For Discovery Violations, Court Orders Retention of Outside Vendor to Collect Responsive Documents, Investigate Possible Spoliation

Carrillo v. Schneider Logistics, Inc., No. CV 11-8557-CAS (DTBx), 2012 WL 4791614 (C.D. Cal. Oct. 5, 2012)

In this case, the court concluded that Defendant failed to comply with its discovery obligations by 1) failing to conduct a reasonably diligent search, 2) improperly withholding responsive documents, and 3) failing to take adequate steps to ensure preservation.  Accordingly, the court ordered that an outside vendor be retained to search for and collect Defendant’s responsive documents and to determine if any documents had been permanently deleted, at Defendant’s expense.  The court also ordered monetary sanctions.

Plaintiffs alleged wage and hour violations at three warehouses which were operated and staffed by several defendants on behalf of one customer (who was not a party).  In the course of discovery, Plaintiffs suspected that one defendant’s production was incomplete and filed a Motion to Compel.  Plaintiffs alleged that Defendant had not conducted a proper search and specifically sought production of documents related to Defendant’s customer, which the court ordered Defendant to produce.  Although some additional information was provided, Defendant’s employees provided troubling deposition testimony regarding Defendant’s search and preservation efforts, including one employee’s testimony that she continued to delete emails and had never been instructed to preserve them.  Accordingly, Plaintiffs filed a motion for “further relief and sanctions” and alleged “substantial gaps” in Defendant’s production.

In short, the court determined that Defendant had failed to comply with its discovery obligations by failing to conduct a reasonably diligent search, by improperly withholding responsive documents, and by failing to take adequate steps to preserve.  Briefly summarizing its position, the court noted that Defendant had “repeatedly represented that diligent searches had been made and that all responsive documents had been produced, only to turn around and ‘find’ more documents after plaintiffs proved those contentions were false” and that Defendant had still not searched a “significant portion” of its electronically stored information or “provided any satisfactory assurance to the court that such documents had not been destroyed during the course of litigation.”

Among the specific violations identified, the court took particular note of Defendant’s failure to search certain of its employees’ email accounts which were maintained on Defendant’s customer’s servers and which utilized the customer’s domain name in the address.  Because of this, Defendant claimed it did not have control of the accounts and that it therefore was not obligated to search them.  The court rejected this assertion, however, where Defendant’s employees utilized the at-issue accounts as “their primary work email.”  The court similarly rejected Defendant’s claim that it lacked control over relevant surveillance tapes maintained by a third party, particularly where Defendant had previously requested and received tapes from the third party—tapes which were in Defendant’s possession but were not produced.  The court was also highly critical of Defendant’s preservation efforts, which were insufficient to prevent at least one employee’s continued deletion of emails and which were all the more troubling in light of Defendant’s failure to suspend its automatic deletion system, which resulted in the permanent loss of any emails which had been manually deleted after 45 days.

Upon consideration of Plaintiffs’ motion and the above described discovery violations (and others) the court determined that Plaintiffs had been prejudiced and that sanctions were warranted.  Before revealing the details of those sanctions, the court noted its lack of confidence that ordering Defendant to conduct a good faith search would be “productive” in light of its failure to comply with the court’s prior discovery order and the failure of Defendant’s designated deponent to specify “with any certainty” the steps taken to search for responsive documents.  The court then ordered that Defendant would be required to retain a mutually agreed upon vendor who would be allowed access to Defendant’s information systems, including those administered by the relevant customer, to search for and collect ESI “within the scope of plaintiffs’ discovery requests and the Court’s discovery order.”  While Defendant would be allowed to review the documents for privilege and confidentiality, no documents identified by the vendor could be withheld on grounds of relevance.  At the same time, the vendor would also conduct a search to determine if any potentially responsive documents had been permanently deleted.  The court also ordered that relevant video tapes be produced.

Finally, the court determined that monetary sanctions were warranted and instructed Plaintiffs to submit documentation establishing the amount of attorneys’ fees and costs incurred as a result of Defendant’s discovery violations.