Avoiding Harsh Sanctions After Technology Failures: Lessons from Recent Cases
Editor’s Note:Technology can be both an enabler and a liability—especially when it falters during the discovery process. In Oakley v. MSG Networks and FTC v. Match Group, the courts evaluated whether reasonable reliance on malfunctioning technologies could shield organizations from harsh spoliation sanctions. These recent rulings underscore an important shift: courts are increasingly looking beyond the failure itself and examining how responsibly parties acted before, during, and after the breakdown. For cybersecurity, information governance, and eDiscovery professionals, these cases highlight the critical importance of thoughtful technology selection, proper implementation, and diligent remediation planning. The takeaway is clear—when technology fails, reasonableness still matters.
Avoiding Harsh Sanctions After Technology Failures: Lessons from Recent Cases
By Phil Favro, Contributing Author for HaystackID
In the age of Artificial Intelligence, organizations need technology to achieve their goals. Technology is indispensable.
But what happens when technology fails?
As often as technology works and functions well, it can also experience glitches. Technology breakdowns present any number of difficulties. Consider information security. Technology failures could render enterprises vulnerable to cyber-attacks, potentially exposing them, as well as employees and customers, to harm.
Technology breakdowns also happen in litigation. If they cause discoverable information to be lost or delays in production, should the producing party be punished? Two recent cases suggest that producing parties may find a reprieve from sanctions despite technology failures if their actions surrounding the failures are reasonable.
In Oakley v. MSG Networks, Inc., a court found that the defendants took reasonable steps to preserve discoverable emails and concluded that the loss of certain emails arising from a technology malfunction was beyond defendants’ control. [1] And in Federal Trade Commission v. Match Group., Inc., a different court refused to severely penalize a defendant whose late document productions resulted from a previously unknown technology failure with its email archiving application. [2]
Oakley and Match Group signal courts’ willingness to overlook technology breakdowns, particularly where parties have engaged in otherwise reasonable discovery conduct. They also spotlight the importance of developing a reasonable process for selecting and implementing enabling technologies for litigation and discovery.
Oakley: No Sanctions Despite Breakdowns with Microsoft Purview eDiscovery
The technology breakdown at issue in Oakley involved Microsoft Purview eDiscovery (Purview), the widely used application designed to facilitate (among other things) the implementation of legal holds on discoverable information in organizations’ Microsoft 365 environments. Defendants applied a “technical legal hold” through Purview to custodians of discoverable information after the incident at Madison Square Garden involving former New York Knicks basketball star, plaintiff Charles Oakley, which eventually gave rise to the litigation. The court observed that the Purview hold was “designed to ‘ensure that [emails are] retained no matter what the user does’ and ‘bypass or override the retention settings of the organization’ so that emails are not automatically deleted.” In addition to the Purview hold, the defendants issued multiple litigation hold notices and reminders to custodians.
Despite the defendants’ efforts to preserve discoverable emails, a “technical malfunction in [their] Microsoft Purview system” apparently allowed emails from 11 of defendants’ custodians that were on legal hold to be lost. The lost communications led Oakley to seek spoliation sanctions against defendants under Rule 37(e). Among the arguments supporting his motion, Oakley asserted that defendants had selectively eliminated evidence because the purported technology breakdown only affected the custodians who removed him from Madison Square Garden. In addition, Oakley argued that the defendants selectively deleted the complete “email inboxes” for four of the custodians at issue. Unlike the other seven custodians, the calendars and meeting invitations for the four custodians at issue had been removed. According to Oakley, this suggested that defendants “deliberately deleted” these custodian accounts and did not mistakenly apply deletion rules to the custodians’ emails.
The court disagreed with Oakley and found that the technology breakdown was the cause of the emails being lost. The court noted with approval that the defendants had circulated written hold notices and implemented the technical hold through Purview. Regarding the latter step, the court indicated that the defendants’ use of Purview—which it characterized as a third-party archiving service— “constitutes a reasonable step to preserve ESI.” Defendants’ reasonableness was also apparent from their efforts to remediate any resulting harm after discovering the “very serious issue in their Microsoft environment.” This included investigating how the emails were lost, seeking their replacement from alternative sources, and hiring an expert to facilitate these efforts.
Nor was the court persuaded by Oakley’s arguments. Oakley’s selective preservation argument lacked merit since, as the court observed, the technology failure impacted 79 other matters where custodians’ emails were on legal hold. Oakley’s argument was further undermined by the fact that the technical malfunction did not affect the emails for a key witness (James Dolan). Moreover, that custodians in other legal matters also had their entire mailboxes (including calendars and meeting invites) eliminated, both of which belied Oakley’s argument and defendants’ position that “this issue was part of a broader Microsoft technical problem.” All of which led to the court to deny Oakley’s motion for spoliation sanctions.
Match Group: No Sanctions Despite Late Productions of Key Documents
The technology glitch in Match Group involved “a third-party archiving vendor” that the defendant (Match Group) used as a clearinghouse for collecting relevant information from its Microsoft 365 platform. When Match Group began using the archiving service, it was with the understanding that the service had “interoperability with the Microsoft platform.”
Nevertheless, near the close of discovery, Match Group determined that the archiving service had not collected hundreds of discoverable documents from certain custodians. Using a “different backup system to identify any responsive documents that had been missed by the archival system,” Match Group turned over nearly 500 additional documents to the Federal Trade Commission (FTC). The documents were produced after the discovery cutoff and after the parties filed cross motions for summary judgment.
The FTC moved for sanctions against Match Group, arguing that the belated productions of documents had improperly deprived the agency of key evidence until after the close of discovery. Among the measures the FTC sought for the harm it suffered was a preclusion sanction under Rule 37(c)(1) that would prevent Match Group from using any of the approximately 500 documents that it produced after discovery closed.
While agreeing with the FTC that it suffered some prejudice, the court denied its request for a preclusion sanction given Match Group’s “reasonable reliance” on the archiving service. The court observed that Match Group produced more than 300,000 documents, nearly all of which were routed through its archiving system, which was “designed to create a complete warehouse of the company’s electronic documents.” That relatively few documents were left uncollected did not impugn the reasonableness of Match Group’s reliance. As the court observed, Match Group did not implement an application “for which it was not intended or was ill-suited.” On the contrary, the archiving service was marketed as being interoperable with Microsoft 365 and generally performed as advertised. In addition, Match Group’s efforts to ameliorate any resulting harm to the FTC also underscored the reasonableness of its conduct. Furthermore, Match Group allayed the prejudice the FTC suffered by allowing the agency to use documents from the late productions to support its positions on summary judgment in its reply brief. The court accordingly concluded that Match Group’s late productions were substantially justified and did not merit issuance of the requested preclusion sanction. [3]
Considerations for Establishing Reasonable Reliance on Enabling Technologies
Oakley and Match Group are instructive on the factors that courts may consider in determining whether an organization’s reliance on certain enabling technologies was reasonable. In the event of a technology glitch during litigation, Oakley and Match Group demonstrate that the selection and implementation of the technology at issue should be key factors in assessing reasonableness.
On the issue of selection, it’s significant that neither Oakley nor Match Group criticized the parties’ selection of Microsoft for their operation and—in the case of defendants in Oakley—their litigation and discovery needs. The generally favorable reputation of Microsoft applications may leave their selection beyond reproach. For purposes of ESI and eDiscovery, the same could apply for comparable applications from Google, Relativity, and other reputable providers.
Offerings from less reputable or well-known vendors could have equivalent capacity for handling discovery duties, though enterprises may need to establish why their technology selections were appropriate. And yet, it does not appear that Match Group had to justify its engagement of the archiving service (Quest Archive) at issue, even though it may not be as commonly known as other providers. Still, organizations should be prepared to substantiate their technology selections.
Regarding implementation, enterprises should ensure that they have deployed the technology in the manner contemplated by the provider. Neither Oakley nor Match Group criticized the manner in which the parties implemented the technologies that ultimately failed. If the technologies were not installed properly, Oakley and Match Group may very well have turned out differently. Proper implementation is a key aspect of establishing reasonableness and defensibility of the technology’s use.
Another key aspect of implementation is ensuring that personnel who are using the technology have been properly trained to do so. For Oakley and Match Group, there was no question that the parties had operated the technologies at issue as advertised. Indeed, Oakley specifically rejected the assertion that the defendants mismanaged their email deletion settings or otherwise “deliberately deleted” the lost emails. And in Match Group, the defendant’s employee was sufficiently knowledgeable about the archiving service that he detected the technology glitch and spearheaded the company’s remediation efforts to ensure a full production was made. In contrast, courts have sanctioned parties whose representatives were not properly trained to handle the technology and, as a result, lost discoverable information.
This leads to a final point: organizations should ensure that their collective efforts to mitigate harm arising from technology failures are reasonable. As Oakley teaches, companies can investigate and seek to address the breakdown. They can identify and produce documents from alternative sources and engage experts to facilitate these efforts. Like the defendant in Match Group, parties can also offer concessions to alleviate prejudice resulting from technical glitches.
Adopting these types of measures can better help organizations establish that courts view their efforts with approval and refrain from imposing severe sanctions to address the harm that could otherwise arise from technology malfunctions.
About Phil Favro
Phil Favro is the founder of Favro Law PLLC, where he counsels clients on ESI, AI, and discovery issues and serves as a special master, mediator, and expert witness. Phil is nationally recognized for his expertise on ESI, discovery, and information governance, with courts acknowledging his credentials. See, e.g., Oakley v. MSG Networks, Inc., No. 17-CV-6903 (RJS), 2025 WL 2061665 (S.D.N.Y. July 23, 2025). This background makes Phil particularly well-suited to counsel clients and advise courts on information-related issues. As a special master, Phil is acclaimed for his collaborative approach, working with parties to find stipulated solutions to complex issues. For disputes that require adjudication, he is renowned for the clarity and vigor of his written dispositions, which are available on legal search engines.
About HaystackID®
HaystackID® solves complex data challenges related to legal, compliance, regulatory, and cyber requirements. Core offerings include Global Advisory, Cybersecurity, Core Intelligence AI™, and ReviewRight® Global Managed Review, supported by its unified CoreFlex™ service interface. Recognized globally by industry leaders, including Chambers, Gartner, IDC, and Legaltech News, HaystackID helps corporations and legal practices manage data gravity, where information demands action, and workflow gravity, where critical requirements demand coordinated expertise, delivering innovative solutions with a continual focus on security, privacy, and integrity. Learn more at HaystackID.com.
Assisted by GAI and LLM technologies.
SOURCE: HaystackID
[1] Oakley v. MSG Networks, Inc., —F. Supp. 3d—, 2025 WL 2076080 (S.D.N.Y. 2025). [2] Fed. Trade Comm’n v. Match Grp., Inc., No. 3:19-CV-2281-K, 2025 WL 46024 (N.D. Tex. Jan. 7, 2025). [3] The court did issue sanctions against Match Group under Rule 16(f)(1)(C) because Match Group violated the court’s scheduling order. The court allowed the FTC to take three additional depositions, each limited to two and one-half hours. The examinations were limited to the issues involved in the late document productions.