Post Process

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Archive for October 22nd, 2007

The Basics on Sanctions

Posted by rjbiii on October 22, 2007

This is the Fourth Installment of Effectively Managing E-Discovery.

Which actions or omissions may give rise to sanctions is partly dependent upon the circuit in which one practices. First, the attorney approaching a discovery project of any size should not have any misguided notion that judges are apt to forgive a lack of familiarity of his client’s system. The Conference of Chief judges stated in a report it issued 2005:

While the manner in which this encouragement should be given will, of necessity, depend on the procedures and practices of a particular jurisdiction, the court should establish the expectation early that counsel must be well informed about their clients’ electronic records. FN1

FN1: Conference of Chief Judges, Guidelines for State Trial Courts Regarding Discovery of Electronically-Stored Information (Rev. Draft, Sept. 2005). See also, Leonard Dutchman, Preserving Data in the Wake of Amended Rule 37(f), http://www.law.com/jsp/legaltechnology/PublArticleFriendlyLT.jsp?id=1160643922347 (last visited October 30, 2006) (“It is ultimately counsel’s duty to preserve and gather discoverable ESI.”); Phoenix Four, Inc. v. Strategic Resources Corp., 2006 WL 1409413 (S.D.N.Y May 23, 2006), *5 (citing Zubulake V) (“Counsel has the duty to properly communicate with its client to ensure that ‘all sources of relevant information [are] discovered.’ “); Craig Ball, EDD Showcase: Worst Case Scenario, Law Technology News (Oct. 31, 2006) at http://www.law.com/jsp/legaltechnology/pubArticleLT.jsp?id=1162215324083, (quoting J. William Speros, referring to attorney liability and explicitly mentioning Residential Funding Corp. v. DeGeorge Fin. Corp., 306 F.3d 99, 108 (2d Cir. 2002) and In re Worldcom, 2004 WL 768573 (S.D.N.Y. 2004)) (“We’ve seen courts hold parties responsible for failing to supervise their vendors.”)

As a matter of principle, sanctions should be used sparingly. Fed. R. Civ. P. R. 37(b)(2). The Federal Rules of Civil Procedure authorize a court to issue, as sanctions for disobeying discovery orders, the following orders (not an exclusive list):

  • An order that the matters regarding which the order was made or any other designated facts shall be taken to be established for the purposes of the action in accordance with the claim of the party obtaining the order;
  • An order refusing to allow the disobedient party to support or oppose designated claims or defenses, or prohibiting that party from introducing designated matters in evidence; and
  • An order striking out pleadings or parts thereof, or staying further proceedings until the order is obeyed, or dismissing the action or proceeding or any part thereof, or rendering a judgment by default against the disobedient party.

Federal courts also possess an inherent authority to impose sanctions for the conduct of litigants in counsel regardless of whether the behavior at issue would be covered specifically under a rule or statute. O’Brien v. Ed Donnelly Ents., Inc., 2006 WL 2583327, at *2 (S.D. Ohio Sept. 5, 2006). The court is given a great deal of latitude in deciding what, if any, sanction should be imposed for bad conduct. Id. What kind of conduct may be penalized? The spectrum of attorney or disputant behavior subject to sanction is large, but for the purposes here, non-production or late production of relevant documents is behavior subject to sanctions, as is spoliation, and the destruction of evidence. Spoliation may be defined as “the failure to preserve evidence that is relevant to pending or potential litigation. See, e.g., Jimenez-Sanchez Restaurants, LLC, Civ. No. 05-1131 (JAG), 2007 WL 1098667, at *1 (D. Puerto Rico March 5, 2007).

The purpose of sanctions is to “deter parties from engaging in [prohibited conduct], place the risk of an erroneous judgment on the party who wrongfully created the risk, and restore the prejudiced party to the position it would have been in had the misconduct not occurred.” Consolidated Aluminum Corp. v. Alcoa, Inc., 2006 WL 2583308 (M.D.La. July 19, 2006). A court has “broad discretion to fashion appropriate sanctions on a case by case basis.” Phoenix Four, Inc., 2006 WL 1409413 at *3. The form in which sanctions can appear include:

  • Exclusion of “spoiled evidence.
  • Allowance of an Adverse Inference;
  • Allowance of further discovery by the party injured by the misconduct;
  • Monetary sanctions;
  • Dismissal of a case (for misconduct by the plaintiff or cross-plaintiff).
  • Default Judgment.

Although the flexibility accorded district courts is understandable, clarity is diminished because of it. Additionally, clarity suffers further from the fact that particular sanctions may be imposed for differing standards of conduct, depending upon the circuit in which the case is taking place.

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Posted in Discovery, EDD Basics, Effectively Managing E-Discovery, FRCP 37(b), Inherent Power of Fed. Courts, Sanctions | Leave a Comment »

E-Discovery spurs business for law firms and vendors

Posted by rjbiii on October 22, 2007

According to PC World, the recently enacted amendments to the FRCP dealing with ESI has confounded corporate legal departments to the point that they are looking outside for help? To whom are they turning? Outside counsel, and EDD vendors, of course:

The fourth annual “Litigation Trends Survey Findings” conducted by Fulbright & Jaworski L.L.P, a global law firm based in Austin, Texas, found that corporate lawyers — over two-thirds based in the United States and the rest mainly in Britain — cited a big jump in use of outside vendors and outside law firms specializing in the e-discovery field. The industry sectors primarily represented are financial services, technology/communications, manufacturing, healthcare, energy and retail.

I’m not sure about the need to turn to outside counsel, frankly, unless you target a specific attorney based on particularized knowledge of the field. Otherwise, at least for the early stages of a dispute (and, for those companies with sufficient resources), in-house counsel should develop sufficient expertise to lead the e-discovery team initiate projects. Why? Well, the GC only has one “client,” and can afford to become intimately acquainted with its IT enterprise. An outside law firm will never have that opportunity (and even if it wanted to, imagine the billable hours…). Furthermore, outside counsel not only needs to be concerned with the Information Systems of its client, but must also “play offense” and investigate the systems of the adversary. Let the in-house department be the defensive coordinator, and they can take the initiative in the early stages, while overseeing a “smooth handoff” once the preservation (and possibly collection) phases have been completed.

Posted in Articles, EDD Industry, eDiscovery Counsel | Leave a Comment »