Ethical Issues in Discovery: What You Do (Or Don't Do) in Discovery Can Hurt You at Trial
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Transcript of Ethical Issues in Discovery: What You Do (Or Don't Do) in Discovery Can Hurt You at Trial
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Kirby B. Drake
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• Recent Discovery Decisions
• Pension Committee
• Rimkus v. Cammarata
• Qualcomm v. Broadcom
• Lessons to be Learned – All; Outside Counsel; Clients; Courts and the State Bar
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• Investor-related action
• Defendants sought sanctions against Plaintiffs
• Failure to preserve and produce documents
• Submission of false declarations regarding collection and production efforts
• Court addressed conduct constituting negligence, gross negligence and willfulness in discovery matters
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• Addressed discovery efforts – or lack thereof – undertaken by Plaintiffs
• Concluded that “all of these plaintiffs were either negligent or grossly negligent in meeting their discovery obligations”
• Sanctions were imposed
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• Interplay between duty to preserve evidence and spoliation
• Duty to preserve arises when party reasonably anticipates litigation
• Breaching duty to may result in sanctions
• Who bears burden of proving that evidence has been lost or destroyed? What are consequences of loss?
• Relevance does not necessarily equal proof of prejudice
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• Burden-shifting test addresses prejudice due to spoliation
• If conduct sufficiently egregious, offending party must rebut presumption of relevance and prejudice
• Requesting party had access to allegedly destroyed evidence
• Evidence would not support requesting party’s claims/defenses
• If no showing of prejudice, no adverse inference instruction
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• May support finding of prejudice due to spoliation by showing:
• Offending party had control over evidence and an obligation to preserve at time of destruction or loss
• Offending party acted with culpable state of mind upon destroying or losing evidence
• Missing evidence relevant to the innocent party’s claim/defense
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• Remedies for spoliation harm assessed on case-by-case basis
• Grant sanctions to deter spoliation, place risk of erroneous judgment on spoliating party, and restore prejudiced party to same position had spoliation not occurred
• Adverse inference sanction imposed – failed to act diligently and search thoroughly at time they reasonably anticipated litigation
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• Counsel’s initial instructions to client did not meet standard for a proper litigation hold
• Did not direct employees to preserve all relevant records
• Did not create mechanism for collecting preserved records
• Did not specifically instruct client not to destroy records so that counsel could monitor collection and production of documents
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• Competing lawsuits
• Non-competition and non-solicitation covenants in ex-employees’ employment agreements
• Trade secret misappropriation in setting up new business
• Allegations of “wholesale discovery abuse”
• Defendants alleged there was no prejudice in failure to produce due to cumulative nature of evidence
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• Allegations of intentional destruction of electronically stored evidence
• Court addressed issues using analytical framework set forth in Pension Committee
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• Rimkus issued document requests related to creation and inception of new company (U.S. Forensic) and contacts with Rimkus clients
• Cammarata produced two emails related to U.S. Forensic formation
• Rimkus again requested all documents sent among those setting up or working for U.S. Forensic before January 1, 2007
• Defendants objected to request as overbroad but stated they “searched several times for any such responsive emails and turned over any responsive emails in their possession”
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• Defendants did not produce any other emails until June 2009 when they produced approximately 60 emails
• Rimkus noticed depositions of U.S. Forensic founders (Bell, Janowsky, DeHarde) regarding U.S. Forensic formation
• Bell testified he had “printed out the things that [he] thought might be responsive, and sent it to [his attorney], when [he] first received the first request” for the emails
• Janowsky admitted he deleted emails but did not recall being instructed to preserve records related to U.S. Forensic formation
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• DeHarde testified he deleted emails because of concern about storage capacity of his email account
• Court compelled DeHarde to produce responsive documents and be re-deposed
• Defendants’ efforts to locate/retrieve emails was superficial
• No information provided about whether deleted emails could be recovered and time/expense required to do so
• Defendants ordered to conduct inquiry
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• DeHarde admitted in deposition that “[w]e deleted them [the emails]. We had a policy that we would delete e-mails during the start-up after two weeks.” DeHarde testified that U.S. Forensic founders all agreed on e-mail deletion policy.
• Over 100 belatedly produced emails showed that Cammarata contacted individuals he had dealt with while working at Rimkus
• Belatedly produced documents showed Cammarata used personal email address to send Rimkus engineering data and reports to his U.S. Forensic email address
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• On September 13, 2009, Cammarata finally produced 15 disks of ESI and numerous boxes of paper documents containing Rimkus correspondence, client contact information and Rimkus power point presentations
• Analysis of Bell’s Rimkus laptop – included Rimkus financial information downloaded to laptop on day of resignation
• Bell concealed personal email account he used to download and take confidential Rimkus financial information
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• Violation of legal duty to preserve evidence when litigation was anticipated
• Scheme to destroy evidence showing extent to which Defendants took confidential information from Rimkus to set up, operate, and solicit business for U.S. Forensic
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• Affirmative steps taken to delete potentially relevant documents
• Selective implementation of document destruction policy at best
• Defendants’ reasons and explanations for deleting or destroying emails inconsistent and lacked support
• Space concerns
• Fear of retaliation
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• Defendants knew of litigation when emails were deleted
• Defendants did not disclose personal email accounts used to take information from Rimkus
• Sufficient evidence for reasonable jury to find that Defendants intentionally and in bad faith deleted emails relevant to issues in case to prevent use of those emails in litigation
• Judge agreed to issue adverse inference instruction with respect to deleted emails but did not strike pleadings
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• Jury can hear about email deletion and concealment/delay that occurred in discovery, consider Defendants’ conduct in deleting emails, and infer that content of deleted emails would be unfavorable to Defendants
• Jury instruction to be issued on duty to preserve information
• Defendants to pay reasonable costs and attorneys’ fees required to identify and respond to the spoliation issues
• Permanent injunction issued based on settlement in November 2010
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• Qualcomm sues Broadcom for patent infringement
• Broadcom defense – waiver by participation in the JVT
• Broadcom requests discovery on Qualcomm’s participation in JVT
• Qualcomm repeatedly denies involvement in JVT during relevant time frame
• Qualcomm files motion for summary judgment on waiver defense
• Trial begins
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• Qualcomm attorney discovers email showing trial witness communicated with JVT
• Trial witness forced to admit existence of emails on cross-exam
• Judge orders production of documents and jury finds in favor of Broadcom on waiver
• Broadcom sought discovery on scope of discovery abuses
• Judge initially sanctions Qualcomm and 6 outside counsel for discovery abuses
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• Qualcomm ordered to pay over $8.5 million
• Six outside counsel initially referred to State Bar of California for investigation of possible ethical violations
• Qualcomm and outside counsel ordered to participate in Case Review and Enforcement of Discovery Obligations (“CREDO”) program
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• Several outside counsel never sanctioned because of steps taken to confirm accuracy of facts
• Reviewed deposition transcripts and discovery responses
• Circulated drafts of pleadings to more senior in-house and outside counsel
• Investigated facts surrounding the JVT
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• Breach of contract due to firing
• Plaintiff sent preservation letter to Defendants before filing lawsuit
• Defendants issued “Do-Not-Destroy” instructions but did not appear to carry out instructions
• Negligence in failing to preserve laptops issued to Plaintiffs while working for Defendant
• Adverse inference instruction appropriate because Plaintiffs “lost access to relevant evidence”
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• Failure to preserve text messages sent between investigating agents and cooperating witness in corruption investigation
• Agents never instructed to preserve messages; deleted messages allegedly “to save memory space”
• Failure to issue timely litigation hold
• Ordered that jury would receive a “spoliation charge” allowing (but not requiring) it to infer that deleted messages were favorable to Defendants
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• 43 hard drives destroyed during ordinary recycling cycle but Plaintiff later produced some information replacing what was lost
• Upheld sanctions against Plaintiff for “willful” destruction of hard drives on which relevant discovery resided
• Adverse inference sanction appropriate
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Brown v. Allen, 344 U.S. 443, 537 (1953)
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Lessons for All
Lessons for Courts and State Bar
Lessons for Outside Counsel
Lessons for Clients
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• Often see failure to fully adhere to the principle of telling the truth
• Failure to admit when wrong when it comes to discovery issues
• Party and its outside counsel often suffer the consequences - sanctions
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• Know the whole truth
• Make accurate representations to the other side as well as to the judge and to the jury
• How?
• Find responsive information and produce it
• Make the team aware of responsive information early
• Allow witnesses/counsel to be prepared to face truth about existence and contents of responsive information before trial
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• If you have to consider whether to produce, probably should go ahead and produce it
• Often less harmful to produce
• Information may be responsive and discoverable but not necessarily admissible
• Courts tending toward requiring production if responsive to a party’s claims or defenses
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Almost never incur wrath of Court by producing (except if it looks like a “document dump”)
But feet can be held to the fire for failure to produce
responsive information
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• Swofford v. Eslinger, No. 6:08-cv-00066, 2009 WL 3818593 (M.D. Fla. Sept. 28, 2009)
• Inside counsel failed to issue litigation hold notice and failed to undertake meaningful actions to preserve relevant information
• Awarded adverse inference sanctions and ordered defendants and inside counsel to pay fees and costs (inside counsel was not attorney of record)
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• Green v. McClendon, No. 08 Civ. 8496, 2009 WL 2496275 (S.D.N.Y. Aug. 13, 2009)
• Counsel failed to provide enough detail to client regarding duty to preserve data and did not explicitly issue litigation hold notice
• Awarded costs
• “The preservation obligation runs first to counsel, who has a duty to advise his client of the type of information potentially relevant to the lawsuit and of the necessity of preventing its destruction.”
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• Cannots
• Musts
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• CANNOT blindly rely on client’s collection and production
• CANNOT blindly trust what client describes as “standard” procedures for approaching discovery issues
• CANNOT shield eyes from seeing certain documents – must challenge clients regarding search and collection strategies
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• MUST reach agreement as to how to engage in discovery process
• MUST have sufficient control over discovery process
• MUST gain access to locations where responsive data may be maintained
• MUST take steps to confirm compliance by key custodians – interviews, written questionnaires, etc.
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• Keep a record of efforts with regard to document search and collection
• Can potentially use record to defend discovery efforts should a discovery dispute arise
• May need to seek agreement from client that documentation of actions taken may be disclosed if issues arise as to sufficiency of discovery efforts
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• MUST define who is responsible for ensuring discovery duties are carried out
• MUST get IT personnel involved
• MUST issue document hold or preservation notice at outset of litigation
• MUST inform employees that they have a duty to manage information in accordance with written policies – litigation or not
• MUST consider investing in management technology/search tools
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• Qualcomm allegedly had a plan in place for collecting documents in response to discovery requests
• Despite having plan, Qualcomm apparently did not fully follow the plan
• MUST follow your plan – plan is only as effective as care given in executing plan
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• CREDO Program: Identify facts that contributed to discovery violation; create and evaluate procedures to correct deficiencies; develop and finalize protocol to prevent future violations
• Modifications to State Discovery Rules
• Consider state-promulgated electronic discovery rules (i.e., California)
• Balance burdens/needs of requesting party and producing party
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• Signed into law on June 29, 2009
• Largely follows 2006 electronic discovery amendments to FRCP
• Requires parties in written discovery responses to object to production of inaccessible information to preserve objections
• Assumes all ESI is accessible and shifts balance by not requiring requesting party to bring motion to compel
• Counsel must know difference between forms in which information can be produced and advantages/disadvantages to client
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For more information, please contact:
Kirby B. DrakeKLEMCHUK KUBASTA LLP