ESI Discovery Best Practices, Part 6 – Now comes the bad news ... potential consequences for inadequate preservation of ESI.

Over the past year, I have blogged about ESI rules and best practices for identification, preservation and collection of ESI. In this blog I want to focus on the potential consequences for inadequate efforts in any of these areas.

There are numerous cases addressing failure to preserve ESI, and I highlight here but a few examples. One significant case is Peerless Industries v. Crimson AV.[1] I mention this case because in a prior blog I wrote that using a third-party vendor for collection efforts is the preferred approach. Well, the court in Peerless stated that a defendant's "hands-off" approach to allowing a vendor to collect documents from a third party over which the defendant had control was insufficient, and ordered sanctions including payment of attorney's fees. So, the take away here is that you can use a vendor, but you can't just say "go get the relevant documents." Counsel for the party must stay involved in the process.

In Day v. LSI Corp.,[2] the issue was whether the defendant had failed to preserve relevant documents, including those belonging to a particularly relevant custodian. In the course of discovery surrounding the issue of spoliation, it became clear that the defendant's preservation and search efforts were neither timely nor comprehensive. In addition, testimony from the general counsel and another employee contradicted each other as to the data being sought. Because certain lost evidence was particularly relevant to one of plaintiff's claims, the court found the risk of substantial prejudice was great, and awarded partial default judgment as to that claim. The court also found that an adverse instruction at trial would be appropriate and ordered the defendant to pay $10,000 in sanctions.

In Multi-Feeder Tech,[3] an interesting case where the magistrate judge ordered sanctions, the defendant appealed to the district court, and the district judge increased the sanctions. The case involved a computer forensic expert who was hired to examine the defendant's computers. The forensic examination identified several occurrences of spoliation by the defendant, including commercial wiping software found on one custodian's computer with 6 deletions occurring after the commencement of the lawsuit and the issuance of the ESI protocol order. The original order was a $500,000 sanction ($475,000 to the plaintiff and $25,000 to the court). The district judge increased the award to the plaintiff to $600,000, finding that there had been repeated violations of the court's discovery orders.

The Apple Samsung battle a few years ago was well publicized, a battle that Samsung ultimately lost at trial.[4] The trial court sanctioned Samsung for failure to turn off its auto delete feature, which allowed responsive e mails to be destroyed. In addition to failing to disable the auto delete future, Samsung also failed to follow up with its employee custodians to ensure that they were preserving relevant data.

The Chin[5] case from the Second Circuit contains some good news in that it reverses the harsh decision in the Pension Committee[6] opinion from Judge Scheindlin–that the failure to issue a litigation hold constitutes gross negligence per se. Instead, the Second Circuit held that "the better approach is to consider the failure as one factor in the determination of whether discovery sanctions should issue." However, parties should continue to issue written hold notices as soon as the obligation is triggered.

Finally, in the In re Delta/Airtran Baggage Fee case,[7] the plaintiff sought to reopen discovery order sanctions against the defendants under FRCP 26(g) for failure to produce responsive documents. The court found that Delta, one of the defendants, did not conduct a reasonable inquiry under FRCP 26(g) and ordered it to pay reasonable costs and attorney's fees incurred as a result of the failure to preserve and produce relevant evidence.

These are but a few of the increasing number of cases addressing inadequate preservation of ESI. Of course, these cases all pre-date the change to FRCP 37 and the upcoming change to FRCP 26. In my next blog, I will address the rule changes and their potential impact on ESI discovery practices.


[1] 2013 U.S. Dist. LEXIS 2985, at *11–12 (N.D. Ill. Jan. 8, 2013)
[2] 2012 U.S. Dist. LEXIS 180319, at *43¬–46 (D. Ariz. Dec. 19, 2012).
[3] 2012 U.S. Dist. LEXIS 132619, at *29 (D. Minn. Sept. 18, 2012).
[4] 881 F. Supp. 2d 1132, 1150 (N.D. Cal. 2012).
[5] 685 F.3d 135, 162 (2d Cir. 2012).
[6] 685 F. Supp. 2d 456, 471 (S.D.N.Y. 2010).
[7] 846 F. Supp. 2d 1335, 1353 (N.D. Ga. 2012).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.