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eDiscovery Law: Model Order Proposes to Limit eDiscovery in Patent Cases
 

A recent article in Texas Lawyer discussed the new model order proposed by Federal Circuit Chief Judge Randall Rader as a measure against the "excesses" of eDiscovery production. As noted at the 2011 Eastern District of Texas Bench Bar Conference in Irving last week, the "Model Order on E-Discovery in Patent Cases" was unanimously voted on by the Federal Circuit Advisory Council and, as a result, could significantly alter the way discovery materials are used in patent cases.

What's Wrong with eDiscovery Now?

In his speech at the 2011 Eastern District of Texas Bench Bar Conference, "Thoughts on the Status and Direction of Patent Litigation in the United States," Judge Rader accuses the courts of becoming “intolerantly expensive”, forcing “accused infringers to acquiesce to non-meritorious claims” therefore imposing “an unhealthy tax on innovation and open competition”.  He compared the model order to the current Federal Rule of Civil Procedure 30, which limits cases to 10 depositions of 7 hours or fewer.

Rader said "the greatest weakness of the U.S. court system is its expense. And the driving factor for that expense is discovery excesses." Hence, the proposed model order to save the participants in these cases time and money.

Model Order Proposes Limits on eDiscovery

Rader's model order would create several limits on the production of electronically stored information in patent cases, including:

  • Exclusion of metadata from eDiscovery production requests without "good cause";
  • Restrictions on email production requests to specific issues and “not general discovery of a product or business”;
  • Delaying of email production requests until after disclosures about the patents, the accused uses of the invention, relevant financial information and the prior art;
  • A maximum of five custodians per party in email requests, and only five search terms each, unless courts specifically allow in excess of that number (if litigants submit requests that exceed those court orders, they must pay for the extra production);
  • Receiving parties cannot use materials asserted by producing parties as attorney-client or work product privileged;
  • Prohibitions on the use of privileged information produced as part of a mass production or other inadvertent release.

For more information about this model order and its implications, see Model Order Would Limit E-Discovery in Patent Cases.

So, what do you think?  Will the model order “catch on” as a way to limit the eDiscovery possible in patent cases?  Will other jurisdictions adopt the model order? Please share any comments you might have or if you'd like to know more about a particular topic.

eDiscovery Case Law: Court Says Lack of eDiscovery Rules for Criminal Cases is a Crime

A New York district court recently ordered the United States Government to reproduce thousands of pages of electronic discovery materials in a criminal case involving the distribution of cocaine.

In United States v. Briggs, No. 10CR184S, 2011 WL 4017886 (W.D.N.Y. Sept. 8, 2011), the Government produced thousands of pages of electronic documents and a number of audio recordings, none of which were text searchable. The court ultimately decided that the onus of producing searchable materials for eDiscovery fell on the Government itself.

  • Defendants requested that the Government reproduce the discovery materials in a searchable format, but the Government refused, stating that it had used a program “routinely used” in criminal cases and would not bear the storage burden or cost of reproducing the documents.
  • The defense argued that the volume of production was virtually impossible to navigate without the ability to sort or search the documents, and that the materials presented for discovery lacked some relevant information. The court later made the comparison that a paper equivalent to this discovery situation “would be if the Government took photographs of thousands of pages… put them in boxes, and invited inspection by defense counsel.”
  • In light of the absence of a rule or standard for discovery of electronic materials in criminal cases such as this one, the court referred to other criminal cases in which the same issues were discussed, including United States v. Warshak, 631 F.3d 266 (6th Cir. 2010) and United States v. O’Keefe, 537 F. Supp. 2d 14 (D.D.C. 2008). Both of these cases dealt at some point with similar debates over document format and extensive discovery production, with different findings of whether the producing party was required to produce in the requested format.
  • The court decided that, in light of the absence of a clear standard, the Government was the party “better able to bear the burden of organizing these records for over twenty defendants in a manner useful to all” and ordered the Government to produce the files in searchable PDF or native format.
  • Finally, the court expressed its hope that the Advisory Committee on Criminal Rules would soon establish rules addressing the production of ESI in criminal cases.

So, what do you think? Was the court fair to put the onus of searchable text production on the Government? Should there be similar rules governing eDiscovery issues in the Federal Rules of Criminal Procedure as there are in the Federal Rules of Civil Procedure? Please share any comments you might have or if you’d like to know more about a particular topic.

eDiscovery Case Law: Court Rules Against Exclusion of Privileged Email

“Clawback” of inadvertently produced privileged documents is a hot topic these days, with J-M Manufacturing’s recent clawback request in their case one of the latest examples.  For more information on mechanisms for “clawback”, check out our blog posts of the last two days.

A District of Columbia court has ruled against exclusion of a privileged email that was inadvertently produced by the defendant, ruling that the defendant’s actions before and after the discovery of the email’s production pursuant to Federal Rule of Civil Procedure 26(b)(5)(B) were not sufficient to ensure protections under Federal Rule of Exclusion (FRE) 502(b)(3), in a case involving alleged violations of the District of Columbia Whistleblower Act.

In Williams v. District of Columbia, No. 06-02076 (CKK), 2011 WL 3659308 (D.D.C. Aug. 17, 2011), the court ruled that the burden of preventing disclosure was on the defendant, and that its insufficient follow up showed “indifference,” and has thus denied the defendant’s Motion to Exclude the inadvertently produced email from evidence.

  • As part of a “recommendation to terminate packet” produced by the defendant, the District of Columbia, in the course of this case, a privileged email was inadvertently included. This email is described as being included in the first ten pages of the packet.
  • Defendant’s counsel sent an email to plaintiff’s counsel five months later, requesting the return of the email and its exclusion under Rule 26(b)(5)(B). There was neither any form of response from the plaintiff nor follow up from the defendant. Only when the email was introduced as an exhibit, more than two years later, did the defendant file its Motion to Exclude.
  • The court considered whether the defendant had met the conditions of Rule 26(b)(5)(B) that a party must “discharge its obligations under Rule 502(b)(3),” and concluded that the defense was negligent in not taking enough steps promptly to remedy the mistake. The defendant’s inability to accurately portray its document review methodology or the number and type of documents produced were also cited as reasons that the defense was itself responsible for the waiver of privilege associated with the email in question.
  • The court found that the defense’s single email request, with no follow up, was inadequate to protect its interest in the privilege of the inadvertently produced email, especially when considered in light of “the approximately two years and eight months before it filed a motion seeking the court’s intervention.”
  • Accordingly, the court ruled against exclusion of the email under FRE 502(b)(3), stating that, “the only ‘injustice’ in this matter is that done by the defendant to itself…. The District’s failure to make reasonable efforts to guard against the disclosure in the first place and to rectify its error once discovered is fatal to its reliance on Rule 502(b).”

So, what do you think? Was the court fair in assigning fault to the defense, or should the benefit of protection under FRE 502(b)(3) have been accorded the District of Columbia in this case? Have you been involved in a similar case or situation? Please share any comments you might have or if you’d like to know more about a particular topic.

eDiscovery Law: Federal Rule of Evidence 502 Protects Against Accidental Waiver of Privilege
 

As noted yesterday, attorneys have reason to be worried about accidental waiver of privilege in today’s cases, where discovery of electronic documents reaches unprecedented volumes. With more electronically stored information (ESI) comes an increased risk of accidentally producing privileged information. Fortunately, there are provisions that can prevent some of the damage of such accidents.

Yesterday, we discussed “clawback” provisions and “quick peek” agreements. Both of these types of agreements can be used to protect against accidental waiver of privilege through production of the wrong documents for discovery. But, sometimes parties are unable to complete such agreements.  In other cases, these protections have been defeated by lawyers in court.  That's where Federal Rule of Evidence (FRE) 502 steps in to ensure that privilege is safeguarded when parties inadvertently produce privileged materials, assuming they take reasonable steps to avoid such inadvertent production.

FRE 502 was enacted in 2008, and it provides that:

  • "Subject matter waiver", the idea that production of a single privileged document waives privilege on all related documents on the same subject matter, does not exist. If and when waiver occurs, it is limited to the documents and information that were actually produced.
  • There is no waiver if the producing party takes reasonable steps to withhold privileged material or requests that materials accidentally produced be returned or destroyed.  Of course, what constitutes “reasonable steps” is open to interpretation.
  • If parties have agreed that inadvertent production will result in no waiver, such an agreement is binding only on the parties involved unless it is part of a court order. The effect of the agreement is broader if the agreement is included in a court order.
  • Any conflict between state and federal rules is determined by choosing the rule that provides the greatest protection of privilege.
  • FRE 502 applies even if a case is conducted under state law.

FRE 502 is relatively new and is still being interpreted by courts, but one thing is clear: the greatest protection afforded by FRE 502 is present when parties have entered into a “clawback” agreement and requested that it be made part of a court order. However, there remains no definitive ruling on what constitutes inadvertent production of privileged information or what constitutes “reasonable steps” to avoid such inadvertent production.

So, what do you think? Does FRE 502 provide important protections, or does it overstep in protecting parties and attorneys who are negligent? What do you think is necessary for a party to claim that production was inadvertent? Please share any comments you might have or if you'd like to know more about a particular topic.

eDiscovery Law: Inadvertent Production is Inevitable, So How Do You Protect Yourself?
 

With exploding volumes of electronically stored information (ESI) being required in discovery proceedings, there is more chance than ever of inadvertently producing materials that should have been protected by privilege. No case exemplifies that better than the current eDiscovery malpractice case involving McDermott, Will & Emery discussed in this blog here, here and here where McDermott’s former client, J-M Manufacturing, has contended that 3,900 privileged documents were erroneously produced.  It is virtually impossible these days to keep every item from production that is protected by attorney-client or work product privilege.

Fortunately, there are protections against a claim of privilege waiver through inadvertent production.  The two most common historical protections are “quick peek” agreements and “clawback” provisions.

“Quick Peek” Agreement

“Quick peek” agreements are available, but not very common, because they present challenges for both parties in a lawsuit.

Instead of reviewing documents, everything is presented for a "quick peek." The requesting party is obligated to sort through all of the evidence and select the documents they wish to have presented for discovery. The producing party then has the opportunity to review those documents for privilege. The onus of review and labor for reviewing the entire collection is on the requesting party, but the producing party must be willing to accept the risk that opposing counsel will use any privileged information viewed against them, even if that information hasn’t been produced.

“Clawback” Provision

The more common protection is known as a “clawback” provision or “clawback” agreement. A part of the protective order made by the court early in a case, a “clawback” provision is an agreement between both parties that any discovery documents that are accidentally produced when they should have been protected by privilege are to be destroyed or returned upon request.

This kind of early agreement is usually simple and straightforward. It protects parties from disagreement over specific documents and prohibits the requesting party from making a claim of waiver.  Of course, parties don’t always agree to enter in such an agreement and sometimes courts have to decide.

One More Protection: Federal Rule of Evidence 502

In addition, the Federal Rule of Evidence (FRE) 502 was created in 2008 to provide additional protection. Before this rule was brought in, it has been argued, and sometimes upheld, that despite agreement between the parties as to no waiver through inadvertent production, that agreement did not extend to other parties in other proceedings. Waiving privilege on a single document has often constituted a waiver for all other documents on the same subject (called “subject matter waiver”).  FRE 502 provides extra protection in these cases.

But, more on that tomorrow!

So, what do you think? Have you ever been in a situation where you had to rely on one or more of these protections to deal with inadvertent production in a case? How did that work out for you and/or your client? Please share any comments you might have or if you'd like to know more about a particular topic.

eDiscovery Trends: Is Email Still the Most Common Form of Requested ESI?
 

Email has historically been the most common form of requested electronically stored information (ESI), but that has changed, according to a survey performed by Symantec and reported in Law Technology News.

According to the article, Symantec’s survey, conducted this past June and July, included lawyers and technologists at 2,000 enterprises worldwide.  However, the article doesn’t indicate the total number of respondents or whether that’s the number of organizations receiving the survey or the number actually responding.

Regarding how frequently (percentage of situations requested) various types of ESI are requested during legal and regulatory processes, the survey yielded some surprising answers:

  • Files and Documents: 67 percent
  • Application and Database Records: 61 percent
  • Email: 58 percent
  • Microsoft SharePoint records: 51 percent
  • Messaging Formats (e.g., instant messaging, texts, and BlackBerry PIN messages): 44 percent
  • Social Media Data: 41 percent

Email requested in legal and regulatory processes just over half the time?  That’s more than surprising, that’s shocking!

Symantec’s survey also asked about implementation of a formal data retention policy, with 30 percent of responding companies indicating that they have discussed but have not implemented a policy and 14 percent indicating that they have no plans to implement a policy (44 percent total that have not implemented a policy).  Reasons for not doing so were as follows (respondents were allowed to pick multiple reasons):

  • No Need Identified: 41 percent
  • Cost: 38 percent
  • No Designated Employee (to implement the policy): 27 percent
  • Too Time Consuming: 26 percent
  • Lack of Expertise: 21 percent

Many of these companies may not feel compelled to implement a policy because they are not frequently in litigation nor are they in regulated industries.

So, what do you think?  Do the percentages above reflect your experience as to how frequently the different types of ESI are requested?  Does the email percentage seem significantly low?  In my experience, it does.  Please share any comments you might have or if you’d like to know more about a particular topic.

eDiscovery Case Update: J-M Manufacturing Tries to Clawback Privileged Documents at Issue in McDermott Malpractice Case
 

One of the most talked about cases from an eDiscovery perspective this year is the case against McDermott Will & Emery for alleged malpractice in the disclosure of privileged documents.  McDermott’s former client, J-M Manufacturing, has contended that 3,900 privileged documents were erroneously produced as part of 250,000 J-M electronic records that were reviewed under McDermott’s supervision.  In late July, J-M filed an amended complaint to its case, naming Navigant Consulting, Stratify and Hudson Legal as third party vendors hired by McDermott to run documents through a filter to identify potential attorney-client privilege documents and perform review of those documents.

Now, J-M has filed a motion seeking clawback of 3,400 privileged documents it contends that McDermott wrongfully produced, claiming the US government and, then, their opponents in the case, received the documents erroneously from McDermott.

The malpractice case was filed in California Superior Court, but was successfully moved to federal court by McDermott.  Recently, Hobson Dungog Bernardino + Davis, representing J-M in this case, filed a motion to remand the case to state court.

J-M says the first production of privileged documents in the case, in response to federal subpoenas, occurred in 2007 and 2008.  Stratify was hired by McDermott to search 1.3 million electronic files to identify potentially responsive and privileged files.  J-M claims it took “various precautions to identify and segregate documents that were subject to attorney-client privilege.", but that McDermott turned over files to the government that were not properly screened for privilege. J-M retrieved those documents through an informal July 2007 “clawback” agreement with the government. Both parties agreed to “return, sequester or destroy any inadvertently produced privileged materials.”

According to the filing, J-M then turned over a second production to the government assuming that its McDermott and its vendor, Stratify, had properly conducted the privilege review as previously instructed.  However, on May 20, 2010 (two months after McDermott had been dismissed), attorneys for one of the relators (John Hendrix at Day Pitney), notified J-M that they held potentially privileged documents, J-M requested the return or destruction of the 3,400 privileged documents in June 2010, but was rebuffed by Day Pitney attorneys, who rejected the request saying J-M had waived privilege by not taking “reasonable steps to prevent disclosure” as specified in Federal Rule of Evidence 502 and Federal Rule of Civil Procedure 26.  J-M has contended that the production of privileged documents was inadvertent and not a waiver.

On February 18, 2011, almost a year after McDermott had been dismissed, J-M entered into a joint clawback agreement with all relators.  Ironically, in a June 3, 2011 email to Day Pitney attorneys, Sheppard Mullin noted an additional production in 2011 by them of 500 allegedly privileged documents as Stratify (still being used as the vendor in this case) “mistakenly released approximately 9,650 ESI files without first presenting them for attorney review”.  As these documents may fall under the February 2011 clawback agreement, the plaintiffs have expressed willingness to destroy these documents.

As Sheppard Mullin has been disqualified in federal court due to conflict of interest, J-M has hired yet a third mega-firm in the False Claims case, Paul Hastings.  The False Claims Act case is still awaiting trial, so it may be difficult for J-M at this point to show how the disclosure of privileged documents has caused it damages.

So, what do you think? Should J-M Manufacturing be able to clawback its privileged documents?  Is it too early to assess malpractice against McDermott? Please share any comments you might have or if you'd like to know more about a particular topic.

eDiscovery Law: Texas Rule 196.4 Protects Parties from "Undue Burden or Cost"
 

A recent article published in Texas Lawyer and reprinted on Law.com raises the question of extensive and costly eDiscovery requests and how to handle them. The authors of Keep E-Discovery Costs from Torpedoing Litigation Budgets present a hypothetical scenario where the opposing counsel has requested production of 10 years of legacy electronic data – a prospect that could cost more in recovery expenses than the value of the entire lawsuit. What is the best approach for counsel to take under the circumstances and what kind of legal recourse is there if producing extensive amounts of electronic information doesn't make sense?

Meet Texas Rule 196.4

The answer – in the state of Texas, at least – is found in Texas Rule of Civil Procedure 196.4. Like Federal Rule of Civil Procedure 26(b)(2), Rule 196.4 states that parties must comply with "reasonable" production requests, but are not forced to produce electronic information for discovery if it cannot be retrieved "through reasonable efforts."  So, when it comes to unduly burdensome discovery requests, don’t mess with Texas!

Rule 196.4 also includes a provision that makes it possible to shift the cost of extensive discovery production to the requesting party. However, an attorney's ability to make a case for challenging a production request or shifting the cost of such production depends on thorough knowledge of the client's information systems. It's paramount to know the details of the client's data storage, backup systems, old and new equipment in order to make an objection on grounds of either Texas or Federal law.

Rule 196.4 Still Being Clarified

Courts are still ruling on how and when this rule applies, so it remains a useful recourse but not a foolproof procedure for issues surrounding extensive (and expensive) production. Therefore, courts have used Federal Rule 26(b)(2) and federal case law to help apply an understanding of what’s reasonably accessible.  In In Re Weekley Homes, LP (2009), the Texas Supreme Court addressed when a trial court may order production of information that is not reasonably available, but instructed trial courts to consider "the reasonable availability of information on a case-by-case basis" which leaves the implementation of these rules open-ended for the moment.

The Texas Lawyer article references other important cases, including the landmark Zubulake v. UBS Warburg LLC (2003) opinion (Zubulake I) which famously adopted a classification system of five categories of media on which electronic data is commonly stored, from most accessible to least, as follows:

  1. Active, online data, such as hard drives;
  2. Near-line data, such as an older robotic storage devices like optical disks;
  3. Offline storage/archives, such as removable media that can be labeled and stored on a shelf like CDs and floppy disks;
  4. Backup tapes, which are sequential access devices not intended for recovery of individual files; and
  5. Erased, fragmented or damaged data.

Understanding these five categories of media and their accessibility is a must for anyone to be prepared to respond to discovery requests, especially like the one posed hypothetically at the beginning of the article.

So, what do you think? Have you ever been hit with a production request with a scope that would have raised eDiscovery costs beyond the value of the suit itself? If so, what did you do? Please share any comments you might have or if you'd like to know more about a particular topic.

eDiscovery Case Law: Are Attachments Part of the Email Or Are They Separate?

A Special Master recently investigated the legal standard concerning whether or not attachments must be produced with the emails to which they were attached in discovery proceedings, and determined that there is no certain answer to be found in case law precedent.

In Abu Dhabi Commercial Bank v. Morgan Stanley & Co, Inc., No. 08 Vic. 7508(SAS), 2011 WL 3738979 (S.D.N.Y. Aug. 18, 2011), the defendants argued that SEI Investments (“SEI”) was at fault for neglecting to produce certain attachments to emails as part of discovery, and that SEI was obligated to produce these attachments and explain their absence. This request ultimately delved into issues of precedent and legal standard:

  • SEI stated that it had already produced the documents that were relevant and were not protected by privilege, and argued that it was not obligated to produce the attachments in question because they were non-responsive to discovery.
  • A Special Master was convened to consider the issue and to establish the legal standard for this type of discovery question.
  • The Special Master found a number of conflicting examples: In some cases, the obligation to produce attachments with the relevant emails was implied, but most of these instances assumed that attachments were required to be produced and focused solely on the format of production. In a number of cases, producing attachments with their emails has been the norm; however, in other cases, emails and attachments were treated as separate in terms of privilege determination.
  • The Special Master concluded that “conceptually” the two could be viewed separately, or they could be seen as a single unit for the purpose of discovery, and advised that the decision should generally be made by the parties involved in advance, during pretrial discovery talks.
  • In this case, the Special Master questioned SEI’s argument for not producing the attachments in question, and at the same time, argued against the probably unnecessary expense of forcing SEI to produce all attachments to all emails previously included in discovery.
  • Therefore, the Special Master made a series of recommendations that were adopted by District Court Judge Shira Scheindlin. These included: a) Production of the non-privileged attachments to the 126 emails previously identified by the defendants, as well as a complete list of any such documents that it proves unable to produce; b) permission for the defendants to request further such attachments as deemed relevant and necessary to this case; and, c) a meeting between all parties to discuss this issue and reach an agreement on policy regarding the production or withholding of email attachments and their format.

So, what do you think? Do you believe that email attachments should generally be produced as a matter of course with the emails to which they were attached, or that they should be considered as separate documents for the purpose of discovery? Please share any comments you might have or if you’d like to know more about a particular topic.

eDiscovery Case Law: Defendants' Privilege Waived for "Completely Ineffective" Discovery Procedures

In a case over purported building and zoning code violations, an Illinois District Court has found the defendants responsible for inadvertently producing several privileged documents during discovery and for a failure to correct the problem in a timely manner, and has ordered the privilege to be waived.

In Thorncreek Apartments III, LLC v. Vill. of Park Forest, Nos. 8 C 1225, 08-C-0869, 08-C-4303, 2011 WL 3489828 (N.D. Ill. Aug. 9, 2011), the plaintiff appealed to have six documents that were accidentally submitted by the defendants (as part of discovery nine months earlier) declared to be not subject to privilege. The court ruled in favor of the plaintiff after the following events:

  • More than two months after the production of discovery documents was completed, the plaintiffs attempted to use two of the defendants’ privileged documents at deposition and the defendants became aware of problems in their own discovery production. Defense counsel contacted the plaintiff’s counsel shortly thereafter to notify them that certain privileged documents had been produced inadvertently during discovery.
  • Four months later, defense counsel produced a privilege log that noted 159 documents that should have been protected during discovery, but which had all been inadvertently disclosed. Defense counsel had intended that plaintiffs would have access to all documents in their shared online discovery database, but that documents “marked as ‘privileged’ during its review… would be automatically withheld from the production database.”
  • The defense and plaintiffs were able to come to an agreement about the majority of the documents between themselves, but six documents remained at issue. The plaintiff filed a motion “seeking an order finding that six documents produced… are not protected from disclosure by the attorney-client privilege or, alternately, are not protected from disclosure because the privilege has been waived” by production of the documents during discovery.
  • The court examined the events of the previous nine months, since the beginning of discovery, and determined that the defendants’ steps to prevent disclosure were “completely ineffective.”
  • The defendant was found to have failed to perform a final check of its discovery documents before production, to have inadvertently produced all of its privileged documents, and to have taken an excessive amount of time after such production to discover its error due, in part, to its failure to produce a privilege log at any time before the problem was uncovered.
  • A portion of each of the six documents was found to be subject to attorney-client privilege, but despite the inadvertent nature of production, the court found the defense entirely at fault for the violation of privilege and ruled accordingly that privilege had been waived.

So, what do you think? Does this kind of inadvertent disclosure constitute a waiver of privilege? Was the ruling appropriate or should the defense have been allowed to “clawback” those privileged documents? Please share any comments you might have or if you’d like to know more about a particular topic.