Top Twenty-Two e-Discovery Opinions of 2016 – 16th and 15th

This is the fourth in a twelve-part installment on the twenty-two most interesting cases in 2016. This installment covers the sixteenth and fifteenth. Stinson v. City of New York 2016 U.S. Dist. LEXIS 868 (S.D.N.Y. Jan. 2, 2016) and Elkharwily v. Franciscan Health Sys., Case No. 3:15-cv-05579-RJB (W.D. Wash. July 29, 2016).

SIXTEENTH – Stinson v. City of New York

judge_robert_sweetThis case implements the terms of the old Rule 37(e) and is of interest because it provides a good contrast between the old and new versions of the rule. Stinson v. City of New York 2016 U.S. Dist. LEXIS 868 (S.D.N.Y. Jan. 2, 2016). This sixteenth most interesting case of 2016 was authored by U.S. District Judge Robert W. Sweet.

In Stinson Judge Sweet entered an Adverse Inference Sanction for defendant’s spoliation. The loss of evidence was caused by defendant’s grossly negligent preservation efforts. The inference granted was not outcome dispositive as the plaintiff had requested. Instead, the jury instruction “would be inference that helpful evidence may have been lost, not relief from their obligation to prove their case.”

The court did not apply the new Rule 37(e), so you can argue that the points in the opinion are not applicable under the revised rule. Still, under these facts, I think a court interpreting the new rule would make the same kind of order but slightly different holding. The line of intent to destroy evidence is sometimes not so clear. 

Judge Sweet expressly held that the proof in the case was inadequate to establish BAD FAITH. It just proved GROSS NEGLIGENCE. Here are the highlights of Judge Sweet’s opinion (record citations omitted). It is so clear and well-written that I will refrain from my usual editor comments.

Plaintiffs, a class of individuals who were allegedly issued summonses without probable cause, have filed a letter-motion seeking sanctions for spoliation of evidence against the Defendants, the City of New York, fifty unnamed New York Police Department (“NYPD” or the “Department”) officers, and former NYPD Commissioner Raymond W. Kelly. … the motion is granted in part and denied in part.  …

The City did not issue any litigation hold until August 8, 2013, more than three years after the filing of the Complaint in this case. A preservation notice to NYPD members of service was distributed via a FINEST message on August 20, 2013, which was to be read to all commands. The evidence indicates that the litigation hold was not effectively communicated, and none of the officers who were named in the City’s initial disclosures acknowledged receiving it. …

[A]lthough the NYPD did not have a specific policy with regards to the destruction of email communications, it did impose a hard size limit on officers’ inboxes, and that when officers hit that limit, “they delete.” … 

The Plaintiffs allege and the Defendants do not dispute that the City has not made any effort to preserve or produce text messages between NYPD officers. 

Defendants produced few or no documents from the accounts of several key custodians, which the Plaintiffs argue is indicative of spoliation. … The City explains that the relative paucity of ESI produced is a result of the fact that “the Police Department on the whole did not operate via email.” … However, these assertions are contradicted by emails that the Plaintiffs have obtained through other means. …

In order to merit an adverse inference, the party seeking sanctions must establish 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 party’s claim or defense such that a reasonable trier of fact could find that it would support that claim or defense. Chin v. Port Auth. of N.Y. & N.J., 685 F. 3d 135, 162 (2d Cir. 2012).

In this case, the latest point at which that duty would have arisen would be May 25, 2010, the day the Plaintiffs filed their Complaint. See Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 216 (S.D.N.Y. 2003).

At multiple points in its briefing, the City argues that because it would be unreasonable to require it to preserve any and all documents indefinitely, it should be held to no preservation obligations at all. It notes that due to the size and scope of the NYPD’s work, and the frequency of litigation involving the Department, a rule that any labor grievance or tangentially-related lawsuit triggers a broad duty to preserve would amount to a “perpetual litigation hold.” That statement is inarguable, but it does not justify a three-year failure to issue a litigation hold in this action, …

Similarly, the Defendants argue that the motion for sanctions should be denied because Plaintiffs demanded that the City preserve “every arguably relevant document within the NYPD.” (D.’s Opp., Dkt. No. 246 at 2.) While the Plaintiffs have made overbroad discovery requests before, see, e.g., Stinson v. City of New York, No. 10 Civ. 4228, 2015 WL 4610422, at *4 (S.D.N.Y. July 23, 2015), the reasonableness or unreasonableness of one party’s demands does not determine the scope of the other party’s obligation to preserve documents. The Plaintiffs’ putative overbroad demands do not excuse the City’s failure to issue a litigation hold, to properly supervise its implementation, or to suspend document retention policies that would foreseeably lead to the spoliation of evidence. …

The City has similarly failed to make any effort to preserve text messages sent between NYPD personnel using department-issue smartphones.  In its briefing, the City argues that it was under no obligation to preserve messages kept on officers’ personal electronic devices, without discussing any preservation obligation regarding texts sent on Department-issued devices. (See D.’s Opp., Dkt. No. 246 at 6.) While the federal courts are divided on when and how a party seeking discovery can access ESI stored on an employee’s personal device, compare Alter v. Rocky Point Sch. Dist., No. 13 Civ. 1100, 2014 WL 4966119, at *10 (E.D.N.Y. Sept. 30, 2014) (“However, to the extent that the School District employees had documents related to this matter, the information should have been preserved on whatever devices contained the information (e.g. laptops, cellphones, and any personal digital devices capable of ESI storage).”) with Cotton v. Costco Wholesale Corp., No. 12-2731, 2013 WL 3819974, at *6 (D. Kan. July 24, 2013)(rejecting document request for text messages on employees’ personal phones), the City does not adequately consider its obligations with respect to information stored on officers’ Department-issued devices. Lieutenant Scott acknowledged in his 30(b)(6) deposition that all officers above the rank of Captain, and some below it, were issued such devices, and that they could use those devices to text each other. (Dkt. No. 222 Ex. J. at 158-59.) As such, those devices were within the possession, custody, or control of the City, and were subject to the same preservation obligation as the City’s other ESI. See Congregation Rabbinical Coll. Of Tartikov, Inc. v. Village of Pomona, No. 07 Civ. 6304, 2015 WL 5729783, at *17 (S.D.N.Y. Sept. 29, 2015).[4] …

The first and most egregious instance of gross negligence was the City’s failure to issue any litigation hold during the first three years of this litigation. Although the failure to issue a litigation hold does not necessitate a finding of gross negligence, it is a factor in determining whether sanctions should issue. Chin, 685 F.3d at 162. While the Second Circuit’s decision in Chin leaves open the question of whether a sufficiently indefensible failure to issue a litigation hold could justify an adverse inference on its own, the question need not be addressed here because there are additional factors supporting such a finding.

One such factor is the failure to properly implement the litigation hold even after it was issued. “[A] litigation hold is not, alone, sufficient; instead compliance must be monitored.” Mastr Adjustable Rate Mtgs. Trust 2006-OA2 v. UBS Real Estate Sec. Inc., 295 F.R.D. 77, 85 (S.D.N.Y. 2013). Here, the communication of the litigation hold was inconsistent at best; although the hold was to be read to all commands via a FINEST message, none of the police officers named in the City’s initial disclosures acknowledged receiving it. …

The failure to circulate a litigation hold, and to ensure that it was properly implemented, was particularly damaging in the context of the NYPD’s standing document retention policies, which ensured that inaction on the part of the City would result in the destruction of evidence. … Although the paucity of relevant emails produced from the inboxes of key decision makers does not establish that ESI was deleted, it is consistent with such spoliation and with Lieutenant Scott’s acknowledgement that deletion of emails was a foreseeable consequence of the NYPD’s storage policy. …

Given the City’s lack of bad faith in its spoliation of evidence and the relatively limited showing of relevance made by the Plaintiffs, a permissive, rather than a mandatory adverse inference is warranted.


FIFTEENTH –  Elkharwily v. Franciscan Health Sys.

judfge_bryanElkharwily v. Franciscan Health Sys., Case No. 3:15-cv-05579-RJB (W.D. Wash. July 29, 2016) is an interesting case because an inaccessibility objection was enforced under Rule 26(b)(2)(B). The opinion was authored by United States District Judge Robert J. Bryan. He is, by the way, well-known as one of the founders of  the American Inns of Court.

Elkharwily is the flip side of the Wagoner case, which I ranked as the eighteenth most interesting, where that objection was overruled, along with a separate proportionality objection. Part of the reason for the different result is that Plaintiff’s counsel in Elkharwily made concessions he should not have and otherwise made poor legal arguments. Judge Robert Ryan heard the arguments and granted a protective order that shifted costs to the requesting party.

The plaintiff doctor in Elkharwily requested the defendant hospital to produce both “live” and “archived” emails relevant to the dispute. The defendant objected to production of both types of ESI. The plaintiff moved to compel. We do not know the basis of the objection to the “live” emails, but the motion to compel was granted as to the “live” emails. The ruling on the “archived” emails was at first withheld, then denied. In this case “live” emails were those emails maintained in the hospital’s email server. The “archived” emails were emails that resided only on back-up tapes. These would be emails that were deleted by users after the backups were made. The defendant’s objection under Rule 26(b)(2)(B) to production of the archived emails was based on an argument that the emails were not accessible due to high cost. 

Just as in Wagoner the defendant in Elkharwily came up with what looks like a grossly inflated cost ($157,500) by a vendor to restore and search the back-up tapes for very short time period. But here in Elkharwily the plaintiff doctor did not contest the cost at all (it seems he had not retained any vendor for advice), but instead placed the entire argument on the hospital’s poor preservation. Here is the court’ summary:

Plaintiff does not discredit Defendant’s argument about the burden or cost of producing the archived emails, but, Plaintiff argues, Defendant is at fault. Defendant should have preserved emails in an accessible format, rather than archiving them, because around July of 2013 Plaintiff expressly requested them after his appeal was denied, and he warned Defendant of future litigation, which also triggered their preservation.

This looks to us like the concession of burden by plaintiff was a big mistake. (Also, a lucky break for the defendant.) This concession meant that under Rule 26(b)(2)(B) the producing party, here the defendant hospital, had met its burden of proving unreasonable accessibility. Under the terms of the Rule this shifted the burden upon the requesting party to show good cause why the producing party should be required to meet the burden and produce the documents anyway. Furthermore, and this is critical, the Judge Ryan did not believe the plaintiff’s allegations that he had put defense counsel on notice, in a phone call, that he would sue, and so triggered a duty to preserve. Defense counsel denied any such conversation and the judge believed the lawyer, not the doctor. Here is the analysis of Judge Ryan:

Plaintiff has not met his burden. Tellingly, Plaintiff does not name individuals that Plaintiff believes exchanged emails about Plaintiff, nor does Plaintiff describe suspected content of the emails. Plaintiff does not even represent with any surety that responsive emails exist. Because Plaintiff has not met his burden for good cause, compelling production of the discovery at expense to Defendant is not warranted.

Plaintiff’s blame-shifting is unpersuasive, because as between Mr. Megard’s and Plaintiff’s conflicting declarations, Mr. Megard’s should be given more weight, for two reasons. First, Mr. Megard, who practices law and bills time to clients for telephone conferences, has no record of any phonecalls from Plaintiff. Second, Mr. Megard’s memory is consistent with the email exchange between Plaintiff and Mr. Weaver in July 2013, where Plaintiff stated that “I guess there is nothing else I can do [to appeal denial of privileges].”

Although Plaintiff has not met his burden to show good cause, which would overcome Defendant’s showing that producing the archived emails is costly and burdensome, the archived emails are “discoverable” under  Fed. R. Civ. P. 26(b)(1). Therefore, upon a request by Plaintiff, Defendant should facilitate access to the discovery, but should do so only at Plaintiff’s expense, payable in advance. Plaintiff should be responsible for all costs, such as retrieving and restoring the backup tapes to an accessible format, except for costs relating to Defendant’s review of the information for privileged material (which is like any other discovery request, e.g., the live emails).

Defendant should not otherwise be compelled to produce the archived emails, and to that extent Plaintiff’s motion should be denied.

Lessons of the case. Here are the primary lessons we see from Elkharwily v. Franciscan Health Sys., Case No. 3:15-cv-05579-RJB (W.D. Wash. July 29, 2016).

  • Objections to discovery that would require the producing party to examine back-up tapes are often successful. The argument is properly made under Rule 26(b)(2)(B), not (b)(1). Restoration of back-up tapes is the perfect example, one made in the Rules Committee Commentary, of ESI that is protected from discovery as not reasonably accessible. We never review backup tapes and always object if we are asked to. I believe that our objections have always been sustained and we have never been ordered to search and produce ESI from back-ups.
  • Never agree with an opposing party’s allegations of excessive e-discovery costs without obtaining expert input as to validity. These estimates are often exaggerated.
  • Do not rely on testimony of your client over that of opposing counsel as to phone conversations that supposedly took place between them before you were retained. This is especially true if your client version of what was said is not corroborated by anyone or thing, and would mean that opposing counsel spoliated evidence.
  • Sometimes you get lucky because of incompetent opposing counsel, but you should never count on that. Here defense counsel was allowed to produce only five pages of emails in response to a Request For Production. That is all the non-privileged “active” emails they claim existed for five identified custodians. Apparently the Plaintiff did not argue effectively that this is a ridiculously small amount and suggests that all of the relevant emails must have been deleted and now exist only on the tapes. This could have been established, for instance, by the deposition testimony of these five custodians, four of whom were doctors. Such an argument could constitute “good cause” under 26(b)(20(B) for many judges.

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