Merge1 can help you gain compliance easily, by leveraging your existing infrastructure.

Courts Continue to Punish Poor eDiscovery Practices with Sanctions

Marketing September 12th, 2012 5:14 pm

According to recent reports, more and more companies are overlooking their compliance and electronic discovery responsibilities. A Duke Law Journal study makes it quite clear that there has been a huge rise in sanctions for ediscovery related violations. Courts have been increasingly responding with hard-hitting sanctions designed to protect the discovery or investigative process from being abused.

Disclaimer: The views expressed in this article do not serve as legal advice. Please contact an attorney for legal counsel on your specific matter and needs.

WHAT ARE THE MOST POPULAR TYPES OF EDISCOVERY SANCTIONS?

Monetary

Monetary sanctions are the most frequently awarded, averaging roughly 65 percent of total ediscovery sanctions the past couple of years. Courts typically grant monetary sanctions to compensate aggrieved parties for their costs in bringing the suit and for any other injury caused by the discovery misconduct. Indeed, in Victor Stanley, Inc. v. Creative Pipe, Inc., the court imposed more than $1 million in attorney fees associated with unnecessary discovery and motion practice directly due to defendant spoliation. Other times, these sanctions serve a punitive purpose as well. For example, in Rosenthal Collins Group, LLC v. Trading Techs. Int’l, Inc., the court imposed a $1 million penalty because it was found that the plaintiff’s agent engaged in egregious conduct, including deliberately modifying and destroying a significant amount of evidence.

Evidence Preclusion and Adverse Inference

As punishment, courts may also elect to disallow certain evidence or issue an inference. When a court issues an adverse inference, it instructs the jury to infer that the party that perhaps manipulated or deleted a piece of digital evidence did so specifically because it was harmful to their position. These sanctions are routinely awarded when evidence is not adequately or timely disclosed or produced.

Although adverse inferences are increasingly issued for poor ediscovery practices, there is no agreement on the standard needed to impose them.

Liberman v. FedEx Ground Package Sys., Inc.: In this personal injury case, the Plaintiff contends that he was negligently hit with a hand truck completely loaded with very heavy boxes. The Plaintiff requested records from the Defendant to identify who struck him. When the Defendant did not oblige, the court found the Defendant did not properly preserve records associated with the case and granted sanctions, using the standard of negligence.

McCargo v. Texas Roadhouse., Inc.: In a discrimination case based on race, which contained an allegation that the Defendant’s employees attempted to set the African American Plaintiff ablaze with a cigarette lighter, counsel for the Defendant claimed to represent all 97 former and current employees of Defendant’s eatery. The court responded to the Defendant’s attorney’s overreaching blanket representation claim by imposing sanctions, using the standard of bad faith.

Surowiec v. Capital Title Agency, Inc.: In this case, a condominium buyer sued his title company and escrow agent, and requested digital data during discovery from the Defendant. In-house counsel used only the Plaintiff’s escrow number and name as search terms. The court concluded that the search terms were not broad enough and granted sanctions as a result, using the standard of gross negligence.

Default Judgment

In the most extreme cases of willful and bad faith discovery or investigative misconduct, a court can enter a default judgment to terminate the action. Behavior resulting in a default judgment may include continually and repeatedly failing to produce relevant documents, ignoring court orders and continually and consistently obstructing the discovery process.

Default judgments often include a monetary component to compensate for egregious conduct and significant damage. For example, in Philips Elecs. N. Am. Corp. v. BC Tech., the Plaintiffs alleged trade secret misappropriation, copyright infringement and related claims. During discovery, the court entered orders to compel the Defendant to produce required evidence. When the Defendant did not comply, the court granted default judgment and monetary sanctions against the Defendant for violating the court’s discovery order, intentionally deleting relevant files from officers’ laptops and lying to the court about the nature of the deleted data.

KEY TAKEAWAY

The easiest and most effective way to prevent court sanctions for poor ediscovery practices is for businesses to meet their responsibilities head on. This is not as difficult as one may think and may not require a significant monetary investment. Globanet assists clients in developing, documenting and implementing effective ediscovery workflow to ensure that repeatable and defensible processes are in place prior to an ediscovery event. We also offer the industry-leading ediscovery platform, Clearwell, to support internal ediscovery processes. Globanet’s ediscovery products and services help minimize the risk of being hit with any of the ediscovery sanctions listed above.

If you are interested in learning how Globanet’s ediscovery products and services let corporate legal teams defensibly manage their regulatory, investigative or legal matters, please Contact Us today.