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Sanctions up for e-discovery

By Christina Pazzanese
Dolan Media

Boston – Sanction motions and awards for e-discovery violations across the country have climbed dramatically in recent years and have now hit “historic highs,” according to a study published in the Duke Law Journal.

The study identified 401 cases filed in federal court before Jan. 1, 2010, with written opinions involving sanction motions or sanction awards. It found that not only have e-discovery sanction cases climbed annually since 1981, the increase in both sanction motions and awards since 2004 has been “significant.”

In 2009, there were more sanction cases (97) and more sanction awards (46) than in any previous year.

Lawyers say the study, the most comprehensive effort they have seen attempt to quantify trends in what is a rapidly expanding and increasingly complicated area of litigation, confirms much of what they have witnessed in their own practices.

“E-discovery is a big issue, it’s an enormous undertaking and it’s incredibly expensive,” said John A. Tarantino of Adler, Pollock & Sheehan in Providence, R.I. “Even if you proceed in good faith, you still can have problems.”

Violations prompting the most sanctions were a failure to preserve evidence, which was cited in 131 of the 230 cases in which sanctions were handed out, followed by a failure to produce evidence, cited in 73 cases.

Sanctions included dismissal and default, as well as adverse jury instructions and monetary awards that ranged from $250 to $8.8 million.

Sanctions against counsel, however, remain rare, the study found.

Timothy J. Dacey III, a veteran business litigator at Goulston & Storrs in Boston, said e-discovery violations and sanctions have become an especially hot topic in the federal courts where high-stakes disputes involving parties that generate and retain more discoverable information – who also have the resources to pursue them from others – tend to play out.

The federal courts have also generated more trailblazing cases, such as the decision from 2003’s Zubulake v. UBS Warburg, that raised awareness among lawyers of the scope of their e-discovery obligations, as well as the pitfalls and potential for abuse, Dacey said.

And a December 2006 amendment to Rule 37(e) of the Federal Rules of Civil Procedure, designed to provide lawyers safe harbor against some sanctions, includes terms like “good faith” and “reasonable effort,” which have led to some confusion and disagreement over what is required to comply with the rule, Dacey said.

Rule 37(e) of the Federal Rules of Civil Procedure – which provides “[a]bsent exceptional circumstances, a court may not impose sanctions under these rules on a party for failing to provide electronically stored information lost as a result of the routine, good faith operation of an electronic information system” – was the most commonly cited rule in the cases studied.

Adler Pollock’s Tarantino said the 2006 rule change has not turned out to be the safe harbor some thought, perhaps contributing to the spike in sanctions.

“A lot of folks may have misread or misunderstood the rule,” he said. “It’s a boat slip, not a harbor.”

Despite the overall uptick in sanctions, those specifically against counsel are still rare and prompted by repeated misconduct, according to the study.

Of the 401 cases studied, only 30 counsel sanctions were handed out and only 25 of those were issued specific awards; the other five were deferred. Sanctions against counsel were considered in seven additional cases, but were ultimately not handed out.

“I think sanctioning lawyers is often only the last resort of a court,” said Stephen D. Riden of Beck, Reed, Riden in Boston. “Courts will typically give lawyers the benefit of the doubt, especially with a large volume of data that’s hard to wrap your arms around.”

Unless the conduct is egregious and opposing counsel offers a “slam-dunk argument,” judges will look for other ways to punish violations, he said.

The article is “Sanctions for E-discovery Violations: By the Numbers” by Dan H. Willoughby Jr., Rose Hunter Jones and Gregory R. Antine, 60 Duke L.J. 789.

One comment

  1. Nothing sends a message like the imposition of sanctions. I expect to see more of this as time moves on and judges are no longer willing to give attorneys a long leash when it comes to e-discovery issues.

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