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Court Sanctions Defendants for Elaborate Spoliation, Declines to Sanction Misled Counsel Unaware of “What was Going on Behind the Scenes” : Electronic Discovery Law

October 7, 2011 By Leave a Comment

United Cent. Bank v. Kanan Fashions, Inc., No. 10 CV 331, 2011 WL 4396912 (N.D. Ill. Mar. 31, 2011); United Cent. Bank v. Kanan Fashions, Inc., No. 10 C 331, 2011 WL 4396856 (N.D. Ill. Sept. 21, 2011)

In this case, the magistrate judge recommended sanctions against defendants for their bad faith spoliation of a relevant server where the evidence strongly suggested that defendants arranged for the sale of the server to company in Dubai, which resulted in the unavailability of its admittedly relevant contents.  The magistrate judge declined to sanction defendants’ attorneys, however, where the evidence indicated that they made efforts to ensure preservation but were misled by their clients and unaware “of what was going on behind the scenes.”

Plaintiff alleged that defendants were in default on several loans and sought damages accordingly.  In the course of discovery, defense counsel repeatedly informed defendants of their obligation to preserve relevant information.  Despite their obligation to preserve and their assurances to counsel that all appropriate efforts were being undertaken, defendants took steps to ensure the unavailability of a relevant server which was maintained in one of defendants’ warehouses.  The details of defendants’ efforts are numerous and complex.  Summarizing broadly, when defendants experienced significant financial problems and defaulted on both the lease of the at-issue server and the loan related to the warehouse in which it was stored, Defendant Shah (who controlled the four corporate defendants) entered into an agreement for a “friendly foreclosure” on the warehouse and for the foreclosing bank to purchase the server’s lease (which was owned by a different bank and also in default) and to resell the server to Shah.  This agreement was reached after plaintiff’s complaint had been filed and after defendants had been informed of their duty to preserve.  Despite this, the arrangements for the bank’s purchase of the lease and resale of the server to Shah were not revealed to defense counsel.  Rather, defendants’ attorneys were assured that preservation was ongoing and repeated these assurances to the court and to the plaintiff, without correction or clarification from defendants.  When counsel eventually learned that the server had been left at the warehouse following defendants’ eviction and was in the possession of the bank, defendants assured counsel that access would not be a problem; such assurances continued for several months.

via Court Sanctions Defendants for Elaborate Spoliation, Declines to Sanction Misled Counsel Unaware of “What was Going on Behind the Scenes” : Electronic Discovery Law.

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Court Orders Government to Reproduce ESI, Discusses Need for Criminal Rules Addressing Electronic Discovery : Electronic Discovery Law

September 22, 2011 By Leave a Comment

United States v. Briggs, No. 10CR184S, 2011 WL 4017886 (W.D.N.Y. Sept. 8, 2011)

Defendants were charged with several counts related to the distribution of cocaine.  In its disclosures, the Government produced thousands of pages of documents as well as audio recordings, none of which were text searchable.  Defendants sought reproduction.  Noting the lack of relevant criminal rules and discussing the requirements of Fed. R. Civ. P. 34, the court relied upon its inherent authority to order reproduction in native format or in a PDF format “suitable for searching.”

In its voluntary discovery, the Government produced disks “containing thousands of pages of documents” as well as audio recordings.  Although the information was allegedly produced using a program “routinely used in cases such as this” (i.e. multi-defendant cases “employing investigative techniques, such as court-authorized recordings of intercepted communications”), it could not be sorted or searched and lacked certain data.  Accordingly, defendants sought reproduction.  The Government resisted, arguing, among other things, that the cost of reproduction was prohibitive and that it lacked the necessary computer storage space to reproduce the data in PDF format.  The Government further alleged that it had produced the particular data requested by defendants (although not in the form sought) and that given defendants’ heavy burden in asserting certain theories to which the data allegedly was relevant, the Government should not bear the burden of reproduction “to suit the defendants.”

via Court Orders Government to Reproduce ESI, Discusses Need for Criminal Rules Addressing Electronic Discovery : Electronic Discovery Law.

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Symantec: Files, Databases Overtake E-Mail in E-Discovery | Law.com

September 17, 2011 By Leave a Comment

E-mail is no longer the most requested type of electronically stored information in e-discovery, having been eclipsed by application data, database records, and documents, according to a new Symantec report.

Symantec, which makes data management and security software, acquired e-discovery specialist Clearwell for $390 million this summer. Its survey taken in June and July included lawyers and technologists at 2,000 enterprises worldwide.

Respondants gave a surprising answer to a question about how frequently various types of ESI are requested during legal and regulatory processes. Files and documents are requested in 67 percent of situations, followed by application and database records at 61 percent, and e-mail at 58 percent, they said. Microsoft SharePoint records are requested 51 percent of the time, while messaging formats such as instant messaging, texts, and BlackBerry PIN messages are needed 44 percent of the time. Data from social media trailed, being needed for 41 percent of ESI requests.

via Symantec: Files, Databases Overtake E-Mail in E-Discovery.

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Court Denies Motion to Exclude Inadvertently Produced Email, Rejects Argument that 26(b)(5)(B) Request for the Email’s Return Satisfied FRE 502(b)(3) Obligation : Electronic Discovery Law

September 16, 2011 By Leave a Comment

Williams v. District of Columbia, No. 06-02076 (CKK), 2011 WL 3659308 (D.D.C. Aug. 17, 2011)

In this case, the court denied the defendant’s motion to exclude an inadvertently produced email where the defendant failed to satisfy the burden of establishing that reasonable steps were taken to prevent disclosure and where the defendant failed to promptly take reasonable steps to rectify the error.  In so holding, the court rejected the defendant’s argument that its actions pursuant to Rule 26(b)(5)(B) (i.e. sending a written request for the return of the email) were sufficient to discharge its obligations under FRE 502(b)(3).

In this case arising from claims of retaliation in violation of the District of Columbia Whistleblower Protection Act, the defendant produced a “recommendation to terminate packet” which contained a privileged email.  The email was located within the first ten pages of the packet.  Five months later, after realizing it’s mistake, the defendant wrote to the plaintiff requesting the return of the email pursuant to Rule 26(b)(5)(B).  The plaintiff did not respond and the defendant did not follow up.  More than two years later, when the email was identified as an exhibit for the plaintiff, the defendant filed a motion to exclude.

After ordering additional briefing from the parties, including on the issue of whether requesting the return of inadvertently privileged material pursuant to Rule 26(b)(5)(B) was “necessary or sufficient (or neither) for a party to discharge its obligations under Rule 502(b)(3),” the court denied the defendant’s Motion to Exclude. (FRE 502(b)(3) requires a party who has inadvertently produced a privileged document to “promptly” take “reasonable steps to rectify the error, including, if applicable following Federal Rule of Civil Procedure 26(b)(5)(B)” to avoid waiver.)

via Court Denies Motion to Exclude Inadvertently Produced Email, Rejects Argument that 26(b)(5)(B) Request for the Email’s Return Satisfied FRE 502(b)(3) Obligation : Electronic Discovery Law.

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Special Master Considers Whether Attachments to Emails Must be Produced : Electronic Discovery Law

September 8, 2011 By Leave a Comment

Abu Dhabi Commercial Bank v. Morgan Stanley & Co, Inc., No. 08 Civ. 7508(SAS), 2011 WL 3738979 (S.D.N.Y. Aug. 18, 2011)

In this case, the Special Master considered the question of whether, under the particular circumstances of this case, emails and their attachments should be considered singular or separate entities and thus, whether they must be produced together.  While no definitive answer emerged, the Special Master’s consideration of the issues and resulting recommendation are illuminating, and were ultimately adopted by District Court Judge Shira Scheindlin.

Summarizing broadly, defendants sought to compel SEI Investments (“SEI”) to produce the attachments to many emails previously produced without them or to provide an explanation for why the attachments were being withheld.  SEI responded that it had produced all relevant, non-privileged, responsive documents and that the unproduced attachments were not responsive primarily because they were outside of the applicable date range.

Seeking to establish the relevant legal standard, the Special Master consulted a diversity of sources, but none provided a definitive answer.  Rather, the sources revealed conflicting treatment and considerations.  In favor of producing together, for example, the Special Master noted that “many” cases imply such an obligation, but acknowledged that most dealt with format of production issues where relevance was presumed.  The Special Master also considered Evidence Rule 106 and the “completeness” standard (leading to the conclusion that if something is attached, it is likely relevant to the context of the communication); Rule 34’s allowance for producing things as kept in the usual course of business and its appealing application to emails and attachments; and the indications of “anecdotal” and secondary sources that production together was “the prevailing practice.”  Against producing together, the Special Master cited the practice of treating emails and attachments separately for purposes of privilege determinations.  Further, the Special Master indicated that “conceptually” there was “a good basis for considering each item . . . seperately,” and reasoned  that “[r]elevance is the sine qua non of discovery” such that “if information is not relevant, it is not discoverable under plain text of the Rule.”  (Citing Rule 26(b)(1))

via Special Master Considers Whether Attachments to Emails Must be Produced : Electronic Discovery Law.

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Court Orders Defendant to Re-Post Facebook Profile Picture Showing Infringing Trade Dress to Allow Plaintiff an Opportunity to Print Chosen Posts : Electronic Discovery Law

September 1, 2011 By Leave a Comment

Katiroll Co., Inc. v. Kati Roll & Platters, Inc., No. 10-3620 (GEB), 2011 WL 3583408 (D.N.J. Aug. 3, 2011)

In this trademark infringement case, Plaintiff sought sanctions for defendants’ alleged spoliation of several categories of evidence, including the contents of the individual defendant’s Facebook page.  Specifically, plaintiff sought sanctions for the defendant’s failure to preserve his Facebook pages in their “original state” i.e., before they were taken down, and because he changed the Facebook profile picture (which had previously displayed the infringing trade dress at issue) without preserving the prior image.  The court held that while the spoliation was unintentional, it was nonetheless “somewhat prejudicial” and ordered the defendant to change the picture back for a brief time, to allow plaintiff to print whatever posts it found relevant.

via Court Orders Defendant to Re-Post Facebook Profile Picture Showing Infringing Trade Dress to Allow Plaintiff an Opportunity to Print Chosen Posts : Electronic Discovery Law.

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Defendants’ “Completely Ineffective” Review Procedure and Failure to Rectify the Inadvertent Disclosure in a Timely Way Results in Finding of Waiver : Electronic Discovery Law

August 24, 2011 By Leave a Comment

Thorncreek Apartments III, LLC v. Vill. of Park Forest, Nos. 8 C 1225, 08-C-0869, 08-C-4303, 2011 WL 3489828 (N.D. Ill. Aug. 9, 2011)

The court held that privilege was waived as to inadvertently produced documents where defendants failed to take reasonable steps to prevent disclosure and failed to rectify the error in a timely way.  In so finding, the court cited defendants’ failure to conduct a final check before production, the failure of the process to protect any privilege (all privileged documents were produced), the nine months between production and discovery of the disclosure, and the failure to timely produce a privilege log, among other things.

Defendants had a three-step process to respond to discovery.  First, backup tapes were searched using agreed upon and court-ordered search terms.  The documents identified by the search were then placed by a vendor into an online database for review by defense counsel.  Following that review, documents released by defendants were placed in an online production database for plaintiffs to access.  It was intended that plaintiffs would have access to both responsive and non-responsive documents.  However, defense counsel was “‘under the impression’ that documents . . . marked ‘privileged’ . . . would be automatically withheld from the production database . . . .”

Nine months after production began (and at least two months after it ended), the inadvertent production came to the attention of defendants when plaintiffs attempted to use two privileged documents at deposition, to which defense counsel objected.  Following that deposition, defense counsel contacted plaintiffs’ counsel to inform him that certain privileged documents had been inadvertently produced.  Four months later, defendants produced a privilege log for the first time, which identified 159 documents that had been inadvertently produced.  No other documents were identified as withheld from production.  Thus, it was presumed that all documents identified as privileged during the review had been inadvertently produced.  Plaintiffs claimed that privilege had been waived and the parties were able to independently resolve their disputes as to all but six documents.

via Defendants’ “Completely Ineffective” Review Procedure and Failure to Rectify the Inadvertent Disclosure in a Timely Way Results in Finding of Waiver : Electronic Discovery Law.

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Court Declines to Excuse Production where Party’s Negligent Failure to Preserve Rendered Data “Less Accessible” : Electronic Discovery Law

August 21, 2011 By Leave a Comment

United States v. Universal Health Servs., Inc., No. 1:07cv000054, 2011 WL 3426046 (W.D. Va. Aug. 5, 2011)

Here, the Commonwealth sought to avoid producing allegedly inaccessible information.  The court declined to excuse production, reasoning in part that it was the Commonwealth’s own “negligent failure to take steps to adequately preserve information” which rendered the information “less accessible.”  Instead, the court indicated that it would order the backup tapes and forensic images be produced to defendants “for use by a commercial vendor” to retrieve the information “in a format usable by the Commonwealth” and that defendants would bear the costs, subject to a motion seeking reimbursement.

Defendants sought to compel production of documents related to complaints of Medicaid fraud from the Commonwealth of Virginia.  The Commonwealth objected, arguing lack of control of the documents, but was ordered to produce them nonetheless.  Thereafter, the Commonwealth indicated it could not produce the documents because it would be unduly burdensome.  Specifically, the Commonwealth asserted that it was too costly to access backup tapes from the relevant time period and that it did not have the technological capability to search forensic images of hard drives which were made following placement of the (delinquent) legal hold.  Interestingly, while the Commonwealth admitted that there were less expensive alternatives for accessing the at-issue information, it claimed that state agencies were bound by state law to take their “information technology needs” to Virginia Information Technologies Agency, the agency that estimated the allegedly burdensome cost to access the backup tapes in question.

via Court Declines to Excuse Production where Party’s Negligent Failure to Preserve Rendered Data “Less Accessible” : Electronic Discovery Law.

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Timing is Still Everything: Motion for Spoliation Sanctions Denied as Untimely : Electronic Discovery Law

August 7, 2011 By Leave a Comment

Am. Nat’l Prop. & Cas. Co. v. Campbell Ins., Inc., No. 3:08-cv-00604, 2011 WL 3021399 (M.D. Tenn. July 22, 2011)

In this case, the court denied plaintiff’s Motion for Sanctions for Spoliation of Evidence as untimely, citing the facts that it had been 14 months since the alleged spoliation was discovered, that discovery had already closed, and that trial was weeks away.  In reaching its conclusion, the court relied heavily on the summary of the law regarding the timeliness of spoliation motions laid out by the court in Goodman v. Praxair Servs., Inc., 632 F. Supp. 2d 494 (D. Md. 2009).

Plaintiff learned in May 2010 that defendants had failed to preserve certain emails from a particularly relevant time period which plaintiff believed would have contained “damning” evidence of defendants’ efforts to solicit plaintiff’s customers in violation of their non-compete obligations.  Despite its belief that spoliation had occurred, plaintiff waited until July 6, 2011 to file a motion for sanctions.  By that time, discovery had closed, the deadline for filing discovery motions had passed, and trial was weeks away.

via Timing is Still Everything: Motion for Spoliation Sanctions Denied as Untimely : Electronic Discovery Law.

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Brad Mixner to participate in the 2011 International Conference on Electronic Litigation

August 5, 2011 By Leave a Comment

Brad Mixner, President of Global EDD Group and Director of Litigation Edge, will be a panelist & blogger at the International Conference on Electronic Litigation being held 11 – 12 August 2011 in Singapore.  He will discuss Electronic Discovery Law and Practice in Singapore & UK  within the Practitioners’ Track along with the following distinguished panelists:

Chairman:
Mr Yeong Zee Kin (Supreme Court of Singapore)

Panellists:
Ms Indranee Rajah, SC (Drew & Napier LLC)
Mr Tan Hee Joek (Tan See Swan & Co)
Mr Chris Dale (E-Disclosure Information Project)

Additionally, Mr. Mixner will be a member of the #ICEL2011 Official Blog Team along with his colleagues from Litigation Edge.  Look for updates and interesting articles at E-Litigation2011.com!

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