Tuesday, December 7, 2010

Year in review: Kroll Ontrack 2010 discovery trend data reveals organizations struggle with preservation, production and general discovery protocols

Minneapolis, MN – Dec. 7, 2010 Kroll Ontrack, the leading provider of information management, data recovery, and legal technologies products and services,today announced its analysis of the reported electronic discovery opinions and five notable discovery themes in 2010. Among the dominant topics reoccurring in the 2010 judicial opinions were the pervasive struggle companies and practitioners continue to have with proper preservation techniques, the continued growth in intolerance by the judiciary for discovery failures and the renewed call for cooperation amongst counsel.

From Jan. 1, 2010 to Oct. 31, 2010, Kroll Ontrack summarized 84 of the most significant e-discovery cases. The number of discovery-related opinions continues to increase exponentially. These 84 opinions represent the trends demonstrated in jurisdictions across the nation. The breakdown of the major issues involved in these cases is as follows:

  • 39 percent of cases addressed sanctions
    • 49 percent of sanctions involved preservation and spoliation issues
    • 27 percent of sanctions involved production disputes
    • 24 percent of sanctions involved withholding discovery and other abuses
  • 18 percent of cases addressed various production considerations
  • 17 percent of cases addressed various procedural issues (such as searching protocol and cooperation)
  • 11 percent of cases addressed privilege considerations and waivers
  • 8 percent of cases addressed computer forensics protocols and experts
  • 2 percent of cases addressed cost considerations
  • 2 percent of cases addressed preservation and spoliation issues (but not sanctions)
  • 2 percent of cases addressed discoverability and admissibility issues

Almost every case that discussed preservation and spoliation issues also included a conversation regarding sanctions. This is not surprising given that 24 percent of respondents to the Fourth Annual ESI Trends Report published by Kroll Ontrack ranked preservation and collection difficulties as their number one concern.

Similar to both 2008 and 2009, the dominant pain point for courts and counsel was sanctions. Of the 33 sanctions cases summarized, 23 opinions (70 percent) awarded sanctions, while only 10 opinions (30 percent) denied sanctions.

"Information management and discovery protocols and processes are far from clear for most organizations. The lack of defined rules leaves organizations relying on case law, which can be contradictory depending on the jurisdiction," said Michele Lange, director of discovery, Kroll Ontrack. "Consequently, organizations should not underestimate the value of conducting proactive measures with a discovery expert - from creating and communicating clear policies to testing those policies - so they are in the best possible position when required to respond to a request for ESI from a government agency or opposing party in a lawsuit, regulatory matter or investigation."

Five notable cases themes from 2010 included:

Preservation
Pension Comm. of the Univ. of Montreal Pension Plan v. Banc of Am. Sec., LLC, 2010 WL 184312 (S.D.N.Y. Jan. 15, 2010). Seven plaintiffs who eventually issued written holds were found to have acted negligently, while the six plaintiffs who failed to issue any written litigation hold were found grossly negligent and subject to a permissive adverse inference sanction. The court found all thirteen plaintiffs worthy of monetary sanctions since they "conducted discovery in an ignorant and indifferent fashion," and awarded the defendants reasonable attorneys' fees and costs associated with the motion.

Rimkus Consulting Group, Inc. v. Cammarata, 2010 WL 645253 (S.D.Tex. Feb. 19, 2010). Court noted that "spoliation of evidence - particularly of electronically stored information - has assumed a level of importance in litigation that raises grave concerns" and "distract[s] from the merits of a case, add[s] costs to discovery, and delay[s] resolution." Imposed a permissive adverse inference instruction and awarded the plaintiff attorneys' fees and costs. Distinguished Pension Committee, finding the differences between circuits in relation to culpability of parties limited the applicability of the approach taken in that case and identified an additional distinction in regard to the burden of proof in relation to relevance and prejudice of spoliated evidence.

Victor Stanley, Inc. v. Creative Pipe, Inc., 2010 WL 3703696 (D. Md. Sept. 9, 2010). Court remarked the eight discrete preservation failures of the defendant "collectively constitute the single most egregious example of spoliation [that he has] encountered in any case . in nearly fourteen years on the bench." Discussed preservation standards and spoliation laws among the Circuits, including in Pension Committee and Rimkus Consulting Group and issued a default judgment for one claim and held that the defendant president pervasively and willfully violated court orders in civil contempt of court, ordering him to be imprisoned for up to two years, or until he paid the attorneys' fees and costs - estimated to be a "significant amount."

Cooperation
Camesi v. Univ. of Pittsburgh Med. Ctr., 2010 WL 2104639 (W.D.Pa. May 24, 2010). Court ordered the parties to meet and confer and issued the defendants a "wake-up call" to "tighten up their discovery practices." Court emphatically directed opposing counsel to act reasonably and in good-faith, working through "disagreements amicably whenever possible" as the court "has neither the time nor the resources to resolve every discovery agreement that surfaces in this or any other case."

Privacy in the Workplace
City of Ontario, California v. Quon, 2010 WL 2400087 (U.S. June 17, 2010). United States Supreme Court declined to issue a "broad holding concerning employees' privacy expectations vis-á-vis employer provided technological equipment." However, the court found the employee should have understood or anticipated that it might be necessary for the City to audit the pager messages and deemed the employer's search of the employee's text messages reasonable.

Privilege
Mt. Hawley Ins. Co. v. Felman Prod., Inc., 2010 WL 1990555 (S.D.W.Va. May 18, 2010). Despite citing numerous steps the plaintiff undertook to prevent disclosure and the existence of a clawback agreement, the court found the plaintiff failed to perform critical quality control sampling and concluded the plaintiff did not take reasonable steps to prevent disclosure. As such, the efforts did not satisfy Fed.R.Evid. 502(b) and privilege was waived. In making its decision, the court also noted the e-mail was "a bell which cannot be unrung," which influenced the defendants' discovery requests and deposition questions.

Discoverability of Additional Mediums
Romano v. Steelcase Inc., 907 N.Y.S.2d 650 (Sept. 21, 2010). Court found public portions of the plaintiff's social networking sites contained content that was material and necessary to the litigation, and discerned a reasonable likelihood that the same would hold true as to the private portions. Noting commentary that "privacy is no longer grounded in reasonable expectations, but rather in some theoretical protocol better known as wishful thinking," and that sharing personal information with others "is the very nature and purpose" of social networking sites the court ordered the plaintiff to provide necessary authorization for access to private Facebook and MySpace accounts.

About Kroll Ontrack Inc.
Kroll Ontrack provides technology-driven services and software to help legal, corporate and government entities as well as consumers manage, recover, search, analyze, produce and present data efficiently and cost-effectively. In addition to its award-winning suite of software, Kroll Ontrack provides data recovery, data destruction, paper and electronic discovery, document review, computer forensics, secure information services, ESI and jury consulting, and trial presentation services. Kroll Ontrack is the technology services division of Kroll Inc., the global risk consulting company. Kroll is a subsidiary of Altegrity, an industry-leading provider of information solutions. For more information about Kroll Ontrack and its offerings please visit: www.krollontrack.com; www.ontrackdatarecovery.com.