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


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

SWT

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

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

First the request from the “Westfield Hills Plaintiffs:

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

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

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

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


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

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

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


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

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

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


“Reasonably Usable” Saves the Day For Requestor – Again

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

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


Sua Sponte Reasonably Usable Analysis:

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

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

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

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

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

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


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

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

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


But Not Without Cost Shifting

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

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


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

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

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

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

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

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

Even more intriguing are these two lines from the decision:

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

“References"

"§ 7:8. Preservation letter"

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

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

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


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

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

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


Ok. This is a short one.

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


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

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


******************

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

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

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

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

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

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

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

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

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

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

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

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

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

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


***********************

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

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

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

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

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

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

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

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

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

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

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

2009-01-31 Two Decisions: Preservation and Spoliation of Tansitory Evidence, and an ESI Privilege Decision (4th Circuit)

Another week, another adverse inference imposed in a spoliation case involving “transitory” evidence. The second case involves the FOIA equivalent of a privilege log dispute, and imo, provides good guidance in connection with seeking native format data of the metadata used to create privilege log.

Advance warning: This digest is lengthy.

All errata acknowledged in advance.

******************

Case: Arista Records, LLC, et al. v Usenet.com, Inc. et al.
Citation: 2009 WL 185992 (SDNY 2009)
Date: 2009-01-26
Topics: Second Circuit spoliation standards, duty to preserve, scope of preservation, retention trigger date, preservation of transitory evidence, expert testimony, broadening application of Fed. R. Civ. P. Rule 37(e).

This copyright infringement case was brought against a provider of access to internet newsgroups by a slew of content provider (record companies, etc.).
At issue is the alleged spoliation by defendant of:

1) “Usage Data,” which Plaintiffs define as “pre-existing records from Defendant[s'] computer ‘servers' reflecting actual requests by Defendant[s'] paid subscribers to download and upload digital music files using Defendant[s'] service;” FN3

2) “Digital Music Files,” which Plaintiffs define as “the physical digital copies of the copyrighted sound recordings at issue in this case and related information hosted on computer servers operated by or on behalf of Defendant[s]”; FN4 and

3) “[h]ighly incriminating promotional materials previously available on the Usenet.com website.” (Pl. Sanctions Mem. at 1, 3.) FN5 Plaintiffs contend that Defendants deliberately destroyed this material even though it had been the subject of discovery requests, and that it would have provided evidence of wide-scale infringement of Plaintiffs' copyrighted sound recordings. (

Some definitional positions by the parties: Defendant Usenet.com defines “usage data” as “log files,” and refer to Digital Music Files as articles”

An initial what-not-to-do in connection with a party’s discovery posturing. Not a good sign when this is discussed at the beginning of a spoliation decision:

“Defendants initially provided false written discovery responses, in which they claimed not to own their servers and, therefore, claimed they could not access the Usage Data. ( See id. ¶ 4 & Ex. 3.) Defendants then changed their tact, claiming that they did own the servers but did not know how to produce the requested log data. Plaintiffs contend that they explained how the Usage Data could be produced and suggested that Defendants provide access to their servers so that Plaintiffs could collect the Usage Data themselves. Defendants first offered, and then withdrew their offer, to provide Plaintiffs direct access to the data.”

“Notwithstanding counsel's commitment, on March 8, 2008, Defendant Reynolds affirmatively disabled user access to what Plaintiffs estimate to be 900 Music Groups, without preserving the Usage Data. ( See Horowitz Decl. ¶¶ 31-32; Servodidio Decl. Ex. 26 (“Reynolds Dep.”) at 83:18-84:19.)”

“The following business day, Defendants produced “junk” Usage Data to Plaintiffs, reflecting subscribers' failed attempts to access the Music Groups.”

“On or around March 11, 2008, Plaintiffs learned of Defendant Reynolds's actions. ( See id. ¶ 8.) In an e-mail to Defendants' counsel, Plaintiffs objected to the disabling of the Music Groups, and reminded Defendants that those files “are the subject of outstanding discovery requests.”

“Plaintiffs followed-up via e-mail, on March 12, and through a formal letter request on March 21, demanding that Defendants preserve the Digital Music Files. ( See id. ¶ 9 & Exs. 9 & 11.) FN7”

Footnote 7 is telling:

“FN7. At this point, the Usage Data had already been lost.”

The spoliation allegations continue apace:

“Despite Defendants' assurances, Defendants did not preserve copies of the Digital Music Files for the disabled groups, nor did they re-enable all the Music-related Groups that had been disabled.FN8 ( See Pl. Sanctions Mem. at 9.) In fact, Plaintiffs claim that Defendants took affirmative steps to delete the Digital Music Files on March 10, and then Defendants reconfigured their system in order to write-over the Digital Music Files, making them irretrievable. ( See Pl. Supp. Mem. at 2-4.) Plaintiffs estimate that only 78 of the 900 Music Groups once available on Defendants' servers were re-enabled to receive articles after March 8, 2008. ( See Pl. Sanctions Mem. at 9; see also Horowitz Decl. ¶ 33.) FN9”

It seems that in spoliation hearings, the really devastating material (check out this testimony) is relegated to footnotes. Another what-not-to-do:

“FN8. Defendant Reynolds testified at his deposition that Defendants took no steps to prevent the Digital Music Files from expiring off the system. ( See Reynolds Dep. at 87:10-89:17; 92:24-94:9.) Defendant Reynolds was asked to explain why he did not preserve the Digital Files. He first stated that it was impossible, then conceded that they “could have been” preserved, but explained “there was no request to produce the articles or to save them.” (Id. at 92:19-20.)”

Could things get any worse? Did they? Yes, and yes. Enter the ubiquitous “server crash:”

“On March 24, Defendants' server crashed and stopped populating the re-enabled newsgroups; Defendants have not offered Music-related Groups on their system since that date. ( See Pl. Reply Mem. at 13; see also Def. Opp. Mem. at 8-9.) Thus the newsgroups that Defendants did re-enable after March 12, received files for only approximately ten days. ( See Pl. Sanctions Mem. at 9.)Moreover, the newsgroups that had been re-enabled “did not ‘re-populate’ in a manner consistent with the normal functionality of these groups.” ( Id.)”

“A snapshot of the so-called Digital Music Files flowing through the server at the time of the crash was captured, and Defendants produced this data to Plaintiffs on June 19, 2008. ( See Def. Opp. Mem. at 9-10.) As a result of the server corruption, however, Defendants were unable to extract the log data. ( See id. at 10.)”


Web Page Deletion - Attempt to Cure or Spoliation

Defendant claims it removed the web site. Plaintiff asserts that removal did not mean destruction of evidence (the web page data):

“Plaintiffs claim that Defendants have either destroyed other inculpatory evidence or misrepresented that it does not exist. ( See Pl. Reply Mem. at 15.) For example, Plaintiffs contend that Defendants destroyed highly incriminating promotional materials that were previously available on theUsenet.com website. FN10 ( See Pl. Sanctions Mem. at 3.) Defendant Reynolds testified at his deposition that it was not until after the commencement of the litigation that he personally removed the webpages, and failed to retain copies. (Fabrizio Decl. Ex. 11 (“Reynolds Oct. 8, 2008 Dep.”) at 1039:12-1041:21.) Plaintiffs argue that this controverts Reynolds's Declaration indicating the materials were simply removed from public access before the case was filed.FN11 ( See Declaration of Gerald Reynolds in Support of Defendant Usenet.com, Inc.'s Opposition to Plaintiffs' Motion for Sanctions, dated Sept. 29, 2008 (“Reynolds Decl.”) ¶22.) Although Defendants have offered to authenticate Plaintiffs' copies of the webpage containing the promotional materials, Plaintiffs take issue with this cure since they are unable to ascertain what other incriminating webpages Defendants destroyed. ( See Pl. Reply Mem. at 15-16 n. 8.)”

Defendants' position: The evidence Plaintiff sought not only was “difficult, if not impossible” to extract, but also no relevant. For example, Defendant claims that user logs only show that “some user requested some article at some time” but did not prove infringement, and that the Articles downloaded are only “text files” that needed to be combined and converted in order to create a music file playable on a downloader’s computer. We’re obviously off to a bad start.

Using the term “necessarily” -- From bad to worse: Defendant further claimed that while the logs identify the name of the article uploaded or downloaded, the article’s name did not “necessarily reveal the contents of the requested file.”


“Transitory” Electronic File Requests:

“From the commencement of discovery, Plaintiffs requested a wide array of electronic files, including the articles (Digital Music Files) and log data (Usage Data). ( See id. at 6.) Defendants repeatedly explained why it was not technologically feasible to produce these potentially responsive documents. ( See id.) Because of the volume of information requested and the fact that Defendants' system was not capable of capturing and storing the majority of this information, the parties discussed protocols and logistics for trying to extract and produce this information.”

If Defendants’ claim of ephemerality of the electronic file requests seems reminiscent of Columbia v Bunnell, read on...

“Defendants argue that the data Plaintiffs seek is transitory in nature, meaning that in-flow of new articles pushes out old articles present on the Usenet. ( See id. at 6.)”


Expert Testimony: Being Good Distinguished from Doing “Good” (quotes mine)

Plaintiffs moved to exclude the testimony of noted technology expert Professor David Farber “proffer expert conclusions or opinions about Defendants' system.” It appears that the Defendant hired Professor Farber on a whim, and the Court just wasn’t in a whimsical mood on decision day. Moreover, although his qualifications were not in dispute, the substantive quality of his investigation was called into question by the Court:

"Here, however, Professor Farber has offered opinions about the capacity and capabilities of Defendants' servers and software, which are the matters largely in contention, by simply accepting what Defendant Reynolds told him. The underlying premise of allowing expert testimony is that “scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue.” Fed.R.Evid. 702. An expert who simply regurgitates what a party has told him provides no assistance to the trier of fact through the application of specialized knowledge. Cf. United States v. Mejia, 545 F.3d 179, 197-98 (2d Cir.2008) (although an expert may rely on hearsay in forming his expert opinions, “[t]he expert may not, however, simply transmit that hearsay to the jury. Instead, the expert must form his own opinions by applying his extensive experience and a reliable methodology to the inadmissible materials. Otherwise, the expert is simply repeating hearsay evidence without applying any expertise whatsoever”) (internal quotation marks and citations omitted); Robinson v. Sanctuary Record Groups, Ltd., 542 F.Supp.2d 284, 292 (S.D.N.Y.2008) (expert whose methodology was founded on hearsay supplied by the party itself, rather than “a source of first-hand, independent expert knowledge,” did not provide reliable evidence).FN23


The Court held a better opinion of Plaintiff’s expert:

“FN23. By contrast, Plaintiffs' expert, Ellis Horowitz, engaged in a detailed analysis of Defendants' system and the data available on that system. The Court finds Horowitz's conclusions about Defendants' system to be deserving of substantial weight.”

Wait, wait, there’s more:

“By his own admission, the following represents the sum of Professor Farber's investigation. In preparation for his Declaration, Professor Farber received, but only “scanned” notes from Mr. Reynolds ( see id.). He also “reviewed the operations manual for Surgenews” FN21 and performed Internet research on the Surgenews software.FN22 ( See Def. Strike Mem. at 6.) Professor Farber did not download any articles from the Usenet in preparation for his Declaration, but he was a heavy Usenet user beginning in the late 1990's. Nevertheless, he has used the Usenet only on a couple of occasions each year since 2000. ( See id.; Farber Dep. 36:8-38:13.) Professor Farber had discussions with Defendant Reynolds concerning the Usenet.com system, the software, the age of the servers, which Professor Farber accepted as reasonable information based on his experience.”

“Professor Farber's Declaration is replete with opinions and conclusions which appear to be nothing more than information supplied to Professor Farber by Defendant Reynolds. The Court acknowledges that “disputes as to the validity of underlying data [relied upon by an expert] go to the weight of the [expert's] evidence” rather than its admissibility. Raskin, 125 F.3d at 66. Even if the Court were to deny Plaintiffs’' Daubert motion, however, and were to consider the conclusions in Professor Farber's Declaration, it would accord them little weight insofar as they purport to describe the capabilities of Defendants' system. As has been discussed, and will be described further, Defendant Reynolds's contentions about his system, which Professor Farber relied upon, have been shown to be misleading and erroneous.”

“Nevertheless, Farber does not simply rely on erroneous data; his opinions are merely a restatement of Defendant Reynolds's views and are not the product of independent analysis."

The coup de grace:

“An expert who simply repeats the hearsay of the client who retained him, without any independent investigation or analysis, does not assist the trier of fact in understanding matters that require specialized knowledge. That, in fact, is what Professor Farber has done in offering opinions about Defendants' system. The Court, therefore, grants Plaintiffs' Motion to Strike those portions of the Declaration that purport to describe the capabilities of Defendants' system. Those portions of the Declaration that are based on Professor Farber's expert knowledge of the Usenet in general and Usenet technology will not be stricken.”


Spoliation

As no motion to compel was pending, the Court’s inherent powers were invoked as the basis for Plaintiff’s spoliation motion. The Court then provide a good overview of the 2d Circuit’s spoliation approach:

“Spoliation is the destruction or significant alteration of evidence, or the failure to preserve property for another's use as evidence in pending or reasonably foreseeable litigation.” West v. Goodyear Tire & Rubber Co., 167 F.3d 776, 779 (2d Cir.1999) (citation omitted). “[A] court may impose sanctions on a party for misconduct in discovery under its inherent power to manage its own affairs.” FN30 Residential Funding Corp. v. Degeorge Fin. Corp, 306 F.3d 99, 106-107 (2d Cir.2002); see also Reilly v. Natwest Markets Group Inc., 181 F.3d 253, 267 (2d Cir.1999) (a district court has wide discretion in sanctioning a party for discovery abuses); see also Metro. Opera Ass'n. v. Local 100, Hotel Employees & Rest. Employees Int'l Union, 212 F.R.D. 178, 219 (S.D.N.Y.2003). Due to the “potency of the court's inherent power, courts must take pains to exercise restraint and discretion when wielding it. Accordingly, [the Second Circuit] has required a finding of bad faith for the imposition of sanctions under the inherent power doctrine.” DLC Mgmt. Corp. v. Town of Hyde Park, 163 F.3d 124, 136 (2d Cir.1998) (citing United States v. Int'l Bhd. of Teamsters, 948 F.2d 1338, 1345 (2d Cir.1991)). Bad faith can be shown by (1) “clear evidence” or (2) “harassment or delay or ... other improper purposes.” Int'l Bhd. of Teamsters, 948 F.2d at 1345 (internal quotation marks and citation omitted).”

The Court then provides a review of what a party asserting spoliation must demonstrate in the 2d Circuit:

“The party bringing a spoliation motion must demonstrate:

1) that its adversary had control of the evidence and a duty to preserve it at the time it was lost or destroyed;

2) that the adversary had a “culpable state of mind” when the evidence was lost or destroyed; and

3) that the lost or destroyed evidence was “relevant” to the moving party's claims such that a reasonable trier of fact could find that it would support a claim. See Residential Funding Corp., 306 F.3d at 107; see also Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 220 (S.D.N.Y.2003) (citing Byrnie v. Town of Cromwell, Bd. Of Educ., 243 F.3d 93, 107-12 (2d Cir.2001)).”


Obligation to Preserve:

Citing Judge Scheindlin’s decision in Zubulake, Magistrate Judge Katz then describes triggering events for a duty to preserve involve a determination of when the duty attaches and what must be preserved:

“Identifying the boundaries of the duty to preserve [evidence] involves two related inquiries: when does the duty to preserve attach, and what evidence must be preserved.” Zubulake, 220 F.R.D. at 216. A party is obligated to preserve evidence when it “has notice that the evidence is relevant to litigation ... [or] should have known that the evidence may be relevant to future litigation.” Kronisch v. United States, 150 F.3d 112, 126 (2d Cir.1998) (citations omitted); accord Fujitsu Ltd. v. Fed. Express Corp., 247 F.3d 423, 436 (2d Cir.2001).


Relevant Date May be Triggered by the Nature of the Evidence: Transitory Evidence:

After reciting the well established doctrine that a duty to preserve is triggered no later than the date on which an action is initiated, or the date when litigation was reasonably anticipated, the Court notes that under certain circumstances, the relevant date may be determined by the “nature of the evidence”

“Nevertheless, when the duty to preserve evidence arises may, under certain circumstances, be dependent upon the nature of the evidence. For example, among other things, Plaintiffs in this action sought e-mails and other communications from Defendants' employees, customers, and business associates, discussing or referring to the Music Groups on Defendants' servers and the uploading and downloading of Music-related files. Defendants were on notice to preserve such documents by no later than the date on which the Complaint was filed, and perhaps earlier, when Plaintiffs notified Defendants of the alleged infringement.”

The Court applies the “nature of the evidence” test to Usage Logs and Music Files contained on defendant’s servers. In acknowledging this ESI as “transitory” Magistrate Judge Katz finds that even though this information was transitory, and not routinely created or maintained by Defendants for their business purposes, the existence of a triggering event (here a specific request by Plaintiff) required that Defendants take to retrieve and store:

“”Some of the other evidence at issue in the instant motion, such as Usage Logs and Music Files contained on Defendants' servers, is transitory in nature, is not routinely created or maintained by Defendants for their business purposes, and requires additional steps to retrieve and restore. Arguably, Defendants may not have had an obligation to preserve such evidence until placed on notice that Plaintiffs considered it relevant and were requesting it. However, Plaintiffs explicitly requested the Usage Data on January 7, 2008. Moreover, there can be no doubt that the Digital Music Files are highly relevant to this case, and Defendants should have been aware of their relevance no later than the date on which the Complaint was filed. In any event, Plaintiffs specifically requested, and sought assurances on March 11, 2008, that these files would be retained.”


Scope of Preservation

The Court then finds that the defendants had actual notice, and that actual notice was sufficient to trigger a duty to preserve, attempt to preserve, or negotiate the protocols for preservation of even transitory data, which they failed to do:

“…once Defendants had actual notice that Plaintiffs were requesting the data, Defendants had the obligation to preserve it, if possible, or to at least negotiate in good faith what data they could produce.FN31 Plaintiffs specifically requested the Usage Data in their document requests ( see Servodidio Decl. Ex. 2), and they reminded Defendants that they had requested the Digital Music Files, on both March 11 and March 12 ( see id. Exs. 8 & 9).FN32 The parties were in negotiations concerning production of the Usage Data ( see, e.g., id. Ex. 4), and Defendants counsel affirmatively advised Plaintiffs in a March 8, 2008 e-mail that Defendants would extract and produce Usage Data for newsgroups that contain the words “mp3” or “sound.” ( See id. Ex. 6.) Nevertheless, after giving that assurance, Defendant Reynolds disabled the Music Files and failed to preserve the Usage Data.”


Broadening Application of Fed. R. Civ. P. 37(e)

In another interesting footnote, the Court likens the duty to preserve in this case to a failure to cease routine and ordinary ESI destruction referred to in Fed. R. Civ. P. Rule 37(e):

“FN31 Although Federal Rule of Civil Procedure 37(e) is not cited by the parties, and does not apply under the circumstances of this case, by analogy the Rule is useful in understanding what steps parties should take to preserve electronic evidence.”

The Court distinguishes two other cases cited by Defendants where preservation of transitory evidence was not required. The distinguishing factor in both cases was that a specific request was made in the instant case:

“Defendants cite two cases for the proposition that they have no duty to preserve the “transient electronic data at issue.” (Def. Opp. Mem. at 14.) In Convolve, Inc. v. Compaq Computer Corp., 223 F.R.D. 162 (S.D.N.Y.2004), the court denied sanctions for alleged spoliation of wave forms. See id. at 176-77. In its analysis, the Convolve court distinguished between e-mails, which have a “semi-permanent existence” and “are recoverable as active data until deleted,” and “ephemeral” data which “exist only until the tuning engineer makes the next adjustment, and then the document changes.” Id. at 177. The court held that under a general litigation hold, and absent a preservation order, sanctions were not warranted. See id. at 177. Similarly, in Healthcare Advocates, Inc. v. Harding, Earley, Follmer & Frailey, 497 F.Supp.2d 627 (E.D.Pa.2007), the court held that sanctions for spoliation were not warranted where a party failed to preserve temporary cache files, since the party did not affirmatively destroy the evidence and the cache files may have been emptied dozens of times before the request for production was made. See id. at 641-42. Defendants reliance on these cases is misplaced because, unlike the instant case, the lost data was not specifically requested prior to its destruction. See Convolve, 223 F.R.D. at 176-77 (parties were under a general litigation hold); Healthcare Advocates, 497 F.Supp.2d at 642 (“To impose a sanction on the Harding firm for not preserving temporary files that were not requested ... does not seem to be a proper situation for an adverse spoliation inference.”).

The Court rules that Defendants had an obligation to preserve and produce:

“In sum, the Court concludes that Defendants did have an obligation to preserve and produce the requested Usage Data and Digital Music Files. A litigant “is under a duty to preserve what it knows, or reasonably should know, is relevant in the action, is reasonably calculated to lead to the discovery of admissible evidence, is reasonably likely to be requested during discovery and/or is the subject of a pending discovery request.” Turner v. Hudson Transit Lines, Inc., 142 F.R.D. 68, 72 (S.D.N.Y.2001); see also Whitney v. Jetblue Airways Corp., No. 07 Civ. 1397(CBA), 2008 WL 2156324, at *4 (E.D.N.Y. Apr. 29, 2008) (finding that defendant had a clear obligation, no matter its document retention policy, to put a litigation hold on any and all documents relating to claim); Zubulake, 220 F.R.D. at 217 (a litigant is under a duty to retain relevant evidence that is likely to be requested and/or is the subject of a pending discovery request).FN36 Here, the discovery in issue was the subject of discovery requests, and Defendants' counsel assured Plaintiffs' counsel that the Usage Data would be produced. ( See Servodidio Decl. Ex. 6.) See Langley v. Union Elec. Co., 107 F.3d 510, 513-14 (7th Cir.1997) (affirming district court's decision to sanction party where counsel agreed to produce evidence, but failed to actually produce it); see also In re Bristol-Myers Squibb Sec. Litig., 205 F.R.D. 437, 444 (D.N.J.2002) (enforcing discovery agreement and stating that “[i]t is essential to our system of justice that lawyers and litigants, above all, abide by their agreements and live up to their own expectations.”)”


Usage Log Preservation

In yet another significant footnote, the Court states that the preservation of usage logs is no stranger to copyright infringement suits. Note the reference to the Bunnell case:

FN36. Courts have recognized the relevance of user log data and infringing digital files in copyright infringement actions, and they have ordered litigants to preserve and produce such data. See Viacom Int'l v. YouTube Inc., 253 F.R.D. 256, 261-62 (S.D.N.Y.2008) (compelling production of user log data and alleged infringing video files in copyright infringement action); see also Columbia Pictures, Inc. v. Bunnell, No. 06 Civ. 1093(FMC)(JCX), 2007 WL 2080419, at *13 (C.D.Cal. May 29, 2007) (requiring production of server log data stored in RAM, and denying sanctions for spoliation, in part, because data was not specifically requested); Twentieth Century Fox Film Corp. v. iCraveTV, No. Civ. A. 00-120 & 00-121, 2000 WL 255989, at *6 (W.D.Pa. Feb. 8, 2000) (relying on log data to demonstrate that users accessed video stream of copyrighted works).


Culpability

This may stand for the proposition that it is unwise to proclaim a lack of decisional authority in connection with an issue to be decided pursuant to a Court’s “inherent powers”:

Defendants’ contention:

“Defendants also argue that “there is no authority to support the culpability of a party in a situation where the alleged despoiled data is of a transitory nature and where no mechanism exists for saving or backing up the massive amount of data and information that is flowing through the server at any given moment.” ( See Def. Opp. Mem. at 15-16.) Defendants contend that they do not have back-up tapes, a back-up mechanism like those present for e-mail servers, or hard copies of the relevant data. (See Reynolds Decl. ¶ 14.) In short, Defendants claim that their actions cannot even be considered negligent since they “cannot reasonably compile the requested information.” (Def. Opp. Mem. at 16.)”

The Court was having none of it:

“The Court cannot accept this position when Defendants concede in their submissions that they later produced Usage Data and Digital Music Files to Plaintiffs. ( See id. at 11; see also Fabrizio Decl. Ex. 7 (“Reynolds Dep. Aug. 13, 2008”) 112:14-112:18 (admitting that Defendants are able to produce log data from “front end” servers without adverse impacts on the functionality of the servers).)”

Surprisingly enough Defendants’ backup claims relied on analogy to the safe harbor provisions of Fed. R. Civ. P. Rule 37(e). Again, the Court turned a deaf ear:

“Defendants further argue that the Digital Music Files expired off their server in the normal course of business, and, therefore, the evidence was not destroyed with a culpable state of mind. Defendant Reynolds testified that no commands that he knew of would change the expiration rate of the Files. ( See Declaration of Charles S. Baker in Support of Defendant's Response in Opposition to Plaintiff's Motion for Sanctions, dated Sept. 29, 2008 (“Baker Decl .”) Ex. 5 (“Reynolds Dep.”) at 89:11-89:25.) The Court disagrees. The evidence submitted by Plaintiffs' expert demonstrates that Defendants took affirmative steps to both change the retention time of the data, and to permanently delete it.FN40”


Additional evidence of culpability


“The analysis of raw data produced from Defendants' spool 2 server establishes that Defendants engaged in a calculated reconfiguration of their servers, which caused the Digital Music Files to expire in an expedited manner.“

“Plaintiffs' analysis establishes that the Digital Music Files expired off the system almost immediately because Defendants took affirmative steps to delete them.”

“A status report for spool 2 from March 10, at 10:16 p.m., shows that spool 2 was storing only about 2 million articles-meaning that almost all of the Digital Music Files had been deleted in approximately 17 hours.FN41 (See Supp. Horowitz Reply Decl. ¶ 13 & Ex. 3.) A status report on March 12, at 2:22 a.m. shows 0% of the storage space being used by mp3 or Music-related articles-indicating that the remaining Digital Music Files had been deleted. ( See id. ¶ 13 & Ex. 3.) After deleting the Digital Music Files, Defendants reconfigured the spool 2 server in order to make sure the deleted files would be written-over and thus irretrievable."

“In addition, Defendants manipulated the Music Group retention times [post-notice to preserve] so that they were reduced to just a few days.” (Bracketed comments added)

“Finally, Defendants have destroyed highly incriminating promotional materials that were previously available on the Usenet.com website. For example, all references to “Music” and “mp3s” were deleted from a promotional webpage on Defendants' website, sometime after March 13, 2008. Defendants destroyed all copies of this webpage, and only produced the sanitized version of it to Plaintiffs during discovery.”


The Court continues:


“The data produced to Plaintiffs post-March 8, however, is not comparable to the data destroyed as a result of Defendants' decision to disable the Music-related Groups, and provides a distorted picture of the activity occurring on Defendants' system.”

This reasoning is emblematic of Defendants’ activities for which the Court ruled that had acted in bad faith:

“It is clear that, Defendants took affirmative steps to disable the Music Groups; they then changed their server configuration, which caused the Digital Music Files to expire at a faster pace, and, ultimately, failed to preserve the requested Usage Data and Digital Music Files. Moreover, defendants' production of the post-March 8 data does not serve to cure their discovery abuses because it is not substantially equivalent to the destroyed data. Finally, Defendant Reynolds has provided, at best, misleading information to this Court concerning Defendants' webpages.”

“The Court, therefore, finds that Defendants' failure to preserve the requested discovery material was in bad faith.”


Relevance

Judge Katz then finds that the “despoiled” evidence was relevant. The following analysis of 2d Circuit (and District Court) decisional authority is instructive:

“The Court must next determine whether the despoiled evidence was “‘relevant’ to the party's claim or defense such that a reasonable trier of fact would find that it would support that claim or defense .” Residential Funding, 306 F.3d at 107; accord Zubulake, 220 F.R.D. at 221. The Second Circuit has explained:

"[R]elevant in this context means something more than sufficiently probative to satisfy Rule 401 of the Federal Rules of Evidence. Rather, the party seeking an adverse inference must adduce sufficient evidence from which a reasonable trier of fact could infer that the destroyed [or unavailable] evidence would have been of the nature alleged by the party affected by its destruction. Courts must take care not to hold[ ] the prejudiced party to too strict a standard of proof regarding the likely contents of the destroyed [or unavailable] evidence, because doing so would subvert the ... purposes of the adverse inference, and would allow parties who have ... destroyed evidence to profit from that destruction. Residential Funding, 306 F.3d at 108-09 (quoting Kronisch, 150 F.3d at 127-28 and Byrnie, 243 F.3d at 110) (internal quotation marks omitted).””


The Court follows in lockstep with 2d Circuit precedent and notes that a finding of bad faith can (and in this case does) create an inference of relevance:

“When evidence is destroyed in bad faith, that alone is sufficient to support an inference that the missing evidence would have been favorable to the party seeking sanctions, and thus relevant. See Residential Funding, 306 F.3d at 109; see also M & T Mortgage Corp. v. Miller, No. 02 Civ. 5410, 2007 WL 2403565, at *10-11 (E.D .N.Y. Aug. 17, 2007) (finding that the “missing documents [were] clearly critical to plaintiff's claims,” and imposing sanctions for spoliation because “defendants acted in bad faith in destroying the documents.” “[S]uch improper conduct alone is sufficient to support a finding that the documents were unfavorable to” defendants). By contrast, when the destruction of evidence is negligent, relevance must be proven through extrinsic evidence by the party seeking sanctions. De Espana, 2007 WL 1686327, at *6. “This corroboration requirement is ... necessary where the destruction was merely negligent, since in those cases it cannot be inferred from the conduct of the spoliator that the evidence would even have been harmful.” Zubulake, 220 F.R.D. at 221 (quoting Turner, 142 F.R.D. at 77.) However, “a showing of gross negligence in the destruction or untimely production of evidence” will support an inference that the evidence would have been unfavorable to the spoliator. Residential Funding, 306 F.3d at 109."


The Penultimate Hammer Blow

“The circumstances here warrant a finding that Defendants' destruction of evidence was in bad faith, or, at a minimum, grossly negligent; however, even assuming this was not the case, Plaintiffs present sufficient extrinsic evidence to confirm the relevance of the spoliated evidence.”


The Court’s Ruling:

Adverse inference instruction and award of attorneys fees and costs.


“Although the spoliated evidence would have assisted Plaintiffs in quantifying the amount of infringing activity occurring through the use of Defendants' service, allowing the adverse inference that the spoliated evidence would have been unfavorable to Defendants, with respect to the contentions Plaintiffs seek to advance, should serve the remedial function of restoring Plaintiffs to the same position they would have been in absent the wrongful destruction of evidence by Defendants. See Kronisch, 150 F.3d at 126.”

“As a consequence of Defendants' actions, Plaintiffs have been forced to expend substantial resources investigating and analyzing Defendants' misconduct. ( See Servodidio Decl. ¶ 31.) The Court finds, therefore, that Plaintiffs are entitled to an award of attorneys' fees and costs incurred in connection with determining that there had been a spoliation of evidence, as well as in connection with this motion. Attorneys' fees and costs “may be appropriate to punish the offending party for its actions or to deter [the] litigant's conduct, sending the message that egregious conduct will not be tolerated ... [S]uch an award serves the remedial purpose of making the opposing party whole for costs incurred as a result of the spoliator's wrongful conduct.” Chan v. Triple & Palace, Inc., 03 Civ. 6048(GEL)(JCF), 2005 WL 1925579, at *10 (S.D.N.Y. Aug. 11, 2005) (internal quotation marks and citations omitted); see also Phoenix Four, Inc. v. Strategic Res. Corp., 05 Civ. 4837(HB), 2006 WL 1409413, at *9 (S.D.N.Y. May 23, 2006) (while denying evidentiary sanctions, ordering the award of attorneys' fees and costs); Pastorello v. City of New York, 95 Civ. 470(CSH), 2003 WL 1740606, at *13 (S.D.N.Y. Apr. 1, 2003) (awarding costs, as well as permitting an adverse inference instruction); Turner, 142 F.R.D. at 78 (awarding attorneys' fees since defendant's spoliation caused “plaintiff to expend time and effort in attempting to track down the relevant information. It then caused the expenditure of additional resources by misleading the plaintiff and the Court ...”).”



******************
Case: Rein v. United States Patent & Trademark Office
Citation: --- F. 3d. --- 2009, WL 188993 (4th Cir. 2009)
Date: 2009-01-28
Topics: eDiscovery and FOIA requests, FIOA Vaughn index requirements, Vaughn index requirements comparison with privilege log requirements, specificity and particularity requirements in 4th and District of Columbia Circuits for both Vaughn indexes and privilege logs

This case involves an action against the U.S. Patent Office in connection with re-examination of NTP’s patents at issue in the ongoing litigation between RIM and NTP. A FOIA request for documents in connection with the U.S.P.T.O.s re-examination. Someone (the Court appears to take pains not to identify which party below was the appellant requestor) and was dissatisfied, with the FOIA production made by the Patent Office. The District Court affirmed the sufficiency of the Patent Office’s search, production and withholding of documents pursuant to the exemption provided by FOIA. A central issue was whether the “Vaughn Index” (described below) provided by the Patent Office satisfied the particularity and specificity requirements required by both FOIA and decisional authority. The 4th Circuit Court of Appeals reversed in part, holding that the “Vaughn Index” provided by the Patent Office did not meet the “specificity” and “particularity” requirements required, thereby preventing the District Judge from making a reasoned decision as to whether the information (note I did not say “documents”) to which the asserted Section 5 Exemption as well as attorney-client and deliberative process privilege, were justified:


“We reverse the district court's grant of summary judgment with regard to the documents R & HW challenged based on Vaughn index descriptions that do not include author, recipient, or necessary factual descriptive information."


FOIA Requests and eDiscovery

First, it is still unclear whether the Fed. R. Civ. P.’s eDiscovery rules will be applied to FOIA requests. Here, the 4th Circuit appears to be leaning away from application, relying on the Supreme Court’s decision in Mead Data Central, Inc. v. U.S. Dep't of the Air Force, 566 F.2d 242 (D.C.
Cir. 1977):

“FN25. ‘Although Congress clearly intended to refer the courts to discovery principles for the resolution of [Exemption 5] disputes, the situations are not identical, and the Supreme Court has recognized that discovery rules should be applied to FOIA cases only ‘by way of rough analogies.’ “ Mead Data Cent., Inc., 566 F.2d at 252.”

That said, the identical logical argument could be made in favor of applying eDiscovery principles to FOIA proceedings.


FOIA “Vaughn Indexes” and §5 Exemptiona, Attorney-Client and Deliberative Process Privileges

A Vaughn index was provided in the Rein case. The production of a Vaughn Index is the required alternative production where an agency chooses to withhold document:

“…the Agencies elected to provide a Vaughn index in lieu of producing withheld documents for in camera review by the district court. See Vaughn, 484 F.2d at 827. To substitute for in camera review, a Vaughn index must describe the withheld material with “reasonable specificity” so that the reviewing court can determine whether the exemption from disclosure applies. Ethyl Corp., 25 F.3d at 1249-50; see also Miscavige v. Internal Revenue Serv., 2 F.3d 366, 367-68 (11th Cir.1993).”

The Court then describes a Vaughn Index:

“A Vaughn index is a list describing the documents an agency withholds. The list must include sufficiently detailed information to enable a district court to rule whether the document falls within a FOIA exemption. The Vaughn index received its name from the decision in which the use of such an index was first discussed, Vaughn v. Rosen, 484 F.2d 820 (D.C.Cir.1973).”

Imo, the contents of Vaughn index may be seen to be analogous to those of a privilege log required by Fed. R. Civ. P. 26(b)5 in non-FOIA cases:

“…the Agencies submitted a Vaughn index FN6 identifying the documents withheld, in whole or in part, based on the claim that the documents were exempt from the FOIA's disclosure requirements. The Vaughn index lists each document by number, and contains columns for reporting the document type (e.g ., e-mail; report), date, employees (authors and recipients), document description/subject, number of pages, whether the document was withheld in whole or in part, the exemption claimed, and any other descriptive remarks.”


FOIA Section 5 Exemptions, Deliberative Process and Attorney Client Privilege

Both agency-specific deliberative process as well as garden variety attorney-client privilege issues are subsumed within a FOIA statutory exemptions analysis In FOIA cases, an agency seeking to withhold a documents under a Section 5 privilege assertion must provide information justifying the assertion of either privilege in its Vaughn index” which is then used by a Court to determine if an exemption (justifying the withholding of information) applies. The Rein court provides a good analysis of the process:

“Exemption 5 [of FOIA] permits an agency to withhold “inter-agency or intra-agency memorandums or letters which would not be available by law to a party other than an agency in litigation with the agency.” Id. It encompasses, inter alia, the deliberative process and attorney-client privileges.FN18 The government bears the burden of demonstrating that a requested document falls under the exemption. 5 U.S.C. § 552(a)(4)(B).

FN17. FOIA specifies nine exemptions from its general disclosure provisions. § 552(b). The only provision of that statute before us in this appeal is (b)(5). All of the § 552(b) exemptions are designed to safeguard public interests against the harms that could arise from overly broad disclosure. FOIA exemptions are, however, narrowly construed to favor the Act's presumption of disclosure. Bowers v. U.S. Dep't of Justice, 930 F.2d 350, 354 (4th Cir.1991). FN18. See infra section III.B.2.“

The burden placed on the agency seeking to withhold documents is relatively heavy:

“These principles led the Court in Ethyl Corporation to find the Vaughn index provided in that case to be insufficient because entries “articulate[d] the Exemption 5 privilege in general terms, using FOIA language, and couple[d] the statement of privilege for each document with a general description of the document.” Id. at 1249. Similarly, the Court of Appeals for the District of Columbia Circuit has observed:

“[C]onclusory assertions of privilege will not suffice to carry the Government's burden of proof in defending FOIA cases. A typical line from the index supplied in this case identifies who wrote the memorandum, to whom it was addressed, its date, and a brief description of the memorandum such as “Advice on audit of reseller whether product costs can include imported freight charges, discounts, or rental fees. Sections 212.93 and 212.92.” ... That is all we are told, save for the affidavits submitted by the regional counsel which repeat in conclusory terms that all the documents withheld fall within one or another of the exemptions.”

“Such an index is patently inadequate to permit a court to decide whether the exemption was properly claimed.... Contrast the index submitted by the agency and described in Mead Data Central, Inc. v. U.S. Dep't of the Air Force, 566 F.2d 242 ( [D.C. Cir.] 1977), which clearly describes the characteristics of the documents which the agency felt brought them within the exemption claimed, and which was still inadequate to permit the court to determine whether all elements of the privileges were present in each document. Coastal States Gas Corp. v. Dep't of Energy, 617 F.2d 854, 861 (D.C.Cir.1980); see also City of Virginia Beach, Va. v. U.S. Dep't of Commerce, 995 F.2d 1247, 1253-54 (4th Cir.1993) (“the burden is on the agency to correlate, with reasonable specificity, materials within a document with applicable exemptions”); Mead Data Cent., Inc., 566 F.2d at 251 (“[W]hen an agency seeks to withhold information[,] it must provide a relatively detailed justification, specifically identifying the reasons why a particular exemption is relevant and correlating those claims with the particular part of a withheld document to which they apply.”).”

The Rein court finds that the Vaughn index produced was inadequate, providing insufficient information for the District Court to determine the applicability of FOIA’s Section 5 Exemption justifying the withholding of
information:

“R & HW claim the district court erred in finding the Vaughn index entries were sufficient for “at least 334 documents” that do not identify their author, recipient, date of origin, or source. We have reviewed both the Vaughn index and Fawcett's declarations regarding the compilation of materials on the index. Almost all of the documents cited by R & HW state “n/a” in the index column devoted to identifying the “employees” authoring or receiving the listed document.FN20 We agree with R & HW that the Vaughn index documents that fail to include information about their author and recipient, or which fail to provide an explanation that adequately substitutes for this information, do not contain adequate information for the district court to have determined whether they were properly withheld.”

Notably, the Court indicated that the failure to include a document’s date did not render a Vaughn index entry automatically inadequate, although “in many situations the date of a document may be a critical factor” In an interesting twist, the Court also notes that the date of a document may play a supporting role in determining a chronology to demonstrate whether a document in question is pre-decisional (and thereby satisfying an element necessary for a successful assertion of the deliberative process privilege).

The Court also notes that an agency may means other than the date of a document to show deliberative process.

The foregoing excerpt may provide the basis for a comparison between a court’s requirement to scrutinize a Vaughn index in connection with a Section 5 FOIA Exemption assertion with that of a court’s privilege log analysis conducted in connection with non-FOIA civil actions:


Circling the Metadata of Privileged Documents Issue

If a privilege log in a non-FOIA case must meet the “particularity and specificity” tests, then a cogent argument may be made to the effect that the metadata of a document (or, information, record or other ESI, if the request is properly worded) in connection with which a privilege is asserted is not privileged, because it is the metadata (and not a party’s interpretation thereof) that provides the Court with the necessary and sufficient information to render a decision as to the applicability of the privilege asserted.

The information the Rein court rules must be disclosed is metadata, or information about information:

“R & HW further assert the Agencies improperly redacted the subject lines of e-mails, file names to documents attached to e-mails, patent claim reference numbers, meeting agenda topics, and other identifying “factual” information that was not subject to the deliberative process privilege. Given the FOIA's strong preference for disclosure, factual information that does not compromise the exempt portions of the documents should be disclosed. [Envtl. Prot. Agency v. Mink, 410 U.S. 73 (1973) at 91.”

The foregoing excerpts provide some ammunition for the argument that native metadata for a privileged document is discoverable. It is also notable that the 4th Circuit in Rein relies on the D.C. Circuit’s seminal decision in Mead Data Central, Inc. v. U.S. Dep't of the Air Force, 566 F.2d 242 (D.C. Cir. 1977) in acknowledging both the distinction between “documents” from “information” and the implied acknowledgement that the latter encompasses the former:

“Because the FOIA focuses on information rather than documents, “[a]ny reasonably segregable portion of a record shall be provided to any person requesting such record after deletion of the portions which are exempt ...." § 552(b) (emphasis added)


Takeaway: If a properly phrased ESI production request asks for “information” and not documents per se, a requesting party might rely on this decision to demand native format metadata of privileged information Why? The real information giving the context in connection with which a privilege is asserted lies in the native format data, the metadata, and not in a second or third order “view of a view of a view” of what an attorney wishes to interpret as context information. Assertions of “deliberative process” “work product” or “attorney client” privilege to metadata may well fail, because metadata is (almost always) context, and not content information. Accordingly, the argument the Rein decision supports the position that any assertion of privilege first requires a showing, by way of a privilege log, “specificity” and “itemization” sufficient for a Court to make a proper analysis and decision. The argument here is that the “specificity” and “itemization” requirements in turn necessitate that the production native format metadata of privileged document.

SWT

2009-01-21 Counsel-Client Cooperation; Continuing Meet-and-Confer Obligations, Form and Format of Production, Undue Burden, and the Emergence of the Two Part Test to Determine Whether ESI is Produced as Kept in "The Usual Course of Business"


Case: Highway 46 Holdings, LLC v. Quantified Marketing Group, LLC
Cite: 2009 WL 113402 (M.D. Fla. 2009)
Date: 2009-01-16
Topics: Vertical duty to cooperate (between client and counsel) in discovery and case management, failure to cooperate a factor in granting terminating sanctions, Florida standard for terminating sanctions is willful and deliberate.

This decision from Judge Antoon, affirming the report and recommendation of U.S. Magistrate Judge Baker confirms that the duty to cooperate in discovery (including, imo, eDiscovery) extends to Counsel and Client as well between opposing counsel. Under 11th Circuit standards, a deliberate or willful failure to do so can help support the imposition of terminating sanctions:


"...the Court finds that Defendant has acted willfully and wrongfully in disobeying the Court order compelling discovery and has made a conscious decision not to prosecute the counterclaim nor defend this action, by failing to provide discovery, failing to respond to two motions to compel discovery, failing to cooperate with its own counsel regarding its discovery and case management obligations, and failing to respond to the motion for sanctions, seeking default and dismissal. The Court also finds that lesser sanctions will not suffice."

It also appears that defendants' counsel attempted (unsuccessfully) to withdraw. The Court recognizes this, recognizes counsel's difficult position, and reserves judicial ire for the defendants alone. By Order denying defense counsel's renewed motion to withdraw, the Court expressly noted:

"The Court is mindful that the circumstances of the case are likely to make it impossible for counsel to respond to scheduling and discovery requirements (including the matters described in the most recently filed motion [Doc. no. 35] ), which may result in Plaintiff seeking relief (perhaps even a default). Such a result does not reflect on counsel so long as he has kept his erstwhile client informed of the proceedings and its responsibilities and maintains his candor about his inability to respond substantively. The Defendant's failure to abide by obligations to its own counsel should not be permitted to prejudice the Plaintiff or slow the progress of the case. Counsel must continue the representation as best he can, and any adverse consequences resulting from his client's failure to cooperate with existing counsel or to obtain substitute counsel would be attributable to the client, not to counsel."

************

Case: S.E.C. v. Collins & Aikman Corp.
Cite: 2009 WL 94311 (S.D.N.Y. 1009)
Date: January 13, 2009
Topics: Email eminently searchable, accessibility, second meet and confer to negotiate reasonable search protocol, work product privilege applicability to "selections" of documents, government agency discovery obligations, government's good faith efforts obligation to negotiate with adversaries regarding search protocol, government assertion of undue burden based on limited public resources.

In this major securities fraud case initiated by the SEC against Collins & Aikman (and, individually David Stockman), an excerpt near the end of the decision encapsulates a key issue:

"When a government agency initiates litigation, it must be prepared to follow the same discovery rules that govern private parties (albeit with the benefit of additional privileges such as deliberative process and state secrets)."

Some background: Defendant Stockman served a Rule 34 discovery request on the SEC asking for 54 separate categories of documents. In response,

"[t]he SEC produced 1.7 million documents (10.6 million pages) maintained in thirty-six separate Concordance databases-many of which use different metadata protocols."

The Court first notes that the databases "d[id] not match Stockman's requests" and that "[N]either party has explained what each database contains. The parties are obviously off to a less-than-perfect start.


Rule 34 Form of Document Production

The Court begins by discussing the two options available to a producing party:

" The litigant may either produce documents "as they are kept in the usual course of business or must organize and label them to correspond to the categories in the request."

The Court later refers to the Advisory Committee notes in adding that this language was added to Rule 34 to prevent "'deliberately [mixing] critical documents with others in the hope of obscuring significance,'" and "intended to minimize the burden of production while maintaining "'internal logic reflecting business use.'"


Work Product Protection and "Selections" of Documents

The Court next turns its attention to the attorney work-product privilege as it pertains to the selection of documents asserted to support a factual allegation in a complaint, and rules such selection non "core" work product. "Core" work product is defined as

"...legal documents drafted by an attorney-her mental impressions, conclusions, opinions, and legal theories. This highest level of protection applies to a compilation only if it is organized by legal theory or strategy."

The Court then summarily rejects the SEC's global work product assertion:

"[t]he SEC's theory that "every document or word reviewed by an attorney is an attorney's work product leaves nothing to surround the core"


Undue Hardship

The SEC took the position that Stockman was free to search nearly 10 million documents. The Court acknowledges both undue hardship and apparent futility:

"Indeed-at significant expense and delay-Stockman could search the document databases using appropriate search terms, but the inaccuracy of such searches is by now relatively well known.FN39 A page-by-page manual review of ten million pages of records is strikingly expensive in both monetary and human terms and constitutes "undue hardship" by any definition."


"FN39. See George L. Paul and Jason R. Baron, Information Inflation: Can the Legal System Adapt?, 13 Rich. J.L. & Tech. 10, at *36-*40 (2007); Jason R. Baron, David D. Lewis, and Douglas W. Oard, TREC-2006 Legal Track Overview, available at http:// trec.nist.gov/pubs/trec15/papers/LEGAL06.OVERVIEW.pdf (noting in a sophisticated study that compared to more complex and costly techniques, Boolean searching located only 57% of known relevant documents, while expert manual searching located 68%). Such a search would be further frustrated by the differing metadata protocols used in the numerous Concordance databases."


Form of Production and The Emergence of the Two Part "Usual Course of Business" Test

This case presents the Court with novel form-of-production issues. The SEC's position is that even if the compilation was not protected by the work product privilege, it (the SEC) had the option to "complete, unfiltered, and unorganized investigatory file, as this is how the documents are maintained in the usual course of its business."

Some background: A typical discovery request for document might (and in actuality should) state that any response shall be made in a format that represents how those documents are maintained or used in the "usual course" of a producing party's business activity.

The Court discusses in a footnote that neither the advisory committee notes, nor any records of congressional debate aid in construing the meaning of the phrase. Instead, the Court turns for guidance to the Federal Rules of Evidence, and Black's Law Dictionary:

"FN44Surprisingly, this term is neither defined nor explained in the advisory committee notes. Nor are there records of congressional debate or cases defining the term. In contrast, there is substantial background concerning Federal Rule of Evidence 803(6), which addresses "regularly conducted business activity." I will discuss this provision below. As Federal Rule of Evidence 803(6) predates the relevant provision in Federal Rule of Civil Procedure 34 by six years, the history of the evidentiary rule is instructive-albeit non-binding-to the interpretation of the procedural rule."

The Court starts its approach to defining "maintained in the usual course of business" with a discussion of the business records exception to the hearsay exclusionary rule set forth in Fed. R. Evid. Rule 803(6). A good summary of the Court's reasoning is provided, again by way of footnote:

"FN47. Fed.R.Evid. 803(6), 1972 Advisory Committee Note. The justification for the Rule is found in the 1972 Advisory Committee Note to the proposed rule: "The element of unusual reliability of business records is said variously to be supplied by systematic checking, by regularity and continuity which produce habits of precision by actual experience of business in relying upon them, or by a duty to make an accurate records as part of a continuing job or occupation." Id. The Committee noted that the key concepts in this exception are "routineness and repetitiveness." Id."

Judge Scheindlin, provides by "rough analogy" (the Court's words) what is imo a logically compelling definition of "in the usual course of business" by offering up a two part test:

"By rough analogy to Rule 803(6), the option of producing documents "as they are kept in the usual course of business" under Rule 34 requires the producing party to meet either of two tests. First, this option is available to commercial enterprises or entities that function in the manner of commercial enterprises. Second, this option may also apply to records resulting from "regularly conducted activity." FN53 Where a producing party's activities are not "routine and repetitive" such as to require a well-organized record-keeping system-in other words when the records do not result from an "ordinary course of business"-the party must produce documents according to the sole remaining option under Rule 34: "organize[d] and label[ed] ... to correspond to the categories in the request.""

The Court's logic is impeccable:

"When records do not result from "routine and repetitive" activity, there is no incentive to organize them in a predictable system. The purpose of the Rule is to facilitate production of records in a useful manner and to minimize discovery costs; thus it is reasonable to require litigants who do not create and/or maintain records in a "routine and repetitive" manner to organize the records in a usable FN55 fashion prior to producing them."

Major takeaway: We now have (at least in the Southern District of New York) a new two part test to determine whether documents are kept in the usual course of business.

First, there must be a usual course of business in which to keep said documents.

Second, a "usual course of business" presumption may arise from a "regularly conducted activity."

Note that where there is no "regularly conducted activity" or "usual course of business" a producing party is then required to organize such records in a usable fashion prior to producing them. This third takeaway will have two major implications in eDiscovery practice. First a party requesting documents should zealously protect its option (some would say responsibility) for articulating an ESI document production request in a manner designed to obtain native format data. Second, where there is no discernible or identifiable "usual course of business" or "regularly conducted activity" associated with document organization, the requesting party should fashion its requests accordingly.


Another Call for Cooperation

The Court rejects outright the SEC's "blanket refusal to negotiate a workable search protocol as "patently unreasonable," Judge Scheindlin invokes the recently published "Sedona Conference Cooperation Proclamation" which urges parties to work in a cooperative rather than adversarial manner to resolve discovery disputes "in order to stem the 'rising monetary costs of discovery disputes.'" The Court holds the specter of an appointment of a Special Master to supervise remaining discovery in this case if, after the Court ordered additional meet and confer, the parties "remain at an impasse":

"With few exceptions, Rule 26(f) requires the parties to hold a conference and prepare a discovery plan. The Rule specifically requires that the discovery plan state the parties' views and proposals with respect to "the subject on which discovery may be needed ... and whether discovery should be conducted in phases or be limited to or focused on particular issues" FN66 and "any issues about disclosure or discovery of electronically stored information .... " FN67 Had this been accomplished, the Court might not now be required to intervene in this particular dispute. I also draw the parties' attention to the recently issued Sedona Conference Cooperation Proclamation, which urges parties to work in a cooperative rather than an adversarial manner to resolve discovery issues in order to stem the "rising monetary costs" of discovery disputes. FN68 The Proclamation notes that courts see the discovery rules "as a mandate for counsel to act cooperatively." FN69 Accordingly, counsel are directly to meet and confer forthwith and develop a workable search protocol that would reveal at least some of the information defendant seeks. If the parties cannot craft an agreement, the Court will consider the appointment of a Special Master to assist in this effort."


Privilege Logs

The Court also rules that the privilege log provided by the SEC was "deficient" and provided insufficient information to the Court in order to evaluate any claims of privilege, and notes that the SEC "asks the Court simply to take its word." One might extend this argument to assert that without document metadata, the producing party is asking that a Court "take its word" that a privilege log actually reflects the metadata of a document to which that privilege is asserted.


eMails

The Court again chides the SEC for making global assertions:


"Because e-mails are inherently searchable, the SEC's blanket refusal to produce any incoming or outgoing e-mails is unacceptable."

Ok, I get the picture. I think. It appears that at least one party refused to negotiate (cooperate) with the other in reaching mutually agreeable parameters for eDiscovery. It's also possible that both parties just ignored the ESI meet and confer requirements of Rule 26 and just propounded away:

"FN95Without even an attempt to negotiate search terms that would weed out privileged, protected, or irrelevant e-mails, the SEC cannot reasonably assert that a routine aspect of modern discovery-search and review of a party's e-mail-is beyond its capability. Essentially, the SEC's position is that the cost of such a search is simply too high, but it has made no effort to document the cost or the likelihood that it would produce relevant, nonprivileged material."

No matter, as the Court was having none of it:

"Once again, the parties are directed to meet and attempt to negotiate a reasonable search protocol (considering the use of appropriate search terms and appropriate limitations of subject matter and date) and then to consider applying this search protocol to a segment of the SEC's e-mail collection to determine whether relevant nonprivileged material might be identified and produced considering all of the factors set forth in Rule 26(b)(2)(C)."

It is perhaps no coincidence that this decision comes hard on the heels of Judge Scheindlin's recent eDiscovery/Special Master's law review article.

Let there be no doubt that Judge Scheindlin walks her talk.

***********
Case: Viacom Intern., Inc. v. YouTube, Inc.
Cite: 2009 WL 10208 (N.D. Cal. 2009)
Date: 2009-01-14
Topics: Fed. R. Civ. P. Rule 45 Non-party subpoenas, non-party motion to compel ESI.


In this class action, United States Magistrate Judge Patricia Trumbull granted defendant YouTube motion to compel production of documents requested by way of a Fed. R. Civ. P. Rule 45 subpoena for ESI served on non-party BayTSP. BayTSP is a DMCA violation detective agency engaged by content providers to monitor YouTube, and "scour[s] every corner of YouTube's site" for DMCA violators:

"BayTSP located in Los Gatos, CA describes itself as 'a service company retained by copyright owners to identify individuals who are making their copyrighted works available for download on the Internet.'"

Non-Party Documents Not Directly Pertaining to Named Defendants Held Discoverable

YouTube requested documents pertaining to non-Viacom entities as well as to content owned by Viacom and its related entities. The Court found no dispute as the relevancy of the latter category of documents. The Court also found, however, that documents requests as they related to non-Viacom related entities were relevant because, pursuant to Rule 26, the information could lead to the discovery of relevant evidence:

"YouTube's stated reasons for obtaining documents related to the non-Viacom related entities appear reasonably calculated to lead to the discovery of admissible evidence. "Rule 26 does not require that the information sought necessarily be directed at the ultimate fact in issue, only that the information sought be reasonably calculated to lead to admissible evidence in the underlying litigation." Gonzales v. Google, Inc., 234 F.R.D. at 683. Accordingly, the court finds that the documents requests as they relate to non-Viacom related entities are relevant too."



Undue Burden


Non-party BayTSP claimed that YouTube's Rule 45 request as overbroad, spanning more than 4 terabytes of data, and one million documents averaging five pages per document, or an estimated five million pages. BayTSP claimed that it spent "over 1900 hours in the last six months searching and reviewing the documents." The number or documents had been narrowed to 650,000 or "half the documents originally identified through the electronic filter"

BayTSP asserted a claim of undue burden and requested cost-shifting. It appears that liability for discovery costs was not quite clear. The Court "at this juncture" found that BayTSP had not shown undue burden, and denied the motion without prejudice.


Format of Production

It's a bit difficult to know what the parties set forth in their "Amended ESI Plan" as to form and format of production. It appears that printouts, load files, and not ESI in native format data was requested. The clue is in the Court's reference to Fed. R. Civ. P. Rule 34(a)'s "reasonably usable" language. That language is, imo, typically triggered where the format of production is not specified, or not made clear in an eDiscovery plan. Not surprisingly, the cost to convert the ESI to reasonably usable (by a third party vendor) was not insignificant:

"YouTube complains that BayTSP has made certain of its documents available on two computer terminals during regular business hours. Therefore, YouTube is constrained to conduct its review and print what it wants at the offices of BayTSP's counsel. YouTube takes no comfort that BayTSP, and perhaps Viacom, will know what documents it has reviewed, what documents it has focused on and what documents it has printed. Instead, YouTube requests that it be allowed electronic access to the Kroll Ontrack database on which the documents exist, be provided with DVDs or other electronic medium of the entire responsive database so that it may upload the database into its own database. This suggested format is consistent with an amended ESI plan governing the underlying litigation. BayTSP states that conversion of the data files onto DVDs or other electronic medium is costly. Indeed, BayTSP speculates the cost could approximate six to ten cents per page to upload.

"Unless YouTube is willing to absorb this cost, BayTSP cannot provide the documents in the requested format. *7 The court agrees that to require YouTube to view that vast amount of documents at the offices of BayTSP's counsel with certain temporal cut-offs is unreasonable. See, e.g., Rule 34(a) requires production in a "reasonably usable form." Fed.R.Civ.P. 34(a)."


Upshot: The Court sent the parties back to meet and confer (with eDiscovery vendor Kroll in attendance) to determine actual cost of obtaining documents and creating [sigh] load files. Note the reference to Chief Magistrate Judge Grimm's decision in Mancia v Mayflower:

"The court agrees that to require YouTube to view that vast amount of documents at the offices of BayTSP's counsel with certain temporal cut-offs is unreasonable. See, e.g., Rule 34(a) requires production in a "reasonably usable form." Fed.R.Civ.P. 34(a). At the hearing, the parties agreed to further meet and confer on the format of production, including discussing with Kroll the actual cost of obtaining documents on the database and/or creating certain load files. Tr. 52:1-15. In light of arguments at the hearing regarding the potential accessibility to electronic documents viewed by YouTube, the court advises the parties to take appropriate measures so that others, intentionally or inadvertently, not determine what documents were viewed, what documents were focused on and what documents were printed. See, e.g., Tr. 32:8-25; 33: 1-25; 34:1-25; 35:14-25; 36: 3-18, 24-25; 37:1-15; 38: 1-6, 19-22. Accordingly, the parties shall further meet and confer on the format of production. "[I]t is in the interests of each of the parties to engage in this process cooperatively." Mancia v. Mayflower Textile Servs. Co., et al., 253 F.R.D. 354, 365 (D.Md.2008)."

Takeaways: Ask for native format data, don't cede interpretation of "reasonably usable" to the producing party, and get that expert in early to clarify form and format of production. Be mindful (as of last week) of Judge Scheindlin's " new two-part usual course of business" test.