E-discovery: a term that has evolved from an interesting sidenote to something that can strike fear into the hearts of the most hardened defense lawyers. The Wall Street Journal Law Blog covered this issue a few weeks ago, pointing to a recent study by several King & Spalding lawyers published in the Duke Law Journal: Sanctions for E-discovery Violations: By the Numbers. The article is an excellent source for cases involving e-discovery sanctions. While it doesn’t specifically mention class actions, there is no question it applies to this field of litigation. Discovery is often a one-sided affair in class actions, and e-discovery sanctions give plaintiffs lawyers additional leverage in "litigating the litigation."
In particular, four of the study’s findings have special relevance to class-action lawyers.
E-discovery sanctions disproportionately affect defendants.
Defendants are sanctioned for e-discovery violations nearly three times more often than plaintiffs. In our survey, defendants were sanctioned 175 times, plaintiffs were sanctioned fifty-three times, and third parties were sanctioned twice. The three-to-one ratio of defendant sanctions to plaintiff sanctions has generally held steady over the last ten years, even as the number of sanction cases and sanction awards has greatly increased.
This is not a surprising result. As Judge Posner recently noted, discovery (at least in class actions) tends to disproportionately affect defendants.
E-discovery sanctions are increasing.
[T]he number of e-discovery sanction cases and the number of e-discovery sanction awards more than tripled between 2003 and 2004, from nine to twenty-nine sanction cases, and from six to twenty-one sanction awards. The numbers continue to rise. Our analysis of pre-2010 cases indicates that there were more e-discovery sanction cases (ninety-seven) and more e-discovery sanction awards (forty-six) in 2009 than in any prior year. In fact, there were more e-discovery sanction cases in 2009 than in all years prior to 2005 combined.
One might have expected e-discovery sanctions to plateau at a certain point, once defendants learned enough about preservation and production to avoid possible sanctions. This result offers two possible inferences: either defendants are not done with their learning curve (avoiding sanctions), or plaintiffs are continuing to make progress on theirs (using e-discovery to litigate the litigation).
Courts are particularly concerned with intentional conduct.
No cases resulted in dismissal when the court characterized the misconduct as mere negligence. In two of the thirty-six dismissal cases, the court characterized the conduct as gross negligence.79 The remainder of the thirty-four cases involved some sort of willful conduct, with twenty involving bad faith.
(Internal footnotes omitted.)
The primary offense is a failure to preserve evidence.
The cases in which adverse jury instructions were issued included forty-three cases involving failure to preserve, four cases involving failure to produce, and five cases involving both. The defendant was sanctioned with an adverse jury instruction in forty-four cases, while the plaintiff was so sanctioned in only eight cases.
(Internal footnotes omitted)
Obviously, this study sounds a cautionary note for class-action defense lawyers. Given the propensity for courts to sanction defendants for not preserving evidence, defense lawyers need to exercise particular care at the beginning of class-action litigation to make sure their clients issue litigation holds, and have been complying with their records-retention policies.