New Jersey Court Affirms Sanction Against Law Firm For Losing Emails

The New Jersey Appellate Division has affirmed an order imposing sanctions against defense counsel for losing attorney-client emails that were relevant to the question whether a settlement had been reached between the parties and that had been identified on defendants’ privilege log.  When the judge directed that the emails be submitted for in camera inspection, defense counsel replied that they were not available because they had been in the file of the defendants’ prior counsel and could no longer be located.

Plaintiffs’ counsel then retained a forensic expert and incurred over $10,000 in costs and attorneys’ fees to recover the emails from backup tapes on the hard drive of the original defense counsel’s firm.  The judge then determined after in camera inspection that the emails were admissible, and ordered the defendants and the law firm representing them to jointly reimburse plaintiffs for that expense. The emails ultimately formed the foundation for the trial court’s ruling in plaintiffs’ favor at trial.

On appeal, the defense firm argued that the sanction was improper because it had not violated any Court Rule in connection with its handling of the emails, and because there was no evidence of intentional spoliation.  The Appellate Division disagreed.

In its opinion in Goldmark v. Brach Eichler LLC, the Court observed that the trial judge had inherent power to impose discovery sanctions, and held that the sanctions were proper even in the absence of intentional spoliation because counsel had an obligation to preserve the documents identified on its privilege log and produce them as required for in camera inspection.  The Court concluded that “[i]t would make a mockery of our discovery rules to allow a party or
its counsel – after identifying privileged information – to destroy or carelessly lose or misplace the materials in question.”

Courts consistently hold that litigants and in-house counsel must preserve documents that bear a relationship to issues in litigation.  Consistent with that, the Goldmark opinion reminds counsel of record to preserve all potentially relevant emails – including privileged client communications – during litigation.