Spoliation Sanctions & Summary Judgment Denial: A Wake-Up Call for Mobile Device Preservation

In this episode of Case of the Week with Kelly Twigger, we delve into a pivotal decision addressing the failure to preserve electronically stored information (ESI) and its costly consequences. The case highlights a retaliation claim against the City of Atlanta, centering on the loss of critical text messages and the resulting sanctions.

Kelly breaks down the District Court's analysis under Federal Rule of Civil Procedure 37(e), explaining the nuanced distinction between prejudice under subsection (1) and intent under subsection (2). The Court's decision to deny summary judgment as a sanction underscores the profound impact of spoliation on litigation outcomes.

Key takeaways include the importance of timely identification and preservation of ESI, particularly from mobile devices, and the severe repercussions of neglecting these obligations. Kelly offers practical advice for counsel on how to mitigate risk and ensure compliance, emphasizing the value of tools for targeted collections and early action.

Join us to learn why failing to preserve even a handful of text messages can derail an entire case and how proactive strategies can safeguard your clients.

Don’t miss this deep dive into a landmark ruling that every litigator should know.

 Maziar v. City of Atlanta (June 18, 2024)
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Thank you for tuning in to Case of the Week with Kelly Twigger. If you found today’s discussion helpful, don’t forget to subscribe, rate, and leave a review wherever you get your podcasts. For more insights and resources on eDiscovery, visit eDiscovery Assistant and explore our practical tools, case law library, and on-demand education from the eDiscovery Academy. Join us next episode as we break down another important case shaping the future of eDiscovery.

Transcript

Facts

We are before the Court on objections to the Magistrate Judge’s order denying sanctions against the City of Atlanta. The underlying case here is a retaliation complaint brought by the plaintiff who worked for the City of Atlanta as the Director of the Atlanta Mayor’s Office of Immigration Affairs from May 2015 through May of 2021.

The plaintiff alleges that she was terminated for lodging complaints about the disparity in pay between herself and her black co-directors, second, objecting to the City’s failure to ensure that COVID-19 relief funds were being distributed in compliance with federal law, and third, the City’s failure to abide by its own limited English proficiency policy. The City claims that it fired Maziar, the plaintiff, primarily for her unprofessional behavior as a result of her conduct during a specific meeting, and the City identified plaintiff’s supervisor, Qaadirah Abdur-Rahim, as the primary decision maker with regard to Maziar’s termination from employment. Prior to the plaintiff’s termination, her counsel sent a demand letter to the City on November 24, 2020 that included a request for the City to issue a litigation hold to preserve all of the ESI related to the plaintiff’s employment. The City did not issue a hold at that time.

Five months later, on April 29, 2021, plaintiff attended a meeting during the course of her employment that subsequently became the reason for her termination. During that meeting, the City alleged that she engaged in unprofessional behavior and terminated her employment on May 6th. Four days later, on May 10th, the City issued a litigation hold to the plaintiff’s supervisor. Counsel for the City instructed the supervisor “to produce any messages related to Ms. Maziar related to the April 29 meeting”, but no one searched the supervisor’s personal or work phone independent of these instructions on the litigation hold. Plaintiff filed suit 15 days later, on May 25, 2021, alleging claims of gender discrimination and retaliation. The Court dismissed plaintiff’s discrimination claims, but allowed the retaliation and whistleblower claims to proceed to discovery.

Plaintiff then served discovery requests a year and six months later in November 2022, ostensibly following the motion to dismiss resolution by the Court on the discrimination claims. One month later than that, so December 2022, the supervisor left her job with the City. And because we love a good plot twist here on the Case of the Week, here comes the kicker. The City wiped the supervisor’s phone of all of the data — in violation of the litigation hold — when the supervisor left her employment. To add more fuel to that fire, the supervisor then upgraded her personal phone in January 2023 and lost all of the text messages that were maintained on the previous phone. The number of people who don’t know how to transfer text messages from one phone to another continues to astound me.

In September 2023 — so now nine months later — after the supervisor wiped her phone and 10 months after the discovery was served, the City produced three text messages from the supervisor. One of them was an image of a text message from another City employee, Carol Anderson. The text message was sent to the supervisor, Abdur-Rahim, about concerns raised by the plaintiff at the April 29th meeting. If you view the message in the actual decision, you’ll see that the message is cropped. Abdur-Rahim did not produce the full text message.

During her deposition, Abdur-Rahim admitted that she had cropped the message to create the image that was produced. Kind of interesting, because first she didn’t have messages from her cell phone, now we’re producing the message from another employee’s cell phone. So somehow that employee gave the message to Abdur-Rahim, and it was cropped. Abdur-Rahim also testified that there were likely additional messages between her and Ms. Anderson about the same meeting that she did not produce. She did indicate that she did not recall receiving any additional messages from Anderson about plaintiff’s conduct, specifically.

The City no longer has access to any of Abdur-Rahim’s texts sent or received prior to her getting her new phone in January 2023. Plaintiff brought a motion for sanctions for failure to preserve the text messages and argued that the produced text messages from Carol Anderson support her claim of retaliation because it shows that the plaintiff was complaining about being asked to do something unethical. She also argued that the cropped message and the others sent about the meeting should have been preserved and produced.

The trial court denied the motion. The plaintiff then filed a timely objection to the District Court.

Analysis

The District Court begins its analysis with Federal Rules of Civil Procedure 37(e), which is the section that provides for sanctions for failure to preserve. The Court here makes an important distinction between subsections (1) and (2) under Rule 37(e), and I really want to highlight that for you here. Rule 37(e) applies where ESI:

1. should have been preserved in anticipation of the conduct of litigation and is lost because that party failed to take reasonable steps to preserve it, and
2. that information cannot be restored or replaced through additional discovery.

If both of those conditions are met, then a court can impose sanctions either under Rule 37(e)(1) or under Rule 37(e)(2). The Court here notes that the 11th Circuit recently clarified the difference between those two subsections in the Skanska USA Civil Se. Inc. v. Bagelheads, Inc. case. We covered the District Court decision in the Bagelheads case on Episode 107 of the Case of the Week, and we discussed the importance of the 11th Circuit’s ruling on sanctions for failure to preserve text messages on mobile devices on the case law panel at the University of Florida eDiscovery Conference in March. Both very important decisions in terms of sanctions under Rule 37(e)(2). In the Skanska case, however, that court found that there was a pattern of conduct that led to a finding of bad faith, which was the equivalent of intent in order to allow for sanctions under Rule 37(e)(2). Here, the Court notes that Rule 37(e)(1) focuses on prejudice to the non-spoliating party, where lost electronic evidence causes “prejudice to another party”, a Court should fashion a sanction that is no greater than necessary to cure the prejudice. Rule 37(e)(2), by contrast, requires a finding that the party acted with the intent to deprive another party of the information’s use in litigation. That’s the equivalent of bad faith, as we discussed, they found in the Skanska case.

The Court states here that bad faith generally means destruction of evidence for the purpose of hiding adverse evidence. So under Rule 37(e), subsection (1) requires prejudice for sanctions, subsection (2) requires intent. The Court also noted in its discussion of Rule 37(e) that District Courts have broad discretion in determining sanctions and that appropriate sanctions may include an adverse inference, denial of a party’s summary judgment motion and issuing an adverse inference instruction, or the exclusion of evidence. The Court also notes that a Magistrate Judge’s ruling must be clearly erroneous to warrant overturning it. So again, a very high standard that we’re looking at here from the District Court.

Here, the District Court looked at the Magistrate Judge’s ruling and found that high bar was met:

[T]he magistrate judge clearly erred by considering only whether the City and Abdur-Rahim failed to preserve text messages regarding potential comparator evidence. Narrowing the issue in this way resulted in a failure to consider whether the deleted text messages contained other information related to Maziar that potentially prejudiced her case.

Comparator evidence is used to defeat employment discrimination claims by attempting to show that one or more employees not in his or her protected class were treated more favorably or leniently in terms of hiring, firing, or discipline. So it’s a narrow category of evidence. The Court here says that you can’t just consider that evidence. You have to look at the whole spectrum of whether or not the plaintiff was prejudiced as a result of the loss of the potential text messages here. There was no dispute that the prerequisites for Rule 37 were met, because the text messages were not preserved and they could not be replaced.

The next question then moved to whether or not the City acted in bad faith. Distinguishing the facts from the Skanska case, the District Court upheld the Magistrate Judge’s finding that there was no bad faith on the City’s part.

Having found no bad faith, the District Court then turned to whether or not the plaintiff was prejudiced by the loss of the text messages. This is where the Court’s opinion diverged from the Magistrate Judge’s underlying decision. The District Court found that the plaintiff was prejudiced by an inability to “contextualize the cropped text or learn additional information from texts about the April 29 meeting that likely existed” and that the plaintiff had been prejudiced and that sanctions were warranted.

The Court then turned to what were appropriate sanctions. The plaintiff here sought an adverse inference instruction, and the Court rejected that idea as being more than was necessary to cure the prejudice. Instead, the Court elected to deny the City’s summary judgment motion as a sanction. According to the Court, the sanction was narrowly tailored to cure the prejudice at this stage because the City’s spoliation prevented plaintiff from contextualizing the cropped text message and deprived her of access to other evidence that may have created certain disputed issues of material fact. That, of course, is the standard for summary judgment.

The Court also awarded monetary sanctions in the form of costs and fees on both the motions before the Court and the sanctions motion before the Magistrate Judge, as well as those that the plaintiff incurred in responding to the summary judgment motion. So, significant costs. No dollar figures in this particular decision, but I’m sure we’re likely to see that before the Court in a subsequent decision.

Takeaways

What are the takeaways here? Well, there are a lot of them.

One of the key things in this case to me is that even what can seem like a small employment matter requires strict attention to preservation and collection and production of ESI. Sometimes these smaller matters are much harder because they’re really not on counsel’s radar as the most pressing matters. These are the ones where ESI can slip through the cracks, just like it did here. We reiterate this almost every week on the Case of the Week, but timeliness in identifying and preserving data is critical. When data from mobile devices is an issue in litigation, it’s imperative that counsel recognize that and immediately take steps to preserve data from any devices in question. Here, that was the supervisor’s phone. There was a legal hold out there. The supervisor knew they were supposed to preserve the information, but no one took any active steps to actually collect the information from the phone.

As a result of failing to preserve that device, the City is faced with having paid counsel to bring and defend multiple motions, and now will have to pay the other side’s costs, as well as lose their summary judgment motion because of this failure to preserve. Neglecting to do early identification and preservation is costly. Identify ways to do that preservation now for the sources of ESI that you have, so that you can have tools and processes in place to get that done when matters arise.

If you are struggling to get your client to take early action, I recommend you show them this decision. It only takes losing a few text messages to upend an entire case in the right set of circumstances. There are tools now to do targeted remote collections of mobile devices that would have cost a very small fraction of what the City ended up paying here.

One question that came up to me early in the facts of this case was whether or not there were grounds for the City to put a hold in place when plaintiff’s counsel sent the demand letter in 2020. There are no other facts from the Court in this opinion to suggest that the City was on notice of a claim that early, but I think that the letter was also a flag to the Court that plaintiff’s counsel had put the City on notice, even if they weren’t compelled to put a litigation hold in place as of the date of the letter. They were clearly on notice before her date of termination that she potentially had claims related to retaliation. I think it was likely a factor for the Court, but it is not specifically articulated in the District Court’s decision. Of course, we stay within the corners of that decision when we’re doing our analysis here on Case of the Week.

This is one of the first times that we’ve covered the denial of a summary judgment motion as a sanction under Rule 37(e). Denial of a summary judgment motion, while it’s not an adverse inference instruction or a dismissal, is a huge sanction here. Not only does the judge deny the motion, but he left open the option for the plaintiff to “request additional prejudice-curing remedies via a motion in limine for trial purposes if she desires.”

The cost to bring a summary judgment motion is always substantial, and it represents a culmination of the evidence in the case to be considered by a judge. Losing that motion means that a jury will now hear the same facts and be able to make a decision. That’s a very different outcome than a summary judgment motion, which is here are the facts as they are established, we want you to determine as a matter of law that this claim does not move forward.

All-in-all here, failing to take critical steps to preserve a few text messages led to the denial of a summary judgment motion, cost to the City on a motion for sanctions before the Magistrate Judge and the District Court, and additional potential motions in limine before trial. That’s a significant turnaround in the City’s case here. I’m going to reiterate it again. Get a plan and process in place to do identification and preservation early in all of your matters. We are always trying to balance the cost of preservation against the likelihood of a matter proceeding, and that’s always a valid consideration. But strike an appropriate balance that weighs in favor of risk mitigation. If you have tools and processes in place that allow you to do that at a lower cost, that cost of risk mitigation drops.