Electronic Discovery Navigator

Spoliation laws affect new Wisconsin eDiscovery regulations

Spoliation laws affect new Wisconsin eDiscovery regulations

"Companies and legal counsels in Wisconsin must take the state's existing spoliation law into account with new eDiscovery regulations set to take effect, according to a report in Wisconsin Lawyer.

Wisconsin defines spoliation as the destruction or withholding of critical evidence, which pertains to email archiving in the case of eDiscovery. Analysis to determine spoliation includes determining if a party knew or should have known litigation was a possibility and if a party destroyed evidence it knew or should have known pertained to a specific case."

Defendant ordered to jail for spoliation

Defendant ordered to jail for spoliation

"A recent e-discovery decision provides important lessons for lawyers and companies about spoliation sanctions.

The defendant’s e-discovery failures in Victor Stanley, Inc. v. Creative Pipe, Inc. - known as Victor Stanley II - were so serious that the company accepted a default judgment on the primary claim filed in the case.

And U.S. District Court Judge Paul Grimm was so angered by the actions of company president Mark Pappas that he ordered Pappas to serve two years in prison for contempt of court, unless and until he pays attorney fees and costs to the plaintiff."

Destroying electronic documents safely

Destroying electronic documents safely

"When it comes to removing a client file or billing record from a computer, simply tapping the delete key is not sufficient.

But several tech-savvy attorneys say that fact isn’t always common knowledge among lawyers.

“People want it to be easy and don’t always consider that they have peoples’ lives on these hard drives with a lot of sensitive information,” said West Bend attorney Clarence O. Behrend.

The sole practitioner has on at least one occasion come across some confidential client information on a computer discarded by a law firm.

Behrend cleaned the data off the machine. But in the wrong hands, it could have created a nightmare for the firm and its client.

The best case scenario is the potential for a breach of confidentiality, said attorney Ronald K. Phillips of Phillips Law SC in Cedarburg.

From a business perspective, if delicate information is disclosed, it can result in misappropriation of trade secrets, he noted."

Being Right and Still Losing

Being Right and Still Losing

"The paradigm that has emerged in e-discovery cases involving spoliation claims is that success regarding the spoliation claim will lead not just to imposition of monetary sanctions on the offending party but also to "adverse inference" instructions that will result in the offending party losing on the merits.

The "poster children" cases for this model were Zubulake v. UBS Warburg, 229 F.R.D. 422 (S.D.N.Y. 2004), "a relatively routine employment discrimination dispute" (in the words of the Zubulake court) which led to a $29.5 million judgment, and Coleman Holdings, Inc. v. Morgan Stanley, 2005 WL 67071 (Fla. Cir. Ct. March 1, 2005), rev'd on other grounds, 955 So. 2d 1124 (Fla. Dist. Ct. App. 4th Dist., 2007), which led to a $1.5 billion (with a "B") judgment. "

Fight Spurious Spoliation Allegations

Fight Spurious Spoliation Allegations

"The problem is that every case involving large amounts of electronically stored information (ESI) is ripe for a threat of sanctions for spoliation and the tactical advantage that such a threat can provide. That's especially true in light of the ease with which people can alter, modify or destroy ESI. Any party involved in litigation is vulnerable, even when operating in good faith and trying to implement a reasonable preservation plan. Alarmingly, in several jurisdictions attorneys do not have to show bad faith to seek sanctions against an opponent; they need only show that the negligent alteration or destruction of potentially relevant evidence occurred when the opponent was under a duty to preserve."

Review E-Discovery to Reduce Spoliation Risks

Review E-Discovery to Reduce Spoliation Risks

"Have you ever been lucky enough to experience the feeling that comes over you when you learn that your client did not retain e-mails that are pertinent to litigation, whether it be that the e-mails were simply deleted or that your client's computer crashed three years ago and sent potentially relevant e-mails straight into Dante's eighth circle of hell? Quite an unsettling feeling. Despite counsel's best efforts, preservation of electronic information seems to be a constant sore spot in complex litigation.

In a post-Zubulake and Morgan Stanley world, where the amendments to the Federal Rules of Civil Procedure went into effect well over a year ago, the struggle with how to best manage electronic data discovery continues. See Zubulake v. UBS Warburg, 229 F.R.D 422 (S.D.N.Y. 2004); see Coleman Holdings v. Morgan Stanley, 2005 WL 679071 (Fla.Cir.Ct. March 1, 2005)."

Intel E-mails Lost Due to IT Manager Error, Lawyer States

According to the latest report, emails of 151 employees that Intel lost were due to a single IT manager who misread a spreadsheet.  "Apparently the names [of these employees] were categorized across multiple tabs, if general counsel D. Bruce Sewell's remarks are accurate, and this single manager didn't click on the tab where the 151 were listed.  As a result, they never received backup instructions."

Some of the lost emails were reportedly those of several senior executives, including CEO Paul Otellini, Chairman Craig Barrett, and SVP Sean Maloney.

Mr. Sewell stated, "We've got a $10 million discovery-management program, and yet that human interface can often be overlooked ... Talk to your IT department."

Comment:  I agree partly with Mr. Sewell's assessment, but the legal duty still falls squarely on counsel to make sure the litigation hold is executed properly, as discussed in my previous post.

Counsel Must Not Only Implement Litigation Hold But Must Also Oversee Its Compliance

School-Link Techs., Inc. v. Applied Res., Inc., Case No. 05-2088 (D.Kan. Feb. 28, 2007)

This is another case that illustrates why counsel needs to be proactive, not reactive, in handling matters during ediscovery, as discussed in my earlier posts here and here.  For example, counsel must not only implement a litigation hold to preserve evidence but must also oversee compliance with it, monitoring the efforts to retain and produce relevant electronically stored information ("ESI").

Failure to Implement Litigation Hold

In this litigation, one of Defendant's key employees testified at her deposition that she never received any instructions from Defendant or its counsel to preserve relevant ESI in her custody.  So, she took it upon herself "to search her computer and home for documents relevant to the parties’ dispute and to send those documents to Defendant’s chief executive officer."  Worse yet, she destroyed some of the ESI she gathered.

Six Hard-Learned Lessons About EDD

As a follow-up to my earlier post on the eDiscovery Survival Guide for Corporate Counsel, here are six important lessons learned from the recent case of In re NTL, Inc. Securities Litigation, Case No. 02-3013, -7377 (S.D.N.Y. Jan. 30, 2007).

1.  Plan ahead -- Start early to get a good understanding of a client's computer/storage systems and retention policies.

2.  Stay focused -- Don't neglect to follow up on the litigation hold memo after it is circulated.  The attorney must be proactive, not reactive, during the entire ediscovery process.

3.  Hide the ball at your peril -- Evading one's ediscovery obligations can result in severe sanctions.  In In re NTL, Inc. Securities Litigation, the court imposed an adverse inference spoliation sanction against the defendants.

4.  Know what you "control" -- Its definition is broader than you think, as the court in In re NTL, Inc. Securities Litigation explained:

Under [FRCP] Rule 34, "control" does not require that the party have legal ownership or actual physical possession of the documents at issue; rather, documents are considered to be under a party's control when that party has the right, authority, or practical ability to obtain the documents from a non-party to the action.  (Emphasis added; internal quotation marks omitted.)

5.  Don't overdelegate -- Make sure the attorney who has been delegated to litigate ediscovery issues understand their legal consequences.

6.  Or else -- Gross negligence in preserving documents can land one in hot water, as In re NTL, Inc. Securities Litigation illustrated:

[T]he Gordon plaintiffs have demonstrated that defendant NTL Europe's failure to preserve documents and ESI ["electronically stored information"] relevant to plaintiffs' allegations was at a minimum grossly negligent. In light of NTL Europe's failure to call the Demerger Agreement to the Court's attention, the Court could find bad faith, but it need not reach that issue. Thus, no extrinsic proof of relevance is necessary, and the Gordon plaintiffs are entitled to an adverse inference spoliation instruction.

(Source: Boehning, Christopher H. and Toal, Daniel J., "Six Hard-Learned Lessons About EDD" (Mar. 2, 2007).)

Court Permitted Written Deposition Questions Because of Plaintiffs' Highly Unusual Discovery Inconsistencies

Thompson v. Jiffy Lube Inter'l, Inc., Case No. 05-1203 (D.Kan. Feb. 22, 2007)

Plaintiffs alleged nationwide "Consumer Protection Act" violations based on media reports, anonymous internet postings, and Plaintiffs' experiences and their interviews with former Jiffy Lube employees and its franchisee store employees.

Since Plaintiffs made several "unusual" amendments to their complaint, Jiffy Lube, doubting the allegations in it, requested the "names, addresses, and phone numbers of the former employees who provided factual support for the allegations in the complaint."  When Plaintiffs refused to provide the information, the court ordered them in July 2006 to do so on Jiffy Lube's motion to compel.  Consequently, Plaintiffs produced the names of four individuals and four email addresses, and represented that the addresses and telephone numbers of the former employees Plaintiffs spoke with were "unknown."

Later, in response to Jiffy Lube's question of whether "communications with these individuals occurred solely by e-mail," Plaintiffs' counsel stated, among other things, that in December 2005 his "hard drive crashed and [he] lost a lot of data that had not been backed up and these individual's contact information and some communications were there."  Based on this information, Jiffy Lube filed a motion for sanctions, arguing that Plaintiffs' failure to preserve the contact information amounted to "spoliation" of evidence.

The court declined to rule on the issue of spoliation, stating that "discovery is currently limited to class certification issues rather than the merits of plaintiffs' claims.  Outright dismissal as a sanction is too severe for the apparent loss of four witnesses addresses and phone numbers.  Moreover, the trial issues are not sufficiently defined at this time to consider whether an adverse inference instruction is appropriate."

Instead, the court was more concerned with "the inconsistency in plaintiffs' discovery responses and representations."

[P]laintiffs initially represented that “all relevant documents were produced” which should have included disclosure of the names of the former employees. Plaintiffs later refused to disclose the names and contact information of the former employees, forcing Jiffy Lube to move to compel. After plaintiffs' dubious legal arguments in opposition were rejected and the information was ordered produced, plaintiffs then argued that the information was lost through a computer crash that occurred six months before defendant even filed its motion to compel. When Jiffy Lube questioned whether plaintiffs conducted an appropriate investigation and the possibility of Rule 11 sanctions, plaintiffs belatedly asserted for the first time that e-mails from the former employees existed but were protected from disclosure.

Plaintiffs provide no rational explanation whatsoever for these inconsistencies but
instead attack Jiffy Lube.

*      *      *

Because of these highly unusual discovery inconsistencies, the court will permit Jiffy Lube to submit written deposition questions to plaintiffs’ counsel. The questions shall be limited to the issue of (1) how and when plaintiffs’ counsel communicated with the four “confidential” witnesses, (2) what type of communications referenced in plaintiffs’ August 8, 2006, letter were lost, and (3) the basis for plaintiffs’ assertion that the only information lost was George Toth’s phone number.