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Document Preservation: Spoliation and the “Ultimate Sanction” : E-Discovery Law Review

November 15, 2011 By Leave a Comment

The proper preservation of electronic data for discovery has become an increasing source of contention between parties. Two recent cases illustrate the importance of mindfully preserving electronic data during discovery.

In Gentex Corp. v. Sutter, No. 3:07-CV-1269, 2011 U.S. Dist. LEXIS 122831 (M.D. Pa. Oct. 24, 2011), the district court granted default judgment to the plaintiffs in a spoliation action. Gentex Corporation sued two of its former employees, Brad Sutter and Patrick Walko, for violating non-disclosure agreements. Gentex claimed that Sutter and Walko copied proprietary files when they left the company and shared them with a rival company, Armor.

In response to the suit, Armor implemented a litigation hold and instructed employees to preserve “all paper documents and electronically stored information concerning the Company’s relationship with Brad Sutter and his work while at the Company.” Armor also obtained a consulting firm to help preserve documents relevant to the litigation.

Sutter, however, began destroying evidence despite knowledge of the litigation hold. Sutter scrubbed his computer, explaining that he did so “because he was scared because Gentex had sued him.” Sutter destroyed all CD-ROMs containing Gentex information that he possessed and purposely destroyed a thumb drive after his deposition. Sutter also deleted numerous email messages when he was printing them for production to Gentex.

Similarly, Walko knowingly deleted documents relating to Gentex files on his computer. Walko claimed that various supervisors, including Sutter, instructed him, “Do what you have to do to clean up. If you need to clean up, clean up.”

via Document Preservation: Spoliation and the “Ultimate Sanction” : E-Discovery Law Review.

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California Federal Court Grants Motion to Adopt Version of Model Order on E-Discovery in Patent Cases Promulgated by Federal Circuit : Electronic Discovery Law

November 10, 2011 By Leave a Comment

DCG Sys., Inc. v. Checkpoint Techs., LLC, No. C-11-03792 PSG, 2011 WL 5244356 (N.D. Cal. Nov. 2, 2011)

In this patent case, Defendant sought an order adopting a modified version of the Model Order on E-Discovery in Patent Cases (“Model Order”) recently promulgated by a subcommittee of the Advisory Council of the Federal Circuit (available here).  Significantly, the Model Order limits the discovery of email by placing limitations on the allowable number of custodians and search terms.  According to the court, such limitations “are designed to address the imbalance of benefit and burden resulting from email production in most cases.”  The order proposed by the Defendant similarly limited the discovery of email.

Plaintiff opposed the adoption of such an order and urged the court to impose any limits on email discovery pursuant to the applicable provisions of the Federal Rules.  Plaintiff further argued that this case was unlike “those ‘actions brought by non-practicing entities where there are large imbalances in the cost and volume of discovery’” and instead involved direct competitors which “introduces issues in this case that are not contemplated by the Model Order” including, for example, “the issue of whether Checkpoint copied DCG’s products and whether DCG is entitled to an injunction.”

via California Federal Court Grants Motion to Adopt Version of Model Order on E-Discovery in Patent Cases Promulgated by Federal Circuit : Electronic Discovery Law.

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Court Denies Motion to Re-Tax Costs Related to Conversion of ESI, Including Costs for “Project Management” : Electronic Discovery Law

November 3, 2011 By Leave a Comment

Jardin v. DATAllegro, Inc., No. 08-CV-1462-IEG (WVG), 2011 WL 4835742 (S.D. Cal. Oct. 12, 2011)

Here, the court denied Plaintiff’s “motion to stay, deny, or re-tax the Clerk’s taxation of costs awarded to Defendants.”  Specifically, the court declined to deny or re-tax costs awarded for converting data to the .TIFF format or to deny or re-tax costs related to a project manager who “oversaw the process of converting data to the .TIFF format to prevent inconsistent or duplicative processing.”  Regarding the latter, the court reasoned that “[b]ecause the project manager’s duties were limited to the physical production of data, the related costs are recoverable.”

“Rule 54(d) creates a presumption in favor of awarding costs to prevailing parties, and it is incumbent upon the losing party to demonstrate why the costs should not be awarded.”  However, “the court’s discretion in awarding costs . . . is limited to awarding costs that are within the scope of 28 U.S.C. § 1920.”  28 U.S.C. § 1920 lists taxable costs, including “[f]ees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case.”

After establishing the relevant legal standard, the court first addressed plaintiff’s motion to deny costs entirely and quickly rejected plaintiff’s arguments that costs should be denied because “he litigated the action in good faith,” because “the issues in the case were close and difficult” or because “there is a significant economic disparity between Microsoft and him.”  The court then turned to the question of whether the costs should be reduced.

via Court Denies Motion to Re-Tax Costs Related to Conversion of ESI, Including Costs for “Project Management” : Electronic Discovery Law.

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Corporations and Their Lawyers Look to the Cloud for DIY E-discovery | Law.com

November 3, 2011 By Leave a Comment

When it comes to e-discovery, corporations and law firms are constantly seeking new ways to drive up efficiency while keeping their costs low. A new survey released by legal technology firm Kroll Ontrack reveals that many are looking to do-it-yourself (DIY) discovery platforms to achieve that balance.

The firm conducted the survey in September in preparation for this week’s launch of its Verve e-discovery DIY platform. Respondents included 100 of the Fortune 1000 companies and 100 medium-to-large law firms. The survey looked at the factors driving corporate decisions to outsource versus keeping e-discovery inside.

“We’ve seen the e-discovery market evolve and mature, and organizations are increasingly looking toward DIY e-discovery software platforms,” says Michele Lange, director of product line management for legal technologies at Kroll.

“Corporations and law firms are increasingly doing some of it in-house,” says Lange.

Eighty-six percent of respondents said they are conducting some aspect of e-discovery on their own. “I think this is a much higher percentage than most people that follow the market would guess,” she says.

via Corporations and Their Lawyers Look to the Cloud for DIY E-discovery.

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Court Acknowledges Calls for Caution when Applying “Proportionality Test” to Preservation, Denies Motion for Protective Order : Electronic Discovery Law

October 21, 2011 By Leave a Comment

Pippins v. KPMG LLP, No. 11 Civ. 0377 (CM)(JLC), 2011 WL 4701849 (S.D.N.Y. Oct. 7, 2011)

KPMG sought a protective order to limit the scope of its preservation obligation or to shift a portion of its preservation costs to plaintiffs.  At the time, the parties awaited ruling on plaintiffs’ Motion to Certify and KPMG was preserving more than 2,500 hard drives at a cost of more than $1,500,000.  Following the court’s analysis, the motion was denied.

In this case, the plaintiffs, potential members of a nationwide FLSA collective and/or a putative New York State class, “challenge[d] KPMG’s treatment of certain accountants in its audit practice . . . .” Discovery was stayed pending determination of plaintiffs’ Motion to Certify.  KPMG sought a protective order to narrow the scope of its preservation obligation as to the hard drives of former and departing associates.  Specifically, KPMG sought an order that would require the preservation of only a random sample of 100 hard drives from among those it had already preserved for this and other litigation.  Alternatively, KPMG sought to shift the cost of any preservation beyond the scope it had suggested.  At the time of the motion, KPMG had already preserved more than 2,500 hard drives of Audit Associates at a cost of more than $1,500,000.  Moreover, KPMG indicated that there were more than 7,500 potential opt-in plaintiffs to the FLSA collective nationwide and more than 1,500 putative class members in New York.

Plaintiffs responded that they were amenable to using sampling as a means to limit the scope of preservation but opposed KPMG’s methodology.  Prior to the motion, the parties had engaged in extensive negotiations and mediation in an effort to reach agreement to no avail.

via Court Acknowledges Calls for Caution when Applying “Proportionality Test” to Preservation, Denies Motion for Protective Order : Electronic Discovery Law.

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Current Listing of States That Have Enacted E-Discovery Rules : Electronic Discovery Law

October 19, 2011 By Leave a Comment

More and more states are adopting statutes and court rules addressing the discovery of electronically stored information.  Here is a current list with links to the relevant provisions.

complete list: Current Listing of States That Have Enacted E-Discovery Rules : Electronic Discovery Law.

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Updated List: Local Rules, Forms and Guidelines of United States District Courts Addressing E-Discovery Issues : Electronic Discovery Law

October 19, 2011 By Leave a Comment

At least 41 United States District Courts now require compliance with special local rules, forms or guidelines addressing the discovery of electronically stored information.  In some districts where there are no local rules or court-mandated forms, individual judges have created their own forms or set out their own preferred protocols for e-discovery.  Here is current collection of United States District Court local rules, standards, guidelines and judge-mandated forms and protocols that specifically address e-discovery issues, with links to the relevant materials.

complete list: Updated List: Local Rules, Forms and Guidelines of United States District Courts Addressing E-Discovery Issues : Electronic Discovery Law.

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District Court Allows Taxation of Costs Related to Electronic Discovery : Electronic Discovery Law

October 15, 2011 By Leave a Comment

In re Aspartame Antitrust Litig., No. 2:06-CV-1732-LDD, 2011 WL 4793239 (E.D. Pa. Oct. 5, 2011)

In this case, the court addressed plaintiffs’ motion to deny or reduce defendants’ bill of costs, and in particular their objections to the costs related to electronic discovery.  Recognizing that “taxing e-discovery is a new area of law where courts have diverged in their approaches,” the court denied plaintiff’s motion as to many of the costs at issue but did disallow or reduce some costs, including those incurred for the convenience of counsel.

“A court may tax ‘fees for printed or electronically recorded transcripts necessarily obtained for use in the case’ and ‘fees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case,’ as well as other specifically enumerated fees” pursuant to 28 U.S.C. § 1902(2) and (4).  In the present case, plaintiffs objected to many of the allowed costs, including those related to e-discovery.

via District Court Allows Taxation of Costs Related to Electronic Discovery : Electronic Discovery Law.

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Corporate Counsel Question Accountability in E-Discovery | Law.com

October 14, 2011 By Leave a Comment

Accountability and quantification are as significant hurdles as cost when corporate counsel shop for e-discovery software, a new report concludes.

Enterprise Strategy Group’s latest research, “E-Discovery Market Trends: A View From the Legal Department,” released Wednesday, includes results from 48 counsel at companies of at least 500 employees. Of those, 86 percent said e-discovery expertise is important when they hire outside counsel and 64 percent requested alternative fee arrangements, the report states.

Accountability, according to 71 percent of responding companies, focuses on sampling to track document review accuracy in individual cases. Comparing results to other cases was an example cited by 50 percent of companies, and comparing to other reviews was cited by 43 percent. Only 29 percent use software to measure individual reviewer productivity.

“Law firms have historically shown a certain lack of inertia in adopting technology, because productivity has been a four-letter word for them,” analyst and report co-author Katey Wood said, in New York. “Overwhelmingly they expect e-discovery to be a competency for their law firms. It’s very important to their selection criteria and their firms to be good at it. But there’s very little accountability. Most of them are not looking at measuring or accuracy metrics … The onus is on law firms to go figure it out,” she said.

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Privilege Waived for Failure to take “Reasonable Means” to Preserve Confidentiality : Electronic Discovery Law

October 12, 2011 By Leave a Comment

Pacific Coast Steel, Inc. v. Leany, No. 2:09-cv-12190-KJD-PAL, 2011 WL 4573243 (D. Nev. Sept. 30, 2011)

Plaintiffs purchased the assets of several companies in which Defendant Leany had an ownership interest and hired him as an Executive Vice President of Pacific Coast Steel (“PCS”).  Leany was eventually terminated and his computer seized.  The privileged documents at issue in this opinion were either on Leany’s work computer at the time of his termination or had been migrated to a PCS server from one of defendants’ servers that was purchased by the plaintiffs.  When litigation ensued, defendants sought the return of the privileged documents in plaintiffs’ possession and a protective order prohibiting inquiry into certain areas related to those documents.  The court declined to grant the protective order upon finding that defendants’ privilege was waived because of their failure to “take reasonable means to preserve the confidentiality of the privileged information.”

Upon plaintiffs’ purchase of the defendant corporations’ assets, Defendant Leany was hired and began working as a Vice President for PCS.  In that capacity, Leany was given his own office and continued to use the computer he had used prior to plaintiffs’ acquisition, although that computer now belonged to PCS.  Prior to his termination, Leany was informed that the contents of all pre-merger communications would be merged onto a single PCS server, but took no effort to remove the allegedly privileged information from the system.  He was also aware of the corporate policy of PCS that the computer system and its contents were the property of the company and that use of the computer system could be and was monitored.  Moreover, when presented the opportunity to take copies of his computer and files following his termination, he made no effort to remove any of the confidential or privileged information.

via Privilege Waived for Failure to take “Reasonable Means” to Preserve Confidentiality : Electronic Discovery Law.

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