The Supreme Court of Arizona recently issued an order amending Arizona Rules of Family Law Procedure to address electronically stored information and electronic discovery.  The amendments are consistent with the January 1, 2008 amendments to the Arizona Rules of Civil Procedure which closely track the amendments to the Federal Rules of Civil Procedure.

The Family Law Procedure amendments related to electronic discovery were made to Rules 49 (Disclosure), 51 (Discovery), 52 (Subpoenas), 62 (Production) and 65 (Sanctions).  The amended rules are effective on January 1, 2009.

A copy of the Court's order and revised rules can be found here.

In, ReedHycalog UK, LTD v. United Diamond Drilling Svcs., Inc., 2008 U.S. Dist. LEXIS 93177 (Oct. 3, 2008), the court held that defendants could not rely on its document production which amounted to an electronic data dump in violation of the Federal Rules of Civil Procedure and local rules.  The court ordered the parties to meet and confer to resolve the issue and agree upon search terms to further limit the production.

During the course of discovery for this patent litigation, defendants imaged hard drives and reviewed documents responsive to plaintiff's production request.  The defendants reviewed the documents for confidentiality and privilege, but made no effort to review the documents for relevance.  As a result, plaintiff's received and subsequently hosted, at its expense, 750 gigabytes of data that allegedly included personal photographs, audio folders and pornography. Plaintiff served defendants with interrogatories seeking the identification of relevant documents.  Defendants, relying on Federal Rule of Civil Procedure  33(d), listed the documents received in response to search terms defendants ran as responsive to the interrogatories. For example, one interrogatory response directed plaintiffs to review over 75,000 documents.

Plaintiff filed a motion to determine the appropriateness of defendants' production of every single document from a relevant custodian, and to determine whether interrogatory responses that list search terms to run over electronically produced documents complies with FRCP 33(d).  After a court ordered meet and confer, plaintiff withdrew its motion as to the interrogatory responses and the parties used search terms to narrow the scope of defendants' document production.  However, the parties still disputed whether all of the data from the original production was still in play or whether the defendants needed to go back and Bates stamp the subset of documents from the subsequent search terms.  The matter was complicated by the fact that defendants contended that the search terms were not agreed upon by the parties.

The court held that defendants' production does not comply with the FRCP or its own local rules noting that there was no effort by either party to limit its production to relevant information.  The court found that defendants production amounted to a data dump with an instruction to "go fish."  Moreover, defendants' insistence that the parties rely on its original production rather than the parties' subsequent effort to narrow the scope of production would effectively render the subsequent effort meaningless.  The court ruled that defendants cannot rely on the prior production because it did not comply with the Federal or local rules; defendants can only rely on the subsequent production resulting from search terms.  The court gave defendants 14 days to supplement their production with additional documents resulting from the use of their own search terms. The court cautioned defendants not to engage in another data dump.  The court also warned both parties that sanctions may come into play "if the discovery games continue."

In Rhoads Indus., Inc. v. Building Materials, Corp., 2008 U.S. Dist. LEXIS 93333 (E.D. Penn. Nov. 14, 2008), the court held that plaintiff waived the attorney-client privilege as to 120 inadvertently produced documents that did not appear on plaintiff's privilege log.  However, the court, noting that plaintiff's efforts to avoid inadvertent disclosure were unreasonable, held that defendants had failed to meet their burden of showing that the plaintiff waived the attorney-client privilege as to 800 other documents.

The case was predicated on a $5.584 million contract between the parties to construct a plant in Quakertown, Pennsylvania.  Plaintiff alleged breach of the agreement and other claims, including negligent misrepresentation.  In preparation for litigation, plaintiff purchased a computer program to perform electronic searches to remove potentially privileged documents from plaintiff's electronically stored information ("ESI").  Plaintiff, its counsel and IT consultant reasonably believed that the computer program would screen out all privileged materials.

In early 2008, the IT consultant began to run the search terms that he had received from plaintiff's counsel.  The terms netted more than 210,000 electronic documents.  In order to filter out potentially privileged emails, he ran searches in the address line of all emails to identify: *rhoadsinc* (plaintiff) and either *gowa* (plaintiff's law firm Gowa Lincoln), *ballard* (plaintiff's other law firm, Ballard), or *cpmi* (plaintiff's non-testifying expert, CPMI, Inc.).  Upon completion of the electronic search, plaintiff's counsel designated more than 2,000 emails as privileged and removed these emails from the documents produced to defendants.  However, these emails were not placed on a privilege log. 

Of the remaining documents, plaintiff's counsel identified 78,000 emails that he believed were responsive and non-privileged. Plaintiff's counsel then conducted a manual review of 22 boxes of paper documents and emails from certain document custodian's mailboxes, some of which had not been subject to the electronic keyword search.  After the manual review, counsel removed certain documents as privileged and logged them on a privilege log.  In May 2008, plaintiff produced three hard drives containing responsive ESI, including the 78,000 emails.  Plaintiff subsequently produced two privileged logs: one from plaintiff's manual review of ESI, the other from the paper document review. In June 2008, defendants' counsel notified plaintiff that certain documents that appeared to be privileged had been produced.  In response, plaintiff's counsel manually reviewed the 78,000 emails and identified 812 privileged emails.  Plaintiff's counsel subsequently sent defendants a third privilege log and requested defendants sequester the inadvertently produced documents pursuant to FRCP 26(b)(5). Defendants filed a motion to deem that plaintiff had waived the privilege as to these emails.

Upon hearing the motion, the court ordered the production of any documents not on a privilege log. After the hearing, plaintiff's counsel inspected the 2,000 emails set aside as a result of the electronic search and created a fourth privilege log which identified an additional 120 privileged documents.

Federal Rule of Evidence 502 protects against waiver of the attorney-client privilege and work product doctrine when the holder of the privilege demonstrates: (1) the production was inadvertent; (2) it took reasonable steps to prevent disclosure; and (3) took reasonable measures to rectify the error.  The court found that there was no dispute that plaintiff inadvertently produced the privileged ESI and ruled that the plaintiff had shown "at least minimal compliance" with the three factors in Rule 502  The unresolved issue for the court was one of "reasonableness." The court noted that two recent cases, Victor Stanley, Inc. v. Creative Pipe, Inc., 250 F.R.D. 251 (D. Md. 2008) and Amersham Biosciences Corp. v. Perkinelmer, Inc., 2007 WL 329290 (D.N.J. 2007) dealt with similar privilege issues.  However, the court found that Judge Paul Grimm's analysis in Victor Stanley embodied an inappropriate "application of hindsight" and that the facts in Amersham were not analogous.  Rather, the court used the five-factor test set forth in Fidelity & Deposit Co. of Md. v. McCulloch, 168 F.R.D. 516 (E.D. Pa. 1996), to analyze the specific facts both for and against the determination of waiver.

The Fidelity factors are: (1) The reasonableness of the precautions taken to prevent inadvertent disclosure in view of the extent of the document production; (2) the number of inadvertent disclosures; (3) the extent of the disclosure; (4) any delay and measures taken to rectify the disclosure; and (5) whether the overriding interests of justice would or would not be served by relieving the party of its error.

The court noted that plaintiff's retention of the IT consultant who recommended and used an electronic screening device was evidence of plaintiff's substantial compliance with one of the advisory committee notes to F.R.E. Rule 502:

   A party that uses advanced analytical software applications and linguistic tools in screening for privilege and work product may be found to have taken "reasonable steps" to prevent inadvertent disclosure. The implementation of an efficient system of records management before litigation may also be relevant.

Fed. R. Evid. 502 advisory committee's note.

The court also found other factors in favor of plaintiff, including the fact that the number of disclosures was relatively small considering the amount of documents reviewed and produced. Yet, the court found that plaintiff's efforts to prevent disclosure were altogether unreasonable and the first four Fidelity factors favored defendants.

   The most significant factor . . . is that [plaintiff] failed to prepare for the segregation and review of the privileged documents sufficiently far in advance of the inevitable production of a large volume of documents.  Once this lawsuit seeking millions of dollars in damages was filed, [plaintiff] was under an obligation to put adequate resources to the task of preparing the documents, which was completely within [plaintiff's] control.  An understandable desire to minimize costs of litigation and to be frugal in spending a client's money cannot be an after-the-fact excuse for a failed screening of privileged documents . . .

Nonetheless, the court held that the fifth factor, the interest of justice, strongly favored the plaintiff.  The court stated that loss of the attorney-client privilege would be a severe sanction that could lead to serious prejudice.  The court held that plaintiff waived the privilege as to the 120 documents that were not on its privilege log prior to the filing of defendants' motion, but denied the motion as to the remaining 800 privileged documents inadvertently produced to defendants.

 

Ryley Document Control Blogger and e-Discovery Thought Leader to Lend Voice at Prestigious Law Technology News.

In Kinnally v. Rogers Corp., 2008 U.S. Dist. LEXIS 93659 (D. Ariz. Nov. 7, 2008), the court denied plaintiffs' motion for an adverse inference instruction due to spoliation of evidence ruling that plaintiffs' motion filed after the discovery cutoff was untimely and, on its merits, failed to present any evidence of either willful or negligent destruction of evidence.

Defendant laid off several employees due to a "reduction in force" ("RIF"), including the four plaintiffs who filed this action claiming age discrimination.  On November 9, 2006, the same day plaintiffs filed the complaint, plaintiffs' counsel sent a letter to defendant's counsel requesting that defendant preserve all relevant information.  The parties initiated discovery soon after the Rule 16 Scheduling Order that was issued on April 23, 2007 with a discovery cutoff for February 25, 2008. 

During the course of discovery, defendant objected to some of plaintiffs' document requests as irrelevant, overly broad and burdensome.  Letters were exchanged between the parties, but plaintiffs never alerted the court to any difficulty or discovery irregularity until they filed their spoliation motion.  In their motion, plaintiffs alleged that defendant failed to implement a timely litigation hold noting that a litigation hold email from defendant's corporate compliance officer was sent years after the EEOC charges were filed and months after the preservation letter from plaintiffs' counsel.  Plaintiffs further claimed that defendant failed to produce its document retention and destruction policies, certain responsive emails, technical notes and lab books. In the alternative, plaintiffs claimed defendant failed to make a diligent and reasonable search for such information.

In response, defendant argued that no litigation hold letter was necessary because the RIF was conducted verbally and all documentation was collected by defendant's HR manager at the end of the RIF process.  Defendant further argued that emails to defendant's RIF Planning Committee members do not address the litigation hold because the emails were a "reconfirmation" that the members had already collected and retained the information. Defendant also contended that all relevant information was collected as part of the EEOC investigation and produced as part of initial discovery.  Defendant argued that plaintiffs have failed to show any actual destruction of evidence and, therefore, cannot meet their burden of proof.

The court held that as a fundamental matter, plaintiffs' failure to take timely action and notify the court of the dispute before the discovery cutoff precluded plaintiffs from raising the issue. On the merits of plaintiffs' spoliation claims, the court held that Rule 37 sanctions could not be ordered as they are only imposed against a party for failure to obey a court-issued discovery order. In order for the court to sanction under its common law authority, plaintiffs must establish (1) the party having control over the evidence had an obligation to preserve it at the time it was destroyed; (2) the records were destroyed with a culpable state of mind; and (3) the destroyed evidence was relevant to the party's claim or defense such that a reasonable trier of fact could find that it would support that claim or defense. In re Napster, Inc. Copyright Litigation, 462 F.Supp.2d 1060, 1078 (N.D. Ca 2006). All elements of the Napster test presume that relevant evidence has indeed been destroyed. Plaintiffs, however, failed to show that defendant destroyed any evidence.  Rather, plaintiffs "suggest" that relevant evidence "may" have been destroyed.  The court stated that the lack of production is not tantamount with destruction.  The court denied plaintiffs' motion holding that an adverse inference instruction cannot be predicated on an "inference" that evidence may have been destroyed, particularly in light of defendants objections to the discovery requests and plaintiffs' failure to timely raise the issue during discovery.

The court also declined to issue sanctions for defendant's failure to issue a timely litigation hold when there was no evidence that defendant failed to preserve evidence. "The absence or untimeliness of a written litigation hold is relevant to a spoliation claim, but it alone is not dispositive."

 

 

Document Control Group's Cecil Lynn published in BNA Digital Discovery & E-Evidence.  Read the article on enforcement of workplace computer privacy policies.

In D'Onofrio v. SFX Sports Group, Inc., 2008 WL 4737202 (D.D.C. Oct. 29, 2008), U.S. Magistrate Judge John Facciola denied defendants' motion for leave to designate a computer search expert and its motion for leave to file supplemental briefing on spoliation.  The court, rejecting both parties' highly technical search protocol proposals, created a protocol on its own.

The issue before the court in this sex discrimination case related to an evidentiary hearing held in early 2008.  The purpose of the hearing was to determine the basis of plaintiff's expert's representations that email and other electronically stored information ("ESI") had not been produced and the circumstances concerning defendants' destruction of plaintiff's work computer after its obligation to preserve had attached. (See 247 F.R.D. 43, 44-45 (D.D.C. 2008)) Also at the earlier hearing, plaintiff testified that there were several types of ESI and paper documents that she had requested, but defendants did not produce, including physical files and items from plaintiff's office.

Plaintiff's expert testified that he might be able to locate ESI on the defendants' servers using forensic techniques.  The parties were subsequently unable to agree upon an adequate protocol to guide the search.  The court heard testimony from a defense witness, one of the defendants' security officers, who testified to what ESI searches he performed in response to plaintiff's requests and explained defendants' computer system. In addition, the court heard testimony from SFX Basketball's VP of Finance who called himself the "de facto I.T. person". He testified that he "scrapped" plaintiff's computer after deciding that it could not be used.

After the parties' respective technology experts failed to come up with a mutually agreeable search protocol to retrieve potentially relevant ESI, Judge Facciola created his own protocol to specify the search terms. The court's protocol provided that plaintiff's expert could search for ESI from: (1) emails to or from plaintiff to include emails in which her name appears in the "cc" or "bcc" lines; (2) email in which her name is mentioned; (3) ESI created by her; (4) ESI sent to her directly or as one of other recipients; and (5) ESI in which her name appears, whether her full name, her first or last name, or initials. The court limited the search to 12 hours a day and ordered that the defendants' representative had full credentials to access the relevant systems and to assist plaintiff's access to the system without qualification or obstruction.  Defendants' IT representative was given the right to monitor the searches and object if the searches would compromise defendants' system or have a significant negative impact on business functioning.

The court denied defendants' motion for leave to designate a forensic expert, whose role would essentially be to look over the shoulder of plaintiff's expert.  Judge Facciola noted that defendants had no reason to believe plaintiff's expert is anything other than an unbiased professional and had the ability to run the searches at anytime without court intervention.

Plaintiff's expert was permitted to mirror defendants' drives and retain copies pending further direction from the court.  If ESI was newly discovered by plaintiff's expert's search, defendants were obligated to restore the items during the search, if such restoration was necessary to render the ESI "reasonably usable" under F.R.C.P. Rule 34.

The defendants agreed to pay for the cost of the search up to $10,000.  The court directed plaintiff's counsel to provide an estimate and reserved the issue of further cost shifting in the event the estimate was greater than $10,000.

 

In Metavante Corp. v. Emigrant Savings Bank, 2008 U.S. Dist. LEXIS, 89584 (E.D. Wisc. Oct. 24, 2008), the court, upon hearing several motions to compel by both parties, ordered plaintiff to produce certain software source codes used by plaintiff, but denied defendant's request that plaintiff produce all electronically stored information ("ESI") in its native format.

Defendant's first motion to compel sought disclosure of the source code from the product plaintiff delivered to defendant under the parties' technology outsourcing agreement.  Defendant contended that it must have access to the information to adequately defend against plaintiff's breach of  contract claims as well as to prosecute its counterclaims of fraud and breach of contract. Specifically, defendant believed that the software code may provide information about the quality of the product plaintiff delivered under the agreement.  Defendant further argued that since it provided its source code to plaintiff, it was entitled to review the source code to compare the two. In response, plaintiff argued that the source code was irrelevant and would be unduly burdensome to produce, claiming isolation of the source code would cost more than $300,000 and take over 5,000 hours. The court held that the code was relevant and that the relative value of the information outweighed the burden of production.  The court also recognized that the defendant offered to    mitigate the cost by using defendant's outside consultants to review the code and parse out any relevant information.

Defendant also sought court supervision in the production of several requested documents by plaintiff as well as a court order that plaintiff provide all requested ESI in its native format. The court held "[defendant's] request for supervision would pervert these goals and unnecessarily increase costs and delay resolution of this case."  The court noted that both parties were sophisticated and had the ability to conduct extensive discovery without relying on the court to  "micro-manage" discovery in this case.  The court also held that defendant had not provided the court with a sufficient basis to justify a native production of electronic information.

Judge Facciola Seeks Creation of Shared Database of Plaintiff's Evidence as well as Defendant's Objections and Supporting Evidence

In El-Amin v. George Washington University, 2008 U.S. Dist. LEXIS 85009 (D. D.C. Oct. 22, 2008), Magistrate Judge Facciola, having reviewed the Sedona Conference's Best Practices for the Selection of Electronic Discovery Vendors:  Navigating the Vendor Proposal Process created a work plan for a system where all existing documents are hyper-linked to fields in a database that will permit the instantaneous retrieval from within the database of the information alleged in the complaint and all facts in support.  The system must be capable of being easily used by both counsel and the court and the requisite software must be made available to the court so the judge can run searches and operate independently.  The system must also be self-contained so it can be used without reference to any other information to resolve questions related to a particular claim or defense.  For example, the plaintiff could hyperlink documents and other evidence in the database and the defendant could state its objections and, if need be, refer to hyper-linked evidence to contradict or impeach.

In Oldenkamp v. United American Ins. Co., 2008 U.S. Dist. LEXIS 84784 (N.D. Okla. Oct. 21, 2008), the court denied plaintiffs' request for spoliation sanctions, including an adverse inference instruction for defendant's failure to preserve recorded telephone conversation tapes and emails relevant to plaintiffs' breach of contract and bad faith claims.

The case involves the denial of benefits under plaintiffs' health insurance policy which defendant contends was due to a preexisting condition of plaintiffs' minor son.  In discovery, defendant produced one email and denied the existence of any additional relevant emails.  Defendant also produced several telephone conversation recordings. Plaintiffs argued that more emails and tapes existed that were not produced in litigation.  Plaintiffs cite to defendant's "Policies and Procedures Regarding Security and Use of Computer Equipment" which encourages defendant's employees to delete emails from their computers as soon as possible.  Plaintiffs also noted that the defendant initially denied the existence of an audio recording between plaintiffs and one of defendant's customer service representatives.  Ultimately, defendant located and produced the tape.

The court held plaintiffs failed to provide any evidence, circumstantial or otherwise, that defendant destroyed or failed to preserve email or telephone recordings.  The court found plaintiffs' argument was essentially: (1) defendant had a document destruction policy; (2) only one email was produced in discovery; and therefore, (3) defendant destroyed relevant email and tape recordings.  The court held the argument was without merit and that plaintiffs must offer some proof that relevant emails existed and the defendant destroyed them intentionally.