In-house e-discovery abuses move Texas US court to impose heavy sanction
Date:
Thursday, May 19, 2011 Ignorant was Blitz, Texas federal District Court Judge T. John Ward ruled in an East Texas case of e-discovery mismanagement so flagrant the offending party will have to wear its abuses like a scarlet letter for the next five years.
When Rene Green sued Blitz U.S.A, Inc., a leading manufacturer of gas cans, for the wrongful death of her husband, the company compounded its own e-discovery self-collection woes by designating an employee to head the collection process who described himself in court as “as computer illiterate as they get.”
Green contended in the products liability case that Blitz’s cans did not include a flame arrester. Blitz, which put its e-discovery destiny in the hands of its "computer illiterate" employee Larry Chrisco, failed to provide – and in some instances, preserve – internal emails that dealt with precisely this issue.
Judge Ward, of the US District Court for the Eastern District of Texas, found Blitz’s discovery process “a willful violation” of its Discovery Order” and imposed a $250,000 "civil contempt" fine. That was just the beginning of a creative sanctions orders that could serve as a lesson for beginners in the e-discovery field.
Ward also ordered that Blitz provide a copy of the court’s Memorandum Opinion and Order to “every plaintiff in every lawsuit it has had proceeding against it” for the previous two years. More severely, Blitz was ordered to include a copy of the court’s sanctions order as its first filing in every new lawsuit in which it participates as a party over the five subsequent years.
The court also imposed an additional $500,000 “purging” sanction that would be tolled for 30 days and forgiven afterward if Blitz provided the court’s order to every plaintiff in every case in which it is being sued presently and or has been sued during the past two years.
Blitz has since appealed the ruling.
A textbook study in self-collection abuses
The case underscores the risk of the collection of data in-house by an inexperienced employee or one that is unaware of the legal ramifications of not producing everything that is relevant. Chrisco, who was assigned by Blitz to collect pertinent material for litigation cases in which Blitz is a party, worked independently and without instruction or guidance from the company’s IT department or the in-house laywers.
“The biggest pitfall of self-collection is when there’s a dispute and you don’t have a disinterested party on the stand,” said Debora Jones, an attorney and consultant at Lighthouse Document Technologies. “You’re automatically suspect and you lose credibility immediately. By putting your own person on the stand, you can’t point the finger at anyone else when there’s a problem of e-discovery.”
Alvin Lindsay, an expert in products liability and partner at the international law firm, Hogan Lovells, voiced similar concern.
“I’m not against in-house collection, per se – not in every case,” Lindsay said, “but it can be done properly. This was the worst way to do it.”
That the defendant’s lawyers informed the plaintiff of the lack of pertinent documentation – principally, emails documenting internal discussions about flame arresters – presumably means they weren’t involved in the search, which are grounds for suspicion, according to Lindsay.
“The thing that’s interesting about this case is that there’s very little discussion of the lawyers involved,” Lindsay said. “They were at fault here by just passing the collection process off to Chrisco, who might have something to hide himself.”
Indeed, Chrisco, a non-lawyer, in addition to his discovery duties, was also responsible in the product development department for researching and investigating flame arresters.
“Willful omission” and the ethics of e-discovery
While the hazards of self-collection include simple negligence and inadvertent omissions arising from technical ineptitude, the most dangerous risks often stem from consciously withholding incriminating evidence.
Judge Ward found Blitz culpable of withholding evidence by its failure to file all pertinent materials within 45 days of the initial scheduling conference, thereby violating the court’s mandatory Discovery Order. The court said the sanctions in the case were not only meant to penalize Blitz but also “to deter those who might be tempted to conduct such conduct in the absence of such a deterrent.”
Blitz failed to provide many “indisputably relevant” emails, including orders from the company’s CEO to develop a flame arrester that met industry standards and a memo discussing ways to decrease product liability.
A simple keyword search for “flame arrester,” the court said, would have produced an August 2005 email titled, “FW: Flame Arrester,” in which a company employee stated, “ As far as your question for the flame arrester, the marine industry uses them in all the boat tanks, so the technology and testing has to be in place today.”
Ethical dilemmas aside, Blitz’s array of discovery transgressions might have been prevented by e-discovery due diligence.
“You have to do your research,” said John Munro, managing director at e-discovery provider Orange Legal Technologies. “You want to make sure to ask, ‘How do you suggest we get at relevant information?’ And if you’re not hearing ‘email searches’ and ‘IT’ and ‘e-discovery,’ at least to ensure that proper steps are taken, that will be a red flag.”
Company had ongoing e-mail deletion policy
While the court also cited the defendant for failing to issue a stand-in-place litigation hold, it found that the more egregious violation arose from a company directive to employees that they routinely delete emails.
Between 2004 and 2007, Paul Hale, the head of IT for Blitz, sent numerous emails instructing employees to destroy electronic communications at a time when the company was facing multiple product liability lawsuits and had the duty to preserve data.
One such email from Hale read, “Will everyone delete all old emails that you can, please? (And then remember to go into the deleted folder, select all items, and delete them as well.)”
Another of Hale’s emails had the subject line, “Clean and Delete All Email Folders, Please!”
As part of the systematic destruction of emails, the company rotated back-up tapes every two weeks, deleting these data cartridges and the reams of emails they contained.
Are courts making examples of some to teach a broader audience?
“A lot of the case law that’s coming out now is explicitly saying, ‘we are making an example of you!’” said Orange Legal Technologies’ Munro. “Judges are trying to make a point in hopes of seeing fewer of these straight spoliation cases.”
Not everybody is getting the message, even as more affordable software and data storage facilities are driving down the cost of competent in-house discovery.
“The solutions that are available in collection are absolutely out there, so this attitude needs to change,” concluded Munro.
