Because You Need to Know: 2019 Year-in-Review, Part 3

A multi-part series reviewing news stories and noteworthy new cases from across 2019

In the first Part, we reviewed selected industry news stories and useful new publications from 2019.  In the second Part, we reviewed selected social media and mobile devices cases from 2019.  In this Part, we discuss selected ESI spoliation sanctions cases from 2019.

Throughout the year, XDD rounds up industry news stories, noteworthy cases, and more in monthly “Because You Need to Know” posts.  In this series, we are reviewing some of the biggest developments and most interesting cases from across 2019.  If you prefer to listen rather than to read, we also recently offered a free, one-hour educational webinar reviewing this material.  A recording of that program is available here.

In this Part, we discuss selected ESI spoliation sanctions cases from 2019, including cases touching on reasonable steps to preserve, intent to deprive, courts’ inherent authority, irretrievable loss, and courts’ discretion on remedies.

ESI Spoliation Sanctions Cases – Reasonable Steps

FRCP 37(e) limits the application of sanctions to situations where ESI that should have been preserved was lost “because a party failed to take reasonable steps to preserve it.”

  • Nuvasive, Inc. v. Kormanis, No. 1:18CV282 (M.D. N.C. Mar. 13, 2019) – In this case, a party’s failure to “investigate[] . . . what text messages his iPhone held, and [] whether any setting on his iPhone might cause the deletion of existing or future text messages” and failure to “obtain[] appropriate advice about saving back-up copies of his text messages” were found not to have been reasonable steps to preserve.  [emphasis added]

ESI Spoliation Sanctions Cases – Intent to Deprive

FRCP 37(e) limits the application of severe sanctions, such as an adverse inference instruction or dismissal, to situations where a party has “acted with the intent to deprive another party of the information’s use in the litigation.”

  • Univ. Accounting Serv., LLC v. Schulton, June 7, 2019 (D. Or. Jun. 7, 2019) – In this case, a party admitted during his deposition to deleting materials so he “could legitimately say [he had] no access” and “because it’s exactly the type of damning information that UAS wants to catch me with,” leading to a finding of intent to deprive under FRCP 37(e)(2).  [emphasis added]
  • GN Netcom, Inc. v. Plantronics, Inc., No. 18-1287 (3rd Cir. Jul. 10, 2019) – In this case, “the District Court reasonably concluded that Plantronics acted in bad faith” based on the facts that a Senior VP “deliberately deleted an unknown number of emails in response to ‘pending litigation’ and urged others to do the same,” that “executives, including its CEO, were not truthful during depositions,” and that “the company was not willing to spend a nominal fee for its expert, Stroz, to fully assess the spoliation and create a final report,” each of which “was an intentional step to interfere with GN’s prosecution of its claims against Plantronics.”  [emphasis added]
  • Woods v. Scissons, No. CV-17-08038-PCT-GMS  (D. Ariz. Aug. 14, 2019) – In this case, the court declined to make a finding itself on the question of a non-party’s intent to deprive, and instead, it allowed the presentation of evidence regarding the alleged ESI spoliation and intent to the jury, so that the jury could determine intent and apply a permissive adverse inference if it found intent to deprive.

ESI Spoliation Sanctions Cases – Inherent Authority

To ensure predictability and consistency, FRCP 37(e) was intended to serve as the sole source of authority for the application of ESI spoliation sanctions, but some courts have continued to rely on their inherent authority for sanctions in certain circumstances.

Defendants argue that there can be no sanctions under Rule 37 because the production of FleetMatics data will have been made in its entirety prior to trial.  Defendants cite Moody v CSX Transportation, Inc., 271 F. Supp. 3d 410, 425 (W.D.N.Y. 2017), as holding that changes to Rule 37 with respect to electronic evidence rejected sanctions for negligent or grossly negligent behavior.  That argument misses the point.  First, the case addresses the spoliation presumption, which has been eliminated here.  Sanctions are still available for intentional acts to deprive a party of discovery.  And as the Court has made clear, Defendants’ acts were intentional, willful, in bad faith, and contumacious.  [emphasis added]

ESI Spoliation Sanctions Cases – Irretrievable Loss

FRCP 37(e) specifies that, in order to apply sanctions under the rule, “electronically stored information that should have been preserved . . . [was] lost . . . and [] cannot be restored or replaced through additional discovery.”  [emphasis added]

Volvo Car USA LLC concedes that it has not subpoenaed any records from CDK Drive. It has not attempted to retrieve the information from any other third-parties. 

Volvo Car USA LLC also has not demonstrated that it is not in possession or does not otherwise have access to any information due to its own use of the Electronic Dealer Management System. 

Rule 37(e) sanctions are not available when the information may be sought from third-parties and Volvo Car USA LLC has not demonstrated that the information is irretrievable. 

. . . 

Defendant has not sought any e-mails or discovery directly from Google and cannot demonstrate that the e-mails are otherwise lost.  [emphasis added]

ESI Spoliation Sanctions Cases – Discretion on Remedies

Although fee awards and adverse inference instructions are most common, courts have great discretion in fashioning appropriate remedies and sanctions, particularly when acting based on inherent authority rather on the terms of FRCP 37(e).

  • Wilmoth v. Deputy Austin Murphy, No. 5:16-CV-5244 (W.D. Ark. Aug. 7, 2019) – In this case, defendant and defendant’s attorney allowed the spoliation of relevant ESI and also engaged in “conduct which might readily be viewed as intentional deception” (including giving incomplete, evasive, or untruthful responses) leading the court to impose not only a permissive adverse inference sanction but also witness preclusion sanctions:

Given his direct involvement in viewing and in failing to ensure preservation of these photographs, the Court finds that his actions demonstrate bad faith and that it would be appropriate to prevent the defendant from calling him as a witness in his case.  The same sanction will also apply to Deputy Hale. . . .  Although the Court recognizes that this sanction at first blush may seem harsh, it would be against the interests of justice to allow an official to testify about pictures which were not preserved, in part, because of that same official’s failure to follow county policy. 

Second, under Rule 37(e)(2)(B) and in light of the Court’s earlier finding that defendant and his counsel have willfully acted to prevent Wilmoth from accessing this documentary evidence that he claims would support his case, the Court will instruct the jury that it may, but is not required to, presume . . . .  [emphasis added]

Upcoming in this Series

Up next, in the final Part of this series, we will conclude our review of 2019 highlights with a discussion of selected proportionality cases from 2019 and a few other cases of note.

About the Author

Matthew Verga

Director of Education

Matthew Verga is an electronic discovery expert proficient at leveraging his legal experience as an attorney, his technical knowledge as a practitioner, and his skills as a communicator to make complex eDiscovery topics accessible to diverse audiences. A fourteen-year industry veteran, Matthew has worked across every phase of the EDRM and at every level from the project trenches to enterprise program design. He leverages this background to produce engaging educational content to empower practitioners at all levels with knowledge they can use to improve their projects, their careers, and their organizations.

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