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Electronic Discovery

eDiscovery Case Law: Defendants Not Required to Share Costs for Plaintiff’s Third Party Request
 

After recapping 2011 case law over four days last week, it seems appropriate to move on to new cases, starting with a couple of stragglers from last year.

In Last Atlantis Capital LLC v. AGS Specialist Partners, No. 04 C 0397, 2011 WL 6097769 (N.D. Ill. Dec. 5, 2011), the plaintiffs proposed that the defendants share in the cost of obtaining data that Plaintiffs subpoenaed from third parties.  The court noted that all parties “involved herein are aware that the linchpin of this entire matter” was to obtain this audit trail data for analysis.  The court had also previously suggested (at a September status conference) “in an effort to accelerate this protracted litigation” that it would be “reasonable” for Defendants to aid in half the costs.  Nonetheless, the court rejected the plaintiff’s proposal for cost-sharing in this case, rejecting the plaintiff arguments for doing so.  Here are the arguments and the court’s rejection of each:

  • Court's comments during the September Status Conference as evidence that costs should be shared: While the court admitted to suggesting to Defendants that Plaintiffs' proposal of cost sharing sounded “reasonable”, those comments “were made to encourage movement within this stagnant litigation”.  Once the Court was able to further research the precedent surrounding cost-sharing, it found no basis for accepting the Plaintiffs' cost-sharing proposal.
  • Plaintiffs' reliance upon the Sedona Conference Commentary on Non–Party Production & Rule 45 Subpoenas, 9 Sedona Conf. J. 197 (2008): The court felt that this Sedona Conference Commentary was “almost entirely irrelevant” to the matter at hand  as it “is largely concerned with the burden being placed on a non-party to produce information”.  Despite the fact that the Commentary “includes a suggestion that parties meet and confer to ‘address’ cost-sharing, amongst other things, in their initial Rule 26(f) conference”, it did not dictate such an arrangement; rather, the Commentary declares that “[c]ost-shifting or cost-sharing are inconsistent with the so-called ‘American Rule’ that each party bears its own litigation costs”.
  • Other Court Opinions: The plaintiffs cited several court opinions – such as Wiginton v. CB Richard Ellis, Inc., 229 F.R.D. 568, 573 (N.D.Ill.2004) and Zubulake v. UBS Warburg LLC, 217 F.R.D. 309, 320 (S.D.N.Y.2003) – to attempt to bolster their argument.  However, the court noted that all of the court opinions “miss the mark as they each address the issue of cost-sharing amongst the requesting party and the producing party, not between a requesting party and a non-requesting, non-producing opponent in the underlying litigation, such as with Defendants.”

The court acknowledged that the defendants had “substantially more resources,” but noted that was a fact it could not consider.  Therefore, the court ruled that “it would not force Defendants to pay for the evidence that Plaintiffs need in order to prove their case against Defendants” and the plaintiffs’ proposal for cost-shifting was denied.

So, what do you think?  Should the defendant have been required to share in the costs?  Please share any comments you might have or if you’d like to know more about a particular topic.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine Discovery. eDiscoveryDaily is made available by CloudNine Discovery solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscoveryDaily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

eDiscovery Trends: ARMA International and EDRM Jointly Release Information Governance White Paper
 

A few months ago, the Electronic Discovery Reference Model (EDRM) and ARMA International announced that they would be collaborating on information governance guidelines for eDiscovery.  It only took them a little over three months to release their first work product.

On December 20 of last year, ARMA and EDRM announced the publication of a jointly developed white paper entitled, How the Information Governance Reference Model (IGRM) Complements ARMA International’s Generally Accepted Recordkeeping Principles (GARP).  The press release announcing the release of the white paper can be found on the EDRM site here.  The web version of the paper is located here and the PDF version can be downloaded here.

The core of the paper is to relate the EDRM Information Governance Reference Model (IGRM) to ARMA’s GARP® principles.  There are eight GARP principles, as follows:

  1. Accountability
  2. Transparency
  3. Integrity
  4. Protection
  5. Compliance
  6. Availability
  7. Retention
  8. Disposition

The white paper provides a chart for assigning ownership to each business unit for each GARP principle and describes the Maturity Model with five levels of effective Information Governance, ranging from Level 1 (Sub-standard) to Level 5 (Transformational).  Transformational describes “an organization that has integrated information governance into its overall corporate infrastructure and business processes to such an extent that compliance with the program requirements is routine”.  Based on the CGOC Information Governance Benchmark Report from a little over a year ago, most organizations have quite a bit of maturing still to do.

The white paper then proceeds to describe each of the eight principles “According to GARP” at Level 5 Transformational Maturity.  Where’s Robin Williams when you need him?  The white paper finishes with several conclusions noting that “the IGRM complements the metrics defined by ARMA International’s Information Governance Maturity Model”.

This white paper provides a great overview of both the IGRM and ARMA GARP principles and is well worth reading to develop an understanding of both models.  It will be interesting to see how the EDRM and ARMA joint effort proceeds from here to help organizations achieve a higher level of “maturity” when it comes to information governance.

So, what do you think?  Have you read the white paper yet?  Do you think the EDRM/ARMA collaboration will lead to greater information governance within organizations?  As always, please share any comments you might have or if you’d like to know more about a particular topic!

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine Discovery. eDiscoveryDaily is made available by CloudNine Discovery solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscoveryDaily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

eDiscovery Year in Review: eDiscovery Case Law, Part 4
 

As we noted the past three days, eDiscovery Daily has published 65 posts related to eDiscovery case decisions and activities over the past year, covering 50 unique cases!  Yesterday, we looked back at cases related to discovery of social media.  One final set of cases to review.

We grouped those cases into common subject themes and have been reviewing them over the next few posts.  Perhaps you missed some of these?  Now is your chance to catch up!

SANCTIONS / SPOLIATION

Behold the king!  I’ll bet that you won’t be surprised that the topic with the largest number of case law decisions (by far!) related to eDiscovery are those related to sanctions and spoliation issues.  Late in 2010, eDiscovery Daily reported on a Duke Law Journal article that indicated back then that sanctions were at an all-time high and the number of cases with sanction awards remains high.

Of the 50 cases we covered this past year, over a third of them (17 total cases) related to sanctions and spoliation issues.  Here they are.  And, as you’ll see by the first case (and a few others), sanctions requested are not always granted.  Then again, sometimes both sides get sanctioned!

No Sanctions for Scrubbing Computers Assumed to be Imaged.  In this case, data relevant to the case was lost when computers were scrubbed and sold by the defendants with the permission of the court-appointed Receiver, based on the Receiver’s mistaken belief that all relevant computers had been imaged and instruction to the defendants to scrub all computers before selling.  Because of the loss of this data, defendants filed a motion for spoliation sanctions for what they described as “the FTC’s bad-faith destruction of Defendants’ computer systems.”  Was the motion granted?

Spoliate Evidence, Don’t Go to Jail, but Pay a Million Dollars.  Defendant Mark Pappas, President of Creative Pipe, Inc., was ordered by Magistrate Judge Paul W. Grimm to "be imprisoned for a period not to exceed two years, unless and until he pays to Plaintiff the attorney's fees and costs". However, ruling on the defendants’ appeal, District Court Judge Marvin J. Garbis declined to adopt the order regarding incarceration, stating it was not "appropriate to Order Defendant Pappas incarcerated for future possible failure to comply with his obligation to make payment…". So, how much was he ordered to pay?  Now we know.  That decision was affirmed here.

Deliberately Produce Wrong Cell Phone, Get Sanctioned.  In this case, the plaintiff originally resisted production of a laptop and a cell phone for examination, but ultimately produced a laptop and cell phone. The problem with that production? After examination, it was determined that neither device was in use during the relevant time period and the actual devices used during that time frame were no longer in plaintiff’s possession. When requested to explain as to why this was not disclosed initially, the plaintiff’s attorney explained that he was torn between his “competing duties” of protecting his client and candor to the court.  Really?

Destroy Data, Pay $1 Million, Lose Case.  A federal judge in Chicago has levied sanctions against Rosenthal Collins Group LLC and granted a default judgment to the defendant for misconduct in a patent infringement case, also ordering the Chicago-based futures broker's counsel to pay "the costs and attorneys fees incurred in litigating this motion" where plaintiff’s agent modified metadata related to relevant source code and wiped several relevant disks and devices prior to their production and where the court found counsel participated in "presenting misleading, false information, materially altered evidence and willful non-compliance with the Court’s orders."

Conclusion of Case Does Not Preclude Later Sanctions.  In this products liability case that had been settled a year earlier, the plaintiff sought to re-open the case and requested sanctions alleging the defendant systematically destroyed evidence, failed to produce relevant documents and committed other discovery violations in bad faith. As Yogi Berra would say, “It ain’t over ‘til it’s over”.

Written Litigation Hold Notice Not Required.  The Pension Committee case was one of the most important cases of 2010 (or any year, for that matter). So, perhaps it’s not surprising that it is starting to become frequently cited by those looking for sanction for failure to issue a written litigation hold. In this case, the defendant cited Pension Committee, arguing that plaintiff’s failure to issue a written litigation hold and subsequent failure to produce three allegedly relevant emails allowed for a presumption that relevant evidence was lost, thereby warranting spoliation sanctions.  Was the court’s ruling consistent with Pension Committee?

No Sanctions Ordered for Failure to Preserve Backups.  A sanctions motion has been dismissed by the U.S. District Court of Texas in a recent case involving electronic backups and email records, on the grounds that there was no duty to preserve backup tapes and no bad faith in overwriting records.

Discovery Violations Result in Sanctions Against Plaintiff and Counsel.  Both the plaintiff and plaintiff's counsel have been ordered to pay sanctions for discovery abuses in a lawsuit in Washington court that was dismissed with prejudice on June 8, 2011.

Meet and Confer is Too Late for Preservation Hold.  A US District court in Indiana ruled on June 28 in favor of a motion for an Order to Secure Evidence in an employment discrimination lawsuit. The defendant 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.

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.

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 this case, 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.

Sanctions for Spoliation, Even When Much of the Data Was Restored.  A Virginia court recently ordered sanctions against the defendant in a case of deliberate spoliation of electronic discovery documents. In this case, the defendant was found to have committed spoliation "in bad faith" in a manner that constituted a "violation of duty… to the Court and the judicial process."

"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 this case, 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.

Defendant Sanctioned for Abandonment and Sale of Server; Defendants' Counsel Unaware of Spoliation.  An Illinois District Court ordered heavy sanctions against the defense for spoliation "willfully and in bad faith" of documents stored on a server, in a case revolving around damages sought for breach of loan agreements.

Facebook Spoliation Significantly Mitigates Plaintiff’s Win.  In this case with both social media and spoliation issues, monetary sanctions were ordered against the plaintiff and his counsel for significant discovery violations. Those violations included intentional deletion of pictures on the plaintiff’s Facebook page as instructed by his Counsel as well as subsequent efforts to cover those instructions up, among others.

Lilly Fails to Meet its eDiscovery Burden, Sanctions Ordered.  In this case, a Tennessee District court found that “Lilly failed to take reasonable steps to preserve, search for, and collect potentially relevant information, particularly electronic data, after its duty to preserve evidence was triggered by being served with the complaint.” As a result, the court ordered sanctions against Lilly. How far did the court go with those sanctions?

Court Grants Adverse Inference Sanctions Against BOTH Sides.  Have you ever seen the video where two boxers knock each other out at the same time? That’s similar to what happened in this case. In this case, the court addressed the parties’ cross motions for sanctions, ordering an adverse inference for the defendants’ failure to preserve relevant video surveillance footage, as well as an adverse inference for the plaintiff’s failure to preserve relevant witness statements. The court also awarded defendants attorneys’ fees and costs and ordered re-deposition of several witnesses at the plaintiff’s expense due to other plaintiff spoliation findings.

Next week, we will begin looking ahead at 2012 and expected eDiscovery trends for the coming year.

So, what do you think?  Of all of the cases that we have recapped over the past four days, which case do you think was the most significant?  Please share any comments you might have or if you’d like to know more about a particular topic.

eDiscovery Year in Review: eDiscovery Case Law, Part 3
 

As we noted the past two days, eDiscovery Daily has published 65 posts related to eDiscovery case decisions and activities over the past year, covering 50 unique cases!  Yesterday, we looked back at cases related to privilege & inadvertent disclosures, proportionality and eDiscovery service disputes, including the notable McDermott Will & Emery eDiscovery malpractice case.  But, we still have more cases to review.  So, let’s keep going!

We grouped those cases into common subject themes and will review them over the next few posts.  Perhaps you missed some of these?  Now is your chance to catch up!

SOCIAL MEDIA

Social media affects all aspects of litigation from the discovery of data from social media web sites to social media communication during trial.  You even have jurors trying to “friend” participants in the case!

Organizations now have to not only plan for preserving, collecting, reviewing and producing conventional data, but also posts, tweets, IMs and more.  You know that already.  What you may not know is that in nearly every case discussed in eDiscovery Daily this past year where social media data was requested, that request was granted.  Oh, and if you have text messages as evidence, you may have to provide corroborating evidence to verify authorship of those text messages for them to be admissible – at least in Pennsylvania.  Here are eight cases related to social media issues:

Jurors and Social Media Don’t Mix.  Discovery of social media is continuing to increase as a significant issue for organizations to address, with more and more cases addressing the topic. However, when it comes to social media, courts agree on one thing: jurors and social media don’t mix. Courts have consistently rejected attempts by jurors to use social technology to research or to communicate about a case, and have increasingly provided pre-trial and post-closing jury instructions to jurors to dissuade them from engaging in this practice.

Cut and Paste Makes the Cut as Evidence.  In this case, the defendant in a criminal case appealed his conviction and raised the issue of whether the prosecution properly authenticated instant messages cut-and-pasted into a Microsoft Word document.

Defendant Can’t Be Plaintiff’s Friend on Facebook.  In this case, Bucks County, Pa., Common Pleas Court Judge Albert J. Cepparulo denied the motion from the defendant requesting access to the photos of plaintiff Sara Piccolo posted in her Facebook account, rejecting McMillen v. Hummingbird Speedway, Inc., in which the court ordered the plaintiff to provide his username and password to the defendant’s attorney, as a precedent.

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. Discoverability of social media continues to be a hot topic in eDiscovery, as eDiscovery Daily has noted in summaries of prior cases that reflect varied outcomes for requests to access social media data.

A Pennsylvania Court Conducts Its Own Social Media Relevancy Review.  Pennsylvania seems to be taking the lead in setting social media discovery precedents. 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.

Defendant Ordered to Re-Post Infringing Photograph to Facebook Profile.  In this case, a New Jersey court ordered the defendant to re-post a photograph displaying infringing trade dress to his Facebook profile for a brief period of time to allow the plaintiff to print copies, in a case involving trademark infringement.

Court Rules 'Circumstantial Evidence' Must Support Authorship of Text Messages for Admissibility.  When are text messages admissible in court? Which text messages qualify as evidence, and what does it take to prove authorship of a text message? A recent opinion from the Pennsylvania Superior Court addresses these very issues in an old yet new way, perhaps setting the precedent for future cases and opening what seems to be a potential Pandora's Box of obstacles to the use of text messages as legal evidence.

Facebook Content Discoverable Yet Again.  It seems most, if not all, of the cases these days where discoverability of social media is at issue are being decided by courts in favor of the parties seeking to discover this information. Here’s another example.

Tune in tomorrow for more key cases of 2011 and see the topic that continues to generate more case law related to eDiscovery than any other!  Yes, I know I said that yesterday, but I forgot that topic was planned for the big finish tomorrow.  Stay tuned!

So, what do you think?  Did you miss any of these?  Please share any comments you might have or if you’d like to know more about a particular topic.

eDiscovery Year in Review: eDiscovery Case Law, Part 2
 

As we noted yesterday, eDiscovery Daily has published 65 posts related to eDiscovery case decisions and activities over the past year, covering 50 unique cases!  Yesterday, we looked back at cases related to eDiscovery cost reimbursement, form of production and international discovery issues.  But, there’s many more cases to recap.  As Lt. Col Frank Slade would say, “I’m just getting warmed up”.  Whoo Ah!

We grouped those cases into common subject themes and will review them over the next few posts.  Perhaps you missed some of these?  Now is your chance to catch up!

PRIVILEGE / INADVERTENT DISCLOSURES

Decisions regarding what information is privileged and whether privilege is waived when inadvertent disclosures occur is always a hot issue for debate.  That was no different in 2011.  And, if you receive an inadvertent disclosure and don’t disclose it, you can get kicked off the case.  Here are five cases related to privilege and inadvertent disclosures:

Privilege Waived for Produced Servers.  Fontainebleau Resort, LLC (FRLLC) produced two servers without conducting any review of the materials, at least one of which had previously been produced to other banks involved in the underlying litigation.  Would they be required to waive privilege on those servers?

When is Attorney-Client Communication NOT Privileged? One answer: When it’s from your work email account, and your employer has a written policy that company email is not private and subject to audit. Oh, and you’re suing your employer.

Read Inadvertent Email, Get Disqualified from Case.  Lesson of the day: When you receive an inadvertently sent privileged email, read it and don’t disclose receipt of it, you can get kicked off the case. In this case, the court disqualified defendant's in-house and outside counsel for their handling of a disputed privileged email that was inadvertently sent by the plaintiffs' counsel to the defendant and shared with defendant’s outside counsel.

Defendants' Privilege Waived for "Completely Ineffective" Discovery Procedures.  In a case over purported building and zoning code violations, an Illinois District Court has found the defendants responsible for inadvertently producing several privileged documents during discovery and for a failure to correct the problem in a timely manner, and has ordered the privilege to be waived.

Court Rules Against Exclusion of Privileged Email. A District of Columbia court has ruled against exclusion of a privileged email that was inadvertently produced by the defendant, ruling that the defendant's actions before and after the discovery of the email's production pursuant to Federal Rule of Civil Procedure 26(b)(5)(B) were not sufficient to ensure protections under Federal Rule of Exclusion (FRE) 502(b)(3), in a case involving alleged violations of the District of Columbia Whistleblower Act.

PROPORTIONALITY

With the explosion of data in the world and rising costs for preserving, collecting, reviewing and producing that data, it’s not surprising that eDiscovery costs are spiraling upward, causing many to cry “uncle” and making the word “proportionality” become quite trendy, with parties and even courts.  Here are four cases where proportionality of eDiscovery was an issue.  Oh, and if you can’t complete production until after the trial is over, that’s probably too late.

Completing Production AFTER Trial is Too Late.  In this case, Judge Royce C. Lamberth of the U.S. District Court for the District of Columbia denied the defendant’s request for consideration that the District had waived all objections, including privileges, and ordered production within one week of the close of trial. In denying the motion, the court likened the proposed production to “a plane with landing gear that deploys just after touchdown, or a stick of dynamite with a unique fuse that ignites only after it explodes.”

KPMG Denied in Request for “Proportionality Test” to Preservation.  In this case, KPMG sought a protective order to narrow its preservation obligation scope to only a random sample of 100 hard drives from among those it had already preserved for this and other litigation or shift the cost of any preservation beyond that requested scope. With that request in hand, the court considered KPMG's request for proportionality as it applied to its preservation obligations.

Court Grants Adoption of Model Order for Patent Case.  Model orders to limit discovery for patent cases have gained popularity in various jurisdictions, including a recent order proposed in Texas. Here’s one patent case where the defendant sought to adopt such a model order.

Plaintiff Not Required to Review Millions of Pages of Unallocated Space.  In this case, the court affirmed the Magistrate Judge’s order which excused plaintiff from having to review and produce millions of pages of documents recovered from unallocated space files due to the extreme burden and cost to do so.

EDISCOVERY SERVICE DISPUTES

It’s a darn shame when law firms can’t get along with their corporate clients or with the vendors they hired.  Perhaps the most discussed case of the year was the eDiscovery malpractice case involving McDermott, Will & Emery, with posts in eDiscovery Daily here, here and here.  Here are two cases where the actual eDiscovery services being provided were in dispute:

eDiscovery Malpractice Case Highlights Expectation of Higher Standards.  Having noted in eDiscovery Daily that competency ethics are no longer just about the law and that competency in eDiscovery best practices is expected from the attorneys and any outside providers they retain, this case may be the first eDiscovery malpractice case ever filed against a law firm (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.

Sometimes the Vendor Sues the Law Firm – And Wins!  The eDiscovery malpractice case involving McDermott, Will & Emery associated with inadvertent production of 3,900 privileged documents has captured considerable interest in the industry and this blog.  Sometimes, the “shoe is on the other foot”, so to speak.

Tune in tomorrow for more key cases of 2011 and see the topic that continues to generate more case law related to eDiscovery than any other!

So, what do you think?  Did you miss any of these?  Please share any comments you might have or if you’d like to know more about a particular topic.

eDiscovery Year in Review: eDiscovery Case Law, Part 1
 

Happy New Year from all of us at CloudNine Discovery and eDiscovery Daily!  If 2012 is like recent years, there should be plenty of interesting developments in the eDiscovery industry.

However, before we look ahead to the coming year, it’s worthwhile to look back at what transpired in 2011 to see what trends began to emerge last year.  And, there is no better way to do that than to review key cases during the year.  eDiscovery Daily has published 65 posts related to eDiscovery case decisions and activities over the past year, covering 50 unique cases!  Needless to say, a lot happened in the courtroom that impacted the eDiscovery world.

We grouped those cases into common subject themes and will review them over the next few posts.  Perhaps you missed some of these?  Now is your chance to catch up!

EDISCOVERY COST REIMBURSEMENT

One of the emerging trends for 2011 was the growing number of cases where the prevailing party was awarded reimbursement of eDiscovery costs.  Maybe that will change the “preserve and produce everything” mentality of some attorneys?  Here are four cases where this issue was addressed:

Sue Me and Lose? Pay My Costs.  In a ruling that may give some plaintiffs' lawyers pause, a federal judge in Pittsburgh has ruled that the winning defendants in an antitrust case are entitled to reimbursement of more than $367,000 in eDiscovery costs.

Plaintiff Responsible for Taxation of eDiscovery Costs.  It appears that making plaintiffs responsible for eDiscovery costs when they lose is becoming a trend. For this case, the Pennsylvania District Court denied the plaintiffs’ motion to eliminate or reduce many of the costs at issue related to electronic discovery but did disallow or reduce some costs, including those incurred for the convenience of counsel.

Another Losing Plaintiff Taxed for eDiscovery Costs.  As noted previously, prevailing defendants are becoming increasingly successful in obtaining awards against plaintiffs for reimbursement of eDiscovery costs. In this case, a California District Court granted the defendants summary judgment on non-infringement and dismissed their counterclaims. The judgment included eDiscovery costs as valid taxed costs against the plaintiff, based on Rule 54(d) which creates a presumption in favor of awarding costs to the prevailing party.

Award for Database Costs Reversed Due to Cost Sharing Agreement.  In this case, Ricoh looked to have the district court’s award of costs to Synopsys reversed for the parties’ use of Stratify for the production of email. While the appellate court decided that the district court properly decided that costs related to the database could be recovered pursuant to 28 U.S.C. § 1920(4), it nonetheless reversed the lower court’s award due to the parties' agreement to split the costs.

FORM OF PRODUCTION

There were several cases related to the form and format of produced ESI, with a number of key issues being debated in the courtroom.  Here are eight cases where production format decisions were made.

Responses to FOIA Requests Must Be Searchable.  Judge Shira A. Scheindlin ruled that federal agencies must turn over documents that include "metadata", which allows them to be searched and indexed.  Indicating that "common sense dictates" that the handling of FOIA requests should be informed by "the spirit if not the letter" of the Federal Rules of Civil Procedure, Judge Scheindlin indicated the government offered "a lame excuse" for delivering non-searchable documents.

Never Mind! Judge Scheindlin Withdraws FOIA Requests Opinion.  Four months later, Judge Scheindlin withdrew that opinion.

Facebook Did Not Deduce That They Must Produce.  In this case, United States Magistrate Judge Howard Lloyd of the Northern District of California compelled Facebook to produce ESI that was previously produced in a converted, non-searchable format and further ordered Facebook not to use a third-party vendor's online production software to merely “provide access” to it. The court’s order granting the plaintiff’s Motion To Compel Production addressed the importance of ESI Protocols, the requirement to produce ESI in native formats, and production of documents versus providing access to them.

Downloading Confidential Information Leads to Motion to Compel Production.  The North Dakota District Court has recently decided in favor of a motion to compel production of electronic evidence, requiring imaging of computer hard drives, in a case involving the possible electronic theft of trade secrets.

Are Attachments Part of the Email Or Are They Separate?  A Special Master recently investigated the legal standard concerning whether or not attachments must be produced with the emails to which they were attached in discovery proceedings, and determined that there is no certain answer to be found in case law precedent.

Court Says Lack of eDiscovery Rules for Criminal Cases is a Crime.  A New York district court recently ordered the United States Government to reproduce thousands of pages of electronic discovery materials in a criminal case involving the distribution of cocaine. In this case, the Government produced thousands of pages of electronic documents and a number of audio recordings, none of which were text searchable. The court ultimately decided that the onus of producing searchable materials for eDiscovery fell on the Government itself.

Produced ESI Doesn’t Need to be Categorized, Even When Voluminous.  In this case, the defendants sought to compel re-production by the Government of ESI in categorized batches relating to transactions with certain characteristics. Judge Victor Marrero of the Southern District of New York denied the defendants’ motion.

New York Supreme Court Requires Production of Software to Review Files.  In this case, the petitioner requested records from the Department of Taxation and Finance in New York that were responsive to petitioner's request under Freedom of Information Law (FOIL) for records related to sales tax audit. The petitioner then moved to compel production of the Department’s Audit Framework Extension software program in order to install it on his computer and view the electronic files. The petitioner's motion was denied, not once, but twice. Would a final appeal result in compelling production of the software?

INTERNATIONAL EDISCOVERY

As companies “go global” and more data is stored “in the cloud”, discoverability of ESI within international jurisdictions is becoming increasingly in dispute.  Here are two cases with global ramifications:

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 this case, 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.

U.S. Court Rules on ECPA Protection of Emails in the Cloud.  An October 3 decision by the Ninth Circuit Court of Appeals offers new clarity in defining and protecting the eDiscovery rights of non-U.S. nationals using U.S. services online, by ruling that emails stored on servers located within the U.S. are protected by national laws on ESI.

Tune in tomorrow for more key cases of 2011!

So, what do you think?  Did you miss any of these?  Please share any comments you might have or if you’d like to know more about a particular topic.

eDiscovery Case Law: Court Grants Adverse Inference Sanctions Against BOTH Sides
 

Have you ever seen the video where two boxers knock each other out at the same time?  That’s similar to what happened in this case.

In Patel v. Havana Bar, Restaurant & Catering, No. 10-1383, (E.D. Pa. Dec. 5, 2011), a case of dueling claims of spoliation, the court imposed sanctions against both parties for failing uphold their duty to preserve relevant evidence.

The plaintiff was attending an engagement party when he fell from a second floor loft overlooking the dance floor. Whether the plaintiff fell due to intoxication or whether he intentionally jumped was a matter in dispute. During discovery, the parties filed cross-motions seeking sanctions for discovery violations.

The bar's video system recorded the evening's events, but the bar owner failed to preserve the recording. He attempted to copy the video before the system's automatic overwriting erased it, but he did not have the right equipment to make a copy. In addition, the system allowed him to print images from the recording, but he failed to take advantage of this feature. Thus, the court found that spoliation had occurred: even though the defendant took some steps to preserve evidence, his steps were inadequate. Thus, the court imposed an adverse inference sanction against the bar.

Additionally, the defendant sought spoliation sanctions against the plaintiff for failing to preserve statements of witnesses who attended the party. In 2008, the plaintiff's sister-in-law sent a message over Facebook asking attendees to write statements supporting the plaintiff's case that he was not intoxicated and that he was merely jovial. However, in 2010, the sister-in-law again asked attendees for statements via Facebook, this time requesting confirmation that the bar recklessly served the plaintiff alcohol and explaining that she would not use statements that the plaintiff jumped from the second floor. The plaintiff did not share any of the statements with the defendant until defense counsel discovered their existence during a deposition. Then, the plaintiff's counsel turned the 2010 statements over one by one as depositions occurred. The plaintiff never produced any of the 2008 statements, and family members offered conflicting stories as to their whereabouts.

The court imposed a number of sanctions on the plaintiff, finding that his behavior "ran completely afoul of the goals of discovery." The sanctions included an adverse inference sanction for failing to provide the statements. The court also ordered the plaintiff to pay for the costs of redeposing several witnesses. Finally, the court awarded the defendants fees and costs "for the time and effort they expended in attempting to obtain discovery that they were entitled to receive."

So, what do you think?  Did they both deserve what they got?  Please share any comments you might have or if you’d like to know more about a particular topic.

Case Summary Source: Applied Discovery (free subscription required).

eDiscovery Daily will take a break for the New Years holiday and will return next Tuesday, January 3.  Happy New Year from all of us at Cloudnine Discovery and eDiscovery Daily!

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine Discovery. eDiscoveryDaily is made available by CloudNine Discovery solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscoveryDaily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

eDiscovery Case Law: Plaintiff Not Required to Review Millions of Pages of Unallocated Space
 

While plaintiff “should have known better than to agree to search terms” that arguably resulted in recovery from unallocated space files of 65 million pages of documents for plaintiff to review for privilege, a magistrate judge in I-Med Pharma, Inc. v. Biomatrix, Inc., No. 03-3677 (DRD), (D.N.J. Dec. 9, 2011) properly excused plaintiff from its stipulation to produce such documents after reviewing them for privilege.

Plaintiff alleged that defendants breached a distribution agreement relating to eye-drops after one of the defendants was acquired by another defendant. A stipulation among the parties provided for a keyword search by defendants’ expert of plaintiff’s computer network, servers, and related storage devices using English and French terms, including “claim”, “revenue*”, and “profit*”. The search resulted in over 64 million hits just in unallocated space of plaintiff’s computer systems.

District Judge Dickinson Debevoise affirmed a magistrate judge’s order excusing plaintiff from a privilege review of the estimated equivalent of 65 million documents in the unallocated space that contained an agreed search term. Judge Debevoise stated its concern over the cost of such a review:

“A privilege review of 65 million documents is no small undertaking. Even if junior attorneys are engaged, heavily discounted rates are negotiated, and all parties work diligently and efficiently, even a cursory review of that many documents will consume large amounts of attorney time and cost millions of dollars.”

Judge Debevoise rejected defendant’s suggestion that plaintiff could simply review documents with the word “privileged” and produce everything else:

“Even when dealing with intact files, potentially privileged information may often be found in emails, memoranda, presentations, or other documents that are not explicitly flagged as privileged or confidential. And since the data searched here is likely to contain fragmented or otherwise incomplete documents, it is entirely possible for privileged material to be found without its original identifying information.”

Defendants had not shown that relevant, non-duplicate information likely would be found in the unallocated space, according to the court. Thus, plaintiff should have known better than to agree on the search terms, but requiring a privilege review of the results would not be fair or just. Judge Debevoise added a list of factors that parties should consider in evaluating reasonableness of search terms:

“In evaluating whether a set of search terms are reasonable, a party should consider a variety of factors, including: (1) the scope of documents searched and whether the search is restricted to specific computers, file systems, or document custodians; (2) any date restrictions imposed on the search; (3) whether the search terms contain proper names, uncommon abbreviations, or other terms unlikely to occur in irrelevant documents; (4) whether operators such as "and", "not", or "near" are used to restrict the universe of possible results; (5) whether the number of results obtained could be practically reviewed given the economics of the case and the amount of money at issue.”

So, what do you think?  Did common sense prevail or should the plaintiff have been held to the agreement?  Please share any comments you might have or if you’d like to know more about a particular topic.

Case Summary Source: Applied Discovery (free subscription required).

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine Discovery. eDiscoveryDaily is made available by CloudNine Discovery solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscoveryDaily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

eDiscovery Case Law: Award for Database Costs Reversed Due to Cost Sharing Agreement
 

An award of costs of $938,957.72, including the winning party’s agreed half share of the cost of a database or $234,702.43, was reversed in Synopsys, Inc. v. Ricoh Co. (In re Ricoh Co. Patent Litigation), No. 2011-1199 (Fed. Cir. Nov. 23, 2011). While the cost of the database could have been taxed to the losing party, the agreement between the parties on cost sharing controlled the ultimate taxation of costs.

After almost seven years of litigation, Synopsys obtained summary judgment and a declaration in Ricoh’s action against seven Synopsys customers that a Ricoh software patent on integrated circuits had not been infringed. During the litigation, Ricoh and Synopsis were unable to agree on a form of production of Synopsis email with its customers, and Ricoh suggested using an electronic discovery company to compile and maintain a database of the email. Synopsis agreed to use of the company’s services and to pay half the cost of the database. After Synopsis obtained summary judgment, the district court approved items in the Synopsis bill of costs totaling $938,957.72, including $234,702.43 for Synopsis’ half share of the cost of the database and $234,702.43 for document production costs.

The court on appeal of the taxation of costs agreed that 28 U.S.C.S. § 1920 provided for recovery of the cost of the database, which was used to produce email in its native format. According to the court, “electronic production of documents can constitute ‘exemplification’ or ‘making copies’ under section 1920(4).” However, the parties had entered into an agreement on splitting the cost of the database and nothing in the 14-page agreement or communications regarding the agreement indicated that the agreement was anything other than a final agreement on the costs of the database. Faced with “scant authority from other circuits as to whether a cost-sharing agreement between parties to litigation is controlling as to the ultimate taxation of costs,” the court concluded the parties’ cost-sharing agreement was controlling. It reversed the district court’s award of $234,702.43 for Synopsis’ half share of the cost of the database.

The court also reversed and remanded the award of an additional $234,702.43 for document production costs because those costs were not adequately documented. For example, many of the invoices simply stated “document production” and did not indicate shipment to opposing counsel. The court stated that the “document production” phrase “does not automatically signify that the copies were produced to opposing counsel.”

So, what do you think?  Should the agreement between parties have superseded the award?  Please share any comments you might have or if you’d like to know more about a particular topic.

Case Summary Source: Applied Discovery (free subscription required).

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine Discovery. eDiscoveryDaily is made available by CloudNine Discovery solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscoveryDaily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

eDiscovery Trends: Joseph Collins
 

This is the fifth of our Holiday Thought Leader Interview series, originally scheduled to be published on Tuesday, but rescheduled to today.  I interviewed several thought leaders to get their perspectives on various eDiscovery topics.

Today’s thought leader is Joseph Collins.  Joseph is the co-founder and president of VaporStream, which provides recordless communications. Joseph previously worked in the energy marketplace, but has become an advocate for private communication in business, even within the legal community.

Your product is designed to provide email-like communications that leave no record after being read. How did you get interested in communications that do not leave records? Why is this a legitimate business need?

We got into recordless communications because of the basic lack of privacy and confidentially online.  When I got my first email account back in the day I was told to be very careful what I write because you have no control over that message; I had to write like what I was writing was going to be on the front page of the newspaper.  The problem is people just don’t communicate that way, people need privacy and email and text just do not allow for it.

There is a legitimate business need because businesses need privacy and confidentiality for their internal communications.  Many times employees need to have confidential discussions and VaporStream facilitates that.  Have frank and honest communications are paramount in any company, and it is very hard to have that when think that that email and conversation might be end up in the wrong place.

Businesses do not need to “keep everything,” in fact they need to be able to decide what is considered to be material business information and what is not.  VaporStream facilities this decision making process because the data creator is going to be much better at knowing what need to be retained then a record management person on the back end.

How do you address the concerns of the legal community about VaporStream communications? Lawyers have been trained to keep records of everything- why should they consider using a service like yours?

Most lawyers keep everything because they already get private communications via attorney privilege, but also because they bill by the hour and want the email to prove it.  So lawyers are not our target market, but their clients are, and lawyers understand the risk and liability in communications.  There is one set of lawyers that can and do use VaporStream: IP lawyers. Their email is discoverable as part of the patent process, so we find IP lawyers like to use it to have those private and confidential communications that they need to effectively do their job.

Does VaporStream enable law breaking? If the executives at Enron had used a product like this, would they have gotten away with conspiring to manipulate financial data?

VaporStream is a technology and any technology can be misused, just like a knife or a car, there are benefits and possible misuse. From a corporate prospective you can use our VaporStream Enterprise Server, which will allow you to use filters just like corporate email and give companies protection from misuse.

In no way would VaporStream have helped Enron. The guys at Enron got caught because they commit fraud, not because of some smoking gun in email discovery. It was the fraud that bankrupted Enron, not the communications around it.  

Do you think that organizations over-preserve electronic evidence? Is there an argument to be made for more data destruction and less retention?

Absolutely, but the question is how do you accomplish this task. Best practices for data preservation and destruction have been around for a while now, but are companies better off today? Looking at the headlines for newspapers and the mountains of eDiscovery, it is clear the answer is no.

VaporStream allows companies to keep the valuable business information in email and then automatically get rid of the non-material information that is created by the company. By keeping information you do not need, not only are you are wasting lots of money each year, but it is a tremendous legal liability. Again, most companies are not obligated to “keep everything,” so it’s crazy to do so.  

What does this mean for eDiscovery? Could parties get in trouble for a failure to preserve evidence if it's discovered they use a service like VaporStream to communicate information relevant to a case?

Well, the key to using VaporStream is to have sound user policy. Then users will know when to use VaporStream and when not to use it. If there is a situation where there is say, a legal hold, then it probably would not a good choice to use VaporStream at that situation. By having the proper user policy, the company is protected, and VaporStream is an extension of that policy.

What is the future of this kind of communication? How does recordless communication fit into a world of social media and mobile computing where people leave digital communications all over the place?

When we look at the communications landscape, there are lots of places to share, which is great, but there is no place to have a private conversation. It’s hard to have honest and frank discussions without having trust in the communications channel.  If you think about the online world as an extension of the real world there still needs to be a place to have a private chat.

Thanks, Joseph, for participating in the interview!

And to the readers, as always, please share any comments you might have or if you’d like to know more about a particular topic!

Editor's Note: eDiscovery Daily will take a break for a couple of days to celebrate the holidays and will resume posts on Tuesday, December 27.  Happy Holidays from all of us at Cloudnine Discovery and eDiscovery Daily!