5 Big Case Decisions about Preservation: What to Expect When You’re Preserving

Six eDiscovery powerhouses talked today at LegalTech New York about the five biggest case decisions about preservation in the past year.

The panelists included lawyer and educator Mike Arkfeld, Esq., Bill Butterfield (Hausfeld LLP and chair of the Sedona Conference Working Group 1), Hon. James Francis (S.D.N.Y.), Maura Grossman, (Wachtell Lipton), former US magistrate Hon. Ron Hedges, and Hon. Frank Maas (S.D.N.Y.) The topic was Preservation Case Law Judges and Experts Evaluate the Top Five Opinions of 2014 and What They Mean to Corporations. Much thanks to our friends at Zapproved for sponsoring this Supersession and making it available to all.

5 Biggest Case Decisions about Preservation & Lessons Learned

Maura asked us quite rhetorically, after Zubulake and Pension Committee, how much more of a warning does counsel need to get a clue about clients’ information systems to impose and monitor an effective legal hold? Given the sanctions in last year’s cases, the answer is: Quite a bit more.

Case #1: Hosch v. BAE Systems

In Hosch v. BAE Systems, (E.D. VA April 24, 2014) everything was deleted from the mobile devices in question after everyone should have known better. As a sanction, the case was dismissed with penalties, costs and fees. Mike talked about the ABA’s 2012 edict that attorneys must become familiar with their clients’ uses of technology in light of the “bewildering pace of change” in the conduct of modern business. When doling out sanctions for bad acting and bad performance in preservation, the judges don’t really care whether it’s the client’s or the attorney’s fault. “The responsibility shall be joint and several,” said Judge Francis.

The Lesson

Outside counsel, in particular, is held to a high standard of diligence and competence to identify relevant ESI and to impose and monitor a litigation hold.

Case #2: Small v. University Medical Center of S. Nevada

In Small v. University Medical Center of S. Nevada (2014 WL 4079507, D. Nev August 18 2014), preservation didn’t even begin until a year to two years after the case was filed. The magistrate issued a preservation order, appointed a special master, and a substantial record was created indicated that there was no litigation hold imposed despite multiple legal hold demands. There was no ownership of preservation, no client or IT interviews, no instructions to clients. The special master found willfulness and recommended the ultimate sanction of judgment, since ESI necessary to the case was destroyed.

The Lesson

Companies need a defined business process for Litigation Response Planning. (Read: Litigation Response Planning: Why Should You Document Your Reasonable Expectation Of Litigation?)

Case #3: Brown v. Tellermate Holdings, Ltd.

In the age discrimination case of Brown v. Tellermate Holdings, Ltd. U.S. Dist LEXIS 90123 (S.D. Ohio July 1, 2014) the “comparables” necessary as evidence of discrimination were stored in defendant’s Salesforce.com. Defendants affirmatively misrepresented what content there was, who had access, how it could be reported and how it could be exported for production. Information important to the case was lost. As sanction, the court precluded defendants from introducing evidence in their favor. The Court opined that it was “counterintuitive” that a system with such importance to the business could not be sliced, diced, reported or exported. “Once again, it is not sufficient to send the discovery request to the client and passively” accept whatever the client says about the ESI. The LTNY panel had a lively discussion about how much expertise the attorney must have personally and how much they can or should trust a client with answers given about complex business systems. In D4’s consulting work, we find that lawyers often ask us how information can be collected from various proprietary or complex systems.

The Lesson

In litigation discovery, attorneys are expected to exercise cooperation, candor and truthfulness—between client and counsel, between opposing counsel, and between counsel and court.

Case #4: Vincente v. City of Prescott 2014

Vincente v. City of Prescott 2014 U.S. Dist LEXIS 109790 (D. Ariz. Amended August 13, 2014) was decided by the chair of the rules committee working on updates to the FRCP, the Hon. David Campbell. In this employment case, in which a disciplined employee was complaining of retaliatory harassment, there were cross claims for spoliation. The decision is an exercise in the analysis required for degrees of culpable conduct for spoliation, from negligence, through gross negligence, to willful conduct and intent to deprive an opponent of important evidence. A critical factor in deciding sanctions is whether the loss resulted in prejudice that cannot be cured, or whether the loss, in fact, was of relevant ESI. The panel used it as a look at proposed new FRCP 37(e), which says, essentially, if you can cure the prejudice, that cure and associated reasonable cost should be the limit of the remedy. If there is intentional spoliation, then more severe sanctions are available.

The Lesson

If you find that you have a preservation problem, risk or disproportionate cost, you are risking a lot by hiding rather than disclosing and trying to negotiate and remediate it.

Case #5: Knickerbocker v. Corinthian Colleges

Knickerbocker v. Corinthian Colleges (W.D. Wash April 7 2014). In this race discrimination case, auto-delete was not halted. When plaintiff challenged the meager production they got, defendants misrepresented how they could extract from a live system, what data actually remained on the system and for how long, what backup data they could review but didn’t, and what backup tape data they should actually review to remediate the loss of ESI. Defendant and counsel refused to participate candidly in the discovery process, but because ultimately the spoliation could be remediated, there was no prejudice, and the sanction amounts were fairly modest. This case left me with a bad feeling that respondents dragging their feet on disclosures about sources of ESI face only a wrist slap, and only if they are found out.

The Lesson

Self-preservation and self-collection is not impermissible per se, but if it’s going to happen, you as an attorney, have to know, that the client is capable and invested in the process. There’s a lot of risk.

The Takeaways: What’s a good lawyer and litigant to do?

  1. Get good at interviewing business clients and IT people about sources of relevant ESI.
  2. Trust but verify. Do not easily and readily accept clients’ plans for preserving and collecting ESI on their own. Make sure to get help for answers on how to discover the contents of complex systems.
  3. Develop a litigation response plan, so that the “emergency” of an unplanned and unbudgeted dispute can be managed as a normal business process.
  4. Read: What You Need to Know About Identifying, Collecting, and Preserving ESI

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