Gibbons Law Alert

Gibbons Law Alert

Tagged: Sanctions

End of the Road: GN Netcom Inc. and Plantronics Settle Eight-Year Litigation Saga Beset by E-Discovery Sanctions

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Posted in General Litigation

On September 8, 2020

On July 12, 2020, United States District Judge Leonard P. Stark of the District Court for the District of Delaware (“District Court”) approved a joint stipulation of settlement filed by GN Netcom Inc., parent of Jabra headphones, and Plantronics. This settlement will end the eight-year old litigation saga between GN Netcom and Plantronics involving allegations that Plantronics had monopolized the relevant market via exclusive distribution deals which required its distributors to only sells Plantronics’ headsets and not those of its rivals. This case is noteworthy as to e-discovery because of the severe sanctions of $3,000,000 and an adverse inference jury instruction entered by the District Court against Plantronics in 2016 pursuant to then recently amended Federal Rule of Civil Procedure 37(e). This blog post will not recount the full panoply of discovery abuses addressed in the District Court’s July 12, 2016 Order, but, in broad strokes, Plantronics was found to have acted in bad faith in failing to take reasonable steps to preserve ESI which could not be restored or replaced. The District Court’s sanctions order was entered because Don Houston, a former executive of the company, “double-deleted” thousands of his own relevant emails despite the existence of a legal hold. Mr. Houston also directed other employees of the company to delete relevant emails. While...

Disappearing Act: Northern District of California Issues Rare Terminating Sanctions for Spoliation on a Massive Scale

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Posted in E-Discovery: Legal Decisions and Court Rules / Technology Developments and Issues

On July 17, 2020

In WeRide Corp. v. Kun Huang, the Northern District of California addressed an egregious case of discovery abuses and spoliation by defendants in a business litigation involving the alleged theft of autonomous vehicle technology. Applying Federal Rules of Civil Procedure 37(b) and 37(e), the court issued rare terminating sanctions against several defendants who willfully and intentionally deleted various forms of ESI, including relevant emails, status reports, and source code, well after the commencement of litigation and after a preservation order issued by the court requiring the preservation of such information. Defendants compounded these abuses by adopting the use of “DingTalk,” an ephemeral communication technology, after the court had issued the preservation order. WeRide, a technology company engaged in the business of developing autonomous cars, employed defendant Jing Wang as CEO in January 2018. WeRide alleged that Wang went on to form his own company, AllRide, as a direct competitor. WeRide also alleged that former employee defendant Kun Huang was recruited by Wang to work for AllRide while still employed by WeRide. WeRide alleged that Huang downloaded various forms of data during this time period and transferred this data onto several USB devices from two WeRide-issued computers, then proceeded to delete files from the devices. WeRide further alleged that AllRide and Huang stole WeRide’s source code,...

In It for the Long Haul: The Duty to Preserve Social Media Accounts Is Not Terminated Upon an Initial Production

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Posted in E-Discovery: Legal Decisions and Court Rules

On June 30, 2020

In a recent decision by a federal district court in Ohio, the court admonished a plaintiff in a gender-based pay discrimination for deactivating her LinkedIn account during the pendency of the litigation after making an initial production. The court concluded that plaintiff had violated her duty to preserve pursuant to Rule 37(e), as the conduct resulted in the deletion of relevant and discoverable information that was the subject of a previous court order. The court declined to impose sanctions because plaintiff had in fact produced data from her LinkedIn account and because defendant could not demonstrate prejudice. However, the court did not let plaintiff’s offense go lightly; the court stated that plaintiff’s action was serious and inappropriate. In Faulkner v. Aero Fulfillment Services, plaintiffs alleged gender-based pay discrimination during their employment with defendant. Pursuant to a court order, plaintiffs had to produce, among other things, the “last three years of social media information.” Plaintiff Faulkner’s counsel followed the directions on the LinkedIn website to download a full data archive in Microsoft Excel format and produced the Excel file to defendant. Subsequently, defense counsel requested the social media information in a different format, a “screenshot” format. But plaintiff’s counsel was unable to produce Ms. Faulkner’s LinkedIn information in the “screenshot” format because the account had already...

SDNY Expands Interpretation of “Possession, Custody, or Control” – Orders Adverse Inference Against Company for Spoliation of Text Messages by Non-Party, Independent Contractor on Personal Phone

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Posted in General Litigation

On April 2, 2018

In Van Zant, Inc. v. Pyle, et al., 270 F. Supp. 3d 656 (S.D.N.Y. 2017), the Southern District of New York ordered an adverse inference against Los Angeles-based Cleopatra Entertainment LLC (“Cleopatra”), based on the conduct of its independent contractor and non-party to the case, Jared Cohn (“Cohn”). Cohn had been hired by Cleopatra to write and direct a motion picture about the 1977 plane crash that killed two members of the Southern rock band Lynyrd Skynyrd. During the film’s production, Cleopatra and Cohn enlisted the aid of Lynyrd Skynyrd drummer Artimus Pyle (“Pyle”), who, along with other surviving band members (and the estates of deceased members), was party to a 1988 Consent Order that set limits on the permissible use of the Lynyrd Skynyrd name; the likenesses, names, and biographical material of its members; the band’s history; and related items. The Consent Order also detailed the respective parties’ rights to royalties from Lynyrd Skynyrd music, merchandise, and other proceeds, and prohibited the parties from “implicitly or through inaction authoriz[ing] the violation of the terms [of the agreement] by any third party.” Pyle initially did not make Cleopatra aware of the Consent Order, but plaintiffs (also parties to the 1988 Consent Order) sent Cleopatra a copy, along with a cease and desist letter, after learning...

Defendant Acting With “A Pure Heart But Empty Head” Not Subject to Spoliation Sanctions Under Amended Rule 37(e)

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Posted in E-Discovery: Legal Decisions and Court Rules

On August 7, 2017

A recent decision denying a motion for spoliation sanctions highlights that a moving party must show that even clearly spoliated ESI is not available from other sources to qualify for an award of any form of sanction under Rule 37(e). In Snider v. Danfoss, LLC, the Northern District of Illinois held that a defendant’s admitted and erroneous destruction of duplicative ESI did not prejudice the plaintiff and therefore sanctions were not warranted. In other words, “no harm, no foul.” Plaintiff Snider worked for Danfoss for a number of years, during which time she was sexually harassed by another employee. Plaintiff informed her acting supervisor of the harassment, and was later transferred to a different position, which she viewed as a demotion and retaliation for her complaint. Approximately one week after the transfer, Plaintiff’s counsel sent a generalized, “preserve all evidence” letter to Danfoss. She then quit, and, pursuant to Danfoss’s policy, her emails were deleted 90 days after her employment ended. Plaintiff’s acting supervisor also later left Danfoss’s employment, and her emails were deleted in accordance with Danfoss’s auto-deletion policy. After the case was filed, Plaintiff deposed her acting supervisor, who suffered from a case of “testimonial amnesia” and was unable to recall a variety of facts, even benign, irrelevant facts. Plaintiff thereafter sought production...

Wrap Up of United States Supreme Court’s 2016-17 Term

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Posted in General Litigation

On July 13, 2017

With the close of the United States Supreme Court’s 2016-17 term, we offer this wrap up of the term’s most important business and commercial cases (excluding patent cases): Kindred Nursing Ctrs, L.P. v. Clark: The Supreme Court continued its full-throated support of arbitration agreements, again rejecting a state supreme court’s effort to apply an ostensibly arbitration-neutral rule of law to invalidate an arbitration agreement. In Kindred, the Kentucky Supreme Court held that an arbitration agreement signed by an attorney-in-fact under a broad power of attorney was invalid because the power of attorney did not expressly give the attorney-in-fact the right to waive the principal’s right to a jury trial. According to the Kentucky Supreme Court, to grant an attorney-in-fact the authority to waive a “fundamental constitutional right,” a power of attorney must grant that authority expressly and unambiguously. Because the right to access the courts and the right to a jury trial are such “fundamental constitutional rights” and because the power of attorney did not expressly and unambiguously waive them, the attorney-in-fact was not authorized to agree to arbitrate the principal’s claims, and no enforceable arbitration agreement was created. The Supreme Court found that the Kentucky Supreme Court’s facially arbitration-neutral rule—that the authority to waive “fundamental constitutional rights” must be expressed unambiguously in a power...

Signs of Life? – Judge Francis Opines that “Inherent Authority” to Sanction Spoliation Related Conduct Survives Amended Rule 37(e)

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Posted in E-Discovery: Legal Decisions and Court Rules

On February 22, 2016

In perhaps the first published decision since the amended Federal Rules took effect on December 6, 2015, United States Magistrate Judge James C. Francis IV, a preeminent judicial e-discovery authority, relied upon amended Rule 37(e) and, somewhat controversially, his inherent authority, to sanction a litigant for evidence tampering and spoliation. The opinion is significant, not solely because it invokes the newly-minted rule, but because it interprets amended Rule 37(e) as not foreclosing the court’s inherent authority as a viable alternative to sanction spoliation-related conduct that may not strictly satisfy the new Rule’s elements.

N.Y. Court Grants Spoliation Sanctions for Destruction of Documents Decades Ago

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Posted in E-Discovery: Legal Decisions and Court Rules

On February 11, 2016

In Warren v. Amchem Products, Inc., Justice Peter Moulton sanctioned defendant J-M Manufacturing Company for destroying documents in 1990 and 1997 – 24 years and 17 years, respectively, before the Warren Estate filed suit against asbestos manufacturers in 2014. The Court granted plaintiff’s motion for spoliation sanctions and ordered that, should the case proceed to trial, the jury will be instructed that it may infer that the destroyed documents would have supported plaintiff’s claims and would not have supported J-M’s defenses.

Rule Amendments Update: U.S. Supreme Court Adopts Proposed Amendments

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Posted in E-Discovery: Legal Decisions and Court Rules

On May 5, 2015

On April 29, 2015, the United States Supreme Court adopted, without changes, the proposed amendments to the Federal Rules of Civil Procedure. (For background information on the proposed amendments, see our previous blog posts from September 25, 2014, June 19, 2014, May 27, 2014, February 10, 2014, and May 6, 2013. Absent action by the United States Congress, the proposed amendments will take effect on December 1, 2015.

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