Margaret Nielsen

Last month, in In Re Pradaxa (Dabigatran Extexilate) Products Liability Litigation, a federal judge in the Southern District of Illinois ordered the defendants in a multi-district litigation (MDL) product liability case to pay nearly $1 million in sanctions for repeated and bad faith discovery violations, primarily based on the defendants’ failure to adequately preserve electronic files and text messages of key custodians. The court attributed many of the discovery failures to the “gross inadequacy” of the defendants’ litigation hold.

While the court’s decision to issue sanctions in this case is likely limited to the specific facts of this case – namely, the defendants’ reported multiple and repeated discovery failures – the case nonetheless demonstrates certain important considerations for litigants in assessing their preservation duty: (1) the need for potentially broad preservation efforts in large, complex cases; (2) the need to reassess and possibly expand preservation notices as litigation develops; (3) the potential value of coordinating with the other side, and possibly the court, on the scope and recipients of preservation notices; and (4) the potential need for specialized e-discovery counsel as challenges begin to accumulate.

Throughout its decision in In Re Pradaxa, the court expressed frustration that “[a]lmost since its inception, this litigation has been plagued with discovery problems” and that “there is a cumulative effect that the Court not only can but should take into account.” In fact, these sanctions were not the first imposed on defendants in this litigation, and the court was clearly influenced by what it characterized as “egregious” misconduct and “contumacious disregard for ‘the Court’s’ authority” by the defendants. The court’s findings, and the degree of sanctions imposed, should be understood in that context.

The defendants initially issued a litigation hold that was narrowly tailored to cover potential custodians for the first 30 Pradaxa product liability cases that were filed. The court found, however, that by a few months later, the defendants knew that nationwide litigation encompassing hundreds of additional cases was imminent and that at that time the defendants could no longer justify the narrow litigation hold. The court concluded that the defendants’ failure to adopt a company-wide litigation hold for certain classes of employees (particularly for all Pradaxa sales representatives) once it knew nationwide litigation was imminent violated their duty to preserve. In particular, the court found the defendants violated the courts’ orders and acted in bad faith by:

  • Failing to preserve files for a key witness;
  • Failing to preserve files for sales representatives and other employees who interact with physicians until over one year after the duty to preserve was triggered;
  • Failing to provide their e-discovery vendor with proper access to all folders on a large shared drive, resulting in significant portions of ESI being “missed” for production purposes;
  • Failing to instruct custodians to preserve text messages and failing to disable auto-delete for text messages.

Notably, the court rejected the defendants’ argument that the proportionality requirement of Rule 26 of the Federal Rules of Civil Procedure allowed the defendants to implement a narrow litigation hold because it would have been unreasonable to preserve ESI for all Pradaxa sales representatives. In rejecting this argument, the court noted that while it may have been unreasonable to issue a litigation hold on the entire class of sales representatives when the litigation involved only a few plaintiffs, once it was known that the Pradaxa litigation would expand nationwide, the defendants could no longer justify a narrower litigation hold. The court explained that “the duty to preserve is not a passive obligation; it must be discharged actively.”

The court also rejected what it characterized as the defendants’ unilateral decisions to narrowly construe their preservation obligations and independently assess burden and proportionality. The court noted that the defendants failed to seek relief from the court for preservation and production obligations they later claimed to be unreasonable or burdensome. Instead, the court found that the defendants had “taken a too narrow and an incremental approach to its ‘company-wide’ litigation hold” and chose incrementally to place holds on certain classes of employees or unilaterally chose not to place an employee on hold if the employee was not considered “important enough” or specifically named by the plaintiff.

With respect to the loss of text messages, the court concluded that the failure to intervene against an automatic deletion process placed the defendants outside the “safe-harbor” provision of Rule 37(e). The defendants argued that while sanctions may be appropriate for failing to turn off auto-delete functions for email, sanctions are not appropriate for failing to stop the auto-delete function for text messages because text messages are a less prominent form of communication and that production of text messages is too burdensome. The court rejected this argument, concluding that the duty to preserve applies to all electronically stored information and does not distinguish between more or less prominent forms of communication. The court also emphasized the fact that the defendants directed their employees to communicate by text message for business purposes, undermining their claim that they were unaware that relevant custodians had work-related text messages.

Ultimately, the court concluded that, based on the pattern and “totality” of discovery misconduct in the case, the defendants had acted in bad faith. The court imposed monetary sanctions of $931,500 ($500 per case) and left open the door to consider further sanctions “once it learns whether the plaintiffs have been so prejudiced by this misconduct as to be unable to fully prosecute their cases.”

As Elizabeth Figueira previously noted, and this case demonstrates, some federal judges have suggested that broad preservation efforts may be appropriate, particularly in class action matters, to avoid a spoliation issue down the road. However, in this case, the defendants never sought relief from the court regarding their preservation duty.

As this opinion demonstrates, parties that act unilaterally in determining the scope and reach of their preservation efforts may run into problems later if the other side challenges those efforts, particularly when coupled with a pattern of misconduct, missed deadlines, and misrepresentations. Parties may be best served by coordinating with adversaries on what is required to comply with their preservation duty and having their efforts approved by the court up front through a stipulated preservation order or by moving for a protective order. Parties also should remember to reassess the sufficiency of their preservation efforts as litigation unfolds and potentially expands beyond what was anticipated when those efforts were undertaken.

Finally, if a party finds itself accused of repeated discovery failures involving ESI as the defendants apparently did here, it may be prudent to consult special e-discovery counsel. This could have two significant benefits. First, counsel with particular experience and training dealing with ESI—such as preserving and producing text messages and file shares—may enable a party to devise cost-effective approaches to resolving ESI-related disputes. Or failing that, such counsel may be able to craft the sort of showing courts increasingly require when invoking proportionality and objecting to preservation or production requests on grounds of burden and expense. Second, adding a fresh face—and one with particular expertise in the areas of concern to the other side and the court—may go a long way in showing the court that the party is taking the concerns seriously and earnestly trying to comply with its obligations. This alone could help avoid a finding of bad faith, which can make a big difference in the sort of sanctions the court may impose.