E-Discovery Law Review : Electronic Discovery Lawyers & Attorneys : Cozen O'Connor Law Firm : Data Preservation & E-Discovery Disputes

Although the Federal Rules of Civil Procedure set the stage for electronic discovery in civil cases, there is no such express regime in the criminal context. 

The absence of such a standard became evident in a recent case in the Western District of New York.  In United States v. Briggs, 2011 WL 4017886 (W.D.N.Y. Sept. 8, 2011), defendants were charged with several counts related to the distribution of cocaine.  The criminal investigation leading to these charges involved court-authorized interceptions of cellular telephone communications indicating that the defendants were allegedly engaged in drug trafficking. 

In its voluntary discovery, the Government furnished defense counsel with disks containing thousands of pages of documents relating to these communications using the IPRO program routinely used by the U.S. Attorney’s Office in cases involving multiple defendants.  Defendants claimed this reported data had problems with omissions and inaccuracies resulting from the collection and management system used. The defendants also objected to the Government’s failure to provide the data in the “most useful form that is readily available” and claimed the “.tiff” files received could not be sorted or searched.  The appropriate format, according to the defendants, was either the “.pdf” or native format.  The Government, in response, refused to provide the files in these formats arguing that the cost of reproduction was prohibitive, that it had already produced the particular data requested by defendants, and that it should not bear the burden of reproduction merely because it would be more helpful or useful to the defendants. 

Examining this issue, the court began by pointing out the absence of a standard in criminal cases for the production of ESI.  While Rule 16(d)(1) of the Federal Rules of Criminal Procedure, the general authority ordering the manner of production in criminal cases, provides that, “[a]t any time the court may, for good cause, deny, restrict, or defer discovery or inspection, or grant other appropriate relief,”  it does not specify the manner in which such production should be made.  The court, therefore, turned to two other jurisdictions addressing criminal prosecutions involving extensive document production.  In United States v. O’Keefe, 537 F. Supp. 2d 14 (D.D.C. 2008), the United States District Court of the District of Columbia, conceded that there was no  criminal equivalent to, and, thus, applied, Federal Rule of Civil Procedure 34.  In United States v. Warshak, 631 F.3d 266 (6th Cir. 2010), the Sixth Circuit refused to require the Government to reproduce electronic materials in the format requested by the defendant because the defendants had ready access to the information and documents as they were kept in the usual course of business.

Applying these rules, the court determined that the Government was the party “better able to bear the burden of organizing these records for over twenty defendants in a manner useful to all.”  The court mandated that the Government must reproduce its disclosure in a searchable format (PDF), or in the native format.  The court based its decision on the rationale that the Government is in the better position to organize the mass of information in a manner that is searchable by the defense because: (1) the Government already compiled this electronic information from its various native forms into a common electronic database and; (2) rather than have each defendant compile the data involving that party or repeat the expense of reproducing the entire Government production, the Government should bear this burden.  In making this decision, the court made it clear that it was not adopting Rule 34 of the Federal Rules of Civil Procedure in all criminal cases, as in O’Keefe, rather it was applying it in only this case.    

Briggs is a clear example of the need for a more uniform regime for ESI in criminal cases.  According to the court, the Justice Department appears to have at least one working group considering the “best practices” for ESI in criminal cases.  Until then, each court faced with a motion to compel criminal discovery with ESI data will have to devise its own scheme for ESI discovery based on the limited rules governing the criminal context at this time.  Defendants, then, are best advised to be prepared and willing to seek the court’s involvement early on to ensure that the production of ESI is reasonable, proportionate, and manageable so as not to cripple their efforts in defending against criminal liability. 

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The proper preservation of electronic data for discovery has become an increasing source of contention between parties. Two recent cases illustrate the importance of mindfully preserving electronic data during discovery. 

In Gentex Corp. v. Sutter, No. 3:07-CV-1269, 2011 U.S. Dist. LEXIS 122831 (M.D. Pa. Oct. 24, 2011), the district court granted default judgment to the plaintiffs in a spoliation action. Gentex Corporation sued two of its former employees, Brad Sutter and Patrick Walko, for violating non-disclosure agreements. Gentex claimed that Sutter and Walko copied proprietary files when they left the company and shared them with a rival company, Armor. 

In response to the suit, Armor implemented a litigation hold and instructed employees to preserve “all paper documents and electronically stored information concerning the Company’s relationship with Brad Sutter and his work while at the Company.” Armor also obtained a consulting firm to help preserve documents relevant to the litigation. 

Sutter, however, began destroying evidence despite knowledge of the litigation hold. Sutter scrubbed his computer, explaining that he did so “because he was scared because Gentex had sued him.” Sutter destroyed all CD-ROMs containing Gentex information that he possessed and purposely destroyed a thumb drive after his deposition. Sutter also deleted numerous email messages when he was printing them for production to Gentex. 

Similarly, Walko knowingly deleted documents relating to Gentex files on his computer. Walko claimed that various supervisors, including Sutter, instructed him, “Do what you have to do to clean up. If you need to clean up, clean up.” 

Gentex’s expert concluded that the deletions were “intentional and coordinated and designed to circumvent the duty to preserve documents.” The district court agreed and found that Gentex had presented sufficient evidence to show that Sutter and Walko engaged in willful spoliation. The court ultimately determined that granting default judgment to Gentex was the “least onerous” sanction corresponding to the willfulness of the spoliation, given Sutter and Walko’s “unabashedly intentional destruction of relevant, irretrievable evidence.”

By contrast, another court facing similar facts refused to levy the ultimate sanction. In Cedar Rapids Lodge & Suites, LLC v. JFS Dev., Inc., No. C09-0175, 2011 U.S. Dist. LEXIS 110671 (N.D. Iowa Sept. 27, 2011), the court determined that “a stronger showing of bad faith [was] required” before it would grant default judgment to the plaintiffs. In that case, plaintiff investors sued the developers of a proposed hotel for fraudulent inducement. Following a protracted discovery dispute, plaintiffs sought default judgment against one of the defendants for failure to comply with discovery requests and for intentional destruction of evidence. 

The defendant previously produced seven computers, ten hard drives, and 23 CDs for inspection and copying. Although the plaintiffs’ expert extracted over 34,000 relevant documents from these sources, the expert concluded that external drives that had been connected to the laptop were missing. Additionally, the expert contended that a large number of relevant documents, folders, files, and emails had been targeted for strategic deletion. The expert, however, conceded that several innocent explanations existed for the deletions and missing drives. 

Citing an Eighth Circuit decision, the district court determined that there was no proof that the defendant intentionally engaged in spoliation. As an initial matter, the court seemed impressed by the sheer volume of documents that plaintiffs had already recovered from the defendants. The defendant had initially produced 875 documents followed by an additional 2,700 pages, not to mention the 34,000 documents extracted from various hard drives and computers. 

Additionally, the court found that plaintiffs had not met the relevant legal standard. To warrant any sanction, much less a default judgment, the court had to find: 1) intentional destruction indicative of a desire to suppress the truth; and 2) actual prejudice to the other party resulting from the spoliation. Here, the court deemed the defendant to be merely “unsophisticated in the requirements of litigation and preservation of documents” rather than willfully destructive. Further, the plaintiffs suffered no prejudice, as “[i]t would seem that Plaintiffs have plenty of information upon which to pursue their claims.” In denying the motion for sanctions, the court simply stated, “I believe a stronger showing of bad faith is required.” 

While a default judgment represents the ultimate sanction in spoliation cases, destruction of electronic evidence can result in sanctions running the gamut from claim dismissal and suppression of evidence to an adverse inference and attorneys’ fees and costs. As the district court judge in Gentex observed, “I am especially conscious of the deterrence value of harsh sanctions in cases like this where the crucial evidence exists in electronic form, and a party may destroy its opponent’s case with the mere click of a button.” These two cases teach us to beware the fine line that distinguishes behavior worthy of a default judgment and behavior that is merely vexatious.

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 In today’s electronic age where text messages, instant messages and e-mails have, to a large degree, supplanted traditional written correspondence, courts are increasingly called upon to apply longstanding evidentiary rules to society’s newer methods of communication. A recent opinion, however, from the Pennsylvania Superior Court, Commonwealth v. Koch, No.1669-MDA-2010, 2011 Pa. Super. LEXIS 2716 (Sept. 16, 2011), suggests that the more things change, the more they stay the same.

According to Koch, a party seeking to admit a text message as evidence at trial faces authentication requirements similar to those of a party seeking to admit a handwritten letter. A letter, for example, may bear Mr. Smith’s signature, or be printed on Mr. Smith’s stationery, but that signature may be forged, or the letterhead copied. Typically, some further authentication is needed to show that the letter is what it purports to be – i.e., a statement made by Mr. Smith. Under Koch, the same principle applies to text messages: the mere fact that a text message came from Mr. Smith’s cell phone number is an insufficient basis to admit that text message as a statement made by Mr. Smith. Additional evidence of the sender’s identity is needed.

In Koch, the trial court admitted testimony and a transcript of thirteen drug-related text messages obtained from a cell phone that the defendant admitted belonged to her. The defendant objected, claiming there was no evidence substantiating that she was the author of the text messages, nor was there evidence that the drug-related texts were directed at her, because Commonwealth witnesses testified that another person was using the defendant’s cell phone at least some of the time. At trial, a police detective further conceded that: the author of the drug-related text messages could not be ascertained; that some of the messages referred to the defendant in the third person and, thus, were not written by the defendant; and that some text messages had been deleted. The defendant was ultimately convicted on two drug-possession charges.

The Pennsylvania Superior Court reversed, holding that the trial court erred in admitting the text messages because the messages were improperly authenticated. In determining the standard for the authentication of text messages, the Superior Court looked to several recent appellate opinions from around the country, as well as its own opinion in In the Interest of F.P., a Minor, 878 A.2d 91 (2005), a case that addressed authentication of instant messages.   From these cases, the court concluded that “e-mails and text messages are documents and subject to the same requirements for authenticity as non-electronic documents generally.”

Establishing authorship of an e-mail or text message, the court observed, can be difficult because e-mail accounts and cell phones are not always exclusively used by the person to whom the e-mail account or cell phone belongs. In the light of this, the court held that “authentication of electronic communications, like documents, requires more than mere confirmation that the number or address belonged to a particular person. Circumstantial evidence, which tends to corroborate the identity of the sender, is required.”

Turning to the facts of the case, the court found that evidence showing that the defendant had written the text messages found on her phone was “[g]laringly absent.” The court noted that there was no confirming testimony from the senders or recipients of the disputed messages and no contextual clues within the messages themselves that revealed the identity of the sender. The court also rejected the idea that the defendant’s physical proximity to the cell phone when it was seized was probative of the defendant’s authorship of the text messages made days or weeks earlier. Under these circumstances, the court concluded that the admission of the text messages was an abuse of the trial court’s discretion.   

With Koch, the Pennsylvania Superior Court has made clear that an individual’s mere association with an e-mail account or cell phone number is an insufficient evidentiary basis for admission of a text message, e-mail, or instant message. A party seeking to introduce electronic communications at trial should be prepared to produce circumstantial evidence that corroborates the identity of the supposed sender. Koch provides some guidance as to what that circumstantial evidence might be: testimony from the sender or recipients, or contextual clues within the message itself. Merely identifying the phone or account from which the message came, however, is not enough.

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A corporate defendant discovers that it will be subject to litigation, yet it actively destroys probative, relevant evidence. Many of us have read, or heard of, opinions where judges have punished a spoliating-defendant by issuing sanctions anywhere from an adverse inference instruction to an entry of default judgment. In recent years, however, it is not only the client that has felt the weight of the responsibility in discovery matters. Starting with Zublake v. UBS Warburg (“Zublake V”), 229 F.R.D. 422 (S.D.N.Y. 2004), courts all over the country have emphasized the duty placed on counsel—both in-house and outside—to ensure that clients comply with their discovery obligations.

Many courts have quoted Zubulake V’s famous line, stating that counsel “must take affirmative steps to monitor compliance so that all sources of discoverable information are identified and searched.” In Qualcomm Inc. v. Broadcom Corp., 05-cv-1958, 2008 U.S. Dist. LEXIS 911 (S.D. Ca., Jan. 7, 2008), for example, the Southern District of California found Qualcomm’s counsel responsible for a “monumental discovery violation” because counsel “did not conduct a reasonable inquiry into the adequacy of Qualcomm’s document search and production.”

This responsibility is not restricted to outside counsel. In Danis v. USN Communications, Inc., No. 98 C 7482, 2000 U.S. Dist. LEXIS 16900 (N.D. Ill. Oct. 23, 2000), the court recognized that in-house counsel did not establish any meaningful document retention program. In-house counsel failed to: 1) give notice to employees to preserve documents; 2) provide criteria as to what should and should not be saved; 3) review any documents that were being thrown away; and 4) review existing practices related to document retention.

Although both in-house and outside counsel can be, and have been, sanctioned for failing to adequately monitor their clients’ compliance with discovery obligations, the following are some steps that can be taken to avoid this result:

• Be proactive. Identify the triggering events that give rise to the duty to preserve. Once that obligation is triggered, issue a timely and comprehensive litigation hold.

• Communicate effectively and often. Do not assume that employees understand what the litigation entails, what their obligations are under the litigation hold, or what documents may be relevant to the litigation.

• Identify and interview key employees. Focus on employees who are likely to have relevant information to: educate them as to the case; learn about, and preserve, relevant information; and ensure compliance with your litigation hold.

• Contact opposing counsel. Explain your process for collecting relevant information to opposing counsel. If the other side has any issues with your process, it is better to resolve these sooner rather than later.

• Communicate frequently. Do not assume that once you issue a litigation hold, your obligations are fulfilled. Do frequently follow-up to ensure that all employees are preserving potentially relevant documents and data.

• Consider the Court’s involvement. One of the clearest ways to ensure that your clients’ discovery obligations, and yours, are fulfilled is to ask the court to set specific standards with respect to the scope and duration of preservation and how data will be reviewed and produced. Being willing to seek court intervention early on will educate the court as to the volume of information and the cost involved and may lead the court to set limits on ongoing preservation and document production.

The responsibility for compliance with the rules with respect to discovery is shared between the client and their counsel. In-house and outside counsel and the various custodians of potentially relevant information need to work as a team and keep the lines of communication open to ensure that their obligations are fulfilled. This allows all involved to comply with their discovery obligations and to identify key documents—favorable and unfavorable—early on and develop their litigation strategy accordingly.
 

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The duty to preserve electronic evidence is triggered once a party “reasonably anticipates” litigation. Silvestri v. GMC, 271 F.3d 583, 591 (4th Cir. 2001);  Pension Committee of the Univ. of Montreal Pension Plan v. Banc of Am. Securities, LLC, 685 F. Supp. 2d 456, 466 (S.D.N.Y. 2010). At that point, parties have an obligation to suspend their routine document retention and destruction policies and implement a “litigation hold” to safeguard all relevant evidence.  The United States Court of Appeals for the Federal Circuit recently reaffirmed the “reasonably foreseeable” standard in Micron Tech., Inc. v. Rambus, Inc., No. 09-1263, 2011 WL 1815975 (Fed. Cir. May 13, 2011). The Court of Appeals explained that the standard is an objective one, “asking not whether the party in fact reasonably foresaw litigation, but whether a reasonable party in the same factual circumstances would have reasonably foreseen litigation.” Id. at *6.  Significantly, the Court in Micron rejected the argument that “litigation be ‘imminent, or probable without significant contingencies’” in order to trigger the duty to preserve. Id. According to the Court, this argument is based on “an overly generous reading of several cases” and is at odds with the flexible reasonably foreseeable standard.  Id. 

The “reasonable anticipation” principle is now well-established but not easily applied as it is necessarily shaped by the factual nuances of the parties’ dispute. Thus, although it is easy to conclude that a defendant has a duty to preserve electronic evidence once it is served with a summons and complaint, the duty to preserve is often triggered in the pre-litigation stage. This is because the duty to preserve is triggered once the defendant is aware of a credible threat of litigation, which is often before a complaint is filed. Determining the date that the party knew or should have known that litigation is reasonably foreseeable is often a subject of dispute. Viramontes v. U.S. Bancorp, No. 10-761, 2011 WL 291077 (N.D. Ill. Jan. 27, 2011).

Some guiding principles, however, are clear. For large organizations, it is clear that more than one or two employees must reasonably anticipate litigation in order to trigger the duty. Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 217 (S.D.N.Y. 2003). Thus, in Toussie v. County of Suffolk, No. 01-6716, 2007 U.S. Dist. LEXIS 93988 (E.D.N.Y. Dec. 21, 2007), the Court reasoned that the duty to preserve electronic evidence did not arise until the complaint was filed. The Court reasoned that, although a “handful” of employees expected the plaintiffs’ lawsuit, “there was no evidence to suggest that a substantial number of key personnel anticipated litigation prior” to such time. In Viramontes, the fact that the plaintiff’s supervisor suspected that the plaintiff might sue, based on a pre-litigation letter written by the plaintiff complaining about the supervisor’s allegedly rude behavior, was not enough to find that the defendant-company should have reasonably anticipated future employment discrimination litigation. 2011 WL 291077 at *4. The court reasoned that the letter did not assert that the plaintiff might bring employment discrimination claims and, in fact, it suggested a “non-litigious resolution” to the plaintiff’s complaints regarding her supervisor’s behavior. Id. Furthermore, the plaintiff’s claims under the Americans with Disabilities Act and the Family and Medical Leave Act were not filed until ten months later. 

The indications that litigation may be forthcoming must be more than “vague” statements and the “mere existence of a dispute does not necessarily mean that parties should reasonably anticipate litigation[.]” Goodman v. Praxair Servs., 632 F. Supp. 2d 494, 510 (D. Md. 2009).  Thus, a demand letter may be a sufficient warning that litigation is on the horizon and a letter advising that an attorney has been retained will certainly trigger the duty to preserve. Id. at 511. Conversely, letters written in the midst of the parties’ dispute do not necessarily trigger the duty. In Cache La Pourdre Feeds, LLC v. Land O’Lakes Farmland Feed, LLC, 244 F.R.D. 614, 622 (D. Colo. 2007), a letter stating that its purpose was to put the defendant on notice of the plaintiff’s trademark rights and “determine whether this situation can be resolved without litigation” did not trigger a duty to preserve. These cases demonstrate that the determination of the trigger date on the duty to preserve is a fact-intensive inquiry.

Also of note is the inter-relationship between the timing of the duty to preserve and application of the work product privilege. In Siani v. State Univ. of New York at Farmingdale, No 09-407, 2010 WL 3170664 (E.D.N.Y. Aug. 10, 2010), for example, the plaintiff argued the defendant had a duty to preserve evidence a full year prior to the filing of the complaint because the defendant retained a law firm at that point to represent it in connection with the plaintiff’s allegations of ongoing discrimination. The defendant was hard-pressed to argue to the contrary given that it had marked documents as protected by the work-product privilege around that same time. Id. at *5. The Court reasoned that the “commonsense conclusion” dictated that if “litigation was reasonably foreseeable for one purpose in January 2008, it was reasonably foreseeable for all purposes.” Id. 

In conclusion, whether and when a party reasonably anticipates litigation, thereby, triggering the duty to preserve electronic evidence depends on many factors, including but not limited to, who within the defendant organization anticipates the litigation, the clarity of the threat, and when privileged documents are created and labeled as such. A reasoned evaluation of all factors is needed and the organization is under a duty to re-evaluate should new information present itself.

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Although the imposition of sanctions for misconduct involving electronic discovery continues to gain momentum, it is still rare that courts turn to the ultimate sanction: the dismissal of a lawsuit. One plaintiff in an Illinois tort case left the court with little choice. In Peal v. Lee, et al., 2010 Ill. App. LEXIS 760 (Ill. App. Ct. 1st Dist. July 30, 2010), the appellate court affirmed the dismissal of a lawsuit due to the plaintiff having intentionally destroyed over 20,000 computer files the day before the defendants’ expert was to inspect the computer.

The plaintiff ice skating instructor sued his employer and others for, among other things, defamation and intentional infliction of emotional distress. While the Complaint alleged that the tortious conduct occurred in 2005, the defendants were in possession of letters that the plaintiff had submitted to the defendants in 2004 complaining of the same conduct. As a result, the defendants moved to dismiss under the statute of limitations, but the court refused to do so because the plaintiff denied authoring those documents.

Fast forward to discovery: The defendants sought to obtain evidence confirming that the plaintiff had written those 2004 letters. After the plaintiff violated a court order requiring that he produce his computer, the court again ordered that the computer be produced by April 10, 2009. The defendants’ forensic expert would later uncover that, on April 9, 2009, the plaintiff used four different data “wiping” programs to permanently delete data from the hard drive, and that before that date, the plaintiff had used three other such programs. This, notwithstanding that his attorney had sent him defense counsel’s electronic discovery preservation letter.

The defendants wisely moved to dismiss the case because of spoliation. To say the least, the trial court was not humored by the plaintiff’s explanation that he had downloaded “cleaning programs” to remove viruses on his computer. After an evidentiary hearing, the court dismissed the case with prejudice. The appellate court found “no evidence” showing that the trial court abused its discretion in dismissing the case. The court’s disdain for the plaintiff’s misconduct was evident, and perhaps best reflected in its colorful description of plaintiff’s arguments: “completely disingenuous,” “nervy,” “hollow,” “patently untruthful,” and “pure pettifoggery.” The plaintiff claimed he did not act in bad faith; the court responded that the plaintiff’s conduct is “the personification of bad faith.”

Few can be surprised by the trial court’s dismissal and the appellate court’s biting affirmance given the plaintiff’s shocking conduct. Still, this case demonstrates that courts can and will resort to the sanction of all sanctions when a party takes such nefarious steps to thwart the discovery process and more generally to undermine the integrity of the judicial system.

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