Ryan M. Billings
rbillings@kmksc.com
(414) 962-5110
In a recent decision, the Seventh Circuit Court of Appeals affirmed a trial court’s order dismissing a plaintiff’s complaint and imposing six-figure sanctions awards because of the plaintiff’s intentional destruction of electronically stored information (“ESI”). The decision, which involved extensive analysis of a sophisticated instant messaging application, underscores the critical importance of satisfying the duty to preserve relevant information, as well as the need to retain experienced and technologically adept counsel to ensure that preservation obligations are met and to pursue the failure to preserve information by a litigation opponent.
Christopher Pable (“Pable”) was a software engineer for the Chicago Transit Authority (“CTA”), and Mike Haynes (“Haynes”) was Pable’s supervisor. CTA and several other transit authorities use software known as the BusTime system, which is a real-time transit tracking application developed by Clever Devices, Ltd. (“Clever Devices”).
Pable discovered a cybersecurity vulnerability in BusTime, and reported it to Haynes (all facts described herein are as found by the Court of Appeals). Rather than reporting this issue up CTA’s chain of command (or involving counsel), Haynes and Pable decided to “test” the vulnerability on Dayton, Ohio’s transit system, which also used the BusTime software. Haynes and Pable did so by inserting a fake report of a bridge closure, which was then publicly posted to the Dayton transit authority’s social media feed.
Clever Devices complained about this test to CTA, who quickly terminated Pable and Haynes. Pable then sued CTA and Clever Devices, alleging they had violated whistleblower protections under federal law by terminating him. However, Pable’s and his counsel’s conduct before and during litigation ultimately led to the dismissal of Pable’s claims and hefty monetary sanctions.
The sanctionable conduct began shortly before Pable’s termination. CTA informed Pable and Haynes that it wanted to interview them, and Pable and Haynes met at a coffee shop to discuss the upcoming interviews. During that meeting, Haynes decided to delete a conversation thread he had with Pable regarding the test on a smartphone application called Signal. Signal is an encrypted messaging service that allows users to communicate by instant message, voice calls and video calls. It is similar to the popular application WhatsApp, but Signal purports to have stronger encryption protection and allows the user numerous options to delete messages. For instance, Signal permits users to set messages to auto-delete after they are read by recipients.
While Haynes admitted he deleted the Signal thread from his own phone, the Signal messages also were deleted from Pable’s phone, and exactly how that occurred was highly disputed. Pable testified that the messages on his phone were automatically deleted when Haynes deleted the message thread. However, Signal’s Chief Operating Officer testified that one user’s deletion of messages on Signal did not remove those same messages from another user’s device. Pable then changed his story, claiming that, for “security reasons,” he had configured Signal to delete messages on his phone when anyone else on a thread deleted messages on their own phone. CTA subsequently learned that Pable later changed his Signal settings to delete messages automatically 24 hours after they were read, resulting in the deletion of numerous messages that Pable had with Haynes after their coffee-shop meeting.
CTA demanded that Pable create a forensic image of his phone to enable attempts to recover the lost messages. Pable’s counsel eventually agreed to perform an image, but the image created was only 0.2 gigabytes. Given its small size, CTA suspected that a full forensic image had not been made. Pable’s counsel initially insisted that a complete image had been made, but later claimed that, due to a “misunderstanding,” the vendor who performed the image had run a set of search terms on the data on the phone, and only imaged the data responsive to the search terms, rather than the entire phone. That vendor, however, testified that Pable’s counsel had expressly instructed them only to copy the data responsive to the search terms. A second image of Pable’s phone was created, revealing additional messages and 25 gigabytes of data, but many of the messages Pable and Haynes exchanged on Signal were never recovered.
CTA moved for dismissal of Pable’s complaint and monetary sanctions. The trial court ultimately dismissed Pable’s case, ordered that Pable and his counsel each be held 50% responsible for paying $75,175.42 in sanctions for failing to preserve electronic information, and that Pable’s counsel pay an additional sanction of $53,388 for unreasonably and vexatiously multiplying the proceedings. Pable and his counsel appealed the decision to the Seventh Circuit Court of Appeals. In a recent decision, the Court of Appeals affirmed the lower court’s rulings.
Federal Rule of Civil Procedure 37(e) permits issuance of the most serious sanctions, such as dismissal, only if the party who deleted evidence did so with the intent to deprive the other party of the deleted information. As a matter of first impression in the Seventh Circuit, the Court of Appeals held that a lower court’s finding of intentional destruction is to be reviewed on appeal under a clear error standard. This sealed Pable’s and his counsel’s fate, as it is challenging to prove clear error. The Court of Appeals found that the trial court did not clearly err in determining that Pable intentionally deleted the messages, especially considering the inconsistent reasons Pable offered as to why the messages were deleted. Accordingly, the Seventh Circuit affirmed the trial court’s dismissal of Pable’s complaint.
As to the $75,175.42 in sanctions awarded against Pable and his counsel, Pable argued that the Seventh Circuit has never expressly ruled that a court may issue monetary sanctions under Rule 37(e). Acknowledging that this was another matter of first impression, the Court of Appeals emphasized that trial courts have broad latitude in fashioning sanction remedies, and affirmed the joint sanctions.
The Court of Appeals also affirmed the $53,388 in sanctions issued against Pable’s counsel. These sanctions were awarded under 28 U.S.C. § 1927, which provides that an attorney who unreasonably and vexatiously multiplies proceedings may be required to pay the other side’s costs and attorneys’ fees. Applying an abuse of discretion standard of review, the Seventh Circuit held that the trial court did not abuse its discretion in awarding sanctions on the basis that Pable’s counsel misrepresented that the first imaging of Pable’s phone was a complete image, refused to correct his misrepresentation, and baselessly opposed CTA’s efforts to require a second imaging. Thus, the Court of Appeals affirmed in full the trial court’s dismissal of the case and the award of more than $128,000 in sanctions against Pable and his counsel.
The Pable case reinforces a number of important lessons. First, a party must be eternally vigilant in preserving information that may be relevant to a legal dispute. Second, counsel investigating the other side’s destruction of evidence must have a thorough understanding of the technology involved. It was only because CTA’s counsel dug deeply into the functionality of Signal that CTA was able to discredit Pable’s explanations. Third, retaining inexperienced or unsophisticated counsel can have drastic consequences. To be sure, Pable engaged in misconduct of his own, but his case was dismissed and he was required to pay hefty sanctions in part because the courts held Pable responsible for the actions of his lawyer. In litigation, choosing the right counsel is essential.
If you have questions concerning preservation of ESI or evidence destruction, or seek representation in procuring or responding to ESI discovery, please contact KMK Attorney Ryan M. Billings at rbillings@kmksc.com or (414) 962-5110.