eDiscovery Advantage Summer 2014
Since the last edition of eDiscovery Advantage, there have been a number of developments in the e-Discovery, Information Governance, and Privacy spaces, including: ΅΅ The Federal Rules Advisory Committee approved amendments to the Federal Rules of Civil Procedure, including a revised version of Rule 37(e) which limits the ability of courts to impose death penalty sanctions and adverse inferences to cases where there is a finding that the spoliating party acted with the intent to deprive the other party of access to the information. ΅΅ The United States Supreme Court held that police may not search an individual’s cell phone without a warrant. ΅΅ The Southern District of Florida reinforced an attorney’s obligation to know the location(s) of his client’s ESI and to be involved in the identification and collection processes. ΅΅ Magistrate Judge Facciola denied the government’s request for access to the entire contents of a Mac user’s e-mail account because the government had not shown probable cause to access the entire account. ΅΅ The Texas Supreme Court clarified that an adverse inference instruction should only be available when the spoliating party acted with the intent to deprive the opposing party of the evidence and lesser sanctions are insufficient to remedy the situation. ΅΅ Wisconsin, Louisiana, Oklahoma and Tennessee joined other states that have limited employers’ ability to compel access to employees’ social media accounts. ΅΅ Courts will require more than just speculation that spoliation has occurred when asked to impose sanctions. Notably, Magistrate Judge Peggy Leen of the District of Nevada issued a decision denying a plaintiff’s request to use predictive coding in a case where the parties had already agreed upon a review protocol and the plaintiff had not provided sufficient disclosure to the opposing party and the court. The decision appears to place a higher burden of disclosure regarding the search methodology to be used on parties wishing to use predictive coding (as opposed to more traditional search methodologies). It remains to be seen how other courts will address this issue. We hope the following summaries and information will continue to aid your understanding of this important and rapidly evolving area of the law, and we look forward to helping you stay abreast of upcoming e-Discovery developments.
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Volume 4, Number 2
Contents AMENDMENTS TO THE FEDERAL RULES....... 2 FEATURED CASES...................................................4 STATE LIMITATIONS ON EMPLOYER ACCESS TO SOCIAL MEDIA.................................................. 6 SOCIAL MEDIA.........................................................7 PRESERVATION AND SPOLIATION .................. 8 PRIVILEGE................................................................. 11 EXPECTATION OF PRIVACY................................ 11 SEARCH, RETRIEVAL AND PRODUCTION.....12 INTERNATIONAL PRIVACY AND CROSS BORDER ISSUES ................................................... 13 RECOVERY OF eDISCOVERY COSTS / COST SHIFTING .................................................................15 DATA BREACH / CYBER SECURITY .................16 RECENT SPEAKING EVENTS .............................16 PAST PUBLICATIONS AND EVENTS................16 FEATURED CONTRIBUTORS ............................. 17 CONTACT US ......................................................... 17
To view the eDiscovery Group's website page with an interactive map of eDiscovery rules by state, click here.
eDiscovery Advantage Rule 16: Rule 16(b) is being amended in three ways: Editor’s Note: Magistrate Judge John Facciola of the United Stated District Court of the District of Columbia announced he intends to retire at the end of the year. Judge Facciola has been a thought leader in every sense of the word in the field of e-discovery and privacy. He was one of the leading lights in the field even prior the enactment of the 2006 amendments the Federal Rules regarding e-discovery. An observer to The Sedona Conference Working Group 1 and faculty at the Georgetown University Law Center, Judge Facciola’s thinking has been a key part of almost every aspect of how we conduct e-discovery.
AMENDMENTS TO THE FEDERAL RULES On May 29-30, 2014, the U.S. Committee on Rules of Practice and Procedure (the “Standing Committee”) approved proposed amendments to the Federal Rules of Civil Procedure addressing Rules 1, 4, 16, 26, 30, 31, 33, 34 and Rule 37(e). The next stop for the proposed amendments is the Judicial Conference, which will consider the proposed amendments at its meeting in September. It is unlikely that any proposed rule changes would go into effect until December of 2015, absent Congressional action. While they are set forth below in numerical order, the most important of these changes relate to Rule 26(b)(1) – scope of discovery and Rule 37(e) setting out an entirely new rule on sanctions. Even though the Amendments will not officially be part of the Federal Rules until the end of 2015, district courts will look to embrace these proposed rules now. See, e.g., Marino v. Usher, 2014 WL 2116114, at *7 (E.D.Pa. May 21, 2014 (recognizing the “[r]ecently proposed amendments to the Federal Rules of Civil Procedure” in particular Rule 1). The following is a summary of the draft rules changes: Rule 1: The last sentence of Rule 1 was amended to emphasize that all parties should construe and administer the rules to secure the just, speedy, and inexpensive determination of every action. This change was intended as a message to parties that they should cooperate with one another to reduce the cost of discovery, particularly those costs related to e-discovery. Rule 4: The presumptive time for serving a defendant in Rule 4(m) is reduced from 120 days to 90 days. This change, together with the shortened times for issuing a scheduling order set by amended Rule 16(b)(2), will reduce delay at the beginning of litigation.
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΅΅ A scheduling conference requires direct, simultaneous communication. The conference may now be held in person, by telephone, or by more sophisticated electronic means. ΅΅ The time to issue the scheduling order is reduced to the earlier of 90 days after any defendant has been served, or 60 days after any defendant has appeared. This changed is designed to expedite the Rule 16(b) conference and promote earlier active judicial case management. ΅΅ Items were added to the list of issues to be included in the scheduling order. The list of items that may be included in a scheduling order will now include preservation of electronically stored information, agreements regarding the effects of disclosure of information covered by attorney-client privilege or workproduct protection, and the order may direct that before filing a discovery motion the movant must request a conference with the court. Rule 26: Rule 26 is being changed in four significant ways: ΅΅ Discovery has been limited to only what is relevant to claims and defenses. Rule 26(b)(1) deletes the following language: “For good cause, the court may order discovery of any matter relevant to the subject matter involved in the action. Relevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence. All discovery is subject to the limitations imposed by Rule 26(b)(2)(C).” Most judges and practitioners mistakenly believe this language is currently within the general scope of discovery. However, in 2000, it was taken out of the general scope and such discovery was only permissible upon a showing of good cause. Because of the ongoing confusion, the Rules Committee has removed the language entirely and, thereby, limiting discovery only to what is RELEVANT TO THE CLAIMS AND DEFENSES at issue. ΅΅ Rule 26(b)(1) is revised to redefine the scope of discovery to include proportionality: The changes, shown below, move the consideration of proportionality from the protective order provision of Rule 26(b)(2)(C)(iii) to the scope of discovery in Rule 26(b)(1). This change is being made to recognize that volume of information available is so broad that pure “relevancy” cannot be the standard. This will allow litigants to argue proportionality directly in negotiating and litigating the scope of discovery.
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eDiscovery Advantage The rule will now allow parties to “obtain discovery regarding any non-privileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, [the parties relative access to relevant information,] the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit. Information within this scope of discovery need not be admissible in evidence to be discoverable.” ΅΅ The portion of present Rule 26(b)(1) that allows for the discovery of “the existence, description, nature, custody, condition, and location of any documents or other tangible things and the identity and location of persons who know of any discoverable matter” has been omitted from the proposed revision. Under the revision, that type of information would only be allowed in discovery when it is relevant and proportional to the needs of the case. ΅΅ Rule 26(d)(1)(B)(2) has been added to allow a party to deliver Rule 34 requests to another party 21 days or more after that party has been served, even though the parties have not yet had the required Rule 26(f) conference. Delivery does not count as service, however; the requests are considered to be served at the first Rule 26(f) conference. This relaxation of the discovery moratorium is designed to facilitate focused discussion during the Rule 26(f) conference. Rules 30, 31, and 33: These Rules were amended slightly to reflect the recognition of proportionality in Rule 26(b)(1). Rule 34: Several amendments are made in Rule 34, aimed at reducing the potential to impose unreasonable burdens by objections to requests to produce. ΅΅ Rule 34(b)(2)(A) allows for the early delivery of Rule 34 requests prior to parties’ Rule 26(f) conference. The time to respond to a Rule 34 request delivered before the parties’ Rule 26(f) conference is 30 days after the first Rule 26(f) conference. ΅΅ Rule 34(b)(2)(B) is amended to require that objections to Rule 34 requests be stated with specificity. The specificity of the objection ties to the new provision in Rule 34(b)(2)(C) directing that an objection must state whether any responsive materials are being withheld on the basis of that objection. The producing party does not need to provide a detailed description or log of all documents withheld, but does need to alert other parties to the fact that documents have been withheld and thereby facilitate an informed discussion of the objection. If adopted, the
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practice of stating general objections is largely over, and only those objections that are the basis of withholding specific categories of documents can be stated. ΅΅ Rule 34(b)(2)(B) is further amended to reflect the common practice of producing copies of documents or electronically stored information rather than simply permitting inspection. A production must be completed either by the time for inspection stated in the request or by a later, reasonable time specifically identified in the response. When it is necessary to make the production in stages, the response should specify the beginning and end dates of the production.
Rule 37(e): Rule 37(e) deals with the failure to preserve electronically stored information. The older Rule 37(e) approach to sanctions has been deleted in its entirety. The approach by certain circuits to permit more serious sanctions to be issued based upon a “negligence” or “gross negligence” standard has been squarely rejected. The new rule provides that sanctions/curative measures may only be awarded where “electronically stored information that should have been preserved in the anticipation or conduct of litigation is lost because a party failed to take reasonable steps to preserve it, and it cannot be restored or replaced through additional discovery.” Further, the court: (i) upon finding of prejudice to another party from loss of the information, may order measures no greater than necessary to cure the prejudice; or (ii) only upon finding that the party acted with the intent to deprive another party of the information’s use in the litigation may grant a spoliation instruction, dismiss the action or enter default judgment. This change is significant in that it, for the most part, takes the “death penalty” off the table, absent a demonstration of intent.
Editorial Note: As this rules package proceeds through the next stages, we will keep you apprised of significant development. In the meantime, you should consider where the rules are heading in prosecuting/ defending your matters, with the idea that many federal judges are likely to consider even the draft rules in the management of their current dockets.
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eDiscovery Advantage FEATURED CASES: Although courts have allowed the use of predictive coding in certain circumstances, the degree of transparency and disclosure necessary for courts to approve its use is still an open question. In Progressive Cas. Ins. Co. v. Delaney, 2014 WL 2112927 (D. Nev. May 20, 2014), Magistrate Judge Peggy A. Leen granted the defendant’s motion to compel the plaintiff to produce documents returned by the parties’ agreed-upon search protocol, rejecting the plaintiff’s unilateral decision to utilize predictive coding. The parties had agreed upon a joint ESI protocol setting forth specific search terms and the plaintiff’s agreement to (1) turn over the non-privileged “hits” produced by the search terms or (2) review the “hits” for responsiveness to the defendants’ requests and then turn over the responsive documents. Utilizing the agreed-upon search terms returned 565,000 potentially responsive documents. After beginning to review these documents, the plaintiff came to understand it would be “too time intensive and expensive” to complete the manual review. In order to reduce its overall burden, the plaintiff unilaterally decided to use predictive coding to review the remaining documents. At no time prior to the making of defendant’s motion to compel did the plaintiff seek the defendant’s consent, or the court’s permission, to use predictive coding. Only after the defendant filed its motion to compel did the plaintiff belatedly seek permission to modify the ESI protocol to allow for the use of predictive coding. Magistrate Judge Leen noted that in cases where predictive coding had been approved for use, the courts “have required an unprecedented degree of transparency and cooperation among counsel in the review and production of ESI responsive to discovery requests,” and have “required the producing party to provide the requesting party with full disclosure about the technology used, the process and the methodology[.]” Here, Magistrate Judge Leen noted that the parties had already agreed to the ESI protocol, which required the plaintiff to “apply the [agreed upon] search terms to email and general documents, review the documents retrieved, and produce them to the [d]efendants” in the designated format. She also noted that the plaintiff was “unwilling to engage in the type of cooperation and transparency that its own e-discovery consultant has so comprehensibly and persuasively explained is needed for a predictive coding protocol to be accepted by the court or opposing counsel[.]”
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Accordingly, Magistrate Judge Leen denied the plaintiff’s request to modify the ESI protocol and required that the plaintiff produce all documents returned by the initial search terms without conducting any review for responsiveness. She did, however, allow the plaintiff to run privilege filters against the results and to stagger the production of the privilege log.
Editorial Note: The Federal Rules of Civil Procedure do not require that a party wishing to use predictive coding provide any disclosure of the methodology or the types of disclosures made in Da Silva Moore and other predictive coding cases. While we consider it a best practice to discuss the planned use of predictive coding with an opposing party early in the discovery process, it is important to understand that there is no requirement to allow the opposing side to review training sets or sample non-responsive documents. However, a party wishing to use predictive coding should employ a defensible strategy to select the initial seed set, employ a subject matter expert to conduct the training, and then should sample the nonresponsive documents to ensure that the predictive coding engine is working as desired.
An attorney’s duty to communicate with his clients about the existence and location of relevant documents and information and to be familiar with his client’s information technology systems remains important. In Procaps S.A. v. Patheon Inc., 2014 WL 800468 (S.D. Fla. Feb. 28, 2014), Magistrate Judge Jonathan Goodman granted the defendant’s motion to compel a forensic analysis of the plaintiff’s electronically stored information. In so doing, Magistrate Judge Goodman noted that the plaintiff’s counsel never traveled to Colombia to meet with the plaintiff’s IT personnel or any executives to discuss “how relevant or responsive electronically stored information (ESI) would be located, and it did not retain an ESI retrieval consultant to help [the plaintiff] implement a litigation hold or to search for relevant ESI and documents.” The court also noted that the plaintiff’s counsel allowed custodians, including a key custodian, to conduct their own searches for documents “without ever seeing [the defendant’s] document request or without receiving a list of search terms from its counsel.” Based on the lack of oversight and direction from counsel, Magistrate Judge Goodman reached the “indisputable conclusion” that the plaintiff’s ESI searches were inadequate and noted there was a strong possibility that “some (and perhaps even a significant amount of) responsive discovery from [the plaintiff] has not yet been
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eDiscovery Advantage located[.]” He concluded further that the situation “mandates a comprehensive forensic search of [the plaintiff’s] ESI and other sources of relevant documents.” Accordingly, Magistrate Judge Goodman required that the plaintiff retain Kroll Ontrack to conduct a forensic analysis of the plaintiff’s ESI, including, among other sources: (1) all computers and mail-stores for specific custodians; (2) all electronic storage media used by each custodian for business purposes; (3) any file servers and databases likely to contain relevant information; and (4) all hard copy documents in the plaintiff’s possession that were likely to contain relevant information. Magistrate Judge Goodman further required Kroll Ontrack to make “a forensic image of each electronic source identified” in his order, search through those sources using an agreedupon set of search terms, and produce any hits in an agreedupon format to the plaintiff for review. Once the universe of search-term hits was collected, Magistrate Judge Goodman allowed Kroll Ontrack to de-duplicate the results using the MD5 or SHA 1 hash values. The plaintiff could then review the results for privilege and necessary redactions. Magistrate Judge Goodman required the plaintiff to “pay all of Kroll’s fees, costs and expenses that Kroll incurs in connection with performing its work under this Order.” Although he realized that the timetables imposed in his order would likely increase the overall cost of the review, Magistrate Judge Goodman stated that this was the result of the plaintiff’s “inadequate collection process” and not something that the defendant should be forced to pay for at this time. Importantly, in awarding the defendant attorneys’ fees of $24,115, Magistrate Judge Goodman noted that the plaintiff and its counsel would each be responsible for 50% of the award. In addition, he urged plaintiff’s counsel “to explore which attorneys caused, or helped cause, this discovery failure and to determine whether those attorneys (rather than the firm itself) should pay all or some of the $12,057.50 fees award.”
Editorial Note: This decision serves as a reminder that counsel is responsible for understanding clients’ IT systems, how ESI is maintained, and for overseeing the litigation hold, collection, and review processes. Abdicating this responsibility can lead to the imposition of fines and/or sanctions on both the client and the lawyer/law firm.
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In In the Matter of the Search of Information Associated with [REDACTED]@MAC.COM That Is Stored at Premises Controlled by Apple, Inc., 2014 WL 1377793 (D.D.C. Apr. 7, 2014), Magistrate Judge John M. Facciola struck down a federal warrant application due to Fourth Amendment violations. The government sought to obtain all emails from a certain account that constituted evidence of violations of certain federal statutes. The government believed its warrant to be constitutional, because it was in compliance the Department of Justice’s manual entitled Searching and Seizing Computers and Obtaining Electronic Evidence in Criminal Investigations. Magistrate Judge Facciola disagreed, stating that the “government must stop blindly relying on the language provided by the … manual. By doing so, it is only submitting unconstitutional warrant applications.” Judge Facciola had denied an earlier warrant application and directed the government on March 7, 2014 to correct two issues with the application: (1) that the government sought to seize an entire email account even though it had only established probable cause for some of the emails; and (2) that the government did not explain what should happen to the seized email that fell outside the scope of the warrant. On the subsequent application, the government did not address Magistrate Judge Facciola’s concerns. Accordingly, Magistrate Judge Facciola once again concluded that the government’s application for all emails in an account would result in illegal search and seizure because the government had not established probable cause to seize the entire email account. Magistrate Judge Facciola recommended that the government provide a search protocol to Apple, then have Apple execute the protocol and turn over any responsive documents. Although he noted that having Apple search the emails was “going a step further” than he believed any other court had done before, Magistrate Judge Facciola believed this was the only solution, especially because the government suggested no viable alternatives that limited the warrant to only those e-mails supported by probable cause. On July 3, 2014, in Brookshire Brothers, Ltd. v. Aldridge, 2014 WL 2994435 (Tex. Jul. 3, 2014) the Texas Supreme Court held that a spoliation instruction, also known as an adverse inference instruction, should only be issued in when “the trial court finds that the spoliating party acted with the specific intent of concealing discoverable evidence, and that a less severe remedy is insufficient to reduce the prejudice caused by the spoliation.” In other words, a spoliation instruction is appropriate where the spoliating party “acted with the subjective purpose of concealing or destroying discoverable evidence.” The Texas Supreme Court did provide for a 5
eDiscovery Advantage limited exception: when negligent spoliation deprives the nonspoliating party “of meaningful ability to present a claim or defense.” More generally, the Texas Supreme Court clarified that before imposing any remedy for spoliation, the trial court must find that “(1) the spoliating party had a duty to reasonably preserve evidence; and (2) the party intentionally or negligently breached that duty by failing to do so.” The Supreme Court also noted that the spoliation determination is to be made “by the trial judge, outside the presence of the jury, in order to avoid unfairly prejudicing the jury by the presentation of evidence that is unrelated to the facts underlying the lawsuit." The Supreme Court also found that although the trial court has “broad discretion to impose a remedy” that remedy “must be proportionate; that is, it must relate directly to the conduct giving rise to the sanction and may not be excessive.” Key factors impacting the trial court’s remedy decision are “the level of culpability of the spoliating party, and the degree of prejudice, if any, suffered by the nonspoliating party.” In the underlying case, the Supreme Court found that the petitioner preserved the footage from a security camera that covered the area where the respondent slipped and fell, but allowed additional footage to be automatically erased. However, the Supreme Court noted that “there is no evidence that [the petitioner] did so with the requisite intent to conceal or destroy relevant evidence or that the [respondent] was irreparably deprived of any meaningful ability to present his claim.” Accordingly, the Supreme Court found that the trial court should not have issued a spoliation instruction and that the “likelihood of harm from the erroneous instruction” was substantial and warranted a new trial.
Wisconsin’s new law provides that employers cannot request or require applicants or employees to provide access to the employees’ or applicants’ personal Internet accounts. It also prohibits any discrimination or retaliation against employees or applicants who refuse to provide this information or access. The Wisconsin statute contains several exceptions to these rules that allow an employer to: (i) obtain access to an employee device that was paid for by the employer in order to access an “account or service provided by the employer”; (ii) investigate, discipline or terminate an employee for unauthorized transfers of proprietary or confidential employer property from the company to the employee’s personal Internet account; (iii) restrict employee access to personal Internet accounts in the workplace via devices that are paid for or provided by the employer; and (iv) view, access or use any employee information that is obtainable without the employee’s private access information, such as publicly viewable social media content. Additionally, an employer who “inadvertently obtains” employee access information is not liable under the statute so long as the employer does not use the information. In Louisiana, the new law, which takes effect on August 1, 2014, similarly restricts the rights of employers to request access to social media and other online accounts of employees and job applicants, but it contains exceptions for conducting workplace investigations to comply with applicable laws and regulations, and for accounts provided for or obtained by the employer. The text of the laws for each state are available here: LA; OK; TN; WI
STATE LIMITATIONS ON EMPLOYER ACCESS TO SOCIAL MEDIA Wisconsin, Louisiana, Oklahoma and Tennessee Enact Laws Restricting Employer Access to Employee Social Media Content Four more states – Wisconsin, Louisiana, Oklahoma and Tennessee – have implemented legislation designed to limit the ability of employers to compel employees to provide access to their social media accounts. These laws fall in line with laws created by other states – including New Jersey, Illinois and California – that limit employers’ access to employee social media accounts.
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eDiscovery Advantage SOCIAL MEDIA Some courts have begun to limit the ability of an adversary to obtain access to social media posts and information. In Root v. Balfour Beatty Constr. LLC, 132 So.3d 867 (Florida Dist. Ct. Appeal, Second District Feb. 5, 2014), the Florida District Court of Appeals overturned that part of the lower court’s order that required the plaintiff to produce certain information from her Facebook account. The plaintiff alleged that the defendant was negligent in “failing to use reasonable care to keep the construction site safe for pedestrians[,]” and she sought to recover for loss of parental consortium. In deciding to limit the defendants’ access to the plaintiff’s Facebook account, the court noted that “trial courts around the country have repeatedly determined that social media evidence is discoverable,” and that “discovery of information on social networking sites simply requires applying ‘basic discovery principles in a novel context.’” Accordingly, the Florida District Court of Appeals found that the defendants had to demonstrate that the discovery they sought met the general discovery standard, i.e., that it was: (1) relevant to the case’s subject matter and (2) admissible in court or reasonably calculated to lead to admissible evidence. The court ultimately held that the requested discovery concerning the plaintiff’s past and present relationships with her children, other family members and significant others, her past and present mental health, stress complaints, use of alcohol and filing of other lawsuits “appears at this time to be irrelevant to [the plaintiff’s] claims for loss of consortium.” The court found that the fact that counsel for one of the defendants admitted that “[t]hese are all things that we would like to look under the hood, so to speak, and figure out whether that’s even a theory worth exploring,” was further evidence that the defendants were seeking to engage in an impermissible fishing expedition. Because social media content is increasingly sought as a source of relevant data, counsel must be competent in advising clients on how to appropriately preserve relevant social media content. Counsel’s failures to properly advise clients on the preservation of social media content can lead to spoliation claims. For example, in Painter v. Atwood, 2014 WL 1089694 (D. Nev. Mar. 18, 2014), Magistrate Judge Nancy J. Koppe was asked to determine what sanctions were appropriate in response to the deletion of certain comments and photos posted to the plaintiff’s Facebook account, and text messages randomly deleted by the plaintiff after the litigation began. Magistrate Judge Koppe found that the Facebook comments were deleted at a time when the plaintiff had a duty to preserve them, and she rejected the plaintiff’s attempt to © 2014 Winston & Strawn LLP
excuse the deletion of the comments in question because the plaintiff was “a 22-year old girl who would not have known better than to delete her Facebook comments.” Magistrate Judge Koppe noted that “[o]nce Plaintiff retained counsel, her counsel should have informed her of her duty to preserve evidence, and further, explained to Plaintiff the full extent of that obligation.” Magistrate Judge Koppe held that the “deletion of a Facebook comment is an intentional act, not an accident, and the Court cannot infer that Plaintiff deleted Facebook comments … after she contemplated the instant litigation, for an innocent reason.” Despite her decision regarding the deleted Facebook comments, Magistrate Judge Koppe declined to find spoliation in connection with the deleted photographs because the defendants produced copies of the photographs and examined the plaintiff about them. With respect to the deleted text messages, Magistrate Judge Koppe held that no spoliation occurred because the plaintiff was not on notice of the need to preserve the text messages at the time she deleted them. Ultimately, after reviewing the specific facts and circumstances, Magistrate Judge Koppe declined to dismiss the plaintiff’s claims, finding that doing so would be “too harsh of a sanction” because there was no significant delay resulting from the spoliation, and the availability of other sanctions meant that the defendant would not be prejudiced. Accordingly, Magistrate Judge Koppe imposed an adverse inference instruction relating to the spoliation of the Facebook comments because the plaintiff deleted them “with a culpable state of mind, and the comments were relevant to Defendants’ claim.” The dangers associated with social media extend beyond the failure to preserve relevant information. Inappropriate contact between judges and/or attorneys and litigants can also lead to problems. For example, in Chace v. Loisel, 2014 WL 258620 (Fl. Ct. App. Jan. 24, 2014), one of the parties to a marriage dissolution proceeding received an ex parte “friend” request on Facebook from the presiding trial judge. At the advice of counsel, the party ignored the request, and the judge subsequently entered a final judgment of dissolution that was unsatisfactory to the party receiving the ex parte “friend” request. After the party was unsuccessful in convincing the trial judge to recuse himself, she filed a petition for writ of prohibition to quash the trial court judge’s order. The appellate court granted the party’s motion, finding that a judge must disqualify herself if “the grounds asserted in a motion for
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eDiscovery Advantage disqualification are legally sufficient to create a well-founded fear in the mind of a party that he or she will not receive a fair trial.” The appellate court in Chace found ample reason to disqualify the trial judge. First, there was Florida legal precedent holding that disqualification could be appropriate when a judge is Facebook “friends” with an attorney, and that judge is presiding over a matter that the attorney represents a party in. The appellate court found that the “friending” by a judge of an actual party “raises far more concern than a judge’s Facebook friendship with a lawyer.” This is because “[t]he ‘friend’ request place[s] the litigant between the proverbial rock and a hard place: either engage in improper ex parte communications with the judge presiding over the case or risk offending the judge by not accepting the ‘friend’ request.” Finally, disqualification was appropriate because a judge’s attempts to engage in ex parte communications with a party creates the appearance of bias, and as such, is prohibited by the Code of Judicial Conduct. Courts and litigants should continue to address challenges to the authentication of social media evidence. For example, in Parker v. State, 85 A.3d 682 (Del. Sup. Ct. Feb. 5, 2014), the Delaware Supreme Court was asked to determine whether the judge or the jury should be the one to determine whether social media has been properly authenticated. In analyzing this question, the Delaware Supreme Court noted there exist two state court approaches for authenticating social media evidence in the United States: (1) the Maryland approach and (2) the Texas approach. The Maryland approach provides that “social media evidence may only be authenticated through the testimony of the creator, documentation of the internet history or hard drive of the purported creator’s computer, or information obtained directly from the social networking site.” The trial judge must determine if the proponent of the social media evidence met these strict requirements before the jury can hear the evidence. In contrast, the Texas approach sets a lower bar for proponents to get social media into evidence. The “proponent can authenticate social media evidence using any type of evidence so long as he or she can demonstrate to the trial judge that a jury could reasonably find that the proffered evidence is authentic.” The judge makes an initial determination of whether a reasonable juror could find the social media to be authentic, and, if so, the evidence is then provided to the jury for its evaluation.
Texas approach “better conform[ed] to the requirements of Rule 104 and Rule 901 of the Delaware Rules of Evidence, under which the jury ultimately must decide the authenticity of social media evidence.”
PRESERVATION AND SPOLIATION Despite numerous decisions setting forth the requirement that parties preserve relevant or potentially relevant evidence once they know of or reasonably anticipate litigation, courts continue to be faced with situations in which one or both of the parties did not adequately preserve relevant ESI. In Calderon v. Corporacion Puertorriquena De Salud, 2014 WL 171599 (D. Puerto Rico Jan. 16, 2014) Judge Francisco Augusto Besosa imposed an adverse inference instruction on the plaintiff as a result of his failure to preserve text messages. Judge Besosa found that the plaintiff had spoliated evidence because the plaintiff selectively preserved evidence after he had already contacted a lawyer, and plaintiff’s decision not to “forward or save the unproduced texts and photos … constitutes conscious abandonment of potentially useful evidence.” In determining that an adverse inference was an appropriate sanction, Judge Besosa noted that to obtain such relief, the moving party must “proffer evidence sufficient to show that the party who destroyed the document knew of (a) the claim (that is, the litigation or the potential for litigation), and (b) the document’s potential relevance to that claim.” Judge Besosa found that the plaintiff’s “selective retention of certain messages over the 38 messages that had been received from [a particular e-mail address] and his respective responses, indicates his belief that the records would not help his side of the case.” He also held that it was “reasonable to conclude that the mere act of [the plaintiff’s] forwarding himself some messages” the same day the plaintiff filed the complaint “reveals his understanding that those messages were relevant to a potential claim[.]” Companies must also take pains to ensure that data is not lost when a company makes changes to its IT infrastructure. In Dataflow, Inc. v. Peerless Ins. Co., 2014 WL 148685 (N.D.N.Y. Jan. 13, 2014), Judge Lawrence E. Kahn was asked to approve the report and recommendation of Magistrate Judge Peebles granting the plaintiffs’ motion for sanctions and for an adverse inference instruction.
The Delaware Superior Court agreed with the trial court’s use of the Texas approach, and upheld the admissibility of the social media evidence. The Supreme Court held that the © 2014 Winston & Strawn LLP
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eDiscovery Advantage Over the course of discovery, the plaintiffs learned that the defendant’s employees routinely communicated with each other via email about specific claims. After the defendant did not produce any internal communications about the plaintiffs’ claim, despite multiple rounds of discovery requests, the plaintiffs inquired as to the lack of emails. The defendant replied that the emails were not available due to a “system change at some point subsequent to May 19, 2010,” whereby “[e]mails not actively marked for preservation were deleted.” In upholding the Magistrate Judge’s recommendation, Judge Kahn noted that there was no doubt that emails were lost in the e-mail system change and that the plaintiffs had offered evidence that at least some of the deleted e-mails were relevant. Judge Kahn also stated that the facts that defendant had admitted to deleting e-mails and “appeared to be purposefully sluggish in admitting that any relevant emails ever existed,” suggested that “the emails may have been more generally harmful to Defendant.” A party seeking an award of sanctions needs to be able to offer more than just speculation that spoliation has occurred. In Arthrex Inc. v. Parcus Med., LLC, 2014 WL 2700802 (M.D. Fla. June 10, 2014), Judge Sheri Polster Chappell denied the plaintiffs’ motion for sanctions, in part because the “motion contains creative arguments rooted in mere speculation.” After noting that in order to be entitled to the adverse inference instruction, the plaintiffs were required to show that the “circumstances surrounding the missing evidence indicate bad faith, such as tampering with evidence,” Judge Chappell found that there were questions concerning whether certain files were deleted or just moved to other locations, and whether the old computers operated by former employees were “discarded, crashed and damaged naturally due to the lifespan of old technology rather than in anticipation of litigation.” Ultimately, Judge Chappell held that while the defendant “may have been careless or negligent in the maintenance of its records … this does not amount to bad faith.” Accordingly, Judge Chappell declined to impose sanctions against the defendant. Similarly, in U.S. Legal Support, Inc. v. Ameen Hofioni, 2014 WL 172336, (E.D. Cal. Jan. 15, 2014), Magistrate Judge Allison Claire denied the plaintiff’s motion for sanctions because the plaintiff could not offer any concrete evidence of spoliation. The individual defendants previously had agreed that they would preserve relevant data on electronic devices, including “personal digital assistants” such as iPads and smart phones. During the course of discovery, the individual defendants
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continued to use their phones, leading the plaintiff to claim that defendants violated their duty to preserve because they altered or deleted relevant data. Magistrate Judge Claire noted that the issue was “whether Defendants violated their duty to preserve and/or the [stipulated preliminary injunction] directing the Individual Defendants ‘to preserve, and not destroy, damage, or alter in any way, any documents or other evidence that are potentially relevant to Plaintiff’s claims’ when they continued to use their personal electronic devices before the devices were imaged.” Judge Claire first declined to issue sanctions under Rule 37(b)(2) because the stipulated preliminary injunction was not a “discovery order,” but rather a preliminary injunction entered into pursuant to Fed. R. Civ. P. 65, leaving her without authority to issue sanctions under Rule 37. Shen then noted that the expert declarations submitted by the plaintiff’s experts did not “shed any light on what was actually lost.” Judge Claire pointed out that “[n]either of these experts identifie[d] any actual loss of data nor provide[d] any forensic analysis of the personal electronic devices at issue.” Without any evidence of spoliation, Judge Claire denied the plaintiff’s motion as premature. Off-boarding of departing employees presents special challenges and requires coordination between the legal department, human resources, and the IT department. Failure to preserve departing employees’ ESI can lead to spoliation. For example, in In re Ethicon Inc. Pelvic Repair Sys. Prod. Liab. Lit., 2014 WL 439785 (S.D.W.Va. Feb. 4, 2014), Magistrate Judge Cheryl A. Eifert was asked to sanction a defendant for alleged spoliation of ESI of nine custodians whose ESI was deleted after they left the defendant’s employ, including the ESI of the defendant’s world-wide president and its chief medical officer. After noting that in the Fourth Circuit, “any fault—be it bad faith, willfulness, gross negligence, or ordinary negligence— is a sufficiently culpable mindset,” Magistrate Judge Eifert examined whether the spoliation of data was done in “bad faith,” or in other words constituted “advantage-seeking behavior by the party with superior access to information[.]” In concluding that the failure to preserve the ESI in question was negligent, Magistrate Judge Eifert noted it was a “disconnect between employees, managers, and the information technology department [that] likely resulted in the loss of relevant evidence.” She found: (1) departing employees were under the impression that documents they preserved for litigation purposes in their offices and/or on their computers would be retained; (2) managers believed that departing employees would inform the company in exit 9
eDiscovery Advantage interviews if they had materials that needed to be preserved; and (3) the IT department understood that it could repurpose a departing employee’s computer unless it received a specific request to remove and preserve information. Magistrate Judge Eifert held that in order to be entitled to the extreme sanctions that they were seeking (i.e., default judgment against the defendant, striking of defenses in other cases, and an adverse inference instruction), the plaintiffs had to demonstrate to the court “with some precision that unique and relevant evidence has been lost, and this loss creates an evidentiary hurdle to them in presenting the essentials of their cases.” She also noted that prejudice to the nonspoliating party “is less acute when there are sources from which at least some of the allegedly spoliated evidence can be obtained … and when the party seeking discovery can obtain extrinsic evidence of the content of at least some of the deleted information from other documents, deposition testimony, or circumstantial evidence.” Ultimately, Magistrate Judge Eifert found that the plaintiffs had not provided “any concrete evidence of prejudice to their cases, as a whole; particularly, not the extent of prejudice that would justify across-the-board sanctions[.]” She did, however, impose lesser sanctions on the defendant for the spoliation of evidence, granting the plaintiffs’ request for monetary sanctions and reasonable costs incurred in bringing the sanctions motion. Similarly, in Jackson Family Wines, Inc. v. Diageo N. Am., Inc., 2014 WL 595912 (N.D. Cal. Feb. 14, 2014), Magistrate Judge Jacqueline Scott Corley imposed both a permissive adverse inference instruction and monetary sanctions on the defendants as a result of the defendants’ “willful” and “conscious disregard of their duty to preserve” documents relevant to the plaintiff’s claims during the off-boarding process. At issue was the deletion of an image of the computer used by defendants’ Director of Consumer Planning at a time when the defendants were already embroiled in this litigation. In response to the plaintiff’s claims of spoliation, the defendants assured the court that they had “collected every single document that [the defendant] had in its custodial files” for the employee and applied “every single keyword search string that the parties previously negotiated” to those same documents. However, it subsequently came to light that the defendants received certain back-up tapes from IBM in October 2013 that held documents relating to the employee in question—several months after the close of discovery— and did not inform either the court or the plaintiff that it had received the documents until it produced some additional documents relating to the employee in December 2013.
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Magistrate Judge Corley held that, “[d]espite being on notice that [the employee’s] documents were potentially relevant, Defendants failed to intervene in their own [off-boarding] process and ensure that [the employee’s] documents were preserved.” Magistrate Judge Corley noted that the defendants did not issue a litigation hold covering the employee’s documents and did not speak to her about preserving documents, and that even though the defendants discovered the deletion of the potentially relevant documents in June 2013, it took the defendants more than six months to bring this fact to the court’s attention. In total, Magistrate Judge Corley found that the defendants’ conduct after learning of the spoliation constituted “circumstantial evidence of … bad faith.” In determining the appropriate sanction, Magistrate Judge Corley stated that courts generally consider three factors: (1) the degree of fault of the spoliating party; (2) the degree of prejudice suffered; and (3) whether there is a lesser sanction available that will avoid substantial unfairness. Having found that the defendants willfully spoliated evidence, the court held that the fact that the defendants tried to cover up their destruction of the employee’s documents “exacerbated the misconduct and tipped the scales in determining the existence of prejudice.” Ultimately, Magistrate Judge Corley imposed a permissive adverse inference instruction, which noted that the defendants failed to preserve the only copy of the employee’s hard drive, which may have contained evidence relevant to the plaintiff’s claims. She found that such an instruction “was proportional to Defendants’ spoliation and their subsequent conduct attempting to conceal the spoliation,” as the instruction relayed the court’s findings concerning spoliation and left it to the jury “to determine the significance of those facts in reaching its verdict.” In addition, Magistrate Judge Corley required that the defendants cover the plaintiff’s fees and costs associated with both the attempt to ensure the documents in question were being preserved and the motion for sanctions. Finally, in Quintero Cmty. Ass’n Inc. v. Hillcrest Bank, 2014 WL 1764791 (W.D. Mo. May 2, 2014), Chief Judge Greg Kays denied the plaintiff’s request to impose an adverse inference instruction against the defendants based on the defendants’ encryption of portable hard drives and other storage media. In the course of responding to an unrelated investigation into a defendant’s lending practices, the FDIC requested that the defendant provide all of its loan files to the FDIC. The defendant copied the files to an external hard drive. A copy of the hard drive was supplied to counsel and to certain of the defendant’s officers and directors. Additional information, including email accounts for certain of the defendant’s 10
eDiscovery Advantage employees were later copied to external drives and sent to the same outside counsel. The drives were eventually returned to the defendant’s successor, and thus were under the control of the FDIC when it became the receiver. In denying the plaintiff’s requests, Judge Kays noted that the FDIC could not access certain files because they were password encrypted. He also noted that the FDIC had contacted several vendors concerning the feasibility of decrypting the drives, only to be told it would be nearly impossible, and had unsuccessfully attempted to locate the passwords used to encrypt the drives. Although the plaintiff contended that the use of password encryption amounted to spoliation, Judge Kays noted that the plaintiff did not provide the court “with sufficient evidence that Defendants, or their attorneys, placed the passwords on the discs, let alone evidence that these actors did so to intentionally block [the plaintiff’s] access.” As the plaintiff could not show “evidence of intentional destruction indicating a desire to suppress the truth,” Judge Kays denied the request for an adverse inference instruction.
PRIVILEGE Rule 502(d) orders/stipulations should be negotiated and entered to protect against claims of waiver. In Georgia Pacific LLC v. OfficeMax Inc., 2014 WL 843498 (N.D. Cal. Feb. 28, 2014), Magistrate Judge Laurel Beeler held that any delay on the plaintiff’s part in identifying certain inadvertently produced privileged documents did not prevent the plaintiff from obtaining the return of those documents under the operative “clawback” agreement. Magistrate Judge Beeler noted that shortly after producing over 17,000 pages, the plaintiff discovered that its vendor had inadvertently produced 503 privileged documents. The plaintiff promptly requested that the defendants return the entire CD. Despite acting promptly to request the return of the privileged documents, it took the plaintiff three and a half months to provide a privilege log identifying the specific documents that were inadvertently produced. Magistrate Judge Beeler reviewed the operative clawback agreement, which provided that the “inadvertent production of any privileged, work product protected or otherwise exempted Information … shall not be deemed a waiver or impairment of any claim of privilege, work product protection or exemption ….” Accordingly, she found that the plaintiff’s original notice was prompt, and that although the plaintiff should have moved more quickly to identify the specific documents, there was no waiver of any applicable privilege.
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Editorial Note: Federal Rule 502(d) continues to be the best kept secret on how to protect clients from claims of waiver. A properly written Rule 502(d) agreement that precludes a finding of waiver following the inadvertent disclosure of privilege material is invaluable. It also allows attorneys to design and implement creative means to limit the cost of privilege review and logging, without later claims of waiver.
EXPECTATION OF PRIVACY US Supreme Court Prohibits Warrantless Searches of Cell Phones In Riley v. California, 134 S. Ct. 2473 (2014), the United States Supreme Court addressed whether an individual has a Fourth Amendment privacy right in the data saved to or accessed on a the individual’s cell phone. During a traffic stop, police found evidence that the appellant possessed concealed and loaded firearms. During the search incident to the appellant’s arrest, the arresting officer seized the appellant’s smart phone, and accessed the information on the phone. As a result, the police found evidence of other crimes. The appellant challenged whether police may, without a warrant, search digital information on a cell phone seized incident to an arrest. A unanimous Supreme Court reversed, finding that, absent exigent circumstances, police must obtain a search warrant to conduct a search of a cell phone incident to an arrest. The Supreme Court found that the search of a cell phone presents great privacy concerns for arrestees, as cell phones, especially smart phones, are in essence mini-computers that contain vast amounts of personal information. The phones present little danger to the arresting officers and the risk that any data present on the phone could be remotely deleted can be alleviated by placing the phone in a protective sleeve. The Supreme Court also noted that while searches of other physical objects collected during an arrest are completed quickly and involve a limited number of things to look through, digital information stored on cell-phones can involve massive quantities of personal information that can require a much more intrusive search. Considering that over 90% of Americans own a cell phone, and the extensive privacy interests cell phone users have in the data stored on their cell phones, the Supreme Court held that the imposition of a bright-line rule was appropriate, especially as the issue was likely to recur on a regular basis.
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eDiscovery Advantage Courts continue to define the contours of the extent to which a party has an expectation of privacy in the text messages sent to others. For example, in State v. Marcum, 319 P.3d 681 (Ok. Crim. App. 2014), the Oklahoma Court of Criminal Appeals addressed whether the defendant had a Fourth Amendment privacy interest in text messages in a codefendant’s account. The state issued a search warrant to codefendant’s service provider, which provided copies of text messages that were located in the co-defendant’s account. Both defendant and co-defendant sought to suppress the evidence on the basis of an illegal search. The lower court found that both defendants had privacy rights in the texts located in the co-defendant’s account, and that the search warrant violated those rights. The Court of Criminal Appeals reversed, finding that the defendant could not have an expectation of privacy in texts located in the co-defendant’s account. The court noted that there are circumstances when persons do have a privacy interest in their own phone accounts. It also noted that the defendant did not have any possessory interest in the co-defendant’s cell phone or his account. The Court of Criminal Appeals held that any text message sent under these circumstances was akin “to mailing a letter; there is no expectation of privacy once the letter is delivered…. It is like leaving a voice mail message, having the recipient receive and play the message, and then claiming the message is private.”
SEARCH, RETRIEVAL AND PRODUCTION Disputes as to the appropriateness of search terms are still being brought to the bench. In Swanson v. Alza Corp., 2013 WL 5538908 (N.D. Cal. Oct. 7, 2013), the parties could not agree on whether the plaintiff should be required to utilize additional Boolean search strings suggested by the defendant. The plaintiff argued that using the additional search terms would be burdensome and costly, while the defendant claimed that the additional search terms were needed because relevant documents were missing from plaintiff’s production. Magistrate Judge Kandis A. Westmore turned to the Northern District of California’s Guidelines for the Discovery of Electronically Stored Information (the “Guidelines”) to assist in resolving the dispute. She noted that the Guidelines “advocate for the proportionality set forth in Rule 26(b)(2)(C) and 26(g)(1)(B)(iii).” Accordingly, Magistrate Judge Westmore engaged in a proportionality analysis of the 11 search term strings, which involved “consider[ing] factors that ‘include the burden or expense of the proposed discovery compared to its likely benefit, and discovery requests for production of ESI should be reasonably targeted, clear, and as specific as practicable.’” © 2014 Winston & Strawn LLP
Ultimately, Magistrate Judge Westmore determined that 4 of the 11 search strings were reasonable and proportional and required the plaintiff to run searches using these search strings. The court found that the remaining 7 search strings, were not proportional and most likely would not produce any new unique relevant documents for production. Similarly, in Saliga v. Chemtura Corp., 2013 WL 6182227 (D. Conn. Nov. 25, 2013), the parties could not agree on production format and search terms, and the plaintiff requested “highly specific information” regarding defendant’s collection efforts. Regarding the format of production, the plaintiff requested production in native format, while the defendant preferred to follow its standard practice of producing documents as searchable PDFs or as TIFFs. The defendant argued that it should not have to produce documents in native format because they cannot be Bates stamped or marked “confidential.” Although Magistrate Judge Donna F. Martinez agreed with the defendant that “TIFF is the most common [production format] choice[,]” she held that the plaintiff should be able to receive data in the native format pursuant to Fed. R. Civ. P. 34(b)(1)(C). Magistrate Judge Martinez did not find defendant’s argument against production in native format compelling. Courts also continue to be asked to determine whether the scope of discovery is proportional to the case at hand. For example, in Thompson v. C&H Sugar Company, Inc., 2014 WL 595911 (N.D. Cal. Feb. 14, 2014), Magistrate Judge Nathanael M. Cousins denied the plaintiff’s motion to compel “all time sheets and payroll documents for all non-African American employees in the packaging department from 2002 to present,” but ordered that defendants produce time sheet documents from 2009 to present. With respect to payroll records, guided by Rule 26(b)(2) (C), Magistrate Judge Cousins held that the requested information was duplicative and cumulative since plaintiffs already possessed these records covering the past 10 years. The court found that the burden on defendants to produce all of these payroll records outweighed “the low likelihood of discovering [additional] relevant evidence.” In addition, Magistrate Judge Cousins limited the plaintiffs’ requested additional categories documents from the same period to documents created from 2009 to the present. In McPherson v. Canon Bus. Solutions, Inc., 2014 WL 654573 (D.N.J. Feb. 20, 2014), Chief Judge Simandle engaged in a Rule 26(b)(2)(C) proportionality analysis to resolve the parties’ discovery dispute. The plaintiff sought information about all
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eDiscovery Advantage potential class members over the past five years, while the defendant sought to limit discovery to the applicable two-year statute of limitations.
such, he found plaintiffs’ request inappropriate because it would require an “extraordinary amount of time and effort in compiling the data into a form usable for plaintiffs’ purposes.”
Judge Simandle noted that class claims could go back five years before the filing of the complaint, and thus defendant’s request to limit the time period to two years was not appropriate. However, Judge Simandle stated that “Plaintiff’s right to discovery is not plenary[,]” and that he must limit discovery sought if it is not proportional to the current needs of the case.
INTERNATIONAL PRIVACY AND CROSS BORDER ISSUES
Although he noted that the plaintiff needed to conduct discovery to determine whether there was a conspiracy to conduct background checks, Judge Simandle found that the plaintiff’s “proposal for wide-ranging discovery of [defendant’s] files … is unjustifiable by the present facts[,]” as there was a low probability that plaintiff’s requested broad discovery would lead to beneficial evidence. Accordingly, Judge Simandle struck a balance by ordering the parties to engage in a “sampling protocol” that required discovery of a ten percent random sample of potential class member data. In addition to refereeing disputes over search terms and the scope of discovery, courts also are being asked to determine whether a party can be forced to produce documents in a format that is not maintained in the ordinary course by the party. In Petrone v. Werner Enterprises, Inc., 8:11-cv-401 (D. Neb. Mar. 31, 2014) (slip opinion), for instance, Senior Judge Lyle E. Strom was asked to decide whether the defendant could be compelled to produce documents regarding changes in duty status in “unrounded intervals.” The plaintiff argued that it needed the “unrounded intervals” because it would contain the exact times of drivers’ duty status changes. In denying the plaintiff’s motion to compel this information, Judge Strom found that the defendants’ system did “not retain the exact times submitted by the drivers” in a format that associated the information with specific drivers. He noted that creating the information in the format requested by the plaintiffs would require “an immense programming effort and considerable human hours to reconcile data points for each driver across the file system and across time.” In reaching this decision, Judge Strom cited to both Federal Rule of Civil Procedure 26(b)(2)(B), which allows parties to avoid providing discovery from sources that are “not reasonably accessible because of undue burden or cost,” and Rule 34(b)(2)(E), which requires a party to produce in the format requested or in a reasonably usable format. Judge Strom noted that the plaintiffs’ request sought the “compilation of many data sources into a single file that associates the distinct data sets with individual drivers.” As
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Delaware Court Compels Discovery from French Defendant In In re Activision Blizzard, Inc. Stockholder Litig., 86 A. 3d 531 (Del. Chancery Feb. 21, 2014), Vice Chancellor J. Travis Laster granted a motion to compel production over objections based on the French blocking statute. In granting the motion, Vice Chancellor Laster noted that although the defendant in question was a société anonyme organized under the laws of France and headquartered in Paris, the defendant had previously been a plaintiff at least four times and a named defendant twice in U.S. litigations. The defendant objected to the plaintiff’s discovery requests on the grounds that the plaintiff needed first to comply with the Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters, and that the discovery requests violated both the French Blocking Statute and the French Data Protection Act. In analyzing these objections, Vice Chancellor Laster noted that neither the Delaware Supreme Court nor the Court of Chancery had ever addressed how a Delaware court should proceed when faced with a foreign blocking statute. Accordingly, Vice Chancellor Laster looked to federal case law, namely the U.S. Supreme Court’s decisions in Societe Nationale Industrielle Aerospatiale v. U.S. Dist. Ct. for S. Dist. of Iowa (“Aerospatiale”) and Societe Nationale pour Participations Industrielles, S.A. v. Rogers. Vice Chancellor Laster referred to Aerospatiale’s guidance that trial courts should exercise their discretion to evaluate the effect of the blocking statute “in light of principles of comity” and based on the interests at stake in the case at hand. He also applied the factors set forth in Sections 441 and 442 of the Restatement (Third) of Foreign Relations Law: (1) the importance of the information requested to the litigation; (2) the degree of specificity of the request(s); (3) whether the information originated in the U.S.; (4) whether there were alternative means of obtaining the information; and (5) the extent to which non-compliance with discovery would undermine U.S. interests or to which compliance would undermine the interests in the foreign country. Ultimately, Vice Chancellor Laster found: (a) the defendants were “primary defendants whose actions, decisions and related communications lie at the heart of this proceeding;” 13
eDiscovery Advantage (b) the requests were “appropriately focused and narrowly tailored for the needs of the case;” (c) it was unclear where the documents originated, but it was likely that a significant portion of the documents originated in the U.S.; (d) there really was no alternative source from which to obtain the requested data; and (e) the interests of Delaware took priority because the defendant’s employees were directors of a Delaware corporation and the defendant had submitted to Delaware law in connection with the restructuring that was the focus of the underlying action. In addition, Vice Chancellor Laster found that the defendant had disregarded the French Blocking Statute when it had been a plaintiff on four prior occasions — leading the court to conclude that the defendant was asserting the Blocking Statute here merely as a matter of convenience. With respect to the French Data Protection Act, Vice Chancellor Laster held that data protection concerns could be alleviated by the entry of a two-tiered confidentiality order and by allowing the defendant to redact certain categories of information that would be subject to the Data Protection Act. He also held that discovery could go forward both under the Hague Convention and the rules of the Court of Chancery.
Article 29 Working Party Opinion Addresses Anonymisation On April 10, 2014, the Article 29 "Data Protection Working Party issued Opinion 05/2014 on Anonymisation Techniques” (the “Opinion”). A copy of the Opinion is available here. The Opinion begins by noting that once a “data set is truly anonymised and individuals are no longer identifiable, European data protection law no longer applies.” The Working Party goes on to evaluate the strengths and weaknesses of the main anonymisation techniques, i.e., randomization and generalization, and provides recommendations for “cautious and responsible use of the techniques to build a process of anonymisation.” Ultimately, the Working Party concludes that anonymisation techniques can “provide privacy guarantees and may be used to generate efficient anonymisation processes, but only if their application is engineered appropriately. The Opinion addresses a few common risks that data controllers should consider when deciding which anonymisation techniques to use, including: (1) whether pseudonymised data to be considered the equivalent of anonymised data; (2) believing that anonymised data is completely free of regulation, as there are other regulations which govern access and/or confidentiality; and (3) the fact that the use of properly anonymised data may still give rise to a loss of privacy.
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Australia Amends Privacy Act On March 12, 2014, both Australia’s Privacy Amendment (Enhancing Privacy Protection) Act 2012 and the Privacy Regulation 2013 took effect. Australia now has a set of 13 harmonized privacy principles (the “APPs”) that regulate the handling of personal information by the government and some private sector organizations (i.e., those with annual turnover of at least $3 million (AUD). The APPs replaced the Information Privacy Principles that applied to Australian government agencies and the National Privacy Principles, which applied to private sector organizations. A number of the APPs are significantly different than the prior versions, including APP 7, which governs the use of personal information for direct marketing, and APP 8, which addresses cross-border transfers of personal information. A full discussion of the 13 APPs can be found here.
Japan Joins APEC CBPR On April 30, 2014, the Asia-Pacific Economic Cooperation (“APEC”) announced that Japan has been approved to participate in APEC’s Cross Border Privacy Rules system. The “Findings Report” of the Cross Border Privacy Rule System Joint Oversight Panel details APEC’s review of Japan’s application and is available here. Japan joins the United States and Mexico as recent additions to the APEC CBPR system. The Findings Report notes that Japan has confirmed that 15 government agencies are members of the APEC Crossborder Privacy Enforcement Arrangement, which creates a framework for regional cooperation in the enforcement of privacy laws while promoting the free flow of information between member countries. As part of the process, Japan will nominate at least one Accountability Agent, or thirdparty organizations that review and certify businesses for participation in the CBPR system, which requires businesses to develop their own internal business rules for cross-border data privacy procedures.
Russia Passes Law Requiring Personal Information to be Stored in Russia On July, 21, 2014, Russian President Vladimir Putin signed legislation that will require personal data operators to store all personal data of Russian citizens in databases physically located within Russia. The law will take effect on September 1, 2016, giving those effected by it time to understand its implications and prepare accordingly. The extent of the law’s effect on companies who currently hold personal information
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eDiscovery Advantage relating to Russian citizens outside of Russia is not clear, but it is easy to see that they will most likely explore methods of segregating that data and keeping it in Russia.
RECOVERY OF eDISCOVERY COSTS / COST SHIFTING Courts continue to be asked to determine whether it is appropriate to shift to a requesting party the cost of compliance with that party’s discovery requests. In Black & Veatch Corp. v. Aspen Ins. (UK), 2014 WL 806122 (D. Kan. Feb. 28, 2014), Magistrate Judge K. Gary Sebelius was presented with a motion for a protective order asking that the court find, among other things, that the plaintiff was not required to conduct additional searches in its document management system and did not need to search the hard drives of 60 proposed custodians. In making this request, the plaintiff argued that it had already produced over 350 GB from its document management system and that further searches were “unreasonable and excessively expensive,” but did not give a detailed estimate of the additional costs involved. Instead, the plaintiff simply estimated that the additional costs would total several hundred thousand dollars. In the alternative, the plaintiff proposed shifting the costs to the defendants by removing all privileged and work-product protected documents, and then producing an entire database after entry of a clawback order. In denying the request for the protective order concerning the additional searches across the plaintiff’s document management system, Magistrate Judge Sebelius noted that the moving party “bears the burden to establish good cause for the entry of a protective order,” and found that the plaintiff’s unsupported and conclusory statements did not satisfy its burden. He also noted that plaintiff did not “detail the monetary expenses it will face by producing the ESI requested by Defendants.” Turning to the question of searching the hard drives of 60 custodians, Magistrate Judge Sebelius noted that the court was “unable to determine the burden of searching [the defendants’] proposed list of custodians on the face of their request.” He pointed out that the plaintiff had not provided any information concerning the proposed custodians’ “job duties, their involvement with the facts at issue in this case, or whether they potentially have relevant information on their hard drives.” The plaintiff also failed to specify the amount of data each custodian maintained on his or her hard drive and “how much time and resources would be necessary to gather such information.”
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Accordingly, Magistrate Judge Sebelius ordered the parties to meet and confer on the appropriate mechanism for searching the hard drives, and noted that the plaintiff’s suggested approach of identifying whether a custodian had a folder dedicated to the reactors at issue in the case or using additional filters to return more pertinent data was “directly in line with Fed. R. Civ. P. 1.” In Cochran v. Caldera Medical, Inc., 2014 WL 1608664 (E.D. Pa. Apr. 22, 2014), the plaintiffs alleged that the defendant’s implantable surgical meshes caused the plaintiffs to suffer serious medical injuries. Although the parties attempted to agree upon a joint discovery protocol, the parties could not agree on the scope of discovery of certain data sources. Ultimately, the defendant requested that the court shift discovery costs and limit discovery. Magistrate Judge Thomas J. Rueter held that cost shifting was not appropriate. Starting from the presumption that “each party to a lawsuit must bear its own discovery costs,” Magistrate Judge Rueter noted that cost shifting between parties can only be considered in two situations: (1) if inaccessible data is being requested for production, or (2) if proportionality supports it. With respect to inaccessibility of the data, Magistrate Judge Rueter explained that parties are not excused from their discovery obligations merely because it costs money to respond to discovery, and that “cost-shifting is potentially appropriate only when inaccessible data is sought.” Magistrate Judge Rueter found that the defendant provided no evidence that the requested information was “not active online or near-line data[,]” or that “the [vast majority of the] ESI sought needs to be restored or otherwise manipulated to be usable[.]” The defendant’s blanket statement that discovery would cost over $500,000 — without any description as to what costs would be associated with searching and restoring inaccessible data — was not sufficient. In analyzing the proportionality factors set forth in Rule 26(b) (2)(C)(iii), Magistrate Judge Rueter found that the burden on the defendant did not outweigh the importance of the discovery and the seriousness of the injuries alleged by the plaintiffs. He also noted that the plaintiffs’ discovery requests were focused, and that “given the volume of the litigation against it, defendant inevitably will need to gather the information sought by plaintiffs.”
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eDiscovery Advantage DATA BREACH / CYBER SECURITY
RECENT SPEAKING EVENTS
Rhode Island Hospital Settles Massachusetts’ Breach Claims
May 20, 2014: Sheryl Falk, "The Zero Hour Phone Call – How to Respond to a Data Breach to Minimize Your Risk” (CEIC, Las Vegas)
On July 22, 2014, Suffolk Superior Court Judge Carol Ball approved a settlement agreement requiring a Rhode Island hospital to pay the Commonwealth of Massachusetts $150,000 to settle claims that the hospital failed to adequately protect the personal information of 12,000 Massachusetts residents during a 2011 data breach. The hospital was alleged to have lost 19 backup tapes containing patient’s names, social security numbers, and other personal information at some point prior to April 2012 and then delayed in informing the Massachusetts Attorney General’s Office until the fall of 2012. In addition to the monetary payment, the hospital agreed to engage an independent firm to conduct an audit of the hospital’s compliance with federal and state regulations and to take corrective measures as necessary. A copy of the Massachusetts Attorney General’s Press Release discussing the settlement is available here.
May 20, 2014: Scott Cohen, “International eDiscovery: Data Protection, Privacy & Cross-Border Issues” (CEIC, Las Vegas, NV). May 2014: John Rosenthal, "Proportionality and Cooperation in E-Discovery: Mythical Panacea or Realistic Goal?" (CEIC Las Vegas, NV). May 2014: John Rosenthal, "Virtual Legaltec - Transforming Electronic Data Discovery Integrating New Technologies to Optimize Quality and Reduce Expenses" (May 2012) May 30, 2014: Christopher Costello, “Cross Border Data Privacy and Privilege” (NorCal EDiscovery & IG Retreat, San Francisco, CA). June 10, 2014: Scott Cohen, “Predictive Coding Minus the Hype – How I Learned to Stop Worrying and Love Predictive Coding” (Equivio Webcast). June 17, 2014: Sheryl Falk, “Anatomy of a Cloud Computing Data Breach” (Houston, TX) June 24, 2014: Scott Cohen, “International E-Discovery: Data Protection, Privacy & Cross-Border Issues” (Inside Counsel Webcast). June 24, 2014: Sheryl Falk, “The Zero Hour Phone Call: Strategies to Take When Faced with a Data Breach,” (Houston Infragard Banking & Finance Special Interest Group, Houston, TX)
PAST PUBLICATIONS AND EVENTS May 21, 2014: John J. Rosenthal & Adam S. Nadelhaft, How To Navigate Social Media Hazards, Law Technology News
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eDiscovery Advantage FEATURED CONTRIBUTORS The Editors wish to thank Anna Lamut and Dan Fazio for their invaluable contribution to the content of this issue.
CONTACT US If you have questions about e-Discovery matters, Winston & Strawn’s eDiscovery Group, or would like to be added to the mailing list, please contact one of the following:
Charlotte
New York
Elizabeth T. Timkovich
[email protected], +1 (704) 350-7780
Christopher C. Costello, Esq. (Executive Editor)
[email protected], +1 (212) 294-3336
Chicago
Scott M. Cohen (Director of eDiscovery Support Services)
[email protected], +1 (212) 294-3558
Matthew W. Poplawski, Esq. (Co-Editor)
[email protected], +1 (312) 558-7233
Washington D.C.
Houston
John J. Rosenthal, Esq. (Editor-in-Chief)
[email protected], +1 (202) 282-5785
Sheryl A. Falk, Esq.
[email protected], +1 (713) 651-2615
Los Angeles/San Francisco Stephen R. Smerek, Esq.
[email protected], +1 (213) 615-1735
Winston & Strawn LLP 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.
© 2014 Winston & Strawn LLP
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