Archive: July 2007

1
District Court Strikes Scheduling Order Provision that Shifted Costs of E-Discovery to Plaintiffs
2
Standing Committee Approves Proposed New Evidence Rule 502
3
Attachment of Protected Email to Service Copies of Motion Requesting its Return Constitutes Deliberate Disclosure to Adversaries, Waiving Any Privilege
4
Government’s “Reckless Disregard” of Preservation Duty Warrants Spoliation Sanctions
5
Court Declines to Order Municipality to Issue Litigation Hold
6
The Sedona Conference® Publishes The Sedona Principles, Second Edition, Addressing Electronic Discovery
7
WTC Insurer and Its Counsel Hit with E-Discovery Sanctions
8
Court Selects Search Terms and Sets Out Detailed Electronic Discovery Protocol in Light of Parties’ Inability to Collaborate
9
“Willful Indifference” to Preservation Obligations Warrants Evidentiary and Monetary Sanctions

District Court Strikes Scheduling Order Provision that Shifted Costs of E-Discovery to Plaintiffs

Pipefitters Local No. 636 Pension Fund v. Mercer Human Res. Consulting, Inc., 2007 WL 2080365 (E.D. Mich. July 19, 2007)

In this brief order on plaintiffs’ objections to an amended scheduling order entered by the magistrate judge, the district court struck that portion of the amended scheduling order shifting the costs of electronic discovery to plaintiffs:

Without a motion pending, the Magistrate Judge ordered that plaintiffs would be required to pay for restoring electronic data, if such was sought by them from defendant.  Under the electronically stored information amendment to Fed.R.Civ.P. 26(b)(2)(B), the party from whom discovery is sought must show that the information is not reasonably accessible because of undue burden or cost.  The court may order discovery if the requesting party shows good cause, but may specify conditions for the discovery.  Due to the lack of a record it is not apparent that the Magistrate Judge engaged in the proper analysis before shifting the cost of discovery to plaintiffs.

Plaintiffs’ motion to strike the Magistrate’s order as it pertains to the costs of electronically stored information is GRANTED.  If the same issue is raised by motion, the analysis set forth in Fed.R.Civ.P. 26(b)(2)(B) will control the outcome.

Standing Committee Approves Proposed New Evidence Rule 502

At its June 11-12, 2007, meeting, the Committee on Rules of Practice and Procedure approved the recommendations of the Advisory Committees on Evidence Rules and approved proposed new Evidence Rule 502 on Waiver of Attorney-Client Privilege and Work Product, among other proposed new rules and amendments.  The Committee also approved a letter to Congress accompanying proposed new Evidence Rule 502.  (Minutes of the June 2007 meeting will be posted here when they become available.)

Previously, on May 15, 2007, the Advisory Committee on Evidence Rules had issued its Report to the Standing Committee regarding its recommendations with respect to proposed Evidence Rule 502 on Waiver of Attorney-Client Privilege and Work Product.  The Report and its supporting documents were summarized here in a May 16, 2007 post.

The Standing Committee will now transmit the proposed new rules and amendments to the Judicial Conference with a recommendation that they be approved and transmitted to the United States Supreme Court.  The proposed new rules and amendments will be available shortly and will be posted on the federal judiciary’s “Pending Rules Amendments Awaiting Final Action” page at: http://www.uscourts.gov/rules/newrules6.htm#proposed0806.

Attachment of Protected Email to Service Copies of Motion Requesting its Return Constitutes Deliberate Disclosure to Adversaries, Waiving Any Privilege

Kingsway Fin. Servs., Inc. v. Pricewaterhouse-Coopers LLP, 2007 WL 1837133 (S.D.N.Y. June 27, 2007)

In this securities case, the parties had entered into a protective order which provided, among other things, that the inadvertent production of purportedly privileged documents would not operate as a waiver of any applicable privilege.  In August 2006, plaintiff produced an April 25, 2003 email and attached memorandum sent from an executive of plaintiff Kingsway to Kingsway’s counsel as part of a production of electronic documents.  In November 2006, defendant John Dore attached a copy of the April 25, 2003 email to a motion for reconsideration of a decision denying summary judgment in a related action pending in Illinois state court.  Four days later, plaintiff submitted a letter to the District Court for the Southern District of New York requesting the return of all copies of the April 25, 2003 email on the ground that it was protected by the attorney-client privilege and had been produced inadvertently.  Plaintiff filed the December 4, 2006 letter to the court under seal.  However, plaintiff attached a copy of the April 25, 2003 email to the service copies of the December 4, 2006 letter, thereby disclosing the contents of the email and the attachment to the defendants once again.

The court thereafter directed all defendants, including Dore, to return all copies of the disputed email, to destroy any documents disclosing its contents, to use best efforts to retrieve any such documents filed with any court, and to make no use of the email pending further order of the court. Read More

Government’s “Reckless Disregard” of Preservation Duty Warrants Spoliation Sanctions

United Med. Supply Co., Inc. v. United States, 77 Fed. Cl. 257 (2007)

In this decision, the United States Court of Federal Claims imposed sanctions against the United States based upon its “reckless disregard of its duty to preserve relevant evidence.”  The court opened its lengthy opinion and order with the following passage:

“One man’s trash is another man’s treasure.”

Aside perhaps from perjury, no act serves to threaten the integrity of the judicial process more than the spoliation of evidence.  Our adversarial process is designed to tolerate human failings – erring judges can be reversed, uncooperative counsel can be shepherded, and recalcitrant witnesses compelled to testify.  But, when critical documents go missing, judges and litigants alike descend into a world of ad hocery and half measures – and our civil justice system suffers.

To guard against this, each party in litigation is solemnly bound to preserve potentially relevant evidence.  In this government contract case, defendant violated that duty not once or twice—but repeatedly, over many years, and in sundry ways, leading to the destruction of many admittedly relevant documents.  Most disturbingly, some of these documents were destroyed even after the court conducted its first spoliation hearing.  While defendant apologizes profusely for what it claims is the “negligence” of some of its employees and for making repeated misstatements to the court as to the steps that were being taken to prevent spoliation, it, nonetheless, asseverates that the court should not—indeed, cannot—impose spoliation sanctions because defendant did not proceed in bad faith.  While defendant may be wrong in asserting that it acted in good faith, it most certainly is wrong in thinking that it can recklessly disregard its obligations to preserve evidence without legal consequence.

Read More

Court Declines to Order Municipality to Issue Litigation Hold

Valdez v. Town of Brookhaven, 2007 WL 1988792 (E.D.N.Y. July 5, 2007)

In this discrimination case, the court decided a number of discovery issues, including plaintiffs’ request that the defendants be directed to send out a litigation hold to the relevant Town employees to preserve records.  Denying the request, the court provided a brief explanation:

[T]he plaintiffs request that the court direct defense counsel to send out a litigation hold to the relevant Town employees to preserve records as well as to conduct a good faith investigation into what documents (electronic or otherwise) may have already been destroyed.  The apparent basis for this request is a conversation during which defense counsel reportedly advised that the "Town has a history of terrible record keeping."  Defense counsel denies any such conversation occurred.  The law is clear that there is an obligation to preserve evidence "when the party has notice that the evidence is relevant to litigation or when a party should have known that the evidence may be relevant to future litigation", see Zubulake v. UBS Warburg, LLC, 220 F.R.D. 212, 216 (S.D.N.Y. 2003) (citing Fujitsu Ltd. v. Federal Express Corp., 247 F.3d 423, 436 (2d Cir. 2001); Kronish v. United States, 150 F.3d 112, 126 (2d Cir. 1998)).  To the extent, however, plaintiffs seek a preservation order that request is denied.  Preservation orders are burdensome and expensive and in the absence of a clear need should not be lightly entered.  See, e.g., Treppel v. Biovail Corp., 233 F.R.D. 363, 370-71 (S.D.N.Y. 2006).

The Sedona Conference® Publishes The Sedona Principles, Second Edition, Addressing Electronic Discovery

SEDONA, AZ – The Sedona Conference®, the nation’s premier nonpartisan law and policy think tank, has announced publication of The Sedona Principles, Second Edition, Best Practices Recommendations and Principles for Addressing Electronic Document Production.  Building on the success of first edition of The Sedona Principles, which appeared in January 2004, the second edition has been eagerly anticipated by lawyers and judges across the country looking for guidance in the fast-paced world of electronic discovery.

The Sedona Principles, Second Edition, may be downloaded here free of charge.

Jonathan Redgrave, chairperson of the Steering Committee of The Sedona Conference® Working Group 1, which drafted both editions of The Sedona Principles, said “the second edition provides helpful and timely guidance for the issues and circumstances that the amended civil rules, by their nature, cannot address.”  He added, “we are very grateful for the contributions and thoughts of the literally hundreds of members of the working group that make this a consensus document reflecting views from a wide array of interests and specialties.”

Richard G. Braman, Executive Director of The Sedona Conference®, said that publication of the second edition “represents a new milestone in our efforts.  It reflects the fact that our Working Groups produce ‘living documents’ that are open to substantive revision as developments in our society and laws may require.  This evolution is in the grand tradition of the common law and also the mission of The Sedona Conference® to move the law forward in a reasoned and just way.”

Read More

WTC Insurer and Its Counsel Hit with E-Discovery Sanctions

In re Sept. 11th Liab. Ins. Coverage Cases, 2007 WL 1739666 (S.D.N.Y. June 18, 2007)

The perils of e-discovery once again made headlines last month – this time in connection with the insurance coverage battles resulting from the September 11, 2001 terrorist attack on the World Trade Center.  On June 18, United States District Judge Alvin K. Hellerstein, for the Southern District of New York, sanctioned Zurich American Insurance Company (“Zurich”) and its counsel, the law firms of Wiley Rein LLP and Coughlin Duffy LLP, $1.25 million upon finding that Zurich (i) asserted unsupported defenses, (ii) deleted electronic evidence, and (iii) delayed the production of a 62-page insurance policy (“the 9/11 document”) and other relevant documents.

At the heart of this complex insurance coverage action is the question whether the Port Authority of New York and New Jersey (“Port Authority”) and Westfield Corporation, Inc. (“Westfield”) are named insureds under a general liability policy issued to World Trade Center Properties LLP (“WTCP”).  Zurich alleged that they were not.  Zurich ultimately changed its position, however, when it produced documents that proved otherwise, long after those documents were first requested.  These critical documents were in Zurich’s counsel’s possession for almost three years before they were produced.  Concerned about the appearance of pleading and discovery abuses, the Court permitted the Port Authority and Westfield to seek sanctions under Rules 11 and 37 of the Federal Rules of Civil Procedure.

Read More

Court Selects Search Terms and Sets Out Detailed Electronic Discovery Protocol in Light of Parties’ Inability to Collaborate

Williams v. Taser Int’l, Inc., 2007 WL 1630875 (N.D. Ga. June 4, 2007)

The court in this wrongful death case had previously held a hearing on outstanding discovery issues, and had directed each party to submit a proposed protocol to govern electronic discovery in the case.  Based on the parties’ filings, their representations during the hearing, as well as their submissions of electronic discovery protocols, the court entered this order resolving a variety of discovery disputes.

On the subject of electronic discovery, the court noted that a number of issues had arisen with respect to Taser’s search of electronic databases of internal communications.  In particular, the parties substantially disagreed about the manner in which the searches for responsive documents contained within these databases were to be performed.  The disagreement focused in large part on the timing of that production, the specific search terms to be used, and the extent to which plaintiffs would be allowed to participate in the search process.

Plaintiffs, for their part, requested that they be permitted to actively participate in the search process at the Taser facility.  Under plaintiffs’ proposal, Taser would make a computer with multiple screens available at its facilities, where plaintiffs’ counsel would appear and provide search requests to the Taser representative actually performing the database searches.  The results of each of plaintiffs’ requested searches would be immediately reviewed for privilege, and plaintiffs would then be provided access to any documents returned and to which no privilege objection was asserted.

Defendants adamantly opposed plaintiffs’ proposal, contending that plaintiffs’ counsel need not be present at Taser’s facilities, that their presence would both substantially hinder Taser’s ongoing business activities and risk the disclosure of privileged information.  Taser instead proposed that search terms be exchanged between the parties by email.  Taser would then perform the searches using the stated terms, and report the number of documents retrieved to plaintiffs, who would then have the opportunity to either accept the search or propose different search terms.  If both parties accepted a given search, Taser would then review the documents produced for privilege and produce all responsive, non-privileged documents.  If, however, the parties disputed whether a given search was acceptable, then either could apply to the court for review, and all searches would cease until the court rendered a decision. Read More

“Willful Indifference” to Preservation Obligations Warrants Evidentiary and Monetary Sanctions

Google Inc. v. Am. Blind & Wallpaper Factory, Inc., 2007 WL 1848665 (N.D. Cal. June 27, 2007)

In this trademark litigation, Google sought terminating, evidentiary, or monetary sanctions based on the alleged failure of defendant American Blind to preserve, collect, and produce evidence.  Google’s motion was premised on two types of alleged misconduct:  First, Google contended that American Blind made inadequate efforts to preserve, collect, and produce relevant evidence.  Second, Google contended that in May of 2006, American Blind’s founder and CEO, Steve Katzman, intentionally destroyed evidence when he “voluntarily resigned” from his position and erased electronic data from certain computers.

Google served American Blind with summons and the complaint in this action seeking declaratory relief in December of 2003.  The presiding judge had previously ruled that a justiciable controversy arose between the parties no later June of 2002, when counsel for American Blind sent Google a “cease and desist” letter that portended litigation.  Thus, the court found that American Blind’s duty to preserve relevant evidence arose no later than December of 2003, and likely arose some eighteen months earlier. American Blind did not argue to the contrary.

With respect to the first basis for the motion, Google made a factual showing that: Read More

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