In EEOC v. Formel D USA, Inc., No. 23-11479 (E.D. Mich. Sept. 12, 2024), Michigan Magistrate Judge Curtis Ivy Jr. ordered Defendant to “produce the litigation hold notice, the date the notice was sent to employees, and the names of all recipients of the notice” after he found that “remedial measures are warranted to cure” the spoliation of cellular telephone data.

Case Discussion and Judge’s Ruling

In this case involving claims of sexual harassment, the EEOC accused defendant of failing to preserve emails, laptops, and cellular telephone data of four custodians—Stadie, Klingler, Thompson and Littleton and claimed it and the plaintiff was prejudiced by the spoliation. Defendant failed to preserve Stadie’s and Klingler’s work cellular telephones and laptops, and also failed to preserve Thompson and Littleton’s emails and their cellular telephones and laptops (who were plaintiff’s supervisors). As a sanction, the EEOC sought the following:

• Defendant to produce the litigation hold notice to relating to Farran to EEOC, including dates and recipients of the notices, kinds and categories of information the employees were instructed to preserve and collect, and any actions employees were instructed to take;
• Defendant shall retain a forensic examiner to determine the timing and cause of the missing ESI and whether it can be recovered; and
• The Court allows the EEOC to take a Rule 30(b)(6) deposition regarding the missing ESI at Defendant’s expense.

Defendant claimed that there was a backup system failure resulting in loss of Thompson’s and Littleton’s emails. And, at the hearing, defendant’s counsel explained that cellular telephones and laptops are unavailable for these four individuals because Defendant does not have a policy of preserving employee’s telephones or laptops and that the information on laptops is stored on the servers, so the laptops themselves are unnecessary. As Judge Ivy stated: “There is no admissible evidence in the record supporting Defendant’s position.”

In analyzing the duty to preserve, Judge Ivy stated: “Defendant had a duty to preserve the ESI of individuals involved in the alleged harassment or retaliation and the investigation as early as August 28, 2018, but no later than September 7, 2018. On August 28th, Plaintiff texted Stadie that she was contacting her lawyer about not being called back to work. Stadie forwarded the complaint via email to the human resources director…On September 7, 2018, Plaintiff emailed two persons in Defendant’s human resources department asking about why there had been no work for her and to inform them of unwanted and inappropriate sexual advances from one of her supervisors…Between September 7 and September 10, 2018, Defendant sought legal advice in anticipate of potential litigation related to the complaints of harassment against Littleton.”

Continuing, Judge Ivy stated: “The Court cannot say that Defendant took reasonable steps to preserve text messages from the human resources personnel (Stadie and Klingler) and the two employees directly involved in the harassment or investigation (Thompson and Littleton). The record shows no attempt to preserve cellular telephone data. Defendant’s lack of a policy to preserve cellular telephone data does not absolve it of responsibility to preserve ESI under the federal rules…As late as September 7, 2018, Defendant anticipated litigation and thus had a duty to preserve telephone communications from these key custodians.”

He also said: “As for the lost emails, operation of an electronic information system is one consideration in deciding whether Defendant took reasonable steps to preserve the ESI. Discussed at length below is Defendant’s method of preserving emails on a server in Germany. Saving emails on a server is a reasonable and usually effective step at preserving them. Defendant cannot explain why Thompson’s and Littleton’s emails were lost during a shift in cloud storage while other email accounts were preserved. It is understandable that the EEOC is suspicious of the loss of the two most key persons in Plaintiff’s claims.”

Noting that “Plaintiffs are prejudiced by the loss”, Judge Ivy stated in regard to the request for litigation hold notices: “Even if the litigation hold notices were not discoverable, ‘particularly when a party has made an adequate showing that the material is protected by the attorney-client privilege or the work product doctrine, litigation letters may be discoverable upon a finding of spoliation.’”

So, Judge Ivy stated: “The Court will require Defendant to produce the litigation hold notice, the date the notice was sent to employees, and the names of all recipients of the notice within 14 days of this Order. Once the EEOC has the list of names, it may inquire into the actions taken in response to the notice. At this time, the Court does not compel disclosure of any other communications between Defendant’s employees and counsel concerning the litigation hold notice. That said, if information surfaces that there was intent to destroy evidence, the ruling may change.”

Judge Ivy also ruled on other disputes, including ordering defendant to produce certain emails using the search terms specified by the EEOC, but with some limitations to ensure relevance, such as requiring connectors for search terms like “Alicia.” And he stated regarding defendant’s self collection of ESI: “counsel cannot merely rely on custodians to self-collect ESI. Rather, counsel must ‘test the accuracy of the client’s response to document requests to ensure that all appropriate sources of data have been searched and that responsive ESI has been collected—and eventually reviewed and produced.”

So, what do you think? Are you surprised that the Court ordered Defendant to produce the litigation hold notice? 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. See Kelly Twigger discuss the case here!

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