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Case Law

Court Grants Motion for Spoliation Sanctions Due to Data that is “Less Accessible” – eDiscovery Case Law
 

In Mazzei v. Money Store, 01cv5694 (JGK) (RLE) (S.D. N.Y. July 21, 2014), New York Magistrate Judge Ronald L. Ellis granted the plaintiff’s motion for spoliation sanctions against the defendant, ordering the defendant to bear the cost of obtaining all the relevant data in question from a third party as well as paying for plaintiff attorney fees in filing the motion.

In this class action fraud case, the plaintiff requested that the defendants be sanctioned for violating the duty to preserve information within an electronic database created by a third party, claiming that the information had been lost from the electronic database system and was now in the possession of another third party, making it more costly to retrieve.  Accordingly, the plaintiff asked the court to direct the defendants to obtain the information from the third party, as a sanction for their failure to preserve the information in its original format.

On the other hand, the defendants claimed that the information was preserved, but it was “not readable,” and stated that it would cost a minimum of $10,000 to determine if the information was even searchable. The defendants also argued that the “not readable” documents were not their responsibility to preserve and produce because the information was controlled by a third party.

Judge Ellis stated that “[a] party is in control of any documents in the possession of a third party if that third party is contractually obligated to make them available…Defendants had both the legal right and practical ability to obtain the information relating to fees in the New Invoice System after the initiation of this action”. He noted that the defendants had a Master Services Agreement with the original third party provider of the database, which gave the defendants “a contractual right to demand the information specifically identifying the fees being charged”, so the defendants “were in control of that information”.

Regarding the defendant’s contention that there is no spoliation issue because the plaintiffs have not shown that the information in the system is less accessible now than prior to the transfer of the defendants' access to the system, Judge Ellis declared “This argument has no merit. Mazzei asserts, and Defendants do not dispute, that the only remaining trace of the information in the New Invoice System is possessed by Lender Processing Services and is not presently in a readable format. Therefore, the information is less accessible than it was when Defendants had access to it.”

Finding that the information was relevant and that the defendants “acted with a culpable state of mind” when they failed to preserve the data in its original form, Judge Ellis ordered the defendants “to 1) bear the cost of determining whether the New Invoice System data currently in the possession of LPS is searchable; 2) pay Mazzei his attorneys' fees for this application.”  The plaintiff was ordered to “submit an affidavit detailing reasonable hours and rates associated with its motion by August 1”.

So, what do you think?  Was the judge right to sanction the defendant for failing to preserve the accessibility of the information?  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.

Court Rules to Limit Scope of Discovery, Noting that “Searching for ESI is only one discovery tool” – eDiscovery Case Law

In United States v. Univ. of Neb. at Kearney, 4:11CV3209 (D. Neb. Aug. 25, 2014), Nebraska Magistrate Judge Cheryl R. Zwart denied the government’s motion to compel discovery, finding that “ESI is neither the only nor the best and most economical discovery method for obtaining the information the government seeks” and stating that searching for ESI “should not be deemed a replacement for interrogatories, production requests, requests for admissions and depositions”.

This Fair Housing Act case involved a case brought about by the government with claims that students were prohibited or hindered from having “emotional assistance animals in university housing when such animals were needed to accommodate the requesting students’ mental disabilities.  Discovery has been a lengthy and disputed process since the parties filed a Stipulation and Order Regarding Discovery back in March of 2012.

The scope of ESI was a major part of the dispute. The defendants objected that the government’s search parameters were too expansive, and the cost of compliance would be unduly burdensome. The defendants explained that the cost of retrieval, review, and production would approach a million dollars, and provided an outline identifying the document “hits” and the estimated discovery costs.  The government served revised search terms on April 14, 2014. Although narrowed, the government’s search terms would still yield 51,131 responsive documents, and based on the defendants’ estimate, would require the defendants to expend an additional $155,574 to retrieve, review, and produce the responsive ESI.

To date, the defendants had paid $122,006 to third-party vendors for processing the government’s ESI requests and proposed the requests be narrowed to the “housing” or “residential” context. The defendants’ search terms would yield 10,997 responsive documents.  The Government did not want to limit the scope of discovery and recommended producing all the ESI subject to a clawback agreement for the Government to search the ESI. The Defendants argued such an agreement would violate the Family Educational Rights and Privacy Act by disclosing student personal identifiable information without their notice and consent.

The court had ordered the parties to provide answers to specific questions regarding their efforts at resolving ESI as part of any motion to compel filed. The government’s responsive statement does not include information comparing the cost of its proposed document retrieval method and amount at issue in the case, any cost/benefit analysis of the discovery methods proposed, or a statement of who should bear those costs.

Judge Zwart stated that she “will not order the university to produce ESI without first reviewing the disclosure, even with the protection afforded under a clawback order. And if UNK must review the more than 51,000 documents requested by the government’s proposed ESI requests, the cost in both dollars and time exceeds the value to be gained by the government’s request.”

Illustrating the lack of proportionality in the government’s requests, Judge Zwart stated “Searching for ESI is only one discovery tool. It should not be deemed a replacement for interrogatories, production requests, requests for admissions and depositions, and it should not be ordered solely as a method to confirm the opposing party’s discovery is complete. For example, the government proposes search terms such as ‘document* w/25 policy.’ The broadly used words “document” and “policy” will no doubt retrieve documents the government wants to see, along with thousands of documents that have no bearing on this case. And to what end? Through other discovery means, the government has already received copies of UNK’s policies for the claims at issue.”

As a result, Judge Zwart stated that “the court is convinced ESI is neither the only nor the best and most economical discovery method for obtaining the information the government seeks. Standard document production requests, interrogatories, and depositions should suffice—and with far less cost and delay.”

So, what do you think?  Were the government’s requests overbroad or should they have been granted their motion to compel?  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.

Court Denies Plaintiff’s Fallback Request for Meet and Confer after Quashing its Subpoena – eDiscovery Case Law
 

In Boston Scientific Corporation v. Lee, 1:13-cv-13156-DJC, (N.D. Cal., Aug 4, 2014), California Magistrate Judge Paul S. Grewal found time to preside over a case other than Apple v. Samsung and granted the motion to quash the plaintiff’s subpoena for the defendant’s laptops, refusing the plaintiff’s fallback position to meet and confer and referencing Leave it to Beaver in the process.

The defendant left the employment of the plaintiff and began working for a competitor, which caused the case to be filed against him, claiming theft of trade secrets and violation of a confidentiality agreement (by downloading confidential information onto a USB thumb drive).  The defendant’s new employer assigned him a laptop when he started his employment, which he used to both perform his job duties and communicate with his attorneys. Several weeks after the lawsuit was filed, the defendant’s employer segregated this laptop with a third party e-discovery vendor, and issued him a second one.

The defendant’s employer also produced forensic information about the contents of the first laptop to the plaintiff in the form of file listing reports, which disclose extensive metadata of the files contained on the laptop, USB reports, and web browsing history reports.  When the plaintiff pressed for more, the defendant’s employer offered to have an independent vendor review a full forensic image of the first laptop to search for pertinent information, including a review of any deleted files.  The plaintiff refused, requesting forensic discovery from both laptops and issued a subpoena, to which the defendant’s employer filed a motion to quash.

Judge Grewal began his order as follows:

“This case illustrates a recurring problem in all civil discovery, especially in intellectual property cases. A party demands the sun, moon and stars in a document request or interrogatory, refusing to give even a little bit. The meet and confer required by a court in advance of a motion is perfunctory at best, with no compromise whatsoever. But when the parties appear before the court, the recalcitrant party possesses newfound flexibility and a willingness to compromise. Think Eddie Haskell singing the Beaver's praises to June Cleaver, only moments after giving him the business in private. Having considered the arguments, the court GRANTS Nevro's motion to quash.”

Explaining his decision, Judge Grewal stated “No doubt there exists discoverable information on the two laptops, but by demanding nothing less than a complete forensic image of not just one but two laptops belonging to a direct competitor, Boston Scientific demands too much. Such imaging will disclose privileged communications related to the litigation as well as irrelevant trade secrets from a nonparty-competitor.  Boston Scientific's subpoena therefore seeks discovery of protected matter, something plainly not permitted under Rule 45, rendering the subpoena overbroad and imposing an undue burden on Nevro.”

Judge Grewal noted that the plaintiff “[a]s a fall back”, proposed what the defendant’s employer had originally proposed: the retention of an independent vendor to “review a full forensic image of the Initial Laptop to search for pertinent information, including a review of any deleted files.”  Judge Grewal closed the door on that request as well, stating “to allow Boston Scientific now to seek shelter from a fallback position that Nevro previously tendered in good faith would make a mockery of both parties' obligation to meet and confer in good faith from the start.  The time to tap flexibility and creativity is during meet and confer, not after.”

So, what do you think?  Should the plaintiff have been granted its fall back request or was it too late for compromise?  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.

Though it was “Switching Horses in Midstream”, Court Approves Plaintiff’s Predictive Coding Plan – eDiscovery Case Law

In Bridgestone Americas Inc. v. Int’l Bus. Mach. Corp., No. 3:13-1196 (M.D. Tenn. July 22, 2014), Tennessee Magistrate Judge Joe B. Brown, acknowledging that he was “allowing Plaintiff to switch horses in midstream”, nonetheless ruled that that the plaintiff could use predictive coding to search documents for discovery, even though keyword search had already been performed.

In this case where the plaintiff sued the defendant for a $75 million computer system that it claimed threw its “entire business operation into chaos”, the plaintiff requested that the court allow the use of predictive coding in reviewing over two million documents.  The defendant objected, noting that the request was an unwarranted change to the original case management order that did not include predictive coding, and that it would be unfair to use predictive coding after an initial screening had been done with keyword search terms.

Judge Brown conducted a lengthy telephone conference with the parties on June 25 and, began the analysis in his order by observing that “[p]redictive coding is a rapidly developing field in which the Sedona Conference has devoted a good deal of time and effort to, and has provided various best practices suggestions”, also noting that “Magistrate Judge Peck has written an excellent article on the subject and has issued opinions concerning predictive coding.”  “In the final analysis”, Judge Brown continued, “the uses of predictive coding is a judgment call, hopefully keeping in mind the exhortation of Rule 26 that discovery be tailored by the court to be as efficient and cost-effective as possible.”

As a result, noting that “we are talking about millions of documents to be reviewed with costs likewise in the millions”, Judge Brown permitted the plaintiff “to use predictive coding on the documents that they have presently identified, based on the search terms Defendant provided.”  Judge Brown acknowledged that he was “allowing Plaintiff to switch horses in midstream”, so “openness and transparency in what Plaintiff is doing will be of critical importance.”

This case has similar circumstances to Progressive Cas. Ins. Co. v. Delaney, where that plaintiff also desired to shift from the agreed upon discovery methodology for privilege review to a predictive coding methodology.  However, in that case, the plaintiff did not consult with either the court or the requesting party regarding their intentions to change review methodology and the plaintiff’s lack of transparency and lack of cooperation resulted in the plaintiff being ordered to produce documents according to the agreed upon methodology.  It pays to cooperate!

So, what do you think?  Should the plaintiff have been allowed to shift from the agreed upon methodology or did the volume of the collection warrant the switch?  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.

Our 1,000th Post! – eDiscovery Milestones

When we launched nearly four years ago on September 20, 2010, our goal was to be a daily resource for eDiscovery news and analysis.  Now, after doing so each business day (except for one), I’m happy to announce that today is our 1,000th post on eDiscovery Daily!

We’ve covered the gamut in eDiscovery, from case law to industry trends to best practices.  Here are some of the categories that we’ve covered and the number of posts (to date) for each:

We’ve also covered every phase of the EDRM (177) life cycle, including:

Every post we have published is still available on the site for your reference, which has made eDiscovery Daily into quite a knowledgebase!  We’re quite proud of that.

Comparing our first three months of existence to now, we have seen traffic on our site grow an amazing 474%!  Our subscriber base has more than tripled in the last three years!  We want to take this time to thank you, our readers and subcribers, for making that happen.  Thanks for making the eDiscoveryDaily blog a regular resource for your eDiscovery news and analysis!  We really appreciate the support!

We also want to thank the blogs and publications that have linked to our posts and raised our public awareness, including Pinhawk, Ride the Lightning, Litigation Support Guru, Complex Discovery, Bryan University, The Electronic Discovery Reading Room, Litigation Support Today, Alltop, ABA Journal, Litigation Support Blog.com, InfoGovernance Engagement Area, EDD Blog Online, eDiscovery Journal, e-Discovery Team ® 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!

I also want to extend a special thanks to Jane Gennarelli, who has provided some serial topics, ranging from project management to coordinating review teams to what litigation support and discovery used to be like back in the 80’s (to which some of us “old timers” can relate).  Her contributions are always well received and appreciated by the readers – and also especially by me, since I get a day off!

We always end each post with a request: “Please share any comments you might have or if you’d like to know more about a particular topic.”  And, we mean it.  We want to cover the topics you want to hear about, so please let us know.

Tomorrow, we’ll be back with a new, original post.  In the meantime, feel free to click on any of the links above and peruse some of our 999 previous posts.  Now is your chance to catch up!  😉

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.

Court Refuses to Ban Samsung from Selling Products Found to Have Infringed on Apple Products – eDiscovery Case Law

Apple may have won several battles with Samsung, including ultimately being awarded over $1 billion in verdicts, as well as a $2 million sanction for the inadvertent disclosure of its outside counsel firm (Quinn Emanuel Urquhart & Sullivan LLP) commonly known as “patentgate”.  But, Samsung has may have won the war with the court’s refusal to ban Samsung from selling products that were found to have infringed on Apple products.

Last Wednesday, U.S. District Judge Lucy H. Koh refused to permanently ban Samsung from selling several mobile phones and tablets that a jury found infringed on Apple patents, ruling Apple hadn’t shown that it would suffer irreparable harm to its reputation.  In her order, Judge Koh stated that the plaintiff hadn’t provided sufficient evidence that it will suffer lost sales specifically due to Samsung’s infringement of the three patents at issue, nor had it demonstrated that the patented inventions drive consumer demand for Samsung’s infringing products.

In its motion for a permanent injunction, Apple had argued that the nearly $120 million in damages that was awarded in May wasn’t enough to compensate Apple for the harm caused by Samsung’s infringement. Apple stated that the ban was necessary to separate Apple’s reputation as an “amazingly innovative company” from Samsung’s reputation as a “fast follower.”

Apple argued that trial evidence demonstrated a causal nexus between the alleged sales-based harm and Samsung’s infringing behavior, but argued, however, that when reputational harm is alleged, the second prong of the irreparable harm test falls away and no separate proof of causal nexus is required.  However, Judge Koh found “no reason to depart from the Federal Circuit’s guidance that a patentee must demonstrate a causal nexus between infringement and any alleged irreparable harm – including injury to reputation.”  She also noted that “Samsung argues persuasively that Apple’s reputation has proved extremely robust … weakening Apple’s claim that it has suffered or will suffer irreparable harm to its reputation from infringement of only three patents.”

So, what do you think?  Will the Apple-Samsung litigation ever end?  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.

Court Sides with Defendant in Dispute over Predictive Coding that Plaintiff Requested – eDiscovery Case Law

In the case In re Bridgepoint Educ., Inc., Securities Litigation, 12cv1737 JM (JLB) (S.D. Cal. Aug. 6, 2014), California Magistrate Judge Jill L. Burkhardt ruled that expanding the scope of discovery by nine months was unduly burdensome, despite the plaintiff’s request for the defendant to use predictive coding to fulfill its discovery obligation and also approved the defendants’ method of using search terms to identify responsive documents for the already reviewed three individual defendants, directing the parties to meet and confer regarding the additional search terms the plaintiffs requested.

In this case involving several discovery disputes, a telephonic discovery conference was held in the instant action on June 27, during which, the Court issued oral orders on three of four discovery disputes.  As to the remaining dispute, the Court requested supplemental briefings from both parties and issued a ruling in this order, along with formalizing the remaining orders.

The unresolved discovery dispute concerned the plaintiffs’ “request for discovery extending beyond the time frame that Defendants have agreed to” for an additional nine months.  In their briefing, the defendants (based on the production efforts to date) claimed that expanding the scope of discovery by nine months would increase their review costs by 26% or $390,000.  The plaintiffs’ reply brief argued that the defendants’ estimate reflected the cost of manual review rather than the predictive coding system that the defendants would use – according to the plaintiffs, the cost of predictive coding was the only cost relevant to the defendants’ burden, estimating the additional burden to be roughly $11,279.

Per the Court’s request, the defendants submitted a reply brief addressing the arguments raised by the plaintiffs, arguing that predictive coding software “does not make manual review for relevance merely elective”.  The defendants argued that the software only assigns a percentage estimate to each document that reflects the assessment of the probability that the document is relevant, but the software is not foolproof and that attorney review is still required to ensure that the documents produced are both relevant and not privileged.

Judge Burkhardt, citing the “proportionality” rule of Federal Rule of Civil Procedure Rule 26(b)(2)(C), denied expanding the scope of discovery by nine months, finding that “Defendants have set forth sufficient evidence to conclude that the additional production would be unduly burdensome”.

The plaintiffs, claiming that the defendants “unilaterally-selected search terms” to identify the original production, also argued discovery produced from three Individual Defendants should be added to the Defendants’ predictive coding software.  But, Judge Burkhardt, formalizing the oral order, stated “[t]he Court approved Defendants’ method of using linear screening with the aid of search terms to identify responsive documents with regard to the emails already reviewed for the three Individual Defendants. The parties were directed to meet and confer regarding the additional search terms Plaintiffs would like Defendants to use.”

So, what do you think?  Was the additional discovery scope unduly burdensome or did the plaintiff have a point about reduced discovery costs?  Please share any comments you might have or if you’d like to know more about a particular topic.

eDiscovery Daily will resume posts on Tuesday.  Happy Labor Day!

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.

Circuit Court Affirms Denial of Sanctions Over Spoliation by Defendant – eDiscovery Case Law

In Automated Solutions Corp. v. Paragon Data Sys., Inc., 13-3025/3058 (6th Cir. June 25, 2014), the Sixth Circuit court affirmed the holdings of the district court, rejecting the plaintiff’s arguments that the district court abused its discretion by denying plaintiff’s motion for spoliation sanctions due to defendant’s failure to preserve information on a hard drive and server.  The circuit court also affirmed the ruling by both the magistrate and district judge that the defendant’s back-up tapes were not subject to the duty to preserve.

In a business deal that “soured” and a litigation that has been ongoing for over eight years, it all began back in 2001 when the plaintiff and defendant entered into a contract to develop and support computer software that would allow the Chicago Tribune to track newspaper subscriptions via a handheld device that communicated with a remote server.  After “tensions emerged between the two companies”, the defendant terminated the contract in 2003. The plaintiff sued the defendant in Ohio state court, and after a bench trial, the state court found in the plaintiff’s favor and declared that it was the sole owner of the software system. Soon after the state court issued its judgment, the plaintiff filed an instant action alleging, inter alia, that the defendant had infringed on its copyright and trademark in the software via its development of a new similar software program that it provided to the Cleveland Plain Dealer.  The defendant removed the new matter to federal court.

After numerous discovery disputes, the district court noted that “Paragon appears to have failed in its duty to preserve information because of pending or reasonably anticipated litigation.” Because the defendant had not produced documentary evidence of development of the new software code to the plaintiff, the court ordered the defendant to submit to a forensic expert investigation of its computer systems for evidence that the defendant copied the plaintiff’s software when creating its own.

The plaintiff moved for sanctions when it became apparent that the defendant disposed of a “Sun Server” key to the software development, and also lost information on two programmer’s hard drives.  The magistrate judge found that defendant was “at most negligent” in its failure to preserve and recommended consideration of an adverse inference only for the loss of one programmer’s information, to be imposed at trial and not at the summary judgment stage.  No sanctions were recommended for any other lost data and the magistrate judge not only concluded that back-up tapes created by the defendant were not subject to preservation, but also recommended granting partial summary judgment in favor of the defendant.  After the district court adopted the recommendations in part and dismissed plaintiff’s claims (rendering the sanctions moot), the plaintiff appealed to the circuit court.

With regard to the “Sun Server” and a programmer’s hard drive, despite the failure to preserve having been found to be negligent, the plaintiff had not shown that the devices contained evidence relevant to the litigation, so the circuit court ruled that the district court did not clearly err in its conclusion that a reasonable trier of fact could not find that the missing information would support plaintiff’s claim.  As for the back-up tapes, the circuit affirmed the earlier court rulings that cited Zubulake v. UBS Warburg LLC, 220 F.R.D. 212 (S.D.N.Y. 2003), which noted that a “litigation hold does not apply to inaccessible backup tapes (e.g., those typically maintained solely for the purpose of disaster recovery), which may continue to be recycled on the schedule set forth in the company’s policy.”

The Sixth Circuit noted that the Second Circuit reasoned that “the better approach is to consider [the failure to adopt good preservation practices] as one factor in the determination of whether discovery sanctions should issue…that a finding of gross negligence does not mandate an adverse inference instruction…and that a case-by-case approach to the failure to produce relevant evidence, at the discretion of the district court, is appropriate”.  Noting that “[t]his case-by-case approach is the law in our circuit as well”, the court stated that “the district court did not commit a clear error of judgment” and affirmed the lower court ruling.

So, what do you think?  Did the plaintiff get a fair shake?  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.

Privilege Not Waived on Defendant’s Seized Computer that was Purchased by Plaintiff at Auction – eDiscovery Case Law

In Kyko Global Inc. v. Prithvi Info. Solutions Ltd., No. C13-1034 MJP (W.D. Wash. June 13, 2014), Washington Chief District Judge Marsha J. Pechman ruled that the defendants’ did not waive their attorney-client privilege on the computer of one of the defendants purchased by plaintiffs at public auction, denied the defendants’ motion to disqualify the plaintiff’s counsel for purchasing the computer and ordered the plaintiffs to provide defendants with a copy of the hard drive within three days for the defendants to review it for privilege and provide defendants with a privilege log within seven days of the transfer.

In this fraud case, after several of the named defendants settled and confessed to judgment, the plaintiffs obtained a Writ of Execution in which the King County (Washington) Sheriff seized various items of personal property, including a computer owned by one of the defendants.  The computer was sold at a public auction, and an attorney for the plaintiffs outbid a representative sent by the defendants and purchased the computer.  The plaintiffs sent the computer to a third party for analysis and requested a ruling as to the admissibility of potentially attorney-client privileged documents contained on it, while the defendants contended the actions of the plaintiffs violated ethical rules, and requested that the plaintiffs return the computer to defendants, and also requested that the plaintiff’s attorneys should be disqualified from the case.

With regard to the plaintiff’s actions, Judge Pechman ruled that plaintiffs’ acquisition of the computer was not “inherently wrongful”, noting the plaintiffs’ claim that they had not reviewed the materials on the computer at the time of the motion.  She also determined that plaintiff’s “use of a third party vendor to make a copy of the hard drive is not equivalent to metadata mining of documents produced through the normal discovery process, because whereas the hard drive might plausibly contain many documents unprotected by any privilege, metadata mining is expressly aimed at the kind of information one would expect to be protected by attorney-client privilege and/or work-product protections”.  As a result, she denied the defendants’ motion to disqualify the plaintiff’s counsel.

As for the waiver of privilege, Judge Pechman used a balancing test to determine waiver “that is similar to Rule 502(b)”, which included these factors:

  1. the reasonableness of precautions taken to prevent disclosure,
  2. the amount of time taken to remedy the error,
  3. the scope of discovery,
  4. the extent of the disclosure, and
  5. the overriding issue of fairness.

Using the analogy of where “an opposing party discovers a privileged document in the other party’s trash”, Judge Pechman considered the potential waiver of privilege.  However, because the defendant stated in a declaration that she had “someone at her office” reformat the hard drive on the computer and install a new operating system and believed her documents had been erased and were not readily accessible, she related it “to the memo torn into 16 pieces than a document simply placed in a trash can without alteration”.

As a result, Judge Pechman determined that given “Defendants’ prompt efforts to remedy the error by filing a motion with the Court and the general sense that parties should not be able to force waiver of attorneyclient privilege through investigative activities outside the discovery process and a superior understanding of the relevant technology, the Washington balancing test weighs against waiver.”  She also and ordered the plaintiffs to provide defendants with a copy of the hard drive within three days for the defendants to review it for privilege and provide defendants with a privilege log within seven days of the transfer.

So, what do you think?  Were the plaintiff’s counsel actions ethical?  Should privilege have been waived?  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.

August Case Law Pop Quiz Answers! – eDiscovery Case Law

Yesterday, we gave you a pop quiz for the eDiscovery case law that we’ve covered in the past three months. If you’re reading the blog each day, these questions should be easy! Let’s see how you did. Here are the answers.

1.  In which case was the plaintiff was ordered to produce photos of herself that were posted to Facebook?:

A. Castillon v. Corrections Corporation of America, Inc.

B. In Cactus Drilling Co. v. Nat’l Union Fire Ins. Co.

C. Forman v. Henkin

D. None of the above

2.  In which case were sanctions imposed, even though no spoliation of evidence ultimately occurred?:

A. EEOC v. SVT, LLC

B. Procaps S.A. v. Patheon Inc.

C. Knickerbocker v Corinthian Colleges

D. None of the above

3.  In which case was over $50,000 of eDiscovery costs awarded to the prevailing party disallowed?:

A. Kwan Software Engineering v. Foray Technologies

B. Miller v. York Risk Servs. Grp.

C. United States v. Shabudin

D. In Progressive Cas. Ins. Co. v. Delaney

4.  In what case was one party ordered to continue to share a review database with the opposing party?:

A. Kwan Software Engineering v. Foray Technologies

B. Miller v. York Risk Servs. Grp.

C. United States v. Shabudin

D. In Progressive Cas. Ins. Co. v. Delaney

5.  In which case did the court disallow the plaintiff’s plan for predictive coding?:

A. Kwan Software Engineering v. Foray Technologies

B. Miller v. York Risk Servs. Grp.

C. United States v. Shabudin

D. In Progressive Cas. Ins. Co. v. Delaney

6.  In what case was the defendant’s request for a deposition to review whether the plaintiff had used “appropriate search tools for ESI discovery” denied?:

A. Koninklijke Philips N.V. v. Hunt Control Sys., Inc.

B. Elkharwily v. Mayo Holding Co.

C. Stallings v. City of Johnston City

D. Raines v. College Now Greater Cleveland, Inc.

7.  In which case did the court suggest the parties consider the use of predictive coding?:

A. Chapman v. Hiland Operating, LLC

B. FDIC v. Bowden

C. Downs v. Virginia Health Systems

D. Zeller v. So. Central Emergency Med. Servs. Inc.

8.  How much was Samsung and Quinn Emanuel ordered to pay for their “Patentgate” disclosure of confidential Apple and Nokia agreements?:

A. $1 million

B. $2 million

C. $3 million

D. $10 million

9.  In which case did the court not only reject the plaintiff’s request for sanctions, but issued a summary judgment in favor of the defendant?:

A. Zeller v. So. Central Emergency Med. Servs. Inc.

B. In re Text Messaging Antitrust Litig.

C. Brown v. Tellermate Holdings

D. Brookshire Bros., Ltd. v. Aldridge

10. In which case did the court issue a severe sanction against the defendant for failure to preserve data from cloud provider Salesforce.com?:

A. Zeller v. So. Central Emergency Med. Servs. Inc.

B. In re Text Messaging Antitrust Litig.

C. Brown v. Tellermate Holdings

D. Brookshire Bros., Ltd. v. Aldridge

As always, please let us know if you have questions or comments, or if there are specific topics you’d like to see covered.

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