Sanctions

Another Reminder That Attorneys Are Responsible for the e-Discovery Behavior of Their Clients

In the summer of 2013, the Northern District of California conducted a hearing over a motion to compel discovery responses which stemmed from e-discovery disagreements.  The plaintiff was a corporate investor in the defendant pharmaceutical company developing bovine-derived oxygen therapeutics.  A corporate officer of the pharmaceutical company was also named a defendant.  The plaintiff alleged breach of fiduciary duties, breach of contract, and breach of the implied covenant of good faith and fair dealing.  In its reply, the defendants counterclaimed breach of a licensing agreement, theft of intellectual property, and interference with prospective economic advantage. Discovery began when the plaintiff served interrogatories, requests for production, and requests for admission.  The defendant corporation submitted its responses two months past the deadline, failed to completely respond to the interrogatories, and submitted incomplete document production.  The plaintiff moved to compel full and complete responses, after which the defendants’ counsel failed to appear at the hearing.   The court granted the plaintiff’s motion and awarded the plaintiff $1,400.00 in sanctions.  Additionally, the plaintiff complained that the defendant officer’s responses were also incomplete and filed two weeks late. These disputes are governed by the discovery rules in the Federal Rules of Civil Procedure.  Rules 33 and 34 establish a 30-day response period for a party to serve its answers and applicable objections.  Additionally, Rule 33(b)(2) states that failure to timely respond to discovery requests generally constitutes a waiver of any objections to those requests.  Under Rule 37, a party may move to compel discover and if the court grants it the responding party must pay the moving party’s reasonable expenses incurred in making the motion. At oral argument, the plaintiff asserted the defendants only produced 121 emails, 109 of which were communications with the the Plaintiff.  The plaintiff alleged this lack of production raised the possibility of spoliation and boded ill for the document preservation efforts of the defendants.  The defendants’ counsel testified he gave instructions to his clients to produce the related documents; however, the court was not convinced.  The court cited Rule 26(g) which places an affirmative obligation on an attorney to ensure a client’s search for responsive documents and information is complete.  The previous submissions were clearly incomplete and it was the attorney’s responsibility to remedy them.  Furthermore, since the responses were late, all of the defendants’ objections were denied even though the court admitted the claims might be vague and overly-broad. The court used its discretion to modify the sanctions placed upon the defendants.  It set a new date for all remaining responsive documents to be submitted and if the new deadline was missed the Defendants would be forced to hire an e-discovery vendor.  Vendors can be very costly.  Furthermore, since the defendants’ failure to timely and fully respond was not justified, the court awarded $5,200.00 in additional attorney’s fees to the plaintiff.  While the defendants’ counsel was still held responsible, the court recognized that the defendants were also responsible for the delay and ordered the parties to split the cost of the sanction.  This illustrates the point that when discovery efforts are not taken seriously, both the client and the attorney can be on the hook for big expenses. George is a student at Seton Hall University School of Law (Class of 2014).  He is pursuing both the Health and Intellectual Property Concentrations and is especially interested in patent law.  He received both a B.E. and M.E. at Stevens Institute of Technology in Biomedical and Systems Engineering, respectively.  Presently, George works as a law clerk at Stone Law in Colts Neck, NJ, where he assists in the drafting of litigation documents and Office Actions with the United States Patent and Trademark Office.

Have You Demonstrated Prejudice For Your Spoliation Sanctions? The Tenth Circuit Requires It

Defendant Rain Link, Inc. received notice that the plaintiff was accusing the company for violating the Americans with Disabilities Act and the Kansas Act Against Discrimination by its receving a letter written by the Kansas Human Rights Commission dated June 10, 2009.  Rain Link acknowledged that it anticipated litigation and, therefore, had a duty to preserve evidence concerning the plaintiff’s allegations.  Although, it is clear from the record that Rain Link did not properly preserve documents, and in some cases, destroyed documents, U.S. Magistrate Judge K. Gary Sebelius found that the plaintiff did not demonstrate prejudice or bad faith on the part of the defendant to allow for plaintiff’s spoliation sanctions or adverse jury instruction.  The District Court judge adopted the report. Plaintiff sought five spoliation sanctions and all, but one, were dismissed with prejudice.  The admission of evidence related to the defendant’s spoliation of evidence was left to the judge presiding over the trial to decide when given the documents placed into evidence.  The plaintiff relied on a 2007 Kansas case, In re Krause, which was prior to the Tenth Circuit’s adoption of a showing of prejudice.  Spoliation sanctions are proper in the Tenth Circuit when: (1) a party had a duty to preserve evidence because it knew, or should have known, that litigation was imminent, and (2) the adverse party was prejudiced by the destruction of the evidence.  This differs from New York and the Zubulake case, which allows for a presumption of prejudice given destruction of documents concerning the litigation.  The U.S. Magistrate Judge Sebelius found that not only did the plaintiff not show prejudice concerning defendant’s destruction of documents, but also that the plaintiff’s examples of destruction showed negligence due to defendant’s routine practices as opposed to intentional deprivation of evidence to the plaintiff. Concerning an email that occurred subsequent to plaintiff’s notice of litigation between itself and Meritrust Credit Union, Rain Link failed to preserve the email in native-format and its attachments and instead produced the document in hardcopy without attachments to the opposing counsel.  The magistrate judge found that the plaintiff did not demonstrate a prejudice as to how the evidence was relevant to his claims.  The plaintiff also requested Rain Link’s drafts of corporate meeting minutes.  However, since Rain Link’s outside counsel notified the court that it was company policy to change the minute drafts after meetings and immediately file them electronically in addition to counsel’s advising clients (including Rain Link) to discard drafts of meeting minutes in order to avoid billing issues, the court found that there was no prejudice and little relevance in requiring the metadata of minute drafts. A more difficult issue arose from a May 6, 2009, telephone conversation between plaintiff’s counsel and defendant’s counsel as described in the defense’s memorandum of law.  Defense counsel’s memorandum asserted that plaintiff abandoned his job while the plaintiff argued that he was terminated by Rain Link.  The defense presented their memorandum in PDF format and explained that due to a computer crash in October 2009, the native format version was lost.  The magistrate judge acknowledged that the plaintiff’s arguments concerning the actual date of creation of the memorandum was relevant to the case and the plaintiff’s argument ultimately hinged on defense counsel’s veracity.  The plaintiff did not demonstrate that defense counsel would misrepresent evidence to the court.  Evidence concerning work in progress data was found to be insufficient and left for the presiding judge to determine if there was prejudice to the plaintiff. Due to the plaintiff’s lack of showing prejudice in the spoliation of documents, the court did not complete a full analysis of bad faith.  However, since the record demonstrated more negligence than intentional wrongdoing, an adverse jury instruction would not be appropriate.

Defendant’s Shortcomings in Discovery Result in Sanctions

The plaintiff, Tony B. Clay, brought claims for employment discrimination and retaliation based on race under Title VII against Consol Pennsylvania Coal Company (“Consol”).

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Court Hesitant to Impose Discovery Sanctions Despite Defendant’s Delay and Non-Compliance With Court Order

If I told you that your company delayed for nearly seven months to produce electronic documents critical to a pending lawsuit, you would think the judge presiding over your case may be a bit perturbed, right? What if I also told you

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No Sanctions for Spoliation?

For all of you bosses, managers, or CEOs out there: Are you thinking about firing that one employee? You know, the one that is always late, slacks on his work, and makes mistake after mistake? You may think that cutting him loose means he is out of your life forever. Well, guess again.

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Defective Diapers and Improper Preservation Lead to Litigation Mess

No company can escape the rigorous rules of eDiscovery, even those that may exist as one-person entities. As soon as the possibility of litigation becomes likely, companies must take the necessary steps to preserve all relevant documents or risk suffering the consequences in court.

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Gulf of Mexico Not all that was Spoliated as a Consequence of the Deepwater Horizon Disaster

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Have a Reasonable Document Retention Policy? Then Follow it!

After finding out certain relevant e-mails had been deleted, PSC immediately motioned to compel discovery and impose sanctions on BIPI. The deleted e-mails were particularly relevant because they pertained to the drug-in-suit, Pradaxa, and were in the possession of an employee who supervised Pradaxa's development.

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Don’t Want Sactions? Don’t Fail to Disclose!

Time and time again we learn that honesty really is the best policy. Rather than cooperate with adversaries, more often than not attorneys continue to fight and prolong the tedious discovery process. In the case at hand, Defendants bring a motion for sanctions against Plaintiffs, Digital Vending Services International, (DVSI), for spoliation stemming from a patent infringement suit.

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Plaintiffs Should Seek to Clone Hard Drives If They Suspect Spoliation Shenanigans

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