One Man’s Trash is Another Man’s Evidence: Why We Don’t Need New Rules, We Need Understanding, Diligence, and Enforcement of Existing Rules

One of my favorite sanctions cases begins with: “One man’s trash is another man’s treasure.” That’s how the United States Court of Federal Claims started its order sanctioning the government for spoliation in United Med. Supply Co., Inc. v. United States, 2007 WL 1952680 (Fed. Cl. 2007). The government didn’t preserve its records after suit was filed, the treasure plaintiff sought to prove its case. Instead, the government shredded the evidence as if it were so much trash. The plaintiff will never know the truth, not because the rules were unclear, but because of a complete lack of diligence and understanding on the part of the government and its lawyers.

Cases like this show that the problem with preservation cannot and will not be solved by new rules. We need education, not legislation. The pursuit of a new easy button is quixotic. Many of my friends disagree with me on this. The Discovery Subcommittee on FRCP Rules meets in Dallas on September 9, 2011, to consider several proposals to amend the rules to address preservation. See Jumping the Gun? Three Approaches to Drafting New Federal Discovery Rules. Many of the top guns in the field are going there to make presentations. I wish them well, but suspect their travel to Texas is in reality a journey to La Mancha.

United Med. Supply Co., Inc. v. United States

After the treasure trove quote the Court in United Medical Supply tore into the government for its grossly negligent ad hocery in the preservation of evidence.

Aside perhaps from perjury, no act serves to threaten the integrity of the judicial process more than the spoliation of evidence. Our adversarial process is designed to tolerate human failings – erring judges can be reversed, uncooperative counsel can be shepherded, and recalcitrant witnesses compelled to testify. But, when critical documents go missing, judges and litigants alike descend into a world of ad hocery and half measures – and our civil justice system suffers.

To guard against this, each party in litigation is solemnly bound to preserve potentially relevant evidence. In this government contract case, defendant violated that duty not once or twice-but repeatedly, over many years, and in sundry ways, leading to the destruction of many admittedly relevant documents. Most disturbingly, some of these documents were destroyed even after the court conducted its first spoliation hearing.

While defendant apologizes profusely for what it claims is the “negligence” of some of its employees and for making repeated misstatements to the court as to the steps that were being taken to prevent spoliation, it, nonetheless, asseverates that the court should not-indeed, cannot-impose spoliation sanctions because defendant did not proceed in bad faith. While defendant may be wrong in asserting that it acted in good faith, it most certainly is wrong in thinking that it can recklessly disregard its obligations to preserve evidence without legal consequence.

Id. at *1. Apparently the government was arguing that it was, in effect, above the law; that, unlike you and me, it could not be sanctioned for its wrongdoing. As we will see, they were not too far off. This has got to change, not the rules. We need uniform insistence on diligence. We need uniform enforcement of existing rules by lawyers and judges alike. Let’s not waste our time with more legislation. Let’s focus instead on education.

The Results of Ad Hocery

The Judge in United Medical Supply, who is known as an expert in e-discovery and technology, describes a parade of discovery horribles. The opinion provides a detailed  description of the blunders and misrepresentations by the Department of Justice, its attorneys and staff, and the Department of Defense. Although the case involves some emails and other electronic records, the main spoliation here is from good old-fashioned shredding. Hundreds of boxes of paper documents, including email print-outs, were thrown away for years after suit was filed. My favorite horribles in the long parade include:

• Making false statements to plaintiff and the Court that a complete search had been made, and all responsive documents had been produced, when in point of fact the government had only searched eight of the eighteen facilities. Defense counsel blamed that one on a bad paralegal. Id. at *3, *4, *15. Boy is that a popular thing for lawyers to do. For shame. Man up government lawyers!
• Sending some of the preservation notices to key players 5 to 6 years after the suit was filed. Id. at *4, *12. Hey, better late than never! It was on their to do list.
• Destroying documents both before and after the preservation notices. Id. Well, at least they were consistent.
  
• Failing to preserve relevant records for five years after the government had notice of plaintiff’s claim. Id. at *12. They were getting around to it, but you know how slow employees with life-time job security in big bureaucracies can move. Wally in Dilbert would be proud.
• Sending evidence to the garbage dump even after the Court’s first hearing on spoliation. Id. What, you expect the government to change their ways of doing things just because of some stupid law suit? Hey, we are the government. We make the laws. You are just a little judge.
  

The Rationale for Punishing the Government for its Destruction of Evidence

The Judge goes on to speak loudly about the need to punish the government and others for this kind of discovery spoliation. Very scary talk. The long and scholarly opinion speaks of the need to send a message of deterrence and impose sanctions, even without proof of bad faith, as that is often an elusive and difficult thing to prove. The strong words include the following that you hope will never be used against you or your client.

Guided by logic and considerable and growing precedent, the court concludes that an injured party need not demonstrate bad faith in order for the court to impose, under its inherent authority, spoliation sanctions. Several reasons lead to this conclusion.

For one thing, it makes little sense to talk of a general duty to preserve evidence if, in fact, the breach of that duty carries no real legal ramifications. Requiring a showing of bad faith as a precondition to the imposition of spoliation sanctions means that evidence may be destroyed wilfully, or through gross negligence or even reckless disregard, without any true consequences. . . .

Second, imposing sanctions only when a spoliator can be proven to have acted in bad faith defenestrates three of the four purposes underlying such sanctions-to protect the integrity of the fact-finding process, to restore the adversarial balance between the spoliator and the prejudiced party, and to deter future misconduct-and severely frustrates the last, to punish. These objectives are hardly served if the court, in effect, is constrained to say to the injured party-“sorry about that, but there is nothing I can do, except to let you present your case, such as it remains.”

Indeed, while some commentators have asserted otherwise, the history of the spoliation doctrine suggests that it was not designed solely to punish those who consciously destroy inculpatory documents, but also to address the manifest unfairness inherent in the loss of relevant evidence. Even if such sanctions were once rooted in an inference of consciousness of a weak case, that is neither the controlling rationale nor the prevailing rule nowadays.

Finally, adopting a bad faith standard when the court is operating under its inherent authority creates an incongruity between the sanctions available for spoliation depending upon whether-or not-a discovery regime has been established that would trigger Rule 37. This incongruity could be viewed as encouraging the earlier destruction of evidence-a race to the shredder, so to speak. . . 

Id. at *10.

It is the duty of the United States, no less than any other party before this court, to ensure, through its agents, that documents relevant to a case are preserved. Indeed, while not entering into the calculus here, a good argument can be made that, as the enforcer of the laws, the United States should take this duty more seriously than any other litigant. Unfortunately, in the case sub judice, irrefutable evidence demonstrates that over an extended period of time, the United States, acting through at least some of its employees, recklessly disregarded that duty, thereby undoubtedly damaging plaintiff’s ability to present its case in this matter and disrupting the orderly administration of this proceeding.

Weighing the seriousness of the fault here, as well as its impact on plaintiff and the integrity of the judicial process, the court concludes that it must impose spoliation sanctions against the United States.

Id. at *15.

The Reality of “Harsh” Punishments Against the Government

After such tough talk, you would expect the opinion to conclude with the imposition of many harsh and stinging penalties to sanction the government. Perhaps an order for someone to go to jail? At least defenestrate a few of the DOJ lawyers? Maybe the entry of a default judgment? Or at the very least, the imposition of an adverse inference and some stiff fines. You would be wrong.

Instead, the 18-page opinion ends with a sanction that merely limits the government’s cross-examination of plaintiff’s experts, and provides for some reimbursement of fees and costs incurred by plaintiffs on discovery. Perhaps this was a stronger penalty than it appears. I don’t know, but certainly the plaintiff was disappointed by this outcome, especially after such a big build-up in the first 16 pages. Can you imagine Judge Grimm ending this opinion with a sanction like that? Apparently, one judge’s strong sanction is another’s slap on the wrist. More rules will never change that. Only education.

The Judge did not give the plaintiff the default judgment it wanted because, in his words, of the lack of “any proof suggesting that the destruction of the records was purposeful and designed to obscure the truth.” Id. at *17. Does that sound like the same judge? Wasn’t he just complaining about the descent into the world of ad hocery? The danger of encouraging a race to the shredder? The higher duty of the government? The harm to the integrity of the judicial process?

I’ll gladly pay you Tuesday for a hamburger today.

I can just hear some observers pick up on the leniency of the actual ruling in United Medical Supply to say that the fear of sanctions is overblown, that there is no real need to focus on the preservation of evidence. They join me in opposing new rules, but for entirely different reasons. They don’t think that preservation is really all that important. Ad hocery is, after all, much cheaper than systems, and sanctions are what happens to the other guy. Even if you are sanctioned, the worst thing likely to happen is a stern lecture, just some trash talk, and little more. We’ll fix our records systems someday. Don’t worry too much about litigation holds. Let’s spend our time and money on other things. I’ll gladly pay you Tuesday for a hamburger today. That is the unofficial motto of the federal government, is it not?

I wish that more judges understood how some litigants are like children; they do not listen to what you say, only what you do. There is a danger that some litigants and their attorneys will continue or adopt the much ado about nothing attitude towards preservation. But don’t kid yourself. It would be  a serious mistake to assume that you can shred or wipe evidence against you or your client because, even if you are caught, you will probably just get a stern talking to. Ad hocery in preservation by private litigants is rarely tolerated. Take this opinion in United Medical Supply with a big grain of government salt. Unless you are a DOJ lawyer, you had better avoid ad hocery when it comes to e-discovery, especially preservation.

Who Loves the Government These Days?

The government often gets away with more stuff than the average Joe, or even the average Fortune 500 mega-corporation. For example, can you imagine any large private organization getting away with a blanket refusal to ever produce any metadata? Yet, that is exactly what happened this year in NDLON v. ICE. Who else but big government can get away with a paper-only records retention policies that were enacted sixty years ago? And then use their inability to keep up with the times as an excuse to defenestrate metadata in all their original records, their computer records, like it was so much trash? (NARA and others have tried to get bills passed to update policies, but Congress, demonstrating its usual partisan attitude of irresponsible incompetence, does not consider that important. See Eg. Electronic Message Preservation Act)

The judge’s thinking in United Medical Supply is right, the government as the enforcer of laws should be held to a higher standard. The best government lawyers say that frequently and live by that. I’ve heard them say it, and I’m impressed. But in reality, when in court, the government is almost never held to a higher standard. To the contrary, the government is sometimes given way too much slack and allowed a lower standard of conduct. The minor sanctions imposed against the government in United Medical prove my point. Even the best judges tend to let the feds get away with spoliation that would cost you and I dearly. I wonder if this will soon change any time soon?

Conclusion: We Need Education and Dedication; Not Legislation.

It would be a serious error to think that spoliation and threats of sanctions are no big deal, especially if you are not the government. Sanctions can and do lose cases, even very big cases. In fact, according to a study by Kroll Ontrack, 39% of e-discovery cases in 2010 were sanction cases, and 49% of them involved preservation and spoliation issues. Sanctions are an important problem, but the answer to the problem is not in new rules. It is in understanding the old ones.

As I said before, a whole lot of important people in this industry don’t agree with me. They want to legislate their way out of the problem. That is why the Discovery Subcommittee on FRCP Rules is meeting in Dallas, Texas on September 9, 2011, to consider several proposals to amend the rules to address preservation. See Jumping the Gun? Three Approaches to Drafting New Federal Discovery Rules. They think that new rules are needed to provide guidance on preservation and move away from judicial ad hocery.

Some have high hopes for what new rules might accomplish. I hope they are right, but I don’t share in the optimism. I’m more inclined to agree with Ron Hedges on this. Like me he thinks that the effort is premature, that we should learn to use the mechanisms we already have. This learning deficit, plus explosive growth in technology and data, are the real cause of the high cost of preservation, not the rules.

I don’t think new rules are the solution. As usual, my solution is better training for more and more lawyers, judges, paralegals, and techs. We need more and better education, not legislation. As Ron likes to point out, we also need to make better use of technology to manage exponential data growth. But again, this is a function of education.

The real source of judicial ad hocery does not come from any deficiency in the rules or conflicts between Circuits. It comes from inadequate understanding of reasonability and proportionality in preservation, not only by judges, but by litigants, law firms, techs, and vendors. It also comes from the failure of many large enterprises to effectively manage their data. Again, this failure comes from a lack of understanding. I am reminded of Plato’s cave. Will more rules really make any difference to lawyers chasing paper shadows?

New rules or not, at the end of the day we will all have to live with a general standard of reasonableness and varying common law applications. Bad faith is, after all, a very fact intensive and subjective finding. Even if a terrific new rule is enacted, and even if it is found to be constitutional (a big if), it will still often come down to personal judicial evaluations of reasonability, intent, and the appropriateness of particular sanctions. It will still come down to a legal requirement that all parties make reasonable efforts at preservation. There is no easy button and we are wasting our time trying to legislate our way out of this mess. Instead, we need more lawyers trained in electronic discovery. We need litigants to listen to them, to exercise diligence, not ad hocery. We need education and dedication; not legislation.

Despite the final holding in United Medical, and despite the tempting promise of easy days from new rules, you need to take preservation seriously now. The judge hearing your case might not be as lenient as this judge in the Court of Federal Claims. He or she might have a different favorite saying having nothing to do with trash, such as: Speak softly and carry a big stick. In that case, watch out, serious sanctions could result. Your opponent could well treasure the thrashing you suffer.