Don’t Bank on this Strategy to Compel Electronically Stored Information

The Court finds the parties could have avoided the expenses of this Motion by conferring appropriately early in the case about ESI.

United States Magistrate Judge Michael R. Merz, Wells Fargo Bank, N.A. v. LaSalle Bank Nat’l Ass’n, 2009 U.S. Dist. LEXIS 70514 (S.D. Ohio July 24, 2009).

Banks really should cooperate on electronic discovery issues when they sue each other.

Gun DeckInstead, Wells Fargo and LaSalle exchanged broadsides over searching back-up tapes and spoliation claims very late in the litigation.  The Court denied the dueling motions and dressed down the parties for not conferring about ESI earlier in the case.

The Parties were bound by several scheduling orders, which included them conferring on the production of electronically stored information and a discovery cut-off date that was extended several times.  Wells Fargo Bank, N.A., 3-4.   

Plaintiff Wells Fargo Bank brought a motion to compel and sanctions motion against Defendant LaSalle Bank National.  The Court summarized the parties’ dispute as follows:

Essentially Wells Fargo contends that LaSalle did not search a number of backup tapes for relevant documents and should be subject to spoliation sanctions for not maintaining all of the backup tapes which might have contained responsive ESI. LaSalle responds that ESI on backup tapes is not readily accessible in that it would take six months and almost half a million dollars to restore the backup tapes. LaSalle counterpunchs by accusing Wells Fargo of the same sins — not producing documents from backup tapes, not placing a litigation hold on backups, etc. Wells Fargo Bank, N.A., 5.

The Court was less than thrilled with the Parties in this case not conferring on electronically stored information and starting an ESI grudge match four months after the close of discovery and two months before trial.  Wells Fargo Bank, N.A., 7. As the Court bluntly stated:

The current dispute is a mild example of the sorts of problems which result when counsel do not deal systematically with ESI problems and possibilities at the outset of litigation, instead of filing one-paragraph boilerplate statements about ESI and waiting for the explosion later. Wells Fargo Bank, N.A., 6-7.

Sword FightThe Court found that restoring the back-up takes was “disproportionate to the likely utility of doing so.”  Wells Fargo Bank, N.A., 7.  Moreover, the cost of the restoration was out of proportion to the amount in controversy.  Wells Fargo Bank, N.A., 8.  Additionally, the Defendant’s practice of printing hard copies of “important” loan documents that had been produced in discovery made the chances of finding anything new remote.  Wells Fargo Bank, N.A., 8. 

The Court very curtly denied the Motion to Compel and Sanctions Motion.  Wells Fargo Bank, N.A., 8. 

Bow Tie Lessons

Electronically stored information must be addressed early in the lawsuit in the Rule 26(f) Conference, not on the eve of trial. 

The Court gave some practice pointers for having an effective meet and confer process by citing to the Sedona Conference Cooperation Proclamation.  The Court included the following six points to aid counsel on ESI matters:

1. Utilizing internal ESI discovery “point persons” to assist counsel in preparing requests and responses;

2. Exchanging information of relevant data sources, including those not being searched, or scheduling early disclosures on the topic of Electronically Stored Information;

3. Jointly developing automated search and retrieval methodologies to cull relevant information;

4. Promoting early identification of form or forms of production;

5. Developing case-long discovery budgets on proportionality principles; and

6. Considering court-appointed experts, volunteer mediators, or formal ADR programs to resolve discovery disputes.

Wells Fargo Bank, N.A., 6, citing The Sedona Conference Cooperation Proclamation, July, 2008, available at thesedonaconference.org. 

As an old friend once said, “Bad news does not get better with age.”  Neither does ignoring electronically stored information until after the close of discovery.

4 thoughts on “Don’t Bank on this Strategy to Compel Electronically Stored Information

  1. CALIFORNIA’S NEW ELECTRONIC DISCOVERY ACT

    Interesting case and a significant example of what can go wrong in the absense of an appropriate 26(f)!

    What’s of concern is in CA’s new EDA it states:

    Cost shifting
    The Act also allows the court to order production of ESI for “good cause” even if the responding party establishes that the ESI is not reasonably accessible. In such circumstances, however, the court may “set conditions” for the production from sources that are not reasonably accessible, including shifting the costs of production to the requesting party.6
    Meet-and-confer requirements

    Unlike the federal Rule 26 that set forth specific requirements to meet and confer on ESI issues in connection with the pre-trial conferences, California’s Rule of Court 3.724 was not amended in the act to require such discussions, despite the fact that the Judicial Council had recommended in 2008 that such a provision be included. Therefore, there is no requirement to meet and confer on ESI issues before a pre-trial conference. That said, it is expected that many state court judges will expect such pre-trial discussions and best practices support such discussions in any event.

    Let’s hope attorney’s are willing to go beyond what’s required for the sake of their clients.

    • California Rules of Court 3.724 was recently amended in the last couple of weeks to include ESI. Section (8) states:

      Unless the court orders another time period, no later than 30 calendar days before the date set for the initial case management conference, the parties must meet and confer, in person or by telephone, to consider each of the issues identified in rule 3.727 and, in addition, to consider the following:

      Any issues relating to the discovery of electronically stored information, including:

      (8)(A)Issues relating to the preservation of discoverable electronically stored information;

      (B)The form or forms in which information will be produced;

      (C)The time within which the information will be produced;

      (D)The scope of discovery of the information;

      (E)The method for asserting or preserving claims of privilege or attorney work product, including whether such claims may be asserted after production;

      (F)The method for asserting or preserving the confidentiality, privacy, trade secrets, or proprietary status of information relating to a party or person not a party to the civil proceedings;

      (G)How the cost of production of electronically stored information is to be allocated among the parties;

      (H)Any other issues relating to the discovery of electronically stored information, including developing a proposed plan relating to the discovery of the information; and

      http://www.courtinfo.ca.gov/rules/index.cfm?title=three&linkid=rule3_724

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  3. Pingback: The Banks Know ESI Is At The Heart Of Their Destruction «

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