Clawback Agreements to Eliminate the Burden of Privilege Review

I am gonna to hit the brakes, he’ll fly right by me.

Maverick, Top Gun

You’re gonna do what?

Merlin, Top Gun

 

Attorneys feel compelled by their duty of competency to their clients to have eyes on every document that might be privileged.

Given cases such as J-M Manufacturing it is easy to see why attorneys are concerned about privilege review in large document review cases.

If an associate attorney were to tell a partner she could rely on a clawback agreement and not conduct privilege review, it is a safe bet the partner would respond as Merlin did to Maverick in Top Gun.

In re Coventry Healthcare, Inc. v. This Document Relates involves issued of undue burden in producing electronically stored information. The Defendants argued that the Plaintiff’s proposed search terms produced “hits” of nearly 200,000. The Defendants claimed the estimated cost to process, host and review the data for responsiveness and privilege was approximately $388,000. In re Coventry Healthcare, Inc. v. This Document Relates, 2013 U.S. Dist. LEXIS 39050, at *14 (D. Md. Mar. 21, 2013). Accordingly, the Defendants sought relief under the proportionality principles of Rule 26(b)(2)(C)(iii).

The parties to their credit had negotiated over search terms to ease the burden on the Defendants (and ultimately themselves in what the Plaintiffs would have to review).

The Court made what some would consider a surprising statement: [A] clawback order can protect Defendants against a claim of waiver, such that Defendants need no longer bear the cost of reviewing the ESI for responsiveness and privilege. In re Coventry Healthcare, Inc., at *16. As such, the Defendants failed to show undue burden in producing electronically stored information.

The Court’s ruling is not the first time such an order was given. As stated in footnote 6, former Magistrate Judge (now District Court Judge) Paul Grimm found that “the more practical approach is to avoid the necessity of an expensive and time-consuming privilege review by entry of a court order with a clawback provision that protects against a claim of waiver by production of a privileged document.” In re Coventry Healthcare, Inc., at 14-15, fn 6, citing Hopson v. Mayor & City Council of Baltimore, 232 F.R.D. 228 (D. Md. 2005).

The Court granted the Plaintiff’s motion to compel and invited the Defendants to confer with the Plaintiffs on a clawback order if they wanted one.

Bow Tie Thoughts

There are several thought leaders who have argued that the cost of privilege review can be eliminated with protective orders and clawback agreements. While having both is definitely a good idea, many attorneys feel terrified at not conducting some sort of privilege review.

One option to privilege review is to leverage technology-assisted review in identifying potentially privileged ESI. I would still always recommend a clawback agreement and potentially a protective order, depending on the subject matter of the ESI. However, TAR such as predictive coding could be used to identify potentially privileged material. Generally speaking, many attorneys have an idea what sort of communications or files will be protected by a privilege. Leveraging technology to identify attorney-client communications, intellectual property, or personal identifiable information can enable the data to be organized based on both privilege and responsiveness. This allows the attorneys to review data that is potentially privilege, if they are so inclined to have eyes on such ESI.

Hands-on eDiscovery: California Seminar on Responding to Discovery Requests

I had the good fortune to organize a seminar on responding to electronic discovery requests for the Santa Clara County Bar Association’s Civil Practice Committee on February 27, 2013. However, this seminar was different from other eDiscovery CLE’s, because the attendees spent a full hour conducting searches for responsive ESI to requests for production. The speakers included Santa Clara County Judge Socrates Manoukian (currently assigned to civil discovery), Tyler Atkinson of McManis Faulkner and Charlie Kaupp of Digital Statra.

Our seminar first focused for one hour on the California eDiscovery Act, California Rules of Court on eDiscovery, search and strategies for conducting document review.

Unfortunately, there is very little published California case law on eDiscovery. We have two main cases to explore, specifically Toshiba America Electronics Components v. Superior Court, 124 Cal. App. 4th 762, 764 (Cal. App. 6th Dist. 2004), which addressed mandatory cost-shifting for translation of back-up tapes into a reasonably useable form and Doppes v. Bentley Motors, Inc., 174 Cal. App. 4th 967 (Cal. App. 4th Dist. 2009), which does not address the eDiscovery Act, but unstated litigation hold issues and eDiscovery abuses resulting in an answer stricken and a default judgment entered.

However, at least one unpublished California opinion hints Courts want more than mere speculation that a discovery production was inadequate:

Following remand, Sukumar asked Nautilus to disclose its e-mails and all other electronically stored information concerning the Med-Fit order. After Nautilus responded that it had already disclosed all relevant documents, Sukumar filed a motion to compel. The trial court denied the motion, concluding that Nautilus’s response was sufficient and Sukumar “has offered only speculation that additional documents exist.” On appeal, Sukumar asserts that the trial court’s order denying his motion to compel should be reversed.

Sukumar v. Med-Fit Sys., 2012 Cal. App. Unpub. LEXIS 3309 (Cal. App. 4th Dist. May 2, 2012).

The appeal in the above case was denied, however it a glimpse at how California courts are handling production issues. Unfortunately, California discovery orders are not published and unpublished cases cannot be cited for any precedential value.  We literally have to watch for tentative orders to see how these issues are being presented to the courts to determine any trends. 

The second hour required attendees to work as teams in a review database finding responsive discovery from the ENRON dataset, which was provided by Digital Strata in their InControl review platform.

Searching for responsive electronically stored information is a frequent topic at continuing legal education seminars, but infrequently a hands-on experience for attorneys. Our attendees were very engaged and diligently worked through the different hypothetical discovery requests.

We gave several case law examples of “bad” discovery requests, such as the following:

Produce any and all information related to email, including messages, from 1997 to 2006. 

Using the above as a reminder that production requests must be reasonably tailored to secure the production of documents relevant to the issues in a Federal lawsuit (See,Thompson v. Jiffy Lube Int’l, 2006 U.S. Dist. LEXIS 27837 (D. Kan. May 1, 2006)), we developed Requests for Production such as the following for the attendees:

Request for Production 3:

Any and all electronically stored information pertaining to the $56 million loss on Catalytica Energy Systems, sent between 12/01/2000 to 12/31/2001, in native file format, with the following extracted text or metadata:

From, To, CC, BCC, Date, Time, Subject, Document Author, Document Name, Custodian, Control Number, Folder (System File Pathway).

Request for Production 4: 

Any and all electronically stored information authored by Will Nolen, Sally Beck, Susie Ayala, Shona Wilson or David Port relating to project “jedi” sent between 1/01/2000 to 12/31/2001, in native file format with extracted text, substantive and embedded metadata.

One hour of conducting searches is only the beginning of how to respond to discovery requests. However, it is a very good first hour for attorneys who want to learn how to effectively search and respond to discovery requests.

I would like to put together a future program focused on conducting privilege review, redaction, production and privilege log creation at a future seminar. I also think attorneys would benefit from a half to full day conference focusing on practical eDiscovery, such as issuing litigation holds, tracking hold compliance, document review strategies, developing search strings, testing different search tools (i.e., concept, complex Boolean, predictive coding), and production.

Conducting discovery is a skill. Like any skill, it is best to learn it by actually doing it. I believe our profession needs more hands-on eDiscovery events for attorneys to build their comfort level and confidence to competently represent their clients.

All I Want For Christmas Are Taxable eDiscovery Costs

Nothing says Merry Christmas like winning eDiscovery costs. One party was able to get over half the gifts on their Christmas List from the Court as taxable costs.

The Defendants submitted eDiscovery costs over $40,000, which was nearly two-thirds of the Defendant’s bill of costs. A service provider made up over half of the eDiscovery costs with a bill of $22,706.90. The rest of the bill was from internal eDiscovery costs. Moore v. Weinstein Co. Llc, 2012 U.S. Dist. LEXIS 178738, 9-10 (M.D. Tenn. Dec. 18, 2012).

Like any Christmas List, the Court found some items to be unreasonable. However, the Court found the service provider’s costs of $22,706.90 to be “reasonable and necessary.” Moore, at *8.

The Case Management Order required production as single-page TIFF’s with Summation DII and LFP load files. Id. The Court stated that the CMO required the processing costs to be incurred by each party. Id. The Court also found that “processing…document[s] for production by, for example, searching for specific custodians, is also a necessary cost of this litigation.” Id.

The Court found that the in-house charges at $150 an hour were “unreasonable.” The Court noted that the service provider hourly rate was $175, “which would presumably be significantly higher than the rates billed” to the Defendant. Moore, at *8-9.

The Court found the following:

The Magistrate Judge believes that a rate comparable to an experienced paralegal would be more appropriate. The technology services technologists have specialized expertise and training similar to a paralegal. Therefore, the Magistrate Judge will set a more reasonable billing rate of $100/hour for Technology Services billing.

Moore, at *9.

The Court found several time entries unnecessary, including:

         Work on discovery budget;

         Preparation of deposition transcripts for review;

         Preparation of documents for hearing; and

         Prepare for and attend telephonic deposition of IT vendor

The Court found that the above totaled 134.9 billable hours at the Court-reduced rate hourly rate of $100 for a total of $13,490.00. Moore, at *9.

Based on the reduction of $13,490.00, the new total taxable costs for eDiscovery were $36,196.90. Moore, at *9-10.

Bow Tie Thoughts

No child ever gets EVERYTHING they want for Christmas. However, the Defendant in this case got a lot in their taxable costs, even if it was at a reduced rate.

In determining eDiscovery costs, it is important to understand what work is actually being done when a Court discusses “processing.” Processing is defined by the Sedona Conference as follows:

Processing Data: An automated computer workflow where native data is ingested by any number of software programs designed to extract text and selected metadata and then normalize the data for packaging into a format for the eventual loading into a review platform.

May also entail identification of duplicates/deduplication and rendering of data into delimited format.

The Sedona Conference Glossary, September 2010

eDiscovery specialists who perform advanced searches, processing, data reduction, recommend technology to use on a case are truly well-educated professionals. It was very good to see a Court recognize their abilities in awarding costs.

Deposition Preparation Tips

Josh Gilliland on tips for deposition preparation using litigation support technology.

No part of this video should be considered legal advice.

eDiscovery Review Strategies

Tips on reviewing electronic discovery, including issue tagging for causes of action or defenses and eDiscovery project management.

eDiscovery Does Not Mean Esoteric Discovery

News Am. Mktg. In-Store Servs., is a breach of contract case involving multiple eDiscovery disputes.  According to the Plaintiff, the Defendant did the following:

Destroyed relevant email evidence, including an email server;

Failed to produce responsive documents in discovery due to the above failure; and

Failed to run appropriate ESI searches on Defendants’ computers.

News Am. Mktg. In-Store Servs. v. Floorgraphics, Inc., 2012 U.S. Dist. LEXIS 76543, at *3 (D.N.J. May 30, 2012).

The Plaintiffs further argued the Defendants needed to produce additional discovery and sanctions were warranted. Additionally, the Plaintiffs sought a neutral computer forensic expert to conduct an evaluation of Defendants’ computer systems. Id.

e-Discovery Mea Culpa

The Defendants countered that no discovery had been destroyed, but admitted that their discovery production was deficient.  News Am. Mktg. In-Store Servs., at *3-4.

The Defendants explained [conceded] that they searched the wrong computers and applied the wrong search terms. News Am. Mktg. In-Store Servs., at *4.

However, the Defendants stated they attempted to correct every deficiency and would continue to do so. Id.

Regarding the “destroyed” email server, the Defendants stated it was a “pass-through” server that had been reformatted.  Id. The Defendants explained the server would push incoming emails through the server to individual computers. Id. According to the Defendants, there was no ESI on this pass-through server. Id.

As part of their mea culpa, the Defendants proclaimed they would make witnesses available to be re-deposed and pay the reasonable attorneys fees for the depositions. Id. Moreover, any motions to compel were premature, because they were producing hundreds of thousands of documents. News Am. Mktg. In-Store Servs., at *5.

The Court’s Findings

The case should be about the merits not some esoteric electronic discovery issue.

Magistrate Judge Mark Falk

The Court’s conclusions on the dispute were direct and to the point:

One, the request to compel discovery is premature. Defendants admit that they used incorrect ESI search terms and did not search all of the appropriate avenues of electronic information. They have represented to the Court that 230,000 documents are in the process of being produced and that the production is being checked and re-checked by Defendants’ computer experts to ensure its accuracy. Thus, there is no basis for an order compelling the production of documents until, at least, Defendants’ production is complete.

Two, it appears that Defendants failed to meet their Federal Rule of Civil Procedure 26(f) ESI obligations at the outset of the case. See Fed. R. Civ. P. 26(f)(3)(C). The briefing discloses that Defendants’ counsel was not aware of the structure of Defendants’ computer systems until recently. It is inappropriate for Defendants to only now—three years after the case was filed and after discovery has closed—investigate their electronic systems.

Three, the Court is unable to determine whether information was contained on Defendants’ “reformatted,” “pass through” server. The parties’ positions on this are diametrically different and consist of unsupported conclusions laced with hyperbole.

Four, it is unclear whether ESI allegedly destroyed (or “passed through” Defendants’ server) may be recovered and, if so, the cost of doing so. This important issue is not adequately addressed in the papers.

Five, it is unclear whether the burden and expense of conducting the electronic discovery outweighs the benefit of doing so. See Fed. R. Civ. P. 26(b)(2)(C)(iii). The Court cannot discern from the papers whether a deep forensic search is justified.

Six, the appointment of a neutral computer expert is not called for at this time. In effect, it would transfer the ESI obligations of the parties to the Court. Stated another way, the issues are not sufficiently articulated for the Court to appoint an expert to embark on an unlimited search.

Seven, there is no basis for the Court to consider spoilation sanctions (or any sanctions) until, at least, Defendants complete their discovery production and the questions raised above are answered.

News Am. Mktg. In-Store Servs., at *5-7, (emphasis added).

The Court allowed the Plaintiff to take the 30(b)(6) deposition of the Defendants’ eDiscovery PMK that would be binding on the Defendant. The parties were directed to meet and confer on the deponent. Additionally, the PMK needed to be able to address whether any ESI could be recovered and the specific cost to do so. News Am. Mktg. In-Store Servs., at *7.

In the event there were still eDiscovery disputes after the deposition, the Court stated:

[T]he parties may simultaneously submit letters (double spaced, not to exceed ten pages) explaining the relevance and importance of the discovery and the benefits and burdens associated with the discovery—e.g., whether the costs and effort of securing the discovery is proportional to the expected result. Any letter from counsel must be accompanied by an affidavit from the party’s ESI expert which addresses the technical aspects of the dispute. The ESI expert’s affidavit must discuss the projected costs of proceeding with as much specificity as possible. General, conclusory statements—e.g., “it will be prohibitively expensive”—are unacceptable.

News Am. Mktg. In-Store Servs., at *7-8.

The Court’s opinion sent a very strong message on the discovery disputes between the parties: The case should be about the merits not some esoteric electronic discovery issue. News Am. Mktg. In-Store Servs., at *8 (emphasis added).

The Court was blunt in advising the parties it was “wary of the use of broad and ambiguous electronic discovery requests as a litigation tactic or as a ‘fishing expedition.’” Id. Moreover, the Court stated it was “troubling” for this level of discovery dispute to surface after 18 months of discovery.  Id. Additionally, the Court effectively sent an ethical message to the parties to “proceed in good faith, take reasonable positions, and attempt to resolve their dispute in accordance with the Guidelines For Litigation Conduct.”  News Am. Mktg. In-Store Servs., at *7-8.

The opinion concludes with the warning the Court “not hesitate to award substantial fees to the non-prevailing party or any party found to be proceeding in bad faith.”  News Am. Mktg. In-Store Servs., at *8-9.

Bow Tie Thoughts

I was impressed with Judge Mark Falk’s outlining of case issues and his order. Additionally, the Defendants attempts to correct their mistakes were very respectable.

This opinion highlights multiple eDiscovery issues that are taking place all over the United States: 1) The Duty of Competency in eDiscovery; 2) Providing the Court adequate information to make rulings; and 3) Do not forget the merits of the lawsuit with electronic discovery issues.

The Duty of Competency and eDiscovery has been slowly developing issue since December 2006. There are many attorneys who outright admit they do not understand preservation, review methodologies or discovery productions. One friend recently told me his firm just asks for paper productions because of the lack of knowledge in what to request.

In the current case, the Court stated, “It is inappropriate for Defendants to only now—three years after the case was filed and after discovery has closed—investigate their electronic systems.”  News Am. Mktg. In-Store Servs., at *5-6. Moreover, the Court it was “troubling” to have this sort of discovery dispute after 18 months of discovery. News Am. Mktg. In-Store Servs., at *8.

How can attorneys best meet their duty of competency in eDiscovery? While every client is different, it is important to have a discovery plan from the inception of the case. This may include in-depth client interviews with the parties, custodians, and IT staff (to name a few), to learn how the client uses technology. How does their email system work? Do they text or iMessage?  What sorts of computers do they use? Any tablets? Voicemail? Any personal devices used for business?

I believe the Duty of Competency requires attorneys to either understand their client’s technology themselves or at a minimum, hire a consultant to help the attorneys navigate the issues. Without such investigation, it is difficult to meet one’s ethical duty of candor to the court on the facts of the lawsuit and provide competent representation of their clients.

As to the second issue, lawyers cannot simply walk into court and tell a judge, “Your Honor, it’s expensive.”  The first questions from the Court will be “why and how much.” The answer cannot simply be “Because it is.”

Attorneys need to argue ESI is not reasonably accessible because of undue burden or cost (Fed. R. Civ. P. 26(b)(2)(B)) or that the burden and expense of conducting the electronic discovery outweighs the benefit of doing so (Fed. R. Civ. P. 26(b)(2)(C)(iii)), with specific information, most likely from an eDiscovery expert or IT professional.

The unofficial standard for demonstrating undue burden or expense might be from Judge Facciola’s United States ex rel. McBride v. Halliburton Co., 2011 U.S. Dist. LEXIS 6412, 1-2 (D.D.C. Jan. 24, 2011) opinion: “In excruciating, but highly educational and useful, detail.”

Judges want to have enough information that they can make the right decision. While there will be attorneys simply proclaiming searching a hard drive is expensive, the better litigation practice is to have a well documented affidavit outlining the process and cost to search for specific ESI.

Finally, Judge Falk’s statement “The case should be about the merits not some esoteric electronic discovery issue,” should go on t-shirts at e-Discovery conferences. It is easy to become enamored with search technology, collection methodologies and every other eDiscovery issue. However, every eDiscovery issue should be framed around the facts of the lawsuit, the causes of action and be relevant to competently move the case forward. The technology exists to enable lawyers to practice law, not to overshadow the merits of the case.

How “Ridiculous” Productions Can Waive the Attorney-Client Privilege

The ridiculously high number of irrelevant materials and the large volume of privileged communications produced demonstrate a lack of reasonableness.

Robert C. Chambers, United States District Court Judge 

Preparing electronic discovery takes careful review and following Judge Grimm’s Victory Stanley checklist.  That did not happen in this case.

The Plaintiffs produced over a million “pages” of ESI, which they marked “Confidential.”  The production included nearly a thousand attorney-client communications.  Felman Prod. v. Indus. Risk Insurers, 2010 U.S. Dist. LEXIS 74970 (S.D. W. Va. July 23, 2010).

The Plaintiffs admitted that nearly 30% of their production was irrelevant.  In the words of the Court, the production included, “car and camera manuals, personal photographs, and other plainly irrelevant documents, including offensive materials.” Felman, at *4.

The Defendants hired a 30 person team to slog through reviewing the Plaintiffs’ production. Felman, at *5.

Clicking through 300,000 irrelevant files probably did not go over well in the accounts receivable meeting with the client.  In theory, if the 30 reviewers were each reviewing 480 records a day, thus a daily total of 14,000 a day, the review team could have spent 21.42 days reviewing all the car manuals and sometimes offensive material. 

However, the Defendants’ possible discord and strife in their discovery review was rewarded with the pony they each wanted in early childhood: An email protected by the attorney-client privilege where the Plaintiff admitted 1) they did not have a sales contract regarding an issue in the case and 2) requested attorney advice on they needed to ask customers to backdate contracts for the Plaintiffs’ insurance claim.  Felman, at *4-5. 

The Defendants filed counter-claims for fraud and breach of contract within a week of discovering the attorney-client email.  Felman, at *5-6. 

Issue:  Did the Plaintiffs waive the attorney-client privilege by failing to take reasonable precautions to prevent the inadvertent disclosure prior to production?

Answer: Yes, especially when the Court calls your production “ridiculous” because of the high number of irrelevant data and privileged files produced. 

The Court explained that the large volume of irrelevant data and thousands of privileged files produced showed that the Plaintiffs review and production methodology was not reasonable (which are two factors of the Victory Stanley test).  Felman, at *10-11. 

As the Court concluded:

Here, the number of inadvertently disclosed documents was enormous (approximately 30% of more than one million pages) and the number and extent of the attorney-client privileged communications disclosed was also very large (thousands of attorney-client protected communications were produced). These facts, standing alone, weigh heavily in favor of finding: (1) the precautions taken to avoid inadvertent disclosure were unreasonable, and (2) Felman’s attorney-client privilege was waived. Moreover, neither of the additional Victor Stanley factors — the delay, or lack thereof, in taking measures to rectify the disclosure or the overriding interests in justice — are to the contrary.

Felman, at *11. 

Bow Tie Thoughts

Parties cannot conduct sloppy review and then try to bomb the opposing side into submission with expensive discovery review costs.  Utilizing technology to defensibly collect relevant data, cull down for responsiveness and conduct meaningful privilege review is essential for effective discovery productions.  Moreover, revenge based productions where a party conducts a data dump on the opposing party may find themselves disclosing confidential information.  Worse, they will lose credibility with the Court by driving up discovery costs.

Federal Rule of Evidence 502(b): Not to be Gutted Like a Fish

Magistrate Judge Facciola addressed Federal Rule of Evidence Rule 502(b) with the inadvertent disclosure of a memorandum protected by the work product doctrine, in a case involving an officer with the DC Department of Corrections.  Amobi v. D.C. Dep’t of Corr., 2009 U.S. Dist. LEXIS 114270, 20-21 (D.D.C. Dec. 8, 2009).  The issue was whether the privileged had been waived by the inadvertent disclosure.

The inadvertently disclosed document was prepared for an arbitration hearing.  Amobi, at *16.  The Court quickly found it was prepared for litigation and contained an attorney’s mental impressions. Amobi , at *16-17.

Rule 502: Burden to Prove Waiver

Federal Rule of Evidence 502 is silent on which party has the burden of proving waiver.  Amobi, at *19.  Judge Facciola applied the pre-502 District of Columbia rule that the “the proponent of the privilege. . . [had] the burden of showing that it [had] not waived attorney-client privilege.”  Amobi, at *19, citing United Mine Workers of Am. Int’l. Union v. Arch Mineral Corp., 145 F.R.D. 3, 6 (D.D.C. 1992).

Three-Part Wavier Test

The three-part test for waiver under Federal Rule of Evidence 502(b) includes the following:

1)       Was the waiver inadvertent?

2)       Did the holder of the privilege take “reasonable steps to prevent disclosure of the privileged document”? Fed. R. Evid. 502(b)(2). 

3)       Did the holder take promptly reasonable steps to rectify the error?

FRE 502(b) does not define “inadvertent.”  Case law varies between District Courts, but the legislative intent of the Rule was to “protect privilege in the face of an innocent mistake.” Amobi, at *20-21, citing Coburn Group, LLC v. Whitecap Advisors LLC, 640 F. Supp. 2d 1032, 1038 (N.D. Ill. 2009) (citing Ltr. from Lee H. Rosenthal, Chair, Comm. on Rules of Practice and Procedure, to Hon. Patrick J. Leahy, Chairman, Comm. on the Judiciary, U.S. Senate, and Hon. Arlen Specter, Member, Comm. on the Judiciary, U.S. Senate, at 2 (Sept. 26, 2007)).

The Court followed the simple “inadvertent” test of whether the party “intended to produce a privileged document or if the production was a mistake.”  Amobi, at *20.  As one can imagine, the Defendants claimed the document was inadvertently produced. 

How to Gut “Inadvertent Productions” Like a Fish

The Plaintiffs in essence argued that if a document was disclosed by a lawyer, then the disclosure was neither mistaken nor inadvertent. Additionally, if the document was disclosed by a non-lawyer, then no reasonable steps were taken to protect the privileged information.  Amobi, at *22-23. 

Judge Facciola pointedly stated the following on the Plaintiffs’ arguments:

…to find that a document disclosed by a lawyer is never inadvertent would vitiate the entire point of Rule 502(b). Concluding that a lawyer’s mistake never qualifies as inadvertent disclosure under Rule 502(b) would gut that rule like a fish. It would essentially reinstate the strict waiver rule in cases where lawyers reviewed documents, and it would create a perverse incentive not to have attorneys review documents for privilege. Amobi, at *23-24.

Reasonable Steps to Prevent Disclosure

Judge Facciola noted that this was not an ESI case where it would have been appropriate to consider “the software that was used to discriminate between the privileged and the non-privileged” information.  Amobi, at *25.  This arguably would have put the party into a Victory Stanly type case, with search terms being evaluated, what quality assurance testing was done to ensure no privileged documents were produced, and other factors to evaluate if reasonable steps were taken to prevent disclosure.   

The Court summarized that the Defendants did not explain their methodology in conducting a privilege review.  Amobi, at *25.  Highlighting the situation that their ship was taking water fast, the Defendants did not state the number of documents they produced, which would have enabled the Court to “determine the magnitude of the error in producing this one document consisting of four pages.”  Amobi, at *25.

The Court’s displeasure with the Defendants’ privilege review is palpable throughout the opinion.   There is no real explanation of what review was conducted, other than a passive voice statement that “several” privilege review were conducted.  Amobi, at *25-26.  As the Court stated:

Indeed, one keeps searching for some statement somewhere in the defendants’ papers that speaks to what they did when they got the documents, how they segregated them so that the privileged documents were kept separate from the non-privileged, and how, despite the care they took, the privileged document was inadvertently produced. Amobi, at *25. 

///

 ///

///

Hence, the efforts taken are not even described, and there is no indication of what specific efforts were taken to prevent disclosure, let alone any explanation of why these efforts were, all things considered, reasonable in the context of the demands made upon the defendants.  Amobi, at *26.

The Court bluntly stated, “There can be no reasonable efforts, unless there are efforts in the first place.”  Amobi, at *26.  The Court held the Defendants failed to prove the privilege was not waived, because there was no evidence of the Defendant taking any reasonable actions to prevent disclosure. Id.

Bow Tie Lessons

Attorneys, paralegals and litigation support professionals are extremely well served by having a privilege review methodology that takes “reasonable steps to prevent disclosure of the privileged document.”  Fed. R. Evid. 502(b)(2).  This is easier said then done when the e-Discovery is in the TeraBytes.

This process could include what one could call a privilege chain of custody, which tracks how the electronically stored information is reviewed for privilege, how the ESI is sequestered if determined to be privileged and quality assurance testing that production sets do not include any privileged electronically stored information.   

Almost all litigation support products allow for issue tagging for privileges and export to Excel features for creating privilege or redaction logs.  Understanding how a firm’s litigation support software functions for production should be tested prior to any production to ensure known privileged ESI is not being inadvertently produced.  If something is inadvertently produced, these procedures most likely would need to be proven up over a battle whether the privileged was waived.

Admissibility of Email Strings and Co-Conspirator Emails

The Federal Rules of Civil Procedure are frequent superstars spotlighting requests and production of electronically stored information in case law.  Whether or not such discovery is admissible is another story. 

Park W. Radiology & Park W. Circle Realty v. Carecore Nat’l Llc, 2009 U.S. Dist. LEXIS 110282 (S.D.N.Y. Nov. 19, 2009) is an extensive opinion addressing the admissibility of email in motions in limine. 

Admissibility of Email Strings

The Plaintiff attempted to exclude an email string pursuant to the Federal Rules of Evidence 402 (Relevancy), 403 (Prejudice), 608 (Character Evidence/Witness Conduct), and 609 (Impeachment by Evidence of Conviction of a Crime). Park, at *8.

The email string contained the statement, “I was hoping that her friends would want to have sex with [sic] me after they saw the ring.”  Park, at *8. As one can imagine, the Plaintiffs argued the email was irrelevant and highly prejudicial if it somehow was relevant.  Park, at *8.

The Plaintiffs further claimed the email chain contained attorney-client communications.  Park, at *8.

The Defendants in turn argued the email was relevant in showing the bias of one of the Plaintiffs’ trial witnesses.  Park, at *8-9. 

The Court held the section of the email string that could show bias of a trial witness was relevant. However, the section stating, “I was hoping that her friends….” was so prejudicial that it outweighed any relevance it had in showing bias.  As such, that section would need to be redacted for trial.  Park, at *9.

Planning a Conspiracy on Email 

The Defendants sought preclusion of emails from a doctor as hearsay between nonparties (Federal Rule of Evidence 802).  Park, at *39. 

The Plaintiffs claimed the email chain showed a conspiracy because a doctor who was affiliated with the Defendants’ Board of Managers “suggested” to the other doctors on the email that the Defendant was “unlawfully controlling the market for imaging centers and suggesting a business decision agreeable to the conspiracy.”  Park, at *40. 

The Plaintiffs argued that the emails were not hearsay, because they were statements between co-conspirators under Federal Rule of Evidence Rule 801(d)(2)(E). Park, at *40. This provision requires the existence of a conspiracy and the participation of the declarant in furthering the conspiracy.  See, Federal Rule of Evidence Rule 801(d)(2)(E).

The Court issued a “preliminary” denial of the Defendants’ motion in limine to exclude the email messages.  Park, at *40-41.  The Court would allow the use of the email exchange, if the Plaintiffs could meet the co-conspirator requirements of Federal Rule of Evidence Rule 801(d) (2) (E).  Id.

Bow Tie Thoughts

Attorneys and vendors often get wrapped up in the production and review of electronically stored information.  This is with good reason, considering the volume of ESI that can appear in discovery.  However, litigation tends to be over the 10 or 20 key documents that prove a party’s case to the jury.  Being ready for any admissibility challenges can help avoid your case theory getting derailed by motions in limine to exclude a key email or instant message.

Attorneys can help prepare for the admissibility of electronically stored information while doing document review.  Coding fields can be set up for issues such as “Relevant,” “Authentication,” “Best Evidence,” “Hearsay” and “Probative Value vs Unfair Prejudice.”  Reviewing attorneys can consider the admissibility factors as they are performing document review, which may impact their choices on which documents to ultimately use in trial or mediation.

The Plumbing of a Motion to Compel

In a product defect case about brass plumbing fittings, the Defendants fought a motion to compel electronically stored information relevant to class certification, because of undue burden and cost.  They lost…in large part. In re Zurn Pex Plumbing Prods. Liab. Litig., 2009 U.S. Dist. LEXIS 47636, 1 (D. Minn. June 5, 2009).

Paper Clogging the Drain

The Court initially required the parties at the beginning of the litigation to only focus on hard copy documents out of the concern the electronically stored information would drive up the cost.  2.  The Court stated:

“ESI may prove to be relevant to the first stage of discovery, we cannot meaningfully make that prediction now, and require the parties to engage in what could be vastly more expensive, and yet utterly futile, discovery.” In re Zurn Pex Plumbing Prods. Liab. Litig., 2.

 

The Court further stated on electronically stored information:

“[S]hould the parties uncover voids in the information disclosed in hard copy form, they are . . . at liberty to press for further discovery including electronically stored information.” In re Zurn Pex Plumbing Prods. Liab. Litig., 2.

The Defendants’ Electronically Stored Information

Deposition testimony revealed the Defendants’ electronically stored information includes employee email folders and files on the network system.  Additionally, the ESI of former employees’ were archived on DVD.  There was also a separate network drive that contained un-segregated folders from over 600 employees.  In re Zurn Pex Plumbing Prods. Liab. Litig., 2-3.

Enter the Litigation Hold and Search Terms

The Defendants produced a list of individuals who were issued a litigation hold. In re Zurn Pex Plumbing Prods. Liab. Litig., 3.

The Plaintiffs in turn requested searches across the different databases with 26 key words.

The Defendants opposed the request as being “not necessary for class certification and that the request was overly broad and would be extremely costly.”  In re Zurn Pex Plumbing Prods. Liab. Litig., 3. 

The Defendants’ Arguments Going Down the Drain

The Defendants argued that 1) the first Court Order did not allow for any ESI productions and 2) producing ESI would be unduly burdensome and costly. 

The first Court order did NOT foreclose electronic discovery.  In re Zurn Pex Plumbing Prods. Liab. Litig., 4.  The Court stated the first Order allowed for electronic discovery if there were “voids in the information disclosed in hard copy form.” Id.  The Court noted email messages showed possible gaps over fittings failures and aggressive water compared to the paper documents.  Id. 

The purpose of civil discovery is to allow parties to “obtain the factual information needed to prepare a case for trial.” In re Zurn Pex Plumbing Prods. Liab. Litig., 5.  Despite the discovery being limited to class action certification, the Court stated there was a presumption in favor of production the Defendants’ electronically stored information.  In re Zurn Pex Plumbing Prods. Liab. Litig., 4-5.

Cost Counts

The Defendants were able to stop a complete rout with their cost arguments. 

The Defendants had approximately 61 gigabytes of data, which would have totaled around 27 million pages if printed.  The Defendants estimated searching all of the databases to cost around $1,150,000 and take seventeen weeks to perform.  That did not include collection and processing. In re Zurn Pex Plumbing Prods. Liab. Litig., 6-7.

The Court Order

The Court did not buy the Defendants’ burdensome arguments, especially considering a lawyer who was not an expert on searches made the claim. In re Zurn Pex Plumbing Prods. Liab. Litig., 6.

The Court did try to limit false hits from the search terms by limiting the number of search terms to 14 specific terms.  The Defendants’s searches were limited to the network drives, custodian emails and the DVDs of the former employees.  In re Zurn Pex Plumbing Prods. Liab. Litig., 6-7. 

Bow Tie Thoughts:

The parties would have been better served addressing electronically stored information at the beginning of the lawsuit, instead of delaying it for over a year.  Both sides would have been in a better position to judge class certification or settlement options if they knew the big picture.  Moreover, the Defendants had over a 600 person company.  Using email would be a fact of life.

The collection, processing, data reduction and review of 61GB would not be cheap, but $1,150,000.00 for the searches alone over 17 weeks sounds inflated. 

The perceived cost might be inflated by thinking of electronically stored information as the same as reviewing 27 million pieces of paper.  ESI can be reduced by targeted collections, pre-discovery tools to reduce the data set that are then fully searchable in a litigation support software.  With paper review, lawyers, contract attorneys and paralegals are digging through boxes of paper only searchable by the human eye. One can see where a seventeen week estimate comes from such a brut force search. 

Processing costs, which include data reduction to cull down electronically stored information, is approximately $600 to $1000 a gigabyte, depending on the vendor’s services.  Attorney review in a litigation support software is reduced by having to review less ESI, such as not reviewing any email newsletters, spam and focusing on specific date ranges.  With that said, estimating the cost to search 61GB that also did NOT include collection and processing to be over a million dollars seems high on the facts presented.