Gibbons Law Alert

Gibbons Law Alert

Category: General Litigation

Amateur Hour Is Over! DR Distributors LLC Offers Crash Course on the Importance of E-Discovery Compliance

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Posted in General Litigation

On March 29, 2021

In DR Distributors, LLC v. 21 Century Smoking, Inc., et al., United States District Judge Iain D. Johnston issued a scathing 256-page opinion, dropping the proverbial hammer on the defendant and its counsel for repeated and egregious e-discovery failures – a veritable Keystone Kops series of discovery errors and misrepresentations spanning several years. The court imposed sanctions pursuant to Federal Rules of Civil Procedure 26(g) and 37, as well as monetary sanctions, and required the defendants’ former counsel to participate in continuing legal education on electronically stored information (ESI). In sum, Judge Johnston put all attorneys on notice that it “is no longer amateur hour” for attorneys grappling with e-discovery – compliance is not merely “best practices,” but required under the Rules, and courts will address incompetence accordingly. The dispute arose from alleged trademark infringement claims involving electronic cigarettes with confusingly similar marks. The case was initiated in 2012 and assigned to Judge Johnston in 2014, who immediately held a case management conference. At this conference, the court asked counsel if litigation holds were issued, and defense counsel neglected to inform the court that no litigation holds had been issued at that point. Defense counsel also affirmatively stated that the defendant, Brent Duke, the principal of 21 Century Smoking, was generally knowledgeable about ESI, including...

Getting Your Ducks in a Row: Court Stresses High Evidentiary Threshold for Rule 37 Sanctions and Cautions Against Precipitous Motions

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Posted in General Litigation

On March 22, 2021

A recent case out of the Middle District of Florida illustrates the importance for parties contemplating motions under Fed. R. Civ. P. 37 to first understand the high threshold required for the court to grant their motions and impose sanctions. Examining a barrage of sanction motions, the court highlighted that a party needs to present a strong factual record when seeking charges of spoliation, as it takes more than simple allegations of destruction or non-retention of evidence to find sanctions appropriate under Fed. R. Civ. P. 37. Further, the decision provides a clear-cut example of unnecessary costs incurred and wasted judicial resources resulting from the failure of the parties to cooperate throughout the discovery process. As discussed below, while a number of the parties in the litigation entered into an electronically stored information (ESI) protocol, it appears that many of the discovery disputes could have been avoided if certain key areas, including the temporal scope of the documents to be produced, were addressed in that protocol. In Centennial Bank v. ServisFirst Bank, Inc., several former employees allegedly violated non-compete provisions of their employment agreements with the plaintiff, Centennial Bank (“Centennial”), when they left to work for the defendant, ServisFirst Bank. Beginning in 2016, the protracted discovery in this litigation involved countless disputes ranging from the...

Don’t Sleep on Service of Process: The Middle District of Pennsylvania Denies Motion to Remand Because Plaintiffs Could Not Justify Out-of-State Service via Certified Mail

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Posted in General Litigation

On March 8, 2021

A recent decision from the United States District Court for the Middle District of Pennsylvania emphasizes the importance of meticulous adherence to the rules governing service of process. In Fox v. Chipotle, the plaintiffs’ failure to properly serve an out-of-state corporation via certified mail – where the plaintiffs’ service of process did not utilize the restricted delivery option offered by the United States Postal Service – resulted in the denial of the plaintiffs’ motion to remand and the associated loss of any tactical advantage the plaintiffs may have believed to exist in litigating their class action in state court instead of federal court. The plaintiff filed a class action complaint against Chipotle in the Court of Common Pleas of Allegheny County of Pennsylvania asserting violations of the Pennsylvania Unfair Trade Practices and Consumer Protection Law, 73 Pa. Cons. Stat. § 201-1, based on claims that Chipotle was “shortchanging” customers who made cash payments. Chipotle is a Delaware corporation with a principal place of business in California, and the plaintiffs’ motion to remand focused on the sufficiency of the plaintiffs’ attempts to serve Chipotle as an out-of-state defendant via certified mail, pursuant to Pennsylvania Rule of Civil Procedure 403. In particular, the plaintiffs claimed to have served Chipotle by certified mail at its corporate headquarters in...

“Accidentally” Destroying Years of Text Messages Is No Defense to Spoliation Sanctions

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Posted in General Litigation

On March 1, 2021

The New York Supreme Court recently granted a defendant spoliation sanctions, in the form of an adverse inference instruction, against the plaintiff for the “accidental” destruction of years’ worth of text messages from the plaintiff’s cellphones. In Iacovacci v. Brevet Holdings, LLC, the plaintiff was terminated from his employment with the defendants in October 2016, through a letter that referred to “possible litigation” and requested that the plaintiff “preserve … electronically stored information (‘ESI’) relating” to the defendant’s business, “includ[ing] all emails, text messages, … and the like, … [including] material on a phone.” Several days after receiving the termination letter, the plaintiff filed a wrongful termination and breach of contract action, and the defendants filed an answer with counterclaims alleging misappropriation of the defendants’ documents, breach of fiduciary duty, and self-dealing. Thereafter, a years-long discovery dispute ensued. The defendants served several requests for documents, including text messages, but the plaintiff objected to the demands as irrelevant and overbroad, and in March 2018, the plaintiff filed a motion for a protective order. In May 2018, the court ordered the plaintiff to produce cellphone and electronic calendar records as requested by the defendants, and at a status conference in December 2018, the court, again, directed the plaintiff to produce the text messages within 30 days. Finally,...

Avoiding Unnecessary Costs: Court Reminds Parties to Narrowly Tailor Discovery Requests

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Posted in General Litigation

On February 16, 2021

As previously highlighted by this blog, discovery is best effectuated through cooperation by the parties in a litigation. A baseline to cooperation is adhering to the discovery rules set forth in the Federal Rules of Civil Procedure. The Supreme Court of Idaho recently issued a reminder to parties that discovery requests must be narrowly tailored in proportion to the needs of the litigation and that serving overly broad discovery requests is not a court-approved negotiation tactic. Further, prior to seeking court intervention, the parties should cooperate in an effort to resolve any discovery disputes by meeting and conferring with sincerity. In Oswald v. Costco Wholesale Corp., the plaintiff was struck by a car and pinned against another car in one of the defendant’s parking lots, causing significant and permanent injuries. The plaintiff sued the defendant, alleging the parking lot was unsafe in its design and construction. In discovery, the plaintiff propounded extremely broad discovery requests, requesting that the defendant disclose “on a nationwide basis any incident [involving] a vehicle impacting anything.” In turn, the defendant sought a protective order asserting the discovery requests were overly broad and unduly burdensome. The court agreed with the defendant, stating that the plaintiff inappropriately used the “hearing as a sort of negotiation whereby the court is expected to replace...

Opening Pandora’s Box: A Preliminary Showing of Spoliation May Result in the Compelled Production of a Litigation Hold Notice

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Posted in General Litigation

On January 28, 2021

In Radiation Oncology Servs. of Cent. N.Y., P.C. v. Our Lady of Lourdes Mem’l Hosp., Inc., the New York Supreme Court reminded litigants that while litigation holds are generally protected by the attorney-client privilege or under the attorney work product doctrine, a preliminary showing of spoliation of evidence may compel the production of an offending party’s litigation hold documentation. In this litigation involving clinical privileges related to an exclusive radiation oncology services agreement, the plaintiffs identified seven specific instances of spoliation by the defendants. These included certain emails that the defendants produced in hard copy form, but for which they were unable to produce the corresponding electronic version and the related metadata – which the court seemed to globally refer to as the “electronically stored information,” or ESI, relating to the emails – because they had been deleted. The plaintiffs successfully argued that the failure to produce the ESI constituted spoliation because it deprived them of the ability to understand whether there were follow-up discussions with other individuals about the content of the communications, including those who may have been copied on the communications or follow-up emails. The court granted the plaintiffs’ motion to compel the production of the defendants’ litigation hold notice because it found that the permanent deletion of the ESI “potentially deprived...

Pushing the Limit: The District of Oregon Concludes that the Attorney-Client Privilege May Apply to Communications Not Involving Attorneys

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Posted in General Litigation

On December 22, 2020

In Ozgur v. Daimler Trucks N. Am. LLC, Judge Mosman, from the United States District Court for the District of Oregon, found that certain emails in the possession of Daimler Trucks North America LLC (“Daimler”) and that were sought by plaintiff were protected by the attorney-client privilege, as the communications were made for the purpose of obtaining legal advice, despite some of the emails not including an attorney as an author or recipient. In this action, plaintiff filed suit against Daimler for age discrimination in connection with his unsuccessful job application for a position opening posted by Daimler. The position that Daimler posted was already held by a foreign national whom Daimler sought to sponsor for a H1B1 visa so that he could remain in his position. In order to sponsor its employee, Daimler had to advertise the position and establish that there were no U.S. citizens who were willing and able to perform the position, then submit such proof to the Department of Labor. To assist in complying with the Department of Labor and immigration laws, Daimler retained outside immigration counsel. The emails disputed in this proceeding were communications involving outside counsel and Daimler employees, including a recruiting manager and a hiring manager. In determining whether the disputed emails were privileged, the court stated...

District Court Denies Protective Order in Putative Class Action: Production of Relevant ESI May Be Time Consuming and Expensive, But Not Unduly Burdensome

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Posted in General Litigation

On December 17, 2020

The District Court for the Eastern District of California recently denied a defendant’s motion for a protective order in a putative class action, finding that the information requested by plaintiff was relevant and subject to pre-certification discovery, and that defendant did not show that the electronically stored information (ESI) was inaccessible due to undue burden or cost, pursuant to Rule 26(b)(2)(C). Additionally, the court determined that even if defendant could show that the ESI was “inaccessible,” plaintiff demonstrated “good cause” to order production of the ESI notwithstanding the potential burden and cost. In Sung Gon Kang v. Credit Bureau Connection Inc., plaintiff, a consumer, filed a putative class action alleging that defendant provided businesses with inaccurate consumer credit information, including that plaintiff and the proposed class of consumers were included on the United States Treasury Department’s Office of Foreign Assets Control (OFAC) list. A consumer is ineligible for credit in the United States if he or she is included on the list. Plaintiff sought to “represent classes consisting of individuals ‘about whom Defendant … sold a consumer report to a third party’ that included an OFAC Hit.” The discovery dispute centered on defendant’s objections to plaintiff’s first set of written discovery requests. Specifically, defendant objected to requests seeking the identities of individuals who had an...

Cooperation Is Key: E.D.N.Y. Decision Illustrates the Risk of Refusing to Cooperate in Discovery

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Posted in General Litigation

On December 11, 2020

While litigation is inherently adversarial, counsel and litigants would be well-served to recognize that “zealous advocacy” and cooperation need not be mutually exclusive, especially in cases with significant amounts of electronically stored information (ESI). A recent decision from the District Court for the Eastern District of New York illustrates the risk a party and/or counsel takes in refusing to engage in the meet and confer process. This decision also reaffirms the fact that, when parties are working on crafting ESI search terms, it is the parties, not the court, who are in the best position to resolve such discovery disputes through the meet and confer process required under FRCP 26. Cooperation during the discovery process is not only economical in avoiding potential costly disputes, but also required by the Federal Rules of Civil Procedure. In particular, Rule 1 instructs the parties must help the court to “secure the just, speedy, and inexpensive determination of every action and proceeding.” To effectuate that goal, Rule 26(f) requires cooperation by the parties in formulating a discovery plan and meaningfully meeting and conferring in the event a discovery dispute arises. In the event the parties fail to cooperate, Rule 37 provides the court the ability to sanction a party for failing “to cooperate in discovery.” Additionally, many times, the...

More Than $750,000 Awarded in TAR Fees Serves as Both Warning and Guidance to E-Discovery Practitioners

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Posted in General Litigation

On December 1, 2020

Last month, we discussed a recent decision from the United States District Court for the District of Kansas, Lawson v. Spirit AeroSystems, Inc.,  in which the court granted defendant’s motion to shift costs for electronically stored information (ESI) related to expenses incurred undertaking Technology Assisted Review (TAR) for approximately 322,000 documents, at plaintiff’s insistence. The court reasoned that there was good cause warranting cost-shifting because plaintiff insisted on pursuing TAR after it became disproportionate to the needs of the case. Recently, the court entertained defendant’s fee application, in which defendant sought $791,700.21 in expenses incurred in connection with TAR and $83,000 in costs and fees incurred conferring with plaintiff and related motion practice. Plaintiff objected to the amount sought, arguing that reasonable TAR expenses did not exceed $330,000. The court ultimately awarded defendant $754,029.46 in TAR-related expenses and a yet-to-be determined amount of expenses in connection with the fee application. In reviewing the fee application, the court noted that its finding of disproportionality was only reinforced by the parties’ intervening cross-motions for summary judgment, in which only one of the almost 100 exhibits submitted by plaintiff originated from defendant’s TAR production. This lone exhibit was submitted “to support an unremarkable factual contention.” In determining the amount of expenses to allocate to plaintiff, the court examined...

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