Archive: January 2011

1
Court Awards $1,049,850.04 in Attorney’s Fees and Costs as Sanction for Discovery Abuse in “Victor Stanley II”
2
Delaware Court of Chancery Issues Guidelines for Preservation of Electronically Stored Information
3
Employee’s Use of a Work Computer to Communicate with Attorney “Akin to Consulting her Lawyer in her Employer’s Conference Room, in a Loud Voice, with the Door Open…”
4
Production of Servers without Review Waives Privilege and so Might Storage of Privileged Materials on Servers Shared with Other Entities
5
K&L Gates, EDRM Collaborate to Enhance E-Discovery Database
6
Jury to Determine Question of Bad Faith and Whether to Draw Adverse Inference as Sanction for Loss of Video Pursuant to Document Retention Policy

Court Awards $1,049,850.04 in Attorney’s Fees and Costs as Sanction for Discovery Abuse in “Victor Stanley II”

Victor Stanley, Inc. v. Creative Pipe, Inc., No. MJG-06-2662 (D. Md. Jan. 24, 2011)

On January 24, 2011, Magistrate Judge Grimm entered an order awarding $1,049,850.04 in attorney’s fees and costs as a sanction for discovery abuse, as discussed in Victor Stanley IIThe amount addressed “attorney’s fees and costs associated with all discovery that would not have been un[der]taken but for Defendants’ spoliation, as well as the briefings and hearings regarding Plaintiff’s Motion for Sanctions.”  As the court explained, “[t]his is because the effects of spoliation are not limited to a party’s efforts to discover and to prove the spoliation and its scope.  Rather, the willful loss or destruction of relevant evidence taints the entire discovery and motions practice.”  In this case specifically, the court found that “Defendants’ first spoliation efforts corresponded with the beginning of litigation” and that “Defendants’ misconduct affected the entire discovery process since the commencement of this case.”

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Delaware Court of Chancery Issues Guidelines for Preservation of Electronically Stored Information

Last week the Delaware Court of Chancery issued new guidelines addressing the preservation of electronically stored information.  The guidelines are intended to “remind all counsel … of their common law duty to their clients and the court with respect to the preservation of electronically stored information.”  Although less than two pages long, the guidelines offer a straightforward discussion of the preservation obligation that arises upon anticipation of litigation and address specific topics including the need for attorney oversight in preservation, steps to be taken in “most cases,” “potential problem areas,” and the possibility of limiting or even eliminating the discovery of ESI upon agreement with opposing parties and their counsel, among other things.

A full copy of the guidelines are available here.

Employee’s Use of a Work Computer to Communicate with Attorney “Akin to Consulting her Lawyer in her Employer’s Conference Room, in a Loud Voice, with the Door Open…”

Holmes v. Petrovich Dev. Co., LLC, 119 Cal. Rptr. 3d 878 (Cal. Ct. App. 2011)

Where plaintiff used her company’s computer to communicate with her attorney despite knowledge of policies prohibiting such use and establishing that employees had no right of privacy as to such materials, the court found that the emails “did not constitute ‘confidential communication between client and lawyer’ within the meaning of Evidence Code section 952” and thus were not privileged and affirmed the holdings of the trial court.

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Production of Servers without Review Waives Privilege and so Might Storage of Privileged Materials on Servers Shared with Other Entities

In re Fontainebleau Las Vegas Contract Litig., 2011 WL 65760 (S.D. Fla. Jan 7, 2011)

In this case, the court found that privilege had been waived as a result of a third party’s voluntary production of servers believed to contain privileged materials without review.

The Term Lenders sought production of documents related to the financing of the construction of the Fontainebleau Resort and Casino in Las Vegas from the third-party parent of Fontainebleau Las Vegas, Fontainebleau Resort, LLC (“FBR”).  FBR resisted production of its documents, albeit without formal motions, until approximately six months after receipt of the subpoena.  During that time, FBR initially alleged that production would be delayed because of the shared status of the servers on which its information was stored and the need to separate its documents from those of other entities by allowing those entities to review all documents stored thereon to determine ownership, privileged status, etc.  FBR had previously raised this issue in the context of an unsuccessful motion to quash similar subpoenas from other banks.  The court’s footnote regarding the shared servers is illuminating:

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K&L Gates, EDRM Collaborate to Enhance E-Discovery Database

As a way of continuing to enhance the value of Electronic Discovery Law, we recently embarked on a project with the e-Discovery Reference Model (EDRM) to classify the more than 1,800 cases in our case database according to the EDRM standards.  These cases will retain their existing searchable tags in addition to the new EDRM classification.  To accomplish this, several EDRM member organizations will soon participate in an “EDRM Coding Challenge” to determine how to most efficiently and accurately identify the EDRM phases to be associated with each case in the database.  Thanks to George Socha, Tom Gelbmann, and the challenge participants from EDRM for their contributions to this project so far and special thanks to LexisNexis and Applied Discovery for supplying the full text of the first 200 case opinions to be coded.  Please watch our blog for updates on this exciting collaboration.

In the meantime, our case database remains available for your e-discovery research needs.

Jury to Determine Question of Bad Faith and Whether to Draw Adverse Inference as Sanction for Loss of Video Pursuant to Document Retention Policy

Rattray v. Woodbury County, 2010 WL 5437255 (N.D. Iowa Dec. 27, 2010)

In this case, the court imposed sanctions for defendants’ failure to preserve relevant video footage and ordered an instruction allowing the jury to determine whether the recording was destroyed in bad faith and, if so, to infer that it would have been unfavorable to the defendants.  In so holding, the court cited as an important factor that the video was the only recording of what occurred, “which weighs heavier in this case than the lack of actual knowledge that litigation was imminent at the time of the destruction.”

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