Sanctions were recently imposed under Rule 26(g) for errors in the collection and preservation of computer files. Cache La Poudre Feeds, LLC v. Land O’Lakes Farmland Feed, LLC, 2007 WL 684001 (D.Colo. March 2, 2007). Rule 26(g) requires an attorney to sign all discovery requests, responses, and objections. The Rule further states that:
The signature of the attorney or party constitutes a certification that to the best of the signer’s knowledge, information, and belief, formed after a reasonable inquiry, the disclosure is complete and correct as of the time it is made.
Moreover, Rule 26(g)(2) provides that by signing, an attorney is certifying that to the
best of the signer’s knowledge, information, and belief, formed after a reasonable inquiry, the request, response, or objection is: . . . (B) not interposed for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation. . . . (C) not unreasonable or unduly burdensome or expensive, given the needs of the case, the discovery already had in the case, the amount in controversy, and the importance of the issues at stake in the litigation.
Unfortunately, in my experience, the obligations imposed upon counsel of record by Rule 26(g) are not always followed. The Land O’Lakes case provides a rare example of the imposition of sanctions for its violation. Even here, the court held that the conduct in question was also sanctionable as spoliation. Further, the sanctions imposed against the defendant whose attorneys violated the rule were minor, only a $5,000 fee award plus court reporter costs. The mild nature of the sanction is perhaps explained by the court’s obvious irritation at the conduct of both parties, including the plaintiff, who had previously been sanctioned for a Rule 11 violation. If the moving party had been wearing a “white hat,” I expect that a far harsher sanction would have been imposed.
Even though the sanctions imposed were relatively minor, the case is still important, not only because Rule 26(g) was applied, but also because of the facts found to be sanctionable. These facts make clear that it is not enough to simply issue a litigation hold to key employees, and then assume they will properly locate, preserve and produce the relevant computer files and other ESI. Counsel have a duty under the rules to followup on the hold notice, and make reasonable efforts to independently verify that the hold directive has been followed, and the relevant ESI has been preserved and produced. This is part of the so called “Zubulake duties” discussed at length in the “Duties” blog page above. See Zubulake v. UBS Warburg LLC, 229 F.R.D. 422 (S.D.N.Y.2004) (“Zubulake V“).
The defendant in this case, Land O’Lakes, sent out a litigation hold notice to key employees within days after the trademark violation suit was filed. The court found the timing was acceptable, but faulted Land O’Lakes’ in-house and outside counsel for the procedure chosen to preserve and collect the ESI, and for the poor followup to the hold notice.
After the written hold notice was sent, there were interviews with key witnesses, but the Land O’Lakes employees were essentially on their own to locate and preserve the emails and other files that they considered to be related to the trademark dispute. The employees looked through their files, and although they located 50,000 pages of documents related to the mark “Profile”, they only found 415 emails. Counsel simply accepted all of this as correct. No attempt was made by either in-house counsel or by outside counsel, who signed the discovery responses under Rule 26, to independently verify their efforts. Counsel simply took the files they produced and assumed that it was complete and the search was thorough. Further, no system-wide key word search was ever run on defendant’s systems, or the key employees, as plaintiff argued strenuously should have been done.
The Court was clearly troubled by this borderline negligent approach under the circumstances. But the court found even more troubling the failure of counsel to prevent the “wiping” of hard drives from computers of employees who left the company after the suit was filed, at least one of whom was undeniably a “key player.” The court considered this a failure to preserve evidence that constituted spoliation.
The plaintiff argued that this conduct constituted a clear violation of defendant’s Zubulake duties. Specifically plaintiff argued that:
Defendants failed to comply with the following “duties” set forth in Zubulake V –
- once litigation is commenced or a party reasonably anticipates litigation, it must suspend its routine document retention/destruction policy and put in place a “litigation hold” to ensure the preservation of relevant documents;
- in furtherance of the “litigation hold,” counsel must become fully aware of the client’s document retention policies and data retention architecture;
- counsel must communicate with “the key players”in the litigation in order to understand how they stored information;
- counsel must take reasonable steps to monitor compliance with the “litigation hold” so that all sources of discoverable information are identified and searched; and,
- having identified all sources of potentially relevant information, a party and its counsel are under a duty to retain that information and produce information responsive to the opposing party’s requests.
Under these circumstances the court held:
While instituting a “litigation hold” may be an important first step in the discovery process, the obligation to conduct a reasonable search for responsive documents continues throughout the litigation. See Fed.R.Civ.P. 26(e)(2) (a party is under a duty seasonably to amend discovery responses “if the party learns that the response is in some material respect incomplete or incorrect and if the additional or corrective information has not otherwise been made known to the other parties during the discovery process or in writing”).
A “litigation hold,” without more, will not suffice to satisfy the ‘reasonable inquiry’ requirement in Rule 26(g)(2). Counsel retains an on-going responsibility to take appropriate measures to ensure that the client has provided all available information and documents which are responsive to discovery requests. Sexton v. United States, 2001 WL 649445 (M.D. Fla. 2001). As the Advisory Committee Notes make clear, “Rule 26(g) imposed an affirmative duty to engage in pretrial discovery in a responsible manner that is consistent with the spirit and purposes of Rules 26 through 37.” In this case, I find that Defendants failed to meet this standard.