Court Sanctions In-House Counsel for Failure to Issue a Litigation Hold and Ensure Preservation

Swofford v. Eslinger, 2009 WL 3818593 (M.D. Fla. Sept. 28, 2009). In this §1983 claim asserting excessive force, the plaintiffs sought sanctions, alleging the defendants destroyed key evidence, including a laptop and emails. Despite receiving preservation notices from the plaintiffs, the defendants' in-house counsel only forwarded a copy of the letters to senior -level employees (who did not ensure other employees complied with the defendants' preservation obligations) and failed to issue a litigation hold. Citing Zubulake V, the court found that it is insufficient for in-house counsel to simply notify employees of preservation notices, but rather counsel "must take affirmative steps to monitor compliance" to ensure preservation. Finding sanctions appropriate for the preservation failures, the court issued an adverse inference sanction for the laptop wiping and deletion of emails. The court also awarded attorneys' fees and costs to the plaintiffs, holding the defendants and in-house counsel jointly and severally liable.

In-House Impact: Corporations must take affirmative steps to safeguard and preserve relevant electronic information upon reasonable anticipation of litigation. While "reasonable anticipation of litigation" remains a question of fact, there is no excuse for instances when a corporation fails to preserve potentially relevant data after it receives a preservation notice. When a party files suit or sends notice that a claim is impending, corporations and counsel must take specific measures to see that relevant information is preserved or potentially face severe sanctions.

Court Finds Ediscovery Service Provider's Fees Recoverable, Taxable Costs Against Corporate Plaintiff

CBT Flint Partners, LLC v. Return Path, Inc., 2009 WL 5159761 (N.D. Ga. Dec. 30, 2009). In this patent infringement action, the defendants filed a motion to tax the costs associated with using an ediscovery vendor to aid in the production of 1.4 million electronic documents and six versions of source code. Objecting, the plaintiff argued that fees associated with the collection of documents for production are not taxable under 28 U.S.C. §1920. Although noting a judicial division of opinion exists as to whether U.S.C §1920 allows recovery, the court cited the highly technical nature and necessity of ediscovery services in the electronic age to overrule the plaintiff's objection and hold the $268,311.22 in costs to be recoverable. In supporting its finding, the court reasoned that the "[t]axation of these costs will encourage litigants to exercise restraint in burdening the opposing party with the huge cost of unlimited demands for electronic discovery."

In-House Impact: Corporations must be aware that courts are becoming increasingly intolerant of parties that make expansive demands for ESI and as a result, incur unnecessary time and expense. Judges are holding litigants and counsel accountable and requiring that prevailing parties be reimbursed for expenses incurred as a result of having to respond to overly-broad requests for discovery. Corporations should work closely with outside counsel and, if necessary, third-party experts to craft requests for ESI that are designed to uncover information relevant to the merits of the case but limit the discovery of irrelevant ESI. Corporate counsel should also be aware of available tools, such as early data assessment technologies, that may provide an early window into case data and enable counsel to craft requests for ESI that are narrowly tailored to uncover facts that are most important to the case.