IADC amicus brief program.

• Author: Owen, Robert D.
• Position: Page 489-514

2. THE DISTRICT COURT MISAPPREHENDED THE NATURE, SCOPE, AND TRIGGER OF THE DUTY TO PRESERVE.

   1. The District Court Held That Takeda's 2002 Litigation Hold Created a Duty to the Allen Plaintiffs to Preserve All ESI Relevant to Any Potential Actos Claim.

      This action, commenced by the Allen plaintiffs in 2011, was the first lawsuit to make a claim against defendants stemming from the onset of bladder cancer by users of Actos. In re Actos, 2014 WL 2872299, at *17. (8) Some 8,000 such lawsuits are now pending in federal and state courts, In re Actos, 2014 WL 5461859, at *37, and the federal cases have been given MDL treatment.

      During discovery, it was learned that Takeda had instituted a broadly-worded litigation hold requiring retention of all materials relating to Actos in 2002. The event spurring the 2002 litigation hold was a lawsuit by a party claiming damages from use of Actos resulting in liver cancer. In re Actos, 2014 WL 2872299, at *7. Takeda custodians were "instructed to preserve any and all documents and electronic data which discuss, mention, or relate to Actos." Id. Even though the liver cancer claims were soon resolved, In re Actos, 2014 WL 2921653, at * 21, the litigation hold was "refreshed" in 2003, 2006, 2007, 2008 and 2011, In re Actos, 2014 WL 2872299, at *17, 20. Compliance with the very broad 2002 hold was less than perfect, resulting in the routine destruction of custodial files of 46 individuals after they had departed their Takeda employment. Id., at *15-16.

      Plaintiffs moved for sanctions based on the loss of these files, and in resolving the motion, the district court concluded that at the time the 2002 hold issued, Takeda had a "reasonable anticipation of litigation for personal injury and death" arising from use of Actos. In re Actos, 2014 WL 2921653, at *25. The court rejected the argument that Takeda did not reasonably anticipate suits involving bladder cancer until the first such suit was filed in 2011, because the litigation hold issued in 2002 was not restricted to a specific "malady." In re Actos, 2014 WL 2872299, at *22; see also id. ("This Court finds it need not determine when Takeda should have implemented a hold because Takeda, in fact, did implement a hold in 2002 and 'refreshed' it thereafter.") (emphases omitted). Thus, the district court concluded that, irrespective of what the law on preservation trigger might have required, Takeda's issuance of the broad hold in 2002 imposed a duty on itself to preserve any and all Actos information relevant to any potential legal claim made at any time in the future regarding the product.

   2. The Common Law Duty To Preserve Evidence Is Triggered by the Reasonable Anticipation of Litigation Over the Claims Asserted In the Case at Bar.

      The district court's holding is contrary to this Court's precedent, which makes clear that the duty to preserve extends only to documents relevant to a claim of which the party has notice.

      In King v. Illinois Central Railroad, 337 F.3d 550 (5th Cir. 2003), the Court addressed precisely this issue. King concerned a lawsuit arising from an automobile-train collision at a railroad crossing, in which the plaintiff (King) alleged that the railroad signal at the crossing malfunctioned. Id. at 552-53. Shortly after the accident, King's attorney had apprised the defendant railroad company that he represented King, but he "made no contention that the signal malfunctioned at the time of the accident and made no request for access to [the railroad's] records or to the signal." Id. at 556. Both the signal itself and its maintenance records were later destroyed for innocent reasons. Id. (noting that the maintenance records were destroyed under a routine file maintenance regime and the signal was destroyed as part of an overall system upgrade).

      Nearly three years later, and after the signal and its maintenance records had been destroyed, the plaintiff informed the railroad for the first time that he was seeking recovery based on an alleged signal malfunction. Id. The plaintiff maintained that the railroad had a duty to preserve both the signal and its maintenance records based on his attorney's contact shortly after the accident, and that its failure to preserve these materials was sanctionable spoliation. The Court disagreed, explaining that, "at the time [the railroad] disposed of the potential evidence, it was unaware that it might be relevant to King's claims," and that plaintiff had therefore "failed to demonstrate a genuine issue of material fact regarding whether [the railroad] had actual or constructive notice of the alleged defect in the signal." Id.

      The King decision confirms that, contrary to the district court's reasoning in this case, the duty to preserve is triggered by and tied to notice of a specific claim, rather than a general awareness that some type of claim might be filed in the future. Here, there is no dispute that, although both are forms of cancer, bladder cancer is a different malady than liver cancer. And the claims made by the Allen plaintiffs are likewise different in kind from the liver-cancer-related claims made regarding Actos in 2002. Under King, defendants' notice of claims related to liver cancer in 2002 cannot trigger a duty to preserve information and materials related to allegations filed nine years later regarding a different ailment, bladder cancer.

      Notably, other courts have also recognized the straightforward principle reflected in King that "[t]he duty to preserve only extends to documents relevant to the claim of which the party has notice," In re Pfizer, Inc. Securities Litigation, 288 F.R.D. 297, 317 (S.D.N.Y. 2013), and have correctly rejected attempts to use a litigation hold related to notice of a particular claim to create general and widespread duties to preserve evidence.

      In the In re Pfizer securities litigation case, for example, the plaintiffs filed securities-fraud claims in 2004 related to Pfizer's Celebrex and Bextra pain-relieving drugs, 288 F.R.D. at 303-04, but argued that Pfizer's duty to preserve evidence was triggered three years earlier, in 2001, when Pfizer became involved in a patent dispute concerning Celebrex and Bextra, id. at 316. Rejecting the plaintiffs' argument, the court explained that, because the 2001 patent litigation raised different factual issues than the 2004 securities action, "[the 2001 litigation] would not have given Pfizer reasonable notice of the foreseeability of this securities fraud litigation." Id.

      In another case involving Pfizer, plaintiff Brigham Young University contended that defendant Pfizer's duty to preserve materials was triggered years before BYU's suit was filed by, inter alia, "Pfizer's document retention policies and its obligations to the Federal Government as well as Pfizer's litigation with other parties." Brigham Young Univ. u. Pfizer, Inc., 282 F.R.D. 566, 572 (D. Utah 2012). The court disagreed, noting that BYU's argument "conflates two very different things. 'When you violate a corporate policy you may well be in trouble with your boss, but that doesn't necessarily mean you have committed a tort.'" Id. (quoting Johnson v. Liberty Mut. Fire Ins. Co., 648 F.3d 1162, 1165 (10th Cir. 2011)). The court went on to explain that, "[a] violation of private corporate policy does not always equate to a violation of the law," and that BYU had "fail[ed] to establish a connection between the duty ... Pfizer had to itself and the duty Pfizer has to BYU to provide discovery in this litigation." Id.

      The Brigham Young Court also rejected the notion adopted by the district court here that a duty to preserve triggered by a particular legal claim...