Services Station Dealers of America and Allied Trades - SSDA

SSDA/NCPR-AT NEWS

March 2007

General Counsel Corner

By Peter H. Gunst, Esquire

Digging Up The Email

When litigating against a large corporation, like an oil company, it is crucial to obtain access to its email. Email is the common mode of communication among corporate employees. Access to it is the best way of showing what the defendant was doing and what its motivation was. In addition, because of the informal and quasi-conversational nature of email, a corporate employee is likely to be less guarded as to his or her true intent in email.

Recent amendments to the Federal Rules of Civil Procedure, which govern the conduct of civil litigation in federal courts throughout the land, tacitly acknowledge the importance of full email discovery. Those amendments, effective December 2006, provide for early communication between opposing counsel concerning the disclosure and discovery of electronically stored information and also expressly provide for its production in civil litigation.

Too often in litigating against large corporations one gets the feeling that the opponent’s effort to preserve and produce electronically stored information is lackadaisical at best. The recent amendments to the federal rules appear to intended to address just such concerns.

That such rule reforms can have real teeth is demonstrated by a recent decision by Judge Hochberg, a federal district court judge in New Jersey, who emphatically enforced local court rules that were closely analogous to the newly amended federal rules.

In complex and drawn out civil litigation, Judge Hochberg took the unusual step of conducting an eleven-day “Integrity Hearing” to get to the bottom of the plaintiffs’ repeated complaints that the defendant, Health Net, Inc., had consistently sabotaged the plaintiffs’ discovery efforts and ignored its discovery obligations by failing to maintain and produce a wealth of pertinent emails, which tended to establish that Health Net had knowingly submitted false cost data.

After hearing detailed testimony concerning Health Net’s tactics, Judge Hochberg released an exhaustive written opinion on December 6, 2006, appropriately the day before Pearl Harbor Day.

The court’s written opinion, Wachtel v. Health Net, Inc., _F.R.D._, 2006 WL 3538935 (D.N.J. 2006), leaves no doubt that Judge Hochberg was displeased mightily with what the Integrity Hearing had revealed. At one point castigating Health Net and its counsel, Judge Hochberg wrote:

Defendants’ strategy has been a concerted war to waste huge time and resources of plaintiffs in pursuing this litigation. It gives “scorched earth litigation” a new standard of brashness. Defendants have also forced the court to devote years to police discovery abuses over and over again. Defendants continue to ignore the court’s rulings over and over again. Defendants’ persistent pattern of delay, defiance of Court Orders, evasive responses to Plaintiffs’ discovery requests and lack of candor have resulted in crushing prejudice to Plaintiffs in the form of forgetful witnesses and extra-ordinary expenditures of time, effort, and money. The wanton waste of judicial resources caused by Health Net, as exemplified herein, is equally staggering.

To redress Health Net’s misconduct and that of its counsel, Judge Hochberg imposed a variety of sanctions that stopped just short of rendering a default judgment against Health Net. These sanctions were imposed:

1. Crucial facts at issue concerning Health Net’s knowing and willful use of outdated cost data to defraud the plaintiffs were deemed admitted because of its repeated suppression of emails pertaining to its submission of the outdated data.

2. Health Net was precluded from using at trial 20,000 pages of documents upon which it relied because of its failure to produce the documentation until after the close of discovery.

3. Health Net’s claim that numerous documents were immune from discovery because they revealed communications with its attorneys was rejected because Health

Net failed to provide a privilege log identifying the documents and stating the basis for its claim of privilege.

4. Health Net was required to pay monetary sanctions in an amount to be determined, which will be quite substantial, to reimburse the plaintiffs for the attorney’s fees and expenses that they encountered as a result of Health Net’s misconduct.

5. The court ordered the deployment of an independent “discovery monitor” to ensure that Health Net met all of its discovery obligations.

Finally, the court reserved the question of whether to impose sanctions personally against one of Health Net’s lead counsel pending its review of a Report and Recommendation by a Magistrate Judge, who had found that sanctionable conduct had in fact occurred.

Judge Hochberg’s opinion demonstrates that email discovery abuses can be dealt with effectively and in a meaningful manner. The recent amendments to the federal rules appear to invite just such a response where appropriate.

It must be emphasized that the rules concerning production of electronically stored information cut both ways. Plaintiffs, too, have an obligation to preserve and produce all relevant emails. Plaintiff’s counsel must not only diligently ensure that the corporate defendant’s emails are produced, but also that his or her client also provides full and forthright discovery.

To access the latest articles by the Service Station Dealer’s legal counsel, please visit the "Service Station Dealers: Legal Issues" section of the Astrachan Gunst & Thomas P.C. website at:

http://www.agtlawyers.com/thefirm/newsitem.php?item=39

pgunst@agtlawyers.com

September 29, 2006

Past President Dennis Sidorski, President Dave Freitag,

Ed Weglarz and Pat Levecchia congratulate Maurice Hellou after he received the Golden Nozzle Award.

June 29, 2005

SSDA-AT Vice President Testifies at Right-to-Repair Hearing

Washington, DC June 28, 2005…. Fred Bordoff, Vice President of the Service Station Dealers of America/National Coalition of Petroleum Retailers and Allied Trades (SSDA/NCPR-AT), testified in support of the Motor Vehicle Owners Right to Repair Act today before the Small Business sub-committee on Workforce, Empowerment and Government Programs. The hearing gave the Long Island shop owner an opportunity to address specific issues in automotive repair dealing with the flow of information between auto manufacturers and independent repair shops. Bordoff, owner of the New York Center for Automotive Training in Long Island City, gave several examples of the inability to perform and complete diagnosis and repair on several makes of vehicles due to the lack of specific vehicle information.

He also stated, “While access to information is a problem, the greater issue is that of programming ability, or lack thereof, available to independents. Without it, the entire repair at the independent facility is viewed as useless by the customer.”

SSDA/NCPR-AT has long supported the efforts of the coalition involved with this legislation.

“This problem will only grow in dimension as the vehicles become ever-more sophisticated”, said Paul Fiore, Executive Vice President of SSDA-AT. While there has been some compromise over the last few years between the manufacturers and the coalition, there is no sign of an agreement both parties can live with. Fiore also stated that, “Our members are very familiar with these two-party disagreements where all the power is on one side. Without government oversight, we doubt there will ever be the smooth flow of information necessary to keep auto repair accessible and affordable.”

The latest version of the Right to Repair Act, H. R. 2048, has been crafted to address concerns raised in the 108th Congress by the auto manufactures and the Federal Trade Commission.

SSDA/NCPR-AT is federation of state service station and automotive repair associations with over 15,000 members nationwide. For a complete copy of the testimony contact Marta Gates at 301-390-4405 on ext. 115.

Following are selected articles from the most recent edition of the SSDA/NCPR-AT News, a monthly publication sent to all members of SSDA/NCPR-AT.