Shapiro, Lifschitz & Schram

“It is fascinating to be on the inner circle with them.”

Edward P. Rudden – President and Owner, Accordia Consulting

Defendants' "backseat approach" to E-Discovery Warrants Sanctions

In Peerless Industries, Inc. v. Crimson AV LLC, the court held that defendants' total reliance on its E-Discovery vendor's ESI collection processes was "insufficient" and granted plaintiff's sanctions motion. 

The court concluded that defendants "took a backseat approach" and "let the process proceed through a vendor." In this patent infringement case, the plaintiff complained that defendant, with a non-party supplier company, infringed upon plaintiff's design patent for a certain style of TV mounts.  During discovery, the court found that the defendant was "in control" of relevant ESI belonging to the non-party supplier and ordered defendant to "obtain the relevant documents from [the non-party supplier]".  According to the court, "[t]his order . . . required defendants to contact individuals at [the non-party supplier] and play a role in obtaining the necessary discovery."

Subsequently, plaintiff filed its motion for sanctions after "it became clear that defendant did not conduct a reasonable investigation regarding [the non-party supplier's] document production or [its] document retention for purposes of this litigation." During deposition testimony, the Managing Director for Crimson could not answer simple questions about the non-party's information systems, custodians, keyword search terms and processes, preservation protocols, or whether any of its employees "were even contacted regarding plaintiff's document requests."

The court therefore concluded that sanctions were appropriate in light of "such a hands-off approach" and continued:

"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 Sycamore, 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."
(Footnote citations omitted.)

The court granted plaintiff's motion for sanctions and ordered that defendant "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."  The court also ordered that plaintiff submit its bill of costs for the preparation of the motion presumably for payment by defendant.

To read the court's opinion in its entirety, please click here.

Did You Know . . .

Members of the SLS trial group have tried in excess of 50 jury trials and 75 bench trials?

The SLS construction group has worked on sports stadiums across the country including Orioles Park in Baltimore and Paul Brown Stadium in Cincinnati?

The SLS construction group has worked on power plant projects across the country?

In 2007 SLS was selected for an Honorable Mention as one of the Best Places To Work in Washington DC?

Ron Shapiro, Steve Schram and Judd Lifschitz have all been selected as SuperLawyers by Law and Politics?

The SLS office building is an historic townhouse constructed in the late 1800s?

SLS has been selected by Martindale-Hubbell as a Preeminent Law Firm?

SLS trial lawyers have argued appeals in the U.S. Circuit Courts of Appeal for the 4th, 5th, 9th, D.C. and Federal Circuit?

SLS trial lawyers have been lead trial counsel in cases in Arizona, California, District of Columbia, Florida, Louisiana, Maryland, New Jersey, New York, North Carolina, Oregon, Texas, and Virginia, - to name just a few?

Virtually all the cases that SLS trial lawyers mediated have been favorably settled at mediation?

The transactional group at SLS was lead counsel on one of the largest, most complex mixed-use projects in downtown Washington, DC involving 4 lenders and 6 property owners?

In appreciation for the outstanding efforts of each of its employees during 2007, SLS gave everyone (attorneys, paralegals, and staff) a 4 day/3 night expense paid trip to Key West, Florida?

The transactional group at SLS has represented tenants in more than 200 retail leases in the Mid-Atlantic region?

Every attorney in the transactional group at SLS has at least 15 years experience?

The transactional group at SLS has represented developers in the purchase, construction, financing and/or sale of more than 75 multi-family apartment projects?

The transactional group at SLS has represented real estate investors and developers with respect to property in Pennsylvania, West Virginia, Delaware, Maryland, the District of Columbia, Virginia, North Carolina, South Carolina, Georgia, Florida, Texas, Tennessee, Michigan and the U.S. Virginia Islands?

Attorneys in the transactional group at SLS have represented eight national banks in commercial real estate loans?

Attorneys in the transactional group at SLS have represented the FDIC, the Resolution Trust Corporation and several banking institutions in loan workout transactions throughout the Mid-Atlantic region?

The transactional group at SLS has represented homebuilders and commercial real estate developers in work-outs of individual loans and also for work-outs of large portfolios involving dozens of properties in several states?

The trial lawyers of SLS have numerous reported decisions to their credit?