It's been a busy year already in the world of electronic discovery. Among other things, the first half of 2010 brought a number of new rulings related to e-discovery sanctions.
So far, litigants are seeking sanctions in fewer cases than in 2009, but sanctions are being awarded at almost the same rate, according to a
mid-year update on e-discovery developments and trends by Gibson Dunn & Crutcher.
Of 103 e-discovery opinions issued from Jan. 1 - June 17 that were analyzed by GDC, litigants sought sanctions in 30 percent, or 31 cases, compared to 42 percent in all of 2009. They received sanctions in 68 percent (21) of those cases, compared to 70 percent in all of 2009.
Costs and fees associated with the discovery dispute itself were the most frequently awarded sanctions, imposed in 14 of the 21 cases in which courts imposed some kind of sanction. Adverse inference instructions were imposed in 4 cases, while other monetary sanctions were imposed in three cases.
"When people look at the numbers, they have to consider the level of sanctions in conjunction with emphasis on cooperation we're seeing in the courts," says Farrah Pepper, of counsel and vice chair of GDC's Electronic Discovery and Information Law practice group. "Courts are stressing that they would rather see parties avoid discovery disputes and motions entirely and handle these issues outside of court rooms."
She notes continued citation to The Sedona Conference Cooperation Proclamation, which is a call to arms for legal practitioners to act cooperatively when trying to resolve discovery issues.
In contrast to how people may be used to approaching disputes in litigation, Pepper says, "when it comes to e-discovery, it's imperative to attempt to handle these issues cooperatively upfront. If a dispute on these issues comes before a court, it can be a dangerous game."
For companies that might find themselves disputing these issues regularly, she says a discovery plan can be valuable. "If a court finds discovery efforts insufficient, companies run the risk real of having to pay opponents costs and fees for any motions that might be brought," Pepper tells Compliance Week.
One case that stands out is
In re A&M Florida Properties (S.D.N.Y. Apr. 7, 2010), in which the court sanctioned both the client and the outside attorney, noting that, while nobody acted in bad faith, outside counsel "simply did not understand the technical depths to which electronic discovery can sometimes go."
That sends a clear message to outside and inside counsel and business people that "this isn't an area in which anyone can stick their head in the sand and assume someone else on the team will figure it out," she says. "The courts are identifying a proactive obligation for counsel and clients to understand e-discovery issues."
Likewise, GDC Senior Associate Matthew Kahn says courts are expecting cooperation not only among the opposing parties in the litigation, but also among outside and in-house counsel and, at times, even business people.
"Courts expect these constituencies to understand the issues relevant to e-discovery and fulfill their responsibilities," says Kahn. "If any of them isn't fulfilling their role, courts won't hesitate to impose at least monetary sanctions to send a message."
Two notable rulings related to adverse inference sanctions for failure to preserve relevant evidence are
Pension Comm. of Univ. of Montreal Pension Plan v. Banc of Am. Sec. (S.D.N.Y. 2010) and
Rimkus Consulting Group, Inc. v. Cammarata (S.D. Tex. 2010).
Read together, Pepper says the two cases provide a "roadmap of the current lay of the land" in terms of the application of adverse inference sanctions, an important tool in the courts' arsenal for addressing e-discovery misconduct.
In
Pension Committee, Judge Shira Scheindlin applied an adverse inference sanction upon showing only of gross negligence, while in
Rimkus, Judge Lee Rosenthal required a showing of willful misconduct.
Depending on the jurisdiction, Kahn says parties could face different levels of culpability for adverse inference sanctions to apply. He says it's a best practice for companies "to conform their conduct to the most stringent standard to make sure they're safe in any jurisdiction," since a number of courts haven't yet weighed in on what level of culpability would be required in imposing such a sanction.
One other notable first-half case is
Cherrington Asia Ltd. v. A&L Underground Inc., in which sanctions were imposed for failing to prepare a Rule 30(b)(6) witness to discuss the party's e-discovery collection efforts.
"The case is a recent reminder that ‘discovery about discovery,' while burdensome and potentially costly, is very much important to the strategy and litigation of a case and shouldn't be neglected," says Pepper.