Fulbright & Jaworski On Landmark Federal Circuit Rulings On Spoliation, Sanctions

Fulbright & Jaworski On Landmark Federal Circuit Rulings On Spoliation, Sanctions

Micron Tech., Inc. v. Rambus Inc., 2011 U.S. App. LEXIS 9730 (Fed. Cir. May 13, 2011) [enhanced version available to lexis.com subscribers / unenhanced version available from lexisONE Free Case Law] and Hynix Semiconductor Inc. v. Rambus Inc., 2011 U.S. App. LEXIS 9728 (Fed. Cir. May 13, 2011) [enhanced version / unenhanced version] held that a duty to preserve evidence attaches when litigation is "pending or reasonably foreseeable" under an objective standard, which does not carry a gloss requiring that litigation be imminent, probable, or without significant contingencies. In this Commentary, Robert D. Owen, David J. Kessler, Richard S. Zembek and David Schwartz, of Fulbright & Jaworski, discuss both decisions. They write:

    In Micron v. Rambus ("Micron II") and its companion case, Hynix v. Rambus ("Hynix II"), the Federal Circuit resolved two appeals from separate district courts on the same alleged pretrial conduct of the same defendant. Both cases involved efforts by Rambus to enforce its patents. The lower courts found that in the early 1990s Rambus pursued a two-prong business strategy: (1) license chip makers that complied with its proprietary standards; and (2) demand license fees and be prepared to bring infringement suits against those manufacturers who adopted the competing standard. The courts further found that years after adopting this strategy and before either case was filed, Rambus instituted a new document retention policy that led to its employees discarding potentially discoverable documents and erasing email backup tapes for data more than three months old.

The Duty To Preserve Attached When Litigation Was Reasonably Foreseeable

    The plaintiffs in each case alleged that Rambus intentionally destroyed relevant, discoverable documents and sought sanctions against it as a result of its actions. Sanctions can only be imposed for discarding evidence if the party had a duty to preserve it at the time of its loss. The duty attaches when litigation is "pending or reasonably foreseeable." The decisions of the district courts - which reached opposite results - turned on when the duty began.

    In Micron v. Rambus ("Micron I"), the District Court for the District of Delaware found that the Micron litigation was reasonably foreseeable in December 1998, so Rambus' duty began at that point and its continued disposal of potentially discoverable documents after that time was spoliation. In Hynix v. Rambus ("Hynix I"), the District Court for the Northern District of California had concluded that the Hynix litigation did not become reasonably foreseeable until late 1999 because a number of contingencies had to occur before Rambus would begin the litigation. No spoliation occurred because the duty did not attach until after Rambus had completed implementation of its new document retention policy.

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