Expensive Ignorance: Counsel and Client Hit with Sanctions for Failing to Understand Client’s Email Storage Methods


Undeniably, the nature of electronic communications and electronic data retention has dramatically increased the scope and complexity of discovery.  However, it has also made it increasingly simple for opposing parties to identify spoliation and non-compliance with discovery orders.  More often than not, the parties have exchanged electronic correspondence and documents prior to litigation.  When that information is not produced during discovery, one party can easily identify information that has been withheld and seek sanctions for spoliation. 

For instance, the defendant in In re A&M Florida Properties II, LLC et al., v. American Federated Title Corp., Bkrtcy. No. 09-15173, 2010 WL 1418861 (Bankr. S.D.N.Y. Apr. 7, 2010) requested that the plaintiffs produce documents related to an important defense raised in response to plaintiffs’ claims.  Among the documents requested were a series of emails that the defendant believed would reveal important facts about what the plaintiffs knew and when.  The defendant was confident that these emails existed because it possessed its own copies of certain emails sent by the defendant to the plaintiffs.  Surprisingly, when the plaintiffs responded to the defendant’s request, the emails the defendant was already aware of and expected to find in the production were entirely absent. 

Over the course of a year and a half, the defendant made multiple requests for the email correspondence that it believed existed.  Eventually, an additional 38 emails were produced and then, finally, the correspondence the defendant believed existed was sent along with 9,586 emails responsive to the initial discovery request.  The bulk of these emails were stored in archive folders that were not initially search as part of the plaintiffs’ “live” system.  Under this court’s holding, attorneys have an obligation to go beyond simple requests to look for documents to "become fully familiar with [the] client’s document retention policies, as well as [the] client’s data retention architecture."

Although the judge stated that neither dismissal of the plaintiffs’ claims nor an adverse inference were appropriate sanctions because the failure was not intentional, the plaintiffs and their counsel were ordered to pay all of the costs associated with two forensic searches of electronic data and the expense the defendant incurred in bringing its motion to compel the documents and the motion for sanctions. 


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