If You Cannot Get The Smoking Gun . . . At Least Get The Smoke
Originally Published April 2006 In Trial Magazine
INTRODUCTION
Unlike criminal cases, a defendant in a civil action is virtually certain to be afforded notice of his alleged misconduct long before he has to sit for a deposition, produce documents, or otherwise explain or justify his alleged misconduct.
What happens then, if the defendant has the mind of a criminal with no reservations about destroying evidence? Especially in today’s digital age, when evidence can be destroyed with a few keystrokes or clicks of a mouse, how can a plaintiff prove, for example, copyright infringement or the misappropriation of trade secrets if the evidence is gone before the defendant even files his responsive pleading?
Although courts are often reluctant to give plaintiffs the opportunity to enter a defendant’s premises without notice to search and seize evidence of wrongdoing, there are weapons found in and out of the Federal Rules of Civil Procedure, which the plaintiff’s practitioner must be aware of to uncover, if not the smoking gun, at least the smoke.
A RULE 65(b) SEARCH AND SEIZURE
In copyright infringement cases, for example, it is often the case that the plaintiff becomes aware of a defendant’s infringement from an “insider” who has knowledge of the infringement without evidence of the infringement. An ex-employee or customer may have heard defendants discussing the fact that they purchased a single software package with one license to install in several different offices. This insider may possess evidence of defendants admitting to owning counterfeit or “cracked” versions of the plaintiff’s software. While this testimony may be persuasive, without direct evidence of wrongdoing, the trial will be nothing more than a battle of contradicting testimony.
Ideally, the plaintiff will want an opportunity to search the defendant’s offices and computers for evidence of infringement before the defendant is afforded an opportunity to engage in Arthur Andersen type “housekeeping.” In some cases, the plaintiff will able to utilize Rule 65(b) of the Federal Rules of Civil Procedure, which authorizes the court to issue a temporary restraining order without notice to the adverse party.
In practice, the plaintiff will file the complaint and its ex parte application for an emergency temporary restraining order under seal and not serve or provide any notice of the lawsuit to the defendant. The application will request that the plaintiff, with the assistance of the United States Marshals, be afforded the opportunity to search for and seize any evidence of infringement.
The relief provided by Rule 65(b) is the exception to the general rule. As explained by the Supreme Court, “our entire jurisprudence runs counter to the notion of court action taken before reasonable notice and an opportunity to be heard has been granted both sides of a dispute.”1 As a result, restraining order applications sought ex parte require the court to serve as the absent party’s advocate, triggering intense judicial scrutiny of a plaintiff’s claims, the relief it seeks, and most importantly, its proffered justification for proceeding ex parte2. Especially when a defendant is unaware that a lawsuit has been filed, such relief also implicates the restrictions imposed by the Fourth and Fifth Amendments of the Constitution.
Accordingly, ex parte relief under Rule 65(b) applies in two situations. First, such relief may be granted when the plaintiff does not know the party’s identity or location. Second, such relief may be granted when “it clearly appears . . . that immediate and irreparable injury, loss, or damage will result to the application before the adverse party or that party’s attorney can be heard in opposition.”3 The former situation is rarely at issue and the latter is rarely provable.
To illustrate, the opportunity to erase computer disks, burn, shred, or hide documents, and coach potential witnesses is present in every civil case. Therefore, a plaintiff must do more than assert that the defendant could or would dispose of evidence if given notice. Instead, a plaintiff must show that the adverse party has a history of disposing of evidence or violating court orders or that persons similar to the defendant have such a history.4
Often, the plaintiff has not had any direct dealings with the defendant and can therefore not present anything beyond intuition, suspicion, or supposition. Without more, the Court will invariably conclude that the plaintiff has not come forth with adequate justification for failing to give notice to the defendant. If the plaintiff wishes to seek injunctive relief, the Court will instruct the plaintiff to bring a fully noticed motion for a preliminary injunction.
Because providing the defendant with notice of the action is tantamount to affording the sinister defendant an opportunity to cover up its tracks of wrongdoing, the plaintiff’s practitioner must be prepared to handle this hurdle dealt by the Court.
THE NEXT BEST THING
No one in America witnessed the murders of Nicole Brown Simpson or Ronald Goldman on June 12, 1994. However, by June 17, 1994, millions of Americans concluded that O.J. Simpson, by then a fugitive from justice in his White Ford Bronco, was the one and only suspect in the double murders on Bundy Drive. Indeed, observing the attempted escape was sufficient for many to conclude that this popular Hall of Famer was a cold blooded killer. Both logically and legally, evidence of flight by a defendant is a silent admission by the defendant that he is unwilling or unable to face the charges against him from which guilt may be inferred.5
The plaintiff’s practitioner must realize that a civil lawsuit is no different. When a plaintiff is denied the rare but essential opportunity to search and seize a defendant’s premises, the plaintiff must do the next best thing: informal and clandestine discovery.
When adhering to the Court’s suggestion of bringing a fully noticed motion for a preliminary injunction, the plaintiff should simultaneously have a strategy in place designed to expose any efforts to eliminate evidence. While it is unlikely that the defendant will pack up his SUV and head for Mexico, defendants in civil lawsuits are rarely suspicious that their conduct following service of a lawsuit could be at issue or even observed. Accordingly, what a defendant does immediately following service can sometimes produce a cornucopia of evidence that would normally be lost forever.
Surveillance
Rather than hire a process server to simply serve the lawsuit and wait to hear from the defendant or his counsel, a plaintiff would be well-advised to hire a reputable private investigator to have a team of individuals conduct surveillance of the defendant and all relevant locations where evidence of wrongdoing could be found (e.g., the defendant’s place of business, residence, etc.). When the team is in place and are conducting surveillance from a public location, the defendant should be formally served with the complaint. From there, the defendant and all relevant locations must be observed and taped. A videotape showing the defendant loading computers and documents into a car or truck immediately after being served with the lawsuit can be very persuasive evidence for a judge or jury.
Dumpster Diving
Dumpster diving (i.e., searching through another’s trash) is not illegal. In 1988, the Supreme Court of the United States concluded in California v. Greenwood that the legality of a warrantless search of a suspect’s trash turned on whether the manifested subjective expectation of privacy in the garbage left on a curb would be accepted by society as objectively reasonable. The Court concluded that, by exposing the garbage to the public and placing it on the side of the street for the express purpose of conveying it to the trash collector, there was no reasonable expectation in the privacy of the discarded items.6
Since Greenwood, dumpster diving has become commonplace among both law enforcement and, perhaps ironically, identity thieves. It has become so prevalent, in fact, that the Federal Trade Commission’s (“FTC”) new “Disposal Rule” provides that businesses must take reasonable measures to protect against unauthorized access to consumer information when the business disposes such information.7
In addition to conducting surveillance, a plaintiff looking for evidence of copyright infringement, trade secret misappropriation, or tortious interference, for example, should also have its private investigators engage in dumpster diving to see whether the defendant has carelessly embarked in a campaign of evidentiary destruction.
A WORD OF CAUTION: INSTRUCT AND SUPERVISE THE INVESTIGATOR
It is imperative that practitioners be aware of the legal limitations of these methods of discovery. As illustrated in Stephen Slesinger, Inc. v. The Walt Disney Co., misconduct in the quest for evidence of misconduct can devastate a party’s case.8
In the early 1990s, plaintiff Stephen Slesinger, Inc. (“SSI”) sued defendant The Walt Disney Corporation (“Disney”) for Disney’s alleged failure to pay the plaintiff royalties in connection with its Winnie the Pooh productions. When SSI commenced litigation, it hired an investigator to surreptitiously procure Disney’s documents outside of the regular discovery process. On some occasions, the investigator discussed his planned activities with SSI. In most instances, he did not.
The lawsuit was litigated for more than ten years before the conduct of SSI’s investigator would be fully addressed by the Court; however, when the conduct was addressed, it cost SSI dearly. To illustrate, the Court first took issue with the fact that neither SSI nor its investigator maintained any logs or records showing what documents were received from the investigator. Next, the Court found that the investigator was not credible when he testified that he only conducted dumpster diving at one Disney location. Even if he did conduct dumpster diving at only one location, the Court noted that the dumpsters at the location “were located on private property, not on a street curb as occurs on trash collection days in residential neighborhoods.” Put another way, “[t]he contents of the . . . dumpsters were not, in this Court’s view, made available to the public so as to give SSI a right to treat Disney’s documents as abandoned and use them for private advantage.”9
Practitioners must be extremely cautious about who they hire to conduct surveillance and dumpster diving. There is no privilege or immunity for breaking the law to obtain evidence.10As the plaintiff’s agent, it is the plaintiff’s responsibility to adequately supervise the investigator’s activities. Pragmatically speaking, the responsibility lies with the plaintiff’s counsel.
In Slesinger, the Court found that the culpability of SSI’s investigator’s shenanigans would be borne by SSI – even if the investigator’s actions conflicted with SSI’s instructions: “SSI claims it instructed [the investigator] to only obtain Disney documents by lawful means, but SSI remains fully responsible for [the investigator’s] misconduct, even if his acts, as SSI’s agents, were contrary to SSI’s explicit instructions.”11
It should be further noted that what SSI’s investigator uncovered was not evidence of Disney’s wrongdoing. Rather, SSI’s investigator recovered privileged documents prepared by Disney’s counsel that, for example, analyzed the risk and potential outcome of the case. SSI’s sole shareholder faxed the document to SSI’s attorneys who in turn circulated and reviewed it in detail. The Court found SSI’s misconduct “willful, tactical, egregious, and inexcusable.”12
When analyzing the appropriate sanction for SSI, the Court explained that neither disqualification of SSI’s counsel nor monetary sanctions were sufficient. SSI’s principals had reviewed the documents and, accordingly, neither disqualification nor monetary sanctions could purge the improperly obtained information from their minds.13
Ultimately, the Court concluded that terminating sanctions were the proper remedy to restore the integrity of the judicial process and fully protect the institution from further SSI abuse.
After more than ten years of litigation, SSI’s complaint against Disney was dismissed.
A RENEWED REQUEST: RULE 65(b) SEARCH AND SEIZURE
So long as the plaintiff’s investigator understands that surveillance and dumpster diving does not entitle him to unfettered access everywhere, the evidence uncovered following service of a lawsuit can often be powerful weapons for liability. In addition, the evidence recovered should also be used to renew the request that the Court grant a Rule 65(b) search and seizure without notice to the defendant. While the defendant will have had some opportunity to conceal evidence of his wrongdoing, he is also under the belief that there will be no discovery until at least the Court holds the formally noticed hearing for a preliminary injunction.
Thus, the plaintiff should go back to Court and explain that as soon as the defendant was served with the complaint, he threw away dozens of pieces of critical evidence showing that he had, for example, pirated the plaintiff’s software. The renewed request will explain that without a Court order the plaintiff will likely never know the extent of defendant’s culpability. It is also worth reminding the Court that irreparable damage may already have been done. Nonetheless, since the initial application was denied on the ground that the plaintiff could not identify specific instances where the defendant has destroyed evidence, it must now grant the motion given that the plaintiff has met its burden with the requisite evidence.
CONCLUSION
Our legal system generally does not deal effectively with parties who are prepared to lie, destroy, fabricate, or destroy evidence. Courts are suspicious of such charges and often assume that they are made for strategic or tactical reasons. Even when true, charges of misconduct can end up hurting the litigant making them as opposed to the litigant or party actually guilty of the misconduct.
Knowing the limitations of Rule 65 and our justice system in general, it is imperative that a plaintiff understand that there are additional weapons available to prove a defendant’s liability. Conducting surveillance and dumpster diving can sometimes uncover actions that implicate liability better than a White Ford Bronco headed for Mexico.
1 Granny Goose Foods, Inc. v. Brotherhood of Teamsters, 415 U.S. 423, 438-39 (1974).
2 Adobe Systems, Inc. v. South Sun Products, Inc., 187 F. R. D. 636, 639 (S.D. Cal. 1999)citing American Can Co. v. Mansukhani, 742 F. 2d 314, 324 (7th Cir. 1984).
3 Fed. R. Civ. P. 65(b).
4 First Tech. Safety Sys., Inc. v. Depinet, 11 F. 3d 641, 650-51 (6th Cir. 1993).
5 Starr v. U.S., 164 U.S. 627, 632 (1897).
6 California v. Greenwood, 486 U.S. 35 (1988).
7 16 C.F.R. § 682.3 (2005).
8 Stephen Slesinger, Inc. v. The Walt Disney Company, 2004 WL 612818 (Cal. Superior) (Not published).
9 Id. at *5.
10 Pullin v. Superior Court, 81 Cal. App. 4th 1161, 1164-65 (2000).
11 Id. at *5 citing Martin v. Leathman, 22 Cal. App. 2d 442, 445 (1937).
12 Id. at * 13.
