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DOJ’s Untimely Litigation Hold Results in Inadequate ESI Production and Sanctions

Posted on December 10th, 2012

In the recent case of U.S. ex rel. Baker v. Community Health Systems, Inc., 2012 WL 5387069 (D.N.M. Oct 3, 2012), the U. S. Department of Justice (DOJ) alleged the defendant engaged in Medicaid fraud.  In a motion for sanctions, defendant alleged that the DOJ’s litigation holds were untimely and as a result, critical emails were deleted thereby prejudicing the defense.

Affirming the Magistrate Judge’s recommendation, the District Court agreed that the DOJ litigation hold was untimely, inadequate and caused the destruction of relevant documents. Although the case was filed in 2005, the DOJ did not impose a litigation hold on two key employees until 2009. Due to this failure, email chains were lost due to the auto-deletion system. The Magistrate Judge applied the general spoliation rule that a duty to preserve evidence arises once a party “reasonably foresees litigation,” and that mere notification is not enough—plaintiff trial attorneys must take affirmative steps to monitor compliance.

Although the key employees were deposed, this was not good enough, as witness testimony was not as strong as the relevant documents or email chains (plus, the key employees could not recall the details of the missing documents.)

The District Court then reviewed the Magistrate Judge’s recommendations for sanctions, which found the DOJ’s untimely litigation hold and inadequate enforcement to be beyond mere negligence, but fell short of bad faith or willful misconduct. The court found the following sanctions to be appropriate:

  • DOJ must produce additional relevant documents as requested;
  • The magistrate judge will determine the monetary fines based on attorney fees and costs of the discovery matters, and
  • The DOJ must to show cause why it should not conduct and pay for a computer forensics expert to conduct a search of their electronic data.

The take away from this case is that all parties, whether they are government agencies or private citizens, must have a strategy prior to filing the case to ensure a proper litigation hold is in place preserve and produce eDiscovery in compliance with the law.  ILS offers consultations and the means to streamline plaintiff ESI productions. Call us at 888-313-4457 for more information.

ILS – Plaintiff Electronic Discovery Firm

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