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E-⁠Discovery Case Law Library
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Case shelved under Reasonableness

“Mortal Mistake” in Delaying Preservation Activities Leads to Sanctions

Fishman v. Tiger Natural Gas
N.D. Cal. November 20, 2018
Why This Case Is Important

A party’s duty to preserve potentially relevant data extends to contracted third parties. A delay in this communication can lead to spoliation and sanctions.

Overview:

In this class action lawsuit for fraudulent telemarketing, the plaintiffs motioned for discovery sanctions against the defendants for failing to keep recordings of sales pitches after the duty to preserve was triggered.

Before filing the initial complaint, the plaintiff sent multiple demand letters notifying the defendants “not destroy evidence in its possession,” including audio recordings of sales pitches that allegedly showcased misrepresentations made by defendants. The defendants were required by law to keep these recordings. However, when plaintiffs requested these audio recordings, the defendants claimed they did not have any call recordings aside from the recording with the named plaintiff in this case, Fishman.

As a result, the plaintiffs motioned for “an order prohibiting defendants from introducing any evidence in an attempt to show that any putative class member received a sales call different from the sales call received by Fishman.”

Ruling:
  • E-Discovery Sanction Granted. The court granted a permissive adverse inference, meaning the jury would be informed of the spoliation and be permitted to decide whether “the call made to Fishman was representative of the sales pitches made to the putative class members.”
  • Reasonable Steps to Preserve Not Taken. It was a year after the initial demand letter was received that the defendants told their telemarketing firm to preserve the audio recordings at issue. The court noted, “this delay has turned out to be a mortal mistake.”
  • Defendants' Excuses Rejected. The defendants go on to claim that plaintiffs’ early demand letters didn’t specifically ask for these audio recordings. The court rejects this argument, stating a reasonable party in the defendant’s situation would have preserved the audio recordings.
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Download the PDF version of Fishman v. Tiger Natural Gas case law alert here. 

Legal Analysis
On Fishman v. Tiger Natural Gas
Anne Bentley McCray, Partner, McGuireWoods
BY
Anne Bentley McCray, Partner, McGuireWoods

Despite the fact that there was no finding of intent, the court ordered what is essentially an adverse inference instruction, proving, once again, that the Amended Rule 37 is not being taken very seriously by the Judiciary. Companies must be mindful of this and ensure that holds are issued timely and to the right persons and entities—even third-party vendors.

Anne McCray's Bio
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