Desarrollo del Nuevo Institucionalismo Económico (NE)

In Harkabi v. SanDisk Corporation[17] the Plaintiffs moved for sanctions against Defendant SanDisk for failing to produce ESI, delayed production of ESI, and spoliation. The plaintiffs were the principal share- holders of MDRM, Inc. which developed technology for use with solid state drives; SanDisk acquired MDRM in 2004 and, as part of the sale, the Plaintiffs agreed to work for SanDisk after the acquisition.50 _SanDisk

issued laptop computers and email accounts to the plaintiffs during their employment, and recovered the same when their employment ended; the Plaintiffs, in anticipation of a dispute, sent, via their counsel, a preservation notice. SanDisk’s in-house council sent four memoranda instructing various actors within the company to preserve the Plaintiffs’ laptops and other associated data.51 _{In 2008, SanDisk changed to a new}

backup system for improved archival, and, soon after, the Plaintiffs’ laptops were imaged and reassigned to other SanDisk employees.52

During discovery, SanDisk could not locate the laptop images and search terms were unsuccessful in locating the data the laptops contained on SanDisk’s file servers.53 _{SanDisk’s counsel misrepresented the}

situation implying the laptops were recycled after 30 days under normal company policy rather than disclosing that the particular laptops at issue were stored for over a year then imaged, with the images subsequently lost.54 _{SanDisk produced 1.4 million documents which it termed as “everything”, then declined to produce}

the requested hard drive images (that it could not find) because, “all electronic documents from [the] hard drive[s] that are relevant to this dispute have already been produced.”55 _{Not surprisingly, the Plaintiffs}

found they were missing files they recalled being stored on their laptops.56 _{In 2009, SanDisk acknowledged}

it could not locate the drive images despite “best efforts”.

In reviewing what SanDisk did produce, the Plaintiffs found (1) fewer of their emails were produced than from other custodians, (2) emails the Plaintiffs were aware of were not produced, and (3) none of the emails from the Plaintiffs files were only between the two plaintiffs.

50_{[17, at 416]}

51_{[17, at 416] (“Acting on those instructions, the laptops were placed in a secure storage area where they remained for more} than a year.”)

52_{[17, at 417] (“Thereafter, a helpdesk employee contacted SanDisk’s Director of Information Security to ascertain whether} the Harkabi and Elazar laptops could be reissued to other employees after imaging and preserving the data from their hard drives. That request was forwarded to SanDisk’s in-house counsel and, according to the helpdesk employee, approved. Then, the Harkabi and Elazar laptops were imaged and the data saved on a SanDisk file server.”) (Internal citations omitted.)

53_{[17, at 417] (“SanDisk began searching its file servers, but could not locate data from the Harkabi and Elazar laptop hard} drives. In April 2009, SanDisk provided search term reports indicating that “Elazar” returned only five hits, and that no email was located for “Harkabi”.”) (Internal citations omitted)

54_{[17, at 417] (“At that time, SanDisk’s counsel advised Plaintiffs’ counsel that, when employees leave the company, their} laptops typically are recycled 30 days later. However, SanDisk’s counsel did not disclose that the Harkabi and Elazar laptops had been secured for a year and that efforts to locate the laptop data on SanDisk’s servers had been unsuccessful.”) (Internal citations omitted.)

55_{[17, at 417]}

56_{[17, at 417] (“Despite considerable effort, Harkabi and Elazar could not find any of the materials they remembered being} on their laptop hard drives—including meeting notes, calendar entries, and digital photographs of technical schematics drawn by Elazar on white boards —showing their involvement in developing the U3.”)

Reasoning from these data points, Harkabi and Elazar concluded that SanDisk had not actually produced any emails from their custodian files. They hypothesize that SanDisk cobbled together emails from other custodians and glossed over the fact that Harkabi’s and Elazar’s files were missing.57

SanDisk then disclosed it lost the Plaintiffs’ email too.58 _{They did, however, eventually find it in the backup}

tapes (after the plaintiffs moved for termination sanctions). 59

Facts aside, Harkabi v. SanDisk applys the same general tests we observed in Zubulake and Metropolitan Opera house for adverse inference and termination sanctions respectively. The novelty of this case centers around five points of interest. First, despite the temporal distance from the aforementioned touch stone cases, the same types of bad practices keep cropping up with the same threat of sanctions, only now the courts have plenty of precedent to measure the failures against. Second, the court is openly willing to hold SanDisk to a higher standard because, “[i]ts size and cutting-edge technology raises an expectation of competence in maintaining its own electronic records” (though, apparently, an unmet expectation.)60 _{Third, the court}

cognizes that, “a cascade of errors, each relatively minor, which aggregated to a significant discovery failure” which, at minimum, constitutes a sufficient negligence to proceed with the Zubulake style analysis for adverse inference.61 _{Fourth, the court cites the upper and lower bounds in how harsh an adverse inference might be.}

In the most harsh formulations, a jury is instructed that certain facts are deemed admitted and must be accepted as true. The least harsh instruction permits, but does not require, a jury to presume that the lost evidence is both relevant and favorable to the innocent party.[17, at 420] The terminating sanctions were not granted because they are a drastic remedy imposed in extreme cases, and here the Court found they were not warranted because there was no evidence SanDisk engaged in conduct such as intentionally destroying evidence.62 _{The adverse inference was granted, with the harshness to be}

determined at trial. Finally, the court recognizes that SanDisk’s misrepresentations were a significant imped- iment to the discovery process which, “[b]ut for Plaintiffs’ forensic analysis and their counsel’s persistence, those deficiencies may not have come to light”; the court subsequently imposes a $150,000 monetary sanction as compensation to the Plaintiffs.63

57_{[17, at 418](Internal citations omitted)}

58_{[17, 418] (“SanDisk concedes that the native production did not include some Harkabi and Elazar emails because they were} not preserved during transfer to the Evault system. The Evault transfer was implemented only for current employees. That Harkabi and Elazar were former employees subject to “ Do–Not–Destroy” memoranda appears to have been ignored.”)

59_{[17, 418] (“After briefing on this motion, SanDisk searched its backup tapes and began recovery of the missing emails.”)} 60_{[17, at 419]}

61_{[17, at 419-20]}

62_{[17, at 420] (“Terminating sanctions are a drastic remedy that should be imposed only in extreme circumstances, usually} after consideration of alternative, less drastic sanctions. [...] Such an extreme sanction is not warranted here. There is no evidence that SanDisk engaged in egregious conduct such as the intentional destruction of evidence.” )

The repeated pattern of obfuscated discovery failings only being revealed due to persistence and forensic analysis points to a strong need for each side to be wary of the other side’s claims and engage its own experts to keep their opponents honest. It also serves as a warning to us, to be alert for subtle clues hinting at such concealed failings.