Electronic Discovery Law Firm : K&L Gates : Electronic Discovery Law

The National Conference of Commissioners on Uniform State Laws has approved its Uniform Rules Relating to the Discovery of Electronically Stored Information and recommended them for enactment in all the states.

The NCCUSL describes the Uniform Rules as follows:

The Uniform Rules Relating to the Discovery of Electronically Stored Information provides states with up-to-date rules for the discovery of electronic documents in civil cases.  The Uniform Rules provide procedures for parties in a civil case to jointly follow relating to a number of issues, including the preservation of the electronic information; the form in which the information will be produced; and the period of time in which the information must be produced.  The Uniform Rules limit the sanctions which may be imposed on a party for failure to provide electronic information that has been lost as the result of routine operation of an electronic information system, only if the system was operated in good faith.  The Uniform Rules address the unique difficulties in accessing some electronic information by providing certain restrictions on its discovery.  For instance, a party may object to discovery of electronically stored information on the grounds that the information is not reasonably accessible because of undue burden or expense.  However, the court may order discovery of such information if it is shown that the likely benefit of the proposed discovery outweighs the likely burden or expense, and may allocate between the parties the expense of conducting the discovery.

A version of the Uniform Rules without comments is available here.

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Columbia Pictures Inc. v. Bunnell, No. 2:06-cv-01093 (C.D. Cal. Dec. 13, 2007) (Order Granting Plaintiffs’ Motion for Terminating Sanctions)

The court imposed terminating sanctions and entered default judgment against defendants in this copyright litigation as a result of defendants’ willful spoliation of key evidence.  The court found that defendants had deleted and/or modified relevant TorrentSpy user forums postings, deleted directory headings that referenced copyrighted works, destroyed user IP addresses and withheld the identities and addresses of site moderators.  The court concluded that defendants’ misconduct had “inalterably prejudiced” plaintiffs’ ability to prove their case, and that terminating sanctions were the only effective recourse.

A copy of the decision is available here.

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On December 11, 2007, Senator Patrick Leahy, Chair of the Senate Judiciary Committee, introduced S. 2450, a bill adding new Evidence Rule 502 to the Federal Rules of Evidence.  The legislation addresses waiver of the attorney-client privilege and work product protection and is identical to proposed Evidence Rule 502, which was approved by the Judicial Conference of the United States and transmitted to Congress for its consideration in September 2007.   See our prior post from October 19, 2007 on the proposed rule.

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Great Am. Ins. Co. of N.Y. v. Lowry Dev., LLC, 2007 WL 4268776 (S.D. Miss. Nov. 30, 2007)

This insurance coverage litigation stemmed from property damage caused by Hurricane Katrina in 2005.  Plaintiff Great American contended that there was a mutual mistake of fact in connection with the formation of the insurance contract, arguing that the parties, acting through their agents, understood that wind damage coverage was excluded.  In this decision, the court ruled on plaintiff’s motion for sanctions for the destruction of a laptop computer by defendant’s insurance agent (Groves), who was also a defendant in the case.

During the summer of 2006, Groves disposed of a personal computer which may have contained information relevant to the issues in dispute.  Although the specific contents of the computer’s hard drive were unknown, the court found that there was evidence in the record that Groves used the computer to prepare correspondence and emails related to the purchase of the policy at issue.  Plaintiff argued that these computer records may have shed considerable light on the question whether Groves believed, at the time he negotiated the purchase of the policy, that the policy would provide coverage for wind damage.  That disputed issue of fact was at the heart of the defense of mutual mistake Great American sought to establish.

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Ryan v. Gifford, 2007 WL 4259557 (Del. Ch. Nov. 30, 2007)

In this letter opinion, the court ruled upon a number of discovery disputes, including one relating to the format of production.  Plaintiff sought an order compelling a defendant to respond to documents requests “in native file format, with original metadata, but without a separate production of metadata.”  Granting that portion of plaintiff’s motion, the court explained:

[M]etadata may be especially relevant in a case such as this where the integrity of dates entered facially on documents authorizing the award of stock options is at the heart of the dispute.  This relevance is further illustrated by the fact that Maxim's special committee, as well as Deloitte & Touche, undoubtedly reviewed metadata as part of their investigation into the backdating problems at Maxim.  This latter fact also undermines the asserted burdensomeness of producing documents in native file format.  Maxim need not produce metadata separately, but the Court does order the production of documents identified in plaintiffs' July 3rd motion to compel in a format that will permit review of metadata, as plaintiffs have clearly shown a particularized need for the native format of electronic documents with original metadata.

A copy of the full decision is available here.

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Coleman (Parent) Holdings, Inc. v. Morgan Stanley & Co. Inc., No. SC07-1251 (Fla. Dec. 12, 2007)

In a brief order issued on December 12, 2007, the Florida Supreme Court denied Coleman (Parent) Holdings, Inc.’s petition for review of the Florida state appellate court decision which reversed the $1.58 billion against Morgan Stanley.  (View our March 21, 2007 post regarding that reversal, and read the appellate court opinion, here.)  The Florida Supreme Court advised that no motion for rehearing would be entertained.  A copy of the order is available here.

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W.E. Aubuchon Co., Inc. v. BeneFirst, LLC, 245 F.R.D. 38 (D. Mass. 2007)

In this case, plaintiffs sued the third-party administrator of their employee medical benefits plans, alleging that it breached its fiduciary duty and the underlying contract by failing to perform its duties in a reasonably prudent manner.  In an earlier motion to compel, plaintiffs had sought, among other things, to compel BeneFirst to produce all medical claims files, including the actual medical bills in BeneFirst's custody or control.  The court ruled that BeneFirst was to provide those files and bills.  BeneFirst sought reconsideration of that ruling, arguing that the requested claims forms were not reasonably accessible within the meaning of FRCP 26(b)(2)(B) because of the high cost to retrieve such information (both in monetary terms and in terms of the man hours it would require to retrieve the information).

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Orrell v. Motorcarparts of Am., Inc., 2007 WL 4287750 (W.D.N.C. Dec. 5, 2007)

In this sexual harassment and gender discrimination case, plaintiff sued her former employer, alleging a hostile work environment, wrongful discharge, and retaliation.  Plaintiff alleged that she was sexually harassed by several male co-workers and/or supervisors, as well as some of the defendant's customers.  Most significantly for the purposes of the pending discovery motions, plaintiff contended that some of the harassment was in the form of "pornographic" and "offensive" emails that she was sent by co-workers and customers.  Plaintiff testified at her deposition that she had received an "overwhelming number" of those emails, "even hundreds" of them.  Although plaintiff received these emails on the laptop computer that defendant provided, she testified that it was her practice was to forward those emails to her home email address and store them on her home computer.  Plaintiff also testified that she forwarded some of these offensive emails to her husband, some of which he received on his computer at his job with the Bendix corporation, a non-party.

Shortly after receiving notice of her termination, but prior to returning her work laptop computer to defendant, plaintiff, with the aid of her husband, had the laptop's hard drive "wiped."  (Defendant later performed a forensic examination of the laptop, which confirmed that no information could be retrieved from the hard drive.)  Plaintiff testified that her purpose in "wiping" the hard drive was to prevent any of her personal information being returned to defendant.  However, plaintiff’s husband presented a slightly different version of events at his deposition, testifying that although he ultimately took the computer to an information technology consultant who "wiped" the computer with a program entitled "Evidence Eliminator," he initially contemplated taking the computer to a "shooting gallery" where it would be destroyed.

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Palgut v. City of Colo. Springs, 2007 WL 4277564 (D. Colo. Dec. 3, 2007)

In this employment discrimination litigation, the magistrate judge made a number of findings and conclusions relevant to several outstanding e-discovery disputes.  Among other things, the judge found:

• That defendant conducted “an adequate and full search of all ESI formatted documents that may be relevant to the issues before this court and which are in [defendant’s] possession.”  Nevertheless, defendant agreed to conduct an additional search, in accordance with the parties’ stipulation, a copy of which is available here.  Among other things, defendant agreed to conduct an additional electronic search of ESI, using keyword searches agreed upon by the parties.
• “That the 2006 Amendments to Fed. R. Civ. P. 34 simply clarify 'that discovery of electronically stored information stands on equal footing with discovery of paper documents.'  See Advisory Committee's Note on 2006 Amendments.  Consequently, without a qualifying reason, plaintiff is no more entitled to access to defendant's electronic information storage systems than to defendant's warehouses storing paper documents[.]”

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Best Buy Stores, L.P. v. Developers Diversified Realty Corp., 247 F.R.D. 567 (D. Minn. 2007)

Best Buy sued its landlords for fraud, breach of contract, breach of fiduciary duty and declaratory judgment, claiming that they overcharged insurance and maintenance costs for common areas.  On September 5, 2007, the magistrate judge ruled on a number of discovery motions filed by the parties.  (A copy of the September 5, 2007 Order is available here.)  Among other things, the magistrate judge concluded that a database prepared by Best Buy in the case of Odom v. Microsoft Corp. (the "Odom database") was reasonably accessible despite a cost of at least $124,000 to restore the data to searchable form.  The magistrate judge found that $124,000 was a reasonable cost considering the potential breach of contract damages exceeding $800,000, the potential for enhanced damages associated with Best Buy’s fraud claims, and the potential long-term economic impact of the outcome of the litigation on all parties.  Further, the magistrate judge noted that "discovery in the Odom case is complete [and] the database has ... been archived by an e-discovery vendor."  Thus, the magistrate judge ordered Best Buy to restore the Odom database to permit discovery by defendants in this case.

Best Buy objected, explaining that discovery in the Odom litigation was not complete, the database had not been archived, and "the data can only be restored from original sources such as backup tapes."  Thus, Best Buy argued that the magistrate judge clearly erred in determining that the Odom database was reasonably accessible and ordering its discovery.

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John B. v. Goetz, No. 07-6373 (6th Cir. Nov. 26, 2007 and Dec. 7, 2007)

This case is a class action on behalf of roughly 550,000 children seeking to enforce their rights under federal law to various medical services, including early and periodic screenings for their physical well being, and dental and behavioral health needs.  Defendants in the case include Tennessee state officials who are in charge of the state programs for these services.

On October 9 and 10, 2007, following a series of conferences and hearings (including a one-week evidentiary hearing on e-discovery issues), the district court issued a 187-page Memorandum and accompanying Order granting plaintiffs’ motion to compel defendants to produce various electronically stored information (“ESI”).  The district court’s Memorandum and Order addressed search terms, key custodians, claims of undue burden and privilege, spoliation, sanctions and cost-shifting.  The district court also sharply criticized the defendants’ preservation and production methods, and ordered the production of all metadata and deleted information.  Further, the district court ordered that plaintiffs’ computer expert “shall be present for the [d]efendants’ ESI production and shall provide such other services to the defendants as are necessary to produce the metadata, as ordered by the Court.”  Additional background on the district court’s October 9 and 10 Memorandum and Order, with links to the 187-page Memorandum, is available in our previous blog entry. The district court subsequently appointed a monitor (former United States Magistrate Judge Ronald J. Hedges of the District of New Jersey) to oversee the court-ordered ESI production.

Defendants moved for reconsideration and/or clarification of various issues addressed in the district court’s October 9 and 10 Memorandum and Order, including the plaintiffs’ expert’s role in the defendants’ production efforts.  On November 15, 2007, the district court issued an Order (dated November 14) directing that plaintiffs’ expert and the court-appointed monitor shall “forthwith inspect the State’s computer systems and computers of the fifty (50) key custodians that contain information relevant to this action.”  The district court further directed that plaintiffs’ expert or his designee “shall make forensic copies of any computer inspected to ensure the preservation of all existing electronically stored information (“ESI”).”  Finally, the district court ordered that the United States Marshall or his designated deputies should accompany the plaintiffs’ expert to “ensure that this Order is fully executed.”  A copy of the district court’s November 15 Order is available here; a copy of the Order from Westlaw is now available here.

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Tuesday, December 11, 2007
12 p.m. Luncheon & Program

Sheraton Station Square
300 West Station Square Drive
Pittsburgh, PA 15219

K&L Gates partner David R. Cohen will discuss how to avoid the pitfalls in litigation surrounding e-discovery requests at an upcoming program hosted by the Pittsburgh Chapter of Risk and Insurance Management Society, Inc. (“RIMS”).  The program will be of particular interest to general counsel, compliance officers and CIOs.  Registration begins at 11:45 a.m., and the cost is $30.

Click here to register for the program.

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In re Rule 45 Subpoena Issued to Robert K. Kochan, 2007 WL 4208555 (E.D.N.C. Nov. 26, 2007)

In this decision, the district court adopted the Memorandum and Recommendation of Magistrate Judge James E. Gates which resolved a dispute centered around a subpoena issued in a case pending in the Southern District of Mississippi.  Plaintiffs in that case sued Forensic Analysis & Engineering Corp. ("FAEC") and others for alleged fraud related to investigation of plaintiffs' insurance claims for damages caused by Hurricane Katrina.

In August 2007, the plaintiffs issued a subpoena duces tecum to nonparty Robert K. Kochan, a Virginia resident and the president of FAEC.  The subpoena directed Mr. Kochan to produce for inspection and copying the following information:

1.  As related or pertaining to Hurricane Katrina, to produce and permit inspection and copying through drive imaging, all electronically stored information created, stored or maintained on or after August 29, 2005, on any laptop computer ever utilized by Adam Sammis in the state of Mississippi at any time on or after August 29, 2005.  This request applies but is not limited to the laptop computer(s) utilized by Adam Sammis while working in the mobile R/V office Forensic Analysis & Engineering deployed to the Mississippi Gulf Coast before, on or after September 26, 2005; and

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Bd. of Regents of Univ. of Neb. v. BASF Corp., 2007 WL 3342423 (D. Neb. Nov. 5, 2007)

In this patent and licensing litigation, the court had previously ordered plaintiff to produce “development documents” related to the project at issue in the litigation.  According to defendant, plaintiff produced 1,737 pages of documents by the order’s deadline in February 2006, but then later produced more than 11,000 pages of new responsive documents in the final days of discovery in the fall of 2007.  Defendant argued that these late-produced documents fell squarely within the ambit of the court’s order and should have been produced 18 months earlier.  Defendant also argued that plaintiff had failed to meet its preservation obligations.

At his deposition, one of the key players employed by plaintiff testified that he was not specifically directed by plaintiff’s counsel to search for electronically stored documents; he was asked to produce “all documents” related to his research, and he produced only hard copy documents without examining his electronic files.  In addition, the witness stated that during 2005 the University changed the storage system for the archiving of electronically produced information, from a University-wide archiving system to a more localized, “individual computer” storage system.  As part of that process the witness reviewed his computer-stored information and preserved what he deemed was important.  Conversely, of course, and without guidance, he deleted what he viewed as unimportant.  He testified that, in that process, neither the University nor counsel directed that electronically stored information pertaining to the relevant project be preserved in any form.  Further, the University's computer system was such that some emails would be automatically deleted “at some point” if not preserved.

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