Breaking News: Blockbuster Sanctions Order Spotlights the Importance of eDiscovery Competence
A federal magistrate judge issued a stunning sanctions order last week in HM Electronics v. R.F. Technologies against multiple defendants and their counsel for widespread discovery misconduct. The order included monetary sanctions and a recommendation that issue sanctions and an adverse inference instruction be imposed on the defendants since they “threatened to interfere with the rightful decision of the case.” While the nature and extent of the sanctions are certainly attention grabbing, the thrust of HM Electronics is ultimately focused on the need for eDiscovery competency.
Breakdowns in the eDiscovery Process
The court identified several breakdowns in the discovery process – some inadvertent and others intentional – that resulted in the sanctions being issued. At some level, all of these breakdowns point to the need for increased competency and more thorough lawyering during the discovery process. Those breakdowns included the following:
- Counsel certified his clients’ “discovery responses as true, to his knowledge or belief, without conducting a reasonable inquiry.” This was simply not the case as 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 that justified the court’s imposition of sanctions under FRCP 37.
- Counsel neglected to properly supervise other lawyers and vendors tasked with handling the production of electronically stored information. 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.”
The nature and extent of these breakdowns and their reflection on lawyer competency are perhaps best encompassed by the following colloquy between the parties’ counsel:
HERRERA: Did your client conduct an ESI search for communication[s]?
O’LEARY: Everything has been produced.
HERRERA: Well, that’s not really my question.
O’LEARY: That’s my response, though. We produced everything when we did that by checking computers.
HERRERA: I’d like to understand the methodology you did conduct.
O’LEARY: I didn’t conduct the ESI search, so I don’t know the methodology. They were told to look for documents on their computer. They did so and we produced them. . . [T]hey obviously conducted the search and produced what they had.
By delegating the search and review process to the clients and then taking no steps to verify compliance, 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 to 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.
Competency Lessons for Counsel
While HM Electronics demonstrates why lawyers must understand how to search for, preserve, and produce ESI, it also provides instruction on how they can do so. With respect to preservation, HM Electronics teaches lawyers to “become familiar with their clients’ information systems and digital data . . . to address [preservation issues].” By becoming knowledgeable with a “client’s organizational structure and computer data structure,” counsel can “adequately advise the client of the duty and method for preserving evidence.”
HM Electronics also spotlights the importance of developing an effective and defensible workflow for the search and review process. That process should address both the “use of available technology” and “appropriate quality control testing” to ensure that productions satisfy the relevance and proportionality standards set forth in FRCP 26. Finally, HM Electronics points lawyers to the nine core issues and skills that the California State Bar considers for competency purposes.
By following these steps, counsel can more readily establish their competency, better protect their clients’ interests in litigation, and avoid the missteps that plagued the lawyers in HM Electronics.