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An Introduction to e-Discovery - Sanctions Await the Nonchalant

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An Introduction to e-Discovery - Sanctions Await the Nonchalant

e-Discovery has exploded onto the scene of commercial litigation. From its rudimentary beginnings around the start of the 21st Century, it has now become a major component of such litigation. Some have even dubbed it “The Tail that Wags the Dog in Complex Commercial Litigation.” In this Introduction to e-Discovery, attorneys learn e-Discovery from both the vendor’s and the litigator’s perspective. Participants will analyze several cases in which courts have admonished, sanctioned, or ruled harshly against attorneys who have been nonchalant about preserving, collecting, reviewing, or producing e-Discovery.


Ken Kula
Senior Counsel
Buether Joe & Counselors, LLC.


Ken Kula: Welcome to an introduction to e-Discovery. Sanctions await the nonchalant, by Quimbee. My name is Ken Kula. Merriam-Webster’s online dictionary defines nonchalant as having an air of easy, unconcerned, or indifference. This can be found at www.merriamwebster.com. The synonyms it provides include; apathetic, casual, complacent, disinterested, indifferent, unconcerned, and uninterested. I dare say, in this internet-based age, and with all the electronically stored information, or ESI that proliferates law firms and cases, if an attorney is any of those things, he or she is inviting a reprimand from the managing partner, or worse yet, sanctions from the court. This presentation strives to ensure all participants gain a general understanding of both the commercial, and legal aspects of e-Discovery, that may affect attorneys or their law firms.

  To do so, the presentation includes a number of course materials, including today's slides complete with detailed presenter notes, current articles on e-Discovery, and six cases that address e-Discovery, and the possible sanctions that may be imposed if the attorney is nonchalant when it comes to it. You may follow along with those slides, or simply sit back, and enjoy our presentation on an introduction to e-Discovery. In the end, it will provide you with a unique overview on e-Discovery, including an analysis of cases, that address areas that are rarely discussed in other CLE programs.

  The cases and there are specific topics that will be discussed are the following, one, QBE insurance Corp versus Jorda Enterprises Inc., 277 F.R.D 676, out of the Southern District of Florida, January 30th, 2012. It discusses the need to prepare 30V6 designees on e-Discovery topics. The second case we'll be talking about, is Measured Wealth Private Client Group, LLC versus Foster. It's a Westlaw case number 20-CV 80148. It's a "slip" opinion out of the Southern District of Florida, dated March 31, 2021. It discusses a court's ability to order e-Discovery, in the form of a forensic examination of a cell phone.

  The third case is Traverse v. Gutierrez Company, another "slip" opinion, Case Number 18-CV 10175, 2020 Westlaw 96001830, out of the District of Massachusetts, June 26th, 2020. This case explains when the duty to preserve, and collect e-Discovery, or ESI begins. The fourth case we'll discuss, is Crosmun v. Trustees of Fayetteville Technical Community College, found at 832 S.E.2d 223, North Carolina Court of Appeals case, decided August 6th, 2019. It discusses the preservation of the attorney-client privilege, even when e-Discovery is required and expensive. The fifth case that we'll talk about, is Charleston Capital Advisors, LLC v. Aciro Junction Inc., 337 Federal Rules Decision 47 out of the Southern District of New York, decided September 30th, 2020. And it discusses the axiomatic importance of email in e-Discovery.

  And finally, we'll talk about DR Distributors, LLC, which can be found at Westlaw 2021, 185082. It's a Northern District of Illinois case, dated January 19th, 2021, and it discusses the potential devastating effect when an attorney does not take reasonable care to preserve, and collect e-Discovery, and instead leaves the client in charge of a self-help e-Discovery process. With that basic summary of what we're going to cover, let's get started with an introduction to e-Discovery, and see why sanctions await the nonchalant. Let's first talk about a brief review of the commercial availability, and the legal importance of e-Discovery. We'll talk about the future of e-Discovery, according to the commercial world. One entity, KMWorld, has more than 25 years of "market coverage experience," serving both technology professionals, and executive management. This can be found at kmworld.com/about us.

  The company goes on to state on its website, "KMWorld, guides more than 50,000 IT, and business professionals at organizations across North America, involved in the evaluation, recommendation, and purchase of enterprise technology products, and services." Consequently, it should know a thing or two about the future of e-Discovery in the legal community. According to KMWorld's article entitled, "Where e-Discovery is Headed in 2021 and Beyond, e-Discovery has undergone a rapid transition in recent years, and they expect growth in this area to continue in the coming year. Both in predictable ways, and in ways we can't yet imagine." KMWorlds overall assessment, is as informative as it is ominous. In particular, the article states, "Analytics once used towards the end of the e-Discovery workflow, is now a regular part of data identification, analysis and document review. For this approach to be most effective data from all possible sources needs to be gathered as early as practical, so that it can be analyzed as a whole.

  The end result of all of this is, that we don't spend months gradually finding where the most relevant data is, we get everything we need at the outset. The relevant and irrelevant and use technology to weed out the detritus in a precise way." Now let's talk about the importance of e-Discovery according to vendors in the legal world. One vendor that focuses on "Comprehensive litigation support," is OnlineLabs/OnlineSecurity. This particular vendor touts its experience and expertise in, "ESI consulting, IT investigations, expert witness testimony, computer forensics, and evidence harvesting." With particular respect to network forensics, the company states the following, "Massive amounts of network data become critical evidence in a case. OnlineSecurity secures this evidence in the form of log files, audit trails, and system parameters. For example, OnlineSecurity recovers evidence from backup systems, and access logs, in order to determine when information was used, if a competitor accessed proprietary information, or whether an email was received." Please look at exhibit A, which has been provided for you for more information on that topic.


  Similarly, with respect to "expert witness testimony," OnlineLabs/OnlineSecurity states that it can provide the experience and expertise, to ensure that valuable evidence is not lost. In particular, the company states, "OnlineSecurity's experts will attest to the veracity, and authenticity of your evidence, to ensure its admissibility in court. Our experts have extensive trial experience testifying on behalf of both plaintiffs and defendants, in State and Federal court. For over a decade, OnlineSecurity has helped clients succeed in civil litigation, OnlineSecurity has uncovered key evidence for its clients, and our experts' testimony has swayed decisions, leveraged better settlements, and provided cause for dismissal."

  You can review more information about expert testimony from OnlineLabs/OnlineSecurity in exhibit B, which has been provided for you. Now, when it comes to the intriguingly entitled, "evidence harvesting", OnlineLabs/OnlineSecurity has the following extremely informative representations, "OnlineSecurity will harvest, and securely preserve all necessary evidence, utilizing forensic software and protocols. All harvested evidence is securely stored for 12 months. In the event any data must be presented in court, OnlineSecurity will testify to the authenticity, integrity, and admissibility of the evidence collected. OnlineSecurity uses court accepted forensic protocols when creating evidentiary copies of information for discovery."

  You can review more information about the services that OnlineSecurity provides, with regards to evidence harvesting in exhibit C, of the presentation. Ultimately, this presentation cannot say it any better than OnlineLabs said it itself. "Electronically stored information, ESI is critical to a legal matter, and can complicate the discovery process. Successful electronic discovery requires attorneys to be familiar with the complexities and nuances of computers, networks, and other electronic systems. OnlineSecurity provides attorneys with a full-service ESI consulting program, designed to help shape electronic discovery requests, and develop successful electronic discovery plans. Our clients capitalize on our experts' knowledge of the evolving rules pertaining to document preservation, collection and production, and extensive experience addressing difficult electronic discovery issues."

  You can find more information about OnlineLabs/OnlineSecurity, and this aspect of its services in exhibit D, of this presentation. Now, enough about OnlineLabs/OnlineSecurity, and the other vendor, for this is not an advertisement for those particular services. Instead, we're going to now turn our attention to an analysis of Federal and State cases, addressing e-Discovery, and sanctions when e-Discovery is not taken seriously. This will be the remainder of the presentation, going over the six cases that I identified early on. The first one, is QBE Insurance Corp v. Jorda enterprises, Inc. Again, it is found at 277 Federal Rules Decision 676, and comes out of the Southern District of Florida, and was decided on January 30th, 2012. We talk about this case to make sure you prepare your 30(b)(6) designee on ESI topics. So, with that, let us now turn to QBE Insurance Corp v. Jorda Insurance.

  As I indicated, this came out of the Southern District of Florida, the Miami Division back in 2012. And in this case, the insurer brought subrogation action, and there was a plumbing subcontractor who moved for discovery sanctions, when the insurer failed to provide adequate corporate representative as a witness for the deposition. This went to the magistrate, and the magistrate held that the insurer would be prohibited from taking position at trial, including introduction of testimony, and exhibits on issues for which its corporate witness designee did not provide testimony. The magistrate also assessed costs and attorney fees as a sanction. In this particular case, the insurer actually was not at fault as the insured. This is because the insured, the plumbing company, was not cooperating with the insurer, and that caused problems for the insurance company. The particular facts of the case are the following.

  The insurer insured a plumbing company. And the issue that was before the court, was what consequences should flow from a plaintiff insurance company's failure to designate a witness, to bind the corporation under federal rule 30(b)(6)? The reason that the issues came to light, were because the designee lack knowledge of several topics listed in the corporate deposition notice, because it is pursuing a subrogation claim assigned to it by its insured, and the insured failed to cooperate. Second, it had no material of its own, being the insurer, to review for certain topics, and had no employees, or agents with the requisite knowledge. Third, the insurer, could not prepare a designee on certain topics, because the insured, as I had said, refused to cooperate with the insurer, even though it received payments, and was under a contractual obligation to cooperate. And finally, to add insult to injury, all of these things happened when the discovery deadline had expired.

  So, the question, is what happens if a party fails to adequately prepare its own designee, who does not review all available materials, and the sole designee proclaimed, that he is not being produced to provide testimony on some of the topics listed in the notice? Well, plaintiff QBE Insurance Company, which was pursuing the subrogation claim against Jorda Enterprises, a plumbing subcontractor, after it had paid more than $3 million on water damages, claimed that the insured had not cooperated, and was embroiled in those scenarios that I outlined above. The court reviewed the situation, and its first question was the first scenario with regard to whether sanctions weren't appropriate.

  The court stated that because the discovery deadline had expired, because QBE did not fulfill its obligation to properly prepare its own designee, and because QBE waited until the corporate representative deposition began to give notice to its designees’ partial inadequacy, and because it's designee could not, but did not review substantial more material in order to be more responsive witness, QBE's requested sanction would be imposed. Specifically, the court held that QBE would be precluded from offering any testimony at trial on the subjects which its designee was unable, or unwilling to testify about at the 30(b)(6) deposition.

  This included information that was readily attainable from ESI, or electronically stored information. The company would not be allowed to put on testimony about particular emails, the company would not be able to put on particular testimony about the documents, and the company would not be able to use particular emails, or particular documents. All of this because the company did not adequately prepare it's 30(b)(6) designee. Now the court went on to state, that because this was the subrogation case, QBE not directly familiar with many of the underlying facts, and was relying on its insurer to consent, to be the corporate representative designee for many of the issues listed in the 30(b)(6) corporate deposition notice. The court recognized this fact, but ultimately it did not matter.


  The insurer had a duty to be adequately prepared, for the 30(b)(6) topic that were designated in the notice, and the insurer did not adequately prepare. The result, was that QBE was precluded from introducing any testimony at trial on the subjects which had hoped its insured would have testified about, had it agreed to send a representative to the corporate representative deposition. And as I indicated, this had long ranging ramifications, because the insured, and the company would not be able to put on any testimony about any of the information that was contained, within either the e-Discovery in the form of emails, or the e-Discovery in the form of e-documents.

  So the underlying message of this case, is to make sure you prepare your 30(b)(6) designee on ESI topics, because otherwise those topics may be off limits at trial, and you will not be able to discuss emails, you'll not be able to discuss e-documents, you will not be able to discuss Excel spreadsheets, or any other types of documents that would have been prepared as electronically stored information, if your 30(b)(6) designee is not prepared to discuss those things. The next case that we're going to talk about, is Measured Wealth Private Client Group, LLC v. Foster. This is another Southern District of Florida case, and it was decided March 31st, 2021. And we talk about this case, because the message is no vessel for ESI is outside the power or authority of the court. So, if we now turn to the Measured Wealth Private Client case, we will see that, as I indicated, it's a 2021 case. It can be found at 2021 Westlaw 1215218.

  And in this case, the discovery issue was brought to the court based upon a motion to compel forensic examination. And the magistrate was given the issue, of whether a motion to compel a forensic examination of a mobile phone was warranted. The court reviewed the instances and the facts of the case, and decided it was. The case states a discovery issue that was before the court, is whether plaintiff could be permitted to conduct a forensic examination of the defendant's mobile phone, to recover certain text messages, and i-messages for a whole year period of January 1st, to December 31st, 2019. The defendant asserted that the temporal scope was too broad, and that it would encompass private and personal emails, or voicemails, i-messages, and text messages. And indicated that it was a mere fishing expedition to obtain his personal and private information. The court made the following findings; First, the court found that plaintiff had properly propounded written discovery requests, seeking certain text messages and I-messages for the time period at issue.

  Namely, January 1st to December 31st, 2019. Second, the court found that i-messages were responsive, they were relevant, and they were proportional to the needs of the case, based upon the recent amendment to the Federal Rules. The court then went on and said that it is quite important that the same phone, is currently in defendant's possession that the defendant had during that 2019 time period. And the court wanted to put an end to the discovery dispute and finds that a forensics examination with necessary safeguards to protect defendant's privacy, "Is the best way to accomplish that task." The court went on to find, that defendant had been obstructionistic, and the court wanted to ensure that all relevant and proportional discovery was produced in the case. Fifth, the court found that it was not a fishing expedition that the plaintiff was trying to engage in, but it was seeking relevant, responsive, and proportional discovery. And the court wanted to ensure that the plaintiff had all the information that it needed at its disposal to try the case.

  And so, the court found that an expert should be utilized to obtain a mirror image of the acquired data from the cell phone, and then run search terms on that mirror image. The court allowed defendants counsel to review the search results provided by the independent expert and identify all documents to which the defendant objected to disclosing to the plaintiff. And then, if the defendant was in doubt whether or not certain messages should be produced, the court said that she could seek leave to submit those documents to the court for in-camera review. But ultimately, the court decided that the e-Discovery, or ESI on the cell phone for an entire year period, would be captured and obtained by the other side, using a forensic examination expert.

  Consequently, no vessel for ESI is outside the power, or the authority of the court. The next case that we'll be discussing, is Traverse v. Gutierrez Company. It is case number 18-CV-10175. It's a "slip" opinion case. It can be found at Westlaw 2020 9601830. It comes out of the District of Massachusetts and was decided on June 26th, 2020. The reason that we're looking at the case, is because it provides the underlying guidance to start the ESI preservation, collection, and assessment process early. So, let's now turn to Traverse v. Gutierrez Company. As I indicated, this came out of the Federal District of Massachusetts, back in June 2020.

  And the issue that was before the court, was defendant's request for sanctions. The magistrate discussed the facts before him and indicated that the defendants were seeking sanctions for the plaintiff's alleged violation of the court's earlier order, and for their alleged failure to preserve, collect, and produce relevant documents. Now, the magistrate granted in part, and denied in part, the defendants request. The issue stemmed from the fact that plaintiffs were to file affidavits, setting forth in detail the specific steps, including the dates that they were taken, in this case to preserve, search for, and produce discoverable, both electronic, and paper documents. The fact of the matter is that the examination, and preservation began way, way too late.

  The defendants allege, that additional discovery that was ordered in 2020, had shown that the plaintiff's representation to the court earlier regarding the nature and circumstances of the modifications made to Ms. Demara's spreadsheets following an order that was entered by the court earlier were false. And that defendants alleged that plaintiffs failed to preserve relevant documents, prior to, and during the litigation at issue. And the defendant further alleged, that the plaintiff's document collection efforts were deficient with all responsibility for location, and producing relevant documents abdicated to the Ms. Demara, and given up by the attorneys.

  Therefore the defendants requested, that the court order that the defendants be allowed to retain at the plaintiff's expense a computer forensic expert, to inspect and image Ms. Travers' computers, order plaintiff's e-Discovery vendor, which was TransPerfect Legal Solution, to submit an affidavit identifying the specific steps, including the dates that it took to conduct its search, and extraction of plaintiffs, and Ms. Demara's email accounts, including the number of unique documents captured in the search, and order plaintiff's counsel to conduct a thorough search for all responsive, hard copy documents in plaintiffs, and their agents possession, custody, and control, and submit an affidavit verifying compliance with that.

  It also asked the court to award defendants their costs and fees associated with the filing of defendant's motion for sanctions, including the supplemental briefing in the motion to compel Ms. Damara's spreadsheets that were at issue. Well, the court undertook its analysis, and indicated that defendants have not shown that the plaintiff's representations, regarding the last modified dates on Ms. Damaris spreadsheets were false. Consequently, the court indicated that, "I do not read it as supporting defendant's position in this respect. She did not testify that she prepared the spreadsheets for production on a single day in late January 2020. Rather, she appears to have testified, that she worked on the production on various dates in December 2019 and January 2020 but copied the files for production in a single day in late January 2020."

  So consequently, the plaintiffs prevailed on that first issue, because the defendants had not shown that the plaintiff's representations regarding the last modified dates on Ms. Demara's spreadsheets were false. Obviously, the last modified dates, were determined by the ESI that was produced in the case. The court then went on to discuss plaintiff's document collection efforts and found that they were indeed deficient. The court stated that, "Astonishingly, plaintiffs now suggests that they did not in fact reasonably anticipate litigation in the fall of 2015, after repeatedly arguing to the court that the work performed by their experts in late 2015, and early 2016 was done in, "Anticipation of litigation," and therefore protected by the work-product doctrine." Obviously, once you lose favor with the court, and your credibility is attacked and diminished, you will find probably very little resources from the court. or recourse from the court.

  The court went on, based upon that false statement to the court to state, "I see no reason, and plaintiffs have not proposed any, why the phrase, anticipation litigation, should be defined differently depending on whether it is used in the context of work-product, or the duty to preserve documents." The court pointed out, that once you determine that litigation is imminent, then you have a duty to start protecting and preserving documents. The court went on to state, "While it is not clear whether relevant documents were destroyed or lost, plaintiff's misguided decision that only financial records received from the defendants would be relevant to this litigation, affected the collection of relevant and responsive documents. As shown by a particular affidavit, plaintiffs never searched for responsive documents outside the documents provided to plaintiff." That was one of the deficient methods of document collection, preservation, and production that the court found in this case.

  The court went on to state, that even if there are questions about the competency and collection of the documents at issue, "Such questions, however, do not warrant the intrusion entailed by a forensic examination of Ms. Traverse's computer at this time, therefore I deny that request. However, I will allow the defendants remaining request for sanctions." Consequently, the court found that even though there was a poor and improper, and deficient document collection, preservation, and production in this particular case, it was not going to simply order that all documents be collected from the party's computer, and simply turned over to the other side.

  That would have been an abusive discretion on the courts to decide. But the bottom-line point of this case, is to start the ESI preservation, collection, and assessment process early, make sure you have adequate protocols in place, make sure you collect documents throughout the possible relevancy area, make sure that those documents are reviewed, and make sure they are produced. We next are going to talk about a case that still makes sure that the attorney-client privilege is held sacrosanct. This is Crosmun spelled C-R-O-S-M-U-N, versus Trustees of Fayetteville Technical Community College. It can be found at eight 32nd S.E.2d 223. It is a North Carolina Court of Appeals case, that was decided August 6th, 2019. So, let's turn to the Crosmun case, and briefly discuss it. As I indicated, this is a decision that came out of the Court of Appeals of North Carolina, in 2019.

  And here we're talking about former employees, who brought action a broad action against an employer, which was a community college, for retaliatory dismissals as violation of the North Carolina Whistleblower Protection Act. The employees moved to compelled discovery, alleging spoliation of electronic evidence. The court ordered forensic computer examination of the employer's servers, without specifying the examiner or method of examination. That was appealed to the Court of Appeals, and the Court of Appeals held that provisions of the discovery order, allowing the employees' expert to conduct forensic examination of all data in employer's computer systems, violated employer's attorney-client, and work-product privileges. And the court further held, that privileged screen provisions of the e-Discovery order were inadequate to protect the employers in attorney-client and work-product privileges.

  So, even in this day and age, when e-Discovery is apparently very broad, the court has still concluded that the attorney-client privilege needs to be kept alive, and that it is very important that any examination of the computer systems, the computers, the servers, anything with regards to the ESI, still has to be done in a way that makes sure that a party's attorney-client privilege, and work-product protections are kept intact. So, let's talk a little bit about this case. It pointed out, rightfully so, that 99% of all information being generated today, is created, and is stored electronically. That is a phenomenal statistic that needs to be repeated. 99% of all information being generated today, is created, and stored electronically.

  That is one of the reasons why litigation has exploded with regards to time and costs, because all of that information stored electronically needs to be captured and reviewed. Now, with regards to this particular case, the defendants were appealing from an order compelling discovery, that allowed the plaintiff's discovery expert access to the Fayetteville Technical Community College's entire computer system, prior to any opportunity for defendants to review and withhold documents that contained privileged information, or otherwise were immune from discovery under the work-product protection. The court held, that the trial court abused its discretion, by compelling production through a protocol that provided the plaintiff's agent with direct access to potentially privileged information and precluded reasonable efforts by the defendants to avoid waiving any of privilege that it may have. Consequently, we're looking at a blanket order from the District Court that said that the college's entire computer system, all the servers, all the computers, all the information, and again, 99% of all information is stored electronically.

  So, the keys to the kingdom were basically being handed over to the other side's computer forensic expert, or ESI expert, and they were to capture all the information, and without giving the other side a chance to review it, and to pull out anything that it believed was attorney-client privilege, or protected under the attorney-work-product doctrine. All that information was supposed to be turned over, to the person that hired the computer forensic examination expert. That's what the District Court ordered. The Court of Appeals reviewed that, and said, "No, that is much too expansive, you are abusing your discretion by not trying to install protocols and safeguards that will protect the party's attorney-client privilege, and work-product protections, and that is improper." That is a very important case, and it needs to be remembered, because nowadays courts appear to be taking a pretty much carte blanche approach to discovery.

  Pretty much anything that is being asked for is being provided. I've run into a number of courts where, as long as something is responsive to the discovery requests, it needs to be produced without any real attention to whether it has relevance to any of the claims or defenses in the case. It has become not relevance that is the guiding force, but responsiveness. In this case, at least the attorney-client privilege, and the work-product protection were still kept in the minds of the court, and the North Carolina Court of Appeals was able to send the case back and indicate that the lower court had abused its discretion. Now, let's talk about the next case, which is Charlestown Capital Advisors, LLC versus Acero Junction, Inc. This can be found at 337 Federal Rules Decision 47. It's a District Court case that came out of the Southern District of New York, in September 30th, 2020. We're going to review it, because the underlying message of this case is to never underestimate the importance of email. So, with that, let's turn to the Charleston Capital Advisor, LLC case, out of the Southern District of New York.

  And here we're talking about a private equity firm, that brought an action against a company that operated a steel mill and its affiliates, for the breach of a merger and acquisition agreement, allegedly signed by the company's co-president. And the equity firm moved for spoliation sanctions against the defendants. So, this document that supposedly was signed was not surprisingly, probably one of the 99% of all information that was kept electronically, and since we're talking about a spoliation issue, I don't guess that it was not kept in the ordinary course of business in an appropriate way. Now, the magistrate reviewed this case, and held that the defendants had a duty to preserve the co-president's emails, that's not surprising. The magistrate held, that the defendants and their counsel failed to take reasonable steps to preserve the co-president's emails, and the magistrate held that the defendant's efforts to restore deleted emails of their co-president were untimely and inadequate.

  And the magistrate held that the firm, was prejudiced by the loss of the co-president's email account, and the magistrate held that the firm was not entitled to imposition of particularly harsh spoliation sanctions, which would be default. But it did award the firm's expenses that was warranted, and lastly the magistrate held that the court would preclude defendants from arguing or presenting evidence to show that the co-president did not receive, or send emails that were spoliated, and would allow the firm to present evidence regarding loss of the co-president's emails. So once again, we're seeing where the court is taking action by preventing certain evidence from being brought to trial, based upon the fact that it wasn't preserved during the e-discovery process. And in this particular case, it was obviously a very important bit of evidence, because the facts of this case indicate that the president received an email, and supposedly signed a document through email.

  Again, this was decided by a magistrate judge, Barbara Moses, and it was Charleston that seek spoliation sanctions, pursuant to Federal Rule of Civil Procedure 37E, against the defendants, Acero Junction. And they wanted the sanctions to include the entry of default judgment against the other side, as a penalty for the failure to preserve the business email account of their co-president and director. The evidence submitted in support of, and an opposition to the sanctioned motion, which actually showed that the Acero defendants and their litigation counsel made significant missteps.

  In particular, at the outset of the action back in 2018, they failed to institute an effective litigation hold, or otherwise take adequate steps to preserve, or to search electronically stored information relative to the action, including the individual's business email account. And then a year later, a mid-level human resources person deleted the entire account that was at issue, as part of a "Wholesale" deletion of former employee emails. To make matters worse, the most relevant emails, which had been identified through the use of basic search terms, and segregated for councils’ future review, also disappeared. So, there were a lot of ESI that was either not collected, or worse yet, that was collected and then destroyed, or not preserved.

  The court obviously found this very disconcerting. So, the court did say, "It is unclear on the record before the court, whether the missing emails were never recovered from the laptop, or alternatively, whether they were intentionally withheld from production as a result of the defendant's (d) duplication procedure." The court went on to state, that their counsel who was responsible for that procedure, was unable to answer the questions definitively at oral argument, that's never a good sign, but the court held it is clear that after deleting the original email account, and losing the segregated emails, and after finding, searching, and producing emails from whatever email data remained on the individual's laptop two years after the crucial communications took place, the defendants still failed to produce all of the discoverable ESI, "Thereby prejudicing plaintiff's ability to present its case at trial." That is a killer finding by the court. Once you find destruction, or spoliation, or lack of production of documents, and you find prejudice, that is not a good sign.

  So, the court went on to state that, "Consequently, the court will impose monetary sanctions on the defendants sufficient to deter them from further misconduct, and compensate Charleston, for its attorney's fees, and other expenses incurred in obtaining documents and information that should have been provided many months earlier, and in litigating the incident sanction motion. In addition, defendants will be," and we've discussed this already, this is a sanction that is being imposed more, and more by the courts. Defendants will be, "Precluded from arguing, or offering testimony, or other evidence designed to show that [CAPOR 00:55:07] did not send or receive emails that had been produced by other parties, and that show any of CAPOR's known email addresses as the sender or recipient.

  Again, let me emphasize that the sanction the court is imposing based upon the failure to adequately preserve, collect, and produce ESI is that "Defendants will be precluded from arguing, or offering testimony, or other evidence designed to show that this individual did not send, or receive emails that have been produced by other parties, and that show any of CAPOR's known email addresses as a sender or recipient.

  The court went on to say, that they may even seek an appropriate jury instruction, the wording of which will be at the discretion of the trial judge, of course, allowing the jury to, "Consider that loss of that evidence, and the circumstances of its loss in evaluating witness credibility." Again, a potentially devastating sanction imposed by the court. When the court turns to the jury, and indicates that various testimony cannot be presented, and various testimony would have been presented except for the fact that these emails were destroyed or lost, and that that fact can be used to assess the credibility of the witness, that could be devastating. Now, let's look at the last case that we have in our remaining minutes. In this case, is DR Distributors, LLC versus 21 Century Smoking Inc.

  A Northern District of Illinois case, decided in 2021, and it's being reviewed to emphasize the fact that, he who abdicates responsibility for ESI, may suffer the wrath of the court. A very ominous title, and as you will see, the facts and the holdings of the case warrant it. So, let's turn to DR Distributors, LLC versus 21 Century Smoking, and here we only have a few minutes to go over it, but here we had a trademark owner who brought an action under the Lanham Act against an alleged infringer and its owner. The defendants asserted counterclaims, including for cancellation of the trademark owner's registration of its trademarks. The District Court granted in part and denied in part, the defense motion for partial summary judgment on registration, cancellation, counterclaim, finding that the tribal issue persisted as to the trademark owner's defense of unclean hands.

  This is the more important part however, the District Court granted in part and denied in part trademark owner's motion to compel discovery. The trademark owner moved for sanctions against defendants and their counsel based upon, among other things, alleged, you guessed it, spoliation of and failure to timely produce electronically stored information, seeking among other things, default and dismissal of counterclaims. Everyone wants the default. Everyone wants an easy win. The court granted the defense counsel's motion to withdraw, stating that he basically screwed up, and the client wasn't listening to him. So, just to go over quickly, the District Court's holdings held that the former defense counsel failed to take reasonable steps to preserve ESI, held that defendant self-collection of ESI was insufficient to satisfy its and counsel's duty to identify, and collect ESI.

  The District Court went on to hold that the owner of the alleged infringer violated duties of candor, honesty, and good faith discovery conduct, held that defendants and former counsel failed to conduct reasonable investigation in connection with disclosures and discovery responses, held that there was a failure to comply with the order compelling production of ESI, warranted imposition of sanctions. District Court held that there was a failure to timely disclose ESI, which warranted sanctions for violation of rule governing initial and supplemental disclosures, and the court held that there was spoliation of ESI, which caused prejudice of the trademark owner warranting curative measures. Again, I will leave you to read this case, it is an extensive case. I believe it's over 100 pages long, and as you can see from the holdings, there is a ton, a ton of bad conduct, which resulted in the harsh sanctions that were handed down by the District Court.

  This concludes our hour-long overview on, "An introduction to e-Discovery," from Quimbee. I hope it has provided you with the background you'll need to perform your role as an attorney before the courts when protecting possibly, your client's most treasured assets. I hope it has also provided you with some insights into e-Discovery, and its role in the law that you may not otherwise get. If you take nothing else away from this presentation, please take away the fact that you are not to be nonchalant when it comes to the preservation, collection, and production of ESI, which amounts to 99% of all information out there. Thank you very much. Feel free to email me if you have any questions, or concerns. Thank you.

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1h 1m 44s

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