W.D.N.C.: Motion for Dismissal Unreasonable Even Where Discovery Violations Run Rampant

Last week, Magistrate Judge Lauren F. Louis issued a decision, Marine Depot Int'l, Inc. v. James River Grp., Inc., No. 19-CV-24821, 2020 U.S. Dist. LEXIS 244385 (W.D.N.C. Dec. 30, 2020) granting in part and denying in part the Defendant's motion for sanctions and dismissal under Federal Rule of Civil Procedure Rule 37. The Plaintiff was previously fined for canceling a deposition without giving sufficient notice; producing documents in an unusable format; and not conducting expert disclosure correctly pursuant to Rule 26.

The Plaintiff's second amended disclosures failed to provide the value for some of the damages it requested for lost profits and lost opportunities as required by Rule 26(a) and the documentation on which those damages calculations are based as required by Rule 34. Judge Louis denied the Defendant's motion for dismissal since the Plaintiff was not found to have acted in bad faith, but ordered that the Plaintiff be precluded from using evidence at trial of damages which are not described in its disclosures.

The Defendant also argued that the Plaintiff failed to search its computers and servers for relevant ESI, noting the absence in its production of communications about the purchase of a company. The Plaintiff's suit alleges breach of contract for the Defendant's failure to purchase the company. The Plaintiff countered that all documents relating to this company were saved on web-based applications (mainly email accounts) pursuant to James River Group's own policy. The Court denied the motion for sanctions on this basis since Rule 34 does not state how a party is to locate responsive documents. ". . . the Court will not require Plaintiff to conduct additional discovery where Defendant has not provided any factual basis for its belief that the additional search of Plaintiff's server is necessary, or to rebut Plaintiff's sworn testimony that there are no relevant, non-duplicative documents stored there." Id. at *11-12.

Partial fees were awarded to the Defendant for its work on its motion for sanctions on the basis of the fact that the, "Plaintiff's discovery violations ran rampant" and a new discovery violation was uncovered at the hearing. However, the Defendant's full fees were not awarded because it sought dismissal which was "an unreasonable expectation here", and the time incurred [67.4 hours] was not reasonable. Id. at *13-14. Judge Louis did not give much weight to the Plaintiff's ability to pay because of its repeated failure to meet its discovery obligations.

New York Appellate Division: No Dismissal for Loss of ESI Stored for 7 Years in a Safe

Last week, the Fourth Judicial Department of the Appellate Division of the New York State Supreme Court issued a decision, Miller v. Miller, No. 761 CA 20-00203, 2020 N.Y. App. Div. LEXIS 8153 (4th Dep't Dec. 23, 2020), ruling on the Defendant's appeal of an order denying its motion for summary judgment on some claims in the complaint. The Defendant was the employer of a man who harassed the Plaintiff and her husband, after the Plaintiff ended her relationship with him. The husband also worked for the Defendant, Moog, Inc.. The Plaintiff's complaint listed causes of action for negligent supervision and retention, and breach of fiduciary duty for which summary judgment motions were denied.

The Defendant argued that the lower court abused its discretion in not dismissing the Plaintiff's complaint for spoliation of evidence. Email data for the accounts of the Plaintiff and her husband was stored on a hard drive that was later found not to function. While the Fourth Department acknowledged that a claim could be dismissed on the ground of spoliation even where there was not intentional destruction of evidence, it observed that prejudice would have to be shown that the negligent destruction of ESI deprived the Defendant of a means of proving her defense. No abuse of discretion was found:

"Although the relevant hard drives appear to have been negligently forgotten in a safe in the law firm of plaintiff's attorney for approximately seven years, there does not appear to be a dispute that the hard drives of plaintiff and her husband were imaged by a vendor for the purpose of preservation. There is no allegation or evidence that plaintiff or her counsel tampered with those hard drives. Further, defendant failed to offer any evidence to support its assertion that the absence of access to 'native electronic files' due to the loss of information on the inoperable hard drive substantially prejudiced, much less precluded, its ability to mount a defense in this action. The court therefore did not abuse its discretion in refusing to dismiss the amended complaint as a spoliation sanction." Id. at *9.

M.D. Ala.: E-Discovery Consultant's Database Review Insufficient to Certify Class

Last week, Judge Royce Lamberth issued a decision, McCullough v. City of Montgomery, No. 2:15-cv-463-RCL, 2020 U.S. Dist. LEXIS 241634 (M.D. Ala. Dec. 23, 2020) denying the Plaintiffs' motion for class certification.

In order to assist them in ascertaining the class members, the Plaintiffs engaged an e-discovery consultant who was tasked with reviewing data in court databases tracking the probation records of a municipal court and a probation services company. The Plaintiffs' suits alleges that the Due Process Clause, the Equal Protection Clause, and 42 U.S.C. § 1983 (which provides a right to sue state governments for civil rights violations) were violated when traffic offenders were jailed for failing to pay fines.

The database records did not show whether or not plaintiffs whose sentences were commuted from fines to jail time actually served that jail time, or if the probation service which is a co-defendant in the case was responsible for supervising that probation. The databases only tracked when fines had been commuted to jail time. Judge Lamberth noted that transcripts and release orders often did not make clear if offenses resulted in actual jail time, or if probationers would have served the same amount of jail time for other offenses for which the commuted time would have been served concurrently. He concluded that:

"The work and testimony of plaintiffs' expert Mr. Rubens [the e-discovery consultant] confirms that the class is not ascertainable. At the class certification hearing, Mr. Rubens repeatedly told the Court that the plaintiffs' attorneys had to make 'judgment calls' about whether or not to include people on the class lists when his work did not produce a definite answer. During direct examination, Mr. Rubens analogized this attorney review process to document review in discovery where a consultant may filter documents before an attorney makes a legal judgment about whether the document is responsive or non-responsive. But that analogy does not hold for the application of objective fact-based criteria like class parameters. If applying class parameters requires legal judgment, then the class has not been objectively defined." Id. at *45-46.

The Court further faulted Rubens for being unable to explain at a hearing why certain individuals who should have been members of the defined class were omitted, and criticized his methodology because exhibits showed it was inconclusive in establishing whether or not some individuals were class members. The Plaintiffs thus could not certify a class for their civil rights claim.

The Plaintiffs also sought to certify a class for an abuse of process claim for probationers who paid less than the minimum monthly requirement. Rubens relied on a field in a database that tracked the minimum amount. Judge Lamberth rejected this approach because, "the plaintiffs' method for defining the class does not necessarily turn on the content of the probation orders. Perhaps that data will match the Municipal Court's records; perhaps it will not." Id. at *51.