It’s Moving Day to BowTieLaw.com

I am very happy to report that Bow Tie Law is moving to www.bowtielaw.com. Our new hosting provider will give Bow Tie Law enhanced posting features, such as embedded podcasts and other new functionality in blog posts.

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Everyone who subscribes to Bow Tie Law on WordPress will continue to receive new posts when they are published. Our readers who subscribe on Google Feedburner will be migrated over after this announcement or sign-up now on Bow Tie Law.

Thank you all for your readership.

Josh

Proportionality is like The Force

The new Federal Rules of Civil Procedure are not as exciting as Star Wars The Force Awakens, but there differently has been an awakening on proportionality. There are those who fear eDiscovery, thus feel the new Rule 26 empowers them to object to every request for production on the grounds the request is not proportional to the merits of the case. Such thinking leads to the Dark Side. The new Rules are designed to bring balance to litigation, not leave it in tatters.

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In a products liability and breach of warranty case involving evaporator coils and condenser coils in air conditioners, the Defendants as the Producing Party claimed producing responsive documents to the Plaintiffs’ request would be unduly burdensome. The Defendants claimed it would take “4,000 hours of lawyer review time over several months” to identify responsive discovery. Siriano v. Goodman Mfg. Co., L.P. (S.D.Ohio Dec. 9, 2015, No. 2:14-cv-1131) 2015 U.S. Dist. LEXIS 165040, at *15.

Magistrate Judge Elizabeth A. Preston Deavers engaged in very thoughtful analysis of Federal Rule of Civil Procedure 26(b)(1)’s new emphasis on proportionality in granting the Plaintiffs’ motion to compel, in part. As a preliminary matter, discovery is available “regarding any nonprivileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case.” Fed. R. Civ. P. 26(b)(1).” Siriano, at *15.

Judge Deavers recounted the proportionality principles of former Fed. R. Civ. P. 26(b)(2)(C)(iii)), now Fed. R. Civ. P. 26(b)(1), that District Courts are to limit discovery where the “burden or expense . . . outweighs its likely benefit, taking into account the needs of the case, the amount in controversy, the parties’ resources, the importance of the issues at stake in the litigation, and the importance of the proposed discovery in resolving the issues.” Siriano, at *15-16.

As the Court noted, “restoring proportionality” was the “touchstone of revised Rule 26(b)(1)’s scope of discovery provisions” with the move of proportionality from Fed. R. Civ. P. 26(b)(2)(C)(iii)) to Fed. R. Civ. P. 26(b)(1). Siriano, at *16.

The Court’s analysis is very thoughtful, finding:

  • The discovery sought by the Plaintiff was directly related to their claims for design and manufacture defects;
  • It is highly unlikely that Plaintiffs could discover similar information from another source or in another manner;
  • Documents pertaining to breach of warranty by other customers would be easily accessible to Defendants but likely inaccessible to Plaintiffs;
  • It is more efficient for Defendants to provide information on their distributors, then the Plaintiffs construct it piecemeal with third-party request;
  • Defendants expended relatively little in complying with discovery, because the information sought had been produced in related cases; and
  • Plaintiffs in their Complaint present a putative class action that could include a significant number of class members who each purchased costly products from Defendants.

Siriano, at *16-19.

Harkening back to Yoda’s “size matters not,” just because something is expensive or time-consuming, does not mean it is unduly burdensome. Siriano, at *19.

The Defendants did not offer any alternative means of identifying or producing electronically stored information. Judge Deavers could have stated, “that is why you fail,” but instead wielded the new Federal Rule of Civil Procedure 1 like a lightsaber, hitting the Defendant with the fact that the “just, speedy, and inexpensive determination of every action and proceeding” is to be employed by not just the Court, but the parties under the new Rule 1. Siriano, at *19.

Under the new Rules, cooperation strikes back. Moreover, coupled with the return of proportionality, the new Rules contemplate “active judicial case management.” Siriano, at *19. Thus with the resolve to go to Dagobah, the Court ordered a discovery conference to discuss possibly conducting discovery in phases. Id. Finally, the parties were also directed to “engage in further cooperative dialogue in an effort to come to an agreement regarding proportional discovery.” Siriano, at *20.

Bow Tie Thoughts

eDiscovery might not be as popcorn worthy as Star Wars, but this is an excellent case applying the 2015 Amendments to the Federal Rules of Civil Procedure. The proportionality analysis is thoughtful in getting to the merits of the case. Judge Elizabeth A. Preston Deavers sets a great benchmark for others to follow in determining proportional discovery in cases.

Remembering Jack Halprin

JackHalprinJack Halprin was a great legal mind in eDiscovery. Jack was smart, had a sharp sense of humor, and a profoundly decent person. His passing leaves a void for those who called him friend.

I met Jack shortly after I began my career in eDiscovery in 2006. One of his colleagues said his nickname was “Happy Jack,” because of his cheerful personality. I found his nickname to be extremely accurate. Every project with him was a grand adventure.

We first presented together at CEIC, focusing on how to preserve electronically stored information and computer forensics. We had a seminar series together where we went from computer forensics to the Federal Rules of Civil Procedure and trial presentation. I had a lot of fun on that series with Jack.

Jack unknowingly called me with a job prospect within an hour of my mother’s death. He knew I had been laid off and was looking for a new job. He called out of thoughtfulness and offered kind words for my mother’s passing.

Those who knew Jack will miss him. I offer his family my sincere condolences. Jack was an outstanding human being who left this Earth far too early.

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.

 

Let’s Play eDiscovery Baseball

We have Geek Judges. I love those Jurists. We also have Judges who love sports. I have a gut feeling it would be fun to go see a baseball game with Magistrate Judge Young B. Kim.

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Bagwe v. Sedgwick Claims Mgmt. Servs., is a case where the prevailing party sought eDiscovery costs against an individual plaintiff. The Court took the mound for its analysis of the Defendants’ arguments with the following wind-up:

Defendants take several different swings to recover their costs related to ediscovery. Defendants first swing for the fence and seek $57,858.94 for the entirety of their ediscovery costs. They miss.

Bagwe v. Sedgwick Claims Mgmt. Servs., 2015 U.S. Dist. LEXIS 8809, at *15 (N.D. Ill. Jan. 27, 2015).

Get out the peanuts and crackerjacks, because Judge Kim was just getting warmed up.

As with many eDiscovery cost cases, the Court stated that the Defendants were “vague” about how the sum of $57,858.94 was determined. The Court cited that the costs pertained to obtaining and culling 422.05 Gigabytes of data down to 25 Gigabytes. Bagwe, at *15-16.

The Defendants argued they used “eDiscovery techniques” and were able to identify “even better” data than the prevailing Defendants in the In re Aspartame Antitrust Litigation, 817 F. Supp. 2d 608, 614-15 (E.D. Pa. 2011). Bagwe, at *16.

Defendants unsuccessfully argued that cases such as “Race Tires, Rawal, and Johnson were all wrongly decided” and that the facts of the current case justified cost recovery. Id. The Court answered this argument as follows:

Defendants’ assertion that Race Tires, Rawal, and Johnson were wrongly decided may be brushed aside because they do not offer any reasons why these cases were wrongly decided or why this court should not follow them. They merely urge the court to award all of their e-discovery costs because “[t]he equities demand [Bagwe] be held fully responsible.” But Rule 54 is not a discovery sanction tool.

Bagwe, at *16-17.

The Court continued the baseball metaphor with, “Defendants next swing for a double and argue that if the entire amount cannot be recovered, they are entitled to at least $7,953.90, which represents the cost of “gather[ing] emails with metadata intact . . . by creating forensic images and then extracting the .pst files into .msg files,” which they say amounts to converting the files into a “readable format.” Bagwe, at *17.

baseball-316934_1280The Court stated this argument was again a miss, because the Defendants did not explain how “the act of gathering e-mails that include metadata is different from other types of non-taxable ‘gathering.’” Id. As stated in prior decisions, “gathering, preserving, processing, searching, culling, and extracting of ESI” are not recoverable. Id.

The Court rejected the Plaintiff’s argument that the only recoverable costs were a $67 thumb drive. Bagwe, at *17-18.

The Defendants did get a hit with their final eDiscovery cost argument on “copying.” As the Court explained in its analysis of exemplification in Section 1920:

Costs for “exemplification and the costs of making copies” through photocopying and the conversion of ESI into a readable format are two sides of the same coin: namely, the pre-and-post digital era approach to “copying,” or creating readable documents that may be transmitted to the party requesting the information. The court notes that Section 1920(4) does not employ the phrase “making photocopies,” which is commonly understood to mean making paper copies, but employs the phrase “making copies of any materials,” which is a much broader phrase with more diverse meaning. Accordingly, Defendants are entitled to recover $7,266.40 in ediscovery costs. 

Bagwe, *18-19, referencing Massuda v Panda Express, Inc, 2014 U.S. Dist. LEXIS 4956, at *6.

$7,266.40 is a good base hit in the world of eDiscovery cost recovery.

Bow Tie Thoughts

First things first: I cannot wait for baseball season.

From a philosophic point of view, I agree with the Defendants that there should be greater recovery for eDiscovery costs. However, no one can cite “Josh thinks so,” in a motion and a Court will simply agree with me.

Proving eDiscovery costs were necessary for litigation and required for productions take invoices that explain what steps were taken and why. Even then, expert affidavits would still need to be prepared to explain to the Court why those eDiscovery technologies were used. Even if a party provided a Judge with the educational background on why those technologies were applied to the data, and how processing IS making copies, there is no guarantee such a report would knock the argument out of the ballpark.

Do I think there should be greater cost recover in eDiscovery costs? You bet. I also think Pablo Sandoval should have stayed with the Giants, but that did not happen. I often have the same melancholy feelings about parties not being able to recover hosting or processing costs as the Panda leaving San Francisco.

Can Retaining Liens Attach to eDiscovery Databases?

Recovering attorney’s fees and costs is one of the more unpleasant aspects of the practice of law. In situations where an attorney has not been paid, a retaining lien gives “the attorney the right to retain possession of the client’s documents and files which come into the attorney’s hands during the course of employment until the balance due for the attorney’s services is paid.” Cronin & Co., Ltd. v Richie Capital Mgmt., LLC, 2014 IL App (1st) 131892-U, ¶¶ 21-32 [2014], citing In re Liquidation of Coronet Insurance Co., 298 Ill. App. 3d 411, 415, 698 N.E.2d 598, 232 Ill. Dec. 507 (1998).

An attorney has to be in continued possession of the client’s property in order to maintain the lien. Id.

Future-Review

Can a retaining lien be held over client data in an online review application hosted by a service provider?

The answer appears to be yes.

While the case facts are substantially detailed, here are the basic events: Attorney is retained as counsel and the attorney retained an eDiscovery service provider to host client files for review. The service provider was contracted to work for the clients, however, it took created the database and took directions from the attorney, thus imputing control to the law firm. Cronin & Co., Ltd., P22-23.

The fact the client information was given to the service provider for hosting did not mean the attorney surrendered possession of that information, which would have destroyed the retaining lien. Cronin & Co., Ltd., P23.

As one can imagine, most lawsuits do not have issues with retaining liens unless there is a dispute. The short story of what happened is representation ended, there was a dispute,  and the attorney sought the client information from the service provider. This put the service provider into a very unpleasant situation on what to do, where the attorney sought injunctive relief to have the client information retained to the lawyer (the facts in the opinion are very detailed, so this is an abridged version).

Whether or not the District Court abused its discretion in granting a temporary restraining order or preliminary injunction was a large part of the case analysis in ordering the service provider to turn the database over to the attorney. The Court vacated and remanded with instructions for the District Court to enter findings the preliminary injunction factors in regards to the balancing of hardships. Cronin & Co., Ltd., P31.

Bow Tie Thoughts

Disputes over fees with clients are not fun. The idea of being a service provider stuck in the middle of a fight between a client and an attorney is extremely undesirable.

I discussed with an attorney who represented a service provider in a fee dispute over hosting fees against a law firm. The lawyer had a novel concept of arguing the work product doctrine did not apply to the attorney work product in the database because his client’s agreement with the law firm was vague, thus they would seek a lien on the server with the client data and attorney work product, and then sell the information to the opposing party in the lawsuit.

This was the single worst idea for conflict resolution I have ever heard. No lawyer would ever work with a service provider that argued work product was not protected by the work product doctrine. Moreover, the idea of selling client information and attorney work product would ensure a service provider is forever on every law firm’s black list in the country. Such tactics would likely violate ethical rules of conduct, the Stored Communication Act, plus possibly other laws.

The current case is extremely different. It will be interesting to see the balancing of hardship analysis on remand.