February's Notable Cases and Events in E-Discovery

1. In United States v. Norris, 2019 WL 4458382 (9th Cir. Sept. 18, 2019), the U.S. Court of Appeals for the Ninth Circuit held that defendant had no subjective, reasonable expectation of privacy in the signal of the electronic MAC address of his devices, where the FBI was able to track the location of his devices based on the signal strength.

In this criminal case, the FBI was investigating the possession and distribution of child pornography through a peer-to-peer file sharing network. Id. at *1. The FBI was able to download child pornography from a user of the network. The FBI identified the user’s IP address, but the internet service provider could not determine the physical address for that particular IP address. The FBI later downloaded child pornography over the same network from the same user. Id. at *2. This time the user was associated with a different IP address, and the internet service provider was able to provide the apartment number and address associated with the IP address.

The FBI obtained a search warrant for the apartment and discovered that the password-protected wireless internet router located in the apartment used a different IP address than the IP address used to share child pornography. After further investigation, the FBI learned that two unknown devices had connected to the router without authorization. The FBI used software and the MAC address (a unique identifier associated with a network device) of one of the devices to attempt to identify the location of the devices. Using a wireless antenna to take readings throughout the apartment building of the strength of the signal associated with the MAC address, the FBI determined that another apartment housed both devices. The FBI further determined that these devices were associated with the username and IP address that had shared child pornography. Id. at *3. Based on this information, the FBI obtained a search warrant for the other apartment and discovered evidence of child pornography.

The government indicted defendant on one count of distribution of material involving the sexual exploitation of minors and one count of possession of material involving the sexual exploitation of minors. Defendant moved to suppress the evidence obtained as a result of the search warrant, arguing that the use of the software and wireless antenna constituted a warrantless search in violation of the Fourth Amendment. Defendant also claimed that the warrant application contained material misrepresentations and omissions.

The district court denied the motion to suppress and dismissed both of defendant’s arguments. The district court first held that no Fourth Amendment search occurred because the FBI did not physically intrude on defendant’s property by taking readings in the apartment building. The district court also considered whether defendant could establish that a search occurred because the FBI violated defendant’s subjective, reasonable expectation of privacy in the MAC address associated with his devices. Id. (citing Katz v. United States, 389 U.S. 347 (1967)). The district court concluded that defendant lacked such an expectation of privacy because he had connected to another tenant’s router without authorization. Id. at *3-*4. The district court also held that none of the alleged misrepresentations and omissions in the search warrant would have invalidated the magistrate’s finding of probable cause when issuing the search warrant. Id. at *4.

Defendant appealed and, in an opinion written by Judge Johnnie B. Rawlinson, the Ninth Circuit affirmed the dismissal of defendant’s motion to suppress. Beginning with defendant’s Fourth Amendment argument, the Ninth Circuit agreed that there was no physical intrusion into defendant’s residence that might trigger a Fourth Amendment search. Defendant’s devices sent a wireless signal to the router in the other apartment that defendant did not rent or own. The FBI agents “captured” this wireless signal from outside of defendant’s apartment and were therefore able to determine the source of the signal. The Ninth Circuit analogized this to “locating the source of loud music by standing and listening in the common area of an apartment complex” where there is no physical intrusion required to identify the source of the music.

The Ninth Circuit also agreed with the district court that defendant could not establish a subjective, reasonable expectation of privacy in his MAC address. Defendant could not establish a subjective expectation of privacy because he openly shared this information with third parties by connecting to a wireless router. Accordingly, defendant “lacked any expectation of privacy in the emission of the signal strength of the MAC address emanating from outside his apartment.” Id. at *5. At the same time, defendant’s expectation of privacy was likewise objectively unreasonable because defendant connected to a wireless router without authorization. Defendant had “no legitimate expectation of privacy in property for which he lacks any possessory or ownership interest.” As the Ninth Circuit observed, courts have generally rejected privacy claims in “the content of property obtained through unauthorized means.”

Finally, with respect to defendant’s arguments concerning the contents of the search warrant application, the Ninth Circuit affirmed the district court’s decision because defendant failed to present any evidence that the agent who drafted the application acted “knowingly, intentionally, or with reckless disregard for the truth.” Id. at *6. And in any event, none of the alleged misrepresentations or omissions “materially affected the probable cause determination.” Id. at *6. Defendant claimed that the application included several omissions related to the software the FBI used to track the location of his devices, but these omissions would not have affected the finding of probable cause.

2. In Man Zhang v. City of New York, 2019 WL 3936767 (S.D.N.Y. Aug. 20, 2019), Magistrate Judge Ona T. Wang awarded plaintiffs attorneys’ fees but denied plaintiffs’ request for entry of a default judgment or an adverse inference instruction because plaintiffs failed to establish that defendants’ failure to preserve certain electronically stored evidence was anything more than negligent.

Plaintiffs, administrators of Zhiquan Zhang’s estate, brought suit against a group of defendants, including the City of New York and the New York City Department of Correction (collectively, “defendants”), following Zhang’s death while in pretrial detention at Rikers Island jail. Id. at *1. According to plaintiffs, despite Zhang complaining to corrections officers about his chest pains and seeking treatment, defendants failed to provide him with adequate medical care. Following closure of discovery, plaintiffs filed a motion seeking sanctions for defendants’ alleged failure to preserve inmate location information, video surveillance footage and telephone recordings. Plaintiffs also sought sanctions because a corrections officer failed to appear for her deposition. As recourse for defendants’ alleged conduct, plaintiffs requested either (1) “an adverse influence,” which, to Magistrate Judge Wang, “appear[ed] to be a request for the Court to strike Defendants’ pleadings and to enter a default judgment,” or (2) “an adverse inference instruction.” Plaintiffs also sought attorneys’ fees and costs.

Before considering the merits of plaintiffs’ spoliation motion, Magistrate Judge Wang set forth the applicable legal standards with respect to ESI and non-ESI evidence. As she explained, “Rule 37(e) of the Federal Rules of Civil Procedure ... governs sanctions for failure to preserve ESI,” and “before the sanctions listed in subsection 2 of Rule 37(e) — i.e., adverse inference, dismissal, or default judgment — are available[,]” “Plaintiffs must show that Defendants acted with the intent to deprive [them] of the information’s use in the litigation.” Id. at *4 (internal quotation marks omitted). Alternatively, under subsection 1, “[u]pon finding prejudice to another party from loss of the information, [the court] may order measures no greater than necessary to cure the prejudice.” Additionally, for ESI evidence, plaintiffs must “demonstrate that the spoliating party had an obligation to preserve the evidence at the time it was destroyed.” Id. (internal quotation marks, brackets and citation omitted).

For non-ESI evidence, Magistrate Judge Wang explained, the spoliation standards found in Residential Funding Corp. v. DeGeorge Financial Corp., 306 F.3d 99 (2d Cir. 2002) apply. Under Residential Funding, “a party seeking an adverse inference instruction is required only to demonstrate (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 the 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.” Id. (internal quotation marks omitted). Magistrate Judge Wang specified that Rule 37(e)’s standard applied to the video surveillance footage and telephone recordings in dispute, while the standards found in Residential Funding applied to the inmate location information. Id. at *5.

As an initial matter, the magistrate judge noted that “the parties agree that Defendants failed to impose a litigation hold relating to any of the[] categories of documents” at issue: “Where the parties disagree is whether Defendants were required to do so, and whether Plaintiffs have sufficiently established the relevance of each set of documents such that spoliation sanctions are warranted.” Id. at *5.

Ultimately, with respect to non-ESI evidence, Magistrate Judge Wang concluded that there was insufficient evidence to conclude that the information sought pertaining to bed numbers or bed charts ever existed. In addition, defendants’ duty to preserve did not extend to defendants’ housing area log books, as plaintiffs contended, and sanctions were not warranted for the loss of documents concerning inmate location information. Id. at *5-*7.

With respect to the video surveillance footage and telephone records, however, Magistrate Judge Wang concluded that sanctions were warranted because (1) defendants destroyed relevant evidence after their duty to preserve attached (no later than April 26, 2016), and (2) plaintiffs were prejudiced by the loss of such evidence. Id. at *5. But plaintiffs managed to demonstrate only that defendants’ failure to preserve the ESI was “at worst negligent,” and Magistrate Judge Wang therefore concluded that plaintiffs were entitled to sanctions under Rule 37(e)(1) and awarded attorneys’ fees and costs. Id. at *7-*10. Finally, as to plaintiffs’ contention that a corrections officer missed her deposition, Magistrate Judge Wang ruled that sanctions were not warranted because regardless of whether the officer was a Rule 30(b)(6) designee or a nonparty, there was no subpoena or order that specifically identified the officer, and, in any case, the officer had good cause for her failure to appear at the deposition as she was “out on medical leave due to illness.” Id. at *10.

3. In Estate of Felipe A. Radelat, 2019 WL 5792652 (Tex. App. Nov. 7, 2019), the Texas Court of Appeals held that the trial court did not abuse its discretion in imposing “death penalty” sanctions by striking a statute of limitations defense where the sanctioned party engaged in discovery misconduct and violated court orders.

In this trusts and estates litigation, the daughter of the deceased sued her mother and brother over their handling of the estate. Id. at *1. Plaintiff alleged that she did not know that she was meant to be a co-trustee or beneficiary of the estate because defendants had withheld the will from her and misled her about its content. Defendants raised a statute of limitations defense, but plaintiff argued that defendant’s fraudulent concealment should toll the limitations statute.

The trial court determined that the defendants engaged in several forms of misconduct during the litigation — submitting a false accounting of rent to the court 70 days after the court-ordered deadline, “failing to provide a statutory accounting for the trusts even four years after [plaintiff] had demanded one, [and] failing to produce financial records despite an order compelling production.” Id. at *2-*3.

The trial court imposed death penalty sanctions, striking the defendants’ limitations defense. Id. at *2. In addition to identifying the myriad forms of misconduct, the trial court “incorporated detailed findings as to why the death-penalty sanction was directly related to appellants’ offensive conduct, why the sanction was not excessive, why lesser sanctions would not have sufficed, and why [defendants’] conduct justified a presumption that their claims and defenses lacked merit.” Id. at *3.

On appeal, defendants-appellants did not contest the factual findings of the trial court, claim that lesser sanctions were more appropriate or attack the damages calculations. Instead, the appeal argued only that “the misconduct should justify the presumption that the claim or defense lacks merit” and that where “the underlying claim or defense appears to have great merit ... there can be no death-penalty sanction.” Id. at *4.

The appellate court rejected appellants’ claims on two grounds. First, it pointed out that the merits of the case were not before it and distinguished other death penalty sanction cases in which appellate courts had considered the underlying merits. Id. at *4. In those cases, the court of appeals explained, the merits had already been resolved by trial or admission, whereas in the instant case there was “no concrete basis on which to judge the merits.” Id. at *4-*5. The appellate court concluded, “we do not believe that either due process or the rules of civil procedure require us to forecast how likely the sanctioned defendant would be to prevail in the absence of a sanction — and to do so based solely on the party’s pleadings.” Id. at *5.

Second, the court of appeals reasoned that even were the merits before it, appellants’ actions suggested that their limitations claim lacked merit. Under Texas law, “[t]o justify a presumption that the claim lacks merit, the misconduct must, at a minimum, reveal some detrimental truth about the sanctioned party’s claim or defense.” Id. (citation omitted). The appellate court highlighted a prior case holding that “[r]efusal to produce evidence that goes to the ‘heart of’ the case may warrant the belief that full and fair disclosure would be damning for the refusing party.” Id. (citing Cire v. Cummings, 134 S.W.3d 835, 841 (Tex. 2004)). Similarly, the court of appeals explained that “pervasive and persistent obstruction of the discovery process in general” often speaks to the underlying merits.

As applied to the instant case, the court of appeals found that appellants’ misconduct went both generally and directly to the merits of the limitations defense. Id. at *6. “[D]iscovery abuses, refusal to cooperate, violations of a temporary injunction meant to protect trust property, and deception of the court ... generally favors the notion that appellants’ defenses lack merit.” Specific to the limitations claim, the appellate court noted that appellee had countered the limitations defense by arguing that fraudulent concealment should toll the limitations period. The appellate court held that “[t]he nature of appellants’ misconduct — a borderline fraud on the court — could have rationally persuaded the trial court that appellants also fraudulently concealed the truth from [appellee].”

4. In Cox v. Swift Transportation Co. of Arizona, LLC, 2019 WL 3573668 (N.D. Okla. Aug. 6, 2019), Magistrate Judge Jodi F. Jayne concluded that both plaintiff and defendant had failed to show intentional or bad-faith conduct by the other party in their dueling sanctions motions.

This litigation arose out of an accident involving two tractor trailers. Id. at *1. Plaintiff, the driver of one of the vehicles, sustained severe injuries and sued, among others, the transportation company that owned the other vehicle. Plaintiff and defendant accused each other of spoliating evidence, and both moved for sanctions in the form of a directed verdict on the issue of liability or an adverse inference instruction. According to Magistrate Judge Jayne, in order to impose these sanctions, the moving party would need to show that (1) ESI should have been preserved in anticipation of the litigation, (2) the other party failed to take reasonable steps to preserve the ESI, (3) the ESI cannot be restored or replaced through additional discovery and (4) the other party acted with the intent to deprive the moving party of the information’s use in the litigation. Id. at *2 (citing Fed. R. Civ. P. 37(e)(2)).

Plaintiff argued that defendant failed to preserve (1) data on the electronic control module of the vehicle, (2) messages delivered from the driver via a mobile communication service and (3) the driver’s electronic logs for the 1.5 hours immediately prior to the accident. Id. at *1. Magistrate Judge Jayne declined to impose a directed verdict or an adverse inference instruction based on these alleged acts of spoliation.

Beginning with the electronic control module data and the driver’s messages, Magistrate Judge Jayne concluded that defendant failed to preserve these data sources but was justified in not retaining the evidence and, in any event, did not act with the intent to deprive. Id. at *2-*3. The module data could have been downloaded from the truck, but it was overridden sometime after the accident. Id. at *2. The driver’s messages could have likewise been preserved but were deleted pursuant to defendant’s data retention policy, which preserved the messages for somewhere between seven and 45 days. In both cases, the data was lost before plaintiff’s counsel sent a spoliation letter to defendant.

Defendant argued that it was justified in not taking steps to preserve the data because it had no reason to believe that it was at fault in the accident based on the police report. Magistrate Judge Jayne agreed that defendant’s decision to not preserve the data was “adequately supported” by the police report and further found “no inference or indication that [defendant] engaged in bad faith or intentional conduct aimed at depriving [plaintiff] of this evidence.” Id. at *3. Defendant had “no indication the evidence would reflect anything other than” the evidence in the police report suggesting plaintiff was a fault. Accordingly, the “non-retention decisions were made in good faith based on facts known to [defendant] at the time.”

With respect to the driver’s electronic logs, defendant took steps to preserve this information following receipt of the spoliation letter. But defendant failed to capture the 1.5 hours of data preceding the accident because it failed to account for the time difference between the location of the accident and the location of defendant’s office. Magistrate Judge Jayne found this explanation “plausible and consistent with the actual missing data,” showing at most a “negligent failure to retain.”

Defendant, for its part, argued that plaintiff had failed to preserve (1) the electronic control module data from his vehicle and (2) paper driver logs in the vehicle at the time of the accident. Id. at *3. Again, Magistrate Judge Jayne found insufficient evidence of the type of intentional or bad-faith conduct required for a directed verdict or adverse inference instruction. Id. at *3-*4. The electronic control module was inside the vehicle, which was hauled away from the scene of the accident by a third party, held for 30 days and sent to the scrapyard. Id. at *3. During this period, plaintiff was in the hospital recovering from his injuries. Magistrate Judge Jayne concluded that at most, plaintiff failed to prevent a third party from scrapping the vehicle, and defendant otherwise failed to make “even a colorable showing of intentional conduct ... that would warrant the requested sanctions.” As for the paper logs, plaintiff claimed they were destroyed in the accident, an explanation that Magistrate Judge Jayne deemed “plausible” given the nature of the accident. Id. at *4. As a result, the logs were not destroyed through any intentional or bad-faith conduct by plaintiff.

Having found that neither plaintiff nor defendant made out a claim of spoliation, Magistrate Judge Jayne denied both motions.