Saturday, November 21, 2009

2009-11-21 Seventh Circuit Announces eDiscovery Pilot Program

Back after a looong break. Posts will be somehwat shorter...but will remain informative, and opinionated. And, so...

On October 1, 2009, the U.S. Circuit Court of Appeals for the Seventh Circuit announced the deployment of Phase One of the not surprisingly titled: “Seventh Circuit Electronic Discovery Pilot Program.” Phase One is effective between October 1, 2009 and May 1, 2010.

This document sets forth both a statement of purpose and preparation of principles for parties engaging in electronic discovery practice in matters before district, bankruptcy, and magistrate court proceedings in the Seventh Circuit. To the best of my knowledge, this is the first circuit-wide program of its kind in the United States. The document is 21 substantive pages in length.

The document is well written, and the assistance in its drafting by technology types is evident throughout.

Document link:

That said, I found especially helpful the proposed ESI discovery standing order, the text of which represents a significant step forward in reducing eDiscovery disputes. Of particular note are the sections addressing cooperation (1.02), eDiscovery Liaisons (2.02), Production Format (2.06), and Education (3.02).

Failure to cooperate in connection with ESI discovery is now expressly sanctionable in all district, bankruptcy and magistrate court proceedings in the Seventh Circuit (See Section 2.01).

BlogNote: This is a great start.

Practice Note: Think this is merely a wish list? Think again. I attended a status conference two weeks ago in connection with an eDiscovery, er, disagreement (another native format battle, wouldn’t you know) and the magistrate judge in the Northern District of Illinois before whom we appeared stated on the record that the Court was adopting the proposed standing order, effectively immediately, and would resolve the parties’ disagreement in accordance therewith.

Kudos to the Seventh Circuit.


Thursday, July 02, 2009

2009-07-02 Supreme Court Extends Crawford v Washington Testimonial Hearsay Doctrine, Old (and Repudiated) Metadata Approaches Rise from The...Repudiated, Forensic Imaging and TRO's, Metadata Mining as an Ethics Issue, and Intentional Spoliation as Basis for Fraud Assertion

Six decisions this week, including one from the U.S. Supreme Court appearing to extend the Sixth Amendment Confrontation Clause protection holding in Crawford v Washington. This decision may have significant implications for computer evidence used as “testimonial hearsay” evidence in future criminal actions. A second case from the District of Massachusetts provides what is in essence a minority view and in large part based older (here, two to three years older) notions of metadata repudiated by recent decisional authority as well as…the Sedona Principles. The third decision, finds the U.S. District Court for the District of New Jersey holding that the results of a forensic computer image analysis supported the issuance of a TRO. The fourth decision addresses the intersection of litigation and professional ethics…in this case, metadata mining by opposing counsel during litigation. Next up is decision from a California Appellate Court, affirming terminating sanctions for spoliation in the tens of millions of dollars (perhaps a near record amount) but reversing the trial court’s punitive damages ruling. The sixth decision, from an appellate panel in New York, shows how spoliation can be alleged as a critical element for an assertion of fraudulent misrepresentation or fraudulent concealment (read: discovery abuse).



Melendez-Diaz v. Massachusetts, --- S.Ct. ----, 2009 WL 1789468 (2009)
Dahl v. Bain Capital Partners, LLC, 2009 WL 1748526 (D.Mass. 2009)
Esquire Deposition Services, LLC v. Boutot, 2009 WL 1812411 (D.N.J. 2009)
Stengart v. Loving Care Agency, Inc., --- A.2d ----, 2009 WL 1811064 (N.J.Super.A.D. 2009)
Electronic Funds Solutions, LLC v. Murphy, 2009 WL 1717383 (Cal.App. 4 Dist. 2009)
IDT Corp. v. Morgan Stanley Dean Witter & Co., --- N.Y.S.2d ----, 2009 WL 1794364 (N.Y.A.D. 1st Dept. 2009)

Case: Melendez-Diaz v. Massachusetts

Citation: --- S.Ct. ----, 2009 WL 1789468 (2009)
Date: 2009-06-25
Topics: Extension of Crawford v Washington Confrontation Clause Protection to forensic analyst affidavits, core testimonial statements, breath-a-lyzer reference, implications for digital evidence, non-conventional witnesses, business record and official record hearsay exception and Confrontation Clause

This decision from the U.S. Supreme Court addresses (and appears to expand) 6th Amendment Confrontation Clause rights. This decision (and the Crawford v Washington holding, discussed in detail below) may have important implications in the realm of computer generated evidence.

What was appealed: Following conviction in state trial court on charges of distributing and trafficking in cocaine, the Appeals Court of Massachusetts, affirmed, ruling that trial court had comported with Sixth Amendment by admitting certificates of analysis sworn by analysts at state laboratory without requiring in-court testimony by analysts. The Supreme Judicial Court of Massachusetts denied review. Certiorari was granted. Note that the reports had to do with the (presumably chemical) testing of a sample of evidence suspected to be cocaine. Not a computer generated report, but, as discussed later in this digest, it appears that the Court is girding for that inevitability.

It is somewhat interesting to note that the U.S. appeared as amicus curiae in support of respondent.

First, the ruling. The Court (with Justice Scalia writing for the 5-4 majority) held:

“(1) analysts' certificates of analysis were affidavits within core class of testimonial statements covered by Confrontation Clause;
(2) analysts were not removed from coverage of Confrontation Clause on theory that they were not “accusatory” witnesses;
(3) analysts were not removed from coverage of Confrontation Clause on theory that they were not conventional witnesses;
(4) analysts were not removed from coverage of Confrontation Clause on theory that their testimony consisted of neutral, scientific testing;
(5) certificates of analysis were not removed from coverage of Confrontation Clause on theory that they were akin to official and business records; and
(6) defendant's ability to subpoena analysts did not obviate state's obligation to produce analysts for cross-examination.” Melendez-Diaz v. Massachusetts, ---U.S. ---, 2009 WL 1789468 (U.S. 2009)

Background Excerpted from the Syllabus

“At petitioner's state-court drug trial, the prosecution introduced certificates of state laboratory analysts stating that material seized by police and connected to petitioner was cocaine of a certain quantity. As required by Massachusetts law, the certificates were sworn to before a notary public and were submitted as prima facie evidence of what they asserted.” Id., at 2009 WL 1789468 at p. 1

The Petitioner objected, asserting that the admission of the certificates without also providing an opportunity for defendant to obtain the in-person testimony of the analyst administering the test violated the 6th Amendment’s Confrontation Clause as interpreted by the Supreme Court’s 2004 decision in Crawford v Washington, 541 U.S. 36 (2004).

More details:

“Petitioner objected, asserting that Crawford v. Washington, 541 U.S. 36, 124 S.Ct. 1354, 158 L.Ed.2d 177, required the analysts to testify in person. The trial court disagreed, the certificates were admitted, and petitioner was convicted. The Massachusetts Appeals Court affirmed, rejecting petitioner's claim that the certificates' admission violated the Sixth Amendment. Id.

“Following conviction in state trial court on charges of distributing and trafficking in cocaine, the Appeals Court of Massachusetts, affirmed, ruling that trial court had comported with Sixth Amendment by admitting certificates of analysis sworn by analysts at state laboratory without requiring in-court testimony by analysts. The Supreme Judicial Court of Massachusetts denied review. Certiorari was granted.”

Crawford v Washington’s Analysis of Testimonial Hearsay and the 6th Amendment Confrontation Clause

The Crawford decision hold that testimonial hearsay is inadmissible at trial unless the witness appears at trial or, if the witness is unavailable, the defendant had a prior opportunity for cross examination. Id.

Examiner’s Certificates are “Core Testimonial Statements” Covered by Confrontation Clause:

Key to the Court’s determination that examiner’s certificates (considered equivalent to affidavits) was that the certificates would be used as evidence at trial, and that under Massachusetts law, the certificate’s sole purpose was to provide prima facie evidence of composition, quality and net weight.” This evidence was clearly both testimonial and accusatory:

“The certificates here are affidavits, which fall within the “core class of testimonial statements” covered by the Confrontation Clause, id., at 51, 124 S.Ct. 1354. They asserted that the substance found in petitioner's possession was, as the prosecution claimed, cocaine of a certain weight-the precise testimony the analysts would be expected to provide if called at trial. Not only were the certificates made, as Crawford required for testimonial statements, “under circumstances which would lead an objective witness reasonably to believe that the statement would be available for use at a later trial,” id., at 52, 124 S.Ct. 1354, but under the relevant Massachusetts law their sole purpose was to provide prima facie evidence of the substance's composition, quality, and net weight. Petitioner was entitled to “be confronted with” the persons giving this testimony at trial. Id., at 54, 124 S.Ct. 1354.” Id.

Respondent’s Arguments:

“Certificates are Non-Accusatory” Argument Rejected

The Respondent (the State of Massachusetts) first argues that the examiner’s certificates are not “accusatory,” an assertion summarily rejected by the Court:

“The arguments advanced to avoid this rather straightforward application of Crawford are rejected. Respondent's claim that the analysts are not subject to confrontation because they are not “accusatory” witnesses finds no support in the Sixth Amendment's text or in this Court's case law.” Id.


Contemporaneity of Statement Creation with Observation Not Irrelevant

On to the issue of contemporaneity, the next argument rejected by the majority. Here, the Court appears to indicate that, at least for Confrontation Clause purposes, contemporaneity of statement with observation does not alter that statement’s testimonial nature:

“The affiants' testimonial statements were not “nearly contemporaneous” with their observations, nor, if they had been, would that fact alter the statements' testimonial character. There is no support for the proposition that witnesses who testify regarding facts other than those observed at the crime scene are exempt from confrontation.” Id.

Analyst “Certificates” are Not Business Records

The Court then determines that the certificates in questions do not qualify as traditional official or business records that could be considered admissible under Fed. R. Evid. Rule 803(6) --- [Reasoning to follow].

Neutral Scientific Testing

The Court also ruled that respondent’s argument that Confrontation Clause protection does not extend to the results from “neutral scientific testing” would “invite a return” to the decision overturned in 2004 by Crawford:

“The argument that the analysts should not be subject to confrontation because their statements result from neutral scientific testing is little more than an invitation to return to the since-overruled decision in Ohio v. Roberts, 448 U.S. 56, 66, 100 S.Ct. 2531, 65 L.Ed.2d 597, which held that evidence with “particularized guarantees of trustworthiness” was admissible without confrontation. Petitioner's power to subpoena the analysts is no substitute for the right of confrontation.” Id.

Burdensomeness Argument Rejected

The Court also rejected respondent’s assertions that Confrontation Clause protections should in these cases be relaxed because of the added burden that would otherwise be shouldered by the state:

“Finally, the requirements of the Confrontation Clause may not be relaxed because they make the prosecution's task burdensome. In any event, the practice in many States already accords with today's decision, and the serious disruption predicted by respondent and the dissent has not materialized.” Id.

Here now, the longer analysis.

Justice Scalia, writing for the majority, states the issue in two sentences:

“The Massachusetts courts in this case admitted into evidence affidavits reporting the results of forensic analysis which showed that material seized by the police and connected to the defendant was cocaine. The question presented is whether those affidavits are “testimonial,” rendering the affiants “witnesses” subject to the defendant's right of confrontation under the Sixth Amendment.” Id. at p. 2

Defendant-Appellant was charged with distributing and trafficking in cocaine in an amount between 14-28 grams. At trial, the prosecution placed into evidence three bags seized from defendant, and also submitted three “certificates of analysis” showing the results of forensic analysis performed on the seized substances. The certificates, which were sworn to before a notary, stated that the substance contained in the three bags was cocaine. Both the forensic examination conducted as well as the “certificates” issued were in accordance with Massachusetts state law.

At the state court drug trial, the prosecution introduced the certificates, which stated that the material seized by police and connected to petitioner was cocaine “of a certain quantity.” Moreover, as required by Massachusetts state law, the certificates were sworn to by a notary public, and were then introduced as prima facie evidence of what they asserted.

Petitioner objected, and asserted that Crawford v Washington 541 U.S. 36 (2004) required the analysts to testify in person. The trial court disagreed, and admitted the certificates. The jury found petitioner guilty. The Massachusetts Appeals Court affirmed the verdict, holding that state decisional authority (here vintage 2005) held that certificates of forensic analysis are not subject to confrontation under the Sixth Amendment. The Supreme Judicial Court of Massachusetts denied review, and the denial was then appealed by way of certiorari to the U.S. Supreme Court.

A brief trip down memory lane for those attorneys (non-attorneys get a pass here) who texted through constitutional law. The Sixth Amendment was made applicable to the States by application of the Fourteenth Amendment in 1965 and so the Court notes:

“The Sixth Amendment to the United States Constitution, made applicable to the States via the Fourteenth Amendment, Pointer v. Texas, 380 U.S. 400, 403, 85 S.Ct. 1065, 13 L.Ed.2d 923 (1965), provides that “[i]n all criminal prosecutions, the accused shall enjoy the right ... to be confronted with the witnesses against him.” Id. at p. 3

Crawford v. Washington

The Court then provides a brief summary of the holding in Crawford v Washington. In reversing the 1980 precedent set in Ohio v. Roberts 448 U.S. 56 (1980):

"In Crawford, after reviewing the Clause's historical underpinnings, we held that it guarantees a defendant's right to confront those “who ‘bear testimony’ ” against him. 541 U.S., at 51, 124 S.Ct. 1354. A witness's testimony against a defendant is thus inadmissible unless the witness appears at trial or, if the witness is unavailable, the defendant had a prior opportunity for cross-examination. Id., at 54, 124 S.Ct. 1354.” Id.

Where the Crawford decision becomes interesting is in its general description of the “class of testimonial statements” and particularly articulation of “core class of testimonial statements” covered by the Confrontation Clause:

“Various formulations of this core class of testimonial statements exist: ex parte in-court testimony or its functional equivalent-that is, material such as affidavits, custodial examinations, prior testimony that the defendant was unable to cross-examine, or similar pretrial statements that declarants would reasonably expect to be used prosecutorially; extrajudicial statements ... contained in formalized testimonial materials, such as affidavits, depositions, prior testimony, or confessions; statements that were made under circumstances which would lead an objective witness reasonably to believe that the statement would be available for use at a later trial.” Id., at 51-52, 124 S.Ct. 1354 (internal quotation marks and citations omitted).” Id.

The Court has no trouble in categorizing the “certificates” at issue as “core testimonial statements,” noting that:

“There is little doubt that the documents at issue in this case fall within the “core class of testimonial statements” thus described. Our description of that category mentions affidavits twice. See also White v. Illinois, 502 U.S. 346, 365, 112 S.Ct. 736, 116 L.Ed.2d 848 (1992) (THOMAS, J., concurring in part and concurring in judgment) (“[T]he Confrontation Clause is implicated by extrajudicial statements only insofar as they are contained in formalized testimonial materials, such as affidavits, depositions, prior testimony, or confessions”). The documents at issue here, while denominated by Massachusetts law “certificates,” are quite plainly affidavits: “declaration[s] of facts written down and sworn to by the declarant before an officer authorized to administer oaths.” Black's Law Dictionary 62 (8th ed.2004). They are incontrovertibly a “‘solemn declaration or affirmation made for the purpose of establishing or proving some fact.’ ” Crawford, supra, at 51, 124 S.Ct. 1354 (quoting 2 N. Webster, An American Dictionary of the English Language (1828)).” Id.

The Court then determines that the “certificates” are “functionally identical” to live, in-court testimony, doing precisely what a witness does on direct examination.” The strong language used to describe the nature of these documents is notable for the use of “identical” rather than “equivalent:”

“The fact in question is that the substance found in the possession of Melendez-Diaz and his codefendants was, as the prosecution claimed, cocaine-the precise testimony the analysts would be expected to provide if called at trial. The “certificates” are functionally identical to live, in-court testimony, doing “precisely what a witness does on direct examination.” Davis v. Washington, 547 U.S. 813, 830, 126 S.Ct. 2266, 165 L.Ed.2d 224 (2006)” Id.

The Court also points out that not only was there a reasonable expectation that the certificates would be used as evidence at trial, but that this was the sole purpose for their creation under Massachusetts law:

“Here, moreover, not only were the affidavits “ ‘made under circumstances which would lead an objective witness reasonably to believe that the statement would be available for use at a later trial,’ ” Crawford, supra, at 52, 124 S.Ct. 1354, but under Massachusetts law the sole purpose of the affidavits was to provide “prima facie evidence of the composition, quality, and the net weight” of the analyzed substance, Mass. Gen. Laws, ch. 111, § 13. We can safely assume that the analysts were aware of the affidavits' evidentiary purpose, since that purpose-as stated in the relevant state-law provision-was reprinted on the affidavits themselves.” Id. at p. 4

Blognote: Let’s pause for a moment and consider the results (a printout) of a breath alcohol measurement device (“Breath-a-lyzer”). The physical evidentiary sample is never preserved, and so the only evidence of blood alcohol level comes from a report, or printout, of the Breath-a-lyzer. Here, we have an “analyst in a box” and a black box at that. The laws of many states routinely provide that the printout of these devices may routinely introduced, and admitted, as evidence of the blood alcohol level of a defendant. Consider also that there is no human analyst involved in the process, merely a test “administrator” (typically a law enforcement officer) who does not analyze the evidence so much as report the results of the printout. Who accuses, in this scenario? The answer to this question is not at all clear, and presents that twilight area where digital evidence and hearsay definitions meet, or collide. More later.

Now, back to the decision.

The Court then quite succinctly sums up its rather lengthy holding in Crawford:

“In short, under our decision in Crawford the analysts' affidavits were testimonial statements, and the analysts were “witnesses” for purposes of the Sixth Amendment. Absent a showing that the analysts were unavailable to testify at trial and that petitioner had a prior opportunity to cross-examine them, petitioner was entitled to “‘be confronted with’ ” the analysts at trial. Crawford, supra, at 54, 124 S.Ct. 1354. FN1” Id. at 4

Confrontation Clause Requires “Live” Testimony

As always, footnotes to decisions like these provide ample additional context, and this decision has more than a few. We start off with footnote 1 (what else?), in which the Court responds to the dissent’s argument that the instant decision opens the Confrontation Clause floodgates to “anyone whose testimony may be relevant” in the proceedings, and that any gaps in the chain of custody normally go to weight, rather than admissibility:

“FN1. Contrary to the dissent's suggestion, post, at ---- - ----, ---- (opinion of KENNEDY, J.), we do not hold, and it is not the case, that anyone whose testimony may be relevant in establishing the chain of custody, authenticity of the sample, or accuracy of the testing device, must appear in person as part of the prosecution's case. While the dissent is correct that “[i]t is the obligation of the prosecution to establish the chain of custody,” post, at ----, this does not mean that everyone who laid hands on the evidence must be called. As stated in the dissent's own quotation, ibid., from United States v. Lott, 854 F.2d 244, 250 (C.A.7 1988), “gaps in the chain [of custody] normally go to the weight of the evidence rather than its admissibility.” It is up to the prosecution to decide what steps in the chain of custody are so crucial as to require evidence; but what testimony is introduced must (if the defendant objects) be introduced live. Additionally, documents prepared in the regular course of equipment maintenance may well qualify as nontestimonial records.” Id.

Blognote: The last sentence of this footnote has special meaning for those with an interest in digital evidence issues. Contrary to those who might argue otherwise, documents prepared in the regular course of maintenance are not the documents (or records) produced by a computing device (such as a Breath-a-lyzer) used to provide evidence of blood-alcohol level used in turn as evidence of an element of a crime. Moreover, documents prepared in the regular course of “equipment maintenance” almost certainly do not include uncompiled source code, even if such source code is changed, or “updated” through a maintenance procedure.

The Court Quells the Dissent’s Opening Alarum

The Court then refutes the dissent’s concern that the instant decision sweeps away nearly a century’s judicial approach to the rules governing the admissibility of scientific evidence. The Court first points out that this “acceptance” is merely thirty years old, and, that nearly all of these decisions rely on the very decision (Ohio v Roberts) and rationale that the Crawford decision rejected.

The rejected theory? That evidence was admissible as long as it bore some “indicia of reliability.”

“The vast majority of the state-court cases the dissent cites in support of this claim come not from the last 90 years, but from the last 30, and not surprisingly nearly all of them rely on our decision in Ohio v. Roberts, 448 U.S. 56, 100 S.Ct. 2531, 65 L.Ed.2d 597 (1980), or its since-rejected theory that unconfronted testimony was admissible as long as it bore indicia of reliability, id., at 66, 100 S.Ct. 2531. See post, at ----.FN2 As for the six Federal Courts of Appeals cases cited by the dissent, five of them postdated and expressly relied on Roberts. See post, at ---- - ----. The sixth predated Roberts but relied entirely on the same erroneous theory. See Kay v. United States, 255 F.2d 476, 480-481 (C.A.4 1958) (rejecting confrontation clause challenge “where there is reasonable necessity for [the evidence] and where ... the evidence has those qualities of reliability and trustworthiness”).” Id.

Blognote: Here, the issue is not so much that the Court rejects reliability as the touchstone for admissibility of scientific evidence, but that a mere “indicia” of reliability or trustworthiness is not enough. Consider again the implications for computer generated information offered or introduced into evidence as a proxy for live testimony.

Back again to the decision.

Forensics Analysts are “Accusatory Witnesses”

The Court then addresses, and then rejects, respondent’s arguments that the analysts are not subject to confrontation because they are not “accusatory witnesses,” and do not “directly accuse” petitioner of wrongdoing:

“Respondent first argues that the analysts are not subject to confrontation because they are not “accusatory” witnesses, in that they do not directly accuse petitioner of wrongdoing; rather, their testimony is inculpatory only when taken together with other evidence linking petitioner to the contraband. See Brief for Respondent 10. This finds no support in the text of the Sixth Amendment or in our case law.” Id. at p. 5

One Fact Necessary to Convict Triggers Status as Accusatory Witness

The Court then determines that the status of “accusatory witness” attaches (thereby triggering confrontation rights) where a witness provides at least “one fact” necessary to convict. The Court also provides an interesting syllogism (which may be useful in digital evidence admissibility arguments), rejecting the (imo) oxymoronic notion that there is no category of witness testimony that may be considered helpful to the prosecution, but immune from confrontation:

“The Sixth Amendment guarantees a defendant the right “to be confronted with the witnesses against him.” (Emphasis added.) To the extent the analysts were witnesses (a question resolved above), they certainly provided testimony against petitioner, proving one fact necessary for his conviction-that the substance he possessed was cocaine. The contrast between the text of the Confrontation Clause and the text of the adjacent Compulsory Process Clause confirms this analysis. While the Confrontation Clause guarantees a defendant the right to be confronted with the witnesses “against him,” the Compulsory Process Clause guarantees a defendant the right to call witnesses “in his favor.” U.S. Const., Amdt. 6. The text of the Amendment contemplates two classes of witnesses-those against the defendant and those in his favor. The prosecution must produce the former; FN3 the defendant may call the latter.” Id.

“Contrary to respondent's assertion, there is not a third category of witnesses, helpful to the prosecution, but somehow immune from confrontation.” Id.

“Non-Typical Witnesses,” The Paradigmatic Trial of Sir Walter Raleigh, and Core Right of Confrontation

It’s not often that we see Blackstone’s Commentaries cited in a judicial decision, but then, this is no ordinary opinion. Indeed, the Court first points out that the dissent argues that analysts should not be subject to confrontation because they are not “’conventional” (or ‘typical’ or ‘ordinary’) witnesses whose ex parte testimony was used at the trial of Sir Walter Raleigh. The Court notes that the case of Sir Walter Raleigh identifies the “core” of the confrontation right rather than defining its limits:

“Respondent and the dissent argue that the analysts should not be subject to confrontation because they are not “conventional” (or “typical” or “ordinary”) witnesses of the sort whose ex parte testimony was most notoriously used at the trial of Sir Walter Raleigh. Post, at ---- - ----; Brief for Respondent 28. It is true, as the Court recognized in Crawford, that ex parte examinations of the sort used at Raleigh's trial have “long been thought a paradigmatic confrontation violation.” 541 U.S., at 52, 124 S.Ct. 1354. But the paradigmatic case identifies the core of the right to confrontation, not its limits. The right to confrontation was not invented in response to the use of the ex parte examinations in Raleigh's Case, 2 How. St. Tr. 1 (1603). That use provoked such an outcry precisely because it flouted the deeply rooted common-law tradition “of live testimony in court subject to adversarial testing.” Crawford, supra, at 43, 124 S.Ct. 1354 (citing 3 W. Blackstone, Commentaries on the Laws of England 373-374 (1768)). See also Crawford, supra, at 43-47, 124 S.Ct. 1354.” Id. at p. 6

Non-Typical Witness - Testimonial Contemporaneity

The Court then rejects the dissent’s arguments that a conventional witness recalls events observed in the past, while an analyst’s report contains near-contemporaneous observations of the test. The Court discounts the importance of contemporaneity, finding that even near-contemporaneous witness statements were inadmissible absent an opportunity to confront:

In any case, the purported distinctions respondent and the dissent identify between this case and Sir Walter Raleigh's “conventional” accusers do not survive scrutiny. The dissent first contends that a “conventional witness recalls events observed in the past, while an analyst's report contains near-contemporaneous observations of the test.” Post, at ---- - ----. It is doubtful that the analyst's reports in this case could be characterized as reporting “near-contemporaneous observations”; the affidavits were completed almost a week after the tests were performed. See App. to Pet. for Cert. 24a-29a (the tests were performed on November 28, 2001, and the affidavits sworn on December 4, 2001). But regardless, the dissent misunderstands the role that “near-contemporaneity” has played in our case law. The dissent notes that that factor was given “substantial weight” in Davis, post, at ----, but in fact that decision disproves the dissent's position. There the Court considered the admissibility of statements made to police officers responding to a report of a domestic disturbance. By the time officers arrived the assault had ended, but the victim's statements-written and oral-were sufficiently close in time to the alleged assault that the trial court admitted her affidavit as a “present sense impression.” Davis, 547 U.S., at 820, 126 S.Ct. 2266 (internal quotation marks omitted). Though the witness's statements in Davis were “near-contemporaneous” to the events she reported, we nevertheless held that they could not be admitted absent an opportunity to confront the witness. Id., at 830, 126 S.Ct. 2266.” Id.

Blognote: A Breath-a-lyzer appliance report, if considered testimonial, would appear to fall into the “near contemporaneous” witness category.

Non-Conventional Witnesses - Non-Observants to Crime or Human Actions Related To It.

The dissent argued that the analysts issuing the certificates were not “conventional” witnesses because they neither observed the crime, “nor any action related to it.” The Court again summarily rejects this argument on the basis that the assertion is unsupported by any authority:

“A second reason the dissent contends that the analysts are not “conventional witnesses” (and thus not subject to confrontation) is that they “observe[d] neither the crime nor any human action related to it.” Post, at ----. The dissent provides no authority for this particular limitation of the type of witnesses subject to confrontation. Nor is it conceivable that all witnesses who fit this description would be outside the scope of the Confrontation Clause. For example, is a police officer's investigative report describing the crime scene admissible absent an opportunity to examine the officer? The dissent's novel exception from coverage of the Confrontation Clause would exempt all expert witnesses-a hardly “unconventional” class of witnesses.” Id.

Blognote: Computing appliances (such as a Breath-a-lyzer) neither “observe” crimes nor any action related to them. Imo the Court’s summary rejection of this argument lays a foundation for the future assertion that a computing appliance such as a Breath-a-lyzer might still be considered an accusatorial testimony generating witness.

Non-conventional Witnesses and Statement Not Provided in Response to Interrogation

The Court then rejects the dissent’s contention that analysts are not “conventional” witnesses because their statements were “not provided in response to interrogation.” The Court finds that a witness against a defendant is no less so for volunteering testimony than s/he is for responding to interrogation:

A third respect in which the dissent asserts that the analysts are not “conventional” witnesses and thus not subject to confrontation is that their statements were not provided in response to interrogation. Ibid. See also Brief for Respondent 29. As we have explained, “[t]he Framers were no more willing to exempt from cross-examination volunteered testimony or answers to open-ended questions than they were to exempt answers to detailed interrogation.” Davis, supra, at 822-823, n. 1, 126 S.Ct. 2266. Respondent and the dissent cite no authority, and we are aware of none, holding that a person who volunteers his testimony is any less a “‘witness against’ the defendant,” Brief for Respondent 26, than one who is responding to interrogation.” Id., at p. 7

Blognote: You guessed it. Bladerunner type Replicants notwithstanding, computing appliances volunteer information (or testimony, if considered witnesses) rather than “respond to interrogation.” [Please, please don’t reboot me…]

Testimony Recounting Historical Events, Testimony Resulting from Neutral Scientific Testing, and Footnote 5

The dissent then argues that Confrontation Clause application will vary with the specie of testimony. The dissent then attempts to draw a distinction between, on the one hand, a situation where the Confrontation Clause will apply (testimony recounting historical events, which is “’prone to distortion or manipulation’” and, on the other hand, testimony that is the “’result of neutral, scientific testing.”

The Court rejects this argument, again finding it to be “little more” than an invitation to reverse Crawford and return to Ohio v Roberts:

“This argument is little more than an invitation to return to our overruled decision in Roberts, 448 U.S. 56, 100 S.Ct. 2531, 65 L.Ed.2d 597, which held that evidence with “particularized guarantees of trustworthiness” was admissible notwithstanding the Confrontation Clause. Id., at 66, 100 S.Ct. 2531.” Id.

Blognote: The result of neutral, scientific testing may also, within the context of computer generated information, be prone to distortion or manipulation.

Confrontation Clause Ultimate Goal – Testable Reliability in the Crucible of Cross Examination

The Court finds that the Confrontation Clause’s goal is to ensure evidentiary reliability, but that the guarantee is procedural rather than substantive. Moreover, from a procedural context, the Confrontation Clause requires not only reliability, but some way to assess, or test that reliability:

““To be sure, the Clause's ultimate goal is to ensure reliability of evidence, but it is a procedural rather than a substantive guarantee. It commands, not that evidence be reliable, but that reliability be assessed in a particular manner: by testing in the crucible of cross-examination. ... Dispensing with confrontation because testimony is obviously reliable is akin to dispensing with jury trial because a defendant is obviously guilty. This is not what the Sixth Amendment prescribes.” 541 U.S., at 61-62, 124 S.Ct. 1354.” Id.

Footnote Five – The Breath-a-lzyer Reference

Footnote five provides a tantalizing hint, and perhaps only a hint, that the Court might entertain a Confrontation Clause appeal in connection with the reports (not maintenance reports) created by Breath-a-lyzer appliances. That future decision will be interesting, as the report of the breath-a-lyzer itself will need to be deemed some type of hearsay as a predicate for any Confrontation Clause analysis:

“Respondent and the dissent may be right that there are other ways-and in some cases better ways-to challenge or verify the results of a forensic test.FN5 But the Constitution guarantees one way: confrontation. We do not have license to suspend the Confrontation Clause when a preferable trial strategy is available.” Id., at p. 8

“FN5. Though surely not always. Some forensic analyses, such as autopsies and breathalyzer tests, cannot be repeated, and the specimens used for other analyses have often been lost or degraded.” Id.

Nor does the Court blithely accept “neutral scientific testing” to be reliable as on its face. In fact…

“Nor is it evident that what respondent calls “neutral scientific testing” is as neutral or as reliable as respondent suggests. Forensic evidence is not uniquely immune from the risk of manipulation. According to a recent study conducted under the auspices of the National Academy of Sciences, “[t]he majority of [laboratories producing forensic evidence] are administered by law enforcement agencies, such as police departments, where the laboratory administrator reports to the head of the agency.” National Research Council of the National Academies, Strengthening Forensic Science in the United States: A Path Forward 6-1 (Prepublication Copy Feb. 2009) (hereinafter National Academy Report). And “[b]ecause forensic scientists often are driven in their work by a need to answer a particular question related to the issues of a particular case, they sometimes face pressure to sacrifice appropriate methodology for the sake of expediency.” Id., at S-17. A forensic analyst responding to a request from a law enforcement official may feel pressure-or have an incentive-to alter the evidence in a manner favorable to the prosecution.” Id.

The Court’s reasoning is deceptively simple:

“Confrontation is one means of assuring accurate forensic analysis.” Id.

The reason for the seeming simplicity of this comment is that the Court then discusses how a “fraudulent analyst” may alter his or her testimony when “forced to confront” the defendant. Moreover, the Court notes, an analyst who provides false results may reconsider or recant testimony when under oath in open court:

Blognote: The implication for computer generated evidence are significant. Examination of source code may be the only way in which computer generated evidence used to prove “even one fact” of a crime may be cross examined. Moreover, the phrase “erroneous convictions based on discredited forensics” may well be read to mean “erroneous convictions based on discredited source code.” Both forensics reports and computer source code speak, and both accuse. Imo, the only difference is that the “speaker” of computer output is source code (or the programmer who created the language spoken by the computing device).

“Confrontation is one means of assuring accurate forensic analysis. While it is true, as the dissent notes, that an honest analyst will not alter his testimony when forced to confront the defendant, post, at ----, the same cannot be said of the fraudulent analyst. See Brief for National Innocence Network as Amicus Curiae 15-17 (discussing cases of documented “drylabbing” where forensic analysts report results of tests that were never performed); National Academy Report 1-8 to 1-10 (discussing documented cases of fraud and error involving the use of forensic evidence). Like the eyewitness who has fabricated his account to the police, the analyst who provides false results may, under oath in open court, reconsider his false testimony. See Coy v. Iowa, 487 U.S. 1012, 1019, 108 S.Ct. 2798, 101 L.Ed.2d 857 (1988). And, of course, the prospect of confrontation will deter fraudulent analysis in the first place.” Id.

“Confrontation is designed to weed out not only the fraudulent analyst, but the incompetent one as well. Serious deficiencies have been found in the forensic evidence used in criminal trials. One commentator asserts that “[t]he legal community now concedes, with varying degrees of urgency, that our system produces erroneous convictions based on discredited forensics.” Metzger, Cheating the Constitution, 59 Vand. L.Rev. 475, 491 (2006). “ Id.

Usefulness of Testing Analysts Honesty, Proficiency and Methodology

The Court then endorses the application of confrontation rights to include analysts, as a means of testing (italics mine) honesty, proficiency and methodology:

“[T]here is wide variability across forensic science disciplines with regard to techniques, methodologies, reliability, types and numbers of potential errors, research, general acceptability, and published material.” National Academy Report S-5. See also id., at 5-9, 5-12, 5-17, 5-21 (discussing problems of subjectivity, bias, and unreliability of common forensic tests such as latent fingerprint analysis, pattern/impression analysis, and toolmark and firearms analysis). Contrary to respondent's and the dissent's suggestion, there is little reason to believe that confrontation will be useless in testing analysts' honesty, proficiency, and methodology-the features that are commonly the focus in the cross-examination of experts.” Id., at p. 9

Business Record Exception Inapplicable Where Regular Course of Business is Production of Evidence for Use at Trial

The Court then addresses respondent’s argument that the analysts’ certificates are admissible “without confrontation” because they are the types of official and business records admissible at common law. The Court finds that the certificates do not qualify as tradition official or business records, and even if they did, their authors would be subject to confrontation. The Court provides some context by way of Fed. R. Evid. Rule 803(6) “regular course of business” exception to the hearsay rule, but notes that the exception does not apply where the regularly conducted business is the generation of evidence of for use at trial:

Documents kept in the regular course of business may ordinarily be admitted at trial despite their hearsay status. See Fed. Rule Evid. 803(6). But that is not the case if the regularly conducted business activity is the production of evidence for use at trial. Our decision in Palmer v. Hoffman, 318 U.S. 109, 63 S.Ct. 477, 87 L.Ed. 645 (1943), made that distinction clear. There we held that an accident report provided by an employee of a railroad company did not qualify as a business record because, although kept in the regular course of the railroad's operations, it was “calculated for use essentially in the court, not in the business.” Id., at 114, 63 S.Ct. 477.FN7.” Id. at p. 10

For those hearsay aficionados among us, Footnote 7 provides some historical context for the “regularly conducted activity” exception:

“FN7. The early common-law cases likewise involve records prepared for the administration of an entity's affairs, and not for use in litigation. See, e.g., King v. Rhodes, 1 Leach 24, 168 Eng. Rep. 115 (1742) (admitting into evidence ship's muster-book); King v. Martin, 2 Camp. 100, 101, 170 Eng. Rep. 1094, 1095 (1809) (vestry book); King v. Aickles, 1 Leach 390, 391-392, 168 Eng. Rep. 297, 298 (1785) (prison logbook).” Id.

Blognote: Ok, I’m a bit confused. The Court refers to the Federal Rules of Evidence here, but as this is an appeal of a state court proceeding, shouldn’t the Massachusetts evidence rules be cited?

The Court gives equally short shrift to the argument that the analyst certificate qualifies as an “official record” pursuant to Fed. R. Evid. Rule 803(8). Especially interesting is the Court’s observation that the functions of a clerk typically are to “authenticate” rather than “create” a record which might be used as evidence against a defendant:

“The dissent identifies a single class of evidence which, though prepared for use at trial, was traditionally admissible: a clerk's certificate authenticating an official record-or a copy thereof-for use as evidence. See post, at ----. But a clerk's authority in that regard was narrowly circumscribed. He was permitted “to certify to the correctness of a copy of a record kept in his office,” but had “no authority to furnish, as evidence for the trial of a lawsuit, his interpretation of what the record contains or shows, or to certify to its substance or effect.” State v. Wilson, 141 La. 404, 409, 75 So. 95, 97 (1917). See also State v. Champion, 116 N.C. 987, 21 S.E. 700, 700-701 (1895); 5 J. Wigmore, Evidence § 1678 (3d ed.1940). The dissent suggests that the fact that this exception was “ ‘narrowly circumscribed’ ” makes no difference. See post, at ----. To the contrary, it makes all the difference in the world. It shows that even the line of cases establishing the one narrow exception the dissent has been able to identify simultaneously vindicates the general rule applicable to the present case. A clerk could by affidavit authenticate or provide a copy of an otherwise admissible record, but could not do what the analysts did here: create a record for the sole purpose of providing evidence against a defendant.” Id.

Relationship between Business/Official Records Hearsay Exception and Confrontation Clause

The Court points out that respondent “misunderstands” the relationship between the business records and official records exception to the hearsay rule, and the Confrontation Clause. The operative distinction is not the nature of the records (business or official) but the purpose for which such business or official records are created. In other words, if such business or official records are generated for the purpose of generating evidence for use or establishing a fact at trial, they are testimonial and confrontation rights attach:

“Respondent also misunderstands the relationship between the business-and-official-records hearsay exceptions and the Confrontation Clause. As we stated in Crawford: “Most of the hearsay exceptions covered statements that by their nature were not testimonial-for example, business records or statements in furtherance of a conspiracy.” 541 U.S., at 56, 124 S.Ct. 1354. Business and public records are generally admissible absent confrontation not because they qualify under an exception to the hearsay rules, but because-having been created for the administration of an entity's affairs and not for the purpose of establishing or proving some fact at trial-they are not testimonial. Whether or not they qualify as business or official records, the analysts' statements here-prepared specifically for use at petitioner's trial-were testimony against petitioner, and the analysts were subject to confrontation under the Sixth Amendment.” Id., at p. 11

Blognote: This decision, considered alongside Crawford v. Washington, provides a framework for the reconsideration of admissibility of digital evidence based not upon reliability, as the Court notes, but on the principle of testability. In other words, naked assertions will not be acceptable. If one makes assertion (i.e., of reliability or trustworthiness) that assertion must be testable, rather than merely asserted. The implications for digital evidence admissibility are significant, but as yet, remain inchoate.

Case: Dahl v. Bain Capital Partners, LLC

Citation: 2009 WL 1748526 (D.Mass. 2009)
Date: 2009-06-22
Topics: Caution in use of metadata, reliance on Sedona’s repudiated position that most metadata is without value.

This decision from the U.S. District Court for the District of Massachusetts presents issues illustrating problems (1) faced by clients with counsel that is/are not quite up to speed on eDiscovery and digital evidence management practice, (2) faced by counsel when dealing with Courts that rely on decisional authority in a practice area which experiences the supercession of even relatively recent vintage (2005) doctrinal authority.

This shareholder’s derivative action pits approximately one dozen law firms (plaintiffs’ side) against approximately 20 defendant side firms. It appears that even with the might of 12 firms, plaintiffs’ were hopelessly outmaneuvered in this eDiscovery hearing.


Playing “Telephone” with Metadata’s Value in Litigation

Yes, it’s true. I’m resorting to the children’s game of “telephone” to illustrate how the approach to metadata was transmogrified into something it was not meant to become.

The Court here first pronounces that “case law shows wariness about metadata’s value” and then relies on Wyeth v Impax Labs, 248 F.R.D. 169, 171 (D. Del. 2006) which in turn relies on Williams v Sprint/United Mgmt. Co., 230 F.R.D. 650, 651 (D. Kan. 2005), which in turn relies guessed it…Sedona’s now repudiated position on the value of metadata.

Let’s parse the references. The first, to Wyeth, finds the Court locating an excerpt that appears to fit the “metadata has little value” proposition:

“Most metadata is of limited evidentiary value, and reviewing it can waste litigation resources.” Williams v Sprint, 230 F.R.D. 640 at 651 (D. Kan. 2005).

Fair enough. That’s the proper excerpt.

Let’s now look at the cite to Williams v Sprint, 230 F.R.D. 640 at 651 (D. Kan. 2005):

The comment balances these potential benefits against the “reality that most of the metadata has no evidentiary value, and any time (and money) spent reviewing it is a waste of resources.” FN65 The comment concludes that a reasonable balance is that, unless the producing party is aware or should be reasonably aware that particular metadata is relevant, the producing party should have the option of producing all, some, or none of the metadata.” Williams v. Sprint/United Management Co., 230 F.R.D. 640, 651 (D.Kan. 2005)

From whence comes this comment, one might inquire? Why, The Sedona Principles, vintage 2005. Footnote 65 tells all:

The Sedona Principles: Best Practices, Recommendations & Principles for Addressing Electronic Document Discovery, Cmt. 12.a. (The Sedona Conference Working Group Series, July 2005 Version), available generally at http://www.thesedo, and more specifically at available at http://www.thesedon content/miscFiles/7 05TSP.pdf.

Of course, The Sedona Principles were modified in 2008 to include a well nigh total positional reversal on metadata value. This reversal in position has been acknowledged by many district courts, and in late 2008, the Aguilar v DHC decision from the Southern District of New York expressly noted Sedona’s positional reversal, and repudiated any decisional authority based on Sedona’s pre-2008 position.

Some Metadata Ordered to Be Produced

Plaintiffs requested all metadata in connection with the “email and word [sic] documents produced.” Defendants offered to produce only 12 fields of metadata. The Court, again relying on repudiated authority,

Focused vs. Restrictive Metadata Approach

And so, in reading the following excerpt, one might ponder whether the Court was focused, or bought outright the proposition that other fields of metadata (master file table analysis, for example) were of so little value that it would be wasteful to order production:

The Shareholders seek all of the metadata associated with emails and word documents produced by the PE Firms. The PE Firms refuse to produce all metadata and instead offer to provide 12 fields of metadata. The court rules in favor of the PE Firms for two reasons. First, case law shows wariness about metadata's value in litigation. Many courts have expressed reservations about the utility of metadata, explaining that it does not lead to admissible evidence and that it can waste parties' time and money. Wyeth v. Impax Lab., Inc., 248 F.R.D. 169, 171 (D.Del.2006); Williams v. Sprint/United Mgmt. Co., 230 F.R.D. 640, 651 (D.Kan.2005). Second, Rule 34 militates against the broad, open disclosure of metadata that the Shareholders seek. The Rule 34 Advisory Committee Notes to the 2006 Amendment express concern that producing diverse types of electronically stored information in the same format would be costly, burdensome, and ultimately fruitless. Fed.R.Civ.P. 34 advisory committee's notes. Instead, the notes explain that requests should be tailored to each type of program, so only necessary data is produced.” Dahl v. Bain Capital Partners, LLC, 2009 WL 1748526, 2 (D.Mass. 2009)

“The court applies this principle to the metadata requests here. Rather than a sweeping request for metadata, the Shareholders should tailor their requests to specific word documents, specific emails or specific sets of email, an arrangement that, according to their memorandum, suits the PE Firms. This more focused approach will, the court hopes, reduce the parties' costs and work. Furthermore, it reflects the general uneasiness that courts hold over metadata's contribution in assuring prudent and efficient litigation.” Id.

One wonders whether the Court’s law clerks set a research date field limitation that cut off all post 2006 decisional authority, or whether plaintiffs’ counsel was hopelessly outgunned.

My wager is on the latter.

Case: Esquire Deposition Services, LLC v. Boutot
Citation: 2009 WL 1812411 (D.N.J. 2009) described as [Not for Publication]

Date: 2009-06-22
Topics: Forensic Image data Supports Grant of TRO NJ

This decision comes to us from the U.S. District Court for the District of New Jersey and involves allegations of breach of non-compete and non-solicitation contract covenant, breach of duty of loyalty, tortious interference with business relationships, and trade secret misappropriation. Plaintiff sought a preliminary injunction against defendants “enjoining and restraining them from engaging in solicitation and competition” in violation of a co-defendant’s prior employment agreement with plaintiff.

Plaintiff also alleged that prior to defendant’s departure, the latter copied “hundreds” of electronic files from plaintiff’s computers. Plaintiff’s TRO request also included the following prayer for relief:

“Specifically, Esquire sought and obtained the issuance of a temporary restraining order, restricting Boutot from:

…(e) Destroying any electronic or hard copy document ... that he obtained from or by virtue of his employment with Esquire ... “ Esquire Deposition Services, LLC v. Boutot, 2009 WL 1812411, 4 (D.N.J.) (D.N.J. 2009)

Here now a (very ) short discourse on the requirements for obtaining injunctive relief. The elements required to be demonstrated are immediate, non-monetary irreparable harm to the movant. The Court also notes that injunctive relief is also an appropriate remedy to enforce a restrictive covenant:

“[T]he grant of injunctive relief is an ‘extraordinary remedy, which should be granted only in limited circumstances.’ ” Instant Air Freight Co. v. C.F. Air Freight, Inc., 882 F.2d 797, 800 (3d Cir.1989) (citing Frank's GMC Truck Ctr. Inc. v. Gen. Motors Corp., 847 F.2d 100, 102 (3d Cir.1988)). Generally, in determining whether to grant a preliminary injunction or a temporary restraining order, courts consider four factors:

(1) the likelihood that the applicant will prevail on the merits at final hearing; (2) the extent to which the plaintiffs are being irreparably harmed by the conduct complained of; (3) the extent to which the defendants will suffer irreparable harm if the preliminary injunction is issued; and (4) the public interest.

S & R Corp. v. Jiffy Lube Int'l, Inc., 968 F.2d 371, 374 (3d Cir.1992) (citing Hoxworth v. Blinder, Robinson & Co., 903 F.2d 186, 197-98 (3d Cir.1990)). “[W]hile the burden rests upon the moving party to make [the first] two requisite showings, the district court” should look to factors three and four when relevant. Acierno v. New Castle County, 40 F.3d 645, 653 (3d Cir.1994). “All four factors should favor preliminary relief before the injunction will issue.” S & R Corp., 968 F.2d at 374 (citing Hoxworth, 903 F.2d at 192).

*5 In order to prove irreparable harm, the moving party must “demonstrate potential harm which cannot be redressed by a legal or an equitable remedy following a trial.” Acierno, 40 F.3d at 653 (quoting Instant Air Freight Co., 882 F.2d at 801). “Economic loss does not constitute irreparable harm.” Acierno, 40 F.3d at 653. “[T]he injury created by a failure to issue the requested injunction must “be of a peculiar nature, so that compensation in money cannot atone for it....” Id. “The word irreparable connotes that which cannot be repaired, retrieved, put down again [or] atoned for.” Id. (internal citations and quotations omitted). In addition, the claimed injury cannot merely be possible, speculative, or remote. Id. at 655. “More than a risk of irreparable harm must be demonstrated. The requisite for injunctive relief has been characterized as a ‘clear showing of immediate irreparable injury,’ or a ‘presently existing actual threat; an injunction may not be used simply to eliminate a possibility of a remote future injury.’ ” Id. (quoting Cont'l Group, Inc. v. Amoco Chems. Corp., 614 F.2d 351, 358 (3d Cir.1980))." Esquire Deposition Services, LLC v. Boutot, 2009 WL 1812411, 4 -5.

“Finally, injunctive relief is an available and appropriate remedy to enforce a restrictive covenant. See e.g., Arch Pers. Care. Prods., L.P. v. Malmstrom, 90 F. App'x 17 (3d Cir.2003) (affirming district court's grant of injunctive relief to enforce a non-compete agreement).” Id.

In performing its analysis, the Court discusses that the plaintiff is likely to succeed on the merits of its breach of contract claim based at least in part on the likelihood that plaintiff’s trade secrets and proprietary information would be used by the ex-employee co-defendant and be his new employer (who just happened to be plaintiff’s direct competitor in other fields). The Court acknowledges the reality of Plaintiff’s apprehension in addressing what was discovery through electronic discovery:

“Esquire's trepidation over unwanted disclosure of its confidential and proprietary information is not unfounded. Esquire secured the services of Andrew Reisman, an expert in the field of computer forensics, for the purpose of analyzing activity on Boutot's work computer at Esquire (the “Esquire Laptop”). After conducting his analysis of the Esquire Laptop,FN9 Mr. Reisman testified that, in his expert opinion, on November 10, 2008 and November 13, 2008, a targeted group of files containing Esquire and personal Boutot data were copied to two thumb drives FN10. (Declaration of Andrew Reisman (“Reisman Decl.”), attached to Verified Complaint at ¶ 13.)" Id.

"FN9. In order to perform the analysis, Mr. Reisman created a “forensic image” of the hard drive associated with the Esquire Laptop. ( See Reisman Decl., at ¶ 5.) According to Mr. Reisman, “a ‘forensic image’ of a hard drive is a verifiable copy of all data present on the drive, including both active files and areas of the drive that contain no active files but that nevertheless contain data.” ( Id.)" Id.

"FN10. A thumb drive, or a USB drive, is an external storage device, which allows copied and stored data to be accessed from other computers. (Reisman Decl., at ¶ 14.)" Id.

"The inescapable conclusion from Mr. Reisman's findings, Esquire asserts, is that Boutot has copied confidential Esquire files to thumb drives and has shared the files with MCS, in violation of the Agreement. This allegation is bolstered by the record before this Court, which includes copies of e-mails that Boutot sent to MCS employees, containing Esquire files.FN11 (Exhibit L, attached to the Avallone Cert.)" Id.

FN11. Such e-mails include a December 18, 2008 e-mail to an MCS technology department employee, to which Esquire's new client presentation module was attached. (5/28 Tr. 53:3-6; Exhibit L, attached to Avallone Cert.) “ Id. at p. 6

Not surprisingly, the Court granted plaintiff’s request for injunctive relief.

Oh, and perhaps metadata (referring to copying of files to thumb drives) was not “without value.”

Case: Stengart v. Loving Care Agency, Inc.
Citation: --- A.2d ----, 2009 WL 1811064 (N.J.Super. A.D. 2009)

Date: 2009-06-26
Topics: Adoption of N.Y. Theory of tort of conversion of ESI; attorney client privilege trumps employer’s right to review emails sent between employee and her attorney, email mining of Image By Opposing Counsel results in ethics violation

This decision from the Appellate Division of the Superior Court of New Jersey finds the Appellate Division court adopting (or at least approving) the position of the Court of Appeals of NY that ESI is property; i.e., that a cause of action of conversion applies to intangible electronic records that are stored on a computer and are indistinguishable from printed documents.

In this case, the Court reasoned that the breach of a company’s computer use policy does not automatically grant it a possessory right in the breaching employee’s private emails:

Ignoring the significance of its express permission for “[o]ccasional personal use,” the company's argument appears to rely chiefly on the fact that plaintiff utilized the company's computer and that anything flowing from that use becomes subject to the company's claimed ownership right. We reject the company's ownership of the computer as the sole determinative fact in determining whether an employee's personal emails may become the company's property.” Stengart v. Loving Care Agency, Inc., 2009 WL 2822064 at p. 6 (N.J.Sup. A.D. 2009

In this regard, we agree with the tenor of a recent decision of the New York Court of Appeals, which discounted the significance of the fact that a company computer was the means by which an employee sent and received personal communications through a separate email account. See Thyroff v. Nationwide Mut. Ins. Co., 864 N.E.2d 1272 (N.Y.2007). Thyroff recognized that a computer in this setting constitutes little more than a file cabinet for personal communications. Id. at 1278. Property rights are no less offended when an employer examines documents stored on a computer as when an employer rifles through a folder containing an employee's private papers or reaches in and examines the contents of an employee's pockets; indeed, even when a legitimate business purpose could support such a search, we can envision no valid precept of property law that would convert the employer's interest in determining what is in those locations with a right to own the contents of the employee's folder of private papers or the contents of his pocket. As a result, we conclude a breach of a company policy with regard to the use of its computers does not justify the company's claim of ownership to personal communications and information accessible therefrom or contained therein.“ Id.

Employee-Attorney Email Sent Through Company Computer Protected by Attorney Client Privilege

The plaintiff here also communicated with her attorney through defendant company’s computers. The trial court determined that the employee had in so doing waived her attorney client privilege to those emails. The appeals court disagreed, holding that:

“…[W]e conclude that the judge exhibited inadequate respect for the attorney-client privilege she found that plaintiff “took a risk of disclosure of her communications and a risk of waiving the privacy she expected” when she communicated with her attorney through her work-issued computer, and that plaintiff's action in the face of the policy “constitute[d] a waiver of the attorney client privilege.” Accordingly, we reverse the order under review and conclude that the emails exchanged by plaintiff and her attorney through her personal Yahoo email account remain protected by the attorney-client privilege. There being no other basis for finding a waiver of the privilege, the judge erred in denying plaintiff's motion for the return of all copies of the emails in question." Id. at p. 9

Ethics Sanctions

It’s never a good sign when an appellate court speaks about attorney behavior inconsistent with a rule regulating attorney conduct. Here, the fact that the company’s attorney foraged through a forensic image of a hard drive, and read certain privileged documents, appears to have triggered a violation of New Jersey Rules of Professional Conduct:

“As we have already mentioned, the company's attorney has examined the privileged emails in question, referencing them in the little discovery that has taken place to date in this matter. We conclude that counsel's actions were inconsistent with the obligations imposed by RPC 4.4(b), which provides that when representing a client, “[a] lawyer who receives a document and has reasonable cause to believe that the document was inadvertently sent shall not read the document or, if he or she has begun to do so, shall stop reading the document, promptly notify the sender, and return the document to the sender.” Id.

The Court makes no distinction between reviewing a paper document and conducting a forensic examination of a computer’s hard drive:

“In considering these obligations, we are not unmindful that circumstances may arise when the attorney who has received such a document-whether through paper discovery or by forensically examining a computer's hard drive-may arguably believe the document is not protected by the attorney-client privilege. For example, the attorney here assumed that the company's policy regarding the use of its computers turned plaintiff's privileged emails into the company's property. Notwithstanding such an assumption, attorneys are obligated, as suggested by RPC 4.4(b), to cease reading or examining the document, protect it from further revelations, and notify the adverse party of its possession so that the attorney's right to retain or make use of the document may thereafter be adjudicated by the court.” Id.

The Court the determines that the company’s counsel had acted with “studied indifference” and that it had an affirmative duty to alert plaintiff that it was in possession of emails protected by attorney-client privilege:

“Here, rather than follow such an approach, Sills Cummis appointed itself the sole judge of the issue and made use of the attorney-client emails without giving plaintiff an opportunity to advocate a contrary position. That being the case, we reject the trial judge's finding that Sills Cummis had no affirmative duty “to alert plaintiff that it was in possession of the subject E-mail before reading it because Sills Cummis believed in good faith, based on [the company's] policy, that the E-mail was not protected by any privilege.” Sills Cummis may have reached that determination in good faith; but counsel thereafter acted in studied indifference to the right of plaintiff to argue otherwise and to seek a contrary ruling from an impartial judge.” Id., at p. 10

The Court reversed and remanded, in part ordering the return of all subject email, and for additional findings, including the imposition of sanctions against defendant’s counsel.

Case: Electronic Funds Solutions, LLC v. Murphy

Citation: 2009 WL 1717383 (Cal.App. 4 Dist. 2009) [Not Officially Published
Date: 2009-06-25
Topics: Large Terminating Sanction for ESI Spoliation

Think terminating sanctions for spoliation might be costly? Well, they are, and this “Not Officially Published” decision from the California Court of Appeals, 4th District, Division 3 stands out as 2009’s poster child for the potential severity of a spoliation sanction.

The decision is short, and so will be this analysis. It seems that the trial court defaulted defendants for having erased their computer hard drives were ordered to be produced in discovery:

Defendants Electronic Payment Technologies, LLC (EPT), Michael Murphy, and Ty Bishop suffered a default judgment of $24,040,272, entered in favor of plaintiffs Electronic Funds Solutions, LLC (EFS) and Michael Barry, after defendants erased information contained on computer hard drives the trial court had ordered produced in discovery.” Electronic Funds Solutions, LLC v. Murphy, 2009 WL 1717383, 1 (Cal.App. 4 Dist. 2009)

After a first reversal, a second complaint, and a second default (can’t make this stuff up), the trial court entered judgment against defendants for 67.3 million dollars, comprising 10 million in tort damages, 7 million in pre-judgment interest, 72,000 in damages for conversion, of $20 million in exemplary damages for trade secret misappropriation; $30 million in general punitive damages; and $224,675.97 in attorney fees and costs.

The appellate panel first finds that the court did not abuse its discretion in imposing terminating sanctions:

The trial court's previous discovery orders are still outstanding and the evidence demonstrates defendants have failed to fully comply. Moreover, defendants' inability to produce the information because they intentionally destroyed some of the responsive materials or transferred them to a third party is not an excuse for failing to obey the trial court's discovery order.” Id.

The nature of defendants’ ESI discovery abuse:

The EFS Computer's hard drive had also been wiped by the Data Eraser software, but the program had been aborted before completion. The Data Eraser program was run on April 10, 2002, at approximately 2:35 p.m. Given the hearing on the motion to compel on April 10 began at 3:00 p.m., and defendants had promised to hand the computer over at the hearing, it appears the defendants aborted the Data Eraser program because defendants ran out of time to complete the wiping process. Although interrupted before it could complete its work, the Data Eraser program did destroy the hard drive's master boot record, partition table, file allocation table, and a number of other sectors. The destruction of these portions of the hard drive made the computer impossible to start up, and prevented the hard drive from being read even as a secondary drive to a running computer. The data recovered from this computer was obtained through forensic techniques.” Id., at p. 4

“Despite the intentional destruction of data on the hard drives, defendants served supplemental responses asserting under oath they had fully complied with the demands, making no mention of any data removed from the computers.” Id.

It must not have been much fun being defendants’ counsel.

One Data Wipe May Comprise a Continuing Discovery Violation

Here, defendants’ own actions rendering permanently unable to comply with a discovery request (or order) is tantamount to being permanently (and in continuing) violation of a discovery order. The Court determined this to be adequate justification for the imposition of a default:

A continuing discovery violation does not end if the responding party is permanently unable to comply because that party intentionally destroyed the materials it was ordered to produce. To simply wipe the slate clean would allow defendants to benefit from their intentional destruction of evidence, an outcome not mandated by the Greenup decision. In our prior opinion, we rejected any suggestion defendants might not have erased data had they known their liability could reach $24 million: “There is a significant difference between choosing not to defend a lawsuit at all, and defending a lawsuit by willfully disobeying lawful discovery orders. Defendants willing to accept known liability may properly elect to watch from the sidelines.’” Id.

“But if a defendant chooses to participate, he or she must play by the rules.... We cannot endorse a litigant's conscious decision to deliberately destroy evidence-based on the perception damages are limited to a particular amount.” ( Electronic Funds, supra, 134 Cal.App.4th at p. 1178.) Accordingly, we conclude the trial court did not abuse its discretion in striking defendants' answers to plaintiffs' amended complaint and entering a default. Id.

First the good news for defendant: The court vacated the 50 million dollar punitive damage award. The bad news: This left intact a nearly 17 million judgment.

Case: IDT Corp. v. Morgan Stanley Dean Witter & Co.
Citation: --- N.Y.S.2d ----, 2009 WL 1794364 (N.Y.A.D. 1 Dept. 2009)

Date: 2009-06-25
Topics: Third party duty to preserve evidence; spoliation as basis for tort of fraudulent concealment or misrepresentation in NY by [not uninvolved] non-party; spoliation of subpoenaed documents by non-party.

In this decision from the New York Supreme Court, Appellate Division, the Court found that New York recognizes that intentional spoliation of evidence may be used the basis for asserting claims of fraudulent concealment or fraudulent misrepresentation.

Keep in mind that defendant Morgan Stanley was a non (but not uninvolved) party upon whom plaintiff served a subpoena for certain relevant documents involving a breach of contract between plaintiff and third party:

“The issue on this appeal is whether cognizable claims for fraudulent misrepresentation and fraudulent concealment may be based on intentional spoliation of evidence, notwithstanding that New York does not recognize an independent tort of third-party negligent spoliation. We conclude that intentional spoliation of evidence may be the basis for such claims.” IDT Corp. v. Morgan Stanley Dean Witter & Co., 2009 WL 1794364, 1 (N.Y.A.D. 1 Dept. 2009)

What was fraudulently misrepresented and concealed? It turns out that defendant Morgan Stanley produced on 2,000 of 500,000 relevant documents requested in plaintiff’s other-action subpoena:

The Court distinguishes two New York precedents concerning third (or non) party duties to preserve.

The Court first notes that the instant plaintiff asserted a claim of intentional spoliation. Moreover, as the Court points out, defendant Morgan Stanley, although not a party, was a fiduciary to the defendant in the unrelated action, and therefore “not uninvolved:”

“The Court of Appeals' decision in Ortega v. City of New York (9 NY3d 69 [2007], supra ) does not require dismissal of IDT's claims for fraud and fraudulent concealment simply because the vehicle for the alleged fraudulent conduct was concealment of evidence. First, the Ortega holding involved a claim of negligent spoliation of evidence, not a claim of intentional concealment or spoliation of evidence. Second, unlike the City in Ortega, which the court noted was a third party with a duty to preserve evidence but with no connection to the underlying litigation, Morgan Stanley was not an uninvolved third party to the arbitration proceeding between IDT and Telefonica. It had fiduciary relationships with both parties, and the concealment of documents from IDT arguably both benefitted its client Telefonica in the arbitration and protected Morgan Stanley from being sued by IDT.” Id., at p. 2

Spoliation as Basis for Fraudulent Concealment in Subsequent Action

In an interesting exercise in logic, the Court also distinguishes New York decisional authority refusing to recognize third party spoliation. In essence, it appears that the Court finds that while the evidence was spoliated (with contents unknown) during the first lawsuit (against a different defendant), the concealed documents were ultimately produced during the second lawsuit, thereby rendering any claims of speculation as to causation and damages moot.

“Two additional circumstances distinguish this case from Ortega. The Ortega court refused to recognize a third-party spoliation claim because the content of the lost evidence is unknown, thus leading to speculation as to causation and damages. Here, there is no such concern because the concealed documents have been produced. The court also found that it would not be sound public policy to permit an independent tort of spoliation to be asserted against a municipality. There are no public policy reasons to disallow IDT's claims for fraud and fraudulent concealment against its fiduciary based on the latter's spoliation of subpoenaed documents.” Id.

Result: New York recognizes (as does New Jersey) the tort of fraudulent concealment and fraudulent misrepresentation based on spoliation of evidence:

“Importantly, the Ortega court wrote that “[a]t bottom, plaintiffs seek recognition of a new cause of action because they cannot meet the traditional proximate cause and actual damages standards at the foundation of our common-law tort jurisprudence” (9 NY3d at 80). IDT suffers from no such impediment. It has met the pleading standard for fraud and fraudulent concealment and thus has a remedy under existing tort principles. There is no indication in Ortega that the court would reject an already recognized common-law tort claim simply because the claim was based on the spoliation of evidence.

We note that the New Jersey courts, which do not recognize a separate tort action for intentional spoliation, recognize a claim of fraudulent concealment based on the intentional spoliation of evidence ( see e.g. Rosenblit v. Zimmerman, 166 NJ 391, 766 A.2d 749 [2001]; R.L. v. Voytac, 402 NJ Super 392, 407-408, 954 A.2d 527, 536 [App.Div.2008] certif granted in part 197 NJ 259, 962 A.2d 530 [2008]; Viviano v. CBS, Inc., 251 NJ Super 113, 597 A.2d 543 [App.Div.1991] certif denied 127 NJ 565, 606 A.2d 375 [1992] ). There is no sound reason for New York courts to conclude otherwise.” Id., at p. 3


Saturday, June 20, 2009

2009-06-20 Counsel Competency and eDiscovery, Meet and Confer - The New Black, and eDisovery Apocrypha, or a Trip Down (Sedona's) Memory Lane

A light week for eDiscovery and digital evidence, with two decisions. Interestingly enough, these decisions provide a study in contrasts, and also point out the dangers lurking in misdescribing, misapplying, or misapprehending the nature of computer generated information or data. The first, from the District of Arizona, finds the court compelling production of metadata. Interestingly enough, the second decision, from the U.S. District Court for the Eastern District of Wisconsin, relies on the “old” Sedona Principles, and finds that metadata need not have been preserved. That said, this second decision might be more representative of two failures by plaintiff: competency, and failure to meet and confer.



Kravetz v. Paul Revere Life Ins. Co., 2009 WL 1639736 (D. Ariz. 2009)
Kay Beer Distributing, Inc. v. Energy Brands, Inc., 2009 WL 1649592 (E.D. Wis. 2009)

Case: Kravetz v. Paul Revere Life Ins. Co.
Citation: 2009 WL 1639736 (D. Ariz. 2009) [Designated “Not for Publication”]
Date: 2009-06-11
Topics: Production of ESI metadata, but not associated content compelled, metadata as relevant evidence

This brief decision from the U.S. District Court for the District of Arizona finds the court deciding defendants’ motion to compel production of hard drives and computer storage media. Here, defendants proposed the computer hard drives and other storage media would be provided to a third party to “determine the number of hours” spent typing by plaintiff each day on his computer (relevant evidence for plaintiff’s disability claims). Plaintiff argued in opposition that such examination would not enable defendants to determine the number of hours plaintiff expended “typing” on his computer each day.

The Court first points to the broad language of Fed. R. Civ. P. Rule 26(b)(1) and Rules 34(a)(1)(A):

“Parties may obtain discovery regarding any non-privileged matter that is relevant to any party's claim or defense.” Fed.R.Civ.P. 26(b)(1). Rule 34(a)(1)(A), Fed.R.Civ.P., allows a party to inspect, copy, test, or sample ‘any designated documents or electronically stored information.’” Kravetz v. Paul Revere Life Ins. Co., 2009 WL 1639736, 1 (D.Ariz.) (D. Ariz. 2009)

U.S. District Judge Martone then discusses why metadata comprised evidence relevant to plaintiff’s claims (and defendants’ defenses). Moreover, the Court determined that defendants had provided sufficient evidence (most likely by way of expert testimony) to support their assertions:

“Defendants have properly explained why the metadata on Kravetz's hard drives and storage devices may be relevant to the number of hours Kravetz worked prior to and after his injury.” Id.

Metadata vs. Content Production

Plaintiff argued that producing his hard drive and storage media was overbroad and would cause undue burden. In what seems to be a response to assertions either of privacy or privilege, the Court orders that only metadata relevant to the hours worked prior to his injury would be produced, and that neither defendants nor the forensic expert were permitted to view the content associated with such metadata:

“Defendants have properly explained why the metadata on Kravetz's hard drives and storage devices may be relevant to the number of hours Kravetz worked prior to and after his injury. However, defendants need not and may not review the substance of documents on plaintiff's hard drives and media devices.” Id.

“We will, therefore, compel plaintiff to provide the requested computer devices with the limitation that defendants may only extract metadata and other necessary electronic information regarding the amount of time spent on documents, but not the substance of the documents themselves. To the extent plaintiff challenges the ability of metadata to show the number of hours he worked, he is free to argue the weight that should be given to this information at trial. Id.

Note that the Court permits plaintiff to argue the probative value (or weight) of the metadata at trial.

Kudos to EDDE Co-Chair George Paul’s firm, Lewis & Roca, who represented defendant in this matter.

Case: Kay Beer Distributing, Inc. v. Energy Brands, Inc.
Citation: 2009 WL 1649592 (E.D.Wis. 2009)
Date: 2009-06-10
Topics: Metadata production denied, failure to meet and confer on search terms, failure to meet and confer

In case anyone believes that the decision (approving the “original” Sedona Principles position that most metadata is without value and denying a party’s motion to compel production thereof) is now history, we refer to this vintage June 2009 decision in which the Court relies on the 2005 (i.e., “original”) Sedona Principles position, finding that no duty to preserve metadata, and no reason to compel production thereof.
Author’s Note: Other than the metadata approach (which, imo, might be the punishment doled out by the court on this hapless plaintiff) this decision is well reasoned.

Of course, the Sedona Principles 2008 metadata approach reversal, together with the late 2008 repudiation of the earlier (metadata valueless) Sedona approach in Aguilar v Immigration and Customs Enforcement Div. of U.S. Dept. of Homeland Security, 255 F.R.D. 350, 2008 WL 5062700 (SDNY November 21, 2008) [see EDDE Digest 4] seems to have escaped notice by the court.

To be sure, this case started out on the wrong foot. Both parties apparently represented to the Court that ESI discovery was not anticipated. The Court notes that in somewhat wry language:

“Although the Rule 26(f) Joint Report and Discovery Plan from December 28, 2007 indicated that the parties “do not anticipate that electronic discovery will be a significant feature of this case,” subsequent events have proven this optimistic prognostication wrong.” Kay Beer Distributing, Inc. v. Energy Brands, Inc., 2009 WL 1649592, 2 (E.D. Wis. 2009)

It’s also not insignificant that the parties’ discovery plan was submitted fully one year after the effective date of the 2006 eDiscovery amendments to the Federal Rules of Civil Procedure.

Did I mention that things started out on the wrong foot? Try this sample:

“Things started out on the wrong foot when Energy Brands erroneously stated that it did not have electronic data, including emails, concerning the claims asserted against it. In March 2008 counsel for the parties met and conferred on Kay Beer's request for email. (Weber Decl. in Supp. of Mot. to Compel, Exs. K-M; Doc. # 53-12, 53-13, 53-14.) In a letter of March 26, 2008, Brian W. McGrath, outside counsel for Energy Brands, represented that Energy Brands did not have electronic data that would include emails relating to Kay Beer. ( Id. at Ex. M; Doc. # 53-14.) At a hearing before the Court on a motion for a protective order the following month, counsel for Energy Brands claimed that everything that in-house counsel for Energy Brands had been able to find in a corporate document search had already been produced to Kay Beer. ( Id. at Ex. CC at 5; Doc. # 53-30.) On May 16, 2008, when asked to admit that it had in its possession or control stored electronic information relating to Kay Beer created on or before November 2, 2007, Energy Brands entered a denial. ( Id . at Ex. I, Resp. to Admit 11; Doc. # 53-10 at 3.) Three days later, Energy Brands admitted that it did have email dating back to approximately June 2003.” Id., at p. 2

The parties were unsuccessful at resolving issues related to the production of additional ESI. In short, plaintiff argued that email production was inadequate, and demanded an ESI search using much broader terms than originally used. Defendant argued that the new search terms demanded to be used by plaintiff was overly broad.

Incredibly, plaintiff then conceded that most of the information demanded (which was stored on five DVDs) was not likely to have any bearing on its claims, and the Court so notes the consequences:

“In this case, even Kay Beer concedes that it is highly unlikely that the vast majority of the ESI on the five DVDs Energy Brands has compiled has any bearing on the issues remaining in this case. Yet, Kay Beer insists that it be provided the DVDs so that it can conduct its own search. Energy Brands has no obligation to turn over to an opposing party in a lawsuit non-discoverable and privileged information.” Id., at p. 4

This deserves the first EDDE “D’oh” Award.

Failure to Meet and Confer to Agree on Search Terms

Nope. Plaintiff didn’t, although defendant offered, and the court also took notice:

“Kay Beer asserts in a footnote that Energy Brands has refused its request to produce the appropriate scope of email, but it offers no factual support for this assertion. (Doc. # 97, Kay Beer Reply at 6, n. 3.) To be sure, among the 313 requests to produce Kay Beer expounded in this case were at least a dozen directed to Energy Brands in which Kay Beer requested that Energy Brands produce email sent or received by named persons that included various terms. But the terms were stated in the disjunctive, requiring Energy Brands to produce ESI having nothing to do with Kay Beer or the facts of this case. See REQUESTS TO PRODUCE NOs. 110-122. The fact that Energy Brands did not want to add to the ESI it would have to review is not evidence of recalcitrance. Kay Beer's assertion that Energy Brands refused to conduct a further search is refuted by three separate emails from counsel for Energy Brands offering to work with Kay Beer's counsel in formulating search terms to locate emails that might be relevant. (Doc. # 53-23, Weber Decl., Exs. R., at 4, and V ., at 3, 7.)” Id., at p. 6

With the following language, one might guess in which decisional direction the Court is headed:

“Instead of working with Energy Brands' counsel, Kay Beer seems to have persisted in its demand that Energy Brands turn over all ESI that even mentions its name or some variant thereof.” Id.

Native File Format, Bates Stamping and Metadata (Oh my)

The Court first points out that plaintiff requested ESI in native data format; here, in the form of Outlook .pst files. The Court, apparently relying on expert declaration, then states:

“Kay Beer has also insisted that all documents be produced in native Outlook format, despite the fact the documents could not be Bates stamped in that format, they would be subject to alteration, and it would not be possible to select certain documents and produce only those in that format.” Id.

Interestingly enough, no mention is made that (as with any other physical evidence) the storage media containing such file could be Bates stamped, a working copy could be made of the original, (presumably forensically sound) .pst file without altering the original (else how do forensics examiners investigate ESI?) and that single emails could be produced either as .msg files, or as .tiffs, with associated metadata provided in a separate production.

These options appeared to lie outside the ken of plaintiff’s counsel.

What appears to have sealed the deal with the Court is plaintiff’s agreement that ESI be produced in either hard or soft copy (whichever was cheapest):

“Energy Brand asserted that Kay Beer's request that documents, information, and or data be produced in their original electronic format was unduly burdensome and noted that the parties had agreed at their Rule 26 conference that either a hard copy or electronic copy would be produced depending on what was most cost-effective.” Id.

Metadata – Circa 2005

Here’s where the Court takes a journey into the past, and relies on a Sedona position repudiated by the Sedona Principles themselves in 2008:

“Energy Brands also agreed that if Kay Beer made a good faith request based on demonstrated need for the native form of a document, Energy Brands would endeavor to produce the document in native form. ( Id.)” Id.

"Energy Brands' offer is consistent with The Sedona Principles for Electronic Document Production, which state that “[u]nless it is material to resolving the dispute, there is no obligation to preserve and produce metadata absent agreement of the parties or order of the court.” The Sedona Principles: Best Practices, Recommendations & Principles for Addressing Electronic Document Discovery (The Sedona Conference Working Group Series, July 2005 Version), available generally at” Id.

Blognote: ESI cannot be authenticated without at least some metadata. See George Paul’s excellent book “Foundations of Digital Evidence” (ABA 2008). All recent decisional authority read by the author of this digest clearly indicates that if metadata is relevant, or may lead to relevant information, it is, (in the absence of privilege, or a showing of inaccessibility, burden, etc.) discoverable.

Blognote: Time to murder a metaphor. It may be that the court punished plaintiff’s counsel for its incompetence, and indeed, that seems to be the theme here, but bad lawyering makes bad law; and this case stands out as an exemplar. Although one District Judge’s decision is not necessarily binding even on fellow District Judges (or Magistrate Judges for that matter) it is also reasonable to expect some deference to be paid to precedent set by earlier decisions. Now, those parties arguing for the production of metadata will have the unpleasant task of arguing against an opinion whose reasoning has been thoroughly repudiated by the very sources relied upon in that prior opinion. Bring on the experts, and the latest version of the Sedona Principles, or proceed at your peril.


Saturday, June 13, 2009

2009-06-13 Early Stage eDiscovery Failures, Spoliation Standards in Delaware State Courts, and The Three Bases for a Court's Imposition of Sanctions for eDiscovery Abuse

Back on track with this week’s digest. Three for review. The first case, from the U.S. District Court for the District of Minnesota provides a what-not-to-do (or what not to not do) in the early stages of discovery. This analysis stands as the longest digest of the shortest decision yet. The second decision involves spoliation sanctions determination and imposition in Delaware state courts. This decision was given an in depth analysis because the Delaware state courts handle a significant volume of commercial and public company litigation. The third decision from the U.S. District Court for the Northern District of Georgia addresses the three sanctions available to a court to address a party’s discovery abuse. The defendant in that case “escaped” evidential sanctions, but not much else.



Beard Research, Inc., et al. v. Kates, et. al., 2009 WL 1515625 (Del.Ch. 2009)
Kipperman v. Onex Corp., 2009 WL 1473708 (N.D.Ga. 2009)


Citation: 2009 WL 1606653 (D. Minn. 2009)
Date: 2009-06-05
Topics: Fed. R. Civ. P. Rule 26 and ESI discovery interpretation, counsel opinion no substitute for expert evidence

This eDiscovery decision from the U.S. District Court for the District of Minnesota arises out of a class action matter. While U.S. District Judge Montgomery first notes that “the parties have worked amicably throughout the discovery process, and [defendant produced] substantial amounts of hard copy, there appeared to be evidentiary gaps of relevant evidence from documents provided by non-parties, and the class plaintiff filed a motion to compel production of ESI.

Following depositions, plaintiffs requested, and defendants produced the names of individuals who had received a “legal hold” (presumably from defendant’s counsel). Plaintiffs then requested that defendant search the emails of these individuals as well as shared server drives. Not surprisingly, as the Court notes, defendant “balked at the request.”

Some extended context is helpful here. In class action litigation it is routine for a court to bifurcate the discovery process into two phases, the first addressing class certification issues and the second addressing others issues, including the merits. This case was no exception: U.S. Magistrate Judge Erickson bifurcated discovery, and ordered the parties to first focus on the issue of class certification.

That said, by the time plaintiff’s “Motion to Compel Production of Electronically Stored Information (“ESI”) was filed, defendant had already produced a substantial volume of hard copy material.

Author’s (Extensive) Note: I typically reserve observations for last, or at least after some analysis, but this case stands out (or may stand out, as the record provided in the decision is somewhat sparse) as a prime “how not to conduct discovery.” This relatively brief opinion deserves proper analysis, but in order to do so, some in-depth background is (at least imo) helpful. So, anything between the dashes (or hyphens set forth in repetitive fashion below) comes from the author, and not the court.


Fed. R. Civ. P. Rule 26

The complaint in this matter was filed well after the effective date of the 2006 amendments to the Federal Rules of Civil Procedure. The hint lies in the index number for that case, which bears an “08” prefix. The two-digit prefix in federal district court civil case numbers indicates the year of filing.
It’s also a good idea to set forth those portions of Rule 26 pertinent to this decision. For those who want to view the source, from the source, here’s the link:

Fed. R. Civ. P. Rule 26(b) - “…General Provisions Governing Discovery

(1) Scope in General. Unless otherwise limited by court order, the scope of discovery is as follows: Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense — including the existence, description, nature, custody, condition, and location of any documents or other tangible things and the identity and location of persons who know of any discoverable matter. For good cause, the court may order discovery of any matter relevant to the subject matter involved in the action. Relevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence. All discovery is subject to the limitations imposed by Rule 26(b)(2)(C).

(2) Limitations on Frequency and Extent.
(A) When Permitted. By order, the court may alter the limits in these rules on the number of depositions and interrogatories or on the length of depositions under Rule 30. By order or local rule, the court may also limit the number of requests under Rule 36.
(B) Specific Limitations on Electronically Stored Information. 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.
(C) When Required. On motion or on its own, the court must limit the frequency or extent of discovery otherwise allowed by these rules or by local rule if it determines that:
(i) the discovery sought is unreasonably cumulative or duplicative, or can be obtained from some other source that is more convenient, less burdensome, or less expensive;
(ii) the party seeking discovery has had ample opportunity to obtain the information by discovery in the action; or
(iii) the burden or expense of the proposed discovery outweighs its likely benefit, considering the needs of the case, the amount in controversy, the parties’ resources, the importance of the issues at stake in the action, and the importance of the discovery in resolving the issues.


(1) Conference Timing. Except in a proceeding exempted from initial disclosure under Rule 26(a)(1)(B) or when the court orders otherwise, the parties must confer as soon as practicable — and in any event at least 21 days before a scheduling conference is to be held or a scheduling order is due under Rule 16(b).
(2) Conference Content; Parties’ Responsibilities. In conferring, the parties must consider the nature and basis of their claims and defenses and the possibilities for promptly settling or resolving the case; make or arrange for the disclosures required by Rule 26(a)(1); discuss any issues about preserving discoverable information; and develop a proposed discovery plan. The attorneys of record and all unrepresented parties that have appeared in the case are jointly responsible for arranging the conference, for attempting in good faith to agree on the proposed discovery plan, and for submitting to the court within 14 days after the conference a written report outlining the plan. The court may order the parties or attorneys to attend the conference in person.
(3) Discovery Plan. A discovery plan must state the parties’ views and proposals on:
(A) what changes should be made in the timing, form, or requirement for disclosures under Rule 26(a), including a statement of when initial disclosures were made or will be made;
(B) the subjects on which discovery may be needed, when discovery should be completed, and whether discovery should be conducted in phases or be limited to or focused on particular issues;
(C) any issues about disclosure or discovery of electronically stored information, including the form or forms in which it should be produced;

So, subject to certain limitations, (i.e., burden, duplication, expense, previous opportunity to discover, and burden-benefit analysis) Fed.R. Civ. P. Rule 26(b) provides that parties may obtain discovery or non-privileged relevant matter. Specific limitations on discovery of ESI may be imposed if a party can show inaccessibility by reason of undue burden or cost.

But wait, before we can undertake eDiscovery, parties are required to “meet and confer” to discuss ESI discovery issues as part of their general meet and confer obligations pursuant to Fed. R. Civ. P. Rule 26.

Fed. R. Civ. P. Rule 26(f)(3)(c) is particularly instructive, as it requires the parties to discuss and attempt to resolve any (emphasis added) ESI discovery issues, including form or production.

So, the Rules give parties specific procedural marching order prior to engaging in discovery generally, and in eDiscovery in particular. In plain language, parties are permitted by the Federal Rules of Civil Procedure to engage in discovery of ESI (subject to limitations set forth above). Before commencing discovery, however, the parties must
1. Meet and discuss eDiscovery issues, including preservation and form of production
2. Prepare some report or proposed case management or scheduling order outlining what issues (including ESI discovery) on which the parties agree, or disagree. The Court then decides disputed discovery issues.


Blognote: There is no language in the Federal Rules permitting a court a priori to prevent a party from undertaking ESI discovery.

Blognote: There is a somewhat fine distinction between undertaking ESI discovery (that is, discovering electronically stored information) and producing ESI. In this action, and although the terminology used by the Court is less than perfectly clear, the issue centered on ESI production and not ESI discovery.

With that out of the way, let’s return to the rather sparsely reported record in this case. No mention is made whether any Rule 26(f) meet and confer took place, or what was discussed, agreed to, or disputed, and no mention is made of any case management order provisions other than discovery bifurcation. What we do know is that this is a class action, and as is typical in class actions, discovery was bifurcated into phases, with the first described as “class certification.” The current discovery dispute arose during this first class certification phase.

This case also qualifies as a top contender for the “what-not-to-do” award for 2009.

Why? It appears that plaintiff’s counsel requested production of ESI in native format (rather than hard copy of ESI) only after “voluminous” hard copy of ESI by defendant:

“The parties have worked amicably throughout the discovery process, and Zurn has produced substantial amounts of hard copy documents.” In re Zurn Pex Plumbing Products Liability Litigation 2009 WL 1606653, 1 (D. Minn. 2009)

But wait, after acquiescing to the production of hard copy printouts of ESI from defendant, plaintiff saw clouds on the otherwise “amicable” discovery event horizon:

“It appears, based on third party discovery, that all of the communications regarding warranty claims and aggressive water have not been disclosed” Id.

Plaintiffs’ counsel then took a more aggressive stance, and requested ESI discovery, specifically a search of certain of defendant’s servers and drives. Not surprisingly, defendant’s response was an objection:

“[After depositions were taken] Plaintiffs requested, and Zurn produced, the names of Zurn employees who have received a legal hold notice in relation to this action. Raiter Aff. Ex. N. Plaintiffs responded with a list of 26 search terms that they wanted Zurn to use to search the emails of the identified employees as well as the shared servers (the J and K Drives). Id. Ex. O. Zurn balked at the request, arguing that the information was not necessary for class certification and that the request was overly broad and would be extremely costly.” Id.

The Court’s eDiscovery Analysis

Plaintiffs argued that the Magistrate Judge foreclosed the production of ESI. The Court disagreed, relying on what is (at least imo) a rather tortured interpretation of Fed. R. Civ. P. Rule 26(b). The Court’s language seems to conflate the discoverability of ESI (which for the most is expressly permitted by the rules) with the production of discovered ESI, which may be limited by a Court:

“The Federal Rules of Civil Procedure anticipate the need for ESI. Rule 26(b)(2)(B), however, places specific limitation on the production of ESI. “A party need not provide discovery of [ESI] from sources that the party identifies as not reasonably accessible because of undue burden or cost.” Fed.R.Civ.P. 26(b)(2)(B). On a motion to compel discovery, “the party from whom discovery is sought must show that the information is not reasonably accessible because of undue burden or cost.” Id. Additionally, a court order can further limit discovery. Id. 26(b)(1). i at p. 2" Id.

“As a threshold matter, Zurn argues that Judge Erickson's October 26, 2007 Order foreclosed the production of ESI. It does not. The Order specifically contemplated that the parties would be allowed to revisit the issue of ESI should they discover “voids in the information disclosed in hard copy form.” October 26, 2007 Order at *9. The emails from the Zurn distributor that discuss fittings failures and aggressive water, and which had not been produced by Zurn directly, suggest that there are gaps in the hard copy information already disclosed. See Raiter Aff. Exs. A, B, C. Accordingly, this Court will revisit the ESI issue in light of Rule 26(b)(2)(B).” Id., at p. 2" Id.

Author’s Note: The Court’s language is interesting because it does seem to confuse ESI discoverability with ESI production itself. I think the definition of ESI production, absent agreement to the contrary by the parties, is not so plastic. One may argue that the production of a hardcopy of a pdf of a word processing file, or a hardcopy of a tiff of an email, is production of ESI, but it is more likely that the hapless requester who is painted into this corner may have supplied both paint and brush to the Court. In this case, plaintiff did accept “voluminous” hard copy.

What plaintiff might have done in lieu of this acquiescence was to appeal the order of the Magistrate Judge to the District Judge. There are risks attendant to this admittedly infrequent, and frequently unsuccessful approach, but the denial of ESI discovery in the form chosen by the requesting party seems appropriate to bring “upstairs” to the District Judge.

Interestingly enough, and in seeming contradiction to its eDiscovery position stated above, the Court then describes the underlying purpose of discovery:

“Zurn first cites the voluminous documents it has already disclosed and makes the argument that Plaintiffs have sufficient discovery to adequately argue the first phase of the class certification issue. Def.'s Mem. in Opp'n to Mot. to Compel [Docket No. 67] at 11-13. This argument glosses over the purpose of discovery, which is to broadly enable parties to obtain the factual information needed to prepare a case for trial. See Alpern v. UtiliCorp United, Inc., 84 F.3d 1525, 1536 (8th Cir.1996). Even focusing on the narrower issue of class certification, there is a presumption in favor of discovery of Zurn's ESI.” Id. at p. 2

Magistrate Judge Erickson’s Decision

What makes this decision intriguing is that the excerpt provided by the District Court of Magistrate Judge Erickson ESI discovery ruling, which appeared to deny plaintiff’s request for discovery of ESI rather than the form of production, stating that:

“[W]hile ESI may prove relevant to the first stage of discovery, we cannot meaningfully make that prediction now, and require the parties to engage in what could be vastly more expensive, and yet utterly futile, discovery.” Id. However, Judge Erickson also stated that “should the parties uncover voids in the information disclosed in hard copy form, they are ... at liberty to press for further discovery including electronically stored information.” Id. at *9.” In re Zurn Pex Plumbing Products Liability Litigation, 2009 WL 16706653 (D. Minn. 2009).

Blognote: eDiscovery is discovery about discovery, irrespective whether that discovery involves class certification, jurisdiction, merits, or otherwise. To hold ESI discovery “meaningful” in one set of circumstances and not in another is to misapprehend the ubiquitous nature of computer generated information as evidence across the spectrum of case types in modern day litigation. Moreover, if Magistrate Judge Erickson’s comments are directed to ESI discovery, his position is also undercut by the fact (and by the acknowledgment of many other judges) that 99 percent of all evidence used in modern litigation is computer generated. That said, the magistrate judge did leave himself an out, permitting a revisitation of the issue (to permit ESI discovery) if circumstances later necessitated same.

ESI Production after Production of Hard Copy Not Duplicative

Not surprisingly, circumstances necessitated revisiting the issue, and the District Court took the more expansive approach, and turns first to defendant’s initial assertion that ESI production would be duplicative and therefore should be denied pursuant to Fed. R. Civ. P. Rule 26(b)(2)(C)(i). District Judge Atherton disagrees, and couches her language on the general schema of broad discovery contemplated by the Federal Rules.

“Zurn first cites the voluminous documents it has already disclosed and makes the argument that Plaintiffs have sufficient discovery to adequately argue the first phase of the class certification issue. Def.'s Mem. in Opp'n to Mot. to Compel [Docket No. 67] at 11-13. This argument glosses over the purpose of discovery, which is to broadly enable parties to obtain the factual information needed to prepare a case for trial. See Alpern v. UtiliCorp United, Inc., 84 F.3d 1525, 1536 (8th Cir.1996). Even focusing on the narrower issue of class certification, there is a presumption in favor of discovery of Zurn's ESI.” Id., at p. 2

Undue Burden and Cost, and Attorneys Representations Thereof

Defendant then argued that the ESI search and production would result in undue burden and cost for defendant, and to this issue the Court accorded greater concern.

“Zurn's second argument, however, that the production of ESI would be unduly burdensome and costly, is a greater concern for the Court. Plaintiffs request roughly 361 gigabytes of data. Brumagin Aff. ¶¶ 2, 3, 4; Freestone Aff. [Docket No. 69] ¶ 5. Zurn represents that by using the generally accepted standard of 75,000 pages per gigabyte, Plaintiffs' request amounts to nearly 27 million pages of documents. Def.'s Mem. in Opp'n to Mot. to Compel at 13, n .4. If the K drive were not searched, the remaining data consists of 48 gigabytes.
FN1 Zurn also states that a search of the custodians' emails and J drive files will require approximately seventeen weeks and cost $1,150,000, exclusive of vendor collection and processing costs, to review and process the data. Freestone Aff. ¶ 9.” Id., at p. 2

The colloquy here is interesting. Defendant’s representations as to “generally accepted standard of 75,000 pages per gigabyte” or 27 million pages, is accorded little weight by the Court. Why? Obvious, my dear Watson. Defendant’s counsel, made the assertion without any expert testimony supporting her assertions. The Court notes that counsel’s naked assumptions didn’t count for all that much.

The Court first disagreed with defendant’s math:

“By the Court's calculation, a search of the custodians' emails and J drive files, as well as the DVD copies of information of former Zurn-employee custodians, consists of roughly 3.6 million pages of documents. It is unclear whether Zurn's cost and time numbers are based on a review of 27 million pages of documents, the 3.6 million pages of documents limited to the J Drive and custodians' emails, or a smaller sample of document pages likely to be flagged as a result of a search for certain relevant terms proposed by Plaintiffs.” Id.

What was at stake here? More than one million dollars in asserted discovery costs for defendant, and a significant expenditure of time:

“Zurn also states that a search of the custodians' emails and J drive files will require approximately seventeen weeks and cost $1,150,000, exclusive of vendor collection and processing costs, to review and process the data.” Id. at p. 1

Did defendant utilize an expert to help the court understand why significant costs and time would be required to comply with plaintiff’s ESI discovery request? The answer is no, and the Court doesn’t skip a beat in weighing in on the probative value of naked argument by counsel:

“The affidavit of Ms. Freestone, an attorney and not an expert on document search and retrieval, is not compelling evidence that the search will be as burdensome as Zurn avers.’ Id.


Call this a stellar example of being penny wise and pound foolish. I’m sure that the cost of hiring an expert to provide evidence for this assertion would have been orders of magnitude less expensive (read: much cheaper) than having to comply with what ultimately was the Court’s decision, and that was to engage in fairly extensive ESI discovery:

“In an effort to control costs, the Court will limit the search to the following fourteen terms based on the likelihood that they will produce relevant documents without including a vast number of documents that are likely irrelevant to the litigation. Zurn shall search the J Drive, the custodians' emails, and the DVDs of the information on the computers of former Zurn-employee custodians using the following terms:

(1) AADFW, (2) Corrosion, (3) Corrosive, (4) Corrosive Water, (5) Crack, (6) Dezinc, (7) Dezincification, (8) DZR, (9) Fail, (10) IMR, (11) Leak, (12) MES, (13) SCC, (14) Stress corrosion cracking.” Id. at p. 3

Oh, and the Court did leave open the door for defendant to raise the burden and cost issue, but reminded counsel to bring an expert for the occasion:

Additionally, if the search, as ordered by the Court, proves to be overly burdensome or costly, Zurn may renew its objection by presenting the Court with specific information including evidence from computer experts on applying the search terms, the number of documents identified, and the cost and time burdens of vetting documents.” Id.

Takeaway -- Producing Party: The author has been there, done that, and has been run over by the same truck that struck defendant’s counsel in this case. In order to prevent such lamentable outcomes, a wise strategy includes having a technology expert on hand to assist a court in understanding that which you are asserting is “generally accepted” as true. “That” of course, in this case, meaning matters technological.

Takeaway – Requesting Party: This motion appears to have been argued without the benefit of having a technology expert present to substantiate counsel’s claims, and this inured to plaintiff’s disadvantage in proceedings before the magistrate judge. Yes, it appears that plaintiffs will get their ESI discovery. That said, had counsel been supported by the declaration or testimony of any expert, ESI discovery might have commenced at the outset.

This decision provides a clarion call (or shout) to counsel to understand that an attorney’s representation about what technology is, or isn’t or about what technology costs, or does, or doesn’t do, amounts to no more than lay opinion to a court. Forewarned is forearmed.

Case: Beard Research, Inc., et al. v. Kates, et. al.
Citation: 2009 WL 1515625 (Del.Ch. 2009)
Date: 2009-05-29
Topics: Delaware duty to preserve, adoption of Zubulake and Sedona guidelines, request for production triggers duty to preserve, basis for imposition of default judgment or adverse inference instruction as sanction for ESI spoliation

This spoliation decision arises from a trade secrets misappropriation and tortious interference with business relation action from the Court of Chancery of Delaware.

The allegations involve the ubiquitous ex-employee, a former employer, the ex-employee’s subsequent employer, and a laptop computer. The sanctions sought were, alternatively, default or an adverse inference jury instruction:

“In particular, Plaintiffs contend that an ex-employee's laptop computer was irretrievably altered after a duty to preserve that evidence had arisen and that the ex-employee and his subsequent employers are responsible for that alteration. By way of remedy, Plaintiffs urge this Court to grant a default judgment in their favor on Counts I and II of their Complaint for tortious interference with business relations and misappropriation of trade secrets, respectively. Alternatively, Plaintiffs request an adverse inference that the destroyed evidence contained information that would favor their claims. Plaintiffs also seek imposition of attorneys' fees and costs. Defendants vigorously oppose the motion for sanctions.” Beard Research, Inc. v. Kates,” 2009 WL 1515625, 1 (Del.Ch. 2009)

Duty to Preserve Under Delaware Law

The Court first provides an analysis of a party’s duty to preserve relevant evidence under Delaware law. Note the reliance on Zubulake IV and the Sedona Guidelines. Not surprisingly the duty to preserve includes evidence that might be relevant to anticipated future litigation:

"A party in litigation or who has reason to anticipate litigation has an affirmative duty to preserve evidence that might be relevant to the issues in the lawsuit.
FN62 Whether a person has reason to anticipate litigation depends on whether the “facts and circumstances ... lead to a conclusion that litigation is imminent or should otherwise be expected.” FN63 A court may sanction a party who breaches this duty by destroying relevant evidence or by failing to prevent the destruction of such evidence.FN64" Id.

"FN62. See Triton Constr. Co. v. E. Shore Elec. Servs. Inc., 2009 WL 1387115, at *8 (Del. Ch. May 18, 2009); Acierno v. Goldstein, 2005 WL 3111993, at *6 (Del. Ch. Nov. 16, 2005); see also Brandt v. Rokeby Realty Co., 2004 WL 2050519, at *11 (Del.Super.Sept.8, 2004) (“A party, anticipating litigation, has an affirmative duty to preserve relevant evidence.”); Positran Mfg., Inc. v. Die bold, Inc., 2003 WL 21104954, at *2 (D.Del. May 15, 2003) (citations omitted); Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 216 (S.D.N.Y.2003).” Id.

“FN63. The Sedona Guidelines: Best Practice Guidelines & Commentary for Managing Information & Records in the Electronic Age (“ Sedona Guidelines ”) 40 n. 1 (2004), available at http://; see also id. at 40 (citing numerous federal cases) (“An organization's information and records management program should anticipate circumstances that will trigger the suspension of normal destruction procedures.”). Id.

In this instance, at issue was [the ex-employees] laptop computer, an original hard drive, and a “substitute” hard drive, and as is typically asserted in this type of proceeding, crashes, reformats and reinstalls. And the deletion of nearly 11,000 relevant files as evidence by forensic examination. Oh my.

It is helpful at this point to provide a truncated event timeline:

October 2007: Plaintiff’s explicitly requested production of the laptop as a source of potentially relevant evidence.

Defendant refused to produce the computer without a court order. No matter, said the Court. The duty to preserve was nonetheless triggered at least as early as that time:

“Whether or not Defendants' position in that regard was substantially justified, Kates, ASDI, and ASG knew as of October 2007, at the latest, that Plaintiffs believed the laptop contained relevant information. In those circumstances, each of those three Defendants had an affirmative duty to preserve the Gateway as evidence.” Id.

But wait, noted the Court: there was an arguably earlier preservation trigger. Here’s why:

February 2004: Defendant [the ex-employee] resigns from plaintiff.
March 2004 (approx): Defendant is employed by co-defendant ASG
Early 2004: Defendant ex-employee understands likelihood of being sued by ex-employer
May 2005: Ex-employee and new employer are sued by plaintiff
June 2005: Plaintiff serves first set of discovery requests to defendant ex-employee

Beginning in 2003 and at all times pertinent thereto, defendant ex-employee used a laptop computer for his everyday work and personal matters.

Plaintiff asserted three arguments in support of its contention that the ex-employee had tampered and with both the original and substitute hard drives “in a way that destroyed or threatened to destroy relevant evidence on a number of occasions:

“(1) Kates's deletion of all ASG data and files from the original hard drive in or around November 2005;
(2) Biggers's installation of a new hard drive in the laptop in or around December 2007 and return of the original hard drive to Kates, who then could not account for its whereabouts; and
(3) Kates's tampering with the laptop and deletion of certain files in July 2008, just before I ordered Defendants to produce it for Plaintiffs' inspection. ” Id. at p. 6

As to the November 2005 actions, the Court first finds that the by deleting files and emptying the trash or recycle bin, the employee had destroyed data. The Court also found that the ex-employee had already been in litigation for a number of months at the time (November 2005) he deleted files and emptied the laptop’s recycle bin.

The Court also determined that the ex-employee’s new employers (both co-defendnats) also had an obligation to preserve “well before 2005” as they shared the same counsel, and had shared the same counsel, since the commencement of the litigation.

But wait, argued the co-defendants. No specific request was
made for the ex-employee laptop, as of November 2005, and so there was no duty to preserve it. Not so, said the Court.

But first, the Court explains that the problems it will later describe might have been prevented by early meet and confer between adversary counsel. The message to future litigants appearing before this court is clear: Agree on ESI issues (including preservation and destruction) and the Court will generally not interfere. Fail to agree, and the Court will not look kindly on a party’s failure to impose stringent preservation measures in a challenge mounted by an adversary. In other words, the Court is likely to hold a party who destroys evidence in the absence of an agreement between the parties to a much higher standard of preservation.

“In complex commercial litigation today, virtually all discovery involves electronic discovery to some extent. It also is well known that absent affirmative steps to preserve it, at least some electronically stored information (“ESI”) is likely to be lost during the course of litigation through routine business practices or otherwise.” Id.

“These realities counsel strongly in favor of early and, if necessary, frequent communications among counsel for opposing litigants to determine how discovery of ESI will be handled. To the extent counsel reach agreements recognizing and permitting routine destruction of certain types of files to continue during litigation, the Court has no reason to object." Id.

“Conversely, if the parties do not focus on the handling of e-discovery in the early stages of a case, the Court is not likely to be sympathetic when, for example, one party later complains that stringent measures were not instituted voluntarily by her adversary to ensure that no potentially relevant information was lost. Rather, instead of holding a party to a stringent standard that might have been appropriate if established earlier in the case, the Court probably will apply an approach it deems reasonable, taking into account the insights provided by the case law and some of the guidelines and principles developed by various respected groups that have studied the challenges of electronic discovery [Footnote omitted].” Id. at p. 7.

Takeaway: In Delaware, negotiate an advantageous (to your client) ESI preservation and destruction agreement with your adversary as early as possible.

Failure to Impose Litigation Hold

The Court also points out that there was “no evidence” produced by any defendants indicating that any actions to preserve evidence were taken as of November 2005. The foreseeability standard will be familiar:

“Defendants knew or, at least, should have known that Kates had a laptop that might contain information relevant to the litigation and, therefore, should be preserved. The complete absence of any evidence that Defendants ASDI, ASG, or Kates took any action to satisfy their obligation to preserve relevant information on Kates's laptop in 2005 leads me to conclude that ASDI and ASG bear some responsibility for the destruction of evidence that occurred in November 2005, albeit much less than Kates himself.” Id.

December 2007: In December 2007, defendant ex-employee “twice successfully and once unsuccessfully” tried to reformat what was apparently a failing hard drive in the laptop. The Court notes that each of these acts “created a risk that relevant information on the original hard drive would be overwritten and effectively destroyed.”

At this time, plaintiff had specifically requested the ex-employee’s laptop (and drive) and that the ex-employee refused to produce same without a court order. The Court points out that even though the hard drive did fail mechanically (failed to spin up), there was still an opportunity to retrieve relevant evidence that defendant ex-employee had a duty to preserve. During that time, the ex-employee’s new employer replaced the failed drive with a new drive. The location of the original drive? Whereabouts unknown.

The Court was not amused:

After determining that the hard drive would not “spin” and that he could not make a “ghost” copy of the drive, Biggers replaced it with a new drive and returned the original to Kates. The original drive has not been seen since then.

The loss of the original hard drive deprived Plaintiffs of the opportunity to examine what might have been relevant evidence. Plaintiffs' IT expert, Paul Herrmann of EVI, has sworn that, even though the hard drive did not spin or operate when Biggers examined it, there is a high likelihood that the drive could have been repaired with full recovery of all data from it.FN68 Defendants did not rebut Herrmann's testimony, and I find it credible." Id. at p. 8

Based on this and other evidence, the Court found that all defendants had breached their duty to preserve relevant evidence.

Late July 2008: Suffice it to say that in late July 2008, “after being advised” that the Court was likely to order the immediate production of the laptop, defendant ex-employee “brazenly ran a disk-cleanup program on the new hard drive on the eve of the hearing regarding it.”

The Court was singularly unimpressed with defendant ex-employee’s attempts at computer hygiene:

“Kates tampered with the laptop without consulting with or providing any advance notice to his own counsel, let alone Plaintiffs. This Court cannot condone such flagrant disregard for the discovery rules and a party's obligation to preserve potentially relevant evidence.” Id.

Delaware Standards for Application of Appropriate Sanctions for Spoliation of Evidence

Under Delaware, a court has the power to impose sanctions under two theories: The first theory is resembles the federal court’s “inherent powers” to manage its own affairs. Indeed, the Court points to the Second Circuit’s decision in Residential Funding v DeGeorge, and the Third Circuit’s decision in Schmidt v. Milwaukee Elec. Tool Corp. in support of its assertions:

“The Court has the power to issue sanctions for discovery abuses under its inherent equitable powers, as well as the Court's ‘inherent power to manage its own affairs.’

“FN70. Residential Funding Corp. v. DeGeorge Fin. Corp., 306 F.3d 99, 106-07 (2d Cir.2002); see also Schmid v. Milwaukee Elec. Tool Corp., 13 F.3d 76, 79 (3d Cir.1994).” Id., at p. 9

Borrowing again from federal court decisions (this time, from the Court’s home federal District of Delaware, the Court explains that sanctions serve three functions:

“Sanctions serve three functions: a remedial function, a punitive function, and a deterrent function.
FN73 Keeping these purposes in mind, the Court will consider the following factors in determining the appropriate sanctions:

FN73. Micron Tech., Inc. v. Rambus Inc., 255 F.R.D. 135, 148 (D.Del.2009) (citation omitted).
(1) the culpability or mental state of the party who destroyed the evidence;
(2) the degree of prejudice suffered by the complaining party; and
(3) the availability of lesser sanctions which would avoid any unfairness to the innocent party while, at the same time, serving as a sufficient penalty to deter the conduct in the future.

FN74. Positran Mfg., Inc. v. Die bold, Inc., 2003 WL 21104954, at *2 (D.Del. May 15, 2003) (citation omitted).” Id. at 9

“The Court has wide latitude to fashion an appropriate remedy, but the remedy must be tailored to the degree of culpability of the spoliator and the prejudice suffered by the complaining party.” Id

Default Judgment or Dismissal

The Court then discusses the menu of sanctions types it could impose under Delaware law.

"To impose a default judgment, the spoliator must have acted “willfully or in bad faith and intended to prevent the other side from examining the evidence.” FN78 Entry of a judgment against the spoliating party should be regarded as “a last resort,” FN79 however, and a motion for such relief should be “granted only if no other sanction would be more appropriate under the circumstances.” FN80 Id. at p. 10

“FN77. Sundor Elec., Inc. v. E.J.T. Constr., 337 A.2d 651, 652 (Del.1975).
FN78. Positran, 2003 WL 21104954, at *2 (citations omitted).FN79. Baliotis v. McNeil, 870 F.Supp. 1285, 1290 (M.D.Pa.1994).” Id.

The Court determines that entry of default would be an “extreme sanction” and that the record in this case did not support it. The Court reasons that while it had been demonstrated that computer information had been deleted, plaintiffs had not shown that the any deleted would have shown that defendant’s had acted in the manner alleged in the complaint. The Court reasoned further that an adverse inference instruction on that issue to be appropriate under the circumstance.

Although the Court acknowledges intentionality to some degree by each defendant, the “marginality” of relevance of the evidence shown to have been destroyed augured in favor of the lesser sanction of an adverse inference instruction rather than a default judgment.

Adverse Inference Sanctions Under Delaware Law – The Sears Test

The Court then provides an analysis for the imposition of sanctions for spoliation under Delaware law.

“As the Delaware Supreme Court said, ‘[i]t is the duty of a court, in such a case of willful destruction of evidence, to adopt a view of the facts as unfavorable to the wrongdoer as the known circumstances will reasonably admit.’
FN82 Id. at p. 10

FN82. Equitable Trust Co. v. Gallagher, 102 A.2d 539, 541 (Del.1954). Id.

The Court then describes the Delaware Supreme Court’s recently announced standards for the adverse inference imposition:

“More recently, the Supreme Court articulated the standard for drawing an adverse inference as follows:

“An adverse inference instruction is appropriate where a litigant intentionally or recklessly destroys evidence, when it knows that the item in question is relevant to a legal dispute or it was otherwise under a legal duty to preserve the item. Before giving such an instruction, a trial judge must, therefore, make a preliminary finding that the evidence shows such intentional or reckless conduct.FN83" Id.

FN83. Sears, Roebuck & Co. v. Midcap, 893 A.2d 542, 552 (Del.2006).” Id.

Adverse Inference Sanctions Imposition Requires Preliminary Finding of Intent or Recklessness

The Court then further explains that under Supreme Court of Delaware’s Sears test, a Court may impose an adverse inference instruction only after a preliminary finding of intent or recklessness:

“It is not enough that the “absence of evidence is not adequately explained.”
FN84 Likewise, the negligent destruction of evidence does warrant drawing an adverse inference; rather, the drawing of an adverse inference requires as a predicate a “preliminary finding of intentional or reckless destruction of evidence. [footnote omitted]” FN85 Id.

The Court then proceeds to define “intent” and “recklessness” when applying the Sears adverse inference propriety test. “Intent” is defined in its traditional manner, and presumes some purposefulness :

“The intentional destruction of evidence is reasonably straightforward. “Intention” modifies the actus reus of the destruction in the sense that the act was voluntary. Thus, for example, a somnambulist who lights a match and tosses it onto a pile of relevant documents does not act with the required mental state for spoliation. For spoliation, the spoliator also must have intended to act “with purpose.” Id., at p. 11

The Court then admits that it has more of a challenge when defining “recklessness” within a spoliation context.

On a spectrum of possible states of mind, recklessness exists somewhere between intentional conduct on one side and negligent conduct on the other side. In Jardel v. Hughes, the Delaware Supreme Court defined recklessness in a civil context as “a conscious indifference to the rights of others.”
FN88 In further describing civil recklessness, the Court stated: “Where the claim of recklessness is based on an error in judgment, a form of passive negligence, plaintiff's burden is substantial,” because the “ precise harm which eventuated must have been reasonably apparent but consciously ignored in the formulation of the judgment.” Id.

All that said, the Court appears to have little difficulty in fashioning a simple definition based on “knowing disregard:”

“Reckless conduct reflects a knowing disregard of a substantial and unjustifiable risk. It amounts to an “I don't care attitude.” Recklessness occurs when a person, with no intent to cause harm, performs an act so unreasonable and so dangerous that he or she knows, or should know, that harm will probably result.’ Id.

Blognote: This resembles the “continuum” of culpability (from negligence to intentionality) utilized by federal courts. See, e.g., Technical Sales Associates, Inc. v. Ohio Star Forge Co. 2009 WL 728520 (E.D.Mich. 2009) [Digested in EDDE 19]

Result: As to defendant ex-employee, the Court found that he had prior notice of the trigger of his duty to preserve, that he was a highly educated individual, and that he with knowledge that he was under a duty to preserve evidence, nonetheless took action on “numerous occasions” to reformat, and then, without real explanation, lost the original hard drive of his laptop computer. The Court found this sufficient basis for the imposition of an adverse inference sanction:

“Moreover, Kates admitted knowing that reformatting his laptop's hard drive on numerous occasions could overwrite or delete data stored on the hard drive. Nevertheless, around November 2005, Kates intentionally deleted files from the laptop after ASG laid him off. Moreover, in or around September 2007, Mr. Elzufon, then lead counsel for Kates, ASDI, and ASG, explicitly told Kates not to destroy his laptop. Still, within a few months, Kates had his original hard drive replaced by an agent of ASDI and then lost the original drive. I find, therefore, that Kates knew of his duties to preserve evidence, including specifically the information on his laptop, but consciously disregarded those duties. Thus, an adverse inference is warranted based on the replacement and subsequent loss of the original hard drive.” Id.

Adverse Inference and Substantive Proof

The Court next addresses the issue of what adverse inference language to use. While the plaintiff urged the Court to infer that the missing evidence (here deleted emails and a PowerPoint presentation) would have provided evidence proving plaintiff’s claims, the Court split adverse inference analysis.

Missing eMail

The Court notes that there was no proof that any such emails existed, and accordingly refuses to take “absence of evidence equates to evidence of absence” argument bait. Following Delaware decisional authority, the Court explains that an adverse inference should never take the place of substantive proof:

“There are two problems with Plaintiffs' argument vis-├í-vis the emails. First, Plaintiffs have no direct evidence that these emails ever existed. The Delaware Supreme Court has held that “even if [a party] were entitled to some kind of inference from [another party's] failure to produce records, this inference does not amount to substantive proof and cannot take the place of proof of a fact necessary to [the first party's] case.”
FN91 In other words, an adverse inference is exactly that-an inference and not substantive proof. Plaintiffs argue that the paucity of emails produced FN92 in comparison to the seventy or so phone calls between Blize and Kates suggests that there may have been more emails that were deleted. To obtain an adverse inference, however, a party must offer more than mere speculation and conjecture that a particular document existed. Id. at p. 12

Blognote: This makes eminent sense. An adverse inference providing substantive proof would be tantamount to a default judgment.

Existence of Email Evidence from Other Sources

The Court also refuses to give an adverse emails in connection with missing emails because the emails still existed and could be obtained from other sources. In so holding, the Court notes that the emails exist on both the send and receive ends, and that some of those emails had indeed been produced.

Adverse Inference and PowerPoint Presentation

The Court took a different tack in addressing the issue of the missing PowerPoint presentation. Here, the only version of the PowerPoint presentation, which was considered relevant evidence, had been irretrievably lost, but only after defendant’s duty to preserve had been triggered.

Consequently, it is reasonable to infer the information for the presentation would have been on the original hard drive for the Gateway. Due to the recklessness of, at least, Kates and arguably ASDI and ASG, as well, in late 2007 and thereafter, in the face of their obligations to preserve potentially relevant evidence, the original hard drive is “gone” and cannot be examined for purposes of this litigation. In these circumstances, I consider it appropriate under the standard set forth by the Supreme Court in Sears to draw an adverse inference that the presentation did include a copy of information from the CB catalog.
FN93 Whether additional adverse inferences are warranted will need to await the completion of the post-trial briefing and argument. Id.

Attorneys Fees, Costs, and Wild Goose Chases

The Court awarded attorneys fees and costs. The language used by the Court strongly suggests that although spoliation issues directly affect parties to a lawsuit, the wasting of judicial resources are never far from the mind of the typical jurist:

“Because the original hard drive was replaced, Plaintiffs were forced to engage in what amounted to a wild goose chase in search of information stored on Kates's computer. Indeed, the actions of Defendants ASDI, ASG, and Kates have frustrated the Court, because it was forced to sit through a hearing about the laptop when the original hard drive already was missing and to read Plaintiffs' opening brief on the pending Motion only to be sandbagged, like Plaintiffs, by the admission in the answering papers that the original hard drive already had been replaced by early 2008. The vexatiousness of Kates's conduct was compounded further by his undisclosed deletion of numerous files from the new hard drive before the July 2008 hearing.” Id., at p. 13

Case: Kipperman v. Onex Corp.
Citation: 2009 WL 1473708 (N.D.Ga. 2009)

Date: 2009-05-27
Topics: Fed. R. Civ. P. Rule 26(g) certification violation, eDiscovery Abuse ND Georgia
This decision comes to us from the U.S. District Court for the Northern District of Georgia. The underlying action involved transfer fraud arising out of a bankruptcy. The Court found that defendant had violated its Fed.R. Civ. P. Rule 26(g) certification obligations. This is the second Rule 26(g) violation case this year (the first was Covad v Revonet, see EDDE Digest 30)

That said, it bodes ill for one party or another when the Court, after noting that the action has fostered more than 600 docket entries, opens up with this:

The lengthy discovery process, which has spawned four discovery hearings, has been contentious at best and abusive at worst, and the court has expressed its displeasure with the parties' behavior on numerous occasions. Kipperman v. Onex Corp., 2009 WL 1473708, 1 (N.D.Ga. 2009)

Both sides filed motions for sanctions, including sanctions for eDiscovery abuse. The Court required additional information as a result of the “severity” of plaintiff’s request for sanctions. Plaintiff’s response, in pertinent part alleged “electronic or email discovery abuse.”

Electronic Discovery

The Court first notes that the parties had “throughout” their dispute battled over defendant’s obligations to provide back-up electronic documents in response to plaintiff’s document production requests. Defendants “had originally agreed to search their client’s active computer files and servers.” The parties discovered that eighteen emails, “at least one” of which came from a Blackberry, were not produced. Plaintiff then demanded restoration and search of backup media (at defendant’s expense, of course) to produce those emails.

As the Court notes:

“The parties engaged in extensive back and forth beginning in March of 2007 as Plaintiff sought to determine what e-mails Defendants had produced from the live server ( i.e., what data stays on the server and for how long), what types of e-mail might be on backup tapes, other sources for such e-mails, and the costs of restoration. Id.., at p. 6

The plaintiff took the only course then available, and filed its motion to compel. Defendants had 40 backup tapes that could have held relevant evidence. The Court noted that plaintiff did not request that all 40 back-up tapes be restored initially, and the Court ordered that two back-up tapes be sampled.

“The court directed Plaintiff to designate two tapes and design a search and directed Defendants to pay for it. The court made Plaintiff the guarantor of the search's success, however, and granted Defendants the right to demand fees if it produced little discoverable material. Plaintiff selected its tapes and provided its terms by January 16, 2008. Defendants performed a search on the two tapes, received hits resulting in thousands of documents, and began releasing documents to Plaintiff on a rolling basis.” Id., at p. 7

The term “thousands of documents” should be kept in mind…

Plaintiff thereafter filed a motion to compel defendant’s full compliance with the Court’s order, and the next day received what the Court described as “an enormous” production of documents.

Defendant’s Misrepresentation

Defendant had represented in a hearing to the Court that [defendant’s] back-up tapes did “overlapped” each other as asserted by defendant’s counsel. During the course of this voluminous production, plaintiff determined that defendant’s back-up did not overlap, and that as such, the back-up tapes produced did not cover the entire period they were asserted to cover by defendant.

The Court held an additional hearing, during which plaintiff argued the value of defendant’s production, and requested one additional tape, a certification of completion from defendant, and “some mechanism to deal” with the fact that plaintiff deposed many witnesses without full access to relevant documents.

The Court examined some email samples and delivered some unpleasant news to the defendant:

“The court itself examined examples of some of the e-mails produced to assess relevance: “I don't consider myself enough of an expert on the law in this area to declare these to be smoking guns but they certainly are hot and they certainly do smell like they have been discharged lately.” Id. at p. 8.

“…In conclusion, the court found, “It is apparent to the court that the Defendants did not do what the court ordered them to do previously, and so this is an instance where I could impose sanctions.” Id.
It’s never a good sign when a Court provides an excerpt from a hearing in a footnote that goes something like this:

“During the hearing defense counsel attempted to justify his earlier statements to the court about e-mail and justify Defendants' actions. Defense counsel also conceded that Defendants should have asked for a protective order with respect to its initial production. The court notes:

“I appreciate the fact that you wish to say that. I thought the Plaintiff's Motions for Sanctions was exceptionally well done. As a young judge I probably would have granted it.”

“I am trying to tell you in the clearest way that I know how that you're about a millimeter away from having your answers struck, and it goes back to the beginning argument we had today to come through this.”

... I didn't say come close. I said this is what you have to do. That's an order of the court, and as an officer of the court you are obliged to follow that or to get a protective order to get relieved of that, and failing either, maybe you have to get rid of your client, I don't know, but what I'm trying to explain to you is something that's been said a lot before. Close doesn't count in hand grenades, horseshoes and it doesn't count here when you have to abide by an order of the court.” Id.

Lying in the [eDiscovery] Bed One Makes, Misrepresentations

Ok, just a footnote, perhaps, but the Court doesn’t stop there. What follows are excerpts from the body of the opinion:

Notwithstanding the fact that the Court was “not unsympathetic” to the “massive” amount of discovery in this litigation:

"Defendants' actions have delayed the production of electronic discovery throughout this litigation. Defendants have consistently tried to minimize the likely value of this discovery. The court's minimal forays into the electronic discovery that has been produced has shown just the opposite. Id., at p. 9

“Therefore, the court gave Defendants numerous tools by which to reduce the burden of e-mail discovery, including an opportunity to limit Plaintiff's search terms and an opportunity to provide a list by which the number of people and the number of boxes being searched could be reduced. Defendants did not take advantage of these opportunities. Defendants must now lie in the bed that they have made.” Id.

The Court then characterizes defendant’s assertions as to the value of email ESI discovery as an unsuccessful attempt to influence the Court’s ruling:

“The court does condemn Defendants, however, for making blatant misrepresentations about the value of e-mail discovery in this case in an effort to influence the court's ruling, for refusing to follow the court's ruling once made, and for behaving as if they, and not the court, got to decide what electronic material was relevant and discoverable under Rule 26 and what material was not.” Id.

Nor was the colloquy between defendants and the Court spared scrutiny:

“Experienced defense counsel misrepresented the scope and value of e-mail discovery to this matter.” Id.

Defendant’s Counsel Representations As Akin to Willful Omission or Misrepresentation

It appears that the Court characterizes defendant’s counsel’s misrepresentations to the Court as arising only from two possibilities: incompetence or some degree of intentionality:

“Further, the court finds it absolutely inconceivable that defense counsel did not know in January of 2008, more than two years into the case and more than one year into full discovery, whether his client readily used e-mails. Any competent counsel should be expected to ask his client such questions in the infancy of discovery. If counsel did not know, it was because he did not wish to know, and reckless indifference to the truth of a matter is a close brother to willful omission or misrepresentation.” Id., at p. 10

Local Counsel On the eDiscovery Abuse Hook

Think you that it may be possible to beard eDiscovery abuse by pinning blame on local counsel? Consider the following footnote [Footnote 6] to the Court’s decision, and think again:

“FN 6. The court finds it notable that Defendants' legal team chose to have local counsel argue the e-mail portion of the hearing. Local counsel likely had the least personal knowledge about the workings of Onex and Magnatrax and the least daily telephone and face contact with the clients. Therefore, the court can conceive of a situation in which local counsel had not had discussions about e-mail usage with his client. Regardless, he was responsible for being familiar with the state of the record. Further, his co-counsel were responsible for ensuring that he made no misrepresentations to the court or for correcting any made. Id.

Blatant Disregard for Court Order

It’s also not a good sign when a party is singled out for not complying with a court’s discovery order:

“Defendants blatantly disregarded the court's order that they produce all documents responsive to Plaintiff's search terms on the two tapes designated. Rather than seeking a protective order Defendants determined themselves that it would be overly burdensome to search the e-mail boxes of hundreds of individuals employed with Onex and its related companies that had no role in the Magnatrax transactions.” Id., at p. 11

Violations of Fed. R. Civ. P. Rule 26(g) Certification

This is the second decision in which a federal district court discusses how eDiscovery abuses may comprise a Fed. R. Civ. P. Rule 26(g) certification violation. The first was Magistrate Judge Facciola’s May 27, 2009 (has it really been that long-lol?) decision in Covad v. Revonet --- F.R.D. ----, 2009 WL 1472345 (D.D.C. 2009)

The Court first acknowledges the Eleventh Circuit’s position that discovery imposes costs on all participants:

“As the Eleventh Circuit has recognized, discovery imposes costs on the litigant from whom discovery is sought, the party seeking discovery, and the judicial system itself. Chudasama v. Mazda Motor Corp., 123 F.3d 1353, 1367 (11th Cir.1997).” Id. at p. 16.

Not surprisingly, the Court also discusses how discovery abuse wastes scarce judicial sources. Here, the Court also explains that a discovery abuse resulting in a Fed. R. Civ. P. Rule 26(g) certification violation may be addressed by a court’s inherent sanctions powers:

“The judicial system uses scarce judicial resources that must be diverted from other cases to resolve discovery disputes. As such, trial courts have numerous mechanisms to discourage discovery abuse. A district court may sanction the parties before it for discovery abuse under the Federal Rules of Civil Procedure or under its own inherent power.” Id.

Federal civil procedure fans (and litigators practicing in federal courts) are no doubt familiar with Rule 26(g). The certification language is no walk in the park, and the Court so notes:

“Fed.R.Civ.P. 26(g) was “designed to curb discovery abuse by explicitly encouraging the imposition of sanctions.” Malautea v. Suzuki Motor Co., Ltd., 987 F.2d 1536, 1542 (11th Cir.1993). Rule 26(g) states:

(1) Signature Required; Effect of Signature. Every disclosure under Rule 26(a)(1) or (a)(3) and every discovery request, response, or objection must be signed by at least one attorney of record.... By signing, an attorney or party certifies that to the best of the person's knowledge, information, and belief formed after a reasonable inquiry:

(A) with respect to a disclosure, it is complete and correct as of the time it is made; and
(B) with respect to a discovery request, response, or objection, it is:

(i) consistent with these rules and warranted by existing law or by a nonfrivolous argument for extending, modifying, or reversing existing law, or for establishing new law;
(ii) not interposed for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation; and
(iii) neither unreasonable nor unduly burdensome or expensive, considering the needs of the case, prior discovery in the case, the amount in controversy, and the importance of the issues at stake in the action.
(3) Sanction for Improper Certification. If a certification violates this rule without substantial justification, the court, on motion or on its own, must impose an appropriate sanction on the signer, the party on whose behalf the signer was acting, or both. The sanction may include an order to pay the reasonable expenses, including attorney's fees, caused by the violation.” Id., 16-17

Rule 26(g) provides one of the rare examples of what can only be described as “strict liability” in the Federal Rules. It is important to understand that sanctions imposition is mandatory (rather than discretionary with the Court) once a Rule 26(g) certification violation has been determined. It should also be noted that while sanctions imposition is mandatory, determination of sanction severity is still left to the Court’s discretion:

"The decision whether to impose sanctions under Rule 26(g)(3) is not discretionary,” and “[o]nce the court makes the factual determination that a discovery filing was signed in violation of the rule, it must impose ‘an appropriate sanction.’ ” Id. at 1372. The court does have considerable discretion in determining what sanction is appropriate.” Id
Greater Sanctions Imposition Discretion Under Fed. R. Civ. P. Rule 37

The Court then discusses a court’s greater flexibility for sanctions determination and imposition under Fed.R. Civ. P. Rule 37. Civil procedure fans already know that a sanctions determination pursuant to Rule 37 requires the violation of a discovery order. And so explains the Court:

“A district court may impose sanctions against a party which violates a discovery order 'as are just'.
Such sanctions may include:

(i) directing that the matters embraced in the order or other designated facts be taken as established for purposes of the action, as the prevailing party claims;
(ii) prohibiting the disobedient party from supporting or opposing designated claims or defenses, or from introducing designated matters in evidence;
(iii) striking pleadings in whole or in part;
(iv) staying further proceedings until the order is obeyed;
(v) dismissing the action or proceeding in whole or in part;
(vi) rendering a default judgment against the disobedient party; or
(vii) treating as contempt of court the failure to obey any order except an order to submit to a physical or mental examination. Fed.R.Civ.P. 37(2)(b)(2). “ Id.

The Court then completes the discovery abuse sanctions triad with a discussion Eleventh Circuit doctrinal overview for sanctions imposed under a court’s inherent powers:

“A court may also sanction litigation misconduct using its inherent power “to manage [its] own affairs so as to achieve the orderly and expeditious disposition of cases.” Eagle Hosp. Physicians, LLC v. SRG Consulting, Inc., No. 08-11026, 2009 WL 613603, *5 (11th Cir. Mar.12, 2005) ( citing Chambers v. NASCO, Inc., 501 U.S. 32, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991)). The court must exercise its power, however, with restraint and discretion. Id. “The key to unlocking the court's inherent power is a finding of bad faith,” and a party may demonstrate bad faith by delaying or disrupting litigation or hampering the enforcement of a court order. In re Sunshine Jr. Stores, Inc., 456 F.3d 1291, 1304 (11th Cir.2006). A party is entitled to due process before a court determines that the party has acted in bad faith and the court invokes its inherent power to impose sanctions and assess fees.” Id. at p. 18

The Court then delivers the first hammer blow:

“The court regards the instant case as a textbook case of discovery abuse.” Id.

Why a “textbook” case? Let us count the ways:

1. Defendant’s Acts Prejudiced Plaintiff in Two Ways: “[The] Trustee has been denied all the documents necessary to depose witnesses and prepare expert reports and the Trustee's preparation has been made disjointed and difficult and it has been forced to expend a fair amount of time and money and effort to get that which should have been more easily obtained.” Id.

2. Defendants eDiscovery Abuse: “The court is most disturbed about Defendants' behavior with respect to the transfer interrogatories and e-mail discovery. In both of these areas, Defendants have blatantly ignored orders of the court and prompted multiple motions to compel. Defendants' only defense is their unpersuasive argument that they have now complied and Plaintiff has suffered no prejudice.” Id.

So, under what theory might sanctions be imposed?

The Court’s language indicates that sanctions are appropriate for the triad of reasons discussed above: Fed. R. Civ. P. 26(g) certification, Fed. R. Civ. P. Rule 37(f) violation of a discovery order, and as an exercise of a court’s inherent powers to sanction, and hints at its ultimate decision:

“In both of these areas, Defendants have blatantly ignored orders of the court and prompted multiple motions to compel. Defendants' only defense is their unpersuasive argument that they have now complied and Plaintiff has suffered no prejudice. Defendants' defense completely ignores the burdens the court and Plaintiff have endured to garner their compliance and the destructive precedent this court would set were it to allow Defendants to escape the consequences of three years of bad behavior simply because they believe they have now complied.” Id.

It’s never a good sign when a court talks about preventing a litigant from escaping discovery abuse consequences. Plaintiff, for its part, requested that the Court impose the “ultimate sanction” and strike defendant’s answer.

Luckily for the defendant (ok, I use that term somewhat loosely) the Court determined that the determination of an outcome determinative sanction would trigger an ad damnum clause that could potentially result in hundreds of millions of dollars, thereby triggering “the largest default judgment in history.” The Court also found only moderate prejudice, as plaintiff had the “raw resources” to proceed with its case through additional discovery (and redepositions).

Blognote: Under the circumstances, and perturbed as the Court was by defendant’s behavior, it appears that its exercise of judicial restraint represented a tacit acknowledgment of the likelihood of appeal and reversal for the imposition of a default.

Result: The Court found that defendant’s acts violated Fed. R. Civ. P. Rules 26 and 37, denied plaintiff’s motion for evidential sanctions, and imposed 1,022,700 in monetary sanctions on defendant.