Always Explain How Requested Information Moves a Case Forward for Proportionality

A requesting party issued a third party subpoena on the ATF for email messages created between 2000 to 2009. The Court denied the production of the messages on the grounds the emails were not reasonably accessible because of being stored on back-up tapes. The moving party also failed to demonstrate good cause to order the production of the requested information. The Court also addressed the proportionality of the request under Federal Rule of Civil Procedure Rule Rule 26(b)(2)(C). Baranski v. United States, 2015 U.S. Dist. LEXIS 71584, *52-54 (E.D. Mo. June 3, 2015).

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The Court began the proportionality analysis highlighting the emails were between six to eight years old and stored on back-up tapes for disaster recovery. Baranski, at *52.

The Court further noted that the production of the emails would “involve substantial costs and time and the active intervention of computer specialists,” which had been explained by expert affidavit. Id.

An added factor included that the emails would have to be searched by specific users and the requesting party had not identified any users to be searched. Id. This made the discovery request not sufficiently specific. Baranski, at *53.

The Court further drove home the proportionality analysis that the cost could not be justified for the requested information without some showing that the requested emails contained information to resolve the issues in the lawsuit. Id. As such, the Court denied the requesting party’s subpoena.

Bow Tie Thoughts

Proportionality is the balancing of two factors: 1) What must be done to make the data accessible (including cost, time on the project, what technology must be used) and 2) How is the information going to be beneficial to the case.

Cost is irrelevant if the information has not objective value to a lawsuit. A party seeking information that especially requires translation into a reasonably useable form should be ready to state why it supports the causes of action in a case, with specific custodians, time frames, and any other information to assist the Judge in making her ruling. Without knowing how the information will move the case forward, a Court will be hard pressed to order expensive data recovery procedures.

You Don’t Want Discovery Overdraft Charges

Discovery deadlines matter. Wells Fargo learned that the hard way with producing a relevant email 8 months after the close of discovery. Given the nature of the relevancy to the lawsuit, limited additional discovery was reopened.

Opps_iStock_Here is the short overview of the case: Plaintiff’s asked Wells Fargo if the other Defendants (now dismissed) were a legitimate business engaged in securities sales. The bank said yes and the Plaintiff transferred $80,000 to the Defendant’s bank account in order to purchase securities that would yield a return of $280,000.

The second transaction involved reinvesting $250,000 of the promised $280,000 to fund a $500,000 loan to renovate an office building, plus an additional $50,000 transaction fee. Gazian v. Wells Fargo Bank Na, 2015 U.S. Dist. LEXIS 69701, *2-3.

The Plaintiffs attempted to withdraw $30,000 and transfer the $250,000 to the Defendants. Wells Fargo informed the Plaintiffs that the dismissed Defendants accounts had been emptied and no money would be transferred to the Plaintiffs. Id.

The Plaintiff’s sued Wells Fargo on the theory the bank “knowingly or negligently made false representations to Plaintiffs” about the dismissed Defendants. Gazian, at *3.

Enter the late-produced email message:

From: BROWN, Patrick [Wells Fargo]

Sent: Tue 8/2/2011 5:36:42 PM

Re: HSBC Bank Guarantee Registration Number BH5843[.]

I have conducted a review on the signor, Craig Cason, for this account, [redacted]7443 — Increase Capital Investments LLC and found several items of concern . . .

This individual has been investigated by the SEC for securities violations and accusations of fraud.

The address on the account is a virtual office that can be rented for $50/month, used frequently by shell companies to give the appearance of legitimacy even though no actual business is conducted there.

The client has filed multiple bankruptcies and has several outstanding judgments (some in excess of $100K), which is not consistent with someone purporting to have $250mil in assets.

Please do not process the receipt of this security. We will be restricting the account and referring the matter to our Security Fraud group. Additionally, please DO NOT disclose this information to the client or the outcome of our review. Please advise the client that we cannot assist him with his request.

Gazian, at *4.

The Defendants claimed this messaged pertained to another securities deal and was not relevant. Gazian, at *5. The Plaintiff and the Court did not agree.

The Court reopened discovery so the Plaintiffs could conduct 5 additional depositions of no more than 20 hours of depo time; 10 additional requests for production; and 10 additional interrogatories. The Court went further to say that the additional depositions and written discovery could inquire into the preservation of emails sent to and from one of the Wells Fargo custodians. Gazian, at *7-8.

Bow Tie Thoughts

A lawsuit can hinge on one smoking gun email that was produced late. This sort of situation is one that needs to be avoided by litigants. The problem when this happens is often one of not having an effective information governance solution, or not issuing a litigation hold correctly, or not collecting ESI, or not knowing how to leverage early case assessment tools to find potentially relevant information. To put it mildly, disaster can happen for many reasons.

How can parties avoid these situations? Use sound technologies to manage data that can issue a litigation hold and preserve relevant ESI. This does require determining what is relevant, but these are problems that can be solved by knowing what actions to take and the tools to properly litigate a case.

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.

Return to the TAR-Pit

Take note all, there is a new predictive coding case by Judge Andrew Peck. The good Judge waded into the TAR-pit of transparency, which in my opinion has caused much unnecessary problems with judges and parties who believe “transparency” is required when predictive coding is used, mandating the disclosure of seed sets. I do not think the Federal Rules of Civil Procedure place such a burden on producing parties by attacking the work-product doctrine or compelling the production of irrelevant information.

Judge Peck summarized that “where the parties do not agree to transparency, the decisions are split and the debate in the discovery literature is robust.” Rio Tinto Plc v. Vale S.A., 2015 U.S. Dist. LEXIS 24996, 8 (S.D.N.Y. Mar. 2, 2015).

Judge Peck’s new opinion did not rule on the issue of seed transparency, because the parties had agreed to an ESI protocol that “disclosed all non-privilege documents in the control sets.” Rio Tinto Plc., at *10. However, Judge Peck provided his thoughts on what I would call a bias against technology-assisted review:

One point must be stressed -it is inappropriate to hold TAR to a higher standard than keywords or manual review. Doing so discourages parties from using TAR for fear of spending more in motion practice than the savings from using TAR for review.

Rio Tinto Plc, at *10, emphasis added.

Business team enjoying victory

That statement is extremely important. There is no valid reason to treat “predictive coding,” or any other form of analytics such as conceptual searching, email threading, or clustering, to higher discovery standards because “technology” is used.

The issue is whether or not the production is adequate. A producing party should not have to disclose attorney work product in analyzing their case or proving the technology functions. Courts do not hold competency hearings on whether an attorney properly knows how to conduct online legal research to ensure attorneys are maintaining their ethical duty of candor to the court. The same logic applies to technology-assisted review and productions.

Judge Peck did state while he generally believed in cooperation, “requesting parties can insure that training and review was done appropriately by other means, such as statistical estimation of recall at the conclusion of the review as well as by whether there are gaps in the production, and quality control review of samples from the documents categorized as now responsive.” Rio Tinto Plc., at *9-10, referencing Grossman & Cormack, Comments, supra, 7 Fed. Cts. L. Rev. at 301-12.

The focus of discovery should be whether or not a production is adequate. Are there production gaps? Is the parent-child relationship maintained between email messages and attachments? Is the producing party conducting quality assurance testing? Is the producing party documenting their efforts?

Judge Peck’s latest opinion will not be the final word on the issue of “transparency.” However, Judge Peck is a well-respected jurist who understands technology-assisted review. His statement that “it is inappropriate to hold TAR to a higher standard than keywords or manual review” is a very welcome one.

WHOA! A Prevailing Party Recovered $57,873.61 in eDiscovery Costs!

thumb-456698_1280My God, is it true? Did a Prevailing Party recover virtually all of its eDiscovery costs?

The answer is yes, thanks to a case in Colorado.

United States District Judge Christine M. Arguello opened her order denying the Plaintiff’s motion to review the clerk’s taxation of costs with the following:

Because Defendants’ costs related to the electronically stored information (“ESI”) are expenses enumerated in 28 U.S.C. § 1920(4), and Plaintiffs were aware that Defendants would have to retain an outside consultant to retrieve and convert the ESI into a retrievable format, Plaintiffs’ Motion is denied.

Comprehensive Addiction Treatment Ctr. v. Leslea, 2015 U.S. Dist. LEXIS 17878, 1.

Rock on. Let’s review the Court’s reasoning.

The Plaintiff took the position that the Defendants’ eDiscovery cost award be reduced from $57,873.61 to $2,387.03, striking the work of a third-party eDiscovery service provider who performed the “retrieving, restoring, and converting data,” on the grounds the work did not constitute “copying.” Leslea, at *2.

The Court explained the Defendants hired their eDiscovery service provider to retrieve and restore ESI in order to respond to the Plaintiff’s Interrogatories and Requests for Productions. The requested discovery included “correspondence, summaries, emails, reports, and memos” relating to specific subject matter. Leslea, at *4-5. The Court noted that the work was complex and time-intensive, requiring three consecutive tolling agreements. Id.

The Defendants communicated with the Plaintiffs three times on the challenges over ESI, including providing detailed information on the scope of the data, archiving, and retention periods on multiple sources of data (hard drives, back-up tapes, etc). Leslea, at *5. In the second communication, the Defendants explained how the service provider restored 83 back-up tapes; and in the third the service provider’s forensic investigator detailed the difficulties in restoring the subject ESI. Id

The Court noted that the Plaintiffs were aware of the ESI challenges, did not recommend any changes to the scope of discovery, and even filed a new complaint with additional allegations. Leslea, at *5-6.

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The Court held that the ESI expenses were “reasonably necessary for use in the case” and not done for the mere convenience of the parties. Leslea, at *6. The Court concluded the order as follows:

Indeed, Plaintiffs were aware of the monumental effort to retrieve and convert the data into a retrievable format in response to their Interrogatories and Requests for Production. The costs incurred by Defendants, the prevailing party, in responding to Plaintiffs’ requests are expenses that are shifted to Plaintiffs, the losing party. Indeed, Plaintiffs own litigation choices and aggressive course of discovery necessarily resulted in “heightened” defense costs. Plaintiffs have not demonstrated that these costs are improper. Accordingly, Defendants are entitled to recover their costs in full measure as determined by the Clerk, which it has identified as $57,873.61.

Leslea, at *6-7, citing In re Williams Sec. Litig-WCG Subclass, 558 F.3d at 1150.

Bow Tie Thoughts

Thank you Judge Arguello for understanding a simple truth: eDiscovery requires technology to retrieve information and translate it into reasonable useable forms that are necessary for the case. This technology and expertise costs money. Yes, this case had an expert who explained what was being done during the litigation. Not every case has such powerful facts explaining the why and how of restoring ESI to make it reasonably useable, but this is an epic victory for taxation of eDiscovery costs.

Stapling Proportionality

Proportionality and costs are not a great argument when you are complaining about your own databases.

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Webb v. Ethicon Endo-Surgery, Inc., is a product liability case over a surgical stapler that misfired during a surgery, resulting in complications to the Plaintiff’s recovery. Webb v. Ethicon Endo-Surgery, Inc., 2015 U.S. Dist. LEXIS 8275, 2-3 (D. Minn. Jan. 26, 2015). The Magistrate Judge attempted surgery on the scope of discovery, resulting in the Defendant arguing the scope was too broad, and the Plaintiff arguing it was too narrow, over three specific discovery requests. The District Court upheld the Magistrate Judge’s order on the scope of discovery.

The Defendant offered a declaration from their risk manager to support their argument to narrow discovery based on proportionality. The Defendant argued that they had made the line of medical staplers for 18 years and the records were stored in multiple databases. Webb, at *14-15.

The Defendant further argued that it would cost $62,400 to search the multiple databases, which was disproportional to the Plaintiff’s damages “in excess” of $50,000. Webb, at *16. This argument failed.

The Court cited that the producing party has the burden of complying with discovery requests and “a corporation [that] has an unwieldy record keeping system which requires it to incur heavy expenditures of time and effort to produce requested documents is an insufficient reason to prevent disclosure of otherwise discoverable information.” Webb, at *16-17, quoting Wagner v. Dryvit Sys., Inc., 208 F.R.D. 606, 611 (D. Neb. 2001) and citing Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 358, 98 S. Ct. 2380, 57 L. Ed. 2d 253 (1978).

The Court held that the Magistrate Judge properly determined the scope of discovery in evaluating the expense, burden, and likely benefit of the information sought for the subject discovery requests. Webb, at *17.

Bow Tie Thoughts

Searching databases is expensive. Many judges do not care for arguments from a producing party that searching multiple, or even dissimilar, databases make the cost of relevant discovery prohibitively expensive. This is like arguing a party should be protected from its own self-inflicted wound on how they manage different databases.

Technology is constantly improving, thus methods of storing data change over time. If a company maintains electronically stored information going back potentially decades, they should be prepared have the ability to search it in litigation in a cost effective manner.