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February 28, 2018 Practice Points

Nonparty ESI Must Sometimes Be Preserved or Risk Rule 37(E) Sanctions

The music may have died, but not the ESI issues.

By Andrew M. Toft

For some of a certain age, October 20, 1977, the day the plane carrying the band Lynyrd Skynyrd crashed in Mississippi, was the day the music died. Thanks to infighting between family members of those killed, a surviving band member, and moviemakers out to make money off of the band’s name, and spoliation of electronically stored information (ESI), Ronnie Van Zant, Inc., et al. v Artimus Pyle, et al., 17-CV-03360-RWS (S.D.N.Y. August 28, 2017), shows that ESI issues never die and lawyers must act to (1) preserve the parties’ ESI, and (2) preserve the ESI of nonparties under the control of a party.

Artimus Pyle was a drummer for Lynyrd Skynyrd who survived the 1977 crash. In 2016, Pyle got involved in a film project about the band, a project allegedly in violation of a 1988 consent order from previous litigation that restricted how the parties to the consent order could use the name Lynyrd Skynyrd; the names, images, and likeness of two band members killed in the 1977 crash; and the history of Lynyrd Skynyrd. Pyle communicated regularly by text with Jared Cohn, a director and screenwriter hired to work on writing and directing the film. While Cohn was paid by one of the companies named as a defendant in the 2017 litigation, Cleopatra, and reported to one of Cleopatra’s employees, he was not an employee of Cleopatra. Later in 2016 the plaintiffs sent the defendants a copy of the 1988 consent order and a cease-and-desist letter. After learning about the continued production of the movie in late April 2017, on May 5, 2017, the plaintiffs filed a lawsuit against two Cleopatra entities and Pyle—but not against Jared Cohn. In mid-May 2017, after the litigation was filed, Cohn switched cellphone providers and got a new cellphone. Some data from the old phone was backed up, but Cohn’s text messages, including those sent and received from Pyle, were not preserved.

On June 30, 2017, the plaintiffs requested that the court issue an adverse-inference sanction against the defendants for spoliation of the text message evidence between Cohn and Pyle. Rule 37(e) (1) permits a court to sanction a party "[i]f electronically stored information that should have been preserved in the anticipation or conduct of litigation is lost because a party failed to take reasonable steps to preserve it, and it cannot be restored or replaced through additional discovery."

Cleopatra argued that it could not be sanctioned for Cohn’s actions, and contended that Cohn’s phone was not within its control. The concept of control has been construed broadly and documents are considered to be under a party's control if the party has the practical ability to obtain the documents from another, irrespective of legal entitlement. The court determined that while Cohn was a non-party, at a practical level his text messages were under Cleopatra's control. Cohn was under contract with Cleopatra to work on the film, and evidence established Cohn worked closely with Cleopatra for over a year. Cohn had participated in the litigation by providing documents and gave a deposition during discovery. Cohn also had a financial interest in the outcome of the litigation because he was entitled to a percentage of the film's net receipts, which would be zero if the plaintiffs prevailed. While the court recognized that determining practical control is not an exact science, "common sense" indicated that Cohn's texts with Pyle were within Cleopatra's control, and in the face of pending litigation over Pyle's role in the film, the texts should have been preserved. An adverse inference as to the missing text messages was presumed.

Andrew M. Toft is an attorney in Denver, Colorado.

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