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Court Determines that Software License Agreement Does Not Eliminate Production Obligation of Video – eDiscovery Case Law

In Pero v. Norfolk S. Ry., Co., No. 3:14-CV-16-PLR-CCS, (E.D. Tenn. Dec. 1, 2014), Tennessee Magistrate Judge C. Clifford Shirley, Jr. granted the plaintiff’s motion to compel discovery of a video declining to require the plaintiff to view the video at the defendant’s counsel’s office or obtain a license for the proprietary viewing software, ordering the defendant instead to either produce a laptop with the video loaded on it or to reimburse the plaintiff for the cost of a software license.

Case Background

The plaintiff, an employee of the defendant, alleged that he was injured during an effort to remove a tree that was blocking railroad tracks. There was a video of the incident, captured with a RailView camera on the locomotive, and the plaintiff filed a motion to compel production of the video after the defendant refused to produce the video recording captured by the RailView camera, because of perceived licensing issues with the software used to view RailView recordings. As a result, the plaintiff filed a motion to compel production of the video and the defendant moved for a protective order.

The defendant stated “that it merely owns a license to use the software and providing a copy of the license to Plaintiff for Plaintiff’s counsel to use in viewing the video would exceed the scope of Defendant’s own license”. Instead, the defendant offered “to permit Plaintiff’s counsel to view the RailView recording at Defendant’s counsel’s office” or suggested “that Plaintiff can pay $500 to obtain its own license to use the RailView software to view the recording”.

Judge’s Ruling

Judge Shirley, in his ruling, referenced Fed. R. Civ. P. 34, which “instructs that if a requesting party does not specify a form for producing electronically stored information, then the responding party ‘must produce it in a form or forms in which it is ordinarily maintained or in a reasonably usable form or forms.’” He also referenced the Comments to the 2006 Amendments which state: “Under some circumstances, the responding party may need to provide some reasonable amount of technical support, information on application software, or other reasonable assistance to enable the requesting party to use the information.” Finally, he referenced relevant case law where other railroad entities objected to production of similar video recordings, singling out Donahoo v. CSX Transportation, Inc., 4:12-CV-104-JHM-HBB, Doc. 46 (E.D. Ky. July 10, 2014), and Swoope v. CSX Transportation, Inc., 4:13-CV-307-HLM, Doc. 54 (N.D. Ga. Aug. 13, 2014) as particularly persuasive.

Finding “that the Defendant’s arguments against producing the recording are not well-taken”, Judge Shirley noted that “Police cruiser cameras, store cameras, and surveillance cameras often use unique operating software, which is almost always embedded with additional information — date, location, usage of lights or other tools — but the existence and use of this software cannot insolate against production. As noted by the court in Swoope, the Defendant certainly envisioned the recordings produced by RailView being used in litigation or other claims against it. It cannot use its choice to enter into a software agreement as a shield against producing a relevant piece of discovery, nor can it use the agreement as a basis for attaching burdensome conditions to the production of the recording.”

As a result, Judge Shirley granted the motion to compel production of the video, ordering the defendant “to either (1) provide the Plaintiff with a laptop computer loaded with the video recording and the software for viewing the recording, which would be used only for that litigation and returned after the litigation, or (2) request that the Plaintiff procure a software license and the Defendant would then reimburse Plaintiff for the costs of that license, within thirty (30) days of its procurement.”

So, what do you think? Should the defendants have been compelled to produce the video or was their proposed approach acceptable? 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 Agrees with Defendants that Producing Medical Records in Native Form is an “Undue Burden” – eDiscovery Case Law
 

In Peterson v. Matlock, 11-2594 (FLW)(DEA). (D.N.J.Oct. 29, 2014), New Jersey Magistrate Judge Douglas E. Arpert denied the plaintiffs motion to compel defendants to produce the plaintiff's electronically stored medical records in “native readable format” after the defendants produced the records in PDF format, agreeing that the defendants had demonstrated that they would suffer an undue burden in complying with the plaintiff's request.

The plaintiff sought a native file production from a computer system that maintained medical files of prison inmates in a database application called “Centricity” from the New Jersey Department of Corrections (DOC) related to his claim that he was beaten by several correctional officers while restrained with handcuffs.  The plaintiff's medical records were previously provided in a PDF file organized in reverse chronological order, which the plaintiff claimed renders the records difficult to navigate and interpret.  According to the plaintiff, when provided in PDF format, the record is missing “the functionality, searchable data points, and metadata which are part of the electronic medical record and are available to a provider…using Centricity.”  Additionally, the plaintiff claimed that the PDF record is missing metadata stored in Centricity in the form of an "audit trail" which records changes or additions to the record.

The defendants argued that the form in which the plaintiff's records were provided is the standard output and method of production and that to produce the records in the form requested by the plaintiff “would be an inordinate drain of time and manpower” because staff from the DOC would be required to “sort through each page of the medical record and make the determination as to which category it fits into.”

Judge Arpert stated that “While Plaintiff claims the record as provided in PDF format is difficult to interpret and navigate, Defendants have demonstrated that they would suffer an undue burden in complying with Plaintiff's request to provide the records in their native format. Although the PDF record provided may be less convenient for Plaintiff, requiring staff from the DOC to sort and identify each page of every inmate medical record would create a substantial hardship and/or expense, which outweighs Plaintiff's interests in receiving the records in their native format.”  As a result, the judge found “that Defendants have fulfilled their obligation with respect to the production of Plaintiff's medical records” and denied the plaintiff’s motion to compel.

So, what do you think?  Should the defendants have been compelled to produce the data natively?  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.

Finding Defendant’s Destruction of Documents to be “Planned, Repeated and Comprehensive”, Court Awards Judgment to Plaintiff – eDiscovery Case Law

In Regulatory Fundamentals Group v. Governance Risk Management Compliance, 13 Civ. 2493 (KBF) (S.D.N.Y. Aug. 5, 2014), New York District Judge Katherine B. Forrest granted the plaintiff’s motion for sanctions and ordered that judgment be entered for the defendant’s “planned, repeated, and comprehensive” destruction of highly-relevant documents.

Case Background

In this copyright infringement action, after the parties engaged in limited discovery, the defendant informed the plaintiff that it “might be missing certain emails.” The defendant later revealed that he had canceled his email account with a third-party vendor, which had hosted his corporate defendants’ websites and email domains.  After the plaintiff noticed the defendant for a deposition to investigate the cancellation and he failed to appear, the plaintiff filed a motion for sanctions alleging that the defendant had engaged in spoliation.

Judge’s Ruling

Judge Forrest began her ruling this way:

“A party to a lawsuit may not destroy relevant evidence without consequence. The nature and magnitude of the consequence follows from the level of culpability. Was, for instance, the destruction of evidence inadvertent and the result of an oversight? Or was it the product of a plan?

The individual defendant in this lawsuit destroyed a large number of highly relevant documents — preventing plaintiff and any finder of fact from ever knowing the full truth of what occurred. Following discovery, lengthy briefing, and an evidentiary hearing, the Court has found that defendant’s destruction was planned, repeated, and comprehensive. It was malicious. This finding is particularly unfortunate in light of the plain fact that the spoliation has turned what was a straightforward commercial dispute into a far more serious issue.

The spoliator here — defendant Gregory V. Wood — is a graduate of Cornell Law School and a member of the bar of the State of New York. His conduct has resulted in entry of judgment against him.”

Judge Forrest noted that “to support the imposition of sanctions, ‘the innocent party must prove the following three elements: that the spoliating party (1) had control over the evidence and an obligation to preserve it at the time of destruction or loss; (2) acted with a culpable state of mind upon destroying or losing the evidence; and that (3) the missing evidence is relevant to the innocent party’s claim or defense.’”

Finding that all three elements were satisfied in this case caused Judge Forrest to issue the following analysis:

“RFG has clearly been prejudiced by Wood’s intentional spoliation. The Court has considered whether sanctions less severe than termination are warranted. For example, the Court has considered monetary sanctions or the imposition of an adverse inference. Neither would be sufficient under the circumstances. The lack of emails prevents RFG from proving the full extent or scope of Wood’s conduct.

Wood’s deletion of emails and his attempted cover-up put RFG in an untenable litigation position — the evidence of the scope of defendants’ alleged misconduct is gone forever. Any sanction short of a terminating sanction would fail to account for the prejudice or to sufficiently penalize Wood or deter others from engaging in such misconduct. Accordingly, the Court grants RFG’s request for a terminating sanction.”

So, what do you think?  Did the defendant’s actions justify the ultimate 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 Opts for Defendant’s Plan of Review including TAR and Manual Review over Plaintiff’s TAR Only Approach – eDiscovery Case Law
 

In Good v. American Water Works, 2:14-01374 (S.D. W. Vir. Oct. 29, 2014), West Virginia District Judge John T. Copenhaver, Jr. granted the defendants' motion for a Rule 502(d) order that merely encouraged the incorporation and employment of time-saving computer-assisted privilege review over the plaintiffs’ proposal disallowing linear privilege review altogether.

Case Background

In this class action litigation involving the Freedom Industries chemical spill, the parties met and conferred, agreeing on all but one discovery issue: privilege review and 502(d) clawbacks.  The defendants proposed that the Rule 502(d) order merely encourage the incorporation and employment of computer-assisted privilege review, while the plaintiffs proposed that the order “limit privilege review to what a computer can accomplish, disallowing linear (aka ‘eyes on’) privilege review altogether”.

The plaintiffs would agree only to a pure quick peek/claw-back arrangement, which would place never-reviewed, never privilege-logged documents in their hands as quickly as physically possible at the expense of any opportunity for care on the part of a producing party to protect a client's privileged and work product protected information.  On the other hand, the defendants did not wish to forego completely the option to manually review documents for privilege and work product protection. 

The plaintiffs argued that if they were to proceed with a manual privilege review, then only 502(b) protection – the inadvertent waiver rule – should apply, and not 502(d) protection, which offers more expansive protection against privilege waivers.

Judge’s Ruling

Judge Copenhaver noted that “[t]he defendants have chosen a course that would allow them the opportunity to conduct some level of human due diligence prior to disclosing vast amounts of information, some portion of which might be privileged. They also appear to desire a more predictable clawback approach without facing the uncertainty inherent in the Rule 502(b) factoring analysis. Nothing in Rule 502 prohibits that course. And the parties need not agree in order for that approach to be adopted”.

Therefore, despite the fact that the plaintiffs were “willing to agree to an order that provides that the privilege or protection will not be waived and that no other harm will come to the Defendants if Plaintiffs are permitted to see privileged or work product protected documents”, Judge Copenhaver ruled that “[i]nasmuch as defendants' cautious approach is not prohibited by the text of Rule 502, and they appear ready to move expeditiously in producing documents in the case, their desired approach is a reasonable one.”  As a result, he entered their proposed Rule 502(d) order, “with the expectation that the defendants will marshal the resources necessary to assure that the delay occasioned by manual review of portions of designated categories will uniformly be minimized so that disclosure of the entirety of even the most sensitive categories is accomplished quickly.”

So, what do you think?  Should the defendants have retained the right to manual review or should the plaintiffs’ proposed approach have been adopted?  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 Allows Costs for TIFF Conversion and OCR, Likens it to “Making Copies” – eDiscovery Case Law

In Kuznyetsov v. West Penn Allegheny Health Sys., No. 10-948 (W.D. Pa.Oct. 23, 2014), Pennsylvania Senior District Judge Donetta W. Ambrose upheld the Clerk of Courts issuance of Taxation of Costs for $60,890.97 in favor of the defendants and against the named the plaintiffs, including costs for “scanning and conversion of native files to the agreed-upon format for production of ESI”.

Case Background

The plaintiffs filed a collective action pursuant to §216(b) of the Fair Labor Standards Act (“FLSA”) against the defendants, which was ultimately decertified as Judge Ambrose ruled that the 824 opt-in plaintiffs were not similarly situated.  After that, the plaintiffs filed a Motion for Voluntary Dismissal, which Judge Ambrose granted, dismissing the claims of the opt-in Plaintiffs without prejudice and dismissing the claims of the named Plaintiffs with prejudice (the plaintiffs appealed and the Third Circuit dismissed the appeal for lack of jurisdiction).

On October 15, 2013, the defendants filed a Bill of Costs seeking a total of $78,561.77. On October 31, 2013, the Clerk of Courts filed a Letter calling for objections to the Bill of Costs, which was followed in January of this year by objections from the named plaintiffs (to which the Defendants filed a response). On August 1, the Clerk of Courts issued his Taxation of Costs in the amount of $60,890.97 in favor of Defendants and against the named Plaintiffs.

Judge’s Ruling

Stating that “Rule 54(d)(1) creates a strong presumption that costs are to be awarded to the prevailing party”, Judge Ambrose analyzed the costs as defined in 28 U.S.C. § 1920, including §1920(4), which covers “Fees for exemplification and the costs of making copies of any material where the copies are necessarily obtained for use in the case”.

Addressing the plaintiff’s contention that the costs awarded were for eDiscovery costs were not necessary and were awarded at unreasonably high rates and referencing the Race Tires case in her ruling, Judge Ambrose stated:

“With regard to unnecessary e-discovery costs and unreasonably high rates, Plaintiffs first argue that the costs associated with Optical Character Recognition (‘OCR’) were unnecessary…As Defendants point out, however, Plaintiffs requested the information be produced in, inter alia, OCR format…The ‘scanning and conversion of native files to the agreed-upon format for production of ESI constitutes `making copies of materials’ as pursuant to §1920(4)…Accordingly, I find the costs associated with OCR conversion are taxable.

Furthermore, I do not find the cost of 5 cents per page for TIFF services to be unreasonably high, nor do I find 24 cents per page for scanning paper documents to be unreasonably high…Consequently, I find not merit to this argument either.”

Rejecting the plaintiff’s arguments that “1) Defendants have unclean hands; 2) Plaintiffs are unable to pay the costs; and 3) it would be inequitable to force the three named Plaintiffs to pay the entire costs of defending against the claims of the opt-in Plaintiffs”, Judge Ambrose affirmed the amount of $60,890.97 in favor of Defendants.

So, what do you think?  Should the costs have been allowed for conversion of native files when they may have already been usable as is?  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.

Defendant Ordered to Produce Archived Emails Even Though Plaintiff Failed to Produce Theirs – eDiscovery Case Law

In Finjan, Inc. v. Blue Coat Systems., 5:13-cv-03999-BLF (N.D. Cal. Oct. 17, 2014), California Magistrate Judge Paul S. Grewal granted the plaintiff’s motion ordering the defendant to produce relevant emails from its eight custodians, even though the plaintiff was unable to provide its own archival emails.

Case Background

As Judge Grewal stated “[t]o cut to the chase in this dispute over the scope and pace of Defendant Bluecoat Systems, Inc.’s document production in this patent infringement case”, the plaintiff moved to compel the defendant to produce email from eight custodians related to both technical documents and damages documents as well as damages testimony.  The defendant did not object to producing any of the technical discovery requested and raised only limited issues concerning the documents on damages, mostly objecting to producing custodial email from archival systems when the plaintiff was not able to do the same in return.

Each party agreed to identify eight custodians and ten terms per custodian for the other to search. The defendant did not dispute the relevance of either the custodians or search terms the plaintiff selected. But when the defendant learned that the plaintiff did not have former employees’ emails — except as produced in other litigations — the defendant balked at the idea that its custodians should have to turn over any email other than from active systems.

Judge’s Ruling

“Reduced to its essence, Rule 26(b)(2)(iii) requires this court to decide: have Blue Coat’s discovery responses been fair? Blue Coat’s discovery responses so far have largely been fair, but not entirely”, stated Judge Grewal.

Judge Grewal found that, with the exception of one document repository recently discovered (as acknowledged by defendant’s counsel), the defendant had completed its obligation regarding the technical document production.  Judge Grewal also ruled that the plaintiff “has identified no legitimate reason why it should be provided discovery on Blue Coat’s foreign sales or valuation on the whole”.  He also stated that the defendant “might reasonably be required to at least tell Finjan what the [third party] agreements are and the status of its efforts to secure consent.”

However, with regard to the archival email, Judge Grewal ruled as follows:

“Where Blue Coat has been less than fair is with respect to archival email for its eight custodians. Blue Coat may largely be in the right that it should not have to dig through legacy systems when Finjan is unable to the same for its custodians. But one party’s discovery shortcomings are rarely enough to justify another’s. And here, at least with respect to documents mentioning Finjan — the one specific category of documents Finjan could identify that it needed from archived email — Finjan’s request is reasonable.”

As a result, the defendant was ordered to “identify all license agreements whose production is awaiting third-party consent and the status of its efforts to secure that consent” within seven days and “produce all archival email from its eight designated custodians that mention Finjan and supplemental Interrogatories 5 and 6” within 21 days.

So, what do you think?  Should the defendant have to produce email when the plaintiff can’t do the same?  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.

The Watergate 18 Minute Gap in Audio Recordings Has Nothing on This Case – eDiscovery Case Law

Anybody who remembers Watergate remembers the big deal made about an 18 1/2 minute gap in audio recordings reported by President Nixon’s secretary, Rose Mary Woods.  This case involves a gap in audio recordings much longer than that.

In Novick v. AXA Network, LLC, 07-CV-7767 (AKH) (KNF) (S.D.N.Y.Oct. 22, 2014), New York Magistrate Judge Kevin Nathaniel Fox granted the plaintiff’s request for sanctions against the defendant, awarding an adverse inference jury instruction for several weeks of spoliated audio recordings and also awarding “reasonable attorney’s fees and costs” associated with the motion as well as retaking several depositions.

Case Background

In this wrongful termination case, the plaintiff contended that the defendants committed several “strikes” justifying his request for sanctions, including spoliating audio recordings because “audio recordings from the time period August 28, 2006 through November 5, 2006 (approximately one-third of the entire time period ordered) are missing,” and “Defendants admit that they were likely erased and taped over” (per defendants letter to the plaintiff on October 25, 2013).  According to the plaintiff, “these recordings are from the most important time period of all – directly before and directly after Mr. Novick’s termination.”  The plaintiff also contended that the defendant had numerous deficiencies in their email production, where the defendant again made several promises to rectify the mistakes.

The defendants contended that “no responsive emails have been withheld and there is no evidence that any emails are missing.”  They did, however, “acknowledge that there are approximately eight weeks of audio recordings, within the period of time for which production of audio recordings was eventually ordered, that cannot be located or produced,” but “[t]his is not a new issue,” and the defendants advised plaintiff of it, on October 17, 2013, when the majority of the recordings were produced to him, and “[t]he fact that these weeks of recordings are missing constitutes the only real issue in plaintiff’s sanctions motion.”  The defendant also acknowledged that they “cannot now explain the absence of these recordings”.

Judge’s Ruling

Judge Fox stated that the court “determined that ‘[t]he defendants’ duty to preserve evidence arose when the plaintiff’s counsel notified the defendants, in the October 16, 2006 letter, that the audio recordings should be preserved because they may be relevant to future litigation’” and that the defendants conceded that “‘there are approximately eight weeks of audio recordings that are missing within the period for which defendants have been ordered to produce audio recordings,’ namely the period of August 28-31, 2006, and September 8-November 5, 2006, and they ‘have not been able to determine when, why or how these audio recordings came to be missing from the group of other audio recordings that were stored on DVDs and have been produced.’”  As a result, Judge Fox ruled that “the Court finds that the defendants spoliated relevant evidence, namely, audio recordings for the period August 28-31, 2006, and September 8-November 5, 2006”.

Judge Fox also noted that “Moreover, the defendants’ misconduct respecting the audio recordings was compounded by their deliberate and unjustified failure to search for and locate e-mail messages, as directed by the September 25, 2013 order. The defendants now admit that it was not until March 2014, that they realized that the Frontbridge archive was not searched for responsive documents, but contend this delay was ‘due to human error,’ without explaining what that error was or why they waited until March 2014 to conduct the investigation concerning the production of e-mail messages.”

As a result, Judge Fox Fox granted the plaintiff’s request for sanctions against the defendant, awarding an adverse inference jury instruction for the defendant’s actions and also awarding “reasonable attorney’s fees and costs” associated with the motion as well as retaking several depositions.

So, what do you think?  Did defense counsel’s quick reaction to the disclosure save the email’s privileged status?  Please share any comments you might have or if you’d like to know more about a particular topic.

BTW, we also covered a ruling on this case last year here.

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.

Plaintiff Can’t “Pick” and Choose When it Comes to Privilege of Inadvertent Disclosures – eDiscovery Case Law

In Pick v. City of Remsen, C 13-4041-MWB (N.D. Iowa Sept. 15, 2014), Iowa District Judge Mark W. Bennett upheld the magistrate judge’s order directing the destruction of an inadvertently-produced privileged document, an email from defense counsel to some of the defendants, after affirming the magistrate judge’s analysis of the five-step analysis to determine whether privilege was waived.

Case Background

In this wrongful termination case, the plaintiff served a request for production of documents that included “all relevant non-privileged emails initiated by or received by the City of Remsen in regard to the Plaintiff and/or any of the issues set forth in Plaintiff’s complaint”.  Among the documents produced was an email, dated July 14, 2012, from defense counsel to Remsen Utility Board members and others discussing an upcoming Utility Board meeting.  Defense counsel learned of the email’s inadvertent disclosure on March 25, 2014, when the plaintiff served supplemental discovery responses on defense counsel and contacted plaintiff’s counsel within 34 minutes of the discovery.

Defense counsel asked that the email be destroyed. The plaintiff’s counsel suggested the email could be redacted to protect “advice relating to procedure,” but indicated he intended to rely on the remainder of the email unless ordered otherwise by the court.  The defendants’ filed a motion requesting that the court order the email’s destruction as an inadvertently produced privileged document, which the magistrate judge granted.

Judge’s Ruling

The Magistrate Judge, Leonard Strand, had applied the five-step analysis to determine the proper range of privilege to extend.  Those five factors were, as follows:

  1. The reasonableness of the precautions taken to prevent inadvertent disclosure in view of the extent of document production: Judge Strand found that the privileged email was “inconspicuously located among various non-privileged email messages”, which, based on the fact that defendants turned over to their counsel 440 pages of documents (including 183 pages of email messages, some pages of which contained more than one email), was upheld as “completely fair and accurate”;
  2. The number of inadvertent disclosures: Since there was only one inadvertent disclosure, Judge Bennett upheld the ruling as “not clearly erroneous”;
  3. The extent of the disclosures: Though the email was sent to six people, all six were privileged recipients of the email, so Judge Bennett upheld the ruling as “not clearly erroneous”;
  4. The promptness of measures taken to rectify the disclosure: Because defense counsel contacted plaintiff’s counsel just 34 minutes after learning of the email’s inadvertent disclosure and requested its destruction, Judge Bennett upheld the ruling as “not clearly erroneous”; and
  5. Whether the overriding interest of justice would be served by relieving the party of its error: Judge Strand, finding that the plaintiff “clearly has other evidence that he intends to rely on in support of his various claims”, ruled in favor of the defendant in this factor as well, which Judge Bennett upheld.

Judge Bennett summarized as follows: “The email is classic legal advice that should be protected by the attorney-client privilege…This interest of justice would be harmed here by permitting Pick to use the email at trial…Given the important nature of the attorney-client privilege and the manner in which the email was inadvertently disclosed, Judge Strand’s conclusion that the overriding interest in justice factor weighed against waiver is not clearly erroneous. Accordingly, Pick’s objection is overruled.”

So, what do you think?  Did defense counsel’s quick reaction to the disclosure save the email’s privileged status?  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.

Judgment of $34 Million against Insurer Dodging Malpractice Claim is a “Dish” Served Cold – eDiscovery Case Law
 

In my hometown of Houston, attempting to deny coverage to a client successfully sued for discovery-related negligence cost OneBeacon Insurance Company a $34 million judgment by a federal jury.

As reported by Robert Hilson in ACEDS (Insurer dodging malpractice claim must pay $34 million for attorney’s discovery blunder, subscription required), OneBeacon Insurance Company attempted to rescind a policy from T. Wade Welch & Associates (TWW), the Houston-based law firm that was sued by former client Dish Network in 2007 after one of its attorneys provided incomplete discovery responses to Dish’s adversary. That failure resulted in so-called “death penalty” sanctions against Dish in a contractual interference case brought by Russian Media Group (RMG), which accepted a $12 million settlement.

After Dish won an arbitration award against TWW for that amount last year, OneBeacon sued TWW in federal court seeking a declaration the law firm voided coverage on its policy by failing to disclose the Dish sanctions prior to entering into that policy. OneBeacon alleged that TWW should have known that those penalties in the Dish case would give rise to a malpractice claim, which would trigger a so-called “prior knowledge exclusion” in the insurance policy that rescinds coverage, the insurer claimed. It also accused the firm of making misrepresentations on its policy application.

However, a jury in the US District Court for the Southern District of Texas begged to differ, finding that:

  • OneBeacon failed to move for a swift settlement with Dish when its liability had become clear; and
  • OneBeacon’s failure to settle the Dish claim amounted to gross negligence.

The jury assessed damages as follows:

  • TWW’s lost profits sustained in the past: $3 million;
  • TWW’s lost profits that, in reasonable probability, it will sustain in the future: $5 million;
  • Sum assessed in exemplary damages for OneBeacon’s gross negligence: $5 million;
  • Sum assessed in exemplary damages because OneBeacon’s conduct was committed knowingly: $7.5 million.

TOTAL: $20.5 million.  Plus, although the OneBeacon policy had a $5 million limit, the “Stowers Doctrine,” which holds that an insurer undertaking the defense of an insured has the obligation to make a good faith attempt to settle the insured’s claim within those policy limits, additionally put the company on the hook for the entire $12.6 million arbitration settlement.  Ouch!

This was after US district Judge Gray Miller, in June, denied summary judgment to OneBeacon, finding that it was not clear from the evidentiary record whether TWW attorneys should have reasonably foreseen the malpractice claim that eventually arose from the Dish sanctions.

For more information on the case, including the jury’s verdict, click here (subscription required).

So, what do you think?  Should OneBeacon have been “on the hook” for the settlement amount or should the “prior knowledge exclusion” have excluded them?  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.

Plaintiff Slips, But Defendant Takes the Fall – eDiscovery Case Law
 

In Riley v. Marriott Int’l, 12-CV-6242P (W.D. N.Y. Sept. 25, 2014), New York Magistrate Judge Marian W. Payson agreed with the plaintiffs that spoliation of data had occurred when the defendant failed to preserve video surveillance and “sweep logs” after one of the plaintiffs slipped and fell in the defendant’s hotel garage and that the defendant was at least grossly negligent for not preserving the information.  However, the judge denied the plaintiffs request for summary judgment, granting an adverse inference instruction instead.

Case Background

The plaintiffs filed suit, claiming a slip and fall accident had occurred at the defendant’s hotel in Maui when Linda Riley slipped and fell on the floor of the hotel's parking garage after exiting an elevator because the floor was wet from rainwater that had been permitted to pool there.  The defendant had a surveillance camera that monitored and recorded the area of Linda's accident twenty-four hours a day and the loss prevention manager at the hotel, testified that the recordings are maintained for thirty days, at which time the stored recordings are overwritten by new recordings.  

According to the loss prevention manager, once he is notified of a potential claim against the Hotel, he is responsible for preserving information relating to that claim and he testified that the video showed Linda's fall, her removal from the scene in a wheelchair, and hotel employees placing wet floor signs and sweeping up the water on the floor.  He also testified that he turned the recording over to the hotel's liability insurance carrier.  The plaintiffs stated that the defendant provided only approximately seven minutes of the footage, which begins about one minute before Linda's accident and filed the motion for summary judgment due to the unavailability of more of the video as well as “sweep logs” that kept a record of floor maintenance by employees.  The defendant did not dispute that the sweep logs and video footage existed or that it had a duty to preserve them, but objected, claiming that the plaintiffs failed to demonstrate prejudice due to the destruction of data.

Judge’s Ruling

Noting that “Marriott has not challenged the Rileys' contention that it had a duty to preserve the destroyed evidence” and that “no genuine question exists that video footage depicting the scene of an accident and sweep logs reflecting maintenance performed at the scene of an accident is likely to contain relevant information”, Judge Payson “easily conclude[d] that Marriott had a duty to preserve both the sweep logs and the video footage from the day of the accident”.  She also stated that “Marriott has failed to offer any justification for its failure to preserve the evidence” and “failed to offer any facts concerning how or why the evidence was destroyed”; therefore, “Marriott's failure to preserve the entire video footage relating to Linda's accident and the sweep logs for the day in question despite the Hotel's loss prevention employee's testimony that he knew that he had a duty to preserve relevant evidence constitutes, at a minimum, gross negligence.” 

However, Judge Payson stopped short of granting the plaintiffs motion for summary judgment, concluding “that an adverse inference instruction is both appropriate and sufficient to deter Marriott from similar future conduct, to shift the risk of an erroneous judgment to Marriott and to restore the Rileys' position in this litigation.”

So, what do you think?  Did the judge go far enough or should the motion for summary judgment have been granted?  Please share any comments you might have or if you’d like to know more about a particular topic.

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