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Preservation

Another Commentary from The Sedona Conference: eDiscovery Best Practices

The Sedona Conference® (TSC) Conference and its Working Group 1 on Electronic Document Retention & Production (WG1) have yet another publication to announce in 2018.  Last week, TSC’s WG1 group announced a new second edition commentary on Legal Holds.

Thursday, TSC’s WG1 group announced its Commentary on Legal Holds, Second Edition: The Trigger & The Process.  Much has changed in the law and technology since The Sedona Conference published the First Edition of this Commentary back in September 2010 (hey, that’s when this blog was founded!). This Second Edition of the Commentary on Legal Holds, which provides practical guidelines for determining when the duty to preserve relevant information arises as well as the scope of preservation, reflects:

  • the 2015 amendments emphasizing the proper scope of discovery and the enhanced role of proportionality in preservation, as well as sharpening the analysis of sanctions for the loss of discoverable electronically stored information (ESI);
  • clarification of the duty of a non-party to respond to a subpoena compared to the duty to preserve information;
  • new guidance on how organizations should address data protection laws and regulations that may affect an organization’s ability to implement legal hold data preservation measures outside of the United States;
  • developments in state and federal case law on preservation and spoliation;
  • new and novel sources of ESI requiring preservation and collection; and
  • advances in electronic document management technology.

Importantly, this Second Edition incorporates the knowledge and guidance embodied in the updated Third Edition of The Sedona Principles.

This Commentary is contained within a manageable 43 page PDF document and, as many good TSC commentaries do, includes several guidelines “to help a party meet its duty to preserve discoverable information and to provide pragmatic suggestions and a framework for creating a set of preservation procedures.”  Here they are:

Guideline 1: A reasonable anticipation of litigation arises when an organization is on notice of a credible probability that it will become involved in litigation, seriously contemplates initiating litigation, or when it takes specific actions to commence litigation.

Guideline 2: Adopting and consistently following a policy governing an organization’s preservation obligations are factors that may demonstrate reasonableness and good faith.

Guideline 3: Adopting a procedure for reporting information relating to possible litigation to a responsible decision maker may assist in demonstrating reasonableness and good faith.

Guideline 4: Determining whether litigation is or should be reasonably anticipated should be based on a good-faith and reasonable evaluation of relevant facts and circumstances.

Guideline 5: Evaluating an organization’s preservation decisions should be based on the good faith and reasonableness of the decisions (including whether a legal hold is necessary and how it should be implemented) at the time they are made.

Guideline 6: Fulfilling the duty to preserve involves reasonable and good-faith efforts, taken as soon as is practicable and applied proportionately, to identify persons likely to have information relevant to the claims and defenses in the matter and, as necessary, notify them of their obligation to preserve that information.

Guideline 7: Factors that may be considered in determining the scope of information that should be preserved include the nature of the issues raised in the matter, the accessibility of the information, the probative value of the information, and the relative burdens and costs of the preservation effort.

Guideline 8: In circumstances where issuing a legal hold notice is appropriate, such a notice is most effective when the organization identifies the custodians and data stewards most likely to have discoverable information, and when the notice:

(a) communicates in a manner that assists persons in taking actions that are, in good faith, intended to be effective;

(b) is in an appropriate form, which may be written, and may be sent by email;

(c) provides information on how preservation is to be undertaken, and identifies individuals who can answer questions about preservation;

(d) includes a mechanism for the recipient to acknowledge that the notice has been received, read, and understood;

(e) addresses features of discoverable information systems that may make preservation of discoverable information more complex (e.g., auto delete functionality that should be suspended, or small sections of elaborate ac-counting or operational databases);

(f) is periodically reviewed and amended when necessary; and

(g) is followed up by periodic reminder notices, so the legal hold stays fresh in the minds of the recipients.43

Guideline 9: An organization should consider documenting the procedure of implementing the legal hold in a specific case when appropriate.

Guideline 10: Compliance with a legal hold should be regularly monitored.

Guideline 11: Any legal hold process should include provisions for releasing the hold upon the termination of the duty to preserve, so that the organization can resume adherence to policies for managing information through its useful life cycle in the absence of a legal hold.

Guideline 12: An organization should be mindful of local data protection laws and regulations when initiating a legal hold and planning a legal hold policy outside of the United States.

The Sedona Conference Commentary on Legal Holds, Second Edition: The Trigger & The Process is open for public comment through February 8, 2019. As always, questions and comments regarding the Commentary may be sent to comments@sedonaconference.org and the drafting team will carefully consider all comments received and determine what edits are appropriate for the final version.  You know the drill.

It’s been a busy year for The Sedona Conference® (TSC).  Earlier this year, the TSC has published the Public Comment Version of its Principles and Commentary on Defensible Disposition, the Public Comment Version of their Primer on Social Media, Second Edition (which we discussed in our panel at Relativity Fest earlier this week), the Public Comment version of its Commentary on BYOD: Principles and Guidance for Developing Policies and Meeting Discovery Obligations, the final version of its new Data Privacy Primer and its Commentary on Information Governance, Second Edition.

So, what do you think?  Does your organization have a program for Legal Holds?  Please share any comments you might have or if you’d like to know more about a particular topic.

Sponsor: This blog is sponsored by CloudNine, which is a data and legal discovery technology company with proven expertise in simplifying and automating the discovery of data for audits, investigations, and litigation. Used by legal and business customers worldwide including more than 50 of the top 250 Am Law firms and many of the world’s leading corporations, CloudNine’s eDiscovery automation software and services help customers gain insight and intelligence on electronic data.

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

Here’s a Terrific Scorecard for Mobile Evidence Discovery: eDiscovery Best Practices

As we’ve noted before, eDiscovery isn’t just about discovery of emails and office documents anymore.  There are so many sources of data these days that legal professionals have to account for and millions more being transmitted over the internet every minute, much of which is being transmitted and managed via mobile devices.  Now, here’s a terrific new Mobile Evidence Burden and Relevance Scorecard, courtesy of Craig Ball!

Craig has had a lot to say in the past about mobile device preservation and collection, even going as far as to say that failure to advise clients to preserve relevant and unique mobile data when under a preservation duty is committing malpractice.  To help lawyers avoid that fate, Craig has described a simple, scalable approach for custodian-directed preservation of iPhone data.

Craig’s latest post (Mobile to the Mainstream, PDF article here) “looks at simple, low-cost approaches to getting relevant and responsive mobile data into a standard e-discovery review workflow” as only Craig can.  But, Craig also “offers a Mobile Evidence Scorecard designed to start a dialogue leading to a consensus about what forms of mobile content should be routinely collected and reviewed in e-discovery, without the need for digital forensic examination.”

It’s that scorecard – and Craig’s discussion of it – that is really cool.  Craig breaks down various types of mobile data (e.g., Files, Photos, Messages, Phone Call History, Browser History, etc.) in terms of Ease of Collection and Ease of Review (Easy, Moderate or Difficult), Potential Relevance (Frequent, Case Specific or Rare) and whether or not you would Routinely Collect (Yes, No or Maybe).  Believe it or not, Craig states that you would routinely collect almost half (7 out of 16 marked as “Yes”, 2 more marked as “Maybe”) of the file types.  While the examples are specific to the iPhone (which I think is used most by legal professionals), the concepts apply to Android and other mobile devices as well.

I won’t steal Craig’s thunder here; instead, I’ll direct you to his post here so that you can check it out yourself.  This scorecard can serve as a handy guide for what lawyers should expect for mobile device collection in their cases.  Obviously, it depends on the lawyer and the type of case in which they’re involved, but it’s still a good general reference guide.

So, what do you think?  Do you routinely collect data from mobile devices for your cases?  And, as always, please share any comments you might have or if you’d like to know more about a particular topic.

Sponsor: This blog is sponsored by CloudNine, which is a data and legal discovery technology company with proven expertise in simplifying and automating the discovery of data for audits, investigations, and litigation. Used by legal and business customers worldwide including more than 50 of the top 250 Am Law firms and many of the world’s leading corporations, CloudNine’s eDiscovery automation software and services help customers gain insight and intelligence on electronic data.

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

Judge Recommends Sanctions for Defendant Under FRCP 37(e)(1): eDiscovery Case Law

In Franklin v. Howard Brown Health Ctr., No. 17 C 8376 (N.D. Ill. Oct. 4, 2018), the Illinois Magistrate Judge, stating that “the defendant has had to concede that, at the very least, it bollixed its litigation hold – and it has done so to a staggering degree and at every turn”, recommended that the plaintiff’s motion for discovery sanctions be granted to the extent that the “parties be allowed to present evidence and argument to the jury regarding the defendant’s destruction/failure to preserve electronic evidence in this case”.

Case Background

In this case for workplace harassment and discrimination, this particular dispute began with the plaintiff’s document request, which required the defendant to produce emails and text messages exchanged between certain key parties involving the plaintiff.  The defendant referred plaintiff to a number of “emails” already produced, but the plaintiff was looking for “instant messages,” as this was the method the plaintiff alleged the individuals used to harass him, but the defendant produced only two of those, despite the fact that deposition testimony indicated that was the standard way employees communicated with one another and one of the key parties said he saved “instant messages” to his Outlook email folder (despite the defendant’s claims that they weren’t as a matter of course).

According to the plaintiff’s supervisor, the plaintiff specifically promised a lawsuit based on “racism, transphobia and sexism” among the staff as early as July 24, 2015, but the defendant’s attorney categorized that as a “vague threat”.  One of the plaintiff’s alleged harassers left the company a mere two days after that, but his computer was wiped within 7 days of his last day at work.  According to the defendant’s general counsel, the litigation hold was not instituted until August 28, 2015.  In the GC’s affidavit, she indicated that he instructed an IT administrator to remove the plaintiff’s computer from the wiping process, but apparently never followed up or looked at the computer (that IT administrator had also left the company and was also now suing the defendant) and that data was lost as well.  The defendant’s GC also never instructed anyone in the IT department to stop the auto-delete of any saved instant messages – as a result, “barely a handful” of them were produced.

Judge’s Ruling

Noting that the “failure to preserve electronic evidence is covered by Fed.R.Civ.P. 37(e)”, the Magistrate Judge said that “In the end, given at least what appears to be the defendant’s gross negligence – and that’s viewing things favorably to the defendant – the best route is that proposed by the Advisory Committee in its notes to the 2015 amendment to Fed.R.Civ.P. 37(e)(1), specifically, allowing the parties to present evidence to the jury regarding the situation that was caused by defendant’s faulty and failed litigation hold… Accordingly, it is recommended that parties be allowed to present evidence and argument to the jury regarding the defendant’s destruction/failure to preserve electronic evidence in this case, and that the jury be instructed as the trial judge deems appropriate.”

So, what do you think?  Is the recommendation an appropriate application of FRCP 37(e)(1)?  Please let us know if any comments you might have or if you’d like to know more about a particular topic.

Also, it’s time for the Fall 2018 eDiscovery Business Confidence Survey on Rob Robinson’s Complex Discovery site.  This quarter’s survey is unique in the fact that it asks three additional questions beyond the standard nine business confidence questions asked during the previous eleven surveys. These new questions are focused on understanding operational business trajectories around the areas of days sales outstanding (DSO), monthly recurring revenue (MRR), and revenue distribution across customer bases.  The response period is between today and achievement of 66 responses or November 30, 2018 (whichever comes first).  66 is not a lot of responses, so you’ll want to get your response in quickly!  We’ll cover the results once they’re published.

Case opinion link courtesy of eDiscovery Assistant.

Sponsor: This blog is sponsored by CloudNine, which is a data and legal discovery technology company with proven expertise in simplifying and automating the discovery of data for audits, investigations, and litigation. Used by legal and business customers worldwide including more than 50 of the top 250 Am Law firms and many of the world’s leading corporations, CloudNine’s eDiscovery automation software and services help customers gain insight and intelligence on electronic data.

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

Court Denies Plaintiff’s Request for Sanctions for Defendant’s Failure to Preserve Surveillance Video: eDiscovery Case Law

In Ball v. George Washington Univ., No. 17-cv-0507 (DLF) (D.D.C. Sept. 27, 2018), District of Columbia District Judge Dabney L. Friedrich, denied the plaintiff’s motion for sanctions for allegedly destroying two surveillance videos, stating: “Because Ball has not proven—even by a preponderance of the evidence—that GW permanently stored the Lafayette Hall surveillance footage, the Court need not conduct further inquiry under Rule 37(e).”

Case Background

In this case for wrongful termination, negligence and violations of rights, the defendant considered surveillance footage from two days (July 13 and 14, 2015) that showed the plaintiff entering and exiting buildings on campus, during its investigation preceding the termination of the plaintiff’s employment.  The defendant produced a July 13 video of the plaintiff in one building and produced screenshots of the July 14 surveillance footage from another building, Lafayette Hall, but it did not produce videos of Lafayette Hall for either July 13 or July 14, which reportedly showed the plaintiff entering and exiting at different times than he had indicated on his time sheet.

According to declarations, the surveillance footage was recorded on network video recorders that automatically delete old footage as the recorders become full. The video recorders that stored the July 13 and 14 Lafayette Hall footage at issue typically delete footage every 30 days (and sometimes as early as 14 days) after recording. Defendant police officers routinely permanently download surveillance footage for use in criminal investigations; however, they download surveillance footage for Human Resources (HR) investigations only upon an HR investigator’s request.

In this case, the parties disputed whether the footage at issue was downloaded: the plaintiff contended that the surveillance footage was permanently stored on CDs and given to a member of the defendant’s HR department (Claude Owens), and ultimately to the defendant’s in-house counsel, arguing that the videos’ alleged non-existence showed that the defendant’s in-house counsel destroyed or lost the videos. The defendant countered that the surveillance footage was not permanently stored but instead was automatically overwritten within 30 days (and possibly 14 days) of recording.  While Owens “thought he might have given the tape to ‘the lawyers’”, a detective with the defendant’s police force (Detective Robinson) stated in a declaration that he never downloaded the Lafayette Hall sixth floor footage and had only showed and sent screenshots to the HR employee.

Judge’s Ruling

Judge Friedrich stated: “Although the evidence before the Court is unclear, the weight of the evidence tilts in favor of GW’s explanation. Robinson’s declaration, coupled with evidence that the envelope remained sealed until Romero opened it, supports a finding that the surveillance footage of Lafayette Hall was never downloaded from the video recorders. Robinson stated that he never downloaded the Lafayette Hall sixth floor footage…And Owens testified that neither he nor Wells ever opened the sealed envelope…To the extent that the deposition testimony of Wells and Owens provides any support for Ball’s theory, the evidence is speculative and inconclusive…Because Ball has not proven—even by a preponderance of the evidence—that GW permanently stored the Lafayette Hall surveillance footage, the Court need not conduct further inquiry under Rule 37(e).”

So, what do you think?  Should the defendant have preserved the video if it was used as evidence to terminate the plaintiff’s employment?  Please let us know if any comments you might have or if you’d like to know more about a particular topic.

Case opinion link courtesy of eDiscovery Assistant.

Sponsor: This blog is sponsored by CloudNine, which is a data and legal discovery technology company with proven expertise in simplifying and automating the discovery of data for audits, investigations, and litigation. Used by legal and business customers worldwide including more than 50 of the top 250 Am Law firms and many of the world’s leading corporations, CloudNine’s eDiscovery automation software and services help customers gain insight and intelligence on electronic data.

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

In No Small Ruling, Court Takes Defendant to Task for Discovery Violations: eDiscovery Case Law

In Small v. Univ. Med. Ctr., No. 2:13-cv-0298-APG-PAL (D. Nev. Aug. 9, 2018), Nevada Magistrate Judge Peggy A. Leen, in a lengthy ruling so large it included a table of contents, accepted and adopted in part and overruled in part the Special Master’s Report and Recommendation and Final Findings of Fact and Conclusions of Law.  Judge Leen sanctioned the defendant with an adverse inference instruction to the jury instead of the default judgment sanction recommended by the special master.

Case Background

In this case involving claims against the defendant for unpaid wages and overtime which followed a Department of Labor (“DOL”) investigation that addressed issues about uncompensated time for hourly employees related to uncompensated meal breaks, the court “reluctantly” appointed a special master after “a series of hearings over many months made it painfully apparent” that the defendant, its counsel, and consultants were failing in their efforts to produce ESI responsive to plaintiffs’ discovery requests, including issuing a production to the plaintiffs that was mostly “unintelligible” with extracted text in pages of undecipherable codes complete with Japanese and Korean characters.

In special master Daniel Garrie’s report (covered by us nearly four years ago here), he found that “Not a single UMC executive took any of the steps necessary to ensure the preservation of evidence. No UMC executive took responsibility for instituting or enforcing a ‘litigation hold,’ or otherwise acting to ensure the preservation of documents in this case.”  Calling the defendant’s widespread failure to preserve data a “mockery of the orderly administration of justice”, he recommended sanctions, stating, “Defendant UMC’s extraordinary misconduct and substantial and willful spoliation of relevant ESI in this case resulted in substantial prejudice to Plaintiffs and the classes, and misled Plaintiffs, the Court, and the Special Master on numerous discovery issues…The level of intentional destruction of evidence by UMC shocks the conscious. As such, as to the 613 Opt-In Plaintiffs, default judgment should be entered against UMC pursuant to Rule 37(b)(2)(A)(iii) & (vi) and the Court’s inherent powers.”

Judge’s Ruling

In a lengthy ruling that re-capped in detail the complaint, the various hearings regarding eDiscovery issues and various declarations during the special master proceedings, Judge Leen stated the following findings and conclusions:

  • “Special Master Garrie was Professional, Neutral, Possessed Specialized Knowledge and Expertise, and Remedied Much of UMC’s ESI Deficiencies” (despite the defendant’s contentions to the contrary);
  • “UMC Failed to Comply with the Court’s Orders to Preserve and Produce ESI”;
  • “UMC Had No Preservation Policy or Litigation Hold Policy and Failed to Timely Implement One”;
  • “UMC Executives Failed to Accept Responsibility for Ensuring that ESI was Preserved and Failed to Notify Key Custodians and IT Staff to Preserve, and Prevent Loss, or Destruction of Relevant, Responsive ESI”;
  • “UMC Failed to Disclose the Existence of Relevant ESI Repositories, Including Multiple Timekeeping Systems and the Q-Drive (drive with files containing human resources, corporate compliance, employee grievance, payroll, and DOL investigation data) Until Late in the Special Master Proceedings”;
  • “UMC Modified, Lost, Deleted and/or Destroyed ESI Responsive to Plaintiffs’ Discovery Requests”;
  • “UMC’s Failure to Comply with its Legal Duty to Preserve, Failure to Put in Place a Timely Litigation Hold, Failure to Comply with Multiple Court Orders to Preserve and Produce Responsive ESI, and Loss and Destruction of Responsive ESI (1) Necessitated the Appointment of a Special Master, (2) Caused Substantial Delay of these Proceedings, and (3) Caused Plaintiffs to Incur Needless Monetary Expenses”; and
  • “The Special Master Correctly Concluded UMC Repeatedly Misrepresented the Completeness of its Production of Documents Produced to DOL; However, UMC Was Not Ordered to Produce Kronos Payroll Data in Spreadsheet Format”.

With regard to sanctions for the defendant, Judge Leen stated “There is no question UMC failed to implement a timely litigation hold and failed to communicate its legal preservation duties to key custodians of discoverable evidence. There is no question that UMC failed to preserve discoverable ESI. There is no question data was lost or destroyed as a result. There is no question sanctions are warranted. UMC concedes they are. The only question is what sanctions are appropriate and proportional for the violations.”

Ruling “it is ‘just and practicable’ to apply the amended version of Rule 37(e)”, Judge Leen ultimately determined “Although the court finds plaintiffs have been prejudiced by the loss of data from key repositories and custodians, the loss has not threatened to interfere with the rightful decision of the case on its merits given the large volume of ESI the special master was able to ensure that UMC produced. For these reasons, the court finds that lesser sanctions are appropriate, proportional, and no greater than necessary to cure the prejudice caused by the loss of ESI uncovered by the special master.”

As a result, Judge Leen, while accepting and adopting the special master’s report, overruled the Special Master’s recommendation of case dispositive sanctions and instead stated: “UMC is sanctioned in the form of an instruction to the jury that the court has found UMC failed to comply with its legal duty to preserve discoverable information, failed to comply with its discovery obligations, and failed to comply with a number of the court’s orders. The instruction will provide that these failures resulted in the loss or destruction of some ESI relevant to the parties’ claims and defenses and responsive to plaintiffs’ discovery requests, and that the jury may consider these findings with all other evidence in the case for whatever value it deems appropriate.”  She also imposed monetary sanctions against the defendant in the form of “reasonable costs and attorneys’ fees unnecessarily incurred by plaintiffs”.

So, what do you think?  Did the court go far enough with sanctions against the defendant?  Please let us know if any comments you might have or if you’d like to know more about a particular topic.

For more about this case, check out this Above the Law article written by Mike Quartararo.

Case opinion link courtesy of eDiscovery Assistant.

Also, if you’re going to be in Houston this Thursday, September 27, just a reminder that I will be speaking at the second annual Legal Technology Showcase & Conference, hosted by the Women in eDiscovery (WiE), Houston Chapter, South Texas College of Law and the Association of Certified E-Discovery Specialists (ACEDS).  I’ll be part of the panel discussion AI and TAR for Legal: Use Cases for Discovery and Beyond at 3:00pm and CloudNine is also a Premier Platinum Sponsor for the event (as well as an Exhibitor, so you can come learn about us too).  Click here to register!

Sponsor: This blog is sponsored by CloudNine, which is a data and legal discovery technology company with proven expertise in simplifying and automating the discovery of data for audits, investigations, and litigation. Used by legal and business customers worldwide including more than 50 of the top 250 Am Law firms and many of the world’s leading corporations, CloudNine’s eDiscovery automation software and services help customers gain insight and intelligence on electronic data.

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

Houston, We Have an Adverse Inference Finding: eDiscovery Case Law

In Hernandez, et al. v. City of Houston, No. 4:16-CV-3577 (S.D. Tex. Aug. 30, 2018), Texas District Judge Kenneth M. Hoyt, finding that the defendant “intentionally destroyed” evidence by wiping the hard drives of several custodians no longer employed by the City, determined “that entering an adverse inference finding is appropriate” against the defendant.

Case Background

In this case regarding alleged illegal detainment of the plaintiffs in City jail where each of the plaintiffs contends that he was held in the City’s jail for more than 48 hours without a judicial determination or a probable cause hearing, the Court entered an agreed ESI order in November 2017, which promoted cooperation between the parties (including agreement on search terms) and designated thirteen specific custodians, whose records the plaintiffs were seeking.  Weeks after the ESI Order, the defendant had still not supplemented missing metadata from an earlier production to bring the production into compliance with the Court’s Order and, after several meet and confers by phone, defendant’s counsel requested an in-person meeting.

On December 13, 2017, during that in-person meeting, the defendant represented that (i) it had not interviewed any of the custodians listed in the ESI Order, (ii) it had not collected documents from any of the custodians listed in the ESI Order and (iii) it had “wiped” the hard drives of six of those custodians no longer employed by the defendant.  At that meeting, the plaintiffs offered to provide names of vendors to help with document processing and review and offered to pay a substantial portion, if not all, of the costs that might be incurred. The defendant refused this offer and missed its December 15, 2017 deadline to certify document production was complete.

In January 2018, the defendant represented that it had collected 72,000 documents, but had yet to review them, despite the passage of the discovery deadline. By February 28, 2018, when the plaintiffs moved to compel production, the defendant had only produced 126 files from the Mayor’s office – all of which was unresponsive to the plaintiffs’ document requests.  In April 2018, the defendant claimed it had collected 2.6 million documents by running “word searches based on the ESI Protocol” and it would take 17,000 hours to review all of those documents.  Based on these representations, the plaintiffs agreed to provide a narrower set of search terms.  On April 10, 2018, the Court ordered the defendant to “produce all non-privileged documents responsive to the plaintiffs’ requests for production nos. 1-4, 8 and 9 in accordance with the Court’s November 8, 2017, ESI Order” and also notified the defendant that “[f]ailure to comply with this Order will result in sanctions, including but not limited to monetary sanctions and an adverse inference instruction”.

When the defendant ran the plaintiffs’ narrowed search terms, it retrieved 48,976 documents.  However, it then proceeded to unilaterally apply its own search terms, which retrieved 9,992 documents, which were reviewed for responsiveness.  The defendant produced only 368 responsive documents in response to the April 10 court order.

Judge’s Ruling

With regard to the wiped drives for the six custodians no longer employed by the defendant, Judge Hoyt stated: “Those hard drives contained ESI that should have been preserved by the City as soon as it anticipated litigation, and definitely after the instant lawsuit was filed. The City acknowledged its “clear obligation” to preserve all responsive documents after the litigation was pending. Yet the City failed to take reasonable steps to preserve the data on the hard drives and intentionally wiped the drives. The Court determines that the information on the hard drives cannot be restored or replaced through additional discovery.”

Judge Hoyt also found that the defendant had “Made Misrepresentations to the Court About Its Flawed Discovery Process”, indicating that it: 1) “represented that it needed to review 2.6 million documents”, 2) “did not review the 78,702 documents generated by the plaintiff’s April 2018 search terms”, 3) “represented that it had issued a litigation hold” and 4) “obfuscated the status of the hard drives”.

As a result, Judge Hoyt ruled, as follows:

“Federal Rule of Civil Procedure 37(b)(2) provides that an order establishing contested facts as true is an appropriate remedy when a party violates a discovery order. See Rule 37(b)(2)(i)-(ii). This type remedy cures the violation without inflicting additional costs on the parties, and for that reason, the Court determines, in its discretion that entering an adverse inference finding is appropriate…

Therefore, the Court HOLDS that the following inference is appropriate based on the City’s conduct:

It is established that (a) throughout the class period, the City of Houston had a policy of not releasing warrantless arrestees who had not received neutral determinations of probable cause within the constitutionally required period of time; (b) throughout the class period, the City’s policymakers were aware of this policy; and (c) the City’s policymakers acted with deliberate indifference to the unconstitutional policy and the constitutional violations that resulted.”

So, what do you think?  Was the adverse inference sanction appropriate in this case?  Please let us know if any comments you might have or if you’d like to know more about a particular topic.

Also, if you’re going to be in Houston on Thursday, September 27, just a reminder that I will be speaking at the second annual Legal Technology Showcase & Conference, hosted by the Women in eDiscovery (WiE), Houston Chapter, South Texas College of Law and the Association of Certified E-Discovery Specialists (ACEDS).  I’ll be part of the panel discussion AI and TAR for Legal: Use Cases for Discovery and Beyond at 3:00pm and CloudNine is also a Premier Platinum Sponsor for the event (as well as an Exhibitor, so you can come learn about us too).  Click here to register!

Sponsor: This blog is sponsored by CloudNine, which is a data and legal discovery technology company with proven expertise in simplifying and automating the discovery of data for audits, investigations, and litigation. Used by legal and business customers worldwide including more than 50 of the top 250 Am Law firms and many of the world’s leading corporations, CloudNine’s eDiscovery automation software and services help customers gain insight and intelligence on electronic data.

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

As Blockchain Joins the Healthcare Profession, Are Legal Departments Prepared to Keep Up?: eDiscovery Trends

When we hear the word blockchain, most of us still think of Bitcoin, that mysterious new currency that seems to equally enthrall forward thinking investors and less-than-savory entrepreneurs who lurk around the darkest parts of the Dark Web. But blockchain technology is finding more and more practical uses, most recently in the healthcare industry.

In a recent Wall Street Journal Article, blockchain is presented as a low-cost, highly secure way to unify healthcare records, which to date has been a huge obstacle. As the article puts it, “In the current tangle of incompatible records systems that typifies U.S. health care, incorrect information can creep in when patient data gets re-entered multiple times by doctors’ offices, insurers and hospital staff. Big errors can seriously affect the quality of care that patients receive, small discrepancies can result in wrongful denials of insurance coverage, and errors of all types add to the system’s cost.”

In very simplified terms, Blockchain works like a giant Google Sheet: a single ledger that can be added to simultaneously by all users in the system, with each “transaction” creating an audit trail so that its data is nearly infallible. For healthcare records systems, this can put patients, insurers, and providers literally on the same page, providing secure and accurate information for all stakeholders across the board.

In January, Nashville-based Change Healthcare (a network of 800,000 physicians, 117,000 dentists and 60,000 pharmacies) introduced a blockchain system for processing insurance claims. The shared ledger of encrypted data gives providers a “single source of truth,” according to Emily Vaughn, blockchain product development director at Change Healthcare.

All parties can see the same information about a claim in real time, so that a patient or provider won’t have to call multiple parties to verify information. Each time data is changed, a record is shown on the digital ledger, identifying the responsible party. Any changes also require verification by each party involved, ensuring record’s accuracy.

Change Healthcare won’t reveal actual numbers about how much the new system (which processes roughly 50 million events daily) cuts costs, but the efficiencies, accuracy, and security will no doubt bring huge savings.

The question regarding the eDiscovery implications with this type of move are clear: How will this data be preserved, collected, and prepared for review? It’s not so much a question of a technical nature (though that will have to be answered by someone, but I’ll leave it to the software engineers to properly answer it). What I mean to say, is that anytime a new data source is introduced into the organization’s landscape, the question of preservation, collection, and production should already be on the minds of the legal department. Often, changes in a company’s technology infrastructure are driven by departments outside of legal: usually a combination of IT and business units looking for efficiency, security, and cost savings. Many times, large decisions will be made, leaving the legal team in the position of playing catch up when it comes to discovery should litigation arise.

So, even if your company isn’t moving to blockchain anytime in the near future, this story of what is happening in the healthcare space is important to consider, because, to quote the poet William Blake, “What is now real, was once only imagined.” And the potential uses for blockchain technology lately seems to be on everyone’s mind.

So, what do you think?  How do you see the increased use of blockchain technology affecting eDiscovery?  Please share any comments you might have or if you’d like to know more about a particular topic.

Sponsor: This blog is sponsored by CloudNine, which is a data and legal discovery technology company with proven expertise in simplifying and automating the discovery of data for audits, investigations, and litigation. Used by legal and business customers worldwide including more than 50 of the top 250 Am Law firms and many of the world’s leading corporations, CloudNine’s eDiscovery automation software and services help customers gain insight and intelligence on electronic data.

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

Court Grants Adverse Inference Sanction Against Infringing Author: eDiscovery Case Law

In Nunes v. Rushton, No. 2:14-cv-00627-JNP-DBP (D. Utah May 14, 2018), Utah District Judge Jill N. Parrish, ruling that the plaintiff was prejudiced by the deletion of one of the defendant’s Google “sock puppet” accounts, granted the plaintiff’s motion for sanctions in part, ordering an adverse instruction to the jury regarding the “bad faith” deletion of that account.  Judge Parrish denied the motion with regard to several other accounts, ruling that the plaintiff was not prejudiced by deletion of those accounts (as most of the information was still available or recoverable).

Case Background

In this case, the defendant infringed the plaintiff’s copyright in her novel by copying protected elements of the book and distributing copies of the infringing work to reviewers and bloggers for promotional purposes. Around this time, the defendant created a number of “sock puppet” accounts on Google and Yahoo by registering these accounts under usernames that did not identify her as the individual controlling the accounts and used these accounts to create several sock puppet accounts on Facebook, Goodreads, and Amazon. The defendant then used the Goodreads and Amazon sock puppet accounts to post positive reviews of her own books and negative reviews of the plaintiff’s books. The defendant also created a Twitter account and a Blogspot account under her pen name to promote her books.

In August 2014, the plaintiff became aware of the potential infringement, attempted to obtain an advance copy of the infringing novel and discover the true identity of the defendant’s pen name. The defendant used her sock puppet social media accounts to anonymously criticize the plaintiff’s efforts to investigate the infringing novel. Sometime in August or September of 2014, after the plaintiff had discovered the defendant’s identity, The defendant deleted most of her sock puppet accounts. The defendant also deleted her pen name Twitter and Blogspot accounts. The plaintiff filed this lawsuit on August 28, 2014.

During litigation, the plaintiff made a discovery request for documents stored on the defendant’s various Google and Yahoo accounts. On August 12, 2015, while this discovery request was pending, the defendant deleted one of her Google sock puppet accounts.  When the court granted a motion to compel the defendant to produce documents from her Google and Yahoo accounts, counsel for the defendant represented that she had lost the passwords to the accounts, leading to subpoenas to those services.  The defendant deleted all of the remaining accounts on March 21, 2016, asserting that she did so because she believed that all of the documents associated with the accounts had been or would be produced by Google and Yahoo pursuant to the subpoenas.  Google stated that the account deleted on August 12, 2015 could not be recovered because too much time had passed, but preserved the accounts that had been deleted on March 21, 2016.

Judge’s Ruling

In analyzing the defendants’ motion, Judge Parrish denied the motion for sanctions regarding most of the accounts, determining that the plaintiff suffered no prejudice because the information pertaining to those accounts either remained, was saved by the plaintiff before the accounts were deleted or could be recovered by Google and Yahoo.

As for the August 12, 2015 deletion of one of the Google accounts, Judge Parrish stated: “At the time of the deletion, Rushton had a duty to preserve this account because litigation was pending. The court also finds that Nunes was prejudiced by the deletion because any documents or emails stored on this account were irretrievably lost… Given that litigation had been pending for almost a year, that Rushton was represented by counsel, and that Nunes had requested the production of documents associated with this Google account, the court infers that Rushton’s August 12, 2015 deletion of one of her Google accounts was done in bad faith.”

As a result, Judge Parrish ordering an adverse instruction to the jury regarding the “bad faith” deletion of that account.

So, what do you think?  Was an advance inference sanction a severe enough punishment?  Please share any comments you might have or if you’d like to know more about a particular topic.

Case opinion link courtesy of eDiscovery Assistant.

Sponsor: This blog is sponsored by CloudNine, which is a data and legal discovery technology company with proven expertise in simplifying and automating the discovery of data for audits, investigations, and litigation. Used by legal and business customers worldwide including more than 50 of the top 250 Am Law firms and many of the world’s leading corporations, CloudNine’s eDiscovery automation software and services help customers gain insight and intelligence on electronic data.

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

Former Employee Sanctioned for Lying Under Oath, Destruction of ESI: eDiscovery Case Law

In Heggen v. Maxim Healthcare Servs., Inc., No. 1:16-cv-00440-TLS-SLC (N.D. Ind. April 27, 2018), Indiana Magistrate Judge Susan Collins ruled that the plaintiff’s destruction of requested cellphone recordings, as well as lying under oath, were sanctionable under FRCP Rule 37.

Case Background

The plaintiff filed the case against her former employer – a provider of temporary medical staffing, home health care, and wellness services – with claims of sexual harassment and retaliation. The plaintiff stated under oath that she chose to leave these employers “voluntarily” because the two clients with whom she worked were going into a nursing home.

However, the defendant pointed out that records show that the plaintiff was terminated after she refused to discuss a complaint that the plaintiff stole $300 from a client under her care, as well as mismanagement of the client’s financial assets. A discovery request to the Indiana Department of Workforce Development revealed that the plaintiff had worked for Interim Health Care immediately prior to joining the defendant, even though she responded to the first request for production with a different former employer, and then stated a second employer during her deposition. Based on the records from Interim, the defendant claimed that the circumstances of the plaintiff’s departure from Interim were “strikingly similar” to the plaintiff’s time at the defendant, including that a patient’s medications went missing – the plaintiff then tested positive for the missing medications on a drug test, and the plaintiff failed to return to work after the complaint.

The clearest contention that the defendant brought is that the plaintiff destroyed key evidence in at least three different ways and this, along with the other actions by the plaintiff, the defendant contended was grounds for a dismissal sanction. The plaintiff testified at her deposition that she made about seven recordings of unidentified defendant employees and said these recordings supported her claims against the defendant, she also testified that the Equal Employment Opportunity Commission (“EEOC”) had the recordings, because she deleted the recordings from her cell phone since she “didn’t want them to have [her] phone lost and have them be out there.” She claimed she had emailed the recordings to the EEOC, but couldn’t find any copy of the emails transmitting the recordings. After sending the emails, she performed a factory reset of her phone (an older Apple model) that basically had “broke[n] down,” and that she was trying to get working again. The reset deleted all of the data stored on it, including the recordings.

She felt that emailing the recordings to EEOC was a form of preservation and “thought it was okay to get rid of them[.]” Copies of three of the recordings were found, and the plaintiff submitted transcripts of these recordings with her response brief, and she also provided a copy of the recordings and transcripts to the defendant. However, there was no explanation for the other missing recordings.

The defendant had sought the recordings from the plaintiff for months through traditional discovery and because it did not have the recordings when it deposed the plaintiff, it felt that resulted in prejudice against them. They also argued that there was a significant difference between original recordings and copies of recordings. What the plaintiff submitted appeared to be at least two different layers of recorded conversations: “an ongoing face-to-face interaction between individuals who are supposedly simultaneously listening to and participating in a different interaction by telephone, all recorded on top of each other.”  Also, because they were copies, there was no way to delve into the original metadata of the recordings. Further, while the original recordings were made on an iPhone, the files produced were in 3GP format, a format generally used by Android phones, raising even more questions.

Judge’s Ruling

Judge Collins ruled that the defendant’s failure under oath to disclose Interim as a prior employer and for her destruction of the original cell phone recordings was sanctionable. But noted that a sanction for discovery abuse must be “a proportionate response to the circumstances.”

Judge Collins stated, “The draconian sanction of dismissal is not presently warranted here. Rather, the present circumstances warrant the imposition of lesser sanctions in the form of a monetary penalty—that is, ordering Heggen to pay the reasonable expenses, including attorney’s fees, that Maxim incurred in filing the motion to compel [See FRCP Rule 37]. The Court has no reason, at least at this juncture, to conclude that the imposition of this monetary penalty would be fruitless. The Court will also consider a spoliation instruction upon a pretrial motion by counsel should this case go to trial. The motion for sanctions is otherwise denied. Heggen is duly warned that any additional discovery transgressions may result in further sanctions against her, up to and including dismissal of this case.”

So, what do you think?  Was the ruling correct or was a sanction of dismissal warranted in this case?  Please share any comments you might have or if you’d like to know more about a particular topic.

Case opinion link courtesy of eDiscovery Assistant.

Sponsor: This blog is sponsored by CloudNine, which is a data and legal discovery technology company with proven expertise in simplifying and automating the discovery of data for audits, investigations, and litigation. Used by legal and business customers worldwide including more than 50 of the top 250 Am Law firms and many of the world’s leading corporations, CloudNine’s eDiscovery automation software and services help customers gain insight and intelligence on electronic data.

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

Judge Recommends Jury Decision on Impact of Spoliation of Emails: eDiscovery Case Law

In BankDirect Capital Fin., LLC v. Capital Premium Fin., Inc., No. 15 C 10340 (N.D. Ill. April 4, 2018), Illinois Magistrate Judge Jeffrey Cole recommended that the court follow the decision in Cahill v. Dart and “allow the appropriate evidence to be presented to the jury” to enable it to determine the “impact, if any, the non-production of the challenged emails has on the merits of the parties’ claims”.  If the court was not inclined to let the matter go to the jury, Judge Cole recommended that the court give a permissive spoliation instruction to the jury informing them of the destruction of the requested emails and that they could consider the deletion of the emails to be evidence in considering claims and counter-claims of the parties.

Case Background

In this case regarding breach of a marketing collaboration agreement between the parties and a counter-claim against the owner of the plaintiff, alleging the marketing agreement was negotiated in bad faith, the defendant raised concerns that the plaintiff had produced no emails from Fall 2010 through November 2011 (the period in which the parties were negotiating their Agreement).  The plaintiff indicated that it changed servers in November 2011 and no longer had possession of any emails prior to then.  In response to the suggestion that the loss of the pre-November 2011 emails might have been deliberate, the plaintiff claimed that the server change was “years before any party could have foreseen litigation”.  Though the parties agreed to a declaration by an employee of the plaintiff regarding this, the plaintiff never provided one.

In May 2017, the defendant served a notice for the deposition of a corporate representative of the plaintiff to cover a number of topics related to the missing emails, but the parties continued to dispute the production of a plaintiff witness before finally agreeing to depose an employee of the bank owner company of the plaintiff.  He testified that the new email archive system was not fully installed at the plaintiff’s organization until July 2012, that five years of emails were kept at the time and that emails were kept until automatically deleted once they aged five years.  This meant that emails going back to November 2010 were in existence and obtainable as of November 2015 when the Complaint was filed, not purged when the plaintiff changed servers.

In addition, the President and CEO of the plaintiff admitted he maintained a separate electronic or computerized “folder” for emails regarding the agreement, this folder would have contained all the communications related to it as of July 2012 when the migration to the new archive was complete and he knew of no reason why he would have deleted them.  Acknowledging that he was “personally responsible for putting in place a litigation hold”, he also admitted that neither he nor anyone else at the plaintiff or its owner company ordered the suspension of the automatic deletion of archived emails until at least October of 2016, nearly a year after the defendant filed suit, noting that he didn’t think there were any bad emails, so their deletion wasn’t problematic.  The chain of events led to the defendant filing a Motion for Spoliation Sanctions seeking the entry of a default judgment or, alternatively, an adverse inference sanction against the plaintiff.

Judge’s Ruling

In providing his recommendation, Judge Cole stated that the plaintiff CEO testimony “is simply not credible”.  Continuing, he said, “No reasonable, successful businessman would be so naive as to think that prior, positive exchanges of emails with one’s present accuser had no capacity to help prove that Capital’s charges were baseless and pretextual.”

Summing up his observations, Judge Cole stated that “there can be no serious doubt that the now unavailable emails ought to have been preserved, and that BankDirect, despite its admitted knowledge that documents were not to be destroyed, intentionally chose not to take reasonable (and quite easy) steps to preserve them.”  As a result, Judge Cole offered the following recommendation:

“Accordingly, it is recommended that the court follow Cahill and, as a matter of its inherent discretion, allow the appropriate evidence to be presented to the jury, which, under proper instructions, will determine the reasons for the non-production and the impact, if any, the non-production of the challenged emails has on the merits of the parties’ claims. Alternatively, if the court is not inclined to let the matter go to the jury, it is recommended that the court give a permissive spoliation instruction to the jury informing them of the destruction of the requested emails and that they could consider the deletion “of the emails to be evidence (not conclusive of course)” in considering BankDirect’s claim and Capital’s counterclaim.”

So, what do you think?  Should the judge have recommended a default judgment sanction in this case?  Please share any comments you might have or if you’d like to know more about a particular topic.

Case opinion link courtesy of eDiscovery Assistant.

Sponsor: This blog is sponsored by CloudNine, which is a data and legal discovery technology company with proven expertise in simplifying and automating the discovery of data for audits, investigations, and litigation. Used by legal and business customers worldwide including more than 50 of the top 250 Am Law firms and many of the world’s leading corporations, CloudNine’s eDiscovery automation software and services help customers gain insight and intelligence on electronic data.

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