The “Who’s on First?” word play by Bud Abbot and Lou Costello captures the core problem of e-discovery today. In this famous comedic example of miscommunication, the tall Abbot says one thing, and the portly Costello hears another. (Abbot and Costello supposedly rarely did this joke the same way twice, but here is one good example of it.) No matter how they played this skit, the resulting confusion was always hilarious. Unfortunately, when this kind of miscommunication happens in the world of e-discovery, and I contend it happens every day in a thousand different ways, the results can be sanctionable. The recent case of Great American Ins. Co. v. Lowry Development, 2007 WL 4268776 (November 30, 2007, S.D.Miss.) provides us with the latest example.
You know, strange as it may seem, they give computer parts peculiar names nowadays. On a personal computer, we have memory, hard drives, files, and even a motherboard. All of these names were used frequently in Great American, although based on the opinion, not always correctly. The plaintiff insurer moved for sanctions against one of the defendants, the insured’s insurance broker, Danny Groves. Groves disposed of his personal computer after suit was filed when he had a duty to preserve all relevant information. He disposed of his PC after it was damaged by a lightning strike! Since I live in the lightning capital of the U.S., I happen to know a lot about what lightning can do to a computer, and none of it is good.
The parties all agreed that Groves’ computer was hit by lightning, but, aside from that, all of the other facts surrounding the destruction of his PC were disputed. So much so, that the Senior District Court Judge in Mississippi trying to sort this all out, L. T. Senter, Jr., required an evidentiary hearing.
After the hearing, where Groves and others testified, Judge Senter was persuaded that sanctions should be imposed against Groves because his disposal of the PC made it impossible for the insurer, Great American, to get documents from computer memory, documents that could have been relevant. Yes, you heard right – the computer memory. Groves argued there was nothing of value in his computer anyway, and so sanctions were not appropriate. To this retort, all the insurer could do was make speculative arguments that two documents might have been in Groves’ computer, since they could not be found anywhere else, and admittedly might not even exist. But if these two documents did exist, the insurer was convinced they would probably support its position that the policy did not cover wind damage, and so they did not have to pay for damages caused by Hurricane Katrina. Here is how Senior Judge Senter. Jr. explains it:
Other than these two documents, Great American has not specifically identified any relevant document that is missing from this record, but it is Groves’s disposal of his computer, the very act at issue, that deprives Great American of the ability to specify the documents in the computer memory that may have been relevant to the issues in this case. Whatever information the computer contained is now permanently unavailable.
Of course, the documents in the computer memory, assuming there were any, were permanently unavailable the minute Groves turned his computer off for the night, not to mention when it was struck by lightning. Computer memory, which is generally understood to mean RAM memory unless otherwise specified, is inherently ephemeral, and only exists in the memory chips as long as they have power. The instant a computer is powered down, the data stored in memory is lost. This was explained in some detail in my prior blog on the Columbia Pictures case, which concerned the discovery of the contents of memory before a computer is turned off or the data in computer memory is otherwise overwritten.
How did the judge in Mississippi get as mad as Costello at the end of the ‘Who’s on First?” routine? Well, perhaps not that mad, but upset enough to impose sanctions to support the insurer’s “mutual mistake” argument. This “mutual mistake” argument is quite creative and bears some explanation. The insurer contends that it should not have to pay damages caused by Hurricane Katrina because when the policy was purchased, neither party thought that the policy covered wind damage, even if the courts in Mississippi now say it does. Since both parties were mistaken, the contract is voidable by the insurer. It is a novel defense, one I have made myself a few times, but I cannot recall that it has ever succeeded. Moreover, I would consider it a very long shot in these circumstances, where a jury in Mississippi must be convinced to side with an insurance company trying to avoid payment of a Hurricane Katrina claim.
But back to the circumstances in this case which agitated the judge enough to sanction Groves. It all started when Groves testified in his first deposition that his computer, the one he used in connection with the purchase of the insurance policy at issue, had been struck by lightning, and so he had no documents to produce. Groves testified that:
Took it in, he couldn’t fix it. He kept it. I don’t know what he did with it. I bought a new one from Dell, and that’s what I have.
The insurer followed up on this deposition testimony by requesting inspection of Groves’ “electronic files.” Groves’ attorney, who presumably was sitting next to Groves when he testified at the deposition, wrote an objection to the request where he stated:
… the only computer that contained such files and/or data was damaged by lightning in the summer of 2006. This computer was thereafter examined by Tech Advanced Computers and determined to be inoperable, and the files and data contained were not retrievable or capable of restoration. This motherboard of the computer was therefore replaced and the old motherboard discarded and is no longer in Groves’s possession.
So, the motherboard was fried by the lightning strike – no surprise there. But was the hard drive also zapped? Cannot tell from this answer, but you can tell that the motherboard was replaced and the old motherboard was discarded. Didn’t Groves just testify that the tech could not fix the computer, so he had to buy a new one from Dell? Did the lawyer think motherboard was the same thing as a computer?
Naturally, the insurance lawyer responded to that objection by talking to the Tech Advanced Computer technician who worked on Grove’s computer, Shawn Cusolito, and persuaded Cusolito to sign an affidavit. The way these things usually work is, the lawyer interviews the witness, and then the lawyer prepares an affidavit for them to sign, using language as favorable as possible for his or her client, in this case the Great American Insurance Company. Not too surprisingly, the tech’s affidavit contradicted both Groves’ testimony, and his attorney’s reponse to the production request. For some reason, Shawn Cusolito was not called to testify at the hearing, and the judge instead relied only on the affidavit, thereby depriving Groves of any chance of cross-examination of this witness. Here is how the Court summarized Cusolito’s affidavit statements:
… the technician reported that he was able to repair Groves’s computer by replacing its motherboard and that he returned the computer to Groves in good working order. Cusolito’s affidavit indicates that damage to the motherboard of this computer would not have caused a loss of any file or data stored in the computer.
I wonder how Cusolito knew that the lightning strike that fried the motherboard would not have caused any loss of data on the hard drive(s)? Did he run complete diagnostic tests on the hard drives to be sure no sectors were damaged? Did he even check that at all? Or did he just replace the motherboard, turn it on, and see that it booted ok? We’ll never know because all we have is his affidavit.
After the insurance company attorney got the Cusolito affidavit, he noticed Grove for a second deposition. This is unusual, but strangely there is no indication of any complaint by Grove or his attorney to a second deposition shortly after the first. At the second deposition, Grove was surprised by the affidavit and asked to explain the discrepancies with his prior testimony. Groves then admitted that his computer had been returned to him; in effect, the affidavit refreshed his memory about that. Still, Groves testified that the computer malfunctioned again a few days later, and this time he just threw it away, rather than waste his time with another repair trip. Once again, to anyone with any experience with computers damaged by a lightning strike, this has a certain ring of truth to it. If portions of a hard drive were damaged, or perhaps other components, then even after the motherboard was replaced, the computer could very well stop working again, or work only sporadically, until it had to access damaged sectors of the drive.
Even though the judge never heard Cusolito testify, and never heard any other expert testimony, he did hear Groves testify, and based on this evidence, he held that Groves’ first deposition testimony was “untruthful” and Groves’ attorney’s response to the production request was “inaccurate and incomplete.” The Judge did not fault the attorney, however, stating that “the attorney could only have relied on Groves for the information set out as grounds for this objection.” Not every judge would take such a forgiving attitude, especially in view of the ability to simply call Cusolito, like the insurer’s counsel later did, to inquire of the facts before signing his name to the pleading in conformity with Rules 11 and 26(g)(1), Federal Rules of Civil Procedure. (Rule 26(g)(1) states: “By signing, an attorney or party certifies that to the best of the person’s knowledge, information, and belief formed after a reasonable inquiry: (A) with respect to a disclosure, it is complete and correct as of the time it is made; …”)
Judge Senter was inclined to go easy on Groves too, since Groves had suffered a terrible personal tragedy a few months before the deposition. For that reason, the judge was inclined to believe Groves’:
… assertion that his misstatements were not the product of a deliberate intention to deceive but rather the product of his emotional distress and general inattention to his business affairs in the wake of his son’s death.
Still, even though he was inclined to believe Groves’ story of “inattention to business affairs,” which is another way of saying “negligence,” as a result of great personal distress, the judge held that Groves’ deposition testimony, contradicted as it was by the Cusolito affidavit, was “sufficient to infer the necessary element of bad faith in connection with his actions.”
For that reason, Judge Senter imposed spoliation sanctions against Groves for throwing away his old computer. He did so based on the assumption that the computer was in “good working order” as Cusolito’s affidavit said, and that this meant there there was still retrievable data on the computer that might have supported the insurance company’s mutual mistake argument against Groves. In explaining his decision, Judge Senter used the correct words this time, and did not refer to destruction of data in computer “memory,” but instead correctly referred to “hard drive.”
I am of the opinion that Great American has established, by clear and convincing evidence, that the destruction of this computer has deprived the parties and the Court of the benefit of any records that may have been contained in the computer hard drive. I am also of the opinion that the data stored on this computer, whatever it may have been, was relevant evidence that Groves was under a duty to preserve during the pendency of this litigation. Great American has also established that the destruction of this computer was not a result of simple negligence or any cause beyond the control of Groves.
It is hard to understand how the insurer was able to prove, and to do so by “clear and convincing evidence,” that the destruction was not the result of negligence, or of causes beyond Groves’ control, such as a lightning strike of his computer.
Still, the sanctions imposed were really not too harsh. Mississippi law apparently imposes a strict “clear and convincing evidence” standard to prove that a contract should be rescinded based on mutual mistake. That is no doubt why the judge found the spoliation evidence met such a high standard, when the typical “preponderance of the evidence” standard (51% or more) is all that is required to prove spoliation.
The Mississippi mutual mistake recession law would require the Great American Insurance Company to prove by clear and convincing evidence that both it and the insured thought that the insurance policy did not cover wind damage at the time the policy was purchased. One wonders why they purchased it? There may be a good answer to that, but still, this defense seldom, if ever, succeeds. Certainly it would be a very hard sell to any jury in Mississippi considering a Hurricane Katrina claim. With a clear and convincing standard, instead of the typical “preponderance of the evidence” standard, it would be a proverbial wild goose chase.
The sanction imposed here for the alleged spoliation was merely to reduce the insurer’s burden of proof from clear and convincing to preponderance. The court will also allow the insurer to present evidence to the jury as to the alleged destruction of evidence. At such time Groves could also present his own evidence on the issue, including, I would hope, expert testimony as to the impact of a lightning strike on a computer. Moreover, Groves could, for the first time, cross-examine the key witness against him, the repair technician, Shawn Cusolito.
I am reminded of a well known line in the the Abbott and Costello movie “The Wistful Widow of Wagon Gap“:
That wild goose chase of yours is going to lay an egg!
It remains to be seen whether it will be rotten or golden.
Thought I would answer some of your questions.
I wonder how Cusolito knew that the lightning strike that fried the motherboard would not have caused any loss of data on the hard drive(s)? This is an alleged lightning strike as stated by the customer, I can neither prove nor disprove lightning damage, as there was no physical evidence of lightning damage
Did he run complete diagnostic tests on the hard drives to be sure no sectors were damaged?
Thorough diagnostics were run on each and every component of the system prior to generating a quote for repair. Both the Dell diagnostics and a third party diagnostic were run on the hard drive to check the sectors. Additionally, there was no evidence of corruption to the file indexes.
Did he even check that at all? Or did he just replace the motherboard, turn it on, and see that it booted ok?
The faulty part was already identified and the customer issued a quote for repair prior to a logic board ever being ordered based on the diagnostics of all of the components. I did not slap in a board and say “I reckon it was just the motherboard.”
Additionally, it defies logic that one would spend money on a repair that carries both a labor and parts warranty, for them to simply discard the system.
Thanks for commenting Shawn. I am glad to hear from your comment that you did the right thing. Not all store techs are as careful, as I am sure you know. Moreover, from my reading, you never actually testified in court, so that is why I asked what I thought would be rhetorical questions. Who knew you would actually answer them on this blog! Also, your use of the term “logic board” instead of “motherboard” illustrates my fundamental point nicely.
As to why anyone would discard the system, the answer is not too hard to understand, but only if there was a lightning strike as Groves testified. Why waste more time on it? He trusted that you did your best and the logic board was functioning, but something else failed. Why return it to have another repair, and likely be told it is something else. If Groves was telling the truth and it was a lightning strike, then its not too hard to believe the computer had more problems then an illogical board. He could be facing more charges to try and fix hopelessly damaged goods, and in any event, more wasted time and effort dealing with it. Lots of folks dont like coming in and talking to computer technicians and trying to enforce warranties. Good money after bad, he might think, might as well buy a new computer.
But you seem to question whether there was in fact lightning strike damage, and say you saw no evidence of that. That is troubling, there should be some evidence of it. I assume something was wrong with the mother board, since you replaced it, but you did not say what was wrong, or why it had to be replaced? What caused the damage? My analysis is based on the assumption that the computer was damaged by ligtning. The opinion indicates the insurer did not challenge this, so I assumed it. If there was no strike, then I agree, Groves whole story falls apart, and it logical to assume that even his mother might not believe him.
Anyway, thanks for setting the record straight on your work, and giving us all better insights into this case!
Once I read your blog, I felt it was imperative that I responded to your questions, as my name was attached with a question of competence. It very often happens in a lightning prone area, that people, unaware of the cause of an actual failure, will say it was lightning- I have even seen systems whose sole failure was viruses/adware/spyware checked in as a lightning strike. Because of this, we have to be very cautious to identify and isolate a system component failure. However, with a lack of physical evidence- scorched boards or components, it is considerably harder to indicate that a system has been damaged due to the lightning.
Just noticed I didn’t answer your underlying question. The board was not powering on at the time of diagnostic. While there were no physical signs of damage to the board, I cannot rule out a possible surge or EMP damage due to the lightning, it was never indicated by me that lightning caused the failure. On a daily basis I see multiple component failures, and have seen plenty of evidence of direct lightning strikes, often bearing some very nice indicators of arcing and burning- but these components are all created by man and can and do fail with or without lightning.
Thanks again Shawn, I’d be happy to take my computer to you for repair any day. I hear and agree with your comments.
[…] Id. pg. 11. Apparently, plaintiff offered no contradictory testimony, and so there was no real dispute. This appears to be another classic example of law-IT miscommunication which I previously wrote about in Who’s On First? […]
[…] e-discovery originate from problems in communication between IT and Legal. I call this the “Who’s On First” phenomena of lawyer/tech miscommunication. Friedberg refers to Judge Scheindlin’s […]
[…] e-discovery sanction cases. (There are some notable exceptions – can you spell Qualcomm?) I have written about this before, and often speak of the problem. The lack of respect can certainly cause a lot of trouble in […]
[…] and I had to throw it away. This is probably the most common excuse used by ESI spoliators. See eg. Great American Ins. Co. v. Lowry Development, 2007 WL 4268776 (November 30, 2007, S.D.Miss.) (defendant claimed he had to throw away his hard […]