Episode 59: Navigating Evidence Preservation and Sanctions

In episode 59 of Case of the Week, we delve into the complexities of a case where the Court meticulously examines various types of data, such as Facebook Messenger messages, recordings, and email communications, to determine the appropriate sanctions for the plaintiff’s serious violations of their duty to preserve evidence and obligations under the Federal Rules of Civil Procedure. As the case unfolds, the Court ultimately decides against dismissal, but grants an adverse inference instruction, awards costs and fees, and permits the defendant to take additional discovery. This episode offers crucial takeaways for legal practitioners, emphasizing the importance of advising clients on preserving data, as well as providing a comprehensive analysis of data types and the elements of Rule 37 in the context of sanctions. Join us as we explore this intricate case and discover the valuable lessons it holds for both attorneys and clients alike.

Introduction

Good morning, and welcome to our #CaseoftheWeek for March 7, 2022. Tomorrow marks the first day back in person at Legal Week in New York City, and I’ll be hopping on a plane shortly after our broadcast. I’m looking forward to seeing folks in person there. If you’re going to be there and interested in taking a look at eDiscovery Assistant, please reach out to us and we’ll get something set up with you.

My name is Kelly Twigger. I am the founder and CEO of eDiscovery Assistant, as well as the Principal at ESI Attorneys, and I appreciate you joining us today.

Each week, as you know, through our partnership with ACEDS, we choose a recent decision in eDiscovery that highlights issues that are key for litigators and those involved in the eDiscovery process and we talked about the practical implications of that case and what it means for you, your practice, and for your clients.

This week’s decision comes to us from the case of Fast v. GoDaddy.com. This is a decision from February 3rd, very recent, from the District of Arizona, written by United States District Judge David Campbell.

As always, we tag each of the decisions in the eDiscovery Assistant database with issue tags, and this one is replete with a number of tags, just because of the number of issues that are going on. Issue tags include:

Background

Now we are before the Court on this decision on a motion for sanctions. In the underlying case, the plaintiff asserted claims for sex and disability discrimination and Family Medical Leave Act retaliation. In essence, the plaintiff was injured, she was required to return to work and claimed that returning to work further exacerbated her injuries.

At the time of this motion before the Court, discovery, fact discovery and expert discovery both have closed. The defendants claim on their motion that the plaintiff knowingly deleted relevant information from her electronic devices and accounts and then failed to produce other relevant information also in a timely fashion. They are seeking sanctions under Rule 37(e) for spoliation and Rule 37(c) for failure to produce relevant information.

Now, we’re well familiar with FRCP 37(e) that provides sanctions for failure to preserve. As we know, there are three elements that it requires

1. That the ESI should have been preserved (i.e. the duty to preserve had arisen).
2. That it’s lost through failure to take reasonable steps to preserve it, and
3. That it cannot be restored or replaced.

Now, keep in mind that Rule 37(e) is the section under that rule that requires intent in order to receive the most egregious sanctions, terminating sanctions, which are dismissal or default judgment. Now, Rule 37(c), these are the two sections of the rule that the Court is doing an analysis under. This is both what the defendant sought, but also what the Court has assessed are the appropriate sections of the rule for analysis and Rule 37(c) authorizes sanctions for failing to produce information that’s required by Rule 26(a) or Rule 26(e). Rule 26(a) requires a party to make initial disclosures of information that it can use to support its claims or defenses, and that’s not the issue here. Rule 26(e) requires a party to supplement its Rule 26(a) disclosures and responses to interrogatory requests for production or request for admission, and that duty to supplement has to be made in a timely manner and the Court notes that it is a continuing affirmative duty.

Sanctions are available under Rule 37(c)(1) for violating 26(e) when a party provides incomplete, misleading or false discovery responses and does not complete or correct them by supplement. With regard to the sanctions under this rule, Rule 37(c)(1) provides that a party who violates Rule 26(e) cannot use the withheld information at trial unless the failure was substantially justified or harmless. We are talking about a preponderance of the evidence standard when it comes to proving the necessary elements for a motion for sanctions.

Facts

Okay, let’s talk about the plaintiff’s duty to preserve in the context of those elements that are required here. The Court found that the duty to preserve arose in May of 2018, when the plaintiff began gathering evidence to use in her lawsuit against GoDaddy. At that time, the evidence showed that the plaintiff had started coordinating with a coworker to gather instant messages from her Slack work account, and the messages are very clear about her intent to bring the lawsuit.

I’m going to encourage you to read this decision. There’s so much going on here that our discussion today is going to be very high level, sort of a 30,000 foot range, but you’re going to want to read all of the messages here. They’re laid out in the Court opinion as to what specifically, because it really gives you a very clear picture of the steps that the plaintiff took here to really delete and get rid of information that could otherwise be incriminating prior to producing it.

The Court notes as well that the duty to preserve can arise prior to retaining counsel. That’s a key point. Sometimes people feel like when they hire counsel is when the duty to preserve arises, and if you have intent to bring a lawsuit, as the plaintiff clearly did here. The duty to preserve arises when you reasonably anticipate litigation. Don’t wait until you hire counsel. That being said, if you do hire counsel, that’s a pretty clear indication that you were aware that you reasonably anticipated litigation.

All right, what is the alleged spoliation that we’re talking about? The defendant alleges that the plaintiff failed to preserve multiple areas of ESI, including a number of Facebook posts, 109 Facebook Messenger messages to and from her coworker, the contents of her cell phone, the contents of an email account, and Telegram Messenger messages between plaintiff and her coworker. Telegram is another instant messaging software that works a little bit like WhatsApp and Signal and messages can be deleted. Once they’re deleted, they’re no longer available.

Okay, let’s look at each of those individual pieces which are broken out by the Court. One of the reasons that I recommend this decision for you to take a look at is it’s going to break down for you what some of the technology difficulties are with some of these platforms. And what it really highlights is that as counsel, you need to advise your client of their duty to preserve immediately. You need to investigate what the sources of information are that they have and ensure that those are kept and likely collected in order for you to be able to produce them when required.

As we’ve seen and we will see with this case, you’re going to find that the downside of the spoliation is much worse than actually producing the information.

Okay, let’s look at the Facebook posts. The defendant learned of the Facebook post during the plaintiff’s deposition when she admitted deleting a post that she had previously produced. She admitted that she had deleted the post “along with others like it”, and couldn’t recall how many she had deleted. That right there is very damning if you’re counsel sitting next to the client at that point, you’re a little disturbed.

The plaintiff conceded that she had archived or deleted posts from three of her Facebook accounts. That was a huge problem. The Court looked at the date the duty to preserve arose, which we said was in May of 2018 and that the plaintiff had deleted posts that were relevant to her lawsuit. The Court honed in on the fact that the plaintiff admitted during her deposition that she was unsure whether she had gone through her social media accounts and turned over everything that might be relevant to her attorney.

That’s a huge problem. She testified that she was aware of relevant social media information that she may not have turned over to her attorney, and she testified that she had deleted a post from April 11th of 2018, a post with obvious relevance to this lawsuit, along with, “Anything out there,” that was “like that.” The Court found based on that testimony and evidence, that the prerequisites for sanctions under Rule 37(e) were satisfied, and then it turned to looking at prejudice and intent.

As with most of the ESI sources in this case, the Court found that prejudice was available or was present because it deprived the defendants of the ability to use that information because it could not be recovered or restored. With regard to intent, the Court looked at whether or not she intended to deprive the defendants of the use and found that plaintiff did based on:

1. The relevance of the information.
2. Knowledge that the post would be useful, and
3. Her choice to permanently deleting the post versus archiving them, as well as the implausibility of her explanation.

One of the things that we find out about the plaintiff here through the depths of this case is that she’s pretty tech savvy, and her ability to make arguments based on lack of being tech savvy get tossed by the Court with regularity.

Each of those things made it sufficient to show the intent. With regard to the Facebook post, we’ve now got all of the prerequisites required for violation of Rule 37(e)(2), and sanctions are likely appropriate.

Okay, next source of ESI is the unsent Facebook messages. There were 109 of them. There are messages that were requested in discovery in April of 2021. Some of them were disclosed in September, three days prior to the coworkers deposition, and at the deposition or shortly thereafter the coworker then produced 487 messages that plaintiff had not produced in 109 instances where the plaintiff unsent messages to her coworker so that the coworker could not produce them. The way that works in Facebook Messenger is you get a timestamp with a message, and then there’s a message in the application itself that says, “this message has been unsent”. It’s pretty clear that messages were unsent between the plaintiff and the coworker.

The plaintiff argued the sanctions were not appropriate because she had produced a full set of messages, including the unsent ones, in response to the motion for sanctions, but the Court found that the messages clearly showed that there was a massive collaboration between the plaintiff and coworker in preparation for and during the case. As I mentioned earlier, I really want you to read the decision to see the detail of these messages. They’re very clear that the plaintiff is instructing the coworker what to do regarding data, what to say, how to prepare for depositions. It’s pretty egregious. There was at least one additional message that was not produced, and that message alone was sufficient to satisfy the prerequisites for sanctions. Under Rule 37(e).

The Court then turned to looking again at prejudice and intent, and found that the context of the message is relevant and that the defendants were prejudiced by the loss of data. With regard to intent, the Court found that the plaintiff unsent the messages to keep the defendants from receiving it in discovery. Therefore it was sent, they were done with intent to deprive, meaning that the prerequisites for Rule 37(e), which require intent, are met for those more terminating harsher sanctions.

Okay, next source of ESI was the plaintiff cell phone. At the time of this request, the plaintiff had an iPhone 12 Pro and claims that it was stolen in September of 2021. The defendant claimed that by failing to back it up to iCloud, plaintiff had breached her duty to preserve plaintiff said that she didn’t need to preserve it because she had preserved the communications on the phone for two years and produced everything that was relevant before it was stolen. The Court found, based on a lot of the evidence that was cumulative here, that the plaintiff had not produced all the relevant information from the device that her duty to preserve was ongoing and existed at the time the phone was stolen, and the issue was whether she failed to take reasonable steps to preserve it. The Court also took into account based on the comments to the 2015 amendments to Rule 37(e), the advisory notes, that the party’s sophistication is to be taken into account regarding the technology and what she could have done in terms of assessing whether reasonable efforts were taken.

Here as I mentioned earlier, because the plaintiff is clearly pretty tech savvy and she runs a team of developers, that the Court didn’t buy that she was not sophisticated enough to have made a backup of her iPhone before it was stolen. Based on that, the Court found that the prerequisites of the loss of the phone were met and that she failed to preserve it.

The Court then looked at prejudice and intent. The loss of the phone meant loss of evidence for the defendants, the prejudice was present. With regard to intent, the Court did not find that the plaintiff acted with intent to deprive here because the phone being stolen could not have been foreseen or intended by the plaintiff, so there was no intent with regard to Rule 37(e).

Moving to the next source, which was plaintiff’s deactivated email account. In this particular situation, plantiff had a web based email account that she knew she would lose access to in August 2020 because she moved to an area that the company did not service. The email was downloaded to her Apple laptop, so it was synced via an iMap account, but she claimed that a subsequent software update removed access to those emails. The plaintiff did not make any effort to move the emails from that account to another account or to download them before losing access, and then she lost access to them all. The Court found that the duty to preserve had arisen and that the plaintiff failed to take reasonable steps to preserve it.

The Court also noted that courts have long recognized that when the deletion of ESI is set to occur, the parties have an affirmative duty to step in and prevent its loss. Because the plaintiff failed to do that here, she met the prerequisites for sanctions under rule 37(e).

The Court then looked to the prejudice and the intent. The emails clearly included communications that were related to the core of the case, and as such, because the defendants did not have them, they had been deprived of that use, and prejudiced existed. With regard to intent, however, the Court found that defendants had not proved intent. The plaintiff took no active steps to discontinue service. This is where this particular situation can be analogised to the DR Distributors case. If you remember that one back from, I believe, January of last year, huge case in which the defendant in that case allowed Yahoo instant chat services to expire and all of those messages to be deleted, but because he did not take an active step to delete them himself, the Court found that there was no intent. That’s a similar situation to what we’re seeing here.

I think when you know that information is going to expire and you allow it to expire and you understand that you have a duty to preserve, I think we may need to revisit that intent standard, but nevertheless, that’s where we are on rule 37(e), there has to be active steps in order to be able to demonstrate intent.

Okay, that is with regard to the deactivated email account, you’ve got the prerequisites for rule 37(e), but no intent. Next one is the Telegram messages. Telegram is, again, another instant messaging service, much like WhatsApp or Signal. What was clear from the evidence here is that the plaintiff used Facebook Messenger to tell the coworker to download and use Telegram Messenger instead of Facebook Messenger, and then, once activated, told them to not to exchange any further messages on Facebook. That was a pretty clear signal to the defendants and to the Court, that Telegram was actively used between the plaintiff and her coworker to continue to collaborate on information that should be collected or what should be done with the case.

In essence, we’re going to find here, through a subsequent communication with a doctor, that the plaintiff here was really very manipulative in terms of how it wanted to craft this case. Both the communications with the coworker, as well as the authoring of a letter that a doctor ultimately signs off on really show the level of manipulation that the plaintiff was going through here in discovery.

With regard to Telegram, a forensic expert for the defendants reviewed Telegram and stated that the, “no messages here yet”, on Telegram, which is what showed up, is consistent with a deleted message chain and it is evidence to show that the plaintiff and her coworker regularly switched between messaging platforms, including text, email, phone, Slack, Facebook, rather than just using one platform exclusively.

The Court found that the messages cited strongly suggested that they had communicated by Telegram, and the screenshots showed that there were contacts in combination with the Facebook Messenger messages discussing it. The Court really came to the conclusion that the plaintiff and her coworker did communicate by Telegram and those messages were not produced. She had failed to preserve those messages or take reasonable steps to preserve them. Those prerequisites are met, now the question comes to prejudice and intent with regard to the Telegram messages.

Clearly, the Telegram messages were relevant based on the fact that they were deleted, and the Court found that there was sufficient prejudice to the defendants. With regard to intent, the Court found that the course of conduct engaged in by plaintiff and the evidence from the Facebook Messenger posts suggest that she deleted those Telegram messages with the intent to deprive them. The messenger messages are “replete with references to their desire to keep certain evidence hidden from defendant”. That’s direct from the Court.

Okay, those are the different sources of ESI that are before us on the motion for sanctions and the analysis as to whether the prerequisites are met with regard to intent and prejudice. What happens when we come upon the motion for sanctions? There’s really three separate categories the defendants are looking at in terms of seeking sanctions under 37(c)(1). One, is a failure to produce the Facebook Messenger messages, the failure to produce four audio recordings of meetings with GoDaddy employees, as well as additional emails from the web based email account.

Analysis

In terms of the Court’s analysis, the Court looked at each type of the data, they analyzed the details of what happened, the context of plaintiff’s actions, and found that with respect to the Facebook Messenger messages, the production of them came after discovery was closed and was not substantially justified by the plaintiff. With regard to the recordings, plaintiff waited until the close of discovery to produce three of the four, but did not produce the fourth one, and the Court found that that failure to produce them had no justification and the failure was not harmless.

With regard to the email communications, the Court found these to be the most troubling. These were emails to a podiatrist that treated the plaintiff, and the podiatrist produced emails, by a third party subpoena, that showed that the plaintiff requested him to write and provided him with a draft letter that her condition was caused by working at GoDaddy after the surgery. The draft that plaintiff sent that’s attached to the emails is nearly identical to what the doctor ultimately signed, and that was a significant issue. As to why the plaintiff had not produced these emails to the doctor.

The Court noted that it retains discretion to authorize sanctions and which sanctions are warranted. At this point, the defendant is seeking dismissal. The Court says that Rule 37(e)(2) sanctions are authorized for three different categories of discovery misconduct. The Court says that the plaintiff actions are, “serious violations of plaintiff duty to preserve and her obligations under the Federal Rules of Civil Procedure.”

Those categories that are serious violations include the deletion of Facebook posts, the unsending of the message conveying a summary of evidence with the coworker, deletion of the Telegram messages with the co worker, and the lost evidence from all of those sources. The Court then looks though at the relevance of those messages to what’s going on in the case, and the Court says that primarily all of the lost information goes to plaintiff’s damages claims. While the spoliation did deprive the defendants of evidence, it did not “foreclose meaningful defense.” Nothing central to the liability issues in the case is what is in the evidence that was spoliated, and therefore dismissal is not warranted.

The Court did, however, note that an adverse instruction is appropriate and granted the motion for sanctions for an adverse inference instruction. The Court then ordered the parties to propose to the Court a proposed adverse inference instruction along with their submission of the jury instructions. The Court also awarded costs and fees on the motion, and allowed the defendant to conduct a forensic examination of the plaintiff’s electronic devices to see if any other data was recoverable. The Court also permitted the defendants to issue up to four additional third party subpoenas.

You’ve got essentially a couple of things. You’ve got an adverse inference instruction, you’ve got costs and fees being awarded, and you’ve got the ability by defendants to take additional discovery to see if they can uncover that information from either electronic devices or from third party sources.

Takeaways

What are our takeaways today? Few things, one, there’s a huge lesson here on how to advise your client regarding preserving data. The plaintiff undertakes most of the spoliation before ever engaging counsel and was clearly a bad actor, but a lot of times we really need to take that opportunity out of the client’s hands. A lot of times spoliation happens because of negligence, but that can seriously upend the case. It can really prejudice your case if, in fact, that happens.

Second takeaway, this opinion is really an excellent analysis of each type of data that’s lost and whether it’s met the elements of Rule 37 for sanctions to be available. It’s a great decision for you to have side by side when you’re laying out a motion for sanctions so that you can be clear and concise on what you present to the Court in order to be able to get a more favorable ruling. Motions for sanctions are inherently very fact based, you’ve got to have your evidence in order and you’ve got to be painting the picture, creating the story that you want the Court to see about what holes exist in your case based on the failure to preserve or failure to produce information.

Conclusion

All right, that’s our #CaseoftheWeek for this week. Thanks so much for joining me. We’ll be back again next week with another decision from our eDiscovery Assistant database. If you’re heading to Legal Week in New York city and want to connect, please reach out to us at support@eDiscoveryAssistant.com and we’d love to see you and show you what we’re doing with the platform.

Thanks so much. Stay safe and healthy out there. Safe travels and have a great week.