E-Discovery Law Alert

Predictive Coding Upheld by District Court: Judge Carter Endorses Judge Peck's Approval of Computer-Assisted ESI Review

Phillip J. Duffy — Wed, 16 May 2012 09:33:14 -0500

On March 2, 2012, we reported on Magistrate Judge Andrew Peck's February 24, 2012 decision in Monique Da Silva Moore, et al., v. Publicis Groupe & MSL Group, Civ. No. 11-1279 (ALC)(AJP) (S.D.N.Y. Feb. 24, 2012), wherein Judge Peck issued the first judicial opinion approving the use of predictive coding "in appropriate cases." You can read that blog post here. On April 25, 2012, District Judge Andrew L. Carter, Jr. rejected plaintiffs' bid to overturn that decision, and cleared the way for the use of computer-assisted ESI review in this case and others. Monique Da Silva Moore, et al., v. Publicis Groupe & MSL Group, Civ. No. 11-1279 (ALC)(AJP) (S.D.N.Y. Apr. 25, 2012).

Judge Peck originally approved the use of predictive coding in Da Silva Moore based on several factors, including the parties' theoretical agreement with the concept, the need to review an enormous data set in excess of 3 million documents, the superiority of computer-assisted review over the alternatives (manual review or keyword searches), the need for cost effectiveness and proportionality under Fed. R. Civ. P.26(b)(2)(C) and the “transparent” process defendants proposed. But he did so over plaintiffs' continued objections, which were detailed in the papers plaintiffs submitted to District Judge Carter on February 22, 2012, and which Judge Peck essentially disposed of in his opinion issued two days later.

When defendants responded to plaintiffs' objections on March 7, 2012, plaintiffs' cried foul and requested leave of District Judge Carter to respond. In sum, plaintiffs contended Judge Peck's written analysis went well-beyond the rationale he articulated from the bench at the February 8, 2012 hearing on which his opinion was based and, further, relied on materials not previously discussed or referenced by the parties. Plaintiffs also objected to the inequity of allowing defendants to respond to plaintiffs' objections after having the advantage of digesting Judge Peck's decision. District Judge Carter granted plaintiffs' request, and plaintiffs filed further detailed objections to defendants' protocol and Judge Peck's rulings. For good measure, plaintiffs also informally asked Judge Peck (by letter) to recuse himself from the case based largely on his participation and comments at e-discovery conferences discussing his support for the use of predictive coding. Judge Peck refused and, in his April 2, 2012 Order, defended himself against plaintiffs' accusations of bias and specifically cautioned plaintiffs to "re-think their scorched earth approach" to the litigation. Judge Peck also predicted his admonition would fall on deaf ears, and it did; on April 13, 2012, plaintiffs formally moved for his recusal, which is pending.

Against this background, District Judge Carter clearly had much to contend with in reviewing and considering plaintiffs' objections. The Court began by summarizing plaintiffs' arguments, to the effect that Judge Peck’s decision was erroneous and contrary to law because the ESI protocol lacks "generally accepted reliability standards" and, as such, its use violates Fed. R. Civ. P. 26 and Fed R. Evid. 702, and that Judge Peck failed to hold an evidentiary hearing and therefore adopted the protocol on an insufficient record and further went beyond the record by considering documents not discussed in the parties initial submissions. Although Judge Carter next proceeded to set forth the case law establishing the applicable "highly deferential standard of review", the Court might just as well have started or even abbreviated its discussion with the concluding sentence of its opinion: "[t]he Court reminds the parties that it affords Judge Peck's non-dispositive rulings great deference and that magistrate judges generally have broad latitude with respect to discovery issues."

Judge Carter adopted Judge Peck's rulings, characterizing them as well-reasoned and generally praising their consideration of the "potential advantages and pitfalls" of predictive coding software. Rejecting plaintiffs' objections, the Court specifically noted that the protocol contained "standards for measuring the reliability of the process" and that "the protocol builds in levels of participation by Plaintiffs." The Court highlighted plaintiffs’ ability to raise concerns about the relevance of culled documents with Judge Peck before final production and found "insufficient evidence" to conclude that the parties’ use of predictive coding software would deprive plaintiffs of "liberal discovery."

The Court also found plaintiffs' reliability arguments "premature" and rejected their arguments regarding the need for an evidentiary hearing, explaining that "if the method appears unreliable as the litigation continues and the parties continue to dispute its effectiveness," Judge Peck could hold the evidentiary hearing later to address those issues. Judge Carter concluded the point by noting that "if the method provided in the protocol does not work or if the sample size is indeed too small to properly apply the technology, the Court will not preclude Plaintiffs from receiving relevant information, but to call the method unreliable at this stage is speculative." In concluding his review, Judge Carter observed "[t]here simply is no review tool that guarantees perfection" and specifically identified the risks inherent in manual and keyword searching. Ultimately finding no basis to disturb Judge Peck's findings that the use of predictive coding software was "more appropriate than keyword searching" in "this particular case," Judge Carter upheld Judge Peck's rulings and denied plaintiffs' objections.

In our initial blog posting discussing Judge Peck's decision, we indicated that Da Silva Moore is significant because it opened the door for parties to consider the use of computer assisted review in appropriate cases without the fear that a party or judge will resist based on a perceived lack of acceptance. Judge Carter's adoption of Judge Peck's rulings constitutes a big, bold underlining of that statement, and regardless of the outcome of any further proceedings, we can expect a great deal of interest in and use of predictive coding technology going forward.

Phillip J. Duffy is a Director on the Gibbons E-Discovery Task Force.

ESI Guidelines for the Bankruptcy Case: The ABA's Electronic Discovery in Bankruptcy Working Group Issues Interim Report

Christopher A. Albanese — Mon, 14 May 2012 09:45:50 -0500

Although the Federal Rules of Civil Procedure were updated in 2006 specifically to deal with electronically stored information (“ESI”), Bankruptcy Courts and Bankruptcy practitioners have had little bankruptcy-specific guidelines for managing ESI and electronic discovery issues. As a result, the ABA commissioned the Electronic Discovery (ESI) in Bankruptcy Working Group “to study and prepare guidelines or a best practices report on the scope and timing of a party’s obligation to preserve [ESI] in bankruptcy cases.” On March 15, 2012, the Working Group published their interim report on ESI in bankruptcy cases in an effort to invite and stimulate comments from a wider audience regarding how ESI issues should be handled in (i) large Chapter 11 cases; (ii) middle market and smaller Chapter 11 cases; and (iii) Chapter 7 and Chapter 13 cases.

The Working Group’s primary focus has been on a Chapter 11 debtor-in-possession’s obligation to preserve ESI in connection with adversary proceedings, contested matters and the bankruptcy case itself, as well as the obligation of non-debtor parties to preserve ESI. Although the report differentiates between cases based on the size of the bankrupt entity and whether it has commenced a reorganization or liquidation proceeding, the principles espoused throughout the report are similar, with the differences primarily being focused on the economic constraints of each type of case.

The proposed standards, not surprisingly, contemplate that the duty to preserve ESI applies in the bankruptcy context. Tracking the traditional standards, the duty to preserve ESI arises when the lawsuit is filed or potential litigation matters become reasonably anticipated. Conversely, the actual or anticipated filing of a bankruptcy case would not, by itself, require a debtor to preserve every piece of information in its possession. Instead, it would, in general, be appropriate for the debtors to continue following routine document retention programs, consistent with the reasonable anticipation of contested matters and adversary proceedings.

One unique principle proposed by the Working Group recognizes that proportionality, an important issue in non-bankruptcy matters, is key to bankruptcy cases. In general, debtors are operating with financial constraints and usually have limited assets, and creditors can generally expect less than a full recovery on their claims. In recognition of this, the Working Group suggests that debtors and trustees should not be forced to spend a disproportionate amount of the debtors’ limited resources on the preservation and production of ESI.

Finally, the principles encourage counsel to meet and confer with respect to ESI issues even where Bankruptcy Rule 7026 does not apply, such as contested matters. Given the nature of a bankruptcy case, where, ideally, disputes are resolved quickly and efficiently to avoid dissipating estate assets, such a conference may help to minimize disputes and promote this efficiency.

In addition, the Working Group provided ESI guidelines and suggested best practices for debtor’s counsel. While not applicable or practical in every bankruptcy case, these guidelines suggest that ESI should be dealt with as a whole at the beginning of a case, as opposed to using a piecemeal approach during the case. The Working Group suggests this approach will prove to be more efficient and less burdensome to the debtor.

Gibbons P.C. continues to monitor the Working Group and will issue an update upon the release of additional interim reports or the final report.

Christopher A. Albanese is an Associate in the Gibbons Financial Restructuring & Creditors' Rights Department. Jeffrey S. Berkowitz, Counsel to the Gibbons Financial Restructuring & Creditors' Rights Department, co-authored this post.

Surf at Your Own Risk: For the First Time in New Jersey, Judge Holds Juror In Contempt for Internet Use During Deliberations

Mara E. Zazzali-Hogan — Tue, 24 Apr 2012 09:35:48 -0500

Last month, the Hon. Peter E. Doyne, A.J.S.C. found jury foreperson Daniel M. Kaminsky to be in criminal contempt pursuant to R. 1:10-2 for violating several orders of the trial judge that prohibited jurors from engaging in any independent research during trial as set forth in In re Kaminsky, (N.J. Sup. Ct., Bergen County, Mar. 12, 2012). After a mistrial was declared in the underlying criminal drug case and two fellow jurors reported Kaminsky’s Internet use, the Court found beyond a reasonable doubt, in the context of an Order to Show Cause hearing and related in camera proceedings, that (1) Kaminsky conducted independent research; (2) the act was contemptuous; and (3) the conduct was willful and contumacious, “with a complete disregard of the court’s authority and instructions.” Although the foreperson was subject to a maximum punishment of six months in prison, a $1,000 fine or both, he was only fined $500.

During the proceedings, the jury was repeatedly advised that Internet and other independent research was prohibited because their deliberations and the verdict should be based solely on the evidence introduced in the courtroom. They were informed of the prohibition during the voir dire process, after being sworn, before each break, and at the end of the day. Nonetheless, during the deliberation phase, the jury foreperson researched the defendant's potential punishment on the Internet, concluding that the penalty could range from ten to twenty years. He found this result to be particularly severe because the defendant was a young man, to the point that the foreperson became physically sick and very emotional at the thought of the defendant be subjected to a long incarceration.

One of the jurors who reported the foreperson felt he had become “tainted” because his independent research concerning the potential penalty drove his deliberations and likely influenced two other jurors. The Court concluded that the foreperson had not researched the specifics of the case at issue was of no moment. Similarly, that the trial judge did not specifically “elucidate every single possible subject which a juror is prohibited from researching” was not relevant. The critical fact was that the foreperson was relying on information that was not admitted as evidence, thereby disobeying the Court’s instructions.

Judge Doyne acknowledged that in New Jersey the “sanctioning of a juror who has violated a jury instruction to refrain from independent research, generally by way of the internet, appears to be absent.” This improper research, however, was not a novel issue for this particular Judge. Click here for a prior blog post regarding Judge Doyne. Nor, as we have previously discussed, is it a unique phenomenon. (For reasons why social media seems to be improperly perceived differently from other traditional means of communication, click here.) Ultimately, Judge Doyne was concerned that there exists the greater problem of general juror disobedience and the failure of some jurors to “conscientiously discharge their duties.” At the same time, he made clear how much he valued the courage and honesty of the two jurors who reported the foreperson. He also emphasized that that the foreperson did not have evil or malevolent intentions. It is clear from this opinion and his prior experience that the Judge did not want to attack jurors and respects their essential functions. Rather, he recommended here, as he had before, that the State’s Model Criminal Jury Charges be revised “to better communicate the importance of obedience to the court’s instructions,” including an explanation of the “reasons for the prohibition on juror research” as well as the “possible punishments for disobedience.”

Will revising the State’s Model Criminal Jury Charges eradicate all instances of jurors conducting research on the Internet? Given the prevalence of such conduct, probably not. But as Judge Doyne noted, jurors generally “possess sufficient discipline, patience, and sense of civic duty” to obey court directives. Thus, if the importance of those directives is clearly conveyed, we will hopefully see a decline in the objectionable behavior and an accompanying improvement in the jury trial system.

Mara E. Zazzali-Hogan is a Director on the Gibbons E-Discovery Task Force.

CAFC Chief Judge Rader on Curbing E-Discovery, Part II

Ralph A. Dengler — Fri, 13 Apr 2012 08:31:09 -0500

In succession to remarks he made this past Fall about the soaring costs of electronic discovery in IP cases and unveiling the Model Order Regarding E-Discovery in Patent Cases, Federal Circuit Chief Judge Randall Rader recently told the ABA Section of IP Law that both the bar and the bench together, must continue to rein in the high costs of e-discovery. Chief Judge Rader suggested that attorneys’ need to limit their e-discovery requests and courts should consider implementing rules to facilitate efficient and cost effective discovery, as many have begun to do. The text of Chief Judge Rader’s speech may be viewed here.

The Chief Judge noted that in other countries, discovery practice is much more restrictive than in the U.S., making patent litigations, among other cases, easier and quicker to handle. In recent years, there has been significant movement in the U.S. to curtail e-discovery. For example, the Districts of Delaware, Kansas and Maryland all have adopted some form of default standards for e-discovery. The Seventh Circuit is in the second phase of its electronic discovery pilot program, and the U.S. International Trade Commission is considering implementing its own rules.

Most recently, in early March, the Eastern District of Texas proposed a Model Order that is based off of Chief Judge Rader’s Model Order, but differs in many ways. The Federal Circuit’s Model Order suggests that a requesting party be limited to e-mail discovery from five custodians with five search terms per custodian, while the Eastern District of Texas’ proposal calls for limits of eight custodians and 10 search terms. Additionally, the Eastern District of Texas’ proposal provides for limited written discovery and a deposition before the service of e-mail production requests.

Although the Eastern District of Texas’ proposed e-discovery order differs from the Federal Circuit’s Model Order, it reflects the intentions Chief Judge Rader had when he introduced the Model Order. Among the Chief Judge Rader’s other comments on the topic, he noted that some type of limitation on e-discovery is called for, regardless of the method and how closely it follows the Federal Circuit’s actual model.

Gibbons will continue to monitor e-discovery developments, and their impact on our clients.

Ralph A. Dengler is Counsel to the Gibbons Intellectual Property Department. Charles H. Chevalier, an Associate in the Gibbons Intellectual Property Department, co-authored this post. This blog post originally appeared on Gibbons IP Law Alert on April 13, 2012.

Pinterest: Potential IP Pitfalls for New Social Networking Trend

Owen J. McKeon — Thu, 05 Apr 2012 09:13:58 -0500

Pinterest, a play on words of “pin” and “interest,” is a virtual, online “pin board,” where user’s can organize and share things they find on the web. While Pinterest is attracting a loyal community of social media users, the site is also the source of some concern for those same users and owners of intellectual property.

The stated Mission of Pinterest is “to connect everyone in the world through the ‘things’ they find interesting . . . a favorite book, toy, or recipe [which] can reveal a common link between two people. With millions of new pins added every week, Pinterest is connecting people all over the world based on shared tastes and interests.” According to the website, a “pin” is an image added to a user’s Pinterest “board” from either a website or as an uploaded image from a user’s computer. Users add the “Pin It” applet to their web browser, which then allows a user to add a pin (an image) by clicking on the “Pin It” button, and adding the requested pin to the user’s pinboard.

For those individuals and companies looking to capitalize on the free promotion that Pinterest offers, they can add a “Pin It” button to their webpages which looks and functions similarly to the buttons offered by other social media websites. Adding another “button” to companies’ webpages is another avenue to increase the social awareness of a brand or products. While many brand owners, companies and individuals will appreciate being “pinned” by users, there will undoubtedly be those who object.

In an effort to clarify policies and protect itself from liability for infringement, Pinterest founder Ben Silbermann posted a blog entry on Friday, March 23, 2012 announcing that the website would be updating its terms of service effective April 6, 2012, including privacy policies and acceptable-use. Pinterest’s newly-adopted policies will likely provide it with the full protection of DMCA and insulate it from claims of infringement.

The bigger threat to Pinterest’s long term viability, however, could come from concerns that its users may be exposing themselves to potential liability by “pinning” third parties’ content without permission. In reality, a sure way for Pinterest users to avoid problems is for Pinterest users to pin only content they create or have permission to use. Only time will tell whether users’ liability concerns will impact Pinterest’s increasing popularity.

For the time being, interest in Pinterest will continue to grow, as will the copyright and trademark implications for the site. With offices in New York City, Newark, Trenton, Philadelphia and Wilmington, Gibbons P.C. stands ready to provide counsel on this, and all other IP matters.

Owen J. McKeon is a Director in the Gibbons Intellectual Property Department. Todd M. Nosher, an Associate in the Gibbons Intellectual Property Department, co-authored this post. This blog post originally appeared on Gibbons IP Law Alert on March 30, 2012.

E-SIN: Court Orders Identification of Suspected Porn Pirates

Paul E. Asfendis — Mon, 02 Apr 2012 13:55:49 -0500

“Anonymous” copyright infringers -- in this case the downloaders of a pornographic video -- should take note of a recent decision. In what is becoming increasingly common, a court was recently asked by a copyright holder to issue an order requiring non-party Internet Service Providers (“ISP”) to identify individual Internet users for purposes of filing a copyright lawsuit against them pursuant to 17 U.S.C. § 101 et seq.

In Digital Sin, Inc. v. John Does 1-176, 12-cv-00176 (S.D.N.Y., Jan. 30, 2012), Plaintiff, a producer of digital porn, in this case “My Little Panties #2,” sought and obtained Internet Protocol (“IP”) addresses from which their video had been illegally downloaded and shared by a “swarm” or group of interacting users -- 176 IP addresses in all. After filing suit against 176 John Doe defendants in the Southern District of New York, Digital Sin filed a motion for expedited discovery, seeking access from the ISPs to the names as well as the e-mail, physical and Media Access Control addresses of the individuals connected to those IP addresses.

District Judge Alison J. Nathan found “good cause” for Digital Sin’s request under Fed. R. Civ. P. 26(d) and (f) to issue pre-meet and confer Rule 45 subpoenas so as to avoid the federal law, 47 U.S.C. § 551(c), barring ISPs from disclosing the identities of putative defendants without a court order. Judge Nathan determined that expedited discovery was necessary to prevent the requested data from being lost as a part of the routine deletions by ISPs.

However, due to the sensitive nature of the matter and the potential for annoyance and embarrassment of the identified individuals (many of whom may not even have been the ones that actually downloaded and shared the pornographic video), the Court also issued a protective order allowing the putative defendants and ISPs to be heard before information could be revealed to Digital Sin. Specifically, the Court ordered that the ISPs were prohibited from producing the Doe Defendants’ identifying information before the expiration of a 60-day period during which the John Does could move to quash the subpoena. In an unusual twist, the Court also allowed anyone who moved to quash or modify the subpoena to proceed anonymously if they wished.

There are at least two important take aways from the Digital Sin decision. First, courts will not hesitate to order non-parties to disclose electronic information that is relevant to the litigation at hand, including for purposes of identifying putative defendants who may have broken the law. Second, depending on the subject matter, courts will also be sensitive to the risk of mis-identification or misuse of such information and will therefore attempt to minimize any potential harm to innocent parties.

Paul E. Asfendis is a Director on the Gibbons E-Discovery Task Force.

Inadvertent Production of Two Privileged Pages Among Over Two Million May Waive the Attorney-Client Privilege

Paul A. Saso — Fri, 30 Mar 2012 09:27:35 -0500

The burdens associated with a massive document review of electronically-stored information (“ESI”) will not, in and of themselves, preclude a court from finding that a party has waived the attorney-client privilege with respect to an inadvertently produced document. In Jacob v. Duane Reade, Inc., Magistrate Judge Katz of the United States District Court for the Southern District of New York held that a privileged, two-page email that was inadvertently produced during the review of over two million documents in less than one month did not have to be returned and that the privilege had been waived because the producing party, Duane Reade, had failed to timely request its return. Duane Reade had used an outside vendor and review team to conduct its review of this large volume of ESI. The document in question concerned a meeting among several individuals, including an in-house attorney at Duane Reade. Duane Reade argued that the email was inadvertently produced because it was neither from nor to an attorney, and only included advice received at a meeting from an in-house attorney, identified in the email only by the first name “Julie.”

After determining that the email was a privileged communication, the Court considered whether Duane Reade waived the privilege by producing it. Under the Second Circuit test for determining whether a party’s inadvertent disclosure constitutes a waiver of the privilege, the Court addressed the following factors: “(1) the reasonableness of the precautions to prevent inadvertent disclosure; (2) the time taken to rectify the error; (3) ‘the scope of the discovery;’ (4) the extent of the disclosure; and (5) an over [arching] issue of fairness.”

The Court determined that the production of the email was inadvertent and that Duane Reade had employed reasonable precautions— including drafting lists of attorney names, employing search filters and quality control reviews—to prevent inadvertent disclosures. However, the Court held that the privilege was waived because Duane Reade did not act “promptly to rectify the disclosure of the privileged email.” The email was produced on November 8, 2011 and was used as an exhibit at a deposition the following day. Duane Reade’s counsel did not object to questioning or the use of the email on the basis of privilege and did not ask the witness about the identity of “Julie.” Duane Reade argued that it was not until another attendee at the privileged meeting was noticed for deposition, two months later, that it discovered the privileged nature of the email and requested its return. The Court held that, because the email was the subject of deposition questions without objection to it being privileged, and because Duane Reade did not diligently work to identify the meeting attendees when the email was at least potentially privileged on its face, the privilege had been waived.

Duane Reade is not the first litigant to inadvertently produce a privileged email, resulting in waiver of the privilege. You can read about similar experiences involving other litigants here and here. Given the potential for inadvertent disclosure of privileged material in voluminous productions of ESI, litigators should employ various precautions to prevent such disclosure, such as those used by Duane Reade, and diligently protect the privilege when it is discovered that potentially privileged material has been produced. As we have previously discussed on this blog (in this post), parties should also seriously consider agreeing at the outset of litigation and requesting that the Court order, pursuant to Federal Rule of Evidence 502(d) and (e), that any disclosure of privileged material will not act as a waiver in the litigation. The rule specifically allows for this type of blanket protection, and properly drafted agreements can obviate any analysis of common law and FRE 502(b) multi-factor tests when disclosures occur.

Paul A. Saso is a Director on the Gibbons E-Discovery Task Force.

Third Circuit Finds That Failing to Produce Original Documents May Constitute Sanctionable Spoliation

Susan L. Nardone — Wed, 28 Mar 2012 09:12:53 -0500

Although in recent years employers have become increasingly focused on the preservation, discovery and production of electronically-stored information, the Third Circuit’s January 4, 2012 decision in Bull v. United Parcel Service serves as a reminder to companies that original documents can and often do play a critical role in employment litigation matters. The preservation and discovery of originals should not be overlooked. Employers should be certain to both request original documents in discovery (and pursue their production through motion practice as necessary) and take necessary steps to preserve originals when litigation is threatened or commenced.

In Bull, the Third Circuit was asked to review the District of New Jersey’s dismissal with prejudice of the plaintiff’s discrimination claim as a sanction for her failure to produce original notes from her health care provider. The primary issue in Bull was whether the production of only copies, when the original documents were available, constituted spoliation and justified the harsh sanction imposed by the District Court. The Third Circuit agreed with the District Court, in part, holding that “producing copies in instances where the originals have been requested may constitute spoliation if it would prevent discovering critical information.” However, the Court determined that based upon the facts of this case, the District Court had abused its discretion when it dismissed the plaintiff’s claims with prejudice.

Factual and Procedural Background

After suffering a work-related injury to her shoulder. UPS offered Plaintiff Lauren Bull a temporary work assignment and, when that assignment ended, she was out of work on Workers’ Compensation. Bull returned to work with restrictions imposed by her health care provider that, in the view of UPS, made it impossible to assign her work. Thereafter, Bull submitted two notes, a few months apart, from a different health care provider. UPS found the two notes to be inconsistent and illegible and requested, but was never provided with, the originals. Bull did not respond to requests that she provide a new doctor’s note and more information, and her discrimination suit followed.

During discovery, Bull produced copies of the notes in question, not the originals. When at trial UPS objected to the introduction of copies of the notes, Bull’s counsel insisted that the originals were no longer available, and the court overruled the objection. Further questioning (some by the Court) revealed that the original notes were at Bull’s home. Bull’s counsel explained that he had asked Bull multiple times for the original notes and she was not able to locate them. Although UPS suggested a less severe sanction, the District Court declared a mistrial and invited UPS to submit a motion for sanctions for Bull’s failure to produce the original notes. Five days later, Bull produced the original notes to the Court. The Court dismissed the case with prejudice, ruling that Bull’s failure to produce the original notes constituted spoliation.

Third Circuit’s Decision

The Third Circuit first examined whether producing copies instead of original documents constituted sanctionable spoliation. The Court affirmed its broad interpretation of spoliation, citing its decision in Brewer v. Quaker State Oil Refining Corp., when it wrote in the context of an adverse inference instruction: “[w]hen the contents of a document are relevant to an issue in a case, the trier of fact generally may receive the fact of the document’s nonproduction or destruction as evidence that the party that has prevented production did so out of the well-founded fear that the contents would harm him.” Equating the destruction of evidence with nonproduction, the Court reasoned that “under certain circumstances, nonproduction of evidence is rightfully characterized as spoliation.”

Having concluded that production of copies when originals have been requested may constitute spoliation, the Court turned to whether spoliation had occurred in this case. According to the Court, spoliation occurs when “the evidence was within the party’s control; the evidence is relevant to the claims or defenses in the case; there has been actual suppression or withholding of evidence; and the duty to preserve the evidence was reasonably foreseeable to the party.” There was no question that the first two elements were met. However, the Court disagreed with the District Court’s conclusion that Bull had intentionally withheld the originals despite knowledge of UPS’ repeated demands that the originals be produced. In what reads as a results-oriented decision, the Court concluded that Bull’s failure to turn over the originals was likely inadvertent, as there was no evidence that she actually knew that a request for the originals had been made. This was so despite a statement on the record during trial by Bull’s attorney that he had repeatedly requested the originals from Bull and Bull told him they were no longer available; and Bull’s testimony that she had never looked for the original documents. The Court also disagreed with the District Court’s characterization of “repeated requests” by UPS for the original documents. Bound by the slim record before it, the Third Circuit chastised the District Court for failing to develop an adequate record for its review.

The Court agreed with the District Court’s conclusion that Bull had a foreseeable duty to preserve and turn over the original notes but not without stating its “reservations.” In an interesting footnote, the Court acknowledged a “growing concern” relating to electronic documents and the difficulty of defining what constitutes an ”original” document. According to the Court, this leads to difficulty in determining “where the boundary of the objectively reasonable duty to preserve such documents lies.” In the Court’s view, counsel is obligated to ensure that their communications are clear in terms of what must be searched for, maintained and produced.

Having concluded that the original notes were not intentionally withheld and that there was no bad faith on Bull’s part, the Court held that the District Court had abused its discretion in finding that sanctionable spoliation had occurred. Although the Court’s conclusion rendered a review of the sanction imposed unnecessary, the Court nevertheless reviewed the record “in an abundance of caution” to determine whether dismissal with prejudice was appropriate. The Court reviewed each of the factors enunciated in Poulis v. State Farm Fire and Cas. Co. and concluded that the District Court had abused its discretion in ordering dismissal.

Implications for Employers

The Third Circuit’s decision is a mixed bag for employers. The Court’s determination that the failure to produce originals when requested can constitute spoliation has the potential to impact parties on both sides. The decision is tempered by its requirement that the original must contain “critical information” that could not be gleaned from a copy. In this case, the Court’s decision was further watered down by the less than compelling factual record and the Court’s apparent inclination to give the plaintiff the benefit of every doubt.

What lessons can be learned from this case? Employers involved in litigation should make an early request for the preservation and production of original documents and if originals are not made available, should pursue their production through motion practice. Waiting until trial to take issue with the failure to produce originals was UPS’ downfall. Similarly, employers must be certain to retain original documents when litigation is threatened or commenced to avoid being on the receiving end of a spoliation allegation.

To discuss any of your company’s employment or e-discovery needs, contact any attorney in the Gibbons Employment & Labor Law Department.

Susan L. Nardone is a Director on the Gibbons E-Discovery Task Force. This blog post originally appeared on Gibbons Employment Law Alert on March 27, 2012.

Not So Fast: Race Tires Court Gives a Flat to Momentum for Broad ESI Cost Shifting Under 28 U.S.C. §1920

Mark S. Sidoti — Tue, 27 Mar 2012 09:43:44 -0500

A Third Circuit Court of Appeals panel, including the Hon. Thomas I. Vanaskie, one of the leading judicial authorities in e-discovery, has spoken -- e-discovery-related cost recovery pursuant to 28 U.S.C. §1920 has limits; the costs must bear a reasonable connection to duplication of materials in the traditional sense to be recoverable by a prevailing party. As the first United States Court of Appeals decision to directly address this closely watched issue, this opinion may disarm a potentially powerful weapon in the already limited arsenal of parties burdened with excessive e-discovery costs.

The case is Race Tires America, Inc., et al. v. Hoosier Racing Tire Corporation et al., No. 11-2316 (3d Cir. Mar. 16, 2012) . It began in September 2007, when Race Tires filed its $90 million suit accusing Hoosier Racing Tire Corp. and Dirt Motor Sports Inc. of violating the Sherman Act by allegedly monopolizing the market for specialized tires. In September 2009, U.S. District Judge Terrence F. McVerry granted motions for summary judgment by Hoosier and Dirt Motor, finding that they had not committed antitrust violations, which was later affirmed by the Third Circuit. The defendants subsequently sought reimbursement of prevailing party costs pursuant Fed. R. Civ. P. 54(b) and §1920.

Throughout the course of the proceedings, Hoosier and Dirt Motor, using separate e-discovery vendors, claimed that they had incurred in excess of $365,000 in e-discovery costs, for activities including preservation and collection of ESI, processing of the collected ESI, keyword searching, culling for privileged material, scanning and TIFF conversion, optical character recognition (“OCR”) and conversion of videos to DVD format. In the application for costs, the defendants cited §1920(4) to recoup the costs of these activities, claiming that they represented fees for “exemplification” and the “costs of making copies of any materials where the copies are necessarily obtained for use in the case.” 28 U.S.C. §1920(4). The District Court found the amounts charged by the e-discovery vendors taxable as “the electronic equivalent of exemplification and copying” and awarded the costs to the defendants. The ruling was certainly not without precedent from other District Courts, including those within the Third Circuit. In several cases, including In re Aspartame Antitrust Litigation, 2011 WL 4793239 (E.D. Pa. 2011), CBT Flint Partners, LLC v. Return Path, Inc., 676 F.Supp. 2d 1376 (N.D. Ga. 2009), and Tibble v. Edison Int’l, (No. CV 07-5359 (C.D. Cal. Aug. 22, 2011), courts have awarded broad e-discovery costs under §1920(4).

Succintly framing the issue, the Race Tires Court stated “the question presented here is whether §1920(4) authorizes the taxation of an electronic discovery consultant’s charges for data collection, preservation, searching, culling, conversion, and production as either ‘exemplification [or] the …making [of] copies of any materials where the copies are necessarily obtained for use in the case.’” Writing for the panel, Judge Vanaskie prefaced the holding by conceding that the cost burdens of e-discovery are quite real and onerous, and becoming increasingly so. He also noted the 2008 amendments to §1920(4) which, in a nod to today’s digital world, clearly broadened the scope of cost recovery by replacing “copies of papers” with “the costs of making copies of any materials.” However, after carefully outlining the legislative history of §1920, the Court found that broad-based cost recovery for most e-discovery activities simply exceeds the statutory mandate.

The Court made short work of defendants’ claim that the e-discovery activities encompassed “exemplification” under the statute, holding that the term applied only to the production of “illustrative evidence or the authentication of public records.” The ESI services provided in this case served neither end.

Moving on to the “copying” element of the statute, the Court held that certain of the vendor activities --including conversion of the native files to TIFF images, the scanning of documents for the purpose of creating digital duplicates and the copying of the videos to DVD -- clearly fall within the definition of copying as contemplated by the language and legislative history of §1920(4). The charges for those services, however, totaled only approximately $30,000 - a fraction of the total ESI costs incurred and awarded. The Court specifically noted that the fact that the e-discovery services are “indispensable” to the discovery process, involve “highly technical” expertise or result in significant cost savings -- factors cited by other courts in support of broader cost awards -- are simply not appropriate criteria by which to assess taxability under the plain language of the statute. Citing numerous decisions denying ESI processing costs that do not entail “making copies,” Judge Vanaskie pointedly opined that contrary decisions that allowed the taxation of “all, or essentially all,” e-discovery costs charged by consultants, including that by the District Judge in the Race Tire case, are “untethered from the statutory mooring.” Importantly, however, the Court further noted that the presumption under the Federal Rules that parties bear their own e-discovery expenses can be tempered, where appropriate, by a cost shifting application under Rule 26(c)’s proportionality scheme.

In sum, the Race Tires decision has significantly slowed the momentum towards broad-based shifting of ESI costs for prevailing parties pursuant to 28 U.S.C. §1920(4), certainly within the Third Circuit. However, unless and until the Supreme Court provides guidance on this issue, the option to seek such costs in other jurisdictions remains viable. Regardless of jurisdiction, prevailing parties should always at least seek reimbursement of copying expenses, including conversion, scanning and other duplication related costs, for both paper and ESI, and ensure that to accomplish this, their vendors clearly document the costs involved in those activities from the outset of their involvement in the case.

Mark S. Sidoti Chairs the Gibbons E-Discovery Task Force.

Who's Paying For This? First Department Requires the Producing Party to Initially Bear the Costs of Production in U.S. Bank N.A. v. GreenPoint Mtge. Funding, Inc.

Elizabeth Ann Fitzwater — Mon, 26 Mar 2012 08:49:46 -0500

For the second time this year, New York’s First Department, Appellate Division, has adopted e-discovery standards articulated in Zubulake v. UBS Warburg LLC, 220 FRD 212 (S.D.N.Y. 2003). On January 31, 2012, the First Department’s decision in Voom H.D. Holdings LLC v. EchoStar Satellite LLC, 2012 N.Y. Slip Op. 00658 (1st Dep’t 2012) adopted the Zubulake standard concerning when a party’s preservation obligations are triggered. Read a blog posting on the Voom decision here. Most recently, on February 28, 2012 the First Department held in U.S. Bank N.A. v. GreenPoint Mtge. Funding, Inc., 2012 NY Slip Op. 01515 (1st Dep’t 2012), that, consistent with Voom’s “adopt[ion] [of] the standards articulated by [Zubulake] in the context of preservation and spoliation, [it was] persuaded that Zubulake should be the rule in this department, requiring the producing party to bear the cost of production to be modified by the IAS court in the exercise of its discretion on a proper motion by the producing party.”

The factual scenario in GreenPoint is a familiar one in the wake of the financial crisis of 2008. GreenPoint Mortgage Funding, Inc. (“GreenPoint”), a mortgage loan originator specializing in “no-doc” or “low-doc” loans, initially sold notes on approximately 30,000 residential mortgages it had securitized (then valued at $1.83 billion). After a series of assignments, the notes were assigned to U.S. Bank, NA (“U.S. Bank”), which claimed that less than two years after the initial sale, approximately $530 million worth of loans had been charged off as a total loss or were severely delinquent. In early 2009, U.S. Bank sued GreenPoint alleging, among other things, that GreenPoint committed “‘gross violations’ of the representations and warranties concerning the attributes of the loans and the policies and practices under which the loans were originated, underwritten and serviced.”

A discovery dispute quickly arose with GreenPoint affirmatively seeking a protective order stating that: (i) each party would pay for its own discovery requests; and (ii) U.S. Bank would pay for GreenPoint’s pre-production attorney review time for purposes of privilege and confidentiality assertions. U.S. Bank conceded that its anticipated document discovery from GreenPoint was expected to be “vast, as were the resulting costs,” and that it could run “into the millions of dollars.” The trial court denied GreenPoint’s request that U.S. Bank bear the cost of compensating GreenPoint’s attorneys but agreed that New York required that the party requesting discovery bear the costs (that were not attorney fees) incurred in its production. U.S. Bank appealed.

While acknowledging the lack of clarity in the New York Civil Practice Law and Rules (“CPLR”) and local court rules and the conflicting case law on the issue of cost allocation in New York State Courts, the First Department disagreed with the GreenPoint trial court’s finding, stating that:

We are now persuaded that the courts adopting the Zubulake standard are moving discovery, in all contexts, in the proper direction. Zubulake presents the most practical framework for allocating all costs in discovery, including document production and searching for, retrieving and producing ESI. As noted, Zubulake requires, consistent with the Federal Rules of Civil Procedure, the producing party to bear the initial cost of searching for, retrieving and producing discovery, but permits the shifting of costs between the parties.

(Emphasis added). The Court went on to list the seven cost shifting factors of Zubulake (see 217 F.R.D. at 322) and cautioned that motion courts “should not follow these factors as a checklist, but rather, should use them as a guide to the exercise of their discretion in determining whether or not the request constitutes an undue burden or expense on the responding party.” The Court called GreenPoint’s motion for a protective order “premature” and found that, given the undeveloped evidence in the record concerning ESI in the underlying litigation, there was “no occasion … for us to opine on the propriety of shifting costs in this matter.” The Court remanded to the trial court with a direction to GreenPoint to bear its own discovery costs, subject to reallocation on a proper showing.

Notably, the appellate court’s decision rejected GreenPoint’s citation of the purported “merits” of the “requestor pays” rule, i.e., encouraging parties to self-regulate the scope of their discovery demands and discouraging parties from placing unnecessary and oppressive costs on an opponent. In doing so, the Court cited the strong public policy of resolving disputes on their merits through fair and fulsome discovery and the risk that litigants (particularly individuals) may be deterred from bringing meritorious claims due to the high costs of discovery. Finally, the Court cited the long-standing rule in New York providing that a prevailing litigant may be able to tax expenses incurred in connection with certain disclosure as “disbursements.”

GreenPoint may prove a welcome decision to the New York practitioner, if only in the certainty it provides. Its mandate enables a practitioner to clearly advise her client as to which litigant, in the first instance, is responsible for the costs of e-discovery: the producing party is initially to incur the cost of searching for, retrieving and producing both electronically stored information and physical documents that have been requested as part of the discovery process. Until GreenPoint, New York case law had been unclear on -- and oftentimes in direct conflict with -- this principle.

Elizabeth Ann Fitzwater is Counsel to the Gibbons Business & Commercial Litigation Department and a member of the Gibbons E-Discovery Task Force.

Ex-Juror Who "Friended" Defendant Faces Jail for Bragging on Facebook About Dismissal From Jury Duty

Jennifer Marino Thibodaux — Thu, 22 Mar 2012 09:02:13 -0500

By now, attorneys should know to advise their clients to watch out for Friend requests from jurors during a trial. The latest debacle concerning jurors use of social media involves a juror “friending” a party and then bragging about his resulting dismissal from the panel. For that juror, his Facebook antics landed him a three-day jail sentence. Click here and here for additional coverage regarding this incident.

Back in December, a Florida man serving jury duty sent a Friend request to the defendant. The defendant told her attorney about the request, and Circuit Judge Nancy Donnellan dismissed the juror and admonished him for his actions. But, the story doesn’t end there.

After his dismissal, the ex-juror took to his Facebook page again. This time, he posted a comment: “Score . . . I got dismissed!! [A]pparently they frown upon sending a friend request to the defendant . . . haha.” Unfortunately for the ex-juror, court officials became aware of the post, leading Judge Donnellan to call the ex-juror back into Court to face criminal contempt charges. At the end of a two-hour hearing, Judge Donnellan commented, “I cannot think of a more insidious threat to the erosion of democracy than citizens who do not care.” She sentenced the ex-juror to three days in jail, and he was led from the courtroom in handcuffs.

This is just another example of social media impacting judicial proceedings. (For recent blog posts on this issue, click here.) As the attorney for the plaintiff in this case commented, “it was a very big deal” to his client “who had $48,000 in medical bills on the line,” and if the female defendant had, for example, responded to the Friend request and went on a date with the juror, perhaps the juror would have found in her favor.

In light of these missteps, attorneys must be keen to clients’ Facebook page and activity and should consider monitoring the Facebook pages of the defendant and any jurors -- especially any juror who has been dismissed for the improper use of social media.

Jennifer Marino Thibodaux is an Associate on the Gibbons E-Discovery Task Force.

Play Nice or Pay the Price: Failing to Cooperate in Creating Preservation Protocols Can Result in Significant Consequences

Sandro G. Ocasio — Tue, 20 Mar 2012 09:05:22 -0500

The dual issues of over-preservation and proportionality took center stage in a recent Southern District of New York class and collective action litigation, leading to a Magistrate’s opinion in Pippins v. KPMG, No. 11-377 (S.D.N.Y. Oct. 7, 2011), and a District Court’s affirmance in Pippins v. KPMG, Civ. No. 11-377 (S.D.N.Y. Feb. 3, 2012), which are sending shock waves through the e-discovery community. The effect of those shock waves here is particularly acute for FLSA and other employment-related class action defendants where the targeted company often possesses and controls ESI pertaining to sometimes thousands of potential plaintiffs.

Pippins arose out of allegations under the Fair Labor Standards Act, 29 U.S.C. § 201 et seq. and the New York State Labor Law, Article 19, § 201 et seq.(and corresponding regulations). In the October opinion, United States Magistrate Judge Cott rejected Defendant KPMG’s application for a protective order to limit its preservation efforts to a random sample of 100 hard drives from the computers used by the several thousand potential putative class members. The Magistrate Judge ordered KPMG to preserve all hard drives at issue because he was, as the District Judge perceived it, impeded by the lack of any information from KPMG that would enable the court to “balance the value of any data contained on the hard drives against the cost of preserving it.” Judge Cott’s opinion sent panic throughout the legal community because it expanded the preservation obligation to potential class action plaintiffs without a balancing or proportionality analysis under F.R.C.P. 26(c).

On February 3, 2012, in a frank and somewhat scathing opinion, United States District Judge McMahon affirmed the Magistrate holding that his opinion was correct in every respect, save for perhaps the Magistrate’s reluctance to involve Judge McMahon earlier in the process. By way of background, Judge McMahon had stayed discovery while resolving the Motion to Conditionally Certify the Class, which she ultimately granted after Pippins I on January 3, 2012. While the motion was pending, KPMG filed its motion for a protective order. KPMG’s primary objection was cost-related, arguing that at the price of $600 per hard drive, the financial burden of preserving hard drives of 7,500 potential opt in plaintiffs in the FLSA matter and 1,500 putative state class members would “swallow the amount at stake.” In fact, KPMG noted that they had already incurred more than $1.5 million in its preservation of about 2,500 former employees’ laptops. As an alternative, KPMG requested that Plaintiffs be obligated to bear the costs of preserving hard drives beyond the initial 100 offered.

In response, Plaintiffs sought a more meaningful sample and ultimately requested an order (1) requiring KPMG to preserve all hard drives of departed employees and (2) directing KPMG to provide Plaintiffs with five hard drives for inspection to “determine whether this issue is even worth fighting about.” As noted by Plaintiffs, “it would be difficult, if not impossible to generate search terms without the opportunity to first determine what the hard drives contain.” Nonetheless, in Judge McMahon’s view, KPMG was not advancing the ball because of its decision not to provide any hard drives for inspection. Ultimately, while the Motion to Certify was pending, Judge Cott ordered preservation of all existing hard drives of former employees until otherwise ordered by him or the parties had reached an agreement regarding methodology to obtain the appropriate sample.

In affirming this decision, Judge McMahon did not let anyone off the hook. She took particular umbrage that no one sought clarification of whether the stay precluded negotiation of the appropriate inspection and sampling procedure so that discovery could “proceed in a meaningful way” while the Motion to Certify was pending. In some terse dicta, she explained that “I cannot begin my discussion of this dispute without recognizing that a complete misinterpretation by everyone of the discovery stay I imposed seems to have contributed to the parties’ inability to agree on a sampling methodology.”

Although Judge McMahon acknowledged that other courts have been hesitant to apply a proportionality test to preservation duties, she made clear that Judge Cott was backed into a corner when he cast a very wide preservation net because the party seeking relief had thwarted his ability to conduct a proportionality analysis. The Court agreed that Judge Cott had no choice but to order preservation of the hard drives of all former employees who she had little trouble holding were “key players” under Zubulake v. UBS Warburg LLC IV, 220 F.R.D. 212, 217-18 (S.D.N.Y. 2003) (“Zubulake IV”), meaning that they were “likely to have relevant information.” As stated by Judge McMahon, if a party withholds information that might help streamline discovery in this type of case, that party should “reasonably anticipate” that each employee or audit associate who would be receiving an opt-in notice should be deemed a potential plaintiff in the matter.

Although this case may cause defendants in class actions to cower at the prospect of potential pre-certification preservation obligations, the Pippins decisions must be read in the context of the parties’, in particular defendants’, failure to cooperate in the early stages of the e-discovery process. Parties resisting wholesale or perceived overextensive preservation and production demands must take care when making proportionality arguments to preface those arguments with clear indicia of cooperation in the early stages of discovery. Objecting parties must, in short, provide the court with the tools necessary to clearly assess the extent of the purported burden, the costs involved and in some cases the lack of relevant information relating to the objected demands. While it is undoubtedly true that this level of cooperation may require disclosing more than a party may initially want, and entail risk in the sense that the sampling may result in evidence that weighs in favor of broader preservation or disclosure, Pippins clearly demonstrates the downside risk to taking the alterative approach.

Sandro G. Ocasio is an Associate on the Gibbons E-Discovery Task Force. Mara E. Zazzali-Hogan, a Director on the Gibbons E-Discovery Task Force, co-authored this post.

Taking the Plunge: Judge Peck Issues First Decision Endorsing Computer-Assisted ESI

Phillip J. Duffy — Fri, 02 Mar 2012 12:40:29 -0500

Late last year, Magistrate Judge Andrew Peck of the U.S. District Court for the Southern District of New York, one of the most prominent judicial thought leaders in e-discovery, wrote an article entitled Search, Forward in which he opined that computer-assisted ESI review "should be used where it will help 'secure the just, speedy and inexpensive' (Fed. R. Civ. P. 1) determination of cases", but he forecast that lawyers awaiting a judicial opinion endorsing predictive coding might have "a long wait." As it turns out, the wait wasn't very long at all; on Friday, February 24, 2012, less than 6 months after the publication of his article, Judge Peck himself issued the first judicial opinion approving the use of predictive coding "in appropriate cases."

Judge Peck issued his opinion in Monique Da Silva Moore, et al., v. Publicis Groupe & MSL Group, Civ. No. 11-1279 (ALC)(AJP) (S.D.N.Y. February 24, 2012), a gender discrimination suit brought by five female plaintiffs against Publicis Groupe, "one of the world's 'big four advertising conglomerates,'" and MSL Group, its U.S. public relations subsidiary. Faced with more than 3 million documents to be reviewed, the parties agreed to use predictive coding -- a process involving senior attorney review and coding of a "seed set" of documents that are then used to train a computer to search the entire data set for relevant documents and cull them -- but they disagreed regarding the methodology.

Defendants' ESI proposal contemplated a series of "iterative rounds" to test and refine the searches and stabilize the training of the search software, with production to plaintiffs of both relevant and irrelevant documents returned by the refined searches. Plaintiffs would then be invited to provide feedback to allow further refinement of the searches. Plaintiffs objected to defendants' protocol and submitted their own, which the Court apparently rejected.

In addressing plaintiffs' objections, Judge Peck underscored the cost-savings rationale expressed in his article and carried over to his decision: "computer-assisted review 'works better than most of the alternatives, if not all of the [present] alternatives. So the idea is not to make this perfect, it's not going to be perfect. The idea is to make it significantly better than the alternatives without nearly as much cost.'" Consistent with Judge Peck's directive, the parties submitted a Joint ESI Protocol, which Judge Peck "so ordered " despite plaintiffs' continuing objections.

On February 22, 2012, plaintiffs filed objections to Judge Peck's rulings with District Judge Carter. In sum, plaintiffs contended Judge Peck's acceptance of defendants' protocol allowed defendants to violate FRCP 26(g)'s requirement to certify defendants' document production is complete and further is not sufficiently reliable to pass muster under Federal Rule of Evidence 702 and the U.S. Supreme Court's decision in Daubert. In the opinion, Judge Peck addressed and ultimately dismissed plaintiffs' objections. The Court reasoned that plaintiffs misunderstood Rule 26(g), which does not require such certification and observed that it would be impossible to certify the completeness of a document production of this magnitude. Moreover, Judge Peck stated that Rule 702 and Daubert are inapplicable to the manner in which parties search for documents in discovery. Judge Peck also explained, in detail, the reasons for his decision to endorse predictive coding in appropriate cases and took the time to offer some "lessons for the future."

In sum, the Court found the use of predictive coding appropriate in Da Silva Moore based on the parties' agreement with the concept, the vast data set of more than 3 million documents, the superiority of computer-assisted review to the alternatives (manual review or keyword searches) the need for cost effectiveness and proportionality under FRCP 26(b)(2)(C) and the “transparent” process defendants proposed.

In this regard, Judge Peck stressed the importance of cooperation among counsel and reiterated the Court's endorsement of The Sedona Conference® Cooperation Proclamation. Moreover, and notwithstanding plaintiffs' expressed concerns, Judge Peck praised defendants' transparency and credited their agreement to provide to plaintiffs all of the documents used to create the seed set, both relevant and non-relevant, as essentially paving the way for the Court's decision.

So, what does all of this mean? Is predictive coding the only way to proceed with large scale document review in the future? Will it eliminate the need for attorney involvement in the document review process? Is computer assisted review the panacea that frustrated and cash strapped litigants have been searching for to solve the incredible cost and manpower burdens of e-discovery. Well, the short answer to these questions is "no." As Judge Peck made clear in his opinion, the Court did not order the use of predictive coding, the parties agreed to it (at least some form of it); there is no requirement that computer-assisted review be used in all cases. Nor, the Court was careful to note, is Da Silva Moore a pronouncement that the ESI Protocol used in that case (which is attached to the opinion will be appropriate in other cases that use predictive coding. Finally, the Court avoided endorsing any particular e-discovery service provider or technology.

As for the continued need for attorney involvement in the review process, as noted in this blog's prior June 2011 posting, while e-discovery software may make lawyers more efficient, "human knowledge, reaction and intuition as to facts, issues and nuances of legal theories make the role of the live attorney indispensable." Indeed, Judge Peck acknowledged as much in his opinion: "[t]he Court recognizes that computer-assisted review is not a magic, Staples-Easy-Button, solution appropriate for all cases. The technology exists and should be used where appropriate, but it is not a case of machine replacing humans: it is the process used and the interaction of man and machine that the courts need to examine."

Da Silva Moore is most significant in that it opens the door for parties to consider the use of computer assisted review or predictive coding in appropriate cases without the fear that a party or judge will resist on the basis that no court has accepted the use of this modern technology in the e-discovery process. The courts have now officially “taken the plunge,” and we predict that the pool will get crowded quickly.

Phillip J. Duffy is a Director on the Gibbons E-Discovery Task Force.

Show Some Respect: International Privacy and Comity Concerns May Become More Important in Foreign E-Discovery Disputes

Jeffrey L. Nagel — Thu, 01 Mar 2012 15:01:21 -0500

Twenty-five years ago in Aerospatiale v. District Court of Iowa the United States Supreme Court admonished lower courts that international comity compels them to “take care to demonstrate due respect for any special problem confronted by the foreign litigant on account of its nationality or the location of its operations, and for any sovereign interest expressed by a foreign state.” And for the last twenty-five years, courts generally have not heeded that advice, giving short-shrift to the idea that foreign privacy or data protection laws must be enforced if the result is to limit discovery of relevant information. At the urging of lawyers and several influential organizations, that could finally be changing.

Recent announcements from two influential groups — the American Bar Association and The Sedona Conference® — make it clear that those who practice in the area of cross-border disputes need courts to better balance the tension between the need for information and the “due respect” owed to foreign data protection and privacy laws in connection with the collection and production of electronically stored information (ESI) originating outside the United States.

Recognizing the complexities of modern civil litigation and the frequency with which lawyers now confront gathering ESI in other countries, the ABA on February 6, 2012 issued a Report and Resolution 103 urging all courts to “consider and respect” the “data protection and privacy laws of any applicable foreign sovereign, and the interests of any person who is subject to or benefits from such laws, with regard to data sought in discovery in civil litigation.” The ABA Report accompanying Resolution 103 recognizes that failing to give “due recognition to the concerns of privacy and data protection of other nations can result in a host of negative consequences,” for example, potential adverse rulings overseas against U.S. litigants as well as stunting “the growth of global commerce, including the cross-border movement of personnel and the hiring of local employees.”

The ABA is not alone in its call for courts to show more respect to international privacy and data protection laws. Recognizing the “unprecedented explosion in information” made possible because of the “easily-replicable nature of ESI” and electronic data generally that is “unconstrained by traditional geographic borders,” The Sedona Conference® in December 2011 developed and published a set of six International Principles on Discovery, Disclosure & Data Protection (available for download at: www.thesedonaconference.org). The first of these international principles is that “courts and parties should demonstrate due respect to the Data Protection Laws of any foreign sovereign and the interest of any person who is subject to or benefits from such laws.” Other principles counsel that any conflict between the need for evidence and a foreign country’s privacy or data protection laws should be adjudicated under a standard of good faith and reasonableness, with an eye towards limiting disclosure to minimize the conflict. The Sedona Working Group 6 Report setting forth these international principles also contains, in Appendix B, a useful Model Protective Order for cases involving cross-border e-discovery. It remains to be seen whether the growing chorus of voices becomes loud enough to have any real influence over how the judiciary deals with the gathering and production of ESI in the face of applicable foreign data protection and privacy laws that seek to limit disclosure. European countries treat individual privacy as a fundamental human right — like life or liberty, whereas courts in the United States have for decades placed a premium on information gathering. Giving due respect to foreign privacy and data protection laws pursuant to the doctrine of international comity will inevitably mean that some litigants in the United States will not get access to certain information from abroad that they otherwise would be entitled to pursuant to the Federal Rules of Civil Procedure or state discovery laws. Balancing such competing interests, however, is critical to fostering a global economy, avoiding unnecessary international tension, and maintaining reasonable limits on the gathering and production of ESI. Now, 25 years after Aerospatiale, courts may be ready to listen.

Jeffrey L. Nagel is a Director on the Gibbons E- Discovery Task Force.

Hard Drive of a Key Non-Party Witness is Searchable in Response to Subpoena

Stephen J. Finley, Jr. — Tue, 28 Feb 2012 14:11:35 -0500

A key non-party fact witness is fairly the target of a subpoena seeking production of ESI. In Wood v. Town of Warsaw, North Carolina, the United States District Court for the Eastern District of North Carolina held that ESI preserved on a former town manager’s personal computer must be made available for a search by a forensic expert in response to the Plaintiff’s subpoena.

Raymond Wood, the former police chief of the town of Warsaw, North Carolina, alleged that his dismissal by former town manager Jason Burrell was motivated by the town’s desire to have “younger blood in the chief’s office.” Plaintiff sued for age discrimination under the Federal Age Discrimination in Employment Act. During discovery, Plaintiff directed a subpoena to non-party Burrell requesting, among other things, a search of Burrell’s personal computer using to be agreed-upon search terms.

Resisting the subpoena, Burrell argued that the proposed search would be time-consuming, costly and an invasion of his personal privacy. He further claimed that he did not use his personal computer for work-related purposes, and that if any responsive documents existed on his personal computer, he would produce them since they would be otherwise responsive to the subpoena. In response, Plaintiff argued that the proposed search was reasonably calculated to lead to the discovery of admissible evidence, that he had already agreed to pay for the cost of the proposed search by a forensic expert, that he had submitted proposed search terms to Burrell’s attorney and that the only cost to Burrell would be a privilege review by his personal attorney.

The Court began its analysis with Federal Rule of Civil Procedure 45, which governs requests for discovery, including ESI, from non-parties. Under Rule 45, a Court must weigh (1) the relevance of the discovery sought; (2) the need for the information; and (3) the potential hardship to the non-party. The Court noted requests to non-parties may also be limited if the information sought “is obtainable from another source that is more convenient, less burdensome, or less expensive, or if the burden of the proposed discovery outweighs its likely benefit." While acknowledging the breadth of the subpoena directed to Burrell, the Court determined that Wood reasonably sought “only those non-privileged documents identified by an electronic search for key words related to the claims and defenses asserted by the parties.” The Court further noted that Burrell was not a disinterested fact witness. Rather, he “is alleged to have been Plaintiff’s supervisor at the time the events at issue occurred and is alleged to have terminated Plaintiff.”
Perhaps the most important holding in Wood was the Court's acknowledgement that employees often transact business outside the workplace using personal electronic devices.

In this age of smart phones and telecommuting, it is increasingly common for work to be conducted outside of the office and through the use of personal electronic devices. Therefore, it is not unreasonable, despite Burrell’s assertions to the contrary, that some relevant information may be found on his personal computer’s hard drive.

Wood clearly supports a party’s effort to obtain ESI from a non-party’s personal electronic devices. (Contrast the New York State Supreme Court's decision in DeRiggi v. Krischen, which you can read about here, where the court refused to order a forensic examination of a plaintiff's personal computer hard drive.) Wood is also another example of a non-party being ordered to comply with a subpoena seeking ESI, even where the non-party may experience some cost or inconvenience in the process. Plaintiff's success in enforcing his subpoena likely resulted, at least in part, from his agreement to pay most of the costs of searching Burrell’s hard drive, as well as Plaintiff’s proactive approach in proposing search terms as part of the meet and confer efforts. Such efforts at cooperation are a clear sign of good faith that nearly always favorably impress a court in resolving an e-discovery dispute of any sort.

Stephen J. Finley, Jr. is an Associate on the Gibbons E-Discovery Task Force.

Still No Cure for the Malady of Jurors' Social Media Use During Trials and Deliberations

Mara E. Zazzali-Hogan — Fri, 24 Feb 2012 09:14:25 -0500

Having recognized the challenges regarding jurors’ use of social media in the courtroom, the Committee on Court Administration and Case Management requested that the Federal Judicial Center (“FJC”) survey district court judges to identify effective mechanisms to curtail this growing problem. In response, the FJC queried 952 district judges and issued Jurors’ Use of Media During Trials and Deliberations, which demonstrates that despite the various strategies devised, it is virtually impossible to prevent jurors’ use of social media and is equally difficult to detect each and every impropriety. This issue is not novel; in fact, this blog has previously reported on instances where jurors’ use of social media had a significant impact on a proceeding as well as suggestions on how to avoid such pitfalls. Click here for those postings.

The General Response

Of the 508 judges who responded to the electronic questionnaire at issue, only 30 judges or 6% reported detecting jurors’ use of social media. This discovery occurred more often during trials rather than deliberations and in criminal trials than civil trials. The social media at issue in these instances were Facebook, Google, instant messaging (“IM”) services, Twitter, Internet chat rooms, Internet bulletin boards, and MySpace.

Nature of the Use

Among the jurists who identified how jurors used social media during trial and deliberations, the most common was through jurors’ “friending” or attempting to “friend” participants in the case (meaning witnesses, parties, attorneys or judges) as well as communicating or attempting to communicate directly with participants. In addition, the judges discovered that jurors used social media to reveal parts of the deliberative process; provide information about other jurors; conduct research; generally share information about the case by, for example, revealing the likely verdict; allow someone else to hear live testimony; and conduct personal business.

Challenges with and Consequences of Detection

Of the 28 judges who indicated how they learned of a juror’s improper use of social media, the most common sources of that discovery were fellow jurors, attorneys or information learned in post-trial motions or interviews. Judges also learned of the malfeasance through court personnel or a party. Most notable is the fact that in only two instances did judges report personally observing jurors utilizing electronic devices in the courtroom. Upon learning of such improprieties, those judges have removed the juror, cautioned the juror about removal, declared a mistrial, held the juror in contempt, fined the juror, questioned the juror and/or held a hearing to determine the scope and nature of information shared.

Strategies for Preventing Jurors’ Use of Social Media Solutions

Fortunately, the majority of the judges who responded to the questionnaire have taken measures to prevent jurors from using social media during trial and/or deliberations, though surprisingly, 30 judges (6%) admitted not specifically addressing the issue with jurors. To prevent use of this media, judges have employed model jury instructions; reminded jurors during voir dire and through various points in the trial of the prohibition and the rationale behind it; confiscated phones and electronic devices during deliberation and/or at the start of each day of trial; articulated potential consequences of disobeying instructions; and/or required jurors to sign a certifications or statements promising not to use social media while serving on a jury or that they adhered to the instructions.

How do we know what, if any of those procedures are effective? The answer is we don’t. As conceded by almost half the jurists who responded to questions about preventive measures and whether they were effective, they simply do not know whether the steps taken were successful. In the meantime, while recognizing there is no panacea, judges, attorneys and fellow jurors must police the use of social media by jurors during trials and deliberations.

Mara E. Zazzali-Hogan is a Director on the Gibbons E-Discovery Task Force.

How a Case Can Crash and Burn: Why a Litigant Should Not Set Afire a Computer After It Crashes (Preservation 101)

Robert D. Brown, Jr. — Wed, 22 Feb 2012 10:12:56 -0500

In Evans v. Mobile County Health Department, 2012 U.S. Dist. LEXIS 8530 (S.D. Ala. Jan. 24, 2012) , a magistrate judge sitting in the Southern District of Alabama (Southern Division) was recently faced with the question of whether plaintiff's intentional burning of a personal computer, which contained discoverable ESI, was worthy of an imposition of sanctions.The defendant, Mobile County Health Department, filed motions to compel discovery and to impose sanctions stemming from plaintiff’s alleged spoliation of critical information and repeated failures to produce discoverable documents and ESI. Based upon the facts and arguments presented to the magistrate, most notably plaintiff Evans’ admission that she destroyed and replaced her personal computer, the Court granted defendant’s motions.

During the discovery phase of plaintiff Evans’ reverse discrimination and retaliation action, defendant requested production of all documents including “all forms of electronically stored information” related to certain allegations in her complaint. This preservation request was mandated in a June 23, 2011 Order. After producing a small and limited amount of documents, Plaintiff was deposed in early September 2011. During this deposition, plaintiff admitted to forwarding relevant materials from her work computer to her home computer. She further admitted to having e-mails on her home computer reflecting her complaints of disparate treatment on account of race. At no time during her deposition did plaintiff give "any hint" that the same personal computer had been destroyed in July or August of that year.

In response to the defendant’s post-deposition motion to compel discovery, plaintiff revealed for the first time that the hard drive on her personal computer crashed and that the 13 year old computer had been replaced. According to plaintiff, the computer was checked by the “Geek Squad” at a local Best Buy store and she was allegedly told to “just buy another computer.” Plaintiff took this advice. However, instead of simply preserving the old computer or turning it over to her attorney, despite litigation being in full swing, plaintiff destroyed it by burning it in her yard a few months before her deposition. Plaintiff’s justification for destroying the computer was to eradicate personal financial records that she could "not risk getting into the wrong hands because of the threat of identify theft." Based upon this newly revealed information, defendant moved before the Court for sanctions, seeking dismissal of all of plaintiff’s claims.

Satisfied that Alabama’s spoliation of evidence standards were consistent with the federal spoliation principles, the Court analyzed defendant’s sanctions motion under Alabama’s five factor analysis set forth in Story v. RAJ Properties, Inc., 909 So. 2d 797 (Ala. 2005) . Given the testimony offered by plaintiff in the deposition and at the motion hearing, the Court determined that the destroyed evidence was important (the first factor), and her culpability (the second factor) was “excessively high.” The Court went as far as to state that “plaintiff’s willful disregard of her obligation to preserve evidence has inhibited the production of evidence that may have been harmful to her case such that whether the spoliated evidence would, in fact, have been detrimental is irrelevant since no one, other that perhaps Evans herself, can know for certain.”

Finding that the facts weighed in favor of the imposition of sanctions, the Court was faced with the most critical question (the fifth factor) --was defendant’s request for dismissal of plaintiff’s claim appropriate or would less severe sanctions suffice? The Court ruled that dismissal was not an appropriate sanction and should be limited to those cases in which “destruction of the evidence has left the defendant in the position that it is unable to defend itself against plaintiff’s allegations.” As plaintiff had produced some critical information during discovery and defendant had access to some information through alternative means (the fourth factor), the Court deemed the imposition of an “adverse inference” charge at the time of trial regarding the destroyed information and an award of attorney’s fees and expenses related to defendant’s motion to be sufficient.

Evans demonstrates that ESI on one’s personal computer is discoverable and must be maintained -- even if the computer is not functioning. Although the Court did not dismiss plaintiff’s complaint outright, Evans sends a strong message that spoliation of ESI, even by individual plaintiffs like Ms. Evans, will not be tolerated, regardless of the alleged justification. In short, the preservation of all known relevant and discoverable ESI, no matter where located, is the best strategy to avoid sanctions. Any other strategy could go up in smoke, as it did for Ms. Evans.

Robert D. Brown, Jr. is Counsel to the Gibbons Products Liability Department and a member of the Gibbons E-Discovery Task Force.

New York's Appellate Courts Surface on Litigation Hold - First Department Confirms Reasonable Anticipation of Litigation Requires Implementation of Litigation Hold

Elizabeth Ann Fitzwater — Tue, 21 Feb 2012 16:41:49 -0500

New York’s First Department Appellate Division is the first New York state appellate court to expressly adopt the “reasonable anticipation trigger” articulated in Zubulake v. UBS Warburg LLC, 220 FRD 212 (S.D.N.Y. 2003): “Once a party reasonably anticipates litigation, it must suspend its routine document retention/destruction policy and put in place a ‘litigation hold’ to ensure the preservation of relevant documents.” Id. at 218. On January 31, 2012, the First Department affirmed the November 9, 2010 Order of the Honorable Richard B. Lowe III which awarded an adverse inference sanction to plaintiff, Voom HD Holdings LLC (“Voom”) against defendant EchoStar Satellite, L.L.C. (“EchoStar”). Voom H.D. Holdings LLC v. EchoStar Satellite LLC, 2012 N.Y. Slip Op. 00658 (1st Dep’t 2012). The First Department found the Zubulake standard to be “harmonious” with existing New York precedent in the traditional discovery context and “provides litigants with sufficient certainty as to the nature of their obligations in the electronic discovery context and when those obligations are triggered.”

The facts of the Voom case provide a familiar example of the breakdown and souring of relationships between business counterparties in advance of an actual litigation. In mid-2007, EchoStar determined its 15-year “affiliation agreement” with Voom was disadvantageous and, by June 2007, EchoStar’s vice chairman had begun exploring ways to terminate the contract. By July 2007, EchoStar had plainly advised Voom that it believed Voom had committed “material breaches” of the contract and EchoStar reserved its “rights and remedies in equity or at law.” For its part, Voom implemented a litigation hold automatically preserving emails on July 31, 2007; EchoStar did not. Nonetheless, EchoStar continued to threaten Voom with termination of the contract throughout the fall of 2007 and into January 2008. EchoStar’s apparent motivation was to force Voom into retrading the contract resulting in more advantageous terms to EchoStar. On January 30, 2008, EchoStar formally terminated the agreement; Voom brought suit in New York State Supreme Court the following day.

EchoStar issued a “litigation hold” only after Voom commenced suit. Justice Lowe found this hold insufficient for several reasons, including because: (i) the hold did not suspend EchoStar’s automatic and permanent purge of deleted emails 7 days after an email’s deletion; this automatic purge was not suspended until four months after litigation was initiated; (ii) EchoStar relied on its employees -- many of whom were presumably not attorneys -- to self collect and determine whether documents were potentially responsive to litigation, and to then remove each one “from EchoStar’s pre-set path of destruction.” Most important to the First Department’s adoption of Zubulake, Justice Lowe found the hold to be too little too late in that “EchoStar’s concession that termination would lead to litigation, together with the evidence establishing EchoStar’s intent to terminate, its various breach notices set to [Voom], its demands and express reservation of rights, all support the conclusion that EchoStar must have reasonably anticipated litigation prior to the commencement of this action.” Specifically, Justice Lowe found that EchoStar should have “reasonably anticipated litigation no later than June 20, 2007, the date [EchoStar’s corporate counsel], sent Voom a written letter containing EchoStar’s express notice of breach, a demand, and an explicit reservation of rights.”

Judge Lowe rejected EchoStar’s argument that it was seeking an “amicable business solution” and therefore, no reasonable anticipation of litigation existed: “EchoStar’s argument ignores the practical reality that parties often engage in settlement discussions before and during litigation, but this does not vitiate the duty to preserve. EchoStar’s argument would allow parties to freely shred documents and purge emails, simply by faking a willingness to engage in settlement negotiations.” Finding EchoStar’s conduct constituted gross negligence, Justice Lowe ruled that a negative, or adverse inference against EchoStar at trial was an appropriate sanction.

The First Department affirmed the trial court’s order finding that “an adverse inference was warranted because EchoStar’s spoliation of electronic evidence was the result of gross negligence at the very least.” In doing so, the First Department expressly rejected the argument that the “reasonable anticipation” standard of Zubulake is “vague and unworkable”:

To adopt a rule requiring actual litigation or notice of a specific claim ignores the reality of how business relationships disintegrate. Sides to a business dispute may appear, on the surface, to be attempting to work things out, while preparing frantically for litigation behind the scenes. EchoStar[’s] approach would encourage parties who actually anticipate litigation, but do not yet have notice of a “specific claim” to destroy their documents with impunity.

The Voom decision is notable for at least three reasons in addition to the guidance concerning the timing of implementing a litigation hold. First, while not expressly stating that self-collection in every case is improper, the First Department, citing Pension Comm. Of the Univ. of Montreal Pension Plan, 685 F. Supp. 2d 456, 473 (S.D.N.Y. 2010), found, “[i]n this case, EchoStar’s reliance on its employees to preserve evidence ‘does not meet the standard for a litigation hold.’” Second, the Court found the lower court’s consideration of EchoStar’s sanction for bad faith conduct relating to “substandard document practices” in an unrelated District of Maryland case, Broccoli v. Echostar Commc’ns Corp., 229 F.R.D. 506 (D. Md. 2005), to be proper and warranted in assessing gross negligence: “The [Broccoli] case demonstrates that EchoStar was well aware of its preservation obligations and of the problems associated with its automatic deletion of e-mails that could be relevant to litigation to which it was a party.” Third, the Court did not consider email “snapshots” that included relevant emails for certain relevant time periods that were recovered in connection with EchoStar’s other litigations to be a mitigating factor; to the contrary: “These e-mails -- a handful only fortuitously recovered, and highly relevant -- certainly permitted the inference that the unrecoverable e-mails, of which the snapshots were but a representative sampling, would have also been relevant.”

The Voom opinion raises difficult questions regarding when companies should decide that pre-litigation negotiations have deteriorated to the point that litigation is “reasonably likely,” and even whether that amorphous standard is an appropriate one on which to base litigation hold trigger decisions. In fact, Lawyers for Civil Justice (“LCJ”), which had filed an amicus brief asking the First Department to overturn Justice Lowe’s verdict, issued a “Special Update” on February 1, 2012 calling the Voom decision a “disappointing setback” and contending that it underscores the need for e-discovery reform. Specifically, LCJ argues that Justice Lowe’s verdict “places an unfair burden on corporations and creates an unattainable standard of practice that will leave even the best intentioned corporations vulnerable to unwarranted legal sanction.” The standard adopted by the First Department, one LCJ member stated, “would vastly inflate costs for corporations as electronic data increases.”

Notwithstanding the controversy surrounding this decision, Voom is instructive for several reasons. Voom should prompt an advocate to make herself aware of a company’s e-discovery past and present with respect to unrelated litigations and to counsel her client to learn from its prior mistakes. Further, it highlights that practitioners should weigh the pros and cons of self-collection. At the very least, where a client has self-collected electronic documents, a practitioner should anticipate opposing counsel’s invocation of this new case in an attempt to impugn that self-collection. Finally, and most significantly, Voom confirms that the duty to preserve electronic evidence is not necessarily synonymous with the commencement of a litigation. Indeed, as in Voom, these obligations can arise months before actual litigation and can be triggered internally when a company reasonably anticipates the commencement of legal action, even when that eventuality may be completely unknown to the future adversary.

Elizabeth Ann Fitzwater is Counsel to the Gibbons Business & Commercial Litigation Department and a member of the Gibbons E-Discovery Task Force.

Lester v. Allied Part 2: "Clean Up" of Compromising Social Media Evidence Can Result in Severe Sanctions

Mara E. Zazzali-Hogan — Tue, 21 Feb 2012 11:30:15 -0500

Though some practitioners might be in denial, the follow-up sanctions orders in Lester v. Allied Concrete Co. et al. dated May 27, 2011 and September 23, 2011 should leave no room for doubt that preservation of social media is as important as any other electronic data or discovery. Similarly, the penalty for intentionally destroying such evidence may reach beyond the purse strings.

As reported late last year in a blog posting regarding Lester Part I, defense counsel moved for sanctions against plaintiff Isaiah Lester and his attorney, Matthew B. Murray, for spoliation of Facebook evidence. Ultimately, although defense counsel’s request for a new trial was denied after the jury had reached a $10.6 million verdict related to the tragic death of Lester’s wife in an automobile accident, Lester and Murray were ordered to pay defense counsel respectively, $180,000 and $542,000. But the sanctions did not end there; Murray’s misconduct was referred to the Virginia State Bar and allegations of Lester’s perjury were referred to the local prosecutor.

During discovery, defendants sought production of the contents of Lester’s account because they believed it would help their case on the issue of damages. Defendants were inspired to pursue this evidence after discovering a photo on Facebook depicting “Lester clutching a beer can, wearing a T-shirt emblazoned with ‘I [heart] hot moms.’” Specifically, they served discovery requests that sought information relating to Lester’s Facebook account including screen-prints and attached the compromising picture.

After reviewing Lester’s Facebook page in conjunction with the discovery requests, Murray’s paralegal (at Murray’s direction) advised Lester via e-mail to “clean up” the Facebook page because “we do NOT want blow ups of other pics at trial so please, please clean up your facebook and myspace.” She also advised there were “other pics that should be deleted.” Thereafter, Murray concocted a scheme to deactivate Lester’s Facebook account and to advise defense counsel that on the date the answer to the discovery was signed that Lester had no Facebook page.

Shortly thereafter, Lester deleted 16 photos (which were ultimately available at trial) to ensure he complied with Murray’s initial “clean up” request, although Murray denied knowledge of deletion of these photos in discovery responses. Thereafter, Murray and Lester attempted -- unsuccessfully -- to cover up these communications and related acts. (Defendants’ internet technology expert was ultimately able to confirm deletion of the photos).

The amount and scope of sanctions in Lester make clear that social media evidence is as important as other electronic discovery, and that the penalties for its spoliation can be as severe as those for destroying other evidence. While the egregious malfeasance of Lester and Murray (and Murray’s paralegal, who was under his supervision) did not result in an overturned verdict (though it was reduced by around $4 million for other reasons), both counsel and client paid a high price for their cavalier treatment and destruction of Facebook evidence.

Mara E. Zazzali-Hogan is a Director on the Gibbons E-Discovery Task Force.

Agree or Else: Delaware Adopts Revised Default Standards for Discovery

Christopher Viceconte — Thu, 09 Feb 2012 09:08:03 -0500

Effective December 8, 2011, the U.S. District Court for the District of Delaware revised its Default Standard for Discovery, Including Discovery of Electronically Stored Information (“ESI”). This third version of the Revised Default Standards contains some new provisions that apply to the discovery of ESI absent agreement by the parties or court order. The Revised Default Standards also set a detailed schedule for the initial exchange of discovery in patent litigation, and reinforce the Court’s expectation of cooperation among the parties and proportionality in the preservation, identification and production of relevant information. Some of the highlights and practical points of the Revised Default Standards are as follows:

Preservation of Discoverable Information: Although parties are required to preserve non-duplicative, potentially discoverable information, absent a showing of good cause, there is no additional requirement to modify, on a going-forward basis, ordinary back-up and archiving procedures. Schedule A to the Revised Default Standards lists specific categories of ESI that presumptively need not be preserved absent a showing of good cause. Therefore, the burden is on the requesting party, if it wants any of the ESI in those categories preserved, to reach agreement with the other side or be able demonstrate good cause for requiring preservation of such information.

Privilege Logs and Work Product: The Revised Default Standards seek to ease the burden presented by the creation of privilege logs by requiring the parties to meet and confer as to whether certain categories of information can be excluded from the logs and whether alternatives to document by document logs can be exchanged. In addition, parties need not include information generated after the filing of the complaint in their privilege logs. The Revised Default Standards also make clear that the parties’ information preservation efforts are protected from disclosure by the work product doctrine. The parties are also to confer on an appropriate non-waiver of privilege order and, until such an order is entered, privileged information, if produced, must be returned if it appears on its face to have been inadvertently produced or if notice is provided within 30 days of inadvertent production.

Initial Disclosures: As part of their initial disclosures, parties must disclose their 10 custodians most likely to have discoverable information and a list of the non-custodial data sources that are most likely to contain non-duplicative discoverable information. Parties must also provide notice as to issues relating to any ESI that a party asserts is not reasonably accessible, as well as anticipated third-party discovery and the timing and sequencing of such discovery. Parties are cautioned that their failure to provide such notice could result in their loss of the ability to protect or pursue such information.

Search and Production Protocols: (1) On-site inspections of electronic media are prohibited absent a showing of specific need and good cause. (2) If a party chooses to use search terms to locate potentially responsive ESI, it must disclose the terms to the requesting party. Absent a showing of good cause, the requesting party may request no more than 10 additional focused terms. Search terms are to be used on non-custodial data sources and emails and other ESI maintained by the party’s 10 custodians, as identified in its initial disclosures. (3) As to format, ESI and non-ESI are to be produced as text searchable image files (e.g., PDF or TIFF); however, the producing party must preserve the integrity of the underlying ESI, i.e., the original formatting, certain metadata, and, where applicable, the revision history. Native files may only be produced when they are not easily converted to image format. (4) Only the following categories of metadata must be preserved and produced to the extent such metadata exists: custodian, file path, email subject, conversation index, from, to, cc, bcc, date sent, time sent, date received, time received, filename, author, date created, date modified, MD5 hash, file size, file extension, control number begin, control number end, attachment range, attachment begin, and attachment end (or the equivalent thereof).

Overall, the Revised Default Standards are aimed at encouraging parties to cooperate to reach reasonable agreements concerning the discovery of ESI. The standards also impose some reasonable and common-sense provisions to follow absent an agreement among the parties. Such provisions should assist litigants in resisting unreasonable demands from an adversary and alleviate some uncertainty about a party’s burden to preserve and produce materials. Counsel practicing in the District of Delaware should pay careful attention to these new requirements.

Christopher Viceconte is a Director in the Gibbons Business & Commercial Litigation Department.