Legal Operations

You Know It’s Bad When The Court Decision Has A Table Of Contents: Part Deux

In this follow-up for Legal Operations readers, we explore another e-discovery disaster.

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Every once in a while, a court decision involving e-discovery issues comes along that is particularly instructive. I wrote about a similar case here about 18 months ago. The outcome was not good then; if possible, this one is worse.

Striking are the common themes that run through cases like this. In fact, during my 20-plus years in e-discovery, it has been my experience that in every case in which e-discovery processes have gone off the rails, it is almost always in the early stages that counsel or the client make mistakes.

For the unenlightened, any time a litigation or investigation event is anticipated, is threatened, or actually commences, parties and their counsel have an obligation to preserve information, including electronically stored information (ESI) that may be relevant to the claims and defenses in the case. That’s the rule. And it’s pretty simple.

Why, then, do we continue to read about horrific circumstances in which the elemental failure to implement a legal hold jeopardizes what, by all accounts, is a legitimate suit (or countersuit, as the case may be)?

One theme I consistently see is a serious lack of technological maturity on the part of the client organization — usually a corporation. Another theme is a lack of experienced lawyers. And finally, cases in which a party has changed counsel also seem to be a common denominator in e-discovery fiascos.

In DR Distributors, LLC v. 21 Century Smoking, Inc., originally filed in 2012, two companies that sell electronic cigarettes brought suit and counterclaims alleging, among other things, trademark violations under the Lanham Act. The court’s decision is 256 pages long.

Like the Smalls decision 18 months ago, this decision was at times painful to read. Not because it was long but because it seems that everything that could go wrong did go wrong. In truth, though, most of the damage was entirely self-inflicted and could have been avoided.

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Much of the blame here is on the defendant because they had repeatedly told former defense counsel that all relevant ESI was on four computer hard drives and that they “had all the data,” which was false — and they knew it was false. The defendant here did nothing to educate counsel otherwise, even after it became apparent that defense counsel was under a distinct misunderstanding. In the end, the defendant failed to reasonably search for and produce ESI even after it had been instructed to do so by the court.

Former counsel for the defendant is not without blame, though. His errors were fundamental. And “because those fundamental errors occurred at the outset of the case, they permeated the entire case from then on,” the court wrote.

Defense counsel failed to understand his client’s ESI, failed to conduct custodian interviews, and failed to issue a written legal hold. In fact, the client here was left to perform the “self-collection of ESI without any instruction, monitoring, or documentation.”

In the end, the defendant failed to preserve and timely disclose relevant ESI. Relevant information was spoliated and even after the spoliation was discovered defendant lied about it and counsel failed to inform the court.

I’m not a lawyer, but I have been teaching lawyers and other legal professionals for more than 20 years that implementing a legal hold is one of the most significant actions a lawyer or client must take at the outset of case. I don’t know if they are not teaching this in law school or if the absence of the words legal hold in the federal rules are the problem. But the bottom line is everyone in the legal business should at this point know they need to preserve relevant information.

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It is not necessary to preserve all ESI when a suit is filed. But there are a few fundamental steps to take. For anyone who needs it, here is a quick checklist for what to do when a litigation event hits:

  1. Immediately identify who may possess relevant information and the systems on which it is stored;
  2. Interview the key people involved in the events leading to the litigation;
  3. Implement a legal hold to prevent the alteration or destruction of any relevant information;
  4. Suspend information disposition policies for any relevant information;
  5. Preserve or collect documents and ESI relevant to the matter.

Do these five things, and you won’t find your name in the table of contents of a long court decision.

Oh, and one more thing I’ve learned over the years: If the judge and his staff take the time to organize a court ruling with a table of contents, it’s usually a bad sign for one of the parties.

Mike Quartararo

Mike Quartararo is the President of the Association of Certified E-Discovery Specialists (ACEDS), a professional member association providing training and certification in e-discovery. He is also the author of the 2016 book Project Management in Electronic Discovery and a consultant providing e-discovery, project management and legal technology advisory and training services to law firms and Fortune 500 corporations across the globe. You can reach him via email at [email protected]. Follow him on Twitter @mikequartararo.

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