Lessons from Brown v. Tellermate
Brown v. Tellermate
Case No. 2:11-cv-1122
U.S. District Court, S.D. Ohio, 2014
U.S. Magistrate Judge Terence P. Kemp recently issued an opinion in the Brown v. Tellermate case which resulted in sanctions including the preclusion of the defendant’s most likely defense strategy. The court imposed these severe sanctions for the defendant not properly identifying and preserving cloud-based data which would have been important to the case.
The case is an employment matter; plaintiffs Robert and Christine Brown were terminated from their sales positions at defendant Tellermate in 2011. The plaintiffs have asserted age discrimination in their complaint, while the defendant maintains the firings were related to performance issues. As evidence of positive performance relative to others, the plaintiffs sought certain information and reports derived from Salesforce.com, the cloud-based customer relationship management (CRM) software often used by sales professionals to track their contacts, leads and sales. All data input into the application is held on Salesforce servers to be accessed at any time by customers.
The defendants, through counsel, put forth a number of strange assertions in an attempt to delay or prevent the production of the Salesforce data. Defense counsel asserted that it could not produce the data because it was not maintained in hard copy format, that it could not print out accurate historical records and that such requests should be directed to the software company and not to the defendant. Defense counsel further stated that the agreement with Salesforce prohibited Tellermate from disclosing the data to any third party. All of these assertions were completely misguided, unfounded or patently untrue.
Aside from the issues with the Salesforce data, there were a number of other discovery issues, including the improper withholding of certain related and relevant documents and an alleged “data dump” production that was sent to the plaintiffs. But the court focuses heavily on the problems connected to the Salesforce data. In short, counsel for Tellermate did not fulfill their discovery-related duties: “… had the right questions been asked of the right people, counsel would have known it as well.” Defendant Tellermate should have created a preservation data set which would have included all potentially relevant Salesforce reports and other data. Both the client and counsel should have reached out to experts with experience in similar cloud-based data. One can imagine a single 10-minute phone call which could have cleared up any ambiguity. In fact, the company employs at least two Salesforce administrators, who should have been able to explain the process of exporting relevant data. The lack of any backups or preservation sets resulted in the spoliation of the relevant data.
What lessons can we take away from all this?
– The investigation and exploration of data systems are important. Clients and counsel need to work together to fully investigate and have at least a base-level understanding of client data and systems. Both lawyer and client should work to involve the right experts, internal or external, who understand how the systems work and how data is stored. Judge Kemp states: “… counsel had an affirmative obligation to speak to the key players at Tellermate so that counsel and client together could identify, preserve, and search the sources of discoverable information.”
– Preservation of relevant data cannot be overlooked. In this case, had Tellermate implemented proper litigation hold and preservation procedures, sanctions possibly could have been avoided with a later production, even if the company had sought to withhold the data on the grounds asserted. Judge Kemp points out: “The failure to take steps to preserve it after the Court’s order to produce it — especially when counsel had already conceded that the information was changing constantly and could not be verified (at least under Tellermate’s approach to preservation, which was to do nothing itself and not to ask Salesforce.com to do anything either) — is just baffling.”
– Cooperation and good faith are imperative in discovery. The opinion details numerous opportunities for counsel to have engaged in discovery discussions in a more meaningful, less obstructionist way. “Parties may still resist producing information if it is not relevant, or if it is privileged, or if the burden of producing it outweighs its value. But they may not, by directly misrepresenting the facts about what information they have either possession of or access to, shield documents from discovery[.]”