REPORT AND RECOMMENDATION AND FINAL FINDINGS OF FACT AND CONCLUSIONS OF LAW OF SPECIAL MASTER DANIEL B. GARRIE
PEGGY A. LEEN, Magistrate Judge.
In this class action against the University Medical Center of Southern Nevada ("UMC"), Plaintiffs allege UMC systematically deprived its employees of appropriate wages and overtime compensation. [Dkt. 37 ("Amended Complaint")]. Plaintiffs state claims under the Fair Labor Standards Act, 29 U.S.C. §§201 et seq. (the "FLSA"), and Nevada state wage and hour laws (id. at ¶¶ 68-70), asserting UMC failed to credit meal breaks not taken (id. at ¶¶20-22); keep employee time records (id. at ¶¶23, 56); and train hourly employees on meal period deductions (id. at 54-56).
Plaintiffs first commenced this action on July 27, 2012, nearly two years ago. The parties are still resolving discovery issues. To date discovery has required a fully briefed motion to compel
Upon the extensive factual findings detailed herein, Special Master Garrie concludes UMC destroyed evidence by failing to identify, preserve, collect, process, and search multiple repositories. Worse, UMC's executives and personnel made numerous misrepresentations to UMC's counsel, the Court, and Special Master Garrie, further delaying these proceedings and driving up their costs. Special Master Garrie notes his serious doubts that UMC can complete discovery in a defensible manner going forward without increased candor to the Court and their own counsel, and more competent technical assistance.
Section II of this Report and Recommendation (the "Report") describes the procedural history and extensive discovery proceedings. Section III presents relevant factual findings. Section IV summarizes the relevant legal standards and conclusions of law. Section V presents recommendations on sanctions.
II. PROCEDURAL HISTORY AND DISCOVERY PROCEEDINGS
A. Pleadings And Conditional Class Certification
Plaintiffs filed their initial complaint in this matter against UMC on July 27, 2012. [Dkt. 1].
Acting through its prior counsel, Morris, Polich & Purdy ("MPP"), UMC moved to dismiss on September 10, 2012. [Dkt. 23]. The Court denied that motion on November 14, 2012. [Dkt. 33]. UMC then filed its Answer on January 2, 2013. [Dkt. 42]. Thereafter, on January 11, 2013, Plaintiffs moved to conditionally certify the class. [Dkt. 46]. After further briefing and argument, the Court granted the motion on June 14, 2013. [Dkt. 106].
B. Discovery Requests And Production Issues
On January 23, 2013, Plaintiffs served their first set of written discovery including interrogatories and requests for production of documents and electronically stored information. Ex.15 (Plaintiffs' First Set of Requests for Production). Plaintiffs requested, inter alia, any documents and data relating to: time worked, labor allocation, and budgeting or allocation of hours. Id. at ¶¶ 15, 18, 35.
Thereafter, the parties filed a Joint Case Management Report on January 28, 2013 that identified documents created from a related 2012 U.S. Department of Labor ("DOL") investigation into UMC's meal break practices.
In March of 2013, the parties agreed to a protocol for production of ESI, and the Court entered an order governing the production of electronically stored information ("ESI") on March 20, 2013. [Dkt. 77 (the "ESI Protocol")]. The ESI Protocol was later amended on May 7, 2014 [Dkt. 165 (primarily adding additional meta-data fields to be produced)], and again on June 5, 2014 [Dkt. 171 (addressing the confidentiality treatment of ESI, and production formatting for previously scanned hard copy documents and un-scanned hard copy documents)].
As described in more detail below, UMC's initial electronic discovery consultant did not perform a complete collection of ESI. Several collections were later undertaken by a second consultant, all riddled with problems. Eventually Special Master Garrie was forced to do a line by line review of the collection script, and collection and production process, to hand hold the parties to a successful resolution. See Section III.B, infra (describing collection efforts).
C. Motions And Seven Status Conferences Between May 2013 And March 2014
On May 2, 2013, UMC substituted the firm of Lewis Brisbois Bisgaard & Smith ("LBBS") as counsel for this matter. [Dkt. 90 (notice of appearance of Margaret Foley and Cayla Witty of LBBS as counsel)].
1. Plaintiffs' May 15, 2013 Motion To Compel ESI
On May 15, 2013, Plaintiffs filed a Motion to Compel specifically seeking electronic discovery and ESI production. [Dkt. 92]. On July 12, 2013, after full briefing and two hearings, Magistrate Judge Leen granted Plaintiffs' Motion. [Dkt. 115]. After that hearing, UMC agreed to hire a new electronic discovery consultant and search available sources, including mobile phones, by August 2, 2013. [Dkt. 119, at 20:9-23, 23:15-16.] The Court also ordered monthly status conferences, and set the first for August 15, 2013. [Dkt. 115].
The First Discovery Status Conference On August 15, 2013: Initial Agreement On Search Terms And Custodians
At the August 15, 2013 status conference, the parties agreed to search the ESI of five custodians with ten search terms. [Dkt. 121]. The Court also ordered the parties to meet and confer to identify these custodians and the ten search terms.
The Second Discovery Status Conference On September 24, 2013: Initial Agreement On Production Timeline
At the September 24, 2013 status conference, the Court ordered UMC to produce ESI for the five custodians' data responsive to the ten search terms within two weeks. [Dkt. 128]. UMC produced the results October 9, 2013. [Dkt. 142].
: The Third Discovery Status Conference On November 12, 2013 Requests Concerning Kronos And Mobile Phone Text Message Data
At the November 12 status conference, Plaintiffs repeated their requests for Kronos data in spreadsheet form, including Kronos spreadsheets related to the DOL investigation. [Dkt. 137, at 4]. Plaintiffs also repeated their request for mobile phone data. Id. LBBS represented to the Court that UMC had produced text message data in its "control and possession." [Dkt. 138]. The Court then ordered the parties to meet and confer, with technical staff present to assist in confirming compliance with the ESI Protocol. [Dkt. 138].
UMC subsequently engaged a new ESI vendor, Joseph Edmondson ("Edmondson"), for the follow-up production, and the parties held a phone conference on November 20, 2013 including both sides' ESI consultants. [Dkt. 141, at 5].
The Fourth Discovery Status Conference On November 26, 2013: Further Discussion Regarding Kronos And Mobile Phone Data
At November 26, 2013 status conference Magistrate Judge Leen expressed concerns and reminded counsel of the critical importance of dialogue and cooperation between counsel and ESI vendors to prevent future problems. [Dkt. 141, at 11-14]. In a January 17, 2014 Joint Report to the Court, UMC represented that it would produce text message data of the five identified custodians by the end of January 2014. [Dkt. 143].
: The Fifth Discovery Status Conference On January 21, 2014 UMC Ordered To Preserve Text Message Data, Discussion Of Sanctions
At the January 21, 2014 status conference, Magistrate Judge Leen ordered UMC to "turn over the prepared Kronos data[,]" and produce all responsive text message data by January 31, 2014. [Dkt. 143]. Plaintiffs moved to appoint a Special Master, and Magistrate Judge Leen stated that she would appoint a Special Master at UMC's expense if problems continued:
if this continues to be a problem, and I will feel it appropriate to use the full panoply of Rule 37 sanctions that I have at my disposal up to and including case dispositive sanctions against UMC if we can't get this case ready for trial and discovery of routine information and ESI produced to Plaintiffs' counsel.
[Dkt. 144, at 19:20-22:2].
: The Sixth Discovery Status Conference On February 11, 2014 Errors In UMC's Production, Discussion Of Special Master Appointment
At the February 11, 2014 status conference, Magistrate Judge Leen expressed her concern regarding UMC's production of gibberish email documents "[c]omplete with Japanese and Korean characters and the embedded data." Magistrate Judge Leen further added these examples were "outrageous." [Dkt. 147].
Because of UMC's repeated production failures, Magistrate Judge Leen ordered the appointment of a Special Master at UMC's expense stating:
[Dkt. 147, at 20:21-21:1].
The Court ultimately selected Daniel B. Garrie to be Special Master in this litigation on March 3, 2014. [Dkt. 149].
: The Seventh Discovery Status Conference on March 10, 2014 Special Master and ESI Vendors Attend, Sanctions Discussed.
At the March 10, 2014 status conference between the parties, their respective ESI vendors Magistrate Judge Leen, and Special Master Daniel B. Garrie it was determined, based on statements by various UMC IT executives at the hearing, that UMC potentially had serious ESI issues relating to identification, preservation, collection, search, and production. UMC was ordered to "provide a data-map of the ESI involved in this litigation for in-camera review on or before the 23rd day of March, 2014. If no data-map exists, then. . .UMC [was to] to explain why no ESI datamap exist[ed] and how Counsel for UMC educated themselves about UMC's information and record keeping systems."
Magistrate Judge Leen ordered that "UMC shall take all steps necessary to preserve ESI potentially relevant to the parties' claims and defenses in this matter in full compliance with the litigation hold/preservation letters sent by Plaintiffs' counsel shortly after this lawsuit was filed," and that "[f]ailure to comply will result in sanctions, up to and including a recommendation . . . [for] dispositive sanctions." [Dkt. 151]. Finally, in her minute order, Magistrate Judge Leen set forth the scope of Special Master Garrie's powers and duties in these proceedings. [Dkt. 152].
D. Scope Of Special Master Report
Under the appointment order, Special Master Garrie was ordered to "undertake an investigation that is limited to the custodians identified by the parties in prior proceedings." [Dkt. 152, at 2]. The Court's order required Special Master Garrie to provide a report analyzing and presenting: (1) "the scope of the collection and the processes used to perform the collection;" (2) "specific findings of fact" about "destruction, deleting or overwriting" of ESI and possible recovery of deleted or lost ESI; (3) adequacy of preservation, including document retention policies and procedures; (4) UMC's role in any failure to preserve and maintain relevant evidence; and (5) whether the current preservation efforts comply with UMC's on-going obligations. Id. at 3.
This Report follows under that order, and the Special Master's powers as provided in Rule 53 of the Federal Rules of Civil Procedure.
III. FINDINGS OF FACT
Electronic discovery is no longer a nascent topic, and the basic structure of proper electronic discovery long ago matured into a standard workflow model. Consistent with that model, the July 2014 Sedona Conference Glossary E-Discovery & Digital Information Management (4th ed.) defines electronic discovery as "[t]he process of identifying, locating preserving, collecting, preparing, reviewing, and producing Electronically Stored Information (ESI) in the context of the legal process."
As detailed herein, Special Master Garrie finds that UMC failed to properly identify relevant repositories, failed to preserve relevant repositories, failed to properly collect relevant ESI, failed to appropriately search for relevant ESI, and failed to properly produce relevant ESI.
A. UMC's Preservation Efforts Were Insufficient
In hearing testimony and declarations, UMC witnesses admitted they failed to take appropriate steps to identify ESI sources.
: UMC's Preservation Efforts Were Insufficient Preservation Chronology
The partial chronology below highlights UMC's serial failures to preserve ESI and concomitant loss of responsive ESI.
The partial chronology demonstrates that UMC did not issue or put any litigation hold in place until after Plaintiffs had deposed a UMC witness, which was more than 250 days after Plaintiffs initiated this action.
: UMC Preservation Efforts Were Insufficient UMC's Prior And Current Counsel Failed To Conduct Timely Custodian Interviews, Leading To The Failure To Identify Key Evidence Repositories Resulting In The Destruction Of Significant Amounts Of Responsive ESI
Special Master Garrie established early on in these proceedings that UMC and MPP did not have a grasp of what IT systems at UMC might contain responsive ESI. For this reason Special Master Garrie ordered UMC to conduct custodian interviews of high priority custodians with the intent of identifying all ESI repositories. [Dkt. 154, at 2].
Later, Special Master Garrie determined that UMC did not perform any investigation of likely ESI sources for any of the custodians, including: Espinoza, Spring, Dwyer, Brannman Panzeri, Claudette Myers, Leah Conedy, Kristy Crowley, Regina Pfaff, Stephanie Merrill, Jerri Strasser, Pat Greaux, Daniel Small, Carolyn Small, William Curtin, David Cohen, Lanette Lawrence, Louise Collard, April Martin, Alicia Jones, Tracy Sutter, Cynthia Jones, Amber Robinson, Tiffanie Fleming, Shaheen Ahmed, and Oscar Borbon. Ex.2 (4/4/14 transcript), at 51:1-8 ("COUNSEL WITTY: In review of prior counsel's records, there is no indication that specific custodian interviews were done. The profiles that were initially requested for preservation I believe were based upon the list that came from plaintiff's counsel, and the discussions, I believe, with regards to scope remain mainly with the prior technologist."). The parties later identified James Mumford ("Mumford"), UMC's Senior Human Resources Analyst, as a new custodian for a total of twenty-seven custodians.
The custodian interviews LBBS later conducted at the Special Master's instruction made it clear that "UMC ESI [c]ollection was [i]ncomplete as of April 10, 2014," uncovering ESI from a variety of sources: network file shares, two laptops, the BlackBerry server, and twenty-four desktops. [Dkt. 159].
: UMC Failed To Identify And Preserve Failure To Identify To LBBS, And Preserve, The Network File Shares "Q-Drive" Resulting In The Destruction Of Responsive ESI
The UMC network shares contained a drive called the "Q-Drive" which stores UMC user's home folders and shared folders between individuals and departments. Apparently, no UMC personnel disclosed to MPP that UMC stored documents responsive to this litigation on the Q-Drive.
Ex.4 (4/22/14 transcript), at 158:25-159:7.
Ex.6 (6/16/14 transcript), at 132:11-13.
MacIntyre testified that "in each risk management office you have a file of active cases or potentially compensable claims." Ex.6 (6/16/14 transcript), at 146:11-13. MacIntyre went on to explain how these types of files were stored on the Q-Drive:
Ex.6 (6/16/14 transcript), at 147:21-23.
Ex.5 (5/6/14 transcript), at 10-20.
The above testimony demonstrates that it is beyond refute that UMC failed to disclose the existence of the Q-Drive folders to counsel until the custodian interviews were conducted in the spring of 2014. Ex.29 (custodian interviews). Indeed, testimony established that UMC did not initially collect any ESI from any UMC network file shares. Ex.3 (4/7/14 transcript), at 116: 2-10; see also, id. at 254:15-257:14 (Custodian interview of Claudette Myers stating that UMC had a network file share folder relating to the DOL investigation that had not been produced).
: UMC Failed To Identify And Preserve Two Laptops Belonging To Key Custodians James Mumford And Doug Spring Were Not Identified Or Preserved Until After The Custodian Interviews In May Of 2014
UMC failed to identify and preserve two laptops used by custodians Mumford and Spring until May of 2014, approximately 640 days after filing of complaint. These laptops were identified through the custodian interviews. Ex.29 (Spring and Mumford custodian interviews).
: UMC Failed To Identify And Preserve Work Computers That Were Used By 24 Of The 27 Custodians
At the April 14, 2014 hearing, Schaibley, UMC's Network Security Administrator testified that while it was possible for users to save data to local drives on workstation desktops, UMC's policy was for UMC users to save to the network file share. Ex.2 (4/4/14 transcript), at 217:2-19. In addition, Shane Lattin ("Lattin"), a Network Engineer at UMC, stated "if it wasn't saved to the home drive on the file server, we wouldn't have a backup." Ex.3 (4/7/14 transcript), at 111:18-23. Based on this information, LBBS apparently did not believe it necessary to instruct UMC to preserve the ESI on these individual work computers.
Later in the same hearing, Plaintiffs submitted a declaration from Daniel Small with an email attached from UMC's Director of Information Technology. The email stated that "many" UMC employees "were storing files and documents on the local C: drive" contrary to UMC policies.
The Small declaration and the custodian interviews conducted by LBBS in April of 2014 confirmed that the aforesaid policy was not followed, meaning responsive ESI was stored on local workstations. The failure by UMC to preserve ESI on these workstations, means that UMC failed to preserve responsive ESI for more than 600 days after the filing of the Complaint. For example:
The above custodian interviews demonstrate that key custodians stored documents on their local computer. Coupled with the fact that there is no backup of the data of these computers UMC's failure to preserve this responsive ESI likely resulted in its destruction.
: UMC Failed To Identify And Preserve Intranet Server That Includes The Policy And Procedure Server
But for Special Master Garrie's involvement, UMC would likely never have identified preserved, or produced any documents from its Intranet. Here, Special Master Garrie ordered [Dkt. 174], UMC to contact Ruben Ghosal ("Ghosal"), UMC's IT Programming Services Supervisor, and work with him to identify applications and ESI repositories on UMC's Intranet that might contain responsive data, including:
UMC did not identify or preserve any of these ESI repositories. In fact, not a single UMC employee disclosed these systems to LBBS even though several of the "seven high priority custodians" interacted with these systems on a daily and/or weekly basis.
The UMC web-based employee complaint application was "UMC WIRE." It was deployed to the Intranet in 2011.
The Siemens Policy and Procedures database server on the UMC Intranet, which contains policies as to meal breaks and compensation, was not preserved until late spring of 2014. UMC later produced responsive data from this server. See Section III.E.6, infra. Ghosal testified at the June 4, 2014 hearing that the Siemens Policy and Procedures database server stored all of UMC policies and procedures, including those relating to break policies. Ex.11 (6/4/14 transcript), at 50. Ghosal also testified that certain individuals at UMC could access these polices and edit an existing one or upload a new one onto the server. Id. UMC's failure to preserve the Siemens Policy and Procedures database therefore resulted in the loss of responsive ESI.
It was further determined that UMC's Intranet was "departmental" in nature. This functionality allowed each department to add and delete information from its Intranet page. Ex.4 (4/22/14 transcript), at 160:12-162:24. The information that was posted to Intranet included job descriptions. Id.at 172:11-14. In fact, Schaibley testified that UMC's HR Department could add or remove job descriptions as they "saw fit." Id. Here too, UMC failed to preserve responsive ESI, including job descriptions on the departmental Intranet pages.
In summary, UMC's failure to identify and preserve these systems on the UMC Intranet coupled with the fact that UMC produced responsive ESI from each of these systems supports the conclusion that there has been destruction of responsive ESI. See Section III.E.5, infra.
: UMC Failed To Identify And Preserve Personal Mobile Phones That Key UMC Custodians Used For Work
UMC employees initially stated in their custodial interviews that they did not use their personal mobile devices for work.
As a result, Special Master Garrie ordered LBBS to inspect the personal phones of the high priority custodians for responsive communications. Aside from Brannman, who was no longer with UMC, LBBS determined (and Special Master Garrie verified) that there was no responsive ESI currently exiting on these devices.
: UMC Failed To Identify And Preserve ESI On The BlackBerry Server And UMC Mobile Devices
Ms. Kisner stated that she first learned of the need to preserve data from the BlackBerry devices of Espinoza, Brannman, and Mumford on January 21, 2014. Ex.26 (Kisner declaration) at ¶6; see also, Ex.5 (5/6/14 transcript), at 187:1-12.
Ex.5 (5/6/14 transcript), at 184:16-185:5 (emphasis added).
Similarly, Williams represented as having responsibility for UMC's BlackBerry server stated that he was not instructed to preserve text message information until "the end of March 2014." Ex.32 (6/25/14 Williams declaration), at ¶3. Williams further stated:
Ex.32 (6/25/14 Williams declaration), at ¶3.
While UMC failed to identify this repository to LBBS,
: UMC's Preservation Efforts Were Insufficient UMC Failed To Institute A Timely And Effective Litigation Hold
Although, in June 2013, UMC claimed to have a "comprehensive document retention policy," [Dkt. 104], LBBS later admitted: "There's no formal policy or protocol that is laid out for litigation such as this lawsuit." See Ex.9 (5/1/14 transcript), at 21:24-22:1; see also, Ex.6 (6/16/14 transcript), at 151-152 (MacIntyre testifying that there were no preservation policies at UMC while he at UMC regarding class action litigations.). Moreover, Spring, the individual identified by UMC as being responsible for preservation for this litigation, testified that he was not aware of any "formal policy" or "formal procedure" for preserving documents. Ex.5 (5/6/14 transcript), at 119:5-10.
The record shows that UMC did receive a litigation hold letter, not issued internally but from Plaintiffs, in August 2012 and again in November 2012. More fundamentally, the declarations and testimony by multiple UMC custodians in multiple hearings show that UMC failed to grasp that they had a duty to issue a preservation notice and preserve evidence irrespective of receiving a letter from Plaintiffs once they were in receipt of the complaint in August of 2012. Finally, the record further demonstrates UMC failed to comply with its duty to verify preservation was on-going, or for that matter taking place, even after it was subject to a duty to preserve.
: UMC Preservation Efforts Were Insufficient Who's On First? — UMC's Executives Failed To Take Responsibility For Preservation And Failed To Notify The Appropriate IT Stakeholders To Prevent The Loss Of Relevant ESI
Not a single UMC executive took any of the steps necessary to ensure the preservation of evidence. No UMC executive took responsibility for instituting or enforcing a "litigation hold," or otherwise acting to ensure the preservation of documents in this case.
(a) Brannman (CEO From July 2011 To January 2014) Received At Least Two Plaintiff Preservation Notice Letters
In a May 23, 2014 sworn declaration, Brannman stated he did not get an instruction to notify employees about preservation until Espinoza contacted him in April 2013. Ex.20 (Brannman declaration), at ¶14. Brannman stated he was not involved in any preservation efforts. Id. at ¶9.
(b) Lawrence Barnard (CEO From February 2014 To Present) Learned Of Preservation Obligation In Passing In The Hallways
UMC CEO Lawrence Barnard ("Barnard")
(c) McKinley (UMC's Chief Information Officer) Received No Preservation Notice But Was Involved In Connecting Initial ESI Vendor With Schaibley To Perform "Initial" Collection
McKinley did not receive any notice to preserve and was not involved in ensuring that preservation was occurring until the Special Master Proceedings. Ex.4 (4/22/14 transcript), at 158-159 ("The first official notice I got of a preservation order. . .was the order I got from [Special Master Garrie] after our first meeting."). In fact, McKinley testified that he never spoke to UMC's counsel in this matter until the late spring of 2013. Ex.4 (4/22/14 transcript), at 157:16-17. This is particularly troubling because it was a member of McKinley's staff, Schaibley, who undertook UMC's collection efforts. See Ex.17 (8/1/14 Schaibley declaration), at ¶4.
(d) MacIntyre (Director Of Risk Management) The Individual Responsible For Effectuating Litigation Holds For Some Types Of UMC Litigation Was Not Involved in UMC's Preservation Efforts
MacIntyre, UMC's then Director of Risk Management and a key custodian in this matter testified that he was unsure whether anyone in UMC's IT department was contacted to assist in any initial preservation efforts for this action:
Ex.6 (5/6/14 transcript), at 129:10-130:1.
Notably, it was the Risk Management Department that initially forwarded Plaintiffs' preservation notice to Spring. Therefore, MacIntyre's failure to be aware of, or involved in, UMC's basic preservation obligations is inexplicable.
(e) Doug Spring (Director Of Human Resources) Was Not Involved In UMC's Preservation Efforts
Spring testified he "did not even know there was such a thing" as a preservation notice issued in this matter in 2012. Ex.5 (5/6/14 transcript), at 78:23. This testimony is particularly perplexing given that he received multiple preservation notices, both from LBBS and from Plaintiffs, had met with outside counsel, and was identified by a number of witnesses as the individual responsible for preservation. See Section III.A.2, supra. Regardless, even after drafting a preservation notice in April of 2013, Spring apparently did not take any further steps to ensure preservation.
Indeed, Special Master Garrie determined Spring had no relevant, substantive interaction with UMC's IT department:
Ex.5 (5/6/14 transcript), at 110:20-111:8; see also, id. at 119:14-25 (Spring again confirming he had no interaction with Schaibley in the collection of any responsive data).
(f) Kisner (IT Manager Tasked With Blackberry Preservation) Received Preservation Instruction Over 500 Days After Initial Complaint Was Served
UMC represented to the Court that it would produce text messages on January 17, 2013. See Section II.C.6, supra. Yet, UMC's counsel and executives failed to instruct Kisner to preserve evidence until January 21, 2014. Ex.3 (4/7/14 transcript), at 84:2-8. This delay in instruction caused the wiping of a substantial number of text messages prior to UMC's text message production. See Section III.E.2, infra.
Carmelito Mendoza ("Mendoza") is a UMC database analyst who has worked at UMC for five years. Ex.11 (6/4/14 transcript), at 8:19-22.
David William ("Williams") is a UMC System Administrator. Williams learned of the lawsuit via an email from Human Resources in July of 2013, approximately 400 days after the filing of the complaint. Ex.32 (6/25/14 Williams declaration), at ¶2. At that time, Williams was not contacted or notified to preserve any information to the lawsuit by LBBS or any UMC executive. Id. It was in March of 2014 that Williams was requested by McKinley to preserve data for this litigation, approximately 500 days after the filing of the suit. Ex.32 (6/25/14 Williams declaration), at ¶2. Williams further testified that he received no instruction to preserve the timekeeping system data for Clarity, CrimeStar, GRASP, and TeleTracking timekeeping systems until the summer of 2014. Ex.14 (8/4/14 transcript), at 110-118.
Shane Lattin ("Lattin") is a UMC Network Engineer. Lattin learned of the litigation and received a preservation notice in the spring of 2014. Lattin was responsible for creating back-ups of "Clarity, TeleTracking, CrimeStar, and GRASP database." Ex.35 (8/1/14 Lattin declaration), at ¶2. At the August 4, 2014 hearing, Lattin testified that he did not receive instructions to preserve and collect the data in these timekeeping systems until late June of 2014. Ex.14 (8/4/14 transcript) at 126-132.
Ruben Ghosal ("Ghosal") is a UMC IT Programming Supervisor. Ghosal learned of the litigation in 2014 and he testified that that he never received a litigation hold letter or notice, as of June 4, 2014. Ex.11 (6/4/14 transcript), at 61:22-62:2. Ghosal is responsible for the Intranet applications, which were determined to have several systems that contained potentially responsive ESI. See Section III.A.2.d., supra.
In summary: (i) UMC did not have any protocol or process and did not follow any protocol or process, in regards to preserving responsive information; (ii) failed to have any executive "own" the responsibility of ensuring compliance with UMC's discovery obligations; (iii) failed to inform or provide notice to several key UMC IT system owners; and (iv) never followed up to see if preservation occurred or whether any of the aforesaid individuals had been properly informed of their preservation obligations. These multiple failures resulted in the destruction of responsive ESI.
B. UMC's Collection And Production Was Riddled With Problems
Special Master Garrie identified multiple problems with UMC's collection and production. Among other things UMC failed to collect:
: UMC's Production And Collection Was Riddled With Problems Collection And Production Timeline
The timeline below demonstrates how, during the course of these proceedings, UMC failed to collect evidence from a litany of sources. UMC's collection efforts were far below the de minimis requirements for a reasonable collection and resulted in high costs, significant delay, and loss of responsive ESI. See Sections III.D and III.E, infra.
UMC is still collecting ESI from various repositories as of the authoring of this Report, including the timekeeping systems discovered in June of 2014. See Section III.C.1.a, infra.
: UMC's Production And Collection Was Riddled With Problems Failures By UMC In Collection
Special Master Garrie finds that the collection of ESI by UMC was riddled with problems and is still not complete.
(a) UMC Self Collected ESI In Both April And August 2013 Using Unreliable Collection Methodology Such That The Effectiveness Of These Collections Remains Undetermined
On April 18, 2013, Schaibley, completed a collection of 26 custodians' emails and personal folders.
After the "initial collection," UMC performed a second self-collection of Espinoza, Spring Mumford, Brannman, and Panzeri, on August 26, 2013, pursuant to Magistrate Judge Leen's Order.
(b) UMC Did Not Collect From Known Responsive ESI Repositories Including: Q-Drive, UMC Workstations, All ESI For Claudette Meyers, Clarity, CrimeStar, TeleTracking, And Blackberry Server Data Until April 2014 Or Later
On or about June 2014, more than a year after UMC's initial collection, Special Master Garrie found that UMC's collection did not include numerous reasonably accessible relevant ESI repositories, including:
In addition, LDG failed to properly collect the ESI for the five key custodians as ordered by the Court. See Ex.17 (8/1/14 Schaibley declaration), at ¶5; Ex.22 (8/6/14 Edmondson declaration), at ¶16 (stating "I verified the source data that had been provided to me in November of 2013. . . was incomplete. . .").
(c) UMC Delayed Collection Without Suspending Backup, Resulting In The Loss Of Responsive ESI.
As the chronology in Section III.B.1 demonstrates, UMC's information technology personnel failed to suspend backup or implement a litigation hold for multiple repositories: e-mail Q-Drive, UMC work computer and devices. This failure to suspend the backup or perform a timely collection of these repositories resulted in the loss of responsive ESI. See Section III.A.2.af. (UMC's failure to preserve ESI repositories).
The table below, provided by Edmondson, demonstrates that responsive ESI was discovered in all the repositories UMC failed to preserve and collect.
The thousands upon thousands of responsive files provided to UMC Counsel for privilege review by Edmondson shows that UMC's failure to preserve and collect ESI in a timely manner,
: UMC's Production And Collection Was Riddled With Problems Failures By UMC's Electronic Discovery Consultant In Production And Collection
(a) UMC ESI Vendor Did Not Make A Complete Copy Of The Collection Or Complete Requisite Chain-Of-Custody Paper Work
As the chronology above sets forth, in April of 2014 LDG subcontracted Mare to create a forensic image of what Schaibley had collected. Ex.17 (8/1/14 Schaibley declaration), at ¶4; see also, Ex.36 (Renard declaration), at ¶¶5-7. In April of 2014, a year later, Special Master Garrie discovered that the forensic image of Schaibley's collection was not complete. Ex.17 (8/1/14 Schaibley declaration), at ¶4.
This failure could have been avoided had forensic collection best practices been followed and chain-of-custody paperwork been completed. Indeed, LDG's performance was so substandard that, as UMC testified: "we refused to pay [them]". Ex.4 (4/22/14 transcript), at 104:17-106:8.
As noted above in the collection timeline (see Section III.B.1, supra), Edmondson used processing and production software that created problems in production. UMC productions suffered from technical issues that prevented collection search from being completed. See Ex.22 (8/6/14 Edmondson declaration), at ¶14 (stating that "despite the software manufacturer's claims the original processing software used, i.e., `Paraben P2 Commander,' had in this case incorrectly produced the responsive email files and that re-processing in EnCase 7.09.03 was the most accurate option currently available"). It is Special Master Garrie's opinion that had Edmondson followed industry best practices, Edmondson would have been able to identify and resolve, or even prevent, most if not all of these technical issues.
All of UMC's ESI vendors have failed repeatedly to follow best practices or use appropriate forensic tools to process and produce ESI under the ESI Protocol.
The above problems were remedied by Special Master Garrie's efforts. See Section III.D, infra.
: UMC's Production And Collection Was Riddled With Problems Failures By UMC's Counsel In Production And Collection
While there is little doubt that UMC's failure to be forthright with LBBS exacerbated many collection issues, LBBS is responsible for some of the collection failures. Specifically, LBBS failed to dialogue with UMC or the electronic discovery vendors, leaving everyone in the dark about what to collect and when ESI should be collected. See Section III.B.1, supra.
LBBS may be forgiven for trusting that MPP's collection efforts followed a semblance of basic protocol and practices, and for relying on their own client's representations. Yet, LBBS' decision not to verify what UMC told them, and not serially engage UMC IT stakeholders in substantive e-discovery dialogue, contributed to UMC's failures regarding identification preservation, collection, search, and production. In summary, LBBS did not meet its affirmative duty to inform UMC it needed to put its document retention program on hold and save and collect relevant documents.
C. UMC Made Multiple Misrepresentations In These Proceedings As To The Existence Of Relevant ESI Repositories, UMC's Ability To Produce Summary Spreadsheets Via Kronos And The Completeness Of The Production Of DOL Documents Submitted In These Proceedings.
UMC and LBBS proffered multiple false representations and statements (many of which are detailed above) that obstructed discovery in these proceedings, causing delays and increased costs, and leading to likely loss or deletion of responsive ESI.
: UMC Made Multiple Misrepresentations In These Proceedings UMC Custodians Lied About, Or At Best Failed To Disclose, Several Key ESI Repositories To LBBS And Special Master Garrie, Of Which Were Later Proven To Contain Relevant ESI
UMC custodians lied, or at best withheld, the existence of several key ESI repositories from LBBS and Special Master Garrie, including: (a) multiple time keeping systems; (b) Intranet applications;
(a) Key Timekeeping Systems Clarity, Crime Star, TeleTracking, And GRASP Were Only Disclosed To The Special Master More Than Three Months Into The Proceedings
This is a dispute about wages and hours and UMC personnel and custodians failed to disclose the existence of four timekeeping systems to counsel and the Special Master: Clarity CrimeStar, TeleTracking, and GRASP. Indeed, the only timekeeping system any UMC custodians disclosed was "Kronos" and, to a limited extent, GRASP. See Ex.2 (4/4/14 transcript), at 141; Ex.7 (4/10/14 transcript), at 16-17.
(i) Clarity Timekeeping System Was Used By Opt-In Plaintiffs, Contains Responsive ESI, And Was Not Disclosed Until May 2014
Clarity was a timekeeping system used by employees at UMC from May 2006 until May 5, 2014 to collect data for analysis of time spent by UMC staff. Ex.32 (6/25/14 Williams declaration), at ¶6.
It was not until the May 30, 2014 hearing, when Special Master Garrie asked about a security group called Clarity that LBBS revealed for the first time a new system that can track breaks, over 650 days after Plaintiffs served their complaint. Clarity was the name of a software system related to timekeeping. Ex.10 (5/30/14 transcript), at 27.
Subsequent declarations submitted to Special Master Garrie in these proceedings show that UMC's management used Clarity reports to review time per project. Ex.32 (6/25/14 Williams declaration), at ¶ 9. It was also determined that lunch breaks could be selected as a line item in the Clarity system. Ex.40 (7/8/14 Williams declaration), at ¶9.
Upon the discovery of the Clarity timekeeping system, Special Master Garrie ordered LBBS to produce a UMC witness with knowledge of the system for questioning, out of concern that UMC had failed to search the right systems. Ex.10 (5/30/14 transcript), at 27-28.
UMC has misrepresented the use and functionality of Clarity. UMC claimed, for example: Clarity was not a "time-keeping" system used by hourly employees; Clarity was used only for the "McKesson project" (also referred to by UMC as the Electronic Health Records (EHR) rollout);
(ii) CrimeStar Timekeeping System Was Used By Opt-In Plaintiffs, Contains Responsive ESI, And Was Not Disclosed Until June 2014
CrimeStar is a dispatching software system public safety officers at UMC used to track time, including meal breaks.
Ex.39 (6/25/14 Witty letter).
Special Master Garrie found that UMC failed to disclose the CrimeStar system to LLBS in custodian interviews, and to Special Master Garrie in hearings. This is even more outrageous that Clarity because Special Master Garrie determined from declarations that "[a] proposal was made to and approved by Doug Spring in UMC Human Resources to allow PSOs to track their meal breaks in our computer aided dispatch (CAD), a part of CrimeStar RMS." Ex.41 (7/8/14 Gurrola declaration), at ¶9. This meant that Spring and Espinoza had direct knowledge as to CrimeStar and its functionality and intentionally withheld the existence of the system from LBBS in custodian interviews, and Special Master Garrie, who questioned them under oath about the existence of any other timekeeping systems at UMC. In addition, UMC failed to preserve CrimeStar ESI until June of 2014, 650 days after service of the Complaint. See Section III.C.1.a.v infra.
(iii) TeleTracking Timekeeping System Was Used By Opt-In Plaintiffs, Contained Responsive ESI And Was Not Disclosed Until June 2014
TeleTracking Timekeeping System consists of two separate pieces: (1) Capacity Management Suite and (2) Service Tracking (ST). Ex.48 (8/7/14 Williams declaration), ¶9.
UMC's counsel stated:
Ex.39 (6/25/14 Witty letter).
Special Master Garrie found that UMC used the TeleTracking system, specifically to track assignments, tasks, breaks, and locations for employees, including certain Opt-In Plaintiffs. Ex.39 (6/25/14 Witty letter).
(iv) GRASP Timekeeping System
GRASP is another system at UMC that might be a repository of potentially relevant ESI in this case, relating to timekeeping. While UMC stated that Kronos, Clarity, TeleTracking, and CrimeStar comprise "the universe of time-tracking systems at UMC" (Ex.39 (6/25/14 Witty letter)), it appears that GRASP may have been utilized by UMC for employee scheduling and time management for patient care. See, e.g., Ex.11 (6/4/14 transcript), at 67:14-20 (Mendoza testified that GRASP was used for "scheduling"). As a result, Special Master Garrie ordered UMC to produce relevant ESI stored in GRASP to Plaintiffs for further analysis. [Dkt. 183].
(v) Additional Timekeeping System Findings
Special Master Garrie determined at the August 4, 2014 hearing that for all the timekeeping systems, aside from TeleTracking, it was possible for a user of the system to overwrite the data entry. Ex.14 (8/4/14 transcript), at 182:1-2, 184:24-25. At the hearing, Special Master Garrie also determined that UMC did not preserve the data captured in Clarity, CrimeStar, TeleTracking, or GRASP and that UMC could not demonstrate that responsive ESI was not lost or destroyed from Clarity, Crimestar, and GRASP. See Ex.14 (8/4/14 transcript), at 125-127; Ex.42 (Linda Williams declaration), at ¶2; Ex.43 (8/7/14 Gurrola declaration), at ¶2.
In summary, but for Special Master Garrie's diligent and thorough questioning of LBBS and UMC witnesses the Clarity, CrimeStar and TeleTracking timekeeping systems likely would have remained undiscovered for the entirety of this litigation.
: UMC Made Multiple Misrepresentations In These Proceedings UMC Does Have The Capability To Generate Excel Spreadsheets From Kronos And Did So For The DOL Investigation
In the course of the Special Master proceedings, UMC presented Panzeri to provide testimony as an individual knowledgeable about the creation of the Kronos summary spreadsheets.
Panzeri confirmed that not only was the creation of such "summary reports" or spreadsheets possible, she in fact had reports she had created in connection with the DOL investigation readily available. Ex.5 (5/6/14 transcript), at 24:19-23 (SPECIAL MASTER: "how quickly could you access those spreadsheets?" PANZERI: "As soon as I get back to my office. They're not in any archive file. They're right where I can get at them."). It is evident that UMC was able to create Kronos summary reports and that UMC did this in the normal course of business. See also, Ex.11 (6/4/14 transcript), at 169:2-10.
The record proves that UMC failed to produce the Kronos "summary report" data that was in UMC's possession, and that UMC's repeated representations that it did not produce such reports in the normal course of business, and that to do so was unduly burdensome was inaccurate. [Dkt. 126, at 4:5-8].
: UMC Made Multiple Misrepresentations In These Proceedings UMC Did Not Produce All Of The DOL Documents Until The Special Master Proceedings.
Until the Special Master proceedings, UMC maintained that its initial production of documents related to the DOL investigation was complete. Ex.18 (3/5/13 Thompson email). Documents obtained from FOIA requests to the DOL contradicted the testimony of Spring, who testified that he did not take any notes at meetings with the DOL or receive any documents from them. Ex.5 (5/6/14 transcript), at 91:5-92:25. Upon further questioning by Special Master Garrie Spring admitted there were meeting notes that had not been disclosed or produced. Ex.5 (5/6/14 transcript), at 93:8-96:2. These notes were later produced with Spring's declaration dated June 10 2014. Ex.45 (Spring declaration). In fact, it was determined that UMC created a variety of DOLrelated documents relevant to and discoverable in this action.
In addition, Special Master Garrie found at the April 7, 2014 hearing that UMC had gathered extensive records relating to the DOL matter and that UMC scanned in these documents and saved them on the Q-Drive. Ex.3 (4/7/14 transcript), at 240:22-241:3. At the hearing, it was also determined that UMC had faxed communications back and forth with DOL representatives scanned in the faxes as images, and stored these faxes on the Q-Drive.
D. UMC's Serial Misrepresentations And Repeated Failure To Act In Good Faith In These Proceedings Directly Caused Large Monetary Costs And Time Delays.
The Special Master process has come at a high cost to all of the parties in this matter. These costs have run into the hundreds of thousands of dollars. This does not include the attendant attorney time and costs.
The Special Master finds that UMC's serial misrepresentations and repeated failure to follow e-discovery best practices were the primary reason for the substantial time and costs of these proceedings, specifically:
These misrepresentation and omissions increased costs by requiring the Special Master to hold multiple additional hearings, review thousands of pages of technical script output, analyze and review hundreds of pages relating to security groups and file access permissions, and invest hundreds upon hundreds of hours reviewing transcripts, declarations, manuals specific to UMC's systems, and other documents submitted in these proceedings.
E. UMC Lost Or Deleted ESI Likely To Be Relevant And Responsive: Q-Drive; SMS Text Messages On UMC BB; Key Custodian Computers; Data On Personal Mobile Device.
ESI that is not properly preserved is often subject to loss, deletion, or modification, for example due to user activity, automatic system updates, or data migrations.
: UMC Lost or Deleted ESI Likely To Be Relevant And Responsive UMC Failed to Preserve the Q-Drive Which Resulted in the Loss of Thousands of Files Including Responsive ESI
In the Joint Report filed on September 19, 2013, UMC stated that UMC's ESI contractor had searched the computers, servers, and cell phones of the five custodians generating more than 5 million hits. [Dkt. 126]. This substantial number of responsive hits did not include the Q-Drive at that time. The Q-Drive was determined to be a key ESI repository. Ex.29 (custodian interviews).
UMC did not preserve or collect the Q-Drive until April of 2014. However, UMC was able to recover and restore a December 2013 Q-Drive snapshot.
After this was determined, Edmondson analyzed the Q-Drive from December 14, 2013 against the Q-Drive from April 4, 2014 and created a report that contained the number of files that were modified or deleted between the oldest existing backup of the Q-Drive from December 14 2013, and Schaibley's April 4, 2014 collection four months later. See Ex.22 (8/6/14 Edmondson declaration), at ¶22. The report was limited to the folders the seven key custodians were able to access.
The report provided by Edmondson showed that over the 116 days between the December Q-Drive backup and the collection, there were a total of 8,969 Q-Drive files in the shared folders of the seven high priority custodians that were modified or deleted. Ex.44 (File comparison Q-Drive file comparison analysis 08.05.14). The specific breakdown of the 8,969 files is as follows: 6,614 files deleted; 1,425 files modified; 930 files moved. Ex.44 (File comparison Q-Drive file comparison analysis 08.05.14).
: UMC Lost Or Deleted ESI Likely To Be Relevant And Responsive SMS Text Messages On UMC Mobile Devices.
On January 31, 2014, after Magistrate Judge Leen considered and ordered preservation and production of smart phone data, UMC produced "a CD-R disc production of Excel files containing the text message data extracted from UMC-issued BlackBerry devices of custodians Brannman Espinoza, and Mumford." See Section II.B, supra. UMC stated it contained "all of the text message information contained on the devices." Ex.47 (1/31/14 Witty letter). In fact, the production of UMC issued BlackBerry text data was of only roughly one month of text message data. [Dkt. 145, at 9:9-12]; see also, Ex.3 (4/7/14 transcript), at 34:25-35:10.
In the parties' February 7, 2014 Joint Report, UMC acknowledged that the "production was extremely limited" but wrongly blamed "the lack of storage space on the Blackberry devices each custodian possessed." [Dkt. 145, at 10:1-12].
Special Master Garrie further determined that UMC failed to preserve e-mails and text messages on the BlackBerry server(s) and devices, noting that UMC issued no preservation notice until after the appointment of the Special Master. Id. at 5:4-9 (citing 4/7/14 transcript, at 36:3-25 63:21-25, 64:1-10, 65:1-23, and 83:6-18). Because no preservation notice was issued, certain UMC-issued BlackBerry devices were "wiped" just prior to UMC's production of mobile phone data on January 31, 2014. See Ex.2 (4/4/14 transcript), at 64:15-21, 133:15-19; Ex.5 (5/6/14 transcript) at 184:16-185:5; Ex.32 (6/25/14 Williams declaration) at ¶ 3.
After establishing these facts, Special Master Garrie issued a subpoena for phone records from Sprint, UMC's mobile provider. Sprint produced 914 pages of records in June 2014, relating to 12 individuals, including several custodians in this matter. Upon inspection of these records the Special Master established the following information:
Taking the 26,374 text messages identified by Sprint as having been sent or received since November 19, 2012 and subtracting the 64 text messages UMC produced, one finds that approximately 26,310 messages were lost or deleted by UMC prior to UMC making its production of text messages.
: UMC Lost Or Deleted ESI Likely To Be Relevant And Responsive Data (Different From SMS) Stored On UMC Mobile Devices And Personal Mobile Devices Used To Conduct UMC Business.
UMC took no appropriate steps to preserve, collect, and/or produce data whether connected to ActiveSync or not — prior to being ordered to do so by Special Master Garrie — from UMC issued mobile devices or personal mobile devices used to conduct UMC business. See Section III.A.2.e (preservation of personal mobile devices used for work).
While LBBS worked diligently with UMC to inspect the personal mobile devices of UMC custodians, its efforts do not eliminate the possibility that relevant data was lost or deleted from personal mobile devices in the approximately two years leading up to this point. Admittedly Special Master Garrie did not find any responsive communications in the UMC work-related messages he reviewed on these personal mobile devices.
However, the loss of responsive ESI is a very likely possibility given (1) the extended period of time that lapsed prior to the preservation of the personal mobile devices, (2) the fact that several custodians upgraded or replaced their personal mobile devices during the time period in question, and (3) the fact that none of key UMC custodians disclosed the use of their personal mobile devices despite being asked by LBBS and the Special Master.
: UMC Lost Or Deleted ESI Likely To Be Relevant And Responsive Data Written To Local UMC Computers.
As detailed above (see Section II.A, supra), UMC failed to preserve ESI on local computers, despite Plaintiffs having requested data from local computers be preserved as early as the August 15, 2013 status conference before Magistrate Judge Leen (and even earlier in the preservation letters Plaintiffs sent in August and November of 2012). In the 250 days between service of the complaint and this collection, it is likely that responsive files were lost. [Dkt. 159 at 5:10-14]; see also, Section III.A.2.c. (discussing UMC preservation of local computers) III.B.2.c. (discussing UMC collection of local computers).
: UMC Lost Or Deleted ESI Likely To Be Relevant And Responsive Intranet Application And The Associated Data And The Siemens Policy & Procedure Server.
UMC failed to preserve several repositories with responsive ESI located on the Intranet. See Section III.2.d. (Intranet preservation by UMC). In fact, Ghosal's testimony suggests that it was more than likely that UMC Departments used the Intranet to add and delete job descriptions which were requested by Plaintiffs in 2013. See Ex.15 (Plaintiffs' First Set of Requests for Production), at 6. Accordingly, UMC likely lost or destroyed responsive Intranet ESI.
IV. CONCLUSIONS OF LAW
A. Nothing New Under The Sun: The Importance Of Cooperation, Communication, And Transparency In Electronic Discovery.
Civil discovery does not change just because ESI is involved. Counsel and parties have duties to clearly communicate, cooperate in the discovery process, and undertake an adequate investigation of facts before making representations. These duties arise irrespective of whether relevant evidence is electronic or non-electronic.
Moreover, ignorance of technology does not excuse counsel or clients from carrying out their duties to preserve and produce ESI. More than a decade of federal court common law and repeated refinements to the Federal Rules of Civil Procedure has established a robust and wellsettled body of law on electronic discovery. Today, ignorance of technology is simply an inadequate excuse for failure to properly carry out discovery obligations.
The Federal Rules of Civil Procedure authorize broad discovery of any matter that may lead to the discovery of admissible evidence, and is not privileged, facially harassing or oppressive. Fed R. Civ. 26(b). The Federal Rules mandate disclosure and require counsel and parties to undertake adequate investigation of facts. See, e.g., Fed, R, Civ. 26(a), 26(f), 26(g).
B. Client And Counsel: The Bad Actor Problem ("The Blame Game")
Here, while Special Master Garrie recognizes LBBS' cooperation, especially that of Counsel Witty, in an extensive and protracted discovery process, UMC's behavior in this matter fell far short of the required standards of transparency and good faith described above.
C. UMC Spoliated Responsive ESI In This Matter ("Hasta La Vista ESI")
UMC failed to preserve and collect responsive ESI in this matter, and this failure led to the spoliation of ESI. See Section III.A, supra. UMC's behavior with near certainty caused irreversible destruction of evidence relevant to these proceedings. See Section III.C, supra.
1. The Duty To Preserve Attaches When A Potential Claim Is Identified And Encompasses All Reasonably Relevant ESI
It is well-settled that "[o]nce a party reasonably anticipates litigation, it must suspend its routine document retention/destruction policy and put in place a `litigation hold' to ensure the preservation of relevant documents". Zubulake v. UBS Warburg, LLC, 220 F.R.D. 212, 218 (S.D.N.Y. 2003); see also, United Factory Furniture Corp. v. Alterwitz, No. 2:12-cv-00059-KJD-VCF 2012 WL 1155741, at *3 (D. Nev. Apr. 6, 2012) (citation omitted); In re Napster, Inc. Copyright Litig., 462 F.Supp.2d 1060, 1070 (N.D. Cal. 2006). "[T]rial courts in the Ninth Circuit generally agree that, `[a]s soon as a potential claim is identified, a litigant is under a duty to preserve evidence which it knows or reasonably should know is relevant to the action.'" Apple Inc. v. Samsung Electronics Co., Ltd., 888 F.Supp.2d 976, 991 (N.D.Cal. 2012) (citing In re Napster, Inc., 462 F.Supp.2d at 1067; AmeriPride Servs., Inc. v. Valley Indus. Serv., Inc., S-00-113 LKK/JFM, 2006 WL 2308442, at *4 (E.D.Cal. Aug. 9, 2006) (same); see also, Hynix Semiconductor Inc. v. Rambus Inc., 645 F.3d 1336, 1346-47 (Fed.Cir. 2011) (litigation hold required when litigation is reasonably certain). Irrespective of the particular test applied, the Special Master reaches the same conclusion: UMC failed to preserve responsive ESI.
2. Parties Have An Affirmative Duty To Ensure Preservation And Communicate Obligations To Employees
The preservation duty is an affirmative duty and requires active involvement of parties. Nonfeasance does not satisfy preservation obligations. In re Napster, Inc., 462 F.Supp.2d at 1060; Zubulake, 220 F.R.D. at 218. A party must not only suspend routine document destruction policies and put in place a hold, but, corporate officers with notice of discovery obligations "must communicate those obligations to employees in possession of discoverable materials," Nat'l Ass'n. of Radiation Survivors v. Turnage, 115 F.R.D. 543, 557-58 (N.D.Cal.1987); Zubulake, 220 F.R.D at 218.
3. UMC Breached Its Duty To Preserve
Here, as detailed in the factual findings above, UMC and its counsel failed to preserve evidence. See Section III.A, supra. First, UMC and counsel failed to implement a timely litigation hold, despite receiving two preservation notices from Plaintiffs' counsel. See Section, III.A.2 supra. Indeed, no litigation hold issued at UMC until after Plaintiffs deposed a UMC witness more than 270 days after Plaintiffs served their complaint. See Section III.A.3, supra. This nine-month delay in beginning to fulfill UMC's preservation obligation (an obligation not entirely met until July 2014) does not satisfy the legal requirement of implementing a litigation hold promptly.
Exacerbating the problem was that nobody within UMC's executive team took responsibility for preservation, or engaged key IT personnel and/or custodians in UMC's preservation effort. See Section III.A.4, supra. The law of this Circuit unequivocally demands that parties communicate preservation obligations to employees and key players in a case to ensure proper preservation. See, e.g., Nat'l Ass'n. of Radiation Survivors, 115 F.R.D., at 557-58. UMC's executives' total disregard of their responsibility in this regard directly contributed to the spoliation of responsive ESI. See Section III.E.1 (Q-Drive), III.E.2 (SMS messages and mobile devices) III.E.3 (personal mobile phone data), III.E.5 (work computers and laptops), III.E.6 (intranet and Siemens server).
4. UMC Willfully Spoliated ESI ("Did I Do That. . .")
"A party's destruction of evidence qualifies as willful spoliation if the party has some notice that the documents were potentially relevant to the litigation before they were destroyed," Leon v. IDX Systems Corp., 464 F.3d 951, 959 (9th Cir. 2006) (internal quotation marks and citation omitted); United States v. Kitsap Physicians Serv., 314 F.3d 995, 1001 (9th Cir. 2002) (internal quotation marks and citation omitted).
As discussed above, there were seven status conferences before Magistrate Judge Leen during which she repeatedly ordered preservation of responsive ESI that UMC failed to preserve. See Section III.A, supra. UMC's deletion of Q-Drive files, and the loss of timekeeping system data, in the face of these preservation orders, are among the more egregious examples of this failure. See Sections III.A.2.a, III.C.1.a, supra. This willful conduct constitutes spoliation through the destruction of critical information of central and potentially dispositive import in this case. See Section III.C, supra.
D. UMC's Spoliation Of Evidence Is Sanctionable Under Ninth Circuit Law ("May It Be So")
In the Ninth Circuit, there are two sources of authority for spoliation sanctions. First, "[a] federal trial court has the inherent discretionary power to make appropriate evidentiary rulings in response to the destruction or spoliation of relevant evidence." Med. Lab. Mgmt. Consultants v. American Broad. Cos., 306 F.3d 806, 824 (9th Cir. 2002) (internal quotation marks and citation omitted). Second, the Court has power to sanction under the Federal Rules of Civil Procedure specifically 26(g) (regarding representations in signed discovery documents) and 37(b)(2)(C) (for failure to "obey an order to provide or permit discovery"). Young v. Facebook, Inc., No. 5:10-cv-03579-JF/PVT 2010 WL 3564847, * 1 (N.D.Cal. Sept.13, 2010) (citing Leon, 464 F.3d at 959); Am. Honda Motor Co., Inc., 762 F.2d 1334, 1337 (9th Cir. 1985); Fjelstad v. Am. Honda Motor Co., 762 F.2d 1334, 1337-38 (9th Cir. 1985).
1. The Court May Issue Sanctions Under Its Inherent Powers
The inherent authority to impose sanctions discussed above applies to those who act "in bad faith, vexatiously, wantonly, or for oppressive reasons." Primus Auto. Fin. Servs., Inc. v. Batarse, 115 F.3d 644, 648 (9th Cir. 1997). UMC's behavior, as described herein, constituted bad faith making the Court's exercise of its inherent power to award sanctions appropriate. See Section III (Findings of Fact).
2. The Court May Issue Sanctions Under The Federal Rules Of Civil Procedure
The Federal Rules of Civil Procedure, state that if a party "fails to obey an order to provide or permit discovery . . . the court may issue further just orders." Fed.R.Civ.P. 37(b)(2)(A). Included among the available sanctions are orders ranging from adverse inferences to outright dismissal of the action or proceeding, in whole or in part. Fed.R.Civ.P. 37(b)(2)(A)(v).
3. Discussion Of Appropriate Sanction Under The Prevailing Ninth Circuit Five Factor Test
The District Court has discretion in its imposition of discovery sanctions. Insurance Corp. of Ireland, Ltd., v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 707 (1982). "[C]ourts have inherent power to dismiss an action when a party has willfully deceived the court and engaged in conduct utterly inconsistent with the orderly administration of justice." Anheuser-Busch, Inc. v. Natural Beverage Distribs., 69 F.3d 337, 348 (9th Cir. 1995) (internal quotation marks and citations omitted);
(a) UMC's Conduct Meets The Willfulness Or Bad Faith Standard
Case-dispositive or case dispositive sanctions generally are available in limited circumstances. Connecticut General Life Insurance Co. v. New Images of Beverly Hills, 482 F.3d 1091, 1096 (9th Cir. 2007). Only "willfulness, bad faith, and fault" justify this severe sanction. Id.; Anheuser-Busch, 69 F.3d at 348 (citation omitted); Henry, 983 F.2d at 947-48, citing Fjelstad 762 F.2d at 1337; see also, Valley Engineers Inc. v. Electric Engineering Company, 158 F.3d 1051 (9th Cir. 1998).
Spoliation of evidence is willful where the party has "some notice that the documents were potentially relevant to the litigation before they were destroyed." Leon, 464 F.3d at 959 (italic emphasis in original). Further, "`disobedient conduct not shown to be outside the control of the litigant' is all that is required to demonstrate willfulness, bad faith or fault." Henry, 983 F.2d at 948, citing Fjelstad, 762 F.2d at 1341; Adriana Int'l Corp. v. Thoeren, 913 F.2d 1406, 1411 (9th Cir. 1990).
UMC's failure to issue a timely preservation notice after Magistrate Judge Leen's repeated orders to preserve ESI, standing alone, on its own constitutes willfulness or bad faith notwithstanding the many additional discovery failures identified above. See Section III.A.3, supra (discussing UMC failure to issue litigation hold). As Judge Koh found in Apple Inc. v. Samsung Elec. Co., 881 F.Supp.2d 1132 (N.D. Cal. 2012) ("Apple I"), failure to turn off an email autodelete function alone constituted willful spoliation. Later, in Apple II (dealing with Apple's spoliation of evidence), Judge Koh stated:
888 F. Supp. 2d at 998.
Special Master Garrie finds that UMC acted with "conscious disregard of its duty to preserve" by failing to institute a litigation hold for at least nine months, conduct that parallels Apple's misconduct in Apple II. UMC (following in Apple's footsteps) similarly failed to ensure that any preservation was effectively implemented, or that key custodians and personnel were informed or educated about preservation. See Section III.A.4, supra (discussing UMC's failures to effectuate preservation). These failures, when coupled with the multiple preservation Orders by both Special Master Garrie and Magistrate Judge Leen constitute willful spoliation. See [Dkt. 121]; [Dkt. 143]; [Dkt. 154]; [Dkt. 159]. Accordingly, Special Master Garrie concludes that UMC's actions were willful and/or in bad faith.
(b) Application of the Five-Factor Test for Case Dispositive Sanctions.
In imposing the "harsh sanction" of dismissal, a court must consider: (1) the public interest in expeditions resolution of litigation; (2) the Court's need to manage its dockets; (3) the risk of prejudice to the party seeking sanctions; (4) the public policy favoring disposition of cases on their merits; and (5) the availability of less drastic sanctions. Jorgensen v. Cassiday, 320 F.3d 906, 912 (9th Cir. 2003) (quoting Malone v. U.S. Postal Serv., 833 F.2d 128, 130 (9th Cir. 1987)); Connecticut Gen. Life Ins. Co. v. New Images of Beverly Hills, 482 F.3d 1091, 1096 (9th Cir. 2007). Special Master Garrie finds that UMC's actions meet all five of these criteria.
(i) The Expeditious Resolution Of This Litigation Serves The Public Interest
The public's interest in expeditious resolution of litigation always favors dismissal." Yourish v. Cal. Amplifier, 191 F.3d 983, 990 (9th Cir. 1999). Here, as recounted above and incorporated herein by reference, UMC violated numerous of the Court's and the Special Master's orders and deadlines with respect to discovery. These violations, including: the willful deletion of SMS messages in direct contravention of Magistrate Judge Leen's order, failure to preserve responsive ESI in Clarity, Crimestar, GRASP, Q-Drive data, and local drives, resulted in the spoliation of evidence. See Section III (A). This spoliation was coupled with multiple misrepresentations by UMC as to the completeness of its productions and UMC's purported compliance with the Court-ordered ESI protocol. See Section III B.3.b; III.C.
UMC's failure to cooperate with counsel and the Court is not harmless. UMC's conduct hindered the Court's and Plaintiff's ability to move this dispute forward diligently. See Godfrey v. Astrue, No CV 07-003336 SS, 2010 U.S. Dist. LEXIS 7578 at * 5 (January 29, 2010, C.D. Cal. 2010) (granting motion to dismiss for failure to prosecute where plaintiff failed to comply with discovery deadlines, failed to respond to defendant's motions and court's order, and failed to attend a court hearing); see also, Ferdik v. Bonzelet, et al., 963 F.2d 1258, 1261 (9th Cir. 1992) (upholding district court's dismissal of action where case dragged on for over year and a half before dismissal during which time it consumed large amounts of court's valuable time that it could have devoted to other cases on the docket); see also, Moneymaker v. CoBen (In re Eisen), 31 F.3d. 1447, 1452 (9th Cir.1994), citing Malone v. United States Postal Service, 833 F.2d 128 (9th Cir.1987) (upholding dismissal where Plaintiff failed to take any substantive action in his case until after the motion to dismiss was filed: "Anything Moneymaker did to move his actions to trial was after he was forced to do so and he "cannot use his actions after the motion to dismiss was filed as evidence of his diligence in prosecuting the suit.") quoting Fidelity Philadelphia Trust Co., v. Pioche Mines Consol., Inc., 587 F.2d 27, 29 (9th Cir. 1978).
(ii) UMC's Actions Have Hindered The Court's Ability To Manage Its Docket
It has long been recognized that the court's inherent power to control its docket includes the ability to issue severe sanctions, such as striking an answer or entering a default judgment where appropriate. See Thompson v. Housing Authority of Los Angeles, 782 F.2d 829, 831 (9th Cir. 1986). Indeed, the Supreme Court has noted that case-dispositive sanctions "must be available to the district court in appropriate cases, not merely to penalize those whose conduct may be deemed to warrant such a sanction, but to deter those who might be tempted to such conduct in the absence of such a deterrent." National Hockey League, 427 U.S. at 643. Herb Reed Enterprises Inc. v. Monroe Powell's Platters, LLC, 2:11-CV-02010-PMP, 2013 WL 3729720 (D. Nev. July 11, 2013) report and recommendation adopted, 2:11-CV-02010-PMP, 2013 WL 5278518 (D. Nev. Sept. 17, 2013)).
Here, UMC's failures to: (1) comply with multiple discovery orders, including the ESI Protocol, as well as the Court's specific orders to preserve evidence; (2) adhere to deadlines set by the Court and the Special Master; and (3) cease misrepresenting its productions as complete and compliant, has effectively halted the timely advancement of this case and the Court's ability to manage its docket.
UMC has violated multiple simply stated orders from the Court and Special Master Garrie. When called to account for the violations, UMC has pleaded their size, their organization structure their employee turnover, and other individual factors. "Where a court order is violated, the second factor also supports case-dispositive sanctions. "Adriana, 913 F.2d at 1412. For all these reasons Special Master Garrie concludes that the second factor weighs in favor of ordering case dispositive sanctions against UMC.
(iii) Plaintiffs' Have Suffered Prejudice As A Result Of UMC's Spoliation
The prejudice inquiry "looks to whether the [spoliating party's] actions impaired [the nonspoliating party's] ability to go to trial or threatened to interfere with the rightful decision of the case." United States ex rel. Wiltec Guam, Inc. v. Kahaluu Constr. Co., 857 F.2d 600, 604 (9th Cir. 1988) (citation omitted).
Data has been lost from UMC's failure to preserve ESI on three timekeeping systems, the Q-Drive, as well as several other key ESI repositories. See Section III.C, supra. It is uncontroverted that UMC's spoliation includes thousands of files on network file shares and thousands of text messages. See Section III.E, supra. UMC's significant delay and errors in preserving and collecting ESI makes it a near certainty that responsive evidence was irretrievably lost or deleted. See Sections III.A, III.B, supra. Thus, Special Master Garrie concludes that Plaintiffs have suffered prejudice.
(iv) Public Policy Does Not Prevent Granting Case Dispositive Sanctions Against UMC
While public policy favors the resolution of cases on their merits, the prejudice Plaintiffs has suffered here outweighs this public policy. See, e.g., Herb Reed, 2013 WL 3729720, at *5 (citing Daniels, 2013 WL 1332248, at *3). UMC's extensive discovery-related misconduct has made it impossible for the Court to continue the case with reasonable assurance that Plaintiffs have sufficient access to facts needed to prosecute their claims. Id.
In addition, the deterrent effect of dispositive sanctions is a public policy interest that supports dispositive sanctions here. UMC is a public institution and there is a need to deter UMC's executives from continuing to turn a blind eye to their discovery obligations. See, e.g., Herb Reed 2013 WL 3729720, at *4 (noting that "case-dispositive sanctions `must be available to the district court in appropriate cases, not merely to penalize those whose conduct may be deemed to warrant such a sanction, but to deter those who might be tempted to such conduct in the absence of such a deterrent.'") quoting Nat'l Hockey League, 427 U.S. at 643); see also, Chilcutt, 4 F.3d at 1325 (noting importance of deterrent effect).
In summary, it is in the interest of public policy that discovery abuses of the scale and extent present here be met with substantial consequences. Such consequences not only justifiably penalize UMC for its disregard of its obligations and protect Plaintiffs from the resulting prejudice but it provides a credible deterrent effect that prevents future abuses. Thus, Special Master Garrie concludes that the fourth factor weighs in favor of ordering case dispositive sanctions against UMC.
(v) Less Drastic Sanctions Cannot Remedy The Prejudice Plaintiffs Have Suffered
The district court must consider "less severe alternatives" than case-case dispositive sanctions before granting such extreme relief. Leon, 464 F.3d 951; United States ex rel. Wiltec Guam, Inc. v. Kahaluu Constr. Co., 857 F.2d 600, 603 (9th Cir. 1988).
The increased costs and delays caused by UMC's serial errors and misrepresentations can be remedied by an order shifting "reasonable" costs and fees to UMC.
Likewise, courts in this Circuit have "inherent discretionary power to make appropriate evidentiary rulings in response to the destruction or spoliation of relevant evidence." Leon, 464 F.3d at 958; Glover v. BIC Corp., 6 F.3d 1318, 1329 (9th Cir. 1993); Apple I, 881 F.Supp.2d at 1135. Here, adverse inference sanctions may remedy some of the prejudice Plaintiffs suffer from the unavailability of relevant evidence at trial. See Zest IP Holdings, LLC v. Implant Direct Mfg. LLC, 2013 U.S. Dist. LEXIS 149727 (S.D. Cal. Oct. 16, 2013).
Finally, neither the parties nor Special Master Garrie have been able to locate extensive case law discussion regarding the issuance of dispositive sanctions to a Plaintiff class. Such a sanction would be at the very least procedurally problematic. Case dispositive sanctions against defendant UMC would first require the certification of the class and the issuance of a default judgment or its equivalent. Such a judgment would also appear to require an inquest or determination of damages, thus forcing a damages trial and arguably undermining one of the benefits of the sanction to the non-spoliating party. Nevertheless, Special Master Garrie finds that case dispositive sanctions are warranted here as lesser sanctions do not fully address the prejudice to Plaintiffs.
This litigation alleges that UMC improperly deprived its employees of appropriate wages and overtime compensation. UMC's widespread failure to preserve, collect and produce ESI including ESI from timekeeping systems and plainly relevant folders on the Q-Drive (see Section III.A.2.a, supra), robs Plaintiffs of ESI and information relevant to their claims. Most perniciously UMC's actions make it impossible to know the degree of prejudice Plaintiffs have suffered. In these circumstances, only case dispositive sanctions fully protect Plaintiffs from UMC's willful failures.
A. Recommendation As to FLSA Opt-in Plaintiffs
The Special Master RECOMMENDS sanctions. Defendant UMC's extraordinary misconduct and substantial and willful spoliation of relevant ESI in this case resulted in substantial prejudice to Plaintiffs and the classes, and misled Plaintiffs, the Court, and the Special Master on numerous discovery issues. See Section III, supra. The level of intentional destruction of evidence by UMC shocks the conscious. As such, as to the 613 Opt-In Plaintiffs, default judgment should be entered against UMC pursuant to Rule 37(b)(2)(A)(iii) & (vi) and the Court's inherent powers. Anderson v. Air West, Inc., 542 F.2d 522, 524 (9th Cir. 1976) ("The law presumes injury from unreasonable delay."); Leon, 464 F.3d at 958 (spoliation of discoverable information is prejudicial in that it interferes with a party's ability to go to trial); Anheuser-Busch, Inc. v. Natural Beverage Distribs., 69 F.3d 337, 348 (9th Cir. 1995) (affirming dismissal of counterclaim where court observed that defendant would "say anything at any time in order to prevail in this litigation.").
B. Recommendation As To Putative Class Plaintiffs
Pursuant to Rule 37(b)(2)(A)(i) & (ii) and the Court's inherent powers, the Special Master believes Plaintiffs are entitled to sanctions in the form of specific factual findings relating to class certification, and a rebuttable presumption regarding certain merit issues.
1. Class Certification Under Federal Rule Of Civil Procedure 23(a)
The Special Master is generally familiar with the allegations in the Amended Complaint [Dkt. 37] and understands that Plaintiffs have filed this case as both an FLSA collective action and a Rule 23 class action. UMC's actions and willful failure to comply with the Court's orders has interfered with the Court's ability to hear this case, substantially delayed the litigation, disrupted the timely management of the Court's docket, wasted judicial resources, prejudiced Plaintiffs and thousands of putative class members, eviscerated the integrity of the Court's case management and discovery orders, and made a mockery of the orderly administration of justice.
Given the breadth of UMC's intentional and willful spoliation, and given that UMC has so grievously and wantonly damaged the integrity of the discovery process such that there can never be an assurance of proceeding on the true and complete facts of this case, the Special Master hereby RECOMMENDS that the Court issue factual findings in support of Rule 23 class certification.
Rule 37(b)(2)(A)(i) expressly provides that the Court can "direct" or "designate [that] facts be taken as established for purposes of the action," while Rule 37(b)(2)(A)(ii) authorizes the Court to issue sanctions "prohibiting the disobedient party from supporting or opposing designated claims or defenses, or from introducing designated matters in evidence." These Rules rightly support ordering factual findings regarding certification as a sanction here, and also support barring UMC from opposing Rule 23 certification in this case. See, e.g., Gaddis v. Abell, No. 03-10773-PM 2006 WL 4671850, at *1 (Bkrtcy. D. Md. July 13, 2006) (court granted certification of class action as a sanction under Rule 37(b) for defendant's failure to produce documents in response to a scheduling order and order requiring production, and denied reconsideration of that order); Resource Life Ins. Co. v. Buckner, 304 Ga.App. 719, 726 (2010) (discovery sanction in form of striking of defendant's evidence filed in opposition to class certification motion was appropriate).
Accordingly, the Special Master RECOMMENDS that the following facts "be taken as established for purposes of the action" in accordance with Rule 37(b)(2)(a)(A)(i), and that UMC be precluded from opposing these findings in accordance with Rule 37(b)(2)(a)(A)(iii):
2. Liability And Damages
The Special Master also RECOMMENDS that as a further discovery sanction Plaintiffs should be granted the following facts as a rebuttable presumption:
C. Recommendation Of Costs And Fees
It is further RECOMMENDED that UMC be ordered to reimburse Plaintiffs' reasonable costs and fees in these proceedings, including their costs in bringing a motion to compel production, in attending discovery status conferences before Magistrate Judge Leen, and for time spent in the proceedings before Special Master Garrie.
Ex.2 (4/4/14 transcript), at 227:12-17.
However, upon further technical investigation by Special Master Garrie, it was determined that the Intranet had write capabilities (Ex.8 (4/15/14 transcript), at 21:5-15).
Ex.5 (5/6/14 transcript), at 119:14-25.
Ex.14 (8/4/14 transcript), at 200:17-201:2.
Ex.14 (8/4/14 transcript), at 70:21-71:8.
UMC has attempted to split hairs between "time-keeping" and "time-tracking" — arguing ostensibly (and incorrectly) that because UMC's pay records are calculated according the Kronos timekeeping system, UMC had no obligation to identify or produce ESI from Clarity, CrimeStar and TeleTracking). See, e.g., Ex.12 (6/26/14 transcript), at 68:15-17 (Counsel for UMC, Cayla Witty, so distinguishing); Ex.38 (6/30/14 Witty letter) (explaining Clarity as a "time-tracking" as opposed to "time-keeping" system).
Ex.44 (File comparison Q-Drive file comparison analysis 08.05.14).