How upgrading your ­smartphone could cost you in the courtroom

Curtis A. Johnson, BridgeTower Media Newswires

Federal and state civil procedure rules, which govern how parties conduct themselves in litigation, have long required litigants to preserve electronic communications and documents or risk sanctions.

Not surprisingly, the list of electronic communications that must be preserved once litigation is anticipated now includes text messages and other data stored on smartphones. Courts have begun sanctioning litigants for intentional spoliation of evidence for doing something most people do every year or so as a matter of course—upgrading their smartphones. Problems can arise when an upgrade results in the loss of saved text messages or other data.

Not all upgrades are problematic. Upgrading without switching phone manufacturers may not result in any loss of data where text messages, photos and other files are migrated to the new device. Cloud backup may preserve pertinent data as well. However, problems start to arise when switching from one manufacturer to another, particularly when an old phone is traded in as a means of reducing the significant cost of a new device.

In Montgomery v. Iron Rooster-Annapolis, LLC, a case from federal court in Maryland, a plaintiff was sanctioned with a negative inference when she traded in her HTC brand phone to Verizon in exchange for a $200 credit toward an Android phone during the course of litigation. Text messages were not migrated from the old phone to the new phone and were lost during in the transition.

Montgomery was suing her former employer, the Iron Rooster restaurant, claiming she was not paid for overtime under wage and hour laws. The restaurant’s defense was that Montgomery was a salaried manager. It argued that the traded-in phone may have contained text messages between Montgomery and other employees of Iron Rooster that proved she was managing those employees.

In support of this argument, Iron Rooster obtained phone bills and Montgomery’s admission that she did in fact exchange text messages with restaurant employees. Montgomery’s co-workers confirmed their belief that the text messages would prove Montgomery was managing them. Iron Rooster relied on the negative inference permitted due to the spoliation of text message evidence in support of its motion seeking dismissal of Montgomery’s claims. The case settled after the court ruled in Iron Rooster’s favor on portions of the motion and reserved judgment on the remaining portions of that motion.

A federal court in New York went one step further than its Maryland counterpart, sanctioning a defendant for failing to prevent a non-party from discarding text messages as the result of an upgrade. Ronnie Van Zant, Inc. v. Pyle involved litigation between the widow of Lynyrd Skynyrd’s frontman, Ronnie Van Zant, who died in an infamous 1977 plane crash, and a film production company working with the band’s drummer, Artimus Pyle, who survived the crash. In 1977 the surviving members of the band and deceased members’ widows agreed on a “blood oath” that no one would perform again under the name Lynyrd Skynyrd, but in 1987 members of the band decided to do an anniversary tour. Litigation by Van Zant’s widow ensued. That case was resolved with a consent order, signed by Pyle and others and entered by the court, restricting the use of the band’s name and the telling of its history.

In 2016, Cleopatra Films decided to make a movie about the band and plane crash. The production company hired Jared Cohn to direct, and gave Pyle a co-producer credit in exchange for his participation in the project. Cohn began exchanging e-mails and text messages with Pyle, and those interactions fed the plot of the film. Upon learning of plans for the film, plaintiffs, including an entity controlled by Van Zant’s widow, sent Cleopatra a cease and desist letter. Cleopatra and Cohn went forward with production anyway, and plaintiffs sued Cleopatra and Pyle, but not Cohn, to prevent the film’s release. Plaintiffs’ success in enjoining release would turn on the level and nature of Pyle’s involvement in the film.

At the end of principal photography, Cohn switched cellular carriers and upgraded his phone. While certain data on the phone, including pictures, was backed up, text messages, including those with Pyle, were not. Pyle failed to cooperate with plaintiffs or Cleopatra to produce the text messages with Cohn, which the court acknowledged may also exist on his phone. Plaintiffs asked the court to sanction Cleopatra for the destruction of Cohn’s text messages.
A federal court in Manhattan found that even though Cohn was not Cleopatra’s employee, his phone was still under Cleopatra’s control because he had a financial interest in seeing the film released and participated in the discovery process. Thus the production company could be liable for Cohn’s destruction of evidence. The judge found the destruction deliberate and sanctionable because Cohn took the time to back up pictures but not text messages during the upgrade process. The court awarded an adverse inference in favor of plaintiffs and as a result presumed the missing text messages were damaging to Cleopatra. That inference came into play when the court decided to permanently enjoin release of the film under the terms of the consent agreement.

Upgrading a smartphone is not the only way that text messages can be destroyed. The more useful smartphones become, the more data they generate and store, and as more and more users of the technology are learning, storage capacity is finite. Smartphone operating systems now allow for the automatic deletion of old text messages in order to save precious storage space. The failure to deactivate this automatic deletion function once litigation is anticipated could yield spoliation sanctions.

Those facing litigation are advised to consult with competent counsel regarding their document preservation responsibilities and the many ways that the inadvertent and intentional deletion of relevant evidence can occur.

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Curtis A. Johnson is a commercial litigator at Bond, Schoeneck & King, PLLC, and a member of the New York State Bar Association Commercial and Federal Litigation Section’s Committee on Electronic Discovery.

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