Litigation Intelligence® - eDiscovery, Digital Evidence and Information Governance Law

2009-11-21T11:35:00.002-05:00

2009-11-21 Seventh Circuit Announces eDiscovery Pilot Program

Back after a looong break. Posts will be somehwat shorter...but will remain informative, and opinionated. And, so...

On October 1, 2009, the U.S. Circuit Court of Appeals for the Seventh Circuit announced the deployment of Phase One of the not surprisingly titled: “Seventh Circuit Electronic Discovery Pilot Program.” Phase One is effective between October 1, 2009 and May 1, 2010.

This document sets forth both a statement of purpose and preparation of principles for parties engaging in electronic discovery practice in matters before district, bankruptcy, and magistrate court proceedings in the Seventh Circuit. To the best of my knowledge, this is the first circuit-wide program of its kind in the United States. The document is 21 substantive pages in length.

The document is well written, and the assistance in its drafting by technology types is evident throughout.

Document link:

www.7thcircuitbar.org/associations/1507/files/Statement1.pdf

That said, I found especially helpful the proposed ESI discovery standing order, the text of which represents a significant step forward in reducing eDiscovery disputes. Of particular note are the sections addressing cooperation (1.02), eDiscovery Liaisons (2.02), Production Format (2.06), and Education (3.02).

Failure to cooperate in connection with ESI discovery is now expressly sanctionable in all district, bankruptcy and magistrate court proceedings in the Seventh Circuit (See Section 2.01).

BlogNote: This is a great start.

Practice Note: Think this is merely a wish list? Think again. I attended a status conference two weeks ago in connection with an eDiscovery, er, disagreement (another native format battle, wouldn’t you know) and the magistrate judge in the Northern District of Illinois before whom we appeared stated on the record that the Court was adopting the proposed standing order, effectively immediately, and would resolve the parties’ disagreement in accordance therewith.

Kudos to the Seventh Circuit.

SWT

2009-07-02T21:37:00.006-04:00

2009-07-02 Supreme Court Extends Crawford v Washington Testimonial Hearsay Doctrine, Old (and Repudiated) Metadata Approaches Rise from The...Repudiated, Forensic Imaging and TRO's, Metadata Mining as an Ethics Issue, and Intentional Spoliation as Basis for Fraud Assertion

Six decisions this week, including one from the U.S. Supreme Court appearing to extend the Sixth Amendment Confrontation Clause protection holding in Crawford v Washington. This decision may have significant implications for computer evidence used as “testimonial hearsay” evidence in future criminal actions. A second case from the District of Massachusetts provides what is in essence a minority view and in large part based older (here, two to three years older) notions of metadata repudiated by recent decisional authority as well as…the Sedona Principles. The third decision, finds the U.S. District Court for the District of New Jersey holding that the results of a forensic computer image analysis supported the issuance of a TRO. The fourth decision addresses the intersection of litigation and professional ethics…in this case, metadata mining by opposing counsel during litigation. Next up is decision from a California Appellate Court, affirming terminating sanctions for spoliation in the tens of millions of dollars (perhaps a near record amount) but reversing the trial court’s punitive damages ruling. The sixth decision, from an appellate panel in New York, shows how spoliation can be alleged as a critical element for an assertion of fraudulent misrepresentation or fraudulent concealment (read: discovery abuse).

SWT

Decisions:

Melendez-Diaz v. Massachusetts, --- S.Ct. ----, 2009 WL 1789468 (2009)
Dahl v. Bain Capital Partners, LLC, 2009 WL 1748526 (D.Mass. 2009)
Esquire Deposition Services, LLC v. Boutot, 2009 WL 1812411 (D.N.J. 2009)
Stengart v. Loving Care Agency, Inc., --- A.2d ----, 2009 WL 1811064 (N.J.Super.A.D. 2009)
Electronic Funds Solutions, LLC v. Murphy, 2009 WL 1717383 (Cal.App. 4 Dist. 2009)
IDT Corp. v. Morgan Stanley Dean Witter & Co., --- N.Y.S.2d ----, 2009 WL 1794364 (N.Y.A.D. 1st Dept. 2009)

***********
Case: Melendez-Diaz v. Massachusetts
Citation: --- S.Ct. ----, 2009 WL 1789468 (2009)
Date: 2009-06-25
Topics: Extension of Crawford v Washington Confrontation Clause Protection to forensic analyst affidavits, core testimonial statements, breath-a-lyzer reference, implications for digital evidence, non-conventional witnesses, business record and official record hearsay exception and Confrontation Clause

This decision from the U.S. Supreme Court addresses (and appears to expand) 6th Amendment Confrontation Clause rights. This decision (and the Crawford v Washington holding, discussed in detail below) may have important implications in the realm of computer generated evidence.

What was appealed: Following conviction in state trial court on charges of distributing and trafficking in cocaine, the Appeals Court of Massachusetts, affirmed, ruling that trial court had comported with Sixth Amendment by admitting certificates of analysis sworn by analysts at state laboratory without requiring in-court testimony by analysts. The Supreme Judicial Court of Massachusetts denied review. Certiorari was granted. Note that the reports had to do with the (presumably chemical) testing of a sample of evidence suspected to be cocaine. Not a computer generated report, but, as discussed later in this digest, it appears that the Court is girding for that inevitability.

It is somewhat interesting to note that the U.S. appeared as amicus curiae in support of respondent.

First, the ruling. The Court (with Justice Scalia writing for the 5-4 majority) held:

“(1) analysts' certificates of analysis were affidavits within core class of testimonial statements covered by Confrontation Clause;
(2) analysts were not removed from coverage of Confrontation Clause on theory that they were not “accusatory” witnesses;
(3) analysts were not removed from coverage of Confrontation Clause on theory that they were not conventional witnesses;
(4) analysts were not removed from coverage of Confrontation Clause on theory that their testimony consisted of neutral, scientific testing;
(5) certificates of analysis were not removed from coverage of Confrontation Clause on theory that they were akin to official and business records; and
(6) defendant's ability to subpoena analysts did not obviate state's obligation to produce analysts for cross-examination.” Melendez-Diaz v. Massachusetts, ---U.S. ---, 2009 WL 1789468 (U.S. 2009)

Background Excerpted from the Syllabus

“At petitioner's state-court drug trial, the prosecution introduced certificates of state laboratory analysts stating that material seized by police and connected to petitioner was cocaine of a certain quantity. As required by Massachusetts law, the certificates were sworn to before a notary public and were submitted as prima facie evidence of what they asserted.” Id., at 2009 WL 1789468 at p. 1

The Petitioner objected, asserting that the admission of the certificates without also providing an opportunity for defendant to obtain the in-person testimony of the analyst administering the test violated the 6th Amendment’s Confrontation Clause as interpreted by the Supreme Court’s 2004 decision in Crawford v Washington, 541 U.S. 36 (2004).

More details:

“Petitioner objected, asserting that Crawford v. Washington, 541 U.S. 36, 124 S.Ct. 1354, 158 L.Ed.2d 177, required the analysts to testify in person. The trial court disagreed, the certificates were admitted, and petitioner was convicted. The Massachusetts Appeals Court affirmed, rejecting petitioner's claim that the certificates' admission violated the Sixth Amendment. Id.

“Following conviction in state trial court on charges of distributing and trafficking in cocaine, the Appeals Court of Massachusetts, affirmed, ruling that trial court had comported with Sixth Amendment by admitting certificates of analysis sworn by analysts at state laboratory without requiring in-court testimony by analysts. The Supreme Judicial Court of Massachusetts denied review. Certiorari was granted.”

Crawford v Washington’s Analysis of Testimonial Hearsay and the 6th Amendment Confrontation Clause

The Crawford decision hold that testimonial hearsay is inadmissible at trial unless the witness appears at trial or, if the witness is unavailable, the defendant had a prior opportunity for cross examination. Id.

Examiner’s Certificates are “Core Testimonial Statements” Covered by Confrontation Clause:

Key to the Court’s determination that examiner’s certificates (considered equivalent to affidavits) was that the certificates would be used as evidence at trial, and that under Massachusetts law, the certificate’s sole purpose was to provide prima facie evidence of composition, quality and net weight.” This evidence was clearly both testimonial and accusatory:

“The certificates here are affidavits, which fall within the “core class of testimonial statements” covered by the Confrontation Clause, id., at 51, 124 S.Ct. 1354. They asserted that the substance found in petitioner's possession was, as the prosecution claimed, cocaine of a certain weight-the precise testimony the analysts would be expected to provide if called at trial. Not only were the certificates made, as Crawford required for testimonial statements, “under circumstances which would lead an objective witness reasonably to believe that the statement would be available for use at a later trial,” id., at 52, 124 S.Ct. 1354, but under the relevant Massachusetts law their sole purpose was to provide prima facie evidence of the substance's composition, quality, and net weight. Petitioner was entitled to “be confronted with” the persons giving this testimony at trial. Id., at 54, 124 S.Ct. 1354.” Id.

Respondent’s Arguments:

“Certificates are Non-Accusatory” Argument Rejected

The Respondent (the State of Massachusetts) first argues that the examiner’s certificates are not “accusatory,” an assertion summarily rejected by the Court:

“The arguments advanced to avoid this rather straightforward application of Crawford are rejected. Respondent's claim that the analysts are not subject to confrontation because they are not “accusatory” witnesses finds no support in the Sixth Amendment's text or in this Court's case law.” Id.

Oops.

Contemporaneity of Statement Creation with Observation Not Irrelevant

On to the issue of contemporaneity, the next argument rejected by the majority. Here, the Court appears to indicate that, at least for Confrontation Clause purposes, contemporaneity of statement with observation does not alter that statement’s testimonial nature:

“The affiants' testimonial statements were not “nearly contemporaneous” with their observations, nor, if they had been, would that fact alter the statements' testimonial character. There is no support for the proposition that witnesses who testify regarding facts other than those observed at the crime scene are exempt from confrontation.” Id.

Analyst “Certificates” are Not Business Records

The Court then determines that the certificates in questions do not qualify as traditional official or business records that could be considered admissible under Fed. R. Evid. Rule 803(6) --- [Reasoning to follow].

Neutral Scientific Testing

The Court also ruled that respondent’s argument that Confrontation Clause protection does not extend to the results from “neutral scientific testing” would “invite a return” to the decision overturned in 2004 by Crawford:

“The argument that the analysts should not be subject to confrontation because their statements result from neutral scientific testing is little more than an invitation to return to the since-overruled decision in Ohio v. Roberts, 448 U.S. 56, 66, 100 S.Ct. 2531, 65 L.Ed.2d 597, which held that evidence with “particularized guarantees of trustworthiness” was admissible without confrontation. Petitioner's power to subpoena the analysts is no substitute for the right of confrontation.” Id.

Burdensomeness Argument Rejected

The Court also rejected respondent’s assertions that Confrontation Clause protections should in these cases be relaxed because of the added burden that would otherwise be shouldered by the state:

“Finally, the requirements of the Confrontation Clause may not be relaxed because they make the prosecution's task burdensome. In any event, the practice in many States already accords with today's decision, and the serious disruption predicted by respondent and the dissent has not materialized.” Id.

Here now, the longer analysis.

Justice Scalia, writing for the majority, states the issue in two sentences:

“The Massachusetts courts in this case admitted into evidence affidavits reporting the results of forensic analysis which showed that material seized by the police and connected to the defendant was cocaine. The question presented is whether those affidavits are “testimonial,” rendering the affiants “witnesses” subject to the defendant's right of confrontation under the Sixth Amendment.” Id. at p. 2

Defendant-Appellant was charged with distributing and trafficking in cocaine in an amount between 14-28 grams. At trial, the prosecution placed into evidence three bags seized from defendant, and also submitted three “certificates of analysis” showing the results of forensic analysis performed on the seized substances. The certificates, which were sworn to before a notary, stated that the substance contained in the three bags was cocaine. Both the forensic examination conducted as well as the “certificates” issued were in accordance with Massachusetts state law.

At the state court drug trial, the prosecution introduced the certificates, which stated that the material seized by police and connected to petitioner was cocaine “of a certain quantity.” Moreover, as required by Massachusetts state law, the certificates were sworn to by a notary public, and were then introduced as prima facie evidence of what they asserted.

Petitioner objected, and asserted that Crawford v Washington 541 U.S. 36 (2004) required the analysts to testify in person. The trial court disagreed, and admitted the certificates. The jury found petitioner guilty. The Massachusetts Appeals Court affirmed the verdict, holding that state decisional authority (here vintage 2005) held that certificates of forensic analysis are not subject to confrontation under the Sixth Amendment. The Supreme Judicial Court of Massachusetts denied review, and the denial was then appealed by way of certiorari to the U.S. Supreme Court.

A brief trip down memory lane for those attorneys (non-attorneys get a pass here) who texted through constitutional law. The Sixth Amendment was made applicable to the States by application of the Fourteenth Amendment in 1965 and so the Court notes:

“The Sixth Amendment to the United States Constitution, made applicable to the States via the Fourteenth Amendment, Pointer v. Texas, 380 U.S. 400, 403, 85 S.Ct. 1065, 13 L.Ed.2d 923 (1965), provides that “[i]n all criminal prosecutions, the accused shall enjoy the right ... to be confronted with the witnesses against him.” Id. at p. 3

Crawford v. Washington

The Court then provides a brief summary of the holding in Crawford v Washington. In reversing the 1980 precedent set in Ohio v. Roberts 448 U.S. 56 (1980):

"In Crawford, after reviewing the Clause's historical underpinnings, we held that it guarantees a defendant's right to confront those “who ‘bear testimony’ ” against him. 541 U.S., at 51, 124 S.Ct. 1354. A witness's testimony against a defendant is thus inadmissible unless the witness appears at trial or, if the witness is unavailable, the defendant had a prior opportunity for cross-examination. Id., at 54, 124 S.Ct. 1354.” Id.

Where the Crawford decision becomes interesting is in its general description of the “class of testimonial statements” and particularly articulation of “core class of testimonial statements” covered by the Confrontation Clause:

“Various formulations of this core class of testimonial statements exist: ex parte in-court testimony or its functional equivalent-that is, material such as affidavits, custodial examinations, prior testimony that the defendant was unable to cross-examine, or similar pretrial statements that declarants would reasonably expect to be used prosecutorially; extrajudicial statements ... contained in formalized testimonial materials, such as affidavits, depositions, prior testimony, or confessions; statements that were made under circumstances which would lead an objective witness reasonably to believe that the statement would be available for use at a later trial.” Id., at 51-52, 124 S.Ct. 1354 (internal quotation marks and citations omitted).” Id.

The Court has no trouble in categorizing the “certificates” at issue as “core testimonial statements,” noting that:

“There is little doubt that the documents at issue in this case fall within the “core class of testimonial statements” thus described. Our description of that category mentions affidavits twice. See also White v. Illinois, 502 U.S. 346, 365, 112 S.Ct. 736, 116 L.Ed.2d 848 (1992) (THOMAS, J., concurring in part and concurring in judgment) (“[T]he Confrontation Clause is implicated by extrajudicial statements only insofar as they are contained in formalized testimonial materials, such as affidavits, depositions, prior testimony, or confessions”). The documents at issue here, while denominated by Massachusetts law “certificates,” are quite plainly affidavits: “declaration[s] of facts written down and sworn to by the declarant before an officer authorized to administer oaths.” Black's Law Dictionary 62 (8th ed.2004). They are incontrovertibly a “‘solemn declaration or affirmation made for the purpose of establishing or proving some fact.’ ” Crawford, supra, at 51, 124 S.Ct. 1354 (quoting 2 N. Webster, An American Dictionary of the English Language (1828)).” Id.

The Court then determines that the “certificates” are “functionally identical” to live, in-court testimony, doing precisely what a witness does on direct examination.” The strong language used to describe the nature of these documents is notable for the use of “identical” rather than “equivalent:”

“The fact in question is that the substance found in the possession of Melendez-Diaz and his codefendants was, as the prosecution claimed, cocaine-the precise testimony the analysts would be expected to provide if called at trial. The “certificates” are functionally identical to live, in-court testimony, doing “precisely what a witness does on direct examination.” Davis v. Washington, 547 U.S. 813, 830, 126 S.Ct. 2266, 165 L.Ed.2d 224 (2006)” Id.

The Court also points out that not only was there a reasonable expectation that the certificates would be used as evidence at trial, but that this was the sole purpose for their creation under Massachusetts law:

“Here, moreover, not only were the affidavits “ ‘made under circumstances which would lead an objective witness reasonably to believe that the statement would be available for use at a later trial,’ ” Crawford, supra, at 52, 124 S.Ct. 1354, but under Massachusetts law the sole purpose of the affidavits was to provide “prima facie evidence of the composition, quality, and the net weight” of the analyzed substance, Mass. Gen. Laws, ch. 111, § 13. We can safely assume that the analysts were aware of the affidavits' evidentiary purpose, since that purpose-as stated in the relevant state-law provision-was reprinted on the affidavits themselves.” Id. at p. 4

Blognote: Let’s pause for a moment and consider the results (a printout) of a breath alcohol measurement device (“Breath-a-lyzer”). The physical evidentiary sample is never preserved, and so the only evidence of blood alcohol level comes from a report, or printout, of the Breath-a-lyzer. Here, we have an “analyst in a box” and a black box at that. The laws of many states routinely provide that the printout of these devices may routinely introduced, and admitted, as evidence of the blood alcohol level of a defendant. Consider also that there is no human analyst involved in the process, merely a test “administrator” (typically a law enforcement officer) who does not analyze the evidence so much as report the results of the printout. Who accuses, in this scenario? The answer to this question is not at all clear, and presents that twilight area where digital evidence and hearsay definitions meet, or collide. More later.

Now, back to the decision.

The Court then quite succinctly sums up its rather lengthy holding in Crawford:

“In short, under our decision in Crawford the analysts' affidavits were testimonial statements, and the analysts were “witnesses” for purposes of the Sixth Amendment. Absent a showing that the analysts were unavailable to testify at trial and that petitioner had a prior opportunity to cross-examine them, petitioner was entitled to “‘be confronted with’ ” the analysts at trial. Crawford, supra, at 54, 124 S.Ct. 1354. FN1” Id. at 4

Confrontation Clause Requires “Live” Testimony

As always, footnotes to decisions like these provide ample additional context, and this decision has more than a few. We start off with footnote 1 (what else?), in which the Court responds to the dissent’s argument that the instant decision opens the Confrontation Clause floodgates to “anyone whose testimony may be relevant” in the proceedings, and that any gaps in the chain of custody normally go to weight, rather than admissibility:

“FN1. Contrary to the dissent's suggestion, post, at ---- - ----, ---- (opinion of KENNEDY, J.), we do not hold, and it is not the case, that anyone whose testimony may be relevant in establishing the chain of custody, authenticity of the sample, or accuracy of the testing device, must appear in person as part of the prosecution's case. While the dissent is correct that “[i]t is the obligation of the prosecution to establish the chain of custody,” post, at ----, this does not mean that everyone who laid hands on the evidence must be called. As stated in the dissent's own quotation, ibid., from United States v. Lott, 854 F.2d 244, 250 (C.A.7 1988), “gaps in the chain [of custody] normally go to the weight of the evidence rather than its admissibility.” It is up to the prosecution to decide what steps in the chain of custody are so crucial as to require evidence; but what testimony is introduced must (if the defendant objects) be introduced live. Additionally, documents prepared in the regular course of equipment maintenance may well qualify as nontestimonial records.” Id.

Blognote: The last sentence of this footnote has special meaning for those with an interest in digital evidence issues. Contrary to those who might argue otherwise, documents prepared in the regular course of maintenance are not the documents (or records) produced by a computing device (such as a Breath-a-lyzer) used to provide evidence of blood-alcohol level used in turn as evidence of an element of a crime. Moreover, documents prepared in the regular course of “equipment maintenance” almost certainly do not include uncompiled source code, even if such source code is changed, or “updated” through a maintenance procedure.

The Court Quells the Dissent’s Opening Alarum

The Court then refutes the dissent’s concern that the instant decision sweeps away nearly a century’s judicial approach to the rules governing the admissibility of scientific evidence. The Court first points out that this “acceptance” is merely thirty years old, and, that nearly all of these decisions rely on the very decision (Ohio v Roberts) and rationale that the Crawford decision rejected.

The rejected theory? That evidence was admissible as long as it bore some “indicia of reliability.”

“The vast majority of the state-court cases the dissent cites in support of this claim come not from the last 90 years, but from the last 30, and not surprisingly nearly all of them rely on our decision in Ohio v. Roberts, 448 U.S. 56, 100 S.Ct. 2531, 65 L.Ed.2d 597 (1980), or its since-rejected theory that unconfronted testimony was admissible as long as it bore indicia of reliability, id., at 66, 100 S.Ct. 2531. See post, at ----.FN2 As for the six Federal Courts of Appeals cases cited by the dissent, five of them postdated and expressly relied on Roberts. See post, at ---- - ----. The sixth predated Roberts but relied entirely on the same erroneous theory. See Kay v. United States, 255 F.2d 476, 480-481 (C.A.4 1958) (rejecting confrontation clause challenge “where there is reasonable necessity for [the evidence] and where ... the evidence has those qualities of reliability and trustworthiness”).” Id.

Blognote: Here, the issue is not so much that the Court rejects reliability as the touchstone for admissibility of scientific evidence, but that a mere “indicia” of reliability or trustworthiness is not enough. Consider again the implications for computer generated information offered or introduced into evidence as a proxy for live testimony.

Back again to the decision.

Forensics Analysts are “Accusatory Witnesses”

The Court then addresses, and then rejects, respondent’s arguments that the analysts are not subject to confrontation because they are not “accusatory witnesses,” and do not “directly accuse” petitioner of wrongdoing:

“Respondent first argues that the analysts are not subject to confrontation because they are not “accusatory” witnesses, in that they do not directly accuse petitioner of wrongdoing; rather, their testimony is inculpatory only when taken together with other evidence linking petitioner to the contraband. See Brief for Respondent 10. This finds no support in the text of the Sixth Amendment or in our case law.” Id. at p. 5

One Fact Necessary to Convict Triggers Status as Accusatory Witness

The Court then determines that the status of “accusatory witness” attaches (thereby triggering confrontation rights) where a witness provides at least “one fact” necessary to convict. The Court also provides an interesting syllogism (which may be useful in digital evidence admissibility arguments), rejecting the (imo) oxymoronic notion that there is no category of witness testimony that may be considered helpful to the prosecution, but immune from confrontation:

“The Sixth Amendment guarantees a defendant the right “to be confronted with the witnesses against him.” (Emphasis added.) To the extent the analysts were witnesses (a question resolved above), they certainly provided testimony against petitioner, proving one fact necessary for his conviction-that the substance he possessed was cocaine. The contrast between the text of the Confrontation Clause and the text of the adjacent Compulsory Process Clause confirms this analysis. While the Confrontation Clause guarantees a defendant the right to be confronted with the witnesses “against him,” the Compulsory Process Clause guarantees a defendant the right to call witnesses “in his favor.” U.S. Const., Amdt. 6. The text of the Amendment contemplates two classes of witnesses-those against the defendant and those in his favor. The prosecution must produce the former; FN3 the defendant may call the latter.” Id.

“Contrary to respondent's assertion, there is not a third category of witnesses, helpful to the prosecution, but somehow immune from confrontation.” Id.

“Non-Typical Witnesses,” The Paradigmatic Trial of Sir Walter Raleigh, and Core Right of Confrontation

It’s not often that we see Blackstone’s Commentaries cited in a judicial decision, but then, this is no ordinary opinion. Indeed, the Court first points out that the dissent argues that analysts should not be subject to confrontation because they are not “’conventional” (or ‘typical’ or ‘ordinary’) witnesses whose ex parte testimony was used at the trial of Sir Walter Raleigh. The Court notes that the case of Sir Walter Raleigh identifies the “core” of the confrontation right rather than defining its limits:

“Respondent and the dissent argue that the analysts should not be subject to confrontation because they are not “conventional” (or “typical” or “ordinary”) witnesses of the sort whose ex parte testimony was most notoriously used at the trial of Sir Walter Raleigh. Post, at ---- - ----; Brief for Respondent 28. It is true, as the Court recognized in Crawford, that ex parte examinations of the sort used at Raleigh's trial have “long been thought a paradigmatic confrontation violation.” 541 U.S., at 52, 124 S.Ct. 1354. But the paradigmatic case identifies the core of the right to confrontation, not its limits. The right to confrontation was not invented in response to the use of the ex parte examinations in Raleigh's Case, 2 How. St. Tr. 1 (1603). That use provoked such an outcry precisely because it flouted the deeply rooted common-law tradition “of live testimony in court subject to adversarial testing.” Crawford, supra, at 43, 124 S.Ct. 1354 (citing 3 W. Blackstone, Commentaries on the Laws of England 373-374 (1768)). See also Crawford, supra, at 43-47, 124 S.Ct. 1354.” Id. at p. 6

Non-Typical Witness - Testimonial Contemporaneity

The Court then rejects the dissent’s arguments that a conventional witness recalls events observed in the past, while an analyst’s report contains near-contemporaneous observations of the test. The Court discounts the importance of contemporaneity, finding that even near-contemporaneous witness statements were inadmissible absent an opportunity to confront:

In any case, the purported distinctions respondent and the dissent identify between this case and Sir Walter Raleigh's “conventional” accusers do not survive scrutiny. The dissent first contends that a “conventional witness recalls events observed in the past, while an analyst's report contains near-contemporaneous observations of the test.” Post, at ---- - ----. It is doubtful that the analyst's reports in this case could be characterized as reporting “near-contemporaneous observations”; the affidavits were completed almost a week after the tests were performed. See App. to Pet. for Cert. 24a-29a (the tests were performed on November 28, 2001, and the affidavits sworn on December 4, 2001). But regardless, the dissent misunderstands the role that “near-contemporaneity” has played in our case law. The dissent notes that that factor was given “substantial weight” in Davis, post, at ----, but in fact that decision disproves the dissent's position. There the Court considered the admissibility of statements made to police officers responding to a report of a domestic disturbance. By the time officers arrived the assault had ended, but the victim's statements-written and oral-were sufficiently close in time to the alleged assault that the trial court admitted her affidavit as a “present sense impression.” Davis, 547 U.S., at 820, 126 S.Ct. 2266 (internal quotation marks omitted). Though the witness's statements in Davis were “near-contemporaneous” to the events she reported, we nevertheless held that they could not be admitted absent an opportunity to confront the witness. Id., at 830, 126 S.Ct. 2266.” Id.

Blognote: A Breath-a-lyzer appliance report, if considered testimonial, would appear to fall into the “near contemporaneous” witness category.

Non-Conventional Witnesses - Non-Observants to Crime or Human Actions Related To It.

The dissent argued that the analysts issuing the certificates were not “conventional” witnesses because they neither observed the crime, “nor any action related to it.” The Court again summarily rejects this argument on the basis that the assertion is unsupported by any authority:

“A second reason the dissent contends that the analysts are not “conventional witnesses” (and thus not subject to confrontation) is that they “observe[d] neither the crime nor any human action related to it.” Post, at ----. The dissent provides no authority for this particular limitation of the type of witnesses subject to confrontation. Nor is it conceivable that all witnesses who fit this description would be outside the scope of the Confrontation Clause. For example, is a police officer's investigative report describing the crime scene admissible absent an opportunity to examine the officer? The dissent's novel exception from coverage of the Confrontation Clause would exempt all expert witnesses-a hardly “unconventional” class of witnesses.” Id.

Blognote: Computing appliances (such as a Breath-a-lyzer) neither “observe” crimes nor any action related to them. Imo the Court’s summary rejection of this argument lays a foundation for the future assertion that a computing appliance such as a Breath-a-lyzer might still be considered an accusatorial testimony generating witness.

Non-conventional Witnesses and Statement Not Provided in Response to Interrogation

The Court then rejects the dissent’s contention that analysts are not “conventional” witnesses because their statements were “not provided in response to interrogation.” The Court finds that a witness against a defendant is no less so for volunteering testimony than s/he is for responding to interrogation:

A third respect in which the dissent asserts that the analysts are not “conventional” witnesses and thus not subject to confrontation is that their statements were not provided in response to interrogation. Ibid. See also Brief for Respondent 29. As we have explained, “[t]he Framers were no more willing to exempt from cross-examination volunteered testimony or answers to open-ended questions than they were to exempt answers to detailed interrogation.” Davis, supra, at 822-823, n. 1, 126 S.Ct. 2266. Respondent and the dissent cite no authority, and we are aware of none, holding that a person who volunteers his testimony is any less a “‘witness against’ the defendant,” Brief for Respondent 26, than one who is responding to interrogation.” Id., at p. 7

Blognote: You guessed it. Bladerunner type Replicants notwithstanding, computing appliances volunteer information (or testimony, if considered witnesses) rather than “respond to interrogation.” [Please, please don’t reboot me…]

Testimony Recounting Historical Events, Testimony Resulting from Neutral Scientific Testing, and Footnote 5

The dissent then argues that Confrontation Clause application will vary with the specie of testimony. The dissent then attempts to draw a distinction between, on the one hand, a situation where the Confrontation Clause will apply (testimony recounting historical events, which is “’prone to distortion or manipulation’” and, on the other hand, testimony that is the “’result of neutral, scientific testing.”

The Court rejects this argument, again finding it to be “little more” than an invitation to reverse Crawford and return to Ohio v Roberts:

“This argument is little more than an invitation to return to our overruled decision in Roberts, 448 U.S. 56, 100 S.Ct. 2531, 65 L.Ed.2d 597, which held that evidence with “particularized guarantees of trustworthiness” was admissible notwithstanding the Confrontation Clause. Id., at 66, 100 S.Ct. 2531.” Id.

Blognote: The result of neutral, scientific testing may also, within the context of computer generated information, be prone to distortion or manipulation.

Confrontation Clause Ultimate Goal – Testable Reliability in the Crucible of Cross Examination

The Court finds that the Confrontation Clause’s goal is to ensure evidentiary reliability, but that the guarantee is procedural rather than substantive. Moreover, from a procedural context, the Confrontation Clause requires not only reliability, but some way to assess, or test that reliability:

““To be sure, the Clause's ultimate goal is to ensure reliability of evidence, but it is a procedural rather than a substantive guarantee. It commands, not that evidence be reliable, but that reliability be assessed in a particular manner: by testing in the crucible of cross-examination. ... Dispensing with confrontation because testimony is obviously reliable is akin to dispensing with jury trial because a defendant is obviously guilty. This is not what the Sixth Amendment prescribes.” 541 U.S., at 61-62, 124 S.Ct. 1354.” Id.

Footnote Five – The Breath-a-lzyer Reference

Footnote five provides a tantalizing hint, and perhaps only a hint, that the Court might entertain a Confrontation Clause appeal in connection with the reports (not maintenance reports) created by Breath-a-lyzer appliances. That future decision will be interesting, as the report of the breath-a-lyzer itself will need to be deemed some type of hearsay as a predicate for any Confrontation Clause analysis:

“Respondent and the dissent may be right that there are other ways-and in some cases better ways-to challenge or verify the results of a forensic test.FN5 But the Constitution guarantees one way: confrontation. We do not have license to suspend the Confrontation Clause when a preferable trial strategy is available.” Id., at p. 8

“FN5. Though surely not always. Some forensic analyses, such as autopsies and breathalyzer tests, cannot be repeated, and the specimens used for other analyses have often been lost or degraded.” Id.

Nor does the Court blithely accept “neutral scientific testing” to be reliable as on its face. In fact…

“Nor is it evident that what respondent calls “neutral scientific testing” is as neutral or as reliable as respondent suggests. Forensic evidence is not uniquely immune from the risk of manipulation. According to a recent study conducted under the auspices of the National Academy of Sciences, “[t]he majority of [laboratories producing forensic evidence] are administered by law enforcement agencies, such as police departments, where the laboratory administrator reports to the head of the agency.” National Research Council of the National Academies, Strengthening Forensic Science in the United States: A Path Forward 6-1 (Prepublication Copy Feb. 2009) (hereinafter National Academy Report). And “[b]ecause forensic scientists often are driven in their work by a need to answer a particular question related to the issues of a particular case, they sometimes face pressure to sacrifice appropriate methodology for the sake of expediency.” Id., at S-17. A forensic analyst responding to a request from a law enforcement official may feel pressure-or have an incentive-to alter the evidence in a manner favorable to the prosecution.” Id.

The Court’s reasoning is deceptively simple:

“Confrontation is one means of assuring accurate forensic analysis.” Id.

The reason for the seeming simplicity of this comment is that the Court then discusses how a “fraudulent analyst” may alter his or her testimony when “forced to confront” the defendant. Moreover, the Court notes, an analyst who provides false results may reconsider or recant testimony when under oath in open court:

Blognote: The implication for computer generated evidence are significant. Examination of source code may be the only way in which computer generated evidence used to prove “even one fact” of a crime may be cross examined. Moreover, the phrase “erroneous convictions based on discredited forensics” may well be read to mean “erroneous convictions based on discredited source code.” Both forensics reports and computer source code speak, and both accuse. Imo, the only difference is that the “speaker” of computer output is source code (or the programmer who created the language spoken by the computing device).

“Confrontation is one means of assuring accurate forensic analysis. While it is true, as the dissent notes, that an honest analyst will not alter his testimony when forced to confront the defendant, post, at ----, the same cannot be said of the fraudulent analyst. See Brief for National Innocence Network as Amicus Curiae 15-17 (discussing cases of documented “drylabbing” where forensic analysts report results of tests that were never performed); National Academy Report 1-8 to 1-10 (discussing documented cases of fraud and error involving the use of forensic evidence). Like the eyewitness who has fabricated his account to the police, the analyst who provides false results may, under oath in open court, reconsider his false testimony. See Coy v. Iowa, 487 U.S. 1012, 1019, 108 S.Ct. 2798, 101 L.Ed.2d 857 (1988). And, of course, the prospect of confrontation will deter fraudulent analysis in the first place.” Id.

“Confrontation is designed to weed out not only the fraudulent analyst, but the incompetent one as well. Serious deficiencies have been found in the forensic evidence used in criminal trials. One commentator asserts that “[t]he legal community now concedes, with varying degrees of urgency, that our system produces erroneous convictions based on discredited forensics.” Metzger, Cheating the Constitution, 59 Vand. L.Rev. 475, 491 (2006). “ Id.

Usefulness of Testing Analysts Honesty, Proficiency and Methodology

The Court then endorses the application of confrontation rights to include analysts, as a means of testing (italics mine) honesty, proficiency and methodology:

“[T]here is wide variability across forensic science disciplines with regard to techniques, methodologies, reliability, types and numbers of potential errors, research, general acceptability, and published material.” National Academy Report S-5. See also id., at 5-9, 5-12, 5-17, 5-21 (discussing problems of subjectivity, bias, and unreliability of common forensic tests such as latent fingerprint analysis, pattern/impression analysis, and toolmark and firearms analysis). Contrary to respondent's and the dissent's suggestion, there is little reason to believe that confrontation will be useless in testing analysts' honesty, proficiency, and methodology-the features that are commonly the focus in the cross-examination of experts.” Id., at p. 9

Business Record Exception Inapplicable Where Regular Course of Business is Production of Evidence for Use at Trial

The Court then addresses respondent’s argument that the analysts’ certificates are admissible “without confrontation” because they are the types of official and business records admissible at common law. The Court finds that the certificates do not qualify as tradition official or business records, and even if they did, their authors would be subject to confrontation. The Court provides some context by way of Fed. R. Evid. Rule 803(6) “regular course of business” exception to the hearsay rule, but notes that the exception does not apply where the regularly conducted business is the generation of evidence of for use at trial:

Documents kept in the regular course of business may ordinarily be admitted at trial despite their hearsay status. See Fed. Rule Evid. 803(6). But that is not the case if the regularly conducted business activity is the production of evidence for use at trial. Our decision in Palmer v. Hoffman, 318 U.S. 109, 63 S.Ct. 477, 87 L.Ed. 645 (1943), made that distinction clear. There we held that an accident report provided by an employee of a railroad company did not qualify as a business record because, although kept in the regular course of the railroad's operations, it was “calculated for use essentially in the court, not in the business.” Id., at 114, 63 S.Ct. 477.FN7.” Id. at p. 10

For those hearsay aficionados among us, Footnote 7 provides some historical context for the “regularly conducted activity” exception:

“FN7. The early common-law cases likewise involve records prepared for the administration of an entity's affairs, and not for use in litigation. See, e.g., King v. Rhodes, 1 Leach 24, 168 Eng. Rep. 115 (1742) (admitting into evidence ship's muster-book); King v. Martin, 2 Camp. 100, 101, 170 Eng. Rep. 1094, 1095 (1809) (vestry book); King v. Aickles, 1 Leach 390, 391-392, 168 Eng. Rep. 297, 298 (1785) (prison logbook).” Id.

Blognote: Ok, I’m a bit confused. The Court refers to the Federal Rules of Evidence here, but as this is an appeal of a state court proceeding, shouldn’t the Massachusetts evidence rules be cited?

The Court gives equally short shrift to the argument that the analyst certificate qualifies as an “official record” pursuant to Fed. R. Evid. Rule 803(8). Especially interesting is the Court’s observation that the functions of a clerk typically are to “authenticate” rather than “create” a record which might be used as evidence against a defendant:

“The dissent identifies a single class of evidence which, though prepared for use at trial, was traditionally admissible: a clerk's certificate authenticating an official record-or a copy thereof-for use as evidence. See post, at ----. But a clerk's authority in that regard was narrowly circumscribed. He was permitted “to certify to the correctness of a copy of a record kept in his office,” but had “no authority to furnish, as evidence for the trial of a lawsuit, his interpretation of what the record contains or shows, or to certify to its substance or effect.” State v. Wilson, 141 La. 404, 409, 75 So. 95, 97 (1917). See also State v. Champion, 116 N.C. 987, 21 S.E. 700, 700-701 (1895); 5 J. Wigmore, Evidence § 1678 (3d ed.1940). The dissent suggests that the fact that this exception was “ ‘narrowly circumscribed’ ” makes no difference. See post, at ----. To the contrary, it makes all the difference in the world. It shows that even the line of cases establishing the one narrow exception the dissent has been able to identify simultaneously vindicates the general rule applicable to the present case. A clerk could by affidavit authenticate or provide a copy of an otherwise admissible record, but could not do what the analysts did here: create a record for the sole purpose of providing evidence against a defendant.” Id.

Relationship between Business/Official Records Hearsay Exception and Confrontation Clause

The Court points out that respondent “misunderstands” the relationship between the business records and official records exception to the hearsay rule, and the Confrontation Clause. The operative distinction is not the nature of the records (business or official) but the purpose for which such business or official records are created. In other words, if such business or official records are generated for the purpose of generating evidence for use or establishing a fact at trial, they are testimonial and confrontation rights attach:

“Respondent also misunderstands the relationship between the business-and-official-records hearsay exceptions and the Confrontation Clause. As we stated in Crawford: “Most of the hearsay exceptions covered statements that by their nature were not testimonial-for example, business records or statements in furtherance of a conspiracy.” 541 U.S., at 56, 124 S.Ct. 1354. Business and public records are generally admissible absent confrontation not because they qualify under an exception to the hearsay rules, but because-having been created for the administration of an entity's affairs and not for the purpose of establishing or proving some fact at trial-they are not testimonial. Whether or not they qualify as business or official records, the analysts' statements here-prepared specifically for use at petitioner's trial-were testimony against petitioner, and the analysts were subject to confrontation under the Sixth Amendment.” Id., at p. 11

Blognote: This decision, considered alongside Crawford v. Washington, provides a framework for the reconsideration of admissibility of digital evidence based not upon reliability, as the Court notes, but on the principle of testability. In other words, naked assertions will not be acceptable. If one makes assertion (i.e., of reliability or trustworthiness) that assertion must be testable, rather than merely asserted. The implications for digital evidence admissibility are significant, but as yet, remain inchoate.

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Case: Dahl v. Bain Capital Partners, LLC
Citation: 2009 WL 1748526 (D.Mass. 2009)
Date: 2009-06-22
Topics: Caution in use of metadata, reliance on Sedona’s repudiated position that most metadata is without value.

This decision from the U.S. District Court for the District of Massachusetts presents issues illustrating problems (1) faced by clients with counsel that is/are not quite up to speed on eDiscovery and digital evidence management practice, (2) faced by counsel when dealing with Courts that rely on decisional authority in a practice area which experiences the supercession of even relatively recent vintage (2005) doctrinal authority.

This shareholder’s derivative action pits approximately one dozen law firms (plaintiffs’ side) against approximately 20 defendant side firms. It appears that even with the might of 12 firms, plaintiffs’ were hopelessly outmaneuvered in this eDiscovery hearing.

Why?

Playing “Telephone” with Metadata’s Value in Litigation

Yes, it’s true. I’m resorting to the children’s game of “telephone” to illustrate how the approach to metadata was transmogrified into something it was not meant to become.

The Court here first pronounces that “case law shows wariness about metadata’s value” and then relies on Wyeth v Impax Labs, 248 F.R.D. 169, 171 (D. Del. 2006) which in turn relies on Williams v Sprint/United Mgmt. Co., 230 F.R.D. 650, 651 (D. Kan. 2005), which in turn relies on...you guessed it…Sedona’s now repudiated position on the value of metadata.

Let’s parse the references. The first, to Wyeth, finds the Court locating an excerpt that appears to fit the “metadata has little value” proposition:

“Most metadata is of limited evidentiary value, and reviewing it can waste litigation resources.” Williams v Sprint, 230 F.R.D. 640 at 651 (D. Kan. 2005).

Fair enough. That’s the proper excerpt.

Let’s now look at the cite to Williams v Sprint, 230 F.R.D. 640 at 651 (D. Kan. 2005):

The comment balances these potential benefits against the “reality that most of the metadata has no evidentiary value, and any time (and money) spent reviewing it is a waste of resources.” FN65 The comment concludes that a reasonable balance is that, unless the producing party is aware or should be reasonably aware that particular metadata is relevant, the producing party should have the option of producing all, some, or none of the metadata.” Williams v. Sprint/United Management Co., 230 F.R.D. 640, 651 (D.Kan. 2005)

From whence comes this comment, one might inquire? Why, The Sedona Principles, vintage 2005. Footnote 65 tells all:

The Sedona Principles: Best Practices, Recommendations & Principles for Addressing Electronic Document Discovery, Cmt. 12.a. (The Sedona Conference Working Group Series, July 2005 Version), available generally at http://www.thesedo naconference.org, and more specifically at available at http://www.thesedon aconference.org/ content/miscFiles/7 05TSP.pdf.

Of course, The Sedona Principles were modified in 2008 to include a well nigh total positional reversal on metadata value. This reversal in position has been acknowledged by many district courts, and in late 2008, the Aguilar v DHC decision from the Southern District of New York expressly noted Sedona’s positional reversal, and repudiated any decisional authority based on Sedona’s pre-2008 position.

Some Metadata Ordered to Be Produced

Plaintiffs requested all metadata in connection with the “email and word [sic] documents produced.” Defendants offered to produce only 12 fields of metadata. The Court, again relying on repudiated authority,

Focused vs. Restrictive Metadata Approach

And so, in reading the following excerpt, one might ponder whether the Court was focused, or bought outright the proposition that other fields of metadata (master file table analysis, for example) were of so little value that it would be wasteful to order production:

The Shareholders seek all of the metadata associated with emails and word documents produced by the PE Firms. The PE Firms refuse to produce all metadata and instead offer to provide 12 fields of metadata. The court rules in favor of the PE Firms for two reasons. First, case law shows wariness about metadata's value in litigation. Many courts have expressed reservations about the utility of metadata, explaining that it does not lead to admissible evidence and that it can waste parties' time and money. Wyeth v. Impax Lab., Inc., 248 F.R.D. 169, 171 (D.Del.2006); Williams v. Sprint/United Mgmt. Co., 230 F.R.D. 640, 651 (D.Kan.2005). Second, Rule 34 militates against the broad, open disclosure of metadata that the Shareholders seek. The Rule 34 Advisory Committee Notes to the 2006 Amendment express concern that producing diverse types of electronically stored information in the same format would be costly, burdensome, and ultimately fruitless. Fed.R.Civ.P. 34 advisory committee's notes. Instead, the notes explain that requests should be tailored to each type of program, so only necessary data is produced.” Dahl v. Bain Capital Partners, LLC, 2009 WL 1748526, 2 (D.Mass. 2009)

“The court applies this principle to the metadata requests here. Rather than a sweeping request for metadata, the Shareholders should tailor their requests to specific word documents, specific emails or specific sets of email, an arrangement that, according to their memorandum, suits the PE Firms. This more focused approach will, the court hopes, reduce the parties' costs and work. Furthermore, it reflects the general uneasiness that courts hold over metadata's contribution in assuring prudent and efficient litigation.” Id.

One wonders whether the Court’s law clerks set a research date field limitation that cut off all post 2006 decisional authority, or whether plaintiffs’ counsel was hopelessly outgunned.

My wager is on the latter.

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Case: Esquire Deposition Services, LLC v. Boutot
Citation: 2009 WL 1812411 (D.N.J. 2009) described as [Not for Publication]
Date: 2009-06-22
Topics: Forensic Image data Supports Grant of TRO NJ

This decision comes to us from the U.S. District Court for the District of New Jersey and involves allegations of breach of non-compete and non-solicitation contract covenant, breach of duty of loyalty, tortious interference with business relationships, and trade secret misappropriation. Plaintiff sought a preliminary injunction against defendants “enjoining and restraining them from engaging in solicitation and competition” in violation of a co-defendant’s prior employment agreement with plaintiff.

Plaintiff also alleged that prior to defendant’s departure, the latter copied “hundreds” of electronic files from plaintiff’s computers. Plaintiff’s TRO request also included the following prayer for relief:

“Specifically, Esquire sought and obtained the issuance of a temporary restraining order, restricting Boutot from:

…(e) Destroying any electronic or hard copy document ... that he obtained from or by virtue of his employment with Esquire ... “ Esquire Deposition Services, LLC v. Boutot, 2009 WL 1812411, 4 (D.N.J.) (D.N.J. 2009)

Here now a (very ) short discourse on the requirements for obtaining injunctive relief. The elements required to be demonstrated are immediate, non-monetary irreparable harm to the movant. The Court also notes that injunctive relief is also an appropriate remedy to enforce a restrictive covenant:

“[T]he grant of injunctive relief is an ‘extraordinary remedy, which should be granted only in limited circumstances.’ ” Instant Air Freight Co. v. C.F. Air Freight, Inc., 882 F.2d 797, 800 (3d Cir.1989) (citing Frank's GMC Truck Ctr. Inc. v. Gen. Motors Corp., 847 F.2d 100, 102 (3d Cir.1988)). Generally, in determining whether to grant a preliminary injunction or a temporary restraining order, courts consider four factors:

(1) the likelihood that the applicant will prevail on the merits at final hearing; (2) the extent to which the plaintiffs are being irreparably harmed by the conduct complained of; (3) the extent to which the defendants will suffer irreparable harm if the preliminary injunction is issued; and (4) the public interest.

S & R Corp. v. Jiffy Lube Int'l, Inc., 968 F.2d 371, 374 (3d Cir.1992) (citing Hoxworth v. Blinder, Robinson & Co., 903 F.2d 186, 197-98 (3d Cir.1990)). “[W]hile the burden rests upon the moving party to make [the first] two requisite showings, the district court” should look to factors three and four when relevant. Acierno v. New Castle County, 40 F.3d 645, 653 (3d Cir.1994). “All four factors should favor preliminary relief before the injunction will issue.” S & R Corp., 968 F.2d at 374 (citing Hoxworth, 903 F.2d at 192).

*5 In order to prove irreparable harm, the moving party must “demonstrate potential harm which cannot be redressed by a legal or an equitable remedy following a trial.” Acierno, 40 F.3d at 653 (quoting Instant Air Freight Co., 882 F.2d at 801). “Economic loss does not constitute irreparable harm.” Acierno, 40 F.3d at 653. “[T]he injury created by a failure to issue the requested injunction must “be of a peculiar nature, so that compensation in money cannot atone for it....” Id. “The word irreparable connotes that which cannot be repaired, retrieved, put down again [or] atoned for.” Id. (internal citations and quotations omitted). In addition, the claimed injury cannot merely be possible, speculative, or remote. Id. at 655. “More than a risk of irreparable harm must be demonstrated. The requisite for injunctive relief has been characterized as a ‘clear showing of immediate irreparable injury,’ or a ‘presently existing actual threat; an injunction may not be used simply to eliminate a possibility of a remote future injury.’ ” Id. (quoting Cont'l Group, Inc. v. Amoco Chems. Corp., 614 F.2d 351, 358 (3d Cir.1980))." Esquire Deposition Services, LLC v. Boutot, 2009 WL 1812411, 4 -5.

“Finally, injunctive relief is an available and appropriate remedy to enforce a restrictive covenant. See e.g., Arch Pers. Care. Prods., L.P. v. Malmstrom, 90 F. App'x 17 (3d Cir.2003) (affirming district court's grant of injunctive relief to enforce a non-compete agreement).” Id.

In performing its analysis, the Court discusses that the plaintiff is likely to succeed on the merits of its breach of contract claim based at least in part on the likelihood that plaintiff’s trade secrets and proprietary information would be used by the ex-employee co-defendant and be his new employer (who just happened to be plaintiff’s direct competitor in other fields). The Court acknowledges the reality of Plaintiff’s apprehension in addressing what was discovery through electronic discovery:

“Esquire's trepidation over unwanted disclosure of its confidential and proprietary information is not unfounded. Esquire secured the services of Andrew Reisman, an expert in the field of computer forensics, for the purpose of analyzing activity on Boutot's work computer at Esquire (the “Esquire Laptop”). After conducting his analysis of the Esquire Laptop,FN9 Mr. Reisman testified that, in his expert opinion, on November 10, 2008 and November 13, 2008, a targeted group of files containing Esquire and personal Boutot data were copied to two thumb drives FN10. (Declaration of Andrew Reisman (“Reisman Decl.”), attached to Verified Complaint at ¶ 13.)" Id.

"FN9. In order to perform the analysis, Mr. Reisman created a “forensic image” of the hard drive associated with the Esquire Laptop. ( See Reisman Decl., at ¶ 5.) According to Mr. Reisman, “a ‘forensic image’ of a hard drive is a verifiable copy of all data present on the drive, including both active files and areas of the drive that contain no active files but that nevertheless contain data.” ( Id.)" Id.

"FN10. A thumb drive, or a USB drive, is an external storage device, which allows copied and stored data to be accessed from other computers. (Reisman Decl., at ¶ 14.)" Id.

"The inescapable conclusion from Mr. Reisman's findings, Esquire asserts, is that Boutot has copied confidential Esquire files to thumb drives and has shared the files with MCS, in violation of the Agreement. This allegation is bolstered by the record before this Court, which includes copies of e-mails that Boutot sent to MCS employees, containing Esquire files.FN11 (Exhibit L, attached to the Avallone Cert.)" Id.

FN11. Such e-mails include a December 18, 2008 e-mail to an MCS technology department employee, to which Esquire's new client presentation module was attached. (5/28 Tr. 53:3-6; Exhibit L, attached to Avallone Cert.) “ Id. at p. 6

Not surprisingly, the Court granted plaintiff’s request for injunctive relief.

Oh, and perhaps metadata (referring to copying of files to thumb drives) was not “without value.”

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Case: Stengart v. Loving Care Agency, Inc.
Citation: --- A.2d ----, 2009 WL 1811064 (N.J.Super. A.D. 2009)
Date: 2009-06-26
Topics: Adoption of N.Y. Theory of tort of conversion of ESI; attorney client privilege trumps employer’s right to review emails sent between employee and her attorney, email mining of Image By Opposing Counsel results in ethics violation

This decision from the Appellate Division of the Superior Court of New Jersey finds the Appellate Division court adopting (or at least approving) the position of the Court of Appeals of NY that ESI is property; i.e., that a cause of action of conversion applies to intangible electronic records that are stored on a computer and are indistinguishable from printed documents.

In this case, the Court reasoned that the breach of a company’s computer use policy does not automatically grant it a possessory right in the breaching employee’s private emails:

Ignoring the significance of its express permission for “[o]ccasional personal use,” the company's argument appears to rely chiefly on the fact that plaintiff utilized the company's computer and that anything flowing from that use becomes subject to the company's claimed ownership right. We reject the company's ownership of the computer as the sole determinative fact in determining whether an employee's personal emails may become the company's property.” Stengart v. Loving Care Agency, Inc., 2009 WL 2822064 at p. 6 (N.J.Sup. A.D. 2009

In this regard, we agree with the tenor of a recent decision of the New York Court of Appeals, which discounted the significance of the fact that a company computer was the means by which an employee sent and received personal communications through a separate email account. See Thyroff v. Nationwide Mut. Ins. Co., 864 N.E.2d 1272 (N.Y.2007). Thyroff recognized that a computer in this setting constitutes little more than a file cabinet for personal communications. Id. at 1278. Property rights are no less offended when an employer examines documents stored on a computer as when an employer rifles through a folder containing an employee's private papers or reaches in and examines the contents of an employee's pockets; indeed, even when a legitimate business purpose could support such a search, we can envision no valid precept of property law that would convert the employer's interest in determining what is in those locations with a right to own the contents of the employee's folder of private papers or the contents of his pocket. As a result, we conclude a breach of a company policy with regard to the use of its computers does not justify the company's claim of ownership to personal communications and information accessible therefrom or contained therein.“ Id.

Employee-Attorney Email Sent Through Company Computer Protected by Attorney Client Privilege

The plaintiff here also communicated with her attorney through defendant company’s computers. The trial court determined that the employee had in so doing waived her attorney client privilege to those emails. The appeals court disagreed, holding that:

“…[W]e conclude that the judge exhibited inadequate respect for the attorney-client privilege she found that plaintiff “took a risk of disclosure of her communications and a risk of waiving the privacy she expected” when she communicated with her attorney through her work-issued computer, and that plaintiff's action in the face of the policy “constitute[d] a waiver of the attorney client privilege.” Accordingly, we reverse the order under review and conclude that the emails exchanged by plaintiff and her attorney through her personal Yahoo email account remain protected by the attorney-client privilege. There being no other basis for finding a waiver of the privilege, the judge erred in denying plaintiff's motion for the return of all copies of the emails in question." Id. at p. 9

Ethics Sanctions

It’s never a good sign when an appellate court speaks about attorney behavior inconsistent with a rule regulating attorney conduct. Here, the fact that the company’s attorney foraged through a forensic image of a hard drive, and read certain privileged documents, appears to have triggered a violation of New Jersey Rules of Professional Conduct:

“As we have already mentioned, the company's attorney has examined the privileged emails in question, referencing them in the little discovery that has taken place to date in this matter. We conclude that counsel's actions were inconsistent with the obligations imposed by RPC 4.4(b), which provides that when representing a client, “[a] lawyer who receives a document and has reasonable cause to believe that the document was inadvertently sent shall not read the document or, if he or she has begun to do so, shall stop reading the document, promptly notify the sender, and return the document to the sender.” Id.

The Court makes no distinction between reviewing a paper document and conducting a forensic examination of a computer’s hard drive:

“In considering these obligations, we are not unmindful that circumstances may arise when the attorney who has received such a document-whether through paper discovery or by forensically examining a computer's hard drive-may arguably believe the document is not protected by the attorney-client privilege. For example, the attorney here assumed that the company's policy regarding the use of its computers turned plaintiff's privileged emails into the company's property. Notwithstanding such an assumption, attorneys are obligated, as suggested by RPC 4.4(b), to cease reading or examining the document, protect it from further revelations, and notify the adverse party of its possession so that the attorney's right to retain or make use of the document may thereafter be adjudicated by the court.” Id.

The Court the determines that the company’s counsel had acted with “studied indifference” and that it had an affirmative duty to alert plaintiff that it was in possession of emails protected by attorney-client privilege:

“Here, rather than follow such an approach, Sills Cummis appointed itself the sole judge of the issue and made use of the attorney-client emails without giving plaintiff an opportunity to advocate a contrary position. That being the case, we reject the trial judge's finding that Sills Cummis had no affirmative duty “to alert plaintiff that it was in possession of the subject E-mail before reading it because Sills Cummis believed in good faith, based on [the company's] policy, that the E-mail was not protected by any privilege.” Sills Cummis may have reached that determination in good faith; but counsel thereafter acted in studied indifference to the right of plaintiff to argue otherwise and to seek a contrary ruling from an impartial judge.” Id., at p. 10

The Court reversed and remanded, in part ordering the return of all subject email, and for additional findings, including the imposition of sanctions against defendant’s counsel.

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Case: Electronic Funds Solutions, LLC v. Murphy
Citation: 2009 WL 1717383 (Cal.App. 4 Dist. 2009) [Not Officially Published
Date: 2009-06-25
Topics: Large Terminating Sanction for ESI Spoliation

Think terminating sanctions for spoliation might be costly? Well, they are, and this “Not Officially Published” decision from the California Court of Appeals, 4th District, Division 3 stands out as 2009’s poster child for the potential severity of a spoliation sanction.

The decision is short, and so will be this analysis. It seems that the trial court defaulted defendants for having erased their computer hard drives were ordered to be produced in discovery:

Defendants Electronic Payment Technologies, LLC (EPT), Michael Murphy, and Ty Bishop suffered a default judgment of $24,040,272, entered in favor of plaintiffs Electronic Funds Solutions, LLC (EFS) and Michael Barry, after defendants erased information contained on computer hard drives the trial court had ordered produced in discovery.” Electronic Funds Solutions, LLC v. Murphy, 2009 WL 1717383, 1 (Cal.App. 4 Dist. 2009)

After a first reversal, a second complaint, and a second default (can’t make this stuff up), the trial court entered judgment against defendants for 67.3 million dollars, comprising 10 million in tort damages, 7 million in pre-judgment interest, 72,000 in damages for conversion, of $20 million in exemplary damages for trade secret misappropriation; $30 million in general punitive damages; and $224,675.97 in attorney fees and costs.

The appellate panel first finds that the court did not abuse its discretion in imposing terminating sanctions:

The trial court's previous discovery orders are still outstanding and the evidence demonstrates defendants have failed to fully comply. Moreover, defendants' inability to produce the information because they intentionally destroyed some of the responsive materials or transferred them to a third party is not an excuse for failing to obey the trial court's discovery order.” Id.

The nature of defendants’ ESI discovery abuse:

The EFS Computer's hard drive had also been wiped by the Data Eraser software, but the program had been aborted before completion. The Data Eraser program was run on April 10, 2002, at approximately 2:35 p.m. Given the hearing on the motion to compel on April 10 began at 3:00 p.m., and defendants had promised to hand the computer over at the hearing, it appears the defendants aborted the Data Eraser program because defendants ran out of time to complete the wiping process. Although interrupted before it could complete its work, the Data Eraser program did destroy the hard drive's master boot record, partition table, file allocation table, and a number of other sectors. The destruction of these portions of the hard drive made the computer impossible to start up, and prevented the hard drive from being read even as a secondary drive to a running computer. The data recovered from this computer was obtained through forensic techniques.” Id., at p. 4

“Despite the intentional destruction of data on the hard drives, defendants served supplemental responses asserting under oath they had fully complied with the demands, making no mention of any data removed from the computers.” Id.

It must not have been much fun being defendants’ counsel.

One Data Wipe May Comprise a Continuing Discovery Violation

Here, defendants’ own actions rendering permanently unable to comply with a discovery request (or order) is tantamount to being permanently (and in continuing) violation of a discovery order. The Court determined this to be adequate justification for the imposition of a default:

A continuing discovery violation does not end if the responding party is permanently unable to comply because that party intentionally destroyed the materials it was ordered to produce. To simply wipe the slate clean would allow defendants to benefit from their intentional destruction of evidence, an outcome not mandated by the Greenup decision. In our prior opinion, we rejected any suggestion defendants might not have erased data had they known their liability could reach $24 million: “There is a significant difference between choosing not to defend a lawsuit at all, and defending a lawsuit by willfully disobeying lawful discovery orders. Defendants willing to accept known liability may properly elect to watch from the sidelines.’” Id.

“But if a defendant chooses to participate, he or she must play by the rules.... We cannot endorse a litigant's conscious decision to deliberately destroy evidence-based on the perception damages are limited to a particular amount.” ( Electronic Funds, supra, 134 Cal.App.4th at p. 1178.) Accordingly, we conclude the trial court did not abuse its discretion in striking defendants' answers to plaintiffs' amended complaint and entering a default. Id.

First the good news for defendant: The court vacated the 50 million dollar punitive damage award. The bad news: This left intact a nearly 17 million judgment.

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Case: IDT Corp. v. Morgan Stanley Dean Witter & Co.
Citation: --- N.Y.S.2d ----, 2009 WL 1794364 (N.Y.A.D. 1 Dept. 2009)
Date: 2009-06-25
Topics: Third party duty to preserve evidence; spoliation as basis for tort of fraudulent concealment or misrepresentation in NY by [not uninvolved] non-party; spoliation of subpoenaed documents by non-party.

In this decision from the New York Supreme Court, Appellate Division, the Court found that New York recognizes that intentional spoliation of evidence may be used the basis for asserting claims of fraudulent concealment or fraudulent misrepresentation.

Keep in mind that defendant Morgan Stanley was a non (but not uninvolved) party upon whom plaintiff served a subpoena for certain relevant documents involving a breach of contract between plaintiff and third party:

“The issue on this appeal is whether cognizable claims for fraudulent misrepresentation and fraudulent concealment may be based on intentional spoliation of evidence, notwithstanding that New York does not recognize an independent tort of third-party negligent spoliation. We conclude that intentional spoliation of evidence may be the basis for such claims.” IDT Corp. v. Morgan Stanley Dean Witter & Co., 2009 WL 1794364, 1 (N.Y.A.D. 1 Dept. 2009)

What was fraudulently misrepresented and concealed? It turns out that defendant Morgan Stanley produced on 2,000 of 500,000 relevant documents requested in plaintiff’s other-action subpoena:

The Court distinguishes two New York precedents concerning third (or non) party duties to preserve.

The Court first notes that the instant plaintiff asserted a claim of intentional spoliation. Moreover, as the Court points out, defendant Morgan Stanley, although not a party, was a fiduciary to the defendant in the unrelated action, and therefore “not uninvolved:”

“The Court of Appeals' decision in Ortega v. City of New York (9 NY3d 69 [2007], supra ) does not require dismissal of IDT's claims for fraud and fraudulent concealment simply because the vehicle for the alleged fraudulent conduct was concealment of evidence. First, the Ortega holding involved a claim of negligent spoliation of evidence, not a claim of intentional concealment or spoliation of evidence. Second, unlike the City in Ortega, which the court noted was a third party with a duty to preserve evidence but with no connection to the underlying litigation, Morgan Stanley was not an uninvolved third party to the arbitration proceeding between IDT and Telefonica. It had fiduciary relationships with both parties, and the concealment of documents from IDT arguably both benefitted its client Telefonica in the arbitration and protected Morgan Stanley from being sued by IDT.” Id., at p. 2

Spoliation as Basis for Fraudulent Concealment in Subsequent Action

In an interesting exercise in logic, the Court also distinguishes New York decisional authority refusing to recognize third party spoliation. In essence, it appears that the Court finds that while the evidence was spoliated (with contents unknown) during the first lawsuit (against a different defendant), the concealed documents were ultimately produced during the second lawsuit, thereby rendering any claims of speculation as to causation and damages moot.

“Two additional circumstances distinguish this case from Ortega. The Ortega court refused to recognize a third-party spoliation claim because the content of the lost evidence is unknown, thus leading to speculation as to causation and damages. Here, there is no such concern because the concealed documents have been produced. The court also found that it would not be sound public policy to permit an independent tort of spoliation to be asserted against a municipality. There are no public policy reasons to disallow IDT's claims for fraud and fraudulent concealment against its fiduciary based on the latter's spoliation of subpoenaed documents.” Id.

Result: New York recognizes (as does New Jersey) the tort of fraudulent concealment and fraudulent misrepresentation based on spoliation of evidence:

“Importantly, the Ortega court wrote that “[a]t bottom, plaintiffs seek recognition of a new cause of action because they cannot meet the traditional proximate cause and actual damages standards at the foundation of our common-law tort jurisprudence” (9 NY3d at 80). IDT suffers from no such impediment. It has met the pleading standard for fraud and fraudulent concealment and thus has a remedy under existing tort principles. There is no indication in Ortega that the court would reject an already recognized common-law tort claim simply because the claim was based on the spoliation of evidence.

We note that the New Jersey courts, which do not recognize a separate tort action for intentional spoliation, recognize a claim of fraudulent concealment based on the intentional spoliation of evidence ( see e.g. Rosenblit v. Zimmerman, 166 NJ 391, 766 A.2d 749 [2001]; R.L. v. Voytac, 402 NJ Super 392, 407-408, 954 A.2d 527, 536 [App.Div.2008] certif granted in part 197 NJ 259, 962 A.2d 530 [2008]; Viviano v. CBS, Inc., 251 NJ Super 113, 597 A.2d 543 [App.Div.1991] certif denied 127 NJ 565, 606 A.2d 375 [1992] ). There is no sound reason for New York courts to conclude otherwise.” Id., at p. 3

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2009-06-20T15:30:00.003-04:00

2009-06-20 Counsel Competency and eDiscovery, Meet and Confer - The New Black, and eDisovery Apocrypha, or a Trip Down (Sedona's) Memory Lane

A light week for eDiscovery and digital evidence, with two decisions. Interestingly enough, these decisions provide a study in contrasts, and also point out the dangers lurking in misdescribing, misapplying, or misapprehending the nature of computer generated information or data. The first, from the District of Arizona, finds the court compelling production of metadata. Interestingly enough, the second decision, from the U.S. District Court for the Eastern District of Wisconsin, relies on the “old” Sedona Principles, and finds that metadata need not have been preserved. That said, this second decision might be more representative of two failures by plaintiff: competency, and failure to meet and confer.

SWT

Decisions:

Kravetz v. Paul Revere Life Ins. Co., 2009 WL 1639736 (D. Ariz. 2009)
Kay Beer Distributing, Inc. v. Energy Brands, Inc., 2009 WL 1649592 (E.D. Wis. 2009)

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Case: Kravetz v. Paul Revere Life Ins. Co.
Citation: 2009 WL 1639736 (D. Ariz. 2009) [Designated “Not for Publication”]
Date: 2009-06-11
Topics: Production of ESI metadata, but not associated content compelled, metadata as relevant evidence

This brief decision from the U.S. District Court for the District of Arizona finds the court deciding defendants’ motion to compel production of hard drives and computer storage media. Here, defendants proposed the computer hard drives and other storage media would be provided to a third party to “determine the number of hours” spent typing by plaintiff each day on his computer (relevant evidence for plaintiff’s disability claims). Plaintiff argued in opposition that such examination would not enable defendants to determine the number of hours plaintiff expended “typing” on his computer each day.

The Court first points to the broad language of Fed. R. Civ. P. Rule 26(b)(1) and Rules 34(a)(1)(A):

“Parties may obtain discovery regarding any non-privileged matter that is relevant to any party's claim or defense.” Fed.R.Civ.P. 26(b)(1). Rule 34(a)(1)(A), Fed.R.Civ.P., allows a party to inspect, copy, test, or sample ‘any designated documents or electronically stored information.’” Kravetz v. Paul Revere Life Ins. Co., 2009 WL 1639736, 1 (D.Ariz.) (D. Ariz. 2009)

U.S. District Judge Martone then discusses why metadata comprised evidence relevant to plaintiff’s claims (and defendants’ defenses). Moreover, the Court determined that defendants had provided sufficient evidence (most likely by way of expert testimony) to support their assertions:

“Defendants have properly explained why the metadata on Kravetz's hard drives and storage devices may be relevant to the number of hours Kravetz worked prior to and after his injury.” Id.

Metadata vs. Content Production

Plaintiff argued that producing his hard drive and storage media was overbroad and would cause undue burden. In what seems to be a response to assertions either of privacy or privilege, the Court orders that only metadata relevant to the hours worked prior to his injury would be produced, and that neither defendants nor the forensic expert were permitted to view the content associated with such metadata:

“Defendants have properly explained why the metadata on Kravetz's hard drives and storage devices may be relevant to the number of hours Kravetz worked prior to and after his injury. However, defendants need not and may not review the substance of documents on plaintiff's hard drives and media devices.” Id.

“We will, therefore, compel plaintiff to provide the requested computer devices with the limitation that defendants may only extract metadata and other necessary electronic information regarding the amount of time spent on documents, but not the substance of the documents themselves. To the extent plaintiff challenges the ability of metadata to show the number of hours he worked, he is free to argue the weight that should be given to this information at trial. Id.

Note that the Court permits plaintiff to argue the probative value (or weight) of the metadata at trial.

Kudos to EDDE Co-Chair George Paul’s firm, Lewis & Roca, who represented defendant in this matter.

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Case: Kay Beer Distributing, Inc. v. Energy Brands, Inc.
Citation: 2009 WL 1649592 (E.D.Wis. 2009)
Date: 2009-06-10
Topics: Metadata production denied, failure to meet and confer on search terms, failure to meet and confer

In case anyone believes that the Autonation.com decision (approving the “original” Sedona Principles position that most metadata is without value and denying a party’s motion to compel production thereof) is now history, we refer to this vintage June 2009 decision in which the Court relies on the 2005 (i.e., “original”) Sedona Principles position, finding that no duty to preserve metadata, and no reason to compel production thereof.
Author’s Note: Other than the metadata approach (which, imo, might be the punishment doled out by the court on this hapless plaintiff) this decision is well reasoned.

Of course, the Sedona Principles 2008 metadata approach reversal, together with the late 2008 repudiation of the earlier (metadata valueless) Sedona approach in Aguilar v Immigration and Customs Enforcement Div. of U.S. Dept. of Homeland Security, 255 F.R.D. 350, 2008 WL 5062700 (SDNY November 21, 2008) [see EDDE Digest 4] seems to have escaped notice by the court.

To be sure, this case started out on the wrong foot. Both parties apparently represented to the Court that ESI discovery was not anticipated. The Court notes that in somewhat wry language:

“Although the Rule 26(f) Joint Report and Discovery Plan from December 28, 2007 indicated that the parties “do not anticipate that electronic discovery will be a significant feature of this case,” subsequent events have proven this optimistic prognostication wrong.” Kay Beer Distributing, Inc. v. Energy Brands, Inc., 2009 WL 1649592, 2 (E.D. Wis. 2009)

It’s also not insignificant that the parties’ discovery plan was submitted fully one year after the effective date of the 2006 eDiscovery amendments to the Federal Rules of Civil Procedure.

Did I mention that things started out on the wrong foot? Try this sample:

“Things started out on the wrong foot when Energy Brands erroneously stated that it did not have electronic data, including emails, concerning the claims asserted against it. In March 2008 counsel for the parties met and conferred on Kay Beer's request for email. (Weber Decl. in Supp. of Mot. to Compel, Exs. K-M; Doc. # 53-12, 53-13, 53-14.) In a letter of March 26, 2008, Brian W. McGrath, outside counsel for Energy Brands, represented that Energy Brands did not have electronic data that would include emails relating to Kay Beer. ( Id. at Ex. M; Doc. # 53-14.) At a hearing before the Court on a motion for a protective order the following month, counsel for Energy Brands claimed that everything that in-house counsel for Energy Brands had been able to find in a corporate document search had already been produced to Kay Beer. ( Id. at Ex. CC at 5; Doc. # 53-30.) On May 16, 2008, when asked to admit that it had in its possession or control stored electronic information relating to Kay Beer created on or before November 2, 2007, Energy Brands entered a denial. ( Id . at Ex. I, Resp. to Admit 11; Doc. # 53-10 at 3.) Three days later, Energy Brands admitted that it did have email dating back to approximately June 2003.” Id., at p. 2

The parties were unsuccessful at resolving issues related to the production of additional ESI. In short, plaintiff argued that email production was inadequate, and demanded an ESI search using much broader terms than originally used. Defendant argued that the new search terms demanded to be used by plaintiff was overly broad.

Incredibly, plaintiff then conceded that most of the information demanded (which was stored on five DVDs) was not likely to have any bearing on its claims, and the Court so notes the consequences:

“In this case, even Kay Beer concedes that it is highly unlikely that the vast majority of the ESI on the five DVDs Energy Brands has compiled has any bearing on the issues remaining in this case. Yet, Kay Beer insists that it be provided the DVDs so that it can conduct its own search. Energy Brands has no obligation to turn over to an opposing party in a lawsuit non-discoverable and privileged information.” Id., at p. 4

This deserves the first EDDE “D’oh” Award.

Failure to Meet and Confer to Agree on Search Terms

Nope. Plaintiff didn’t, although defendant offered, and the court also took notice:

“Kay Beer asserts in a footnote that Energy Brands has refused its request to produce the appropriate scope of email, but it offers no factual support for this assertion. (Doc. # 97, Kay Beer Reply at 6, n. 3.) To be sure, among the 313 requests to produce Kay Beer expounded in this case were at least a dozen directed to Energy Brands in which Kay Beer requested that Energy Brands produce email sent or received by named persons that included various terms. But the terms were stated in the disjunctive, requiring Energy Brands to produce ESI having nothing to do with Kay Beer or the facts of this case. See REQUESTS TO PRODUCE NOs. 110-122. The fact that Energy Brands did not want to add to the ESI it would have to review is not evidence of recalcitrance. Kay Beer's assertion that Energy Brands refused to conduct a further search is refuted by three separate emails from counsel for Energy Brands offering to work with Kay Beer's counsel in formulating search terms to locate emails that might be relevant. (Doc. # 53-23, Weber Decl., Exs. R., at 4, and V ., at 3, 7.)” Id., at p. 6

With the following language, one might guess in which decisional direction the Court is headed:

“Instead of working with Energy Brands' counsel, Kay Beer seems to have persisted in its demand that Energy Brands turn over all ESI that even mentions its name or some variant thereof.” Id.

Native File Format, Bates Stamping and Metadata (Oh my)

The Court first points out that plaintiff requested ESI in native data format; here, in the form of Outlook .pst files. The Court, apparently relying on expert declaration, then states:

“Kay Beer has also insisted that all documents be produced in native Outlook format, despite the fact the documents could not be Bates stamped in that format, they would be subject to alteration, and it would not be possible to select certain documents and produce only those in that format.” Id.

Interestingly enough, no mention is made that (as with any other physical evidence) the storage media containing such file could be Bates stamped, a working copy could be made of the original, (presumably forensically sound) .pst file without altering the original (else how do forensics examiners investigate ESI?) and that single emails could be produced either as .msg files, or as .tiffs, with associated metadata provided in a separate production.

These options appeared to lie outside the ken of plaintiff’s counsel.

What appears to have sealed the deal with the Court is plaintiff’s agreement that ESI be produced in either hard or soft copy (whichever was cheapest):

“Energy Brand asserted that Kay Beer's request that documents, information, and or data be produced in their original electronic format was unduly burdensome and noted that the parties had agreed at their Rule 26 conference that either a hard copy or electronic copy would be produced depending on what was most cost-effective.” Id.

Metadata – Circa 2005

Here’s where the Court takes a journey into the past, and relies on a Sedona position repudiated by the Sedona Principles themselves in 2008:

“Energy Brands also agreed that if Kay Beer made a good faith request based on demonstrated need for the native form of a document, Energy Brands would endeavor to produce the document in native form. ( Id.)” Id.

"Energy Brands' offer is consistent with The Sedona Principles for Electronic Document Production, which state that “[u]nless it is material to resolving the dispute, there is no obligation to preserve and produce metadata absent agreement of the parties or order of the court.” The Sedona Principles: Best Practices, Recommendations & Principles for Addressing Electronic Document Discovery (The Sedona Conference Working Group Series, July 2005 Version), available generally at http://www.thesedonaconference.org.” Id.

Blognote: ESI cannot be authenticated without at least some metadata. See George Paul’s excellent book “Foundations of Digital Evidence” (ABA 2008). All recent decisional authority read by the author of this digest clearly indicates that if metadata is relevant, or may lead to relevant information, it is, (in the absence of privilege, or a showing of inaccessibility, burden, etc.) discoverable.

Blognote: Time to murder a metaphor. It may be that the court punished plaintiff’s counsel for its incompetence, and indeed, that seems to be the theme here, but bad lawyering makes bad law; and this case stands out as an exemplar. Although one District Judge’s decision is not necessarily binding even on fellow District Judges (or Magistrate Judges for that matter) it is also reasonable to expect some deference to be paid to precedent set by earlier decisions. Now, those parties arguing for the production of metadata will have the unpleasant task of arguing against an opinion whose reasoning has been thoroughly repudiated by the very sources relied upon in that prior opinion. Bring on the experts, and the latest version of the Sedona Principles, or proceed at your peril.

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2009-06-13T23:29:00.004-04:00

2009-06-13 Early Stage eDiscovery Failures, Spoliation Standards in Delaware State Courts, and The Three Bases for a Court's Imposition of Sanctions for eDiscovery Abuse

Back on track with this week’s digest. Three for review. The first case, from the U.S. District Court for the District of Minnesota provides a what-not-to-do (or what not to not do) in the early stages of discovery. This analysis stands as the longest digest of the shortest decision yet. The second decision involves spoliation sanctions determination and imposition in Delaware state courts. This decision was given an in depth analysis because the Delaware state courts handle a significant volume of commercial and public company litigation. The third decision from the U.S. District Court for the Northern District of Georgia addresses the three sanctions available to a court to address a party’s discovery abuse. The defendant in that case “escaped” evidential sanctions, but not much else.

SWT

Decisions:

In re ZURN PEX PLUMBING PRODUCTS LIABILITY LITIGATION, 2009 WL 1606653 (D. Minn. 2009)
Beard Research, Inc., et al. v. Kates, et. al., 2009 WL 1515625 (Del.Ch. 2009)
Kipperman v. Onex Corp., 2009 WL 1473708 (N.D.Ga. 2009)

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Case: In re ZURN PEX PLUMBING PRODUCTS LIABILITY LITIGATION
Citation: 2009 WL 1606653 (D. Minn. 2009)
Date: 2009-06-05
Topics: Fed. R. Civ. P. Rule 26 and ESI discovery interpretation, counsel opinion no substitute for expert evidence

This eDiscovery decision from the U.S. District Court for the District of Minnesota arises out of a class action matter. While U.S. District Judge Montgomery first notes that “the parties have worked amicably throughout the discovery process, and [defendant produced] substantial amounts of hard copy, there appeared to be evidentiary gaps of relevant evidence from documents provided by non-parties, and the class plaintiff filed a motion to compel production of ESI.

Following depositions, plaintiffs requested, and defendants produced the names of individuals who had received a “legal hold” (presumably from defendant’s counsel). Plaintiffs then requested that defendant search the emails of these individuals as well as shared server drives. Not surprisingly, as the Court notes, defendant “balked at the request.”

Some extended context is helpful here. In class action litigation it is routine for a court to bifurcate the discovery process into two phases, the first addressing class certification issues and the second addressing others issues, including the merits. This case was no exception: U.S. Magistrate Judge Erickson bifurcated discovery, and ordered the parties to first focus on the issue of class certification.

That said, by the time plaintiff’s “Motion to Compel Production of Electronically Stored Information (“ESI”) was filed, defendant had already produced a substantial volume of hard copy material.

Author’s (Extensive) Note: I typically reserve observations for last, or at least after some analysis, but this case stands out (or may stand out, as the record provided in the decision is somewhat sparse) as a prime “how not to conduct discovery.” This relatively brief opinion deserves proper analysis, but in order to do so, some in-depth background is (at least imo) helpful. So, anything between the dashes (or hyphens set forth in repetitive fashion below) comes from the author, and not the court.

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Fed. R. Civ. P. Rule 26

The complaint in this matter was filed well after the effective date of the 2006 amendments to the Federal Rules of Civil Procedure. The hint lies in the index number for that case, which bears an “08” prefix. The two-digit prefix in federal district court civil case numbers indicates the year of filing.
It’s also a good idea to set forth those portions of Rule 26 pertinent to this decision. For those who want to view the source, from the source, here’s the link:

http://www.uscourts.gov/rules/CV2008.pdf

Fed. R. Civ. P. Rule 26(b) - “…General Provisions Governing Discovery

(1) Scope in General. Unless otherwise limited by court order, the scope of discovery is as follows: Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense — including the existence, description, nature, custody, condition, and location of any documents or other tangible things and the identity and location of persons who know of any discoverable matter. For good cause, the court may order discovery of any matter relevant to the subject matter involved in the action. Relevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence. All discovery is subject to the limitations imposed by Rule 26(b)(2)(C).
(2) Limitations on Frequency and Extent.
(A) When Permitted. By order, the court may alter the limits in these rules on the number of depositions and interrogatories or on the length of depositions under Rule 30. By order or local rule, the court may also limit the number of requests under Rule 36.
(B) Specific Limitations on Electronically Stored Information. A party need not provide discovery of electronically stored information from sources that the party identifies as not reasonably accessible because of undue burden or cost. On motion to compel discovery or for a protective order, the party from whom discovery is sought must show that the information is not reasonably accessible because of undue burden or cost. If that showing is made, the court may nonetheless order discovery from such sources if the requesting party shows good cause, considering the limitations of Rule 26(b)(2)(C). The court may specify conditions for the discovery.
(C) When Required. On motion or on its own, the court must limit the frequency or extent of discovery otherwise allowed by these rules or by local rule if it determines that:
(i) the discovery sought is unreasonably cumulative or duplicative, or can be obtained from some other source that is more convenient, less burdensome, or less expensive;
(ii) the party seeking discovery has had ample opportunity to obtain the information by discovery in the action; or
(iii) the burden or expense of the proposed discovery outweighs its likely benefit, considering the needs of the case, the amount in controversy, the parties’ resources, the importance of the issues at stake in the action, and the importance of the discovery in resolving the issues.

Fed. R. Civ. P. Rule 26(f) CONFERENCE OF THE PARTIES; PLANNING FOR DISCOVERY.

(1) Conference Timing. Except in a proceeding exempted from initial disclosure under Rule 26(a)(1)(B) or when the court orders otherwise, the parties must confer as soon as practicable — and in any event at least 21 days before a scheduling conference is to be held or a scheduling order is due under Rule 16(b).
(2) Conference Content; Parties’ Responsibilities. In conferring, the parties must consider the nature and basis of their claims and defenses and the possibilities for promptly settling or resolving the case; make or arrange for the disclosures required by Rule 26(a)(1); discuss any issues about preserving discoverable information; and develop a proposed discovery plan. The attorneys of record and all unrepresented parties that have appeared in the case are jointly responsible for arranging the conference, for attempting in good faith to agree on the proposed discovery plan, and for submitting to the court within 14 days after the conference a written report outlining the plan. The court may order the parties or attorneys to attend the conference in person.
(3) Discovery Plan. A discovery plan must state the parties’ views and proposals on:
(A) what changes should be made in the timing, form, or requirement for disclosures under Rule 26(a), including a statement of when initial disclosures were made or will be made;
(B) the subjects on which discovery may be needed, when discovery should be completed, and whether discovery should be conducted in phases or be limited to or focused on particular issues;
(C) any issues about disclosure or discovery of electronically stored information, including the form or forms in which it should be produced;

So, subject to certain limitations, (i.e., burden, duplication, expense, previous opportunity to discover, and burden-benefit analysis) Fed.R. Civ. P. Rule 26(b) provides that parties may obtain discovery or non-privileged relevant matter. Specific limitations on discovery of ESI may be imposed if a party can show inaccessibility by reason of undue burden or cost.

But wait, before we can undertake eDiscovery, parties are required to “meet and confer” to discuss ESI discovery issues as part of their general meet and confer obligations pursuant to Fed. R. Civ. P. Rule 26.

Fed. R. Civ. P. Rule 26(f)(3)(c) is particularly instructive, as it requires the parties to discuss and attempt to resolve any (emphasis added) ESI discovery issues, including form or production.

So, the Rules give parties specific procedural marching order prior to engaging in discovery generally, and in eDiscovery in particular. In plain language, parties are permitted by the Federal Rules of Civil Procedure to engage in discovery of ESI (subject to limitations set forth above). Before commencing discovery, however, the parties must
1. Meet and discuss eDiscovery issues, including preservation and form of production
2. Prepare some report or proposed case management or scheduling order outlining what issues (including ESI discovery) on which the parties agree, or disagree. The Court then decides disputed discovery issues.

_______________

Blognote: There is no language in the Federal Rules permitting a court a priori to prevent a party from undertaking ESI discovery.

Blognote: There is a somewhat fine distinction between undertaking ESI discovery (that is, discovering electronically stored information) and producing ESI. In this action, and although the terminology used by the Court is less than perfectly clear, the issue centered on ESI production and not ESI discovery.

With that out of the way, let’s return to the rather sparsely reported record in this case. No mention is made whether any Rule 26(f) meet and confer took place, or what was discussed, agreed to, or disputed, and no mention is made of any case management order provisions other than discovery bifurcation. What we do know is that this is a class action, and as is typical in class actions, discovery was bifurcated into phases, with the first described as “class certification.” The current discovery dispute arose during this first class certification phase.

This case also qualifies as a top contender for the “what-not-to-do” award for 2009.

Why? It appears that plaintiff’s counsel requested production of ESI in native format (rather than hard copy of ESI) only after “voluminous” hard copy of ESI by defendant:

“The parties have worked amicably throughout the discovery process, and Zurn has produced substantial amounts of hard copy documents.” In re Zurn Pex Plumbing Products Liability Litigation 2009 WL 1606653, 1 (D. Minn. 2009)

But wait, after acquiescing to the production of hard copy printouts of ESI from defendant, plaintiff saw clouds on the otherwise “amicable” discovery event horizon:

“It appears, based on third party discovery, that all of the communications regarding warranty claims and aggressive water have not been disclosed” Id.

Plaintiffs’ counsel then took a more aggressive stance, and requested ESI discovery, specifically a search of certain of defendant’s servers and drives. Not surprisingly, defendant’s response was an objection:

“[After depositions were taken] Plaintiffs requested, and Zurn produced, the names of Zurn employees who have received a legal hold notice in relation to this action. Raiter Aff. Ex. N. Plaintiffs responded with a list of 26 search terms that they wanted Zurn to use to search the emails of the identified employees as well as the shared servers (the J and K Drives). Id. Ex. O. Zurn balked at the request, arguing that the information was not necessary for class certification and that the request was overly broad and would be extremely costly.” Id.

The Court’s eDiscovery Analysis

Plaintiffs argued that the Magistrate Judge foreclosed the production of ESI. The Court disagreed, relying on what is (at least imo) a rather tortured interpretation of Fed. R. Civ. P. Rule 26(b). The Court’s language seems to conflate the discoverability of ESI (which for the most is expressly permitted by the rules) with the production of discovered ESI, which may be limited by a Court:

“The Federal Rules of Civil Procedure anticipate the need for ESI. Rule 26(b)(2)(B), however, places specific limitation on the production of ESI. “A party need not provide discovery of [ESI] from sources that the party identifies as not reasonably accessible because of undue burden or cost.” Fed.R.Civ.P. 26(b)(2)(B). On a motion to compel discovery, “the party from whom discovery is sought must show that the information is not reasonably accessible because of undue burden or cost.” Id. Additionally, a court order can further limit discovery. Id. 26(b)(1). i at p. 2" Id.

“As a threshold matter, Zurn argues that Judge Erickson's October 26, 2007 Order foreclosed the production of ESI. It does not. The Order specifically contemplated that the parties would be allowed to revisit the issue of ESI should they discover “voids in the information disclosed in hard copy form.” October 26, 2007 Order at *9. The emails from the Zurn distributor that discuss fittings failures and aggressive water, and which had not been produced by Zurn directly, suggest that there are gaps in the hard copy information already disclosed. See Raiter Aff. Exs. A, B, C. Accordingly, this Court will revisit the ESI issue in light of Rule 26(b)(2)(B).” Id., at p. 2" Id.

Author’s Note: The Court’s language is interesting because it does seem to confuse ESI discoverability with ESI production itself. I think the definition of ESI production, absent agreement to the contrary by the parties, is not so plastic. One may argue that the production of a hardcopy of a pdf of a word processing file, or a hardcopy of a tiff of an email, is production of ESI, but it is more likely that the hapless requester who is painted into this corner may have supplied both paint and brush to the Court. In this case, plaintiff did accept “voluminous” hard copy.

What plaintiff might have done in lieu of this acquiescence was to appeal the order of the Magistrate Judge to the District Judge. There are risks attendant to this admittedly infrequent, and frequently unsuccessful approach, but the denial of ESI discovery in the form chosen by the requesting party seems appropriate to bring “upstairs” to the District Judge.

Interestingly enough, and in seeming contradiction to its eDiscovery position stated above, the Court then describes the underlying purpose of discovery:

“Zurn first cites the voluminous documents it has already disclosed and makes the argument that Plaintiffs have sufficient discovery to adequately argue the first phase of the class certification issue. Def.'s Mem. in Opp'n to Mot. to Compel [Docket No. 67] at 11-13. This argument glosses over the purpose of discovery, which is to broadly enable parties to obtain the factual information needed to prepare a case for trial. See Alpern v. UtiliCorp United, Inc., 84 F.3d 1525, 1536 (8th Cir.1996). Even focusing on the narrower issue of class certification, there is a presumption in favor of discovery of Zurn's ESI.” Id. at p. 2

Magistrate Judge Erickson’s Decision

What makes this decision intriguing is that the excerpt provided by the District Court of Magistrate Judge Erickson ESI discovery ruling, which appeared to deny plaintiff’s request for discovery of ESI rather than the form of production, stating that:

“[W]hile ESI may prove relevant to the first stage of discovery, we cannot meaningfully make that prediction now, and require the parties to engage in what could be vastly more expensive, and yet utterly futile, discovery.” Id. However, Judge Erickson also stated that “should the parties uncover voids in the information disclosed in hard copy form, they are ... at liberty to press for further discovery including electronically stored information.” Id. at *9.” In re Zurn Pex Plumbing Products Liability Litigation, 2009 WL 16706653 (D. Minn. 2009).

Blognote: eDiscovery is discovery about discovery, irrespective whether that discovery involves class certification, jurisdiction, merits, or otherwise. To hold ESI discovery “meaningful” in one set of circumstances and not in another is to misapprehend the ubiquitous nature of computer generated information as evidence across the spectrum of case types in modern day litigation. Moreover, if Magistrate Judge Erickson’s comments are directed to ESI discovery, his position is also undercut by the fact (and by the acknowledgment of many other judges) that 99 percent of all evidence used in modern litigation is computer generated. That said, the magistrate judge did leave himself an out, permitting a revisitation of the issue (to permit ESI discovery) if circumstances later necessitated same.

ESI Production after Production of Hard Copy Not Duplicative

Not surprisingly, circumstances necessitated revisiting the issue, and the District Court took the more expansive approach, and turns first to defendant’s initial assertion that ESI production would be duplicative and therefore should be denied pursuant to Fed. R. Civ. P. Rule 26(b)(2)(C)(i). District Judge Atherton disagrees, and couches her language on the general schema of broad discovery contemplated by the Federal Rules.

“Zurn first cites the voluminous documents it has already disclosed and makes the argument that Plaintiffs have sufficient discovery to adequately argue the first phase of the class certification issue. Def.'s Mem. in Opp'n to Mot. to Compel [Docket No. 67] at 11-13. This argument glosses over the purpose of discovery, which is to broadly enable parties to obtain the factual information needed to prepare a case for trial. See Alpern v. UtiliCorp United, Inc., 84 F.3d 1525, 1536 (8th Cir.1996). Even focusing on the narrower issue of class certification, there is a presumption in favor of discovery of Zurn's ESI.” Id., at p. 2

Undue Burden and Cost, and Attorneys Representations Thereof

Defendant then argued that the ESI search and production would result in undue burden and cost for defendant, and to this issue the Court accorded greater concern.

“Zurn's second argument, however, that the production of ESI would be unduly burdensome and costly, is a greater concern for the Court. Plaintiffs request roughly 361 gigabytes of data. Brumagin Aff. ¶¶ 2, 3, 4; Freestone Aff. [Docket No. 69] ¶ 5. Zurn represents that by using the generally accepted standard of 75,000 pages per gigabyte, Plaintiffs' request amounts to nearly 27 million pages of documents. Def.'s Mem. in Opp'n to Mot. to Compel at 13, n .4. If the K drive were not searched, the remaining data consists of 48 gigabytes. FN1 Zurn also states that a search of the custodians' emails and J drive files will require approximately seventeen weeks and cost $1,150,000, exclusive of vendor collection and processing costs, to review and process the data. Freestone Aff. ¶ 9.” Id., at p. 2

The colloquy here is interesting. Defendant’s representations as to “generally accepted standard of 75,000 pages per gigabyte” or 27 million pages, is accorded little weight by the Court. Why? Obvious, my dear Watson. Defendant’s counsel, made the assertion without any expert testimony supporting her assertions. The Court notes that counsel’s naked assumptions didn’t count for all that much.

The Court first disagreed with defendant’s math:

“By the Court's calculation, a search of the custodians' emails and J drive files, as well as the DVD copies of information of former Zurn-employee custodians, consists of roughly 3.6 million pages of documents. It is unclear whether Zurn's cost and time numbers are based on a review of 27 million pages of documents, the 3.6 million pages of documents limited to the J Drive and custodians' emails, or a smaller sample of document pages likely to be flagged as a result of a search for certain relevant terms proposed by Plaintiffs.” Id.

What was at stake here? More than one million dollars in asserted discovery costs for defendant, and a significant expenditure of time:

“Zurn also states that a search of the custodians' emails and J drive files will require approximately seventeen weeks and cost $1,150,000, exclusive of vendor collection and processing costs, to review and process the data.” Id. at p. 1

Did defendant utilize an expert to help the court understand why significant costs and time would be required to comply with plaintiff’s ESI discovery request? The answer is no, and the Court doesn’t skip a beat in weighing in on the probative value of naked argument by counsel:

“The affidavit of Ms. Freestone, an attorney and not an expert on document search and retrieval, is not compelling evidence that the search will be as burdensome as Zurn avers.’ Id.

Yowch.

Call this a stellar example of being penny wise and pound foolish. I’m sure that the cost of hiring an expert to provide evidence for this assertion would have been orders of magnitude less expensive (read: much cheaper) than having to comply with what ultimately was the Court’s decision, and that was to engage in fairly extensive ESI discovery:

“In an effort to control costs, the Court will limit the search to the following fourteen terms based on the likelihood that they will produce relevant documents without including a vast number of documents that are likely irrelevant to the litigation. Zurn shall search the J Drive, the custodians' emails, and the DVDs of the information on the computers of former Zurn-employee custodians using the following terms:

(1) AADFW, (2) Corrosion, (3) Corrosive, (4) Corrosive Water, (5) Crack, (6) Dezinc, (7) Dezincification, (8) DZR, (9) Fail, (10) IMR, (11) Leak, (12) MES, (13) SCC, (14) Stress corrosion cracking.” Id. at p. 3

Oh, and the Court did leave open the door for defendant to raise the burden and cost issue, but reminded counsel to bring an expert for the occasion:

Additionally, if the search, as ordered by the Court, proves to be overly burdensome or costly, Zurn may renew its objection by presenting the Court with specific information including evidence from computer experts on applying the search terms, the number of documents identified, and the cost and time burdens of vetting documents.” Id.

Takeaway -- Producing Party: The author has been there, done that, and has been run over by the same truck that struck defendant’s counsel in this case. In order to prevent such lamentable outcomes, a wise strategy includes having a technology expert on hand to assist a court in understanding that which you are asserting is “generally accepted” as true. “That” of course, in this case, meaning matters technological.

Takeaway – Requesting Party: This motion appears to have been argued without the benefit of having a technology expert present to substantiate counsel’s claims, and this inured to plaintiff’s disadvantage in proceedings before the magistrate judge. Yes, it appears that plaintiffs will get their ESI discovery. That said, had counsel been supported by the declaration or testimony of any expert, ESI discovery might have commenced at the outset.

This decision provides a clarion call (or shout) to counsel to understand that an attorney’s representation about what technology is, or isn’t or about what technology costs, or does, or doesn’t do, amounts to no more than lay opinion to a court. Forewarned is forearmed.

***********
Case: Beard Research, Inc., et al. v. Kates, et. al.
Citation: 2009 WL 1515625 (Del.Ch. 2009)
Date: 2009-05-29
Topics: Delaware duty to preserve, adoption of Zubulake and Sedona guidelines, request for production triggers duty to preserve, basis for imposition of default judgment or adverse inference instruction as sanction for ESI spoliation

This spoliation decision arises from a trade secrets misappropriation and tortious interference with business relation action from the Court of Chancery of Delaware.

The allegations involve the ubiquitous ex-employee, a former employer, the ex-employee’s subsequent employer, and a laptop computer. The sanctions sought were, alternatively, default or an adverse inference jury instruction:

“In particular, Plaintiffs contend that an ex-employee's laptop computer was irretrievably altered after a duty to preserve that evidence had arisen and that the ex-employee and his subsequent employers are responsible for that alteration. By way of remedy, Plaintiffs urge this Court to grant a default judgment in their favor on Counts I and II of their Complaint for tortious interference with business relations and misappropriation of trade secrets, respectively. Alternatively, Plaintiffs request an adverse inference that the destroyed evidence contained information that would favor their claims. Plaintiffs also seek imposition of attorneys' fees and costs. Defendants vigorously oppose the motion for sanctions.” Beard Research, Inc. v. Kates,” 2009 WL 1515625, 1 (Del.Ch. 2009)

Duty to Preserve Under Delaware Law

The Court first provides an analysis of a party’s duty to preserve relevant evidence under Delaware law. Note the reliance on Zubulake IV and the Sedona Guidelines. Not surprisingly the duty to preserve includes evidence that might be relevant to anticipated future litigation:

"A party in litigation or who has reason to anticipate litigation has an affirmative duty to preserve evidence that might be relevant to the issues in the lawsuit.FN62 Whether a person has reason to anticipate litigation depends on whether the “facts and circumstances ... lead to a conclusion that litigation is imminent or should otherwise be expected.” FN63 A court may sanction a party who breaches this duty by destroying relevant evidence or by failing to prevent the destruction of such evidence.FN64" Id.

"FN62. See Triton Constr. Co. v. E. Shore Elec. Servs. Inc., 2009 WL 1387115, at *8 (Del. Ch. May 18, 2009); Acierno v. Goldstein, 2005 WL 3111993, at *6 (Del. Ch. Nov. 16, 2005); see also Brandt v. Rokeby Realty Co., 2004 WL 2050519, at *11 (Del.Super.Sept.8, 2004) (“A party, anticipating litigation, has an affirmative duty to preserve relevant evidence.”); Positran Mfg., Inc. v. Die bold, Inc., 2003 WL 21104954, at *2 (D.Del. May 15, 2003) (citations omitted); Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 216 (S.D.N.Y.2003).” Id.

“FN63. The Sedona Guidelines: Best Practice Guidelines & Commentary for Managing Information & Records in the Electronic Age (“ Sedona Guidelines ”) 40 n. 1 (2004), available at http:// thesedonaconference.org/content/miscfiles/TSG9_05.pdf; see also id. at 40 (citing numerous federal cases) (“An organization's information and records management program should anticipate circumstances that will trigger the suspension of normal destruction procedures.”). Id.

In this instance, at issue was [the ex-employees] laptop computer, an original hard drive, and a “substitute” hard drive, and as is typically asserted in this type of proceeding, crashes, reformats and reinstalls. And the deletion of nearly 11,000 relevant files as evidence by forensic examination. Oh my.

It is helpful at this point to provide a truncated event timeline:

October 2007: Plaintiff’s explicitly requested production of the laptop as a source of potentially relevant evidence.

Defendant refused to produce the computer without a court order. No matter, said the Court. The duty to preserve was nonetheless triggered at least as early as that time:

“Whether or not Defendants' position in that regard was substantially justified, Kates, ASDI, and ASG knew as of October 2007, at the latest, that Plaintiffs believed the laptop contained relevant information. In those circumstances, each of those three Defendants had an affirmative duty to preserve the Gateway as evidence.” Id.

But wait, noted the Court: there was an arguably earlier preservation trigger. Here’s why:

February 2004: Defendant [the ex-employee] resigns from plaintiff.
March 2004 (approx): Defendant is employed by co-defendant ASG
Early 2004: Defendant ex-employee understands likelihood of being sued by ex-employer
May 2005: Ex-employee and new employer are sued by plaintiff
June 2005: Plaintiff serves first set of discovery requests to defendant ex-employee

Beginning in 2003 and at all times pertinent thereto, defendant ex-employee used a laptop computer for his everyday work and personal matters.

Plaintiff asserted three arguments in support of its contention that the ex-employee had tampered and with both the original and substitute hard drives “in a way that destroyed or threatened to destroy relevant evidence on a number of occasions:

“(1) Kates's deletion of all ASG data and files from the original hard drive in or around November 2005;
(2) Biggers's installation of a new hard drive in the laptop in or around December 2007 and return of the original hard drive to Kates, who then could not account for its whereabouts; and
(3) Kates's tampering with the laptop and deletion of certain files in July 2008, just before I ordered Defendants to produce it for Plaintiffs' inspection. ” Id. at p. 6

As to the November 2005 actions, the Court first finds that the by deleting files and emptying the trash or recycle bin, the employee had destroyed data. The Court also found that the ex-employee had already been in litigation for a number of months at the time (November 2005) he deleted files and emptied the laptop’s recycle bin.

The Court also determined that the ex-employee’s new employers (both co-defendnats) also had an obligation to preserve “well before 2005” as they shared the same counsel, and had shared the same counsel, since the commencement of the litigation.

But wait, argued the co-defendants. No specific request was made for the ex-employee laptop, as of November 2005, and so there was no duty to preserve it. Not so, said the Court.

But first, the Court explains that the problems it will later describe might have been prevented by early meet and confer between adversary counsel. The message to future litigants appearing before this court is clear: Agree on ESI issues (including preservation and destruction) and the Court will generally not interfere. Fail to agree, and the Court will not look kindly on a party’s failure to impose stringent preservation measures in a challenge mounted by an adversary. In other words, the Court is likely to hold a party who destroys evidence in the absence of an agreement between the parties to a much higher standard of preservation.

“In complex commercial litigation today, virtually all discovery involves electronic discovery to some extent. It also is well known that absent affirmative steps to preserve it, at least some electronically stored information (“ESI”) is likely to be lost during the course of litigation through routine business practices or otherwise.” Id.

“These realities counsel strongly in favor of early and, if necessary, frequent communications among counsel for opposing litigants to determine how discovery of ESI will be handled. To the extent counsel reach agreements recognizing and permitting routine destruction of certain types of files to continue during litigation, the Court has no reason to object." Id.

“Conversely, if the parties do not focus on the handling of e-discovery in the early stages of a case, the Court is not likely to be sympathetic when, for example, one party later complains that stringent measures were not instituted voluntarily by her adversary to ensure that no potentially relevant information was lost. Rather, instead of holding a party to a stringent standard that might have been appropriate if established earlier in the case, the Court probably will apply an approach it deems reasonable, taking into account the insights provided by the case law and some of the guidelines and principles developed by various respected groups that have studied the challenges of electronic discovery [Footnote omitted].” Id. at p. 7.

Takeaway: In Delaware, negotiate an advantageous (to your client) ESI preservation and destruction agreement with your adversary as early as possible.

Failure to Impose Litigation Hold

The Court also points out that there was “no evidence” produced by any defendants indicating that any actions to preserve evidence were taken as of November 2005. The foreseeability standard will be familiar:

“Defendants knew or, at least, should have known that Kates had a laptop that might contain information relevant to the litigation and, therefore, should be preserved. The complete absence of any evidence that Defendants ASDI, ASG, or Kates took any action to satisfy their obligation to preserve relevant information on Kates's laptop in 2005 leads me to conclude that ASDI and ASG bear some responsibility for the destruction of evidence that occurred in November 2005, albeit much less than Kates himself.” Id.

December 2007: In December 2007, defendant ex-employee “twice successfully and once unsuccessfully” tried to reformat what was apparently a failing hard drive in the laptop. The Court notes that each of these acts “created a risk that relevant information on the original hard drive would be overwritten and effectively destroyed.”

At this time, plaintiff had specifically requested the ex-employee’s laptop (and drive) and that the ex-employee refused to produce same without a court order. The Court points out that even though the hard drive did fail mechanically (failed to spin up), there was still an opportunity to retrieve relevant evidence that defendant ex-employee had a duty to preserve. During that time, the ex-employee’s new employer replaced the failed drive with a new drive. The location of the original drive? Whereabouts unknown.

The Court was not amused:

After determining that the hard drive would not “spin” and that he could not make a “ghost” copy of the drive, Biggers replaced it with a new drive and returned the original to Kates. The original drive has not been seen since then.

The loss of the original hard drive deprived Plaintiffs of the opportunity to examine what might have been relevant evidence. Plaintiffs' IT expert, Paul Herrmann of EVI, has sworn that, even though the hard drive did not spin or operate when Biggers examined it, there is a high likelihood that the drive could have been repaired with full recovery of all data from it.FN68 Defendants did not rebut Herrmann's testimony, and I find it credible." Id. at p. 8

Based on this and other evidence, the Court found that all defendants had breached their duty to preserve relevant evidence.

Late July 2008: Suffice it to say that in late July 2008, “after being advised” that the Court was likely to order the immediate production of the laptop, defendant ex-employee “brazenly ran a disk-cleanup program on the new hard drive on the eve of the hearing regarding it.”

The Court was singularly unimpressed with defendant ex-employee’s attempts at computer hygiene:

“Kates tampered with the laptop without consulting with or providing any advance notice to his own counsel, let alone Plaintiffs. This Court cannot condone such flagrant disregard for the discovery rules and a party's obligation to preserve potentially relevant evidence.” Id.

Delaware Standards for Application of Appropriate Sanctions for Spoliation of Evidence

Under Delaware, a court has the power to impose sanctions under two theories: The first theory is resembles the federal court’s “inherent powers” to manage its own affairs. Indeed, the Court points to the Second Circuit’s decision in Residential Funding v DeGeorge, and the Third Circuit’s decision in Schmidt v. Milwaukee Elec. Tool Corp. in support of its assertions:

“The Court has the power to issue sanctions for discovery abuses under its inherent equitable powers, as well as the Court's ‘inherent power to manage its own affairs.’FN70“ Id.

“FN70. Residential Funding Corp. v. DeGeorge Fin. Corp., 306 F.3d 99, 106-07 (2d Cir.2002); see also Schmid v. Milwaukee Elec. Tool Corp., 13 F.3d 76, 79 (3d Cir.1994).” Id., at p. 9

Borrowing again from federal court decisions (this time, from the Court’s home federal District of Delaware, the Court explains that sanctions serve three functions:

“Sanctions serve three functions: a remedial function, a punitive function, and a deterrent function.FN73 Keeping these purposes in mind, the Court will consider the following factors in determining the appropriate sanctions:

FN73. Micron Tech., Inc. v. Rambus Inc., 255 F.R.D. 135, 148 (D.Del.2009) (citation omitted).
(1) the culpability or mental state of the party who destroyed the evidence;
(2) the degree of prejudice suffered by the complaining party; and
(3) the availability of lesser sanctions which would avoid any unfairness to the innocent party while, at the same time, serving as a sufficient penalty to deter the conduct in the future.FN74

FN74. Positran Mfg., Inc. v. Die bold, Inc., 2003 WL 21104954, at *2 (D.Del. May 15, 2003) (citation omitted).” Id. at 9

“The Court has wide latitude to fashion an appropriate remedy, but the remedy must be tailored to the degree of culpability of the spoliator and the prejudice suffered by the complaining party.” Id

Default Judgment or Dismissal

The Court then discusses the menu of sanctions types it could impose under Delaware law.

"To impose a default judgment, the spoliator must have acted “willfully or in bad faith and intended to prevent the other side from examining the evidence.” FN78 Entry of a judgment against the spoliating party should be regarded as “a last resort,” FN79 however, and a motion for such relief should be “granted only if no other sanction would be more appropriate under the circumstances.” FN80 Id. at p. 10

“FN77. Sundor Elec., Inc. v. E.J.T. Constr., 337 A.2d 651, 652 (Del.1975).FN78. Positran, 2003 WL 21104954, at *2 (citations omitted).FN79. Baliotis v. McNeil, 870 F.Supp. 1285, 1290 (M.D.Pa.1994).” Id.

The Court determines that entry of default would be an “extreme sanction” and that the record in this case did not support it. The Court reasons that while it had been demonstrated that computer information had been deleted, plaintiffs had not shown that the any deleted would have shown that defendant’s had acted in the manner alleged in the complaint. The Court reasoned further that an adverse inference instruction on that issue to be appropriate under the circumstance.

Although the Court acknowledges intentionality to some degree by each defendant, the “marginality” of relevance of the evidence shown to have been destroyed augured in favor of the lesser sanction of an adverse inference instruction rather than a default judgment.

Adverse Inference Sanctions Under Delaware Law – The Sears Test

The Court then provides an analysis for the imposition of sanctions for spoliation under Delaware law.

“As the Delaware Supreme Court said, ‘[i]t is the duty of a court, in such a case of willful destruction of evidence, to adopt a view of the facts as unfavorable to the wrongdoer as the known circumstances will reasonably admit.’ FN82 Id. at p. 10

FN82. Equitable Trust Co. v. Gallagher, 102 A.2d 539, 541 (Del.1954). Id.

The Court then describes the Delaware Supreme Court’s recently announced standards for the adverse inference imposition:

“More recently, the Supreme Court articulated the standard for drawing an adverse inference as follows:

“An adverse inference instruction is appropriate where a litigant intentionally or recklessly destroys evidence, when it knows that the item in question is relevant to a legal dispute or it was otherwise under a legal duty to preserve the item. Before giving such an instruction, a trial judge must, therefore, make a preliminary finding that the evidence shows such intentional or reckless conduct.FN83" Id.

FN83. Sears, Roebuck & Co. v. Midcap, 893 A.2d 542, 552 (Del.2006).” Id.

Adverse Inference Sanctions Imposition Requires Preliminary Finding of Intent or Recklessness

The Court then further explains that under Supreme Court of Delaware’s Sears test, a Court may impose an adverse inference instruction only after a preliminary finding of intent or recklessness:

“It is not enough that the “absence of evidence is not adequately explained.” FN84 Likewise, the negligent destruction of evidence does warrant drawing an adverse inference; rather, the drawing of an adverse inference requires as a predicate a “preliminary finding of intentional or reckless destruction of evidence. [footnote omitted]” FN85 Id.

The Court then proceeds to define “intent” and “recklessness” when applying the Sears adverse inference propriety test. “Intent” is defined in its traditional manner, and presumes some purposefulness :

“The intentional destruction of evidence is reasonably straightforward. “Intention” modifies the actus reus of the destruction in the sense that the act was voluntary. Thus, for example, a somnambulist who lights a match and tosses it onto a pile of relevant documents does not act with the required mental state for spoliation. For spoliation, the spoliator also must have intended to act “with purpose.” Id., at p. 11

The Court then admits that it has more of a challenge when defining “recklessness” within a spoliation context.

On a spectrum of possible states of mind, recklessness exists somewhere between intentional conduct on one side and negligent conduct on the other side. In Jardel v. Hughes, the Delaware Supreme Court defined recklessness in a civil context as “a conscious indifference to the rights of others.” FN88 In further describing civil recklessness, the Court stated: “Where the claim of recklessness is based on an error in judgment, a form of passive negligence, plaintiff's burden is substantial,” because the “ precise harm which eventuated must have been reasonably apparent but consciously ignored in the formulation of the judgment.” Id.

All that said, the Court appears to have little difficulty in fashioning a simple definition based on “knowing disregard:”

“Reckless conduct reflects a knowing disregard of a substantial and unjustifiable risk. It amounts to an “I don't care attitude.” Recklessness occurs when a person, with no intent to cause harm, performs an act so unreasonable and so dangerous that he or she knows, or should know, that harm will probably result.’ Id.

Blognote: This resembles the “continuum” of culpability (from negligence to intentionality) utilized by federal courts. See, e.g., Technical Sales Associates, Inc. v. Ohio Star Forge Co. 2009 WL 728520 (E.D.Mich. 2009) [Digested in EDDE 19]

Result: As to defendant ex-employee, the Court found that he had prior notice of the trigger of his duty to preserve, that he was a highly educated individual, and that he with knowledge that he was under a duty to preserve evidence, nonetheless took action on “numerous occasions” to reformat, and then, without real explanation, lost the original hard drive of his laptop computer. The Court found this sufficient basis for the imposition of an adverse inference sanction:

“Moreover, Kates admitted knowing that reformatting his laptop's hard drive on numerous occasions could overwrite or delete data stored on the hard drive. Nevertheless, around November 2005, Kates intentionally deleted files from the laptop after ASG laid him off. Moreover, in or around September 2007, Mr. Elzufon, then lead counsel for Kates, ASDI, and ASG, explicitly told Kates not to destroy his laptop. Still, within a few months, Kates had his original hard drive replaced by an agent of ASDI and then lost the original drive. I find, therefore, that Kates knew of his duties to preserve evidence, including specifically the information on his laptop, but consciously disregarded those duties. Thus, an adverse inference is warranted based on the replacement and subsequent loss of the original hard drive.” Id.

Adverse Inference and Substantive Proof

The Court next addresses the issue of what adverse inference language to use. While the plaintiff urged the Court to infer that the missing evidence (here deleted emails and a PowerPoint presentation) would have provided evidence proving plaintiff’s claims, the Court split adverse inference analysis.

Missing eMail

The Court notes that there was no proof that any such emails existed, and accordingly refuses to take “absence of evidence equates to evidence of absence” argument bait. Following Delaware decisional authority, the Court explains that an adverse inference should never take the place of substantive proof:

“There are two problems with Plaintiffs' argument vis-á-vis the emails. First, Plaintiffs have no direct evidence that these emails ever existed. The Delaware Supreme Court has held that “even if [a party] were entitled to some kind of inference from [another party's] failure to produce records, this inference does not amount to substantive proof and cannot take the place of proof of a fact necessary to [the first party's] case.” FN91 In other words, an adverse inference is exactly that-an inference and not substantive proof. Plaintiffs argue that the paucity of emails produced FN92 in comparison to the seventy or so phone calls between Blize and Kates suggests that there may have been more emails that were deleted. To obtain an adverse inference, however, a party must offer more than mere speculation and conjecture that a particular document existed. Id. at p. 12

Blognote: This makes eminent sense. An adverse inference providing substantive proof would be tantamount to a default judgment.

Existence of Email Evidence from Other Sources

The Court also refuses to give an adverse emails in connection with missing emails because the emails still existed and could be obtained from other sources. In so holding, the Court notes that the emails exist on both the send and receive ends, and that some of those emails had indeed been produced.

Adverse Inference and PowerPoint Presentation

The Court took a different tack in addressing the issue of the missing PowerPoint presentation. Here, the only version of the PowerPoint presentation, which was considered relevant evidence, had been irretrievably lost, but only after defendant’s duty to preserve had been triggered.

Consequently, it is reasonable to infer the information for the presentation would have been on the original hard drive for the Gateway. Due to the recklessness of, at least, Kates and arguably ASDI and ASG, as well, in late 2007 and thereafter, in the face of their obligations to preserve potentially relevant evidence, the original hard drive is “gone” and cannot be examined for purposes of this litigation. In these circumstances, I consider it appropriate under the standard set forth by the Supreme Court in Sears to draw an adverse inference that the presentation did include a copy of information from the CB catalog.FN93 Whether additional adverse inferences are warranted will need to await the completion of the post-trial briefing and argument. Id.

Attorneys Fees, Costs, and Wild Goose Chases

The Court awarded attorneys fees and costs. The language used by the Court strongly suggests that although spoliation issues directly affect parties to a lawsuit, the wasting of judicial resources are never far from the mind of the typical jurist:

“Because the original hard drive was replaced, Plaintiffs were forced to engage in what amounted to a wild goose chase in search of information stored on Kates's computer. Indeed, the actions of Defendants ASDI, ASG, and Kates have frustrated the Court, because it was forced to sit through a hearing about the laptop when the original hard drive already was missing and to read Plaintiffs' opening brief on the pending Motion only to be sandbagged, like Plaintiffs, by the admission in the answering papers that the original hard drive already had been replaced by early 2008. The vexatiousness of Kates's conduct was compounded further by his undisclosed deletion of numerous files from the new hard drive before the July 2008 hearing.” Id., at p. 13

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Case: Kipperman v. Onex Corp.
Citation: 2009 WL 1473708 (N.D.Ga. 2009)
Date: 2009-05-27
Topics: Fed. R. Civ. P. Rule 26(g) certification violation, eDiscovery Abuse ND Georgia
This decision comes to us from the U.S. District Court for the Northern District of Georgia. The underlying action involved transfer fraud arising out of a bankruptcy. The Court found that defendant had violated its Fed.R. Civ. P. Rule 26(g) certification obligations. This is the second Rule 26(g) violation case this year (the first was Covad v Revonet, see EDDE Digest 30)

That said, it bodes ill for one party or another when the Court, after noting that the action has fostered more than 600 docket entries, opens up with this:

The lengthy discovery process, which has spawned four discovery hearings, has been contentious at best and abusive at worst, and the court has expressed its displeasure with the parties' behavior on numerous occasions. Kipperman v. Onex Corp., 2009 WL 1473708, 1 (N.D.Ga. 2009)

Both sides filed motions for sanctions, including sanctions for eDiscovery abuse. The Court required additional information as a result of the “severity” of plaintiff’s request for sanctions. Plaintiff’s response, in pertinent part alleged “electronic or email discovery abuse.”

Electronic Discovery

The Court first notes that the parties had “throughout” their dispute battled over defendant’s obligations to provide back-up electronic documents in response to plaintiff’s document production requests. Defendants “had originally agreed to search their client’s active computer files and servers.” The parties discovered that eighteen emails, “at least one” of which came from a Blackberry, were not produced. Plaintiff then demanded restoration and search of backup media (at defendant’s expense, of course) to produce those emails.

As the Court notes:

“The parties engaged in extensive back and forth beginning in March of 2007 as Plaintiff sought to determine what e-mails Defendants had produced from the live server ( i.e., what data stays on the server and for how long), what types of e-mail might be on backup tapes, other sources for such e-mails, and the costs of restoration. Id.., at p. 6

The plaintiff took the only course then available, and filed its motion to compel. Defendants had 40 backup tapes that could have held relevant evidence. The Court noted that plaintiff did not request that all 40 back-up tapes be restored initially, and the Court ordered that two back-up tapes be sampled.

“The court directed Plaintiff to designate two tapes and design a search and directed Defendants to pay for it. The court made Plaintiff the guarantor of the search's success, however, and granted Defendants the right to demand fees if it produced little discoverable material. Plaintiff selected its tapes and provided its terms by January 16, 2008. Defendants performed a search on the two tapes, received hits resulting in thousands of documents, and began releasing documents to Plaintiff on a rolling basis.” Id., at p. 7

The term “thousands of documents” should be kept in mind…

Plaintiff thereafter filed a motion to compel defendant’s full compliance with the Court’s order, and the next day received what the Court described as “an enormous” production of documents.

Defendant’s Misrepresentation

Defendant had represented in a hearing to the Court that [defendant’s] back-up tapes did “overlapped” each other as asserted by defendant’s counsel. During the course of this voluminous production, plaintiff determined that defendant’s back-up did not overlap, and that as such, the back-up tapes produced did not cover the entire period they were asserted to cover by defendant.

The Court held an additional hearing, during which plaintiff argued the value of defendant’s production, and requested one additional tape, a certification of completion from defendant, and “some mechanism to deal” with the fact that plaintiff deposed many witnesses without full access to relevant documents.

The Court examined some email samples and delivered some unpleasant news to the defendant:

“The court itself examined examples of some of the e-mails produced to assess relevance: “I don't consider myself enough of an expert on the law in this area to declare these to be smoking guns but they certainly are hot and they certainly do smell like they have been discharged lately.” Id. at p. 8.

“…In conclusion, the court found, “It is apparent to the court that the Defendants did not do what the court ordered them to do previously, and so this is an instance where I could impose sanctions.” Id.
It’s never a good sign when a Court provides an excerpt from a hearing in a footnote that goes something like this:

“During the hearing defense counsel attempted to justify his earlier statements to the court about e-mail and justify Defendants' actions. Defense counsel also conceded that Defendants should have asked for a protective order with respect to its initial production. The court notes:

“I appreciate the fact that you wish to say that. I thought the Plaintiff's Motions for Sanctions was exceptionally well done. As a young judge I probably would have granted it.”

“I am trying to tell you in the clearest way that I know how that you're about a millimeter away from having your answers struck, and it goes back to the beginning argument we had today to come through this.”

... I didn't say come close. I said this is what you have to do. That's an order of the court, and as an officer of the court you are obliged to follow that or to get a protective order to get relieved of that, and failing either, maybe you have to get rid of your client, I don't know, but what I'm trying to explain to you is something that's been said a lot before. Close doesn't count in hand grenades, horseshoes and it doesn't count here when you have to abide by an order of the court.” Id.

Lying in the [eDiscovery] Bed One Makes, Misrepresentations

Ok, just a footnote, perhaps, but the Court doesn’t stop there. What follows are excerpts from the body of the opinion:

Notwithstanding the fact that the Court was “not unsympathetic” to the “massive” amount of discovery in this litigation:

"Defendants' actions have delayed the production of electronic discovery throughout this litigation. Defendants have consistently tried to minimize the likely value of this discovery. The court's minimal forays into the electronic discovery that has been produced has shown just the opposite. Id., at p. 9

“Therefore, the court gave Defendants numerous tools by which to reduce the burden of e-mail discovery, including an opportunity to limit Plaintiff's search terms and an opportunity to provide a list by which the number of people and the number of boxes being searched could be reduced. Defendants did not take advantage of these opportunities. Defendants must now lie in the bed that they have made.” Id.

The Court then characterizes defendant’s assertions as to the value of email ESI discovery as an unsuccessful attempt to influence the Court’s ruling:

“The court does condemn Defendants, however, for making blatant misrepresentations about the value of e-mail discovery in this case in an effort to influence the court's ruling, for refusing to follow the court's ruling once made, and for behaving as if they, and not the court, got to decide what electronic material was relevant and discoverable under Rule 26 and what material was not.” Id.

Nor was the colloquy between defendants and the Court spared scrutiny:

“Experienced defense counsel misrepresented the scope and value of e-mail discovery to this matter.” Id.

Defendant’s Counsel Representations As Akin to Willful Omission or Misrepresentation

It appears that the Court characterizes defendant’s counsel’s misrepresentations to the Court as arising only from two possibilities: incompetence or some degree of intentionality:

“Further, the court finds it absolutely inconceivable that defense counsel did not know in January of 2008, more than two years into the case and more than one year into full discovery, whether his client readily used e-mails. Any competent counsel should be expected to ask his client such questions in the infancy of discovery. If counsel did not know, it was because he did not wish to know, and reckless indifference to the truth of a matter is a close brother to willful omission or misrepresentation.” Id., at p. 10

Local Counsel On the eDiscovery Abuse Hook

Think you that it may be possible to beard eDiscovery abuse by pinning blame on local counsel? Consider the following footnote [Footnote 6] to the Court’s decision, and think again:

“FN 6. The court finds it notable that Defendants' legal team chose to have local counsel argue the e-mail portion of the hearing. Local counsel likely had the least personal knowledge about the workings of Onex and Magnatrax and the least daily telephone and face contact with the clients. Therefore, the court can conceive of a situation in which local counsel had not had discussions about e-mail usage with his client. Regardless, he was responsible for being familiar with the state of the record. Further, his co-counsel were responsible for ensuring that he made no misrepresentations to the court or for correcting any made. Id.

Blatant Disregard for Court Order

It’s also not a good sign when a party is singled out for not complying with a court’s discovery order:

“Defendants blatantly disregarded the court's order that they produce all documents responsive to Plaintiff's search terms on the two tapes designated. Rather than seeking a protective order Defendants determined themselves that it would be overly burdensome to search the e-mail boxes of hundreds of individuals employed with Onex and its related companies that had no role in the Magnatrax transactions.” Id., at p. 11

Violations of Fed. R. Civ. P. Rule 26(g) Certification

This is the second decision in which a federal district court discusses how eDiscovery abuses may comprise a Fed. R. Civ. P. Rule 26(g) certification violation. The first was Magistrate Judge Facciola’s May 27, 2009 (has it really been that long-lol?) decision in Covad v. Revonet --- F.R.D. ----, 2009 WL 1472345 (D.D.C. 2009)

The Court first acknowledges the Eleventh Circuit’s position that discovery imposes costs on all participants:

“As the Eleventh Circuit has recognized, discovery imposes costs on the litigant from whom discovery is sought, the party seeking discovery, and the judicial system itself. Chudasama v. Mazda Motor Corp., 123 F.3d 1353, 1367 (11th Cir.1997).” Id. at p. 16.

Not surprisingly, the Court also discusses how discovery abuse wastes scarce judicial sources. Here, the Court also explains that a discovery abuse resulting in a Fed. R. Civ. P. Rule 26(g) certification violation may be addressed by a court’s inherent sanctions powers:

“The judicial system uses scarce judicial resources that must be diverted from other cases to resolve discovery disputes. As such, trial courts have numerous mechanisms to discourage discovery abuse. A district court may sanction the parties before it for discovery abuse under the Federal Rules of Civil Procedure or under its own inherent power.” Id.

Federal civil procedure fans (and litigators practicing in federal courts) are no doubt familiar with Rule 26(g). The certification language is no walk in the park, and the Court so notes:

“Fed.R.Civ.P. 26(g) was “designed to curb discovery abuse by explicitly encouraging the imposition of sanctions.” Malautea v. Suzuki Motor Co., Ltd., 987 F.2d 1536, 1542 (11th Cir.1993). Rule 26(g) states:

(1) Signature Required; Effect of Signature. Every disclosure under Rule 26(a)(1) or (a)(3) and every discovery request, response, or objection must be signed by at least one attorney of record.... By signing, an attorney or party certifies that to the best of the person's knowledge, information, and belief formed after a reasonable inquiry:

(A) with respect to a disclosure, it is complete and correct as of the time it is made; and
(B) with respect to a discovery request, response, or objection, it is:

(i) consistent with these rules and warranted by existing law or by a nonfrivolous argument for extending, modifying, or reversing existing law, or for establishing new law;
(ii) not interposed for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation; and
(iii) neither unreasonable nor unduly burdensome or expensive, considering the needs of the case, prior discovery in the case, the amount in controversy, and the importance of the issues at stake in the action.
....
(3) Sanction for Improper Certification. If a certification violates this rule without substantial justification, the court, on motion or on its own, must impose an appropriate sanction on the signer, the party on whose behalf the signer was acting, or both. The sanction may include an order to pay the reasonable expenses, including attorney's fees, caused by the violation.” Id., 16-17

Rule 26(g) provides one of the rare examples of what can only be described as “strict liability” in the Federal Rules. It is important to understand that sanctions imposition is mandatory (rather than discretionary with the Court) once a Rule 26(g) certification violation has been determined. It should also be noted that while sanctions imposition is mandatory, determination of sanction severity is still left to the Court’s discretion:

"The decision whether to impose sanctions under Rule 26(g)(3) is not discretionary,” and “[o]nce the court makes the factual determination that a discovery filing was signed in violation of the rule, it must impose ‘an appropriate sanction.’ ” Id. at 1372. The court does have considerable discretion in determining what sanction is appropriate.” Id
.
Greater Sanctions Imposition Discretion Under Fed. R. Civ. P. Rule 37

The Court then discusses a court’s greater flexibility for sanctions determination and imposition under Fed.R. Civ. P. Rule 37. Civil procedure fans already know that a sanctions determination pursuant to Rule 37 requires the violation of a discovery order. And so explains the Court:

“A district court may impose sanctions against a party which violates a discovery order 'as are just'.
Such sanctions may include:

(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. 37(2)(b)(2). “ Id.

The Court then completes the discovery abuse sanctions triad with a discussion Eleventh Circuit doctrinal overview for sanctions imposed under a court’s inherent powers:

“A court may also sanction litigation misconduct using its inherent power “to manage [its] own affairs so as to achieve the orderly and expeditious disposition of cases.” Eagle Hosp. Physicians, LLC v. SRG Consulting, Inc., No. 08-11026, 2009 WL 613603, *5 (11th Cir. Mar.12, 2005) ( citing Chambers v. NASCO, Inc., 501 U.S. 32, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991)). The court must exercise its power, however, with restraint and discretion. Id. “The key to unlocking the court's inherent power is a finding of bad faith,” and a party may demonstrate bad faith by delaying or disrupting litigation or hampering the enforcement of a court order. In re Sunshine Jr. Stores, Inc., 456 F.3d 1291, 1304 (11th Cir.2006). A party is entitled to due process before a court determines that the party has acted in bad faith and the court invokes its inherent power to impose sanctions and assess fees.” Id. at p. 18

The Court then delivers the first hammer blow:

“The court regards the instant case as a textbook case of discovery abuse.” Id.

Why a “textbook” case? Let us count the ways:

1. Defendant’s Acts Prejudiced Plaintiff in Two Ways: “[The] Trustee has been denied all the documents necessary to depose witnesses and prepare expert reports and the Trustee's preparation has been made disjointed and difficult and it has been forced to expend a fair amount of time and money and effort to get that which should have been more easily obtained.” Id.

2. Defendants eDiscovery Abuse: “The court is most disturbed about Defendants' behavior with respect to the transfer interrogatories and e-mail discovery. In both of these areas, Defendants have blatantly ignored orders of the court and prompted multiple motions to compel. Defendants' only defense is their unpersuasive argument that they have now complied and Plaintiff has suffered no prejudice.” Id.

So, under what theory might sanctions be imposed?

The Court’s language indicates that sanctions are appropriate for the triad of reasons discussed above: Fed. R. Civ. P. 26(g) certification, Fed. R. Civ. P. Rule 37(f) violation of a discovery order, and as an exercise of a court’s inherent powers to sanction, and hints at its ultimate decision:

“In both of these areas, Defendants have blatantly ignored orders of the court and prompted multiple motions to compel. Defendants' only defense is their unpersuasive argument that they have now complied and Plaintiff has suffered no prejudice. Defendants' defense completely ignores the burdens the court and Plaintiff have endured to garner their compliance and the destructive precedent this court would set were it to allow Defendants to escape the consequences of three years of bad behavior simply because they believe they have now complied.” Id.

It’s never a good sign when a court talks about preventing a litigant from escaping discovery abuse consequences. Plaintiff, for its part, requested that the Court impose the “ultimate sanction” and strike defendant’s answer.

Luckily for the defendant (ok, I use that term somewhat loosely) the Court determined that the determination of an outcome determinative sanction would trigger an ad damnum clause that could potentially result in hundreds of millions of dollars, thereby triggering “the largest default judgment in history.” The Court also found only moderate prejudice, as plaintiff had the “raw resources” to proceed with its case through additional discovery (and redepositions).

Blognote: Under the circumstances, and perturbed as the Court was by defendant’s behavior, it appears that its exercise of judicial restraint represented a tacit acknowledgment of the likelihood of appeal and reversal for the imposition of a default.

Result: The Court found that defendant’s acts violated Fed. R. Civ. P. Rules 26 and 37, denied plaintiff’s motion for evidential sanctions, and imposed 1,022,700 in monetary sanctions on defendant.

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2009-06-11T23:44:00.004-04:00

2009-06-11 Spoliation Determinations, Sanctions, Meet and Confer Requirements

Four spoliation decisions this week. The first, from the U.S. District Court for the District of Colorado, involves the Tenth Circuit’s approach to spoliation sanctions determination (application and type) but check the number of out-of-circuit citations relied upon by the Court. The second decision, from the Ninth Circuit, examines spoliation sanctions imposition under California law. The third decision finds the federal court for the District of Connecticut determining whether Oregon common law allows causes of action alleging intentional or negligent spoliation. The fourth case, again from the U.S. District Court for the District of Connecticut finds the Court imposing severe evidentiary sanctions, and hints at the effects of a spoliation finding on summary judgment determinations. Last but certainly not least, the Ford Motor Company decision finds the U.S. District Court for the District of New Jersey which painstakingly (with emphasis on “pain”) examining the consequences for failing (or refusing) to meet and confer to resolve issues concerning form and format of production, search and collection. Want to know how easy it can be to waive rights to Burger King (“have it your way”) discovery? Read the Ford Motor Company decision.

SWT

Decisions:

Asher Associates, LLC v. Baker Hughes Oilfield Operations, Inc., 2009 WL 1328483 (D. Colo. 2009)
Kearney v. Foley & Lardner, LLP, --- F.3d ----, 2009 WL 1297656 (9th Cir. 2009)
In re Helicopter Crash Near Wendle Creek, British Columbia, On August 8, 2002, 2009 WL 1391422 (D. Conn. 2009)
Ford Motor Company, et al., v. Edgewood Properties, Inc., ---F. Supp. 2d ---, 2009 WL 1416223 (D. N.J. 2009)
Innis Arden Golf Club v. Pitney Bowes, Inc., --- F.Supp.2d ----, 2009 WL 1416169 (D. Conn. 2009)

***********
Case: Asher Associates, LLC v. Baker Hughes Oilfield Operations, Inc.
Citation: 2009 WL 1391422 (D. Colo. 2009)
Date: 2009-05-12T
opics: Preclusion of testimony for spoliation, Tenth Circuit spoliation analysis - determination of occurrence and determination of sanctions type, failure to request preservation does not excuse duty to preserve or failure to preserve

This decision from the U.S. Court for the District of Colorado involves spoliation of a physical object, rather than electronically stored information (ESI) but U.S. Magistrate Judge Shaffer’s analysis both invokes Zubulake IV, much Second Circuit decisional authority and a good analysis of 10th Circuit sanctions litigation (determination of spoliation as well as type of sanction warranted).

Preventing Discovery from Becoming a Futile Exercise, Reasonable Foreseeability, and Imminence

The Court starts out with an interesting articulation of Zubulake IV, and continues with an approving reference to the Second Circuit’s “reasonably foreseeable” (negligence) spoliation standard in West v Goodyear (both cited below within excerpts).

“To ensure that the discovery permitted by Rule 26(b)(1) does not become a futile exercise, putative litigants have a duty to preserve documents or materials that may be relevant to potential future litigation. See Zubulake v. UBS Warburg, LLC, 220 F.R.D. 212, 216 (S.D.N.Y.2003) (“the obligation 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”).” Asher Associates, LLC v. Baker Hughes Oilfield Operations, Inc., 2009 WL 1328483, 5 (D. Colo. 2009)

While the Court does pay homage to the Zubulake/West line of cases, it is important to understand that the Tenth Circuit qualifies (or limits) the temporal range for what is foreseeable to that of “imminence,” and the Court so states in this decision. Other courts (most notably those in the Second and Ninth Circuits) view the temporal range as fact-determinative, and do not impose an “impending” condition on the issue of foreseeability:

“Spoliation” has been defined as “the destruction or significant alteration of evidence, or the failure to preserve property for another's use as evidence in pending or reasonably foreseeable litigation.” See, e.g., West v. Goodyear Tire & Rubber Co., 167 F.3d 776, 779 (2d Cir.1999). See also United States v. Koch Industries, Inc., 197 F.R.D. 463, 482 (N.D.Okl.1998) (acknowledging a litigant's duty “to preserve evidence that it knows or should know is relevant to imminent or ongoing litigation”). Id.

Court’s Inherent Power to Impose Sanctions for Destruction of Evidence

Here, the Court undertakes an analysis of its inherent powers to impose sanctions for spoliation in pursuant to both Tenth Circuit decisional authority as well as the Fed. R. Civ. P. Rule 37(b)(2), qualified, however, but the Tenth Circuit’s requirement that foreseeability of litigation must be near in time to the onset of litigation itself:

“The court has inherent power to impose sanctions for the destruction or loss of evidence. See, e.g., Millsap v. McDonnell Douglas Corp., 162 F.Supp.2d 1262, 1309 (N.D.Okla.2001). See also Procter & Gamble Co. v. Haugen, 179 F.R.D. 622, 631 (D.Utah 1998) (recognizing a court's inherent power and authority under Fed.R.Civ.P. 37(b)(2) to sanction a litigant “who is on notice that documents and information in its possession are relevant to litigation, or potential litigation, or are reasonably calculated to lead to the discovery of admissible evidence, and destroys such documents and information”), judgment aff'd in part and rev'd in part on other grounds, 222 F.3d 1262 (10th Cir.2000).” Id.

The imminence qualifier:

“A spoliation sanction is proper where (1) a party has a duty to preserve evidence because it knew, or should have known, that litigation was imminent, and (2) the adverse party was prejudiced by the destruction of the evidence.” Burlington Northern and Santa Fe Railway Co. v. Grant,, 505 F.3d 1013, 1032 (10th Cir.2007), citing 103 Investors I, L.P. v. Square D. Co., 470 F.3d 985, 989 (10th Cir.2006).” Id.

Fashioning and Appropriate Sanction for Spoliation

The Court then continues with its spoliation analysis and discusses the factors it is required to consider in exercising its discretion to fashion an appropriate sanction…” In the many decisions digested here, it appears that the distinction between a court’s determination that spoliation has occurred and its determination of the type of sanction to impose is sometimes blurry, in large part because much of the same analysis for determining whether spoliation has occurred is used to determine the severity of the sanction once a spoliation has been found. This decision is no exception. That sad, what the Court appears to be determining at this stage is not whether a sanction should be imposed, but what manner of sanction it may “fashion.”

Here, the Court begins with the requirements of culpability and relevance, and relies upon a three step analysis approach utilized by…the Ninth Circuit. Note again, that while the Court’s language is couched in the language of “fashioning” an appropriate sanction, the failure to establish elements such as relevance or culpability result in a hard stop finding of no spoliation:

In exercising its discretion to fashion an appropriate sanction, the court must consider the culpability of the responsible party and whether the evidence was relevant to prove an issue at trial. See Estate of Trentadue ex rel. Aguilar v. United States, 397 F.3d 840, 862-63 (10th Cir.2005) (citing Aramburu v. Boeing Co., 112 F.3d 1398, 1407 (10th Cir.1997)). To that end, this court will apply a three-step analysis. First, the court must determine whether the missing second ESP would be relevant to an issue at trial. See United States v. $40,955.00 in United States Currency, 554 F.3d 752, 758 (9th Cir.2009) (“A party does not engage in spoliation when, without notice of the evidence's potential relevance, it destroys the evidence according to its policy or in the normal course of its business.”). If that question is answered in the negative, the court's analysis stops there. If the missing evidence would be relevant, the court must then decide whether Centrilift was under an obligation to preserve the second ESP. Finally, if such a duty existed, the court must consider what sanction, if any, is appropriate given the non-moving party's degree of culpability, the degree of any prejudice to the moving party, and the purposes to be served by exercising the court's power to sanction.” Id.

Author’s Note: In the opinion cited above The Ninth Circuit employs some curious language that appears to expand the coverage of the safe harbor provisions of Fed. R. Civ. P. Rule 37(e). Rule 37(e) provides:

“Absent exceptional circumstances, a court may not impose sanctions under these rules on a party for failing to provide electronically stored information lost as the result of the routine, good faith operation of an electronic information system.”

The Ninth Circuit appears to graft the alternative of ESI “in the normal course of its business” in addition to ESI losses “according to policy.” Not sure where this goes, but I’m almost certain we’ll see this cited again in an argument in favor of more expansive safe harbor coverage.

Ok, back to the decision.

Tenth Circuit: Three Step Spoliation Analysis, Three Step Sanctions Type Determination

The Court states that culpability and relevancy are determined according to a three-step analysis. Upon closer examination, if one includes a determination of the degree of culpability, what the Court describes is a six step test, with the third step (determination that sanctions will be imposed) itself comprised of three sub-steps (type of sanction to impose). Clear, eh what? This might be better set forth in a logic-tree (I’ll put that on the back burner for now) but here’s the analysis sequence:

Step 1: Determine if missing evidence is relevant. If missing date is not relevant there can be no spoliation. If relevant, proceed to step two.
Step 2: If relevant, was there a duty to preserve evidence? If not, there can be no spoliation. If a duty to preserve is determined to have existed, however, spoliation occurs and proceed to step three.
Step 3: If spoliation is determined to have occurred, impose sanction based on determination using the following sub-steps:
Step 3a: Degree of culpability
Step 3b: Degree of prejudice to non-spoliating party
Step 3c: Purposes to be served by exercising the court’s power to sanction

Step One: Relevance of the Missing Evidence

The Court begins with a good relevance analysis, in large part relying on Second Circuit authority and the Federal Rules of Evidence. The Court begins with the traditional definition of relevance as set forth in Fed. R. Evid. Rule 401:

“Given the claims asserted in this litigation, the relevance of the second ESP seems self-evident. See Fed.R.Evid. 401 (“ ‘relevant evidence’ means evidence having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence”).” Id., at p. 6Relying on decisional authority from both the Second Circuit and the Southern District of New York, the Court notes that relevant evidence need not be conclusive, and that for spoliation analysis purposes, means that a trier of fact could find that the evidence would support the non-spoliating party’s claim(s) or defense(s):

“See also United States v. Schultz, 333 F.3d 393, 416 (2d Cir.2003) (“evidence need not be conclusive in order to be relevant”); Zubulake v. UBS Warburg LLC, 220 F.R.D. at 220 (destroyed evidence is “relevant” for purposes of a spoliation analysis where a reasonable trier of fact could find that the evidence would support a party's claim or defense). But see In re WRT Energy Securities Litigation, 246 F.R.D. 185, 197 (S.D.N.Y.2007) (“A moving party may obtain modest sanctions by showing only that the lost evidence was pertinent to its claims. However, where more severe sanctions are at issue, the movant must demonstrate that the lost information would have been favorable to it.”).” Id.

Author’s Note: What’ interesting in the excerpt from the In re WRT Energy Securities Litigation Case is the distinction between “pertinent” relevant evidence (deserving of only “modest sanctions”) and “favorable” relevant evidence, which at least in the Second Circuit, could warrant the imposition of more severe sanctions.

After conducting a hearing which involved expert testimony from both plaintiff and defendant, the Court determined that the condition of the physical object now missing was “directly relevant” (and would have been favorable) to the non-spoliating party’s claims.

Duty to Preserve: Foreseeability of Future Litigation must be More than a Possibility

Having determined that the missing evidence was relevant, the Court turns next to the second step, and determines whether the spoliating party in this instance had a duty to preserve evidence. The Court again relies on decisional authority from the Second Circuit and from the Eastern District of New York:

In most cases, the duty to preserve evidence is triggered by the filing of a lawsuit. However, the obligation to preserve evidence may arise even earlier if a party has notice that future litigation is likely. See, e.g., Kronisch v. United States, 150 F.3d 112, 126 (2d Cir.1998) (the obligation to preserve evidence arises when a party should have known that the evidence may be relevant to future litigation); Henkel Corp. v. Polyglass USA, Inc., 194 F.R .D. 454, 456 (E.D.N.Y.2000) (a party's obligation to preserve evidence arises when it has notice of the evidence's relevance to litigation “likely to be commenced”).” Id. at p. 7

Blognote: It is still unclear (to me, at least) how the Court can embrace both “imminence” of litigation and “likel[ihood]” of litigation in the same analysis. Imminent means very near term, and projects a sense of immediacy, while the term “likely” appears more temporally flexible. Of course, if one chose to be flip, one might assert that “imminent” is what the Court says it is…or perhaps because imminence is eminently a factually driven concept.

Here Magistrate Judge Shaffer considered all the information on the record, and determined that a duty to preserve had been triggered prior to the destruction of the evidence based upon an “emphatic letter sent by plaintiff’s counsel, which, referring to an earlier letter, described the former as a ‘failed attempt” to resolve the dispute ‘without litigation.’ Interestingly enough, the Court cites the Hynix v. Rambus decision from the Northern District of California for the proposition that foreseeability means more than a possibility:

“Here, the facts compel a different conclusion. Plaintiff's letter of September 8, 2006, came quickly on the heels of the Warranty Claim letter sent on September 1, 2008. While the earlier letter had not specifically threatened litigation, the September 8 correspondence adopted a decidedly different and emphatic tone. Plaintiff's outside counsel characterized the earlier letter as a “failed” attempt to resolve the dispute “without litigation.” Where Plaintiff's September 1st letter referred to “expenditures” incurred by Asher Associates in connection with Well Test Contracts, outside counsel now indicated that his client had been “significantly damaged,” provided Centrilift with an “interim damage calculation,” and claimed that “damages continue to accrue.” The September 8th letter demanded an “immediate payment” and imposed a five-day deadline for making that payment.FN9 Outside counsel went so far as to identify the specific claims for relief that Asher Associates would assert if it initiated “such legal or other action to enforce its rights.” FN10 Given the tenor of the September 8th letter, Centrilift should have understood that future litigation was reasonably foreseeable and substantially “more than a possibility.” See Hynix Semiconductor Inc. v. Rambus, Inc., 591 F.Supp.2d 1038, 1061 (N.D.Cal.2006).” Id. at p. 8

Blognote: Magistrate Judge Shaffer penned the landmark Colorado federal court preservation duty decision in Cache La Poudre Feeds, LLC v. Land O’ Lakes, Inc., 244 F.R.D. 614 (D. Colo. 2007) but distinguishes the series of communications between counsel in that decision as having been sufficiently “less than adamant” to preclude a finding that a duty to preserve had been triggered. It’s always interesting to have a judge provide an analysis distinguishing current and former decisions:

“Plaintiff cites my decision in Cache La Poudre Feeds, LLC v. Land O'Lakes, Inc., 244 F.R.D. 614, 623 (D.Colo.2007), as support for its assertion that Plaintiff's correspondence in September 2006 was too vague to trigger a duty to preserve evidence. See Defendant's Response in Opposition, at 6. To the contrary, the facts in Cache La Poudre are completely distinguishable. In that case, plaintiff's counsel sent the putative defendant successive letters over a nearly two-year period in which she reiterated her client's desire to explore a negotiated resolution of the parties' dispute. I concluded that the less-than-adamant tone of counsel's letters, coupled with the lengthy passage of time, belied the contention that Cache La Poudre's correspondence had triggered a duty to preserve evidence.” Id., at p. 7

Non-Spoliators’ Failure to Request Preservation No Excuse for Failure to Preserve

The Court then relies on an ESI preservation decision from U.S. Magistrate Judge Grimm from the federal district court of Maryland and finds that the non-spoliating party’s failure to request or demand preservation does not excuse the duty to preserve, or pull back the trigger for that duty:

“The court acknowledges that Plaintiffs' letters of September 1 and 8, 2006, never specifically asked that the ESPs be preserved nor sought an opportunity to conduct their own inspection of the pumps. Those oversights, however, do not excuse Centrilift's failure to preserve relevant evidence. Cf. Thompson v. United States Department of Housing and Urban Development, 219 F.R.D. 93, 100 (D.Md.2003) (holding that a party's failure to request the preservation of documents “does not vitiate the independent obligation of an adverse party to preserve such information”).” Id., at p. 8

Intent (or Culpability) and Failure to Preserve Evidence

The Court begins its determination of intent with a sampling of decisional authority indicating that fault for failing to preserve evidence may fall anywhere within a continuum, ranging from “innocence” on through degrees of negligence and intentionality.

“Common sense suggests that a failure to produce or preserve relevant evidence may involve conduct that falls “along a continuum of fault-ranging from innocence through the degrees of negligence to intentionality.” Residential Funding Corp. v. DeGeorge Financial Corp., 306 F.3d 99, 108 (2d Cir.2002). See also Anderson v. Cryovoc, Inc., 862 F.2d 910, 925 (1st Cir.1988) ( “[n]ondisclosure comes in different shapes and sizes; it may be accidental or inadvertent, or considerably more blameworthy”); Minter v. Prime Equipment Co., 2007 WL 2703093, *3 (E.D.Okla.2007) (recognizing that “spoliation occurs with varying degrees of culpability”).” Id.

Blognote: Ok, this is why spoliation analyses give me migraines. Where in the continuum of “fault” lies the concept of “innocence.” What is an “innocent” fault? Imo, that means “faultless,” which in turn should lie outside any continuum defining fault. Innocence should mean zero fault. But if no fault exists, how can one find a violation of a duty to preserve? My point is that there must be some degree of culpability to support a finding of a violation of a preservation duty. Ordinary negligence provides the “should have known” for the lesser degree of fault, but I fail to see how total innocence can have any degree of fault sufficient to proceed with any spoliation analysis.

Bad Faith and Adverse Inferences

Spoliation decision fans (all three) should be familiar with the non-spoliating party’s assertion-dilemma: How to prove that the evidence that has been destroyed was relevant or would have been favorable to it (or unfavorable to the spoliating party) where the evidence is now missing? \

"A showing of bad faith can help a court make a determination that the missing relevant evidence (note that relevance must first be shown) would have been unfavorable to the spoliating party. In such instances, and only where bad faith, rather than mere negligence is found, a court in the Tenth Circuit is permitted to grant the “dispositive” sanction of an adverse inference instruction to the jury:
“In Aramburu v. Boeing Co., 112 F.3d 1398, 1407 (10th Cir.1997), the Tenth Circuit held that “the bad faith destruction of a document relevant to proof of an issue at trial gives rise to an inference that production of the document would have been unfavorable to the party responsible for its destruction.” In the same decision, the Tenth Circuit further reasoned that no adverse inference should arise where the destruction of a document resulted from mere negligence, because only bad faith would support an “inference of consciousness of a weak case.” FN11 Id. See also Henning v. Union Pacific Railroad Co., 530 F.3d 1206,1219-20 (10th Cir.2008).” Id.

Footnotes are often quite instructive, and Footnote 11 to this decision is no exception. Rather than defining a term by what it is not, the court in the Goodman case cited in this footnote provides a good description of “bad faith” --- without using the term “faith.”

“FN11. “ ‘Bad faith’ is the antithesis of good faith and has been defined in the cases to be when a thing is done dishonestly and not merely negligently. It is also defined as that which imports a dishonest purpose and implies wrongdoing or some motive of self-interest.” Attorneys Title Guaranty Fund v. Goodman, 179 F.Supp.2d 1268, 1277 (D.Utah 2001).” Id.

Bad Faith Not Required for Imposition of Non-Dispositive Sanctions Such as Evidence Exclusion

In another interesting twist, the Court discusses that a finding of bad faith is not required for a court’s imposition of “non-dispositive” spoliation sanctions, or where either no adverse inference is requested (or is not appropriate). Included in such “non-dispositive” sanctions are evidence exclusions:

"Of course, in cases where an adverse inference instruction is neither requested nor appropriate, the Tenth Circuit has held that a finding of bad faith is not required to impose non-dispositive sanctions, such as excluding evidence. 103 Investors I, L.P. v. Square D Co., 470 F.3d at 988-89. See also Jordan F. Miller Corp. v. Mid-Continental Aircraft Service, Inc., 139 F.3d 912 (Table) (10th Cir.(Okla.1998).” Id.

This leaves the question whether a finding of negligent spoliation can result in the imposition of sanctions of evidence exclusion. We’ll know soon enough. First, though, the Court’s finds that defendant’s spoliation (or failure to preserve evidence) resulted from negligence or carelessness and not bad faith. Moreover, as the Court states in another instructive footnote, differences of opinion do not support a finding of bad faith:

“After carefully reviewing the record presented by the parties, I conclude that Centrilift's failure to preserve the second ESP was the product of negligence or carelessness, but not bad faith. It is undisputed that the second ESP is no longer intact and many of its primary components have been scrapped in whole or in part. There is no evidence, however, that would support a finding that the disposition of those parts was motivated by bad faith or willfulness on the part of Centrilift and its employees. Without question, the parties had diametrically opposed views on why the well tests failed.” Id. at p. 9

“FN12 That difference of opinion, without more, does not suffice to establish bad faith.” Id.

Appropriate Sanctions

Plaintiff requested a variety of sanctions, including an order:

1) Granting of an adverse inference instruction to the jury at trial;
2) Prohibiting defendant from calling any witness who would testify that the missing evidence (equipment) was in good working condition;
3) Prohibiting defendant from providing an opinion about the well from which the missing evidence was removed, and
4) Granting attorneys fees and costs

Having found no bad faith on the part of defendant, however, the Court was constrained to deny plaintiff’s request for any dispositive sanctions or adverse inference instruction. (Note here that the Court uses the disjunctive, and appears not to categorize an adverse inference instruction as a “dispositive sanction:”

“In the absence of bad faith, however, the court cannot impose a dispositive sanction or give an adverse inference instruction at trial. Again, I do not find that the factual record supports Plaintiffs' claim of bad faith and, therefore, must deny their motion to the extent that it seeks an adverse instruction.” Id., at p. 10

Prejudice to Non-Spoliating Party and Leveling the Playing Field

The Court begins its prejudice analysis by discussing the remedial functions served by the imposition of sanctions for spoliation. Spoliation fans will note the Court’s reference to two widely cited decisions: Mosaid, from the District of New Jersey and In re WRT Securities Litigation, from the Southern District of New York.

“Spoliation sanctions serve a remedial function by leveling the playing field or restoring the prejudiced party to the position it would have been [in] without spoliation.” Mosaid Technologies Inc. v. Samsung Electronics Co., 348 F.Supp.2d 332, 335 (D.N.J.2004). Cf. Silvestri v. General Motors Corp., 271 F.3d 583, 590 (4th Cir.2001) (spoliation sanctions are intended to “level the evidentiary playing field,” as well as penalize the offending party). In striving to “level the playing field,” there must be some reasonable relationship between the sanction imposed and the prejudice actually suffered by the moving party. See Larson v. Bank One Corp., 2005 WL 4652509, *14 (N.D.Ill.2005). Cf. In re WRT Energy Securities Litigation, 246 F.R.D. at 200 (“in the process of leveling the playing field, care must be taken not to tilt it too far in favor of the party seeking sanctions.”). Id.

Tenth Circuit Factors for Determining Appropriate Sanctions

The Court next turns to Tenth Circuit decisional authority in non-spoliation cases and discusses the five factors to be taken into account by a district court in its selection of an appropriate spoliation sanction:

"In a non-spoliation case, the Tenth Circuit has held that the trial court should weigh several factors in determining an appropriate sanction:

(1) the degree of actual prejudice to the moving party;
(2) the amount of interference with the judicial process;
(3) the culpability of the non-moving party;
(4) whether the court warned the party in advance that a dispositive sanction would be likely for non-compliance, and
(5) the efficacy of lesser sanctions.

See Ehrenhaus v. Reynolds, 965 F.2d 916, 921 (10th Cir.1992). See also Gates Rubber Co. v. Bando Chemical Industries, Ltd., 167 F.R.D. 90, 101 (D.Colo.1996).FN15 “ Id.

In another illuminating footnote, the Court points out that spoliator-culpability, or actual notice (to preserve) from the non-spoliating party are not applicable where only “non-dispositive” sanctions are under consideration:

“FN15. Where a dispositive sanction is not at issue, only the first three factors are applicable. See Markham v. National States Insurance Co., 2004 WL 3019308, * 12 (W.D.Okla.2004).” Id., at p. 10

Result: In pertinent part, the Court ordered the exclusion of any testimony that the missing equipment was in good working condition, and further permitted the plaintiff to inform the jury that defendant had failed to preserve the complete unit:

“Having failed to preserve the second ESP as a complete unit, Centrilift should be precluded from offering at trial an opinion as to the “working condition” of the complete unit. Plaintiffs should also be permitted to tell the jury that Centrilift failed to preserve the second ESP as a complete unit after July 20, 2006.” Id., at p. 11.

Oh, and the Court also granted plaintiff’s request for attorneys fees and costs.

Blognote: This decision is noteworthy, if only for the volume of foreign (i.e., extra-circuit) decisional authority relied upon by the Court in its spoliation analysis, including the First, Second, Fourth and Ninth Circuits decisions in its opinion. Sister district courts include Maryland, Illinois, New York (Eastern and Southern), New Jersey, and California (Northern and Central).

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Case: Kearney v. Foley & Lardner, LLP
Citation: --- F.3d ----, 2009 WL 1297656 (9th Cir. 2009)
Date: 2009-05-12
Topics: Tort of spoliation in California includes significant alteration of evidence

This decision is from a (Racketeer Influenced Corrupt Organizations Act) RICO matter appealed to the U.S. Court of Appeals for the Ninth Circuit. Here, a property owner brought suit against a school district’s law firm for allegedly suppressing the results of soil percolation test. The district court dismissed, and the property owner appealed.

Here, the Circuit Court of Appeals discusses the tort of spoliation under California common law:

“Spoliation of evidence is the “destruction or significant alteration of evidence, or the failure to preserve property for another's use as evidence, in pending or future litigation.” Hernandez v. Garcetti, 68 Cal.App.4th 675, 680, 80 Cal.Rptr.2d 443 (1998). Kearney v. Foley & Lardner, LLP, --- F.3d ----, 2009 WL 1297656, 8 (9th Cir. 2009)

An interesting twist on the definition of spoliation is the expansion of the term evidentiary destruction to include “significant alteration.” This has significant implications for ESI discovery, as it may be argued that any manipulation of computer generated information is a significant alteration.

It also appears that, at least in California, the tort cannot be asserted if the non-spoliator could have discovered the evidence during discovery or before the conclusion of the litigation.

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Case: In re Helicopter Crash Near Wendle Creek, British Columbia, On August 8, 2002
Citation: 2009 WL 1391422 (D. Conn. 2009)
Date: 2009-05-18
Topics: Conn federal district court review of spoliation as tort under Oregon law; non-futility amendment requirement pursuant Fed. R. Civ. P. Rule 15(a)(2)

In this matter from the U.S. District Court for the District of Connecticut, the Court rules on plaintiff’s motion to amend its complaint to include, inter alia, causes of action alleging negligent and intentional spoliation of evidence. Defendant objected to the amendments alleging destruction of evidence, arguing that Oregon spoliation is not recognized under Oregon law.

What we have here is “the only remaining case before” the Court in a multi-district litigation, originally filed in Oregon, and now in the Connecticut federal district court. Here, in the course of ruling upon plaintiff’s motion for leave to amend its complaint, U.S. District Judge Underhill must first determine whether Oregon law recognizes spoliation as an independent tort. Interestingly, once having decided the spoliation issue, District Judge Underhill indicates that the case will be returned to the federal district court in Oregon, where the case was originally filed.

The Court first notes that motions for leave to amend complaint in a federal court pursuant to Fed. R. Civ. P. Rule 15(a)(2) will not be permitted if the amendment would be futile if totally unsupported by the facts, or if no cognizable cause of action is alleged:

“A motion to amend will not be allowed under Rule 15(a)(2) if it is futile-that is, “if no set of facts can be proved under the amendment to the pleadings that would constitute a valid and sufficient claim or defense.” Miller v. Rykoff-Sexton, Inc., 845 F.2d 209, 214 (9th Cir.1988). If Oregon law does not recognize negligent and intentional spoliation as causes of action, and instead only permits that evidentiary inferences be drawn from spoliation, Croman's objection should be sustained. If Oregon law does recognize those causes of action, or is silent with respect to those causes of action but I predict the Oregon Supreme Court would recognize them, Sikorsky's motion for leave to amend should be granted.” In re Helicopter Crash Near Wendle Creek, British Columbia, On August 8, 2002, 2009 WL 1391422, 1 (D. Conn. 2009)

Accordingly, the Court notes, if no cause of action for spoliation exists under Oregon law, the Court must deny the motion for leave to amend.

Oregon Law on Spoliation is Unsettled

District Judge Underhill begins by pointing the Oregon common law is silent on the existence of either intentional or negligent spoliation.

It appears that spoliation law, although ancient doctrinally, has only recently emerged onto the litigation scene. Lest there be any doubt that these developments illustrate the emergence (or revival) of a spoliation practice, witness the tortuous analysis undertaken by District Judge Underhill in the following excerpt.

First, the Court reminds us that in the absence of appropriate decisional authority, a federal district court sitting in diversity must use its judgment in deciding how the highest court of that state would decide any particular issue.

“The Oregon Supreme Court has not yet considered whether intentional or negligent spoliation claims present cognizable causes of action. In such instances, “[i]n the absence of controlling forum state law, a federal court sitting in diversity must use its own best judgment in predicting how the state's highest court would decide the case.” Takahashi v. Loomis Armored Car Serv., 625 F.2d 314, 316 (9th Cir.1980). “In re Helicopter Crash Near Wendle Creek, British Columbia, On August 8, 2002, 2009 WL 1391422, 1 (D. Conn. 2009)

The Court’s analysis then turns to recent decisional authority from the U.S. District Court of Oregon, and cited by defendant, holding that the Oregon does not recognize the tort of intentional spoliation of evidence by a party:

“Croman argues that, in exercising my “best judgment in predicting how [Oregon]'s highest court would decide the case,” I should be persuaded by the holding in Blincoe v. Western States Chiropractic College, 2007 WL 2071916 (D.Or. July 14, 2007). In Blincoe, Magistrate Judge Papak recommended granting the defendant's motion to dismiss an intentional spoliation claim and concluded that “Oregon law does not recognize the tort of intentional spoliation of evidence by a party.” 2007 WL 2071916, at *7. Judge Papak's analysis considered the law of other states, as well as Oregon's numerous statutory, non-tortious remedies dealing with spoliation of evidence, in reaching that conclusion. Id. at *7-9.FN2” Id.

Unfortunately for defendant, even though the Oregon Supreme Court had not ruled on the existence of either flavor or spoliation-as-tort, the Court of Appeals of Oregon “discussed and recognized a claim of negligent spoliation of evidence.” Although the language from that decision excerpted by District Judge Underhill stands for something less than absolute clarity, the phrase “failed to make a prima facie showing” is a pretty clear indication that a prima facie showing of negligent spoliation would be sufficient to properly allege a cause of action under Oregon law:

“In the time since Blincoe, although the Oregon Supreme Court has not addressed whether intentional or negligent spoliation causes of action are recognized under the law of the state, the Court of Appeals of Oregon discussed and recognized a claim of negligent spoliation of evidence. In Marcum v. Adventist Health System/West, 215 Or.App. 166, 168 P.3d 1214, 1228-29 (Or.App.2007), rev'd on other grounds, 345 Or. 237, 193 P.3d 1 (Or.2008), the Oregon appellate court acknowledged the parties' dispute regarding spoliation causes of action under Oregon law, declined to “address the precise contours” of a negligent spoliation claim, and ultimately held that the plaintiff-appellant's negligent spoliation claim failed. Nonetheless, the Marcum court discussed the merits of that claim:” Id.

“’We need not, and do not, address the precise contours of a cognizable claim for “negligent spoliation” under Oregon law. That is so because plaintiff here failed to make a prima facie showing that defendants' alleged failure to maintain or produce the allegedly “missing” records materially impaired her prosecution of her medical negligence and informed consent claims.’” Id., at. p. 2

District Judge Underhill then determined that leave to amend a complaint to allege negligent spoliation under Oregon law would not be futile, and that absent decisional authority (or other developments) to the contrary, it was also likely that the Supreme Court of Oregon would recognize both torts of negligent and intentional spoliation of evidence.

“[A]bsent further guidance or development from the Oregon Supreme Court, the appellate court's decision in Marcum indicates that Sikorsky's proposed amendments adding spoliation claims would not be futile. Absent a more recent or more authoritative ruling to the contrary, I predict on the basis of the Marcum decision that the Supreme Court of Oregon would recognize intentional and negligent spoliation of evidence as causes of action .FN3 “In the absence of a pronouncement by the highest court of a state, the federal courts must follow the decision of the intermediate appellate courts of the state unless there is convincing evidence that the highest court of the state would decide differently.” Owen ex rel. Owen v. United States, 713 F.2d 1461, 1464 (9th Cir.1983). Here, there is no convincing evidence that the Oregon Supreme Court would not recognize spoliation causes of action. Accordingly, Sikorsky's motion for leave to amend (doc. # 361) is GRANTED.” Id.

Result: Motion for leave to amend to allege intentional and negligent spoliation of evidence granted.

Blognote: This digest will keep abreast of spoliation law developments (especially as they relate to computer generated information or ESI discovery) so stay tuned.

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Case: Ford Motor Company, et al., v. Edgewood Properties, Inc.
Citation: ---F. Supp. 2d ---, 2009 WL 1416223 (D. N.J. 2009)
Date: 2009-05-19
Topics: Waiver by operation of late objection to producing party's non-native production, preserving objections to non-response ESI data format, ESI document collection process, cooperation and eDiscovery agreements, Sedona Principal 12

In this action from the United States District Court for the District of New Jersey for contract contribution and indemnification under Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) and state environmental law, both parties moved to compel discovery.

U.S. Magistrate Judge Salas ruled, inter alia, that the contractor's objection to format for production of electronically stored information (ESI) was untimely, and that contractor failed to make colorable showing that owner withheld documents in response to request for ESI.

Preservation of Objections to Format of ESI Produced – Use It or Waive It

This case stands as a stark warning to counsel who, as requesting parties, intend to take advantage of the 2006 amendment to the Federal Rules of Civil Procedure, entitling requesting parties to define the form and format of production. If the producing party fails to produce as requested, and the requesting party fails to timely object, any future objection will likely be considered waived.

The “What Not to Do” Follows:

Here, although ESI in native data format was properly requested, the producing party responded by stating that it would produce ESI in .tiff format, with accompanying searchable text. It appears that the parties either failed or agreed to fail to meet and confer to discuss any disagreements prior to defendant’s raising the issue surrounding plaintiff’s ESI production with a motion to compel:

Defendant’s Request:

“Edgewood demanded in its initial document request that Ford produce documents in native format (or documents containing metadata), as it was entitled to ask it to do under Fed.R.Civ.P. 34. (Joint Appendix (“JA”) Ex. 9).” Ford Motor Co. v. Edgewood Properties, Inc., ---F.R.D.---, 2009 WL 1416223, 5 (D.N.J. 2009)

Plaintiff’s response:

“The heart of the problem is that in Ford's response (JA Ex. 4), it wrote that ‘Ford and Ford Land will produce such electronically stored information in Tagged Image File Format (“TIFF”) with accompanying searchable text.’” Id.

Dueling Declarations, Passivity and Failure to Timely Object

The Court notes that both sides exhibited a lack of exemplary behavior in dealing with what ultimately became a serious discovery dispute. That said, the Court found that the requesting party was both “passive” to what it later asserted was non-responsive ESI production, as well as that party’s failure to timely raise it before the Court.

Result: Objection to ESI production format waived:

The dueling declarations of Brooke Gaede on behalf of Edgewood, and John McGahren on behalf of Ford, suggest that the parties never came to an agreement as to how documents would be produced, so Ford unilaterally adopted its own objection and produced them in TIFF format. The Court will need not wade into the murky waters of whether or not Edgewood affirmatively assented to Ford's document production, for Edgewood's passivity to Ford's production and its timely failure to object to it renders its objection waived. Id.

What is becoming very clear from the tenor of these decisions is that the Court’s are rapidly losing patience with counsel’s inability or unwillingness to cooperate in eDiscovery planning, and late-to-the-gate complaints when the inevitable ESI discovery disputes arise therefrom:

“The Sedona Principles and Sedona commentaries thereto are the leading authorities on electronic document retrieval and production. William A. Gross Const. Assc., Inc. v. American Mfrs. Mut. Ins. Co., 256 F.R.D. 134, 136 (S.D.N.Y.2009) (“[t]his Court strongly endorses The Sedona Conference Cooperation Proclamation”); John B. v. Goetz, 531 F.3d 448 (6th Cir.2008) (following principles); Aguilar v. Immigration and Customs Enforc. Div. of U.S. Dep't of Homeland Sec., 255 F.R.D. 350 (S.D.N.Y.2008) (same)” Id.

And so, Magistrate Judge Salas then invites (or directs) counsel for the parties to embark upon a journey through the straits of ESI discovery. The Court isn’t taking up print space for no reason: note the use of the phrase “parties’ concomitant obligations.”

“Relying on the principles and on the Federal Rules, Aguilar explicated the procedure by which parties are to propound electronic discovery requests upon each other, and the parties' concomitant obligations thereto.” Id.

Requesting Party Must Specify Format of Production in Request

A requesting party is not required to specify the format of production, but if it does not, Rule 34(b)(2)(E)(ii) provides that in the event a requesting party does not specify ESI production format, the producing party is now fully entitled to produce ESI in what it considers to be “reasonably usable form or forms,” provided that the producing party complies with Fed. R. Civ. P. Rule 34(b(2)(D) and affirmatively state to requestor “the form or forms it intends to use.” Not surprisingly courts (including this court) hold that “reasonably usable” can mean .tiff images with searchable text.

“Aguilar explained that under Rule 34, a party may request the form of production as metadata. “The responding party then must either produce ESI in the form specified or object.” Here, Ford objected to the production of metadata. “If the responding party objects ... the responding party must state “the form or forms it intends to use for its production of ESI.” Id. (quoting Fed.R.Civ.P. 34(b)(2)(D)). If the requesting party further objects and states an alternative form, the parties must meet and confer in an effort to solve the dispute before filing a motion to compel. Aguilar, 255 F.R.D. at 355. Here, crucially, Edgewood did not object to Ford's production within a reasonable period of time, as will be fleshed out in detail below.” Id., at p. 7

How badly mangled was defendant’s discovery efforts? The following excerpt provides a hint or five, but it’s never a good sign when a court suggests that issues addressing adherence to Sedona Principal 12, relating to agreements concerning production of metadata, are best undertaken before production begins. In short, it appears that there was no eDiscovery agreement (or cooperation, for that matter) between the parties. The Court so notes, and explains the consequences (usually bad, at least to one party):

“The squabble between the parties about the appropriate mode of production certainly is not indigenous to this case, and to that end, the Court does not write on a clean slate. For the courts and in particular the Sedona Principles specifically have addressed the production of metadata absent an agreement by the parties on the mode of production. Specifically, Principle 12 of the Sedona Principles states that:

“Absent party agreement or court order specifying the form or forms of production, production should be made in the form or forms in which the information is ordinarily maintained or in a reasonably usable form, taking into account the need to produce reasonably accessible metadata that will enable the receiving party to have the same ability to access, search, and display the information as the producing party where appropriate or necessary in light of the nature of the information and the needs of the case Id. at 356 (emphasis added). Thus, the producing party ordinarily must take into account the need for metadata to make otherwise unintelligible documents understandable.” Id., at p. 6

As the Court indicates, it’s always better to lock the barn door before Bessie takes that stroll… and before production is complete:

“This Principle, of course would be better applied in a case where production had not yet commenced.” Indeed, Aguilar observed that “[c]ourts generally have ordered the production of metadata when it is sought in the initial document request and the producing party has not yet produced the documents in any form.” Id. at 357. Such is not the case here, as Ford's production is complete. Id.

So, how long did defendant wait until bringing the issue of format of production to the Court’s attention?

The gestation period for waiver was nearly nine months:

The foregoing conclusively demonstrates that Edgewood waited from the end of March 2008 to November 2008 to object to Ford's production. And even then it waited two months to bring the problem to this Court's attention. This is by no means to suggest that parties seek court intervention every time there is a whiff of a dispute between them. Meet and confers between the parties are integral to the discovery process. Id., at p. 7

Note again the Court’s emphasis on the requesting party’s apparent failure to request a meet and confer to resolve the issue.

The Court’s take?

“…[T]he delay in this case on the part of Edgewood is patently unreasonable.”

What-Not-to-Do: Waiving Objections to Format of Production by Passivity Until Production is Complete

“The simple holding here is that it was unreasonable to wait eight months after which production was virtually complete.

And now, the first hammer blow:

“It was incumbent on Edgewood to review the adequacy of the first production so as to preserve any objections. The Court is not dictating a rigid formulation as to when a party must object to a document production. Reasonableness is the touchstone principle, as it is with most discovery obligations. The simple holding here is that it was unreasonable to wait eight months after which production was virtually complete. Id., at p. 7

The proper way to go about resolving an eDiscovery dispute is to meet and confer (in a timely fashion) and if no resolution ensures, a party must then, and also in a time fashion, bring the issue before the court.

The Court then delivers the coup de grace:

“The Court finds Edgewood's objection to be out of time. It is beyond cavil that this entire problem could have been avoided had there been an explicit agreement between the parties as to production, but as that ship has sailed, it is without question unduly burdensome to a party months after production to require that party to reconstitute their entire production to appease a late objection. The advent of E-Discovery does not serve to destroy parties' discovery obligations that would exist in the ordinary course were other media involved. Parties would be best to heed the admonition of a recent court that “the best solution in the entire area of electronic discovery is cooperation among counsel.” William A. Gross, supra, 256 F.R.D. at 136l.” Id.

Result: No goodness for defendant:

“Accordingly, Edgewood's motion to compel the native documents is denied.” Id.

Plaintiff’s Document Collection Process

Defendant also “mounted a complaint” against plaintiff Ford’s document collection process. Defendant asserted that there was a “noticeable absence of documents in Ford’s production” related to key issues. Methinks defendant means that production was a mite bit gappy. Defendant’s assertion was that plaintiff’s document collection process was flawed, and sought relief in the form of…a second document search and collection:

“Edgewood responded that it…’is seeking to confirm the adequacy of Ford's manual document collection process using a limited, least cost, least burdensome test. This test involves using a vendor to perform a narrowly tailored key word search of electronically-stored records from a limited time period associated with certain custodians ... for the purpose of determining whether Ford failed to collect responsive documents. The search would be performed on Ford's electronically-stored as such records are stored in their original location (e.g., a custodian's laptop, Ford servers, etc.).’” Id., at p. 8

The Court didn’t quite see it that way:

“In essence, then, even though it disavows the term “entire reconstitution of the document collection process,” the remedy proposed by Edgewood does, in fact, seek at least a substantial reconstitution of the document collection process by trying to add to the existing repository of ESI that Ford collected over a year ago.” Id.

You can see where this is going. The first stop is the Sedona Principles.

In essence, the Sedona practice commentary condones automated ESI discovery searches.
“In The Sedona Conference Best Practices Commentary on the Use of Search and Information Retrieval Methods in E-Discovery, Practice Point 1 states that “[i]n many settings involving electronically stored information, reliance solely on a manual search process for the purpose of finding responsive documents may be infeasible or unwarranted. In such cases, the use of automated search methods should be viewed as reasonable, valuable, and even necessary.” (emphasis added).” Id.

The second stop is meet-and-confer-ville. Not surprisingly, the Court again returns to the failure by the requesting party’s to attempt to reach some type of agreement on search, collection and culling ESI:

“Once again, the Court confronts this peculiar situation insofar as Edgewood has a point that the document collection method used by Ford is not necessarily contemplated under the Sedona Principles, but that agreement by the parties at the outset as to the mode of collection would have been the proper and efficacious course of action. However, “[a]bsen[t] agreement, a [responding] party has the presumption, under Sedona Principle 6, that it is in the best position to choose an appropriate method of searching and culling data.” The Sedona Conference Best Practices Commentary on the Use of Search and Information Retrieval Methods in E-Discovery.” Id.

The result: Another hammer blow to defendant:

"Once again, the lack of agreement here inheres to the detriment of Edgewood.” Id.

Producing Party Has No Carte Blanche to Determine Mode of Collection, but is best Positioned to Do So

The Court notes that the Sedona principles “wisely” state that “it is in fact, the producing party who is [in] the best position to determine the method by which they will collect documents.” The Court notes, however, that the power to determine collection, search and culling methods is not absolute, which opens the door to a challenge by an adversary. The Court also hints that search, collection and culling should be discussed in a meet and confer and, where possible, agreed to in advance by the parties:

“The Sedona Principles wisely state that it is, in fact, the producing party who is the best position to determine the method by which they will collect documents. The producing party responding to a document request has the best knowledge as to how documents have been preserved and maintained. That being said, the producing party under the Sedona Principles doesn't have carte blanche to specify the mode of collection and it is clear that manual collection is sometimes even disfavored. However, absent an agreement or timely objection, the choice is clearly within the producing party's sound discretion." Id., at p. 9

Assertions of Production Inadequacy Must be Colorable

Ultimately, the Court wasn’t buying defendant’s argument that plaintiff Ford’s production was inadequate, and found that “reinventing the wheel” would be unduly burdensome to plaintiff Ford.

“The Court finds that reinventing the wheel here would be unduly burdensome to Ford. See Fed R. Civ. P. 26(b)(2)(C)(i). The gravamen of Edgewood's complaint is that it suspects it has not received all of the documents to which it is entitled.” Id.

Conclusory allegations of nefarious behavior asserted late in the game just won’t cut it:

“But such a conclusory allegation premised on nefarious speculation has not moved several courts, nor will it move this one, to grant burdensome discovery requests late in the game. See, e.g., Margel v. E. G.L. Gem Lab Ltd., No. 04-1514, 2008 WL 2224288, at *3 (S.D.N.Y. May 29, 2008) (“[u]nder ordinary circumstances, a party's good faith averment that the items sought simply do not exist, or are not in his possession, custody or control, should resolve the issue of failure of production ...”) (quoting Zervos v. S.S. Sam Houston, 79 F.R.D. 593, 595 (S.D.N.Y.1978)); Golden Trade S.r.L. v. Lee Apparel Co., 143 F.R.D. 514, 525 n. 7 (S.D.N.Y.1992) (“[i]n the face of a denial by a party that it has possession, custody or control of documents, the discovering party must make an adequate showing to overcome this assertion”); see also U.S. v. O'Keefe, 537 F.Supp.2d 14, 22 (D.D.C.2008) (noting that in the face of a protest of “inexplicable deficiencies” in a party's production, vague and speculative notions that there, in essence, should be more, are insufficient to compel judicial action). Id.

Result: Motion denied. Why? Assertions of bad behavior based only on a belief that documents are being withheld by a producing party do not a colorable showing of bad faith make.

“Here, Edgewood has not made a colorable showing that Ford is purposefully (or even negligently) withholding documents.” Id.

But all was not lost for defendants. Depositions had not yet taken place, and the Court indicates some willingness to revisit the issue if evidence indicating bad faith arises from these depositions.
“If relevant, unproduced documents appear or are even referenced in these depositions, Edgewood can move for the appropriate relief before this Court at that time, whether it be via another motion to compel documents, or for sanctions. For now, however, Edgewood's motion to compel on this point is denied.” Id.

Blognote: This decision addresses a topic deserving of some discussion. Imo, there are three levels of counsel attitude to eDiscovery. Those who understand nothing and want to avoid ESI discovery at all costs; those who understand enough to know that they want to avoid eDiscovery at all costs, and those that understand eDiscovery and are prepared to engage in same. Given these three varieties of counsel, there are three possible counsel-sets in any litigation. The first set is comprised of counsel on both (or all) sides who don’t understand eDiscovery, and who affirmatively choose not to engage in same. The second set is comprised of counsel on both (or all) sides who understand enough about eDiscovery to avoid it all costs, and who either tacitly agree or stipulate to same. The third set is the most interesting. One side’s counsel is either eDiscovery ignorant or eDiscovery phobic. The other side’s counsel understands and embraces eDiscovery. And runs circles around her adversaries. I suspect that this counsel-set falls within that third category.

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Case: Innis Arden Golf Club v. Pitney Bowes, Inc.
Citation: --- F.Supp.2d ----, 2009 WL 1416169 (D. Conn. 2009)
Date: 2009-05-21
Topics: Counsel involvement as trigger for duty to preserve, suspension of routine document retention and destruction policy, bad faith or intent not required for imposition of sanctions for spoliation, spoliation sanctions of evidence preclusion, implications of spoliation finding for summary judgment and Daubert expert exclusion

This decision, again involving CERCLA claims, comes to us from the U.S. District Court for the District of Connecticut. Although not involving ESI, the Court addresses preservation duty triggers that are equally applicable to ESI. This case also stands as a reminder of the circuit split on the issue of bad faith or intent. In the Second Circuit (and not in the Tenth and others) a party may be sanctioned for spoliation of evidence even in the absence of bad faith or intentional conduct.

In this case, plaintiff golf club discovered PCB’s (a pollutant) on its property that it alleged emanated from defendant’s adjoining property. Through time, defendant golf club failed to preserve certain relevant soil samples.

Here, U.S. District Judge Atherton rules on defendant Pitney Bowes’ motion for sanctions for spoliation of evidence, holding that:

(1) plaintiff- land owner's duty to preserve soil samples attached when its counsel became actively involved;
(2) the landowner breached its duty to preserve evidence.

U.S. District Judge Atherton ruled that the appropriate sanction for plaintiff golf club’s spoliation was preclusion of evidence based on soil samples.

The Court starts out with the statement that the duty to preserve evidence “is fundamental to federal litigation.” The Court continues with Second Circuit decisional authority outlining both the duty, and the consequences for its breach:

“The obligation 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. See Kronisch v. United States, 150 F.3d 112, 126 (2d Cir.1998). Once a court has concluded that a party was under an obligation to preserve the evidence that it destroyed, it must then consider whether the evidence was intentionally destroyed, and the likely contents of that evidence. See id. at 127. The determination of an appropriate sanction for spoliation, if any, is confined to the sound discretion of the trial judge, see West v. Goodyear Tire & Rubber Co., 167 F.3d 776, 779 (2d Cir.1999), and is assessed on a case-by-case basis. See United States v. Grammatikos, 633 F.2d 1013, 1019-20 (2d Cir.1980). Innis Arden Golf Club v. Pitney Bowes, Inc., ---F.R.D.---, 2009 WL 1416169, 5 (D. Conn. 2009)

Spoliation Sanctions May be Imposed Pursuant to Fed. R. Civ. P. Rule 37(b) or Under Court’s Inherent Powers

It always pays to keep in mind that there are two avenues for spoliation sanctions imposition. A spoliation sanction requested pursuant to Fed. R. Civ. P. Rule 37(b) must be made after a discovery order has been violated. Spoliation sanctions may also be imposed without a discovery order violation under federal common law doctrine of a court’s “inherent powers:”

“In addition to the sanctions authorized by Federal Rule of Civil Procedure 37(b) for spoliation of evidence in violation of a court order, “a district court may impose sanctions for spoliation, exercising its inherent power to control litigation.” West, 167 F.3d at 779. Id.

Duty to Preserve Evidence

District Judge Atherton then sets out Second Circuit (and some Southern District of New York) decisional authority in explaining a party’s duty to preserve evidence. In sum, the duty may attach either when legal proceedings have begun, or when a party should have known that evidence may be relevant to anticipated future litigation:

“The “obligation to preserve evidence arises when the party has notice that the evidence is relevant to litigation.” Kronisch, 150 F.3d at 126. This duty may attach not only once legal proceedings have begun, but also “when a party should have known that the evidence may be relevant to future litigation.” Id. (emphasis added).” Id.

Suspension of Document Retention or Destruction Policy

Citing Zubulake IV, the Court then explains that once a duty to preserve has been triggered, a party must suspend its document retention policy:

"As other courts have found, “[o]nce a party reasonably anticipates litigation, it must suspend its routine document retention/destruction policy and put in place a ‘litigation hold’ to ensure the preservation of relevant documents.” Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 218 (S.D.N.Y.2003); see also Treppel v. Biovail Corp., 249 F.R.D. 111, 118 (S.D.N.Y.2008) (following Zubulake's formulation); Doe v. Norwalk Cmty. Coll., 248 F.R.D. 372, 377 (D.Conn.2007) (same); In re NTL, Inc. Securities Litig., 244 F.R.D. 179, 193 (S.D.N.Y.2007) (same).” Id.

Spoliation Sanction Spoilers: Affirmative Disclaimer or Delay

Disclaimer or delay by the non-spoliating party constitutes defenses to a spoliation challenge:

“…[T]he cases in which courts deny requests for sanctions turn on facts showing that the party seeking the evidence either disclaimed an interest in the evidence or did not seek to inspect the evidence within a reasonable time. See, e.g., Allstate Ins. Co. v. Hamilton Beach/Proctor Silex, Inc., 473 F.3d 450, 457-58 (2d Cir.2007) (declining to impose sanctions where the party “affirmatively disclaimed any interest in the evidence ... after being provided a full opportunity to inspect the items”); Fujitsu, 247 F.3d at 436 (finding sanctions not warranted given that “FedEx did not request to inspect the damaged shipping container after Fujitsu notified it of the damage, nor at any time other than prior to making the summary judgment motion”)” Id., at p. 7

The Court found that plaintiff golf club had spoliated evidence, and that defendant Pitney Bowes had neither affirmatively disclaimed, nor delayed its assertion of evidence spoliation.

And so, on to the sanctions-type determination.

Appropriate Sanctions

Borrowing from Third Circuit decisional authority, District Judge Atherton then provides an overview of what type of sanction to apply after a finding of spoliation has been made. The objectives are threefold: prophylactic, punitive and remedial.

“After a finding of spoliation, “the applicable sanction should be molded to serve the prophylactic, punitive, and remedial rationales underlying the spoliation doctrine.” West, 167 F.3d at 779. Factors to be considered include “the degree of fault of the party who altered or destroyed the evidence,” “the degree of prejudice suffered by the opposing party,” and whether the appropriate sanction minimizes the prejudice to the opposing party and “serve[s] to deter such conduct by others in the future.” Howell v. Maytag, 168 F.R.D. 502, 505 (M.D.Pa.1996) (quoting Schmid v. Milwaukee Elec. Tool Corp., 13 F.3d 76, 79 (3d Cir.1994)).” Id., at p. 8

Presumptively harsh is another term that comes to mind.

Second Circuit – No Bad Faith or Intent Required for Imposition of Spoliation Sanctions

In the sanctions-type determination phase, Second Circuit decisional authority is clear: a showing of bad faith or intentional conduct is not necessary:

“In the Second Circuit, a party may be sanctioned for the destruction of evidence even in the absence of bad faith or intentional misconduct. Byrnie v. Town of Cromwell, 243 F.3d 93, 107-08 (2d Cir.2001). “Trial judges should have the leeway to tailor sanctions to insure that spoliators do not benefit from their wrongdoing-a remedial purpose that is best adjusted according to the facts and evidentiary posture of each case.” Reilly v. Natwest Markets Group, 181 F.3d 253, 267 (2d Cir.1999).” Id.

The Court explains further that the destruction of evidence by the plaintiff golf club so materially impaired and prejudiced the defendant’s ability to mount a “bright line” defense that a sanction more severe than an adverse inference was warranted, and the Court ruled that a preclusion of evidence was appropriate:

“While the Court finds no basis on which to conclude that Innis Arden purposefully destroyed evidence to advantage it or disadvantage Pitney Bowes, the consequences of the loss of this evidence are significant and cannot be adequately remedied through applying an adverse inference. By virtue of the failure to preserve scientific sampling and data, Pitney Bowes has been precluded from what might have been a bright-line defense, such as radioisotope dating showing that the PCB-contaminated sediment predated Pitney Bowes's presence on Barry Place. Such a defense could obviate the need for and expense of a trial, while a negative-inference sanction can only be applied at trial. In destroying the underlying evidence that its experts have relied on, Innis Arden has hampered Pitney Bowes's capacity to challenge the underlying foundations for the experts' opinions. In short, the key raw “fingerprint” evidence in this case simply no longer exists, but the party that is responsible for its destruction seeks to benefit from its use. For all these reasons, in the Court's view, the appropriate sanction to adequately address the harm suffered by Pitney Bowes, penalize Innis Arden, and deter future destruction of evidence is preclusion of evidence based on the soil samples Innis Arden took from its own property and subsequently destroyed.” Id., at p. 10.

Spoliation and Summary Judgment Practice, and Daubert Expert Exclusion

One issue arising from spoliation assertions is whether a finding of spoliation can support the denial of summary judgment when the movant is the spoliating party. In one sentence, the Court provides a tantalizing clue, perhaps indicating that a finding of spoliation may be included to presume as true facts for purposes of summary judgment. The Court also appears to be willing to take plaintiff’s spoliation into account in considering whether to exclude plaintiff’s Daubert expert (or testimony):

“Accordingly, Pitney Bowes's and Pateley's motions for sanctions for spoliation of evidence [Doc.419, 426] are granted, and the sanction of preclusion detailed above will be imposed at trial and in consideration of the pending motions for summary judgment and Daubert expert exclusion."

Stay tuned.

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2009-06-07T23:32:00.006-04:00

2009-06-07 Forensics to the Forefront; Also, Search Warrants (computer forensic searches, that is), Meet and Confer, Cooperation and Sanctions

Back in blog.

Forensics: Computer forensics moves to the forefront this week, with two decisions. The first, but Magistrate Judge John Facciola (DCDC), provides and in depth discussion of whether, and to what extent, forensic imaging will be permitted. The second, from the U.S. District Court for the District of Massachusetts, discusses how a forensic examination may be appropriate where the computer itself is “at the heart” of litigation. Also discussed is how privacy concerns may be addressed. This decision also provides a well articulated forensic computer examination protocol Computer Search Warrant: In another decision from Magistrate Judge Facciola, a discourse on the limits of warrants for computer searches. Neither strictly eDiscovery nor digital evidence, but criminal procedure fans might have an interest.
Cooperation: Coming soon to a court room near you. This decision from the U.S. District Court for the Eastern District of Michigan involves meet and confer requirements, discovery plans, and sanctions.

TMI (too much information) this week to include the two spoliation decisions in the queue. Stay tuned for midweek update.

SWT

Decisions:

Covad Communications Co. v. Revonet, Inc., --- F.R.D. ----, 2009 WL 1472345 (D.D.C. 2009)
In re Application for Search Warrant, Mag. No. 09-320 (D.D.C. 2009) Unpublished
Capitol Records, Inc. v. Alaujan, 2009 WL 1292977 (D. Mass. 2009),
Argus and Associates, Inc. v. Professional Benefits Services, Inc., 2009 WL 1297374 (E.D. Mich. 2009)

***********
Case: Covad Communications Co. v. Revonet, Inc.
Citation: --- F.R.D. ----, 2009 WL 1472345 (D.D.C. 2009)
Date: 2009-05-27
Topics: When forensic computer search permitted, search methods, database as well as content as evidence, forensic copy costs, cost imposition for computer forensics analysis, testability, Fed. R. Civ. P. 26(b(2)(C) balancing test required for ESI production challenges based on undue burden; Fed. R. Civ. P. Rule 26(g) certification violation as basis for forensic examination of email server

This latest installment from the Covad v Revonet case in the U.S. District Court for the District of Columbia comes to us courtesy of U.S. Magistrate Judge John Facciola. Before the Court were three issues for decision: Whether plaintiff should be allowed to conduct a forensic search of defendant’s computers; how the computers should be searched and last but never least, which party should bear the cost in connection with the forensic analysis.

Some context is appropriate here, and Magistrate Judge Facciola sums it up better than anyone else:

“…Revonet used a database called the Federated Database to house all of its sales lead information regardless of the source. Covad has alleged that Revonet took sales lead data-stored in the Federated Database-that belonged to Covad and gave it to other customers.” Covad Communications Co. v. Revonet, Inc., --- F.R.D. ----, 2009 WL 1472345, 1 (D.D.C. 2009)

The Court begins by noting that the database content as well as the evidence “within the database itself and elsewhere are at the very heart of this lawsuit.”

Blognote: This is the second time in two weeks that we’ve heard “heart of this lawsuit” or “heart of this litigation” Check out the Alaujan decision, below.

Database Search Protocol and Testability

The parties could not come to an agreement in connection with how the database was to be searched, and after attempts to negotiate as to how to search it failed, then brought the database issue to the Court. Each party then proposed its own proposal for searching the database, but the Court found them both wanting because of “untested factual assumptions.” This is one of the first decisions in which the notion of “testability” (which, in the opinion of this author and a rag-tag assemblage of others, is perhaps the critical element for determining the reliability of ESI) appears.

The Hearing - Defendant’s Expert

The Court set a hearing on the issue of database search, and heard expert testimony from both sides. Defendant’s expert testified that although he did not inspect the servers themselves, he did “spoke with a number of IT personnel” at defendant Revonet. Defendant’s expert testified that defendant had experienced a number of post-litigation commencement crashes, and further testified that “it would be risky to make a forensic copy of the servers because they are very old.” Defendant’s expert also estimated the cost to conduct the forensic copying at “$47,000, not including legal expenses associated with the actual forensic examination.”

The Court also states that Defendant’s expert makes no mention of individual computers:

“He [Revonet’s expert] did not discuss any individual computers, whether they exist, whether they should be imaged, or how much that might cost.” Id., 2009 WL 1472345 at 2.

The Hearing - Plaintiff’s Expert

The Court noted that plaintiff Covad’s expert, for his part, provided testimony contradicting Revonet’s expert’s assertions that a forensic analysis would be “extremely time consuming and expensive.”

Recall just above, how the Court mentions that defendant Revonet’s expert never discusses individual computers? Well, it turns out there was testimony from a defendant Revonet’s current “Director of Channel Sales Strategies” web-based access to the database from…individual computers.

Blognote: It is a bit hard to believe that defendant’s counsel was unaware of web based access to the database by individual computers, yet defendant’s expert discussed neither web based access nor individual computers in his testimony. Imo, “horizontal (my term) cooperation between counsel in discovery also requires in turn what I call “vertical” cooperation between counsel and client. Without such “vertical cooperation,” horizontal cooperation may be impeded, or even thwarted. Considered also in light of the Fed. R. Civ. P.’s continuing duty to supplement discovery responses, a failure by counsel, client (and expert) to cooperate might result in less than advantageous decisions from a court. Did that happen here? You can guess, but let’s first continue with the analysis.

The Court summary of plaintiff Covad’s expert's testimony:

“Finally, Covad called Scott Ellis, a forensic computer analyst, to testify as an expert witness. Ellis contradicted Purdue's contention that it would be extremely time consuming and expensive to make forensic copies of the drives. Ellis also testified that the fact that Revonet used a web-based interface for their salespeople to access the Federated Database was important because computers that access the Internet make temporary Internet cache files, so he would want to look at those PCs. He would also want to look at the PCs of IT Specialists who were moving data around. Ellis ultimately gave a rough estimate of $25,000 for the forensic investigation.” Id.

Takeaway: Forensic imaging pricing is not as monolithic as advertised.

Forensic Imaging and Forensic Search

First, kudos to M.J. Facciola for using the term “imaging” rather than “mirror imaging.” Modifying “imaging” with the word “mirror” is redundant at best, and capable of two meanings at worst.

The Court first distinguishes between conducting a forensic imaging, and conducting a “forensic search,” noting that the cost of forensic imaging small in comparison with the cost of searching the image itself, and determines that the creation of a forensic image benefits both parties:

“As an initial matter, Covad seeks to make forensic images of Revonet's drives and computers to preserve information as it currently exists. The expense associated with taking a forensic image is small compared with the cost of the forensic search itself and provides both parties and the Court with the best possible present depository of the crucial information in the database. The process is obviously not as time consuming as the forensic search itself and lessens some of the cost of forensic searching since the search can be done off-site rather than on the premises housing the servers or computers.” Id., at p. 4.

Further, it the Court takes a decidedly common sense approach to assertions of disruption:

“Any interference with business operations will be insignificant because I will require the searching to be done over a weekend.” Id.

Age Alone Does Not a Hard Drive Infirm Make

Ok, I admit to cutting my fair share of classics courses. Mangled English (mine) notwithstanding, the Court did not credit defendant’s expert opinion as to the riskiness of imaging a hard drive either at or even past its expected useful life:

While I appreciate that Revonet's servers are nearing or past their life span, I credit Ellis's testimony that age alone does not render the items so fragile that the process of taking the images will destroy the servers.” Id.

Magistrate Judge Facciola in what can only be described as impeccable logic, asserts that the defendant will in actuality benefit from the Court’s order directing such imaging. Well taken, for if defendant’s hard drives are so near to their demise, defendant Revonet would actually be taking a very potent disaster recovery pill – before the disaster occurs.

“Creating a forensic image is no more burdensome than using the server for everyday business activities and may ultimately benefit Revonet by creating a forensic record of its data before it uploads the data onto new servers, whether it rents the space (the so-called “cloud configuration”) or buys new ones.” Id.

Takeaway: Be very careful about what you wish your expert to emphasize. Oh, and file this under petard-hoisting; what not-to-do.

The Court also ruled that plaintiff’s expert would conduct both the forensic drive imaging as well as the search to conducted subsequent to that imaging. Remember those non-server type computers that were not discussed by defendant’s expert? Well, the Court remembered as well, and directed that

“Revonet shall permit Scott Ellis to make forensic images of inter alia, the following:

“… Personal Computers that interfaced with any of the above mentioned drives between the date when Covad and Revonet entered into a contract and December 31, 2006.” Id.

This means that, for defendant Revonet, the search party wasn’t quite over, and that it will need to disclose and present for forensic imaging any non-server type computer that may contain relevant ESI:

“If there is any dispute about whether a given computer was used during the relevant time period, Ellis shall make a forensic copy of the computer in any event and preserve it pending further order of this Court. The resulting forensic images will be safeguarded by Ellis who will preserve them inviolate. He shall only use these forensic copies of the devices or electronic depositories at issue to conduct forensic searches.” Id., at p. 5.

But wait, it gets better…

Forensic Searching

A little factual context is helpful here. Defendant Revonet “explained that its databases were housed in a back end database server, and that information was segregated by “campaigns” of which there were two involving Covad. Thus, defendant argued, the only campaign information to be searched should be restricted to the “two Covad campaigns.”

Not so, argued Covad. Plaintiff asserted that it needed full access to the forensic copies of the drives (we’ll come back to this point shortly):

“…[B]ecause [Covad] needs access to historical data about the database, not just the database itself. Much of that historical data will not be visible by looking at the database alone.”

Fed. R. Civ. P. Rule 34 Analysis

The Court begins with a discussion of the application of Fed. R. Civ. P. Rule 34 (request for production, inspection, etc., of documents and things) to electronically stored information, or ESI:

“Rule 34 permits a party to “copy ... electronically stored information” but is limited by Rule 26, which allows only for discovery of “any non-privileged matter that is relevant.”Fed.R.Civ.P. 26(b)(1).” Id.

Privileged vs. Confidential Information

Defendant Revonet apparently asserted that the information contained in the database (as well the database itself) was confidential, and therefore protected from disclosure in discovery. The Court then pauses for a short discourse on the difference between “privileged” information, which may, unless waived, be withheld from production, and “confidential information” which is not protected from disclosure by any privilege, but may be protected from public disclosure by way of well established judicially imposed restrictions:

"Rule 34 permits a party to “copy ... electronically stored information” but is limited by Rule 26, which allows only for discovery of “any non-privileged matter that is relevant.” Fed.R.Civ.P. 26(b)(1). FN2 Revonet does not argue that the information at issue is privileged, because it falls within a recognized common law privilege but only that it is confidential because it may expose information that Revonet is obliged by contract to keep confidential. Confidentiality is not a basis for withholding information in the ordinary course if it can be protected by a protective order (which I will gladly sign) restricting access to confidential information to certain persons and prohibiting its use for any purpose other than the limited purpose of the forensic copying and searching that I am ordering." Id.

Metadata Takes Center Stage

The Court’s next recognizes the importance of metadata as evidence qua evidence (and in this matter, critical evidence) rather than information that may be used to authenticate other evidence:

“Furthermore, the testimony of Purdue and Ellis suggests that there will likely be pieces of information located on the server but outside of the Federated Database that would tend to show what Revonet did with the data because of the way that SQL databases usually work and how the electronically stored information was used by Revonet. As I have explained, that information is certainly relevant. Indeed, it is the very heart of this lawsuit.” Id.

Blognote: And so, the transmogrification of metadata from “without value” (Sedona, pre-2008) to Aguilar v. DHS (2008)…to Covad. Imo, the definition of metadata has always been relational, and plastic. Data about data means more than “embedded,” “application,” or “system” metadata. What the Court in Covad supports is that, in the world of computer generated information, bits are bits. To a Word document, therefore, the Word program (the executable file) may be metadata. To the Word program, or executable file, the Word document is metadata.

Forensic Data Imaging

The Court next addresses the advisory committee’s comments to Fed.R. Civ. P. rule 34, which “cautions against making forensic examination the default,” noting, however, that the committee also “…encourages courts to ‘guard against undue intrusiveness’ Id.

The Court then provides some additional decisional authority heeding these cautions:

“Because these examinations raise issues of confidentiality and can produce thousands of documents that have to be reviewed for relevance and privilege, “compelled forensic imaging is not appropriate in all cases, and courts must consider the significant interests implicated by forensic imaging before ordering such procedures.” John B. v. Goetz, 531 F.3d 448, 460 (6th Cir.2008); see also White v. Graceland Coll. Ctr. for Prof. Dev. & Lifelong Learning, Inc., No. 07-CV-2319, 2009 WL 722056, at *7-8 (D.Kan. Mar. 19, 2009) (quoting Advisory Committee Notes to 2006 amendments for the proposition that forensic imaging is not appropriate in all cases and noting that courts permit imaging when there is trade secret or electronic evidence at issue, or where discovery responses suggest some inconsistency or impropriety).” Id. at p. 6

Forensic Search Distinguished From Forensic Inspection – Where the Real Burden Lies

Magistrate Judge Facciola then discusses what appears to be a heretofore unaddressed issue raised by the language of Red. R. Civ. P. 34, and explains that Rule 34 speaks to forensic imaging only, and not forensic searches (or, perhaps more correctly, searches of forensic images):

“The precise scope of the limitations suggested by the 2006 Amendment to Rule 34, as it applies to forensic inspection of a relevant object as opposed to a forensic search for documents, is unclear because the sections of that Rule denominated “Procedure” do not specify what, if any requirements, must be met before a court permits the inspection.” Id., at p. 6

The Court notes, however, that an ESI discovery request must, like any other discovery request, meet the requirements of Fed. Rule Civ. P. Rule 26, carrying with it the requirements in turn that, in the absence of good cause shown by a requesting party, a producing party may not provide ESI based on accessibility based assertions of burden or cost:

“The request must, however, be a request “within the scope of Rule 26(b).” Fed.R.Civ.P. 34(a).”

"Rule 26(b)(2)(B) provides that a party “need not provide discovery of electronically stored information from sources the party identifies as not reasonably accessible because of undue burden or cost.” Despite that showing, the court may nevertheless order discovery from such sources if the demanding party shows good cause. Id. In making this determination, the court must “consider the limitations of Rule 26(b)(2)(C).” Id. Those limitations are, of course, those that pertain to all discovery, whatever form it takes, and require a court to limit the extent of discovery if it determines that (1) the discovery sought is unreasonably cumulative or duplicative or can be obtained from other sources that are more convenient, less burdensome or expensive; (2) the requesting party has had ample opportunity to obtain the information by other discovery; (3) “the burden or expense of the proposed discovery outweighs its likely benefit, considering the needs of the case, the amount in controversy, the parties' resources, the importance of the issues at stake in the action, and the importance of the discovery in resolving the issues.” Fed.R.Civ.P. 26(b)(2)(C). Since the latter rule pertains to all discovery, whether forensic inspection of an object under Rule 34(a)(1)(A) should also be viewed through the prism of the data on it not being reasonably accessible under Rule 26(b)(2)(B) (that requires good cause to search for data that is not reasonably accessible) is of little moment.” Id.

Fed. R. Civ. P. Rule 26(b)(2)(C) Balancing Test Required to be Undertaken Where Challenges to Forensic Imaging Based On Undue Burden Are Made

This is hard (for me) and took several readings to understand. Or to believe I understand. The Court appears to take the position that while a showing of good cause may be required to defeat an assertion of undue burden for ESI production, a court’s determination involving such assertions (involving even what is reasonably accessible) “must” take into account the limitations of Fed. R. Civ. P. Rule 26(b)(2)(C).

“As a form of discovery, forensic inspection is unquestionably subject to the balancing required by Rule 26(b)(2)(C) whenever any discovery is challenged as an undue and unnecessary burden. I am therefore required to use that calculus to ascertain whether the forensic imaging should be permitted.” Id.

Got that?

Fed. Rule 26 (b)(2)(C) Balancing Analysis

Keep in mind that defendant Revonet did challenge plaintiff Covad’s request to forensically search defendants Federated Database server, and in support of its assertions, argued that:

(1) The servers in question were old and might crash;
(2) Defendant Revonet’s business would be disrupted while the search is conducted; and
(3) The requested search would disclose information that is subject to confidentiality agreements with other Revonet clients.

The Court wasn’t buying, and easily addresses each in turn. Note Magistrate Judge Facciola’s ability to zero in with laser like accuracy on arguments that while appearing to be facially supportable, are in essence spun with gossamer cloth. Nor does the Court mince words (or spend many) in making short shrift of defendant’s argument:

“None of these arguments are compelling. The searches will be done on copies of the forensic images, so the servers themselves will not be affected after the initial copies are made. The search will be conducted on the weekend and concerns about confidentiality can easily be alleviated through a protective order.” Id.

Blognote: It appears that defendant was perhaps a wee bit disingenuous in asserting that the search (rather than the creation) of the forensic images would threaten the stability or operation of the servers themselves. That said, I’m not sure why the Court felt the need to order that the search of the images be conducted on a weekend. By implication, there can be no disruption of business by the search of an image, rather than a search of the server itself, but I suspect the Court sought to forestall future additional assertions of burden. Defendant’s insistence that the search would result in the disclosure of non-party information subject to confidentiality agreements is also somewhat surprising, since (as the Court notes) these types of issues are typically and routinely addressed by protective orders.

Ok, back to Covad. Recall that the Court embarked upon a balancing analysis required by Fed. R. Civ. P. Rule 26(b)(2)(C). The balancing determination for defendant Revonet was made in just four sentences.

Not a good sign for defendant Revonet. Neither is the balancing analysis performed by the Court in determining plaintiff Covad’s need. The Court starts off with an ominous (for Revonet) determination-followed-by explanation. First, the determination, consisting entirely of a single sentence:

“On the other hand, the “needs of the case ... the amount in controversy ... the importance of the issues at stake in the action, and the importance of the discovery in resolving the issues,” Rule 26(b)(2)(C)(iii), surely establish that the potential benefit of the forensic search outweighs its burden.” Id.

Sole Source of Information Equates to No Alternative Method to Obtain Evidence

That the information sought could not be obtained from any other source is perhaps the most significant factor in the Court’s Rule 26(b)(2)(C) determination:

"First, there is simply no other way in which to seek this information, and it should establish once and for all what Revonet did with the Covad data that was in the Federated Database. Indeed, the investigation may have a determinative impact on whether this case will survive.” Id., at p. 7

Interestingly enough, the Court notes that the forensic imaging and search may well result in accelerated resolution of the case. Indeed, the Court appears to acknowledge that the transformation role of ESI in modern litigation:

“If the forensic imaging shows little use of the data from Covad by Revonet, Covad's financial motivation to continue this lawsuit may disappear or at least lead to an early settlement. If, on the other hand, the data contradicts Revonet's assertions, made throughout the lawsuit, that Revonet made little use of the Covad data, then the shoe will be on the other foot. In either event, the data simply must be found and analyzed before the parties and the Court can get their hands around what this case is truly worth. It is simply one of those perhaps unusual cases where paradoxically “the amount in controversy,” “the likely benefit,” and the “needs of the case” can only be ascertained by permitting the discovery sought.” Id.

Forensic Imaging as Tool for “Speedy and Just” Conclusion to Litigation

This is one of the first decisions in which forensic imaging is viewed not as the deployment of a cannon to kill a fly, but rather as a tool to streamline rather than impair the litigation process:

“Second, while the issues at stake in this commercial controversy may be not be of interest to any one but these litigants, they still have a right to its speedy and just conclusion, which, in my view, will be advanced by the forensic imaging. I know of no other way to examine the data and how it was used by Revonet.”

"Third, while Revonet's complaints at the hearing that it is in difficult financial circumstances may have merit, the forensic searching may produce the information it needs to decide how much more of its resources (including money for legal fees) to devote to this case."

Balance of Fed. R. Civ. P. Rule 26(b)(2)(C) Factors Favors Forensic Imaging and Search

Result: The Court determined that:

“…[On] balance, I conclude that Revonet's objections to the forensic searching, while meritorious, are overwhelmed by the necessity of the forensic searching that I am ordering.” Id.
Author’s Note: It should be kept in mind that forensic imaging (as contradistinguished from forensic search) is inexpensive, and getting less expensive on a per gigabyte basis. (As for search, tools are available to conduct ESI searches that are orders of magnitude cheaper than the “print and search” approach)" Id.

Forensic Examination of Email Servers

Plaintiff Covad also sought leave for permission to conduct a forensic examination of defendant Revonet’s email servers, providing three assertions in support therefore:

“(1) Revonet's e-mail production was facially incomplete;
(2) Revonet's email production suggests that it was using e-mail to give leads to clients; and
(3) Revonet's servers failed after litigation was initiated but before discovery commenced in earnest.”

The Court notes that allegations of deficient email production are legion, and then provides us with an excellent overview on when, and under what circumstances, a forensic examination of an email server will be permitted by a court:

"There is certainly authority for the proposition that if a party's e-mail production suggests that she is intentionally hiding things, or failing to take appropriate steps to respond to discovery, a forensic examination may be appropriate. Preferred Care Partners Holding Corp. v. Humana, Inc., No. 08-CV-20424, 2009 WL 982460, at *14-15 (S.D.Fla. Apr.9, 2009) (allowing forensic exam at producing party's expense because of discovery failings, inconsistencies and defendant's “print and purge” campaign); Peskoff v. Faber, 244 F.R.D. 54, 59 (D.D.C.2007) (allowing forensic examination because documents were conspicuously absent in certain time periods and
circumstances suggested that absence was the result of party's misconduct).” Id., at p. 8.

The Court also mentions that the right to forensic email examination is neither automatic nor unlimited:

“However, it does not automatically follow that every time a litigant alleges that the other party's electronic production is deficient in some regard the appropriate next step is to conduct a forensic examination. See Exec. Air Taxi Corp. v. City of Bismark, N.D., 518 F.3d 562, 569 (8th Cir.2008) (finding no deficiency with e-mail production to warrant forensic examination; party's mere suspicion not enough); Sup. Prod. P'ship v. Gordon Auto Body Parts Co., Ltd., No. 06-CV916, 2009 WL 690603, at *2-3 (S.D.Ohio Mar. 12, 2009) (refusing to allow forensic search as a sanction for discovery misconduct where party seeking exam had not provided any evidence that relevant e-mails had been lost or destroyed by inadequate litigation hold).” Id.

Poor Records Management Practices Alone Do Not Provide Basis for Forensic Email Server Examination

The Court make the point that poor records management does not, standing alone, provide the basis for granting leave to conduct a forensic examination of a party’s email servers.

“It is the rare case that a litigant does not allege some deficiency in the production of electronically stored information, particularly e-mail. All too many entities lack records management policies that are aggressively enforced, and records keeping may be a function not of an enterprise wide policy but determined by the idiosyncratic habits of the various users. In such a situation, the possibility that one user saved everything while another saved nothing may lead to curious gaps in the e-mails that are produced and an inability to explain why any are missing."

"While such productions cast little glory on the companies that produce them, I cannot find any authority in the cases to date that permit a court to conclude that allegations of deficiencies in themselves automatically require a forensic search whenever a party claims that there are, for example, fewer e-mails from a person or about a subject or transmitted in a given time than the party expected to find. This would result in forensic examinations in virtually every case, which would increase the cost of litigation involving electronically stored information markedly not only because of the cost of the examination itself, but also because it would yield information that would have to be sorted for relevance and privilege. Experience shows that the latter, involving expensive reviewing of “e-mail strings” by lawyers, paralegals or by vendors to whom the work has been outsourced, may dwarf the cost of the search.” Id.

Forensic Examination of Email Servers Require Assertion of Fed.R. Civ. P. Rule 26(g) Certification Violation

In what again appears to be a first, the Court imposes a requirement that a party seeking a forensic examination of another party’s email server must first assert that the producing party violated its Fed. R. 26(g) certification obligation:

“Fear of the consequences of consistently ordering forensic searches of e-mail servers should, at a minimum, require a showing that permits the finding, albeit based on circumstantial evidence, that the producing party has not complied with Rule 26(g) because the production is not “complete and correct as of the time it was made.” Fed.R.Civ.P. 26(g)(A).” Id.

Blognote: A Fed. R. Civ. P. Rule 26(g) certification violation can result (and in at least one other case has resulted) in sanctions to both counsel as well as client. See In re Simonson, 2008 WL 4830807 (Bktpcy. W.D. Wash. 2008) digested in EDDE 3).

Failure of Counsel to Cooperate Influences Court’s Forensic Examination Determination

Plaintiff Covad alleged that defendant Revonet’s email production was deficient, arguing that only four “external” emails had been produced. Plaintiff also “identified various deficiencies with search terms.”

On this issue, however, the Court made some ungentle observations about counsel’s failure to cooperate in connection with search term and protocol development, noting in particular that defendant Revonet asserted that Covad failed to respond to Revonet’s repeated requests that Covad suggest search terms.

"As evidence of Revonet's alleged shortcomings, Covad identified e-mails that had been produced recently, noted that only four external e-mails had been produced, and identified various alleged deficiencies with search terms. Notably, however, Revonet asked Covad's counsel repeatedly to suggest search terms, and Covad's counsel did not respond to any requests. Given that history it is unfair to allow Covad to fail to participate in the process and then argue that the search terms were inadequate. This is not the kind of collaboration and cooperation that underlies the hope that the courts can, with the sincere assistance of the parties, manage e-discovery efficiently and with the least expense possible. See The Sedona Conference Cooperation Proclamation (2008), available at http://www.thesedonaconference.org/content/tsc_cooperationproclamation.” Id., at p. 9

Result: The Court deferred its decision on forensic examination of certain email servers until the forensic examiner provided his report.

Forensic Examination of Email Server Ordered

The Court did permit the forensic examination of certain of defendant Revonet’s email servers. The Court’s first observed that one of defendant Revonet’s email servers crashed after litigation had been commenced, and that no backup had been made.

“The original Revmail one server that once resided in Sioux Falls crashed after this case had been filed, and there were no back-ups. Revonet had a responsibility to take reasonable steps to preserve relevant information once it had notice of litigation. While the destruction of e-mails here was clearly inadvertent, Revonet has a responsibility to take appropriate steps to try to recover those e-mails, and it is not clear that it has ever done so. Orrell v. Motorcarparts of Am., Inc., No. 3:06-CV-418, 2007 WL 4287750, at *7 (W.D.N.C. Dec. 5, 2007) (“The fact that plaintiff's home computer allegedly ‘crashed’-as opposed to having been ‘wiped’ as the work laptop was-in no way eliminates the Plaintiff's burden to do all she could under those circumstances to preserve evidence.”).” Id.

Bad juju. But wait, there’s more (and “more” email servers to boot):

Defendant’s “Retired” Email Servers

“There was no evidence presented regarding what efforts Revonet took to extract data from the two e-mail servers that have since been retired, particularly the first one, which crashed completely. Because we need to determine what, if any, data was lost before evaluating what effect the server crash had on the adequacy of production, Ellis should first examine the forensic images of Revmail one and Revmail two to determine whether it is possible to do a forensic search of either of them." Id.

Think you perhaps that your client’s assertions that certain of its email servers have crashed, or that certain other of its email servers are just too old and infirm to forensically image and examine, will stand against an assertion of deficient email production? Maybe, but maybe not, especially where a comparison of all available email servers might complete what might otherwise comprise an incomplete production:

“The only e-mail server that is currently operational at Revonet is Revmail. Thus, Revonet's document request responses would have come from searches run on Revmail. Revmail one and Revmail two were both in operation during the time when Covad and Revonet were working together. Thus, it is very possible that there were e-mails created during the time that Revmail one and Revmail two were operational that would be relevant to this case. What is not clear, however, is the degree to which data may exist on Revmail one or Revmail two that was not transferred to Revmail. Thus, a comparison should be made between Revmail one and Revmail and between Revmail two and Revmail to determine what, if any, data exists on the non-operational servers that does not exist on Revmail. These comparisons should yield the universe of e-mails that have not yet been considered for production (if Revmail one and Revmail two can be searched in their present states).” Id.

Yowch.

Individual PC’s Join The Search Party

Gee. We always speak of servers, and networks, and other such grandiose terms, but when the rubber hits the road, a mere PC almost always appears on the scene, and this case is no exception. The Court also directed the forensic examiner to image individual PCs, although it is unclear whether or not these PCs are networked:

"Like the Federated Database, the individual PCs are relevant because they may contain information that demonstrates how the relevant data was used at Revonet. Accordingly, Ellis shall create a forensic image of each PC and conduct a search of it to ascertain if it contains data that would tend to show

(1) Revonet's receipt of information from Covad, or
(2) Revonet's modification of the information from Covad, or
(3) Revonet's use of the information from Covad in the period
(a) from the date of the contract between Covad and Revonet until December 31, 2006, or
(b) from the date of the contract between Covad and Revonet to the present.

If he finds indications that such data exists, he shall report to the parties what indications he has found and whether he believes additional searches will yield additional data.” Id., at p. 10.

Costs and "Outcome-Determinative" Technology

The Court then addresses the issue of ESI discovery costs. The Court first relies on District Judge Scheindlin’s decision from the Zubulake decision set in noting that the producing party typically bears the cost of production:

“It has long been the presumption in this country that the producing party bears the cost of production and “[a]ny principled approach to electronic evidence must respect that presumption.” Zubulake v. UBS Warburg, LLC, 217 F.R.D. 309, 317 (S.D.N.Y.2003). “ Id., at p. 11

The Court, while recognizing that the cost of ESI production may increase as new technologies enter the eDiscovery arena, also recognizes that such technologies may provide evidence that is “outcome determinative.”

That said, the Court determines that the financial burden imposed by the cost of production in this matter are small, and requires that the producing party (defendant Revonet) bear the costs of production:

“Fortunately for me, the financial burden of “producing” electronic information in this case is relatively low, and I will require Revonet to bear that cost. When I say “producing,” however, I am referring to the costs of satisfying Revonet's obligations under the Federal Rules of Civil Procedure to either (1) make items available for examination, or (2) produce documents. See Fed.R.Civ.P. 34.” Id.

Stay tuned for further developments.

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Case: In re Application for Search Warrant
Citation: Mag. No. 09-320 (D.D.C. 2009)
Date: 2009-06-04
Topics: Criteria, bases for permitting search of computer, 4th Amendment

This decision is not a perfect fit into either an eDiscovery or digital evidence slot, but as it discusses computer searched within a criminal procedure context, it may be of interest to criminal procedure fans.

Here, Magistrate Judge Facciola opens up with a statement of concern about computer searches in a criminal procedure context. It appears that, from a magistrate judge’s perspective, the battle royale is always permission and scope against time. In other words, in an instance such as this, a judge is placed in the unenviable position of making a quick decision, because delay may result in destruction of evidence, and moot the issue.

“The questions of the proper scope of a search of a computer and the necessary showing to secure the search continue to trouble me. Unfortunately, the questions frequently arise on an emergency basis because the search must be conducted quickly if it is to be effective and prevent the obliteration of the data because the object of the police investigation suspects that the police may be coming.”

In this decision, M.J. Facciola was asked to reconsider his decision striking (1) a demand for the right to search all electronic storage devices and disks, and (2) to search “computers, software, hardware . . . to include any and all computer equipment . . .

The government’s bases for the request for reconsideration were that defendant had apparently used a word processing program to type a document in the first instance, and a reference to the sending of an email in the second. The Court notes that “other than these two indications” there was no indication that the alleged conspirators had used email to communicate with each other or using the computer to advance the conspiracy charged. To the contrary, the Court states:

“[T]he warrant application indicates that the conspirators advanced their purposes by speaking on the phone or in person.”

Mere Use of a Computer, Without More, Insufficient Basis to Grant Forensic Search of Computer

The Court’s take on the scope of the search requested is significant and imo, may also have privacy ramifications:

“In my view, the mere use of the computer on two occasions does not justify the intended forensic search of the entire computer and all peripheral storage devices. To conclude otherwise would mean that the government would have the right to search the memory of the computer and the storage devices not merely for the information they have probable cause to believe might be evidence of a crime, i.e., the e-mail and document referred to in the application, but for all the information they contain merely because there was use of the computer on two occasions. Without proof of a consistent use of the computer to communicate or otherwise advance the conspiratorial scheme, it cannot be said that the computer is being used as an instrumentality of a crime.”

Use of Computer for One Purpose Does Not Open Door to Forensic Examination of All Computer Contents

The Court rejects the premise that the use of a computer for purpose “A” opens the door to a forensic search of the computer for evidence of use for purposes other than “A”

“While it could be said that use on two occasions might suggest greater use, allowing the search on that basis leads ineluctably to the conclusion that the presence of a computer in certain premises and its use on a few occasions is an always permissible basis for a forensic search of its entire contents. I cannot accept that proposition for it appears to me to be the very general search that the 4th Amendment prohibits. It proceeds upon the premise that I reject: that use of a computer for one purpose provides justification not merely for other evidence of its use for that purpose but to search its entire contents.”

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Case: Capitol Records, Inc. v. Alaujan
Citation: 2009 WL 1292977 (D. Mass. 2009)
Date: 2009-05-06
Topics: Forensic imaging permitted where computer itself is at heart of litigation, privacy concerns, expert examination order

We can see a theme running through computer forensic examination challenge decisions, and that, succinctly put, a forensic examination (including imaging and search) will be permitted where the computer, or hard drive, is “at the heart” of the litigation.

In this copyright infringement case from the United States District Court for the District of Massachusetts (which predates the Covad decision, above) U.S. District Judge Gertner rules on defendant’s motion for a protective order involving a laptop and a desktop computer.

Here, plaintiffs sought to inspect defendant’s computers by way of creating forensically sound images of the hard drives of both defendant’s laptop and desktop computers:

“In particular, they seek to examine the two computers for evidence supporting their infringement claims by creating mirror-images of the hard-drives, which involves making an exact copy of the full contents of each drive for inspection by a forensic computer expert. Importantly, the computer that was originally used to download the songs identified by the Plaintiffs in the Complaint has been discarded or destroyed. Instead, the computers at issue were subsequently owned by the Defendant and, as Tenenbaum has conceded, were also used for file-sharing activities.” Capitol Records, Inc. v. Alaujan, 2009 WL 1292977, 1 (D. Mass. 2009)

Interestingly enough, plaintiffs apparently offered little or no opposition to defendant’s motion for protective order as it related to the laptop, and the Court denied plaintiff’s request in connection therewith.

In their opposition to the Motion for a Protective Order, the Plaintiffs barely address the Toshiba laptop; as a result, the Court sees no reason to permit its inspection.” Id.

Takeaway: If you request a forensic examination of a computer, be prepared to justify that request, and be well prepared in the face of the inevitable motion protective order.

So, this dispute centered on defendant’s desktop computer, which he took to college after engaging in alleged file-sharing on his parents’ home computer. Defendant admitted to using the computer for file-sharing activities.

Relevance as Basis for Permitting Forensic Examination of Computer

Plaintiffs argued in support of a broad search forensic search premised upon Fed. R. Civ. P. Rule 26(b) wide scope based upon notion of relevance:

“[Plaintiffs] argue that such evidence is relevant to the claims stated in the Complaint under Fed .R.Civ.P. 26(b) because it bears on where the identified songs were uploaded and potentially transmitted; and because it contains data likely to lead to admissible evidence of the Defendant's continuous and willful copyright infringement by virtue of his subsequent file-sharing.” Id.

Defendant, for his part, challenged plaintiffs’ assertions with the standard and now routine assertions of burden, privacy, and attorney client privilege.

“The Defendant objects that such disk-imaging is overbroad, unduly burdensome, would violate his privacy, and would jeopardize confidential attorney-client communications.” Id.

Imaging, Privacy Concerns, and the “Heart of Litigation”

The Court here first concedes that imaging (the Court uses the term “mirror” --- it’s ambiguous, and largely incorrect) of a computer hard drive raises privacy concerns, but that these concerns are overshadowed where the computer itself is at the center of litigation:

“While mirror-imaging poses serious privacy concerns, where the computer itself is at the heart of the litigation-where it is, in effect, an instrumentality of the alleged copyright infringement-it is plainly relevant under Fed.R.Civ.P. 26(b). This is particularly so given Tenenbaum's admissions and the scope of his defenses. The Gateway computer is one of the very devices used by the Defendant for file-sharing, as he admitted at his deposition. See Ameriwood Industries, Inc. v. Liberman, 2006 WL 3825291 at *4 (E.D.Mo.2006) (“[A]llegations that a defendant downloaded trade secrets onto a computer provide a sufficient nexus between plaintiff's claims and the need to obtain a mirror image of the computer's hard drive.”). His inability to remember relevant details of this file-sharing and his inconsistent discovery responses further open the door to the mirror-imaging that Plaintiffs seek.” Id.

Drive Imaging and Privacy Concerns

First, lest there be any doubt, a court has the authority to order the imaging of a computer drive. That said, it is interesting that the Court (the Massachusetts federal court) needs to reach out to district court decisions from Kansas and the Eastern District of California for authority:

“The Court has the authority under Fed.R.Civ.P. 34 and 26(b) to order mirror-imaging of a party's hard drive. See Balboa Threadworks, Inc. v. Stucky, 2006 WL 763668 (D.Kan.2006); Ameriwood Industries, 2006 WL 3825291; Communications Center, Inc. v. Hewitt, 2005 WL 3277983, at * 1 (E.D.Cal.2005).” Id.

Sufficient Nexus Between Computers and Claims Must Exist to Permit Imaging

What is of greater concern to the Court are defendant’s privacy interests in his computers, and District Judge Gertner notes that:

"The principal issue in these cases centers instead on concerns for defendants' privacy, especially where “the connection between the computers and the claims in the lawsuit are unduly vague or unsubstantiated in nature.” Balboa Threadworks, 2006 WL at *3. In the instant case, the Court finds that there is a sufficiently close connection between the Gateway computer, but not the Toshiba laptop, and the claims in this lawsuit.” Id.

While claims of privacy may be routinely asserted in a challenge to a request for a forensic imaging of a computer, such claims are routinely (and with increasing frequency) addressed with an appropriate protective order:

“It further concludes that the Defendant's privacy objections can be addressed through a robust protective order, as described in detail below. See Ameriwood Industries, 2006 WL 3825291; Arista Records, Inc. v. Tschirhart, Case No. 05-CA03720G, slip op. (W.D.Tex. Jan. 25, 2006) (ordering mirror imaging of file-sharing defendant's hard drive with protective order to preserve confidential and privileged information from disclosure).” Id., at p. 2.

That said, the Court determined that Plaintiffs’ proposed protective order was inadequate to protect defendant’s privacy concerns, which apparently were well articulated by defendant’s counsel:

“Mindful of the potential exposure of non-relevant personal information occasioned by mirror-imaging, the Court allows this discovery only subject to a Protective Order consistent with the terms provided below. The very technological reasons that necessitate a mirror-image of the entire hard-drive-i.e., the manner in which digital information is stored on the computer and the way in which “deleted” files are retained-also makes Plaintiffs' Proposed Protective Order markedly insufficient in light of the Court's substantial privacy concerns. See Decl. of Dr. Doug Jacobson, Exh. F to Pl. Opp. to Protective Order (document # 682-2). Because ‘deleted’ but non-relevant files no longer remain in the operating system's directory, the Defendant would be unable to designate them in the privilege log proposed by Plaintiffs.”

“Moreover, the categories of documents slated for exclusion by the Plaintiffs-attorney-client communications, student grades, unpublished research, and medical records-are woefully inadequate to cover the range of non-relevant personal information likely stored on the hard-drive.” Id.

The Rigorous Computer Forensic Examination Procedure

The Court adopts the Eastern District of Missouri’s Ameriwood approach in ordering a “more rigorous procedure” to be undertaken in connection with the forensic examination of defendant’s computer. The procedure is well articulated, and set forth in its entirety:

“A more rigorous procedure is provided here, as adapted from that used by the district court in Ameriwood Indus. Inc. v. Liberman, 2006 WL 3825291, at *4 (E.D.Mo.2006):

1. Plaintiffs shall select a computer forensic expert of their choosing to produce a mirror-image of the Gateway computer's hard-drive.”

2. The Expert and any assistants assigned to the computer inspection shall execute a Confidentiality Agreement agreed to by the parties and shall sign a copy of and abide by the Protective Order in place in this action.

3. The Defendant shall make the Gateway computer available to the Plaintiffs' Expert at his counsel's office at a mutually agreeable time within 10 business days of the approved Protective Order. The Expert shall make a mirror-image of the Gateway computer's hard-drive, a process which should require no more than several hours. He or she may not remove the Defendant's computer from the premises.

4. Only the Expert and his or her assistants assigned to this project are authorized to inspect, or otherwise handle the Defendant's computer or the mirror-image generated. No employee of the Plaintiffs, or their counsel, will inspect or otherwise handle the mirror-image produced. The Expert will also maintain all information in the strictest confidence. Furthermore, the Expert will maintain a copy of the mirror images and all recovered data and documents until 60 days after the conclusion of this litigation.

5. The Expert shall examine any recoverable file-sharing data on the mirror-image, including electronic records generated by file-sharing software and “metadata” associated with music files. Recoverable data includes ‘deleted’ files that no longer appear in the operating system's directory.

6. The Expert shall not examine any non-relevant files or data, including those belonging to the following categories: emails, word-processing documents, PDF documents, spreadsheet documents, image files, video files, or stored web-pages. On their face, none of these types of electronic files appear to have any established relevance to Tenenbaum's use of file-sharing software or allegedly infringing activities. As an added precaution, the Defendant shall also be permitted to designate any attorney-client communications or privileged work-product files in a Privilege Log provided to both the Expert and the Plaintiffs' counsel prior to inspection. These files shall be immediately deleted from the mirror-image by the Expert and, under no circumstances, may they be opened or their contents examined by the Expert.

7. Based on this inspection of the mirror-image, the Expert shall produce a report which describes the music files found on the computer and any file-sharing information associated with each one, as well as any other records of file-sharing activity. The report may also address any evidence that the hard-drive has been “wiped” or erased since the initiation of this litigation.

8. The Expert shall disclose this report only to the Defendant's counsel, who will have five business days to lodge any objections to the report based on privilege. Any such objections shall first be communicated in writing to Plaintiffs' counsel. If the parties cannot resolve any dispute themselves, the Plaintiffs shall file a Motion to Compel the production of the Expert's report. If there is no dispute, or the parties reach an agreement themselves, the Defendant shall promptly disclose the Expert's report to the Plaintiffs.

9. In resolving any Motion to Compel, the Court may require the Defendant to submit the Expert's report for review in camera. Id., pp. 2-3

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Case: Argus and Associates, Inc. v. Professional Benefits Services, Inc.
Citation: 2009 WL 1297374 (E.D.Mich. 2009)
Date: 2009-05-09
Topics: Meet and confer obligations, discovery plan, and sanctions

This decision from the U.S. District Court for the Eastern District of Michigan serves as a reminder that the courts are becoming increasingly impatient with counsel who, in the course of conducting discovery, fail to cooperate, or fail to provide an adequate discovery plan as required be Fed. R. Civ. P. Rule 26(f)(2) and Rule 26(f)(3)(C).

In ruling on the instant motion to compel, U.S. Magistrate Judge Hluchaniuk was less than impressed by the conduct of both plaintiff and defendant. In sum, plaintiff claimed that defendant had not disclosed the existence or availability of defendant’s web site that plaintiff now asserted was relevant to its claims of contract and other statutory breaches.

The first dart was aimed at the plaintiff. It seems that 10 months was a bit long to assert the need for, but not retain, the services of an expert:

“The record does not support plaintiffs' claim that they acted with due diligence regarding discovery in this case. A plaintiff has an affirmative duty to prove its case and should not file a complaint without some reasonable basis for doing so. As late as December of 2008, approximately 10 months after the complaint was filed, plaintiffs were still saying they needed the services of an expert to identify the instances in which they claim defendant breached some duty to process medical claims of plaintiffs' employees. If plaintiffs intended to rely so heavily on the services of an expert witness to prove their case, they should have retained the expert much earlier in the process than they did.” Argus and Associates, Inc. v. Professional Benefits Services, Inc., 2009 WL 1297374, 2 (E.D.Mich. 2009)

As for the defendant, the Court started off somewhat lightly, noting that there was no “real basis” for plaintiff’s claim that defendant misled them about the defendant’s web site:

“Further, there is no real basis for the claim that defendant misled plaintiffs with respect to the availability of Medi-Web. As pointed out by defendant, their responses to discovery requests identified the existence of the Medi-Web system and plaintiffs' experience with the system before the litigation made them aware of the system.” Id., at p. 3.

The defendant does not escape without some pointed criticism about its discovery behavior:
“While defendant did not intentionally mislead plaintiffs with respect to the availability of the Medi-Web system, its conduct in making the system available to plaintiffs was not exemplary. Parties to civil litigation are required to meet and confer with respect to discovery. Fed.R.Civ.P. 26(f).” Id.

The Court then joins with many of its sister district courts in reminding counsel that, yes, there is a duty to meet and confer, there is a duty to discuss a discovery plan, and yes, ESI discovery discussions are required to take place in satisfaction of these obligations. Here, the Court focuses its ire on both parties:

“The parties are required to “develop a discovery plan” that would reasonably include “disclosure or discovery of electronically stored information, including the form or forms in which it should be produced.” Fed.R.Civ.P. 26(f)(2) and (3)(C). Developing a reasonably complete discovery plan is the responsibility of both parties. The parties in the present case did not live up to the requirements of the rule. When the lawyers in this case conferred about discovery at the outset of the case, as the rule contemplates, the Medi-Web system, which clearly is within the definition of electronically stored information, should have been discussed and included in the discovery plan. It is the failure of the parties to do what the rule reasonably requires that brings us to this controversy.” Id.

Both parties in this case were at fault. Plaintiff, for its part, was tardy in responding to defendant’s discovery requests because it failed to retain the expert which it alleged was necessary to respond same. Defendant, for its part, failed to disclose the availability of a web site (now) alleged by plaintiff to be relevant.

The Court split the baby.

The plaintiff failed to disclose by a court imposed deadline (or seek extension thereof) in compliance with an order to compel, triggering the imposition of Fed. R. Civ. P. 37, the sanction for which would have been a limitation of proofs presented at trial in accordance with Fed. R. Civ. P. 37(a)(2)(B)(ii). Defendant’s actions, however, resulted in the moderation what would have been a more severe sanctions against the plaintiff:

“A court has discretion with respect to the imposition of sanctions where a party has failed to make disclosures. This Court informed plaintiffs that if the disclosures sought through the motion to compel were not made by January 16, 2009, the sanction to be imposed would be a limitation on the presentation of proofs at trial. This sanction is one available under Rule 37(b)(2)(A)(ii).” Id.

“Counsel for plaintiffs readily accepted this deadline and never attempted to obtain relief from that deadline when it became clear that the deadline would not be met. The undersigned believes that the sanction indicated in the December 31, 2008 order should generally be enforced. However, given the fact that defendant bears some of the fault for the Medi-Web information not being available at an earlier date, an exception will be made for any information relating to a breach of duty with respect to a claim processed by defendant that was not known to plaintiffs until after it had access to the Medi-Web system and only became known to plaintiffs as a result of access to Medi-Web.” Id.

“Plaintiffs will have the burden of proving that errors in processing of claims by defendant were either disclosed to defendant no later than January 16, 2009, or not known to plaintiffs until after, and as a result of, access to Medi-Web. Given the circumstances of this case and the above sanctions, no other sanctions will be imposed on any of the parties and costs or attorney fees will not be imposed.” Id.

Takeaway: Had defendant been more forthright, or better equipped to handle ESI discovery and disclosure, it might have been handed an “outcome determinative” evidentiary decision.

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2009-05-26T00:24:00.005-04:00

2009-05-26 Privilege Logs, Spoliation, and Some Existentialism

Five decisions for this week, including one from U.S. Magistrate Judge Facciola on privilege, privilege logs, and eDiscovery. Also, decisions from the Southern District of Florida ordering forensic imaging of a computer, the Tenth Circuit analyzing spoliation standards, standards for review of a district court’s discovery order decision involving spoliation findings and decision whether (or not) to imposing sanctions, from District Judge Patel from the Northern District of California involving spoliation sanctions remedies, and, last but not least, a decision from the Southern District of New York engaging in a bit of spoliation metaphysics.

Privilege Logs: First up is a decision from Magistrate Judge Facciola (D.D.C.) addressing privilege log adequacy issues and their applicability to ESI.
Spoliation: Four spoliation decisions on the menu. The first is a decision from the Southern District of Florida involving the discoverability of deleted files and a party’s request for direct access to a producing party’s computer and ESI. The second decision is from the U.S. Court of Appeals for the Tenth Circuit addressing (what else) Tenth Circuit spoliation standards, and the interplay between those standards and the preservation regulations promulgated under Title VII and the ADA. The third decision is from the Northern District of California, and discusses preservation duty triggers (actual and constructive) spoliation sanctions standards imposition in the Ninth Circuit, and the types of remedies (evidential and monetary) available for spoliation. Last but not least, a spoliation decision from the Southern District of New York, holding that evidence must be shown to have existed in order to assert a spoliation claim.

SWT

Decisions:
NLRB v. Jackson Hospital Corp., ---F.Supp. 2d---, 2009-WL1351415 (D.D.C. 2009)
Bank of Mongolia v. M&P Global Financial Services, Inc., 2009 WL 1117312 (S.D. Fla. 2009)
Turner v. Public Service Co. Of Colo., --- F.3d ----, 2009 WL 1132126 (10th CIr. 2009)
RealNetworks, Inc. v. DVD Copy Control Ass'n, Inc., 2009 WL 1258970 (N.D. Cal. 2009)
Hawknet Ltd. v. Overseas Shipping Agencies, et al., 2009 WL 1309854 (S.D.N.Y. 2009)

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Case: NLRB v. Jackson Hospital Corp.
Citation: ---F. Supp. 2d---, 2009 WL 1351415 (D.D.C. 2009)
Date: 2009-05-15
Topics: Privilege log sufficiency and adequacy, remedies for privilege log inadequacy or insufficiency, stipulations regarding privilege of ESI based discovery

U.S. Magistrate Judge John Facciola of the U.S. District Court for the District of Columbia provides the digest with this decision, issued in his capacity as special master (appointed by the U.S. Circuit Court of Appeals for the D.C. Circuit).

Author’s Note: While not an eDiscovery decision per se (non-ESI discovery decisions do affect eDiscovery, after all) any decision from Magistrate Judge Facciola in this arena is always instructive, and often entertaining. In this instance, one issue involved the sufficiency of a privilege log. Recall that privilege logs (required to be produced, where discovery material is withheld under Fed. R. Civ. P. Rule 26(b)(5). Privilege logs in the eDiscovery arena are worthy of special attention because (imo) the metadata associated with ESI can provide precisely the information required to be disclosed in a privilege log. Moreover, although a challenge to the “reliability” of a privilege log for paper documents might seem far-fetched, a challenge to the reliability of ESI metadata (also ESI, imo) falls in line with evolving approaches to digital evidence generation, acquisition management.

Ok, back to the decision.

Challenges to Privilege Log Adequacy

First, it should be clear that the adequacy of a privilege log may be made by a party pursuant to Fed. R. Civ. P. Rules 34 and 37, or sua sponte by the court. In this instance, it appears that defendant Jackson Hospital Corp. raised this issue (together with a variety of others) in its appeal to the D.C. Circuit Court of Appeals, and provided the basis for remand to M.J. Facciola for his decision as special master.

Magistrate Judge Facciola typically never minces words, and the first sentence in the Court’s analysis is no exception:

“The privilege log submitted by the NLRB in this case leaves much to be desired.” N.L.R.B. v. Jackson Hosp. Corp., ---F.Supp.2d ----, 2009 WL 1351415, 2 (D.D.C.,2009)

We're not off to a good start.

The Court then provides a short analysis of the privilege log rule set forth in the Federal Rules:

“The rule requires that the party who is claiming privilege expressly make the claim and “describe the nature of the documents ... not produced ... and do so in a manner that, without revealing information, itself privileged or protected, will enable other parties to address the claim.” Fed.R.Civ.P. 26(b)(5).” Id., at *2.

The Court found that “all too many” of defendant NLRB’s entries “fail[ed]” to meet this requirement.

Courts will frequently provide a party with the opportunity to supplement privilege logs deemed inadequate or insufficient. Here, the Court describes how a party might remedy such inadequacies:

“The inadequacy of a privilege log can be remedied in four ways:

1. Permit the party another chance to submit a more detailed log;
2. Deem the inadequate log a waiver of the privilege;
3. In camera inspection of the withheld documents; or
4. In camera inspection of a select sample of the withheld documents.” Id.

It should be kept in mind that a waiver of privilege is really not a remedy or second bite at the apple, but more in the nature of a fairly severe sanction. The Court realizes this in its depiction of waiver as “draconian.” That said, the Court discusses the impact of an inadequate privilege log on the Court, describing waiver as “least consumptive” of judicial resources, and “in camera of all withheld documents” to be “most forgiving” but “most consumptive” of judicial resources.

“Unringing the Bell”

The Court also brings to light the ever-present problem that the finder of fact (here, the court) will see documents that are privileged, and that even though judges “routinely disregard inadmissible evidence, “it may be difficult to unring the bell.”

Inadequacy of Privilege Logs as Factor in Shaping Remedy for Insufficiency

The facts and circumstances surrounding the inadequacy of a privilege log may itself provide context and basis for a court’s choice of remedy, and the Court articulates this in classic Facciola style:

“Shaping a remedy may also be a function of how inadequate the log is when viewed against other factors. The context of the creation of the document, for example, viewed from the perspective of the history of the litigation, may permit reasonable inferences about the document that eliminate any need for in camera inspection.” Id.

“Stated in another way, the Court does not leave its common sense at the door when it examines a privilege log and the legitimate inferences that it draws from an entry in a privilege log may rescue that entry from being condemned as inadequate in the first place-relieving the Court of any obligation to review it in camera-even though the privilege log as to that entry could and should have been more specific.” Id.

Privilege Log Challenges Are Symmetric

For those who might view privilege log challenges as a tool to be put into routine eDiscovery use, the Court also cautions practitioners to be mindful that the tool is two-edged:

“Finally, lawyers have a healthy respect for their own skins and know that if they demand work product from opposing counsel it will only be a matter of time before that gun is turned around and aimed at them.” Id.

Stipulations as to Privilege and ESI

The Court takes the approach that “sophisticated counsel,” i.e., those aware that certain classes and categories of information are “presumptively privileged” will take appropriate measures to address privilege, and privilege logs, early on in litigation. These measures may well take the form of a stipulation between the parties agreeing that:
“…[C]ertain categor[ies] of information [are] so clearly likely to be work product that [they] need not even be logged on a privilege log; [their] privileged nature is conceded. Id., at *3.

The Court then goes on to state that this approach, and such agreements, may be particularly helpful to both the parties (and a court) where ESI is involved:

“All these impediments to securing information that is presumptively protected by the work product privilege may lead sophisticated counsel to agree that a certain category of information is so clearly likely to be work product that it need not even be logged on a privilege log; its privileged nature is conceded. Such agreements may become common now that the search for electronic data, subject to a Request to Produce, can yield amounts of potentially privileged information that is staggering; this Court, for example, has a case in which there are over 9,000 entries in the privilege log based on a production described as “hundreds of thousands of documents.” Id.

Takeaways: Submitting inadequate or insufficient privilege logs is risky business. Where both counsel are sophisticated, and where meaningful cooperation has taken place, Court’s may suggest (and later order) that counsel enter into a preliminary stipulation regarding privileged materials in cases involving ESI.

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Case: Bank of Mongolia v. M&P Global Financial Services, Inc.
Citation: 2009 WL 1117312 (S.D. Fla. 2009)
Date: 2009-04-24
Topics: Requesting party’s motion for direct access to producing party’s ESI and hardware; availability of ESI from third party sources as basis for ordering forensic imaging, deleted computer files held discoverable, violation of local rule requiring explanation to be provided in connection with discovery request objection

This decision from the Southern District of Florida involved a motion to compel defendant’s response to plaintiff’s request for document production. In this RICO (Racketeer Influenced and Corrupt Organization Act) plaintiff Bank alleged that defendants conspired to defraud plaintiff of 23 million dollars. Plaintiff Bank served defendants with a request for document production. One day after the deadline for production, plaintiff’s counsel sent an email asking when plaintiff could expect a response, but received no response. Five days later, plaintiff’s counsel left a voice mail with defendants’ counsel, but again received no response. Plaintiff then filed a motion to compel production, which was not responded to by defendants, resulting in U.S. District Judge Rosenbaum’s issuance of an order to show cause directing that defendants file their response. This decision is a written memorialization of the oral order granting the motion to compel.

I'm digesting this decision, so of course, this is where things get interesting. The defendants provided a one page response, stating that (1) certain documents were not in their possession, (2) certain other documents would be provided “in the near future” and in some very chopped language apparently claiming that these documents were to be “…obtain[ed] them from a foreign country,” and (3) objected to certain other documents requests as “vague and burdensome.”

Blognote: Federal Civil Procedure fans might chuckle at notion of asserting a “vague and burdensome” objection after ignoring a discovery request, and where such an assertion is made only after an order compelling production…

Ok, back to the decision. Plaintiff maintained, inter alia, that defendants had spoliated certain documents, that defendants had failed to provide a valid explanation for their failure to timely respond to discovery requests, and that any objections to privilege were, of course, waived.

Request to Allow Requesting Party Access to Producing Party’s Electronic Records and Hardware

It’s not often that we see a request for a party to have direct access to a producing party’s ESI and computers, but that’s an issue now facing the court:

“In light of the M & P Defendants' failure to produce all responsive documents and the lack of a valid excuse, Plaintiff requests that Defendants be sanctioned for their conduct by allowing Plaintiff access to Defendants' electronic records and computer hardware to allow Plaintiff to locate all responsive documents.” Bank of Mongolia v. M&P Global Financial Services, Inc., 2009 WL 1117312, at *2 (S.D. Fla. 2009)

The Court held a hearing on plaintiff’s motion (which included an assertion that defendants had spoliated evidence). The Court then undertakes an analysis of the steps defendants had taken to comply with plaintiff’s discovery requests and plaintiff’s assertions in support of its motion.

A Producing Party’s ESI “What-Not-to-Do,” or, How to Tee Up a Requesting Party’s Justification to Search a Producing Party’s ESI and Computers

The defendant here provided the Court with a list of what it had failed to do in connection with its obligation to respond to plaintiff’s discovery requests. The phrase “let me count the ways” comes to mind:

“On April 20, 2009, Plaintiff and the M & P Defendants presented argument at a hearing on Plaintiff's Motion. At the hearing, the Court inquired of the M & P Defendants as to whether they had provided all responsive documents to Plaintiff, as Defendants had indicated in paragraph 1 of Defendants' Response to Plaintiff's Request for Production.

“The M & P Defendants conceded that they had not performed a search of all deleted and unsaved electronic documents and requested twenty days for Defendants' own computer expert do a thorough search of all electronic documents, including deleted and unsaved documents.

“When the Court requested information regarding the steps that Defendants had taken to conduct a search for responsive documents, counsel for the M & P Defendants was not in a position at that time to set forth Defendants' search methodology.” 2009 WL 1117312 at *2.

Defendants also asserted that certain classes of documents requested were not under their control and could not be produced. The documents located in a “foreign country,” defendant submitted, would be “coming soon” or “shortly.”

The Court wasn’t buying, and orally granted plaintiff’s Motion to Compel, including awarding attorneys fees and costs.

But wait, it doesn’t end here. Let’s go to the Court’s analysis.

The Purpose of Discovery

Many decisions are written concerning the scope of discovery, but, there have not been many recent cases discussing the reason for discovery in the first place. Indeed, Fed. R. Civ. P. Rule 26 provides the “what you may do” but not (by presumably by intent) does not provide the context for conducting discovery. The Court draws upon 1946 vintage Advisory Committee Comments to the amendments to Fed.R. Civ. P. 26(b) notes to explain the philosophical underpinnings for the adoption of Rule 26:

“R. 26(b), Fed.R.Civ.P. The Advisory Committee Notes to Rule 26 indicate that “[t]he purpose of discovery is to allow a broad search for facts, the names of witnesses, or any other matters which may aid a party in the preparation or presentation of his case.” Adv. Com. Notes, 1946 Amendment, R. 26, Fed.R.Civ.P. (citations omitted) (emphasis added). Indeed, the Advisory Committee Notes approvingly cite language from a case stating that “the Rules ... permit ‘fishing for evidence as they should.’ “ Id. (citation omitted); see also Hickman v. Taylor, 329 U.S. 495, 507 (1947) (“No longer can the time-honored cry of ‘fishing expedition’ serve to preclude a party from inquiring into the facts underlying his opponent's case.”)” [Emphasis in original]. Id., at *4

District Judge Rosenbaum that notes that federal courts, including the Eleventh Circuit, have long recognized the “wide scope of discovery allowed under the Federal Rules of Civil Procedure,” but also recognizes that:

“[T]he scope of permissible discovery is not unbounded. Requested discovery must be relevant, and it must not impose undue burden, under the tests described in Rule 26(b)(2)(C).” Id.

Waiver of Objections to Discovery Requests Under Federal and Local Court Rules

With that in mind, the Court then states first that defendants’ objections were based upon assertions of vagueness and overbreadth, but not relevancy. With the acknowledgment that the material requested was relevant, the Court then addresses defendants’ discovery action (or failure to act). Here, another discovery “what-not-to-do”:

The Court then makes short shrift of defendants’ assertions that document production requests were “vague and overbroad,” finding violations of both local court rules as well as the Federal Rules of Civil Procedure. First up: the Court’s waiver analysis under the federal rules.

Succinctly put, an untimely response (and in this case, repeatedly ignored requests for explanation in connection therewith) will, without good cause shown, effect a waiver:

“With the exception of the M & P Defendants' objection to document request 16 “as too vague and burdensome,” the M & P Defendants do not contest the relevance of Plaintiff's production requests. As for their objection to document request 16, the Court concluded that the M & P Defendants' objections were waived, in light of Defendants' untimely response to Plaintiff's document requests and their repeated failures to respond to Plaintiff's inquiries regarding the whereabouts of Defendants' responses. See Williams v. Bridgestone/Firestone, Inc., 2008 WL 4755675, *1 (S.D.Fla. Oct. 28, 2008); United Steel Workers of America, AFL-CIO-CLC v. Ivaco, 2002 WL 31932875, *4 (N.D.Ga. Jan. 13, 2003) (citing Marx v. Kelly, Hart & Hallman, P.C., 929 F.2d 8,12 (1st Cir.1991) and In re United States, 864 F.2d 1153, 1156 (5th Cir.1989)); Pitts v. Francis, 2008 WL 2229524, *2 (N.D.Fla. May 28, 2008) (noting that the Advisory Committee Notes to Rule 34, Fed.R.Civ.P., explain that Rule 34's requirement that objections be made timely and stated with reasons “is essentially the same as that in Rule 33” that provides that “ ‘[a]ny ground [for an objection to an interrogatory] not stated in a timely objection [ i.e., thirty days] is waived unless the court, for good cause, excuses the failure.’ ”).” Id.

Compounding the violation of Fed. R. Civ. P. Rule 34 was defendants’ apparent failure to comply with local court rules, in this instance Local Court rule 26.1 G.3.(a) of the U.S. District Court for the Southern District of Florida.

“Moreover, even if Defendants' objections were timely or Defendants could provide good cause for their failure to file their objections timely-neither of which occurred in the instant case, the M & P Defendants' objections were entirely conclusory and contained no explanation as to why Defendants viewed document request 16 as “vague or burdensome.” Such objections do not comply with Local Rule 26.1 G.3.(a) which provides, “Where an objection is made to any interrogatory or sub-part thereof or to any document request under Federal Rule of Civil Procedure 34, the objection shall state with specificity all grounds.”

“Objections that state that a discovery request is “vague, overly broad, or unduly burdensome” are, standing alone, meaningless and fail to comply with both the Local Rules and Rule 34's requirement that objections contain a statement of reasons. See Pitts v. Francis, 2008 WL 2229524, *2. A party objecting on these grounds must explain the specific and particular way in which a request is vague, overly broad, or unduly burdensome. In addition, claims of undue burden should be supported by a statement (generally an affidavit) with specific information demonstrating how the request is overly burdensome. See Benfatto v. Wachovia Bank, N.A., 2008 WL 4938418, *4 (S.D.Fla. Nov. 19, 2008) (citing Convertino v. U.S. Dept. of Justice, 565 F.Supp.2d 10, 14 (D.D.C.2008)). In view of the lack of any statement of reasons why Defendants viewed request 16 as overly burdensome or vague, the Court cited these shortcomings as an additional basis for overruling Defendants' objections. Thus, the Court found that all of Plaintiff's document requests fell within the permissible scope of discovery.” Id. at *5

Blognote: This is but one of an increasing number of decisions where both District Judges and Magistrate Judges emphasize the importance of adhering to local court rules, and wielding a sanctions cudgel for non-compliance therewith.
Deleted Computer Files Held Discoverable

Defendants “forthrightly” acknowledged at the hearing that they had failed to search for documents, including deleted emails, admittedly in their possession. The Court points out that deleted computer files of any type are discoverable:

“At the hearing, the M & P Defendants' counsel forthrightly acknowledged that he was unable to identify the steps taken to identify responsive documents, and conceded that more responsive documents may well exist in Defendants' possession, as Defendant had not attempted to search deleted computer records. Deleted computer files, however, whether e-mails or otherwise, are discoverable. See, Wells v. Xpedx, 2007 WL 12000955, *1-2 (M.D. Fla. April 23, 2007) (“producing party has the obligation to search available electronic systems for deleted emails and files”) (citing to Advisory Committee Notes, Fed.R.Civ.P. 34) (internal citations omitted); see, e.g., Antioch Co. v. Scrapbook Borders, Inc., 210 F.R.D. 645, 652 (D.Minn.2002) (citing Rowe Entertainment, Inc. v. The William Morris Agency, Inc., 205 F.R.D. 421, 427, 431 (S.D.N.Y.2002); Simon Property Group, L.P. v. MySimon, Inc., 194 F.R.D. 639, 640 (S.D.Ind.2000); Playboy Enterprises, Inc. v. Welles, 60 F.Supp.2d 1050, 1053 (S.D.Cal.1999) (other citations omitted).” Id., at *6

Recovery of Relevant Evidence from Third Party Sources Provides Justifies Court Appointment of Independent Computer Expert

The Court’s reaction to what appeared to be defendants’ abusive discovery behavior should come as no surprise. The Court held that it would appoint an independent computer forensics expert to examine defendants’ computers for deleted files, and declined defendants’ request for additional time to select an expert of its own choosing:

“Additionally, based on the discrepancies between Defendants' Response to Plaintiff's Requests for Production and their concession at the hearing that not all documents have yet been produced, and particularly in light of the recovery of apparently responsive documents by the Plaintiffs from third-party sources, the Court determined that an independent expert should be appointed to retrieve any deleted responsive files from Defendants' computers. See U & I Corp. v. Advanced Medical Design, Inc., 251 F.R.D. 667, 676-77 (M.D.Fla.2008) (authorized use of independent computer expert to sample information on hard drives for responsive information); see e.g., Antioch Co., 210 F.R.D. at 652-53 (setting forth procedure for independent expert to “mirror image” party's hard drive to retrieve deleted files, as set forth in Playboy Enterprises, Inc., 60 F.Supp.2d at 1054-55); Simon Property Group, L.P., 194 F.R.D. at 641-42 (following basic structure for an independent expert paid by party requesting information to “mirror image” other party's hard drives to identify deleted files, and following procedure set forth in Playboy Enterprises, Inc.). The Court declined Defendants' suggestion instead that they receive an additional twenty days for their own in-house computer expert to look for responsive information, in view of the M & P Defendants' past lack of response to Plaintiff's request for information, the questionability of some of the M & P Defendants' responses in their Response to Plaintiff's Request for Production, and Plaintiff's presentation of documents responsive to the Plaintiff's Request for Production to the M & P Defendants, but obtained from third parties, which appear to be records that the M & P Defendants should have had.” Id., at *7

Computer Forensic Expert Selection and Management Procedures

District Judge Robinson also provides a good general procedure in connection with the selection and utilization of the services of a computer forensics expert. The following summarizes these guidelines:

1. Independent Computer Expert to Be Appointed by Court: An independent third party computer expert shall be appointed by the Court and shall mirror image the producing party’s computer system.

2. Counsel Meet and Confer Deadline for Expert Designation: The parties have until _______, to meet and confer regarding their designation of an independent computer expert. If the parties cannot agree on an independent computer expert, each party shall submit its recommendation for an independent expert to the Court, and the Court shall select the expert.

3. Confidentiality: The expert selected shall sign a confidentiality order, and shall be allowed to hire other outside support if necessary in order to mirror image M & P Defendants' computer system. Any outside support shall be required to sign the same confidentiality order.

4. Expert as Officer of the Court: The appointed independent computer expert shall serve as an Officer of the Court. Thus, to the extent that this computer expert has direct or indirect access to information protected by attorney-client privilege, such disclosure will not result in any waiver of the producing party’s privilege.

5. Actions to be Taken By Expert: The expert shall mirror image the M & P Defendants' computer system.

6. Requesting Party to Provide List of Search Terms: The requesting party shall provide a list of search terms to the Court to identify responsive documents to requesting party’s document requests by _________. After requesting party has submitted the search terms to the Court, the producing party shall have 5 days to submit its objections to the Court regarding any of the search terms, which the Court will rule upon. The Court will provide the search terms to the independent expert.

7. Expert to Search Image Using Search Terms and Provide Results to Producing Party and the Court: Once the expert has imaged the producing party’s computer system, the expert shall search the image results using the search terms designated by the Court. The results of the search terms will be provided to the producing party and to the Court, along with an electronic copy of all responsive documents (also to be provided to both the producing defendants and the Court).

8. Producing Party to Review Search Terms Results and Either Produce or Identify for Privilege Log: The producing party shall review the search term results provided by the Court's expert and identify all responsive documents. The M & P Defendants shall either produce all responsive documents to Plaintiff or identify those responsive documents not produced on a privilege log to Plaintiff within 20 days of the date that the M & P Defendants receive the search term results from the independent expert. Any privilege log produced shall comply strictly with the Local Rules for the Southern District of Florida.

9. Computer Expert Fee Payment: Requesting party shall pay for all fees and costs of hiring the independent expert at this time. However, if at a later time there is evidence of the producing party’s improper deletion of electronic documents or any other associated improper conduct, the Court will revisit this issue and consider charging the producing party for the fees and costs of the independent expert or imposing the fees and costs on the parties in a duly appropriate proportioned manner.

10. Expert to Detail Steps Taken in Affidavit: The independent expert shall provide a signed affidavit detailing the steps he or she took in mirror imaging the M & P Defendants' computer system and searching the mirror image for the search terms within 5 days of providing the M & P Defendants and the Court with the results of the search for search terms in the mirror image.

Blognote: In this decision, District Judge Robinson expressly incorporates a mandate for compliance with the Local Florida Rules for the Southern District of Florida into the Court’s order. Moreover, while the Court did not shift fees for the computer expert, it reserved the right to so shift expert fees and costs on producing party where there was “evidence” of improper deletion or “any other associated improper conduct.” What degree of “evidence of…improper deletion…or any other associated improper misconduct” remains to be seen.

Direct Access to Producing Party’s Computers and ESI Not Permitted

Oh, and while the Court made initial reference to the possibility of a requesting party’s direct access to a producing party’s computers and ESI, it was not prepared to go that far:

“While this procedure does not provide Plaintiff access to the M & P Defendants' documents as Plaintiff requested, the M & P Defendants' failure to adequately respond to Plaintiff's request for documents is not sufficient grounds to give Plaintiff unfettered access to Defendants' computer system. See In re For motor Company, 345 F.3d 1315, 1317 (11th Cir.2003). The court anticipates, however, that the procedure set forth above should ensure that all responsive electronic documents will be identified, while minimizing the intrusion into the M & P Defendants' records.” Id., at *8

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Case: Turner v. Public Service Co. Of Colo.
Citation: --- F.3d ----, 2009 WL 1132126 (10th CIr. 2009)
Date: 2009-04-28
Topics: 10th Circuit spoliation standards, bad faith showing is required, and negligence insufficient to impose adverse inference instruction; negligent spoliation may justify imposition of lesser sanctions; Failure to seek sanctions under Fed. R. Civ. P. Rule 37 and Title VII, ADA preservation requirements (29 CFR §1602.14)

This appeal to the U.S. Circuit Court of Appeals for the 10th Circuit, arose from a summary judgment by the District Court of Colorado against the plaintiff-appellant, who had brought a Title VII action against prospective employer alleging sex discrimination. One issue appealed to the 10th Circuit involved plaintiff’s allegations that defendant spoliated notes created at her interview.

Plaintiff’s Diligence and Defendant’s Duty to Preserve Under the Federal Common Law and 29 CFR §1602.14

This decision brings to light an interesting interplay between Federal common law (as interpreted by the 10th Circuit Court of Appeals) and preservation requirements promulgated under Title VII and the ADA (and as set forth in 29 CFR §1602.14). The Court, while acknowledging the Title VII and the ADA might well impose heightened preservation duties upon a prospective employer, there is a concomitant obligation on a plaintiff to diligently defend his or her own interests.

What is noteworthy is that the Court suggests that a federal district court in the 10th Circuit has greater sanctions powers under Fed. R. Civ. P. Rule 37 (involving sanctions for failure to comply with a discovery order) than it has under the “inherent powers” doctrine. What stronger or greater latitude in connection with discovery abuse the court leaves unaddressed, but the net effect was that plaintiff’s failure to avail herself of Rule 37’s discovery abuse procedures somehow diluted the impact of any alleged spoliation that might result in a violation of 29 CFR §1602.14:

“Even in cases where employers destroy evidence they are required to retain under 29 C.F.R. § 1602.14, plaintiffs must be “diligent in the defense of their own interests,” and should seek sanctions under Federal Rule of Civil Procedure 37 to remedy any prejudice caused by spoliation. See Mathis v. John Morden Buick, Inc., 136 F.3d 1153, 1156 (7th Cir.1998). When a plaintiff fails to seek sanctions under Rule 37 and thus “forecloses access to the substantial weaponry in the district court's arsenal,” the plaintiff's only remaining option is to seek sanctions under a spoliation of evidence theory. Id. at 1155; see also Aramburu v. Boeing Co., 112 F.3d 1398, 1407 (10th Cir.1997) (applying the spoliation of evidence doctrine in a discrimination case). Turner v. Public Service Co. of Colorado, 563 F.3d 1136, 1149, 2009 WL 1132126, 11 (10th Cir. 2009).

Tenth Circuit Spoliation Standards – Litigation Must be Imminent

The Court then provides a brief analysis of spoliation sanctions imposition standards for the Tenth Circuit, comprising (sorry, patent counsel) (1) a duty to preserve; (2) real or constructive knowledge that litigation was imminent; and (3) prejudice to the non-spoliating party. Yes, I’ve expanded the two-prong analysis into three, and with good reason. That “because” language inserts an additional condition into the analysis. It’s also wise to keep in mind that, at least in the Tenth Circuit, the knowledge (real or constructive) is that litigation is imminent. Of course, “imminent” will in all likelihood be very fact dependent, but certainly has a sense of impending occurrence. Other circuits (notably the Second, and Ninth) employ a “reasonably foreseeable in anticipated future litigation” test. Anticipated future litigation appears much more expansive than immanency of litigation:

“Spoliation sanctions are proper when “(1) a party has a duty to preserve evidence because it knew, or should have known, that litigation was imminent, and (2) the adverse party was prejudiced by the destruction of the evidence.” Burlington N. & Santa Fe Ry. Co. v. Grant, 505 F.3d 1013, 1032 (10th Cir.2007).” Turner v. Public Service Co. of Colorado, 563 F.3d 1136, 1149-1150, 2009 WL 1132126, 11 (10th Cir. 2009).

Bad Faith Required for Adverse Inferences – Inference of Consciousness of Weak Case

“But if the aggrieved party seeks an adverse inference to remedy the spoliation, it must also prove bad faith. ‘Mere negligence in losing or destroying records is not enough because it does not support an inference of consciousness of a weak case.’ Aramburu, 112 F.3d at 1407.” Id., 563 F. 3d at 1149.

No Adverse Inference Absent Showing of Bad Faith

“Without a showing of bad faith, a district court may only impose lesser sanctions. Henning, 530 F.3d at 1220.” Id., at p. 1149.

Whether these lesser sanctions are evidential (preclusion of evidence, preclusion of testimony about evidence, or preclusion of argument about spoliated evidence) is unaddressed.

Standards for Review of District Court’s Discovery Findings

Most appeals of discovery decisions appear in the form of objections to a U.S. Magistrate’s report and recommendation to a district court, or in the form of objections to a U.S. Magistrate’s discovery order made by a party to a district court. Here, we have a relatively rare appeal of a federal district court’s order to a United States circuit court of appeal. Here now the standards for review.

Appellate Court Review of District Court Findings of Bad Faith or Negligence, Decision to Impose Sanctions

Negligence or Bad Faith Findings –Factual- Reversal Only for Clear Error

Factual findings, made by a federal district court including whether a party acted in bad faith (or otherwise) are reviewed only for clear error:

“We review a district court's finding of bad faith or “mere negligence” for clear error…” Id., at 1150

Decision to Impose Sanctions Reversal Only for Abuse of Discretion

A Court’s decision to impose or deny sanctions for spoliation are legal in nature, and viewed for abuse of discretion:

“…[T]he district court's decision to impose or deny spoliation sanctions for abuse of discretion. Grant, 505 F.3d at 1032.” Id.

Result: The Court of Appeals first found no clear error in the district court finding of lack of bad faith, and “considering the record as a whole” the Court could not say that the district court’s finding lacked factual support. Moreover, the Court found no abuse of discretion by the district court in failing to impose a lesser (read: any) sanction, because there was no showing that the destroyed documents resulted in “actual” as opposed to merely “theoretical” prejudice to the plaintiff.

“The court moreover did not abuse its discretion when it refused to impose a lesser sanction to remedy PSCo's alleged spoliation. Assuming PSCo had a duty to retain the interview notes under the spoliation doctrine, there is no evidence that Turner was “actually, rather than merely theoretically” prejudiced by their loss. Id., at p. 1150.

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Case: RealNetworks, Inc. v. DVD Copy Control Ass'n, Inc.
Citation: 2009 WL 1258970 (N.D. Cal. 2009)
Date: 2009-05-05
Topics: Spoliation in 9th Circuit, letter of preservation, triggers for duty to preserve, pre-litigation evidence generation and management behavior asserted as basis for violation of duty to preserve and spoliation claim

In this matter, plaintiffs RealNetworks, Inc. and RealNetworks Home Entertainment, Inc. (“Real”) seeks a declaratory judgment that they have neither “breached a license agreement with the DVD Copy Control Association (“DVD CCA”) nor violated the anti-circumvention provisions of the Digital Millennium Copyright Act” (“DMCA”). U.S. District Judge Patel resolves three motions in this not-surprisingly proceedings-heavy litigation. The two relevant motions are plaintiffs’ motion to appoint a discovery referee, and defendant’s motion for sanctions for spoliation of evidence.

Blognote: the DVD CCA is a consortium whose members include content providers Twentieth Century Fox Film Corp., Paramount Pictures, Corp., NBC Universal Corp., Universal City Studios Productions, LLP, Columbia Pictures, Inc., Disney Enterprises, Inc…well, you get the picture.

Some context information will be helpful:

Real sells and distributes a product called “RealDVD” whose features include storing an “image” of copy-protected digital content on a computer hard drive. The DVD CCA members employ a copy-protection mechanism called CSS (Content Scramble System). CSS technology employs encryption processes to scramble content so that it cannot be played without first being decrypted. The CSS technology protects copyrighted content from unauthorized copying.

In short, plaintiff Real’s request for relief included judgment that both RealDVD and Facet did not breach the CSS License Agreement, and did not violate the anti-circumvention provisions of the DMCA. The DVD CCA and “Studio” defendants claimed the opposite.

Here now, the timeline of events (always helpful in a preservation duty-trigger decision)

August, 2007 – The DVD CCA licensed CSS technology to Real.
September 8, 2008 – Defendants “formally advised plaintiff Real that is was in violation of the License Agreement (because RealDVD permitted digital-to-digital copying of DVD content in a personal computer environment) and that plaintiff was in violation of the anti-circumvention provisions of the DMCA.
September 9, 2008 – The parties entered into a standstill/tolling agreement.
September 25, 2008 - Counsel for defendants sent a letter to Real informing it that Studio defendants intended to file a lawsuit against Real and seek injunctive relief.
September 30, 2008 – Plaintiff Real filed an action for declaratory judgment pursuant to 28 USC §§2201, 2202, seeking a declaratory judgment that “in making the RealDVD product, Real did not breach the CSS License Agreement and did not violate the anti-circumvention provisions of the DMCA.
September 30, 2008 – Plaintiff Real released and made the RealDVD product available for download.
September 30, 2008 – Defendants filed an action in the Central District of California, alleging plaintiff Real violated both the CSS License Agreement as well as the DMCA anti-circumvention provisions.
October 14, 2008 – The CD Cal. suit was transferred to the Northern District of California, and related to plaintiff Real’s action for declaratory judgment.
October 3, 2008 – The Court issued defendants’ requested Temporary Restraining Order to restrain and enjoin plaintiff Real from further distribution of the RealDVD product.
October 3, 2008 – The “Studio Defendants” filed a counter-complaint against plaintiff Real alleging breach of the CSS License Agreement, and violations of DMCA anti-circumvention provisions.
October 6, 2008 – (Still with me?) Plaintiff Real’s legal department “emailed a document preservation memorandum to members of the RealDVD team, instructing all recipients to “preserve all documents and electronic and hard copy data from July 2007 to the present relating to any aspect of RealDVD, the CSS License Agreement, and the DVD CCA”
November 11, 2008 – Defendant DVD CCA file a motion for preliminary injunction to join the “Studio” defendants to enjoin Real from producing, selling, offering, or otherwise trafficking its RealDVD product.
November 11, 2008 – Plaintiff Real filed a motion to amend it complaint to add claims for a second Real product (“Facet”) that “share[d[ many of the functionalities of RealDVD…”
December 22, 2008 – The Court granted Real’s motion to amend it complaint to include the Facet product.
February 25, 2009 – The “Studio” defendants filed a motion for sanctions for Real’s alleged spoliation of evidence.
March 2, 2009 – The DVD CCA joined in the motion for sanctions for spoliation of evidence.

Bases For Spoliation Assertions Against Real

Defendants allege that plaintiff Real failed to take adequate steps to preserve evidence from the April 2007 “inception” of the Facet product. The spoliation claims also asserted that plaintiff Real:

“[S]poliated key evidence, specifically notebooks of Senior Program Manager Nicole Hamilton on the Facet project and an ArccOS.zip file.”

Defendant Real, for its part, argued in opposition that:

“…(1) there was no duty to maintain documents until at least the beginning of negotiations between the parties in September 2008, and shortly thereafter, in October 2008, Real instituted a document hold;
(2) that Real was unaware of the existence of these notebooks, because [Senior Program Manager] Hamilton had failed to turn them over when Hamilton’s supervisor had previously asked for all Facet-related materials; and
(3) contrary to defendants’ argument, Real management issues no order to destroy related evidence. Real also subsequently produced the disputed ARccOS.zip file on March 4, 2009."

Sanctions for Spoliation of Evidence

District Judge Patel first sets the context for a court’s ability to sanction, covering imposition under both Fed. R. Civ. P. Rule 37 and a federal court’s “inherent powers:”

“District courts may impose sanctions as part of their inherent power “to manage their own affairs so as to achieve the orderly and expeditious disposition of cases.” Chambers v. NASCO, Inc., 501 U.S. 32, 43, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991); see also Unigard Sec. Ins. Co. v. Lakewood Eng'g & Mfg. Corp., 982 F.2d 363, 368 (9th Cir.1992) (excluding evidence as a sanction for spoliation). This power includes the “broad discretion to make ... evidentiary rulings conducive to the conduct of a fair and orderly trial.” Id. at 368, quoting Campbell Indus. v. M/V Gemini, 619 F.2d 24, 27 (9th Cir.1980).” RealNetworks v DVD Copy Control Ass’n, Inc., 2009 WL 1258970 at *6 (N.D. Cal 2009)

“District courts' inherent power to sanction may be invoked in response to destruction of evidence. If a party breaches its duty to preserve evidence, the opposing party may move the court to sanction the party destroying evidence. See Unigard, 982 F.2d at 365.” RealNetworks, 2009 WL 1258970 at *5

The Three Sanctions for Spoliation

District Judge Patel then describes the “three ways” in which a spoliating party may be evidentially sanctioned: adverse inferences, preclusion of testimony, and dismissal or default. The Court notes that dismissal is reserved for those most egregious acts of spoliation.

“Courts may sanction parties responsible for spoliation of evidence in three ways. First, a court can instruct the jury that it may draw an inference adverse to the party or witness responsible for destroying the evidence. See Glover v. BIC Corp., 6 F.3d 1318, 1329 (9th Cir.1993); Akiona v. United States, 938 F.2d 158, 161 (9th Cir.1991). Second, a court can exclude witness testimony proffered by the party responsible for destroying the evidence and based on the destroyed evidence. See, e.g., Glover, 6 F.3d at 1329; Unigard, 982 F.2d at 368-69. Finally, a court may dismiss the claim of the party responsible for destroying the evidence. See Allstate Ins. Co. v. Sunbeam Corp., 53 F.3d 804, 806-07 (7th Cir.1995); see also Chambers, 501 U.S. at 45 (“outright dismissal ... is a particularly severe sanction, yet is within the court's discretion”); Alexander v. Nat'l Farmers Org., 687 F.2d 1173 (8th Cir.1982) (noting dismissal of claims is a severe sanction and may be warranted for “outrageous” destruction of evidence).” Id., at *5.

Blognote: There are some decisions (and at least one from the Southern District of New York) that appear to provide a fourth evidential sanction; preclusion of argument. Some have mentioned that this might be unconstitutional, but that particular sanction will be revisited in and discussed in future digests.

Ok, back to the decision and to the Ninth Circuit’s approach to bad faith.

Bad Faith Not Required to Warrant Court’s Imposition of Sanctions

The Court then acknowledges that a finding of “bad faith” is not a pre-requisite to the imposition of sanctions for spoliation of evidence. Indeed, as the Court states, mere “notice” that the destroyed evidence was potentially relevant to anticipated litigation is sufficient to impose sanctions:

“A party's destruction of evidence need not be in “bad faith” to warrant a court's imposition of sanctions. Glover, 6 F.3d at 1329; Unigard, 982 F.2d at 368 n. 2. District courts may impose sanctions against a party that merely had notice that the destroyed evidence was potentially relevant to litigation. See Glover, 6 F.3d at 1329; Akiona, 938 F.2d at 161; cf. Unigard, 982 F.2d at 368 n. 2 (sanctions may be imposed for “willfulness or fault by the offending party”).” Id.

Culpability or bad faith may, however, play a role in determining what, rather than whether, sanctions are to be imposed. Moreover, as the Court points out, sanctions should be imposed on a “least onerous” basis serving both a remedial as well as deterrent purpose under the circumstances:

“However, a party's motive or degree of fault in destroying evidence is relevant to what sanction, if any, is imposed. Baliotis v. McNeil, 870 F.Supp. 1285, 1291 (M.D.Pa.1994); see also Schmid v. Milwaukee Elec. Tool Corp., 13 F.3d 76, 79 (3rd Cir.1994) (courts should choose “the least onerous sanction corresponding to the willfulness of the destructive act and the prejudice suffered by the victim”).” Id.

Duty to Preserve Evidence

The Court next turns to an analysis of the duty to preserve evidence as construed by the decisional authority from the various California federal district courts, and District Judge Scheindlin’s seminal preservation holdings from the Zubulake decision-set. It is interesting to note that the Court does not cite any Ninth Circuit decisional authority on the duty to preserve:

“As soon as a potential claim is identified, a litigant is under a duty to preserve evidence which it knows or reasonably should know is relevant to the action. Nat'l Ass'n of Radiation Survivors v. Turnage, 115 F.R.D. 543, 556-57 (N.D.Cal.1987) (Patel, J.); Baliotis, 870 F.Supp. at 1290; see also Unigard, 982 F.2d at 365, 369 (upholding the district court's exclusion of plaintiff's expert testimony based on evidence plaintiff destroyed two years before filing suit). The future litigation must be “probable,” which has been held to mean “more than a possibility.” Hynix Semiconductor Inc. v. Rambus, Inc., 591 F.Supp.2d 1038, 1061 (N.D.Cal.2006) (Whyte, J.). The duty to preserve evidence also attaches when “a party should have known that the evidence may be relevant to future litigation.” In re Napster, Inc. Copyright Litig., 462 F.Supp.2d 1060, 1068 (N.D.Cal.2006), quoting Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 216 (S.D.N.Y.2003).” Id., at *5.

District Judge Patel describes two types of preservation duty triggers. A duty to preserve is triggered once a potential claim is identified, and what must be preserved is evidence either known, or that a litigant should reasonably know is relevant to the action. The second type of trigger, more fully described in the Zubulake decision-set, occurs at a time when prior to the onset of litigation, but where a party knows or should have known that evidence may be relevant to future litigation. It is important to keep in mind that this second trigger has been held to apply to specific anticipated litigation, rather than a general anticipation of “some” (quotes mine) litigation potential involving such evidence.

Defendants’ Motion for Spoliation of Evidence

Here, defendants assert that plaintiff “failed to take adequate steps to preserve evidence and has spoliated key evidence during the course of the instant litigation. Defendants assert that plaintiff Real’s employees were “fully knowledgeable” about the potential for litigation since early 2007 (the timeline above shows that a licensing agreement was entered into in August 2007, and it is probably safe to assume that negotiations had been in progress prior to that time).

The Challenge to Pre-Litigation Evidence Generation and Management Behavior

What’s interesting here are defendants’ further assertions about plaintiff’s pre-litigation evidence generation and management behavior. Specifically, defendants claimed that plaintiffs

“…[C]arefully crafted any discoverable document in a manner helpful to Real’s litigation by using specific words and avoiding certain word phrases.” Id., at *7.

Defendants’ support for these assertions:

[Senior Program Manager Nicole Hamilton, who was employed by Real until one week prior to the commencement of litigation] testified that “she was told by her boss…to delete emails related to the ArccOS and Ripguard Technologies on several occasions.” Id.

“Defendants also learned of [Hamilton’s] notebooks, which she stated were handed over to Real at the time of her termination, but have not been produced in discovery.” Id.

Real Senior Advisor Richard Wolper stated in his deposition that “his own ‘standard practice’ was to keep documents he thought were relevant, and that he might need for his recollection in the future, but also to delete “tons of stuff” every day.

Todd Basche, who consulted with Real on the RealDVD project, “…was never asked to preserve his documents and deleted everything he had related to [the] RealDVD project in April 2008, when his consulting arrangement ended, as was his customary practice.

Based on these and other depositions, defendants alleged that plaintiff Real failed to “take steps to preserve evidence,” including:

“(1) failing to instruct employees to preserve evidence;
(2) possibly destroying Hamilton's notebooks for the Facet technology;
(3) routinely instructing employees to delete possibly relevant emails;
(4) failing to produce ARccOS-related archive files; and
(5) allowing Strategic Advisors Basche and Wolpert on the RealDVD project to destroy project-related documentation. Real has also refused to permit redeposition of Barrett, the supervisor allegedly responsible for the destruction orders.” Id., at *7

No laggards themselves, defendants requested six (count’em, six) sanctions; five evidential and one monetary: a preservation order, a testimony impeachment preclusion on matters involving the withheld notebook, an inference that plaintiff knowingly purchased circumvention technology, preclusion of Real’s fact witness testimony, re-deposition on the issue of spoliation and the second Real product, and of course, monetary award:

“(1) a preservation order for all existing and future documents relating to RealDVD, CSS, ARccOS or Ripguard, including backup tapes;
(2) precluding Real from impeaching or controverting Hamilton's testimony on five areas which the controverted notebooks purportedly cover;
(3) inferring that Real knowingly purchased technologies to circumvent ARccOS and Ripguard;
(4) precluding Real from offering testimony from Basche and Wolpert;
(5) requiring Real to produce Barrett for a deposition on spoliation and Facet; and
(6) requiring Real to pay monetary sanctions as appropriate.” Id., at *8

Particularized Rather Than General Litigation Risk Triggers Duty to Preserve

Plaintiff Real had prepared a PowerPoint deck in April 2007 which stated that the DMCA posed a “risk” to the RealDVD product, and “discusses the ‘threat of a lawsuit.’” Id. at *8.

The Court also points out that Senior Program Manager Hamilton “testified that she was told within hours of being hired in July 2007 that there would be litigation over RealDVD and the idea of litigation over RealDVD was drummed into the team on a daily basis.” Id.

Moreover, the Court notes, Real’s Senior Program Manager also testified that “there were concerns about litigation over [the] Facet [product] and with DVD CCA.” Id.

The PowerPoint presentation under discussion had a bullet point slide entitled “DVD Ripping Issues,” subtitled “Risks,” and bullet points for “DVD CCA Issues and Tactics” and “DMCA Issues.” Id.

Perhaps most revealing was a July 2007 presentation from Real that “has a slide that has a box labeled ‘threats’ and a bullet point stating ‘[legal action by Hollywood on basis of copyright, not DVD CCA license.’” Id.

Nope, folks, can’t make this stuff up.

With this record under consideration, and couching its reasoning under the label “theoretical threat” the Court explains that general knowledge of probable litigation, at least under these circumstances, was insufficient to push the trigger for plaintiff Real’s duty to preserve back to April 2007.

“[I]t is not clear whether the slide from the April 2007 presentation indicates knowledge of probable litigation with DVD CCA or a possible discussion of plans to license CSS technology from DVD CCA. The July 2007 presentation merely references a theoretical threat of litigation “by Hollywood” and not an actual threat by any particular party. Moreover, it indicates that Real did not believe that it would be sued based on the DVD CCA license, given that it was a presentation created before the August 2007 CSS License Agreement. Thus, these presentation slides are not strong indicators of knowledge of probable litigation with defendants. See Hynix, 591 F.Supp.2d at 1061.” Id. at *8.

Indeed, the Court reasons, plaintiff Real’s August 2007 entry into a licensing agreement with defendants DVD CCA:

“…[I]ndicates that Real did not believe that it would be sued based on the DVD CCA license, given that it was a presentation created before the August 2007 CSS License Agreement. Thus, these presentation slides are not strong indicators of knowledge of probable litigation with defendants. See Hynix, 591 F.Supp.2d at 1061.” Id.Not surprisingly, the Court finds that the April 2007 PowerPoint slide deck did not operate to trigger an early (April 2007) duty to preserve evidence:

Thus, these presentation slides are not strong indicators of knowledge of probable litigation with defendants. See Hynix, 591 F.Supp.2d at 1061. Id.

Takeaway: Reasonably foreseeable future or anticipated litigation requires the identification of a specific counter-party, and not a third-person abstraction such as “they” (in this case, the term “they” means “Hollywood”).

The Court then addresses defendants’ argument for an earlier date for the trigger of plaintiff Real’s duty to preserve evidence based on conversation between Real employees in which these employees were instructed to use certain words in emails and documents because there might be litigation “someday.”

“For instance, Barrett stated in an email that ARccOS was not encryption and that he wouldn't call it copy protection. Lynch Dec., Exh. 12. Barrett acknowledged that he instructed members of the Facet team to minimize use of words like “ripping” because the term may be misconstrued.” Id.

Here’s where it gets interesting. Plaintiff real argued that even if a few Real employees recognized the potential for litigation involving a new product, that Real was under no obligation to preserve all documentation “until there was an actual threat or notice of some lawsuit.”

The Court agreed with Real:

“The court agrees with Real that a general apprehension of lawsuits does not create a duty to preserve all documentation related to RealDVD. The cited statements do not rise to a probability that the instant litigation by or against Studio defendants would result.” Id. at *9.

Ok, so I need some talking down. How does a preservation trigger that occurs when litigation is reasonably foreseeable square with the Real’s assertion that it was under “no” obligation to preserve all documents “until there was actual threat or notice of some lawsuit”?
It appears that the Court couches it’s reasoning on the theory that a generalized apprehension of litigation does not trigger a duty to preserve:

“A general concern over litigation does not trigger a duty to preserve evidence. Real had no duty to preserve relevant documents or evidence until a potential claim was identified or future litigation was probable. See Turnage, 115 F.R.D. at 556-57; Baliotis, 870 F.Supp. at 1290; Hynix, 591 F.Supp.2d at 1061.” Id., at *9.

The facts also helped the Court decide in Real’s favor. Engaging in negotiations and entering into a licensing agreement with defendants augured against a finding that Real should have anticipated future litigation with defendants:

“Real participated in discussions about RealDVD with Studio defendants in August 2008, but Real asserts that it was negotiating in good faith and that none of the representatives from the studios threatened litigation during those meetings.” Id., at *9.

So, when did Real know that there was “probable litigation” sufficient to trigger a duty to preserve? Defendants’ September 8, 2008 “formal notice” to plaintiff Real that it was in violation of the DVD CCA License agreement:

“However, shortly before its September 8, 2008 planned announcement of RealDVD, Real was on notice that litigation was probable and a potential claim was identifiable because various studios objected to RealDVD's release and expressed concern that RealDVD violated the CSS License Agreement. As a result of the objections by the studios, Real entered into a tolling/standstill agreement concerning RealDVD. Real was also given actual notice of litigation on September 25, 2008, which created a duty to ensure preservation of its relevant documents and data.” Id., at *9

And when did actual notice of litigation occur? The trigger for Real’s duty to preserve occurred on September 25, 2008, when defendants sent plaintiff a letter stating that they intended to commence litigation.

The score is: Constructive notice as of September 8, 2008, and actual notice as of September 25, 2008. The Court’s finding? No duty to preserve prior to September 2008:

“Thus, beginning in early September 2008, Real knew that there was probable litigation and had a duty to preserve all documents and evidence related to this action. The court finds that Real was not under a duty to preserve evidence in anticipation of litigation prior to September 2008.” Id.

A. Willful Destruction of Documents

Defendants also argued that plaintiff Real engaged in three instances of willful evidence destruction:

“(1) Real has not preserved or produced Hamilton's notebooks;
(2) Real's employees or team members destroyed documents or emails and
(3) Real has not produced the arccos.zip file purchased from overseas hackers.” Id.
Hamilton’s Notebooks

On October 6, 2008, Real distributed an email memorandum instructing various employees to preserve evidence:

“Real distributed an email to members of the Facet and Vegas RealDVD teams, as well as other employees, consultants and officers who may have documents and materials relevant to the litigation, instructing them to preserve documents and hard copy data from July 2007 to the present relating to any aspect of RealDVD, the CSS License Agreement and the DVD CCA.” Id.

The memorandum’s language:

“Please do not destroy, discard, alter or erase any document or computerized information generated on or after July 1, 2007 to the present relating to: (1) RealDVD, including the development, marketing and distribution of RealDVD; (2) the CSS License Agreement and Real's activities under that Agreement, and (3) the DVD CCA, including any communications with the DVD CCA.” Id., at *10

The Court points out that the memorandum states that it was applicable to: “…all electronic and hard copy information, including letters, memos, reports, handwritten notes, e-mails, computer records and programs, data stored on hard drives and backup tapes. Id.

Although District Judge Patel notes that there was a “gap” between early September 2008 and October 6, 2008 (before Real had a preservation policy in place in connection with the instant litigation), the defendants did not claim that there was any willful document destruction during this time.

The Court found that Real’s preservation policy, when deployed, was sufficient for comprehensive preservation of evidence going forward (presumably from October 8, 2008). Maybe not, as the Court also instructed the parties to “negotiate and file a stipulated proposed Preservation Order for all existing and future documents relating to all products at issue or likely to be at issue in this litigation…” Id.

The Court also found that plaintiff Real had failed to take steps to preserve Real Senior Product Manager Hamilton’s notebooks. What appears to be the operative reason for the Court’s finding is that the preservation notice was distributed to Real employees, including Hamilton, one week prior to her termination, and a showing of willfulness did not enter into the Court’s calculus:

“Since Hamilton was terminated less than one week prior to this action, which was within the time period when Real was on notice of probable litigation from Studio defendants, Real was required to preserve any of her relevant work documents. See In re Napster, Inc. Copyright Litig., 462 F.Supp.2d at 1068. Even though Hamilton had not worked on the RealDVD project since June 2008, Real should have known at the time of her termination that her notebooks from the period of time in which she worked on RealDVD were relevant to this action.” Id.

“There is no indication that these notebooks were willfully destroyed by Real, and they may have been inadvertently lost in the course of termination of an employee. However, Real failed to preserve the notebooks after Hamilton's termination, which was during the time they knew about litigation with Studio defendants.” Id.

“Even if it was a single notebook with little relation to the Facet product, as plaintiffs contend, this notebook should have been preserved for possible relevance to this litigation.” Id., at *11
Result: The Court found that the imposition of sanctions for destruction of the notebooks was appropriate:

“Thus, sanctions for failure to preserve Hamilton's notebooks are appropriate. Pursuant to the court's inherent power to impose sanctions, the court GRANTS sanctions against Real for failing to preserve Hamilton's notebooks in relation to this litigation. ” See Chambers, 501 U.S. at 43.” Id., at *11.

eMail Deletions

The Court next addressed defendants’ contention that a Real Senior Strategic Advisor instructed Real employees to delete emails. That advisor testified that he never told anyone to delete emails related to the instant action. Further, the Court noted, the routine post-engagement document destruction by another consultant to Real was found to have occurred prior to the early September 2008 trigger. The Court accorded sufficient credibility to this testimony and found that plaintiff had not deleted emails after the trigger for preservation had occurred in September 2008.

Failure to Initially Produce The ArccOs.zip File

Defendants asserted that sanctions were appropriate because plaintiff Real did not at first produce ESI (the ArccOS.zip file). At first, plaintiff Real stated that the files was corrupted by a virus, but then produced the file on March 4, 2009. Defendants argued that sanctions were still necessary because Real “prevented the production of the file, even though it was not corrupted and contained highly relevant evidence.”

The Court makes short shrift of this argument, and holds that the production, albeit untimely of the file resulted in no prejudice to defendants.

“Since the file has been subsequently produced by Real, defendants have not shown that they were seriously prejudiced by the delay, particularly given the multiple continuances of deadlines in this litigation, and Real has not engaged in willful destruction of the file. Thus, the court DENIES a defendants' request for sanctions in regards to the arccos.zip file.” Id., at *12

B. Order Precluding Real from Impeaching or Controverting Testimony

Defendants’ sanctions motion also requested an order of preclusion, in effect preventing plaintiff Real from impeaching or controverting the testimony of plaintiff’s former Senior Product Manager Hamilton. Since Ms. Hamilton was referred to as a “terminated” employee, one might surmise that she bore some measure of ill will toward her former employer. That said, the Court proceeds with its analysis:

“Defendants move for an order precluding Real from impeaching or controverting Hamilton's testimony based on the following five areas purportedly covered in Hamilton's notebooks: (1) Real's awareness of, and strategies undertaken to circumvent ARccOS and Ripguard; (2) Real's use of CSS-cracking code in the development of Facet and its knowledge that such code was non-compliant with the CSS license specifications; (3) Real's knowledge at the time of entering the CSS license that DVD CCA would view RealDVD to be non-compliant; (4) Real's knowledge that its product would be used by consumers for rent/rip/return or borrow/rip/return purposes; and (5) Real's awareness that movies marked with CGMS flags were marked “do not copy” by content owners.” Id. at *12.

Discoverability from Other Sources and Source Code as Most Comprehensive Record

The Court wasn’t in a buying mood. Although it acknowledged that the contents of Senior Product Manager Hamilton’s notebooks [wa]s unknown, the “above listed topics purportedly covered in the notebooks may be discoverable by other sources of evidence…”

Perhaps most important, the Court goes on to hold that the source code, and not the notebooks, as the “most comprehensive” record on the development of the Facet program.

Result: The Court denied that portion of defendants’ motion for sanctions requesting preclusion of Real’s ability to impeach or controvert certain testimony.

C. Adverse Inference

Defendant argued for an inference instruction that plaintiff Real knowingly purchased DMCA circumvention technology. The basis for this was Real’s purchase of the ArccOS.zip file from an overseas vendor, and the initial delay in production to defendants. The Court, while noting that the production of the ArccOS.zip file was no longer an issue, ruled that it would infer from communications that Real was aware of non-CSS technologies, but denied as premature the request for an inference that plaintiff Real knowingly purchased DMCA circumvention technologies.

D. Preclusion of Testimony

Defendants next argued that Real should be precluded from offering the testimony of certain Real consultants because one consultant deleted all his files following his engagement, and because a second consultant deleted “tons” of emails everyday.”

The Court noted that the first consultant had retrieved documents “through back-up” and “relayed them to plaintiff Real for production.” (One wonders, however, what a consultant might mean when he certifies that s/he has “destroyed” all information after an engagement). As to the second consultant, the Court found that the references to deleting “tons” of email vague, and that that consultant testified that he deleted no litigation-relevant emails.

That, together with the implementation of Real’s litigation hold and preservation policy on all litigation related documents and emails, was sufficient for the Court to find no prejudice to defendants.

Result: The Court denied the motion to preclude testimony.

E. Witness Re-deposition on Spoliation

The Court was apparently unamused by testimony that an official of plaintiff Real’s supervisor Barrett. There was evidence showing that Barrett “had a campaign to destroy documents unfavorable to Real’s litigation,” and this provided basis sufficient for the Court to permit defendants to re-depose Barrett on the topic of spoliation:

“Defendants argue that the court ruled that they were entitled to a redeposition of Barrett on Facet, and because Barrett had a campaign to destroy documents unfavorable to Real's litigation, there is a greater reason for this deposition to go forward. Accordingly, even though defendants have already deposed Barrett once, the court hereby GRANTS defendants' request for a deposition on spoliation and Facet and instructs Real to produce Barrett for a second deposition on these topics.” Id., at 13

Bad juju.

F. Monetary Sanctions

It should come as no surprise that the Court grants defendants’ motions for attorney fees and costs in connection with the spoliation motion:

“Although the court finds no evidence of willful destruction of documents, Real failed to preserve Hamilton's notebooks when it knew there was probable litigation with Studio defendants and knew that Hamilton's notebooks could contain relevant notes from the RealDVD project.” Id., at *14

“The court chooses not to draw an adverse inference against Real for alleged spoliation of evidence, nor will the court exclude witness testimony proffered by Real or dismiss Real's claims based on this failure to preserve evidence at this time. See Glover v. BIC Corp., 6 F.3d at 1329.” Id.

“Pursuant to the court's inherent power to impose sanctions, the court GRANTS monetary sanctions against Real for failing to preserve evidence in relation to this litigation. See Chambers v. NASCO, Inc., 501 U.S. at 43. An award of attorneys' fees and related costs is GRANTED to defendants for pursuing the evidence of spoliation of Hamilton's notebooks and for bringing this part of the sanctions motion.” Id.

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Case: Hawknet Ltd. v. Overseas Shipping Agencies, et al.
Citation: 2009 WL 1309854 (S.D.N.Y. 2009)
Date: 2009-05-06
Topics: Spoliation requires that evidence must be shown to have existed

In this maritime law decision from the Southern District of New York, the Court has before it plaintiff’s motion for an adverse inference based “upon missing documents.”

U.S. District Judge Buchwald makes short shrift of plaintiff’s motion, recognizing that documents must first be shown to have existed as a predicate for asserting the spoliation of same:

“Here, plaintiff has not made an actual showing that evidence has been spoliated. Though plaintiff s argument surely is plausible, they provide no hard evidence that there existed documents which were subsequently destroyed or withheld. Consequently, no adverse inferences will be drawn from the alleged missing documents. Farella v. City of New York, Nos. 05 Civ. 5711, 8264, 2007 WL 193867, at *2 (S.D.N.Y. Jan. 25, 2007) (spoliation sanctions are inappropriate unless the party moving for sanctions can show the documents existed in the first place).” Hawknet Ltd. v. Overseas Shipping Agencies, 2009 WL 1309854, 7 (S.D.N.Y. 2009)

File this decision under: Spoliation, metaphysics of.

2009-05-20T23:47:00.005-04:00

2009-05-21 Pre-Review Access by Adverse Party, Failure to Adhere to Local Court Rules,Metadata Production Discussions and Work Product Privilege, Ninth Circuit Spoliation Standards

Three decisions for this week, including, of course, one spoliation decision.

Requesting Party’s Right to Pre-Privilege ESI Search, Local Rule Adherence Required: This decision from the United States District Court for the Eastern District of Wisconsin discusses under what circumstances a requesting party’s expert might be permitted direct pre-review access to ESI. Also, a somewhat less-than-gentle reminder that failure to adhere to local court rules might result in decidedly less-than-gentle consequences.
Discussions About How to Locate and Interpret Metadata Held Work Product; Disclosure to Independent Auditor Held Not to Waive Work-Product Privilege: In this “not-for-citation” (but nonetheless published) decision from the U.S. District Court for the Northern District California, the Court finds first that discussions between counsel and its consultant about metadata were protected by attorney work product privilege. The court also addresses whether a disclosure (that included ESI) to an independent auditor waives work-product privilege.
Spoliation: What’s an eDiscovery and digital evidence digest without a spoliation decision? (Please, this was a rhetorical question). The is from the United States District Court for the District of Arizona, addresses Ninth Circuit standards for determining both imposition and sanctions determination standards, records retention policies.

SWT

Decisions: Henderson v. U.S. Bank, N.A., 2009 WL 1152019 (E.D. Wis. 2009)
S.E.C. v. Schroeder 2009 WL 1125579 (N.D Cal. 2009)
Reed v. Honeywell Intern., Inc., 2009 WL 1125542 (D. Ariz. 2009)

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Case: Henderson v. U.S. Bank, N.A.
Citation: 2009 WL 1152019 (E.D. Wis. 2009)
Date: 2009-04-29
Topics: Requesting party’s right to search pre-privilege review of requested ESI; ESI storage media; party’s concealment of ESI or lack of expertise to search ESI (including metadata) might trigger requesting party to pre-privilege ESI review, adherence with local rules

This decision from the United States District Court for the Eastern District of Wisconsin arises from a claim of unenforceability of a “confidentiality and non-solicitation” agreement asserted by the plaintiff, a former employee of defendant bank. Before the court is defendant’s motion to compel “production of certain electronic devices,” which include desktops, laptops, flash drives, and other “similar electronic storage devices…” together with “all passwords, access codes” and the like.

Ok, so much for the easy part. We have counterclaims in play here, and accordingly, yesterday’s plaintiff became today’s counter-defendant. The original defendant bank (now sitting in the shoes of a plaintiff) had an interesting ESI discovery approach.

Counterclaiming plaintiff’s (defendant bank’s) request for production provided further that its consultant would “duplicate the devices,” and create images of the hard drives. The original devices would then be returned to counterclaim defendants (the original plaintiff) together with copies of the images so created. The defendant/counter-plaintiff bank then stated that:

“[i]t would stipulate to measure to protect confidential information stored on the devices, and stated that it was not seeking information protected by the attorney-privilege.” Henderson v. U.S. Bank, N.A. 2009 WL 1152019, *1 (E.D. Wis. 2009)

Not surprisingly, the plaintiff/counter-defendant objected, asserting in a lumberingly Luddite fashion that:

“[S]uch a request is the e-discovery equivalent of requesting all of counterclaim defendants’ filing cabinets. Rather than making such an unlimited request, argue counterclaim defendants, [counterclaim plaintiff] must as for specific categories of [ESI] and allow counterclaim defendants to search their own devices and produce responsive information” Id.

The first problem here, of course, is that placing a requesting party in charge of examining and adverse party’s documents for privilege or confidentiality is somewhat akin to putting the fox in charge of the hen house.

Defendant bank, for its part, wanted to conduct its own search of plaintiff’s ESI (and storage devices) -a perverse variant of self-help, one might presume- so that it could determine whether counter-defendant had stolen and “was using” the bank’s confidential information.

Although the Court recognizes the counter-plaintiff’s concerns and rights to request, it also notes that, without more, this does not give a requesting party a carte blanche right to makes its own ESI search:

“However, although U.S. Bank is entitled to request and review this information, Rule 34(a) does not give U.S. Bank the right to conduct its own search of the electronic devices. Rather, “[l]ike the other discovery rules, Rule 34(a) allows the responding party to search his records to produce the required, relevant data.” In re Ford Motor Co., 345 F.3d 1315, 1317 (11th Cir.2003). Thus, U.S. Bank cannot simply request all of counterclaim defendants' electronically-stored information and search it at will. It must instead request specific categories of information and allow counterclaim defendants an opportunity to search their own data and produce responsive materials.” Id.

Requesting Party’s Right to Search - Under Some Circumstances

What is interesting is that the Court leaves some leeway for a requesting party to search an adversary’s ESI “under some circumstances”:

“I note that in some circumstances it may be appropriate to allow a requesting party direct access to a responding party's electronically-stored data, such as where the court has cause to believe that a responding party has concealed information or lacks the expertise necessary to search and retrieve all relevant data, including metadata or residual data. Id. at 1317; Fed.R.Civ.P. 34 advisory committee's note (comment on 2006 amendments to Subdivision (a), penultimate paragraph) (“The addition of testing and sampling to Rule 34(a) with regard to documents and electronically stored information is not meant to create a routine right of direct access to a party's electronic information system, although such access might be justified in some circumstances.”). In the present case, I have no reason to think that counterclaim defendants would not perform a diligent search of their electronic information and disclose any and all responsive information. Should U.S. Bank have any doubts about counterclaim defendants' ability to search their own electronic files, it can depose counterclaim defendants after they have responded to U.S. Bank's specific requests and question them about their retrieval efforts. Any deficiencies can be addressed between counsel or, if necessary, pursuant to a subsequent motion to compel. Id., at *2.

So, the Court has articulated circumstances under which a requesting party’s expert may review ESI. The use of the phrase “cause to believe” is interesting, because it does not discuss the burden placed upon a moving party in making such a showing. U.S. District Judge Adelman’s decision appears to place limits on appears in turn to be the somewhat more expansive language (e.g., “routine right of direct access to a party’s electronic information system”) contained in the Advisory Committee notes.

Accordingly, a court may therefore compel a pre-search, pre-redaction, and pre-privilege review production of ESI (including the ESI storage media or devices) where it has cause to believe a producing party:

1. Has concealed information; or
2. Lacks the expertise to search and retrieve all relevant data, including metadata or residual data.

Methinks Judge Adelman is delivering a stern warning to the parties - the specter of requesting party ESI search potential still looms large, at least in this matter:

“As discussed, U.S. Bank has not identified any specific electronic information for production, and thus counterclaim defendants have not had the opportunity to search their own electronic devices and produce responsive materials. Accordingly, U .S. Bank's demand for direct access to electronic materials is premature, and its motion to compel will be denied.” Id., at *2

Adherence to Local Court Rules

I have this thing about adherence to local rules, and for two reasons. First, non-adherence may cause a pleading to be disregarded by a court, and annoy the judge. Second, it will undoubtedly annoy the judge. Here, the parties appeared to have played fast and loose with requests for extensions of time and leave for exceeding page limitations.

First, the tee-up:

“I must discuss one other matter. As required by the scheduling order, U.S. Bank filed its motion to compel pursuant to Civil Local Rule 7.4. Under that rule, counterclaim defendants were required to file their brief in opposition to the motion within five days, and the brief was to be limited to three pages. However, they did not file their brief on time and it exceeded the page limit. They did file a motion asking for additional time to file their brief (though not pursuant to Civil Local Rule 7.4, as required), but I had not ruled on the motion by the time the brief was due, and in any case the motion did not request permission to file a brief in excess of the page limit. Although I routinely grant requests for extensions and to exceed page limits and normally do not rigorously enforce the local rules, I find that counsel for plaintiff and counterclaim defendants have taken too many liberties in the present case. Not only have they disregarded the local rules and the scheduling order in connection with the present motion, they have exhibited similar behavior in connection with the pending motion for judgment on the pleadings. In support of that motion, counsel filed a twenty-page reply brief, which is five pages longer than the local rules allow. Although counsel filed a contemporaneous motion for leave to file a brief that “modestly exceeds” the fifteen-page limit (Mot. to Extend Page Limit at 1),FN* the brief obviously has been doctored to appear shorter than it really is. For example, counsel included arguments in a page-long footnote and a number of single-spaced, bullet-point paragraphs. Although no local rule prohibits the use of long footnotes or single-spaced paragraphs, the court estimates that had the arguments appearing in these sections been included in traditional, double-spaced text, the brief would have exceeded the page limit by ten pages. Had counsel been forthright about their brief's length, I likely would have granted their request to exceed the page limit without further ado.”

What counsel does not want to hear from any judge:

“As it stands, however, the brief adds to my concerns about counsel's disregard for the local rules and scheduling order.” Id., at *2.

And, of course, the Court’s coup de grace:

“Despite counsel's conduct, I will grant their pending requests. But I caution counsel for plaintiff and counterclaim defendants that they must from now on follow the local rules and scheduling order to the letter. Any requests to depart from the local rules or scheduling order must be made by motion under Rule 7.4. If a motion to depart is pending at the time a brief or other paper is due, counsel should assume that the motion will not be granted and must comply with the rule or scheduling order as written. I will impose sanctions for any future violations.” Id., at *3

Takeaways: Ask for whatever ESI may be relevant, or may reasonably lead to relevant information, but remember that e-discovery production operates in identical fashion to paper-based document production, in turn meaning that, without good cause, it will be the producing party who searches, identifies, determines what is confidential or privileged, and withholds accordingly.

And always, always, read and comply with local court rules.

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Case: S.E.C. v. Schroeder
Citation: 2009 WL 1125579 (N.D. Cal. 2009) [Not for citation, per opinion]
Date: 2009-04-27
Topics: Discussions between attorney and consultant in connection with metadata protected by attorney work product privilege, non-party ESI production, no waiver of work product privilege by disclosure to independent auditor,

This decision from U.S. Magistrate Judge Howard Lloyd of the United States District Court for the Northern District of California arises out one of the many stock-option grant backdating cases (here, against KLA-Tencor). In this matter, non-party discovery (including ESI discovery) was sought from both KLA-Tencor (the defendant in the underlying backdating action) as well as the law firm (and several of its attorneys retained by KLA-Tencor as independent counsel to its “Special Committee” investigation of the backdating allegations. In essence, the defendant here was KLA-Tencor’s ex-CEO, and sought certain documents from non-parties KLA-Tencor and the independent counsel retained by the “Special Committee” created to investigate the alleged option grants backdating.

Discussions About Metadata Held Protected By Attorney Work Product Privilege

Without providing much by way of explanation, Judge Lloyd rules that communications about “locating” and “interpreting” metadata that took place between the Special Committee independent counsel and its retained consultants were protected from disclosure by the attorney work product privilege:

“Communications between Skadden and its consultant, LECG, need not be produced. The withheld communications reportedly contain “documents related to methods for document review and retention, discussions regarding how to locate and interpret metadata, a collection of documents that LECG deemed important related to a particular witness, and emails discussing special projects that LECG completed during the investigation.” (Miller Decl. ¶ 34). It is not apparent that any of those communications were disclosed beyond Skadden and LECG. Further, it appears that these communications comprise opinion work product, and Schroeder has not demonstrated a substantial need for any facts that might be contained in them. Schroeder's motion as to these documents is denied. ” S.E.C. v. Schroeder 2009 WL 1125579, at *12 (N.D.Cal. 2009)

This decision, which addresses a quasi non-party’s obligations to produce, might have resulted in a different ruling had the issue arisen between the actual parties engaged in the lawsuit. I think that the issues relating to “how to locate and interpret” might have been addressed by the parties’ counsel during the Fed. R. Civ. P. Rule 26(f) meet and confer.

Which brings to mind an interesting issue. Although it appears that the court has designated this decisions “Not for Citation,” one wonders whether it will be cited nevertheless for the proposition that discussions about metadata production (rather than metadata itself) are protected by work product privilege.

No Waiver of Work Product Privilege for Disclosure to Independent Auditors

The defendant here sought “the production of documents and communications between the Special Committee and KLA's outside auditors,...includ[ing] a PowerPoint presentation” presented to the independent auditors by the Special Committee’s independent counsel. In short, defendant here claimed a “broad subject matter waiver” as to any documents disclosed to the independent auditor. Moreover, the Special Committee’s independent counsel asserted that the information disclosed was attorney work product, and that there was no waiver because the independent auditor was not “adversarial” to the independent counsel:

“Schroeder argues that these disclosures effected a broad subject matter waiver as to any documents that were so disclosed. Skadden maintains that the information that was disclosed is attorney work product. It contends that there was no waiver because PwC is not adversarial to KLA. See Bergonzi, 216 F.R.D. at 497 (“Work product protection is waived where disclosure of the otherwise privileged documents is made to a third party, and that disclosure enables an adversary to gain access to the information.”).” S.E.C. v. Schroeder 2009 WL 1125579, at *8 (N.D.Cal. 2009)

The Court then begins with a case law analysis, showing a “split” as to whether disclosure to an independent auditor waives attorney work product privilege. The Court first cites two cases from the Northern District of California and one from the Southern District of New York holding that a waiver had occurred, but then relies on a more recent options backdating decision from the Southern District of New York finding no waiver, and sides with that more recent decision:

“Courts are split over the question whether disclosure to an independent auditor waives protection. Some courts find a waiver on the ground that the auditor acts as a “public watchdog” with interests that are not necessarily aligned with those of the company being audited. See, e.g., Medinol, Ltd. v. Boston Scientific Corp.., 214 F.R.D. 113, 116 (S.D.N.Y.2002) (concluding that work product protection as to the special litigation committee's materials was waived when the information was disclosed to an outside auditor); Diasonics Securities Litig., No. C83-4584, 1986 WL 53402 (N.D. Cal., June 15, 1986) (concluding that the work product protection did not apply to documents disclosed to an auditor acting as a public accountant rather than as a consultant). Cf. Samuels v. Mitchell, 155 F.R.D. 195, 200-201 (N.D.Cal.1994) (finding no waiver where documents were disclosed to an auditor that acted as a consultant rather than as a public accountant).”

“Nevertheless, under the circumstances presented here, this court finds that the better view, recently followed by another court in this district in a different stock option backdating case, is that espoused by Merrill Lynch & Co. v. Allegheny Energy, Inc., 229 F.R.D. 441 (S.D.N.Y.2004). That court concluded that disclosures to outside auditors do not have the “tangible adversarial relationship” requisite for waiver. Id. at 447. The court reasoned: A]ny tension between an auditor and a corporation that arises from an auditor's need to scrutinize and investigate a corporation's records and book-keeping practices simply is not the equivalent of an adversarial relationship contemplated by the work product doctrine. Nor should it be. A business and its auditor can and should be aligned insofar as they both seek to prevent, detect, and root out corporate fraud. Indeed, this is precisely the type of limited alliance that courts should encourage. For example, here Merrill Lynch complied with Deloitte & Touche's request for copies of the internal investigation reports so that the auditors could further assess Merrill Lynch's internal controls, both to inform its audit work and to notify the corporation if there was a deficiency.” Id. at 448.” S.E.C. v. Schroeder, 2009 WL 1125579, at *9 (N.D.Cal. 2009)

“As noted by the court in Roberts, this view “furthers the strong public policy of encouraging critical self-policing by corporations. Indeed, sanctioning a broad waiver here would have a chilling effect on the corporation's efforts to root out and prevent corporate fraud and disclose the results as necessary to its auditors.” 254 F.R.D. at 381-82.” Id.

Result: “Schroeder's motion as to these documents is denied.”

Metadata and Work-Product Privilege

In what appears to be one of the first decisions addressing the issue, U.S. Magistrate Judge

Communications between Skadden and its consultant, LECG, need not be produced. The withheld communications reportedly contain “documents related to methods for document review and retention, discussions regarding how to locate and interpret metadata, a collection of documents that LECG deemed important related to a particular witness, and emails discussing special projects that LECG completed during the investigation.” (Miller Decl. ¶ 34). It is not apparent that any of those communications were disclosed beyond Skadden and LECG. Further, it appears that these communications comprise opinion work product, and Schroeder has not demonstrated a substantial need for any facts that might be contained in them. Schroeder's motion as to these documents is denied.” Id., at *12

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Case: Reed v. Honeywell International, Inc.
Citation: 2009 WL 1125542 (D. Ariz. 2009)
Date: 2009-04-27
Topics: Destruction of handwritten notes used to create PowerPoint presentation and final report, records retention policy, Ninth Circuit inherent powers to sanction, spoliation, no bad faith requirement, and sanctions

This decision from the United States District Court for the District of Arizona involves a wrongful termination and USERRA (employment discrimination for service in the armed forces) violations. Here, the plaintiff alleged that defendant destroyed a supervisor’s handwritten notes used to create a report and PowerPoint presentation which provided the bases for terminating the plaintiff’s employment.

It was undisputed that (1) defendant made no efforts to preserve the supervisor’s notes (after the latter left defendant’s employ) and (2) that it was defendant’s “express policy to “require the retention of all investigative notes.” Moreover, plaintiff produced an email showing that defendant had recognized the potential for litigation nearly one year prior to the supervisor’s departure.

Plaintiff’s motion sought the following relief:

“Plaintiff requests that this Court exercise its discretion to impose the specific sanction of excluding evidence relating to the alleged investigation that Defendants claim to have conducted into the allegations against Ms. Reed and her subordinates because of Defendants' failure.”
Ninth Circuit Approach to Inherent Power to Levy Sanctions

There was no discovery motion pending (and, accordingly, no violation of a discovery order) so the Court relied on its “inherent powers” approach in determining whether, and to what degree, sanctions were warranted in this case. Note that there is no requirement for a showing of “bad faith” in asserting destruction of evidence in the Ninth Circuit. In fact, mere “inadvertence” may suffice. Moreover, the Court nonetheless finds prejudice (or at least a substantial litgation impairment) to the non-spoliating party in its despiction of plaintiff’s position as being left “without meaningful alternative” to the destroyed evidence:

“A district court has the inherent power to levy sanctions for spoliation of evidence. U.S. v. $40,955.00 in U.S. Currency, 554 F.3d 752, 758 (9th Cir.2009). As Defendants concede, a party's destruction of evidence need not be in “bad faith” to warrant a court's imposition of sanctions in the Ninth Circuit. Glover v. BIC Corp., 6 F.3d 1318, 1329 (9th Cir.1993). Defendants argue that the loss was inadvertent and that inadvertent losses do not warrant sanctions. Med. Lab. Mgmt. Consultants v. Am. Broad Cos., 306 F.3d 806, 824 (9th Cir.2002) (holding that trial court did not abuse its discretionary power in refusing to order an adverse inference for inadvertently lost slides that were either misplaced or stolen between a hotel room in Geneva and Defendants' expert's landing in New York City). However, in the Ninth Circuit, sanctions may be awarded even for inadvertent loss. Leon v. IDX System Corp. ., 464 F.3d 951, 959 (9th Cir.2006) (affirming $65,000 spoliation sanction where party had some notice of pending litigation but claimed that it overwrote computer files to protect privacy rather than to avoid litigation). Defendants attempt to distinguish this case on the basis that in Leon, there was no secondary evidence available of the files, whereas here, they argue, the Mr. Eden's typed summaries qualify as a reasonable approximation of the underlying handwritten notes and that these typed summaries eliminate any potential prejudice to Plaintiff. However, a review of the typewritten memoranda reveal that they are summaries of what occurred in the meetings rather than “transcriptions” of the notes spontaneously taken during a meeting Plaintiffs are therefore left without a meaningful alternative to Mr. Eden's handwritten notes.” Reed v. Honeywell Intern., Inc., 2009 WL 886844, at *10 (D. Ariz. 2009)

Duty to Preserve

The Court also notes that Northern District decisions follow the Second Circuit doctrinal authority holding that a duty to preserve may arise well in advance of litigation, and may be further arise under a negligence-type standard:

Moreover, “[t]he duty to preserve material evidence arises not only during litigation but also extends to the period before the litigation when a party reasonably should know that the evidence may be relevant to anticipated litigation.” World Courier v. Barone, 2007 WL 1119196 at *1 (N.D.Cal.2007) (quoting Kronisch v. United States, 150 F.3d 112, 126 (2d Cir.1998)). Defendants apparently anticipated litigation on this matter at least a year prior to Mr. Eden's departure and the disappearance of the notes.” Id.

Frustrating Non-Spoliating Party’s Ability to Cross Examine Discrepancies

District Judge Murguia then discusses how defendant’s destruction of the original handwritten notes makes it impossible to cross examine defendant’s former supervisor as to any discrepancies between the destroyed evidence and the later-created typewritten versions:

“Without access to the notes, Plaintiffs are unable to cross-examine Mr. Eden regarding any discrepancies between the handwritten notes and his typewritten summaries. The notes could have revealed inconsistencies in his testimony about what the witnesses told him and might have revealed any exaggerations or mistakes in memory. They also would have revealed any inconsistencies between what the witnesses told him and what they told the ultimate decisionmakers. Plaintiffs are unable to obtain this information from any other source. Plaintiffs thus appear to have established that they are prejudiced by Honeywell's inadvertent loss of Mr. Eden's notes.” Id., at *10-11.

The Court found that spoliation had occurred, and that defendant’s spoliation in turn had prejudiced plaintiff’s ability to prosecute its case.

Sanctions Imposed

Plaintiff’s requested that defendant be prohibited from offering any evidence relating to plaintiff’s conversations with defendant’s former supervior regarding plaintiff’s conduct.

“The only remaining question is the appropriate sanction. Plaintiffs argue that “[t]he appropriate sanction is to prohibit the Defendants from offering any evidence relating to Mr. Eden's conversations with Plaintiff and others in the organization regarding plaintiff's conduct, his alleged investigation, including testimony and other evidence regarding witness interviews or conversations between Mr. Eden and Plaintiff, as well as the product of the alleged investigation, his report and Powerpoint presentation .” (Dkt. # 63 at 7-8)” Id., at 11

The Court thought otherwise, and ruled that the imposition of sanction was more properly brought at trial or conclusion of the case:

“However, any sanctions for misbehavior on the part of Honeywell is more appropriately remedied at trial or at the conclusion of the case. Based on the information presented, the Court is prepared to consider an adverse jury instruction at trial. Striking any and all evidence relating to the BRAVO investigation would essentially constitute a directed verdict as it would likely guarantee a verdict in Plaintiff's favor. A directed verdict appears too harsh a penalty for Defendants' alleged inadvertent conduct. Halaco Engineering Co. v. Costle, 843 F.2d 376, 380 (9th Cir.1988) (“In cases where the drastic sanctions of dismissal or default are ordered, the range of discretion for a district court is narrowed and the losing party's non-compliance must be due to willfulness, fault, or bad faith.”). Plaintiff's motion for sanctions for spoliation of evidence is therefore denied as premature without prejudice to Plaintiff's refiling of the motion as a Motion in Limine or Request for Adverse Jury Instruction prior to trial.” Id., at *10-11

Result: Plaintiff received more or less what she requested. The Court viewed striking evidence as tantamount to a directed verdict, and deemed a directed verdict to be “too harsh a penalty for Defendant’s alleged inadvertent conduct.” The Court denied the motion for exclusion of evidence as a sanction for spoliation without prejudice to plaintiff’s refiling her pleading as motion in limine and request for “Adverse Jury Instruction” prior to trial.

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