Counsel’s Failure to “Examine Critically” Client’s Representations about “Existence and Availability of Documents” was “Overriding Reason” for Discovery Problems

Brown v. Tellermate Holdings, Ltd., No. 2:11-cv-1122, 2014 WL 2987051 (S.D. Ohio July 1, 2014)

While the preservation, review, and production of ESI often involves procedures and techniques which do not have direct parallels to discovery involving paper documents, the underlying principles governing discovery do not change just because ESI is involved. Counsel still have a duty (perhaps even a heightened duty) to cooperate in the discovery process; to be transparent about what information exists, how it is maintained, and whether and how it can be retrieved; and, above all, to exercise sufficient diligence (even when venturing into unfamiliar territory like ESI) to ensure that all representations made to opposing parties and to the Court are truthful and are based upon a reasonable investigation of the facts. As another Judge of this Court has observed, “trial counsel must exercise some degree of oversight to ensure that their client’s employees are acting competently, diligently and ethically in order to fulfill their responsibility to the Court,” Bratka v. Anheuser–Busch Co., 164 F.R.D. 448, 461 (S.D.Ohio 1995) (Graham, J.). That holds true whether the bulk of the information relevant to discovery is ESI or resides in paper documents.

In this age discrimination case, the court determined that both defendant and counsel failed to uphold their discovery obligations, including by failing to timely produce ESI and by failing to make timely efforts to preserve.  The court observed, however, that the “significant problems arose in this case for one overriding reason: counsel fell far short of their obligation to examine critically the information which Tellermate gave them about the existence and availability of documents requested by the Browns.”  “As a result, they did not produce documents in a timely fashion, made unfounded arguments about their ability and obligation to do so, caused the Browns to file discovery motions to address these issues, and, eventually, produced a key set of documents which were never subject to proper preservation.”  Accordingly, the court ordered that defendant was precluded from “using any evidence which would tend to show that the Browns were terminated for performance-related reasons” and also ordered monetary sanctions, to be paid jointly by defendant and counsel.

The opinion in this case is quite long and addresses several instances of discovery failures, described by the court as indicating “what appears to have been a pattern of Tellermate’s failure either to learn or communicate the truth about matters related to discovery, and its counsel’s failure to make the reasonable inquiries required by Rule 26(g).”  Most significant were defendant’s and counsel’s failures related to a web-based application utilized by defendant’s sales force, including plaintiffs (prior to their termination), which tracked sales activities, among other things.  When information from the application was requested, defendant and counsel asserted (repeatedly and emphatically) that defendant was not in control of the data and could not produce it which, as it turns out, was entirely untrue.  Moreover, no steps were taken to preserve the information based, at least in part, upon counsel’s unfounded (and mistaken) belief that the third party service provider would preserve the data.  By the time counsel checked this assumption, the integrity of the data (which was ultimately produced) was in question because it had been subject to possible changes by defendant’s sales force who still utilized the application, absent any effort to preserve. 

Other discovery violations included additional misrepresentations to the court regarding a different category of documents, counsel’s failure to sufficiently follow up regarding the existence of requested information, delayed assertions of privilege, a “document dump” of over 50,000 pages “largely consisting of irrelevant and unresponsive documents,” and the drastic over-marking of documents as “Attorney’s Eyes Only.”  Many of these issues are addressed in detail in the court’s opinion.

Ultimately, the court found that sanctions were warranted and ordered, among other things, that defendant was precluded from “using any evidence which would tend to show that the Browns were terminated for performance-related reasons” and monetary sanctions, to be paid jointly by defendant and counsel.