Failing to issue a litigation hold letter is not per se evidence of sanctionable conduct

Haynes v. Dart, 2010 WL 140387 (N.D. Ill., Jan. 11, 2010)

Here at Practical Ediscovery, we are always on the lookout for decisions that bring a little bit of sanity to the crazy world of ediscovery. Therefore, we thought the Haynes decision was worth a mention. While Haynes involved the alleged failure to preserve paper records, not ESI or emails, the decision addressed a motion for sanctions which claimed that evidence was lost as a result of the alleged failure to impose a formal litigation hold at the onset of the case.

While a party has a duty to preserve potentially relevant information once litigation is “reasonably anticipated,” the court in Haynes, further explained that the duty to preserve potentially discoverable information does not require a party to retain every scrap of paper in its possession. In fact, the court acknowledged that the steps a party must take “to satisfy its obligation to preserve evidence may vary from case to case.” Significantly, the court in Haynes observed that while the failure to institute a litigation hold was a “relevant” consideration, it was “not per se evidence of sanctionable conduct.” The court observed that this case was one of many pending against the Sheriff’s Office, which runs the largest single site jail in the country, “and that the establishment of a formal litigation hold in every case could cause an undue burden.” Because of the “breadth of the plaintiffs’ claims and discovery requests,” the court in Haynes could not conclude “that the absence of a large-scale litigation hold was objectively unreasonable.” The court also found it significant that the lost evidence involved the handwritten notes of a jail superintendent and that there was “no evidence that relevant documents were destroyed pursuant to a routine destruction policy that defendants failed to curb.”

So, while Haynes is helpful, the decision does have its limits and should not be viewed as a “Get Out of Jail Free Card.” Obviously, the safest approach in any case is for the client to take reasonable steps to preserve potentially relevant information once litigation is reasonably anticipated. Decisions such as Haynes provide only a limited backstop, should a misstep occur.

Haynes bears mentioning for another reason. Various ediscovery decisions seemingly require an attorney to follow up and confirm that the client’s “key personnel” are aware of the litigation hold and are preserving potentially relevant ESI. Attorneys frequently ask how they can or should identify the key personnel to whom these decisions vaguely refer. After-the-fact criticisms always speak with the wisdom of 20-20 hindsight. The court in Haynes noted that the particular employee of the defendant whose notes were the subject of plaintiffs’ motion for sanctions had been listed in plaintiffs’ Rule 26(a)(1) initial disclosures as someone likely to have discoverable information. Therefore, the court concluded that the witness should have been instructed to preserve relevant information no later than the date of that initial disclosure. Accordingly, one common-sense approach to identifying the client’s “key personnel” is to work from the parties’ Rule 26(a)(1) disclosures. Occasionally, there may be other key employees, but in many, if not most instances, the witnesses listed in those initial disclosures will be the persons most likely to possess relevant information that should be preserved.

Sanctions rejected where evidence was destroyed pursuant to routine, good-faith records management practice before receipt of any notice of a likelihood of litigation

Today’s post demonstrates the importance of a document retention/destruction policy applicable to a company’s paper and electronic records that is consistently applied and routinely followed.

In Mohrmeyer, plaintiff sought discovery sanctions in the form of an adverse inference instruction because Wal-Mart failed to preserve certain records relevant to his accident. The particular record, a maintenance log, was not typically preserved in the ordinary course of the company’s business. It was routinely discarded on a weekly basis. Plaintiff noted that Wal-Mart employees attended to him immediately after his fall, called 911 and summoned an ambulance to take him to the hospital. As a result, the plaintiff in Mohrmeyer claimed that Wal-Mart’s duty to preserve all relevant documents was triggered immediately following his fall because Wal-Mart “should have known” that his accident would result in litigation.

Mohrmeyer is significant because the court recognized:

The law does not and should not require businesses to preserve any and all records that may be relevant to future litigation for any accidental injury, customer dispute, employment dispute, or any number of other possible circumstances that may give rise to a claim months or years in the future, and there is absolutely no contemporaneous indication that a claim is likely to result at the time the records are destroyed pursuant to a routine records management policy.

That Wal-Mart preserved some records relating to the plaintiff’s accident pursuant to its policy involving accidental injuries did not change the result in the court’s view because the particular maintenance log was only temporarily retained and was routinely discarded. Merely because Wal-Mart summoned an ambulance for the plaintiff did not make the litigation more likely to occur. The court found no deliberate or improper conduct by Wal-Mart involving its failure to preserve what the court described as a “transient record.”

The court recognized that a duty to preserve applies only when a party has been put on notice that evidence is relevant to pending litigation or which may be relevant to future litigation that is likely to occur. It concluded that at the time the maintenance log was discarded, there only existed a speculative possibility that a lawsuit might be brought. The court observed that before the log was destroyed Wal-Mart had received no telephonic or written warning from the plaintiff or his counsel raising the possibility of a lawsuit and there was no history of litigation between the parties which made a lawsuit more likely to occur. The court was not willing “to presuppose the likelihood of litigation for every slip and fall accident that occurs.”

The court in Mohrmeyer distinguished the factual scenario presented from an airline disaster where the “trigger date” for the preservation of evidence would clearly be the date of the disaster “because of the high likelihood of litigation following such [an event].” The mere fact that an accident had occurred was insufficient to establish that litigation was likely to ensue.

The court also noted that the plaintiff testified in his deposition that he did not even consider filing a lawsuit until a couple of months after the accident occurred, which was long after the maintenance records were destroyed in the ordinary course of the company’s business. This is a good practice point to remember in discovery in any matter where discovery sanctions potentially may be sought.

Accordingly, Mohrmeyer concluded that when evidence is destroyed pursuant to a company’s “routine, good-faith records management practices” before any notice of the likelihood of litigation is received, discovery sanctions of any type are not warranted.

Vitruvian Man image courtesy Flickr user Michael Licht under this Creative Commons license.

The Good, The Bad And The Ugly (of an ediscovery decision)

Scalera v. Electrograph Systems, Inc., 2009 WL 3126637 (E.D.N.Y. Sept. 29, 2009)

Today’s blog post is named after the 1967 epic spaghetti western starring Clint Eastwood. Wikipedia explains that the movie’s plot “centers around three gunslingers competing to find a fortune in buried confederate gold.” Intended by its director to be a “tongue-in-cheek satire on run-of-the-mill westerns,” Quintin Tarentino once called it “the best-directed film of all time.”

While that might be a bit of a stretch, The Good, The Bad and The Ugly aptly summarizes the court’s holding in Scalera v. Electrograph Systems. While you won’t find any confederate gold, bounty hunters or ghost towns in the decision, there are a number of important points that can be gleaned from the opinion. However, as with many ediscovery decisions, there are several bad, and at least one downright ugly finding entered by the court. Luckily, while the court concluded the company “unquestionably breached a duty to preserve emails,” the plaintiff failed to establish that any of the destroyed emails would have been favorable to her claim and, thus, the court denied plaintiff’s request for an adverse inference instruction. As a result, on several levels, Scalera is a decision that merits your attention.

Read the rest of this entry »

An opinion sure to make everyone’s “Top Ten” list of ediscovery decisions for the year

Goodman v. Praxair Servs. Inc., 632 F.Supp.2d 494 (D.Md. 2009)

Near the end of the year, various commentators and bloggers will typically post their list of top ediscovery decisions for the year. While it may be a bit early for predictions, one decision that should make everyone’s top ten list this year is Goodman v. Praxair Services. The decision was written by Judge Paul Grimm who also was the author of the Hopson, Victor Stanley and Mancia decisions. Judge Grimm always seems to be on the leading edge of ediscovery issues.

Praxair is notable for its comprehensive treatment of issues that frequently arise involving the preservation of electronically stored information (“ESI”) and sanctions that can result for the failure to do so. The decision contains more ediscovery law than many book chapters on the topic. Even the most experienced ediscovery practitioner will find some helpful insights in the decision. If there is one ediscovery decision you read this year, Praxair should be the one. The issues addressed by Judge Grimm in Praxair include:

• The trigger date for a duty to preserve
• The timeliness of a spoliation motion.
• Identifying the “key players” to whom the litigation hold should be directed.
• Determining what ESI is under a party’s control.
• Distinguishing the duty to preserve from the duty to produce.
• Ediscovery and small “mom and pop” companies.
• Whether sanctions can be imposed for the spoliation of evidence by an agent.
• State of mind required for spoliation sanctions.
• Four scenarios when costs and attorney fees are allowed.
• Sanctions for unilaterally preserving only the ESI that a party deems relevant.

Judge Grimm even traces the “historic roots” of spoliation to Armory v. Delamirie, 93 Eng. Rep. 664 (K.B. 1722), which he describes as a Dickensian tale of avarice and greed involving a chimney sweep’s discovery of a jewel and a goldsmith’s subsequent attempt to keep it for himself. Because of Judge Grimm’s comprehensive treatment of the issues noted above, we have divided our review and commentary on Praxair into multiple parts that will appear over the next few days on Practical Ediscovery. This first part outlines Praxair’s factual background and addresses when a duty to preserve is triggered.

Read the rest of this entry »

Seventh Circuit’s Electronic Discovery Pilot Program

Recently, the Seventh Circuit announced its Electronic Discovery Pilot Program. The program was developed in response to continuing comments by the business community and practicing attorneys about the need to reform the civil pretrial discovery process. It is an attempt to reduce the cost and burden of ediscovery in litigation. What makes the Seventh Circuit’s pilot program unique is that its results will be reviewed and analyzed during the program’s phases.

A series of Principles Relating to the Discovery of Electronically Stored Information (“ESI”) were developed and codified in a standing order. These principles are intended to serve as supplemental procedural ediscovery guidelines for the parties in selected cases. Individual district court, magistrate, and bankruptcy judges in the Seventh Circuit have agreed to adopt the principles and implement them in selected cases during Phase I of the program, which runs through May 1, 2010.

Kenneth J. Winters, the Managing Director of the Sedona Conference®, and former Colorado Supreme Court Judge Rebecca Kourlis, the Executive Director of the Institute for Advancement of the American Legal System (“IAALS”) at the University of Denver, assisted in the development and review of these principles.

IAALS is developing questionnaires to assess the efficacy of the principles. The questionnaires will be completed by the judges and lawyers participating in Phase I of the program. The results of the IAALS’ questionnaires will be presented to the Seventh Circuit at its annual meeting in May, 2010. At that time, the program’s ediscovery principles will be reviewed and refined as needed. Phase II of the program is scheduled to proceed from June, 2010 through May, 2011. It is contemplated that in May, 2011, Phase II findings will be presented and the Seventh Circuit’s final ediscovery principles announced.

Among other things, the principles require in the event of a dispute during the meet and confer process, the appointment of an ediscovery liaison who should be prepared to participate in ediscovery dispute resolution. These principles also recognize that that Rule 26(b)(2)(C)’s proportionality principles should be applied when formulating a discovery plan; provide that sanctions can be imposed for the failure to cooperate and participate in good faith in the meet and confer process; identify categories of ESI, which are generally not discoverable in most cases; and provides that if a party intends to request the preservation or production of these categories of ESI, that such a request be discussed at the parties’ initial meet and confer session or as soon thereafter as practicable.

Read the rest of this entry »

The failure to timely issue a litigation hold did not itself create a question of material fact warranting the denial of summary judgment

Kotakis v. Wesco Distrib., Inc., 2009 WL 1850827 (W.D.Pa. June 26, 2009)

In Kotakis, plaintiff filed a Title VII claim asserting she was subjected to discrimination and retaliation because of her gender. The defendant moved for summary judgment, and plaintiff argued that a genuine issue of material fact was triggered because the defendant failed to take steps to preserve its electronically stored information (“ESI”) until nearly eleven (11) months after receiving notice of the litigation.

The district court quickly disposed of plaintiff’s argument. It observed that following Lujan v. National Wildlife Fed’n., 497 U.S. 871, 888 (1990), the party opposing summary judgment must proffer specific evidence found in the record which demonstrates the existence of a genuine factual dispute on a material issue which requires resolution by a jury. The district court in Kotakis held no question of material fact was presented by the plaintiff, and entered summary judgment in defendant’s favor.

In a footnote, the district court acknowledged plaintiff’s argument that the defendant failed to timely issue a litigation hold, but noted a recent decision, Phillips v. Potter, 2009 WL 1362049, *4-6 (W.D.Pa. May 14, 2009), which ruled that sanctions were inappropriate even though the defendant failed to timely issue a litigation hold when “there was no evidence that relevant documents were destroyed.” The district court in Kotakis found the logic of Potter persuasive, and applied its rationale in rejecting plaintiff’s summary judgment argument. Kotakis, 2009 WL 185027 at *4, n.2.

Thus, when a party opposing summary judgment fails to establish that potentially relevant ESI was lost due to a failure to timely institute a litigation hold, the mere fact that the moving party failed to timely take the necessary procedures to preserve ESI does not, in and of itself, provide a basis to deny the entry of summary judgment.

Must a lawyer’s litigation hold letter be written by an IT professional?

Green v. McClendon, 2009 WL 2496275 (S.D.N.Y. Aug. 13, 2009)

This isn't Mrs. McClendon

In Green v. McClendon, the court ordered that sanctions be entered against Mrs. McClendon and her counsel for the failure to preserve certain electronically stored information (“ESI”) about an Excel spreadsheet that she produced in discovery. The ESI was lost when “the son of a friend” who was “familiar with computers” reinstalled the operating system on her home computer. The court in Green was uncertain if the plaintiff had actually been deprived of any information because all files on the defendant’s home computer were downloaded onto discs before the hard drive on the computer was reinstalled, and those discs were subsequently produced in discovery. Nonetheless, the court ordered that sanctions be entered, and in the process fashioned an order that may have spawned a potential conflict of interest for defendant and her counsel.

One of the criticisms of ediscovery is that it has evolved into a tactical game of “gotcha,” where one of the goals is to shift the focus from the merits of the case to sanctions on the opposing party. The court’s opinion in Green suggests that trend has not abated. Unfortunately, in a zeal to protect all things digital, the court in Green assumed either that a litigation hold was not properly issued or that the client “brazenly” disregarded those instructions. The court apparently never considered whether the client may not have known or failed to realize that the reinstallation of her home computer’s hard drive would result in the loss of electronic information under the circumstances.

An issue simmering beneath the surface of Green is how detailed must a lawyers’ litigation hold instructions be in order to comply with the attorney’s ethical and professional duties? Does the applicable standard of care require that lawyers now specifically advise their clients to not reinstall the hard drives on their home computers? If so, given the myriad of technological ways ESI can be lost, must a lawyer’s litigation hold letters be written by an IT professional? It is the client’s obligation to preserve evidence not the lawyer’s responsibility. As litigation-hold letters become longer and more detailed, how likely is it that they will be read, understood and followed by the client?

Read the rest of this entry »

Rule 26(c) motion to stay discovery – an underutilized tool to control ediscovery costs

Ellington Credit Fund, Ltd. v. Select Portfolio Servs., Inc., 2009 WL 274483 (S.D.N.Y. Feb. 3, 2009); Stone v. Lockheed Martin Corp., 2009 WL 267688 (D. Colo. Feb. 2, 2009).

Given the current economic climate, many retailers are offering two-for-one specials to boost sales. That same approach is warranted with this post since both the Select Portfolio and Lockheed Martin decisions address the same topic – Rule 26(c) Motions to Stay Discovery.

Read the rest of this entry »

Learn how to avoid ediscovery sanctions from Cool Hand Luke

Keithley v. The Home Store.com, Inc., 2008 WL 3833384 (N.D.Cal., Aug.12, 2008)

What is the one line from the movie Cool Hand Luke that everyone remembers?

No, it’s not Carl the floor walker’s speech about spending “a night in the box” for various rule violations. And no, it’s not Dragline’s comments about Lucille as she washes a car in front of the chain gang while they are cutting down weeds on the side of a road. It’s the Captain’s infamous line after he knocks Luke to the ground with a billy club: “What we’ve got here is failure to communicate.” And that is today’s tip for avoiding ediscovery sanctions.

Read the rest of this entry »