Thought Leadership and Industry Trends
Bad eDiscovery practices are integral part of $18.5 million fee award
By William Belt, Director of Enterprise Development, CDS.
A recent antitrust/unfair trade practices case should send a clear message to litigants about the importance of proper eDiscovery to every part of a litigation. In Procaps S.A. v. Patheon Inc. et al, the defendant was awarded $18.5 million in attorneys’ fees and costs as the prevailing party in summary judgment. The award wasn’t a sanction for violating the eDiscovery rules under the Federal Rules of Civil Procedure (FRCP). Instead the plaintiff’s failure to meet its eDiscovery obligations was part of the court’s analysis of whether the defendant was entitled to attorneys’ fees. The court recognized that eDiscovery practices are among the factors that should be considered in determining a party’s behavior during litigation.
In Procaps, the parties were involved in a difficult 3 year legal battle. Prior to filing for summary judgment, defendant Patheon discovered Procaps failed to meet its eDiscovery obligations, including failing to preserve potentially relevant evidence and allowing employees to self-collect documents and use only one search term to search for documents. When the court ordered a forensic analysis of Procaps’ computer systems, the new review and production resulted in 150,000 additional documents being produced.
Surprisingly, the decision doesn’t discuss the FRCP eDiscovery rules. Instead, the award is based on the court’s analysis of the legal standard for awarding attorneys’ fees in unfair trade practices cases. The court found that the plaintiff’s failure to properly satisfy its eDiscovery obligations instead fits in two of the factors for awarding fees: the “scope and history of the case” and “deterrence.” In looking at the scope and history of the case, the court noted that “nothing was easy” in the case from scheduling and taking depositions to obtaining documents and electronically stored information. The parties fought over everything. Procaps also changed its theory of the case after the initial round of summary judgment motions, generating the need for more discovery.
With respect to the deterrence factor for awarding fees, Patheon argued in part that a full award would deter others from “shifting the costs of such obligations to their adversaries by requiring their adversaries to participate in a forensic analysis to ensure document production.” In addition, it would “incent parties to comply with their discovery obligations” and would not deter plaintiffs from bringing meritorious or even arguable claims.
Although the court didn’t focus on the eDiscovery violations, it’s clear that it considered eDiscovery as part of the overall litigation process justifying an award of attorneys’ fees.
Since the amendments to the eDiscovery rules were implemented, much of the discussion has been on how they provide limitations on excessive and burdensome obligations. However, this case (and other sanctions cases) demonstrate that eDiscovery is conducted in a larger legal context.
In addition, these cases illustrate the importance of properly overseeing the collection process, something Procaps didn’t do. Parties need to deploy the right legal and technical experts if they want to avoid problems with their eDiscovery.
Contact us for a consultation regarding how we can help you manage your eDiscovery.