Threat of Destruction Justifying Third Party Preservation of ESI

Companies have a strong interest in making sure proprietary information does not go to competitors. Warning signs are employees who email confidential information to their personal accounts and then delete the sent email from their work email account. The following is one such case where third party email providers were ordered to preserve email created by the Defendants to avoid the destruction of relevant ESI.

United States District Judge Edward Davila addressed the duty to preserve in a case where two employees allegedly misappropriated confidential information. Parties [at the latest] have a duty to preserve evidence when a complaint is filed. OOO Brunswick Rail Mgmt. v. Sultanov, No. 5:17-cv-00017-EJD, 2017 U.S. Dist. LEXIS 2343, at *3 (N.D. Cal. Jan. 6, 2017), citing Echostar Satellite LLC v. Freetech, Inc., No. C-07-06124 JW, 2009 U.S. Dist. LEXIS 131412, at *2 (N.D. Cal. Jan. 22, 2009).

In order for a court to order stricter preservation, there must be a showing of “significant concern that potentially relevant evidence will be destroyed . . . .” Id., citing Bright Sols. for Dyslexia, Inc. v. Doe 1, No. 15-CV-01618-JSC, 2015 U.S. Dist. LEXIS 117252, at *2 (N.D. Cal. Sept. 2, 2015).

Courts consider the following factors on whether to order preservation:

(1) Threats to preservation of the evidence;

(2) Irreparable harm likely to result to the party seeking preservation; and

(3) The capability of the custodian to maintain the evidence sought to be preserved.

Brunswick at *2, citing Echostar, 2009 U.S. Dist. LEXIS 131412, at *2.

The Court found the Plaintiff had met the requirements for preservation. Brunswick at *3-4. First, there was the risk that the relevant email could be deleted from the Defendants’ personal email accounts hosted by Google and Rackspace. Brunswick at *3. There was the risk the hosting providers could delete the relevant email pursuant to their data destruction policies, if the Defendants moved the email to their “trash” folders. Brunswick at *3-4.

The second element was met, because the destruction of these emails would cause irreparable harm to the Defendant. Brunswick at *4. The third element was met, because it was “within the reasonable capabilities of Google and Rackspace to preserve material associated” with the Defendants. Id.

The Plaintiffs were to serve the preservation order on the hosting providers, which in turn had 72 hours to comply with the court order. Brunswick at *8. The Third Parties were to notify the Court in writing of the preservation.

Bow Tie Thoughts

Misappropriation cases where there are emails with confidential information can get crazy fast. These cases often have very specific timeframes with known email addresses in play for preservation. It is not often email service providers get preservation orders, but it can happen. I believe the typical case is where the parties themselves are ordered to preserve the ESI and not the hosting provider.