May’s Notable Cases and Events in E-Discovery

1. In Hsueh v. New York State Department of Financial Services, 2017 WL 1194706 (S.D.N.Y. Mar. 31, 2017), Judge Paul A. Crotty held that the court’s inherent power to control litigation rather than Fed. R. Civ. P. 37(e) was the proper basis for granting a motion for spoliation sanctions where the plaintiff intentionally deleted relevant ESI.

In this employment discrimination action, plaintiff admitted at her deposition that she may have recorded conversations with a human resources employee who had investigated plaintiff’s allegations of sexual harassment against another employee. Id. at *2. Plaintiff explained that she thought she had recorded one meeting with human resources but deleted the recording because the audio quality was poor. Id.

After the deposition, defendants filed a motion for spoliation sanctions based on the deleted recording. Id. On the day that plaintiff’s opposition to the motion was due, plaintiff’s counsel submitted a letter to the court advising that plaintiff had recovered the recording with the help of her husband. Id.at *3. Defendants requested that the court reopen discovery and require plaintiff and her husband to sit for depositions regarding the recording. Id. Judge Crotty granted the request and reserved the right to impose attorney’s fees and costs in connection with the reopened discovery and spoliation sanctions.

Following discovery and the additional depositions, defendants renewed their motion for spoliation sanctions. Judge Crotty first considered whether the sanctions motion was governed by Rule 37(e) or by the court’s inherent power to control litigation. Id. at *4. Rule 37(e) provides that the court may impose spoliation sanctions if ESI “that should have been preserved in the anticipation or conduct of litigation is lost because a party failed to take reasonable steps to preserve it, and it cannot be restored or replaced through additional discovery.” Judge Crotty stated that while plaintiff’s audio recordings constituted ESI, Rule 37(e) did not apply, as it is concerned with a party’s failure to take reasonable steps to preserve ESI and does not apply “to situations where, as here, a party intentionally deleted the recording.” Hsueh, 2017 WL 1194706, at *4.

Invoking the court’s “inherent power to control litigation in imposing spoliation sanctions,” Judge Crotty set forth the applicable sanctions standard: “A party seeking an adverse inference instruction based on the destruction of evidence must establish (1) that the party having control over the evidence had an obligation to preserve it at the time it was destroyed; (2) that the records were destroyed with a culpable state of mind; and (3) that the destroyed evidence was relevant to the party’s claim or defense such that a reasonable trier of fact could find that it would support that claim or defense.” (quoting Chin v. Port Auth. of N.Y. & N.J., 685 F.3d 135, 162 (2d Cir. 2012).

Applying that standard, Judge Crotty ruled that sanctions were appropriate in this case. Plaintiff argued that sanctions were unnecessary because she had managed to restore the recording, but Judge Crotty found this argument unpersuasive because there was reason to believe that the recording plaintiff restored was an incomplete version of the original recording. Id. at *5. Plaintiff also claimed that she did not act with the intent to deprive the defendants of the recording and had deleted the recording because it was inaudible and she was “nervous” about the legality of the recording. Judge Crotty noted that the “intent to deprive” requirement comes from Rule 37(e) and is inapplicable to the instant motion. In any event, the court was satisfied that plaintiff had acted with bad faith and intended to deprive defendants of the use of the recording. Judge Crotty found plaintiff’s explanation for why she deleted the recording unconvincing because the restored recording was audible, plaintiff failed to mention any legal concerns related to the recording until her second deposition and plaintiff initially did not admit to having made any recordings during her first deposition. Id.

Finally, Judge Crotty concluded that an adverse inference instruction was the appropriate remedy because “[plaintiff] was under an obligation to preserve the recording; the recording was undoubtedly highly relevant to [plaintiff’s] claim against [defendants]; and [plaintiff] acted in bad faith, and with an intent to deprive [defendants] of the use of the recording, in deleting it.” Id. at *6.

2. In Morgan Hill Concerned Parents Assoc. v. California Dept. Educ., 2017 WL 445722 (E.D. Cal. Feb. 2, 2017), Magistrate Judge Allison Claire granted plaintiffs’ motion to compel production in native format with metadata, including the reproduction of information already produced, where defendant failed to follow the protocol set forth in Fed. R. Civ. P. 34(b) and unilaterally produced in “load file” format.

In this case, two associations of parents of children with disabilities alleged that the California Department of Education violated the Individuals with Disabilities Education Improvement Act through its allegedly systemic failure to provide a free appropriate public education to children with disabilities. Id. at *1. Plaintiffs moved to compel defendant to produce emails in native format with all metadata attached. In response, defendant moved for a protective order against the production of ESI in native format, arguing that the documents had already been produced in “the industry standard load format” and that “producing documents in their native format would infringe on the deliberative process, attorney-client and attorney work product privileges.” Defendant sought a protective order, stating that “the burden of producing the requested metadata outweighs any probative value.” Id.

Plaintiffs’ first requests for production specified that ESI be produced “in their native electronic format together with all metadata and other information associated with each document in its native electronic format.” Id. at *2. Defendant objected to almost every request on the grounds of burden, relevance and privilege but did not specifically object to the request for native production or propose an alternative format. Defendant produced responsive documents in a “load file” format. Three years later, defendant finally made a specific objection to the requested format and argued that it had already produced ESI in a format approved by the special master in the case and that a party may not demand production in one format versus another “just because one would allegedly ease a party’s review process.” Id. at *3.

Plaintiffs argued that defendant failed to follow the protocol for objecting to a requested format of production under Rule 34 and that its failure to do so, or to propose an alternative, waived any objections to plaintiffs’ request for native production. Defendant countered that it had timely objected and was “entitled” to disregard plaintiffs’ request because it had produced ESI in a “reasonably usable” format that did not degrade its searchability. Id.

The magistrate judge first noted that Fed. R. Civ. P. 34(b) states that the requester of information may specify the form or forms in which ESI is to be produced and, in the absence of any timely format objection, the responding party waives the objection and must produce the requested ESI in the form requested. Id. at *4. Relying on this provision, Magistrate Judge Claire rejected defendant’s argument, noting that the defendant had failed to timely object to the request for native production or to propose an alternative format and instead had produced documents in a format of its choosing. Id. at *6. She also rejected defendant’s claim that a party cannot demand production in a particular format just because it would ease the review process, observing that this argument was “directly contrary to the governing Rules” and that ease of review was “precisely why the requesting party would specify the format.” The magistrate judge stated that defendant’s issue with native production being unduly burdensome was a problem of its own making and that the defendant could have avoided such burden if it had complied with the rules. Id. at *7. With regard to defendant’s argument disputing the relevance of metadata, the magistrate judge indicated it was not necessary to address such relevance arguments as the district court had already determined that defendant should produce ESI in native format. Id. at *8.

Finally, Magistrate Judge Claire rejected defendant’s argument that producing in native format would infringe on the deliberative process, attorney-client privilege and the work product protection. Id. at *8-*9. She found that defendant’s privilege logs failed to provide the information necessary to review the privilege claim and gave the defendant 30 days to either produce the documents or provide an appropriate privilege log. Id. at *9-*12.

3. In Diesel Power Source v. Crazy Carl’s Turbo, 2017 WL 721995 (D. Utah Feb. 23, 2017), United States Magistrate Judge Brooke C. Wells denied plaintiff’s motion for sanctions, finding that the plaintiff had failed to sufficiently narrow its search terms after it offered 72 spelling variations on the “five detailed search terms” ordered by the court and criticized both parties for their lack of cooperation in discovery.

In this matter, plaintiff sought sanctions against the defendants for their alleged failure to comply with a court order compelling them to produce certain items. Id. at *2. Following a December 2016 hearing, it became apparent that some requested items were not produced — in particular, federal tax returns, bank statements and emails found based on certain search terms. In January 2017, the magistrate judge issued an order taking plaintiff’s motion for sanctions under advisement but noted that the email search terms submitted by the plaintiffs were “overly generic and result in an undue burden placed upon Defendants.” The magistrate judge therefore ordered the plaintiffs to provide “five detailed search terms that must be more detailed than those previously submitted” and stated that resolution of plaintiff’s motion for sanctions would depend in part on defendants’ compliance with producing the requested discovery. Id.

Following the issuance of the order, the plaintiff provided the defendants with five search terms but also 72 “spelling variations” on these search terms for a total of 77 search terms. In light of the number of search terms, the defendants filed their own motion for order to show cause and for sanctions, claiming that the plaintiff was on a fishing expedition. In response, the plaintiff argued that it was easy to search using the 72 “spelling variations” if quotations were used.

In considering the motions, Magistrate Judge Wells stated that both parties were at fault. First, she found that plaintiff failed to sufficiently narrow its search terms. The magistrate judge specifically took issue with plaintiff’s action in providing five search terms with 72 additional “spelling variations,” stating “[s]uch an expansion is not within the spirit and intent of the court’s prior orders, its comments during hearings or within the principles of proportionality found in the discovery rules.” As a result, the magistrate judge ruled that plaintiff was permitted to use the five search terms it has provided, along with three spelling variations for each of the five search terms, for a total of 20 terms. Id.

As for the defendants’ motion, the magistrate judge stated that it not only misstated the record but also failed to comply with the local discovery rules by failing to provide any certification that the parties made reasonable efforts to reach agreement on the disputed matters. Id. at *3. She also noted that defendants’ motion was an attempt to draw the court’s attention away from defendants’ own malfeasance, as there was “no excuse for Defendants’ failure to provide the federal tax returns and bank statements.” Id.

As a final comment, Magistrate Judge Wells told the parties to stop stonewalling: “[G]oing forward there needs to be a renewed spirit of cooperation otherwise the court will use its inherent powers to sanction the attorneys in this case for the continued stonewalling that has been a reoccurring theme in this litigation.” Id.