What are penalties for non-compliance of e-discovery

The UBS Warburg case set a precedent for identifying, preserving and producing emails and implementing litigation holds. Other high-profile cases have subsequently resulted in heavy sanctions for spoliation. PricewaterhouseCoopers was penalized with a $345 million judgment for not preserving materials under a litigation hold. Morgan Stanley was ordered to pay $1.45 billion following a ruling of e-discovery violations, although the ruling was later overturned.

Monetary damages aren’t the only penalties for noncompliance. Failure to comply can also result in a company’s own employees being barred from testifying or other evidence being excluded. Noncompliance can also lead to an “adverse influence” jury instruction that can cost a company the case.

Judges have held also companies in contempt for not fully complying with e-discovery rules. A judge in Louisiana recently called Dell Inc.’s e-discovery conduct “unconscionable” after learning that the company’s search efforts in an ongoing case did not include words such as camera.

In one of the most extreme cases, Arthur Andersen was handed a criminal conviction for obstructing justice for shredding records just before being handed a subpoena from the U.S. Securities and Exchange Commission. Even though it was later reversed, the impact of this charge played a large part in forcing the company to shut down and ushered in the conditions for the Sarbanes-Oxley Ac