It’s seminar season again, which means I’m spending a lot of time preparing for upcoming speaking engagements. For several of the engagements, I’m also preparing written materials that require a good deal of research. I say this, in part, in the hopes that you’ll forgive my reduced posting schedule but, also, as a lead-in to today’s post. I came across this case, which was decided in January, in the course of my recent research. Although it’s not hot-off-the-presses recent, it’s recent enough and important enough that it warrants a blog post. So here goes.
The case, In re Pfizer, Inc. Sec. Litig., was brought by a class of shareholders and related to two of the company’s pain-relief drugs. The particular decision of interest was on motions brought by both sides seeking sanctions for failure to preserve electronic evidence. The part that relates to employers specifically is the allegation of the plaintiffs that Pfizer failed to preserve employee “eRooms.”
An eRoom was "a collaborative application” for company employees to “share documents, share calendars, archive email, conduct discussions/instant messaging, and to conduct informal polls.”
When the plaintiffs sought discovery of documents “sent to or maintained” in one of the company’s eRooms, Pfizer’s counsel discovered that the company had decommissioned the used of eRooms. The company had archived the eRooms and their contents but, when the archives were restored for production in the litigation, only the documents (and corresponding metadata) that existed in them at the time they were archived could be recovered. In other words, the restored eRoom reflected information only as it existed when the eRoom was archived.
The good news was that the documents saved in the eRooms were mostly duplicative of documents saved elsewhere in the company’s network, so they had likely been captured and produced as part of the discovery process. However, the court found, the eRooms had value in and of themselves as compilations. Therefore, Pfizer had a duty to preserve them and failed to do so.
Nevertheless, the court found that the company’s conduct was, at worst, negligent. The company instituted a litigation hold and preserved and produced a tremendous volume of information in the course of discovery. There was no evidence that the failure to preserve and produce the eRooms was intentional or willful. Furthermore, the court found that plaintiffs had not shown that they were deprived of relevant evidence as a result of the failure to preserve. Thus, the court determined that sanctions were not appropriate.
The real take-away from this case is a reminder of how difficult it can be to truly capture all sources of electronically stored information used in an organization. An employer who provides employees with technological resources like eRooms and other internal collaboration and knowledge-management platforms take on the added burden of having to preserve the data those platforms contain in the event of litigation.
In other words, the more tools you have and the more advanced the tools are, the more difficult the burden in litigation.
In re Pfizer, Inc. Sec. Litig., 288 F.R.D. 297 (S.D.N.Y. Jan. 8, 2013).