In Brooks v. Motsenbocker Advanced Developments, Inc., 2008 U.S. Dist. LEXIS 76230 (S.D. Cal. Sept. 29, 2008), the court granted plaintiff’s motion for leave to take the additional deposition of defendant’s person with knowledge of the computer systems. 

Plaintiff had previously requested information regarding defendant’s computer systems in interrogatories. According to the court, the defendant did not provide any specific information about its computer systems in response.  Plaintiff argued that if it were not allowed to depose the IT witness, plaintiff would be forced to spend an inordinate amount of resources conducting electronic discovery and filing a motion to recover the costs.  The court agreed and held that the plaintiff had already tried, without success, to obtain the information by other methods.  The court granted the requested deposition noting that it would promote efficiency in the litigation.

On September 27, 2008, Governor Arnold Schwarzenegger vetoed Assembly Bill 926 which contained e-discovery amendments similar to the  2006 e-discovery amendments to the Federal Rules of Civil Procedure.

In Shirk v. Fifth Third Bancorp, 2008 U.S. LEXIS 85793 (S.D. Ohio Sept. 26, 2008), the court held the defendant must restore and produce 72 newly-found backup tapes pursuant to the court's previous order directing the defendant to produce responsive emails from all backup tapes from the 2001-2002 time period.

In addition to the previous order, the court reserved the issue of whether defendant would need to restore backup tapes from other time periods as it wanted to use the restoration and production of the 2001-2002 documents as a sampling as to the efficacy of requiring production of additional back up tapes from 2003 and 2004.

Defendant argued that since they had already restored and produced 21 backup tapes from 2001-2002, the remaining tapes need not be restored.  The court disagreed and granted plaintiffs' motion, holding the defendant misstated the court's prior ruling which ordered the defendant to restore and produce all responsive backup tapes from 2001-2002. The only decision the court reserved was whether or not to order production of electronic documents from 2003 and 2004.  The court also found plaintiffs had met their initial burden of showing the emails were relevant and that good cause exists for their production.  The court explained that even if the information sought by plaintiffs is "inaccessible," defendant failed to make a credible showing of undue burden and cost sufficient to avoid the obligation to produce responsive documents or to shift the costs to plaintiffs.

In Dong Ah Tire & Rubber Co., Ltd. v. Glasforms, Inc., 2008 WL 4298331 (N.D. Cal. Sept. 19, 2008), the court issued an interim order seeking more information before ruling on defendant and a third party plaintiff's motion for terminating sanctions against a third party defendant for spoliation and destruction of documents. 

Defendant Glasforms manufactures fiberglass insulator rods.  Third party defendant Taishan made the fiberglass which was distributed in the United States by third party defendants CTG.  Glasforms claims  the Taishan fiberglass was contaminated with graphite which caused the fiberglass to conduct electricity, a dangerous latent defect. 

Taishan's manager of quality assurance testified pursuant to Rule 30(b)(6) for three days in February 2008, but, according to the court, the deponent was unable to provide knowledgeable testimony on the majority of the topics, including Taishan’s preservation efforts.  At issue in the case is when such efforts began and specifically what steps Taishan took to preserve documents.  The court ordered Taishan to conduct a diligent search and reasonable inquiry into each of Glasforms' requests for production and to produce internal email regarding the subject matter of the case, including communications between Taishan and CTG, relevant documents Taishan identified, but did not previously produce and documents for which no search was previously taken.  If no documents were found, Taishan was required to submit a declaration stating that a search was made for all responsive documents and detailing why responsive documents could not be produced or providing the circumstances by which the responsive documents were misplaced or destroyed. 

Taishan claimed it could not be expected to preserve "every conceivable relevant piece of evidence" because it did not anticipate litigation until six days before the complaint was filed.  The court found the time line was critical in the case, but that several entries were missing.  Based on the information at hand, the court held that the triggering event for litigation may have been as early as 2004.  The court also noted a discrepancy between Taishan’s document destruction policy and what was actually preserved.  In addition, as members of the International Organization for Standardization, both Taishan and CTG were required to maintain records for a reasonable amount of time which they apparently did not do. 

The court reserved the issue of sanctions and ordered the continuation of the  of the 30(b)(6) deposition to determine what the parties knew with respect to the operative claims in the litigation and, more importantly, when they knew.

In Kipperman v. Onex Corporation, 2008 U.S. Dist. LEXIS 71629 (N.D. Ga. Sept. 19, 2008), the court revisited its prior ruling wherein it ordered defendants to produce email from two electronic backup tapes selected by plaintiff.  Plaintiff selected the tapes and also provided search terms.  The court had also ordered defendants to search all email mailboxes on both of the tapes utilizing search terms provided by plaintiff.  The court suggested plaintiff be more "artful" with its search terms and utilize a list of the people, provided by defendants, to review whether all mailboxes needed to be searched.  The court also invited defendants to participate in the determination of the search terms, but defendants did not provide search terms nor seek to narrow the terms suggested by plaintiff.

Defendants went back to the court seeking an order relieving their production of (1) search results that they deem to be irrelevant; (2) documents responsive to a particular search term; and (3) documents captured from the email mailboxes of defendants' subsidiary.  The court granted the latter two requests, but denied defendants' request for an order relieving it from producing certain documents.  The court noted that it had given the defendants every opportunity to narrow the terms to reduce the amount of irrelevant data collected, but the defendants failed to do so.  The court explained, "[t]he court gave defendants numerous tools by which to reduce the burden of email discovery, including an opportunity to limit plaintiff's search terms and an opportunity to provide a list by which the number of peoples and the number of boxes being searched could be reduced.  Defendants did not take advantage of these opportunities.  Defendants must now lie in the bed that they have made."

On September 19, 2008, President Bush signed Senate Bill S. 2450 which amends the Federal Rules of Evidence to address inadvertent waiver of the attorney-client privilege and work product doctrine.  The bill is codified in FRE Rule 502 and provides, in part,  that the inadvertent disclosure of privileged materials does not operate as a waiver of those materials if the holder of the privilege or protection took reasonable steps to prevent disclosure, or if the holder took reasonable steps to rectify the error, including (if applicable) following Federal Rule of Civil Procedure 26(b)(5)(B). The law applies to all pending cases and to previously-filed cases, to the extent just and practicable.

In Wong v. Thomas, 2008 U.S. Dist. LEXIS 71246 (D. N.J. Sept. 10, 2008) (Not for Publication), the court denied plaintiff's motion for sanctions holding that she failed to show electronic documents allegedly destroyed by defendants were relevant to her claims or defenses.

Plaintiff was the former Executive Director of Defendant New Jersey Higher Education Student Assistance Authority.  In May 2005, she filed a complaint alleging discrimination based on race and national origin, wrongful termination and claimed that she was repeatedly pressured to engage in unlawful activity.  During the parties' Rule 26 conference with the court, plaintiff advised defendants that "electronic discovery would be integral to her ability to corroborate and establish her claims."  Defendants'requested plaintiff postpone on serving discovery until the parties had an opportunity to discuss settlement.

Nearly a year later, plaintiff served a document request seeking relevant electronically stored information, including all email correspondence between the parties.  At the court's request, plaintiff provided a detailed document request to assist the defendants in locating and searching for relevant emails. Defendants had previously "purged" electronic documents and were otherwise unable to recover and provide emails to plaintiff.  "Purging" as defined by the Dept. of State's Chief Information Officer, included the closing of individuals' email accounts, deletion of files from their office computers after termination of employment and the routine deletion of files from the State's servers that store emails.

The Department was able to retrieve some emails dating back to October 2005.  Defendants also employed outside vendors to recover emails from earlier in time.  The vendors were able to recover more than 22,500 emails that amounted to roughly 80,000 pages of documents, but none of the emails were responsive to plaintiff's document request.

In denying the motion for sanctions, the court found that defendants acted in good faith by certifying under oath that the documents inadvertently destroyed bore no relation at all to the pending litigation.  The court similarly found that plaintiff failed to articulate what potentially relevant documents was destroyed.  Rather, in her document request, plaintiff did not identify with any particularity what information was, or may have been, contained in the electronic data. Plaintiff also did not demonstrate how the requested information would impact her claims. Instead, plaintiff generally speculated as to what "might" be relevant and possibly included in the purged files.  The court held that plaintiff did not meet her threshold showing regarding the relevancy of any specific evidence that she alleged had been destroyed by the defendants.

In Meir Babaev v. Grossman, 2008 U.S. Dist. LEXIS 77731 (S.D.N.Y. Sept. 8, 2008), the court ruled that an adverse inference instruction was appropriate for defendants’ refusal to turn over certain banking records and for the disposal of a computer that contained potentially relevant information.

In this case, plaintiffs alleged they were fraudulently induced to invest $100,000 in defendants’ catering businesses. In the course of discovery, plaintiffs argued defendants' "belated" claims that their computer had been lost or misplaced was spoliation of evidence. Plaintiffs also accused defendants of willfully refusing to produce banking records. Defendants contended the “lost” computer had been left at one of its catering assignments and when the computer was to be retrieved, the files were corrupted or otherwise inaccessible.  Defendants then discarded the computer claiming its removal was prior to any anticipation of litigation. Defendants further contended their banking records were not in their care, custody and control. 

The court disagreed and found defendants’ evidence unpersuasive.  The court held that although it was difficult to discern precise dates when evidence was corrupted or destroyed, the conclusion to be reached from the record was the evidence on the computer should have been preserved, that it was destroyed with a culpable state of mind and that it was relevant to the plaintiffs' claim that they were lied to by the defendants about their financial situation when the relevant investments were made. The court further held that plaintiffs were entitled to an adverse inference instruction to the effect that the spoliated evidence confirmed plaintiffs’ stock purchase in defendants’ catering businesses in the amounts set forth in the complaint and further supported plaintiffs’ claims of falsity in the defendants’ representations about their fiscal soundness, which induced the plaintiffs to invest.  The court also rejected defendants’ argument that records held by their bank were not in defendants’ care, custody and control.  The court noted that documents are under a party's control when it has the right, authority or practical ability to obtain them from a non-party.  Thus, the defendants had no basis to assert that it lacked sufficient control over the records which they could simply request from their bank.    The court found the defendants' failure to produce the documents also warranted the adverse inference instruction and awarded plaintiffs $5,000 in costs and fees in connection with the sanctions motion.

In Metrokane, Inc. v. Build NY, Inc., 2008 U.S. Dist. LEXIS 69272 (S.D.N.Y Sept. 3, 2008), the court awarded a variety of sanctions, including an adverse inference instruction, against plaintiff Metrokane for its failure to preserve and produce emails adverse to its claims and for discovery misconduct in redacting an email which the court called “plainly deliberate and inexcusable.”

Plaintiff filed two lawsuits seeking declaratory relief of non-infringement or unenforceability with respect to a defendant’s design patents and trademarks and a claim of tortious interference with its relationship with one of its customers.   Defendant Build NY, in turn, sued for infringement of their patents and trademarks. A third party witness, who purportedly designed tote bags that defendant claimed infringed upon defendant's intellectual property, produced  a series of emails that he had sent to, and received from, various representatives of the plaintiff, including at least one corporate official.  According to the court, the emails, many of which were never produced by plaintiff, could fairly be read as potentially damaging to several aspects of plaintiff’s case.  In particular, one email questioned whether plaintiff’s product was confusingly similar to defendant’s product which was inconsistent with plaintiff’s assertion that the products were dissimilar. Some of the emails also contained the complete text of previously redacted emails produced by plaintiff.  The redacted portions arguably contained non-privileged admissions by plaintiff that it was aware that its products were infringing and assured the department store Kohls that it would be indemnified from any legal claims made by defendant. 

The court made short shrift of both plaintiff’s procedural (e.g., failure to meet and confer prior to filing motion) and substantive arguments (e.g., plaintiff has no formal retention policy and no prejudice to defendant), noting that a meet and confer session was unnecessary since the injury to defendant was imposed by the delay in receiving the emails.  If, as plaintiff asserted, it was no longer in possession of the emails, then a meeting to discuss future production of the emails would have been futile.  Moreover with respect to plaintiff’s substantive claims, the court held that plaintiff failed to offer evidence that it did not possess the produced emails and, in fact, did produce some of the emails, albeit, in redacted form.  The court further noted “the very careful avoidance by [plaintiff] of any direct representation -- even in the form of a non-admissible attorney's assertion -- that the company did not have the unproduced e-mails in its possession.”       

The court stated the obligation to preserve evidence arises when the party has notice that the evidence is relevant to litigation or when a party should have known that the evidence may be relevant to future litigation.  At a minimum, by the date of the emails, plaintiff knew of the potential for litigation with the defendant as evidenced by the discussion of indemnification. The court inferred plaintiff’s negligence in failing to produce and preserve the documents, but declined to assign a greater level of culpability noting that plaintiff did produce at least one email reflecting its product may infringe on defendant’s intellectual property rights. Nonetheless, the court found defendant’s claim of prejudice was overstated and that any prejudice suffered was, in large part, remediable.       

The court employed a variety of sanctions to address plaintiff’s misconduct.  First, the court deemed the emailed statement regarding indemnification to be binding and included within the records of the pending summary judgment motions.  However, if plaintiff’s tortious-interference claim survives summary judgment, plaintiff would be required to make certain witnesses available to testify at deposition about the indemnification agreement.  Next, the court required plaintiff to bear all costs associated with the depositions, including attorneys’ fees incurred in preparing for and conducting the deposition.  Finally, at trial, the defendant will be entitled to offer evidence as to plaintiff’s concealment of the emails and will be entitled to a jury instruction as to the possible inferences the jurors may draw from plaintiff’s concealment.  Defendant was also entitled to the cost of filing, preparing, briefing and arguing the sanction’s motion. 

In Nursing Home Pension Fund v. Oracle Corp.,No. C01-988SI (N.D. Cal. Sept. 2, 2008), U.S. District Court Judge Susan Illston ruled that Oracle intentionally destroyed and withheld emails authored and received by its CEO.  In addition, the ruling slammed Oracle for the deliberate destruction of audio recordings sought as evidence. The class action lawsuit was brought by shareholders who allege the software company made false statements about the company’s business management software and its financial health in quarterly statements filed in 2001.

According to the complaint, Oracle CEO Larry Ellison was aware of the company’s financial distress and sold $900 million in stock before investors were clued into the problem.  In an effort to prove these claims, defendants sought tapes and transcripts of interviews that a journalist conducted with Ellison several years prior for a book entitled “Softwar”.  The tapes and transcripts were stored electronically on the laptop of the author, Matthew Symonds. Apparently, a year ago, Symonds instructed a computer repair shop to destroy the evidence.

Judge Illston held that an adverse-inference instruction was appropriate and the jury would be instructed to assume that Ellison knew about the problems at Oracle before they were disclosed to its shareholders and the public.  "The court believes it is appropriate to infer that the e-mails and the Softwar-related materials would demonstrate Ellison's knowledge of, among other things, problems with the [management software], the effects of the economy on Oracle's business and problems with defendant's forecasting models,” Illston said in her ruling.