Friday, March 27, 2009

2009-03-27 Southern District of New York Sounds Clarion Call for Cooperation and Transparency, Spoliation, and the Shift in Judicial Approach to Imaging: Still Not Routine, But Now, Not Extraordinary

Three cases this week, including, of course, another spoliation decision. The first case, from the Southern District of New York, mandates cooperation and transparency in conducting eDiscovery. The second decision, from the District of Kansas, shows a trend to a (somewhat) relaxed standard for granting requests for drive imaging, and provides and interesting discourse on time based ESI discrepancy analysis. The third decision is (yet another) sanctions-imposing ESI spoliation decision, this time from the Eastern District of Michigan.

Thanks to Dave Isom of Greenberg Traurig, who pointed out the Graceland decision.


William A. Gross Const. Associates, Inc. v. American Mfrs. Mut. Ins., --- F.R.D. --- 2009 WL 724954 (S.D.N.Y. 2009)
White v. Graceland College Center for Professional Development, 2009 WL 722056 (D.Kan. 2009)
Technical Sales Associates, Inc. v. Ohio Star Forge Co., 2009 WL 728520 (E.D.Mich. 2009)

Case: William A. Gross Const. Associates, Inc. v. American Mfrs. Mut. Ins.
Cite: --- F.R.D. --- 2009 WL 724954
Date: 2009-03-19
Topics: Cooperation, transparency, attorney competency, search terms, quality control and testing, non-party email production and separation of relevant from non-relevant emails.

Let's start by pointing out that it’s never a good sign for at least one of the parties when a decision from a United States Magistrate Judge begins with:

“This Opinion should serve as a wake-up call to the Bar in this District about the need for careful thought, quality control, testing, and cooperation with opposing counsel in designing search terms or “keywords” to be used to produce emails or other electronically stored information (“ESI”). While this message has appeared in several cases from outside this Circuit, it appears that the message has not reached many members of our Bar.”

This decision from the Southern District of New York involved a multi-million dollar dispute over the contract for construction of the Bronx County Hall of Justice. What was sought in discovery were project-related emails stored on a non-party’s server.

United State Magistrate Judge Andrew Peck first notes that non-party Hill’s “only contribution” to the search term discussion consisted of remarking that (1) one party’s search terms were overbroad, (2) that the other party’s search terms were too narrow, and (3) that non-party Hill did not want to produce non-project related emails. In an apparent aside, Magistrate Judge Peck also remarks that non-party Hill never used a “Re: [Project]” naming convention, which complicated the search:

“This problem would have been avoided, of course, if Hill used a standard “Re” line in its Bronx Courthouse emails to distinguish that project from its other work. It did not do so, however. Moreover, while Hill was in the best position to explain to the parties and the Court what nomenclature its employees used in emails, Hill did not do so-perhaps because, as a non-party, it wanted to have as little involvement in the case as possible. “

With this level of cooperation (or lack thereof), the Court took it upon itself to craft search terms for the parties, a role it clearly did not relish:

“”That left the Court in the uncomfortable position of having to craft a keyword search methodology for the parties, without adequate information from the parties (and Hill).

The Court’s opinion of the parties’ cooperation (and a rather unsubtle jab at either the energy level or competency of counsel) speaks volumes:

“This case is just the latest example of lawyers designing keyword searches in the dark, by the seat of the pants, without adequate (indeed, here, apparently without any) discussion with those who wrote the emails.”

Warnings from The Beltway

Magistrate Judge Peck relies on (or is it invokes) on the line of decisional authority from Magistrate Judge Facciola (DCDC), and Chief Magistrate Judge Paul Grimm (D. Md.) in warning attorneys about this problem. The cases will be familiar to eDiscovery fans:

"Prior decisions from Magistrate Judges in the Baltimore-Washington Beltway have warned counsel of this problem, but the message has not gotten through to the Bar in this District. As Magistrate Judge Paul Grimm has stated:

“While keyword searches have long been recognized as appropriate and helpful for ESI search and retrieval, there are well-know limitations and risks associated with them, and proper selection and implementation obviously involves technical, if not scientific knowledge....Selection of the appropriate search and information retrieval technique requires careful advance planning by persons qualified to design effective search methodology. The implementation of the methodology selected should be tested for quality assurance; and the party selecting the methodology must be prepared to explain the rationale for the method chosen to the court, demonstrate that it is appropriate for the task, and show that it was properly implemented. Victor Stanley, Inc. v. Creative Pipe, Inc., 250 F.R.D. 251, 260, 262 (D.Md. May 29, 2008) (Grimm, M.J.).”

“Magistrate Judge Facciola has taken the warning even further:

"Whether search terms or “keywords” will yield the information sought is a complicated question involving the interplay, at least, of the sciences of computer technology, statistics and linguistics. Given this complexity, for lawyers and judges to dare opine that a certain search term or terms would be more likely to produce information than the terms that were used is truly to go where angels fear to tread. This topic is clearly beyond the ken of a layman and requires that any such conclusion be based on evidence that, for example, meets the criteria of Rule 702 of the Federal Rules of Evidence. United States v. O'Keefe, 537 F.Supp.2d 14, 24 (D.D.C.2008) (Facciola, M.J.); accord, Equity Analytics, LLC v. Lundin, 248 F .R.D. 331, 333 (D.D.C.2008) (Facciola, M.J.); FN3 see also, e.g., In re Seroquel Products Liability Litig., 244 F.R.D. 650, 662 (M.D.Fla.2007) (Baker, M.J.) (“[W]hile key word searching is a recognized method to winnow relevant documents from large repositories, use of this technique must be a cooperative and informed process.... Common sense dictates that sampling and other quality assurance techniques must be employed to meet requirements of completeness.”); Jay Grenig, Browning Marean & Mary Pat Poteet, Electronic Discovery & Records Management Guide: Rules, Checklists & Forms (2009 ed.), § 15:15 (“[K]eyword searches do not reflect context. They can also miss documents containing a word that has the same meaning as the term used in the query but is not specified. Misspelled words may be missed in a keyword search.”).”

Attorney “Guesses” Inadequate

Opinion footnotes frequently contain good nuggets, and Footnote 3 to this decision is no exception:

“FN3. This Court need not now decide whether expert testimony is required; what is required is something other than a lawyer's guesses, without client input, and without any quality control testing to see if the search terms produce reasonably all the responsive ESI and limited ‘false positives.’”

Takeaway: Courts are increasingly unlikely to accept an attorney's “guesses” when it comes to technology (presumably even when cloaked in a properly stentorian tone).

The Court then broadly adopts cooperation between counsel as the underlying approach when commencing eDiscovery:

“Of course, the best solution in the entire area of electronic discovery is cooperation among counsel. This Court strongly endorses The Sedona Conference Cooperation Proclamation (available at”

The Warning to Attorneys (and Parties) in The Southern District: Competency, Cooperation and Transparency

Magistrate Judge Peck joins other judges, including Facciola, Grimm, Baker, and others in making a clarion call (and warning) for those engaging in electronic discovery:

“Electronic discovery requires cooperation between opposing counsel and transparency in all aspects of preservation and production of ESI. Moreover, where counsel are using keyword searches for retrieval of ESI, they at a minimum must carefully craft the appropriate keywords, with input from the ESI's custodians as to the words and abbreviations they use, and the proposed methodology must be quality control tested to assure accuracy in retrieval and elimination of “false positives.” It is time that the Bar-even those lawyers who did not come of age in the computer era-understand this.”

Case: White v. Graceland College Center for Professional Development
Citation: 2009 WL 722056 (D.Kan. 2009)
Date: 2009-03-18
Topics: Time discrepancies in email and attachments justify reproduction of ESI in native data format, failure to meet and confer waived in renewed motion to compel, computer system clock investigation, time based ESI discrepancies

This decision from the District of Kansas involves both a motion to compel ESI requested, as well as for production of ESI previously ordered to be produced. Plaintiff had sought Outlook .pst and .ost files, and now also seeks hard drive images as well as expert analysis of the computer clock relied upon to create defendant’s emails, apparently suspecting that there was a creation/preparation time conflict.

Here, plaintiff sought native data format of emails previously produced in paper form.
This case has some interesting twist. Plaintiff was allegedly terminated from employment by defendant after it was discovered that plaintiff had been falsifying records. During discovery, it was plaintiff who claimed that ESI had been somehow manipulated or altered:

“Plaintiff sought the electronic and native copies to confirm or contradict when the emails and attachment documents were prepared.”

Plaintiff retained an expert to examine the native format ESI, and the Court notes that time-based data discrepancies did exist:

“Plaintiff thereafter retained a computer expert to analyze three emails between her supervisors and their associated attachments to determine the creation dates of these materials. The expert found discrepancies between the creation and sent dates of the emails and attachments, but could not make any definitive conclusions without more information. This motion to compel followed.”

Duty to Meet and Confer

Despite these accusations by plaintiff, no attempt-to-resolve was made by way of meet and confer pursuant to Fed. R. Civ. P. Rule 37 took place. Magistrate Judge Waxse, waives these requirements, noting that such a meeting would in all likelihood be futile, and that on a motion to renew, the requirement to meet and confer may be waived:

“Here, the Court declines to further delay resolution of the matter to allow Plaintiff an opportunity to satisfy her duty to confer. The Court will instead waive Plaintiff's non-compliance with the duty to confer and will consider the merits of her re-filed motion.”

The Court also finds that extenuating circumstances exist (discrepancies in email and attachment creation dates) and requires a re-production of ESI, even though the Court finds that defendants “have satisfied their obligation” with respect to the prior discovery order:

This is one of the first cases in a later-discovered time-based data discrepancy substantiated a re-production of native format data:

“As previously noted, Plaintiff's computer expert has identified discrepancies with the creation dates of Email # 1 and the attachments to Emails # 2 and # 3. Plaintiff now requests that the Court order Defendants to produce the Outlook PST and OST files of the mailboxes that sent or received the emails at issue so that her computer expert can make more definitive conclusions about when the emails and attachments were created, when they were modified or edited, and what modifications and edits were made to the documents after they were created. The Court is persuaded that the Outlook PST and OST files would likely assist the expert in determining when the emails and attachments were created.”

Drive Imaging – A Shift Toward Becoming More Routine

The Court provides a good analysis of the standard for obtaining an image of a hard drive. The last sentence in the following paragraph is a tee-up to the Court’s noting that the requirement to produce a drive image is becoming more routine:

“Requests for physical inspection of another party's hard drives or requests for forensic and mirror imaging of hard drives are generally governed by Fed.R.Civ.P. 34(a), which allows a party to request that another party “produce and permit the requesting party ... to inspect, copy, test, or sample ... electronically stored information.” FN8 The advisory committee notes to the 2006 amendment to Rule 34(a) suggest that direct inspection of an opponent's hard drive is not routine, but may be justified in some circumstances:”

The Court then notes decisions where in civil cases drive imaging has been ordered:

“At least three decisions in the District of Kansas have considered and permitted the inspection and forensic or mirror imaging of computer hard drives in the context of civil discovery.FN10 In G.D. v. Monarch Plastic Surgery,FN11 the court granted the plaintiffs' request to compel production of computer for forensic testing or mirror imaging, but denied the request as to files or records related to non-parties and the defendants' employees. In another case, Balboa Threadworks, Inc. v. Stucky,FN12 the court commented that “[i]t is not unusual for a court to enter an order requiring the mirror imaging of the hard drives of any computers that contain documents responsive to an opposing party's request for production of documents.” In Jacobson v. Starbucks Coffee Co.,FN13 the court, noting that production of a computer for inspection is unusual, was persuaded that the circumstances of the case, including a history of incomplete and inconsistent responses to production requests, warranted production of the computer or a mirror image of the hard drive for the plaintiff's inspection.

“FN10. See G.D. v. Monarch Plastic Surgery, P.A., 239 F.R.D. 641, 648 (D.Kan.2007); Balboa Threadworks, Inc. v. Stucky, No. 05-1157-JTM-DWB, 2006 WL 763668, at *3 (D.Kan. Mar. 24, 2006); Jacobson v. Starbucks Coffee Co., No. 05-1338-JTM, 2006 WL 3146349, at *6-7 (D.Kan. Oct. 31, 2006)”.

Imaging – Not Routine, But No Longer Extraordinary

It’s official (at least in the District of Kansas) --- while imaging is still not considered “routine” it also is no longer considered “extraordinary.” The survey of case law is a bit lengthy, but instructive:

“While still cautious, many courts now consider requests for inspection or requests for forensic or mirror imaging of computers to be neither routine nor extraordinary.FN16 Apart from compelling production and inspection of computer hard drives and forensic imaging where trade secrets and electronic evidence are involved, courts have also compelled production based upon discrepancies or inconsistencies in a response to a discovery request or the responding party's unwillingness or failure to produce relevant information. FN17

“FN16. John B. v. Goetz, 531 F.3d 448, 459 (6th Cir.2008) (“To be sure, forensic imaging is not uncommon in the course of civil discovery.”); Clearone Commc'ns, Inc. v. Chiang, Civ. No. 2:07cv00037TC, 2007 WL 3275300, at *1 (D.Utah Nov. 5, 2007) (imaging of opposing parties' computers is neither viewed as routine, nor completely extraordinary).”

“FN17. See, e.g., Koosharem Corp. v. Spec Personnel, LLC, Civ. A. No. 6:08-583-HFF-WMC, 2008 WL 4458864, at *2 (D.S.C. Sept. 29, 2008) (allowing forensic analysis on defendants' computers based upon failure to produce documents and due to the relevance of electronic information stored on the computers); Ferron v. Search Cactus, L.L. C., No. 2:06-CV-327, 2008 WL 1902499, at *2 (S.D. Ohio April 28, 2008) (allowing plaintiff's forensic computer expert to mirror image plaintiff's computer systems' hard drives based upon plaintiff's failure to place sufficient litigation hold and failure to otherwise produce the relevant information); P.J. ex rel. Jensen v. Utah, 247 F.R.D. 664, 672 (D.Utah 2007) (allowing defendants limited access to the relevant documents on the plaintiffs' crashed hard drive and computer because the plaintiffs provided only relevant research documents that they saved or printed); Orrell v. Motorcarparts of Am., Inc., No. Civ. 3:06CV418-R, 2007 WL 4287750, at *7 (W.D.N.C., Dec. 5, 2007) (allowing the employer defendant to conduct forensic examination of the plaintiffs' home computer where plaintiffs had wiped the hard drive of her work-issued laptop computer and had testified that she forwarded email to her home computer); Ameriwood Indus., Inc. v. Liberman, No. 4:06CV524-DJS, 2006 WL 3825291 (E.D.Mo. Dec. 27, 2006), as amended, 2007 WL 685623 (E.D.Mo. Feb. 23, 2007) (allowing independent expert to obtain and search a mirror image of defendants' computer equipment upon plaintiff presenting evidence suggesting that defendants failed to produce responsive email).”

Magistrate Judge Waxse orders the imaging of the subject drives finding that the plaintiff had raised sufficient issues relating to (1) ESI creation dates, (2) defendants had not provided an adequate explanation for these discrepancies, and (3) plaintiff had shown that the image would permit “more definitive” conclusion (based presumably on access to previously unavailable metadata) as to the time discrepancies:

“In this case, the Court is persuaded that Plaintiff has shown sufficient circumstances to allow some type of direct access to the computer hard drives that created or modified the documents attached to Emails # 2 and # 3. Plaintiff has established that her expert noted discrepancies as to the creation date of the email attachment “CC Basic Form 06092004.doc” and Defendants have not adequately explained the discrepancies. She has further established that more information is needed to make more definitive conclusions as to the creation dates of the documents and when they were modified or edited, and what modifications and edits were made to the documents after they were created.”

Computer System Clock

The plaintiff also requested that the Court permit review of the defendants computer to “verify the accuracy” of the system clocks. Plaintiff’s expert asserted that he needed both drive images and the system clock to “make definitive” conclusions about the time based data discrepancies:

“[Plaintiff's] computer expert concluded in his report that, without being able to verify the system clock of the computer and without having mirror images of the hard drives that created the documents at issue, it is not possible for him to make definitive conclusions about when the documents were created, when the documents were created, when they were modified or edited, and what modifications or edits were made to the documents after they were created.”

The Court picks up an interesting point about computer clocks in the defendant’s computer, but this really applies in a general way to nearly all of today’s computing environments:

“Defendants argue that allowing Plaintiff's expert to review the system clocks would be futile. They point out that a computer's system clock is part of a computer's motherboard. As such, they have no way of determining whether the current motherboard in the computers is the same motherboard that was present in 2004. Plaintiff's alleged expert does not suggest that he has the ability to determine how a system clock was set in 2004.”

The Court agreed with Defendant, and denied plaintiff’s request, deeming the proposed action “futile.”

[Blognote and opinion: While it is true that a system clock is typically installed on a motherboard, and that replacing the motherboard necessarily implies replacing the system clock, that issue is really a red herring. The real issue is that there is no robust time anchor to ESI in current computing systems, and no simple way to tell now, whether a system clock was correct in the past, or whether it had been falsely set or re-set, and later re-set again to the “correct” time. It should be noted here that accuracy, while helpful, generally means the extent to which a clock does not drift away from the time originally set. That time may, or may not have been the correct time, and so a clock may be accurate, but based on a false initial setting or resetting. In short, a very accurate clock set to a wrong time is a clock that keeps very accurate, but incorrect, time. Imo, discovery disputes on time based data discrepancies may well see an increase as a result.


Case: Technical Sales Associates, Inc. v. Ohio Star Forge Co.
Citation: 2009 WL 728520 (E.D.Mich. 2009)
Date: 2009-03-19
Topics: Sixth Circuit preservation obligation standards, Sixth Circuit spoliation standards (federal common law), sanctions for spoliation predicated on court’s inherent powers, failure to produce ESI, post litigation commencement deletion of ESI, imposition of attorneys fees and costs, deferral of adverse inference decision determined at trial.

This decision arises out of a dispute over sales commissions. It’s never a good sign when a court (here, District Judge Cohn) first notes some post-litigation (and post-discovery) commencement data destruction activity:

“[Non-party]Midwest, in preparing to perform the required searches on the mirror image of the hard drive on Billups' first computer, detected that approximately 70,000 files had been deleted in April 2008 (during the discovery period in this litigation) using a tool known as “Eraser.” Midwest also determined that files on the hard drive on the computer Billups currently uses, had been moved into the recycle bin of his email folder. Specifically, folders called “Pat's Personal Folder Mailbox” and “Pat's Mailbox” were moved to the recycle bin, beginning at 2:08 a.m. Friday, October 24, 2008, the day after the Stipulated Order was entered and days before the scheduled examination.”

The fact pattern in this decision is not especially easy to follow, but what appears to be the gist of defendant’s defense against plaintiff’s spoliation assertion underscores out the difficulty in proving the negative; in this instance, the defendant claimed existence and later destruction of emails could not be deduced from the mere non-existence of emails:

“OSF says that the fact that Midwest did not find the Marado email means it never existed or Midwest performed an incomplete search. OSF also says that it performed a “more extensive” search of its computers than Midwest and did not discover the Marado email. OSF also says that 70,000 files which were deleted on Billups' old workstation were done in the ordinary course of business because that computer had “severe operational issues” and that “all of the necessary files” were transferred to Billups' new computer workstation. OSF also says that the files in Billups' email folders moved to the recycle bin and are not lost. OSF further says that the Marado email is immaterial and TSA has not been prejudiced by any of OSF's actions.”

Sixth Circuit Duty to Preserve, Sanctions Imposition Analysis

The Court then provides an analysis of ESI preservation obligations under Sixth Circuit decisional authority, which by the way, adopts the Second Circuit and Sedona Principles approach:

“The Court of Appeals for the Sixth Circuit has recently stated that “[a]s a general matter, it is beyond question that a party to civil litigation has a duty to preserve relevant information, including [electronically stored information], when that party ‘has notice that the evidence is relevant to litigation or ... should have known that the evidence may be relevant to future litigation.’ ” John B. v. Goetz, 531 F.3d 448, 459 (6th Cir.2008) (quoting Fujitsu Ltd. v. Fed. Express Corp., 247 F.3d 423, 436 (2d Cir.2001) and citing Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 216-18 (S.D.N.Y.2003); The Sedona Principles: Best Practices, Recommendations & Principles for Addressing Electronic Document Production, Second Edition 11, 28 (The Sedona Conference Working Group Series, 2007), available at http:// www.thesedonaconferen

“The Sixth Circuit goes on to say that ‘[i]It is the responsibility of the parties to ensure that relevant [electronically stored information] is preserved, and when that duty is breached, a district court may exercise its authority to impose appropriate discovery sanctions. Id. (citing Fed.R.Civ.P. 37(b), (e) see also The Sedona Principles, supra, at 70 (noting that sanctions should be considered only if the court finds a clear duty to preserve, a culpable failure to preserve and produce relevant ESI, and a reasonable probability of material prejudice to the adverse party).’”

Despite the rather intricately set-out timeline (which I have not included), the Court cuts to the chase:

“Here, TSA is correct that the issue is not whether the Marado email exists or whether Midwest conducted an inadequate search, a contention it vigorously denies. Rather, the issue is whether the fact that OSF deleted 70,000 files on Billups' old computer in April 2008 during the pendency of the litigation and whether the deletion of email folders from Billups' present computer just days before the examination, constitutes the destruction of electronic evidence.”

Ok, here's the Cliffs Notes timeline and event-posture:

(1) plaintiff’s document request specifying the production of emails generated between two individuals during an articulated time period,
(2) defendant’s failure to produce same,
(3) letters from plaintiff’s counsel to defendant’s counsel in connection with the failure to produce,
(4) depositions and attendant document requests,
(5) objections to documents requested
(6) additional counsel-to-counsel letters,
(7) additional production that still failed to produce documents requested by plaintiff,
(8) the completion of a Fed. R. Civ. P.30(b)(6) deposition,
(9) a letter from plaintiff’s counsel requesting the 30b6 deposition of defendant’s IT person,
(10) numerous drafts of a stipulated order regarding forensic examination, and
(11) an examination of defendant’s computer by a forensic expert retained by plaintiff

The forensic examintation described in event 11 showed that a large number of emails had been deleted and that a wiping utility had been used on the examined computers, and at an apparently unpropitious time:

“Among other things, the examination revealed that a file wiping program had been installed on the older computer, and that somebody had deleted or altered nearly 70,000 emails to prevent them from being read. This file wiping apparently occurred in April 2008, long after TSA had requested the emails which Mr. Billups sent to or received from Ms. Marado. With regard to Mr. Billups' current computer, the examination revealed that on October 24, 2008, just days before the forensic examination, somebody had deleted “Pat's Personal folder Mailbox” and “Pat's Mailbox”.”

Mayhaps the wiping program on the older computer was purchased from "Ye Olde Wipe Shoppe"?

With the results and opinion of the forensic examiner in hand, the Court provides a rather unsubltle hint as to what will ultimately ensue:

“As the [forensic examiner] report's conclusion indicates, the deletion of the files was clearly intentional:

"In conclusion, my analysis revealed the presence of a file wiping program on the older system used by Pat Billups (Dell PC2). Analysis on the Dell PC2 system (old system) revealed nearly 70,000 files, which were deleted/wiped to prevent recovery. Furthermore, my analysis uncovered on the Dell PC1 system (new system), the deletion of Pat's Mailbox, which occurred on 10/24/08.The presence of nearly 70,000 altered files, installation of a file wiping utility, deletion of Pat's Mailbox clearly indicates to this examiner a willful intent to hide or destroy electronic evidence.”

The Court’s observations:

“Based on the above, it is difficult to find that OSF did not intentionally destroy electronic information on both of Billups' computers after such information was requested. OSF knew that TSA was seeking emails between Marado and Billups, and was particularly interested in emails around the time of the dinner meeting, including the Marado email. Yet, OSF allowed filed on both of Billups' computers to be deleted.”

Additional Observations and Midnight Data Manipulation

The Court notes that defendant provided no explanation for the timing (or the time) of the ESI destruction:

"Moreover, the timing of the destruction appears more than coincidental. The 70,000 files on Billups' old computer were erased in April 2008 at about the same time TSA informed OSF that it wished to conduct a forensic examination. The email folders on Billups' new computer were moved to the recycle bin at 2:00 am on Friday, October 24, 2008, the day before the examination.FN6 Under the circumstances, the Court finds that OSF's actions with respect to Billups' computer violated its obligation to preserve electronic evidence.

“FN6. There is no explanation as to the reason that the move of the emails folders to the recycle bin occurred during the middle of the night. It is odd to say the least."

Odd indeed.

Fed.R. Civ. P. Rule 37(e) Safe Harbor Does Not Protect Intentional ESI Deletion

The Court found that under these circumstances, defendant’s ESI destruction was not sheltered by the safe harbor provisions of Fed. R. Civ. P. Rule 37(e):

“This rule is intended to protect a party from sanctions where the routine operation of a computer system inadvertently overwrites potentially relevant evidence, not when the party intentionally deletes electronic evidence. See, e.g., 8A Fed. Prac. & Proc. Civ.2d § 2284.1.”

Spoliation Sanctions Under Court’s Inherent Powers

District Judge Cohn then notes the appropriateness of plaintiff’s request for spoliation sanctions pursuant to the court’s inherent powers:

“…TSA is seeking sanctions under the court's inherent authority which is appropriate. The authority to impose sanctions for spoliated evidence arises not from substantive law but, rather, ‘from a court's inherent power to control the judicial process.’ Chambers v. NASCO, Inc., 501 U.S. 32, 45-46, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991).”

Sixth Circuit Spoliation Sanctions Governed By Federal Common Law

This decision follows the Sixth Circuit authority stating that the determination of spoliation sanctions are to be determined in accordance with federal law.

[Blognote: It is important to keep in mind (my migraine is returning) that while spoliation sanctions are governed by federal law, a determination of spoliation in the Sixth Circuit is made pursuant to state law: “State law governs the issue of spoliation of evidence in both federal question and diversity cases. See Beck v. Haik, 377 F.3d 624, 641 (6th Cir.2004). Under Michigan law, “[e]ven when an action has not been commenced and there is only a potential for litigation, the litigant is under a duty to preserve evidence that it knows or reasonably should know is relevant to the action.” Brenner v. Kolk, 226 Mich.App. 149, 162, 573 N.W.2d 65 (1997).” Fox v Riverdeep, 2008 WL 52444297 (E.D. Mich 2008).

Ok, back to the instant decision and the Sixth Circuit’s standard for determination of spoliation sanctions:

“The Sixth Circuit has recently made clear that the determination of spoliation [sic] sanctions is governed by federal law and subject to the court's discretion. Adkins v. Wolever, 554 F.3d 650, 2009 WL 248682 (6th Cir. Feb.4, 2009) (en banc). The Sixth Circuit also explained that [a]s our sister circuits have recognized, a proper spoliation sanction should serve both fairness and punitive functions. See Vodusek v. Bayliner Marine Corp., 71 F.3d 148, 156 (4th Cir.1995) (observing that a proper sanction will serve the “purpose[s] of leveling the evidentiary playing field and ... sanctioning the improper conduct”). Because failures to produce relevant evidence fall “along a continuum of fault-ranging from innocence through the degrees of negligence to intentionality,” Welsh, 844 F.2d at 1246, the severity of a sanction may, depending on the circumstances of the case, correspond to the party's fault."

"Thus, a district court could impose many different kinds of sanctions for spoliated evidence, including dismissing a case, granting summary judgment, or instructing a jury that it may infer a fact based on lost or destroyed evidence. Vodusek, 71 F.3d at 156.” *9 Adkins, 554 F.3d 650, 2009 WL 248682 at *2.”

The Court determined that defendant had failed to preserve ESI and that it had also spoliated ESI. In accordance with these findings, the Court imposed attorneys fees and costs, but deferred imposition of more severe sanctions until trial:

“Here, OSF had an obligation to preserve electronic data, particularly emails on Billups' computers. It did not. Emails and files were deleted at a time when the parties were in litigation and OSF was aware that TSA was seeking a forensic examination. While it may never be known whether the Marado emails ever existed,FN7 OSF's conduct merits a sanction. While the Court finds that a monetary sanction in the amount of the cost of the forensic examination appears to be appropriate, i.e. $17,786.25, the actual amount of the sanction as well TSA's entitlement to an adverse jury instruction will be determined at trial once the substantive harm caused by OSF's actions is known.”



Monday, March 23, 2009

2009-03-23 Digital Evidence Management (and Litigation) Practice Management Tip

Antivirus, Search, and Data Leak Prevention Products and Preservation

It appears that at least one (and perhaps many) deep anti-virus scans change "last access" time and date stamps. In the link appearing below, Symantec notifies (or is it "warns") that the use of a full system scan will cause changes to "last access" dates. The only work-around (at least insofar as Symantec) is concerned, is to disable deep-scanning.

This raises some interesting ESI preservation issues.

First, an argument could be made that failing to disable this feature after the trigger of a duty to preserve constitutes some degree of ESI spoliation.

In this argument stance, the safe harbor provisions of Fed. R. Civ. P. Rule37(e) would be unavailing to a party who failed to cease activity in connection with what is arguably a "routine good faith operation of an electronic information system." In "ordinary negligence" jurisdictions (among others, the Second, Seventh, and Ninth Circuits), and depending on the surrounding circumstances, this might result in a court's finding a failure to preserve, negligent document destruction, or outright spoliation.

Second, an argument (or defense) might be made that disabling a deep scanning anti-virus feature would be overly burdensome, and expose the producing entity to immense operational, financial, and other security risks.

A third approach, of course, might be to temporarily suspend deep scans pending a copy of pertinent information set(s). A fairly coherent argument might in turn be made that this, too, would be overly burdensome, costly, and risky.

The link to the Symantec site is here:

Data Leak Prevention and Search Tools

Some DLP products can be used as anti-forensics tools, and some search tools may inadvertently do so (comforting thought, to be sure). Of course, none are certified (or even claimed) not to, because, until now, we haven't asked the questions. And if we don't know the questions to ask, we remain eyebrow deep in...vendor promotional material.

So, the first question out of the gate in a protocol setting session is:"Do any of the protocols effect metadata changes? Better yet, do any proposed methodologies flip evidentiary bits (and here, we assume evidence is, broadly, relevant [or which could lead to relevant] metadata as well as data)?

Two scenarios, both with unpleasant prospects for counsel. (1) Counsel becomes aware of flaw only after otherwise well conducted eDiscovery is completed, necessitating motion practice, testing, experts, evidentiary hearing, and a decisional dice throw. (2) Counsel makes inquiry prior to use of particular technology, and either before or during eDiscovery period, moves to object to use of particular technology (and perhaps offers an alternate), necessitating expert testimony, testing, evidentiary hearing, and another throw of the decisional dice.

The unpleasant prospect here is the burden counsel will bear in convincing a court that without testability, there can be no reliability of a particular methodology, no matter how ubiquitous, and no matter how self-serving, no matter how nicely printed the collateral promotional or technical material, and no matter how reassuring mere human testimony might be.

Saturday, March 21, 2009

2009-03-21 Spoliation, More Spoliation, and a Decision Compelling Forensic Imaging

Three decisions this week, including a forensic data collection decision from the Southern District of New York, a , And yes, what how else to welcome Spring but with two spoliation decisions, one in a direct appeal of a Bankruptcy Court judgment from the Northern District of Illinois, and the second a New Hampshire ruling where the Supreme Court of New Hampshire looks to the Federal Rules (and federal district and appellate court decisional authority) for eDiscovery guidance, and discusses spoliation standards for that state.


Grochocinski v. Schlossberg, --- B.R., ----, 2009 WL 635447 (N.D.Ill. 2009)
Anthropologie, Inc. v. Forever 21, Inc., 2009 WL 690239 (S.D.N.Y. 2009
New Hampshire Ball Bearings, Inc. v. Jackson, --- A.2d ----, 2009 WL 691205 (N.H. 2009)

Case: Grochocinski v. Schlossberg
Citation: ---B.R.---, 2009WL635447
Date: 2009-03-11
Topics: eDiscovery in Bankruptcy (adversary), proceedings, ESI destruction, District Court appellate standards governing ruling of bankruptcy courts (clear error for facts, de novo for legal conclusions), "abuse of discretion" review of discovery sanctions, Seventh Circuit standards for default judgment impositions resulting from discovery order violations.

In this direct appeal from a trial decision in an adversary proceeding from the Bankruptcy Court of the Northern District of Illinois, the District Court affirmed an entry of judgment in favor of the bankruptcy trustee and against a transferee of property from a bankrupt (and a finding that there had been a fraudulent property transfer). While this is not a true "non-party" sanctions proceeding and appeal, it is noteworthy that the defendant was not the bankrupt, but the transferee of the bankrupt.

In this case, counsel for the Trustee sent a letter of preservation to the transferee on December 20, 2007, giving them "notice to retain all electronic discovery related to the Trustee’s adversary proceeding. Apparently, the transferee ("Defendant") must have given the Trustee’s counsel some concern. Here’s what happened next:

March 24, 2008: Trustee files motion to compel defendant to provide access to all computer hard drives which contained data related to the subject transfer ;

April 4, 2008: The Bankruptcy Court granted the Trustee’s motion and enters a protective order related to production of ESI contained in defendant’s computers. That order also provided for the hiring of a "computer forensic services firm" to "mirror the hard drives" on defendant’s computers and to act as custodian "of the data contained therein."

(Blognote: The term should be "image" and not "mirror" – I’ve brought up that distinction in litigation).

You can see where this is headed. On April A mere three days following the issuance of the protective order:

April 7, 2008: The computer expert’s analysis showed that (1) a wiping program called "nCleaner" had been "installed and launched on at least two computer as of April 1, 2008; "(2) (2) over 16,000 files on at least two computers had been destroyed on or around April 1, 2008; (3) overwriting operating systems were installed on two of the computers in January-February 2008; and (4) a program to verify the integrity of the data destruction had been installed on the computers."
The bankruptcy court found that:

"[Defendant] had a duty to preserve electronic files pursuant to the electronic document retention letter, and that the electronic files and data were destroyed in violation of this duty."
Really, is there any need to digest further? Methinks so.

April 9, 2008: The Trustee filed a motion seeking sanctions against defendant "based on the evidence from the computer expert. The bankruptcy court held a hearing, and:

"…found the evidence, which [defendant] had been under a duty to preserve, had been spoiled."

The bankruptcy court then entered an order of sanctions against defendant.

The sanctions order:

"…stipulated that the facts as alleged by the Trustee relating to [defendant] were taken as proof against him,…that [defendant] was prohibited from introducing testimony or other evidence in opposition to those facts," and "…additionally, [defendant] was ordered to pay various costs of Trustee’s counsel and the computer expert."

District Court Review of Bankruptcy Court Judgments

District Judge Castillo then sets the required decisional approach to be used by a District Court, sitting in direct-appeals posture, in connection with an appeal of a bankruptcy court ruling. In short the standards are "clear error" for factual findings, and "de novo" review for legal conclusions:

""The bankruptcy court's factual findings are reviewed for clear error, and its legal conclusions are reviewed de novo. Dollie's Playhouse, Inc. v. Nable Excavating, Inc., 481 F.3d 998, 1000 (7th Cir.2007). "Clear error is an extremely deferential standard of review, and will only be found to exist where the ‘reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.’ " Pinkston v. Madry, 440 F.3d 879, 888 (7th Cir.2006) (quoting Anderson v. City of Bessemer City, 470 U.S. 564, 573 (1985)). Accordingly, this Court may not "reverse the finding of the trier of fact simply because ... [we] would have decided the case differently." Id."

District Judge Castillo then focuses his discussion on the standard for review (clear error) for factual findings underpinning a discovery sanctions ruling:

This Court reviews the imposition of discovery sanctions for abuse of discretion. Maynard v. Nygren, 332 F.3d 462, 467 (7th Cir.2003). Thus, this Court will uphold any exercise of the bankruptcy court's discretion that could be considered reasonable, "even if we might have resolved the question differently." Id. Additionally, the factual findings underlying the bankruptcy court's imposition of sanctions are reviewed for clear error. Negrete v. Nat'l R.R. Passenger Corp., 547 F.3d 721, 724 (7th Cir.2008).

Seventh Circuit "Uphill Battle" Standard for Review of Discovery Sanctions

District Judge Castillo then notes that the "abuse of discretion" standards for appellate review of imposition of discovery sanctions in the Seventh Circuit is well-nigh insurmountable:

"When ordering the sanctions of default judgment or dismissal for discovery violations, the court must find that the party's actions displayed willfulness, bad faith, or fault. Collins v. Illinois, 554 F.3d 693 (7th Cir.2009). Under the abuse of discretion standard, "an appellant faces an uphill battle" in seeking to reverse a lower court's sanction order. In re Golant, 239 F.3d 931, 937 (7th Cir.2001). A court's decision will be upheld so long as it could be considered reasonable. Collins, 554 F.3d at 693."

Seventh Circuit Requirements for Showing of Bad Faith Non Compliance with Court Order Met

The defendant argued that the bankruptcy court’s ruling was "clear error" because the relevant Seventh Circuit standards were not met. The U.S. Court of Appeals for the Seventh Circuit sanctions imposition standard for failure comply with a discovery order pursuant to Fed. R. Civ. P. Rule 37(b)2(B) include a finding of willfulness, bad faith or fault. What’s notable about this language is that the Seventh Circuit’s approach (at least, in the author’s opinion) is one of near-presumptive correctness:

"When ordering the sanctions of default judgment or dismissal for discovery violations, the court must find that the party's actions displayed willfulness, bad faith, or fault. Collins v. Illinois, 554 F.3d 693 (7th Cir.2009). Under the abuse of discretion standard, "an appellant faces an uphill battle" in seeking to reverse a lower court's sanction order. In re Golant, 239 F.3d 931, 937 (7th Cir.2001). A court's decision will be upheld so long as it could be considered reasonable. Collins, 554 F.3d at 693."

Default Judgment Imposition as Sanction for Discovery Order Violation

The Court notes that the Seventh Circuit has "questioned" whether the imposition of a terminating sanction resulting from a discovery violation must be supported by either a "preponderance of" or by "clear and convincing" evidence, but finds that sanctions were properly imposed under either standard:

The Seventh Circuit has recently questioned whether a default judgment from a discovery violation must be supported by "clear and convincing evidence," as opposed to a "preponderance of the evidence" standard. Ridge Chrysler Jeep, LLC v. Daimler Chrysler Fin. Serv. Americas LLC, 516 F.3d 623, 625 (7th Cir.2008)(noting that neither a statute or the Constitution requires an elevated burden for dismissal as a sanction, when the burden in the underlying suit is a preponderance of the evidence); Wade v. Soo Line R.R. Corp., 500 F.3d 559, 564 (7th Cir.2007). The Court finds that under either standard, there is sufficient evidence of [Defendant's] bad faith."

The Court’s reasoning is simple and straightforward: The defendant had a duty to preserve, both before and after the issuance of the Court’s motion to compel, and violated that duty:

"Beginning in December 2007, [Defendant] was under an obligation to retain all electronic discovery related to the Trustee's adversary proceeding."

" On March 24, 2008, the Trustee filed a motion to compel [Defendant] to provide access to all computers that contained data related to the transfers… After reviewing three computers that were utilized by [Defendant], the computer expert concluded:

(1) that a disk cleaning program called "nCleaner" was installed and launched on at least two computers as of April 1, 2008;
(2) over 16,000 files on at least two computers had been destroyed on or around April 1, 2008;
(3) overwriting operating systems were installed on two of the computers in January-February 2008; and (4) a program to verify the integrity of the data destruction had been installed on the computers."

The Court found that at minimum, defendant had acted in bad faith, justifying the imposition of terminating sanctions:

"Even if [Defendant] did not destroy the files himself, the bankruptcy court found that at the very least [Defendant] acted in "reckless disregard" of his discovery obligations. Such disregard is sufficient to establish bad faith. See In re Thomas Consol. Indus. Inc., 456 F.3d 719, 726 (7th Cir.2006)("... blatant disregard of the bankruptcy court's order was more than sufficient to demonstrate the bad faith finding that justified dismissal.")."

The Court’s affirmed the imposition of terminating sanctions (judgment) on the defendant, adding that:

"The sanctions imposed against [Defendant] are not unreasonable in light of the broad discretion afforded to the bankruptcy court in determining sanctions. See Golant, 239 F.3d at 937 (a lower court is not required to select the least severe sanction, as long as the sanction selected is reasonable)."


Case: Anthropologie, Inc. v. Forever 21, Inc.
Citation: 2009 WL 690239 (S.D.N.Y. 2009)
Date: 2009-03-11
Topics: Incomplete ESI production, summaries of raw data insufficient, forensic data collection ordered.

This copyright infringement action from the Southern District of New York should be classified in either the "what-not-to-do" or the "only in Ne w York" ESI abuse discovery abuse category. Here, not only did the defendant fail to produce ESI as requested, and then ordered to be produced by the Court, it then provided only "summaries" of the requested ESI.

Ok, no crystal ball needed to presume that the requesting party filed a motion to compel, but the U.S. Magistrate Judge Dolinger’s Court’s approach and analysis provides a good approach framework:

"Principally, Anthropologie seeks an order compelling defendants to provide the documents in issue, including all such documents in electronic storage. Plaintiff also asks for an order permitting it to appoint an expert to copy and review the hard drives of the computer system utilized by Forever 21 for its business in order to search for the categories of documents that defendant has contended it does not keep, particularly documentation of its sales of the infringing garments and resulting profits."

The defendant here apparently had played fast and loose, and upon its own whim and caprice, at variously stated that it had no underlying ESI in response to either discovery requests, but that for settlement purposes, it did.

The Court wasn’t buying:

"Instead, Forever 21 has, over an extended period of time, insisted that it did not have such documents or lacked ready access to them, representations that are incredible on their face. Moreover, at the same time-and in plain contradiction of these representations-this defendant offered to provide cumulated data, solely for settlement purposes, that it plainly could only have derived from underlying documentation that defendant was claiming either did not exist or was not accessible."

"…Given the scale of defendants' business, it is virtually inconceivable that it does not keep records-whether hard copies or in electronic storage-reflecting the detailed data involved in purchasing, distributing, and selling each of these garments. Now defendants' own conduct in discovery-including its proffer of summaries of that data-conclusively demonstrates the falsity of its prior representations. Moreover, its effort to shield even its summaries from the discovery process (by designating them as "for settlement purposes only") reflects a refusal to comply with even the minimal requirements of the governing discovery rules."

Raw Data Summaries Held Insufficient Production

The Court, after finding that defendant’s ploys had resulted in serious delay (think impeding the orderly administration of justice), and describing as "frivolous" defendants arguments opposing plaintiff’s sanctions motion, addresses both defendant’s credibility as well as the issue of its insufficient ESI production:

"Delays aside, the proffer by defendants of summaries (even if not limited to settlement purposes) is not a substitute for production of the raw data on which the summaries are based. Plaintiff is not required to take such summaries-apparently prepared exclusively for the litigation-on faith. Moreover, while this proposition is true in all cases, it is especially so here, where the credibility of defendants is in serious question."

The Court noted that the summaries provided by defendant contradictory, but this comment tees up the piece de resistance:

"In addition, as noted, defendants have made a series of manifestly false statements over a period of many months about the non-existence or inaccessibility of essential corporate records involving documentation of purchases, distribution, and sale of the allegedly infringing garments-and this too puts in serious question the trustworthiness of their representations as to the accuracy of their data."

Continuing with my mangling of the French language, the Magistrate Judge Dolinger then delivers the coup-de-grace and orders the production of four categories of information:

"The foregoing makes it manifest that defendants must turn over to plaintiff's counsel forthwith the data and documentation on the basis of which they prepared each of the summaries that they have proffered to plaintiff between last April and the end of December"

"...Furthermore, this production is to include not only hard-copy documents, but any electronically stored data that comes even arguably within the scope of these four categories. To facilitate this requirement, plaintiff is to provide to defendants' counsel within seven days the specifications for formatting any such electronically stored data to facilitate its use by plaintiff. The production is to be made within seven days thereafter."

Request for On-Site Forensic Imaging

Plaintiff further requested that the Court order an on-site forensic imaging of defendant’s hard drives to ascertain whether all of defendant’s responsive records had been produced. The defendant claimed that granting this relief would "take weeks and gravely harm its business." Perhaps not surprisingly, the Court sided with the plaintiff, noting that in certain circumstances (such as where litigant credibility has come into question), this is an appropriate remedy, citing to U.S. District Judge Shira Scheindlin’s recently published Digital Evidence casebook:

"Although such court-ordered on-site inspections are not routinely granted, they may well be justified where there is considerable doubt about the completeness of a litigant's production and the information in question goes to the heart of the claims in the case. See, e.g., Shira A. Scheindlin et al., Electronic Discovery and Digital Evidence: Cases & Materials 271-75 (West 2009) (discussing cases). In this case defendants' performance to date appears to justify the use of such a procedure if it can be performed without undue delay and burden."

Blognote: It is becoming increasingly common for courts to invite (or perhaps remind) prevailing parties in a Fed. R. Civ. P. Rule 37 proceeding to apply for attorneys fees and costs:

"Finally, in view of the delay and expense occasioned by defendants' course of conduct in discovery, plaintiff is authorized to apply, pursuant to Rule 37(a)(4), for an award of the expenses of its motion, including reasonable attorneys' fees."

I suspect that the motivation for this (apart from the clear language of Rule 37)is more warning (to others) than reward.

Case: New Hampshire Ball Bearings, Inc. v. Jackson
Citation: --- A.2d ----, 2009 WL 691205 (N.H. 2009)
Date: 2009-03-18
Topics: New Hampshire looks to FRCP for eDiscovery guidance, New Hampshire spoliation standards, adopts Second Circuit’s Residential Funding approach; forensic images and failure to employ write blockers.

This case involved an action against a former employee of plaintiff, alleging breach of confidentiality and misappropriation of trade secrets. A jury found the defendant had not misappropriated trade secrets, but had breached his confidentiality agreement. The decision from Supreme Court of New Hampshire affirms the trial court’s rulings concerning discovery motions, evidentiary rulings jury instructions and post-trial motions, almost all of which focus on the duty to preserve ESI, failure thereof, and the type of inference instruction permitted by the court.

Taking things from back to front, let’s look at what the plaintiff sought by way of jury instructions:
"At the beginning of this case, I issued an Order requiring the defendants to preserve relevant evidence. The evidence presented demonstrates that defendants Sargent and Jackson failed to comply with my Order. Therefore, if you find that a reasonable person in the position of Sargent and/or Jackson would have preserved the evidence, you may assume that the evidence that was not preserved would have helped the plaintiff, and you may decide the case as if the evidence was helpful to the plaintiff and presented by the plaintiff during the trial."

The Court rejected plaintiff’s proposed instructions and crafted its own:

"I instruct you that all parties are under an obligation to preserve documents and records from the time that the party is reasonably on notice that a document or record may become evidence or be subject to discovery in a lawsuit. In this case, the Plaintiff maintains that the Defendants intentionally lost or destroyed certain records or documents subject to a preservation obligation. The Defendants deny this and to the extent that documents or records are missing, they suggest innocent explanations. Also, the Defendants, in turn, maintain that the Plaintiff destroyed certain records subject to a preservation obligation, a claim that the Plaintiff has denied. If, based on the evidence, you find that records or documents would have been relevant to this case and that a party intentionally lost or destroyed them to keep the information secret, you may draw an unfavorable inference on account of there having been missing documents or records. If you find, however, that there was an innocent explanation for the missing records or documents, or if you find that those records and documents would not have been relevant to this case, you may not draw such an inference."

Both sets of instructions appear to permit the jury to draw an inference, but the court-crafted instructions also appear to include a pre-condition to that permission, and that is that there must not have been an "innocent explanation" and that the documents would have been relevant. The Court’s instruction set also reminds the jury that, without satisfaction of those preconditions, it (the jury) was not prohibited from drawing that inference.

This case makes for interesting reading, as a forensics examination of the relevant storage devices (including cameras, flash drives, and laptop hard drives) showed evidence of deletions, overwriting of data, disk wiping, disk reformatting, and outright flash drive destruction that occurred after the defendant’s duty to preserve had been triggered. Oh, and there was some evidence that an internet search had been made seeking information on the erasing of computer hard drives. (As Mr. Gleason used to say, a "mere bag of shells").

The trial court was not amused by the evidence of defendant’s actions, considered them to be indirect criminal acts, and referred the defendant to the New Hampshire Attorney General (who after review, declined to prosecute). One wonders why plaintiff had not chosen to commence aComputer Fraud and Abuse Act action.

New Hampshire State eDiscovery Proceedings Guided by Federal Rules of Civil Procedure

I think this one of the first decisions in which a highest state court (District of Columbia excepted because it is not a state) expressly announcing that it will take guidance from the Federal Rules of Civil Procedure for eDiscovery:

"Because electronic discovery has been more predominant in federal courts, we look to those courts for guidance."

The Supreme Court of New Hampshire follows with a succinct multi-district (and Circuit) court decisional analysis:

"We begin by recognizing that electronic data, including forensic imaging of hard drives, is within the scope of discoverable material. See In re Pharmatrak, Inc., 329 F.3d 9, 17 (1st Cir.2003); Antioch Co. v. Scrapbook Borders, Inc., 210 F.R.D. 645, 652 (D.Minn.2002). Because electronic discovery can easily become broad and intrusive, "[c]ourts have been cautious in requiring the mirror imaging of computers where the request is extremely broad in nature and the connection between the computers and the claims in the lawsuit are unduly vague or unsubstantiated in nature." Balboa Threadworks, Inc. v. Stucky, No. 05-1157-JTM-DWB, 2006 WL 763668, at *3 (D.Kan. Mar. 24, 2006). Without a sufficient showing of relevance and need, courts disallow the "drastic discovery measure" of permitting a party to image all of an opponent's electronic media. McCurdy Group v. American Biomedical Group, Inc., 9 Fed. Appx. 822, 831 (10th Cir.2001). Courts are more receptive, however, to circumscribed requests limited to specified individuals or computers expected to produce relevant information. See Rowe Entertainment v. William Morris Agency, 205 F.R.D. 421, 427-28, 432-33 (S.D.N.Y.2002) (granting revised and limited request for defendants' backup tapes and emails and prescribing protocols for imaging); Simon Property Group L.P. v. mySimon, Inc., 194 F.R.D. 639, 641 (S.D.Ind.2000) (granting access to computers used by four named individuals); Playboy Enterprises, Inc. v. Welles, 60 F.Supp.2d 1050, 1053 (S.D.Cal.1999) (granting access to defendant's personal computer). We find the limitations imposed in federal courts to be both sensible and persuasive."

Adverse Inferences and New Hampshire Reliance on Second Circuit Spoliation Analysis

The Supreme Court of New Hampshire notes that the Second Circuit approach to spoliation set forth in Residential Funding v DeGeorge accords with New Hampshire decisional authority:
"As one court held, however, the trial court may grant a party's request for an adverse inference instruction if the evidence establishes: "(1) that the party having control over the evidence had an obligation to preserve it at the time it was destroyed; (2) that the records were destroyed with a culpable state of mind; and (3) that the destroyed evidence was relevant to the party's claim or defense such that a reasonable trier of fact could find that it would support that claim or defense." Residential Funding Corp. v. DeGeorge Financial, 306 F.3d 99, 107 (2d Cir.2002) (quotations omitted). This standard accords with our own case law. See Murray, 149 N.H. at 271; see also Super. Ct. R. 35 g(2)(b) (court can designate certain facts be taken as established to sanction discovery abuse)."

That said, in New Hampshire, where testimony conflicts, or where credibility is brought into the mix, spoliation is for the jury to decide:

"If, however, there remains a question of fact as to any of the three factors, spoliation is a matter for the jury, not the judge. See Murray, 149 N.H. at 271 (affirming jury instruction substantially the same as the instruction given here); Rodriguez v. Webb, 141 N.H. 177, 179 (1996)."

"Because there were conflicting explanations concerning the defendants' state of mind and the relevance of missing evidence, the trial court properly allowed the jury to determine the weight and credibility to be given the testimony. See Transmedia Restaurant Co. v. Devereaux, 149 N.H. 454, 461 (2003) (stating weight and credibility of testimony is within the jury's province)."

"…Although the trial court gave more credit to NHBB's allegations of spoliation, it acknowledged that the jury was free to find differently and submitted the case to the jury. That decision was not erroneous. After the jury apparently credited the defendants, it was not an unsustainable exercise of discretion for the trial court to uphold the verdict in light of conflicting testimony."

Blognote: I expect that there a growing need for both federal and state uniformity in eDiscovery (and ultimately, digital evidentiary matters). Whether that need is addressed in the near future is anyone’s guess.


Saturday, March 14, 2009

2009-03-14 [Another] Spoliation Decision, Non-Party eDiscovery, and a Database Discourse

A trio of decisions this week, and yes; another week, another spoliation decision (this from the Eastern District of New York). A second case from the Eastern District of Louisiana involves a motion to compel non-party eDiscovery, and a third addresses the issues of a database as... a business record.


Case: ACORN, et al., v County of Nassau
Citation: 2009 WL 605589 (EDNY 2009)
Date: 2009-03-09
Topics: Spoliation, Second Circuit spoliation standards, duty to preserve; failure to implement litigation hold, gross negligence, failure to search for electronic documents, counsel's requirement to manage discovery, "manual" search of electronic files, imposition of attorneys fees and costs.

In this decision from the Eastern District of New York, U.S Magistrate Judge Wall rules on a letter application seeking sanctions (including adverse inference, striking of pleadings, costs and (I like this) any other sanctions against defendant Nassau County. A quick aside: By operation of local rules, some District Courts (including the Eastern District of New York) require that prior to filing a motion for discovery sanctions pursuant to Fed. R. Civ. P. Rule 37, that the movant instead write a letter to the Court seeking permission to file same. What has evolved is actually an efficient truncation of the rather laborious steps needed to draft a formal motion to compel or for sanctions. The Courts have been treating these letters as motions for virtually identical (with Rule 37) or inherent powers-based relief. Ok, back to the decision...

The plaintiff's claims for sanctions were based on defendant's failure to implement a litigation hold, to suspend routine document destruction, and to conduct a search of electronic documents for potentially responsive material. The documents in question were missing emails.

The following excerpt will help give a sense of the tenor of the Court's view of defendant's evidence (mis)management:

"No matter how it is dressed up or characterized-as confusion or inconvenience or indifference or incompetence-the County's position is that it had no obligation to preserve discoverable materials until after the motion to dismiss was decided. This position is indefensible and is in direct contradiction with clearly established law. The court finds that from June 2005 until September 2006, the County breached its duty to preserve."

Spoliation and Failure to Implement Litigation Hold

The following excerpts illustrate that spoliation analysis in the Eastern (and Southern) District of New York follows precedent virtually graven-in-stone:

West v Goodyear - Spoliation in the Second Circuit:

"Spoliation is the destruction or significant alteration of evidence, or the failure to preserve property for another's use as evidence in pending or reasonably foreseeable litigation." West v Goodyear Tire and Rubber Co., 167 F. 3d 776, 779 (2d Cir. 1999)

Zubulake V - Spoliation Inferences:

"If evidence is relevant to a party's claim, its spoliation can "support an inference that the evidence would have been unfavorable to the party responsible for its destruction." Zubulake v. UBS Warburg LLC (“Zubulake V), 229 F.R.D. 422, 430 (S.D.N.Y.2004) (quoting Kronisch v. United States, 150 F.3d 112, 126 (2d Cir.1998))"

Zubulake V - Adverse Inferences Requirements:

"A party seeking an adverse inference instruction (or other sanctions) based on the spoliation of evidence must establish the following three elements: (1) that the party having control over the evidence had an obligation to preserve it at the time it was destroyed; (2) that the records were destroyed with a ‘culpable state of mind’ and (3) that the destroyed evidence was ‘relevant’ to the party's claim or defense such that a reasonable trier of fact could find that it would support that claim or defense.” Zubulake V, 229 F.R.D. at 430. The court will address those elements in turn."

Zubulake IV - Duty to Preserve Evidence

"The duty to preserve evidence “arises when the party has notice that the evidence is relevant to litigation or when a party should have known that the evidence may be relevant to future litigation.”Zubulake v. UBS Warburg LLC (“Zubulake IV”), 220 F.R.D. 212, 216 (S.D.N.Y.2003) (quoting Fujitsu Ltd. v. Federal Express Corp., 247 F.3d 423, 436 (2d Cir.2001). Once the duty to preserve arises, a litigant is expected, at the very least, to “suspend its routine document and retention/destruction policy and to put in place a litigation hold.” Zubulake IV, 220 .R.D. at 218."

Duty to Preserve is Affirmative

Magistrate Judge Wall also relies upon a recent District Court of Connecticut decision in pointing out the "a party needs to take affirmative acts to prevent its system from routinely destroying information" (Doe v. Norwalk Cmty Coll., 2007 U.S. Dist LEXIS 51084 (D. Conn. 2007).


Having been served with the complaint, the defendant County Attorney allegedly sent the complaint to the appropriate Nassau County government offices, and [in 2005] "gave them a verbal hold." The County argued that it was "difficult to pinpoint who the individuals were at the inception of the complaint...who were responsible for what actions" and the County "couldn't just put a blanket hold throughout the County."

Despite (or perhaps on account of) a stay of discovery granted in this matter, the Court found that "there is no indication that Nassau County took any steps whatever to prevent the routine destruction of documents prior to [the implementation off a formal litigation hold in] September 2006.

"Further, the County apparently did not take any action regarding the location, protection, or restoration of electronic materials until December 22, 2006, five months after the motion to dismiss had been decided, and over a year and a half after the complaint was served.

The Court found defendant Nassau County's preservation efforts more than a bit unacceptable...see the opening excerpt that begins with "No matter how it is dressed up..." The result: A finding that defendant breached its duty to preserve.

Zubulake V and Residential Funding - Spoliation, Culpable State of Mind, and Ordinary Negligence

The Court undertakes the (by now) well recognized standard for a finding of spoliation in the Second Circuit. A party seeking spoliation sanctions must show that the spoliator had a culpable state of mind (citing Zubulake V), and that

"[I]n this circuit, this prong of the spoliation test can be 'satisfied by showing that evidence was knowingly...or negligently' destroyed. Residential Funding v DeGeorge Fin. Corp., 306 F. 3d 99 108 (2d Cir. 2002)."

Failure to Implement Litigation Hold at Outset of Litigation Supports a Finding of Gross Negligence

The Court finds no difficulty in escalating the behavior of defendant past an ordinary negligence threshold. The Court states that well settled case law finds that a "failure to implement a litigation hold at the outset of litigation amounts to "gross negligence. * 7 (S.D.N.Y. Aug.11, 2005); Zubulake IV, 220 F.R.D. at 221."

Counsel's Requirement to Oversee Discovery Compliance

In fact, once a litigation hold is implemented, counsel is required to oversee compliance with the litigation hold and to monitor the party's efforts to retain and produce relevant documents. Zubulake V, 229 F.R.D. at 432." Again, the Court noted defendant Nassau County's counsel failure-set: Verbal hold only, no formal hold, no supporting affidavits, and no follow up. No finding of ordinary negligence here:

"Nassau County admits there was no “formal” hold, but claims that a “verbal” hold was communicated to the agencies associated with the complaint by Ms. Miller. The County did not submit an affidavit from Ms. Miller, and there is nothing in the record to indicate exactly who received this direction or when it was received. Significantly, there is no indication that Ms. Miller or anyone else in the County Attorney's Office followed up to ensure that relevant documents were being retained. The court finds the County's failure to implement a proper litigation hold amounts to gross negligence."

The Court divided its [post-duty to preserve finding] negligence analysis into two parts. Magistrate Judge Wall first found that the County's actions (or, as the Court notes, "inactions") concerning a litigation hold amounted to "gross negligence," and that the County's conduct "regarding the preservation of electronic evidence was, at the very least, negligent."

The second Zubulake V/West requirement of culpability [the first is the duty to preserve] was therefore met.

Relevance - Where Culpability Does Double Duty

The Court first discusses relevance, which comprises the third prong of a West/Zubulake V spoliation analysis:

"To satisfy the third prong of the spoliation claim, the plaintiffs must establish that the missing e-mails were relevant evidence, and that the destroyed evidence would have been favorable to them. Residential Funding Corp., 306 F.3d at 109 (citing Kronisch, 150 F.3d at 126); see also Zubulake V, 229 F.R.D. at 430. In this context, the term “relevance” “means something more than sufficiently probative to satisfy Rule 401 of the Federal Rules of Evidence.” Residential Funding Corp., 306 F.3d at 108-09."

Here's where relevance analysis becomes somewhat, er, um, recursive. Or, as it appears, the concept of culpability serves two purposes; the first being a standalone requirement for a finding of spoliation, and the second is to offer an alternative method for a inferential finding of relevance. The Court points out that "relevance may be demonstrated in two ways."

"First, it may be inferred if the spoliator is shown to have a sufficiently culpable state of mind. Triple 8 Palace, 2005 WL 1925579, at * 8."

The second way to establish relevance: extrinsic evidence to prove the negative:

"The second way to establish relevance is for the moving party to submit “extrinsic evidence tending to demonstrate that the missing evidence would have been favorable to it.” Triple 8 Palace, 2005 WL 1925579, at * 8 (citation omitted). In order to obtain an adverse inference, the destroyed evidence must “have been of the nature alleged by the party affected by the destruction.”Id.

"In other words, the plaintiffs here must present extrinsic evidence tending to show that the destroyed e-mails would have been favorable to their case. Zubulake IV, 220 F.R.D. at 221"

Insufficient Showing that Deleted Electronic Data Would Have Been Favorable to Plaintiff

The Court finds here that there was insufficient extrinsic evidence in the record to conclude that the existence of additionally relevant emails would have been more favorable to plaintiffs:

"While it is certainly theoretically possible that some electronic data may have been deleted, there is no reason to believe that those materials would have provided any additional support for plaintiffs' claims. The court finds that the plaintiffs have not sufficiently demonstrated that any destroyed or lost materials would have been favorable to them, and thus, to the extent plaintiffs' motion seeks an adverse inference instruction, it is denied."

Blognote and opinion: Neither the opinion, nor those portions of the record disclosed therein discuss what forensic activity was undertaken by Plaintiff, and I suspect that very little, or none was. No mention is made of any discovery preservation protocol agreed upon by the parties, nor does it appear that any attempt to request a forensic examination of the relevant computers or other storage devices was discussed or requested by plaintiffs.

Blognote: There really are three ways to show relevance: The Court notes in dicta that the Plaintiff did not argue that relevance was shown as a matter of law due to Nassau County's gross negligence, and apparently leaves the door open such assertions to be made:

"Plaintiffs do not argue that relevance has been shown as a matter of law due to Nassau County's gross negligence in failing to institute a litigation hold. While a showing of gross negligence may, in some circumstances, support a claim that missing evidence was relevant to the movant's case, the circumstances in this case do not require such a determination. Cf. Residential Funding Corp., 306 F.3d at 109 (citing Reilly v. Natwest Markets Group, Inc., 181 F.3d 253, 267-68 (2d Cir.1999)); Cine Forty-Second St. Theatre Corp. v. Allied Artists Pictures Corp., 602 F.2d 1062, 1068 (2d Cir.1979)."

Nevertheless, in rides gross negligence to the rescue (of plaintiff's claims for sanctions) resulting in an imposition of attorneys fees and costs:

Given the court's finding regarding the County's grossly negligent conduct in failing to implement a litigation hold, some sanction against the County is warranted...An award of costs serves both a remedial and punitive purpose-it will compensate plaintiffs for having to make this motion, and it will discourage the County from repeating its cavalier decision to forego implementing a litigation hold while a motion to dismiss is pending."

Result: No spoliation, but award of attorneys fees and costs.

Manual ESI Search

In an odd twist of logic, the Court accepts the County's representations that it has no capability to (I guess electronically) search ESI (i.e., emails or MS Office Documents) and allows for the adequacy of a "manual" search of emails and other electronic documents.

"Plaintiffs have not provided any case law suggesting that a “manual” search of electronic files does not satisfy a party's discovery obligations."


Case: Hoover v Florida Hydro, Inc.
Citation: 2009 WL 586507 (E.D. La. 2009)
Date: 2009-03-06
Topics: Motion to compel ESI discovery from non-party

In this decision from the Eastern District of Louisiana, a non-party was served with two subpoenas, both of which directed her to produce her laptop and flash drive computer. The non-party made appropriate objections to that request in the first, but not in response to the second, subpoena. The first subpoena was held invalid. U.S. Magistrate Judge Roby found that while the non-party did indeed object to the first subpoena, that objection was predicated on her production of information in document form.

The Court wasn't in a buying frame of mind, and found the basis for the objection unavailing:

The Court further notes that, while Ms. Hoover contends that she objected to the first subpoena, the objection was based upon the fact that she produced the information in document form. The discovery rules, however, contemplate the production of edata, which she has refused to produce. Mary Catherine Hoover is therefore required to produce her computer for inspection at a mutually agreeable date and time, as determined by counsel for the parties."

Note the use of the term “edata.”

Case: McClendon et al., v. Challenge Financial Investors Corp., et al.
Citation: 2009 WL 589245
Date: 2009-03-09
Topics: Fed. R. Evid. Rule 803(6), database as business record, statistical run as business record, database reliability established by pattern of human activity associated with database operation.

In this class action matter from the U.S. District Court for the District of Ohio, U.S. District Judge O'Malley approves a Report and Recommendation of the Magistrate Judge. In so doing, Judge O'Malley notes that a "computer database is a record when the data was entered into the computer in the regular course of business. See United States v. Weinstock, 153 F. 3d 272, 276 (6th Cir. 1998).

Likewise, a "'statistical run' from a computer data base is a 'business record' pursuant to Rule 803(6)" [Internal citations omitted]

What is interesting about this decision is that the Court makes a finding of reliability (the third requirement of Fed. R. Evid. Rule 803(6) satisfying the third requirement of the business records exception to the hearsay rule because the database administrator stated in testimony that "[i]t was Challenge's regular practice to maintain and update the database."

The Court then goes on to say the "regularly prepared records are particularly reliable because the person creating the record has a strong incentive to be accurate. [Citation omitted]."
I think the Court's approach is somewhat simplistic. First, it is the computer, and not the person, who creates the record. The computer has no incentive to be accurate, because the computer doesn't know if it is accurate or not. (A computer with incentive would qualify as a Turing machine). In like fashion, a computer might regularly, routinely, and in perfectly operational fashion produce garbage data. It may be that plaintiff's counsel might have sought the benefit of an expert witness to explain why routine and regular activity by a computer might not necessarily impute reliability.

What appears to have swayed the judge was defendant's witness, who "consolidated defendant's financial statement" and who testified that:

Defendant's "accountants regularly updated the Challenge database in connection with mortgage loans and downloaded financial information directly from banks. As this information was clearly critical to Challenge's core business-loan servicing -the accountants had every reason to be accurate and regularly maintain and update the Challenge database."

An aside: The challenge to the database information as a business record was asserted by plaintiffs (in an unsuccessful attempt) to defeat a CAFA jurisdictional assertion resulting in the removal of the action from state to federal court.

Another aside: Challenge, according to the Court, is "now defunct." It would be somewhat ironic if Challenge's defunct status was somehow related to the reliability of the information contained in the database....


Thursday, March 05, 2009

2009-03-05 Discovery Abuse Findings and Sanctions Order in Bray & Gillespie v Lexington Insurance Company

This sanctions order, issued yesterday by Magistrate Judge Karla Spaulding of the Middle District of Florida, warrants an extended post. Purely imo, I think it’s significance compares with Magistrate Judge Major’s decision in Qualcomm v Broadcom. Of course, it ain't over till it's over, and that means we'll have to await (1) the District Judge's approval and adoption of Magistrate Judge Spaulding's Order (not a Report and Recommendation), and any appeal (whether to the District Judge or to the 11th Circuit).

Case: Bray & Gillespie Management, LLC., et al. v. Lexington Ins. Co., et al.
Citation: 2009 WL546429 (MD FL 2009)
Date: 2009-03-04
Topics: eDiscovery abuse, client and law firm sanction, attorney sanction, sanctions based on inherent powers and Fed.R. Civ. P. Rule 37, inherent power to sanction non-parties for bad faith conduct, non-compliance with form of production, failure to produce metadata, deletion, alteration
or manipulation of metadata, attorney misunderstanding technical terms (competency), attorneys as fact witnesses in ESI discovery proceedings, TIFF images are not native format ESI, TIFF images deemed not maintained in "ordinary course of business".

Imo, this 51 page decision ranks in significance with the 2008 Qualcomm v Broadcom sanctions order. In what appears to be turning into an epic discovery abuse decision from the U.S. District Court from the Middle District of Florida, U.S. Magistrate Judge Karla Spaulding sets context by recounting the numerous discovery conferences and two days of evidentiary hearings regarding "ongoing difficulties with the form of production of electronically stored information ("ESI") by Plaintiffs.

In the instant proceedings Defendant Lexington sought "an order compelling ESI production "in the form specified in its request for production of documents ("RFP")" awarding sanctions for continuing non-compliance with Fed.R.Civ.P. Rule 34, and M.J. Spaulding’s April 11, 2008 Order compelling discovery responses to certain of Defendant Lexington’s requests.

The short of it: Defendants requested ESI produced in native data format, or in the alternative, in "Extractiva" format. Plaintiff B&G failed to produce in the form specified by Defendants. Bad juju, and we’re only on page 2.

Then, the eDiscovery actions of Plaintiff’s counsel are placed under intense judicial scrutiny. Magistrate Judge Spaulding notes that although "[C]ounsel for Plaintiffs argued that the form of production was substantially justified," [B&G’s counsel’s] arguments were "premised on material misrepresentations and omission regarding facts underlying the form in which ESI was maintained by B&G and provided to its lawyers." (Bad juju, and we're still on page 2)

But wait, it gets worse:

"Accordingly, while Lexington seeks sanctions only against B&G, this Court has also put counsel of record for B&G on notice that certain lawyers at Reed Smith, LLP, who made the misrepresentations and withheld material information, Reed Smith, LLP, and B&G’s in-house counsel are also subject to sanctions."

This case involved a dispute about insurance coverage claims for hurricane damages sustained by Plaintiff B&G in 2004. Anderson, Kill & Olick ("AKO") represented B&G in connection with its claims submission. In connection with these activities, both electronic and paper records were gathered by B&G’s counsel AKO. Paper docs were scanned, other ESI (such as emails and email attachments) were "downloaded in native data format."

Magistrate Judge Spaulding is nothing if not definitionally precise: for purposes of the instant decision, she defines ESI as information that is first instantiated electronically, rather than scanned from paper to generate a digital image:

"FN3 Throughout this Order, I will use ESI to refer only to electronically stored information, not to information that was scanned from paper form to a digital image."

Both scans and ESI were copied to a hard drive ("Target Hard Drive") at B&G counsel AKO's office, where a program called "Extractiva" was "used to convert the scanned documents and ESI to TIFF images. (In footnote 4, the Court quoting from the Sedona Principles, notes that .tiff images ""lose searchable text and metadata that might enable better understanding and utility of the evidence.""). AKO failed to instruct anyone to exclude metadata thought would be automatically captured by Extractiva. After loading the .tiff images and associated metadata into an Introspect database, the "Target Hard Drive" was put into storage.

The complaint was filed in February 2007, and the Orlando office of Boies, Schiller and Flexner ("Boies Schiller") was substituted as AKO's local counsel. In January of 2008, John Ellison, one of AKO's partners handling the case thereafter joined Reed Smith as partner. Ellison did not withdraw and continued to co-counsel for plaintiff B&G.

In March 2008, B&G discharged AKO as counsel and John Ellison and Reed Smith "effectively became B&G's lead attorney." AKO subsequently moved to withdraw as counsel, and the Court permitted its withdrawal, conditioned upon AKO's delivery of all discovery materials and other litigation-centric documents to new counsel Reed Smith.

BlogNote: Stay with me. This timeline plays an important role in the Court's reasoning.

Sometime "after May 2, 2008" Reed Smith partner John Berringer became involved in the case, and asked Reed Smith associate Jeremy Heinnickel to assist with eDiscovery issues. Meanwhile, attorney W. Bruce DelValle, formerly outside counsel for plaintiff B&G, entered his appearance as in-house counsel for B&G, and substituted as local attorney for Boies Schiller. In September 2008, B&G filed for bankruptcy protection, and thereafter attorney Michael Beaudine and "other lawyers" at Latham, Shuker, Eden & Beaudine appeared as co-counsel for B&G. Defendant Lexington has been represented throughout by Daniel C. Brown at Carlton Fields (Carlton Fields).

Ok, now that the cast of main characters is set, on to the proceedings:

In their August 2007 Case Management report, the parties reported that they believed eDiscovery was necessary, but after meeting and conferring, could not reach an agreement on form of ESI production. That said, defendant Lexington's second RPD requested ESI, and specified form of ESI production pursuant to Fed. R. Civ. P/ Rule 34(b)(1)(C) as follows:

"Electronically stored information" includes all "electronically stored information" as that term is used in Federal Rules of Civil Procedure 26(a)(1)(B) and 34(a)(1). . . . As used in these Requests for Production a request for "electronically stored information" calls upon you to produce such information, without deletion or alteration of meta-data, in its native form, and to indicate the computer hardware and software program(s) needed to translate the information into usable form in the information’s native format. Lexington RFP 1 at 5 ¶ J (emphasis in original); Lexington RFP 2 at 3 ¶ G (same).

"Document" includes electronically stored information – including writings, drawings, graphs, charts, photographs, sound recordings, images, and other data or data compilations–stored in any medium from which information can be obtained either directly or, if necessary, after translation by the responding party into a reasonably usable form."

Defendant Lexington's further instructions to B&G:

"Please state, for each item of electronically stored information, the hardware, medium (for example, "compact disk" or "compact disk reader") and software program required to inspect the information contained in the item in the native format in which the information is stored and the computer hardware and software required to copy the information in such native format."

Despite these requests, plaintiff B&G's counsel objected to the "requested form for producing electronically stored information (something the Court notes that the FRCP do not permit) but did not object to B&G's ESI definitions or to its native data format requests.

What B&G Produced - The Meaning of "Scanned"

In response to defendant's second RPD, B&G produced 27 discs containing .tiff images of paper documents produced previously to defendant Lexington. The B&G attorney at AKO signed the RFP responses for B&G understood "scanned" to mean converting paper documents to an electronically stored image. The Court "credited that attorneys testimony only to the extent that it referred to scanning of "documents that originally existed in paper form, and not production of ESI."
You can see where this is heading...

B&G, without objecting to Defendant Lexington ESI format request, served a supplemental response, and then an amended supplemental response, to Lexington's RPD. Although B&G asserted in a discovery conference that it had:

"produced about 100,000 e-mail documents categorized by sender's email in-box" and that "about 100,000 electronic non-email documents...are into the queue and will be produced in the next two weeks or so, perhaps even earlier."

The problem: the ESI had been produced as .tiff images without metadata. As you might surmise, Rule 37 motion practice ensued, and on April 11, 2008, Magistrate Judge Spaulding issued an order compelling plaintiff B&G to respond to the request as instructed in that request (and provide native format data, etc.).

B&G's ESI Representations

At a March 28, 2008 discovery conference, counsel for B&G (Reed Smith) represented that a March 14 CD contained email and attachments. Upon examination, defendant Lexington's counsel discovered that the disc "contained 108,845 documents in .tiff format. The Court then makes the
following point perfectly clear:

"TIFF images are not the native format of email or other ESI"

To steal a line from Bugs and company, that's not all, folks. The Court also notes that:

"Similarly, Lexington’s counsel discovered that the April 30 Discs contained at least 721,331 pages of documents, many of which were e-mails. See Doc. No. 202-9 ¶¶ 5-6. All of the documents were TIFF images with no metadata and no coding that would allow the documents to be searched by fields, such as creation date, last modification date, author, or subject. Doc. No. 202-10 ¶¶ 5-7; see also Doc. No. 222-2 ¶ 5. Thus, both the March 14 Disc and the April 30 Discs did not comply with Lexington’s specifications in its RFPs that ESI be produced in native format without alteration or deletion of metadata. The April 30 Discs also did not comply with the April 11 Order directing B&G to produce documents responsive to the specific requests identified in the Renewed Motion to Compel."

At minimum, the Court points out, TIFF format "eliminated" search capabilities, and OCR conversion would have been necessary to make the images searchable. "Accordingly," the Court states, "the March 14 Disc and the April 30 Disc contain ESI that was not in reasonably usable form."

BlogNote: Although I would have argued in addition that .TIFF's are not ESI (and that, as such these files never existed as original ESI), Judge Spaulding does cite Judge Scheindlin's new Digital Evidence book as source for her reason why a .tiff file is not generally "reasonably usable:

"FN9 When a person "scans" a document, the resulting electronic output is stored as a picture of the document, such as in the TIFF images produced by B&G in this case. See SHIRA A. SCHEINDLIN, DANIEL J. CAPRA, ELECTRONIC DISCOVERY AND DIGITAL EVIDENCE 708 (2009) [hereinafter "ELECTRONIC DISCOVERY"] (A scanner is "[a]n input device commonly used to convert paper documents into images."). OCR used to convert physical documents or
electronic images into text files has significant limitations. OCR generally does not recognize handwriting. If the image file is of poor quality, OCR often cannot produce usable text files. Id. at 696."

Section "D" to the Order: "Berringer's False Story About How B&G Collected ESI"

One could argue that no blanks need be filled in other than the caption to Section "D" to the Order.

That said, this is where this decision begins to resemble Magistrate Judge Major's 2008 eDiscovery abuse decision in Qualcomm v Broadcom. Some choice excerpts follow.

"During the course of the negotiations to resolve the dispute regarding the form of production of ESI, [Reed Smith attorney] Berringer concocted a story about the process that B&G and AKO used to gather the discoverable documents"

How Not to Produce ESI in Native Data Format: Claim that Client Printed Files and Scanned into .tiff Format

"Berringer explained that "B&G printed the documents from B&G’s electronic systems. B&G sent the printed documents to Anderson Kill. Anderson Kill scanned the documents to create TIFF images of them . . . , from which production was then made." Doc. No. 202 at 15 n.11 (emphasis in original) (Counsel for Lexington’s description of the explanation)."

The Court states that B&G's attorney Berringer was aware of quite the opposite:

""In creating this false tale, Berringer ignored numerous facts known or readily available to him about the actual process that was used to collect ESI and produce it to Lexington. On April 9, 2008, Berringer defended a deposition of Harold Lueken, formerly in-house counsel for B&G, who
testified that information was "electronically transferred" and given to AKO in 2006."

Willful Blindness of B&G's Retained Counsel

The Court was not sparing in its depiction of B&G's outside counsel's discovery behavior:

"Reed Smith attorneys had access to the Introspect database before and after AKO transferred it to Reed Smith. If he had reviewed the Introspect database, Berringer would have seen that it contained ESI metadata. Finally, Berringer could simply have contacted AKO to learn how the information was gathered. See id. at 344 (Berringer did not seek information from AKO about
the scope of the agreement to produce scanned copies of documents in lieu of hard copies); accord. Id. at 238, 259-61 (cooperation between AKO and Reed Smith).10"

"The false explanation Berringer gave regarding how ESI had been collected was based, at best, on willful blindness which unreasonably prolonged and multiplied the proceedings regarding the ESI discovery dispute."

On May 27, 2008, Defendant Lexington filed a Third Motion for Sanctions including a Third Motion to Compel Production of ESI (I believe that is how the pleading was captioned). The Court notes that "Lexington argued, in sum, that B&G violated Rule 34 by failing to produce ESI in the form specified in Lexington’s RFPs and violated the April 11 Order by producing the April 30 Discs, which did not comply with the specified form of production of ESI. Lexington sought an order compelling production of ESI in the form specified in Lexington’s RFPs, striking portions of B&G’s claims to which the requests for production at issue pertained, and awarding Lexington the reasonable costs, including attorney’s fees, it incurred in filing the motion."

Plaintiff B&G countered with arguments, inter alia, that

(1) Lexington had not specified form of request in initial case management cnference did in its RFP),
(2) the RPD contained definitions buried in boilerplate,
(3) the native format data requests were overly burdensome, and
(4) that the documents were "provided 'as kept in the usual course of business,'" citing to several out-of-circuit cases in which courts determined that failure to produce metadata did not violate Rule 34.

(BlogNote: Quick retreat to the timeline: On June 28, 2008 the Introspect data base was transferred to B&G new counsel, Reed Smith. As of June 28, 2008, therefore, Reed Smith had a copy of the Target Hard Drive, replete with all ESI and associated metadata.)

Counsel for the parties continued to confer in an attempt to resolve or narrow eDiscovery issues throughout June 2008. On June 23, Reed Smith attorneys disclosed defendants' counsel that B&G's ESI had not been "printed and scanned," but rather, that "native format emails were collected and then converted into TIFF images using a program that set to selectively exclude
certain types of metadata."

What Defines Non-Cooperation, or, How Not to Cooperate

"During these [June 2008] discussions, Reed Smith attorneys did not disclose what metadata the Introspect database actually contained; did not disclose how the ESI in native format was transferred to the Introspect database; and did not disclose the existence of the Target Hard Drive or that Reed Smith had a copy of it in its possession."

B&G's counsel at Reed Smith attorneys then offered to produce "load files" (of a type not discussed) containing "seven basic metadata fields for the TIFF images previously produced..."

Metadata Offered, Then Offer Withdrawn

Here's where it gets murky. Or messy. Or ugly, depending upon your pov. At one point, Reed Smith attorney Berringer offered to give defendant Lexington "all of the metadata in the Introspect database," but then and apparently without explanation, retracted that offer:

"When defense counsel asked that B&G disclose in writing the metadata contained in the Introspect database, among other things, Berringer withdrew the offer."

The June 25, 2008 Evidentiary Hearing - Semantics Gives Way to Facts

At an evidentiary hearing held in June 2008, defendant's technology expert opined that "the discs contained ESI that had been converted to TIFF images, not scanned copies of paper documents. The discs had metadata showing the beginning and ending of each page, but no other metadata and no text search capabilities.

As well, the Court noted, there was no ability to link email by conversation thread, link attachments to particular emails, no hash values (to determine if ESI is/are duplicates). The expert also testified that the conversion of spreadsheets into TIFF images made the spreadsheets essentially unreadable and "did not disclose the underlying formulas for financial calculations."

Perhaps not coincidentally, it was only after defendant's expert's testimony that attorney Berringer "revealed to the Court for the first time" that he had "learned that ESI had been copied to the Target Hard Drive and converted to TIFF images stored into the Introspect database."

BlogNote: Some disclosures are better not left for a closing argument in a sanctions hearing:

"Ellison and Berringer did not disclose until closing argument, that sometime before June 20, 2008, [the] Reed Smith analyst reviewed the Introspect database and the Target Hard Drive and told [Reed Smith associate] Heinnickel that metadata existed for the documents on the March 14 and April 30 Discs."

When Cornered, Blame Your Adversary

B&G's counsel, Reed Smith attorneys Ellison and Berringer "repeatedly argued that their failure to learn and disclose the correct information about the gathering and production of ESI was the result of AKO's (Plaintiff's predecessor counsel) refusal to provide them information."

That dog wouldn't hunt.

June 2008 Sanctions Imposed on Plaintiff B&G for ESI Manipulation

The failure to produce metadata, or strip it away by means of flattening ESI into an unsearchable .TIFF sans metadata is addressed by Magistrate Judge Spaulding assessing fault and imposing monetary penalties:

"At the conclusion of the hearing, I found that B&G "directly or through their agents deliberately manipulated the electronically stored information in such a way as to withhold from the defendants the information that had been requested, specifically metadata." Id. at 196.15

"I further found that the problems with the ESI production were caused by B&G and its agents, and therefore "they will be the ones to bear the burden of whatever cost it takes to get" the ESI produced in a usable format."

It is perhaps noteworthy to point out that Plaintiff B&G appealed the June 2008 Order to the District Judge, in essence asserting the Magistrate Judge Spaulding had (1) erred by failing to reduce her order to writing, and (2) that the Court abused its discretion by requiring expedited production of ESI "too quickly" and thereby placing an undue burden on Plaintiffs. Not surprisingly, the District Judge overruled Plaintiff B&G's and "affirmed the order in all aspects."

Thereafter, in attempted compliance, Plaintiff B&G provided Lexington with a hard drive ("B&G Hard Drive") that "was not complete, not in the original format, and not as maintained by B&G in the ordinary course of business."

Re-Opened Sanction Hearing December 8 2008

In October 2008, the Court issued a notice to B&G's in house counsel,to Reed Smith attorney Berringer, and the Reed Smith firm, affording them an opportunity to file a supplemental response addressing "why sanctions should not be imposed against any or all of them as the attorney(s) responsible for the sanctionable conduct." The Court also later re-opened the June 8, 2008
evidentiary hearing.

When Cornered A Second Time, Blame Predecessor Counsel

B&G outside counsel's supplemented response at the re-opened evidentiary and sanctions hearing:

"In their supplemental response to the motion for sanctions, Reed Smith and Ellison again asserted that "[b]ecause of the poor communication with prior counsel, and the termination of B&G’s prior chief legal officer, it has proven difficult for Reed Smith and John Ellison to get the facts about
Plaintiffs’ document production.""

The December 8, 2008 Hearing

Cast blame Plaintiff B&G's current counsel tried, but come the hearing, predecessor counsel AKO testified through its attorneys that AKO "always cooperated with Reed Smith...allowing [them] unrestricted remote access to the Introspect database."

Nevertheless, at this point, and with a torrent of impeachment testimony provided by Plaintiff's B&G's predecessor counsel AKO, B&G's current counsel began conceding points... and at the hearing, one of Reed Smith's attorneys conceded that the "asserted" communications problems between Reed Smith and AKO were "'overstated.'"

"[B&G co-lead counsel and Reed Smith Attorney]Berringer conceded that he had incorrectly advised defense counsel that ESI contained in the Introspect database had been printed and scanned."

Berringer also testified about, well, I think he testified about his misunderstanding of "how the hard drive c[a]me about." The following testimonial excerpt is included solely to point out a rather feeble (strictly imo) attempt at feigned technological ignorance:

"I asked Jeremy [Heinnickel] and I’m sure we asked the client, how did this target hard drive come about? Every time we raised the question, we were told that Maya Cater and Leuken were involved. "You’d have to talk to them." But every time we raised the question, somebody talked about the [student interns]. And I guess what happened was I just translated that, because the only thing I could ever take from most of these discussions was that [the student interns] stood in front of scanners, scanning documents for a full weekend; and I just – I guess I made an unconscious leap then and assumed that they had scanned everything."

The Money Shot: Withholding Disclosure of Hard Drive Containing ESI Metadata

Something more significant than Berringer's "we screwed up" defensive posture (actual testimony excerpt) was his "acknowledgement that he did not disclose the existence of the Target Hard Drive containing the ESI in native format during the negotiations with Lexington's counsel."

The Court wasn't into buying the "screw-up" argument:

"Berringer was evasive and dissembling when asked to explain why Reed Smith did not simply produce the metadata in the Introspect database associated with the TIFF images when it produced the March 14 and April 30 Discs."

It was also clear that there was an easy way to comply with Defendant's RPD's, and at minimum, that meant to produce the TIFF images in searchable fashion together with the associated metadata:

"Berringer also knew that the Introspect database was searchable by fields that contained metadata such as name, date, subject matter, to, from, and CC. Id. at 278-79, 305-06. Berringer testified, 'I know that the fields that we told them [the Introspect database] had were to, from, date, re line, if there was one, cc’s, bcc’s.'). Id. at 304-05 (emphasis added). Berringer identified a letter in which Reed Smith offered 'to produce load files containing certain metadata fields for the e-mails produced' that included, but were not limited to, those set forth in the letter. Id. at 313. Thus, there was no need to search the ESI in native format before determining the scope of the metadata in the Introspect database, and no need to conduct a privilege review of the ESI in native format. Rather, B&G and Reed Smith could easily have produced for each TIFF image on the March 14 and April 30 Discs a corresponding load file containing the metadata for each image as stored in the Introspect database."

The Court then determined that the evidence supported a finding that B&G has (at least as of March 4, 2009) still not disclosed all the metadata in the Introspect database.

Now, on to the Court's analysis:

eDiscovery Violations Analysis

Waiver of Objection to Form of ESI Production Results in Fed. R. Civ. P. Rule 34

Although the Court found that the parties complied with the Fed. R. Civ. P. Rule 26f) meet and confer, even though they did not reach an agreement. The Court then provides an analysis of Fed. R.Civ. P. Rule 34 requestor's option to designate format of production of ESI. In particular, the Court notes, defendant Lexington specified the form of production -- "in native form without deletion or alteration of metadata." Relying on Rule 37a)(3)(B)(iv), the Court found that plaintiff B&G waived its objections to defendant Lexington's RFP because it failed to support the objections in a response to the Renewed Motion to Compel.

Plaintiff B&G's Violation of April 11, 2008 Order

On April 11, 2008 Order, the Court ordered B&G to produce by April 30, 2008 "all responsive documents in its possession, custody or control to the extent requested in the Renewed Motion to Compel. The Court found that B&G could have produced responsive ESI by that deadline. That B&G (or its counsel) had in its possession, but chose not to produce, the Target Hard Drive that contained what would have been documents responsive to the request, the Court found that B&G violated the April 11, 2008 order by "failing to produce ESI in the specified form.

Available Sanctions Discover Violations Sanctions Under Fed. R. Civ. P. Rule 37

The Court then provides a short analysis of possible sanctions for violations of a discovery order pursuant to Fed. R. Civ. P. Rule 37(b):

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

Fed. R. Civ. P. Rule 37 Sanctions Applicable to Party, Its Counsel, or Both

The Court goes on to describe the "instead of" or "in addition to" language of Rule 37(b)(2)(C), where in essence, sanctions for discovery violations may be imposed against a party, the party's advising attorney, or both, and that sanctions may include attorneys fees caused by the failure.

The Court then states that under 11th Circuit decisional precedent, a motion for sanctions under Rule 37 may include both a party and his attorney, and that a court also has the double option of holding either the party, the attorney, or both responsible:

"'[A] motion for sanctions under Rule 37, even one which names only a party, places both that party and its attorney on notice that the court may assess sanctions against either or both unless they provide the court with a substantial justification for their conduct.' Devaney v. Continental Am. Ins. Co., 989 F.2d 1154, 1160 (11th Cir. 1993)."

No Bad Faith or Willfulness Required for Imposition of Discovery Violation Sanctions

The Court then notes that Rule 37 sanctions do not require a finding of either willfulness or bad faith by the party or its counsel, relying again on the 11th Circuit's decision in Devany v Continental Am. Ins. Co., supra.

Court's Inherent Power to Sanction

Magistrate Judge Spaulding also notes that the Court, pursuant to Supreme Court and 11th Circuit authority, has inherent power to sanction for discovery violations:

"Courts have the discretion to sanction conduct that abuses the judicial process even if procedural rules exist that govern the same conduct. Chambers v. NASCO, Inc., 501 U.S. 32, 44-45, 48-49 (1991). In fashioning appropriate sanctions, courts have the inherent power to impose sanctions on parties, lawyers, or both. In re Sunshine Jr. Stores, Inc., 456 F.3d 1291, 1304 (11th Cir. 2006). The court may tax attorney’s fees and costs "when either has acted in bad faith, vexatiously, wantonly, or for oppressive reasons." Byrne v. Nezhat, 261 F.3d 1075, 1106 (11th Cir. 2001)"

Court's Inherent Power to Sanction Non-Parties for Bad Faith Discovery Violations

In what appears to be a decision of first impression for the Middle District of Florida, the Court adopts the reasoning of a decision from the U.S. District Court of the Eastern District of Michigan in finding that non-parties may be subject to inherent power sanctions imposition for bad faith discovery violations:

"The court’s inherent power also includes sanctioning non-parties for bad faith conduct. See generally Chambers, 501 U.S. at 43; see also Helmac Prods. Corp. v. Roth (Plastics) Corp., 150 F.R.D. 563, 564-67 (E.D. Mich. 1993) (citing Chambers as authority to sanction non-parties). The
sanctioning of non-parties requires additional safeguards. I find persuasive the decision in Helmac Products that a non-party must "(1) have a substantial interest in the outcome of the litigation and (2) substantially participate in the proceedings in which he interfered." Helmac Prods. Corp.,
150 F.R.D. at 568."

No Substantial Justification Shown

The Court notes that the Supreme Court imposes a negative pre-condition (no substantial justification) prior to permitting the imposition of a sanction for discovery violations under a Court's inherent power:

""The Supreme Court has clarified that an individual’s discovery conduct should be found ‘substantially justified’ under Rule 37 if it is a response to a ‘genuine dispute, or if reasonable people could differ as to the appropriateness of the contested action.’" Devaney, 989 F.3d at 1163 (quoting Pierce v. Underwood, 487 U.S. 552, 565 (1988) (citations omitted))."

B&G's "Substantial Justification" Arguments

Three were asserted:

(1) B&G’s response to Lexington’s RFPs referred to an agreement to produce scanned copies of documents;
(2) Lexington delayed in objecting to the form of production of ESI; and,
(3) B&G was entitled to produce ESI as maintained in the usual course of its business and in reasonably usable form." [citations omitted]

Magistrate Judge Spaulding's analysis:

(1) The evidence established that the agreement among counsel related only to documents that were maintained in paper form. B&G did not produce all documents as scanned copies: "Rather, B&G's attorneys manipulated ESI to convert the searchable text to a TIFF image stripped of metadata." The Court found these facts to "undermine" B&G's assertions of justifiable reliance.

(2) Lexington's Delay in Objecting to B&G's failure "might carry some weight if B&G had produced ESI in a form permitted by Rule 34 at the outset. It didn't, and the Court again found no evidence of "justifiable reliance."

(3) Magistrate Judge Spaulding provides incisive comments about "maintained in the usual course of its business" --- Put succinctly, the Court found that it was not TIFF images that was maintained by B&G in usual course of its business." In fact, the argument was apparently made that the ESI, together with its associated metadata was what *was* maintained in B&G's ordinary course of business. Relying on the Federal Rules Advisory Committee notes to Rule 34, the Court also found that B&G's deletion of metadata from its discovery response "significantly degraded Lexington’s ability to search the ESI and, accordingly, that it was not in a reasonably usable form as required by Rule 34." Once again, B&G's "substantial justification" argument fell on deaf ears.

Out of Circuit Case Law Permitting Non-Production of ESI Metadata on Basis of Substantial Justification Rejected

B&G cited three cases in support of its assertion that it was "substantially justified in not producing ESI in native data format with associated metadata," and, notwithstanding the Court's finding them non-binding, rejects them each in turn as non-supportive of plaintiff's position:

Kentucky Speedway, LLC v. NASCAR, Inc., Civ. Action No. 05-138-WOB, 2006 WL 5097354 (E.D. Ky. Dec. 18, 2006) -- The Court notes that in this case, the movant did not specifically request the manner in which ESI should be produced, and that, on the facts of that case, that Court noted that the belated request was not warranted.

Michigan First Credit Union v. Cumis Ins. Soc’y, Inc., No. 05-74423, 2007 WL 4098213 (E.D. Mich. Nov. 16, 2007) --- In this case, the defendant objected to the format of production (native format data, with associated metadata). Judge Spaulding again notes that B&G never objected to the format of production specified by defendant Lexington.

In re Payment Card Interchange Fee & Merch. Disc. Antitrust Litig. ("In re Payment Card"), No. MD 05-1720(JG)(JO), 2007 WL 121426 (E.D.N.Y. Jan. 12, 2007). In this case, the requests were served (and responses produced) before the effective date of the amended Rule 34. In that case, even though defendant's had failed to object, the Court found it would "not be fair to impose the costs of reproduction of the ESI on the individual plaintiffs," but warned them that future production would likely require them to reproduce any ESI that was produced in a form that was reasonably usable. Rather than support plaintiff B&G's position, the Mag. Judge Spaulding finds here that "Accordingly, B&G’s knowledge of the decision in In re Payment Card provides additional support for the finding that the form in which it produced ESI to Lexington was not substantially justified"

The Impax Labs Decision Footnote

Footnotes are typically at least as instructive (if not more so) as opinion text in the main. Footnote 25 tells all:

"B&G cited Wyeth v. Impax Labs., Inc., 248 F.R.D. 169 (D. Del. 2006) for the proposition that when counsel do not agree on the form of production of ESI, a party is not required to produce ESI in native format." The Wyeth court’s decision was based on local discovery standards that directed parties to produce ESI as image files if they could not agree on a different form of \production. Id. at * 4-5. This Court does not have local discovery standards that establish the default form of production of ESI in the absence of agreement of the parties."

Author's Note: What is interesting is whether, in Delaware, a challenge to the local rules (as contradicting, or limiting, the Federal Rules) might be asserted.

Ok, back to Judge Spaulding's decision.

In a showng of impeccable logic, Magistrate Judge Spaulding also disposes of any remaining "substantial justification" arguments:

"Most telling, if B&G and its attorneys believed the form in which they produced ESI was substantially justified, there was no reason for them to conceal information and make material misrepresentations about the way ESI was collected and the form in which it was kept in the Introspect database."

" Instead, Reed Smith and its attorneys went to great length to fabricate explanations about why they could not produce ESI. In response to the April 11 Order, they asserted the costs and burden B&G would incur in producing ESI without disclosing to the Court and the parties that ESI with associated metadata was readily available in the Introspect database."

Deliberate or Reckless Disregard of Truth Does Not Provide Substantial Justification

This may not really require much explanation, but again, the Court was not sparing in its criticism of B&B's counsel's discovery conduct:

"During the December 8, 2008, hearing, counsel for Reed Smith still argued that production of ESI in native format would have been unduly burdensome because the privilege review had not been conducted of the ESI on the Target Hard Drive. In making this argument, counsel ignored the evidence that a privilege review had been done in the Introspect database, and that the metadata associated with the TIFF images on the March 14 and April 30 Discs could be produced from the Introspect database."

The Court's take: "Such deliberate or reckless disregard of the truth can never provide substantial justification under Rule 37."

Accordingly, B&G and its counsel have not established that their production of ESI and their response to the April 11 Order were substantially justified.

Sanctions for eDiscovery Violations Imposed

First, a finding of prejudice to defendant Lexington as requesting party:

"Lexington has been prejudiced by

(1) being unable to complete discovery after receiving ESI in a form that was not reasonably usable;

(2) incurring additional expense in using ESI that was produced in a form that limited its ability to search it; and,

(3) incurring attorney’s fees, costs, and litigation expenses in establishing that ESI had not been properly produced."

Perhaps most tellingly, B&G's discovery violations were ongoing:

"The interim relief that I granted resulted in production of the Logix Systems Hard Drive and B&G Hard Drive, but B&G still has not produced all specified ESI in reasonably usable form."


(1) Order directing Plaintiff B&G to produce (again): "Accordingly, B&G shall provide to Lexington the Introspect database, except for information already segregated as privileged or protected. B&G shall bear all costs related to this production, including purchasing software or paying license fees for Lexington’s use of the database software, and hiring professionals to copy the database, if necessary. Lexington may elect the form or forms in which it wishes the production of the Introspect database to be made – it may ask for a copy of the Introspect database, remote access to the database, or both."

(2) To ensure B&G's compliance, the Court also ordered it to provide a computer expert selected by Defendant with direct access to the Introspect database maintained by Reed Smith, so that "the expert can confirm that all information loaded into the Introspect database (except for privileged or
otherwise protected information) has been produced to Lexington.

(3) Discovery reopened as to Defendant for 60 days.

No Sanctions Against In House Counsel

The Court gave B&G's in house counsel (who was not an attorney advising B&G during the pertinent time period) a pass, and a strict warning:

"DelValle entered the case in May 2008 and became local counsel for B&G in June 2008. I credit his testimony that he did not participate in the production of ESI until after my June 25 Order requiring reproduction of ESI. Accordingly, I find that he was not an attorney advising B&G with respect to the production of ESI in March and April 2008. I remind DelValle, however, that blindly relying on outside counsel falls short of the duty he has as an officer of the court, as counsel of record, and as an advocate for his client."

Sanctions Against B&G's Outside Co-Lead Counsel

Sanctions Against Ellison: The Court first sets forth the discovery violation rules applicable to "advising attorneys" --

"Rule 37 provides that the party or the attorney advising the sanctionable conduct, or both, are subject to sanctions. Fed. R. Civ. P. 37(a)(5)(A), (b)(2)(C). The Eleventh Circuit has explained that "[t]he phrase ‘attorney advising such conduct’ does not . . . exclude . . . an attorney’s willful blindness . . . ; to the contrary, the phrase instructs that when an attorney advises a client in discovery matters, he assumes a responsibility for the professional disposition of that portion of a lawsuit and may be held accountable for positions taken or responses filed during that process." Devaney, 989 F.2d at 1161-62. In this respect, "[s]anctions exist, in part, to remind attorneys that service to their clients must coexist with their responsibilities toward the court, toward the law and toward their brethren at the bar.""

The Court then finds that Ellison to an "advising attorney" and finds him personally liable for sanctions:

"Ellison has been one of the lead counsel of record in this case since its inception. While he presented evidence that he was not involved in production of discovery before April 2008, the evidence shows that he began advising B&G regarding discovery before the April 30 Discs were produced."

"The improper production of ESI on the April 30 Discs and the discovery misconduct that followed was done under Ellison’s supervision, and necessitated the motion for sanctions and proceedings related thereto.

The Court's ruling: "As such, Ellison was "an attorney advising" B&G regarding the discovery misconduct, and he is personally liable for Rule 37 sanctions."

It bears mentioning that Ellison's argument that "his local counsel was in charge of the production of the April 30 Discs" fell on deaf ears: It did not relieve him from personal liability "because counsel of record may not avoid sanctions for his own conduct on the basis that another attorney was advising the client regarding the discovery matter at issue. Citing 11th Circuit precedent in Stuart I. Levin & Assocs., P.A. v. Rogers, 156 F.3d 1135 (11th Cir. 1998), Magistrate Judge Spaulding notes that in that case :

"The [11th Circuit] observed that while Levin "may have delegated some of these duties to his associate, such a delegation-while it may provide a ground for sanctioning [his associate]-did not relieve Levin of his own duties." Id. The Eleventh Circuit noted that "[a]s counsel of record, Levin
owed a duty to his client fully to represent his interests, and he owed a duty to the court to comply with the court’s orders." Id. Accordingly, the Eleventh Circuit found that the district court had not abused its discretion in imposing Rule 37 sanctions against Levin."

Magistrate Judge Spaulding's ruling:: "As in Levin, because Ellison’s own conduct was not substantially justified, he is subject to sanctions under Rule 37 and shall pay the reasonable attorney’s fees, costs, and expenses Lexington incurred in filing the motion for sanctions and in the matters arising therefrom. These costs include the fees and expenses of expert witness Teshima. In addition, Ellison shall pay the Court’s court reporter, Diane Peede, for the cost of transcribing the December 8, 2008, hearing on the motion for sanctions. "

Sanctions Against Plaintiff's Counsel and Plaintiff's Counsel's Firm

Magistrate Judge Spaulding also finds Plaintiff's counsel's law firm responsible for the discovery abuse of its attorneys:

"Reed Smith, through its partners and associate attorneys, was also responsible for the discovery misconduct."

The Court singled out Reed Smith, and Reed Smith attorney Berringer for his behavior:

"The evidence establishes that Reed Smith, particularly through its partners Ellison and Berringer, acted in bad faith with respect to the events that occurred after Lexington objected in May 2008 to the form of B&G’s production of ESI. Specifically, Berringer falsely told opposing counsel that B&G had caused all of its ESI to be printed and scanned to support the position that B&G could not produce metadata or text searchable documents. He made no reasonable effort to determine whether the story he told was true – such as looking at the information in the Introspect database or asking AKO."

"Counsel for Lexington and the Court were deceived by Berringer’s deliberate fabrication, and it resulted in a significant waste of resources for Lexington and the Court. Berringer finally disclosed to Lexington’s counsel on the eve of the June 25, 2008, hearing that B&G’s ESI had been obtained in electronic form and transferred to the Introspect database, but that disclosure remained deceptive and incomplete. He did not disclose what metadata the Introspect database contained or the extent to which the ESI therein had full text search capacity. He did not reveal, until after Teshima testified at the June 25 hearing, that B&G possessed the Target Hard Drive on which the ESI in native format was stored."

Berringer received additional excoriating attention from the Court:

"Berringer continued this pattern of deliberate misrepresentation through willful blindness in his testimony at the December 2008 hearing. He testified about the metadata on the Introspect
database, even though he never examined the database to determine what it contained. He was evasive about why B&G did not simply disclose the metadata on that database before the hearing.
Berringer and Ellison also made material misrepresentations to the Court about the reason they did not produce the metadata from the Introspect database to resolve the production problems. Both of them repeatedly told the Court that AKO had been asked to provide necessary information, but refused to do so. Instead, as the evidence established, throughout the relevant period, AKO made the Introspect database remotely accessible without restrictions to Reed Smith"

Order Imposing Sanctions Against B&G's Outside Counsel and Counsel's Firm, cont'd

"The totality of this conduct establishes that Reed Smith’s actions in this regard were deliberately designed to impede Lexington’s ability to discover and reasonably use ESI maintained by B&G. This bad faith conduct disrupted and delayed the discovery process and caused significant prejudice to Lexington. The bad faith conduct also unreasonably multiplied the proceedings in this case."

Magistrate Judge Spauldings' Ruling: "Accordingly, pursuant to Rule 37 and the Court’s inherent power, I find that Reed Smith is jointly and severally liable with Ellison to pay the reasonable attorney’s fees, costs, and expenses Lexington has incurred in filing the motion for sanctions and in the proceedings related thereto. These costs include the fees and expenses of expert witness Teshima, whose testimony was essential to uncovering the misrepresentations made regarding
ESI. Reed Smith is also jointly and severally liable with Ellison to reimburse the Court’s court reporter for the cost of transcribing the December 8, 2008, hearing on the motion for sanctions. "

"Finally, I will issue an order to show cause why John Berringer Esq., should not also be personally sanctioned for his conduct in this case."

I expect that this decision will be appealed first to the District Judge, and then, perhaps, to the 11th Circuit. That said, the standards for review (and reversal) are either abuse of discretion or clear error...

Stay tuned.