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Court Grants Lesser Sanctions Against Defendant for Various Discovery Issues: eDiscovery Case Law

In New Mexico Oncology v. Presbyterian Healthcare Servs. No. 1:12-cv-00526 MV/GBW (D.N.M. Aug. 16, 2017), New Mexico Magistrate Judge Gregory B. Wormuth, detailing numerous defendant discovery deficiencies alleged by the plaintiff, ruled that the “harsh sanctions of default judgment or an adverse jury instruction” requested by the plaintiff “are not warranted” and instead opted to require the defendant to pay plaintiff costs related to activities resulting from defendants’ over-designation of documents as privileged and recommended that the defendants be ordered to pay the plaintiff 75% of the costs associated with its Motion for Sanctions including all fees paid to expert witnesses to prepare reports and testify at the motion hearing.

Case Background

In this case, the plaintiff, detailing numerous alleged defendant discovery deficiencies, filed a Motion for Sanctions, requesting that the Court sanction the defendants by ordering default judgment against them, or, alternatively that the Court sanction the defendants by ordering an adverse jury instruction.  The allegations included:

  • Defendants failed to issue a proper litigation hold. The plaintiff alleged that the defendants’ original May 2012 litigation hold was inadequate because (1) it did not account for the “email jail,” a function which required that employees delete or archive emails when they run out of inbox space; (2) it covered only thirty-five employees and improperly excluded several key witnesses; (3) it allowed employees to determine which emails were irrelevant to the lawsuit and could be deleted; and (4) it did not apply to Defendants’ Live Exchange Server (a.k.a., the Transport Dumpster) and therefore did not preserve documents deleted by individual employees.
  • Defendants intentionally deleted discoverable emails received or sent by Dr. Dava Gerard. The two primary pillars of the plaintiff’s case for intentional deletion were: (1) the data found within the “free space” of the Gerard PST file (the PST file was 2 GB in size, but only 128 MB of materials were readable by native software when opened), and (2) data was found in the unallocated space on the hard drive on which the Gerard PST file was saved.
  • Defendants used privilege designations for the purpose of concealing documents and information. After the defendants produced their original privilege and redaction logs, the plaintiff objected to 2,831 of the 4,143 entries to which Defendants included in the logs.  The defendants conducted a re-review and produced 1,095 documents which were originally listed on the privilege log and 864 documents which were originally listed on the redaction log.  The plaintiff then objected to all 1,312 remaining listings on the privilege and redaction logs, stating that it no longer had confidence in Defendants’ privilege designations, leading to a second re-review, which led to an additional 861 documents produced.  The plaintiff then filed a Motion to Compel and for Sanctions against Defendants, which included a request “that the Court appoint a Special Master to conduct an independent in camera review” of the remaining records withheld and redacted – that review led to 197 additional documents ordered to be produced.

The plaintiff also complained that the defendants failed to produce usable billing and claims data in a timely manner, produced ESI for the wrong custodian named Mike West and did not properly collect hard copy documents in discovery.  As Frank Costanza would say at the Airing of Grievances during Festivus, “I got a lot of problems with you people”.

Judge’s Ruling

Judge Wormuth, reviewing the allegations in considerable detail, determined the following:

  • Improper litigation hold: Judge Wormuth acknowledged that “Without question, Plaintiff points out some imperfections with the litigation hold and its implementation” and he detailed several of those. However, he also explained that “Plaintiff failed to establish that these imperfections were a result of bad faith or that they resulted in the spoliation of evidence.”
  • Intentional deletion of emails: Noting that “the conclusion that data residing in the PST’s free space is only the result of deletion rests on the assumption that the export was conducted via the ‘client-side’ method, rather than the alternative ‘server-side’ method”, Judge Wormuth cited a lack of evidence that the collection specialist used a clean hard drive to conduct the collection and pointed to the presence of export logs to determine that the exports were conducted via the “server-side” method and concluded that “Plaintiff has not demonstrated by a preponderance of the evidence that Defendants intentionally deleted emails that should have been disclosed.”
  • Privilege designations: Judge Wormuth agreed with the Special Master’s report that the defendants “did not act in bad faith”. But, he did state “this does not mean that Defendants are free from blame. It is clear that Defendants over-designated documents as privileged, and that even their re-reviews were insufficient to fix their own errors. As a result, Plaintiff was required to repeatedly assert objections until the Special Master ultimately resolved the issue.”

As for the other issues, Judge Wormuth ruled that the “Plaintiff can demonstrate no prejudice resulting from any such delays” in receiving the billing and claims data, that the “collection of documents from the wrong Mike West was an inadvertent error and not done in bad faith” and that, because of the plaintiff’s failure to request that the Court allow additional depositions of the employees associated with the hard copy documents, “more severe sanctions are not warranted”.

Ultimately, Judge Wormuth ruled that the “harsh sanctions of default judgment or an adverse jury instruction” requested by the plaintiff “are not warranted” and instead opted to require the defendant to pay plaintiff costs related to activities resulting from defendants’ over-designation of documents as privileged and recommended that the defendants be ordered to pay the plaintiff 75% of the costs associated with its Motion for Sanctions including all fees paid to expert witnesses to prepare reports and testify at the motion hearing.

So, what do you think?  Was that an appropriate level of sanctions for the various discovery issues?  Please share any comments you might have or if you’d like to know more about a particular topic.

Case opinion link courtesy of eDiscovery Assistant.

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

Thanks to ACEDS, Today’s the Day to Learn How Recent Case Law Has Affected Your eDiscovery Practices: eDiscovery Best Practices

The best predictor of future behavior is relevant past behavior. Nowhere is that more true than with legal precedents set by past case law decisions, especially when it relates to eDiscovery best practices.  Are you aware of recent case law decisions related to eDiscovery best practices and what that those decisions mean to your organization?  Thanks to our friends at ACEDS, you can learn a lot about those case law decisions today.

Today’s ACEDS webinar at noon CT (1pm ET, 10am PT) is titled Key eDiscovery Case Law Review for First Half of 2017.  This one-hour webcast will cover key case law covered by the eDiscovery Daily blog related to eDiscovery for the first half of 2017, what the legal profession can learn from those rulings and whether any of the decisions run counter to expectations set by Federal and State rules for civil procedure. Topics include:

  • How should objections to production requests be handled?
  • Are you required to produce subpoenaed data stored internationally?
  • Should there be a limit to fees assessed for discovery misconduct?
  • When is data stored by a third party considered to be within your control?
  • Should courts dictate search terms to parties?
  • How can you make an effective proportionality argument to address burdensome requests?
  • Can the requesting party dictate the form of production?
  • Does storing data on a file share site waive privilege?
  • If data is intentionally deleted, should Rule 37(e) apply?
  • Is circumstantial evidence of intentional spoliation good enough to warrant sanctions?
  • Should keyword search be performed before Technology-Assisted Review?

I’ll be presenting the webcast, Tom O’Connor, who is now a Special Consultant to CloudNine!  To register for the webcast and get Tom’s and my unique takes on these cases, click here.  Hope you can make it!

Also, if your organization has been affected by the recent hurricanes and you need the ability to access your data for a period of time while you rebuild, or to save costs in hosting for a case so that you can apply those savings to rebuilding your infrastructure, CloudNine can help.  Click here to find out more and also how to help out those who were affected.

So, what do you think?  Do you think case law regarding eDiscovery issues affects how you manage discovery?  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. eDiscovery Daily is made available by CloudNine solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscovery Daily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

Court Grants Defendant’s Request for $18.5 Million in Attorney Fees and Costs: eDiscovery Case Law

In Procaps S.A. v. Patheon Inc., 12-24356-CIV-GOODMAN, 2014 U.S. Dist. (S.D. Fla. Aug. 17, 2017), Florida District Judge Jonathan Goodman, in a very lengthy ruling, granted the defendant’s supplemental motion for attorney’s fees and non-taxable costs in the full amount requested of $18,494.846.

Case Background

In this case regarding an antitrust lawsuit filed by the plaintiff in which the defendant eventually won on summary judgment, the defendant filed a motion for costs and a motion for attorney’s fees and non-taxable costs.  The Court eventually entered an order on the defendant’s bill of taxable costs, awarding it a judgment of $173,480.80 in taxable costs.  After the plaintiff appealed, the Eleventh Circuit Court of Appeals affirmed the Court’s summary judgment ruling.  In doing so, the Eleventh Circuit explained that “at bottom, this is essentially a breach of contract case — and so Procaps’s failure to support an antitrust theory is not all that surprising.”

The defendant then filed, under seal, (after extensive briefing, a multi-hour hearing and motion practice on other legal issues) a Supplemental Motion for Attorney’s Fees and non-taxable costs, explaining that the revised total amount sought is $18,494,846.  In the defendant’s Supplemental Motion, while the defendant noted that it used higher hourly rates for fees incurred in 2016 and 2017 because its hourly rates increased over time, those rates still represented the 47.25% reduction off its primary law firm’s standard rates ordered by the Court.

Both parties agreed that the non-exhaustive list of discretionary factors that are considered when evaluating a Florida Deceptive and Unfair Trade Practices Act (FDUTPA) fee application was found in the case Humane Society of Broward County, Inc. v. Florida Humane Society, 951 So. 2d 966, 971-72 (Fla. 4th DCA 2007), which stated the factors as:

(1) the scope and history of the litigation; (2) the opposing party’s ability to satisfy the award; (3) whether an award would deter others from acting in similar circumstances; (4) the merits of the respective positions, including the degree of [Procaps’] culpability or bad faith; (5) whether the claim brought was not in subjective bad faith but was frivolous, unreasonable, or groundless; (6) whether the defense raised a defense mainly to frustrate or stall; and (7) whether the claim brought was to resolve a significant legal question under FDUTPA law.

Judge’s Ruling

Judge Goodman, in considering the first factor, noted that “Nothing was easy in this case. Nothing. Basically, the parties fought about anything and everything.”  He also observed that “Procaps largely based its FDUTPA claim on its antitrust claim theory and sought both damages and attorney’s fees under this count…It continued to press despite the Court’s warning that it might be liable for all of Patheon’s fees under FDUTPA.”  Judge Goodman, noting that “in December 2015, Patheon explained that Procaps’ market value was $238.9 million”, also ruled that the plaintiff “does have the ability to pay an $18.5 million judgment.”

Considering the plaintiff’s culpability or bad faith, Judge Goodman spent a lot of time on this issue, including time discussing alleged prior misconduct by the plaintiff’s lead counsel in another case.  While he stated that “the Court is not going to consider the Surgery Centers case and similarly will not specifically consider the 16 bad faith factors (from this case) and the alleged appellate-level misconduct asserted by Patheon”, he also stated that the “facts underlying the 16 bad faith factors are, for the most part, true or substantially true (sic). They happened. The Court knows that they happened (or substantially happened) because of its involvement in this case for the past four-and-a-half years.”

Ultimately, Judge Goodman determined that all the factors necessary to grant the fee request were present and stated that “the Court notes that even Procaps admits that the antitrust theory inherent in its FDUTPA claim was dependent on the success it had with the federal Sherman Act antitrust claim. Therefore, those federal claims concerned allegations of deceptive and unfair trade practices, which means that Patheon, as the prevailing party, is entitled to fees and costs for the entire action.”  As a result, Judge Goodman, determining that the defendant’s method for calculating the fees was proper, granted the defendant’s supplemental motion for attorney’s fees and non-taxable costs in the full amount requested of $18,494.846.

We’ve covered this case three other times previously – here are the three links to those previous rulings.

So, what do you think?  Is that a reasonable award, given all of the plaintiff’s alleged misconduct over the course of the case?  Please share any comments you might have or if you’d like to know more about a particular topic.

Case opinion link courtesy of eDiscovery Assistant.

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

Defendant’s Request for Social Media Data is Reasonably Calculated to Be Overbroad: eDiscovery Case Law

In Ehrenberg v. State Farm Mut. Auto. Ins. Co., No. 16-17269 (E.D. La. Aug. 18, 2017), Louisiana Magistrate Judge Janis van Meerveld, rejecting the defendant’s request for the plaintiff’s social media data as “reasonably calculated to lead to the discovery of admissible evidence”, identified a level of social media data to be produced by the plaintiff that considered “weighing relevance and proportionality”.

Case Background

In this case where the plaintiff sued the defendant for additional damages to compensate her for all of her injuries and losses sustained when she was struck by a motor vehicle, after learning of numerous vacations taken by the plaintiff, the defendant requested complete social media data (“a complete copy of your post-accident…data link from your…account, including but not limited to messages, photos, wall posts, friends posts, your posts, metadata associated with photos, etc.) from the plaintiff’s Facebook, Twitter and Instagram accounts.  The defendant filed a Motion to Compel when the plaintiff objected to the requests as “invasion of privacy and not relevant”.

Judge’s Ruling

Judge van Meerveld began her analysis by pointing out the defendant’s request was not in line with current rules:

“Although State Farm focuses its briefing on whether its requests are ‘reasonably calculated to lead to the discovery of admissible evidence,’ the Court must point out that this phrase does not guide the scope of discovery. The amendments to the Federal Rules of Civil Procedure that went into effect in December 2015 deleted this language from Rule 26. That Rule now provides that ‘parties may obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case.’” 

Judge van Meerveld also noted that “In addition to being relevant, discovery must be proportional to the needs of the case.”  With that in mind, she ruled that “after weighing relevance and proportionality, including privacy considerations, as to Ms. Ehrenberg’s Facebook, Twitter, and Instagram accounts, the Court finds discoverable the following categories of information from the date of the alleged accident through the present:

  1. Posts or photos that refer or relate to the accident.
  2. Posts or photos that refer or relate to physical injuries that Ms. Ehrenberg alleges she sustained as a result of the accident and any treatment she received therefore.
  3. Posts or photos that refer or relate to other, unrelated physical injuries suffered or sustained by Ms. Ehrenberg.
  4. Posts or photos reflecting physical activity by Ms. Ehrenberg and/or which reflect a physical capability of Ms. Ehrenberg.
  5. Posts or photos that refer or relate to emotional distress or mental anguish that Ms. Ehrenberg alleges she sustained as a result of the accident and any treatment she received therefore.
  6. Posts or photos that refer or relate to any alternative potential emotional stressors experienced by Ms. Ehrenberg.
  7. Posts or photos that refer or relate to any vacations taken by Ms. Ehrenberg, including but not limited to the specific vacations referred to by State Farm in its Motion to Compel.”

Judge van Meerveld also stated that if the defendant were to discover evidence that the plaintiff had deleted social media posts (which the defendant had suggested happened), then “it may return to the Court to request relief.”

So, what do you think?  What should courts do (if anything) to make sure parties know the current Rules?  Please share any comments you might have or if you’d like to know more about a particular topic.

If you’ve been watching the news the past few days, you’ve seen the devastation in my hometown of Houston from Hurricane Harvey.  What can you do to help?  Consider donating online to the Houston Food Bank, Galveston County Food Bank or Corpus Christi Food Bank.  Or the Coastal Bend Disaster Recovery Group.  And, if you’re in the Houston area, you can volunteer at the American Red Cross here or by calling 713-526-8300.  Thanks for your help.

Case opinion link courtesy of eDiscovery Assistant.

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

Court Denies Plaintiff’s Request for Defendant’s Source Code Production: eDiscovery Case Law

In Congoo, LLC v. Revcontent LLC, et al, No. 16-401 (MAS) (D.N.J. Aug. 10, 2017), New Jersey Magistrate Judge Tonianne J. Bongiovanni, finding that the plaintiff “has not met its burden of demonstrating that production of the source code is relevant and necessary”, denied the plaintiff’s Motion to Compel the inspection and production of the defendants’ source code.

Case Background

In this case the plaintiff alleged that the defendant (its competitor) published or caused to be published false and misleading “native advertising” (i.e., integrated online advertising in published content on various internet news and information sites).  The plaintiff stated that the source code was highly relevant because it pertained to a central issue in the case, that is, whether the defendants were involved in the creation of the content in false and misleading ads and asserted that production of the source code was necessary to prove their claim.  The defendants argued that requiring it to produce its source code to a competitor would cause irreparable harm to its business and stated that it has provided the plaintiff with evidentiary support concerning the few software functions that are relevant to its claims.

In February 2017, a discovery conference was held to discuss the issue of production of the source code and the Court stated that the parties should make their full submission to the Court on the issue.  Then, in March, the plaintiff filed the instant motion to compel inspection and production of the defendants’ source code.

Judge’s Ruling

Judge Bongiovanni, noting that “[t]he Court has broad discretion in deciding discovery issues such as that raised by the parties here”, indicated that “[i]n order for the production of source code to be compelled, Plaintiff must prove that it is relevant and necessary to the action.”  In that regard, Judge Bongiovanni stated that:

“The Court is not convinced that an understanding of the Defendants’ influence on or creation of the ads requires production of the technology, i.e., the source code, utilized by the Defendants. Rather, the Court is persuaded that through witness testimony an understanding of the functionality of the software algorithm as it relates to issues in this case, e.g., selection of higher paying Content Recommendations, can be adequately addressed.”

Judge Bongiovanni also found that the source code’s “highly confidential nature is such that it cannot be adequately safeguarded by a Discovery Confidentiality Order and therefore outweighs the need for production”, pointing to the declaration of the defendant’s Chief Product Officer, which pointed to an investment of 7 to 10 million dollars in the development of the software and the fact that neither the defendant’s “in-house lawyers nor any of our outside counsel is permitted to access and/or view Revcontent’s highly proprietary Source Code.”

As a result, Judge Bongiovanni found that the plaintiff “has not met its burden of demonstrating that production of the source code is relevant and necessary” and denied the plaintiff’s Motion to Compel the inspection and production of the defendants’ source code.

So, what do you think?  Should there be special considerations for producing source code or other intellectual property?  Please share any comments you might have or if you’d like to know more about a particular topic.

Case opinion link courtesy of eDiscovery Assistant.

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

Citing SCA, Court Denies Motions to Compel Microsoft, Google and Yahoo to Produce Emails: eDiscovery Case Law

In PPG Indus., Inc. v. Jiangu Tie Mao Glass Co., Ltd., No. 2:15-cv-965 (W.D. Pa. July 21, 2017), Pennsylvania District Judge Mark R. Hornak denied the plaintiff’s Motions to Compel third parties Microsoft, Google and Yahoo to Produce Responsive Documents Pursuant to their Subpoenas, finding that “resolution of this case begins and ends with the Stored Communications Act (‘SCA’), which generally provides that ‘a person or entity providing an electronic communication service to the public shall not knowingly divulge to any person or entity the contents of a communication while in electronic storage by that service.’”

Case Background

In this case where one of the plaintiff’s employees was arrested and charged with theft of trade secrets and ultimately committed suicide while under house arrest, the plaintiff obtained consent for the production of all materials related to the case from the employee’s brother, who was also the executor and beneficiary of his estate.  After receiving permission from the Court to conduct limited pre-answer discovery and serve specified subpoenas, the plaintiff served subpoenas on Microsoft, Google and Yahoo seeking e-mail communications received and sent from the employee’s accounts with each company.  When Microsoft, Google and Yahoo refused to provide the requested communications, the plaintiff filed the Motions to Compel.

Judge’s Ruling

Judge Hornak began his ruling by stating: “The resolution of this case begins and ends with the Stored Communications Act (‘SCA’), which generally provides that ‘a person or entity providing an electronic communication service to the public shall not knowingly divulge to any person or entity the contents of a communication while in electronic storage by that service.’”  He also noted, however, “under the SCA a provider ‘may divulge the contents of a communication’ in certain circumstances, including when it has ‘the lawful consent of the originator or an addressee or intended recipient of such communication.’ § 2702(b)(3).”

The plaintiff argued that because the executor of the employee’s estate had consented to production of the emails, the SCA’s exception for the “lawful consent of the originator,”§ 2702(b)(3), applies and argued that under Pennsylvania law an executor has the authority to handle a decedent’s digital assets, including his electronic communications.  However, Judge Hornak stated that “First, it is plain that the SCA does not provide an exception to its general prohibition on disclosure for civil subpoenas…Second, even when one of the exceptions to prohibited disclosures delineated in§ 2702(b) applies, the SCA nonetheless does not require providers to disclose communications. To begin, § 2702(b) specifically states that providers ‘may’ divulge communications if an exception applies; it does not state that they ‘must’ do so.”

Judge Hornak did note that the plaintiff “could still gain access to the emails in Thomas Rukavina’s Microsoft account should it choose to pursue them. Microsoft stipulated at argument and in its papers that if the Pennsylvania court with jurisdiction over Thomas Rukavina’s estate concludes that Robert Rukavina’s consent is ‘lawful consent’ under § 2702(b)(3), Microsoft will voluntarily divulge the emails PPG seeks.”  He also noted that the plaintiff “could also potentially obtain the emails in Thomas Rukavina’s Yahoo and Google accounts by identifying the individual(s) who have been accessing the accounts since Thomas Rukavina’s death” (since both providers had indicated that his accounts had been accessed on “numerous” occasions since his death).

However, Judge Hornak’s parting notice was that, in the case of the Yahoo account, the employee had “repeatedly consented to Yahoo’s Terms of Service (‘TOS’), which included…a ‘No Right of Survivorship and Non-Transferability’ provision… [which] explains that any rights Thomas Rukavina had to the contents of his Yahoo account terminated upon his death.”  So, he would have been unlikely to order Yahoo to produce the emails under any circumstances.

Regardless, for the reasons noted above, Judge Hornak the plaintiff’s Motions to Compel against all three third parties.

So, what do you think?  Is it time to rewrite or update the 31 year old Stored Communications Act?  Please share any comments you might have or if you’d like to know more about a particular topic.

Case opinion link courtesy of eDiscovery Assistant.

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

Plaintiff Sanctioned for Spoliation of Evidence in His Case Against Taylor Swift: eDiscovery Case Law

In Mueller v. Swift, No. 15-cv-1974-WJM-KLM (D. Colo. July 19, 2017), Colorado District Judge William J. Martinez ruled that “Plaintiff’s loss or destruction of the complete recording of the June 3, 2013 conversation [between the plaintiff and his supervisors] constitutes sanctionable spoliation of evidence”, but rejected the defendants’ request to make a finding of bad faith and to give the jury an adverse inference instruction, opting instead for permitting the defendants to cross-examine the plaintiff in front of the jury regarding the record of his spoliation of evidence.

Case Background

In this case against the defendants for tortious interference with the plaintiff’s employment contract and one defendant’s counterclaims for the torts of assault and battery over a well-publicized claim of inappropriate touching, the plaintiff met with his superiors at the radio station where he worked on June 3, 2013 to discuss the defendant’s claim of inappropriate touching. Unbeknownst to the supervisors at the time, the plaintiff made an audio recording of their conversation.  The following day, the plaintiff was terminated from his employment by one of the supervisors, who explained that one reason for the plaintiff’s termination was because he perceived Plaintiff had “changed his story that it couldn’t have occurred, then that it was incidental.”

At some point thereafter, well after having first contacted an attorney regarding potential legal action, the plaintiff edited the audio recording of the conversation, and then sent only “clips” of the entire audio file to his attorney.  According to his testimony, the plaintiff edited the audio file on his laptop computer, on which he also retained a full copy of the original audio file(s).  However, he claimed that he spilled coffee on the keyboard of his laptop and was given “a new machine” by the Apple Store and he didn’t retain the hard drive from the old laptop.  The plaintiff also kept an external hard drive “to store audio files and documents”, and the complete audio recording was saved on this drive, but he indicated that, at some point, it “stopped working.”  At his deposition, the plaintiff testified that he “may have kept” this hard drive, but that because it was “useless” he “[didn’t] know if I discarded it because it was junk”. As a result, the complete audio file was never produced and the defendants moved for a Court-imposed sanction for spoliation of evidence, and for the Court to give the jury an adverse inference instruction at trial, to direct the jury “that the entirety of the June 3, 2013 audio recording would have been unfavorable to Plaintiff.”

Judge’s Ruling

Judge Martinez ruled that the plaintiff had a duty to preserve the recording, that the recording was “relevant to numerous disputed facts and issues” in the case, that the defendants were prejudiced by the loss of evidence and that the degree of culpability warrants a sanction.  While declining to make a finding that the plaintiff acted in bad faith, Judge Martinez indicated that the “spoliation falls higher up on the ‘continuum of fault’” than “mere negligence”, noting that it was “troubling” that the plaintiff also threw out his cell phone, months after the litigation was filed, noting “it may have been the device that he originally used to record the June 3, 2013 conversation”.

As a result, Judge Martinez concluded that “Plaintiff’s loss or destruction of the complete recording of the June 3, 2013 conversation constitutes sanctionable spoliation of evidence”, but, determining that the defendants’ request for an adverse inference instruction sanction “would be unduly harsh in the circumstances of this case”, deciding instead to permit the defendants to cross-examine the plaintiff in front of the jury regarding the record of his spoliation of evidence.

So, what do you think?  Was that an appropriate sanction given the lack of finding of bad faith?  Please share any comments you might have or if you’d like to know more about a particular topic.

Case opinion link courtesy of eDiscovery Assistant.

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

Plaintiff Can Review Documents Deemed as Non-Responsive, But Has to Bear its Own Costs: eDiscovery Case Week

eDiscovery Case Week concludes today.  We covered four cases this week and, Wednesday, we covered our Wednesday webcast Key eDiscovery Case Law Review for First Half of 2017 (click here to check out the replay of that) as well.  Here’s the final case.  Just when you thought it was safe to go back in the courtroom!

In Nachurs Alpine Solutions, Corp. v. Banks, No. 15-CV-4015-LTS (N.D. Iowa July 7, 2017), Iowa Chief Magistrate Judge C. J. Williams granted in part and denied in part the plaintiff’s motion to compel ESI discovery, by ordering the defendants to produce all of the ESI documents it identified as unresponsive under an Attorneys Eyes Only label and that the plaintiff bear its own costs of reviewing the documents for the categories it believes may hold relevant documents.

Case Background

In this case regarding allegations of confidential, proprietary, and trade secret information taken by a former employee of the plaintiff to the defendant (his new employer), the Court entered an order regarding ESI after a dispute between the parties.  Using search terms approved in the Court’s order, the defendants searched their ESI for documents containing those search terms. The defendants then reviewed those documents for privilege, duplication, and relevance.

The defendants produced two batches of ESI, along with a privilege log reflecting documents withheld on privilege grounds.  The second production batch included placer-sheets stating “Non-Responsive File” marking 235 documents that the defendants believed were nonresponsive.  Through discussions, the plaintiff apparently discovered there were as many as 44,000 other documents that the defendants had withheld from the first batch as nonresponsive (defendants put the number at approximately 24,000 documents).

Attempts to resolve their differences on the first batch proved fruitless and, while the plaintiff identified 28 categories of documents it believed were properly withheld as non-responsive, it identified four categories of documents it believed were relevant and requested an order requiring defendants to produce all of the nonresponsive documents under the same conditions as those produced in the second batch (i.e., (1) Attorneys Eyes Only designation; and (2) no admission of relevance), with defendants paying attorneys’ fees for the cost of culling through the documents for responsive documents.  The defendants argued that plaintiff’s motion amounts to a request that defendants “perform a second, costly review of all of the 24,479 documents withheld as non-responsive.”

Judge’s Ruling

In considering the “countervailing factors”, Judge Williams found that “it would be disproportional to require defendants to go back through the documents to identify those that fall within the four categories plaintiff believes are most likely to generate relevant documents. Nor, even if it did, is it likely that plaintiff would not be any more satisfied or the Court more confident with the result.”  He also presumed that the defendants were “unwilling to comply with the alternative because plaintiff wants defendants to pay the attorneys’ fees associated with culling through the documents”, not because the defendants had something to hide.

As a result, Judge Williams ruled, as follows: “The Court finds the appropriate resolution to this dispute is: (1) defendants produce all of the ESI documents it identified as unresponsive under an Attorneys Eyes Only label; (2) that the production is not to be deemed as an admission by defendants that the documents are relevant; and (3) that plaintiff bear its own costs of reviewing the documents for the categories it believes may hold relevant documents. Should plaintiff discover relevant documents during this review which it believes were wrongfully withheld by defendants, then plaintiff can bring a motion for sanctions at that time to recover some or all of the attorneys’ fees associated with the search.”

So, what do you think?  Should parties be ordered to produce documents determined to be non-responsive absent a clear showing that they were misclassified?  Please share any comments you might have or if you’d like to know more about a particular topic.

Case opinion link courtesy of eDiscovery Assistant.

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

Court Grants Most of Plaintiff’s Cost Recovery Request, Including All eDiscovery Costs: eDiscovery Case Week

eDiscovery Case Week continues.  We’ll cover four cases this week and, yesterday, we covered our Wednesday webcast Key eDiscovery Case Law Review for First Half of 2017 (click here to check out the replay of that) as well.  Here’s the next case.  Just as there are five “Sharknado” movies (sadly), there will be five case law related posts this week.

In Ariel Inv., LLC v. Ariel Capital Advisors LLC, No. 15 C 3717 (N.D. Ill., July 17, 2017), Illinois District Judge Matthew F. Kennelly granted the prevailing plaintiff’s request to tax most requested costs in the amount of $99,378.32, including the entire amount ($85,666.51) requested for reimbursement for eDiscovery costs.

Case Background

In this case where the plaintiff sued the defendant alleging trademark infringement, unfair competition, and cybersquatting in violation of the Lanham Act, the Court granted summary judgment for the defendant on the cybersquatting claim before trial, but the plaintiff prevailed in a bench trial on its remaining Lanham Act and state law claims.  The Court entered a permanent injunction barring the defendant from continuing to use the term “Ariel” in connection with its business.

After the ruling, the plaintiff submitted a request to cover “nearly $110,000 in costs” under Federal Rule of Civil Procedure 54(d).  The defendant contended that no costs should be awarded because the plaintiff only partially prevailed, whereas the plaintiff argued that it was the prevailing party because it was awarded substantial relief.

Judge’s Ruling

With regard to the defendant’s claim that no costs should be awarded because the plaintiff only partially prevailed, Judge Kennelly ruled: “The prevailing party for purposes of Rule 54(d) is the party that prevails with regard to a substantial part of the litigation…There is no question that Ariel Investments prevailed with regard to a substantial part of the litigation. Indeed, it was the prevailing party on all of its claims other than the cybersquatting claim.”

With that issue decided, Judge Kennelly considered reimbursement requests related to costs for depositions, court transcripts, exemplification and other costs, including eDiscovery costs totaling $85,666.51.  Judge Kennelly noted that the “Seventh Circuit has not addressed in detail the recoverability of e-discovery expenses” and that “[t]his Court and others in the district have previously followed the reasoning of the Third Circuit” in cases like Race Tires of America, Inc. v. Hoosier Racing Tire Corp., 674 F.3d 158 (3d Cir. 2012) (covered by us here), which ruled against several eDiscovery related costs as not constituting “making copies”.

Nonetheless, Judge Kennelly stated: “Ariel Investments has sufficiently shown that the costs it requests are recoverable. Specifically, Ariel Investments has established, by way of an affidavit offered in response to Ariel Capital’s challenge to the content of the e-discovery vendor invoices, that the charges for which it seeks reimbursement all involved expenses for ‘the process by which documents in a variety of native forms . . . are copied and converted’ to a readable format…Ariel Capital cannot reasonably object to otherwise recoverable costs that it required Ariel Investments to incur.”

As a result, Judge Kennelly granted the plaintiff’s request to tax the entire amount ($85,666.51) requested for reimbursement for eDiscovery costs and total costs in the amount of $99,378.32.

So, what do you think?  Why do some courts award reimbursement of eDiscovery costs while others don’t?  Please share any comments you might have or if you’d like to know more about a particular topic.

Case opinion link courtesy of eDiscovery Assistant.

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

Today’s the Day to Learn How Recent eDiscovery Case Law Has Affected Your Organization: eDiscovery Case Week

eDiscovery Case Week continues.  We’ll cover four cases this week (catching up on a couple from earlier this year) and we’ll cover today’s webcast Key eDiscovery Case Law Review for First Half of 2017 (click here to sign up for that) as well.  Land shark!

The best predictor of future behavior is relevant past behavior. Nowhere is that truer than with legal precedents set by past case law decisions, especially when it relates to eDiscovery best practices.  Are you aware of recent case law decisions related to eDiscovery best practices and what that those decisions mean to your organization?

Today at noon CST (1:00pm EST, 10:00am PST), CloudNine will conduct the webcast Key eDiscovery Case Law Review for First Half of 2017.  This one-hour webcast will cover key case law covered by the eDiscovery Daily blog related to eDiscovery for the first half of 2017, what the legal profession can learn from those rulings and whether any of the decisions run counter to expectations set by Federal and State rules for civil procedure. Topics include:

  • How should objections to production requests be handled?
  • Are you required to produce subpoenaed data stored internationally?
  • Should there be a limit to fees assessed for discovery misconduct?
  • When is data stored by a third party considered to be within your control?
  • Should courts dictate search terms to parties?
  • How can you make an effective proportionality argument to address burdensome requests?
  • Can the requesting party dictate the form of production?
  • Does storing data on a file share site waive privilege?
  • If data is intentionally deleted, should Rule 37(e) apply?
  • Is circumstantial evidence of intentional spoliation good enough to warrant sanctions?
  • Should keyword search be performed before Technology-Assisted Review?

I’ll be presenting the webcast, along with Julia Romero Peter, General Counsel and VP of Sales at CloudNine AND Karen DeSouza, Director of Review Services for CloudNine.  To register for the webcast, click here.  If you miss it, it’s gone forever! (not really, it’s being recorded)… :o)

So, what do you think?  Do you think case law regarding eDiscovery issues affects how you manage discovery?  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. eDiscovery Daily is made available by CloudNine solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscovery Daily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.