This Sidley Update addresses the following recent developments and court decisions involving e-discovery issues:
- a decision from the U.S. Court of Appeals for the Second Circuit affirming a district court’s denial of sanctions for alleged spoliation of electronically stored information (ESI) and holding that the 2015 amendments to Federal Rule of Civil Procedure 37(e) abrogated the lesser “culpable state of mind” standard for proving intent in connection with lost ESI
- an order from the U.S. District Court for the Southern District of New York finding that the plaintiff spoliated relevant WhatsApp messages but deferring a decision on the appropriate sanctions under Rule 37(e)(1) or (e)(2) pending an evaluation of the parties’ testimony at trial regarding the plaintiff’s intent
- a ruling from the U.S. District Court for the District of Vermont compelling the production of metadata
- an opinion from the U.S. District Court for the Southern District of New York denying a motion to compel the production of computer source code on proportionality grounds but requiring the production of alternative, less burdensome discovery in its place
In this action alleging excessive force under 42 U.S.C. § 1983 against the City of Yonkers, the City of Yonkers Police Department, and various individual police officers, the jury returned a verdict in favor of the officers, and Plaintiff appealed. Id. at *1. On appeal, Plaintiff argued that the magistrate judge overseeing his jury trial erred in denying his request for an adverse inference instruction based on a missing video of him being tased when he was arrested.
The trial record reflected that Plaintiff was tased twice during his arrest and that each deployment of the taser should have generated a video. Id. at *2. Video of the first deployment of the taser “had somehow been overwritten” according to one witness, and Plaintiff’s girlfriend at the time of trial testified that she saw one of the arresting officers holding a USB drive and heard him say: “It shows everything that we did and nothing that he did.”
Based on the alleged spoliation of the first taser video, Plaintiff asked the district court to instruct the jury under Rule 37(e)(2) that it could draw an adverse inference against the arresting officers, but the district court declined to do so because the evidence before it was insufficient to establish that any defendant “acted with an intent to deprive [Plaintiff] of the use of the video.” The district court had also found that there was no “clear evidence” of a “cover up” or that the first taser video ever existed in the first place, “speculating that perhaps the first taser deployment did not trigger a video recording or that the first and second taser deployments happened within the same eight-second period captured by the [taser’s] log.” The district court advised that Plaintiff’s counsel could address the absence of the first video in closing arguments.
Following the trial and jury verdict in favor of Defendants, Plaintiff moved to set aside the verdict. The district court denied this motion, and Plaintiff appealed. Id. at *3.
Judge Walker started his analysis of the spoliation issue with a discussion regarding the state of mind required for sanctions under Rule 37(e)(2). He explained that before 2015, a party seeking an adverse inference instruction based on lost evidence had to establish that a party obligated to preserve evidence that failed to do so acted with “a culpable state of mind,” which could include negligence. He went on to explain that the 2015 amendments to Rule 37 added two subsections addressing spoliation of ESI. Id. at *4. The first subsection allows a court, upon a finding of prejudice to another party arising from the loss of ESI, to order “measures no greater than necessary to cure the prejudice.” Id. (quoting Rule 37(e)(1)). The second subsection enumerates certain sanctions — namely, presuming that the lost information was unfavorable to the spoliating party, giving an adverse inference instruction to the jury, dismissing the action, or entering default judgment — that the court may impose “only upon finding that the party acted with the intent to deprive another party of the information's use in the litigation.” Id. (quoting Rule 37(e)(2)).
Judge Walker noted that the Advisory Committee notes to the 2015 Amendments to Rule 37 explicitly state that subdivision (e)(2) rejected prior case law authorizing adverse inference instructions upon a finding of negligence because, under the rule as amended, “only the intentional loss or destruction of evidence gives rise to an inference that the evidence was unfavorable to the party responsible for that loss or destruction.” Id. (emphasis in original). Judge Walker distinguished case law offered by Plaintiff regarding application of the prior “culpable state of mind” standard, finding that these cases did not address whether the 2015 Amendment abrogated the lesser “culpable state of mind” standard in the context of lost ESI.
Judge Walker held that the 2015 Amendment to Rule 37(e)(2) abrogated the lesser “culpable state of mind” standard for lost ESI and, therefore, “the imposition of a sanction under Rule 37(e)(2) requires a finding of intent to deprive another party of the information’s use in the litigation.” Judge Walker noted that this holding was in accord with the majority of decisions from other circuits and did not call into question the culpable state of mind standard for evaluating the loss of nonelectronic evidence. Id. at *5.
Judge Walker next turned to the burden of proof for determinations under Rule 37(e)(2), stating that the parties disputed whether Rule 37(e)(2)’s requirements must be proven by clear and convincing evidence or by a preponderance of the evidence. He noted that there were “varying approaches taken by district courts within this circuit.”
Judge Walker held that “the preponderance standard is appropriate” because it is the “usual rule in civil cases” and “furthers the goal of uniformity,” and there was no suggestion that the rule intended to impose a heightened burden of proof. He noted that a higher burden of proof was generally reserved for cases where “particularly important individual interests or rights are at stake” such as proceedings to terminate parental rights, involuntary commitment proceedings, or deportation proceedings and that the issuance of an adverse inference instruction, or even the dismissal of an action, “does not invoke interests or rights of the same caliber as those proceedings listed above.”
Judge Walker also explained that a higher burden of proof was unnecessary because the “intent to deprive” standard is “both stringent and specific” and contemplates “not merely the intent to perform an act that destroys ESI but rather the intent to actually deprive another party of evidence.” Id. at *6. He noted that “[p]roving such specific intent is not easy and frequently depends upon circumstantial evidence.”
Judge Walker next turned to the question of whether a jury must find facts and make credibility determinations for a Rule 37(e)(2) ruling, holding that there was no such requirement. He explained that Rule 37(e) “plainly contemplates that findings relevant to the imposition of sanctions” be made by courts and that such factual findings affecting the admission of evidence as a sanction is “routine.” He concluded that “although a district court may reserve for the jury questions of fact related to adverse inference instructions under Rule 37(e)(2), it is also proper for a district court to make those factual determinations” itself. Id. at *7.
Applying these standards to the Plaintiff’s appeal, Judge Walker held that the district court did not abuse its discretion in denying Plaintiff’s request for an adverse inference instruction that the jury could infer that the purportedly lost taser video was unfavorable to the officer defendants under Rule 37(e)(2). Id. at *7-8. Applying an “abuse of discretion,” standard, he accepted the district court’s factual findings that the evidence was insufficient to establish that any defendant acted with the requisite intent, including that there was “just not enough evidence for [the district court] to be even convinced” that there ever existed a video of the first taser deployment. Judge Walker found that the district court was entitled to make its own credibility determinations in this regard and to discount testimony regarding an officer’s remarks about a USB drive allegedly containing the video. Finally, Judge Walker found no error in the district court’s finding that there was no evidence of a “cover up” to destroy one of the taser videos.
Accordingly, Judge Walker concluded that the district court did not abuse its discretion in denying Plaintiff’s request for an adverse inference instruction under Rule 37(e)(2).
Plaintiff, a mixed martial arts athlete, sued Defendant, a videogame service business, alleging that Defendant failed to pay Plaintiff pursuant to a promotional contract. Id. at *1. Based on asserted breaches of the promotional contract, the parties had exchanged demand letters in April and June of 2022. Plaintiff’s demand letter, sent on April 11, 2022, expressly put Defendant “on notice of potential litigation” and made clear that relevant custodians were required to “take all necessary steps to preserve … communications, documents and [ESI] relevant to the contract.” Plaintiff filed his complaint on July 31, 2023.
During discovery, Plaintiff and his manager testified at their depositions that they deleted all internal WhatsApp communications pertaining to the parties’ business relationship. Plaintiff testified that he “changed numbers and/or devices about twice a year” without “ever bothering to check the WhatsApp website to see how he could save his texts and threads.” Id. at *2. Another custodian “similarly did not attempt to check whether or how to preserve ESI across the five or six devices he switched-out for [P]laintiff since 2022.”
Judge Buchwald explained that WhatsApp was “a main channel for [P]laintiff, his manager, and [Defendant’s] executives to discuss matters relevant to the” parties’ contract. She explained that existing messages discussed the terms and conditions of the contract, payment, conduct, and performance under the contract and Plaintiff’s conduct at various promotional events. These messages “bolster[ed] the inference that the deleted messages would be meaningfully relevant to the substantive issues in this case.”
After Plaintiff raised this issue with the court, Plaintiff was ordered to report on whether the deleted communications could be retrieved. But after investigating the matter, Plaintiff notified the court that the messages could not be recovered. Plaintiff then filed a motion for spoliation sanctions under Rule 37(e).
Judge Buchwald began her analysis under Rule 37(e) by explaining that “[t]he threshold consideration in the spoliation analysis is whether the spoliating party had an obligation to preserve the evidence at the time it was destroyed.” Id. at *3. She concluded that Plaintiff and his manager both had a duty to preserve documents but failed to do so. She stated that the duty to preserve arose “at least as early as April 11, 2022” when Plaintiff’s counsel sent defendant “a textbook demand letter” previewing litigation, expressly directing the parties and relevant nonparties to preserve evidence, describing the scope of the evidence that should be preserved, and outlining the consequences for spoliation. Id. at *3-4.
Judge Buchwald found that the April 11, 2022, demand letter precluded Plaintiff from denying that he had a duty to preserve WhatsApp messages at the time they were lost. She also rejected an argument that Plaintiff’s manager, as a nonparty, had no duty to preserve evidence because “[n]on-parties that control relevant evidence owe the same preservation duties as parties.” Id. at *4. Judge Buchwald concluded that Plaintiff’s manager was “entrusted with overseeing many aspects of [P]laintiff’s daily life” and “therefore had inside access to [P]laintiff” and his dealings with Defendant. She found it “beyond cavil that both [P]laintiff and his manager owed comparable preservation duties at the time of destruction.”
Judge Buchwald next held that notwithstanding their duty to preserve, Plaintiff and his manager “wholly failed to take even the most basic steps to comply with their preservation obligations.” In particular, she noted the “de minimis effort that would have been required to preserve WhatsApp communications across Plaintiff’s numbers and/or devices” by using “WhatsApp’s built-in feature that allows users to change their phone numbers and still retain their chat histories.”
Turning to the issue of whether Defendant was prejudiced by the loss of ESI, Judge Buchwald explained that assessing the prejudicial impact of spoliation requires “an evaluation of the information’s importance in the litigation.” Id. at *5. She concluded that Defendant “easily demonstrates from available evidence that WhatsApp was a main channel for discussing matters directly relevant to the” parties’ contract, and there “is no reason to doubt” that the deleted messages were “similar in kind to the preserved messages and therefore impact the ability of [D]efendant to substantiate its counterclaim and defenses.”
Judge Buchwald next addressed appropriate sanctions under Rule 37(e)(1), noting that Defendant sought (1) preclusion of any testimony by Plaintiff about the deleted messages’ contents, (2) permission to present evidence of [P]laintiff’s spoliation, and (3) fees and costs associated with the spoliation motion. She found the first two sanctions appropriate because Plaintiff had established prejudice as a result of a duty to preserve that was breached. But she declined to grant attorneys’ fees because “Rule 37(e), unlike every other subsection in Rule 37, does not contain a clause that expressly permits the recuperation of attorney’s fees and expenses” and because Defendant had not demonstrated that it undertook “corrective discovery efforts beyond the making of this motion.” Id. at *6.
Judge Buchwald did not decide whether sanctions under Rule 37(e)(2) should be awarded. She noted that such sanctions were available if “the Court finds that the party acted with the intent to deprive another party of the information’s use in the litigation,” which “is the equivalent of bad faith in other spoliation contexts.” But she determined that Plaintiff’s intent and “the propriety of an adverse inference” would have to wait for an evaluation of the parties’ testimony at trial.
Accordingly, Judge Buchwald granted Defendant’s motion and awarded sanctions under Rule 37(e)(1) but not Rule 37(e)(2).
Plaintiff, a former administrative assistant to the director of athletics at Defendant University of Vermont and State Agricultural College, brought this action for copyright infringement related to a university logo called the “Sophcat Design” that she claimed to have created. Id. at *1.
In discovery, Plaintiff requested “[a] copy of each draft or version of the Sophcat Design, including, but not limited to, all works that are substantially similar, derived from, or based on the Sophcat Design.” In response, Defendant produced the Photoshop (PSD) file that Defendant originally received from Plaintiff, but Defendant did not provide any metadata along with the file. As Judge Sessions explained, the underlying metadata consists of imbedded information that describes the document’s history.
Plaintiff moved to compel disclosure of the file’s metadata, claiming that it would reveal the date and time that Defendant received the file. She argued that the Photoshop file downloaded by Defendant also would contain metadata that includes drafts or derivatives of the SophCat design.
Judge Sessions began his analysis by explaining that district courts have broad discretion in deciding motions to compel discovery, but the scope of discovery is generally limited to any “nonprivileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties’ relative access to relevant information, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit.” Id. (quoting Rule 26(b)(1)).
Turning to the issue of metadata, Judge Sessions stated that if the metadata of the photoshop file sent to Defendant contained information about drafts or derivatives of the SophCat design, that information would be “plainly relevant to Plaintiff’s claims with respect to authorship” of the design. He noted that both parties relied on a prior case, Aguilar v. Immigration and Customs Enforcement Div., 255 F.R.D. 350, 353-55 (S.D.N.Y. 2008). But while Aguilar “reflected some resistance to compelling production of metadata, many of the factual complexities in that case, including production of spreadsheets and databases, are not present here.”
Judge Sessions first granted Plaintiff’s motion to compel production of metadata showing the “date and time the PSD file was received” by Defendant. Defendant argued this information was not in dispute and therefore not relevant, but Judge Sessions found that the “burden of such production will be minimal” and ordered Defendant to produce “a screenshot of the date and time the PSD file was received” “or by providing Plaintiff with the exact time date and time of when the PSD file was received.”
With respect to additional metadata, Judge Sessions referred again to Aguilar, where the court had noted that “when, as in this case, the parties did not come to an agreement about metadata data in their initial discovery stipulations, courts tend to deny later requests, often concluding that the metadata is not relevant.” But he explained that if the “ultimate determinant is relevance …, Plaintiff’s desire for all derivative versions of the design appears justified on its face.”
Judge Sessions referred to a “recent consensus that metadata production should be made in the form or forms in which the information is ordinarily maintained or in a reasonably usable form, taking into account the need to produce reasonably accessible metadata that will enable the receiving party to have the same ability to access, search, and display the information as the producing party where appropriate or necessary in light of the nature of the information and the needs of the case.” Id. at *3 (quoting Aguilar and The Sedona Principles: Best Practices Recommendations and Principles for Addressing Electronic Document Production Principle 12 (2d ed.)).
Based on this consensus, Judge Sessions held that Plaintiff was “entitled to access the data file delivered to” Defendant such that she would have “the same ability to access, search, and display the information as the producing party.” Accordingly, Judge Sessions granted Plaintiff’s motion to compel discovery of the requested metadata.
In this action for antitrust violations by Defendants in connection with a joint venture through which Defendant gained confidential access to certain of Plaintiff’s software code, Plaintiff alleged that Defendants illegally incorporated Plaintiff’s code into several of Defendants’ products.
In discovery, Plaintiff requested source code from Defendants to “reveal the cross-compatible nature of Defendants’ products” that would have “allegedly incentivized consumers to buy Defendants’ products and avoid products from competitors like Plaintiff.” Id. at *1. Plaintiff submitted an affidavit from an expert along with its request for the source code, in which the expert asserted that “[t]echnical design documents are not an adequate substitute for the production of source code” because — among other reasons — those documents lack sufficient detail and sometimes fail to include changes implemented into the source code’s final version.
In opposing production of the source code, Defendants argued that “cross-compatibility” was not relevant to Plaintiff’s antitrust claims but could be shown through other discovery. Defendants also argued that it would be burdensome to produce source code because the code would have to be assembled from multiple sources, requiring “dozens of people and countless hours,” and would require significant security measures because the source code “contains sensitive information used in mission-critical settings in governments and major financial institutions around the world.”
In addressing Plaintiff’s request for source code, Magistrate Judge Reznik explained that Plaintiff must prove that Defendants’ source code is “relevant and necessary to the action” in order to compel its disclosure, meaning that Plaintiff must show “a connection between the source code and the claims at issue.” Id. at *2. With respect to necessity, Magistrate Judge Reznik noted that courts weigh competing interests by considering whether production of source code is “proportional to the needs of the case given the sensitivity of the source code, the burden of producing it, and the potential availability of alternate means to obtain the information in question.”
Magistrate Judge Reznik found that Plaintiff sufficiently demonstrated that production of the source code was relevant but failed to show necessity. With respect to relevance, she found that Plaintiff “established a sufficient connection between its antitrust claims and Defendants’ source code” because the source code may contain evidence about the cross-compatibility of Defendants’ products relevant to the issue of whether Defendants developed cross-compatible products to create a barrier of entry that either impeded or foreclosed competition from such rival entities as Plaintiff.
But Magistrate Judge Reznik found that Plaintiff failed to satisfy its burden of showing that “broad production of source code is necessary and proportional to the needs of the case” in light of the sensitivity of source code. Id. at *3. She explained that “source code production is also recognized as incredibly burdensome,” and noted testimony from Defendants’ expert detailing that it would “require dozens of individuals gathering code from many separate repositories to create a copy available for review,” and Defendant would need to “create a secure process for Plaintiff's expert to review it.”
Magistrate Judge Reznik held that an additional reason for rejecting Plaintiff’s request for source code was that “there are alternative, unexplored options available to Plaintiff to gather the information it seeks” including “other discovery tools like interrogatories and depositions.” She noted that Defendants “offered to disclose various high-level design documents and product release notes that their expert says would provide evidence sought by Plaintiff about cross-compatibility.” She ordered that “[i]f that production proves inadequate for any reason, Plaintiff will have the chance to say so and perhaps better define what they may be looking for.”
Accordingly, Magistrate Judge Reznik held that the production of source code was not proportional to the needs of the case and therefore not necessary, “balancing sensitivity, burden, and the availability of alternatives.” Id. at *4. She therefore ordered Defendants to produce their high-level design documents, product release notes, and other relevant product documentation and denied Plaintiff’s request without prejudice to renewal after reviewing this alternative discovery.
Information on past notable cases and events in e-discovery can be found here.
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