Close
Enter your
text here

Case Law

Judge Peck Wades Back into the TAR Pits with ‘Da Silva Moore Revisited’: eDiscovery Case Law

In Rio Tinto Plc v. Vale S.A., 14 Civ. 3042 (RMB)(AJP) (S.D.N.Y. Mar. 2, 2015), New York Magistrate Judge Andrew J. Peck approved the proposed protocol for technology assisted review (TAR) presented by the parties, but made it clear to note that “the Court’s approval ‘does not mean. . . that the exact ESI protocol approved here will be appropriate in all [or any] future cases that utilize [TAR].’”

Judge’s Opinion

Judge Peck began by stating that it had been “three years since my February 24, 2012 decision in Da Silva Moore v. Publicis Groupe & MSL Grp., 287 F.R.D. 182 (S.D.N.Y. 2012)” (see our original post about that case here), where he stated:

“This judicial opinion now recognizes that computer-assisted review [i.e., TAR] is an acceptable way to search for relevant ESI in appropriate cases.”

Judge Peck then went on to state that “[i]n the three years since Da Silva Moore, the case law has developed to the point that it is now black letter law that where the producing party wants to utilize TAR for document review, courts will permit it.” (Here are links to cases we’ve covered related to TAR in the last three years). He also referenced the Dynamo Holdings case from last year, calling it “instructive” in its approval of TAR, noting that the tax court ruled that “courts leave it to the parties to decide how best to respond to discovery requests”.

According to Judge Peck, the TAR issue still to be addressed overall “is how transparent and cooperative the parties need to be with respect to the seed or training set(s)”, commenting that “where the parties do not agree to transparency, the decisions are split and the debate in the discovery literature is robust”. While observing that the court “need not rule on the need for seed set transparency in this case, because the parties agreed to a protocol that discloses all non-privileged documents in the control sets”, Judge Peck stated:

“One point must be stressed — it is inappropriate to hold TAR to a higher standard than keywords or manual review. Doing so discourages parties from using TAR for fear of spending more in motion practice than the savings from using TAR for review.”

While approving the parties’ TAR protocol, Judge Peck indicated that he wrote this opinion, “rather than merely signing the parties’ stipulated TAR protocol, because of the interest within the ediscovery community about TAR cases and protocols.” And, he referenced Da Silva Moore once more, stating “the Court’s approval ‘does not mean. . . that the exact ESI protocol approved here will be appropriate in all [or any] future cases that utilize [TAR]. Nor does this Opinion endorse any vendor . . ., nor any particular [TAR] tool.’”

So, what do you think? How transparent should the technology assisted review process be? 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. eDiscoveryDaily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

Court Rules on Dispute about Search Terms and Organization of Produced Documents: eDiscovery Case Law

In Lutzeier v. Citigroup Inc., 4:14-cv-00183-RLW (E.D. Mo. Feb. 2, 2015), Missouri District Judge Ronnie I. White ruled on two motions to compel discovery by the plaintiff, addressing (among other things) disagreement on search terms to be used by the defendant and lack of organization and labeling of the defendant’s production to date.

Case Summary

In this employment termination dispute, the plaintiff filed a motion to compel defendant’s discovery in several areas, including asking the Court to order the defendants to add five categories of search terms, as follows:

(1) “Executive training” and/or “leadership development training program”;

(2) “PEP” and/or “program expenditure proposal” and/or “internal control”,

(3) “OCC,” “office of comptroller of currency,” “FRB,” “federal reserve board,” and/or “consent order”;

(4) “Insufficient assurance”; and

(5) “Whistleblower,” “retaliate,” “retaliation,” “SOX,” “Sarbanes Oxley,” and/or “Dodd Frank.”

The defendants claimed that the new categories of search terms were “so common and generic that they will return a significant volume of irrelevant documents that it is not sufficient to justify the additional burden”, maintaining that using the search protocol for “Fred,” “Lutzeier,” “LOIS,” “COSMOS,” and “Champney” would produce all of the relevant documents. The defendants also claimed that adding these additional search terms would produce an additional 555,909 documents and, therefore, the burden “greatly outweighs the likelihood that these searches will yield additional documents not already captured by Defendants’ search protocol.”

In the plaintiff’s second motion to compel, he complained that the defendants had produced in excess of 46,217 documents without providing any indication as to which documents are responsive to which of Plaintiff’s 58 requests for production. The defendants acknowledged that they did not organize and label their production, but argued that the ESI agreement dictates the method of production and further claimed that, even if Rule 34(b)(2)(E) controls, they had complied with its requirements as the document production was fully searchable, “which negates any need to organize the production”.

Judge’s Ruling

Judge White agreed that “the majority of the search terms suggested by Plaintiff are too generic and are likely to produce a large number of documents that are irrelevant to this case” and found that “the current search criteria adequately ensures that the proper documents that are relevant to Plaintiff’s causes of action are produced”. As a result, he denied the plaintiff’s request to additional search criteria, except for the phrase “consent order” because “there appears to be some confusion as to whether other consent orders exist that are relevant to this case”.

As for organization of the production, Judge White ruled that the method of the defendants’ production “complies with both the ESI agreement and with Rule 34″. Both parties relied on Venture Corp. Ltd. v. Barrett in their arguments, and Judge White held that the defendants “have complied with the requirements outlined there”, finding “that Defendants’ production is in a reasonably usable form or forms and/or the production is searchable, sortable and paired with relevant metadata.”

So, what do you think? What information should courts require to be able to rule on the relevance of search terms? 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. eDiscoveryDaily 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. eDiscoveryDaily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

You Don’t Get a Second Chance to Make a First Document Production Request: eDiscovery Case Law

In Allison v. Clos-ette Too, LLC, No. 14 CV 1618 (LAK)(JCF) (S.D.N.Y. Jan. 9, 2015), New York Magistrate Judge James C. Francis, among other motions considered, denied the plaintiff’s motion to compel the defendants’ production of electronically stored information (ESI) in native format after the plaintiff had previously requested (and received) ESI from the defendants without specifying the desired document format.

Case Summary

In this employment dispute, the plaintiff originally requested ESI from the defendants in July 2014, without specifying a format. The defendants responded to the plaintiff’s demands later that month, and supplemented their response on various dates and the plaintiff did not object to the format of these productions. However, when the defendants requested that all ESI be produced in native format, the plaintiff was inspired to make a reciprocal request regarding the documents previously produced by the defendants. Following an oral discussion and request by plaintiff’s counsel that the defendants reproduce the earlier production in native format, the defendants declined to do so and the plaintiff filed the instant motion to compel.

Judge Francis dealt with the plaintiff’s request swiftly, as follows:

“Under Rule 34 of the Federal Rules of Civil Procedure, a party may specify the form in which electronically stored information is to be produced. Fed. R. Civ. P. 34(b)(1)(C). “If a request does not specify a form for producing electronically stored information, a party must produce it in a form or forms in which it is ordinarily maintained or in a reasonably usable form or forms.” Fed. R. Civ. P. 34(b)(2)(E)(ii). The plaintiff did not originally object to the format of the defendants’ productions…She does not appear to contest that it is “reasonably usable,” nor does she even allege that native format documents would be more useful to her. As “[a] party need not produce the same electronically stored information in more than one form,” Fed. R. Civ. P. 34(b)(2)(E)(3), the plaintiff’s motion to compel is denied.”

So, what do you think? Should the plaintiff have been entitled to a second production? 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. eDiscoveryDaily 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. eDiscoveryDaily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

Appeals Court Reverses Award for Attorney Fees for Overbroad ESI Requests: eDiscovery Case Law

In Bertoli et al. v. City of Sebastopol, et al., No.A132916 (Ct. App. Ca. Jan. 20, 2015), the California Court of Appeals, while not disagreeing with the trial court’s finding that the plaintiff’s ESI request was “unfocused and nonspecific, unduly burdensome, and an alarming invasion of privacy rights”, disagreed that their Public Records Act (PRA) requests were “clearly frivolous” and reversed the trial court’s order for attorneys fees and costs.

Case Summary

The plaintiff, after being hit by a car while walking in a crosswalk, was rendered permanently physically and mentally disabled. Her attorney served PRA requests seeking electronically stored information (ESI) on the defendant in anticipation of her personal injury lawsuit. There was an initial request for collision reports, about which the defendant maintained it provided several records and offered for the plaintiff’s attorney to indicate which additional collision reports he wanted.

When the plaintiff served an additional 62 ESI requests, including requests to search private computers that the plaintiff believed could contain responsive documents, the defendant objected to the 62 separate requests as “overly extensive, overly broad and, in some cases, unlimited in time.” The defendant made suggestions to narrow the requests, and the plaintiff offered to pay for a third-party eDiscovery vendor to assist with the searches, but the disputes continued. Once the personal injury lawsuit was filed, the defendant set a deadline for the plaintiff’s attorney to complete his review. Ultimately, the parties could not reach an agreement on the ESI requests and the plaintiff filed a Petition for Writ of Mandate under the Public Records Act for relief.

In June 2011, the trial court – having “carefully weighed the competing interests at stake” – denied the petition. In its order, it noted that the defendant had shown a “remarkable degree of openness and cooperation” in its response to the plaintiff’s PRA requests and characterized the relief sought in the Petition as an “unprecedented fishing expedition” which would “constitute an alarming invasion of property rights, an extravagant use of limited city resources, and an unwanted green light for immoderate discovery.” Pursuant to the Public Records Act, the trial court deemed the petition “clearly frivolous” and ordered for the plaintiff to pay the defendant’s requested attorneys’ fees, which had risen from the initial request of $42,280 to $82,380. The plaintiff appealed the trial court’s finding of clear frivolousness in August 2011 and appealed the amount of fees awarded in March 2012.

The appellate court’s analysis agreed with the trial court’s finding that the plaintiff’s requests constituted an undue burden, but stated that “the mere fact that the Petition was impermissibly overbroad and therefore properly rejected by the trial court does not necessarily mean that it was entirely without merit. Rather, as stated above, it is an open issue whether and to what extent public records may be obtained from private computers under the PRA. Further, there was evidence that several current employees had responsive documents that were not disclosed and that certain city council members, at least, used their home computers for City-related business. Thus, despite the overbreadth of the Petition, it was not, on that basis, clearly frivolous.” As a result, the appellate court reversed the order for attorneys fees and costs.

So, what do you think? Should the unduly burdensome requests be enough to justify reimbursement of attorneys fees or was the appellate court decision correct? 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. eDiscoveryDaily 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. eDiscoveryDaily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

Judge Shows Her Disgust via “Order on One Millionth Discovery Dispute”: eDiscovery Case Law

In Herron v. Fannie Mae, et al., 10-943 (RMC) (DC Feb. 2, 2015), DC District Judge Rosemary M. Collyer issued an order titled “Order on One Millionth Discovery Dispute” where she decided that “Contrary to its usual practice, the Court will rule immediately, in writing” on the latest discovery disputes between the plaintiff and defendant.

In this case, the plaintiff, a former vice president who returned to the defendant in 2009 as a consultant to help implement U.S. Department of Treasury mortgage foreclosure prevention programs, sued the defendant for wrongful termination, claiming she was fired after reporting what she believed were problems with how the defendant was handling those programs. In her four page order, Judge Collyer made clear her disgust with the process, as follows:

“The parties are inching towards the end of discovery, the time for which has been extended repeatedly. Most recently, this Court declared that all discovery will terminate at the end of February. The parties bring yet another discovery dispute before the Court and request a telephone conference (the Court’s preferred method of resolving discovery issues).

Much as the Court admires the advocacy of counsel, it is exhausted with these disputes. Contrary to its usual practice, the Court will rule immediately, in writing, based on Plaintiff’s letter dated January 30, 2015 (Letter) addressed to the Court and attachments and Fannie Mae’s letter dated February 2, 2015 addressed to the Court and attachments.”

With regard to the plaintiff’s request for “both documents and testimony from a Fannie Mae representative about . . . [t]he process by which bonuses were awarded…[and] [t]he criteria used by management…showing how corporate goals regarding the MHA Program (including HAMP…) were met”, Judge Collyer rejected the plaintiff’s requests stating:

“Even as narrowed by the parties, these deposition and document-request topics are highly overbroad…Her allegations of wrongful termination from a single contractor position on a single Program do not entitle her to the entirety of the confidential internal presentations and deliberations on executive bonuses by the Board of Directors for all of Fannie Mae’s executive staff for two years…These topics could have, and should have, been laser focused. They were not and will not be enforced.”

Judge Collyer also ruled on the plaintiff’s requests for 30(b)(6) witness testimony, granting the request on a limited basis in one instance and requiring the defendant to designate two previous deponents as 30(b)(6) witnesses to the extent of their prior testimony or produce a different 30(b)(6) witness.

So, what do you think? Are there WAY too many disputes regarding discovery today? 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. eDiscoveryDaily 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. eDiscoveryDaily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

When Claiming Workplace Injury, Facebook Posts Aren’t Handy, Man: eDiscovery Case Law

In Newill v. Campbell Transp. Co., 2:12-cv-1344 (W.D. Pa. Jan. 14, 2015), Pennsylvania Senior District Judge Terrence F. McVerry ruled on the plaintiff’s motion in limine on miscellaneous matters by allowing the defendant to introduce Facebook posts into evidence that related to the plaintiff’s physical capabilities, but not those that related to his employability.

Case Summary

In this workplace injury case related to the plaintiff’s employment with a shipping company, the plaintiff sought, via his motion, to preclude the defendant from introducing several of his Facebook posts into evidence, on the basis that they are irrelevant or would be unfairly prejudicial. The defendant responded that the posts were relevant to show that following the accident the plaintiff retained the ability to engage in physical activities despite his claim of injury.

The defendant sought to introduce Facebook posts where the plaintiff discussed “physically taxing activities” such as painting, landscaping, flooring, going to the gym, undercoating a truck, and “going physical”. The plaintiff also apparently advertised his services as a handyman and suggested that “no job [was] 2 big or 2 small.” The Defendant also argued that the posts were relevant to the question of the plaintiff’s employability, which the defendant’s expert testified would have been improved if he adopted a “sensible social medial presence” and eliminated posts containing “casual or rough language” on Facebook.

Judge’s Decision

Judge McVerry found that “posts from Plaintiff’s Facebook account ‘that reflect physical capabilities inconsistent with a plaintiff’s claimed injury are relevant.’”  He also stated, however:

“While the Court understands that Plaintiff may be embarrassed by the content of some of his posts, that alone is not a sufficient basis for excluding the posts under Rule 403. If, at trial, Defendant attempts to introduce a particular Facebook post that Plaintiff feels is unduly embarrassing, the issue of the admissibility can be re-raised at that time and the Court reserves the discretion to exclude it pursuant to Fed. R. Evid. 611 (granting the court discretion to bar harassment and undue embarrassment of a witness).

As to Defendant’s second argument, the Court is not convinced that Costantini should be permitted testify about Plaintiff’s inane postings on Facebook when discussing the issue of his employability. To be sure, potential employers do often consider an applicant’s Facebook account when making a hiring decision. But Costantini’s testimony that Plaintiff’s Facebook account “probably is not giving the employers a good impression” is nothing more than speculation. There is nothing in the record actually linking his Facebook posts to his inability to obtain new employment until recently or suggesting that the types of jobs for which Plaintiff was qualified would be harder to obtain because of his Facebook posts. Without such a link having been established, Costantini has no basis to offer an opinion on these matters.”

As a result, Judge McVerry denied the portion of the plaintiff’s motion “insofar as it seeks to prevent Defendant from introducing Facebook posts that tend to contradict his claimed damages”, but granted the portion with regard to the defendant’s expert being permitted to rely on Plaintiff’s Facebook posts in assessing his employability.

So, what do you think? Should the defendant be prohibited from introducing posts that demonstrate the plaintiff’s employability? 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. eDiscoveryDaily 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. eDiscoveryDaily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

Court Awards Attorney Fees to Defendant After Delayed Production by Plaintiff: eDiscovery Case Law

In Michigan Millers Mutual Insurance Co. v. Westport Insurance Corp., 1:14-cv-00151 (USDC W.D. Mich. Nov. 7, 2014), Michigan Magistrate Judge Phillip J. Green awarded some (but not all) of the attorney fees requested by the defendant after the plaintiff “made repeated promises to produce the subject documents”, but “failed to do so for nearly three months after the deadline for responding to Westport’s Rule 34 request” and “compliance was obtained only after Westport filed its motion to compel”.

Case Summary

In the reinsurance dispute described by the judge as a “document-intensive case”, the parties filed a Joint Status Report on May 7, 2014 in which they agreed “to make available” by May 28, certain identified documents without the need of a formal request for production. The deadline for voluntary production was extended at the plaintiff’s request to June 4 and the defendant completed its voluntary production of documents on that date. However, the plaintiff failed to do so.

The defendant sent the plaintiff inquiries as to the status of its production on June 10, 12 and 16. After receiving no response, on June 17, the defendant served a Rule 34 request for a production of documents, including those identified by the plaintiff for voluntary disclosure. The Rule 34 request incorporated the parties’ previous agreement to produce electronic documents in single page TIFF format with DII load file or native format within their original file structure. The defendant sent a reminder to the plaintiff on July 11 of their agreement to voluntarily produce the documents identified in the Joint Status Report and “specifically asked MMMIC’s counsel to advise if that understanding was incorrect”, which the plaintiff apparently never did.

The parties agreed to give the plaintiff an additional 14 days to produce responsive documents and, on August 1, the plaintiff responded to the Rule 34 request, indicating that “many documents [were] ready for production,” but also requested a protective order to prevent dissemination of the documents to persons not involved in the case. On August 6, the parties filed a joint proposed protective order regarding the handling of “Discovery Material”, but reminders from the defendant to the plaintiff to produce documents on August 6, 11 and 14 received no reply from the plaintiff, so on August 25, the defendant filed a motion to compel. After further back and forth, the parties agreed to an order on October 2, which noted that the production would be made no later than October 10. On October 13, the plaintiff finally produced 66,000 pages of documents in electronic format on three CDs.

Judge’s Decision

Judge Green stated that “MMMIC made repeated promises to produce the subject documents, beginning with the May 7, 2014, Joint Status Report, but it failed to do so for nearly three months after the deadline for responding to Westport’s Rule 34 request, and more than four months after the deadline for voluntary production set by the Court in the Case Management Order. Even then, compliance was obtained only after Westport filed its motion to compel, and on the eve of the scheduled hearing.

That constitutes a sufficient basis for awarding reasonable attorney’s fees and expenses to Westport.”

The defendant sought $10,399.75 in attorney’s fees and expenses under Rule 37(a)(5)(A), but Judge Green, after a detailed review of the hours expended (and factoring in a 7.5% discount), awarded $3,180.72.

So, what do you think? Should the fees have been awarded for the plaintiff’s late production? 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. eDiscoveryDaily 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. eDiscoveryDaily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

Plaintiffs Not Sanctioned for Late Production, Citing Their $29,000 Expense to Hire Experts to Assist: eDiscovery Case Law

In Federico et al. v. Lincoln Military Housing LLC, et al., 2:12-cv-80 (E.D. VA, Dec. 31, 2014), Virginia Magistrate Judge Douglas E. Miller, concluding that the defendants had not established that the plaintiffs had acted in bad faith when failing to meet production deadlines, declined to impose “any further sanction against Plaintiffs beyond the $29,000 expense associated with their expert’s production of the Facebook records”, except for a portion of the reasonable attorney’s fees associated with the original motion to compel.

Case Summary

In this class action for personal injury and property damage allegedly arising from mold in military housing, there had been numerous discovery disputes, including several motions for sanctions and reciprocal requests for costs and fees related to the parties’ alleged non-compliance. On June 4, 2014, the Court held the first hearing on discovery disputes, which came on the plaintiffs’ motions for Protective Orders seeking relief from the defendants’ requests for production, and certain subpoenas, during which the Court admonished the assembled plaintiffs present at the hearing to turn over related material to their attorney and permit counsel to determine whether it was relevant. The Court also advised the plaintiffs that there could be consequences if materials were not provided as required by the Rules.

After the plaintiffs’ supplemental productions were still considered incomplete by the defendant, the plaintiffs’ counsel stated they had engaged an outside vendor to provide estimates (which were then estimated to be $22,450, eventually rising to $29,000) and design a search protocol for electronic media. On July 10, the plaintiffs requested an emergency hearing to extend the July 17 production deadline, which the Court declined to do, advising plaintiffs’ counsel that if the plaintiffs were unable to produce any more responsive documents, they were required to advise the Court and defendants of the nature of any search they had performed. After the plaintiffs failed to meet the production deadline, the defendants filed a motion for sanctions to dismiss the plaintiffs’ claims for failure to comply.

In subsequent oral argument regarding the defendants’ motion, the plaintiffs indicated that they had engaged their IT consultant, who was present and described the ongoing process for searching and processing relevant records, primarily from social media. As a result, the Court deferred any ruling until after the consultant’s production. In September, Plaintiffs produced the results of their consultant’s search, including over 5,000 records from social media, and contended that any material omitted resulted from their clients’ inexperience in managing electronic production and not from bad faith or intentional destruction of evidence.

Judge’s Decision

Judge Miller used the Fourth Circuit’s four-part test to help decide whether to impose sanctions, as follows: (1) whether the non-complying party acted in bad faith, (2) the amount of prejudice that noncompliance caused the adversary, (3) the need for deterrence of the particular sort of non-compliance, and (4) whether less drastic sanctions would have been effective. With regard to the bad faith factor, Judge Miller stated:

“Defendants have failed to establish that any Plaintiff deliberately destroyed evidence known to be relevant, or otherwise acted in bad faith. While Plaintiffs’ delayed production should not have required Court action, they did eventually produce a nearly complete record of email and social medial posts and these materials were available to Defendants prior to most of the depositions. In addition, the limited relevance of the voluminous material produced suggests that any gaps in production were not likely intentional and do not prejudice Lincoln’s defense.”

As a result, Judge Miller ruled that the Court “declines to impose any further sanction against Plaintiffs beyond the $29,000 expense associated with their expert’s production of the Facebook records, but will award a portion of the reasonable attorney’s fees associated with the original motion to compel.”

So, what do you think? Should the plaintiffs have been sanctioned for their late production or was the judge’s ruling appropriate, considering the plaintiffs’ challenges and expense and efforts to comply? 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. eDiscoveryDaily 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. eDiscoveryDaily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

Plaintiff Sanctioned for Late Production, But Not for Failure to Produce Data Held by Outside Vendor: eDiscovery Case Law

In Ablan v. Bank of America, 11 C 4493 (N.D.Ill. Nov. 24, 2014), Illinois Magistrate Judge Daniel G. Martin recommended that the defendant’s Motion for Sanctions should be granted in part and denied in part, recommending that the plaintiffs be barred from using any new information at summary judgment or at trial that was contained on eight CD-ROMs produced late, but recommending no sanctions for failing to produce or make available documents held by the plaintiff’s outside vendor.

Case Summary

The plaintiffs had been previously sued in state court by third party Tax Strategies Group, LLC (“TSG”), claiming that plaintiff Ablan violated their Financial Representation Agreement with TSG by interfering with TSG’s efforts to obtain financing for the acquisition of a group of CarMax dealerships. The plaintiffs filed this litigation against the defendants in July 2011, while the State Court Litigation was still pending (it was settled a few months later).

The defendants’ current motion was originally a motion for evidence spoliation based upon the plaintiffs’ representations that the documents they received from TSG in the State Court Litigation no longer existed. After the defendants filed their motion, “Plaintiffs located eight (8) CD-ROMs containing discovery produced to Ablan by TSG in the State Court Litigation.” On June 26, 2014, over three months after discovery closed, the plaintiffs produced to the defendants the TSG documents contained on the eight (8) CD-ROMs, which contained over 14,000 pages of documents.

With the documents produced, the defendants were no longer seeking sanctions for spoliation, but did seek sanctions based on the plaintiffs’ failure to timely produce and supplement and identified two alleged discovery violations by the plaintiffs: “(1) Plaintiffs’ failure to timely produce 14,000 pages of TSG documents contained on the eight (8) CD-ROMs in their possession and (2) Plaintiffs’ failure to produce 350,000 TSG documents in the possession of their vendor, Protek”. The defendants requested that the plaintiffs pay defendants’ attorneys’ fees in bringing the motion as well as the defendants’ expert costs associated with reviewing the recently located TSG documents; and that the plaintiffs be barred from relying on or introducing any of the recently located TSG documents at summary judgment or trial.

Court Recommendation

Stating that there is “no explanation in the record as to why Plaintiffs’ initial search failed to uncover the eight (8) CD-ROMs of TSG documents”, Judge Martin found “that Plaintiffs violated Rule 26(e) by failing to timely supplement their production in response to Defendants’ First Set of Requests for Production of Documents. Thus, Rule 37 prohibits Plaintiffs from using any new information on the eight (8) CD-ROMS”. He also found that “Defendants would be prejudiced if Plaintiffs were allowed to rely on new information disclosed for the first time in their untimely production of TSG discovery documents to defeat summary judgment or at trial” and recommended that they be barred from doing so.

Regarding the documents held by the plaintiff’s outside vendor, Judge Martin stated that, although (under Rule 34) parties must produce data within their custody and control (even when not in their physical possession), that the plaintiffs never had possession, custody, or control of the data and did not have the legal right to obtain the data. He disagreed with the defendant that the plaintiffs should be required to subpoena the TSG documents from the vendor, instead finding that “Defendants did not seek an extension of the discovery deadline so that they could subpoena the information from Protek” and stating that “Such a request would very likely have been granted”. Judge Martin also rejected the defendant’s request that the plaintiff pay the defendants’ expert costs associated with reviewing the recently located TSG documents, stating that “there is no evidence that Plaintiffs’ tardy production caused Defendants’ excess expert costs”.

As a result, Judge Martin recommended that the plaintiffs pay defendants’ attorneys’ fees in bringing the motion, but NOT the defendants’ expert costs associated with reviewing the recently located TSG documents, and that the plaintiffs be barred from relying on or introducing any of the recently located TSG documents at summary judgment or trial.

So, what do you think? Should the plaintiffs have had to produce data held by their outside vendor, or was Judge Martin correct in ruling that they did not have custody and control? 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. eDiscoveryDaily 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. eDiscoveryDaily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

Payday Loan Company Sanctioned for Discovery Violations: eDiscovery Case Law

In James v. National Financial LLC, C.A. 8931-VCL (Del Ch. Dec. 5,2014), Delaware Vice Chancellor Laster granted the plaintiff’s motion for sanctions after determining that the defendant’s “discovery misconduct calls for serious measures”. However, the plaintiff’s request for a default judgment was not granted, but lesser sanctions that included attorneys’ fees and a ruling that the lack of information contained in the requested document resulted in an admission.

Case Summary

On May 7, 2013, the plaintiff borrowed $200 from the defendant, which does business in multiple locations in Delaware under the name Loan Till Payday LLC. The plaintiff needed the $200 to pay for rent and groceries. The loan agreement, which consisted primarily of boilerplate provisions, imposed onerous terms. It contemplated twenty-six bi-weekly payments of $60 with a final balloon payment of $260. The total repayments added up to $1,620, for a cost of credit of $1,420 and an APR of 838.45%. Yikes. The standard loan agreement signed by the plaintiff gave her sixty days after signing the agreement to opt out of the mandatory arbitration provision, which she did and filed a verified class action complaint against the defendant, claiming unconscionable lending practices.

During discovery, the plaintiff asked the defendant to provide information about loans it made, including the annual percentage rates (“APRs”). After the defendant moved for a protective order, the court ordered the defendant to produce certain categories of information, including the APRs. The defendant produced a spreadsheet containing some of the categories but not others. When the plaintiff checked the APRs against the few loan documents she had, they differed and the defendant’s principal ultimately agreed that the data contained errors. The court ordered the defendant to produce an updated spreadsheet (which they did) and an affidavit from an IT consultant attesting to the procedures used to populate the spreadsheet (which they did not), and the spreadsheet omitted information required by the court’s order. As a result, the plaintiff moved for default judgment sanctions against the defendant.

Court Ruling

Noting that “[t]he court expects Delaware counsel to play an active role in the discovery process, including in the collection, review and production of documents”, Vice Chancellor Laster granted the plaintiff’s motion for sanctions, but not the requested default judgment sanctions, stating that “National’s discovery misconduct calls for serious measures. Although I believe that entry of a default judgment would be warranted on these facts, I will not grant that remedy in light of the Delaware Supreme Court’s guidance about invoking the ultimate sanction and the availability of less punitive consequences.” Instead, the Vice Chancellor awarded attorneys’ fees and ruled that the lack of information contained in the requested document resulted in an admission.

So, what do you think? Should the default judgment sanction have been awarded? Please share any comments you might have or if you’d like to know more about a particular topic.

Click here to see our previous story about the Delaware Court of Chancery amending its Rules regarding discovery two years ago.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine. eDiscoveryDaily 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. eDiscoveryDaily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.