In Episode 149, Kelly Twigger discusses whether a preliminary showing of spoliation overcomes privilege associated with the content and distribution of legal hold notices in FTC v. Amazon.com, Inc. (July 9, 2024).
Introduction
Welcome to this week’s episode of our Case of the Week series brought to you by eDiscovery Assistant in partnership with ACEDS. My name is Kelly Twigger. I am the CEO and founder at eDiscovery Assistant, your GPS for ediscovery knowledge and education, and the Principal at ESI Attorneys. Thanks so much for joining me today.
A couple of announcements before we dive into this week’s case. This Thursday, July 18th, I will be hosting a workshop as part of the Midwest Chapters of ACEDS four-part series on ESI protocols. The first three episodes in that series have already aired, but are available to stream here. You can use the link to sign up to receive more details and also for the workshop which will be on July 18th.
Next, our team will be in New York City next week at the Master’s Conference that’s taking place on Wednesday, July 24th, and we’d love to see you there. I’ll be participating on a panel with Liz Gary and Bansri McCarthy from Morgan Lewis, as well as former Magistrate Judge Andrew Peck, now with DLA Piper, and Jessica Ross of Swiss Re. We’ll also be doing our breakout session and playing our eDiscovery Navigator game after lunch. So come and test your ediscovery knowledge with us. Last year’s winner, Liz Gary, will be back to try and defend her title. So if you want to take Liz down, you’ll have to come and join us! If you’re interested in getting a code to be able to attend the Master’s Conference for free, you can drop us a line at support@ediscoveryassistant.com, and one of our team will reach out.
All right, now on with our show.
Each week on the Case of the Week, I choose a recent decision in ediscovery and talk to you about the practical implications of what that decision means for your practice, your clients, and how you need to be proceeding on a daily basis in ediscovery. This week’s decision is a very short one, but very compelling in that it touches, again, on the issue of whether the legal holds that counsel send to custodians are privileged and under what circumstances that privilege can be circumvented and those holds will have to be produced. This is the second time that this has come up in Case of the Week in 2024, and we’ll get into that.
Background
Our decision this week comes to us from FTC v. Amazon.com. This is a case that’s pending in the Western District of Washington, and this is a decision from United States District Judge John Chun dated July 9, 2024, so just a week ago. Judge Chun has 24 decisions in our eDiscovery Assistant database. Each decision in our database, as you know, is tagged with our proprietary issue tagging structure. This week’s issues include Signal, ephemeral data, 30(b)(6) corporate designee, spoliation, legal hold, attorney-client privilege, attorney work-product, and failure to produce.
Facts
We are before the Court on a matter that is brought by the FTC, alleging that Amazon is a monopolist that uses a set of interlocking, anti-competitive and unfair strategies to illegally maintain its monopoly power. The FTC and its state Attorney General partners say that Amazon’s actions allow it to stop rivals and sellers from lowering prices, degrade quality for shoppers, overcharge sellers, stifle innovation, and prevent rivals from fairly competing against Amazon. I hadn’t really thought about it, but given that today is the first day of Amazon Prime, this case is fairly timely. This is an enormous antitrust case with significant implications for consumers and merchants who sell their products through Amazon.
We are before the Court today on the FTC’s motion to compel the production of “document preservation notices and its instructions about the use of ephemeral messaging applications, including Signal.” Plaintiffs sought the documents as relevant to their assessment of defendant’s potential spoliation from two ephemeral messaging applications, Signal and Wickr. The FTC’s RFP sought “[a]ll litigation holds, preservation notices or similar documents sent by Amazon in connection with the June 17, 2019 preservation letters, August 5, 2019 Voluntary Access Letter, February 20, 2020 Civil Investigative Demand, and/or September 26, 2023 Complaint in this matter”, as well as instructions or advice given to employees about the use of ephemeral messaging, including but not limited to Signal and Wickr. Defendant objected to these requests as privileged and did not produce them.
From a timeline perspective, think about the dates that I just gave you on the specific things that the FTC is requesting. They’re saying to Amazon “we know that you sent out notices as early as June 2019, again in August of 2019, again in February 2020, and again in September 2023, all of which were likely triggered by the duty to preserve information as a result of the FTC’s investigation.” This case was not filed by the FTC until September 2023, but the FTC was working with Amazon on an investigation for four years prior to the filing of the complaint. And according to these requests for production, asking for these legal hold notices, they want data that goes back as far as the early stages of that investigation in 2019.
Analysis
What is the Court’s analysis here?
It’s a pretty simple fact pattern. The Court began its analysis by agreeing that the documents that plaintiffs are asking for may be relevant to spoliation. But the Court also acknowledged that black-letter law says that “litigation hold notices are not discoverable, ‘particularly when a party has made an adequate showing that the letters include material protected under attorney-client privilege or the attorney work-product doctrine.”
Citing to case law, the plaintiffs argued that a preliminary showing of spoliation overcomes the protections against disclosure that might otherwise apply to document preservation notices and attorney-client privileged communications about litigation holds or spoliation. In response, the defendant made multiple arguments. The Court really latched on to one from the defendant, which asserted that the appropriate response in this situation is to order a 30(b)(6) deposition of the party seeking the privilege. In this case, the defendant is asking the Court to order the FTC to take a 30(b)(6) deposition of an Amazon employee.
The Court then looked to similar cases in which courts have granted 30(b)(6) depositions and testimony that then provided a sufficient basis for requiring production of the legal hold notices. So essentially, case law gives us a basis, in fact, for using the 30(b)(6) notice as the next procedural step before compelling production of the preservation notices.
The plaintiffs came back and argued that they’d already sought corporate testimony on Amazon’s preservation efforts, citing excerpts from testimony that was given by Amazon’s corporate representative at an investigational hearing taken during the pre-complaint investigation, and that an additional deposition would be fruitless. During that testimony, plaintiffs asked about the document preservation notices that Amazon had circulated, and Amazon’s counsel stated that the witness had not viewed specific hold notices and that Amazon viewed those as privileged communications. They’d already asked the question once, and Amazon had refused to answer it. Now Amazon is saying “well, ask us again”, and the plaintiffs are saying, “what is the point of that?”
The court disagreed with plaintiffs and ordered Amazon to provide a 30(b)(6) witness within 30 days and allowed plaintiff to ask about:
- when and to whom the litigation notices were given,
- what kinds of categories of information and data defendants employees were instructed to preserve and collect, and
- what specific actions they were instructed to take to that end.
The Court then permitted plaintiffs to renew their motion if the deposition did not provide the information necessary to analyze the full extent of the possible spoliation. With that ruling, the Court then denied the motion without prejudice. We are essentially left with Amazon now being required to provide a 30(b)(6) witness who will be able to provide those three categories of information.
Takeaways
What are our takeaways from this case?
We’re seeing a lot more decisions this year in which parties are working to compel the production of legal holds — documents that have been consistently protected as privileged. But, as we discussed in Episode 138 on Case of the Week, which was the Uber Technologies case, there are certain circumstances where the courts will order the production of information around the legal holds, i.e., information about the sources of ESI preserved, what sources of ESI it preserved, when each source was preserved, when each ESI source was used, what each source was used for, and the general types of information housed in each source. In the Uber Technologies case, Uber was also required to provide names and roles of folks who received the actual litigation hold. So very similar to the information that the Court has ordered here.
There’s no information in this decision about what the alleged spoliation is at this point from the FTC. So we don’t have a real basis to think strategically about what’s happening here. But given the subset of information in the request for production that they’re asking for Signal and Wickr data, we can absolutely consider that those ephemeral messaging applications are likely the sources of that potential spoliation.
Now, in the case before us, the FTC wants the actual legal hold notices to know what Amazon told its custodians regarding the preservation of data from Signal or Wickr. If you’ve read our 2023 eDiscovery Case Law Report , we walked through how a user can change their settings in Signal to have messages auto delete or become ephemeral. Signal can be an ephemeral messaging application, but its default settings are to keep messages on the device that they’re sent from and to. Because of that, it’s important to know what instructions, if any, Amazon gave to its custodians about preservation of data for the application. Now, as to Wickr, interestingly, Amazon bought Wickr in 2021, stopped allowing new users on the app on December 31, 2022, and discontinued the use of Wickr on December 31, 2023.
Remember that the investigation from the FTC started in 2019, so two full years before Amazon bought Wickr. The question of what data was retained for purposes of this litigation is important, especially when it appears that plaintiffs know that Wickr was used to communicate information that may be relevant to the litigation. The FTC filed this case in September 2023, after those four years of investigation into Amazon’s practices — during which time, according to news reports, they sought documents for more than 130 current and former Amazon employees. So pretty good bet that the FTC had a good source, a good knowledge base of information of what was available, and what sources were used to communicate as a result of that years-long investigation that is now showing up in this motion.
Context here is key, and it seems likely that we’ll see a revisit of this spoliation issue given the amount of evidence that the FTC already had prior to filing suit. It will be an interesting analysis in that it appears Amazon’s duty to preserve Wickr will have risen well before it shut the platform down in December of 2023.
Practically speaking, the key takeaway from this case is that the privileged protections of a legal hold may be overcome by a preliminary showing of spoliation and that a compelling party is entitled to a 30(b)(6) depo on the topics above to determine whether they get the actual notices.
This analysis adds a level of complexity to how counsel leverage legal hold notices to communicate to custodians and liaisons for specific data sources. In my view, it really ratchets up the need for early and direct conversations with custodians and the liaisons of those data sources. The more we get into these complex data sources — mobile devices, collaboration tools — things that are not our standard email that are kept forever and ever, it’s more important than ever to have those conversations early. A notice that’s sent via an email with a follow-up conversation following shortly thereafter that ensures that a custodian knows and fully understands their obligations is really important, as well as the proactive collection of data in order to mitigate risk.
Keep that in mind as you’re moving forward — that these legal hold notices now are being challenged more and more regularly. Yes, both examples (Amazon and Uber) are in these large MDL and significant litigations against technology companies, but that doesn’t mean that the principles won’t filter down into other litigation. Be aware of the potential overcoming of the privilege of litigation holds. If there is an allegation of spoliation to which those legal holds could become relevant, be prepared to provide a 30(b)(6) witness to answer the questions that are outlined both in the Uber Technologies case and in this decision from FTC v. Amazon.
Conclusion
That’s our Case of the Week for this week. Thanks for joining me. We’ll be off next week at the Master’s Conference in New York City, so please come and join us. Then please join us on Tuesday, July 30th, for what will mark our 150th episode of the Case of the Week. Thanks so much to all of you who’ve been tuning in for the last few years to watch our series, and we look forward to talking again on the 150th episode.
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Have a great week!
