Close
Enter your
text here

Ethics

eDiscovery Case Law: More Sanctions for Fry’s Electronics
 

In E.E.O.C. v Fry’s Electronics, Inc., No. C10-1562RSL, 2012 U.S. Dist. (W.D. Wash. July 3, 2012), Washington District Judge Robert S. Lasnik ordered several sanctions against the defendant in this sexual harassment case (including ordering the defendant to pay $100,000 in monetary sanctions and ordering that certain evidence be considered presumptively admissible at trial), but stopped short of entering a default judgment against the defendant.  This ruling came after having previously ordered sanctions against the defendant less than two months earlier.

Prior Sanctions

On May 10, Judge Lasnik granted in part plaintiffs' motion for sanctions in this case, finding that the defendant had spoliated evidence, including data and computer hard drives. In that ruling, Judge Lasnik believed that the prejudicial effect of the spoliation could be counteracted by “(a) instructing the jury that one of the justifications for firing [one of the plaintiffs] was pretextual and (b) allowing plaintiff considerable leeway in arguing what information might have been gleaned from the computer hard drives had they not been destroyed by defendant”. At the time, Judge Lasnik also indicated “some concern regarding the efficacy and thoroughness of defendant's searches” which led to more information being discovered after he ordered a second search.

Additional Spoliation and Misconduct

During a Rule 30(b)(6) deposition held on May 30, the plaintiffs learned for the first time that the accused individual had previously been accused of sexual harassment in 2001 and that an investigation had been conducted. According to Judge Lasnik, the defendant “intentionally withheld this information and the related documents from discovery by raising unfounded objections and ‘negotiating’ a narrowing of the discovery requests” and found the defendant's conduct to be “unfair, unwarranted, unprincipled, and unacceptable”.

Misconduct by the defendants noted by Judge Lasnik also included the redaction of responsive information, “[e]ven after defendant's objections to certain discovery requests were overruled”, as well as production of hundreds of pages of information with the “fallacious argument” that they were relevant to the claims.

Consideration of Default Judgment Sanction

Judge Lasnik noted that it is “once again left to determine whether to strike defendant's answer and enter default judgment against it”, but noted that dismissal is a “harsh sanction” and the following factors must be considered when determining “whether a dispositive sanction is appropriate under either its inherent powers or Rule 37(b): (1) the public's interest in the expeditious resolution of litigation; (2) the Court's need to manage its docket efficiently and effectively; (3) the risk of prejudice to the party seeking sanctions; (4) the public policy in favor of considering cases on the merits; and (5) the availability of less drastic sanctions.”  While finding that the first three factors supported a dispositive sanction, Judge Lasnik ruled against a dispositive sanction in factor 4, indicating that “[t]he public has an interest in a determination of those issues based on the facts, rather than by judicial fiat”.

Lesser Sanctions Ordered

Instead, Judge Lasnik ordered lesser sanctions, indicating that “Defendant's affirmative defenses related to (i) its efforts to prevent and correct harassment in the workplace, (ii) plaintiffs' failure to utilize protective and corrective opportunities provided by defendant, (iii) its good faith and/or privilege to act as it did in this case are STRICKEN.” He also stated that certain documents and testimony related to “other complaints or reports of sexual harassment” at the company were “presumptively admissible at trial”. He also ordered sanctions of $100,000 “to offset the excess costs caused by defendant’s discovery violations, to punish unacceptable behavior, and as a deterrent to future bad conduct” to be split evenly between the two individual plaintiffs, the EEOC and the Court Clerk.

So, what do you think?  Are you surprised that the defendant didn’t receive a default judgment sanction?  Please share any comments you might have or if you’d like to know more about a particular topic.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine Discovery. eDiscoveryDaily is made available by CloudNine Discovery solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscoveryDaily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

eDiscovery Case Law: Major Bank and Law Firm Sanctioned for “Pattern of Discovery Abuses”
 

As noted in ABA Journal, Greenberg Traurig and its client, TD Bank, have received sanctions in Coquina Investments v. Rothstein, 10-cv-60786, U.S. District Court, Southern District of Florida for a “pattern of discovery abuses before, during, and after trial”.  As U.S. District Judge Marcia Cooke noted, “it often times appears that this litigation was conducted in an Inspector Clouseau-like fashion.  However, unlike a Pink Panther film, there was nothing amusing about this conduct and it did not conclude neatly.”

While Judge Cooke sanctioned Greenberg Traurig, she determined that sanctions were not warranted against the individual attorneys, despite the fact that their “handling of this case left much to be desired.”  However, she noted that while “they certainly acted with negligence”, “[t]he evidence does not support a finding that any of them acted willfully or in bad faith.”

Texas-based Coquina Investors won a $67 million verdict in January for aiding and abetting fraud by then-attorney Scott Rothstein in a civil damages suit brought by investors.  It’s the first civil jury verdict in this country against a bank for aiding and abetting fraud.  Judge Cooke did find that TD Bank "willfully concealed relevant evidence from its trial counsel” and “that TD Bank "had actual knowledge of Rothstein’s fraud”.  Both parties were required to pay plaintiff’s legal fees and pursuing the sanctions.  Rothstein has been disbarred and is serving a 50-year prison sentence in a secret location under the federal witness protection program.

According to the Miami Herald, two documents were primarily at issue in the sanctions motion:

  • “Customer Due Diligence” form: This document was redacted by the bank to conceal that the bank had put a "high risk" label on Rothstein's law firm concerning its potential for money laundering. That information was not blacked out when the same document was subsequently produced in a related case against the bank, however, alerting the plaintiffs' legal team to the alteration.  The bank contended at trial it had not considered Rothstein's firm high-risk, and hence was not required to monitor his accounts closely.
  • “Standard Investigative Protocol”: This document detailed the bank's policy on knowing its customers and preventing money laundering.  TD Bank claimed prior to trial that the document didn’t exist.  It was produced months later and the delay was apparently was due to a mistake on the part of a Greenberg lawyer who is no longer with the firm.

A spokeswoman for the law firm said it will comply with the judge's decision. “We regret the deficiencies that gave rise to this order,” she wrote in an email.  However, TD Bank plans to appeal both the sanctions ruling and the underlying $67 million jury award, a spokeswoman wrote in an email.

So, what do you think?  Are you surprised that the individual attorneys weren’t sanctioned, as well?  Please share any comments you might have or if you’d like to know more about a particular topic.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine Discovery. eDiscoveryDaily is made available by CloudNine Discovery solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscoveryDaily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

eDiscovery Trends: Conduct Yourself Ethically with EDRM’s Model Code of Conduct
 

The Electronic Discovery Reference Model (EDRM) has made numerous contributions to the eDiscovery industry since it was founded in 2005, with the EDRM diagram (above) having become a universally accepted standard – rare in our industry – to reflect the eDiscovery life cycle.  Last year, we noted the introduction of the EDRM Model Code of Conduct (MCoC), which focuses on the ethical duties of service providers associated with these five key principles and also provides a corollary for each principle to illustrate ethical duties of their clients.  Now, your organization can subscribe to the MCoC to demonstrate its commitment to conducting itself in an ethical manner.

As the invitation email (to subscribe) from EDRM notes, “The MCoC was drafted by members of the EDRM MCoC Project and reflects years of exhaustive dialogue and a wide array of viewpoints representative of the interests of corporations, law firms and service providers…[It] is designed to promote predictability and stability in the legal industry for both providers and consumers of electronic discovery products and services.”

You can read the code online here, or download it as a 22 page PDF file here.  To voluntarily subscribe to the MCoC, you can register on the EDRM website here.  Identify your organization, provide information for an authorized representative and answer four verification questions (truthfully, of course) to affirm your organization’s commitment to the spirit of the MCoC, and your organization is in!  You can also provide a logo for EDRM to include when adding you to the list of subscribing organizations.  As of this writing, there are 39 subscribing organizations listed here, including CloudNine Discovery, the company I work for (and sponsor of this blog, in case you haven’t noticed).

So, what do you think?  Is your organization subscribed?  If not, what’s stopping you?  Please share any comments you might have or if you’d like to know more about a particular topic.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine Discovery. eDiscoveryDaily is made available by CloudNine Discovery solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscoveryDaily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

eDiscovery Best Practices: Judge Facciola Discusses Competency and Ethics
 

The American Bar Association (ABA) Model Rules of Professional Conduct (Model Rules) require that an attorney possess and demonstrate a certain requisite level of knowledge in order to be considered competent to handle a given matter.  Specifically, Model Rule 1.1 states that, "[a] lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness, and preparation reasonably necessary for the representation."

As noted in Law Technology News, eDiscovery vendor iConect hosted a free webinar last week entitled "Duty of Competency and E-Discovery", in which Joshua Gilliland, author of Bow Tie Law's Blog and founder of legal iPad app developer Majority Opinion, discussed ethics and eDiscovery with Magistrate Judge John M. Facciola of the United States District Court for the District of Columbia.  The “sheriff” speaks!

The LTN article notes that, according to Judge Facciola, the requirement for competency now requires "a fundamental understanding of the way information is produced." This entails: 1) some understanding of the information systems you and your client are relying upon; 2) knowing your own limitations; and 3) if you don't understand, have someone at your side, i.e. an expert, who does, he declared.

With regard to ethics and eDiscovery, Judge Facciola gave an example of what might occur in a 26(f) meet and confer, which he called "the linchpin" of the 2006 amendments to the Federal Rules of Civil Procedure. Two lawyers are meeting in discovery in a case involving pharmaceuticals. One lawyer knows that the drug Pharmadine is spelled with an "e" not an "a" but doesn't correct the opposing party even though he knows it will disrupt his opponent's search, prolonging the discovery period by six months. Labeling this the difference between a material fact and not speaking to correct a mistake, Facciola says there's "no ethical rule" for this, but, ultimately that lawyer is going to have to go before a judge and account for those extra six months. Model rules regulate a profession's ethics, they don't influence a judge's decision. "Ethics rules are not a safe harbor," Facciola warned.

For more observations from Judge Facciola topics such as cooperation, preservation and search methodology, click on this link to access the article from Law Technology News.  And, for more on the subject of competency and ethics as it relates to eDiscovery, check out this post and this post from our archives.

So, what do you think?  Are you addressing ethics and competency requirements in your firm as it relates to eDiscovery?  Please share any comments you might have or if you’d like to know more about a particular topic.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine Discovery. eDiscoveryDaily is made available by CloudNine Discovery solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscoveryDaily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.