Sanctions

Leaving Your Hard Drives in a Rental House is Negligent, Court Rules – eDiscovery Best Practices

In Net-Com Services, Inc. v. Eupen Cable USA, Inc., No. CV 11-2553 JGB (SSx) (C.D. Cal. Aug. 5, 2013), the plaintiff’s destruction of evidence was negligent where its principal failed to take steps to preserve evidence he had stored in a home he rented to nonaffiliated lessees.

A principal of the plaintiff, Steve Moffatt, had custody and control over the company’s documents, which included its financial information. The company was using one accounting system but switched to another when it moved into a new location. When the employee looked for this data and could not find it, he assumed it had been “lost or stolen.” However, he did not report the loss to the company’s insurer or to the police.

Over the previous three years that the company was in operation, it was based in Moffatt’s home office. The company went out of business in October 2011, and as the company wound down, Moffatt stored all of the company’s computer hardware and software in his garage. Around that same time, in September or October 2011, Moffatt rented his home. The only precaution he took was to instruct his lessees not to throw any equipment or software away. Despite this instruction, he drove by the home either in September or October and noticed that the renters “had put a ‘big pile of office equipment and everything else in the front yard’” and were throwing them in dumpsters. As associate retrieved the computers’ hard drives from the renters’ trash in September 2011. The hard drives stored the company’s most recent accounting system; another back-up drive stored the same information, but it was most likely thrown out as well.

In 2012, during discovery, the court granted Eupen’s motion to compel “production of ‘missing accounting information,’ including financial data believed to be stored on purportedly ‘dead’ hard drives. Net-Com responded that the data “may no longer exist” and that its principals had had “no luck” accessing the information on the drives. The court ordered Net-Com to produce the missing information, aside from the company’s federal and state tax returns. It also required Net-Com “to produce ‘the computer hard drives containing potentially relevant ESI that Net-Com has been unable to restore’ to allow Eupen USA ‘to test Net-Com’s assertion that the information is inaccessible.’”

In July 2013, Eupen filed a motion for sanctions based on the loss of data and suggested that Net-Com “be precluded from offering evidence of its damages because its production of financial data was incomplete and insufficient due to the loss of information ‘allegedly contained on a computer hard drive that was apparently no longer functional.’” In response, Net-Com argued that no evidence existed that he hard drives had been “‘irreparably damaged’ such that their contents [were] irretrievable.’” The court declined to preclude the evidence but ordered Net-Com to send the hard drives to a vendor for forensic analysis.

Net-Com complied and submitted the drives to a vendor, Ai Networks. The vendor found “‘recoverable data on at least one of the hard drives,’” said it could retrieve it within three weeks, and estimated the cost to recover it would be between $2,000 and $3,000.

The court found that Net-Com’s duty to preserve arose at least by February 8, 2011, when it filed the lawsuit. The complaint alleged that Net-Com’s damages amounted to “millions of dollars”; therefore, the complaint placed the company’s financial and accounting data at issue. But “seven months after filing suit, Moffatt effectively abandoned the hardware and software containing Net-Com’s financial records by leaving the equipment and data in a garage in a house he rented out to third parties. Even if the eventual loss and destruction of evidence was not intentional, it was definitely negligent.”

The court found sanctions appropriate, noting that an adverse inference instruction is “‘adverse to the destroyer not because of any finding of moral culpability, but because the risk that the evidence would have been detrimental rather than favorable should fall on the party responsible for its loss.’” Although the court could not yet determine whether Eupen had been prejudiced, it ruled that Net-Com had to “bear the full cost of restoring and producing data on the hard drives” and ordered the company “to restore and produce any relevant data from the subject hard drives within fourteen days of the date of this Order.”

So, what do you think?  Were the sanctions severe enough?   Please share any comments you might have or if you’d like to know more about a particular topic.

Case Summary Source: Applied Discovery (free subscription required).  For eDiscovery news and best practices, check out the Applied Discovery Blog here.

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.

Despite Missing and Scrambled Hard Drives, Court Denies Plaintiff’s Request for Sanctions – eDiscovery Case Law

In Anderson v. Sullivan, No. 1:07-cv-00111-SJM (W.D. Pa. 08/16/2013), a Pennsylvania court found “that no sanctions are warranted” despite the disappearance of one hard drive, “scrambling” of another hard drive and failure to produce several e-mails because the evidence was not relevant to the underlying claims and because there was no showing the defendants intentionally destroyed evidence.

In the underlying lawsuit, the plaintiff alleged that she was retaliated against by officials employed by, or associated with, the Millcreek Township School District (“MTSD”) because she made several whistleblower reports against the District and its top administrators, including Dean Maynard (MTSD’s former Superintendent) for violation of her First Amendment rights and the Pennsylvania Whistleblower Act.  In January of 2007, Maynard inadvertently sent an email to an MTSD teacher, instead of to the intended recipient.  The email allegedly revealed previously undisclosed personal relationships that Maynard had with two people he had recommended for employment with the District.  Maynard disclosed this letter to the School Board and an investigation ensued, where several computers were examined, including those of Maynard and the plaintiff.

As part of this examination, MTSD’s IT department removed the original hard drives from the targeted employees’ computers and replaced them with a new hard drive onto which the employee’s active files would be copied so that the laptop would function without interruption; however, the original hard drive from Maynard’s computer was lost.

When the new hard drive that was installed in Maynard’s computer was examined by Anderson’s expert in approximately June 2011, the expert discovered the hard drive was “scrambled” possibly by some type of wiping software.

At summary judgment, the court concluded that the plaintiff’s claims did not qualify as whistleblower reports under the PWA because they did not disclose any non-technical violation of law.  After her claims were dismissed on summary judgment, the plaintiff filed a motion for sanctions due to the disappearance of one hard drive, “scrambling” of a second hard drive, and withholding 44 pages of e-mails from a 10,000-page production to conceal that one of the hard drives was missing.  Although this court entered summary judgment in favor of all defendants, they retained jurisdiction to adjudicate the motion for sanctions.

Because the plaintiff’s claims were dismissed as a matter of law, the court found that sanctions were not warranted on either hard drive because they could not have contained relevant evidence.  The court also determined that there was a lack of evidence suggesting that evidence was intentionally destroyed.  With regard to the 44 pages of e-mails that were not produced, the court found there was nothing in the record to suggest they were intentionally withheld or even were relevant to the plaintiff’s claims.  So, the court denied the motion for sanctions.

So, what do you think?  Should the motion for sanctions have been granted?   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 Daily is Three Years Old!

We’ve always been free, now we are three!

It’s hard to believe that it has been three years ago today since we launched the eDiscoveryDaily blog.  We’re past the “terrible twos” and heading towards pre-school.  Before you know it, we’ll be ready to take our driver’s test!

We have seen traffic on our site (from our first three months of existence to our most recent three months) grow an amazing 575%!  Our subscriber base has grown over 50% in the last year alone!  Back in June, we hit over 200,000 visits on the site and now we have over 236,000!

We continue to appreciate the interest you’ve shown in the topics and will do our best to continue to provide interesting and useful posts about eDiscovery trends, best practices and case law.  That’s what this blog is all about.  And, in each post, we like to ask for you to “please share any comments you might have or if you’d like to know more about a particular topic”, so we encourage you to do so to make this blog even more useful.

We also want to thank the blogs and publications that have linked to our posts and raised our public awareness, including Pinhawk, Ride the Lightning, Litigation Support Guru, Complex Discovery, Bryan College, The Electronic Discovery Reading Room, Litigation Support Today, Alltop, ABA Journal, Litigation Support Blog.com, Litigation Support Technology & News, InfoGovernance Engagement Area, EDD Blog Online, eDiscovery Journal, Learn About E-Discovery, e-Discovery Team ® and any other publication that has picked up at least one of our posts for reference (sorry if I missed any!).  We really appreciate it!

As many of you know by now, we like to take a look back every six months at some of the important stories and topics during that time.  So, here are some posts over the last six months you may have missed.  Enjoy!

Rodney Dangerfield might put it this way – “I Tell Ya, Information Governance Gets No Respect

Is it Time to Ditch the Per Hour Model for Document Review?  Here’s some food for thought.

Is it Possible for a File to be Modified Before it is Created?  Maybe, but here are some mechanisms for avoiding that scenario (here, here, here, here, here and here).  Best of all, they’re free.

Did you know changes to the Federal eDiscovery Rules are coming?  Here’s some more information.

Count Minnesota and Kansas among the states that are also making changes to support eDiscovery.

By the way, since the Electronic Discovery Reference Model (EDRM) annual meeting back in May, several EDRM projects (Metrics, Jobs, Data Set and the new Native Files project) have already announced new deliverables and/or requested feedback.

When it comes to electronically stored information (ESI), ensuring proper chain of custody tracking is an important part of handling that ESI through the eDiscovery process.

Do you self-collect?  Don’t Forget to Check for Image Only Files!

The Files are Already Electronic, How Hard Can They Be to Load?  A sound process makes it easier.

When you remove a virus from your collection, does it violate your discovery agreement?

Do you think that you’ve read everything there is to read on Technology Assisted Review?  If you missed anything, it’s probably here.

Consider using a “SWOT” analysis or Decision Tree for better eDiscovery planning.

If you’re an eDiscovery professional, here is what you need to know about litigation.

BTW, eDiscovery Daily has had 242 posts related to eDiscovery Case Law since the blog began!  Forty-four of them have been in the last six months.

Our battle cry for next September?  “Four more years!”  🙂

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.

Court Awards Sanctions, But Declines to Order Defendants to Retain an eDiscovery Vendor – Yet – eDiscovery Case Law

In Logtale, Ltd. v. IKOR, Inc., No. C-11-05452 CW (DMR) (N.D. Cal. July 31, 2013), California Magistrate Judge Donna M. Ryu granted the plaintiff’s motion to compel responses to discovery and awarded partial attorney’s fees as a result of defendants’ conduct.  The judge did not grant the plaintiff’s request to order Defendants to retain an eDiscovery vendor to conduct a thorough and adequate search for responsive electronic documents, but did note that the court would do so “if there are continuing problems with their document productions”.

Case Background

The plaintiff, a shareholder in pharmaceutical company IKOR, Inc. (“IKOR”), a filed suit against the defendant and two of its officers, Dr. James Canton and Dr. Ross W. Tye, accusing the defendant of misrepresentations to induce the plaintiff to invest, breach of fiduciary duties, breach of contract, and breach of the implied covenant of good faith and fair dealing. The defendant brought counterclaims for breach of a licensing agreement, theft of intellectual property, and interference with prospective economic advantage.

In the motion to compel, the plaintiff sought to compel the defendants’ compliance with a prior court order to compel the production of all responsive documents as well as to compel production from Dr. Canton, who objected to several of Plaintiff’s discovery requests.  The plaintiff contended that Defendants’ document productions were incomplete and that they “failed to adequately search for all responsive electronic documents”, asserting that all three defendants had produced a total of only 121 emails, 109 of which were communications with the plaintiff (including only three pages in response to a request seeking all documents relating to the defendant’s communications with a company run by three of IKOR’s principals. The “dearth of responsive documents, as well as the lack of emails from at least one key individual”, caused the plaintiff to “raise concerns about the quality of Defendants’ document preservation and collection efforts” and express concerns about possible “evidence spoliation through the deletion of emails”. The plaintiff also contended that Dr. Canton waived his objections by failing to serve a timely response.

Judge’s Ruling

Judge Nyu agreed with the plaintiff’s, noting that “Given the paucity of documents produced by Defendants to date, as well as counsel’s own acknowledgment that Defendants’ productions have been incomplete, the court shares Plaintiff’s concerns about the inadequacy of Defendants’ search for responsive documents. Defense counsel has not been sufficiently proactive in ensuring that his clients are conducting thorough and appropriate document searches, especially in light of obvious gaps and underproduction. Under such circumstances, it is not enough for counsel to simply give instructions to his clients and count on them to fulfill their discovery obligations. The Federal Rules of Civil Procedure place an affirmative obligation on an attorney to ensure that a client’s search for responsive documents and information is complete.”  She also agreed with the plaintiff regarding Dr. Canton’s objections, since he “offered no reason for his late responses”.

Judge Nyu ordered the defendants to “produce all remaining responsive documents by no later than August 26, 2013”, noting that “if there are continuing problems with their document productions, the court will order them to retain the services of an e-discovery vendor”.  Judge Nyu also granted attorney’s fees for the plaintiff’s activities “as a result of Defendants’ conduct”, albeit at a reduced amount of $5,200.

So, what do you think?  Was the sanction warranted?   Should the judge have ordered the defendants to retain an eDiscovery vendor?  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.

Imagine if the Zubulake Case Turned Out Like This – eDiscovery Case Law

You’ve got an employee suing her ex-employer for discrimination, hostile work environment and being forced to resign.  During discovery, it was determined that a key email was deleted due to the employer’s routine auto-delete policy, so the plaintiff filed a motion for sanctions.  Sound familiar?  Yep. Was her motion granted?  Nope.

In Hixson v. City of Las Vegas, No. 2:12-cv-00871-RCJ-PAL (D. Nev. July 11, 2013), Nevada Magistrate Judge Peggy A. Leen ruled that the duty to preserve had not yet arisen when the plaintiff sent an internal email complaining she was being subjected to a hostile work environment and discrimination and that the failure to suspend its then-existing practice of automatically purging emails after 45 days did not warrant sanctions.

Here’s the timeline:

  • In March 2010, the plaintiff sent an email to a City of Las Vegas Personnel Analyst in the Employee Relations Division complaining she was being subjected to a hostile work environment and discrimination.
  • A chain of correspondence took place between April 6 and 7 of 2010 between the union representative assisting the plaintiff and a city employee.
  • In July 2010, the plaintiff alleged that the defendant constructively terminated her by forcing her to submit her resignation.
  • In September 2010, the plaintiff filed a complaint with the Nevada Equal Rights Commission.

The plaintiff and the defendant both produced the chain of correspondence from April 6 and 7 of 2010, but the defendant’s production omitted an email from the city employee (Dan Tarwater) to the union representative (Michael Weyland) commenting that “perhaps Weyland will have the good sense to have the Plaintiff retract her hostile work environment claim”.  Thus, the plaintiff filed a motion for sanctions.

The defendant indicated that their email system permanently deleted all messages after 45 days unless a sender or a recipient affirmatively saved the document to a folder, which didn’t happen with this particular email and also argued that “because Plaintiff has a copy of the email, any failure to disclose it is harmless”.

Judge Leen ruled that the “record in this case is insufficient to support a finding that the City was on notice Ms. Hixson contemplated litigation sufficient to trigger a duty to preserve electronically stored information by suspending its then-existing practice of automatically purging emails after 45 days.”  She also stated that “Plaintiff resigned July 15, 2010, and asserts she was constructively discharged. Nothing in the record suggests that on or before the date of her resignation, the Plaintiff threatened litigation, or informed the City that she had retained counsel about her employment disputes…By July 15, 2010, when Plaintiff resigned, the email system the City used as the time would have already purged Mr. Tarwater’s April 7, 2010, email unless it was saved to a folder.”

As a result, the court denied the plaintiff’s motion for sanctions.

So, what do you think?  Did the defendant have a duty to preserve the email and, if so, should the motion for sanctions have been granted?   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.

Scheindlin Reverses Magistrate Judge Ruling, Orders Sanction for Spoliation of Data – eDiscovery Case Law

If you’re hoping to get away with failing to preserve data in eDiscovery, you might want to think again if your case appears in the docket for the Southern District of New York with Judge Shira Scheindlin presiding.

As reported in by Victor Li in Law Technology News, (Scheindlin Not Charmed When Revisiting Spoliation a Third Time), Judge Scheindlin, who issued two of the most famous rulings with regard to eDiscovery sanctions for spoliation of data – Zubulake v. UBS Warburg and Pension Committee of the Montreal Pension Plan v. Banc of America Securities – sanctioned Sekisui America Corp. and Sekisui Medical Co. with an adverse inference jury instruction for deleting emails in its ongoing breach of contract case, as well as an award of “reasonable costs, including attorneys’ fees, associated with bringing this motion”.

Last year, the plaintiffs sued two former executives, including CEO Richard Hart of America Diagnostica, Inc. (ADI), a medical diagnostic products manufacturer acquired by Sekisui in 2009, for breach of contract.  While the plaintiffs informed the defendants in October 2010 that they intended to sue, they did not impose a litigation hold on their own data until May 2012. According to court documents, during the interim, thousands of emails were deleted in order to free up server space, including Richard Hart’s entire email folder and that of another ADI employee (Leigh Ayres).

U.S. Magistrate Judge Frank Maas of the Southern District of New York, while finding that the actions could constitute gross negligence by the plaintiffs, recommended against sanctions because:

  • There was no showing of bad faith, and;
  • The defendants could not prove that the emails would have been beneficial to them, or prove that they were prejudiced by the deletion of the emails.

The defendants appealed.  Judge Scheindlin reversed the ruling by Magistrate Judge Maas, finding that “the destruction of Hart’s and Ayres’ ESI was willful and that prejudice is therefore presumed” and the “Magistrate Judge’s Decision denying the Harts’ motion for sanctions was therefore ‘clearly erroneous.’”

With regard to the defendants proving whether the deleted emails would have been beneficial to them, Judge Scheindlin stated “When evidence is destroyed intentionally, such destruction is sufficient evidence from which to conclude that the missing evidence was unfavorable to that party.  As such, once willfulness is established, no burden is imposed on the innocent party to point to now-destroyed evidence which is no longer available because the other party destroyed it.”

Judge Scheindlin also found fault with the proposed amendment to Rule 37(e) to the Federal Rules of Civil Procedure, which would limit the imposition of eDiscovery sanctions for spoliation to instances where the destruction of evidence caused substantial prejudice and was willful or in bad faith, stating “I do not agree that the burden to prove prejudice from missing evidence lost as a result of willful or intentional misconduct should fall on the innocent party.  Furthermore, imposing sanctions only where evidence is destroyed willfully or in bad faith creates perverse incentives and encourages sloppy behavior.”

As a result, Judge Scheindlin awarded the defendants’ request for an adverse inference jury instruction and also awarded “reasonable costs, including attorneys’ fees, associated with bringing this motion”.  To see the full opinion order (via Law Technology News), click here.

So, what do you think?  Should sanctions have been awarded?   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.

Permissive Adverse Inference Instruction Upheld on Appeal – eDiscovery Case Law

In Mali v. Federal Insurance Co., Nos. 11-5413-cv, 12-0174-cv (XAP) (2d Cir. June 13, 2013), the Second Circuit explained the distinctions between two types of adverse inference instructions: a sanction for misconduct versus an explanatory instruction that details the jury’s fact-finding abilities. Because the lower court opted to give a permissive adverse inference instruction, which is not a punishment, the court did not err by not requiring the defendant to show that the plaintiffs acted with a culpable state of mind.

After a fire destroyed a barn converted into a residence, the plaintiffs sought to recover $1.3 to $1.5 million from their insurance policy. The insurance company made three payments before becoming skeptical of the plaintiffs’ claim. In particular, the company balked at the plaintiffs’ statement that they had high-end amenities, such as four refrigerators and copper gutters, and their sketch of the barn’s layout, which showed fourteen rooms, a second floor with four rooms and a bathroom, and four skylights. During discovery, the plaintiffs claimed they had no photographs of the barn, but at trial, an appraiser testified that the plaintiffs had shown her photographs of items in the barn and of the barn, which she testified only had one floor, not two as the plaintiffs claimed.

The defendants asked the court to impose an adverse inference instruction on the plaintiffs as a sanction for destroying the photographic evidence. Over the plaintiffs’ objection, the court instructed the jury that it could draw an adverse inference from the plaintiffs’ failure to produce the photographs. The jury agreed with the defendant and found the plaintiffs had submitted fraudulent claims that forfeited their insurance coverage.

On appeal, the plaintiffs argued that the jury’s verdict should be vacated and that a new trial was required because the court did not make findings to justify this sanction. However, the appellate court ruled that the plaintiffs’ argument was “based on a faulty premise” because the trial court “did not impose a sanction on the Plaintiffs.” Therefore, no findings were required. It also found the plaintiffs’ reliance on a prior Second Circuit decision, Residential Funding Corp. v. DeGeorge Financial Corp., 306 F.3d 99, 107 (2d Cir. 2002), where the court ruled that a trial court “must find facts that justify” an adverse inference instruction based on spoliation, inapposite. In Residential Funding, the plaintiff failed to meet its discovery obligations because it did not produce e-mails or backup tapes. The court refused to impose the defendant’s requested sanction, which was an instruction to the jury that it “‘should presume the e-mails . . . which have not been produced, would have disproved [Residential]’s theory of the case,’” because the defendant had not provided facts sufficient to support the sanction.

Here, the Second Circuit explained the distinction between the two types of adverse inferences in these cases: (1) one that punishes “misconduct that occurred outside the presence of the jury during the pretrial discovery proceedings, often consisting of a party’s destruction of, or failure to produce, evidence properly demanded by the opposing party,” and (2) one that “simply explains to the jury, as an example of the reasoning process known in law as circumstantial evidence, that a jury’s finding of certain facts may (but need not) support a further finding that other facts are true.” The court ruled that the latter instruction “is not a punishment” but instead is “an explanation to the jury of its fact-finding powers.”

The Mali court found the trial court’s instructions did not “direct the jury to accept any fact as true” or “instruct the jury to draw any inference against the Plaintiffs.” Because “the court left the jury in full control of all fact finding,” it fell within the explanatory classification of instructions.

So, what do you think?  Was the permissive adverse inference instruction warranted?   Please share any comments you might have or if you’d like to know more about a particular topic.

Case Summary Source: Applied Discovery (free subscription required).  For eDiscovery news and best practices, check out the Applied Discovery Blog here.

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.

EEOC Sanctioned for Failing to Comply with Motion to Compel Production – eDiscovery Case Law

As noted previously in this blog, the Equal Employment Opportunity Commission (EEOC) was ordered to turn over social media information related to a class action case alleging sexual harassment and retaliation.  Apparently, they were less than cooperative in complying with that order.

In EEOC v. Original Honeybaked Ham Co. of Georgia, 11-cv-02560-MSK-MEH, 2012 U.S. Dist. (D. Colo. Feb. 27, 2013), Colorado Magistrate Judge Michael E. Hegarty sanctioned the EEOC for failing to provide discovery of social media content.

This has been a busy case with at least eight court rulings in 2013 alone, including ruling where Judge Hegarty barred the EEOC from asserting claims not specifically identified during pre-suit litigation and prohibited the EEOC from seeking relief on behalf of individuals who the defendant could not reasonably identify from the information provided by the EEOC.

In this ruling, Judge Hegarty stated: “I agree that the EEOC has, on several occasions, caused unnecessary expense and delay in this case. In certain respects, the EEOC has been negligent in its discovery obligations, dilatory in cooperating with defense counsel, and somewhat cavalier in its responsibility to the United States District Court.”

Elaborating, Judge Hegarty stated, as follows:

“The offending conduct has been demonstrated in several aspects of the EEOC’s discovery obligations. These include, without limitation, the following. First, the circumstances surrounding the EEOC’s representations to this Court concerning its decision to use its own information technology personnel to engage in forensic discovery of the Claimants’ social media (cell phones for texting, web sites for blogging, computers for emailing), for which I had originally appointed a special master. The EEOC unequivocally requested this change, which I made an Order of the Court on November 14, 2012 (docket #248). Weeks later, the EEOC reneged on this representation, requiring the Court and the Defendant to go back to the drawing board. Second, in a similar vein, the EEOC changed its position — again ostensibly because some supervisor(s) did not agree with the decisions that the line attorneys had made — after lengthy negotiation and agreement with Defendant concerning the contents of a questionnaire to be given to the Claimants in this case, designed to assist in identifying the social media that would be forensically examined. The EEOC’s change of mind in midstream (and sometimes well downstream) has required the Defendant to pay its attorneys more than should have been required and has multiplied and delayed these proceedings unnecessarily.”

Stating that he had “for some time, believed that the EEOC’s conduct was causing the Defendant to spend more money in this lawsuit than necessary”, Judge Hegarty granted (in part) the defendants’ Motion for Sanctions and required the EEOC to “pay the reasonable attorney’s fees and costs expended in bringing this Motion”.  Perhaps more to come.

So, what do you think?  Was the sanction sufficient?  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: Sanctions at an All-Time High

eDiscovery sanctions are at an all-time high, according to a Duke Law Journal law review article.  The article summarizes a study of 401 cases involving motions for sanctions related to discovery of electronically stored information (ESI) in federal courts through 2009, with a total of 230 sanction awards in those cases.  A link to the article can be found here.

In an increasing number of cases, more attention is focused on eDiscovery than on the merits, with a motion for sanctions becoming very common.  The sanctions imposed against parties in many of these cases have been severe, including adverse jury instructions, significant monetary awards and even dismissals. These sanctions have occurred despite the safe harbor provisions of Rule 37(e) of the Federal Rules of Civil Procedure, which have provided little protection to parties or counsel.

The study also found that defendants are sanctioned almost three times as often as the plaintiffs in a lawsuit (175 to 53). The most common type of misconduct to receive a sanction was failing to preserve relevant information (sanctions were granted in 90 cases). Often, multiple types of misconduct led to the sanctions. Other types of misconduct included a failure to produce information and delays in producing the information.

Other key notable stats:

  • 354 of the 401 cases where sanctions were requested and 198 of the 230 sanction awards have occurred since 2004;
  • The most common types of cases with sanctions are employment (17 percent), contract (16 percent), intellectual property (15.5 percent) and tort cases (11 percent);
  • 183 district court judges and 111 magistrate judges from 75 federal districts in 44 states, the Virgin Islands, the District of Columbia, and Puerto Rico, have issued written opinions regarding e-discovery sanctions;
  • Cases involving e-discovery sanctions and sanction awards more than tripled between 2003 and 2004, from 9 to 29 sanction cases, and from 6 to 21 sanction awards;
  • There were more e-discovery sanction cases (97) and more e-discovery sanction awards (46) in 2009 than in any prior year – more than in all years prior to 2005 combined!!

The study also has a year-to-year breakdown of sanctions from 1981 through 2009, with a bar chart that illustrates the tremendous growth in sanction cases and awards in the last six years.  A partner and senior attorneys at King & Spaulding’s Discovery Center assisted the students in analyzing the cases and identifying the trends in sanctions.

So, what do you think?  Have you been involved in any cases where sanctions have been requested or awarded?  Please share any comments you might have or if you’d like to know more about a particular topic.

Sanctions and Other Things that Go Bump in the Night

Sunday is Halloween, so it seems appropriate to try to “scare” you before the big day.  Does this scare you?

“pervasive and willful violation of serial Court orders to preserve and produce ESI evidence be treated as contempt of court, and that he be imprisoned for a period not to exceed two years, unless and until he pays to Plaintiff the attorney’s fees and costs that will be awarded to Plaintiff as the prevailing party”

What about this?

“From this Court’s perspective, a monetary sanction of $150,000 should be sufficient to compensate Plaintiffs for their added expense and deter SanDisk from taking shortcuts.”

Or this?

“For his misconduct, Peal has already received a severe sanction in having his complaint dismissed with prejudice.”

How about this?

A party does not need formal notice to know that spoliation of evidence and misrepresentations may lead to dismissal.”

Scary, huh?  If the possibility of sanctions keep you awake at night, then the folks at eDiscovery Daily will do our best to provide useful information and best practices to enable you to relax and sleep soundly, even on Halloween!

Of course, if you really want to get into the spirit of Halloween, click here.

What do you think?  Is there a particular eDiscovery issue that scares you?  Please share your comments and let us know if you’d like more information on a particular topic.

Happy Halloween!