Recent Surveys Illustrate Complexity of E-Discovery Compliance for U.S. Companies

Posted on January 14, 2008 by Peter M. Dennis

The challenge of complying with e-discovery rules was illustrated in the results of two surveys released recently. A survey from Robert Half Legal, (a company specializing in attorney recruitment and placement) found that one in four lawyers in North America believe that e-discovery will have the single largest impact on the practice of law in the next five years. Why? According to Charles Volkert, Executive Director of Robert Half Legal, "the complexity and cost of the task, coupled with the associated information technology and human resource needs, make [e-discovery] a challenge."

Similarly, a survey published in eWeek.com  found that two-thirds of U.S. businesses are generally ignoring the issue of e-discovery.  According to the survey's author Michael Osterman, the companies, "are either ignoring the new federal mandates for compliance and e-discovery or are clearly not well educated on how to meet the technical requirements."

The results of these two surveys, at first glance appear somewhat contradictory. Are the majority of companies really ignoring the legal issue expected to have the largest impact in the near future? However, both surveys seem to point to the same problem, a lack of clarity in many companies on how to effectively and efficiently comply with e-discovery rules. 

The survey conducted by Robert Half indicates that e-discovery is expected to have such a large impact because of the complexity and expense of compliance. Likewise, in discussing the results of the survey in eWeek, Michael Osterman, stated that many companies are still unclear on the concept of e-discovery in general. "There really is no consensus yet on whether a company should keep all its e-mail and other docs, or whether a company should keep a finite number of years' worth of data, or whether it should keep more than 30 days' worth of data."

Time will tell whether e-discovery will be the largest issue facing the practice of law in the U.S. However, the actual impact will likely largely be effected by the current corporate response to e-discovery rules.

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Sanctions Imposed for "Monumental Discovery Violation"

Posted on January 14, 2008 by Joseph O. Wilson

A California federal court judge sanctioned wireless chip developer Qualcomm Inc. and six of its outside lawyers on January 7, 2008 for what the judge labeled a "monumental discovery violation" in connection with Qualcomm's failure to turn over electronically-stored information.  One of Qualcomm's central arguments in patent litigation against Broadcom Corp. rested on Qualcomm's position that prior to September 2003 it had not been involved in working on a committee tasked with creating a video coding standard. 

The fly in the ointment was 46,000 emails (totaling over 300,000 pages) showing that Qualcomm had, in fact, been involved with the committee as early as August, 2002.  What to do? 

Qualcomm apparently decided not to produce the emails even though Broadcom had requested them in discovery.  At the same time, Qualcomm produced lots of emails evidencing its involvement in the committee after September 2003.  Despite knowing about some of the emails, Qualcomm's outside lawyers repeatedly asserted that there was no evidence of Qualcomm's earlier involvement in the committee.  Everybody was up the creek.

The court sanctioned Qualcomm to the tune of $8.5 million in attorneys fees and costs, noting that "Qualcomm's claim that it inadvertently failed to find and produce these documents also is negated by the massive volume and direct relevance of the hidden documents. . . .  [I]t is inexplicable that Qualcomm was able to locate the post-September 2003 [ ] documents that either supported, or did not harm Qualcomm's arguments but were unable to locate the pre-September 2003 [ ] documents that hurt its arguments."

As for the lawyers, the court found that they had "assisted Qualcomm in committing this incredible discovery violation by intentionally hiding and recklessly ignoring relevant documents, ignoring or rejecting numerous warning signs that Qualcomm's document search was inadequate, and blindly accepting Qualcomm's unsupported assurances that its document search was adequate."  The court continued to note that the attorneys "then used the lack of evidence to repeatedly and forcefully make false statements and arguments to the court and jury."  The court referred the attorneys to the California Bar for investigation and possible imposition of sanctions.  We will keep you posted as to the punishment handed down.

A copy of the decision is here.

 
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Employer Policy Regarding Email for Personal Use Trumps Attorney-Client Privilege

Posted on January 10, 2008 by Joe Wilson

 A recent New York appellate court decision offers some guidance on the interplay among an employer's right to monitor email traffic, an employee's expectation of privacy in their email and the attorney-client privilege.  In a decision by the Supreme Court for New York County, the Plaintiff, Dr. Scott, was fired by Beth Israel Medical Center and sued for $14 million in severance payments.  Dr. Scott got a bit ahead of himself, though, and sent several emails about the impending suit to his lawyers while still employed by the hospital, using his work email account and a hospital computer.  When the hospital informed his attorneys that it had the emails, Dr. Scott moved for a protective order preventing their use in litigation.

The question, then, was what took precedence, the attorney-client and work product privileges, or the hospital's email policy, which provided that the hospital's email system was not for personal use and that the hospital reserved the right to access emails at any time.

The court found that "A 'no personal use' policy combined with a policy allowing for employer monitoring and the employee's knowledge of these two policies diminishes any expectation of privacy," and the combined effect "is to have the employer looking over your shoulder every time you send an e-mail."  Thus, the court held that the emails were not protected, and were properly discoverable in litigation.  The full decision appears here: Scott v. Beth Israel Medical Center.
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