Counsel’s Accidental Information Back-Up Breaks the Budget

http://ow.ly/6hvAc

Article by Christopher D. Dize, appearing on E-Lessons Learned website.

This article discusses the New York State case of Oxxford Info. Tech., Ltd. v. Novantas, LLC, 910 N.Y.S.2d 77 (N.Y. App. Div. 2010).

In this case, counsel for the plaintiff entered into a stipulated confidentiality agreement regarding the preservation of data provided by the defendant.  The stipulation called for the erasure of all the defendant's data after the termination of the case. Plaintiff's counsel accidentally stored data belonging to the defendant on various back-up tape systems, and upon realizing this error, they sought relief from the court to modify the confidentiality agreement, rather than incur the costs of data removal.  The court denied the attorney's request, and so did the appellate court.

The article states the following in regard to this situation:

"In what was no doubt a humbling moment for plaintiff’s counsel, New York’s Appellate Division basically said, “You should have known better.”

“Plaintiff voluntarily consented to the Confidentiality Order . . . and its counsel, who have demonstrated experience in and sophisticated knowledge of electronic discovery matters, should have foreseen the problem and addressed it when the Confidentiality Order was being negotiated.”

The appellate division reasoned that the cost to Oxxford’s counsel did “not outweigh defendants’ bargained-for interest in the post-litigation destruction of its business information in outsiders’ hands . . . .” The court emphasized that the plaintiff’s proposed safeguards for keeping Novantas’ business secrets safe amounted to “something considerably less than a guarantee.”

It is possible that the court would have reversed if counsel had not “demonstrated experience in and sophisticated knowledge of electronic discovery matters.” But we know for sure that if you do demonstrate such experience and knowledge of e-discovery, cleanup is on you if you mess something up.

And if you agree to return or destroy the other party’s confidential information at the close of litigation, the ol’ too-costly excuse ain’t gonna cut it if you don’t. This is especially true when the other party relies on a confidentiality stipulation, into which you entered while flexing your e-discovery muscles."

This is a perfect example of how costly an eDiscovery error can be.