Lessons in Mandatory Preclusion for Failure to Disclose ESI

In a case on an unsecured creditor seeking notarial fees and expenses from a failed bank with dueling summary judgment motions, the FDIC argued the Plaintiff did not prove the exact amount they were owed. Biaggi & Biaggi, P.S.C. v. FDIC, 2018 U.S. Dist. LEXIS 63841, at *1-3 (D.P.R. Apr. 16, 2018). The Plaintiff attempted to supplement their original motion with additional invoices to prove the amount owed…five months later.

The problem: that was late discovery.

Parties are required under Rule 26(a)(1) to make their initial disclosures of documents or ESI that supports their claims or defenses. Biaggi & Biaggi, at *9, citing Fed. R. Civ. P. 26(a)(1)(A)(ii). If additional information is discovered, thus the original disclosure was not complete or correct, a party must supplement their initial disclosure. Id, citing Fed. R. Civ. P. 26(e)(1)(A). The noncompliance with disclosure or supplement information requirements is the mandatory preclusion of that information under Rule 37(c)(1), unless the party can show the failure was substantially justified or harmless. Id. The factors to consider include:

1) The history of the litigation;

2) The sanctioned party’s need for the precluded evidence;

3) The party’s reason for non-disclosure;

4) The prejudice to the opponent; . . .

5) The effect on the court’s docket” and

6) “Whether a less severe sanction would achieve the same aims as preclusion while still giving the plaintiff his day in court.”

Biaggi & Biaggi, at *10.

The Court found the invoices should have been include in the Plaintiff’s initial disclosures or supplement to the initial disclosures. Biaggi & Biaggi, at *10-11. The Plaintiff made no effort to prove the late disclosure was either substantially justified or harmless. The Court precluded the invoices from being considered for the Plaintiff’s summary judgment motion. However, as the invoices had been disclosed to the Defendant, the Court allowed the Defendant one month to conduct discovery on the invoices and the Plaintiffs could use them at trial. Biaggi & Biaggi, at *11-12.

Bow Tie Thoughts

The mandatory preclusion rules for a failure to disclose information that supports a claim or defense is a nightmare situation for lawyers. No one wants to be arguing a late disclosure was either harmless or substantially justified. The best way to avoid those situations is with careful case analysis, followed by thoughtful investigation for ESI that supports a party’s claims. That means using search terms, data analytics, predictive coding, and the often forgotten strategy of talking to your client. Find out what supports your case and develop the search strategy to find what you can use to vindicate your client’s rights.

Josh Gilliland is a California attorney who focuses his practice on eDiscovery. Josh is the co-creator of The Legal Geeks, which has made the ABA Journal Top Blawg 100 Blawg from 2013 to 2016, the Web 100 from 2017 to 2018, and was nominated for Best Podcast for the 2015 Geekie Awards. Josh has presented at legal conferences and comic book conventions across the United States. He also ties a mean bow tie.