Li v. Merck & Co., Inc.

Background

Merck sought three categories of sanctions. First, it requested an adverse-inference instruction based on Nina Xiaoyan Li’s alleged deletion of three categories of paper documents: handwritten edits by Li and her daughter, documents Li printed and removed from Merck during the last 90 days of her employment, and documents a former Merck employee mailed to Li after her termination. Second, under Federal Rule of Civil Procedure 37(e), Merck requested a forensic examination of Li’s and her husband’s devices or, alternatively, an instruction that Li deleted electronic communications. Third, Merck requested $5,000 in sanctions against Li’s counsel under Rule 26(g).

Preservation duty and paper documents

The court determined that Li’s duty to preserve evidence arose when she was terminated in March 2023. Although Li had consulted lawyers during an internal workplace dispute in December 2022, the court found no indication that she was then contemplating a lawsuit. The court therefore rejected Merck’s argument that the preservation duty began in December 2022.

Because the handwritten edits and the documents Li allegedly printed and removed were destroyed before the preservation duty arose, the court rejected Merck’s spoliation argument as to those documents. As to the documents mailed by former coworker Xiaolan Shen, the court found that Shen most likely mailed printed work emails concerning Li’s human-resources dispute, not the confidential slide deck Merck identified. The court also found that Merck already had the relevant internal emails and therefore was not deprived of documents or relevant information. The court DENIED Merck’s request for sanctions based on its inherent authority.

Electronically stored information

Rule 37(e) permits sanctions when electronically stored information that should have been preserved is lost, cannot be restored or replaced through additional discovery, and other requirements are met. The court acknowledged that Li’s document production had been seriously defective and had previously ordered her to redo the collection and production using a document vendor.

Nevertheless, the court found that Merck had not shown that any specific electronic information was both lost and unable to be restored or replaced through additional discovery. The court noted that the communications involved other people, including Merck employees and people Merck had subpoenaed, and that Merck had not explained why those sources could not provide the communications. The court therefore DENIED Merck’s Rule 37(e) motion. The court emphasized that this ruling did not approve Li’s piecemeal or untimely electronic production.

Rule 26 sanctions against counsel

Rule 26(g) requires an attorney signing a discovery response to certify, after a reasonable inquiry, that the response complies with the rules and is not unreasonable or unduly burdensome. The court found that Li’s counsel signed an October 21, 2024 response stating that responsive communications between Li and her daughter either never existed or had been thrown away. The parties agreed that this response was false, and the court found that counsel knew it was false by at least early December.

The court rejected counsel’s explanation that counsel had relied on Li’s memory. It found that counsel could not transfer responsibility for a diligent document search to the client and that the search counsel described should have located the responsive communications. Merck’s attorneys spent 30 to 40 hours addressing the missing communications, at a cost exceeding $25,000, but requested only $5,000. The court found that amount reasonable, GRANTED Merck’s motion for Rule 26 sanctions, and SANCTIONED attorney Deborah Kochan $5,000, payable to Merck within 30 days.

Result

The court denied Merck’s inherent-authority sanctions request, denied its Rule 37(e) sanctions motion, and granted its Rule 26 sanctions motion against attorney Deborah Kochan for $5,000.