Archive for April 2015

Supreme Court Approves Proposed Amendments to Federal Rules of Civil Procedure, Submits Proposals to Congress for Approval

Today, April 29, 2015, Chief Justice John G. Roberts submitted the proposed amendments to the Federal Rules of Civil Procedure which “have been adopted by the Supreme Court of the United States” to Congress for final approval.  Absent legislation to reject, modify or defer the rules, they will become effective December 1, 2015.

A copy of the Supreme Court’s submission to Congress is available here.

Court Imposes “Death Penalty Order” for Discovery Violations, Rejects Reliance on Retention Policy

Crews v. Avco Corp., No. 70756-6-I, 2015 WL 1541179 (Wash. Ct. App.  Apr. 6, 2015)

In this case, the trial court held Defendant in contempt and ultimately imposed a “death penalty order” for discovery violations, including the failure to produce relevant information.  Notably, the trial court rejected Defendant’s reliance on its document retention policy as an explanation for why the information was unavailable.  On appeal, the appellate court affirmed the imposition of sanctions but remanded for amendment of the final judgment to reflect any offsets authorized by statute.

The claims in this case arose from a plane crash in which several people were killed.  Plaintiffs alleged that the engine failure was caused by a faulty carburetor and sought discovery relating to the design and manufacture of the carburetor and any communications indicating Defendant’s knowledge of defects or malfunctions, among other things.  Despite multiple motions to compel and court orders to produce and a finding of contempt, Defendant failed to satisfy Plaintiffs’ discovery demands.

In its defense, Defendant relied in part upon its document retention policy.  Specifically, after being held in contempt, Defendant submitted a declaration from counsel detailing its efforts to comply with the court’s order to produce, explaining that “pursuant to company policy” certain categories of documents were “‘retained only for fixed periods of time’” and stating that many of the documents supplied by another defendant (which tipped off Plaintiffs to Defendant’s possible possession of relevant, unproduced evidence) were “‘beyond the various retention periods in [Defendant’s] Records Management Policy.’”  However, the policy itself was not provided.

In response to a subsequent motion for sanctions alleging continued failure to produce requested evidence, Defendant again explained that “under its records management policy, many of the documents that [another party] produced were no longer in [it’s] possession.”  Plaintiffs, in turn, noted that Defendant “failed to submit any employee affidavit stating that no responsive documents existed or that certain evidence was destroyed under the records management policy” and relied instead upon the declaration of counsel, which had been “rejected” by the prior judge when addressing earlier motions.

At argument regarding sanctions on the first day of trial, Defendant produced a copy of the policy for the trial court.  The court, in turn, found that “it was unclear whether the policy extended to the documents requested by the plaintiffs” and indicated it was “‘not satisfied . . . that some of the documents requested by the plaintiff couldn’t have been produced.’”  The motion for sanctions was orally granted and a written order followed the next day.  Among other things, the written order stated that Defendant’s “justification for nonproduction was insufficient” and reasoned that “‘[t]he court examined the [records management policy], which was provided without affidavit or declaration and here finds the categories within it, combined with counsel’s assignment of documents to the categories within it, to be overly vague.’”

The trial also court found that Defendant’s “‘continued disregard and violation of the discovery and contempt orders’” was willful and that it continued to prejudice the Plaintiffs.  Accordingly, the trial court imposed severe sanctions, including that all allegations against the defendant were deemed admitted and that all of Defendant’s defenses were stricken. Ultimately, the jury awarded one Plaintiff $17,283,000 (the other Plaintiff settled after the compensatory damages phase).

Defendant appealed, arguing that the sanctions order violated due process and challenging the sanctions as too severe and in error.  Analyzing Defendant’s objections, the appellate court laid out the requisite showing to justify harsh sanctions under CR 37(b)—that the discovery violations were willful or deliberate, that the opposing party was substantially prejudiced, and that the trial court explicitly considered lesser sanctions—and, following substantial analysis, largely affirmed the findings of the lower court.  Notably, the appellate court acknowledged that “[d]iscovery sanctions serve to deter, punish, compensate, educate, and ensure that the wrongdoer does not profit from the wrong,” and, when addressing whether lesser sanctions would have sufficed, found that it was reasonable for the trial court to find that “although monetary sanctions could have compensated [Plaintiff], they would not adequately punish, deter, or educate.”

Specifically regarding the lower court’s rejection of Defendant’s reliance on its document retention policy, the appellate court noted that the policy was not part of the record, but nonetheless found there was no abuse of discretion:

The scope and operation of the policy is unclear and unsupported. Avco’s attorney declarations and pleadings do not explain how the policy applies to the “various categories” of documents requested. Avco did not submit any other evidence, such as employee affidavits, about how the policy applied to the requested documents and their destruction. As the trial court noted, it would require a “leap of faith” to conclude that the policy covered the evidence in question here.

The appellate court went on to consider Defendant’s failure to comply with the lower court’s order to produce responsive documents and affirmed the lower court’s finding that Plaintiff was prejudiced.

Ultimately, despite largely affirming the sanctions imposed, the appellate court remanded the case for “amendment of the final judgment to reflect any offsets authorized pursuant to chapter 4.22 RCW.”

A full copy of the court’s opinion is available here.

Court Imposes “Death Penalty Order” for Discovery Violations, Rejects Reliance on Retention Policy

Crews v. Avco Corp., No. 70756-6-I, 2015 WL 1541179 (Wash. Ct. App.  Apr. 6, 2015)

In this case, the trial court held Defendant in contempt and ultimately imposed a “death penalty order” for discovery violations, including the failure to produce relevant information.  Notably, the trial court rejected Defendant’s reliance on its document retention policy as an explanation for why the information was unavailable.  On appeal, the appellate court affirmed the imposition of sanctions but remanded for amendment of the final judgment to reflect any offsets authorized by statute.

The claims in this case arose from a plane crash in which several people were killed.  Plaintiffs alleged that the engine failure was caused by a faulty carburetor and sought discovery relating to the design and manufacture of the carburetor and any communications indicating Defendant’s knowledge of defects or malfunctions, among other things.  Despite multiple motions to compel and court orders to produce and a finding of contempt, Defendant failed to satisfy Plaintiffs’ discovery demands.

In its defense, Defendant relied in part upon its document retention policy.  Specifically, after being held in contempt, Defendant submitted a declaration from counsel detailing its efforts to comply with the court’s order to produce, explaining that “pursuant to company policy” certain categories of documents were “‘retained only for fixed periods of time’” and stating that many of the documents supplied by another defendant (which tipped off Plaintiffs to Defendant’s possible possession of relevant, unproduced evidence) were “‘beyond the various retention periods in [Defendant’s] Records Management Policy.’”  However, the policy itself was not provided.

In response to a subsequent motion for sanctions alleging continued failure to produce requested evidence, Defendant again explained that “under its records management policy, many of the documents that [another party] produced were no longer in [it’s] possession.”  Plaintiffs, in turn, noted that Defendant “failed to submit any employee affidavit stating that no responsive documents existed or that certain evidence was destroyed under the records management policy” and relied instead upon the declaration of counsel, which had been “rejected” by the prior judge when addressing earlier motions.

At argument regarding sanctions on the first day of trial, Defendant produced a copy of the policy for the trial court.  The court, in turn, found that “it was unclear whether the policy extended to the documents requested by the plaintiffs” and indicated it was “‘not satisfied . . . that some of the documents requested by the plaintiff couldn’t have been produced.’”  The motion for sanctions was orally granted and a written order followed the next day.  Among other things, the written order stated that Defendant’s “justification for nonproduction was insufficient” and reasoned that “‘[t]he court examined the [records management policy], which was provided without affidavit or declaration and here finds the categories within it, combined with counsel’s assignment of documents to the categories within it, to be overly vague.’”

The trial also court found that Defendant’s “‘continued disregard and violation of the discovery and contempt orders’” was willful and that it continued to prejudice the Plaintiffs.  Accordingly, the trial court imposed severe sanctions, including that all allegations against the defendant were deemed admitted and that all of Defendant’s defenses were stricken. Ultimately, the jury awarded one Plaintiff $17,283,000 (the other Plaintiff settled after the compensatory damages phase).

Defendant appealed, arguing that the sanctions order violated due process and challenging the sanctions as too severe and in error.  Analyzing Defendant’s objections, the appellate court laid out the requisite showing to justify harsh sanctions under CR 37(b)—that the discovery violations were willful or deliberate, that the opposing party was substantially prejudiced, and that the trial court explicitly considered lesser sanctions—and, following substantial analysis, largely affirmed the findings of the lower court.  Notably, the appellate court acknowledged that “[d]iscovery sanctions serve to deter, punish, compensate, educate, and ensure that the wrongdoer does not profit from the wrong,” and, when addressing whether lesser sanctions would have sufficed, found that it was reasonable for the trial court to find that “although monetary sanctions could have compensated [Plaintiff], they would not adequately punish, deter, or educate.”

Specifically regarding the lower court’s rejection of Defendant’s reliance on its document retention policy, the appellate court noted that the policy was not part of the record, but nonetheless found there was no abuse of discretion:

The scope and operation of the policy is unclear and unsupported. Avco’s attorney declarations and pleadings do not explain how the policy applies to the “various categories” of documents requested. Avco did not submit any other evidence, such as employee affidavits, about how the policy applied to the requested documents and their destruction. As the trial court noted, it would require a “leap of faith” to conclude that the policy covered the evidence in question here.

The appellate court went on to consider Defendant’s failure to comply with the lower court’s order to produce responsive documents and affirmed the lower court’s finding that Plaintiff was prejudiced.

Ultimately, despite largely affirming the sanctions imposed, the appellate court remanded the case for “amendment of the final judgment to reflect any offsets authorized pursuant to chapter 4.22 RCW.”

A full copy of the court’s opinion is available here.

What the judges think: e-discovery practices and trends

by Daniel Miller and Tina Miller

This article was originally published in the Lawyers Journal, The Journal of the Allegheny County Bar Association, April 3, 2015.

A recent survey of leading federal jurists indicates that many attorneys need to improve their knowledge and practices regarding e-discovery.

The “Federal Judges Survey on e-discovery Best Practices and Trends,” commissioned by the e-discovery software firm Exterro, reflects responses from 22 federal district and magistrate judges, including the Western District of Pennsylvania’s Chief Judge Joy Flowers Conti, Judge Nora Barry Fischer and Magistrate Judge Lisa Pupo Lenihan.

The judges were asked 15 multiple-choice questions covering a number of e-discovery topics. Despite the numerous and varied e-discovery seminars and training sessions currently available to practitioners, the survey results indicate that many attorneys still lack e-discovery competency. In particular, the judges complained about two main problems – a lack of knowledge about their clients’ e-discovery environment and a lack of cooperation between opposing parties and attorneys.

To read the full article, click here. Reprinted with permission from the Lawyers Journal.

No Sanctions for Discovery Failures Resulting from Court-Ordered Seizure of Defendants’ Books and Records in a Separate Case

Perez v. Metro Dairy Corp., No. 13 CV 2109(RML), 2015 WL 1535296 (E.D.N.Y. Apr. 6, 2015)

Plaintiffs in this collective action sought spoliation sanctions for Defendants’ failure to produce certain relevant evidence, including payroll records, W-2s, cashier sheets, etc.  Defendants objected to the motion on the grounds that “all of their books, records and computers were seized” pursuant to the court’s order in a different case and that there was no opportunity to make any copies or back ups.  Accordingly, the court reasoned that Defendants had not destroyed their records and found that “[u]nder the specific circumstances of this case … defendants did not have an obligation to copy their books and records before complying with the court order.”  The court also reasoned that even if Defendants did have an obligation to preserve, there was no evidence of Defendants’ requisite culpable state of mind.  Plaintiffs’ motion for sanctions was denied.

Plaintiffs sought serious sanctions for Defendants’ failure to produce requested employment documents and records.  Defendants objected, asserting that their books, records and computers were seized pursuant to the court’s order in another case.  More specifically, Defendants asserted that the books and records were seized within twenty-four hours of the court’s order, and that “they did not have an opportunity to copy or electronically back up their files.”

Despite the non-party’s possession of Defendants’ computers and records (as the result of the seizure), some discovery was undertaken.  Three hundred pages of payroll records were provided to Plaintiffs as a result of Defendants’ counsel’s contact with counsel for the non-party.  Additionally, Plaintiffs subpoenaed the records from the non-party and conducted an inspection of the records prior to filing the motion for sanctions.  To the extent that some records were no longer available, Defendants argued that “they had no control over the records and were not complicit in their loss or destruction.”

Assessing Defendants’ duty to preserve and noting the failure of Plaintiffs or the court to identify case law addressing a comparable situation, the court found that “under the specific circumstances of this case,” Defendants had no obligation to copy their records before complying with the court’s order regarding seizure of their property.  Moreover, the court found that even if Defendants did have a duty to “copy or otherwise preserve” the records prior to seizure, there was “no suggestion that they acted with any intent or knowledge that the records would be unavailable to plaintiffs in discovery.”   Thus, the court found no evidence that Defendants had the “requisite culpable state of mind.”

A full copy of the court’s order is available here.