BlackBerry Boo-Boos: How to Get the Judge to Text You Adverse Inference Instructions

Southeastern Mechanical Services, Inc., v Brody, et al., is the story of how wiping the data off your BlackBerry can result with the Court having you drawn and quartered.  Not with horses, but with adverse inference instructions.

In a trade secret case where Individual Defendants left the Plaintiff’s company and went to the Defendant’s company, issues with BlackBerry data spoliation exploded like a fireball in the night.  Southwestern Mechanical Services, Inc., v Brody, et al., 2009 U.S. Dist. Lexis 85430 (August 2009).  There is an “app” for that sort of spoliation called adverse inference instructions.

The key facts of the case took place in a matter of days.  The three Individual Defendants purchased their BlackBerries between May 28 to May 30, 2008.  The devices were used for email, phone and text messaging. 

The Individual Defendants’ BlackBerries were synced with the Defendant’s email server between June 3 to June 4, 2008.  SMS, at *5-6. 

A demand letter was sent from the Plaintiff on June 6, 2008 and email messages were preserved on June 10.  SMS, at *7.  A temporary restraining order (TRO) was issued on June 13 and the Individual Defendants were instructed to return their laptops and BlackBerries on June 17, 2008.  SMS, at *7-8.

The Defendants represented that no email messages were lost from the Individual Defendants’ BlackBerries or laptops because they were synced to the Defenant’s BlackBerry Enterprise Server.  SMS, at *4.  As such, the email messages were not on any hard drives, but an email server.  SMS, at *6.

Forensic Examination of the BlackBerries

After the execution of a litigation hold and the physical sequestering of the Individual Defendants’ BlackBerries and computers, the Plaintiff’s expert performed a forensic examination using Paraben Device Seizure software on the BlackBerries.  SMS, at *9-12.

The Plaintiff’s expert quickly determined the BlackBerries had been wiped clean: No phone records, no text messages, no email messages or applications existed on the devices.  SMS, at *10.  Moreover, the data on the devices was different from what would be on a brand new BlackBerry and different from one only used as a phone.  SMS, at *11, fn 8.

This sort of thing does not happen by accident.  The only ways this would happen (according to the expert) would be by a “hard reset” or someone entered the incorrect password ten times.  SMS, at *11.

The Defendant’s forensic expert also determined that the BlackBerry SIM cards contained some contacts and text messages, but not emails messages. SMS, at *12.

Dial S for Spoliation

For those who are not familiar with spoliation, it is the intentional destruction of evidence.  SMS, at *13.  To prove sanctions for spoliation under Florida law, a party must show the following: 

1)       The evidence existed at one point in time;

2)       There was a duty to preserve the evidence on the part of the spoliator; and

3)       The evidence was crucial to the movant’s prima facie case.

SMS, at *14. 

The Court rocketed through these three factors answering all in the affirmative.  SMS, at *15.

The Court found that there were circumstances showing the destruction of the email, text messages and phone data was in bad faith. SMS, at *16-17.  The Court found the Individual Defendants to not be credible in explaining the data loss, because the expert testimony showed that 3 of the 4 ways the data could have been lost were by intentional acts.  SMS, at *17.  Further, the Individual Defendants had both the motive and opportunity to erase the data on their BlackBerries. SMS, at *16-17.

Furthering the Individual Defendants’ credibility gap, there was evidence of other deleted data.  One Individual Defendant’s prior computer he used while employed by the Plaintiff had all of its email and contacts deleted.  The other Individual Defendant used a software program to delete all of the data on it before returning it to the Plaintiff.  SMS, at *19-20.   

The Court found that the appropriate sanction for the loss of data was an adverse inference instruction regarding the Individual Defendants failure to preserve data on BlackBerries that would be advantages to Plaintiffs and disadvantageous to the Individual Defendants. SMS, at *23.  While default judgment was avoided, the Court’s irritation is visible throughout the opinion.  

Bow Tie Thoughts

The Court’s analysis of the BlackBerry preservation and data deletion was very well done.  This case highlights how data on a BlackBerry (or any Smartphone) can be deleted and the importance of having procedures to enact a litigation hold on these devices.

Speedy Delivery: Compelling Imaging & Searching of Everything

In a contract dispute regarding a shipping vendor, the Plaintiff brought a motion to compel the collection and processing of the entire contents of Defendants’ hard drives, network drives, and user files.  Unishippers Global Logistics, LLC v. DHL Express (USA), Inc., 2009 U.S. Dist. LEXIS 94844 (D. Utah Oct. 12, 2009).

In not much of a surprise, the Court said “No.”

Please Sign Here: Meet & Confer over Custodians

As the discovery dispute began, the parties agreed to provide each other a list of custodians to be searched for responsive documents.  Unishippers Global Logistics, at *4.  The Defendants identified 13 opposing custodians and the Plaintiff 36 custodians.  Id. 

The litigants agreed to produce “all emails between or among the custodians” and to perform searches on internal and external email networks.  Unishippers Global Logistics, at *4. 

The Dispute: Imagining Network Files, User Files & Hard Drives

The Plaintiff claimed the Defendant refused to “image and search the network files, user files, and the hard drives of its identified custodians for responsive documents.” Unishippers Global Logistics, at *4. 

 One can imagine the Gigabytes very quickly expanding for ESI review with 36 custodians…

The Motion to Compel

You can sense the Court was not happy with the Plaintiff.  They failed to comply with local rules on discovery disputes and brought the motion to compel without first receiving or reviewing the Defendants’ production.  Unishippers Global Logistics, at * 6.

The Plaintiff wanted the Court to order the Defendants to “conduct relevant word searches of its custodians’ user files, network drives, and individual hard drives for responsive documents.” Unishippers Global Logistics, at * 6.  Moreover, the Plaintiff took issue with the Defendant collecting and reviewing email from custodians and collecting non-duplicative ESI from other sources, and then producing accordingly.  Unishippers Global Logistics, at * 6. 

The Defendants opposed the motion as premature and that the Plaintiff wanted everything electronic searched.  Unishippers Global Logistics, at * 6.

The Court Order

The Court held the Plaintiff’s arguments were without merit. Unishippers Global Logistics, at * 7.

First, it is self-evidence that a producing party “must determine whether it possesses relevant documents that are responsive to a particular discovery request.” Unishippers Global Logistics, at * 7.  To be blunt, that is just how document review and discovery works. 

Secondly, the Court held it was unnecessary and unduly burdensome to force the Defendant to “collect and process the entire contents of the custodians’ hard drives, network drives, and user files,” that were known to be non-relevant.  Unishippers Global Logistics, at * 7.  

Third, the Defendant explained their email discovery protocols, which the Court seemed to accept as defensible.   Unishippers Global Logistics, at *8-9.   

The Court based its ruling on Federal Rule of Civil Procedure Rule 26(b)(2)(C) which states a court “must limit the frequency or extent of discovery . . . if it determines that . . . the discovery sought is unreasonably cumulative or duplicative, or can be obtained from some other source that is more convenient, less burdensome, or less expensive.” Unishippers Global Logistics, at * 7, citing  Fed. R. Civ. P. 26(b)(2)(C)(i).  Moreover, a court must also limit discovery where “the burden or expense of the proposed discovery outweighs its likely benefit.” Unishippers Global Logistics, at * 7-8, citing Fed. R. Civ. P. 26(b)(2)(C)(iii).

Bow Tie Thoughts

This motion probably could have been dismissed as not ripe or for procedural defects.  Additionally, the Plaintiff would have been in a much stronger position if they actually had reviewed the Defendant’s production. 

The Plaintiff did not make an articulable basis that the Defendant somehow failed in their discovery production, such as a Rule 26(g)(1) violation.  However, if there are later production discrepancies, we may see a follow up to this case.

Proving Up Destroyed ESI is Favorable to Your Position is Hard to Do

In an ADA employment case, the Plaintiff sought spoliation sanctions and an adverse inference instruction for the destruction of electronically stored information (ESI). Scalera v. Electrograph Sys., 2009 U.S. Dist. LEXIS 91572 (E.D.N.Y. Sept. 29, 2009).

The Plaintiff lost.

 

 

 

 

 

 

The Discovery Requests

The Plaintiff sought the following discovery: 

1) All emails sent or received by Defendant’s employees regarding Plaintiff’s medical condition;

2) All emails sent by Defendant’s employees regarding Plaintiff’s request or need for any accommodation for her medical condition;

3) All emails sent on Defendant’s “Inter-Office email system” to and from Plaintiff from 2005 to the present, “including any emails predating Plaintiff’s employment;” and

4) All “backup and/or archive (computer) data which was generated by Defendants” and related to Plaintiff’s employment. Scalera, at *5.

Discovery Production History

In the Plaintiff’s version of the facts, the Defendant only produced a “handful” of email.  Scalera, at *5. 

The Defendant provided 16 backup tapes to an electronic discovery service provider.  Scalera, at *6.  Only two of the tapes met “the criteria for restorable data.”  Scalera, at *6.  The vendor was unable to restore the backup tapes, which the Plaintiff claimed spoliation that required an adverse inference sanction.  Scalera, at *6. 

Requirements for Adverse Inference Instructions

A party must prove the following for spoliation warranting an adverse inference instruction: 

1) “The party having control over the evidence had an obligation to preserve it at the time it was destroyed;”

2) “The records were destroyed with a ‘culpable state of mind;’” and

3) “The destroyed evidence was ‘relevant’ to the party’s claim or defense such that a reasonable trier of fact could find that it would support that claim or defense.”

Scalera, at *7, citing Toussie v. County of Suffolk, 2007 U.S. Dist. LEXIS 93988, at *6 (E.D.N.Y. Dec. 21, 2007).

The Duty to Preserve

As one can imagine, the Plaintiff argued the duty to preserve for her discrimination claim arose very early, after she fell down steps and sent a letter to the building landlord.  Scalera, at *7-11, 28.The Court disagreed and held the duty to preserve arose when the Defendants received the EEOC charge for discrimination.  Scalera, at *25.

The Court found the Plaintiff’s arguments for when the duty to preserve began pushed logic “beyond the boundary of reasonableness.”  Scalera, at *28. 

The Plaintiff argued that since the Defendants knew the Plaintiff had a “disability,” they should have known she needed a handrail at the side door to prevent injury; therefore her injury should have alerted the Defendants the Plaintiff would have sued them for discrimination.  Scalera, at *28.  The Court did not agree.

The Court also held that filing a worker’s compensation claim did not trigger a duty to preserve for a possible discrimination claim.  Scalera, at *29-30. 

The Court effectively held that the tort accident and following worker’s compensation action did not trigger the duty to preserve for a discrimination claim.  The Defendant’s duty to preserve began at the time the Defendant received the EEOC charge.

The HR Hard Drive

The Defendant’s HR manager retired at least one month, possibly two, after the Defendant had a duty to preserve evidence.  However, because of the Defendant’s policy of erasing employee hard drives after they leave, the Defendant was unable to search the HR person’s computer.   Scalera, at 36-37.  This amounted to a failure in the Defendant’s duty to preserve. 

The Defendant tried playing “preservation Twister” by dancing around the HR policy of printing all HR emails and retaining them as hard copies as “no harm, no foul” argument for erasing the HR manager’s hard drive.  Scalera, at *37.  The Court noted the Plaintiff had produced emails that the Defendant had not produced, which openly questioned whether all HR emails were printed.  Scalera, at *38.

Emails Going Rogue

The Defendant’s production included email messages with partial email strings that were “personnel or employment records.”  Scalera, at *38.  The Plaintiff also had email messages requesting reasonable accommodations that the Defendant did not produce.  These messages were required to be saved for one year under the ADA.  Scalera, at *39. 

Surprisingly enough, these failures were not a breach of the duty to preserve.  The one year retention period under the ADA would have ended prior to the EEOC action and thus before the triggering event duty to preserve.  Scalera, at *40-41.

A Culpable State of Mind

The Court found the Defendant acted negligently in preserving ESI.  Scalera, at *44.  Based on declarations, the Court found that the Defendant did not attempt to preserve ESI until two months after the EEOC complaint. 

The General Counsel for the company took action after receiving the EEOC by meeting with employees who interacted with the Plaintiff and “spoke to” employees about saving ESI. Scalera, at *42.  The attorney was confident that all the “necessary” documents had been preserved after talking with IT, learning about the backup tapes and the fact the company did not have a data destruction policy.  Scalera, at *42.

The Court was not thrilled with the Defendant’s preservation attempts.  The Court noted that searches of the key player hard drives were either not done or finished after the EEOC charge was received. Scalera, at *44.  Moreover, two of the people the Corporate Counsel spoke to never had their hard drives searched.  Scalera, at *45.  Additionally, the IT person’s declaration showed that some information on hard drives was never backed up.   Scalera, at *45.  These failures could have resulted in the loss of electronically stored information.  Scalera, at *45.

The final kicker was that Corporate Counsel “speaking to” key employees was not a formal litigation hold.  Scalera, at *45.  Case law requires a party engage in the following steps for litigation hold compliance:

1) Issue a litigation hold at the outset of litigation or whenever litigation is reasonably anticipated;

2) Clearly communicate the preservation duty to “key players;” and

3) “Instruct all employees to produce electronic copies of their relevant active files” and “separate relevant backup tapes from others.”

Scalera, at *46, citing Zubulake v. UBS Warburg LLC, 229 F.R.D. 422, 433-34 (S.D.N.Y. 2004).

The Court stated that if a proper hold had been in place, the HR manager’s hard drive would have been searched instead of erased.  Scalera, at *47.

The Court found that the Defendant’s communications directly resulted in the loss of ESI, which was negligent.  Scalera, at *47-48. 

Relevance: The Sanction Killer

Relevance can be proven by showing a party acted with gross negligence (a culpable state of mind) or offering some “…extrinsic evidence tending to demonstrate that the missing evidence would have been favorable to it.” Scalera, at *49.

In cases where a party seeks an adverse inference instruction, the moving party must show the lost evidence would have been favorable to the moving party.  Scalera, at *49.

The Plaintiff did not establish “relevance” as a matter of law because the Defendant only acted negligently, not with gross negligence.  Scalera, at *49-50. 

Putting a spin on extrinsic evidence, the Plaintiff offered email messages that were if anything FAVORABLE to the Defendant, showing that the Defendants made reasonable accommodations for the Plaintiff.  Scalera, at *51. 

Bow Tie Thoughts: A Swing and a Miss

The Defendant in this case had a poorly executed litigation hold (if you could call oral instructions a litigation hold) and botched preservation of hard drives.  However, such failures are not a “strict liability” offense for instant adverse inference instructions.  A moving party still must prove that the lost evidence would have been favorable to their position.  That did not happen here.

A Three Page Order Hitting De-Duplication & Litigation Holds

From the plains of Kansas comes another short and powerful order by Magistrate Judge David Waxse.  On Constitution Day, Judge Waxse was very busy in White v. Graceland College Ctr. for Prof’l Dev. & Lifelong Learning, Inc., 2009 U.S. Dist. LEXIS 85849 (D. Kan. Sept. 18, 2009).  For an earlier discussion of this case, please see The Express Way to Your Hard Drive and What Happens When the Requesting Party Does Not State a Form of Production?.

The Court ordered the parties to complete the following discovery by October 1, 2009:

1)       Defendant’s production of de-duplicated data.  The Court required the Defendants to “provide their computer expert and technician used for the de-duplication process to explain and describe this process, including the technique and criteria used by the process, to Plaintiff’s expert.” White, 1-2.

2)       A meet and confer between experts on a search protocol for PST’s to find three email messages. White, 2.

3)       A search to be performed with the both experts present on the PST data. White, 2.

4)       Defendants were to perform an immediate privilege review. White, 2.

5)       Non-privileged search results were to be produced to Plaintiff counsel immediately. White, 2.

6)       Defense production of the litigation hold notice issued at the beginning of the case.  White, 2-3.

De-Duplication: Separating the Clones from the Twins

If you have never heard of de-duplication, or have heard of it but have been afraid to ask what it is, it is defined as “the process of separating duplicative email messages, word processing documents, and other computer files from your electronic file collection.”  Michael R. Arkfeld, Arkfeld on Electronic Evidence, Glossary, G-5 (2^nd. Ed.).

As one can imagine, de-duplication requires technology to reduce multiple identical digital copies (image a true DNA clone) down to one.  Now imagine electronically stored information such as an Excel file that has been emailed from a Defendant to a Plaintiff.  This file is not an exact copy (thus like a twin), because the metadata can be different by who opened the file last, or other smaller changes that make it a different file, thus something you might not want to “de-dupe.” 

I can imagine the Defendants’ expert explaining they used a specific software tool and “de-duped” by metadata fields or MD5 Hash Values or some other defensible process.  It will be interesting to see what is next reported in this case. 

 Litigation Hold Notice Production

A Court generally requires production of a litigation hold letter if there have been issued of spoliation (See, The Holding Pattern: Lessons Learned on Litigation Holds).  In this case, the Court required the production of the litigation hold notices and that such production was agreed not be a waiver of the attorney-client privilege or work product doctrine.  White, 3. 

Tools that generate and track litigation hold notices are now commercially available and will make such productions easier in future litigation.

Production Madness: The Covad Story Continues with New ESI Pitfalls

Understandably, taking an electronic document such as a spreadsheet, printing it, cutting it up, and telling one’s opponent to paste it back together again, when the electronic document can be produced with a keystroke is madness in the world in which we live.

Magistrate Judge John M. Facciola, Covad Communs. Co. v. Revonet, Inc., 2009 U.S. Dist. LEXIS 75325 (D.D.C. Aug. 25, 2009).

Magistrate Judge John M Facciola has addressed ESI issues before in Covad Communs. Co. v. Revonet, Inc. (see, Playing with Fire: Producing ESI as Paper, Discovery Production Workflow: Lessons from Magistrate Judges Facciola & Grimm and The Return of Covad Communications: Forensic Imaging of Databases & Email Servers). On August 25, the Court issued a new opinion and I have a feeling another will be published before Christmas. 

Procedural History

The Covad opinion is a “direct sequel” to the “Christmas Eve” opinion of last year.  The second opinion is from May 27, 2009, which has must read analysis on forensic imaging of hard drives and email servers. However, no one is calling the second opinion the “Sink the Bismark” Order, in recognition of the events of May 27, 1941. 

In the new opinion (which history fans could call the Voyage 2 Opinion), the Plaintiff brought a motion to compel compliance with the “Christmas Eve” opinion due to the “adequacy” of the Defendants’ responses and email searches.  Covad, 1-2.

The Case at Bar: Format and Completeness

There are two intertwined issues of Covad 3: Format and Completeness. 

“Format” addressed the December 24, 2008 Order regarding:

(1) The 35,000 pages the Defendant produced in hard copy prior to the Motion to Compel; Covad, 2-3.

(2) The 2,832 pages of documents originally produced in hard copy while the Motion to Compel was pending; Covad, 3.

(3) Any other information that have been produced since the December 24, 2008 Order or will be produced in the future. Covad, 3.

“Completeness” addressed whether the Defendants had produced anything pursuant to the discovery requests.  Covad, 3.  Plaintiff Covad advanced the following arguments in support of their motion:

(1) Only a subset of all the documents that should have been produced in response to the original 44 Requests to Produce Documents have been produced; Covad, 3.

(2) The e-mail search, no matter what it produced, was not designed to find the relevant e-mails because of the narrow and under-inclusive search terms that were used; Covad, 3.

(3) The litigation hold and search term documents have never been produced in electronic format, Covad, 3.

(4) Defendant Revonet has not produced many of the documents identified in its own initial disclosures. Covad, 3.

Many of these issues were still pending from the ordered forensic search in Covad 2 at the time of the Covad 3 opinion was issued.  (See, The Return of Covad Communications: Forensic Imaging of Databases & Email Servers).  Thus, the Court did not address the “completeness” issues, because the forensic search may make some of the issues moot.  Covad, 3-4. 

Judge Facciola set the stage for possibly limiting any more productions of relevant electronically stored information under the Federal Rule of Civil Procedure Rule 26(b)(2)(C) “balancing factors” that “…include….(i) whether the discovery is “unreasonably cumulative or duplicative,” and (ii) whether the party seeking discovery “has had ample opportunity to obtain the information by discovery in the action.” Covad, 4.

The Court acknowledged that discovery was ongoing and procedurally the Defendants could not respond to some of the issues in the Plaintiff’s Reply brief.  However, the Court wanted answers to these four issues:

1. Is it Revonet’s position that its production to date satisfies all the demands made of it by Covad’s Request for Production of Documents? Covad, 5.

2. Will Revonet produce what Covad calls the litigation hold and search term documents in native format? Covad, 5.

3. Does Revonet consider itself bound, by either the Requests for Production or by some agreement with counsel to produce the litigation hold and search term documents? If not, why not? Covad, 5.

4. Has Revonet produced or will it produce the items that Covad argues were identified in Revonet’s initial disclosures? Covad, 5-6.

The Court ordered a neutral statement of facts to answer the above issues.  Moreover, the Court would deem these answers certified under Federal Rule of Civil Procedure Rule 26(g)(1).  Covad, 5-6.  The Court alluded in Covad 2 that it would potentially take violating Rule 26(g)(1)(A) to compel a forensic search of the Defendant’s email servers.  Covad Communs. Co. v. Revonet, Inc., 2009 U.S. Dist. LEXIS 47841, 22 (D.D.C. May 27, 2009).

When Production Sets Don’t Match

The Plaintiff claimed the Defendant did not produce all of the emails in native file format, thus resulting in a discrepancy between the paper and native file productions.  Covad, 7. 

The Defendant explained that the review platform they used for the first paper production was only able to export email in an HTML format.  Covad, 7.  After the first Court order, the Defendants re-produced email messages with a PST using a different production method.  Covad, 7. 

As one can imagine, there was a difference between the first production in paper and the second in native file format.  The Defendants claimed it was too burdensome to cross-reference the two productions to define the size and scope of the discrepancy.  Covad, 7.

This is an avoidable situation.  While I am not sure exactly what was done in this case, ESI should be collected in a documented methodology and processed in a defensible manner.  This should give the party MD5 Hash Values and an index of the processed ESI.  All litigation support review software creates a document index and almost all a production log.  This should enable a party to track what has and has not been produced in discovery.  Instead, the Defendant has to cross-reference a HTML system to a PST production.  This situation could have been avoided with treating ESI as ESI and not producing paper in the first place. 

As Judge Facciola stated:

More to the point, I have already resolved the issue of whether, on balance, Revonet should be required to produce the 35,000 pages in native format, and I have not seen any new information that causes me to revisit my conclusion on that point. Obviously, I contemplated that the e-mails be produced in native format; I was not granting a license to produce fewer e-mails in native format than were produced in hard copy. Hence, Revonet is going to have to produce the missing e-mails. Covad, 8-9.

A Bad Form of Production Plan

The Defendants also produced “useless” paper printouts of spreadsheets that “run horizontally across several sheets of paper, resulting in a sea of seemingly random numbers and data, with no effective labels, column headings, or other identifying information.” Covad, 10.  The Plaintiff’s attorney was told he “could paste these hundreds of pages together,” to make the “paper-ized” spreadsheets useable.  Covad, 10.

The Parties were attempting to resolve this form of production debacle outside of court at the time of the opinion.  Judge Facciola reminded the Parties that “…documents that were originally created in an electronic format (which must be the vast majority, if not all, of them) must be produced in an electronic format that is ‘the form or forms in which it is ordinarily maintained or in a reasonably usable form or forms.’” Covad, 12, Fed. R. Civ. P. 34 (b)(2)(E)(ii).

It is an understatement to say Courts frown on parties producing ESI in a way that degrades its searchability.  Covad, 12-13.  As Judge Facciola stated: 

Understandably, taking an electronic document such as a spreadsheet, printing it, cutting it up, and telling one’s opponent to paste it back together again, when the electronic document can be produced with a keystroke is madness in the world in which we live. Covad, 14.

The clock is ticking for the Defendants to respond to the Court’s questions.  I am waiting for what happens next in Covad 4.  Depending on the timing of the pleadings and the Defendants’ actions, Judge Facciola might be issuing an “Antietam” or “Trafalgar” order this fall.

Spoliation! A New Drama at the District Courthouse about a Litigation Hold and Missing Electronically Stored Information

The stage is set: There is a triggering event for a lawsuit, a litigation hold is enacted and evidence is preserved. 

A drama played out not according to the above script with a law firm and client almost ending up on the hook for a botched litigation hold. 

In Pinstripe, Inc. v. Manpower, Inc., the Defendant failed to enact a litigation hold after being instructed by counsel to preserve evidence.  However, after learning of the failed hold and loss of evidence, the Defendants spent $30,000 on an expedition to find the lost ESI.  The Plaintiffs sought a default judgment, a spoliation instruction and monetary damages.   Pinstripe, Inc. v. Manpower, Inc., 2009 U.S. Dist. LEXIS 66422 (N.D. Okla. July 28, 2009).

The Timeline of Facts

The follow chronology of events tells the spoliation story:

April 18, 2008 — Defendant responds to discovery. Pinstripe, Inc. 3.

July 15, 2008 — Defendant produces responsive documents. Pinstripe, Inc. 3.

Aug./Sept. — Discussion between Plaintiff and Defendant regarding sufficiency of Defendant’s responses. Defendant is asked to certify the completeness of its responses and does. Pinstripe, Inc. 3.

Oct. 6, 2008 — Plaintiff realizes Defendant’s document production is incomplete. Pinstripe, Inc. 3.

Jan. 13, 2009 — Plaintiff requests information from Defendant regarding preservation of documents. Defendant realizes not all e-mails have been produced. Pinstripe, Inc. 3.

Jan. 15, 2009 — In-house counsel realizes Defendant has not issued a litigation hold. Counsel issues the hold immediately. Pinstripe, Inc. 3.

March 2, 2009 — Defendant reveals that two employees may have deleted discoverable e-mails.  Pinstripe, Inc. 3.

The Law on Litigation Holds and Spoliation (In Brief)

A party must enact a litigation hold to preserve evidence once it reasonably anticipates litigation.  This includes suspending its document retention and destruction policy and communicating the “hold” to the “key players” in the litigation. Pinstripe, Inc., 4.

Sanctions for the destruction of evidence can include the extreme measures of adverse inference instructions or dismissal of a case.  The sanction must fit the willfulness of the “party who destroyed evidence and the prejudice suffered by the other party.” Pinstripe, Inc., 5-6.  The intent of these sanctions ensures discovery accuracy, punishment for those who willfully destroy ESI and compensation for those who suffer prejudice from the lost evidence.  Pinstripe, Inc., 5, citing Koch v. Koch Indus, Inc., 197 F.R.D. 463, 483 (N.D.Okla. 1998).

The general test for issuing a negative inference instruction is  “(1) that the party controlling evidence had an obligation to preserve it at the time it was destroyed; (2) that the destruction occurred ‘with a culpable state of mind’, and (3) that the evidence destroyed was relevant.” Pinstripe, Inc., 9.

A Lawyer’s Nightmare: Threat of Sanctions for Spoliation

Attorneys at the law firm drafted a revised document retention policy and litigation hold for the Defendants. Pinstripe, Inc., 7-8.  The attorneys believed their client had enacted a litigation hold, but after 14 months found out the client never enacted the litigation hold.

The attorneys learned about the lack of the litigation hold after producing discovery.  Id. 

The law firm was not sanctioned for what one might be able to argue was a failure to comply with Federal Rule of Civil Procedure Rule 26(g)(1)(A), which requires that a discovery response is certified as “complete and correct as of the time it is made” with the attorney’s signature.  The Court found that the attorneys “made reasonable inquiry as to the completeness of Manpower’s document production and relied on the client’s representations in that regard.”  Pinstripe, Inc., 8. 

A Lawyer’s Nightmare II: Client Sanctioned for Spoliation

The Defendant failed in their duty to preserve relevant ESI.  Their lawyers sent them a litigation hold and the Defendants “failed to monitor compliance with the oral instructions” issued to some of the Defendant’s managers.    Pinstripe, Inc., 8. 

The Court did not order a default judgment or adverse inference instruction against the Defendant, because the botched litigation hold was not an intentional attempt to destroy electronically stored information.  Pinstripe, Inc., 8. 

However, one of the Defendant’s employees’s destroyed email messages.  This sent the Defendants on a dramatic quest to recover the lost ESI, which include attempts by IT staff, a forensic consultant and a $30,000 price tag.  Pinstripe, Inc., 9.  The Defendant claimed that any of the lost email attachments were saved on a different server and approximately 700 emails were retrieved by recipients of the employee’s email messages. Pinstripe, Inc., 9.

No Harm, No Foul?

The Court found not only that any extreme sanctions were not justified, but that Plaintiffs had not demonstrated the Defendant had “not recovered the e-mails at issue or that any missing e-mails are relevant to” the Plaintiff’s claims. Pinstripe, Inc., 10.

The Plaintiff’s prejudice from the missing email was only preparing for and rescheduling depositions.  Pinstripe, Inc.,10.  Moreover, the Plaintiffs were not able to produce any evidence that any specific ESI was destroyed.  Pinstripe, Inc., 11. 

While the Defendants avoided “nuclear sanctions,” they did not get off scot-free from their failed litigation hold.  The Court’s sanctions order included the following: 

1)       Defendants would cover the costs for any depositions that had to be re-opened. Pinstripe, Inc., 11.

2)       Plaintiff could depose Defendant’s IT person or forensic consultant at the Defendant’s expense, excluding attorney’s fees.  Pinstripe, Inc., 11-12.

3)       If the Plaintiff learned of a specific, relevant e-mail that has not been recovered or otherwise produced, it could petition the Court for further relief. Pinstripe, Inc., 12

4)        The Defendant was required to “contribute the sum of $ 2,500 to the Tulsa County Bar Association to support a seminar program on litigation hold orders, and preservation of electronic data.” Pinstripe, Inc., 12.

Bow Tie Thoughts

Case law on litigation holds and the preservation of evidence seems to be coming out on a weekly or bi-weekly basis.  Lawyers need to be vigilant when it comes to preserving evidence and working with their clients to ensure they are following a litigation hold.  There are new tools on the market available to help attorneys track litigation holds to ensure compliance, which are certainly worth exploring given the cost to litigate a spoliation motion or spend $30,000 to forensically search for lost ESI.

Keep on Trucking: Data Productions or Summaries

The Plaintiffs in Flying J, Inc. v. Pilot Travel Ctrs. LLC brought a motion to compel discovery request for data pertaining to trucker fuel card transactions and for the producing party to create a separate monthly report. Flying J, Inc. v. Pilot Travel Ctrs. LLC, 2009 U.S. Dist. LEXIS 55283, 6 (D. Utah June 25, 2009).

In prior discovery, the Plaintiffs were directed to produce similar information about their trucker fuel card business in response to the Defendant’s interrogatories.  Flying J, Inc., 6. 

Plaintiffs argued that the Defendants cannot request the same information in their discovery requests and then refuse the Plaintiffs’ requests.  Flying J, Inc., 6-7.

The Defendants’ claimed that “[w]hile a party may be under an obligation to compile data in response to interrogatories [as was the case with the interrogatories Defendants sent Plaintiffs], [Defendant] would be under no comparable obligation to [create compilations] in response to a Rule 34 request.” Flying J, Inc., 7.

The Issues: Creating Summaries & Producing Raw Data

The Court summarized the issues at bar as 1) Whether the Defendants had to create summaries of the credit card transactions and 2) Was it unreasonably burdensome for the Defendants to produce data without the Plaintiffs also producing it.  Flying J, Inc., 7-8.

One Wide Load of a Discovery Request

The Request sought ESI “sufficient to show” monthly totals, which the Court translated as data the Plaintiffs could use to determine the totals.  The Request also sought summaries that required the Defendants to “slide, dice and summarize the data.”  Flying J, Inc., 8.

The Defendant admitted that the data was relevant and would satisfy the discovery request.  Flying J, Inc., 8-9.

Rule 34 Response: Data or Summarizes  

The Court stated that Rule 34 cannot compel a party to summarize data.  However, a responding party might choose to do so if the summary would be “truly responsive to the request.”  Flying J, Inc., 9.

The Court held the Producing Party could produce the data or a summary of the data that was responsive to the request for production.  Flying J, Inc., 9.  The Court specifically stated:

 The court does not read Fed. R. Civ. P. 34 or its prior order on similar data as permitting a request for production to require a responding party to create compilations and summaries. The rule speaks of “compilations” as a type of information that may be sought. On the other hand, the rule probably does not prohibit a responding party from creating providing summaries if they are truly responsive to the request. This might be preferable for the producing party and acceptable to the requesting party. But a request for production cannot require a responding party to compile and summarize. Because the information Plaintiffs seek is relevant and derivable from Comdata’s transaction database, Comdata must produce responsive information, either in the form of the transaction database or in acceptable summaries it creates.  Flying J, Inc., 9.

No Excuse by Lack of Reciprocity

The Court shot down the Defendants’ claim that the discovery request was “unreasonably burdensome” without requiring the Plaintiffs to make a similar production.  Flying J, Inc., 9-10. 

Civil discovery rules do not allow an “excuse by lack of reciprocity.”  Flying J, Inc., 10.  The Court stated, “A party is not excused from making disclosures because ‘another party has not made its disclosures.’” Id.

What Should be the Ordinary Course of Business: Reviewing ESI in Litigation Support Software

The Defendants in Valeo Elec. Sys. v. Cleveland Die & Mfg. Co., brought a motion to compel the Plaintiffs to organize their electronically stored information production into 28 specific categories to match the Defendants’ discovery requests.  The Defense motion was denied.  Valeo Elec. Sys. v. Cleveland Die & Mfg. Co., 2009 U.S. Dist. LEXIS 51421, 1-2 ( E.D. Mich. June 17, 2009).

The Plaintiffs’ Production 

The Plaintiffs produced over 270,000 pages of documents as they were “kept in the usual course of business.”  Valeo Elec. Sys., 2, citing Federal Rule of Civil Procedure Rule 34(b)(2)(E).

The production included “emails and other electronically stored information (“ESI”) in the order that they were found on the hard drive of each document’s custodian.”  Valeo Elec. Sys., 2.  The ESI production (rightly) maintained the parent-child relation between the email messages and the corresponding attachments.  Id.

Paper documents were scanned to searchable PDFs, along with the corresponding folder tables from where the documents were stored.  Id.

The Plaintiff’s ESI and documents were produced on 15 CD’s. Id. Most CD’s can hold nearly 700MB of data, so the total size of the production must have been approximately 10GB to 10.5.

The Plaintiffs’ Indices and Spreadsheets

The Plaintiffs produced two indices to assist the Defendants in organizing the discovery production.  Valeo Elec. Sys., 2.

The first index was a 3 page table identifying the “custodian for each Bates range of documents and identifying certain specific documents.” Valeo Elec. Sys., 3.

The second was an Excel spreadsheet that identified the ESI as follows: 

1. Document Bates range;
2. Directory and, where applicable, a file name identifying where it was stored;
3. Document name or title or “re:” line for emails containing such; and
4. Estimated date the document was created or modified.  Valeo Elec. Sys., 3.

The Court further described:

The many attachments in this spreadsheet follow immediately the document or email to which they relate, and again the Bates numbers parallel those in the three page index so the source or Valeo employee from whose computer the documents were obtained can be identified for each grouping of documents. Valeo Elec. Sys., 3.

The Defendant’s Motion to Compel

The Defendants engaged in what their associate attorneys must have thought was a Death March style review of the 15 CD’s of discovery without using any litigation support software.

The Defendants complained they had to “manually open each and every electronic file on each of the [15] CDs produced.” Valeo Elec. Sys., 4. Additionally, the Defendants had to “ope[n] and revie[w] each of the thousands of individual electronic files.” Valeo Elec. Sys., 4. They also claimed the ESI was “innocuously” named to frustrate discovery review. Valeo Elec. Sys., 4.

The Defendants wanted the Plaintiffs to organize their production to match the 28 categories from the Defendants’ discovery requests. Valeo Elec. Sys., 4-5.

Form of Production under Federal Rule of Civil Procedure Rule 34

A party’s discovery obligations pursuant to Federal Rule of Civil Procedure Rule 34(b)(2)(E)(i), require them to “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.” Valeo Elec. Sys., 6.  To put it bluntly, the producing party can produce the ESI in the “usual course of business” or label and organize them.  Id.

The Plaintiffs produced the ESI as it was kept in the usual course of business.  This was the end of their discovery production obligations.  Valeo Elec. Sys., 6-8.

The Court described the Excel spreadsheet as the closet thing to a “magic decoder ring” the Defendants were going to get from the Plaintiffs.  Valeo Elec. Sys., 6-7.

This included relevant metadata in an index, Bates stamps by custodian and in an estimated chronological order.  Valeo Elec. Sys., 6-7.

The Court held the Plaintiffs met their discovery obligations and had no further duty to “organize” the production for the Defendants. Valeo Elec. Sys., 7.

 Best Advice for a Law Firm: Invest in a Litigation Support System

These two indices may be the nearest thing approaching a “magic decoder ring” and defense counsel may consider it of no more help than the Rosetta Stone leaving him and his associates hours of work ahead to comb through what was previously undecipherable hieroglyphics on the 15 discs. Nonetheless, all ESI documents produced are searchable in Adobe and/or other commercially available litigation search programs. Following Plaintiff’s counsel’s demonstration on June 17, it is determined that this production, including the supplemental Excel spreadsheets provided on June 17 satisfies Valeo’s Rule 34 burden and the parties’ agreement following the Rule 26(f) conference. Valeo Elec. Sys., 7

The Defense attorneys in this case would serve their clients by investing in a litigation support software for reviewing electronically stored information.  A brute force review across multiple CD’s is not cost effective in 2009.

Not using a litigation support system such as CT Summation iBlaze, LexisNexis Concordance, or hosted services such as Kcura Relativity, plus many other fine products, to review electronically stored information is extremely wasteful in attorney time and money.

In the interest of full disclosure, I am an employee of D4 LLC.  We are business partners with CT Summation, LexisNexis, Kcura, and Clearwell Systems.  I also worked for CT Summation for nearly 2.5 years and have over 5 years experience with the iBlaze product.   

Search & Analyze with Technology

Attorney review should not be engulfed in a document quagmire of “opening” and “reviewing” the “thousands of individual electronic files” in a production.

Pre-Discovery tools can be used prior to document review to cull down a production to eliminate email from news agencies, email domains and other non-relevant sources.  This technology allows attorneys to focus their search terms down to responsive ESI that can then be export for review. 

Clearwell Systems Transparent Search Function

Almost all litigation support products index electronically stored information, allow for searching of native files, organizing, tagging for issues, analysis and everything else that goes into the current practice of law. 

Search Results in Kcura Relativity

Document review also becomes more productive as extracted text from the native files populates the “Author,” “Document Date” and other objective fields.  Associates and paralegals no longer need to manually enter that information when the data can be extracted in ESI processing and used to auto-populate a review database.

CT Summation iBlaze Database

An attorney using a litigation support system to review ESI can leverage a database populated by extracted text from ESI processing to search email by Sender, focus in by date range and review email messages and their attachments. 

CT Summation iBlaze Search Feature

Modern Lawyers: iPhones, Requests for Metadata & Automated Review

In the iPhone Age technology in the law firm is a fact of life. Not using litigation support system to review electronically stored information is comparable to whining about using Lexis or Westlaw for online legal research. Or worse yet, a lawyer refusing to use a word processing program because they only know how to dictate.  It might even violate an attorney’s duty of competency to their client, due to the volume of ESI driving up costs by refusing to use the tools to make review cost effective.

Few attorneys can explain with a straight face to their client that they spent 7 hours looking for 10 emails on 15 CD’s that could have been located in seconds with a name and date search in almost any litigation support software.  

For example, I remember being a young associate digging through 40 boxes for hours to find ONE certificate of completion in a construction defect case.  That time was cut off the bill to the client.  Litigation support software eliminates that wasted time and allows lawyers to focus on their case, not an ocean of documents.

Cost Analysis of Litigation Support Software

Some may claim purchasing a litigation support software is cost prohibitive.  Consider the following:

Partner Hourly Rate: $250 to $300

Associate Attorney’s Hourly rate at an insurance defense firm: $150 to $200

Paralegal Hourly Rate at insurance defense firm: $100

Cost of one CT Summation iBlaze mobile license: approximately $2800

Cost of a CT Summation iBlaze 5 node license: approximately $8000

Valeo Elec. Sys. v. Cleveland Die & Mfg. Co., had 270,000 pages of documents to review (the opinion is not clear as to the exact nature of the data).  Assuming an associate can review one document a minute, they are reviewing 60 documents an hour and at least 480 in an 8 hour work day. 

After 16 hours slogging through loose data on CD’s (or 960 documents in two days), a firm has paid for one CT Summation license.  After 5 associates have each worked 10 hours the firm has paid for a 5 node network system. 

Associate and paralegal review outside of a litigation support software can result with review notes on Word files, yellow tablets or random Excel files.  A law firm using a review software maintains all notes and issue tags in one database that is fully searchable by everyone using the program. 

The $20,000 Motion to Compel vs Using Litigation Support Software

Bringing a motion to compel in Federal Court costs anywhere from $10,000 to $30,000, depending on the nature of the dispute (form of production or search terms), attorneys’ fees, and whether experts are needed for technical knowledge.  All the costs of that motion would buy you a 10 to 20 node network system with most desktop litigation support systems.

A party can host 10.5GB of data (15 CD’s worth of ESI) in a product like Kcura Relativity for approximately $70 a Gigabyte per month and with three attorney reviewers for $375 a month (total monthly cost estimate of $1110) for 9 to 27months, depending on the data, number of reviewers and processing costs.

Document Review in Kcura Relativity

Final Thoughts

Not using a litigation support software or service to review electronically stored information is like using a typewriter instead of a computer.  While I might be “Old School” when it comes to bow ties, law firms are best served by embracing technology to help control, organize and review discovery.

Coffee, Donuts and a Meet & Confer on Electronically Stored Information

Dunkin’ Donuts sued to terminate a franchise agreement on the basis the Defendants breached their contract by erroneously reporting employee wages on an IRS W-2 Form and trademark infringement.  Dunkin’ Donuts Franchised Rests. LLC v. Grand Cent. Donuts, Inc., 2009 U.S. Dist. LEXIS 52261, 4-5 (E.D.N.Y. June 19, 2009).  The Defendants in turn alleged counterclaims for breach of contract and breach of the implied covenant of good faith and fair dealings.  Dunkin’ Donuts, 5.

Factual Overview

The Defendants originally contracted with the Plaintiffs to develop Dunkin’ Donuts and Baskin-Robbins stores on 2002.  Dunkin’ Donuts, 4. 

Dunkin and Baskin-Robbins Franchised Shops LLC attempted to re-acquire some of the Defendant’s stores in 2006.  After the Defendants refused, the Plaintiffs sent a notice of default and franchise termination notice in 2007.  Dunkin’ Donuts, 4.  The lawsuit followed.

The Defendants brought a motion to compel Discovery and Interrogatory Answers.  Dunkin’ Donuts, 3.

Discovery 101: Defendants’ Arguments for Production

The Defendants sought pursuant to Federal Rule of Civil Procedure Rule 26(b)(1) documents relevant to the Plaintiffs’ alleged breach of the implied covenant of good faith and fair dealings.  The Defendants argued the Plaintiffs manufactured reasons for the Defendant’s “default” of the franchise agreement and thusly sought discovery support those claims.  Dunkin’ Donuts, 6-7. 

The Defendants specifically sought documents related to the Plaintiffs approving store expansions where a franchise was performing below performance levels.  Dunkin’ Donuts, 7.  The Defendants also wanted “Dunkin’s policies and practices regarding franchise terminations.”  Dunkin’ Donuts, 7.

The Plaintiffs took the position their motive for terminating the agreement was irrelevant, because they had the express contractual right to terminate the franchise.  Dunkin’ Donuts, 7.

Good Faith & Fair Dealings: Not Just for Boy Scouts

The case was governed by Massachusetts law, which states that “a covenant of good faith and fair dealing is implied in every contract.” Dunkin’ Donuts, 7.

Making life factually interesting, a party might not breach any express contract terms, but could still breach the implied covenant of good faith and fair dealings.  Dunkin’ Donuts, 8.  As such, “…a party to a contract is not free to terminate it according to its terms.” Dunkin’ Donuts, 8, citing Zapatha v. Dairy Mart, Inc., 381 Mass. 284, 408 N.E.2d 1370, 1379 (Mass. 1980).

Implied Covenant of Good Faith & Discovery Rules

Federal Rules of Civil Procedure Rule 26(b)(1) allows a party to “obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense.” Dunkin’ Donuts, 6-7, citing Rule 26. 

Documents pertaining to the Plaintiffs motivations on the termination of the franchise agreement were clearing within the purview of Rule 26(b)(1).  The Court reasoned that the Defendants were entitled to discovery of their counterclaims, because the issue of the lawsuit was whether the Plaintiffs acted with ulterior motives to terminate the contract.  Dunkin’ Donuts, 11. 

The Court granted almost all of the Defendant’s discovery requests, with some being limited by time and scope.  Dunkin’ Donuts, 12-15.

The Court reasoned that if the Defendants could show the Plaintiffs acted in bad faith regarding the termination of the agreement, the Plaintiffs could be liable for the breach of the implied covenant of good faith.  Dunkin’ Donuts, 11. 

The Federal Rule of Civil Procedure Rule 26(f) Conference

Things got a little more interesting with the Plaintiffs’ email. 

The Court ordered the parties to meet and confer on a search protocol for the Defendants’ requests.  Dunkin’ Donuts, 15.  The Court justified the order on Federal Rule of Civil Procedure Rule 26(f) to formulate a discovery plan and the Sedona Conference Cooperation Proclamation, citing in part the need to avoid discovery cost increases.  Dunkin’ Donuts, 14-15. 

The Defendants were to provide a list of individuals whose emails they wanted searched, along with “specific search terms” for each person’s email to be searched.  Dunkin’ Donuts, 15.  This order is a little different then some of the other recent search term orders, because the search terms were to be specific to each individual.    Perhaps this was to avoid any “donut holes” in proposed search terms.

Bow Tie Thoughts

I could see an exchange of email messages being very important to showing a party’s “bad faith” to breach the implied covenant of good faith and fair dealings. 

While there might not be a smoking gun email of “let’s act in bad faith and breach the implied covenant,” I can envision a party reviewing many email threads for deposition exhibits and their case in chief. 

I would also be disappointed if the meet and confer did not have some coffee or ice cream.

An Email State of Mind: Confessions of an Online Fraudaholic

A Criminal Defendant maintained an online business that was a shame: Orders were made and money paid, but the items ordered were either not sent or non-conforming goods instead.  This is all fun and games for the Defendant until an undercover FBI agent placed orders in a sting operation. 

The Defendant challenged the admission of customer email messages from the trial as they “were hearsay and that their admission was highly prejudicial and violated the spirit of the Confrontation Clause of the Sixth Amendment.”  United States v. Levy, 2009 U.S. App. LEXIS 14163, 8-9 (4th Cir. Va. June 30, 2009).   The Court did not agree.

Background Facts: Online Business Fraud

An online business owner ran two companies selling women’s fashions.  The Defendant served as the victim’s supplier.  Levy, 1-2. Both online businesses failed because of customer’s complaining they did not receive the ordered merchandise and demanded refunds.  Levy, 2-3.

The Defendant set up her own online business, with a laundry list of people not getting what they ordered for several years.  

One person made several attempts to get her merchandise through the Defendant’s website, which cost the Defendant a transaction fee with each attempt.  The Defendant sent the customer fraudulent documents from a make believe law firm that included a falsified complaint, apparently to scare the victim off.  Levy, 3-4.  

An undercover FBI agent placed an order through the Defendant’s website and true to form, did not get what she ordered.  The FBI eventually searched the Defendant’s house after the FBI orders were never shipped. Levy, 4.

The Government introduced into evidence at trial emails collected from the Defendant’s computer.  The emails were exchanges with angry customers and the Defendant’s replies.  Levy, 5.

The Defendant was convicted of three counts of mail fraud and four counts of wire fraud.  Levy, 5-6.  The Court estimated at least eighty-two victims who suffered $ 168,300.77 in damages.  Id. The Defendant was sentenced to 46 months’ imprisonment and pay $ 168,300.77 in restitution. Levy, 1.

The Defendant’s appealed followed.

Email & Hearsay: The Truth of the Matter Asserted

The Defendant challenged the customer email evidence on appeal as 1) hearsay and 2) the evidence was highly prejudicial and violated the 6^th Amendment Confrontation Clause.  Levy, 8-9.

The Court did not agree.  The Court held the email messages were not hearsay, because they were not offered for the truth of the matter asserted.  Levy, 9.

The customer email messages were offered so the Defendant’s party admissions in her email would show the context of the Defendant’s “intent, lack of mistake, and notice.” Levy, 9.

As such, the customer email messages were not hearsay and thusly did not violate the Confrontation Clause.  Levy, 9.

The Defendant’s conviction was upheld, but her sentence was vacated on sentencing grounds and remanded. Levy, 13.

Bow Tie Thoughts

Many of the e-Discovery admissibility examples are coming from criminal cases, since they go to trial more.  As more civil cases go to trial, Courts will likely look to the “e-admissibility” cases from criminal convictions for guidance in authenticating ESI, addressing hearsay and other evidentiary issues.