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Ethical Issues in Discovery - Trial Skills

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Ethical issues in discovery and lessons to be learned from recent discovery-related decisions, citing Qualcomm v. Broadcom, Rimkus v. Cammarata, and Pension Committee v. Bank of America Securities

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Ethical Issues in Discovery - Trial Skills

  2. 2. Overview • Recent Discovery Decisions • Pension Committee • Rimkus v. Cammarata • Qualcomm v. Broadcom • Lessons to be Learned – All; Outside Counsel; Clients; Courts and the State Bar
  3. 3. “Those who cannot remember the past are condemned to repeat it.”
  4. 4. Pension Committee v. Bank of America Securities (S.D.N.Y. 2010) • Investor-related action • Defendants sought sanctions against Plaintiffs • Failure to preserve and produce documents • Submission of false declarations regarding collection and production efforts • Court addressed conduct constituting negligence, gross negligence and willfulness in discovery matters
  5. 5. Pension Committee – Key Facts and Conclusion • Addressed discovery efforts – or lack thereof – undertaken by Plaintiffs • Concluded that “all of these plaintiffs were either negligent or grossly negligent in meeting their discovery obligations” • Sanctions were imposed
  6. 6. Pension Committee – Key Facts • Interplay between duty to preserve evidence and spoliation • Duty to preserve arises when party reasonably anticipates litigation • Breaching duty to may result in sanctions • Who bears burden of proving that evidence has been lost or destroyed? What are consequences of loss? • Relevance does not necessarily equal proof of prejudice
  7. 7. Pension Committee – Burden Shifting Test • Burden-shifting test addresses prejudice due to spoliation • If conduct sufficiently egregious, offending party must rebut presumption of relevance and prejudice • Requesting party had access to allegedly destroyed evidence • Evidence would not support requesting party’s claims/defenses • If no showing of prejudice, no adverse inference instruction
  8. 8. Pension Committee – Showing of Prejudice • May support finding of prejudice due to spoliation by showing: • Offending party had control over evidence and an obligation to preserve at time of destruction or loss • Offending party acted with culpable state of mind upon destroying or losing evidence • Missing evidence relevant to the innocent party’s claim/defense
  9. 9. Pension Committee – Remedies • Remedies for spoliation harm assessed on case-by-case basis • Grant sanctions to deter spoliation, place risk of erroneous judgment on spoliating party, and restore prejudiced party to same position had spoliation not occurred • Adverse inference sanction imposed – failed to act diligently and search thoroughly at time they reasonably anticipated litigation
  10. 10. Pension Committee – Litigation Hold Insufficient • Counsel’s initial instructions to client did not meet standard for a proper litigation hold • Did not direct employees to preserve all relevant records • Did not create mechanism for collecting preserved records • Did not specifically instruct client not to destroy records so that counsel could monitor collection and production of documents
  11. 11. Rimkus Consulting v. Cammarata (S.D. Tex. Feb. 19, 2010) • Competing lawsuits • Non-competition and non-solicitation covenants in ex- employees’ employment agreements • Trade secret misappropriation in setting up new business • Allegations of “wholesale discovery abuse” • Defendants alleged there was no prejudice in failure to produce due to cumulative nature of evidence
  12. 12. Rimkus Consulting - Overview • Allegations of intentional destruction of electronically stored evidence • Court addressed issues using analytical framework set forth in Pension Committee
  13. 13. Rimkus Consulting - Facts • Rimkus issued document requests related to creation and inception of new company (U.S. Forensic) and contacts with Rimkus clients • Cammarata produced two emails related to U.S. Forensic formation • Rimkus again requested all documents sent among those setting up or working for U.S. Forensic before January 1, 2007 • Defendants objected to request as overbroad but stated they “searched several times for any such responsive emails and turned over any responsive emails in their possession”
  14. 14. Rimkus Consulting - Facts • Defendants did not produce any other emails until June 2009 when they produced approximately 60 emails • Rimkus noticed depositions of U.S. Forensic founders (Bell, Janowsky, DeHarde) regarding U.S. Forensic formation • Bell testified he had “printed out the things that [he] thought might be responsive, and sent it to [his attorney], when [he] first received the first request” for the emails • Janowsky admitted he deleted emails but did not recall being instructed to preserve records related to U.S. Forensic formation
  15. 15. Rimkus Consulting - Facts • DeHarde testified he deleted emails because of concern about storage capacity of his email account • Court compelled DeHarde to produce responsive documents and be re-deposed • Defendants’ efforts to locate/retrieve emails was superficial • No information provided about whether deleted emails could be recovered and time/expense required to do so • Defendants ordered to conduct inquiry
  16. 16. Rimkus Consulting - Facts • DeHarde admitted in deposition that “[w]e deleted them [the emails]. We had a policy that we would delete e-mails during the start-up after two weeks.” DeHarde testified that U.S. Forensic founders all agreed on e-mail deletion policy. • Over 100 belatedly produced emails showed that Cammarata contacted individuals he had dealt with while working at Rimkus • Belatedly produced documents showed Cammarata used personal email address to send Rimkus engineering data and reports to his U.S. Forensic email address
  17. 17. Rimkus Consulting - Facts • On September 13, 2009, Cammarata finally produced 15 disks of ESI and numerous boxes of paper documents containing Rimkus correspondence, client contact information and Rimkus power point presentations • Analysis of Bell’s Rimkus laptop – included Rimkus financial information downloaded to laptop on day of resignation • Bell concealed personal email account he used to download and take confidential Rimkus financial information
  18. 18. Rimkus Consulting - Allegations • Violation of legal duty to preserve evidence when litigation was anticipated • Scheme to destroy evidence showing extent to which Defendants took confidential information from Rimkus to set up, operate, and solicit business for U.S. Forensic
  19. 19. Rimkus Consulting - Conclusions • Affirmative steps taken to delete potentially relevant documents • Selective implementation of document destruction policy at best • Defendants’ reasons and explanations for deleting or destroying emails inconsistent and lacked support • Space concerns • Fear of retaliation
  20. 20. Rimkus Consulting - Conclusions • Defendants knew of litigation when emails were deleted • Defendants did not disclose personal email accounts used to take information from Rimkus • Sufficient evidence for reasonable jury to find that Defendants intentionally and in bad faith deleted emails relevant to issues in case to prevent use of those emails in litigation • Judge agreed to issue adverse inference instruction with respect to deleted emails but did not strike pleadings
  21. 21. Rimkus Consulting - Conclusions • Jury can hear about email deletion and concealment/delay that occurred in discovery, consider Defendants’ conduct in deleting emails, and infer that content of deleted emails would be unfavorable to Defendants • Jury instruction to be issued on duty to preserve information • Defendants to pay reasonable costs and attorneys’ fees required to identify and respond to the spoliation issues • Permanent injunction issued based on settlement in November 2010
  22. 22. Qualcomm v. Broadcom - Timeline • Qualcomm sues Broadcom for patent infringement • Broadcom defense – waiver by participation in the JVT • Broadcom requests discovery on Qualcomm’s participation in JVT • Qualcomm repeatedly denies involvement in JVT during relevant time frame • Qualcomm files motion for summary judgment on waiver defense • Trial begins
  23. 23. Qualcomm v. Broadcom - Timeline • Qualcomm attorney discovers email showing trial witness communicated with JVT • Trial witness forced to admit existence of emails on cross-exam • Judge orders production of documents and jury finds in favor of Broadcom on waiver • Broadcom sought discovery on scope of discovery abuses • Judge initially sanctions Qualcomm and 6 outside counsel for discovery abuses
  24. 24. Qualcomm v. Broadcom - Sanctions • Qualcomm ordered to pay over $8.5 million • Six outside counsel initially referred to State Bar of California for investigation of possible ethical violations • Qualcomm and outside counsel ordered to participate in Case Review and Enforcement of Discovery Obligations (“CREDO”) program
  25. 25. Qualcomm v. Broadcom – Sanctions for Most But Not All • Several outside counsel never sanctioned because of steps taken to confirm accuracy of facts • Reviewed deposition transcripts and discovery responses • Circulated drafts of pleadings to more senior in- house and outside counsel • Investigated facts surrounding the JVT
  26. 26. Harbkabi v. Sandisk Corp. (S.D.N.Y. Aug. 23, 2010) • Breach of contract due to firing • Plaintiff sent preservation letter to Defendants before filing lawsuit • Defendants issued “Do-Not-Destroy” instructions but did not appear to carry out instructions • Negligence in failing to preserve laptops issued to Plaintiffs while working for Defendant • Adverse inference instruction appropriate because Plaintiffs “lost access to relevant evidence”
  27. 27. U.S. v. Suarez (D.N.J. Oct. 21, 2010) • Failure to preserve text messages sent between investigating agents and cooperating witness in corruption investigation • Agents never instructed to preserve messages; deleted messages allegedly “to save memory space” • Failure to issue timely litigation hold • Ordered that jury would receive a “spoliation charge” allowing (but not requiring) it to infer that deleted messages were favorable to Defendants
  28. 28. Medcorp Inc. v. Pinpoint Techs. Inc. (D. Colo. June 2010) • 43 hard drives destroyed during ordinary recycling cycle but Plaintiff later produced some information replacing what was lost • Upheld sanctions against Plaintiff for “willful” destruction of hard drives on which relevant discovery resided • Adverse inference sanction appropriate
  29. 29. “He who must search a haystack for a needle is likely to end up with the attitude that the needle is not worth the search.” Brown v. Allen, 344 U.S. 443,537 (1953)
  30. 30. Lessons to be Learned from Recent Discovery-Related Decisions Lessons for All Lessons for Courts and State Bar Lessons for Outside Counsel Lessons for Clients
  31. 31. Lessons for All: 1. The Truth Matters • Often see failure to fully adhere to the principle of telling the truth • Failure to admit when wrong when it comes to discovery issues • Party and its outside counsel often suffer the consequences - sanctions
  32. 32. Lessons for All: 1. The Truth Matters • Know the whole truth • Make accurate representations to the other side as well as to the judge and to the jury • How? • Find responsive information and produce it • Make the team aware of responsive information early • Allow witnesses/counsel to be prepared to face truth about existence and contents of responsive information before trial
  33. 33. Lessons for All: 2. Err in Favor of Production • If you have to consider whether to produce, probably should go ahead and produce it • Often less harmful to produce • Information may be responsive and discoverable but not necessarily admissible • Courts tending toward requiring production if responsive to a party’s claims or defenses
  34. 34. Lessons for All: 2. Err in Favor of Production Almost never incur wrath of Court by producing (except if it looks like a “document dump”) But feet can be held to the fire for failure to produce responsive information
  35. 35. Inside and Outside Counsel Responsible • Swofford v. Eslinger, No. 6:08-cv-00066, 2009 WL 3818593 (M.D. Fla. Sept. 28, 2009) • Inside counsel failed to issue litigation hold notice and failed to undertake meaningful actions to preserve relevant information • Awarded adverse inference sanctions and ordered defendants and inside counsel to pay fees and costs (inside counsel was not attorney of record)
  36. 36. Inside and Outside Counsel Responsible • Green v. McClendon, No. 08 Civ. 8496, 2009 WL 2496275 (S.D.N.Y. Aug. 13, 2009) • Counsel failed to provide enough detail to client regarding duty to preserve data and did not explicitly issue litigation hold notice • Awarded costs • “The preservation obligation runs first to counsel, who has a duty to advise his client of the type of information potentially relevant to the lawsuit and of the necessity of preventing its destruction.”
  37. 37. Lessons for Outside Counsel: 3. Taking Responsibility for Ensuring Client Compliance with Discovery • Cannots • Musts
  38. 38. Lessons for Outside Counsel: 3. Taking Responsibility for Ensuring Client Compliance with Discovery • CANNOT blindly rely on client’s collection and production • CANNOT blindly trust what client describes as “standard” procedures for approaching discovery issues • CANNOT shield eyes from seeing certain documents – must challenge clients regarding search and collection strategies
  39. 39. Lessons for Outside Counsel: 3. Taking Responsibility for Ensuring Client Compliance with Discovery • MUST reach agreement as to how to engage in discovery process • MUST have sufficient control over discovery process • MUST gain access to locations where responsive data may be maintained • MUST take steps to confirm compliance by key custodians – interviews, written questionnaires, etc.
  40. 40. Lessons for Outside Counsel: 4. Document Your Discovery Efforts • Keep a record of efforts with regard to document search and collection • Can potentially use record to defend discovery efforts should a discovery dispute arise • May need to seek agreement from client that documentation of actions taken may be disclosed if issues arise as to sufficiency of discovery efforts
  41. 41. Lessons for Outside Counsel: 5. If You Don’t Have a Plan, Make One • MUST define who is responsible for ensuring discovery duties are carried out • MUST get IT personnel involved • MUST issue document hold or preservation notice at outset of litigation • MUST inform employees that they have a duty to manage information in accordance with written policies – litigation or not • MUST consider investing in management technology/search tools
  42. 42. Lessons for Outside Counsel: 6. If You Have a Plan, Adhere to It • Qualcomm allegedly had a plan in place for collecting documents in response to discovery requests • Despite having plan, Qualcomm apparently did not fully follow the plan • MUST follow your plan – plan is only as effective as care given in executing plan
  43. 43. Lessons for Outside Counsel: 7. Compliance Programs/Modify Rules • CREDO Program: Identify facts that contributed to discovery violation; create and evaluate procedures to correct deficiencies; develop and finalize protocol to prevent future violations • Modifications to State Discovery Rules • Consider state-promulgated electronic discovery rules (i.e., California) • Balance burdens/needs of requesting party and producing party
  44. 44. Electronic Discovery Act - California • Signed into law on June 29, 2009 • Largely follows 2006 electronic discovery amendments to FRCP • Requires parties in written discovery responses to object to production of inaccessible information to preserve objections • Assumes all ESI is accessible and shifts balance by not requiring requesting party to bring motion to compel • Counsel must know difference between forms in which information can be produced and advantages/disadvantages to client
  45. 45. Lessons Learned