This article is the second in a series addressing the challenges of litigating in state courts and arbitration forums with no e-discovery rules or precedents. Click here to read part one.

This month, we consider the pitfalls that may await a party who incorrectly assumes that the absence of established rules or precedents means that e-discovery obligations can be safely ignored.

There are many good reasons to be concerned about the extent to which e-discovery practice in the federal courts has devolved into vituperative sanctions battles. However, the headline-grabbing sanctions awards that have inspired these increasingly toxic sanctions fights do have one dramatic benefit —inside and retained counsel are now well armed with numerous horror stories to demonstrate to the client why careful preservation and collection are essential.  

However, in many state courts, the absence of any specific rules or history of imposing harsh sanctions may be viewed by some clients (and counsel) as an invitation to depart materially from federal court standards of e-discovery practice. The dangers of this approach are well illustrated by the recent widely-noted decision of the New York Appellate Division, First Department, in Voom HD Holdings LLC v. Echostar Satellite LLC, ___ N.Y.S.2d ___, 2012 WL 265833 (1/31/2012). In this case, the appellate division affirmed the trial court’s adverse inference instruction as a sanction for the defendant’s failure to implement a sufficient litigation hold.

The appellate court’s opinion does not cite a single precedent applying New York law, apart from a single decision dating from 2010 (two years after the alleged spoliation). Nonetheless, the court had no hesitation in adopting the Zubulake line of precedents from the federal courts as the correct standard for judging the defendant’s preservation efforts under New York law. In dicta, the court even suggested that the defendant’s misconduct would have supported striking the defendant’s answer — a death sentence sanction.

In this writer’s experience, some litigants mistakenly assume that, if there are no court rules or precedents addressing e-discovery, then the local trial court bench must lack the sophistication to discern and punish e-discovery misdeeds. However, the judge hearing your company’s case does not live in a vacuum, and she has read the same e-discovery sanctions headlines in both the popular and legal press.

The trial court judge will expect competent counsel to bring the e-discovery lessons learned in federal court with them to the state court; the lack of formal rules is no excuse for counsel to check their common sense and their professional ethics at the door. Even if the judge hearing your case does not have extensive prior involvement with e-discovery disputes, trial court judges are by training and experience adept at quickly digesting complex factual issues. And, frankly, most e-discovery disputes present technical issues that are much less complex than the medical expert testimony in a typical state court personal injury case.

The absence of clear rules or precedents only increases the potential exposure for an e-discovery offender.  If a discovery dispute comes before the court only after the alleged e-discovery offense already has been committed, then the judge likely will choose the applicable standard for decision only after she has already considered the evidence of the discovery misdeeds and also may have formed a view of the underlying merits of the case.  This gives the court substantial flexibility to put a judicial thumb on one side of the scale.  Although the appellate division’s adoption of the Zubulake line of cases probably was not outcome determinative in Voom HD v. Echostar, the court was quite clear that its assessment of the spoliation issue was heavily influenced by its perception of the equities of the underlying dispute. 

Rules provide warnings of danger for the unwary.  When your company litigates in a forum with no clear rules or precedents for e-discovery, your company is entering potentially treacherous waters.   The need for vigilant e-discovery counsel may be greatest in the forums that may appear to be giving e-discovery the least attention.