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For e-Discovery Efforts “Wholly Devoid of Competence” and for Spoliation, Court Orders Sanctions and Prohibits Indemnification from Insurer : Electronic Discovery Law

July 14, 2011 By Leave a Comment

PIC Group, Inc. v. LandCoast Insulation, Inc., No. 1:09-CV-662-KS-MTP, 2011 WL 2669144 (S.D. Miss. July 7, 2011)

A Special Master determined that defendant’s discovery failures were largely the result of a “callous and careless attitude” rather than a “craven effort to hide or destroy information”, save one instance of intentional deletion by defendant’s Manager of Legal Affairs.  Adopting in part the Special Master’s recommendations, the court ordered sanctions, including production of the non-privileged contents of the manager’s hard drive and payment of plaintiff’s attorney’s costs and fees, with the condition that payment be rendered by defendant, not its insurance company.

A Special Master tasked with investigating defendant’s discovery efforts determined that several discovery failures had occurred, including spoliation.  Indeed, when describing his initial findings, the Special Master characterized defendant’s efforts as “wholly devoid of competence, yet only once motivated by guile.”  Among the failures reported were: 1) a lack of evidence of “any corporate policy, procedure, or concerted effort” on the part of defendant to “preserve electronic data;” 2) a lack of evidence that defendant or counsel “‘engaged anyone to preserve, collect, or examine potentially responsive ESI until long after’ it should have been” (the Special Master was able to easily locate ESI that defendant had not previously identified by “simply looking for it, in the same manner that a secretary looks for a document or email”); 3) defendant’s admission that an employee’s laptop had been stolen from his car and that the image of that drive taken before the theft had been lost; and 4) defendant’s admission that another computer had been erased two to three months after the incident from which this suit arose.  Most noteworthy, however, was the discovery that defendant’s Manager of Legal Affairs, a disbarred attorney acting as defendant’s “unofficial general counsel,” used antiforensic software to wipe his hard drive on the day it was collected.  Accordingly, the Special Master recommended sanctions to which defendant objected, particularly on the grounds of proportionality.

via For e-Discovery Efforts “Wholly Devoid of Competence” and for Spoliation, Court Orders Sanctions and Prohibits Indemnification from Insurer : Electronic Discovery Law.

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Improving legal records management: harness the DNA of data | CPA Global

August 31, 2010 By Leave a Comment

Data discovery has played a key role in US litigation for two generations, during which time nearly all forms of information have migrated to the digital realm. Yet, according to Texas-based trial lawyer and e-discovery expert, Craig Ball, few legal departments are addressing this reality. He says that, despite the central role of electronic information in our lives, e-discovery efforts are either overlooked altogether or pursued in such epic proportions that discovery dethrones the merits as the focal point of the case.

Ball believes that, at each extreme, lawyers must bear some responsibility for the failure. ‘Few have devoted sufficient effort to understanding their clients’ information architecture or mastering tools and techniques to manage data,’ he argues. ‘We didn’t know how good we had it when discovery meant only paper. Paper is tangible. It has to be stored somewhere physically accessible, and systems have developed over time to store and retrieve it. Paper holds power of place, whereas electronic data accumulates invisibly.

‘Even if employees label electronic data accurately, they rarely file it consistently,’ continues Ball. ‘Thousands of emails sit ignored in inboxes; their subject lines offering no clue as to their contents. Documents are saved in cryptically named folders on desktops and portable storage media or replicated between work and home computers. There is still plenty of paper around, too, but filing systems, like filing clerks, have all but disappeared.’

Ball adds that there is a standard misconception that evidence can be retrieved simply by running a Googlelike search across a company’s electronic files. ‘That’s rarely feasible, even in high-tech enterprises,’ he emphasises. Similarly, he is frustrated by the attempts by many lawyers to try to convert e-data into paper form. ‘Such is the volume of electronic information that it would be impossible to convert it all to hard copy,’ he says, ‘and yet lawyers seem to overwhelmingly favour this expensive, inferior path over learning to deal with electronic data differently.’

via Improving legal records management: harness the DNA of data.

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Court Orders Retention of Third Party Vendor to Assist with Document Review and Production, Appoints Special Master to Resolve Future Disputes : Electronic Discovery Law

July 26, 2010 By Leave a Comment

Multiven, Inc. v. Cisco Sys., Inc., 2010 WL 2813618 (N.D. Cal. July 9, 2010)

Observing that plaintiff and counterdefendants had insisted upon “a review process that guarantees that they will not finish this extensive project in any reasonable amount of time”, namely reviewing large volumes of information without first narrowing the material using search terms, the court acknowledged the need to expedite production and directed plaintiff and counterdedendants to retain a third party vendor to assist in their discovery efforts.  Accepting defendant’s offer, the court further ordered that Cisco would bear half the cost.

via Court Orders Retention of Third Party Vendor to Assist with Document Review and Production, Appoints Special Master to Resolve Future Disputes : Electronic Discovery Law.

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Predictability in EDD Rules Remain Elusive | NY Law Journal

April 7, 2010 By

Last time, we reviewed Judge Shira Scheindlin’s must-read decision in Pension Committee,[FOOTNOTE 1] in which she suggests that her series of Zubulake decisions (the last of which was issued in 2004) imposed a range of categorical e-discovery duties in the Southern District of New York and quite possibly beyond. Her Pension Committee decision warns that the breach of these post-Zubulake duties will almost invariably constitute “gross negligence” and subject litigants to the most severe of discovery sanctions.

But a recent decision by Judge Lee H. Rosenthal of the Southern District of Texas — another luminary in the constellation of judges shaping the law of e-discovery — highlights that e-discovery standards remain unsettled and defy application of immutable and inflexible rules. Indeed, Rosenthal’s opinion in Rimkus Consulting v. Cammarata[FOOTNOTE 2] notes that circuit splits have emerged on some fundamental e-discovery concepts.

Rimkus Consulting involved allegations of intentional destruction of evidence, but, much like Scheindlin’s opinion in Pension Committee, Rosenthal engages in a wide-ranging discussion of the duty to preserve evidence, conduct that breaches that duty, the level of culpability necessary to impose sanctions, and the standard that must be satisfied to justify a spoliation instruction.

Unlike Scheindlin, however, Rosenthal does not seek to establish bright-line rules. Instead, she invokes the traditional negligence language of reasonableness and proportionality that arguably was absent from Pension Committee. The opinion also cautions against viewing the e-discovery efforts of litigants through the distorting lens of hindsight, through which flaws in even the most vigilant e-discovery efforts can be brought into stark relief.

Moreover, as had Scheindlin in Pension Committee, Rosenthal expresses “grave concerns”[FOOTNOTE 3] about the ascendancy of spoliation litigation, particularly as related to electronic documents. It is obvious to most jurists who have had occasion to focus on e-discovery issues that the cost and delay inherent in “discovery about discovery” are all too often needless and avoidable.

via Predictability in EDD Rules Remain Elusive.

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E-Discovery Do’s and Don’ts of ‘Pension Committee’ | Law.com

February 12, 2010 By Leave a Comment

JUDGE SCHEINDLIN’S ‘PENSION COMMITTEE’ CASE DO’S

Do issue written litigation holds. Litigation holds should be in writing and disseminated to the widest of audiences early. For prospective plaintiffs, litigation holds should be issued no later than upon retention of outside counsel. Litigation holds should explicitly instruct employees and potential custodians not to destroy records. Slip Op. at 12, 29, 33, 44, 47, 72.

Do search broadly. Preservation and collection of the records of employees who were key players in the events in dispute is a given. The failure to preserve and obtain records of employees with relatively minor or even redundant roles, however, could also be branded as negligent. Likewise, failure to collect the documents of former employees or those of individuals who may have changed jobs within the company can trigger unwelcome scrutiny. Slip Op. at 10, 49, 53, 58, 67-69.

Do supervise discovery adequately. Individuals well-versed in discovery responsibilities, such as in-house or outside counsel, should seize control of preservation and collection activities. Delegating these duties to an unsupervised, inexperienced assistant or paralegal, or affording employees the discretion to determine what should be maintained and turned over, can be problematic. Slip Op. at 28, 50-54, 65, 77.

Do chronicle discovery efforts contemporaneously. Keeping close track of one’s own discovery efforts — e.g., when preservation was mandated; what has been preserved; which custodians have had their files collected; what has been produced; why ostensible sources of discovery were not tapped — will be invaluably helpful if those efforts are later challenged by the opposition. Being able to pronounce with certainty that those efforts were diligent and thorough should minimize the danger of a discovery skirmish turning into an all-out battle before the court. Slip Op. 30-33, 54-57.

Do assume that oversights will be identified. Multi-front and multi-party suits carry unique concerns, as do actions where discovery is obtained by subpoena from non-parties. Adversaries can often track down the documents that should have appeared, but did not appear, in your production — or at least identify the gaps. Overselling the reliability of your collection and production, as plaintiffs did with glowing affidavits here, will only do permanent damage to your credibility before the court. Slip Op. at 32.

Do monitor and manage discovery, even in the wake of a stay. A discovery stay is not a release from discovery obligations. Discovery stays may be imposed for a variety of reasons, such as pending adjudication of a motion to dismiss implicating the PSLRA, or pending resolution of a related first-filed proceeding. Preservation of electronic or paper documents should not await termination of the stay, or lapse during the stay. Slip Op. at 47.

Do “anticipate and undertake document preservation with the most serious and thorough care, if for no other reason than to avoid the detour of sanctions.” Slip Op. at 25. In addition to facing sanctions, the plaintiffs here were forced to devote months and considerable resources to defending their discovery efforts — time and money that could have been better spent pursuing their claims against the defendants.

Do sweep all forms of ESI. Restricting preservation and collection to email inboxes is insufficient. An appropriately comprehensive discovery plan considers other sources, including central electronic and network files, personal computers on which employees conducted company work, PDAs, and backup tapes (when “such tapes are the sole source of relevant information”). Slip Op. at 43 n.99, 59-60, 70, 73.

via Law.com – E-Discovery Do’s and Don’ts of ‘Pension Committee’.

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Judge Scheindlin analyzes the law of spoliation : Electronic Discovery Blog

January 19, 2010 By Leave a Comment

Plaintiff producers were a group of investors who had brought an action to recover $550 million lost as a result of the liquidation of two British Virgin Island hedge funds. In October, 2007, the Citco Defendants claimed that large gaps in plaintiffs’ document production had been found. Depositions were held and declarations submitted between October, 2007 and June 2008. As a result of this discovery, defendant requestors moved for sanctions, alleging that plaintiffs had failed to properly preserve and produce documents, and had submitted false declarations regarding their efforts.

Judge Scheindlin then undertook an exhaustive review of the various aspects of the law underlying spoliation:

I begin with a discussion of how to define negligence, gross negligence, and willfulness in the discovery context and what conduct falls in each of these categories. I then review the law governing the imposition of sanctions for a party’s failure to produce relevant information during discovery. This is followed by factual summaries regarding the discovery efforts – or lack thereof – undertaken by each of the thirteen plaintiffs against whom sanctions are sought, and then by an application of the law to those facts.

Id. at *5-*6. The judge concluded that all plaintiffs were either negligent or grossly negligent in meeting their discovery obligations; thus, sanctions were required.

via Judge Scheindlin analyzes the law of spoliation : Electronic Discovery Blog.

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