We are careful when discussing discovery sanctions, particularly spoliation, for a simple reason. The companies we represent that make medical products tend to have allegations about failing to produce discoverable information in the course of the litigation against them. Indeed, there is a style of litigating against drug and device companies, and other corporate defendants, that focuses on burdensome discovery, discovery-on-discovery, and motions on discovery and discovery-on-discovery in the hopes that the defendants will settle before plaintiffs get to their holy grail, default judgment entered in their favor. The willingness of some state courts to head down this road has been a major driver in fights over litigation tourism, including personal jurisdiction and the enactment of CAFA. Even in federal court, some MDLs—like Actos and Pradaxa—have seemed to feature allegations of spoliation by the defendants more than anything like the merits of plaintiffs’ claims. In other litigations, it looks like the plaintiffs have pushed a similar spoliation angle, but the courts have not bought it. Overall, when you represent a company in a bunch of cases, you know there will be lots of documents to produce and continuing claims that you did not produce enough. If the issues in the litigation implicate events in the distant past and/or a number of entities in different places, then the chances increase that spoliation allegations will accompany the complaints about non-production.
On the other side of the “v,” it often seems like a different story. We have tracked decisions imposing requirements on plaintiffs suing drug or device manufacturers to maintain documents, access electronic sources, produce documents, etc., and we can say that significant sanctions against a plaintiff for failing to produce documents are rare and a spoliation instruction against a plaintiff is rarer. Purcell v. Gilead Sciences, Inc., No. 17-3523, 2021 U.S. Dist. LEXIS 77379 (E.D. Pa. Apr. 22, 2021), takes a deep dive into these issues in a False Claims Act case brought by two former sales representatives over the marketing of two of defendant’s drugs. We will jump to the end and state that the plaintiff was assessed relatively small financial sanctions and a spoliation instruction was denied without prejudice while a last-ditch effort was going to be pursued to find some of the missing materials. As we recount a boiled-down version of history and the court’s analysis, we invite the reader to ask the question “how would things be different if the defendant manufacturer and its counsel did what the plaintiff and his counsel did here?” Ask it a few times if you want.
The nature of the Relators’ allegations are not clear, but they clearly implicated the preservation and discovery of text messages they sent while working for the defendant. In fact, one of the relators (we will call her “Relator 1”) produced thousands of text messages, including hundreds to/from the other relator (we will call him “Relator 2”), and attempted to withhold hundreds more. Relator 2 produced five text messages and attempted withhold nine more, all to/from Relator 1. This was a tip off for the defendant. Although the suit was filed in 2017, concerned events starting before then, and he kept working for defendant until 2018, the few texts Relator 2 produced started in July 2019. This was another tip off. Despite an order requiring the parties to preserve documents and making text messages discoverable, multiple representations of relators’ counsel about compliance, letter writing, motions practice, hiring an independent third-party vendor, a deposition of Relator 2, and two hearings—the latter of which included experts for both sides—Relator 2 still had not produced an additional text message one year later. Yet, the record was quite clear that otherwise discoverable messages existed when the suit was filed—by which time the relators certainly had to retain relevant evidence—and were created while the case was pending but before discovery began after the case was unsealed. That is the short version. While spoliation inferences and instructions under Fed. R. Civ. 37(e) require the court to find that “the party acted with intent to deprive another party of the information’s use in the litigation,” the reality is that a party—particularly a large corporate defendant—will have to come forward with a convincing explanation about the lack of bad intent. Here, the court found that Relator 2 and his counsel had offered no such explanation. Even though the court found that they had failed to comply with its orders and misrepresented compliance to the defendant, it determined the record was insufficient to find that Relator 2 had acted with such bad intent.
The longer version (even our abridged version of it) sounds way worse. Relator 2 had five electronic devices and cloud storage as potential sources of electronic information. The main focus was the smartphone he used from 2013 through March 2019, when he replaced it with a new model and put the old phone in a drawer in his house. He never produced a text message from the first phone, which he had used in connection with his employment for defendants over five years, including almost a year after bringing suit. The old phone did not go to his counsel until after opposing counsel had complained about the adequacy of production and been assured that all reasonable steps had been taken to preserve documents and produce them, including Relator 2’s texts. In the interim, it had been wiped. The independent vendor found forty-two unproduced texts in the backup for his new phone, but efforts to get texts from the old phone from any of the obvious sources had failed. The mysterious wiping may have been—again, Relator 2 and his counsel offered no benign explanation, just ignorance and non-compliance—from one of Relator 2’s daughter taking phone from the drawer, changing the passcode through the cloud service, and trying to use it as her own phone, which resulted in a number of failed attempts to access the phone before providing it to a vendor. Of course, the old phone and the various back-up sources were known to be sources of evidence in a pending federal lawsuit, but the relators’ counsel did not obtain them until late in the game. Even when the court held the first hearing and ordered relators to facilitate the third-party forensic review, relators’ counsel somehow failed to turn over the new phone or information to allow cloud access for the old phone. We could go on, especially if we wanted to highlight how a corporate defendant could never get away with such apparent shenanigans.
Instead, we will go to the rulings on the two types of sanctions sought, basically costs under 37(b) and spoliation under 37(e). On the former, the court found lots of non-compliance by Relator 2 and his counsel. For instance, they “did not comply with their obligations to preserve any possible evidence,” counsel “did not ensure compliance with [the ESI order] by undertaking reasonable steps to ensure all of his electronically stored information including his text messages shall not be permanently deleted or altered,” and they “offer no explanation for this failure to preserve since August 2017 and disregard of our [ESI order] despite their statement of compliance on March 18, 2020.” Id.at **22-24. Such non-compliance (and misrepresentations) caused the defendants to incur significant costs and fees, for which relators’ counsel was ordered to pay up to about $20,000 plus the full cost (instead of half) of the third-party vendor’s work. In addition to that not being much given the conduct at issue, it was also payable by counsel not Relator 2. As the court found, “[w]e have no basis to impute the Relators’ counsel’s strategy on disclosing partial information to Mr. Purcell and thus do not impose a monetary sanction on him nor may his lawyers seek or obtain repayment from their clients.” Id. at *25. This may change, though, as further sanctions were possible once the third-party vendor finished its work. That work could change the court’s finding—with our italics—that there was “no basis today to find Mr. Purcell” was personally responsible for wiping the old phone or preventing access to its backup. Id. at *22.
That could also change the denial without prejudice on the second type of sanctions sought. While the court found that it could not meet the 37(e) requirement of Relator 2’s “intent to deprive” the defendant of the text messages from his old phone—the one he used during the relevant time period, including for a year and a half after he brought suit—it did find Relator 2 and his counsel “acted in conscious disregard (either through oversight or negligence) in their preservation of electronically stored information.” Id. at *28. It also noted they had no benign explanation for how or when the old phone got wiped. If further evidence shows that Relator 2 or his lawyers “intentionally deleted these texts as opposed to his family using and changing the activation code and  backup” in a way that led to accidentally deleting everything from the old phone, then an order for an adverse instruction would probably be issued. Id. at *33. As we suggested at the start, we prefer litigation to be decided on the merits rather than on motions about discovery. That preference applies across the board, but we do look forward to evening out the playing field when it comes to the rules for discovery and potential sanctions on both sides of the “v.”