Five Easy Pieces – An Interview Without Toast

Kurt Leafstrand on his Clearwell Systems blog e-Discovery 2.0 runs a feature from time to time called Five e-Discovery Questions with various e-discovery types, beginning with Craig Ball. Kurt uses a format where he writes out five questions, emails them to you, and then asks you to email answers back. Personally, I prefer live interviews with some interactivity and spontaneity. Still, if Craig could do it. After all, it was only five questions, five easy pieces. That reminded me of the great movie, Five Easy Pieces, where Jack Nickolson’s character Bobby Dupea found out you can’t always get toast with your breakfast. Here’s the famous “toast” scene from the movie, which is well worth the view.

With that in mind, I decided to at least read the questions and see if this was something I was willing to do. The first thing I notice is that these are news-conference type questions. You know the ones where the reporter cleverly asks three questions all mixed up as one question, and then has the nerve to ask a followup. For instance, the first question Kurt asks is clearly three questions. He does not even try to hide it like a professional reporter. Apparently this is not his day job. Still, I kept reading and the alleged fifth question (really the ninth) was amusing to me, so I agreed to do it. Besides, it sounded like a pretty easy way to write my own blog on this lazy summer weekend.  But be warned, this may well end up being a fast road to nowhere; we’ll see.

Here are the “five” questions I was asked, in writing no less and without toast. I tried to keep the responses fresh by starting with a tape recorder and dictating my off-the-cuff, linked answers.

e-Discovery Teams

Kurt Leafstrand’s First Question: We have always loved the name of your Blog –”e-Discovery Team.” It succinctly sums up your overall approach and philosophy of e-discovery. What’s the current state of the “e-discovery team” in most organizations? How has it progressed over the last few years? Where does it need to go to next?

Losey’s Answer: You are correct that the name of my blog – “e-Discovery Team” does sum up my overall approach. I believe that e-discovery should be handled differently from all other areas of the law. It requires a team approach where lawyers and IT work closely together. That is why I have also devoted my web Floridalawfirm.com to this proposition. It also requires a different kind of lawyer, one who is comfortable with technology.

You first first question asks about the current state of e-discovery teams in “most organizations.” I have seen surveys indicating that most of the so called “serial litigant” companies, that is, the large corporations who because of their business tend to be sued a lot, such as the pharmaceuticals, large telephone companies and the like, have set up internal e-discovery teams. For companies that are not serial litigants and thus are not force to address e-discovery right away, the percent decreases dramatically. I would guess less than half. For law firms, my guess is that about ten percent have set up e-discovery type departments or teams, or at least say they have.

These survey based statistics can be misleading. When I talk to members of large corporate e-discovery teams in an informal off-the-record manner at conferences and such, most confess that they are struggling. Typically, I think it is because they are asked to do too much with too little. Companies need to adequately fund an e-discovery team in order for the team to succeed.

As for the law firms, most of the e-discovery teams you see touted on websites are just marketing. My guess is that there are only about 25-50 law firms in America with bonafide, functioning e-discovery teams, and many of the top AmLaw 100 firms are stumbling along without one. That is why you keep seeing them making horrible e-discovery bloopers. Their clients’ reaction to these mistakes is the truly amazing thing. Unlike Jack Nicholson’s character in the great ending to Five Easy Pieces, the clients just put up with it all and never seem to leave. They may be on a fast road to nowhere, but don’t seem to care.

Moving on to your second first question on how the e-discovery team approach has progressed over the last years, I would say that the progress has been mixed. I have given umpteen presentations to corporate counsel and others to explain the benefits of e-discovery teams over the past three years. The argument itself is easy to make and compelling, so long as you add enough graphics to keep everyone awake. I have not run into anyone yet who doesn’t agree that it’s a good idea. So I think we’ve come a long way in selling the concept. But the implementation is another question. There we still have a long way to go.

Again, the answer is adequate funding and real training, which I address in a minute. You can’t simply add this job description and demands on people’s time and expect it to work. Most corporate counsel and their IT and business partners on corporate e-Discovery Team already have more than enough to do. You can’t expect them to do this new job, and do it right, and keep doing all of their old jobs too. You have to take stuff off their plate to make room for them to perform these new functions. The best solution is to hire someone whose sole job it is to run an e-Discovery team. Then you also have to give the team money for software and outside vendors and consultants.

Although these comments have been directed to the internal corporate e-discovery team, the same comments apply to law firms forming their own e-Discovery Team service group. They need to combine whatever lawyers they have that know about e-discovery with whatever tech support and paralegals they have that know about e-discovery. There is a tendency for the two to operate in separate fiefdoms, which is contrary to the team approach. Such integration is not easy, however, especially since there is an extreme shortage of knowledgeable e-discovery lawyers. It seems like there are two or three knowledgeable e-discovery techs for every attorney. Either that or they are just better at fooling me than lawyers are.

As to your third first question, where this needs to go next, companies and law firms need to better fund and train their internal e-discovery teams so that they can be fully operational and realize their cost-saving and quality control potentials. It takes some money to save a lot more. Obviously, this is hard sell in the current economy, so I expect there will be several more years of struggle before this happens. But when it does and these skilled teams becomes a priority for companies, then they can affect significant cost savings in e-discovery. As a bonus, fewer mistakes will be made and the whole process will be far less painful than it is now.

From the law firm perspective, e-Discovery Teams can affect significant profits and competitive advantage by the skilled rendition of e-discovery services. The existence of an internal corporate e-Discovery Team does not make outside counsel obsolete, it just changes the role and requires higher skills and greater collaboration. Further, many companies, especially the medium size and small ones, will never form their own teams and so law firms and vendors will continue to have to do everything for them.

But there is more to this than just throwing money at the problem and funding the teams. We also need a lot more in the way of knowledge input. There are several dozen people across the country that really know this field, but that is not nearly enough to address the hundreds, if not thousands of companies and law firms that need this knowledge. Short of cloning, the best solution is to retain an outside “coach” for teams; one that assists many teams at once. The coach is not a full time team member, but rather an outside expert that helps organize the team, train the players, design the plays, and after that, helps encourage the players to win the game on their own. Although these days I spend a lot more time in litigation than I do in e-discovery teamwork, my favorite role is that of e-Discovery Team coach.

“Empty Head, Pure Heart” Defense to Spoliation

Kurt Leafstrand’s Second Question: Should there be an adverse inference distinction between cases where e-discovery may have been conducted in a sloppy, incomplete fashion, but without malice, versus one in which the party actively sought to hide or suppress documents in the case?

Losey’s Answer: There should be and there is. The law already distinguishes between negligent spoliation, grossly negligent spoliation, and intentional spoliation. Also, other circumstances may enter into a judge’s determination of whether there has been bad faith exercised in connection with the destruction of evidence. If a judge is convinced by the evidence that it is simply an empty head, but pure heart destruction of evidence, they are going to be easier on the attorney and the parties. As Bobby Dupea said: “If you wouldn’t open your mouth, everything would be just fine.”

Still, the pure heart empty head defense will only take you so far. It might be enough to stop an adverse inference instruction, but not enough to stop lesser sanctions. For instance, opposing counsel may still be able to talk about what happened to the jury, which could be just as effective as an actual instruction. Further, the empty headed attorney with the pure heart may also end up with an empty wallet. The attorneys may be personally required to pay fees and expenses, as we have seen in numerous cases recently. Further, if its not the attorney’s fault at all, but rather the party’s empty head and pure heart, you can rest assured that most judges will not hesitate to make the party’s pocket empty too.

Pure heart or not, people are going to have to pay for these mistakes because the loss and destruction of evidence is, and long has been, a serious issue in the common law. If you have any doubt about that, take a look at my recent blog on Armory v. Delamarie, the case decided in 1722 that started the spoliation doctrine. The defendant in that case, a goldsmith named Delamarie, tried the empty head pure heart excuse for losing the precious stones that were at issue on this case. The judge didn’t buy the argument. He assumed that the goldsmith had intentionally hidden the evidence so that the jury could not see it and the goldsmith would not have to give the gems back.

That is always a danger with the pure heart defense. The judge or jury may not believe you. You may claim that you just didn’t know what you were doing and this is a common thing for “bad guys” to do, but that doesn’t mean the judge and jury are going to believe you. It’s all a matter of weighing the evidence. I think judges are going to look very closely at these defenses in the future and that they will be skeptical of lawyers who come up with “Opps – my bad! Sure didn’t mean to” defense. The lawyer and parties may well be telling the truth, but clever opposing counsel may be able to make it look like they did it on purpose. So the best thing to do is get your act together and save the evidence. This does not mean perfection – mistakes will always happen – but it does mean the exertion of reasonable efforts.

Kurt Leafstrand’s Third Question: Are judges equipped with enough information to be able to make this distinction? (between intentional and accidental destruction)

Losey’s Answer: There’s an old expression that all attorneys involved in litigation know very well: “The devil is in the details.” This is true with most issues in litigation. The facts of a particular case shape the law. This is how the common law system of justice is supposed to work. In the United States the judges do not go out and get these facts like they do in civil law countries. Here fact gathering is up to the attorneys. Therefore, the judges will be equipped with enough information to make this distinction if the attorney’s involved do a good job in bringing the facts to the judge.

How do attorneys get this information? Through discovery of course. That’s where we get into the can of worms of “discovery about discovery.” Whenever you get into a motion for sanctions situation you have opened up that can. Before you know it, you are taking depositions and having evidentiary hearings about what you did to collect documents, what you did to preserve documents, even who said what at the Rule 26 “meet and greet” conference between attorneys, as we saw recently in the Bray and Gillespie case.

This kind of discovery about discovery and evidentiary hearings on who did what in discovery can become tremendously expensive. I don’t point this out to suggest that we not get to the truth and that we not protect the system from people who would try to hide their wrong doings by destroying the evidence. I point this out to stress the importance of doing e-discovery right, which includes preserving the evidence correctly. Yes, it does take a little time, effort, and thus money to preserve evidence upon notice of a dispute. But this is money well spent. This kind of money will protect the company from later being involved in these kinds of expensive sanctions hearings, discovery about discovery, and the like. Again, this all comes back to the e-discovery team approach of preventive medicine. Companies and law firms need to take the time to set up the systems to prevent the destruction of evidence, both accidental or intentional. Either way, pure heart or not, it is going to open up an expensive can of worms and therefore it is worth the money to nip it on the bud.

Kurt Leafstrand’s Fourth Question: What is the biggest gap today between e-discovery vendor offerings and what legal end-users need.

Losey’s Answer: It is the gap between the ears of the end-users and vendors. I say this with respect because these end-users and vendors are often extremely bright people, but most of the attorneys have not had the opportunity to receive training in electronic discovery. For one thing, it was never offered in law school, until recently. Even now less than 5% of the law schools in the country offer any classes in e-discovery. Most of the end-users learn what they know by on the job experience. This is a process of trial and error that rarely leads to best practices. End-users need better education.  The CLEs are inadequate. The education programs in most law firms are also inadequate, if they exist at all. Better educated and knowledgeable end-users will make for better consumers of vendor offerings.

Vendors share some responsibility in this as well. They need to take the time to really educate their users about their products, rather than just dazzle, scare, and promise. Vendors should never use words or phrases that are not commonly employed by the end-users, or, if they must, then they should carefully explain it to them in an apologetic manner. A vendor that goes around talking geek-talk over the heads of end-users is not doing anybody a favor, including themselves.

Kurt Leafstrand’s Fifth Question: How much time does it really take you to crank out one of your blog posts? Does the hot Florida sun keep you indoors typing away at your computer? Or do you have some sort of waterproof lap top that allows you to write while floating in your screened in pool?

Losey’s Answer: There you go again, three questions in one. Not to mention you are now getting kind of personal here, aren’t you, especially for an email interview with no toast? As Bobby Dupea says in Five Easy Pieces (imagine Jack Nicholson’s voice now):

I don’t know if you’d be particularly interested in hearing anything about me. My life, I mean… Most of it doesn’t add up to much that I could relate as a way of life that you’d approve of… I’d like to be able to tell you why, but I don’t really… I mean, I move around a lot because things tend to get bad when I stay. And I’m looking… for auspicious beginnings, I guess…

My real answer is not particularly interesting either, but for the brave reader still hanging on, I’ll give you what passes for a straight answer. It takes me about 8 to 20 hours per weekend to grind out a blog post, which typically runs from 3,000 to 6,000 words. This week’s blog, with the interview and all, will only take about 6 hours, thank you very much. Of course, it’s not really that good either, but then there is always this famous exchange in Five Easy Pieces to make up for it:

Bobby: What else do you do?
Catherine: Well, there’s fishing, boating, and concerts on the mainland. [Laughs] I feel funny telling you this. This is really your home. You probably know better than I what there is to do.
Bobby: Nothing.
Catherine: Nothing?
Bobby: Nothing.
Catherine: Well, it must be very boring for you here.
Bobby: That’s right.
Catherine: I find that very hard to comprehend. I don’t think I’ve ever been bored. Excuse me.

To help ease the boredom for my readers I also have guest bloggers contribute to the e-Discovery Team blog from time to time. In which case it only takes me a couple of hours to help them along with editing, hyper-linking, design, photographs, proofing, and final posting to the blog.

Obviously all of this is a labor of love on my party. I enjoy trying to make legal education interesting and wherever possible, maybe even somewhat entertaining. I believe that legal writing should be integrated with both popular and classical culture, but preferably not in the same article. That is why I try each week to weave cultural elements into each blog and to include visual images. This week it is the good Mr. Nicholson and Five Easy Pieces and last week it was Charles Dickens. Who knows what next week may bring? It often depends on what new cases are published or what other events in the world of e-discovery come to my attention. This is a fast moving field that is still in its formative stages and I enjoy being a part of it. Like Bobby says, I’m looking… for auspicious beginnings.

Legal writing should not be cold, dull, and isolated. The law is wrapped up in society; it is the bones which holds it all together. So why shouldn’t writing about the law include cultural references? I think that words and pictures should go together; that the ideal approach to education is multimedia. Most legal writing is too sterile and aloof for me. It is often clever, but that is not enough. It should also be interesting. To put it another way, boredom is the enemy of education and imagination and creativity are its friends. I think I just made that up. Anyway, it sounds like a good motto for a training program that I am working on now.

As to your question about my floating in a pool: well, you made a pretty good guess, although I do not have a waterproof laptop. Is there such a thing? Typically I have every tech toy in the world, so I doubt there is or I would already have purchased one. Right now I’m an avid fan of the Macbook Air all flash drive version. I can take it with me anywhere, and usually do. I have written my blog in all kinds of places, but usually I just write at home. To quote one last time from the oh-so-mortal Bobby Dupea:

Bobby: What are you doing screwing around with all this crap?
Catherine: I do not find your language very charming.
Bobby: It isn’t. It’s direct.
Catherine: I’d like you to leave so that I can take a bath. Is that direct?

The Chimney Sweep Boy and the Goldsmith: the Ancient Origins of the Doctrine of Spoliation

It was the best of times, it was the worst of times. It was the year of Our Lord one thousand seven hundred and twenty two. Sir John Pratt, the Lord Chief Justice of England and Wales, and his assembled jury at the Court of the Kings Bench were preparing to hear an odd civil case, Armory v. Delamirie, brought by a chimney sweep boy. Sir Pratt had just returned to the bench after serving as the interim Chancellor of the Exchequer for two months at the request of King George. He was glad to be back to the Kings Bench, but yesterday had been hard. The jury convicted a boy of pick-pocketing, one of 240 capital offenses, forcing him to sentence the poor lad to death by hanging. Sir Pratt was glad to be hearing civil trials today.

After the case was called, Judge Pratt saw the plaintiff, Marc Armory. He was a young lad, dirty, and black with soot as only a chimney sweep’s apprentice can be, but unlike the doomed pickpocket of yesterday, he had a confident, grim air of determination. Young Mr. Armory had had the audacity to bring suit in trover against a prominent London goldsmith, Shannan Delamirie. Armory sought damages for Delamirie’s alleged wrongful taking of two valuable gems. Armory had no Barrister to assist, while the jeweler, Delamirie, had a lawyer of the King’s Bench at his side. Still, Chief Justice Pratt would hear this boy out and help his story be told for the jury to decide. For he did not much like the Lord who was defendant’s Barrister, and liked even less the looks of Delamirie.

The defendant Delamirie was sitting at defendant’s table. He was a mere man of business, an elderly, pimply-faced, vegetable-diet sort of man, in a black coat, dark mixture trousers, and small black gaiters; a kind of being who seemed to be an essential part of the desk at which he was writing, and to have as much thought or sentiment. No, Lord Chief Justice Pratt did not like this French goldsmith. He would do what he could to help the jury do justice that day in the Kings Court.

The chimney sweep boy’s  story began with light and hope. He told of finding a ring quite by chance in the dirt by the side of a road. He saw a glittering among the ash and picked it up. He discovered it was a ring, and after cleaning it, realized that it had two jewels of the finest water. Armory hoped that his fortune was now made, that he could buy his way out of servitude from his cruel master Gamfield. He had only to find out the value of his fortune and seek to sell it to an honest jeweler.

Armory’s tale soon turned to darkness and despair upon entering the store of Delamirie. There he was eyed suspiciously by the jeweler’s apprentice, a boy of his own age named Thompson. Armory told Thompson that he had found a ring and wanted to know its value. When Thompson saw the ring, he told Armory that the two stones might have some slight value, but he could not possibly know for sure until he removed the stones from the ring to weigh and examine them. The jury listened to this testimony with rapt attention. They guessed what would happen next.

Armory did not want to part with his precious ring, but he saw no way around it. He would have to let him weigh the stones to learn their value. So, the goldsmiths’s apprentice took the ring to a back room while the master, Delamirie, stayed to keep an eye on the chimney sweep boy. The goldsmith’s apprentice then called out that the weight of the stones showed their value to be three halfpence. The master jeweler then offered to pay that sum to the boy, telling him that was all he could get for it, that he should take it quick and get out of the store. He knew that he had stolen it from someone’s chimney and should be happy to get anything.

The boy refused the three halfpence. He had dreams that the ring and jewels might be worth ten pounds, more than enough to buy his way out of indentured servitude and start his own chimney sweep business. Armory demanded ten pounds, and Delamirie just laughed and told him to leave. Armory demanded the return of the ring and began shouting. The goldsmith’s apprentice came back and handed him the ring and chased him out of the store with a knife. Armory looked and saw the ring no longer had the jewels. Its sockets were empty.  Delamirie then knew that his only hope was to try to find justice in the Kings Court.

After Armory’s own testimony, two more witnesses were called in his behalf. They were goldsmiths who were competitors of Delamirie. They had examined the ring and from the size of the sockets estimated the approximate range of value of the gems that could fit in them. The price ranged from a half a pound, if the gems were of poor quality, to a high of ten pounds, as the boy had dreamed, if in fact the jewels had been of the finest water.

Next the elderly goldsmith, Delamirie, and his apprentice gave their testimony. They told a different tale, but did admit that the chimney sweep boy brought in a ring with two small stones in it. They said they inspected the stones and that they were, in their professional opinion, of very poor quality, worth at best three halfpence total. Now it is true as lawyers hold that there are two kinds of particularly bad witnesses–a reluctant witness, and a too-willing witness. The goldsmith and his apprentice were both. Their story had the hollow ring to it of convenient lies. Judge Pratt was a wise man who had heard many witnesses testify under oath. He had known a vast quantity of nonsense talked about bad men not looking you in the face. Don’t trust that conventional idea. Dishonesty will stare honesty out of countenance any day in the week, if there is anything to be got by it.

The Lord Chief Justice asked Delamirie to show the two stones to the jury and tradesman in attendance so they could see for themselves their size and brilliance. That is when all were told that the stones had been lost, accidentally thrown away by Delamirie’s assistant after the suit had been filed. Delamirie’s lawyer then spoke up, noting that it was a shame they were gone, but it was just an accident and they were of no value anyway. This whole suit was just a pig in a poke, drawing a fine laugh from the jury.

The Barrister argued that the plaintiff had completely failed to prove that the stones had any value. Obviously the boy did not know, for that is why he came to the goldsmith to begin with. The other tradesman who testified did not know either, for they had never seen the stones and did not know their quality. Delamirie’s barrister argued that Armory’s action in trover should fail because he had no proof of ownership. It was obvious that the boy had found the ring in a chimney while practicing his trade. He was not its rightful owner. The boy was just a thief.  The goldsmith, once possession of the chattel was tendered to him, had as much right to the stones as the boy. Neither had received the stones by purchase or inheritance. The fact that he had since misplaced the stones was of no importance because the boy did not own them anyway. He cited to several cases to support his arguments. Several of the law clerks were seen nodding in agreement to the points of law and learned case discussion, but not Judge Pratt. He knew full well that there is a wisdom of the head, and a wisdom of the heart. He also knew from experience that if there were no bad people, there would be no good lawyers. Of course, poor pro se Armory had nothing to say in response to the learned brilliance of opposing counsel. He was beginning to wonder why he had ever spent the half pence to bring this suit.

The case was fully presented in an hour and it was then time for the Lord Chief Justice to render his charge to the jury for the King’s justice to be dispensed. At that point, the Lord turned to the jury and began to speak in his deep authoritative voice. He was wearing his full red and white robes, elaborate gold chain, and finest wig.

Chief Justice Pratt spoke with affection beaming out of one eye, and calculation shining out of the other as he gave the jury history’s first adverse inference instruction, saying:

That unless the [goldsmith] did produce the jewel [and he did not], and shew it not to be of the finest water, they should presume the strongest against him, and make the value of the best jewels the measure of their damages.

After that instruction, more like an order, there was no doubt how the jury would rule. They left to meet in private to decide and returned ten minutes later. The verdict was handed to the Chief Justice. The jury had ruled for the young chimney sweep boy and awarded him the full ten pounds requested. That was a vast sum of money in those days. The defendant was shocked. There was no appeal. The chimney sweeps and other tradesmen in the court stood and cheered. The people’s faith in the government was renewed.

The Chief Justice left the court room with all rising before him, a few even bowed their heads. His demeanor never changed, not even a smile. But he had a pleasant thought in his head for a change: It is a far, far better thing that I do, than I have ever done; it is a far, far better rest that I go to, than I have ever known. The Lord Chief Justice had not been sleeping well those days. He was one of the most powerful men in the country, if not the world. He possessed a vast fortune and had many great accomplishments to his name. Little did he know that they would all be forgotten in the dust bin of history, save for this one small act of kindness to a dirty chimney sweep boy.

And what of the lad? The chimney sweep boy sat stunned too. He was surrounded by his tradesman friends who patted him on the back. Nearby too were a horde of well-wishers, including several lawyers now more than willing to help the boy to collect his judgment. Yes, the civility which money will purchase, is rarely extended to those who have none. The chimney sweep boy was overjoyed with the justice of the Kings Bench. His life was changed forever.

As Charles Dickens said, whose other quotes are italicized above: A boy’s story is the best that is ever told.

This case not only explains the origin of the doctrine of spoliation, but shows how justice is sometimes built by small acts of human kindness. In the immortal words of Charles Dickens at the end of A Tale of Two Cities:

I see a beautiful city and a brilliant people rising from this abyss, and, in their struggles to be truly free, in their triumphs and defeats, through long years to come, I see the evil of this time and of the previous time of which this is the natural birth, gradually making expiation for itself and wearing out.

Armory v. Delamirie

This historical event, obviously somewhat fictionalized here, is forever memorialized in the written opinion of Lord Chief Justice John Pratt, which is still studied in law schools around the world. Armory v. Delamirie, 1 Strange 505, 93 Eng. Rep. 664 (K.B.1722). Here is the full text of this opinion. It is the first case in the world to be won by an adverse inference instruction to the jury as the result of bad faith spoliation of evidence.

The plaintiff being a chimney sweeper’s boy found a jewel and carried it to the defendant’s shop (who was a goldsmith) to know what it was, and delivered it into the hands of the apprentice, who under pretence of weighing it, took out the stones, and calling to the master to let him know it came to three halfpence, the master offered the boy the money, who refused to take it, and insisted to have the thing again; whereupon the apprentice delivered him back the socket without the stones. And now in trover against the master these points were ruled:

1. That the finder of a jewel, though he does not by such finding acquire an absolute property or ownership, yet he has such a property as will enable him to keep it against all but the rightful owner, and subsequently may maintain trover.

2. That the action well lay against the master, who gives a credit to his apprentice, and is answerable for his neglect, Jones v Hart, Salk 441. Cor. Holt CJ, Mead v Hammond, supra. Grammer v Nixon, post, 653.

3. As to the value of the jewel several of the trade were examined to prove what a jewel of the finest water that would fit the socket would be worth; and the Chief Justice directed the jury, that unless the defendant did produce the jewel, and shew it not to be of the finest water, they should presume the strongest case against him, and make the value of the best jewels the measure of their damages: which they accordingly did.

Thanks to Judge Paul Grimm for bringing the ancient roots of sanctions in the Armory case to my attention in his new opinion, Goodman v. Praxair Services, Inc. _F.Supp.2d_, 2009 WL 1955805 (D.Md. July 7, 2009). Although I have filled in some of the facts above to spin the tale, the case of Armory v. Delamirie is very real. As Judge Grimm put it, Armory is a “Dickensian tale of avarice and trickery” which appears to be the first case to originate what we now call the doctrine of spoliation. As Judge Grimm’s states in Goodman at *17:

The doctrine of spoliation originated in England in 1722 in the case of Armory v. Delamirie, 93 Eng. Rep. 664 (K.B.1722). See, e.g., Sullivan v. Gen. Motors Corp., 772 F.Supp. 358, 360 n. 3 (N.D.Ohio 1991) (“At least two federal courts have traced the origins of [the spoliation doctrine] to Armory v. Delamirie.…”) (citing Welsh v. United States, 844 F.2d 1239, 1246 (6th Cir.1988); Nation-Wide Check Corp., Inc. v. Forest Hills Distribs., Inc., 692 F.2d 214, 218 (1st Cir.1982)); Stefan Rubin, Tort Reform: A Call for Florida to Scale Back its Independent Tort for the Spoliation of Evidence, 51 Fla. L.Rev. 345, 346 (1999) (“Perhaps the earliest recorded decision to recognize and reprimand the spoliation of evidence was the eighteenth century decision in Armory v. Delamirie.”); Lawrence B. Solum & Stephen J. Marzen, Truth and Uncertainty: Legal Control of the Destruction of Evidence, 36 Emory L.J. 1085, 1087 & n. 4 (1987) (noting that an unfavorable inference for spoliation of evidence is of “ancient lineage”) (citing Armory, 93 Eng. Rep. 664) (citations omitted)).

The common law, based as it is on a close examination of the particular facts of the case at hand, has long abhorred the destruction of evidence and has taken a strong stance against it from the days of 1722 forward. As an American Judge so eloquently put it in 1882:

The law, in hatred of the spoliator, baffles the destroyer, and thwarts his iniquitous purpose, by indulging a presumption which supplies the lost proof, and thus defeats the wrongdoer by the very means he had so confidentially employed to perpetrate the wrongdoing.

Pomeroy v. Benton, 77 Mo. 64, 86 (1882).

Goodman v. Praxair Services, Inc.

Goodman is another of Judge Grimm’s law review articles cleverly disguised as a discovery order. Goodman v. Praxair Services, Inc., _F.Supp.2d_, 2009 WL 1955805 (D.Md. July 7, 2009). Judge Grimm here writes a long scholarly opinion on a motion for sanctions in a breach of contract case. It is an excellent compilation of the law of spoliation sanctions, especially in Judge Grimm’s federal jurisdiction in Maryland, but also of great use to e-discovery lawyers everywhere. This is the third in a series of similar scholarly orders by Judge Grimm in small cases.

The first was Lorraine v. Markel American Ins. Co., 2007 WL 1300739 (D. Md. May 4, 2007), which I wrote about in The Admissability of Electronic Evidence. The lawyers in this case involving $21,900 in insurance proceeds were surprised when their cross-motions for summary judgment were denied for failure to lay a proper foundation for the electronic documents submitted to support these motions. Judge Grimm’s 101 page opinion reads like a law review article and collects the law in the U.S. on the admissibility of electronic evidence.

The second was Mancia v. Mayflower Textile Services Co., Civ. No. 1:08-CV-00273-CCB (D. Md. October 15, 2008). His 30-page discovery order in this suit for unpaid overtime provides an excellent overview of the federal rules and other law that require a cooperative approach to discovery.

Now with Goodman, we have another great scholarly opinion in an otherwise unremarkable case, unusual only for the fact that it features a pro se plaintiff in federal court. The plaintiff, Marc Goodman, is suing a large corporation for a $30,000 bonus he says is due to him under a consulting contract. The defendants are represented by one of the biggest and best law firms in the country, and – here is the amazing part – Mr. Goodman is winning.

It is the story of the poor little chimney sweep boy all over again, but this time it is email, not jewels, and the underdog plaintiff is a consultant.  A few months after I first wrote this article, Marc Goodman emailed me and, among other things, sent the attached photo of himself in Dickensian costume. It was part of a larger magazine cover photo that was taken well before my article. A clear case of life imitating art imitating life. Quite strange really.

Anyway, back to the case. The defendants admit they lost their email, but say it was not on purpose, besides they were of no value anyway. They contend that Goodman’s motion is just a pig in a poke desperate move by a man who cannot prove his case. After all, the defendant’s CEO, Shannan Marty, printed out all of the emails of importance and the paper copies were produced. Defense counsel went so far as to demand that Goodman himself be sanctioned, not them, for bringing a frivolous motion. A tad arrogant, eh? Know your judge, I say.

Judge Grimm at *6 made the following comment regarding defense counsel:

There is no evidence that has been brought to the Court’s attention to suggest that Tracer’s counsel instructed Marty to implement the litigation hold, or that any other Tracer employees or consultants were advised to implement a litigation hold.

Goodman v. Praxair Services, Inc., supra at *6. Hmm. Way to go defense counsel.

Judge Grimm was also not pleased by the pig in a poke argument, especially their contention that the production of the paper print-outs of all of the relevant emails proves that nothing of value was lost by the destruction of the email.

The argument of an accused spoliator that it did not violate its duty to preserve evidence because it retained the “relevant” information and only deleted “irrelevant” information rings particularly hollow. The ultimate decision of what is relevant is not determined by a party’s subjective assessment filtered through its own perception of self-interest.

Id. at *17.

The Timing, Hair-Trigger, Scope, and Culpability Issues in Goodman

The Goodman opinion goes into great depth in addressing the issue of when a sanctions motion should be made. This analysis was made in response to defendants’ argument that the pro se plaintiff’s motion should not even be considered because it was filed too late, after the close of discovery and filing of summary judgment motions, but before they were ruled upon.

Judge Grimm also went to great lengths in Goodman to explore the issue of when a litigation hold should have been triggered. He found that the duty to preserve was triggered by a letter from Goodman dated January 5, 2001, which Judge Grimm says “openly threatened litigation.” Id. at pg. *6, *13. I read the letter quoted in the opinion and must respectfully disagree. Id. at pg. *5. It just seems like another in a series of vague threats to me and should not have triggered a burdensome litigation hold duty. Why Judge Grimm labored so long over this fact question is beyond me, because Goodman’s next letter of February 19, 2001, wherein Judge Grimms admits “Goodman markedly ratcheted up the dispute,” caused defendants to consult with their attorneys for the first time regarding Goodman’s demands and implement their version of a litigation hold. The real problem here was not the timing of implementation of the hold, it was the inadequacy of the hold.

Judges should be conservative when using hindsight to pick a trigger date. Parties are not blessed with clairvoyance and should be given the benefit of the doubt. Litigation holds are expensive to implement, well at least they are when done right, and parties should not be required to have a hair trigger to avoid later possible sanctions.

Of course, the six week difference in this case was of no importance here whatsoever, which is what makes the analysis so mysterious. The CEO instituted a litigation hold in February 2001, by consulting an attorney and telling herself not to destroy any more emails. I kid you not. According to the opinion, that is all she did and, as mentioned, the law firm did nothing further. Since the spoliation complained of here came years later when the computers were recycled and wiped, this parsing of the meaning of “reasonably anticipated litigation” for a trigger date by reading between the lines of letters was of no real importance.

Judge Grimm’s analysis of another issue was better done, namely the issue of when agents and other third parties should also be notified of a litigation hold.  He applied the well-known rule that:

[D]ocuments are considered to be under a party’s control when that party has “ ‘the right, authority, or practical ability to obtain the documents from a non-party to the action.’ “ Id. (quoting Bank of N.Y. v. Meridien BIAO Bank Tanzania Ltd., 171 F.R.D. 135, 146-47 (S.D.N.Y.1997)).

Id. at *16. Judge Grimm found that:

Apart from Goodman’s conclusory statements, no evidence has been presented to demonstrate that Tracer/PSI had any legal control over documents prepared or maintained by Wilson.

Id. at *17.

Judge Grimm then does an excellent analysis of the spoliation issues of culpability. Id. at *18-*21. He concludes the order with his ruling:

*23 In conclusion, Goodman’s Motion is granted in part and denied in part. Specifically, he is entitled to an adverse jury instruction fashioned by Judge Garbis with respect to Tracer/PSI’s failure to preserve Marty’s laptop and Marty’s failure to preserve her relevant emails and documents. The appropriate instruction would be a general adverse instruction that permits, but does not require, the jury to draw an adverse inference against Tracer/PSI as a result of its violation of the duty to preserve relevant evidence. All other requested relief is denied, with exception to Goodman being entitled to seek reimbursement for costs, exclusive of attorney’s fees, properly apportioned to the Motion filed and relief received.

Conclusion

I turn to Dickens again for the final four quotes to conclude this story of destruction of electronic evidence, justice, encouragement, and hope.

Electric communication will never be a substitute
for the face of someone who with their soul
encourages another person to be brave and true.

Whatever I have tried to do in life,
I have tried with all my heart to do it well;
whatever I have devoted myself to,
I have devoted myself completely;
in great aims and in small
I have always thoroughly been in earnest.

No one is useless in this world
who lightens the burdens of another.

And so, as Tiny Tim observed,
God bless Us, Every One!

The old “Sick Computer,” “Pig in a Poke,” and “Somnambulist” defenses were tried again recently with no success

Some of the best-known excuses for destroying electronic evidence — the “Sick Computer,” “Pig in a Poke,” and “Somnambulist” defenses — were all tried out in one case recently in the Delaware Court of Chancery: Beard Research, Inc. v. Kates, 2009 WL 1515625 (Del.Ch. May 29, 2009). I am pleased to say that they met with no success. These questionable defenses were not raised by digital pirates as we saw in last week’s blog, Inside the Head of a Digital Pirate. No, the pirates had tried more innovative excuses, such as “wiped the drive by upgrading to Vista,” “made gifts of the computers to departing employees,” and the one I think is destined to become a classic, “we just bought the hard drives already suspiciously wiped like that on eBay.” No, the excuses in Beard Research were not raised by pirates, they were raised by respected scientists. Arr. It seems that when it comes to e-discovery, there is a little bit of pirate and mad scientist in all of us, especially those blessed (or cursed) with high IQs.

A few scientists and other Ph.D. types think that they are smarter than everyone else and so they can get away with stuff. As this case shows, some even think they can destroy electronically stored information (“ESI”) after they have been sued. They figure that they will never get caught, and if they do, that they can hide behind a series of oh-so-clever excuses or subterfuge. Once again, this case was a rude awakening for another smart-alecky practitioner of the dubious art of “a little bit of knowledge is a dangerous thing.” When competent legal counsel is on the other side, truth has a way of coming out. When spoliators are then exposed, a good judge will hold them accountable, pirates and scientists alike.

Dog Ate My Hard Drive Type Excuses

Beard Research is a garden variety unfair competition case where defendants tried some of the classic dog ate my hard drive type excuses. The employer, Beard Research, sued its former employees, scientists all, who went to work for a competitor chemical processing company. One of the defendant chemists, Dr. Michael Kates, was discovered to have destroyed files on his computer after he was sued and even after a request for production was made. He kept on destroying files after discovery orders were entered and did not stop his destruction until just before his computer was turned over to the plaintiffs’ computer forensics expert. At least he did not turn over the laptop while it was still hot from deletions and missing a screw from a hurried reassembly, like the defendant did in another smart-alicky spoliator case, Gutman v. Klein 2008 WL 4682208 (E.D. N.Y. Oct. 15, 2008). The Gutman case is also famous for defendant’s testimony under oath to try to explain his actions: “Whatever. I told him whatever. I did whatever I felt right to do, whatever.”

Dr. Kates was more articulate. He tried to explain his tampering with his computer’s hard drive on multiple occasions with the sick computer excuse, where he in effect said: my computer was sick, it didn’t work right, and so I had to wipe all of the the bad ESI away, in fact, it was so sick I had to wipe, reformat, and wipe again and again, until finally it just died and I had to throw it away. This is probably the most common excuse used by ESI spoliators. See eg. Great American Ins. Co. v. Lowry Development, 2007 WL 4268776 (November 30, 2007, S.D.Miss.) (defendant claimed he had to throw away his hard drive because it had been hit by lightening and did not work right). Dr. Kates compounded his ruse by putting a new hard drive into his computer right after he threw away his old one. Then he later claimed to have forgotten about the switch and so produced the new hard drive to plaintiffs’ expert without telling them it was a different drive. Yup, the old switcherro comes to e-discovery.

Although these sick computer stories are somewhat amusing, they lack the flair and originality of my all time favorite excuse, the attack by midnight hackers, as described in Optowave Co. Ltd. v. Nitikin, 2006 WL 3231422 (M.D. Fla. November 7, 2006). Here the defendant, Dr. Nikitin, who held a Ph.D. in photonic engineering from Leningrad University, claimed that all of his emails were erased when a hacker broke into his computers in the middle of the night and erased them. Dr. Nikitin even filed a police report to try to substantiate his story. So here the dog was replaced by a mysterious Midnight Hacker who ate all of his emails. Bad hacker, but oh so convenient for Dr. Nikitin. Too bad for the Russian scientist that he ran into a judge who is very sophisticated in technology, Magistrate Judge David Baker in Orlando, and opposing counsel that I like to think are very competent, namely my own law firm, Akerman Senterfitt. Dr. Nikitin’s story of the Midnight Hacker was exposed as a bad faith coverup of intentional spoliation and an adverse inference sanction was awarded. Id. We won the case largely based on that inference.

Pig in a Poke Defense

But getting back to the scientists in the Beard Research case, the defendants lawyers tried to buttress their “sick computer” and “old switcherro” maneuvers with two of my favorite legal arguments, the “pig in a poke” defense, that I have written about before, and the “somnambulist” defense, employed in most every sanctions case, but without this catchy name until the fine judge who authored this opinion thought it up.

In the “pig-in-a-poke” defense, you argue that the ESI that no one will ever see because your client destroyed it, was anyway of no value. It goes with the “no harm, no foul” argument. Sure, my client made a mistake, but no one was injured by it, so it does not matter and sanctions are not justified. Under this argument, counsel for the alleged spoliator contends that the computer his client destroyed or wiped did not contain strong evidence, or to follow the analogy, did not contain fat juicy pigs. It just had irrelevant junk, mere inedible cats of no use to anyone. Since the contents are unknown, they are hidden in a “poke,” no one will ever know. The assertion of mere cats is hard to prove wrong. You don’t know what you don’t know.

Yes, this is a classic defense that will surely be repeated many more times, and is sometimes even valid, although with competent opposing counsel and a good judge, you may have a high burden of proof by circumstantial evidence for that argument to prevail. For a recent case where the pig in a poke argument was accepted by the court, see: Phillips v. Potter, 2009 WL 1362049, *5 (W.D.Pa. May 14, 2009). This argument is, however, often hard to advance because the law presumes that the poke had pigs you did not want your adversary to see and that is why you destroyed the bag.

Somnambulist Defense

The second “Somnambulist” argument has been used many times before, and no doubt will continue to be used, but to my knowledge this is the first time a judge raised the colorful specter of somnambulism to identify it. Beard Research, Inc. v. Kates, surpa. A tip of the hat goes to the author of this opinion, Delaware state court judge Donald F. Parsons, who, by the way, under Delaware tradition is called a Vice Chancellor, not a judge (seems appropriate here somehow). In this argument you claim that although the spoliator may have done it, he did not do it on purpose. It was just an accident and so sanctions are not appropriate, especially the ultimate sanction of a default which requires proof of intent in all jurisdictions. Here is the excellent way Vice Chancellor Parsons put it (footnotes omitted):

*11 Before applying the Sears test to these facts, I pause to define some key terms. The intentional destruction of evidence is reasonably straightforward. “Intention” modifies the actus reus of the destruction in the sense that the act was voluntary. Thus, for example, a somnambulist who lights a match and tosses it onto a pile of relevant documents does not act with the required mental state for spoliation. For spoliation, the spoliator also must have intended to act “with purpose.” In Gallagher, the Delaware Supreme Court “reasoned that an adverse inference is consistent with human nature and common sense: if a party intentionally destroys evidence, it is reasonable to infer that the evidence was not favorable to that party.”

Vice Chancellor Parsons here has it figured out. He correctly compares Dr. Kates excuses for wiping his hard drive with a story of “a somnambulist who lights a match and tosses it onto a pile of relevant documents.”

Wiping Away ESI

The defendants here in Beard Research did the digital equivalent to tossing a match onto a pile of relevant documents when Dr. Kates wiped, then threw away his hard drive. According to Dr. Kates, he had a really sick computer and so his actions should be excused. Here is the story.

Suit was filed on May 5, 2005, thus clearly triggering a duty to preserve at that time. On June 21, 2005, a request for production was served, specifically including a request for email communications among defendants. On October 31, 2005, Dr. Kates was laid off by his new employer, who was by then his co-defendant in this law suit. Naturally, this upset Dr. Kates and he became a very mad scientist.  In the court’s words, “he was angered by this development and, therefore, deleted all ASG data and files from the Gateway hard drive and then “emptied” the computer’s trash or recycle bin.” Id. at *2. Of course, any decent forensic expert could still recover the ESI at this point, even though it had been double-deleted.

No doubt Dr. Kates knew this as well, because in December 2005, he claims his computer got sick and crashed. So “he reformatted the hard drive and reinstalled system software.” Id. He claims his computer mysteriously crashed again a few months later, so he reformatted and reinstalled the system software a second time. Now he is thinking the information has been destroyed. In the court’s words: “Kates admittedly understood that reformatting the hard drive or installing a new operating system could “wipe[ ] out the old data.” Id. In fact, I am pretty sure the Ph.D was wrong about that. I assume Craig Ball or someone will correct me if I am mistaken here, but a forensic expert could still recover the original information, perhaps all of it, depending on the interim use of the hard drive to store other ESI. That is because reformatting a hard drive, like deleting files, does not actually wipe away or write over information. It just loses the indexing for the files storing it. The operating system pretends like the information, the ones and zeros, are gone so that new ESI could be written over it. But it is really still there unless and until new information in the form of zeros and ones are actually written over it, which could be never.

The Alleged Death and Switcheroo of Defendant’s Hard Drive

Next, there are a couple of motions to compel production of ESI and orders making it obvious that Dr. Kates computer will likely be subject to expert examination if he does not produce his emails, which of course he knows he cannot do because he has erased everything. Then in September 2007, over two years into the case, Dr. Kates claims that his poor computer once again got sick, crashed, and died. Dr. Kates claimed that this time the hard drive was dead for good and he could not restart it.

By remarkable coincidence this happened at the same time Dr. Kates’ lawyer finally got around to asking him to look for his emails. Remember that the case started on May 5, 2005 and there was a specific request for emails on June 21, 2005, yet Dr. Kates’ lawyer apparently did not speak to his client about retrieving emails until September 2007! Here is what the court says (footnotes omitted):

On September 18, 2007, counsel for Kates and the other Defendants asked Kates how to go about retrieving any emails sent from his personal computer, because Plaintiffs had requested such emails. Kates responded: “The email[s] were sent from my personal computer. However, when I was laid off from [ASG], the computer was reformatted. There are no emails of any kind on the computer. The computer at this point doesn’t even function.” After determining that Kates still had the computer, Defendants’ counsel warned: “Don’t trash it.”

So, what does the scientist defendant do? He immediately trashes it of course. This is starting to sound a lot like the digital pirate defendant in Arista Records LLC v. Usenet.com, Inc., supra at *16, *18, who deleted files the same day his attorney promised they would be produced.

Here is what supposedly happened in Beard Research. After doing God knows what to his computer, on December 11, 2007 Dr. Kates takes it to the IT department of his new employer (who is now also a co-defendant), and asks them to try to fix it. They could not, in fact the IT guy, Scott Biggers, later testified that “he could not fix the hard drive or even get it to “spin”; he also could not make a “ghost” copy of the drive.” Beard Research, supra at *3. They installed a new hard drive for Dr. Kates and then returned his old one to him, the one with all of the information sought by the plaintiffs. That is when Dr. Kates simply threw it away. The court at page *4 provides the relevant quote of his affidavit where Dr. Kates admits to it, well sort of:

At this time, I still do not have a specific recollection of the hard drive being returned by Mr. Biggers but I have no evidence to prove that he is wrong and upon reflection and based on the discussion with Mr. Biggers it is likely that the hard drive was returned to me…. [W]hile I have no independent recollection of doing it, I can only conclude that I discarded the original hard drive at or about the time Scott returned it to me or very shortly thereafter.

The story of the poor sick computer does not end here. A few months after the new hard drive was installed, Dr. Kates claimed the second drive stopped working too. Then “sometime in April or May 2008, Kates removed the new hard drive and put it in a drawer.” Id. At this point Dr. Kates has saved a hard drive all right, just not the one he was supposed to, but a second one that has no chance whatsoever of containing any of the evidence needed. How convenient. No doubt he is thinking that he is a very clever scientist and the lawyers and judges will never catch on to the old switcherro he has just engineered. If you think I am being unfair, consider what happened next.

The plaintiffs next filed a third motion to compel requesting that Kates’s laptop be turned over to them so that it could be searched by Plaintiffs’ IT expert. Here is how Vice Chancellor Parsons described what happened next (footnotes omitted):

Argument on the third motion to compel was set for July 24, 2008. On July 23, 2008, Kates received a call from his counsel advising that he probably would have to produce the laptop the next day. Kates retrieved the computer’s hard drive from a desk drawer and reinstalled it. Kates then “defragmented the hard drive and computer” before turning them over to his counsel on the morning of July 24. As Defendants expected, the Court ordered the laptop produced later that same day.

Hmm. Why would he defragment the hard drive? Moreover, how could he, since he claimed before that it was not working? Perhaps it was working all along? Perhaps defragmenting would make it look like he engaged in half-hearted attempts to hide ESI? Perhaps this would cause all to believe that this was indeed the hard-drive they were looking for, the one that might contain relevant ESI? Of course, he knew it was not. He knew he had “discarded” that hard drive back in December 2007 and that no one knew about that except for him. But does he tell anybody about the switcheroo? No, of course not, that defeats the whole purpose of it. Dr. Kates lets the Plaintiffs’ experts study away and look for treasures that he knows they will never find because he knows it is the wrong drive. No doubt he was quite pleased with himself at that point.

The plaintiffs’ expert report is actually very interesting, even if, unbeknownst to them, it did pertain to the wrong drive. Remember, according to the affidavit of Dr. Kates, this second disk had supposedly been sitting in a drawer from December 2007 to just before when it was produced on July 24, 2008. Yet the experts found that “more than 11,000 files were deleted of which at least 1,062 files had been on the hard drive as of May 3, 2008, but were no longer recoverable.” Id. They stated they were no longer recoverable because:

[O]n July 23, 2008 at 9:19 p.m., the hard drive was defragmented, allegedly making recovery of the deleted data difficult or impossible. Id. On July 24 at 5:34 a.m., a “disk cleanup” program was run, which deleted the contents of the computer’s recycle bin, internet cache, and other temporary storage areas.

My, what a tangled web we weave . . . Now this sure has every appearance of being the right hard drive. Too bad the contents cannot be recovered just because of an innocent defragmentation of the hard drive just before it was produced. So very clever. Or maybe he had something else to hide?

After the expert’s report, on October 6, 2008, the plaintiffs moved for sanctions against Dr. Kates because of his deletion and defragmentation of the hard drive delivered to the plaintiff’s expert. The set up is near perfect. No one seems to know abut the switcherro (that only came out later). All seems to be going according to plan. No doubt Dr. Kates thinks this motion will be easy to defeat. Indeed, it was not even brought up for hearing until February 2, 2009, and the bench trial was scheduled for the next month.

Vice Chancellor Persons Unravels the Tangled Web

Just before the trial begins, however, the Vice Chancellor catches onto the whole ruse, switcherro and all. He puts the pieces of the puzzle together and grants the motion in part, establishing an adverse inference and awarding fees. More importantly, the cat is now out of the bag. Judge Parsons has figured out what happened and is obviously not pleased. He does not grant plaintiff’s full request for a default judgment. That might be easy to reverse on appeal. He plays it safe, after all this is a trial in equity. There is no jury. Only the Vice Chancellor decides the ultimate outcome of the case against Dr. Kates and the other  defendants, who have in the meantime taken pains to try to distance themselves as far as possible from Dr. Kates.

Although Vice Chancellor Persons made his oral ruling on the motion for sanctions just before the trial, which took place from March 3-19, 2009 (a fairly long trial for a commercial litigation case such as this), he did not write this sanctions Order until May 29, 2009. By this time he has had the benefit of hearing all of the testimony in the whole case, including that of the lead defendant, Dr. Kates. Vice Chancellor Parsons reserved ruling after the trial concluded on March 19, 2009, and as of the time of writing this opinion on May 29, 2009, the parties had not completed their post-trial memorandums. He will not rule on the merits until this post-trial briefing is complete, but I for one am willing to predict that things will not go well for Dr. Kates. I may be wrong, since I know nothing about this case or the facts except what is stated in this one opinion, but consider the excellent grasp the judge appears to have concerning the spoliation ruse and old switcherro tactic of deception by omission.

First of all, the Vice Chancellor did not believe Dr. Kates story that the first drive was so sick that it died. He instead followed the testimony of plaintiffs’ expert and found that:

Based on Kates’s testimony regarding the information he deleted from the laptop in 2005, the presentation Kates gave to ASDI between December 2003 and March 2004 conceivably still remained on the original hard drive that Kates gave to Biggers. Had Biggers or Kates taken appropriate precautions to preserve that defective drive, the evidence on it likely would be available today. Unfortunately, no such precautions were taken. In these circumstances, Kates is plainly culpable for the loss of the original hard drive. As to ASDI and ASG (co-defendants), their degree of fault is greater than it was in connection with Kates’s actions in November 2005. Despite knowing that the laptop might contain relevant evidence, ASDI, ASG, and their counsel did virtually nothing to preserve that computer. The sole exception was Defendants’ counsel’s admonition to Kates not to trash the laptop.

Id. at *8. The judge nailed it here. Further, he saw through the hard drive shell game and understood perfectly what Dr. Kates had been up to:

In late July 2008, after being advised that the Court was likely to order the immediate production of his laptop, Kates brazenly ran a disk-cleanup program on the new hard drive on the eve of the hearing regarding it. At the time, Kates’s counsel apparently did not know the original hard drive had been replaced. With the benefit of hindsight and the belated development of the surrounding facts, it seems unlikely that the new hard drive would have contained any relevant information. In addition, the information Kates deleted apparently pertained to pornographic images that would have caused him personal embarrassment, rather than material relevant to the case. Nevertheless, Kates tampered with the lap-top without consulting with or providing any advance notice to his own counsel, let alone Plaintiffs. This Court cannot condone such flagrant disregard for the discovery rules and a party’s obligation to preserve potentially relevant evidence.

… neither ASDI, ASG, nor Kates advised Plaintiffs when they produced the laptop that it had a new hard drive. Instead, they allowed Plaintiffs and their IT expert to embark on a wasteful wild goose chase, thinking they were dealing with the original hard drive.

Kates is a highly educated individual, having received a doctorate in chemistry, and a sophisticated businessman. Kates, ASDI, and ASG all were on notice by mid-2005 that electronic documents could be relevant to this action. Moreover, Kates admitted knowing that reformatting his laptop’s hard drive on numerous occasions could overwrite or delete data stored on the hard drive. Nevertheless, around November 2005, Kates intentionally deleted files from the laptop after ASG laid him off. Moreover, in or around September 2007, Mr. Elzufon, then lead counsel for Kates, ASDI, and ASG, explicitly told Kates not to destroy his laptop. Still, within a few months, Kates had his original hard drive replaced by an agent of ASDI and then lost the original drive. I find, therefore, that Kates knew of his duties to preserve evidence, including specifically the information on his laptop, but consciously disregarded those duties. Thus, an adverse inference is warranted based on the replacement and subsequent loss of the original hard drive.

Id. at *8, *9, *11

Still not convinced that the judge gets it and is ready to rule accordingly? Then consider the comments he made at the end of the opinion:

Because the original hard drive was replaced, Plaintiffs were forced to engage in what amounted to a wild goose chase in search of information stored on Kates’s computer. Indeed, the actions of Defendants ASDI, ASG, and Kates have frustrated the Court, because it was forced to sit through a hearing about the laptop when the original hard drive already was missing and to read Plaintiffs’ opening brief on the pending Motion only to be sandbagged, like Plaintiffs, by the admission in the answering papers that the original hard drive already had been replaced by early 2008. The vexatiousness of Kates’s conduct was compounded further by his undisclosed deletion of numerous files from the new hard drive before the July 2008 hearing.

You never want to have a judge feel like he has been sandbagged by you, much less frustrated by your client’s vexatious conduct. Those are strong words for a Vice Chancellor getting ready to pass judgment on your case.

Conclusion

Vice Chancellor Donald Parsons included a general comment on e-discovery and preservation in his Beard Research opinion that all trial lawyers should hear:

In complex commercial litigation today, virtually all discovery involves electronic discovery to some extent. It also is well known that absent affirmative steps to preserve it, at least some electronically stored information (“ESI”) is likely to be lost during the course of litigation through routine business practices or otherwise. These realities counsel strongly in favor of early and, if necessary, frequent communications among counsel for opposing litigants to determine how discovery of ESI will be handled. To the extent counsel reach agreements recognizing and permitting routine destruction of certain types of files to continue during litigation, the Court has no reason to object. Conversely, if the parties do not focus on the handling of e-discovery in the early stages of a case, the Court is not likely to be sympathetic when, for example, one party later complains that stringent measures were not instituted voluntarily by her adversary to ensure that no potentially relevant information was lost. Rather, instead of holding a party to a stringent standard that might have been appropriate if established earlier in the case, the Court probably will apply an approach it deems reasonable, taking into account the insights provided by the case law and some of the guidelines and principles developed by various respected groups that have studied the challenges of electronic discovery.

Id. at *7.  I expect that these sentiments are held by all judges in the country, including state court judges like Parson who are just beginning to see e-discovery, as well as federal judges, especially magistrates, many of whom have far greater experience with these issues than state judges.

Preservation should always be job number one at the beginning of any complex commercial litigation case like this. But this task involves far more than lawyers talking to opposing counsel about preservation as Vice Chancellor Parsons states. In fact, such conversations are secondary to the first and far more important conversations between lawyer and client. How could defense counsel here possibly wait over two years to talk to their client about preserving ESI and collecting email?

Beard Research shows that this kind of sleep walking is an invitation to disaster. You never know when one of your clients, or their employees, might be a secret pirate or mad scientist. Some, although smart, may not know that the law requires preservation of ESI. Others may know alright, but think they are above the law and can destroy email with impunity. They may not think it is such a big deal to destroy such casual, ephemeral information. Many people put things in email that they later regret, even scientists and high-powered businessmen. It is just human nature to want to try to hide email and other kinds of ESI they might have on their computer to avoid exposure and embarrassment, not to mention loss of a bitterly contested law suit. The temptation to “bend the rules a bit” might even be greater for high IQ smart-alick types who think they can get away with it.

For these reasons and more, if you are a lawyer it is foolhardy to presume that just because your client is smart and sophisticated, that they already know about preservation and will automatically comply. Remind them. Do it right away when a case first starts. You may even have to cajole them a tad, and sometimes quite a lot. Notices and reminders are important, and so is actual preservation by copying and collection of ESI. Absent express agreement with opposing counsel to the contrary, this must be done at the beginning of the case, not two years down the road as happened in Beard Research. The ethical imperatives of diligence and competence require nothing less. The failure to do so in some circumstances may not only be foolish, but also malpractice, even unethical.