Looking Back on 2014: The 7 Most Important eDiscovery Cases in Delaware - Part 5

This is the fifth in a series of posts summarizing the 7 most important eDiscovery cases in Delaware in 2014.

Kan-Di-Ki, LLC (d/b/a Diagnostic Laboratories) v. Robert Suer, C.A. No. 7937–VCP, Oral Argument on Various Outstanding Motions, Pre-Trial Conference and Rulings of the Court on Motion for Summary Judgment, September 24, 2014.

While various motions were addressed at this hearing before Vice Chancellor Parsons, the most relevant to eDiscovery was the Plaintiff’s Motion for Sanctions for suppression or spoliation of evidence, including the deletion of relevant emails and the loss of unpreserved text messages which the Plaintiff argued pointed to a “pattern of suppression” on the part of the Defendant.  Plaintiff requested that the Court draw broad adverse inferences against the Defendant and afford his testimony no weight.  Additionally, the Plaintiff requested fees and costs associated with the motion.

While the litigation arose in October 2012, there was evidence that the duty to preserve relevant evidence could have arisen as early as January 2012.  In December 2012, the Plaintiff issued discovery requests which specifically requested text messages.  In late December or early January 2013, the Defendant moved for a stay of the discovery process while the Defendant’s bankruptcy proceedings in California were resolved.  In arguing the motion, the Defendant assured the Court that there was no risk of spoliation or of any evidence being destroyed or forgotten.  It was a few months later that Defendant allegedly lost his cell phone.  Defense counsel argued that there was not sufficient evidence for a finding of recklessness on the part of the Defendant, because it was not common practice to back-up cell phones during litigation.  Vice Chancellor Parsons pointed out that there was no Delaware case law that went specifically to the issue of preservation of text messages.  He acknowledged that it would be a best practice to back up text messages on a cell phone as soon as practical after receiving document requests for text messages, but noted that whether or not the Defendant’s lack of preservation rose to either reckless or intentional behavior in this case was a fact issue that would need to be fully explored during trial.

Vice Chancellor Parsons noted that “it’s a big deal to draw an adverse inference of the sort [the Plaintiff is] thinking about, and I’m going to do it on a full record if I’m going to do it at all.”  Similarly, the Court needed a full record to determine when the duty to preserve arose and whether the Defendant’s deletion of email “in the ordinary course of business” would constitute reckless or intentional behavior.

After trial, the Court issued a written opinion (decided July 22, 2015) and found that the duty to preserve arose at the latest in early April 2012 when the Defendant began communicating with his attorneys about the matters in dispute.  The Court found that the Defendant was at least reckless with respect to his failure to preserve the incriminating emails deleted between January and mid-April 2012 and the text messages on the lost cell phone.  While the Vice Chancellor did not attribute the loss of the cell phone to any malicious motive, he did find that there was no explanation for why the Defendant and his counsel did nothing to preserve the text messages on the cell phone between April 2012, when the duty to preserve arose, and March 2013, when the cell phone was lost (especially in light of the document requests served in December 2012 which specifically requested the text messages).  This issue was further exacerbated by counsel’s initial statement that there were no relevant text messages when pressed on the issue of why they had not been produced.

The Defendant’s argument that there was no harm because the destroyed evidence could have been collected (and in fact, some of it was) from any of the 47 third parties that had been subpoenaed in the case did not convince the Court.  The Vice Chancellor explained that third parties do not have the same duty to preserve and it is plausible, if not likely, that they could have deleted or failed to preserve relevant evidence.

Although the Court granted the Plaintiff’s Motion for Sanctions, Vice Chancellor Parsons did not grant the broad adverse inferences requested by the Plaintiff.  Instead, he tailored narrow inferences as appropriate based on the missing evidence and he granted reasonable attorneys’ fees and expenses incurred in filing and arguing the Motion for Sanctions.

This case emphasizes how seriously the Court takes a party’s duty to preserve evidence, including on mobile devices.  It also serves as an important reminder that the duty to preserve can, and often does, attach before litigation has formally commenced.  Attorneys should counsel their clients on their duty to preserve early in the relationship, as soon as practicable after an anticipation of litigation arises.  Counsel also needs to take more concrete steps to ensure that all relevant evidence is being preserved, especially given the ease (whether intentional or not) with which an email can be deleted or a phone can be lost.