Privileged

Court Observes “Timing is Everything” in Determining When Litigation is Anticipated: eDiscovery Case Law

Yesterday, I noted that COVID-19 is impacting several courts and closing many – at least for now.  But, I also noted that we still have several cases we can cover from earlier this year regarding eDiscovery.  Here’s one.

In Noah’s Wholesale, LLC v. Covington Specialty Ins., No. 19-24845-CIV-COOKE/GOODMAN (S.D. Fla. March 13, 2020), Florida Magistrate Judge Jonathan Goodman ruled that the defendant “anticipated litigation approximately midway between the two extreme positions urged by the clients” after reviewing in camera the filed-under-seal documents for which the defendant asserted work product protection.

Case Background

In this theft-of-business-property insurance claim case, each party had a significantly different view about the time of when the defendant first anticipated litigation. The defendant contended it anticipated litigation immediately upon receipt of the plaintiff’s notice of its loss, while the plaintiff contended that the defendant did not anticipate litigation until the lawsuit was filed, more than a year after the first loss notice was provided.

At the discovery hearing on the defendant’s claim of work product protection over the insurance claim file at issue, defense counsel presented several potential dates (starting with the earliest in time) that could conceivably be the date when the work product doctrine was to be established for the plaintiff’s claim file and filed an affidavit of the litigation specialist assigned to the subject claim, in support of its various potential dates for beginning the work product protection over the claim file.  Judge Goodman, while noting that her affidavit does not explain what legal training, if any, she has received to be a “litigation specialist”, then proceeded to review filed-under-seal documents in camera to evaluate against those dates.

Judge’s Ruling

Judge Goodman began his order by stating: “’Timing,’ they say, ‘is everything’”, noting that “The ubiquitous ‘they’ may well be correct about that timing thing when it concerns the issue of when a party anticipated litigation under the work product doctrine.”

With regard to the dates proposed by the defendant, Judge Goodman ruled as follows:

  • June 27, 2017, because it was the date that the sole owner of Noah’s Wholesale recorded his statement about the loss and provided a document indicating that the alarm system was not activated on the date of the loss: Judge Goodman stated: “The Undersigned disagrees with Covington’s argument that work product protection over the claim file starts on June 27, 2017, because there was still uncertainty about whether litigation would ensue at this point. By Covington’s own actions, such as sending a reservation of rights letter in August 2017 (asking Noah’s Wholesale for more information/documentation of the loss), it is evident that Covington was still in ‘information gathering mode’ and not certain about litigation.”
  • August 3, 2017, because it was the date when “Covington’s assigned claims administrator sent the insured correspondence . . . indicating it was investigating the claim under a reservation of rights, and specifically requested certain information from the insured”: Judge Goodman stated: “the Undersigned similarly disagrees with beginning the work product protection on the date of the ROR letter because Covington was still investigating Noah’s Wholesale’s claim and had not declined or otherwise reached a final decision on coverage of the claim.”
  • June 6, 2018, because it was the date when “Covington re-opened the subject claim after it received correspondence from Joshua Widlansky, Esq., advising Covington that the insured had retained the law firm of Padula Bennardo Levine in relation to the subject claim.”: Judge Goodman stated: “After reviewing the claim file in camera, the Undersigned agrees with Covington that June 6, 2018, when Noah’s Wholesale informed Covington that it retained counsel in relation to the subject claim, is the date when the work product protection should begin over the claim file. The in camera inspection shows that Covington responded to the letter as if litigation were imminent, and created claim file documents from that point forward with the ‘prospect of litigation [as] the primary motiving purpose.’…Discussing the need for outside coverage counsel (after learning that the insured retained counsel) is a tangible illustration of a view that litigation was anticipated.”

So, what do you think?  Is the notification that the party has retained an attorney a good milestone to use for reasonable anticipation of litigation?  Or is there a better one prior to the case actually being filed?  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.

Court Denies Plaintiff’s Sanctions Request, Points Out Her Own “Misconduct”: eDiscovery Case Law

In Vaks v. Quinlan, et al., No. 18-12571-LTS (D. Mass. Feb. 24, 2020), Massachusetts District Judge Leo T. Sorokin denied the plaintiff’s Motion to Compel and for Sanctions, calling her accusations “without basis” and pointing out her own “pattern of misconduct and disregard of the governing rules”.

Case Background

In this case involving claims of age discrimination by the plaintiff against the defendants, the plaintiff, in filing the motion, accused the defendants and their attorneys of: (1) “obstructing” a deposition; (2) “relentless refusal to produce documents”; and (3) “defiantly [and] in bad faith violat[ing] every Federal Rule of Civil Procedure related to discovery[.]”

Judge’s Ruling

Judge Sorokin, in responding to the plaintiff’s accusations, stated: “These are serious accusations made in writing. They are without basis.”  Judge Sorokin also referenced a previous observation from his court where he “note[d] that there is no basis to infer improper discovery practices by defendant or anything other than reasonable forthright practices by [defense] counsel.”  Continuing, he noted:

“Indeed, to date, Plaintiff—rather than Defendants—has not conformed to the governing rules. She filed late discovery requests…which the Court ultimately found were almost entirely overbroad, unreasonable, and not proportional to the case…She induced the Court to issue an order by making a material misrepresentation: in writing, she represented that defense counsel had assented to an extension of the governing schedule which, the Court later learned, defense counsel had not.”

Judge Sorokin also outlined the plaintiff’s submission of documents produced by the defendants in a pending motion as “plainly designated as confidential” and “in direct violation of the protective order” that defendants had requested which was approved by the court, even though the plaintiff had “never challenged any confidentiality designations”.  Judge Sorokin indicated that filing “establishes a pattern of misconduct and disregard of the governing rules.”

As for the merits of the plaintiff’s motion to compel, Judge Sorokin addressed her five claims, as follows:

  • Format of the documents produced electronically by defendants: Judge Sorokin stated: “This challenge is without merit. Defendants produced the metadata both for documents and emails. As to emails, they searched their servers, and produced the relevant emails with attachments and metadata…This is a permissible practice.”
  • Defendants advanced improper general objections: Judge Sorokin stated: “Not so. Defendants augmented their ‘general’ objections with specific objections.”
  • Defendants withheld responsive non-privileged documents: Judge Sorokin stated that “nothing before the Court, contrary to Vaks’ arguments, suggests” that took place, noting that “Defendants produced multiple privilege logs” and indicated that the plaintiff “simply misunderstands” a reference from the defendants to imply there were suppressed documents.
  • Certain documents withheld by Defendants pursuant to the work product privilege doctrine were not privileged: Judge Sorokin stated: “This argument similarly fails”, noting that documents in contention were prepared at the direction of the defendant’s general counsel, “so that she could provide legal advice. In these circumstances, such documents are properly withheld.”
  • Reopen the now-completed Rule 30(b)(6) deposition: Judge Sorokin noted that there was “no basis” to do so, stating: “Indeed, Vaks has not demonstrated in any way that Mr. LeBlanc did not adequately answer questions during his deposition. Moreover, she did not, in any of the parties’ communications after Mr. LeBlanc’s deposition, claim that the deposition was deficient.”

In denying the motion, Judge Sorokin also stated: “One more issue bears comment. Vaks requests sanctions. None are merited here. Whatever the merits of Vaks’ claims—a matter upon which the Court has no view—defense counsel has discharged her discovery obligations well. She has made reasonable accommodations for a pro se party, as she must, while pressing her client’s positions firmly—all while under repeated attack. There is no basis whatsoever for the imposition of sanctions, nor even an arguable basis to request sanctions.”

So, what do you think?  Does the ruling open the door for the defendants to file their own motion for sanctions?  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.

Court Rules on Status of “Functional Employee, Declines Sanctions as Premature: eDiscovery Case Law

In Digital Mentor, Inc. v. Ovivo USA, LLC, No. 2:17-cv-01935-RAJ (W.D. Wash. Feb. 4, 2020), Washington District Judge Richard A. Jones granted in part and denied in part the defendant’s motion to compel, ruling that the plaintiff had not shown that a consultant to the plaintiff met the criterion of being considered a “functional employee” for which all communications with the plaintiff could be considered privileged, but denying the defendant’s request for preclusion sanctions, determining those to be “premature”.

Case Background

In this case involving trademark and copyright infringement and breach of contract claims that the defendant created a “pirated” version of the plaintiff’s product, the parties had a discovery dispute stemming from William Chastain’s consulting role with the plaintiff.  The plaintiff claimed that Chastain was its “functional employee” and so his communications with the plaintiff were subject to attorney-client privilege or work product protection.  Chastain was purportedly involved in the negotiation, discussion and execution of the pertinent contracts and agreements at issue with the defendant, was a direct conduit of the plaintiff in the events leading up to this litigation and was never paid for his role and was never employed by the plaintiff.

The defendant disagreed, claiming that Chastain did not qualify as a “functional employee” and moved to compel the plaintiff to produce all documents relating to Chastain, including correspondence between Chastain, the plaintiff and/or its counsel; even documents identified DMI’s privilege log.  The defendant also sought to prohibit the plaintiff from relying upon any documentation including or relating to Chastain and any testimony from, or referring to, Chastain during hearings or trial and also sought reasonable fees and expenses in bringing the motion.

Judge’s Ruling

Noting that “as one district court indicates, ‘the dispositive question is the consultant’s relationship to the company and whether by virtue of that relationship [s]he possesses information about the company that would assist the company’s attorneys in rendering legal advice’”, Judge Jones stated: “When answered in the affirmative, the consultant is ‘in all relevant respects the functional equivalent of an employee’ and communications between corporate counsel and the consultant may be covered under attorney-client privilege.”

But, Judge Jones continued: “On the record presented, DMI has not shown that Chastain’s involvement meets this criterion. There is no documentation of Chastain’s duties vis-à-vis DMI or its corporate counsel, nor does the record demonstrate that Chastain had specialized knowledge such that counsel would rely on him to facilitate legal advice for the company…There is also little to indicate that communications between Chastain and DMI’s counsel were primarily of a legal, as opposed to a business, nature…Having found that DMI has not met its burden, the Court GRANTS Ovivo’s motion to the extent documents are only being withheld on this basis of privilege. Having found the ‘functional employee’ requirements not met, the Court will not analyze Ovivo’s claims of waiver.”

However, considering preclusion sanctions based on the defendant’s claim that Chastain destroyed relevant documents because (as the plaintiff stated) he “does not keep any emails and/or documentation as he has been a victim of corporate theft and hacking incidents in the past”, Judge Jones stated: “The Court cannot impose sanctions based on Ovivo’s allegations under Rule 37. Sanctions under Rule 37 are allowed only against a party that disobeys a court issued discovery order. However, the court’s inherent authority to impose sanctions for the wrongful destruction of evidence includes the power to exclude evidence that, given the spoliation, would ‘unfairly prejudice an opposing party.’…Although Chastain’s purported email practices seem particularly dubious, the Court agrees with DMI that Ovivo’s request for preclusion sanctions is premature. Ovivo has not presented any evidence in support of its spoliation theory other than Chastain’s failure to produce documents in response to its subpoena…Without evidence about what was purportedly destroyed, when it occurred, what extent DMI had any involvement, and any resulting prejudice, preclusion sanctions are inappropriate. The Court also declines to award attorney’s fees related to this motion.”

So, what do you think?  Is it premature to consider sanctions if the party acknowledges destroying relevant documents?  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.

Court Agrees that Emails Including Counsel Aren’t Privileged Because They Don’t Offer Legal Advice: eDiscovery Case Law

In Guardiola v. Adams Cty. School District No. 14 et al., No. 1:18-cv-03230-RM-NRN (D.Colo. Oct. 25, 2019), Colorado District Court Judge Raymond P. Moore overruled the defendants’ objection to the magistrate judge’s order compelling them to disclose three e-mails that they contended were subject to the attorney-client privilege, ruling that “[t]he disputed e-mails do not directly request or offer legal advice.”

Case Background

In this case where the plaintiff claimed wrongful termination because of his association with an organization that the defendants believed was encouraging students to protest against the school board, the parties had a discovery dispute over e-mail concerning the implementation of new security measures at school board meetings in which members of Defendant Adams County School District No. 14 Board of Education and their counsel participated. The magistrate judge reviewed in camera five e-mails from the discussion and then invited briefing on the issue of attorney-client privilege. Both sides filed briefs.  The magistrate judge then determined two of the e-mails – one sent by counsel and another responding to it six minutes later – were privileged but the first, second, and portions of the fifth were not.

The magistrate judge found that the sender of the first e-mail was forwarding a security plan proposed by a third-party security provider and seeking input and direction from all the decision-makers, as well as counsel, about implementing it. The magistrate judge determined that the sender’s request was not privileged simply because the attorney was included in the discussion.  The magistrate judge found that the sender of the second e-mail was expressing concerns about strategy, perception, and public opinion and that the e-mail was not sent for the purpose of giving or receiving legal advice.  And the magistrate judge found that the sender of the fifth e-mail reflected the sender’s decision with respect to the proposed security plan and her reasons for that decision; thus, it was merely a business communication and not privileged.  The defendants objected.

Judge’s Ruling

Noting that “The privilege ‘protects only those disclosures necessary to obtain informed legal advice which might not have been made absent the privilege’”, Judge Moore stated: “The disputed e-mails do not directly request or offer legal advice. Nor are they necessary to obtain such advice. Instead, the disputed e-mails are part of a broader discussion about increasing security at school board meetings. Although legal considerations are one component of that discussion, the disputed e-mails, on their face, predominantly relate to other issues. The primary purpose of the first e-mail is to address logistical issues raised by a private security provider. The primary purpose of the second e-mail is to share concerns about managing public opinion. And the primary purpose of the fifth e-mail is to announce and explain the decision that was reached. To the extent legal issues are tangentially related to the broader topic of security, that is not enough to bring the content of these e-mails within the attorney-client privilege.”

Noting that “Defendants cite no authority, nor is the Court aware of any, for the proposition that the Court is precluded from assessing the e-mails at face value and based on the context in which they were sent”, Judge Moore stated, in overruling the defendants’ objection: “Defendants have failed to show that the attorney-client privilege applies to the disputed e-mails and that the magistrate judge’s ruling was clearly erroneous or contrary to law.”

So, what do you think?  Should emails including counsel always be considered privileged or do they need to include legal advice?  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.

Wal-Mart is Allowed to Clawback Inadvertent Disclosures, But Still Sanctioned Over What They Revealed: eDiscovery Case Law

In Bellamy v. Wal-Mart Stores, Texas, LLC, No. SA-18-CV-60-XR (W.D. Tex. Aug. 19, 2019), in a case that was discussed earlier this week at Relativity Fest, Texas District Judge Xavier Rodriguez ruled that the defendant was entitled to “claw back” the documents it inadvertently produced in the case, but still considered those documents in analyzing the plaintiff’s motion for sanctions and granted that motion to the extent that he ruled that the defendant could not assert any comparative negligence defense in this case, including arguing that the danger (of a pallet being left unattended in the store) was open and obvious.

Case Background

In this case involving a slip and fall, the plaintiff alleged that she sustained severe injuries to her knees and ankles when she tripped over a pallet in one of the defendant’s stores.  After the Magistrate Judge ordered the defendant to supplement its disclosures and discovery responses and provide the plaintiff with a privilege log as to any withheld documents as part of dismissing an earlier plaintiff motion for sanctions without prejudice, a paralegal in counsel for the defendant’s office inadvertently produced documents that the defendant claimed were privileged under the attorney-client privilege or work product. While arguing that some of the inadvertently produced documents were not privileged, the plaintiff also argued that the inadvertently produced documents demonstrated that defendant’s counsel acted in bad faith and engaged in discovery abuse.

Judge’s Ruling

While noting that “This Court encourages parties to enter into a Rule 502(d) Order” (which we have covered here previously), Judge Rodriguez also remarked that failing to request such an order “was the first of many mistakes by Defendant’s counsel in this case”, so he performed an analysis under Rule 502(b) to determine whether the defendant had waived privilege for the inadvertently disclosed documents.

Because the plaintiff ultimately conceded the documents were privileged after an in camera review by the Court, the Court decided not to “dwell on this issue”.  But, Judge Rodriguez did remark that “the privilege log was woefully deficient”, noting that he was “unable to ascertain the identities of various recipients of the emails in question.”  Nonetheless, finding that the disclosure was inadvertent, that the defendant took reasonable steps to prevent disclosure and that the defendant promptly took reasonable steps to rectify the error, Judge Rodriguez ruled that “Defendant is entitled to ‘claw back’ the documents it inadvertently produced” under Rule 502(b).

However, Judge Rodriguez also stated: “But that is not the end of this analysis. Although Plaintiff may not further use these documents in this case, preventing their use in analyzing the pending motion for sanctions would result in a perverse result, upending the rules of civil procedure and encouraging discovery abuse.”  In reviewing the inadvertently produced emails, Plaintiff’s counsel became aware of the following:

  • As early as July 23, 2018, Defendant’s counsel knew of the identity of the store manager who interviewed Plaintiff shortly after her accident;
  • As early as July 23, 2018, Defendant’s counsel knew of the identity of the employee who left the pallet unattended;
  • By August 6, 2018, counsel for Defendant knew of the addresses and phone numbers for these two persons; and
  • By February 9, 2019, counsel for Defendant knew the identity of the asset protection manager that was supposed to obtain the surveillance footage.

However, the defendant failed to list these individuals in their Rule 26(a)(1) initial disclosures and failed to timely list them in answers to interrogatories.  Judge Rodriguez stated: “It is apparent from a reading of the materials submitted either Defendant’s counsel was grossly negligent in fulfilling their discovery obligations or they realized they had an uncooperative manager who was refusing to assist in their investigation, and they did not want to disclose the identities of potentially ‘bad’ witnesses.”

In reviewing the inadvertently produced emails, Plaintiff’s counsel also became aware of the following:

  • On November 21, 2016, the manager completed a Document Preservation Directive requesting that surveillance video be collected, along with photos taken at the scene and the statement from the customer;
  • By January 16, 2018, Defendant was aware that the store lost the video and that the store manager was refusing to provide any statement;
  • Wal-Mart’s outside claim investigation agency reported that exposure on this claim was probable and suggested that the claim be “compromise[d] to avoid spoliation potential”; and
  • On June 29, 2018, one of Defendant’s outside counsel wrote an email to “Travis Rodmon-Legal” indicating that the claim file notes video from the scene was saved; “however, the Walmart discovery sources have not been able to provide a video to date.”

Judge Rodriguez stated: “Counsel for Defendant never disclosed to Plaintiff’s counsel that at one time video may have existed that was now lost. Rather, counsel merely kept repeating that video does not exist.”  It was also discovered that the defendant hired an investigator to conduct an undisclosed full social media/background check on the plaintiff on June 20, 2018.

While noting that the defendant had a duty to preserve the video, that it failed to take reasonable steps to preserve that video and that the video cannot be restored or replaced through additional discovery, Judge Rodriguez stated that “Rule 37(e)(2) is not applicable because Plaintiff has failed to establish that Wal-Mart acted with the intent to deprive her of the video.”  But he did rule that “Plaintiff has established prejudice under Rule 37(e)(1)” and, noting that “Defendant has raised a contributory negligence defense in this case” (arguing that the danger of the pallet was open and obvious), ruled that “Defendant may not assert any comparative negligence defense in this case, including arguing that the danger was open and obvious.”

So, what do you think?  Should inadvertently disclosed privileged documents be considered in ruling on sanctions motions?  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.

Appellate Court Vacates Order Allowing Plaintiff’s Expert Access to Defendant’s ESI Prior to Privilege Determination: eDiscovery Case Law

In Crosmun v. Trustees of Fayetteville Technical Community College, No. COA18-1054 (N.C. Ct. App. Aug. 6, 2019), the Court of Appeals of North Carolina, holding that the trial court abused its discretion by compelling production through a protocol that provided the plaintiffs’ expert with direct access to potentially privileged information and precluded reasonable efforts by Defendants to avoid waiving any privilege, vacated the order and remand for further proceedings not inconsistent with its opinion.

Case Background

In this claim of retaliatory dismissals from the defendant’s community college in violation of the North Carolina Whistleblower Protection Act, the plaintiffs served discovery requests on the defendants, including for ESI located in the school’s computers and servers.  After expressing concerns that the defendants had destroyed responsive ESI and sending several letters, the plaintiffs filed a motion to compel requesting the trial court “[o]rder that the parties identify a computer forensics entity or individual who, at Defendants’ cost, will search the computer servers at FTCC to determine if Defendants have deleted emails and files pertaining to these discovery requests.”

From that motion to compel, the trial court ultimately entered a Protocol Order compelling discovery and entered an order, as requested by the plaintiffs, providing for a forensic examination of the defendants’ computer files by a computer forensic expert retained by the plaintiffs.  Per the order, the plaintiffs’ forensic expert would conduct keyword searches for all responsive data and also keyword searches for potentially privileged data. Documents retrieved in responsive searches that were not identified as privileged were ordered to be delivered directly to the plaintiffs, without the defendants being able to review them for privilege. The defendants appealed the order, contending that it amounted to an involuntary waiver of their attorney-client privilege and the work-product doctrine.

Appellate Court Ruling

The appellate court ruling, written by Judge Lucy Inman, started out by noting: “Seeking justice often involves enduring tedium” and also noted that “ESI has become so pervasive that the volume of ESI involved in most cases dwarfs the volume of any paper records”.  No kidding.  Despite that, the court noted that “North Carolina authority regarding eDiscovery is bare bones.”

Relying on decisions from other courts around the country as well as Sedona Conference principles, the appellate court ruled: “In short, the Protocol Order provides Plaintiffs’ agent direct access to privileged information, which disclosure immediately violates Defendants’ privileges. It furthers that violation by directing that agent, having attempted to screen some privileged documents out through the use of search terms, to produce potentially responsive documents without providing Defendants an opportunity to examine them for privilege. If, following that continued violation, Plaintiffs—their agent notwithstanding—receive privileged documents, Defendants must attempt to clawback that information, reducing their privilege to a post-disclosure attempt at unringing the eDiscovery bell. Such compelled disclosure of privileged information is contrary to our law concerning both attorney-client privilege and work-product immunity…As a result, we hold the trial court misapprehended the law concerning attorney-client privilege and the work-product immunity (however understandably given its undeveloped state within the eDiscovery arena), vacate the Protocol Order, and remand for further proceedings.”

So, what do you think?  Should parties ever be granted access to ESI before the producing party can perform a privilege review?  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.

Court Rules That Privilege Assertion and Potential Fraud Don’t Mix: eDiscovery Case Law

See what I did there?  ;o)

In Gates Corp. v. CRP Indus., Inc., No. 16-cv-01145-KLM (D. Colo. May 21, 2019), Colorado Magistrate Judge Kristen L. Mix overruled the Defendant’s Objection to Report and Recommendation of Special Master on Gates Corporation’s Motion to Pierce Attorney/Client Privilege and proceeded with the Discovery Master’s recommendation, ordering the defendant to submit for in camera review readable and searchable versions of the documents identified as privileged by the defendant (along with an Excel spreadsheet of the privilege log) to the Special Master for review.

Case Background

This dispute involved whether actions by the defendant (alleged to be “a direct competitor of” the plaintiff) in response to the plaintiff’s inquiry about its former employee’s theft of proprietary information can serve as the basis for invocation of the crime-fraud exception to the attorney-client privilege.  After plaintiff’s counsel notified the defendant of the potential theft of proprietary information by plaintiff’s former and defendant’s then-current employee, Laura Bale (“Bale”), the company eventually commenced an “investigation”, by having a non-lawyer human resources executive perform a keyword search of David Hirschhorn’s (“Hirschhorn”) emails, Bale’s supervisor throughout her employment with the defendant.  That search “did not find any evidence that [Hirschhorn] had received any proprietary information from Bale.”

As noted by Judge Mix in her recount of the facts “it is now undisputed that this conclusion [that Hirschhorn did not “receive” any of Plaintiff’s proprietary information from Bale] was incorrect.”  The defendant acknowledged that Hirschhorn subsequently admitted to the FBI that he received and opened the file containing Plaintiff’s confidential information, and the defendant had made no argument that Hirschhorn lied to the FBI.  Bale subsequently testified under oath that Hirschhorn knew about her possession of the plaintiff’s proprietary database approximately six months after she started working for the defendant, long before the “investigation” began. Despite Bale’s compromised credibility, her testimony in this regard had been amply confirmed by other evidence.

In objecting to the Discovery Master’s report, the defendant contended:

  1. That because Plaintiff’s counsel’s letter about the alleged theft “implicated Bale alone, [Defendant] reasonably focused its investigation on Bale, who worked off of her own laptop and used a personal email address, instead of launching a company-wide investigation”;
  2. That Hirschhorn did not admit any knowledge of wrongdoing at the time of the investigation and that the company only learned several years later that he received and opened the file containing Plaintiff’s confidential information;
  3. That the Discovery Master erroneously recognized mere spoliation as a “crime” or “fraud” which triggers the exception; and
  4. That the Discovery Master took it upon himself to find a basis for application of the crime-fraud exception on grounds not asserted by Plaintiff.

Judge’s Ruling

With regard to the defendant’s contentions, Judge Mix responded as follows:

  1. Noting that Bale “was not a solitary or isolated employee” and that “her work contemplated and required frequent interactions with other company employees”, Judge Mix stated that “I cannot agree that so limiting the investigation was reasonable or prudent.”
  2. Judge Mix noted that “if Defendant were correct, corporate parties to litigation could avoid scrutiny of their attorney-client communications by simply contending that although some employees did bad things, the wrongdoers neither admitted it to select company representatives nor did those representatives otherwise find out about it, so the crime-fraud exception does not apply.” She indicated that “argument flies in the face of long-standing precedent holding that corporate agents’ acts are attributable to the corporate entity.”
  3. Judge Mix observed that “spoliation can occur as a result of mere negligence or intentional destruction of evidence, so to the extent that the Discovery Master concluded that intentional spoliation supports application of the crime-fraud exception, his conclusion is not inconsistent with the intent requirement of the doctrine.” She also stated that “the Court need not decide whether Plaintiff presented sufficient evidence of intentional spoliation to invoke the crime-fraud exception, as the evidence of fraudulent concealment discussed above is a sufficient basis to do so.”
  4. Agreeing with the plaintiff’s contention that it actually did raise the issues discussed in the Discovery Master’s Order, Judge Mix pointed out that “Defendant itself concluded, in responding to Plaintiff’s Motion [#88], that Plaintiff was ‘insinuat[ing] that [Defendant] engaged in spoliation of materials relevant to this action.’”

As a result, Judge Mix overruled the Defendant’s Objection to the Discovery Master’s recommendation, ordering the defendant to submit its identified privileged documents for in camera review.

So, what do you think?  Should the defendant have have been forced to turn over the documents it identified as privileged?  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.

Court Orders Plaintiff to Share in Discovery Costs of Non-Party: eDiscovery Case Law

In Lotus Indus., LLC v. Archer, No. 2:17-cv-13482 (E.D. Mich. May 24, 2019), Michigan Magistrate Judge Anthony P. Patti granted in part and denied in part without prejudice non-party City of Detroit Downtown Development Authority’s (DDA) motion for protective order in connection with the Court’s order granting in part and denying in part the plaintiff’s motion to compel documents requested by subpoena, ordering the plaintiff to pay some of DDA’s discovery costs, but not as much as DDA requested.

Case Background

In this civil RICO and First Amendment retaliation case associated with redevelopment of property in Detroit, the Plaintiff filed a motion to compel production of documents requested in his September 2018 subpoena to nonparty DDA in January 2019.  A hearing was held on the plaintiff’s motion on March 26, 2019, after which the Court entered an order granting in part and denying in part Plaintiff’s motion, ordering DDA to produce, by April 26, 2019, documents responsive to Request Nos. 4-6 of Plaintiff’s subpoena for the November 19, 2016 to present time period, and to produce a privilege log for any documents withheld on the basis of privilege.

On April 19, 2019, DDA filed the instant motion for protective order, seeking an extension of time to produce responsive documents and requesting that the plaintiff pay DDA its share of the expenses of production before being obligated to begin to comply with the Court’s order, contending that the volume of potentially responsive documents was substantially larger than anticipated (48.5 GB of data) and would impose a significant expense on DDA to produce and require far more time to complete than allowed by the Court’s order.  DDA initially anticipated the total expense of production at $127,653.00, which included $21,875.00 in costs to upload the data and approximately $105,778.00 in attorney’s fees in connection with a privilege review. DDA requested Plaintiff pay the $21,875 in costs and 25% of the anticipated attorney’s fees ($26,444.50); in response, the plaintiff opposed that motion and questioned why the costs were so high.

At the May 8, 2019 hearing on the motion, the parties agreed on new search terms to further refine the number of responsive documents and the Court scheduled a status conference for May 23, 2019 to discuss the results of that search. On May 22, 2019, DDA submitted a supplemental brief explaining that the revised search yielded 8.5 GB of data that must be reviewed for privilege, at a cost of $2,125.00 to upload the data to counsel’s eDiscovery platform and anticipated costs of $44,705.00 in attorneys’ fees to conduct a privilege review, so it sought an order for the plaintiff to pay DDA $2,125.00 in costs and $11,176.25 in attorneys’ fees (still 25% of the total attorneys’ fees anticipated).

Judge’s Ruling

Judge Patti found that “DDA has sufficiently established that it will be forced to incur $2,125.00 in fixed costs to upload the 8.5 GB of data to its third-party e-discovery platform in order to review it for production, and that it anticipates incurring $44,705 in attorneys’ fees to conduct a privilege review, prepare a privilege log and prepare the non-privileged documents for production.”

He also noted that “DDA has demonstrated that it has no interest in the outcome of this litigation, as it is not a party and Plaintiff’s prior case against it was dismissed as a sanction for Plaintiff’s ‘repeated misrepresentations’ and ‘failures to comply with discovery orders — despite warnings and the imposition of less severe sanctions…While DDA may more readily bear the expense of production than Plaintiff, that factor alone does not dictate that Plaintiff is relieved of the obligation to pay for some of the expense of production, particularly where this litigation has no particularized public importance and considering the ‘unusual circumstances’ in this case, including that Plaintiff’s prior lawsuit against the DDA was dismissed as a sanction, and he and his clients have been at the receiving end of multiple sanction awards in related and unrelated litigation, significant portions of which this particular plaintiff and his counsel have apparently failed to pay…In addition, the subpoena was directed in part at the general counsel for DDA, and Plaintiff should have anticipated that production of documents in response would require a robust privilege review prior to production, especially given the litigation history between Plaintiff and the DDA.”

As a result, DDA’s motion was granted in part and denied in part without prejudice and Judge Patti ordered that:

  1. “Plaintiff must pay to DDA the sum of $4,360.25, which constitutes the $2,125.00 in costs to upload the 8.5 GB of data to DDA’s counsel’s e-discovery platform, and $2,235.25 in attorneys’ fees (5% of the anticipated attorneys’ fees to conduct a privilege review, prepare a privilege log and prepare the non-privileged documents for production).
  2. Plaintiff must deliver the $4,360.25 check payable to City of Detroit Downtown Development Authority (although the check can be delivered to counsel for DDA) on or before 5:00 p.m. Monday, June 3, 2019. Plaintiff shall also promptly certify such payment to the Court, and include a copy of the check.
  3. DDA need not continue further efforts to produce documents until it is paid in full. Once paid, DDA shall have 45 days from that date to produce responsive documents, and a privilege log for any documents withheld on the basis of privilege.”

So, what do you think?  Do you agree with the distribution of costs?  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.

Court Upholds Decision Not to Compel Plaintiff to Produce Unredacted Narrative of Events: eDiscovery Case Law

In Kratz v. Scott Hotel Group, LLC, No. 4:17-cv-00212-TWP-DML (S.D. Ind. Apr. 29, 2019), Indiana District Judge Tanya Walton Pratt, stating “[t]o invoke schoolyard vernacular: no do-overs”, denied the defendant’s objections to the Magistrate Judge’s decision not to compel the plaintiff to produce versions of an unredacted narrative of events associated with his hotel stays and interactions with hotel staff.

Case Background

In this class action lawsuit against the defendant alleging violation of the Indiana Consumer Protection Act, breach of contract and misrepresentation, the plaintiff revealed during a deposition that he had created a narrative of events in a Microsoft Word file to document his hotel stays and interactions with hotel staff.  Later, the plaintiff produced a redacted version of the narrative in PDF format and claimed work product privilege over the redactions, to which the defendant objected.

In October 2018, the parties convened for a discovery conference with the Magistrate Judge, who, under the impression that only one (redacted) version of the narrative existed, denied the defendant’s request to require the plaintiff to produce the unredacted version of the narrative.  The defendant filed an Objection to the ruling in November 2018, pursuant to Federal Rule of Civil Procedure 72(a).  However, the Magistrate Judge subsequently discovered that the plaintiff’s counsel misrepresented the facts at that discovery conference and that the plaintiff had sent the earliest, native (unredacted) version of the document to his attorney in September 2017.  The plaintiff had sent subsequent versions of the document, updated in preparation of litigation, to his attorney in April 2018 and June 2018.  Upon learning this information, the Magistrate Judge amended her ruling and ordered the plaintiff to produce the September 2017 version of the narrative in its native Word document format, but not the last two versions because they were determined to be made in anticipation of litigation.  The defendant maintained its objections to the Magistrate Judge’s ruling as to the second and third iterations of the narrative.

Judge’s Ruling

Judge Pratt noted that “Scott Hotel presents numerous arguments that were not made at the October 29, 2018 conference before the Magistrate Judge”, but also noted that the defendant’s objection briefing “treats the Court’s review of the Magistrate Judge’s decision as an opportunity for de novo presentation and review.”  With regard to those arguments, Judge Pratt concluded that the presentation of arguments not raised before a magistrate judge is “clearly inappropriate” and stated that she “will disregard newly submitted arguments regarding waiver of work product protection and attorney-client privilege. ‘To invoke schoolyard vernacular: no do-overs.’”

As for work product protection for the modifications performed to the document in anticipation of litigation, Judge Pratt stated that “[t]he mere fact that Kratzer recorded his thoughts in anticipation of litigation as modifications and additions to a pre-existing document instead of in a new document does not exclude those thoughts from work product protection.”  Given “Scott Hotel’s ability to depose Kratzer and access most of the content of the later versions of the narrative renders its [substantial need and undue hardship] arguments unpersuasive”, Judge Pratt denied the defendant’s Objection to the Magistrate Judge’s decision.

So, what do you think?  Do you think that modification of a document previously ruled as not privileged could be considered privileged if it was done in anticipation of litigation?  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.

Court Grants Motion to Compel Production of Telephone Records from Individual Plaintiff: eDiscovery Case Law

In Siemers v. BNSF Railway Co., No. 8:17-cv-360 (D. Neb. Apr. 8, 2019), Nebraska Magistrate Judge Susan M. Bazis finding that the plaintiff’s telephone records are discoverable pursuant to Fed. R. Civ. P. 26, that they are not subject to a privilege claim just because plaintiff’s counsel’s telephone number may appear in the records and that privacy issues are minimal to non-existent (since the at-issue records do not contain the substance of communications), ordered the plaintiff to produce his telephone records within one week of the order.

Case Background

In this case regarding the plaintiff’s suit against his former employer for alleged violations of the Federal Employers Liability Act (“FELA”), the defendant requested production of the plaintiff’s cellular telephone records from November 1, 2016 (the day before the claimed injury incident that is the basis of Plaintiff’s lawsuit) to present. After the plaintiff refused to produce any records in response to the defendant’s request, a discovery dispute conference was held in October 2018, with the Court finding that the plaintiff’s communications with coworkers or others from the defendant and telephone records evidencing the same were relevant and discoverable, and ordered the parties to further confer regarding production of these items.

The plaintiff then issued a subpoena to his cellular telephone provider and received a listing of incoming and outgoing telephone calls and text messages, but not the substance of any communications. Nonetheless, the plaintiff refused to produce to the defendant the telephone records produced to him in response to his subpoena.

In the final pretrial conference, the defendant argued that the records were discoverable because whether and how often plaintiff has communicated with BNSF coworkers or management since his alleged injury could have credibility considerations, that identifying the fact that a communication occurred between the plaintiff and his attorney was not privileged or, alternatively, that it was not unduly burdensome to redact those references and that no privacy interest was implicated in the telephone records because the records do not contain the substance of any communications.  The plaintiff argued that the defendant’s request was “overbroad on its face and therefore not reasonably calculated to lead to the discovery of relevant information” and also contended that the discovery sought by the defendant was “unreasonably cumulative or duplicative and could have been obtained from other sources that is more convenient, less burdensome, or less expensive.”

Judge’s Ruling

Considering the respective arguments, Judge Bazis ruled as follows:

  1. “Plaintiff’s telephone records from November 1, 2016 to present and any other records received by Plaintiff in response to his subpoena to his cellular telephone provider are discoverable pursuant to Fed. R. Civ. P. 26. BNSF is entitled to discover whether and how often Plaintiff has communicated with coworkers or BNSF management since his alleged injury.
  2. The fact that Plaintiff’s counsel’s telephone number may appear in the records does not render them subject to a privilege claim. Plaintiff may redact references to communications between Plaintiff and Plaintiff’s counsel, which the Court finds is not overly burdensome.
  3. Privacy considerations of Plaintiff or third parties not involved in this litigation are minimal to non-existent since the at-issue records do not contain the substance of communications.”

As a result, Judge Bazis ordered (in all caps, no less) the plaintiff “to produce to BNSF all records received in response to Plaintiff’s subpoena to his cellular telephone carrier” within one week of the order, noting that he could “redact references to communications between Plaintiff’s counsel and Plaintiff (but is not required to do so to maintain privilege claims regarding the substance of the communications).”

So, what do you think?  Was that appropriate or was the defendant’s request overbroad?  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.