And here we go ...
 
From Cricket Technologies Case Index:
 
Phoenix Four, Inc. v. Strategic Resources Corp., 2006 WL 1409413
(S.D.N.Y. May 23, 2006)
 
Summary:
The district court monetarily sanctioned the defendants and their law
firm for gross negligence in not identifying and disclosing inaccessible
but highly relevant electronic information until late in the discovery
process.  The court held that the law firm was obligated to question its
clients about potential sources of electronic information and to follow
up with technical examinations in the absence of the availability of IT
staff.
 
Plaintiff investment firm sued its defunct investment advisor and its
former officers for fraud and fiduciary duty breach, and moved for
sanctions against the defendants and their law firm for failure to
produce relevant electronic files relating to the parties' relationship.
Plaintiff also contended that defendants should be sanctioned for having
abandoned ten computer workstations at the defunct business location.
Defendants produced all paper records and electronic accounting records
but not substantial electronic information located in a partitioned (and
invisible) space on a server that had been moved when the investment
advisor business closed and its officers started up new operations at
another location.
 
The court declined to impose an adverse inference instruction re: the
abandoned workstations and also declined to impose an adverse inference
instruction re: the late produced electronic documents found on the
partitioned server ... however it found that the defendant's law firm
"failed in its obligation to locate and timely produce the evidence.".
Counsel's mere instruction to collect electronic information was
insufficient to absolve it from sanctions.
 
The court explained that counsel's duty is not to retrieve information
from an inaccessible source but to determine whether any information is
stored there.  Citing new e-discovery Federal Rule 26(a) (requiring a
description by category and location of ... electronically stored
information) the court stated that under the new rule parties "must
identify even those sources that are 'not reasonably accessible,'"
although they may not have to actually produce from inaccessible
sources.  The court held that defense counsel knew of its obligations to
identify inaccessible sources because the new rule essentially codified
"Zubulake IV and V".
 
The court found that the defendant's counsel's deficiencies constituted
"gross negligence" and ordered that the law firm share equally with
defendants the cost of the monetary sanctions imposed under Rule
37(c)(1) (plaintiff's attorneys' fees for brining the sanctions motion
and $10,000 each for re-depositions of three witnesses). ...
 
I have only included the basics of this case here; to read the rest of
the summary and/or search their case index, visit
www.crickettechnologies.com - you have to register but it is a free
resource.  I find it to be extremely valuable.
 
Gotta run and share this with a few of my lawyers now ... have a great
day everyone!
Julie
 
Julie J. Colgan
Manager of Records Services
Arnall Golden Gregory LLP
Atlanta, GA
404.873.8164 direct
404.439.1811 fax
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