Court Enforces Strict Sanctions For Failing To Be Competent In ESI Obligations

Farrell Fritz, P.C.
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Historically, the legal profession has been reluctant to embrace technology and electronic discovery in the practice of law. Indeed, practitioners often still exchange discovery in paper format or ignore, altogether, medium, like text messages, that may be repositories of relevant information. A recent case — In DR Distributors, LLC v 21 Century Smoking, Inc. – is an example supporting the belief of judges “that too many attorneys pay too little heed to both the spirit and the letter of procedural rules addressing e-discovery.” This decision, which focuses on the basic duties and fundamentals of handling electronically stored information (“ESI”) during all stages of litigation, is a must read for litigators appearing in Federal courts.

Background:

In DR Distributors, LLC v 21 Century Smoking, Inc. is a trademark dispute involving electronic cigarettes branded under similar marks. In late 2012, Brent Duke (“Duke”), one of the defendants and the principal of defendant 21 Century Smoking (“21 Century” and with Duke “Defendants”) met with his attorneys to draft initial disclosures. During the meeting, Duke explained he used two email accounts (Yahoo! and GoDaddy) and chat applications for business and personal purposes.

Although Defendants’ attorneys purportedly advised Duke to preserve all potentially relevant emails from both of his accounts, they failed to issue a litigation hold or to instruct Duke to disable automated deletion features on the account that would auto-delete emails or chats. Further, Defendants’ attorneys were under the mistaken assumption that they could obtain all necessary emails from Defendants’ computer servers, when in reality, these “web-based emails and messages” were stored online.

Adding insult to injury, Defendants’ attorneys then allowed Duke to self-collect emails and communications relevant to the litigation. At no time did Defendants’ attorneys monitor or supervise the searches performed by Duke. And so, three years later, after the close of fact discovery and various allegations that Defendants withheld relevant communications, Defendants’ reengaged an ESI vendor, who found over 15,000 responsive documents that were never collected or produced. And, Defendants were unable to recover additionally potentially relevant emails because many had been deleted by the automated deletion feature that was never disabled.

Ultimately, Plaintiff filed a motion for sanctions based on Defendants’ failures and the failures of their former counsel to timely produce ESI and for spoliation of ESI. As part of its motion, Plaintiff requested a wide range of sanctions, including civil contempt and monetary sanctions.

The Court was deeply troubled that Defendants’ former counsel lacked the basic knowledge, training, and skills to handle properly ESI. Specifically, Judge Johnston detailed the myriad mistakes made by defense counsel including counsel’s: (1) argument that “because this is a trademark case, ESI was unimportant;” (2) failure to provide a litigation hold; and (3) allowing unsupervised self-collection of relevant documents by Duke. Notably, the Court was particularly annoyed with counsel’s attempt to shift blame to the ESI vendor for failing to properly identify and produce relevant emails and communications. According to the Court, it is a lawyer’s responsibility to have “a reasonable understanding of the[ir] client’s information systems” and that such “ understanding of the client’s information systems allows counsel to create a systematic process and plan for responding to discovery requests.”

In sum, the Court granted Plaintiff’s motion and imposed several sanctions including pursuant to Rule 26(g) and 37 of the Federal Rules of Civil Procedure, monetary sanctions, and required Defendants’ former counsel to attend “at least eight hours of continuing legal education.(CLE) on ESI.”

Conclusion:

As noted by Judge Johnson, “[i]t is no longer amateur hour. It is way too late in the day for lawyers to expect to catch a break on e-discovery compliance because it is technically complex and resource-demanding.” And so, let this case serve as an important reminder to all lawyers of their obligation to be competent in ESI or to engage an attorney who is.

Thank you to second year associate, James Maguire in the Firm’s Uniondale office, for his research assistance related to today’s blog.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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