Authored By: Michael Tucker Jr.

Citation: In re TMI Litig., 193 F.3d 613 (3d Cir. 1999)

Employee/Employer Implicated: Plaintiffs’ Counsel

e-Lesson Learned: Continuing non-compliance with expert discovery deadlines can result in the loss of a large and important part of your case. This is especially true when a court sets a drop deadline after a party has repeatedly taken advantage of its leniency.

Tweet This: Court Goes Nuclear on Deadline Desperados

This case arises out of the nuclear reactor accident that occurred at the Three-Mile Island Power Plant on March 28, 1979. This 3rd Circuit decision was rendered more than 20 years after the incident and after a complicated procedural history that included multiple filings by thousands of plaintiffs in both state and federal court. Congressional amendment of a statute finally allowed all of the cases to be consolidated in federal court. The main issue decided on appeal was the district court’s exclusion of expert testimony, based on the gatekeeping standards of Daubert, which restricted plaintiffs’ ability to show that they were exposed to radiation sufficient to cause injury. The other issue on appeal was the award of sanctions for violations of pre-trial discovery requirements and orders. As this is an eDiscovery blog, I will be addressing the discovery and sanctions issues rather than the voluminous and complex scientific matters that arose in this nearly 200 page decision.

Authored By: Jessica K. Rauskolb

Citation: F.T.C. v. First Universal Lending, LLC, 2011 WL 673879 (S.D.Fla.)

Employee/Employer Implicated: Outside Counsel, Miscellaneous

e-Lesson Learned: If you scrub the data off your computers, you can’t blame the other side for destruction of evidence. Your adversary does not have to make sure that you have information to establish your defense.

Tweet This: No Bad Faith? No sanctions. Especially not where the accused party never had control of the later scrubbed PCs

Don’t blame others for your mistakes! If you are given permission by a court appointed receiver to scrub relevant data off your computers to eventually sell them, you can’t blame the other side for spoliation of relevant data that you need to establish your defense - especially not if the other side never had control over the computers with the relevant data! You will not be able to succeed, just ask the defendants in F.T.C. v. First Universal Lending, LLC. In F.T.C. v. First Universal Lending, the F.T.C. investigated the defendants for their mortgage modification practices by alleging that defendants had violated the Federal Trade Commission Act and that defendants had acted in violation of the Telemarketing Sales Rule. For the duration of the investigation, the court appointed a temporary receiver who took control of defendants’ business premises.

Authored By: Michael Paragano

Citation: Cache La Poudre Feeds LLC v. Land O’Lakes, Inc., F.244 R.D. 614 (D. Colo. 2007)

Employee/Employer Implicated: Outside Counsel, Misc. Employee

e-Lesson Learned: The duty to preserve evidence is not necessarily dependent on the tender of a preservation letter, but the duty to preserve must be predicated on something more than just mere discontent.

Tweet This: Be Clear That You Are Suing, and The Other Side Will Have to Preserve!

The duty to preserve evidence is normally triggered by the filing of a lawsuit. However, the duty may arise even earlier when there is a mere “possibility” of a lawsuit. Problems arise because the legal system has grown more and more every day and lawsuits are always a “possibility”. Thus, courts have found that when there is an unequivocal notice of litigation, the party absolutely has a duty to preserve but there must be more than just a mere “possibility” of a lawsuit for the duty to be triggered. Courts will determine when that duty arises based on the facts of each individual case.

Authored By: M.J.R.

Citation: Jannx Medical Systems, Inc. v. Methodist Hospitals, Inc., 2010 WL 4789275 (N.D. Ind., Nov. 17, 2010)

Employee/Employer Implicated: Outside Counsel, In-house Counsel, Senior Management, information technology manager

e-Lesson Learned: Discoverable data must be produced in a reasonably usable form in which it is ordinarily maintained and not in a format more difficult for the requesting party to use in litigation.

Tweet This: Indiana Court hands down a harsh punishment for shady electronic discovery practices!

Not only was Jannx scolded by the District Court on three separate issues, they are now responsible for significant legal fees, and lost a motion to protect their own data. It’s safe to say the Indiana District Court was not impressed with the Jannx legal team. Basically, this case involves a dispute over pre-trial discovery motions between the plaintiff, Jannx Medical Systems and defendants, Methodist Hospital, Crothall Healthcare, Inc., and Propoco Professional Services. The Court issued an opinion and order on Defendant’s motion to get Jannx to comply with electronic discovery and Jannx’s motion to withhold electronic data from discovery by reason of trade secrets, etc.

Authored By: Michael Tucker Jr.

Citation: Orbit One Communs. V. Numerex Corp., 2010 U.S. Dist. LEXIS 123633 (S.D.N.Y. 2010)

Employee/Employer Implicated: Information Technology Administrator; Outside Counsel; Owner/Executive

e-Lesson Learned: Mere inadequacy of preservation efforts does not warrant sanctions unless it can be shown that discovery-relevant evidence has been lost. Despite that, it is better to adequately prepare for and execute a proper litigation hold than rely on dumb luck and coincidence to avoid sanctions.

Tweet This: Plaintiff not sanctioned for ESI preservation failures when comprehensive failures did not actually result in lost evidence.

In 2006, Numerex, a satellite communications company, began attempts to acquire Orbit One, which was owned by David Rosen, Scott Rosenzweig and Gary Naden. These negotiations resulted in an asset purchase agreement signed in July 2007, under whose terms Rosen, Rosenzweig, and Naden would continue on with Numerex, with Rosen becoming president of the new division. Around the same time Naden’s former company, Axxon initiated suit against Orbit One and Orbit’s attorneys ordered a litigation hold to ensure preservation of information relating to that controversy.

Authored By: Christopher Dize

Citation: Ahroner v. Israel Discount Bank of New York, etc., et al., 2010 N.Y. App. Div. LEXIS 9087 (Dec. 7, 2010).

Employee/Employer Implicated: Banks, Management, and Attorneys

e-Lesson Learned: Keep your eye on who’s doing what . . . you just might lose your hard drive.

Tweet This: NY Appellate Division Affirms Spoliation Sanctions

In 2002, bank employee Jacob Ahroner was not happy with his employer, Israel Discount Bank of New York. Consequently, in July 2003, he brought suit, alleging hostile work environment and discrimination based on race, age, and national origin. In November 2002, seven months prior to filing the action, however, Ahroner’s attorney wrote to the Bank. The letter informed the Bank that it was “placed on notice that [it] must undertake all efforts to preserve from spoliation all documents and other records relating to our client’s employment, as well as any unlawful conduct of [the Bank] or its employees. As you may be aware, spoliation gives rise to an inference and instruction that the missing documents would have proved the charging party’s case.” The Bank replied that it was aware of its obligations.

Authored By: Mallory Griffin

Citation: Dzung Chu v. Oracle Corp. (In re Oracle Corp. Secs. Litig.), 627 F.3d 376, 386 (9th Cir. Cal. 2010)

Employee/Employer Implicated: Upper Management

e-Lesson Learned: Failure to preserve electronic documents could lead a Judge to grant your adversary an adverse inference on what those missing documents may or may not have said.

Tweet This: “Do you want a jury making inferences about what your emails may or may not have said?”

“STOP PUTTING WORDS IN MY MOUTH” is something you might expect to be screamed during a typical fight on the Jersey Shore. However, if you are not careful complying with electronic discovery requests – you’re going to have a “Situation” in the form of a big fat SANCTION that leaves you saying, “but that’s not what my emails said.” What can no longer be seen, found, or read can’t hurt you – right? WRONG. Failing to preserve documents can easily come back to bite you in the ass. Be careful with the documents you have, but don’t be quick to cast aside those you claim are missing or destroyed.

Authored By: Eric Abes

Citation: Gallagher v. Crystal Bay Casino, LLC et al., 2010 U.S. Dist. LEXIS 124421 (D. Nev. Nov. 8, 2010)

Employee/Employer Implicated: Owners; Executives; Counsel

e-Lesson Learned: Failure to preserve evidence can be fatal, financially and judicially.

Tweet This: Whether a company keeps everything, or waits until a trigger to begin preservation, they should consult a lawyer to develop the proper plan for their company.

When I was a kid, every year at Hanukah, my mom had a one in one out policy for toys. If I got a new Transformer, I had to donate an old toy to Goodwill. It taught me two important lessons: always think of those less fortunate and try to keep the clutter in your home to a minimum. My fiancé cannot bear to part with anything. About five years ago she lost weight and went from a size 14 to a size 8. Today, half of her closet is filled with clothes that are 6 sizes too big for her. Which one would you rather have for a client?

Authored By: S.S.K.

Citation: Estate of Davis v. Spriggs, 2010 WL 4817348 (Delaware County Nov. 19, 2010)

Employee/Employer Implicated: Miscellaneous employees

e-Lesson Learned: Having an “Evidence Eliminator” program which destroys electronic data on a computer upon start-up can justify incidental deletion of evidence when your job involves sensitive information.

Tweet This: OH AppCt: It’s legal to destroy incriminating evidence on your computer! (Sometimes.)

Again with the scandalous sex tapes? Seriously? With all the publicity surrounding leaked sex tapes coupled with the prevalence and ease of digital communication, one cannot honestly believe such a tape will remain a well kept secret. You’ll receive no sympathy on this blog for your escapades, and you’ll receive no sympathy in the Ohio court system, either. In Davis v. Spriggs, Spriggs was suing her former husband (Davis) for posting pictures and video on an adult website after the divorce settlement, signed a few months prior, specifically prohibited such distribution. Spriggs discovered these pictures after logging into a members-only adult website which sent her enough email spam she just had to check it out. Whilst cruising the racy adult website she also discovered pictures of her ex’s new girlfriend.

Authored By: Jessica K. Rauskolb

Citation: Oxxford Info. Tech., Ltd. v Novantas LLC, 2010 NY Slip Op 8363 (N.Y. App. Div. 1st Dep

Employee/Employer Implicated: Outside counsel, In-house counsel

e-Lesson Learned: You have to pay for the deletion of inadvertently backed up business information that was obtained by you from the opposing side, according to a confidentiality stipulation. You cannot renegotiate the terms of a confidentiality agreement regarding your adversary’s business information.

Tweet This: You only get one shot – Think before you make a promise and then make sure you and your lawyers keep it, if not it could cost you!

You have to make sure everyone on your side keeps the promises you make! When you and your adversary enter into a confidentiality stipulation about the return or destruction of confidential business information you received as a result of a lawsuit, you have to make sure that you and your outside counsel fully comply with this agreement, even if it turns out to be more costly than you anticipated. This applies even to inadvertently backed-up information by your outside counsel, as it did to the Plaintiff in Oxxford Information Technology, Ltd. V. Novantas LLC.