Third Circuit Highlights the Importance of E-Discovery Expert in a Civil Action Disrupted by Spoliation
August 27, 2019
By: Sarah A. Phipps
On July 10, 2019, in GN Netcom, Inc. v. Plantronics, Inc., the United States Court of Appeals for the Third Circuit granted a motion for a new trial based upon the lower court’s refusal to allow the testimony of an electronic discovery expert regarding the significance of the opposing party’s spoliation of electronically stored information (“ESI”). This decision indicates the importance of using an e-discovery expert in cases where spoliation has occurred and a permissive adverse inference instruction has been awarded as a sanction against the offending party.
As background, GN Netcom, Inc. v. Plantronics, Inc. is an antitrust dispute brought by GN Netcom, a telephone headset company, against Plantronics, one of its competitors. In 2016, the trial court, the United States District Court for the District of Delaware (“district court”), ordered severe sanctions against Plantronics for spoliation of ESI, pursuant to Rule 37(e) of the Federal Rules of Civil Procedure. Even after Plantronics issued a legal hold to stop the destruction of any and all electronic data, an executive of the company, Don Houston, “double-deleted” thousands of his own relevant emails, a process that ensured those messages could never be recovered. Recoverable evidence proved Mr. Houston repeatedly directed other employees of the company to delete certain relevant emails, in direct violation of the legal hold. Although Plantronics’ legal counsel made some effort to remediate the spoliation, the district court determined that the actions taken were wholly inadequate.
Ultimately, the district court determined that Plantronics “failed to take reasonable steps to preserve ESI which cannot be restored or replaced, that it did so in bad faith with the intent to deprive GN [Netcom] from using the information contained in the emails, and that GN [was] prejudiced by the loss of the emails.” Although the district court considered entering default judgment as a sanction for Plantronics’ conduct, which GN Netcom specifically requested, it ultimately decided that a dispositive sanction was inappropriate. The district court (i) ordered monetary sanctions in the amount of GN Netcom’s attorneys’ fees and costs related to the litigation of the discovery misconduct; (ii) ordered Plantronics to pay $3 million in punitive sanctions; (iii) allowed GN Netcom to submit a permissive adverse inference jury instruction at trial; and (iv) indicated that other evidentiary sanctions may be appropriate in the future.
Despite the spoliation of relevant evidence weakening GN Netcom’s case, and the severe monetary and evidentiary sanctions levied against Plantronics, the case progressed forward to trial. During the presentation of its case, GN Netcom attempted to introduce evidence of Plantronics’ spoliation by calling an e-discovery expert to testify; however, the district court refused to allow the expert’s testimony, stating that it had “a desire to reduce ‘the risk of spoliation taking over’ the trial and ‘the risk of unfair prejudice given the inflammatory nature of the evidence.’” Therefore, instead of allowing GN Netcom’s expert to testify, the court “decided to read ‘stipulations’ to the jury and limit parties to referencing only the facts in those stipulations during trial.” After a six-day trial, the jury found in favor of Plantronics, “finding that GN proved a relevant market—a prerequisite for its claims—but did not prove all of the elements for any of its three antitrust claims.” GN Netcom timely moved for a new trial, but the trial court denied its motion.
On appeal, GN Netcom requested that the Third Circuit overturn the district court’s ruling on its motion for sanctions and change the sanctions levied against Plantronics to a default judgment in GN Netcom’s favor. GN Netcom alternatively requested that the Third Circuit grant a new trial based upon the district court’s refusal to allow GN Netcom’s e-discovery expert’s testimony regarding the extent of Plantronics’ spoliation of relevant ESI.
The Third Circuit ultimately affirmed the district court’s decision not to issue a default judgment against Plantronics as a sanction for its spoliation of relevant ESI, stating that the lower court “thoroughly examined alternatives to default judgment and provided due consideration to their fairness and deterrent value, and it committed no error of law or assessment of fact in the process.”
However, the Third Circuit found that the district court abused its discretion by excluding GN Netcom’s e-discovery expert’s testimony. In its analysis, the Third Circuit determined that the expert’s testimony was “relevant” pursuant to Federal Rules of Evidence 401 and 402 because “[t]he [d]istrict [c]ourt’s permissive adverse inference instruction made Plantronics’ spoliation a material issue for the jury to consider at trial, so any spoliation-related evidence clears the baseline relevance hurdle of Rules 401 and 402.” The Third Circuit further determined that the probative value of this relevant spoliation evidence was not outweighed by the danger of “unfair prejudice, confusing the issues, misleading the jury, undue delay, wasting time, or needlessly presenting cumulative evidence,” pursuant to Rule 403 of the Federal Rules of Evidence.
As proffered, [the expert’s] proposed testimony would have tended to show that the scope of [the executive’s] spoliation was more significant than Plantronics had represented, thereby helping the jury decide whether to draw an adverse inference—as it was instructed it could do. The [d]istrict [c]ourt explicitly chose to put certain issues of material fact, such as whether Plantronics engaged in a “massive cover-up to hide antitrust violations,”  in the jury’s hands. By withholding evidence regarding the scope of the spoliation, the court deprived the jury of the ability to make an informed decision about the adverse inference, and the instruction was less effective.
After determining that the district court’s refusal to allow the e-discovery expert’s testimony was an abuse of the court’s discretion, the Third Circuit held that the error was not harmless.
There was evidence of significant spoliation in this case and allegations that some of the destroyed evidence was damning to Plantronics’s defense. The [d]istrict [c]ourt instructed the jury to determine whether Plantronics’s spoliation was a massive cover-up, whether the missing evidence was damning, and whether it wished to draw an adverse inference. [The expert’s] excluded testimony could have assisted the jury in making those determinations, and thus could have changed the outcome of the case. We have determined that an error was not harmless in less weighty situations.
Accordingly, the Third Circuit concluded that the district court abused its discretion when it excluded the e-discovery expert’s testimony and remanded the case for a new trial.
The Third Circuit’s decision on this issue should cause any attorney involved in a matter where significant spoliation of ESI has occurred to consider retaining an e-discovery expert to explain the scope of the party’s spoliation at trial. This testimony may help a jury understand the significance of the offending party’s destruction of specific, targeted ESI. Without this testimony, some jurors may feel that they do not have enough information to draw an adverse inference against the offending party, rendering an important, evidentiary sanction meaningless.
Author: Sarah Phipps, Associate, General Litigation
© August 2019 Jackson Kelly PLLC
 See generally GN Netcom, Inc. v. Plantronics, Inc., 930 F.3d 76 (3d Cir. July 10, 2019) (“GN Netcom 2”).
 See generally GN Netcom, Inc. v. Plantronics, Inc., No. 12-1318-LPS, 2016 WL 3792833 (D. Del. July 12, 2016) (“GN Netcom 1”).
 Id. at *12–14
 Id. at *2–5 (discussing the spoliation of evidence undertaken by employees of Plantronics).
 Id. at *2.
 Id. at *7 (“Moreover, the Court is not convinced that Plantronics took all the reasonable steps it could have taken to recover deleted emails after discovering that Mr. Houston had instructed others to delete emails. Despite knowing that spoliation extended beyond Mr. Houston to other custodians, such as Mr. Gonzalez and Mr. Meadows . . ., Plantronics engaged [a forensic expert] only to recover Mr. Houston’s emails and asked Blackstone to conduct back-up tape collections only for Mr. Houston.”).
 Id. at *12.
 GN Netcom 2, 930 F.3d at 79.
 GN Netcom 1, at *14. (“While GN's ability to make its case on the disputed facts has been hampered by Plantronics' conduct, the Court believes that the sanctions it is imposing do what is warranted to rectify that prejudice while still permitting both sides to proceed before a factfinder with a full and fair opportunity to prevail on the merits.”).
 Id. at *12-13.
 GN Netcom 2, 930 F.3d at 81–82.
 Id. at 82 (citation omitted).
 Id. at 83–84.
 Id. at 82–89.
 Id. at 83.
 Id. at 85.
 Id. at 86 (emphasis added).
 Id. at 85, 86–88 (citation omitted).
 Id. at 86 (internal citation omitted) (emphasis added).
 Id. at 89 (citation omitted).