Antitrust Sanctions: The Duty to Preserve Chats

09/11/2024|3 minute read

On August 5, 2024, District Judge Amit P. Mehta (U.S. District Court, District of Columbia) ruled in United States v. Google LLC that Google violated §2 of the Sherman Act by monopolizing the internet search engine market. While the decision is sure to be one of the biggest this year, the court's decision on spoliation sanctions, amounting to three pages at the end of the 286-page decision, holds one of the biggest lessons - the duty to preserve chats remains a top priority for courts and government enforcers.

Last year, the Department of Justice (DOJ) filed a motion for sanctions and sought an adverse inference under Federal Rule 37(e) for Google's "systemic destruction of documents." According to the court, the company had a "long-time practice (since 2008) of deleting [Google] chat messages among . . . employees after 24 hours," a practice that purportedly continued three years into the litigation. The focus of the sanctions motion was "ephemeral" messaging platforms, which automatically delete information after a short period of time (e.g., daily) or after the recipient views them, frequently as a default setting.

Ultimately, Judge Mehta decided not to award sanctions because (i) he found sufficient evidence of an antitrust violation without the chats and (ii) he deemed intent irrelevant to the monopolization claims at issue. Even so, Judge Mehta warned:

Judge Mehta's admonition follows a March 2023 sanctions decision by District Judge James Donato in Epic Games, Inc. v. Google, Inc. (U.S. District Court, Northern District of California). Covering much of the same conduct as addressed in Judge Mehta's decision, Judge Donato awarded attorneys' fees for Google's failure to preserve internal Google chat messages. While employees were instructed to turn on their chat history when discussing case-related issues, thereby preserving those discussions for litigation, Judge Donato decided that a voluntary preservation protocol managed by employees was not enough to discharge the company's Rule 37(e) duty. At trial, Judge Donato also instructed the jury that they could consider the company's failure to comply with Rule 37 in deciding whether it had engaged in anticompetitive conduct.

In the DOJ's separate ad tech case against Google in the Eastern District of Virginia, the DOJ recently requested that presiding District Judge Leonie Brinkema "sanction Google's conduct by presuming that the spoliated chats were unfavorable to Google on all issues disputed at trial, including market definition, monopoly power, the anticompetitive nature of Google's conduct, and the harm from Google's conduct." Just this week in a pretrial motion hearing, Judge Brinkema criticized Google's failure to preserve chats. Because Judge Brinkema will preside over the case as fact finder, her criticism suggests spoliation may play a significant role in her ruling on the DOJ's monopolization claims.

There are several key takeaways from these developments:

• First, some basics: Federal Rule 37 requires taking affirmative steps to preserve ephemeral messages in some circumstances. Many messaging platforms have default auto-delete functions that may need to be disabled when litigation is anticipated. The Google cases demonstrate that allowing employees to decide what to preserve at their discretion can be risky. Moreover, Federal Rule 37 aims to prevent organizations from gaining any advantage by not preserving information. As Judge Donato put it in his sanctions order, "the remedy should fit the wrong." Where a court is unable to assess whether the spoliated information would have been relevant, it may impose severe sanctions, especially if there is evidence of intentional spoliation.
• Second, the DOJ Antitrust Division and the Federal Trade Commission (FTC) view ephemeral messaging as critically important in antitrust cases. Earlier this year, those agencies issued guidance on the issue and revised the language in their standard preservation letters, specifications for second requests, voluntary access letters, and subpoenas to explicitly instruct recipients to preserve these types of messages. While courts have historically interpreted Rule 37 broadly to apply to all types of information, this guidance demonstrates that antitrust enforcers are laser-focused on the issue.
• Third, the DOJ and the FTC have shown interest in pursuing criminal obstruction-of-justice charges for particularly egregious cases of failing to preserve ephemeral messages. In its January 2024 guidance on ephemeral messaging, the DOJ warned: "The Antitrust Division and the Federal Trade Commission expect that opposing counsel will preserve and produce any and all responsive documents, including data from ephemeral messaging applications designed to hide evidence. Failure to produce such documents may result in obstruction of justice charges."

Organizations should take heed of these recent decisions and develop policies for preserving ephemeral messages well before they anticipate legal disputes. When it comes to litigation, it is better to be safe than sorry; document preservation is crucial. Stay tuned.

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