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eDiscovery Trends: 2012 Predictions – By The Numbers

With a nod to Nick Bakay, “It’s all so simple when you break things down scientifically.”

The late December/early January time frame is always when various people in eDiscovery make their annual predictions as to what trends to expect in the coming year.  I know what you’re thinking – “oh no, not another set of eDiscovery predictions!”  However, at eDiscovery Daily, we do things a little bit differently.  We like to take a look at other predictions and see if we can spot some common trends among those before offering some of our own (consider it the ultimate “cheat sheet”).  So, as I did last year, I went “googling” for 2012 eDiscovery predictions, and organized the predictions into common themes.  I found eDiscovery predictions here, here, here, here, here, here and Applied Discovery.  Oh, and also here, here and here.  Ten sets of predictions in all!  Whew!

A couple of quick comments: 1) Not all of these are from the original sources, but the links above attribute the original sources when they are re-prints.  If I have failed to accurately attribute the original source for a set of predictions, please feel free to comment.  2) This is probably not an exhaustive list of predictions (I have other duties in my “day job”, so I couldn’t search forever), so I apologize if I’ve left anybody’s published predictions out.  Again, feel free to comment if you’re aware of other predictions.

Here are some of the common themes:

  • Technology Assisted Review: Nine out of ten “prognosticators” (up from 2 out of 7 last year) predicted a greater emphasis/adoption of technological approaches.  While some equate technology assisted review with predictive coding, other technology approaches such as conceptual clustering are also increasing in popularity.  Clearly, as the amount of data associated with the typical litigation rises dramatically, technology is playing a greater role to enable attorneys manage the review more effectively and efficiently.
  • eDiscovery Best Practices Combining People and Technology: Seven out of ten “augurs” also had predictions related to various themes associated with eDiscovery best practices, especially processes that combine people and technology.  Some have categorized it as a “maturation” of the eDiscovery process, with corporations becoming smarter about eDiscovery and integrating it into core business practices.  We’ve had numerous posts regarding to eDiscovery best practices in the past year, click here for a selection of them.
  • Social Media Discovery: Six “pundits” forecasted a continued growth in sources and issues related to social media discovery.  Bet you didn’t see that one coming!  For a look back at cases from 2011 dealing with social media issues, click here.
  • Information Governance: Five “soothsayers” presaged various themes related to the promotion of information governance practices and programs, ranging from a simple “no more data hoarding” to an “emergence of Information Management platforms”.  For our posts related to Information Governance and management issues, click here.
  • Cloud Computing: Five “mediums” (but are they happy mediums?) predict that ESI and eDiscovery will continue to move to the cloud.  Frankly, given the predictions in cloud growth by Forrester and Gartner, I’m surprised that there were only five predictions.  Perhaps predicting growth of the cloud has become “old hat”.
  • Focus on eDiscovery Rules / Court Guidance: Four “prophets” (yes, I still have my thesaurus!) expect courts to provide greater guidance on eDiscovery best practices in the coming year via a combination of case law and pilot programs/model orders to establish expectations up front.
  • Complex Data Collection: Four “psychics” also predicted that data collection will continue to become more complex as data sources abound, the custodian-based collection model comes under stress and self-collection gives way to more automated techniques.

The “others receiving votes” category (three predicting each of these) included cost shifting and increased awards of eDiscovery costs to the prevailing party in litigation, flexible eDiscovery pricing and predictable or reduced costs, continued focus on international discovery and continued debate on potential new eDiscovery rules.  Two each predicted continued consolidation of eDiscovery providers, de-emphasis on use of backup tapes, de-emphasis on use of eMail, multi-matter eDiscovery management (to leverage knowledge gained in previous cases), risk assessment /statistical analysis and more single platform solutions.  And, one predicted more action on eDiscovery certifications.

Some interesting predictions.  Tune in tomorrow for ours!

So, what do you think?  Care to offer your own “hunches” from your crystal ball?  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 Year in Review: eDiscovery Case Law, Part 4
 

As we noted the past three days, eDiscovery Daily has published 65 posts related to eDiscovery case decisions and activities over the past year, covering 50 unique cases!  Yesterday, we looked back at cases related to discovery of social media.  One final set of cases to review.

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

SANCTIONS / SPOLIATION

Behold the king!  I’ll bet that you won’t be surprised that the topic with the largest number of case law decisions (by far!) related to eDiscovery are those related to sanctions and spoliation issues.  Late in 2010, eDiscovery Daily reported on a Duke Law Journal article that indicated back then that sanctions were at an all-time high and the number of cases with sanction awards remains high.

Of the 50 cases we covered this past year, over a third of them (17 total cases) related to sanctions and spoliation issues.  Here they are.  And, as you’ll see by the first case (and a few others), sanctions requested are not always granted.  Then again, sometimes both sides get sanctioned!

No Sanctions for Scrubbing Computers Assumed to be Imaged.  In this case, data relevant to the case was lost when computers were scrubbed and sold by the defendants with the permission of the court-appointed Receiver, based on the Receiver’s mistaken belief that all relevant computers had been imaged and instruction to the defendants to scrub all computers before selling.  Because of the loss of this data, defendants filed a motion for spoliation sanctions for what they described as “the FTC’s bad-faith destruction of Defendants’ computer systems.”  Was the motion granted?

Spoliate Evidence, Don’t Go to Jail, but Pay a Million Dollars.  Defendant Mark Pappas, President of Creative Pipe, Inc., was ordered by Magistrate Judge Paul W. Grimm to "be imprisoned for a period not to exceed two years, unless and until he pays to Plaintiff the attorney's fees and costs". However, ruling on the defendants’ appeal, District Court Judge Marvin J. Garbis declined to adopt the order regarding incarceration, stating it was not "appropriate to Order Defendant Pappas incarcerated for future possible failure to comply with his obligation to make payment…". So, how much was he ordered to pay?  Now we know.  That decision was affirmed here.

Deliberately Produce Wrong Cell Phone, Get Sanctioned.  In this case, the plaintiff originally resisted production of a laptop and a cell phone for examination, but ultimately produced a laptop and cell phone. The problem with that production? After examination, it was determined that neither device was in use during the relevant time period and the actual devices used during that time frame were no longer in plaintiff’s possession. When requested to explain as to why this was not disclosed initially, the plaintiff’s attorney explained that he was torn between his “competing duties” of protecting his client and candor to the court.  Really?

Destroy Data, Pay $1 Million, Lose Case.  A federal judge in Chicago has levied sanctions against Rosenthal Collins Group LLC and granted a default judgment to the defendant for misconduct in a patent infringement case, also ordering the Chicago-based futures broker's counsel to pay "the costs and attorneys fees incurred in litigating this motion" where plaintiff’s agent modified metadata related to relevant source code and wiped several relevant disks and devices prior to their production and where the court found counsel participated in "presenting misleading, false information, materially altered evidence and willful non-compliance with the Court’s orders."

Conclusion of Case Does Not Preclude Later Sanctions.  In this products liability case that had been settled a year earlier, the plaintiff sought to re-open the case and requested sanctions alleging the defendant systematically destroyed evidence, failed to produce relevant documents and committed other discovery violations in bad faith. As Yogi Berra would say, “It ain’t over ‘til it’s over”.

Written Litigation Hold Notice Not Required.  The Pension Committee case was one of the most important cases of 2010 (or any year, for that matter). So, perhaps it’s not surprising that it is starting to become frequently cited by those looking for sanction for failure to issue a written litigation hold. In this case, the defendant cited Pension Committee, arguing that plaintiff’s failure to issue a written litigation hold and subsequent failure to produce three allegedly relevant emails allowed for a presumption that relevant evidence was lost, thereby warranting spoliation sanctions.  Was the court’s ruling consistent with Pension Committee?

No Sanctions Ordered for Failure to Preserve Backups.  A sanctions motion has been dismissed by the U.S. District Court of Texas in a recent case involving electronic backups and email records, on the grounds that there was no duty to preserve backup tapes and no bad faith in overwriting records.

Discovery Violations Result in Sanctions Against Plaintiff and Counsel.  Both the plaintiff and plaintiff's counsel have been ordered to pay sanctions for discovery abuses in a lawsuit in Washington court that was dismissed with prejudice on June 8, 2011.

Meet and Confer is Too Late for Preservation Hold.  A US District court in Indiana ruled on June 28 in favor of a motion for an Order to Secure Evidence in an employment discrimination lawsuit. The defendant had given the plaintiff reason to believe that emails and other relevant documents might be destroyed prior to Rule 26(f) meeting between the parties or Rule 16(b) discovery conference with the court. As a result, the plaintiff formally requested a litigation hold on all potentially relevant documents, which was approved by US Magistrate Judge Andrew Rodovich.

Court Orders Sanctions in Response to "Callous and Careless Attitude" of Defendant in Discovery.  A Special Master determined that multiple discovery failures on the part of the defendant in an indemnity action were due to discovery procedures "wholly devoid of competence, yet only once motivated by guile". Accordingly, the court ordered sanctions against the defendant and also ordered the defendant to pay all costs associated with its discovery failures, including plaintiff's attorney fees and costs.

Court Upholds Sanctions for Intentional Spoliation of Unallocated Space Data.  The Supreme Court of Delaware recently upheld the sanctions against the defendant for wiping the unallocated space on his company’s computer system, despite a court order prohibiting such destruction. In this case, Arie Genger, CEO of Trans-Resources, Inc., argued that sanctions against him were unreasonable and made a motion for the court to overturn its previous decision regarding spoliation of discovery materials. Instead, after due process, the court upheld its earlier decision.

Sanctions for Spoliation, Even When Much of the Data Was Restored.  A Virginia court recently ordered sanctions against the defendant in a case of deliberate spoliation of electronic discovery documents. In this case, the defendant was found to have committed spoliation "in bad faith" in a manner that constituted a "violation of duty… to the Court and the judicial process."

"Untimely" Motion for Sanctions for Spoliation Denied.  A recent ruling by the US District Court of Tennessee has denied a motion for sanctions for spoliation on the grounds that the motion was "untimely." In this case, the plaintiff argued that the defendants' admitted failure to preserve evidence "warrants a harsh penalty," but the court found in favor of the defense that the motion was untimely.

Defendant Sanctioned for Abandonment and Sale of Server; Defendants' Counsel Unaware of Spoliation.  An Illinois District Court ordered heavy sanctions against the defense for spoliation "willfully and in bad faith" of documents stored on a server, in a case revolving around damages sought for breach of loan agreements.

Facebook Spoliation Significantly Mitigates Plaintiff’s Win.  In this case with both social media and spoliation issues, monetary sanctions were ordered against the plaintiff and his counsel for significant discovery violations. Those violations included intentional deletion of pictures on the plaintiff’s Facebook page as instructed by his Counsel as well as subsequent efforts to cover those instructions up, among others.

Lilly Fails to Meet its eDiscovery Burden, Sanctions Ordered.  In this case, a Tennessee District court found that “Lilly failed to take reasonable steps to preserve, search for, and collect potentially relevant information, particularly electronic data, after its duty to preserve evidence was triggered by being served with the complaint.” As a result, the court ordered sanctions against Lilly. How far did the court go with those sanctions?

Court Grants Adverse Inference Sanctions Against BOTH Sides.  Have you ever seen the video where two boxers knock each other out at the same time? That’s similar to what happened in this case. In this case, the court addressed the parties’ cross motions for sanctions, ordering an adverse inference for the defendants’ failure to preserve relevant video surveillance footage, as well as an adverse inference for the plaintiff’s failure to preserve relevant witness statements. The court also awarded defendants attorneys’ fees and costs and ordered re-deposition of several witnesses at the plaintiff’s expense due to other plaintiff spoliation findings.

Next week, we will begin looking ahead at 2012 and expected eDiscovery trends for the coming year.

So, what do you think?  Of all of the cases that we have recapped over the past four days, which case do you think was the most significant?  Please share any comments you might have or if you’d like to know more about a particular topic.

eDiscovery Year in Review: eDiscovery Case Law, Part 3
 

As we noted the past two days, eDiscovery Daily has published 65 posts related to eDiscovery case decisions and activities over the past year, covering 50 unique cases!  Yesterday, we looked back at cases related to privilege & inadvertent disclosures, proportionality and eDiscovery service disputes, including the notable McDermott Will & Emery eDiscovery malpractice case.  But, we still have more cases to review.  So, let’s keep going!

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!

SOCIAL MEDIA

Social media affects all aspects of litigation from the discovery of data from social media web sites to social media communication during trial.  You even have jurors trying to “friend” participants in the case!

Organizations now have to not only plan for preserving, collecting, reviewing and producing conventional data, but also posts, tweets, IMs and more.  You know that already.  What you may not know is that in nearly every case discussed in eDiscovery Daily this past year where social media data was requested, that request was granted.  Oh, and if you have text messages as evidence, you may have to provide corroborating evidence to verify authorship of those text messages for them to be admissible – at least in Pennsylvania.  Here are eight cases related to social media issues:

Jurors and Social Media Don’t Mix.  Discovery of social media is continuing to increase as a significant issue for organizations to address, with more and more cases addressing the topic. However, when it comes to social media, courts agree on one thing: jurors and social media don’t mix. Courts have consistently rejected attempts by jurors to use social technology to research or to communicate about a case, and have increasingly provided pre-trial and post-closing jury instructions to jurors to dissuade them from engaging in this practice.

Cut and Paste Makes the Cut as Evidence.  In this case, the defendant in a criminal case appealed his conviction and raised the issue of whether the prosecution properly authenticated instant messages cut-and-pasted into a Microsoft Word document.

Defendant Can’t Be Plaintiff’s Friend on Facebook.  In this case, Bucks County, Pa., Common Pleas Court Judge Albert J. Cepparulo denied the motion from the defendant requesting access to the photos of plaintiff Sara Piccolo posted in her Facebook account, rejecting McMillen v. Hummingbird Speedway, Inc., in which the court ordered the plaintiff to provide his username and password to the defendant’s attorney, as a precedent.

Social Media Posts Deemed Discoverable in Personal Injury Case.  A Pennsylvania court recently ordered the plaintiff in a personal injury lawsuit to disclose social media passwords and usernames to the defendant for eDiscovery. Discoverability of social media continues to be a hot topic in eDiscovery, as eDiscovery Daily has noted in summaries of prior cases that reflect varied outcomes for requests to access social media data.

A Pennsylvania Court Conducts Its Own Social Media Relevancy Review.  Pennsylvania seems to be taking the lead in setting social media discovery precedents. In this case, a Pennsylvania court agreed to review a plaintiff's Facebook account in order to determine which information is subject to discovery in a case relating to the plaintiff's claim of injury in a motor vehicle accident.

Defendant Ordered to Re-Post Infringing Photograph to Facebook Profile.  In this case, a New Jersey court ordered the defendant to re-post a photograph displaying infringing trade dress to his Facebook profile for a brief period of time to allow the plaintiff to print copies, in a case involving trademark infringement.

Court Rules 'Circumstantial Evidence' Must Support Authorship of Text Messages for Admissibility.  When are text messages admissible in court? Which text messages qualify as evidence, and what does it take to prove authorship of a text message? A recent opinion from the Pennsylvania Superior Court addresses these very issues in an old yet new way, perhaps setting the precedent for future cases and opening what seems to be a potential Pandora's Box of obstacles to the use of text messages as legal evidence.

Facebook Content Discoverable Yet Again.  It seems most, if not all, of the cases these days where discoverability of social media is at issue are being decided by courts in favor of the parties seeking to discover this information. Here’s another example.

Tune in tomorrow for more key cases of 2011 and see the topic that continues to generate more case law related to eDiscovery than any other!  Yes, I know I said that yesterday, but I forgot that topic was planned for the big finish tomorrow.  Stay tuned!

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.

eDiscovery Year in Review: eDiscovery Case Law, Part 2
 

As we noted yesterday, eDiscovery Daily has published 65 posts related to eDiscovery case decisions and activities over the past year, covering 50 unique cases!  Yesterday, we looked back at cases related to eDiscovery cost reimbursement, form of production and international discovery issues.  But, there’s many more cases to recap.  As Lt. Col Frank Slade would say, “I’m just getting warmed up”.  Whoo Ah!

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!

PRIVILEGE / INADVERTENT DISCLOSURES

Decisions regarding what information is privileged and whether privilege is waived when inadvertent disclosures occur is always a hot issue for debate.  That was no different in 2011.  And, if you receive an inadvertent disclosure and don’t disclose it, you can get kicked off the case.  Here are five cases related to privilege and inadvertent disclosures:

Privilege Waived for Produced Servers.  Fontainebleau Resort, LLC (FRLLC) produced two servers without conducting any review of the materials, at least one of which had previously been produced to other banks involved in the underlying litigation.  Would they be required to waive privilege on those servers?

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

Read Inadvertent Email, Get Disqualified from Case.  Lesson of the day: When you receive an inadvertently sent privileged email, read it and don’t disclose receipt of it, you can get kicked off the case. In this case, the court disqualified defendant's in-house and outside counsel for their handling of a disputed privileged email that was inadvertently sent by the plaintiffs' counsel to the defendant and shared with defendant’s outside counsel.

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

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

PROPORTIONALITY

With the explosion of data in the world and rising costs for preserving, collecting, reviewing and producing that data, it’s not surprising that eDiscovery costs are spiraling upward, causing many to cry “uncle” and making the word “proportionality” become quite trendy, with parties and even courts.  Here are four cases where proportionality of eDiscovery was an issue.  Oh, and if you can’t complete production until after the trial is over, that’s probably too late.

Completing Production AFTER Trial is Too Late.  In this case, Judge Royce C. Lamberth of the U.S. District Court for the District of Columbia denied the defendant’s request for consideration that the District had waived all objections, including privileges, and ordered production within one week of the close of trial. In denying the motion, the court likened the proposed production to “a plane with landing gear that deploys just after touchdown, or a stick of dynamite with a unique fuse that ignites only after it explodes.”

KPMG Denied in Request for “Proportionality Test” to Preservation.  In this case, KPMG sought a protective order to narrow its preservation obligation scope to 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. With that request in hand, the court considered KPMG's request for proportionality as it applied to its preservation obligations.

Court Grants Adoption of Model Order for Patent Case.  Model orders to limit discovery for patent cases have gained popularity in various jurisdictions, including a recent order proposed in Texas. Here’s one patent case where the defendant sought to adopt such a model order.

Plaintiff Not Required to Review Millions of Pages of Unallocated Space.  In this case, the court affirmed the Magistrate Judge’s order which excused plaintiff from having to review and produce millions of pages of documents recovered from unallocated space files due to the extreme burden and cost to do so.

EDISCOVERY SERVICE DISPUTES

It’s a darn shame when law firms can’t get along with their corporate clients or with the vendors they hired.  Perhaps the most discussed case of the year was the eDiscovery malpractice case involving McDermott, Will & Emery, with posts in eDiscovery Daily here, here and here.  Here are two cases where the actual eDiscovery services being provided were in dispute:

eDiscovery Malpractice Case Highlights Expectation of Higher Standards.  Having noted in eDiscovery Daily that competency ethics are no longer just about the law and that competency in eDiscovery best practices is expected from the attorneys and any outside providers they retain, this case may be the first eDiscovery malpractice case ever filed against a law firm (McDermott Will & Emery) for allegedly failing to supervise contract attorneys that were hired to perform the client’s work and to protect privileged client records.

Sometimes the Vendor Sues the Law Firm – And Wins!  The eDiscovery malpractice case involving McDermott, Will & Emery associated with inadvertent production of 3,900 privileged documents has captured considerable interest in the industry and this blog.  Sometimes, the “shoe is on the other foot”, so to speak.

Tune in tomorrow for more key cases of 2011 and see the topic that continues to generate more case law related to eDiscovery than any other!

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.

eDiscovery Year in Review: eDiscovery Case Law, Part 1
 

Happy New Year from all of us at CloudNine Discovery and eDiscovery Daily!  If 2012 is like recent years, there should be plenty of interesting developments in the eDiscovery industry.

However, before we look ahead to the coming year, it’s worthwhile to look back at what transpired in 2011 to see what trends began to emerge last year.  And, there is no better way to do that than to review key cases during the year.  eDiscovery Daily has published 65 posts related to eDiscovery case decisions and activities over the past year, covering 50 unique cases!  Needless to say, a lot happened in the courtroom that impacted the eDiscovery world.

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!

EDISCOVERY COST REIMBURSEMENT

One of the emerging trends for 2011 was the growing number of cases where the prevailing party was awarded reimbursement of eDiscovery costs.  Maybe that will change the “preserve and produce everything” mentality of some attorneys?  Here are four cases where this issue was addressed:

Sue Me and Lose? Pay My Costs.  In a ruling that may give some plaintiffs' lawyers pause, a federal judge in Pittsburgh has ruled that the winning defendants in an antitrust case are entitled to reimbursement of more than $367,000 in eDiscovery costs.

Plaintiff Responsible for Taxation of eDiscovery Costs.  It appears that making plaintiffs responsible for eDiscovery costs when they lose is becoming a trend. For this case, the Pennsylvania District Court denied the plaintiffs’ motion to eliminate or reduce many of the costs at issue related to electronic discovery but did disallow or reduce some costs, including those incurred for the convenience of counsel.

Another Losing Plaintiff Taxed for eDiscovery Costs.  As noted previously, prevailing defendants are becoming increasingly successful in obtaining awards against plaintiffs for reimbursement of eDiscovery costs. In this case, a California District Court granted the defendants summary judgment on non-infringement and dismissed their counterclaims. The judgment included eDiscovery costs as valid taxed costs against the plaintiff, based on Rule 54(d) which creates a presumption in favor of awarding costs to the prevailing party.

Award for Database Costs Reversed Due to Cost Sharing Agreement.  In this case, Ricoh looked to have the district court’s award of costs to Synopsys reversed for the parties’ use of Stratify for the production of email. While the appellate court decided that the district court properly decided that costs related to the database could be recovered pursuant to 28 U.S.C. § 1920(4), it nonetheless reversed the lower court’s award due to the parties' agreement to split the costs.

FORM OF PRODUCTION

There were several cases related to the form and format of produced ESI, with a number of key issues being debated in the courtroom.  Here are eight cases where production format decisions were made.

Responses to FOIA Requests Must Be Searchable.  Judge Shira A. Scheindlin ruled that federal agencies must turn over documents that include "metadata", which allows them to be searched and indexed.  Indicating that "common sense dictates" that the handling of FOIA requests should be informed by "the spirit if not the letter" of the Federal Rules of Civil Procedure, Judge Scheindlin indicated the government offered "a lame excuse" for delivering non-searchable documents.

Never Mind! Judge Scheindlin Withdraws FOIA Requests Opinion.  Four months later, Judge Scheindlin withdrew that opinion.

Facebook Did Not Deduce That They Must Produce.  In this case, United States Magistrate Judge Howard Lloyd of the Northern District of California compelled Facebook to produce ESI that was previously produced in a converted, non-searchable format and further ordered Facebook not to use a third-party vendor's online production software to merely “provide access” to it. The court’s order granting the plaintiff’s Motion To Compel Production addressed the importance of ESI Protocols, the requirement to produce ESI in native formats, and production of documents versus providing access to them.

Downloading Confidential Information Leads to Motion to Compel Production.  The North Dakota District Court has recently decided in favor of a motion to compel production of electronic evidence, requiring imaging of computer hard drives, in a case involving the possible electronic theft of trade secrets.

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

Court Says Lack of eDiscovery Rules for Criminal Cases is a Crime.  A New York district court recently ordered the United States Government to reproduce thousands of pages of electronic discovery materials in a criminal case involving the distribution of cocaine. In this case, the Government produced thousands of pages of electronic documents and a number of audio recordings, none of which were text searchable. The court ultimately decided that the onus of producing searchable materials for eDiscovery fell on the Government itself.

Produced ESI Doesn’t Need to be Categorized, Even When Voluminous.  In this case, the defendants sought to compel re-production by the Government of ESI in categorized batches relating to transactions with certain characteristics. Judge Victor Marrero of the Southern District of New York denied the defendants’ motion.

New York Supreme Court Requires Production of Software to Review Files.  In this case, the petitioner requested records from the Department of Taxation and Finance in New York that were responsive to petitioner's request under Freedom of Information Law (FOIL) for records related to sales tax audit. The petitioner then moved to compel production of the Department’s Audit Framework Extension software program in order to install it on his computer and view the electronic files. The petitioner's motion was denied, not once, but twice. Would a final appeal result in compelling production of the software?

INTERNATIONAL EDISCOVERY

As companies “go global” and more data is stored “in the cloud”, discoverability of ESI within international jurisdictions is becoming increasingly in dispute.  Here are two cases with global ramifications:

Bankruptcy Court Denies Foreign Access to Debtor's Emails.  A Southern District of New York United States Bankruptcy Court denied access to a debtor's emails on July 22, in a foreign request involving international eDiscovery. In this case, the U.S. Bankruptcy Court determined that to permit a relief request from a German insolvency administrator would directly contravene the "fundamental principles" of U.S. public policy by undermining the right to privacy in electronic communications and the right of parties involved in any court order to receive notice of such proceedings and of their involvement.

U.S. Court Rules on ECPA Protection of Emails in the Cloud.  An October 3 decision by the Ninth Circuit Court of Appeals offers new clarity in defining and protecting the eDiscovery rights of non-U.S. nationals using U.S. services online, by ruling that emails stored on servers located within the U.S. are protected by national laws on ESI.

Tune in tomorrow for more key cases of 2011!

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.

eDiscovery Case Law: Award for Database Costs Reversed Due to Cost Sharing Agreement
 

An award of costs of $938,957.72, including the winning party’s agreed half share of the cost of a database or $234,702.43, was reversed in Synopsys, Inc. v. Ricoh Co. (In re Ricoh Co. Patent Litigation), No. 2011-1199 (Fed. Cir. Nov. 23, 2011). While the cost of the database could have been taxed to the losing party, the agreement between the parties on cost sharing controlled the ultimate taxation of costs.

After almost seven years of litigation, Synopsys obtained summary judgment and a declaration in Ricoh’s action against seven Synopsys customers that a Ricoh software patent on integrated circuits had not been infringed. During the litigation, Ricoh and Synopsis were unable to agree on a form of production of Synopsis email with its customers, and Ricoh suggested using an electronic discovery company to compile and maintain a database of the email. Synopsis agreed to use of the company’s services and to pay half the cost of the database. After Synopsis obtained summary judgment, the district court approved items in the Synopsis bill of costs totaling $938,957.72, including $234,702.43 for Synopsis’ half share of the cost of the database and $234,702.43 for document production costs.

The court on appeal of the taxation of costs agreed that 28 U.S.C.S. § 1920 provided for recovery of the cost of the database, which was used to produce email in its native format. According to the court, “electronic production of documents can constitute ‘exemplification’ or ‘making copies’ under section 1920(4).” However, the parties had entered into an agreement on splitting the cost of the database and nothing in the 14-page agreement or communications regarding the agreement indicated that the agreement was anything other than a final agreement on the costs of the database. Faced with “scant authority from other circuits as to whether a cost-sharing agreement between parties to litigation is controlling as to the ultimate taxation of costs,” the court concluded the parties’ cost-sharing agreement was controlling. It reversed the district court’s award of $234,702.43 for Synopsis’ half share of the cost of the database.

The court also reversed and remanded the award of an additional $234,702.43 for document production costs because those costs were not adequately documented. For example, many of the invoices simply stated “document production” and did not indicate shipment to opposing counsel. The court stated that the “document production” phrase “does not automatically signify that the copies were produced to opposing counsel.”

So, what do you think?  Should the agreement between parties have superseded the award?  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).

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

eDiscovery Trends: Joseph Collins
 

This is the fifth of our Holiday Thought Leader Interview series, originally scheduled to be published on Tuesday, but rescheduled to today.  I interviewed several thought leaders to get their perspectives on various eDiscovery topics.

Today’s thought leader is Joseph Collins.  Joseph is the co-founder and president of VaporStream, which provides recordless communications. Joseph previously worked in the energy marketplace, but has become an advocate for private communication in business, even within the legal community.

Your product is designed to provide email-like communications that leave no record after being read. How did you get interested in communications that do not leave records? Why is this a legitimate business need?

We got into recordless communications because of the basic lack of privacy and confidentially online.  When I got my first email account back in the day I was told to be very careful what I write because you have no control over that message; I had to write like what I was writing was going to be on the front page of the newspaper.  The problem is people just don’t communicate that way, people need privacy and email and text just do not allow for it.

There is a legitimate business need because businesses need privacy and confidentiality for their internal communications.  Many times employees need to have confidential discussions and VaporStream facilitates that.  Have frank and honest communications are paramount in any company, and it is very hard to have that when think that that email and conversation might be end up in the wrong place.

Businesses do not need to “keep everything,” in fact they need to be able to decide what is considered to be material business information and what is not.  VaporStream facilities this decision making process because the data creator is going to be much better at knowing what need to be retained then a record management person on the back end.

How do you address the concerns of the legal community about VaporStream communications? Lawyers have been trained to keep records of everything- why should they consider using a service like yours?

Most lawyers keep everything because they already get private communications via attorney privilege, but also because they bill by the hour and want the email to prove it.  So lawyers are not our target market, but their clients are, and lawyers understand the risk and liability in communications.  There is one set of lawyers that can and do use VaporStream: IP lawyers. Their email is discoverable as part of the patent process, so we find IP lawyers like to use it to have those private and confidential communications that they need to effectively do their job.

Does VaporStream enable law breaking? If the executives at Enron had used a product like this, would they have gotten away with conspiring to manipulate financial data?

VaporStream is a technology and any technology can be misused, just like a knife or a car, there are benefits and possible misuse. From a corporate prospective you can use our VaporStream Enterprise Server, which will allow you to use filters just like corporate email and give companies protection from misuse.

In no way would VaporStream have helped Enron. The guys at Enron got caught because they commit fraud, not because of some smoking gun in email discovery. It was the fraud that bankrupted Enron, not the communications around it.  

Do you think that organizations over-preserve electronic evidence? Is there an argument to be made for more data destruction and less retention?

Absolutely, but the question is how do you accomplish this task. Best practices for data preservation and destruction have been around for a while now, but are companies better off today? Looking at the headlines for newspapers and the mountains of eDiscovery, it is clear the answer is no.

VaporStream allows companies to keep the valuable business information in email and then automatically get rid of the non-material information that is created by the company. By keeping information you do not need, not only are you are wasting lots of money each year, but it is a tremendous legal liability. Again, most companies are not obligated to “keep everything,” so it’s crazy to do so.  

What does this mean for eDiscovery? Could parties get in trouble for a failure to preserve evidence if it's discovered they use a service like VaporStream to communicate information relevant to a case?

Well, the key to using VaporStream is to have sound user policy. Then users will know when to use VaporStream and when not to use it. If there is a situation where there is say, a legal hold, then it probably would not a good choice to use VaporStream at that situation. By having the proper user policy, the company is protected, and VaporStream is an extension of that policy.

What is the future of this kind of communication? How does recordless communication fit into a world of social media and mobile computing where people leave digital communications all over the place?

When we look at the communications landscape, there are lots of places to share, which is great, but there is no place to have a private conversation. It’s hard to have honest and frank discussions without having trust in the communications channel.  If you think about the online world as an extension of the real world there still needs to be a place to have a private chat.

Thanks, Joseph, for participating in the interview!

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

Editor's Note: eDiscovery Daily will take a break for a couple of days to celebrate the holidays and will resume posts on Tuesday, December 27.  Happy Holidays from all of us at Cloudnine Discovery and eDiscovery Daily!

eDiscovery Case Law: Lilly Fails to Meet its eDiscovery Burden, Sanctions Ordered

In Nacco Materials Handling Group, Inc. v. Lilly Co., No. 11-2415 AV, (W.D. Tenn. Nov. 16, 2011), the court required the defendant to bear the costs of discovery where its preservation and collection efforts were “woefully inadequate.” Parties must cooperate and voluntarily preserve, search for, and collect ESI to avoid the imposition of sanctions.

In this case, Nacco, a manufacturer and seller of lift trucks and aftermarket parts, accused Lilly, a former Nacco dealer, of illegally accessing its proprietary, password-secured website on over 40,000 occasions. Nacco asserted a host of claims, including violations of the Computer Fraud and Abuse Act, computer trespass, misappropriation of trade secrets, tortious interference with contract and business relations, and tortious interference with prospective economic advantage.

Nacco filed a motion seeking expedited discovery so that its forensic expert could search Lilly’s computers and determine which computers accessed Nacco’s proprietary information. The expert turned up evidence of inappropriate access on 17 of the 35 computers he examined.

As discovery continued, Nacco also requested the deposition of a 30(b)(6) witness. However, the witness Lilly offered was unprepared to answer questions on the topics outlined in the deposition notice. Based on the witness’s statements in the deposition and evidence found during the forensic examination, Nacco filed a motion to prevent the further spoliation of evidence and sought sanctions.

The court decided that Lilly’s attempts to preserve evidence were “woefully inadequate.” The company “failed to take reasonable steps to preserve, search for, and collect potentially relevant information, particularly electronic data, after its duty to preserve evidence was triggered by being served with the complaint.” Specifically, U.S. Magistrate Judge Diane Vescovo found that the company “failed to timely issue an effective written litigation hold, to take appropriate steps to preserve any existing electronic records, to suspend or alter automatic delete features and routine overwriting features, and to timely and effectively collect ESI.”

The court explained that Lilly sent the litigation hold to seven of its 160 employees without adequate instructions—and the seven did not include the “key players” to the litigation. The company made no further efforts to prevent the deletion of e-mail, data, or backup tapes. Finally, the company apparently “left collection efforts to its employees to search their own computers with no supervision or oversight from management. Lilly did not follow up with its employees to determine what efforts were taken to preserve and collect relevant evidence, and Lilly failed to document any of its search and collection efforts.” Therefore, the court found that Lilly breached its duty to preserve relevant evidence.

After finding the company negligent, the court imposed sanctions against Lilly that included the expense of additional discovery, including the cost of a second 30(b)(6) deposition, the forensic examinations and imaging already complete, the costs of additional analysis of computers of the nine employees who accessed Nacco’s website, and the costs of imaging the computers in its service department. In addition, the court ordered Lilly to pay monetary sanctions equal to plaintiff’s reasonable costs, including attorney’s fees, in bringing the motion.

Finally, the court ordered Lilly to provide an affidavit describing its preservation and collection efforts and certifying that it had suspended its automatic delete functions and preserved backup tapes.

So, what do you think?  Were the sanctions justified? If so, did the court go far 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).

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

eDiscovery Trends: Jason R. Baron
 

This is the first of the Holiday Thought Leader Interview series.  I interviewed several thought leaders to get their perspectives on various eDiscovery topics.

Today’s thought leader is Jason R. Baron. Jason has served as the National Archives' Director of Litigation since May 2000 and has been involved in high-profile cases for the federal government. His background in eDiscovery dates to the Reagan Administration, when he helped retain backup tapes containing Iran-Contra records from the National Security Council as the Justice Department’s lead counsel. Later, as director of litigation for the U.S. National Archives and Records Administration, Jason was assigned a request to review documents pertaining to tobacco litigation in U.S. v. Philip Morris.

He currently serves as The Sedona Conference Co-Chair of the Working Group on Electronic Document Retention and Production. Baron is also one of the founding coordinators of the TREC Legal Track, a search project organized through the National Institute of Standards and Technology to evaluate search protocols used in eDiscovery. This year, Jason was awarded the Emmett Leahy Award for Outstanding Contributions and Accomplishments in the Records and Information Management Profession.

You were recently awarded the prestigious Emmett Leahy Award for excellence in records management. Is it unusual that a lawyer wins such an award? Or is the job of the litigator and records manager becoming inextricably linked?

Yes, it was unusual: I am the first federal lawyer to win the Emmett Leahy award, and only the second lawyer to have done so in the 40-odd years that the award has been given out. But my career path in the federal government has been a bit unusual as well: I spent seven years working as lead counsel on the original White House PROFS email case (Armstrong v. EOP), followed by more than a decade worrying about records-related matters for the government as Director of Litigation at NARA. So with respect to records and information management, I long ago passed at least the Malcolm Gladwell test in "Outliers" where he says one needs to spend 10,000 hours working on anything to develop a level of "expertise."  As to the second part of your question, I absolutely believe that to be a good litigation attorney these days one needs to know something about information management and eDiscovery — since all evidence is "born digital" and lots of it needs to be searched for electronically. As you know, I also have been a longtime advocate of a greater linking between the fields of information retrieval and eDiscovery.

In your acceptance speech you spoke about the dangers of information overload and the possibility that it will make it difficult for people to find important information. How optimistic that we can avoid this dystopian future? How can the legal profession help the world avoid this fate? 

What I said was that in a world of greater and greater retention of electronically stored information, we need to leverage artificial intelligence and specifically better search algorithms to keep up in this particular information arms race. Although Ralph Losey teased me in a recent blog post that I was being unduly negative about future information dystopias, I actually am very optimistic about the future of search technology assisting in triaging the important from the ephemeral in vast collections of archives. We can achieve this through greater use of auto-categorization and search filtering methods, as well as a having a better ability in the future to conduct meaningful searches across the enterprise (whether in the cloud or not). Lawyers can certainly advise their clients how to practice good information governance to accomplish these aims.

You were one of the founders of the TREC Legal Track research project. What do you consider that project’s achievement at this point?

The initial idea for the TREC Legal Track was to get a better handle on evaluating various types of alternative search methods and technologies, to compare them against a "baseline" of how effective lawyers were in relying on more basic forms of keyword searching. The initial results were a wake-up call, in showing lawyers that sole reliance on simple keywords and Boolean strings sometimes results in a large quantity of relevant evidence going missing. But during the half-decade of research that now has gone into the track, something else of perhaps even greater importance has emerged from the results, namely: we have a much better understanding now of what a good search process looks like, which includes a human in the loop (known in the Legal Track as a topic authority) evaluating on an ongoing, iterative basis what automated search software kicks out by way of initial results. The biggest achievement however may simply be the continued existence of the TREC Legal Track itself, still going in its 6th year in 2011, and still producing important research results, on an open, non-proprietary platform, that are fully reproducible and that benefit both the legal profession as well as the information retrieval academic world. While I stepped away after 4 years from further active involvement in the Legal Track as a coordinator, I continue to be highly impressed with the work of the current track coordinators, led by Professor Doug Oard at the University of Maryland, who was remained at the helm since the very beginning.

To what extent has TREC’s research proven the reliability of computer-assisted review in litigation? Is there a danger that the profession assumes the reliability of computer-assisted review is a settled matter?

The TREC Legal Track results I am most familiar with through calendar year 2010 have shown computer-assisted review methods finding in some cases on the order of 85% of relevant documents (a .85 recall rate) per topic while only producing 10% false positives (a .90 precision rate). Not all search methods have had these results, and there has been in fact a wide variance in success achieved, but these returns are very promising when compared with historically lower rates of recall and precision across many information retrieval studies. So the success demonstrated to date is highly encouraging. Coupled with these results has been additional research reported by Maura Grossman & Gordon Cormack, in their much-cited paper Technology-Assisted Review in EDiscovery Can Be More Effective and More Efficient Than Exhaustive Manual Review, which makes the case for the greater accuracy and efficiency of computer-assisted review methods.

Other research conducted outside of TREC, most notably by Herbert Roitblat, Patrick Oot and Anne Kershaw, also point in a similar direction (as reported in their article Mandating Reasonableness in a Reasonable Inquiry). All of these research efforts buttress the defensibility of technology-assisted review methods in actual litigation, in the event of future challenges. Having said this, I do agree that we are still in the early days of using many of the newer predictive types of automated search methods, and I would be concerned about courts simply taking on faith the results of past research as being applicable in all legal settings. There is no question however that the use of predictive analytics, clustering algorithms, and seed sets as part of technology-assisted review methods is saving law firms money and time in performing early case assessment and for multiple other purposes, as reported in a range of eDiscovery conferences and venues — and I of course support all of these good efforts.

You have discussed the need for industry standards in eDiscovery. What benefit would standards provide?

Ever since I served as Co-Editor in Chief on The Sedona Conference Commentary on Achieving Quality in eDiscovery (2009), I have been thinking that the process for conducting good eDiscovery. That paper focused on project management, sampling, and imposing various forms of quality controls on collection, review, and production. The question is, is a good eDiscovery process capable of being fit into a maturity model of sorts, and might be useful to consider whether vendors and law firms would benefit from having their in-house eDiscovery processes audited and certified as meeting some common baseline of quality? To this end, the DESI IV workshop ("Discovery of ESI") held in Pittsburgh last June, as part of the Thirteenth International AI and Law Conference (ICAIL 2011), had as its theme exploring what types of model standards could be imposed on the eDiscovery discipline, so that we all would be able to work from some common set of benchmarks, Some 75 people attended and 20-odd papers were presented. I believe the consensus in the room was that we should be pursuing further discussions as to what an ISO 9001-type quality standard would look like as applied to the specific eDiscovery sector, much as other industry verticals have their own ISO standards for quality. Since June, I have been in touch with some eDiscovery vendors have actually undergone an audit process to achieve ISO 9001 certification. This is an area where no consensus has yet emerged as to the path forward — but I will be pursuing further discussions with DESI workshop attendees in the coming months and promise to report back in this space as to what comes of these efforts.

What sort of standards would benefit the industry? Do we need standards for pieces of the eDiscovery process, like a defensible search standard, or are you talking about a broad quality assurance process?

DESI IV started by concentrating on what would constitute a defensible search standard; however, it became clear at the workshop and over the course of the past few months that we need to think bigger, in looking across the eDiscovery life cycle as to what constitutes best practices through automation and other means. We need to remember however that eDiscovery is a very young discipline, as we're only five years out from the 2006 Rules Amendments. I don't have all the answers, by any means, on what would constitute an acceptable set of standards, but I like to ask questions and believe in a process of continuous, lifelong learning. As I said, I promise I'll let you know about what success has been achieved in this space.

Thanks, Jason, for participating in the interview!

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

eDiscovery Trends: Potential ESI Sources Abound in Penn State Case
 

Whether you’re a college football fan or not, chances are you’ve heard about the scandal associated with the allegations of serial child abuse by former Penn State football coach Jerry Sandusky.  There seems to be new developments almost daily and the scandal has already cost the jobs of the university president, vice president, athletic director and the head football coach, Joe Paterno, who had been head coach since 1965 and on the coaching staff since 1950 (most of us weren’t even born yet!).  Numerous lawsuits seem highly likely to arise as a result of the alleged abuse against a variety of defendants, including the university, individuals alleged to be involved in the abuse and cover-up and also the Second Mile Foundation founded by Sandusky.

Seth Row, an attorney with Parsons Farnell & Grein LLP in Portland (OR), has written an article published in the Association of Certified eDiscovery Specialists (ACEDS) web site providing a detailing of potential sources of ESI that may be relevant in the case.  The article illustrates the wide variety of sources that might be responsive to the litigation.  Here are some of the sources cited by Row:

  • Videotape of entry and exit from the athletic facilities at Penn State, to which Paterno gave Sandusky access after the latter resigned in 1999;
  • Entry/exit logs, which are likely housed in a database if keycards were used, for the Lasch Football Building, where abuse was allegedly witnessed
  • Phone records of incoming and outgoing calls;
  • Electronic rosters of football players, coaches, staff, student interns, and volunteers affiliated with the Penn State football program over time;
  • The personal records of these individuals, including telephone logs, internet search histories, email accounts, medical and financial records, and related information created over time;
  • University listservs;
  • Internet forums – a New York Times article reported last week that a critical break in the investigation came via a posting on the Internet, mentioning that a Penn State football coach might have seen something ugly, but kept silent;
  • Maintenance logs maintained by the two custodial employees who allegedly witnessed abuse;
  • Identities of all media beat reporters who covered the Penn State football team;
  • Passenger and crew manifests for all chartered flights of the Penn State football team in which Sandusky was a passenger;
  • Sandusky's credit card records to document meals and outings where he may have been accompanied by victims, and records of gifts he purchased for them;
  • All records of the Second Mile Foundation identifying boys who participated in its programs, as well as the names of donors and officers, directors and staff;
  • Paper record equivalents of this ESI that were produced in the 1990s before electronic recordkeeping became prevalent;
  • All electronic storage and computing devices owned or maintained by Sandusky, Paterno and other central figures in the scandal, including cell phones, personal computers, tablet computers, flash drives, and related hardware.

With such a wide variation of potential custodians and time frames, it will be difficult to quickly narrow down the potential ESI sources.  As the author points out, it seems likely that Penn State has already locked down its records retention policies throughout the university.  They certainly would seem to have a reasonable expectation of litigation.  Investigators and attorneys will likely be racing against time to identify as many other parties as possible with potentially responsive ESI.

So, what do you think?  Have you been involved in litigation with such a wide distribution of potentially responsive ESI?  Please share any comments you might have or if you’d like to know more about a particular topic.