In an early-morning order on Tuesday, Apple v. Samsung presiding Judge Lucy Koh ruled that the jury will not hear that both parties may have inadvertently, or purposefully, destroyed email evidence which may have been pertinent to the case.
Editor's note: It should be noted that conflicting reports from other media outlets put Judge Koh's Monday statements into question, however AppleInsider has obtained the signed written order which corroborates CNET's coverage.
The offer to not disclose either side's possible breach of legal responsibility came after Judge Koh overruled a previous judgment from Magistrate Judge Paul Grewal, which denied Samsung's motion to hold Apple to similar evidence destruction claims. According to in-court reports from CNET, the jurist said on Monday that she would be siding with Samsung's filing, requiring her to inform the jury that both parties failed to keep emails and other documents related to the case.
Apple in July won a motion for an adverse inference jury instruction against Samsung over the company's mySingle email system which includes a security protocol that automatically destroys messages after two weeks. The Cupertino company said mySingle could have deleted evidence germane to the case even after Samsung was made aware of the impending lawsuit. For reference, the email auto-deletion system was resulted in a similar adverse ruling seven years ago in the New Jersey court case Mosaid v. Samsung.
In a so-called "me too" filing, Samsung countered Apple's adverse instruction win with its own motion, alleging the iPhone maker failed to preserve possibly vital emails. At the time, the argument was thought to be weak, however Judge Koh's decision to overrule Magistrate Judge Grewal's denial proves otherwise.
Tuesday's lengthy 30-page order outlines Judge Koh's reasoning in not sanctioning either party:
Among a litany of examples of precedent and legal minutiae, including suspect evidence preservation by both sides, the Court granted-in-part and denied-in-part Samsung's motion for relief from Judge Grewal's denial.
Judge Koh found the following jury instructions were warranted:
The judge notes, however, that both parties wished neither jury instruction be given if the Court decided to issue identical adverse inferences, and will therefore not be reading either when jury deliberations begin.
Apple v. Samsung is scheduled to continue on Tuesday, when both parties have two hours each to present their closing arguments. The case will then move on to jury deliberation which may yield a verdict by the end of the week.
Editor's note: It should be noted that conflicting reports from other media outlets put Judge Koh's Monday statements into question, however AppleInsider has obtained the signed written order which corroborates CNET's coverage.
The offer to not disclose either side's possible breach of legal responsibility came after Judge Koh overruled a previous judgment from Magistrate Judge Paul Grewal, which denied Samsung's motion to hold Apple to similar evidence destruction claims. According to in-court reports from CNET, the jurist said on Monday that she would be siding with Samsung's filing, requiring her to inform the jury that both parties failed to keep emails and other documents related to the case.
Apple in July won a motion for an adverse inference jury instruction against Samsung over the company's mySingle email system which includes a security protocol that automatically destroys messages after two weeks. The Cupertino company said mySingle could have deleted evidence germane to the case even after Samsung was made aware of the impending lawsuit. For reference, the email auto-deletion system was resulted in a similar adverse ruling seven years ago in the New Jersey court case Mosaid v. Samsung.
In a so-called "me too" filing, Samsung countered Apple's adverse instruction win with its own motion, alleging the iPhone maker failed to preserve possibly vital emails. At the time, the argument was thought to be weak, however Judge Koh's decision to overrule Magistrate Judge Grewal's denial proves otherwise.
Tuesday's lengthy 30-page order outlines Judge Koh's reasoning in not sanctioning either party:
In considering what spoliation sanction to impose, if any, courts generally consider three factors: “‘(1) the degree of fault of the party who altered or destroyed the evidence; (2) the degree of prejudice suffered by the opposing party; and (3) whether there is a lesser sanction that will avoid substantial unfairness to the opposing party.’"[…]Thus, while a finding of bad faith is not a prerequisite for an adverse inference sanction, “a party’s motive or degree of fault in destroying evidence is relevant to what sanction, if any, is imposed.”
Among a litany of examples of precedent and legal minutiae, including suspect evidence preservation by both sides, the Court granted-in-part and denied-in-part Samsung's motion for relief from Judge Grewal's denial.
Judge Koh found the following jury instructions were warranted:
Samsung Electronics Company has failed to preserve evidence for Apple’s use in this litigation after its duty to preserve arose. Whether this fact is important to you in reaching a verdict in this case is for you to decide.
Apple has failed to preserve evidence for Samsung’s use in this litigation after its duty to preserve arose. Whether this fact is important to you in reaching a verdict in this case is for you to decide.
The judge notes, however, that both parties wished neither jury instruction be given if the Court decided to issue identical adverse inferences, and will therefore not be reading either when jury deliberations begin.
Apple v. Samsung is scheduled to continue on Tuesday, when both parties have two hours each to present their closing arguments. The case will then move on to jury deliberation which may yield a verdict by the end of the week.
1Case No.: 11-CV-01846-LHKORDER RE: MOTIONS FOR RELIEF FROM NONDISPOSITIVE MAGISTRATE JUDGE ORDERS
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UNITED STATES DISTRICT COURTNORTHERN DISTRICT OF CALIFORNIASAN JOSE DIVISIONAPPLE INC., a California corporation,Plaintiff and Counterdefendant,v.SAMSUNG ELECTRONICS CO., LTD.,a Korean corporation;SAMSUNG ELECTRONICS AMERICA, INC.,a New York corporation;SAMSUNG TELECOMMUNICATIONSAMERICA, LLC, a Delaware limited liabilitycompany,Defendants and Counterclaimants.)))))))))))))))Case No.: 11-CV-01846-LHKORDER RE: SAMSUNG’S MOTIONSFOR DE NOVO DETERMINATION OFDISPOSITIVE MATTER REFERREDTO MAGISTRATE JUDGE, OR, IN THEALTERNATIVE, MOTION FOR RELIEFFROM NONDISPOSITIVE PRETRIALORDER OF MAGISTRATE JUDGE(re: dkt. #1392, 1799)Samsung moves for relief from portions of Magistrate Judge Grewal’s July 24, 2012 OrderGranting-in-Part Apple’s Motion for an Adverse Inference Jury Instruction.
See
ECF No. 1321(“Adverse Inference Order”); ECF No. 1392 (“Motion”). Apple filed an opposition, ECF No. 1531(“Opp’n”); Samsung filed a reply, ECF No. 1579 (“Reply”); and Apple filed a motion for leave tofile a sur-reply, ECF No. 1614 (“Sur-reply”), which this Court GRANTS. Samsung also moves forrelief from Magistrate Judge Grewal’s August 16, 2012 Order Denying Samsung’s Motion forAdverse Inference Jury Instruction.
See
ECF No. 1792 (“Denial Order”); ECF No. 1799 (“SecondMotion”). After the Court provided the parties with its tentative rulings on these two motions,
see
ECF No. 1848, Apple responded to Samsung’s Second Motion.
See
ECF No. 1856 at 1-4. The
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parties were given an opportunity to address both motions at the hearing on Final Jury Instructionson August 20, 2012. For the reasons discussed herein, Samsung’s motion for relief from JudgeGrewal’s Adverse Inference Order is GRANTED IN PART and DENIED IN PART, andSamsung’s motion for relief from Judge Grewal’s Dismissal Order is GRANTED.
I.
BACKGROUND
A.
Samsung’s Preservation Efforts
Although Apple seeks, and Judge Grewal imposed, an adverse inference jury instructionagainst all three Defendants – Samsung Electronics Co., Ltd (“SEC”), Samsung ElectronicsAmerica, Inc. (“SEA”), and Samsung Telecommunications America, LLC (“STA”) – only SEC’sdocument preservation activities are at issue here.
See
Adverse Inference Order at 1 n.3. SEC usesa homegrown, proprietary web-based system called “mySingle,” which has been SEC’s defaultemail system since 2001.
See
id.
at 7. mySingle stores received and sent employee emails oncompany-wide servers.
Id.
The system automatically and permanently deletes emails from themySingle server after two weeks, although employees can preserve any emails they choose bysaving them onto their hard drives.
Id.
at 8-9. Emails can be saved individually or collectively, thelatter by clicking a “Save All” button.
Id.
at 9, 11. The system also provides a reminder inadvance of each bi-weekly deletion.
Id.
at 11. In lieu of mySingle, employees may choose insteadto use Microsoft Outlook, which allows for automatic archiving of all emails.
Id.
at 10. Samsungasserts that its 14-day retention period was adopted in 2001 for four reasons: “(1) ‘it avoids thedanger that confidential business information will be misappropriated in the event the computeritself is lost or stolen’; (2) it is cheaper than using a 30-day retention period; (3) it ‘reduces theamount of information that could inadvertently be disclosed through misdirected email, or stolenthrough unauthorized access or hacking into an employee’s email account on the system;’ and (4)the policy best complies with Korean privacy law.”
Id.
at 8-9 (internal citations and footnotesomitted).Sometime in July 2010, after Samsung launched its Galaxy line of smartphones, Apple’sCEO Steve Jobs and Apple’s Chief Operating Officer Tim Cook met with Samsung CEO J.Y. Lee.,and “‘advised Mr. Lee that Samsung needed to cease copying Apple’s iPhone designs and
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infringing Apple’s patents immediately.’”
Id.
at 12 n.59 (quoting Decl. of Richard J. Lutton, Jr. inSupp. of Apple’s Mot. for a Prelim. Inj. (“Lutton Decl.”), ECF No. 128, ¶¶ 2-4). On August 4,2010, Apple met with a Samsung representative and gave a presentation illustrating Samsung’salleged infringement of certain Apple patents. Order at 12. Shortly thereafter, on August 23, 2010,and again on September 3, 2010,
1
Samsung emailed certain Samsung employees litigation holdnotices, which stated, in relevant part:In light of the recent discussions between Samsung Electronics Co., Ltd.(“Samsung”) and Apple Inc. (“Apple”), there is a reasonable likelihood of futurepatent litigation between Samsung and Apple unless a business resolution can bereached. . . . The purpose of this e-mail is to request that you preserve any and allsuch documents that may be relevant to the issues in a potential litigation betweenSamsung and Apple until it is fully resolved. Please be aware that the above-mentioned exemplary list of documents
2
is not exhaustive and the categories of documents may well be even broader. For this reason,
if you have any doubt
as towhether you should preserve particular documents,
you are instructed to retainthem
. . . . [I]t is important that you do not destroy or discard any potentiallyresponsive documents
AND PRESERVE ANY SUCH RELEVANTDOCUMENTS
until the likelihood of litigation relating to these issues has beensufficiently attenuated, or until otherwise notified by Samsung’s Legal or IP teams.Decl. of Esther Kim in Supp. of Apple’s Mot. for Adverse Inference Jury Instruction, ECF No. 895(“Kim Decl.”), at Ex. 9-A (emphases in original). The “exemplary list of documents” identified inthe August 23 litigation hold notice specifically includes “correspondence, . . . electronic files ande-mails.” Kim Decl. Ex. 9-A. In addition, the notice enumerates ten categories of potentiallyrelevant documents subject to the preservation duty, including documents that relate to:(1) Apple or any of Apple’s patents that could potentially impact Samsung’srelevant business units (e.g., Digital Media & Communications, Device Solutions,etc.); (2) the design, development, testing, manufacturing, reverse engineering,distribution and sale of any Samsung product that Apple would likely accuse of infringing one or more of Apple’s patents; . . . (6) any internal analysis, assessments(including any efforts by Samsung to design around Apple’s patents) and/or reportsconcerning either Apple’s patents or Samsung’s patents that are currently thesubject of the discussions between Apple and Samsung; . . . (9) any communications
1
The September 3 notice is a Korean translation of the August 23 notice, which is drafted inEnglish.
See
Kim Decl. Ex. 9 at 1;
see
Order at 12 n.60.
2
The exemplary list of documents described in the litigation hold notice includes “tangible itemsof any kind that contain information, including for example paper documents, correspondence,memoranda, handwritten notes, drawings, presentation slides, business diaries, electronic files ande-mails.” Kim Decl. Ex. 9-A.
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to third parties (e.g., for analysis purposes to third party vendors or law firms)concerning any of the Apple patents; and (10) any communications with anyonerelating to any Apple patent and/or Apple patent claim against Samsung.Kim Decl. Ex. 9-A. Finally, the notice informs recipients that the preservation duty extends to“documents stored in long term record retention, as well as documents in your office computer orany central files,” and instructs recipients to “ensure that any scheduled disposal of such relevantdocuments (if any) is immediately suspended.”
Id.
The August 23 litigation hold notice itself wassent to only 27 Samsung custodians, although the notice asks recipients to “distribute this messageto anyone else who may have any such relevant documents,” and states that “[t]his obligation toretain relevant documents applies generally to all employees and outside consultants or agents of Samsung.”
Id.
;
see id.
Ex. 9-S (list of custodian recipients). There is no record of any furtherpreservation actions on Samsung’s part for the next seven months.
See
Adverse Inference Order at13.Apple filed this lawsuit against Samsung on April 15, 2011.
See
ECF No. 1. On April 21,2011, and continuing over the next few weeks, Samsung sent litigation hold notices to a total of approximately 2,841 Samsung employees.
See
Kim Decl. Ex. 9 at 1;
id.
Exs. 9-C, 9-E, 9-G. TheApril 21 and subsequent hold notices were similar in content to the August 23 notice, but identifiedmore categories of relevant documents. Samsung personnel and outside counsel provided varioustrainings to relevant employees describing the duty to preserve relevant documents and thelitigation hold requirements, and employees were instructed to inform their subordinates about thepolicy. Adverse Inference Order at 14-15. However, Samsung never audited its employees togauge compliance with this policy.
Id.
at 16. mySingle continues to be the SEC’s default emailsystem, and SEC has not suspended the fourteen day e-mail deletion feature on mySinglethroughout the duration of this litigation. Order at 21.
B.
Adverse Inference Order
On May 1, 2012, Apple filed a Motion for Adverse Inference Jury Instructions Due toSamsung’s Spoliation of Evidence, which Samsung opposed.
See
ECF Nos. 895, 987. In itsmotion, Apple sought a finding that Samsung spoliated evidence, and as a sanction for suchconduct, an adverse inference jury instruction “to the effect that: (1) Samsung had a duty to
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