More from the Courts on Self-Collection, Self-Collection Part 5

In an era of increased cost-consciousness, relying on self-collection can seem like an appealing savings, but it can also lead to dramatic downstream complications and costs

In “A Shortsighted Shortcut,” we discussed why getting collection right is so important.  In “Custodian Collection Risks,” we discussed the risks associated with custodian self-collection.  In “IT Collection Risks,” we discussed the risks of organization self-collection.  In “The Courts on Self-Collection,” we discussed two examples of what the courts have said and done about self-collection.  In this final Part, we review three more such examples. 

We’ve now seen in Leidig v. BuzzFeed and NDLON v. ICE that the risks and consequences of employing self-collection approaches are not merely hypothetical.  One self-collection failure resulted in evidence preclusion, and the other resulted in substantial additional discovery.  Let’s conclude our discussion of self-collection risks with a look at three more case examples.

What Else Have the Courts Said About Self-Collection?

• Peter Kiewit Sons’, Inc. v. Wall Street Equity Group, Inc., et al., Case No. 8:10CV365 (D. Neb. May 18, 2012)
  • In this case, the defendants were sanctioned for host of discovery failures, several of which were the result of relying on employees for management of ESI sources and for conducting the searches for relevant ESI, leading the court to conclude that the “Defendants’ search of their electronic files to provide discovery responses was woefully inadequate.” For example:

• • • “Defendants argue they had [] their most ‘computer literate’ employee, conduct a keyword search for ‘Kiewit’ from her work station and that search revealed no letters or communications with potential clients containing the term . . .”

• • • “. . . she is not a computer expert and has no formal training in computer sciences. Defendants have offered no evidence that they spoke with a forensic examiner or any other computer expert to even evaluate what the cost and burden of thoroughly searching Server 2.”

• • • “[Defendant employee] claims he knows nothing about computers, but admits he dumped Server 1 in the trash, after the discovery battles had erupted and with no notice to the Plaintiff or this court, upon concluding the motherboard was ‘fried.’”

• • • Defendants also “vehemently resisted and attempted to delay” a needed forensic examination after discovery issues started to be uncovered

Ultimately, the magistrate judge concluded that the search process employed by the defendants was not “a good faith search for the electronically stored information.”  As sanction, the court ordered the defendants to:

. . . pay for Plaintiff’s reasonable attorney’s fees and the expenses associated with Continuum’s forensic examination of Defendants’ computer equipment, and for filing and litigating the motion to compel and all other motions and hearings associated with retrieving and searching Defendants’ computer files.

Moreover, due to the other evidence of defendants’ “bad faith” discovery conduct, the magistrate judge recommended the application of a permissive adverse inference jury instruction.

• SunTrust Mortgage, Inc. v. AIG United Guaranty Corp., et al., Case No. 3:09cv529 (E.D. Va. Mar. 29, 2011)
  • In this case, the plaintiff relied upon an employee central to the underlying dispute to perform identification and collection of relevant materials, and that employee took the opportunity to alter several relevant documents to make them support her version of events.  In-house counsel and plaintiff executives initially discovered that the employee had materially altered two emails, but they chose not to properly investigate the employee’s other ESI for further alterations.  No forensics help or outside experts were hired, and after the plaintiff’s IT personnel encountered some technical difficulties while trying to work with an image of the employee’s hard drive, they simply gave up.  As a result, in-house and outside counsel later relied upon an email they did not know had been altered to support their amended complaint.  Defendants noticed a discrepancy between that version of the email and the version defendants possessed, and they enlisted an outside forensic expert who determined that the plaintiff’s version had been altered, which led to significant additional discovery being undertaken:

Subsequently, the Court allowed full discovery into the facts respecting the alteration of emails.  The trial on the merits was postponed.  That discovery consumed several months.  Briefing on the merits and of the sanctions issues was very extensive.  The Court conducted several hearing on related discovery issues.  And, there was a three-day evidentiary hearing.

. . .

The quantum of discovery time, briefing, exhibits, forensic examinations, and hearings bespeak the expenditure of hundreds of thousands of dollars (perhaps more) in legal fees and expenses.  [emphasis added]

Ultimately, additional altered emails were discovered, and the court found that the employee had perpetrated a fraud on the court for which the plaintiff was responsible.  The court also determined that “[t]he handling of the matter by [the plaintiff’s] in-house counsel and its management . . . constituted an abuse of the litigation process” and that “in-house counsel, as well as its senior management, were willfully blind.”  As sanction for the fraud and abuse, the plaintiff was ordered to pay defendant’s “very significant additional legal fees and expenses” that were incurred to “preserve[] the integrity of the judicial record.”

• Green v. Blitz U.S.A., Inc, Case No. 2:07-CV-372 (TJW) (E.D. Tex. Mar. 1, 2011)
  • In this case, the defendant’s discovery workflow involved a particular employee within the company meeting with counsel to find out what materials might be relevant and then talking to individuals or departments he thought might have such materials and asking them to provide him with those materials.  The employee “did not institute a litigation-hold of documents, do any electronic word searches for emails, or talk with the IT department regarding how to search for electronic documents” [emphasis added].  As a result, numerous relevant documents were missed and never produced – some of which could have been found with “shocking . . . ease” if appropriate IT or collection experts had been involved in the process.  On the basis of their significant, “willful” discovery failures, the court ordered the defendant to:

• • • “pay $250,000.00 in civil contempt sanctions to the plaintiff”

• • • “furnish a copy of this Memorandum Opinion Order to every Plaintiff in every lawsuit it has had proceeding against it, or is currently proceeding against it, for the past two years” (or pay an additional $500,000 sanction if they failed to do so)

• • • “for the next five years . . . in every new lawsuit it participates in as a party, whether plaintiff, defendant, or in another official capacity, it must file a copy of this Memorandum Opinion and Order with its first pleading or filing in that particular court”

For Assistance or More Information

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