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Electronic Discovery

Defendant Not Required to Modify Production After Plaintiff Fails to Demonstrate Prejudice: eDiscovery Case Law

In Excel Enterprises, LLC v. Winona PVD Coatings, LLC, No. 3:16-cv-19-WCL-MGG (N.D. Ind., Feb. 17, 2017), Indiana Magistrate Judge Michael G. Gotsch, Sr. ruled that despite the fact that the defendant failed to demonstrate that it produced documents kept in the ordinary course of business, the plaintiff failed to demonstrate any prejudice suffered from the current state of the production and granted the defendant’s motion to reconsider the court’s earlier order regarding the format of the defendant’s production.

Case Background

In this breach of contract case, the plaintiff’s counsel informed the defendant’s counsel that the documents in its original production were not searchable and identified the format for the documents it preferred. In response, the defendant converted all of its responsive documents to the plaintiff’s preferred format and delivered them to the plaintiff in the requested format on 8 days later in July 2016.

On that same day, the plaintiff filed a motion to compel alleging, among other things, that the defendant had not complied with the production requirements set forth in Fed. R. Civ. P. 34(b)(2)(E)(i), which requires parties to produce documents responsive to requests for production “as they are kept in the usual course of business” or to “organize and label them to correspond to the categories in the request.”  The plaintiff argued that the defendant’s documents were not presented as they were kept in the usual course of business and asked the Court to compel the defendant to organize and label the documents to clarify which document responded to which specific discovery request.

The Court ultimately granted this part of the plaintiff’s motion, ordering the defendant “to supplement its production to identify by Bates Numbers which documents were produced in response to which specific discovery requests by November 15, 2016” because the defendant’s assertion that it produced the requested documents as they were kept in the ordinary course of business was not sufficiently supported with appropriate evidence.  In response, the defendant filed an instant motion to reconsider, presenting additional evidence (including attaching an affidavit from its Director of Information Technology) in an attempt to show that its production complies with Rule 34(b)(2)(E)(i).  However, the plaintiff objected, arguing that the affidavit failed to explain how the documents were stripped of their metadata and converted to unsearchable .pdf and .tiff files before the initial production or maintained as unsearchable .pdf and .tiff files in its ordinary course of business.

Judge’s Ruling

Judge Gotsch noted that the defendant “had the opportunity to present evidence that it produced the 30,000 documents as they were kept in the usual course of its business”, but its “attempt to so demonstrate was determined to be deficient to such an extent that the Court ordered Winona to comply with the other option under Rule 34(b)(2)(E)(i)—organizing and labeling the 30,000 documents to correspond to the categories in Excel’s discovery requests.”  Even with the affidavit submitted with the instant motion to reconsider, Judge Gotsch noted that the affidavit “clearly describes the process Winona used to produce its responsive documents to Excel, but provides no explanation of how the responsive documents were kept in the ordinary course of Winona’s business.”

However, the defendant also argued that “Excel has yet to offer any argument or evidence that it has suffered prejudice as a result of Winona’s production.”  To that, Judge Gotsch responded, stating that “Winona is correct. Through both its second motion to compel and its objection to the instant motion to reconsider, Excel has merely asked the Court to hold Winona to the form of Rule 34(b)(2)(E)(i) with no discussion of any adverse effect on Excel should the Court deem Winona’s current production of 30,000 documents, in the format explicitly requested by Excel and with important identifying information, complete.”  Noting that Fed. R. Civ. P. 26(b)(1), gives district courts broad powers to manage discovery in their cases, Judge Gotsch stated that “Excel’s demand for strict compliance with Rule 34(b)(2)(E)(i) amounts to a form-over-substance argument. As such, the cost and time Winona would expend to organize and label the 30,000 responsive documents at this time would pose a burden that outweighs the potential benefit of the exercise to Excel.”  As a result, he granted the defendant’s motion to reconsider the court’s earlier order.

So, what do you think?  Was that the right decision or should the court have stuck with its original order?  Please share any comments you might have or if you’d like to know more about a particular topic.

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

Requesting 72 Spelling Variations on Five Search Terms Spells Trouble for Plaintiffs: eDiscovery Case Law

In Diesel Power Source et. al. v. Crazy Carl’s Turbos et. al., No. 14-826 (D. Utah, Feb. 23, 2017), Utah Magistrate Judge Brooke C. Wells denied the plaintiff’s Motion for Sanctions for the failure of the defendant to produce ESI, finding that the plaintiff had failed to sufficiently narrow its search terms by introducing 72 spelling variations on the five terms it proposed.  Judge Wells also denied the defendants’ Motion for Order to Show Cause and for Sanctions, finding that the defendants had failed to provide any “certification that the parties made reasonable efforts to reach agreement on the disputed matters.”

Case Background

In this case regarding defamatory comments and photographs allegedly posted on the internet by the defendants about the plaintiffs (who were business competitors), Judge Wells led off her order by stating: “To state that the parties in this matter are not cooperating with each other is an understatement.”  Throughout the case, each of the parties had taken turns filing motions for sanctions and each of the parties had complained to the court about the other side failing to provide requested discovery, causing Judge Wells to note that the case “has sat stuck in the quagmire of discovery despair” since it was filed in November 2014.

The plaintiffs sought sanctions against the defendants for their alleged failure to comply with a May 2016 court order compelling them to produce certain items. Following a hearing held in December 2016, it became apparent that some items were still outstanding. The court took the Motion for Sanctions under advisement before finding in January 2017 that the email search terms submitted by the plaintiffs were “overly generic and result in an undue burden placed upon Defendants”. The court ordered the plaintiffs to provide “five detailed search terms that must be more detailed than those previously submitted”.

Following the court’s order, the plaintiff provided the defendants with five search terms, but also provided 72 “spelling variations” on these search terms for a total of 77 search terms.  Due to the number of search terms, the defendants filed a Motion for Order to Show Cause and for Sanctions, again asserting that the plaintiff was on a fishing expedition and also arguing that the plaintiff had failed to comply with the court’s May 2016 order, asking for sanctions citing to the Ehrenhaus factors.  In response, the plaintiff argued it is easy to search using the 72 “spelling variations” if quotations are used.

Judge’s Ruling

In considering the motions, Judge Wells stated: “After considering all that has happened during discovery the court finds both parties to be at fault. First, the court finds Plaintiff has failed to sufficiently narrow its search terms. Previously the court found Plaintiff’s search terms to be overly generic placing an undue burden upon Defendants. Now, Plaintiff has taken the court’s instruction to provide five search terms to an extreme by supplementing it with 72 additional ‘spelling variations.’ Such an expansion is not within the spirit and intent of the court’s prior orders, its comments during hearings or within the principles of proportionality found in the discovery rules.”  As a result, Judge Wells ruled that “Plaintiff is permitted to use the five search terms it has provided along with three listed spelling variations, three for each of the five search terms, for a total of twenty terms.”

As for the defendants’ motion, Judge Wells stated that “Defendants Motion for Order to Show Cause and for Sanctions not only misstates the record before the court, it also fails to comply with the Short Form Discovery Rules as set forth by Judge Nuffer and as set forth in Local Rule 37-1. Defendants have failed to provide any ‘certification that the parties made reasonable efforts to reach agreement on the disputed matters’ and that provides an additional basis to deny Defendants motion.”  Judge Wells also noted that “[m]uch of Defendants motion is an attempt to draw the court’s attention away from Defendants own malfeasance. There is no excuse for Defendants failure to provide the federal tax returns and bank statements.”

Judge Wells also issued a warning to “both parties that going forward there needs to be a renewed spirit of cooperation otherwise the court will use its inherent powers to sanction the attorneys in this case for the continued stonewalling that has been a reoccurring theme in this litigation.”

So, what do you think?  Should courts rule on limiting spelling variations of search terms?  Please share any comments you might have or if you’d like to know more about a particular topic.

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

For the Fifth Year, Florida is the Place to Be for eDiscovery Education: eDiscovery Trends

The fifth annual University of Florida E-Discovery Conference is coming up one week from today, on March 30, and you can attend even if you don’t plan to be in the state of Florida on that day.

Not surprisingly, given the new technology CLE requirement in Florida, the focus of the conference this year is competence in 2017.  As the conference site notes, it’s “no longer your grandfather’s e-discovery (circa 2005). There are exciting new e-discovery tools, new offerings and huge new challenges against a backdrop of increasing demands for competence by judicial officials.”

Notable speakers include Craig Ball, George Socha of BDO Consulting, David Horrigan of kCura, Ralph Losey of Jackson Lewis, Mary Mack of ACEDS, Kenya Dixon of the FTC, Corey Lee of Hunton & Williams and Sonya Strnad from Holland & Knight.  Not to mention a number of federal and state judges, including U.S. Magistrates William Matthewman, Anthony Porcelli, and Gary Jones, Florida Circuit Court Judge Meenu Sasser, and retired Florida Circuit Court Judge Ralph Artigliere.

The conference includes topics ranging from cloud/social media/mobile devices preservation to collections on a budget to meet and confer to defending your keyword search.  The use of artificial intelligence for document review is explored, as well as efficient and reliable document review using contemporary tools.  The day ends with a judicial panel where federal and state judges discuss what they now expect from clients and attorneys.  A link to the Agenda is here.

For the first time, the University of Florida Levin College of Law is also sponsoring an E-Discovery CareerFest to respond to the growing interest of University of Florida law students in exploring career paths that involve electronic discovery and data analytic skills.  The CareerFest will be conducted the day before the main conference, Wednesday, March 29, from 3:00 to 5:30PM ET.

The 2017 UF Law E-Discovery Conference has been approved for 6 General, 6 Technology and 1 Ethics CLE credits by the Florida Bar.  If you plan to attend in person, the event will once again take place at the University of Florida Levin College of Law campus.  But, if you can’t attend in person, the event will also (once again) be streamed online.

The conference costs $199 to attend in person or $99 to attend via livestream.  Members of the 8th Judicial Circuit Bar Association, ACEDS and Friends of the conference are eligible to receive a discounted rate.  The conference is free to attend in person or via livestream to all employees of federal and state government agencies, judges and judicial staff, students, and academics.  To register for the conference, click on the “Register Now” link on the conference web site here.

So, what do you think?  Are you attending the conference?  Please share any comments you might have or if you’d like to know more about a particular topic.

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

Here’s a FREE Training Course on How to Do TAR: eDiscovery Best Practices

A lot of people can talk about technology assisted review (TAR), but how many people actually know how to conduct an eDiscovery review using TAR?  Here’s a TAR course that’s designed to show you how to do it.

On Ralph Losey’s excellent e-Discovery Team® blog, he has unveiled the e-Discovery Team’s training course on how to conduct electronic document review enhanced by active machine learning, a type of specialized Artificial Intelligence.  In other words, the training course is designed to teach you how to “do” TAR.

The TAR method that Ralph discusses is called Hybrid Multimodal IST Predictive Coding 4.0 and the Course is composed of Sixteen Classes, which are individual pages on the e-Discovery Team site.  The Classes are here (links to each one are available via the Introduction link below):

  1. First Class: Introduction
  2. Second Class: TREC Total Recall Track
  3. Third Class: Introduction to the Nine Insights Concerning the Use of Predictive Coding in Legal Document Review
  4. Fourth Class: 1st of the Nine Insights – Active Machine Learning
  5. Fifth Class: Balanced Hybrid and Intelligently Spaced Training
  6. Sixth Class: Concept and Similarity Searches
  7. Seventh Class: Keyword and Linear Review
  8. Eighth Class: GIGO, QC, SME, Method, Software
  9. Ninth Class: Introduction to the Eight-Step Work Flow
  10. Tenth Class: Step One – ESI Communications
  11. Eleventh Class: Step Two – Multimodal ECA
  12. Twelfth Class: Step Three – Random Prevalence
  13. Thirteenth Class: Steps Four, Five and Six – Iterate
  14. Fourteenth Class: Step Seven – ZEN Quality Assurance Tests
  15. Fifteenth Class: Step Eight – Phased Production
  16. Sixteenth Class: Conclusion

Ralph notes that “With a lot of hard work you can complete this online training program in a long weekend. After that, this course can serve as a solid reference to consult during your complex document review projects.”

The sixteen classes in this course cover seventeen topics, split into nine insights and eight workflow steps:

  1. Active Machine Learning (aka Predictive Coding)
  2. Concept & Similarity Searches (aka Passive Learning)
  3. Keyword Search (tested, Boolean, parametric)
  4. Focused Linear Search (key dates & people)
  5. GIGO & QC (Garbage In, Garbage Out) (Quality Control)
  6. Balanced Hybrid (man-machine balance with IST)
  7. SME (Subject Matter Expert, typically trial counsel)
  8. Method (for electronic document review)
  9. Software (for electronic document review)
  10. Talk (step 1 – relevance dialogues)
  11. ECA (step 2 – early case assessment using all methods)
  12. Random (step 3 – prevalence range estimate, not control sets)
  13. Select (step 4 – choose documents for training machine)
  14. AI Rank (step 5 – machine ranks documents according to probabilities)
  15. Review (step 6 – attorneys review and code documents)
  16. Zen QC (step 7 – Zero Error Numerics Quality Control procedures)
  17. Produce (step 8 – production of relevant, non-privileged documents)

Ralph provides charts to illustrate the insights and steps on his Introduction class.  Ralph notes that they “offer this information for free on this blog to encourage as many people as possible in this industry to get on the AI bandwagon.”  I asked Ralph if he wanted to say anything additional to our readers regarding the course and he told me that he “will be adding homework assignments next at the end of each class.”  I look forward to “diving in” and reviewing the classes on my own ASAP.  Thanks, Ralph!

So, what do you think?   Have you used TAR on a case yet?  If so, how did it go?  Please share any comments you might have or if you’d like to know more about a particular topic.

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

6,905 Billable Hours for Attorney Review May Not Be Billable if the Reviewer Isn’t Actually an Attorney: eDiscovery News

A contract lawyer for a Pennsylvania plaintiffs’ firm clocked 6,905 hours of work on a shareholder lawsuit against former executives and directors of Sprint Corp. related to its 2005 merger with Nextel.  One problem, however: that attorney had apparently been disbarred for years when he performed the work.

According to an article in the Wall Street Journal (One Lawyer, 6,905 Hours Leads to $1.5 Million Bill in Sprint Suit, written by Joe Palazzolo and Sara Randazzo, subscription required), “Alexander” Silow, a contract lawyer for the Weiser Law Firm PC, clocked 6,905 hours of work during the case. Averaging about 13 hours a day, Silow reviewed 48,443 documents and alone accounted for $1.5 million, more than a quarter of the requested legal fees, according to court documents.  Those awarded fees had already been cut from $4.2 million down to just $450,000 back in November of last year.

That initial fee reduction was awarded after Kansas District Judge James Vano called the requested amount “unbelievable.” “It seems that the vast amount of work performed on this case was illusory, perhaps done for the purpose of inflating billable hours,” Judge Vano, who sits in Olathe, Kan., wrote in a Nov. 22 opinion.

Silow had been working as a contract attorney for at least eight years when staffing agency Abelson Legal Search placed him at the Weiser firm in 2008, according to a Feb. 3 letter from the firm to Judge Vano. The law firm was notified by a third party it declined to name and learned that no one with Silow’s name was listed in a state database of licensed lawyers, Robert B. Weiser, co-founder of the firm, said in the letter.  Silow had presented himself to the firm as “Alexander J. Silow”, but “was in actuality named Jeffrey M. Silow” and confessed he had been disbarred when the firm confronted him, the letter said. The firm has since ended its relationship with Mr. Silow and alerted authorities, it said.  The Pennsylvania’s attorney discipline office confirmed Mr. Silow was disbarred in 1987 but could provide no additional information.

At least one Sprint Shareholder has requested that the case be reviewed again by Judge Vano in light of the new allegations.

According to Lester Brickman, an emeritus professor at Benjamin N. Cardozo School of Law in New York who has written about bill padding, plaintiffs’ firms bill for work done by contract attorneys like Mr. Silow at hourly rates of $300 or more when they submit their fee requests, but they typically pay the attorneys $20 to $40 per hour.  Brickman said it is common for firms to staff cases with contract attorneys and direct them to review thousands of documents to run up the fees.  In this case, bill padding and excessive markup appears to have been the least of the firm’s problems.

Thanks to ACEDS for the tip on the story!

Also, yesterday, I thanked our readers for 6 1/2 years of support and readership of the blog.  Today, I want to thank JD Supra and its readership for being named the Readers’ Choice Top Author in eDiscovery (and CloudNine being named the Top Firm) for 2017!  Distribution of our posts via JD Supra has grown our readership greatly over the past year and I really appreciate our partnership with JD Supra and thank all of you for reading our blog, whether it’s via JD Supra or the “old fashioned way” via our site!  Thank you so much!

So, what do you think?   Should firms do more to ensure that the attorneys they use for review are actually licensed attorneys?  Please share any comments you might have or if you’d like to know more about a particular topic.

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

78 is Great! eDiscovery Daily Is Seventy Eight! (Months Old, That Is)

A new record!  (Get it?)  Seventy eight months ago today (a.k.a., 6 1/2 years), eDiscovery Daily was launched.  It’s hard to believe that it has been 6 1/2 years since our first three posts debuted on our first day, September 20, 2010.  Now, we’re up to 1,656 lifetime posts, and so much has happened in the industry that we’ve covered.

Twice a year, we like to take a look back at some of the important stories and topics during that time.  So, here are just a few of the posts over the last six months you may have missed.  Enjoy!

Thanks, once again, for your support!  Our subscriber base and daily views continue to grow, and we owe it all to you!  Thanks for the interest you’ve shown in the topics!  We will do our best to continue to provide interesting and useful eDiscovery news and analysis.  And, as always, please share any comments you might have or if you’d like to know more about a particular topic!

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

Lack of Comma Means That Breaking Up Overtime Pay is Hard to Do: Litigation Trends

Do do do

Down dooby doo down down

Comma, comma, down dooby doo down down

Comma, comma, down dooby doo down down

Breaking up is hard to do

Not since Neil Sadaka’s classic song has a “comma” meant so much.  A class-action lawsuit about overtime pay for truck drivers has come down to punctuation and the lack of an Oxford comma has resulted in an appeals court reversal of a partial summary judgment by a lower court.

As reported by Newser (Dairy Drivers in Maine Are Celebrating a Missing Comma, written by Jenn Gidman), dairy drivers in Maine won an appeal because of a missing Oxford comma. In the suit over overtime pay against Oakhurst Dairy, first filed in 2014, drivers complained that a list of tasks not eligible for overtime did not make it clear whether “distribution” counted, mainly because of the lack of the Oxford comma.

FWIW, an Oxford comma is defined as a comma used after the penultimate item in a list of three or more items, before ‘and’ or ‘or’ (e.g. Michelangelo was an Italian painter, sculptor, and architect).  Some believe it should be used and others don’t, so the usage of it varies.

In this case, three truck drivers sued Oakhurst Dairy in 2014, seeking more than four years’ worth of back overtime pay that they had not been paid. Maine law requires workers to be paid 1.5 times their normal rate for each hour worked after 40 hours, but it also identifies certain exemptions, as noted in Maine state law, which says (in Exemption F) that overtime rules do not apply to:

The canning, processing, preserving, freezing, drying, marketing, storing, packing for shipment or distribution of:

(1) Agricultural produce;

(2) Meat and fish products; and

(3) Perishable foods.

So, does that mean overtime rules don’t apply to packing for shipment and they also don’t apply to distribution?  Or does it mean that overtime rules don’t apply to packing, for shipment or distribution?

The district court ruled the former, which interpreted the law as excluding those involved in distribution (e.g., truck drivers) from overtime pay.  The drivers appealed, and in a 29-page court decision handed down on Monday, the First Circuit Court of Appeals reversed the District Court’s grant of partial summary judgment to the defendant.  Referring to the language as “ambiguous”, the Court stated:

“Given that the delivery drivers contend that they engage in neither packing for shipment nor packing for distribution, the District Court erred in granting Oakhurst summary judgment as to the meaning of Exemption F. If the drivers engage only in distribution and not in any of the standalone activities that Exemption F covers – a contention about which the Magistrate Judge recognized possible ambiguity – the drivers fall outside of Exemption F’s scope and thus within the protection of the Maine overtime law.”

The amount at stake could be as much as $10 million.  Thanks to the absence of an Oxford comma, those truck drivers may yet recoup that amount.

So, what do you think?   Can you think of any other cases that may have turned on punctuation?  Please share any comments you might have or if you’d like to know more about a particular topic.

Happy St. Patrick’s Day!!

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine. eDiscovery Daily is made available by CloudNine solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscovery Daily 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 Reproduce ESI in Native Format, As Originally Requested by Plaintiffs: eDiscovery Case Law

In Morgan Hill Concerned Parents Assoc. v. California Dept. of Education, No. 2:11-cv-3471 KJM AC (E.D. Cal. Feb. 2, 2017), California Magistrate Judge Allison Claire granted the plaintiffs’ motion to compel the defendant to produce emails in native format with all metadata attached, but denied the plaintiffs’ motion for sanctions without prejudice to its renewal using Sacramento rates for attorneys’ fees.  Judge Claire also denied the defendant’s motion for a protective order regarding production of the native format data, and its motion for sanctions.

Case Background

In this case regarding alleged violations of the Individuals with Disabilities Education Improvement Act, the plaintiffs served their First Set of Requests for Production of Documents in April 2013. The request specified that the ESI should be produced “in their native electronic format together with all metadata and other information associated with each document in its native electronic format.”  One month later, the defendant responded, but did not object to the instruction that ESI be produced in native format and did not propose any other format for producing the ESI, instead objecting to nearly every individual request in the First Set on the grounds that they were “unduly burdensome”, “not relevant to the present litigation,” and protected by the attorney client and deliberative process privileges.

In October 2013, the defendant submitted a proposed protective order to the court where it “observe[d]” that “the question whether to produce metadata generally involves a balancing test ….”.  The defendant subsequently claimed this was its original objection to the production of ESI in native format – they didn’t explicitly object to native format production until a letter sent to the plaintiffs in August 2016.  According to the defendant, they had produced ESI “as load files, a standard format approved by the Special Master on April 7, 2016.”  The parties met and conferred on the format of production issue in October 2016 without success.

Judge’s Ruling

With regard to the defendant’s argument that “[a] requesting party cannot demand production in one format versus another just because one would allegedly ease a party’s review process,” Judge Claire stated: “This argument runs directly contrary to the governing Rules, which expressly state just the opposite: the requester ‘may specify the form or forms in which electronically stored information is to be produced.’… Indeed, CDE’s dismissive rejection of ‘ease’ of review as a valid reason for specifying the format is difficult to understand, since ease of review is precisely why the requesting party would specify the format, and it is the very reason the requester is permitted to do so.”

With regard to the defendant’s argument that it can ignore the plaintiffs’ request for native format and produce it in some other format so long as the production is in a “`usable form, e.g., electronically searchable and paired with essential metadata’”, Judge Claire noted that the “The Rules specify that the responding party may produce ESI ‘in a reasonably usable form’ if the request ‘does not specify a form for production.’”  Since the plaintiffs’ request did specify it, Judge Claire ruled that “there was no basis for CDE to simply ignore it and produce it in a format of CDE’s own choosing.”  Judge Claire also rejected the defendant’s “attempt to drag the Special Master into this dispute” via undocumented recollection of an ex parte phone call approval from the Special Master, by noting that the Special Master is a technical consultant only, “not a judge who could ‘approve’ or disapprove of discovery production formats.”

Judge Claire also rejected even the defendant’s earliest claimed date of objection (October 2013) as untimely, since it was “six months after the document requests were served” and also ruled the more explicit objection in August 2016 as untimely as well.

As for the defendant’s argument that reproducing the ESI in native form would be burdensome, Judge Claire stated: “The court rejects this argument because this is a problem of CDE’s own making. CDE created the problem it now complains about by engaging in an ESI production in a format of its choosing — the ‘load file format’ — rather than the native format, with all metadata attached, as plaintiffs had requested.”  Judge Claire also noted that the defendant could have produced it originally in the requested format or objected in a timely manner and worked to meet and confer with the plaintiff – neither of which happened.

As a result, Judge Claire granted the plaintiffs’ motion to compel the defendant to produce emails in native format with all metadata attached.  Judge Claire denied the plaintiffs’ motion for sanctions without prejudice to its renewal using Sacramento rates for attorneys’ fees and also denied the defendant’s motion for a protective order regarding production of the native format data, and its motion for sanctions.

So, what do you think?  Could the defendant have gotten its way if it had objected in a timely manner?  Please share any comments you might have or if you’d like to know more about a particular topic.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by CloudNine. eDiscovery Daily is made available by CloudNine solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscovery Daily 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 Impact of Cybersecurity Concerns on M&A Activities is Growing: eDiscovery Trends

This is the second story that I’ve covered in the past several months where cybersecurity concerns impacted merger and acquisitions.  See below for more on the first one…

After Verizon Communications took a $350 million discount on its purchase of Yahoo based on the massive data breaches disclosed by the Internet company last year, it may be time for cybersecurity and data privacy lawyers to take a more active role in merger and acquisition discussions.

In Bloomberg Law (Are Cyber Lawyers Poised to Play Bigger Role in M&A?, written by Rebecca Beyer), the author notes that, in two attacks in 2013 and 2014, more than a billion Yahoo users’ personal account info was hacked.  Yes, that’s billion with a “b”.

The resulting acquisition of Yahoo by Verizon, negotiated over several months, may be the first time a merger price has been discounted because of a data breach, said Craig A. Newman, a global cybersecurity partner at Patterson Belknap Webb & Tyler in New York.  Yahoo tapped Hunton & Williams to handle the cyber issues in its amended agreement with Verizon, according to a company representative. The firm’s privacy and cybersecurity practice is led by Lisa J. Sotto, a noted expert who chairs the Department of Homeland Security’s Data Privacy and Integrity Advisory Committee.

Sotto was quoted in the article observing: “Privacy and data security really had for years been on the back burner in M&A transactions…It’s only in the last few years that privacy and cyber security lawyers have been brought into the due diligence and document negotiation process.”

After Yahoo announced the hacks of its users’ data, many people asked whether Verizon would try to back out of the deal — or if it would be able to.

But walking away from a merger agreement is almost impossible, according to Steven Davidoff Solomon, a professor at UC Berkeley School of Law. To exit a deal, a company would need to prove that a data breach counts as a material adverse event or change as defined by so-called MAC clauses in merger agreements, he said.

Proving a material adverse event often requires battling in court over questions like whether an incident was “significant” and “durational,” said Solomon, who has written in the past that about the Yahoo/Verizon deal. He noted that it’s not at all clear whether data breaches — even of the size disclosed by Yahoo — would rise to that level.

As a result, buyers are asking their counsel to look long and hard at targets’ IT departments so they can at least be informed in advance about potential problems. According to a survey by West Monroe Partners, 80 percent of respondents said cybersecurity due diligence was highly important in reaching a deal (and 77 percent said that issue had “increased significantly” in importance in the past two years).

So, it may be a good idea to get your cyber lawyers involved in the early stages of M&A discussions.  And, make sure you’re on the same page when talking about mergers and acquisitions.  :o)

The first post I mentioned at the top of this post related to this merger of law firms where the lead attorney of one firm decided to merge with a larger law firm, at least in part over her concerns about cybersecurity.  Concerns about cybersecurity are not only impacting mergers, they are also causing them, at least in some instances.

So, what do you think?   Do concerns about cybersecurity and data privacy play a role in M&A discussions at your organization?  Please share any comments you might have or if you’d like to know more about a particular topic.

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

EDRM Releases New Security Questionnaire: eDiscovery Trends

As promised when they announced the project last August, EDRM announced last week the release of a new Security Audit Questionnaire, which is designed to be a practical tool for evaluating the security capabilities of corporations, law firms, cloud providers, and third parties offering electronic discovery or managed services.

The security survey evaluates an organization’s data security and practices, allowing potential customers to assess the risk of entrusting sensitive data to the vendor. The tool can be used to assess data protection from destruction or unauthorized access, as well as to assure regulatory compliance with data-related legislation such as HIPAA, the Sarbanes-Oxley Act, and security breach notification laws.

The evaluation allows the assessor to determine the level of risk the organization may be assuming by engaging the vendor or partner and to make suggestions to improve security practices and enhance the service provided.  The tool is also suited for organizations who wish to conduct a self-audit to assess security capabilities and identify areas for improvement.

The seven security disciplines addressed in the audit questionnaire include 74 separate criteria, as follows:

  • General Security (2 questions)
  • Security and Risk Management (17 questions)
  • Asset Security (5 questions)
  • Communications and Network Security (23 questions)
  • Identity and Access Management (10 questions)
  • Security Operations (15 questions)
  • Software Development Security (2 questions)

The rank scale is dependent on the category, as some categories have “yes/no” questions only and others have a rank scale from 1 to 10.  Each question allows for recording of additional notes and a summary sheet keeps track of the scores across the seven security disciplines.

A team of EDRM members representing e-discovery providers, corporate legal, and law firms convened in August 2016 to discuss security and compliance requirements and create a plan for the Security Audit Questionnaire.  Amy Sellars, assistant general counsel, litigation support for Walmart Legal, and Julie Hackler, account executive at Avansic, led the team of 14 professionals with backgrounds in e-discovery, security, IT technologies, and litigation support in creating the tool. Over several months of collaborative effort, the team identified the seven key security areas for audit, developed checklists and audit questions, and built and tested the questionnaire.

“E-discovery increasingly involves very large volumes of potentially sensitive data, and multiple organizations may play a role in processing, hosting, review and production of documents,” said George Socha, EDRM co-founder. “It’s critical that decision makers assess the security capabilities of e-discovery providers, and the questionnaire was designed to guide that assessment.”

A copy of the questionnaire can be downloaded from the EDRM/Duke Law website here.

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

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