You've probably seen a number of headlines about Samsung being sanctioned [PDF] by the magistrate judge in Apple v. Samsung, for not retaining emails early enough. FOSSPatents put out an article,1 implying doom and gloom for Samsung, as he usually does when he writes about Android. His headline proclaimed that Samsung now has a credibility problem with the jury.
Not yet, it doesn't. There's a lot more to this story than FOSSPatents told you in that article. First, Samsung has filed for de novo review of the magistrate's order, so we haven't reached The End of that story yet. Samsung has also filed a motion [PDF] asking for an equal adverse inference jury instruction, if the review fails to reverse the magistrate's order. Samsung points out that Apple also failed to retain emails from the date the magistrate chose as the one to go by, August of 2010, that Apple didn't issue an order to retain documents until it filed this lawsuit in April of 2011. Why, then, should only one party be sanctioned, Samsung asks?
Jump To Comments
Here's the opening paragraph of Samsung's De Novo Review motion:
PLEASE TAKE NOTICE THAT, pursuant to Local Rule 72-3, Fed. R. Civ. P. 72(b), and 28 U.S.C. § 636(b)(1)(B), Samsung will and hereby does move this Court for relief from portions of the July 24, 2012 Order Granting-In-Part Apple’s Motion to Adverse Inference Jury Instruction. (Dkt. 1321.) In an order that directly conflicts with the ITC decision rejecting the same arguments, Magistrate Judge Grewal applied the wrong standard to conclude that Samsung’s preservation obligation attached in August 2010; failed to apply the same rules to Apple as he did to Samsung; erroneously ignored Samsung’s arguments that Apple was required to establish prejudice and failed to do so; and adopted a proposed instruction that wrongly imposes mandatory findings on the jury. Because a Magistrate Judge lacks statutory authority to impose an adverse inference jury instruction, this Court must engage in de novo review, which will establish that this “order,” if followed, will constitute reversible error invalidating any victory which Apple might achieve.
The title of the filing is "SAMSUNG’S MOTION FOR DE NOVO DETERMINATION OF DISPOSITIVE MATTER REFERRED TO MAGISTRATE JUDGE, IN THE ALTERNATIVE, MOTION FOR RELIEF FROM NONDISPOSITIVE PRETRIAL ORDER OF MAGISTRATE JUDGE", but that's because it's arguing that the order was dispositive, but just in case, it argues for relief from it if the judge doesn't agree it is dispositive, as footnote 1 explains:
1 In the alternative Samsung appeals his ruling pursuant to Local Rule 72-2, Fed. R. Civ. P . 72(a), and 28 U.S.C. § 636(b)(1)(A). If the Court reviews the “order” as resolving a nondispositive motion, it should be subject to “independent, plenary review of purely legal determinations by the magistrate judge.” Lerma v. URS Federal Support Services, 2011 WL 2493764, at *3 (E.D. Cal. 2011) (citing Osband v. Woodford, 290 F.3d 1036, 1041 (9th Cir. 2002) (de novo review of magistrate judge rulings on issue of law)). Moreover, the Magistrate Judge plainly adopted facts set forth in Apple’s motion without even analyzing the contrary evidence Samsung presented, meaning that even his factual findings should be reviewed with “special scrutiny”. Silver v. Executive Car Leasing Long-Term Disability Plan, 466 F.3d 727, 733 (9th Cir. 2006). For example, the Magistrate Judge accepted Apple’s contention that Joon-Il Choi did not produce any emails (Order at 20:4-6), despite evidence presented by Samsung that 547 emails were produced with Joon-Il Choi as custodian. (Alex Binder Decl., Dkt No. 987-39, ¶ 10. See also Raymond Warren Decl., Dkt. No. 987-66, ¶¶ 4-8 (explaining a processing issue that delayed the production of Mr. Choi’s email)).
What does dispositive mean? The motion tells us:
A magistrate judge’s order is dispositive if it “conclusively determine[s] the disputed question . . . [that] is properly considered a claim or defense of a party.” U.S. v. Rivera-Guerrero, 377 F.3d 1064, 1068-69 (9th Cir. 2004). The “order” finds “as a matter of law, that Samsung failed to preserve evidence after its duty to preserve arose” and that the jury should be instructed to apply corresponding presumptions – findings that are dispositive of Apple’s spoliation claim. It bears on all of Samsung’s claims and defenses because it directs the jury to presume the “lost evidence was favorable to Apple.” (Order at 24.)
Mistakes of fact and law are always appealable. At the very end, if not granted relief before, Samsung can raise this issue on appeal after the trial is over, but it would prefer to handle it now and avoid having it be a factor at trial.
It all came about because the judge picked a date, August 23, 2010, whereby he felt Samsung should have known that litigation was going to happen. What is the duty to retain all about? The magistrate's order explained:
The common law imposes the obligation to preserve evidence from the moment that litigation is reasonably anticipated. The bottom line is that there is no mathematical formula. When you reasonably expect to be sued, your duty to preserve begins. When is that, though? When do you know?
Apple argued successfully that Samsung had to know litigation was inevitable as of early in August of 2010, when Apple did a presentation for Samsung intended to show that it believed Samsung was infringing some Apple patents.
Since Samsung knew it wasn't going to change its products, Apple argued, Samsung must have known litigation would follow. Samsung argued that the proper date was the date Apple chose, April of 2011, because there had been negotiations with Apple on disputes before, and they'd managed to settle them without lawsuits, and back in 2010, it had no idea which claims Apple would use even if it did sue later on.
What the magistrate found compelling against Samsung was that after the presentation by Apple, Samsung in fact did issue an order to retain documents to some of its employees on August 23, 2010, but Apple felt there weren't enough emails saved, that some must have been lost. The notice told the employees that unless the ongoing negotiations were successful, litigation was reasonably likely. What the magistrate didn't like was not following up afterwards to make sure those employees were retaining everything they should. And he took that as an admission and ruled Samsung had a duty to preserve from that date onward:
Individually, and certainly collectively, these facts support imposition of some form of sanction. Samsung’s failure to issue sufficiently distributed litigation hold notices on August 23, 2010, and Samsung’s failure to monitor its custodial employees’ preservation efforts in the face of its biweekly destruction policy once litigation holds issued, warrants sanctions. The court is mindful, however, that any sanction must be the least drastic available to adequately mitigate the prejudice Apple suffered.
So here we are.
Normally a judge won't sanction without finding a culpable state of mind. The magistrate even referred to the usual three elements considered:
There is not complete agreement about whether spoliation sanctions are appropriate in any given instance, and, more specifically, whether an adverse inference instruction is warranted. The majority of courts use some variation of the three-part test set forth by Judge Scheindlin in Zubalake IV for determining whether to grant an adverse inference spoliation instruction. That test is as follows: “[a] party seeking an adverse inference instruction (or other sanctions) based on the spoliation of evidence must establish the following three elements: (1) that the party having control over the evidence had an obligation to preserve it at the time it was destroyed; (2) that the records were destroyed with a ‘culpable state of mind;’ and (3) that the evidence was ‘relevant’ to the party’s claim or defense such that a reasonable trier of fact could find that it would support that claim or defense.”
I left out the footnotes, which you can read in the PDF.
This judge, however, decided that bad faith wasn't a required element; it is enough if Samsung showed a "conscious disregard" of its retention obligations, he decided, and he thought that bar was reached by Samsung continuing to use an email system he felt was inadequate and that Samsung should have known was inadequate from an earlier case. That's one of the items Samsung finds fault with, that he more or less struck out on his own.
It was intended as a rather mild adverse inference jury instruction, I gather, because the judge didn't find bad faith on Samsung's part, in that the instruction tells the jury that it's up to them to decide if it matters at all anyhow. But if they think it matters, they can assume that relevant materials that could have helped Apple have been lost. And that could be serious. Here's the magistrate's language:
The court finally turns to the appropriate language for an adverse inference instruction in this instance. In the absence of any finding of bad faith, and the court’s finding that Samsung acted with conscious disregard of its obligations, or willfully, the court orders the jury be instructed as follows:
Here's what FOSSPatents wrote:
Samsung has failed to prevent the destruction of relevant evidence for Apple’s use in this litigation. This is known as the “spoliation of evidence.”
I instruct you, as a matter of law, that Samsung failed to preserve evidence after its duty to preserve arose. This failure resulted from its failure to perform its discovery obligations.
You also may presume that Apple has met its burden of proving the following two elements by a preponderance of the evidence: first, that relevant evidence was destroyed after the duty to preserve arose. Evidence is relevant if it would have clarified a fact at issue in the trial and otherwise would naturally have been introduced into evidence; and second, the lost evidence was favorable to Apple.
Whether this finding is important to you in reaching a verdict in this case is for you to decide. You may choose to find it determinative, somewhat determinative, or not at all determinative in reaching your verdict.117
117 See Johnson v. Wells Fargo Home Mortgage, Inc., 635 F.3d 401, 422 (9th Cir. 2011) (“We cannot conclude that the District Court abused its discretion or otherwise erred in ordering this [adverse inference jury instruction] sanction. Indeed, the District Court’s sanction, which permits the jury to decide if any documents were destroyed when Johnson’s hard drives were reformatted, strikes us as precisely the kind of flexible and resourceful sanction order that district judges should be encouraged to craft. We therefore affirm the sanction order.”).
At 1 AM local time, Magistrate Judge Paul S. Grewal just entered an order that
considerably ups the ante for Samsung's persuasive efforts at the trial
starting next Monday. The jury will receive an adverse inference instruction
with respect to Samsung's spoliation of evidence by failing to retain relevant
messages on its corporate email server even at a time when litigation was
"reasonably foreseeable". In essence, the jury will be told that Samsung failed
to comply with its obligations to preserve evidence, and the jury may (though
it need not) presume that relevant evidence that would have been favorable to
Apple was destroyed. This must be a nightmare for a trial lawyer who tries to
enhance his client's (and demolish his adversary's) credibility. And yet,
FOSSPatents, when Samsung filed its motion for equal sanctions on Apple, called it ridiculous2 to even file such a motion:
There are very smart and serious people at work, and this is a strategically important lawsuit for a huge industry, but Samsung's motion bears an eerie resemblance to a child telling its parents that its sibling was guilty of the same behavior it was just punished for. "He too did that." If it will have the effect on the jury that he predicted in his first article, is it unreasonable to try to fix it? The judge ended by calling his instruction a "modest, optional adverse jury instruction", which is why it doesn't live up to the first FOSSPatents article, on the one hand, but on the other, to Samsung, it's far from modest or optional, and thus it's certainly not ridiculous to try to fix it.
I would not make a remark like that if Samsung's motion was at least remotely reasonable. But the objective is transparent, and even before Apple files its reply I can see a number of reasons for which the motion makes no sense whatsoever except that Samsung may hope that a U.S. court will always want to avoid being seen as applying double standards in a major commercial dispute between its own country's and an allied country's most valuable companies. But a ridiculous motion is still a ridiculous motion, and I don't think Judge Koh and Judge Grewal will hesitate to deny a motion that lacks merit.
It's clear that Samsung brings this motion because it's afraid of the impact of the spoliation-of-evidence instruction on its credibility in the jury's eyes. If Samsung won the same kind of instruction against Apple, the jury might think that they're both equally untrustworthy, though in practical terms the lost emails on Samsung's part were most likely very relevant to the willfulness question while it's a safe assumption that even if any emails were lost on Apple's part, they wouldn't make a difference.
Time will tell about how the judges will view the motions. But it's never safe to assume anything in litigation. In court, it's about evidence, not assumptions. And how reckless would Samsung be, if it's worried about the effect on the jury, if it *didn't* try to fix it? That's why it's not ridiculous at all to file it. Samsung thinks the order is factually and legally in error. In its appeal motion, Samsung says this:
D. The Magistrate’s Adverse Inference Instruction Imposes An Impermissible If you noticed the judge's footnote 117 at the end of his jury instruction, he seems to know that it's up to the jury to decide, not the judge, in that he quotes Johnson that says so. And yet, Samsung points out, he doesn't really leave it up to the jury, instead *telling* them what to assume.
Irrebuttable Factual Finding And Is Inconsistent With The Authority
On Which He Relies
The sole authority cited by the Magistrate Judge to support the imposition of a definitive finding of spoliation on the jury (Order at 24 n.117) is Johnson v. Wells Fargo Home Mortgage, Inc., 635 F.3d 401 (9th Cir. 2001). Johnson does not support the instruction that he ordered. In that case, the Court approved an adverse inference instruction that asked the jury to find whether evidence was destroyed. See Johnson, 635 F.3d at 422 . Here, by contrast, the Magistrate Judge ordered that the jury be instructed that (1) “Samsung has failed to prevent the destruction of relevant evidence for Apple’s use in this litigation.”; (2) “as a matter of law . . . Samsung failed to preserve evidence after its duty to preserve arose” because it failed “to perform its discovery obligations”; and (3) it could “presume” both that “relevant evidence” – that is, evidence that “would have clarified a fact at issue in the trial and otherwise would naturally have been introduced into evidence” – “was destroyed after the duty to preserve arose” and also that “the lost evidence was favorable to Apple.” Thus, while portions of the instruction purport to leave it up to the jury to “presume” that Apple had met its burden, Samsung’s ability to rebut this presumption is rendered illusory by the first two paragraphs of the instruction, which as quoted above conclusively instruct the jury that “Samsung has failed to prevent the destruction of relevant evidence for Apple’s use in this litigation.”
There is no support for imposing such mandatory findings on the jury. In Johnson, the authority relied on by the Magistrate Judge, the district court did not impose mandatory findings at all. Instead, the court correctly left it to the jury to determine whether evidence was destroyed; only if that was shown would the jury be allowed to presume that the evidence was unfavorable to Johnson. See Johnson, 635 F.3d at 422 (quoting instruction and explaining that it “permits the jury to decide if any documents were destroyed”) (emphasis added). Under Ninth Circuit law, “[a] fact finder may draw an inference against any party that destroys or despoils evidence, but that inference is permissive rather than mandatory.” Dae Kon Kwon v. Costco Wholesale Corp., 2012 WL 605808, at *1 (9th Cir. 2012) (emphasis added). The Magistrate’s proposed instruction here clearly errs in taking the critical decision of whether evidence was destroyed – and if so, whether it was relevant – away from the jury, despite finding no bad faith on the part of Samsung. See, e.g., Pace v. Nat’l R.R. Passenger Corp., 291 F. Supp. 2d 93, 97 (D. Conn. 2003) (instructing jury that “[i]f you find that: (1) the records at issue would be relevant . . . ; (2) that the records were destroyed . . . then you may infer that the contents of these destroyed records would be harmful to the railroad’s position in this case.”). Even the factually distinguishable Mosaid case, also cited by Judge Grewal, imposed a clearly permissive inference. See Mosaid Techs., Inc. v. Samsung Elecs. Co., 348 F. Supp. 2d 332, 334 (D. N.J. 2004) (instructing the jury: “If you find that defendants could have produced these e-mails, . . . and that the e-mails would have been relevant . . . you are permitted, but not required, to infer that the evidence would have been unfavorable”).
In sum, Judge Grewal (1) exceeded his authority, (2) unfairly applied different standards to Samsung and Apple, (3) provided no basis for his findings on relevance and prejudice, and (4) ordered an instruction that is internally inconsistent and contradicted by the authority that he cites. His decision should be reversed, lest it undermine the fairness of the trial and ensure that any verdict in Apple’s favor must be reversed.
It's not too late for Samsung to try to get this fixed, either, just because the trial has already begun, because there are normally motions filed even during a trial, and the jury instructions aren't given until the very end of the trial, after all the evidence has been presented and the closing arguments are done. So there's plenty of time. You saw that in the Oracle v. Google trial, after all.
I can't imagine Samsung failing to file it, in addition to the review motion. At the very worst, we'll see Samsung raise it on appeal if it ends up losing the case. (By the way, if you think that's a slam dunk, do read the ruling [PDF] from the Federal Circuit, showing how little both the District Court judge and the appeals court judges think of three of the four Apple patents. The only one the appeals court found worthy of an injunction was the notorious design patent, the rectangle with rounded corners.)
FOSSPatents views it as a kind of copycat motion, calling it a "me too" motion. But it's not that either, in that it's asking for the sanctions only if the separately filed request for de novo review of the magistrate's order is not successful, and also because, as I'll show you in a moment, Samsung is asking for a much stronger language against Apple:
Samsung is separately appealing Judge Grewal’s decision as beyond his authority and contrary to law and fact. If that decision is not reversed after the required de novo review, then Samsung is entitled to have the very same adverse inference instruction given as against Apple as any to be given against Samsung.
The issue is fairness. That's what judges are supposed to dispense, and if both parties failed to preserve evidence, where would the fairness be if the court only sanctions one of them? That's the argument. Does that sound unreasonable to you?
Look what Samsung tells the court [PDF] about Apple's email retention in its Preliminary Statement in its Motion on the subject, from its attached Memorandum of Points and Authorities, page 3 of the PDF:
Holding one party to a legal standard as to which its adversary is excused is manifestly reversible error. Yet that is precisely what is contemplated in Magistrate Judge Grewal’s July 24, 2012 Order. Why, then, did the magistrate judge sanction only Samsung? Because only Apple at that point had presented a motion seeking such relief:
Magistrate Judge Grewal concluded that the relevant date triggering Samsung’s duty to preserve in this case was August 23, 2010. Noting the evidence that Apple did not issue a litigation hold notice until April 2011 (and in many cases, long after), Judge Grewal stated “Samsung has always been free to argue, at the appropriate time, that Apple too is guilty of spoliation.” (Order at 16, n.82.) Now is the appropriate time.
Until this time, Samsung had no occasion to file a motion inconsistent with its position, accepted by the ITC, that neither side had an obligation to preserve evidence based on the discussions between the parties in August 2010. Indeed, if any party was on notice that litigation was likely to result, it was the putative plaintiff, Apple, not Samsung.
If Samsung is to be held to a duty to preserve evidence effective August 23, 2010 by virtue of Apple making a so-called “infringement presentation” to Samsung on August 4, 2010, Apple must be held to the same standard. Because it is undisputed that Apple did not issue any litigation hold notices before April 2011, and because of the same evidence of prejudice—a striking lack of emails from key Apple inventors and other custodians that suggest significant deletion of relevant information—the same spoliation adverse inference instructions issued against Samsung must also be issued against Apple.
On July 24, 2012, Magistrate Judge Grewal issued an order granting Apple’s motion for an adverse inference jury instruction against Samsung based on spoliation of evidence. (See Dkt. No. 1321, hereinafter, “Order”.) In his order, Judge Grewal found that an August 4, 2010 meeting between Apple and Samsung in which Apple accused Samsung of infringement triggered Samsung’s duty to preserve evidence potentially relevant to this litigation. (Order at 15-17.)
Since neither started to retain documents starting at the date the judge has chosen as the key date, their conduct is, in that sense, identical, so why is Samsung being sanctioned, and not Apple too, Samsung is arguing. It even argues that Apple's conduct is worse in two ways, first, because Apple didn't start to retain documents until much later than Samsung, and two, because while Samsung might have believed that the parties could work things out as they often had before, Apple knew before Samsung did that it planned to sue, not just negotiate:
Judge Grewal found that the duty to preserve was triggered by the following:
Apple delivered, in person, a comprehensive summary of its specific patent
infringement claims against specific Samsung products. Whatever hopes Samsung might have subjectively held for a license or other non-suit resolution, this would certainly put a reasonably prudent actor on notice that litigation was at least foreseeable, if not “on the horizon.”
(Order at 16:3-7.) Immediately following the above passage, Judge Grewal wrote a footnote stating that Apple’ s “fail[ure] to issue litigation hold notices in August 2010 is irrelevant to the court’s determination here. Samsung has always been free to argue, at the appropriate time, that Apple too is guilty of spoliation.”
Although in August 2010 Samsung had no way of knowing the intended scope or likelihood of Apple filing this lawsuit in April 2011, Samsung issued a limited litigation hold notice based on Apple’s August 4, 2010 discussions with Apple—good-faith efforts to preserve that Apple has now successfully used against Samsung. (See Order at 13 n.34; 16-17.) That notice did not say that Samsung knew that litigation was likely: it stated that “[i]n light of the recent discussions between Samsung Electronics Co., Ltd. (“Samsung”) and Apple Inc. (“Apple”), there is a reasonable likelihood of future patent litigation between Samsung and Apple unless a business resolution can be reached.” (emphasis added). Judge Grewal simply ignored the italicized words, not to mention the long history of the two companies reaching just such “business resolutions,” effectively punishing Samsung for being more vigilant than Apple regarding protecting potential evidence.
Did you notice the dates? Apple did not issue a litigation hold notice until April 2011. So why does Samsung have a duty of preservation as of August 2010? Why not Apple as well? Or looking at it from a different angle, if Apple’s conduct "shows that in fact litigation was not probable as of August 2010" since it didn't start to preserve documents until the following year, why should Samsung have thought that litigation was probable back in August of 2010 if Apple didn't think it was?
In contrast, Apple—the plaintiff in the initial lawsuit who certainly knew the likelihood of filing its own lawsuit—issued no litigation hold notice at all until after filing its lawsuit in April 2011.1 Even worse, Apple did not issue litigation hold notices to critical designers and inventors of the very patents it asserted were infringed until January 2012 and later.
See Declaration of Alex Binder, filed concurrently (“Binder Decl.”), Exs. 1-2.
Maybe because of the email system Samsung used? Maybe because Samsung produced relatively few emails from some employees, leading to the presumption that there must have been some lost? Well, here's what Samsung says Apple was doing when it wasn't saving documents, from its adverse inference motion, pages 4-6:
In contrast, Apple—the plaintiff in the initial lawsuit who certainly knew the likelihood of filing its own lawsuit—issued no litigation hold notice at all until after filing its lawsuit in April 2011. Even worse, Apple did not issue litigation hold notices to critical designers and inventors of the very patents it asserted were infringed until January 2012 and later. (Binder Decl., ¶¶ 8-12.) For example, four Apple design witnesses did not receive litigation hold notices until January 11, 2012. (Binder Decl., ¶ 8; Exs. 1-2.) One Apple inventor, Brian Huppi, did not receive a hold notice until January 11, 2012. (Id. at ¶ 9.) In fact, Apple did not complete delivery of over 25 percent of its litigation hold notices until after January 30, 2012. (Id. at ¶ 27.) Steve Jobs, a named inventor on 8 patents, never received a hold notice. (Id. at ¶ 10.) And many of the individuals listed on Apple’s own Initial Disclosures in this case did not receive hold 7 notices until September and December 2011, and in some cases January 2012. (Id. at ¶ 12.)...
Samsung then presents charts showing the evidence that is missing from Apple, using the same measuring stick the magistrate used against Samsung. The judge "pointed to evidence of 'statistical contrast' presented by certain Samsung witnesses who did not appear to have produced sufficient numbers of emails," Samsung writes, but "even more serious statistical contrasts are evidenced by Apple’s own production", and that's what the charts are for. What's good for the goose, is the point.
As Judge Grewal himself found, Apple was aware of the scope of its claims even before Samsung was. See Order at 16 (“Apple delivered, in person, a comprehensive summary of its specific patent infringement claims against specific Samsung products. Whatever hopes Samsung might have subjectively held for a license or other non-suit resolution, this would certainly put a
reasonably prudent actor on notice that litigation was at least foreseeable, if not ‘on the horizon.’”). It was Apple that prepared this presentation (prior to the initial meeting) and Apple that chose to litigate. Under Micron, it would be reversible error—which threatens to infect this entire trial—to impose a duty on the accused and no duty at all on the patentee.
II. UNDER MAGISTRATE JUDGE GREWAL ’S ORDER, APPLE DESTROYED EVIDENCE
WITH A CULPABLE STATE OF MIND
In his Order, Judge Grewal held that although the record did not establish any bad faith on Samsung’s part, an adverse inference instruction can be supported by a lesser showing of “conscious disregard.” Id. at 18:10. He did not base this finding on Samsung’s “prudence and responsibility in regards to its post-complaint preservation efforts” (Order at 16:15-18), but found conscious disregard based on Samsung’s failure “to send litigation hold notices in August 2010, beyond a select handful of employees, when its duty to preserve relevant evidence arose” and its failure to provide “follow-up” until April 2011, after Apple filed its complaint. Id. at 19:1-5. According to Judge Grewal, this “is more than sufficient to show willfulness.” Id. at 19:6.
These arguments apply with far greater force to Apple’s conduct. Apple issued no litigation hold notices until after it filed its complaint, and, as discussed in more detail above, Apple did not issue hold notices to many key inventors and other fact witnesses until months after filing its complaint, despite being in the better position to know that it intended to initiate litigation, and the likely scope of its claims. (See Binder Decl., ¶¶ 7-12.)
The ITC was presented with the same date, by Apple, and the same arguments that Apple used to obtain this order, Samsung points out, and decided that the date the magistrate here chose was not the right starting point, as Samsung points out in footnote 3:
3 Although Apple also raised the August 23, 2010 litigation hold notice in its spoliation motion in the ITC, Judge Pender found Samsung’s preservation obligation was triggered at the “inception of the [ITC] investigation,” not August or September, 2010. (Thomas Watson Decl. ISO Opp. to Apple’s Adv. Inference Mot., Dkt. No. 987-4, Ex. 1, Opinion at 6.) Why didn't Samsung earlier file such a motion?
Samsung had not previously requested an adverse inference instruction because it believed
(and continues to believe) that both parties’ duties to preserve evidence were triggered when Apple filed this lawsuit in April 2011, not in August 2010. But if the magistrate's date is the right one, then the language should be even stronger, Samsung argues, in a jury instruction regarding Apple's failure to preserve from that date:
However, if Judge Grewal’s ruling that the infringement discussions between Apple and Samsung in August 2010 triggered a duty to preserve is upheld, Apple’s undisputed failure to issue any litigation hold notices until after it filed this lawsuit in April 2011 (in contrast to Samsung’s limited litigation hold notices in August 2010), requires that any adverse inference instruction given as against Samsung must be given as against Apple as well. Samsung further requests that, because Apple was the plaintiff-patentee who initiated this lawsuit, the adverse inference instruction as against Apple contain the following
Discovery disputes are very, very common. And parties get sanctioned sometimes, although frankly this magistrate's order is a little odd to me. There's in general a kind of arc of sanctions, depending on how serious it is and whether or not the other side was prejudiced by the failure on the other side.
Apple initiated this lawsuit, and you should presume that it was more reasonable for a party in Apple’s position to foresee litigation than it was for a party in Samsung’s position.
See Micron Tech., Inc. v. Rambus Inc., 645 F.3d 1311, 1325 (Fed. Cir. 2011).
By the way, Apple was recently sanctioned for disobeying this court's order. The order sanctioning Apple [PDF] from the same magistrate, is dated July 11th, and it is for money damages, in an amount yet to be determined.
Here's what the judge says Apple did wrong:
To assess the merits of Samsung’s sanctions request, the court looks to: (1) what it ordered Apple to produce in the December 22 Order and by when; (2) whether Apple complied; and (3) if Apple did not comply, whether Samsung’s requested sanctions are appropriate. As you can see, Apple didn't obey one of the court's discovery orders. So it has to pay Samsung some money.
There is really no question that Apple violated the December 22 Order. In fact, the court’s April 12 Order already said as much.40 The December 22 Order directed Apple to produce transcripts of Apple witnesses, testifying in their employee capacity, in cases bearing a technological nexus to this one. It did not in any way exempt from production relevant transcripts simply because the employee is not testifying in this case.41 Nor did the order apply the “technological nexus” standard to individual transcripts, as opposed to overall cases. Apple contends that its failure is excusable because the meet-and-confer process led Apple to believe something different. But as this court has previously explained, once an order issues, all that is left to do is to comply with the order as written.42 The court cannot tolerate anything less.
To be sure, the court’s December 22 Order was not limited to inventors. But even assuming it did apply only to inventors, as Apple claims to have understood, the record is clear that Apple produced inventor transcripts after April 12, 2012, confirming that Apple failed to comply with even its own limited reading of the order. Moreover, if Apple believed that the December 22 Order was unclear on this point, the proper course was for Apple to seek clarification immediately, as Apple has shown it knows how to do. It was not to read self-serving limitations into the order. Under Apple’s tortured reading of the December 22 Order, Apple could avoid producing highly probative—and even damning—testimony from earlier cases simply by withholding a witness from its trial list. Nothing in the court’s December 22 Order provides for such a result.
Having found that Apple imposed an unreasonable limitation on the December 22 Order, the court also finds that Apple’s violation was not substantially justified. This leaves only the question of whether additional sanctions, beyond these findings, are appropriately levied.
The Ninth Circuit has held that a party’s failure to produce documents as ordered is considered sufficient prejudice to establish sanctionable conduct.43 Moreover, in the Ninth Circuit prejudice from unreasonable delay is presumed.44 In considering alternatives, the court returns to the Ninth Circuit’s familiar five-factor inquiry: “(1) the public’s interest in expeditious resolution of litigation; (2) the court’s need to manage its dockets; (3) the risk of prejudice to the party seeking sanctions; (4) the public policy favoring disposition of cases on their merits; and (5) the availability of less drastic sanctions.”45 Where a court order is violated, the crux of the analysis lies in factors 3 and 5—the risk of prejudice to the party seeking sanctions, and the availability of less dramatic sanctions.46
Here, factors 3 and 5 weigh in favor of monetary sanctions, but nothing more. Try as it might, the court cannot find in Samsung’s papers or argument anything specific in the late-produced prior depositions, beyond the delay, that especially prejudiced Samsung.47 In particular, Samsung identifies no further analysis or specific further discovery it requires in order to understand what the transcripts disclosed. And even if there is such testimony, Samsung is of course still able to use it to cross-examine any Apple witness at trial.
Finally, as to the availability of the least dramatic sanction necessary to achieve Rule 37’s purpose, while the fees and costs requested by Samsung are reasonable—and warranted—the remainder of Samsung’s proposal, especially prohibiting Apple’s experts from affirmatively relying on the transcripts and their contents, while not permitting testimony to the contrary, strikes the court as unduly burdensome for the trial judge to enforce.
No later than July 22, 2012, Samsung shall identify its requested fees and costs. No later than July 29, 2012, Apple shall pay them.
40 See Docket No. 867 (Apr. 12 Order) at 9 (“Apple must produce all relevant deposition transcripts based on the standard that it itself proffered. This includes, but is not limited to, the eight cases that Samsung has identified and justified as having an undisputed technological nexus to this action. In addition, Apple must produce the deposition transcripts from the 796 ITC Investigation.”).
41 As previously discussed, this order should not be construed as sanctioning Apple for its failure to produce relevant transcripts subject to protective orders or local rules barring their production absent court or third-party approval.
42 See Apple Inc. v. Samsung Elecs. Co., Ltd., Case No. C 11-1846 LHK (PSG), 2012 WL 1595784, at *3 n.16 (N.D. Cal. May 4, 2012) (citing In re Google Litig., Case No. C 08-03172 RMW (PSG), 2011 WL 6951972, at *5 (N.D. Cal. July 8, 2011) (“Once the order compelling production issued, the focus of this court's appropriate inquiry necessarily shifts to compliance.”)).
43 See, e.g., Computer Task Group, Inc. v. Brotby, 364 F.3d 1112, 1116 (9th Cir. 2004); Payne v. Exxon Corp., 121 F.3d 503, 508 (9th Cir. 1997); Adriana Intern. Corp. v. Thoeren, 913 F.2d 1406, 1412 (9th Cir. 1990).
44 See In re Phenylpropanolamine (PPA) Products Liability Litig., 460 F.3d 1217, 1236-37 (9th Cir. 2006) (“Prejudice from unreasonable delay is presumed. Failure to produce documents as ordered is sufficient prejudice, whether or not there is belated compliance.”) (citing In re Eisen, 31 F.3d 1447, 1452-53 (9th Cir. 1994)); see also G-K Properties v. Redevelopment Agency of the City of San Jose, 577 F.2d 645, 647 (9th Cir. 1978) (noting that “in this era of crowded dockets,” willful disregard of court discovery orders—including “last minute tender of relevant documents”—merits sanctions based on the prejudice to the opposing party and the imposition on other litigants of the courts).
45 See Valley Eng’rs v. Electric Eng’g Co., 158 F.3d 1051, 1057 (9th Cir. 1998).
46 See id. (“We have said that where a court order is violated, factors 1 and 2 support sanctions and 4 cuts against case-dispositive sanctions, so 3 and 5, prejudice and availability of less dramatic sanctions, are decisive.”).
47 See Docket No. 968 (Samsung’s Mot. for Sanctions) at 13-14; Docket No. 1088 (Samsung’s Reply in Supp. of its Mot. for Sanctions) at 9-12.
In case you've been reading headlines and simplistic analysis of this case and came away with the wrong idea that Samsung was singled out for bad conduct in discovery, you can see that is not the case. And even this sanction order against Apple is complicated in that Apple doesn't like the bill Samsung came up with, and it has filed some objections to the amount. So it's not finally determined yet either in every particular. Like I always say, law is complex, and it ain't over 'til it's over.
What is the core problem that results in so many unfortunate articles about this case? The biggest problem, Samsung has told the court, is what appears to it to be a coordinated campaign to blacken Samsung's name in the media. Perhaps that's why the UK court told Apple recently it had to publicly tell the world that Samsung did not copy Apple.
Anyway, this should be enough for you to see that the law is complex, this case is complex, and the parties are each represented by fabulous law firms that are fighting in what I'd call cut-to-the-bone, hard-hitting style, and so it isn't really suited to dramatic predictions of doom for either side. The complexity means that nothing is settled yet, not even this adverse jury instruction tussle. You have to wait until you reach the end of the particular issue to write supportable headlines about the effect it will or won't have, if only because none of this might end up happening. If, for example, Samsung wins its review, there will be no jury instruction against Samsung, and if that happens, Samsung's alternative relief, an equal instruction against Apple, won't happen either.
My point is, it's too early to know, and so if someone does predict or imply some earth-shaking results from a motion won or lost, probably there's more to the story, or, as in this case, considerably less.
And don't forget, even after the jury renders a verdict, whoever loses is certain to appeal, so please get ready for a long story. There's miles and miles to go.