ethical issues in ediscovery - lessons to be learned

ETHICAL ISSUES IN ELECTRONIC DISCOVERY:LESSONS TO BE LEARNED

BY:KIRBY DRAKE

Overview

• Recent Discovery Decisions• Pension Committee• Rimkus v. Cammarata• Qualcomm v. Broadcom

• Lessons to be Learned• Lessons for All• Lessons for Outside Counsel• Lessons for Clients• Lessons for Courts and the State Bar

“Those who cannot remember the past are condemned to repeat it.”

Pension Committee v. Bank of America Securities (S.D.N.Y. 2010)

• Investor-related action• Defendants sought sanctions against

Plaintiffs• Failure to preserve and produce documents• Submission of false declarations regarding

collection and production efforts

• Court addressed conduct constituting negligence, gross negligence and willfulness in discovery matters

Pension Committee – Key Facts and Conclusion

• Address discovery efforts – or lack thereof – undertaken by Plaintiffs

• Concluded that “all of these plaintiffs were either negligent or grossly negligent in meeting their discovery obligations” and sanctions were imposed

Pension Committee – Key Facts

• Interplay between duty to preserve evidence and the spoliation of evidence

• Duty to preserve arises when party reasonably anticipates litigation

• Breach of duty to preserve leading to spoliation may result in sanctions

• Who bears burden of proving that evidence has been lost or destroyed and what are consequences of the loss?

• Relevance does not necessarily equal proof of prejudice

Pension Committee – Burden Shifting Test

• Burden-shifting test to address prejudice related to spoliation

• If conduct is sufficiently egregious, offending party must rebut presumption of relevance and prejudice• Show requesting party had access to allegedly

destroyed evidence• Show evidence would not support requesting

party’s claims/defenses

• If no showing of prejudice, no adverse inference instruction

Pension Committee – Showing of Prejudice

• Support finding of prejudice due to spoliation by showing that:• Offending party had control over evidence

and an obligation to preserve it at time of destruction or loss

• Offending party acted with culpable state of mind upon destroying or losing evidence

• Missing evidence relevant to the innocent party’s claim/defense

Pension Committee – Remedies

• Remedy for spoliation harm assessed on case-by-case basis

• Sanctions should deter spoliation, place risk of erroneous judgment on spoliating party, and restore prejudiced party to same position had spoliation not occurred

• Court imposed an adverse inference sanction – failed to act diligently and search thoroughly at time they reasonably anticipated litigation

Pension Committee – Litigation Hold Insufficient

• Counsel’s initial instructions to client did not meet standard for a litigation hold• Did not direct employees to preserve all

relevant records• Did not create mechanism for collecting

the preserved records• Did not specifically instruct client not to

destroy records so that counsel could monitor the collection and production of documents

Rimkus Consulting v. Cammarata (S.D. Tex. Feb. 19, 2010)

• Competing lawsuits related to Non-competition and non-solicitation covenants in ex-employees’ employment agreements and claims of trade secret misappropriation in setting up new business

• Allegations of “wholesale discovery abuse”

• Defendants alleged there was no prejudice in failure to produce because of cumulative nature of evidence

Rimkus Consulting - Overview

• Allegations of intentional destruction of electronically stored evidence

• Court addresses issues using analytical framework set forth in Pension Committee

Rimkus Consulting - Facts

• Rimkus issued document requests related to creation and inception of new company (U.S. Forensic) and contacts with Rimkus clients

• Cammarata produced two emails relevant to formation of U.S. Forensic

• Rimkus again requests all documents sent among those setting up or working for U.S. Forensic before January 1, 2007

• Defendants objected to request as overbroad but stated they “searched several times for any such responsive emails and turned over any responsive emails in their possession”


• Defendants did not produce any other emails from November 2007 to June 2009 despite many requests

• In June 2009, Defendants produced approximately 60 emails

• Rimkus noticed depositions of U.S. Forensic founders (Bell, Janowsky, DeHarde) regarding formation of U.S. Forensic• Bell testified he had “printed out the things that [he]

thought might be responsive, and sent it to [his attorney], when [he] first received the first request” for the emails

• Janowsky admitted to deleting emails concerning the formation of U.S. Forensic but did not remember whether anyone had ever talked to him about preserving records related to the formation of U.S. Forensic


• DeHarde testified that he deleted emails because of concern about the storage capacity of his email account

• Court compelled DeHarde to produce responsive documents and be re-deposed

• Defendants’efforts to locate/retrieve electronically stored information had been superficial• No identification of any sources of relevant information that

were not reasonably accessible.

• No information about whether deleted emails could be recovered and how much time and expense might be required.

• Defendants ordered to conduct inquiry


• DeHarde admits in deposition that “We deleted them [the emails]. We had a policy that we would delete e-mails during the start-up after two weeks.” DeHarde testified that U.S. Forensic founders had agreed on this e-mail deletion policy.

• Over 100 belatedly produced emails show that Cammarata contacted individuals he had dealt with while working at Rimkus

• Belatedly produced documents showed Cammarata used personal email address to send Rimkus engineering data and reports to his U.S. Forensic email address


• On September 13, 2009, Cammarata first produced 15 disks of ESI and numerous boxes of paper documents containing Rimkus correspondence, client contact information and Rimkus power point presentations

• Analysis of Bell’s Rimkus laptop – included Rimkus financial information downloaded to laptop on day of resignation

• Bell concealed personal email account used to download and take confidential Rimkus financial information

Rimkus Consulting - Allegations

• Alleged violation of legal duty to preserve evidence when there is an anticipation of litigation by deleting emails

• Alleged scheme to destroy evidence showing the extent to which Defendants took confidential information from Rimkus to use to set up, operate, and solicit business for U.S. Forensic

Rimkus Consulting - Conclusions

• Court found affirmative steps taken to delete potentially relevant documents

• Selective implementation of document destruction policy at best

• Defendants’ reasons and explanations for deleting or destroying the emails found to be inconsistent and lack support – space concerns; fear of retaliation


• Defendants knew of litigation when emails were deleted

• Defendants did not disclose personal email accounts used to take information from Rimkus

• Sufficient evidence for reasonable jury to find that Defendants intentionally and in bad faith deleted emails relevant to issues in case to prevent use of these emails in litigation

• Judge to issue adverse inference instruction with respect to deleted emails but no striking of Defendants’ pleadings (prejudice but far from irreparable)


• Jury can hear about email deletion and concealment/delay in discovery

• Jury instruction about to duty to preserve information

• Jury can infer that content of deleted emails unfavorable to Defendants

• Jury can consider Defendants’ conduct in deleting emails and content of deleted emails

• Defendants to pay reasonable costs and attorneys’ fees required to identify and respond to the spoliation issues

Qualcomm v. Broadcom Timeline

Qualcomm sues Broadcom for patent infringement

Broadcom requests discovery on Qualcomm’s participation in the JVT

Qualcomm repeatedly denies involvement in the JVT during relevant time frame

Qualcomm files motion for summary judgment on waiver defense

Broadcom defense – waiver by participation in the JVT

Trial begins

Qualcomm v. Broadcom Timeline

Trial begins Trial witness forced to admit existence of emails on cross examination

Judge orders production of documents and jury finds in favor of Broadcom on waiver

Broadcom sought discovery on scope of discovery abuses

Qualcomm attorney discovers email showing trial witness communicated with the JVT

Judge sanctions Qualcomm and 6 outside counsel for discovery abuses

Qualcomm v. Broadcom - Sanctions

• Qualcomm ordered to pay $8,568,633.24• Six outside counsel referred to the State Bar

of California for investigation of possible ethical violations

• Qualcomm and outside counsel ordered to participate in Case Review and Enforcement of Discovery Obligations (“CREDO”) program

Qualcomm v. Broadcom – Sanctions for Most But Not All

• Several outside counsel never sanctioned because of steps taken to confirm accuracy of facts• Reviewed deposition transcripts and

discovery responses• Circulated drafts of pleadings to more senior

in-house and outside counsel• Investigated the facts surrounding the JVT

“He who must search a haystack for a needle is likely to end up with the attitude that the needle is not worth

the search.”

Brown v. Allen, 344 U.S. 443,537 (1953)

Lessons to be Learned from Recent Discovery-Related Decisions

Lessons for All

Lessons for Courts and State Bar

Lessons for Outside Counsel

Lessons for Clients

Lessons for All:1. The Truth Matters• Often see failure to

fully adhere to the principle of telling the truth

• Failure to admit when wrong when it comes to discovery issues

• Party and its outside counsel often suffer the consequences - sanctions

Lessons for All:1. The Truth Matters• Know the whole truth• Make accurate representations to the other

side as well as to the judge and to the jury• How?

• Find responsive information and produce it• Make the team aware of responsive information

early• Allow witnesses/counsel to be prepared to face

truth about existence and contents of responsive information before trial

Lessons for All:2. Err in Favor of Production• If you have to consider whether to produce,

probably should go ahead and produce it• Often less harmful to produce• Information may be responsive and

discoverable but not necessarily admissible• Courts tending toward requiring production

if responsive to a party’s claims or defenses

Lessons for All:2. Err in Favor of Production

Almost never incur wrath of Court by producing (except if it looks like a “document dump”)

But feet can be held to the fire for failure to produce responsive

information

Inside and Outside Counsel Responsible

• Swofford v. Eslinger, No. 6:08-cv-00066, 2009 WL 3818593 (M.D. Fla. Sept. 28, 2009)• Inside counsel failed to issue litigation hold

notice and failed to undertake meaningful actions to preserve relevant information

• Awarded adverse inference sanctions and ordered defendants and inside counsel to pay fees and costs (inside counsel was not attorney of record)

Inside and Outside Counsel Responsible

• Green v. McClendon, No. 08 Civ. 8496, 2009 WL 2496275 (S.D.N.Y. Aug. 13, 2009)• Counsel failed to provide enough detail to

client regarding duty to preserve data and did not explicitly issue litigation hold notice

• Awarded costs• “The preservation obligation runs first to

counsel, who has a duty to advise his client of the type of information potentially relevant to the lawsuit and of the necessity of preventing its destruction.”

Lessons for Outside Counsel:3. Taking Responsibility for Ensuring Client Compliance with Discovery

• Cannots• Musts


• CANNOT blindly rely on client’s collection and production

• CANNOT blindly trust what client describes as “standard” procedures for approaching discovery issues

• CANNOT shield eyes from seeing certain documents – must challenge clients regarding search and collection strategies


• MUST reach agreement as to how to engage in discovery process

• MUST have sufficient control over discovery process

• MUST gain access to locations where responsive data may be maintained

• MUST take steps to confirm compliance by key custodians – interviews, written questionnaires, etc.


“The Committee’s concerns are heightened in this age of electronic discovery when attorneys may not physically touch and read every document within the client’s custody and control. For the current ‘good faith’ discovery system to function in the electronic age, attorneys and clients must work together to ensure that both understand how and where electronic documents, records and emails are maintained and to determine how best to locate, review, and produce responsive documents. Attorneys must take responsibility for ensuring that their clients conduct a comprehensive and appropriate document search.”

Fed. R. Civ. P. 26(g) Advisory Committee Notes

Lessons for Outside Counsel:4. Document Your Discovery Efforts• Keep a record of efforts with regard to

document search and collection• Can potentially use record to defend

discovery efforts should a discovery dispute arise

• May need to seek agreement from client that documentation of actions taken may be disclosed if issues arise as to sufficiency of discovery efforts

Lessons for Outside Counsel:5. If You Don’t Have a Plan, Make One• MUST define who is responsible for ensuring

discovery duties are carried out• MUST get IT personnel involved• MUST issue document hold or preservation

notice at outset of litigation• MUST inform employees that they have a duty

to manage information in accordance with written policies – litigation or not

• MUST consider investing in management technology/search tools

Lessons for Outside Counsel:6. If You Have a Plan, Adhere to It• Qualcomm allegedly had a plan in place for

collecting documents in response to discovery requests

• Despite having plan, Qualcomm apparently did not fully follow the plan

• MUST follow your plan – plan is only as effective as care given in executing plan

Lessons for Outside Counsel:7. Compliance Programs/Modify Rules• CREDO Program

• Identify facts that contributed to discovery violation

• Create and evaluate procedures to correct deficiencies

• Develop and finalize protocol to prevent future violations

• Modifications to State Discovery Rules• Consider state-promulgated electronic discovery

rules (i.e., California)• Balance burdens/needs of requesting party and

producing party

Electronic Discovery Act - California

• Signed into law on June 29, 2009• Largely follows 2006 electronic discovery

amendments to Federal Rules of Civil Procedure (FRCP)

• Requires parties in written discovery responses to object to production of inaccessible information to preserve objections

• Assumes all ESI is accessible and shifts balance by not requiring the requesting party to bring a motion to compel but responding party must bring a motion for protective order

• Require counsel to know the difference between forms in which information can be produced and the advantages/disadvantages to the client

Electronic Discovery Act - California

• Courts must limit the frequency or extent of discovery of ESI when certain conditions exist:• It is possible to obtain the information from a

more convenient, less burdensome or expensive source

• the discovery sought is unreasonably cumulative or duplicative

• the party seeking the discovery has had ample opportunity to previously obtain the information sought; or

• the likely burden or expense outweighs the likely benefit, taking into account the amount in controversy, the resources of the parties, the importance of the issues, and the importance of the requested information in resolving the issues

Lessons Learned

ethical issues in ediscovery - lessons to be learned

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