When federal and state investigators five years ago began subpoenaing J-M Manufacturing Company Inc. as part of an investigation into allegations in a whistleblower suit, the company's lawyers at McDermott Will & Emery handed over 250,000 documents.
But according to a lawsuit J-M filed Thursday in a state court in Los Angeles, McDermott produced too much--all because it did not thoroughly review the work of contract attorneys at e-discovery vendor Stratify Inc. J-M claims that 3,900 privileged documents were handed over to the federal government. J-M, which replaced McDermott in March 2010 with Sheppard Mullin Richter & Hampton, says those documents were in turn handed over by the federal government to the whistleblower's lawyers, who have refused to destroy or return them.
The lawsuit comes amid increased use of outside vendors to tackle the rising costs of e-discovery. Stephen Gillers, an ethics professor at New York University, said while it's understood that lawyers need to supervise vendors, the standards for that supervision remain imprecise. "This is an emerging issue because of the increase in outside service providers, especially in discovery," said Gillers, who stressed he was speaking generally and not commenting on J-M's suit.
The suit stems from a qui-tam lawsuit filed under seal in 2006 by John Hendrix, a former employee of J-M. In an amended complaint filed last week, Hendrix accused J-M of violating the False Claims Act by knowingly selling substandard PVC pipes that were used in military bases, state road projects, and sewer distribution systems. While the United States declined to intervene, some states have, including Virginia, Nevada, and New Mexico. (Holland & Knight represents a separate defendant, Formosa Plastics Corporation.)
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Source: law.com
By: Nate Raymond
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