Don’t Pass The eDiscovery Buck To The Vendor
In Peerless Indus., Inc. v. Crimson AV, LLC (N.D. Ill. Jan. 8, 2013), another court made it clear that a law firm or litigant can’t just rely on an outside vendor to handle the process associated with eDiscovery preservation, collection, search, and review- and it is not okay to “take a back seat approach and instead let the process proceed through a vendor.” Particularly when the best answer a deponent can give regarding what efforts were undertaken is that they were handled “I guess by the vendor . . . .” As you can guess, this is a sanctions case.
The Peerless case involved allegation patent infringement stemming from the defendant’s manufacturing and sale of TV mounts. The plaintiff’s former supplier of TV mounts was a Chinese company, and this Chinese company had documents salient to the litigation. During discovery, the Peerless court held that the defendant was in control of the Chinese company’s documents- meaning they were withing the defendant’s possession, custody, or control, and thereby part of the universe of data that the defendant would need to cull to produce documents in response to discovery requests.
This ruling (that the Chinese company’s documents were in the defendant’s control) required defendants to “contact individuals at [the Chinese company] and play a role in obtaining the necessary discovery.”
Yet, at a deposition of one of the Chinese company’s corporate representatives “it became clear that defendant did not conduct a reasonable investigation regarding [the Chinese company's] document production or [the Chinese company's] document retention for purposes of this litigation.” Because of this (and likely also because of what appears to be the plaintiff’s frustration in obtaining discovery from the defendant) the plaintiff filed a renewed motion for sanctions—the third motion filed by the plaintiff related to “essentially the same set of documents.”
The Peerless court noted the deposition testimony of the Chinese company’s representative (in response to queries as to what was done to collect documents) that “there was a process outlined ‘I guess by the vendor,’” who
“provided instruction . . . on how to collect documents[.]” At this deposition, the company representative was unable to answer questions about the Chinese company’s preservation, collection, search, and review efforts. He could not even say whether any of the Chinese company’s employees “were even contacted regarding plaintiff’s document requests.”
The Peerless court then found that “such a hands-off approach” was insufficient, holding that
Because of the control or “close coordination” between the two companies, defendants were required to produce the requested information. Defendants cannot place the burden of compliance on an outside vendor and have no knowledge, or claim no control, over the process. Defendants must produce all responsive documents, even if those documents are held by [the Chinese company], because we have already determined that the separation of the two companies “cannot be used as a screen to disguise the coordinated nature” of their business.
Defendants would like us to accept their assertion that they have provided everything. But without more, neither this Court nor plaintiff can be satisfied with only this statement. Defendants must show that they in fact searched for the requested documents and, if those documents no longer exist or cannot be located, they must specifically verify what it is they cannot produce. Defendants are ordered to do this [within 23 days].
The court then granted the plaintiff’s motion for sanctions for an award of costs associated with the preparation of the motion for sanctions.
This case is a good lesson for vendors, clients, and lawyers alike.
Non-lawyer eDiscovery vendors need to be careful not cross the line into providing legal services, and lawyers and clients need to be cognizant that they can’t just shluff off their responsibilities onto a vendor and wash their hands of responsibility for making the legal judgment calls. Advising a client on what is a legally sufficient preservation, collection, search, and review effort, and guiding them through that process, is a task for a lawyer. There is a knowledge gap in the bar-at-large in the eDiscovery world, and plenty of lawyers are more than happy to defer entirely to non-lawyer judgments on legal issues involving eDiscovery, and to let vendors take the helm on assuming total responsibility for eDiscovery. As this case shows, clients and lawyers do so at their peril- and the vendors need to be equally wary. It is tough for a vendor to say “no” or get outside help when a law firm wants them to handle everything (including making legal judgment calls)- but vendors play with fire when they skirt the line of providing legal services.