Beginning with U.S. District Court Judge of the Southern District of New York Shira Scheindlin's landmark series of decisions in Zubulake, the specter of e-discovery sanctions seemed to hang like a cloud over civil litigation and civil litigators, threatening the unwary with an avalanche of draconian penalties for not understanding the technical and ever-expanding world of ESI.
The most recent sanctions cases, however, tell a different, although perhaps not surprising, story. As with traditional discovery, courts asked to impose sanctions look carefully at the facts and, absent fairly obvious and egregious misconduct, seem reluctant to impose sanctions for e-discovery misconduct. E-discovery obviously has required attorneys to become familiar with and competent to handle technical issues and to learn how to conduct a search of electronic media. But sanctions cases tend to relate to basic principles of discovery, not complex technical issues. Issue an appropriate litigation hold notice, make sure the key people are aware of it and make sure it is being followed and that documents are not being destroyed. These straightforward, almost routine, rules — which apply equally to traditional discovery — likely will protect lawyers and their clients against any onslaught of e-discovery-related sanctions. Indeed, most e-discovery sanctions seem to occur not because lawyers or their clients are unaware of technical advances in the world of e-discovery, but rather because e-discovery made available the proof that sanctions were appropriate — usually because a party failed to follow basic principles.
For instance, in Taylor v. Mitre, 2012 U.S. Dist. LEXIS 161318 (E.D.Va. Nov. 8, 2012), the U.S. District Court for the Eastern District of Virginia granted the defendant's motion for sanctions and dismissed the plaintiff's employment discrimination suit because the plaintiff destroyed documents. The plaintiff, Alan S. Taylor, a long-time employee of Mitre Corp., was a computer expert. He obtained counsel in anticipation of bringing his lawsuit in 2009 and was put on notice of his obligation to preserve documents. He filed an EEOC claim in November 2010, and filed his complaint in November 2011. Between filing the EEOC claim and the complaint, Taylor "'wiped' his work desktop computer, then 'took a sledgehammer to it' and disposed of it in the local landfill," according to the opinion. After the magistrate judge ordered Taylor to submit his current computer for inspection, he "ran a program called Evidence Eliminator" and another program called "CCleaner," each of which was intended to permanently erase electronic files. As the court rightly observed, "Mr. Taylor's conduct has been so egregious that it amounts to a forfeiture of his claim."
Similarly, in Day v. LSI, No. CIV 11-186-TUC-CKJ. (D.Ariz. Dec. 20, 2012), a plaintiff suing his former employer for wrongful termination and other torts accused his former employer of failing to preserve relevant documents. Defendant LSI's general counsel received notice of the claim and sent written instructions not to destroy documents to some custodians, but not all. Specifically, he failed to notify a key custodian who had been involved in the plaintiff's hiring and firing. When the key custodian was identified six months later, LSI was unable to produce his ESI. Further, an LSI employee gave testimony regarding the document gathering that was directly contrary to the general counsel's testimony. The employee testified that he had been instructed only to search "for specific emails and data," whereas the general counsel testified that he instructed the employee to search for "any and all data." Finally, the company had not even followed its own data retention policies with regard to certain relevant electronic documents. The court found that LSI's general counsel had a "culpable mind" and "acted willfully" in failing to ensure the retention of all documents, even after receiving notice of the litigation.
Both Taylor and Day represent misconduct, not mishandling of complicated ESI issues. Even accidental mishandling of ESI typically gives rise to sanctions only if the "accident" represents conduct that may fairly easily be identified as reckless or negligent. For instance, in Cytec Carbon Fibers LLC v. Hopkins, 2012 U.S. Dist. LEXIS 172249 (D.S.C. Dec. 5, 2012), a defendant claimed to have accidentally deleted text messages from his phone while trying to transfer them for production to his computer. Destruction of documents a litigant already has identified and promised to produce was likely sanctionable before the advent of e-discovery; if the copy machine "ate" the document because the user did not know how to use the machine, that likely would have been spoliation, as well. If anything, the court seemed to give the benefit of the doubt to the defendant, who stated in an affidavit that he had been told by Apple and Verizon that the texts were unrecoverable, but who invited the plaintiffs to try to recover the messages. The court found that the failed attempt to transfer the text messages "satisfies at least the required minimum level of culpability," but took into account the accidental nature of the destruction when determining the appropriate sanction. It refused to enter the default judgment requested by the plaintiffs, noting that they had access to other evidence to prove their case. The court agreed only to adopt an adverse inference instruction.
Thus, e-discovery sanctions cases are not so much about the increasingly technical and ever-expanding world of ESI, but rather the increasing ways that ESI may be used to prove spoliation of the most basic sort. So, for instance, in Scentsy v. B.R. Chase LLC, No. 1:11-cv-00249-BLW (D.Idaho Oct. 2, 2012), the court allowed depositions at the plaintiff's expense to determine whether the plaintiff's "clearly unacceptable" litigation hold and document retention policies actually caused any spoliation. There, plaintiff Scentsy's general counsel first failed to follow the basic rules of discovery. First, he failed to issue a written litigation hold. Rather, he "spoke to the individuals that would have information regarding [the lawsuit] and asked — requested that those documents not be deleted." Second, he failed to ensure the retention of relevant documents. Scentsy's document retention policy routinely deleted emails after six months. And its computer system allowed any user to delete his or her own documents, at the user's discretion and judgment. The general counsel did nothing to change these policies, even after receiving notice of the litigation.
It was evident to the court that allowing the six-month auto-delete to continue and issuing an inadequate verbal hold constituted the destruction of evidence necessary for a spoliation claim. It was not clear to the court, however, that relevant emails had been deleted. Because a complete forensic examination of Scentsy's computer system undisputedly would have been a lengthy and costly process, the court fashioned a remedy that made clear its displeasure with Scentsy's conduct: it required the plaintiff to pay attorney fees and costs for the defendant to depose appropriate individuals to determine whether relevant documents were destroyed. The court also warned that Scentsy's document retention and litigation hold practices were unacceptable and noted its assumption that each would improve.
In Anderson v. Otis Elevator, 2012 U.S.Dist. LEXIS (E.D.Mich. Nov. 13, 2012), the court taught that the new types of evidence available because of the ever-increasing world of ESI emphatically did not lessen the obligation of proving spoliation. There, a class of former employees claimed that a workforce reduction was discriminatory. The defendant elevator company argued that the reduction was because of a reduction in sales. When the defendant produced only three pages of relevant electronic financial/budget documents for the years requested and "not a single contemporaneous electronic mail message or any other communication" related to the decision to reduce the workforce, the plaintiffs sought an adverse inference, arguing that more documents and emails must have existed. The plaintiffs also complained that they were unable to extract metadata from Otis' employee evaluation spreadsheets. The Otis employee in charge of the spreadsheets did not know why the metadata was unavailable, but testified that he had a computer crash prior to the inception of the lawsuit, in which he lost a lot of information.
The court refused to impose any sanction, largely because the plaintiffs had not used any new technology to actually show spoliation had occurred. It found the plaintiffs' "unsupported 'belief' that there must be more" documents inadequate to support a spoliation claim because the plaintiffs had no proof that any documents were destroyed, that defendants had any obligation to preserve documents or that any documents were destroyed with a culpable mind. The court also faulted the plaintiffs for failing to provide any evidence showing that any metadata had been destroyed. Finally, the court was critical of the plaintiffs' failure to conduct any forensic exams of Otis' servers to even determine whether any emails or other electronic correspondence ever existed.
In short, the nightmare some imagined after Zubulake does not seem to be the reality — nor should it be. Litigators plainly need to understand the basics of e-discovery, how to search ESI and how to ensure that their clients are complying with e-discovery preservation and production obligations. But e-discovery's primary impact on sanctions seems to be that technology, for better or worse, is making the proof of the client's conduct — or misconduct — more and more accessible, not that it is creating new reasons to impose sanctions. The rules to avoid sanctions remain simple and largely the same as they always have been: issue a reasonably well-informed litigation hold notice at the beginning of a case to the appropriate people and ensure that the notice is followed.
Mathieu J. Shapiro founded and chairs the e-discovery practice group at Obermayer Rebmann Maxwell & Hippel. He is a partner in the firm's litigation department, works primarily on complex commercial litigation cases and is known for his strategic and results-oriented approach to litigation. He can be reached at firstname.lastname@example.org.
Mathieu J. Shapiro