Guest Blogger Ben Kerschberg: E-Discovery Sanctions Reach Towering Heights — and Should Be Applauded

Today, at Advanced Discovery, we are honored to introduce Mr. Ben Kerschberg as our guest thought provoker. A Founder of Consero Group LLC, Mr. Kerschberg graduated from the University of Virginia and Yale Law School, where he was a Coker Fellow. From his experiences as a clerk for Judge Gilbert S. Merritt of the U.S. Court of Appeals for the Sixth Circuit, Ben became (and has remained) fascinated by the intersection of law and technology.

Currently contributing to Forbes’ Law and Technology blog, Ben has also contributed to The Huffington Post and has had articles published in The American LawyerCorporate Counsel,Law and Technology News and Texas Lawyer.

As our first highlighted selection from Mr. Kerschberg’s many contributions, we present E-Discovery Sanctions Reach Towering Heights — and Should Be Applaudedas originally published on Forbes.

There are sanctions, and then there are sanctions.

In Green v. Blitz U.S.A, Inc. (E.D. Tex. Mar. 1, 2011), the U.S. District Court for the Eastern District of Texas found the defendant’s abuse of the discovery process to be so egregious that it ordered theE-Discovery Service Providers - Advanced Discoveryoffending party to provide a copy of the court’s highly detailed opinion to every plaintiff in every lawsuit it has had proceedings against it during the two previous years. Moreover, the court ordered that a copy of the opinion be filed with the abusing party’s first pleading with the presiding court in every new lawsuit in which it is a party, whether as a plaintiff, defendant, or any other capacity, for five years.

In Green, the court considered egregious discovery abuse by the defendant, which withheld material corporate communication that would have been material to the case. Plaintiff’s counsel, who represented another plaintiff against Blitz in a different federal court, discovered those withheld documents in the other case over one year after Green and Blitz settled their case.

The court did not take lightly to this “willful” discovery abuse, ordering steep sanctions against the defendant.

  1. The court ordered Blitz, which touts itself as “the leader in industry gas cans,” to pay $250,000 in civil contempt sanctions to the plaintiff.
  2. The court ordered Blitz to provide a copy of the court’s Memorandum Opinion and Order levying these sanctions and detailing the company’s discovery abuse “to every Plaintiff in every lawsuit it has had proceeding against it, for the past two years.” Wow. The court issued a $500,000 “purging” sanction that it tolled for 30 days to give the defendant time to comply and thereby extinguish that sanction.
  3. The court ordered Blitz, for the next five years, to file a copy of the court’s Memorandum Opinion and Order in Green with its first pleading or filing with the presiding court, “in every new lawsuit it participates in as a party, whether as a plaintiff, defendant, or in another official capacity.” Wow again. I’m impressed.

Facts of the Case

The plaintiff, Rene Green, brought this products liability lawsuit, asserting that a defective gas can manufactured by Blitz caused the death of her husband. Green’s lawyer was also counsel for another case against Blitz in the Western District of Texas. Through discovery in the other case, nearly a year after the settlement in Green, counsel learned of documents that were not produced in Green and promptly returned to the Eastern District of Texas with a Motion to Re-Open The Case, which was denied due to the statute of limitations, and a Motion for Sanctions.

Blitz had already been accused of discovery abuse in two federal court cases, including in one court that ordered sanctions as recently as 2010.

Blitz had what might generously be described as a unique way of conducting its discovery. It had one employee, Larry Chrisco, who was responsible for searching for and collecting documents documents related to ongoing litigation. Chrisco described himself before the court as follows: “I am about as computer illiterate as they get.” At no time whatsoever did Chrisco institute a litigation hold of documents or do anyword searches for emails–this turned out to be highly problematic, as we shall see–or even talk with Blitz’s IT department about how to search for electronic documents. The court stated that that the fact that Chrisco did not know how to search for electronic documents was “immaterial” and had no bearing on the company’s “obligation to conduct such a search.”

Green’s attorney identified “numerous documents not produced in this case that are extremely relevant and material.” These included: (1) a written “wish list” by the CEO stating his desire to “[d]evelop & introduce device [sic] to eliminate flashback from a flame source,” and advocating that said device comply with industry standards; (2) an email to and from corporate executives, as well as Chrisco, with the the subject “FW: Flame Arrester”; and (3) an internal document from a team meeting that included Chrisco where decreasing liability related to Blitz’s product was discussed.

The court deemed each of these documents to be “indisputably relevant” and found that Blitz’s “conduct constitutes a willful violation of the Court’s Discovery Order” as well as a separate Order to supplement discovery.

Failure to Preserve Documents

The court’s analysis focused on Blitz’s failure to preserve documents with a litigation hold. But Blitz did more than that — it actively encouraged the destruction of electronic records during time periods relevant to Greenand other lawsuits. The court found:

Far from instituting a litigation hold on relevant electronic documents, Blitz actually asked its employees to routinely delete electronic documents. From 2004 through 2007, Blitz’s department head, Paul Hale, routinely sent emails to all Blitz employees instructing them and encouraging them to delete email. . . . [T]here are at least ten emails in the record where Paul Hale requested that all employees at Blitz delete their emails. During this precise time period, Blitz was actively defending multiple products liability lawsuits relating to its gas cans and had a duty to preserve evidence. Paul Hale admits that when he sent these multiple emails telling employees to delete their email, the employees were not told to retain email relevant to ongoing litigation.

In light of these facts, the court ordered the sanctions set forth above.

What Did The Court Really Do Here? And Why We Should Applaud It.

Some may consider these sanctions overly harsh. I do not. No exposition on the important of the discovery process is needed here. Suffice it to say that judges take such behavior personally. They don’t like when litigants waste the court’s time, and they don’t like to be taken for fools.

This opinion will likely be appealed, but what did the court actually do here? Its opinion is a matter of public record that any even semi-zealous advocate in future cases should find either with a basic online search or on PACER. The opinion brings Blitz into line, holds it accountable, and forces it to conduct future discovery appropriately, thereby rebutting anypossible prejudice against it. It saves the court’s brethren in future cases precious time and resourses and ensures that the results in open cases on sister dockets are not compromised by Blitz’s systematic abuse of the discovery process.

When I reread the paragraph above, I am left with the belief that the district court here rendered a social good. And while courts decide cases, I’d like to think that they do more than just that, and this opinion is a prime example of how courts can look beyond the immediate cases before them and consider the welfare of the judicial system as a whole. I believe Judge T. John Ward did just that, and we should all applaud him.

Ben Kerschberg is a Founder of Consero Group LLC.  You may follow Consero on Twitter @ConseroGroupLLC.  I welcome comments, suggestions, tips, and criticism.

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