Cautionary Tale from Brooklyn: Search Terms ‘Designed To Fail’

October 20, 2019

Every lawyer who thinks e-discovery is not important, that you can just delegate it to a vendor, should read Abbott Laboratories, et al. v. Adelphia Supply USA, et al., No. 15 CV 5826 (CBA) (LB) (E.D.N.Y. May 2, 2019). This opinion in a trademark case in Brooklyn District Court (shown here) emphasizes, once again, that e-discovery can be outcome-determinative. If you mess it up, you can doom your case. If a lawyer wants to litigate today, they either have to spend the substantial time it takes to learn the many intricacies of e-discovery, or associate with a specialist who does. The Abbott Labs case shows how easily a law suit can be won or lost on e-discovery alone. Here the numbers did not add up, key custodians were omitted and guessed keywords were used, keywords so bad that opposing counsel called them designed to fail. The defendants reacted by firing their lawyers and blaming everything on them, but the court did not buy it. Instead, discovery fraud was found and judgment was entered for the plaintiff.

Magistrate Judge Lois Bloom (shown right) begins the Opinion by noting that the plaintiff’s motion for case ending sanctions “… presents a cautionary tale about how not to conduct discovery in federal court.” The issues started when defendant made its first electronic document production. The Electronically Stored Information was all produced in paper, as Judge Bloom explained “in hard copy, scanning them all together, and producing them as a single, 1941-page PDF file.” Opinion pg. 3. This is not what the plaintiff Abbott Labs wanted. After Abbott sought relief from the court the defendants on March 24, 2017 were ordered  to “produce an electronic copy of the 2014 emails (1,941 pages)” including metadata. Defendant then “electronically produced 4,074 pages of responsive documents on April 5, 2017.” Note how the page count went from 1,942 to 4,074. There was no explanation of this page count discrepancy, the first of many, but the evidence helped Abbott justify a new product counterfeiting action (Abbott II) where the court ordered a seizure of defendant’s email server. That’s were the fun started. As Judge Bloom put it:

Once plaintiffs had seized H&H’s email server, plaintiffs had the proverbial smoking gun and raised its concerns anew that defendants had failed to comply with the Court’s Order to produce responsive documents in the instant action (hereinafter “Abbott I”). On July 12, 2017, the Court ordered the H&H defendants to “re-run the document search outlined in the Court’s January 17 and January 21 Orders,” “produce the documents from the re-run search to Abbott,” and to produce “an affidavit of someone with personal knowledge” regarding alleged technical errors that affected the production.³ Pursuant to the Court’s July 12, 2017 Order to re-run the search, The H&H defendants produced 3,569 responsive documents.

Opinion pg. 4 (citations to record omitted).

Too Late For Vendor Help and a Search Strategy Designed to Fail

After the seizure order in Abbott II, and after Abbott Labs again raised issues regarding defendants’ original production, Judge Bloom ordered the defendants to re-run the original search. Defendants then retained the services of an outside vendor, Transperfect, to re-run the original search for them. In supposed compliance with that order, the defendants, aka H&H, then produced 3,569 documents. Id. at 8. Defendants also filed an affidavit by Joseph Pochron, Director in the Forensic Technology and Consulting Division at Transperfect (“Pochron Decl.”) to try to help their case. It did not work. According to Judge Bloom the Pochron Decl. states:

… that H&H utilized an email archiving system called Barracuda and that there are two types of Barracuda accounts, Administrator and Auditor. Pochron Decl. ¶ 13. Pochron’s declaration states that the H&H employee who ran the original search, Andrew Sweet, H&H’s general manager, used the Auditor account to run the original search (“Sweet search”). Id. at ¶ 19. When Mr. Pochron replicated the Sweet search using the Auditor account, he obtained 1,540 responsive emails. Id. at ¶ 22. When Mr. Pochron replicated the Sweet search using the Administrator account, he obtained 1,737 responsive emails. Id. Thus, Mr. Pochron attests that 197 messages were not viewable to Mr. Sweet when the original production was made. Id. Plaintiffs state that they have excluded those 197 messages, deemed technical errors, from their instant motion for sanctions. Plaintiffs’ Memorandum of Law at 9; Waters Decl. ¶ 8. However, even when those 197 messages are excluded, defendants’ numbers do not add up. In fact, H&H has repeatedly given plaintiffs and the Court different numbers that do not add up.

Moreover, plaintiffs argue that the H&H defendants purposely used search terms designed to fail, such as “International” and “FreeStyle,” whereas H&H’s internal systems used item numbers and other abbreviations such as “INT” and “INTE” for International and “FRL” and “FSL” for FreeStyle. Plaintiff’s Memorandum of Law at 10–11. Plaintiffs posit that defendants purposely designed and ran the “extremely limited search” which they knew would fail to capture responsive documents …

Opinion pgs. 8-9 (emphasis by bold added). “Search terms designed to fail.” This is the first time I have ever seen such a phrase in a judicial opinion. Is purposefully stupid keyword search yet another bad faith litigation tactic by unscrupulous attorneys and litigants? Or is this just another example of dangerous incompetence? Judge Bloom was not buying the ‘big oops” theory, especially considering the ever-changing numbers of relevant documents found. It looked to her, and me too, that this search strategy was intentionally design to fail, that it was all a shell-game.

This is the wake-up call for all litigators, especially those who do not specialize in e-discovery. Your search strategy had better make sense. Search terms must be designed (and tested) to succeed, not fail! This is not just incompetence.

The Thin Line Between Gross Negligence and Bad Faith

The e-discovery searches you run are important. The “mistakes” made here led to a default judgment. That is the way it is in federal court today. If you think otherwise, that e-discovery is not that important, that you can just hire a vendor and throw stupid keywords at it, then your head is dangerously stuck in the sand. Look around. There are many cases like Abbott Laboratories, et al. v. Adelphia Supply USA.

I say “mistakes” made here in quotes because it was obvious to Judge Bloom that these were not mistakes at all, this was fraud on the court.

E-Discovery is about evidence. About truth. You cannot play games. Either take it seriously and do it right, do it ethically, do it competently; or go home and get out. Retire already. Discovery gamesmanship and lawyer bumbling are no longer tolerated in federal court. The legal profession has no room for dinosaurs like that.

Abbott Labs responded the way they should, the way you should always expect in a situation like this:

Plaintiffs move for case ending sanctions under Federal Rule of Civil Procedure 37 and invoke the Court’s inherent power to hold defendants in default for perpetrating a fraud upon the Court. Plaintiffs move to strike the H&H defendants’ pleadings, to enter a default judgment against them, and for an order directing defendants to pay plaintiffs’ attorney’s fees and costs, for investigating and litigating defendants’ discovery fraud.

Id.

Rule 37(e) was revised in 2015 to make clear that gross negligence alone does not justify a case-ending sanction, that you must prove bad faith. This change should not provide the incompetent with much comfort. As this case shows, the difference between mistake and intent can be a very thin line. Do your numbers add up? Can you explain what you did and why you did it? Did you use good search terms? Did you search all of the key custodians? Or did you just take the ESI the client handed to you and say thank you very much? Did you look with a blind eye? Even if bad faith under Rule 37 is not proven, the court may still find the whole process stinks of fraud and use the court’s inherent powers to sanction misconduct.

As Judge Bloom went on to explain:

Under Rule 37, plaintiffs’ request for sanctions would be limited to my January 17, 2017 and January 27, 2017 Orders which directed defendants to produce documents as set forth therein. While sanctions under Rule 37 would be proper under these circumstances, defendants’ misconduct herein is more egregious and goes well beyond defendants’ failure to comply with the Court’s January 2017 discovery orders. . . .  Rather than viewing the H&H defendants’ failure to comply with the Court’s January 2017 Orders in isolation, plaintiffs’ motion is more properly considered in the context of the Court’s broader inherent power, because such power “extends to a full range of litigation abuses,” most importantly, to fraud upon the court.

Opinion pg. 5.

Judge Bloom went on the explain further the “fraud on the court” and defendant’s e-discovery conduct.

A fraud upon the court occurs where it is established by clear and convincing evidence “that a party has set in motion some unconscionable scheme calculated to interfere with the judicial system’s ability impartially to adjudicate a matter by . . . unfairly hampering the presentation of the opposing party’s claim or defense.” New York Credit & Fin. Mgmt. Grp. v. Parson Ctr. Pharmacy, Inc., 432 Fed. Appx. 25 (2d Cir. 2011) (summary order) (quoting Scholastic, Inc. v. Stouffer, 221 F. Supp. 2d 425, 439 (S.D.N.Y. 2002))

Opinion pgs. 5-6 (subsequent string cites omitted).

Kill All The Lawyers

The defendants here tried to defend by firing and blaming their lawyers. That kind of Shakespearean sentiment is what you should expect when you represent people like that. They will turn on you. They will use you for their nefarious ends, then lose you. Kill you if they could.

Judge Bloom, who was herself a lawyer before becoming a judge, explained the blame-game defendants tried to pull in her court.

Regarding plaintiffs’ assertion that defendants designed and used search terms to fail, defendants proffer that their former counsel, Mr. Yert, formulated and directed the use of the search terms. Id. at 15. The H&H defendants state that “any problems with the search terms was the result of H&H’s good faith reliance on counsel who . . . decided to use parameters that were less robust than those later used[.]” Id. at 18. The H&H defendants further state that the Sweet search results were limited because of Mr. Yert’s incompetence. Id.

Opinion pg. 9.

Specifically defendants alleged:

… the original search parameters were determined by Mr. Yert and that he “relied on Mr. Yert’s expertise as counsel to direct the parameters and methods for a proper search that would fulfill the Court’s Order.” Sweet Decl. ¶ 3–4.  As will be discussed below, the crux of defendants’ arguments throughout their opposition to the instant motion seeks to lay blame on Mr. Yert for their actions; however, defendants cannot absolve themselves of liability here by shifting blame to their former counsel.

Opinion pg. 11.

Here is how Judge Bloom responded to this “blame the lawyers” defense:

Defendants’ attempt to lay blame on former counsel regarding the design and use of search terms is equally unavailing. It is undisputed that numerous responsive documents were not produced by the H&H defendants that should have been produced. Defendants’ prior counsel conceded as much. See generally plaintiffs’ Ex. B, Tr. Of July 11, 2017 telephone conference.

Mr. Yert was asked at his deposition about the terms that H&H used to identify their products and he testified as follows:

Q. Tell me about the general discussions you had with the client in terms of what informed you what search terms you should be using.

A. Those were the terms consistently used by H&H to identify the particular product.

Q. So the client told you that FreeStyle and International are the terms they consistently used to refer to International FreeStyle test strips; is that correct?

A. That’s what I recall.

Q. Did the client tell you that they used the abbreviation FSL to refer to FreeStyle?

A. I don’t recall.

Q. If they had told you that, you would have included that as a search term, correct?

A. I don’t recall if it was or was not included as a search term, sir.

Opinion pgs. 10-11.

The next time you are asked to dream up keywords for searches to find your client’s relevant evidence, remember this case, remember this deposition. Do not simply use keywords that the client suggests, as the attorneys did here. Do not simply use keywords. As I have written here many, many times before, there is a lot more to electronic evidence search and review than keywords. This is the Twenty First Century. You should be using AI, specifically active machine learning, aka Predictive Coding.

You need an expert to help you and you need them at the start of a case, not after sanctions motions.

Judge Lois Bloom went on to explain that, even if defendant’s story of innocent reliance on it lawyers was true:

It has long been held that a client-principal is “bound by the acts of his lawyer agent.” Id. (quoting Link v. Wabash RR. Co., 370 U.S. 626, 634 (1962)). As the Second Circuit stated, “even innocent clients may not benefit from the fraud of their attorney.” Id. . . .

However, notwithstanding defendants’ assertion that the search terms “FreeStyle” and “International” were used in lieu of more comprehensive search terms at the behest of Mr. Yert, it is undisputed that Mr. Sweet, H&H’s general manager, knew that H&H used abbreviations for these terms. Mr. Sweet admitted this at his deposition. See Sweet Dep. 81:2-81:24, Mar. 13, 2018. . . . The Court need not speculate as to why defendants did not use these search terms to comply with defendants’ obligation to produce pursuant to the Court’s Order. Mr. Sweet, by his own admission, states that “on several occasions he contacted Mr. Yert with specific questions about whether to include certain emails in production.” Sweet Decl. ¶ 7. It is inconceivable that H&H’s General Manager, who worked closely with Mr. Yert to respond to the Court’s Order, never mentioned that spelling out the terms used, “International” and “FreeStyle”, would not capture the documents in H&H’s email system. Mr. Sweet knew that H&H was required to produce documents regarding International FreeStyle test strips, regardless of whether H&H’s documents spelled out or abbreviated the terms. Had plaintiffs not seized H&H’s email server in the counterfeiting action, plaintiffs would have never known that defendants failed to produce a trove of responsive documents. H&H would have gotten away with it.

Opinion pgs. 12-13.

Defendants also failed to produce any documents by three custodians Holland Trading, Howard Goldman, and Lori Goldman. Again, they tried to blame that omission on their attorney, who they claim directed the search. Oh yeah, for sure. To me he looks like a mere stooge, a tool of unscrupulous litigants. Judge Bloom did not accept that defense either, holding:

While defendants’ effort to shift blame to Mr. Yert is unconvincing at best, even if defendants’ effort could be credited, counsel’s actions, even if they were found to be negligent, would not shield the H&H defendants from responsibility for their bad faith conduct.

Opinion pgs. 19-20. Then Judge Bloom went on to cite the record at length, including the depositions and affidavits of the attorneys involved, to expose this blame game as a sham. The order then concludes on this point holding:

There is no credible explanation for why the Holland Trading, Howard Goldman, and Lori Goldman documents were not produced except that the documents were willfully withheld. Defendants’ explanation that there were no documents withheld, then that any documents that weren’t produced were due to technical glitches, then that the documents didn’t appear in Mr. Sweet’s original search, then that if documents were intentionally removed, they were removed per Mr. Yert’s instructions cannot all be true. The H&H defendants have always had one more excuse up their sleeve in this “series of episodes of nonfeasance,” which amounts to “deliberate tactical intransigence.” Cine, 602 F.2d at 1067. In light of the H&H defendants’ ever-changing explanations as to the withheld documents, Mr. Sweet’s inconsistent testimony, and assertions of former counsel, the Court finds that the H&H defendants have calculatedly attempted to manipulate the judicial process. See Penthouse, 663 F.2d 376–390 (affirming entry of default where plaintiffs disobeyed an “order to produce in full all of [their] financial statements,” engaged in “prolonged and vexatious obstruction of discovery with respect to closely related and highly relevant records,” and gave “false testimony and representations that [financial records] did not exist.”).

Opinion pgs. 22-23.

The plaintiff, Abbott Labs, went on to argue that “the withheld documents freed David Gulas to commit perjury at his deposition. The Court agrees.” Id. at 24. The Truth has a way of finding itself out, especially with competent counsel on the other side and a good judge.

With this evidence the Court concluded the only adequate sanction was a default judgment in plaintiff’s favor. Message to spoliating defendants, game over, you lose.

Based on the full record of the case, there is clear and convincing evidence that defendants have perpetrated a fraud upon the court. Defendants’ initial conduct of formulating search terms designed to fail in deliberate disregard of the lawful orders of the Court allowed H&H to purposely withhold responsive documents, including the Holland Trading, Howard Goldman, and Lori Goldman documents. Defendants proffered inconsistent positions with three successive counsel as to why the documents were withheld. Mr. Sweet’s testimony is clearly inconsistent if not perjured from his deposition to his declaration in opposition to the instant motion. Mr. Goldman’s deposition testimony is evasive and self-serving at best. Finally, Mr. Gulas’ deposition testimony is clearly perjured. Had plaintiffs never seized H&H’s server pursuant to the Court’s Order in the counterfeiting case, H&H would have gotten away with their fraud upon this Court. H&H only complied with the Court’s orders and their discovery obligations when their backs were against the wall. Their email server had been seized. There was no longer an escape from responsibility for their bad faith conduct. This is, again, similar to Cerruti, where the “defendants did not withdraw the [false] documents on their own. Rather, they waited until the falsity of the documents had been detected.” Cerruti.,169 F.R.D. at 583. But for being caught in a web of irrefutable evidence, H&H would have profited from their misconduct. . . .

The Court finds that the H&H defendants have committed a fraud upon the court, and that the harshest sanction is warranted. Therefore, plaintiffs’ motion for sanctions should be granted and a default judgment should be entered against H&H Wholesale Services, Inc., Howard Goldman, and Lori Goldman.

Conclusion

Attorneys of record sign responses under Rule 26(g) to requests for production, not the client. That is because the rules require them to control the discovery efforts of their clients. That means the attorney’s neck is on the line. Rule 26(g) does not allow you to just take a client’s word for it. Verify. Supervise. The numbers should add up. The search terms, if used, should be designed and tested to succeed, not fail. This is your response, not the client’s. You determine the search method, in consultation with the client for sure, but not by “just following orders.” You must see everything, not nothing. If you see no email from key custodians, dig deeper and ask why. Do this at the beginning of the case. Get vendor help before you start discovery, not after you fail. Apparently the original defense attorneys here did just what they were asked, they went along with the client. Look where it got them. Fired and deposed. Default judgment entered. Cautionary tale indeed.

 

 


Purple Rain of Sanctions Falls on the Record Company in the “Prince Case” for their Intentional Destruction of Text Messages

March 10, 2019

Honey, I know, I know
I know times are changing
It’s time we all reach out
For something new, that means you too.
Purple Rain
PRINCE Rogers Nelson
1958-2016

I know, I know, it used to be good enough just to save the relevant emails and ESI on company computers. Not any more. Times are changing. Important business is now conducted by phone text and other messages. It’s time we all reach out and save something new, save the texts, save the phones. That directive applies to everyone, that means you too. Prince record company executives recently found that out the hard way in District Court in Minneapolis. Paisley Park Enters. v. Boxill, No. 0:17-cv-01212, (D. Minn., 3/5/19) (copy here: Prince_Discovery_Order).

United States Magistrate Judge Tony N. Leung sanctioned the record company defendant and its two top executives in a suit over the posthumous release of Prince’s “Deliverance” album. They were sanctioned because the plaintiff, the Prince Estate via Paisley Park, proved that the defendant executives intentionally destroyed text messages about the album. They denied bad intent and claim they did what they thought the law required, save the emails and office computer data. Defendants claimed they provided discovery from other sources of ESI, including their work computers, cooperated with a forensic data firm to ensure Plaintiffs obtained everything they sought, but, they further argue that Plaintiffs never asked to inspect their cell phones during this process. They claimed they did not know they also had to preserve their text messages.

One is reminded of the first verse to Purple Rain:
I never meant to cause you any sorrow
I never meant to cause you any pain
I only wanted to one time to see you laughing
I only wanted to see you
Laughing in the purple rain

Judge Tony Leung was not laughing, purple rain or not. He did not believe defendants’ good faith intent argument. He was no more impressed by their “times are changing,” “we didn’t know” argument than Prince was in Purple Rain. In today’s world preservation of email is not enough. If text messages are how people did business, which was the case in Paisley Park, then these messages must also be preserved. As Judge Leung put it:

In the contemporary world of communications, even leaving out the potential and reality of finding the modern-day litigation equivalent of a “smoking gun” in text messages, e-mails, and possibly other social media, the Court is baffled as to how Defendants can reasonably claim to believe that their text messages would be immune from discovery.

Perhaps what really got to the judge was that these record executives not only the deleted the texts, they wiped the phones and then they threw them away. This was all before suit was filed, but they knew full well at the time that the Estate was going to sue them for copyright violations.  As Judge Leung explained (emphasis added):  “An e-discovery lawyer for Plaintiffs’ law firm indicates that had Staley and Wilson not wiped and discarded their phones, it might have been possible to recover the deleted messages. (ECF No. 387, p. 2).” (Note: this is the first time I can recall this expression “e-discovery lawyer”  being used in an opinion.)

Text Message Spoliation Law

Judge Leung provides a good summary of the law.

The Federal Rules of Civil Procedure require that parties take reasonable steps to preserve ESI that is relevant to litigation. Fed. R. Civ. P. 37(e). The Court may sanction a party for failure for failure to do so, provided that the lost ESI cannot be restored or replaced through additional discovery. Id. Rule 37(e) makes two types of sanctions available to the Court. Under Rule 37(e)(1), if the adverse party has suffered prejudice from the spoliation of evidence, the Court may order whatever sanctions are necessary to cure the prejudice. But under Rule 37(e)(2), if the Court finds that the party “acted with the intent to deprive another party of the information’s use in the litigation,” the Court may order more severe sanctions, including a presumption that the lost information was unfavorable to the party or an instruction to the jury that it “may or must presume the information was unfavorable to the party.” The Court may also sanction a party for failing to obey a discovery order. Fed. R. Civ. P. 37(b). Sanctions available under Rule 37(b) include an order directing that certain designated facts be taken as established for purposes of the action, payment of reasonable expenses, and civil contempt of court.

Pgs.6-7

There is no doubt that Staley and Wilson are the types of persons likely to have relevant information, given their status as principals of RMA and owners of Deliverance. Nor can there be any reasonable dispute as to the fact that their text messages were likely to contain information relevant to this litigation. In fact, Boxill and other third parties produced text messages that they sent to or received from Staley and Wilson. Neither party disputes that those text messages were relevant to this litigation. Thus, the RMA Defendants were required to take reasonable steps to preserve Staley and Wilson’s text messages.

The RMA Defendants did not do so. First, Staley and Wilson did not suspend the auto-erase function on their phones. Nor did they put in place a litigation hold to ensure that they preserved text messages. The principles of the “standard reasonableness framework” require a party to “suspend its routine document retention/destruction policy and put in place a ‘litigation hold’ to ensure the preservation of relevant documents.” Steves and Sons, Inc. v. JELD-WEN, Inc., 327 F.R.D. 96, 108 (E.D. Va. 2018) (citation and internal quotation marks omitted). It takes, at most, only a few minutes to disengage the auto-delete function on a cell phone. It is apparent, based on Staley’s affidavit, that he and Wilson could have taken advantage of relatively simple options to ensure that their text messages were backed up to cloud storage. (ECF No. 395, pp. 7-9). These processes would have cost the RMA Defendants little, particularly in comparison to the importance of the issues at stake and the amount in controversy here. Failure to follow the simple steps detailed above alone is sufficient to show that Defendants acted unreasonably.

Pgs. 8-9

But that is not all the RMA Defendants did and did not do. Most troubling of all, they wiped and destroyed their phones after Deliverance and RMA had been sued, and, in the second instance for Wilson, after the Court ordered the parties to preserve all relevant electronic information, after the parties had entered into an agreement regarding the preservation and production of ESI, and after Plaintiffs had sent Defendants a letter alerting them to the fact they needed to produce their text messages. As Plaintiffs note, had Staley and Wilson not destroyed their phones, it is possible that Plaintiffs might have been able to recover the missing text messages by use of the “cloud” function or through consultation with a software expert. But the content will never be known because of Staley and Wilson’s intentional acts. The RMA Defendants’ failure to even consider whether Staley and Wilson’s phones might have discoverable information before destroying them was completely unreasonable. This is even more egregious because litigation had already commenced.

Pg. 9

It is obvious, based on text messages that other parties produced in this litigation, that Staley and Wilson used their personal cell phones to conduct the business of RMA and Deliverance. It is not Plaintiffs’ responsibility to question why RMA Defendants did not produce any text messages; in fact, it would be reasonable for Plaintiffs to assume that Defendants’ failure to do so was on account of the fact that no such text messages existed. This is because the RMA Defendants are the only ones who would know the extent that they used their personal cell phones for RMA and Deliverance business at the time they knew or should have reasonably known that litigation was not just possible, but likely, or after Plaintiffs filed suit or served their discovery requests.

Furthermore, the RMA Defendants do not get to select what evidence they want to produce, or from what sources. They must produce all responsive documents or seek relief from the court. See Fed. R. Civ. P. 26(c) (outlining process for obtaining protective order).

Pg. 12

Having concluded that the RMA Defendants did not take reasonable steps to preserve and in fact intended to destroy relevant ESI, the Court must next consider whether the lost ESI can be restored or replaced from any other source. Fed. R. Civ. P. 37(e).

Pg. 13

While it is true that Plaintiffs have obtained text messages that Boxill and other parties sent to or received from Staley and Wilson, that does not mean that all responsive text messages have been recovered or that a complete record of those conversations is available. In particular, because Wilson and Staley wiped and destroyed their phones, Plaintiffs are unable to recover text messages that the two individuals sent only to each other. Nor can they recover text messages that Staley and Wilson sent to third parties to whom Plaintiff did not send Rule 45 subpoenas (likely because they were not aware that Wilson or Staley communicated with those persons). The RMA Defendants do not dispute that text messages sent between Staley and Wilson are no longer recoverable.  . . .

At most, Plaintiffs now can obtain only “scattershot texts and [e-mails],” rather than “a complete record of defendants’ written communications from defendants themselves.” First Fin. Sec., Inc. v. Lee, No. 14 cv-1843, 2016 WL 881003 *5 (D. Minn. Mar. 8, 2016). The Court therefore finds that the missing text messages cannot be replaced or restored by other sources.

Pgs. 13-14

There is no doubt that Plaintiffs are prejudiced by the loss of the text messages. Prejudice exists when spoliation prohibits a party from presenting evidence that is relevant to its underlying case. Victor Stanley, 269 F.R.D. at 532. As set forth above, in the Court’s discussion regarding their ability to replace or restore the missing information, Plaintiffs are left with an incomplete record of the communications that Defendants had with both each other and third parties. Neither the Court nor Plaintiffs can know what ESI has been lost or how significant that ESI was to this litigation. The RMA Defendants’ claim that no prejudice has occurred is “wholly unconvincing,” given that “it is impossible to determine precisely what the destroyed documents contained or how severely the unavailability of these documents might have prejudiced [Plaintiffs’] ability to prove the claims set forth in [their] Complaint.” Telectron, Inc. v. Overhead Door Corp., 116 F.R.D. 107, 110 (S.D. Fl. 1987); see also Multifeeder Tech., Inc. v. British Confectionary Co. Ltd, No. 09-cv-1090, 2012 WL 4128385 *23 (D. Minn. Apr. 26, 2012) (finding prejudice because Court will never know what ESI was destroyed and because it was undisputed that destroying parties had access to relevant information), report and recommendation adopted in part and rejected in part by 2012 WL 4135848 (D. Minn. Sept. 18, 2012). Plaintiffs are now forced to go to already existing discovery and attempt to piece together what information might have been contained in those messages, thereby increasing their costs and expenses. Sanctions are therefore appropriate under Rule 37(e)(1).

Sanctions are also appropriate under Rule 37(e)(2) because the Court finds that the RMA Defendants acted with the intent to deprive Plaintiffs of the evidence. “Intent rarely is proved by direct evidence, and a district court has substantial leeway to determine intent through consideration of circumstantial evidence, witness credibility, motives of the witnesses in a particular case, and other factors.” Morris v. Union Pacific R.R., 373 F.3d 896, 901 (8th Cir. 2004). There need not be a “smoking gun” to prove intent. Auer v. City of Minot, 896 F.3d 854, 858 (8th Cir. 2018). But there must be evidence of “a serious and specific sort of culpability” regarding the loss of the relevant ESI. Id.

Pgs. 15-16

The Court can draw only one conclusion from this set of circumstances: that they acted with the intent to deprive Plaintiffs from using this information. Rule 37(e)(2) sanctions are particularly appropriate as to Wilson, RMA, and Deliverance for this reason as well.

Pg. 17

The Court believes that Plaintiffs’ request for an order presuming the evidence destroyed was unfavorable to the RMA Defendants and/or for an adverse inference instruction may well be justified. But given the fact that discovery is still on-going, the record is not yet closed, and the case is still some time from trial, the Court believes it more appropriate to defer consideration of those sanctions to a later date, closer to trial. See Monarch Fire Protection Dist. v. Freedom Consulting & Auditing Servs., Inc., 644 F.3d 633, 639 (8th Cir. 2011) (holding that it is not an abuse of discretion to defer sanction considerations until trial). At that point, the trial judge will have the benefit of the entire record and supplemental briefing from the parties regarding the parameters of any such instruction or presumption.

The Court will, however, order the RMA Defendants to pay monetary sanctions pursuant to Rules 37(b), and 37(e) and the Court’s pretrial scheduling orders.

Pgs. 18-19

The Court will therefore order, pursuant to Rules 37(b)(2)(C), 37(e)(1), and 37(e)(2) and the Court’s pretrial scheduling orders, the RMA Defendants to pay reasonable expenses, including attorney’s fees and costs, that Plaintiffs incurred as a result of the RMA Defendants’ misconduct. The Court will order Plaintiffs to file a submission with the Court detailing such expenses and allow the RMA Defendants the opportunity to respond to that submission. In addition, pursuant to Rule 37(e)(2) and the Court’s pretrial scheduling order, the Court will also order the RMA Defendants to pay into the Court a fine of $10,000. fn3 This amount is due within 90 days of the date of this Order.

Pg. 20

Let’s close with the original music of Prince.

 

 


Happy Birthday to Abraham Lincoln, America’s First Tech-Lawyer

February 12, 2019

Lincoln in his lawyer phaseAbraham Lincoln was born on February 12, 1809. He was probably our greatest President. Putting aside the tears honest Abe must now be shedding over his political party, it is good to remember Lincoln as an exemplar of a U.S. lawyer. All lawyers would benefit from emulating aspects of his Nineteenth Century legal practice and Twenty First Century thoughts on technology. He was honest, diligent, a deep thinker and ethical. Very ethical. He did not need to be lectured on Cooperation and Rule 1. He also did not need to be told to embrace technology, not hide from it. In fact, he was a prominent Tech-Lawyer of his day, well known for his speaking abilities on the subject. Near the end of his legal career Abe was busy pushing technology and his vision of the future. Sound familiar dear readers? It should. Most of you are like that.

Close up of Lincoln's face on April 10, 1865

Lincoln Was a Technophile

Lincoln was as obsessed with the latest inventions and advances in technology as any techno-geek e-discovery lawyer alive today. The latest things in Lincoln’s day were mechanical devices of all kinds, typically steam-powered, and the early electromagnetic devices, then primarily the telegraph. Indeed, the first electronic transmission from a flying machine, a balloon, was a telegraph sent from inventor Thaddeus Lowe to President Lincoln on June 16, 1861. Unlike Lincoln’s generals, he quickly realized the military potential of flying machines and created an Aeronautics Corps for the Army, appointing Professor Lowe as its chief. See Bruce, Robert V., Abraham Lincoln and the Tools of War. Below is a copy of a handwritten note by Lincoln introducing Lowe to General Scott.

Lincoln's handwritten introduction of Professor Lowe

At the height of his legal career, Lincoln’s biggest clients were the Googles of his day, namely the railroad companies with their incredible new locomotives. These newly rich, super-technology corporations dreamed of uniting the new world with a cross-country grid of high speed transportation. Little noticed today is one of Lincoln’s proudest achievements as President, the enactment of legislation that funded these dreams, the Pacific Railway Act of 1862. The intercontinental railroad did unite the new world, much like the Internet and airlines today are uniting the whole world. A lawyer as obsessed with telegraphs and connectivity as Lincoln was would surely have been an early adopter of the Internet and an enthusiast of electronic discovery.  See: Abraham Lincoln: A Technology Leader of His Time (U.S. News & World Report, 2/11/09).

Abraham Lincoln loved technology and loved to think and talk about the big picture of technology, of how it is used to advance the dreams of Man. In fact, Lincoln gave several public lectures on technology, having nothing to do with law or politics. The first such lecture known today was delivered on April 6, 1858, before the Young Men’s Association in Bloomington, Illinois, and was entitled “Lecture on Discoveries and Inventions.” In this lecture, he traced the progress of mankind through its inventions, starting with Adam and Eve and the invention of the fig leaf for clothing. I imagine that if he were giving this speech today (and I’m willing to try to replicate it should I be so invited) he would end with AI and blockchain.

In Lincoln’s next and last lecture series first delivered on February 11, 1859, known as “Second Lecture on Discoveries and Inventions,” Lincoln used fewer biblical references, but concentrated instead on communication. For history buffs, see the complete copy of Lincoln’s Second Lecture, which, in my opinion, is much better than the first. Here are a few excerpts from this little known lecture:

The great difference between Young America and Old Fogy, is the result of Discoveries, Inventions, and Improvements. These, in turn, are the result of observation, reflection and experiment.

Writing – the art of communicating thoughts to the mind, through the eye – is the great invention of the world. Great in the astonishing range of analysis and combination which necessarily underlies the most crude and general conception of it, great, very great in enabling us to converse with the dead, the absent, and the unborn, at all distances of time and of space; and great, not only in its direct benefits, but greatest help, to all other inventions.

I have already intimated my opinion that in the world’s history, certain inventions and discoveries occurred, of peculiar value, on account of their great efficiency in facilitating all other inventions and discoveries. Of these were the arts of writing and of printing – the discovery of America, and the introduction of Patent-laws.

Can there be any doubt that the lawyer who wrote these words would instantly “get” the significance of the total transformation of writing, “the great invention of the world,” from tangible paper form, to intangible, digital form?  Can there be any doubt that a lawyer like this would understand the importance of the Internet, the invention that unites the world in a web of inter-connective writing, where each person may be a printer and instantly disseminate their ideas “at all distances of time and of space?”

Lincoln standing by his generals in the field; close up

Abraham Lincoln did not just have a passing interest in new technologies. He was obsessed with it, like most good e-discovery lawyers are today. In the worst days of the Civil War, the one thing that could still bring Lincoln joy was his talks with the one true scientist then residing in Washington, D.C., the first director of the Smithsonian Institution, Dr. Joseph Henry, a specialist in light and electricity. Despite the fact that Henry’s political views were anti-emancipation and virtually pro-secession, Lincoln would sneak over to the Smithsonian every chance he could get to talk to Dr. Henry. Lincoln told the journalist, Charles Carleton Coffin:

My visits to the Smithsonian, to Dr. Henry, and his able lieutenant, Professor Baird, are the chief recreations of my life…These men are missionaries to excite scientific research and promote scientific knowledge. The country has no more faithful servants, though it may have to wait another century to appreciate the value of their labors.

Bruce, Lincoln and the Tools of War, p. 219.

Lincoln was no mere poser about technology and inventions. He walked his talk and railed against the Old Fogies who opposed technology. Lincoln was known to be willing to meet with every crackpot inventor who came to Washington during the war and claimed to have a new invention that could save the Union. Lincoln would talk to most of them and quickly separate the wheat from the chaff. As mentioned, he recognized the potential importance of aircraft to the military and forced the army to fund Professor Lowe’s wild-eyed dreams of aerial reconnaissance. He also recognized another inventor and insisted, over much opposition, that the army adopt his new invention: Dr. Richard Gatling. His improved version of the machine gun began to be used by the army in 1864, and before that, the Gattling guns that Lincoln funded are credited with defending the New York Times from an invasion by “anti-draft, anti-negro mobs” that roamed New York City in mid-July 1863. Bruce, Lincoln and the Tools of War, p. 142.

As final proof that Lincoln was one of the preeminent technology lawyers of his day, and if he were alive today, surely would be again, I offer the little known fact that Abraham Lincoln is the only President in United States history to have been issued a patent. He patented an invention for “Buoying Vessels Over Shoals.” It is U.S. Patent Number 6,469, issued on May 22, 1849. I could only find the patent on the USPTO web, where it is not celebrated and is hard to read. So as my small contribution to Lincoln memorabilia in the bicentennial year of 2009, I offer the complete copy below of Abraham Lincoln’s three page patent. You should be able to click on the images with your browser to enlarge and download.

Lincoln Patent Pg. 1
Lincoln Patent Pg. 2Lincoln Patent Pg. 3 (Drawings)

The invention consisted of a set of bellows attached to the hull of a ship just below the water line. After reaching a shallow place, the bellows were to be filled with air that buoyed the vessel higher, making it float higher and off the river shoals. The patent application was accompanied with a wooden model depicting the invention. Lincoln whittled the model with his own hands. It is on display at the Smithsonian and is shown below.

Lincoln Hand-Carved Wooden Model of Patent

Lincoln Filing Invention at Patent Office (fictionalized depiction)

Conclusion

On Abe Lincoln’ birthday it is worth recalling the long, prestigious pedigree of Law and Technology in America. Lincoln is a symbol of freedom, emancipation. He is also a symbol of Law and Technology.  If Abe were alive today, I have no doubt he would be, among other things, a leader of Law and Technology.

Stand tall friends. We walk in long shadows and, like Lincoln, we shall overcome the hardships we face. As Abe himself was fond of saying: down with the Old Fogies; it is young America’s destiny to embrace change and lead the world into the future. Let us lead with the honesty and integrity of Abraham Lincoln. Nothing less is acceptable.



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