Judge Sets Strict Discovery Standard for In-House Attorneys
A federal judge in Coquina Investments v. Rothstein [2012 WL 3202273 (S.D. Fla. Aug. 3, 2012, Case No. 10-60786)] levied harsh sanctions against TD Bank and its outside counsel for numerous discovery violations, including most notably, the failure to conduct an adequate internal search for documents. Coquina involved a high-profile case regarding TD Bank’s alleged assistance with a Ponzi scheme that resulted in a $67 million verdict against the bank. The judge issued a post-trial order against the bank and its counsel for negligently failing to turn over relevant documents. The ruling criticized the bank’s failure to produce documents in their native format, which led to the loss of key information in the discovery production, and the lack of coordination among its many attorneys.
The Association of Corporate General Counsel (ACC), a global bar association for in-house counsel, filed an amicus brief in support of TD Bank’s appeal, urging the 11th Circuit to reverse the sanctions as creating an “impossible standard” for in-house counsel to follow during the discovery process. The ACC argues that holding the client responsible for errors in a discovery process that involves hundreds of attorneys and a high volume of documents sets an unrealistic precedent for in-house counsel and would have a chilling effect on how they operate. The lower court’s ruling, the ACC says, demonstrates a fundamental misunderstanding of how in-house counsel work and the resources available for discovery.
This ruling is one of many recent discovery opinions throughout the country that emphasize the need for attorneys to work closely with their clients during the discovery process. It also highlights the importance of both preserving and producing documents in their native format to ensure relevant information is disclosed. Finally, it suggests that corporate counsel should actively assist outside counsel in litigation and participate in searching for and producing relevant material.