I am writing today, on Jewish Passover, regarding an opinion that AI found for me, namely a standing search of all of Pacer using Lex Machina. My AI assistant found a sanctions order for spoliation in an employment law case in Chicago. Schmalz v. Village Of North Riverside, et al, No. 1:2013cv08012 – (N.D. Ill., March 23, 2018). The opinion is a Report and Recommendation by U.S. Magistrate Judge Mary Rowland, a rising star in the e-discovery world. Her writing and analysis of Rule 37(e) is excellent. I can assure you that, despite its name, it is not at all schmaltzy. The sanctions granted were good for the moving party, but could have been better, kind of like chicken soup without the matzo balls. Trust me, thanks to my wife, Molly Friedman, I am an expert on that culinary subject.
The lukewarm sanctions in Schmalz were entered against defendants for the inadvertent loss of fifty text messages when key custodian cell phones were not saved after suit was filed. There was no real dispute as to the spoliation, which Judge Rowland called gross negligence. The arguments were about the remedy, the sanctions, if any, to be entered for this spoliation.
The Plaintiff, Schmalz, asked for dispositive sanctions under Rule 37(e)(2), either striking the defense or an adverse inference instruction. Judge Rowland passed-over these harsh sanctions as over-kill. She found that was unnecessary to counteract the prejudice caused to the plaintiff by loss of the text messages. She reached this opinion based on her finding that intentional, or bad faith, destruction of evidence was not shown. Instead, the evidence proved that defendants failure to preserve a few cell phones within their control was gross-negligence, not bad faith. In other words, just , not bad guys. Judge Rowland did, however, enter sanctions, permitting the plaintiff to present evidence at trial concerning the negligent text message loss. The Order also allows plaintiff to argue to the jury that they should presume that the contents of these texts would be contrary to defense witnesses testimony. Judge Rowland also granted Plaintiff Schmalz a fee award.
At page six of the Schmalz opinion, Judge Rowland explains the background and how the spoliation was discovered by surprising deposition testimony of a key witness:
In his February 2016 deposition, Defendant Niemann revealed that he had “at least 50” text message communications before and after the election with Defendant Hermanek about the police department, who he would promote to the Commander position, why he did not want a lieutenant’s position, and about Plaintiff specifically.
Plaintiff issued a discovery request for the text messages identified in Defendant Neimann’s deposition. (Dkt. 168 at 6). Defendants answered that there were no texts to be produced because “neither defendant Hermanek nor defendant Niemann still possess their cell phones from that time period.” …
Defendants’ duty to preserve the text messages arose as early as August 2013 when they received a litigation hold letter. See (Dkt. 207-1). Further, Defendants admit that they failed to take any steps to preserve the text messages. See (Dkt. 179-2, at 2–3). Likewise, Defendants admit that the text messages have been lost and cannot be replaced by additional discovery as they have exhausted all efforts to retrieve the messages. See (Dkt. 179-2, at 2–3). Given that these predicate elements are met, the Court next determines whether Plaintiff is prejudiced from loss of the text messages. See Fed. R. Civ. P. 37(e)(1).
Judge Rowland then goes on to explain her analysis at pages eight and nine of her opinion.
These text messages are certainly relevant as they involve private communications between the primary defendants and decision-makers in the case during a critical time period, and the alleged subject matter of the text messages involve issues highly pertinent to the underlying claim, including promotions in the police department and the Plaintiff specifically.
Defendants’ argument that Plaintiff is not prejudiced because “there are other means to obtain the contents of the conversations from the defendants, including prior oral discovery and potential trial testimony,” (Def.’s Resp., Dkt. 196 at 5), is unavailing. “A party has the right to prosecute its case in the way it deems fit based on all available relevant evidence.” Larson v. Bank One Corp., No. 00 C 2100, 2005 WL 4652509, at *14 (N.D. Ill. Aug. 18, 2005); see also Hickman v. Taylor, 329 U.S. 495, 507, 67 S. Ct. 385, 392, 91 L. Ed. 451 (1947) (“Mutual knowledge of all the relevant facts gathered by both parties is essential to proper litigation.”). The content of text messages cannot be replaced simply by eliciting testimony from the Defendants, and by having Plaintiff accept that testimony rather than relying on the actual messages to use as they deem fit. Without the lost text messages, Plaintiff is deprived of the opportunity to know “the precise nature and frequency” of those pri-vate communications, which occurred during a critical time period. See Ronnie Van Zant, Inc. v. Pyle, 270 F. Supp. 3d 656, 670 (S.D.N.Y. 2017) (finding prejudice when text messages were lost and “the precise nature and frequency of those communications cannot be verified”). Accordingly, the Court finds that Plaintiff has suffered prejudice as a result of the spoliation of highly relevant text messages. …
Upon a finding of prejudice, a court may order “measures no greater than necessary to cure the prejudice.” Fed. R. Civ. P. 37(e)(1). Under Subdivision (e)(1), the court has much discretion to fashion an appropriate sanction, and “[t]he range of such measures is quite broad if they are necessary for this purpose.” Fed. R. Civ. P. 37(e), 2015 Amendment Advisory Committee Notes.
Judge Rowland then wraps up her analysis at page fifteen of the Schmalz opinion.
Because the Court finds that Defendants acted with gross negligence, which is insufficient to support a finding of intent as required under Rule 37(e)(2), the Court concludes that a lesser sanction under Rule 37(e)(1) is appropriate. … To address the prejudice resulting from Defendant’s spoliation of evidence, the Court recommends that the parties shall be allowed to present evidence to the jury regarding the destruction of the text messages and the likely relevance of the lost information; and that the jury shall be instructed that it may consider this information when making its decision. However, the jury shall not be given specific instructions on any presumption or inference based on the destruction of the text messages.
Do not be a caveman lawyer and forget the cell phones of key custodians. They may need to be preserved, depending on the facts. In Schmalz the cell phones contained key evidence. An interview of the witness at the beginning of the case should have revealed this important fact. The interview should have triggered appropriate preservation. That did not happen here. Judge Rowland found that defendant’s failure was a cave-man lawyer like mistake, grossly negligent and out of touch with 21st Century discovery. For that reason, what appears to have been an easily defendable case has become a nightmare. See Order of Judge Darrah in Schmalz dated October 28, 2016 ($60,000 settlement). The plaintiff can now put on a side-show at trial on cell phone negligence and missing messages. Although better to the defense than a mandatory adverse inference instruction, which is almost certainly a deathblow, this kind of testimony will distract from the otherwise questionable merits of the case.