Archive for March 2016

Living Color Enters., Inc. v. New Era Aquaculture, Ltd., No. 14-cv-62216-MARRA/MATHEWMAN, 2016 WL 1105297 (S.D. Fla. Mar. 22, 2016)

In this case, text messages were deleted when Defendant failed to turn off the automatic delete function on his cellular phone. Because “the great majority” of the messages were produced from another source—and thus not lost—however, and where the court determined there was no prejudice or evidence of Defendant’s “intent to deprive” or bad faith, Plaintiff’s Motion for Sanctions was denied.

Plaintiff moved for sanctions upon Defendant’s explanation that he had few text messages to produce because of his use of a feature that automatically deletes text messages after 30 days and the fact that he had replaced his phone in 2014 and again in 2015. Notably, however, despite Defendant’s failure to preserve, many of the at-issue text messages were available from an alternative source.

With the agreement of the parties, the court undertook its analysis pursuant to newly-amended Rule 37(e), beginning with the “preliminary spoliation questions.” Specifically, the court instructed that “[i]f the alleged spoliation involves ESI”—as this case did—“the Court must proceed to the next step and answer the following three questions under Rule 37(e)”:  1) “Was the allegedly spoliated ESI evidence that should have been preserved?” 2) “Was the allegedly spoliated ESI lost because a party failed to take reasonable steps to preserve it?” and 3) “Is the allegedly spoliated ESI evidence that cannot be restored or replaced through additional discovery?”   The court continued:

If the answer to any of questions 1–3 is “no”, then the Court need proceed no further under Rule 37(e), and a motion for spoliation sanctions or curative measures must be denied. If the answer to all three of the questions is “yes”, however, then the Court must analyze the facts at hand under subsection (e)(1) if there is a finding of “prejudice” or under subsection (e)(2) if there is a finding of “intent to deprive.”

Finding that the text messages at-issue were ESI that should have been preserved and that “at least some” could not be replaced and were therefore “lost,” the court turned to its analysis of prejudice and whether Defendant intended to deprive Plaintiff of the text messages.

Turning first to subsection (e)(1), which allows for the imposition of curative measures “no greater than necessary” upon a finding of prejudice, the court found that no sanctions were warranted where Plaintiff failed to explain “any direct nexus between the missing text messages and the allegations in its Complaint” and where the missing text messages “appear[ed] to be unimportant,” and “the abundance of preserved information appear[ed] sufficient to meet the needs of the Plaintiff.”

Next, the court considered whether Defendant acted with the requisite “intent to deprive” and found there was no direct evidence of such intent or bad faith and that Defendant “simply acted negligently in erasing the text messages either actively or passively.” In so finding, the court accepted the explanation of Defendant and his counsel that the automatic delete functionality was turned on prior to the litigation, reasoning that it was “common practice amongst many cell phone users to delete text messages as they are received or soon thereafter” and that there was “nothing nefarious about such a routine practice under the facts presented here.” The court also noted that “Defendant is an individual who appears to be a relatively unsophisticated litigant.”

Finally, the court dismissed Plaintiff’s arguments regarding Defendant’s alleged second email address.

A full copy of the court’s order is available here.

Best Payphones, Inc. v. City of New York, Nos. 1-CV-3924 (JG) (VMS), 1-CV-8506 (JG) (VMS), 3-CV-0192 (JG) (VMS); 2016 WL 792396 (E.D.N.Y. Feb. 26, 2016)

In this case, the court addressed Defendants’ motion for sanctions for Plaintiff’s failure to preserve hard copy documents and electronically stored information and therefore conducted simultaneous but separate analyses of the alleged spoliation under the common law (tangible items/hard copy) and recently-amended Fed. R. Civ. P. 37(e) (ESI). Ultimately, the court determined that Plaintiff was negligent in its failure to preserve relevant information but that the lack of prejudice precluded imposition of the serious sanctions requested.  Instead, Plaintiff was ordered to pay Defendants’ attorneys’ fees and costs related to the motion.

Defendants sought sanctions for Plaintiff’s alleged failure to preserve both ESI and hard copy information, including emails between Plaintiff and third parties allegedly seeking to purchase Plaintiff’s business. Defendants claimed that Plaintiff’s duty to preserve arose in the summer of 2000, when Plaintiff “commenced related litigation against Defendants in New York State Supreme Court.”  Defendants further claimed that the information was lost as the result of Plaintiff’s failure to institute a litigation hold or to follow up with its principal to ensure preservation.

In response to Defendants’ motion, Plaintiff claimed that a litigation hold requirement was not established in case law until 2004, that Defendants had not established that Plaintiff acted unreasonably as to its preservation obligations, that Defendants could have—but did not—seek the information from third parties, that the missing documents were not relevant to proving Defendants’ case because of other available evidence, and that Defendants suffered no “demonstrable prejudice in light of the documents they ha[d] received” among other things.

Turning to its analysis, the court acknowledged that “as the law currently exists in the Second Circuit, there are separate legal analyses governing the spoliation of tangible evidence versus electronic evidence.” Specifically, the failure to preserve electronically stored evidence is subject to new Fed. R. Civ. P. 37(e), while the loss of hard copy and/or tangible items remains subject to the common law.

Addressing the question of a duty to preserve, the court reasoned that the “the duty to preserve was well-developed in th[e] Court’s jurisprudence years before Plaintiff filed its lawsuit” and held that Plaintiff had a duty to preserve “once it commenced its first action against Defendants” in July 2000.

Regarding whether Plaintiff had a “culpable state of mind” the court noted it was required to analyze Plaintiff’s culpability separately as to tangible things and electronic evidence with the common law requiring mere negligence to justify an adverse inference and Fed. R. Civ. P. 37(e) requiring a finding that Plaintiff acted “with the intent to deprive Defendants of that information.”  Ultimately, as to both categories of evidence, the court found that “Plaintiff’s conduct amounted to mere negligence.”  In so finding, the court rejected arguments in support of a finding of willfulness, noting Plaintiff’s willingness to supplement its production in response to Defendants’ motion (thus precluding a finding that Plaintiff acted willfully or was grossly negligent in its failure to produce that information) and Defendants’ own failure to seek the discovery from non-parties. (“Although this may have significantly increased Defendants’ discovery burdens, Defendants cannot properly complain that the documents . . . are not available when Defendants have not shown that they sought these documents from non-parties.”)  The court also noted that Plaintiff’s principal “believed he was satisfying his burden to retain all relevant records and was not acting willfully in his failure to preserve evidence” and further noted that “at the time in issue,” “preservation standards and practices for email retention were in flux.” Thus, for example, where the principal “labored under the mistaken belief that by keeping his emails as ‘new,’ he was saving them,” “the Court [could] not find that [the principal] acted unreasonably as is required for the Court to issue sanctions under Rule 37(e).” Finally, the court acknowledged the principal’s explanation for his failure to save certain at-issue activity reports that he believed were inaccurate, and therefore irrelevant.

Ultimately, the court found that although the missing information was relevant, Defendants did not show that they were prejudiced by its destruction. “[T]herefore, there [was] no spoliation under Second Circuit case law or under Rule 37(e).”

Accordingly, the court denied Defendants’ request for serious sanctions, including an adverse inference, and instead found that Plaintiff was responsible for Defendants’ attorneys’ fees incurred in bringing the motion for sanctions.

A copy of the court’s order is available here.

In re Takata Airbag Prods. Liab. Litig., MDL No. 2599 (S.D. Fla. Mar. 1, 2016)

In this opinion, the District Court considered Defendants’ proposal to redact or withhold certain irrelevant information from responsive documents and document families. In approving the proposal, the court cited Chief Justice John Roberts’ recent comments that recently amended Federal Rule of Civil Procedure 26 “crystalizes the concept of reasonable limits on discovery through increased reliance on the common-sense concept of proportionality.” Reasoning that such comments “highlight” that “a party is not entitled to receive every piece of relevant information,” the court concluded that “it [was] only logical” that “a party is similarly not entitled to received every piece of irrelevant information in responsive documents if the producing party has a persuasive reason for why such information should be withheld.”

Previously, a Special Master approved Defendants’ proposal to redact or withhold certain irrelevant information from responsive documents and document families and identified seven categories of information “deemed irrelevant.” Upon de novo review of that decision, the District Court also concluded that Defendants’ proposal was appropriate, identifying as the requisite “persuasive reason” the danger of providing competitors with “competitively sensitive information to the ultimate detriment of each Defendant.”  Concerned that the seven enumerated categories of non-responsive information “could contain highly relevant information,” however, the court modified them to better ensure that no relevant information was withheld.

A copy of the court’s order is available here.