E-Discovery Update: Lessons From An E-Discovery Disaster

Litigators are irresistibly drawn to watching legal train wrecks. Scanning a freshly-issued opinion to find the facts leading to sanctions or default judgment almost always makes you feel better about your own troublesome clients — and makes you thankful that you have, thus far, avoided traveling down a similar path to punishment. Opinions castigating “bad” litigants can be as entertaining as a novelist’s latest legal thriller. And sometimes, too, they provide valuable reminders in how (not) to construct a case.

The recent case of Southern New England Telephone Company (“SNET”) v. Global NAPS, Inc., 2008 WL 2568567 (D.Conn. June 23, 2008), is a classic demonstration of how stonewalling and committing perjury, especially with respect to electronic discovery matters that can be independently validated, remains a poor litigation strategy. Defendant Global NAPS and its various corporate relatives (collectively, “Global”), declined to comply with discovery requests, even after the court ordered them, under explicit threat of default judgment, to turn over relevant materials. Instead, key witnesses denied the existence of corporate records, in direct contradiction of previous sworn statements they made in other litigation. Key accounting documents also mysteriously vanished, and SNET was able to demonstrate that someone had installed and used a “Window Washer” electronic file shredding utility on a key computer several times immediately before the computer was scheduled to be inspected by a forensics expert. Faced with ample evidence of these and other heavy-handed and improper discovery tactics, the court entered a default judgment for SNET, concluding that “These willful violations have prejudiced, indeed likely destroyed, SNET’s ability to prove its case… Defendants ‘rolled the dice on the district court’s tolerance for deliberate obstruction,’ and this court does not believe they should be allowed to ‘return to the table.’ (citing Bambu Sales, Inc. v. Ozak Trading Inc., 58 F.3d 849, 853, (2d Cir.1995).” 2008 WL 2568567 at *14.

Anyone reading the Global case can see why the judge believed that default judgment (plus an award of attorneys fees to SNET) was the only way to resolve a case that now lacked most of the substantive evidence needed to decide the case on its merits. However, the Global opinion also reinforces several key aspects of e-discovery practice.

1. Don’t Underestimate The Power Of Computer Forensics

In Global, key evidence was irretrievably destroyed, making it impossible to decide the case on its merits. However, though substantive electronic evidence was overwritten, forensic analysis of residual data helped plaintiff SNET identify exactly how, when, and what materials had been destroyed—with devastating results. Through metadata stored on the Windows registry and elsewhere on the hard drive, forensic examiners were able to find evidence that ESI “shredding” software had been installed—and when it had been used. Moreover, because of the way that the deletion software had been used, forensic examiners were able to identify the names of the files that had been destroyed—even though the files themselves and any associated slack space had been wiped clean.

SNET’s success in finding key spoliation evidence may lead some practitioners to conclude that forensic analysis should be used in all cases. Unfortunately, the decision to engage a forensic examiner is much more complex. While litigants questioning the accuracy of an opposing party’s ESI production may want to consider using a competent forensics examiner to validate the ESI that they receive, the cost of a full forensic analysis (which is rarely needed) can be considerable, especially is expert testimony (billed by the hour) is required to introduce the evidence. As useful as this strategy may be, it’s not something to be undertaken lightly. Where, however, a litigant has some concrete evidence of discovery mismanagement, forensic analysis may be the only hope for uncovering the rest of the story.

2. Forensic Analysis Is An Investment, Not An Entitlement

A reading of the Federal Rules of Civil Procedure and their state analogs makes discovery looks wonderfully straightforward: litigants ask for relevant materials, and producing parties are required to collect these materials, render them to a reasonably useful format if they are not already in one, and give them to the requesting party—all at the producing party’s expense. In reality, of course, litigants often squabble over the production of the most relevant evidence, especially if it arguably falls into the “not reasonably accessible” category defined in revised Fed.R.Civ.P. 26. Litigants seeking these materials should brace themselves for vigorous motion practice, especially if they have asked the producing party to cover all associated costs.

Litigants who have a substantive need for non-traditional discovery information—as opposed to those who may make such requests for negotiating or other strategic reasons but for whom this evidence is not essential—should strongly consider fronting the collection cost for such information. In Global, as in numerous other cases, the advanced forensic analysis that revealed the extent of defendants’ discovery shenanigans was done at the sole cost of the requesting party—even though the information was within the custody and control of the producing party. Based on existing case law, it is unclear whether the court would have required the producing party to pay for this work. After all, forensic analysis, though it is deeply grounded in fact, is a form of expert testimony usually designed to “connect the dots” of disparate data that cannot be usefully understood by a lay witness. Court-appointed experts are rarely appropriate for this type of fact-driven analysis, since the results clearly benefit one litigant over another. However, Courts have been inclined to designate forensic experts as officers of the court to sidestep potential privilege waiver issues.

The bottom line: litigants should consider forensic examiners to be partisan experts whose costs are part of your own litigation budget.

3. Even The Best Counsel Can’t Save A Client From Its Own Bad Acts

Unlike some other high-profile cases involving ESI spoliation, the Global court placed full responsibility for discovery shortcomings on defendants, not on its counsel. Indeed, unlike the well-known Zubulake v. UBS Warburg LLC (“Zubulake V”), 229 F.R.D. 422 (S.D.N.Y. 2004) and Metropolitan Opera Assoc., Inc. v. Local 100, 212 F.R.D. 178 (S.D.N.Y. 2003)) cases, which were also decided in the Second Circuit, Global is silent as to any obligation of counsel to double-check the adequacy of a client’s discovery responses before certifying them for production. Whether or not this divergence of opinion was intended to highlight the fact that trial court opinions have no controlling authority on other trial courts, Global, Zubulake, and Metropolitan Opera all do agree that no amount of lawyering can shield a client from the consequences of intentionally destroying relevant evidence in an attempt to derail ongoing litigation. Other jurisdictions will continue to analyze the extent to which outside counsel shares responsibility for client actions, but litigants themselves will continue to bear the greatest responsibility for their own actions.

What does this mean for lawyers? Existing ethical rules already require us to counsel our clients against ignoring their legal obligations. However, many clients would benefit from additional guidance regarding the treatment of ESI [electronically stored information]. Combining practical best practice tips with a stern admonition regarding the potential liability for mismanaging discovery of digital materials may encourage clients to reconsider overly aggressive discovery practices they may have had in mind. And if it doesn’t, it’s their loss, not that of their attorneys.

Posted in: Case Management, Columns, E-Discovery Update, Legal Ethics, Legal Research