Judge Issues Sanctions Order as “Wake-up Call” to Attorneys

    Sep 23, 2015

    A federal magistrate judge has issued what some legal experts are calling a “stunning sanctions order” in HM Electronics v. R.F. Technologies against multiple defendants and their counsel for widespread discovery misconduct.

    The order, which included monetary sanctions as well as a recommendation that sanctions and an adverse inference instruction be imposed on the defendants, is being described as a “wake-up call” to attorneys to become competent in e-discovery.

    It was alleged that the defendants “intentionally withheld and destroyed highly relevant electronically stored documents,” according to a 78-page order from U.S. Magistrate Judge Mitchell Dembin. The order said the defendants “threatened to interfere with the rightful decision of the case.”

    In the order, the magistrate notes that the lawyers did not issue a litigation hold; did not do proper follow-up; and overlooked certain issues, Favro explained. And the magistrate concluded, “This type of lawyering falls below the standard … for discovery.” In other words, the lawyers were not doing what they should be doing on e-discovery and failed to pay close enough attention to their clients’ actions.

    According to Philip Favro, senior discovery counsel at Recommind, the court identified several breakdowns in the discovery process – some inadvertent and others intentional – that resulted in the sanctions. They included the following:

    • Counsel certified his clients’ “discovery responses as true, to his knowledge or belief, without conducting a reasonable inquiry.” But the court found that many of the defendants’ responses were “false” and “misleading,” resulting in sanctions being issued under Federal Rule of Civil Procedure 26(g)(3).
    • Counsel declined to “implement a litigation hold, or otherwise communicate to Defendants the importance of preserving relevant documents.” Instead of issuing a hold and taking other efforts to preserve relevant information, counsel relied on its clients’ representation that they do “not delete documents in the normal course of business.” That failure, together with other misconduct by the defendants, resulted in the destruction of key documents.
    • Counsel neglected to properly supervise other lawyers and vendors tasked with handling the production of ESI. By failing to take a direct supervisory role in the search and review process, counsel allowed the defendants to “withhold[] as privileged and without further review, more than 150,000 pages of ESI that were not privileged nor identified in a privilege log.”
    • Counsel “failed to produce over 375,000 pages of ESI until well after the close of discovery because they failed to perform quality control checks or to supervise their ESI vendor.”
    • By passing off the search and review process to the clients and then taking no steps to verify compliance, Favro said, the court held that counsel fell far short of its duty to supervise others “who are involved in the document collection, review, and production process.” Citing the new California State Bar eDiscovery ethics opinion, the court explained that such a duty is “non-delegable” and that counsel “must maintain overall responsibility for the work” at all times.

    For those who wish to establish a good legal hold process and potentially prevent similar sanctions in their own legal actions, a resource from ARMA International is useful: 7 Steps for Legal Holds of ESI and Other Documents. This publication is available for purchase through the online ARMA store:
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