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Case Blurb: Cammarata; The difficulty of proving relevance and prejudice of destroyed documents

Posted by rjbiii on March 29, 2010

It is well established that a party seeking the sanction of an adverse inference instruction based on spoliation of evidence must establish that: (1) the party with control over the evidence had an obligation to preserve it at the time it was destroyed; (2) the evidence was destroyed with a culpable state of mind; and (3) the destroyed evidence was “relevant” to the party’s claim or defense such that a reasonable trier of fact could find that it would support that claim or defense. The “relevance” and “prejudice” factors of the adverse inference analysis are often broken down into three subparts:

(1) whether the evidence is relevant to the lawsuit;
(2) whether the evidence would have supported the inference sought; and
(3) whether the nondestroying party has suffered prejudice from the destruction of the evidence.

Pension Committee recognized the difficulty and potential for unfairness in requiring an innocent party seeking discovery to show that information lost through spoliation is relevant and prejudicial. Those concerns are acute when the party seeking discovery cannot replace or obtain extrinsic evidence of the content of deleted information. But in many cases–including the present case–there are sources from which at least some of the allegedly spoliated evidence can be obtained. And in many cases–including the present case–the party seeking discovery can also obtain extrinsic evidence of the content of at least some of the deleted information from other documents, deposition testimony, or circumstantial evidence.

Courts recognize that a showing that the lost information is relevant and prejudicial is an important check on spoliation allegations and sanctions motions. Courts have held that speculative or generalized assertions that the missing evidence would have been favorable to the party seeking sanctions are insufficient. By contrast, when the evidence in the case as a whole would allow a reasonable fact finder to conclude that the missing evidence would have helped the requesting party support its claims or defenses, that may be a sufficient showing of both relevance and prejudice to make an adverse inference instruction appropriate.

See case summary here.

Rimkus Consulting Group, Inc. v. Cammarata, 2010 U.S. Dist. LEXIS 14573, 30-31 (S.D. Tex. Feb. 19, 2010) (referring to Pension Comm. of the Univ. of Montreal Pension Plan v. Banc of Am. Sec., LLC, No. 05 Civ. 9016, 2010 U.S. Dist. LEXIS 4546, 2010 WL 184312, at *3 (S.D.N.Y. Jan. 15, 2010))

See case Summary for Pension Committee here.

Posted in 5th Circuit, Adverse Inference, Case Blurbs, Judge Lee H. Rosenthal, S.D. Tex., Sanctions, Spoliation | Tagged: , | Leave a Comment »

Case Blurb: Cammarata; Bad Faith a Requirement for the Imposition of Severe sanctions in the 5th Cir

Posted by rjbiii on March 29, 2010

As a general rule, in this circuit, the severe sanctions of granting default judgment, striking pleadings, or giving adverse inference instructions may not be imposed unless there is evidence of “bad faith.”

Other circuits have also held negligence insufficient for an adverse inference instruction. The Eleventh Circuit has held that bad faith is required for an adverse inference instruction. The Seventh, Eighth, Tenth, and D.C. Circuits also appear to require bad faith. The First, Fourth, and Ninth Circuits hold that bad faith is not essential to imposing severe sanctions if there is severe prejudice, although the cases often emphasize the presence of bad faith. In the Third Circuit, the courts balance the degree of fault and prejudice.

See case summary here.

Rimkus Consulting Group, Inc. v. Cammarata, 2010 U.S. Dist. LEXIS 14573, at *23-24 (S.D. Tex. Feb. 19, 2010)(internal citations removed).

Posted in 5th Circuit, Adverse Inference, Bad Faith, Case Blurbs, Judge Lee H. Rosenthal, S.D. Tex., Sanctions, Spoliation | Leave a Comment »

Case Blurb: Cammarata; On Determining Appropriate Sanctions for Spoliation

Posted by rjbiii on March 29, 2010

Determining whether sanctions are warranted and, if so, what they should include, requires a court to consider both the spoliating party’s culpability and the level of prejudice to the party seeking discovery. Culpability can range along a continuum from destruction intended to make evidence unavailable in litigation to inadvertent loss of information for reasons unrelated to the litigation. Prejudice can range along a continuum from an inability to prove claims or defenses to little or no impact on the presentation of proof. A court’s response to the loss of evidence depends on both the degree of culpability and the extent of prejudice. Even if there is intentional destruction of potentially relevant evidence, if there is no prejudice to the opposing party, that influences the sanctions consequence. And even if there is an inadvertent loss of evidence but severe prejudice to the opposing party, that too will influence the appropriate response, recognizing that sanctions (as opposed to other remedial steps) require some degree of culpability.

See case summary here.

Rimkus Consulting Group, Inc. v. Cammarata, 2010 U.S. Dist. LEXIS 14573, at *21-22 (S.D. Tex. Feb. 19, 2010)

Posted in 5th Circuit, Case Blurbs, Judge Lee H. Rosenthal, S.D. Tex., Sanctions, Spoliation | Tagged: , | Leave a Comment »

Case Blurb: Cammarata; Application of General Rules to Spoliation Allegations

Posted by rjbiii on March 29, 2010

These general rules (on spoliation and sanctions) are not controversial. But applying them to determine when a duty to preserve arises in a particular case and the extent of that duty requires careful analysis of the specific facts and circumstances. It can be difficult to draw bright-line distinctions between acceptable and unacceptable conduct in preserving information and in conducting discovery, either prospectively or with the benefit (and distortion) of hindsight. Whether preservation or discovery conduct is acceptable in a case depends on what is reasonable, and that in turn depends on whether what was done–or not done–was proportional to that case and consistent with clearly established applicable standards. As Judge Scheindlin pointed out in Pension Committee, that analysis depends heavily on the facts and circumstances of each case and cannot be reduced to a generalized checklist of what is acceptable or unacceptable.

See case summary here.

Rimkus Consulting Group, Inc. v. Cammarata, 2010 U.S. Dist. LEXIS 14573, at *20-21 (S.D. Tex. Feb. 19, 2010)(referring to Pension Comm. of the Univ. of Montreal Pension Plan v. Banc of Am. Sec., LLC, No. 05 Civ. 9016, 2010 U.S. Dist. LEXIS 4546, 2010 WL 184312, at *3 (S.D.N.Y. Jan. 15, 2010))

See case Summary for Pension Committee here.

Posted in 5th Circuit, Case Blurbs, Judge Lee H. Rosenthal, S.D. Tex., Sanctions, Spoliation | Tagged: , | Leave a Comment »

Case Blurb: Cammarata; Duty to Preserve

Posted by rjbiii on March 29, 2010

Generally, the duty to preserve arises when a party “‘has notice that the evidence is relevant to litigation or . . . should have known that the evidence may be relevant to future litigation.'” Generally, the duty to preserve extends to documents or tangible things (defined by Federal Rule of Civil Procedure 34) by or to individuals “likely to have discoverable information that the disclosing party may use to support its claims or defenses.”

See case summary here.

Rimkus Consulting Group, Inc. v. Cammarata, 2010 U.S. Dist. LEXIS 14573, at *18-19 (S.D. Tex. Feb. 19, 2010)

Posted in 5th Circuit, Case Blurbs, Duty to Preserve, FRCP 34, Judge Lee H. Rosenthal, S.D. Tex. | Leave a Comment »

Case Blurb: Cammarata; Definition of Spoliation

Posted by rjbiii on March 29, 2010

Spoliation is the destruction or the significant and meaningful alteration of evidence.

See case summary here.

Rimkus Consulting Group, Inc. v. Cammarata, 2010 U.S. Dist. LEXIS 14573 at *18 (S.D. Tex. Feb. 19, 2010)

Posted in 5th Circuit, Case Blurbs, Judge Lee H. Rosenthal, S.D. Tex., Spoliation | Leave a Comment »

Case Blurb: Cammarata; Court’s Authority to Impose Sanctions for Spoliation

Posted by rjbiii on March 29, 2010

Allegations of spoliation, including the destruction of evidence in pending or reasonably foreseeable litigation, are addressed in federal courts through the inherent power to regulate the litigation process if the conduct occurs before a case is filed or if, for another reason, there is no statute or rule that adequately addresses the conduct. If an applicable statute or rule can adequately sanction the conduct, that statute or rule should ordinarily be applied, with its attendant limits, rather than a more flexible or expansive “inherent power.”

When inherent power does apply, it is “interpreted narrowly, and its reach is limited by its ultimate source–the court’s need to orderly and expeditiously perform its duties.” In [Supreme Court case] Chambers, the inherent power was linked to the bad-faith conduct that affected the litigation. See 501 U.S. at 49. If inherent power, rather than a specific rule or statute, provides the source of the sanctioning authority, under Chambers, it may be limited to a degree of culpability greater than negligence.

See case summary here.

Rimkus Consulting Group, Inc. v. Cammarata, 2010 U.S. Dist. LEXIS 14573, 14-15 (S.D. Tex. Feb. 19, 2010) (internal citations removed).

Posted in 5th Circuit, Case Blurbs, Inherent Power of Fed. Courts, Judge Lee H. Rosenthal, S.D. Tex., Sanctions, Spoliation | Leave a Comment »

Case Summary: Cammarata; Court Discusses E-Discovery Misconduct, Proportionality and Reasonableness

Posted by rjbiii on March 26, 2010

Rimkus Consulting Group, Inc. v. Cammarata, 2010 U.S. Dist. LEXIS 14573 (S.D. Tex. Feb. 19, 2010)

Procedural History: In Nov. 2006, Rimkus was sued by former employees Nickie Cammarata and Gary Bell. In this action in Louisiana, Cammarata and Bell sought a declaratory judgment that the forum-selection, choice-of-law, noncompetition, and nonsolicitation provisions in agreements they had signed with Rimkus were unenforceable. In response, Rimkus brought two actions in 2007 against these ex-employees in Texas; one in January and one in February. Rimkus alleged breach of the noncompetition and nonsolicitation covenants in their written employment agreements and that they used Rimkus’s trade secrets and proprietary information in setting up and operating a competitive enterprise (U.S. Forensic). The Texas cases were consolidated in this court.

Procedural Posture: The court convened to hear motions by Rimkus alleging that the Cammarata and Bell and their counsel “conspiratorially engaged” in “wholesale discovery abuse” by destroying evidence, failing to preserve evidence after a duty to do so had arisen, lying under oath, failing to comply with court orders, and significantly delaying or failing to produce requested discovery. Defendants responded by acknowledging that they did not preserve “some arguably relevant emails” but argue that Rimkus cannot show prejudice because the missing emails “would be merely cumulative of the evidence already produced.” Rimkus asked the court to strike the defendants’ pleadings,enter a default judgment against them or give an adverse inference jury instruction, and hold both defendants and their counsel in contempt.

Discussion: The court began its analysis by acknowledging the framework recently set out by Judge Scheindlin in Pension Committee of the University of Montreal Pension Plan v. Banc of America Securities, LLC, No. 05 Civ. 9016, 2010 U.S. Dist. LEXIS 4546, 2010 WL 184312 (S.D.N.Y. Jan. 15, 2010) (see our case summary here). Unlike Montreal Pension Plan, this case involve allegations of intentional destruction of ESI, but common analytical issues existed, nevertheless.

In the fifth circuit, Federal Courts apply federal rules in diversity cases. The court stated that allegations of spoliation are addressed by courts by an applicable statute that adequately addresses the conduct with its attendant limits, and if no such statute exists, by the more flexible inherent power of the court. When inherent power does apply, it is interpreted narrowly, and its reach is limited by its ultimate source–the court’s need to orderly and expeditiously perform its duties. In this case, the court’s inherent power and Rule 37 both apply.

Electronically stored information is routinely deleted or altered and affirmative steps are often required to preserve it. Such deletions, alterations, and losses cannot be spoliation unless there is a duty to preserve the information, a culpable breach of that duty, and resulting prejudice. Generally, the duty to preserve arises when a party has notice that the evidence is relevant to litigation or . . . should have known that the evidence may be relevant to future litigation. Generally, the duty to preserve extends to documents or tangible things (defined by Federal Rule of Civil Procedure 34) by or to individuals likely to have discoverable information that the disclosing party may use to support its claims or defenses.

The court stated that bright-line rules were difficult to draw with respect to acceptable and unacceptable behavior in e-discovery matters, and explained that acceptable conduct turned on the concepts of reasonableness and proportionality with respect to the case.

Analysis depends heavily on the facts and circumstances of each case and cannot be reduced to a generalized checklist of what is acceptable or unacceptable. Determining whether sanctions are warranted and, if so, what they should include, requires a court to consider both the spoliating party’s culpability and the level of prejudice to the party seeking discovery. Culpability can range along a continuum from destruction intended to make evidence unavailable in litigation to inadvertent loss of information for reasons unrelated to the litigation. Prejudice can range along a continuum from an inability to prove claims or defenses to little or no impact on the presentation of proof. A court’s response to the loss of evidence depends on both the degree of culpability and the extent of prejudice.

The court explained that the general rule for the 5th Circuit is that severe sanctions of granting default judgment, striking pleadings, or giving adverse inference instructions may not be imposed unless there is evidence of “bad faith.” This is different from the 2d Circuit’s rule allowing for such rulings in instances of gross negligence, under which the court in Pension Committee of the University of Montreal Pension Plan was operating. The court went on to list the general rule of other circuits, as summarized in the table below.

Circuit Standards for Severe Sanctions

The court then contrasted case law between the 5th and 2d circuits, noting that the Supreme Court’s decision in Chambers v. NASCO, Inc., 501 U.S. 32 (U.S. 1991) might limit the ability of a court to impose sanctions when acting under the authority of its inherent powers.

The court then turned to the issue of burden of proof. A party seeking the sanction of an adverse inference instruction based on spoliation of evidence must establish that: (1) the party with control over the evidence had an obligation to preserve it at the time it was destroyed; (2) the evidence was destroyed with a culpable state of mind; and (3) the destroyed evidence was “relevant” to the party’s claim or defense such that a reasonable trier of fact could find that it would support that claim or defense.

The “relevance” and “prejudice” factors of the adverse inference analysis are often broken down into three subparts: “(1) whether the evidence is relevant to the lawsuit; (2) whether the evidence would have supported the inference sought; and (3) whether the nondestroying party has suffered prejudice from the destruction of the evidence.” Like the court in Pension Committee, the court here acknowledged the difficulty and potential unfairness in requiring an innocent party seeking discovery to show that information lost through spoliation is relevant and prejudicial. Fortunately in this case (and many others), the party seeking discovery can also obtain extrinsic evidence of the content of at least some of the deleted information from other documents, deposition testimony, or circumstantial evidence.

The court also stated its belief that such requirements act as an important check on spoliation allegations and sanctions motions. Unlike the 2d circuit, case law in the Fifth Circuit indicates that an adverse inference instruction is not proper unless there is a showing that the spoliated evidence would have been relevant. Also unlike the 2d circuit, the 5th circuit has no case law allowing for the presumption that destroyed evidence was relevant or its loss prejudicial, even in the event that bad-faith is established. Before an adverse inference may be drawn, there must be some showing that there is in fact a nexus between the proposed inference and the information contained in the lost evidence and that “some extrinsic evidence of the content of the emails is necessary for the trier of fact to be able to determine in what respect and to what extent the emails would have been detrimental.

In the present case, the party seeking sanctions for deleting emails after a duty to preserve had arisen presented evidence of their contents. The evidence included some recovered deleted emails and circumstantial evidence and deposition testimony relating to the unrecovered records. There was no need to rely on a presumption of relevance or prejudice.

In determining an appropriate penalty, the court stated that the severity of a sanction for failing to preserve when a duty to do so has arisen must be proportionate to the culpability involved and the prejudice that results. A sanction should be no harsher than necessary to respond to the need to punish or deter and to address the impact on discovery. Adverse inference instructions can take varying forms that range in harshness, and are properly viewed as among the most severe sanctions a court can administer.

The court made the findings necessary to submit the spoliation evidence and an adverse inference instruction to the jury. The court noted, however, that the record also presented conflicting evidence about the reasons the defendants deleted the emails and attachments; evidence that some of the deleted emails and attachments were favorable to the defendants; and an extensive amount of other evidence for the plaintiff to use.

The instruction formulated by the court will ask the jury to decide whether the defendants intentionally deleted emails and attachments to prevent their use in litigation. If the jury finds such misconduct, the jury must then decide, considering all the evidence, whether to infer that the lost information would have been unfavorable to the defendants. Rather than instruct the jury on the rebuttable presumption steps, it is sufficient to present the ultimate issue: whether, if the jury has found bad-faith destruction, the jury will then decide to draw the inference that the lost information would have been unfavorable to the defendants

Posted in 5th Circuit, Adverse Inference, Burden of Proof, Case Summary, Duty to Preserve, Inherent Power of Fed. Courts, Judge Lee H. Rosenthal, Litigation Hold, S.D. Tex., Sanctions, Spoliation | 7 Comments »

Case Summary: Hoover; Third Party Subpoenas and the Scope of Discovery

Posted by rjbiii on November 24, 2008

Hoover v. Fla. Hydro, Inc., 2008 U.S. Dist. LEXIS 87839 (E.D. La. Oct. 1, 2008 )

The case involves a contract dispute between Louisiana resident Floyd Hoover and Florida Hydro, Inc., a Florida Corporation. Hoover brought the action, alleging that provisions of an oral contract between the parties promised Hoover a percentage of ownership for his efforts in securing funding for the company, and that these provisions were never fulfilled by the company.

Florida Hydro issued a subpoena deuces tecum to both Hoover’s mother, Mary Catherine Hoover, and his good friend, Shaun Sanghani. The subpoenas sought testimony, and forensic inspection of their personal computers, and any media in their possession (such as hard drives, flash drives, etc…) that might contain relevant data.

Hoover moved to quash the subpoenas, arguing that they are “unwarranted, unduly burdensome, and seek to harass his witnesses.” He contended that both individuals had already produced all relevant material in hard copy form. He described the subpoenas as the company’s attempt at a ‘fishing expedition, and an infringement of privacy and proprietary interests of his mother, his friend and himself. Finally, he accused the company of failing to adequately narrow the scope of the subpoenas.

Florida Hydro countered that: 1) the subpoenas are not overly broad, unduly burdensome, or harassing in nature because neither Mrs. Hoover nor Mr. Sanghani objected on that basis; 2) the subpoenas are reasonably related to the claims and are temporally limited to the relevant years; and 3) they have attempted to make production easy by offering to pick up the documents, reimburse the associated costs, granting multiple extensions, and delaying depositions.

The court concluded, over defendant’s objections, that Hoover had standing to file the Motion to Quash, because although the subpoenas were not issued to him, they sought information information that may have been sent by or for him.

The court ruled that objections to both subpoenas were filed within the requisite time period after the subpoenas were issues, and were therefore timely. The court then addressed substantive issues on the motion.

Undue Burden
Hoover contends that granting inspection and production of the computers is unwarranted and unduly burdensome. In the light of production by these witnesses of documents in hard copy form, defendant has no right to inspect ESI on the computers. Because these witnesses complied with earlier subpoenas, these newly issued subpoenas are duplicative and unwarranted, unless defendants make a definitive showing that these individuals deliberately failed in their duties to respond.

Florida Hydro disagreed, noting that neither individual objected based on Hoover’s current arguments. The company also maintained that it did not violate any rule merely by making its request that the parties produce ESI.

The court noted that upon proper objection by a third party to the inspection ordered by a subpoena, the Court must determine whether the plaintiff’s need for the inspection is sufficient to outweigh the burden imposed by the inspection on the third party.

Taking note of the fact that the objection to the subpoenas came, not from the parties served, but the plaintiff, the court stated that facts in the record clearly indicated that Mrs. Hoover had documents relevant to the case on her computer. The court also disagreed with plaintiff’s assertion that in order to challenge the completeness of Mrs. Hoover’s production, it should have filed a motion to compel, stating that a party is free to utilize the discovery method it deems appropriate. As precedent, the court cited Gabarick v. Laurin Maritime (America), Inc., No. 08-04007, 2008 U.S. Dist. LEXIS 61685, 2008 WL 3560426, at *2 (E.D.La. Aug. 11, 2008), noting that it cited Rule 26(d) for the proposition that ‘there is no priority rule for the sequence of discovery.’). The court further cited Lee v. Knutson, 112 F.R.D. 105 (N.D. Miss 1986), for the proposition that a party may choose the methods of discovery which he or she will employ, “so long as the choice is not foreclosed by the [Federal] Rules.”

While the court ruled that in the case of Mrs. Hoover, compliance the subpoena did not impose undue burden, it did state that the parties may agree upon a search protocol that would prevent personal, family, non-business related communications from being retrieved during the forensic computer inspection of her laptop and/or personal computer. The court ruled against quashing the subpoena served to Mrs. Hoover.

However, the court granted the motion to quash Mr. Sanghani’s subpoena, because the defendant’s assertions that his production in response to a motion to compel was incomplete was of a general nature, and there had been no showing of any defect in his response.

Attorney Client Privilege
The court was not persuaded by plaintiffs arguments that because he used his mother’s computer occasionally and continued to use her computer to access his email accounts as well as to transact business, including reading correspondence from his attorneys and reviewing their work product, the communications are privileged. The court noted that Mrs. Hoover did not make any such objections, and that the failure to follow the Federal Rules of Civil Procedure may result in waiver of the attorney-client privilege and/or work-product protection. The court was not convinced that a search protocol could not be designed that would enable the exclusion of any document where privilege was claimed.

Search Protocol

Plaintiff proposed a four part protocol: 1. Florida Hydro must produce a search protocol in advance of the inspection to be reviewed and approved by the Court; 2. Florida Hydro must prepare a confidentiality agreement prior to the inspection; 3. The third-party witness whose laptop is subject to the inspection shall be present during the inspection; and 4. Florida Hydro must reimburse the third party witness for all of the inspection costs, including attorney’s fees associated with same and for any damages caused by the inspection.

The court declined to accept the specific proposal, but did agree that the establishment of a protocol was appropriate, and set a deadline for an agreement between the two parties.

The court, therefore, granted the motion to quash for the subpoena issued to Mr. Sanghani, but denied the motion to quash for the subpoena to Mrs. Hoover.

Posted in 5th Circuit, Case Summary, E.D. La., Magistrate Judge Karen Wells Roby, Motion to Quash, Subpoenas, Third Parties | Leave a Comment »

Case Blurb: Hoover; Standards for Motion to Quash Subpoena

Posted by rjbiii on November 23, 2008

Rule 45 governs the issuance of subpoenas, and provides that on timely motion, the issuing court must quash or modify a subpoena if it requires disclosure of privileged or other protected matter, or otherwise subjects the subpoenaed person to undue burden. FED. R. CIV. P. 45(c)(3). Under Rule 45(c)(1), “[a] party or attorney responsible for issuing and serving a subpoena must take reasonable steps to avoid imposing undue burden or expense on a person subject to the subpoena.” FED. R. CIV. P. 45(c)(1). Furthermore, Rule 45(c)(3) further provides that “[o]n timely motion, the issuing court must quash or modify a subpoena that . . . fails to allow a reasonable time to comply.” FED. R. CIV. P. 45(c)(3).

Hoover v. Fla. Hydro, Inc., 2008 U.S. Dist. LEXIS 87839 at *4 (E.D. La. Oct. 1, 2008)

Posted in 5th Circuit, Case Blurbs, E.D. La., FRCP 45, FRCP 45(c), Magistrate Judge Karen Wells Roby, Motion to Quash, Subpoenas, Third Parties | Leave a Comment »