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Case Law

Despite 18 Missing Emails in Production, Court Denies Request for “Discovery on Discovery” – eDiscovery Case Law

In Freedman v. Weatherford Int’l, 12 Civ. 2121 (LAK) (JCF) (S.D.N.Y. Sept. 12, 2014), New York Magistrate Judge James C. Francis, IV denied the plaintiff’s request to, among other things, require the defendant to produce “certain reports comparing the electronic search results from discovery in this action to the results from prior searches” – despite the fact that the plaintiff identified 18 emails that the defendant did not produce that were ultimately produced by a third party.

Case Background

In this securities fraud class action, Judge Francis had previously denied three motions to compel by the plaintiffs seeking production of “(1) ‘certain reports comparing the electronic search results from discovery in this action to the results from prior searches’; (2) ‘documents concerning an investigation undertaken by [the] Audit Committee’ of [the] defendant…; and (3) ‘documents concerning an investigation undertaken by the law firm Latham & Watkins LLP’.”  In denying the motions, Judge Francis stated that “Although I recognized that such ‘discovery on discovery’ is sometimes warranted, I nevertheless denied the request because the plaintiffs had not ‘proffered an adequate factual basis for their belief that the current production is deficient.’”

However, Judge Francis granted reconsideration and asked for further briefing on the second item, based on the plaintiffs’ presentation of “new evidence, unavailable at the time [they] filed their [earlier] motion, which allegedly reveals deficiencies in [Weatherford’s] current production.”

Eighteen Missing Emails

The new evidence referenced by the plaintiffs consisted of 18 emails from “critical custodians at Weatherford” that were produced (after briefing on the original motion to compel was complete) not by the defendants, but by a third-party causing the plaintiffs to contend that Weatherford’s production is “significantly deficient.”  The plaintiffs contended that “providing them with a “report of the documents `hit'” by search terms used in connection with the Latham and Audit Committee Investigations will identify additional relevant documents that have not been produced here.”

Judge’s Ruling

However, Judge Francis disagreed, stating “the suggested remedy is not suited to the task. The plaintiffs admit that of those 18 e-mails only three, at most, would have been identified by a search using the terms from the investigations.”  He also cited Da Silva Moore, noting that “[T]he Federal Rules of Civil Procedure do not require perfection…Weatherford has reviewed “millions of documents [] and [produced] hundreds of thousands,” comprising “nearly 4.4 million pages,” in this case…It is unsurprising that some relevant documents may have fallen through the cracks. But, most importantly, the plaintiffs’ proposed exercise is unlikely to remedy the alleged discovery defects. In light of its dubious value, I will not require Weatherford to provide the requested report.”

So, what do you think?  Was the decision justified or should the defendant have been held to a higher standard?  Please share any comments you might have or if you’d like to know more about a particular topic.

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

Apple Recovers Part, But Not All, of its Requested eDiscovery Costs from Samsung – eDiscovery Case Law

Apple won several battles with Samsung, including ultimately being awarded over $1 billion in verdicts, as well as a $2 million sanction for the inadvertent disclosure of its outside counsel firm (Quinn Emanuel Urquhart & Sullivan LLP) commonly known as “patentgate”, but ultimately may have lost the war when the court refused to ban Samsung from selling products that were found to have infringed on Apple products.  Now, they’re fighting over relative chicken-feed in terms of a few million that Apple sought to recover in eDiscovery costs.

On December 5, 2013, Apple submitted its Bill of Costs seeking a total of over $6.2 million in three categories of taxable costs: “printed or electronically recorded transcripts;” “exemplification and the costs of making copies;” and “[c]ompensation of interpreters.” Samsung filed objections on January 24 of this year. Apple then filed an Amended Bill of Costs on February 6, 2014, waiving and withdrawing certain costs, including the costs related to its sanctions motion against Samsung. Apple’s Amended Bill of Costs sought a total of nearly $5.9 million in costs (of which, nearly $1.5 million related to eDiscovery costs).  Yet, on February 20, Samsung again filed objections.

On June 6, the Clerk taxed costs in the amount of $2,064,940.55, disallowing: $193,884.17 in transcript costs $3,346,652.74 in costs for exemplification and copies and $282,500 in compensation of interpreters.  Both parties sought judicial review of the Clerk’s assessment with Apple requesting that the Court increase the costs award to the full amount requested in their Amended Bill of Costs and Samsung making multiple arguments against the assessment of costs, including the fact that they were appealing the award, Apple only received a partial recovery and that millions of dollars requested were either untaxable or unjustified.

California District Judge Lucy H. Koh found that there was “no basis to defer a decision on the bill of costs pending Samsung’s appeal” and also concluded that Apple is the prevailing party because “[t]he large jury damages award in favor of Apple clearly “materially alter[ed] the legal relationship between the parties” in this case. Moreover, Samsung did not prevail on any of its counterclaims.”

With regard to the eDiscovery costs, Samsung argued that 1) Apple failed to prove that these costs were the functional equivalent of making copies and not costs for intellectual effect, 2) Apple’s documentation failed to prove whether the costs requested are tied to documents actually produced to Samsung and 3) Apple’s “extremely high per page e-discovery rate is excessive and therefore impermissible.”

Judge Koh focused in on the second argument, stating that “it is somewhat unclear from Apple’s documentation of its e-discovery costs whether and to what extent Apple’s claimed costs cover only the costs of documents produced to Samsung. However, in the briefing on the parties’ Cross-Motions, Apple acknowledges that many of its claimed e-discovery costs relate to documents not produced to Samsung.”  As a result, she ruled that “Using Apple’s own figures, Apple estimates that it uploaded a total of 18,264,712 pages of which 2,944,467 pages were ultimately produced…Based on this, the Court calculates that approximately 16.12% of Apple’s e-discovery costs were spent on documents produced to Samsung. The Court will therefore award Apple e-discovery costs in the amount of $238,102.66.” [emphasis added]

The awarded eDiscovery costs were part of an overall award to Apple of nearly $1.9 million.

So, what do you think?  Should the eDiscovery portion of the award have been limited to documents Apple produced?  Please share any comments you might have or if you’d like to know more about a particular topic.

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

October Case Law Pop Quiz Answers! – eDiscovery Case Law

Yesterday, we gave you a pop quiz for the eDiscovery case law that we’ve covered since the beginning of August. If you’re reading the blog each day, these questions should be easy! Let’s see how you did. Here are the answers.

1.  In which case was a request for predictive coding NOT approved by the Court?:

A. Bridgestone Americas Inc. v. Int’l Bus. Mach. Corp.

B. Dynamo Holdings v. Commissioner of Internal Revenue

C. In re Bridgepoint Educ., Inc., Securities Litigation

D. Predictive Coding was approved in ALL of the above cases

2.  In which case did the Court state that searching for ESI should not be deemed a replacement for other discovery mechanisms?:

A. United States v. Univ. of Neb. at Kearney

B. Boston Scientific Corporation v. Lee

C. Mazzei v. Money Store

D. Bridgestone Americas Inc. v. Int’l Bus. Mach. Corp.

3.  In which case was a party sanctioned for failing to preserve data in a readable form?:

A. United States v. Univ. of Neb. at Kearney

B. Boston Scientific Corporation v. Lee

C. Mazzei v. Money Store

D. Bridgestone Americas Inc. v. Int’l Bus. Mach. Corp.

4.  In which case did the Court liken the plaintiff’s fall back willingness to compromise to “Eddie Haskell singing the Beaver’s praises to June Cleaver, only moments after giving him the business in private”?:

A. United States v. Univ. of Neb. at Kearney

B. Boston Scientific Corporation v. Lee

C. Mazzei v. Money Store

D. Bridgestone Americas Inc. v. Int’l Bus. Mach. Corp.

5.  In which case did the Court approve the plaintiff’s predictive coding plan, even though it was “switching horses in midstream”?:

A. United States v. Univ. of Neb. at Kearney

B. Boston Scientific Corporation v. Lee

C. Mazzei v. Money Store

D. Bridgestone Americas Inc. v. Int’l Bus. Mach. Corp.

6.  In which case did the Court approve use of predictive coding, disagreeing that it was “unproven technology”?:

A. Price Waicukauski & Riley v. Murray

B. Small v. University Medical Center of Southern Nevada

C. Melian Labs, Inc. v. Triology LLC

D. Dynamo Holdings v. Commissioner of Internal Revenue

7.  In which case did a client claim legal malpractice by its attorney firm for failing to review documents before production?:

A. Price Waicukauski & Riley v. Murray

B. Small v. University Medical Center of Southern Nevada

C. Melian Labs, Inc. v. Triology LLC

D. Dynamo Holdings v. Commissioner of Internal Revenue

8.  In which case was the plaintiff allowed to produce images instead of native files due to a joint stipulation between the parties?:

A. Price Waicukauski & Riley v. Murray

B. Small v. University Medical Center of Southern Nevada

C. Melian Labs, Inc. v. Triology LLC

D. Dynamo Holdings v. Commissioner of Internal Revenue

9.  In which case did the special master assigned to the case recommend default judgment against the defendant for failing to preserve data on several devices, including smartphones?:

A. Price Waicukauski & Riley v. Murray

B. Small v. University Medical Center of Southern Nevada

C. Melian Labs, Inc. v. Triology LLC

D. Dynamo Holdings v. Commissioner of Internal Revenue

10. In which case was privilege not waived on the defendant’s seized computer that was purchased by the plaintiff at auction?:

A. Bridgestone Americas Inc. v. Int’l Bus. Mach. Corp.

B. Boston Scientific Corporation v. Lee

C. Melian Labs, Inc. v. Triology LLC

D. None of the above*

*The answer is Kyko Global Inc. v. Prithvi Info. Solutions Ltd.

As always, please let us know if you have questions or comments, or if there are specific topics you’d like to see covered.

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

October Case Law Pop Quiz! – eDiscovery Case Law

We enjoyed the eDiscovery case law pop quiz that we did back in August so much, that we decided it’s time for another one – this one is customized to the case law that we’ve covered since the beginning of August.  If you’re reading the blog each day, these questions should be easy!  If not, we’ve provided a link to the post with the answer.  We’re that nice.  Test your knowledge!  Tomorrow, we’ll post the answers for those who don’t know and didn’t look them up.

1.  In which case was a request for predictive coding NOT approved by the Court?:

A. Bridgestone Americas Inc. v. Int’l Bus. Mach. Corp.

B. Dynamo Holdings v. Commissioner of Internal Revenue

C. In re Bridgepoint Educ., Inc., Securities Litigation

D. Predictive Coding was approved in ALL of the above cases

2.  In which case did the Court state that searching for ESI should not be deemed a replacement for other discovery mechanisms?:

A. United States v. Univ. of Neb. at Kearney

B. Boston Scientific Corporation v. Lee

C. Mazzei v. Money Store

D. Bridgestone Americas Inc. v. Int’l Bus. Mach. Corp.

3.  In which case was a party sanctioned for failing to preserve data in a readable form?:

A. United States v. Univ. of Neb. at Kearney

B. Boston Scientific Corporation v. Lee

C. Mazzei v. Money Store

D. Bridgestone Americas Inc. v. Int’l Bus. Mach. Corp.

4.  In which case did the Court liken the plaintiff’s fall back willingness to compromise to “Eddie Haskell singing the Beaver’s praises to June Cleaver, only moments after giving him the business in private”?:

A. United States v. Univ. of Neb. at Kearney

B. Boston Scientific Corporation v. Lee

C. Mazzei v. Money Store

D. Bridgestone Americas Inc. v. Int’l Bus. Mach. Corp.

5.  In which case did the Court approve the plaintiff’s predictive coding plan, even though it was “switching horses in midstream”?:

A. United States v. Univ. of Neb. at Kearney

B. Boston Scientific Corporation v. Lee

C. Mazzei v. Money Store

D. Bridgestone Americas Inc. v. Int’l Bus. Mach. Corp.

6.  In which case did the Court approve use of predictive coding, disagreeing that it was “unproven technology”?:

A. Price Waicukauski & Riley v. Murray

B. Small v. University Medical Center of Southern Nevada

C. Melian Labs, Inc. v. Triology LLC

D. Dynamo Holdings v. Commissioner of Internal Revenue

7.  In which case did a client claim legal malpractice by its attorney firm for failing to review documents before production?:

A. Price Waicukauski & Riley v. Murray

B. Small v. University Medical Center of Southern Nevada

C. Melian Labs, Inc. v. Triology LLC

D. Dynamo Holdings v. Commissioner of Internal Revenue

8.  In which case was the plaintiff allowed to produce images instead of native files due to a joint stipulation between the parties?:

A. Price Waicukauski & Riley v. Murray

B. Small v. University Medical Center of Southern Nevada

C. Melian Labs, Inc. v. Triology LLC

D. Dynamo Holdings v. Commissioner of Internal Revenue

9.  In which case did the special master assigned to the case recommend default judgment against the defendant for failing to preserve data on several devices, including smartphones?:

A. Price Waicukauski & Riley v. Murray

B. Small v. University Medical Center of Southern Nevada

C. Melian Labs, Inc. v. Triology LLC

D. Dynamo Holdings v. Commissioner of Internal Revenue

10. In which case was privilege not waived on the defendant’s seized computer that was purchased by the plaintiff at auction?:

A. Bridgestone Americas Inc. v. Int’l Bus. Mach. Corp.

B. Boston Scientific Corporation v. Lee

C. Melian Labs, Inc. v. Triology LLC

D. None of the above

As always, please let us know if you have questions or comments, or if there are specific topics you’d like to see covered.

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

Battle Continues between Attorneys and Client over Attorneys’ Failure to Review Documents – eDiscovery Case Law

In Price Waicukauski & Riley v. Murray, 1:10-cv-1065-WTL-TAB (S.D. Ind. Sept. 18, 2014), Indiana District Judge William T. Lawrence granted the plaintiff’s request for summary judgment for failure to pay attorney’s fees of over $125,000, and refused to issue summary judgment for either party related to a legal malpractice claim for the plaintiff’s admitted failure to review documents produced in the defendants’ case against another party because of a factual dispute regarding the plaintiff’s knowledge of the documents produced.

Case Background

This case was filed in August 2010 by the Plaintiff, Price Waicukauski & Riley, LLC, (“PWR”) against the Defendants, Dennis and Margaret Murray and DPM, Ltd. (“Murrays”), to recover $127,592.91 in attorneys’ fees owed to the plaintiff. The attorneys’ fees stem from the plaintiff’s representation of the defendants in a rather contentious lawsuit against Conseco that spanned more than six years, ultimately settling.  In November 2010, unhappy with the plaintiff’s representation, the defendants filed a counterclaim against the plaintiff alleging legal malpractice.

Legal Malpractice Claim of Breach of Duty of Loyalty

The defendants alleged several allegations of legal malpractice against the plaintiff, including conflict of interest, failure to properly plead federal subject matter jurisdiction and failure to take depositions and conduct discovery as they requested, among other allegations.  One allegation related to the defendants’ claim that the plaintiff breached the duty of loyalty to the defendants by failing (despite the defendant’s request to do so) to review documents before production in the case that revealed a Trust set up on behalf of the plaintiffs that wasn’t disclosed in interrogatory responses.  The plaintiff informed Mr. Murray that it reviewed the documents; however, it ultimately admitted that it did not.  As a result of the misleading interrogatory responses, Conseco filed a motion for sanctions which was granted, resulting in the defendants being ordered to pay over $85,000 in attorneys’ fees to their opponent’s lawyers.

The defendants claimed that the plaintiff knew about the Trust from the outset of its representation; however, the plaintiff (“falsely and underhandedly”, according to the defendants) represented to the magistrate judge assigned to the Underlying Litigation that it had no knowledge of the Trust until the defendants’ accountant produced the Murrays’ tax returns.

Judge’s Analysis and Ruling

The plaintiffs referenced Niswander v. Price Waicukauski & Riley, LLC, where the court held that “[w]hether . . . the Plaintiffs’ attorneys had a duty to review the documents personally before producing them in discovery . . . is simply not something within the knowledge of a layperson.”  However, Judge Lawrence noted, “[t]he Murrays have no expert testimony on either of these two related claims; however, they claim they fall into the above-mentioned exception for when no expert testimony is needed: ‘when the question is within the common knowledge of the community as a whole or when an attorney’s negligence is so grossly apparent that a layperson would have no difficulty in appraising it.’”  Judge Lawrence also agreed with the defendants differentiation of Niswander to this case in that they specifically directed the plaintiff to review the documents while the plaintiffs in Niswander did not.

Judge Lawrence also stated that “[t]he same rings true with the Murrays’ allegation that PWR falsely denied knowledge of the Trust… Again, the Court believes that it is well within the knowledge of a layperson that attorneys should not lie and falsely implicate their own clients in order to shield themselves from liability. Thus, the Court agrees that no expert testimony is needed on this claim regarding the standard of care.”

However, Judge Lawrence decided that “neither party is entitled to summary judgment on this issue” because “there is a factual dispute that precludes granting summary judgment on this claim. PWR maintains that it did not lie; it steadfastly maintains that it had no knowledge of the Trust at the outset of the litigation. Thus, when asked by the magistrate judge when it found out about the Trust, it informed her truthfully. Therefore, whether or not PWR breached a duty that caused injury to the Murrays depends on whom the jury believes: Mr. Murray or PWR.”

Ultimately, Judge Lawrence granted the summary judgment on behalf of the plaintiffs for the attorney’s fees of $127,592.91 (which the defendant did not dispute, but argued that “[t]he successful pursuit of [their] claims would effectively eliminate PWR’s claim”) and denied the defendant’s summary judgment request, but refused a final judgment as outstanding claims remained against the plaintiff.  Judge Lawrence concluded his ruling by noting that “The only claims that remain to be tried are the proximate cause issue with regard to the federal subject matter jurisdiction claim and the allegation of malpractice committed by PWR as a result of its alleged failure to review certain documents that led to sanctions being imposed on Mr. Murray.”

So, what do you think?  Does the failure by the plaintiff to review the defendant’s production constitute legal malpractice?  Please share any comments you might have or if you’d like to know more about a particular topic.

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

Failure to Preserve Data on Various Devices Causes Special Master to Recommend Default Judgment – eDiscovery Case Law
 

In Small v. University Medical Center of Southern Nevada, No. 2:13-cv-00298-APG-PAL (D. Nev. Aug. 18, 2014), Special Master Daniel B. Garrie, calling the defendant’s widespread failure to preserve data a “mockery of the orderly administration of justice”, recommended that the court enter an order of default judgment, along with further sanctions, in favor of the plaintiffs.

This employment law dispute had required to date “a fully briefed motion to compel with accompanying oral argument; seven discovery status conferences over eight months before Magistrate Judge Peggy A. Leen; the appointment of Special Master Daniel B. Garrie; five in person, all day hearings conducted by the Special Master; 14 telephonic hearings before the Special Master; over 20 declarations submitted by employees and agents of UMC (many supplementing or amending prior incomplete or inaccurate declarations); and written submissions by counsel and ESI experts.”

A partial chronology within the Special Master’s report demonstrated that the defendant did not issue or put any litigation hold in place until after the plaintiffs had deposed a defendant witness, which was more than 250 days after the plaintiffs initiated the action.  As Special Master Garrie noted, “In fact, these proceedings confirmed UMC has no ‘litigation hold’ policy, and did not institute any "litigation hold" procedures in response to this lawsuit.”

The defendant had two policies for mobile devices: a “company-issued, personally enabled” (COPE) device policy and a “bring your own device” (BYOD) policy where employees used personal smart phones. Ultimately, it was determined that the devices under the COPE policy were not put under litigation hold until after a number of the devices were wiped clean, which resulted in the loss of 26,310 messages. As for devices under the BYOD policy, the defendant did not issue a litigation hold on the devices at all, which resulted in the loss of approximately two years of ESI that would have been potentially responsive to the case. 

The defendant also failed to identify and preserve network file shares, two laptops belonging to key custodians and work computers used by 24 of the 27 custodians, among other data sources.  As Special Master Garrie noted, “Not a single UMC executive took any of the steps necessary to ensure the preservation of evidence. No UMC executive took responsibility for instituting or enforcing a ‘litigation hold,’ or otherwise acting to ensure the preservation of documents in this case.”

As a result, Special Master Garrie recommended sanctions, stating, “Defendant UMC's extraordinary misconduct and substantial and willful spoliation of relevant ESI in this case resulted in substantial prejudice to Plaintiffs and the classes, and misled Plaintiffs, the Court, and the Special Master on numerous discovery issues…The level of intentional destruction of evidence by UMC shocks the conscious. As such, as to the 613 Opt-In Plaintiffs, default judgment should be entered against UMC pursuant to Rule 37(b)(2)(A)(iii) & (vi) and the Court's inherent powers.”  He also stated his belief that “Plaintiffs are entitled to sanctions in the form of specific factual findings relating to class certification, and a rebuttable presumption regarding certain merit issues.”  Finally, he recommended that the defendant “be ordered to reimburse Plaintiffs' reasonable costs and fees in these proceedings, including their costs in bringing a motion to compel production, in attending discovery status conferences before Magistrate Judge Leen, and for time spent in the proceedings before Special Master Garrie.”

So, what do you think?  Do the actions by the defendant merit such a harsh sanction?  Please share any comments you might have or if you’d like to know more about a particular topic.

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

Court Rules that Joint Stipulation Supports Plaintiff’s Production of Images Instead of Native Files – eDiscovery Case Law

In Melian Labs, Inc. v. Triology LLC, No. 13-cv-04791-SBA (N.D. Cal. Sept. 4, 2014), California Magistrate Judge Kandis A. Westmore denied the plaintiff’s motion to compel discovery in native form because the production format had been agreed upon under the parties’ ESI protocol under the Joint Rule 26(f) Report filed by the parties that supported production in “paper, PDF, or TIFF format”.

In this trademark dispute, the plaintiff sought a declaratory judgment that its website did not infringe upon the defendant’s trademark, but rather, that the defendant’s use of the trademark infringed on the plaintiff’s senior trademark rights.

On March 26, 2014, the parties filed a case management conference statement (referred to as the “Joint Rule 26(f) Report”), and informed the district court that:

“With respect to the production of electronic data and information, the parties agree that the production of metadata beyond the following fields are not necessary in this lawsuit absent a showing of a compelling need: Date Sent, Time Sent, Date Received, Time Received, To, From, CC, BCC, and Email Subject. The parties agree to produce documents electronic form in paper, PDF, or TIFF format, and spreadsheets and certain other electronic files in native format when it is more practicable to do so.”

The plaintiff began its document production on June 23 and had produced 1218 pages of documents to date.  On August 1, the defendant complained about the format of the plaintiff’s document production of its electronically stored information (“ESI”), claiming that the produced PDFs were stripped of all metadata in violation of the agreement of the parties and that the spreadsheets were not produced in native format.  The defendant contended that the plaintiff’s production of “7 large PDF image documents, which each appear to be a compilation of ESI improperly collected and produced,” were violative of Federal Rule of Civil Procedure 34(b)(2)(E), because they were not produced in their native format and are not reasonably usable.  The defendant also contended that the plaintiff failed to comply with the Joint Rule 26(f) Report by refusing to produce all spreadsheets in native format – the plaintiff acknowledged that some of its spreadsheet printouts were difficult to read, and, in those cases, it produced the spreadsheets in native format (Excel) upon request, but contended that the parties never agreed to produce all spreadsheets in native format.

Judge Westmore stated that “Triology’s complaint is purely one of form and, at this juncture, it is not claiming that Melian’s production is incomplete. Rule 34(b) only requires that the parties produce documents as they are kept in the usual course of business or in the form ordinarily maintained unless otherwise stipulated. Fed. R. Civ. P. 34(b)(2)(E). The parties’ Joint Rule 26(f) Report is a stipulation, and, therefore, Rule 34(b) does not govern. Further, the Joint Rule 26(f) Report does not require that all ESI be produced electronically. Instead, it states that ESI may be produced in paper, PDF or TIFF.”

Judge Westmore also noted that “Triology fails to articulate why metadata is important to emails, when every email should contain the information sought on the face of the document.”  As a result, he ruled that the defendant’s “request to compel the production of all emails in a searchable or native format is denied”.

So, what do you think?  Did the Joint Rule 26(f) Report allow the plaintiff to produce PDFs with no metadata or was the defendant still entitled to native files with at least the email metadata?  Please share any comments you might have or if you’d like to know more about a particular topic.

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

Court Approves Use of Predictive Coding, Disagrees that it is an “Unproven Technology” – eDiscovery Case Law
 

In Dynamo Holdings v. Commissioner of Internal Revenue, Docket Nos. 2685-11, 8393-12 (U.S. Tax Ct. Sept 17, 2014), Texas Tax Court Judge Ronald Buch ruled that the petitioners “may use predictive coding in responding to respondent's discovery request” and if “after reviewing the results, respondent believes that the response to the discovery request is incomplete, he may file a motion to compel at that time”.

The cases involved various transfers from one entity to a related entity where the respondent determined that the transfers were disguised gifts to the petitioner's owners and the petitioners asserted that the transfers were loans.

The respondent requested for the petitioners to produce the electronically stored information (ESI) contained on two specified backup storage tapes or simply produce the tapes themselves. The petitioners asserted that it would "take many months and cost at least $450,000 to do so", requesting that the Court deny the respondent's motion as a "fishing expedition" in search of new issues that could be raised in these or other cases. Alternatively, the petitioners requested that the Court let them use predictive coding to efficiently and economically identify the non-privileged information responsive to respondent's discovery request.  The respondent opposed the petitioners' request to use predictive coding, calling it "unproven technology" and added that petitioners could simply give him access to all data on the two tapes and preserve the right (through a "clawback agreement") to later claim that some or all of the data is privileged.

Judge Buch called the request to use predictive coding “somewhat unusual” and stated that “although it is a proper role of the Court to supervise the discovery process and intervene when it is abused by the parties, the Court is not normally in the business of dictating to parties the process that they should use when responding to discovery… Yet that is, in essence, what the parties are asking the Court to consider – whether document review should be done by humans or with the assistance of computers. Respondent fears an incomplete response to his discovery. If respondent believes that the ultimate discovery response is incomplete and can support that belief, he can file another motion to compel at that time.”

With regard to the respondent’s categorization of predictive coding as “unproven technology”, Judge Buch stated “We disagree. Although predictive coding is a relatively new technique, and a technique that has yet to be sanctioned (let alone mentioned) by this Court in a published Opinion, the understanding of e-discovery and electronic media has advanced significantly in the last few years, thus making predictive coding more acceptable in the technology industry than it may have previously been. In fact, we understand that the technology industry now considers predictive coding to be widely accepted for limiting e-discovery to relevant documents and effecting discovery of ESI without an undue burden.”

As a result, Judge Buch ruled that “[p]etitioners may use predictive coding in responding to respondent's discovery request. If, after reviewing the results, respondent believes that the response to the discovery request is incomplete, he may file a motion to compel at that time.”

So, what do you think?  Should predictive coding have been allowed in this 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 Discovery. eDiscoveryDaily is made available by CloudNine Discovery solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscoveryDaily should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

Court Grants Motion for Spoliation Sanctions Due to Data that is “Less Accessible” – eDiscovery Case Law
 

In Mazzei v. Money Store, 01cv5694 (JGK) (RLE) (S.D. N.Y. July 21, 2014), New York Magistrate Judge Ronald L. Ellis granted the plaintiff’s motion for spoliation sanctions against the defendant, ordering the defendant to bear the cost of obtaining all the relevant data in question from a third party as well as paying for plaintiff attorney fees in filing the motion.

In this class action fraud case, the plaintiff requested that the defendants be sanctioned for violating the duty to preserve information within an electronic database created by a third party, claiming that the information had been lost from the electronic database system and was now in the possession of another third party, making it more costly to retrieve.  Accordingly, the plaintiff asked the court to direct the defendants to obtain the information from the third party, as a sanction for their failure to preserve the information in its original format.

On the other hand, the defendants claimed that the information was preserved, but it was “not readable,” and stated that it would cost a minimum of $10,000 to determine if the information was even searchable. The defendants also argued that the “not readable” documents were not their responsibility to preserve and produce because the information was controlled by a third party.

Judge Ellis stated that “[a] party is in control of any documents in the possession of a third party if that third party is contractually obligated to make them available…Defendants had both the legal right and practical ability to obtain the information relating to fees in the New Invoice System after the initiation of this action”. He noted that the defendants had a Master Services Agreement with the original third party provider of the database, which gave the defendants “a contractual right to demand the information specifically identifying the fees being charged”, so the defendants “were in control of that information”.

Regarding the defendant’s contention that there is no spoliation issue because the plaintiffs have not shown that the information in the system is less accessible now than prior to the transfer of the defendants' access to the system, Judge Ellis declared “This argument has no merit. Mazzei asserts, and Defendants do not dispute, that the only remaining trace of the information in the New Invoice System is possessed by Lender Processing Services and is not presently in a readable format. Therefore, the information is less accessible than it was when Defendants had access to it.”

Finding that the information was relevant and that the defendants “acted with a culpable state of mind” when they failed to preserve the data in its original form, Judge Ellis ordered the defendants “to 1) bear the cost of determining whether the New Invoice System data currently in the possession of LPS is searchable; 2) pay Mazzei his attorneys' fees for this application.”  The plaintiff was ordered to “submit an affidavit detailing reasonable hours and rates associated with its motion by August 1”.

So, what do you think?  Was the judge right to sanction the defendant for failing to preserve the accessibility of the information?  Please share any comments you might have or if you’d like to know more about a particular topic.

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

Court Rules to Limit Scope of Discovery, Noting that “Searching for ESI is only one discovery tool” – eDiscovery Case Law

In United States v. Univ. of Neb. at Kearney, 4:11CV3209 (D. Neb. Aug. 25, 2014), Nebraska Magistrate Judge Cheryl R. Zwart denied the government’s motion to compel discovery, finding that “ESI is neither the only nor the best and most economical discovery method for obtaining the information the government seeks” and stating that searching for ESI “should not be deemed a replacement for interrogatories, production requests, requests for admissions and depositions”.

This Fair Housing Act case involved a case brought about by the government with claims that students were prohibited or hindered from having “emotional assistance animals in university housing when such animals were needed to accommodate the requesting students’ mental disabilities.  Discovery has been a lengthy and disputed process since the parties filed a Stipulation and Order Regarding Discovery back in March of 2012.

The scope of ESI was a major part of the dispute. The defendants objected that the government’s search parameters were too expansive, and the cost of compliance would be unduly burdensome. The defendants explained that the cost of retrieval, review, and production would approach a million dollars, and provided an outline identifying the document “hits” and the estimated discovery costs.  The government served revised search terms on April 14, 2014. Although narrowed, the government’s search terms would still yield 51,131 responsive documents, and based on the defendants’ estimate, would require the defendants to expend an additional $155,574 to retrieve, review, and produce the responsive ESI.

To date, the defendants had paid $122,006 to third-party vendors for processing the government’s ESI requests and proposed the requests be narrowed to the “housing” or “residential” context. The defendants’ search terms would yield 10,997 responsive documents.  The Government did not want to limit the scope of discovery and recommended producing all the ESI subject to a clawback agreement for the Government to search the ESI. The Defendants argued such an agreement would violate the Family Educational Rights and Privacy Act by disclosing student personal identifiable information without their notice and consent.

The court had ordered the parties to provide answers to specific questions regarding their efforts at resolving ESI as part of any motion to compel filed. The government’s responsive statement does not include information comparing the cost of its proposed document retrieval method and amount at issue in the case, any cost/benefit analysis of the discovery methods proposed, or a statement of who should bear those costs.

Judge Zwart stated that she “will not order the university to produce ESI without first reviewing the disclosure, even with the protection afforded under a clawback order. And if UNK must review the more than 51,000 documents requested by the government’s proposed ESI requests, the cost in both dollars and time exceeds the value to be gained by the government’s request.”

Illustrating the lack of proportionality in the government’s requests, Judge Zwart stated “Searching for ESI is only one discovery tool. It should not be deemed a replacement for interrogatories, production requests, requests for admissions and depositions, and it should not be ordered solely as a method to confirm the opposing party’s discovery is complete. For example, the government proposes search terms such as ‘document* w/25 policy.’ The broadly used words “document” and “policy” will no doubt retrieve documents the government wants to see, along with thousands of documents that have no bearing on this case. And to what end? Through other discovery means, the government has already received copies of UNK’s policies for the claims at issue.”

As a result, Judge Zwart stated that “the court is convinced ESI is neither the only nor the best and most economical discovery method for obtaining the information the government seeks. Standard document production requests, interrogatories, and depositions should suffice—and with far less cost and delay.”

So, what do you think?  Were the government’s requests overbroad or should they have been granted their motion to compel?  Please share any comments you might have or if you’d like to know more about a particular topic.

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