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Recent Cases Spotlight the Limitations of Discovery Sanctions

Discovery sanctions are often viewed as a litigation game-changer. They seemingly offer a way to tip the scales of justice against a sanctioned party and drive a matter toward settlement. Nevertheless, sanctions have their limitations, particularly if they are not case dispositive. As discussed in article recently published by Legaltech News, even an adverse inference instruction is no substitute for marshaling evidence through discovery to establish claims or defenses at trial.

The Sanctions in GN Netcom v. Plantronics

The GN Netcom v. Plantronics case is particularly instructive on the limitations of discovery sanctions. GN Netcom gained instant and widespread recognition after the court issued an adverse inference instruction against Plantronics for its destruction of relevant ESI. The spoliation at issued involved a senior Plantronics executive who deleted thousands of his own emails and directed subordinates to destroy many of their own messages. Since the spoliation was undertaken to enhance the company’s position in litigation, the court held that it evinced bad faith and an “intent to deprive” plaintiff of the emails.

And yet, Plantronics’ “egregious conduct” only resulted in a permissive adverse inference instruction. This meant the jury was free either to consider or to reject evidence of Plantronics’ spoliation in connection with its verdict. A mandatory instruction would have obligated the jury to presume the lost evidence was unfavorable to Plantronics. The court declined to issue a more severe sanction because it wished to preserve a trial on the merits of plaintiff’s antitrust claims. Issuing a mandatory instruction, reasoned the court, would unduly favor plaintiff at trial.

Concerned, however, that a permissive adverse inference would not sufficiently remedy the harm Plantronics caused, the court coupled it with other remedial measures in the interest of justice. They included financial sanctions of approximately $5 million and the possibility of imposing “evidentiary sanctions” if needed to further redress the harm from Plantronics’ spoliation.

Verdict for Plantronics

In its final pretrial order last fall, the court described the preliminary and final adverse inference instructions that it would provide the jury. In both instructions, the court made clear that Plantronics intentionally destroyed evidence. The court additionally provided the jury with a lengthy statement of “Stipulated Facts” regarding the nature and extent of Plantronics’ spoliation.

Despite all of the information it received about Plantronics’ spoliation, the jury reached a defense verdict on the merits of plaintiff’s antitrust claims. Almost reflexively, plaintiff moved for a new trial based on what it argued was reversible error: the court’s failure to issue a mandatory adverse inference resulting from Plantronics’ spoliation. In response, the court rejected this assertion for all of the reasons encapsulated in its previous orders. Moreover, the court held that any error it might have committed in not issuing a “dispositive sanction” was harmless. Simply put, plaintiff failed to adduce evidence, particularly from its “own files – of lost sales or customers,” for the jury to accept its version of the facts.

The Waymo v. Uber Settlement

A similar example can be found in the recently resolved Waymo v. Uber litigation. In that trade secret dispute over autonomous vehicle technology, plaintiff appears to have staked the outcome of its case on Uber’s destruction of text messages and other relevant information. Plaintiff obtained permissive adverse inference instructions and curative measures that allowed it to present evidence and argument to the jury regarding Uber’s destruction of text messages and other evidence.

Despite these sanctions, plaintiff negotiated a settlement four days into the parties’ trial that has generally been viewed as a victory for Uber. According to commentators, the settlement suggests the jury was not likely to be convinced that Uber’s spoliation was evidence of trade secret misappropriation. Given the foregoing, the settlement allowed plaintiff to obtain some value from the litigation rather than risk a complete defense verdict as in GN Netcom.

Discovery Lessons from GN Netcom and Waymo

GN Netcom and Waymo provide an important reminder regarding the role of discovery sanctions in litigation. In both cases, the parties could only go so far with their spoliation arguments. Plaintiff in GN Netcom did not win at trial because it failed to present evidence from its “own files” to establish its antitrust claims. Settlement in Waymo was the best option for plaintiff given the lack of affirmative evidence of trade secret theft.

GN Netcom and Waymo teach that parties are generally better served by dedicating their energies to obtaining dispositive evidence rather than dispositive sanctions. Parties must still marshal evidence through discovery if they are to ultimately obtain favorable litigation outcomes.

Philip Favro
Philip Favro
Philip Favro acts as a trusted advisor to organizations and law firms on issues surrounding discovery and information governance. Phil provides guidance on data preservation practices, litigation holds, data collection strategies, and ESI search methodologies. In addition, he offers direction to organizations on records retention policies and the need to manage dynamic sources of information found on smartphones, cloud applications, and social networks. Phil is available to serve as a special master on issues related to electronic discovery. Phil is a nationally recognized thought leader and legal scholar on issues relating to the discovery process. His articles have been published in leading industry publications and academic journals and he is frequently in demand as a speaker for eDiscovery education programs. Phil is a member of the Utah and California bars. He actively contributes to Working Group 1 of The Sedona Conference where he leads drafting teams and serves as the Steering Committee project manager. Prior to joining Driven, Phil practiced law in Northern California where he advised a variety of clients regarding business disputes and complex discovery issues. He also served as a Judge Pro Tempore for the Santa Clara County Superior Court based in Santa Clara, California.