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Case shelved under Reasonableness

Special Master Recommends Default Judgement, and Why the Judge Said No

Daniel Small v. University Medical Center
D. Nevada August 9, 2018
Why This Case Is Important

Even when egregious, intentional e-discovery conduct leads to the spoliation of potentially relevant data, the court will be wary to issue case dispositive sanctions.

Overview:

In this class claim for unpaid wages and overtime compensation, the court addressed whether sanctions were warranted for the defendant violating its discovery obligations and failing to preserve large amounts of potentially relevant information, including 26,000 text messages and 38,000 documents.

After nine months and eight case management meetings, it was “painfully apparent” to the court that defendants “were failing in their efforts” to produce useable responsive data based on the plaintiffs’ requests. A special master was appointed at the defendant’s expense.

The special master found “multiple failures to implement timely preservation procedures, and to identify and collect information from relevant responsive repositories, resulted in the destruction of ESI.” Based on the defendant’s poor e-discovery tactics, the special master recommended case dispositive sanctions.

Ruling:
  • Court Does Not Adopt Special Master’s Recommendation. After a substantial amount of time, the court declined to issue a case dispositive default judgement based on the defendant’s e-discovery conduct, choosing rather to issue an adverse jury instruction and monetary fines.
  • Lesser Sanctions Cure the Prejudice Based on Rule 37(e). The court justified its penalty stating, “Although the court finds plaintiffs have been prejudiced by the loss of data from key repositories and custodians, the loss has not threatened to interfere with the rightful decision of the case on its merits given the large volume of ESI the special master was able to ensure that UMC [the defendant] produced.”
  • Key Data May be Stored in Multiple Locations. For all data modified or lost, the court was hopeful that this data “is likely to be found in other locations.”
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Download the PDF version of Daniel Small v. University Medical Center case law alert here. 

Legal Analysis
On Daniel Small v. University Medical Center
Anne Bentley McCray, Partner, McGuireWoods
BY
Anne Bentley McCray, Partner, McGuireWoods

The Magistrate’s Report and Recommendation in this case was written BEFORE the Rules were amended in December 2015, so the court was right here to reject the recommendation to impose the harshest punishment. The court rightly determined that negligence or gross negligence in ESI preservation does not warrant dispositive sanctions and that mitigating factors such as proportionality and whether other sources of data are available should be considered when determining appropriate sanctions.

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