I thought I’d share with you my most recent article published in this month’s monthly newsletter from Fios, The Electronic Discovery Counselor.
As Qualcomm was the electronic discovery watershed for patent attorneys, so too will Praxair (Goodman v. Praxair Services, Inc., _F.Supp.2d_, 2009 WL 1955805 (D.Md. July 7, 2009)) be a defining e-discovery moment for environmental and contract attorneys. Prior to Qualcomm, it was common to hear patent attorneys say that legal holds and e-discovery just didn’t apply in their practice. But after the multiple and high-profile opinions in Qualcomm, patent attorneys have gotten religion.
Environmental attorneys often say that all the evidence exists on paper. Contract attorneys often say that their disputes are too small to warrant e-discovery.
Judge Paul Grimm blasts through those arguments as he dissects a $30,000 environmental consulting contract dispute. The key issues are spoliation and legal holds. Other issues discussed in passing include costs for pro se litigants, consultants’ data, searching backup tapes and the hold obligations of successors in interest.
Timing of obligation for legal hold
From the facts surrounding this $30,000 non-payment of a success fee, Judge Grimm draws several examples of instances where litigation can reasonably be anticipated. In doing so, Judge Grimm points to adversarial behavior as triggering “reasonable anticipation.” After a couple attempts to communicate (attempts that Goodman, but not Judge Grimm, felt were enough to put Praxair on notice), Goodman wrote that he had consulted two attorneys and, if the matter was not resolved, he would be forced to litigate. This language, coupled with the fact that it was written and not oral, trips the trigger for reasonable anticipation. Judge Grimm contrasts that language with demand letters in other cases that were more “cooperative” by encouraging the resolution of payment to avoid litigation.
There is a definite split in the circuits on the issue of “reasonable anticipation,” with one court even holding that industry conditions can put a party on notice; see Phillip M. Adams & Associates, L.L.C., v. Dell, Inc., 2009 WL 910801 (D.Utah March 30, 2009).
Timing of filing the spoliation motion
Judge Grimm also is explicit in Praxair that spoliation motions need to be brought as soon as possible, and before the end of the discovery period.
…there is a particular need for these motions to be filed as soon as reasonably possible after discovery of the facts that underlie the motion. This is because resolution of spoliation motions are fact intensive, requiring the court to assess when the duty to preserve commenced, whether the party accused of spoliation properly complied with its preservation duty, the degree of culpability involved, the relevance of the lost evidence to the case, and the concomitant prejudice to the party that was deprived of access to the evidence because it was not preserved. See, e.g., Silvestri, 273 F.3d at 594-95. Before ruling on a spoliation motion, a court may have to hold a hearing, and if spoliation is found, consideration of an appropriate remedy can involve determinations that may end the litigation or severely alter its course by striking pleadings, precluding proof of facts, foreclosing claims or defenses, or even granting a default judgment. And, in deciding a spoliation motion, the court may order that additional discovery take place either to develop facts needed to rule on the motion or to afford the party deprived of relevant evidence an additional opportunity to develop it from other sources. The least disruptive time to undertake this is during the discovery phase, not after it has closed. Reopening discovery, even if for a limited purpose, months after it has closed or after dispositive motions have been filed, or worse still, on the eve of trial, can completely disrupt the pretrial schedule, involve significant cost, and burden the court and parties. Courts are justifiably unsympathetic to litigants who, because of inattention, neglect, or purposeful delay aimed at achieving an unwarranted tactical advantage, attempt to reargue a substantive issue already ruled on by the court through the guise of a spoliation motion, or use such a motion to try to reopen or prolong discovery beyond the time allotted in the pretrial order.
Judge Grimm found a duty to preserve for the company that was a successor in interest. This should be a wakeup call for due diligence and transition teams for M&A work. Judge Grimm did not find spoliation where backup tapes were not searched. He did, however, find spoliation where a key custodian, with no formal legal hold issued from or monitored by her attorney, deleted emails and had her computer redeployed. He also provides a primer on how to demonstrate that custodians were likely to have (or not have) relevant information – a prerequisite for a spoliation claim.
Judge Grimm awarded costs (but not attorney’s fees) to pro se litigant Goodman. Goodman may become the next Laura Zubulake on the speaker circuit as a master of e-discovery process. See also Ralph Losey’s most excellent dip into fairy tales venerable foundational case law regarding the history of spoliation.