E-Discovery Sanctions Traps in the Remote Workplace: Preserving Digital Data Even When the Office is Closed

Even in normal times, few discovery challenges in commercial and IP litigation are more daunting or more fraught with risk than responding to probing e-discovery requests that seek the production of digital data stored on the mobile devices of a corporate party's agents or employees. While the 2015 amendment to Rule 37, FRCP, provides greater clarity about what sanctions are appropriate for different degrees of responsibility for a failure to preserve and produce relevant Electronically Stored Information (ESI), the real-world application of the Rule by the courts demonstrates how laxity let alone willful misconduct in preserving and producing digital data stored on mobile devices can have devastating effects on litigants.

This issue is magnified by the abrupt transition of much of the business world to working remotely from far-flung locations. On April 2, 2020, The Guardian reported:

In the last month, there was a 535% rise in daily traffic to the Zoom.us download page * * * Its app for iPhone has been the most downloaded app in the country for weeks * * *.

And, as has been reported about the major meeting software products such as Zoom, WebEx, and GoToMeeting "all include the ability for meetings to be recorded and saved for later use."^[1] In fact:

Most allow the recording to capture not only what the speakers on the call say, but any screens that are shared, side conversations that occur in the "chat" window and a full list of participants who have logged into the meeting.[2]

Thus, there can be no question that an organization that either is (or reasonably anticipates being) in litigation would be hard-pressed to show, in the terms of FRCP 26(b)(2)(B), that preservation and production of the ESI captured from relevant online meetings "is not reasonably accessible because of undue burden or cost," so certainly if a relevant online meeting is recorded, then preserving the recording will be essential.

A review of a few court decisions issued in the past year demonstrates how litigants can get into hot water when they fall short in dealing with requests for the production of ESI stored on mobile devices:

• Paisley Park Enterprises, Inc. v. Boxill, 330 F.R.D. 226 (D. Minn. 2019) - Suit by the estate of the internationally acclaimed recording artist Prince against Boxill, a sound engineer who had worked with Prince and who, after his death, had taken tracks of certain unreleased songs he had worked on with the artist, edited them, and, in league with his co-defendants, released them. After text messages between Staley and Wilson, principals of a co-defendant company, were included in their initial discovery responses and plaintiffs issued a follow-up request for all text messages Staley and Wilson sent to each other or to third parties bearing on relevant issues in the case, defendants disclosed that "text messages had not been preserved because Staley and Wilson did not disengage the auto-delete function on their phones and because Staley had wiped and discarded his phone in October 2017 and Wilson had wiped and discarded his phone in January 2018 and then wiped and discard[ed] his new phone in May 2018." at 232. Noting that "[i]t takes, at most, only a few minutes to disengage the auto-delete function on a cell phone" and that Staley and Wilson "could have taken advantage of relatively simple options to ensure that their text messages were backed up to cloud storage," the Magistrate Judge concluded that "[f]ailure to follow the[se] simple steps . . . alone is sufficient to show that Defendants acted unreasonably." Id. at 233. The court continued:

  Most troubling of all, they wiped and destroyed their phones after Deliverance and RMA had been sued, and, in the second instance for Wilson, after the Court ordered the parties to preserve all relevant electronic information, after the parties had entered into an agreement regarding the preservation and production of ESI, and after Plaintiffs had sent Defendants a letter alerting them to the fact they needed to produce their text messages.

  Id. The court determined that "an order presuming the evidence destroyed was unfavorable to the RMA Defendants and/or for an adverse inference instruction may well be justified" but withheld any final ruling since discovery was still ongoing. Id. at 238.

• DriveTime Car Sales Co., LLC v. Pettigrew, 2:17-cv-371, 2019 WL 1746730 (S.D. Ohio, April 18, 2019) - The Plaintiff company, DriveTime, a used car dealer, sued Pettigrew, one of its employees, and a company called Pauley Motor. Pettigrew would attend used car auctions and purchase vehicles for DriveTime to resell to retail purchasers. DriveTime discovered that Pettigrew had begun purchasing many more vehicles from Pauley Motor than from any other seller, and that the purchase prices were, on average, well above the NADA "blue book" value. DriveTime sued both Pettigrew and Pauley Motor, asserting that Pauley Motor had paid cash kickbacks to Pettigrew and that Pettigrew had breached his duty of loyalty to DriveTime. After Pauley Motor's representative, Bruce Pauley, testified at his deposition that he had exchanged text messages with Pettigrew, Drivetime requested the production of the text messages, but Pauley responded that he had since replaced his mobile phone and had failed to preserve the text messages, despite having been advised to do so in a litigation hold notice issued earlier in the case by DriveTime's counsel. DriveTime moved for sanctions for spoliation of the text messages and sought an adverse inference instruction from the court. The court declined to grant the relief DriveTime requested, holding that while DriveTime had "established that the text messages cannot be restored or replaced through additional discovery, because neither Pettigrew nor the wireless carriers for Pauley Motor’s representatives have access to them either," under Rule 37(e)(2) an adverse inference instruction could only be given if "Pauley Motor acted with the intent to deprive DriveTime of the text messages' use in the litigation when it failed to preserve them." Id. at *4. The court held that DriveTime had failed to show that Pauley Motor acted with the requisite intent, saying:

  Rule 37(e)(2)’s intent standard is stringent and does not parallel other discovery standards. Culhane v.Wal-Mart Supercenter, No. 2:17-CV-13061, ___ F. Supp. 3d ___, 2019 WL 1097488, at *3 (E.D. Mich. Jan. 10, 2019) (quoting Moody v. CSX Transportation, Inc., 271 F. Supp. 3d 410, 431 (W.D.N.Y. 2017) and Jenkins v. Woody, 2017 WL 362475, *17 (E.D. Va. 2017)) (internal quotation marks omitted).

  Id.

• Cordova v. Walmart Puerto Rico, Inc., 16-2195, 2019 WL 3226893 (D. P.R. July 16, 2019). Angie Mercado Cordova sued Walmart Puerto Rico, Inc. alleging that she had been the victim of unlawful discrimination, retaliation and dismissal, and asserted damages, including damages for, among other things physical/emotional distress. After Walmart served a request for the production of Cordova's "social media" Cordova responded that she had previously had a Facebook account but had lost the ability to access it and could not recall the name she had used to access the account. Subsequently, Walmart found an account under the name of "Mercado Eigna" (Cordova's second last name followed by her first name spelled backwards) and was able to determine from the publicly available information on it that after her suit was filed the plaintiff had updated her photograph and had referred to herself as "living happily ever after" (in stark contrast to her complaints in her lawsuit of severe mental and emotional distress). The same afternoon that Walmart last saw the account, it was taken down and became unavailable. In response to Walmart's request that she download all the information from her Facebook account - Walmart even provided her with step-by-step instructions about how to do so - Cordova responded that she had deleted her account following her last production to Walmart. The Court held that "that Mercado’s non-compliance with her duty to supplement Facebook-related discovery responses when she regained access to said account and her subsequent deletion of the Facebook account warrant a sanction." Id. at *4. The Court declined to grant Walmart's motion to dismiss the case for "fraud on the court" but held that it would impose the sanction of an adverse instruction pursuant to Rule 37(e)(2).

The lessons to be learned from these and earlier cases decided since the 2015 amendment to Rule 37(e) are clear:

• Immediately upon becoming aware that litigation is reasonably anticipated well before the filing of suit or the receipt of a request for production of "relevant documents" counsel should make certain that a litigation hold notice is delivered to (and receipt acknowledged by) pertinent personnel specifically directing them to preserve not only texts, emails, and social media posts and messages, but also communications on other platforms such as Skype and Slack as well as all potentially relevant online meetings conducted with the aid of Zoom, Go to Meeting, WebEx, or any of the available online meeting applications where a video/audio record of the meeting was made.
  • Any "auto-delete" functions including those on ephemeral messaging applications such as SnapChat, Telegram, Hash, Cover Me, Confide, Signal and Wickr should be either disabled (or arrangements should be made to download/preserve any and all relevant messages on these applications before they are lost) pending the receipt of contrary instructions (usually after the litigation threat has passed or litigation has concluded).
• Organizations that employ "Bring Your Own Device" ("BYOD") policies permitting employees to use their personal devices for company business should be especially careful to ensure that company policies specifically allow company access to (and control over) the employees' use of messaging and online meeting applications.[3] The policy should prohibit the use of messaging applications that automatically delete messages within a short time after they are sent/received.
• Even organizations that have no specific policy about employees' use of their personal mobile devices for business purposes, but become aware that company personnel are, in fact, using their own laptops, tablets or cellphones for communicating with one another or with customers, suppliers, and others with whom the company does business, must establish clear written policies and take steps to ensure that they are both understood and followed. Nothing can be left to chance waiting until the organization is already in litigation is too late.
• Wholly apart from the risk that relevant messages may be deleted, mobile devices are commonly replaced for one reason or another sometimes because an existing device is lost or stolen, but more often because it is discarded when a new, improved model is purchased to replace it. An organization's written policies must anticipate those events and make a reasonable effort to ensure that, whenever possible, the "old" device's relevant, business-related ESI is uploaded and preserved before it is removed from circulation.

E-discovery providers are hard at work building tools to gather ESI from new messaging platforms, though their development of tools necessarily lags behind the creation of new products. Unfortunately, the message hygiene of platform users tends to lag even more. While most members of the workforce have finally grasped that emails are forever, many think that various messaging or online meeting platforms are somehow exempt from that rule. With in-person meetings no longer an option, the volume of these electronic communications is on the rise, as is the likelihood that such messages will contain information that is relevant to future litigation. It is more important than ever to establish preservation policies and practices that will preempt serious sanctions under Rule 37.

[1] Gina M. Vitiello and Patrick Kennedy, Recording Online Meetings: A Guide to E-Discovery Best Practices (Nov. 8, 2020), published at https://www.law.com/dailyreportonline/2019/11/08/recording-online-meetings-a-guide-to-ediscovery-best-practices/

[2] Id. Going a step further, Microsoft Teams software provides specific directions to ensure that "an entire team or select users can be put on [a] legal hold." See https://docs.microsoft.com/en-us/MicrosoftTeams/legal-hold.

[3] See The Sedona Conference Commentary on BYOD: Principles and Guidance for Developing Policies and Meeting Discovery Obligations (2018), available at https://thesedonaconference.org/publication/Commentary_on_BYOD.

More questions? Contact the authors or visitFish's Intellectual Property Law Essentials.