Court Denies Oracle’s Request for Sanctions for Transferring Data During Duty to Preserve: eDiscovery Case Law

In Oracle USA, Inc. v. Rimini Street, Inc., No. 2:10-cv-00106-LRH-VCF (D. Nev. Sept. 21, 2020), Nevada Magistrate Judge Cam Ferenbach recommended that plaintiff Oracle’s motion against Rimini for sanctions for transferring data pursuant to Rule 37 be denied, finding that “Oracle has not shown that any ESI was lost within the meaning of Rule 37”.

Case Background

In this copyright infringement case associated with a third-party support provider for Oracle’s enterprise software, making unauthorized copies of the software to support its clients, Oracle argued that during the injunction compliance period, Rimini used an Automated Framework subprogram called TransferFiles, “to copy PeopleSoft files from Rimini’s systems to customer-associated environments.”…Oracle also argued that Rimini used a program that destroyed a certain number of files it distributed using TransferFiles, stating “there is no way to determine whether the files Rimini produced are the same as the files it distributed to customers.”  While also arguing that Rimini has a history of spoliating evidence, Oracle did concede that Rimini immediately changed their procedure once Oracle sent them a letter about this issue, and since October 2019 Rimini modified its, “TransferFile tool to preserve the intermediate, duplicate copies at issue”…Still Oracle requested that the Court should draw a rebuttable presumption that the information contained in the spoliated files was unfavorable to Rimini and filed a motion against Rimini for sanctions for transferring data.

Rimini countered that, “[w]hen a Rimini engineer uses TransferFiles to transmit such a file to a client, it creates a new copy on the client’s system while retaining Rimini’s original file”…and argued that it had used TransferFiles since 2013, that Oracle knew about the TransferFiles subprogram, and that Rimini changed the program as soon as Oracle raised the issue.  Analogizing the transfer process to copying text from one file to another where the content is temporarily located in the computer clipboard, Rimini stated that “the result of the TransferFiles process is (at least) two identical copies of a file where only one previously existed.”  Rimini also argued that it did not know, nor could it have reasonably known, that Oracle would seek these temporary files in discovery and stated that it recovered most of the temporary files Oracle claimed were spoliated and that it produced the newly produced temporary files after October 2019 through the end of discovery.

During a status hearing, Oracle argued: 1) that there was no need to take any limited discovery regarding the lost documents from Rimini, 2) that taking third party discovery would delay the proceedings by approximately six months because of the response times, and 3) that there was no guarantee that what currently exists in the files of the customers will be that exact same ESI.

Judge’s Ruling

Evaluating the arguments from the respective parties, Judge Ferenbach stated: “I conclude that Rimini’s analogy, that the missing files are mere transitory, intermediate files (like the transitory copy of words on the clipboard in a word processing application when a user copies/pastes from one document to another) is a credible and good-faith explanation regarding how Rimini’s engineers use TransferFiles to transmit files to a client, and how it creates a new copy on the client’s system while retaining Rimini’s original file. Since I conclude that the missing files are transitory copies, I also conclude that Rimini did not have an obligation to preserve each instance of relevant electronically stored information. This is compounded by the fact that the transitory files were duplicative of the files that already existed on Rimini’s (and the client’s) systems.”


Judge Ferenbach also noted in recommending that Oracle’s motion for sanctions for transferring data be denied: “Oracle did not attempt to take third-party discovery during the discovery period to replace any of the missing ESI at issue. The purpose of the third-party discovery would have been to compare customer copies of the files received from Rimini with those produced by Rimini in discovery. Oracle cited delay (noting that responses from third parties have taken about six months in the past) as one of the reasons it did not take third-party discovery, yet it waited eight months from its last correspondence with Rimini regarding this issue to file the instant motion. The timing of Oracle’s motion, long after the close of discovery, and its blanket rejection of the Court’s (reluctant) invitation regarding potentially re-opening discovery on this issue, supports a finding that the documents at issue are not “lost,” as required by Rule 37(e).”

So, what do you think?  Was Oracle’s motion for sanctions for transferring data valid or did they “blow it” by not filing the motion earlier?  Please share any comments you might have or if you’d like to know more about a particular topic.

Case opinion link courtesy of eDiscovery Assistant, an Affinity partner of eDiscovery Today. You can catch CEO Kelly Twigger’s #caseoftheweek broadcast about this case here!

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by my employer, my partners or my clients. eDiscovery Today is made available solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscovery Today should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

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