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Samsung and Quinn Emanuel Ordered to Pay Over $2 Million for “Patentgate” Disclosure – eDiscovery Case Law

Remember the “patentgate” disclosure last year (by Samsung and their outside counsel firm of Quinn Emanuel Urquhart & Sullivan LLP) of confidential agreements that Apple had with Nokia?  Did you think they were going to avoid having to pay for that disclosure?  The answer is no.

In a June 20 ruling by California Magistrate Judge Paul S. Grewal, he began by noting “With the present quiet on the docket, it is easy to forget the long tumult of this case that once reigned. The ceremonial courtroom has cleared. The fire drills of motions on shortened time have ceased. All that remains for now, at least for the undersigned, is the relatively mundane issue of what makes for reasonable fees.

The fees at issue arise from this court’s order awarding sanctions to Apple and Nokia. The sanctions followed the court’s finding that Samsung and Quinn Emanuel were responsible for the unauthorized distribution of Apple and Nokia confidential information. Samsung and QE object to certain of the fees Apple and Nokia now claim, which means the court must wade into the billing entries and make various calls. So, here goes.”

The summary of events related to the inadvertent disclosure by Quinn Emanuel are described here and the details of the sanction applied to Quinn Emanuel are described here.

The question in this order turned to the fees and costs requested by Apple and Nokia.  Section C of the order was titled “With Limited Exceptions, Apple And Nokia’s Requests Have Been Sufficiently Supported To Sustain The Requested Award” and Judge Grewal stated that “in the over four hundred pages of correspondence and billing records submitted for review, the court has identified only 19 records that it finds troubling” (those were entries where partners and senior associates block billed ten or more hours on “drafting,” “preparing” “revising” or paying “attention to” various briefs and were listed in detail, along with the reduced amount after a 20% reduction penalty).

As for the rest of the entries, Judge Grewal commented that “[t]he court notes and appreciates that both Apple and Nokia have applied a series of discounts to their requests already” and ordered that, aside from the noted exceptions “the court finds that the remaining costs and fees requested by Apple and Nokia are reasonable and shall be awarded.  No later than 30 days from this order, Samsung and QE are to pay Nokia a total of $1,145,027.95 and Apple a total of $893,825.77 in fees and costs.” (emphasis added)

So, what do you think? Were those amounts awarded excessive?  Or did Samsung and Quinn Emanual get off lightly?  Please share any comments you might have or if you’d like to know more about a particular topic.

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

Apple Wins Another $119.6 Million from Samsung, But It’s Only 6% of What They Requested – eDiscovery Case Law

Those of you who have been waiting for significant news to report from the Apple v. Samsung litigation, your wait is over!

As reported last week in The Recorder (Jury Awards Apple $119.6 Million in Mixed Verdict), a California Federal jury ordered Samsung on Friday to pay Apple $119.6 million for infringing three of Apple’s iPhone patents.  However, the award was a fraction of the nearly $2.2 billion Apple was requesting.

According to the federal jury of four women and four men, nine Samsung mobile devices infringed on Apple’s “quick links” patent and three devices were found to have infringed on Apple’s “slide-to-unlock” patent.  The jury also calculated Samsung’s damages on Apple’s autocorrect patent, but ruled that Samsung products did not infringe on two other Apple patents.

The jury also awarded $158,400 to Samsung for its counterclaims of patent infringement against Apple.

In August of 2012, Apple was awarded over a billion dollar verdict, but U.S. District Judge Lucy Koh later reduced those damages to a measly $599 million and ordered a retrial on 13 of Samsung’s products, saying the earlier jury’s math on those gadgets didn’t add up.  Then, last November, a jury ruled that Samsung owed Apple another $290.5 million for selling mobile devices that infringed five iPhone and iPad patents, bringing the total awarded for infringing on Apple products back up to almost $930 million.  Now, the total awarded is back over a billion.

From the never ending case that brought us an adverse inference sanction and “patentgate”, resulting in another sanction for Samsung’s outside counsel (Quinn Emanuel Urquhart & Sullivan LLP) for their inadvertent disclosure of Apple license information, what can happen next?  Stay tuned.

So, what do you think? Will this case ever end? Please share any comments you might have or if you’d like to know more about a particular topic.

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

Apple Can’t Mention Inadvertent Disclosure in Samsung Case – eDiscovery Case Law

Back in January, Quinn Emanuel Urquhart & Sullivan LLP was sanctioned for their inadvertent disclosure in the Apple vs Samsung litigation (commonly referred to as “patentgate”).  California Magistrate Judge Paul S. Grewal handed down an order on motions for sanctions against Quinn Emanuel (in essence) requiring the firm to “reimburse Apple, Nokia, and their counsel for any and all costs and fees incurred in litigating this motion and the discovery associated with it”.  Many felt that Samsung and Quinn Emanuel got off lightly.  Now, Apple can’t even mention the inadvertent disclosure in the upcoming Samsung trial.

According to a story on Law360 (subscription required), U.S. District Court Judge Lucy Koh barred Apple last Wednesday from presenting evidence that Quinn Emanuel leaked confidential information regarding an Apple license agreement, saying that such testimony could prejudice jurors.  “The court believes any evidence [on the leak] could be irrelevant and a waste of time. It would confuse the jury and is outweighed by prejudice,” Judge Koh said. “Apple says it doesn’t intend to bring in any information of that violation unless Samsung opens the door.”

Judge Koh also came close to barring Apple from introducing evidence on the total revenues Samsung earned selling its products that are alleged to infringe on Apple patents. In their damages retrial in November where Apple was awarded $290.5 million (bringing the total awarded for infringing on Apple products to almost $930 million), Samsung’s revenues became a sticking point.  Although Samsung argued last week that Apple shouldn’t be allowed to bring up any of Samsung’s revenues or profits from the accused products, Judge Koh said she wouldn’t go that far. Apple’s damages expert uses many of those numbers in his calculations, and it would be “weird” to limit his testimony on income he considered in those calculations, she said.

For our previous coverage of the case, click here, here, here, here, here and here.

So, what do you think? Is this the case that never ends?  Will there be much more to come?  Do you wish you had some of the fees from this case?  Please share any comments you might have or if you’d like to know more about a particular topic.

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

Quinn Emanuel Sanctioned for Inadvertent Disclosure, Samsung Escapes Sanction – eDiscovery Case Law

California Magistrate Judge Paul S. Grewal has now handed down an order on motions for sanctions against Samsung and the Quinn Emanuel law firm in the never-ending Apple v. Samsung litigation for the inadvertent disclosure of confidential agreements that Apple had with Nokia, Ericsson, Sharp and Philips – now widely referred to as “patentgate”.

After discovery on the matter, Judge Grewal ruled as follows:

“Quinn Emanuel shall reimburse Apple, Nokia, and their counsel for any and all costs and fees incurred in litigating this motion and the discovery associated with it, as required by Rule 37 in the absence of ‘substantial justification’ or other showing of ‘harmlessness,’ neither of which the court finds here. That expense, in addition to the public findings of wrongdoing, is, in the court’s opinion, sufficient both to remedy Apple and Nokia’s harm and to discourage similar conduct in the future.”

Basically, Judge Grewal determined that “what began as a chorus of loud and certain accusations had died down to aggressive suppositions and inferences, and without anything more, Quinn Emanuel and Samsung cannot reasonably be subject to more punitive sanctions”.

Apple and Nokia had proposed a number of “creative” sanctions that Quinn and Samsung ranging from an injunction against Samsung in the case to a ten-year ban from representing any party adverse to Nokia – suggestions that Judge Grewal referred to as “ludicrously overbroad”.

For a link to the order, click here.

For our previous coverage of the case, click here, here, here, here and here.

So, what do you think?  Did Samsung and Quinn Emanuel get off lightly?  Or was the sanction appropriate?   Please share any comments you might have or if you’d like to know more about a particular topic.

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

2013 eDiscovery Year in Review: eDiscovery Case Law, Part 3

As we noted on Thursday and Friday, eDiscoveryDaily published 78 posts related to eDiscovery case decisions and activities over the past year, covering 62 unique cases!  Friday, we looked back at cases related to production format disputes, search disputes and technology assisted review.  Today, let’s take a look back at cases related to proportionality and the first half of the cases related to sanctions (yes, there were that many).

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

PROPORTIONALITY / COOPERATION

There were certainly at least a handful of cases where proportionality of eDiscovery and cooperation between parties was at issue, including the most viewed post in the history of this blog.  Here are three such cases:

Is a Blended Document Review Rate of $466 Per Hour Excessive?  Remember when we raised the question as to whether it is time to ditch the per hour model for document review? One of the cases we highlighted for perceived overbilling was ruled upon last month. In the case In re Citigroup Inc. Securities Litigation, New York District Judge Sidney H. Stein rejected as unreasonable the plaintiffs’ lead counsel’s proffered blended rate of more than $400 for contract attorneys—more than the blended rate charged for associate attorneys—most of whom were tasked with routine document review work.

Court Rejects Defendants’ Claim of Undue Burden in ERISA Case.  In the case In re Coventry Healthcare, Inc.: ERISA Litigation, Maryland Magistrate Judge Jillyn K. Schulze rejected the defendants’ claim of undue burden where they failed to suggest alternatives to using the plaintiffs’ search terms and where they could enter a clawback order to eliminate the cost of reviewing the data for responsiveness and privilege.

Court Agrees with Defendant that Preserving 5 Terabytes of Data is Enough.  In United States ex rel. King v. Solvay, S.A., Texas District Judge Gray Miller granted the defendant’s request for a protective order where the plaintiffs only offered generalized, unsupported claims to support their request to extend and expand discovery.

SANCTIONS

Yes, once again, the topic with the largest number of case law decisions related to eDiscovery is those decisions related to sanctions.  Of the 62 cases we covered this past year, over 40% of them (26 total cases) related to sanctions, either due to spoliation issues or inadequate or untimely productions, many of which were granted, but some were denied.  Here are the first 13 cases:

Company Should Have Preserved Personal eMails, But No Sanctions (Yet).  In Puerto Rico Telephone Co. v. San Juan Cable LLC, Puerto Rico Magistrate Judge Bruce J. McGiverin found that “plaintiff has proffered sufficient evidence to establish that [the defendant] OneLink failed to preserve relevant emails within its control”, but denied the plaintiff’s request for sanctions at this time because of the “absence of bad faith” on the defendant’s part and the plaintiff’s failure to demonstrate prejudice.

The Ubiquitous Apple Samsung Case and “Patentgate”.  When something gets the “gate” suffix added to it, that’s not a good thing. It’s hard to believe that a case can get more intense than when a billion dollar verdict is awarded (later reduced to a measly $599 million, then increased back up to $930 million), but the Apple v. Samsung case seems to only be getting more intense, due to the disclosure of confidential agreements that Apple had with Nokia, Ericsson, Sharp and Philips – now widely referred to as “patentgate”.

Duty to Preserve Triggered When Litigation is “Imminent”, Not “Reasonably Foreseeable”.  In the case In re Pradaxa (Dabigatran Etexilate) Products Liability Litigation, Chief District Judge David R. Herndon ruled that at least in the Seventh Circuit, the duty to preserve is triggered not when litigation is “reasonably foreseeable” but when “a litigant knew or should have known that litigation was imminent.”

Leaving Your Hard Drives in a Rental House is Negligent, Court Rules.  In Net-Com Services, Inc. v. Eupen Cable USA, Inc., the plaintiff’s destruction of evidence was negligent where its principal failed to take steps to preserve evidence he had stored in a home he rented to nonaffiliated lessees.

Despite Missing and Scrambled Hard Drives, Court Denies Plaintiff’s Request for Sanctions. In Anderson v. Sullivan, a Pennsylvania court found “that no sanctions are warranted” despite the disappearance of one hard drive, “scrambling” of another hard drive and failure to produce several e-mails because the evidence was not relevant to the underlying claims and because there was no showing the defendants intentionally destroyed evidence.

Court Awards Sanctions, But Declines to Order Defendants to Retain an eDiscovery Vendor – Yet.  In Logtale, Ltd. v. IKOR, Inc., California Magistrate Judge Donna M. Ryu granted the plaintiff’s motion to compel responses to discovery and awarded partial attorney’s fees as a result of defendants’ conduct. The judge did not grant the plaintiff’s request to order Defendants to retain an eDiscovery vendor to conduct a thorough and adequate search for responsive electronic documents, but did note that the court would do so “if there are continuing problems with their document productions”.

Imagine if the Zubulake Case Turned Out Like This.  You’ve got an employee suing her ex-employer for discrimination, hostile work environment and being forced to resign. During discovery, it was determined that a key email was deleted due to the employer’s routine auto-delete policy, so the plaintiff filed a motion for sanctions. Sound familiar? Yep. Was her motion granted? Nope.

Scheindlin Reverses Magistrate Judge Ruling, Orders Sanction for Spoliation of Data.  If you’re hoping to get away with failing to preserve data in eDiscovery, you might want to think again if your case appears in the docket for the Southern District of New York with Judge Shira Scheindlin presiding.

Permissive Adverse Inference Instruction Upheld on Appeal.  In Mali v. Federal Insurance Co., the Second Circuit explained the distinctions between two types of adverse inference instructions: a sanction for misconduct versus an explanatory instruction that details the jury’s fact-finding abilities. Because the lower court opted to give a permissive adverse inference instruction, which is not a punishment, the court did not err by not requiring the defendant to show that the plaintiffs acted with a culpable state of mind.

Default Judgment Sanction Upheld on Appeal.  In Stooksbury v. Ross, the Sixth Circuit upheld the entry of default judgment as a sanction against defendants that repeatedly failed to comply with discovery obligations, including producing a “document dump” of tens of thousands of pages of nonresponsive information that prejudiced the plaintiffs.

Spoliation Sanctions Can Apply to Audio Files Too.  In Hart v. Dillon Cos., Colorado Magistrate Judge David L. West granted the plaintiff’s Motion for Sanctions for Spoliation of Evidence for failing to preserve a tape recorded interview with the plaintiff and set a hearing and oral argument as to what sanctions should be imposed for October.

Printed Copies of Documents Not Enough, Spoliation Sanctions Upheld for Discarding Computer.  On May 30, the Appellate Division of the Supreme Court of New York, First Department upheld a spoliation sanction against a plaintiff that failed to preserve electronic files and discarded his computer containing those files.

Appellate Court Denies Sanctions for Routine Deletion of Text Messages.  In PTSI, Inc. v. Haley, the appellate court denied a motion for spoliation sanctions where the defendants routinely deleted text messages and other data to “clean up” their personal electronic devices: the volume of messages and limited amount of phone storage made it difficult to retain all data and still use the phone for messaging.

Tune in tomorrow for the remaining thirteen sanctions cases in 2013!

So, what do you think?  Did you miss any of these?  Please share any comments you might have or if you’d like to know more about a particular topic.

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

Samsung Again Owes Apple Almost $1 Billion, Sanction Deadline Nears – eDiscovery Case Law

The news continues to get worse for Samsung Electronics Co. in its colossal legal battle with Apple Inc…

A California federal jury ruled on November 21 that Samsung owes Apple $290.5 million for selling mobile devices that infringed five iPhone and iPad patents, bringing the total awarded for infringing on Apple products to almost $930 million.

The jury deliberated over the course of three days before reaching its decision and awarding the amount, which was less than the $380 million Apple sought from Samsung, but far more than Samsung’s efforts to cap damages at $53 million.

In August of last year, Apple was awarded over a billion dollar verdict, but U.S. District Judge Lucy Koh later reduced those damages to a measly $599 million and ordered a retrial on 13 of Samsung’s products, saying the earlier jury’s math on those gadgets didn’t add up.

And, that may not be the worst of it for Samsung.  Due to the disclosure of confidential agreements that Apple had with Nokia, Ericsson, Sharp and Philips – now widely referred to as “patentgate” – Samsung and its outside counsel Quinn Emanuel Urquhart & Sullivan LLP are facing sanctions for that disclosure.

According to a declaration from Nokia’s Chief Intellectual Property Officer, Paul Melin, on June 4, in a meeting between Samsung and Nokia licensing executives, Dr. Seungho Ahn informed Nokia that the terms of the Apple-Nokia license were known to him. Specifically, according to Mr. Melin, Dr. Ahn stated that Apple had produced the Apple-Nokia license in its litigation with Samsung, and that Samsung’s outside counsel had provided his team with the terms of the Apple-Nokia license. Mr. Melin recounts that to prove to Nokia that he knew the confidential terms of the Apple-Nokia license, Dr. Ahn recited the terms of the license, and even went so far as to tell Nokia that “all information leaks.”

Partner John Quinn of Quinn Emanuel acknowledged the inadvertent disclosure, which was apparently due to an associate at the firm failing to obscure a footnote and two paragraphs while performing a digital redaction of a 150-page report which was posted on an FTP site that was accessible by Samsung personnel.

As a result, California Magistrate Judge Paul S. Grewal ordered an “in camera” review of documents that Samsung claimed as privileged which Apple doubted that they were legitimately withheld from its lawyers.  Then, on November 8 after the review was conducted, Judge Grewal ordered Samsung and Quinn Emanuel to show cause why they should not be sanctioned, stating that “it appears…that sanctions against Samsung and its attorneys are warranted”.  However, he gave Samsung one last chance to defend its actions ordering Samsung to file a brief by December 2 (today) to explain why it should not be sanctioned, while also allowing Apple and Nokia to file a brief to propose appropriate sanctions, with a hearing on the matter set for next Monday, December 9.

So, what do you think?  Can it get any worse for Samsung?   Please share any comments you might have or if you’d like to know more about a particular topic.

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

The Ubiquitous Apple Samsung Case and “Patentgate” – eDiscovery Case Law

When something gets the “gate” suffix added to it, that’s not a good thing.

It’s hard to believe that a case can get more intense than when a billion dollar verdict is awarded (later reduced to a measly $599 million), but the Apple v. Samsung case seems to only be getting more intense, due to the disclosure of confidential agreements that Apple had with Nokia, Ericsson, Sharp and Philips – now widely referred to as “patentgate”.

Here is a summary of events as they are described in California Magistrate Judge Paul S. Grewal’s Order from October 2 regarding Apple’s motion for sanctions (which Nokia joined):

“During the massive fact discovery in this case between August 2011 and March 2012, Apple produced copies of a number of its patent license agreements, including a June 2011 license between Apple and Nokia. Apple marked the Apple-Nokia license as “Highly Confidential —Attorney Eyes’ Only” as permitted by the court’s protective order. Apple also produced and marked as “Highly Confidential —Attorney Eyes’ Only” similar patent license agreements it has reached with Ericsson, Sharp, and Philips.”

“As fact discovery transitioned to expert discovery, on March 24, 2012, Samsung’s outside counsel sent Samsung a draft expert report by Dr. David J. Teece. Dr. Teece’s report concerned damages to be awarded for Apple’s alleged infringement of Samsung’s asserted declared-essential patents. Because it addressed highly confidential, attorneys’ eyes only information, the report should have been fully redacted of that information before it was sent. However, intentionally or inadvertently, it was not. The report as distributed included key terms of each of the four Apple license agreements.”

“Samsung’s outside counsel [Quinn Emanuel Urquhart & Sullivan LLP] posted the report on an FTP site that was accessible by Samsung personnel. An email providing instructions to access the FTP site was addressed to the regular client distribution list used by counsel to provide Samsung personnel updates regarding this case. The information was then sent, over several different occasions, to over fifty Samsung employees, including high-ranking licensing executives. Specifically, on at least four occasions between March 24, 2012 and December 21, 2012, Samsung’s outside counsel emailed a copy of some version of the report to Samsung employees, as well as various counsel representing Samsung in courts and jurisdictions outside the United States.”

“At this point, things get murky. According to a declaration from Nokia’s Chief Intellectual Property Officer, Paul Melin, on June 4, 2013, in a meeting between Samsung and Nokia licensing executives, Dr. Seungho Ahn informed Nokia that the terms of the Apple-Nokia license were known to him. Specifically, according to Mr. Melin, Dr. Ahn stated that Apple had produced the Apple-Nokia license in its litigation with Samsung, and that Samsung’s outside counsel had provided his team with the terms of the Apple-Nokia license. Mr. Melin recounts that to prove to Nokia that he knew the confidential terms of the Apple-Nokia license, Dr. Ahn recited the terms of the license, and even went so far as to tell Nokia that “all information leaks.” Mr. Melin also reports that Dr. Ahn and Samsung then proceeded to use his knowledge of the terms of the Apple-Nokia license to gain an unfair advantage in their negotiations with Nokia, by asserting that the Apple-Nokia terms should dictate terms of a Samsung-Nokia license.”

Over the next few weeks, Samsung appealed the order to District Judge Lucy Koh, who was even more critical, finding the disclosures “improper” and Samsung’s lack of cooperation “inexcusable”.  A couple weeks later, Samsung provided sworn declarations, including one by Dr. Ahn that strongly contradicted Nokia’s representation of the June meeting. At a follow up hearing, Judge Grewal said he was not yet convinced that sanctions were warranted, ordering an “in camera” review of documents that Samsung claimed as privileged which Apple doubted that they were legitimately withheld from its lawyers.

As for Quinn Emanuel, who is also facing potential sanctions, partner John Quinn acknowledged the inadvertent disclosure, which was apparently due to an associate at the firm failing to obscure a footnote and two paragraphs while performing a digital redaction of the 150-page report and announced the creation of a new document retention policy to provide a “second pair of eyes” and avoid similar errors in the future (as reported by IT-Lex)

This past Friday, Judge Grewal ordered Samsung and Quinn Emanuel to show cause why they should not be sanctioned, stating “Having finally crawled out from under the boxes, it appears to the undersigned that if anything was breached, it was this court’s protective order, and that sanctions against Samsung and its attorneys are warranted”.  However, he gave Samsung one last chance to defend its actions ordering Samsung to file a brief by December 2 to explain why it should not be sanctioned, while also allowing Apple and Nokia to file a brief to propose appropriate sanctions, with a hearing on the matter set for December 9.

It will be interesting to see what transpires from here.  There have been at least 31 court filings so far this year in this case, so it looks like they’re just getting warmed up.

So, what do you think?  Are Quinn Emanuel and Samsung in serious trouble?  Please share any comments you might have or if you’d like to know more about a particular topic.

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

Avoiding the Redaction “Epic Fail” – eDiscovery Best Practices

On the surface, it may seem easy enough to redact a document during eDiscovery review to obscure confidential or privileged information.  All you need to do is draw a black box over the affected text, right?  Not so fast, my friend.  There’s a lot more to consider in order to ensure that you don’t inadvertently produce information that was intended to be redacted.  Here are a few redaction “epic fails” and how to avoid them.

Failure to “Burn” the Redaction into the Image

If the redaction isn’t “burned” into the image so that it cannot be removed, the redacted data can still be viewed (as these unfortunate folks found out).  Especially when your images are Adobe Acrobat PDF files, the most common mistake is to redact by obscuring the text by drawing a black box over the text or images you want redacted.  A simple “cut and paste” can remove the black box, revealing the redacted text.  Acrobat provides a redaction tool (for those editing the PDF there) to properly apply a redaction – it’s best to save the file to a new name after the redaction has been applied.

If you’re using a review application to manage the review, the application should ensure a “burned in” redaction for anything exported or printed, regardless of whether it lets you look at the redacted data within the application itself.  For example, CloudNine Discovery’s review application, OnDemand®, provides a tool to enable the reviewer to draw a gray box over the text to be redacted so that text can still be viewed within the application.  However, if the file is exported or printed, that box gets “burned” in as a black box to completely obscure the redacted text.

Failing to Update Corresponding Text Files to Remove Redacted Text

Even if the image is handled properly, you can still disclose redacted text if you don’t make sure that the corresponding text file, whether extracted from the native file or generated via Optical Character Recognition (OCR), isn’t updated to remove the redacted text.  If you don’t update the corresponding text files, you’re allowing redacted text to slip through the production “back door”.  This happens more often than you might think.

Producing Un-Redacted Native Files

If you’re producing native files, you’ve hopefully discussed with opposing counsel how to handle native files that require redaction.  Typically, the approach is to convert those to an image format and redact the image.  Sometimes the parties agree to “redact” the native files themselves and produce those.  If so, as is the case with Adobe PDF files, there’s a right way and wrong way to redact native files.  Changing the text to white or the background to match the text color is not the same as redacting the text.  All you have to do is to revert back to the original formatting or simply highlight the affected area to see the redacted text.  Instead, you’ll want to agree on a procedure where the text is deleted or replaced with an equal amount of meaningless content (e.g., all “X”s) to preserve text flow and pagination (make sure track changes is off before redacting).  You may even want to agree to copy the entire content of a redacted document to a new file (to remove residual document composition information that might remain).  To see what I “redacted” up above, highlight it with your cursor.  🙂

Failing to Redact Metadata

You may redact content on the document that you produce separately as metadata, via a load or data file.  Failing to check the produced metadata for redacted documents could enable redacted data to slip through.  So, don’t forget to check and remove any sensitive data here, as well.

Quality Control (QC) Check before Producing

Generally, when producing documents with redactions, you should have a checklist that ensures that image redactions are “burned” in, that redacted native files (if produced natively) are properly redacted, and that corresponding text files and metadata have been checked to ensure that redacted data has been removed from those as well.  Otherwise, your production of redacted materials can wind up as an “epic fail”.

So, what do you think?  How do you handle redactions within your productions?  Do you have a process to QC check redactions before producing?  Please share any comments you might have or if you’d like to know more about a particular topic.

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

eDiscovery Case Law: More Sanctions for Fry’s Electronics
 

In E.E.O.C. v Fry’s Electronics, Inc., No. C10-1562RSL, 2012 U.S. Dist. (W.D. Wash. July 3, 2012), Washington District Judge Robert S. Lasnik ordered several sanctions against the defendant in this sexual harassment case (including ordering the defendant to pay $100,000 in monetary sanctions and ordering that certain evidence be considered presumptively admissible at trial), but stopped short of entering a default judgment against the defendant.  This ruling came after having previously ordered sanctions against the defendant less than two months earlier.

Prior Sanctions

On May 10, Judge Lasnik granted in part plaintiffs' motion for sanctions in this case, finding that the defendant had spoliated evidence, including data and computer hard drives. In that ruling, Judge Lasnik believed that the prejudicial effect of the spoliation could be counteracted by “(a) instructing the jury that one of the justifications for firing [one of the plaintiffs] was pretextual and (b) allowing plaintiff considerable leeway in arguing what information might have been gleaned from the computer hard drives had they not been destroyed by defendant”. At the time, Judge Lasnik also indicated “some concern regarding the efficacy and thoroughness of defendant's searches” which led to more information being discovered after he ordered a second search.

Additional Spoliation and Misconduct

During a Rule 30(b)(6) deposition held on May 30, the plaintiffs learned for the first time that the accused individual had previously been accused of sexual harassment in 2001 and that an investigation had been conducted. According to Judge Lasnik, the defendant “intentionally withheld this information and the related documents from discovery by raising unfounded objections and ‘negotiating’ a narrowing of the discovery requests” and found the defendant's conduct to be “unfair, unwarranted, unprincipled, and unacceptable”.

Misconduct by the defendants noted by Judge Lasnik also included the redaction of responsive information, “[e]ven after defendant's objections to certain discovery requests were overruled”, as well as production of hundreds of pages of information with the “fallacious argument” that they were relevant to the claims.

Consideration of Default Judgment Sanction

Judge Lasnik noted that it is “once again left to determine whether to strike defendant's answer and enter default judgment against it”, but noted that dismissal is a “harsh sanction” and the following factors must be considered when determining “whether a dispositive sanction is appropriate under either its inherent powers or Rule 37(b): (1) the public's interest in the expeditious resolution of litigation; (2) the Court's need to manage its docket efficiently and effectively; (3) the risk of prejudice to the party seeking sanctions; (4) the public policy in favor of considering cases on the merits; and (5) the availability of less drastic sanctions.”  While finding that the first three factors supported a dispositive sanction, Judge Lasnik ruled against a dispositive sanction in factor 4, indicating that “[t]he public has an interest in a determination of those issues based on the facts, rather than by judicial fiat”.

Lesser Sanctions Ordered

Instead, Judge Lasnik ordered lesser sanctions, indicating that “Defendant's affirmative defenses related to (i) its efforts to prevent and correct harassment in the workplace, (ii) plaintiffs' failure to utilize protective and corrective opportunities provided by defendant, (iii) its good faith and/or privilege to act as it did in this case are STRICKEN.” He also stated that certain documents and testimony related to “other complaints or reports of sexual harassment” at the company were “presumptively admissible at trial”. He also ordered sanctions of $100,000 “to offset the excess costs caused by defendant’s discovery violations, to punish unacceptable behavior, and as a deterrent to future bad conduct” to be split evenly between the two individual plaintiffs, the EEOC and the Court Clerk.

So, what do you think?  Are you surprised that the defendant didn’t receive a default judgment sanction?  Please share any comments you might have or if you’d like to know more about a particular topic.

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

eDiscovery Cautionary Tales: Inadvertent Disclosure Leaves Naked Short Selling Practices Exposed
 

While traveling back from Los Angeles for LegalTech West Coast 2012 (LTWC) this week, I saw an interesting story on the Above the Law blog (with references to The Economist, DeepCapture and Rolling Stone) regarding a litigation blunder committed by a major law firm on behalf of a major client, inadvertently disclosing an unredacted version of a sensitive document.

The California office of Morgan Lewis handling high-profile litigation for Goldman Sachs accidentally released an unredacted version of a document that the firm and its clients have spent years trying to keep secret.   Overstock.com sued Goldman Sachs (as well as Merrill Lynch and also other banks now no longer involved in the case), claiming that the banks caused its stock to fall through the practice of “naked” short selling (which is selling stock you don’t have and didn’t borrow, creating an artificial supply of stock shares).  The suit was dismissed by a California judge, who ruled that not enough of the alleged wrongdoing happened in the state.  According to The Economist:

“That was how things stood until the end of last week, when the defendants’ lawyers sent their opposition to a plaintiffs’ motion to the other parties in the case. One of the exhibits attached to this, presumably inadvertently, was an unredacted version of an earlier filing by Overstock, opposing the defendants’ motion to seal papers. Within this exhibit is an intriguing six-page section, “Facts Defendants Improperly Seek to Seal” (pages 14-20 of this), containing excerpts of e-mails written by Goldman and Merrill employees.”

According to DeepCapture, the responsible lawyer is alleged to be Joseph Floren, a partner at Morgan Lewis.  Ironically, Goldman and its attorneys have spent a significant amount of time (which means significant money) to keep this information sealed only to have this “blunder” release it publicly.

Matt Taibbi of Rolling Stone provides a commentary regarding information contained in the filing (language warning!), as follows:

“Now, however, through the magic of this unredacted document, the public will be able to see for itself what the banks’ attitudes are not just toward the “mythical” practice of naked short selling (hint: they volubly confess to the activity, in writing), but toward regulations and laws in general.

“Fuck the compliance area – procedures, schmecedures,” chirps Peter Melz, former president of Merrill Lynch Professional Clearing Corp. (a.k.a. Merrill Pro), when a subordinate worries about the company failing to comply with the rules governing short sales.

We also find out here how Wall Street professionals manipulated public opinion by buying off and/or intimidating experts in their respective fields. In one email made public in this document, a lobbyist for SIFMA, the Securities Industry and Financial Markets Association, tells a Goldman executive how to engage an expert who otherwise would go work for “our more powerful enemies,” i.e. would work with Overstock on the company’s lawsuit.”

A copy of the unredacted filing is located here.  Needless to say, clear naming of files as to whether they are redacted or unredacted, along with a thorough quality check, could have prevented this mistake.  I’ll leave it up to you to decide whether the mistake represents a form of karma in exposing these corporate practices.  🙂

So, what do you think?  What procedures do you have in place for avoiding inadvertent disclosures?  Please share any comments you might have or if you’d like to know more about a particular topic.

eDiscovery Daily will take a break for Memorial Day weekend.  See you on Tuesday!

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