Court Ruling: Defendant's "Staggering Degree" of Failure to Preserve ESI Means Sanctions

Court Ruling: Defendant's "Staggering Degree" of Failure to Preserve ESI Means Sanctions

Legal consequences abound at every corner in healthcare. Each month this blog discusses examples of what those consequences can be.

The legal complications that can manifest for providers as a result of “lost” electronically stored information (ESI) is a familiar topic for Legal eSpeaking readers. As I have noted previously, per Federal Rule of Civil Procedure 37(e), if a party to litigation has lost ESI, it might avoid the imposition of remedial measures or sanctions if, among other things, the party had taken “reasonable steps” to avoid that loss. In Franklin v. Howard Brown Health Center, No. 17 C 8376 (N.D. Ill. Oct. 4, 2018), the court found that the defendant had done anything BUT take reasonable steps to avoid the loss of ESI. In fact, “the defendant has had to concede that, at the very least, it bollixed its litigation hold—and it has done so to a staggering degree and at every turn.” So… what went wrong?

The plaintiff in Franklin requested that the defendant produce “emails and text messages.” It turned out that the plaintiff was actually looking for instant messages, the purported method by which he had been harassed by the defendant’s personnel. The defendant produced two of these and could not produce any others. The plaintiff moved for the imposition of sanctions under Rule 37(e). Here are some of the findings of the court in ruling on the motion:

  • The defendant’s general counsel had issued an untimely and ineffective legal hold that gave “no indication what employees were to do with documents or electronic files and information that had to be preserved, or how they should be preserved, and there was no indication they should forward or deliver the information, files, etc., to defendant’s legal department.”
  • No attorney supervised the preservation efforts of the defendant’s employees. Rather, employees decided “on their own what was relevant and what wasn’t.”
  • Additional instant messages had existed on a hard drive of a former employee of the defendant but the hard drive had been wiped.
  • The plaintiff’s work computer, on which the additional instant messages were presumably stored, could not be located even though it had been supposedly preserved.
  • Any instant messages that had existed on the computers of the plaintiff’s alleged harassers—other employees of the defendant—had been auto-deleted.

Based on these and other findings the court concluded that the defendant had been grossly negligent in its failure to preserve the additional instant messages and recommended that the parties “be allowed to present evidence and argument to the jury regarding the defendant’s destruction/failure to preserve electronic evidence in this case, and that the jury be instructed as the trial judge deems appropriate.”

This ruling was made by a United States magistrate judge, to whom the plaintiff’s motion was referred by a United States district judge. The magistrate judge’s ruling was made as a recommendation to that district judge, who will review the recommendation and issue a final ruling on the sanctions motion.

The magistrate judge’s findings of fact and recommendation holds several lessons for both attorneys and health information management professionals. The most prominent are:

  • The importance of a comprehensive legal hold notice
  • The need to secure any and all electronic devices that may contain relevant ESI.

A failure to do both may lead to unpleasant consequences!


**Editor’s Note: The views expressed in this column are those of the author alone and should not be interpreted otherwise or as legal advice.

Ron Hedges, JD, is a former US Magistrate Judge in the District of New Jersey and is a writer, lecturer, and consultant on topics related to, among other things, electronic information. He is a Senior Counsel with Dentons US LLP.
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