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Case Law: Spoliate Evidence and Go to Jail–OR NOT?!?

As previously referenced in eDiscovery Daily, defendant Mark Pappas, President of Creative Pipe, Inc., was ordered by 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 that will be awarded to Plaintiff as the prevailing party pursuant to Fed. R. Civ. P. 37(b)(2)(C).”.

Judge Grimm found that “Defendants…deleted, destroyed, and otherwise failed to preserve evidence; and repeatedly misrepresented the completeness of their discovery production to opposing counsel and the Court.”  As a result, he ordered “that Pappas’s pervasive and willful violation of serial Court orders to preserve and produce ESI evidence be treated as contempt of court”, resulting in the severe sanction.

Pursuant to Magistrate Judge Grimm’s September 9 decision and order and the relevant local rule, however, defendants were allowed to object to the same order. In that briefing, Mr. Pappas’ counsel argued that “[t]his Court’s power to impose a coercive civil contempt sanction … is limited by a party’s ability to comply with the order,” and further that, “[i]f the fee awarded is so large that Mr. Pappas is unable to pay it, the ordered confinement would not be coercive, but punitive, and could not be imposed without criminal due process protections.” Defendants thus requested that Magistrate Judge Grimm’s order be modified such that, following the quantification of the fee award, Mr. Pappas be permitted to demonstrate his inability to pay it, and further to provide that Mr. Pappas would only be confined if he is able to pay but refuses to do so. The District Court agreed with Mr. Pappas’ counsel and, on November 1, 2010, issued a Memorandum and Order holding as follows: “[T]he Court does not find it appropriate to Order Defendant Pappas incarcerated for a future possible failure to comply with his obligation to make payment of an amount to be determined in the course of further proceedings. Certainly, if Defendant Pappas should fail to comply with a specific payment order, the Court may issue an order requiring him to show cause why he should not be held in civil contempt for failure to comply with that payment order. Also, under appropriate circumstances, criminal contempt proceedings might be considered.”

That same day, the Court further ordered that defendants must pay plaintiff the amount of $337,796.37 by November 5 and, if such payment is not made, defendants must appear on November 8 for a civil contempt hearing. Moreover, if defendants failed to pay and Mr. Pappas failed to appear at the civil contempt hearing, “a warrant may be issued for his arrest so that he shall be brought before the Court as soon as may be practicable.” From the docket it appears that ultimately the parties resolved the issue between them without the need for a further contempt proceeding.

So, what do you think?  What will happen next?  Please share any comments you might have (including examples of other cases where sanctions included jail time) or if you’d like to know more about a particular topic.

Case Summary Source: E-Discovery Law Alert, by Gibbons P.C.

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.

SaaS and eDiscovery: Load Your Own Data

Software as a Service (SaaS) applications hosted “in the cloud” are continuing to become more popular.  A new IDC study forecasts the SaaS market to reach $40.5 billion by 2014, an annual growth rate of 25.3%.  Also by 2014, about 34% of all new business software purchases will be via SaaS applications, according to IDC.

If you haven’t used a SaaS application, you haven’t used the Internet.  Amazon, Facebook, Twitter, eBay and YouTube are all examples of SaaS applications.  Ever shared a document via Google Docs with a colleague or business partner?  Use SalesForce.com for Customer Relationship Management (CRM)?  These are SaaS applications too.

Like any software application, SaaS applications are driven by data.  Many enable you to upload your own data to use and share via the Web.  Facebook and YouTube enable you to upload and share pictures and videos, Google Docs is designed for sharing and maintaining business documents, and even SalesForce.com allows you to upload contacts via a comma-separated values (CSV) file.

eDiscovery SaaS Applications

SaaS applications have also become increasingly popular in eDiscovery (especially for review and production of ESI) with several eDiscovery SaaS applications available that provide benefits including: no software to install, intuitive browser-based interfaces and ability to share the collection with your client, experts, and co-counsel without distributing anything more than a login.

However, most eDiscovery SaaS applications do not enable the user to upload their own data.  Or, if they do, it can be costly.

One exception is OnDemand™, which has now rolled out the new SelfLoader™ module in beta to enable clients to load their own data.  With SelfLoader, clients can load their own images, OCR text files, native files and metadata to an existing OnDemand database using an industry-standard load file (IPRO’s .lfp or Concordance’s .opt) format.

The best part?  You can load your data for free.  With SelfLoader, OnDemand provides full control to load your own data, add your own users and control their access rights.

Is this a start of a trend in eDiscovery?  Will more eDiscovery SaaS providers provide self-loading capabilities?  What do you think?  Please share any comments you might have or if you’d like to know more about a particular topic.

eDiscovery Best Practices: Cost of Data Storage is Declining – Or Is It?

Recently, I was gathering information on the cost of data storage and ran across this ad from the early 1980s for a 10 MB disk drive – for $3,398! That’s MB (megabytes), not GB (gigabytes) or TB (terabytes). What a deal!

Even in 2000, storage costs were around $20 per GB, so an 8 GB drive would cost about $160.

Today, 1 TB is available for $100 or less. HP has a 2 TB external drive available at Best Buy for $140 (prices subject to change of course). That’s 7 cents per GB. Network storage drives are more expensive, but still available for around $100 per TB.

At these prices, it’s natural for online, accessible data in corporations to rise exponentially. It’s great to have more and more data readily available to you, until you are hit with litigation or regulatory requests. Then, you potentially have to go through all that data for discovery to determine what to preserve, collect, process, analyze, review and produce.

Here is what each additional GB can cost to review (based on typical industry averages):

  • 1 GB = 20,000 documents (can vary widely, depending on file formats)
  • Review attorneys typically average 60 documents reviewed per hour (for simple relevancy determinations)
  • That equals an average of 333 review hours per GB (20,000 / 60)
  • If you’re using contract reviewers at $50 per hour – each extra GB just cost you $16,650 to review (333×50)

That’s expensive storage! And, that doesn’t even take into consideration the costs to identify, preserve, collect, and process each additional GB.

Managing Storage Costs Effectively

One way to manage those costs is to limit the data retained in the first place through an effective records management program that calls for regular destruction of data not subject to a litigation hold. If you’re eliminating expired data on a regular basis, there is less data to go through the EDRM discovery “funnel” to production.

Sophisticated collection tools or first pass review tools (like FirstPass™, powered by Venio FPR™) can also help cull data for attorney review to reduce those costs, which is the most expensive component of eDiscovery.

So, what do you think? Do you track GB metrics for your eDiscovery cases? Please share any comments you might have or if you’d like to know more about a particular topic.

Social Tech eDiscovery: Twitter Guidelines for Law Enforcement

Tuesday, I provided information regarding Facebook’s Law Enforcement page with information about serving civil subpoenas. Facebook provides quite a bit of useful information regarding serving subpoenas, including the address for registered agent (to process requests), information required to identify users, fee for processing, turnaround time, and fee to expedite responses. Facebook is very informative with regard to how subpoenas are handled in terms of cost and time to process.

So, it makes sense to look at other popular social media sites to see how they are handling this issue. Twitter is probably right behind Facebook in terms of popularity in the social media world and they have a “Guidelines for Law Enforcement” page to address requests for non-public information for Twitter users.

As the Twitter policy notes, most Twitter profile information is public, so anyone can see it. A Twitter profile contains a profile image, background image, as well as the status updates, which, of course, they call “tweets”. In addition, the user has the option to fill out location, a URL, and a short “bio” section about themselves for display on their public profile. Non-public information includes “log data” such as IP address, browser type, the referring domain, pages visited, search terms and interactions with advertisements (as noted in their Privacy Policy page).

Twitter doesn’t provide any cost information regarding processing subpoena requests, nor do they address standard turnaround times or fees to expedite processing. Their policy is to notify users of requests for their information prior to disclosure unless they are prohibited from doing so by statute or court order and they do require the URL of the Twitter profile in question to process any subpoena requests. They do provide email, fax and physical address contact information to address user information requests. FYI, only email from law enforcement domains will be accepted via the email address. Preservation requests must be signed with a valid return email address, and sent on law enforcement letterhead. Non-law enforcement requests should be sent through regular support methods (via their main support page).

So, what do you think? Have you ever needed to file a subpoena on Twitter? Please share, or let us know or if you’d like to know more about a particular topic.

Social Tech eDiscovery: Facebook Subpoena Policy

As President and CEO of Trial Solutions, I’ve noted and embraced the explosion in use of social technology over the past few years (Trial Solutions has a Facebook, Twitter and LinkedIn page, and this blog, with more to come soon). According to new statistics from Nielsen, social network sites now account for 22.7% of time spent on the web, a 43% jump in one year (by contrast, email only accounts for 8.3%). With that explosion in social tech use, companies have had to address social media as another form of media to collect for eDiscovery. It seems there’s a new article or blog post online every week on the subject and there is a social media webinar at Virtual Legal Tech this Thursday.

As probably the most popular social media site, Facebook is one of the most likely sites for relevant ESI. There are already a number of stories online about people who have lost their jobs due to Facebook postings, such as these. There is even a Facebook group to post stories about Facebook firings. Oh, the irony!

Naturally, cases related to Facebook eDiscovery issues have become more prevalent. One case, EEOC v. Simply Storage Management, resulted in a May ruling that “SNS (social networking site) content is not shielded from discovery simply because it is ‘locked’ or ‘private’”. So, request away!

If the employee resists or no longer has access to responsive content (or you need to request from their online friends through “Wall” posts), you may have to request content directly from Facebook through a subpoena. Facebook has a Law Enforcement page with information about serving civil subpoenas, including:

  • Address for Registered Agent (to process requests)
  • Information Required to Identify Users – Facebook user ID (“UID”) or email address
  • Fee for Processing ($500, plus an additional $100 if you want a notarized declaration)
  • Turnaround Time (minimum of 30 days)
  • Fee to Expedite Responses ($200)

Obviously, fees are subject to change, so check the page for the latest before serving your subpoena.

So, what do you think? Have you ever needed to file a subpoena on Facebook? Aware of other case law related to Facebook eDiscovery? Please share, or let us know or if you’d like to know more about a particular topic.

Case Law: Spoliate Evidence and Go to Jail?!?

One of the most well-known cases in eDiscovery is Victor Stanley (VSI) v. Creative Pipe (CPI) and is a prime example of what NOT to do when conducting a search for relevant ESI in litigation – Victor Stanley, Inc. v. Creative Pipe, Inc., 2008 U.S. Dist. LEXIS 42025 (D. Md. May 29, 2008), – including not testing the search methodology, resulting in inadvertent disclosure of 185 privileged documents, and the waiving of privilege of same. If you’re not familiar with this case, Google it and you’ll find plenty of sites/articles that discuss its significance.

If that was a blow to Creative Pipe and their president, Mark Pappas, the order issued on September 9th for that same case (now widely referenced as “Victor Stanley II”) makes the May 2008 order pale in comparison.

Judge Grimm found that “Defendants…deleted, destroyed, and otherwise failed to preserve evidence; and repeatedly misrepresented the completeness of their discovery production to opposing counsel and the Court.” As a result, he ordered “that Pappas’s pervasive and willful violation of serial Court orders to preserve and produce ESI evidence be treated as contempt of court, and that he be imprisoned for a period not to exceed two years, unless and until he pays to Plaintiff the attorney’s fees and costs that will be awarded to Plaintiff as the prevailing party pursuant to Fed. R. Civ. P. 37(b)(2)(C).”

Ouch!

Clearly, Judge Grimm felt that Pappas’ and CPI’s behavior in this case over four years represented intentional destruction of evidence and he ruled accordingly on plaintiff’s motion regarding same. Perhaps his view of their actions can be summarized by footnote 19 in the order:

“CPI named one of its product lines the “Fuvista” line. Pappas admitted during discovery that “Fuvista” stood for “F**k you Victor Stanley,” (Pappas Dep. 22:20-24, Pl.’s Mot. Ex. 5, ECF No. 341-5), demonstrating that Pappas’s wit transcended sophomoric pranks such as logging into VSI’s web site as “Fred Bass” and extended to inventing insulting acronyms to name his competing products. When disclosed, the meaning of this acronym removes any doubt about his motive and intent. No doubt Pappas regarded this as hilarious at the time. It is less likely that he still does.”

So, what do you think? Is this the start of a trend – prison sentences for evidence spoliation? Or, is this an extreme example of clear intentional evidence destruction? Please share any comments you might have (including examples of other cases where sanctions included jail time) or if you’d like to know more about a particular topic.

More to come on this case in the future…