LACBA Update, January 2013
By Richard D. Hoang, associate at McCurdy & Leibl, LLP, Assistant Professor of Law at the Irvine University College of Law in Cerritos, California, and member of the LACBA Professional Responsibility and Ethics Committee. He can be reached at firstname.lastname@example.org. The opinions expressed are his own.
Discovery in civil cases has become increasingly difficult in light of electronically stored information (ESI).1 ESI has been a topic of discussion for the past couple of years since many people use e-mails to communicate and computers to save important documents (e.g., contracts, mortgage documents). With storage space at a premium, and most people and companies trying to contain costs, it is logical and cost-effective to store the information/documents on CDs, hard drives, and flash drives. However, storing material on CDs, hard drives, or flash drives means that there is potentially a lot more material (sometimes more than 100,000 pages) for attorneys to review. Even though the amount of material an attorney must review has changed, the ethical duties have not changed. Rather, compliance with said duties has become more complex because of electronically stored information and e-discovery.2
With the increase in ESI in litigation, revisiting Qualcomm, Inc. v. Broadcom Corp.3 is instructive and serves as a cautionary tale to practitioners. In Qualcomm, e-mails were not produced pursuant to pretrial discovery requests. The existence of the e-mails was not discovered until Qualcomm was preparing a witness to testify at trial and learned that 21 e-mails that may have been responsive to discovery requests were on the witness’s laptop. The significance of these e-mails was such that they may have precluded Qualcomm from suing companies like Broadcom and thus were critical to the litigation. The existence of these e-mails came to light during the trial, and the court issued an order granting sanctions against Qualcomm, Inc. and its attorneys for discovery abuses, and also referred six lawyers to the California State Bar for an “appropriate investigation and possible imposition of sanctions.”4 A post-trial investigation revealed the presence of 46,000 potentially responsive e-mails that were not produced in pretrial discovery. The court later found that there was insufficient evidence to prove the six lawyers acted in bad faith and declined to impose any sanctions against them.5
Since Qualcomm, courts in other cases have addressed the duties of counsel and client with respect to electronically stored information, as well as the consequences (i.e., spoliation of evidence sanctions) associated with failure to produce/retain ESI.6 Rule 5-220 of the California Rules of Professional Conduct states: “A member shall not suppress any evidence that the member or the member's client has a legal obligation to reveal or to produce.” Related to this is the duty to preserve all relevant documents in anticipation of litigation.7 One court has stated that it is not sufficient to rely on an employee’s search for relevant documents.8 Another court has stated that it is not sufficient to merely notify employees of a litigation hold; rather, “[c]ounsel must take affirmative steps to monitor compliance so that all sources of discoverable information are identified and searched.”9 “Counsel must oversee compliance with the litigation hold, monitoring the party’s efforts to retain and produce the relevant documents.”10 “Proper communication between a party and her lawyer will ensure (1) that all relevant information (or at least all sources of relevant information) is discovered, (2) that relevant information is retained on a continuing basis, and (3) that relevant non-privileged material is produced to the opposing party.”11
Below is an outline of the “steps that counsel should take to ensure compliance with the preservation obligation”
First, counsel must issue a “litigation hold” at the outset of litigation or whenever ligation is reasonably anticipated. The litigation hold should be periodically re-issued so that new employees are aware of it, and so that it is fresh in the minds of all employees.
Second, counsel should communicate directly with the “key players” in the litigation…Because these “key players” are the “employees likely to have relevant information,” it is particularly important that the preservation duty be communicated clearly to them.
Finally, counsel should instruct all employees to produce electronic copies of their relevant active files. Counsel must also make sure that all backup media which the party is required to retain is identified and stored in a safe place. In cases involving a small number of relevant backup tapes, counsel might be advised to take physical possession of backup tapes. In other cases, it might make more sense for relevant backup tapes to be segregated and placed in storage.12
The above framework provides a good starting point for dealing with e-discovery. However, with increasing use of electronic media to store information and the resulting proliferation of e-discovery, it will be necessary for attorneys to work closely with their clients in responding to discovery requests involving ESI as well as collecting and preserving ESI so as to not run afoul of any ethical or statutory obligations.
1 “‘Electronically stored information’ means information that is stored in an electronic medium.” Code Civ. Proc. §2016.020(e). “‘Electronic’ means relating to technology having electrical, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities.” Code Civ. Proc. §2016.020(d).
2 See John Cowling and Daniel Nelson, Technology: Ethics meets e-discovery, Inside Counsel (November 9, 2012), at http://www.insidecounsel.com/2012/11/09/technology-ethics-meets-e-discovery (discussion of any attorney’s duties of competence, confidentiality, candor toward the tribunal, and fairness pursuant to ABA Model Rules of Professional Conduct 1.1, 1.6, 3.3, and 3.4, respectively); see Patrick A. Fraioli, Jr., New Discovery Rules, Same “Old” Ethics Rules, County Bar Update (May 2008), available at https://www.lacba.org/news-and-publications/lacba-update/past-ethics-articles/2008-may-ethics-fraioli for a discussion on Qualcomm, Inc. v. Broadcom Corp.
3 Qualcomm, Inc. v. Broadcom Corp., No. 05CV1958-B, 2008 WL 66932 (S.D. Cal. 2008).
4 Id. at 18. The six attorneys referred to the State Bar were initially prevented by the magistrate court from defending their alleged conduct pursuant to the attorney-client privilege asserted by the client, Qualcomm, Inc. The sanctioned attorneys filed objections to the sanctions and asked the court for a finding of a “self-defense” exception to Qualcomm’s assertion of the attorney-client privilege, which was denied. Qualcomm then submitted declarations that exonerated Qualcomm and were “critical of the services and advice of their retained counsel.” Qualcomm, Inc. v. Broadcom Corp., No. 05CV1958-B, 2008 WL 638108, at 3 (S.D.Cal. 2008). In light of the “accusatory adversity between Qualcomm and its retained counsel regarding the issue of assessing responsibility for the failure of discovery,” the district court vacated the prior order denying the sanctioned attorneys from asserting the “self-defense” exception. Id.
5 Order Declining to Impose Sanctions Against the Responding Attorneys and Dissolving the Order to Show Cause (April 2, 2010), Document 998, Qualcomm, Inc. v. Broadcom Corp., No. 05CV1958-B; see State Bar of California, Standing Committee on Professional Responsibility and Conduct, Formal Op. No. 1997-151 (an attorney may reveal confidential information to the “extent necessary to defend himself against the client’s claim that he was responsible for the sanctions,” citing Brockway v. State Bar, 53 Cal. 3d 51, 63 (Cal. 1991)); but see L.A. County Bar Assn. Prof'l. Responsibility and Ethics Comm., Formal Op. No. 519 (2007) (an attorney may not reveal privileged communications or a client’s confidential information without the informed, written consent of the client for purpose of defending allegations brought against the attorney by a third party).
6 See Pension Committee of the University of Montreal Pension Plan v. Banc of America Securities, LLC, 685 F. Supp. 2d 456 (S.D.N.Y. 2010) (substantial gaps were noted in plaintiffs’ document production where the attorneys had instructed plaintiffs to preserve and collect all documents, including e-mails and electronic documents as the documents were necessary to draft a complaint, though the instruction was not limited to such documents); Victor Stanley, Inc. v. Creative Pipe, Inc., 269 F.R.D. 497 (D.Md. 2010) (court entered default judgment as to a copyright infringement claim, awarded monetary sanctions, and denied entry of default judgment on other claims, without prejudice, unless it could be shown that the defendants’ spoliation of evidence (consisting of such things as failure to implement a litigation hold, deletion of electronically stored information after suit was filed, failure to preserve an external hard drive) prevented plaintiff from meeting its burden of proof).
7 Pension Committee, 685 F. Supp.2d at 466; Cedars-Sinai Medical Center v. Superior Court, 18 Cal. 4th 1, 12 (Cal. 1998) (discovery sanctions are appropriate in circumstances where evidence is destroyed in response to a discovery request after litigation has commenced since the destruction would be in anticipation of the discovery request).
8 Id. at 473.
9 Zubulake v. UBS Warburg LLC (Zubulake V), 229 F.R.D. 422, 432 (S.D.N.Y. 2004).
12 Id. at 433-34, internal citations omitted.