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Costly Moments in Electronic Discovery

National Law Journal

PIPPINS V. KPMG LLP

U.S. Magistrate Judge James Cott ruled on Oct. 7 that KPMG LLP must preserve the hard drives of thousands of current and former audit associates in a proposed class action seeking unpaid overtime. The case, brought by Justin M. Swartz, a partner at Outten & Golden in New York, involves potentially 7,500 potential opt-in plaintiffs in a nationwide class and 1,500 potential class members in New York.

The ruling was one of the largest preservation orders on record. KPMG, represented by Andrew Stern, a partner in Sidley Austin's New York office, had moved for a protective order, arguing that the firm already had spent $1.5 million to preserve more than 2,500 hard drives, and that expanding preservation to include all potential class members would cost more than $100 million. He offered instead to preserve a random sample of 100 hard drives, but the plaintiffs balked at that.

Cott ruled that limiting the discovery to "key players," or keeping it in proportion to the estimated value of the case — both factors that have been applied to production requests — were not required for preservation orders. The U.S. Chamber of Commerce has filed an amicus brief in support of KPMG, which has appealed the order to District Judge Colleen McMahon.