The importance of early planning and thorough preservation of electronic data cannot be overstated, especially when it comes to litigation. In a recent case, Two Canoes LLC v. Addian Inc. (April 30, 2024), the failure to preserve WeChat messages on a mobile device led to significant complications, including potential sanctions. Let’s dive into this case and explore the key takeaways that can help you avoid similar pitfalls.
Background
In Two Canoes LLC v. Addian Inc., Two Canoes sought sanctions for the spoliation of WeChat messages by Addian’s CEO. The case revolves around the sale of counterfeit N95 masks during the pandemic. Addian, a small family-owned logistics company, sold these masks to Aobvious Studio LLC, which then sold them to Two Canoes.
The timeline of events is critical. In November 2020, 3M sued Addian, alleging the masks were counterfeit. Addian settled the lawsuit in June 2021. Just a couple of weeks later, Two Canoes threatened litigation against Aobvious, and Addian was put on notice. Two Canoes filed suit in November 2021, and Addian was added as a third party in January 2022.
During discovery, Addian’s CEO, Wolworth, produced various electronic data but failed to include WeChat messages, claiming his phone was lost. WeChat, an ephemeral messaging app, permanently deletes messages from its servers after a set period unless they are backed up on the user’s device. Wolworth had discarded at least three phones over a year and a half, leading to the loss of these messages.
Court’s Analysis
The court analyzed whether Addian took reasonable steps to preserve relevant WeChat messages under Rule 37(e)(2) of the Federal Rules of Civil Procedure. It found that Addian had a duty to preserve data from November 2020 and that WeChat messages were lost due to Wolworth’s failure to back up his phones. The court deferred the decision on sanctions for prejudice and intent to trial, allowing the jury to evaluate Wolworth’s credibility.
Key Takeaways
Early Planning and Custodian Interviews are Crucial
Identifying sources of electronically stored information (ESI) and potential data loss early in the litigation process is essential. Conduct custodian interviews to uncover relevant data sources, including mobile devices, to prevent spoliation issues. Early awareness allows for strategic planning and preparation, avoiding the complications of addressing lost data retroactively.
Importance of Mobile Device Preservation
Mobile devices play a critical role in eDiscovery. Counsel must proactively preserve data stored on these devices. The cost of preserving a mobile device is minimal compared to defending a motion for sanctions and the associated risks at trial. Ensuring the preservation of mobile device data can prevent significant trial complications and potential sanctions.
Understanding Application Retention Policies
Applications like WeChat frequently change their data retention practices. It’s crucial to understand the retention policies at the time relevant to your case. Preserving data from such applications can eliminate unnecessary motion practice and ensure compliance with preservation duties.
Conclusion
The Two Canoes LLC v. Addian Inc. case highlights the complexities and challenges of data preservation in eDiscovery, particularly with ephemeral messaging applications like WeChat or other data on mobile devices that can be easily lost. Early planning, diligent preservation efforts, and a thorough understanding of application-specific retention policies are essential to avoid sanctions and ensure a smooth litigation process.
By addressing these issues proactively, litigators can better protect their clients and streamline their trial strategy. Early planning and comprehensive data preservation are not just best practices—they are essential strategies for success in today’s digital litigation landscape.
She is a co-author of Electronic Discovery and Records and Information Management, and host of Case of the Week at eDiscovery Assistant. As Principal at ESI Attorneys, Kelly manages the boutique eDiscovery and information law firm that acts as operational business partners with its clients to advise law firms, corporations, and municipalities on all areas of electronic information including eDiscovery, privacy, cybersecurity, and information governance.
Kelly is also the CEO of eDiscovery Assistant — a SaaS-based practical resource for litigators handling eDiscovery — that curates discovery decisions, rules, and additional content. She is developing an online academy to provide on-demand education for lawyers and legal support professionals to stay abreast of changes in the law and technology that affect litigation and clients’ obligations to respond.
You can reach Kelly at [email protected], join her Facebook community group at Let’s Talk eDiscovery, or connect with her on Twitter @kellytwigger.