e-Lessons Learned

Fool me once, shame on you. Fool me twice, more shame on you. Fool me three times and you are in some hot water! Regardless of whether you are (or represent) the plaintiff or the defendant, your discovery obligations are the same: Absent a valid, court-sanctioned objection, you must comply with your adversary’s discovery demands.

While electronically stored information (ESI) may be a rather esoteric concept for many of us (perhaps most), in the eyes of the law and the court, ESI is just as real as traditional paper documents; and one’s failure to search for and disclose ESI in a timely manner could lead to big problems for an attorney and the client. In one case, it may have cost one company $25 million.

Only six-months ago, in B & G Management v. Lexington Insurance, the United States District Court for the Middle District of Florida, Orlando Division, granted a motion for Rule 37 Discovery Sanctions brought by defendant Lexington Insurance Co. (“Lexington”) against plaintiff B & G Management (“B&G”) that effectively defeated B&G’s claim for $25 million in damages.

In that case, B&G filed a complaint against Lexington, its insurer, for breaching the commercial property insurance policy it issued B&G. B&G had filed a claim with Lexington for business interruption losses allegedly incurred as a result of damage to its Treasure Island Resort caused by Hurricane Jeanne. B&G’s claimed the $25 million policy limit.

Throughout discovery, time and time again, B&G failed to satisfy its obligation to search for, locate, and disclose electronically stored documents containing information relevant to B&G’s business interruption losses in accordance with Lexington’s discovery demands. B&G also ignored court orders establishing discovery disclosure timeframes and mandating B&G’s production of certain documents.

Even so, B&G twice managed to side-step Lexington attempts for court ordered sanctions. B&G’s luck ran out on Lexington’s third attempt. The court granted Lexington’s motion for sanctions and, reflecting the severity of B&G’s misconduct, barred B&G from using the very information that could have supported its claim for $25 million in damages.

Yet, were B&G’s failures the result of sloppy work or a calculated business decision to deprive its adversary of the very information most beneficial to its case? In the end it does not matter whether it was the former or the latter – B&G’s discovery failures led to court ordered sanctions effectively defeating its claim.

Article posted on February 25, 2010 at 2:39 AM |              More... 
Tagged as: Accessibility, Cost Sharing & Shifting, Discoverability, Experts, Good Faith, Procedure, Production of Data, Sanctions.
View more articles implicating: In-House Counsel, Outside Counsel, Upper Management
Subscribe to this post's comments through its RSS 2.0 feed.