Rule 26 Blog
Delaware Courts to Big Biz: No More EDiscovery Hanky Panky
Written by Eric P. Blank   
Thursday, 18 June 2009 09:05
You know that electronic discovery is here to stay when a state court in Delaware - one of the most pro-business states in the nation - makes it clear that corporations have to play by the same rules as everyone else where e-discovery is concerned.

According to a June 16th story in The National Law Journal, the Delaware Court of Chancery issued two letter rulings and two opinions between May 18 and June 2 directly addressing e-discovery issues that had before then received scant attention by that state’s court system.

The rulings touched upon a number of e-discovery issues, including the early preservation of evidence, who should pay for expensive data-recovery projects, granting adverse inferences when missing evidence is deemed harmful to the party that can’t or won’t produce it and awarding costs and legal fees to the party that made the motion for opposing counsel to produce that evidence.

The National Law Journal reports that the Delaware Court of Chancery issued the following rules and opinions "in the space of three weeks":

• Grace Brothers Ltd. v. Siena Holdings Inc. - The court granted the plaintiff’s motion to compel the defendant to produce directors’ emails on an expedited basis.

• Beard Research Inc. v. Kates - The court awarded plaintiffs attorney fees and expenses related to their motion for sanctions for spoliation of evidence and granted plaintiffs’ request for an adverse inference that missing evidence contained information favorable to its case.

• Omnicare Inc. v. Mariner Health Care Management Co. - The court ordered the defendants to produce back up tapes of deleted emails if email archives yield evidence.

• Triton Construction Co. Inc. v. Eastern Shore Electrical Services Inc. - The court drew an adverse inference against the defendant, a former Triton employee, for destroying a thumb drive and home computer with information about Triton’s business. The court ordered the former employee and Eastern Shore, his current employer, to pay $167,644 in damages plus interest for the plaintiff’s cost to bring motion for contempt of a preliminary injunction.

This isn’t the first time a judge in Delaware has given guidance regarding e-discovery practices. Back in 2005, the chief judge of the United States District Court for the District of Delaware developed a collection of nonbinding e-discovery standards.

These standards laid out the following principles, among others:

• It is expected that parties to a case will cooperatively reach agreement on how to conduct e-discovery.

• Parties shall discuss the parameters of their anticipated e-discovery at the Federal Rules of Civil Procedure 26(f) conference.

• Each party to a case will designate a single individual through which all e-discovery requests and responses are made.

• If parties intend to employ an electronic search to locate relevant electronic documents, the parties will disclose any restrictions as to scope and method which might affect their ability to conduct a complete search.

The Delaware District Court’s guidelines also touched upon how and in which format electronic documents should be produced, document retention agreements between parties and so forth.

For decades, Delaware was a top choice among Fortune 500 businesses as their state of incorporation due to what was perceived as a corporate friendly tax and legal structure. Other states such as Nevada have attempted to position themselves in a similar manner to attract businesses.

Knowing e-discovery is often considered burdensome by corporations, one might think that Delaware would be hesitant to put the screws to businesses when it comes to producing electronic evidence.

That no longer appears to be the case, as the Delaware Chancery Court’s recent rulings and opinions indicate. The obvious question now is this: Will the rest of the state courts with a dearth of e-discovery rulings follow suit?

I’ll answer that with another question: If Delaware, once considered the most pro-business state in the country, has jumped on the e-discovery bandwagon, can the rest of the states really be that far behind?

Photograph of Eric Blank

Eric P. Blank is the founder and managing attorney of Blank Law + Technology PS. His practice focuses on electronic discovery counseling, e-security response planning and implementation, investigations and computer forensics. Mr. Blank has conducted more than 300 investigations into computer and software-related torts and employee misconduct since 2001 and has frequently been a court-appointed special master or neutral in e-discovery matters.
 
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