#CaseoftheWeek episode 62 is an analysis of Stemmelin v. Matterport, Inc., 2022 WL 818654 (N.D. Cal. 2022 from March 17, 2022. CEO Kelly Twigger discusses whether a failure to preserve G Suite data was sanctionable absent a showing of prejudice.
The decision comes from United States Magistrate Judge Thomas S. Hixson.
Good morning, and welcome to episode 62 of our Case of the Week. My name is Kelly Twigger, I am the CEO and Founder of eDiscovery Assistant and the Principal at ESI Attorneys. Thanks so much for joining me today.
Each week, as you know, through our partnership with ACEDS, we choose a recent decision from our eDiscovery Assistant database that highlights key issues for litigators and those involved in the eDiscovery process. We talk about the practical implications of that decision for you, your practice and your clients.
This week’s decision comes to us from a case called Stemmelin v. Matterport pending in the Northern District of California. This is a case that’s assigned to Judge Alsup as the District Court Judge and to Judge Thomas Hixson as the United States Magistrate Judge. This decision is from Judge Hixson.
If you’re familiar with Judge Hixson, you know that we get a lot of case law in eDiscovery Assistant out of the Northern District of California. Judge Hixson is well founded in eDiscovery issues and has 57 cases in our database of decisions that he has authored.
This particular decision is from March 17th, just a little under a month ago and deals with two specific issues, failure to preserve and 30(b)(6)or corporate designee. Those are the issues assigned to the case in eDiscovery Assistant. Let’s talk a little bit about what’s happening in this case.
Now, we are before the case on a motion for sanctions under Rule 37(e), which is the section on failure to preserve. We’ve talked multiple times about the various sections under Rule 37, and that as a party bringing motion for sanctions, you need to be very clear on which section you’re under and what the elements are of that section, and to make sure that you have the facts to support each of those elements. As we’re going to see here, the plaintiffs did not.
There are three separate issues that the plaintiffs are seeking sanctions on. One is a failure to preserve noncustodial information, including sales scripts, archival data relating to a specific program that is the subject of the complaint, marketing of the program, including web pages, as well as operating procedure manuals. All of that information is non custodial information that was lost.
The second issue is a failure to preserve Gmail data for seven former employees of the defendant. The remaining issues relate to issues claimed about depositions in which the defendant put forward individual fact witnesses who were also responsible for specific categories under the 30(b)(6) notice, and the plaintiffs felt that there were issues with the state of preparation of those witnesses.
What we’re going to see as the Court addresses those issues on the deposition, is that those issues were more appropriate for a motion to compel. They were not appropriate for a motion for sanctions and the Court says as much. What we’re going to talk about in terms of takeaways is, is that really the best use of resources for your client? Are you really thinking through the strategy of leveraging Rule 37 with regard to a motion to compel and potentially getting sanctions under Rule 37(b), which has a lower bar than Rule 37(e), what the plaintiffs are claiming here?
The Court starts by noting the language of Rule 37(e), which is the failure to preserve, and that section requires that when data is lost that should have been preserved–you’ve got to establish the duty to preserve–and it cannot be restored or replaced, the Court can, upon finding a prejudice to another party, they can order measures no greater than is necessary to cure the prejudice or only upon a finding that the party acted with the intent to deprive. The Court may presume the information that was lost was unfavorable to the party and instruct the jury that it may or must presume the information was unfavorable to the party, otherwise known as an adverse inference instruction, or the Court may dismiss the action or enter a default judgment. Under Rule 37(e), we’ve got to have prejudice and intent to deprive in order to get any kind of terminating sanctions.
Let’s dive into the Court’s analysis on the various issues that are raised by the plaintiff here. What we really find, as I mentioned, is that what’s before the Court on a motion for sanctions isn’t really appropriate for a motion for sanctions. This is where the site to our previous discussion in the Bragg case on the case of the week really comes into play. If you go back and take a look at our post on that case, you’ll see that there were issues there where the Court really looked at and said, “hey, you brought a motion for sanctions that wasn’t appropriate, and now we’re going to provide a basis for the other side to bring sanctions against you for an inappropriate sanctions motion.” That’s a risk that you run when you’re looking at sanctions. We need to be very clear in understanding what is needed under Rule 37(e) and what you’re bringing to the table.
Now, the Court starts here with addressing the deposition issues that the plaintiffs have raised. First, the Court addresses the plaintiff’s complaint that while some of the board presentations were produced in discovery, that the plaintiffs don’t know whether all of them have been produced, and for some of the produced presentations, they don’t know whether those are the final versions of those presentations such that they can rely on them as being the affirmative representations to the board.
The Court looks at this and says this is not appropriate for a sanctions motion, that a sanctions motion requires that ESI must be lost, and here there’s no facts alleging that anything is actually missing. This is simply you need to dig into whether or not the real information has been produced, and that’s more appropriate on a motion to compel.
The Court then goes into the next series of complaints that the plaintiff raises on depositions regarding the lack of preparation of 30(b)(6) deponents.
In one instance, the plaintiff alleges that the 30(b)(6) witness could not identify when some of the documents were at use by the defendants. In another instance, that one witness had not reviewed all of the documents that were listed in the 30(b)(6) in preparation for the deposition. The Court states, and I’m going to quote this language, “When a deposing party thinks that a Rule 30(b)(6) witness has not been adequately prepared, the normal remedy is a motion to compel.” While the Court notes that the parties do not have a motion to compel before it, it does state that a series of “I don’t know answers” does not rise to the level of a motion for sanctions, but instead skips a vital step.
Here we’re really finding that the plaintiff here has brought a motion that’s not appropriate before the Court on these particular issues and that’s where I’m advocating that you want to understand specifically what a motion for sanctions is and what kind of factual detail you need to have before you bring it.
The Court also notes here — in terms of thinking about whether or not it should consider the motion for sanctions a motion to compel — that Judge Alsup’s standing order specifically lays out what needs to happen in order for a motion for sanctions to be in play before the Court and states that because that standing order exists, the Court cannot consider this as a motion to compel. What we’ve got is essentially effort by the plaintiff that they’re going to have to go back on a motion to compel and be able to fight that fight.
With regard to the lack of preparation of the 30(b)(6) witnesses, the Court notes that the witnesses were designated on very broad topics about how the deponents were at fault and it notes that, “If an organization cannot reasonably locate a witness to testify based on personal knowledge, there is no requirement under FRCP 30(b)(6) for the organization to woodshed or to educate an individual to testify on that subject.” The Court notes that plaintiff’s motion does not address that portion of the standing order from Judge Alsup or present any argument that the defendant did not reasonably locate a witness to testify based on personal knowledge.
With regard to the issues that would be raised on the motion to compel, the Court seems to kind of address them. What strikes me in this decision is that there’s not a lot of specific factual information about what the plaintiff has put forward on this motion, but it doesn’t appear that there is a sufficient basis here for either a motion to compel or a motion for sanctions.
After the deposition complaints, the Court then moves to the analysis on the alleged failure to preserve G Suite data and that is Google Suite data, Google Apps data — Google Docs, Google Sheets, and Google Mail.
The Court notes that the defendant produced data from 30 different custodial and noncustodial sources, and that the plaintiff, “Does not identify anything that was uniquely in the possession of the seven custodians they claim should have been preserved and cannot be obtained elsewhere.”
Essentially, what we’ve got here is that 30 custodians and non custodial sources are produced by the defendant, and the plaintiff believes that there are seven additional custodians who are essentially former employees of the defendant whose data was not preserved and should have been preserved and produced. The plaintiff argues, essentially, we don’t have any of this data, so we can’t tell you what would be in it, but by the very nature of the jobs that these custodians held, they would have had relevant ESI.
The Court says, okay, maybe that’s the case, but would any of that data from any of those custodians be available from coworkers whose data was produced? If that’s the case, then the data is not lost. What we’re finding, again, is that there’s not a sufficient factual basis from the plaintiffs here for the Court really to dive in and do an analysis as to whether or not there is lost ESI for purposes of a motion for sanctions.
The Court does entertain the plaintiff’s argument that if there was something unique in one or more of these custodians data, then the failure to preserve that data itself is the reason why the plaintiff cannot identify what was lost. This is kind of the age old problem in the eDiscovery. We put it on the party seeking the discovery to show why they are prejudiced, why they should be getting additional data. The Court says here that the plaintiff has to show that prejudice or intent to deprive, and that the plaintiff hasn’t shown either one here. Essentially, we’ve got data that doesn’t exist that the plaintiff doesn’t know anything about, and the Court requiring under Rule 37(e) that the plaintiff show prejudice and intent to deprive in order to be able to recover under that section.
Instead, the Court says that the plaintiff did not show that the types of documents differed in type or category as compared to other produced files, and instead argued that the unpreserved data would have been consistent with what was produced. Now, that means that the data that the plaintiffs seek that wasn’t produced would be cumulative of the data that was already produced, and that’s a no-no when it comes to a motion for sanctions.
The Court found really no basis for drawing any kind of inference of the intent to deprive, and that because the plaintiffs acknowledged that the data from those additional seven custodians would be cumulative as well as a failure to show prejudice, there was no basis for sanctions.
Last point the Court addresses is the non-custodial ESI that was not preserved by the defendant, and this includes web pages, sales scripts, some operating manuals, things that we mentioned at the start of our discussion.
The Court says that the plaintiff is complaining about data that was created before the duty to preserve arose in 2019. Again, we’re under Section 37(e), which is failure to preserve and failure to preserve is triggered based on when the duty to preserve arose and then that ESI is actually lost.
The plaintiff here argued that it was required to go to the Wayback Machine in order to find web pages prior to 2019 and the Court said, well, I’m glad that you are able to find that information, but there was no official duty to preserve by the defendant prior to July of 2019, so there’s no failure to preserve for Rule 37.
What are our takeaways from this case? Well, one, we’ve got a big issue here where the plaintiffs have essentially brought what should have been a motion to compel on the deposition issues as a motion for sanctions. One does have to wonder how that impacts the relationship between the plaintiffs and the Court. The judges don’t like to have their resources and time wasted when essentially you’re bringing a motion that’s not appropriate before the Court.
We talked, and it’s outlined in that Bragg case, as well as other decisions on our Case of the Week, exactly what the elements are that are required to bring a motion for sanctions under Rule 37(e), and the plaintiff simply didn’t have them here.
Now, it may be the case that there are additional facts on the briefing that we’re not included in the decision by the Court, and we go strictly based on that decision here at Case of the Week. There may be more to the story than what we know. That’s always the case and we’re sort of doing Monday morning quarterbacking here at Case of the Week, but really looking at what the decision means because that’s what we use to base arguments and find persuasive or non persuasive authority to be able to argue.
The notion here, in terms of our next takeaway, the notion here that plaintiffs really wanted data that didn’t exist, but that they have to show prejudice or intent to deprive under Rule 37(e). That’s a consistent issue that we face in discovery where you’re a plaintiff and you know that there is information that’s out there and you feel like the request that you’ve sent should cover that information, but you’re getting the run around from the other side or the other side is saying that we produced all the information that we had an obligation to produce. The question is, how do you go about resolving that issue? Well, you’re going to have to use data that you have.
You’re going to have to find some outside source of information that’s going to persuade the Court that there is additional information here that needs to be provided. Ways you can do that, you can take data that you are produced and use metadata. In this particular instance because we’re looking at seven additional custodians G suite data that the plaintiffs wanted, the plaintiffs could have used the data that was produced to them to show some relationship or why they’re missing a particular attachment that would be particularly relevant if one of those seven custodians made the most important presentation to the board, then perhaps that information would compel some sort of need for the Court to get engaged here. Essentially, the plaintiffs didn’t provide any of that information.
You’ve got to have some factual basis to say to the Court, hey, here’s why these additional seven people should be implicated based on the data that we have and why they should have known to preserve those accounts. You’ve got to provide a legitimate factual basis to allow the Court to do some analysis. None of the facts that would require that analysis are present in this decision.
Now, we’ve talked, and I want to kind of reiterate as our final takeaway that the analysis on a motion for sanctions is now well defined in case law. You need to know what you need to do and the facts you will need to satisfy each element. Otherwise, your motion for sanctions is a waste of time and money as well as the Court’s resources. Know and understand the difference between Rule 37(b) on a motion to compel, Rule 37(b) allows you to seek sanctions, not terminating sanctions, but sanctions for a violation of a court order.
In this particular instance if the plaintiffs have gone and gotten a court order to compel production of specific information and then moved for sanctions based on a failure to comply with that court order, they would have alleviated the need for the prejudice and the intent to deprive that falls under Rule 37(e).
Know your sanctions. Know what you need to be doing on a motion for sanctions; be educated on these issues.
That’s our Case of the Week for this week. Thank you so much for joining me. We’ll be back again next week with another decision from our eDiscovery Assistant database.
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Thanks so much. Have a great week. Stay safe and healthy out there.
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