It was an eventful year, particularly in e-discovery. In August, we highlighted six notable cases from the first half of 2017. Of course, there were many more. As we close out 2017, here are two more cases involving court-issued sanctions over lack of preservation and intentional spoliation.
In 2015, we first blogged about the very high-profile Volkswagen emissions scandal that eventually resulted in the case of United States v. Volkswagen AG. We followed up in 2016 with a post about a former Volkswagen Group employee suing the company for wrongful termination and violation of Michigan whistleblower law.
The case continued to make headlines when, at the top of this year, the United States and the automobile company reached an agreement: Volkswagen would plead guilty to conspiracy, obstruction of justice for the loss of documents and entry of goods by false statement, pay fines of more than $4 billion and also work with an independent compliance monitor during its three-year probation.
Leading up to the obstruction of justice charge was German counsel’s failure to preserve documents by actually implying that they should be destroyed. Ahead of the legal hold issuance, which Attorney A in Germany delayed, the same attorney advised employees to “check their documents.” The employees followed through by deleting a number of documents. The purging continued after Attorney A also advised a software company that Volkswagen worked with to do the same. As a result, thousands of relevant documents were destroyed; many of them, however, were eventually recovered.
Attorney A blatantly ignored the advice from Volkswagen’s counsel in America on how important preservation of information was. Instead, the attorney pressed on with attempting to delete and destroy documents that would implicate its client, resulting in a hefty obstruction of justice fine and the further tarnishing of the Volkswagen brand.
In another case later this year, August 2017, Ronnie Van Zant, Inc. v. Pyle, involving the widow of a Lynyrd Skynyrd band member who was killed in a plane crash versus surviving band members over the use of the band’s name, the matter of failing to properly preserve information arose again.
Despite the entry of a Consent Order to control when the surviving band members could use the name Lynyrd Skynyrd or names/images/likenesses of the deceased, the future defendant, Cleopatra Records, went ahead and made a film about the crash. The director/screenwriter of the film was named Jared Cohn.
After the plaintiffs had filed suit, and when the movie’s filming had concluded, Cohn, who was considered a non-party, not only got a new phone but also changed cell phone providers. While some of the data, like photos, was backed up and preserved, data like text messages were not. Plaintiffs asked the court for an adverse inference sanction.
Despite Cleopatra’s argument that Cohn was a non-party and therefore it could not be sanctioned for his actions or control of the phone, the court disagreed. It found that while Cohn was a non-party, his text messages were, in fact, under Cleopatra’s control as the record company contracted Cohn. It also found that Cohn’s action of acquiring a new phone and backing up the photos but not the text messages as an intentional act.
In short, the court considered this type of behavior as worthy of sanctions that are intended to prevent and weigh in favor of an adverse inference. The court then concluded that an adverse inference was appropriate against Cleopatra Records.
These cases illustrate the importance of timely and defensible legal hold procedures as well as well the consequences of intentional spoliation. This year continued the anticipated trend by the courts to consider the new Federal Rules of Civil Procedure and emphasizing matters like preservation.
This year, the courts also emphasized, for example, equal use of Rule 26(b)(1) for proportionality factors in the September 2017 case of Oxbow Carbon & Minerals LLC v. Union Pac. R.R. and that while a discovery request that is “reasonably calculated” is “familiar,” it is “never correct,” as shown in the September 2017 case of Pothen v. Stony Brook Univ.
In the new year, we will follow the current trends in e-discovery case law, among other topics. We appreciate your readership in 2017 and wish you a safe and happy start to 2018!