From the Georgetown Law Advanced E-Discovery Institute: the E-Discovery Case Law Update

12 November 2009

The first session was a truly all-star U.S. judicial panel: Magistrate Judge John Facciola, Magistrate Judge Paul Grimm, Magistrate Judge Nan Nolan,  Magistrate Judge Andrew Peck,  District Court Judge Shira Scheindlin and Magistrate Judge David Waxe, moderated by Kenneth Withers, Director of Judicial Education and Content for The Sedona Conference.

The focus was on the five major subject areas in discovery, and the seminal cases for each (click on the case name for a link to the case):

1.  Preservation           Adams v. Dell, Inc., 2009 WL 910801 (D. Utah arch 30, 2009)

Judge Facciola (who led the discussion on the case) summed up the case by saying “with nobody in charge, with no retention policy, the company in effect screwed itself.  The company had basically empowered the employees”. 

There was a lively discussion among the judges (often arguing against each other) over how a company can “be reasonably made to understand” the duty to preserve evidence for litigation.  But, as one judge pointed out, it is not easy.  You know where you stand with the IRS:  7 years to retain records.  But the whole “in anticipation of litigation” concept … it’s tough.  And as numerous attendees said “our corporate clients tell us that they don’t run a business in anticipation of litigation.  Anybody might get sued.”

The case:

In this patent infringement case, the plaintiff sought sanctions against the defendants for failing to produce relevant emails that it alleged would prove the defendants’ piracy of the plaintiff’s patented and proprietary technology. The defendants insisted their email servers were not designed to archive emails. Rather, individual employees themselves determined which emails to retain.

The court explained that the defendants’ reliance on their employees’ judgment in deciding what to preserve was not an adequate retention policy. The court denied the defendants’ reliance on Rule 37(e) and held the spoliation was not the result of a “good faith” or “routine” removal of electronic data.

In addition, the court determined that the duty of preservation arose several years prior to this lawsuit being filed, in the context of a related class action involving the same technology as the patent.

The court reserved decision on the appropriate sanction pending the close of discovery when the degree of prejudice could be determined.

2.  Form of production    Aguilar v. Immigration  2008 WL 5062700 (S.D.N.Y.  Nov 21,  2008).

This case addresses how metadata fits into discovery and the use and application of Rule 34.  As the judges pointed out, an attorney can request a specific form of production but the best request is “give me all your ESI in the manner of which you maintain it” because it costs money to strip out.  And, as Judge Rosenbaum pointed out, it is probably best to do it all in native, really.

And, said all the judges on the panel, the Aguilar judge was doing what all judges should be doing:  providing solutions/options for the immediate case and just pontificating wide principles.

The case:

In a civil rights class action suit, the parties did not discuss the production of metadata in their Rule 26(f) conference and only mentioned it “in passing” by letter before the defendant had completed its document collection efforts. Later, the plaintiff requested that the defendants produce metadata from emails and electronic documents, and produce any spreadsheets and databases in native format.

The defendants objected on relevance and burden grounds and proposed to produce all ESI as text-searchable .pdf format documents. The court engaged in a detailed analysis of the discoverability of metadata, drawing on the rules, the case law and Principle 12 of The Sedona Principles (Second Edition), concluding that timely requests for relevant and accessible metadata are routinely granted, but courts are reluctant to order a second production if metadata was not originally requested, nor will courts order the production of metadata or production in native format unless the metadata or format are relevant or will materially aide in search for relevant information.

The court declined to order the defendant to repeat the collection of active email from employees or to attempt to capture email metadata from backup media. The court further found that the production of metadata related to word processing and PowerPoint documents would not materially enhance the plaintiffs’ ability to search the relatively small production nor was the metadata more than marginally relevant to the plaintiffs’ claims, and it would only order production if the plaintiff assumed all costs.

The court ordered the production of spreadsheets in native form, as the defendant had expressed a willingness to do so.

Finally, the court ordered that the defendant to demonstrate its hierarchical database for the plaintiff in a “training environment” using dummy data, to allow the plaintiffs’ expert to identify what metadata may be necessary to request. 

Note: there was also brief mention of Armor Screen v. Storm Catcher 2008 WL 5262707 (S.D. Fla. Dec 21, 2008) wherein the defendants moved to compel a second production of documents in a form that would not require them to purchase software to view. The court determined that there was a software program available for $1,700, and the defendants’ failure to exercise reasonable options or discuss this matter in the Rule 26(f) conference suggested a lack of effort on the part of the defense counsel. The court denied the motion to compel discovery and ordered the moving party to pay the prevailing party’s costs and attorney’s fees.

3.  Proportionality    In re Rail Freight Fuel Surcharge Antitrust Litigation 2009 U.S. Dist. LEXIS 56748 (D.D.C. July 2, 2009)

Proportionality proportionality proportionality.  The buzz word today as it was at the Masters Conference (click here) and the ACC Annual Meeting (click here).

The judges discussed how discovery sought cannot be overbroad and must be relevant to any genuinely contested issue, and that the plaintiff must demonstrated any significant, unexplained, or prejudicial failure in the defendant’s production of documents or ESI.

They also said counsel simply must “work together productively and treat each other civilly” and not use “zealous advocacy” as or combative litigation tactics.

And courts were no longer allowing parties to plead ignorance when it comes to e-discovery and technology.

The case:

In this class-action antitrust case for price-fixing of Rail Fuel Surcharges, the plaintiffs contended that discovery on both class certification and substantive issues should proceed simultaneously rather than be phased before and after a finding by the court on class certification.

The court held that since elements necessary to prove class certification and the merits of the case were inextricably linked, the plaintiffs should be able to attain discovery before class certification; however, this decision did not relieve the parties’ obligation brief the issue of class certification by the date scheduled in the case management order, and therefore the plaintiff and defendant must allocate their discovery priorities accordingly.

The judge then went on to note that “I appreciate that this is a compromise but I can only hope that like any compromise it will displease both parties equally.”

Also mentioned:  Newman v. Borders, Inc. 257 F.R.D. 1 (D.D.C. April 6, 2009) where the court noted that given the almost universal use of email in business communication, the plaintiff should have put the defendants on notice that it wanted to discuss the company’s document retention program so that the defendants could properly prepare for the deposition. Citing the Sedona Conference® Cooperation Proclamation, the court held that it is the judge’s obligation to help move the case along since the attorney’s fees most likely had already dwarfed any recovery that could be awarded.

4.  Privilege and Rule 502

Two cases provide the setting:

Rhoads Industries, Inc. v. Building Materials  2008 WL 4916026 (E.D. Pa. 2008)

In a suit by a construction company for breach of contract, the plaintiff inadvertently produced 800 electronic documents it claimed were privileged, and the defendants moved to deem the privilege claims waived. Noting that Fed. R. of Evid. 502(b) establishes a national standard for consideration of claims of privilege waiver, the court nevertheless resorted to prior Third Circuit precedent and a five-factor balancing test.

Analyzing the plaintiff’s document review procedures in detail the court found that “its efforts were, to some extent, not reasonable.” However, the court relied a factor of the Third Circuit test that does not appear in Rule 502(b) — the overall interests of justice — to find that the defendants had not met their burden of proof that privilege had been waived for documents that appeared on the privilege log but had been inadvertently produced. In a subsequent decision, 2008 U.S. Dist. LEXIS 96404 (E.D. Pa. Nov. 26, 2008), the court clarified its opinion and provided explicit instructions for the logging of email strings that contain both privileged and non-privileged messages.

Heriot v. Byrne  2009 WL 742769 (N.D. Ill. March 20, 2009)

In this action over ownership of copyrights, the plaintiffs inadvertently produced privileged documents. In ruling on the defendants’ motion to bar the plaintiffs from clawing back the documents, the court held that attorney-client privilege and work product doctrine attached to documents between defendants and their consultants. The court held that Fed. R. Evid. 502 applied to the issue of waiver of privilege by inadvertent production, and that existing Seventh Circuit precedent could be used to determine whether the production gave rise to a waiver under Rule 502(b).

Among other things, the court found that the plaintiffs had undertaken a reasonable pre-production privilege review and that there was no duty to undertake a post-production review after a vendor had mistakenly produced the documents. The court also found that the plaintiffs had acted promptly to assert their privilege claims.

5.  Search warrants       U.S. v. Comprehensive Drug Testing  473 F.3d 915 (9th Cir. 2006)

Our favorite case of the session, and a complex one indeed.

Comprehensive Drug Testing (CDT) administered testing of professional baseball players for steroid use under the collective bargaining agreement between the players and Major League Baseball. Federal law enforcement investigators had reasonable cause to suspect ten specific players of steroid use. The government secured a grand jury subpoena in the Northern District of California seeking all “drug testing records and specimens” pertaining to Major League Baseball in CDT’s possession; obtained a warrant in the Central District of California authorizing a search of CDT’s facilities in Long Beach; and obtained a warrant from the District of Nevada for the urine samples on which the drug tests had been performed, which were stored in Las Vegas.

The subpoena in the Northern District of California was quashed, and motions under Fed R. Crim. P. 41(g) for the return of records and specimens were granted. The government appealed all three district court decisions, which were upheld by an en banc panel of the Ninth Circuit. The appellate court issued detailed guidance to all judges considering subpoenas or search warrants for computer data from non-parties in a criminal proceeding.

The guidance included:

(1) magistrates should insist that the government waive reliance upon the plain view doctrine in digital evidence cases;

(2) segregation and redaction must be either done by specialized personnel or an independent third party. If the segregation is to be done by government computer personnel, it must agree in the warrant application that the computer personnel will not disclose to the investigators any information other than that which is the target of the warrant;

(3)  warrants and subpoenas must disclose the actual risks of destruction of information as well as prior efforts to seize that information in other judicial fora;

(4) the government’s search protocol must be designed to uncover only the information for which it has probable cause, and only that information may be examined by the case agents; and (5) the government must destroy or, if the recipient may lawfully possess it, return non-responsive data, keeping the issuing magistrate informed about when it has done so and what it has kept.