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Even with Bad Communication and Unfulfilled Discovery Obligations, Sanctions Still Not Granted: eDiscovery Case Law

eDiscovery Case Week concludes today!  We had a great webcast on Wednesday where Tom O’Connor and I discussed key eDiscovery case law for the first half of 2018 – 22 cases in all!  Check it out! – Doug

In US v SuperValu, No. 11-3290 (C.D. Ill. July 12, 2018), Illinois District Judge Richard Mills ruled against sanctions requested by the defendants at this time, even though the relators didn’t “live up to their discovery obligations.”

Case Background

The relators filed this qui tam action alleging the defendants defrauded government healthcare programs by fraudulently reporting inflated Usual and Customary (U&C) pharmacy prices for prescriptions filled for government healthcare program beneficiaries.

In their first amended complaint, the relators claimed they each spoke individually with employees of certain of the defendants’ pharmacies. The defendants alleged the relators relied heavily on these alleged conversations to support their fraud allegation, and that the relators shredded contemporaneous notes of “supposed conversations” with the defendants’ employees. It was also charged that the relators intentionally deleted computer files concerning these conversations and threw away the computer on which the files were stored, thereby precluding examination of the relevant metadata.

On December 20, 2016, the defendants served interrogatories seeking details of the alleged conversations, and the relators identified 19 alleged conversations between employees of the parties. The defendants also requested production which sought, among other things, documents relating to certain phone calls. The relators produced no documents in response to the requests.

Subsequently, the relators’ counsel produced five documents which one of the relators’ employees confirmed were the notes that he made on his home computer concerning phone calls he allegedly made to various defendant pharmacies. He then testified he had no independent recollection of the substance of these calls. The computer on which he prepared the notes “quit working,” and he threw it away after the filing of this lawsuit, which “deleted everything [all documents he prepared on the computer related to this lawsuit] after [he] sent them to counsel.” A number of other notes were also prepared on the computer, and some of the handwritten notes or reports that were the basis for this information were shredded or destroyed.

The relators claimed the defendants made no effort to investigate the matters it addresses in its motion and did not speak to counsel for the relators before filing the motion. They also disputed the defendants’ allegations that “Notes not produced to date have been lost forever, and all metadata reflecting the timing of the creation and editing of even the summaries has likewise been lost and is non-recoverable.”

The relators claimed their counsel has electronic copies of all the notes discussed by defendants in its motion, with metadata, and some copies of Schutte’s handwritten notes. However, the defendants did not ask for these materials. The relators contended that even if certain handwritten notes were destroyed, all relevant information was preserved.

The relators also alleged that a number of these allegedly spoliated documents are protected by the work product doctrine and were not subject to discovery.  The defendants filed a motion for limited sanctions for spoliation of evidence.

Judge’s Ruling

After taking into consideration FRCP 26 and 37, as well as previous case law, Judge Mills ruled:

“In some respects, it appears that the parties are having communication problems. If the documents are simply paper or electronic records of statements made by employees of the defendants, the Court fails to see how such documents could possibly constitute the relators’ work product. Accordingly, those documents should have been turned over to the Defendants upon request, pursuant to Rule 26(b)(3)(C)(ii).”

Judge Mills continued: “The defendants will have an opportunity to question the relators about the alleged conversations, the circumstances under which any notes were prepared, and any other relevant matters, including the destruction of the computer and any metadata that may have been lost. If it comes to light that a party acted inappropriately or in bad faith, the Court will consider imposing sanctions at that time…Although it appears that the Relators may not have lived up to their obligations under the discovery rules, the Court does not believe that the sanctions requested by the Defendants are appropriate at this time.”

So, what do you think? Is this ruling within the correct interpretation of spoliation sanctions under Rule 37? 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.

Court Rules Non-Party Subpoenaed ESI Not Subject to 100-Mile Boundary: eDiscovery Case Week

eDiscovery Case Week continues!  We had a great webcast yesterday where Tom O’Connor and I discussed key eDiscovery case law for the first half of 2018 – 22 cases in all!  Now, on to covering cases for the second half of 2018!  :o)

In Curtis v. Progressive N. Ins. Co., No. CIV-17-1076-C (W.D. Okla. June 13, 2018), Oklahoma District Judge Robin J. Cauthron, noting that the non-party “subpoena at issue does not require the travel or attendance of any witnesses and Plaintiff is requesting the production of electronic documents”, found that “there is no violation of the 100-mile limitation for electronic documents pertaining to Rule 54” and granted the plaintiff’s Motion to Compel Compliance with Subpoena directed to the non-party.

Case Background

In this case where the plaintiff claimed breach of contract, bad faith, unjust enrichment, and fraud against the defendant insurance company over the valuation of the plaintiff’s vehicles after two automobile collisions, the plaintiff served non-party Mitchell International, Inc. with a subpoena duces tecum in March 2018.  The plaintiff requested documents from Mitchell pertaining to “the correspondence, purchase, and analysis of the [computer valuation system]” Mitchell utilized to create valuations of total loss vehicles for the defendant and served Mitchell through its Oklahoma registered agent.  Within two weeks, Mitchell served written objections to Plaintiff’s subpoena.  Subsequent discussion failed to reach a resolution and the plaintiff filed a Motion to Compel Compliance with Subpoena.

The plaintiff argued that her subpoena was valid and enforceable because “a subpoena that commands a person to travel beyond the 100-mile boundary must be quashed however, a Court retains discretion to command compliance with a subpoena for documents which requires production beyond the 100-mile limitation.”  The plaintiff also noted that “[t]he contractual nature of the relationship between Progressive and Mitchell, as well [as] the cost-savings incentives marketed to Progressive by Mitchell are relevant to the claims in this lawsuit . . . concerning the method and manner in which the system operates in creating values for Progressive’s Oklahoma insureds is the fundamental basis of Plaintiff’s claims.”  Mitchell argued that the Court lacked jurisdiction to hear the plaintiff’s motion because Mitchell maintains its headquarters and principal place of business in San Diego and the subpoena demands compliance in Shawnee, Oklahoma.

Judge’s Ruling

Noting that “Federal district courts enjoy broad discretion over discovery measures”, Judge Cauthron, in granting the plaintiff’s motion, stated:

“Here, Plaintiff states—and Mitchell does not dispute—that the information requested can be produced electronically. Mitchell has an Oklahoma registered agent and Progressive Northern Insurance Company continues to use the valuation system licensed and provided by Mitchell in Oklahoma to conduct business. As a result, Mitchell regularly transacts business in Oklahoma. The subpoena at issue does not require the travel or attendance of any witnesses and Plaintiff is requesting the production of electronic documents. This Court finds that there is no violation of the 100-mile limitation for electronic documents pertaining to Rule 54.”

Two weeks later, Judge Cauthron also denied the defendant’s motion to quash the subpoena.

So, what do you think?  Should there even be a 100-mile limitation for discovery?  Please let us know if 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 Declines to Compel Defendant to Produce Direct Messages Between its Employees: eDiscovery Case Week

eDiscovery Case Week is here!  We got a head start on it by catching up on a case on Friday, leading up to our webcast on Wednesday where Tom O’Connor and I will be talking about key eDiscovery case law for the first half of 2018.  With that in mind, let’s discuss a key case regarding custody and control by Twitter of the direct messages of its employees.

In Shenwick v. Twitter, Inc., No. 16-cv-05314-JST (SK) (N.D. Cal. Feb. 7, 2018), California Magistrate Judge Sallie Kim ruled on several discovery disputes between the parties, including denial of a request by the plaintiffs to order the defendants to produce protected direct messages of individual custodians who are not parties.

In this securities class action on behalf of all persons who purchased or otherwise acquired common stock of the defendant, there were six issues in dispute.  One key dispute involved a request from the plaintiffs that the defendants search Twitter private direct messages that each custodian sent and received.  The defendants had agreed to provide direct messages for individual defendants Anthony Noto and Richard Costolo only (who had consented to their production). The defendants argued that the Stored Communications Act prevents the disclosure of direct messages from anyone other than a named individual defendant.

In agreeing with the defendants, Judge Kim stated:

“’The Stored Communications Act prevents ‘providers’ of communication services from divulging private communications to certain entities and individuals… Courts have held that the Stored Communications Act prevents a court from enforcing a subpoena issued to a third party ECS or RCS for the protected information.’ Crispin v. Christina (sic) Audigier, Inc., 717 F.Supp.2d 965, 971-72 (C.D. Cal. 2010)… Plaintiffs are correct that a court can compel a party to produce information within the party’s custody and control, but they confuse the identity of the party with the identity of the individual custodians. Here, for purposes of analysis, the Court will treat Twitter as if it is separate from the individual custodians who have direct messages stored with Twitter. The individual custodians other than Costolo and Noto are not parties. In other words, because Defendants claim, without opposition, that Twitter did not require its employees to use direct messages for communications, the Court must evaluate Twitter separately from the individual custodians who have privacy rights protected by the Stored Communications Act. The two named individual defendants, Costolo and Noto, are allowing discovery of their direct messages, as Plaintiffs can issue to them requests for information pursuant to Rule 34 and obtain their direct messages… Plaintiffs merge Twitter and its individual custodians’ rights. They are not the same. If Plaintiffs issued a third party subpoena to a company—not Twitter—for direct messages that the individual custodians sent and received, there is no question that the Court could not enforce such a subpoena. Under the same reasoning, the Court cannot compel Twitter, a party in this litigation, to produce protected direct messages of individual custodians who are not parties simply because Twitter is also the provider of the direct messaging service.”

Ruling on other disputes, Judge Kim: 1) ordered the defendants to search the files of an additional custodian, Jack Dorsey, co-founder of Twitter and former CEO; 2) denying without prejudice the plaintiff’s request that the defendants produce documents from Falquora, Twitter’s internal message board; 3) ordered the defendants to produce documents in unredacted form that were covered by a stipulated Protective Order; 4) denying the plaintiff’s motion to compel documents containing terms “DAU” (daily active users) and “MAU” (monthly active users) WITHOUT PREJUDICE as potentially overbroad (allowing the plaintiffs to re-file the motion with a more specific, targeted approach if they are concerned the other requests for production are not yielding relevant documentation); 5) that the search “engag*” be conducted for documents with that term within 10 words of 20 terms proposed by defendants and up to 10 additional terms proposed by plaintiffs; and 6) denying WITHOUT PREJUDICE the plaintiff’s motion to compel the defendants to produce documents concerning Defendants’ efforts to “maintain, search for and preserve all documents” (which the defendants deemed to be privileged).

Despite the six issues being ruled on, Judge Kim stated “it is clear that the parties have worked hard in meeting and conferring to narrow the issues of dispute. The Court commends the parties for doing so and for presenting the remaining issues for dispute in a clear and cogent matter. The Court is confident that the parties will continue to meet and confer in good faith, narrow the areas of their dispute, and only present to the Court matters which they cannot resolve and which are significant.”

So, what do you think?  Should the direct messages of Twitter employees have been ruled out of the custody and control of Twitter?  Please let us know if 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 Rules Search Terms Overly Broad Under Rule 26 in Convertible Top Patent Case: eDiscovery Case Law

In Webastro Thermo & Comfort v. BesTop, Inc., No.16-13456 (E.D. Mich. June 29, 2018), Michigan Magistrate Judge R. Steven Whalen ruled in favor of the plaintiff’s protective order, requesting the narrowing of search terms for ESI production in this patent dispute.

Case Background

The plaintiff manufactures an automobile roof and also a roof-opening mechanism for which it has a patent and claimed that the defendant manufactures a roof-opening mechanism under the name “Sunrider for Hartop” that infringes on their patent. The defendant contended that its Sunrider product is based on prior art, invalidating the plaintiff’s patent.

The defendant requested emails during discovery, but the plaintiff claimed the total emails generated and received by these companies was voluminous and many would encompass matters having nothing to do with this lawsuit. The ESI order from the court contemplated that search terms should be narrowed to exclude extraneous and irrelevant information and that production requests should be limited to eight key custodians and ten search times on each side.

However, the plaintiff contended that the defendant’s proposed search terms were “overbroad, indiscriminate, and contrary to BesTop’s obligations under the Court’s ESI Order,” and despite pre-motion communication between counsel, the parties were at an impasse, leading to the plaintiff seeking a protective order “sparing Webasto from unduly burdensome email discovery, until such time as BesTop propounds reasonable email search requests containing appropriate narrowing criteria.”  The plaintiff also requested an order requiring the defendant to cover costs associated with the plaintiff’s production.

Judge’s Ruling

Judge Whalen stated in his discussion, “The majority of BesTop’s search terms are overly broad, and in some cases violate the ESI Order on its face. For example, the terms ‘throwback’ and ‘swap top’ refer to Webasto’s product names, which are specifically excluded under…the ESI Order. The overbreadth of other terms is obvious, especially in relation to a company that manufactures and sells convertible tops: ‘top,’ ‘convertible,’ ‘fabric,’ ‘fold,’ ‘sale or sales. Using ‘dwg’ as an alternate designation for ‘drawing’ (which is itself a rather broad term) would call into play files with common file extension .dwg.”

Judge Whalen continued: “Apart from the obviously impermissible breadth of BesTop’s search terms, their overbreadth is borne out by Mr. Carnevale’s [plaintiff’s attorney] declarations, which detail a return of multiple gigabytes of ESI potentially comprising tens of millions of pages of documents, based on only a partial production. In addition, the search of just the first 100 records produced using BesTop’s search terms revealed that none were related to the issues in this lawsuit.  Contrary to BesTop’s contention that Webasto’s claim of prejudice is conclusory, I find that Webasto has sufficiently ‘articulate[d] specific facts showing clearly defined and serious injury resulting from the discovery sought….’”

Counsel for the parties was ordered to meet and confer in order to show a good-faith effort in focusing and narrowing the defendant’s search terms, so that the plaintiff’s production of ESI would remain relevant within the meaning of Rule 26 and exclude ESI that would have no relationship to this case.  The defendant was also ordered to submit an amended discovery request with the narrowed search terms within 14 days, after which, a new deadline for production of the ESI would be determined.

Because the opportunity was granted to the defendant to reformulate its discovery request to conform to the ESI Order, the plaintiff’s request for cost-shifting was denied, but Judge Whalen indicated the court “may reconsider” if the defendant “does not reasonably narrow its requests”.

So, what do you think? Is this ruling within the correct interpretation of proportionality under FRCP 26? Please share any comments you might have or if you’d like to know more about a particular topic.

P.S. – The case style refers to the plaintiff as “Webastro”, while the body of the order correctly refers to the plaintiff as “Webasto”.

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 Vacates Order Requiring Defendant to Review and Produce as Much as Three Million Emails: eDiscovery Case Law

As we approach “case week” in a couple of weeks and our webcast on Key eDiscovery Case Law Review for the First Half of 2018 on Wednesday, July 25th, we’re catching up on a handful of cases from earlier this year.  Enjoy!

In Nece v. Quicken Loans, Inc., No. 8:16-cv-2605-T-23CPT. (M.D. Fla. Feb. 27, 2018), Florida District Judge Steven D. Merryday sustained the defendant’s objection to an order requiring the defendant to produce all documentation related to do-not-call requests received between September 2012 and June 2013 and also required the plaintiff to move for class certification by April 13.

Case Background

In this case involving a dozen calls to an individual who had placed her number on the national do-not-call registry but had inquired about a mortgage from the defendant, the plaintiff sued the defendant for calling with an artificial or prerecorded voice, for calling a number on the national do-not-call registry (a violation of 47 C.F.R. § 64.1200(c)), and for calling the plaintiff before “institut[ing]” several procedures required by a Telephone Consumer Protection Act (TCPA) regulation.  The court eventually granted summary judgment on the first two claims, but denied summary judgment on the Section 64.1200(c) claim because of “two predominant disputes of material fact.”

The plaintiff had originally all documentation related to requests received by the defendant requesting that it not contact (or revoking consent to contact) consumers, even though the TCPA contains a four-year limitation for documentation requested.  The defendant objected for several reasons, including the burden and the relevance of the plaintiff’s requests, stating that the requests require collecting and reviewing at least three million e-mails, a review that might cost millions of dollars.  Nonetheless, on May 5, 2017, the magistrate judge partially granted the plaintiff’s motion to compel, calling the plaintiff’s requests “overly broad and disproportionate to Plaintiff’s needs at this stage of the proceedings”, but also “not wholly irrelevant to Plaintiff’s allegations” and ordered the documentation to be provided for the period between September 2012 and June 2013.  The magistrate judge also denied the defendant’s quick motion for clarification or reconsideration of the May 5 order, even after the defendant indicated that compliance would require dozens of employees to spend months on document review and would cost at least hundreds of thousands of dollars.  The defendant objected to both orders, arguing that it had “already produced 12,000-plus pages of records relating to 450,000 phone numbers and individuals,” and that complying with the order “might require 15,000 hours of a Quicken employee’s or of outside counsel’s time.”

Judge’s Ruling

In ruling on the defendant’s objection, Judge Merryday stated: “For too long, Nece has avoided confronting the reality that individualized issues often predominate in putative TCPA class actions involving a dispute about consent or the revocation of consent…The resolution of Nece’s claim will require the jury to parse Nece’s words and to determine when Nece revoked consent to a call. As the February 14 order explains, several ‘unique’ or idiosyncratic facts (including the phrasing of Nece’s comments and Nece’s repeated submissions) contribute to the determination whether Quicken stopped calling Nece within a reasonable time. In this circumstance, Nece’s class-discovery requests impose on Quicken a burden disproportional to the needs of this action. Because the May 5 order clearly erred by requiring Quicken to respond to the requests, Quicken’s objection (Doc. 77) is SUSTAINED, and the May 5 order is VACATED to the extent the May 5 order conflicts with this order.”

As for the plaintiff’s request to extend the deadline for class certification, Judge Merryday stated: “Class-certification discovery remained available to Nece for eleven months. In that time, Nece ‘propounded [sixty-one] requests for production, [ten] interrogatories, and [twenty-five] requests for admission.’…Quicken provided more than ten-thousand records about the putative class.”  However, Judge Merryday allowed the plaintiff to move for class certification by April 13, 2018 (earlier than the plaintiff requested date of August 16, 2018), even though the local rule deadline to do so was December 7, 2016.

So, what do you think?  Should the magistrate judge’s order have been vacated?  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.

Court Sanctions Plaintiff After Jury Verdict for Failing to Disclose Third Party Communications: eDiscovery Case Law

In Singer Oil Co., LLC v. Newfield Exploration Mid-Continent, Inc., No. CIV-16-768-M (W.D. Okla. June 5, 2018), Oklahoma District Judge Vicki Miles-LaGrange ruled that the plaintiff did violate Federal rules by not disclosing the communications its counsel had with the third parties referenced in plaintiff’s counsel’s time records, but found that the defendant’s proposed sanction was an “extremely harsh sanction not warranted by the circumstances involved” and limited the plaintiff sanction to require the plaintiff to pay the attorneys’ fees the defendant incurred in filing its motion for sanctions and its reply.

Case Background

In November 2016, the plaintiff served its responses to the defendant’s discovery requests, representin that it had fully and truthfully answered the interrogatories and had produced or would produce all responsive documents to the requests for production.  The plaintiff subsequently confirmed that all responsive documents had been produced, did not claim privileged status for any unproduced documents and did not supplement its response to interrogatories or requests for production in the case.

After this case was tried to a jury in November 2017, the plaintiff filed its Amended Motion to Recover Attorney’s Fees. During review of the time records associated with that motion, the defendant became aware for the first time that throughout the course of this litigation, the plaintiff’s attorney frequently corresponded by e-mail with numerous third parties regarding several of the issues that were disputed in this litigation and the two wells at issue in the case, with the defendant asserting that at least two of the communications took place before plaintiff served its discovery responses.  In its response, plaintiff asserted that it did not violate the Court’s orders, did not violate the spirit of the Court’s orders, did not violate the letter or spirit of the discovery code and contended that the majority of the communications would fall under the work product doctrine.

Judge’s Ruling

After considering Federal Rules 26(g)(1),(3), 26(e)(1)(A) and 37(c)(1), Judge Miles-LaGrange found that “while plaintiff may not have intentionally violated the above-referenced discovery rules, plaintiff did violate those rules by not disclosing the communications its counsel had with the third parties referenced in plaintiff’s counsel’s time records. Request for Production No. 5 specifically requests any and all correspondence between plaintiff (including plaintiff’s counsel) and any other person or entity with respect to Newfield, the Smith Well, the Edgar Well, or the subject of this lawsuit; the Court finds the communications at issue would fall within this request for production. Additionally, while these communications likely would be protected by the work product doctrine, plaintiff did not assert such and did not provide Newfield with a privilege log such that Newfield could contest any claim of privilege. However, the Court finds that based upon plaintiff’s description of the communications at issue, any lack of production only had a very minimal, if any, impact on this case.”

As for an appropriate sanction against the plaintiff, Judge Miles-LaGrange stated: “In light of the amount of attorneys’ fees requested by plaintiff and the amount of costs taxed, the Court finds Newfield’s proposed sanction is an extremely harsh sanction not warranted by the circumstances involved. Having reviewed the parties’ submissions, the Court finds an appropriate sanction would be to require plaintiff to pay the attorneys’ fees Newfield incurred in filing its motion for sanctions and its reply.”

So, what do you think?  Do you think that was a sufficient sanction for failing to produce relevant ESI?  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’s Ruling on Scope Under Rule 26 Brings a Mixed Bag of Motions Granted and Denied: eDiscovery Case Law

In TMJ Grp., LLC v. IMCMV Holdings, No. 17-4677 (E.D. La. April 6, 2018), Louisiana Magistrate Judge Janis van Meerveld ruled on Motions to Compel by both parties, both of which were granted in part and denied in part.

Case Background

The plaintiff, TMJ, alleged that it had been fraudulently induced to invest in two Margaritaville restaurants (one in the Mall of America and one in New Orleans) by the defendants. An interesting aspect of the discovery motions is TMJ’s allegation that it sought and obtained financing for the investment at issue in this lawsuit from FNBC Bank and that IMCMV altered financial figures in the financial statements so that FNBC would approve the financing after initially rejecting it.

IMCMV’s Motion to Compel

The first item at issue was the defendant’s motion to compel the redacted communications between FNBC and the plaintiff, which were ordered for in-camera review, as well as several depositions given after the discovery deadline. As a result, issues arose around scope of discovery under FRCP Rule 26.

The plaintiff submitted much of their document production right before or on the discovery deadline (around 3,700 pages) and as a result, the defendant said it didn’t have all the relevant documents available for the depositions where some FNBC documents were discussed, and because it did not have sufficient time to review those documents prior to the deposition, they argue that they “had an incomplete picture of the relationship, agreements, and documents, exchanged between FNBC and TMJ.”

The defendant also sought to compel the deposition of one or more former FNBC representatives, pointing out that the FNBC representatives are listed on both parties’ witness lists. However, because they did not have all of the FNBC documents prior to the discovery deadline, they initially decided not to depose FNBC. The late production of documents caused them to revisit this decision.

The plaintiff opposed the deposition of any FNBC representatives, claiming the request is untimely, because they identified FNBC personnel in its initial disclosures and earlier document production and that the defendant had long had sufficient information to determine whether to take such depositions. The plaintiff insisted it would be prejudiced if the depositions were allowed, given that trial was imminent.

TMJ’s Motion to Compel

The plaintiff’s motion to compel sought certain financial documents, including tax returns and schedules, financial statements, and accounting ledgers for all of the defendant’s other Margaritaville restaurants, insisting the documents were relevant, because the defendant’s financial forecasts were based on comparable IMCMV owned restaurants, which influenced their decision to invest.

The defendant claimed these financials were irrelevant and disproportional as the other restaurants are not a part of this litigation. The defendant explained that this data was already produced in Excel files which was considered by their expert.

The plaintiff also demanded responses to its interrogatories regarding the reasoning behind changes to financial statements made while the investments at issue here were being negotiated, alleging that the defendant altered them to make the investment appear more attractive to the plaintiff and FNBC. The plaintiff makes note that their identical responses to the three requests aren’t “boilerplate,” but that they meaningfully explain how changes were made by stating that “in preparing financial projections, [IMCMV] takes into account planned seating capacity, estimated revenue per seat per year, the financial results of other Margaritaville-themed restaurants, the location, market competitors, and the labor market.”

The plaintiff also sought text messages between the parties, pointing out that they frequently corresponded in this manner. The defendant responded that their former chief development officer left the company, and they had not been able to access his iPhone. The defendant requested passcodes from the former CDO, but those didn’t work. Another individual who also was no longer working for IMCMV, had custody of the phone in the interim, but he had reset the phone and added a new passcode. The defendant then contacted Apple and its carrier, AT&T, who both indicated that the passcode could not be bypassed without resetting the phone.

Judge’s Ruling

Regarding IMCMV’s motions, there was no real dispute that a deposition of an FNBC representative is within the scope of discovery. Judge van Meerveld ruled that “a second deposition of Motwani [an FNBC Bank representative] is appropriate here in light of the documents produced after his deposition. The scope of the deposition shall be limited to the documents produced after Motwani’s deposition, and any other documents or issues required to give context to, provide clarification of, to contrast with, or explain discrepancies with the documents produced after Motwani’s deposition. This could, therefore, permit reference to earlier produced documents.” Accordingly, an extension of the discovery deadline was provided, and the defendant “may proceed with a deposition of one FNBC representative and, if necessary due to that representative’s inability to provide complete answers, a second FNBC representative.”

In regard to the plaintiff’s motions, Judge van Meerwald agreed that “the financial documents for the other Margaritaville restaurants are not relevant or proportional to the needs of this case. TMJ already has the key performance indicators extracted from those financials for the purpose of creating the business cases and pro formas for the proposed investment. The relevance of the financial statements of the other restaurants is too tangential to justify the burden of production.” As to these documents, the motion to compel was denied.

As to the plaintiff’s demand that certain financial documents be produced in Excel rather than PDF format, the court found the burden to the defendant “too great to justify IMCMV undertaking that endeavor here. However, the Court has ordered the parties to work together to provide the documents in their native format. If this is unsuccessful, the parties may contact the chambers of the undersigned to set up a telephone conference to discuss.”

So, what do you think? Did the judge interpret the idea of scope under Rule 26 correctly?  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 Football Players Sanctioned for Failure to Produce: eDiscovery Case Law

In Michael E. Davis, et al. v. Electronic Arts, Inc., No. 10-cv-03328-RS, (N.D. Cal., April 3, 2018), California Magistrate Judge Donna M. Ryu ruled that the plaintiff’s failure to fully comply with the discovery requests by the defendant were sanctionable under FRCP Rule 37, which states, “Such sanctions may include ordering a party to pay the reasonable expenses, including attorneys’ fees, caused by its failure to comply with the order or rule.”

Case Background

Three former NFL players claimed that Electronic Arts (EA) used their likenesses in the Madden NFL videogame series without authorization. In July 2017, EA moved to compel plaintiffs to provide further responses to discovery, and the court ordered the parties to meet and confer regarding the disputes set forth in the letters and to file joint letters regarding any remaining disputes. After a hearing, the Court granted in part EA’s motions to compel further responses to requests for the production of documents (“RFPs”), interrogatories, and requests for admission (“RFA”), setting a deadline for response on September 28, 2017.

A day after the deadline, the plaintiffs responded by saying they had, “engaged in a reasonable and diligent search” but found no responsive documents to certain requests. The plaintiffs also said the requested privilege log was rendered unusable due to a computer error even though both the plaintiffs and the plaintiffs’ attorney had stated in an earlier hearing that they had regular communications via email regarding the case.

EA requested sanctions of $45,000 against the plaintiffs under Rule 37. However, the billing records EA provided to the court did not segregate the fees by task or category, which makes it difficult to evaluate the reasonableness of the time expended, or to calculate precise sums that should be allowed or disallowed. But even with the problems with EA’s billing records, it was clear that EA incurred substantial attorneys’ fees in attempting to obtain plaintiffs’ compliance and seeking court intervention.

Judge’s Ruling

Given the inconsistencies between counsel and plaintiffs’ statements about communications regarding this litigation, Judge Ryu expressed concern about the adequacy of the plaintiffs’ search for responsive documents and ordered them to “search thoroughly all . . . email, going all the way back, for communications between [Plaintiffs] and other people who are not lawyers about this case.”

Judge Ryu also ruled that the plaintiffs’ response to the defendant’s discovery request was deficient and found monetary sanctions appropriate in this case, in addition to the evidentiary sanctions, as their conduct forced EA and the court to continue to expend significant resources to address plaintiffs’ failure to meet its discovery obligations and provide basic discovery.

“A sanction of $25,000 is justified in these circumstances and acknowledges that this amount represents a significant discount from the actual attorneys’ fees incurred by EA as a result of plaintiffs’ counsel’s actions. The court finds that $25,000, coupled with the evidentiary consequences set forth above, are an appropriate sanction here.”

So, what do you think?  Was the ruling correct or were sanctions unwarranted 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.

Court Compels Discovery in Response to Party That Was Using Outdated Rule 26 Standard: eDiscovery Case Law

In Cen Com, Inc. v. Numerex Corp., No. C17-0560 RSM, (W.D. Wash., April 11, 2018), Washington Chief District Judge Ricardo S. Martinez ruled that the Plaintiff’s refusal to comply with the Defendant’s request for discovery using specific search terms was not justified, and that the Plaintiff must “fully comply with the subpoenas that Defendants served upon them and shall produce all responsive documents in a format that is accessible/readable by Defendants.”

Case Background

A request for discovery was issued by the Defendant for the founder and owner of the Plaintiff, along with two current employees of the Plaintiff, all of whom were former employees of the Defendant. The plaintiffs objected to the subpoenas “on the basis that it was an improper attempt to obtain discovery from a party employee,” and “that the subpoena is overbroad, unduly burdensome, and that the costs outweigh the potential for acquiring relevant information.”

The Defendant also filed a motion to compel the Plaintiff to use specific electronic search terms (“attorney w/2 general” and “consent w/2 decree”) related to a 2012 consent decree that Plaintiff entered into with Washington State’s Attorney General. The Plaintiff objected to the search terms regarding the consent decree as irrelevant.

As part of a counterclaim, the Plaintiff requested sanctions against the Defendant, claiming they withheld certain documents because of a pending motion for protective order, which was later denied by the Court. However, the Plaintiff continued to seek sanctions for the time period that it alleges Defendants were not in compliance with the stipulated ESI Order.

Judge’s Ruling

In Judge Martinez’s ruling, all of the Defendants’ motions were granted. Regarding the scope and relevance of the discovery request, it was noted that the Plaintiff was basing their refusal to comply on the former FRCP Rule 26 standard and not in line with the current version of Rule 26, which states discovery must be relevant to the claim and proportional to the needs of the case, while taking into account the parties’ access to relevant information and available resources, the importance of the discovery in resolving the matter, and whether the burden or expense of discovery outweighs its likely benefit.

Additionally, under Rule 37, “The party who resists discovery has the burden to show that discovery should not be allowed, and has the burden of clarifying, explaining, and supporting its objections.” Here the Plaintiff failed to explain specifically why the documents are not relevant, or that a search of the documents would be unduly burdensome, and instead only made the blanket statement that the documents sought “do not concern this matter and could not lead to relevant information.”

In regard to the Plaintiff’s counterclaim, Judge Martinez denied the motion for sanctions, citing Rule 37(d)(2): “A failure described in Rule 37(d)(1)(A) is not excused on the ground that the discovery sought was objectionable, unless the party failing to act has a pending motion for a protective order under Rule 26(c).”

So, what do you think?  Was the ruling correct or were the Defendant’s requests “overly burdensome”?  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.

Defendant Sanctioned for “Deliberately” Altering a Skype Communication: eDiscovery Case Law

In GoPro, Inc. v. 360Heros, Inc., No. 16-cv-01944-SI (N.D. Cal. March 30, 2018), California District Judge Susan Illston denied the plaintiff’s motion for summary judgment and denied the defendant’s motion in limine to exclude the testimony of the plaintiff’s forensic analysis expert, but granted (in part) the plaintiff’s motion for partial terminating sanctions against the defendant for forging evidence in two Skype conversations, opting for an adverse inference instruction sanction and reimbursement of expenses related to forensic analysis and testimony instead of the terminating sanctions sought.

But first, this week’s eDiscovery Tech Tip of the Week is about Saving Searches.  Documentation is a key component of a sound discovery process. The ability to automatically save the searches that you have performed not only saves time in retrieving those documents later, but it also helps document the process for performing searches should you have to defend your approach in court.  Saving searches is just one component of an overall program for documenting your approach in eDiscovery.

To see an example of how Saving Searches is conducted using our CloudNine platform, click here (requires BrightTalk account, which is free).

Case Background

In this case regarding federal and state trademark infringement and unfair competition, the defendant (in November 2016) produced to the plaintiff two emails (in a single PDF format) containing the transcript of two 2014 Skype conversations between representatives of the plaintiff and defendant where . In the Skype conversations as produced by the defendant, the plaintiff referenced the term “abyss” twice (the parties had a dispute over plaintiff’s ABYSS mark).

At his deposition, the defendant representative testified under oath that the PDF document was a true and correct copy of the Skype conversation, stating that he had copied and pasted the Skype conversation into an email, and then sent it to himself. He claimed the only alteration he made to the document was to highlight the two lines of conversation containing the word “abyss”. In response to the plaintiff’s request for the Skype files in their native form, the defendant representative claimed the original Skype conversation was no longer available to him.

As part of its investigation into the defendant’s claims, the plaintiff accessed equipment containing its end of the Skype conversation and its Skype records did not contain the two highlighted lines referencing “abyss.” To confirm their findings, GoPro retained a forensic expert (Derek Duarte of Blackstone Discovery) to conduct a forensic analysis, which determined that it’s representative’s imaged Skype database did not contain the two highlighted lines referencing “abyss”, leading to the motion for partial terminating sanctions.  In response, the defendant claimed that the expert’s results were unverifiable and unreliable because he could not verify that the data on the hard drive contained the same data as it did in 2014.

Judge’s Ruling

In ruling on the motion, Judge Illston ruled, as follows:

“The Court is not persuaded by defendant’s explanation of the suspect document, and concludes on the present record that defendant deliberately altered it in an effort to strengthen its legal position with respect the ABYSS mark. GoPro argues it has been prejudiced because as part of its investigation into 360Heros’ prior use defense, GoPro incurred various expenditures, including having to locate and hire an expert to forensically investigate the Skype chat. Sanctions less drastic than terminating sanctions are available to remedy any potential prejudice to GoPro. Accordingly, the Court finds that sanctions are warranted, and that the appropriate sanctions in this case are twofold: (1) an adverse inference instruction at trial, related to Mr. Kintner’s conduct; and (2) reimbursement to GoPro of the costs incurred in retaining Mr. Duarte, including expenses paid to Mr. Duarte and the cost of attorney time required to locate and retain Mr. Duarte. Plaintiff shall submit its statement of costs so incurred in a sworn document to be filed no later than April 13, 2018.”

Judge Illston also denied the plaintiff’s motion for summary judgment, finding that “defendant raises material issues of fact as to numerous of the factors”.  She also denied the defendant’s motion in limine to exclude the testimony of the plaintiff’s forensic analysis expert, but Judge Illston found the expert to be “qualified to testify on these matters” and that his proposed testimony was “directly relevant to the authenticity of the disputed Skype conversation.”

So, what do you think?  Did the judge go far enough with her sanctions?  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.