Episode 98: The Importance of Mobile Device Data Preservation Based on Lessons from a Key Case

In a recent case, the City of Seattle faced sanctions in the form of an adverse inference instruction for the deletion of text messages following its support in closing a 16-block area in downtown Seattle during the Capitol Hill Occupied Protest. In episode 98, Kelly Twigger, founder of eDiscovery Assistant, discusses the implications of this ruling in the case of Hunter’s Capital, LLC v. City of Seattle. The case was presided over by United States District Judge, Thomas S. Zilly, and the adverse inference instruction was issued in 2023. This ruling highlights the importance of proper preservation and handling of data from mobile devices — specifically text messages and Signal data.

Introduction

Hi, and welcome to episode 98 of our Case of the Week series, published in partnership with ACEDS. My name is Kelly Twigger. I am the CEO and founder of eDiscovery Assistant and the principal at ESI Attorneys.

We are marching very quickly towards our 100th episode on the Case of the Week. Thank you so much for joining me on this journey as we learn ediscovery through case law.

All right, let’s dive into this week’s decision. This is an important case this week, and I really want you to pay attention closely to a lot of the takeaways and the keys in the facts of the analysis of this decision. This case highlights very complex issues associated in dealing with mobile devices and data that resides only on that device and the need for parties to address preservation of data from those devices early on and in an effective manner. This decision comes to us from Hunters Capital, LLC vs. The City of Seattle.

This is a decision from United States District Judge Thomas Zilly on January 13, 2023, so just about a month ago. As always, we tag each of the cases in our eDiscovery Assistant database with our issue tags. This week’s issues include bad faith, cost recovery, default judgment, mobile device, legal hold, failure to preserve, adverse inference, spoliation, text messages, and sanctions. So a lot going on here. Let’s talk a little bit about the facts in this case.

Background

This case arose from the protests in Seattle following the death of George Floyd in Minneapolis in 2020. The plaintiffs here are property owners, businesses, and residents of the Capitol Hill neighborhood in Seattle. From June 8 to July 1, 2020, the plaintiffs allege that in response to the Capitol Hill Occupied Protests known as CHOP, the City of Seattle supported the closure of a 16 block radius of the Capitol Hill neighborhood. Plaintiffs alleged that that closure led to extensive property damage, public safety issues, and an inability to access and use their property.

CHOP was an autonomous occupation zone — so one that was established by the protesters, not by the City. On June 8, 2020, the Seattle Police Department left its East Precinct building, following a week of very violent and aggressive actions between the police and the protesters that led to the police boarding up their station and leaving it. One day later, on June 9, Black Lives Matter sued the City for its violent response to protesters. Shortly after that, the plaintiffs filed this case on June 24 — while CHOP was still ongoing — against the City and several high ranking officials, including the mayor, the police chief, and the fire department chief.

We are before the court in that case on competing motions for sanctions for spoliation of text messages. Both parties here are asking the Court to enter default judgment or for adverse inference instructions, as well as costs and fees for sanctions for spoliation of text messages. Let’s talk specifically about the facts that relate to the plaintiff’s motion for sanctions, because the Court breaks up its decision into those two independent motions.

Facts on Plaintiffs’ Motion for Sanctions

On June 19, 2020, Mayor Durkin’s—Mayor of the City of Seattle— office sent out a legal hold notice to its employees informing them of their responsibility to retain public records, such as text messages on their city owned personal smartphones and mobile devices. Again, June 19, 2020. Plaintiffs filed this case on June 24, 2020, while CHOP was still ongoing. That same day, the plaintiffs also sent a letter to the mayor advising the City of its obligations to preserve evidence, including text messages. On June 30, the plaintiffs’ counsel again sent another preservation letter to the City requesting preservation of text messages. After the plaintiffs filed the case, the mayor, the police chief, and the fire department chief, as well as six other individuals, deleted thousands of text messages from their mobile devices.

The Court begins its analysis of the plaintiff’s motion by looking specifically at the facts of the high ranking officials. What you will see in this decision is every flavor of “how I lost my phone” or “how I have no explanation for thousands of text messages that were manually deleted from my phone.” Now, again, we’re looking at the facts on the plaintiff’s motion. These are the actions taken by the defendants, the City of Seattle, and high ranking officials there. The Court starts by looking specifically at the mayor’s story about why she no longer has text messages related to the activities that happened around CHOP.

According to the facts in the decision, the City did not send a legal hold notice to the mayor until July 22, 2020. That would be a full three weeks after the occupation ended on July 1st. That’s also five weeks after the litigation was filed and multiple preservation letters were received by the City. Seems very difficult to me to believe that the Mayor of Seattle did not understand or reasonably anticipate litigation prior to its finding, but that is not specifically addressed in its decision.

Now, prior to receiving that legal hold notice on July 22, the mayor claimed that she allegedly dropped her phone in the water on July 4 (which is worthy of considering that it was only three days after the CHOP protests ended) and when restoring the phone once it started working, selected a “disable and delete” function that stopped synchronizing text messages with iCloud,” and she also set all text messages to delete within 30 days.

Her staff then got her a new iPhone because the phone, even though it restarted after being in the water, did not work very effectively. But they did not make a backup of the old iPhone, simply replaced her old one with a new phone, and all of the text messages were deleted, according to the new policy that she set up when she restarted the phone after it fell in the water. At some point, the new phone was set by someone on the Mayor’s staff to retain text messages forever.

Switching to the 30 day delete function after her original phone fell in the water caused the loss of 5746 of Mayor Durkin’s text messages from before June 25, 2020. The Mayor’s Counsel knew that the texts were missing as of October 20, 2020, but did not tell the plaintiffs until March 2021. That’s a huge issue in this case — the communication between defense counsel to the plaintiffs regarding the loss of text messages on any of these officials phones, but that’s what we know as it pertains to the Mayor.

The Court then looked at the Police Chief, whose name is Carmen Best. The Police Chief was named in preservation letters, but did not receive a legal hold from the City until July 27, 2020. The Chief then resigned following CHOP and turned in her phone to the City in September of 2020, but not before manually deleting more than 27,000 text messages from her phone, including everything from before the date that she resigned.

Counsel again did not tell the plaintiffs about the missing messages until March of 2021. When plaintiffs counsel learned about the deletion of the messages from the Police Chief they also subpoenaed the personal phone from the Chief based on evidence that the Chief had used her personal phone to communicate regarding CHOP. She had already reset her personal phone, and there was no backup. Those are the facts as they pertain to the Police Chief.

Now looking at the fire chief, Harold Scoggins. Again, Chief Scoggins was named in the preservation letters, but did not receive a litigation hold notice from the City until July 27, 2020. He had no text messages prior to October 8, 2020, when he claims he was locked out of his iPhone for using the wrong passcode too many times. As of October 8, he went to the Apple Store, where an employee reset his device, deleting all prior text messages.

The City says that it learned of Chief Scoggins behavior in February of 2021, which is several months after it actually happened, and even more time after the City was under an obligation to preserve those text messages. And I have to ask the obvious question here—why did it take eight months for the City to seek out the contents of this phone? Mobile devices are generally the very first consideration because of this exact issue unless a party doesn’t want the evidence to be found.

Now, the court goes on to recount the facts of four other individuals, all of whom received legal hold notices and all of whom somehow reset their phones within a two month period, deleting thousands of text messages and all of the evidence that would have been relevant to the case on CHOP. Those are the facts that relate to the plaintiff’s motion for sanctions.

The defendants also moved for sanctions for spoliation of text messages and data from Signal, an instant messaging application. And we’ll talk a little bit more specifically about those facts in a little bit.

Analysis on Plaintiffs’ Motion

The Court begins with Rule 37(e), as always, for a failure to preserve, and notes that, “in the 9th Circuit, spoliation of evidence raises a presumption that the destroyed evidence goes to the merits of the case and further, that such evidence was adverse to the party that destroyed it.” Now, that’s not a presumption that exists in every jurisdiction in this country. It’s important to note that that’s where the Court is operating from here.

This Court goes through an excellent discussion of the analysis under Rule 37(e), and it’s one to follow if you’re drafting a motion for sanctions or responding to a motion under Rule 37(e). The Court discusses the intent requirement for an adverse inference instruction and, citing additional case law, notes that the requisite intent can be found when a litigant “fails to provide a credible explanation for departing from standard operating procedures and intentionally failing to preserve ESI.”

The Court then addresses the analysis under Rule 37 as it applies to the facts on the plaintiff’s motion here and finds that the text messages were, in fact, ESI, that a substantial number of deleted texts were lost and cannot be restored or replaced, and that the City did not take reasonable steps to preserve the text message and that its failure to preserve was, “egregious.”

The Court then considered, because those elements of Rule 37(e) are met, whether sanctions are appropriate, including whether the requisite intent and prejudice is established.

As to prejudice, the court found that

plaintiffs have been deprived of text messages from multiple officials representing the highest levels of City government and those responsible for establishing and implementing the City’s response to CHOP. Of great significance is the fact that any direct messages between these officials, such as those between Mayor Durkin and Chief Best or between Mayor Durkin and Chief Scoggins, cannot be recovered. The Court finds that the deleted text messages threaten to interfere with the rightful decision in this case and sanctions against the City are clearly warranted.

As to intent, the Court noted “on this record, the court finds substantial circumstantial evidence that the City acted with the requisite intent necessary to impose a severe sanction and that the City’s conduct exceeds gross negligence.”

All of the top ranking officials purged through factory resets, changed retention settings, or manual deletions, thousands of CHOP related messages from their phones after they were under a clear obligation to preserve such information. The Court also points to the timing of the City’s knowing about the Mayor’s loss of text messages that it knew on August 21, 2020, shortly after the legal hold went out. But the City did not take any action to ensure that any other officials text messages were preserved. The Court found that that was evidence of intent by the City under Rule 37(e).

However, the Court noted that although the plaintiffs had presented substantial circumstantial evidence that the City acted with the requisite intent to deprive, Plaintiffs have “not presented sufficient evidence from which the Court can conclude that the seven city officials acted pursuant to some elaborate conspiracy to delete their text messages.”

Now, that is an eyebrow raiser. I have to ask here, when all of the text messages are gone and the phone conversations were not recorded, how could the plaintiffs possibly have met that burden to show a conspiracy to delete the information? Again, we’re back to putting the burden on a party who is deprived of the information, the burden of showing that that information would have shown a conspiracy? That doesn’t make any sense.

Back to the Court’s analysis. Having found that prejudice and intent have been shown, the Court then determined that an adverse inference instruction was appropriate to cure the prejudice, but denied plaintiffs request that any instruction clearly identify the elements of the claims that the jury should presume are satisfied. Instead, the Court says that while the plaintiffs have been prejudiced by the destruction of the official’s text messages, “whether these spoliated text messages contained evidence supporting particular elements of plaintiffs claims remains unclear. Instead, the Court will issue an adverse inference instruction at trial that the jury may presume that the City officials’ text messages deleted after the plaintiffs commenced this action were unfavorable to the City.”

That is not a particularly strong adverse inference instruction that a jury may pursue.

Facts on Defendant’s Motion for Sanctions

Turning next to the defendant’s motion that alleges the plaintiffs spoliated text messages as well as data from Signal, which is an instant messaging application that the plaintiffs use. Four of the plaintiffs no longer had text messages related to CHOP for various reasons. Of these four individuals, some of them are CEOs of companies that were plaintiffs in the lawsuit and some of them are individuals.

For example, Michael Malone, who was the CEO of Hunter’s Capital Entities, one of the plaintiffs, provided his phone to counsel to be imaged, and then later lost the device. Someone found the device, shipped it back to Mr. Malone, but it was stolen after the delivery driver left it on the street. After that all happened, they learned that the image that plaintiffs counsel had taken did not contain any text messages from the time during CHOP.

Other plaintiffs have similar stories that phones were lost or replaced after providing them to counsel, and they did not know that the text messages were not captured. One of the plaintiff’s phones stopped working through no fault of his own, and another testified that it is his practice to routinely delete text messages shortly after he receives them, even though he knew he needed to keep them for purposes of the litigation.

That’s what we know is about text messages. Data in Signal is a little bit different. Starting in June 2020, several of the plaintiffs started using Signal to discuss the protests. Messages could be set to disappear from phones on Signal after a certain period of time by the sender, but none of the plaintiffs in this situation had Signal set to have messages automatically disappear.

So all of those messages would have still existed if they had been captured by the images of the devices made by plaintiff’s counsel. The participants testified that they used Signal very passively for a few days and discontinued the use of it. Some of them discontinued the use of it in June. Others continued use of it through December 2020 in a very spotty fashion. So a lot of really different information about how the participants used that particular application and no real information about what it was that they exchanged.

Analysis on Defendant’s Motion

The Court then moves to the analysis of the defendant’s motion. And again, we’re talking about four individuals from multiple plaintiffs. The Court states, as we would expect, that both the text and Signal messages are in fact ESI under Rule 37, but that the City did not meet its burden to show that two of the plaintiffs failed to take reasonable steps to preserve their messages. In doing so, the Court juxtaposed the plaintiff’s behavior against that of the City officials that involved factory resetting phones or manually deleting text messages without ensuring that they were preserved elsewhere. Instead, here we had situations where plaintiff’s phones were imaged by counsel, but the image did not contain all the information needed, and the plaintiffs were not aware of that or the plaintiff’s devices were lost, not through their own fault.

The Court also found that as to the Signal messages, that plaintiff’s counsel found a third party who had access to all 8500 Signal messages and that those were provided so that information was replaced from another location and there was no spoliation as to Signal. With regard to two of the plaintiffs (we said there were four), the Court said that the City hadn’t met its burden. With regard to two of them, the Court noted that plaintiffs counsel seemed to concede that those plaintiffs had in fact, spoliated evidence.

That’s a question that I think you should look at a little bit when you are addressing this for your own clients, because it didn’t seem to me at all like counsel should have conceded that there was spoliation for these two plaintiffs. They both had pretty good stories, and they come out when we’re looking at intent.

The Court then said, even though there was spoliation, there was no intent as to those two individuals. One believed that the text messages had been captured by the imaging of the phone, and the other noted that he routinely deletes his text as a matter of practice, and that practice was followed here, so no intent.

The Court did, however, find that the City was prejudiced by the loss of messages and granted the City’s motion in part. The Court allowed for the presentation of evidence and argument at trial about those missing text messages in response to the City’s motion for sanctions.

So by conceding that those two plaintiffs spoliated evidence, it allowed for the City to get that presentation of evidence and argument. I think here the plaintiffs’ counsel really needed to consider that even though that evidence was lost, it was not, in fact, spoliation. So I think there’s a different argument that could have been made there.

The Court ordered that both the motions were granted in part and denied in part. As I mentioned, as the plaintiff’s motion, the Court will instruct the jury that it may presume that the City officials text messages were unfavorable to the City, and plaintiffs will be allowed to present evidence and argument at trial regarding the City’s deletion of text messages. The Court also granted the costs and fees.

On the City’s motion, the City will be allowed to present evidence and argument at trial regarding Mr. Malone’s missing text messages only. So it is a much more limited subset for the City regarding the loss of information.

Takeaways

This is a really key case from a takeaway perspective, so let’s talk about those.

This decision, as I noted at the outset, highlights the extreme level of importance in being prepared to capture data from mobile devices quickly. Neither party here seemed to do it very well, and as a result, evidence was lost and expensive motion practice was incurred. The loss of evidence perhaps is much more important given the sanctions that were ordered by the Court.

A key fact of note here is that plaintiffs’ counsel imaged the phones as they should have, but they did not realize that they had not captured all of the data that was necessary. That image of the phone should have captured both text messages as well as the Signal data, and failure to both do that properly and to review the data and make sure you have what you need is a potential malpractice issue, both from a perspective of preservation but failing to review it.

This case would also seem to suggest that getting legal hold notice letters out immediately is key. Here, we found that the City did not issue legal hold notices until almost a solid month after the litigation was actually filed, but more importantly than that, almost six weeks after CHOP actually occurred. While I’d like to be able to advocate that those legal hold notices should have been issued earlier, here it doesn’t really seem to make much of a difference.

Plaintiffs’ counsel here did everything that you would want to do. They sent early preservation letters with specific requests for what data should be preserved and for which custodians. But it did not stop the intentional deletion of text messages by those city officials. So the next question is this — how can you stop wholesale deletion from city officials in this case? Or in a situation where you have questions as to whether or not the officials will delete the information?

This is hard to say. This is where we’re finding that parties would rather accept sanctions for spoliation and deletion of data that’s harmful to their case than abide by the Federal Rules of Civil Procedure, and there is essentially no way to stop it. One possible alternative is this — you can go to the Court and ask for preservation of those mobile devices, but you will have to be able to show that you have reason to suspect intentional deletion of information. And those standards vary by court. So that’s something you’ll have to dig into.

Where you are concerned that information will be deleted, you may need to take the proactive step of going to the Court and asking for that information to be preserved. Even if it isn’t, the only sanctions that you will likely get are the adverse inference that is given here.

Now, if the Court orders that preservation and that preservation order is ignored or not handled correctly, then maybe you escalate to a default judgment. But we’re not seeing that very frequently in case law.

As I mentioned, this case is really a compelling example of how a party would rather face sanctions for spoliation of evidence than face the repercussions of the actions that the data would show. It was very compelling to me in this case that the Court put the burden on the plaintiffs to show that there was a conspiracy among these high ranking officials to all delete their text messages.

And the reason for that is this – how coincidental is it that every single one of them deleted every single text message off of their phones, all for different reasons and all with different back stories, but the result was exactly the same? That would be more evidence of a conspiracy in a civil case, say, than in an antitrust action than it was considered by the Court here.

I think we really have to ask, is there a point at which the sanctions provisions of Rule 37 are not sufficient to address this kind of wholesale spoliation? Will a jury be able to infer enough conduct of these city officials without evidence of their decision making that would have been documented in those thousands of text messages? I bet not.

The subject matter of this litigation is highly controversial in so many ways in society today, it almost seems unfair to address those issues with a blanket approach under the Federal Rules. But that’s what we have, and that is what is to be applied consistently across decisions and litigation.

Even here, where a court finds that intentional deletion of data and prejudice to the plaintiffs exists, it was unwilling to issue the ultimate sanction of a default judgment. The question becomes, what does it take for that to happen? How could the plaintiffs here possibly show the decision making among those city officials from a liability perspective if they were communicating solely by text message and those text messages were all deleted by every single individual? How much farther will parties be willing to go to continue to spoliate data, knowing the limited risk that they will face by the federal courts?

Conclusion

Okay, that’s our Case of the Week for this week. Thanks so much for joining me. We’ll be back again next week with another decision from our eDiscovery Assistant database, this one highlighting yet another incredible issuing of sanctions by federal courts.

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Thanks and have a great week.