ALIVECOR, INC., Plaintiff, v. APPLE, INC., Defendant Case No. 21-cv-03958-JSW United States District Court, N.D. California Filed June 02, 2023 Counsel Andrew M. Holmes, Pro Hac Vice, Michelle Ann Clark, Sean S. Pak, Andrew Michael Holmes, Krishna Shah, Bruce C. Lee, Quinn Emanuel Urquhart & Sullivan LLP, San Francisco, CA, Brian L. Saunders, Pro Hac Vice, Quinn Emanuel Urquhart & Sullivan LLP, Washington, DC, Deshani Florance Ellis, Adam Bryan Wolfson, Quinn Emanuel Urquhart & Sullivan, LLP, Los Angeles, CA, Scott Liscom Watson, Quinn Emanuel Urquhart Oliver & Hedges LLP, Los Angeles, CA, Matthew S. Hosen, Quinn Emanuel Urquhart & Sullivan LLP, Seattle, WA, Nicolas Vernon Siebert, Pro Hac Vice, Quinn Emanuel Urquhart & Sullivan, New York, NY, for Plaintiff. Bethany Marvin Stevens, Hannah L. Cannom, Walker Stevens Cannom LLP, Los Angeles, CA, Daniel Glen Swanson, Jason C. Lo, Jennifer J. Rho, Katarzyna Ryzewska, Gibson, Dunn & Crutcher LLP, Los Angeles, CA, Caeli A. Higney, Julian Wolfe Kleinbrodt, Katherine Warren Martin, Gibson Dunn & Crutcher LLP, San Francisco, CA, David R. Eberhart, O'Melveny & Myers LLP, San Francisco, CA, Cynthia Richman, Pro Hac Vice, Melanie L. Katsur, Pro Hac Vice, Gibson Dunn and Crutcher LLP, Washington, DC, for Defendant. White, Jeffrey S., United States District Judge ORDER DENYING MOTION FOR AN ADVERSE JURY INSTRUCTION *1 Now before the Court for consideration is the motion for an adverse jury instruction filed by Plaintiff AliveCor, Inc. (“AliveCor”). The Court has considered the parties' papers, relevant legal authority, and the record in the case, and its finds this matter suitable for disposition without oral argument. See N.D. Civ. L.R. 7-1(b). The Court VACATES the hearing scheduled for May 26, 2023. For the following reasons, the Court DENIES AliveCor's motion. BACKGROUND AliveCor filed this antitrust case against Apple on May 25, 2021, alleging that Apple made changes to the Apple Watch software that made it effectively impossible for third party apps to provide heartrate analysis. The Court will not go into the details of factual background, which are discussed in detail in prior Orders. The parties have engaged in extensive discovery and raised numerous discovery disputes, which have been resolved by Magistrate Judge Kim. The instant dispute concerns documents from Myoung Cha (“Cha”). Cha joined Apple's health team in 2015 and eventually became Apple's Director of Health Strategy. (Deposition of Myoung Cha (“Cha Depo.”) 18:22-20:5.) At Apple, Cha focused on developing partnerships with external health partners including healthcare companies like insurers and pharmaceutical companies and government entities. (Id.) Emails authored by Cha and produced by Apple's other document custodians show that Cha was engaged in conversations about AliveCor, Apple's business strategy for health functionalities on the Apple Watch, and [redacted]. (See Declaration of Adam Wolfson (“Wolfson Decl.”), Exs. Q-T, V-Y.) Cha left Apple on May 14, 2021. (Cha Depo. 255:8-11.) [redacted] (Deposition of Robin Goldberg (“Goldberg Depo.”) 33:16-34:22.) Cha was not designated as a custodian or identified in the parties' initial disclosures. In October 2022, AliveCor became aware of Cha and his potential relevance to the case after reviewing Apple's first document productions. On November 14, 2022, AliveCor requested that Apple add Cha as a document custodian. (Wolfson Decl., Ex. C.) Apple did not agree to AliveCor's request, and it informed AliveCor that Cha left Apple before the complaint was filed and accordingly it “would need to investigate whether Apple had any of his custodial documents.” (Id.) AliveCor submitted the dispute to Magistrate Judge Kim for resolution. (Id., Ex. D.) At the hearing, Apple disclosed that it did not know if it had Cha's documents given his separation from Apple. (Declaration of Jason Lo (“Lo Decl.) ¶ 8.) On December 5, 2022, Judge Kim granted AliveCor's request to add Cha as a custodian. (Dkt. No. 129.) AliveCor proposed search terms for Cha's documents on December 27, 2023. (See Wolfson Decl., Ex. E.) Apple agreed to a set of revised search terms on January 10, 2023. (Lo Decl., Ex. E.) Apple collected 240,000 documents from Cha's remaining files. (Lo Decl. ¶ 11.) Apple applied the search terms to the documents and produced 45 documents to AliveCor in two batches—a batch of forty documents on January 31, 2023, and the remaining five documents on February 8, 2023. (Id.) On February 9, 2023, AliveCor raised concerns regarding Cha's documents. (Id. Ex. G.) AliveCor deposed Cha on February 11, 2023. (See Wolfson Decl. ¶ 10.) On February 24, 2023, AliveCor took the deposition of Robin Goldberg, Apple's corporate representative designated to testify on the topic of Apple's document preservation and retention procedures. (Id. ¶¶ 12, 15-16.) At the deposition, [redacted] (Goldberg Depo. 47:11-15.) *2 Fact discovery closed on February 27, 2023. All discovery-related motions were required to be resolved by this date. AliveCor filed this motion March 16, 2023. The Court will discuss additional facts as necessary in the analysis. ANALYSIS A. Applicable Legal Standards. Under Federal Rule of Civil Procedure 37(e), sanctions may be warranted for spoliation of ESI when “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 [the information] cannot be restored or replaced through additional discovery.” Fed. R. Civ. P. 37(e). If a court finds that the loss of information has prejudiced the moving party, it may order “measures no greater than necessary to cure the prejudice.” Fed. R. Civ. P. 37(e)(1). If a court finds that the offending party “acted with the intent to deprive another party of the information's use in litigation,” the court may impose more severe sanctions. Fed. R. Civ. P. 37(e)(2). Under Rule 37(e)(2), the court may issue the following sanctions: (1) a presumption “that the lost information was unfavorable to the party”; (2) a jury instruction “that it may or must presume the information was unfavorable to the party”; or (3) a dismissal or default judgment. Id. B. Timeliness of AliveCor's Motion. Apple argues AliveCor's motion is untimely. Local Rule 37-3 requires that all discovery-related motions be filed within 7 days of the close of fact discovery. See N.D. Civ L.R. 37-3. The commentary to Rule 37-3 provides that discovery-related motions include motions regarding the duty to preserve documents and spoliation motions. N.D. Civ. L.R. 37-3 commentary. Fact discovery closed in this case on February 27, 2023. AliveCor filed this motion on March 16, 2023. AliveCor disputes Rule 37-3's applicability to the motion. Even if Rule 37-3 does apply, AliveCor counters that the version of the Local Rules in effect at the time the parties' agreed to the fact discovery deadline did not include the commentary specifically delineating spoliation motions as a discovery-related motion. Given the timing and discrepancies between the versions of the Local Rules, the Court declines to decide the motion on timeliness grounds. C. The Court Denies AliveCor's Motion for an Adverse Jury Instruction. 1. Duty to Preserve. The Court first considers when Apple's duty to preserve documents in this litigation was triggered. A party's obligation to preserve evidence for use in litigation arises when litigation is pending or becomes “reasonably foreseeable.” See Hynix Semiconductor Inc. v. Rambus Inc., 645 F.3d 1336, 1345-46 (Fed. Cir. 2011) (applying Ninth Circuit law); Apple, Inc. v. Samsung Electronics Co., 888 F. Supp. 2d 976, 989 (N.D. Cal. 2012). “This is an objective standard, asking not whether the party in fact reasonably foresaw litigation, but whether a reasonable party in the same factual circumstances would have reasonably foreseen litigation.” Micron Tech., Inc. v. Rambus Inc., 645 F.3d 1311, 1320 (Fed. Cir. 2011); see also Waymo LLC v. Uber Techs., Inc., No. C 17-00939 WHA, 2018 WL 646701, at *15 (N.D. Cal. Jan. 30, 2018). The mere existence of a potential claim or the distant possibility of litigation are insufficient. Hynix, 645 F.3d at 1346. However, litigation need not be “imminent” for it to be reasonably foreseeable. Id. *3 AliveCor urges that Apple's duty to preserve Cha's ESI began on December 7, 2020, when AliveCor filed a patent infringement lawsuit against Apple involving claims about Apple's development and use of ECG and heart rhythm analysis functionality on the Apple Watch. Despite AliveCor's arguments, the Court does not find that Apple's duty to preserve Cha's ESI attached as early as December 2020. The fact that the parties were engaged in patent litigation does not mean that Apple should have reasonably foreseen that AliveCor would later assert antitrust claims against it. For the same reason, the Court is not persuaded that Apple's preservation duty for this litigation attached on April 20, 2021, when AliveCor initiated an investigation at the International Trade Commission alleging infringement of the same patents at issue in the patent litigation. Moreover, Apple represents that AliveCor did not notify Apple about the potential antitrust claims prior to serving the complaint in this action, a point AliveCor does not dispute. Thus, the Court finds that Apple's duty to preserve data attached on May 25, 2021, the date this action was filed. 2. Reasonable Steps to Preserve Data. “The duty to preserve evidence does not extend to every bit of ESI in a defendant's possession, but is limited to evidence likely to be relevant to a claim or defense as to which litigation is reasonably foreseeable.” Best Label Co. v. Custom Label & Decal, LLC, No. 19-cv-03051-SI (VKD), 2022 WL 1525301, at *4 (N.D. Cal. May 13, 2022) (citing Oracle Am., Inc. v. Hewlett Packard Enter. Co., 328 F.R.D. 543, 550 (N.D. Cal. 2018). Rule 37(e) requires a party take “reasonable steps” to preserve such evidence. Fed. R. Civ. P. 37(e). AliveCor contends that Apple failed to take reasonable steps to preserve Cha's documents because it failed to suspend its auto-deletion process despite Cha's relevance to the pending litigation. Apple argues it made reasonable efforts to preserve evidence because it tried to identify the individuals and data sources at Apple with information potentially relevant to the action. According to Apple, it was reasonable to conclude that Cha was not relevant because his responsibilities, which focused on creating strategic partnerships with healthcare companies, did not seem relevant to AliveCor's claims, which focused on changes to the heartrate algorithm. The Court finds Apple's arguments on this point unpersuasive. Cha should have been identified as an individual with information potentially relevant to this action. Relevancy is a broad standard, especially for discovery purposes. See Fed. R. Civ. P. 26(b)(1). Cha worked on strategic health initiatives, and the record shows that he regularly corresponded about the Apple Watch and AliveCor with individuals Apple did identify as relevant. At the very least Cha's role at Apple and his connection to relevant custodians should have made him the subject of a litigation hold, even if he was not subsequently identified as custodian. Despite Cha's relevance, Apple allowed his server emails to be deleted pursuant to its auto-deletion policy after the duty to preserve attached. And Cha was never subject to a litigation hold in this matter because he left Apple before the lawsuit was filed. (Goldberg Depo. 47:16-19.) Indeed, Apple did not issue a litigation hold in this action until August 2021, four months after the litigation was filed and long after the duty to preserve was in place. (Id. 44:21-45:5.) Apple should have taken the affirmative step to suspend the auto-deletion policy with regard to Cha's emails when this lawsuit was filed. See generally Apple Inc. v. Samsung Electronics Co., 881 F. Supp. 2d 1132, 1137 (N.D. Cal. 2012) (“[I]t generally is recognized that when a company or organization has a document retention policy, it is obligated to suspend that policy and implement a litigation hold to ensure the preservation of relevant documents after the preservation duty has been triggered.”) (citation and internal quotation marks omitted). On this record, the Court concludes Apple did not take reasonable steps to preserve electronically stored information that should have been preserved in the anticipation or conduct of litigation as required by Rule 37(e). 3. Prejudice Under Rule 37(e)(1). *4 Rule 37(e)(1) requires a showing of prejudice before sanctions may issue. If the Court finds prejudice, it may order measures no greater than necessary to cure the prejudice. Fed. R. Civ. P. 37(e)(1). “Prejudice exists where ‘the [spoiling party's] actions impaired [the moving party's] ability to go to trial or threatened to interfere with the rightful decision of the case.’ ” RG Abrams Ins. v. L. Offs. of C.R. Abrams, 342 F.R.D. 461, 507 (C.D. Cal. 2022) (quoting United States ex rel. Wiltec Guam, Inc. v. Kahaluu Constr. Co., 857 F.2d 600, 604 (9th Cir. 1988)). Rule 37(e)(1) “does not place a burden of proving or disproving prejudice on one party or the other,” but instead “leaves judges with discretion to determine how best to assess prejudice in particular cases.” Fed. R. Civ. P. 37(e)(1) advisory committee's note to 2015 amendment. Because “[p]roving that lost evidence is relevant can be a difficult task...courts have held that a party must only come forward with plausible, concrete suggestions as to what [the destroyed] evidence might have been.” hiQ Labs, Inc. v. LinkedIn Corp., No. 17-CV-03301-EMC, 2022 WL 18399982, at *21 (N.D. Cal. Nov. 4, 2022) (internal citation and quotation marks omitted). AliveCor argues it is prejudiced by the loss of Cha's emails. AliveCor contends that Cha's emails obtained through other Apple custodians “are among the hottest in the case.” (Mot. at 12.) As a result, and by virtue of Cha's role at Apple, AliveCor asserts that Cha likely had other relevant and responsive emails about Apple's purported strategy to eliminate competition for watchOS heart rhythm analysis apps, which are now unrecoverable. As result, AliveCor contends it “lost the chance to review memoranda to file, emails [Cha] sent to others in the company, emails [Cha] exchanged with market participants, or emails [Cha] wrote to himself as reminders for later.” (Id. at 9.) AliveCor also contends that Cha's files cannot be replicated or recovered from other custodians or through his deposition testimony. Apple disputes the prejudice to AliveCor. Apple does not deny that it failed to preserve Cha's server emails. However, it contends that it was able to collect 240,000 documents from Cha, 45 of which were produced to AliveCor.[1] Apple also contends that AliveCor was not prejudiced because although it deposed Cha for seven hours, it failed to question him directly about the existence of other potentially relevant emails. Apple also asserts that the responsive emails Cha sent to the eight other custodians in this matter were produced, which means they were not lost as required by Rule 37. Finally, Apple contends there is no prejudice because AliveCor fails to show that the lost emails would not have been duplicative of information already produced. Establishing prejudice is difficult because the ESI has been destroyed and thus, the contents of whatever was lost is unknown. Mindful of the fact that prejudice exists where the deletion of the ESI impairs a party's ability to go to trial, the Court concludes AliveCor has failed to make a sufficient showing of prejudice to support relief under Rule 37(e)(1). *5 Rule 37(e)(1) permits sanctions for information that is “lost...and [ ] cannot be restored or replaced through additional discovery.” Fed. R. Civ. P. 37(e)(1). Here, there is no dispute that a portion of Cha's ESI is not lost. A number of Cha's emails were preserved and produced through Apple's other document custodians. Additionally, Apple searched [redacted] and produced relevant and responsive documents from these sources. Thus, this information was not “lost” because it was “replaced through additional discovery.” Fed. R. Civ. P. 37(e). AliveCor also fails to provide sufficient concrete, plausible suggestions as to what the deleted server emails might have contained. AliveCor offers no concrete evidence about the particular nature of the deleted emails but asks the Court to assume that Cha's lost emails contained relevant discussions about AliveCor and about Apple's purported strategy of eliminating competition to the Apple Watch. It is possible that the deleted emails contained such discussions, but it is also possible they did not. Even assuming that the deleted emails were relevant to these topics, the deletion of the emails is minimized by the documents already produced in this litigation from Cha and from custodians with whom he regularly communicated and by Cha's deposition testimony. Moreover, AliveCor has failed to explain how the deletion of Cha's emails hampers its ability to go to trial or obtain the evidence it needs for its case. AliveCor has documents and testimony from Cha regarding his purported strategy for eliminating competition for heart rhythm analysis apps. To the extent they existed, additional emails relevant to these topics may have been useful to enhance AliveCor's case, but AliveCor has not shown that the absence of these emails will prevent it from proving its antitrust claims. Based on the record before the Court at this time, it is difficult to gauge the amount of prejudice to AliveCor due to the loss of Cha's emails, and the Court has insufficient evidence to determine that the lost emails would benefit AliveCor. Thus, keeping in mind that Court may “order measures no greater than necessary to cure” the prejudice, the Court concludes AliveCor has not shown prejudice sufficient to warrant sanctions under Rule 37(e)(1). 4. Intent to Deprive Under FRCP 37(e)(2). The severity of the sanctions allowed under Rule 37 increases “upon finding that the party acted with the intent to deprive another party of the information's use in the litigation.” Fed. R. Civ. P. 37(e)(2). Rule 37(e) does not define “intent.” The 2015 Advisory Committee Notes to the amendment of Rule 37(e) advise that “[n]egligent or even grossly negligent behavior” is insufficient to show “intent.” 2015 Advisory Comm. Notes. Rather, “intent” requires that the evidence shows, or it is reasonable to infer, that a party purposefully destroyed evidence to avoid its litigation obligations. Dish Network LLC v. Jadoo TV, Inc., No. 20-cv-01891-CRB (LB), 2022 WL 11270394, at *3 (N.D. Cal. Oct. 19, 2022). A finding of prejudice is not required under Rule 37(e)(2) because intent presumes prejudice. Here, the Court concludes the record does not support a finding that Apple intentionally spoliated Cha's server emails. The emails were deleted pursuant to Apple's standard document retention procedure for departed employees. Cha left Apple shortly before the litigation was filed, and his emails were deleted [redacted] before Apple issued a litigation hold for this matter to any document custodians. This suggests that Apple did not intend to deprive AliveCor of evidence but merely allowed the routine e-email deletion to proceed in accordance with its established procedures. Apple's conduct in failing to halt the auto-deletion process and in delaying to issue a litigation hold was undoubtedly irresponsible and careless, and perhaps even grossly negligent, but the Court cannot infer from that conduct that Apple purposefully destroyed Cha's emails to avoid its litigation obligations to justify sanctions under Rule 37(e)(2). *6 However, the Court's conclusion that Apple did not intentionally dispose of Cha's emails under Rule 37(e)(2) should in no way be understood as condoning Apple's and its counsel's conduct in disclosing the deletion of Cha's emails. The record shows that Apple first told AliveCor that Cha's server emails were deleted and unrecoverable during the deposition of Apple's records custodian on February 24, 2023, days before the close of fact discovery. Apple has not explained when it learned that Cha's server emails were deleted, but surely Apple and its counsel knew this fact well before February 24, 2023, given that the collection and search process of Cha's documents began in early January 2023. Instead of explaining the delay in disclosure, Apple maintains it was entirely forthcoming with AliveCor and Judge Kim about Cha's emails because it informed them that it might not have all of Cha's documents. This argument is unconvincing. There is a meaningful difference between vaguely alluding to the availability of documents and affirmatively stating that relevant documents were deleted and are unrecoverable. Apple and its counsel failed to do the latter until under oath in a deposition. Apple's disclosures to AliveCor and Judge Kim about the possibility of difficulties in collecting Cha's documents did not relieve it of its discovery obligations or duties of candor. The Court is troubled by the lack of candor exhibited by Apple and its counsel, but such behavior does not show Cha's emails were deleted with the intent to deprive AliveCor of their use in litigation or entitle AliveCor to the Rule 37 sanctions it seeks here. D. Motions to Seal. The parties filed various administrative motions to seal. AliveCor filed several administrative motions to consider whether Apple's material should be sealed. (Dkt. Nos. 153, 161, 163, 169.) Apple filed declarations in support of sealing (see Dkt. Nos. 155, 165, 166, 175), and the Court concludes Apple has demonstrated that portions of the filings and exhibits should be maintained under seal. However, it appears from the supporting declarations that Apple believes that some of the material AliveCor originally redacted can be filed in the public record. Apple also filed administrative motions to consider whether AliveCor's material should be sealed in connection with its opposition to AliveCor's motion for an adverse jury instruction. (Dkt. Nos. 158, 159.) AliveCor filed a declaration in support of the motions. (Dkt. No. 160.) The Court concludes AliveCor has demonstrated that portions of certain exhibits should be maintained under seal. However, AliveCor represents in its supporting declaration that some of the material Apple originally redacted can be filed in the public record. Accordingly, by May 26, 2023, the parties shall meet and confer and submit a joint consolidated proposed order listing in table format each document or portion thereof that is sought to be sealed in accordance with the positions set forth by counsel in the declarations in support of sealing. Apple's motion to seal portions of its opposition and exhibits thereto is GRANTED. (Dkt. No. 156.) Apple's motion to seal portions of Exhibit 1 to Apple's administrative motion for leave to file sur-reply is GRANTED. (Dkt. No. 167.) CONCLUSION For the foregoing reasons, AliveCor's motion for an adverse jury instruction is DENIED. IT IS SO ORDERED. Dated: May 18, 2023 Footnotes [1] The content of the 240,000 custodial documents is the subject of Apple's request for leave to file a sur-reply and AliveCor's opposition thereto. The Court GRANTS Apple's request and has reviewed Apple's sur-reply and AliveCor's opposition. Despite Apple's attempt to clarify the documents searched, there is no dispute that Cha's server emails were deleted and were not included in the 240,000 custodial documents.