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#CaseoftheWeek Episode 6: Forensic Examinations and Sanctions

Happy New Year! We start 2021 with a follow up on the last #CaseoftheWeek we did in 2020β€”ππ«πšπ π  𝐯. 𝐒𝐖 π‡πžπšπ₯𝐭𝐑 𝐒𝐲𝐬., 𝐈𝐧𝐜. 𝟐𝟎𝟐𝟎 𝐖𝐋 πŸ‘πŸ—πŸ”πŸ‘πŸ•πŸπŸ’ (𝐃. 𝐂𝐨π₯𝐨. 𝟐𝟎𝟐𝟎).

Good morning and welcome to this week’s Case of the Week. I’m Kelly Twigger, CEO and founder of e-discovery assistant and the principal at ESI Attorneys. ACEDS and eDiscovery Assistant have teamed up to create this case of the week livestream to provide education for lawyers and legal professionals on ediscovery case law and talk about some of the practical implications of decisions that are coming out in the courts. And you all know, I just love to talk about ediscovery. We’ve seen a record number of decisions through eDiscovery Assistant this year.

If you’re familiar with our platform, eDiscovery assistant is the only place where you can find curated ediscovery decisions from across the country, together with rules and checklists and forms to be able to help you in the practical aspects of dealing with electronic discovery.

This week we’re talking about forensic examination and sanctions with a case out of the United States District Court for the District of Colorado, which is near and dear to my heart and just down the street. Before we get started, there will be a link to the case on the events page in LinkedIn. If you’re watching this on a different platform, you’ll need to run to the LinkedIn page in order to get that link. We’ll also added to the blog posts that will be forthcoming. Usually we do these on Tuesdays and those blog posts are available on Thursday or Friday of the week at eDiscoveryassistant.com/blog. You can also sign up at eDiscoveryassistant.com to receive those when they’re posted.

Also in the events page, you’ll see the link to the University of Florida E-Discovery Conference we put on. I’m part of a planning committee together with many esteemed members of the ediscovery community. This year’s event will be free and virtual. It’s very practical. We just put together the agenda finalized last week, really looking forward to it. Go ahead and sign up on that site that’s in the comments section and also on the event page to get information about the UF event when registration becomes live, which I believe will be soon or in early January.

Finally, if you haven’t seen it on LinkedIn yesterday, we released a video, a very silly video that I put together with a number of colleagues from the industry who are good friends and colleagues called the “12 Days of eDiscovery”. It’s a silly take, and we did it to honor the memory of Gayle O’Connor and to raise donations for Grace House, which is a center in New Orleans that was very close to Gayle’s heart and one that she supported. If you haven’t seen that, please take a few minutes to check it out. You can see it at ediscoveryassistant.com, also on the eDiscovery Today blog and on the Relativity blog. Thanks so much to my cast and crew for putting that together this week.

Since we’re on our last case of 2020, our case this week is one that we briefly discussed during the year in review on the Relativity webinar, which was on December 17th, I believe. We talked about this case briefly, but I think one of the most important parts of context of this case is that Judge Jones, who was also on that Relativity webinar, talked about the fact that this year we’ve seen a lot of cases where parties are asking for very stringent sanctions, where the conduct in the case does not merit those sanctions. What I think is important to talk about today in the context of the Bragg case, which is what we’re going to discuss, is when you have a basis for sanctions and what you need to have going into the court.

We all know in litigation that a party’s relationship to the judge, what you bring before the judge, your behavior, your conduct with the other side and how that’s shown to the judge all have an impact on how things are perceived. We’re humans and that’s the way it goes. I think judges would tell you that generally they try to be unbiased on every decision that comes before them, but there can be no question that as you engage in behavior throughout litigation, that that all builds up and has an impact on how your emotions are received. Those are all key litigation strategy tips. I usually say that litigation is 98% B.S. and 2% about the law, and I think that that can be very true in situations where you’re looking at bringing motions that maybe you don’t have all the facts in the basis that you need to have to be successful.

With that in mind, let’s get into 𝐁𝐫𝐚𝐠𝐠 𝐯. 𝐒𝐖 π‡πžπšπ₯𝐭𝐑 System. This is a decision from United States Magistrate Judge N. Reid Neureiter and is dated July 13th, 2020. This is actually one that we wrote about on a eDiscovery Assistant blog. You’re welcome to take a look at that blog post, and that link will be in the comments as well.

What happened in the Bragg case?

If you’ve had any experience litigating in the health care industry or with Medicare or Medicaid, you know that Medicare and Medicaid have very specific requirements with regard to billing practices in order to be able to recover funds under those two insurance policies or policies or programs, I should say. There are many, many what we call qui tam actions where health care providers will essentially tell on their employers for not following practices. Medicare and Medicaid fraud is kind of its own section area of specialty in litigation.

This case is essentially about that, but it’s about a plaintiff who was terminated from her job and claimed that she was terminated because she was trying to gather information related to Medicare and Medicaid fraud with regard to putting in IVs. One of the things with Medicare and Medicaid is that you have to document the time that the IV is inserted in the time that the IV is taken out. The plaintiff in this case, Bragg, essentially sought dismissal under Rule 37(e) when emails that she believed had documented that fraud were not produced in discovery.

Let’s talk a little bit deeper about some of the facts here, because the court held an evidentiary hearing on the motion for sanctions and seeking of dismissal and went into a fair amount of testimony–much more so than we see on a lot of sanctions motions–both from the forensic examiners, but also from witnesses in the case.

While at SHS, which was the defendant in this case, the health system, the plaintiff had been asked by the CFO to document the fraud issues that she believed she was seeing. The plaintiff stated that she had sent 45, between 45 and 85, emails on the issue and maintained them in a folder on her computer titled “Angela”. Other evidence that the court talked about during the hearing showed that other employees had similar concerns about billing practices. The chief nursing officer also testified that she was told to destroy records after the plaintiff left. Now, she also testified that she didn’t destroy any records because she didn’t have any in her possession, and she didn’t have access to the plaintiff’s computer.

The folder, the “Angela” folder that the plaintiff claims maintained all of these emails that was not produced in discovery was really the full subject of this particular evidentiary hearing. What’s important is that that folder lived only on the plaintiff’s computer. According to what’s documented in the case, that folder lived only on the hard drive of the plaintiff’s computer and not in some shared location that other folks had access to. The court looked at after the plaintiff’s departure what steps SHS took to preserve ESI and to get legal hold in place.

After the plaintiff left, a preservation letter was sent to SHS, and after that, SHS put a hold in place on email and locked down the plaintiff’s computer computer using a right block function. That meant that the computer could be accessed but that nothing could be deleted from the computer. Both sides, the plaintiff and the defendant had separate forensic examiners who looked at the plaintiff’s machine, and both showed only that the computer was accessed and that data was collected from the folder that the plaintiff requested after the date of the request.

Why are we even here if both the plaintiffs, if both the experts showed that. Well, the plaintiff’s forensic expert testified that there was no deletion of the data, but that it was possible that there had been a file that was deleted and that it had remained in the unallocated space on the computer. He also showed that after the plaintiff’s termination that a Chrome browser was added to the computer because of the size of that file, it would have taken up most of the unallocated space, thereby potentially writing over a deleted file.

But he still couldn’t show that there was a deleted file. And the same was true of the defendant’s examiner. The defendant’s examiner looked at the computer and said, “there’s no evidence of any deletion here. I can see the same access on the same date that the plaintiff’s examiner saw. But there simply is no deletion here”.

They both testified that there was also no wiping software, and there just was no evidence that any user created files were deleted. That’s really important because when we’re looking at forensic examination, you’ll look at operating system files and you look at user created files, and user created files are generally what we’re talking about. Any discovery, unless we’re talking about some sort of ephemeral data or other things that are captured by the machine.

One thing that was really key here in the facts is that the plaintiff herself did not testify at the evidentiary hearing. Instead, her lawyers elected to rely on snippets of deposition testimony that she had given. In her deposition testimony, she testified that despite that she had asked for 45 to 85 emails or said that those exist, she could only testify about three of them. She didn’t really know how many were in the folder because she felt like that’s where she put them, but she didn’t know for sure. She couldn’t describe any of the specific emails. The court made a specific note in the case that had the plaintiff been there and the court was able to question or understand more of what the basis for the plaintiff’s understanding that these emails existed would have been, that would have made a difference in the determination of this case.

With the fact that the plaintiff didn’t testify, that the defendant’s expert said there was no deletion, the plaintiff’s expert couldn’t confirm that there was any deletion and the processes and procedures that SHS followed, really the court’s determination came out that there were no facts at all supporting the plaintiff’s contention that SHS had failed to preserve documents.

In starting the court’s analysis, the court did what we usually do. We look at the applicable law and the court reviewed the elements of a spoliation claim, which are pretty straightforward. A party has a duty to preserve evidence. That party destroys the evidence intentionally or in bad faith. That’s the update to Rule 37(e) that happened in 2015. It’s a much higher bar and the destruction of the evidence works to the opponent’s prejudice. That prejudice is really key because you can have evidence that is, that goes missing, that’s gone, that’s no longer available, and that prejudices another party. If it’s not intentionally destroyed, you don’t have a basis for sanctions under 37(e).

What you have is a basis for getting a lesser sanction that would cure the prejudice. Looking to that, taking to the spoliation analysis, then looking at 37(e), the court has the authority to enter sanctions under 37(e) where there’s prejudice to the other party, and then the sanction must only cure the prejudice. That’s what we were just talking about. Or if the intent to deprive its own, you can assume that the information loss was favorable to the other party and then sanctions can issue in the form of an adverse inference instruction or dismissal, which is what is being sought here.

Essentially you’ve got two different parts of 37(e) that you can can go to. You’ve got failure to show, intent to deprive where you can only have a sanction that will cure prejudice if there is any assuming you can show actual spoliation and then you’ve got where the intent to deprive does actually exist. That’s when you get to the adverse instruction or to a dismissal. You can already tell here that the facts, as we’ve described them, they’re probably not going to rise to the level of dismissal.

In terms of applying that analysis to the facts of this case, the court found that there were no facts at all that supported plaintiff’s contention that Southwest had acted improperly in preserving documents. In fact, they went so far as to say that the process employed by SHS actually fully complied with their legal obligations to preserve ESI. In words that that you never want to hear when you have a client bringing the motion for sanctions, the court stated that there was zero evidence that SHS destroyed any relevant evidence or that any evidence was even lost or deleted.

The plaintiff’s belief that emails had been deleted when both experts stated there was no evidence of deletion was not sufficient. The court even went so far as to to really articulate these words, which I think are important to to think about here. “If the court were to accept plaintiff and Mr. Penrod’s position (that was the plaintiff’s forensic expert) spoliation would necessarily occur in almost every lawsuit involving ESI. There may be a case where overwhelming unallocated space may result in the loss or destruction of potentially relevant information, but this is not that case.”

What’s really important here is that there was no ESI that was lost that could even be determined, should have been preserved. None of the elements for spoliation were met, and therefore, there was no basis for sanctions under 37e. What’s even more significant in this case is that after finding that determination, SHS also asked for cost on its motion, and the court stated that sanctions could be awarded when a pleading or motion is for an improper purpose under Rule 11. They also gave SHS the opportunity to submit that Rule 11 motion.

Not only did the plaintiff not get any sanctions for lack of this information, but now there may be facing a Rule 11 motion. We haven’t seen that yet on the docket. What we have seen is a follow up from the district court looking further at analysis of trying to exclude forensic examination reports by the defendant. That’s a separate issue, and one, that if you’re interested in forensic examination and how that’s being affected in case law, you want to take a look at that decision. That one came out just about a month ago.

What are our takeaways?

With regard to sanctions, first, you need to really understand the basis under 37(e) for sanctions. Now, we talked last week about another sanctions decision in which the court used their inherent authority to provide sanctions. That’s a separate basis. Under Rule 37(e), if that’s what you’re moving for, you need to understand that the burden falls on you as the moving party. You’re going to need to meet each of the elements for spoliation, and you’re going to have to show intent to deprive in order to get those those extremely harsh sanctions of an adverse inference or dismissal.

We’ve seen a lot of cases this year asking for those harsher sanctions where they’re not warranted. And again, you need to think about how that impacts your case on a go forward basis when you’re seeking sanctions that you simply don’t have a basis for.

That’s our case of the week for this week. Thanks for joining me. Remember to sign up to receive information to register for the UF Conference. We’d love for you to take a look at our 12 days of eDiscovery video and contribute if that’s something that’s in your purview this year.

This is again, our last update for 2020. We wish you the happiest of holidays. Hug the ones you’re with and please stay safe and healthy. All the best. Happy New Year.

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