N.J. Company Faces Sanctions Over Failed Litigation Hold

http://ow.ly/6GMWS

An article by Mary Pat Gallagher published by the New Jersey Law Journal and appearing on law.com on the LTN webpage.

The article describes a situation in which a corporation was sanctioned for failing to preserve information.  As the article states, "A party that destroyed potential evidence after its lawyers at Pashman Stein failed to impose a litigation hold and left it to the company's nonlawyer CFO to sort out what was relevant has been slapped with spoliation sanctions.

In a ruling on Wednesday, District Judge Esther Salas found that N.V.E., an Andover, N.J., nutritional supplement company, did not destroy records deliberately but was grossly negligent in failing to preserve them."

The article goes on to provide some further information about this situation, "Pashman Stein failed to oversee the discovery process, leaving Jensen "responsible for not only gathering the documents to produce in discovery but making relevance calls without the assistance of counsel," Salas said, adding she was "extremely surprised to learn that Mr. Jensen has received no assistance from counsel, nor has any counsel from Pashman Stein visited N.V.E. over the five years this litigation has been pending to review any documents.""

The article provides some specifics about what information was lost, and when.  In addition the article states, "Aidan O'Connor of Pashman Stein says N.V.E. is considering asking for reconsideration or an interlocutory appeal. "I don't think anyone could have predicted that we would not be able to get into our old computers," he says. He also notes that Palmeroni never took N.V.E. up on its offer that he could hire an expert to try to access the data.

He says that since the case was filed there's been a "sea change" in the law regarding litigation holds, which are "now done as a matter of course."

Palmeroni's counsel when the spoliation motion was filed, Westfield solo Fred Shahrooz Scampato, says, "if you represent a company that's being sued or bringing a lawsuit, you have an obligation to issue a litigation hold letter.""

P.S.  If you are concerned about best practices for litigation hold, SRM Legal can provide some technological options that can assist with this process.