Wednesday, January 21, 2009

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."


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

" 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:// (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.


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.


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.

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