Recently in Discovery Issues Category

July 9, 2010

Court of Chancery Explains E-Discovery Obligations of Litigants

Electronic discovery plays a central role in litigation where parties claim violations of trade secrets and breaches of noncompete agreements. Electronic discovery and forensic investigations often reveals extremely damaging evidence against the former employee, including acts such as downloading or e-mailing valuable company information.

The sheer number of emails that must be collected and reviewed can be an overwhelming task. VeriSign (the exclusive registry for .com and .net domains) estimates that there are approximately 2.25 billion email queries per day, and that is only a fraction of the number of emails sent each day.

When litigation commences, a question may arise as to whose responsibility it is to ensure all emails and other forms of electronic documents have been preserved and collected. Delaware's Court of Chancery has, not surprisingly, had several occasions to set forth how the Court intends to have litigants handle electronic discovery.

Most recently, in Roffe v. Eagle Rock Energy, GP, L.P., et al., C.A. No. 5258-VCL (telephone conference on discovery dispute held April 8, 2010), Vice Chancellor Laster specifically stated, "[Y]ou do not rely on a defendant to search their own e-mail system...There needs to be a lawyer who goes and makes sure the collection is done properly."

Vice Chancellor Laster's point is well-taken. Too often litigants discover that their opponent failed to collect potentially relevant electronically stored information (ESI), only to find out that the data has since been damaged, or worse, destroyed.

Another frequent circumstance is the producing party represents that they have turned over all relevant, non-privileged documents, only to find out that when their client harvested ESI it only searched a limited number of sources and neglected to search accessible archive locations or off-site servers. When these circumstances arise, the neglectful party is vulnerable to sanctions, such as fines, paying an opponent's attorneys' fees, and in some cases, an instruction that an adverse inference should be drawn against them.

In that same discovery teleconference, Vice Chancellor Laster also pointed out that any party involved in electronic discovery must investigate whether any auto-delete settings are operational. His comments suggested that if auto-delete settings were operational and impairing relevant documents, a forensic evaluation to make sure evidence was not lost would be appropriate.

In short, Delaware's Court of Chancery will not permit "lackadaisical" e-discovery. Therefore, any party involved in litigation should prepare a thoughtful and sound approach to working with electronically stored information.