I. TRENDS IN FLORIDA LITIGATION
a. The “Apex” Doctrine
In federal and state courts throughout the US, a party’s ability to depose high-ranking officials of an organization, also known as “apex” witnesses, is a recurring and high-stakes discovery battle in complex business lawsuits.
Both Florida law and the federal Apex Doctrine protect “apex” individuals from being forced to appear for deposition to account for the reality that high-ranking officials are vulnerable to harassing depositions and need some measure of protection from the courts. See Gen. Star Indem. Co. v. Atl. Hospitality of Fla., LLC, 57 So. 3d 238, 240 (Fla. 3d DCA 2011). Accordingly, “apex” witnesses generally are not forced to testify unless it has been established that the testimony to be elicited is (1) necessary and relevant, and (2) unavailable from a lower-level employee. See State Dep’t of Health & Rehab. Servs. v. Brooke, 573 So. 2d 363, 371 (Fla. 1st DCA 1991).
As one Florida appellate court has explained: “The job of the president of the company is to manage the company, not fly around the United States in depositions about . . . disputes of which the president has no personal knowledge . . . If all claimants demand and obtain the same right, the chief executive officer manages his or her deposition schedule, not the company.” Gen. Star Indem. Co., 57 So. 3d at 240.
But there’s a wrinkle: in Florida, appellate courts have only clearly applied the apex doctrine to governmental agencies — not corporations. This can be problematic when a party seeks high level corporate depositions to abuse, harass, and create settlement pressure, instead of to seek out the truth.
In 2020 the Florida Supreme Court will have the opportunity to provide much needed guidance on broader application of the apex doctrine to curb these discovery abuses, as a case has made its way up through the appellate courts and is ready to be decided by the Florida high court this year. The Florida Supreme Court case is Suzuki Motor Corp. v. Winckler, Case No. SC19-1998 (Fla. Sup. Ct.), and it is a case that many trial lawyers throughout the state and the country are keeping an eye on.
b. The Rise of “Electronically Stored Information,” or “ESI”
Businesses and individuals now store most if not all of their information electronically. It costs less, and it’s convenient. On top of that, everyone now uses email, text, chat, Skype, Facetime, or Zoom anytime they want for fast and efficient communication.
The impact on litigation has been enormous. Litigants have amassed an immense amount of electronically stored information, commonly referred to as ESI, and discovery expenses have soared as a result.
There are a few reasons why the modern realities of electronic communication and ESI have posed challenges in lawsuits. For example, parties to litigation have to account for their preservation obligations, which — save for a few jurisdictions — impose a duty to preserve evidence relevant to litigation of a claim directly to the court, not to a party’s adversary. The challenges around ensuring compliance with these preservation obligations, in the face of the new realities of ESI, are substantial. And the consequences of a compliance failure can be dire. One Florida appellate court has observed that “[t]he intentional destruction or alteration of evidence undermines the integrity of the judicial process and, accordingly, may warrant imposition of the most severe sanction of dismissal of a claim or defense, the striking of pleadings, or entry of a default.” Tramel v. Bass, 672 So. 2d 78, 84 (Fla. 1st DCA 1996). And at least one federal court has noted that “the destruction of evidence undermines two important goals of the judicial system — truth and fairness.” Rambus, Inc. v. Infineon Techs. AG, 222 F.R.D. 280, 288 (E.D. Va. 2004); see also United Med Supply Co v. United States, 77 Fed. Ct. 257, 258 (Fed. Cl. 2007) (“Aside perhaps from perjury, no act serves to threaten the integrity of the judicial process more than the spoliation of evidence.”).
The destruction of electronic evidence is so serious that it can lead to fines or, for counsel, disbarment.
Parties also have to account for what happens once the initial preservation obligation is satisfied. In other words, how do we now navigate the discovery process? In a perfect world, the parties preserve their documents, exchange them without controversy, and proceed to either a speedy resolution or trial.
But rarely is the world of litigation perfect. And often there is much controversy which, with the explosion of ESI, has transformed the way discovery is handled in litigation.
There are two developments in particular that merit some discussion here. First, a new form of discovery that is now referred to as “discovery on discovery.” Second, a relatively new sanction when ESI discovery abuses are revealed — the forensic examination.
i. “Discovery on discovery”
A new discovery tactic, born from the rise of ESI, has developed in recent high-stakes litigation. It’s called “discovery on discovery.” And, as the name suggests, it involves litigants seeking information about the discovery process— rather than the merits of the claims at issue. When used properly, this method of discovery can be appropriate in situations where there is a legitimate basis to suggest that a party has failed to comply with its preservation or discovery obligations. In such cases, a litigant might seek discovery on plaintiffs’ sources, preservation, and collection of ESI — information that otherwise has nothing to with the nature of the dispute.
In practice, such discovery is now regularly abused, evolving into a common tactic that has been squarely rejected by numerous courts as improper gamesmanship that delays and distracts from the merits of a case. For example, courts consistently deny discovery on discovery where the moving party fails to present specific facts demonstrating a production deficiency or misconduct. See e.g., Martin v. Allstate Ins. Co., 292 F.R.D. 361, 364 (N.D. Tex. 2013) (finding that deposition inquiries into, inter alia, a document retention policy are overbroad and irrelevant because the requesting party failed to produce evidence beyond speculation that the requested documents had not been produced); Edelen v. Campbell Soup Co., 265 F.R.D. 676, 684 (N.D. Ga. 2010) (denying request for deposition testimony on efforts to preserve evidence where plaintiff provided no evidence that defendants had not honored their discovery obligations); see also E.E.O.C. v. Boeing Co., CV 05-03034-PHX-FJM, 2007 WL 1146446, at *2 (D. Ariz. Apr. 18, 2007) (denying motion to compel 30(b)(6) deposition because “plaintiff does not explain why defendant's efforts to locate documents are relevant to a claim or defense in this case”).
The 2012 Amendments to the Florida Rules similarly provide a framework for handling ESI issues such as “discovery on discovery:”
In determining any motion involving discovery of electronically stored information, the court must limit the frequency or extent of discovery otherwise allowed by these rules if it determines that (i) the discovery sought is unreasonably cumulative or duplicative, or can be obtained from another source or in another manner that is more convenient, less burdensome, or less expensive; or (ii) the burden or expense of the discovery outweighs its likely benefit, considering the needs of the case, the amount in controversy, the parties' resources, the importance of the issues at stake in the action, and the importance of the discovery in resolving the issues.
Fla. R. Civ. P. 1.280(d)(2).
Yet there has been limited application of the amendments to such disputes in Florida litigation, leaving parties fighting over these issues on a regular (and escalating) basis.
What happens when serious ESI issues arise, and a Court is confronted with evidence of potential eDiscovery abuse? We’ll next review one of the more severe sanctions that has developed to deal with this exact situation.
ii. “The Forensic Examination”
If a litigant is found to have abused the discovery process, forensic examination can now be employed to ensure that the rules of discovery are obeyed.
Forensic examination is a digital process of preserving ESI in its most original form by collecting, identifying, and validating the information to reconstruct past events.
The first step is to make an exact image of the digital information on the devices at issue — the computers, hard drives, servers, phones, tablets, etc. — leaving intact on the device the original data and metadata. All of these devices can be collected and their information extracted pursuant to a court-authorized forensic examination.
This method of sanction has become so common that both the federal and Florida courts have offered some guidance on their use and application.
In federal courts, for example, to succeed on a motion to authorize a forensic examination of another party’s computers, courts have required “credible evidence that the opposing party is unwilling to produce computer generated documents or that it has withheld relevant information.” Coast to Coast Eng’g Servs., Inc. v. Roop, 2016 WL 6602626, at *1 (D. Me. 2016) (citing Williams v. Massachusetts Mut. Life Ins. Co., 226 F.R.D. 114, 146 (D. Mass. 2005)). This means presenting “at least some reliable information that the opposing party’s representations are misleading or substantively inaccurate,” such as a “history of incomplete and inconsistent responses to [the inquiring party’s] production requests.” Id. (citing Jacobson v. Starbucks Coffee Co., WL 3146349, at *7 (D. Kan. 2006)).
This is a significant burden — “[m]ere suspicion or speculation that an opposing party may be withholding discoverable information is insufficient to support an intrusive examination of the opposing party’s electronic devices or information systems.” Hespe v. City of Chicago, 2016 WL 7240754, at *4 (N.D. Ill. Dec. 15, 2016).
Florida law has generally tracked the federal courts in this area, allowing for the forensic examination of computer hard drives and other relevant electronic devices under Florida Rule of Civil Procedure 1.350(a)(3). See Holland v. Barfield, 35 So. 3d 953, 955 (Fla. 5th DCA 2010). In Florida, a forensic examination is generally appropriate where there is proof that discovery was thwarted, a likelihood that information exists on the devices, and an absence of a less intrusive alternative to obtain the information. See Holland v. Barfield, 35, So. 3d 953, 955 (Fla. 5th DCA 2010) (a forensic examination will be “approved after the requesting party proved (1) evidence of any destruction of evidence or thwarting of discovery; (2) likelihood the information exists on the devices; and (3) no less intrusive means exists of obtaining the information.”).
The proliferation of ESI will not change any time soon, and the disputes arising out of it will shape the scope of litigation for many years to come. As litigants continue to raise issues related to ESI in new and novel ways, courts will continue to grapple with how to deal with the new realities of eDiscovery.
c. “Impact of COVID-19 – Force Majeure”
The novel coronavirus disease (COVID-19) outbreak has spread to dozens of countries, infected tens of thousands of people, and caused substantial disruptions to travel and trade.
We are all now familiar with terms such as “self-quarantine” and “social-distancing” that just a few weeks ago, would have triggered a confused look. In the United States, cities have ordered residents to stay at home, and counties have ordered the closure of “non-essential” retail businesses, beaches, parks, and recreational venues. These restrictions have forced individuals and businesses to adapt their daily routines with no clear end in sight.
Many are left wondering whether the economic fallout that follows will excuse performance for contracts they no longer need or can no longer fulfill. The most reasonable response would be for tenants, landlords, lenders, and insurance carriers to work with each other to create a resolution that is equally painful for all. Of course, if most people were reasonable, we lawyers would most likely be out of a job.
During these uncertain times, the first place many will look to is the force majeure clause buried at the end of their contracts with other boilerplate provisions. A force majeure clause excuses performance for one or both parties due to an extraordinary event. These events are primarily “Acts of God,” which courts have interpreted to be limited to extreme natural weather events. Given this narrow interpretation, is a health pandemic an act of God?
Logic dictates that businesses could not have prevented the COVID-19 outbreak with any reasonable care or foresight. The head of the World Health Organization himself stated, “We are in unchartered territory. We have never before seen a respiratory pathogen that is capable of community transmission, but which can also be contained with the right measures.” That last part of the sentence is the biggest wrinkle the courts will face in the inevitable litigation over this issue. Because COVID-19 can be “contained with the right measures,” federal, state, and local governmental agencies dove in and mandated by civil orders various quarantines, business closures, and lockdowns. The affected business owner has no control over this — the governments are using their inherent power for the betterment of the community at large. So how can a business owner comply with their contractual obligations when they have no business to run due to a government closure, not the virus itself?
On March 30, 2020, Governor DeSantis issued a “Stay-At-Home” policy mimicking the City of Miami’s already-existing policy. While individuals are restricted by federal, state and local governments to their homes, parties will certainly trace contractual challenges to the government closure, rather than the coronavirus. Once those restrictions are lifted, courts might not find that the government closure was the ultimate obstacle preventing performance, but rather individuals who may still confine themselves to their homes out of fear. It is well established that fear alone will not excuse performance. However, there is still a good amount of gray area in between.
For those under current contracts, the economic fallout that follows the coronavirus might not excuse performance either. Some thoughtful parties may expressly define an act of God to include a pandemic, which would allow the force majeure clause to come into play. But many transactional lawyers probably have not considered anything like COVID-19.
So, are you out of luck? Not necessarily. There are alternative defenses such as the doctrine of impossibility and frustration of purpose.
Under the doctrine of impossibility of performance, a party is relieved from performing a contractual obligation due to no fault of their own; the party could neither have foreseen the risk at the time of entering the contract or prevented the event in question from occurring. This, and other legal doctrines, provide solid legal defenses for a business owner to cease performance of their contractual obligations.
The same holds for business interruption insurance. These insurance policies cover the loss of income that a business suffers due to total or partial business closure. Policy forms are both standard and varied based on express exclusions to coverage, and the coronavirus might not fall within the scope of a delineated event-triggering coverage. We are already seeing litigation emerge to obtain a determinative ruling on whether COVID-19 can be interpreted to have caused a physical loss or damage to an insured’s property within the meaning of business interruption coverage provisions — a question many courts and juries will be asked to answer.
Given the coronavirus’s novelty, there are arguments for both sides. We will certainly witness a great shift in the language of future policies as we strive to define “pandemics” as a matter of law. But in the meantime, if reasonable heads do not prevail, the courts will be seeing this issue all over the country, and business owners will fight to keep their livelihoods afloat.