For those of us who have been in the eDiscovery industry for many years – perhaps even as far back as the old “discovery” days – the name Sira Scheindlin evokes thoughts of Columbus, Lewis & Clarke, or the astronauts of the Apollo missions: individuals who went where no one had gone before.  With respect to Judge Scheindlin, her decisions and eDiscovery critiques in the seminal Zubulake v. UBS Warburg cases remain relevant to this day, six years after adjudication.  In addition to being a catalyst for the 2006 revisions to the Federal Rules of Civil Procedure, the Zubulake cases serve as stark reminders of how badly things can go in litigation when eDiscovery is done poorly.

And so it is with no small amount of foreboding that 2010’s first major eDiscovery decision involves not only the “godmother of eDiscovery”, but provides yet another stark reminder that eDiscovery risks are alive and well and ready to hammer the unprepared.  The Pension Committee of the University of Montreal Pension Plan v. Banc of America Securities LLC, 05 Civ. 9016, in the Southern District of New York, involves claims by investors who are seeking to recover losses of some $550 million related to the liquidation of two British Virgin Island-based hedge funds.

At the risk of extrapolating a bit too much from a single case, here are the key warnings we believe this case signals to the eDiscovery industry as we settle into 2010:

1. Sanctions are just as relevant in 2010 as they have ever been, perhaps even more so.  Consider the Pension Committee case: sanctions weren’t levied against an unwitting foreign litigant unversed in US discovery or a “mom and pop” shop for whom litigation happens very rarely.  On the contrary, sanctions here were given to a plaintiff – the very party that chose the jurisdiction and timing of litigation.  Furthermore, plaintiffs here are seeking recovery of $550 million.  Anyone with that kind of bank roll can likely afford whatever law firms suit their needs.  And given that we are now more than 3 years removed from the revised FRCP, courts seem increasingly likely to not give litigants the benefit of the doubt – especially litigants who can afford to hire someone to tell them they should know better.
2. eDiscovery can be hard, so hard that wealth and “sophistication” does not necessarily equal eDiscovery savvy.  The Pension Committee case is a textbook example of how to make a judge very, very angry.  To wit, here are the plaintiffs’ offenses Judge Scheindlin cited in her ruling:
   a) “…failure "to institute a timely written litigation hold" -- a communication to employees to stop the routine and legitimate destruction of data in anticipation of commercial litigation or a civil enforcement action
   b) failure to collect or preserve any electronic documents prior to 2007
   c) continued deletion of electronic documents after the duty to preserve arose
   d) failure to request documents from key players
   e) delegation of search efforts without supervision from management
   f) destruction of backup data potentially containing responsive documents of key players and/or submit(ing) misleading or inaccurate declarations…”
   So incensed was Judge Scheindlin that she ordered an adverse jury instruction to be given with respect to the 6 most offensive plaintiffs.  For those not versed in adverse jury instructions, they’re pretty much a worst case scenario as they often result in a case dying a quick death.
3. eDiscovery expertise and technology can be both a shield and a sword.  As the Pension Committee case shows, lack of eDiscovery expertise – both by client and outside counsel – can get a party in serious trouble.  Conversely, i.e. for the defendants in this case (especially Citgo), eDiscovery expertise can provide a distinct advantage both as a shield (defending oneself against the other party’s requests, motions, or even substantive claims) and as a sword (attacking the other side by exploiting their lack of expertise or technological capabilities).  This is where technology can play such a critical role, especially technology which allows a party to learn more about their case from the very outset, i.e. at or before time of collection.

The year is not even 3 weeks old and we already have a significant decision from probably the industry’s best-known judge in which a party – 13 of them, actually – have found themselves on the wrong end of an eDiscovery proceeding.  Here’s betting it won’t be the last such decision of 2010.  Fasten your seatbelts ladies and gentlemen, this ride is nowhere near over.