[EDRM Editor’s Note: The opinions and positions are those of Michael Berman.]
EEOC v. Formel D USA, Inc., 2024 WL 4172527 (E.D. Mich. Sept. 12, 2024), addressed several interesting issues. Among them were: general principles of discovery; the role of counsel in self-collection; discovery on discovery; the date that the litigation hold was triggered; whether reasonable post-trigger steps were taken; curative sanctions under Fed.R.Civ.P. 37(e)(1); discovery of litigation hold notices and implementation; search parameters; and discovery blocking under the GDPR. The EEOC’s motion to compel and for sanctions was granted in part.
THE ROLE OF COUNSEL IN SELF-COLLECTION
One issue, self-collection of ESI by the defendant, had two subparts. First, was self-collection permissible? Second, did this self-collection violate a stipulated order which provided “that ESI collection would be done under the supervision of counsel.”
According to the court, the defendant argued that “there is nothing improper about its collection methods. Counsel interviews clients and those with potential information, identifies potential custodians, and instructs them to pull documents. Counsel then asks follow-up questions based on information throughout the case…. It insists that it is not conducting unchecked discovery.”
The Formel court did not agree, writing that counsel must take an active, affirmative role: “Thus, counsel cannot merely rely on custodians to self-collect ESI. Rather, counsel must test the accuracy of the client’s response to document requests to ensure that all appropriate sources of data have been searched and that responsive ESI has been collected—and eventually reviewed and produced.” Id. at *7 (quotations omitted).
It is unclear whether ‘asking follow-up questions’ includes testing the accuracy of the search. If Defendant’s counsel is not testing the accuracy of the searches, counsel must do so unless it is supervising the search in-person. Failure to do so may result in sanctions, including monetary sanctions.
EEOC v. Formel D USA, Inc., 2024 WL 4172527, at *7 (E.D. Mich. Sept. 12, 2024).
The Formel defendant’s efforts came “close,” but did not mention “testing the accuracy” of the response. The court explained: “It is unclear whether ‘asking follow-up questions’ includes testing the accuracy of the search. If Defendant’s counsel is not testing the accuracy of the searches, counsel must do so unless it is supervising the search in-person. Failure to do so may result in sanctions, including monetary sanctions.” Id.
There are more rigorous and defensible approaches to self collection: “Self-Collection” May Be Reasonable Using Ralph Losey’s Dual-Protection System (Jan. 19, 2024).
For more on self-collection, see Unsupervised Self-Collection Predictably Led to Problems (Jan. 2, 2021); Maker’s Mark: A Different View of Self Collection (Aug. 3, 2021); Self-Identification and Self-Preservation: A Fool for a Client? (May 26, 2011).
DISCOVERY ON DISCOVERY
The EEOC sought discovery on discovery. “The EEOC accuses Formel D of failing to preserve emails, laptops, and cellular telephone data of four custodians—Stadie, Klingler, Thompson and Littleton, and this failure prejudices the EEOC and Plaintiff. Stadie’s and Klingler’s work cellular telephones and laptops are no longer available. Thompson and Littleton’s emails and their cellular telephones and laptops are also no longer available. Thompson and Littleton are arguably the most important of the four—both were Plaintiff’s supervisors. Plaintiff accuses Littleton of sexual harassment and complained to Thompson about it.” Id. at *1.
As Fed.R.Civ.P. 37(e)(1) sanctions, the EEOC sought copies of litigation hold notices, dates and the names of recipients of those notices, as well as further descriptions; appointment of a forensic examiner to determine when the ESI went missing; and, a Rule 30(b)(6) deposition on the missing ESI at defendant’s expense. The EEOC did not seek sanctions under Rule 37(e)(2).
Triggering the Duty to Preserve
The court held that plaintiff’s text to Stadie “that she was contacting her lawyer about not being called back to work” was a trigger of the duty to preserve. It wrote that “Stadie forwarded the complaint via email to the human resources director.”
Even if that was not a trigger, shortly thereafter, plaintiff emailed the H.R. department informing it of unwanted sexual advances. Defendant’s privilege log showed that, shortly after that, the defendant sought legal advice. The email claim and privilege log were also confirmation of a trigger date. See Discovery About Discovery – When Was Duty to Preserve Triggered? (Jul. 23, 2024); Documenting When the Duty to Preserve Potentially Responsive Information Was Triggered (Jan. 17, 2021); Triggering the Duty to Preserve ESI (Dec. 27, 2020); cf. Some Tactical Options for Businesses Faced With Pre-Litigation Preservation Demands (Jan. 29, 2021).
However, the defendant asserted that: “The accounts were not deleted by an employee, so it is impossible to know when they were deleted.”
Nevertheless, at least implicitly, the court determined that the ESI was lost after the trigger date.
Did Defendant Take Reasonable Preservation Steps?
Defendant asserted that it had taken reasonable preservation steps: “Defendant says there was a backup system failure resulting in loss of Thompson’s and Littleton’s emails.” Defendant “explained that cellular telephones and laptops are unavailable for these four individuals because Defendant does not have a policy of preserving employee’s telephones or laptops. These items are either returned to the vendor or are overwritten and used by the next employee.” [1]
The court was unimpressed with several of defendant’s arguments:
The Court cannot say that Defendant took reasonable steps to preserve text messages from the human resources personnel (Stadie and Klingler) and the two employees directly involved in the harassment or investigation (Thompson and Littleton). The record shows no attempt to preserve cellular telephone data. Defendant’s lack of a policy to preserve cellular telephone data does not absolve it of responsibility to preserve ESI under the federal rules.
Id. at *3 (emphasis added).
In short, a pure heart, but empty head, is not a defense to spoliation. Even reasonable data retention policies – – and I suggest that this one was not reasonable – – may give rise to spoliation in particular circumstances. Courts have stated that parties cannot “blindly destroy documents and expect to be shielded by a seemingly innocuous document retention policy.” Felder Part 4 of 4: Was the Felder Defendant’s 14-Day Video Overwriting Policy Defensible? (Aug. 22, 2024).
The Formel court held that the missing ESI was subject to a duty to preserve, and selective loss of relevant ESI was suspicious:
As for the lost emails, operation of an electronic information system is one consideration in deciding whether Defendant took reasonable steps to preserve the ESI. Discussed at length below is Defendant’s method of preserving emails on a server in Germany. Saving emails on a server is a reasonable and usually effective step at preserving them. Defendant cannot explain why Thompson’s and Littleton’s emails were lost during a shift in cloud storage while other email accounts were preserved. It is understandable that the EEOC is suspicious of the loss of the two most key persons in Plaintiff’s claims. [emphasis added].
Id.
While it is correct that “routine operation” is a consideration, the old “safe harbor” has been found lacking at both federal and State levels. Felder Part 4 of 4: Was the Felder Defendant’s 14-Day Video Overwriting Policy Defensible? Further the perils of self-preservation and preservation-in-place have long been known. Self-Identification and Self-Preservation: A Fool for a Client? (May 26, 2011).
The Burden of Proof
However, the Formel court focused on the burden of proof:
The Federal Rules of Civil Procedure are silent about which party bears the burden of proving the reasonableness of the steps to preserve ESI. Some courts give the burden of proof to the party with better access to the information—the party who lost the ESI. … Other courts would place the burden on the party moving for sanctions. … The parties here did not adequately brief the issue of who carries the burden.
Id. at *4 (citations omitted).
As to the emails, it then held:
There is not enough evidence to determine whether reasonable steps were taken to preserve the emails, no matter who should have the burden. This finding is crucial because remedial measures are authorized only if reasonable steps were not taken.
Id.
A different result was reached as to cell phones:
Because the Court concludes that reasonable steps to preserve the cellular telephone data were not taken, remedial measures are warranted to cure that lost data, so the analysis continues, but only as to the lost cellular telephone data.
Id.
CURATIVE SANCTIONS FOR LOSS OF CELL DATA
Having excluded the laptops and email, the Formel court found prejudice by the loss of the cellular data.
The Formel court rejected the EEOC’s request that the defendant pay for a Rule 30(b)(6) deposition, holding that such payment would not be “curative” under Rule 37(e)(1). The EEOC fared better on other issues.
Essentially, the Formel court held that the litigation hold notice was not privileged and, even if privileged, it was discoverable due to the spoliation of cell phone data. This principle is long and well-established. See The Hon. Paul W. Grimm, M. Berman, et al., “Discovery About Discovery Does the Attorney-Client Privilege Protect All Attorney-Client Communications Relating to the Preservation of Potentially Relevant Information?” 37 U.Balt.L.Rev. 413 (2008); Are Litigation Hold Notices Discoverable? (Mar. 5, 2022); When is a Litigation Hold Notice Discoverable? — When a Litigation Hold is Defective (Aug. 9, 2021); When is a Litigation Hold Notice Discoverable? (Dec. 1, 2020); Discovery on Discovery (Apr. 29, 2022); Recent “Textbook” Analysis of Fed.R.Civ.P. 37(e)(Apr. 17, 2023); cf. Sanctions Sought in “Murky Mess” (Jul. 15, 2023).
The Formel court also required disclosure of the date the litigation hold notice was sent and the names of all recipients. In 8 Lessons Learned – Part IV – Disclosure of Recipients of Litigation Hold Notices (May 9, 2024), I discussed a recent decision holding that the names of recipients of litigation hold notices are not privileged. The court wrote that: “This basic information is exactly the same information which would appear on a privilege log for withheld work product, if the Court were to require the Parties to provide privilege logs of documents which post-date the Complaint in this matter…. Further the list of persons who received litigation holds is not, itself, work product because disclosing that list does not disclose any of the analyses, bases, or criteria used by counsel to create that list. Rule 26(a)(1)(A)(i) requires counsel to provide a list of individuals likely to have discoverable information that the party may use to support its claims and defenses, and that list is not considered work product even though it directly implicates the party’s claims and defenses.”
Defendant cannot explain why Thompson’s and Littleton’s emails were lost during a shift in cloud storage while other email accounts were preserved. It is understandable that the EEOC is suspicious of the loss of the two most key persons in Plaintiff’s claims.
Id. at *3 [emphasis added].
Then, the Formel court wrote: “Once the EEOC has the list of names, it may inquire into the actions taken in response to the notice. At this time, the Court does not compel disclosure of any other communications between Defendant’s employees and counsel concerning the litigation hold notice. That said, if information surfaces that there was intent to destroy evidence, the ruling may change.” Id. at *5.
There is authority that “the steps taken by a client to implement a litigation hold are discoverable, without any showing of need, loss of ESI, or otherwise.” Grimm, Berman, et al., “Discovery About Discovery,” 37 U. Balt. L. Rev. at 427.
In the law review article, we concluded that:
Certain facts–such as what steps a litigant took, or failed to take, to preserve material–should be deemed routinely discoverable. Other facts, such as the contents of a litigation hold letter, and attorney-client implementation discussions, should require a greater showing to support disclosure. Actual legal advice, if disclosable at all, should be discoverable only upon a more compelling showing and, perhaps, after in camera review. Although, where there is evidence of a breach of the duty to preserve, there are multiple bases for seeking discovery of some attorney-client preservation communications, the least problematic approach is to assert that implementation communications are unprivileged, compelled exchanges that are only conditionally relevant.
Id. at 455.
We suggested that:
In today’s practice, counsel and their clients are well advised to think early and often about the potential for discovery on discovery. Especially in the highly complex world of e-discovery, even with good faith efforts, it is very easy to fail to preserve or lose relevant information by inadvertence. Even the inadvertent loss of relevant data may lead to probing questions into the conduct of counsel and client before a court resolves a sanctions motion.…. [C]ounsel and client should be aware, when drafting preservation documents and engaging in implementation discussions, that those documents and discussions may voluntarily or involuntarily be presented to a court for review in connection with a spoliation motion. Prudence suggests, for example, that litigation hold letters should not contain surplus tactical and strategic discussions, and should be no more expansive than necessary to effectively accomplish the preservation task. It may be advisable to circumscribe preservation discussions and segregate notes regarding the implementation of preservation efforts from substantive communications involving the merits of the dispute. Additionally, all participants in the adversary process need to consider the probability that, even absent a preliminary showing of breach of the duty to preserve, the steps taken by a client to preserve information are likely discoverable, and that discovery may indirectly disclose some information regarding attorney-client communications.
Id. at 454 (emphasis added).
Notes
[1] The court wrote that defendant argued that “information on laptops is stored on the servers, so the laptops themselves are unnecessary.” However, according to the court: “There is no admissible evidence in the record supporting Defendant’s position.” Nevertheless, the EEOC advised that “it can obtain information stored on laptops via the server.” Thus, laptops were not at issue on the sanctions motion.
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