Recent Order for Sanctions by N. District of Illinois Reinforces the Importance of Counsel’s Role in Supervising Discovery

In Peerless Indus., Inc. v. Crimson AV, LLC (N.D. Ill. Jan. 8, 2013), the Northern District of Illinois granted plaintiff’s motions for sanctions because defendants did not perform an adequate document collection and instead took “a back seat approach” and let the process “proceed through a vendor.” This opinion highlights a recent trend of courts and state bars cautioning clients and counsel against undue reliance on outside vendors for compliance with their discovery obligations.

In this patent infringement case, defendants failed to produce documents from one of their suppliers after it was proven that defendants exercised considerable control over the supplier. Rather than diligently collecting documents from the key custodian at the supplier, defendants allowed an outside vendor to instruct the custodian how to collect his own documents, which he ultimately did not do. During the 30(b)(6) deposition, defendants admitted that they “had no part in the process of obtaining the requested discovery or of determining how [the supplier] managed their documents and what might be relevant to plaintiff’s requests.”

In granting plaintiff’s motions, the Court reasoned:

“Such a hands off approach is insufficient…Defendants cannot place the burden of compliance on an outside vendor and have no knowledge, or claim no control, over the process. Defendants must produce all responsive documents…”

Discovery vendors offer many key discovery services, such as collecting documents, processing and hosting data, providing a document review platform, offering applications for computer assisted review, and preparing documents for production. However as this decision makes clear, the parties themselves must take responsibility for the discovery process and cannot simply rely on an unsupervised vendor to meet their obligations. Here, defendants were required to show that they had, in fact, searched for the requested documents, and simply delegating that task to a vendor (who did not actually do it) was found to be an insufficient effort.

Thus, the burden falls squarely on the parties and their counsel to oversee the discovery process and ensure that all obligations are being met. Clients should leverage technology and outside processing vendors wherever possible to save costs and promote efficiencies, but ultimate responsibility for complying with the discovery rules always remains with the client and its counsel.

This issue sometimes gets muddled when sophisticated vendors employ experienced former attorneys who offer to take responsibility for managing the discovery process. This may lull the client and its counsel into thinking the vendor is providing legal counsel which can adequately guard against discovery blunders. They cannot.

In January 2012, the District of Columbia Committee on the Unauthorized Practice of Law issued Opinion 21-12 (later adopted by the District of Columbia Bar Ethics Committee in its June 30, 2012 Opinion), which directly supports the Peerless opinion. The District of Columbia makes clear that employees of discovery service companies and staffing agencies (even if individually admitted to practice law) cannot represent outside clients or provide legal advice, and they must be directed or supervised by attorneys with an attorney-client relationship with the client. The discovery services companies may provide administrative, logistical, and technical support, but may not provide any supervisory activities that require the application of professional legal judgment.

Clients and counsel must continue to recognize that discovery service companies are not authorized to practice law. The recent trend of courts and state bars cautioning clients and counsel against undue reliance on outside vendors reinforces the importance of counsel’s role in supervising discovery.

Leave a Reply