bad faith creates
perverse incentives and encourages sloppy behavior. Id.
As she reviewed the facts of the case, Judge Scheindlin
found clearly erroneous the magistrate judges conclusion
that the destruction may well rise to the level of gross
negligence but was not willful because there was no
showing of a malevolent purpose. Id. at *5. The excuse of
a cluttered server was insufcient to excuse the deletion:
even a good faith explanation for the willful destruction of
ESI when the duty to preserve has attached does not alter
the fnding of willfulness. Id. at *6. Therefore, based on the
plaintifs failure to institute a litigation hold for 15 months
and on its failure to notify the IT vendor of the need to
preserve for an additional 6 months, as well as the dele-
tion of the emails of two signifcant custodians, she ruled
that the destruction of evidence was intentional and grossly
negligent.
In evaluating the relevance of the documents, Judge
Scheindlin explained that [w]hen evidence is destroyed
willfully, the destruction alone is sufcient circumstantial
evidence from which a reasonable fact fnder could con-
clude that the missing evidence was unfavorable to that
party. Id. at *5 (footnote omitted). In addition, she noted
that a showing of gross negligence in the destruction . .
. of evidence will in some circumstances sufce, standing
alone, to support a fnding that the evidence was unfavor-
able to the grossly negligent party. Id. (footnote omitted).
Therefore, she found that prejudice to the innocent party
may be presumed because that party is deprived of what
[the court] can assume would have been evidence relevant
to [the innocent partys claims or defenses]. Id. (foot-
note omitted). Here, the documents were clearly relevant
because they referred to the acquired companys compli-
ance with the terms of the stock purchase agreement.
Furthermore, she refused to shift the burden to establish
prejudice to the innocent party, the defendants, where
the plaintif had intentionally destroyed the evidence. To
do otherwise would allow parties who have destroyed
evidence to proft from that destruction. Id. at *7. Here, an
unknowable amount of ESI was permanently destroyed.
Id. at *7. Therefore, an adverse inference was proper. The
judge also awarded the costs and attorneys fees associ-
ated with bringing the motion.
LH
In this case involving allegations of employment discrimi-
nation and other matters, the U.S. District Court Judge
adopted the report and recommendation of a U.S. Magis-
trate Judge fnding that prejudice was required to impose
an adverse inference instruction.
The matter arose when the plaintif fled a complaint after
being dismissed from the defendant. During the course
of the case, the plaintif uncovered the loss of ESI, which
he alleged prejudiced his case. The defendants had
destroyed draft meeting minutes, emails in their native for-
mat (although produced in PDF format), work-in-progress
documents, and an attorneys memorandum memorializing
a telephone call with the plaintifs counsel. The plaintif
argued that losing metadata associated with the docu-
ments was a hardship because it would have illuminated
the content and sequence of revisions and could have
shown that the documents were fabricated. Id. at *4.
The plaintif sought sanctions, including an adverse infer-
ence instruction, the admission of evidence relating to the
spoliation, the exclusion of certain evidence, attorneys
fees, and other monetary sanctions. The plaintif argued
that the court could presume prejudice from the inten-
tional destruction of documents, based on a 2007 opinion
from the U.S. Bankruptcy Court for the District of Kansas
that applied the Southern District of New Yorks Zubulake
standard.
However, the magistrate judge disagreed, based on more
recent Tenth Circuit case law that specifcally required
prejudice. Here, the plaintif was required to show actual
prejudice rather than theoretical prejudice, meaning the
destroyed evidence would have to be relevant to the
claims or defenses in the case. Id. at *3. Mere speculation
would not sufce.
Turning to the evidence, the court did not fnd the defen-
dants destruction of evidence to be intentional; rather, it it
resulted from defendants failure to suspend their routine
practices, which under the circumstances demonstrates
negligence. It does not suggest an intent to deprive plaintif
of evidence. Id. Furthermore, according to the defendants,
a number of remaining documents either never existed,
were produced to plaintif in discovery, or were properly
withheld based on a claim of privilege. Id. Although the
plaintif contested these assertions, he could not establish
that the defendants failure to produce these documents
negatively afected his case.
The only close call was a memorandum prepared by
defense counsel. Id. at *5. The memorandum was pro-
duced in PDF format, but the plaintif wanted the native
format version so he could review the metadata and raise
a challenge to its authenticity. Although the plaintif called
into question the lawyers veracity, he could not provide any
evidence suggesting that defense counsel would make
misrepresentations to this court. Id. Therefore, he could
not establish the requisite prejudice.
Herrmann v. Rain Link, Inc.,
No. 11-1123-RDR, 2013 WL 4028759 (D. Kan. Aug. 7, 2013)
Kansas Federal Court Finds No Prejudice as Grounds
for Denying Spoliations Sanctions
Takeaway
The Hermann decision serves as a reminder of
the lack of consistency across jurisdictions on
what threshold a party is required to meet before
a court will issue sanctions for the spoliation of
ESI. The magistrate judges recommendation
runs counter to some recent decisions in other
jurisdictions where prejudice can be presumed,
such as Judge Shira Scheindlins August 2013
opinion in Sekisui American Corp. v. Hart.
10
AMC Tech., LLC v. Cisco Sys., Inc.,
No.: 11-cv-3403 PSG, 2013 WL 3733390 (N.D. Cal. July 15, 2013)
Northern District of California Opinion Shows Judicial Restraint
When Duty to Preserve Is Deemed Not Limitless
Sc
Sanctions were not appropriate where a party destroyed
the evidence of an employee who was not a key player in
the litigation and did not destroy the evidence in bad faith.
In this breach of contract action, the plaintif asked the
defendant to produce information from an employee who
had retired just before the lawsuit was fled. The custo-
dian in question was not one of the key business execu-
tives who participated in the deal, although he did provide
some calculations on sales estimates that may have been
pertinent to the plaintifs claim. The defendant could not
comply with the request because it had reformatted the
employees computer and deleted his email archives 30
days after his departure, in accord with the companys
standard retention practices.
The court began by acknowledging that the defendant had
a general duty to preserve evidence once it received notice
of the claim in July 2011. However, the court noted that
the scope of this duty is not limitless. Id. at *_. Rather, it is
confned to what is reasonably foreseeable to be relevant
to the action. Requiring a litigant to preserve all documents,
regardless of their relevance, would cripple parties who are
often involved in litigation or are under the threat of litiga-
tion. Id. at *_. Here, the employee was an unlikely candi-
date to have relevant documents.
In assessing whether Cisco acted with a culpable state
of mind, the court reviewed the appropriate standard: [a]
party acts with a culpable state of mind when it consciously
disregards its litigation duty to preserve information. Here,
the court found that Cisco did not act in conscious disre-
gard of its litigation preservation duties because again, the
fling of the suit did not reasonably put Cisco on notice to
preserve [the custodians] documents given [his] tangential
relationship to the [contract]. Id. at *__. Furthermore, the
deletion was routine: the defendant was simply following its
established company procedure of deleting information
within 30 days. Id. at *__.
Finally, the court found that the documents had only tan-
gential relevance to the claims. Id.at *__. Moreover, the lost
documents were not unique, and the information created
by the custodian was included among evidence already
provided.

Takeaway
Parties should observe that the defendant
escaped further scrutiny for two primary rea-
sons: (1) it had a documented retention pol-
icy, which helped establish that there was no
willfulness on its part, and (2) the employee at
issue was not a key custodian. Therefore, par-
ties would be well advised to take steps well
before litigation arises to establish a defensible
records retention program. In addition, parties
should evaluate matters as early as possible to
determine potential custodians and then work
to obtain opposing counsels agreement as to
the proper scope of discovery.
9
Tr
Sekisui Am. Corp. v. Hart,
No. 12 Civ. 3479(SAS)(FM), 2013 WL 2951924 (S.D.N.Y. June 10, 2013)
Without Evidence of Prejudice, S.D.N.Y. Court Denies
Sanctions Despite Spoliation of Evidence
U.S. District Judge Shira Scheindlin referred this matter to
a magistrate judge, who decided that a partys failure to
establish prejudice was fatal to its request for an adverse
inference instruction as a sanction for spoliation.
In this case arising from the plaintifs failed acquisition of
a company owned by the defendants, the plaintif notifed
the defendants that it intended to sue them for breach of
contract. However, the plaintif waited more than 15 months
to implement a litigation hold. Furthermore, the company
failed to notify a vendor overseeing its IT operations to
preserve email, which was subsequently lost, until three
months after it fled the lawsuit. Meanwhile, the plain-
tifs ofce manager authorized the destruction of several
employees email folders, including the former presidents
fles, to solve fle server problems due to the amount of
email.
The defendants argued the destruction of the emails were
the result of the plaintifs willful, wanton and reckless
disregard for its discovery obligations. Id. at *3. Therefore,
they were entitled to an adverse inference instruction. Id.
The magistrate judge applied a three-part test to determine
whether an adverse inference instruction was appropriate:
(a) the party having control over the evidence
had an obligation to preserve it; (b) the records
were destroyed with a culpable state of mind;
and (c) the destroyed evidence was relevant
to the moving partys claim or defense, such
that a reasonable trier of fact could fnd that it
would support that claim or defense.
Id. (citation omitted). Here, there was no question that the
plaintif had a duty to preserve the emails, and the com-
panys failure to take [reasonable precautions] to preserve
Harts email fles constitutes at least negligence. Id. at *4.
However, the question of culpability was a closer issue.
The defendants could not show the emails were deleted
for any malevolent purpose. Id. However, the IT vendors
ability to delete Harts email folder may well rise to the
level of gross negligence. Id. But culpability did not by
itself entitle [the defendants] to sanctions. Id.
The defendants also had to establish that the emails were
relevant and that they sufered prejudice. Here, the defen-
dants did not show that relevant information potentially
helpful to them is no longer available. Id. The court found
it telling that despite their complaints, the defendants had
yet to produceor even describeso much as a single
relevant email that [the plaintif] has failed to produce. Id.
Moreover, although the plaintif conceded that the dele-
tion was a serious mistake, it attempted to remedy the
mistake by disclosing the problem to defense counsel and
by continuing to search for alternative sources of informa-
tion and locating at least 36,000 emails. Id. at *3. It also
asserted that the lost emails were of only marginal rel-
evance to the defendants case and that the signifcant
number of Hart emails that have been located show[ed]
that any prejudice was minimal. Id.
2
Takeaway
Here, the plaintif was fortunate in two respects.
First, it was able to fnd other sources of the
sought-after ESI. Second, the defendants were
unable to establish how the loss of information
might have prejudiced them. However, most
parties in similar situations likely will not be so
lucky. Well before they anticipate litigation, orga-
nizations should establish a litigation plan that
includes steps to preserve information, such as
implementing a litigation hold and working with
the IT department and outside vendors to halt
the automatic destruction of records.
The defendants had also complained about the loss of
other custodians emails. Some of the custodians emails
were not among the list of agreed-upon custodians for
the case. Some others fles had been preserved, but the
defendants had previously instructed these custodians
to delete unwanted email. Id. at *8. The fles of one
employee, who was responsible for FDA compliancean
issue that played a role in the plaintifs decision to renege
on the acquisitionhad been deleted, ostensibly to pre-
vent the accumulation of junk mail that was cluttering the
companys server. However, the plaintif had collected and
produced almost 7,000 emails and their attachments from
the employees archived email fles and other custodians
fles. Therefore, the court had no reason to fnd any preju-
dice to the defendants, and sanctions were unwarranted.
At best, the defendants have established the presence of
some smoke, intimating that there consequently must have
been a fre. Id. at *9.
In addition, this opinion refects the language of the pro-
posed amendment to Federal Rule of Civil Procedure 37(e),
which would permit spoliation sanctions only for willful or
bad faith spoliation that caused substantial prejudice or
that irreparably deprived a party of a meaningful oppor-
tunity to present or defend against claims. Although U.S.
District Judge Shira Scheindlin ultimately reverses the
magistrate judges opinion, this standard may soon become
the law of the land.
Case
Summaries
CASE SUMMARIES
Sokn v. Fieldcrest Cmty. Unit School Dist 2014 WL 201534 (C.D.Ill., Jan. 16, 2014)
Unfair labor practices case involving destruction of audio tape recordings; being unable to
determine when the tapes were destroyed, Court could not rule that destruction was done in
bad faith and therefore sanctions not appropriate. Additional deposition ordered.
7
VENUE: C.D. Ill.
JUDGE: Joe Billy McDade
Little Hocking Water Assn v. Dupont LEXIS 134869 (S.D. Ohio Sept. 20, 2013)
In this dispute over waste disposal practices, court declined to issue sanctions or permit additional
discovery regarding the defendants preservation eforts (including production of litigation
hold letters) due to insufcient preliminary showing that spoliation had occurred.
6
VENUE: S.D. Ohio
Hixson v. City of Las Vegas, 2:12-cv-00871-RCJ-PAL (D. Nev. July 10, 2013)
Wrongful discharge case where plaintif fled for Rule 37(c) sanctions due to automatic destruction of emails; court
found that the duty to preserve had not attached until after the alleged spoliation occurred and denied sanctions.
Tr
VENUE: D. Nev.
JUDGE: Peggy Leen
Pillay v Millard Refrigerated Services 2013 WL 2251727 (N.D.Ill., May 22, 2013)
Employment case where plaintif sought spoliation motion for destruction of performance
data due to routine data destruction; resulted in adverse inference sanction.
7
VENUE: N.D. Ill.
JUDGE: Joan Lefkfow
Cottle-Banks v. Cox Communications, Inc. 2013 U.S. Dist. LEXIS 72070 (S.D. Cal. May 21, 2013)
In this unfair competition lawsuit, plaintif alleged destruction of relevant audio recordings; agreeing that spoliation
had occurred, the court denied motion for adverse inference due to lack of any showing of prejudice.
9
VENUE: S.D. Cal.
JUDGE: Gonzalo Curiel
Research Foundation of State University of New York v. Nektar Therapeutics,
No. 1:09 cv 1292 (N.D.N.Y. May 15, 2013)
In this patent dispute case, the court denied defendants motion for an adverse inference, citing
among other actions a comprehensive preservation policy and issuance of legal holds.
2
VENUE: N.D.N.Y.
JUDGE: Gary L. Sharpe
Kirgan v FCA LLC 2013 U.S. Dist. LEXIS 51747 (C.D. Ill., Apr. 10, 2013)
Employment case involving defendants routine destruction of calendar entries (despite issuing
a LH notice) and false testimony; court granted adverse inference and monetary fne.
7
VENUE: C.D. Ill.
JUDGE: John Gorman
Dunbar v Google 2013 US Dist LEXIS 48630 (N.D.Cal, Apr. 2, 2013)
Plaintif sought prior versions of documents retained in defendants document
management system; court ordered additional discovery.
9
VENUE: N.D. Cal.
JUDGE: Paul Grewal
Frank Gatto v United Air Lines, et al, 10-cv-1090-ES-SCM (D. NJ Mar. 25, 2013)
Personal injury case where defendant sought sanctions related to the deletion
a Facebook account, resulting in an adverse inference sanction.
3 Sc
VENUE: D. N.J.
JUDGE: Steven Mannion
Kenneth Day v LSI Corp., No. CIV 11-186-TUC-CKJ (D. Ariz., Dec. 20, 2012)
Employment discrimination case, where a critical witness was excluded from the original preservation request
and legal hold; data was subsequently lost, resulting in default judgment and adverse inference sanctions.
9 Sc
VENUE: D. Ariz.
JUDGE: Cindy K. Jorgenson
LEGEND: VENUES: # TOPICS: Tr Trigger Pr Proportionality Sc Scope Te Technology LH Legal Hold
SANCTIONS: Monetary Sanctions Adverse Inference Additional Discovery Dismssed
CASE SUMMARIES
E.E.O.C. v. JP Morgan Chase Bank N.A., No. 2:09-cv-00864 (S.D. Ohio Feb. 28, 2013)
EEOC discrimination case involving destruction of data due to untimely issuance of a legal hold
and failure to suspend routine email culling, resulting in permissive adverse inference.
6 Tr
VENUE: S.D. Ohio
JUDGE: Gregory L. Frost
E.E.O.C. v. Ventura Corp., Civ. No. 11-1700 (PG), 2013 U.S. Dist. LEXIS 19662 (D.P.R. Feb. 12, 2013)
Title VII complaint where relevant documents were shredded and emails lost due to a software migration,
despite multiple warnings from the EEOC. Resulted in adverse inference despite absence of bad faith.
1
VENUE: D.P.R.
Christou v. Beatport, LLC, Civil Action
No. 10-cv-02912-RBJ-KMT, 2013 U.S. Dist. LEXIS 9034 (D. Colo. Jan. 23, 2013)
Commercial case where defendant failed to take steps to preserve text messages, and due to loss of the
phone, there were subsequently unable to produce requested messages during discovery. Citing that the
duty to preserve had attached, the court found negligence and provided a rebuttable inference at trial.
10
VENUE: D. Colo.
JUDGE: R. Brooke Jackson
Simms v. Deggeller Attractions 7:12-cv-00038-JCT (W.D. Va. January 2, 2013)
Personal injury case where plaintif moved for sanctions for destruction of photos; court concluded
duty to preserve neither existed nor bad faith; denied the motion, applying Rule 37(e) safe harbor.
Tr
VENUE: W.D. Va.
JUDGE: James Turk
Haskins et al v First American Title, No. 10-5044 (D. NJ, Oct. 18, 2012)
Insurance fraud case where plaintif fled a motion to compel preservation of ESI held
by third-parties (agents). Court found ESI was in defendants possession, custody or
control and ordered issuance of litigation hold and request for production.
3 Sc
VENUE: D. N.J.
JUDGE: Joel Schneider
Scentsy Inc. v. B.R. Chase LLC, No. 1:11-cv-00249-BLW, 2012 WL 4523112 (D. Idaho Oct. 2, 2012)
Copyright infringement case where defendant fled a motion to compel forensic examination. Court concluded
plaintifs litigation hold and document retention policies were clearly unacceptable (lack of written legal hold;
timing of verbal hold coinciding with fling complaint; routine email disposition after 6 months). Court ordered
additional depositions (along with potential for additional sanctions if spoliation found to have occured).
Tr
VENUE: D. Idaho
JUDGE: B. Lynn Winmill
Hynix Semiconductor, Inc. v Rambus, Inc. No. C-00-20905 RMW (N.D. Cal. Sept. 21, 2012)
Upon appeal, two federal court cases (Hynix v Rambus and Micron Tech v Rambus) were remanded after
fnding difering conclusions regarding spoliation claims with nearly identical underlying facts. Originally,
in Hynix, the court determined that Rambus did not spoliate documents. The Federal Circuit court
concluded that the court had applied too narrow a standard of forseeability. Following reconsideration,
the court concluded the earlier trigger date and that Rambus had therefore committed spoliation.
9 Tr
VENUE: N.D. Cal.
JUDGE: Ronald M. Whyte
Robinson v. Jones Lang LaSalle Americas Inc.,
No. 3:12-cv-00127-PK, 2012 U.S. Dist. LEXIS 123883 (D. Or. Aug. 29, 2012)
No principled reason to articulate diferent standards for the discoverability of
communications through email, text message, or social media platforms.
Boeynaems v. LA Fitness Internatl, 285 F.R.D. 331 (E.D. Pa. August 16, 2012)
Rule 23 consumer class action involving dispute over membership termination rights. Plaintif
sought expanded scope of discovery; court entered a cost-shifting order against plaintifs.
Pr
VENUE: E.D. Pa.
JUDGE: Balyson
Apple v Samsung Elecs. C. Ltd. No. C 11-1846 LHK (PSG) (N.D. Cal. July 25, 2012)
In this patent infringement case, court agreed with Apple in seeking an adverse inference
for data spoliation due to failure to suspend automated deletion of email protocol (and lack
of email being produced form 14 key fact witnesses for relevant time period)
9
VENUE: N.D. Cal.
JUDGE: Paul Grewal
CASE SUMMARIES
Chin v Port Authority of New York New Jersey
Nos. 10-1904-cv(L), 10-2031-cv(XAP), 2d Cir., July 10, 2012
In this Second Circuit Court of Appeals employment discrimination opinion, Chin sought a
spoliation sanction for Port Authoritys purported gross negligence for failure to issue a written
legal hold; court rejected SDNY per se gross negligence argument, fnding that in this case
there was no prejudice sufered due to ample evidence being produced by the Port.
2 LH
VENUE: 2d Cir N. Y.
JUDGE: Miriam
Goldman Cedarbaum
Omogbehin v. Cino 2012 U.S. App. LEXIS 12545, (3d Cir. N.J. June 20, 2012)
Employment discrimination suit where plaintif fled a motion alleging spoliation; court concluded that plaintif
had failed to prove that supposed emails had in fact existed (an no allegation of faulty legal hold processes)
3 Pr
VENUE: 3d Cir N. J.
JUDGE: Franklin S.
Van Antwerpen
In re: Oil Spill by the Oil Rig Deepwater Horizon in the Gulf
of Mexico on April 20, 2010 E.D.La., MDL No. 2179
Former BP drilling engineer indicted on charges he deleted text messages
relevant to the ongoing lawsuit (obstruction of justice)
5 Te
VENUE: E.D. La.
GenOn Mid-Atlantic LLC v. Stone & Webster Inc.,
No. 11 Civ. 1299(HB)(FM) (S.D.N.Y. Apr. 20, 2012)
In this contract dispute, defendant alleged spoliation by data held by a third-party;
court found that the duty to preserve did extend to data under practical control
of the party, but denied sanctions due to lack of prejudice shown.
2
VENUE: S.D.N.Y.
JUDGE: Frank Maas
BYU v. Pfzer Inc. (D. Utah, April 16, 2012)
BYU alleged that 1) Pfzers initial inquiry for legal advice following its withdrawal from the
research arrangement was a preservation triggering event and 2) that Pfzers 1994 litigation
sensitized it to the possibility that additional interested parties might come forward. Court
denied that the duty to preserve had attached 12 years prior to fling complaint.
10 Tr
VENUE: D. Utah
JUDGE: Brooke C. Wells
Danny Lynn Electrical v. Veolia ES Solid Waste
No. 2:09CV 192-MHT, 2012 U.S. Dist. LEXIS 31685, (M.D. Ala. March 9, 2012)
In denying a motion for sanctions late in the case, the court concluded that the defendant had not acted in bad
faith, that an efective litigation hold process was in place, and the degree of prejudice sufered was minimal.
1 Pr
VENUE: M.D. Ala.
JUDGE: Terry F. Moorer
Tracy v. NVR Inc., 04-cv-6541L (WDNY, March 26, 2013)
In this FLSA class-action lawsuit, plaintifs moved to compel production of litigation hold notices and list of
recipients, based on preliminary showing of spoliation of potentially similarly situated opt-in plaintifs. The motion
was denied due to plaintifs failure to demonstrate that the duty to preserve extended to potential opt-in plaintifs,
nor that spoliation had occurred. The court did grant NVRs motion for spoliation against one of the opt-in plaintifs.
2 Sc
VENUE: W.D.N.Y.
JUDGE: Marian W. Payson
State National Insurance Co. v. County of Camden 08-cv-5128 (D.N.J. March 21, 2012)
Finding the Countys eforts severely lacking (including a failure to institute a legal hold
after the trigger event, suspend auto-deletion of email, or retain copies of any back-up
tapes), the Court ordered monetary sanctions despite fnding no actual spoliation
3
VENUE: D. N.J.
JUDGE: Noel L. Hillman
Pouncil v. Branch Law Firm Case No. 10-1314-JTM-DJW (D. Kan. Mar. 7, 2012)
In this malpractice product liability case, motion to compel defendant for failing to take proper steps to
preserve ESI (including court-ordered litigation hold, additional discovery and monetary sanctions for costs)
10
VENUE: D.Kan.
JUDGE: David Waxse
CASE SUMMARIES
915 Broadway Associates, LLC, v. Paul, Hastings, Janofsky & Walker, LLP
2012 NY Slip. Op. 50285U (N.Y. Sup. February 16, 2012)
In this malpractice real estate transaction case, the court agreed with motion for spoliation sanctions
and dismissal of the claim with prejudice due to a failure to take adequate steps to preserve potentially
relevant evidence (including failure to implement an efective litigation hold process, suspend
automated destruction of email, decommission and discarding of an integral email server)
NY LH Sc
VENUE: N.Y. Sup.
JUDGE: Bernard J. Fried
Pippins v. KPMG LLP 279 F.R.D. 245 (February 3, 2012)
During the stay of discovery in this FLSA class-action lawsuit, KPMG sought a protective order
limiting the scope of preservation eforts due to the burden imposed by preserving hard drives for
thousands of former employees that might fall within a potential FLSA collective. After failing to resolve
the dispute, the court concluded that it would be premature to limit scope of preservation.
2 Sc
VENUE: S.D.N.Y.
JUDGE: James L. Cott
Voom HD Holdings LLC v. EchoStar Satellite LLC
2012 NY Slip Op 00658 (January 31, 2012)
Contract dispute, confrming lower court sanctions due to EchoStar failed to issue a legal
hold once litigation could be reasonably anticipated and failed to suspend automatic email
deletion until four months after the suit was fled resulting in a loss of relevant emails.
NY Tr
VENUE: N.Y. Sup.
JUDGE: Sallie
Manzanet-Daniels
Perez v. Vezer Industrial Professionals, Inc. 2011 WL 5975854 (E.D. Cal. Nov. 29 2011)
Personal injury case where no litigation hold was implemented and minimal, if any, eforts
were made to preserve relevant documents and ESI; small monetary sanction awarded
to plaintif (due to lack of gross negligence and minimal prejudice sufered)
9
VENUE: E.D. Cal.
JUDGE: Carolyn K. Delaney
NACCO Materials Handling Group, Inc. v. Lilly Co.
(No. 11-2415 AV, 2011 WL 5986649, W.D. Tenn. Nov. 16, 2011)
In this case involving improper access to secure dealer website, Lilly failed to take reasonable steps to preserve
(e.g., failure to issue company-wide litigation hold due to scope of allegations, to suspend auto-delete and routine
overwriting features, or to collect ESI), resulting in court-imposed preservation actions and monetary sanctions.
6 Sc
VENUE: W.D. Tenn.
JUDGE: Diane K. Vescovo
N.V.E., Inc. v. Jesus J. Palmeroni, et al. Civil Action
No. 06-5455 (ES), 2011 U.S. Dist. LEXIS 107600 (D.N.J., September 21, 2011)
Wrongful termination case where defendant admits to not issuing a legal hold and found to be was grossly negligent
in failing to preserve records (e.g., destroying ESI from a computer system that was subsequently upgraded)
3
VENUE: D. N.J.
JUDGE: Esther Salas
E.I. Du Pont De Nemours & Co. v. Kolon Indus., Inc.
No. 3:09cv58, 2011 WL 2966862 (E.D. Va. July 21, 2011)
In this countersuit, Kolon was found to have failed to implement an efective legal hold process and
key players indicating intentional destruction of relevant documents; adverse inference in lieu of default
judgment (citing eforts in issuing litigation holds and subsequent eforts to preserve fles)
4 Pr
VENUE: E.D. Va.
JUDGE: Robert E. Payne
Haraburda v. Arcelor Mittal USA, Inc.
No. 2:11 cv 93, 2011 WL 2600756 (N.D. Ind. June 28, 2011)
Employment discrimination case where defendant chose to defer issuing a litigation hold
or implement a process to preserve evidence until after the Rule 26(f) conference; court
agreed with motion to compel and ordered placing an appropriate litigation hold
7
VENUE: N.D. Ind.
JUDGE: Andrew P. Rodovich
Gaalla v. Citizens Medical Ctr. 2011 WL 2115670 (S.D. Tex. May 27, 2011)
Plaintifs sought sanctions in response to the defendants failure to preserve disaster recovery backup tapes.
The court ruled against sanctions, fnding preservation eforts that were undertaken were reasonable, including
issuing a timely litigation hold, making timely snapshots of relevant email accounts and instituting journaling.
5 Sc
VENUE: S.D. Tex.
JUDGE: Janis G. Jack
CASE SUMMARIES
Zimmerman v. Weis Markets, Inc.,
2011 Pa. Dist. & Cnty. Dec. LEXIS 187 (Pa. County Ct. May 19, 2011)
Ordering plaintif to provide all passwords, user names and log-in names for any and all MySpace and Facebook
accounts to Defendant because no privilege exists for information posted in the non-public sections of social
websites, liberal discovery is generally allowable, and the pursuit of truth as to alleged claims is a paramount ideal.
PA Te
Surowiec v. Capital Title Agency, Inc. 2011 WL 1671925 (D. Ariz. May 4, 2011)
Finding gross negligence for inadequate preservation eforts and discovery misconduct, including failing to
issue a timely litigation hold and suspend routine document destruction when the defendant should have
reasonably anticipated litigation, the court imposed monetary sanctions and an adverse inference instruction.
9
VENUE: D. Ariz.
JUDGE: David G. Campbell
E.I. du Pont de Nemours and Co. v. Kolon Indus., Inc.
2011 WL 1597528 (E.D. Va. Apr. 27, 2011)
Despite a claim by the plaintif that critical information was lost, the court denied
sanctions for willful spoliation, citing that a defendants duty to preserve is not absolute,
but must only be reasonable and proportional to the circumstances.
4 Pr
VENUE: E.D. Va.
JUDGE: Robert E. Payne
Steuben Foods, Inc. v. Country Gourmet Foods LLC
WL 1549450,WDNY April 21, 2011
Breach of contract case where defendant asserted plaintifs reliance on a verbal
legal litigation hold and failure to produce at least three emails warranted spoliation
sanctions; court found no evidence of spoliation or resulting prejudice
2
VENUE: W.D.N.Y.
JUDGE: Leslie Foschio
Star Direct Telecom, Inc. v. Global Crossing Bandwidth, Inc.
2011 WL 1125493 (W.D.N.Y. Mar. 21, 2011)
Among numerous discovery disputes, plaintif sought spoliation sanctions for destruction of
emails; court concluded that duty to preserve arose when complaint was fled (not earlier as
contended by Star Direct); however, failing to issue a litigation hold nor take adequate steps
to preserve amounted to gross negligence and imposition monetary sanctions
2 Tr
VENUE: W.D.N.Y.
Green v. Blitz U.S.A., Inc. 2011 U.S. Dist. LEXIS 20353 (E.D. Tex. Mar. 1, 2011)
Product liability case where court found defendant failed to preserve ESI (and even
encouraging deletion in line with records policies); monetary sanction and order to provide
Memorandum to opposing counsel in every lawsuit for forthcoming fve years
5 LH
VENUE: E.D. Tex.
JUDGE: T. John Ward
Philips Electronics North America Corp., et al. v BC Technical
No. 2:08-CV-639-CW-SA, 2011 WL 677462 (D. Utah Feb. 16, 2011)
Copyright infringement and misappropriation of trade secrets; failure to issue timely litigation hold while key
players wantonly destroyed incriminating evidence, resulting in sanctions and summary judgment for plaintif
10 LH
VENUE: D. Utah
JUDGE: Samuel Alba
Viramontes v. U.S. Bancorp 2011 WL 291077 (N.D. Ill. Jan. 27, 2011)
The banks retention policy kept e-mails for 90 days, after which the e-mails were overwritten
and destroyed. However, the retention policy would be promptly suspended on the occurrence of
litigation or other triggering event. Because the bank followed its Record Retention Procedures
in good faith, and suspended auto-deletion up on anticipation of litigation, it was protected
from court sanctions under the Federal Rules of Civil Procedure 37(e) safe harbor.
7 Tr
United States v. Halliburton Co. 2011 WL 208301 (D.D.C. Jan. 24, 2011)
Plaintif requested additional production of emails from an expanded list of custodians, despite signifcant
production that had already been completed. The court determined that the plaintif had failed to
demonstrate that missing emails were crucial, and that additional discovery was not warranted.
DC
VENUE: D.D.C.
JUDGE: John M. Facciola
CASE SUMMARIES
Orbit One Communications, Inc. v. Numerex Corp.
2010 WL 4615547 (S.D.N.Y., Oct. 26, 2010)
Despite the failure to engage in model preservation, the court denied a motion for
spoliation due to insufcient evidence that any lost ESI was relevant to the case (rejecting
notion that failing to issue a written legal hold is per se gross negligence).
2
VENUE: S.D.N.Y.
JUDGE: James Francis
McMillen v. Hummingbird Speedway, Inc., (C.C.P. Jeferson County, PA Sep. 9, 2010)
Ordering plaintif to provide his Facebook and MySpace user names and passwords to
counsel for defendants, rejecting plaintifs argument that communications shared among ones
private friends is somehow protected against disclosure in discovery and instructing no
social network site privilege has been adopted by our legislature or appellate courts.
PA
Victor Stanley, Inc. v. Creative Pipe, Inc., et al. D.MD, Sept. 9, 2010
Copyright and patent infringement, unfair competition involving purposeful destruction
and overwriting of fles in order to obfuscate incriminating evidence, resulting in sizable
monetary sanctions and default judgment on copyright infringement
4
VENUE: D. MD
JUDGE: Paul Grimm
Medcorp, Inc. v. Pinpoint Tech., Inc. 2010 WL 2500301 (D. Colo. June 15, 2010)
Case involving intentional destruction of 43 hard drives containing relevant information; fnding
negligence, court issued monetary sanctions and adverse inference instruction against Medcorp
10
VENUE: D. Colo.
JUDGE: Kristen L. Mix
Jones v. Bremen High School Dist. 228 2010 WL 2106640 (N.D. Ill. May 25, 2010)
Wrongful termination where defendant failed to issue a litigation hold until well after trigger event, lack of
meaningful guidance to key players, and continued automatic destruction of ESI (including backup tapes
for email); fnding gross negligence, sanctions included cost shifting and additional depositions
7
VENUE: N.D. Ill.
JUDGE: Susan E. Cox
Passlogix, Inc.v.2FA Technology LLC, et al. 2010 WL 1702216 (SDNY Apr. 27, 2010)
Breach of contract case involving 2FAs failure to issue a legal hold (despite being a small company) and
intentional bad-faith spoliation resulting in prejudice; monetary sanction designed to punish bad actors directly
2
VENUE: S.D.N.Y.
JUDGE: Peter K. Leisure
Merck Eprova AG v. Gnosis S.p.A. et al. 07 Civ. 5898 (SDNY Apr. 20, 2010)
Mislabeling of a nutritional agreement involving inadequate preservation eforts (lack of litigation
hold, failure to suspend automatic email deletion and inadequate supervision of custodian
search; fnding of gross negligence and monetary sanctions and additional deposition
2 LH
VENUE: S.D.N.Y.
JUDGE: Richard J. Sullivan
Crown Castle USA, Inc. v. Fred A. Nudd Corp.
2010 U.S. Dist. LEXIS 32982, (WDNY Mar. 31, 2010)
Product liability case involving gross negligence due to a failure to monitor the approach used to determine
where and what to look for in terms of responsive documents; failure to suspend auto-delete of emails;
and failure to issue legal hold (rejecting adverse inference due to lack of bad faith and prejudice)
2 LH
VENUE: W.D.N.Y.
Rimkus Consulting Group Inc. v. Nickie G. Cammarata, et al.,
07-cv-00405 (SDTX Feb. 19, 2010)
Non-compete and misappropriation of secrets; lack of written hold and willful destruction of evidence by the
defendants after the duty to preserve had attached, resulting in monetary sanctions and adverse inference instruction
5 Tr
VENUE: S.D. Tex.
JUDGE: Lee H. Rosenthal
Pension Comm. v. Banc of America Sec., LLC 685 F. Supp. 2d 456 (S.D.N.Y. 2010)
Complex litigation case where several plaintifs were found to have failed to implement reasonable preservation
eforts, including failure to issue written legal holds and other shortcomings resulting in fnding of gross negligence
2 LH
VENUE: S.D.N.Y.
JUDGE: Shira A. Scheindlin
CASE SUMMARIES
Einstein v. 357 604199/07 (N.Y. Sup. Ct. November 4, 2009)
Construction defect; plaintif fled motion to compel discovery and misrepresentations; failure to implement
any legal hold, make any attempt to investigate relevant data sources, and failure to preserve (e.g., due
to email quota restrictions) deemed grossly negligent; monetary sanction and adverse inference
NY LH
VENUE: N.Y. Sup.
JUDGE: Charles E. Ramos
Scalera v. Electrograph Sys., Inc., 2009 WL 3126637 (E.D.N.Y. Sept. 29, 2009)
In this employment discrimination case, plaintif moved for sanctions due to loss of allegedly relevant emails
caused by failing to issue a litigation hold notice nor take other steps to preserve ESI; despite fnding negligence
for such missteps, the court denied request for an adverse inference due to lack of proving relevance.
2 Sc
VENUE: E.D.N.Y.
JUDGE: A. Kathleen
Tomlinson
Swoford v. Eslinger, 671 F. Supp. 2d 1274 (M.D. Fla. 2009)
In this personal injury suit, plaintif sought sanctions for intentional destruction of ESI; the court agreed,
fnding bad faith and imposed both attorney fees and an adverse inference against the defendant.
VENUE: M. D. Fla.
JUDGE: Mary S. Scriven
Major Tours v. Colorel, 2009 U.S. Dist. LEXIS 68128 (DNJ Aug. 4, 2009)
Discrimination case where plaintifs sought production of litigation hold letters; after concluding
likelihood that spoliation had occurred due to delayed recognition of a triggering event and
30(b)(6) testimony provided, court agreed and ordered hold letters be produced
3 Tr
VENUE: D. N.J.
Pinstripe, Inc. d/b/a Acctknowledge v. Manpower, Inc.,
2009 U.S. Dist. LEXIS 66422 (ND Okla. Jul. 28, 2009)
The key takeaway from this case is the need to communicate, communicate and do some more
communication when implementing a litigation / legal hold. A quick phone call confrming the steps
being taken to implement the litigation hold would have saved over $30,000.00 in this case.
10
VENUE: N.D. Okla.
Phillip M. Adams & Associates, L.L.C., v. Dell, Inc.
2009 WL 910801 (D.Utah March 30, 2009)
Infringement case, moving for terminating sanctions due to spoliation; discussion of when trigger event
occurred, with reasonable anticipation being based on multiple lawsuits arising out of the same issue
(foppy disk errors) some fve years earlier when industry was sensitized to the issue in the case)
10 Tr
VENUE: D. Utah
JUDGE: David Nufer
Synventive Molding Solutions v. Husky Injection Molding Systems,
2009 U.S. Dist. LEXIS 105306 (D. Vt. Mar. 13, 2009)
Patent infringement lawsuit in which the Court ultimately orders plaintif to implement a litigation hold
as to personnel likely to possess discoverable information. The court also orders plaintif to fle a sworn
declaration, including, among other things, a description of the nature and extent of the litigation hold
put in place in response to this Order, including the individual personnel afected by the hold.
2 LH
VENUE: D. Vt.
Acorn v. County of Nassau 2009 WL 605859 (E.D.N.Y. Mar 9, 2009)
Employment discrimination case where plaintif sought actions against the county for failure to implement
a timely hold nor adequately search for ESI (formal litigation hold issued 15 months after trigger event);
fnding of gross negligence and monetary sanction (but no prejudice; therefore no adverse inference)
2 Tr LH
VENUE: E.D.N.Y.
Keithley v. TheHomeStore.com 2008 U.S. Dist. LEXIS 61741 (Aug 12, 2008)
Intellectual property infringement case; plaintif fled motion claiming spoliation and discovery
misconduct; court agreed that the ...failure to have an adequate litigation hold in place and the failure
to issue reminders to employees regarding the duty to preserve evidence was at least grossly negligent
and resulted in spoliation of relevant ESI; $1.4M monetary sanctions and adverse inference
9 LH
VENUE: N.D. Cal.
JUDGE: Elizabeth D. Laporte
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Preservation Case Law

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Preservation Case Law

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