fyi from Kroll Ontrack
Case Law Update and E-Discovery News
July 2009 - Volume 9 Issue 7
Inside This Issue:
- Recent ESI Court Decisions
- Practice Points: Near De-Duplication & E-Mail Threading – Overcome
Redundant Data Woes and Gain a Better Understanding of Your Case
- News & Events
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Recent ESI Court Decisions
Court Orders Search of Server Data Contingent on Possibility of Keyword
Search
Feig v. Apple Org., Inc., 2009 WL 1515506 (S.D.Fla. May 29, 2009). In this
wrongful termination litigation, the plaintiff sought production of the
defendant's communications, including e-mails to and from the plaintiff. The
defendant claimed that production of employee e-mails referencing the
plaintiff was burdensome and would produce irrelevant documents. The
defendant also argued that its server was shut down when it went out of
business and that if the employee e-mail accounts were recreated, they would
be impossible to search by keyword. Rejecting the defendant's irrelevancy
argument, the court found that e-mails sent by the plaintiff's co-workers
could be reasonably calculated to lead to admissible evidence. Thus, the
court ordered an electronic search of the defendant's server data. The court
noted that if a keyword search proved impossible, the defendant could seek a
protective order provided it had support from a computer forensic expert.
***
LA Supreme Court Finds Court of Appeal Erred in Vacating Preliminary
Injunction Regarding Dissemination of Privileged E-Mails
Council of the City of New Orleans v. Washington, 2009 WL 1492869 (La. May
29, 2009). In this litigation, the Supreme Court of Louisiana held that the
Court of Appeal erred when it vacated the preliminary injunction issued by
the District Court since it considered a constitutional issue that was not
raised on appeal. Previously in Council of the City of New Orleans v.
Washington, 2009 WL 1300747 (La. App.4 Cir. May 12, 2009), the Court of
Appeal considered the defendant's appeal of the preliminary injunction
preventing the defendant from disseminating e-mails. The plaintiff argued
the e-mails were not sanitized for privilege, that ethical rules require
return of the documents, and that the temporary nature of the injunction did
not violate the defendant's First Amendment rights. Finding the injunction
violated the defendant's constitutional rights since the records had already
been released pursuant to a written public records request, the Court of
Appeal vacated the injunction. The court recognized that ethical and
procedural violations would likely be asserted against the defendant if the
inadvertently privileged documents – by definition not public records – were
disseminated but found the constitutional issues overrode any ethical
concerns.
***
Court Imposes Sanctions for "Wasteful Wild Goose Chase"
Beard Research, Inc. v. Kates, 2009 WL 1515625 (Del.Ch. May 29, 2009). In
this tortious interference with business relations litigation, the
plaintiffs sought spoliation sanctions claiming a computer was irretrievably
altered after the defendants' preservation duty arose. Specifically, the
plaintiffs alleged the repeated reformatting of a personal computer and the
loss of a hard drive caused the destruction of relevant incriminating
e-mails and a presentation. The defendants argued there was no obligation to
preserve one of the defendant's computers since there was no request for it.
Finding this "mistaken view" let the defendants "off the hook too easily,"
the court determined the defendants were responsible for the evidence
destruction. The court also found the defendants liable for the loss of an
original hard drive. Based on these discovery abuses that led the plaintiffs
and their IT expert on a "wasteful wild goose chase," the court granted an
adverse inference sanction with regard to the presentation but declined to
sanction the loss of e-mails as the plaintiffs did not adequately prove
their existence. The court also awarded attorneys' fees and expenses
associated with the sanctions motion.
***
Court Rules Data on Backup Tapes Is Not Necessarily Not Reasonably
Accessible
Omnicare, Inc. v. Mariner Health Care Mgmt. Co., 2009 WL 1515609 (Del.Ch.
May 29, 2009). In this breach of contract litigation, the plaintiff moved to
compel restoration and production of e-mails contained on backup tapes at
the defendant's expense and to comply with the terms of a non-executed
e-discovery stipulation regarding search terms. The defendant's e-mails were
stored on backup tapes pursuant to an internal data retention policy. The
court denied the plaintiff's motion to compel backup tape restoration and to
shift costs to the defendant, finding that data stored on backup tapes are
not necessarily non-reasonably accessible and that the defendant had not
adequately demonstrated that the e-mails were not reasonably accessible.
However, the court was not convinced that relevant data would be retrieved
from restoration of the backup tapes. Accordingly, the court ordered
production from the defendant's active data stores in order to assess the
likelihood of finding relevant data on the backup tapes, noting that it
found no impropriety in the defendant's data retention policy. Turning to
the search term dispute, the court declined to resolve the issue as it had
not been adequately informed about the dispute and lacked a sufficient basis
to resolve the parties' impasse. The court noted the search term dispute may
best be resolved by "a neutral third party with recognized expertise in
searching complex databases."
***
Court Orders Forensic Imaging and Searching of Database and E-Mail Servers
Covad Commc'ns. Co. v. Revonet Inc., 2009 WL 1472345 (D.D.C. May 27, 2009).
In this ongoing trade secrets misappropriation litigation, the plaintiff
sought forensic images of the defendant's drives and computers as well as
forensic searches of its database and e-mail servers. The defendant argued
that its servers were too fragile for forensic images and that imaging
constituted an undue burden. The defendant also objected to the forensic
search of its servers, claiming it may reveal information that the defendant
is obliged by contract to keep confidential. Disregarding the defendant's
arguments, the court granted the plaintiff's request for forensic imaging,
finding the imaging would not stress the servers any more than day-to-day
use. The court also ordered the forensic search of the defendant's servers,
stating that no alternative way existed and that any confidential material
could be safeguarded by a protective order. Regarding the e-mail servers,
the court determined insufficient authority existed to conclude ESI
deficiency allegations automatically warranted forensic searches. The court
reserved decision on whether forensic examination was appropriate until the
plaintiff's expert's report was submitted. The court also ordered a
comparison between servers to determine what data existed on non-operational
servers that did not exist on the remaining operational one.
***
Court Stops Short of Default Judgment in "Textbook Case" of Discovery Abuse
but Awards More Than One Million Dollars in Monetary Sanctions
Kipperman v. Onex Corp., 2009 WL 1473708 (N.D.Ga. May 27, 2009). In this
constructive transfer and fraud case, the plaintiff sought sanctions in the
form of a default judgment against the defendant for discovery abuses. The
plaintiff asserted that the defendant repeatedly defied court orders,
unilaterally narrowed the scope of restoration and production of
court-ordered backup tapes, unilaterally redacted court-ordered produced
documents to the point that such documents became unusable and
misrepresented to the court the likely relevance of e-mails sought. The
defendants maintained that their redactions were in compliance with the
court's orders and insisted that the broad discovery requested by the
plaintiff would likely be fruitless. The court agreed with the plaintiffs
that the defendant had blatantly disregarded court orders by making
misrepresentations during discovery and stated it was deeply disturbed by
the defendant's discovery conduct in what it regarded as "a textbook case of
discovery abuse." However, the court declined to order default sanctions,
citing novel issues of liability and noting that granting a default judgment
in this case might be a grant of the largest default judgment sought in
United States history. The court alternatively awarded $1,022,700 in
monetary sanctions against the defendant to be paid to the plaintiff.
***
Court Denies Discovery of Documents Protected by Israeli Confidentiality
Laws
Linde v. Arab Bank, 2009 WL 1456573 (E.D.N.Y. May 22, 2009). In this case
arising out of the Anti-Terrorism Act and the Alien Tort Claims Act, the
defendant sought production of documents from three non-parties. The
defendant first sought production of documents from Israel Discount Bank New
York (IDBNY) held in Israel by IDBNY's parent company Israel Discount Bank
(IDB). The defendant also sought production of documents from Bank Hapoalim,
which objected to production citing various Israeli laws including laws
against self-incrimination. Citing IDB's insignificant relationship to the
litigation and that IDBNY was not a "mere department" of IDB, the court
refused to allow jurisdictional discovery of documents held by IDB. Turning
to the second request, the court rejected the non-party's claims of
self-incrimination and commercial secrets laws violations but felt the other
legal arguments raised constituted "prohibitions on disclosure that raise a
true conflict between United States discovery rules and Israeli
confidentiality laws." The court considered five factors contained within
the § 442 of the Restatement (Third) of the Foreign Relations Law of the
United States: the importance of the investigation of the documents, the
specificity of the request, whether the information originated in the United
States, the availability of alternative means of securing the information,
and the extent to which noncompliance would undermine American interests or
compliance would undermine the interests of the state in which the
information is located. Noting all factors, except for the specificity
requirement, weighed in favor of the non-party, the court denied discovery
of the materials protected by Israeli confidentiality laws but ordered
production of the remaining materials.
***
Court Issues Evidence Preclusion Sanction for Preservation Failure
Innis Arden Golf Club v. Pitney Bowes, Inc., 2009 WL 1416169 (D.Conn. May
21, 2009). In this environmental law litigation, the defendant sought
sanctions alleging the plaintiff failed to preserve electronic data packages
associated with soil sample testing. Noting the data at issue was
indisputably destroyed, the court analyzed whether a preservation obligation
existed and whether sanctions were warranted. The court found a duty to
preserve arose by mid-2005 at the latest, when the plaintiff's documents
evinced an understanding that the evidence would be critical to the upcoming
litigation. Citing the plaintiff's own recognition of the importance of the
evidence, the court rejected the plaintiff's argument that destruction
should be excused since the defendant did not demonstrate an intent to rely
on the evidence during litigation. Noting an adverse inference would be an
insufficient remedy, the court found the appropriate sanction to be
preclusion of the evidence.
***
Court Imposes Adverse Inference Citing Party's Failure to Preserve Relevant
ESI
Plunk v. Village of Elwood, IL, 2009 WL 1444436 (N.D.Ill. May 20, 2009). In
this civil rights action, both parties filed a "slew of pretrial motions."
The defendants argued the court should bar the plaintiffs' expert from
testifying unless discovery was re-opened. The plaintiffs requested an
examination of the defendants' computer system by their expert to determine
if any deleted ESI was backed up. The plaintiffs also sought default
judgment sanctions based on the defendants' destruction of an audio
recording, failure to preserve data on computers and hard drives, and
failure to back up relevant ESI. Addressing the defendants' motion, the
court found the defendants' discovery failures and withdrawn expert
statement that certain hard drives were not wiped clean necessitated
testimony from the plaintiffs' expert, and thus allowed a short deposition
from the plaintiffs' expert at cost to the defendants as a "fair discovery
sanction for defendants' failure to follow the rules." Turning to the
plaintiffs' motions, the court denied the examination request as expensive
and futile. Regarding sanctions, the court rejected the defendants'
arguments that evidence erasure was inadvertent and found the defendants
breached their preservation obligations. The court determined an adverse
inference sanction was appropriate, using the plaintiffs' expert's
identification of e-mail chains suggesting relevant documents were destroyed
accidentally or intentionally as partial justification.
***
Motion to Re-Produce Documents in Native Format Denied Despite Initial
Native Production Request After Unreasonable Delay in Objection
Ford Motor Co. v. Edgewood Properties, Inc., 2009 WL 1416223 (D.N.J. May 19,
2009). In this environmental litigation, the defendant moved for
re-production in native format of the plaintiffs' entire ESI production
previously produced in TIFF format and for a keyword search by a forensic
expert to confirm the adequacy of the plaintiffs' manual document collection
process. The plaintiffs had demanded native production in their initial
document request and argued the keyword search was appropriate to confirm
the adequacy of the defendant's collection, as certain documents were
noticeably absent from production. The court denied the defendant's motion
for re-production, finding the defendant waived its objection to production
format by failing to make a timely objection; the defendant waited eight
months to first object to the requested production format and an additional
two months before bringing the matter to the court's attention. Turning to
the second motion, the court found that the defendant had not made a
colorable showing that documents had been withheld because of inadequate
collection. The court accordingly held that it would not grant the
burdensome discovery requested based on "nefarious speculation" of missing
documents this "late in the game."
***
Court Grants Adverse Inference Sanction Finding Intentional or Reckless
Destruction of Computers and Thumb Drive
Triton Constr. Co. v. Eastern Shore Elec. Servs., Inc., 2009 WL 1387115
(Del.Ch. May 18, 2009). In this breach of fiduciary duty litigation, the
plaintiff sought an adverse inference instruction claiming the defendant
intentionally destroyed ESI on his work computer and did not produce his
personal laptop or thumb drive. The plaintiff retained a computer forensic
expert who found a wiping program installed on the computer that made
certain files and deleted e-mails irretrievable. The defendant argued he
never used wiping software and no longer owned the home computer or thumb
drive. Finding the defendant intentionally, or at least recklessly,
destroyed relevant evidence on his work computer and intentionally failed to
preserve evidence on the other media forms, the court imposed an adverse
inference sanction.
***
Court Denied Motion to Compel and Refused Cost-Shifting, Citing Lack of Bad
Faith
Robert v. Board of County Comm'rs of Brown County, Kan., 2009 WL 1362530
(D.Kan. May 14, 2009). In this employment litigation, the plaintiff moved to
compel production of a single e-mail. The plaintiff argued the court should
order a forensic search for the e-mail by an outside expert at the
defendants' expense. The defendants had offered to allow the plaintiff to
conduct a forensic search at her own expensive but the plaintiff rebuffed
the offer, citing insufficient resources. The defendants asserted they had
been unable to recover the e-mail and additional searches were futile
because the hard drive had been irreparably damaged. The court denied the
motion and refused to shift the costs, finding no evidence of bad faith by
the defendants. The court further rejected the plaintiff's alternative
request that the defendants contact their e-mail provider to acquire the
message, reasoning the defendants are only obligated to produce documents in
their possession or control.
***
Mere Speculation of Destruction of Relevant E-Mails Insufficient to Justify
Sanctions
Phillips v. Potter, 2009 WL 1362049 (W.D.Pa. May 14, 2009). In this sexual
discrimination case, the plaintiff filed a motion for sanctions based on the
defendant's failure to preserve electronically stored information; the
defendant admitted that a litigation hold was not put into place after
litigation became foreseeable and that e-mails were destroyed by an
automatic deletion system as a result. The defendant argued that sanctions
were nevertheless inappropriate because the e-mails destroyed were not
relevant. The court agreed with the defendant that there was no evidence of
destruction of relevant documents and refused to order sanctions arising out
of "mere speculation" that relevant documents were destroyed, noting also
that there was no indication of any bad intent on the part of the defendant.
***
Court Orders Mirror-Imaging of Hard Drive in File Sharing Case
Capitol Records, Inc. v. Alaujan, 2009 WL 1292977 (D.Mass. May 6, 2009). In
this copyright infringement case, the defendant moved for a protective order
to prevent the mirror imaging of two computers. The defendant argued the
discovery was overbroad, an invasion of privacy and violated attorney-client
privilege. The plaintiffs sought inspection of the computers to determine
whether they were used for file sharing. The court granted the protective
order and denied imaging with regard to one of the computers that was barely
addressed by the plaintiffs in their response to the defendant's motion. The
court allowed imaging of the second computer subject to a protective order
whereby the plaintiffs would select a computer forensic expert to examine
relevant, non-privileged data on the computer, citing the centrality of the
second computer to the litigation alongside the defendant's substantial
privacy concerns. The court ordered the expert would provide a report
describing any relevant files to the defendant's counsel, who would have
five days to lodge any objection before disclosing the report to the
plaintiffs.
***
Court Chastises All Parties in E-Discovery Dispute for "Procedural
Wrangling"
Technical Sales Associates, Inc. v. Ohio Star Forge Co., 2009 U.S. Dist.
(E.D.Mich. May 1, 2009). In this sales contract dispute, a third-party
forensic examination corporation sought attorneys' fees and costs for its
defense against an unsuccessful motion for contempt filed by the defendant.
The defendant had moved for contempt arguing that the third party's
disclosure of findings of spoliation to the plaintiff directly, without
noticing the defendant, was a violation of the stipulated order. The court
ruled that the third party had not violated the stipulated order because the
order dealt narrowly with the discovery of actual data and did not govern
the discovery of wrongdoing. The court, however, determined that the third
party was not "free from taint" and should have provided the substance of
the report to the defendant. The court further noted that all the parties
had behaved poorly by engaging in "procedural wrangling" during discovery,
resulting in an electronic discovery dispute that "has become the sideshow
which eclipses the circus." The court ordered the third party to submit its
billing records but reserved decision on the motion until the end of the
case consistent with the determination of the sanctions motion.
To view additional case summaries visit:
http://www.krollontrack.com/case-summaries/?news=US_CaseLaw_July_09_txt.
--
Peterk
Richmond, Va
"I want to keep what I earn" is regarded as greedy and unenlightened.
"I want to take what you earn" is regarded as selfless and progressive.
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