To echo a popular tag line frequently heard on Top 40 radio stations, when it comes to court-imposed sanctions for e-discovery failures, “the hits just keep on comin’!” According to a recent study published in the Duke Law Journal, sanctions for e-discovery violations are occurring more frequently than ever. Dan H. Willoughby, Jr., Rose Hunter Jones, Gregory R. Antine, Sanctions for E-Discovery Violations: By The Numbers, 60 Duke Law J. 789 (2010). However, there may be light at the end of the tunnel, as it appears that the frequency of sanctions awards is trending downward after hitting an all-time high in 2009.
Increase in Sanctions
The Duke study was based upon a review of 230 sanctions awards in 401 federal cases decided before January 1, 2010. The authors found sanctions motions and awards have increased significantly since 2004, and the so-called “safe harbor” provisions of Federal Rule of Civil Procedure 37(e) have provided minimal cover for parties and attorneys. It is not clear whether this increase is due to the complexities of e-discovery rules as embodied in the 2006 amendments to the FRCP, or rather, due to an increase in bad behavior. In any event, the authors note that leading practitioners have advocated for more uniform standards and guidelines that embrace concepts of “reasonableness” and “proportionality” and a standardized adverse inference instruction.
Significance of Increase and Types of Cases
According to the study, there were more e-discovery sanctions cases decided and sanctions awarded in 2009 than in any other year. In fact, the staggering magnitude of the increase is reflected by the fact that the number of 2009 e-discovery sanctions cases and awards exceeded the aggregate total in all years prior to 2005. The study also revealed that sanctions motions have been filed in all federal courts, in all types of cases, and have been granted based upon a mix of rules of procedure, statutes and powers. One of the more interesting statistics is that defendants have been sanctioned three times more often than plaintiffs, a statistic that has remained constant over the past decade.
Sanctionable Conduct and the Range of Potential Sanctions
Sanctions were awarded most often in response to failures to preserve ESI but were also awarded for ESI production failures and delays. In response, courts have imposed a range of sanctions, from the most severe — dismissal of all claims or defenses, adverse jury instructions and monetary awards, some as high as $5 million — to lesser but still significant sanctions, such as witness or evidence preclusion, shifts in burdens of proof and supplemental discovery. Some courts have devised more creative penalties by, for example, ordering participation in court-administered ethics programs or payments to fund bar association educational programs.
Attorneys Are Not Immune from Sanctions
In addition to discussing sanctions against litigants, the study also highlighted the increase in sanctions imposed against both in-house and outside counsel. These most commonly took the form of attorneys’ fees and cost awards in amounts from $500 to $500,000. In some instances, both counsel and the parties were responsible for paying those fees and costs. Those awards emanated from various levels of misconduct including negligence, gross negligence, reckless and intentional conduct.
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Although sanctions motions and awards increased steadily through 2009, the Duke authors conclude that the pendulum may be swinging back to a more reasonable and proportional approach by the courts; although the number of sanctions motions filed in 2010 increased, courts granted 55% of those motions as compared with 70% in 2009. See 2010 Year-End Electronic Discovery and Information Law Update, published by Gibson Dunn. Thus, while the overall number of successful sanctions motions and awards remains staggering and a potent reminder of the pitfalls that await the unwary, perhaps courts in the sanctions context are implicitly recognizing the complexities and challenges of e-discovery as well as more practical and reasonable threshold inquiries such as whether discovery-relevant information was actually lost. A good example of this approach is the sanctions analysis in the recent Orbit One case. Orbit One Communications, Inc. v. Numerex Corp., 2010 WL 4615547 (S.D.N.Y. Oct. 26, 2010). Additional discussion of this case can be found here.