Seven Seas Cruises S. De. R.L. v. V. Ships Leisure SAM, 09-23411-CIV-UNGARO/SIMONTON, 2011 U.S. Lexis 19465 (S.D. Fla., Feb. 19, 2011).
Plaintiff Seven Seas initiated the action against multiple defendants, claiming damages from defendants’ “failure to provide proper ship management, care and oversight for several cruise ships…”. Specific accusations included, inter alia: negligent representations, negligence, and breach of contract. After defendants answered, and both sides filed tit for tat motions for summary judgment, the court issued an order granting a motion to compel filed by Plaintiffs. The motion required defendants to:
- Identify which employees’ systems had been searched;
- Explain the absence of certain documents from production; and
- Describe search terms used to conduct ESI searches.
The order allowed that after defendants filed an affidavit with the information required by the order, plaintiffs were free to renew their motion for to compel further discovery. They elected to do exactly that, resulting in this opinion.
Plaintiffs maintain that they have discovered “gaps” in the production by plaintiffs, despite defendants’ repeated assurances to the contrary. First, plaintiffs contend defendants searched (and produced) the ESI for a mere nine employees, failing to search other custodians likely possessing relevant data. Seven Seas had submitted a list of 19 employees/custodians or email addresses that were incorrectly excluded from searches.
Next, Seven Seas argue that the production for those custodians that were searched was incomplete. To bolster their claim, plaintiffs identified specific time frames where ESI was not produced for those custodians. They claimed this was the case for at least four custodians. Plaintiff’s attorneys approach in pressing their case is described by the court:
At the hearing, Plaintiffs chronologically recounted each request made by Plaintiffs through the course of discovery regarding the production of ESI, and also reiterated the representations made by the Defendants in response to those requests. Generally, throughout the course of the ESI discovery, Defendants assured Plain-tiffs that Defendants were conducting complete ESI searches for materials responsive to Plaintiffs’ requests. Plaintiffs contend, however, that each time such production or representation regarding the thoroughness of the production was made, that Plaintiffs later found out that the production was not, in fact, complete.
In addition, throughout the hearing, Plaintiffs pointed to statements made by Defendants in submissions to the Court wherein Defendants repeatedly asserted that all relevant custodians’ computers and laptops had been searched. According to Plaintiffs, as a result of the repeated assurances by Defendants that ultimately proved to not be true, Plaintiffs have no confidence in the Defendants’ ability to conduct proper ESI searches, and further have no faith in the Defendants’ representations regarding the same.
And then they bring it home with this:
Thus, Plaintiffs argue that because the Defendants’ failure to produce all responsive ESI discovery has prejudiced the Plaintiffs and because such omissions are ongoing and intentional, that the Court should strike the Defendants’ pleadings and enter a final default judgment against both Defendants. In addition, Plaintiffs request that the Defendants be ordered to pay the costs associated with Plaintiffs having to bring the Renewed Motion to Compel.
Post Process Comment: From the outside looking in, it really looks like counsel for Seven Seas went about this the right way. We have analyzed, in the past four years, innumerable cases where the court felt the need to admonish counsel for vagueness, or making conclusory statements without backing them up with evidence. Here, counsel went through a round of “attack analytics,” (we’ll look at this in a moment) during which they analyzed the production, documented what they perceived as deficiencies, and presented their findings as argument, while including specific examples for the court to hang its hat on. Of course, we aren’t done…defendants get their chance to speak.
Defendants “generally took exception” with some of the “missing custodians” included on Plaintiffs list, and supplemented their arguments with specific information to explain the absence of either custodians from the search, or for data missing for specific time periods from produced custodians.
Defendants then acknowledged that not all relevant ESI had been produced, and then conceded that “in hindsight” and e-discovery consultant or vendor should have been retained to assist them.
Post Process Comment: This is a telling admission. It is an implicit acknowledgment that eDiscovery methodologies weren’t solid due to the inexperience of their staff who were engaged in the project.
In an effort to put the best face on things, V. Ships Leisure reiterated earlier assertions (at least to effort…doesn’t seem possible that they continued to claim the production wasn’t deficient in light of their earlier admission). They also noted that they had supplemented production with additional data, and were prepared to hand over more data that very day. V Ships Leisure then noted went to the “volume defense” by noting that they had already produced hundreds of thousands of documents (ESI and hard copy). They also defended their efforts by noting that some of their custodians were overseas, complicating the logistics behind their project.
V Ships Leisure continued their arguments by stating that the bulk of the relevant evidence was contained in correspondence between plaintiffs and defendants, so plaintiffs already had most of the evidence prior to their suit. Defendants complained that Seven Seas had never alerted them to the gaps prior to filing their motion. Although defendants agreed to re-execute the searches on both already produced custodians and on “missing” custodians, they also claimed that no prejudice to plaintiffs had been demonstrated, an argument plaintiffs could not refute.
Post Process Commentary: Defendants fought back hard, but is it enough? Their admissions may be the most significant part of their arguments, but perhaps their efforts in already producing substantial volumes of data, and the potential lack of prejudice to plaintiffs will carry the day.
The court began by reciting the law behind FRCP 37.
Federal Rule of Civil Procedure 37 addresses a litigant’s failure to make disclosures or to cooperate in discovery and sets forth sanctions that may be imposed by a Court. Rule 37 sanctions are intended to prevent unfair prejudice to the litigants and insure the integrity of the discovery process.” Thus, Federal Rule of Civil Procedure 37 gives a district court the power to enter a default, strike pleadings, or render judgment against a party that disobeys the court’s discovery or pretrial scheduling orders. However, the severe sanction of a default judgment is appropriate only as a last resort, when less drastic sanctions would not ensure compliance with the court’s orders. In addition, Rule 37(b) only permits imposition of the ultimate sanction if a party willfully or in bad faith failed to obey a discovery order. It is not justified under Rule 37(b) if a party’s failure to comply with a discovery order was caused by simple negligence or a misunderstanding of the court order. If the party does not provide a credible explanation of how he interpreted an order compelling discovery in a way that excluded certain documents from the scope of the order, the party’s unsupported assertion that it misunderstood the order is insufficient, and it is not clear error for the district court to find that the party’s failure to comply with the discovery order was willful and in bad faith. Further, when a party claims that he was unable to produce documents in the time allowed by the court, but he does not produce any evidence to support the argument, a district court’s finding of willfulness is not clearly erroneous. Nonetheless, a district court is not required to first impose lesser sanctions if the lesser sanction would be ineffective.
Defendants’ Failure to Produce ESI:
The court began by reciting a history of disputes caused by defendant’s failures to produce or thoroughly search for potentially relevant ESI. The court then admonished both parties for failing to conduct an early meet and confer:
[I]t appears that many of the disputes related to the production of e-discovery could have been significantly narrowed, if not totally avoided, had the Parties held an e-discovery conference early-on in the litigation as required by Federal Rule of Civil Procedure 26(f), wherein issues regarding disclosure and production of ESI could have been thoroughly discussed.
Continuing on, the court articulated its first major conclusion:
[I]t is clear that the Defendants have failed to properly conduct complete, thorough and timely searches of ESI responsive to the Plaintiffs’ discovery requests. There is no doubt that the manner and method in which the Defendants conducted their ESI searches were wholly inadequate.
That said, the court noted that because the production gaps had not yet been plugged, the damage done to plaintiff’s case could not yet be determined. The court also applied some blame to Seven Seas, noting that they could have identified missing custodians or data sources earlier. While the court granted that defendant’s deficiencies were more likely due to its staff’s “unfamiliarity” with e-discovery, and not any malfeasance, the continued inability to conduct EDD competently at this point in the game is inexcusable.
On this point, the court stated:
Indeed after this Court’s January 19th Order, if not before, the Defendants should have reasonably known that they needed to retain an E-discovery consultant to ensure that they properly conducted their ESI searches.
Because of this, said the court, sanctions were appropriate. The ordered defendants to engage an electronic discovery vendor to assist in searching and producing ESI from certain custodians included on plaintiff’s “missing custodian list.” Plaintiff’s request to re-execute searches over the data sets associated with custodians whose ESI had already produced was denied, as in the court’s view, the production of this data was sufficient.
The court concluded that the appropriate sanctions were to:
- Deny defendants motion for summary judgment;
- Award plaintiffs attorneys costs, to be paid by defendants.
The court declined to enter a default judgment on behalf of plaintiffs, as had been requested in the Motion to Compel.
Post Process Comment: The sanctions imposed might be considered fairly mild, considering some of the language contained within the opinion. The biggest mitigating factor for defendants appeared to be the lack of any evidence concerning damage done to plaintiffs case by the omissions in production.
I’d like to reflect a bit on the evidence and arguments brought by Plaintiffs to demonstrate that deficiencies exist in the production. There are two common methods of attacking document productions. You can impugn the results–that is, the contents in the production dataset–or you can question the methodology that produced the dataset. Here, we see examples of both.
In attacking the production, plaintiffs examined the production and reviewed what custodians might be missing. This can be done by reviewing correspondence. When you get significant email or mail traffic going to or coming from individuals whose data has not been produced, a flag should come up. And that’s what was done here.
Another way to look at custodians or data sources is to obtain knowledge of opposing party’s IT systems to ensure that all repositories were searched. Perhaps a Sharepoint site was established where an implicated project’s documents were stored, but not searched or produced.
By attacking the results, you eventually hope to discover a weak methodology or holes in the workflow…because merely pointing out bad results can sometimes be dismissed by legitimate factors (so-called safe harbor deletions, or data residing in sources which are “not readily accessible”). Of course, if production results are obviously deficient, then perhaps that in itself can provide sufficient ammunition to warrant sanctions or other measures.
Next, plaintiffs looked at material from those custodians whose data was produced, and analyzed its completeness by focusing on chronology. This “production gap” analysis has proven very effective, in my experience. Sometimes such gaps can be legitimately explained, but their existence, especially across multiple custodians, should be explored.