U.S. District Court Judge Marcia Cooke provided a stark reminder about the importance of fully, completely and timely producing documents requested in litigation. In the case of Coquina Investments v. Scott Rothstein and TD Bank, N.A., S.D. Fla. Case No. 10-60786-Civ-Cooke/Bandstra, Judge Cooke issued an Omnibus Order on Motion for Sanctions [ECF No. 911], which granted, in part, two Motions for Sanctions against TD Bank and its law firm, Greenberg Traurig.
The case relates to the $1.2 billion Ponzi scheme that was perpetrated by former South Florida attorney Scott Rothstein, who was allegedly aided by TD Bank employees. After a two-month trial (and only about four hours of deliberations), a jury found in favor of Coquina Investments and a $67 million verdict was entered against TD Bank. After the verdict was entered, Coquina Investments requested an award of sanctions related to, among other things, the alleged alteration of TD Bank’s Customer Due Diligence (“CDD”) form and the failure to produce a TD Bank document titled “Standard Investigative Protocol.”
The CDD is a form that was generated by TD Bank’s Cash Management Department for its customer’s accounts. The original electronic version of the document for the account in question, in its native form, contained a red banner running across the top of the page with the words “HIGH RISK” in capital letters, as well as embedded information showing which Bank employees saved, reviewed or edited the document and when they did so. However, the document produced in the litigation was a black and white copy, which did not appear to contain the words “HIGH RISK” and which did not include the embedded archive and editing history. (Click here for a copy of Coquina’s Brief, the second page of which clearly shows the difference between the two versions of the document)
With respect to the Standard Investigative Protocol, TD Bank’s employees and attorneys steadfastly maintained throughout the litigation that such a document did not exist. This included affidavits signed by TD Bank employees. However, it turns out that the document did, in fact, exist and was in the possession of both TD Bank and its attorneys, including on a searchable document database and within e-mails received by TD Bank employees and its attorneys. Even worse, upon being advised of the possibility that the document might exist, TD Bank and its attorneys failed to conduct a thorough search for it and didn’t even run a key-word search on the document database.
After three days of hearings and consideration of supplemental briefs, Judge Cooke found a “pattern of discovery abuses before, during, and after trial.” Judge Cooke further found that “TD Bank acted willfully in failing to comply with its discovery obligations and assist its outside counsel to properly litigate” the case and that the law firm negligently failed to comply with discovery obligations. Judge Cooke also found that Coquina Investments suffered prejudice. Judge Cooke even took TD Bank’s in-house attorneys to task for their lack of involvement in supervising or assisting with the litigation.
Based upon those findings, Judge Cooke granted sanctions against Greenberg Traurig (but not any individual attorneys) and TD Bank pursuant to Rule 37. The sanctions included taking as established for purposes of this case “that TD Bank’s monitoring and alert systems were unreasonable and that TD Bank had actual knowledge of Rothstein’s fraud,” in an effort to prevent prejudice to Coquina Investments on appeal. Greenberg Traurig and TD Bank were also ordered to pay reasonable attorneys’ fees and costs associated with the requests for sanctions. As a final insult, Judge Cooke stated that it often appeared that the case was litigated “in an Inspector Clouseau-like fashion.”
This ruling reinforces the importance of taking care to fully, completely and timely produce documents in litigation. It is clear that litigation counsel must work closely with clients (including in-house counsel) to ensure that thorough searches are performed and all responsive documents are produced in their original format. The risk of not doing so is clearly great.
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David Greene is a partner with the law firm of Fox Rothschild LLP. David represents clients in a variety of commercial litigation matters in State and Federal Courts throughout Florida. David can be contacted at (561) 804-4441 or dgreene@foxrothschild.com.