Judge Doherty, in the Western District of Louisiana, characterized the current state of the law (and technology) as follows:
“The common law spoliation doctrine, its nuances and application—along with the duties it imposes on both litigants and prospective litigants, and the ramifications for failing to comply with its requirements—is in a state of development and flux throughout the nation, primarily triggered and fueled by the radical technological developments in information creation, storage, and sharing, none of which could have been imagined when the applicable Federal Rules of Civil Procedure were first contemplated. The internet, cloud, and computer programs, all are profoundly impacting discovery, its costs and management, particularly as businesses continue to change their manner and method of communicating; their creation and storage of information and documents, and their abilities to retain and delete that information at the touch of a button. This technology continues to evolve at such a rapid pace it has far outreached the existing applicable law, both jurisprudential and statutory. The questions and inquiry of whether a party deliberately destroyed an alleged defective widget are quite different from those inherent in whether and how one might have failed to manage and maintain hard copies resting in a filing cabinet, which are quite different from those inherent in whether, or how, one might have failed to omit from the ordinary course of deletion, documents found only on a hard drive and, likely, will be quite different from those inherent in the question of whether or how document information existing only in the virtual reality of ‘the cloud’ or the next inevitable technological advance, was retained or eliminated. However, at the core of all such inquiries is, and will remain, the fundamental questions of what information is generated; how that information is stored; whether there was or should have been a legal obligation to retain that information; and if so, whether that legal obligation was honored; and, if not, why not; and ultimately, whether prejudice actually flows from that failure and how one goes about proving prejudice from the absence of information. The ever expanding universe of available information and documents possibly subject to discovery, and the ever expanding ways that information and those documents can be created, stored, transmitted, retained and omitted, and, in fact, perhaps exist in an ever more ‘virtual’ world of information, would have been inconceivable only a few decades ago, however, have at their core certain common inquiries. The Fifth Circuit has not had the opportunity to consider these dramatic technological changes and their effects, if any, on the doctrines governing destruction of more tangible evidence, which, often by their nature, were not subject to sophisticated storage and ‘retention policies,’ when determining application of these principles in this Circuit. Therefore, this Court’s analysis will address both longstanding jurisprudence, as well as the persuasive guidance found in opinions issued by its sister courts both in the Fifth Circuit and its sister Circuits, addressing the specific and unique interplay between information storage and destruction and the ever evolving technology as that interplay relates to the judicial process …. Within the analysis of spoliation, as an evidentiary matter, when the relevant conduct is not readily addressed by Fed.R.Civ.P. 37, the Courts rely upon the inherent powers of the Court to govern their actions as to sanctions. Due to the self-evident apparent risks associated with the exercise of inherent powers by a Court, both the United States Supreme Court and the Fifth Circuit are clear, a Court should not impose the nature of sanctions requested by the PSC, unless there has been a specific finding of bad faith on the part of the person or entity against whom sanctions are being considered …. This Court, in its initial ruling, noted the distinctions between Fed.R.Civ.P. 37 and the jurisprudence surrounding the PSC’s claim of spoliation—the former usually not requiring a showing of bad faith or willful abuse of the judicial process for sanctions to be imposed when violated, the latter when grounded within the inherent powers, more often requiring a showing of bad faith or willful abuse of the judicial process for the type of sanctions requested by the PSC to flow. The former is more often directed to attorney conduct, but, also, embraces party conduct; the latter, more often embracing party conduct; the former, more often addressing conduct once the parties are before the Court by way of litigation, the latter, more often addressing conduct occurring before the parties are formally before the Court. However, the distinctions are not hard and fast rules. Indeed, the facts of this matter act to blur these suggested distinctions.”
“This Court finds for the reasons given in its preliminary ruling, and for reasons given in this ruling, as well as the evidence presented at trial, that Takeda, the party, engaged in conduct designed to hide certain information relevant to the risks of, development of, and marketing of its product Actos® that would be relevant to litigation surrounding the use of Actos® and to hide its conduct relevant to that destruction and deletion of files. Takeda’s conduct both preceded filing of suit in the Allen case—and any MDL suit—and, also, continued after the filing of the Allen suit, or the first filing among the MDL cases, and, also, continued into and through general discovery, motion practice, and the Allen trial. Additionally, certain of the noted conduct, but certainly not all, was presented to the Court by way of Takeda’s agents within the MDL litigation, i.e. Takeda’s counsel. As noted, this Court has and continues to defer ruling on the PSC’s allegations that Takeda’s enrolled counsel—as distinct from Takeda’s in-house counsel or Takeda as a corporate entity—violated Fed.R.Civ.P. 37. Thus, this Court’s focus, at this juncture, is Takeda’s, as a corporate entity, alleged violations of Fed.R.Civ.P. 37 and the jurisprudence surrounding the PSC’s claim of spoliation and sanctions….”
The Court allowed evidence of spoliation to go to the jury “based upon Takeda’s violation of Rule 37 as well as Takeda, the corporate entity’s, willful abuse of the judicial process under the Court’s inherent power. This Court notes, again, the majority of evidence supporting the issue of spoliation also supports the issue of punitive damages and would, for that reason, have gone before the jury in that context.…”
The court gave an instruction to the jury which culminated in: “I instruct you that you are free to infer those documents and files would have been helpful to the plaintiffs or detrimental to Takeda, if you feel the evidence you have heard supports that inference I instruct you that you are free to infer those documents and files would have been helpful to the plaintiffs or detrimental to Takeda, if you feel the evidence you have heard supports that inference.”
Based on the Court’s findings that Takeda, the corporate entity itself, violated Fed.R.Civ.P. 37 “with the positions taken with this Court within this litigation,” the court further ordered that:
- Takeda shall continue at its sole cost to reconstruct all deleted files and a timeline and review process for oversight by the Court shall be established with the involvement of the Special Masters, the PSC, and Takeda. This timeline and review process shall contain periodic reporting by both parties to the Special Masters and periodic review by this Court by way of reporting by the Special Masters to the Court. Consequently, this Court directs all parties and the Clerk of Court to direct all future discovery disputes to the Article III Court and this Court will refer discovery matters to the magistrate judge on an issue by issue basis.
- The Court DEFERS, until completion of the above noted process and determination of the final impact and cost of Takeda’s conduct, a determination of attorney’s fees arising out of Takeda’s violation of Fed.R.Civ.P. 37 and bad faith spoliation of evidence, allowing the PSC, at the appropriate time, when full knowledge is available as to those costs, to re-urge this issue.
- The Court will, however, at this juncture, entertain within a separate filing and request by the PSC, for shifting to Takeda, the specific costs, including attorney’s fees, incurred by the PSC of all third party discovery—that would not have otherwise been conducted—and which was required to establish the violation of Fed.R.Civ.P. 37 or to establish spoliation.
- Should the PSC determine a more meaningful 30(b)(6) deposition is required, this Court will so order and orders that all reasonable costs of this deposition, including attorney’s fees, shall be borne by Takeda. Furthermore, Takeda’s designation of representative(s) shall be submitted to this Article III Court no later than one month before the deposition(s) in order for this Court to ensure the representative(s) selected have the requisite personal corporate knowledge to respond to the areas of inquiry identified. After the conclusion of that/those 30(b)(6) deposition(s)—should the PSC deem it appropriate, after a careful comparison of the responses then given, against those given by Mr. Regard, the Court would entertain a request that all or part of all reasonable costs, including attorney’s fees, as well as all costs of the Special Master’s participation, directly incurred by the PSC in the actual taking of the 30(b)(6) deposition(s) to which Mr. Regard responded, as well as relevant participation in the discovery interplay surrounding the 30(b0(6) deposition with the magistrate judge, be shifted from the PSC to Takeda.
- All attorney’s fees shifted, for these purposes only and exclusively, shall be at an agreed to rate, or at the equivalent defense counsel rate charged for their participation in the noted matters.
- All other requests for sanctions as to Takeda’s counsel—remain DEFERRED.
In re Actos, MDL No. 2299, 2014 WL 2921653 (W.D.La. June 23, 2014).
See also In re Actos, MDL No. 2299, 2014 WL 5461859 (W.D.La. Oct. 27, 2014) (approving a ratio of 1:25 of compensatory damages to punitive damages, resulting in an award of punitive damages against Takeda in the amount of $27,656,250.00, and against Lilly in the amount of $9,218,750.00).