Inadvertent E-Discovery Disclosure Leads to Sanctions

Document production is often an arduous task made more so by e-discovery requirements. Electronically stored data results in exponentially more complicated, time-consuming and expensive discovery. Many law firms have protocols to efficiently handle e-discovery or they work with a vendor to lend a hand. However, recent decisions suggest that courts have heightened expectations and are less likely to overlook mistakes by firms who handle sensitive data. A recent decision out of California serves as a reminder that failure to follow reasonable e-discovery standards may result in sanctions.

In Apple Inc. v. Samsung Electronics Co. Ltd. et al., No. 5:11-cv-01846, a federal judge in the Northern District of California imposed sanctions upon a law firm for disclosing confidential “source code” data in a patent dispute. According to the decision, the law firm inadvertently provided its client – Samsung Electronics – with an unredacted version of an expert report containing details about smartphone technology to a major competitor of Samsung, Apple, Inc.

According to the decision, the firm did not take steps to adequately redact documents pursuant to a protective order before authorizing disclosure.

The court specifically took issue with the firm’s lack of a safety net and failure to utilize more than one set of eyes to review the production. The court described the firm’s self-described structure of “650 lawyers wide and 1 lawyer deep” used to manage highly confidential information as “akin to a trapeze artist flying high without a net.”

The judge also concluded that the firm did not properly react to the disclosure after it was reported by an associate. The judge found that this behavior merited the imposition of sanctions and required the firm to reimburse Apple for its costs.

This decision demonstrates the importance of proper quality controls when dealing with e-discovery and sensitive information. It is easy to miss the needle in a haystack and therefore law firms must implement reasonable e-discovery controls before producing materials.

Firms can also protect themselves by establishing clawback agreements, which permit parties to retrieve documents that were inadvertently disclosed. Finally, promptly communicating with the adversary about improper production can go a long way in the eyes of the court.