Failure to Implement Legal Hold and Supervise Discovery Among Counsel’s Sanctionable Sins

HM Elecs. v. R.F. Techs., Inc., No. 12cv2884-BAS-MDD, 2015 U.S. Dist. LEXIS 104100 (S.D. Cal. Aug. 7, 2015).

In this trademark dispute, the court issued stringent sanctions against the defendants and their counsel for the intentional withholding and destruction of relevant documents. The court found sanctions were justified against the defendants and some of their lawyers for five primary transgressions.

First, the defendants’ counsel neither imposed a legal hold nor explained the importance of preserving documents to their clients. Defense counsel relied on the word of defendant Babak Noorian, the CEO of defendant R.F. Technologies (RFT). Noorian asserted that the company did not delete documents in the normal course of business, although RFT did not have a written policy addressing the data preservation, it did not inform employees of the need to preserve documents, and Noorian admitted that he couldn’t “possibly check” the behavior of all 60 RFT employees.

Second, Noorian instructed RFT’s salesforce to destroy relevant documents. As a result, an unknown number of documents were likely deleted. The court found the destruction occurred intentionally and in bad faith.

Third, Noorian signed and certified discovery responses that contained false information, including claims that documents did not exist though they did. The defendants’ counsel also certified the discovery responses without conducting a reasonable inquiry. In particular, the court noted counsel’s repeated assertions, in writing, in a sworn declaration, and during a meet and confer, that all responsive documents were produced and that no responsive documents were withheld based on the attorney-client privilege. Counsel also remarked that the defendant had looked for and produced documents at a meet and confer—a point when RFT had neither reviewed nor produced its ESI.

Fourth, the defendants used 59 broad search terms such as “confidential,” which appeared in the footer of every e-mail from RFT, to justify withholding more than 150,000 nonprivileged documents, without review. No one reviewed any of these documents to confirm whether they were privileged, and none were listed on a privilege log.

Finally, the defendants’ counsel did not produce more than 375,000 pages of data until after discovery closed because they did not perform quality control checks or supervise their ESI vendor. A vendor employee mistakenly believed a data export was complete and removed a drive too early during the process. As a result, relevant documents favorable to the plaintiff were concealed, and the litigation was delayed.

The court concluded that, but for the plaintiff’s “diligence” and “persistence,” the defendants “would have gained a significant and unfair advantage at trial.” Even so, some relevant documents remained missing, and the plaintiff was “forced to litigate this case with incomplete facts and to expend significant resources hunting down ESI.” Because of this prejudice, sanctions were warranted.

Ultimately, the court determined that the spoliation did not impair the plaintiff’s ability to go to trial but “threatened to interfere with the rightful decision of the case.” Accordingly, the appropriate punishment consisted of monetary sanctions against the defendants as well as their counsel and his law firm, issue sanctions finding that a key document and its contents were fabricated and false, and an adverse inference instruction.

Case Details

HM Elecs. v. R.F. Techs., Inc., No. 12cv2884-BAS-MDD, 2015 U.S. Dist. LEXIS 104100 (S.D. Cal. Aug. 7, 2015).


The court was alarmed that defense counsel ignored red flags and refused to take any responsibility for the discovery errors. The judge termed these failings an “abdication” of counsel’s role to “craft[] and implement[] an effective discovery process.”

The opinion provides a host of suggestions for how counsel can avoid similar predicaments:

  • Issue a legal hold “tailored to the client and the particular lawsuit.” Learn the client’s computer systems, organizational structure, and data to advise the client about its duty to preserve. Once implemented, monitor compliance with the legal hold.
  • Supervise anyone involved in the document preservation, collection, review, and production process.
  • While reviewing every page of a document production is not required for certification, at least review a sample of the production.
  • Be transparent with opposing counsel about the amount of data.
  • If necessary, ask opposing counsel or the court for an extension of time to allow sufficient time to sample the document collection and ensure the accuracy of discovery responses.
  • Speak with a range of key custodians, not just one employee, about document preservation practices. Collect and sample documents to confirm what employees say.