Philip Favro, Innovative Driven: Court Rejects Sanctions Based on Party’s Efforts to Remediate Data Loss

Extract from Philip Favro’s article “Court Rejects Sanctions Based on Party’s Efforts to Remediate Data Loss”

Litigation readiness for organizations generally begins with basic ESI preservation steps, including litigation holds, relevant source checklists, and follow up steps with custodians. In some instances, however, the basics may not be enough. Given the frequency of data loss from custodial and non-custodial sources, companies should also consider incorporating remediation strategies into their approach to preservation to better ensure defensibility. Medidata Solutions v. Veeva Systems (S.D.N.Y. Sept. 22, 2021) shows the wisdom of this approach.

In that case, the court rejected a requested adverse inference against a corporate defendant even though one of its employees spoliated relevant ESI. That the defendant avoided sanctions was not the result of chance. The data loss remediation measures the defendant took established the reasonableness of its overall approach to preservation and generally spotlight the importance of taking such measures.

Defendant’s Preservation Efforts

Medidata Solutions involves trade secret claims in which plaintiffs allege that five of their former employees took trade secrets with them when they began working for defendant (Veeva) and incorporated those trade secrets into Veeva’s line of competing products.

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