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Storage Firm Sanctioned $150K for eDiscovery Snafu

by on September 13, 2010

When you make your money making storage devices it’s a little embarrassing to show up in court without data that’s supposed to be safely stored on your hardware. It can be costly, too. That’s what storage titan SanDisk discovered recently in a case before federal district court Judge William H. Pauley III in New York.

Gavel SanDisk is embroiled in a $4 million lawsuit with two former employees over an alleged breach of contract and implied covenant of good faith fair dealing. The pair’s attorneys requested that SanDisk produce in court data from the laptops the duo used while working for SanDisk. The company couldn’t initially produce the data, but claimed it was destroyed despite reasonable efforts to preserve it.

Here’s what happened.

After receiving a document preservation letter from employees’ counsel, SanDisk’s attorney issued a “Do Not Destroy” memo. In compliance with that memo, the employees’ laptops were placed on the shelf.

A year later, SanDisk decided it needed the laptops so it saved all the data on them to its servers in the form of a mirror image and wiped their hard drives. When the time arrived to produce data from the drives to comply with e-discovery, SanDisk couldn’t find the data. After some wrangling, the company bit the bullet and went through the expensive process of reconstructing the data from billions of pages of documents stored on backup tapes.

Judge Pauley, unhappy with SanDisk’s actions during the e-discovery process, especially during the initial, or native, production of evidence, observed:

“As this sanctions motion highlights electronic discovery is not always easy or straightforward. And not every delay warrants sanctions. It appears that Plaintiffs will have the benefit of all of their emails not just at trial, but also during depositions. Thus, the prejudice to [the employees] from late-produced emails is contained.”

“However,” he continued, “SanDisk’s misrepresentations about its native production obscured the deficiencies and stopped discovery in its tracks. But for the Plaintiff’s forensic analysis and their counsel’s persistence, those deficiencies may not have come to light. Plaiintiff’s were forced to brief a motion and endure a lengthy delay.”

For that reason, the judge ordered SanDisk to pay the employees $150,000 for the hassle it caused them.

Yet another lesson learned in the murky waters of preparing for eDiscovery. We’ve showed before how eDiscovery non-compliance can result in heavy fines. This example shows the importance of having an eDiscovery policy well in place at your organization. Is your company covered when it comes to eDiscovery? What policies have you put into place to prepare?

One Comment
  1. Ha! That would be embarrassing. Come to court prepared guys! Geez…

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