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November 17, 2017 Top Story

Cloudy with a Chance of Sanctions

Court troubled by defendant’s delays, threats, and obfuscation of ESI production

Geoff A. Gannaway

iStockphoto by Getty Images

A California federal magistrate has sanctioned the defendant in an employment discrimination suit for failing to timely collect and produce electronic discovery. The court issued the sanction order upon finding that the defendant had repeatedly delayed production, deleted emails, threatened opposing counsel, and missed court-imposed deadlines.

Clouds on the Horizon: The Court Intervenes and the Defendant Makes Threats

By all initial indications, the parties in Bird v. Wells Fargo expected a fairly routine discovery process. In their initial joint report to the court, the parties indicated that they did not expect "significant electronic discovery issues," and they planned to meet and confer on proposed search terms. That rosy forecast quickly changed. Just before the close of non-expert discovery, the court intervened when it learned that production of electronically stored information (ESI) had not even begun.

The parties appeared for a 90-minute conference in which the court provided guidance regarding the scope of electronic discovery, ordered the parties to meet and confer, and requested another status report in two weeks. On the same day as the conference with the court, Wells Fargo demanded that the plaintiff provide a list of proposed terms for Wells Fargo's search for responsive emails. Wells Fargo warned that if the plaintiff did not provide the list within two days, the agreement to produce emails would be "null and void ab initio," and Wells Fargo would seek sanctions.

The Thunder Rolls: Missing Emails and Delay Revealed

Two weeks later, Wells Fargo first revealed to the plaintiff and the court that the plaintiff's email account had been purged following her termination. Wells Fargo also advised that it needed six to eight weeks to gather its other employees' emails, which would then require attorney review before production. Wells Fargo also purported to reserve the right to shift the cost of collecting and producing ESI to the plaintiff and her counsel.

After receiving this report, the court issued an order expressing frustration that the discovery process had "completely broken down." The court observed that Wells Fargo had no legal basis for refusing to produce ESI before reaching an agreement on search terms, or for the threat to force the plaintiff to pay Wells Fargo's costs of production. The court ordered Wells Fargo to implement measures immediately to produce documents on a rolling basis, and set a deadline for completion of production. The court also directed Wells Fargo to disclose the search terms it used to locate responsive documents, and invited the plaintiff to file a motion for sanctions if it believed Wells Fargo had not satisfied its discovery obligations.

Lightning Strikes: The Court Orders Sanctions

When the court's production deadline came, Wells Fargo had not yet begun its rolling production of electronic discovery. Wells Fargo explained that the delay was due to the several weeks needed to "pull the emails," but never formally requested to extend the court's deadline. The court then issued an order characterizing Wells Fargo's production effort as "fraught with delays and obfuscation" with no "indication of voluntary compliance." The court directed Well Fargo to pay sanctions in the amount of half of the fees incurred by the plaintiff in bringing the motion for sanctions.

Bring Your Umbrella: How to Deal with E-Discovery Squalls

Section leaders see the Bird sanctions order as a reminder of the importance of being proactive in planning and managing electronic discovery. "The sooner you can get your arms around e-discovery issues, the better," observes Michael S. LeBoff, Newport Beach, CA, cochair of the ABA Section of Litigation's Commercial & Business Litigation Committee. "The last thing you want to happen is for the judge to step in to solve your problem," LeBoff adds. Sometimes a client will need advance notice to gather emails, so "when a lawyer is first retained, he needs to inform his clients of their discovery obligations and construct a plan for gathering and producing ESI," advises Scott E. Reiser, Roseland, NJ, cochair of the Section of Litigation's Ethics & Professionalism Committee

When a court has already criticized the pace of discovery, an attorney should bend over backwards to meet court deadlines. "Wells Fargo compounded its error when it failed to show a good-faith effort, produce some documents, and ask for an extension of the deadline as soon as it became clear it could not comply with the court's order," explains Reiser. And lawyers risk a judge's ire by persisting in aggressive posturing after initial missteps. "You can tell from the order there was a lot of frustration on the judge's part, and it should never have gotten that far. The tone of Wells Fargo's submissions was a turn-off for the court, and that probably contributed to the decision to issue sanctions," notes LeBoff.

Geoff A. Gannaway is a contributing editor for Litigation News.

Keywords: ethics, email, ESI, sanction, search terms, electronic discovery, e-Discovery

Hashtags: #e-discovery, #ESI, #electronicdiscovery, #sanctions

Related Resources:
• Geraldine S. Brown, "iWitness: Reining in E-Discovery," Litigation (Summer 2011)
• Steven D. Ginsburg, "A Practical Look at Preserving ESI," Practice Points (January 31, 2017)
• Eric B. Levasseur and Jeanniece Jackson, "Steps to Consider Before Seeking Sanctions for Failure to Preserve and Produce ESI," Practice Points (June 30, 2017)

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