Pension litigation has been on the rise for many years. A recent decision by the Nova Scotia Supreme Court provides an important reminder to employers and pension plan administrators about the costs and burdens associated with email communications in the context of such litigation.
Background on the e-discovery process
The vast majority of our communications are now sent and received electronically. E-mail is not the only technology used for business communication, but is often the primary one.
When a legal dispute arises, parties to the litigation must disclose to each other a collection of “producible” documents and information. The standard for production varies by province, but in general, parties must produce records and information relevant to the issues in dispute.
Emails are often a significant source of producible information in a business litigation matter.
Even in the best circumstances, however, e-mail is not well organized. The production of e-mails in the context of litigation can be expensive due to the time and resources that, inevitably, need to be devoted to reviewing potentially relevant documents. This process can be streamlined by engaging in e-discovery–a process in which whole e-mail accounts are retrieved electronically and processed electronically to identify producible e-mails.
The HRM pension committee case
The Halifax Regional Municipality pension committee is responsible for overseeing the investment of the Halifax Regional Municipality and Halifax public sector pension plans. The pension committee commenced a $50 million claim in the Nova Scotia Supreme Court against its former investment advisors, State Street Global Advisors Ltd., related to investment losses sustained by the pension plans.
To resolve a significant production dispute that arose reasonably early in the litigation, the court ordered the pension committee and State Street to search their electronically stored information using 51 keywords. The 51 keyword search produced over 16,000 hits, mostly e-mail and e-mail attachments.
The committee’s task of reviewing the responsive e-mails was made difficult by how the e-mails were organized.
Some of the committee members were lawyers and senior municipality officers and they used their e-mail account with the municipality to send and receive confidential correspondence related to their day-to-day municipality work and to send and receive correspondence related to pension committee matters. As a result, confidential e-mails relating to general affairs of the municipality were mixed with emails relating to affairs of the pension plans, all on a server controlled by the municipality.
The municipality cooperated with the pension committee to help the pension committee meet its production obligations, but the municipality wanted to review the producible e-mails itself first to protect its own confidences. However, when the municipality identified the volume of e-mails that would need to review, the municipality objected.
The pension committee brought a motion to the court to amend the initial e-discovery order and seek relief from its “inordinate burdens.” The pension committee’s approach was to point out the flaws in the ordered search terms by illustrating how they were likely to produce a large number of “false positives.”
The court dismissed the motion. It held that the prior court order requiring the 51 term search was the product of the parties’ argument and a lengthy court decision, and that there were no compelling reasons to adjust the original order for the pension committee’s benefit alone.
Lessons learned
E-mail practices that promote convenience and seem benign can have significant consequences to an organization’s readiness for litigation.
Members of a pension administration committee regularly deal with matters that may very well become the subject of litigation at a later date, yet they also typically have full-time “day jobs” in addition to their committee responsibilities.
Organizations should consider introducing a reliable process for having committee members separate e-mails associated with pension plan matters, e.g., through the use of separate e-mail accounts, a labelling protocol or otherwise.
Dan Michaluk and Terra Klinck are partners at Hicks Morley Hamilton Stewart Storie LLP. Michaluk focuses on information and privacy law and Klinck practices exclusively in the area of pension, benefits and executive compensation.