“Discovery” is the bane of the litigation attorney’s existence. After all, the attorney gets bogged down in the tedium of documents, interrogatory questions, depositions and other forms of pretrial discovery. This is especially true in construction litigation, where one could quickly get mired in specifications, design drawings, emails, change orders and project reports.

While all this may sound dizzying, it is essential. A party to a lawsuit has a right to obtain discovery from its adversary. If it does not receive the discovery to which it is entitled, the aggrieved party may seek court-imposed sanctions against its adversary. 

To understand how to avoid this fate best, we will look at a recent decision from a federal district court in Pennsylvania.

Definition of Discovery

Before getting into the case details, it is essential to understand the definition of discovery in litigation. Black’s Dictionary defines “discovery” as: “Compulsory disclosure, at a party’s request, of information that relates to the litigation … . The primary discovery devices are interrogatories, depositions, requests for admissions, and requests for production.” 

Discovery is essential in litigation because it “allows an attorney to know as much about a case, with limitations, as the opposing attorney knows. In some cases, the facts, opinions, conclusions, theories, and even trial preparation materials are there for the asking. Discovery permits a lawyer to review and probe the good, the bad, and the indifferent from the safety of the office before settlement and long before trial … . A thorough use of discovery leaves few reasons for two reasonable attorneys seeking to satisfy their clients’ best interests to decide to go to trial instead of negotiating a settlement.” Roger S. Haydock, David F. Herr & Jeffrey W. Stempel, “Fundamentals of Pretrial Litigation” 194 (3d ed. 1994).

When you read this rationale for why discovery is important, it is easy for the non-attorney to say, “Why should I turn over this information? Why should I disclose documents and information that may be helpful to my adversary?” 

The answers to both questions are simple — at least to someone who stayed awake during civil procedure class in law school: “Because court rules require it and discovery is a reciprocal benefit that promotes full disclosure of information in furtherance of a full and fair litigation process.” While these beneficial purposes are important, the discovery process itself is, at times, tedious.

Discovery Is Drudge Work

In Domus BWW Funding LLC v. Arch Insurance Company, No. 2:23-cv-00094-JDW, 2024 WL 3761737, at *1 (E.D. Pa. Aug. 12, 2024), the federal district court judge hearing the case teed up his ruling on a discovery dispute as follows: 

“No less an authority than Daniel Webster observed that to be a great lawyer, one ‘must first consent to be only a great drudge.’ No part of legal practice better illustrates this maxim than discovery, which is, from start to finish, drudgery. As the data available to search multiplies, so does the drudgery required. Yet discovery rules promote efficiency, transparency, and the administration of justice, three interests I don’t take lightly and that I expect lawyers before me to honor. So, while lawyers might not enjoy it, they have to take their discovery obligations seriously.”

By that sparkling introduction, the reader of this decision can tell that things will not end well for one of the parties. In this case, the court noted that Arch Insurance Co. and its attorneys “didn’t take discovery obligations seriously.” The judge said that Arch has “shown carelessness, a lack of diligence, and indignation at any criticism of its conduct.” 

Among other things, Arch did not locate relevant hard copy documents belonging to a critical witness (even though the witness said she had the documents); Arch had a paralegal handle its electronic documents without appropriate lawyer supervision, resulting in a late, incomplete production (which Arch’s lawyer did not disclose to its adversary). Arch lost emails from its underwriter on the file. 

“Overall, Arch and its counsel demonstrated a cavalier attitude towards discovery obligations. And while some of Arch’s failings have proven harmless (or nearly harmless), the loss of [electronically stored information or ESI] from a key custodian is not harmless. It is sanctionable, and I will impose sanctions as a result.” Domus, 2024 WL 3761737, at *1.

In reviewing this case, it is important to remember the two statements I made previously: First, a party has a right to discovery. Second, the relevant court rules require it.

Rules Govern Discovery

Under the Federal Rules of Civil Procedure, which applied to the Domus case, a party must supplement or correct a discovery disclosure in a “timely manner if the party learns that in some material respect, the disclosure or response is incomplete or incorrect, and if the additional or corrective information has not otherwise been made known to the parties during the discovery process or in writing[.]” See Fed. R. Civ. P. 26(e)(1)(A). 

If a party fails to do this and does not demonstrate that the “failure was substantially justified or is harmless,” a court may sanction the party or its lawyer. See Fed. R. Civ. P. 37(c)(1). 

Similarly, if a party “spoliates” or destroys evidence, a court may sanction the spoliator or destroyer of proof. As it relates to ESI, appropriate sanctions for spoliation include “forbidding the party that failed to preserve information from putting on certain evidence, permitting the parties to present evidence and argument to the jury regarding the loss of information, or giving the jury instructions to assist in its evaluation of such evidence or argument.” Fed. R. Civ. P. 37(e) (Adv. Comm. Note to 2015 Amendment). 

Thus, when a party destroys electronically stored information “with the intent to deprive another party of the information’s use in the litigation,” a judge may presume the information was unfavorable to the infracting party, instruct the jury that it may or must presume the information was unfavorable or dismiss the action. Fed. R. Civ. P. 37(e)(2). This is known as an adverse jury instruction. Domus, 2024 WL 3761737, at *4.

At the end of its decision, the court granted Domus an adverse jury instruction. “[T]o the extent that this case proceeds to trial, I will permit Domus to introduce evidence of Arch’s failure to preserve Mr. McGowan’s emails, and I will craft appropriate jury instructions at the time of trial...” Domus, 2024 WL 3761737, at *6. 

As for Arch’s late document production, prejudicing Domus’s ability to ask questions at deposition about these late documents, “in fairness to Domus, I will permit Domus to reopen discovery, and, to the extent Domus’s additional discovery is reasonable, I will require Arch to pay for it.” Domus, 2024 WL 3761737, at *7.

Harsh Penalties

In the world of litigation, these penalties are very harsh. The district court acknowledged as much in the conclusion of its opinion: “Arch’s approach to discovery in this case is cavalier, at best. It ignored its obligations, and it turned indignant when confronted with its failures. I find its approach troubling, and it falls well below what I expect from the lawyers who appear before me. The record demonstrates that Domus was justified in its concerns, even if Arch won’t admit as much. Arch’s misconduct has prejudiced Domus’s ability to make its case, so I will impose sanctions to deter future misconduct and to offset the prejudice that Arch has caused.” Domus, 2024 WL 3761737, at *7.

The lessons of the Domus case are simple: take discovery obligations seriously, do not run afoul of court rules and orders, and conduct the discovery process fairly and in good faith. By not following these principles, Arch Insurance Co. and its lawyers garnered a court ruling that altered the complexion of their case and undoubtedly weakened their position in any settlement negotiations going forward. 

While the court did not ding them with monetary sanctions, litigating a case with a prospective adverse jury instruction looming over your head is probably just as bad.