2009-02-28 Cost Shifting, Conflicting Metadata Discovery Decisions, Expedited eDiscovery in TRO Proceedings, and an Order to Conduct a (Minimum) Four Hour eDiscovery Meet and Confer

Five decisions this week (not described in order of appearance): An Eastern District of Texas eDiscovery decision expressly adopts Zubulake cost-shifting approach as well as endorsing a very broad ESI discovery approach; an Eastern District of Wisconsin overbroad ESI discovery request decision that appears to exclude discovery of metadata; an Eastern District of New York decision that requires a meet and confer to discuss production of email string headers; a Southern District of New York decision addressing expedited ESI discovery, discovery abuse, and sanctions imposition in connection with TRO and order to show cause; and a Southern District of New York decision in which the court ordered the parties to engage in at least one four-hour minimum length meet and confer to discuss and propose search terms.


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Case: Proctor & Gamble Co. v. S.C. Johnson & Son, Inc.
Citation: 2009 WL 440543 (E.D.Tex. 2009)
Date: 2009-02-19
Topics: Unsupported discovery cost claims, ED Tex adopts Zubulake approach to cost-shifting analysis

In this case from the Eastern District of Texas, U.S. District Judge Ron Clark, the parties agreed to production of documents electronically and in .tiff format and searchable by application of optical character recognition (OCR) process. This case is notable because it is one of the first where the asserted costs for producing, and then running an OCR process on paper documents, is flagged as potentially excessive. Defendant estimated that the cost would run in excess of $200,000, and that cost should therefore shift to the Plaintiff-requestor. The Court notes that the Defendant disclosed neither the number of pages of documents to be scanned into .tiff format and OCR’d, nor the associated processing cost per page. Plaintiff’s counter argument was that .tiff and OCR process estimate was only 3 cents per page.

What is (imo) encouraging is that this Court appears to take what might be inflated discovery production cost assertions with a grain of salt:

"Even assuming Plaintiff's estimate of three cents per page is low [FN2], the court finds it difficult to believe that in the age of electronically stored information so much of the requested data is only maintained in hard copy format which would require OCR to be searchable. In short, Defendant has failed to provide any support whatsoever for its estimate. "

"FN2. Plaintiff does not provide a source for this estimate. However, a simple Internet search reveals multiple software programs available for OCR conversion at costs ranging from about $200 to $600. While this option may not be appropriate for some or all Defendant's document custodians, and does not take into account the cost of the time needed to convert the documents, it does tend to make the $200,000 figure provided by Defendant appear somewhat inflated."

Reading between the lines, it may also become increasingly difficult for a party to assert that source data generally (origination evidence) is paper or hard copy based. Perhaps the documents in this action are old (meaning typewritten). Perhaps the soft-origination documents have now been destroyed within the protection of Fed. R. Civ. P. Rule 37’s safe harbor. The record does not disclose this, although the parties here are not small entities by any measure.


Zubulake Cost Shifting Analysis

The Court then performs a cost-shifting analysis using Judge Scheindlin’s Zubulake seven factor criteria, and finds that cost shifting is not warranted:

"In Zubulake, the court held that cost shifting could be considered when the data requested was relatively inaccessible and formulated a seven factor test: (1) the extent to which the request was specifically tailored to discover relevant information; (2) the availability of such information from other sources; (3) the total cost of production, when compared to the amount in controversy; (4) the total cost of production, when compared to the resources available to each party; (5) the relative ability of each party to control costs and the incentive to do so; (6) the importance of the issues at stake in the litigation; and (7) the relative benefits to the parties of obtaining the information. Zubulake, 217 F.R.D. at 322. These seven factors should not be weighted equally; rather, they should be considered in numerical order of descending importance, where factors one and two are the most important and factor seven is the least important. Id. at 323. Analysis of these seven factors does not favor cost-shifting."


Overbroad [Discovery Requests] Means Not Relevant or Not Likely to Lead to Discovery of Admissible Evidence


Also interesting is the Court’s interpretation of "overbroad" to mean either irrelevant or unlikely to lead to the discovery of admissible evidence:

"However, other than a statement that this request is "overbroad," Defendant does not contend that the information requested is not relevant, nor unlikely to lead to the discovery of admissible information. Discovery pursuant to the Federal Rules is a "broad ... regime," O2 Micro Int'l v. Monolithic Power Sys., 467 F.3d 1355, 1366 (5th Cir.2006), and the Local Rules for the Eastern District of Texas reflect this. Discovery need not even be admissible at trial to be obtained under the Federal Rules, since its purpose is to "remove surprise from trial preparation so the parties can obtain evidence necessary to evaluate and resolve their dispute." Stone v. Unocal Termination Allowance Plan, 2007 U.S. Dist. LEXIS 33082 at *4 (S.D.Tex. May 7, 2007) (citation omitted). Absent a showing, or even a claim, that the evidence sought is neither relevant nor reasonably likely to lead to the discovery of admissible information, this factor does not favor Defendant's position."

The Court also recognizes, albeit implicitly, that technological advances can, do, and will produce tools that will permit eDiscovery to be conducted in increasingly cost-efficient ways. Imo, it follows that tools that streamline processes also reduce their costs:

"OCR, while perhaps not absolutely necessary to litigation, is a tool that greatly decreases the time and effort counsel must invest in searching and examining documents. Presumably, each party would perform the OCR process in a cost-effective manner to minimize their costs. Requiring the parties to incur this cost, when the OCR process is likely to streamline the discovery process and reduce the chance that either side will employ tactics designed to hide relevant information in a mountain of difficult-to-search documents is neither unreasonable nor burdensome."
One the other hand, (see next decision)


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Case: Kay Beer Distributing, Inc. v. Energy Brands, Inc
Citation: 2009 WL 425821 (E.D.Wis. 2009)
Date: 2009-02-20
Topics: Overbroad ESI discovery requests denied; Term search in email limited to body of message adequate.

In this decision from the Eastern District of Wisconsin, Plaintiff moved to compel production of ESI from Defendant. It appears that while Defendant’s search produced a total of 17 gigabytes of data consisting of 56,547 documents (and in turn comprising hundreds of thousands of pages) not all of the documents were produced to Plaintiff. Defendant maintained that many of the documents were not relevant, and that only documents in which the term "Kay Beer" was referenced or appeared "in the body of the email" were produced. Plaintiff asserted this to be an incomplete production. U.S. District Judge Griesbach sided with the defendant and denied the request for supplemented ESI production.

Perhaps, and just perhaps, a better approach might have been to show why (with appropriate expert testimony) the term "Kay Beer" or references to "Kay Beer" which occurred outside the body of the emails in question (in metadata perhaps) would have been appropriate. Perhaps a better structured Rule 26f conference addressing the issue in advance might have avoided this motion practice.


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Case: Gucci America, Inc. v. Gucci
Citation: 2009 WL 440463 (S.D.N.Y. 2009)
Date: 2009-02-20
Topics: Expedited ESI Discovery Violation Sanctions; failure to specify ESI search conducted

In this fashionably stylish TRO decision from the Southern District of New York, the parties agreed to an expedited discovery schedule in connection with the court’s determination of an order to show cause. Defendant’s explanations included: failure to comprehend that (in Federal Courts) discovery obligations are continuing, and that hallowed uber-explanation: "computer illiteracy" --- U.S. Magistrate Judge Francis wasn’t buying any of it:

"Mr. Litwak has offered a variety of excuses for failing to comply with the discovery requirements of the TRO. In part, he contends that he did not realize that he had a continuing obligation to produce documents once the initial production was made. (Tr. at 48). He also maintains that he provided all documentation to his prior counsel and is unaware of what counsel then forwarded to Gucci's attorneys. (Tr. at 81-82). Finally, he blames his failure to produce electronically -stored documents on his ignorance of computers, and he asserts that it was necessary to enlist his wife's assistance to search his computer files. (Tr. at 46-47). None of these explanations withstands scrutiny."

"Because Gucci persistently sought additional documentation from Mr. Litwak, he could not have failed to understand the continuing nature of his discovery obligations. Although it is conceivable that Mr. Litwak gave his former attorney more documents than were ultimately produced, he has failed to identify with specificity even one such document. Similarly, Mr. Litwak's claims of computer illiteracy are entirely conclusory. He has never explained what searches he and his wife did conduct, what files were opened, and why the forensic examination uncovered numerous documents that he had been unable to locate."

"Finally, there is compelling evidence that Mr. Litwak was not candid during the discovery process. Despite the fact that counsel for Gucci asked Mr. Litwak about licensing agreements during the September 17, 2007 deposition and confirmed that Mr. Litwak had produced all documents about prospective licensing arrangements, Mr. Litwak failed to mention his discussions with Mr. Balistreri, even though he had sent Mr. Balistreri a draft contract in June and sent him an e-mail referencing that contract just two days after the deposition. (Tr. at 52-55). Mr. Litwak's explanation that he "forgot" about the prospective water license while he was being deposed is simply not credible."


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Case: Lapin v. Goldman, Sachs & Co.
Citation: 2009 WL 222788 (S.D.N.Y. 2009)
Date: 2009-01-23
Topics: Class action pre-certification meet and confer, with parties and experts ordered to discuss proposed ESI search terms; party’s objection to concept of search terms

In this class action case from the Southern District of New York, U.S. Magistrate Judge Eaton ordered the parties, and their computer experts, meet for "at least four hours" to discuss proposals for ESI search terms. The following excerpt wins this week’s cupidity award:


"In any event, Plaintiff has resumed making objections to the entire concept of search terms."
Defendant, to its credit, made what appears to be a good faith effort to craft unilaterally craft a search terms list."

"On December 22, 2008, Defendants served their list of proposed search terms (Exh. G, first enclosure). Defendants' list consists of 75 company names from Plaintiff's Document Requests, plus 23 other search terms including:
align!
(bank! or IBD) w/10 analyst
(bank! or IBD) w/15 influence
(bank! or IBD) w/25 report
(bank! or IBD) w/25 research
impartial!
(IPO or offering) w/25 report
(IPO or offering) w/25 research
pentathlon
pressur!"

Magistrate Judge Eaton’s response:

"I have no expertise in this area, but I think Defendants' first effort shows good faith."

Judge Eaton then addresses Plaintiff’s assertions as to the concept of search qua search, dismisses Plaintiff’s ruminations, and orders Plaintiff to compile and provide a list of search terms, and, no surprise here, hold another meet and confer with Defendant’s counsel (for at least four hours), all the while being mindful to discuss costs and follow-up searches using additional terms:

"At page 24, Plaintiff asserts that the entire search term approach is of questionable validity, but if the Court adopts it, Plaintiff wants an order requiring Defendants to submit "revised" search terms, and only then would Plaintiff have to suggest his own search terms. Instead, I direct Plaintiff to serve his own list of search terms, and then the attorneys and their computer experts must promptly hold a meeting with at least four hours of discussion about proposals for search terms. Among other things, they should discuss (a) the estimated cost of the search and (b) the cost of a possible follow-up search with a supplemental list of search terms."

Ok, I really have to comment on the level of competency (or lack thereof) exhibited by Plaintiff’s counsel. A challenge to a search protocol, if well articulated (and with expert testimony) may (and imo is) robust litigation practice. That said, any basis for insisting the world is flat in the 21st Century is, well, kind of thin. I think it is also clear that Magistrate Judge Eaton was being fair --- not the Plaintiff’s counsel, but to Plaintiff, who might otherwise have been gravely prejudiced by his counsel’s litigation, er, um, strategy (or is it tactic?)…


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Case: Brookdale Univ. Hosp. & Medical Center, Inc. v. Health Ins. Plan of Greater N.Y.
Citation: 2009 WL 393644 (E.D.N.Y. 2009)
Date: 2009-02-13
Topics: Failure to produce eMail "string headers;" order to produce missing email information stayed pending court ordered meet and confer.

In what is becoming a common occurrence, Courts are declining to referee ESI discovery disputes without first requiring the parties to make some effort to meet and confer to resolve same. (Hmmm. Isn’t that already required by Fed. R. Civ. P. Rules 26f and 37?). Here, the Court directed Plaintiff to provide missing email information (metadata is not mentioned, which makes one wonder how the initial discovery request was articulated).

"On January 30, 2009, the Court directed plaintiff to "provide defendants with ... the missing information from the produced emails by [February 6, 2009] ("to","cc", "re")." By letter dated February 6, 2009, plaintiff informs the Court that [Jamaica Hospital's Novell] GroupWise e-mail system is set to a "classic" default setting which does not include "header" information (including addresses, "cc's" or subject lines) when an e-mail is replied to and that e-mail is no longer available for retrieval. This information is supported by the statement of Ms. Larios, GroupWise Service Administrator, at Jamaica Hospital who spoke with Novell. Document 130."

"In response, HIP states that if the emails at issue are "separately produced ... the missing header problem would largely be alleviated, since the final email of an email string always includes standard header information." Document 131. HIP requests that the Court direct plaintiff to (1) provide a written certification attesting to the circumstances surrounding the missing email string headers; (2) re-produce all emails in electronic form; (3) search its computer systems to locate and produce each of the included emails; and (4) to the extent that any of the included emails cannot be located, fully explain the surrounding facts and circumstances. Id. Plaintiff opposes HIP's requests, stating that "the information that is not on the ‘header’ is not maintained, as it was never created," and that the "missing information would not be revealed if the e-mail is viewed in native form." Document 132."

Not surprisingly, the Court was not in an argument-buying mood. While it did not issue an order compelling production, the Court sent the parties off to meet and confer-ville:

"The Court is not remotely satisfied with plaintiff's explanation. The default setting on plaintiff's system does not excuse plaintiff from producing the requested materials. Just imagine if the shoe was on the other foot, and it was defendant claiming it could not produce a large number of emails showing who the emails were sent to. Plaintiff would not be satisfied with the proffered third-hand explanation of an administrator as plaintiff has provided here, and rightly so. The Court will stay HIP's request. Brookdale and HIP's counsel shall attempt to resolve this issue by February 20, 2009"

Moral of the story (imo, as always): When it comes to eDiscovery and digital evidence managemnt, make sure to meet and confer. Early. And often.

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2009-02-20 Survival of Spoliation in Subsequent Forum; 2d Circuit Discovery Abuse Standard of Review Reprised; Forensic Imaging Ordered to Ascertain Creation Date

Three for this week. The Puffin case tells us that a duty to preserve, once triggered, can live on in a separate action brought in a different forum. The Agiwal decision reminds us of the standards for review (and reversal) of eDiscovery decisions, and the Hinojos decision, at least imo, stands for the proposition that mere testimony may not help establish the provenance of undated computer generated information.

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Case: Kvitka v. Puffin Co., L.L.C.
Citation: 2009 WL 385582 (M.D.Pa. 2009)
Date: 2009-02-13
Topics: Survival of duty to preserve in subsequent related action, spoliation, email exchanges on discarded laptop, notices and letters to preserve evidence; type of spoliation sanctions imposed on spoliator’s claims and non-spoliating party’s counterclaims.

Another week, another duty to preserve, and another spoliation decision. In this case from the Middle District of Pennsylvania, involving an antique doll dealer, and an antique doll industry magazine, U.S. District Judge Sylvia Rambo imposed an adverse inference sanction against a spoliating party whose duty to preserve survived conclusion of a related prior state court action. Despite the gravity of a spoliation hearing, the Court found time for some wry humor…see Footnote 3.

Here, prior to the commencement of the first action in state court (sometime during September 2005 which I will presume is what the Court means by "shortly after" August 30, 2005) the defendant sent a preservation notice/letter. In January 2006, defendant produced its emails in response to plaintiff’s request therefore. The Court does not indicate the outcome of the state court proceedings.

Now, I *think* that the following occurred in the subsequently filed case in Federal Court (the decision is not clear, but it’s reasonable to assume so):

In response to an interrogatory, plaintiff stated that she began having trouble with her "old" laptop beginning in February 2006, and described these problems in a subsequent deposition: ("…it was doing totally wonky things, ridiculous things"). Plaintiff then disposed of the old laptop without preserving potentially relevant evidence.

"On or about February 27, 2006, Kvitka notified her computer technician, Chuck Tressler, of her computer problems, and Tressler-without examining the old laptop-informed her that she should purchase a new laptop. ( Id. Ex. G at 51). Tressler ordered a new laptop for Kvitka on February 27, 2006, and Kvitka received email confirmation of this order on the old laptop, which she forwarded to Tressler via the old laptop. ( See id. Ex. G at 45; Ex. F at 16-17, 44-45.) The new laptop was shipped on or about March 7, 2006 and was set up by Tressler within about one week. ( Id. Ex. G at 16-17.) Sometime later in March 2006, Kvitka threw her old laptop into the trash. ( Id. Ex. F at 29.) On March 16, 2006, during a conference regarding Plaintiffs' request for emails in Defendants possession, the commonwealth trial court judge inquired about the status of the original emails. ( Id. at 6.) Plaintiffs failed to inform the judge that the old laptop had been discarded at the conference or in subsequent written correspondence, and instead opted to discontinue the pending state court litigation. ( Id. at 6-7.) Plaintiffs, then, filed the instant federal suit on April 25, 2006, yet failed to inform Defendants that Kvitka had disposed of her old laptop and its hard drive until October 27, 2007."

Judge Rambo was clearly not amused at Plaintiff’s explanation as to both evidentiary search and preservation efforts. Let’s just say it’s not a good sign when a judge describes an assertion as "absurd." Perhaps particularly insightful is plaintiff’s "I mean it’s a computer, not a person" comment:

"Meanwhile, Kvitka maintained until January 2008-and her computer technician implied during deposition testimony-that no files or emails were recovered from her old laptop. ( Id. at 8.) On January 14, 2008, Defendants moved for an order of inspection of Kvitka's new laptop, at which time Plaintiffs' counsel informed Defendants that "some" emails had been recovered from her old laptop and appeared on her new laptop. ( Id.) Kvitka, while insisting that no data had been transferred from her old laptop to her new laptop, gave the following absurd explanation as to how she located files and emails on her new laptop that she nor her computer technician ever transferred from her old laptop:

"Q. How did it come about that you found these documents? Was-

"A. I looked for them really hard, and I found them. At the time that this was going on, there was a lot of other things that were going on in my life, a lot. And I don't think that I quite understood how important it was for me to find them, plus I was real interested and real devastated mainly by the fact that I lost a lot of personal things, like I said, that had to do with my kids that were just real important to me. And [my attorney] kept saying to me, look, it's real important if you can find anything. So what I did was I sat down for hours. Also some of these things turned up in places that I didn't expect to find them, like I said. I mean it’s a computer, it's not a person. There were things that for whatever reason showed up in files that they weren't supposed to show up in. I had a picture that showed up on my desktop. I had a file that showed up in a place that was an email. I had things that just showed up in places that they weren't supposed to show up. And so I went through every inch, every centimeter, every place that anything could be and I came up with the things that I then forwarded to my attorney."

Spoliation Approach in Pennsylvania Federal Courts

The Federal Courts in Pennsylvania appear to follow a "purely Federal" approach to spoliation, relying on Federal "common law" and 3rd Circuit decisional authority. For instance, the Ogin case cited by Judge Rambo relies on the 3rd Circuit’s Mosaid decision, which in turn relies on both Southern District (Zubulake) and 2d Circuit (West v Goodyear) for fundamental spoliation principles. Which, to my mind, also make Pennsylvania an "ordinary negligence" spoliation standard jurisdiction.

Ok, back to the Puffin case:.

"Defendants argue that Kvitka's intentional discarding or destruction of her old laptop that contained email files directly related to her claims against them prohibits them from defending against her claims and prosecuting their cross-claims, thereby entitling them to summary judgment as a sanction for spoliation of the evidence. As a general rule, "[a] party which reasonably anticipates litigation has an affirmative duty to preserve relevant evidence." Howell v. Maytag, 168 F.R.D. 502, 505 (M.D.Pa.1996). Courts define "spoliation" as "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." Ogin v. Ahmed, 563 F.Supp.2d 539, 542 (M.D.Pa.2008). When a party has destroyed evidence, courts may appropriately impose sanctions, including dismissal of claims, the exclusion of countervailing evidence, or a jury instruction on the "spoliation inference," which permits the jury to presume that "the destroyed evidence would have been unfavorable to the position of the offending party." Id. (quoting Schmid v. Milwaukee Elec. Tool Corp., 13 F.3d 76, 78 (3d Cir.1994)). Courts must consider the facts and circumstances when fashioning an appropriate sanction, but ultimately the use and fashioning of sanctions appertain to "the inherent power of district courts ... to manage their own affairs so as to achieve the orderly and expeditious disposition of cases." Baliotis v. McNeil, 870 F.Supp. 1285, 1289 (M.D.Pa.1994) (citing Chambers v. NASCO, Inc., 501 U.S. 32, 43, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991) (internal quotation marks omitted))."

"Courts contemplate the following "key considerations" before determining an appropriate sanction: (1) the degree of fault of the party who altered or destroyed the evidence; (2) the degree of prejudice suffered by the opposing party; and (3) whether there is a lesser sanction that will avoid substantial unfairness to the opposing party and, where the offending party is seriously at fault, will serve to deter such conduct by others in the future. Schmid, 13 F.3d at 79. There is no question that Kvitka intentionally discarded the laptop despite instructions not to dispose of it.

Accordingly, the court will review each of these factors."

Fault – Disposal of Laptop Containing Relevant Evidence

Plaintiff maintained that her decision to throw out the old laptop was "’an innocent and routine effort [] to maintain her business’" and that it was the damage to the hard drive on the laptop, rather than her disposal of same, that cause the loss of data. Unfortunately for plaintiff, the judge declined the invitation to consider the disposal of a damaged laptop containing relevant evidence as anything but "routine" The Court finds that plaintiff acted in bad faith and fault:

"Defendants argue that Kvitka acted in bad faith when she disposed of her old laptop, acting with the greatest degree of fault. The court agrees.

"Kvitka acknowledged that "this entire thing has a lot to do with some emails," yet nevertheless discarded her old laptop that contained the emails relevant to her claims in direct defiance of instructions provided to her attorney. She discarded the laptop despite advice from her computer technician that skilled professionals could possibly recover files relevant to the litigation. ( See Doc. 58 Ex. G at 19.) After discarding the old laptop, she failed to inform the judge presiding over her first lawsuit that she had engaged in such conduct despite the judge's direct inquiries and, instead, discontinued that litigation and filed the instant complaint in federal court.

"During the course of this suit, she has conducted herself in an evasive and confrontational manner during depositions and has attempted to mislead the court by withholding evidence that she now claims was transferred without explanation from her old laptop to her new laptop. When confronted by defense counsel regarding her deception, she refused to answer questions, concocted an outlandish story, and attempted to manipulate the facts of the case by substantively changing deposition testimony and an interrogatory answer with transparently evasive failure of recollection answers. She gave no explanation for these changes."

"Plaintiffs challenge this by insisting that Kvitka's decision to throw out the old laptop amounted to an "innocent and routine effort[ ] to maintain her business," and that "[t]he damage to the laptop hard drive, which was not caused by Plaintiffs, is the primary cause of the loss of electronic e-mail data." The court simply cannot accept that under the circumstances described above Kvitka's disposal of the old laptop constituted an "innocent and routine" effort to maintain her business. To the contrary, she testified that the old laptop was acting "wonky" and "ridiculous," but she could still send emails from the old laptop. She, nonetheless, ordered a new laptop in haste, disposing of the old laptop with knowledge that the emails could be retrieved or recovered and that she needed to preserve the old laptop's hard-drive. Kvitka has attempted to avoid this reality by manipulating testimony, yet she would have done well to heed the words of the great playwright Henrik Ibsen who wrote, "Many a man can save himself, if he admits he's done wrong and takes his punishment.FN3""

FN3. Henrik Ibsen, A Doll's House (J.W.Lowell Co. 1889) (1879)."


Prejudice

The Court also found that Plaintiff’s actions had prejudiced defendants ability to both defend against plaintiff’s claims and prosecute its own counterclaims.

"As Kvitka admitted, the facts giving rise to her claims as well as Defendants' cross-claims have "a lot to do with some emails." Accordingly, to properly defend or prosecute this case, Defendants would need access to Kvitka's old laptop to inspect and investigate her email program and hard-drive."


Sanctions Imposed In Connection with Plaintiff’s Claims, and Defendant’s Counterclaims

It’s interesting to note that in this case the Court imposed sanctions of differing severity against plaintiff, imposing terminating sanctions against plaintiff for plaintiff’s claims, but imposing the (arguably) less drastic sanction of an adverse inference against plaintiff in connection with defendant’s counterclaims:

Plaintiff’s Claim

"The court will dismiss Plaintiffs' claims. As described above, Plaintiffs acted with the highest degree of fault, acting in bad faith. Kvitka destroyed the laptop necessary for Defendants to effectively challenge the validity of Plaintiffs' claims by throwing it in the trash. She engaged in this conduct, despite instruction from her attorney to maintain the old laptop, the hard-drive, and all relevant emails as well as instruction from her computer technician that data could be recovered from a damaged hard-drive. Moreover, Kvitka has been manipulative and evasive throughout the litigation in an apparent attempt to succeed on her claims and downplay the severity of her acts. These acts have severely prejudiced Defendants by stripping them of information necessary to defend against Plaintiffs' claims. Under such circumstances, the court has no other option but to dismiss Plaintiffs' claims with prejudice."

Defendant’s Counterclaims

"The court, however, does not believe such a drastic remedy is necessary for Defendants' cross-claims, because Defendants have evidence that if combined with an adverse inference may persuade a jury to find in their favor on their fraud based claims. The Court of Appeals has explained that "[w]hen the contents of a document are relevant to an issue in a case, the trier of fact generally may receive the fact of the document's nonproduction or destruction as evidence that the party that has prevented production did so out of the well-founded fear that the contents would harm him." Ogin, 563 F.Supp.2d at 542 (citing Brewer v. Quaker State Oil Ref. Corp., 72 F.3d 326, 334 (3d Cir.1995)). Courts will give an adverse inference instruction if (1) the evidence in question was within the party's control, (2) it appears that there has been actual suppression or withholding of the evidence, (3) the evidence destroyed or withheld was relevant to claims or defenses, and (4) it was reasonably foreseeable that the evidence would later be discoverable. Id. at 543.

"Here, each element is satisfied. First, Kvitka testified that Plaintiffs retained the old laptop in their exclusive control. Second, Kvitka testified to intentionally discarding the old laptop. Third, the destroyed emails and other evidence on the old laptop would have greatly assisted Defendants in prosecuting claims based on emails that Plaintiffs destroyed. Finally, Kvitka has admitted that she knew to preserve the emails because of their relevance, but still discarded the old laptop. Because the elements have been satisfied, the court will permit the adverse inference instruction and will preclude Plaintiffs from arguing that individuals tampered with the paper copies of emails possessed by Defendants."


Note: It’s also clear that attorneys are utilizing notices to preserve or letters regarding preservation (my preference) but the content of these letters show that most are still at the very beginning of the learning curve at best, and at worst underscore the lack of understanding of basic technology precepts. The last line of this excerpted quote from defendants’ counsel preservation letter is exemplary:

"In turn, I trust that you will dutifully inform your client, whether or not her previous attorneys at Stark & Stark have already done so, that her computer(s) particularly her computer hard drive(s), and all her accumulated email account message files going back several years must be safeguarded and preserved as potential material evidence. As you know, emails can be deleted, but they cannot be erased."


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Case: Agiwal v. Mid Island Mortg. Corp. (2d Cir. 2009)
Citation: --- F.3d ----, 2009 WL 350717
Date: 2009-02-13
Topics: 2d Circuit standard for review of discovery abuse decisions

Just a quick reminder that in the Federal Court system, a discovery abuse decision issued by either a Magistrate Judge or District Judge is reviewed on a very high "abuse of discretion" and determinations of a litigant’s fault are reviewed using a "clear error" standard. Not an eDiscovery or digital evidence case, but applicable nevertheless, and even to pro se litigants. The latest from the United States Circuit Court of Appeals for the Second Circuit:

"We review a district court's imposition of sanctions under Rule 37, including dismissal, for abuse of discretion. See, e.g., Bobal v. Rensselaer Polytechnic Inst., 916 F.2d 759, 764 (2d Cir.1990); see also Sieck v. Russo, 869 F.2d 131, 134 (2d Cir.1989) ("We ... prefer to ... provide the teeth to enforce discovery orders by leaving it to the district court to determine which sanction from among the available range is appropriate."). However, we have recognized that "dismissal with prejudice is a harsh remedy to be used only in extreme situations, and then only when a court finds ‘willfulness, bad faith, or any fault’ " by the non-compliant litigant. Bobal, 916 F.2d at 764. Whether a litigant was at fault or acted willfully or in bad faith are questions of fact, and we review the District Court's determinations for clear error.FN2 See Friends of Animals Inc. v. U.S. Surgical Corp., 131 F.3d 332, 334 (2d Cir.1997).

"Several factors may be useful in evaluating a district court's exercise of discretion to dismiss an action under Rule 37. These include: "(1) the willfulness of the non-compliant party or the reason for noncompliance; (2) the efficacy of lesser sanctions; (3) the duration of the period of noncompliance, and (4) whether the non-compliant party had been warned of the consequences of ... noncompliance." Nieves v. City of New York, 208 F.R.D. 531, 535 (S.D.N.Y.2002) (citing Bambu Sales, Inc. v. Ozak Trading Inc., 58 F.3d 849, 852-54 (2d Cir.1995)). Further, we note that dismissal pursuant to Rule 37 is appropriate "not merely to penalize those whose conduct may be deemed to warrant such a sanction, but to deter those who might be tempted to such conduct in the absence of such a sanction." Nat'l Hockey League v. Metro. Hockey Club, Inc., 427 U.S. 639, 643, 96 S.Ct. 2778, 49 L.Ed.2d 747 (1976)."


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Case: Hinojos v. Park City Mun. Corp.
Citation: 2009 WL 392450 (D.Utah 2009)
Date: 2009-02-17
Topics: Re-opening discovery, forensic imaging ordered to ascertain creation date of undated printout.

This short decision is notable in that the Court not only re-opens discovery, but requires that forensic image of a computer be created to ascertain the creation date and time of undated interview notes produced after the discovery period had closed. Although not cited by the Court, I think the decision to not place undue reliance on testimony supporting the provenance of computer generated information is clearly in line with the 9th Circuit’s (BAP) decision in In re VeeVinhnee

The Court was not amused by the late production and imposed a cost-shift to the producing party:
"Plaintiff proposes that "an independent and mutually agreed upon expert ... obtain ... data from Mr. Cashel's computer" FN8 to show the creation and modification dates of the investigative memorandum and Brittany Angelovich interview notes. While Defendant has outlined its explanation of the late production of these materials,FN9 information Defendant has later produced muddies the water.FN10 Plaintiff is entitled, at his sole expense, to verify the truth of what Defendant is saying."

The Court was also wary of a non-forensically sound image creation and analysis:

"The proposal for direct access to the Cashel computer is too risky, however. FN11 If Plaintiff will pay for a mutually acceptable independent expert to image the storage on the Cashel computer , then Plaintiff's forensic expert may take possession of and have access to the image only for purposes of examining the data files for the investigative memorandum and Brittany Angelovich interview summary (and any backups or fragments of those files) to determine creation and modification dates, and edit history."

2009-02-11 Reasonably Usable, Cost Shifting, Preservation Notices, Suspension of Routine Document Retention Policy


A trio of interesting cases this week, The first involves what may be an emerging use of the phrase “reasonably usable” to require native format data production even where the request does not so state. That option may not be without cost shifting to the requestor, however. The second decision involves bad (or non-existent) preservation notification practice. The third decision involves an insufficient showing by a party that its adversary had violated a litigation hold by failing to suspend its routine document retention policy.

SWT

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Case: In re Classicstar Mare Lease Litigation
Citation: 2009 WL 260954 (E.D.Ky. 2009)
Date: 2009-02-02
Topics: Native data format production; reasonably usable;reproduction in native format ordered, cost shifting

In this decision, U.S. Magistrate Judge James Todd denied Defendant Geostar’s Motion for Protective Order involving production of ESI in native data format. There were discovery requests propounded by two groups of plaintiffs. Before the Court stands another example of (imo) inarticulate discovery requests in the digital age (and post the 2006 FRCP amendments):

First the request from the “Westfield Hills Plaintiffs:

“Request No. 9 sought GeoStar's “financial statements, whether accountant or internally prepared, all other financial information, all general ledgers, all accounting journal entries (such as cash receipts, cash disbursements,etc.) and the source documents evidencing those entries pertaining to the financial condition of GeoStar from 2001 to the present.” With regard to the format of the requested production, the West Hills Plaintiffs requested the production of responsive documents “as they are kept in the usual course of business or [as] organized and labeled to correspond with the paragraphs and subparagraphs set forth below.””

Note the clarity with which native format data was not requested. Not surprisingly, defendant Geostar objected:

“GeoStar objects to Plaintiffs' proposed form for producing electronically stored information. GeoStar further objects to Plaintiffs' definition and instructions related to “computer file” as set forth in Definitions and Instructions paragraph 13(f). GeoStar further objects on the grounds that requests for “computer files,” as defined in paragraph 13(f), are unduly burdensome and cost prohibitive. GeoStar specifically objects to this definition as exceeding the scope of Federal Rule of Civil Procedure 34.GeoStar supports the proposal of Defendant David Plummer that the parties agree on an appropriate protocol for the production of responsive electronically stored information pursuant to Federal Rule of Civil Procedure 34, as amended and now in effect.”

Geostar, for its part, relied on its pattern of past production which comprised .tif format files with load files in either Concordance or Summation discovery database format.


Aguilar v Dept. of Homeland Security --- Footnote 3

The Court then relies on a footnote from Aguilar v Dept. Homeland Security--- F.Supp.2d ----, 2008 WL 5062700 (S.D.N.Y. 2008) to support the proposition that a .tiff file or a .pdf file is a “mirror image of the electronic document.

“FN3. TIFF is a static image format similar to a PDF that creates a mirror image of the electronic document. See PSEG Power N.Y., Inc. v. Alberici Constructors, Inc., No. 1:05-CV-657 (DNH)(RFT), 2007 WL 2687670, at *2 n. 2 (N.D.N.Y. Sept. 7, 2007); In re Payment Card Interchange Fee & Merch, Disc., No. MD 05-1720(JG)(JO), 2007 WL 121426, at *1 n. 2 (E.D.N.Y. Jan. 12, 2007).”


Digest Author’s Opinion and Note: A .tiff file Is Not an Image and Not a Mirror Image

I will on occasion take exception to a decisional point that I think misapprehends basic technology definitions. I do this not to create a “gotcha” but so that I (and other litigators) won’t have to argue over and again against decisional authority used to perpetuate that misapprehension.Consider those cases decided pre-Aguilar refusing to permit discovery of metadata based on AutoNation as precedent, which in turn placed reliance on Sedona’s pre-epiphaniacal “most metadata has no value” proclamation.Sedona’s position stood uncorrected and in stark contrast to the clear understanding of those many attorneys and technologists involved in eDiscovery practice for more than two years. Of course, Sedona has now turned 180 degrees in its approach to metadata, but this nevertheless provides cold comfort to the many litigants who were denied the opportunity to engage in proper discovery during the two-plus year pre-flip.

That said: This decision (and Aguilar) incorrectly defines a term that has, but, imho, a tiff or pdf file is not and should not be accepted as (1) a bit for bit image of a “document” (whatever that means, as some ‘documents’ begin their lives as pieces of records in a database) and (2) is certainly not a “mirror image” because it is not an image in the first place, even though the screen image can be duplicate. The Classicstar Court relies on this statement made by Judge Maas in Aguilar v, Dept, Homeland Security, but repetition does not make an erroneous definition correct.


“Reasonably Usable” Saves the Day For Requestor – Again

It appears that ‘reasonably usable” determinations are beginning to favor the production of native data format eve where native format data is not expressly requested. Here, defendant Geostar asserted that its original production met and satisfied its production obligation by producing .tif files, and not surprisingly, that since Plaintiffs had not specified native format data, Defendants were obligated to produce only that which was “reasonably usable:

“GeoStar takes the position that GeoStar's original production, thus, met and satisfied the requirements of Fed.R.Civ.P. 34(b)(2)(E). See Autotech Tech. Ltd. Partnership v. Automtaiondirect.com, Inc., 248 F.R.D. 556, 559-60(N.D.Ill.2008) (where a party does not specify a format in which the documents are to be produced, production of documents in .pdf and .tif format “complied with the ordinary meaning of Rule 34”). GeoStar argues that it had the option to produce the documents in their native format or in an alternative format that was “reasonably usable” and that did not “significantly degrade” the searchability function of the documents. See United States v. O'Keefe, 537 F.Supp.2d 14, 23 (D.D.C.2008) (“production of the electronically stored information in PDF or TIFF format would suffice, unless defendants can show that those formats are not ‘reasonably usable’and that the native format, with the accompanying metadata, meet the criteria of ‘reasonably usable’ whereas the PDF or TIFF formats do not”).”


Sua Sponte Reasonably Usable Analysis:

In what may appear to be a surprising twist, the Court undertakes a “reasonably usable” analysis to determine the appropriateness of requiring the production of metadata, even though Plaintiffs never argued the issue:

"Plaintiffs do not directly address the issue of whether the data, as already produced is “reasonably usable,” arguing instead that the production of data in its native format would save them “hundreds of hours.” The West Hills Plaintiffs argue that “[i]n cases where the financial data is voluminous, [the] reporting feature is essential to the discovering party's ability to sort through the data.” [Response at 5.] In other words, the West Hills Plaintiffs are not arguing that the data produced is not usable, only that it could be so much more us[e]able in its native format.”

Although the Court states that the issue to be decided is whether the production was reasonably usable (citing a 500 page .tif file as an example) it was also concerned that Defendants had at one point agreed to produce native format data:

“The question before the Court, then, is whether GeoStar's original production was “reasonably usable” under Fed.R.Civ.P. 34(b)(2)(E). If the production made was “reasonably usable” and the non-native format did not “significantly degrade” the searchability of the documents, Geostar argues that it should not be required to make a second production and that the burden is on the West Hills Plaintiffs to provide proof that the production does not meet these requirements. See, e.g., Perfect Barrier LLC v.Woodsmart Solution, Inc., No. 3:07-cv-103-JVB, 2008 WL 2230192, *3 (N.D.Ind.May 27, 2008).”

“Nonetheless, the Court is very concerned by a July 25, 2008, exchange between counsel for the West Hills Plaintiffs and counsel for GeoStar Corporation, which reads as follows: This letter responds to your prior letter and emails regarding documents produced by GeoStar Corporation. You asked that we produce the financial and accounting records in their native format. I do not know, however, whether you have the software to be used in connection with that information. GeoStar runs two software packages for its financial records: (1) Creative Solutions; and (2) Oil & Gas Information Systems. It is my understanding that the later program may cost in excess of $15,000. Although we could provide you with the data housed in these programs, it would be useless without the software in which to import that data. We will provide you with the financial records in a format that will allow you to upload them into your Summation or Concordance database, and we can provide you with the data in its native format if you chose to buy the software.”

“Whatever the wording of the Request and Geostar's obligations under the relevant Rules of Civil Procedure, it is quite clear that GeoStar agreed to produce the material in its native format to the West Hills Plaintiffs and that GeoStar understood that the West Hills Plaintiffs considered the data “degraded” without the metadata intact. Indeed, the West Hills Plaintiffs have apparently concluded that it is worth the cost of obtaining the specific software necessary to read the native format data so that they might use its embedded metadata to better understand the data and the information that it represents.”


Saving the Requestor’s Bacon – Ineffective Addressing of Native Format Data Issue

Ok, it is now clear that it is the Plaintiff/requestor let off the hook by the Court:

“Having considered the facts and arguments presented and the relevant law, the Court shall order GeoStar to produce the data in its native format-effectively holding the parties to the agreement that they reached between themselves during the summer of 2008-notwithstanding the fact that the West Hills Plaintiffs' request may not have effectively addressed this issue on its own.”


But Not Without Cost Shifting

The Court was concerned about the implications of ordering what was tantamount to a re-do of Defendants’ discovery production, and the additional burdensomeness and costs asserted to be associated with it by the Defendants. The Court also holds Plaintiffs accountable for inarticulately propounded and (apparently) badly managed eDiscovery efforts. The result (and a sub-rosa warning to those who might view “reasonably usable” arguments as a cost-free “eDiscovery Request Repair Kit” :

“Finally, as GeoStar has already produced the data once and as the original document request did not specify a native format production, it is only fair to shift the reasonable cost of copying and delivering this second production to the West Hills Plaintiffs.”“


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Case: Stone v Lockheed Martin Corp.
Citation: 2009 WL 267688 (D. Colo. 2009)
Date: 2009-02-02
Topics: Preservation letters, failure to send preservationletter, stay of eDiscovery pending motion to dismiss

In this case, Plaintiff filed an “Emergency Motion to Preserve Evidence” and Defendant filed a Motion to Stay Discovery Pending Ruling on Motion to Dismiss and Plaintiff’s “Motion for Order to Protect Plaintiff from Defendant’s Process and Discovery Abuse.” This short decision provides scant factual background, but hints at what is happening between the parties. The Court here granted Defendant’s motion to stay discovery (using its discretionary powers). Under 10th Circuit precedent, a Court, in considering the propriety of a stay must determine:

“[w[hether the movant is likely to prevail in the related proceeding; whether, absent a stay, any party will suffer substantial or irreparable harm; and, the public interests at stake. United Steelworkers of America v.Oregon Steel Mills, Inc., 322 F.3d 1222, 1227 (10th Cir.2003).

A stay of discovery under the instant circumstances is clearly the nuclear option and is to be made on a case-by-case analysis:

“The underlying principle in determination of whether to grant or deny a stay clearly is that ‘[t]he right to proceed in court should not be denied except under the most extreme circumstances.” Commodity Futures Trading Com'n v. Chilcott Portfolio Management, Inc., 713 F.2d 1477, 1484 (10th Cir.1983)(quoting Klein v. Adams & Peck, 436 F.2d 337, 339 (2d Cir.1971). In other words, stays of the normal proceedings of a court matter should be the exception rather than the rule.’”

Two points are noteworthy. First, the type of pleadings filed by Plaintiff, which appear (imo) designed to make discovery unilateral (i.e., excusing plaintiff but not defendant”). Second, it also appears that something has occurred to undermine the Plaintiff’s case in the main. Whether it be an obvious ground for dismissal or the behavior of the plaintiff is unclear.The Court granted the stay, and denied Plaintiff’s Motions, without prejudice, pending its determination of Defendant’s Motion to Dismiss.

Even more intriguing are these two lines from the decision:

“The “Emergency Motion to Preserve Evidence” (Doc. No. 33) is DENIED without prejudice, as Plaintiff failed to assert or attach a “presentation letter.”Plaintiff is directed to review the information regarding eDiscovery & Digital Evidence attached to this order.”
I have not seen the term “presentation” letter come up in this context, and I believe the quotations are to emphasize the necessity for a party seeking information to issue a “preservation” letter. The second line provides an excerpt from a good eDiscovery handbook by Grenig and Gliesner.

“References"

"§ 7:8. Preservation letter"

"A carefully drafted “preservation” letter should be sent to the other party or the other party's attorney at the earliest possible moment, describing the data to be preserved, and requesting a meeting to construct a mutually acceptable search and production protocol.[ FN1 ] The preservation letter is a very important tool. At a minimum, It places the other party on notice with respect to its duties to avoid spoliation. It also serves as an excellent basis for seeking sanctions, if it is later discovered that spoliation did in fact occur. [ FN2 ] The actual tenor and content of a preservation letter will almost certainly be a matter of speculation, to a significant degree, because it should be sent before, or at the same time, as the commencement of litigation and well before any voluntary disclosures by a party under Rule 26 of the Federal Rules of Civil Procedure [ FN3 ], and before any discovery has occurred. However, the preservation letter does not have to be simple guess work either. Basic investigative work should uncover appropriate points to include in such a letter. For example, much can be inferred about the nature of possible digital evidence in the possession of a party and its location from the party's government filings (such as SEC or UCC filings), as well as from a party's own website.[ FN4 ].Common sense should guide the actual points to include in a preservation letter. This is not a discovery request; all counsel is trying to do is to “freeze frame” the digital holdings of a party so that they do not evaporate, through intentional misconduct or the normal processes associated with the deletion of computer files due to the ongoing business of a party.A party can disregard the request to preserve, but once the request has formally been made and evidence disappears, a preservation letter may place the discovering party in a superior position to seek sanctions or other relief. At a minimum, a letter should begin with a general statement that the discovering party expects the party to preserve digital evidence that in all probability will be relevant to the issues in a case, or may lead to the discovery of such evidence. The preservation letter should include a request that the other party suspend its regular document retention policy pending discovery.[ FN5 ] The preservation letter should identify all of the possible locations where such evidence might conceivably reside. *3 Writing a letter or otherwise putting a party on notice of the intention to seek eDiscovery is not an idle gesture. Spoliation is the destruction of, or failure to, preserve and protect evidence.[ FN6 ] A party has the duty to protect and preserve evidence once it is on notice that it must do so.[ FN7 ] Courts have held that a party may be under a duty to prevent spoliation even if litigation is only reasonably anticipated.[ FN8 ] Important: A court may also order the preservation of digital data during the pendency of a lawsuit.[ FN9 ] Spoliation of digital evidence after a preservation order has been issued can have very severe consequences. [ FN10 ]"

"The letter should inform the opposing party that a mere file backup of the hard drive Is not adequate preservation.[ FN11 ] The party must be instructed to image hard drive in bit-stream copies, where all areas, used and unused, of the hard drive are copied. [ FN12 ] If a file is deleted before a backup is made, the deleted file will not be copied unless it is a bit-stream copy. [ FN13 ] The letter should also request that deleted files that are reasonably recoverable be immediately undeleted. [ FN14 ] If the discovering party suspects data will not be preserved properly and is dealing with a Novell NOS system, the discovering party should consider Including a request in a preservation letter for an “NSS Pool Snapshot” that can be preserved for later use during discovery. According to Novell: In NetWare 6.5, Novell Storage Services supports pool snapshots to improve backup and restore services. A pool snapshot is a metadata copy of a storage data pool that preserves a point-in time view of a data pool. When you back up a pool from its pool snapshot, your backup can capture every file in the pool on your server. A pool snapshot also supports file recovery. After you take a snapshot, you can activate it at a later time to access the original pool's data as it existed at the time of the snapshot. Both the pool and its snapshots can be active and available concurrently. You access data on the active pool snapshot just as you would any other pool, even while data is changing on the original pool you snapped. [ FN15 ] Windows 2003 Server has a similar utility called “shadowing.” If a discovering party suspects data will not be preserved properly and is dealing with a Windows 2003 environment, the discovering party should consider including a request in a preservation letter for a “shadow copy” that can be preserved for later use during discovery. Windows 2003 shadow copy function takes a snapshot of a network volume and places the copy on a different volume on the network.After a snapshot is taken, files from the read-only shadow can be accessed at any time without complications typical of network volumes that are in use. [ FN16 ] Preserving evidence becomes a simple matter of taking a snapshot that can be searched and used like the original volume, without disrupting the network in anyway. This may render traditional backups unnecessary and put the power of deleted file restoration in the hands of every user with appropriate permission.”

Another warning to tread carefully when commencing litigation that involves ESI.


Post Script: Quite by a coincidence of contemporaneity, a decision by Judge ___ (N.D. Indiana) in Cunningham v Smithkline Beecham (---F.R.D. --- (2009 WL 250401 (N.D. Ind. 2009), follows District of Columbia District Court precedent, offering a different perspective on whether discovery may be compelled where the sufficiency of a claim or defense information is atissue:

“Discovery is not to be denied because it relates to a claim or defense that is being challenged as deficient. (Citing Alexander v FBI, 194 F.R.D. 316 (D.D.C. 2000, quoting in turn 8 C. Wright & A. Miller, Federal Practice & Procedure §2008 (2d ed. 1994).

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Case: Ellington Credit Fund, Ltd., v. Select Portfolio Services, Inc.
Citation: 2009 WL 274483
Date: 2009-02-03
Topics: Insufficient support for claims that document retention policy.


Ok. This is a short one.

Just saying so doesn’t make it true, especially where claims of ESI destruction for failure to impose litigation hold is concerned. Of course, the decision does not state whether an expert was retained to substantiate the assertions, or whether adequate pre-motion discovery (such as a Fed. R. Civ. P. 30b deposition) was conducted. U.S.District Judge Sullivan decided this matter with the record reflecting mere assertions by the party requesting that the Court revisit the imposition of a stay on discovery, and an affidavit of the opposing party’s “Vice President of Data Conversion and Corporate Advance Control.” It appears as if no pertinent discovery was attempted by party seeking to lift the stay.It should come as no surprise that an affidavit trumps a “naked” assertion:
“In the instant motion, Plaintiffs ask the Court to revisit its finding that they would not be prejudiced by the discovery stay. Indeed, they assert that they “have already been prejudiced” by the “confessed destruction of electronic evidence in native format” by Defendant Select Portfolio Servicing, Inc. (“SPS”). (Pls.' Mem. ¶ 1 (emphasis added).) The basis for that contention appears to be Plaintiffs' allegation that “Base Liquidation Reports” maintained by SPS “are no longer available in native format due to systematic purges of Defendant SPS's computer systems....” ( Id. ¶ 10.) Put simply, Plaintiffs' assertions are unpersuasive.”


In opposition to the instant motion, SPS provided an affidavit from Joseph Arico, SPS' Vice President of Data Conversion and Corporate Advance Control, stating that a litigation hold was imposed at SPS when this action was commenced. (Arico Aff. ¶ 5.) The Arico Affidavit states further that, as a result of the litigation hold, the “regular document retention policy has not been applied to the documents and files relating to the loans at issue in this case,” ( id. ¶ 5), and that no relevant files-including Base Liquidation Reports-have been destroyed ( id . ¶ 9). Plaintiffs have not challenged the representations in the Arico Affidavit, and they point to no specific circumstances to support a finding that documents have, in fact, been destroyed.”

“*2 Based on Defendants' representations, and absent any evidence to the contrary, the Court is satisfied that Defendants are fully aware of their obligation to preserve documents relevant to this matter, as well as the risks associated with failing to do so. Therefore, Plaintiffs have not demonstrated that they “have already been prejudiced”-or that they are likely to be prejudiced in the future-by the discovery stay. Accordingly, the discovery stay imposed in the Court's June 12, 2008 Order will remain in place.”


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2009-02-08 Digital Evidence Spoliation Claim and Issue Preclusion, and eMail Authentication

Two decisions this week. The first decision raises an interesting question about issue and claim preclusive effects of a spoliation decision in Federal court. The second decision focuses on authentication, hearsay email, and summary judgment practice.

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Case: Hynix Semiconductor, Inc. et al. v Rambus, Inc.
Citation: No. C-00-20905 (RMW) (N.D. Cal. 2009)
Date: 2009-02-03
Topics: Spoliation, issue and claim preclusive effects of spoliation

In these epic patent infringement cases (I’ve cited only one of the cases, which were consolidated for the purpose of this decision) U.S. District Judge Whyte (N.D. Cal) entered an order staying the California infringement cases pending the appeal by Rambus following the decision rendered in a bench trial involving the many of the same parties in the District Court of Delaware. U.S. District Judge Sue Robinson ruled that those Rambus patents at issue were unenforceable against the same co-defendant (Micron Technology) resulting from Rambus’ spoliation of digital evidence.

Micron asserted a claim of issue preclusion (res judicata) against Rambus, with the same unenforceability allegations, but “with some difference in the patents and the products accused.” (Hynix, another co-defendant, asserted a claim of collateral estoppel [or claim preclusion] to which the Court stated that it would issue a separate order.

After analyzing relevant decisional authority setting forth requirements for imposition of a judicial stay, the Court first decides that 9th Circuit precedent rather than Federal Circuit precedent applies (this is, after all a patent infringement action), and reasons that on balance, the equities tilted in favor of granting a stay. The Court states that the harm to manufacturers would be “small.” The Court’s somewhat glib remarks stand as a warning to be careful about that which you seek:

“With respect to the Manufacturers, a stay will delay a trial they have repeatedly urged be stayed”

The Court then provides its substantive basis for the imposition of a stay:

“The court has thus concluded that a stay of the Northern California actions except Hynix I pending the Federal Circuit's resolution of the spoliation appeals will simplify the proceedings and conserve the parties' and the judiciary's resources“

The Court also punts, kinda sorta, on the issue of issue preclusion:

“As to the pending motions for issue preclusion and summary judgment, the Manufacturers can claim no harm from a stay.

Imo, the Court’s real concern is one of inconsistent decisions based on nearly identical fact sets (and perhaps the fact that Judge Whyte had issued a prior ruling inconsistent with that of the more recent decision by Judge Robinson…)

"Where the purportedly preclusive decision is subject to an appeal, the prudent course is to stay any determination on the second action while the appeal is resolved” “See, e.g., Arco Polymers, Inc. v. Studiengesellschaft Kohle, 710 F.2d 798 (Fed. Cir. 1983) ("[W]e think it appropriate to suspend further proceedings in this case until we have decided Dart. The decision in Dart may be dispositive of the present case. If it is, there would be no need for us to determine the res judicata issue in the present case."); Maryland ex rel. Gliedman v. Capital Airlines, Inc., 267 F. Supp. 298, 305 (D. Md. 1967). Here, the existence of inconsistent decisions on spoliation counsel against a hasty application of issue preclusion to one while ignoring the other. Although Rambus may suffer some prejudice as the terms of its patents near expiration, Rambus' counsel stated at the hearing that its first priority is entry of judgment in the Hynix I Action.5”

My understanding (perhaps flawed) of issue vs. claim preclusion: Issue preclusion (or res judicata) exists between parties, or those in privity to them. Collateral estoppel (claim preclusion) does not require identity or privity of parties.


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Case: Asher v. Baxter Intern., Inc.
Citation: 2009 WL 260979 (N.D.Ill. 2009)
Date: 2009-02-04
Topics: eMail authentication, authentication of business records generally, authentication requirement at summary judgment mirrors that required at trial, hearsay, business records hearsay exception

In this case, which began as a putative class action suit in which certification was not granted, U.S. District Judge Manning granted summary judgment against defendant Baxter International, Inc. The remaining individual plaintiffs relied in part on a portion of an email memorandum asserted to have originated with defendant. That email memorandum in turn allegedly demonstrated that defendant knew that its financial projections were unattainable, and therefore satisfied the material misrepresentation and scienter showings required to successfully assert a securities fraud action.

The plaintiffs evidently provided only a portion of the emailed memorandum, and oddly enough, failed to authenticate the document:

"The plaintiffs contend that, based upon that passage, the defendants “were well aware of the turmoil surrounding the Renal [therapy] service centers.” According to the plaintiffs, because income from the renal treatment service centers was going to “miss the target” and create a “budget gap,” the memorandum left the defendants with “little doubt that there were from the start severe misgivings about Baxter's ability to live up to the commitments and related projections.” (Plaintiffs' Response, R. 302 at 11.)"

"For several reasons, the quoted passage is not evidence that the defendants knew that Baxter's projections had become unattainable. First, the plaintiffs have not authenticated the memorandum. Evidence submitted in support of or in opposition to a motion for summary judgment must be admissible at trial under the Federal Rules of Evidence. See Woods v. City of Chicago, 234 F.3d 979, 988 (7th Cir.2000). Among the requirements of the Rules of Evidence is that the document be authentic. See Fed.R.Evid. 901(a)."

"Authentication does not erect a particularly high hurdle to admissibility, and is “satisfied by evidence sufficient to support a finding that the matter in question is what its proponent claims.” Id.; see also Bledsoe v. Potter, 03 CV 3890, 2005 WL 2230188, at *2 n. 1 (N.D.Ill. Sept. 7, 2005). “The party offering the evidence is not required to rule out all possibilities inconsistent with authenticity, or to prove beyond any doubt that the evidence is what it purports to be.” Boim v. Quranic Literary Inst., 340 F.Supp.2d 885, 915 (N.D.Ill.2004) (citation omitted). “Normally, to demonstrate such trustworthiness and reliability at the summary judgment stage, the party seeking to offer the business record must attach an affidavit sworn to by a person who would be qualified to introduce the record as evidence at trial, for example, a custodian or anyone qualified to speak from personal knowledge that the documents were admissible business records.” Woods v. City of Chicago, 234 F.3d 979, 988 (7th Cir.2000); see also Martz v. Union Labor Life Ins. Co., 757 F.2d 135, 138 (7th Cir.1985) (“When a party seeks to offer evidence through other exhibits, they must be identified by affidavit or otherwise made admissible in evidence.”).

“*7 The plaintiffs have offered no affidavits or any other evidence establishing the authenticity of the Young memorandum. Although it appears to be a business record, the plaintiffs have not authenticated it as such and, accordingly, it is inadmissible."

"Second, and in a related vein, the plaintiffs have not established that the defendants or anyone else involved in assembling Baxter's 2002 projections ever saw the memorandum or knew its contents. Indeed, the plaintiffs have failed even to identify the positions within Baxter that the memorandum's sender and recipient held at the time. Without knowing their job titles, it is not possible to infer that the defendants were aware of the memorandum or that the concerns expressed within it were relayed to them.” Asher v. Baxter Intern., Inc. L 260979, 6 -7 (N.D.Ill. 2009)

The digital evidence takeaways from this decision are twofold. First, it is clear that the Fed. R. Civ. P. and District Court local rules, as well as decisional authority, require that evidence submitted in support of or in opposition to a summary judgment motion be authenticated in accordance with Fed. R. Evid. Rule 901. If documents, which clearly include digital evidence, are not authenticated in advance of a summary motion or opposition filing, a court will not consider them in its summary judgment deliberations. It is also important to note that if a court considers that digital evidence could not be authenticated (i.e., is not capable of being authenticated), and therefore inadmissible at trial, it is compelled to exclude and not consider the evidence at summary judgment.

This is strictly imo: Ok, this may seem obvious, but if the “light-burden” approach to digital evidence authentication shifts, (per In re VinHnee and progeny) to a greater authentication burden on the proponent, we may well witness cases won or lost on the basis of trustworthiness or reliability determinations well in advance of trial, and perhaps, where either spoliation or eDiscovery abuse is asserted during discovery, well in advance of summary judgment motion practice.

I also find it odd that plaintiffs’ counsel here did not explore other pathways to authenticate the email memorandum in question. Although the memorandum was arguably a business record, it may also be considered a statement against interest, and not hearsay. As for authentication, it might have been a good idea to produce make a request for admission as to authenticity of the entire email, and then attach the entire email in evidence, or produce the entire email during a FRCP Rule 30b deposition and obtain a similar admission. The decision does not indicate that any efforts described above were made by plaintiffs’ counsel.