eDiscovery Advantage
Summer 2013 Volume 3, Number 2
Introduction Since the last edition of eDiscovery Advantage: •
The Advisory Committee on Federal Rules of Civil Procedure formally published for public comment amendments to the Federal Rules of Civil Procedure that impact both discovery as a whole and the scope of preservation and availability of sanctions.
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The United States District Court for the District of Kansas’ Rule 1 Task Force has issued recommendations designed to ensure that civil litigation is handled in the just, speedy and inexpensive manner contemplated by Rule 1 of the Federal Rules of Civil Procedure.
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The Minnesota Supreme Court approved amendments to Minnesota’s Rules of Civil Procedure addressing cooperation and proportionality in the discovery process.
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The International Trade Commission and the IRS updated rules or guidance for dealing with e-Discovery.
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The Article 29 Working Party issued an Explanatory Document on Binding Corporate Rules for Data Processors.
As always, we hope that the following summaries and information continue to aid your understanding of this important and rapidly evolving practice area, and we look forward to helping you stay abreast of upcoming developments.
Table of Contents Introduction ........................................................... 1 Federal, State, and International e-Discovery Rule Developments .................. 2 International And Cross Border e-Discovery Developments ............................. 5 Ethics ....................................................................... 7 Preservation and Spoliation ........................... 7 Predictive Coding ..............................................13 Social Media.........................................................14
As evidenced by Judge Scheindlin’s latest decision, and others addressing the same topic, courts continue to struggle with the question of what conduct and level of fault is sufficient to warrant the imposition of an adverse inference instruction.
Search, Retrieval, and Production...............17
A number of decisions have addressed whether and how predictive coding should be structured and implemented. Social media continues to be a big focus, especially regarding whether it can be obtained in discovery, to what extent lawyers can use it to conduct their investigations of the facts of their clients’ cases, and to what extent judges can use social media while avoiding claims of undue bias and/ or influence.
Upcoming Speaking Events...........................23
Privilege and Waiver Issues ...........................19 Recovery Of e-Discovery Costs / Cost Shifting ...................................................... 20 Stored Communications Act ........................22 Past Publications And Events .....................23 Featured Contributors ..................................23 Contact Us .........................................................23
eDiscovery Advantage
Winston & Strawn LLP
FEDERAL, STATE, AND INTERNATIONAL E-DISCOVERY RULE DEVELOPMENTS Proposed Amendments to the Federal Rules of Civil Procedure
“The proposed amendments to Rule 37(e) provide guidance to courts addressing the issue of whether to impose sanctions for the loss of discoverable information…”
On May 8, 2013, the Advisory Committee on Federal Rules of Civil Procedure issued a “Report of the Advisory Committee on Civil Rules,” which presented for action a “proposal recommending publication for comment of revisions to Rules 1, 4, 16, 26, 30, 31, 33, 34, 36 and 37” of the Federal Rules of Civil Procedure. A copy of the Advisory Committee’s report is available here. At its June meeting, the Committee on Rules and Practice and Procedure of the Judicial Conference of the United States (the “Standing Committee”) approved the Advisory Committee’s proposed amendments for publication and public comment. The proposed amendments were released for public comment starting in August 2013, with hearings set for November 7, 2013 (D.C.), January 9, 2014 (Phoenix) and February 7, 2014 (Dallas). While the proposed amendments address a variety of issues, two of the more important ones address the scope of discovery under Rule 26 and the imposition of sanctions under Rule 37 for a party’s failure to preserve discoverable information. The proposed amendment to Rule 26 would, among other things, clarify that the scope of discovery should be “proportional to the needs of the case considering the amount in controversy, the importance of the issues at stake in the action, the parties’ resources, the importance of discovery in 2
resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefits.” The proposed amendments to Rule 37(e) provide guidance to courts addressing the issue of whether to impose sanctions for the loss of discoverable information and recognize that “a party that adopts reasonable and proportionate preservation measures should not be subject to sanctions.” Specifically, Rule 37(e)(1) would preclude a court from imposing sanctions for the failure to preserve discoverable information unless the court finds that the party’s actions: “(i) cause substantial prejudice in the litigation and were willful or in bad faith, or (ii) irreparably deprived a party of any meaningful opportunity to present or defend against the claims in the litigation.” The amended Rule 37(e) also includes a list of factors that courts should consider in determining whether a party’s efforts were willful or in bad faith, including: (1) the extent the party was on notice that litigation was likely and that the information would be discoverable; (2) the reasonableness of the party’s efforts; (3) whether the party received a request to preserve that was clear and reasonable, and whether the person making such a request conferred in good faith as to its scope; (4) the proportionality of the preservation efforts to the litigation; and (5) whether the party timely sought the court’s guidance on unresolved issues concerning preserving discoverable information. The Committee Notes to Rule 37(e) state that the amended rule is designed to “ensure that potential litigants who make reasonable
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Winston & Strawn LLP efforts to satisfy their preservation responsibilities may do so with confidence that they will not be subjected to serious sanctions should information be lost despite those efforts.” The proposed amendments include a number of other changes, including a reduction in the presumptive number of depositions a party may take in a given case from 10 to 5, a reduction in the general time limit placed on depositions from 7 hours to 6 hours, and a reduction in the presumptive number of interrogatories from 25 to 15. In addition, the proposed amendments would seek in the first instance to limit parties to a total of 25 requests for admission. Each of these limits can be increased by court order or by stipulation of the parties. District of Kansas Issues Rule 1 Task Force Recommendations for Public Comment Since March 2012, the United States District Court for the District of Kansas has been involved in an intense effort to find ways to ensure that litigation is handled in the “just, speedy, and inexpensive manner” contemplated by Rule 1 of the Federal Rules of Civil Procedure. The Rule 1 Project, as it has come to be known, has resulted in a number of specific recommendations, including, among others, recommendations addressing the discovery of electronically stored information. The recommendations have been approved by the Court, which is now inviting public comments on them before they are fully implemented. A copy of the Rule 1 Task Force’s recommendations (the “Recommendations”) is available here. Comments may be e-mailed to the 3
Clerk of the Court at Tim_Obrien@ksd. uscourts.gov by September 10, 2013. Among other things, the Recommendations “strongly encourage[] the parties to conduct their planning conferences under Fed. R. Civ. P. 26(f) in person,” and note that “it’s unacceptable to simply exchange draft planning reports by e-mail.” In addition, the Recommendations include a sample Rule 16 report and a set of “Guidelines for Cases Involving Electronically Stored Information [ESI]” (the “ESI Guidelines”). The ESI Guidelines stress the need for cooperation and that the parties should consider the “proportionality principle inherent within the Federal Rules.” They also address both a party’s identification and preservation obligations and the conduct of discovery of ESI after a litigation has been initiated. Importantly, the ESI Guidelines suggest that parties designate an “e-discovery liaison” who is: (1) familiar with the party’s electronic information systems; (2) knowledgeable about the technical aspects of e-discovery; and (3) prepared to participate in the resolution of e-discovery disputes. Minnesota Supreme Court Amends Rules of Civil Procedure Relating to ESI The Minnesota Supreme Court approved amendments to Minnesota’s Rules of Civil Procedure and the General Rules of Practice for the District Courts on February 4, 2013 and February 12, 2013. The amendments were “aimed at facilitating more cost effective and efficient civil case processing.” Two of the main ways Minnesota plans to achieve this aim
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Winston & Strawn LLP are through proportional discovery and cooperation. Minnesota’s amendments closely follow the Federal Rules of Civil Procedure’s proportionality doctrine as provided in F.R.C.P. 26(b)(2)(C). Minnesota’s new Rule 1, relating to the Scope of the Rules of Civil Procedure, requires the court and the parties to conduct a proportionality assessment in each civil action “to assure that the process and the costs are proportionate to the amount in controversy and the complexity and importance of the issues.” Rule 1 goes on to state that “[t]he factors to be considered by the court in making a proportionality assessment include, without limitation: needs of the case, amount in controversy, parties’ resources, and complexity and importance of the issues at stake in the litigation.” In addition, Rule 26.02(b), relating to the scope and limits of discovery, further states that discovery “must comport with the factors of proportionality….” Finally, the court may order discovery of any matter relevant to the subject matter involved in the action “[u] pon a showing of good cause and proportionality.” In terms of cooperation, Rule 26.06 relating to the required discovery meet and confer was amended by requiring the parties to confer within 30 days from the initial due date for an answer. The parties must develop a proposed discovery plan and file a written report outlining the discovery plan with the court. Finally, if a party fails to participate in good faith in developing and submitting the discovery plan, the court may “require that party or attorney to pay to any 4
other party the reasonable expenses, including attorney’s fees, caused by the failure.” Editor’s Note: Taking these amendments into consideration as a whole, Minnesota has expressed its belief that the notion of proportionality should be considered when analyzing all aspects of electronic discovery and reviewed as early in the case as possible. In addition, for parties that do not wish to cooperate in good faith discovery, including by analyzing proportionality, the rules have teeth that allow Minnesota state courts to force the parties at fault (or their attorneys) to pay reasonable expenses. IRS Memo Revises Guidance for Complying with e-Discovery Rules On March 15, 2013, the IRS revised and reissued its “Interim Guidance for Complying with E-Discovery Rules” (the “Interim Guidance”). The Interim Guidance describes the procedures established by the Office of Chief Counsel “for complying with discovery requests for electronically stored information (ESI).” According to the Interim Guidance, ESI includes, but is not limited to, “e-mail and other electronic communications, word processing documents, spreadsheets, electronic calendars, telephone logs, Internet usage files, meta-data, voicemail, text messages, and network access information.” In the context of a collection case, the Interim Guidance notes that ESI will include, among other things, “ICS histories, results of electronic research, and any other information regarding the case that is either obtained, recorded, or sent electronically.” In addition, “[a]ll ESI relating to a particular taxpayer’s case must be preserved when litigation
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Winston & Strawn LLP is initiated or can be reasonably anticipated.” The Interim Guidance also describes the process by which the IRS issues a litigation hold and identifies, collects, and preserves relevant ESI. With respect to e-mail messages that are not subject to litigation holds, the Interim Guidance notes that such messages should be printed with the attachments and transmission information and placed in the case file. Once this has been done, the messages can be deleted unless needed for “reference purposes.” A copy of the Interim Guidance is available here. International Trade Commission Amends e-Discovery Rules Effective June 20, 2013, the International Trade Commission (“ITC”) amended its Rules of Adjudication and Enforcement. The amendments are designed to “reduce expensive, inefficient, unjustified, or unnecessary discovery practices in agency proceedings while preserving the opportunity for fair and efficient discovery for all parties.” The ITC previously published a Notice of Proposed Rulemaking on October 5, 2012. The amended rules as implemented are largely similar to those set forth in the Notice of Proposed Rulemaking, with several notable exceptions and clarifications. Notably, the ITC clarified that: (1) the ability of an administrative law judge to limit discovery when a party stipulates to certain facts is limited to discovery as to the particular facts that are the subject of the stipulation; (2) although a party does not need to provide “discovery of electronically 5
stored information from sources that the person identifies as not reasonably accessible because of undue burden or cost,” the requesting party can still obtain such ESI if it makes a showing of “good cause” as to why the ESI should be produced; (3) the ITC declined to impose numerical limits on the number of custodians because an administrative law judge already has the discretion to limit the frequency or extent of discovery in certain circumstances, and tying limits to specific numerical targets “may be inappropriate in some circumstances”; (4) Part 210(e)(3), which allows parties to avoid the requirement of producing a privilege log, is not a categorical “claw-back” rule and does not “supplant an applicable waiver doctrine”; and (5) administrative law judges have the ability “to determine how cost shifting should be implemented, if at all, based on the specific facts of a particular discovery dispute.” A copy of the Federal Register notice discussing the changes made after the public comment period and including the text of the amended rules is available here.
INTERNATIONAL AND CROSS BORDER E-DISCOVERY DEVELOPMENTS On April 19, 2013, the Article 29 Data Protection Working Party (the “Working Party”) issued an “Explanatory Document on the Processor Binding Corporate Rules” (the “Explanatory Document”) that discussed the formulation of binding corporate rules (“BCR”) for data processors (the “Processors”). A
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Winston & Strawn LLP copy of the Explanatory Document is available here. The Explanatory Document builds on the Working Party’s September 17, 2012 working document setting forth the application form for the approval of BCRs for Processors, and is intended to lead to “a certain degree of simplification for multinational organisations routinely processing and exchanging personal data on a world-wide basis[.]” According to the Working Party, “BCR for Processors are meant to be a tool which would help frame international transfers of personal data that are originally processed by a Processor on behalf of an EU Controller[,]” where the data is then sub-processed with the Processor’s corporate family. Processors can apply to the European Union for approval of its BCR and the determination that such BCR constitute adequate safeguards for international transfers—allowing the data controller (the “Controller”) to comply with applicable EU data protection laws. Such approval, however, does not obviate the requirement that the Controller apply to the competent Data Protection Authority(ies) for authorization to transfer the data to the Processor in the first instance. The Explanatory Document notes that the BCR for Processors should be attached to the Service Level Agreement between the Controller and the Processor. The Service Level Agreement can provide that the Processor and Controller can determine in advance whether the Controller must give consent each time a transfer is made to one of the Processor’s related companies. By using BCR for Processors, there is 6
no need for the Processor to sign contracts to frame transfers between its affiliated Subprocessors. The Working Party notes that BCR for Processors must establish the following principles, among others, enforceable through third-party beneficiary rights clauses: (1) the duty of the Processor to respect the BCR and the Controller’s instructions regarding data processing, as well as the security and confidentiality measures included in the Service Level Agreement; (2) creation of third party beneficiary rights for data subjects; (3) the Processor’s liability for paying compensation for, and remedying of, any breaches of the BCR; (4) the burden of proof for showing that there has not been a breach lies with the Processor; and (5) the duty to cooperate with the applicable Data Protection Authorities. The Explanatory Document states that BCRs for Processors can be modified post approval provided that the Processor “report[s] changes to all group members, to the Data Protection Authorities and to the Controller.” Processors must give Controllers notification of such changes to the BCR in a timely manner in order to allow the Controller to object to the change or terminate the contract before the modification is made. The Explanatory Document also addresses the fact that a Processor applying for approval of BCR must demonstrate the existence of a “system which guarantees awareness and implementation of” the BCR throughout the Processor’s corporate family by employees who have “received appropriate training and have the relevant information
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Winston & Strawn LLP (including the BCR) always available[.]” It also provides that the Processor: (1) must “provide for data protection audits and/or external supervision by internal or external accredited auditors on a regular basis, with direct reporting to the privacy officer/ function”; (2) create a specific point of contact for the data subject; and (3) respect the Controller’s instructions regarding the data processing.
ETHICS States continue to focus on establishing guidelines for the ethical use of social media. In Opinion 2013-189, the Ethics Committee of the Oregon State Bar Association addressed whether a lawyer, or someone working for the lawyer, could request access to non-public social media content. In discussing the issue, the Ethics Committee noted that it had previously held that lawyers could access “publicly available information on a person’s social networking website.” With respect to accessing the nonpublic portions of such websites, the Ethics Committee stated that “[a]bsent actual knowledge that the person is represented by counsel, a direct request for access to the person’s non-public personal information is permissible.” However, the Ethics Committee noted that Oregon RPC 4.3 requires that the lawyer “shall not state or imply that the lawyer is disinterested,” and that if the lawyer knows, or reasonably should know that where the unrepresented person misunderstands the lawyer’s role in the matter, “the lawyer shall make reasonable efforts to correct the misunderstanding.”
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The Ethics Committee noted that a “simple request to access nonpublic information does not imply that Lawyer is ‘disinterested’ in the pending legal matter. On the contrary, it suggests that Lawyer is interested in the person’s social networking information,” albeit for an unidentified purpose. In addition, the Ethics Committee opined that the failure of the account holder to inquire further as to the identity of the lawyer is “not the equivalent of misunderstanding Lawyer’s role in the matter.” Opinion 2013-189 makes it clear that lawyers, and individuals working for such lawyers, “may not engage in subterfuge designed to shield Lawyer’s identity from the person when making the request” for access to the non-public information. The Ethics Committee notes that there is a narrow exception that allows a lawyer to “supervise lawful covert activity in the investigation of violations of civil or criminal law or constitutional rights” if the lawyer’s conduct is otherwise in compliance with Oregon’s Rules of Professional Conduct. The exception is limited to instances where the lawyer “in good faith believes that there is a reasonable possibility that unlawful activity has taken place, is taking place or will take place in the foreseeable future.”
PRESERVATION AND SPOLIATION On August 15, 2013, Judge Shira S. Scheindlin issued a decision in Sekisui American Corp. v. Hart, 2013 WL 4116322 (S.D.N.Y. Aug. 15, 2013) in which she addressed the state of mind necessary for the imposition of spoliation sanctions. In the case before
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Winston & Strawn LLP her, the defendants had requested that the plaintiffs be sanctioned for the destruction of certain ESI, including the e-mail account of one of the defendants. Although in an earlier decision, Sekisui American Corp. v Hart, 2013 WL 2951924 (S.D.N.Y. June 10, 2013) Magistrate Judge Frank Maas declined to impose any sanctions on the plaintiffs, Judge Scheindlin reversed Magistrate Maas’ decision and imposed an adverse inference instruction against the plaintiffs. In so doing, Judge Scheindlin noted that the plaintiffs had deleted the defendant’s e-mail account “five months after the [defendants] had received the Notice of Claim,” and had waited until 15 months after sending the Notice of Claim to issue a litigation hold. In the interim, the defendant’s e-mail account was “permanently deleted” by the plaintiffs’ IT vendor. Plaintiffs proffered a good faith explanation for this deletion, i.e., plaintiffs wanted to free up space on the server. Subsequently, the plaintiffs also deleted the e-mail account of another former employee for the stated reason that it was “removing emails that were unnecessary for the continued operation of [the plaintiffs’] business.” In deciding to impose an adverse inference instruction, Judge Scheindlin noted that in the Second Circuit the party seeking an adverse inference instruction must prove: (1) the party in control of the data had an obligation to preserve it; (2) the records were destroyed with a culpable state of mind; and (3) the destroyed evidence was relevant to the moving party’s claim or defense so that the fact finder
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could find that it supported such a claim or defense. For Judge Scheindlin, the case turned on whether or not the plaintiffs had the requisite state of mind when they deleted the ESI of the defendant and the other employee. In considering this issue, Judge Scheindlin noted that the former employee who ordered the deletion of the defendant’s e-mail account was “very certain” the ESI should be destroyed and “demanded the destruction despite the fact that the [vendor] recommended against such action.” The fact that the plaintiffs offered a good faith explanation for the destruction did not change Judge Scheindlin’s conclusion that the ESI was deleted willfully. Having found that the plaintiffs willfully deleted ESI, Judge Scheindlin held that “once willfulness is established, no burden is imposed on the innocent party to point to now-destroyed evidence” to demonstrate prejudice and the risk that the destroyed information would have been detrimental to the spoliating party “should fall on the party responsible for its loss.” Editor’s Note: In addition to deciding the case at hand, Judge Scheindlin made it clear that she is not in favor of the proposed amendments to Federal Rules’ limitation on imposing sanctions to situations involving willful and/or bad faith destruction of ESI, as she believes this “creates perverse incentives and encourages sloppy behavior.” She also stated that she does not believe that the burden of proving prejudice should fall on the innocent party where the spoliation was done willfully or in bad faith.
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Winston & Strawn LLP In Phillip M. Adams & Associates, LLC v. Dell Computer Corp., 2013 WL 1092719 (Fed. Cir. Mar. 18, 2013), the Federal Circuit required that a spoliating party act in bad faith in order for an adverse inference instruction to be warranted. The Federal Circuit reversed the trial court’s imposition of an adverse inference instruction, noting that “an adverse inference sanction in particular must be predicated on the bad faith of the party destroying the records.” The Federal Circuit held that “[t]he district court committed legal error by imposing an adverse inference instruction absent a finding of bad faith.”
“the crucial element in determining whether an adverse inference instruction is appropriate is not that the evidence was destroyed, but rather the reason for the destruction. ”
Other courts have focused on the reason for the destruction of ESI in determining whether to impose an adverse inference instruction. For example, in Bracey v. Grondin, 712 F.3d 1012 (7th Cir. Mar. 15, 2013), the Seventh Circuit affirmed the district court’s denial of spoliation sanctions for failing to preserve video evidence where none of the defendants participated in or had knowledge of the failure to preserve. At issue were prison security cameras that overwrote their content every three days. The plaintiff claimed that the defendants spoliated evidence when they failed to preserve the video footage, which may have captured activity at issue in the case. The district court denied the plaintiff’s request for an adverse inference instruction, finding that “none of the individual defendants were involved in the decision not to preserve the video.” The Seventh Circuit noted that the crucial element in determining 9
whether an adverse inference instruction is appropriate is not that the evidence was destroyed, but rather the reason for the destruction. The Seventh Circuit also held that simply establishing the defendants’ duty to preserve is not enough; the moving party also must show destruction in bad faith, which requires finding that the destruction was done for the purpose of hiding adverse information. The plaintiff did not assert that any prison official actually viewed the video in question, or that the officials knew that the tapes “potentially contained adverse information.” Without such allegations, the plaintiff could not meet his burden of demonstrating that the defendants destroyed the video in bad faith. In Gerlich v. U.S. Dept. of Justice, 711 F.3d 161 (D.C. Cir. Mar. 29, 2013), the D.C. Circuit overturned the district court’s denial of a spoliation sanction for the destruction of hiring records allegedly containing annotations and internet printouts concerning the plaintiffs’ political affiliations. The D.C. Circuit held that an adverse inference instruction was appropriate because the defendant’s employees responsible for the hiring records “were on notice” that an investigation and future litigation were reasonably foreseeable at the time the employees destroyed those records. The Court then turned to the question of whether the destroyed records were relevant to the appellants’ claims, finding that the lawyers working for the defendant, “could hardly not have known, given the egregious and notorious factual circumstances,” that the spoliated evidence “would
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Winston & Strawn LLP be relevant” to the investigation into the defendant’s hiring practices. Moreover, the Court found that the facts and circumstances of the case were sufficient to allow the Court to support “a reasonable inference that the destroyed records could have supported” the plaintiffs’ claims. Importantly, (1) the defendant’s employee was known to conduct inquiries into applicants’ political and ideological affiliations, (2) a search of the defendant’s employee’s computer showed that she had conducted similar searches on two of the plaintiffs, and (3) references were made to certain political and ideological affiliations on the plaintiffs’ applications.
“…a court examining a spoliation claim must also determine whether the destruction of (or failure to preserve) evidence results in prejudice to the opposing party. ”
The D.C. Circuit instructed the district court on remand to “construe the evidence in light of this negative spoliation inference, which would permit a reasonable trier of fact to find that the [plaintiffs] were harmed by the creation and use of the destroyed records.” In Oracle USA Inc. v. Rimini Street Inc., No. 2:10-cv-00106-LRH-PAL (D. Nev. Mar. 29, 2013), Magistrate Judge Peggy Leen had to decide whether or not defendants failed to preserve relevant data in the form of a “software library.” In January 2010, after litigation was filed, defendants deleted an internal software library that the plaintiffs claimed contained unauthorized, highly relevant digital copies of the plaintiffs’ copyrighted works. The defendants stated that although they anticipated potential litigation, they deleted the software library because the defendants wanted to save storage space, and essentially deleted an obsolete folder of software, the
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contents of which were recorded prior to the deletion. There was no question that the evidence had been spoliated, and the Court held that the deletion of the software library was “willful, in the sense that it was deleted well after [the defendants were] on notice of potential litigation[.]” Magistrate Judge Leen noted that a court examining a spoliation claim must also determine whether the destruction of (or failure to preserve) evidence results in prejudice to the opposing party. Here, Magistrate Judge Leen held that the plaintiffs were prejudiced by the spoliation, which included the deletion of relevant meta-data that would offer evidence about the use of the software library at issue. In terms of the appropriate sanction for the defendants’ conduct, the Court noted that the defendants had offset some of the prejudice because they offered to stipulate that the deleted software library included a complete copy of the plaintiffs’ copyrighted software. The Court found that this stipulation would, in effect, be a greater remedy than the rebuttable presumption of the adverse inference sanction that the plaintiffs had requested. Although Magistrate Judge Leen imposed an adverse inference instruction relating to the defendants’ breach of their duty to preserve the software library, she denied the defendants’ request for a “rebuttable presumption” that the defendants used materials from the deleted software library in every instance listed in the defendants’ responses to the plaintiffs’ interrogatories.
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Winston & Strawn LLP In Kirgan v. FCA LLC, 2013 WL 1500708 (C.D. Ill. Apr. 10, 2013), Magistrate Judge John A. Gorman decided that the appropriate sanction for the defendant’s spoliation of one of its employee’s electronic calendars was to impose an adverse inference instruction, preclude the defendant from using evidence that may have been contained in such calendar, and order the defendant to pay double the plaintiff’s attorneys’ fees in preparing the motion for sanctions to “compensate Plaintiff for the effort that was made in her counsel’s attempts to obtain the [defendants’] calendars.”
“…while there “may have been some shortcomings in [the plaintiff’s] document retention protocol, it was, at most, negligent in its effort to preserve evidence…”
The Court noted that the defendant’s employee continued his regular practice of deleting his electronic calendar entries after the date had passed, even though the plaintiff had sent a notice that an EEOC charge would be filed, and, after the case was filed, requested the calendar in written discovery. Although the employee knew in 2011 that the plaintiff was seeking the calendars, he continued his regular practice through March 1, 2013. Magistrate Judge Gorman noted that any determination of whether sanctions are appropriate under the specific circumstances presented requires an analysis of three factors: (1) whether there was a breach of the duty to preserve; (2) the spoliating party’s level of intent; and (3) the prejudice that results from the breach. The Court found that there was no question that the duty to preserve had been breached and that the defendant’s COO “repeatedly lied about the calendars, all the while deleting entries therein,” which created the “clear impression that he 11
had deliberately decided to thwart Plaintiff’s efforts to obtain them.” Magistrate Judge Gorman found that the defendant would be directly liable (instead of being vicariously liable) if he did not inform the COO of the need to cease routine document destruction practices or failed to supervise the document retention. Likewise, in Research Foundation of State University of New York v. Nektar Therapeutics, 2013 WL 2145652 (N.D.N.Y. May 15, 2013), the defendant requested that the Court impose an adverse inference instruction and monetary sanctions on the plaintiff because the plaintiff allegedly failed “to timely issue written litigationhold notices, preserve all relevant backup-tape data and suspend its auto-delete practices.” In determining that sanctions were inappropriate, Chief Judge Gary L. Williams noted that the plaintiff has had, since 2001, a “comprehensive standard document preservation policy, issued both verbal and written litigation hold notices, preserved backup tapes of emails before commencement, and confirmed that no custodian had deleted any documents related to” the subject matter of the action. Judge Williams held that while there “may have been some shortcomings in [the plaintiff’s] document retention protocol, it was, at most, negligent in its effort to preserve evidence relating to this litigation.” In addition, the Court found that the defendant had failed to “adduce evidence suggesting the existence, let alone destruction, of relevant documents.” Judge Williams specifically noted that the defendant admitted that it “would be ‘impossible’ for it ‘to prove’ what [the plaintiff] may have destroyed.”
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Winston & Strawn LLP Similarly, in Pillay v. Millard Refrigerated Svcs., Inc., 2013 WL 2251727 (N.D. Ill. May 22, 2013), Judge Joan Humphrey Lekfow was asked to determine whether the defendant’s failure to suspend the automatic deletion of certain data required the imposition of an adverse inference instruction. In agreeing to impose such an instruction, Judge Lekfow noted that the plaintiffs had sent “numerous pieces of correspondence alerting [the defendant] of the need to preserve this evidence,” and that the plaintiffs had filed EEOC charges in defense of which the defendant relied on the information that was subsequently automatically deleted.
“…destruction of relevant evidence, by itself, does not warrant an adverse inference instruction,…”
The Court noted that the “destruction of relevant evidence, by itself, does not warrant an adverse inference instruction,” and that in order for such an instruction to be appropriate the moving party has to demonstrate that the defendant “acted in bad faith, which is akin to conduct that is intentional or reckless.” Judge Lekfow analyzed the surrounding circumstances and found that the defendant made no effort to suspend the automatic deletion of information after being put on notice that such information should be preserved. She also found that the plaintiffs were prejudiced by loss of the information because they could not challenge the defendant’s professed reason for terminating one of the plaintiffs. In Gatto v. United Air Lines, Inc., 2013 WL 1285285 (D.N.J. Mar. 25, 2013), Magistrate Judge Steven C. Mannion imposed an adverse inference instruction at trial against the plaintiff for failing to preserve his Facebook account. The plaintiff was allegedly 12
injured while unloading baggage at John F. Kennedy Airport in New York City. The plaintiff claimed to have suffered a number of injuries, including a torn rotator cuff and knee and back injuries, which he claimed “rendered him permanently disabled.” The defendants sought discovery of the plaintiff’s social media accounts and online business activities. Although the plaintiff provided the defendants with authorization to access much of this information, he did not initially provide access to his Facebook account. The plaintiff ultimately provided the requisite authorizations to defendant’s counsel, who then accessed the plaintiff’s Facebook account and printed out portions of the plaintiff’s Facebook page. Facebook subsequently informed the plaintiff that his account had been accessed from an IP address that was unknown to the plaintiff. The plaintiff then deactivated his Facebook account, and the account was deleted by Facebook after 14 days had passed. Claiming that the printed-out portions of the plaintiff’s Facebook account showed him engaged in physical and social activities inconsistent with his claimed injuries, the defendants brought a motion for spoliation sanctions, requesting the imposition of an adverse inference instruction and attorneys’ fees. Magistrate Judge Mannion noted that in order to issue an adverse inference instruction, the Court needed to evaluate four factors: (1) that the evidence was within the plaintiff’s control; (2) that the plaintiff suppressed or withheld the evidence; (3) that the destroyed evidence was relevant to claims or defenses in the
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Winston & Strawn LLP case; and (4) that the plaintiff should have reasonably foreseen that the evidence would be discoverable. The Court found that the first, third, and fourth factors were clearly present. With respect to the second factor, Magistrate Judge Mannion rejected the plaintiff’s arguments that he reasonably deactivated his account because of his prior experience with it being hacked. He also noted that “the spoliation inference serves a remedial function, leveling the playing field after a party has destroyed or withheld relevant evidence,” and that with regard to actual suppression, “so long as the evidence is relevant, the ‘offending party’s culpability is largely irrelevant.’” As such, the Court held that the plaintiff’s intentional deactivation of his Facebook account and his subsequent failure to reactivate it effectively caused the account to be permanently deleted, and that the defendants had been prejudiced as a result, justifying the imposition of the adverse inference instruction. Magistrate Judge Mannion denied the request for attorney’s fees, noting that the plaintiff’s destruction of evidence “does not appear to be motivated by fraudulent purposes or diversionary tactics,” and that there would not be any unnecessary delay.
PREDICTIVE CODING Courts continue to address whether and how predictive coding can be used in a variety of different situations. For example, Judge Steven L. Perk, in Fosamax/Alendronate Sodium Drug Cases, No. JCCP 4644 (Orange Co. Cal. Sup. Ct. Apr. 18, 2013), had to decide whether or not to order a 13
party to redo its search methodology. The defendant took documents it previously produced in other Fosamaxrelated product liability litigation cases and produced them in response to the plaintiffs’ discovery requests. The defendant did not use predictive coding in the other Fosamax-related cases. The plaintiffs demanded that the defendant recollect documents, use predictive coding, and produce responsive documents in native format. In denying the plaintiffs’ request, Judge Perk stated that the defendant demonstrated to the Court that its use of search terms and its production of responsive documents in TIFF format in the other Fosamax-related product liability cases met the standard of a reasonable search and diligent inquiry in California. In addition, plaintiffs could not show that the likely benefit received from defendant’s use of predictive coding and production in native format outweighed the burden on defendant. Other courts have dealt with the extent to which the party desiring to use predictive coding must allow the opposing party to participate in designing the predictive coding methodology. In Gordon v. Kaleida Health, 2013 WL 2250579 (W.D.N.Y. May 21, 2013), Magistrate Judge Leslie G. Foschio was faced with a motion to compel the defendants to “engage in meaningful meet and confer discussions regarding an ESI protocol.” The defendants had objected to the participation of the plaintiffs’ ESI consultant regarding the use of predictive coding and establishing a protocol. The Court noted that the plaintiffs argued, based on Magistrate
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Winston & Strawn LLP Judge Peck’s decision in DaSilva Moore, that “where a party intends to use predictive coding to assist in the review and production of ESI, it is necessary that the parties negotiate a protocol to guide the use of predictive coding software[.]”
“…there must be a threshold showing that the requested information is reasonably calculated to lead to the discovery of admissible evidence.…”
Magistrate Judge Foschino did not have to compel the defendants to agree to meet and confer because the defendants only objected to the inclusion of the plaintiffs’ ESI expert in those discussions, not to the concept of a meet and confer regarding predictive coding. The plaintiffs’ ESI expert was the subject of a disqualification motion, as it had previously performed work for the defendants relating to the case at hand. However, the Court noted that the defendants had argued that “courts do not order parties in ESI discovery disputes to agree to specific protocols … based on the general rule that ESI production is within the ‘sound discretion’ of the producing party.” Going a step further, in EOHRB, Inc. v. HOA Holdings LLC, 2013 WL 1960621 (Del. Ch. May 6, 2013), Vice Chancellor Laster reversed his earlier order requiring the parties to “retain a single discovery vendor” and to “conduct document review with the assistance of predictive coding.” In coming to this decision, the Court noted that the parties had agreed that “based on the low volume of relevant documents expected to be produced in discovery by [the plaintiffs], the cost of predictive coding assistance would likely be outweighed by any practical benefit” of using predictive coding. Vice Chancellor Laster also noted that the parties had agreed that they did 14
not need to use the same discovery review platform. Editor’s Note: As these cases indicate, there is no consensus on when and/or how predictive coding should be used. Parties considering using predictive coding should consider, as the parties did in EOHRB Inc., whether the cost of using predictive coding outweighs its benefits, and the extent to which a party is willing to allow an opponent to be involved in training the predictive coding software.
SOCIAL MEDIA With the sustained growth in the use of social media, more courts have had occasion to address when and how such evidence can be obtained and how it can be introduced in a case. The Middle District of Tennessee had its first opportunity to rule on the discoverability of social media content in Potts v. Dollar Tree Stores, Inc., 2013 WL 1176504 (M.D. Tenn. Mar. 20, 2013). After reviewing holdings from other courts (the order referenced the Eastern District of Michigan and the New York Appellate Division), the Court held that “there must be a threshold showing that the requested information is reasonably calculated to lead to the discovery of admissible evidence.” This is done to make sure a requesting party is not allowed to engage in a fishing expedition of the responding party’s documents. As the defendant, who requested access to plaintiff’s private Facebook postings, could not make a threshold showing that these public Facebook postings were relevant to the claims and defenses at issue, it was denied access to the plaintiff’s private Facebook content.
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Winston & Strawn LLP In Kennedy v. Contract Pharmacal Corp., 2013 WL 1966219 (E.D.N.Y. May 13, 2013), Magistrate Judge E. Thomas Boyle rejected defendants’ motion to compel documents relating to social media. The defendants had requested the production of “(1) ‘[a]ll documents … regarding Plaintiff’s utilization of social networking sites,’” “(2) ‘[a] ll documents … regarding Plaintiff’s expression of an emotional feeling while utilizing a social networking site,’” and “(3) ‘[a]ll documents … regarding Plaintiff’s employment with Defendants while utilizing a social networking site ….’” Magistrate Judge Boyle denied defendants’ motion, finding that their requests were “vague, overly broad and unduly burdensome” as there was no specificity to the requests and “no effort to limit these requests to any relevant act alleged in this action.” Similarly, in Salvato v. Miley, 2013 WL 2712206 (M.D. Fla. June 11, 2013), Magistrate Judge Philip R. Lammens denied the plaintiff’s motion to compel the defendant to respond to certain interrogatories and requests for production seeking broad access to the defendant’s social media accounts. The plaintiff had requested that the defendant: (1) identify the social media accounts used by the defendant; (2) provide the user name associated with the profile and/or social media account; and (3) identify the email address associated with the social media account, the dates the defendant maintained the account, and/or whether the account was still active. The plaintiff stated he wanted this information because the defendant may have made electronic communications about the incident at issue in the case. 15
Magistrate Judge Lammens denied the plaintiff’s motion, noting that the “party seeking discovery has the threshold burden of showing that the requested discovery is relevant[,]” and that the plaintiff had not met his burden in the case at hand and the plaintiff’s “broadly drafted discovery requests” were more in line with a fishing expedition and thus inappropriate. However, in Giacchetto v. PatchogueMedford Union Free School District, 2013 WL 2897054 (E.D.N.Y. May 6, 2013), Magistrate Judge A. Kathleen Tomlinson disagreed with the approach many courts have taken in determining if private social media content is discoverable in cases involving physical and/or emotional damages. Magistrate Judge Tomlinson held that requiring the requesting party to make an evidentiary showing that the plaintiff’s social media profile contains information that undermines the plaintiff’s claims before allowing a defendant access to the private portions of the plaintiff’s social media profile “can lead to results that are both too broad and too narrow.” Magistrate Judge Tomlinson noted that although a plaintiff should not be required to turn over the content of the private section of his or her social media profile simply because the public content undermines the plaintiff’s claims, the plaintiff “should be required to review the private section and produce any relevant information.” The Court noted that there is no requirement under the Federal Rules of Civil Procedure that a party “prove the existence of relevant material before requesting it.”
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Winston & Strawn LLP In conducting a traditional relevancy analysis, Magistrate Judge Tomlinson noted there is a “distinction between the relevance of social networking information to claims for physical damages and claims for emotional damages.” Postings regarding a person’s physical activity can directly dispute that person’s claims of physical damages. However, the Court noted that “the relationship of routine expressions of mood to a claim for emotional distress damages is much more tenuous, and “routine status updates and/or communications on social networking websites” are not automatically relevant to claims for emotional damage.
there is a “distinction between the relevance of social networking information to claims for physical damages and claims for emotional damages.”
As such, Magistrate Judge Tomlinson required the plaintiff to “produce any specific references to the emotional distress she claims she suffered or treatment she received in connection with the incidents underlying her Amended Complaint,” as well as any “postings on social networking websites that refer to an alternative potential stressor.” With respect to the plaintiff’s claims for physical damages, the Court required the plaintiff to produce social media content “that reflect physical capabilities inconsistent with a plaintiff’s claimed injury.” Courts not only have struggled with whether and how to allow parties to obtain access to the social media accounts of opposing parties, but they also have struggled with whether and under what circumstances a judge may use social media. In Youkers v. State, 2013 WL 2077196 (Tex. App. Dallas May 15, 2013), the Texas Court of Appeals was asked to determine whether a trial judge’s use of social media biased 16
his sentencing of a defendant. The defendant filed a motion for a new trial due to “‘an undisclosed friendship’ between the judge and the father of [defendant’s] girlfriend, improper communications between the two, and influence over the judge by the father.” The Court held that “[m]erely designating someone as a ‘friend’ on Facebook ‘does not show the degree or intensity of a judge’s relationship with a person.’” It also noted that “[a]llowing judges to use Facebook and other social media is consistent with the premise that judges do not ‘forfeit [their] right to associate with [their] friends and acquaintances nor are [they] condemned to live the life of a hermit.’” In the case at hand, the Court found that the trial judge: (1) had “friended” the victim’s father when they were both running for office at the same time; (2) received one communication from the victim’s father asking for leniency for the defendant; and (3) had stopped reading the message when he learned it was from the victim’s father, disclosed the communication to the parties, placed the communication in the clerk’s file, and informed the father that there would be no further ex parte communications. Under such circumstances, the Court held that the trial judge “acted in full compliance with the Texas Committee on Judicial Ethics’ recommended procedure for treatment of ex parte communications,” and that “a reasonable person in possession of all the facts would conclude that the contact between the judge and the father did not cause the judge to abandon his judicial role of impartiality.”
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SEARCH, RETRIEVAL, AND PRODUCTION
“…the defendant was required to “identify in table format the search terms used, the dates on which it performed the searches, any individual custodians or central sources subject to each set of terms used in the searches, and the number of responsive documents.”
Many discovery disputes, and resulting motions to compel, stem from a requesting party’s belief that the responding party has not produced all responsive documents, either because it did not conduct a reasonable search for relevant documents or unreasonably limited the scope of relevancy. These discovery issues, and resulting motions to compel, faced Magistrate Judge Paul S. Grewal in In re iPhone/iPad Application Consumer Privacy Litig., 2013 WL 843833 (N.D. Cal. Mar. 6, 2013). Here, the Court granted the plaintiffs’ initial motion to compel production of documents because the defendant unreasonably limited the scope of relevancy in its productions to plaintiffs. At that time, the Court made final rulings on the scope of relevance of the plaintiffs’ document requests, and on November 21, 2012, ordered that the defendant make productions in accordance with that scope. Subsequently, the plaintiffs filed another motion to compel production, alleging that the defendant failed to produce materials covered in the Court’s November 21 order. They also argued that the defendant failed to produce documents in response to two new discovery requests. Magistrate Judge Grewal first noted that the plaintiffs demonstrated that the defendant failed to produce all relevant records. The Court found it particularly persuasive that the defendant attached to its summary judgment motion certain documents that were responsive to the Court’s November 21 order, but that had not been produced in discovery. In 17
addition, after the second motion to compel was filed, the defendant’s counsel admitted to the Court that there were other responsive documents that needed to be produced. Magistrate Judge Grewal could not understand why it took three months from the November 21 order, and another motion to compel, for the defendant to start ascertaining whether or not it produced all responsive documents. Finally, the defendant had made representations to the Court, prior to the November 21 order, that it had conducted a thorough document collection and that there were no more relevant documents to be produced, which turned out to be inaccurate. Based upon the defendant’s conduct, Magistrate Judge Grewal stated that he could not rely on the defendant’s current representation that it would produce all responsive documents. As a result, he ordered the defendant to file with the Court (within two days), “a detailed account of the discovery process it has used in this case.” Specifically, the defendant was required to “identify in table format the search terms used, the dates on which it performed the searches, any individual custodians or central sources subject to each set of terms used in the searches, and the number of responsive documents.” Magistrate Judge Grewal also required the defendant’s senior litigation manager to file a detailed declaration explaining the defendant’s identification, search, and collection methodologies. The Court postponed deciding the plaintiffs’ motion to compel until after it had reviewed the discovery process to determine its reasonableness.
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Winston & Strawn LLP Like In re iPhone/iPad above, in U.S. v. Solvay S.A., 2013 WL 820498 (S.D. Tex. Mar. 5, 2013), Judge Gray H. Miller addressed the proper scope of discovery. During discovery, the defendant sought a 26(c) protective order to protect it from what it claimed were unduly burdensome discovery and preservation demands made by the relators. Specifically, the defendant sought to limit the relevant time period since it believed the relators’ requests pertaining to “ongoing” fraud were baseless due to a lack of reliable indicia in the relators’ complaint. The Court ultimately granted the protective order and limited the relevant time period and preservation obligation. Following Rule 26(b)(2)(C) of the Federal Rules of Civil Procedure, Judge Miller stated that reasonable limits must be placed on discovery. He noted that there were no specific and particularized allegations of fraudulent conduct made by relators in their complaint to support their broad definition of the relevant time period. In addition, the relevant time frame the defendant proposed, which the court approved, was already significantly longer than the time period about which the relators had personal knowledge. Finally, the defendant provided detailed analysis regarding its current cost to preserve, process, and review potentially relevant data, and the undue burden the relators’ relevant time period definition would cause defendant. This detailed analysis included information such as: (1) major sources of relevant data; (2) the volume of data being preserved; (3) the number of potential custodians at issue; (4) the estimated additional volume of emails that would 18
need to be preserved under relators’ relevant time period definition; (5) the cost to process emails currently being preserved; (6) the cost of processing additional emails should the relators’ time period be followed; and (7) the cost to review emails. Similarly, in Easley et al. v. U.S. Home Corp., et al., 2013 WL 1145138 (D. Nev. Mar. 18, 2013), Judge Miranda M. Du faced a motion to compel after the parties could not resolve their discovery disputes. Judge Du upheld the magistrate judge’s order denying the plaintiffs’ motion to compel and upholding the award of fees to the defendants on their motion to compel production of the tax returns of one of the plaintiffs. In the case, the plaintiffs had filed suit against the defendants for improper termination based upon race. The plaintiffs requested production of all ESI concerning events giving rise to the plaintiffs’ terminations and the defendants’ preservation efforts. Judge Du denied the plaintiffs’ motion to compel, finding they had not met their burden in proving that the defendants possessed any additional relevant emails beyond what they had already produced, or that the defendants controlled any of the unproduced texts the plaintiffs claimed they had. The plaintiffs also sought to compel production of managerial attendance records. However, the Court noted that the defendants claimed that they did not keep time records for management-level employees. As a result, the plaintiffs could not prove any additional records existed beyond those already provided by the defendant.
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Winston & Strawn LLP In yet another order addressing how discovery should be conducted, in In Re Pinnacle Engineering, Inc., 2013 WL 941820 (Tex. App. Hous. (1 Dist.) Mar. 12, 2013), the Court of Appeals for the First District of Texas directed the trial court to vacate a December 18, 2012 order (the “December order”) granting the plaintiff’s motion to compel production and threatened to issue a writ of mandamus if the trial court failed to comply. The December order allowed an unnamed forensic computer expert unrestricted access to search relators’ computers and servers, including personal computers, for documents relating to the plaintiff’s resume, his hiring, and his educational background. The Court of Appeals cited that “[p]roviding access to information by ordering examination of a party’s electronic storage device is particularly intrusive and should be generally discouraged ….”
“[p]roviding access to information by ordering examination of a party’s electronic storage device is particularly intrusive and should be generally discouraged …”
The Court, guided by controlling precedent in In re Weekley Homes, found the December order to be an abuse of discretion for several reasons: (1) the plaintiff never made any required initial showing that relators were withholding relevant materials; (2) the plaintiff only made conclusory statements and bare allegations that relators were withholding discovery; (3) the plaintiff’s requests, and the December order, did not inform the relators of the exact nature of the information sought; (4) the plaintiff never demonstrated that the proposed method for data retrieval was feasible; (5) the December order did not specifically identify the forensic expert to be used, and there was no evidence or hearing on whether or not that expert was qualified to conduct the forensic 19
work ordered; (6) the December order did not provide any guidelines or mechanisms to safeguard privileged and confidential information, and failed to take into account relators’ privacy rights; and (7) the December order did not have appropriate limits as to which computers and servers should be searched.
PRIVILEGE AND WAIVER ISSUES In Dornoch Holdings Int’l, LLC v. Conagra Foods Lamb Weston, Inc., 2013 WL 2384235 (D. Idaho May 1, 2013), Special Master Deborah A. Ferguson was asked to review the electronically stored information of a bankrupt Chilean company for privilege, and to “prepare a privilege log for the Court and Parties.” With the technical assistance of an e-Discovery vendor, the Special Master screened the ESI for privileged documents. The plaintiffs provided two lists of search terms that were then refined by the Special Master “by adding other privileged search terms, and removing ineffective ones[.]” Ultimately, the privilege filter identified approximately three 3 percent of the documents as privileged. The Special Master, working in conjunction with the e-Discovery vendor, then reviewed a statistically significant sample of the documents caught by the privilege screen to arrive at a specific threshold above which the documents are deemed to be privileged. As the plaintiffs had not been given access to the data obtained by the Special Master, they were under no obligation to substantiate any claim of privilege. Notably, to the extent that the defendants wished to challenge
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Winston & Strawn LLP documents at or above this privilege threshold, they “would be responsible for [the] cost of this further analysis.” On May 16, 2013, Special Master Ferguson issued a supplemental report that argued that the plaintiffs, who had subsequently been given access to all of the ESI collected from the bankrupt Chilean company, “have the right to assert (and the burden to establish) privilege where [p]laintiffs deem appropriate, going forward.” As such, she recommended that the Court sustain the defendants’ objection to her earlier report to the extent the objection focused on the fact that the plaintiffs had not substantiated the privilege claims as to a number of documents. Editor’s Note: It is a bit surprising that the Court allowed the Special Master to review the documents and prepare a privilege log before giving the plaintiff the right to review the documents and make whatever privilege calls were necessary. If this approach is adopted more widely, together with the use of a Rule 502(d) order, the amount of time parties spend reviewing documents for privilege and creating privilege logs will decrease significantly. The impact of Dornoch is limited by the fact that Senior District Judge Terry J. Hatter Jr. dismissed the plaintiffs’ claims with prejudice after he found that the plaintiffs “willfully deceived the Court and engaged in conduct utterly inconsistent with the orderly administration of justice.” Dornoch Holdings Int’l, LLC v. Conagra Foods Lamb Weston, Inc., 2013 WL 2384103 (D. Idaho May 24, 2013).
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RECOVERY OF e-DISCOVERY COSTS / COST SHIFTING Cost shifting is typically addressed when one party is requested to produce documents from data sources that are not reasonably accessible. However, in Juster Acquisition Co., LLC v. North Hudson Sewerage Auth., 2013 WL 541972 (D.N.J. Feb. 11, 2013), the defendant sought a protective order limiting the plaintiff’s proposed 67 search terms to locate relevant ESI, or requested that costs be shifted to the plaintiff if the defendant was required to use the plaintiff’s search terms. Magistrate Judge Hammer denied the defendant’s motion for a protective order, noting that at first blush, several of the search terms appeared to be overbroad. However, the defendant did not provide any “compelling factual basis or sufficient legal background to support its motion for a protective order.” The Court could not make burdens determinations because the defendant did not provide any information relating to the sampling of the search terms or costs associated with having to review the search term results. The Court also could not rule out any of the terms, as it believed all of them related to the nature of the dispute. In addition, the plaintiff and defendant agreed to pay for their own ESI costs. Finally, the defendant failed to comply with Federal Rule of Civil Procedure 26(c)(1), which requires the movant to confer in good faith with the opponent prior to requesting a protective order.
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Winston & Strawn LLP In regard to the defendant’s request to shift the costs, the Court cited Zubulake II, stating “[c]ost-shifting is potentially appropriate only when inaccessible data is sought.” The defendant made no claims that the data at issue was from an inaccessible source. Moreover, although not required to do so, the Court analyzed cost shifting under Zubulake’s sevenfactor test. The Court established that the Zubulake factors all either favored plaintiff or were neutral, further supporting its rejection of the defendant’s cost-shifting request. In Hallmark Cards, Inc. v. Monitor Clipper Partners, LLC, 2013 WL 1155245 (W.D. Mo. March 20, 2013), Judge Ortie Smith was asked to determine what e-Discovery costs were taxable costs of ESI pursuant 28 U.S.C. § 1920(4). Judge Smith noted that few courts of appeal have addressed this issue squarely, and that the Eighth Circuit had not yet dealt with it. Judge Smith relied on the Third Circuit’s definition of taxable ESI costs, as provided in Race Tires Am., Inc. v. Hoosier Racing Tire Corp., 674 F.3d 158, 167 (3d Cir. 2012), holding that scanning documents and converting computer data into a readable format constituted copying within the meaning of the statute, and were taxable. However, the Court held that the costs of storing ESI were not compensable costs under 28 U.S.C. § 1920(4) and thus, the plaintiffs could not recover amounts associated with these costs. Judge Smith also highlighted that the plaintiff had made it difficult for him to determine compensability of ESI costs, as the plaintiff had simply provided a stack of its e-discovery vendor’s 21
invoices to the Court and requested that those invoices be paid in full. The judge did not approve of this method of seeking compensation because the invoices were not self-explanatory and the plaintiff provided no additional information as to what services the vendor performed. Like Judge Smith in Hallmark Cards, Inc., in eBay Inc. v. Kelora Sys. LLC, 2013 WL 1402736 (N.D. Cal. April 5, 2013), Magistrate Judge Laura Beeler was asked to determine which e-Discovery costs are taxable under 28 U.S.C. 1920(4). For Magistrate Judge Beeler, the issue was what types of e-Discovery costs are costs analogous to “exemplification and the costs of making copies,” which are clearly recoverable under Section 1920(4). Following the precedent established by Plantronics Inc. v. Aliph, Inc., 2012 WL 6761576 (S.D. Cal. Oct. 23, 2012), and In re Ricoh Co. Patent Litig., 661 F.3d 1361 (Fed. Cir. 2011), Magistrate Judge Beeler held that a prevailing party can recover costs under Section 1920(4) for the following general categories of costs: scanning paper documents, Bates stamping, slip sheet preparation, blowback preparation, and OCR conversion. In addition, the Court held that the prevailing parties could also recover “certain processing costs tied to specific productions as part of the copying process, productions in agreed-to native format, and load files necessary to read information.” Moreover, the Court allowed prevailing parties to recover costs associated with making a forensic copy and other non-standard acquisition costs, because such costs were “tied to providing copies of the ‘most
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Winston & Strawn LLP responsive’ documents.” The Court did not award any costs relating to “distilling data.”
STORED COMMUNICATIONS ACT The Stored Communications Act (“SCA”) continues to weigh heavily on attempts to obtain access to information held by Internet Service Providers. For example, in Optiver Australia Pty. Ltd. & Anor. v. Tibra Trading Pty. Ltd. & Ors., 2013 WL 256771 (N.D. Cal. Jan. 23, 2013), Magistrate Judge Paul S. Grewal addressed whether the plaintiff in an Australian action could obtain discovery from Google. The Australian plaintiff moved the U.S. court for judicial assistance pursuant to 28 U.S.C. § 1782, and then issued a subpoena to Google seeking, among other things, documents “sufficient to identify the recipient(s), sender, subject, date sent, date received, date read, and date deleted of emails, email attachments, or Google Talk messages” containing certain terms that were sent or received from specified e-mail addresses during specific time periods. Magistrate Judge Grewal denied the majority of the plaintiff’s requests, finding that the SCA “prohibits any knowing disclosure by service providers of the content of electronic communications, no matter how insignificant.” The Court also noted that the SCA also bars disclosure of
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the subject line of e-mail messages, as “revealing the subject line would necessarily reveal information about the substance of the communication.” However, Magistrate Judge Grewal held that the SCA did not prohibit the plaintiff from obtaining noncontent metadata associated with the requested emails such as the names of the account holders, the date and time the email accounts were created, and the countries where the email accounts were created. Similarly, in Obodai v. Indeed, Inc., 2013 WL 1191267 (N.D. Cal. Mar. 21, 2013), Magistrate Judge Kandis A. Westmore ruled that the defendant’s subpoena to Google violated the SCA. The subpoena requested, among other things, all “Documents relating to any individual(s) who created, accessed and/or used” the e-mail address at issue. The Court held that a “plain reading of … [the] subpoena suggests that [the plaintiff is] seeking contents of e-mails and other communications that are protected by the SCA.” However, as the plaintiff represented that it was only seeking subscriber information, Magistrate Judge Westmore modified the subpoena “to only include non-content information[.]” In addition, Magistrate Judge Westmore held that the plaintiff was entitled to “obtain all IP addresses used to access” the e-mail account in question, “as well as the dates and times of such access.”
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Upcoming Speaking Events September 16, 2013
John Rosenthal, Federal Rules Committee and E-Discovery, Ninth Annual Meeting of the American College of Business Court Judges, Fairfax, VA
September 17, 2013
John Rosenthal, Corporate eDiscovery Best Practices, PLI, New York
October 15-17, 2013
John Rosenthal, 2013 EDI Leadership Summit, Santa Monica, CA
Past Publications and Events August 22, 2013
Scott Cohen, The Business of Litigation and Practice Support, ILTA, Las Vegas, NV
August 19, 2013
Scott Cohen, If I Were in Your Shoes … Strengthening Partner Relationships, ILTA, Las Vegas, NV
May 19-22, 2013
John Rosenthal, e-Discovery Best Practices and Avoiding Common Mistakes, CEIC Guidance Software 2013 – 13th Annual CEIC Conference Session
May 1, 2013
Christopher Costello, Laying the Foundations of e-Discovery Competence, Carmel Valley e-Discovery Retreat
Featured Contributors The Editors wish to thank Michael Baniak, Esq., Alan Stevens, Esq. Anna Lamut, Esq., and Marcia Bobb, Esq. for their invaluable contributions to the content of this issue.
Contact Us If you have questions about the items in this issue of eDiscovery Advantage, would like to learn more about these cases or other e-Discovery matters, or would like to be added to the mailing list, please contact one of the following:
New York Christopher C. Costello, Esq. (Executive Editor)
[email protected]
+1(212) 294-3336
Martin C. Geagan (Co-Editor)
[email protected]
+1(212) 294-4615
Scott M. Cohen (Director of eDiscovery Services)
[email protected]
+1(212) 294-3558
[email protected]
+1(202) 282-5785
[email protected]
+1(312) 558-7233
Washington D.C. John J. Rosenthal, Esq. (Chair, eDiscovery Group)
Chicago Matthew W. Poplawski, Esq. (Co-Editor)
Winston & Strawn LLP’s eDiscovery & Information Management Practice Group (the “eDiscovery Group”) brings years of “real world” experience and offers our clients and case teams the full continuum of services along the electronic discovery reference model behind our own firewall. Our services include preservation, collection, early case assessment, processing, hosting, and review. The eDiscovery Group also offers a wide variety of consulting services, including eDiscovery risk assessments, eDiscovery response programs, vendor selection, training of legal and technical staffs, data mapping, legacy retirement and records retention programs. These materials have been prepared by Winston & Strawn LLP for informational purposes only. These materials do not constitute legal advice and cannot be relied upon by any taxpayer for the purpose of avoiding penalties imposed under the Internal Revenue Code. Receipt of this information does not create an attorney-client relationship. No reproduction or redistribution without written permission of Winston & Strawn LLP. © 2013 Winston & Strawn LLP
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