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Court Orders Monetary Fine for Gross Negligence and Intentional Spoliation of ESI, Including Emails, Text-Messages, and Skype Messages : Electronic Discovery Law

May 12, 2010 By 1 Comment
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Passlogix, Inc. v. 2FA Tech., LLC, 2010 WL 1702216 (S.D.N.Y. Apr. 27, 2010)

Upon finding that defendants spoliated relevant information, including emails, Skype messages, and computer logs, the court declined to order an adverse inference, to preclude defendants from the presentation of arguments implicating the discarded documents, or to order defendants to pay plaintiff’s costs, but ordered monetary sanctions in the amount of $10,000, after balancing “2FA’s litigation conduct with its status as a small corporation.”

In this opinion, the court addressed plaintiff’s allegations that defendants, specifically defendant Gregory Salyards, committed fraud on the court by creating and sending an anonymous email “in an effort to expand discovery, cause Passlogix competitive harm, and garner a favorable settlement.”  Defending against the accusation, Salyards proffered the affirmative defense of IP spoofing, “stating that a Passlogix employee may have ‘spoofed’ his IP address in an effort to impersonate him on the internet.”  Passlogix also sought spoliation sanctions arguing that defendants failed to implement a legal hold and took part in intentional spoliation of data, including emails and text messages.

Although beyond the scope of this summary, the court’s lengthy discussion of the anonymous email(s) and Salyards’ defense of “IP spoofing” is fascinating and showcases how ever-advancing technology has created scenarios for consideration that, not long ago, seemed more the stuff of spy novels than of litigation in our federal courts.

via Court Orders Monetary Fine for Gross Negligence and Intentional Spoliation of ESI, Including Emails, Text-Messages, and Skype Messages : Electronic Discovery Law.

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Court Orders Monetary Sanctions for Production Delay Resulting from Counsel’s Failure to Become Familiar with Plaintiff’s Retention Policies and Systems : Electronic Discovery Law

April 14, 2010 By Leave a Comment
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In re A&M Fla. Props. II, LLC, 2010 WL 1418861 (Bankr. S.D.N.Y. Apr. 7, 2010)

Where plaintiff’s counsel “failed in his obligation to locate and produce all relevant documents in a timely manner” by failing to gain a sufficient understanding of plaintiff’s computer systems resulting in significantly delayed production of relevant documents, the court declined to impose terminating sanctions or an adverse inference but ordered monetary sanctions against plaintiff and counsel in an amount to be determined.

Upon plaintiff’s production of requested discovery, defendant was surprised by the lack of internal emails produced.  Thereafter, plaintiff retained new counsel who, in an effort to settle the issue, ordered plaintiff to perform a “company-wide” search for responsive information.  The search was conducted under the direction of Deborah Garfinkle, plaintiff’s Chief Technology Officer.  Unfortunately, counsel was “uninformed on the detailed workings of [plaintiff’s] computer system and email retention policies.”  Specifically, counsel was unaware of the existence of archive folders to which employees regularly moved emails.  The archive folders were therefore not searched.

Eventually, defendant brought the lack of email production to the court’s attention.  The parties thereafter agreed to jointly retain a forensic expert to search plaintiff’s computer system.  Because plaintiff’s counsel remained unaware of the archive folders, the forensic search did not include them.  When certain emails were not found in the forensic search, defendant suspected intentional spoliation.

Responding to the accusation of spoliation, Garfinkle informed defendant’s counsel of the existence of archive folders.  Upon plaintiff’s own subsequent search of those folders, additional responsive emails were found.  Plaintiff argued that the situation could have been avoided had defendant included archives in its search request.  Defendant argued that plaintiff should have known to search the archives.  Both sides agreed to a second search by the forensic expert, including the archives.

Following the second forensic examination, plaintiff’s counsel’s “mistaken impression” regarding the methodology for production of the recovered ESI resulted in a two-month delay in the production of certain responsive emails to defendant.

via Court Orders Monetary Sanctions for Production Delay Resulting from Counsel’s Failure to Become Familiar with Plaintiff’s Retention Policies and Systems : Electronic Discovery Law.

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