Law Technology

Defendant?s Loss of Electronic Information Was Sanctionable Due to Information Management Practices

By Michael Arkfeld

Phillip M. Adams & Assocs. v. V., No. 05-64, 2009 U.S. Dist. LEXIS 26964 (N.D. Utah Mar. 30, 2009).

In an action involving claims of misappropriation of trade secrets, plaintiff filed a motion to sanction defendant for spoliation based on defendant?s failure to produce discovery, where a large number of documents were lost as a result of defendant?s information management practices. The court noted that there did not appear to be any backup system or data backup policy. Instead, employees were responsible for downloading important e-mails or documents to their individual computers in order to avoid the automatic overwriting of all documents due to limited space on defendant?s servers.

Defendant was not entitled to safe harbor with respect to its loss of electronically stored information because, even though defendant?s e-discovery expert submitted a declarant providing the history and the reasons for defendant?s computers system, the declarant did not provide any opinion about the reasonableness or good faith of defendant?s system and did not evaluate the risk of data loss due to defendant?s reliance on its employees to backup and archive important e-mails and files. Also, the declaration did not show that the expert was familiar with the precise practices pointed out by employees.      

In another case where an indexing system made documents practically inaccessible, the court spoke of a party?s duty to use an adequate information management system:

[U]tilizing a system of record-keeping which conceals rather than discloses relevant records, or makes it unduly difficult to identify or  locate them, [renders] the production of the documents an excessively burdensome and costly expedition. To allow a defendant whose business generates massive records to frustrate discovery by creating an inadequate filing system, and then claiming undue burden, would defeat the purposes of the discovery rules.

The court concluded that defendant violated its duty to preserve information and given defendant?s degree of culpability, based on defendant?s information management practices, the court concluded that a sanction was appropriate, subject to a determination of prejudice.

Case Link: www.lawpartnerpublishing.com/docs/cases/2009/mar/Phillip M. Adams & Assocs._V._03_2009.pdf

Cross-references to Arkfeld on Eletronic Discovery and Evidence:

§ 7.9, Litigation Hold and Sanctions
§ 7.9(A),(4), Limited ?Safe Harbor? Provision ? Rule 37(e)
§ 7.9(A)(1), Preservation Obligation

Full post as published by Electronic Discovery & Evidence on August 02, 2009 (boomark / email).