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Monday, May 26, 2008

Saint Paul/ RICO Update Plaintiffs Objections To Magistrate's Order Of April 23, 2008 And Amended Order Of May 8, 2008."

Blogger Bob said...

I will be posting this motion in sections.

There maybe copy errors.

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Frank J. Steinhauser, III, et al., Civil No. 04-2632
JNE/SRN
Plaintiffs,
v. PLAINTIFFS’ JOINT
OBJECTIONS TO
MAGISTRATE’S ORDER OF
APRIL 23, 2008, AND
AMENDED ORDER OF
MAY 8, 2008
City of St. Paul, et al.,
Defendants.
Sandra Harrilal, et al., Civil No. 05-461
JNE/SRN
Plaintiffs,
v.
Steve Magner, et al.,
Defendants.
Thomas J. Gallagher, et al., Civil No. 05-1348
JNE/SRN
Plaintiffs,
v.
Steve Magner, et al.,
Defendants.
Case 0:04-cv-02632-JNE-SRN Document 229 Filed 05/12/2008 Page 1 of 15
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TO THE HONORABLE JUDGE ERICKSEN:
NOW COMES Plaintiffs in order to file their Joint Objections to Magistrate Nelson’s
April 23, 2008, Order (04-2632, ECF 220; 05-461, ECF 195; and 05-1348, ECF 188), and
Amended Order of May 8, 2008 (04-2632, ECF 225, 05-461, ECF 199, 05-1348, ECF 192)
pertaining to Plaintiffs’ Renewed Motion for Sanctions (04-2632, ECF 161; 05-461, ECF 138;
05-1348, ECF 132), and to respectfully show the Court:
INTRODUCTION
In Plaintiffs’ Joint Renewed Motion for Sanctions, Plaintiffs’ provided evidence that
during the course of this litigation Defendants destroyed documents relevant to the claims of
Plaintiffs including intentional discrimination, and defenses raised by Defendants, including
immunity defenses, made egregious misrepresentations concerning the destruction and
therefore unavailability of other relevant evidence, and delayed production of evidence and
failed to produce large volumes of other “City documents” relevant to Plaintiffs’ claims.
The Court refused to find that Defendants had acted in “bad faith” (Order at 7-10, 13,
14), determined that Plaintiffs had failed to establish that they had been prejudiced by
Defendants’ destruction of documents, misrepresentations and failures to produce other
documents (Order at 8-11, 13, 14), denied Plaintiffs’ requests for sanctions, including costs
and attorney’s fees related to bringing its motion (Order at 14, 15) and failed to grant
Plaintiffs’ request for an evidentiary hearing (Shoemaker Aff., 3-5-08 ECF 183 – Steinhauser,
para. 90).
Case 0:04-cv-02632-JNE-SRN Document 229 Filed 05/12/2008 Page 2 of 15
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FACTUAL BACKGROUND TO MOTION FOR SANCTIONS
The Steinhauser, the Harrilal, and the Gallagher cases were filed in May 2004, March
2005 and July 2005, respectively. Defendants failed to place a “litigation hold” on potentially
relevant documents. Order at 2, 3.
Plaintiffs initially moved in June 2007 for sanctions based upon spoliation of relevant
evidence and non-production of relevant evidence. Order at 2. The Court determined that
Plaintiffs had not demonstrated prejudice from Defendants’ conduct and denied the motion.
Order at 3.
Plaintiffs original and renewed motion for sanctions were based on Defendants’
destruction of 15,000-18,000 Truth-In-Sale-of-Housing (“TISH”) housing inspection reports
for 2001-2003 after litigation was commenced, destruction of most of the e-data/e-mails for
the time periods prior to December 2005 (most relevant time period for Plaintiffs’ claims and
Defendants’ claimed immunity defenses was 1999 through 2005), failure to produce City
documents related to the Saint Paul Public Housing Agency (PHA), and failure to produce
certain other City documents including documents related to the City’s Problem Properties
2000 code enforcement initiative. Order at 2.
Case 0:04-cv-02632-JNE-SRN Document 229 Filed 05/12/2008 Page 3 of 15
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ISSUES
1. The Court made a decision contrary to the law by holding that where a party during the
course of litigation destroys or fails to retain relevant evidence, a finding of intentional -
bad faith destruction is required in order for any sanction to be imposed. Order at 7, 8, 9,
10, 13, 14.
2. The Court made a decision contrary to the law that Plaintiffs’ had a high burden to show
that they were “prejudiced” by Defendants’ destruction or non-retention of relevant
evidence during the course of litigation. Order at 6.
3. The Court made a decision contrary to the law that Plaintiffs had failed to demonstrate
prejudice from Defendants’ overall conduct including destruction and non-retention of
relevant evidence and other abusive litigation tactics. Order at 8, 9, 10, 11, 13, 14.
4. The Court made a decision contrary to the law in failing to award Plaintiffs’ their costs and
attorney’s fees incurred as a result of Defendants conduct when the Court acknowledged
Plaintiffs may have been harmed. Order at 8, 14.
5. The Court made clearly erroneous determinations of fact concerning Defendants’ failure to
produce City-PHA documents, Defendants’ destruction of TISH housing inspection
reports, and Defendants’ destruction of e-data/e-mails from the time periods relevant to
Plaintiffs’ claims and Defendants claims of immunity.
STANDARD OF REVIEW
The Court must modify or set aside any portion of the Magistrate’s Order found to be
clearly erroneous or contrary to law. Fed.R.Civ.P. 72(a); and Local Rule 72.2(a). At the same
time, however, where, as here, the decision under review does not offer a reasoned
explanation for its decision, and merely adopts one party's arguments in their entirety (as the
Court did here in adopting Defendants’ arguments in their entirety), “it is incumbent on the
Court to check the adopted findings against the record ‘with particular, even painstaking,
care.’ ” Holland v. Island Creek Corp., 885 F. Supp. 4, 6 (D.D.C. 1995), citing Berger v. Iron
Workers Reinforced Rodmen Local 201, 843 F.2d 1395, 1408 (D.C.Cir.1988).


ARGUMENT AND AUTHORITIES
1. Where a party during the course of litigation destroys or fails to retain relevant evidence, a
finding of intentional - bad faith destruction indicating a desire to suppress the truth is not
required in order for certain sanctions to be imposed.
At the April 14, 2008, hearing on Plaintiffs renewed motion for sanctions the Court
acknowledged that no showing of “bad faith” was required because the subject documents had
been destroyed by Defendants after litigation was commenced. Nevertheless, the Court
applied the “bad faith” standard in its Order. Order at 7-10, 13, 14.
The Eighth Circuit’s decision in Stevenson v. Union Pacific, 354 F.3d 739, 745 (8th
Cir. 2004) is directly on point. The Court in Stevenson determined that the district court’s
order for an adverse inference instruction sanction based upon the ongoing destruction of
records during litigation was supported by the court's inherent power even absent an explicit
bad faith finding. 354 F.3d at 750. See E*Trade Sec. LLC v. Deutsche Bank AG, 230 F.R.D.
582, 589 (D.Minn 2005) (no “bad faith” needed to sanction defendants where computer hard
drives wiped clean after defendants aware of potential for litigation).
Any possible destruction of evidence is to be treated as a serious transgression of
discovery procedures in that it goes to the core of the Court’s truth-finding mission. See
Dillon v. Nissan Motor Co., 986 F.2d 263, 269 (8th Cir. 1993).
Here, after being sued by Plaintiffs, Defendants and other public officials and
employees destroyed written communications related to their policies and actions and multiple
years of housing inspection records. The Court made an egregious mistake in treating these
shocking violations of the law and Court rules in such a light manner.
Case 0:04-cv-02632-JNE-SRN Document 229 Filed 05/12/2008 Page 5 of 15
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Plaintiffs submit that at the very least public defendants should be held to the same
standard of preserving evidence applicable to private corporations before this Court. When
considering the sophisticated and litigious nature of the Defendant City and the important
policies of honesty and openness by government officials and employees in public matters, the
Court seriously erred in not sanctioning Defendants for destruction of relevant evidence while
these cases were before this Court.
Defendants had a duty at the commencement of the Steinhauser lawsuit in May 2004,
to place a litigation hold on all relevant evidence that might be useful to Plaintiffs.
Defendants failed to do so then or thereafter when they were sued in Harrilal and Gallagher in
2005. Discovery requests in Steinhauser were served on Defendants in November of 2004
requesting all inspection reports, records and “emails” of all officials and City agencies.
Defendants continued to destroy e-data/e-mails and TISH reports thereafter until sometime in
January 2007. How could that have happened without being intentional? During the filings
of these three lawsuits, Defendant Dawkins was a lawyer who headed the main code
department of the City. Defendants had a large full service law firm at their disposal.
Defendants were familiar with Court rules due to the City’s vast experience with state and
federal court actions. Yet the Court has held that such a failure to preserve the written
communications of City officials and employees and housing inspection reports for the
relevant time period prior to December 2005 was not in “bad faith”.
Even though Plaintiffs were not required to demonstrate Defendants’ “bad faith,”
Plaintiffs submit that Defendants conduct rose to the level of “bad faith” or at least “gross
Case 0:04-cv-02632-JNE-SRN Document 229 Filed 05/12/2008 Page 6 of 15
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negligence” thereby justifying a finding of “prejudice” because the evidence was relevant,
would have been helpful to Plaintiffs and could have led to discovery of other evidence.
Defendants having “destroyed a significant quantity of documents, the exact extent of which
is now indeterminable,” should not now be allowed to “claim that the information contained is
irrelevant or unimportant.” Capellupo v. FMC Corp., 126 F.R.D. 545, 551 (D.Minn. 1989).
Here, as in Capellupo, Plaintiffs were “deprived of significant amounts of potentially helpful
information” especially evidence going to the issues of Defendants’ claimed immunity
defenses and Plaintiffs’ claims requiring a showing of “intentional discrimination.” Id. at 552.
2. The Magistrate Judge made a decision contrary to the law in requiring a high standard for
a showing of “prejudice” from Defendants’ destruction or non-retention of relevant
evidence during the course of litigation. Order at 6.
Magistrate Nelson determined that “sanctions for improper document destruction may
not be imposed until ‘the moving party can demonstrate that they have suffered prejudice as a
result of the spoliation’” (citing E*Trade, 230 F.R.D. at 592; and Stevenson, 354 F.3d at 745;
and Keefer v. Provident Life & Accident Ins. Co., 238 F.3d 937, 940 (8th Cir. 2000).
Plaintiffs submit that the Court improperly applied a heavy burden on Plaintiffs to
demonstrate prejudice when the Court should have found prejudice from the nature and
volume of the documents destroyed and from the time period the destruction took place.
Equally as important, the Court failed to account for the necessity of Plaintiffs showing
intentional discrimination in support of many of their claims, which would best be shown by
the written, electronic communications of City officials and employees – e-data/e-mails that
were destroyed for all relevant time periods prior to December 2005.
Case 0:04-cv-02632-JNE-SRN Document 229 Filed 05/12/2008 Page 7 of 15
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The Court also failed to consider that the written, electronic communications of
Defendants and City officials and employees would have been the best source of evidence
directly bearing on their claimed immunity defenses. The e-data/e-mails destroyed for the
time periods prior to December 2005 relate directly to the knowledge, motive and conduct of
Defendants on the issues of immunity. Plaintiffs have been prejudiced by the almost complete
destruction of key evidence on the immunity issues. The nature and volume of destruction
justifies a prohibition against Defendants’ motion for summary judgment.
The substantial and complete nature of the destruction of three years of TISH housing
inspection reports and the e-data/e-mails of Defendants, City Council members and other key
players for all periods prior to December 2005, the time periods relevant to Defendants’
claims of immunity and Plaintiffs constitutional and statutory claims, justifies a finding of
“prejudice” to Plaintiffs from said destruction. See E*Trade, 230 F.R.D. at 592. The written
communications of Defendants and City officials/employees on the issues of immunity
defenses and intentional discrimination is similar to the only recording of conversations
contemporaneous to an accident. Stevenson, 354 F.3d at 748. There is no substitute evidence
available.
The Court here, contrary to the Court in Stevenson, placed too high of a burden on
Plaintiffs to demonstrate prejudice. “Courts must take care not to ‘hold the prejudiced party to
too strict a standard of proof regarding the likely contents of the destroyed [or unavailable]
evidence,’ because doing so ‘would subvert the…purposes of the adverse inference and would
allow parties who have…destroyed evidence to profit from that destruction.” Residential
Case 0:04-cv-02632-JNE-SRN Document 229 Filed 05/12/2008 Page 8 of 15
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Funding Corp. v. DeGeorge Fin. Corp., 306 F.3d 99, 109 (2d Cir. 2002).
3. The Magistrate Judge made a decision contrary to the law in determining that Plaintiffs
had failed to demonstrate that they had suffered prejudice from Defendants’ overall
conduct including destruction and non-retention of relevant evidence and other abusive
litigation tactics. Order at 8, 9, 10, 11, 13, and 14.
The Court erred in its determination that, “Utterly absent from Plaintiffs’ affidavits and
exhibits is a showing that they were prejudiced by the non-disclosure of PHA-related
documents.” Order at 8. Plaintiffs detailed the substantial prejudice suffered by Plaintiffs due
to Defendants non-disclosure of City documents related to PHA. See Shoemaker Affs.,
3/5/08, ECF 183 - Steinhauser, pp. 9-25, 43-44, and 3-31-08, ECF 211 – Steinhauser -
moreover, Defendants have not yet produced the large volumes of City’s documents related to
PHA as set forth in Counsel’ affidavits. See Shoemaker Aff. ECF 211.
Defendants during the litigation destroyed three years of TISH housing inspection
records that Defendants’ own liability expert opined were relevant to Plaintiffs’ claims. The
Court recognized the relevancy of these TISH reports. Order, 11-13-07, ECF 134 -
Steinhauser, at 5, fn 3). See Shoemaker Aff. 3-5-08 ECF 183, pp. 25-33.
Due to Defendants’ destruction of the TISH reports that were centrally located at
Defendant Dawkins’ office, Plaintiffs were forced to attempt to obtain TISH reports from 45
inspectors with no assurance that those inspectors maintained their copies of reports past the
three-year retention period applicable to both the City and TISH inspectors.
The Court erred in determining that, “Plaintiffs never subpoenaed the TISH evaluators.
Such a failure to pursue discovery is incongruent with Defendants’ claim of prejudice.” Order
at 10. The Court suggested that Plaintiffs could seek the TISH reports from inspectors
Case 0:04-cv-02632-JNE-SRN Document 229 Filed 05/12/2008 Page 9 of 15
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through subpoenas and Defendants would be required to bear the subpoena costs. Order at 10.
Arguably, the Court’s Order included service fees, but there was no provision for $15,000 in
copy costs of the replacement records (15,000 reports, four pages each, at $.25/page), for
$13,500 from 45 deposition transcripts ($300 each), or for the Plaintiffs’ attorney fees. But
for Defendants destruction of centrally stored TISH housing inspection reports, Plaintiffs
would not have been faced with these prohibitively burdensome additional costs and fees.
The Eighth Circuit in Stevenson held that even though the destroyed track maintenance
records were of limited use, where those documents had been destroyed after litigation was
commenced, Plaintiffs had suffered sufficient prejudice to warrant an adverse inference
instruction sanction. Id. at 749-50. Here, the Court determined that Plaintiffs had not shown
what the missing e-data/e-mails would have contained - but Plaintiffs had demonstrated that
the missing e-data consisted of written communications of Defendants, City officials and
employees and influential third-parties. Under Stevenson, even if this e-data was of limited
use, its destruction during litigation should have resulted in a prejudice finding and an adverse
inference instruction and/or other sanctions.
4. The Magistrate Judge made a decision contrary to the law in failing to award Plaintiffs’
their costs and attorney’s fees incurred as a result of Defendants conduct when the
Magistrate Judge acknowledged that Plaintiffs may have been harmed. Order at 8 and 14.
The Magistrate erred by failing to award Plaintiffs’ their costs and attorney’s fees
incurred as a result of Defendants conduct. Here, as in Capellupo, the actions of Defendants
“have imposed an enormous burden on counsel for plaintiffs.” Capellupo, 126 F.R.D. at 553.
Case 0:04-cv-02632-JNE-SRN Document 229 Filed 05/12/2008 Page 10 of 15
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5. The Magistrate Judge made clearly erroneous determinations of fact concerning
Defendants’ destruction of TISH inspection records, non-production of Problem Property
reports, and Defendants’ destruction of emails and e-data from the key time period of the
illegal code enforcement.
a. TISH inspection records.
The Court made a clearly erroneous factual determination that, “Defendants also
reminded Plaintiffs that they had not even asked for the [TISH] reports until 2007,
approximately two years after they first learned of the reports, and that the City had produced
all of the reports in its possession to Plaintiffs at that time.” Order at 10. Defendants
deliberately misrepresented the facts to the Court. In November 2004, the Steinhauser
Plaintiffs requested Defendants produce all inspection reports; Defendants responded that
those reports included TISH reports. Shoemaker Aff., 8-6-07, ECF 114 – Steinhauser, para.
16.
Finally, the Court made a clearly erroneous factual determination, “The Court finds no
malfeasance by Defendants or prejudice to Plaintiffs with respect to the Sandberg [TISH]
report[s] and related documents.” Order at 10 (emphasis added). The Sandberg Reports fell
within the scope of the Steinhauser discovery requests and yet were not produced until years
later.
b. E-data/E-mails.
In November of 2004, the Steinhauser Plaintiffs requested Defendants produce all edata/
e-mails. Shoemaker Aff., 8-6-07, ECF 114 – Steinhauser, paras. 18, 21. Because
Defendants’ failed to place a litigation hold on e-data/e-mails, Defendants produced miniscule
e-data/e-mails for the relevant periods prior to December 2005. See Engel Aff. ECF 152 -
Case 0:04-cv-02632-JNE-SRN Document 229 Filed 05/12/2008 Page 11 of 15
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Gallagher, Ex. 12-39.
The Court made the following clearly erroneous factual determination concerning the
destruction of e-data prior to December 2005: “Other than the reasons already discussed,
Defendants offer an additional reason: because Plaintiffs’ counsel had explicitly limited the
discovery request to emails from December 2005 onward, in a letter dated June 6, 2007.”
Order at 13.
Plaintiffs never limited their document request to email communications from
December of 2005 forward, or at any other time waived their right to email communications
for the relevant periods prior to December 2005. As Mr. Shoemaker stated to Ms. Seeba in a
letter dated May 15, 2007:
We understand from you that the electronic communications such as emails between
City departments and third parties have not been retained for the period prior to
December 2005. In light of that surprising and disturbing development, we request
production of the following: emails, inter-departmental emails, correspondence,
memos, and other written communications from December 2005 through April 30,
2007, between City departments, and to and from City departments and non-city
entities and individuals, … We want to know what date each e-document … was
discarded after your receipt of the Steinhauser Notice of Claim in July 2003 and who
authorized the employees of the City’s Information Services staff to destroy the edocuments
that were relevant to Plaintiffs’ claims.
See Exhibit 10 to Seeba affidavit in opposition to sanctions, page 3 (emphasis added).
In Plaintiffs June 6, 2007 letter, Plaintiffs again sought emails from 1994 to present:
Emails, inter-departmental emails, correspondence, memos, and other written
communications during 1994 through 2004, and thereafter to present, between City
Agencies, and to and from same and non-city entities and individuals, …
Emails both within the City and to and from third parties have been relevant to the
claims herein since 2002. …inspectors also testified to use of the e-mail system in their
work for the City. It certainly appears to us that Defendants and City officials and
Case 0:04-cv-02632-JNE-SRN Document 229 Filed 05/12/2008 Page 12 of 15
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CONCLUSION
Because Plaintiffs’ provided evidence to the Court that during the course of this
litigation that Defendants destroyed documents relevant to the claims of Plaintiffs and
defenses raised by Defendants, including immunity defenses, made egregious
misrepresentations concerning the destruction and therefore unavailability of other relevant
evidence, and delayed and failed to produce large volumes of other “City documents” relevant
to Plaintiffs’ claims, and this abusive conduct prejudiced Plaintiffs, Plaintiffs’ requests for
sanctions should be granted, including an award of costs and attorney’s fees.
WHEREFORE, PREMISES CONSIDERED, Plaintiffs pray this Court:
1. Overrule Magistrate Judge’s Order on the specific objections noted herein;
2. Award reasonable attorney fees and costs in bringing the motions for sanctions; and
3. Order such other and further relief, at law or in equity, to which Plaintiffs may be justly
entitled.
Respectfully submitted,
SHOEMAKER & SHOEMAKER, P.L.L.C.
Dated: May 12, 2008 By: s/ John R. Shoemaker
John R. Shoemaker (#161561)
Centennial Lakes Office Park
7701 France Avenue South, Suite 200
Edina, Minnesota 55435
(952) 841-6375
Attorneys for Plaintiffs Steinhauser, et. al.
Attorneys for Plaintiffs Harrilal, et.