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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