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Case Law

Defendant Not Sanctioned Despite Use of Evidence Wiping Software: 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 our Wednesday webcast Key eDiscovery Case Law Review for First Half of 2017 (click here to sign up for that) as well.  Here’s the next case.  And, unlike the “Phelps vs. Shark” debacle, I promise nothing about this post was computer generated… :o)

In HCC Ins. Holdings, Inc. v. Flowers, No. 1:15-cv-3262-WSD (N.D. Ga., Jan. 30, 2017), Georgia District Judge William S. Duffey, Jr. denied the plaintiff’s motion for adverse inference sanctions despite evidence that the defendant had used evidence wiping software twice after being ordered to produce her personal computer, stating that the plaintiff “offers only bare speculation that any of its trade secrets or other data were actually transferred” to the defendant’s laptop.

Case Background

In this case, the defendant was accused of misappropriating trade secrets after she left her company and started a competitive company. The plaintiff claimed that when the defendant left the company, she took confidential files with her to benefit her new company and also claimed that, after receiving the lawsuit papers in this case, and after the Court ordered the defendant to produce her personal computer, she destroyed data on her personal laptop and also on a thumb drive that was plugged into her personal computer on September 20, 2015 (which was after she received a preservation notice and the complaint in the case).

The defendant’s husband, an experienced IT professional, claimed he inserted his personal thumb drive on September 20 to back-up data on the defendant’s personal laptop, but the thumb drive was corrupted and did not work, and that he therefore threw it away (the defendant’s own computer forensic expert claimed that it did work properly the second time, when it was plugged in for 38 seconds.

On September 19, 2015, and again three days later, the day after the Court ordered the defendant to produce her personal computer, the computer wiping program CCleaner was manually run on her personal laptop.  During that time, the program Defraggler (program that overwrites deleted files in unallocated space on a computer’s hard drive) was also run and so was a program called WinUndelete (which is used to recover deleted files).  The plaintiff claimed the defendant’s husband used WinUndelete to confirm that he had destroyed evidence, but he claimed he ran the program off of his work thumb drive to familiarize himself with it for future use for work purposes.  After running extensive searches over several weeks, a neutral examiner did not locate any of the plaintiff’s confidential information or trade secrets on any of the devices produced by the defendant.

Judge’s Ruling

In reviewing the results, Judge Duffey stated: “HCC’s Motion is based on a series of events it casts as suspicious, but HCC offers only bare speculation that any of its trade secrets or other data were actually transferred from HCC Life’s systems to Flowers’ personal laptop. A party seeking spoliation sanctions must prove that (1) the missing evidence existed at one time; (2) the defendant had a duty to preserve the evidence; and (3) the evidence was crucial to the plaintiff’s prima facie case… Here, after extensive discovery, including examinations by a neutral forensic examiner and the parties’ expert forensic examiners, depositions, and subpoenas of email and cloud-based storage companies, HCC does not provide any evidence to show that Flowers or her husband actually transferred any data from HCC Life to her personal devices or cloud storage media she controlled.”

As a result, Judge Duffey ruled as follows: “Though Flowers’ and her husband’s actions are troubling, and in breach of her duty to preserve, the Court finds spoliation sanctions are not warranted.”

So, what do you think?  Is this ruling troubling?  Or should the motioning party be required to show evidence of actual responsive ESI deleted?  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 Rules that Plaintiff’s Request for Data from Defendant is “Extraordinarily Burdensome”: eDiscovery Case Week

Why is a picture of a shark on this post?  Because it’s Shark Week on the Discovery Channel (not electronic discovery of course, but the generic kind of discovery).  To celebrate Shark Week in eDiscovery terms, we’ve decided to make this week eDiscovery Case Week on the eDiscovery Daily blog.  We’ll cover four cases in the next five days (catching up on a couple from earlier this year) and will cover our Wednesday webcast Key eDiscovery Case Law Review for First Half of 2017 (click here to sign up for that) as well.  Here’s the first case.

In Solo v. United Parcel Services Co., No. 14-12719 (E.D. Mich. Jan. 10, 2017), Michigan Magistrate Judge R. Steven Whalen agreed that the defendant showed that the level of data requested by the plaintiff “would be extraordinarily burdensome” and ordered the parties to discuss the defendant’s proposed methodology and “meet, confer, and agree on a mutually acceptable sampling methodology” if the plaintiff did not agree to the defendant’s approach.

Case Background

In this class action suit, the plaintiffs alleged that the defendant consistently overcharged for delivery charges that had a declared value of $300 or more.  In an interrogatory, the plaintiffs requested the defendant to provide detailed information for packages with a declared value of $300 or more over the alleged overcharging period, which could extend as far back as 2008 from the end date of December 29, 2013.

In response, the defendant contended that providing the package-specific information requested would be excessively burdensome in terms of both time, manpower, and costs and indicated that the “package level detail” requested by Plaintiffs is only maintained in a “live” format (easily accessible electronically) for a limited time period and is then archived on backup tapes.  To bolster its claim that the request was burdensome, the defendant estimated that it would take at least six months just to restore the archived tapes as described above, at a cost of $120,000 in labor, requiring its employees to take on responsibilities outside of their regular duties and that cost estimate did not include the time and expense of analyzing the data once extracted in order to answer the interrogatory.

Instead, the defendant provided an estimate of the number of packages with declared value over $300 that were shipped during the period June 30, 2013 to December 29, 2013 – this time period was chosen because its contract terms state that a customer must give notice of a billing dispute within 180 days, or the issue is waived.

Judge’s Ruling

In evaluating the defendant’s response to the plaintiff’s request, Judge Whalen stated: “I am persuaded that UPS has carried its burden of showing that producing package-specific information going as far back as 2008 would be extraordinarily burdensome, particularly at this stage of the proceedings. Given the scope of UPS’s business operations and the exigencies of its proprietary billing system, there is a valid business reason for maintaining ‘live’ data for a limited period of time and storing older data on backup tapes.”  Judge Whalen also agreed with the defendant that if it prevailed on the 180 day limit issue, “the most likely period that will be found relevant will be the six-month time frame from June 30, 2013 to December 29, 2013.”

With that in mind, Judge Whalen stated: “The estimate that UPS produced for the six-month period encompassing the latter half of 2013 was based on a method that extrapolated “live” data from a more recent period. At the time this motion was filed, Plaintiffs were not privy to UPS’s methodology, given that it involved disclosure of proprietary information. However, now that a protective order has been entered [Doc. #74], UPS will disclose its methodology under the “attorneys’ eyes only” provision. It may be that Plaintiff is satisfied that UPS’s methodology is sufficient. If not, the parties will meet, confer, and agree on a mutually acceptable sampling methodology.”

So, what do you think?  Did the defendant provide enough basis to show the plaintiff’s request to be extraordinarily burdensome?  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.

Need an “Assist” with Your eDiscovery Practices? Get an eDiscovery Assistant!: eDiscovery Best Practices

As someone who writes a blog daily for (part of) my living, I can attest that it can be a challenge to stay on top of eDiscovery trends and case law.  I try to do my best to provide some of that to the readers of this blog and, when it comes to case law, we provide posts on about 60 to 70 cases each year (we’re over 400 unique cases covered lifetime).  But, here’s a resource that provides access to even more case law, and several other great resources, as well.

eDiscovery Assistant™ is a site developed by ESI Attorneys that was built by attorneys and information law practitioners to provide several resources to help people get started — faster and with confidence — in eDiscovery.  Those resources include: case law, rules, checklists, forms, glossary of terms and (coming soon) a learning center with short, practical videos that explain concepts users can implement in their own eDiscovery operations.

When you open eDiscovery Assistant, you begin with a dashboard that shows you recent case law on the left hand side and a History of your activities on the right hand side to enable you to get back to something you looked at previously.  A list of Favorites that you’ve created is listed in the lower left side of the form and cite lists of case law searches is shown in the lower right side of the form.  Along the top of the form is a menu to enable you quickly navigate to search for case law, locate Federal, State and other rules, access a resource of checklists and forms for best eDiscovery practices, access your cite lists and access a glossary of eDiscovery-related terms.  Here’s an example of what the dashboard looks like:

According to the eDiscovery Assistant site, they have a database of over 5,000 eDiscovery decisions.  Each of those is categorized by the types of issues being addressed, so if you want to click on a type of issue to see how many case decisions and opinions there are about it, simply click on the issue to pull up all of those cases.  For example, clicking on the Technology Assisted Review (TAR) issue pulls up 39 results.  You can also perform date range searches and look for specific names (such as the name of a judge in whose courtroom you may find yourself) and other terms.  The application enables you to view the case decision and download it to PDF if desired.  As somebody who does a lot of research into key eDiscovery case law, it’s nice to have it all in one place.

The Checklists and Forms page includes over 40 checklists and forms in a variety of areas ranging from identifying relevant sources of ESI to legal holds to meet & confer/Rule 26 conferences, with forms and letters including sample preservation letters, sample clawback agreement and chain of custody forms.  It’s a great resource for those who need some help in getting started in several key areas of the eDiscovery process.

I spoke to Kelly Twigger, CEO of ESI Attorneys and eDiscovery Assistant, about the goal for the platform and why she decided to build the platform in the first place:

“I built eDiscovery Assistant to be the practice tool I wanted for my practice. I wanted to find case law by issue FAST. I wanted to know what discovery decisions the judge assigned to my case has authored without sifting through everything she’s written. And I wanted the rules for all jurisdictions at my fingertips. That’s why we built a proprietary tagging structure to let you sort case law by issue, jurisdiction, judge, date and keyword. Hours of work is reduced to minutes. ROI is made with one search.”

Kelly also indicated that they are “working with eDiscovery professionals from around the country to create a community of users who want to stop reinventing the wheel and learn as technology and the law develop.”

From a pricing standpoint, Kelly indicated that pricing is available on a per seat, multiple seat or custom site basis.  You can sign up directly for per seat monthly and annual subscriptions on ediscoveryassistant.com. The annual subscription includes two free months.  For firms or organizations seeking more than five seats, you can contact them to set up multiple seats on one account.

eDiscovery Assistant also offers the ability for a firm or organization to have a separate branded site. Custom sites can also include a separate administrative backend to upload proprietary checklists and templates for sharing within the firm only.  Contact them at 720.414.6106 or at support@ediscoveryassistant.com to inquire about pricing for custom options.

I want to thank everybody at the Women in eDiscovery (WiE) Houston Chapter for inviting me to speak at the Legal Technology Showcase & Conference yesterday.  It was a terrific and very well attended conference!  I also want to thank my fellow panelists in the “State of the Industry” panel: Lana Schell from ONE Discovery (who moderated), Michele Lange of KrolLDiscovery, Lynn Frances Jae of iCONECT and Richard Dilgren of Fronteo.  We led off with the first panel of the day and discussed a variety of topics including Technology Assisted Review, the growth of cloud automation technology within eDiscovery, the impact of cybersecurity on eDiscovery and the impact of the 2015 Federal rules changes.  It was an enjoyable and informative discussion!

So, what do you think?  Do you have a go to resource for eDiscovery case law and best practices?  Besides eDiscovery Daily, of course!  :o)  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 Denies Defendant’s Motion to Overrule Plaintiff’s Objections to Discovery Requests

Cloud Data is Within Defendant’s Possession, Custody and Control, Court Rules: eDiscovery Case Law

This case is a few months old, but is one of the cases we will cover in next week’s webcast Key eDiscovery Case Law Review for First Half of 2017 (click here to sign up)…

In Williams v. Angie’s List, No. 1:16-00878-WTL-MJD (S.D. Ind. April 10, 2017), Indiana Magistrate Judge Mark J. Dinsmore found that the plaintiffs “have met their burden of demonstrating” that the defendant has a legal right to obtain background data in Salesforce and that “Plaintiffs request for production properly seeks documents within Angie’s List’s ‘possession, custody, or control’ under Rule 34(a).”  He also denied the defendant’s request for cost shifting.

Case Background

In this case where 48 current and former employees of Defendant claimed they were entitled to “substantial compensation” for hours worked without pay, those plaintiff claimed that the defendant instructed them to underreport their overtime hours on their computerized time records.  Because the plaintiffs frequently worked from home, they sought production of “background data” automatically recorded while they were working in the defendant’s sales platform, Salesforce, in an effort to “close the gaps” allegedly left by the other records.

The defendant argued that the plaintiffs’ request for the Salesforce records falls outside of Rule 34(a)(1) because the records are outside of the defendant’s “possession, custody, or control” because Salesforce is a third-party provider of services and the defendant has no greater rights to the background data than any other person. The defendant also cited a $15,000 invoice it had received from Salesforce for the background data it had already provided to the plaintiffs.  The plaintiffs, in reply, argued that the defendant’s argument is belied by their conduct in producing a year’s worth of background data.  The defendant also argued if the Court grants the Motion, it should apportion some or all of the costs of production to the plaintiffs.

Judge’s Ruling

In making his ruling, Judge Dinsmore observed that “evidence before the Court demonstrates that Angie’s List and Salesforce have a longstanding contractual relationship and that the background data is recorded ‘for’ Angie’s List as part of the ordinary course of their business relationship. Even while end users such as Angie’s List ‘ordinarily’ do not access such data, the evidence clearly demonstrates that they are able to do so upon asking. In fact, the most compelling fact before the Court is that Angie’s List, despite dragging its feet and protesting vociferously, were actually able to retrieve and produce one year’s of the background data, collected for Angie’s List as part of its use of Salesforce’s sales platform, to Plaintiffs in discovery. The fact that Angie’s List has already produced one-third of the requested data, coupled with the evidence demonstrating the relationship between Angie’s List and Salesforce, compels the conclusion that Angie’s List has a ‘legal right to obtain’ the discovery sought.”

As a result, Judge Dinsmore concluded that “Plaintiffs request for production properly seeks documents within Angie’s List’s “possession, custody, or control” under Rule 34(a).”  After acknowledging the Court’s authority to “proportion the costs of e-discovery in cases of undue cost or burden”, Judge Dinsmore considered eight proportionality related factors to rule against cost shifting of some of the production costs to the plaintiffs.

So, what do you think?  Should the plaintiffs have been required to split 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. 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 Defendant’s Motion to Overrule Plaintiff’s Objections to Discovery Requests

Court Limits Burden for Defendant to Search Loan Numbers, Splits Costs Between Parties: eDiscovery Case Law

In Phoenix Light SF Ltd. v. Deutsche Bank Nat’l Trust Co., No. 14cv10103 (JGK)(DF) (S.D.N.Y. June 5, 2017), New York Magistrate Judge Debra Freeman granted the plaintiffs’ motion to compel in part, ordering the defendant to search for 16,000 loan numbers proposed by the plaintiffs’ and ordered the parties to split the costs for performing the searches.

Case Background

In this case where the plaintiffs alleged that the defendant breached contractual and fiduciary obligations owed to the plaintiffs in connection with trusts for which the defendant served as trustee, the plaintiffs filed a motion to compel the defendant to run a search using approximately 245,000 individual loan numbers as discrete search terms or, at least run a sample search, using 16,000 selected loan numbers as search terms and produce documents responsive to the searched loan numbers.

To date, the defendant had only searched for only relevant trust names and the defendant’s own “trust identifiers”, explaining that its “routine” internal practice was to use these trust identifiers – not individual loan numbers – in communicating by email, both internally and externally, about loans within the trusts.  However, the plaintiffs provided the Court with four examples of email strings that were produced in discovery by the defendant, each of which included emails referencing individual loan numbers and not the trust names or identifiers on which the defendant had relied.

In arguing that the additional burden imposed by the search terms requested by the plaintiffs would be disproportionate to its likely yield, the defendant pointed to another case where a search of 72,000 individual loan numbers identified by the plaintiff returned 733,000 documents not previously produced, of which – based on its review of a sample of those documents – the defendant deemed 1.38 percent, at most, to be responsive to the plaintiffs discovery demands.

Judge’s Ruling

With regard to the defendant’s claim that its “routine” practice was to use trust identifiers for communication, Judge Freeman stated: “Plaintiffs have fairly demonstrated that, but for the happenstance that particular emails or attachments in each string included the trust name or identifier, the remainder of the relevant emails would not have been located by Defendant’s prior searches, and therefore would not have been produced. Further, Plaintiffs’ submitted evidence shows that Defendant’s assertion that it was not its practice to reference individual loan numbers in emails, without also referencing a trust name or identifier, is incorrect — or, at least, that Defendant’s employees did not utilize that practice consistently.”

As for the additional burden argument by the defendant, Judge Freeman observed that, in the other case, “the plaintiff apparently did not concur with Defendant that the responsiveness rate for the search performed was as low as Defendant represented” and that “this Court has no way to gauge the potential importance of the non-duplicative documents that were located through that search.”  As a result, Judge Freeman stated: “Plaintiffs should be given the opportunity to review at least the additional documents that a sample loan-number search would uncover and that Defendant would produce as responsive to document requests, and then to return to this Court if, in their view, the volume and/or significance of any newly produced documents warrants a further, more extensive search.”

Judge Freeman therefore ordered the defendant to perform a search for the 16,000 loan numbers, and to “produce to Plaintiff all responsive, non-privileged documents discovered through that search, unless already produced in discovery in identical form.”  Judge Freeman also noted that “counsel should confer in good faith” regarding the use of qualifiers to avoid “false hits”, and found it “reasonable” for the plaintiffs to share half of vendor costs to perform the searches, in the approximate amount of $11,000.

So, what do you think?  Does this level of burden dictate splitting of costs?  Or does it depend on the case?  Please share any comments you might have or if you’d like to know more about a particular topic.

Also, if you’re going to be in Houston on July 20, Women in eDiscovery (WiE) Houston Chapter, in partnership with South Texas College of Law, will be hosting the inaugural eDiscovery “Legal Technology Showcase & Conference” at South Texas College of Law in downtown Houston.  I will be participating as a panelist on the “State of the Industry” panel and my colleague, Karen, will be moderating the “Legal Operations and Litigation Support” panel.  Click here for more information about the conference, including how to register!

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 Defendant’s Motion to Overrule Plaintiff’s Objections to Discovery Requests

Court Rules Decisively in Battle Between eDiscovery Providers Over Hired Sales Agents: eDiscovery Case Law

In a lawsuit filed by DTI against LDiscovery and four former sales agents of DTI who were hired by LDiscovery, claiming they misappropriated trade secrets, interfered with client relationships and breached their contracts, an opinion provided by New York District Judge Jed S. Rakoff last week detailed his rejection of all arguments by DTI that led to his denial of a motion for a preliminary injunction on June 16.

An article in Bloomberg Law (Judge Rakoff Shoots Down eDiscovery Trade Secrets Case, written by Gabe Friedberg) provides more information, noting that DTI filed its lawsuit in April against the four salesman (who had originally worked for Epiq prior to DTI’s acquisition of Epiq) and LDiscovery, after they resigned from DTI in January.  As the opinion notes, “the Individual Defendants signed employment agreements with LDiscovery whereby they agreed to resign from DTI by no later than January 31, 2017…The agreements set forth that the Individual Defendants will then take a ‘Sabbatical Year,’ during which LDiscovery will “not request and the [Individual Defendants] will not provide, any work, information, or services purported to be restricted by the Epiq [Employment Agreements].””  According to the article, LDiscovery agreed to pay $5.1 million in total bonus payments to the four agents during the “sabbatical year” alone.

Among the contentions by DTI was that the Individual Defendants “have breached or are threatening to breach their nondisclosure covenants by improperly copying and retaining DTI’s proprietary information” by failing to return two thumb drives in their possession, but Judge Rakoff concluded “that this was inadvertent rather than the result of a conspiracy” when forensic analysis failed to show either was used in copying files from DTI.  Another part of that contention was that one of the individual defendants had obtained an invoice spreadsheet from DTI, but Judge Rakoff determined that “DTI voluntarily forwarded the spreadsheet” to him to verify the accuracy of his commission checks and that, while that defendant forwarded it on to the other individual defendants so they could verify theirs as well, Judge Rakoff determined that there was no evidence that they had distributed it to any third parties, including LDiscovery.

DTI also contended that the Individual Defendants breached their employee non-solicitation clauses by jointly searching for new employment and also by allegedly soliciting two other DTI employees, but Judge Rakoff stated that agreement was “unenforceable insofar as it purports to prohibit at-will employees, who have yet to accept an offer of new employment, from “inducing” or even “encouraging” their coworkers to leave their present employer.”  Judge Rakoff also stated this:

“To be sure, if DTI desires to prevent its employees from coordinating their resignations, it is free to hire them pursuant to term employment agreements. DTI, however, cannot use restrictive covenants to supply itself all the benefits of term agreements while simultaneously retaining the right to lay off its personnel whenever it so desires. This is not a proper purpose for such a restraint on free market competition.”

With regard to DTI’s claims that the Individual Defendants breached their client non-solicitation covenants, Judge Rakoff stated that the “Epiq Employment Agreements do not require the Individual Defendants to cease all contact with their clients following their departure from DTI” and referred to “a suggestion by defendant Kreger to grab lunch or for a particular client to call him” (with no testimony provided that the Individual Defendants had solicited those clients for business) as “innocuous”.

As a result, Judge Rakoff dismissed the claims against LDiscovery and granted the individual defendants’ motion to move the case to a private arbitration.

Having heard stories about what some companies will do to enforce non-compete agreements, including sending cease and desist letters for a variety of perceived breaches of those agreements, this is the first instance I can think of where eDiscovery providers disputed the scope and validity of those agreements in court.  Given the huge compensation numbers and the dispute between two heavyweights in the industry (both backed by private equity firms), I wouldn’t be surprised to see more of these types of disputes in the future.  While I cannot dispute the impact of a successful sales person in obtaining clients in the first place, I would have thought that a company’s software and/or services would be the primary factor in retaining those clients.  Silly me.

Bloomberg Law provides a link to the case docket where (if you’re a subscriber), you can click a link to view the opinion.  It’s an interesting and fascinating read.

So, what do you think?  How enforceable should non-compete agreements be?  As always, please share any comments you might have with us or let us know if you’d like to know more about a particular topic.

Also, if you’re going to be in Houston on July 20, Women in eDiscovery (WiE) Houston Chapter, in partnership with South Texas College of Law, will be hosting the inaugural eDiscovery “Legal Technology Showcase & Conference” at South Texas College of Law in downtown Houston.  I will be participating as a panelist on the “State of the Industry” panel and my colleague, Karen, will be moderating the “Legal Operations and Litigation Support” panel.  Click here for more information about the conference, including how to register!

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.

Here’s a Chance to Learn How Recent eDiscovery Case Law Has Affected Your Organization: eDiscovery Trends

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?

On Wednesday, July 26 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.

Also, if you’re going to be in Houston on July 20, Women in eDiscovery (WiE) Houston Chapter, in partnership with South Texas College of Law, will be hosting the inaugural eDiscovery “Legal Technology Showcase & Conference” at South Texas College of Law in downtown Houston.  I will be participating as a panelist on the “State of the Industry” panel and my colleague, Karen, will be moderating the “Legal Operations and Litigation Support” panel.  Click here for more information about the conference, including how to register!

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 Denies Defendant’s Motion to Overrule Plaintiff’s Objections to Discovery Requests

Court Declines to Impose Sanctions for Failure to Preserve Web History: eDiscovery Case Law

In Eshelman v. Puma Biotechnology, Inc., No. 7:16-CV-18-D (E.D.N.C. June 7, 2017), North Carolina Magistrate Judge Robert B. Jones, Jr., among other rulings, denied the plaintiff’s motion for an order permitting a jury instruction in response to the defendant’s failure to preserve certain internet web browser and search histories, concluding that the plaintiff “is not entitled to a sanction pursuant to Rule 37(e)(1)” and that the plaintiff “is not entitled to an adverse jury instruction as a sanction pursuant to Rule 37(e)(2).”

Case Background

In this case involving alleged defamatory statements made by the defendant against the plaintiff in an investor presentation, two weeks after the complaint was filed in February 2016, the defendant issued an internal litigation hold notice related to the plaintiff’s claims in this case which defined documents to include electronically-stored information and advised employees to err on the side of preservation if there was a question as to whether material qualified as documents, but did not explicitly reference internet browser histories, internet search histories, or internet sites visited.  In May 2016, approximately 120 days after the publication of the investor presentation, counsel for the plaintiff sent a letter to the defendant’s counsel requesting that the defendant preserve, among other things, the “web browser histories” of individuals involved in the drafting of the January 7, 2016 presentation.  The plaintiff reiterated that request in its document requests in June 2016.

Counsel for the defendant responded that the defendant uses Google Chrome as an internet browser, which deletes web browser history after 90 days, and accordingly, the web browser history information sought in the discovery requests no longer existed and did not exist at the time of the May letter, leading to the motion filed by the plaintiff seeking “a jury instruction to mitigate the harm caused by the defendant’s failure to preserve electronically stored information.”

Judge’s Ruling

Judge Jones initially observed that “while the plaintiff states that he seeks a jury instruction to mitigate the harm caused by the defendant’s failure to preserve electronically stored information (“ESI”), the plaintiff does not define the particular instruction sought.”  Considering Rule 37(e)(1) and Rule 37(e)(2), Judge Jones determined the following:

Observing that “the plaintiff has not established one of the threshold elements of Rule 37(e)—namely, that the lost ESI ‘cannot be restored or replaced through additional discovery. . . .’”, Judge Jones stated that “other avenues of discovery are likely to reveal information about the searches performed in advance of the investor presentation. For example, the plaintiff could seek information about the internet searches performed by the individuals who prepared the investor presentation through deposition testimony.”  Judge Jones also stated that “the plaintiff has failed to make a sufficient showing of prejudice to support relief under Rule 37(e)(1). In order to impose a sanction under Rule 37(e)(1), the court must have some evidence regarding the particular nature of the missing ESI in order to evaluate the prejudice it is being requested to mitigate.”  As a result, Judge Jones determined that “the plaintiff is not entitled to a sanction pursuant to Rule 37(e)(1).”

Judge Jones also ruled that “the plaintiff has also failed to show that the defendant acted with the requisite intent to deprive him of the ESI in order to support the imposition of an adverse jury instruction under Rule 37(e)(2),” noting that “[a]t most, the circumstances indicate the ESI was lost due to the defendant’s negligence, but do not suggest the presence of intentional conduct. Negligence, however, will not support an award of sanctions under Rule 37(e)(2).”  As a result, Judge Jones determined that “the plaintiff is not entitled to an adverse jury instruction as a sanction pursuant to Rule 37(e)(2).”

So, what do you think?  Should internet histories be a standard form of ESI to be preserved in litigation?  Or does it depend on the case?  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 Denies Defendant’s Motion to Overrule Plaintiff’s Objections to Discovery Requests

With Ample Evidence of Bad Faith, Court Sanctions Defendant for Failure to Produce Documents: eDiscovery Case Law

In CrossFit, Inc. v. Nat’l Strength and Conditioning Assn., No. 14cv1191 JLS (KSC) (S.D. Cal. May 26, 2017), California District Judge Janis L. Sammartino granted the plaintiff’s motion for several issue, evidentiary, and monetary sanctions, but denied the plaintiff’s request for terminating sanctions due to the defendant’s bad faith that resulted in the defendant’s failure to produce documents.

Case Background

In this case between competing fitness training organizations where the plaintiff argued that the defendant published a false study regarding the plaintiff’s program and injury rates of its participants, the defendant filed a separate suit in state court against the plaintiff alleging trade libel, defamation, and unfair business practices.  The plaintiff received discovery during the state-court action that appeared to either directly respond to discovery or contradict assertions the defendant deponents had made in this case. The plaintiff then deposed the defendant’s Education Coordinator in the state-court case, during which he admitted that several of the statements in his federal-action declaration, submitted under penalty of perjury, were false.  The plaintiff then “ran several controlled searches in the state-court production” which “yielded hundreds of documents material to the issues in this action and that the defendant should have produced in response to the plaintiff’s discovery requests in this case.

Given that pretrial proceedings were only several weeks away at the time the plaintiff discovered these documents, the plaintiff simultaneously moved to continue the pretrial proceedings and for sanctions against the defendant, including terminating sanctions or, in the alternative, issue, evidentiary, and monetary sanctions.

Judge’s Ruling

Judge Sammartino, indicating that the documents withheld “are too numerous to comprehensively catalog”, provided several examples in her order, including various emails, a 2013 executive summary and “[d]ocuments that affirmatively demonstrate Mr. Clayton’s perjury”.  Judge Sammartino indicated that Rule 37 “authorizes the district court, in its discretion, to impose a wide range of sanctions” and that district courts have inherent power to “impose sanctions including, where appropriate, default or dismissal… However, because dismissal is such a severe remedy it should be imposed only in extreme circumstances, and “only where the violation is ‘due to willfulness, bad faith, or fault of the party.’”

Detailing several of the defendant’s transgressions, Judge Sammartino stated that “the Court agrees with Plaintiff that there is ample evidence of willfulness, bad faith, or fault.”  Judge Sammartino also noted that “nearly every factor weighs in favor of imposing terminating sanctions” and concluded that the Court “is well within its discretion to award terminating sanctions”, but declined to do so, opting for issue, evidentiary, and monetary sanctions instead.  However, before even getting to those, Judge Sammartino awarded these sanctions to address concerns regarding whether the defendant had produced all relevant documents:

“(1) Plaintiff SHALL commission a neutral forensic analysis of the the defendant’s servers and Defendant SHALL pay all costs relating to such forensic analysis;

(2) Defendant SHALL within fourteen days, under penalty of perjury, acquire declarations from all relevant the defendant personnel either (a) assuring or reaffirming that no documents relevant to this litigation have been destroyed or (b) admitting to any destruction;

(3) If at the conclusion of the neutral forensic evaluation it appears that documents have been destroyed, or that the discovery misconduct is substantially greater than the scope of which Plaintiff is currently aware, Plaintiff is GRANTED LEAVE TO RENEW its Motion for Terminating Sanctions and present the newly discovered evidence; and

(4) Defendant SHALL LODGE within fourteen days a copy of the document referenced in Plaintiff’s Sanction Motion Exhibit A so that the Court may conduct an in camera review of the document. Additionally, Plaintiff SHALL PROVIDE a copy of this Order to the neutral forensic analyst so that she may search for other instances of the document referenced in Exhibit A—or its deletion—and any surrounding context.”

The plaintiff supplied a list of thirty potential issue and adverse inference sanctions and Judge Sammartino awarded 17 of them in her order.  In addition, Judge Sammartino, while deducting some costs, awarded $73,550.83 in fees to the plaintiff in connection with its Sanctions Motion and ex parte Continuance.

So, what do you think?  Should the judge have gone ahead and ordered terminating sanctions based on the defendant’s actions to date?  Please share any comments you might have or if you’d like to know more about a particular topic.

eDiscovery Daily will resume with new posts on Wednesday, July 5.  Happy Independence Day!

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 Defendant’s Motion to Overrule Plaintiff’s Objections to Discovery Requests

Legal Right Supersedes Physical Possession When It Comes to Control of ESI, Court Rules: eDiscovery Case Law

In First American Bankcard, Inc. v. Smart Business Technology, Inc., et. al., No. 15-638 (E.D. La., May 24, 2017), Louisiana Magistrate Judge Joseph C. Wilkinson, Jr. granted the Plaintiff’s Motion to Compel Discovery and for Reasonable Expenses against one of the defendants in “substantial part” with regard to interrogatories and requests for production of ESI within physical possession of the former owners of the defendant company, but denied “in limited part” with regard to the plaintiff’s request to take forensic imaging of the defendant company’s computer system, because “neither the relevance nor the proportionality of the forensic imaging sought by this request are readily apparent to the court”.

Case Background

In this case regarding damages the plaintiff allegedly incurred as a result of “deficient and defective” software design, manufacture and hosting of software products for use by plaintiff in processing cash advance and check cashing at casinos, the plaintiff served discovery requests, including document requests upon one defendant – Smart Business Technology, Inc. (Smart).  After determining Smart’s responses and objections to be lacking, the plaintiff filed a Motion to Compel and for Reasonable Expenses to obtain additional responses to certain interrogatories and certain document requests.

Judge’s Ruling

Judge Wilkinson granted the motion with regard to the plaintiff’s Interrogatories, overruling all objections and stating that “defendant has offered nothing sufficient to support or establish its objections on grounds of disproportionality and undue burden and expense outweighing the likely benefit of this highly relevant discovery.”

With regard to the defendant’s objections to producing requested ESI because it “does not have possession of the requested data” because it “is no longer a going concern” and, upon its business demise, the materials “remained in the hands of [its] former owners and top officers, co-defendants Fuente and Romero”, Judge Wilkinson stated that “[t]his argument is unpersuasive for two reasons… First, because defendant did not assert this argument in its Rule 34(b) written responses, the objection has been waived… Second, a party’s obligation to produce materials in the Rule 34 production and inspection process extends beyond mere possession. Defendant’s obligation is to produce such materials or electronically stored information (“ESI”) that are within its possession, custody or control…Rule 34’s definition of possession, custody, or control, includes more than actual possession or control of [documents]; it also contemplates a party’s legal right or practical ability to obtain [documents] from a [non-party] to the action.”

With regard to the plaintiff’s request to take forensic imaging of the defendant company’s computer system, Judge Wilkinson stated that the “motion is denied, at least at this time”, noting that “[u]nlike the discovery that is the subject of the interrogatories and requests for production addressed above, neither the relevance nor the proportionality of the forensic imaging sought by this request are readily apparent to the court.”

So, what do you think?  What does “possession, custody or control” mean to you?  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.