State court practitioners beware: sanctions can be entered against your clients for failing to preserve emails, even if your state has not adopted a set of ediscovery rules

Einstein v. 357 LLC, et. al. (N.Y. Supreme Court, October 21, 2009)

In Einstein, a trial judge in the Supreme Court of the State of New York recently entered sanctions against several defendants for their failure to implement a litigation hold which resulted in the loss of emails relating to the presale condition of a condominium unit purchased by the plaintiffs in Brooklyn, New York. The trial judge recognized that even though New York had not yet enacted any rules addressing electronic discovery, and that its Civil Practice Law Rules and common law decisions were silent on the need to institute a litigation hold, New York courts have turned to the Federal Rules of Civil Procedure and case law interpreting them for guidance in other contexts.

The crux of the problem in Einstein was the limited storage capacity of the company’s email server. Each of the company’s brokers were allocated 200 megabytes of space, and once that limit was reached, a broker could not send or receive emails until that space was cleared for more email traffic. As a result, brokers had to clear old emails from the system in the ordinary course of their business. Unfortunately, a litigation hold was never instituted, and as a result, emails (several of which the plaintiff’s produced to the defendants) were not preserved. While emails were forwarded through a central server, the company’s email system was configured in such a way that once an email was deleted by an individual user from the user’s inbox, it was also deleted on the central server. While daily, weekly and monthly backup tapes were made of the email server, the daily and weekly backups were periodically reused. Thus, if emails sent or received during a particular month were also deleted during that month, the monthly backup would not capture those deleted emails.

The court concluded the defendants’ counsel and the company’s IT director failed to investigate the basic mechanics of the company’s email system and its retention practices until 11 months after plaintiffs first served their document demands upon the defendants. The court further concluded that defendants were aware of the fact that the contents of their emails would be relevant to the litigation and recalled that it had repeatedly warned defendants about the need to make a complete production of those emails. Accordingly, the court ruled that the defendants’ failure to take any steps “to implement a litigation hold, relying instead on backup tapes that a reasonable investigation would have revealed failed to capture relevant emails deleted manually by individual users,” constituted gross negligence, and warranted a finding of spoliation.

Therefore, the court imposed sanctions in the form of an adverse inference instruction relating to the missing emails, and awarded attorneys’ fees as well as expert costs associated with the review of the defendants’ hard drives.

While admittedly, a trial court decision lacks any precedential value, Einstein amply demonstrates that parties who are sued in state court, even in those states which have not enacted their own set of ediscovery rules, are not immune from ediscovery sanctions. One of our recent posts identified those states which had adopted their own set of ediscovery rules. Outside counsel would be wise to advise their clients of the need to impose a litigation hold in every case in which they are retained, even state-court proceedings, and seek to preserve ESI in state-court litigation. Counsel also would be wise to investigate the client’s email and information systems as well as its paper and electronic retention/destruction policies. Companies and their counsel can no longer safely assume that because a particular state has not enacted its own set of ediscovery rules that the client has no obligation to preserve and produce relevant electronically stored information.

Photo courtesy Flickr user Mike Licht under this Creative Commons license.

View the opinion below or by clicking here.

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State court ediscovery rules scorecard

Anyone old enough to remember when Jack Brickhouse and Lou Bodreau were WGN’s broadcasters for the lovable losers on the north side of Chicago, will have fond memories of the venerable public address announcer who graced the “friendly confines” known as Wrigley Field. At the beginning of each game Pat Pieper would begin with his signature announcement: “Attention, Attention, please! Have your pencils and scorecards ready and I will give you the correct lineups for today’s game.”

As of September 2009, there are 24 states which have enacted their own electronic discovery rules. Staying on top of this movement is important for attorneys with multi-jurisdictional practices and for general counsel whose companies operate in multiple states or ship their products through out the country, and as a result, are sued in various jurisdictions. Texas adopted its ediscovery rules (Tex. R. Civ. P. 196.4) before the federal rules were enacted and has not attempted to amend its rules to mirror the federal rules. Several of the states listed below (Idaho and Mississippi) follow the Texas approach. While other states have attempted to base at least some of their ediscovery rules on the corresponding federal provisions, in some instances there are obvious gaps and differences between the analogous state and federal rules, and in others, the variations are subtle, yet significant. So there is no substitute for reviewing the actual rules themselves.

Thus, with a tip of the hat to Tom Allman who originally began tracking those states that adopted their own set of ediscovery rules, and with a bow to Pat Pieper, get your pencils and scorecards ready for a list of those states that have enacted ediscovery rules which are linked below to their respective state rules:

• Alaska
• Arizona
• California
• Idaho
• Indiana
• Iowa
• Kansas
• Louisiana
• Maine
• Maryland
• Michigan
• Minnesota
• Mississippi
• Montana
• Nebraska
• New Hampshire
• New Jersey
• North Dakota
• Ohio
• Tennessee
• Texas
• Utah
• Virginia
• Wyoming

Pat Pieper served as the public address or field announcer at Wrigley Field for 59 years – he worked longer in that capacity than the ediscovery rules listed above likely will. Some fun facts about Pat on his Wikipedia page are that from 1916 to 1932, he used a megaphone to make his field announcements, and he never missed a game at Wrigley Field after 1924 until he retired in 1974. He likely should be listed in Ripley’s Believe It or Not for watching the most baseball games ever lost. Had he only gone to the South Side and worked for the White Sox, at least he could have watched some winning baseball including the 1959 Champs known as the Go Go Sox. Yes, I admit it, I am a White Sox fan, and I am waiting for the most interesting manager in baseball, Ozzie Guillen to pop back up on Twitter. Or was he also Twitterjacked?

Scorecard photo courtesy of Flickr user Caitlinator under this Creative Commons license.