Apple Inc. v. Samsung Elecs. Co.

• Decision Date: 25 July 2012
• Docket Number: Case No. C 11–1846 LHK (PSG).
• Citation: 881 F.Supp.2d 1132
• Court: U.S. District Court — Eastern District of California
• Parties: APPLE INC., Plaintiff, v. SAMSUNG ELECTRONICS CO., LTD., a Korean corporation; Samsung Electronics America, Inc., a New York corporation; and Samsung Telecommunications America, LLC, a Delaware limited liability company, Defendants.

881 F.Supp.2d 1132

APPLE INC., Plaintiff,

v.SAMSUNG ELECTRONICS CO., LTD., a Korean corporation; Samsung Electronics America, Inc., a New York corporation; and Samsung Telecommunications America, LLC, a Delaware limited liability company, Defendants.

Case No. C 11–1846 LHK (PSG).

United States District Court,

N.D. California,

San Jose Division.

July 25, 2012.

Michael A. Jacobs, Harold J. McElhinny, Jason R. Bartlett, Jennifer Lee Taylor, Morrison & Foerster LLP, San Francisco, CA, for Plaintiff.

ORDER GRANTING–IN–PART APPLE'S MOTION FOR AN ADVERSE INFERENCE JURY INSTRUCTION

PAUL S. GREWAL, United States Magistrate Judge.

In this patent infringement suit, Plaintiff Apple Inc. (“Apple”) seeks an adverse inference jury instruction against Defendants Samsung Electronics Co., LTD. (“SEC”), Samsung Electronics America, Inc. (“SEA”), and Samsung Telecommunications America, LLC (“STA”) (collectively “Samsung”).¹ Samsung opposes.² At issue is whether Samsung took adequate steps to avoid spoliation after it should have reasonably anticipated this lawsuit and elected not to disable the “auto-delete” function of its homegrown “mySingle” email system.³

Because the answer to this question is no, the court GRANTS–IN–PART Apple's motion for an adverse inference jury instruction.⁴

I. INTRODUCTION

Samsung's auto-delete email function is no stranger to the federal courts. Over seven years ago, in Mosaid v. Samsung, the District of New Jersey addressed the “rolling basis” by which Samsung email was deleted or otherwise rendered inaccessible.⁵Mosaid also addressed Samsung's decision not to flip an “off-switch” even after litigation began.⁶ After concluding that Samsung's practices resulted in the destruction of relevant emails, and that “common sense dictates that [Samsung] was more likely to have been threatened by that evidence,” ⁷Mosaid affirmed the imposition of both an adverse inference and monetary sanctions.⁸

Rather than building itself an off-switch—and using it—in future litigation such as this one, Samsung appears to have adopted the alternative approach of “mend it don't end it.” As explained below, however, Samsung's mend, especially during the critical seven months after a reasonable party in the same circumstances would have reasonably foreseen this suit, fell short of what it needed to do.

II. LEGAL STANDARDS

A. The Court's Inherent Authority to Impose Spoliation Sanctions

Courts are vested with inherent powers arising out of “ ‘the control necessar[y] ... to manage their own affairs so as to achieve the orderly and expeditious disposition of cases.’ ” ⁹ This inherent power has been recognized in American jurisprudence for almost two centuries as essential to the orderly administration of the judicial process.¹⁰ More recently, the Ninth Circuit has explicitly recognized trial courts' “inherent discretionary power to make appropriate evidentiary rulings in response to the destruction or spoliation of relevant evidence,” ¹¹ and that sanctions for spoliation of evidence may be imposed under the court's inherent powers to manage its own affairs.¹² The court's inherent powers includes the ability to levy appropriate sanctions against a party who prejudices its opponent through the spoliation of evidence that the spoliating party had reason to know was relevant to litigation.¹³

B. The Various Forms Spoliation Sanctions May Take

A trial court's discretion regarding the form of a spoliation sanction is broad, and can range from minor sanctions, such as the awarding of attorneys' fees,¹⁴ to more serious sanctions, such as dismissal of claims ¹⁵or instructing the jury that it may draw an adverse inference.¹⁶The court's discretion is not, however, without its limits. Courts must weigh several factors when deciding which type of sanction to impose on a spoliator. Any remedy applied to a spoliator “should be designed to: (1) deter parties from engaging in spoliation; (2) place the risk of an erroneous judgment on the party who wrongfully created the risk; and (3) restore ‘the prejudiced party to the same position he would have been absent the wrongful destruction of evidence by the opposing party.’ ” ¹⁷ Sanctions under these “inherent powers must be exercised with restraint” and should be appropriate to the conduct that triggered the sanction.¹⁸

C. A Litigant's Duty to Preserve Relevant Evidence

The common law imposes the obligation to preserve evidence from the moment that litigation is reasonably anticipated.¹⁹ For example, in Sampson v. City of Cambridge, Md.,²⁰ the defendant's duty arose no later than the date when plaintiff's counsel, prior to filing the complaint, asked the defendant by letter to preserve relevant evidence.²¹ However, a future litigant is not required to make such a request, “and a failure to do so does not vitiate the independent obligation of an adverse party to preserve such information” if the adverse party knows or should know of impending litigation.²²

D. The Scope of a Litigant's Preservation Duties

The duty to preserve evidence also “includes an obligation to identify, locate, and maintain, information that is relevant to specific, predictable, and identifiable litigation.” ²³ It is well-established that the duty pertains only to relevant documents.²⁴ Relevant documents include:

[A]ny documents or tangible things (as defined by Rule 34(a)) made by individuals “likely to have discoverable information that the disclosing party may use to support its claims or defenses.” The duty also includes documents prepared for those individuals, to the extent those documents can be readily identified (e.g., from the “to” field in e-mails). The duty also extends to information that is relevant to the claims or defenses of any party, or which is “relevant to the subject matter involved in the action.” Thus, the duty to preserve extends to those employees likely to have relevant information-the “key players” in the case.²⁵

At the same time, it generally is recognized that when a company or organization has a document retention policy, it “is obligated to suspend” that policy and “implement a ‘litigation hold’ to ensure the preservation of relevant documents” after the preservation duty has been triggered.²⁶

E. The Court's Test for Spoliation Sanctions

There is not complete agreement about whether spoliation sanctions are appropriate in any given instance, and, more specifically, whether an adverse inference instruction is warranted. The majority of courts use some variation of the three-part test set forth by Judge Scheindlin in Zubulake IV for determining whether to grant an adverse inference spoliation instruction. ²⁷ That test is as follows: “[a] party seeking an adverse inference instruction (or other sanctions) based on the spoliation of evidence must establish the following three elements: (1) that the party having control over the evidence had an obligation to preserve it at the time it was destroyed; (2) that the records were destroyed with a ‘culpable state of mind;’ ²⁸ and (3) that the evidence was ‘relevant’ to the party's claim or defense such that a reasonable trier of fact could find that it would support that claim or defense.” ²⁹ After considering these factors, a court must then consider all available sanctions and determine the appropriate one. ³⁰

III. DISCUSSION

A. Samsung's Preservation Efforts

1. Samsung's “mySingle” Email System

Samsung's default email system is titled “mySingle.” ³¹ mySingle was “set up” in 2000.³² The system is proprietary and was created by a Samsung subsidiary named Samsung Data Systems (“SDS”).³³ mySingle went operational in 2001,³⁴ and is web-based.³⁵ mySingle stores received and sent employee emails on company-wide servers,³⁶ as opposed to dividing the servers by business unit,³⁷ and Samsung employees access their mySingle email accounts through a web-based interface. ³⁸ mySingle contains a “general guideline [that] calls for all e-mails to be automatically deleted after the passage of two weeks.” ³⁹ This functionality operates and stores email companywide in Korea, has no exceptions,⁴⁰ and has been in place since mySingle went operational. ⁴¹ Samsung uses mySingle in this way because: (1) “it avoids the danger that confidential business information will be misappropriated in the event the computer itself is lost or stolen”; ⁴² (2) it is cheaper than using a 30–day retention period; ⁴³ (3) it “reduces the amount of information that could inadvertently be disclosed through misdirected email, or stolen through unauthorized access or hacking into an employee's email account on the system;” ⁴⁴ and (4) the policy best complies with Korean privacy law.⁴⁵

Employees using mySingle can save any emails they deem relevant.⁴⁶ The mySingle interface has a “Save All” button that employees can “click” to save all email in their inbox and sent folders to their computer's hard drive. ⁴⁷ If an employee clicks this button every two weeks, all of that employee's emails will be saved.⁴⁸ Employees also have the option of selecting individual emails or groups of emails, rather than all emails, and saving just these specific emails to their hard drives.⁴⁹Samsung gives its employees the option of using Microsoft Outlook. ⁵⁰ Microsoft Outlook, unlike mySingle, allows employees to automatically view and archive emails they receive on their local hard drives. ⁵¹ mySingle's 14–day destruction policy does not apply to locally saved emails on Microsoft Outlook.⁵² Samsung employees do not require permission to use Outlook for storing email, but they do need its permission to use Outlook for sending email.⁵³

It is within each Samsung employee's discretion whether to save relevant documents.⁵⁴ Samsung has never attempted to verify whether Samsung employees are complying with the instructions they were told to follow. ⁵⁵ mySingle does have a feature, however, that reminds employees when the time for biweekly deletion of their emails is near. ⁵⁶ “The ‘Help’ page in mySingle explains in both...