Archive: December 2007

1
Uniform Rules Relating to the Discovery of Electronically Stored Information Approved and Recommended for Enactment
2
Terminating Sanctions Warranted for Willful Spoliation of Evidence
3
Bill Introduced to Enact Evidence Rule 502
4
Defendant’s Disposal of Laptop and Untruthful Testimony about Circumstances of Disposal Warrant Adverse Inference Instruction and Relaxed Burden of Proof for Plaintiff
5
Native Production Warranted Where Alleged Backdating of Documents is at the Heart of Parties’ Dispute
6
Florida Supreme Court Denies Review of Decision Reversing $1.58 Billion Judgment Against Morgan Stanley
7
Good Cause Exists for Production of “Not Reasonably Accessible” Claims Information
8
Defendant Former Employer Entitled to Forensic Inspection of Plaintiff’s Home Computer, at Defendant’s Expense
9
Cost to Restore Inaccessible Backup Tapes Exceeds Possible Yield of Relevant Information
10
District Court Sustains Plaintiff’s Objection to Magistrate Judge’s Order Requiring Restoration and Production of Database Prepared in Separate Litigation

Uniform Rules Relating to the Discovery of Electronically Stored Information Approved and Recommended for Enactment

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.

Terminating Sanctions Warranted for Willful Spoliation of Evidence

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.

Bill Introduced to Enact Evidence Rule 502

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.

Defendant’s Disposal of Laptop and Untruthful Testimony about Circumstances of Disposal Warrant Adverse Inference Instruction and Relaxed Burden of Proof for Plaintiff

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.

Read More

Native Production Warranted Where Alleged Backdating of Documents is at the Heart of Parties’ Dispute

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.

Florida Supreme Court Denies Review of Decision Reversing $1.58 Billion Judgment Against Morgan Stanley

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.

Good Cause Exists for Production of “Not Reasonably Accessible” Claims Information

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).

Read More

Defendant Former Employer Entitled to Forensic Inspection of Plaintiff’s Home Computer, at Defendant’s Expense

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.

Read More

Cost to Restore Inaccessible Backup Tapes Exceeds Possible Yield of Relevant Information

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[.]”

Read More

District Court Sustains Plaintiff’s Objection to Magistrate Judge’s Order Requiring Restoration and Production of Database Prepared in Separate Litigation

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.

Read More

Copyright © 2016, K&L Gates LLP. All Rights Reserved.