Case Law Archives

eDiscovery Case Law: Produced ESI Doesn’t Need to be Categorized, Even When Voluminous

November 30, 2011

In United States v. Rubin/Chambers, Dunhill Ins. Servs., No. 09 Cr. 1058, (S.D.N.Y. Nov. 4, 2011), defendants’ motion to have the Government in a criminal antitrust conspiracy case organize and format its discovery production to indicate which of four categories of collusion each document or electronic file related to was denied. The Government was “under no general obligation to identify or sort Brady material within even an extremely voluminous disclosure.”

Defendants were charged with conspiring to rig bids and fix prices on municipal derivatives. They asked for an order requiring the Government “to produce discrete collections of documents and electronic files that relate to four categories of transactions, and that such production be organized and formatted so as to indicate to which of those four categories each document or electronic file relates.” Defendants contended that the categories correlated to different aspects of the Government’s theory of collusion and that the categorization of overt acts that the Government was expected to prove at trial “would be useful to impeach the testimony of cooperating witnesses who will testify as to Defendants’ intent in entering into the Featured Transactions.”

The court denied defendants’ motion. Brady materials already produced to defendants in mostly searchable format did not have to be produced again “in categorized batches” relating “to transactions with certain characteristics.” The court stated: “Absent prosecutorial misconduct — bad faith or deliberate efforts to knowingly hide Brady material — the Government’s use of ‘open file’ disclosures, even when the material disclosed is voluminous, does not run afoul of Brady.” While the court acknowledged its discretion regarding defendants’ motion, the Government had provided searchable electronic documents, defendants had corporate assistance and could assist in their own defense since they were not being incarcerated before trial, and each defendant was represented by “prominent, sophisticated counsel.” The collapse of the law firm serving as the technical coordinator for the defendants’ discovery review platform “while unfortunate, does not alter the inescapable conclusion here: Defendants are anything but impoverished and certainly not so incapacitated as to warrant shifting such a substantial portion of the burden of preparing their defense to the Government.”

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

Case Summary Source: Applied Discovery (free subscription required). For eDiscovery news and best practices, check out the Applied Discovery Blog 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.

eDiscovery Case Law: Facebook Content Discoverable Yet Again

November 23, 2011

It seems most, if not all, of the cases these days where discoverability of social media is at issue are being decided by courts in favor of the parties seeking to discover this information. Here’s another example.

In Largent v. Reed, 2011 WL 5632688, (Pa. C.P. Franklin Co. Nov. 8, 2011) the court ruled that the plaintiff’s Facebook information was discoverable as being relevant and not privileged and ordered the plaintiff to turn over her Facebook login information to the defendant within 14 days, giving the defendant a 21-day window to inspect the plaintiff’s Facebook profile (after which she was allowed to change her password).

In this case, one of the plaintiffs claimed that a motorcycle accident caused by the defendant left her with chronic physical and mental pain. During a deposition of one of the plaintiffs, the defendant learned that she had a Facebook account and had accessed it as recently as the night before the deposition. The defendant had reason to believe that the plaintiff had posted pictures of herself on Facebook enjoying life with her family as well as a status update about going to the gym. Accordingly, the defendant filed a Motion to Compel, demanding that the plaintiff provide her Facebook username and password to enable the defendant to demonstrate that the plaintiff’s injuries aren’t as bad as she claimed.

The defendant cited two cases where discovery of social network content was granted: Zimmerman v. Weis Markets, Inc., No. CV-09-1535, 2011 WL 2065410 (Pa. Comm. Pl. May 19, 2011) and McMillen v. Hummingbird Speedway, Inc., No. 113-2010 CD (C.P. Jefferson, Sept. 9, 2010). The plaintiffs responded with two cases where courts denied discovery of Facebook material: Piccolo v. Paterson, No. 2009-4979 (Pa. C.P. Bucks May 6, 2011) and Kennedy v. Norfolk S. Corp., No. 100201437 (Pa. C.P. Phila. Jan 15, 2011).

The court considered the following factors in ruling for the defendant:

Relevancy: Since the plaintiff claimed that “she suffers from, among other things, chronic physical and mental pain” and that the defendant claimed that the plaintiff’s “formerly public Facebook account included status updates about exercising at a gym and photographs depicting her with her family that undermine her claim for damages” the court ruled that the information sought by the defendant is “clearly relevant”.
Privilege and Privacy: The court noted that there “is no confidential social networking privilege under existing Pennsylvania law” and that there is “no reasonable expectation of privacy in material posted on Facebook”.
Stored Communications Act of 1986 (SCA): While the SCA places limits on the government’s ability to compel Internet Service Providers (ISPs) to disclose information about their users, only one court has addressed whether Facebook is an entity covered by the SCA: Crispin v. Christian Audigier Inc., 2010 U.S. Dist. Lexis 52832 (C.D. Calif. May 26, 2010). In that case, it was ruled that the information being sought directly from Facebook (and other social networking sites) was protected under the SCA, but this court ruled that the SCA does not apply in this case because the plaintiff “is not an entity regulated by the SCA.”
Breadth of Discovery Request: The court noted that the plaintiff’s contention that the defendant’s motion is “akin to asking her to turn over all of her private photo albums and requesting to view her personal mail” is “mistaken” as content posted on Facebook is not private. So, such a request would not “cause unreasonable annoyance, embarrassment, oppression, burden or expense” as the cost to investigate the plaintiff’s Facebook information would be borne by the defendant.

As a result, the court ruled in favor of the defendant and ordered the plaintiff to turn over her Facebook login information to the defendant within 14 days. Hopefully, the plaintiff doesn’t resort to tampering with the content on their Facebook page.

So, what do you think? Assuming relevance, should all parties be required to produce social media information? Please share any comments you might have or if you’d like to know more about a particular topic.

Happy Thanksgiving from all of us at eDiscovery Daily and CloudNine Discovery!

eDiscovery Case Law: Facebook Spoliation Significantly Mitigates Plaintiff’s Win

November 21, 2011

“Spoliation of evidence” refers to the deliberate destruction of evidence prior to a trial. It is a rare event in civil litgation. But, spoliation of evidence was found in a case involving a personal injury lawyer in Virginia. Lawyer Matthew Murray was ordered to pay $522,000 for instructing his client to remove photos from his Facebook age. His client was ordered to pay $180,000 for obeying his instructions. A state district judge issued these sanctions in the case of Lester v. Allied Concrete Co., Nos. CL08-150, CL09-223 (Va. Cir. Ct. Oct. 21, 2011).

Murray was found to have told his client to remove pictures, such as the one of him holding a beer and wearing a t-shirt that said “I ♥ hot moms.” The client was a recent widower suing about the death of his wife.

In this case, the defendant was able to show via expert testimony that the widower deleted 15 photos from his Facebook account and perhaps a 16th. The photos were provided to the defendant later, before the trial. The jury found in favor of Mr. Lester and awarded $10 million. Subsequent to the trial, the judge ordered that Plaintiff’s counsel provide copies of emails between the lawyer and his client to the court for in camera inspection (i.e., for the judge’s eyes only). When the district judge ordered production of these emails, he ruled that emails related to Defendant’s request for production were not attorney-client privileged.

This all started when one of the defense lawyers apparently “hacked” into Mr. Lester’s Facebook page via a mutual friend and observed the photos showing Mr. Lester as apparently non too distraught over his wife’s death.

The court found that the plaintiff, Isaiah Lester, lied about his depression and treatment. The court found that Murray told Lester via email “to clean up” his Facebook page and told the client that “blow-ups” of pictures like the “I [heart] hot moms” photo would cause problems at trial. Lester deactivated his Facebook page. A few days later, in responding to discovery requests, the plaintiff said he did not have a Facebook account. The defendants complained – at this point they knew Lester had or should have a Facebook account. Murray then asked Lester to reactivate his account. The plaintiff’s lawyer also provided hard copies of the 16 photos to the defense.

At his subsequent deposition, Mr. Lester lied about what he had done and denied he had deactivated his Facebook account.

Defendants then issued a subpoena duces tecum for emails between Lester and his lawyer for the time period when the request for production was issued. Plaintiff resisted. The defense then filed a motion to compel. The court required a privilege log of the disputed emails. The judge found the initial privilege log deficient. When Murray finally produced the incriminating email, he claimed its prior omission was error and blamed the omission on a paralegal, ultimately leading to the sanctions.

So, what do you think? Were those sanctions fair or were they excessive? Please share any comments you might have or if you’d like to know more about a particular topic.

Case Summary Source: San Antonio Employment Law Blog.

eDiscovery Case Law: Court Grants Adoption of Model Order for Patent Case

November 17, 2011

Model orders to limit discovery for patent cases have gained popularity in various jurisdictions, including this recent order proposed in Texas. Here’s one patent case where the defendant sought to adopt such a model order.

In DCG Sys., Inc. v. Checkpoint Techs., LLC, No. C-11-03792 PSG, (N.D. Cal. Nov. 2, 2011), defendant Checkpoint asked the court to enter a version of the model order. (The proposed version differed from the model order in the number of keywords and custodians and on an issue of metadata.) The court granted defendant’s motion.

Plaintiff DCG objected to the entry of the order. It argued that since this was a case between competitors, and not a case brought by a nonpracticing entity (an “NPE,” or sometimes called a “patent troll”), the discovery would be improperly impeded by the model order’s limitations on email discovery.

NPE or patent troll cases often involve asymmetrical discovery – the plaintiff has few documents but the defendant has many. And some commentators have proposed that the model eDiscovery order seeks to reduce the ill-effects of this asymmetry. In this case plaintiff argued that it would need discovery on legitimate issues that may have arisen with an actual competitor, e.g., whether defendant copied plaintiff’s technology and whether plaintiff was entitled to an injunction. Plaintiff’s argument presupposed that the model order’s limitations would cut into the scope of that purported legitimate discovery.

The court rejected plaintiff’s arguments. It found that: (1) nothing in the model order or the Chief Judge of the Federal Circuit’s speech unveiling the order suggested that it was intended only for NPE cases, and (2) there was no reason to believe that non-NPE (competitor) cases presented less compelling circumstances in which to impose reasonable restrictions on the timing and scope of email discovery.

The court also addressed the notion that the model order would help only in NPE cases or cases involving asymmetrical eDiscovery. It observed that the model order could have double the benefit in competitor cases. If using the model order to relieve the burden on the producing party in an NPE case was a good thing, then using it in a suit between competitors benefit both sides and be twice as good.

So, what do you think? Are model orders to limit discovery a good idea? If so, should they apply to other types of cases? Please share any comments you might have or if you’d like to know more about a particular topic.

Case Summary Source: Practical eDiscovery Blog, by Hinshaw & Culbertson, LLP.

eDiscovery Case Law: KPMG Denied in Request for “Proportionality Test” to Preservation

November 14, 2011

In Pippins v. KPMG LLP, No. 11 Civ. 0377 (CM)(JLC), (S.D.N.Y. Oct. 7, 2011), defendant’s request for a protective order allowing it to maintain only a random sample of 100 hard drives from 2,500 laptops or to require plaintiffs to bear the cost of maintaining 2,500 hard drives was denied.

It was not shown that information on the hard drives was duplicative, and it was too early in the litigation to know whether the cost of maintaining the hard drives was proportional to plaintiffs’ potential recovery. In an action concerning whether accountants should be considered exempt employees under the Fair Labor Standards Act, defendant sought an order allowing it to preserve only a random sample of 100 hard drives from laptops of former and departing accountant employees. Defendant already was preserving almost 2,500 such hard drives at a cost of $1.5 million. As an alternative, defendant sought an order requiring plaintiffs to bear the cost of maintaining more than 100 of the hard drives.

Plaintiffs were willing to use sampling to lessen the number of hard drives but contended that a random sample of the hard drives would not be a meaningful sample. Plaintiffs also contended that keyword searching of the random samples suggested by defendant was outmoded and not likely to cull out information sought by plaintiffs, including work product and hours worked by defendant’s accountant associates. Plaintiffs sought an order requiring production of five of the hard drives for inspection so that the parties could negotiate a resolution to the hard drive preservation issue. The court denied defendant’s motion for a protective order and directed defendant to preserve hard drives of members of the New York class that plaintiffs sought to represent.

While the court considered defendant’s preservation efforts “comprehensive,” it did not appear that other information being preserved duplicated information on the hard drives. Also, the cost of preserving the hard drives could be substantial but it was too early to know whether that cost would be proportional to the value of the litigation. The court added that courts in the Southern District of New York “have cautioned against the application of a proportionality test as it relates to preservation.” While the court would not order defendant to provide plaintiffs with five sample hard drives, it encouraged the parties to seek agreement on sampling pending a ruling on class certification and a lifting of the stay of discovery in the action.

So, what do you think? Do proportionality and preservation mix? Please share any comments you might have or if you’d like to know more about a particular topic.

Case Summary Source: Applied Discovery (free subscription required). For eDiscovery news and best practices, check out the Applied Discovery Blog here.

eDiscovery Horrors! Does This Scare You?

October 31, 2011

Today is Halloween. While we could try to “scare” you with the traditional “frights”, we’re an eDiscovery blog, so it seems appropriate to try to “scare” you in a different way. Does this scare you?

Although the court declined to re-open the case, it found that defendant had committed discovery abuses, including failing to disclose relevant evidence and failing to issue a litigation hold; therefore, the court ordered the defendant to pay plaintiff an additional $250,000 over the previously agreed settlement amount. The court further ordered that defendant had thirty days to furnish a copy of the court’s Memorandum Opinion and Order “to every Plaintiff in every lawsuit it has had proceeding against it, or is currently proceeding against it, for the past two years” and issued an additional $500,000 sanction to be “extinguished” upon a showing of compliance.

What about this?

Even though many (but not all) of the documents were recovered (most from backup tape), the court rejected the defendant’s argument that “there can be no spoliation finding because many documents were recovered” and eventually produced, stating: "The fact that technology permits the undoing of spoliation does not change at all the fact that spoliation has occurred."

Or this?

Then, in January of this year, Judge Grimm entered an order awarding a total of $1,049,850.04 in “attorney’s fees and costs associated with all discovery that would not have been un[der]taken but for Defendants' spoliation, as well as the briefings and hearings regarding Plaintiff’s Motion for Sanctions.”

How about this?

The court concluded based on case history that “emails and text messages are documents and subject to the same requirements for authenticity as non-electronic documents generally” and found that the evidence that the defendant had authored these text messages was absent.

Scary, huh? If the possibility of sanctions and changing court requirements keep you awake at night, then the folks at eDiscovery Daily will do our best to provide useful information and best practices to enable you to relax and sleep soundly, even on Halloween!

Of course, if you really want to get into the spirit of Halloween, click here. This will really terrify you!

What do you think? Is there a particular eDiscovery issue that scares you? Please share your comments and let us know if you’d like more information on a particular topic.

Happy Halloween!

eDiscovery Case Law: Court Rules 'Circumstantial Evidence' Must Support Authorship of Text Messages for Admissibility

October 28, 2011

When are text messages admissible in court? Which text messages qualify as evidence, and what does it take to prove authorship of a text message?

A recent opinion from the Pennsylvania Superior Court, Commonwealth v. Koch, No. 1669-MDA-2010, 2011 Pa. Super. LEXIS 2716 (Sept. 16, 2011), addresses these very issues in an old yet new way, perhaps setting the precedent for future cases and opening what seems to be a potential Pandora’s Box of obstacles to the use of text messages as legal evidence.

In Commonwealth v. Koch, a transcript of thirteen SMS text messages were submitted by the prosecution and admitted into evidence. Although these text messages had been sent from a cell phone owned by the defendant, defense objected to their admission on the grounds that no evidence substantiated the defendant’s authorship of the text messages in question.
In fact, witnesses had testified that other people had been seen using the cell phone. Several of the thirteen text messages referred to the defendant in the third person, which substantiated the defendant’s claim that she had not written or sent the text messages.
The court concluded based on case history that “emails and text messages are documents and subject to the same requirements for authenticity as non-electronic documents generally” and found that the evidence that the defendant had authored these text messages was absent.
Ruling that the defendant’s ownership of the cell phone was not enough to prove that she had sent the messages in question, the court declared that parties seeking to introduce electronic materials, such as cell phone text messages and email, must be prepared to substantiate their claim of authorship with “circumstantial evidence” that corroborates the sender’s identity. That evidence may come in the form of testimony from the sender or recipient, testimony of witnesses to the creation of the correspondence, or even “contextual clues” in the message itself.

Where written correspondence may be subjected to questioning (e.g., signatures can be forged or letterhead copied), eDiscovery materials that clearly come from a given email account or cell phone source have been historically less open to scrutiny. However, since cell phones and even email accounts may be shared (or hacked), this could leave room for argument, as in this case, that the correspondence in question did not originate with the party who appears to have sent it.

In one respect, applying the old standard of evidence to new ESI materials, such as text messages might make sense. On the other hand, doing so also opens the door for defense attorneys to use the same tactic to remove text messages and email correspondence from evidence – whether or not they are legitimately relevant in court – based on the extreme challenge of proving the issue of authorship.

So, what do you think? Was the court right in ruling against the admission of these text messages as evidence? Does this decision create more eDiscovery problems than it solves? Please share any comments you might have or if you’d like to know more about a particular topic.

eDiscovery Case Law: Defendant Sanctioned for Abandonment and Sale of Server; Defendants' Counsel Unaware of Spoliation

October 20, 2011

An Illinois District Court ordered heavy sanctions against the defense for spoliation “willfully and in bad faith” of documents stored on a server, in a case revolving around damages sought for breach of loan agreements.

In United Cent. Bank v. Kanan Fashions, Inc., No. 10 C 331, 2011 WL 4396856 (N.D. Ill. Sept. 21, 2011), the defendants were found to have hidden and sold (or fabricated the sale of) a server which was subject to discovery. The defendants also misled their own counsel about their discovery procedures with regard to its preservation obligations and the sale of this crucial server. Accordingly, a magistrate judge ruled in favor of sanctions against the defendants based almost entirely on recommendations made in United Cent. Bank v. Kanan Fashions, Inc., No. 10 CV 331, 2011 WL 4396912 (N.D. Ill. Mar. 31, 2011):

Although the defendants’ counsel reminded them several times of their obligation to preserve evidence, and the defendants claimed at all times that they were taking the necessary steps to ensure a smooth and correct discovery process, they misled their own attorneys. In fact, the defendants proceeded to sell a server that contained information relevant to the suit.
The circumstances associated with the sale were extensive, involving the defendants defaulting on a loan on the warehouse in which the server was stored. When they made plans for foreclosure on the warehouse, they also made arrangements that the bank would purchase the lease on the server, originally held by a different lender, without informing their defense lawyers.
When defense counsel learned of the foreclosure and these arrangements, the defendants maintained that they could get access to the server as needed for discovery.
Several months later, the court ordered the defendants to retrieve either the server or a forensic copy of its contents for discovery. It was only a few days later that the defendants informed their counsel and the court that the server had been sold by the bank to a business in Dubai.
All of the above took place after the defendants had been repeatedly informed of the need to preserve evidence for discovery, and of their obligations with regard to ESI.
The circumstances of the sale of the server were so unusual that the court concluded that the defendants had, themselves, had a hand in the sale of the server to Dubai and the removal of the server from the court’s reach.
The magistrate judge found that defendants were solely responsible for the spoliation, having deliberately misled the court, the plaintiffs, and the defendant’s own counsel.
Defendants were ordered to pay sanctions that include reimbursement of the plaintiff for all costs related to the Motion for Sanctions. Defendants are also “barred from introducing any evidence regarding the data on the warehouse server”. The jury is to be “informed of the Defendants’ abandoning of the server” and instructed that the spoliation of the server “may be considered evidence that the server contained evidence unfavorable to Defendants’ position.”
The plaintiff’s request for sanctions against the defense counsel was dismissed by the magistrate judge.

So, what do you think? Have you ever been involved in a case where a similar instance of spoliation took place? Please share any comments you might have or if you’d like to know more about a particular topic.

eDiscovery Case Law: U.S. Court Rules on ECPA Protection of Emails in the Cloud

October 14, 2011

An October 3 decision by the Ninth Circuit Court of Appeals offers new clarity in defining and protecting the eDiscovery rights of non-U.S. nationals using U.S. services online, by ruling that emails stored on servers located within the U.S. are protected by national laws on ESI.

In Suzlon Energy Ltd v. Microsoft Corporation, the court determined that holders of online accounts whose servers are located in the U.S., regardless of their location or nationality, are protected by the Electronic Communications Privacy Act of 1986, commonly known as the "ECPA." The ECPA ensures that the disclosure of emails by electronic communication service providers is limited and restricted to specific circumstances.

The Suzlon case originated out of an Australian case brought by an Indian company (Suzlon) against an Indian defendant, Rajagopalan Sridhar and put the Ninth Circuit Court's opinion on the reach of the ECPA to the test.

The plaintiff's legal counsel sought access to emails in the defendant's Hotmail account, stored on Microsoft servers located in the U.S.
The defendant did not provide consent for his emails to be used in discovery, nor did Microsoft consent to release the emails in question.
Microsoft's objection brought the case before the U.S. District Court for the Western District of Washington and later before the Ninth Circuit Court of Appeals, both of which agreed that the emails were protected by the ECPA.
Despite the plaintiff's and defendant's Indian nationality, and the fact that the suit in question was Australian, the U.S. court ruled in a manner that creates a powerful precedent for future lawsuits related to electronic communication providers whose servers are located in the U.S. As a result of this case, it has become clear that any users with accounts in U.S.-held cloud services will be subject to the same protections under the ECPA as a U.S. citizen.

So, what do you think? Does this ruling offer fair and sensible protect to U.S.-based companies and the users of their cloud services, or does it unnecessarily complicate the field of international eDiscovery? Please share any comments you might have or if you'd like to know more about a particular topic.

eDiscovery Trends: Sometimes the Vendor Sues the Law Firm – And Wins!

September 30, 2011

The eDiscovery malpractice case involving McDermott, Will & Emery has captured considerable interest in the industry and this blog, with recent posts here, here and here to relate developments in the case associated with inadvertent production of 3,900 privileged documents.

Sometimes, the “shoe is on the other foot”, so to speak.

As noted in David’s Snow’s article on Law Technology News entitled Is Cataphora Case a Sign of Vendor-Law Firm Fights to Come?, Cataphora (which has its legal division acquired by Ernst & Young since the case was filed) won a judgment of $317,113 against several big-time mass-torts plaintiffs firms in a breach of contract case.

In Cataphora, Inc. v. Parker et al., Cataphora sued the plaintiffs firms associated with the Chinese drywall multidistrict litigation for breach-of-contract, for cancelling the contract for pre-trial document review after receiving an invoice for an up-front fee of $366,000. Cataphora never did the work.

According to Roger Chadderdon, technology counsel at Cataphora, who represented the company in court, “We got screwed,”. “Their strategy from day one was to drag this out as long as possible to make it go away.” He says the plaintiffs firms told Cataphora, “Sue us if you dare.”

They dared, and the jury decided in favor of Cataphora, that the contract was enforceable, and issued the award. This case was tried in the Northern District of California Magistrate court – an appeal is expected.

The plaintiffs firms associated with this litigation have been involved in a wide variety of multimillion dollar class-action lawsuits, ranging from Vioxx to the BP oil spill to the Toyota acceleration defect to the Bridgestone / Firestone tire cases.

“These guys are the worst of hypocrites that you can possibly find,” Chadderdon says. “They claim to be trying to help the little guy, but what they’re doing is trying to put more money in their own pockets. Everybody knows that, but this is a case that illustrates it beyond what I have ever seen.”

Snow’s article quotes Tom O’Connor, a previous thought leader on this blog, for reactions, and O’Connor asked the question “How many vendors have you ever heard of suing lawyers and winning?”, O’Connor noted that “Mostly the dirty linen in this stuff never goes public. In the old days, they'd settle the case. From the firm point of view, nobody wanted their business practices aired. That's not the sort of lawsuit that ever would've been filed 5 years ago.”

As Snow’s article notes, the Above the Law blog has a more extensive write-up on the case for more information.

So, what do you think? Do the McDermott and Cataphora cases signal a trend of contentious relationships between vendor and law firm? Or are they aberrations? Please share any comments you might have or if you’d like to know more about a particular topic.

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