The e-Discovery Sanctions Cube

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01Dec2009

The e-Discovery Sanctions Cube

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By William F. Hamilton

Sanctions CubeOver the past few years, federal and state courts have rendered an unprecedented number of e-discovery sanctions orders and decisions. The trend is towards more and increased sanctions for e-discovery failures. These sanctions cases need a unifying theme and explanation; they need a model for analysis. This article presents the  E-Discovery Sanctions Cube as a first effort at such an analytic tool. What is at stake is more than a theoretical exercise. Without a coherent model, we seem to learn the lessons of each case, but lack a comprehensive overview to ward off future disasters. If we can grasp the underlying dynamics of e-discovery sanction cases, we may be better able to devise a strategy to avoid e-discovery train wrecks. Indeed, our preliminary use of the E-Discovery Sanctions Cube as a teaching tool in law school e-discovery classes suggests that early dialogue between counsel and judge in Rule 16(b) hearings is key to the avoidance of sanctions and upholding the integrity of our system of justice.

Litigation History

Before today’s digital deluge, the last major litigation transformation was the introduction of discovery itself in 1938. Before the 1938 amendments to the Federal Rules of Civil Procedure, “discovery” required special bills, writs, and pleadings. Much like arbitration today, pre-discovery litigation required each party to assemble its own evidence and then head to trial. For this reason, the celebrated core litigation skills were the oral advocacy talents of argument, cross examination, and jury persuasion. For example, we recall and retell the courtroom oratory skills of Clarence Darrow and William Jennings Bryan.

Discovery brought with it new and often decisive battles, contests and conflicts. For the next 60 years, the courts and litigation counsel addressed the challenges of paper discovery. Federal and state civil procedure rules were often tweaked and adjusted. There were discovery excesses, abuses, and “gamesmanship,” but the general consensus was that paper discovery, and discovery in general, “worked.” Trials were fairer; meritless and purely legal cases decided more expeditiously, and surprise and ambush minimized. Notwithstanding the occasional haunting visceral late night fears that perhaps the cost of discovery did not quite match the value it added to the quest for justice, discovery arrived, stayed, and conquered. Discovery even survived the advent of the high-powered copy machines that began to proliferate in the 1980’s, creating proverbial paper mountains.

 The data deluge of the 21st century, however, was something astoundingly new, dangerous, and explosive. Our civil procedure rules were designed for paper-based information exchanges. All of a sudden, sixty years of experience with paper management was suddenly next to worthless. Virtually overnight federal and state judges were required to adapt discovery rules that had been created to manage recognizable, solid, handy, viewable paper, to digitally based information. The new, intangible evidence was easily lost and altered, stored invisibly, forensically recoverable, and lurking here, there, and everywhere in computer and network nooks and crannies. Just as modern science eviscerated our trust in our “common sense perception” (Do you feel that you’re living on a rotating, giant rock hurdling at millions of miles per minute through space in an orbit around the sun?), our courts were willy-nilly tasked with managing “discovery” in an abundantly rich yet alien world of digital information, where our common senses seemed to provide little guidance. Our federal and state judges were the first who were required to both understand and manage this paradigm shift.

Justice as a Sacred Social Imperative

This was (and is) not a small or minor burden. Litigation and trials are designed to produce a social result. Its goal or “telos” is justice attained by deciding fairly between different factual claims and applying the law even-handedly to these determined and sometime agreed upon facts. This is what we mean by judicial integrity and inviolability. For the body politic, belief in the process is as important as the actual result. Our civil justice process is the knitting that binds the often stretched and attenuated seams of civil society. We are outraged by perceived miscarriages of justice, corrupt officials, and apparent jury mistakes precisely because of our fundamental belief in the judicial process and recognition of its importance to the body politic. The courtroom is a sanctuary. Our judges wear robes. We sit in pews. The courtroom’s physical design resembles our churches and synagogues. This public commitment and belief in the court process is apparent in the multitude of “redemption” movies, plays, and novels about litigation, trials, and lawyers.

Of course, litigation is not perfect. We miss the mark more than we would like to admit. But the public generally believes that when the litigation rules and procedures are correctly followed and when each player properly performs their role, the result will be at least a rough approximation of justice. As we would say on NPR, “This we believe.

It is part of our public faith. The judiciary and the legal profession must make good on this promise. The challenge of our current epoch is to reinvent this “sacred” process on the fly in the midst of the exponentially expanding digital revolution.

Hannah Arendt and Vita Activa

This reinvention is made all the more complicated because litigation is a rough and tumble, hard-scrabble world. As Ralph Losey has poignantly quipped to our e-discovery class at the University of Florida, making justice sometimes resembles making sausage. It isn’t always pretty. This is because litigation is a form of human action. Hannah Arendt explains the existential dimensions of human speech and action in her brilliant book The Human Condition.

 Human affairs are fragile because our actions, taken among a plurality of other acting humans, rarely attain the intended goal. To act is to suffer because we are responsible for the consequences of what we begin. Action requires courage; freedom weighs on us; we anxiously await unknown fates. Our life stories can only be told at the end. We can only “act” in a human world where our actions are meshed into the actions and responses of others. Our acts may ultimately take us—and others– where we never imagined, both for good and bad.

To do and to suffer are like opposite sides of the same coin, and the story that an act starts is composed of its consequent deeds and sufferings.

Arendt, Hannah, The Human Condition, p. 190 (University of Chicago Press, 1958).

The risks of action are worth the adventure because action accompanied by speech is revelatory. Action and its attendant speech reveal the truth and character of the actor to the world and to the actor himself.

This unpredictability of outcome is closely related to the revelatory character of action and speech, in which one discloses one’s self without ever either knowing himself or being able to calculate beforehand whom he reveals.

Id. at 192. Litigation partakes of this existential drama.

Litigation as Process

Commencing litigation is to begin an untold story which, when done well, is revelatory of the truth and character of its actors. Litigation and trials create the space for truth to appear. As with any form of genuine human action, litigation is unpredictable. We attempt to channel this inherent unpredictability in litigation with a set of rules, conventions, and procedures. We believe in checks and balances. We hold that the clash of properly arrayed forces allows the appearance of the truth and its implied correlate of justice.

I think this is the predominant belief of litigators who are suspicious of talk of “cooperation.” For them, litigation requires conflict and a clash of forces in the courtroom’s open and public space. Unfortunately, sometimes this attitude boils over into the extreme “Bill E. Boie” syndrome, which heralds the e-discovery train wrecks requiring courts to resort to a wide variety of sanctions to protect the revelatory space of litigation.

Litigation is an elaborate, expensive process. A failed litigation requiring a “do-over” is extraordinarily expensive and wasteful. The ordeal of a “do-over” is not merely a tremendous financial burden to the parties, but also causes a major expenditure of limited and valuable judicial resources. We only have so many judges who have only so much time. The litigation process is labor intensive. Failed litigations caused by mistakes of lawyers, parties, jurors, and judges are almost intolerable. The mandate to get it right the first time is part of the reason that that litigation plods slowly and deliberately.

Like medicine, processes and procedures must be in place to prevent mistakes. I’m reminded of the utility company maxim that, “No job is too important or too urgent not to do carefully and safely.” A similar litigation maxim might be, “No litigation is too important or too urgent not to proceed without due process.” We don’t want the validity, sanctity, and revelatory expectation of the litigation process to be wrecked by missing documents, erroneous evidence, or googling jurors. The litigation process slowly clarifies, narrows, and refines the factual and legal issues. Frequently the result is a settlement, but sometimes a trial. This litigation issue refinement process looks like a funnel: as the time of the case progresses the issues are narrowed.

Cooperation Proclamation

These elements of time, refinement, and the costs of failure return us to the judiciary’s embrace of the work of The Sedona Conference and especially the Cooperation Proclamation. Approximately 100 judges have endorsed The Sedona Conference’s Cooperation Proclamation. An increasing number of judicial decisions are citing the Cooperation Proclamation. Why? Because the judiciary quickly learned that e-discovery failures are a new, dangerous wrecking ball that threatens the integrity of the litigation process. Many in the judiciary also know that while e-discovery is difficult, it can be learned, and the best way to cultivate this learning is to require litigation counsel to meet and confer about the specific e-discovery issues that are common to litigation. Virtually every case will involve ESI preservation, every case will involve search and collection of ESI, every case will involve ESI production, every case will involve proportionality issues. This is why the more savvy state and local federal district courts have adopted rules requiring litigators to discuss, negotiate, and reach a decision or declare an impasse on common, core e-discovery issues. Ralph Losey, myself, and others have drafted a basic local rule to jump start this e-discovery dialogue in any litigation.

The Sedona Conference’s Cooperation Proclamation’s purpose is to get attorneys discussing
e-discovery in a meaningful way “early and often.” Of course, dialogue does not mean agreement, and the judiciary should not interpret the Cooperation Proclamation to suggest that the judiciary will not have to resolve genuine e-discovery disputes or that counsel have failed or should be chastised if the court is asked to decide an e-discovery issue. Genuine disputes abound. The Cooperation Proclamation is neither a judiciary relief act nor a magic wand unburdening federal and state courts with the hard work of resolving legitimate e-discovery disputes. The Cooperation Proclamation means good, old fashioned negotiation: making proposals and backing proposals with reasons, and responding rationally to counter-proposals. With this “good faith bargaining,” reminiscent of the requirements of labor negotiations, many agreements will be reached on many e-discovery issues.

Shallow arguments and demands will fall to the side as courts make themselves available to promptly hear the residual (and important) e-discovery disputes. Counsel might be tempted to make a weak, shallow argument to the opposition; but nothing focuses a litigator’s attention more than the likelihood of having to make such an argument in the open space of a public courtroom to an attentive, informed judicial official. Ironically, the quicker the judiciary responds to
e-discovery disputes, the fewer e-discovery disputes will make their way to the courthouse. On the other hand, courts must not think that the Sedona Cooperation Proclamation will end reasonable e-discovery disputes. But it will take us far in preventing train wrecks. Let’s see why.

 The measure of an e-discovery litigation train wreck is sanctions: the greater the wreck, the greater the sanctions. The imposition of sanctions depends on a wide variety of factors and circumstances which are always case specific. These wide ranging factors include such considerations as the timing and scope of the failure, the good faith of counsel and the parties, whether the failure is the result of mere negligence or studied indifference, the candor of the litigants, the ability to level the playing field, the potential utility of the lost or missing data, the costs associated with locating and diagnosing the failure, and the repetitive nature of any failures or non-compliance. The grouping of these factors is not easy. Sometimes the constellation of this factors results in sanctions and other times not. Which circumstances will result in minor sanctions and which combination of factors will result in severe sanctions?

Two Dimensional Analysis of Sanctions

One way to get our arms around the likelihood of sanctions is to segregate these factors into two groups. The two grouping of sanctions factors that immediately suggest themselves are prejudice and culpability. By prejudice, I mean the harm to the side not causing the e-discovery failure. For example, the harm or prejudice of late identified and produced electronically stored information may be an incomplete deposition because the deponent could not be examined about missing documents. By culpability, I mean the degree of negligence or bad faith associated with the e-discovery failure. Using the above example, the unproduced ESI may have been located on an orphaned server bearing legacy data. If an examination of the data on such a server was considered, but not pursued due to cost and a good faith belief that little or no important data would be located, then the level of culpability would likely be low. The other extreme of culpability would be the intentional deletion of data using an “Evidence Eliminator” type of software.

We can now transform these two groupings in the vertical and horizontal axes of a Cartesian graph. One axis can represent the degree of prejudice and the other axis the degree of culpability. The scale of culpability ranges forms minor goofs, to reasonable errors, to negligence, to gross negligence, to intentional malfeasance. Under long established law the greater the culpability, the greater the likelihood and severity of sanctions, ranging from chastising attorneys, awarding fees, ordering additional depositions, to requiring production re-dos, instructing juries with adverse inferences, striking pleadings, and even entering defaults. Similarly, the greater the prejudice to the opposition, the greater is the likelihood and severity of sanctions. Combining these two axes of prejudice and culpability gives us a two-dimensional predictive diagram.

The yellow area indicates the sanctions warning zone and the red zone spells real danger and trouble. Our two dimensional sanctions graph allows us to plot the likelihood of sanctions. If the prejudice is low and the culpability low, the likelihood of sanctions is low. Even if the prejudice is relatively high, but the culpability low, our predictive graph shows us that the likelihood of sanctions may also be avoided. However, if culpability is high and prejudice high, the resulting coordinates will place us clearly in the yellow zone, if not the red danger zone.

Three Dimensional Model for Understanding of Sanctions

This two axes diagram, however, doesn’t quite capture the whole picture. Damage to the “existential” component and social mission of litigation is missing. Where is the axis that shows the harm to the litigation process demonstrating that the bell cannot be un-rung, that the social fabric has been harmed, and the integrity of the process compromised?

The jurisprudence of e-discovery sanctions has been called a jurisprudence of judicial anger. To me, this judicial “anger” reflects the frustration associated with e-discovery failures causing litigation train wrecks whose repair is beyond remedy of mere “do-overs” of this deposition, that production, or this hearing. Small, culpable errors causing prejudice and early litigation delays can be managed with relatively minor sanctions. Near end-game failures are frequently beyond repair. It is one thing to need to re-depose one witness; it is another to need to re-depose every witness. At some point, the story unfolding in litigation cannot be re-commenced, the drama cannot be re-enacted, and the interplay of the litigation’s actors cannot be fairly re-staged. In short, the integrity of the process has been irreparably compromised. The existential element of time (which is part of the human condition and makes action, freedom, and the revelation of character and truth possible) is an inherent dimension of litigation. Litigation is inescapably temporal. The world moves on. Even the case which must be replayed after appeal returns to find a different, changed world. Harm to the integrity of the process needs to be added to our sanctions model.

For this reason, I posit in accordance with case law that the later in litigation an e-discovery failure is exposed, the greater the likelihood that sanctions will be imposed and that they will be severe, such as adverse inferences, witness exclusion, issue preclusion, and striking pleadings. Using our previous example, if an e-discovery failure is discovered on the eve of trial that requires the re-deposition of many, if not all witness, the result is more than likely an adverse inference, rather than a trial delay of months (or years) to allow a “re-do” of the entire litigation. This e-discovery failure does not merely reflect culpability and prejudice. It has become a failure that damages the character of the litigation process, the social mission, and the ability of the litigation to unfold the truth. A true predictor of the likelihood of sanctions requires consideration of this harm and these values. The model requires a third axis: time.

A third axis representing time transforms the flat Cartesian diagram into a three dimensional solid, here shown as a cube.

 By time I mean the progress of the litigation from inception, to pleadings, motions, production, depositions, summary judgment, trial and post trial motions. The three dimensional sanctions model is a more accurate predictor of the likelihood of sanctions than the flat Cartesian graph because it includes the impact of time on the courts’ imposition of sanctions. The combination of all three factors — culpability, prejudice and time — best explains and predicts the likelihood of sanctions and the severity of sanctions. For example, an e-discovery failure causing substantial prejudice coupled with some degree of negligence may not result in serious sanctions if addressed early in a case. Courts will first do their best to level the playing field and to rebalance the contest in an effort to let the litigation process work its magic. On the other hand, if significantly prejudicial data is unearthed immediately prior to, during, or after trial that was caused by repeated negligence or gross negligence, courts will likely find that only dramatic and conclusive sanctions can fully address the irredeemable harm caused by the e-discovery failure. The unfortunate results of the Qualcomm and Bray & Gillespie cases make this point.

The Sanctions Cube allows us to predict with more confidence the likelihood of sanctions and the severity of sanctions. The Sanctions Cube also makes it easier to understand the judiciary’s embrace of The Sedona Conference’s Cooperation Proclamation. The Cooperation’s Proclamation’s commitment to a genuine, open, and early dialogue about e-discovery issues prevents e-discovery issues from festering and emerging late in the litigation as temporal wrecking balls crushing the litigation’s promise. If, as the Cooperation Proclamation and the Rules, especially Federal Rule of Civil Procedure 26(f), and many federal and state court local rules mandate, e-discovery issues are discussed early and often, severe sanctions will happen with less severity and less frequency. This is because counsel will be required to engage in good faith e-discovery bargaining and dialogue. This persistent joint e-discovery engagement will surface latent e-discovery issues for prompt resolution by the court without damaging the existential, social mission of litigation to provide the human space for the appearance of truth and justice.

Conclusion

The reinvention of litigation in the digital age is a work in progress for all of us. We tend to think about sanctions as a one party failure. But the Sanctions Cube brings to the foreground the fact that litigation is not merely a private matter between two or more parties. What Judge Grimm has eloquently referred to in Mancia as the lawyer’s duty to the Court is reflected in the temporal, existential depth of the Sanctions Cube. More is at stake than one party’s success or failure. The social good is at issue. The Sanctions Cube has a pedagogical value, and I commend it to my colleagues teaching e-discovery in our law schools and universities. However, I hope it also serves as a reminder to judges and practitioners of the importance of doing e-discovery right so as to maintain the integrity of the litigation process, its power to tell and make stories, and its power to knit the body politic.

We need to think of e-discovery failures as avoidable accidents that we all have a stake in preventing. Courts must enact and utilize local e-discovery rules; the bar must promote CLEs; judges, magistrate judges, and general masters must become engaged at the outset of cases in e-discovery management; and counsel must provoke, prompt, and cajole the opposition into early e-discovery good faith bargaining.

Let’s commit to make the Rule 16 pretrial conference to discuss the Rule 26(f) report on e-discovery (and other issues) the most important pretrial litigation event of any lawsuit. Anything else is benign neglect that runs the risk of spinning the e-discovery sanctions cube.

About the Author

William F. Hamilton is Board Certified in Business Litigation and Intellectual Property by The Florida Bar. His work includes complex business litigation in the areas of contract, software, and technology disputes, intellectual property (copyright, trademark, patent and trade secrets law), e-commerce, data security, telecommunications, trade regulation and unfair trade practices, and commercial real estate.

Mr. Hamilton currently serves as co-chair of Holland & Knight’s national E-Discovery practice and teaches Electronic Discovery and Digital Evidence as an Adjunct Professor at the University of Florida’s Levin College of Law. Mr. Hamilton is a featured speaker and writer on business litigation, electronic discovery and evidence. Mr. Hamilton is also a neutral arbitrator and mediator for the World Intellectual Property Organization, the International Trademark Association, and the American Arbitration Association. Prior to his position as co-chair of the firm’s e-discovery practice, Mr. Hamilton served as Holland & Knight’s Technology Partner responsible for the design and launch of the firm’s web site, intranet, and client extranets.

Copyright William F. Hamilton 2009. All rights reserved. Written for e-Discovery Team.

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