Archive: June 2009

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Magistrate Judge Declines to Compel Plaintiff to Categorically Organize Documents that were Produced as Kept in the Usual Course of Business
2
You Get What You Pay For: Court Allows Access to Defendant’s Relevant Backup Tapes and Email Archives provided Plaintiff is Willing to Bear the Costs
3
Court Orders Producing Party to Bear the Cost of Production but Not Conversion where Documents are Produced as Ordinarily Maintained, Declines to Compel Production of All Metadata
4
Court Finds Request Overly Broad and Unduly Burdensome and Denies Motion to Compel but Orders Search of Electronically Stored Information According to Its Instruction
5
Iowa Supreme Court Adopts New Evidence Rule 5.502 Addressing the Disclosure of Information Subject to the Attorney-Client Privilege and Work Product
6
Appellate Court Finds Trial Court Abused its Discretion by Failing to Impose Terminating Sanctions for Discovery Abuses, Directs Entry of Default Judgment
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Upcoming Events
8
Finding Plaintiffs’ Ex-Employee and his New Employers Culpable for the Spoliation of Ex-Employee’s Laptop, Court Orders Adverse Inference and Monetary Sanctions
9
Finding Defendants’ Behavior “a Textbook Case of Discovery Abuse,” Court Orders $1,022,700 in Monetary Sanctions
10
Court Declines to Compel Production of Documents from Foreign Jurisdiction upon Finding a Lack of Personal Jurisdiction and where Certain Documents are Protected from Production by Israeli Law

Magistrate Judge Declines to Compel Plaintiff to Categorically Organize Documents that were Produced as Kept in the Usual Course of Business

Valeo Elec. Sys., Inc. v. Cleveland Die & Mfg. Co., 2009 WL 1803216 (E.D. Mich. June 17, 2009)

In response to defendant’s requests for production, plaintiff produced over 270,000 pages of emails and other electronically stored information (“ESI”) as they were kept in the usual course of business.  Plaintiff also produced two indices which identified the custodian for each bates range, the location the file was stored, document titles and “re:” lines of emails, and additional information regarding the creation and storage of the information produced.  Defendant argued that despite the information provided, it nonetheless had to open and review each file individually and alleged that plaintiff named the files “innocuously” in order to frustrate its review.  Discussing the relevant burden to a party producing its files as maintained in the usual course of business, the court found plaintiff had satisfied its burden under Fed. R. Civ. P. 34 and the parties’ agreement and denied defendant’s motion to compel plaintiff to organize the data into 28 specific categories.

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You Get What You Pay For: Court Allows Access to Defendant’s Relevant Backup Tapes and Email Archives provided Plaintiff is Willing to Bear the Costs

Kilpatrick v. Breg, Inc., 2009 WL 1764829 (S.D. Fla. June 22, 2009)

This case arose from plaintiff’s claim that defendant’s product caused plaintiff to develop a degenerative cartilage condition (chondrolysis), that defendant was aware of the risk of such a condition, and that defendant is therefore liable for plaintiff’s damages resulting from the condition.  In the course of discovery, plaintiff became concerned that defendant’s production of electronic discovery was incomplete and filed a motion to compel.  Acknowledging the validity of plaintiff’s concern but noting the unlikely possibility that any material new documents were located in defendant’s email archives or on disaster recovery tapes, the court concluded that plaintiff may, but was not required to, hire an outside vendor “for the purpose of confirming the completeness of [defendant’s] production, at is own expense” subject to specific conditions enumerated by the court.

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Court Orders Producing Party to Bear the Cost of Production but Not Conversion where Documents are Produced as Ordinarily Maintained, Declines to Compel Production of All Metadata

Dahl v. Bain Capital Partners, LLC, 2009 WL 1748526 (D. Mass. June 22, 2009)

In a comprehensive yet brief opinion, the court addressed several issues including the cost of conversion and production of electronically stored information (“ESI”) and the production of metadata, among other things.

Specifically, noting that “courts will rarely shift costs to the requesting party and this is not one of those exceptional circumstances,” the court declined to shift the cost of defendants’ production of electronically stored information (“ESI”) but held that defendants would not have to pay to change the format of their responsive documents and that plaintiffs would bear the cost for such modification, if desired.  In support of its holding, the court reasoned:

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Court Finds Request Overly Broad and Unduly Burdensome and Denies Motion to Compel but Orders Search of Electronically Stored Information According to Its Instruction

Kay Beer Distrib., Inc. v. Energy Brands, Inc., 2009 WL 1649592 (E.D. Wis. June 10, 2009)

Following the court’s award of partial summary judgment to defendant, the sole cause of action remaining was plaintiff’s claim for breach of an oral agreement.  In support of that claim, plaintiff sought to compel the production of five DVDs containing the results of defendant’s search for potentially responsive electronically stored information ("ESI") referencing plaintiff, including emails.  Because of the broad nature of defendant’s search, the DVDs contained some information that was privileged or otherwise non-discoverable.  Defendant opposed the request as overly broad and unduly burdensome “given the narrow issues remaining in the case.”  Moreover, defendant had previously produced responsive ESI, including ESI contained on the DVDs.  The court denied plaintiff’s motion to compel.  Having denied the motion, the court nonetheless recognized defendant’s obligation to “conduct reasonable searches” to respond to plaintiff’s discovery requests and ordered defendant to conduct additional searching of the ESI at issue as instructed by the court.

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Iowa Supreme Court Adopts New Evidence Rule 5.502 Addressing the Disclosure of Information Subject to the Attorney-Client Privilege and Work Product

On April 2, 2009, the Iowa Supreme Court approved the adoption of Evidence Rule 5.502 addressing the disclosure of information covered by the attorney-client privilege and work product.  Substantially similar to recently enacted Federal Rule of Evidence 502, the new rule outlines the effects of disclosure with regard to waiver, including the effect of inadvertent disclosure.  The rule became effective on June 1, 2009.

Click here to view the full text of the Supreme Court’s report.

Appellate Court Finds Trial Court Abused its Discretion by Failing to Impose Terminating Sanctions for Discovery Abuses, Directs Entry of Default Judgment

Doppes v. Bentley Motors, Inc., 94 Cal. Rptr. 3d 802 (Cal. Ct. App. 2009)

In this case arising from plaintiff’s claims of a foul odor in his new car and defendant’s failure to repair it, plaintiff repeatedly sought terminating sanctions from the trial court for defendant’s repeated and egregious discovery abuses.  Instead, the trial court ordered the jury would be instructed regarding defendant’s discovery failures and allowed to draw an adverse inference. Even when presented with additional evidence of defendant’s failures during trial, the trial court refused to award terminating sanctions.  On appeal, the appellate court found that the trial court abused its discretion in failing to impose terminating sanctions and remanded the case with instructions to strike defendant’s answer and enter default judgment, among other things.

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Upcoming Events

E-Discovery Workshop via HP Halo Telepresence Collaboration Studios – “E-Discovery in a Down Economy:  Achieving Litigation Readiness While Cutting Costs and Improving Outcomes”

July 16, 2009
HP Halo Studio Locations:
     New York, NY – 2 Penn Plaza, 8th Floor
     Marlborough, MA – 200 Forest St.
     Alpharetta, GA – 5555 Windward Parkway
9:30 – 12:30 PM

K&L Gates Partner, David Cohen, will co-facilitate this timely discussion covering a range of topics, including e-discovery readiness, identifying and addressing the risks of e-discovery, best practices of successful organizations, and how your business can achieve the balance of cutting costs, protecting your business, and preparing for the future, among others.

Click here to learn more.

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Finding Plaintiffs’ Ex-Employee and his New Employers Culpable for the Spoliation of Ex-Employee’s Laptop, Court Orders Adverse Inference and Monetary Sanctions

Beard Research, Inc. v. Kates, 981 A.2d 1175 (Del. Ch. 2009)

In this case, arising from plaintiffs’ claims that defendants interfered with business relationships and misappropriated trade secrets, plaintiffs sought sanctions against defendants for the destruction of information on a laptop computer which belonged to defendant Michael Kates, a former employee of plaintiffs.  The court refused to award default judgment, as requested, but ordered an adverse inference against Kates and ordered monetary sanctions against Kates and defendants Advanced Synthesis Group (“ASG”) and ASDI, Inc. (“ASDI”) resulting from Kates’s destruction of a relevant hard drive and ASG’s and ASDI’s failure to take reasonable steps to prevent that destruction.

Dr. Michael Kates was employed by plaintiffs between 1997 and February 2004.  In mid-2003, while still employed by plaintiffs, Kates purchased a Gateway laptop for business purposes.  Between 2003 and early 2004, Kates’s relationship with plaintiffs deteriorated.  In December 2003, Kates resigned from plaintiff C&B Research & Development, Inc. (“CB”) and on February 13, 2004, Kates also resigned from plaintiff Beard Research, Inc. (“BR”).  Kates began working at ASG three days later and eventually went to work for ASDI; he continued to use the Gateway laptop.  ASDI provided management services for ASG and both plaintiffs and defendants were involved in the sale of chemical compounds through a catalog, among other things.  On May 4, 2005, CB and BR filed suit against Kates, ASDI, ASG and others.

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Finding Defendants’ Behavior “a Textbook Case of Discovery Abuse,” Court Orders $1,022,700 in Monetary Sanctions

Kipperman v. Onex Corp., 2009 WL 1473708 (N.D. Ga. May 27, 2009)

In this constructive transfer and fraud case arising out of the 2003 bankruptcy of Magnatrax Corporation, plaintiff alleged numerous discovery abuses on the part of defendants and sought sanctions accordingly.  Among the abuses described were several allegations related to defendants’ failure to produce information stored on backup tapes, even upon being ordered to do so, and other various and related misdeeds.  Calling defendants actions a “textbook case of discovery abuse,” the court found in favor of plaintiff but declined to strike defendants’ answer, as requested, and ordered defendants to pay plaintiff $1,022,700 in monetary sanctions.

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Court Declines to Compel Production of Documents from Foreign Jurisdiction upon Finding a Lack of Personal Jurisdiction and where Certain Documents are Protected from Production by Israeli Law

Linde v. Arab Bank, PLC, 2009 WL 1456573 (E.D.N.Y. May 22, 2009)

In this case, defendant Arab Bank moved to compel production of documents, pursuant to subpoena, by non-parties Israel Discount Bank, Ltd. (“IDB”), its indirect, wholly –owned subsidiary, Israel Discount Bank of New York (“IDBNY”), and Bank Hapoalim (“Hapoalim”).  Arab Bank served its first subpoena on IDBNY seeking, among other things, the production of IDB documents located in Israel.  Arab Bank also served a second subpoena on IDBNY seeking “the production of identical information from its parent, IDB.”  Hapoalim was also served with a subpoena seeking the production of documents located in Israel.  IDBNY generally complied with the first subpoena but objected to the production of IDB documents located in Israel.  As to the second subpoena, IDBNY accepted service on behalf of itself, but not IDB, and IDB resisted the production of the documents sought based on the court’s lack of personal jurisdiction.  Hapoalim also resisted production arguing that much of the information sought was protected from discovery by Israeli law.  The court denied Arab Bank’s motion as to IDB documents located in Israel upon finding that IDBNY lacked sufficient control of such documents and because the court lacked personal jurisdiction over IDB.  The court also denied Arab Bank’s motion as to those documents protected by Israeli law, but indicated its willingness to require production of the other documents requested.

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