New Mexico Oncology and Hematology Consultants, Ltd. v. Presbyterian Healthcare Services et al
FINDINGS AND RECOMMENDED DISPOSITION by Magistrate Judge Gregory B. Wormuth re 673 MOTION for Sanctions. (twr)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW MEXICO
NEW MEXICO ONCOLOGY AND
HEMATOLOGY CONSULTANTS, LTD.,
No. 1:12‐cv‐00526 MV/GBW
PRESBYTERIAN HEALTHCARE SERVICES, et al.,
FINDINGS AND RECOMMENDED DISPOSITION OF PLAINTIFF’S MOTION
This matter comes before the Court upon Plaintiff’s Motion for Sanctions (doc.
673). The Court held a hearing on the motion on July 25, 2017,1 and heard oral
argument on the motion on August 2, 2017. Docs. 732, 736. For alleged discovery
violations, Plaintiff seeks a default judgment or, in the alternative, an adverse jury
instruction at trial. Based on the findings laid out below, I recommend denial of these
severe sanctions. However, I conclude that certain costs should be assessed against
1 Prior to the hearing, Plaintiff filed three motions in limine. See docs. 697‐99. The Court has considered
the evidence presented at the hearing as well as the evidence referenced herein. To the extent that it has
considered evidence Plaintiff sought to exclude, those motions are denied.
Under Rule 37 of the Federal Rules of Civil Procedure, the Court may sanction a
party “[i]f electronically stored information that should have been preserved in the
anticipation or conduct of litigation is lost because a party failed to take reasonable
steps to preserve it, and it cannot be restored or replaced through additional discovery.”
FED. R. CIV. P. 37(e). Parties to a lawsuit are under an “obligation to preserve evidence
when the party has notice that the evidence is relevant to litigation or when a party
should have known that the evidence may be relevant to future litigation.” Browder v.
City of Albuquerque, 209 F. Supp. 3d 1236, 1243 (D.N.M. 2016) (citations omitted). This
duty to preserve evidence arises “when litigation is imminent.” U.S. ex rel. Baker v.
Cmty. Health Sys., Inc., No. CIV. 05‐279 WJ/ACT, 2012 WL 12294413, at *3 (D.N.M. Aug.
31, 2012), objections overruled, No. CIV. 05‐279 WJ/ACT, 2012 WL 5387069 (D.N.M. Oct. 3,
2012). “Spoliation includes the intentional or negligent destruction or loss of tangible
and relevant evidence which impairs a party’s ability to prove or defend a claim.” Id.
A party may be sanctioned for spoliation when “(1) a party has a duty to
preserve evidence because it knew, or should have known, that litigation was
imminent, and (2) the adverse party was prejudiced by the destruction of the evidence.”
Turner v. Pub. Serv. Co. of Colorado, 563 F.3d 1136, 1149 (10th Cir. 2009). In order for a
court to sanction a party for spoliation, the moving party must show by a
preponderance of evidence that the other party destroyed evidence.2 In re Krause, 367
B.R. 740, 764 (D. Kan. 2007) (“The burden is on the moving party to prove, by a
preponderance of the evidence, that the opposing party failed to preserve evidence or
b. Default Judgment
Plaintiff requests that the Court sanction Defendants by ordering default
judgment against them. Under Rule 37, the Court may enter a default judgment “only
upon finding that the party acted with the intent to deprive another party of the
information’s use in the litigation.” FED. R. CIV. P. 37(e)(2). A default judgment is
considered a “harsh sanction” requiring some demonstration of “willfulness, bad faith,
or some fault of the offending party rather than inability to comply.” EBI Sec. Corp. v.
Net Command Tech, Inc., 85 F. Appʹx 105, 108 (10th Cir. 2003) (unpublished). “Because
default judgment deprives a litigant of his or her day in court, it is appropriate only
where a lesser sanction would not serve the interest of justice.” In re Rains, 946 F.2d 731,
733 (10th Cir. 1991) (internal quotations omitted).
At oral argument, Defendants contended that the proper standard of proof for default judgment or an
adverse jury instruction regarding spoliation should be “clear and convincing.” While I recognize that
there is support for Defendants’ argument, I find that Plaintiff’s motion should be denied on the merits
even under a preponderance of evidence standard. See, e.g., Gates Rubber Co. v. Bando Chem. Indus., Ltd.,
167 F.R.D. 90, 108 (D. Colo. 1996) (clear and convincing evidence required to order a dismissal or default
judgment, but preponderance of evidence sufficient to impose lesser sanctions); In re DaimlerChrysler AG,
No. CIV.A. 00‐993‐JJF, 2003 WL 22951696, at *2 (D. Del. Nov. 25, 2003) (“The burden of establishing
prejudice must be shown by direct evidence which is clear and convincing when dispositive sanctions are
sought, and by a preponderance of the evidence when non‐dispositive sanctions are sought.”) (internal
quotations omitted). Therefore, I will presume that the preponderance of evidence standard applies.
In considering sanctions, the Court should consider a number of factors,
including: (1) “the degree of actual prejudice” to the other party; (2) “the amount of
interference with the judicial process;” (3) “the culpability of the litigant;” (4) “whether
the [C]ourt warned the party in advance that dismissal of the action would be a likely
sanction for noncompliance;” and (5) “the efficacy of lesser sanctions.” Ehrenhaus v.
Reynolds, 965 F.2d 916, 921 (10th Cir. 1992). Default judgement is an appropriate
sanction “[o]nly when the aggravating factors outweigh the judicial system’s strong
predisposition to resolve cases on their merits.” EBI Sec. Corp., 85 F. Appʹx at 108.
c. Adverse Jury Instruction
Plaintiff alternatively requests that the Court sanction Defendants by ordering an
adverse jury instruction. As with default judgment, the Court may “instruct the jury
that it may or must presume the information was unfavorable to the party” “only upon
finding that the party acted with the intent to deprive another party of the information’s
use in the litigation.” FED. R. CIV. P. 37(e)(2). An adverse inference instruction is “ a
powerful sanction[,] as it brands one party as a bad actor and necessarily opens the
door to a certain degree of speculation by the jury, which is admonished that it may
infer the presence of damaging information in the unknown contents [of the missing
documents].” Henning v. Union Pac. R. Co., 530 F.3d 1206, 1219 (10th Cir. 2008). “[I]f the
aggrieved party seeks an adverse inference to remedy the spoliation, it must also prove
bad faith.” Turner, 563 F.3d at 1149; see also Vick v. Texas Employment Commʹn, 514 F.2d
734, 737 (5th Cir. 1975) (“Mere negligence is not enough, for it does not sustain an
inference of consciousness of a weak case.”). Unless the aggrieved party can
demonstrate bad faith, the Court may only impose lesser sanctions. Henning, 530 F.3d
a. Litigation Hold
Plaintiff alleges that Defendants should be sanctioned for failure to implement a
proper litigation hold. Doc. 673 at 30‐32. A litigation hold is “an affirmative act taken
by a partyʹs attorney or management directing the partyʹs employees or agents to take
affirmative steps to preserve evidence which otherwise might be lost. The purpose of
the hold is to avoid the loss of evidence through intentional or negligent actions, or
even through routine document management.” Helget v. City of Hays, No. 13‐2228‐
KHV‐KGG, 2014 WL 1308893, at *3–4 (D. Kan. Mar. 31, 2014). “Once 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.”
U.S. ex rel. Baker, 2012 WL 12294413, at *2 (internal quotations omitted). Then, “[o]nce a
litigation hold is in place, a party and her counsel must make certain that all sources of
potentially relevant information are identified and placed on hold.” Cache La Poudre
Feeds, LLC v. Land OʹLakes, Inc., 244 F.R.D. 614, 627–28 (D. Colo. 2007) (internal
Such a litigation hold applies not only to physical documents but also to
electronic data. Browder, 209 F. Supp. 3d. at 1243; see also Cache La Poudre Feeds, 244
F.R.D. at 620. However, a corporation in not required to, “upon recognizing the threat
of litigation, preserve every shred of paper, every e‐mail or electronic document, and
every backup tape.” Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 217 (S.D.N.Y. 2003).
Rather a party must preserve “any documents or tangible things (as defined by Rule
34(a)) made by individuals likely to have discoverable information that the disclosing
party may use to support its claims or defenses. Id. at 217‐18 (internal quotations and
Plaintiff filed its initial Complaint on May 16, 2012. See doc. 1. On May 22, 2012,
Defendants issued a legal hold directive to thirty‐five employees whom it believed most
likely to have relevant information based on Plaintiff’s Complaint. Doc. 685 at 2. This
first litigation hold directed employees that they “must make diligent and reasonable
efforts to preserve responsive documents in all locations where they may be found.”
Doc. 685‐1 at 2. The litigation hold covered an expansive list of subject matters for
which employees must retain relevant emails. Id. at 2‐3. Employees were also directed
to send to Defendants’ counsel a list of additional employees not on the original list
“who may have relevant documents, data[,] or information.” Id. at 3. Several
individuals were so identified and were then issued the legal hold directive soon
thereafter. Id. Plaintiff filed its first Amended Complaint on June 5, 2012, and then filed
its Second Amended Complaint on February 13, 2013. See docs. 12, 24. In March 2013,
Defendants issued an updated litigation hold directive to an additional 174 individuals
whom Defendants believed may have responsive information. Doc. 685 at 3.
Plaintiff alleges that Defendants’ original May 2012 litigation hold was
inadequate because (1) it did not account for the “email jail,” a function which required
that employees delete or archive emails when they run out of inbox space; (2) it covered
only thirty‐five employees and improperly excluded several key witnesses; (3) it
allowed employees to determine which emails were irrelevant to the lawsuit and could
be deleted; and (4) it did not apply to Defendants’ Live Exchange Server and therefore
did not preserve documents deleted by individual employees Doc. 673 at 3‐4; doc. 695 at
1‐4. The Court will consider each argument in a slightly different order.
Employee Discretion in Determining Relevance
Plaintiff’s most broad argument is its contention that the litigation hold
impermissibly gave discretion to employees to determine what documents, email, and
other information might be relevant to the lawsuit and thus subject to the hold. Doc.
695 at 3‐4. Plaintiff contends that permitting such discretion is per se inadequate.
However, an entity is not required to, “upon recognizing the threat of litigation,
preserve every shred of paper, every e‐mail or electronic document, and every backup
tape.” Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 217 (S.D.N.Y. 2003). Rather a party
“must not destroy unique, relevant evidence that might be useful to an adversary.” Id.
Indeed, courts have found a litigation hold in which a party “directed employees to
produce all relevant information and then relied upon those same employees to
exercise their discretion in determining what specific information to save” can be
sufficient as long as routine procedures which might eliminate relevant information are
no longer continued. Cache La Poudre Feeds, 244 F.R.D. at 629; see also Concord Boat Corp.
v. Brunswick Corp., No. LR‐C‐95‐781, 1997 WL 33352759, at *6 (E.D. Ark. Aug. 29, 1997)
(“The fact that Defendant allowed individual employees to use discretion whether to
retain e‐mail is simply not indicative of bad faith.”). Of course, as recognized by the
cases cited by Plaintiff, a party cannot defend against a spoliation charge by blithely
(and self‐interestedly) claiming that all destroyed documents were irrelevant. But those
cases do not stand for the proposition that employees subject to a litigation hold are
forbidden from any discretion. In this case, Defendant’s employees were not given a
generic “retain relevant documents” instruction. Instead, they were directed to retain
documents and data “that mention or discuss or relate to any of” an exhaustive list of
subjects. See doc. 707‐1 at 47‐52. They were also directed that if “you are unsure about
the relevance of a document, be cautious and preserve it.” Id. This court cannot
conclude that the limited discretion permitted to the subjects of the litigation hold in
this case rendered the hold inadequate.
Plaintiff also alleges that due to the existence of an email jail, which required
employees to delete or archive emails once they ran out of inbox space, Defendants’
employees did not adhere to the litigation hold and deleted relevant emails. Doc. 673 at
3, 31. Plaintiff points out that a number of deponents who were subject to the litigation
hold experienced email jail during the relevant time period and admitted to deleting
emails in response. Id. at 31. However, none of them testified that they believed that
the requirements of “email jail” overrode their obligations under the hold, or that they
in fact deleted items they otherwise would have retained pursuant to the hold. See doc.
685‐7 at 2‐3 (Anna Marie Garcia); doc. 685‐5 at 2 (Jay Olive); doc. 685‐9 at 1‐2 (Lora
Allpass); doc. 685‐10 at 2‐3 (Louanne Cunico); doc. 685‐11 at 2‐3 (Ann Greenberg); doc.
685‐12 at 2‐3 (Matthew Nagy). To prove the contrary, Plaintiff points to two pieces of
evidence: (1) a letter from Defendants’ counsel stating that certain emails which pre‐
date the second litigation hold “may have been deleted in the ordinary course of
business” by employees not covered by the first litigation hold and (2) a letter from
Defendants’ counsel stating that certain emails identified by Plaintiff may have been
“deleted in the ordinary course of business, with each custodian believing that they
were not relevant to the instant litigation.” Doc. 552‐1; doc. 673‐3 at 133.
However, these circumstances do not carry the weight Plaintiff assigns them.
With respect to the first example, it is not a surprise that employees not covered by the
litigation hold would delete items in the ordinary course of business. It certainly does
not prove that, when they were brought within the litigation hold, they did not follow
those instructions with or without the existence of “email jail.”3 With respect to the
second example, Plaintiff provides no evidence to controvert Defendants’ counsel’s
description of the apparently deleted items as “relat[ing] to tangential or peripheral
issues that have only tenuous relevance to the underlying claims of the litigation.” Doc.
673‐3 at 133. Consequently, their deletion by some custodians fails to establish that
employees covered by the litigation hold did not perform their obligations under the
litigation hold in good faith notwithstanding the “email jail.”
Limited Number of Employees
Plaintiff further argues that the May 2012 litigation hold was inadequate because
it failed to cover several important witnesses. Doc. 673 at 4. Specifically, Plaintiff
contends that the original litigation hold improperly excluded the following employees:
(1) Anna Maria Garcia; (2) Jay Olive; (3) Lora Allpass; (4) Dean Putt; (5) Nicki Evans; (6)
Jaimie Martin (7) Mike West; and (8) any of the Nurse Navigators. Doc. 673 at 4. In
response, Defendants argue that any key employees not originally included in the
litigation hold were added through the reference process. Id. at 26. In fact, Defendants
specifically note that Anna Maria Garcia, Lora Allpass, Jay Olive, and relevant Nurse
Whether they should have been included in the earlier litigation hold will be addressed in a later
Navigators were added to the litigation hold through this process prior to the issuance
of the second expanded litigation hold in March 2013. Doc. 685 at 2. Further,
Defendants confirmed that, although the documents were collected from the incorrect
Mike West, the litigation hold was sent to the correct Mike West. Id. at 25 n.28; Ex. 1 at
Therefore, we are left with three individuals Plaintiff identifies as important
witnesses were not included in the first litigation hold: Dean Putt, Nicki Evans, and
Jaimie Martin. However, Defendants explained that Dean Putt had already left his
employment by the time the litigation hold was issued, which explains why he was not
included. Doc. 685 at 25‐26. Defendants contend that neither Nicki Evans nor Jaimie
Martin were considered to be relevant. Id. at 26. Having considered the parties’
arguments on the matter, the Court is unpersuaded that either Ms. Evans or Ms. Martin
was a “key player” such that the failure to include them in the original litigation hold
was blameworthy. See id. at 256‐27.
Even if Ms. Evans and Ms. Martin were important witnesses, Plaintiff could have
objected to their names being excluded from the distribution list in November 2016,
when Plaintiff received the names of all thirty‐five employees who received the May
2012 litigation hold. Doc. 673‐1 at 45. Plaintiff failed to do so, and additionally chose
not to depose either witness even after learning that they had been excluded from the
list. Doc. 685 at 27. Furthermore, Ms. Evans was included in the March 2013 litigation
Plaintiff also argues that Defendant is guilty of spoliation because of the delay in
adding 174 individuals to the original litigation hold which covered more than 40
individuals after the initial supplementation. Doc. 673 at 5. Aside from pointing to the
sheer number of the additional employees added to the hold in March 2013, Plaintiff
does not establish that the newly‐added individuals were so significant based upon the
allegations in Plaintiff’s original Complaint that failure to include them in the original
hold violated Defendants’ discovery obligations.
Plaintiff also argues that Defendants’ litigation hold was insufficient because it
“did not apparently put a litigation hold on the part of their Live Exchange Server (the
Transport Dumpster) that would catch  deleted emails.” Doc. 695 at 1‐2. Whether a
litigation hold was ever placed on the server and how such a hold would operate were
hotly debated at the hearing and oral argument. In any event, emails would end up in
the Transport Dumpster only if they were actively deleted by a user. As noted above,
there is insufficient evidence that custodians subject to the litigation hold failed in their
obligations. Consequently, the apparent failure to timely place a litigation hold on the
Transport Dumpster would result in no spoliation.
Without question, Plaintiff points out some imperfections with the litigation hold
and its implementation. First, given the relative cheapness of digital storage, parties
will have less and less justification to permit key employees to utilize discretion in the
retention of ESI. Certainly, the best approach is to implement a server‐side hold on all
digital data utilized by key employees and to later use search algorithms to parse
relevance. Second, in the light most favorable to Defendants, they failed to timely
implement a server‐side litigation hold. In fact, the Court is persuaded that either a
server‐side litigation hold never went into effect, or it was not properly applied.
Relatedly, businesses that utilize email jail to conserve server space should shut down
such features for employees subject to a litigation hold. Defendants failed to do so.
Third, Defendants failed to adequately explain the reason for the delay between the first
and second waves of litigation hold recipients. Certainly, the mere possibility of a
settlement is insufficient. However, as explained above, Plaintiff failed to establish that
these imperfections were a result of bad faith or that they resulted in the spoliation of
The litigation hold provided Defendants’ employees comprehensive guidelines
for retaining relevant documents and information. For example, the litigation hold (1)
directed that employees preserve all relevant documents and data; (2) described the
various forms of documents that must be retained; (3) detailed seventeen subject
matters for which information must be retained; (4) directed the employees to err on the
side of retention if they had any doubt as to the relevance of information; (5) directed
employees to suspend any automatic deletion programs; (6) directed employees to
identify any other employees who may have relevant information; and (7) required the
recipient to sign an acknowledgement promising to comply with the litigation hold.
Doc. 707‐1. This litigation hold was imposed on approximately 40 key employees on or
about May 2012. Doc. 685 at 2. By March 2013, another 174 employees were made
subject to the hold. Id. at 2‐3.
Admittedly, the discretion afforded employees under the hold and the delay in
implementing the expanded hold created the theoretical possibility that an employee
could have deleted a relevant email. However, even if an individual employee were to
delete an email that might be relevant to the case, it is extremely likely that such an
email would be preserved by another employee due to the overlapping nature of
emails. In business settings such as that of Defendants, inter‐company emails typically
involve multiple recipients. For example, any individual email would appear in the
inbox of (1) the employee who sent the email; (2) each employee who received the
email; (3) each employee who received a carbon copy of the email; and (4) each
employee who received a blind carbon copy of the email. Moreover, earlier emails are
routinely included in later responsive threads. For the litigation hold to fail to result in
the retention of such an email, it would be necessary for every employee in every
address field to violate the litigation hold and delete that email. Given the breadth of
the topics included in the litigation hold letter, its directive to err on the side of
retention and the large number of employees eventually subject to the hold, any
conclusion that a unique and relevant email was completely deleted would be pure
speculation. See also Centrifugal Force, Inc. v. Softnet Commcʹn, Inc., 783 F. Supp. 2d 736,
742‐43 (S.D.N.Y. 2011) (“the mere fact that a single email was deleted in contravention
of the instruction to preserve does not reflect either bad faith, the intentional destruction
of evidence, or gross negligence”). In short, Plaintiff cannot show any prejudice from
the litigation hold that was put into place by Defendants.
b. Gerard PST Issue
The most serious allegation levelled by Plaintiff is that Defendants intentionally
deleted discoverable emails received or sent by Dr. Dava Gerard. Doc. 673 at 16‐23. A
severe sanction such as default judgment or an adverse jury instruction would certainly
be warranted if this possibility were accepted by the Court.
In September 2016, Plaintiff discovered documents belatedly disclosed from the
custodianship of Mike West which should have also appeared earlier in the documents
from the custodianship of Dr. Gerard. Doc. 673 at 18. Plaintiff questioned Defendants
about this issue. Id. On November 15, 2017, Defendants sent a letter to Plaintiff
explaining that they had “identified an error that occurred in Dr. Gerard’s original
export.” Doc. 552‐1 at 3. In short, Defendants claim that the failure to disclose a large
number of Dr. Gerard’s emails was the result of a computer glitch which went
undetected until November 2017. Doc 685 at 31‐32. Plaintiff claims that some agent of
Defendants intentionally deleted the emails after the server export was completed. Doc.
695 at 7‐13.
Generally speaking, the collection of emails in this case starts with an export
from a computer or the server. The export creates a PST file. The PST file is then
opened by Defendants’ e‐discovery vendor, Epiq. Search algorithms are run against the
emails and documents included therein. From the subset of “hits,” the documents are
then reviewed further for privilege and other issues which may affect their
discoverability. Epiq collected the PSTs which would be found on discrete workstations
such as laptops and desktops. Doc. 735 at p. 170:3‐11; doc. 673‐1 at 10. T‐Systems, the
contractor who runs Defendants’ Live Exchange Server, collected the PSTs for each
custodian off the server. Doc. 673‐1 at 10. For Dr. Gerard, Epiq collected 15 PSTs from
various workstations, and T‐Systems collected the single PST from the server. Doc. 735
at p.172:5‐10. The Gerard PST at issue was the PST collected from the server by the T‐
Systems’ employee, Ron Narvaez. Doc. 695 at 7‐13. In October 2014, after the server
exports had been conducted by T Systems, Epiq eDiscovery Solutions, Inc. took custody
of the hard drives containing the server PSTs (included the hard drive containing the
Gerard PST at issue) and maintained custody until it was eventually sent to DriveSavers
for forensic analysis. Doc. 735 at p. 282:1‐5.
Plaintiff’s Evidence of Intentional Deletion
The two primary pillars of Plaintiff’s case for intentional deletion are: (1) the data
found within the “free space” of the Gerard PST file, and (2) the data found in the
unallocated space on the hard drive on which the Gerard PST file was saved. See doc.
673 at 21; doc. 695 at 8. According to Plaintiff, such data would only be found if an
individual, after completing the export from the server, deleted emails from the
exported PST. 673 at 21; doc. 695 at 8.
(1) Data in free space of Gerard PST
The Gerard PST was 9.2 GB in size. Doc. 685‐2 at 7. However, when it was
opened by Epiq, only 128 MB of materials were readable by native software. Id. This
result is unusual because “[a] typical email dataset will expand about 50% or more
during processing, but [the Gerard] PST decreased in size substantially.” Id. at 8. Rene
Novoa, the court‐appointed forensic examiner, analyzed the hard drive containing the
Gerard PST file. See doc. 645 at 1‐2. Mr. Novoa testified that during the course of his
analysis, he found approximately 37,000 emails residing in the free space of the PST.
Doc. 735 at p. 18:4‐21. Mr. Novoa concluded that these items could be the result of
deletion of emails. Id. at pp. 23:19‐24:6.
While Mr. Novoa expresses that intentional deletion is a possibility given his
analysis, Mr. Wilson, Plaintiff’s expert, goes further. He opines that, “there is no way to
place data in the free space of a PST during a client‐side export,” and that “[t]he only
way a client‐side PST can have data in the free space of the PST is when it is deleted
from the PST after creation.” Doc. 673‐1 at 17. Moreover, Defendants’ expert, Mr.
Aaron Read, testified that under a client‐side collection, data could only exist in the free
space of the PST through either deletion or corruption. Doc. 735 at p. 166:12‐19.
Of course, the conclusion that data residing in the PST’s free space is only the
result of deletion rests on the assumption that the export was conducted via the “client‐
side” method, rather than the alternative “server‐side” method. Indeed, Mr. Wilson’s
assumption on this point is unsurprising because the T‐Systems employee who
conducted the export has repeatedly described conducting a client‐side export. Doc.
673‐1 at 6; doc. 695‐2 at 3 (Mr. Wilson stating that “Mr. Narvaez stated during his
interview that he performed a client‐side collection and . . . walked through a detailed
description of that process including a number of details that could only apply to a
client‐side collection”); doc. 735 at p. 157:19‐21 (Mr. Read confirming that “the process
[Mr. Narvaez] described was a client‐side collection”). So, should the Court conclude
that the export of Gerard’s server PST was conducted via the “client‐side” method, the
existence of data in the free space of that PST is strong evidence of post‐export deletion.
(2) Data in unallocated space of hard drive
Mr. Novoa explained that “[i]nformation was recovered from the unallocated
space of Hard Drive‐I and recovered lost data in [the Gerard PST file].” Doc. 673‐3 at 1.
He also testified that he was able to extract forty‐eight email messages from the
unallocated space of the hard drive which related to the Gerard PST. Doc. 735 at pp.
21:4‐22:2. Mr. Novoa testified that although he found “deleted fragments” in the
unallocated space of the hard drive, he “[could] not determine where they came from.”
Id. at p. 24:13‐22.
In fact, Mr. Novoa concluded that “either [the email messages] were deleted
from other e‐mail accounts or [the data] was previously there on the hard drive.” Doc.
735 at p. 25:3‐5. Mr. Novoa then explained that the files could have been on the hard
drive from a previous case, as this “dirty target media” could remain on the hard drive
if it were not properly sanitized. Id. at pp. 25:21; 44:24‐45:12 (Mr. Novoa confirming that
these are the only two options to explain how data could reside on the unallocated
space of the hard drive). Mr. Novoa further explained:
“In best practices, when we reuse target media for collections, it is our
process to wipe it or wiping zeros or sanitizing the drive so there would
be no residual data at all on the target drive. If there is data in the
unallocated space, it could be from deletion. It could be there from a
previous case . . . .”
Id. at p. 26:6‐11.
Both Mr. Wilson and Mr. Novoa testified that, assuming a clean hard drive was
used at the start of the collection process, the only way data could reside on the
unallocated space of the hard drive is through post‐export deletion. Doc. 735 at pp.
24:7‐26‐11; 117:23‐118:28. So, should the Court conclude that Mr. Narvaez exported the
Gerard’s server PST to a cleanly formatted hard drive, the existence of data in the
unallocated space of that hard drive is strong evidence of post‐export deletion.
Plaintiff’s Key Assumptions Are Undermined by Evidence or Lack
(1) No evidence that Mr. Narvaez began Gerard PST export with clean
It is uncontroverted that it is the best practice to export a PST in these
circumstances to a clean hard drive. However, Plaintiff has provided no evidence that
Mr. Narvaez did so. First, Plaintiff did not ask Mr. Narvaez if he did so, and Mr.
Narvaez never indicated either way. Doc. 735 at p. 26:13‐22. Second, Mr. Novoa
testified that he was unable to make such a determination through his analysis of the
hard drives. Id. at p. 119:7‐21. Finally, as Mr. Wilson testified, there were several
“deficiencies in the collection process used by Mr. Narvaez.” Id. at pp. 74:18‐75:5. For
example, Mr. Wilson testified that Mr. Narvaez did not follow “best practices” such as
(1) failing to maintain any documentation for his collection; (2) failing to note the total
message count on the server; (3) failing to include messages from the Transport
Dumpster; (4) failing to restore recoverable items; (5) failing to create log files and check
them for errors; (6) failing to generate a digital signature for the PST files; (7) failing to
create an acquisition document log; (8) failing to establish a chain of custody; and (9)
failing to use a forensic sound copy process.4 Id. at pp. 78:20‐80:7. While several of Mr.
Wilson’s noted deficiencies are in dispute, his criticism of Mr. Narvaez’s work is
inconsistent with Plaintiff’s assumption that Mr. Narvaez followed best practices in
using a clean hard drive.
In summary, Plaintiff suggests despite all these noted deficiencies in Mr.
Narvaez’s collection process, the Court should assume that he followed best practices in
using a clean hard drive to conduct the export of the Gerard PST file. I cannot reach
such a conclusion based on the evidence and testimony provided, as it is very possible
that Mr. Narvaez used a hard drive which contained dirty target media. Further, it is
possible that Mr. Narvaez used a clean hard drive and encountered an error in his first
attempt to export the PST file. Mr. Wilson testified that during the interview Mr.
Narvaez stated that “if a collection failed, he would re‐collect it.” Doc. 735 at 80:11‐15.
While Mr. Narvaez did not state whether he performed a second collection after an
error occurred, Mr. Read stated that the existence of data on the unallocated space of
the hard drive “is likely a result of the process used by Mr. Narvaez and may include an
action such as interrupting the export process, deleting the contents of the PST, and
Additionally, as described above, it seems that Mr. Narvaez failed to accurately explain his export
process, as he explained a client‐side collection instead of the server‐side collection he performed.
then restarting the export.” Doc. 707‐3 at 5; see also doc. 735 at pp. 80:8‐15, 135:18‐136:1.
In his declaration, Mr. Read stated that “[t]he items in the unallocated space of Hard
Drive‐I are likely artifacts of the method employed by T‐Systems to export the PST
files.” Doc. 685‐3 at 3.
For all these reasons, the Court finds that the presence of data in the unallocated
hard drive space does not prove by a preponderance of evidence that intentional
(2) Export logs reflect a “server‐side” export
In March 2017, Defendants retained a forensic consulting firm, Stroz Friedberg,
to review the Gerard PST. Doc. 685‐1 at 11. As part of that review, Stroz Friedberg
discovered logs which Defendants claim were generated as a result of T Systems’s
collection. Doc. 673 at 22; doc. 673‐3 at 68; doc. 685‐1 at 11. For all but two of the forty‐
three employees, the log results state “Search Succeeded.” Doc. 685‐3 at 20‐64. The only
logs which suggest errors are those of Dr. Gerard, which states “Search failed,” and of
Todd Sandman,5 which states “Search partially succeeded.” Id. at 29, 64. The logs
“confirm that the collection included deleted items,” which is indicative of a server‐side
collection. Doc. 685‐3 at 2, 20‐64 (logs showing “Search Dumpster: True”). Experts for
Defendants explain that after a recollection of Mr. Sandman’s PST, both Epiq and Stroz Friedberg
confirmed that all email fragments have an active copy within Mr. Sandman’s PST. See doc. 685 at 15‐16; ;
doc. 685‐2 at 12; doc. 685‐3 at 8. Plaintiff does not contest this conclusion with regard to Mr. Sandman. See
generally doc. 695.
both Plaintiff and Defendants agree that the logs, if genuine, were created by a server‐
side export. See doc. 673‐1 at 18 (Mr. Wilson stating that “[t]he export logs appear to
have been created by the Multi‐Mailbox Search function of Exchange 2010 which would
mean that a server‐side export was performed”); doc. 685‐3 at 2 (Mr. Read stating that
“the export logs associated with T Systems’ collection process show that a server‐side
collection was performed”).
Admittedly, Plaintiff contends that the Court should not accept that the logs are
genuine. It points to Mr. Narvaez’s repeated statements that describe a client‐side
export. Further, Mr. Wilson testified that Mr. Narvaez “said he had no logs available,
[and] did not generate logs for these collections.” Doc. 735 at pp. 77:23‐78:1. Mr. Wilson
also noted several inconsistencies with the logs found by Stroz Friedberg, including: (1)
the time stamps indicate that the exports occurred in the evening and nighttime,
whereas Mr. Narvaez stated that he conducted the exports during daytime hours; (2)
the exports were email only and did not include calendar and task items; and (3) some
of the logs had did not contain full logging information. Doc. 735 at pp. 95:12‐96:21.
Notwithstanding these valid points, the Court finds that the logs discovered by
Stroz Friedberg are valid and reliable. First, it is uncontroverted that the logs were
found where automatically generated server‐side export logs would be saved. Doc 735
at pp. 98:7‐14; 255:4‐11. Second, all experts agree that, on their face, the logs appear
consistent with such automatically generated logs. Id. at pp. 128:2‐23; 237:8‐238:5.
Finally, the only alternative – that the logs are a complete fraud and forgery – is simply
not believable in these circumstances. It is not that the Court cannot imagine such
willful conduct by a party faced with litigation of this scope. But in this case, such a
claim is particularly difficult to accept. First, as Mr. Read testified, forging such logs
this well would be nearly impossible. Id. at pp. 274:18‐275:9. Second, forging these logs
at the beginning on the off‐chance that they could be used to prove a server‐side export
years in the future seems impossibly prescient. Third, if one were to go to all the
trouble of creating such a forgery, one would expect them to easily avoid some of the
odd inconsistencies pointed out by Mr. Wilson. Finally, if one were to forge logs to
prove a server‐side export, you would expect them to ensure that Mr. Narvaez made
sure to describe such an export.
Having concluded that the logs are reliable, they prove that Mr. Narvaez
conducted a server‐side export of Dr. Gerard’s PST. Consequently, the existence of free
space in that PST does not establish intentional deletion of emails from it. Instead, the
log shows that there was a massive error in the export of the Gerard PST.
Consequently, when the flawed Gerard PST was opened by Epiq, it contained about 1%
of the data it should have contained.
Plaintiff has not demonstrated by a preponderance of the evidence that
Defendants intentionally deleted emails that should have been disclosed. While the
errors in collection were either avoidable or immediately rectifiable, they were
c. Privilege Designations
Plaintiff argues that Defendants used privilege designations for the purpose of
concealing documents and information. Doc. 673 at 23‐26. On November 17, 2014,
Plaintiff served Defendants with its First Set of Document Requests. Doc. 604 at 4.
Defendants served its responses and objections to the document requests on January 23,
2015. Id. On January 22, 2016, Defendants produced their privilege and redaction logs
to Plaintiff. Id. at 5; doc. 673 at 23. On March 15, 2016, Plaintiff objected to 2,831 of the
4,143 entries to which Defendants included in the logs. Doc. 604 at 5; doc. 673 at 23.
After conducting a re‐review, Defendants produced 1,095 documents which were
originally listed on the privilege log and 864 documents which were originally listed on
the redaction log. Doc. 604 at 5; doc. 673 at 23. Plaintiff then objected to all 1,312
remaining listings on the privilege and redaction logs, stating that it no longer had
confidence in Defendants’ privilege designations. Doc. 445‐11; doc. 604 at 5‐6.
Defendants then conducted a second re‐review, and produced an additional 861
documents. Doc. 604 at 65‐6.
On July 14, 2016, Plaintiff filed a Motion to Compel and for Sanctions against
Defendants, which included a request “that the Court appoint a Special Master to
conduct an independent in camera review” of the remaining records withheld and
redacted by Defendants. Doc. 445 at 3. On August 11, 2016, the Court appointed a
Special Master to review Defendants’ privilege designations. See doc. 470. The Special
Master found that 197 additional documents “are not protected by the attorney client
privilege or work product doctrine or are to be produced as part of a subject matter
waiver.” Doc. 604 at 30; doc. 604‐1. On February 17, 2017, the Court adopted the Special
Master’s Report and Recommendations and ordered Defendants to produce the
additional documents. Doc. 606.
Plaintiff argues that Defendants abused their privilege by continuously
misrepresenting the contents of documents which were incorrectly designated as
privileged. Doc. 673 at 25‐26; see also doc. 445. However, as discussed above, the harsh
sanctions of default judgment or an adverse jury instruction require a finding of
“willfulness, bad faith, or some fault of the offending party.” EBI Sec. Corp., 85 F. Appʹx
at 108. Here, although the Special Master found that Defendants had over‐designated
documents as privileged, he did not find that Defendants were “unduly or unjustifiably
delayed in responding to and trying to resolve the dispute, acted in bad faith[,] or
otherwise engaged in inexcusable conduct.” Doc. 604 at 20. The Special Master
incorporated this finding into his conclusion, as he specifically “recommend[ed] a
finding that neither party acted in bad faith.” Id. at 29.
In fully adopting the Special Master’s Report and Recommendation and
considering the entire history of Defendants’ over‐designations and re‐reviews, I agree
that Defendants did not act in bad faith. Therefore, I recommend that the sanctions of
default judgment or an adverse jury instruction are not warranted. However, this does
not mean that Defendants are free from blame. It is clear that Defendants over‐
designated documents as privileged, and that even their re‐reviews were insufficient to
fix their own errors. As a result, Plaintiff was required to repeatedly assert objections
until the Special Master ultimately resolved the issue. Therefore, as discussed below, I
find that a lesser sanction against Defendants is warranted and would “serve the
interest of justice.” In re Rains, 946 F.2d at 733.
d. Billing and Claims Data Production
Plaintiff argues that Defendants failed to produce usable billing and claims data
in a timely manner. Doc. 673 at 9‐13. Specifically, Plaintiff claims that the billing and
claims data produced by Defendants on February 18, 2016 was unusable. Id. at 10.
Plaintiff alleges that Defendants were required to produce new billing data, and that
they did so on June 24, 2016. Id. However, Plaintiff argues that Defendants did not
produce a complete set of billing data until February 7, 2017. Id. at 10‐12. Likewise,
Plaintiff alleges that Defendants did not produce a complete set of claims data until
September 2, 2016. Id. at 12‐13.
Defendants argue that they produced all requested billing data on July 21, 2016,
and produced all requested claims data on July 28, 2016. Doc. 685 at 17. Defendants
claim that the delay in producing all of the requested data occurred because Plaintiff
continuously requested additional data and was unclear in its requests. Id. at 18.
Defendants argue that once Plaintiff clarified its requests, Defendants sent the
additional billing and claims data. Id.
Regardless of whether Defendants intentionally delayed in producing usable
billing and claims data, sanctions are not warranted because Plaintiff has suffered no
prejudice. The parties agree that by February 7, 2017, Defendants had produced a
complete usable set of billing and claims data as requested by Plaintiff. Doc. 673 at 12;
doc. 685 at 18. On February 8, 2017, Plaintiff filed an unopposed motion to extend the
expert deadlines “so as to incorporate [the additional data sent by Defendants].” Doc.
597. On February 14, 2017, the Court granted this unopposed motion and extended the
expert deadlines. Doc. 600. Therefore, the Court has already provided a remedy for any
unnecessary delays by Defendants in producing usable billing and claims data. As
Plaintiff can demonstrate no prejudice resulting from any such delays, I find that the
severe sanctions requested by Plaintiff are not warranted.
e. Mike West Documents
Plaintiff alleges that Defendants should be sanctioned for their mistake of
disclosing ESI for the wrong Mike West. Doc. 673 at 15‐16. Plaintiff claims that
Defendants failed to provide a proper explanation as to how the error occurred, and
should have discovered the error much earlier than they did. Id. Plaintiff states that
Defendants originally produced zero documents from Mike West, but after the error
was resolved Defendants produced 1,836 documents. Id. at 16. Defendants explain that
they did not discover the error until after Plaintiff sent them a letter inquiring as to a
specific email. Doc. 685 at 6. Defendants maintain that this issue has been fully
resolved, as Defendants immediately produced the documents from the correct Mike
West and Plaintiff conducted a second deposition on October 26, 2016. Id.
The Court finds that the collection of documents from the wrong Mike West was
an inadvertent error and not done in bad faith. The ESI was collected not by
Defendants’ counsel but instead by Defendants’ IT department, and such an error may
not have been obvious to those employees who conducted the collection. Plaintiff has
received the documents from the correct Mike West, and the Court granted Plaintiff the
opportunity to conduct a second deposition. See doc. 504 at 2‐3; doc. 532 at 2.
Additionally, the Court granted Plaintiff the opportunity to conduct five additional
depositions as a follow‐up to the information obtained in the Mike West disclosures.
Doc. 557; see also doc. 555 at 3. Further, the correct Mike West was subject to the original
litigation hold put in place by Defendants in May 2012. Doc. 685‐1 at 3. Therefore, I
find that the severe sanctions requested by Plaintiff are not warranted for this mistake.
f. Production of Hard Copy Documents
Plaintiff alleges that Defendants did not properly collect hard copy documents in
discovery. Doc. 673 at 13. Plaintiff states that multiple employees testified that they
took handwritten notes and that those documents were never collected and produced to
Plaintiff until late in discovery. Id. at 13‐15. Specifically, Plaintiff asserts that
Defendants failed to collect hard copy documents from Dennis Batey, Anne Greenberg,
Jennifer Ellis, Mike West, and Dean Putt. Id. at 13‐15. Defendants assert that they asked
employees “to identify any hard copy documents that could potentially contain
responsive material,” and then collected any such material. Doc. 685 at 19.
Although Defendants may not have produced all hard copy documents prior to
the depositions of their employees, almost all of the hard copy documents were
produced following the depositions. Doc. 673 at 13‐15. Plaintiff states that Defendants
produced hard copy documents from employees Anne Greenberg, Jennifer Ellis, and
Mike West following their depositions. Id. Further, Defendants have asserted that they
produced all non‐privileged hard copy documents from Dennis Batey. Doc. 685‐1 at 15.
Had Plaintiff objected to the late production of these hard copy documents, Plaintiff
could have requested that the Court allow additional depositions of these employees.
Plaintiff did not do so. Given Plaintiff’s decision not to seek less severe sanctions which
could remedy these issues, more severe sanctions are not warranted.
The only remaining issue relates to Plaintiff’s suggestion that Defendants may
have failed to search for hard copy documents of the referral cards described by Dean
Putt in his deposition. See doc. 673 at 14‐15. However, Plaintiff notes that Defendants
did represent that they searched for the referral cards, and is concerned because
Defendants “did not say whether they searched for any physical copies.” Id. at 15.
Defendants are hereby ordered to certify to Defendants that they searched for physical
copies of such items and the results of said search. At this time, no further sanctions
related to this issue are appropriate.
The Court concludes that the harsh sanctions of default judgment or an adverse
jury instruction are not warranted. While Defendants made many mistakes and were
often uncooperative in attempting to resolve issues raised by Plaintiff, the I find that
they did not act in bad faith. Therefore, I recommend that the Court deny Plaintiff its
requested sanctions of default judgment or an adverse jury instruction. However, I find
that Defendants are responsible for the many issues that arose during the course of
discovery, and conclude that lesser sanctions are appropriate. See Browder, 187 F. Supp.
3d at 1295‐96 (D.N.M. 2016) (“Among [the Court’s] inherent powers is the ability to
fashion an appropriate sanction . . . include[ing], for example: “an award of attorney
fees; an order that the culpable party produce related documents regardless of any
claims of privilege or immunity; excluding evidence or striking part of a partyʹs proof;
allowing the aggrieved party to question a witness in front of the jury about the missing
evidence; and imposing costs for creating a substitute for spoliated data.”) (internal
quotations and citations omitted).
Defendants’ over‐designation of documents as privileged, as discussed above,
constitutes their most egregious discovery violation. Defendants over‐designated
documents in their original privilege and redaction logs, then did so a second time after
conducting their first re‐review, and then did so a third time after conducting their
second re‐review. Despite multiple chances to correct their errors, Defendants
continued to withhold documents and information on an improper claim of privilege.
Because of Defendants’ continued violations, Plaintiff was forced to file a Motion to
Compel and for Sanctions (doc. 445), and a Special Master finally resolved the issue over
a year after Defendants’ produced their initial privilege and redaction logs. Therefore,
Defendants shall pay Plaintiff costs associated with its Motion to Compel and for
Sanctions (doc. 445), which was denied by the Court without prejudice due to the
assignment of the Special Master to resolve the issue. See doc. 453 at 1‐2. Defendants
shall also pay Plaintiff costs associated with its briefing of the issues resolved by the
Special Master’s first Report and Recommendations. See doc. 604. Finally, Defendants
shall also pay Plaintiff’s costs in preparing objections to Defendants’ privilege
designations throughout the course of this lawsuit.
Next, I find that Defendants were negligent in their production of ESI in the
course of litigation. Moreover, their response to the issues raised by Plaintiff were
inadequate to quell Plaintiff’s justifiably rising suspicion. As discussed more fully
above, Defendants committed the following errors in producing ESI:
a. Defendants’ IT department failed to implement the May 2012 litigation hold
on ESI. It is undisputed that Defendants’ IT department did not implement
the litigation hold on Defendants’ Live Exchange Server at that time, and it is
uncertain whether the IT department even implemented the March 2013
litigation hold at any point.
b. Defendants failed to ensure that the export process would create quality
information for use in litigation. Defendants failed to notice T Systems’s error
until Plaintiff asked for the location of an email which it believed should have
been located within the Gerard PST. Defendants should have ensured that
the exports were conducted successfully and immediately performed a
recollection of any exports which either resulted in negative expansion or
produced logs containing an error message.
c. Defendants, through T Systems, likely either used a hard drive containing
dirty target media or conducted a recollection on a hard drive which
contained email fragments from a previous failed collection.
d. Defendants, through T‐Systems and Mr. Narvaez, failed to properly record
the chain of custody for the hard drives containing the server PST exports.
e. Defendants, through T Systems and Mr. Narvaez, failed to accurately
describe the collection method used to export the Gerard PST. Mr. Narvaez
described a client‐side collection, yet the logs demonstrate that he actually
conducted a server‐side collection.
f. Defendants failed to discover the export logs until March 2017, which was
several months after Plaintiff began questioning the efficacy of Defendants’
expert procedures and the existence of such logs. This delay necessitated
Plaintiff’s filing of the Motion for Sanctions without the benefit of a crucial
piece of evidence.
g. Defendants’ collected documents from the wrong Mike West, which caused
the Court to order a second deposition of Mike West as well as additional
depositions of other employees in order to follow‐up on information gathered
during the second Mike West deposition.
Considering all of this evidence in conjunction, I find that Defendants’
negligence resulted in many of the errors in producing ESI which caused Plaintiff to
believe the instant motion to be necessary. While this negligence does not support the
severe sanctions of default judgment or an adverse jury instruction as requested by
Plaintiff, a lesser sanction against Defendants is warranted and would “serve the
interest of justice.” In re Rains, 946 F.2d at 733. Therefore, I recommend that Defendants
be ordered to pay Plaintiff 75% of the costs associated with its Motion for Sanctions (doc.
673),6 including all fees paid to expert witnesses to prepare reports and testify at the
However, this total shall not include the fees and costs associated with the preparation and filing of the
motions in limine found at docs. 697 and doc. 699.
Plaintiff’s motion for sanctions seeks dispositive relief and, in the alternative,
relief related to the conduct of the trial. Those requests fall within the authority of the
presiding judge to grant or deny. See 28 U.S.C. § 636(b)(1). Consequently, the
undersigned has herein recommended denying the severe sanctions but instead
granting costs associated with the motion for sanctions. Both these recommendations
are subject to de novo review should a party file written objections with the Clerk
pursuant to 28 U.S.C. § 636(b)(1). If these recommendations are accepted by the
presiding judge, a subsequent order will direct the filing of affidavits outlining the costs
and fees to be charged to Defendants and will set a timeline for objections to such
In contrast, the ruling above directing Defendants to pay the costs associated
with privilege over‐designation relates to a pre‐trial matter. Consequently, the
undersigned possesses the authority to order those costs under 28 U.S.C. § 636(b)(1)(A).
While that order may of course be appealed to the presiding judge, there is no need to
await the ordering of affidavits. Therefore, within ten days of the filing of this
document, Plaintiffs shall file an affidavit outlining expenses ordered in connection
with the privilege over‐designation. Defendants’ objections to the amount claimed, if
any, shall be filed within ten days of the filing of the affidavits.
IT IS SO ORDERED.
GREGORY B. WORMUTH
UNITED STATES MAGISTRATE JUDGE
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