Discover. According to Merriam-Webster, this term means “to make known or visible” or “to obtain sight or knowledge of for the first time.”[i] In the context of litigation, the process of discovery is intended to make known or visible to the parties involved, and ultimately to the court, the facts relevant to the claims and defenses in that case.
Opining on the importance of the discovery procedures established by the Federal Rules of Civil Procedure, the Supreme Court has stated that those discovery mechanisms are “one of the most significant innovations of the Federal Rules of Civil Procedure” noting
“the various instruments of discovery now serve (1) as a device . . . to narrow and clarify the basic issues between the parties, and (2) . . . for ascertaining the facts, or information as to the existence or whereabouts of facts, relative to those issues. Thus civil trials in the federal courts no longer need be carried on in the dark. The way is now clear, consistent with recognized privileges, for the parties to obtain the fullest possible knowledge of the issues and facts before trial.”[ii]
Along with the increasing reliance on technology in our daily lives, and the pandemic-induced rise to prominence of hybrid and remote work environments, the importance of how these discovery procedures are used to ascertain facts and information from potentially relevant ESI is a concern for nearly all varieties of civil litigation claims.
What Not To Do
A recent order in an employment dispute highlights this truth-seeking function of the process of discovery and provides numerous examples of what not to do during discovery. In Burris v. JP Morgan Chase & Co., et. al, the Plaintiff alleged he was fired and subsequently blacklisted from employment in the financial industry for complaining about Defendants’ practices in violation of the whistleblower retaliation provisions of the Dodd-Frank and Sarbanes-Oxley Acts.[iii] Following related proceedings filed with FINRA and OSHA, Plaintiff filed a complaint in federal court in September 2018.[iv]
Related to discovery, the parties entered into a stipulated protective order that was granted by the Court in October 2019.[v] The Court then granted a second addendum to that stipulated protective order in October 2020, and warned Plaintiff that Defendants could seek appropriate sanctions if Plaintiff engaged in discovery misconduct including, but not limited to, efforts to obstruct and attempts to evade, or unduly delay, discovery efforts; deletion or failure to preserve potentially relevant ESI; unreasonable failure to identify potentially relevant ESI; or providing “misleading information concerning his Electronic Media and Potentially Relevant ESI” and “called for the appointment of ‘an independent expert qualified in digital forensics and electronic discovery’ . . . to ‘investigate and advise the parties and/or the Court whether . . . Potentially Relevant ESI was deleted, manipulated, removed from, or concealed from detection on Plaintiff’s Electronic Media.’”[vi]
In April 2021, the court-appointed expert’s updated report was filed and included detailed findings regarding Plaintiff’s spoliation efforts.[vii] These efforts included:
- performing factory resets on all six of his mobile phones on at least six different occasions that permanently deleted all device content;[viii]
- purchasing and using, on at least two occasions, the iShredder program on his mobile devices that was specifically designed and advertised to make recovery of deleted data impossible;[ix]
- performing factory resets of both laptops he provided for imaging;[x]
- using iShredder and Bleachbit, a program designed to create “gibberish files” to overwrite existing data, repeatedly on the older of his two laptops;[xi]
- attempting “to deceive the forensic examiners by passing off a laptop he did not purchase until September 2020 (and which was not commercially available until June 2020) as one of the laptops that was discussed” during his March 2020 deposition;[xii]
- wiping all data from two USB drives “using software designed to destroy data . . . . the day before Plaintiff produced them for examination”;[xiii] and
- failing to preserve any text messages dated before October 30, 2020 due to either intentional deletion or lack of confirmation that those messages were transferred from one device to the next.[xiv]
Based upon these findings, Defendants filed a motion to sanction Plaintiff in July 2021[xv] arguing that Plaintiff’s bad faith could be inferred from his “efforts to continue destroying ESI even after he was admonished by his own counsel not to destroy evidence” and after the appointment of a forensic expert “to investigate his conduct”, his “use of commercial programs specifically designed to hide evidence”, “Plaintiff’s admission, during his deposition, that one of the reasons he destroyed the ESI was to prevent Defendants from obtaining his “client data,” which was specifically designated as a potentially relevant subject area”, and “Plaintiff’s repeated lies under oath when questioned about his spoliation of evidence.”[xvi] In his reply to Defendant’s motion, Plaintiff did not dispute the spoliation efforts described by the expert’s report, instead arguing “his conduct was not sanctionable because the devices at issue did not contain ESI that was potentially relevant to this litigation”[xvii]
No Spoils If You Engage in Spoliation
Although the old adage dictates that to the victor go the spoils, there are no spoils and no victory for one who engages in spoliation. In this case, the Court adopted “the undisputed facts in the expert’s report” and made thirteen additional factual findings regarding Plaintiff’s spoliation efforts.[xviii] Defendants sought “the imposition of terminating sanctions under both Rule 37(b)(2) and Rule 37(e)(2)” of the Federal Rules of Civil Procedure, but the Court addressed only “Rule 37(e)(2) because it specifically contemplates the imposition of sanctions based on the loss of ESI.”[xix]
As rewritten in 2015, Federal Rule of Civil Procedure 37(e)(2) states
“If electronically stored information that should have been preserved in the anticipation or conduct of litigation is lost because a party failed to take reasonable steps to preserve it, and it cannot be restored or replaced through additional discovery, the court: . . . (2) only upon finding that the party acted with the intent to deprive another party of the information’s use in the litigation may: (A) presume that the lost information was unfavorable to the party; (B) instruct the jury that it may or must presume the information was unfavorable to the party; or (C) dismiss the action or enter a default judgment.”[xx]
Applicable only to ESI, or electronically stored information, and only when “such information is lost,” this rule “authorizes” and provides “specific measures” and related necessary findings to “justify these measures” where “information that should have been preserved is lost.”[xxi] To apply this rule, courts must decide “whether and when a duty to preserve arose” considering “the extent to which a party was on notice that litigation was likely and that the information would be relevant.”[xxii] In evaluating whether a party took reasonable steps to preserve the information in good faith, “[t]he court should be sensitive to the party’s sophistication with regard to litigation” and proportionality, that is whether preservation efforts were reasonable in light of the party’s resources.[xxiii]
Subdivision (e)(2) of the rule “authorizes courts to use specified and very severe measures to address or deter failures to preserve electronically stored information,” but only where it is found that “the party that lost the information acted with the intent to deprive another party of the information’s use in the litigation.”[xxiv] It is not necessary under this subdivision of the rule that the
“court find prejudice to the party deprived of the information. This is because the finding of intent [to deprive another party of the information’s use in the litigation]. . . can support not only an inference that the lost information was unfavorable to the party that intentionally destroyed it, but also an inference that the opposing party was prejudiced by the loss of information that would have favored its position.”[xxv]
Courts exercise caution in imposing the measures specified in Rule 37(e)(2), and a finding that a party intended to “deprive another party of the lost information’s use in the litigation does not require a court to adopt” any of these specified measures.[xxvi] “The remedy should fit the wrong, and the severe measures authorized by this subdivision should not be used when the information lost was relatively unimportant or lesser measures . . . would be sufficient to redress the loss.”[xxvii]
Where sanctions are sought under Rule 37(e), the “party seeking sanctions . . . has a threshold duty to show that the ESI at issue was, in fact, lost or destroyed.”[xxviii] Once that showing is made, the court must determine whether the ESI in question (1) “should have been preserved in the anticipation or conduct of litigation”; (2) “is lost because a party failed to take reasonable steps to preserve it”; and (3) “cannot be restored or replaced through additional discovery.”[xxix] If the answer to all three of those questions is yes, and the court determines the intent of the nonmovant was to deprive another party of the information’s use in the litigation, it may impose any of the sanctions authorized by Rule 37(e)(2) in its discretion.[xxx]
“Here,” the Court reasoned, “large volumes of ESI were lost.”[xxxi] The Court’s findings, which were undisputed by the Plaintiff, detailed Plaintiff’s efforts to delete ESI “from six cell phones, two laptops, and two USB devices,” his failure to preserve his text messages, and the purging of his email account.[xxxii] “Although Plaintiff dispute[d] whether the deleted ESI was potentially relevant . . . everybody agrees that it is gone.”[xxxiii] Noting that it can be difficult to determine when a duty to preserve relevant documents arose in some cases, the Court stated “[t]his is not such a case. . . . At a minimum, Plaintiff had a duty to preserve relevant documents once he initiated this action in September 2018 . . . [and] many of the challenged acts of spoliation occurred after that date – after the initiation of litigation.”[xxxiv]
In defense of his actions, Plaintiff’s primary argument was that the ESI he deleted “was irrelevant to the claims and defenses in this litigation . . . because it was generated after the date of his termination (and/or after the conclusion of the FINRA arbitration in 2014).”[xxxv] However, the Court stated, the definition of “Potentially Relevant ESI” as stipulated by the parties in the second addendum to the protective order included “no temporal cutoff on the scope of “potentially relevant ESI” and encompassed “ESI that concerns, substantiates, refers or relates to . . . Plaintiff’s efforts to find other employment after his employment with Defendants ended or otherwise mitigate his purported damages” which would all post-date Plaintiff’s termination by Defendants in November 2012.[xxxvi]
The Court called Plaintiff’s admissions that he intentionally deleted client data “damning” reasoning that this client data referred, in the context of the case, “to the clients that Plaintiff serviced after leaving Defendants’ employment” and such information “was directly relevant to Plaintiff’s claim for prospective economic damages, as recognized in the parties’ joint definition of “potentially relevant ESI.””[xxxvii] Regarding Plaintiff’s purged emails, the Court found Defendants had submitted “undisputed evidence” that Plaintiff communicated with Defendants through that email account and that “all communications between Plaintiff and current or former employees of Defendants were deemed potentially relevant, regardless of when they were sent.”[xxxviii] On this element, the Court concluded “Plaintiff had notice that the ESI he was destroying was potentially relevant to the litigation.”[xxxix]
Noting Plaintiff’s arguments that he engaged in these “extensive evidence-destruction efforts” to “eliminate embarrassing, but irrelevant, personal information” and used the BleachBit and iShredder programs to save space and enhance device performance, the Court stated “this rationale is almost laughable” because BleachBit in particular “was intended to fill the device with useless gibberish, not save space.”[xl]
“Plaintiff was caught red-handed in a series of other lies and acts of deception during the forensic examination process, including lying about when he stopped using his personal email account and attempting to pass off a recently purchased laptop as a different laptop. This backdrop raises a strong inference that the ESI destroyed by Plaintiff was not irrelevant, personal information but information that was devastating to (and, at a minimum, potentially relevant to) his claims in this action.”[xli]
Plaintiff did not take reasonable steps to preserve ESI in this case, but rather “engaged in an intentional, lengthy, and multifaceted scheme to destroy ESI.”[xlii] The Court determined, based on the findings of the court-appointed expert, that the ESI was “irretrievably lost” and “not replaceable through additional discovery.”[xliii]
Regarding whether the Plaintiff acted with intent to deprive Defendants of the information’s use in the litigation, the Court stated that “the sheer number of obfuscatory actions undertaken by Plaintiff . . . evince an unusually clear level of intent to deprive Defendants of potentially relevant ESI.”[xliv] Further, the temporal proximity “between Plaintiff’s acts and key discovery events provid[ed] further circumstantial evidence of intent”, and even more convincing, the Court described Plaintiff’s attempt to pass off a laptop “purchased in September 2020 as the laptop he described during his March 2020 deposition” as “outrageous conduct [that] is utterly inconsistent with good faith.”[xlv]
Noting that sanctions such as entry of judgment against a party or dismissal of a case are disfavored, the Court stated that in determining whether to order such sanctions, courts consider (1) the public interest is resolving the litigation expeditiously; (2) “the court’s need to manage its dockets; (3) the risk of prejudice to the party seeking sanctions; (4) the public policy favoring disposition of cases on their merits; and (5) availability of less drastic sanctions.”[xlvi] The Court reasoned that Plaintiff violated the Court’s October 2020 order requiring Plaintiff “to preserve and produce ESI for forensic review” and had previously been warned of possible sanctions, including the possibility of dismissal.[xlvii] “Having given careful consideration to the aforementioned standards, and recognizing that dismissal is a disfavored sanction that should be imposed sparingly, the Court still concludes that dismissal is warranted here.”[xlviii]
“’Dismissal is appropriate where a pattern of deception and discovery abuse made it impossible for the district court to conduct a trial with any reasonable assurance that the truth would be available . . . Sometimes . . . a party’s discovery violations make it impossible for a court to be confident that the parties will ever have access to the true facts.’”[xlix]
Even if Plaintiff had proposed lesser sanctions, “the Court would decline to impose” them, the Court stated, because “the sheer scope of Plaintiff’s dishonesty and spoliation efforts – which the Court explicitly finds amounted to bad faith – makes this the rare case where it is impossible to have confidence that Defendants will ever have access to the true facts.”[l] Noting dismissal would be “highly prejudicial to Plaintiff”, the Court reasoned the prejudice of dismissal was somewhat reduced because “Plaintiff already had the opportunity to litigate several of his termination-related claims on the merits, via a two-week FINRA arbitration”[li]
The Court concluded that Plaintiff’s “extensive misconduct and deception, without any obvious contrition or awareness of the wrongfulness of his conduct” posed a serious risk any further proceedings would be “plagued” by a similar pattern of discovery abuse and deception that would make “it impossible for the district court to conduct a trial with any reasonable assurance that the truth would be available” and ordered Plaintiff’s complaint dismissed with prejudice.[lii]
So what can we take away from Burris and incorporate into our own practice? In Part 2 of this blog post, I’ll discuss lessons learned from Burris and best practices for litigants faced with discovery. Stay tuned!
DISCLAIMER: The information contained in this blog is not intended as legal advice or as an opinion on specific facts. For more information about these issues, please contact the author(s) of this blog or your existing LitSmart contact. The invitation to contact the author is not to be construed as a solicitation for legal work. Any new attorney/client relationship will be confirmed in writing.
[i] Merriam-Webster Dictionary, “Discover” available at https://www.merriam-webster.com/dictionary/discover (last accessed February 25, 2022).
[ii] Hickman v. Taylor, 329 U.S. 495, 500 – 501 (1947).
[iii] Order, Burris v. JP Morgan Chase & Company, et. al, Case No. 2:18-cv-03012-DWL at 1 – 2 (D. Az. Oct. 7, 2021).
[iv] Id at 3 – 4.
[v] Id at 5.
[vi] Id at 5 – 6.
[vii] Id at 11.
[xi] Id at 11 – 12.
[xii] Id at 12.
[xiii] Id at 12 – 13.
[xiv] Id at 13.
[xv] Id at 6.
[xvi] Id at 15.
[xvii] Id at 13.
[xviii] Id at 13 – 14.
[xix] Id at 18.
[xx] Fed. R. Civ. P. 37(e)(2).
[xxviii] Burris, No. 2:18-cv-03012-DWL at 19.
[xxix] Id at 19.
[xxx] Id at 19 – 20.
[xxxi] Id at 21.
[xxxiv] Id at 22.
[xxxv] Id at 23.
[xxxvi] Id at 24.
[xxxviii] Id at 25.
[xxxix] Id at 24.
[xl] Id at 26.
[xli] Id at 25.
[xlii] Id at 26.
[xliii] Id at 27.
[xliv] Id at 28.
[xlv] Id at 29.
[xlvii] Id at 30.
[xlix] Id at 31 (quoting Valley Engineers v. Elec. Eng’g Co., 158 F.3d 1051, 1057 (9th Cir. 1998)).
[l] Id at 31.
[lii] Id at 30 – 31.