About bowtielaw

I am an attorney CLE presenter on e-Discovery issues.

There are no Magic Words for Taxation of Processing Costs, but there is the Law

Taxation of cost cases can be dull. However, when the Judge shoots down an argument with a YouTube video in the opinion, you know it’s a party.

The prevailing party in a trademark infringement case between companies that make portable electronic fitness tracking devices sought $88,888.86 in costs and the clerk awarded $54,089.15. The Court ultimately granted $63,660.94 in costs. Fitbug Ltd. v. Fitbit, Inc., 2015 U.S. Dist. LEXIS 62879, *2 (N.D. Cal. May 13, 2015).

The opposing party made a procedural argument against awarding costs based on the fact the declaration filed in support of the Bill of Costs with statutory citations did not include the three words “allowable by law.” The Court rejected this argument, stating:

… the requirement a party say the “three little words,” “allowable by law,” is merely a reminder that the Court expects them to submit costs they believe are taxable, not a set of magic words necessary to receive any costs. Cf. Sarah Vaughan, Three Little Words, on Live at the London House (Mercury Records 1958), available at: https://www.youtube.com/watch?v=9WSZ6IRC-ys

Fitbug Ltd., at *4-5.

With that, Judge Samuel Conti simultaneously invoked one of the greatest jazz singers of the 20th Century and reminded us that legal arguments do not come out of book of spells. Well played. Fitbug Ltd., at *6.

Taxation of eDiscovery Costs

The Court noted that Section 1920 was enacted in 1853 and did not speak on electronic discovery costs (largely because “new” technology at that time included typewriters and telegraphs). Fitbug Ltd., at *6.

Judge Conti summarized that taxation for “exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case . . .” applies to some electronic discovery expenses. Fitbug Ltd., at *7.

Granting Data Extraction and Processing Costs

The Court allowed $32,282.05 in processing and data extraction costs to be taxed. Fitbug Ltd., at *11. There are many cases where processing costs are denied, so this is a significant award.

The supporting declarations explained that the costs related “to collection, scanning and conversion of documents, and related processes necessary to the eDiscovery process,” and these entries specifically “concern document collection, including scanning and related processes.” Fitbug Ltd., at *8. In a supplemental declaration, the prevailing party explained the costs were necessary to prepare discovery documents for production to the opposing party in the format to which the parties agreed to produce ESI. Fitbug Ltd., at *8-9.

The Court held the processing expenses were properly taxed for complying with the parties’ ESI agreement. Furthermore, the Court also allowed the costs for extracting metadata, because “these too are necessarily incurred, allowable exemplification costs because they were incurred not for the convenience of counsel, but to comply with the parties’ agreement.” Fitbug Ltd., at *10-11.

The Court also held that the cost of converting document formats as required per the parties’ agreement were also taxable. The Court explained the costs were “expressly contemplated by the parties’ agreement and are necessarily incurred exemplification costs.” Fitbug Ltd., at *11-12.

Bow Tie Thoughts

ESI Protocols determined at the Rule 26(f) Conference and codified in a Court Order at the Rule 16(b) Hearing matter. This case highlights that production formats agreed to by the parties can be taxable. However, if the parties had agreed that discovery costs were to be carried by the parties, this case could have turned out very differently.

A lawyer cannot cry “I Cast Ye Costs Out!” as if these were magic words that would prohibit a prevailing party from recovering agreed to costs for the production of ESI. However, a well prepared ESI Protocol that addresses costs could have that very effect.

How eDiscovery Experts Can Help Fight the Blues

Magistrate Judge Jonathon Goodman knows the value of an expert deposition in complex litigation and B.B. King.

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Everyday I Have the Blues

Here is the basic dispute in Procaps S.A. v. Patheon Inc.: The Plaintiff, based in Columbia, did not put a litigation hold in place until ordered by the Court. There are issues with inadequate searches and the Plaintiff’s attorney did not travel to Columbia to meet with the Plaintiff’s IT team. Custodians conducted searches themselves for collection without reviewing the discovery requests. The Plaintiff is accused of spoliation of electronically stored information. A spoliation motion is expected. Procaps S.A. v. Patheon Inc., 2015 U.S. Dist. LEXIS 53997, 2-4 (S.D. Fla. Apr. 24, 2015).

A Special Master was appointed to examine the eDiscovery and forensic issues in the case. Additionally, a neutral third-party computer forensic expert examined the Plaintiff’s computers. A Report was prepared that showed “that nearly 200,000 emails, PDFs, and Microsoft Word, Excel, and PowerPoint files were apparently deleted. It appears that approximately 5,700 of these files contain an ESI search term in their title, which indicates that they could have been subject to production in the forensic analysis if they had not been deleted. Procaps, at *7.

The Report also stated duplicate files could exist and that “there is no evidence that any ESI or other documents have been deleted or purged with no chance of being recovered.” Procaps, at *7-8.

To Know You is to Love You

The Defendants sought to conduct the deposition of the neutral third-party expert to explain the report. After a protracted discussion of whether the Court could order such a deposition procedurally, the Court stated Federal Rule Evidence 706(b)(2) expressly provided for such depositions. Procaps, at *15.

The Court explained that deposing the expert would benefit the parties and the Court in understanding the ESI issues in the case. As the Judged explained, “the Undersigned has no hesitation about disclosing my appreciation for help on complex ESI issues from court-appointed, neutral forensic experts (and from special masters with considerable experience in E-discovery).” Procaps, at *14-15.

The Court ordered the deposition of the third-party computer forensic expert to be conducted in part by the Special Master. Procaps, at *2-3. The goal of the deposition was to assist the Court in deciding the issues from the deleted files and assist the Defendant in determining whether or not to file a sanctions motion. Id.

Bow Tie Thoughts

First things first, I hope B.B. King is comfortable.

The “e” in “eDiscovery” is not because it is “easy.” Determining whether ESI was lost, whether it exists in another location, whether it is not reasonably accessible, requires expert analysis. This expert analysis needs to be communicated to the Court, usually in the form of a Report or Affidavit, but sometimes in a deposition.

The battles in this case focused on procedural issues with having the expert deposition. The Court rightly allowed the deposition and was wise to leverage the Special Master, who is very knowledgeable in eDiscovery, to conduct the deposition. Many cases have complex issues with how to collect data and strategies for reviewing ESI. Employing an expert is a smart way to focus on the merits and not get lost in eDiscovery issues.

 

Straightening Out the Form of Production

Magistrate Judge Stanley Boone had to straighten out a form of production dispute in a consumer protection case over curling irons. As the parties in this case learned, sometimes the form of production needs a detangler.

iStock_CurlingHairThe Plaintiffs requested ESI to be produced in native file format or TIFF with associated metadata. The Defendant produced ESI as PDFs. Wilson v. Conair Corp., 2015 U.S. Dist. LEXIS 57654, 4-5 (E.D. Cal. Apr. 30, 2015).

Judge Boone began his analysis with a summary of the form of production rules under Rule 34:

(E) Producing the Documents or Electronically Stored Information. Unless otherwise stipulated or ordered by the court, these procedures apply to producing documents or electronically stored information:

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

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

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

Wilson, at *6-7.

The Plaintiff’s request for ESI to be produced in native format was very standard. However, the data requested was produced from a proprietary third-party “STARS” database. Wilson, at *8. The Plaintiffs would not be able to access or review this data as it is ordinarily maintained because of its proprietary nature.

The Defendants produced the proprietary ESI as PDFs. The Plaintiff challenged this static image form of production in favor of TIFFs with metadata. Wilson, at *9. However, the Defendants were willing to produce future ESI as TIFFs. Id.

Excel files were also produced as PDF’s in order to redact information. Id. The Plaintiffs sought the Excel files to be produced in native file format. Id.

The Plaintiffs argued in favor of a TIFF production over PDF because the “format is more efficient, cost effective, and better suited for use inside a database application and it will require additional work to get the data produced in PDF format into a usable state.” Wilson, at *9-10.

The Plaintiffs further demanded the ESI from the STARS database be produced in Excel format. The Defendants ultimately agreed to this production format, but did not explain how the issue of redaction would be addressed in the opinion. Wilson, at *10.

The Court stated, the “Rules do not require a party to produce ESI in the form most helpful to the opposing party.” Wilson, at *10, citing U.S. ex rel. Carter v. Bridgepoint Educ., Inc.,     F.R.D.    , 2015 U.S. Dist. LEXIS 26424, 2015 WL 818032, at *15 (S.D. Cal. Feb. 20, 2015). As such, the Court ultimately held that 1) the STARS data could not be produced in its native format; 2) the Defendant would produced additional discovery in TIFF format; and 3) the Defendant would produce associated metadata for its prior production if it had not already done so. Wilson, at *11.

Bow Tie Thoughts

As any good hair stylist can tell you, a good product can help detangle knotted up hair. The same can be said for virtually any of the review applications on the market today. Most pride themselves on being able to review native file format, near-native, and static images such as TIFF and PDF.

I think it is odd to have a fight over which static image to produce. Both TIFF and PDF work well in today’s modern review applications. This was not always the case, as PDFs can be both a native file and static image in older review applications. It has been awhile since I have seen this be an issue in document review. That being said, if a requesting party asks for a specific static image format, I recommend honoring the request.

There are horror stories where producing parties have produced batches of native files as massive PDF’s that are several hundred, or thousand, of pages. In those situations, the requesting party has a very strong argument that the production was not in a reasonably useable form.

SmartPhone Forensics Hypothetical with Planet Data

SmartPhone discovery is heavily dependent on experts. What steps need to be done to ensure no data is lost? What are the best collection strategies? Can there be a targeted collection on BYOD devices? If not, how can data be reviewed?

Brad Berkshire and Russ Capps from Planet Data joined me for a podcast to discuss these issues and more. You can listen to the podcast on BuzzsproutiTunes, or the YouTube video.

Brad and Russ also discussed the following hypothetical, giving great insight on how to approach mobile forensics:

Executive at start-up uses personal cell phone for work. Receives work email and personal. Executive is an active texter, who communicates with her family by text and business partners.

Executive is sitting at a stoplight when sideswiped by another car. Other driver is at fault. She takes photos of the damaged cars. One is texted to her husband that she is ok, followed by an email from her personal account to her insurance agent with a photo of the damage. Executive also emails business partners to say she was hit by a car and will not be in the office.

What is your collection strategy to only acquire data relevant to the accident? How would you not collect company confidential information? How would you collect potentially privileged data protected by the spousal communication privilege?

Hard to Decide Discovery Disputes on Proportionality if No One Knows the Value of the Case

Magistrate Judge Paul Grewal ordered the supplemental production of damages information in a patent case based on proportionality and supplemental disclosures. Corning Optical Communs. Wireless v. Solid, Inc., 2015 U.S. Dist. LEXIS 49069, 5-8 (N.D. Cal. April 14, 2015). This is a unique argument that makes a lot of sense: How can the Court decide discovery issues without knowing the value of a lawsuit?

Judge Grewal highlighted a common occurrence in patent infringement litigation: Neither party can say how much the case is worth. Corning, at *2.

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Parties are required to give some damages-related information as part of their Rule 26(a) initial disclosures. The Plaintiff in the current case stated for this required disclosure: “No documents related to this calculation exist at this time.” Corning, at *7.

Judge Grewal looked to a quote from Judge Alsup on this issue in patent cases:

Only to the extent that, and only for so long as, the patent plaintiff is unable, despite its Rule 11 obligations, to fully satisfy the Rule 26(a) disclosure requirement, a patent plaintiff is temporarily excused from disclosing a shortfall in information (but it must disclose the rest at the outset). The burden is on the patent plaintiff to explain in its Rule 26 initial disclosures the extent of any such disability and the reason therefor. This must be specific—such as, by way of hypothetical example, ‘despite a diligent pre-suit investigation plaintiff has been unable to learn even an approximation of the extent of sales of the accused product and will seek this data in discovery.’ Again, that some material is as yet unknown does not excuse nondisclosure of what is or should be known. Plaintiff is not required to do the impossible but is required to do the best it can. Just because some items cannot yet be disclosed does not mean that nothing should be disclosed. If the Court later determines that the disclosure should have and could have reasonably been more complete, then, to that extent, preclusion or other sanctions may well be required.

Corning, at *4, citing Brandywine Communs. Techs., LLC v. Cisco Sys., 2012 U.S. Dist. LEXIS 162165, 3 (N.D. Cal. Nov. 13, 2012).

The Defendants in the current case propounded an interrogatory for the Plaintiff to state their “theory of damages, apportionment among the Defendants, the method used to calculate damages including without limitation whether the calculation is based on lost profits, reasonable royalty, or some other measure of damages,” and issues of prejudgment interest. Corning, at *5.

The Court held that the Plaintiff’s response to wait for their expert report was “plainly insufficient.” Corning, at *6-7. The Court explained it needed to know what the case was worth in order to resolve discovery disputes. As the Court summed up: “Proportionality is part and parcel of just about every discovery dispute.” Corning, at *7.

The Court cited to Rule 26(e)’s requirement to supplement initial disclosures based on new information learned in the course of discovery. Id. As such, the Court ordered the Plaintiff to supplement its Rule 26(a)(1)(A)(iii) damages-related disclosures by April 30 (16 days from the date of the order). Id. The Plaintiff was also required to answer the Defendant’s interrogatory, including:

The amount of damages Plaintiff seeks under each of its asserted damages theories (including lost profits, reasonable royalty, interest and any other asserted theory); 

Plaintiff’s apportionment of damages between Defendants and each asserted patent; 

For each asserted patent, the time period of which Plaintiff seeks damages as a result of the alleged infringement;

To the extent Plaintiff seeks to recover both lost profits and a reasonable royalty, the theory under which it claims such recovery is appropriate;

The witnesses on which Plaintiff intends to rely to support its damages claim;

The documents on which Plaintiff intends to rely to support its damages claim;

To the extent Plaintiff claims that it lost profits as a result of the alleged infringement, the facts on which Plaintiff bases its claim, including the identity and amount of

Plaintiff’s products on which Plaintiff claims to have lost profits; and

To the extent Plaintiff seeks to recover a reasonable royalty, the facts on which Plaintiff bases its claim, including the date of the hypothetical negotiation, any allegedly comparable licenses, the term of the reasonable royalty sought and any other Georgia-Pacific factors on which Plaintiff intends to rely.

Corning, at *7-8.

Bow Tie Thoughts

Proportionality is the key to resolving discovery disputes. I am not a patent litigator, but it is shocking to have litigation where parties cannot give a basic value of damages. Granted, patent litigation is highly complex and specialized. Moreover, computing complex damages is the territory of experts. However, if a case has multiple powerhouse law firms with teams of lawyers billing away, one would hope damage-related disclosures are made earlier in the case, opposed to later.

Can You Sue for Invasion of Privacy if Someone Reposts an Instagram Photo?

basketball-31353_1280If a basketball player posts a public photo to Instagram, and then another basketball player reposts the photo, can the first basketball player sue for Invasion of Privacy, Intentional Infliction of Emotional Distress, Defamation, and General Negligence?

The answer is yes, you can sue, but you will not survive a motion to dismiss. That is the lesson from Binion v. O’Neal, 2015 U.S. Dist. LEXIS 43456, 1 (E.D. Mich. Apr. 2, 2015).

US District Judge Avern Cohn started this opinion in the most logical place: Instagram’s terms of service. The Court quote Instagram’s FAQ’s and privacy statement as follows:

Instagram is a social media website that describes itself as a “fun and quirky way to share your life with friends through a series of pictures.” (FAQ, Instagram.com, https://instagram.com/about/faq/ (last visited Mar. 5, 2015)) Every Instagram user is advised that “[a]ll photos are public by default which means they are visible to anyone using Instagram or on the instagram.com website.” (Id.) However, Instagram allows users to “make [their] account private” such that “only people who follow [the user] on Instagram will be able to see [their] photos.” (Id.) If the Instagram user fails to make his/her account private, “anyone can subscribe to follow [their] photos.” (Id.)

Instagram‘s privacy policy states that “[b]y using our Service you understand and agree that we are providing a platform for you to post content, including photos, comments and other materials (“User Content”), to the Service and to share User Content publicly. This means that other Users may search for, see, use, or share any of your User Content that you make publicly available through the Service.” (Privacy Policy, Instagram.com, https://instagram.com/about/legal/privacy/ (last visited Mar. 5, 2015)) The privacy policy further states, “[a]ny information or content that you voluntarily disclose for posting to the Service, such as User Content, becomes available to the public, as controlled by any applicable privacy settings that you set. . . . Once you have shared User Content or made it public, that User Content may be re-shared by others.” (Id.)

Binion v. O’Neal, 2015 U.S. Dist. LEXIS 43456, 2-3 (E.D. Mich. Apr. 2, 2015).

The Court reviewed each claim against Defendant Burke. The analysis focused heavily on Instagram’s privacy policies and Michigan law, as case was based in diversity.

The Invasion of Privacy cause of action was based on all four traditional claims: (1) “[i]ntrusion upon the plaintiff’s seclusion or solitude, or into his private affairs”; (2) “[p]ublic disclosure of embarrassing private facts about the plaintiff”; (3) “[p]ublicity which places the plaintiff in a false light in the public eye”; (4) “[a]ppropriation, for the defendant’s advantage, of the plaintiff’s name or likeness.” Binion, at *6.

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All of these claims failed. First, the Court found that a publicly posted photo to Instagram by a Plaintiff could not form a claim for “Intrusion upon Seclusion.” Binion, at *7. The Court agreed with the Defendant “that no reasonable person, particularly in the social media age, would find it objectionable to obtain and repost a photograph that someone had already posted publicly.” Id.

The Court also found there was no public disclosure of embarrassing private facts or “false light” claims from reposting a photo that originated from the Plaintiff. Binion, at *7-9. There was also no appropriation, as there was no evidence that reposting the photo of the Plaintiff gave the Defendant any pecuniary benefit. Binion, at *10.

The intentional infliction of emotional distress (IIED) requires a Plaintiff prove “(1) extreme and outrageous conduct; (2) intent or recklessness; (3) causation; and (4) severe emotional distress.” Binion, at *11. Reposting a publicly available photo from social media does not go “beyond all possible bounds of decency” to sustain a claim for IIED. Id.

The Court’s analysis of defamation was interesting. Defamation requires (1) “a false and defamatory statement concerning the plaintiff”; (2) “an unprivileged publication to a third party”; (3) “fault amounting to at least negligence on the part of the publisher”; and (4) “either actionability of the statement irrespective of special harm or the existence of special harm caused by the publication.” Binion, at *12.

The Court focused on the fact there were no statements attributed to the Defendant. The Plaintiff argued that the Defendant’s posting of the photo implied the Plaintiff was mentally handicapped or his appearance made him “worthy of ridicule.” Binion, at *13.

The Court rejected these arguments. There was no evidence that the Defendant had any statements that implied the Plaintiff was mentally handicapped. Moreover, Michigan Courts have held that online statements are “statements of pure opinion, rather than statement or implications of actual, provable fact.” Binion, at *13-14, citing Ghanam v Does, 303 Mich. App. 522, 547 (2014).

The Plaintiff’s general negligence claim also failed, because there was not a legal duty between both basketball players, other than “the general duty to conform to the legal standard of reasonable conduct in the light of the apparent risk.” Binion, at *14. Moreover, the Defendant argued that his relationship with the “Plaintiff is no different than with the millions of other Instagram users who post photographs that can be shared, reposted, and commented on.” Id.

The Court agreed. There is no case law precedent that supports the legal theory that there is a “social media duty” on reposting photos with foreseeable consequences of emotional harm. Id.

Bow Tie Thoughts

The collection of Instagram photos in cases involving online torts is an interesting one. The subject photos can exist in the Instagram App, on a party’s Instagram photo online, and in the Camera Roll of the phone. The “right” image to capture for litigation can turn on the type of case. Many times simply printing the image as a PDF from Instagram.com could be all that is required. Other cases might just require a screen capture of the app on the smartphone. There are situations where collecting the photo from the smartphone is required, such as when GPS metadata is relevant. Whatever the situation, attorneys should consider what is the relevant source of information to preserve.