Saturday, December 27, 2008

2008-12-27 Affirming Aguilar, Court Calls for Competency and Collaboration

Case: Covad Communications Company, v. Revonet, Inc.
Citation: 06-cv-1892 (D.C.D.C. 2008)
Date: December 24, 2008
Topics: eDiscovery, Counsel Cooperation, Competency, Native Format Data, Reasonably Usable, Requester's Choice of Format; Cost Shifting


First, please note the changed format for case reporting. Where possible, I also include links to free access to decisions on-line. Any comments, critiques or suggestions are welcome.

This decision by Magistrate Judge John Facciola of the United States District Court for the District of Columbian, underscores the need for counsel to be competent in matters electronic. Discovery matters, to be precise. This decision also emphasizes the need for counsel to know what it is they request, and be able to articulate that request in such a manner that the Court can divine not only what is requested, but the form and format of production. Magistrate Judge Facciola first points out that the discovery dispute before the Court were served prior to the effective date of amended Fed. R. Civ. P. R 26, and then remarks that disputes like these were what the rules were amended to address.

The Court first notes that the parties never discussed ESI form and format of production:

"This controversy predates that provision, and underscores its importance.See Aquilar v. Immigration and Customs Enforcement Div. of the U.S. Dep't of Homeland Sec., No. 07-CV-8224, 2008 WL 5062700, at *8-9 (S.D.N.Y. Nov. 21,2008) (emphasizing the need for cooperation between counsel in defining the form of production) (citing The Sedona Conference Cooperation Proclamation (2008), available at

Issues relating to counsel competency (of both parties) never stray far from the Court's analysis:

"It does not appear that Covad and Revonet ever discussed what form this (or any other) production should take. Instead the parties seem to be making assumptions based on each others' behavior: Covad expecting its documents in electronic form because Revonet hired a company to collect electronically stored information, and Revonet assuming that they should produce 35,000 pages of e-mails in hard copy because Covad produced its documents in that format."

Think drafting eDiscovery requests in the post-2006 Fed. R. Civ. P.amendment universe is a cut-and-paste operation? Think again.

"Thus, I am supposed to determine by examining ancient boilerplate - designed for discovery in a paper universe - such nice questions as whether an e-mail, existing in a computer's memory is a "tangible thing" and how e-mails are "maintained in the ordinary course of business." While I have considered a similar provision in depth once before, I see no need to repeat that metaphysical exercise here because it is a waste of judicial resources to continue to split hairs on an issue that should disappear when lawyers start abiding by their obligations under the amended Federal Rules and talk to each other about the form of production. I would much prefer to carry out my duties in accordance with Rule 1, which provides that the rules "should be construed and administered to secure the just, speedy, and inexpensive determination of every action and proceeding." Fed. R. Civ. P.1.

"How inarticulate might be an eDiscovery request?

"Therefore, though Covad's instruction is hopelessly imprecise and Revonet could colorably argue that it should be interpreted to include several different formats, no reasonable person can honestly believe that hard copy is one of them."

What happened here is that the discovery request asked for "tangible things.[see long list in opinion]."maintained in the ordinary course of business." The problem, as discussed by Magistrate Judge Facciola, is that "tangible"and ESI don't play well in the same sandbox (hence the Court's reference to "ancient boilerplate"). The problem presented here was what to do about production of 35,000 additional emails? The producing party wanted to produce in hard copy (think "tangible") and the requesting party, apparently newly sensitized to the world of eDiscovery, now demanded supplemental production in native data format.

Here, the requesting party's saving grace resulted from a combination of judicial practicality (or perhaps mercy) and reference to the actual wording of the request. The requesting party did not request native data format (but instead used the term "tangible thing" - the "ancient boilerplate").It did, however, request that production be made as kept in the "ordinary course of business." The Court points out that the likelihood that Covad kept its 35,000 email trove in paper format in the "ordinary course of business" was a bit more than highly unlikely:

"More importantly, I do not need to parse words because no one is pretending that Revonet prints all of its e-mails or converts them to TIFF files on a daily basis no matter how ephemeral, meaningless or trivial their content.[Footnote omitted] Therefore, though Covad's instruction is hopelessly imprecise and Revonet could colorably argue that it should be interpreted to include several different formats, no reasonable person can honestly believe that hard copy is one of them. For hard copy to be an acceptable format, one would have to believe that Revonet, in its day to day operations, keeps all of its electronic communications on paper. There is no evidence in the record that Revonet operates in this manner, and no suggestion that such a practice would be anything but incredible"

In ordering the supplemental production in native format, the Court took a practical and, imo, fair approach in resolving the issue, but not without some additional poignant observation:

"Therefore, even though I can't say I know what Covad has asked for, I can say what they have not asked for, and that is what they got. "

The subtext of this decision appears to be that while the Court might cut a break to requesting (or producing) parties in some instances, we are rapidly approaching a point where (1) WIAIWYG (what is asked is what you get), and WIRIWYP (what is requested is what you produce), and (2) we shouldn't expect the Courts to act as technology experts in interpreting either ESI discovery requests or responses.The Court also provides a short cost-shifting analysis and decides that no undue burden (justifying a cost-shift) are present in this instance:

"Revonet would have had to incur the cost of privilege review had it produced the e-mails in native format in the first place. That natural burden would not have been shifted because it is presumed that reviewing the data to ascertain whether any of it is privileged must be done by the producing party as a matter of course. Peskoff v. Faber, 251 F.R.D. 59, 61 (D.D.C. 2008) (costs of production should be shifted only if burden is undue because, for example, sources are not reasonably accessible)."

The Court ultimately decides that the parties should share in the additional costs incurred, but with another reference to counsel's competency:

"Since both parties went through the same stop sign, it appears to me that they both should pay for the crash. I will require them to share the cost of the paralegal removing the privileged e-mails, as I have described it, to a cost of no greater than $4,000, i.e., $2,000 each. I expect Revonet to keep a careful record of the time spent and to alert me if there is any risk that the cost will exceed $4,000. At that point (which I hope will not be reached) I will ask Revonet to estimate what it will cost to finish the job and seek the views of counsel as how to cover it.

Characterization of counsel meet-and-confer obligations to discuss nature and format of production as "essential":

"This whole controversy could have been eliminated had Covad asked for the data in native format in the first place or had Revonet asked Covad in what format it wanted the data before it presumed that it was not native. Two thousand dollars is not a bad price for the lesson that the courts have reached the limits of their patience with having to resolve electronic discovery controversies that are expensive, time consuming and so easily avoided by the lawyers' conferring with each other on such a fundamental question as the format of their productions of electronically stored information."

It will be interesting to see how future motions of this type are treated by the Courts.

Tuesday, December 09, 2008

2008-12-10 Metadata - The New Black - Guidelines from the Southern District of New York

In Aguilar v Immigration and Customs Enforcement Div. of U.S. Dept. of Homeland Security, 2008 WL 5062700 (SDNY November 21, 2008), Judge Maas provides an excellent overview of the discovery process as it relates to metadata, including definitions, and cautionary words to counsel in crafting discovery requests and production, and yes, the dying breath of the Sedona Principles first (dismissive) treatment of metadata.

This November 21, 2008 decision highlights the increasing evidentiary significance accorded by Courts to metadata. It bears keeping in mind that many early decisions held, and until recently, the position of the Sedona Conference, was that most metadata had no value or relevance. In this blogger's view (and in the view of many of my more knowledgeable colleagues) this possession was as incorrect in theory as it was untenable in practice. (As a member of WG1, I wrote to express my (then) contrary views approximately two years ago).

What is also notable is that the Court now eschews Sedona's prior position concerning metadata, and adopts the revised position of the Sedona Principles Comment 12, in substance recognizing that metadata is relevant where it may contain context information and follows the District of Maryland's position that metadata is generally discoverable. What the Court appears to accept is that that metadata provides the context for content, and that context that is necessary for the authentication of digital evidence. (We'll leave discussion of challenges to metadata authenticity for another post).

On a procedural note, the Court finds that although no formal motion to compel was filed (the Southern District of New York's local rules require that a letter be written prior to the filing of a discovery related motion), the Court treated the letter as a motion to compel. In that letter Plaintiff requested that the court compel production of "responsive emails and electronic documents" in TIFF format with corresponding metadata and with "meaningful information" about the metadata fields...

Citing Williams v Sprint, 230 F.R.D. 640 (D. Kan. 2005), the Court first notes that “'As a general rule of thumb, the more interactive the application, the more important the metadata is to understanding the application's output.'”

The Court then describes a spreadsheet application as one whose "interactivity" lies somewhere between a database and a word processing application:

"Thus, while metadata may add little to one's comprehension of a word processing document, it is often critical to understanding a database application. Id.“A spreadsheet application lies somewhere in the middle” and the need for its metadata depends upon the complexity and purpose of the spreadsheet. Id"

After defining metadata generally as "data about data," the Court fleshes out the definition, and then provides a good interpretation of the different categories of metadata. This next section is lengthy but thorough, and borrowing liberally from the Sedona Principles:

"Types of Metadata"

"Metadata, frequently referred to as “data about data,” is electronically-stored evidence that describes the “history, tracking, or management of an electronic document.” Id. at 646. It includes the “hidden text, formatting codes, formulae, and other information associated” with an electronic document. The Sedona Principles-Second Edition: Best Practices Recommendations and Principles for Addressing Electronic Document Production Cmt. 12a (Sedona Conference Working Group Series 2007), ( “Sedona Principles 2d” ); see also Autotech Techs. Ltd. P'Ship v., Inc., 248 F.R.D. 556, 557 n. 1 (N.D.Ill.2008) (Metadata includes “all of the contextual, processing, and use information needed to identify and certify the scope, authenticity, and integrity of active or archival electronic information or records”). Although metadata often is lumped into one generic category, there are at least several distinct types, including substantive (or application) metadata, system metadata, and embedded metadata. Sedona Principles 2d Cmt. 12a; see United States District Court for the District of Maryland, Suggested Protocol for Discovery of Electronically Stored Information 25-28, ( “Md.Protocol” )."

"a. Substantive Metadata"

"Substantive metadata, also known as application metadata, is “created as a function of the application software used to create the document or file” and reflects substantive changes made by the user. Sedona Principles 2d Cmt. 12a; Md. Protocol 26. This category of metadata reflects modifications to a document, such as prior edits or editorial comments, and includes data that instructs the computer how to display the fonts and spacing in a document. Sedona Principles 2d Cmt. 12a. Substantive metadata is embedded in the document it describes and remains with the document when it is moved or copied. Id. A working group in the District of Maryland has concluded that substantive metadata “need not be routinely produced” unless the requesting party shows good cause. Md. Protocol 26. "

"b. System Metadata"

" System metadata “reflects information created by the user or by the organization's information management system.” Sedona Principles 2d Cmt. 12a. This data may not be embedded within the file it describes, but can usually be easily retrieved from whatever operating system is in use. See id. Examples of system metadata include data concerning “the author, date and time of creation, and the date a document was modified.” Md. Protocol 26. Courts have commented that most system (and substantive) metadata lacks evidentiary value because it is not relevant. See Mich. First Credit Union v. Cumis Ins. Soc'y, Inc., No. Civ. 05-74423, 2007 WL 4098213, at *2 (E.D.Mich. Nov. 16, 2007); Ky. Speedway, LLC v. Nat'l Assoc. of Stock Car Auto Racing, No. Civ. 05-138, 2006 WL 5097354, at *8 (E.D.Ky. Dec. 18, 2006); Wyeth v. Impax Labs., Inc., 248 F.R.D. 169, 170 (D.Del.2006). System metadata is relevant, however, if the authenticity of a document is questioned or if establishing “who received what information and when” is important to the claims or defenses of a party. See Hagenbuch v. 3B6 Sistemi Elettronici Industriali S.R.L., No. 04 Civ. 3109, 2006 WL 665005, at *3 (N.D.Ill. Mar. 8, 2006). This type of metadata also makes electronic documents more functional because it significantly improves a party's ability to access, search, and sort large numbers of documents efficiently. Sedona Principles 2d Cmt. 12a."

"c. Embedded Metadata"

"Embedded metadata consists of “text, numbers, content, data, or other information that is directly or indirectly inputted into a [n]ative [f]ile by a user and which is not typically visible to the user viewing the output display” of the native file. Md. Protocol 27. Examples include spreadsheet formulas, hidden columns, externally or internally linked files (such as sound files), hyperlinks, references and fields, and database information. Id. This type of metadata is often crucial to understanding an electronic document. For instance, a complicated spreadsheet may be difficult to comprehend without the ability to view the formulas underlying the output in each cell. For this reason, the District of Maryland working group concluded that embedded metadata is “generally discoverable” and “should be produced as a matter of course.” Id. at 27-28."

The Court then offers an analysis of the discoverability of metadata in the Federal Courts:

"Federal Rules"

"Metadata is not addressed directly in the Federal Rules of Civil Procedure but is subject to the general rules of discovery. Metadata thus is discoverable if it is relevant to the claim or defense of any party and is not privileged. Fed.R.Civ.P. 26(b) (1). Additionally, “[f]or good cause, the court may order discovery of any matter [including metadata] relevant to the subject matter involved in the action.” Id. The “[r]elevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence.” Id. The discovery of metadata is also subject to the balancing test of Rule 26(b)(2)(C), which requires a court to weigh the probative value of proposed discovery against its potential burden."

Know It, Use It (the Request) or Lose It

OK, so most, if not all, metadata is discoverable. The Court then makes a point, or warning, to parties to make sure to know what to request, and how to request it. This decision points out how a party may actually waive its right to obtain otherwise perfectly discoverable metadata by not availing itself of its right to request form and format of production. Fail to do this in the first instance, and you cede to the producing party the right to produce in any "reasonably usable" format, which may or may not include metadata, or the type of metadata sought. See the last line of this excerpt:

"Although metadata is not specifically referenced, Rule 34 of the Federal Rules of Civil Procedure addresses the production of ESI. Fed.R.Civ.P. 34(a)(1)(A), (b)(2)(E). Under the Rule, a requesting party may specify a form of production and request metadata. Fed.R.Civ.P. 34(b)(1)(C). (A typical request might be to produce Word documents in TIFF format with a load file containing the relevant system metadata.) The responding party then must either produce ESI in the form specified or object. If the responding party objects, or the requesting party has not specified a form of production, the responding party must “state the form or forms it intends to use” for its production of ESI. Fed.R.Civ.P. 34(b)(2)(D). Thereafter, if the requesting party objects and suggests an alternative form, the parties “must meet and confer under Rule [37(a)(1) ] in an effort to resolve the matter before the requesting party can file a motion to compel.” Fed.R.Civ.P. 34(b), advisory committee's note, 2006 amendment. "

"If the requesting party does not specify a form for producing ESI, the responding “party must produce it in a form or forms in which it is ordinarily maintained or in a reasonably usable form or forms.” Fed.R.Civ.P. 34(b)(2)(E)(ii). Although a party may produce its ESI in another “reasonably usable form,” this does not mean “that a responding party is free to convert electronically stored information from the form in which it is ordinarily maintained to a different form that makes it more difficult or burdensome for the requesting party to use the information efficiently in the litigation.” Fed.R.Civ.P. 34(b), advisory committee's note, 2006 amendment. In particular, if the ESI is kept in an electronically-searchable form, it “should not be produced in a form that removes or significantly degrades this feature.” Id.; see also Payment Card, 2007 WL 121426, at *4 (documents stripped of metadata allowing searches do not comply with Rule 34(b)). The Federal Rules also specify that a “party need not produce the same [ESI] in more than one form.” Fed.R.Civ.P. 34(b)(2) (E)(iii)."

The Court takes pains to discuss Sedona's concession as to the importance of metadata, although it is odd that metadata's importance in digital evidence authentication is not directly address (although that is perhaps what Sedona means by "accessibility and functionality"):

"Sedona Principles"

"The Sedona Conference (“Conference”), a nonprofit legal policy research and education organization, has a working group comprised of judges, attorneys, and electronic discovery experts dedicated to resolving electronic document production issues. Since 2003, the Conference has published a number of documents concerning ESI, including the Sedona Principles. Courts have found the Sedona Principles instructive with respect to electronic discovery issues. See, e.g., Autotech Techs. Ltd. P'Ship, 248 F.R.D. at 560; Williams, 230 F.R.D. at 652."

"In the first edition of the Sedona Principles, the Conference stated that “unless it is material to the resolution of a dispute, there is no obligation to ... produce metadata absent agreement of the parties or order of the court.” The Sedona Principles: Best Practices Recommendations and Principles for Addressing Electronic Document Production Principle 12 (Sedona Conference Working Group Series 2005) ( “Sedona Principles 1st” ). The Conference further noted that because most “metadata has no evidentiary value” and the time and money spent reviewing it would be a waste of resources, there should be a “modest legal presumption” against the production of metadata. Id. Cmt. 12a. The Conference nevertheless observed that if metadata is relevant, it should be produced. Id."

"The foreword to the second edition of the Sedona Principles notes that in revising the principles, “[p]articular attention [was] given to updating the language and commentary on Principle 12 (metadata).” Sedona Principles 2d Foreword. Significantly, Principle 12 and the commentaries accompanying it were revised to remove any presumption against the production of metadata. Principle 12 now reads:

'Absent party agreement or court order specifying the form or forms of production, production should be made in the form or forms in which the information is ordinarily maintained or in a reasonably usable form, taking into account the need to produce reasonably accessible metadata that will enable the receiving party to have the same ability to access, search, and display the information as the producing party where appropriate or necessary in light of the nature of the information and the needs of the case.' Sedona Principles 2d Principle 12 (emphasis added). Thus, in the first edition of the Sedona Principles the Conference seemed to focus solely on the relevancy of metadata; in the second edition the Conference placed greater weight on the enhanced accessibility and functionality that metadata provides to the recipients of ESI.The commentary to Principle 12 also was expanded to provide criteria for deciding whether metadata should be produced in a given case. The commentary advises parties to consider: (i) “what metadata is ordinarily maintained”; (ii) the relevance of the metadata; and (iii) the “importance of reasonably accessible metadata to facilitating the parties' review, production, and use of the information.” Id. Cmt. 12a. In selecting a form of production, the two “primary considerations” should be the need for and probative value of the metadata, and the extent to which the metadata will “enhance the functional utility of the electronic information.” Id. Cmt. 12b."

The Court then notes that other court decisions have generally ordered the production of metadata sought in an initial document production request where the party has not yet produced documents in any form:

"There is a clear pattern in the case law concerning motions to compel the production of metadata. Courts generally have ordered the production of metadata when it is sought in the initial document request and the producing party has not yet produced the documents in any form. SeePayment Card. 2007 WL 121426, at *4 (directing production of metadata for any documents not yet produced); Hagenbuch, 2006 WL 665005, at *4 (granting motion to compel production in native form); In re, 233 F.R.D. at 91 (production ordered in TIFF format with corresponding searchable metadata databases). But see Mich. First Credit Union, 2007 WL 4098213, at *2 (court denied production despite timely request for metadata because it was not relevant and production would be unduly burdensome). On the other hand, if metadata is not sought in the initial document request, and particularly if the producing party already has produced the documents in another form, courts tend to deny later requests, often concluding that the metadata is not relevant. See Autotech Techs., 248 F.R.D. at 559-60 (court refused to compel production of metadata not sought in initial request); D'Onofrio v. SFX Sports Group, Inc., 247 F.R.D. 43, 48 (D.D.C.2008) (same); Payment Card, 2007 WL 121426, at *4 (denying motion to compel metadata for documents already produced in TIFF format because another production would be unduly burdensome); Ky. Speedway, 2006 WL 5097354, at *8 (motion to compel production of metadata denied when request first came seven months after production); Wyeth, 248 F.R.D. at 171 (documents produced in TIFF format were sufficient since parties never agreed on form of production);. But see Williams, 230 F.R.D. at 654 (ordering production of Excel spreadsheets with metadata even though no request had been made initially because producing party should reasonably have known that metadata was relevant)."

The Court sums it up quite nicely: When it comes to requesting metadata, no ask, no get:

In sum, as a recent article has noted, if a party wants metadata, it should “Ask for it. Up front. Otherwise, if [the party] ask[s] too late or ha[s] already received the document in another form, [it] may be out of luck.” Adam J. Levitt & Scott J. Farrell, Taming the Metadata Beast, N.Y.L.J., May 16, 2008, at 4. Hagenbach illustrates the wisdom of this advice. In that patent infringement suit, the plaintiff demanded electronic document production in native form in his first document request. 2006 WL 665005, at *1 (request for “identical, electronic copies” of the documents). The defendants rejected this request and produced the documents in TIFF format without metadata. Id. The court noted that the TIFF documents did not contain such relevant information as the creation and modification dates of documents, email attachments and recipients, and other metadata. Id. at *3. The court also observed that the metadata was relevant to the plaintiff's infringement claim because it “will allow him to piece together the chronology of events and figure out, among other things, who received what information and when.” Id. The court therefore ordered production in native form despite the fact that the defendants could not Bates stamp the documents and had already made a production. Id. at *4.

"By comparison, in Autotech Technologies, the court denied a motion to compel the production of metadata for Word documents after the plaintiff had already produced the documents in both PDF and paper format. 248 F.R.D. at 557. In that case, the initial production request did not specify a form for production. As the court noted, the plaintiff therefore could have produced its documents in the form in which they were ordinarily maintained or in a reasonably usable form. Id. at 558. In concluding that production in PDF form constituted a reasonably usable form, the court relied heavily upon the defendant's failure to ask for metadata at the outset. Id. at 559-60. The court stated that it “seems a little late to ask for metadata after documents responsive to a request have been produced in both paper and electronic format.” Id. at 559. The court also noted that, “[o]rdinarily, courts will not compel the production of metadata when a party did not make that a part of its request.” Id. It concluded that the defendant “was the master of its production requests; it must be satisfied with what it asked for.” FN5 Id . at 560."

Footnote 5

Footnote 5 of this decision is notable, because it explains that prior decisional authority (here, Autotech Techs placed reliance on the first Sedona Principles addressing the importance of metadata:

"To bolster its conclusion, the court in Autotech Technologies relied on the “modest” presumption against the production of metadata stated in the Sedona Principles 1st. Autotech Techs., 248 F.R.D. at 560. As noted above, that presumption has been abandoned in the Sedona Principles 2d."

eDiscovery: A Party Driven Process -The Call for Cooperation:

The Court then examines the emerging approach to the eDiscovery process and dispute resolution, placing the burden of resolving issues relating to metadata production squarely upon the parties' shoulders:

"The Federal Rules of Civil Procedure, case law, and the Sedona Principles all further emphasize that electronic discovery should be a party-driven process. Indeed, Rule 26(f) requires that the parties meet and confer to develop a discovery plan. That discovery plan must discuss “any issues about disclosure or discovery of [ESI], including the form or forms in which it should be produced.” Fed.R.Civ.P. 26(f)(3)(C) (emphasis added). In fact, the commentary to the rule specifically notes that whether metadata “should be produced may be among the topics discussed in the Rule 26(f) conference.” Fed.R.Civ.P. 26(f) advisory committee's note, 2006 amendment. As the commentary further observes, early “identification of disputes over the forms of production may help avoid the expense and delay of searches or productions using inappropriate forms.” Id. Thus, at the outset of any litigation, the parties should discuss whether the production of metadata is appropriate and attempt to resolve the issue without court intervention."

"Likewise, courts have emphasized the need for the parties to confer and reach agreements regarding the form of electronic document production before seeking to involve the court. See, e.g ., Scotts Co. LLC v. Liberty Mut. Ins. Co., No. 2:06-CV-899, 2007 WL 1723509, at *4 (S.D. Ohio June 12, 2007) (refusing to decide whether metadata need be produced because it was unclear “whether the parties have fully exhausted extra-judicial efforts to resolve” the dispute); Ky. Speedway, 2006 WL 5097354, at *8 (“metadata ... should be addressed by the parties in a Rule 26(f) conference”); Hopson v. Mayor and City Council of Baltimore, 232 F.R.D. 228, 245 (D.Md.2005) (“counsel have a duty to take the initiative in meeting and conferring to plan for appropriate discovery of [ESI including metadata] at the commencement” of thec ase).
The Sedona Principles also stress the need for the parties to resolve issues concerning metadata. As the Conference explains, the purpose of the amended Federal Rules is “to require parties, not courts, to make the tough choices that fit the particular discovery needs of a case.” Sedona Principles 2d Cmt. 12c. This is appropriate because it is not the court but the parti
es who have the greatest knowledge of the documents in a case and whether the metadata accompanying those documents is relevant. Indeed, the Conference recently has issued a “Cooperation Proclamation,” in which it stresses that the Federal Rules are a mandate that counsel act cooperatively in resolving discovery issues. See Sedona Conference Cooperation Proclamation 2 (2008),"

Tuesday, December 02, 2008

2008-12-02 Fed. R. Civ. P. 26(g) Used as Basis for Imposing Discovery Abuse Sanctions on Counsel

Case: Name:In re Simonson v. Global FInancial Solution, LLC
Citation: 2008 WL 4830807 (Bktpcy. W.D. Wash. 2008)
Date: 2008-10-27

In this Bankruptcy court adversary proceeding from the Western District of Washington, the Court finds that the counsel for the Debtors engaged in discovery abuse by withholding relevant documents from the Trustee. There was no motion to compel filed. The Court imposed sanctions against Debtors' counsel (but not the Debtor), but did not use either Fed. R. Civ. P. Rule 37 (remember, no MTC was filed) or its inherent powers as a basis for sanctions imposition. Eschewing both Rule 37 and inherent powers, the Court found that Debtors' counsel had violated the attorney certification requirement imposed by Fed. R. Civ. P. 26(g)m and cited that violation as ample substantiation for the imposition of sanctions (payment of Trustee's attorneys fees and costs).

In an interesting exercise of recursivity, the Bankruptcy Court draws from a Washington State precedent, which in turn draws its reasoning from the Federal Rules of Civil Procedure.

Relevant Excerpts:

"Although federal law and the Federal Rules of Civil Procedure apply to this case, a Washington Supreme Court decision, Washington State Physicians Insurance Exchange & Association v. Fisons Corp., 122 Wash.2d 299, 858 P.2d 1054 (1993), provides additional guidance as to how the above described rules should be applied. In addressing whether the lower court should have awarded sanctions against a drug company for discovery abuse, the court held that the inherent power of the court to sanction should not be used where other court rules more properly apply. The court further held that the sanction provision of Washington Civil Rule 37 should not be applied where the more specific provisions of Rule 26 better fit the situation. The court went on to construe Washington Civil Rule 26(g), which is virtually identical to Rule 26(g), Fed.R.Civ.P., looking to federal law for guidance. The court concluded after reviewing federal authorities that “[s]ubjective belief or good faith alone no longer shields an attorney from sanctions under the rules,” that intent need not be shown before sanctions are mandated, and a motion to compel compliance with the rules is not a prerequisite to a sanctions motion. Id. at 1078.The court held that in determining whether an attorney has complied with the rule, the trial court should consider all of the surrounding circumstances, the importance of the evidence to its proponent, and the ability of the opposing party to formulate a response or comply with the request.

"The Trustee's Right to Compensation Under Rule 26(g).

Rule 26(g), Fed.R.Civ.P., applies to the circumstances at issue in this case. Thus, there is no need for the Court to utilize Rule 37 or its inherent powers to issue sanctions. Having found that Herman Recor was not substantially justified in failing to provide discovery to the Trustee, Rule 26(g) requires the Court to award sanctions to the Trustee, including reasonable attorneys' fees caused by the violation.

It should be noted that the Trustee has not sought any sanctions against the Levenhagens. Mr. Levenhagen produced documents promptly and completely. If anything, the Levenhagens were cast in an uncooperative and negative light by their counsel's failure to turn over documents to the Trustee."

Tuesday, November 25, 2008

2008-11-24 Digital Evidence Held Not Authenticated and Inadmissible Under Vinhnee Test

The Bankruptcy Court of the Central District of California issued a decision in October following the Ninth Circuit's approach in Vinhnee approach to digital evidence authentication. It bears repeating that in order to have evidence considered by a jury (or a judge, in Bankruptcy court) it must first be authenticated in accordance with Federal Rules of Evidence Rule 901. The Bankruptcy Court in In re Vargas, --- B.R. ----, 2008 WL 4864986 (Bkrtcy.C.D.Cal. 2008) sets forth what must be demonstrated by a party seeking to have its digital evidence admitted.

"The basic elements for the introduction of business records under the hearsay exception for records of regularly conducted activity all apply to records maintained electronically.

1. The business uses a computer.

2. The computer is reliable.
3. The business has developed a procedure for inserting data into the computer.
4. The procedure has built-in safeguards to ensure accuracy and identify errors.
5. The business keeps the computer in a good state of repair.
6. The witness had the computer readout certain data.
7. The witness used the proper procedures to obtain the readout.
8. The computer was in working order at the time the witness obtained the readout.
9. The witness recognizes the exhibit as the readout.
10. The witness explains how he or she recognizes the readout.
11. If the readout contains strange symbols or terms, the witness explains the meaning of the symbols or terms for the trier of fact.

The Vargas Court recognizes that Vinhnee imposes a more rigorous authentication burden on those seeking to admit computer generated information into evidence:

"Under Ninth Circuit law, the fourth requirement subsumes details regarding the computer policy consisting of

(a) control procedures including control of access to the database,
(b) control of access to the program,

(c) recording and logging of changes,
(d) back-up practices, and
(e) audit procedures to assure the continuing integrity of the records.

[In re] Vinhnee, 336 B.R. at 446 (citing EDWARD J. IMWINKELRIED, EVIDENTIARY FOUNDATIONS § 4.03[2] (5th ed.2002)"

Friday, November 14, 2008

2008-11-14 eDiscovery Sanctions Proceeding Permit Deposition of Prior Counsel

In the November 3 decision in Bray & Gillespie Management LLC v. Lexington Ins. Co., 2008 WL 4826115 (M.D.Fla. 2008). Magistrate Judge Spaulding set a full day for what promises to be a spirited reopening of an evidentiary hearing involving a sanctions motion for discovery violations.

The ground rules set for the hearing provide some context as to what might be expected:

"The Federal Rules of Evidence will apply at the hearing" (in a footnote to this sentence, the Court added: "The Court will not accept testimony from counsel of record in a narrative fashion. Therefore, if an attorney for a party will testify, another attorney must be present to conduct the direct examination.")

"2. Conflicts, if any, in the information before the Court regarding when Reed Smith and lawyers affiliated with it has access to the Introspect database containing information sought in discovery in the present case;

3. Responsibility of counsel of record for any sanctionable conduct related to the present motions. See, e.g., Stuart I. Levin & Assocs., P.A. v. Rogers, 156 F.3d 1135, 1141 (11th Cir.1998); see also Comiskey v. JFTJ Corp., 989 F.2d 1007, 1009-10 (8th Cir.1993); Cache La Poudre Feeds, LLC v. Land O'Lakes, Inc., 244 F.R.D. 614 (D.Colo.2007)."

The preceeding paragraph also merited its own footnote:

"At the close of the previous evidentiary hearing, counsel for Plaintiffs submitted that he should have been permitted to present evidence from previous counsel of record regarding good faith conferences among counsel, the meaning of terms in discovery responses, and other information. If counsel for Plaintiffs wish to present such evidence, or other information such as retainer agreements or time records showing the division of work between and among counsel, they may promptly seek permission to depose prior counsel, if necessary, to obtain the information and present it to the Court."

That attorneys engaging in eDiscovery may be expected to testify about the eDiscovery process (and not the merits) should come as no surprise.

Saturday, November 01, 2008

2008-11-01 Search Protocol Warfare

In the latest chapter in the discovery dispute between the parties in D'Onofrio v. SFX Sports Group, Inc.,--- F.R.D. ----, 2008 WL 4737202 (D.D.C. 2008) the efficacy of proposed search protocols have (as we have expected) now become the subject to challenge. Magistrate Judge Facciola has no problem resisting the siren song of (and short-circuited an attempt t0 to win an argument by the use) of "techno-babble:"

"Defendants have proposed a protocol which, unfortunately, is highly technical. I made it clear at the hearing that I expected the lawyers to rely upon their obviously competent IT professionals and Mr. Bond to arrive at a protocol that would satisfy those professionals who fully understand what they were doing and produce a document that was easy to understand and use. What I got was a proposed defendants' protocol that is highly restrictive and full of undefined “buzz words.”
Additionally, in one respect the defendants' protocol is incomprehensible. On the crucial question of what will occur if the search yields previously unproduced e-mails, the defendants' protocol indicates that they will be handled “according to the protocol stated in paragraph 2 herein.” Defs.' Prot ¶ 8. But, paragraph 2 says that a Clear Channel employee must be present when the Legato system is accessed and there is no protocol whatsoever in paragraph 2 that makes the reference in paragraph 8 comprehensible."

This (perhaps not so gentle) chiding of the parties by reference to their "obviously competent IT professionals" and their utter failure to arrive at a mutually satisfactory protocol that was "easy to understand and use" speaks not so much to the IT professionals, but to counsel, either for their failure to understand what their IT professionals were doing sufficient to distill it into non-tech-speak, or for their refusal to do so, perhaps in hopes that their respective arguments would win judicial points for technological complexity.

Magistrate Judge Facciola then takes matters into the Court's hands:

"Since I have gotten so little help from counsel, I will create a protocol of my own using as best I can my understanding of the limited agreement that the parties reached when plaintiff's counsel reacted to defendants' proposal."

The Court, after noting that defendant failed to implement a proper litigation hold after receiving notice that plaintiff intended to sue, then rejects defendants' attempts to limit the scope of eDiscovery search, apparently because the court found that defendants had not conducted a proper search in the first instance:

"Defendants have agreed that plaintiffs' expert may search their computer system or individual computers for electronically stored information. Defendants, however, are unfairly and irrationally limiting the scope and potential results of the search to be conducted. They are obliged to permit the plaintiffs' expert to conduct a diligent search of all potential repositories of electronically stored information that are likely to yield information that is responsive to plaintiff's discovery demands. The restrictions they would impose are inconsistent with that responsibility and I reject them."

Judge Facciola then delivers the coup de grace, giving wide search latitude to plaintiff's expert:

"The parties do not even agree on which systems or hard drives are to be searched. They both reference the Legato system, but plaintiffs also seek access to defendants' local servers in the District of Columbia and to any computers that may be recovered. The testimony I have heard convinces me that plaintiff's expert must be permitted to search any depository of electronically stored information that may contain the following electronically stored information: (1) e-mails to or from plaintiff to include e-mails in which her name appears in the “cc” or “bcc” lines; (2) e-mail in which her name is mentioned; (3) electronically stored information created by her; (4) electronically stored information sent to her, again whether sent to her directly or as one of other recipients; (5) electronically stored information in which her name appears, whether her full name or her first or last name or initials."

Operative terms: "...any repository of electronically stored information"

For those thinking that ESI search disputes are outlier events, it is submitted that the following issues will be litigated with increasing frequency.

Link to the decision:

Friday, October 31, 2008

2008-10-31 Source Code Production Compelled in Commercial Dispute - From Both Parties

In a decision from last week, a motion to compel production of source code was granted by a federal court in Wisconsin. In Metavante Corp. v. Emigrant Sav. Bank Slip Copy, 2008 WL 4722336 (E.D.Wis. 2008), Judge Stadtmeuller found that weighing all the factors, the balance tipped in favor of production (that Emigrant produced its source code to Metavante was also not lost on the court):

"The court finds that the source code Metavante utilized in its performance under the outsourcing agreement is relevant, or may reasonably lead to admissible evidence. See Fed.R.Civ.P. 26(b)(1). Metavante's source code may reveal the quality of the online banking product that Metavante delivered, and whether Metavante fully performed under the agreement. In balancing the value of the source code against the burden of producing it, the court finds that the potential value outweighs the burden. While Metavante asserts that the cost of producing its source code will be great, Emigrant has offered to mitigate the cost by using Emigrant's outside consultants to review the code and parse out any relevant information. Moreover, the parties have experience in exchanging the source code in this case. The court also recognizes that any confidentiality concerns that Metavante may have are addressed by the court's May 14, 2008 protective order. (Docket # 125)."

The production of source code will in all likelihood be more frequently requested, and produced (or production compelled) in future cases. Remarks in uncompiled code may reveal much about what code does (or fails to do) once compiled. It's not at all improbable that compilers may also be sought in future discoverty requests.

Sunday, October 26, 2008

2008-10-26 Technology, Business and Litigation: Sword, Weakening Shield

This excerpt from AAB Joint Venture v U.S. , 75 Fed Cl. 432 (2008) provides what is perhaps an emerging judicial resistance to the defense of excessive burden presented by eDiscovery (as contradistinguished from non-e-Discovery):

"To permit a party “to reap the business benefits of such technology and simultaneously use that technology as a shield in litigation would lead to incongruous and unfair results.” Linnen v. A.H. Robins Co., No. 97-2307, 1999 WL 462015, at *6 (Mass.Super. Ct. June 16, 1999)."AAB Joint Venture v U.S. , 75, Fed Cl. 432, 443 (2008)

Saturday, October 25, 2008

2008-10-25 Custody or Control Decision Includes Computers at Work or at Home

The Court in Allcare Dental Management, LLC v. Zrinyi, 2008 WL 4649131 (D.Idaho 2008) addresses the scope of a discovery request "custody and control language. The Court held that custody or control expressly included those computing equipment regardless of geographic location.

"Defendants Zrinyi and Greene are further ordered to make available to Plaintiffs' designated computer forensics expert any and all computers and portable or detachable hard-drives in Defendants' possession, custody, or control and used by Defendants since August 24, 2008, including but not limited to any computer or portable or detachable hard drive in their homes or place of business. Defendants shall make available all of the computer equipment described above, at their places of business or residences, to Plaintiffs' designated computer forensics expert immediately upon being served with a copy of this Memorandum Decision and Order."

Monday, October 20, 2008

2008-10-20 Discovery Abuse Sanctions in the District of Columbia Circuit

In Perez v. Berhanu --- F.Supp.2d ----, 2008 WL 4604065 (D.D.C. 2008) the Court provides a good analysis of discovery sanctions approach by the D.C. Circuit. In this case, the Court discusses that an imposition of the most severe sanctions, and the D.C. Circuit's requirement that “willfulness or at least gross negligence” is required to justify the most severe discovery sanctions). In this matter, the discovery abuse was so egregious (failure to respond to discovery requests) that the Court granted a default judgment rather than compelling response from the defendant.

Saturday, October 04, 2008

2008-10-04 No Ask, Maybe Get: TIFF Files Held Not Reasonably Searchable

In a September 15, 2008 decision in the case of Goodbys Creek, LLC v Arch Ins. Co., Inc. (2008 WL 4279693 (MD FL 2008), Magistrate Judge Snyder, while recognizing that a failure to ask for native data format may waive a later request for same, nevertheless accepted the assertion that a production of a tiff format file made searching them "much more difficult" and compelled defendant to (and apparently in the alternative) to:

"provide any documents previously supplied as TIFF images in their native data format, provide any documents in another comparably searchable format, or supply Goodbys with software for searching the TIFF images."

This decision represents a departure from recent decisional authority that (1) holds a requesting party to its first request language, and in the absence of a specific format request, (2) permits a producing party to provide only "reasonably usable" ESI.
2008-10-03 Jury Acquits Former McAfee GC of 4 of 5 Counts, Hung on Fifth

The most appropriate commentary on the what appears to be an inexcusably late production of emails that would have bolstered the defendant's case here is the jury's verdict of acquittal.

Friday, October 03, 2008

2008-10-03 eMail Production Delay Blamed on Contract Lawyers

Add these ingredients together and you may see why Judge Patel said "heads will roll":
1. Subpoena to company whose former general counsel is on trial for options backdating served two years before trial.
2 On the eve of trial, relevant emails (reportedly critical to defense argument) are produced.
3. Delay excuse: Blame for the delay was place on "contract attorneys.

Most states (and the ABA) require that an attorney maintain adequate supervision over others working for them --- and this requirement extends to "contract" lawyers.

Update: McAfee attorneys claimed the delay was "inadvertant," and defendant's counsel was "astonished." Judge Patel ordered McAfee's counsel to provide an explanation of how the discovery system worked. Judge Patel toned down a bit and stated "Ok, nobody's head rolled."

I don't think we've seen the last of these incidents.

Thursday, September 04, 2008

2008-09-04 Nursing Home Pension Fund v Oracle - Spoliation Decision

In this decision Judge Ilston found that Oracle had spoliated evidence, imposed sanctions, and took spoliation into account in deciding a summary judgment motion.

Judge Ilston first states the basis for the imposition of sanctions, noting the Court has the power to sanction, either under its inherent powers or in consequence of a failure "to obey an order to provide or permit discovery" pursuant to through Fed. R. Civ. P. Rule 37:

"The Court has inherent powers to [sic] arising out of “‘the control necessarily vested in courts to manage their own affairs so as to achieve the orderly and expeditious disposition of cases.’” UnigardCase 3:01-cv-00988-SI Document 1478 Filed 09/02/2008 Sec. Ins. Co. v. Lakewood Eng’g & Mfg. Corp., 982 F.2d 363, 368 (9th Cir. 1992) (quoting Chambersv. NASCO, Inc., 501 U.S. 32, 43, 111 S. Ct. 2123, 2132 (1991)); see also Toste v. Lewis Controls, Inc.,1996 WL 101189, *2 (N.D. Cal. Feb. 27, 1996). In this regard, “[a] federal trial court has the inherent discretionary power to make appropriate evidentiary rulings in response to the destruction or spoliationof relevant evidence.” Glover v. BIC Corp., 6 F.3d 1318, 1329 (9th Cir. 1993). Federal courts also have authority to sanction a party “who fails to obey an order to provide or permit discovery” under FederalRule of Civil Procedure 37(b)(2)(A). Leon v. IDX Sys. Corp., 464 F.3d 951, 958 (9th Cir. 2006)(internal quotation marks omitted).

Moreover, as other (but not all) courts have ruled, a showing of bad faith is not required:

I. Standard for Imposing Spoliation/Discovery Abuse Sanctions

The Court need not find bad faith by the offending party before issuing sanctions for destruction of evidence; willfulness or fault can suffice. Id.; Unigard, 982 F.2dat 368 n.2 (citing Halaco Eng’g Co. v. Costle, 843 F.2d 376, 380 (9th Cir. 1988)). Sanctions may beappropriate when a party knew or should have known that the destroyed evidence was potentiallyrelevant to litigation. Glover, 6 F.3d at 1329 (“Surely a finding of bad faith will suffice, but so will simple notice of potential relevance to the litigation.”) (internal quotation marks omitted)."

Judge Ilston then reinforces the notion that negligence (simple notice, and ordinary negligence, at that) may be sufficient trigger for a Court to use its inherent powers to sanction.

"The Court has inherent powers to arising out of “‘the control necessarily vested in courts to
manage their own affairs so as to achieve the orderly and expeditious disposition of cases.’” UnigardUnigard, 982 F.2d at 368 n.2 (citing Halaco Eng’g Co. v. Costle, 843 F.2d 376, 380 (9th Cir. 1988)). Sanctions may be appropriate when a party knew or should have known that the destroyed evidence was potentiallyrelevant to litigation. Glover, 6 F.3d at 1329 (“Surely a finding of bad faith will suffice, but so willsimple notice of potential relevance to the litigation.”) (internal quotation marks omitted)."

II. Type of Sanction

Judge Ilston then describes the types of sanctions available for destruction of evidence:

"Courts have developed three types of sanctions for destruction of evidence. First, a court can instruct the jury that it may infer that evidence made unavailable by a party was unfavorable to that party. See, e.g., id.; Akiona v. United States, 938 F.2d 158, 161 (9th Cir. 1991); Cedars-Sinai Med. Ctr.v. Superior Court of Los Angeles, 18 Cal. 4th 1, 11-12 (1998); Trevino v. Ortega, 969 S.W.2d 950, 960(Tex. 1998). Second, a court can exclude witness testimony based on the spoliated evidence. See, e.g.,Unigard, 982 F.2d at 368-69; BTO Logging Inc. v. Deere & Co., 174 F.R.D. 690, 692-93 (D. Or. 1997).The third and harshest of sanctions is to dismiss the claim of the party responsible for the spoliation.See, e.g., Allstate Ins. Co. v. Sunbeam Corp., 53 F.3d 804, 806-07 (7th Cir. 1995); see also Chambers,501 U.S. at 45 (noting that “outright dismissal . . . is a particularly severe sanction, yet is within thecourt’s discretion”); Cedars-Sinai Med. Ctr., 18 Cal. 4th at 12."

The triad of adverse inferences, exclusions of testimony based on spoliated evidence, and dismissal of a spoliating party's claims, which is considered an "ultimate" sanction.

III. Factors to Be Considered in Determining Type of Sanctions

Judge Ilston then discusses (and is guided by) the 3rd Circuit's approach in choosing a sanction, which involves an examination of the degree of fault of spoliating party, degree of prejudice to non-spoliating party, and the adequacy of a lesser sanction. The Court then discusses 9th Circuit approach to imposing the ultimate sanction of dismissal (or judgment), which in turn involves a consideration of (1) public interest in expeditious resolution; (2) Court's need to manage docket; (3) risk of prejudice to non-spoliating party; (4) public policy favoring disposition on the merits, and (5) availability of lesser sanctions:

"In determining whether and what type of sanctions to issue, the Third Circuit has explained that courts should consider three factors: 1) “the degree of fault of the party who altered or destroyed theevidence,” 2) “the degree of prejudice suffered by the opposing party,” and 3) “whether there is a lesser sanction that will avoid substantial unfairness to the opposing party.” Schmid v. Milwaukee, 13 F.3d76, 79 (3rd Cir. 1994); see also Toste, 1996 WL 101189 at * 2 (“[A] party’s motive or degree of fault in destroying evidence is relevant to what sanction, if any, is imposed.”). The Ninth Circuit has also explained that “[b]efore imposing the ‘harsh sanction’ of dismissal,” courts should consider “(1) the public’s interest in expeditious resolution of litigation; (2) the court’s need to manage its dockets; (3)the risk of prejudice to the party seeking sanctions; (4) the public policy favoring disposition of cases on their merits; and (5) the availability of less drastic sanctions.” Leon, 464 F.3d at 958. However,district courts “need not make explicit findings regarding each of these factors.” Id."

Judge Ilston adopted the recommendation of the Special Master, agreeing that adverse inferences were warranted as to evidence "not produced or preserved" In particular, the Court found that Oracle's spoliation did not warrant terminating sanctions, finding that Oracle had provided substantial discovery, that public policy favored disposition on the merits, and that lesser sanctions were warranted.

This was a PLSRA case, and by statute the culpapble state of mind (culpability) standard threshhhold necessary for the imposition of an adverse inference was "willfulness:"

"In order for a court to impose an adverse inference sanction, plaintiffs must demonstrate “‘(1) that the party having control over the evidence had an obligation to preserve it at the time it was destroyed; (2) that[evidence was] destroyed with a culpable state of mind; and (3) that the destroyed evidence was relevant to the party’s claim or defense such that a reasonable trier of fact could find that it would support that claim or defense.’” Napster, 462 F. Supp. 2d at 1078 (quoting Hamilton v. Signature Flight SupportCorp., 2005 WL 3481423, *3 (N.D. Cal. Dec. 20, 2005)). Here, the parties agree that the culpable stateof mind is willfulness, because plaintiffs’ claims arise under the Private Securities Litigation ReformAct (“PSLRA”), which provides that a party may apply for an award of appropriate sanctions where itis “aggrieved by the willful failure of an opposing party to” preserve relevant evidence. 15 U.S.C. §78u-4(b)(3)(C)(ii)."

IV: When Showing of Prejudice Required for Dismissal Sanction.

Judge Ilston recognizes that the decisional authority has been somewhat unclear as to whether a showing of prejudice must be made in order to support a sanction of dismissal. The Court then follows a recent 9th Circuit decision (which in turn follows other jurisdictions) holding that while a finding of prejudice is required for a terminating sanction in a Fed. R. Civ. P. 37 hearing (failure to obey discovery order, etc.), a showing of prejudice is not required where a court is acting sua sponte, or in the use of its "inherent powers"

"The parties debate whether plaintiffs must demonstrate prejudice before the Court can impose lesser sanctions. The Ninth Circuit has recognized that it has sent conflicting signals regarding whether prejudice must be shown in order for the sanction of dismissal to be appropriate. Anheuser-Busch, Inc.v. Natural Beverage Distribs., 69 F.3d 337, 353 (9th Cir. 1995) (collecting cases). A court in this districtrecently clarified that the Ninth Circuit has required a showing of prejudice only when courts are actingunder Federal Rule of Civil Procedure 37, which applies when a party disobeys a court order regardingdiscovery. Napster, 462 F. Supp. 2d at 1075 n.4; cf. Halaco Eng’g Co. v. Costle, 843 F.2d 376, 382 (9thCir. 1988) (prejudice is an optional factor when courts are acting under their inherent authority); withHenry v. Gill Indus., Inc., 983 F.2d 943, 948 (9th Cir. 1993) (prejudice is a “key factor[]” when courtsare acting under the authority of Rule 37); Wanderer v. Johnston, 910 F.2d 652, 656 (9th Cir. 1990)(showing of prejudice is essential when courts are acting under the authority of Rule 37). When acting under its inherent authority, however, a district court need not consider prejudice to the party moving partyfor sanctions, Napster, 462 F. Supp. 2d at 1075 & n.4, and prejudice has not been required when a partymoves for lesser sanctions, id. at 1078. "

Judge Ilston does tip her hat to the difficulty of proving prejudice where the evidence that might have demonstrating that prejudice has been destroyed or otherwise been made unavailable:

"Here, the Court is considering lesser sanctions in the form ofan adverse inference, and even assuming prejudice is required, the Court notes that it would be quite difficult for plaintiffs to demonstrate how they were harmed by evidence to which they do not have access."

What remains to be seen is where there is a massive of amount of discovery provided (arguably showing some compliance with the rules, but where there also is established substantial document alteration.

The Court found:

1. No willfulness in failure to preserve backup tapes

2. Wilful failure to preserve Larry Ellison's email

The Court's finding merits some discussion. First, it appears that only 16 emails were produced from Ellison's own email account (i.e., sent directly from or received directly to), although more than 1,650 of Ellison's emails were referenced in the email threads of other Oracle employees:

"As to Ellison’s email files, the Court finds that sanctions are appropriate. It is undisputed thatdefendants produced only 15 emails sent or received by Ellison from Ellison’s own email files, anddefendants do not contend that all of Ellison’s emails were preserved in his files. Instead, defendantsnote that over 1,650 of Ellison’s emails were produced to plaintiffs from the files of other Oracleemployees. Defendants, relying on Wachtel v. Health Net, Inc., 2007 WL 1101436 (D.N.J. Apr. 10,2007), argue that plaintiffs are not entitled to receive multiple copies of Ellison’s emails. The Court disagrees. It could have been helpful to plaintiffs to demonstrate that certain emails were discoveredin Ellison’s files; otherwise, for instance, Ellison could argue that he never actually read or received anemail that was sent to him, and thus had no knowledge of its contents. Moreover, having establishedwith certainty that numerous emails were not produced from Ellison’s email files – because the emailswere produced from other files or accounts – it is impossible to know whether additional unproducedemails were also deleted or not turned over. This uncertainty about the existence of other emails isprecisely the reason all of Ellison’s emails should have been preserved and produced."

Notably, the last sentence's language, stating that "uncertainty about hte existence of other emails" may act as a preservation duty trigger in other cases.

V. Control and Spoliation

One required element in order to show spoliation is that a spoliating party had control over the evidence it had a duty to preserve. Here, "notes, transcripts and tape recordings" relating to the book "Softwar"(considered relevant evidence to the underlying proceedings) had been permitted to be destroyed:

"The Court also finds that an adverse inference is appropriate with regard to materials created inconnection with the drafting of the book Softwar. The materials in question, according to plaintiffs, are“at least 135 hours of tapes and transcripts of [] interviews with Ellison on topics such as Suite 11i,insider trading, forecasting, the economy, and Oracle’s billion dollar savings claim.” Plaintiff’sSupplemental Motion at 27. Plaintiffs first moved to compel production of these materials on October30, 2006, and on December 29, 2006, Special Master Infante granted plaintiffs’ motion to compelproduction of “any interview notes, transcripts or tape recordings relating to the book.” Winkler Decl.ex. 194 at 4. Many of these materials were never produced to plaintiffs, however, because it appearsthat sometime in late 2006 or January 2007, Symonds, the author of Softwar, destroyed the materialsin question by directing a computer repair shop to dispose of the laptop on which Symonds had storedthe recorded audio files of interviews with Ellison. Winkler Decl. ex. 214. It is undisputed thatdefendants were able to produce to plaintiffs roughly 200 pages of transcripts from interviews conductedin 2002, but were not able to produce any recordings or transcripts from interviews conducted in 2001"

The Court found that although defendant did not have physcial control over the laptop containing the transcripts and recordings, it did have a duty to attempt to preserve prior to their destruction:

"Even assuming defendants did have copies of the materials and were powerless to preventtheir destruction, the Court finds sanctions necessary because Ellison knew of the litigation at the timemost interviews were conducted, and failed to take any efforts to preserve the materials despite hisobligation to do so."

VI. Spoliation and Summary Judgment

Whether a finding of spoliation can help defeat a summary judgment motion has not received much judicial attention. There is some decisional authority from NY that indicates that a finding of spoliation may or may not defeat a motion for summary judgment, but it appears that the spoliated evidence must be shown to be fairly damaging. This does set up a very difficult requirement of proving a negative (show how spoliated evidence --- the content of which may never be known, might present a genuine issue of material fact). Judge Ilston appears to take the position that Oracles spoliation will provide support sufficient to defeat a summary judgement motion for at least some of the plaintiff's claims:

"To summarize, the Court holds that plaintiffs are entitled to adverse inference instructions with regard to Ellison’s emails and the Softwar-related materials, but not with regard to other evidence. The Court will take these adverse inferences into account when deciding the parties’ summary judgment motions. Specifically, the Court believes that it is appropriate to infer that the emails and Softwarmaterials would demonstrate Ellison’s knowledge of, among other things, problems with Suite 11i, the effects of the economy on Oracle’s business, and problems with defendants’ forecasting model, but theCourt notes that such inferences will not assist plaintiffs in demonstrating the existence of genuine issues of material fact for every element of their § 10(b) claims, such as the element of loss causation.To assist the Court with the resolution of these issues, the Court asks that both parties revise and re-filetheir motions for summary judgment to clearly specify the precise contours of the adverse inferencesthat should be drawn from the emails and Softwar materials, and to take these inferences into account with regard to the propriety of summary judgment."

Sunday, August 24, 2008

2008-08-24 Pre-Litigation Duty to Preserve, Even Without Court Order - Fourth Circuit

In an August 20, 2008 decision in Buckley v. Mukasey, 2008 WL 3854498, 12 (4th Cir. 2008) the U.S. Court of Appeals for the 4th Circuit recognizes that a duty to preserve material evidence may extend to the "period before" litigation. A showing of "when" a party should know that evidence may be relevant to anticipated litigation becomes the next point of contest, and a risky one for evidence "producers."

"[W]e simply observe that (even absent a court order) “[t]he duty to preserve material evidence arises not only during litigation but also extends to that period before the litigation when a party reasonably should know that the evidence may be relevant to anticipated litigation.” Silvestri v. Gen. Motors Corp., 271 F.3d 583, 591 (4th Cir.2001)."
2008-08-24 Spoliation under Illinois Law Mirrors Residential Funding's Ordinary Negligence Analysis

In a recent decision, the District Court provides an examination of spoliation principles under Illinois law. While noting that the spoliation does constitute a separate cause of action, it points out that both Illinois state courts as well as the 7th Circuit have embraced the "ordinary negligence" standard for a finding of spoliation, aligning the 7th Circuit with the 2d Circuit's Residential Funding decision.

In Stoner v. Wal-Mart Stores, Inc., 2008 WL 3876077, 2 (C.D.Ill.,2008), the District Court analyzed the 7th Circuit's approach to spoliation in Illinois, and under Illinois law, imposing a negligence approach to showing of destruction of evidence, i.e., duty, breach, and, damages:

"In Borsellino v. Goldman Sachs Group, Inc., 477 F.3d 502 (7th Cir.2007), the Seventh Circuit summarized Illinois law regarding spoliation of evidence, as follows:[P]laintiffs brought their spoliation charges in two separate claims-one for intentional spoliation of evidence and one for negligent spoliation. The Supreme Court of Illinois has emphasized, however, that the state does not recognize a tort of intentional spoilation of evidence, and that negligent spoliation is not itself an independent tort but rather a type of negligence. Boyd v. Travelers Ins. Co., 652 N.E.2d 267, 273 (Ill.1995); see Cangemi v. Advocate S. Suburban Hosp., 845 N.E.2d 792, 815 (Ill.App.2006)(“Plaintiffs cite to no case that specifically recognizes intentional spoliation of evidence as a tort in Illinois. Neither have we found such an Illinois case.”). We thus analyze the two charges of spoliation as an ordinary negligence claim, which to prevail will eventually require showing a duty (in this case to protect documents), a breach of that duty, causation, and damages. Boyd, 652 N.E.2d at 270. Borsellino, 477 F.3d at 509-510. See also, Dardeen v. Kuehling, 821 N.E.2d 227, 231 (Ill.2004)."

Wednesday, August 20, 2008

2008-08-19 Government Ordered to Perform ESI Search, Provide Detailed Privilege Log in Criminal Case

In the second instalment of U.S. v O'Keefe, 2006-cr-0249 (D.C.D.C. 2008), Magistrate Judge Facciola extends the adoption of ESI discovery principles to criminal matters. In this decision, the Court first requires that the Government stop equivocating as to the existence of ESI, and

"examine the pertinent files and state unequivocally whether it is in possession of any documents that would fall within this discovery request, i.e. whether there have come into existence since April 1, 2006 written matter, to include electronically stored information, such as Department analyses, or other documents that concern or mention the 21 employees specified in the discovery request. It must also produce them.

Judge Facciola then applies FRCP Rule 26 to the instant criminal proceeding:

"If it believes that any of them are privileged and seeks to withhold them, then I will once again borrow a rule from the Federal Rules of Civil Procedure and require the government to "describe the nature of the documents, communications, or tangible things not produced or disclosed—and do so in a manner that, without revealing information itself privileged or protected, will enable other parties to assess the claim." Fed. R. Civ. P. 26(b)(5). I expect this document, most commonly called a "privilege log," to so explicitly describe the documents that in camera review is unnecessary. See Victor Stanley, Inc. v. Creative Pipe, Inc., --- F.R.D. ---, 2008 WL 2221841, at *10 (D. Md. 2008)."

The first O'Keefe "borrowing," which imported Fed R. Civ. P. Rule 34 ESI discovery principles, was blogged here on 2008-02-20. The Victor Stanley decision discussing keyword search efficacy challenges was blogged here 2008-06-03. Judge Facciola's insistence on a meaningful (i.e., detailed) privilege log has significant implications for civil as well as criminal proceedings. Privilege logs are typically scant, and often go unchallenged by the requesting party. A detailed privilege log may reveal that a document is not privileged, expose discovery abuses, or constitute an admission. While assuming that the work product privilege applies in criminal cases, Judge Facciola leaves for another day (and further briefing) whether the privilege "if it applies, could trump either the government’s discovery obligation or its constitutional obligation to produce evidence that would tend to exculpate the defendant."

Link to the decision:

Tuesday, August 12, 2008

2008-08-12 Spoliation and Discovery Abuse Analysis: Convergence Continues

The distinction between spoliation and failure to produce evidence continues to blur.

In Alden v. Mid-Mesabi Associates Ltd. Partnership, 2008 WL 2828892 (D.Minn. 2008). the District Court held that "[We] understand that, as we have previously warned the Plaintiff, the failure to produce evidence, without just cause, which is relevant within the context of Rule 26, bears a close relationship to the “spoliation of evidence,” and is sanctioned accordingly. See, Sylla-Sawdon v. Uniroyal Goodrich Tire Company, supra at 280; Dillon v. Nissan Motor Co., Ltd., 986 F.2d 263, 267 (8th Cir.1993); SDI Operating Partnership, L.P. v. Neuwirth, 973 F.2d 652, 655 (8th Cir.1992); Scout v. City of Gordon, 849 F.Supp. 687, 690-91 (D.Neb.1994); Capellupo v. FMC Corp., 126 F.R.D. 545, 551 (D.Minn.1989); cf., Baker v. General Motors Corp., 86 F.3d 811, 817 (8th Cir.1996), rev'd on other grounds, 522 U.S. 222 (1998)."

In the Second, Ninth, and Eleventh Circuits, failure to withhold evidence may result from a finding of "purposeful sluggishness." The seminal case for this is the Residential Funding Corp. v DeGeorge Financial Corp. 306 F.3d 99 (2d Cir. 2002).

Monday, August 11, 2008

2008-08-11 Spoliation and Work Product Privilege - Assertion Presumes Anticipation

It should be kept in mind that a party asserting the work product privilege in order to limit production of requested information is presumed to have anticipated that litigation (and triggered the invocation of Zubulake, Residential Mortgage and progeny) as of the date relevant to the underlying information for which privilege status is sought. In other words, the privilege presumes relevance as well as the foreseeability of litigation, and if Zubulake and progeny apply, a duty to preserve (including the duty to suspend routine document destruction) may be triggered.

Courts have held that an assertion of work product privilege (whether core or "fact") on a privilege log may be deemed an admission. The central prerequisite for an assertion of the work product privilege, a "party must show, as to each document, that the work product in question was: (1) prepared by, or under the direction of, an attorney and (2) was prepared in anticipation of litigation." Rambus, Inc. v. Infineon Technologies AG, 220 F.R.D. 264, 272 (E.D.Va. 2004). This duty to preserve (or to suspend routine document destruction) is triggered, arguably, contemporaneously with the time the evidence in question was prepared, and in the digital evidence world, created or generated. See U.S. Fire Ins. Co. v. Bunge North America, Inc., 2008 WL 2548129 (D.Kan. 2008). Once the duty to preserve/suspend is triggered, it is also triggered for all relevant (and forseeably relevant) digital evidence generated as of the time of the privileged document's preparation.

Wednesday, July 23, 2008

2008-07-23 Negligent Destruction of Evidence Tort Makes "Appearance" in NY

In the July 16, 2008 decision in Newton v. City of New York 2008 WL 2775646 (S.D.N.Y. 2008), Judge Scheindlin states that while "New York does not recognize the tort of “third-party negligent spoliation of evidence...” [t]he courts appear to permit an action for the negligent destruction of evidence so long as the plaintiff can meet the requirements of a standard negligence action."

What this portends for negligent destruction of computer generated information claims remains to be seen. It is relatively clear that an independent cause of action for spoliation may not be brought in the 2d Circuit. That said, a negligent destruction of evidence claim, brought against a third party, involves fewer pleading elements than a spoliation claim. The most onerous pleading element in a spoliation claim is a showing that what was spoliated would have either supported the non-spoliator's claims or disproved the spoliating party's claims. Porivng that negative presents a very imposing barrier to a successful spoliation claim, although there are some decisions that support an approach that permits the actions of the spoliating party to support an inference that the spoliated evidence was supporting/damaging.

Another unanswered question is whether a negligent destruction of evidence claim can be asserted as an independent claim by a party against a party (independent of a District Court's inherent powers to sanction, or Fed. R. Civ. P. 37).

Friday, July 18, 2008

2008-07-18 Cost-Shifting Relief Requests are Preventive

Failure to Raise Cost Shifting Issue in Timely Fashion Results in Denial of Motion

In a decision from the Eastern District of Michigan [Cason-Merenda v. Detroit Medical Center, 2008 WL 2714239 (E.D.Mich. 2008)] defendant Detroit Medical Center moved the court for an order requiring the plaintiff to pay for third party vendor costs in connection with ESI production. Magistrate Judge Scheer issued this decision, denying the motion to shift costs, and in a rather strongly worded opinion, puts out the message that requests to shift costs must be made in a timely fashion, or be denied.

Relevant Rule:

The Court began with a recitation of relevant excerpts from Fed. R. Civ. P. 26:

"Fed. R. Civ. P. 26(b)2(B) provides as follows: A party need not provide discovery of electronically stored information from sources that the party identifies as not reasonably accessible because of undue burden or cost. On motion to compel discovery or for a protective order, the party from whom discovery is sought must show that the information is not reasonably accessible because of undue burden or cost. If that showing is made, the court may nonetheless order discovery from such sources if the requesting party shows good cause, considering the limitations of Rule 26(b)2(C). The court may specify conditions for the discovery.

The parties did undertake a Rule 26(f) meet and confer, issue a proposed joint ESI Order, and that Order was in fact signed by the Court:
"In this action, the parties entered a Stipulated Order for Discovery of Electronically Stored Information, which was adopted by the court on June 20, 2007. The Order notes that the parties held several discussions regarding the possibility of limiting the scope and extent of discovery and that future agreements might be reached. They also reserved the right to petition the court to limit the scope and burden of discovery and to request that the opposing party share the costs."
The issue raised before the Court involved the reservation of rights provision, permitting either party to petition the court to limit the scope and burden of discovery, and request cost sharing presented the issue to the court.
So how did defendant run afoul of both the Rule 26 and their discovery Order, and in effect waive their rights to request cost shifting to plaintiff? Defendants Motion failed for two reasons; the first relating to the discovery order itself, and the second having its basis in Fed. R. Civ. P. Rule 26(b)2(b) and 26(c):
Here, the defendant apparently engaged a third party ESI vendor to produce the relevant requested ESI, paid for same, and then decided to seek costs. It did not object to the request, nor did it file a motion for a protective order seeking relief by way of cost shifting or cost sharing.
The Court determined that the procedure for asserting a cost shifting or sharing claim is identical to the assertion of any other objection to a request for production. In other words, a disagreement about cost shifting is a discovery dispute, and should have been handled in the same way as any other discovery dispute. The ESI discovery Order in this case specifically provided that any all motions to compel discovery were required to be discovery be filed within 14 days of a party's "receipt of notice of such disputed discovery" Defendant here failed to so file, and the Court deemed the filing of the motion to shift costs untimely as a first basis for denial of that motion.
The second basis for the Court's denial of the motion for cost shifting focused on an interpretation of Fed. R. Civ. P. Rule 26 and relevant decisional authority on cost-shifting that in essence requires an assertion of cost-shifting to be made prior to the what the Court termed defendant's choice at "self-martyr[dom], i.e., the undertaking of, and incurring costs of production first, and seeking redress for costs after such undertaking.
"[Defendant] DMC surely was, or should have been, aware of the substantial cost of responding to Plaintiffs' discovery requests before it undertook to do so. Rather than raising the issue of undue burden and cost before they were incurred, when there would have been an opportunity for the court to demand a showing of good cause by the requesting party, explore alternatives, impose conditions or otherwise encourage compromise, DMC elected to suffer the expense and only then seek contribution from the Plaintiffs."
The relevant decisional authority supporting the proposition that a motion for cost-shifting or sharing be made (by way of a motion for protective order, etc.) before the discovery is undertaken will be familiar to eDiscovery aficionados:

"The federal rules contemplate that discovery will proceed without judicial intervention unless a party moves for a protective order or an order compelling discovery. Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 98 S.Ct. 2380, 57 L.Ed.2d 253 (1978). Ordinarily, a party must bear the expense of complying with discovery requests, although he may invoke the district court's discretion to grant orders protecting him from undue burden or expense, including orders conditioning discovery upon cost shifting. Id., at 358. There is authority that “[a] court should consider cost shifting only when electronic data is relatively inaccessible, such as in back up tapes.” Zubulake v. U.B.S. Warburg LLC, 217 F.R.D. 309, 324 (S.D.N.Y.2003). Thus, to the extent that DMC maintains that the information produced by it in discovery was accessible, court ordered cost shifting is inappropriate."

The Court also noted that by not acting in a timely fashion, the defendant actually deprived the Court of the ability to decide a priori, from a variety of relief options it might have imposed:
"The clear import of the language employed is that the court has wide discretion to prevent undue burden or expense. But for Defendant's delay, the court would have been in a position to select from a range of alternative actions:

In [the Court's], the provisions of that rule simply underscore the untimeliness of the instant motion. The rule provides, in pertinent part, that “[t]he court may, for good cause, issue an order to protect a party or person from ... undue burden or expense, including one or more of the following:
(A) Forbidding the disclosure or discovery;
(B) Specifying terms, including time and place, for the disclosure or discovery;
(C) Prescribing a discovery method other than the one selected by the party seeking discovery;
(D) Forbidding inquiry into certain matters, or limiting the scope of disclosure or discovery to certain matters;Fed.R.Civ.P. 26(c)(1)."

In addition, had the court determined to impose conditions upon DMC's production, Plaintiffs presumably would have been in a position to elect either (a) to accept the conditions or (b) to forego the discovery and save DMC the burden and expense of producing it. Unfortunately, DMC's tardy filing has deprived this court of its most valuable prerogatives. Having elected to martyr itself rather than to seek relief in a timely fashion, DMC seeks an order imposing the cost of its choice upon its opponents. I find neither substantive merit nor equity in its request."

Takeaway: Cost-shifting or cost-sharing are by definition discovery disputes, and accordingly, requests relief must be by way of appropriate preventive (perhaps even preemptive) procedure (i.e., a motion for a protective order, or a response to a motion to compel). Oh, and don't be a martyr.