To Gatto from Zubulake: 2 Thumbs-up for Better Information Governance/Anti-Spoliation.

SPOLIATION PARLAY:

The Virginia wrongful death litigation of Lester v. Allied Concrete, in which cost sanctions[1] were awarded for spoliation of online evidence,[2] has a new compatriot in the New Jersey case of Gatto v. United Airlines.[3]  Counsel should be mindful when advising clients with regard to electronic evidence, and Judges are taking note and increasingly ready to issue both adverse inference “spoliation instructions” along with steep monetary sanctions for spoliation of evidence due to a failure of Information Governance generally, and of document retention practices, specifically; especially in that exponentially expanding category of Electronically Stored Information (ESI).

One member of the Gartner Group has defined Information Governance, as “[…] the specification of decision rights and an accountability framework to encourage desirable behavior in the valuation, creation, storage, use, archival and deletion of information.  It includes the processes, roles, standards and metrics that ensure the effective and efficient use of information in enabling an organization to achieve its goals”.[4]

Focusing on the last 7 words of this definition “enabling an organization to achieve its goals”, winning the case should not come at the expense of sanctions that lead to a lost case, that wipe-out the award from a victory, or that leave the winner of a pyrrhic victory in the negative after paying a sanctions award to the losing but smiling party.  In at least one of the above cases of Lester and Gatto, Counsel had apparently advised the client to “clean-up” their Facebook, or something like that.  It is vitally important that Counsel get to grips and up to date with the expanding offerings of online social media tools, and their impacts on the litigation landscape, the document retention matrix, the scope of Professional Responsibility, and the cost of sanctions for spoliation and failures to produce.

“Spoliation is the destruction or significant alteration of evidence, or the failure to preserve property for another’s use as evidence in pending or reasonably foreseeable litigation”.[5] [emphasis added].

THE STANDARDS, TODAY:

As shown in Mosaid,[6] Zubulake,[7] and Goodyear,[8] Not all Judges and Magistrate Judges, will see mere adverse inference instructions, which allow the errant side to still try their luck, enough of a deterrent.[9]  Indeed, with a January 15, 2010 opinion entitled Zubulake Revisited: Six Years Later,[10] Judge Scheindlin clarified her thoughts on Information Governance and Discovery (e-Discovery) of Electronically Stored Information (ESI) by providing several solid, useful, bright line rules distinguishing between ESI lapses as negligence, willfulness, and gross negligence.

“[…], it is well established that negligence involves unreasonable conduct in that it creates a risk of harm to others, but willfulness involves intentional or reckless conduct that is so unreasonable that harm is highly likely to occur.”[11]

“Gross negligence has been described as a failure to exercise even that care which a careless person would use”.[12]

In addition to her analysis, Judge Scheindlin issues a clear caveat as follows “[t]hese examples are not meant as a definitive list.  Each case will turn on its own facts and the varieties of efforts and failures is infinite”.[13]  However, applying the above standards to specific steps of the litigation process, she continues in what I here condense and present as a handy cheat-sheet.

1. Preservation of Relevant Information.

“A failure to preserve evidence resulting in the loss or destruction of relevant information is surely negligent, and, depending on the circumstances, may be grossly negligent or willful”.[14]

2. Intentional Hampering Acts (*author’s terminology).

“[…] the intentional destruction of relevant records, either paper or electronic, after the duty to preserve has attached, is willful”.[15]

3. Issuance of a Litigation Hold.

“Possibly after October, 2003, when Zubulake IV was issued, and definitely after July, 2004, when the final relevant Zubulake opinion was issued, the failure to issue a written litigation hold constitutes gross negligence because that failure is likely to result in the destruction of relevant information”.[16]

4. Collection and Review.

“[…] depending on the extent of the failure to collect evidence, or the sloppiness of the review, the resulting loss or destruction of evidence is surely negligent, and, depending on the circumstances may be grossly negligent or willful.  For example, the failure to collect records – either paper or electronic – from key players constitutes gross negligence or willfulness as does the destruction of email or certain backup tapes after the duty to preserve has attached”.[17]

5. Litigation Dragnets (*author’s terminology).

“By contrast, the failure to obtain records from all employees (some of whom may have had only a passing encounter with the issue in the litigation), as opposed to key players, likely constitutes negligence as opposed to a higher degree of culpability”.[18]

6. Additional Preservation Measures (*author’s terminology).

“[…] the failure to take all appropriate measures to preserve ESI likely falls in the negligence category”.[19]

7. Assessing the Relevance and Prejudice of Spoliated Evidence (*author’s terminology).

“[…] for more severe sanctions – such as dismissal, preclusion, or the imposition of an adverse inference – the court must consider, in addition to the conduct of the spoliating party, whether any missing evidence was relevant and whether the innocent party has suffered prejudice as a result of the loss of evidence”.[20]

8. Presumptions of Relevance; Jury Instructions (*author’s terminology; emphasis added).

“Where a party destroys evidence in bad faith, that bad faith alone is sufficient circumstantial evidence from which a reasonable fact finder could conclude that the missing evidence was unfavourable to that party”.[21]

In the extreme, willful or bad faith conduct can bring jury instructions “that certain facts are deemed admitted and must be accepted as true”; in the mid-range, willful or reckless conduct may bring jury instructions imposing a “mandatory but rebuttable” presumption.[22]

At the baseline-level, an instruction may issue that “permits (but does not require) a jury to presume that the lost evidence is both relevant and favorable to the innocent party.  If it makes this presumption, the spoliating party’s rebuttal evidence must then be considered by the jury, which must then decide whether to draw an adverse inference against the spoliating party”.[23]

9. Fitting the Sanction to the Conduct/Misconduct (*author’s terminology).

“It is well accepted that the court should always impose the least harsh sanction that can provide an adequate remedy.  The choices include – from least harsh to most harsh – further discovery, cost-shifting, fines, special jury instructions, preclusion, and the entry of default judgment or dismissal (terminating sanctions).  The selection of the appropriate remedy is a delicate matter requiring a great deal of time and attention by a court.”[24]

10. When Terminating Sanctions are Appropriate (*author’s terminology).

“However, a terminating sanction is justified in only the most egregious cases, such as where a party has engaged in perjury, tampering with evidence, or intentionally destroying evidence by burning, shredding, or wiping out computer hard drives”.[25]

THE TAKEAWAY:

♦Actively backup (all ESI systems of the client, of Counsel, and of the agents for each);

♦Be comprehensive (in coverage scope: in-house systems, mobiles, external providers);

♦Communicate duties (in advance and ongoing: Counsel to client; client to Counsel);

♦Diligently enforce (client for Counsel oversight; Counsel to confirm compliance);

♦Educate fully your employees and agents (client-side, Counsel-side, and outside);

♦Fix snafus, logjams, and communications failures as fast and fully as possible;

♦Get professionals involved in your Information Governance plans very early.

ESI is here to stay, and expanding in depth and breadth at an extreme pace; e-Discovery has caught-up, and is keeping up – at least in the Second Circuit and the Districts it comprises, and also in the United States Court of Appeals for the Federal Circuit.[26]  Counsel should follow-suit!

************************************************************************

Author:

Ekundayo George is a sociologist and a lawyer, with over a decade of legal experience including business law and counseling (business formation, outsourcing, commercial leasing, healthcare privacy, Cloud applications, social media, and Cybersecurity); diverse litigation, as well as ADR; and regulatory practice (planning and zoning, environmental controls, landlord and tenant, and GRC – governance, risk, and compliance investigations, audits, and counseling) in both Canada and the United States.  He is licensed to practice law in Ontario, Canada, as well as in New York, New Jersey, and Washington, D.C., in the United States of America (U.S.A.). Please See: http://www.ogalaws.com

He is an experienced strategic and management consultant; sourcing, managing, and delivering on high stakes, strategic projects with multiple stakeholders and multidisciplinary teams.  Please See: http://www.simprime-ca.com

Backed by courses in management, organizational behaviour, and micro-organizational behaviour, Mr. George is also a writer, tweeter and blogger (as time permits), and a published author in Environmental Law and Policy (National Security aspects).

Hyperlinks to external sites are provided to readers of this blog as a courtesy and convenience, only, and no warranty is made or responsibility assumed by either or both of George Law Offices and Strategic IMPRIME Consulting & Advisory, Inc. (“S’imprime-ça”), in whole or in part for their content, or their accuracy, or their availability.

This article does not constitute legal advice or create any lawyer-client relationship.

---

[1] Lester v. Allied Concrete, (Case No. CL08-150, and Case No. CL09-223), Final Order dated October 21, 2011 (Va. Cir. Ct. 2011). Online: >http://www.scribd.com/doc/78439131/Lester-v-Allied-Concrete-CL08-150-102111-Final-Order< The amount of the final sanction was a fees award of $722,000.00.

[2] Lester v. Allied Concrete, (Case No. CL08-150, and Case No. CL09-223), Ruling dated September 1, 2011 (Va. Cir. Ct. 2011).  This ruling granted inter alia, a motion for sanctions (the party deleted Facebook photos then the account, and later swore under oath to never having done so, with their legal counsel further attesting that the client did not own a Facebook account); all after the other side had gotten wind of the account and requested production.  Online: >http://valawyersweekly.com/vlwblog/files/2011/09/Lester-Hogshire-order.pdf<

[3] Gatto v. United Air Lines, Inc., No. 10-cv-1090, 2013 U.S. Dist. LEXIS 41909, slip op. at 11 (D.N.J. Mar. 25, 2013).  Ruling dated March 25, 2013.  Once again, a Facebook account had been improperly deleted after a production request and Order.  The Judge, here, (stating at note 1 on page 5 of the Judgement that there was no difference to him between mere “account deactivation” and “permanent account deletion” with regard to spoliation: “[…]as either scenario involves the withholding or destruction of evidence [.]”), ruled that an adverse inference instruction to the jury would suffice, and declined to impose a monetary sanction.  Online: >http://www.technologylawsource.com/uploads/file/GattovUnitedAirLinesCaseNo10-cv-1090-DNJ.pdf<

[4] Debra Logan, Research VP, Gartner Research.  What is information Governance?  And Why is it So Hard? Published on blogs.gartner.com, January 11, 2010.  Online: >http://blogs.gartner.com/debra_logan/2010/01/11/what-is-information-governance-and-why-is-it-so-hard/<

[5] This definition was laid down by United States Circuit Judge Joseph M. McLaughlin, writing the February 12, 1999 judgement of a unanimous 2^nd Circuit panel in West v. Goodyear Tire & Rubber Co., 167 F3d 776, 779 (1999).  There, the 2^nd Circuit remanded a case on finding that outright dismissal of Plaintiff’s negligence action for spoliation (disposing of the allegedly malfunctioning device) was too draconian a sanction.  It was followed by the Southern District of New York with United States District Judge Shira A. Scheindlin’s July 20, 2004 ruling in Zubulake v. UBS Warburg LLC, 229 F.R.D. 422 (2004) – sometimes also styled Zubulake V – an employment discrimination case involving spoliation by failure to preserve and produce backup email tapes, that was itself a precedent in the guidance the Judge issued for future electronic discovery practices; as well as by the New Jersey District Court with the December 7, 2004 ruling of United States District Judge William J. Martini, in Mosaid Technologies v. Samsung Electronics, 348 F.Supp.2d 332, 335 (D.N.J. 2004), also involving the spoliation of electronic evidence where the failure to specifically mention “emails” within/alongside a request for the production of “documents”, should not have permitted the non-production and willful destruction of those emails.

[6] Id. Online: >http://www.clearwellsystems.com/e-discovery-blog/wp-content/uploads/2012/07/Mosaid-Technologies-Inc-v-Samsung-Electronics-Co-Ltd.pdf<

[7] Supra note 5.  Online :>http://billdanielslaw.com/Forum/wp-content/uploads/2010/07/Zubulake-v-UBS-Warburg-LLC1.pdf<

[8] Supra note 5.  Online: >https://bulk.resource.org/courts.gov/c/F3/167/167.F3d.776.98-7324.html<

[9] See contra, Gatto, at note 3, supra, and accompanying text.

[10] Zubulake Revisited: Six Years Later (January 15, 2010 Amended Opinion and Order of United States District Judge Shira A. Scheindlin, in) Pension Committee of the University of Montreal Pension Plan v. Banc of America Securities, LLC, No. 05 Civ. 9016 (SAS), 2010 WL 93124 (S.D.N.Y. Jan. 11, 2010).  Online: >http://ralphlosey.files.wordpress.com/2010/01/05cv9016-january-15-2010-amended-opinion.pdf<

[11] Id. at page 7 of the 88 page Amended Opinion and Order.

[12] Id. at page 8.

[13] Id. at page 10.

[14] Id. at pages 8-9.

[15] Id. at page 9.

[16] Id. at page 9.

[17] Id. at page 10.

[18] Id. at page 10.

[19] Id. at page 10.

[20] Id. at page 14.

[21] Id. at page 15.

[22] Id. at pages 21-22.

[23] Id. at page 22.

[24] Id. at pages 19-20.

[25] Id. at pages 20-21.

[26] See Ekundayo George.  GRC: Governance (Part 2).  Published on ogalaws.wordpress.com, October 29, 2012, at note 12 and accompanying text.  Online: >https://ogalaws.wordpress.com/category/regulatory-and-government-affairs/governance-risk-compliance-grc-and-sanctions/<  Model e-Discovery Order for patent litigation, as presented to the Eastern District of Texas Judicial Conference on September 27, 2011, by the Honourable Randall R. Rader, Chief Judge of the United States Court of Appeals for the Federal Circuit.