Oracle USA, Inc. v. Rimini St., Inc.
Oracle USA, Inc. v. Rimini St., Inc.
2020 WL 9209714 (D. Nev. 2020)
September 21, 2020
Ferenbach, Cam, United States Magistrate Judge
Summary
Oracle sought sanctions against Rimini for spoliation of ESI. Rimini argued that the missing files were transitory duplicates, and the court found that Rimini had no obligation to preserve them. Oracle could have sought the missing documents from alternate sources, but did not do so, and waited eight months to file the motion for sanctions. As a result, the court recommended denying Oracle's motion.
Additional Decisions
ORACLE USA, INC.; a Colorado corporation; ORACLE AMERICA, INC.; a Delaware corporation; and ORACLE INTERNATIONAL CORPORATION, a California corporation, Plaintiff,
v.
RIMINI STREET, INC., a Nevada corporation, Defendant
v.
RIMINI STREET, INC., a Nevada corporation, Defendant
Case No. 2:10-cv-00106-LRH-VCF
United States District Court, D. Nevada
Signed September 21, 2020
Counsel
Beko O. Reblitz-Richardson, Pro Hac Vice, Sean Phillips Rodriguez, Steven C. Holtzman, Pro Hac Vice, Boies Schiller Flexner LLP, Benjamin Patrick Smith, Pro Hac Vice, David Richard Kocan, Pro Hac Vice, Jenna K. Stokes, Pro Hac Vice, Sharon Ruth Smith, Zachary Hill, Pro Hac Vice, John A. Polito, Pro Hac Vice, Lindsey McGrath Shinn, Pro Hac Vice, Morgan, Lewis & Bockius, LLP, Gabriel Schlabach, Pro Hac Vice, Paul, Weiss, Rifkind, Wharton & Garrison LLP, San Francisco, CA, David Salmons, Pro Hac Vice, Morgan Lewis & Bockius, Jessica Phillips, Pro Hac Vice, William A. Isaacson, Pro Hac Vice, Paul, Weiss, Rifkind, Wharton & Garrison LLP, Meryl C. Governski, Pro Hac Vice, Boies Schiller & Flexner LLP, Raechel Keay Kummer, Pro Hac Vice, Washington, DC, Dorian E. Daley, Pro Hac Vice, Deborah K. Miller, Pro Hac Vice, James C. Maroulis, Pro Hac Vice, Oracle Corporation, Redwood City, CA, Jenny C. Wu, Pro Hac Vice, Paul, Weiss, Rifkind, Wharton & Garrison LLP, New York, NY, Karen L. Dunn, Pro Hac Vice, Paul, Weiss, Rifkind, Wharton & Garrison LLP, Washington D.C., DC, Richard J. Pocker, Boies Schiller & Flexner, LLP, Las Vegas, NV, for Plaintiff Oracle USA, Inc.Beko O. Reblitz-Richardson, Pro Hac Vice, Sean Phillips Rodriguez, Steven C. Holtzman, Pro Hac Vice, Boies Schiller Flexner LLP, Benjamin Patrick Smith, Pro Hac Vice, David Richard Kocan, Pro Hac Vice, Jenna K. Stokes, Pro Hac Vice, Sharon Ruth Smith, Zachary Hill, Pro Hac Vice, John A. Polito, Pro Hac Vice, Lindsey McGrath Shinn, Pro Hac Vice, Morgan, Lewis & Bockius, LLP, Gabriel Schlabach, Pro Hac Vice, Paul, Weiss, Rifkind, Wharton & Garrison LLP, San Francisco, CA, David Salmons, Pro Hac Vice, Morgan Lewis & Bockius, Jessica Phillips, Pro Hac Vice, William A. Isaacson, Pro Hac Vice, Paul, Weiss, Rifkind, Wharton & Garrison LLP, Meryl C. Governski, Pro Hac Vice, Boies Schiller & Flexner LLP, Raechel Keay Kummer, Pro Hac Vice, Washington, DC, Dorian E. Daley, Pro Hac Vice, Deborah K. Miller, Pro Hac Vice, James C. Maroulis, Pro Hac Vice, Oracle Corporation, Redwood City, CA, Jacob J.O. Minne, Pro Hac Vice, Morgan Lewis, Palo Alto, CA, Jenny C. Wu, Pro Hac Vice, Paul, Weiss, Rifkind, Wharton & Garrison LLP, New York, NY, Karen L. Dunn, Pro Hac Vice, Paul, Weiss, Rifkind, Wharton & Garrison LLP, Washington D.C., DC, Richard J. Pocker, Boies Schiller & Flexner, LLP, Las Vegas, NV, for Plaintiff Oracle International Corporation.
Beko O. Reblitz-Richardson, Pro Hac Vice, Sean Phillips Rodriguez, Steven C. Holtzman, Pro Hac Vice, Boies Schiller Flexner LLP, Benjamin Patrick Smith, Pro Hac Vice, Jenna K. Stokes, Pro Hac Vice, Sharon Ruth Smith, Zachary Hill, Pro Hac Vice, John A. Polito, Pro Hac Vice, Lindsey McGrath Shinn, Pro Hac Vice, Morgan, Lewis & Bockius, LLP, Gabriel Schlabach, Pro Hac Vice, Paul, Weiss, Rifkind, Wharton & Garrison LLP, San Francisco, CA, David Salmons, Pro Hac Vice, Morgan Lewis & Bockius, Jessica Phillips, Pro Hac Vice, William A. Isaacson, Pro Hac Vice, Paul, Weiss, Rifkind, Wharton & Garrison LLP, Meryl C. Governski, Pro Hac Vice, Boies Schiller & Flexner LLP, Raechel Keay Kummer, Pro Hac Vice, Washington, DC, Jenny C. Wu, Pro Hac Vice, Paul, Weiss, Rifkind, Wharton & Garrison LLP, New York, NY, Karen L. Dunn, Pro Hac Vice, Paul, Weiss, Rifkind, Wharton & Garrison LLP, Washington D.C., DC, Richard J. Pocker, Boies Schiller & Flexner, LLP, Las Vegas, NV, for Plaintiff Oracle America, Inc.
Blaine H. Evanson, Pro Hac Vice, Casey J. McCracken, Pro Hac Vice, Jeffrey T. Thomas, Pro Hac Vice, Jennafer Marie Tryck, Pro Hac Vice, Stephen C. Whittaker, Pro Hac Vice, Gibson Dunn & Crutcher LLP, Irvine, CA, Daniel B. Winslow, Pro Hac Vice, Rimini Street, Inc., Pleasanton, CA, Eric Vandevelde, Pro Hac Vice, Samuel Grant Liversidge, Pro Hac Vice, Lauren Blas, Pro Hac Vice, Gibson, Dunn & Crutcher L.L.P., Los Angeles, CA, Gretchen Harting Kleinman, Pro Hac Vice, John P. Reilly, Pro Hac Vice, Michael Hitsky, Pro Hac Vice, Farah Shirin Anthony, Scott S. Hoffmann, Rimini Street, Inc., Joel D. Henriod, Daniel F. Polsenberg, Lewis Roca Rothgerber Christie LLP, Leslie A.S. Godfrey, Greenberg Traurig, LLP, W. West Allen, Howard & Howard Attorneys PLLC, Las Vegas, NV, Joseph A. Gorman, Pro Hac Vice, Gibson, Dunn & Crutcher LLP, San Francisco, CA, Lisa DeBrosse Johnson, Pro Hac Vice, Boston, MA, Mark A. Perry, Pro Hac Vice, Gibson, Dunn & Crutcher LLP, Washington, DC, Peter Strand, Pro Hac Vice, Shook, Hardy & Bacon L.L.P., Kansas City, MO, for Defendant.
Ferenbach, Cam, United States Magistrate Judge
Report and Recommendation MOTION FOR SANCTIONS PURSUANT TO RULE 37 [ECF No. 1359]
*1 Before the Court is plaintiffs Oracle USA, Inc., Oracle America Inc., and Oracle International Corporation's (collectively “Oracle”) motion for sanctions pursuant to Rule 37. (ECF No. 1359). The Court recommends denying the motion.
I. Background
Oracle alleges that defendant Rimini Street Inc. (“Rimini”) spoliated evidence and seeks sanctions pursuant to Federal Rule of Civil Procedure 37. (ECF No. 1359). Oracle argues that during the injunction compliance period, Rimini used an Automated Framework subprogram called TransferFiles, “to copy PeopleSoft files from Rimini's systems to customer-associated environments.” (Id. at 12.) Oracle argues that Rimini used a program that destroyed a certain number of files it distributed using TransferFiles. (Id.) Oracle argues, “there is no way to determine whether the files Rimini produced are the same as the files it distributed to customers.” (Id. at 17.)
Oracle argues in its motion that Rimini has a history of spoliating evidence. (Id. at 17-18 and 24, citing to ECF No. 466). Oracle concedes that Rimini immediately changed their procedure once Oracle sent them a letter about this issue, and since October 2019 Rimini modified its, “TransferFile tool to preserve the intermediate, duplicate copies at issue[.]” (ECF No. 1359 at 18). Oracle asks that as spoliation sanctions, the Court should draw a rebuttable presumption that the information contained in the spoliated files was unfavorable to Rimini.” (Id.)
Rimini argues in its response that, “[w]hen a Rimini engineer uses TransferFiles to transmit such a file to a client, it creates a new copy on the client's system while retaining Rimini's original file.” (ECF No. 1372 at 6). Rimini argues that it has used TransferFiles since 2013, that Oracle knew about the TransferFiles subprogram, and that Rimini changed the program as soon as Oracle raised the issue. (Id.) Rimini argues that, “Oracle objects only to Rimini's alleged failure to preserve the transitory [redacted] copy (which typically exists for a matter of seconds)—even though the result of the TransferFiles process is (at least) two identical copies of a file where only one previously existed.” (Id.) Rimini states that, “[t]he copy/paste functionality in a word-processing program is analogous. When a user copies text from one document to another, the text is first copied to an intermediate “clipboard” in the computer's memory, from which it can then be pasted to its destination. The original copy remains, in addition to the newly created duplicate; but the transitory copy on the clipboard is not retained in the ordinary course.” (Id. at 6-7.) Rimini argues that since the absence of clipboard copies in discovery would not constitute spoliation, its actions via TransferFile prior to Oracle's letter should not be sanctionable. (Id. at 7.)
Rimini argues that because the files were transitory duplicates, that it did not know, nor could it have reasonably known, that Oracle would seek these temporary files in discovery. (Id.) Rimini states that it recovered most of the temporary files Oracle claims were spoliated and that it produced the newly produced temporary files after October 2019 through the end of discovery. (Id.) Rimini argues that although the Court found that it spoliated evidence in the past, that was seven years ago and does not constitute a pattern. (Id.)
*2 Rimini argues that Oracle's motion is untimely because it waited until long after discovery closed to bring the motion. (Id. at 18). Rimini also argues that Oracle could have brought this issue to the Court's attention during the discovery period so that the Court could have fashioned a remedy if needed. (Id. at 19). Rimini argues that one example of a potential remedy could have been to allow, “Oracle to serve (additional) limited subpoenas to Rimini's clients to obtain the additional copies of the transferred files from the client's systems[.]”
Oracle argues in its reply that, “there is no way to know whether the files were identical because Rimini destroyed them.” (ECF No. 1376 at 8, emphasis omitted). Oracle also argues that Rimini mischaracterizes the files at issue as transitory; it argues that the files are more analogous, “to attachments stored in the ‘sent’ folder of an email account.” (Id.) Oracle argues that Rimini's actions are, “akin to the email user's developing and running an email deletion program that automatically and continuously deletes all sent emails.” (Id.) Oracle also argues that, “Rimini's claim that Oracle previously acknowledged that Rimini's production of a single copy of each transferred file, along with a list of the clients that received each file, would be a fair and proportional way for Rimini to satisfy its discovery obligations grossly mischaracterizes Oracle's position.” (Id. at 12, internal citations and emphasis omitted.) Oracle argues that since, “these are the files Rimini actually sent to customers, they were central to determining Rimini's Injunction compliance[.]” (Id.) Oracle argues there was no need to seek relief during the discovery period because, “Rimini's destruction of the documents” caused prejudice to Oracle, and the Court, “could not have ordered Rimini to reverse the deletion.” (Id.)
On September 3, 2020, the Court held a video status hearing to determine four preliminary issues. (See ECF Nos. 1420 at 3-4 and 1425). The order setting the status hearing also stated that, “[t]he parties will also have an opportunity to clarify their respective positions regarding the issues of fact [ ].” Regarding the first, third, and fourth issues, the parties agreed that: (a) there is a reliable record regarding the list of Rimini's clients that received each file; (b) that the Court need not set an in-person evidentiary hearing to make factual findings regarding the nature of the files and whether the files could have been restored or replaced through additional discovery; and (c) that the Court could decide this motion on the briefing without holding an evidentiary hearing. (ECF No. 1425). The parties did not agree regarding the second preliminary issue: whether the parties believe that re-opening limited discovery could solve the issue of whether the files can be restored or replaced, pursuant to Federal Rule of Civil Procedure 37(e).
Oracle argued at the status hearing that there was no need to take any limited discovery regarding the lost documents from Rimini. Oracle argued that taking third party discovery would delay the proceedings by approximately six months because of the response times. Oracle also argued that there was no guarantee that what currently exists in the files of the customers will be that exact same ESI. Rimini has no control over the materials on the customers’ sites. Oracle cannot be certain that those documents remain in the possession of the customer in an unaltered form. Oracle argued that customer discovery might not provide it with the exact material that is the subject of the spoliation motion.
*3 Rimini argued that it produced copies of most of the allegedly missing ESI, but to the extent that there are missing files, Oracle could have brought the motion sooner so that the Court could have fashioned a remedy, but instead Oracle waited eight months after its last correspondence with Rimini on this issue to file its motion for spoliation. Rimini also argues that any files Oracle alleges are missing could exist and would be easy to find. For example, Rimini noted that six missing files at issue were sent to only one client. Rimini stated that it would not object to, and would help facilitate, allowing Oracle to serve limited third-party subpoenas. Rimini argued that responses to third-party subpoenas took six months in the past because the subpoenas were broad, but that narrow third-party subpoenas, such as would be appropriate here, would not cause a long delay. Rimini argued that allowing narrow third-party discovery would cure the issue.
Rimini also filed a demonstrative exhibit before the hearing which outlines Rimini's positions regarding the issues of fact. (See ECF No. 1421). Oracle filed a response[1] to the demonstrative exhibit after the hearing to rebut Rimini's positions. (ECF No. 1426). Rimini filed a reply to Oracle's response that notes that demonstrative exhibits are typically handed out in Court at the hearing and that Rimini only filed the demonstrative exhibit before the hearing because the parties would be appearing on video.
II. Discussion
Spoliation is “the destruction or significant alteration of evidence, or the failure to preserve property for another's use as evidence, in pending or future litigation.” Kearney v. Foley & Lardner, LLP, 590 F.3d 638, 649 (9th Cir. 2009). Federal Rule of Civil Procedure 37(e) establishes the necessary findings to support curative measures for spoliation of electronically stored information.
Rule 37(e) states in part:
If electronically stored information that should have been preserved in the anticipation or conduct of litigation is lost because a party failed to take reasonable steps to preserve it, and it cannot be restored or replaced through additional discovery, the court: (1) upon finding prejudice to another party from loss of the information, may order measures no greater than necessary to cure the prejudice[.]
See Federal Rule of Civil Procedure 37(e),(e)(1).
A court may then impose sanctions under Rule 37(e) only if it finds “(1) [the party] failed to preserve ESI ‘that should have been preserved’ in anticipation or conduct of litigation; (2) the information was lost because [the party] failed to take reasonable steps to preserve it; (3) the ESI cannot be restored or replaced; and (4) the plaintiffs were prejudiced by the loss.” Small v. Univ. Med. Ctr., No. 2:13-cv-0298-APG-PAL, 2018 WL 3631882, 2018 U.S. Dist. LEXIS 134716 at 236-37 (D. Nev. July 31, 2018).
Parties are not required to “preserve each instance of relevant electronically stored information”:
ESI is maintained in a wide variety of formats, locations, and structures. Many copies of the same ESI may exist in active storage, backup, or archives. Computer systems manage data dynamically, meaning that the ESI is constantly being cached, rewritten, moved, and copied. For example, a word processing program usually will save a backup copy of an open document into a temporary file every few minutes, overwriting the previous backup copy. In this context, imposing an absolute requirement to preserve all ESI would require shutting down computer systems and making copies of data on each fixed disk drive, as well as other media that normally are used by the system.
The Sedona Principles, Third Edition: Best Practices, Recommendations & Principles for Addressing Electronic Document Production, 19 Sedona Conf. J. 1, 112 (2018).
*4 A court may not sanction a party for spoliation under FRCP 37(e) if the parties can restore or replace the lost ESI through feasible means. See 2015 Advisory Committee Notes to FRCP 37(e). Courts have declined to award sanctions for deleted ESI where other avenues of discovery could “replace” it by revealing the same information that the deleted ESI would have provided. See, for example, Oracle Am., Inc. v. Hewlett Packard Enter. Co., 328 F.R.D. 543, 552-54 (N.D. Cal. 2018) (Court did not sanction Oracle regarding missing documents, finding no loss when missing documents could be reproduced from other sources or were produced from other sources, and that loss is a “threshold inquiry”); see also Adams AV Select Invs., LLC v. Klein, 2020 WL 2425715, at 5 (D. Del. May 12, 2020) (no sanctions warranted where emails were “forwarded to [a different] account or sent to other parties”); see also Eshelman v. Puma Biotechnology, Inc., 2017 WL 2483800, at 5 (E.D.N.C. June 7, 2017) (Despite deleted internet browser history that could not be restored, the Court declined to order sanctions in part because the plaintiff could seek information about the same internet searches performed through deposition testimony).
Other courts have declined to award sanctions where the moving party failed to take discovery to try to replace the deleted ESI. See Best Payphones, Inc. v. City of New York, No. 1-CV-3924 (JG) (VMS), 2016 WL 792396, at 4 (E.D.N.Y. Feb. 26, 2016), aff'd as modified sub nom. Best Payphones, Inc. v. Dobrin, 409 F. Supp. 3d 130 (E.D.N.Y. 2018)(Court denied Rule 37 sanctions where the movants failed to request copies of the deleted ESI from third parties); see also Mfg. Automation & Software Sys. v. Hughes, No. 2:16-cv-08962-CAS(KSx), 2018 WL 2059839, at 7, 2018 U.S. Dist. LEXIS 73424, at 18 (C.D. Cal. Apr. 30, 2018)(The Court found that, “that the proper procedure with respect to requesting Rule 37(e) sanctions would have been for defendants (1) to file a motion to compel any missing electronically store information and (2) in the event they could not obtain the missing emails from plaintiff or through a court order, to subpoena missing emails from alternate sources.”).
Rule 37 does not contain an express time limit for filing a motion for sanctions. Courts have “identified a number of factors that can be used to assess the timeliness of spoliation motions.” Goodman v. Praxair Servs., Inc., 632 F. Supp. 2d 494, 506-08 (D. Md. 2009) (collecting cases); see also Long v. Howard Univ., 561 F. Supp. 2d 85, 91 (D.D.C. 2008). Relevant to Oracle's motion, “courts must give consideration to the explanation of the moving party as to why the motion was not filed earlier.” Wakefield v. ViSalus, Inc., No. 3:15-CV-1857-SI, 2019 WL 1411127, at 3 (D. Or. Mar. 27, 2019)(internal citation omitted); see also Long, 561 F. Supp. 2d at 91 (characterizing factors governing timeliness sanctions motion as “when the movant learned of the discovery violation, how long he waited before bringing it to the court's attention, and whether discovery has been completed”).
The parties present dueling analogies regarding the missing ESI. The parties also do not agree regarding the number of missing files, but the number of missing documents is irrelevant to this analysis.
I conclude that Rimini's analogy, that the missing files are mere transitory, intermediate files (like the transitory copy of words on the clipboard in a word processing application when a user copies/pastes from one document to another) is a credible and good-faith explanation regarding how Rimini's engineers use TransferFiles to transmit files to a client, and how it creates a new copy on the client's system while retaining Rimini's original file. Since I conclude that the missing files are transitory copies, I also conclude that Rimini did not have an obligation to preserve each instance of relevant electronically stored information. This is compounded by the fact that the transitory files were duplicative of the files that already existed on Rimini's (and the client's) systems.
*5 Even assuming arguendo that Oracle's analogy (that the missing ESI is more akin to deleted emails) is correct, its motion for sanctions would still fail because Rimini has not lost any ESI pursuant to the plain language of Rule 37(e). The parties agree that there is a reliable list of clients that Oracle could have subpoenaed during the discovery period: ESI is not lost if it is available from another source or if it “exists in multiple locations.” See 2015 Advisory Committee Notes to FRCP 37(e). Oracle could have sought the missing documents from alternate sources (Rimini's clients).
Oracle did not attempt to take third-party discovery during the discovery period to replace any of the missing ESI at issue. The purpose of the third-party discovery would have been to compare customer copies of the files received from Rimini with those produced by Rimini in discovery. Oracle cited delay (noting that responses from third parties have taken about six months in the past) as one of the reasons it did not take third-party discovery, yet it waited eight months from its last correspondence with Rimini regarding this issue to file the instant motion. The timing of Oracle's motion, long after the close of discovery, and its blanket rejection of the Court's (reluctant) invitation regarding potentially re-opening discovery on this issue, supports a finding that the documents at issue are not “lost,” as required by Rule 37(e).
Oracle also argued that there was “no guarantee” that Rimini's clients would have unaltered versions of the ESI it seeks, but there is never any guarantee that a third-party, who has no obligation to preserve ESI, would have missing ESI. The purpose of taking discovery is seek the truth. If a copy existed in another location, this would have cured the issue. There is also no evidence that Rimini engaged in bad faith as it had been open and honest with Oracle regarding its TransferFiles subprogram for many years and it changed the program as soon as Oracle raised the issue. Rimini also offered to facilitate in helping Oracle seek additional discovery from its own clients. Oracle was not diligent in its obligation to take discovery before seeking sanctions. The missing ESI could be reproduced from other sources, but Oracle told the Court it does not want to re-open discovery to test its theory or cure the issue.
Oracle has not shown that any ESI was lost within the meaning of Rule 37. Since Rimini did not have an obligation to preserve the transitory ESI at issue here, Rimini took reasonable steps to preserve evidence (i.e. the duplicates it maintained on its systems and produced to Oracle). Loss is a threshold requirement for sanctions. It is not necessary to determine what the remedy for the loss of any ESI should be.
The Court recommends denying Oracle's motion.
Accordingly,
IT IS RECOMMENDED that Oracle's motion for sanctions pursuant to Rule 37 (ECF No. 1359) be DENIED.
Footnotes
Oracle's response is not fashioned as a motion, but Oracle attached a proposed order to strike Rimini's demonstrative exhibit. The Court declines to construe Oracle's response as a motion and will not strike the demonstrative exhibit, but the Court did review and consider the facts and arguments both parties presented.