2009-01-31 Two Decisions: Preservation and Spoliation of Tansitory Evidence, and an ESI Privilege Decision (4th Circuit)

Another week, another adverse inference imposed in a spoliation case involving “transitory” evidence. The second case involves the FOIA equivalent of a privilege log dispute, and imo, provides good guidance in connection with seeking native format data of the metadata used to create privilege log.

Advance warning: This digest is lengthy.

All errata acknowledged in advance.

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Case: Arista Records, LLC, et al. v Usenet.com, Inc. et al.
Citation: 2009 WL 185992 (SDNY 2009)
Date: 2009-01-26
Topics: Second Circuit spoliation standards, duty to preserve, scope of preservation, retention trigger date, preservation of transitory evidence, expert testimony, broadening application of Fed. R. Civ. P. Rule 37(e).

This copyright infringement case was brought against a provider of access to internet newsgroups by a slew of content provider (record companies, etc.).
At issue is the alleged spoliation by defendant of:

1) “Usage Data,” which Plaintiffs define as “pre-existing records from Defendant[s'] computer ‘servers' reflecting actual requests by Defendant[s'] paid subscribers to download and upload digital music files using Defendant[s'] service;” FN3

2) “Digital Music Files,” which Plaintiffs define as “the physical digital copies of the copyrighted sound recordings at issue in this case and related information hosted on computer servers operated by or on behalf of Defendant[s]”; FN4 and

3) “[h]ighly incriminating promotional materials previously available on the Usenet.com website.” (Pl. Sanctions Mem. at 1, 3.) FN5 Plaintiffs contend that Defendants deliberately destroyed this material even though it had been the subject of discovery requests, and that it would have provided evidence of wide-scale infringement of Plaintiffs' copyrighted sound recordings. (

Some definitional positions by the parties: Defendant Usenet.com defines “usage data” as “log files,” and refer to Digital Music Files as articles”

An initial what-not-to-do in connection with a party’s discovery posturing. Not a good sign when this is discussed at the beginning of a spoliation decision:

“Defendants initially provided false written discovery responses, in which they claimed not to own their servers and, therefore, claimed they could not access the Usage Data. ( See id. ¶ 4 & Ex. 3.) Defendants then changed their tact, claiming that they did own the servers but did not know how to produce the requested log data. Plaintiffs contend that they explained how the Usage Data could be produced and suggested that Defendants provide access to their servers so that Plaintiffs could collect the Usage Data themselves. Defendants first offered, and then withdrew their offer, to provide Plaintiffs direct access to the data.”

“Notwithstanding counsel's commitment, on March 8, 2008, Defendant Reynolds affirmatively disabled user access to what Plaintiffs estimate to be 900 Music Groups, without preserving the Usage Data. ( See Horowitz Decl. ¶¶ 31-32; Servodidio Decl. Ex. 26 (“Reynolds Dep.”) at 83:18-84:19.)”

“The following business day, Defendants produced “junk” Usage Data to Plaintiffs, reflecting subscribers' failed attempts to access the Music Groups.”

“On or around March 11, 2008, Plaintiffs learned of Defendant Reynolds's actions. ( See id. ¶ 8.) In an e-mail to Defendants' counsel, Plaintiffs objected to the disabling of the Music Groups, and reminded Defendants that those files “are the subject of outstanding discovery requests.”

“Plaintiffs followed-up via e-mail, on March 12, and through a formal letter request on March 21, demanding that Defendants preserve the Digital Music Files. ( See id. ¶ 9 & Exs. 9 & 11.) FN7”

Footnote 7 is telling:

“FN7. At this point, the Usage Data had already been lost.”

The spoliation allegations continue apace:

“Despite Defendants' assurances, Defendants did not preserve copies of the Digital Music Files for the disabled groups, nor did they re-enable all the Music-related Groups that had been disabled.FN8 ( See Pl. Sanctions Mem. at 9.) In fact, Plaintiffs claim that Defendants took affirmative steps to delete the Digital Music Files on March 10, and then Defendants reconfigured their system in order to write-over the Digital Music Files, making them irretrievable. ( See Pl. Supp. Mem. at 2-4.) Plaintiffs estimate that only 78 of the 900 Music Groups once available on Defendants' servers were re-enabled to receive articles after March 8, 2008. ( See Pl. Sanctions Mem. at 9; see also Horowitz Decl. ¶ 33.) FN9”

It seems that in spoliation hearings, the really devastating material (check out this testimony) is relegated to footnotes. Another what-not-to-do:

“FN8. Defendant Reynolds testified at his deposition that Defendants took no steps to prevent the Digital Music Files from expiring off the system. ( See Reynolds Dep. at 87:10-89:17; 92:24-94:9.) Defendant Reynolds was asked to explain why he did not preserve the Digital Files. He first stated that it was impossible, then conceded that they “could have been” preserved, but explained “there was no request to produce the articles or to save them.” (Id. at 92:19-20.)”

Could things get any worse? Did they? Yes, and yes. Enter the ubiquitous “server crash:”

“On March 24, Defendants' server crashed and stopped populating the re-enabled newsgroups; Defendants have not offered Music-related Groups on their system since that date. ( See Pl. Reply Mem. at 13; see also Def. Opp. Mem. at 8-9.) Thus the newsgroups that Defendants did re-enable after March 12, received files for only approximately ten days. ( See Pl. Sanctions Mem. at 9.)Moreover, the newsgroups that had been re-enabled “did not ‘re-populate’ in a manner consistent with the normal functionality of these groups.” ( Id.)”

“A snapshot of the so-called Digital Music Files flowing through the server at the time of the crash was captured, and Defendants produced this data to Plaintiffs on June 19, 2008. ( See Def. Opp. Mem. at 9-10.) As a result of the server corruption, however, Defendants were unable to extract the log data. ( See id. at 10.)”


Web Page Deletion - Attempt to Cure or Spoliation

Defendant claims it removed the web site. Plaintiff asserts that removal did not mean destruction of evidence (the web page data):

“Plaintiffs claim that Defendants have either destroyed other inculpatory evidence or misrepresented that it does not exist. ( See Pl. Reply Mem. at 15.) For example, Plaintiffs contend that Defendants destroyed highly incriminating promotional materials that were previously available on theUsenet.com website. FN10 ( See Pl. Sanctions Mem. at 3.) Defendant Reynolds testified at his deposition that it was not until after the commencement of the litigation that he personally removed the webpages, and failed to retain copies. (Fabrizio Decl. Ex. 11 (“Reynolds Oct. 8, 2008 Dep.”) at 1039:12-1041:21.) Plaintiffs argue that this controverts Reynolds's Declaration indicating the materials were simply removed from public access before the case was filed.FN11 ( See Declaration of Gerald Reynolds in Support of Defendant Usenet.com, Inc.'s Opposition to Plaintiffs' Motion for Sanctions, dated Sept. 29, 2008 (“Reynolds Decl.”) ¶22.) Although Defendants have offered to authenticate Plaintiffs' copies of the webpage containing the promotional materials, Plaintiffs take issue with this cure since they are unable to ascertain what other incriminating webpages Defendants destroyed. ( See Pl. Reply Mem. at 15-16 n. 8.)”

Defendants' position: The evidence Plaintiff sought not only was “difficult, if not impossible” to extract, but also no relevant. For example, Defendant claims that user logs only show that “some user requested some article at some time” but did not prove infringement, and that the Articles downloaded are only “text files” that needed to be combined and converted in order to create a music file playable on a downloader’s computer. We’re obviously off to a bad start.

Using the term “necessarily” -- From bad to worse: Defendant further claimed that while the logs identify the name of the article uploaded or downloaded, the article’s name did not “necessarily reveal the contents of the requested file.”


“Transitory” Electronic File Requests:

“From the commencement of discovery, Plaintiffs requested a wide array of electronic files, including the articles (Digital Music Files) and log data (Usage Data). ( See id. at 6.) Defendants repeatedly explained why it was not technologically feasible to produce these potentially responsive documents. ( See id.) Because of the volume of information requested and the fact that Defendants' system was not capable of capturing and storing the majority of this information, the parties discussed protocols and logistics for trying to extract and produce this information.”

If Defendants’ claim of ephemerality of the electronic file requests seems reminiscent of Columbia v Bunnell, read on...

“Defendants argue that the data Plaintiffs seek is transitory in nature, meaning that in-flow of new articles pushes out old articles present on the Usenet. ( See id. at 6.)”


Expert Testimony: Being Good Distinguished from Doing “Good” (quotes mine)

Plaintiffs moved to exclude the testimony of noted technology expert Professor David Farber “proffer expert conclusions or opinions about Defendants' system.” It appears that the Defendant hired Professor Farber on a whim, and the Court just wasn’t in a whimsical mood on decision day. Moreover, although his qualifications were not in dispute, the substantive quality of his investigation was called into question by the Court:

"Here, however, Professor Farber has offered opinions about the capacity and capabilities of Defendants' servers and software, which are the matters largely in contention, by simply accepting what Defendant Reynolds told him. The underlying premise of allowing expert testimony is that “scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue.” Fed.R.Evid. 702. An expert who simply regurgitates what a party has told him provides no assistance to the trier of fact through the application of specialized knowledge. Cf. United States v. Mejia, 545 F.3d 179, 197-98 (2d Cir.2008) (although an expert may rely on hearsay in forming his expert opinions, “[t]he expert may not, however, simply transmit that hearsay to the jury. Instead, the expert must form his own opinions by applying his extensive experience and a reliable methodology to the inadmissible materials. Otherwise, the expert is simply repeating hearsay evidence without applying any expertise whatsoever”) (internal quotation marks and citations omitted); Robinson v. Sanctuary Record Groups, Ltd., 542 F.Supp.2d 284, 292 (S.D.N.Y.2008) (expert whose methodology was founded on hearsay supplied by the party itself, rather than “a source of first-hand, independent expert knowledge,” did not provide reliable evidence).FN23


The Court held a better opinion of Plaintiff’s expert:

“FN23. By contrast, Plaintiffs' expert, Ellis Horowitz, engaged in a detailed analysis of Defendants' system and the data available on that system. The Court finds Horowitz's conclusions about Defendants' system to be deserving of substantial weight.”

Wait, wait, there’s more:

“By his own admission, the following represents the sum of Professor Farber's investigation. In preparation for his Declaration, Professor Farber received, but only “scanned” notes from Mr. Reynolds ( see id.). He also “reviewed the operations manual for Surgenews” FN21 and performed Internet research on the Surgenews software.FN22 ( See Def. Strike Mem. at 6.) Professor Farber did not download any articles from the Usenet in preparation for his Declaration, but he was a heavy Usenet user beginning in the late 1990's. Nevertheless, he has used the Usenet only on a couple of occasions each year since 2000. ( See id.; Farber Dep. 36:8-38:13.) Professor Farber had discussions with Defendant Reynolds concerning the Usenet.com system, the software, the age of the servers, which Professor Farber accepted as reasonable information based on his experience.”

“Professor Farber's Declaration is replete with opinions and conclusions which appear to be nothing more than information supplied to Professor Farber by Defendant Reynolds. The Court acknowledges that “disputes as to the validity of underlying data [relied upon by an expert] go to the weight of the [expert's] evidence” rather than its admissibility. Raskin, 125 F.3d at 66. Even if the Court were to deny Plaintiffs’' Daubert motion, however, and were to consider the conclusions in Professor Farber's Declaration, it would accord them little weight insofar as they purport to describe the capabilities of Defendants' system. As has been discussed, and will be described further, Defendant Reynolds's contentions about his system, which Professor Farber relied upon, have been shown to be misleading and erroneous.”

“Nevertheless, Farber does not simply rely on erroneous data; his opinions are merely a restatement of Defendant Reynolds's views and are not the product of independent analysis."

The coup de grace:

“An expert who simply repeats the hearsay of the client who retained him, without any independent investigation or analysis, does not assist the trier of fact in understanding matters that require specialized knowledge. That, in fact, is what Professor Farber has done in offering opinions about Defendants' system. The Court, therefore, grants Plaintiffs' Motion to Strike those portions of the Declaration that purport to describe the capabilities of Defendants' system. Those portions of the Declaration that are based on Professor Farber's expert knowledge of the Usenet in general and Usenet technology will not be stricken.”


Spoliation

As no motion to compel was pending, the Court’s inherent powers were invoked as the basis for Plaintiff’s spoliation motion. The Court then provide a good overview of the 2d Circuit’s spoliation approach:

“Spoliation is the destruction or significant alteration of evidence, or the failure to preserve property for another's use as evidence in pending or reasonably foreseeable litigation.” West v. Goodyear Tire & Rubber Co., 167 F.3d 776, 779 (2d Cir.1999) (citation omitted). “[A] court may impose sanctions on a party for misconduct in discovery under its inherent power to manage its own affairs.” FN30 Residential Funding Corp. v. Degeorge Fin. Corp, 306 F.3d 99, 106-107 (2d Cir.2002); see also Reilly v. Natwest Markets Group Inc., 181 F.3d 253, 267 (2d Cir.1999) (a district court has wide discretion in sanctioning a party for discovery abuses); see also Metro. Opera Ass'n. v. Local 100, Hotel Employees & Rest. Employees Int'l Union, 212 F.R.D. 178, 219 (S.D.N.Y.2003). Due to the “potency of the court's inherent power, courts must take pains to exercise restraint and discretion when wielding it. Accordingly, [the Second Circuit] has required a finding of bad faith for the imposition of sanctions under the inherent power doctrine.” DLC Mgmt. Corp. v. Town of Hyde Park, 163 F.3d 124, 136 (2d Cir.1998) (citing United States v. Int'l Bhd. of Teamsters, 948 F.2d 1338, 1345 (2d Cir.1991)). Bad faith can be shown by (1) “clear evidence” or (2) “harassment or delay or ... other improper purposes.” Int'l Bhd. of Teamsters, 948 F.2d at 1345 (internal quotation marks and citation omitted).”

The Court then provides a review of what a party asserting spoliation must demonstrate in the 2d Circuit:

“The party bringing a spoliation motion must demonstrate:

1) that its adversary had control of the evidence and a duty to preserve it at the time it was lost or destroyed;

2) that the adversary had a “culpable state of mind” when the evidence was lost or destroyed; and

3) that the lost or destroyed evidence was “relevant” to the moving party's claims such that a reasonable trier of fact could find that it would support a claim. See Residential Funding Corp., 306 F.3d at 107; see also Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 220 (S.D.N.Y.2003) (citing Byrnie v. Town of Cromwell, Bd. Of Educ., 243 F.3d 93, 107-12 (2d Cir.2001)).”


Obligation to Preserve:

Citing Judge Scheindlin’s decision in Zubulake, Magistrate Judge Katz then describes triggering events for a duty to preserve involve a determination of when the duty attaches and what must be preserved:

“Identifying the boundaries of the duty to preserve [evidence] involves two related inquiries: when does the duty to preserve attach, and what evidence must be preserved.” Zubulake, 220 F.R.D. at 216. A party is obligated to preserve evidence when it “has notice that the evidence is relevant to litigation ... [or] should have known that the evidence may be relevant to future litigation.” Kronisch v. United States, 150 F.3d 112, 126 (2d Cir.1998) (citations omitted); accord Fujitsu Ltd. v. Fed. Express Corp., 247 F.3d 423, 436 (2d Cir.2001).


Relevant Date May be Triggered by the Nature of the Evidence: Transitory Evidence:

After reciting the well established doctrine that a duty to preserve is triggered no later than the date on which an action is initiated, or the date when litigation was reasonably anticipated, the Court notes that under certain circumstances, the relevant date may be determined by the “nature of the evidence”

“Nevertheless, when the duty to preserve evidence arises may, under certain circumstances, be dependent upon the nature of the evidence. For example, among other things, Plaintiffs in this action sought e-mails and other communications from Defendants' employees, customers, and business associates, discussing or referring to the Music Groups on Defendants' servers and the uploading and downloading of Music-related files. Defendants were on notice to preserve such documents by no later than the date on which the Complaint was filed, and perhaps earlier, when Plaintiffs notified Defendants of the alleged infringement.”

The Court applies the “nature of the evidence” test to Usage Logs and Music Files contained on defendant’s servers. In acknowledging this ESI as “transitory” Magistrate Judge Katz finds that even though this information was transitory, and not routinely created or maintained by Defendants for their business purposes, the existence of a triggering event (here a specific request by Plaintiff) required that Defendants take to retrieve and store:

“”Some of the other evidence at issue in the instant motion, such as Usage Logs and Music Files contained on Defendants' servers, is transitory in nature, is not routinely created or maintained by Defendants for their business purposes, and requires additional steps to retrieve and restore. Arguably, Defendants may not have had an obligation to preserve such evidence until placed on notice that Plaintiffs considered it relevant and were requesting it. However, Plaintiffs explicitly requested the Usage Data on January 7, 2008. Moreover, there can be no doubt that the Digital Music Files are highly relevant to this case, and Defendants should have been aware of their relevance no later than the date on which the Complaint was filed. In any event, Plaintiffs specifically requested, and sought assurances on March 11, 2008, that these files would be retained.”


Scope of Preservation

The Court then finds that the defendants had actual notice, and that actual notice was sufficient to trigger a duty to preserve, attempt to preserve, or negotiate the protocols for preservation of even transitory data, which they failed to do:

“…once Defendants had actual notice that Plaintiffs were requesting the data, Defendants had the obligation to preserve it, if possible, or to at least negotiate in good faith what data they could produce.FN31 Plaintiffs specifically requested the Usage Data in their document requests ( see Servodidio Decl. Ex. 2), and they reminded Defendants that they had requested the Digital Music Files, on both March 11 and March 12 ( see id. Exs. 8 & 9).FN32 The parties were in negotiations concerning production of the Usage Data ( see, e.g., id. Ex. 4), and Defendants counsel affirmatively advised Plaintiffs in a March 8, 2008 e-mail that Defendants would extract and produce Usage Data for newsgroups that contain the words “mp3” or “sound.” ( See id. Ex. 6.) Nevertheless, after giving that assurance, Defendant Reynolds disabled the Music Files and failed to preserve the Usage Data.”


Broadening Application of Fed. R. Civ. P. 37(e)

In another interesting footnote, the Court likens the duty to preserve in this case to a failure to cease routine and ordinary ESI destruction referred to in Fed. R. Civ. P. Rule 37(e):

“FN31 Although Federal Rule of Civil Procedure 37(e) is not cited by the parties, and does not apply under the circumstances of this case, by analogy the Rule is useful in understanding what steps parties should take to preserve electronic evidence.”

The Court distinguishes two other cases cited by Defendants where preservation of transitory evidence was not required. The distinguishing factor in both cases was that a specific request was made in the instant case:

“Defendants cite two cases for the proposition that they have no duty to preserve the “transient electronic data at issue.” (Def. Opp. Mem. at 14.) In Convolve, Inc. v. Compaq Computer Corp., 223 F.R.D. 162 (S.D.N.Y.2004), the court denied sanctions for alleged spoliation of wave forms. See id. at 176-77. In its analysis, the Convolve court distinguished between e-mails, which have a “semi-permanent existence” and “are recoverable as active data until deleted,” and “ephemeral” data which “exist only until the tuning engineer makes the next adjustment, and then the document changes.” Id. at 177. The court held that under a general litigation hold, and absent a preservation order, sanctions were not warranted. See id. at 177. Similarly, in Healthcare Advocates, Inc. v. Harding, Earley, Follmer & Frailey, 497 F.Supp.2d 627 (E.D.Pa.2007), the court held that sanctions for spoliation were not warranted where a party failed to preserve temporary cache files, since the party did not affirmatively destroy the evidence and the cache files may have been emptied dozens of times before the request for production was made. See id. at 641-42. Defendants reliance on these cases is misplaced because, unlike the instant case, the lost data was not specifically requested prior to its destruction. See Convolve, 223 F.R.D. at 176-77 (parties were under a general litigation hold); Healthcare Advocates, 497 F.Supp.2d at 642 (“To impose a sanction on the Harding firm for not preserving temporary files that were not requested ... does not seem to be a proper situation for an adverse spoliation inference.”).

The Court rules that Defendants had an obligation to preserve and produce:

“In sum, the Court concludes that Defendants did have an obligation to preserve and produce the requested Usage Data and Digital Music Files. A litigant “is under a duty to preserve what it knows, or reasonably should know, is relevant in the action, is reasonably calculated to lead to the discovery of admissible evidence, is reasonably likely to be requested during discovery and/or is the subject of a pending discovery request.” Turner v. Hudson Transit Lines, Inc., 142 F.R.D. 68, 72 (S.D.N.Y.2001); see also Whitney v. Jetblue Airways Corp., No. 07 Civ. 1397(CBA), 2008 WL 2156324, at *4 (E.D.N.Y. Apr. 29, 2008) (finding that defendant had a clear obligation, no matter its document retention policy, to put a litigation hold on any and all documents relating to claim); Zubulake, 220 F.R.D. at 217 (a litigant is under a duty to retain relevant evidence that is likely to be requested and/or is the subject of a pending discovery request).FN36 Here, the discovery in issue was the subject of discovery requests, and Defendants' counsel assured Plaintiffs' counsel that the Usage Data would be produced. ( See Servodidio Decl. Ex. 6.) See Langley v. Union Elec. Co., 107 F.3d 510, 513-14 (7th Cir.1997) (affirming district court's decision to sanction party where counsel agreed to produce evidence, but failed to actually produce it); see also In re Bristol-Myers Squibb Sec. Litig., 205 F.R.D. 437, 444 (D.N.J.2002) (enforcing discovery agreement and stating that “[i]t is essential to our system of justice that lawyers and litigants, above all, abide by their agreements and live up to their own expectations.”)”


Usage Log Preservation

In yet another significant footnote, the Court states that the preservation of usage logs is no stranger to copyright infringement suits. Note the reference to the Bunnell case:

FN36. Courts have recognized the relevance of user log data and infringing digital files in copyright infringement actions, and they have ordered litigants to preserve and produce such data. See Viacom Int'l v. YouTube Inc., 253 F.R.D. 256, 261-62 (S.D.N.Y.2008) (compelling production of user log data and alleged infringing video files in copyright infringement action); see also Columbia Pictures, Inc. v. Bunnell, No. 06 Civ. 1093(FMC)(JCX), 2007 WL 2080419, at *13 (C.D.Cal. May 29, 2007) (requiring production of server log data stored in RAM, and denying sanctions for spoliation, in part, because data was not specifically requested); Twentieth Century Fox Film Corp. v. iCraveTV, No. Civ. A. 00-120 & 00-121, 2000 WL 255989, at *6 (W.D.Pa. Feb. 8, 2000) (relying on log data to demonstrate that users accessed video stream of copyrighted works).


Culpability

This may stand for the proposition that it is unwise to proclaim a lack of decisional authority in connection with an issue to be decided pursuant to a Court’s “inherent powers”:

Defendants’ contention:

“Defendants also argue that “there is no authority to support the culpability of a party in a situation where the alleged despoiled data is of a transitory nature and where no mechanism exists for saving or backing up the massive amount of data and information that is flowing through the server at any given moment.” ( See Def. Opp. Mem. at 15-16.) Defendants contend that they do not have back-up tapes, a back-up mechanism like those present for e-mail servers, or hard copies of the relevant data. (See Reynolds Decl. ¶ 14.) In short, Defendants claim that their actions cannot even be considered negligent since they “cannot reasonably compile the requested information.” (Def. Opp. Mem. at 16.)”

The Court was having none of it:

“The Court cannot accept this position when Defendants concede in their submissions that they later produced Usage Data and Digital Music Files to Plaintiffs. ( See id. at 11; see also Fabrizio Decl. Ex. 7 (“Reynolds Dep. Aug. 13, 2008”) 112:14-112:18 (admitting that Defendants are able to produce log data from “front end” servers without adverse impacts on the functionality of the servers).)”

Surprisingly enough Defendants’ backup claims relied on analogy to the safe harbor provisions of Fed. R. Civ. P. Rule 37(e). Again, the Court turned a deaf ear:

“Defendants further argue that the Digital Music Files expired off their server in the normal course of business, and, therefore, the evidence was not destroyed with a culpable state of mind. Defendant Reynolds testified that no commands that he knew of would change the expiration rate of the Files. ( See Declaration of Charles S. Baker in Support of Defendant's Response in Opposition to Plaintiff's Motion for Sanctions, dated Sept. 29, 2008 (“Baker Decl .”) Ex. 5 (“Reynolds Dep.”) at 89:11-89:25.) The Court disagrees. The evidence submitted by Plaintiffs' expert demonstrates that Defendants took affirmative steps to both change the retention time of the data, and to permanently delete it.FN40”


Additional evidence of culpability


“The analysis of raw data produced from Defendants' spool 2 server establishes that Defendants engaged in a calculated reconfiguration of their servers, which caused the Digital Music Files to expire in an expedited manner.“

“Plaintiffs' analysis establishes that the Digital Music Files expired off the system almost immediately because Defendants took affirmative steps to delete them.”

“A status report for spool 2 from March 10, at 10:16 p.m., shows that spool 2 was storing only about 2 million articles-meaning that almost all of the Digital Music Files had been deleted in approximately 17 hours.FN41 (See Supp. Horowitz Reply Decl. ¶ 13 & Ex. 3.) A status report on March 12, at 2:22 a.m. shows 0% of the storage space being used by mp3 or Music-related articles-indicating that the remaining Digital Music Files had been deleted. ( See id. ¶ 13 & Ex. 3.) After deleting the Digital Music Files, Defendants reconfigured the spool 2 server in order to make sure the deleted files would be written-over and thus irretrievable."

“In addition, Defendants manipulated the Music Group retention times [post-notice to preserve] so that they were reduced to just a few days.” (Bracketed comments added)

“Finally, Defendants have destroyed highly incriminating promotional materials that were previously available on the Usenet.com website. For example, all references to “Music” and “mp3s” were deleted from a promotional webpage on Defendants' website, sometime after March 13, 2008. Defendants destroyed all copies of this webpage, and only produced the sanitized version of it to Plaintiffs during discovery.”


The Court continues:


“The data produced to Plaintiffs post-March 8, however, is not comparable to the data destroyed as a result of Defendants' decision to disable the Music-related Groups, and provides a distorted picture of the activity occurring on Defendants' system.”

This reasoning is emblematic of Defendants’ activities for which the Court ruled that had acted in bad faith:

“It is clear that, Defendants took affirmative steps to disable the Music Groups; they then changed their server configuration, which caused the Digital Music Files to expire at a faster pace, and, ultimately, failed to preserve the requested Usage Data and Digital Music Files. Moreover, defendants' production of the post-March 8 data does not serve to cure their discovery abuses because it is not substantially equivalent to the destroyed data. Finally, Defendant Reynolds has provided, at best, misleading information to this Court concerning Defendants' webpages.”

“The Court, therefore, finds that Defendants' failure to preserve the requested discovery material was in bad faith.”


Relevance

Judge Katz then finds that the “despoiled” evidence was relevant. The following analysis of 2d Circuit (and District Court) decisional authority is instructive:

“The Court must next determine whether the despoiled evidence was “‘relevant’ to the party's claim or defense such that a reasonable trier of fact would find that it would support that claim or defense .” Residential Funding, 306 F.3d at 107; accord Zubulake, 220 F.R.D. at 221. The Second Circuit has explained:

"[R]elevant in this context means something more than sufficiently probative to satisfy Rule 401 of the Federal Rules of Evidence. Rather, the party seeking an adverse inference must adduce sufficient evidence from which a reasonable trier of fact could infer that the destroyed [or unavailable] evidence would have been of the nature alleged by the party affected by its destruction. Courts must take care not to hold[ ] the prejudiced party to too strict a standard of proof regarding the likely contents of the destroyed [or unavailable] evidence, because doing so would subvert the ... purposes of the adverse inference, and would allow parties who have ... destroyed evidence to profit from that destruction. Residential Funding, 306 F.3d at 108-09 (quoting Kronisch, 150 F.3d at 127-28 and Byrnie, 243 F.3d at 110) (internal quotation marks omitted).””


The Court follows in lockstep with 2d Circuit precedent and notes that a finding of bad faith can (and in this case does) create an inference of relevance:

“When evidence is destroyed in bad faith, that alone is sufficient to support an inference that the missing evidence would have been favorable to the party seeking sanctions, and thus relevant. See Residential Funding, 306 F.3d at 109; see also M & T Mortgage Corp. v. Miller, No. 02 Civ. 5410, 2007 WL 2403565, at *10-11 (E.D .N.Y. Aug. 17, 2007) (finding that the “missing documents [were] clearly critical to plaintiff's claims,” and imposing sanctions for spoliation because “defendants acted in bad faith in destroying the documents.” “[S]uch improper conduct alone is sufficient to support a finding that the documents were unfavorable to” defendants). By contrast, when the destruction of evidence is negligent, relevance must be proven through extrinsic evidence by the party seeking sanctions. De Espana, 2007 WL 1686327, at *6. “This corroboration requirement is ... necessary where the destruction was merely negligent, since in those cases it cannot be inferred from the conduct of the spoliator that the evidence would even have been harmful.” Zubulake, 220 F.R.D. at 221 (quoting Turner, 142 F.R.D. at 77.) However, “a showing of gross negligence in the destruction or untimely production of evidence” will support an inference that the evidence would have been unfavorable to the spoliator. Residential Funding, 306 F.3d at 109."


The Penultimate Hammer Blow

“The circumstances here warrant a finding that Defendants' destruction of evidence was in bad faith, or, at a minimum, grossly negligent; however, even assuming this was not the case, Plaintiffs present sufficient extrinsic evidence to confirm the relevance of the spoliated evidence.”


The Court’s Ruling:

Adverse inference instruction and award of attorneys fees and costs.


“Although the spoliated evidence would have assisted Plaintiffs in quantifying the amount of infringing activity occurring through the use of Defendants' service, allowing the adverse inference that the spoliated evidence would have been unfavorable to Defendants, with respect to the contentions Plaintiffs seek to advance, should serve the remedial function of restoring Plaintiffs to the same position they would have been in absent the wrongful destruction of evidence by Defendants. See Kronisch, 150 F.3d at 126.”

“As a consequence of Defendants' actions, Plaintiffs have been forced to expend substantial resources investigating and analyzing Defendants' misconduct. ( See Servodidio Decl. ¶ 31.) The Court finds, therefore, that Plaintiffs are entitled to an award of attorneys' fees and costs incurred in connection with determining that there had been a spoliation of evidence, as well as in connection with this motion. Attorneys' fees and costs “may be appropriate to punish the offending party for its actions or to deter [the] litigant's conduct, sending the message that egregious conduct will not be tolerated ... [S]uch an award serves the remedial purpose of making the opposing party whole for costs incurred as a result of the spoliator's wrongful conduct.” Chan v. Triple & Palace, Inc., 03 Civ. 6048(GEL)(JCF), 2005 WL 1925579, at *10 (S.D.N.Y. Aug. 11, 2005) (internal quotation marks and citations omitted); see also Phoenix Four, Inc. v. Strategic Res. Corp., 05 Civ. 4837(HB), 2006 WL 1409413, at *9 (S.D.N.Y. May 23, 2006) (while denying evidentiary sanctions, ordering the award of attorneys' fees and costs); Pastorello v. City of New York, 95 Civ. 470(CSH), 2003 WL 1740606, at *13 (S.D.N.Y. Apr. 1, 2003) (awarding costs, as well as permitting an adverse inference instruction); Turner, 142 F.R.D. at 78 (awarding attorneys' fees since defendant's spoliation caused “plaintiff to expend time and effort in attempting to track down the relevant information. It then caused the expenditure of additional resources by misleading the plaintiff and the Court ...”).”



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Case: Rein v. United States Patent & Trademark Office
Citation: --- F. 3d. --- 2009, WL 188993 (4th Cir. 2009)
Date: 2009-01-28
Topics: eDiscovery and FOIA requests, FIOA Vaughn index requirements, Vaughn index requirements comparison with privilege log requirements, specificity and particularity requirements in 4th and District of Columbia Circuits for both Vaughn indexes and privilege logs

This case involves an action against the U.S. Patent Office in connection with re-examination of NTP’s patents at issue in the ongoing litigation between RIM and NTP. A FOIA request for documents in connection with the U.S.P.T.O.s re-examination. Someone (the Court appears to take pains not to identify which party below was the appellant requestor) and was dissatisfied, with the FOIA production made by the Patent Office. The District Court affirmed the sufficiency of the Patent Office’s search, production and withholding of documents pursuant to the exemption provided by FOIA. A central issue was whether the “Vaughn Index” (described below) provided by the Patent Office satisfied the particularity and specificity requirements required by both FOIA and decisional authority. The 4th Circuit Court of Appeals reversed in part, holding that the “Vaughn Index” provided by the Patent Office did not meet the “specificity” and “particularity” requirements required, thereby preventing the District Judge from making a reasoned decision as to whether the information (note I did not say “documents”) to which the asserted Section 5 Exemption as well as attorney-client and deliberative process privilege, were justified:


“We reverse the district court's grant of summary judgment with regard to the documents R & HW challenged based on Vaughn index descriptions that do not include author, recipient, or necessary factual descriptive information."


FOIA Requests and eDiscovery

First, it is still unclear whether the Fed. R. Civ. P.’s eDiscovery rules will be applied to FOIA requests. Here, the 4th Circuit appears to be leaning away from application, relying on the Supreme Court’s decision in Mead Data Central, Inc. v. U.S. Dep't of the Air Force, 566 F.2d 242 (D.C.
Cir. 1977):

“FN25. ‘Although Congress clearly intended to refer the courts to discovery principles for the resolution of [Exemption 5] disputes, the situations are not identical, and the Supreme Court has recognized that discovery rules should be applied to FOIA cases only ‘by way of rough analogies.’ “ Mead Data Cent., Inc., 566 F.2d at 252.”

That said, the identical logical argument could be made in favor of applying eDiscovery principles to FOIA proceedings.


FOIA “Vaughn Indexes” and §5 Exemptiona, Attorney-Client and Deliberative Process Privileges

A Vaughn index was provided in the Rein case. The production of a Vaughn Index is the required alternative production where an agency chooses to withhold document:

“…the Agencies elected to provide a Vaughn index in lieu of producing withheld documents for in camera review by the district court. See Vaughn, 484 F.2d at 827. To substitute for in camera review, a Vaughn index must describe the withheld material with “reasonable specificity” so that the reviewing court can determine whether the exemption from disclosure applies. Ethyl Corp., 25 F.3d at 1249-50; see also Miscavige v. Internal Revenue Serv., 2 F.3d 366, 367-68 (11th Cir.1993).”

The Court then describes a Vaughn Index:

“A Vaughn index is a list describing the documents an agency withholds. The list must include sufficiently detailed information to enable a district court to rule whether the document falls within a FOIA exemption. The Vaughn index received its name from the decision in which the use of such an index was first discussed, Vaughn v. Rosen, 484 F.2d 820 (D.C.Cir.1973).”

Imo, the contents of Vaughn index may be seen to be analogous to those of a privilege log required by Fed. R. Civ. P. 26(b)5 in non-FOIA cases:

“…the Agencies submitted a Vaughn index FN6 identifying the documents withheld, in whole or in part, based on the claim that the documents were exempt from the FOIA's disclosure requirements. The Vaughn index lists each document by number, and contains columns for reporting the document type (e.g ., e-mail; report), date, employees (authors and recipients), document description/subject, number of pages, whether the document was withheld in whole or in part, the exemption claimed, and any other descriptive remarks.”


FOIA Section 5 Exemptions, Deliberative Process and Attorney Client Privilege

Both agency-specific deliberative process as well as garden variety attorney-client privilege issues are subsumed within a FOIA statutory exemptions analysis In FOIA cases, an agency seeking to withhold a documents under a Section 5 privilege assertion must provide information justifying the assertion of either privilege in its Vaughn index” which is then used by a Court to determine if an exemption (justifying the withholding of information) applies. The Rein court provides a good analysis of the process:

“Exemption 5 [of FOIA] permits an agency to withhold “inter-agency or intra-agency memorandums or letters which would not be available by law to a party other than an agency in litigation with the agency.” Id. It encompasses, inter alia, the deliberative process and attorney-client privileges.FN18 The government bears the burden of demonstrating that a requested document falls under the exemption. 5 U.S.C. § 552(a)(4)(B).

FN17. FOIA specifies nine exemptions from its general disclosure provisions. § 552(b). The only provision of that statute before us in this appeal is (b)(5). All of the § 552(b) exemptions are designed to safeguard public interests against the harms that could arise from overly broad disclosure. FOIA exemptions are, however, narrowly construed to favor the Act's presumption of disclosure. Bowers v. U.S. Dep't of Justice, 930 F.2d 350, 354 (4th Cir.1991). FN18. See infra section III.B.2.“

The burden placed on the agency seeking to withhold documents is relatively heavy:

“These principles led the Court in Ethyl Corporation to find the Vaughn index provided in that case to be insufficient because entries “articulate[d] the Exemption 5 privilege in general terms, using FOIA language, and couple[d] the statement of privilege for each document with a general description of the document.” Id. at 1249. Similarly, the Court of Appeals for the District of Columbia Circuit has observed:

“[C]onclusory assertions of privilege will not suffice to carry the Government's burden of proof in defending FOIA cases. A typical line from the index supplied in this case identifies who wrote the memorandum, to whom it was addressed, its date, and a brief description of the memorandum such as “Advice on audit of reseller whether product costs can include imported freight charges, discounts, or rental fees. Sections 212.93 and 212.92.” ... That is all we are told, save for the affidavits submitted by the regional counsel which repeat in conclusory terms that all the documents withheld fall within one or another of the exemptions.”

“Such an index is patently inadequate to permit a court to decide whether the exemption was properly claimed.... Contrast the index submitted by the agency and described in Mead Data Central, Inc. v. U.S. Dep't of the Air Force, 566 F.2d 242 ( [D.C. Cir.] 1977), which clearly describes the characteristics of the documents which the agency felt brought them within the exemption claimed, and which was still inadequate to permit the court to determine whether all elements of the privileges were present in each document. Coastal States Gas Corp. v. Dep't of Energy, 617 F.2d 854, 861 (D.C.Cir.1980); see also City of Virginia Beach, Va. v. U.S. Dep't of Commerce, 995 F.2d 1247, 1253-54 (4th Cir.1993) (“the burden is on the agency to correlate, with reasonable specificity, materials within a document with applicable exemptions”); Mead Data Cent., Inc., 566 F.2d at 251 (“[W]hen an agency seeks to withhold information[,] it must provide a relatively detailed justification, specifically identifying the reasons why a particular exemption is relevant and correlating those claims with the particular part of a withheld document to which they apply.”).”

The Rein court finds that the Vaughn index produced was inadequate, providing insufficient information for the District Court to determine the applicability of FOIA’s Section 5 Exemption justifying the withholding of
information:

“R & HW claim the district court erred in finding the Vaughn index entries were sufficient for “at least 334 documents” that do not identify their author, recipient, date of origin, or source. We have reviewed both the Vaughn index and Fawcett's declarations regarding the compilation of materials on the index. Almost all of the documents cited by R & HW state “n/a” in the index column devoted to identifying the “employees” authoring or receiving the listed document.FN20 We agree with R & HW that the Vaughn index documents that fail to include information about their author and recipient, or which fail to provide an explanation that adequately substitutes for this information, do not contain adequate information for the district court to have determined whether they were properly withheld.”

Notably, the Court indicated that the failure to include a document’s date did not render a Vaughn index entry automatically inadequate, although “in many situations the date of a document may be a critical factor” In an interesting twist, the Court also notes that the date of a document may play a supporting role in determining a chronology to demonstrate whether a document in question is pre-decisional (and thereby satisfying an element necessary for a successful assertion of the deliberative process privilege).

The Court also notes that an agency may means other than the date of a document to show deliberative process.

The foregoing excerpt may provide the basis for a comparison between a court’s requirement to scrutinize a Vaughn index in connection with a Section 5 FOIA Exemption assertion with that of a court’s privilege log analysis conducted in connection with non-FOIA civil actions:


Circling the Metadata of Privileged Documents Issue

If a privilege log in a non-FOIA case must meet the “particularity and specificity” tests, then a cogent argument may be made to the effect that the metadata of a document (or, information, record or other ESI, if the request is properly worded) in connection with which a privilege is asserted is not privileged, because it is the metadata (and not a party’s interpretation thereof) that provides the Court with the necessary and sufficient information to render a decision as to the applicability of the privilege asserted.

The information the Rein court rules must be disclosed is metadata, or information about information:

“R & HW further assert the Agencies improperly redacted the subject lines of e-mails, file names to documents attached to e-mails, patent claim reference numbers, meeting agenda topics, and other identifying “factual” information that was not subject to the deliberative process privilege. Given the FOIA's strong preference for disclosure, factual information that does not compromise the exempt portions of the documents should be disclosed. [Envtl. Prot. Agency v. Mink, 410 U.S. 73 (1973) at 91.”

The foregoing excerpts provide some ammunition for the argument that native metadata for a privileged document is discoverable. It is also notable that the 4th Circuit in Rein relies on the D.C. Circuit’s seminal decision in Mead Data Central, Inc. v. U.S. Dep't of the Air Force, 566 F.2d 242 (D.C. Cir. 1977) in acknowledging both the distinction between “documents” from “information” and the implied acknowledgement that the latter encompasses the former:

“Because the FOIA focuses on information rather than documents, “[a]ny reasonably segregable portion of a record shall be provided to any person requesting such record after deletion of the portions which are exempt ...." § 552(b) (emphasis added)


Takeaway: If a properly phrased ESI production request asks for “information” and not documents per se, a requesting party might rely on this decision to demand native format metadata of privileged information Why? The real information giving the context in connection with which a privilege is asserted lies in the native format data, the metadata, and not in a second or third order “view of a view of a view” of what an attorney wishes to interpret as context information. Assertions of “deliberative process” “work product” or “attorney client” privilege to metadata may well fail, because metadata is (almost always) context, and not content information. Accordingly, the argument the Rein decision supports the position that any assertion of privilege first requires a showing, by way of a privilege log, “specificity” and “itemization” sufficient for a Court to make a proper analysis and decision. The argument here is that the “specificity” and “itemization” requirements in turn necessitate that the production native format metadata of privileged document.

SWT

2009-01-21 Counsel-Client Cooperation; Continuing Meet-and-Confer Obligations, Form and Format of Production, Undue Burden, and the Emergence of the Two Part Test to Determine Whether ESI is Produced as Kept in "The Usual Course of Business"


Case: Highway 46 Holdings, LLC v. Quantified Marketing Group, LLC
Cite: 2009 WL 113402 (M.D. Fla. 2009)
Date: 2009-01-16
Topics: Vertical duty to cooperate (between client and counsel) in discovery and case management, failure to cooperate a factor in granting terminating sanctions, Florida standard for terminating sanctions is willful and deliberate.

This decision from Judge Antoon, affirming the report and recommendation of U.S. Magistrate Judge Baker confirms that the duty to cooperate in discovery (including, imo, eDiscovery) extends to Counsel and Client as well between opposing counsel. Under 11th Circuit standards, a deliberate or willful failure to do so can help support the imposition of terminating sanctions:


"...the Court finds that Defendant has acted willfully and wrongfully in disobeying the Court order compelling discovery and has made a conscious decision not to prosecute the counterclaim nor defend this action, by failing to provide discovery, failing to respond to two motions to compel discovery, failing to cooperate with its own counsel regarding its discovery and case management obligations, and failing to respond to the motion for sanctions, seeking default and dismissal. The Court also finds that lesser sanctions will not suffice."

It also appears that defendants' counsel attempted (unsuccessfully) to withdraw. The Court recognizes this, recognizes counsel's difficult position, and reserves judicial ire for the defendants alone. By Order denying defense counsel's renewed motion to withdraw, the Court expressly noted:

"The Court is mindful that the circumstances of the case are likely to make it impossible for counsel to respond to scheduling and discovery requirements (including the matters described in the most recently filed motion [Doc. no. 35] ), which may result in Plaintiff seeking relief (perhaps even a default). Such a result does not reflect on counsel so long as he has kept his erstwhile client informed of the proceedings and its responsibilities and maintains his candor about his inability to respond substantively. The Defendant's failure to abide by obligations to its own counsel should not be permitted to prejudice the Plaintiff or slow the progress of the case. Counsel must continue the representation as best he can, and any adverse consequences resulting from his client's failure to cooperate with existing counsel or to obtain substitute counsel would be attributable to the client, not to counsel."

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Case: S.E.C. v. Collins & Aikman Corp.
Cite: 2009 WL 94311 (S.D.N.Y. 1009)
Date: January 13, 2009
Topics: Email eminently searchable, accessibility, second meet and confer to negotiate reasonable search protocol, work product privilege applicability to "selections" of documents, government agency discovery obligations, government's good faith efforts obligation to negotiate with adversaries regarding search protocol, government assertion of undue burden based on limited public resources.

In this major securities fraud case initiated by the SEC against Collins & Aikman (and, individually David Stockman), an excerpt near the end of the decision encapsulates a key issue:

"When a government agency initiates litigation, it must be prepared to follow the same discovery rules that govern private parties (albeit with the benefit of additional privileges such as deliberative process and state secrets)."

Some background: Defendant Stockman served a Rule 34 discovery request on the SEC asking for 54 separate categories of documents. In response,

"[t]he SEC produced 1.7 million documents (10.6 million pages) maintained in thirty-six separate Concordance databases-many of which use different metadata protocols."

The Court first notes that the databases "d[id] not match Stockman's requests" and that "[N]either party has explained what each database contains. The parties are obviously off to a less-than-perfect start.


Rule 34 Form of Document Production

The Court begins by discussing the two options available to a producing party:

" The litigant may either produce documents "as they are kept in the usual course of business or must organize and label them to correspond to the categories in the request."

The Court later refers to the Advisory Committee notes in adding that this language was added to Rule 34 to prevent "'deliberately [mixing] critical documents with others in the hope of obscuring significance,'" and "intended to minimize the burden of production while maintaining "'internal logic reflecting business use.'"


Work Product Protection and "Selections" of Documents

The Court next turns its attention to the attorney work-product privilege as it pertains to the selection of documents asserted to support a factual allegation in a complaint, and rules such selection non "core" work product. "Core" work product is defined as

"...legal documents drafted by an attorney-her mental impressions, conclusions, opinions, and legal theories. This highest level of protection applies to a compilation only if it is organized by legal theory or strategy."

The Court then summarily rejects the SEC's global work product assertion:

"[t]he SEC's theory that "every document or word reviewed by an attorney is an attorney's work product leaves nothing to surround the core"


Undue Hardship

The SEC took the position that Stockman was free to search nearly 10 million documents. The Court acknowledges both undue hardship and apparent futility:

"Indeed-at significant expense and delay-Stockman could search the document databases using appropriate search terms, but the inaccuracy of such searches is by now relatively well known.FN39 A page-by-page manual review of ten million pages of records is strikingly expensive in both monetary and human terms and constitutes "undue hardship" by any definition."


"FN39. See George L. Paul and Jason R. Baron, Information Inflation: Can the Legal System Adapt?, 13 Rich. J.L. & Tech. 10, at *36-*40 (2007); Jason R. Baron, David D. Lewis, and Douglas W. Oard, TREC-2006 Legal Track Overview, available at http:// trec.nist.gov/pubs/trec15/papers/LEGAL06.OVERVIEW.pdf (noting in a sophisticated study that compared to more complex and costly techniques, Boolean searching located only 57% of known relevant documents, while expert manual searching located 68%). Such a search would be further frustrated by the differing metadata protocols used in the numerous Concordance databases."


Form of Production and The Emergence of the Two Part "Usual Course of Business" Test

This case presents the Court with novel form-of-production issues. The SEC's position is that even if the compilation was not protected by the work product privilege, it (the SEC) had the option to "complete, unfiltered, and unorganized investigatory file, as this is how the documents are maintained in the usual course of its business."

Some background: A typical discovery request for document might (and in actuality should) state that any response shall be made in a format that represents how those documents are maintained or used in the "usual course" of a producing party's business activity.

The Court discusses in a footnote that neither the advisory committee notes, nor any records of congressional debate aid in construing the meaning of the phrase. Instead, the Court turns for guidance to the Federal Rules of Evidence, and Black's Law Dictionary:

"FN44Surprisingly, this term is neither defined nor explained in the advisory committee notes. Nor are there records of congressional debate or cases defining the term. In contrast, there is substantial background concerning Federal Rule of Evidence 803(6), which addresses "regularly conducted business activity." I will discuss this provision below. As Federal Rule of Evidence 803(6) predates the relevant provision in Federal Rule of Civil Procedure 34 by six years, the history of the evidentiary rule is instructive-albeit non-binding-to the interpretation of the procedural rule."

The Court starts its approach to defining "maintained in the usual course of business" with a discussion of the business records exception to the hearsay exclusionary rule set forth in Fed. R. Evid. Rule 803(6). A good summary of the Court's reasoning is provided, again by way of footnote:

"FN47. Fed.R.Evid. 803(6), 1972 Advisory Committee Note. The justification for the Rule is found in the 1972 Advisory Committee Note to the proposed rule: "The element of unusual reliability of business records is said variously to be supplied by systematic checking, by regularity and continuity which produce habits of precision by actual experience of business in relying upon them, or by a duty to make an accurate records as part of a continuing job or occupation." Id. The Committee noted that the key concepts in this exception are "routineness and repetitiveness." Id."

Judge Scheindlin, provides by "rough analogy" (the Court's words) what is imo a logically compelling definition of "in the usual course of business" by offering up a two part test:

"By rough analogy to Rule 803(6), the option of producing documents "as they are kept in the usual course of business" under Rule 34 requires the producing party to meet either of two tests. First, this option is available to commercial enterprises or entities that function in the manner of commercial enterprises. Second, this option may also apply to records resulting from "regularly conducted activity." FN53 Where a producing party's activities are not "routine and repetitive" such as to require a well-organized record-keeping system-in other words when the records do not result from an "ordinary course of business"-the party must produce documents according to the sole remaining option under Rule 34: "organize[d] and label[ed] ... to correspond to the categories in the request.""

The Court's logic is impeccable:

"When records do not result from "routine and repetitive" activity, there is no incentive to organize them in a predictable system. The purpose of the Rule is to facilitate production of records in a useful manner and to minimize discovery costs; thus it is reasonable to require litigants who do not create and/or maintain records in a "routine and repetitive" manner to organize the records in a usable FN55 fashion prior to producing them."

Major takeaway: We now have (at least in the Southern District of New York) a new two part test to determine whether documents are kept in the usual course of business.

First, there must be a usual course of business in which to keep said documents.

Second, a "usual course of business" presumption may arise from a "regularly conducted activity."

Note that where there is no "regularly conducted activity" or "usual course of business" a producing party is then required to organize such records in a usable fashion prior to producing them. This third takeaway will have two major implications in eDiscovery practice. First a party requesting documents should zealously protect its option (some would say responsibility) for articulating an ESI document production request in a manner designed to obtain native format data. Second, where there is no discernible or identifiable "usual course of business" or "regularly conducted activity" associated with document organization, the requesting party should fashion its requests accordingly.


Another Call for Cooperation

The Court rejects outright the SEC's "blanket refusal to negotiate a workable search protocol as "patently unreasonable," Judge Scheindlin invokes the recently published "Sedona Conference Cooperation Proclamation" which urges parties to work in a cooperative rather than adversarial manner to resolve discovery disputes "in order to stem the 'rising monetary costs of discovery disputes.'" The Court holds the specter of an appointment of a Special Master to supervise remaining discovery in this case if, after the Court ordered additional meet and confer, the parties "remain at an impasse":

"With few exceptions, Rule 26(f) requires the parties to hold a conference and prepare a discovery plan. The Rule specifically requires that the discovery plan state the parties' views and proposals with respect to "the subject on which discovery may be needed ... and whether discovery should be conducted in phases or be limited to or focused on particular issues" FN66 and "any issues about disclosure or discovery of electronically stored information .... " FN67 Had this been accomplished, the Court might not now be required to intervene in this particular dispute. I also draw the parties' attention to the recently issued Sedona Conference Cooperation Proclamation, which urges parties to work in a cooperative rather than an adversarial manner to resolve discovery issues in order to stem the "rising monetary costs" of discovery disputes. FN68 The Proclamation notes that courts see the discovery rules "as a mandate for counsel to act cooperatively." FN69 Accordingly, counsel are directly to meet and confer forthwith and develop a workable search protocol that would reveal at least some of the information defendant seeks. If the parties cannot craft an agreement, the Court will consider the appointment of a Special Master to assist in this effort."


Privilege Logs

The Court also rules that the privilege log provided by the SEC was "deficient" and provided insufficient information to the Court in order to evaluate any claims of privilege, and notes that the SEC "asks the Court simply to take its word." One might extend this argument to assert that without document metadata, the producing party is asking that a Court "take its word" that a privilege log actually reflects the metadata of a document to which that privilege is asserted.


eMails

The Court again chides the SEC for making global assertions:


"Because e-mails are inherently searchable, the SEC's blanket refusal to produce any incoming or outgoing e-mails is unacceptable."

Ok, I get the picture. I think. It appears that at least one party refused to negotiate (cooperate) with the other in reaching mutually agreeable parameters for eDiscovery. It's also possible that both parties just ignored the ESI meet and confer requirements of Rule 26 and just propounded away:

"FN95Without even an attempt to negotiate search terms that would weed out privileged, protected, or irrelevant e-mails, the SEC cannot reasonably assert that a routine aspect of modern discovery-search and review of a party's e-mail-is beyond its capability. Essentially, the SEC's position is that the cost of such a search is simply too high, but it has made no effort to document the cost or the likelihood that it would produce relevant, nonprivileged material."

No matter, as the Court was having none of it:

"Once again, the parties are directed to meet and attempt to negotiate a reasonable search protocol (considering the use of appropriate search terms and appropriate limitations of subject matter and date) and then to consider applying this search protocol to a segment of the SEC's e-mail collection to determine whether relevant nonprivileged material might be identified and produced considering all of the factors set forth in Rule 26(b)(2)(C)."

It is perhaps no coincidence that this decision comes hard on the heels of Judge Scheindlin's recent eDiscovery/Special Master's law review article.

Let there be no doubt that Judge Scheindlin walks her talk.

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Case: Viacom Intern., Inc. v. YouTube, Inc.
Cite: 2009 WL 10208 (N.D. Cal. 2009)
Date: 2009-01-14
Topics: Fed. R. Civ. P. Rule 45 Non-party subpoenas, non-party motion to compel ESI.


In this class action, United States Magistrate Judge Patricia Trumbull granted defendant YouTube motion to compel production of documents requested by way of a Fed. R. Civ. P. Rule 45 subpoena for ESI served on non-party BayTSP. BayTSP is a DMCA violation detective agency engaged by content providers to monitor YouTube, and "scour[s] every corner of YouTube's site" for DMCA violators:

"BayTSP located in Los Gatos, CA describes itself as 'a service company retained by copyright owners to identify individuals who are making their copyrighted works available for download on the Internet.'"

Non-Party Documents Not Directly Pertaining to Named Defendants Held Discoverable

YouTube requested documents pertaining to non-Viacom entities as well as to content owned by Viacom and its related entities. The Court found no dispute as the relevancy of the latter category of documents. The Court also found, however, that documents requests as they related to non-Viacom related entities were relevant because, pursuant to Rule 26, the information could lead to the discovery of relevant evidence:

"YouTube's stated reasons for obtaining documents related to the non-Viacom related entities appear reasonably calculated to lead to the discovery of admissible evidence. "Rule 26 does not require that the information sought necessarily be directed at the ultimate fact in issue, only that the information sought be reasonably calculated to lead to admissible evidence in the underlying litigation." Gonzales v. Google, Inc., 234 F.R.D. at 683. Accordingly, the court finds that the documents requests as they relate to non-Viacom related entities are relevant too."



Undue Burden


Non-party BayTSP claimed that YouTube's Rule 45 request as overbroad, spanning more than 4 terabytes of data, and one million documents averaging five pages per document, or an estimated five million pages. BayTSP claimed that it spent "over 1900 hours in the last six months searching and reviewing the documents." The number or documents had been narrowed to 650,000 or "half the documents originally identified through the electronic filter"

BayTSP asserted a claim of undue burden and requested cost-shifting. It appears that liability for discovery costs was not quite clear. The Court "at this juncture" found that BayTSP had not shown undue burden, and denied the motion without prejudice.


Format of Production

It's a bit difficult to know what the parties set forth in their "Amended ESI Plan" as to form and format of production. It appears that printouts, load files, and not ESI in native format data was requested. The clue is in the Court's reference to Fed. R. Civ. P. Rule 34(a)'s "reasonably usable" language. That language is, imo, typically triggered where the format of production is not specified, or not made clear in an eDiscovery plan. Not surprisingly, the cost to convert the ESI to reasonably usable (by a third party vendor) was not insignificant:

"YouTube complains that BayTSP has made certain of its documents available on two computer terminals during regular business hours. Therefore, YouTube is constrained to conduct its review and print what it wants at the offices of BayTSP's counsel. YouTube takes no comfort that BayTSP, and perhaps Viacom, will know what documents it has reviewed, what documents it has focused on and what documents it has printed. Instead, YouTube requests that it be allowed electronic access to the Kroll Ontrack database on which the documents exist, be provided with DVDs or other electronic medium of the entire responsive database so that it may upload the database into its own database. This suggested format is consistent with an amended ESI plan governing the underlying litigation. BayTSP states that conversion of the data files onto DVDs or other electronic medium is costly. Indeed, BayTSP speculates the cost could approximate six to ten cents per page to upload.

"Unless YouTube is willing to absorb this cost, BayTSP cannot provide the documents in the requested format. *7 The court agrees that to require YouTube to view that vast amount of documents at the offices of BayTSP's counsel with certain temporal cut-offs is unreasonable. See, e.g., Rule 34(a) requires production in a "reasonably usable form." Fed.R.Civ.P. 34(a)."


Upshot: The Court sent the parties back to meet and confer (with eDiscovery vendor Kroll in attendance) to determine actual cost of obtaining documents and creating [sigh] load files. Note the reference to Chief Magistrate Judge Grimm's decision in Mancia v Mayflower:

"The court agrees that to require YouTube to view that vast amount of documents at the offices of BayTSP's counsel with certain temporal cut-offs is unreasonable. See, e.g., Rule 34(a) requires production in a "reasonably usable form." Fed.R.Civ.P. 34(a). At the hearing, the parties agreed to further meet and confer on the format of production, including discussing with Kroll the actual cost of obtaining documents on the database and/or creating certain load files. Tr. 52:1-15. In light of arguments at the hearing regarding the potential accessibility to electronic documents viewed by YouTube, the court advises the parties to take appropriate measures so that others, intentionally or inadvertently, not determine what documents were viewed, what documents were focused on and what documents were printed. See, e.g., Tr. 32:8-25; 33: 1-25; 34:1-25; 35:14-25; 36: 3-18, 24-25; 37:1-15; 38: 1-6, 19-22. Accordingly, the parties shall further meet and confer on the format of production. "[I]t is in the interests of each of the parties to engage in this process cooperatively." Mancia v. Mayflower Textile Servs. Co., et al., 253 F.R.D. 354, 365 (D.Md.2008)."

Takeaways: Ask for native format data, don't cede interpretation of "reasonably usable" to the producing party, and get that expert in early to clarify form and format of production. Be mindful (as of last week) of Judge Scheindlin's " new two-part usual course of business" test.

2009-01-17 Preservation, Spoliation, Sanctions, and Emergency Relief

Another spoliation hearing in a major patent case, and two from Magistrate Judge Facciola, one of which involves (and orders) preservation of White House emails in advance of the Bush-to-Obama transition, and the other, a good example of bad lawyering.

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Case: Micron Technology, Inc. v Rambus, Inc.
Cite: --- F.Supp.2d ----, 2009 WL 54887, (D. Del. 2009)
Date: 2009-01-09
Topics: Spoliation, spoliation standard in patent cases, document retention policy, reasonable forseeability of litigation triggering document preservation, document retention policy reasonableness test, Third Circuit bad faith requirement for imposition of dispositive sanctions.

In this patent infringement decision, the plaintiff was found by the Court to have spoliated key documents that would have shown involvement in a standards setting organization (reminiscent of Qualcomm v Broadcom). The spoliation was serious enough to warrant a finding of inequitable conduct, which in turn operated to invalidate (and deem unenforceable) the 12 patents asserted as infringed.

Some what-not-to-do's:

1. Post litigation commencement shredding of 480 boxes of documents

2. Document retention policy designed in conjunction with formation of patent litigation strategy (destroy, then litigate).

3. Litigation was reasonably foreseeable (and document preservation triggered) when patent litigation strategy was developed (two years prior to filing suit).

4. Oral, rather than emailed or otherwise recorded discussion of document retention program was encouraged.

The District Court first relies on Federal Circuit precedent (this is a patent case) and states that:

"[T]he imposition of sanctions in, patent cases, is controlled by regional circuit law. Monsanto Co. v. Ralph, 382 F.3d 1374, 1380 (Fed.Cir.2004)."

For those wishing to join, or share my continuing spoliation migraine, I offer the following analysis. The Monsanto case cited by the Rambus court is a Federal Circuit decision which, to my reading, holds only that regional circuit law is to be applied "when reviewing sanctions orders" and does not appear to limit the application of circuit decisional authority to patent matters. In fact, the Federal Circuit precedent relied on by the Monsanto decision says just that:

"A decision to sanction a litigant pursuant to Fed.R.Civ.P. 37 is one that is not unique to patent law, DH Tech., Inc. v. Synergystex Int'l, Inc., 154 F.3d 1333, 1343, 47 USPQ2d 1865, 1873 (Fed.Cir.1998), and we therefore apply regional circuit law to that issue, Midwest Indus., Inc. v. Karavan Trailers, Inc., 175 F.3d 1356, 1359, 50 USPQ2d 1672, 1675 (Fed.Cir.1999) (en banc in relevant part). Transclean Corp. v. Bridgewood Services, Inc., 290 F.3d 1364, 1370 (Fed. Cir. 2002)"

I bring this up only to point out that if the Rambus court analysis means that a District Court should employ a non-regional circuit (state law rather than Federal common law) in non-patent cases, then woe betide the attorney who must determine the proper spoliation standard in a case where there is.a pendent state law claim asserted together with a patent claim.

Ok, back to the Rambus case. The District Court of Delaware generally follows the spoliation test set forth in the Mosaid case by the 3rd Circuit Court of Appeals, but sprinkles bits and pieces of other District Courts and U.S. Courts of Appeal authority into the decisional mix.

The District Court applies the “Pure” Federal Common Law Spoliation Approach (I use the term “pure” where a Federal District Court relies on Federal Common law only and makes no state spoliation law reliance or incorporation):

""Spoliation is the destruction or significant alteration of evidence, or the failure to preserve property for another's use as evidence, in pending or reasonably foreseeable litigation." Kounelis v. Sherrer, 529 F.Supp.2d 503, 519 (D.N.J.2008) (citing Mosaid Tech. Inc. v. Samsung Elec. Co., 348 F.Supp.2d 332, 335 (D.N.J.2004)). "Spoliation occurs when a party has intentionally or negligently breached its duty to preserve potentially discoverable evidence," and cannot occur in the absence of such a duty. Id., at 518-19."

Duty to preserve is drawn from 2nd Circuit as well as Federal District court decisions from California, Delaware and New Jersey:

"A duty to preserve evidence arises when there is knowledge of a potential claim. Winters v. Textron, Inc., 187 F.R.D. 518 (M.D.Pa.1999). A potential claim is generally deemed cognizable in this regard when litigation is pending or imminent, or when there is a reasonable belief that litigation is foreseeable. For instance, a duty to preserve evidence can arise many years before litigation commences; imminency is sufficient to create the duty, but it is not a requirement. See Kronish v. United States, 150 F.3d 112, 126 (2d Cir.1998); In re Napster, Inc. Copyright Litig., 462 F.Supp.2d 1060, 1068 (N.D.Cal.2006); In re Quintus Corp., 353 B.R. 77, 80-84 (Bankr.D.Del.2006), aff'd, 2007 WL 4233665 (D.Del.2007). As soon as a potential claim is thus identified, a party is under a duty to preserve evidence which it knows, or reasonably should know, is relevant to the future litigation. Nat'l Ass'n of Radiation Survivors v. Turnage, 115 F.R.D. 543, 556-57 (N.D.Cal.1987)."


Reasonableness Test for Document Retention Policies

Borrowing precedent from the U.S. Court of Appeals for the Eighth Circuit, the Court provides an interesting twist on document retention policy and document destruction, and appears to endorse an approach in which a court may determine if a document retention policy is prima facie reasonable

"If a party has a record retention policy, it is appropriate for the court to determine "whether the policy is reasonable considering the facts and circumstances surrounding the relevant documents," or whether it was instituted in bad faith. Lewy v. Remington Arms Co., 836 F.2d 1104, 1112 (8th Cir.1988)."

The Court then notes that once a Court has found a document retention policy reasonable under the circumstances, a Zubulake analysis may then be undertaken:

"Even if the court finds the policy to be reasonable given the nature of the documents subject to the policy, the court may find that under the particular circumstances certain documents should have been retained notwithstanding the policy. For example, if [a party] knew or should have known that the documents would become material at some point in the future then such documents should have been preserved. Thus a [party] cannot blindly destroy documents and expect to be shielded by a seemingly innocuous document retention policy. Gumbs v. Int'l Harvester, Inc., 718 F.2d 88, 96 (3d Cir.1983). Therefore, "[o]nce a party reasonably anticipates litigation, it must suspend its routine document retention/destruction policy and put in place a 'litigation hold' to ensure the preservation of relevant documents." Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 218 (S.D.N.Y.2003)."


Imminence Not Required to Trigger Duty to Preserve

The Rambus court acknowledges that a duty to preserve may be triggered well in advance of litigation, as Rambus found out.

“A duty to preserve arises when there is knowledge of a potential claim. Winters v.Textron, Inc., 187 F.R.D. 518 (M.D.Pa.1999). A potential claim is generally deemed cognizable in this regard when litigation is pending or imminent, or when there is a reasonable belief that litigation is foreseeable. For instance, a duty to preserve evidence can arise many years before litigation commences; imminency is sufficient to create the duty, but it is not a requirement. See Kronish v. United States, 150 F.3d 112, 126 (2d Cir.1998); In re Napster, Inc. Copyright Litig., 462 F.Supp.2d 1060, 1068 (N.D.Cal.2006); In re Quintus Corp., 353 B.R. 77, 80-84 (Bankr.D.Del.2006), aff'd, 2007 WL 4233665 (D.Del.2007). As soon as a potential claim is thus identified, a party is under a duty to preserve evidence which it knows, or reasonably should know, is relevant to the future litigation. Nat'l Ass'n. of Radiation Survivors v. Turnage, 115 F.R.D. 543, 556-57 (N.D.Cal.1987).


Dispositive Sanctions

The Rambus court, following 3rd Circuit precedent, notes that:

"Consistent with the analytical framework identified in Schmid, such sanctions are not warranted in the absence of demonstrated bad faith (i.e., the intentional destruction of evidence) and prejudice. With respect to the latter, the imposition of a dispositive sanction should be confined to those cases where the failure to produce " 'materially affect[s] the substantial rights of the adverse party' and is 'prejudicial to the presentation of his case.' " Gates, 167 F.R.D. at 104 ( citing Wilson v. Volkswagen of America, Inc., 561 F.2d 494, 503 (4th Cir.1977))."


So, we have the adoption 8th Circuit standards to determine if a document retention policy is prima facie reasonable, 3rd Circuit spoliation standards require a showing of "bad faith" or "intentional" destruction of evidence, rather than the negligence applied by the 2d Circuit and others.


Burden of Proof to Establish Spoliation

The Rambus court acknowledges that the standard of proof required to prevail in a spoliation claim "is not a matter of settled law in the Third Circuit."
Citing a District Court of Colorado case, the Court decides that "clear and convincing" standard for spoliation mirrors the "clear and convincing"
standard for a finding of inequitable conduct in patent cases:

"Although the court recognizes that requiring clear and convincing evidence for the imposition of dispositive sanctions for spoliation places an onerous burden on the aggrieved party (where the very proof of intent and prejudice arguably has been destroyed), nevertheless, the court concludes that this higher burden can appropriately operate as the clear and convincing burden operates in the patent arena in proving inequitable conduct."

Now, for the Court's decision, and for Rambus, not a pretty result:

"In determining the degree of prejudice suffered by Micron as a result of this spoliation of evidence, Micron has carried its burden under Schmid to prove that the documents destroyed FN58 were discoverable and the type of documents that would be relevant to the instant litigation. More specifically, Micron asserts unenforceability due to patent misuse and violation of the antitrust and unfair competition laws (based in part on Rambus' conduct at JEDEC), as well as inequitable conduct. These are defenses that are illuminated by evidence of a non-public nature, e.g., by internal Rambus documents.FN59 Because the record demonstrates that there were documents relevant to these defenses,FN60 the court concludes that Micron has been prejudiced by Rambus' conduct. That prejudice has been compounded by Rambus' litigation conduct, which has been obstructive at best, misleading at worst."
"In determining which of the potential sanctions for spoliation should be imposed, the court is directed to find the least harsh sanction that serves both to avoid substantial unfairness to Micron but deter such conduct in the future. In reviewing the record, the court concludes that the showing of bad faith is so clear and convincing that the showing of prejudice can be proportionally less. The spoliation conduct was extensive, including within its scope the destruction of innumerable documents relating to all aspects of Rambus' business; when considered in light of Rambus' litigation conduct, the very integrity of the litigation process has been impugned. Sanctions such as adverse jury instructions and preclusion of evidence are impractical, bordering on meaningless, under these circumstances and in the context of a typical jury trial.FN61 Therefore, the court concludes that the appropriate sanction for the conduct of record is to declare the patents in suit unenforceable against Micron. An order will issue."

Link to the decision (from Rambus site): http://investor.rambus.com/downloads/2009-01-09%20Opinion%20on%20Unclean%20Hands.pdf

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Case: Jones v Hawley
Cite: --- F.R.D. ----, 2009 WL 63000 (D.D.C. 2009)
Date: 2009-01-12
Topics: Mutuality of duty to preserve, spoliation, failure to preserve, sanctions, adverse inference, D.C. Circuit Court of Appeals spoliation approach.

Plaintiffs (former TSA employees) alleged that the TSA's loss of a hard drive containing personal information (names, social security numbers, dates of birth, etc.). In an interesting twist, it was the plaintiff's failure to preserve emails and other documents that led the Court to render the following decision. This case shows just how blurry the line can be between spoliation and negligent document withholding or destruction. That blur was in large part caused by defendants' own actions, and, in this blogger's opinion, underscores the importance of mutuality of the duty to preserve:

"1. Failed to preserve and produce documents relevant to their claim, although they admitted that they had such documents in their possession.

"2. Indicated that they had no responsive documents in their response to the defendants' Request to Produce Documents, although their other responses to discovery indicated that they did.

"3. Never searched for documents that the defendants demanded, except for one plaintiff, who limited his search to what he described as information that was "reasonably accessible." Defs. Mot. at 5-6 ( quoting deposition of plaintiff Soulia at 105).

"4. Indicated that they would supplement their responses to the interrogatories but never did."
Plaintiff's position? The missing evidence was "barely relevant" and so no harm or prejudice could be found by plaintiff's failure to keep or produce.

Magistrate Judge Facciola notes plaintiff's:

"[m]isapprehension" that a fundamental purpose of discovery is to secure information that will impeach or contradict an opponent's case."


The Court then finds that:

"Since the plaintiffs have lost information that they were unquestionably required to preserve and produce, the question becomes what remedy is appropriate for the Court to impose."

The Court reminds us that Fed. R. Civ. P. provides no express remedy for spoliation, and then provides a good spoliation sanctions imposition analysis in the District of Columbia Circuit Court of Appeals.

Notably, the Court of Appeals draws on Federal, and not state common law, (in this case, District of Columbia, or Maryland law):

""[i]t is settled beyond all question that at common law the destruction, alteration, or failure to preserve evidence in pending or reasonably foreseeable litigation warrants the finder of fact inferring that the destroyed evidence would have been favorable to the opposing party." Ashford v. E. Coast Express Eviction, No. 06-CV-1561, 2008 WL 4517177, at *2 (D.D.C. Oct. 8, 2008) (citing United Med. Supply Co., Inc. v. United States, 77 Fed. Cl. 257, 263 (2007)). See also Shepherd v. Am. Broad. Cos., 62 F.3d 1469, 1481 (D.C.Cir.1995) (holding that each party has " 'an obligation to preserve and also not to alter documents it knew or reasonably should have known were relevant ... if it knew the destruction or alteration of those documents would prejudice [its opponent]." ') (internal quotations omitted). "[A] court may employ an adverse inference due to a party's 'failure to preserve evidence,' even if deliberate or reckless conduct is not present." More v. Snow, 480 F.Supp.2d 257, 275 (D.D.C.2007) (citations omitted); Miller v. Holzmann, No. 95-CV-1231, 2007 WL 172327, at *3 (D.D.C. Jan. 17, 2007) ("It is the law of this Circuit that a party has an obligation to preserve evidence it knew or reasonably should have known was relevant to the litigation and the destruction of which would prejudice the other party to that litigation."). Before allowing an adverse inference however, "the court should consider the 'degree of negligence or bad faith involved, the importance of the evidence involved, the importance of the evidence lost to the issues at hand, and the availability of other proof enabling the party deprived of the evidence to make the same point." ' Id."


Magistrate Judge Facciola then provides a chart (you can see the chart by clicking the link to the decision below) listing the plaintiff's claims, and quite adroitly explains how each of these claims operates as an admission that "while they once had the relevant documents, they no longer do and therefore never produced them during discovery."

Finding plaintiff's negligence "inexcusable," the Court then ordered the imposition of an adverse inference in connection with those documents not "kept and produced."

In case anyone is curious, plaintiffs were represented by counsel, apparently employed by the American Federation of Government Employees.

Link to the decision: https://ecf.dcd.uscourts.gov/cgi-bin/show_public_doc?2007cv0855-39

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Case: Citizens for Responsibility and Ethics in Washington v Exec. Office of the White House
Cite: 07-cv1707; 07-cv-1577 (D.C.D.C.)
Date: 2009-01-15
Topics: Duty to Preserve; emergency relief in connection with ESI preservation; Not your everyday search and document preservation case

In this latest chapter involving the White House emails, Magistrate Judge Facciola faced an issue in connection with which he had limited information, and a very short period of time in which to make a decision based on that limited information. The White House represented to the Court that, in accordance with standing orders of the District Court produce hard drives containing certain ESI (emails) generated by the Executive Office of the President (EOP) between 2003 and 2005. Despite the broad wording of the District Court's order, the EOP represented to Magistrate Judge Facciola on January 14 that it would:

"[p]rovide only upon those divisions whose records are subject to the Federal Records Act ("FRA")3 and not to those subject to the Presidential Records Act ("PRA").4 As a result, they have not and will not fulfill the obligations now imposed by Judge Kennedy's order as to the latter."

The Court notes that the missing emails (apparently retrievable from backup
tapes) to be "at the very heart of this lawsuit, and finds a "profound societal interest in their preservation. They are, after all, the most fundamental and useful contemporary records of the recent history of the President's office."

In what is his signature style, Magistrate Judge Facciola puts the need to preserve the truth in historical perspective:

"If Napoleon was right when he said that he did not care who wrote France's laws if he could write its history, then the importance of preserving the e-mails cannot be exaggerated."

The Court's rationale appears much earlier in the decision:

"To further complicate the matter, the records at issue are not paper records that can be stored but electronically stored information that can be deleted with a keystroke. Additionally, I have no way of knowing what happens to computers and to hard drives in them when one administration replaces another."

With time running out (two days before the Bush-Obama transition) the Court was left with only two choices:

"Moreover, at this point I am between a rock and a hard place. If, despite the defendants' representations, e-mails were transmitted from PRA to FRA agencies and back but I preclude a search for them in the PRA agencies, I will be honoring a representation without having any opportunity to test its correctness. I may therefore fail miserably to preserve the res of this lawsuit based on an untested assertion."

"If, on the other hand, I do not honor the representation and order all computers to be searched, I am at least doing all I can to preserve the res in the only way possible. The importance of doing so easily trumps the costs involved. "

It appears that the EOP attempted to run the clock. Time ran out --- for the
EOP:

"Therefore, defendants must appreciate that the Order I am issuing requires them to search for e-mails in the specified period in both PRA and FRA agencies."

Link to decision: https://ecf.dcd.uscourts.gov/cgi-bin/show_public_doc?2007cv1707-105

2009-01-03 Another Reason to Request eDiscovery Bifurcation, Retain an Expert, and Ask and Substantiate Metadata Request

Case: Kingsway Financial Serv, Inc. v. Pricewaterhouse-Coopers LLP
Cite: 2008 WL 5423316, 6 (S.D.N.Y. 2008)
Date: 2008-12-31
Topics: Late request metadata, failure to substantiate request for metadata.

In another decision relying on (the very recent decision in) Aguilar v Dep't Homeland Security, the Kingsway Financial decision provides a nice "what not to do" list for counsel about to engage in eDiscovery.

What should counsel do? First, bifurcate discovery into merits based and eDiscovery tracks. In that way you need not eat up merits based discovery requests (depos, interrogatories, etc.) by engaging in eDiscovery, and vice-versa. Second, any issue or unresolvable dispute may then be addressed much earlier in the discovery cycle. Third, retain a technology expert to assist in early eDiscovery planning and execution.

What is clear from this decision is that plaintiffs neither understood the type of metadata, nor could they articulate a good foundation for the reason metadata was requested in the first place. Now, the Aguilar decision (upon which the Kingsway court relies) does emphasize the importance of metadata (although a general understanding of the criticality of metadata for authentication and admissibility is still a ways off) and repudiates the first Sedona proclamation that most metadata is of no value. Aguilar might easily stand for the proposition that ESI production almost mandates concurrent metadata production.

Here, the Court steps away from that position, and places the burden on the requesting party to (a) request metadata, and presumably in an initial discovery request; (b) identify the type(s) of metadata sought, and (c) provide at least some reason for the request. In this blogger's opinion, the assistance and participation of an expert from the outset of litigation might well have resulted in a different decision (i.e., the production of the metadata sought much earlier in litigation, or perhaps a sanctions hearing for spoliation/negligent evidence destruction) :

"Plaintiffs do not identify the types of metadata they seek nor do they explain why metadata is relevant in this matter. In addition, plaintiffs do not raise any questions about the authenticity of any documents produced by PwC nor do they claim that any document has been improperly “doctored” or modified."

"The nature of metadata and the current state of the law regarding its production are discussed in detail by the Honorable Frank Maas, United States Magistrate Judge, in Aguilar v. Immigration & Customs Enforcement Div. of the United States Dep't of Homeland Sec., 07 Civ. 8224(JGK)(FM), 08 WL 5062700 (S.D.N.Y. Nov. 21, 2008). As Aguilar points out, there are three different types of metadata: (1) substantive metadata; (2) system metadata, and (3) embedded metadata. 08 WL 5062700 at *3-*4. In general, metadata is relevant when the process by which a document was created is in issue or there are questions concerning a document's authenticity; metadata may reveal when a document was created, how many times it was edited, when it was edited and the nature of the edits. In the absence of an issue concerning the authenticity of a document or the process by which it was created, most metadata has no evidentiary value. 08 WL 5062700 at *5.

"In its response, PwC represents that much of the metadata sought by plaintiffs was deleted from PwC's computer system prior to the commencement of this action and no longer exists. With respect to a number of plaintiffs' requests for metadata, PwC sets forth the date and time on which the documents for which metadata was requested were last modified, but no other information."

"In light of the dubious value of metadata and plaintiffs' total failure to explain its relevance to the claims and defenses in this action, plaintiffs' application to compel its production is denied. Given the advanced stage of discovery in this litigation and the absence of any showing that production of metadata would serve any useful purpose, I am left with the strong sense that ordering the production of metadata would not shed any light on any of the claims or defenses in this action. This ruling resolves Items 38, 39, 40, 41, 50, 51." Kingsway Financial Services, Inc. v. Pricewaterhouse-Coopers LLP, 2008 WL 5423316, 6 (S.D.N.Y. 2008)"