Federico v. Lincoln Military Housing, LLC, Due to Late Production of ESI Court Declines to Shift Costs; Denies Sanctions for Lost Text Messages Citing Rule 37 (e)

This case involves consolidated claims for personal injury and property damage stemming from mold in military housing maintained by the Defendant, Lincoln Military Housing.

Defendant’s lawyer sent a preservation letter to the attorney of the first Plaintiff, Shelley Federico, approximately three months after she moved out of the military housing at issue. The letter instructed her to maintain internet and web browser history files, texts, email messages, and social media postings potentially relevant to the claims in the suit. Although they were all represented by the same attorney, it was unclear whether any other Plaintiff in the case received a preservation letter.

When discovery began, Defendants issued interrogatories demanding that each of the Plaintiffs produce all the ESI outlined in the preservation letter sent to Ms. Federico’s attorney. The resulting production of the Plaintiffs was limited to a few printed emails and did not contain any original email, social media posts or text messages.

At a hearing on discovery disputes, Plaintiffs’ counsel acknowledged that his clients were heavy email users and noted that he thought his clients “did not quite understand how comprehensive (their production) had to be.” The Court admonished the Plaintiffs to turn over all relevant ESI and warned that there could be consequences if they failed to produce the materials. Despite the instruction by the Court, the Plaintiffs still produced only a few additional emails and continued to inform their counsel that they were looking for additional electronic media.

In response to the Defendants’ motion to compel, Plaintiffs made a supplemental production containing some additional email and social media posts (in hard copy). After the Court expressed its “disbelief” at the lack of electronic media, the Plaintiffs indicated their desire to retain a technical consultant to assist them with their search for ESI. The Plaintiffs asked the Court to order the Defendants to bear the $22,450.00 expense for the consultant. The Court refused to allocate costs or to order a forensic investigation as it believed that a thorough self-directed search would be sufficient. The Court ordered the Plaintiffs to provide detailed information on the search efforts they undertook to locate relevant ESI.

After the Plaintiffs failed to meet the production deadline, the Defendants filed a motion for sanctions, primarily the dismissal of the case. The Court did not dismiss the case and deferred its decision on sanctions until after the Plaintiffs’ production which would be directed by its technology consultant.

The Plaintiffs produced the result of their consultant’s search which included 5,000 social media records. In a briefing on the outstanding issue of sanctions, Defendants argued that the Plaintiffs’ total production was inadequate and that the relevance of material produced demonstrated the “severe consequences flowing from the data which Defendants contend is lost, missing or destroyed.” Plaintiffs argued that they had produced all the discoverable electronic evidence and that it highlighted the minimal relevancy of the electronic media to the liability issues. The Plaintiffs also indicated that any omitted evidence was a result of their inexperience in managing electronic production and not a result of either bad faith or intentional destruction of the evidence.

In its analysis, the Court noted that the Defendants’ motion primarily sought dismissal, “the harshest sanction” and that “when dismissal is ordered, it usually follows the intentional bad faith destruction of evidence which was central to the issues in dispute.” Declining to dismiss the case, the Court held that none of the Plaintiffs’ evidence was so central to the defense that its loss would have deprived the Defendants of their ability to defend the case. The Court noted further that the Defendants never established that any of the Plaintiffs intentionally destroyed relevant evidence or acted in bad faith. The Court indicated that although Plaintiffs’ production was delayed, they eventually produced a nearly complete record of email and social medial posts which were available to the Defendants prior to the commencement of depositions. The Court also observed that the voluminous material produced was of limited relevance suggesting that “any gaps in production were not likely intentional” and did not prejudice the Defendants’ defense.

The Court undertook a Rule 26 (b)(2)(C) proportionality analysis and found that almost all the electronic production occurred after the motion to compel and that the depositions showed that either the Plaintiffs were “poorly instructed or deliberately dilatory in their obligations to produce responsive material.” The Court therefore declined any cost shifting and the cost of the technology consultant remained the Plaintiffs’ expense. The Court also awarded a portion of attorneys’ fees.

The Defendants further contended that sanctions were warranted for Plaintiffs’ failure to produce text messages. The Court held that the “Plaintiffs’ failure to produce text messages from the time they lived in the subject housing resulted from either the routine operation of their phones’ service provider or their routine good-faith maintenance of their phones.” The Court noted that due to the normal operations of cell phone messaging systems, the Plaintiffs would have needed to move their text messages to another platform to “preserve” their content. The Court observed that there was no evidence that “any Plaintiff even sent a relevant, non-privileged text message, much less that all Plaintiffs should have been on notice of an obligation to preserve their texts at a time when their actions would have preserved anything that may have been relevant.” The Court reasoned that to find otherwise, would have required the Plaintiffs to understand that their daily texts messages could contain information relevant to a future litigation before being served with a discovery request or conferring with their counsel. The Court therefore held that the loss of the Plaintiffs’ text messages was the result of the routine, good faith operation of their phones and Defendants did not present any “exceptional circumstances” surrounding the loss of the text messages. The Court found that the Plaintiffs’ failure to produce the text messages resulted from the “routine, good-faith operation of their phones” and therefore sanctions were precluded under Rule 37 (e) which bars sanctions for failing to provide information lost “as a result of the routine, good faith operation of an electronic information system,” without exceptional circumstances.

Federico v. Lincoln Military Housing, LLC, No. 2:12-cv-80, 2014 WL 7447937 (E.D. Va. Dec. 31, 2014)

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