Failure to Reasonably Inquire About the Completeness of Your Discovery Can Cost You

Failure to Reasonably Inquire About the Completeness of Your Discovery Can Cost You

A lawsuit over  a policy charging plane passengers for their checked luggage has put lawyers across the country on notice as to what constitutes a “reasonably inquiry” when it comes to complying with discovery obligations.  And the lesson cost Delta and AirTran a lot more than a $15 checked-luggage fee.

Counsel for Delta learned the hard way in In re Delta/AirTran Baggage Fee Antitrust Litigation that despite acknowledging that the company failed to provide plaintiffs with all the relevant discovery requested and attempting to remedy the situation upon this discovery, Delta was still subject to sanctions under Fed. R. Civ. P. 26(g) and 37(c)(1), as well as the reasonable fees associated with the litigation.

In Delta/Airtran Baggage Fee Antitrust Litigation, people around the country filed suit against air carriers Delta and AirTran for their policy of charging passenger $15 to check their first piece of luggage. Plaintiffs alleged that both AirTran and Delta conspired to charge the fee, which would have violated the Sherman Act. The suits were eventually consolidated into a multi-district litigation.

Plaintiffs filed discovery demands upon the two carriers, seeking all documents related to the first-bag fee. During this discovery period, on February 2, 2009, the United States Department of Justice Antitrust Division (“DOJ”) was conducting its own investigation, seeking information from Delta regarding the baggage-fee through a Civil Investigative Demand (“CID”). In addition to the investigation into the baggage-fee, the DOJ was also conducting another inquiry into Delta regarding its proposed swap of airport landing slots with U.S. Airways.

On November 8, 2010, Plaintiffs filed a motion for spoliation sanctions against Delta, claiming that the company did not comply with DOJ’s bag fee CID. While in-house counsel did email a document-preservation and litigation hold notice to the necessary parties, the company itself waited over three months from the time it received the CID to copy all files on the custodians’ computers and suspend the employee email destruction policy. Plaintiffs argued that this time period would have included documents relevant to the baggage-fee issue. In February of 2011, the Court denied Plaintiff’s motions, stating that Plaintiffs did not prove that this material consisted of critical evidence or that Delta had acted in bad faith.

In making its bad-faith determination, the court referred to the company’s numerous assurances that all the documents relating to the bag-fee issue had been produced.

It was during the DOJ’s investigation into the landing spots that the department received documents relating to the baggage-fee issue, not produced in response to the CID in February 2009. In a letter to the Court, by way of explanation, Delta stated that the documents retrieved for the landing spots investigation were collected and produced by a different law firm not involved in the bag-fee case. Delta’s later investigation into the issue uncovered that the company failed to upload all of the data from the relevant custodian’s hard drives and that it failed to discover additional back-up tapes in the company’s internal technology department evidence locker.

Delta retained Pricewaterhouse Cooper, which discovered approximately 60,000 pages of documents relating to the baggage-fee that had not been produced in response to Plaintiffs’ document requests. After locating the documents and back-up tapes, Delta provided the material to Plaintiffs in April and May of 2011.

In response to this finding, Plaintiffs sent a letter to the Court, demanding spoliation sanctions. Plaintiffs wrote that Delta’s discovery failures indicated that it purposely withheld this material, and urged the Court to reopen discovery, to set a proposed case schedule, for sanctions against Delta, and an order compelling Delta and AirtTran to produce ongoing correspondence with the DOJ bag-fee investigation.

Delta responded to the letter by maintaining that it was amenable to reopening discovery, but that it did not believe sanctions were warranted, given that the incomplete discovery provided was an “inadvertent mistake,” and not intentional. Also, the company asserted that the documents that were missing had little, if any relevance to the case. In regard to requests for the ongoing correspondence with DOJ, Delta and AirTran asserted that the investigation was confidential pursuant to 15 U.S.C. §1313(c).

The Court first considered reopening discovery, and took note that Delta did not object to this request. The Court will later take this into account in determining the consequences of sanctions, as Delta’s concession on the discovery issue indicated a willingness on the company’s behalf to “work this out.” The Court ordered the reopening of discovery, limited to no more than 4 months from the date of the order.

Regarding sanctions, despite Delta’s argument that it reasonably believed all documents related to the baggage-fee issue had been produced, the Court indicated that the discovery failures could not go unpunished, especially in light of the company’s many assurances to the contrary. Rule 26(g) requires a signing attorney to certify after a reasonable inquiry that the discovery responses were complete and correct to the best of the attorney’s knowledge. The Court found that Delta’s failure to make sure all relevant hard drives were actually searched and its failure to search the evidence locker warranted sanctions.

In determining what sanctions were appropriate, the Court did consider some mitigating factors, including the fact that upon discovering the missing documents and tapes, Delta immediately notified the Court and Plaintiffs, and handed the material over. Further, Delta acknowledged that discovery should be reopened and that it should be required to pick up the costs for the additional discovery. It also made these attempts to remedy the situation prior to motions for summary judgment and trial. The Court determined that these facts, combined with the fact that the evidence later found did not contain a “smoking gun” regarding Plaintiffs’ allegations, led to the finding that Delta must pay reasonable expenses and attorneys’ fees caused by its violation, but nothing more.

In determining the penalties stemming from the sanctions, the Court fell short of preventing Delta from being able to use the material provided on its behalf. Under Rule 37(c)(1), a party who fails to provide information as required by Rule 26(e) is not allowed to use that information unless its failure was substantially justified or harmless. This however, is not a mandatory consequence of sanctions. The Court found that Delta notified all parties relatively quickly regarding the missing material, and that there was no “smoking gun” as to Plaintiffs’ theory in the material. The Court also added that there was no evidence presented indicating that Delta willfully withheld these documents. Therefore, the sanctions were limited to Plaintiffs’ reasonable expenses and attorneys fees in connection with the motion, the extended discovery period, and the motion relating to spoliation sanctions.

Regarding AirTran, they too, failed to produce all documents relating to the baggage-fee issue, and had to produce an additional 125 documents. In a joint argument asserted by both Delta and AirTran, which included the assertion that the DOJ investigation was to remain confidential pursuant to federal statute, the Court cited to a general rule that “where proof is largely in the hands of alleged conspirators, antitrust plaintiffs must be given ample opportunity for discovery.” The Court held that the discovery of this material is necessary, but limited to what would otherwise be discoverable under the Fed. R. Civ.  P. 26 (material that could lead to the discovery of other admissible evidence.).

In sum, it is necessary that counsel conduct a diligent and thorough investigation to determine that all discovery requested by opposing counsel be produced. Simply signing off that discovery is complete, without reasonably inquiry into the completeness of that discovery, could subject you to sanctions, despite the unintentional nature of the omissions. While quick action to remedy the omissions or mistakes may help mitigate the fall out, those mistakes will still cost you—and your client.

Alex Weininger received her B.A. from Penn State University. She will receive her J.D. from Seton Hall University School of Law in 2013.  After graduation, Ms. Weininger will serve as a law clerk for a judge sitting in Superior Court of New Jersey, Family Part. 

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