No Triggering Event, No Duty to Preserve

In an employment dispute, the Plaintiff claimed the Defendants had a duty to preserve electronically stored information at the beginning of an HR investigation after she sent a letter outlying concerns with her manager.  The Plaintiff was ultimately put on a performance review and terminated.  Viramontes v. United States Bancorp, 2011 U.S. Dist. LEXIS 7850, at *6 (N.D. Ill. Jan. 27, 2011).

The Defendants only retained email messages for a 90 day period, after which the messages were destroyed.  Viramontes, at *5.  The Plaintiffs learned of the Defendants’ retention policy after proposing a protocol for electronically stored information.  Viramontes, at *4-5. 

The Plaintiffs sought an adverse inference jury instruction that the destroyed email messages contained discriminatory and retaliatory statements. Viramontes, at *6.  Moreover, the Plaintiff also asked the Defendants be prevented from arguing the lack of email correspondence showed no discriminatory statements were made and that the Plaintiff was not subject to discrimination because of the lack of email evidence.  Viramontes, at *6-7

The Court’s analysis was whether the HR complaint was a “triggering event” for the Defendant to issue a litigation hold. 

The Rules of Spoliation

Spoliation is defined when a party “destroys evidence relevant to an issue in the case.” Viramontes, at *7.  The Duty to Preserve is triggered when a party “knew, or should have known, that litigation was imminent.” Id. The moving party must also show the information was destroyed in “bad faith,” which means it was destroyed with the “purpose of hiding adverse information.” Id.

Federal Rule of Civil Procedure Rule 37(c)(1) states, in relevant part:  

“If a party fails to provide information or identify a witness as required by Rule 26(a) or (e), the party is not allowed to use that information or witness to supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or harmless.”

Viramontes, at *8. 

The Court has in its inherent authority the power to impose sanctions, in addition to Federal Rule of Civil Procedure Rule 37. Viramontes, at *8. 

The “Safe Harbor” provision of Federal Rule of Civil Procedure Rule 37(e) limits sanctions, unless there are “exceptional circumstances,” when electronically stored information is lost “due to the routine operation of a party’s computer system if the operation was in good faith.” Viramontes, at *8.

The Court’s Reasoning

The Court found that the Plaintiff’s HR letter was not a triggering event for the Defendants’ Duty to Preserve, because the letter was a grievance letter and not written to threaten litigation.  Viramontes, at *8-9.  Since litigation was not “imminent or reasonably foreseeable,” the Defendants were not under a duty to preserve and suspend their data destruction policies.  Viramontes, at *9.

Bow Tie Thoughts

Battles over spoliation and whether there has been a trigger event are fact specific.  In this case, litigation was not “imminent or reasonably foreseeable.”  There are other cases when an HR complaint could be a triggering event.

The Courts will engage in fact specific analysis over whether the duty to preserve has triggered.  Whether there is spoliation is not a strict liability offense that requires merely a claim of destroyed data, but factually analysis on whether litigation was “imminent or reasonably foreseeable.”

Discovery in a Flash (Drive)

Flash drives were the center of a discovery dispute in a trade secret dispute between high-speed printer service providers. OcÉ N. Am. v. McS Servs., 2011 U.S. Dist. LEXIS 5403 (D. Md. Jan. 20, 2011).

The Plaintiff sought a forensic image of the flash drives, because the devices contained their software alleged used by the Defendants.  OcÉ N. Am., at *3.

Discovery was expedited in advance of a preliminary injunction hearing.  Pursuant to Court Order, the Defendants allowed the Plaintiff’s expert to image 21 laptop computers at issue in the dispute over several days.  However, on the third day, the Defendants told the Plaintiff’s expert their office was closing and the Plaintiff’s expert was not allowed to image the 15 flash drives.  OcÉ N. Am., at *3.

The Plaintiff in turned filed a motion to compel before the preliminary injunction hearing, which was denied because, “[a]lthough [the thumb drives are] ultimately discoverable, such discovery is not necessary on an expedited basis to prepare for a preliminary injunction hearing.” OcÉ N. Am., at *4.

The parties agreed to a Stipulated Preliminary Injunction that provided for a neutral third-party to take possession of the flash drives and forensically image them.  Once imaged, the flash drives were destroyed, leaving only the forensic image of the electronically stored information on the 15 flash drives. OcÉ N. Am., at *4-5.

As expected, the Plaintiff wanted access the data from the forensically imaged flash drives.  The Defendants opposed on several grounds, including the novel argument that the Plaintiff never requested the forensically imaged information, just the flash drives in discovery, which now no longer existed.  OcÉ N. Am., at *5-6.

The Defendants’ arguments were vaporized by the Court in a flash.  The Court explained that when the Plaintiff requested the flash drives, “it sought not the physical device but rather the ESI contained therein.” OcÉ N. Am., at *10. The Court stated:

As a matter of practical concern, therefore, if the original thumb drives were discoverable, Capsicum’s forensic images of the thumb drives must also be discoverable, and Océ need not propound a new discovery request for what amounts to the exact same information.

OcÉ N. Am., at *10.

Bow Tie Thoughts

The Court summarized the basics of producing electronically stored information in its reasoning:

            Producing Party creates an image of responsive ESI

            Producing Party reviews ESI for production

            Producing Party produces filtered responsive files

            OcÉ N. Am., at *10.

The key issue in producing electronically stored information is the information, not necessarily the device containing the information.  A party is very hard pressed to create a forensic copy of information that was requested and then claim the information was never requested, because the device that originally contained the information no longer exists.

Putting 4 Terabytes of Discovery on Ice

Sometimes, it takes a Court order to cool the fiery passions of litigation.

In a RICO action in the packaged ice industry, the Defendant sought to chill the cost of searching 4 Terabytes of data. McNulty v. Reddy Ice Holdings, Inc., 2011 U.S. Dist. LEXIS 3173, 6-7 ( E.D. Mich. Jan. 13, 2011).

Both parties claimed the moral high ground in conferring over search terms.  McNulty, at *6-7.  However, the Defendant sought an order for the Plaintiff to work with the Defendant and “its electronic discovery consultant to try to come up with an agreed scope and means for conducting searches for the requested documents in identifiable sub-populations of Home City’s ESI…” McNulty, at *3-4.

4 Terabytes is a mind-numbing volume of data. 

The Court noted in a footnote that a Terabyte is nearly 220 million pages of printed text.  McNulty, at *4, fn 1.

As such, 4 Terabytes would be 880 million pages of text. 

If reviewed as standard boxes of paper, one can estimate a human being can review 60 pages an hour, which would add to 480 a day.  Reviewing 880,000,000 pages of text would take approximately 13,333,333.33 hours.

And that is just first pass review.

The Court’s power to cool off discovery is pursuant to Federal Rule of Civil Procedure Rule 26(b)(2)(B), which states in relevant part:

Specific Limitations on Electronically Stored Information. A party need not provide discovery of electronically stored information from sources that the party identifies as not reasonably accessible because of undue burden or cost. On motion to compel discovery or for a protective order, the party from whom discovery is sought must show that the information is not reasonably accessible because of undue burden or cost. If that showing is made, the court may nonetheless order discovery from such sources if the requesting party shows good cause, considering the limitations of Rule 26(b)(2)(C). The court may specify conditions for the discovery.

McNulty, at *5. 

The Court was not about to order the searching of potentially responsive data to be put in the freezer.  The Court observed the Plaintiff had good cause for requesting the search of the Defendant’s data.  McNulty, at *6.  Moreover, the Court had the authority under the Federal Rules of Civil Procedure to “‘specify conditions for discovery,’ including requiring the Plaintiff to provide more narrowly focused search terms, and other courts have so ordered.” McNulty, at *6.  

The Plaintiff was willing to work with the Defendant in drafting search terms and defining custodians.  McNulty, at *6.  However, the Court stated there had been no cooperation based on “mutual recriminations of intransigence.”  McNulty, at *6-7. 

As the Court so curtly observed, “That will change with this Order.” McNulty, at *7. 

The Court ordered the parties to meet and confer, in good faith, to develop search terms for the Defendant’s reasonably accessible ESI.  McNulty, at *7.  The Plaintiff was also directed to provide “reasonably fashioned search terms and criteria.” McNulty, at *7. 

Bow Tie Thoughts

Across the United States, Federal Magistrate Judges know what they are doing when it comes to e-Discovery.  The age of parties in Federal Court dragging their heels on search terms is drawing to its end. 

There are several interesting things about the McNulty opinion:

Magistrate Judge R. Steven Whalen understands Federal Rule of Civil Procedure Rule 26(b)(2)(B).  This is indicative of other judges across the country.  

Cooperation in the development of search terms is pivotal in discovery.

Electronic discovery consultants are a fact of life when dealing with large volumes of ESI.

Opinions such as McNulty give me a lot of hope in how the Courts are evolving in their understanding of electronically stored information.  While the parties needed the helping hand of the Court to cooperate, this opinion illustrates a positive trend.

Fasten Your Seatbelts: Database Productions in a Searchable Format

Producing databases is not as easy as fastening your seatbelt and enjoying the flight…

A former airline employee sued his union claiming the union “failed to properly process his grievances arising out of his discharge from Northwest Airlines.” Lynch v. Air Transp., 2010 U.S. Dist. LEXIS 138143 (E.D. Wis. Dec. 17, 2010).

The Plaintiff requested the production of a “grievance database” by both interrogatory and request for production that “related to other union members who retired or quit while they had a grievance pending.”   Lynch, at *4.

The Defendant objected on over broad, unduly burdensome and privacy grounds.  However, the Defendant ultimately produced a 300-page Word document in Rich Text Format.  Lynch, at *4-5.   The Word document included all the filed grievances for over a decade that were withdrawn after a grievant left the airline’s employment.  Lynch, at *5.      

However, the Plaintiff’s request was for information on “every grievance that the IAM has taken forward despite the grieving employee’s decision to quit or retire.” Lynch, at *4.      

The Defendant maintained the “grievance records” as 1) a hard copy file on each grievance and 2) a searchable database which could be exported to a Word document.  Lynch, at *5. 

The Defendant had 60,000 grievance files.   Id.

The Defendant claimed because of how the data was stored, they could not respond to the Plaintiff’s request.  Id.

The Plaintiff argued the Defendant should produce the database as an Excel file or simply give him access to the entire database.  Lynch, at *5-6. 

The Court took several issues with the Plaintiff’s request.  First, the requested electronically stored information possible was not relevant to the lawsuit, because any responsive ESI would have to be factually similar (both with an individual who was no longer an employee and had a similar grievance).  Lynch, at *7-8. 

The second problem was that the information the Plaintiff wanted was not retrievable from the Defendant’s database.  Lynch, at *8.   The computer system did not either 1) record the rationale for arbitration decisions or 2) list the employment status of a greivant.  Lynch, at *8.  As the Court explained:

[T]here is no searchable notation for those grievances that IAM decides to pursue despite the grievant no longer being employed. Requiring IAM to nevertheless attempt to retrieve such information from its files and computer database would force it to incur substantial costs. There is nothing before me to suggest that IAM can, with the click of a mouse, perform a simple computer search.

Lynch, at *9. 

The Court explained that to comply with the Plaintiff’s request, the Defendant would need to review 60,000 physical files and then cross-reference them with the date of each step of the arbitration process and the individual’s employment status.  Lynch, at *9. 

The Court said “no” to such a production burden on the responding party.  Lynch, at *9. 

The Court also refused to order the Defendants turn over the entire database to the Plaintiff.  Lynch, at *9.   As the Court explained:

The fact that much information today is electronically stored has not rendered obsolete the rules limiting the scope of discovery; nor does counsel’s willingness to stipulate to a protective order provide a license to scavenge through any and all records maintained by the other party.

Lynch, at *9.

The Court finally addressed the form of production: Word vs Excel. 

The Court explained that the Plaintiff did not specify Excel in his request.  Lynch, at *10-11.  While the Plaintiff did later tell the Defendant orally that it wanted the database in an Excel format, the Defendant had already started its production in Word format (the file format the Defendant ordinarily produced in).  Lynch, at *11. 

The Court found that the Defendants did not ”convert” the database to remove functionality, especially since the Word document itself was searchable.  Lynch, at *11.

Bow Tie Thoughts

The production of databases in a searchable format has been litigated before and will be litigated again.  In this case, it makes sense the production was in Word, because it was the standard way the Defendant had maintained/produced the database before.  However, it might have turned out differently if the searchable features were truly degraded or the Plaintiff had specifically requested Excel format in their original request.

However, there is a bigger issue: A database contains only what data it has in it, not necessarily the data a requesting party wants.  In this case, it appeared the information sought simply was not in the database without the responding party doing significant document review and then analysis of other data to generate a specific report for the Plaintiff.  The Court put the breaks on forcing the Defendant to review 60,000 records and do extensive cross-referencing of other union members.  In other situations, such a report might be warranted.

Production of Litigation Hold Letters & Imaging Hard Drives

In an action initiated by an insurance company, the Defendant sought various discovery from the Plaintiff.  Am. Gen. Life Ins. Co. v. Billard, 2010 U.S. Dist. LEXIS 138570 (N.D. Iowa Dec. 29, 2010).  Two issues pertained to the production of litigation hold letters and forensically imaging hard drives.

Litigation Hold Letters

The Defendant sought information regarding the Plaintiff’s obligation to enact a litigation hold.  Am. Gen. Life Ins. Co., at *17.

The Plaintiff objected at first on relevance and privilege, however, admitted someone might have deleted “an email” (which implies a single message).   Am. Gen. Life Ins. Co., at *18.

The Plaintiff’s attorney made several representations at the hearing:

1)    The Plaintiff would produce any non-privileged and responsive documents that exist.

2)    The attorney received and had not reviewed the Plaintiff’s document retention protocols prior to the hearing.

3)    The Plaintiff had such a “comprehensive method” for preserving ESI, a litigation hold letter might not have been needed. 

Am. Gen. Life Ins. Co., at *18.

The Court did not address the representation that a litigation hold letter was not needed because of a “comprehensive” preservation method.  However, the Court did order the Plaintiff to produce any litigation hold letters or state no preservation notices were sent to the Plaintiff’s employees.  Am. Gen. Life Ins. Co., at *18.

Forensic Imaging a Hard Drive

The Defendant sought the forensic imaging of all hard drives/storage devices used by two of Plaintiff’s employees.  Am. Gen. Life Ins. Co., at *19.

The Plaintiff (rightly) objected on privilege and relevancy grounds.  Am. Gen. Life Ins. Co., at *19.  The Plaintiffs also argued the hard drives contained “commercially sensitive information.” Am. Gen. Life Ins. Co., at *19. 

The Defendant did not cite any authority for the forensic imagining of the Plaintiffs’ hard drives.  As such, the Court held that without some proof that the “mirror imaging” would produce additional responsive ESI, the motion to compel was denied.  Am. Gen. Life Ins. Co., at *19. 

Bow Tie Thoughts

Letter writing might be a dying art, but sending a litigation hold is not.

It is a novel argument that a “comprehensive” data preservation system would eliminate the need to communicate the duty to preserve to a client.  While it is certainly plausible a corporate party could capture and archive all employee’s computer generated content, it is a hard sell such technology eliminates the obligation to inform a party to preserve evidence.  To be blunt, a party needs to be told of their duty to preserve relevant ESI to avoid “an email might have been deleted” situation. 

As for the forensic imaging of hard drives, there is no rule all preservation of data must be a full forensic image.  Data preservation must be done in a forensically defensible sound manner, which goes to the process, not a bit for bit image of a hard drive.  Technology continues to improve for targeted collections, in which selected folders and files are copied in a forensically defensible  process. For example, see products from PinPoint Labs, Paraben or Guidance, plus others, who sell such software and hardware.  Such collections reduce time to review ESI and avoid the imaging of non-responsive or otherwise protected information.

The Merger: Litigation Holds & Search Terms

In an action to rescind a merger agreement, the Plaintiff brought a motion for the Defendant to restore back-up tapes; conduct keyword searches; document results from the keyword searches; and conduct additional searches after conferring on the first keyword search.  Escue v. Sequent, Inc., 2010 U.S. Dist. LEXIS

The Plaintiff argued the Defendant did not issue a litigation hold over a Department of Labor investigation. Additionally, the Defendant CEO deleted email on a daily basis and the CFO deleted email monthly.  Escue, at *2. This naturally led to the argument the Defendants committed gross negligence.  Escue, at *2.

The Plaintiff also argued the Defendant stopped creating monthly back-up tapes after the filing of the lawsuit.  Escue, at *2.

The Plaintiff also took issue with the Defendants limiting their keyword searches before the date of the merger and their refusal to pay for restoring back-up tapes from the Department of Labor action or the civil lawsuit.  Escue, at *3.

Defendants’ Counter Arguments

The Defendants argued for the denial of the Plaintiff’s motion, because the Plaintiff did not specify any information that he believed existed that had not been produced.  Escue, at *6. 

The Defendants produced 250,000 pages of documents and that the sufficiency of those responses had not been challenged by the Plaintiff.  Escue, at *4. 

Moreover, the Plaintiff did not challenge of any of the Defendants’ objections to the discovery requests.  Id.

The Defendants’ summarized the Plaintiff’s arguments as “asserting” responsive information existed on the disaster recovery back-up tapes and that the Defendant should pay for restoring them.  Escue, at *4-5. 

The Defendant also described the Plaintiff’s motion as requiring them to “embark on an open-ended collaborative process involving multiple key word searches in the hope that there may be documents responsive to unspecified requests.”  Escue, at *5. 

The Defendants further argued a litigation hold had been in effect since February 2006. Escue, at *5.  The Defendants further explained that the CEO deleted “junk email” and that the other email was archived and available.   Escue, at *5. 

Moreover, the Defendant CEO also searched his email inbox, archived email, personal computer and hard copy documents in response to the Plaintiff’s discovery requests.  Escue, at *5.  Additionally, the CFO was not with the company at the time of the merger and thus did not have any ESI or documents to produce.  Escue, at *5. 

Back-Up Tapes: Betting on Results  

 

The Defendants argued that the cost of restoring and conducting unspecified searches on 45 back-up tapes outweighed any “speculative benefit” of possible responsive ESI that might be found.  Escue, at *5.  The estimated cost of restoring the back-up tapes was $82,860.30. Escue, at *8. 

Additionally, if any responsive ESI was found, it would be duplicative discovery and delay the case 19 weeks.  Escue, at *6-7. 

The Defendants also argued that 32 of the 46 were not relevant to the lawsuit, because they were created after the merger.  Escue, at *7.  If there had been any documents that misled the Plaintiff in the merger agreement, they would have been created before the actual merger.  Escue, at *7. 

Court Finding

The Court found the following:

Plaintiff has failed to demonstrate that Defendant intentionally deleted or archived email that should have been subject to a litigation hold. Escue, at *8. 

The Defendant explained why the CFO did not have responsive ESI. Escue, at *9. 

The search terms were a different matter.  The Court noted the Defendant did not keep a record of his searches.  However, the Plaintiff attorney was, in the words of the Court, “slow” in conferring with the Defense attorney on search terms.  Escue, at *9.  As such, the Court ordered allowed the Plaintiff to request the Defendant search the CEO’s email using the prior agreed upon keywords.  Escue, at *9.

Bow Tie Thoughts

Documenting search terms is extremely important in litigation.  What software was used?  What words did a party use?  What connectors were used with the search terms?  Was their methodology defensible?  Were “false positives” included in the results? 

2011 will see the end of the hue and cry practice of yelling “litigation hold” in the hopes of sanctions being issued.  Before a party challenges the effectiveness of a litigation hold, they must be able to argue how a hold was not effective, what ESI is missing and have some evidence to show the opposing party failed in their duty to preserve.