An opinion from Judge Rebecca Doherty in In re Actos (Pioglitazone) Products Liability Litigation, MDL No. 11-2299, provides valuable lessons on the consequences of drafting overly-broad litigation hold notices, as well as the importance of providing evidence from knowledgeable witnesses in defense of document retention procedures.
In a Rule 37 and spoliation motion, the plaintiffs alleged that defendants, Takeda Pharmaceuticals U.S.A., Inc. and several of its affiliates in the United States, Japan, and Europe (collectively “Takeda”), purposefully deleted the files of 46 former employees, including several high-level officers. The plaintiffs sought a default judgment or, in the alternative, a combination of sanctions that included an adverse inference jury instruction, cost-shifting, and a fine.
The court first addressed whether Takeda had a duty to preserve the deleted information and, if so, when that obligation arose. Takeda argued its obligation was triggered on February 15, 2011, when it issued a litigation hold notice specifically limited to bladder cancer product liability litigation. However, Takeda acknowledged that liability claims involving Actos (the product at issue) went back as far as 2002 and that the company had issued a “general Actos ‘products liability’ litigation hold” in July 2002 in connection with litigation over liver injuries. Importantly, the broadly-written 2002 litigation hold, which was subsequently “refreshed” five times, instructed recipients to “preserve any and all documents and electronic data which discuss, mention, or relate to Actos,” and it explicitly stated that the hold was to be interpreted “in its broadest sense to prevent the deletion or destruction of any recorded information and data relating in any way to Actos.” Takeda argued that, despite the clear language to the contrary, the 2002 litigation hold was limited to information relating to liver injuries and, therefore, the company did not have an obligation to preserve information related to bladder cancer at that time.
The court deferred until the close of evidence its decision on the plaintiffs’ request for sanctions under Rule 37 and only discussed its ability to impose sanctions for spoliation under its inherent power to control the judicial process and litigation. The court took the 2002 litigation hold notice as written and found that Takeda had a duty to preserve all documents related to Actos when the hold was first issued in 2002. Specifically, the court found that the “clear, express, and unambiguous language of the 2002 Litigation Hold and its ‘refreshed’ incarnations all contain broad language without limitation to or distinction between or among specific maladies and, therefore embrace the bladder cancer claimants who are plaintiffs in the instant MDL.”
After finding that Takeda had a duty to preserve and breached it by deleting the files of the 46 employees, the court next considered sanctions. Citing binding Fifth Circuit precedent, as well as Judge Shira Scheindlin’s landmark decision in Zubulake v. UBS Warburg, LLC, 220 F.R.D. 212 (S.D.N.Y. 2003), the court stated it would consider Takeda’s degree of fault, the degree of prejudice plaintiffs suffered as a result of the spoliation, and the degree of sanction necessary to redress the misconduct. Although the court stated it had “grave concerns” about Takeda’s intent, it found that the plaintiffs had failed to demonstrate “sufficient bad faith to support the full breadth of onerous sanctions requested” and decided to allow all evidence of bad faith to go to the jury and it would devise an appropriate jury instruction, if one is warranted, after hearing all of the evidence.
Also noteworthy was the court’s displeasure with Takeda’s designation of an “outside electronic discovery consultant” as the company’s 30(b)(6) witness because that individual had “no personal knowledge of any of the corporate history, conduct, or internal workings of any Takeda entity.” In addition, the court disapproved of Takeda’s decision to submit with its opposition to the plaintiffs’ motion the unsworn statement of its Assistant General Litigation Counsel, whose “testimony” did not indicate any personal knowledge of the pertinent facts and was, instead, a “self-serving declaration more in the nature of expert testimony as to the law,” which the court found to be “not appropriate” and “of no benefit.”
The lessons to be learned from Judge Doherty’s opinion are clear: (1) courts will strictly interpret the terms of a written litigation hold, and (2) a party must designate as its 30(b)(6) witness an individual with actual knowledge of pertinent facts. So, what price did Takeda ultimately pay for its spoliation? Stay tuned this week for “the rest of the story” detailed in part two of our discussion of the impact of Takeda’s conduct on this high-stakes multi-district litigation.