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eDiscovery Case Law: No Sanctions for Scrubbing Computers Assumed to be Imaged
 

When scrubbing data from a computer drive related to litigation, it’s a good idea to make absolutely sure that there is another copy of that data, via backup or forensic image.  Don’t just take someone’s word for it.

In Federal Trade Commission v. First Universal Lending, LLC, No. 09-82322-CIV, (S.D. Fla. Feb. 17, 2011), the FTC investigated the defendants for their mortgage modification practices by alleging that defendants had violated the Federal Trade Commission Act and that defendants had acted in violation of the Telemarketing Sales Rule. For the duration of the investigation, the court appointed a temporary receiver who took control of defendants’ business premises.

During the discovery stage, the FTC wanted to preserve relevant data that was on defendants’ computers and servers by imaging them. When defendants’ were ask about the locations of all relevant computers and servers, they failed to reveal the location of servers with relevant data. As a result, these servers were not imaged and thus the data was not preserved. Due to misleading testimony by defendants, the receiver believed that all computers and servers had been imaged. Because of the incorrect belief that all of the relevant data had been preserved, the receiver permitted defendants to scrub the computers and sell them. It turned out that some of these were the ones that had not been imaged.

Defendants filed a motion to enjoin the prosecution and/or moved for dismissal of the case due to plaintiff’s spoliation of evidence. Defendants asserted that the FTC had either destroyed or caused to be destroyed computer evidence that would prove all of the defendants’ defenses.

The court found no basis for imposing sanctions against the FTC for the destruction of defendants’ computer system and denied defendants’ motion. The court established that it can impose an adverse inference against a party where the court finds that the party has engaged in spoliation of evidence. For this inference to be applicable there has to be a finding of bad faith. A court can make this finding through direct evidence or circumstantial evidence. If bad faith is based on circumstantial evidence, the following prerequisites must be present: (1) evidence once existed that could fairly be supposed to have been material to the proof or defense of a claim at issue in the case; (2) the spoliating party engaged in an affirmative act causing the evidence to be lost; (3) the spoliating party did so while it knew or should have known of its duty to preserve the evidence; and (4) the affirmative act causing the loss cannot be credibly explained as not involving bad faith by the reason proffered by the spoliator.

The court found that there was no direct evidence of bad faith. Further it pointed out that defendants failed to establish bad faith by circumstantial evidence, since the FTC had not destroyed the computer systems, but rather, the defendants did. The court went on to state, that even assuming, arguendo, that defendants destroyed the hard drives due to the receiver’s agent’s instruction, it did not change the fact that neither the receiver, nor the agent is the FTC.

Furthermore, the court went on that to the extent that defendants’ position could be construed to seek to attribute blame to the FTC for the receiver’s instruction to scrub the computers based on the FTCs misstatement, there was no malicious motive on the FTC’s investigator evident. This was at most negligent, and negligence is not sufficient for an adverse inference instruction as a sanction for spoliation.

Further, the defendants did not demonstrate that the absence of the missing data was fatal to their defense because it was established that alternative sources of information existed.

At last, the court emphasized that the FTC was under no obligation to preserve defendants’ evidence, especially considering the fact that the FTC never had control or dominion over the computers – the receiver did.

So, what do you think?  What are your procedures for ensuring data backup before destruction?  Please share any comments you might have or if you’d like to know more about a particular topic.

Case Summary Source: eLessons Learned Blog.

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 Trends: Tom O’Connor of Gulf Coast Legal Technology Center
 

This is the eighth of the LegalTech New York (LTNY) Thought Leader Interview series.  eDiscoveryDaily interviewed several thought leaders at LTNY this year and asked each of them the same three questions:

  1. What do you consider to be the current significant trends in eDiscovery on which people in the industry are, or should be, focused?
  2. Which of those trends are evident here at LTNY, which are not being talked about enough, and/or what are your general observations about LTNY this year?
  3. What are you working on that you’d like our readers to know about?

Today’s thought leader is Tom O’Connor.  Tom is a nationally known consultant, speaker and writer in the area of computerized litigation support systems.  A frequent lecturer on the subject of legal technology, Tom has been on the faculty of numerous national CLE providers and has taught college level courses on legal technology.  Tom's involvement with large cases led him to become familiar with dozens of various software applications for litigation support and he has both designed databases and trained legal staffs in their use on many of the cases mentioned above. This work has involved both public and private law firms of all sizes across the nation.  Tom is the Director of the Gulf Coast Legal Technology Center in New Orleans.

What do you consider to be the current significant trends in eDiscovery on which people in the industry are, or should be, focused?

I think that there is still a lack of general baseline understanding of, not just eDiscovery principles, but technology principles.  Attorneys have been coming to LegalTech for over 30 years and have seen people like Michael Arkfeld, Browning Marean and folks like Neil Aresty, who got me started in the business.  The nouns have changed, from DOS to Windows, from paper to images, and now its eDiscovery.  The attorneys just haven’t been paying attention.  Bottom line is: for years and years, they didn’t care about technology.  They didn’t learn it in law school because a) they had no inclination to learn technology and b) they didn’t have any real ability to learn it, myself included.  With the exception of a few people like Craig Ball and George Socha, who are versed in the technical side of things – the average attorney is not versed at all.  So, the technology side of the litigation world consisted of the lit support people, the senior paralegals, the support staff and the IT people (to the minimal extent they assisted in litigation).  That all changed when the Federal Civil Rules changed, and it became a requirement.

So, if I pick up a piece of paper here and ten years ago used this as an exhibit, would the judge say “Hey, counsel, that’s quite a printout you have there, is that a Sans Serif font?  Is that 14 point or 15 point?  Did you print this on an IBM 3436?”  Of course not.  The judge would authenticate it and admit it – or not – and there might be an argument.  Now, when we go to introduce evidence, there are all sorts of questions that are technical in nature – “Where did you get that PST file?  How did that email get generated?  Did you run HASH values on that?”, etc.  And, I’m not just making this up.  If you look at decisions by Judge Grimm or Facciola or Peck or Waxse, they’re asking these questions.  Attorneys, of course, have been caught like the “deer in the headlights” in response to those questions and now they’re trying to pick up that knowledge.  If there’s one real trend I’m seeing this year, it’s that attorneys are finally taking technology seriously and trying to play catch up with their staff on understanding what all of this stuff is about.  Judges are irritated about it.  We have had major sanctions because of it.  And, if they had been paying attention for the last ten years, we wouldn’t be in the mess that we are now.

Of course, some people disagree and think that the sheer volume of data that we have is contributing to that and folks like Ralph Losey, who I respect, think we should tweak the rules to change what’s relevant.  It shouldn’t be anything that reasonably could lead to something of value in the case, we should “ratchet it down” so that the volume is reduced.  My feeling on that is that we’ve got the technology tools to reduce the volume – if they’re used properly.  The tools are better now than they were three years ago, but we had the tools to do that for awhile.  There’s no reason for these whole scale “data dumps” that we see, and I forget if it was either Judge Grimm or Facciola who had a case where in his opinion he said “we’ve got to stop with these boilerplate requests for discovery and responses for requests for discovery and make them specific”.

So, that’s the trend I see, that lawyers are finally trying to take some time to try to get up to speed – whining and screaming pitifully all the way about how it’s not fair, and the sanctions are too high and there’s too much data.  Get a life, get a grip.  Use the tools that are out there that have been given to you for years.  So, if I sound cynical, it’s because I am.

Which of those trends are evident here at LTNY, which are not being talked about enough, and/or what are your general observations about LTNY this year?

{Interviewed on the final afternoon of LTNY}  Well, as always, a good show.  This year, I think it was a great show, which is actually a bit of a surprise to me.  I was worried, not that it would go down from last year, but that we had maybe flattened out because of the economy (and the weather).  But, the turnout was great, the exhibit halls were great, a lot of good information.  I think we’re seeing a couple of trends from vendors in general, especially in the eDiscovery space.  We’re seeing vendors trying to consolidate.  I think attorneys who work in this space are concerned with moving large amounts of data from one stage of the EDRM model to another.  That’s problematic, because of the time and energy involved, the possible hazards involved and even authentication issues involved.  So, the response to that is that some vendors attempt to do “end-to-end” or at least do three out of the six stages and reduce the movement or partner with each other with open APIs and transparent calls, so that process is easier.

At the same time, we’re seeing the process faster and more efficient with increased speed times for ingestion and processing, which is great.  Maybe a bigger trend and one that will play out as the year goes along is a change in the pricing model, clearly getting away from per GB pricing to some other alternative such as, maybe, per case or per matter.  Because of the huge amount of data we have do so.  But also, we’re leaving out an area that Craig Ball addressed last year with his EDna challenge – what about the low end of the spectrum?  This is great if you’re Pillsbury or DLA Piper or Fulbright & Jaworski – they can afford Clearwell or Catalyst or Relativity and can afford to call in KPMG or Deloitte.  But, what about the smaller cases?  They can benefit from technology as well.  Craig addressed it with his EDna challenge for the $1,000 case and asked people to respond within those parameters.  Browning Marean and I were asking “what about the $500,000 case?”  Not that there’s anything bad about low end technology, you can use Adobe and S1 and some simple databases to do a great job.  But, what about in the middle, where I still can’t afford to buy Relativity and I still can’t afford to process with Clearwell?  What am I going to use?  And, that’s where I think new pricing and some of the new products will address that.  I’ve seen some hot new products, especially cloud based products, for small firms.  That’s a big change for this year’s show, which, since it’s in New York, has been geared to big firms and big cases.

What are you working on that you’d like our readers to know about?

I think the things that excite me the most that are going on this year are the educational efforts I’m involved in.  They include Ralph Losey’s online educational series through his blog, eDiscovery Team and Craig Ball through the eDiscovery Training Academy at Georgetown Law School in June.  Both are very exciting.

And, my organization, the Gulf Coast Legal Technology Center continues to do a lot of CLE and pro-bono activities for the Mississippi and Louisiana bar, which are still primarily small firms.  We also continue to assist Gulf Coast firms with technology needs as they continue to rebuild their legal technology infrastructure after Katrina.

Thanks, Tom, for participating in the interview!

And to the readers, as always, please share any comments you might have or if you’d like to know more about a particular topic!

eDiscovery Case Law: Responses to FOIA Requests Must Be Searchable

Southern District of New York Judge Shira A. Scheindlin is at it again!  Her latest ruling is that the federal government must provide documents “in a usable format” when it responds to Freedom of Information Act (FOIA) requests.

Noting that “Once again, this Court is required to rule on an eDiscovery issue that could have been avoided had the parties had the good sense to ‘meet and confer,’ ‘cooperate’ and generally make every effort to ‘communicate’ as to the form in which ESI would be produced.”, Judge Scheindlin ruled that federal agencies must turn over documents that include “metadata,” which allows them to be searched and indexed.  Indicating that “common sense dictates” that the handling of FOIA requests should be informed by “the spirit if not the letter” of the Federal Rules of Civil Procedure, Judge Scheindlin indicated the government offered “a lame excuse” for delivering non-searchable documents.

In National Day Laborer Organizing Network v. U.S. Immigration and Customs Enforcement Agency, 10 Civ. 3488, the National Day Laborer Organizing Network, Center for Constitutional Rights and the Immigration Justice Clinic at the Benjamin N. Cardozo School of Law sued to require production of a wide range of documents under the Freedom of Information Act in August 2010.  In response, the government agency defendants produced documents grouped together in large files that were not searchable, for which individual documents could not be easily identified, with emails separated from their attachments.

Consistent with the decisions of several state courts regarding their own FOIA statutes, Judge Scheindlin ruled that the federal law requires that metadata, which allows for electronic files to be organized and searched, must be retained in the records agencies produce.  While the federal act doesn’t specifically specify the form in which documents must be delivered, it does require that documents be provided in any “format” that is “readily reproducible” by the agency in that format.  Metadata, in the FOIA context, is “readily reproducible,” Judge Scheindlin noted.

Judge Scheindlin also observed that “whether or not metadata has been specifically requested,” the production of non-searchable documents is “an inappropriate downgrading” of electronically stored information and provision of files “stripped of all metadata and lumped together without any indication of where a record begins and ends” is not an “acceptable form of production,” she said.

A copy of the opinion and order can be found here.

So, what do you think?  Have you been the recipient of a “lumped together” non-searchable production recently?  Please share any comments you might have or if you’d like to know more about a particular topic.

Deadline Extended to Vote for the Most Significant eDiscovery Case of 2010
 

Our ‘little experiment’ to see what the readers of eDiscoveryDaily think about case law developments in 2010 needs more time as we have not yet received enough votes yet to have a statistically significant result.  So, we’ve extended the deadline to select the case with the most significant impact on eDiscovery practices in 2010 to February 28.  Evidently, calling out the vote on the last business day before LegalTech is not the best timing.  Live and learn!

As noted previously, we have “nominated” five cases, which we feel were the most significant in different issues of case law, including duty to preserve and sanctions, clawback agreements under Federal Rule of Evidence 502, not reasonably accessible arguments and discoverability of social media content.  If you feel that some other case was the most significant case of 2010, you can select that case instead.  Again, it’s very important to note that you can vote anonymously, so we’re not using this as a “hook” to get your information.  You can select your case without providing any personal information.  However, we would welcome your comments as to why you selected the case you did and you can – optionally – identify yourself as well.

To get more information about the nominated cases (as well as other significant cases), click here.  To cast your vote, click here.

And, as always, please share any comments you might have or if you’d like to know more about a particular topic.

Vote for the Most Significant eDiscovery Case of 2010!
 

Since it’s awards season, we thought we would get into the act from an eDiscovery standpoint.  Sure, you have Oscars, Emmys and Grammys – but what about “EDDies”?  (I’ll bet you wondered what Eddie Munster could possibly have to do with eDiscovery, didn’t you?)

So, we’re conducting a ‘little experiment’ to see what the readers of eDiscoveryDaily think about case law developments in 2010.  This is our first annual “EDDies” award to select the case with the most significant impact on eDiscovery practices in 2010.  No cash or prizes being awarded, or even a statuette, but a chance to see what the readers think was the most important case of the year from an eDiscovery standpoint.

We have “nominated” five cases below, which we feel were the most significant in different issues of case law, including duty to preserve and sanctions, clawback agreements under Federal Rule of Evidence 502, not reasonably accessible arguments and discoverability of social media content.  We have a link to review more information about each case, and a link at the bottom of this post to cast your vote.

Very Important!  You can vote anonymously, so we’re not using this as a “hook” to get your information.  You can click on the link at the bottom, select your case and be done with it.  However, we would welcome your comments as to why you selected the case you did and you can – optionally – identify yourself as well.  eDiscoveryDaily will publish selected comments to reflect opinion of the voters as well as the vote results on February 7.  Click here to cast your vote now!

So, here are the cases:

Duty to Preserve/Sanctions

  • The Pension Committee of the Montreal Pension Plan v. Banc of America Securities, LLC, 29010 U.S. Dist. Lexis 4546 (S.D.N.Y. Jan. 15, 2010) (as amended May 28, 2010) – “Pension Committee”: The case that defined negligence, gross negligence, and willfulness in the electronic discovery context and demonstrated the consequences (via sanctions) resulting from those activities.  Judge Shira Scheindlin titled her 85-page opinion “Zubulake Revisited: Six Years Later”.  For more on this case, click here.
  • Victor Stanley, Inc. v. Creative Pipe, Inc., 2010 WL 3530097 (D. Md. 2010) – “Victor Stanley II”: The case of “the gang that couldn’t spoliate straight” where one of the defendants faced imprisonment for up to 2 years (subsequently set aside on appeal) and the opinion included a 12 page chart delineating the preservation and spoliation standards in each judicial circuit.  For more on this case, click here and here.

Clawback Agreements

  • Rajala v. McGuire Woods LLP, 2010 WL 2949582 (D. Kan. July 22, 2010) – “Rajala”: The case that addressed the applicability of Federal Rule of Evidence 502(d) and (e) for “clawback” provisions for inadvertently produced privileged documents.  For more on this case, click here.

Not Reasonably Accessible

  • Major Tours, Inc. v. Colorel, 2010 WL 2557250 (D.N.J. June 22, 2010) – “Major Tours”: The case that established a precedent that a party may obtain a Protective Order relieving it of the duty to access backup tapes, even when that party’s failure to issue a litigation hold caused the data not to be available via any other means.  For more on this case, click here.

Social Media Discovery

  • Crispin v. Christian Audigier Inc., 2010 U.S. Dist. Lexis 52832 (C.D. Calif. May 26, 2010) – “Crispin”: The case that used a 24 year old law (The Stored Communications Act of 1986) to address whether ‘private’ data on social networks is discoverable.  For more on this case, click here.

If you feel that some other case was the most significant case of 2010, you can select that case instead.  Other notable cases include:

  • Rimkus v. Cammarata, 2010 WL 645253 (S.D. Tex. Feb. 19, 2010): Where District Court Judge Lee Rosenthal examined spoliation laws of each of the 13 Federal Circuit Courts of Appeal.
  • Orbit One Communications Inc. v. Numerex Corp., 2010 WL 4615547 (S.D.N.Y. Oct. 26, 2010): Magistrate Judge James C. Francis concluded that sanctions for spoliation must be based on the loss of at least some information relevant to the dispute (differing with “Pension Committee” in this manner).
  • DeGeer v. Gillis, 2010 U.S. Dist. Lexis 97457(N.D. Ill. Sept. 17, 2010): Demonstration of inadvertent disclosure made FRE 502(d) effective, negating waiver of privilege.
  • Takeda Pharmaceutical Co., Ltd. v. Teva Pharmaceuticals USA, Inc., 2010 WL 2640492 (D. Del. June 21, 2010): Defendants’ motion to compel the production of ESI for a period of 18 years was granted, with imposed cost-shifting.
  • E.E.O.C. v. Simply Storage Management, LLC, 2010 U.S. Dist. Lexis 52766 (S.D. Ind. May 11, 2010): EEOC is ordered to produce certain social networking communications.
  • McMillen v. Hummingbird Speedway, Inc., No. 113-2010 CD (C.P. Jefferson, Sept. 9, 2010): Motion to Compel discovery of social network account log-in names and passwords was granted.

Click here to cast your vote now!  Results will be published in eDiscoveryDaily on February 7.

The success of this ‘little experiment’ will determine whether next year there is a second annual “EDDies” award.  😉

And, as always, please share any comments you might have or if you’d like to know more about a particular topic.

eDiscovery Case Law: When is Attorney-Client Communication NOT Privileged?

One answer: When it’s from your work email account, and your employer has a written policy that company email is not private and subject to audit.  Oh, and you’re suing your employer.

In Holmes v. Petrovich Dev. Co., LLC, 2011 WL 117230 (Cal. Ct. App. Jan. 13, 2011), a California court of appeals upheld a trial court ruling that emails from a plaintiff to her attorney via her company’s computer “did not constitute ‘confidential communication between client and lawyer’ within the meaning of Evidence Code section 952” and thus were not privileged.

The plaintiff, Gina Holmes worked as an executive assistant at Petrovich Development of Sacramento, California.  When hired, she read and signed the company’s policies regarding use of computers, which informed employees that they had no right of privacy to any personal information created or maintained on company computers, and that such information was subject to monitoring.

Holmes claimed Petrovich Development became hostile when it found out she was pregnant shortly after being hired in 2004 and used her company’s computer to communicate with an attorney, eventually quitting her job and suing her employer.  During the case, emails between her and her attorney were introduced at trial “to show Holmes did not suffer severe emotional distress, was only frustrated and annoyed, and filed the action at the urging of her attorney”.  Despite plaintiff’s protests that the emails were privileged, they were not excluded from evidence at trial.  Rather, the trial court ruled that the emails “were not protected … because they were not private.”  Because the plaintiff did not prevail on any of her claims, she appealed, claiming the court erred in failing to exclude the emails.

In a 3-0 decision by the Sacramento Third Appellate District, they affirmed the findings of the trial court, stating that the plaintiff’s use of the company computer after being expressly advised that her messages were not private was “akin to consulting her attorney in one of defendants’ conference rooms, in a loud voice, with the door open, yet unreasonably expecting that the conversation overheard … would be privileged.”.  The court also noted that “communication under these circumstances is not a “‘confidential communication between client and lawyer’ “ within the meaning of section 952 because it is not transmitted “by a means which, so far as the client is aware, discloses the information to no third persons other than those who are present to further the interest of the client in the consultation….”.

So, what do you think?  Was justice served?  Please share any comments you might have or if you’d like to know more about a particular topic.

eDiscovery Case Law: Privilege Waived for Produced Servers

If you were at the International Legal Technology Association (ILTA) trade show this past August, you may have noticed a huge unfinished building in the middle of the strip – the Fontainebleau Resort.  It sits idle after financing was pulled, forcing Fontainebleau Las Vegas LLC to file for Chapter 11 bankruptcy in June of 2009.  Naturally, lawsuits followed, between the Term Lenders and Fontainebleau Resort, LLC (FRLLC), the third party parent of Fontainebleau Las Vegas – In re Fontainebleau Las Vegas Contract Litig., (S.D. Fla. Jan 7, 2011)

A company that responded to a third party subpoena and court orders compelling production by handing over three servers to lenders without conducting any relevancy review and without reviewing two of the servers for privileged materials waived privilege for documents on the two servers that were not reviewed.

The parent company of a resort in bankruptcy proceedings was served by lenders to the resort with a subpoena for production of documents. The company did not object to the scope of the subpoena, and the court granted a motion of the lenders to compel production. Counsel for the company then halted work by an e-discovery vendor who had completed screening the company’s email server for responsive documents but had not started a privilege review because of concerns that the company could not pay for the services. Counsel for the company also sought to withdraw from the case, but the company was unable to find new counsel.

Rather than seeking a stay or challenging discovery rulings from the court, the company turned over data from a document server, an accounting server, and an email server. According to the court, the three servers were turned over to the lenders without any meaningful review for relevancy or responsiveness. Despite an agreement with the lenders on search terms for the email server, the company produced a 126 gigabyte disk with 700,000 emails from that server and then, without asking for leave of court, was late in producing a privilege log for data on the email server. The lenders sought direction from the court on waiver of privilege and their obligation if they found privileged materials in the data produced by the company. The company for the first time then raised objections to the burdensomeness of the original subpoena served over six months earlier given the company’s lack of resources or employees to conduct a document review.

The court held that the company “waived the attorney-client privilege and work product protection, and any other applicable privileges, for the materials it produced from two of three computer servers in what can fairly be described as a data dump as part of a significantly tardy response to a subpoena and to court-ordered production deadlines.” The court stated that in effect, the company “took the two servers, which it never reviewed for privilege or responsiveness, and said to the Term Lenders ‘here, you go figure it out.’”

However, because the company prepared a privilege log for the email server, the court added that privileges were not waived for materials from the email server. Also, the lenders were directed to alert the company to any “clearly privileged material they may find during their review of the production on the documents and accounting servers.” Although the court was not ruling on admissibility at trial of that privileged material, the lenders would be allowed to use it during pre-trial preparations, including depositions.

So, what do you think?  Was justice served?  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: Crispin v. Christian Audigier Inc.

Yesterday, we took a look at “Major Tours, Inc. v. Colorel”, which addresses whether a party may obtain a Protective Order relieving it of the duty to access backup tapes, even when that party’s failure to issue a litigation hold resulted in the data only being available on those backup tapes.

Discoverability of social media content has been a big topic this year, with several cases addressing the issue, including this one, previously discussed on eDiscovery Daily.  The holiday week look back at cases concludes with Crispin v. Christian Audigier Inc., 2010 U.S. Dist. Lexis 52832 (C.D. Calif. May 26, 2010), which addresses whether ‘private’ data on social networks is discoverable.

This copyright infringement claim brought by artist Buckley Crispin against defendant and designer Christian Audigier, alleges that Audigier used artwork outside the scope of the original oral license between the parties and also sub-licensed the artwork to other companies and individuals (named as co-defendants) without Crispin’s consent.  The defendants served subpoenas on social media providers Facebook, MySpace, and Media Temple, directing them to turn over all communications between Crispin and Audigier, as well as any communications referencing the co-defendants.

Crispin sought to quash the subpoenas, arguing that they sought private electronic communications protected under the Stored Communications Act of 1986 (SCA), prohibiting Electronic Communication Services (ECS) and Remote Computing Services (RCS) providers from turning over those communications, but the motion was denied because Magistrate Judge John E. McDermott determined that Facebook, MySpace, and Media Temple did not qualify for protection from disclosure under the SCA.  Crispin moved for reconsideration with the U.S. District Court for the Central District of California.

District Court Judge Margaret Morrow’s decision partially reversed and partially vacated Judge McDermott’s order, finding that the SCA’s protections (and associated discovery preclusions) include at least some of the content hosted on social networking sites, including the private messaging features of social networking sites protected as private email.  She also concluded that because Facebook, MySpace, and Media Temple all provide private messaging or email services as well as electronic storage, they all qualify as both ECS and RCS providers, with appropriate SCA protections.

However, regarding Facebook wall postings and MySpace comments, Judge Morrow determined that there was insufficient evidence to determine whether these wall postings and comments constitute private communications as the user’s privacy settings for them were less clear and ordered a new evidentiary hearing regarding the portions of the subpoenas that sought those communications.

This opinion sets a precedent that, in future cases, courts may allow protection to social networking and web hosting providers from discovery based on SCA protections as ECS and RCS providers and may consider social media ESI protected, based on the provider’s privacy controls and the individual user’s privacy settings.

So, what do you think?  Is this the most significant eDiscovery case of 2010?  Please share any comments you might have or if you’d like to know more about a particular topic.

Happy New Year from all of us at Trial Solutions and eDiscovery Daily!

eDiscovery Case Law: Major Tours v. Colorel

Yesterday, we took a look at “Rajala v. McGuire Woods”, Judge David Waxse’s opinion regarding the applicability of Federal Rule of Evidence 502(d) and (e) in McGuire Woods’ request for a clawback provision for privileged documents.

The holiday week look back at cases continues with Major Tours, Inc. v. Colorel, 2010 WL 2557250 (D.N.J. June 22, 2010), which addresses whether a party may obtain a Protective Order relieving it of the duty to access backup tapes, even when that party’s failure to issue a litigation hold resulted in the data only being available on those backup tapes.

Major Tours appealed a 2009 Magistrate Judge’s order concluding that certain backup tapes were not reasonably accessible under Rule 26(b)(2)(B) and that the plaintiffs had not shown good cause to require their production under the seven factor test set forth in the Advisory Committee Notes to Rule 26(b)(2)(B). The Magistrate Judge made this determination despite finding that the defendant, Michael Colorel, had not instituted adequate litigation hold notices until several years after the duty to preserve had attached.

Upon appeal to U.S. District Court Judge Jerome Simandle, Major Tours claimed that the Magistrate Judge had not given “appropriate weight to the defendants’ culpability for the emails being inaccessible, given that the reason for the increased cost of recovery was the defendants’ failure to institute a timely and effective litigation hold.” and also argued that a party cannot rely on Rule 26(b)(2)(B) if that party’s negligence caused the inaccessibility of the requested data in the first place.

Judge Simandle first addressed “whether, as a matter of law, a protective order under Rule 26(b)(2)(B) can ever be granted to a party when the evidence is inaccessible because of that party’s failure to institute a litigation hold” and concluded that “no such bright line rule exists.”, finding that Colorel’s culpability in failing to preserve the information did not override application of the multi-factor good cause test under Rule 26(b)(2)(B). Judge Simandle cited the decision in Disability Rights Council of Greater Washington v. Washington Metropolitan Transit, 242 F.R.D. 139 (D.D.C. 2007), in which Magistrate Judge John M. Facciola considered the same issue and “concluded that the proper approach was to balance the defendants’ culpability as one factor in the seven factor analysis.”  Judge Simandle noted that “The Rules compel exactly this discretionary balancing of costs and benefits of discovery, not a bright line requirement of production, no matter how burdensome, how likely to succeed, or how necessary to the litigation, if a party fails to adequately preserve every byte of previously accessible data.”

As to whether the magistrate judge adequately considered defendants’ culpability, Judge Simandle found that he did and affirmed his order, noting that considering the volume of evidence produced by Colorel, the backup tapes were “likely to produce evidence of only marginal, cumulative benefit and at great expense” and that “this outweighed the slim likelihood of the discovery of non-cumulative evidence even if there was some unknown degree of negligent spoliation.”

So, what do you think?  Is this the most significant eDiscovery case of 2010?  Please share any comments you might have or if you’d like to know more about a particular topic.

eDiscovery Case Law: Rajala v. McGuire Woods

Yesterday, we took a look at “Pension Committee”, Judge Shira Scheindlin’s significant opinion regarding the duty for plaintiffs (as well as defendants) to preserve ESI and sanctions for failing to live up to that duty.

The holiday week look back at cases continues with Rajala v. McGuire Woods LLP, (D. Kan. July 22, 2010), which addresses the applicability of Federal Rule of Evidence 502(d) and (e) in McGuire Woods’ request for a clawback provision for privileged documents.

As part of negotiations over an appropriate protective order covering the treatment of confidential information, defendant McGuire Woods drafted a proposed order that included a clawback provision. Plaintiff opposed inclusion of a clawback provision in the agreement, arguing that the protective order should not deal with privilege issues and that “[t]he parties are free to enter stipulations at other times over other discovery issues, including … waiver of privileges and clawbacks… There is no need to force the issue here.” The protective order was subsequently entered without a clawback provision. After further meet and confer sessions, plaintiff still would not enter into a clawback agreement, and defendant filed a motion for entry of a clawback provision.

Agreeing with defendant’s arguments, the Court held that both Federal Rule of Civil Procedure 26(f) and Federal Rule of Evidence 502 contemplated the use of clawback provisions and that “entry of an order containing a clawback provision is not dependent on the agreement of the parties.” Because of the extensive amount of ESI in the litigation, and because defendant is a law firm with thousands of clients and a high risk of potential inadvertent disclosure, the Magistrate Judge concluded that defendant had made the requisite showing of good cause for entry of a clawback provision:

“[T]his case is precisely the type of case that would benefit from a clawback provision. Such a provision will permit the parties to conduct and respond to discovery in an expeditious manner, without the need for time-consuming and costly pre-production privilege reviews, and at the same time preserve the parties’ rights to assert the attorney-client privilege or work product immunity.”

So, what do you think?  Is this the most significant eDiscovery case of 2010?  Please share any comments you might have or if you’d like to know more about a particular topic.

Case Summary Source: Sidley Austin LLP.

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.