IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN RE FACEBOOK INC. DERIVATIVE ) CONSOLIDATED LITIGATION ) C.A. No. 2018-0307-JTL
MEMORANDUM OPINION IMPOSING SANCTIONS FOR SPOLIATION
Date Submitted: December 9, 2024 Date Decided: January 21, 2025
Justin O. Reliford, SCOTT+SCOTT, Wilmington, Delaware; Maxwell R. Huffman, SCOTT+SCOTT, San Diego, California; Donald A. Broggi, Jing-Li Yu, SCOTT+SCOTT, New York, New York; Geoffrey M. Johnson, SCOTT+SCOTT, Cleveland Heights, Ohio; Co-Lead Counsel and Counsel for Co-Lead Plaintiff City of Birmingham Retirement and Relief System.
Frederic S. Fox, Hae Sung Nam, Donald Hall, Aaron Schwartz, KAPLAN FOX & KILSHEIMER LLP, New York, New York; Co-Lead Counsel and Counsel for Co-Lead Plaintiff California State Teachers’ Retirement System and for Plaintiff Firemen’s Retirement System of St. Louis.
Kevin H. Davenport, Samuel L. Closic, John G. Day, Stacey A. Greenspan, David C. Skoranski, Kirsten M. Valania, Seth T. Ford, PRICKETT, JONES & ELLIOTT, P.A., Wilmington, Delaware; Co-Lead Counsel and Counsel to Co-Lead Plaintiffs Construction and General Building Laborers’ Local Union No. 79 General Fund and City of Birmingham Retirement and Relief System and to Plaintiff Lidia Levy.
Frank R. Schirripa, Daniel B. Rehns, Kurt M. Huciker, Kathryn A. Hettler, Scott R. Jacobsen, HACH ROSE SCHIRRIPA & CHEVERIE LLP, New York, New York, Co- Chair of Executive Committee of Plaintiffs’ Counsel and Counsel to Co-Lead Plaintiff Construction and General Building Laborers’ Local Union No. 79 General Fund, and Additional Counsel to Plaintiffs.
Thaddeus J. Weaver, DILWORTH PAXSON LLP, Wilmington, Delaware; Co-Chair of Executive Committee of Plaintiffs’ Counsel and Counsel to Plaintiff Karen Sbriglio and Additional Plaintiffs.
Catherine Pratsinakis, DILWORTH PAXSON LLP, Philadelphia, Pennsylvania; Co- Chair of Executive Committee of Plaintiffs’ Counsel and Counsel to Plaintiff Karen Sbriglio.
Thomas J. McKenna, Gregory M. Egleston, GAINEY McKENNA & EGLESTON, New York, New York; Executive Committee of Plaintiffs’ Counsel and Additional Counsel for Plaintiffs. Peter B. Andrews, Craig J. Springer, David M. Sborz, Jacob D. Jeifa Esq., ANDREWS & SPRINGER, Wilmington, Delaware; Brian J. Robbins, Stephen J. Oddo, Gregory E. Del Gaizo, ROBBINS LLP, San Diego, California; Joseph W. Cotchett, Mark Molumphy, Tyson Redenbarger, Gia Jung, COCHETT PITRE & McCARTHY LLP, Burlingame, California; Joseph J. Tabacco, Jr., Daniel E. Barenbaum’ BERMAN TABACCO, San Francisco, California; Executive Committee of Plaintiffs’ Counsel and Additional Counsel for Plaintiffs.
Kevin R. Shannon, Berton W. Ashman, Jr., Callan R. Jackson, Justin T. Hymes, POTTER ANDERSON & CORROON LLP, Wilmington, Delaware; William Savitt, Ryan McLeod, Anitha Reddy, Stephen D. Levandoski, Iliria Camaj, Tobias Kuehne, WACHTELL, LIPTON, ROSEN & KATZ, New York, New York; Attorneys for Defendants Mark Zuckerberg, Sheryl K. Sandberg, Kostantinos Papamiltiadis, Jeffrey D. Zients, Peggy Alford, Kenneth I. Chenault, Peter A. Thiel, Susan D. Desmond- Hellmann, Reed Hastings, Marc L. Andreessen, and Erskine B. Bowles.1
LASTER, V.C.
1 Sixteen law firms signed the latest joint stipulation governing the case schedule. See Dkt. 505. Even more law firms have entered appearances. The counsel listed here are the counsel appearing in the signature blocks of the filings related to the spoliation motion. The plaintiffs moved for sanctions against two individual defendants who
failed to preserve electronically stored information (“ESI”). The plaintiffs succeeded
against the defendant who was a C-suite officer and director. The plaintiffs failed
against the defendant who was an outside director.
As a sanction, the officer defendant will only be able to prevail on any issue
where she bears the burden of proof if she can carry her burden by clear and
convincing evidence. The officer defendant also must pay the expenses plaintiffs
incurred pursuing sanctions.2
I. FACTUAL BACKGROUND
The facts are drawn from the parties’ submissions in connection with the
motion seeking sanctions.3 The court has also considered other documents of record
2 The term “expenses” refers collectively both to attorneys’ fees and amounts
paid out of pocket that might be referred to more traditionally and colloquially as expenses. This is how Section 145 of the Delaware General Corporation Law deploys the term. See, e.g., 8 Del C. § 145(a) (authorizing a corporation in a proceeding other than one brought by or in the right of the corporation to provide indemnification “against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred”); id. § 145(b) (authorizing a corporation in a proceeding brought by or in the right of the corporation to provide indemnification “against expenses (including attorneys’ fees) actually and reasonably incurred”); id. § 145(c) (mandating corporation to indemnify a director or officer who was successful on the merits or otherwise in defending a proceeding “against expenses (including attorneys’ fees) actually and reasonably incurred”). The out-of-pocket expenses encompassed by Section 145 are broader than the restricted concept of “costs” in the statute that authorizes the recovery of court costs in the Court of Chancery. See 10 Del. C. § 5106; Scion Breckenridge Managing Member, LLC v. ASB Allegiance Real Estate Fund, 68 A.3d 665, 686–88 (Del. 2013).
3 Citations in the form “Compl. ¶ ____” refer to the paragraphs of the operative
complaint. Citations in the form “Mot. ¶ ____” refer to paragraphs of Plaintiff’s Motion for Curative Relief And Sanctions Against Defendants Sheryl Sandberg and Jeffrey and matters suitable for judicial notice. What follows are not formal factual findings,
but rather how the record appears at this stage of the case.
A. The Consent Order
In 2011, the Federal Trade Commission filed an eight-count complaint against
Meta Platforms, Inc. (“Meta” or the “Company”), a Delaware corporation. The
Company owns and operates social media platforms including Facebook, Messenger,
WhatsApp, and Instagram.
The FTC alleged that since 2007, the Company allowed third parties to
develop, run, and operate applications on the Facebook platform that enabled third
parties to obtain personal information about Facebook users. The complaint
explained that the Company generated revenue from the third-party developers. The
complaint charged that the Company had “deceived consumers by telling them they
could keep their information on Facebook private, and then repeatedly allowing it be
shared and made public.”4
Zients. Citations in the form “DOB ¶ ____” refer to paragraphs of Defendants’ Opposition To Plaintiffs’ Motion For Curative Relief And Sanctions Against Sheryl Sandberg And Jeffrey Zients, and citations in the form “Readinger Aff. ¶ ____” refer to paragraphs in the Affidavit of Laura G. Readinger in support of that brief. Citations in the form “PRB at ____” refer to the Plaintiffs’ Reply Brief in support of their motion, and citations in the form “Huffman Aff. ¶ ____” refer to paragraphs in Affidavit of Maxwell R. Huffman in support of their reply. Citations in the form “Ex. [number] at ____” refer to plaintiffs’ exhibits submitted in connection with their motion and reply brief.
4 Compl. ¶ 81 (internal quotations marks omitted).
2 On July 27, 2012, the Company settled the charges by entering into a consent
decree (the “Consent Order”). Its terms required that the Company
• not make “any further deceptive privacy claims”;
• “get consumers’ approval before it changes the ways it shares their data”;
• “obtain periodic assessments of its privacy practices by independent, third- party auditors for the next 20 years”;
• not make misrepresentation about the privacy or security of consumers’ personal information;
• obtain consumers’ affirmative express consent before enacting changes that override their privacy preferences;
• prevent anyone from accessing a user’s material more than 30 days after the user has deleted his or her account;
• establish and maintain a comprehensive privacy program designed to address privacy risks associated with the development and management of new and existing products and services, and to protect the privacy and confidentiality of consumers’ information; and
• within 180 days, and every 2 years after that for the next 20 years, obtain independent, third-party audits certifying that it has a privacy program in place that meets or exceeds the requirements of the Consent Order, and ensure that the privacy of consumers’ information is protected.5
Since 2012, foreign governments have charged the Company with violating
privacy laws and regulations addressing the same topics as the Consent Order. Those
actions include:
5 Compl. ¶ 89.
3 • A 2016 fine by a German court for failing to clearly state in the terms and conditions the extent to which Facebook licensed users’ intellectual property, such as photos and videos, to third parties.6
• A 2017 fine imposed by France’s privacy regulator for misusing user data for targeted advertising and for using cookies to illegally track what users did on and off the Company’s platforms.7
• A 2017 fine imposed by the European Union’s antitrust regulator for changing the Company’s privacy policy, contrary to a 2014 pledge to segregate WhatsApp data from the Company’s other platforms.8
B. The Cambridge Analytica Scandal
In March 2018, The New York Times reported that Cambridge Analytica, a
British data analytics firm, had harvested the private information of more than 50
million Facebook users without their permission.9 The article reported that
Cambridge Analytica paid the Company for information that included users’
6 Compl. ¶ 302 (citing Reuters Staff, German Court Fines Facebook $109,000
in Dispute Over IP License Clause, REUTERS (Feb. 29, 2016), https://www.reuters.com/article/us-facebook-germany/german-court-fines-facebook- 109000-in-dispute-over-ip-license-clause-idUSKCN0W21W4).
7 Compl. ¶ 303 (citing Samuel Gibbs, Facebook Facing Privacy Actions Across
Europe as France Fines Firm €150k, THE GUARDIAN (May 16, 2017), https://www.theguardian.com/technology/2017/may/16/facebook-facing-privacy- actions-across-europe-as-france-fines-firm-150k).
8 Compl. ¶ 304 (citing Reuters Staff, EU Fines Facebook 110 Million Euros Over
WhatsApp Deal, REUTERS (May 18, 2017), https://www.reuters.com/article/us-eu- facebook-antitrust/eu-fines-facebook-110-million-euros-over-whatsapp-deal- idUSKCN18E0LA).
9 Matthew Rosenberg, et al., How Trump Consultants Exploited the Facebook
Data of Millions, N.Y. TIMES (Mar. 17, 2018), https://www.nytimes.com/2018/03/17/us/politics/cambridge-analytica-trump- campaign.html.
4 identities, personal identifying information, friends, and “likes.”10 The Consent Order
prohibited those practices.
C. The Legal Hold
Shortly after the Cambridge Analytica scandal broke, the Company issued a
legal hold.11 It stated:
Litigation has been filed regarding, and certain U.S. and international governmental bodies and other third parties have indicated that they intend to investigate, events related to Dr. Aleksandr Kogan’s use of the Facebook Platform and his and our interactions with Cambridge Analytica (CA), Strategic Communication Laboratories (SLC), Eunoia Technologies, Inc., and Christopher Wylie.12
The legal hold instructed its custodians that they “have a legal obligation to preserve
and not destroy any pertinent evidence in [their] possession that could be relevant to
this matter.”13
The legal hold specified that the retention obligation applied to
all hard copy and electronic data and documents (such as files, data tables or logs, notes, memos, spreadsheets, docs stored in Dropbox and Box, Quip, and Google or Zoho Docs), and all correspondence (such as email, instant messages, Skype messages, WhatsApp messages, FB Messages, text messages, FB Group posts, and letters).14
The legal hold also identified more specific categories of documents, including:
10 Id.
11 See Ex. 1.
12 Id.
13 Id.
14 Id.
5 • “Documents that refer or relate to Aleksandr Kogan, Aleksandr Spectre, or Global Science Research (GSR), and University of Cambridge;”
• “Documents that refer or relate to the app “thisisyourdigitallife” (App ID: 599050663475147);”
• “Documents that refer or relate to Cambridge Analytica (CA), Strategic Communication Group, Strategic Communication Laboratories (SCL), SCL Elections Limited, or Alexander Nix;”
• “Documents that refer or relate to Christopher Wylie or Eunoia Technologies, Inc.;”
• “Documents that refer or relate to Michael lnzlicht, Daniel Randles, University of Toronto, or Toronto Laboratory for Social Neuroscience; or”
• “Documents that refer or relate to developer access to user data via apps integrated with the Facebook Platform.”15
The legal hold instructed custodians to make certain that they “do not delete or
destroy” documents and explained that if custodians were “unsure whether a
document is relevant to matters, save it.” 16 The legal hold told recipients, “If you
create a document in the future that is relevant to the matters, save it.”17
Sheryl Sandberg, a member of the Company’s senior leadership team, received
the legal hold. At the time, she served as the Company’s Chief Operating Officer, a
role she held until August 2022. She also served as a member of the Company’s board
of directors (the “Board”), a position she held until May 2024.
15 Id. (original emphasis).
16 Id.
17 Id.
6 D. This Litigation
This litigation began on April 25, 2018. As it progressed, the Company
reminded the custodians about the legal hold. After Jeffrey Zients joined the Board
in 2018, the Company sent him the legal hold.18 Zients served on a special committee
tasked with evaluating and recommending a potential settlement with the FTC.
On July 31, 2018, outside counsel contacted Sandberg and Zients “to discuss
document preservation and collection in connection with the Cambridge Analytica-
related derivative cases.”19 In November 2018, outside counsel contacted Zients to
discuss his preservation obligations.20
E. Discovery
On May 10, 2023, the court denied the defendants’ motion to dismiss. After
that ruling, the parties moved forward with discovery.
Discovery has been extensive. The defendants have collected documents from
thirty-two custodians and dozens of unique custodial sources, including business and
personal email accounts, messaging platforms, and Meta Workplace communication
tools.21 The defendants have produced over 1.7 million documents containing over 8.9
million pages.
18 Mot. ¶ 4; DOB ¶ 6.
19 Ex. 5.
20 Ex. 6.
21 DOB ¶ 8; Readinger Aff. ¶ 3.
7 Between November 3, 2023 and March 28, 2024, the plaintiffs asked the
defendants about their collection of ESI.22 On April 3, 2024, the plaintiffs served
interrogatories seeking information about the preservation of ESI.23 In their answers,
the defendants disclosed Sandberg’s personal Gmail account,24 maintained under a
pseudonym, that she used to “communicate about matters potentially relevant to the
claims and defenses in this action.”25 The defendants’ disclosed that “Sandberg’s
Gmail emails were collected and preserved for other litigations” and that counsel was
“investigating their availability.”26 Then came the big disclosure: “Prior to this
litigation, Defendant Sandberg had a practice of regularly deleting emails from her
Gmail account that are over 30 days old.”27
The defendants similarly disclosed that Zients used a personal email account
to “communicate about matters potentially relevant to the claims and defenses in this
22 Mot. ¶ 7.
23 Ex. 14.
24 Ex. 15 at 8. Defendants maintain Sandberg “communicated about business
through her company email account,” and that “[s]he also maintained a personal Gmail account, but avoided using it for company matters.” DOB ¶ 5. Defendants argue that Sandberg “could not control the address at which others emailed her,” accepting that emails involving business matters sometimes went to her Gmail account. Id.
25 Ex. 15 at 8.
26 Id. at 9.
27 Id.
8 action.”28 They reported that Zients’s account had an “approximately six-month data
retention practice during his board tenure.”29 In other words, the account deleted
older emails. The defendants stated that they were “investigating whether any data
from that account was backed up or stored locally and could be recovered.”30
On May 8, 2024, the plaintiffs asked when Sandberg stopped deleting emails
from her Gmail account and the status of her recovery efforts. On June 18, the
defendants declined to answer, citing the ongoing nature of their investigation.31 The
plaintiffs asked about Zients’s emails. The defendants reported that after an
“investigation and consultation with a forensic ediscovery specialist, the individual
defendants do not believe that any emails from [Zients’s] personal account in the
collection period were retained on any local media.”32
On June 26, 2024 the plaintiffs followed up about Sandberg and Zients’s
document preservation efforts. The plaintiffs asked again about when Sandberg
stopped deleting her Gmail emails. They also asked whether Zients preserved his
28 Id. at 10. Defendants agree that “Zients used three email accounts to communicate about Meta-related matters: a company account, a business account, and a personal account.” DOB ¶ 6. Zients’s company email account and business email account were fully preserved. Id.
29 Ex. 15 at 10.
30 Id.
31 Ex. 17.
32 Id.
9 documents from the final six months of his Board tenure (November 2019 to May
2020). The plaintiffs proposed including Sandberg and Zients’s personal email
addresses in the ESI search terms.33 The defendants declined.34
On August 9, 2024 the defendants informed the plaintiffs that “there is no
specific date in which Ms. Sandberg’s email practice was in place with respect to her
personal Gmail account. Because there is no specific date, at this time, we cannot
provide a specific date at which she ceased the practice.”35 The defendants also
reported no one collected “any emails from [Zients’s personal] account,” and the
deleted emails were irretrievably lost.36
F. Mitigation Efforts
Having disclosed that Sandberg and Zients failed to preserve ESI, the
defendants investigated whether the data could be obtained from other sources. The
defendants also examined the ESI that remained in an effort to draw inferences about
what the lost ESI might have contained.
For Sandberg, defense counsel reviewed approximately 3,800 emails from her
Gmail account plus 300 other documents obtained that her counsel had from other
33 Ex. 19 (June 26, 2024 email from A. Schwartz to C. Jackson).
34 Ex. 21. (July 16, 2024 email from C. Jackson to J. Day).
35 Id. (August 9, 2024 email from C. Jackson to A. Schwartz).
36 Id. While emails from Sandberg and Zients’s personal accounts are lost, the
documentary record contains at least 11,576 communications involving Sandberg and at least 527 communications involving Zients. DOB Readinger Aff. ¶ 3.
10 litigation. None were responsive. There were also 57 emails in the record that were
also sent to or from Sandberg’s Gmail account, so those emails were not lost.
For Zients, defense counsel reviewed over 6,500 documents from Zients’s other
accounts and identified 415 that were sent to or from his personal account, so those
emails were not lost. Defense counsel produced 527 documents in which one of
Zients’s three email addresses appears in the from, to, cc, or bcc metadata fields.
II. LEGAL ANALYSIS
The plaintiffs moved for curative sanctions for spoliation. “Spoliation is the
destruction or significant alteration of evidence, the failure to preserve evidence
properly for another’s use, or the improper concealment of evidence.”37 The plaintiffs
contend that Sandberg and Zients spoliated evidence by failing to preserve ESI.
Court of Chancery Rule 37(e) addresses the failure to preserve ESI. It states:
If ESI that should have been preserved in the reasonable anticipation of or actual notice of imminent litigation is lost because a party failed to take reasonable steps to preserve it, and it cannot be restored or replaced through additional discovery, the court:
(1) upon finding prejudice to another party from loss of information, may order measures no greater than necessary to cure the prejudice; or
(2) only upon finding that the party acted recklessly or with the intent to deprive another party of the information’s use in the litigation, may, among other things:
(A) presume that the lost information was unfavorable to the party; or
37 Goldstein v. Denner, 310 A.3d 548, 567 (Del. Ch. 2024).
11 (B) dismiss the action or enter a default judgment.
Emails are a type of ESI, so Rule 37(e) applies.38
Under Rule 37(e), to obtain sanctions for a party’s failure to preserve ESI, the
requesting party must show (i) the responding party had a duty to preserve the ESI,
(ii) the ESI is lost, (iii) the loss is attributable to the responding party’s failure to take
reasonable steps to preserve the ESI, and (iv) the requesting party suffered
prejudice.39 For an adverse inference or case-dispositive sanctions, the plaintiff must
show that the responding party acted recklessly or intentionally when failing to
preserve ESI.40
A. The Threshold Issue of Timing
When considering a motion addressing spoliation, there is always a threshold
question about timing. The plaintiffs here moved while discovery was ongoing, rather
than just before or after trial. Several Delaware decisions have deferred ruling on
spoliation motions until after trial.
38 See KT4 P’rs LLC v. Palantir Techs. Inc., 203 A.3d 738, 751 (Del. 2019)
(“‘Emails,’ of course, are a type of ‘electronic document.’”).
39 Goldstein, 310 A.3d at 557.
40 Id. at 583.
12 “Delaware trial courts have inherent power to control their dockets.”41 That
authority includes determining how a case should proceed for the “orderly
adjudication of claims.”42
Determining when to address a spoliation motion “rests in the discretion of the
court based on the facts of each case.”43 Pertinent factors include “the nature of the
spoliation, the stage of the case, the court’s ability to provide case-specific relief, and
any scheduling order that might apply.”44 “If a party seeks an order compelling the
defendants to provide additional discovery or to pay for the movant to conduct
additional discovery, then it would be foolish to defer the motion until trial.”45 Along
similar lines, “[i]f a ruling on the motion will help the parties prepare for trial or limit
the issues to be addressed at trial, then it often will make sense to address the motion
before trial.”46 But “[i]f the motion turns on evidentiary issues that the court will
evaluate at trial, then it will make sense to defer the motion until trial.”47
41 Solow v. Aspect Res., LLC, 46 A.3d 1074, 1075 (Del. 2012).
42 Unbound P’rs Ltd. P’ship v. Invoy Hldgs. Inc., 251 A.3d 1016, 1030 (Del.
Super. 2021) (cleaned up).
43 Goldstein, 310 A.3d at 571.
44 Id.
45 Id.
46 Id.
47 Id.
13 Here, the motion rests on undisputed facts regarding the failure to preserve
ESI. The motion does not turn on disputed facts that would warrant an evidentiary
hearing or post-trial adjudication. Moreover, the plaintiffs seek remedies that would
affect how the balance of discovery and pre-trial proceedings unfold. The plaintiffs
seek sanctions including (i) preventing Sandberg and Zients from moving for
summary judgment, (ii) raising the burden of proof for their affirmative defenses, and
(iii) precluding certain testimony at trial. Whether the court grants those sanctions
will affect how the parties prepare for trial and present their evidence. The proper
time to consider the plaintiff’s motion is now.
B. Was There A Duty To Preserve The Emails?
The first question under Rule 37(e) is whether the ESI “should have been
preserved.”48 “Rule 37(e) does not apply . . . when information or evidence is lost
before a duty to preserve attaches.”49
A party must “preserve potentially relevant evidence as soon as the party
either actually anticipates litigation or reasonably should have anticipated
litigation.” 50 “A party is not obligated to preserve every shred of paper, every e-mail
48 Ct. Ch. R. 37(e)
49 Goldstein, 310 A.3d at 571 (quoting Living Color Enter., Inc. v. New Era
Aquaculture, Ltd., 2016 WL 1105297, at *4 (S.D. Fla. Mar. 22, 2016).
50 Id.; see also Beard Rsch., Inc. v. Kates, 981 A.2d 1175, 1187 (Del. Ch. 2009).
14 or electronic document.”51 But, a party is obligated to “preserve what it knows, or
reasonably should know, is relevant to the action, is reasonably calculated to lead to
the discovery of admissible evidence, is reasonably likely to be requested during
discover and/or is the subject of a pending discovery request.”52
“The duty to preserve extends to those employees likely to have relevant
information—the ‘key players’ in the case.”53 “An organization’s decision to circulate
a litigation hold is a strong indication that a duty to preserve evidence exists, because
it shows that the organization subjectively anticipates litigation.”54
Sandberg and Zients do not contest their duty to preserve. 55 In March 2018,
the Company issued a legal hold to Sandberg that covered “all correspondence,”
including emails, concerning “platform policy, data policy/data use/privacy policy, or
privacy settings,” “compliance with the 2011 FTC Consent Order,” “developer access
to user data,” “Cambridge Analytica,” and related topics.56 In May, the Company
51 Seibold v. Camulos P’rs LP, 2012 WL 4076182, at *23 (Del. Ch. Sept. 17,
2012).
52 Id.
53 Goldstein, 310 A.3d at 572–73 (quoting Zubulake v. UBS Warburg LLC, 220
F.R.D. 212, 217 (S.D.N.Y. 2003).
54 Id. at 573.
55 DOB ¶ 13.
56 Ex. 1.
15 notified Zients about the legal hold when he joined the Board.57 In these
communications, the Company instructed Sandberg and Zients that their
preservation obligation extended to existing and to-be-created documents, wherever
they might exist.58
Sandberg and Zients also received “FAQs Regarding Legal Holds.”59 The
answers to the FAQs emphasized the obligation to preserve “any information related
to the Matter,” including information on personal devices and accounts.60 Zients and
Sandberg received frequent reminders about their preservation obligations.61 And the
Company’s outside counsel offered to work with Zients to collect potentially
responsive materials.62
Sandberg and Zients had an affirmative duty to preserve their personal emails
as evidence. The first prerequisite for sanctions is therefore satisfied.
57 Mot. ¶ 16; DOB ¶ 6.
58 Mot. ¶ 16; Ex. 3–4 (Sept. 16, 2019 and March 27, 2019 FAQs for the legal
hold).
59 Mot. ¶ 17.
60 Ex. 4 (Mar. 27, 2019 FAQs for the legal hold).
61 Mot. ¶ 17; Ex. 23–27 (“REMINDER” notices from July 3, 2018, February 7,
2019, August 16, 2019, September 2, 2019, and September 16, 2019).
62 Ex. 6.
16 C. Are The Emails Lost?
The second question in the Rule 37(e) analysis is whether the ESI “is lost.”63
“Information is lost for the purposes of Rule 37(e) only if it is irretrievable from
another source, including other custodians.”64 “Because [ESI] often exists in multiple
locations, loss from one source may often be harmless when substitute information
can be found elsewhere.”65
The defendants argue that messages form Sandberg and Zients’s personal
accounts should not be considered “lost” for purposes of Rule 37(e) because they would
not have been relevant or responsive. The Rule 37(e) inquiry does consider relevance
and responsiveness, but as part of the analysis of prejudice. When analyzing whether
ESI is lost, the court asks whether it could be obtained from other sources.
Here, the defendants collected some of the otherwise lost ESI from other
sources. They located 57 emails sent to or from Sandberg’s Gmail account, and they
identified 415 emails sent to or from Zients’s personal email address. Those emails
were not lost and cannot support a spoliation sanction.
Otherwise, the ESI from Sandberg and Zients’s personal accounts is lost. It
cannot be recovered from their accounts, and it cannot be obtained from other sources.
63 Ct. Ch. R. 37(e).
64 Goldstein, 310 A.3d at 574.
65 Id. (quoting Fed. R. Civ. P. 37(e) advisory committee’s notes).
17 D. Were The Emails Lost Due To A Failure To Take Reasonable Steps To Preserve Them?
The third question in the Rule 37(e) analysis is whether the ESI was lost
“because a party failed to take reasonable steps to preserve it.”66 “ESI discovery
involves five fundamental steps: (1) identification, (2) preservation, (3) collection, (4)
review, and (5) production.”67 The issues here are identification and preservation.
When a party has a duty to preserve evidence, that “party must act reasonably
to preserve the information that it knows, or reasonably should know, could be
relevant to the litigation, including what an opposing party is likely to request.”68
“The standard is reasonableness.”69
The first step in preserving evidence is “taking reasonable steps to identify
information that should be collected and preserved.”70 This process requires “locating
the relevant people and the locations and types of ESI.”71 The relevant people are
those “who have custody of the relevant ESI or the ability to obtain the ESI.”72
66 Ct. Ch. R. 37(e).
67Goldstein, 310 A.3d at 575 (quoting DR Distribs., LLC v. 21 Century Smoking, Inc., 513 F. Supp. 3d 839, 923 (N.D. Ill. 2021)).
68 Goldstein, 310 A.3d at 575.
69 Id.
70 Id.
71 Id. (internal quotations marks omitted).
72 Id. (internal quotations marks omitted).
18 Counsel must interview these individuals “to learn the relevant facts regarding ESI
and to identify, preserve, collect, and product the relevant ESI.”73 “The relevant
locations are those places where the ESI can be found so that it can be both (a)
preserved and (b) collected and produced. Although both are necessary, preserving
ESI is distinct from collecting and producing ESI.”74
After identifying the reasonably likely sources of ESI, “the party must take
reasonable steps to collect and preserve it.”75 The party need not preserve all
documents in its possession; “it must preserve what it knows and reasonably ought
to know is relevant to possible litigation and is in its possession, custody, or control.”76
In determining reasonableness, a court “should be sensitive to the party’s
sophistication with regard to litigation in evaluating preservation efforts; some
litigants, particularly individual litigants, may be less familiar with preservation
obligations than others who have considerable experience in litigation.”77
Simply circulating a litigation hold is not sufficient.78 “The organization must
take steps to ensure the recipients of the hold understand what it means and abide
73 Id. (internal quotations marks omitted).
74 Id. (internal quotations marks omitted).
75 Id. at 576.
76 Id. (internal quotations marks omitted).
77 Id. (internal quotations marks omitted).
78 Id. at 577.
19 by it.”79 “The organization also must suspend or modify routine document retention
or document destruction policies so that evidence is not lost.”80
Individuals must take similar steps. “[T]hey must disable auto-delete functions
that would otherwise destroy emails or texts.”81 “They also must back up data from
personal devices before disposing of them.”82 Failing to disable the auto-delete setting
or back up messages before deletion demonstrates that a defendant acted
unreasonably.83 Individuals may not claim ignorance. “After receiving a litigation
hold, an individual must take steps to determine what is necessary to comply.”84 This
includes learning what is necessary “to prevent destruction or automatic deletion.”85
Under these principles, Sandberg failed to take reasonable steps to preserve
ESI. Starting on March 22, 2018, Sandberg had a legal duty to preserve evidence,
including ESI, relating to the topics identified in the legal hold. Sandberg is a highly
sophisticated individual who served as the Company’s Chief Operating Officer and as
79 Id.
80 Id.
81 Id.
82 Id.
83 See id.
84 Id.
85 Id.
20 a director during the events in question. She knew what was required, and she could
have consulted with Company counsel if she had any doubts.
Sandberg did not take reasonable steps to identify likely sources of ESI. The
legal hold told Sandberg to preserve “any pertinent evidence in our possession that
could be relevant to the matter.”86 The legal hold specifically referenced “all
correspondence (such as email, instant messages, Skype messages, WhatsApp
messages, FB Messages, text messages, FB Group posts, and letters).”87
Nor did Sandberg’s counsel provide transparency when plaintiffs’ counsel
raised the issue.88 The plaintiffs asked about possible sources of ESI on November 3,
2023.89 No one identified Sandberg’s Gmail account until May 2024, six months
later.90 It should not have taken that long to respond. And the response counsel gave
was confounding. Counsel stated in an interrogatory response that “[p]rior to this
litigation, Defendant Sandberg had a practice of regularly deleting emails from her
86 Ex. 1.
87 Id.
88 See, e.g., Ex. 8 at 6–7 (Nov. 3, 2023 email from S. Greenspan to G. Rice, J.
Cree, and J. Hymes); Ex. 8 at 1 (Nov. 14, 2023 email from J. Hymes to G. Rice, R. Smith, and S. Greenspan); Ex. 9 at 6–8 ; Ex. 10; Ex. 11; Ex. 12; Ex. 13. Between November 3, 2023 and March 28, 2024, plaintiffs’ counsel repeatedly inquired about the individual defendants’ collection of non-Meta ESI. Defense counsel gave vague updates on the progress of this collection.
89 See Ex. 8.
90 Ex. 15.
21 Gmail account that are over 30 days old.”91 That response did not state when the
practice began, did not state when it ended, and did not explain whether Sandberg
used an autodelete feature or deleted emails selectively. The defendants also failed
to respond forthrightly to follow-up inquiries that sought to pin down answers.92
Sandberg had an obligation to preserve the emails in her Gmail account, and her
counsel had an obligation to address that issue earlier in the case. Once the plaintiffs
asked about Sandberg’s Gmail account, counsel had an obligation to provide answers.
Counsel’s failure to give a straight answer in Sandberg’s interrogatory
responses or when answering plaintiffs’ questions supports an inference that
Sandberg was not using an auto-delete function but rather picking and choosing
which emails to delete.93 That practice violated her obligation to produce documents.
The fact that the Company preserved some of the emails from Sandberg’s Gmail
account for other litigations94 does not mean that Sandberg took reasonable steps to
collect and preserve her Gmail communications for this litigation. She plainly didn’t.
Zients also failed to take reasonable steps to collect and preserve ESI. Zients
received the legal hold after joining the Board in May 2018. Zients relied primarily
91 Id.
92 Id.
93 Sandberg’s interrogatory responses simply stated: “Prior to this litigation,
Defendant Sandberg had a practice of regularly deleting her emails from her Gmail account that are over 30 days old.” Ex. 15 at 9.
94 Ex. 15 at 9.
22 on non-Meta email accounts for Company-related communications. For the same
reasons as Sandberg, Zients failed to take reasonable steps to identify his personal
email account as a likely source of ESI.
Zients used an auto-delete function on his personal email that deleted data
approximately every six months.95 On June 18, 2024, the individual defendants
represented that “[f]ollowing investigation and consultation with a forensic
ediscovery specialist, the individual defendants do not believe that any emails from
[Zients’s] personal account in the collection period were retained on any local
media.”96 On August 9, the individual defendants confirmed that Zients’s counsel did
not collect any emails from his personal account and that his emails were
irretrievably lost.97 By failing to disable the auto-delete function on his personal email
account, Zients lost his emails and did not take reasonable steps to collect and
preserve the ESI.
E. Prejudice
The imposition of sanctions for spoliation requires a showing of prejudice.
Absent prejudice, the failure to preserve ESI need not be remedied because, by
definition, no harm was done.
95 Id. at 10.
96 Ex. 17.
97 Ex. 21.
23 “Prejudice exists when spoliation prevents a party from obtaining and
potentially using relevant evidence.”98 Determining whether prejudice exists is
difficult because spoliation creates an evidentiary vacuum. Proving the lost evidence
is relevant is difficult “precisely because the evidence no longer exists.”99
The prejudice analysis starts by requiring that the requesting party “provide
some minimal explanation as to why the lost ESI could have been relevant and either
admissible in its own right or reasonably likely to lead to the discovery of admissible
evidence.”100 The mere fact that evidence is lost in not sufficient to demonstrate
prejudice; the requesting party must “provide a plausible explanation as to way
evidence could have been relevant such that the failure to preserve is prejudicial.”101
Once the party seeking sanctions meets that initial burden, then the party that
failed to preserve the ESI must convince the court that the lost ESI did not result in
prejudice. Possible reasons include that the material could not have been relevant,
would not have been admissible or potentially have led to the discovery of admissible
evidence, or otherwise could not have been used by the requesting party to its
advantage.102
98 Goldstein, 310 A.3d at 583.
99 Id.
100 Goldstein, 310 A.3d at 585.
101 Id. at 584.
102 Id. at 585.
24 Here, the plaintiffs have made a showing sufficient to demonstrate prejudice.
Both Sandberg and Zients regularly used their personal email accounts to
communicate about Company business and compliance issues. Both Sandberg and
Zients deleted or allowed communications to be deleted after receiving legal holds
and reminders. The plaintiffs now lack access to that evidence. They cannot use the
emails to question witnesses; they cannot use the emails as affirmative proof; they
cannot use the emails to cross examine witnesses. The burden therefore shifts to the
spoliators to show a lack of prejudice.
1. Sandberg’s ESI
Sandberg failed to make a convincing case against a finding of prejudice.
She argued that no relevant ESI was lost—and hence there could be no
prejudice—because she did not use her Gmail account to conduct Company business
in a significant way. To justify that claim, Sandberg cites discovery statistics about
emails that were preserved and collected from thirty-two custodians and dozens of
unique custodial sources. In that collection, there were only fifty-seven emails sent to
or from Sandberg’s Gmail account.103 There were 11,576 emails from her Company
account.104 The defendants also reviewed approximately 3,800 emails from
103 Defendants cited fifty-six emails in their opposition brief. At the time of the
hearing, defendants updated the number to fifty-seven. See Hearing Tr. at 28.
104 DOB ¶ 15; Readinger Aff. ¶ 6.
25 Sandberg’s Gmail account that were preserved and that hit on the negotiated search
terms. The defendants represent that none were responsive.105
It does not follow from those statistics that Sandberg did not use her Gmail
account for Company business. The defendants admit she did, and the contents of the
fifty-seven emails that were preserved shows that she did. Those emails discussed:
• That Facebook users were “feeling fundamentally insecure about protecting themselves;”106
• The Company’s lagging “trust among FB regular users,”107
• Regulatory matters involving the “FTC, SEC, [and] state AGs;”108
• The “reputational danger” Cambridge Analytica posed to the Company,109
• “FB privacy,”110 and
• “US Privacy Legislation.”111
105 Readinger Aff. ¶ 6; Ex. 21 at 1. While defendants produced and reviewed a
large number of documents, 93% of their production consisted of re-producing documents from other privacy-related litigation. Huffman Aff. ¶ 2. Only 1.1% of the documents the Company produced are from Sandberg’s custodial files; none are from Zients’s custodial files. Id.
106 Ex. 28 at 3.
107 Ex. 39.
108 Ex. 29.
109 Ex. 30.
110 Ex 38.
111 Id.
26 Because Sandberg selectively deleted items from her Gmail account, it is likely that
the most sensitive and probative exchanges are gone.
The record provides a sufficient basis to conclude that Sandberg failed to
preserve ESI that would have been relevant to this action. The loss of that ESI
constitutes prejudice.
2. Zients’ ESI
In contrast, Zients demonstrated that his lost ESI was unlikely to be
responsive and hence the loss was not prejudicial.
The defendants assert that Zients’s “relevant communications were
overwhelmingly via official email and board-portal distributions to all of the directors
on the board or its committees.”112 They represent that they reviewed over 6,500
documents from Zients’s company and business accounts that hit on the search
terms.113 The defendants found 415 emails sent to or from Zients’s personal email
address.114 Of these communications, 411 went to the Board, a committee, or also
included other Company directors or employees.115 As with Sandberg, the defendants
112 DOB ¶ 17.
113 Id.; Readinger Aff. ¶ 11.
114 Readinger Aff. ¶ 12.
115 Id. Defendants’ counsel represents that the “remaining four documents are
emails between Zients and a fellow director.” Id.
27 argue that plaintiffs failed to support an inference that the lost ESI contained emails
that were both relevant and unique.
As with Sandberg, it does not follow from those statistics that Zients did not
use his personal email account for Company business. Because Zients’s emails are
lost, there is no way to determine what they could have contained. Nevertheless, in
contrast with Sandberg, there is less reason to think that Zients lost relevant ESI.
First, Zients was an outside director, not a C-suite officer, so he logically would
have been less immersed in Company operations and likely received communications
comparable to what other directors received.
Second, Zients joined the Board after the Company’s run of fines and the
Cambridge Analytica scandal. He did not participate in those events in real time.
Emails relating to those topics would have been in the nature of after-the-fact reviews
or efforts to avoid similar problems in the future.
Zients put himself at risk of sanctions by maintaining the auto-delete feature
on his personal email account, after receiving a legal hold instructing him to preserve
potentially relevant documents, after receiving numerous reminders, and even after
consulting with counsel. But the plaintiffs have not made a showing sufficient to
support a conclusion that Zients lost responsive ESI. The analysis of Zients’s email
stops here.
F. The Sanctions Necessary To Cure The Prejudice Sandberg Caused
Rule 37(e) authorizes a range of sanctions to cure prejudice. The court can
deem certain facts to be true, preclude the use of certain evidence, strike particular
28 pleadings or claims, modify the burden of proof for particular issues, allow additional
discovery, enter default judgment, and award expenses.116 Before the court can draw
an adverse inference or enter default judgment, the court must conclude that the
party “acted recklessly or with the intent to deprive another party of the information’s
use in the litigation.”117
Here, the plaintiffs ask the court to
• increase Sandberg and Zients’s burden of proof for affirmative defenses to the standard of clear and convincing evidence;
• preclude Sandberg and Zients from testifying about information received through or sent from their personal email accounts as part of any defense in their case in chief;
• prohibit Sandberg and Zients from moving for summary judgment; and
• award plaintiffs their expenses.
None of those sanctions requires a culpable mental state.
In this case, the prejudice arises from the loss of the emails from Sandberg’s
Gmail account, the plaintiffs’ inability to use those materials as evidence, and the
defendants’ ability to testify with fewer constraints due to the absence of
contemporaneous emails from Sandberg’s personal account.
To address that prejudice, the court will impose one sanction the plaintiffs have
requested: raising Sandberg’s standard of proof by one level on any issue where she
116 See Ct. Ch. R. 37(b); Terramar Retail Ctrs., LLC v. Marion #2-Seaport Tr.
U/A/D June 21, 2002, 2018 WL 6331622, at *14 (Del. Ch. Dec. 4, 2018).
117 Ct. Ch. R. 37(e)(2).
29 bears the burden of proof.118 In Genger, the court went further, holding that the
spoliator “will be unable to prevail on any material factual issue if the only evidence
in support of his own position is his own testimony.”119 Under that ruling, “[a]bsent
corroborating testimony or documents, [the spoliator’s] mere word will be insufficient
to meet his burden of persuasion.”120 In this case, there is other documentary evidence
from Sandberg, so the court will consider her testimony and give it the weight due.
But the standard of proof required for the affirmative defenses Sandberg raises will
be clear and convincing evidence.
This is a meaningful sanction, but does not rise to the level of a burden shift.
The burden of proof “determine[s] what happens if there is no credible evidence on a
topic, or if there is some credible evidence, but not enough that either side could carry
the evidence by a preponderance.”121 In such a case, the party with the burden of
proof loses. In a typical civil case, the plaintiff bears the burden of proof. Shifting the
burden of proof changes who wins in the absence of sufficient credible evidence.
Increasing the burden of proof does not have the same effect. It does not force
Sandberg to carry a burden on issues where she would not otherwise have to come
118 TR Invs., LLC v. Genger, 2010 WL 541687, at *2 (Del. Ch. Feb. 3, 2010).
119 Id.
120 Id.
121 Goldstein, 310 A.3d at 586 (discussing how presumptions and burdens operate).
30 forward with proof. It only affects issues where Sandberg already had the burden of
proof, such as her affirmative defenses.
The plaintiffs also asked the court to preclude Sandberg from testifying about
information received through or sent from their personal email accounts as a part of
their case in chief. Precluding testimony is a more serious sanction and not warranted
here. Sandberg’s deletions prejudiced the plaintiffs, but the defendants produced
many of Sandberg’s emails from other sources. The plaintiffs can cross-examine
Sandberg on any testimony she gives.
The plaintiffs additionally asked the court to prevent Sandberg from moving
for summary judgment. This is a fact-specific case, so it is highly unlikely that
summary judgment will be an efficient procedural vehicle for resolving part or all of
it. If Sandberg moves for summary judgment, and if the plaintiffs believe that emails
from her Gmail account would have been relevant to the summary judgment motion,
then the court will take that into account when considering the motion. There is no
reason at this point to deny summary judgment in advance.
Finally, the plaintiffs are awarded the expenses they incurred pursuing the
spoliation issue against Sandberg. The plaintiffs may recover not only the expenses
relating to the motion itself, but also expenses for the effort required to pin down
Sandberg’s positions and confirm that the ESI was not available from other sources.
The plaintiffs are not awarded the expenses they incurred pursing the spoliation
issue against Zients.
31 Some of their expenses may overlap. If the plaintiffs would have incurred
expenses to pursue the motion against Sandberg, then they can recover those
expenses, even if the expenses also related to Zients.
The parties will exchange information about their respective attorneys’ fees
and costs and attempt to reach accord in good faith. If they cannot agree, the plaintiff
may file an application.
III. CONCLUSION
The motion for sanctions is granted in part. Sandberg must prove her
affirmative defenses by clear and convincing evidence and plaintiffs are awarded
their expenses as set forth in the rulings in this decision. The motion is denied with
respect to the sanctions requested against Zients.