Kirby B. Drake

• Recent Discovery Decisions

• Pension Committee

• Rimkus v. Cammarata

• Qualcomm v. Broadcom

• Lessons to be Learned – All; Outside Counsel; Clients; Courts and the State Bar

• Investor-related action

• Defendants sought sanctions against Plaintiffs

• Failure to preserve and produce documents

• Submission of false declarations regarding collection and production efforts

• Court addressed conduct constituting negligence, gross negligence and willfulness in discovery matters

• Addressed discovery efforts – or lack thereof – undertaken by Plaintiffs

• Concluded that “all of these plaintiffs were either negligent or grossly negligent in meeting their discovery obligations”

• Sanctions were imposed

• Interplay between duty to preserve evidence and spoliation

• Duty to preserve arises when party reasonably anticipates litigation

• Breaching duty to may result in sanctions

• Who bears burden of proving that evidence has been lost or destroyed? What are consequences of loss?

• Relevance does not necessarily equal proof of prejudice

• Burden-shifting test addresses prejudice due to spoliation

• If conduct sufficiently egregious, offending party must rebut presumption of relevance and prejudice

• Requesting party had access to allegedly destroyed evidence

• Evidence would not support requesting party’s claims/defenses

• If no showing of prejudice, no adverse inference instruction

• May support finding of prejudice due to spoliation by showing:

• Offending party had control over evidence and an obligation to preserve at time of destruction or loss

• Offending party acted with culpable state of mind upon destroying or losing evidence

• Missing evidence relevant to the innocent party’s claim/defense

• Remedies for spoliation harm assessed on case-by-case basis

• Grant sanctions to deter spoliation, place risk of erroneous judgment on spoliating party, and restore prejudiced party to same position had spoliation not occurred

• Adverse inference sanction imposed – failed to act diligently and search thoroughly at time they reasonably anticipated litigation

• Counsel’s initial instructions to client did not meet standard for a proper litigation hold

• Did not direct employees to preserve all relevant records

• Did not create mechanism for collecting preserved records

• Did not specifically instruct client not to destroy records so that counsel could monitor collection and production of documents

• Competing lawsuits

• Non-competition and non-solicitation covenants in ex-employees’ employment agreements

• Trade secret misappropriation in setting up new business

• Allegations of “wholesale discovery abuse”

• Defendants alleged there was no prejudice in failure to produce due to cumulative nature of evidence

• Allegations of intentional destruction of electronically stored evidence

• Court addressed issues using analytical framework set forth in Pension Committee

• Rimkus issued document requests related to creation and inception of new company (U.S. Forensic) and contacts with Rimkus clients

• Cammarata produced two emails related to U.S. Forensic formation

• Rimkus again requested all documents sent among those setting up or working for U.S. Forensic before January 1, 2007

• Defendants objected to request as overbroad but stated they “searched several times for any such responsive emails and turned over any responsive emails in their possession”

• Defendants did not produce any other emails until June 2009 when they produced approximately 60 emails

• Rimkus noticed depositions of U.S. Forensic founders (Bell, Janowsky, DeHarde) regarding U.S. Forensic formation

• Bell testified he had “printed out the things that [he] thought might be responsive, and sent it to [his attorney], when [he] first received the first request” for the emails

• Janowsky admitted he deleted emails but did not recall being instructed to preserve records related to U.S. Forensic formation

• DeHarde testified he deleted emails because of concern about storage capacity of his email account

• Court compelled DeHarde to produce responsive documents and be re-deposed

• Defendants’ efforts to locate/retrieve emails was superficial

• No information provided about whether deleted emails could be recovered and time/expense required to do so

• Defendants ordered to conduct inquiry

• DeHarde admitted in deposition that “[w]e deleted them [the emails]. We had a policy that we would delete e-mails during the start-up after two weeks.” DeHarde testified that U.S. Forensic founders all agreed on e-mail deletion policy.

• Over 100 belatedly produced emails showed that Cammarata contacted individuals he had dealt with while working at Rimkus

• Belatedly produced documents showed Cammarata used personal email address to send Rimkus engineering data and reports to his U.S. Forensic email address

• On September 13, 2009, Cammarata finally produced 15 disks of ESI and numerous boxes of paper documents containing Rimkus correspondence, client contact information and Rimkus power point presentations

• Analysis of Bell’s Rimkus laptop – included Rimkus financial information downloaded to laptop on day of resignation

• Bell concealed personal email account he used to download and take confidential Rimkus financial information

• Violation of legal duty to preserve evidence when litigation was anticipated

• Scheme to destroy evidence showing extent to which Defendants took confidential information from Rimkus to set up, operate, and solicit business for U.S. Forensic

• Affirmative steps taken to delete potentially relevant documents

• Selective implementation of document destruction policy at best

• Defendants’ reasons and explanations for deleting or destroying emails inconsistent and lacked support

• Space concerns

• Fear of retaliation

• Defendants knew of litigation when emails were deleted

• Defendants did not disclose personal email accounts used to take information from Rimkus

• Sufficient evidence for reasonable jury to find that Defendants intentionally and in bad faith deleted emails relevant to issues in case to prevent use of those emails in litigation

• Judge agreed to issue adverse inference instruction with respect to deleted emails but did not strike pleadings

• Jury can hear about email deletion and concealment/delay that occurred in discovery, consider Defendants’ conduct in deleting emails, and infer that content of deleted emails would be unfavorable to Defendants

• Jury instruction to be issued on duty to preserve information

• Defendants to pay reasonable costs and attorneys’ fees required to identify and respond to the spoliation issues

• Permanent injunction issued based on settlement in November 2010

• Qualcomm sues Broadcom for patent infringement

• Broadcom defense – waiver by participation in the JVT

• Broadcom requests discovery on Qualcomm’s participation in JVT

• Qualcomm repeatedly denies involvement in JVT during relevant time frame

• Qualcomm files motion for summary judgment on waiver defense

• Trial begins

• Qualcomm attorney discovers email showing trial witness communicated with JVT

• Trial witness forced to admit existence of emails on cross-exam

• Judge orders production of documents and jury finds in favor of Broadcom on waiver

• Broadcom sought discovery on scope of discovery abuses

• Judge initially sanctions Qualcomm and 6 outside counsel for discovery abuses

• Qualcomm ordered to pay over $8.5 million

• Six outside counsel initially referred to State Bar of California for investigation of possible ethical violations

• Qualcomm and outside counsel ordered to participate in Case Review and Enforcement of Discovery Obligations (“CREDO”) program

• Several outside counsel never sanctioned because of steps taken to confirm accuracy of facts

• Reviewed deposition transcripts and discovery responses

• Circulated drafts of pleadings to more senior in-house and outside counsel

• Investigated facts surrounding the JVT

• Breach of contract due to firing

• Plaintiff sent preservation letter to Defendants before filing lawsuit

• Defendants issued “Do-Not-Destroy” instructions but did not appear to carry out instructions

• Negligence in failing to preserve laptops issued to Plaintiffs while working for Defendant

• Adverse inference instruction appropriate because Plaintiffs “lost access to relevant evidence”

• Failure to preserve text messages sent between investigating agents and cooperating witness in corruption investigation

• Agents never instructed to preserve messages; deleted messages allegedly “to save memory space”

• Failure to issue timely litigation hold

• Ordered that jury would receive a “spoliation charge” allowing (but not requiring) it to infer that deleted messages were favorable to Defendants

• 43 hard drives destroyed during ordinary recycling cycle but Plaintiff later produced some information replacing what was lost

• Upheld sanctions against Plaintiff for “willful” destruction of hard drives on which relevant discovery resided

• Adverse inference sanction appropriate

Brown v. Allen, 344 U.S. 443, 537 (1953)

Lessons for All

Lessons for Courts and State Bar

Lessons for Outside Counsel

Lessons for Clients

• Often see failure to fully adhere to the principle of telling the truth

• Failure to admit when wrong when it comes to discovery issues

• Party and its outside counsel often suffer the consequences - sanctions

• Know the whole truth

• Make accurate representations to the other side as well as to the judge and to the jury

• How?

• Find responsive information and produce it

• Make the team aware of responsive information early

• Allow witnesses/counsel to be prepared to face truth about existence and contents of responsive information before trial

• If you have to consider whether to produce, probably should go ahead and produce it

• Often less harmful to produce

• Information may be responsive and discoverable but not necessarily admissible

• Courts tending toward requiring production if responsive to a party’s claims or defenses

Almost never incur wrath of Court by producing (except if it looks like a “document dump”)

But feet can be held to the fire for failure to produce

responsive information

• Swofford v. Eslinger, No. 6:08-cv-00066, 2009 WL 3818593 (M.D. Fla. Sept. 28, 2009)

• Inside counsel failed to issue litigation hold notice and failed to undertake meaningful actions to preserve relevant information

• Awarded adverse inference sanctions and ordered defendants and inside counsel to pay fees and costs (inside counsel was not attorney of record)

• Green v. McClendon, No. 08 Civ. 8496, 2009 WL 2496275 (S.D.N.Y. Aug. 13, 2009)

• Counsel failed to provide enough detail to client regarding duty to preserve data and did not explicitly issue litigation hold notice

• Awarded costs

• “The preservation obligation runs first to counsel, who has a duty to advise his client of the type of information potentially relevant to the lawsuit and of the necessity of preventing its destruction.”

• Cannots

• Musts

• CANNOT blindly rely on client’s collection and production

• CANNOT blindly trust what client describes as “standard” procedures for approaching discovery issues

• CANNOT shield eyes from seeing certain documents – must challenge clients regarding search and collection strategies

• MUST reach agreement as to how to engage in discovery process

• MUST have sufficient control over discovery process

• MUST gain access to locations where responsive data may be maintained

• MUST take steps to confirm compliance by key custodians – interviews, written questionnaires, etc.

• Keep a record of efforts with regard to document search and collection

• Can potentially use record to defend discovery efforts should a discovery dispute arise

• May need to seek agreement from client that documentation of actions taken may be disclosed if issues arise as to sufficiency of discovery efforts

• MUST define who is responsible for ensuring discovery duties are carried out

• MUST get IT personnel involved

• MUST issue document hold or preservation notice at outset of litigation

• MUST inform employees that they have a duty to manage information in accordance with written policies – litigation or not

• MUST consider investing in management technology/search tools

• Qualcomm allegedly had a plan in place for collecting documents in response to discovery requests

• Despite having plan, Qualcomm apparently did not fully follow the plan

• MUST follow your plan – plan is only as effective as care given in executing plan

• CREDO Program: Identify facts that contributed to discovery violation; create and evaluate procedures to correct deficiencies; develop and finalize protocol to prevent future violations

• Modifications to State Discovery Rules

• Consider state-promulgated electronic discovery rules (i.e., California)

• Balance burdens/needs of requesting party and producing party

• Signed into law on June 29, 2009

• Largely follows 2006 electronic discovery amendments to FRCP

• Requires parties in written discovery responses to object to production of inaccessible information to preserve objections

• Assumes all ESI is accessible and shifts balance by not requiring requesting party to bring motion to compel

• Counsel must know difference between forms in which information can be produced and advantages/disadvantages to client

For more information, please contact:

Kirby B. DrakeKLEMCHUK KUBASTA LLP

214-367-6000kirby@kk-llp.comwww.kk-llp.com