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Preservation

2012 eDiscovery Year in Review: eDiscovery Case Law, Part 3

As we noted the past two days, eDiscoveryDaily published 98 posts related to eDiscovery case decisions and activities over the past year, covering 62 unique cases!  Yesterday, we looked back at cases related to social media and the first cases approving technology assisted review.  Today, let’s take a look back at cases related to admissibility and the duty to preserve and produce electronically stored information (ESI).

We grouped those cases into common subject themes and will review them over the next few posts.  Perhaps you missed some of these?  Now is your chance to catch up!

ADMISSIBILITY AND DUTY TO PRESERVE AND PRODUCE

Admissibility of ESI, and the duty to preserve and produce it, is more at issue than ever.  Whether the issue is whether certain emails should be considered privileged, whether cloning of computer files is acceptable or whether text messages require substantiation of authorship, parties are disputing what ESI should actually be admissible in litigation.  Parties are also disputing when and where litigation holds are required and whether collection and search practices are acceptable.  In short, there are numerous disputes about data being produced and not being produced.  Here are (a whopping) sixteen cases related to admissibility and the duty to preserve and produce ESI:

Emails Between Husband and Wife Are Not Privileged, If Sent from Work Computer.  In United States v. Hamilton, the Fourth Circuit found that the district court had not abused its discretion in finding that e-mails between the defendant and his wife did not merit marital privilege protection because the defendant had used his office computer and his work e-mail account to send and receive the communications and because he had not taken steps to protect the e-mails in question, even after his employer instituted a policy permitting inspection of e-mails and he was on notice of the policy.

Defendant Had Duty to Preserve Despite No Physical Possession of Documents.  In Haskins v. First American Title Insurance Co., a court found that an insurance company had a duty to issue a litigation hold to its independent title agents because litigation was reasonably foreseeable and the duty to preserve extends to third parties, as long as the documents are “within a party’s possession, custody, or control.” Although it did not have physical possession, the insurance company controlled the agents’ documents because it had “‘the legal right or ability to obtain the documents from [the agents] upon demand.’”

Defendant Compelled to Produce Additional Discovery to Plaintiff.  In Freeman v. Dal-Tile Corp., a case alleging harassment and discrimination, among other claims, against her former employer Dal-Tile Corporation, the plaintiff brought a motion to compel, asserting that some of the defendant’s discovery responses related to its search for ESI were deficient.

Defendant Claiming Not Reasonably Accessible Data Has Some ‘Splaining To Do.  In Murray v. Coleman, the plaintiff alleged harassment and retaliation in connection with his employment with the New York State Department of Correctional Services (DOCS). This discovery dispute arose when the plaintiff requested access to certain electronic records, alleging that the defendants withheld them.

Cloning of Computer Files: When There’s a Will, There’s a Way.  In Matter of Tilimbo, a court held it was permissible to order cloning of computer files where doing so did not place an unreasonable burden on a nonparty, appropriate steps were taken to protect any privileged information, and the nonparty had not previously produced the requested information in hard copy.

Citing Rule 26(g), Court Orders Plaintiff’s Counsel to Disclose Search Strategy.  Our 501st post on the blog addresses S2 Automation LLC v. Micron Technology, where New Mexico District Judge James Browning ordered the plaintiff’s attorneys to disclose the search strategy their client used to identify responsive documents, based on Federal Rule 26(g) that requires attorneys to sign discovery responses and certify that they are “complete and correct.”

Judge Scheindlin Says “No” to Self-Collection, “Yes” to Predictive Coding.  When most people think of the horrors of Friday the 13th, they think of Jason Voorhees. When US Immigration and Customs thinks of Friday the 13th horrors, do they think of Judge Shira Scheindlin?  New York District Judge Scheindlin issued a decision on Friday, July 13, addressing the adequacy of searching and self-collection by government entity custodians in response to Freedom of Information Act (FOIA) requests.

Plaintiff Compelled to Produce Mirror Image of Drives Despite Defendant’s Initial Failure to Request Metadata.  In Commercial Law Corp., P.C. v. FDIC, Michigan District Judge Sean F. Cox ruled that a party can be compelled to produce a mirror image of its computer drives using a neutral third-party expert where metadata is relevant and the circumstances dictate it, even though the requesting party initially failed to request that metadata and specify the format of documents in its first discovery request.

Court Allows Third Party Discovery Because Defendant is an “Unreliable Source”.  Repeatedly referring to the defendant’s unreliability and untrustworthiness in discovery and “desire to suppress the truth,” Nebraska Magistrate Judge Cheryl R. Zwart found, in Peter Kiewit Sons’, Inc. v. Wall Street Equity Group, Inc., that the defendant avoided responding substantively to the plaintiff’s discovery requests through a pattern of destruction and misrepresentation and therefore monetary sanctions and an adverse jury instruction at trial were appropriate.

Inadmissibility of Text Messages Being Appealed.  In October 2011, we covered a case – Commonwealth v. Koch – where a Pennsylvania Superior Court ruled text messages inadmissible, declaring that parties seeking to introduce electronic materials, such as cell phone text messages and email, must be prepared to substantiate their claim of authorship with “circumstantial evidence” that corroborates the sender’s identity. That case, where Amy N. Koch was originally convicted at trial on drug charges (partially due to text messages found on her cell phone), is now being appealed to the state Supreme Court.

Another Case with Inadmissible Text Messages.  Above, we discussed a case where a Pennsylvania Superior Court ruled text messages inadmissible, declaring that parties seeking to introduce electronic materials, such as cell phone text messages and email, must be prepared to substantiate their claim of authorship with “circumstantial evidence” that corroborates the sender’s identity. That case is now being appealed to the state Supreme Court. Today, we have another case – Rodriguez v. Nevada – where text messages were ruled inadmissible.

Court Grants Plaintiff’s Motion to Compel Mirror-Imaging of Defendant’s Computers.  In approving a motion for expedited discovery in United Factory Furniture Corp. v. Alterwitz, Magistrate Judge Cam Ferenbach granted the plaintiff’s motion for a mirror-imaging order after determining the benefit outweighed the burden of the discovery, and it denied as unnecessary the plaintiff’s motion for an order to preserve evidence and a preliminary injunction from spoliation of evidence.

Court Orders eDiscovery Evidentiary Hearing When Parties Are Unable to Cooperate.  A month ago, in Chura v. Delmar Gardens of Lenexa, Inc., Magistrate Judge David J. Waxse ordered an evidentiary hearing to discuss the sufficiency of the defendant’s search for ESI and format of production in response to the plaintiff’s motion to compel additional searching and production.

At The Eleventh Hour, Encrypted Hard Drive Is Decrypted.  In our previous post regarding the case U.S. v. Fricosu, Colorado district judge Robert Blackburn ruled that Ramona Fricosu must produce an unencrypted version of her Toshiba laptop’s hard drive to prosecutors in a mortgage fraud case for police inspection. Naturally, the defendant appealed. On February 21st, the 10th U.S. Circuit Court of Appeals refused to get involved, saying Ramona Fricosu’s case must first be resolved in District Court before her attorney can appeal. She would have been required to turn over the unencrypted contents of the drive as of March 1. However, at the last minute, Colorado federal authorities decrypted the laptop.

Court Rules Exact Search Terms Are Limited.  In Custom Hardware Eng’g & Consulting v. Dowell, the plaintiff and defendant could not agree on search terms to be used for discovery on defendant’s forensically imaged computers. After reviewing proposed search terms from both sides, and the defendant’s objections to the plaintiff’s proposed list, the court ruled that the defendant’s proposed list was “problematic and inappropriate” and that their objections to the plaintiff’s proposed terms were “without merit” and ruled for use of the plaintiff’s search terms in discovery.

KPMG Loses Another Round to Pippins.  As discussed previously in eDiscovery Daily, KPMG sought a protective order in Pippins v. KPMG LLP to require the preservation of only a random sample of 100 hard drives from among those it had already preserved for this and other litigation or shift the cost of any preservation beyond that requested scope. Lawyers for Pippins won a ruling last November by Magistrate Judge James Cott to use all available drives and Judge Cott encouraged the parties to continue to meet and confer to reach agreement on sampling. However, the parties were unable to agree and KPMG appealed to the District Court. In February, District Court Judge Colleen McMahon upheld the lower court ruling.

Tune in tomorrow for more key cases of 2012 and, once again, the most common theme of the year!

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

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

Defendant Had Duty to Preserve Despite No Physical Possession of Documents – eDiscovery Case Law

In Haskins v. First American Title Insurance Co., No. 10-5044 (RMB/JS), 2012 U.S. Dist. (D.N.J. Oct. 18, 2012), a court found that an insurance company had a duty to issue a litigation hold to its independent title agents because litigation was reasonably foreseeable and the duty to preserve extends to third parties, as long as the documents are “within a party’s possession, custody, or control.” Although it did not have physical possession, the insurance company controlled the agents’ documents because it had “‘the legal right or ability to obtain the documents from [the agents] upon demand.’”

Customers sued First American Title Insurance Company for its alleged scheme to overcharge for title insurance when they refinanced their residential mortgages. During discovery, the plaintiffs sought access to closing documents that were not physically held by First American but by its independent title agents. Because Rule 34(a) of the Federal Rules of Civil Procedure permits a requesting party to seek access only to documents that are within another party’s “possession, custody, or control,” the court considered whether that “control” extended to documents in the hands of the independent title agents.

First establishing that control exists when “a party ‘has the legal right or ability to obtain the documents from another source upon demand’” and that “a party is not required to have physical possession of documents for control to be present,” the court highlighted the specific language in contracts between First American and its independent title agents that conferred control upon the company: “make all Documentation available for inspection and examination by COMPANY at any reasonable time” and “permit First American to examine, audit and copy all financial information and records upon reasonable prior notice.”

That some of the contracts contained language indicating that the files were the agent’s property did not negate First American’s “continued right of access to and use of its agents’ files” or disrupt its control “of the files within the meaning of Rule 34.” Moreover, any attempted argument by First American that it could not “‘force’ its agents to comply” with the company’s production request would be without merit because “First American [could] claim that the agent breached its contract if the agent [did] not produce the requested files.”

Concluding that First American possessed control over the agents’ documents requested by the plaintiffs, the court considered next whether First American had a legal obligation to issue a litigation hold ordering its agents to preserve requested documents. Because the “duty to preserve documents arises when a party ‘knows or reasonably should know’ that litigation is foreseeable,” and because the duty extends even to third parties, as long as the documents are “within a party’s possession, custody, or control,” First American, which was already engaged in litigation with the plaintiffs, had a duty to issue the litigation hold to its independent title agents.

Therefore, the court ordered First American to (1) send requests for copies of closing documents to its independent title agents who had closing documents that the parties had agreed would be produced and (2) issue a litigation hold to its agents to preserve the documents requested by the plaintiffs.

So, what do you think?  Was the court correct to order First American to issue the hold?  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.

“Rap Weasel” Forced to Honor $1 Million Reward Offered via YouTube – eDiscovery Case Law

It isn’t every day that eDiscoveryDaily has reason to reference The Hollywood Reporter in a story about eDiscovery case law, but even celebrities have eDiscovery preservation obligations during litigation.  In Augstein v. Leslie, 11 Civ. 7512 (HB) (SDNY Oct. 17, 2012), New York District Judge Harold Baer imposed an adverse inference sanction against hip hop and R&B artist Ryan Leslie for “negligent destruction” of a hard drive returned to him by the plaintiff after a $1 million reward was offered via YouTube.  On November 28, a jury ordered him to pay the $1 million reward to the plaintiff.

Reward Offered, then Refused

While Leslie was on tour in Germany in 2010, a laptop and external hard drive (that contained some of Leslie’s songs not yet released) were stolen.  Capitalizing on his popularity on social media, Leslie initially offered $20,000 for return of the items, then, on November 6, 2010, a video on YouTube was posted increasing the reward to $1 million.  The increase of the reward was also publicized on Leslie’s Facebook and Twitter accounts.  After Augstein, a German auto repair shop owner, returned the laptop and hard drive, Leslie refused to pay the reward alleging “the intellectual property for which he valued the laptop was not present on the hard drive when it was returned”.

Plaintiff’s Arguments as to Why Reward was not Warranted

Leslie attempted to make the case that when he used the word “offer,” that he really meant something different. He argued that a reasonable person would have understood mention of a reward not as a unilateral contract, but instead as an “advertisement” – an invitation to negotiate.

Leslie’s other argument was that, regardless whether it was an “offer” or not, Augstein failed to perform because he did not return the intellectual property, only the physical property.  Leslie claimed that he and several staff members tried to access the data on the hard drive but were unable to do so.  Leslie sent the hard drive to the manufacturer, Avastor, which ultimately deleted the information and sent Leslie a replacement drive.  The facts associated with the attempts to recover information from the hard drive and requests by the manufacturer to do the same were in dispute between Leslie, his assistant, and Avastor, who claimed no request for data recovery was made by Leslie or anyone on his team.

Judge’s Responses and Decision

Regarding Leslie’s characterization of the offer as an “advertisement”, Judge Baer disagreed, noting that “Leslie’s videos and other activities together are best characterized as an offer for a reward. Leslie ‘sought to induce performance, unlike an invitation to negotiate [often an advertisement], which seeks a reciprocal promise.’”

Regarding Leslie’s duty to preserve the hard drive, Judge Baer noted: “In this case, Leslie was on notice that the information on the hard drive may be relevant to future litigation and, as a result, had an obligation to preserve that information. Augstein contacted Leslie personally and through his attorney regarding the payment of the reward, and a short time later, the hard drive was sent by Leslie to Avastor….Leslie does not dispute these facts.”  As a result, Judge Baer found that “Leslie and his team were at least negligent in their handling of the hard drive.”

Citing Zubulake among other cases with respect to negligence as sufficient for spoliation, Judge Baer ruled “I therefore impose a sanction of an adverse inference; it shall be assumed that the desired intellectual property was present on the hard drive when Augstein returned it to the police.”  This led to the jury’s decision and award last month, causing the New York Post to characterize Leslie as a “Rap Weasel”, which Leslie himself poked fun at on Instagram.  Only in America!

So, what do you think?  Was the adverse inference sanction warranted?  Please share any comments you might have or if you’d like to know more about a particular topic.

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

Plaintiff Hammered with Case Dismissal for “Egregious” Discovery Violations – eDiscovery Case Law

Apparently, destroying your first computer with a sledgehammer and using Evidence Eliminator and CCleaner on your second computer (when you have a duty to preserve both) are not considered to be best practices for preservation.  Who knew?  😉

In Taylor v. Mitre Corp., (E.D. Va. Nov. 8, 2012), Virginia District Court Judge Liam O’Grady upheld the findings by the Magistrate Judge for dismissal of the plaintiff’s claims and payment of the defendant’s reasonable attorney’s fees and costs due to “egregious” discovery conduct.  Here’s why:

  • The plaintiff hired counsel back in 2009 “in anticipation of bringing this lawsuit against Mitre for violations of the FMLA and failure to accommodate his disabilities.  Mr. Taylor’s lawyer immediately put him on clear notice that he was required to maintain all files and documents (electronic and otherwise) related to his claim, and that deleting or discarding such files could result in sanctions including dismissal of his claim.”;
  • The plaintiff filed his EEOC claim in November 2010;
  • Sometime in 2011, the plaintiff “wiped” his work desktop, then “took a sledgehammer to it” and disposed of it in the local landfill (as noted in the footnote: “Mr. Taylor has given varying accounts of the size and type of the hammer he used to wreck the computer, but does not deny that he smashed it with some nature of mallet.”);
  • Before destroying his work computer, the plaintiff “attempted” to back up files from it “but was only partially successful”;
  • In November 2011, the plaintiff filed his complaint;
  • On July 1, the Magistrate Judge “ordered Mr. Taylor to submit his current computer, a laptop, to inspection within a week.”  The plaintiff “had represented that whatever documents he maintained during the partially successful backup operation described above had been transferred to the laptop, and the Defendant won permission to inspect the laptop”;
  • A few days later, the defendant’s forensic expert examined the laptop and determined that the plaintiff had “run a program called Evidence Eliminator, a program whose express purpose is removing ‘sensitive material’ from one’s hard drive and defeating forensic software.”  The plaintiff admitted that “he downloaded the program the same day he learned of the Court’s inspection order”;
  • The plaintiff also ran another program CCleaner (which also erases files from the computer so that they cannot be recovered) “at least twice between the time of the Court’s inspection order and the actual inspection.”

The plaintiff claimed “that CCleaner was set to run automatically, and so even if it did delete relevant documents, the deletion was not intentional.” – a claim that the court found to be “highly suspicious”.  However, when it came to the installation of Evidence Eliminator, Judge O’Grady did not mince words:

“For Mr. Taylor to download and run a program whose express purpose is deletion of evidence in direct response to the Magistrate Judge’s order that his computer be produced for inspection was to blatantly disregard his duties in the judicial system under which he sought relief. The Court finds Mr. Taylor’s conduct to be egregious and highly contemptuous of the inspection order. Mr. Taylor has forfeited his right to pursue his claims with this Court any further.”

So, what do you think?  Is this the most egregious example of spoliation you’ve ever seen?  Please share any comments you might have or if you’d like to know more about a particular topic.

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

Defendant Compelled to Produce Additional Discovery to Plaintiff – eDiscovery Case Law

During this Thanksgiving week, we at eDiscovery Daily thought it would be a good time to catch up on some cases we missed earlier in the year.  So, we will cover a different case each day this week.  Enjoy!

Where the facts of the case led a court to conclude that certain electronically stored information (ESI) could contain evidence relevant to the case, the court ordered a party to comply with its discovery obligations related to that ESI.

In Freeman v. Dal-Tile Corp., No. 5:10-CV-00522-BR, 2012 U.S. Dist. (E.D.N.C. Oct. 2, 2012), a case alleging harassment and discrimination, among other claims, against her former employer Dal-Tile Corporation, the plaintiff brought a motion to compel, asserting that some of the defendant’s discovery responses related to its search for ESI were deficient.

Specifically, the plaintiff sought to compel a keyword search of preserved e-mails belonging to certain individuals for a time frame that began two months after the plaintiff left Dal-Tile. The defendant objected, arguing that because the plaintiff had already left the company during the time frame for e-mails requested, any such e-mails “could not be relevant to Plaintiff’s harassment claims, because ‘the sole issue is whether Dal-Tile knew or should have known of the harassment and failed to take appropriate steps to halt it.’”

North Carolina Magistrate Judge William A. Webb disagreed, stating that it was “reasonable to expect” that e-mails written or received during that time period “could contain historical e-mails, i.e., an e-mail chain, given that the requested search period begins only two months after Plaintiff resigned.” Moreover, the plaintiff’s request hit the mark for other reasons: “The custodians whose e-mail Plaintiff requests to have searched are . . . the human resource officer who investigated Plaintiff’s complaints, and . . . the regional vice-president to whom [the human resources officer] reported her investigation findings.” In addition, the search terms that the plaintiff requested were “appropriately limited in number and scope and, thus, reasonably calculated to lead to the discovery of admissible evidence.”

Moreover, Judge Webb noted, Dal-Tile did “not assert[ ] that it would be unduly burdensome to search the e-mail[s requested]” or the hard drive of the human resources officer, a search of which the plaintiff had included in her request.

Therefore, the plaintiff’s motion was granted.

So, what do you think?  Should the plaintiff’s motion have been granted?  Please share any comments you might have or if you’d like to know more about a particular topic.

From All of Us at CloudNine Discovery and eDiscovery Daily, Happy Thanksgiving!  eDiscovery Daily will resume with new posts next Monday.

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.

Rambus’ “Shred Days” Result in Sanctions Yet Again – eDiscovery Case Law

During this Thanksgiving week, we at eDiscovery Daily thought it would be a good time to catch up on some cases we missed earlier in the year.  So, we will cover a different case each day this week.  Enjoy!

By the way, the Rambus cases are among the most “famous” from an eDiscovery spoliation standpoint.  As you’ll see from the description below, Rambus is still paying for activities way back in 1998 that have been ruled to be spoliation of data.

In Hynix Semiconductor Inc. v. Rambus, Inc., No. C-00-20905 RMW, 2012 U.S. Dist. (N.D. Cal. Sept. 21, 2012), California District Judge Ronald Whyte used his discretion to fashion an appropriate fact-specific sanctions award after it found a party willfully destroyed evidence despite reasonably foreseeable litigation, it destroyed such evidence in bad faith, and the opposing party suffered prejudice.

In this discovery dispute over spoliation and sanctions in a patent lawsuit, the district court reconsidered this case after its previous decision was vacated by the Federal Circuit and remanded. Previously, in this court, Hynix Semiconductor Inc. et al. (Hynix) had “unsuccessfully urged” that Rambus, Inc. (Rambus) had engaged in the spoliation of evidence, and “its ‘unclean hands’ warranted dismissal of its patent infringement claims.” On appeal, however, the Federal Circuit remanded the case so that the district court could consider it under a different spoliation test, which had been applied in another case presenting an identical spoliation issue, Micron Technology, Inc. v. Rambus Inc., 645 F.3d 1311 (Fed. Cir. 2011) (Micron II).

Therefore, the court had to analyze whether “Rambus destroyed records at a time when litigation was reasonably foreseeable. If so, the court will determine whether Rambus acted in bad faith. Next, the court will determine the nature and extent of any prejudice suffered by Hynix as a result of the spoliation. Finally, the court will decide what sanction is appropriate, if any.”

The court found that Rambus engaged in spoliation of evidence when it destroyed documents on “Shred Days” in 1998, 1999, and 2000 when it invited an outside company to Rambus to shred documents that employees provided for shredding in accordance with the company’s document retention policy. The court found that on those Shred Days, litigation was reasonably foreseeable. Noting that the “important question” was not when Rambus’s duty to preserve arose, “but rather the binary question of whether litigation was reasonably foreseeable by the date on which documents were destroyed,” the court found that although litigation was not foreseeable when Rambus destroyed some of its back-up tapes in July 1998, it was reasonably foreseeable by the time of Shred Day 1998.

At the time the back-up tapes were destroyed in July, the court pointed to numerous questions that existed about the success of Rambus’s patented product and what features the existing patents covered. Management had only held hypothetical discussions about potential targets of litigation, and they had not discussed in depth budgeting for litigation. Destruction of back-up tapes was done “primarily” for “housekeeping” purposes.

By the time Shred Day 1998 occurred, however, Rambus “anticipated instituting litigation.” A Rambus officer, Joel Karp, whom the company hired in 1997 to assess whether competitors were infringing on Rambus’s patents, had advised employees of the company’s documentation retention policy, and “the fact that he advised them to discard documents that questioned the patentability of ideas suggests he had litigation on his mind.” Moreover, a litigation strategy was being “aggressively developed,” and Rambus was turning its attention heavily toward a certain part of its business, which it believed it had to fight to protect.

Thus, finding that Rambus had engaged in spoliation beginning with Shred Day 1998, the court turned to analyze whether Rambus acted with “unclean hands.” The court set forth the applicable standard: “To find bad faith in the spoliation context, ‘the district court must find that the spoliating party intended to impair the ability of the potential defendant to defend itself.’” While Rambus asserted that it conducted document destruction only to execute its “neutral” document retention policy, Hynix argued that regardless of Rambus’s compliance with its own document retention policy, Rambus knew litigation was reasonably foreseeable and destroyed documents in bad faith “to gain a litigation advantage.” In addition, Hynix argued that Karp ordered Rambus employees to destroy documents selectively, keeping ones that would protect their patents and destroying ones that would cause difficulty in litigation.

Parsing the evidence, the court found:

“Although the evidence does not support a conclusion that Rambus deliberately shredded documents it knew to be damaging, the court concludes that Rambus nonetheless spoliated evidence in bad faith or at least willfully. This conclusion is based upon the facts that: (1) Rambus destroyed records when litigation was reasonably foreseeable; (2) Karp, the officer in charge of the destruction, was experienced in litigation and undoubtedly knew that relevant documents should not be destroyed when litigation is reasonably foreseeable; (3) the destruction was part of a litigation plan; (4) one of the motives of the destruction was to dispose of potentially harmful documents; and (5) Rambus shredded a huge number of documents without keeping any records of what it was destroying.”

The court then turned to the issue of whether Rambus’s bad faith spoliation of evidence had prejudiced Hynix. The Micron II court set forth the applicable standard for evaluating prejudice: “‘Prejudice to the opposing party requires a showing that the spoliation materially affect[s] the substantial rights of the adverse party and is prejudicial to the presentation of his case.’ (citation omitted) ‘In satisfying that burden, a party must only come forward with plausible, concrete suggestions as to what [the destroyed] evidence might have been.’” Moreover, if the spoliation had already been determined to have been in bad faith, the spoliating party had a heavy burden to show its document destruction had not prejudiced the other party. Yet, the court cautioned, “the alleged misconduct by the spoliator . . . must relate directly to an issue concerning which the complaint is made.”

Here, Hynix had claimed that Rambus’s patents were invalid, and the court explained, “the invalidity defenses of anticipation and obviousness depend upon how one of ordinary skill in the art would have understood the prior art.” In this case, all prior art was accessible to Hynix and therefore the document destruction did not prejudice Hynix. The other defense of “inadequate written description” similarly turned on information that was available to Hynix. As such, the court found that Hynix’s invalidity defenses were not prejudiced by Rambus’s spoliation of evidence.

On the other hand, however, the court found that Rambus did not overcome Hynix’s allegations of prejudice based on its unenforceability complaint against Rambus. The court found that “it appear[ed] plausible that spoliated evidence might have shed additional light on the scope” of certain disclosure obligations that Rambus had with respect to its patents. Because this allegation offered a concrete suggestion for Hynix as to what the destroyed evidence could have been, Rambus had a heavy burden to disprove prejudice, which the court found it could not overcome.

Having concluded that Rambus “spoliated documents in bad faith and that Hynix has established prejudice,” the court then considered sanctions, noting it had “wide discretion whether to hold the patents-in-suit unenforceable pursuant to Hynix’s unclean hands defense, or to impose a different sanction.”

The court used the following analysis to evaluate the appropriateness of sanctions:

“In gauging the propriety of the sanction, the district court must take into account

“(1) the degree of fault of the party who altered or destroyed the evidence; (2) the degree of prejudice suffered by the opposing party; and (3) whether there is a lesser sanction that will avoid substantial unfairness to the opposing party and, where the offending party is seriously at fault, will serve to deter such conduct by others in the future.” (citation omitted) The sanction ultimately imposed must be commensurate with the analysis of these factors.”

In examining the Rambus’s degree of fault, the court found that

“Rambus’s fault was significant but not as great as that of a spoliator who knows of adverse evidence and specifically alters, hides or destroys that evidence. There is a possibility that Rambus did not destroy any evidence that would have been beneficial to Hynix’s litigation position. However, because Rambus is the party that destroyed documents by the box and bag without keeping any record of what was destroyed, Rambus must suffer the consequences of that uncertainty.”

Hynix’s degree of prejudice was significant, the court held, because it “was arguably prejudiced in its ability to litigate its equitable claims and defenses,” and if it had been able to better litigate them, it possibly could have avoided a royalty fee that was awarded against it based on a previous determination that Rambus’s patents were valid.

Therefore, the court “conclude[d] that the sanction most commensurate with Rambus’s conduct and [the fact that a royalty rate was previously awarded] is to strike from the record evidence supporting a royalty in excess of a reasonable, nondiscriminatory royalty. Such a remedy recognizes that Rambus’s patents have been determined to be valid while at the same time recognizing that Rambus’s spoliation of evidence should preclude it from entitlement to a royalty that places Hynix at a competitive disadvantage.” The court decided to use its discretion to fashion a sanction, noting that “a retrial of the case with either an adverse jury instruction or an evidentiary exclusion order would involve considerably more delay and expense,” and there had already been great delay in reaching a final determination in the case.

So, what do you think?  Was it appropriate to issue sanctions at this point and, if so, were they harsh enough?  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.

Defendant Claiming Not Reasonably Accessible Data Has Some ‘Splaining To Do – eDiscovery Case Law

In Murray v. Coleman, No. 08-CV-6383, 2012 U.S. Dist. (W.D.N.Y. Sept. 12, 2012), the plaintiff alleged harassment and retaliation in connection with his employment with the New York State Department of Correctional Services (DOCS). This discovery dispute arose when the plaintiff requested access to certain electronic records, alleging that the defendants withheld them.

In his motion, the plaintiff asserted that the defendants “never provided a ‘chronological e-mail history of any kind.’” In response, defense counsel “simply aver[red] that after plaintiff filed this motion to compel, he provided plaintiff with…‘the documents sought’ and, therefore, plaintiff’s motion is ‘moot.’” The plaintiff responded to the defendant’s reply, asserting that “‘virtually no electronic records [were] included’ in defendant’s discovery responses.”

Because the defense counsel’s response to the plaintiff’s motion was “terse,” New York Magistrate Judge Jonathan Feldman stated that it was “difficult . . . to determine whether defendants have in fact produced all relevant electronic records and e-mails as demanded by plaintiff.” Lacking in defense counsel’s response were “details regarding how and where electronically stored information (“ESI”) is held, what efforts were made to preserve relevant ESI, and the method used by defendants to locate, search and produce relevant ESI.”

As such, Judge Feldman “construe[d the defendants’] response as a claim that ESI, including e-mails, [were] not . . . produced because the data demanded [was] destroyed or [was] not ‘reasonably accessible’” pursuant to Rule 26(b)(2)(B) of the Federal Rules of Civil Procedure, which requires a producing party to “show that the information is not reasonably accessible because of undue burden or cost.”

Therefore, because the defendants had not sufficiently demonstrated that the ESI was not reasonably accessible, Judge Feldman ordered as follows:

“Defense counsel shall file an affidavit of a person with direct knowledge of DOCS’s document and e-mail retention system stating: (1) the document/e-mail retention policy used by DOCS currently and during the relevant time periods, (2) the dates of e-mails “reasonably accessible” for production in this litigation, (3) the back up or legacy system, if any, used by DOCS to preserve or archive e-mails that are no longer “reasonably accessible” and whether responsive documents or data may potentially be found on such back up or legacy systems, (4) whether accessing archived or back up e-mails would be unduly burdensome or costly and why, and (5) the date when a litigation hold or document preservation notice was put in place by DOCS regarding this matter and either a copy of or a description of the preservation or litigation hold utilized by DOCS.”  [emphasis added]

Judge Feldman ordered the defense to provide this affidavit within 30 days.

So, what do you think?  Was this an appropriate ruling given the situation?  Or did the defendant deserve sanctions?  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.

Cloning of Computer Files: When There’s a Will, There’s a Way – eDiscovery Case Law

In Matter of Tilimbo, No. 329/M-2007, 2012 N.Y. Misc. (Surr. Ct., Bronx Cnty. Aug. 22, 2012), a court held it was permissible to order cloning of computer files where doing so did not place an unreasonable burden on a nonparty, appropriate steps were taken to protect any privileged information, and the nonparty had not previously produced the requested information in hard copy.

In this claim based on a will contest, the plaintiffs moved for an order permitting their computer forensic expert to examine the personal computer hard drive of a nonparty witness, the deceased’s attorney Patrick Wynne, limited to finding and reviewing documents related to Rose Tilimbo, her will, as well as a deed transfer from her to Salvatore Tilimbo that formed the basis of the will contest. Wynne objected on the basis that he had already, at the court’s direction, been deposed on the subject and “provided an affirmation stating that he conducted the requisite diligent search of his ‘computer files and any other [additional] relevant files’ and did not find responsive documents or computer files.” He argued that “a balancing of the sanctity of the attorney-client privilege against the scope of permissible discovery warrant[ed] the denial of the motion.”

Noting that ESI of a nonparty is discoverable, the court held that so long as it did not place an unreasonable burden on Wynne, a solo practitioner, the examination and cloning of Wynne’s computer was permissible. Although Wynne had produced in hard copy all of the documents he said he possessed, the court pointed out that such disclosures did not prevent the ESI itself from being sought. In addition, Wynne had not been able to produce any documents related to the deed transfer at issue, and any such documents that existed would clearly be material and relevant to the case. Therefore, the court offered the following parameters for the cloning:

“The court finds that the cloning would not place an unreasonable burden upon Wynne if all of the computers can be cloned at his office in four hours or less on a date and at a time that he selects, which may include in whole or in part a time after normal business hours. Alternatively, the cloning will be allowed outside of Wynne’s office if it can be done by removing the computer(s) on a Saturday at any time selected by Wynne and returned to his office by Monday between 8:30 and 9:00 a.m. If Wynne prefers, the computer(s) may be removed from his office on any other day, provided the computer(s) are returned to his office within 24 hours. If the cloning is to be done outside of Wynne’s office and more than one computer is to be cloned, then at Wynne’s option, only one computer may be removed from his office at a time. In the event that the cloning can be accomplished within the time allocated herein either at Wynne’s office or by removal of the computer(s), Wynne shall have the right to select whether or not he wants the cloning to be done at his office. In the event that the cloning requested by the movants cannot be performed within the time frame provided herein, the court finds that the disruption to Wynn’s practice of law outweighs the benefits that the movants might obtain from the information provided by the cloning. Furthermore, should a computer be removed from Wynne’s office and not returned within the time provided herein, the movants shall pay Wynne $200 for each hour or part thereof that the return is delayed.”

In addition, the forensic analysts were limited to locating documents likely to lead to discoverable evidence related to the decedent and were given specific instructions on what to do with any unrelated documents that were accidentally uncovered.

So, what do you think?  Should cloning of the computer have been allowed?  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.

Defendant Appeals Sanctions, Only to See Sanction Amount Raised on Appeal – eDiscovery Case Law
 

In Multifeeder Tech. Inc. v. British Confectionery Co. Ltd., No. 09-1090 (JRT/TNL), (D. Minn. Sept. 18, 2012), the defendant had been previously sanctioned $500,000 ($475,000 to the plaintiff and $25,000 to the court) and held in contempt of court by the magistrate judge for spoliation, who also recommended an adverse inference instruction be issued at trial.  The defendant appealed to the district court, where Minnesota District Judge John Tunheim increased the award to the plaintiff to $600,000.  Oops!

Background

In this breach of contract case, the magistrate court granted the plaintiff’s motion in 2010 to compel discovery of several specific document requests after the defendants failed to comply with those requests.  After the defendant had still failed to comply six months later, the plaintiff motioned the court for sanctions due to the defendant’s failure to comply with the court’s previous 2010 order. While granting the plaintiff’s motion for sanctions, the magistrate judge also ordered that the parties try to cooperate to agree on the handling of eDiscovery in the case. Failing an agreement, each side would then be permitted to submit a proposal for the court to use to establish an eDiscovery protocol.

Forensic Examination of Defendant’s Computers

When the parties could not come to an agreement, they did so, and the court chose the plaintiff’s proposal, appointing a computer forensic expert to image and examine the defendant’s computers, allocating the forensic discovery costs between the parties.  The forensic examination identified several occurrences of spoliation by the defendant, including commercial wiping software found on one custodian’s computer with “six deletions occurring after both the commencement of the lawsuit and issuance of the ESI Protocol Order” and concealment of an encrypted volume and deletion of a PST file by a vice president of the company.

Sanctions Ordered by Magistrate Court

After reviewing the facts and sanctions at the Court's disposal, the Magistrate Judge recommended that:

(1)   An adverse inference instruction be given with regard to the defendant’s destruction of evidence;

(2)   The defendant be held in civil contempt, and ordered to pay $25,000 to the Court and $475,000 to the plaintiff.  With regard to the $475,000, the Court found that amount to constitute reasonable expenses under Fed. R. Civ. P. 37(b)(2)(C) because "it encompasses much of CFS's current unpaid invoices, some past paid amounts by Multifeeder to CFS, and reasonable legal fees and costs for litigating this discovery debacle."

Both Parties Object to Sanction Amount

The defendant objected with regard to the finding of spoliation by the two individuals, objected that the $475,000 sanction was too high because the plaintiff was partly responsible for the “massive” costs for the forensic examination and appealed to the district court.  In turn, the plaintiff also objected to the sanction amount, indicating that the “award fails to adequately cover the reasonable expenses it incurred as a result of [the defendant’s] conduct” and asked that the total amount be raised to over $692,000.

Sanction Amount is Increased, not Decreased

Judge Tunheim upheld the finding of spoliation against the two individuals.  With regard to the sanction amount, Judge Tunheim noted that “the recommended $475,000 sanction is insufficient” and found as follows:

“The Court has also considered that this is not the first sanctions order in this case; British's repeated violations of the Court's discovery orders warrant significant sanctions to deter British from further misconduct. Therefore, the Court finds that a sanction of $600,000 represents reasonable expenses and attorneys' fees because it encompasses much of CFS's current unpaid invoices, at least some past paid amounts by Multifeeder to CFS, and reasonable legal fees and expenses in litigating this discovery dispute.” [emphasis added]

Judge Tunheim also ordered the defendant to pay “half of the sanctions award, $300,000, within 90 days of the date of this Order. The second half of the sanctions award will be payable no later than 120 days of the date of this Order.”

So, what do you think?  Should the defendant appeal again or quit before they get further behind?  Please share any comments you might have or if you’d like to know more about a particular topic.

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

eDiscovery Daily is Two Years Old Today!
 

It’s hard to believe that it has been two years ago today since we launched the eDiscoveryDaily blog.  Now that we’ve hit the “terrible twos”, is the blog going to start going off on rants about various eDiscovery topics, like Will McAvoy in The Newsroom?   Maybe.  Or maybe not.  Wouldn’t that be fun!

As we noted when recently acknowledging our 500th post, we have seen traffic on our site (from our first three months of existence to our most recent three months) grow an amazing 442%!  Our subscriber base has nearly doubled in the last year alone!  We now have nearly seven times the visitors to the site as we did when we first started.  We continue to appreciate the interest you’ve shown in the topics and will do our best to continue to provide interesting and useful eDiscovery news and analysis.  That’s what this blog is all about.  And, in each post, we like to ask for you to “please share any comments you might have or if you’d like to know more about a particular topic”, so we encourage you to do so to make this blog even more useful.

We also want to thank the blogs and publications that have linked to our posts and raised our public awareness, including Pinhawk, The Electronic Discovery Reading Room, Unfiltered Orange, Litigation Support Blog.com, Litigation Support Technology & News, Ride the Lightning, InfoGovernance Engagement Area, Learn About E-Discovery, Alltop, Law.com, Justia Blawg Search, Atkinson-Baker (depo.com), ABA Journal, Complex Discovery, Next Generation eDiscovery Law & Tech Blog and any other publication that has picked up at least one of our posts for reference (sorry if I missed any!).  We really appreciate it!

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

We talked about best practices for issuing litigation holds and how issuing the litigation hold is just the beginning.

By the way, did you know that if you deleted a photo on Facebook three years ago, it may still be online?

We discussed states (Delaware, Pennsylvania and Florida) that have implemented new rules for eDiscovery in the past few months.

We talked about how to achieve success as a non-attorney in a law firm, providing quality eDiscovery services to your internal “clients” and how to be an eDiscovery consultant, and not just an order taker, for your clients.

We warned you that stop words can stop your searches from being effective, talked about how important it is to test your searches before the meet and confer and discussed the importance of the first 7 to 10 days once litigation hits in addressing eDiscovery issues.

We told you that, sometimes, you may need to collect from custodians that aren’t there, differentiated between quality assurance and quality control and discussed the importance of making sure that file counts add up to what was collected (with an example, no less).

By the way, did you know the number of pages in a gigabyte can vary widely and the same exact content in different file formats can vary by as much as 16 to 20 times in size?

We provided a book review on Zubulake’s e-Discovery and then interviewed the author, Laura Zubulake, as well.

BTW, eDiscovery Daily has had 150 posts related to eDiscovery Case Law since the blog began.  Fifty of them have been in the last six months.

P.S. – We still haven't missed a business day yet without a post.  Yes, we are crazy.

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.