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Reflections on information management within the legal and regulatory arena

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Courts expect affirmative steps during Litigation Holds…

Posted by Johnny Lee on May 2, 2010

…which can be costly if bungled. Simply put, a properly executed litigation hold is a written notice distributed to every individual likely to have discoverable information to preserve all potentially responsive information when litigation is pending, imminent, or reasonably foreseeable.

The 2008 Qualcomm Inc. v. Broadcom Corp. decision sent a shockwave across the e-Discovery world ($8.5M in monetary sanctions and six attorneys referred to the state bar’s disciplinary committee)…with the court finding that there was an “incredible” failure of communication. Of course, the facts of this case may seem particularly egregious to the casual observer. After all, in its analysis, the Court emphasized that the documents counsel failed to produce directly refuted a critical argument proffered by Qualcomm—both in pre-trial motions and throughout the trial. The Court also found that no attorney assumed supervisory responsibility for verifying that the necessary discovery had been conducted AND that this failure jeopardized counsel’s ability to determine that there was a factual basis for the legal arguments advanced in the case.

The case law unfolding ever since re-emphasizes that counsel must take affirmative steps “to monitor compliance so that all sources of discoverable information are identified and searched” as well as preserved (q.v., Swofford v. Eslinger). This harkens directly back to the Qualcomm case, where the Court weighed the following in its sanctions decision:

  • the sheer volume of documents that Qualcomm failed to share with opposing counsel;
  • the relative ease with which Qualcomm ultimately found the suppressed documents;
  • the failure to search the computers used by key players in the case;
  • inadequate research to investigate the nature of Qualcomm’s information storage, including basic concepts (e.g., email storage, how often company desktops and laptops were backed up, what measure of structured data existing in the environment);
  • the rather straightforward nature of the information repositories and search terms employed to find the suppressed documents; and
  • the absence of any proof that Qualcomm had engaged in any meaningful oversight of its document production.

In a later case, Judge Scheindlin (of Zubulake fame) emphasized that counsel’s duties are both affirmative and formal…writing that the “failure to issue a written litigation hold constitutes gross negligence because that failure is likely to result in the destruction of relevant information” (q.v., Pension Comm. of the Univ. of Montreal Pension Plan v. Banc of Am. Secs from earlier this year).  As with her seminal work in Zubulake, Judge Scheindlin has worked to provide some forward-looking guidance to litigants hoping to avoid ire from the bench.

This evolving case law continues to demonstrate two things: (1) courts are increasingly unforgiving when companies fail to demonstrate a reasonable standard of care in preserving responsive data; and (2) the failure to revisit—and to realign—existing policies and practices can cost companies dearly when they find themselves embroiled in litigation.

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