Top Twenty-Two e-Discovery Opinions of 2016 – 12th and 11th

This is the sixth in a twelve-part installment on the twenty-two most interesting e-discovery cases  in 2016. This installment covers the twelfth and eleventh most interesting. Living Color Enters., Inc. v. New Era Aquaculture, Ltd., No. 14-cv-62216, 2016 WL 1105297 (S.D. Fla. Mar. 22, 2016) and Johnson v Serenity TransportationCase No. 15-cv-02004-JSC (N.D. Cal. October 28, 2016).

TWELFTH – Living Color Enters., Inc. v. New Era Aquaculture, Ltd.

judge_william_matthewmanThe twelfth most interesting opinion arises out of an unfair competition case in West Palm Beach, Florida, District Court involving the destruction of text messages. Living Color Enters., Inc. v. New Era Aquaculture, Ltd., No. 14-cv-62216, 2016 WL 1105297 (S.D. Fla. Mar. 22, 2016). The opinion was written by Magistrate Judge William Matthewman. It provides some good news for defendants struggling to preserve all ESI that might be relevant to a case and so avoid spoliation sanctions. On the other hand, the ruling will make it more difficult to prove spoliation by former employees who have deleted text messages. This is, we know, a fairly common issue these days

Judge Matthewman denied Plaintiff’s motion for sanctions under new Rule 37(e) for a Defendant’s deletion of text messages. The motion was against one of several individual defendants included in the suit, Daniel Leyden. As background note that District Court Judge Kenneth Marra later – 9/9/16 – granted SJ for Leyden because he found that “Leyden was not covered by a non-solicitation agreement and was therefore free to compete against Living Color once he resigned.” In the Judge Marra Order, Leyden appears to have won a Summary Judgment on all other counts against him, and is no longer a party to the case, albeit still a key witness on the remaining counts. We suspect the absence of wrongdoing on his part may have colored the earlier sanctions ruling by the Magistrate.

A key fact in Judge Matthewman’s sanctions ruling is that text messages were admittedly deleted, but Defendant claimed it happened because “he has always used the cell phone feature that automatically deletes text messages after 30 days and that he, admittedly, neglected to disable the feature when the lawsuit was filed.” Oops.

Defendant argued no harm, however, because the other key party to most of the text messages, Mark Vera, had preserved his messages and they were produced.

Plaintiff countered that text messages were still missing and explained that a “subpoena to Defendant’s cell phone carrier yielded no results and that Plaintiff is still entitled to other communications that Leyden had with other potential witnesses regarding the circumstances at issue in this case.” Note subpoena’s to carriers are always a fruitless way to obtain the content, although you can get information on the existence of the account, etc. The carriers do not maintain the messages after a user deletes, and even if they did have them, that are not permitted to produce them without the message owners consent or court order.

The sanctions motions was decided based on a series of counter-affidavits, not live testimony. Other courts might well convene an evidentiary hearing, but, as mentioned, it looks like Judge Matthewman was disinclined to believe the “trumped up” charges against this defendant and other exaggerated rhetoric plaintiff’s counsel here seemed fond of.

rule_37eredThe opinion has a good summary of the law of spoliation under new Rule 37(e), citing to 11th Circuit law. You will want to refer to this opinion in any sanctions research. I will not bother repeating the black letter here, but suggest you read it for a good summary (pgs. 9-13). All criteria were met for imposition of sanctions except for the final criteria of prejudice or bad faith. Rule 37(e)(1) (“if there is a finding of prejudice’)’ and (e)(2) (“if there is a finding of intent to deprive.”) On this issue the court followed the Committee Commentary which says “The rule does not place a burden of proving or disproving prejudice on one party or the other.”

Under the affidavits presented the court did not see any prejudice to the plaintiff by the destruction of evidence. Moreover, “if there was any prejudice to Plaintiff at all, it was so minimal that the Court does not find it necessary to order measures to cure the alleged prejudice.” (pg 11). The court’s further explanation of the ruling shows plaintiff counsel’s failure of proof and thus provides a guide for what you need to do to obtain sanctions under Rule 37(e):

Plaintiff argues in its Motion that Stlweyden’s participation in the scheme outlined in the Second Amended Complaint (D.E. 1 18) is crucial to Plaintiff’s claims against Leyden and the evidence would have established he was involved in the scheme to misappropriate Plaintiffs business and customers.” This is an extremely conclusory statement that really does not establish any prejudice to Plaintiff. Plaintiff has not explained any direct nexus between the missing text messages and the allegations in its Complaint.

The asserted missing text messages appear to be unimportant, and the abundance of preserved information
appears sufficient to meet the needs of Plaintiff. The Court does not find spoliation sanctions to be proper pursuant to Rule 37(e)(1).

Next the court considered the alternate grounds for sanctions under 37(e)(2) – “intent to deprive.” Evidence of bad faith intent can support sanctions even without evidence of prejudice. The court did not find any bad faith here noting:

… it is common practice amongst many cell phone users to delete text messages as they are received or soon thereafter. There is nothing nefarious about such a routine practice under the facts presented here.

While Defendant clearly had an obligation to retain the relevant text messages after this law suit was initiated, the Court finds that Defendant simply acted negligently in erasing the text messages either actively or passively. … There is no evidence that he intended to deprive Plaintiff of the text messages or that he acted in bad faith. No sanctions should be imposed pursuant to Rule 37(e)(2).


ELEVENTH – Johnson v Serenity Transportation

judge_corleyThe eleventh most interesting case is by U.S. Magistrate Judge Jacqueline Scott Corley out of San Francisco. Johnson v Serenity TransportationCase No. 15-cv-02004-JSC (N.D. Cal. October 28, 2016).

This is a putative class action involving alleged improper classification of independent contractor status. As the court explained in an earlier decision in this case:

Plaintiffs are “mortuary transportation drivers who carry dead bodies and other human remains from various locations (including nursing homes, hospitals, and homes) to Defendants’ facilities.”

Yup. Hearse today, gone tomorrow; or, as I prefer to call the case “Uber meets the after-life.” A good summary of the holding here might be: Discovery is not disproportionate just because you say so.

hearseThe attorneys for one of the many defendant funeral home operators decided that they were tired of producing emails in response to Plaintiffs’ requests, and so they invoked new Rule 26(b)(1) and said they were done, that they had already made proportional efforts. The Plaintiffs argued that Defendant had prematurely pronounced the effort dead and had, in the court’s paraphrasing of the argument:

… withheld emails responsive to Plaintiff’s proposed search terms and custodians that are relevant to the joint employer question at issue in SCI’s pending motion for partial summary judgment and has waived attorney-client and attorney work product privilege by producing only a belated and insufficient privilege log. Plaintiff asks the Court to order SCI to produce all documents responsive to Plaintiff’s search terms forthwith.

Here is the counter argument of the morticians’ attorneys, again as paraphrased by the court:

SCI, for its part, urges that (1) it has produced all relevant, non-privileged responsive documents so any production of further documents is duplicative and not proportional to the needs of the case; and (2) Plaintiff has waived any argument about privilege by making no effort to meet and confer on that issue.

rule_26b1So defense counsel raised proportionality under the new rules and should win, right? No. They did it all wrong. You cannot just say its disproportionate and let it go at that. You cannot just make unilateral decisions and stop work. You have to communicate. You have to offer some evidence, some facts. They did not. They just decided. Judges do not like that. Deciding disputed issues is their job.

When you look at the facts that came out of the briefing, and hearing, the facts seem almost laughable as to burden. The only relevance argument on which the Defendant prevailed pertained to the Plaintiff’s extreme position that all docs with hits should be produced without any consideration of relevance. This is such a blatantly wrong argument. Will attorneys all of the country on both sides of the “v” stop making this crazy argument please?

The Plaintiffs also lost on the waiver by poor privilege log argument, but the court did order defense counsel to do the log over again and provide more detail this time.

Here is Judge Corley’s key language and one reason why we find her opinion in Johnson so interesting:

… a defendant does not have discretion to decide to withhold relevant, responsive documents absent some showing that producing the document is not proportional to the needs of the case. See Fed. R. Civ. P. 26(b)(1). SCI has made no such showing.

A party cannot unilaterally decide that there has been enough discovery on a given topic.

SCI’s withholding of these four relevant documents—emails that are responsive to the search terms and say either “Serenity” or “Friedel”—without any showing of burden that would render production out of proportion to the needs of the case was improper. These four emails suggest that SCI may be withholding other relevant ESI. Accordingly, the Court ORDERS SCI to produce all non-privileged, relevant documents (emphasis added) that include the search terms “Serenity” or “Friedel”—by November 4, 2016. (Editorial note: that was just one week for the redo.)

As to P’s waiver by inadequate log argument (for which there is authority by the way, so be careful out there), Judge Corley disposed of that as follows:

Plaintiff asks the Court to deem SCI to have waived privilege over its ESI for having failed to produce a sufficient log for these three emails, or a log at all for the remainder of ESI documents withheld since production began. (Dkt. No. 150 at 3-4.) Courts have discretion to deem failure to produce a timely privilege log as a complete waiver of privilege. See Coalition for a Sustainable Delta v. Koch, No. 1:08-CV-00397 OWW GSA, 2009 U.S. Dist. LEXIS 100728, 2009 WL 3378974, at *3 (E.D. Cal. Oct. 15, 2009) (citing Burlington No. & Santa Fe Ry. Co. v. United States, 408 F.3d 1142, 1149 (9th Cir. 2005). The Court declines Plaintiff’s invitation to find waiver here, where the dispute appears to turn on an insufficient log regarding only three documents and where it appears that the parties have not yet met and conferred on this issue, contrary to the requirements of the Court’s Standing Order. Instead, the Court ORDERS SCI to produce an adequate privilege log by November 4, 2016 for every responsive document withheld on privilege grounds.

Primary lesson learned in  Johnson v Serenity Transportation: Do not bluff when to comes to burden. Assume your hand will be called. Line up actual, unexaggerated facts to support any proportionality argument. Ask the court for relief and put your cards on the table. “A party cannot unilaterally decide that there has been enough discovery on a given topic.” If you bluff and exaggerate, it may well come back to haunt you. That is what happened here in this Uber meets the after-life case.

Further, and this is critical, do not try to hide the ball behind 26(b)(1), which is what may have happened here. If you find relevant documents, you have to produce them. Unless they are privileged, there is simply no excuse or grounds under (b)(1), or anywhere else, to refuse to produce relevant documents you have already found.

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