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Case Law

eDiscovery Case Law: "Untimely" Motion for Sanctions for Spoliation Denied

A recent ruling by the US District Court of Tennessee has denied a motion for sanctions for spoliation on the grounds that the motion was “untimely.”

In Am. Nat’l Prop. & Cas. Co. v. Campbell Ins., Inc., No. 3:08-cv-00604, 2011 WL 3021399 (M.D. Tenn. July 22, 2011), the plaintiff argued that the defendants’ admitted failure to preserve evidence “warrants a harsh penalty,” but the court found in favor of the defense that the motion was untimely.

  • The defendants, Tommy Campbell, Marshall C. Campbell and Campbell Insurance, Inc. were previously found to have failed to preserve email evidence from the period between April and July 2009. The plaintiff claimed that these emails contained “damning evidence” and that this discovery spoliation was deliberate.
  • This spoliation was discovered in May 2010, but the plaintiff did not file a motion for sanctions until July 16, 2011 – more than fourteen months after the spoliation was discovered and almost five months after discovery closed in February of 2011.
  • With the trial less than seven weeks way, the court considered this motion for sanctions for spoliation in the light of the summary of the law on spoliation that was provided in Goodman v. Praxair Services, Inc., 632 F.Supp.2d 494 (D.Md.2009). Among other points, the district court in Goodman v. Praxair encouraged courts to be aware of the time between the close of discovery and a motion related to spoliation, as well as cautioning against spoliation motions “made on the eve of trial.”
  • The court rejected the plaintiff’s excuse for the timing on the basis that “because the relevant emails were deleted and cannot possibly be produced, the Motion for Sanctions ‘is not a discovery motion.'”
  • Because of the “disruptive” timing of the motion, and the inability of the plaintiff to effectively explain why they delayed so long in filing a motion after this spoliation was encountered in discovery, the court ultimately ruled against the motion for sanctions, calling it “untimely”.

So, what do you think? Does spoliation of evidence “expire” or should timeliness matter at all in a case like this one? Please share any comments you might have or if you’d like to know more about a particular topic.

eDiscovery Trends: Same Old Story, Lawyers Struggling to “Get” eDiscovery
 

A couple of days ago, Law Technology News (LTN) published an article entitled Lawyers Struggle to Get a Grasp on E-Discovery, by Gina Passarella, via The Legal Intelligencer.  Noting that “[a]ttorneys have said e-discovery can eat up between 50 to 80 percent of a litigation budget”, the article had several good observations and quotes from various eDiscovery thought leaders, including:

  • Cozen O'Connor member David J. Walton, co-chairman of the firm's eDiscovery task force, who observed that “I'm afraid not to know [eDiscovery] because it dominates every part of a case”;
  • LDiscovery General Counsel Leonard Deutchman, who noted that the younger generation comfortable with the technology will soon be the judges and attorneys handling these matters, asked the question “what happens to those people that never change?”.  His answer: “They die.”
  • K&L Gates eDiscovery analysis and technology group Co-Chairman Thomas J. Smith noted that “A lot of the costs in e-discovery are driven by paranoia because counsel or the party themselves don't really know the rules and don't know what the case law says”.
  • Morgan Lewis & Bockius partner Stephanie A. "Tess" Blair heads up the firm's e-data practice and hopes that in five years eDiscovery will become more routine, noting “I think we're at the end of the beginning”.
  • Dechert's e-discovery practice guru Ben Barnett said, “Technology created the problem, so technology needs to solve it.”  But, David Cohen, the head of Reed Smith's eDiscovery practice, said that the increasing amount of data sources are keeping ahead of that process, saying “You have to make improvements in how you handle it just to tread water in terms of cost”.

There are several other good quotes and observations in the article, linked above.

On the heels of Jason Krause’s two part series on this blog regarding the various eDiscovery standards organizations, and the controversy regarding eDiscovery certification programs (referenced by this post regarding the certification program at The Organization of Legal Professionals), where do attorneys turn for information?  How do attorneys meet the competency requirements that the American Bar Association (ABA) Model Rules set forth, when an understanding of eDiscovery has become an increasing part of those requirements?

One common denominator of the firms quoted above is that they all have one or more individuals focused on managing the eDiscovery aspect of the cases in which they’re involved.  Having an eDiscovery specialist (or a team) can be a key component of effectively managing the discovery process.  If you’re a smaller firm and cannot devote a resource to managing eDiscovery, then find a competent provider that can assist when needed.

In addition to identifying an “expert” within or outside the firm, there are so many resources available for self-education that any attorney can investigate to boost their own eDiscovery “savvy”.  Join one of the standards organizations referenced in the two part series above.  Or, participate in a certification program.

One method for self-education that attorneys already know is case law research – while there is always variety in how some of the issues are handled by different courts, case decisions related to eDiscovery can certainly identify risks and issues that may need to be addressed or mitigated.  Subscribing to one or more resources that publish eDiscovery case law is a great way to keep abreast of developments.  And, I would be remiss if I didn’t note that eDiscovery Daily is one of those resources – in the nearly 11 month history of this blog, we have published 43 case law posts to date.  More to come, I’m sure… 😉

So, what do you think? Do you have a game plan for “getting” eDiscovery?  Please share any comments you might have or if you'd like to know more about a particular topic.

eDiscovery Case Law: Bankruptcy Court Denies Foreign Access to Debtor's Emails

A Southern District of New York United States Bankruptcy Court denied access to a debtor’s emails on July 22, in a foreign request involving international eDiscovery.

In re Toft, No. 11-11049 (ALG), 2011 WL 3023544 (Bankr. S.D.N.Y. July 22, 2011), the U.S. Bankruptcy Court determined that to permit a relief request from a German insolvency administrator would directly contravene the “fundamental principles” of U.S. public policy by undermining the right to privacy in electronic communications and the right of parties involved in any court order to receive notice of such proceedings and of their involvement.

  • Dr. Martin Prager, in his role as authorized insolvency administrator in a German bankruptcy proceeding, sought permission to access the mail and electronic correspondence of Dr. Jurgen Toft. Although the majority of such correspondence was located under European purview, two of the email accounts belonging to the debtor were found to be stored on servers owned by U.S. Internet Service Providers (“ISPs”).
  • The Munich District Insolvency Court had previously approved a Mail Interception Order, which had been granted recognition by the English High Court of Justice before being brought before the United States Bankruptcy Court.
  • Prager sought a U.S. court order that would grant comity to his German Mail Interception Order and compel the two American ISPs to provide him with “all of the Debtor’s e-mails currently stored on their servers and to deliver to Prager copies of all e-mails received by the Debtor in future,” without notice being provided to the debtor by either the court or the ISPs.
  • Despite the approval of the English High Court of Justice, the US Bankruptcy Court found that it could not grant relief to Prager’s request. The court determined that to grant access to emails as requested by Prager would be “banned under U.S. law, and it would seemingly result in criminal liability under the Wiretap Act and the Privacy Act for those who carried it out.”
  • In addition, the court observed that providing permission for access to emails without informing the debtor would also be contrary to U.S. law, which requires that all parties involved in any court order must receive notice.
  • As a result, the court concluded that the relief request was impossible to grant without running “manifestly contrary” to U.S. law and public policy, and did not honor Prager’s request.

So, what do you think? Was the court’s rejection of Prager’s request the only answer, or were there other routes that could have been taken in dealing with this international eDiscovery request? Please share any comments you might have or if you’d like to know more about a particular topic.

eDiscovery Trends: Third Party Vendors Named in McDermott eDiscovery Malpractice Case
 

You might remember eDiscovery Daily's blog post a few weeks ago about the filing of an eDiscovery malpractice lawsuit against McDermott Will & Emery by J-M Manufacturing Co., a former client of McDermott's.

This case has struck a chord in the eDiscovery community since its filing on June 1, drawing attention to the practices and standards that are at the heart of eDiscovery and outsourced review. Now, the First Amended Complaint has revealed the third party vendors involved in the eDiscovery malpractice suit.

Navigant Consulting, Stratify and Hudson Legal Named in First Amended Complaint

On July 28, J-M Manufacturing filed the amended complaint to its case against McDermott. The amended malpractice complaint describes the role of the third party vendors hired by McDermott, as follows:

  • According to J-M Manufacturing, McDermott hired both Navigant Consulting, Inc. and Stratify, Inc. to run documents through a filter intended to identify and separate materials that were covered by attorney-client privilege and any documents not responsive to subpoenas.
  • Prior to the second production of privileged documents to the federal government, Hudson Legal was also hired by McDermott, and was tasked with reviewing documents identified as potentially privileged and classifying them as either: a) responsive and privileged, b) responsive and not privileged, or c) nonresponsive.

Despite the efforts of these three companies, approximately 3,900 privileged documents were included in the 250,000 discovery documents that were turned over to the government and, in turn, given to relators for examination. The relators subsequently refused to return the privileged documents on the grounds that McDermott twice conducted privilege reviews before producing the documents.

J-M Manufacturing Claims McDermott Held Files Hostage

The new amendment also includes the assertion that McDermott held relevant case files “hostage” against payment of an outstanding invoice of $530,477 after it was replaced as J-M Manufacturing's attorney. A McDermott partner reportedly emailed the president of J-M Manufacturing and said, "I'm told that our firm policy is not to release all files until full payment is made. If you'd like all the files now, please send a check for the entire $530,477 and we'll get them out to you promptly."

In the amended complaint, J-M Manufacturing contends that McDermott’s contact (including the above referenced email) violated the California Rules of Professional Conduct, preventing J-M from recognizing the “true nature and extent of the negligent disclosure” until it was too late.

In its own filing, McDermott responded to the amended complaint by criticizing J-M Manufacturing for "scandalous and irresponsible allegations that could not have been the result of a reasonable pre-filing inquiry." McDermott indicated that they’re “willing and able to set the record straight”, but has “resisted the temptation to tell the full story without first giving J-M the opportunity to withdraw its complaint”.  McDermott also warned that “J-M’s interests could be seriously compromised” if McDermott is forced to fully disclose the facts.

So, what do you think? Has this case degenerated into "scandalous and irresponsible allegations", or are McDermott and its vendors at fault? Will we see more cases like this? Please share any comments you might have or if you'd like to know more about a particular topic.

eDiscovery Case Law: Court Upholds Sanctions for Intentional Spoliation of Unallocated Space Data

The Supreme Court of Delaware recently upheld the sanctions against the defendant for wiping the unallocated space on his company’s computer system, despite a court order prohibiting such destruction.

In Genger v. TR Investors, LLC, No. 592,2010, 2011 WL 2802832 (Del. July 18, 2011), Arie Genger, CEO of Trans-Resources, Inc., argued that sanctions against him were unreasonable and made a motion for the court to overturn its previous decision regarding spoliation of discovery materials. Instead, after due process, the court upheld its earlier decision, as follows:

  • In TR Investors, LLC v. Genger, 2009 WL 4696062 (Del. Ch. Dec. 9, 2009), the defendant was found to have intentionally spoliated electronic discovery documents by instructing an IT consultant to wipe unallocated space on his company’s computers. This action was taken in contempt of court and in contravention of a Status Quo order directing all parties to prevent alteration or destruction of any company documents.
  • Genger was penalized with an order to produce 10 documents for discovery that had previously been considered privileged, the raising of the burden of persuasion with regard to his defense, a preclusion from his testimony being permitted as factual evidence, and several sanctions.
  • The sanctions included attorney’s fees and expenses related to the sanctions motions, which totaled roughly $3.2 million. At the time, this amount was agreed upon by all parties.
  • Following this 2009 order, the defendant appealed the sanctions, arguing that because the court’s Status Quo order did not explicitly refer to unallocated hard drive space, the obligation to preserve documents and discoverable materials found there became “an impossible burden… effectively requiring the company to refrain from using its computers entirely.”
  • On July 18, the court decided in favor of upholding the sanctions against Genger. The reasoning behind this decision revolved around the fact that Genger did not unknowingly delete discoverable documents in the normal course of using his company’s computers, but instead, deliberately set out to destroy information that was included in the court’s Status Quo order.
  • The court was clear in emphasizing that this decision is meant to apply only in such a situation, “where a party is found intentionally to have taken affirmative steps to destroy or conceal information to prevent its discovery at a time that party is under an affirmative obligation to preserve that information.”
  • The court also recommended that, in the future, parties be clear in discussing unallocated space on computer hard drives and in deciding to either include or exclude such space from preservation orders like this one.

So, what do you think? Have you been involved in any cases resulting in sanctions associated with deletion of unallocated space data? Please share any comments you might have or if you’d like to know more about a particular topic.

eDiscovery Case Law: Court Orders Sanctions in Response to "Callous and Careless Attitude" of Defendant in Discovery

A Special Master determined that multiple discovery failures on the part of the defendant in an indemnity action were due to discovery procedures “wholly devoid of competence, yet only once motivated by guile”. Accordingly, the court ordered sanctions against the defendant and also ordered the defendant to pay all costs associated with its discovery failures, including plaintiff’s attorney fees and costs.

The defendant’s discovery efforts in PIC Group, Inc. v. LandCoast Insulation, Inc., No. 1:09-CV-662-KS-MTP, 2011 WL 2669144 (S.D. Miss. July 7, 2011) resulted in several discovery failures, including spoliation of data, mostly through carelessness and incompetence:

  • After consideration of the computer forensics experts recommended by the parties in this case, the court rejected all seven recommendations and appointed its own Special Master (Craig Ball, a previous thought leader interviewee on eDiscovery Daily) to conduct an investigation into the indemnity case, which would revolve around the collapse of scaffolding erected by the defendant.
  • The defendant’s efforts resulted in multiple discovery failures, including: 1) failure to impose “any corporate policy, procedure, or concerted effort [to] preserve electronic data”; 2) no effort to preserve or collect ESI until it was too late to protect the relevant data; 3) the theft of an employee’s laptop and subsequent loss of the backup of that hard drive; and 4) the erasure of another computer containing relevant ESI sometime two or three months after the collapse of the scaffolding at issue in this lawsuit.
  • As a result, the Special Master recommended sanctions against the defendant for its “callous and careless attitude” and sloppy measures taken in the course of discovery.
  • In response to these proposed sanctions, the defendant argued that none of its failures in the course of discovery were due to bad faith, and demonstrated that the plaintiff suffered only minimal prejudice.
  • Although the Special Master determined that the discovery failures were caused by a lack of caution while collecting and preserving evidence, rather than willful intent to alter discovery, he still recommended, and the court ordered, sanctions against the defendant.
  • Accordingly, the defendant was ordered to pay the plaintiff’s attorney fees and expenses accrued as a result of the defendant’s discovery failures, as well as pay the Special Master’s fees and expenses.  The defendant was also compelled to produce an image of the laptop that had been erased (from imaging conducted after the erasure) and the court reopened discovery in this case.  The court declined the Special Master’s recommendation for additional monetary sanctions ($50,000), though it did adopt his recommendation that the defendant “shall not seek indemnification or reimbursement from their insurance company” to pay the assessed fees.

So, what do you think? Were these sanctions merited, or should there be clear intent to deceive for such sanctions to be awarded? Please share any comments you might have or if you’d like to know more about a particular topic.

eDiscovery Case Law: Meet and Confer is Too Late for Preservation Hold

A US District court in Indiana ruled on June 28, 2011 in favor of a motion for an Order to Secure Evidence in an employment discrimination lawsuit.

The defendant in Haraburda v. Arcelor Mittal USA, Inc., No. 2:11 cv 93, 2011 WL 2600756 (N.D. Ind. June 28, 2011) had given the plaintiff reason to believe that emails and other relevant documents might be destroyed prior to Rule 26(f) meeting between the parties or Rule 16(b) discovery conference with the court. As a result, the plaintiff formally requested a litigation hold on all potentially relevant documents, which was approved by US Magistrate Judge Andrew Rodovich.

  • Shortly after filing a complaint of employment discrimination, the plaintiff, Marie A. Haraburda, became concerned that the defendant might destroy evidence that she intended to request in discovery. She emailed Sharon Stillman, a human resources manager of the defendant, Arcelor Mittal, about emails that had previously been deleted from her account and was informed that “files stored on company computers are company property and can be assessed and/or deleted as the company views appropriate”.
  • The defendant refused the plaintiff’s request that the defendant place a litigation hold on evidence or take other measures to protect potentially relevant documents, with the comment that such a request by the plaintiff was “premature”.
  • The plaintiff came to believe that the defendant would destroy relevant evidence before the Rule 26(f) discovery confidence, and, therefore, moved for an Order to Preserve Evidence.

In ruling, the court reminded all parties that they have “a duty to preserve evidence when [they know], or should have known, that litigation was imminent.” “Evidence” includes any materials that are relevant or could be deemed relevant during the litigation, including such emails as the plaintiff had brought to the defendant’s attention via Ms. Stillman. A large corporation, therefore, has a duty to not only create a “comprehensive” data protection plan to ensure that documents are preserved, but to inform its employees of that policy so that it will be scrupulously upheld, said the court.

The court also expressed the belief that given the plaintiff’s potential for difficulty if relevant materials were not protected, and in the absence of additional burden on the defendant to preserve existing evidence, the plaintiff’s motion was reasonable.  Accordingly, the court ordered a litigation hold placed “on any and all documents and information that may reasonably be related to the pending litigation”.

So, what do you think? Given previous case law examples, are you surprised that the defendant tried to delay the litigation hold? Please share any comments you might have or if you’d like to know more about a particular topic.

eDiscovery Case Law: A Pennsylvania Court Conducts Its Own Social Media Relevancy Review

Pennsylvania seems to be taking the lead in setting social media discovery precedents, as evidenced by this case summarized on eDiscovery Daily earlier this week.  In this case, a Pennsylvania court agreed to review a plaintiff’s Facebook account in order to determine which information is subject to discovery in a case relating to the plaintiff’s claim of injury in a motor vehicle accident.

The plaintiff in Offenback v. L.M. Bowman, Inc., No. 1:10-CV-1789, 2011 WL 2491371 (M.D. Pa. June 22, 2011) was directed to allow the court to access his Facebook and MySpace accounts in order to determine which parts of his social media accounts are subject to discovery. After a thorough review, the court expressed its “confusion” over the plaintiff’s inability to conduct this review himself in order to present discoverable information to the court:

  • The plaintiff claimed that he suffered injuries in a car accident on November 6, 2008 that “limited his ability to sit, walk, stand, ride in a vehicle, bend, stoop, push, pull, and lift”. He also claimed he could not work and was unable to relocate as he’d planned to do before the accident.  Additionally, the plaintiff claimed that he “suffers anxiety, depression, and post-traumatic stress as a result of the accident”.
  • The court found the client’s physical and emotional experience relevant in this case, and sought discovery of key information in his social media accounts that might shed light on his health and well-being at the time of the accident and thereafter.
  • The court initially requested access to both the plaintiff’s Facebook and MySpace accounts, but changed the order to request access exclusively to his Facebook account once the plaintiff had asserted that he had not accessed MySpace since November 2008 and had lost the requested login information in the intervening period.
  • After its review, the court consulted both the plaintiff and the defendant about the Facebook photos, updates, and other materials it considered relevant, in consideration of the “broad scope of relevance” argued by the defendants.
  • Notably, the court ordered discovery of photographs and Facebook updates indicating that the plaintiff purchased a motorcycle in 2010 and may have ridden it from Kentucky to Pennsylvania and possibly on a trip to West Virginia.
  • The court ended its review by expressing its “confusion about why the parties required the Court’s assistance in deciding which information within the plaintiff’s Facebook account is responsive to Defendants’ discovery requests”. The court stated its desire that, in future cases of a similar nature, the plaintiff be accountable for reviewing his own Facebook profile, presenting discoverable materials and raising objections if so desired.

So, what do you think? Should the court have conducted the review itself? Please share any comments you might have or if you’d like to know more about a particular topic.

eDiscovery Trends: Is eDiscovery Malpractice More Widespread Than You Think?
 

Last month, we discussed the eDiscovery malpractice case filed against McDermott Will & Emery for allegedly failing to supervise contract attorneys that were hired to perform the client’s work and to protect privileged client records.  This case is still continuing to generate much buzz in the eDiscovery community and I’m sure it will be closely followed as it progresses.

At least one attorney from another firm has weighed in on the possibility of eDiscovery malpractice in other cases.  Dennis Kiker, a partner with LeClair Ryan noted in their blog The e-Discovery Myth that eDiscovery malpractice is probably more widespread than most people think.  Among his observations:

  • “E-Discovery is a discipline.  Far too many attorneys in firms large and small think that e-discovery is something they can do on the side, when they are not drafting motions to dismiss an antitrust class action or preparing to depose a scientist in a patent infringement matter.  Unfortunately, this is simply not true.”
  • “[E]-discovery goes far beyond the rules.  It is one thing to understand that there are different possible forms of production permitted for electronically stored information under Rule 34, and quite another to know how to effectively and defensibly identify, preserve, collect, process, review and produce ESI.”
  • “Not even IT professionals pretend to understand all of the different information systems that exist in a single company.  Do we really expect every trial attorney to have greater expertise and understanding than the professionals that work in the field every day?”
  • “A large document review is, by definition, a large project requiring significant project management skills… In short, this is a complex, high-risk task that requires specialized skills and experience.  It is not something one does once a year and gets good at.”
  • “Malpractice claims are just one of the possible consequences of practicing in a complex area without the requisite expertise.  Loss of client goodwill, damaged reputations for lawyer and firm alike, monetary sanctions – all of these are the dancing partners of those that believe that e-discovery is something that every litigator knows how to do.”

It’s an excellent post with a number of good points.  There are some attorneys who have really worked hard at developing their eDiscovery expertise and knowing when to rely on others with the expertise they don’t have.  But, as I have observed, there are many attorneys that have tried to play “part-time eDiscovery expert” with less than terrific results (at best).  In many cases, their saving grace is that the opposing attorney is equally inept when it comes to eDiscovery best practices.

So, what do you think? Is eDiscovery malpractice more widespread than we think? Please share any comments you might have or if you'd like to know more about a particular topic.

eDiscovery Case Law: Social Media Posts Deemed Discoverable in Personal Injury Case

A Pennsylvania court recently ordered the plaintiff in a personal injury lawsuit to disclose social media passwords and usernames to the defendant for eDiscovery.

On May 19, the court ruled in favor of a motion to compel the plaintiff in Zimmerman v. Weis Markets, Inc., No. CV-09-1535, 2011 WL 2065410 (Pa. Comm. Pl. May 19, 2011) to disclose his usernames, login names and passwords for Facebook and MySpace accounts that contained hidden or private posts. Discoverability of social media continues to be a hot topic in eDiscovery, as eDiscovery Daily has noted in summaries of prior cases here, here and here that reflect varied outcomes for requests to access social media data.

In Zimmerman v. Weis Markets, Inc., the court ruled in favor of the defendant’s motion for several reasons involving the plaintiff’s use of public social media as well as the circumstances of the case:

  • The plaintiff’s public postings on the social media sites in question included discussion of his injury, which was deemed relevant to his claim of serious and permanent impairment. These public postings were construed by the court as sufficient to demonstrate likelihood that his non-public postings would also contain relevant information about his injury.
  • Although, the court did not wish its decision in this matter to be viewed as authorizing “fishing expeditions” to private social media accounts in personal injury cases in general, it reasoned that since examination of the public portions of the plaintiff’s Facebook and MySpace accounts turned up relevant evidence on the subject of the plaintiff’s injury, discovery of the remaining private postings was also likely to do so.
  • The court also reasoned that the plaintiff’s choice to bring this issue to trial, as well as his decision to share information about his injury online (showing pictures of him in shorts with his scar visible, as well as recent pictures with his motorcycle), meant that he could not have a reasonable expectation of social media privacy.

Although courts often permit eDiscovery of private and hidden social media postings, this decision by the court illustrates a need for relevance of the evidence to be shown before that permission is granted.

So, what do you think? Was the court wrong in allowing eDiscovery of personal Facebook and MySpace accounts, or does the plaintiff in a personal injury case waive his right to social media privacy? Please share any comments you might have or if you’d like to know more about a particular topic.