SAN FRANCISCO (Legal Newsline) - In a certified class action lawsuit last month, Safeway Inc. was saddled with sanctions totaling nearly $700,000 for presenting discovery sans guidance and failing to identify responsive files produced as evidence.
Plaintiff Michael Rodman sued Safeway for breach of contract with online shoppers, alleging customers were charged higher prices than in store. The suit directly involves shoppers who were registered with Safeway after 2006, as Safeway's online contract allegedly assured consumers the prices charged for groceries online were the same as those in the actual store.
Rodman requested responsive documents about contract terms for registrants prior to 2006, but Safeway said it didn't have access to any responsive documents or special terms regarding those customers. In October 2015, one week prior to trial, Safeway produced documents with relevancy to consumers registered before 2006 found on a "legacy" computer drive.
The discovery was allegedly found by Safeway's director of marketing, Steve Guthrie, although a previous deposition declared that Guthrie's search for responsive documents came up empty.
Last December, Rodman's attorneys filed a motion for discovery sanctions under Rule 26(g), alleging Safeway made "false and inaccurate statements" in regard to the discovery following claims it did not exist. Safeway argued that its document discovery was reasonable.
However, according to Federal Rule of Civil Procedure 26(g), reasonableness is measured objectively, with no requirement of bad faith. A sanction can only be imposed if a court finds a certification violated this rule without substantial justification.
"What is interesting about this case is that the imposition of sanctions under 26(g), is that there is no requirement for bad faith or intent," said Brad Harris, vice president of product at Zapproved, an e-discovery software provider.
In this case, the court ruled in favor of Safeway, but said the grocery store chain performed an unreasonable initial search for responsive documents.
The court's reasoning cites the reliance of Guthrie, who had no prior experience conducting discovery searches and failed to keep a record of searches he made. The court's final ruling found the overall evidence is indicative of an "objectively unreasonable" search, stating that anyone conducting an "adequate search would have looked in the folders of the legacy drive in question."
As a result of its oversight, Safeway was ordered to pay $688,646 in attorney fees. This is approximately one-third of the amount initially requested by the plaintiff, with Safeway alleging Rodman would have still incurred expenses in putting forward his case regardless of the late discovery.
"Although disputes over discovery protocols are fairly common, sanctions really do not occur all that often," Harris said.
"When litigants fail to meet their discovery obligations, sanctions from the court can be appropriate to restore a prejudiced party and deter bad behavior in others and are often headline news."