Bates Numbering ESI & Other Dates with a Recycle Bin

There are battles that do not make sense.  This is one of those cases.

In a civil dispute over fraudulent investments, the Plaintiff brought a motion to compel the Defendant to “Bates Label” electronically stored information in native file format, because the local Discovery Practices Handbook required Bates numbering of ESI.  U.S. Holdings, Inc. v. Suntrust Bank, 2011 U.S. Dist. LEXIS 29956, at 13-14 (S.D. Fla. Mar. 23, 2011).

The Defendant countered that to “Bates Label” their prior discovery produced in native file format, they would need to re-produce it as TIFF’s for branding of Bates Labels.  U.S. Holdings, Inc. at *13.  Moreover, the conversion costs would be between $16,000 to $75,000.  Id.

The Plaintiff’s counter argument was $16,000 was not overly expensive given the claims in the lawsuit (notice no mention of $75,000).  U.S. Holdings, Inc. at *13.

The Court stated that the local “Discovery Practices Handbook” required ESI to be produced with Bates Labels.  U.S. Holdings, Inc. at *13.

However, the Court denied the Plaintiff’s motion to compel, but ordered all future ESI productions to be Bates Labeled (and by default converted to a static image and therefore driving up the costs of discovery).  U.S. Holdings, Inc. at *13-14.

The Court explained that the Plaintiff did not counter the Defendant’s argument that Bates Labeling of ESI requires conversion of native files to TIFF or PDF.  Id.

The Court specifically held:

 

It appears that there was no objection to the production of ESI in native format; and, it appears that the vast majority of the ESI produced is not directly relevant to the claims and defenses in the case at bar. Therefore, at this stage of the litigation, and under the circumstances of this case, Defendants are not be required to Bates label the ESI already produced. However, any future production of ESI shall be Bates labeled.

U.S. Holdings, Inc. at *13-14.

 

Bow Tie Thoughts

Any default local “discovery handbook” requiring ESI to be converted to a static image for “Bates Labeling” needs a date with a recycle bin.

First, Federal Rule of Civil Procedure Rule 1 states the following, in relevant part:

These rules govern the procedure in all civil actions and proceedings in the United States district courts… They should be construed and administered to secure the just, speedy, and inexpensive determination of every action and proceeding.

(As amended Dec. 29, 1948, eff. Oct. 20, 1949; Feb. 28, 1966, eff. July 1, 1966; Apr. 22, 1993, eff. Dec. 1, 1993; Apr. 30, 2007, eff. Dec. 1, 2007.)

Any interpretation of a “Discovery Handbook” that can increase the cost of litigation $16,000 to $75,000 clearly violates the first rule of the Federal Rules of Civil Procedure that cases be “administered to secure the just, speedy, and inexpensive determination of every action and proceeding.”

Second, Federal Rule of Civil Procedure Rule 34(b)(2)(E) states, in relevant part:

(i) A party must produce documents as they are kept in the usual course of business or must organize and label them to correspond to the categories in the request;

(ii) If a request does not specify a form for producing electronically stored information, a party must produce it in a form or forms in which it is ordinarily maintained or in a reasonably usable form or forms; and

(iii) A party need not produce the same electronically stored information in more than one form.

Jannx Med. Sys. v. Methodist Hosps., Inc., 2010 U.S. Dist. LEXIS 122574, at *8 (N.D. Ind. Nov. 17, 2010).

The above interpretation of the “Discovery Handbook” stands directly opposed to Federal Rule of Civil Procedure Rule 34(b)(2)(E).

The issue of “Bates Labeling” electronically stored information is understandable given the decades of legal assistants stamping paper documents.  However, that dogmatic practice has come to an end with electronically stored information.  Data cannot be forced into a paper model of production that 1) drives up the cost of discovery and 2) violates the Federal Rules of Civil Procedure.  Just imagine converting an Excel file with multiple tabs and fields to a static image solely for the sake of branding a number on it.

The issue of “Bates Labeling” is solved with 1) Assigning records control numbers and 2) Producing MD5 or SHA5 hash numbers as production fields with metadata.  These digital fingerprints are the 21^st Century way to address these issues, not compounding the cost of discovery by converting searchable native files to static images for the sake of branding them with a number.

Parties should discuss at a meet and confer how ESI should be produced.  There is nothing that should stop parties from determining that “Bates Labeling” of ESI is producing a hash value, reported to the Court in a joint statement, which can be codified as a court order at a Federal Rule of Civil Procedure Rule 16(b) conference.

The future is now.  We should not limit discovery “Bates numbers” to paper productions of the 1950s with the technology available today.

Feng Shui False Tweets

The Plaintiff, a professional Chicago interior designer, was the director of marketing, PR and e-commerce for the Defendant, a well-known interior designer. Maremont v. Susan Fredman Design Group, Ltd., 2011 U.S. Dist. LEXIS 26441, at *4 (N.D. Ill. Mar. 15, 2011).

After being injured in an accident, the Defendant impersonated the Plaintiff on Facebook and Twitter.  The Plaintiff sued and the Defendant brought a motion to dismiss.  Maremont, at *1-2.

The Factual Focal Point

The Plaintiff had a popular following on both Facebook and Twitter.  All social media messages had her image on them.  Additionally, the Plaintiff maintained a blog hosted on the Defendant’s blog.  Maremont, at *5.

The Plaintiff was hit by a car and hospitalized with extensive injuries, which included surgeries, physical rehabilitation and recovering in a wheel chair.  Maremont, at *5-7.   While in the hospital, she was told the Defendant were promoting themselves with the Plaintiff’s Facebook and Twitter accounts.  Maremont, at *6.

The Plaintiff told the Defendant to stop “impersonating” her online, because 1) it made it look like the Plaintiff had not been hurt badly and 2) she had returned to work. Maremont, at *6.

The Defendant continued impersonating the Plaintiff on both Twitter and Facebook. Id.

After several months of recovery, the Plaintiff learned the Defendant was still impersonating her on her social media accounts.  Maremont, at *7.   The Plaintiff changed her passwords on her accounts, which prompted the Defendant to text the Plaintiff.  Id. After the Plaintiff confirmed she changed her passwords to the Defendant, the Defendant and her employees stopped visiting or contacting the Plaintiff.  Id.

Accent Colors of the Law: Lanham Act, Right to Publicity & Common Law Right to Privacy

False Endorsement

The Court upheld the Plaintiff’s “false endorsement” claim under the Lanham Act.  Maremont, at *9-10.

A “false endorsement” is “…when a person’s identity is connected with a product or service in such a way that consumers are likely to be misled about that person’s sponsorship or approval of the product or service.” Maremont, at *9, citing, Stayart v. Yahoo! Inc., 651 F.Supp.2d 873, 880-81 (E.D. Wis. 2009).

The Court explained that the Plaintiff alleged sufficient facts to survive the motion to dismiss, because 1) she alleged she had a popular following on Twitter and Facebook related to her commercial work and 2) the Plaintiff was in commercial marketing when the Defendant used her social media accounts.  Maremont, at *10.

As such, the Court found the Plaintiff alleged a commercial injury based on the Defendant’s use of the Plaintiff’s Facebook and Twitter profiles.  Id.

Right to Publicity

The Plaintiff alleged the Defendant violated her rights under the Illinois Right to Publicity Act, because the Defendant did not have her written consent to use her likeness. Maremont, at *11.

The Defendant challenged the Plaintiff’s “right to publicity” claim as being untimely under state law, because the one-year statute of limitations had run from when the Plaintiff first learned of the use of her social media profiles.  Maremont, at *11.

The Court found the Plaintiff’s claim timely, because under the “continuing injury” doctrine, because of the several month period the Defendant used the Plaintiff’s social media profiles.  Maremont, at *13.  The Plaintiff filed her lawsuit within one year of her text message exchange with the Defendant about changing her passwords, which was the end of the alleged infringement.  Id. As such, the Plaintiff’s claims were timely.  Id.

Common Law Right to Privacy Claim

The Defendant was successful in the dismissal of the Plaintiff’s Common Law Right to Privacy Claim, because the Illinois Right to Publicity Act replaced common law causes of action.  Maremont, at *14.

The Plaintiff claimed two additional common law torts: 1) unreasonable intrusion upon the seclusion of another and 2) a claim based on publicity that reasonably places another in a false light before the public. Maremont, at *14.

The Court granted the motion to dismiss on the intrusion into her “digital life,” because the Plaintiff did not develop the argument whether such a claim is actionable.  Maremont, at *14-15.

The Plaintiff’s “false light” claim also failed, because she did not sufficiently allege actual malice or special damages.  Maremont, at *15.

Bow Tie Thoughts

We will see more cases involving the blending of personal lives and professional business development.  These issues present intriguing questions of law and electronic discovery challenges.

Consider an employer requiring their employees to use their personal social media profiles to promote the company.  Does that give an employer the right to highjack personal social media profiles if the employee is hospitalized?  How about if the employee leaves the company?

All of the discovery in this case is digital: Social Media and Text Messages.  Both are high transitory and can present preservation challenges.  Attorneys must consider social media in their electronic discovery planning, from collection and review.  While Outlook based email is very established, “cloud” based social media discovery cannot be ignored.

Bringing Reasonableness to Undue Burden

Hock Food, Inc. v. William Blair & Co., is a dispute over the calculation of the “success” fees paid to the Defendant in assisting the Plaintiff with the sale of their business interests.  Hock Foods, Inc. v. William Blair & Co., L.L.C., 2011 U.S. Dist. LEXIS 24874 (D. Kan. Mar. 11, 2011).

The bulk of the discovery disputes centered on an interrogatory to identity client disputes over a 10-year period and a corresponding discovery request to produce engagement letters identified in the interrogatory.  Hock Foods, Inc. at *6.

The Plaintiff also sought an order to compel the Defendant to modify its search parameters related to how fees were calculated.  Hock Foods, Inc. at *6.

Calculating Undue Burden

The Defendant opposed the discovery requests on undue burden grounds.  Hock Foods, Inc. at *23-25.

The Defendant claimed they had between 1,000 to 1,500 clients they would need to investigate to determine whether there had been any disputes with any of them.   Hock Foods, Inc. at *23.  Interviews were estimated in the hundreds of hours with the key players.  Id.

The Defendant’s ESI was also 12 terabytes of data.  As the Court explained:

This District has conceptualized one gigabyte as the equivalent of a “truck load” of documents. [citations omitted]

It is impossible to even begin to calculate the time and expense associated with searching 12,000 truck loads of electronic documents alone. The search Plaintiff demands would be the discovery equivalent of searching for a needle in a haystack—an irrelevant needle.

Hock Foods, Inc. at *23.

Reasonableness and Undue Burden

The Court found the discovery requests to be unduly burdensome, but that was not the end of the analysis. Hock Foods, Inc. at *25-29.

The Court explained that the Defendant still needed to do a “reasonable search for responsive information” to the extent the discovery request was not objectionable.  Hock Foods, Inc. at *28-29.

The Court admitted it could not explain how a less burdensome search could be conducted, due to not knowing the Defendant’s records information system, but noted that the Defendant could ask its general counsel if it had a list of clients with disputes.  Hock Foods, Inc. at *29.  This was an area the Court encouraged the parties to meet and confer over.  Hock Foods, Inc. at *30.

The Court further examined the proposed cost to review the 12 Terabytes of data.  The Defendant claimed it would cost between $100 to $300 a gigabyte to run search terms over the data.  Hock Foods, Inc. at *32.  Searching all 12 Terabytes would cost $1.2 million to $3.6 million, not including document review.  Id. As such, the Court found searching all 12 Terabytes to be unduly burdensome.  Id.

However, that did not let the Defendant off the hook to conduct a reasonable search for responsive ESI.  Hock Foods, Inc. at *32.

The Court conceded that it did not have enough information to give the parties specific guidance, but suggested the following:

Part of any such reasonable search might include a more limited search of Defendant’s ESI. For example, it might be appropriate to search Mr. Simon’s emails or other key executives who were likely to have been involved in any disputes or disagreements. Additionally, if Defendant’s search of its hard copy documents reveals only a handful of clients with whom it had a disagreement, it might be reasonable to search the emails of the individuals who were involved in those disputes.

Hock Foods, Inc. at *32-33.

Bow Tie Thoughts

There is a fine line between undue burden and not conducting any inquiry to respond to a discovery request.  Case law has its share of examples of parties claiming e-Discovery is expensive, thus “unduly burdensome” and therefore the responding party need go no further in searching and reviewing ESI.

Hock Foods, Inc. follows a different path: the Defendant demonstrated searching 12 Terabytes would be unduly burdensome and the Court agreed, but that did not allow them to not conduct any reasonable search for responsive electronically stored information.

A Standard for Undue Burden: Excruciating, But Highly Educational and Useful, Detail

Discovery Balancing Acts in a War Zone

United States ex rel. McBride v. Halliburton Co., is a qui tam action over alleged fraudulent billing for services provided to the US military in Iraq.  The case involved inflated headcounts in Morale, Welfare and Recreation (“MWR”) facilities and fraudulent billing for those costs to the United States government.  United States ex rel. McBride v. Halliburton Co., 2011 U.S. Dist. LEXIS 6412, 1-2 (D.D.C. Jan. 24, 2011).

Balancing Search Terms and Undue Burden

The discovery disputes were numerous, and in his trademark detailed fashion, Magistrate Judge Facciola addressed each one in turn. 

One dispute centered on the collection and searching of additional custodians who were “cc-ed” on relevant emails was justified or unduly burdensome on the producing party. McBride, at *12-22. 

The Defendants initially searched 20 custodians for responsive electronically stored information.  McBride, at *12.  The Defendants voluntarily searched the data a second time with expanded keywords.  McBride, at *13-14. 

The Plaintiff demanded additional information, which promoted the Defendants to run another expanded search.  McBride, at *14-15.  The Defendants searched 230 custodians, which included all custodians in all litigation involving the Defendants.  McBride, at *15.  The uber-search of did not result any hits for the desired custodian the Plaintiff wanted in their request.  Id.  The Defendant took the position that since the emails were not found in the custodians the parties agreed to search; the Defendants did not need to conduct any more searches.  Id. 

The Plaintiff demanded the Defendants conduct additional searches of anyone who had been “cc-ed” on the already relevant email messages with the relevant reports.  McBride, at *15. 

The Defendants objected, claiming that search would add another 35 custodians.  Moreover, the Defendants estimated the search process would take months.  McBride, at *15-16. 

Judge Facciola stated a phrase that will cast a shadow of what must be demonstrated for an effective undue burden argument: “In excruciating, but highly educational and useful, detail.”

The Defendants’ manager for the e-Discovery group submitted a declaration that explained process of how data is collected from employees, which might include the following sources of ESI:

 (1) The employee’s hard disk drive, which can include the original disk drive, a “ghosted” image of the drive, and self-collected copies of the drive, of which [the Defendants] may possess none, one, or several collections for each identified custodian;

(2) Copies of current or former employees’ electronic data made at different points in time in response to various audits, inquiries, and litigation, which copies may include information no longer on the employees’ hard drive today (or was not on the hard drive at the time of his or her departure); and

(3) The employee’s mailbox or “homeshare” (personal network folder), with the possibility that there could be multiple existent copies of both the mailbox and homeshare if the employee was a custodian in other matters; indeed, there are multiple sources of such data, and it is not usual for more than a dozen to exist.

McBride, at *16-17. 

The Court explained that after the data was found, it was then copied in “a forensically appropriate manner to preserve its metadata and prevent its alteration.” McBride, at *17. 

The collection of data in the US involved data being sent to a service provider from storage; however, things would be a little trickier for the data in Iraq.  McBride, at *17. 

The overseas ESI would need to be shipped back to the United States or harvested over network connections.  Id.  The collection over a network would take days from just one custodian.  The Defendants’ e-Discovery manager estimated that each custodian had 15 to 20 gigabytes of data.  Collecting the data could take two to ten days for each custodian.  McBride, at *17-18. 

The workflow would then include processing the data and de-duplication for review.  McBride, at *18.   The data would then be searched for relevance and privileged.  Id.

Utility vs. Cost of Searches

The Court gave a very succinct summary of discovery cost analysis: 

All discovery, even if otherwise permitted by the Federal Rules of Civil Procedure because it is likely to yield relevant evidence, is subject to the court’s obligation to balance its utility against its cost. Fed. R. Civ. P. 26(b)(2)(C). More specifically, the court is obliged to consider whether (1) the discovery sought is unreasonably cumulative or duplicative, or obtainable from a cheaper and more convenient source; (2) the party seeking the discovery has had ample opportunity to obtain the sought information by earlier discovery; or (3) the burden of the discovery outweighs its utility. Id. The latter requires the court to consider (1) the needs of the case; (2) the amount in controversy; (3) the parties’ resources; (4) the importance of the issues at stake in the action; and (5) the importance of the discovery in resolving the issues. Fed. R. Civ. P. 26(b)(2)(C)(iii).

McBride, at *18-19.   

The Court recognized a significant factor in favor of production: “Claims of fraud in providing services to military personnel raise important, vital issues of governmental supervision and public trust.” McBride, at *19.

However, the parties had spent $650,000 in discovery.  The “king’s ransom” in Judge Facciola’s words did not include attorneys’ fees. McBride, at *19.

The discovery already produced included two million paper documents, thousands of spreadsheets and half a million emails.  Id.

The Court denied the Plaintiff’s motion, because the Plaintiff had not demonstrated that the email messages not already produced were “critical to her proof.” McBride, at *19-20.  As such, the cost of the collection and search outweighed its utility. McBride, at *20.  In the words of the Court, “there is no showing whatsoever from what has been produced that those emails not produced will make the existence of some crucial fact more likely than not.”  Id.

The Federal Rules of Civil Procedure vs. Common Law Spoliation

The Plaintiff argued that the Defendants would violate a preservation order if they could not produce email messages from a specific custodian and should be sanctioned accordingly.  McBride, at *21.    The Court began its analysis with the following: 

It is important to keep separate, and not conflate, two distinct concepts: whether an additional search for certain information should be conducted, and whether or not the inability to find certain information should be sanctioned. The first is a question of interpreting the Federal Rules of Civil Procedure, while the second is a matter of the application of the common law principle of spoliation.

McBride, at *21.    

The Plaintiff’s sanction argument effectively would have a producing lose their right to argue against additional searches under Federal Rule of Civil Procedure Rule 26(b)(2)(C)(iii) if the producing party could not produce data they were asserted to preserve.  McBride, at *21-22.    

As the Court stated:

If that were true…then even an entirely innocent loss of information would deprive the party who occasioned the loss of reliance upon the balancing of the factors in Rule 26(b)(2)(C)(iii) to argue against an additional search. There is nothing in the Federal Rules that could possibly justify such an extraordinary sanction, and thereby rob Rule 26(b)(2)(C)(iii) of its intended universal application.

McBride, at *22.    

Bow Tie Thoughts

Proving undue burden requires specific documentation of the process used to collect data; where the data is location; time involved in collecting the ESI; and estimated cost.  While judges across the country will not be applying an “excruciating detail” test, parties need to demonstrate undue burden with evidence.

Driving the Snakes from e-Discovery Seminar

Driving the Snakes from e-Discovery, the first seminar by the Santa Clara County Bar Association e-Discovery Task, will be on March 17, 2011 in San Jose, California.  This two-hour seminar is the first of a four-part series on e-Discovery in Silicon Valley. To register for the panel, please click here. 

“Driving the Snakes from e-Discovery” is an introduction to electronic discovery. It will address practical solutions for understanding and competently handling e-Discovery issues, whether you are working with a small client or a large enterprise and will include an overview of e-Discovery terminology; understanding computers and sources of electronic data; collection methodologies for large and small clients; litigation hold notices and strategies; and best practices for complying with the California Electronic Discovery Act and the Federal Rules of Civil Procedure.

I am very proud to be on this panel with an all-star panel, including:

Judge Socrates Manoukian, Santa Clara County Superior Court

William Kellermann, Esq., Director of e-Discovery at Wilson Sonsini Goodrich & Rosati

Dianne Sweeny, Esq., Pillsbury Winthrop Shaw Pittman LLP

Kate Wilson, Esq., Berliner Cohen

Jon Rowe, PinPoint Labs

If you are in Silicon Valley and the San Francisco Bay Area, we hope you can join us on March 17 for Driving the Snakes from e-Discovery.  Our panel is also sponsoring O’Doul’s Non-Alcoholic Beer in honor of St. Patrick’s Day.

The “Friendly” Jurors & Stored Communication Act

It is surprising this has not happened earlier: Two jurors meet and “friend” each other on Facebook during a criminal trial in California State Court.  The Criminal Defendant is found guilty.  Juror Number Five later informed the Criminal Defense Attorney the Juror Number One (hereinafter the Plaintiff) made comments about the trial on Facebook. Juror No. One v. California, 2011 U.S. Dist. LEXIS 16834 (E.D. Cal. Feb. 14, 2011).

Why would the Criminal Defense Attorney click the “Like” button on the Plaintiff’s Status comments? 

One comment was that Juror Number One was “still” on jury duty and the other he was “’bored’ during the presentation of cell phone record evidence.” Juror No. One, at *1.

The hearing and evidence on juror misconduct ran straight into the Stored Communications Act.  The Criminal Defendant issued a subpoena on Facebook for the Plaintiff’s posts.  Juror No. One, at *2.  Facebook refused because of the Stored Communications Act.  Id.

The Criminal Defendant than issued a subpoena directly to the Plaintiff for the Facebook material.  Juror No. One, at *2.  The Court quashed the subpoena because it was overly broad. Id.

The Court ultimately ordered the Plaintiff to “execute a consent form sufficient to satisfy the exception stated in [the Stored Communications Act] Title 18, U.S.C. section 2702(b) allowing Facebook to supply the postings made by Juror # 1 during trial.”  Juror No. One, at *2. 

The Plaintiff filed a Writ of Prohibition in the California Court of Appeal, which was denied.  An appeal is pending before the California Supreme Court.  Juror No. One, at *3. 

The Plaintiff sought a temporary restraining order from Federal Court on the grounds that the consent form would violate his Fourth Amendment right to privacy; Fifth Amendment right against self-incrimination; the Electronic Communications Act; the California Constitution, plus other California statutes.  Juror No. One, at *3. 

The Federal Court abstained from ruling on the temporary restraining order, because there was no evidence the California Supreme Court would not take the appeal.  The only evidence of the California Supreme Court not acting on the Plaintiff’s appeal were based on phone calls to clerks at the California Supreme Court.

Bow Tie Thoughts

Juror conduct (or misconduct) goes to the heart of our judicial system.  Judges and Attorneys should inform jurors that posting about a case on Twitter, Facebook or any social media forum is not acceptable.

The issue of whether ordering someone to consent and waive their Stored Communication Act rights is an interesting one.  Whether that violates the Fourth and Fifth Amendments will one day be decided.