What Insurers and Defense Counsel Should Know About E-Discovery

Episode Notes

Transcript

Best Insurance Law Podcast

What Insurers and Defense Counsel Should Know About E-Discovery

02/04/2020

 

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Intro: This is the Insurance Law Podcast, brought to you by Best’s Recommended Insurance Attorneys.

 

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John Czuba: Welcome to Best Insurance Law Podcast, the broadcast about timely and important legal issues affecting the insurance industry. I am John Czuba, Managing Editor of Best’s Recommended Insurance Attorneys.

 

We are pleased to have with us today attorney Jim Boyers from the law firm Wooden McLaughlin in Indianapolis, Indiana. Jim Boyers is a partner and trial lawyer who represents clients in complex matters involving multiple parties arising from product liability, construction and environmental claims.

 

Jim’s work has included Multiple Multidistrict Litigation or MDL matters in federal court. Jim works on E-Discovery strategy and claims, including the negotiation of and court documents about search terms, the handling of data from complex databases and standing orders for production of such discovery.

 

And Jim, thank you so much for joining us again this morning.

 

James M. Boyers: Thank you for inviting me to this discussion today.

 

John Czuba: Today’s discussion is What Insurers and Defense Counsel Should Know About E-Discovery, and for our first question today Jim, when does the duty to preserve potential evidence begin?

 

James M. Boyers: Your expectation should be that the obligation to preserve begins when a party reasonably anticipates litigation or should. The obligation can arise based on the significant of the — significance of the claims and injury, publicity associated with the event, statements made by the claimant or by the claimant’s retention of an attorney, and this obligation cuts both ways, for insured, insurers and claimants.

 

Oftentimes the claimant’s attorney will send a preservation letter demanding that all relevant documents and data be preserved from text, to emails, to photos, to surveillance video and the car event data recorders. Of course claimants have the same obligations to preserve their evidence and that may often include tax and social media.

 

John Czuba: Jim, what does the duty to preserve require?

 

James M. Boyers: Well, not to sound like a lawyer, but it really depends on many variables, but at the most fundamental level the duty involves taking reasonable steps to preserve all documents and data that are reasonably likely to contain relevant information for the claim.

 

In federal court and in many state courts around the country the concept of proportionality applies to limit the scope of preservation when sources may be duplicative, they may be cost prohibitive to deal with or so voluminous as to make their use in the case overly burdensome. But if we set aside the issue of potential breadth of scope of the duty to preserve, it simply requires all parties involved to take steps early on in the case to identify potential data sources and to determine whether they can or should be preserved.

 

So for example, in an auto collision case the data sources could include event data recorders from the vehicle, Smartphone, digital cameras and social media accounts, especially on injury issues.

 

In premises liability cases, we will see many of the same or similar sources, but other things like surveillance video or maintenance records, incident reports, guest records or customer transaction records, these all can be helpful in putting together the whole picture and potentially identifying witnesses.

 

Now, some may think that printing a photo or taking the screenshot of a text or converting them to a PDF satisfies the duty to preserve, but that isn’t always the case. If opposing counsel agrees to that, it may be acceptable, but it eliminates metadata which may be determined to be relevant, metadata that would be in the native form of the evidence.

 

So for example, a printed photo loses metadata that for most digital cameras would include date, time and potentially location of the photo and also help verify the presentation of the image at trial.

 

And finally, the best practice is to issue formal litigation data and document preservation hold to client and to send a preservation letter to the opposing party.

 

John Czuba: Jim, what can happen when duty is not met?

 

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James M. Boyers: This depends as well oftentimes based on the jurisdiction, the venue and the specific circumstances. I would say that federal court typically takes the most aggressive approach. In most circumstances though courts will assess what data was lost and what prejudice was created by the law and importantly whether good faith efforts were taken to avoid losing relevant data.

 

Now, sometimes you may lose data in one form, but be able to find it from other sources and this can help avoid sanctions for the party that lost the data. And where a party can demonstrate the good faith efforts to preserve or that the lost data had limited value, courts typically will limit the level of sanction or leave it to the jury to assess whether or not the lost evidence would have been prejudicial to that party.

 

So I will give you a couple of examples of how courts handled situations where the opposing party failed in the court’s opinion to meet its duty to preserve and how it can impact the valuation of cases.

 

So the first example that I want to talk about was a state court trial a little over a year ago where we dealt with a situation where the plaintiff filed suit not long after the event at issue took place; it was a medical malpractice case involving the treatment of an infection or an alleged infection in a toe. So the timing and appearance of the toe in the pictures was essential to assessing the relevance to the case and to determining the material issues.

 

But the plaintiff instead of giving us digital images at the outset of the case provided print copies. Now, during the course of discovery we requested the original digital images and they were not produced. So the court prior to the initial trial date had agreed to issue a spoliation instruction. Now, spoliation instruction tells a jury that images or evidence was lost and that they are entitled to conclude that that lost evidence would have been harmful to the party who lost the photos.

 

So that was a very positive thing, but in this instance the plaintiff at the last minute identified digital images and provided them to us, as a result the case was continued and we were able to show that the print images that we were given distorted the appearance of the digital images, that certain images had never been provided to us and those happened to have dates and coincided with our client’s medical records and that they actually lost some of the digital images.

 

So the court limited what the plaintiff could use in terms of the images that it had and they ultimately only presented one in their case and issued a spoliation instruction as well and we think it significantly undermined the plaintiff’s credibility at trial and ultimately the jury ruled our way.

 

In another federal matter that we recently handled, the opposing party lost text messages and emails after the duty to preserve had been triggered and the federal magistrate issued a report and recommendation to sanction those defendants with the default judgment on liability.

 

Now, this is an extreme remedy and an extreme sanction, but the court found that the loss of data from the employee’s personal devices and work computer demonstrated insufficient preservation efforts and supported a finding of bad faith. And in the report the magistrate said that when the defendants denied that they could access or control certain data, he believed the characterization was wildly false and concluded also that that lost data likely would have had a material impact on the case.

 

Now, the case was resolved before the district court judge adopted that report, but we are convinced that it had a significant impact, an adverse impact on the defendant’s position heading into the resolution of the case.

 

(00:10:04)

 

Now, that Magistrate, Magistrate Dinsmore from the Southern District of Indiana has a recently published case called Senior Lifestyle Corporation v. Key Benefit Administrators, Inc. and the Westlaw site is 2019 Westlaw 3281637. We suggest if you have the chance to review that because it gives a really nice analysis of spoliation issues.

 

And finally, I want to talk about another federal court matter that we handled involving a commercial dispute including the theft of trade secrets. Now, when we did our 30(b)(6) deposition or corporate representative depositions in that case, the representative testified that he had destroyed his smartphone after he had been put on notice of potential violation of his employment agreement. Now, we never got to the point where we filed a motion for sanctions based upon that clear act of spoliation, but we are certain that it helped us in presenting our position in mediation, which also led to the resolution.

 

John Czuba: Jim, what steps should be taken to avoid spoliation issues in cases?

 

James M. Boyers: Well, I think insures when claims come in need to consider creating procedures for identifying and preserving sources of relevant data when claims appear likely to end up in litigation. Those procedures might include having a data questionnaire for insureds in liability claims, ensuring that the insured has also received a preservation notice from outside counsel and verifying that they have acted on the preservation.

 

In some cases having regional or national relationships with forensic collection vendors can be helpful, and in cases where there is really significant exposure and a large amount of electronic discovery consider retaining discovery counsel to handle those on a broad basis.

 

John Czuba: And Jim, finally, what steps should be taken to ensure that plaintiff preserves evidence?

 

James M. Boyers: Well, I think that there should be a procedure in place to put claimants on notice of their obligations to preserve and that it can pay dividends, because it arises — the duty arises before they receive a preservation letter and regardless of whether you ever send one, but the benefits of sending it is it establishes a point by which the plaintiff cannot argue or the claimant cannot argue that it failed to anticipate litigation.

 

It also helps frame the scope of the preservation, which is important to make sure that their good faith arguments go away if they are too narrow or at least they have to come up with a good reason for why their preservation was more narrow than what was requested.

 

Finally, I think having relationships with e-discovery vendors and e-discovery counsel can maximize insured’s ability to avoid spoliation issues and also obtain essential evidence in a cost-effective way.

 

John Czuba: Jim, thanks very much for joining us today.

 

James M. Boyers: Thank you.

 

John Czuba: That was Jim Boyers from the Law Firm of Wooden McLaughlin in Indianapolis, Indiana, and special thanks to today’s Producer, Frank Vowinkel.

 

And thank you all for joining us for Best’s Insurance Law Podcast. To subscribe to this audio program, go to our webpage www.ambest.com/claimsresource. If you have any suggestions for a future topic regarding an insurance law case or issue, please email us at [email protected].

 

I am John Czuba and now this message.

 

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Outro: Best’s Insurance Professionals Resources features valuable insurance industry content, including searchable profiles of client recommended insurance attorneys, adjusters and expert service providers, brought to you by A.M. Best, known worldwide as a respected source of insurance industry news and information. Visit ambest.com/claimsresource.

 

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