In This Issue:

	Recent ESI Court Decisions
	Practice Points: 2007 Year-In-Review — E-Discovery's Biggest Developments
	News & Events

Recent ESI Court Decisions

Court Orders Protection of Litigation Hold Notice and Production of Revised Privilege Log
Muro v. Target Corp., 2007 WL 3254463 (N.D.Ill. Nov. 2, 2007). In this suit, the plaintiff alleged the defendants sent unsolicited credit cards in the mail which violated the Truth in Lending Act and sought class-action certification. Several discovery disputes ensued, involving questions regarding the discoverability of the defendants' litigation hold notices and adequacy of the defendants' privilege log. The court upheld the magistrate judge's finding that the defendants' litigation hold notice was protected by the work-product doctrine. Relying upon Upjohn Co. v. United States, 449 U.S. 383 (1981), the court found that Fed. R. Civ. P. 26(b)(5)(A) does not require privilege logs to separate entries of multiple e-mails within the same string and that a single e-mail of a forwarded chain to counsel is protected by the attorney-client privilege. However, the court found serious defects in the defendants' privilege log because it failed to identify all of the recipients of some messages and the plaintiff was unable to assess whether recipients fell within the sphere of corporate privilege. The log also used "sometimes-cryptic job titles to explain the recipients of e-mails," which made it difficult to assess the applicability of privilege. The court allowed the defendants ten days to submit a revised privilege log addressing the above defects so the court could perform an in camera review and determine privilege protection.

Court Orders Production Absent a Sufficient Demonstration of Inaccessibility and Denies Attorneys Fees
Am. Fast Freight, Inc. v. Nat'l Consolidation & Distribution, Inc., 2007 WL 3357694 (W.D.Wash. Nov. 7, 2007). In this suit alleging breach of contract, the plaintiffs filed a motion to compel discovery of material relevant to the claim that the defendant intentionally used a corporate alter ego to evade duties to the plaintiffs. The defendant argued that the sought after information would not lead to the production of relevant information and that the burden of production outweighed the plaintiffs' likely benefit. The court ordered production consistent with the plaintiffs' request and listed five factors relevant in determining the burden question: 1) the needs of the case; 2) the amount in controversy; 3) the parties' resources; 4) the importance of the issue at stake; and 5) the importance of the proposed discovery. Further, court found that the breadth of the discovery requests justified the defendant's failure to produce documents and denied the plaintiffs' request for attorney's fees.

Court Allows Expedited Discovery Before Rule 26(f) Conference
Arista Records, LLC v. Does 1-4, 2007 WL 4178641 (W.D. Mich. Nov. 20, 2007). In this copyright infringement suit, the plaintiff requested leave to subpoena a third party internet service provider (ISP) to supply contact information for the four "Doe" defendants, who allegedly downloaded and distributed hundreds of music files illegally. In reaching its decision, the court considered the pending amendment to Fed. R. Civ. P. 26(d)(1) (which became effective December 1, 2007) that would allow for discovery prior to the Rule 26 hearing upon a showing of good cause. The court found that the plaintiff established good cause based on the allegation of a prima facia claim of copyright infringement, the limited period of time the ISP retained activity logs, the narrow tailoring of the request and the necessity of the information to the case. The court therefore allowed the plaintiff to take immediate discovery by serving a subpoena on the ISP.

Court Denies Protective Order Supported by Vague Assertions
U & I Corp. v. Advanced Med. Design, Inc., 2007 WL 4181900 (M.D.Fla. Nov. 26, 2007). In this breach of contract case, the defendant filed a second motion to compel and sought sanctions for insufficient compliance with the first motion to compel, claiming the plaintiff failed to produce numerous 2004 e-mail attachments, relevant correspondence and certain critical documents identified by Bates number. The plaintiff countered with a motion for a protective order, arguing that the request was unduly burdensome as the parties already exchanged over six thousand pages. The court was not persuaded by the plaintiff's vague assertion and denied the motion for the protective order. The defendant also subpoenaed similar documents from a non-party who sought to quash the subpoena, claiming undue burden. The court was again not persuaded by the lack of detail provided as to the efforts required to comply and upheld the subpoena. Before ruling on the issue of sanctions, the court ordered the plaintiff to submit an affidavit from its corporate representative detailing the cause of the missing information and efforts undertaken to retrieve it.

Court Refuses to Order Production of Database Absent Sufficient Good Cause
Best Buy Stores, L.P. v. Developers Diversified Realty Corp., 2007 WL 4230806 (D.Minn. Nov. 29, 2007). In this claim alleging inter alia, breach of contract, the plaintiff, a commercial tenant, brought suit against the defendant landlords. Following the issuance of the magistrate judge's discovery order, both parties filed objections. The plaintiff objected to the magistrate judge's order as it required production of an alternative database prepared for another litigation. The defendants objected to the magistrate judge's order to the extent that it denied the defendants' motion to compel the plaintiff to fulfill its discovery obligations. After conducting a Fed. R. Civ. P. 26(b) and Zubulake analysis, the court found that the high costs associated with restoring the database did not allow the previous discovery database to be reasonably accessible. In response, the defendants claimed that the plaintiff should have been on notice of potential production and thus had a duty to preserve the database due to this pending litigation. Disagreeing with the defendants' objection, the court found the database to be relevant in any potential litigation and that specific discovery requests did not exist to create an obligation to maintain the database. The court then conducted a good cause analysis using seven factors as required by Fed. R. Civ. P. 26(b)(2)(B) to determine if discovery using the database should be permitted. Despite the defendants' concerns, the court found that the absence of specific arguments to connect the concerns to the magistrate judge's discovery order could not constitute sufficient good cause to order restoration of the database.

State Supreme Court Denies Petition for Review in Billion Dollar Sanction Case
Coleman (Parent) Holdings, Inc. v. Morgan Stanley & Co., Inc., 2007 WL 4336316 ( Fla. Dec. 12, 2007). In this underlying fraud case, a jury originally awarded the plaintiff $1.58 billion due to the defendant's willful destruction of e-mail and failure to comply with the court's production order. The award stemmed from the court's jury instruction sanction which made the jury aware of the defendant's attempt to "thwart" e-mail discovery. The defendant appealed and the state appellate court reversed the award in favor of the defendant based on the plaintiff's failure to prove compensatory damages. The plaintiff appealed and the Florida Supreme Court denied the petition for review. See also Morgan Stanley & Co., Inc. v. Coleman (Parent) Holdings, Inc ., 2007 WL 837221 (Fla. App. 4th Dist. Mar. 21, 2007); Coleman (Parent) Holdings, Inc. v. Morgan Stanley & Co., Inc., 2005 WL 679071 (Fla. Cir. Ct. Mar. 1, 2005).

Other New Case Summaries Added to the Kroll Ontrack Case List This Month:

• Court Denies Plaintiff's Motion to Compel and Request for Sanctions – Vaughn v. City of Puyallup, 2007 WL 3306743 (W.D.Wash. Nov. 6, 2007).
• Court Orders Production of Documents Not Protected as Opinion Work-Product – Parkdale Am., LLC v. Travelers Cas. and Sur. Co. of Am., Inc., 2007 WL 4165247 (W.D.N.C. Nov. 19, 2007).
• Court Grants Motion to Compel Non-Party's Production but Refuses to Impose Sanctions – In re Rule 45 Subpoena Issued to Robert K. Kochan, 2007 WL 4208555 (E.D.N.C. Nov. 26, 2007).
• Court Lowers Burden of Proof as Sanction for Spoliation – Great Am. Ins. Co. of New York v. Lowry Development, LLC, 2007 WL 4268776 (S.D.Miss. Nov. 30, 2007).
• Court Orders Production in Native Format upon Showing of Particular Need – Ryan v. Gifford, 2007 WL 4259557 (Del.Ch. Nov. 30, 2007).

To view additional case summaries visit: http://www.krollontrack.com/case-summaries/

Practice Points: 2007 Year-In-Review — E-Discovery's Biggest Developments

The 2006 amendments to the Federal Rules of Civil Procedure (FRCP) elicited many new and developing issues in 2007 ranging from ongoing evolution of state e-discovery laws, judicial interpretation of the rules and changes in technology. This year has seen a virtual e-discovery boom, as the legal community continues to learn how to best manage the increasing chasm of electronic information created and stored on a daily basis. Specifically, changes to the FRCP offer specific guidelines for counsel as they made decisions about the relevance, discoverability, production and costs associated with e-mail, word processing documents, spreadsheets, databases and more. This article examines this year's top developments.

State Rules Update

At the time of this article's publication, most states have not adopted the changes made to the Federal Rules of Civil Procedure or amended their rules to specifically include ESI provisions. The following states have enacted rules that either mirror the federal rules or include language specific to ESI: Arizona, Idaho, Indiana, Louisiana, Minnesota, Mississippi, Montana, New Hampshire, New Jersey and Texas.

In 2007, the National Conference of Commissioners on Uniform State Laws acted in an attempt to achieve state uniformity. Following a week of scholarly debate and discussion, the group issued its final approval and recommendation of the uniform rules relating to the discovery of ESI. Their proposal is comparable to the FRCP, modified only where necessary to accommodate various state procedures.

Common Law Guidance

As expected, 2007 launched a flurry of common law jurisprudence in light of the codification of the new rules. The major issues involved in e-discovery cases during 2007 broke down as follows:

• 25% of cases addressed discovery requests and motions to compel
• 24% of cases addressed spoliation/sanction
• 23% of cases addressed issues involving the form of production
• 9% of cases addressed preservation/litigation holds
• 7% of cases addressed attorney-client privilege and waiver
• 6% of cases addressed production fees
• 6% of cases addressed admissibility of electronic evidence

A majority of e-discovery cases over the past year have focused on provisions relating to sanctions and the safe harbor provisions in Rule 37 along with the data accessibility provisions in Rule 26(b)(2)(B).

Sanctions and the Safe Harbor

The safe harbor in Rule 37(f) (now Rule 37(e) in the recent December 1, 2007 rule renumbering effort) was intended to protect organizations from sanctions for the destruction of data resulting from routine, good-faith operation of an information management system. However, the defending party must still show reasonable operation of its electronic management system and few, if any, have observed such protection under the new rule.

For example, the court in Doe v. Norwalk Community College, 2007 WL 2066497 (D.Conn. July 16, 2007), refused to allow the defendant to claim the protections of Rule 37(f) because it failed to suspend its deletion policy upon notice of litigation. Another court refused protection in In re Krause, 367 B.R. 740 (Bkrtcy.D.Kan. June 4, 2007), since the hard drive wiping was not discontinued once the duty to preserve attached. The court in Oklahoma ex. rel. Edmondson v. Tyson Foods, Inc., 2007 WL 1498973 (N.D.Okla. May 17, 2007), went as far as to warn the parties to be "very cautious in relying upon any 'safe harbor' doctrine as described in new Rule 37(f)."

There is a common theme among the multitude of ESI sanction cases issued in 2007. Courts are unwilling to overlook discovery abuses. Under the proper set of facts, a court will impose sanctions, including monetary sanctions, adverse inference sanctions and default judgment. As case law reveals, the best advice for corporations and their counsel is to remain vigilant in preserving electronic information and addressing e-discovery issues. In navigating the e-discovery waters, do not be lulled into a false sense of security by the language contained in the Rule 37(f) "safe harbor."

Reasonable Accessibility

Cases focusing on this issue establish a common set of inquiries that a court must consider when determining whether information is reasonably accessible. Even if one party can establish inaccessibility, the requesting party can still compel production upon a showing of good cause. The court will look to an additional set of factors to determine whether good cause has been shown. Is the data available from another source? How important is the data to the case at hand? Should cost shifting be considered? Two of the most notable ESI accessibility cases in 2007 included Columbia Pictures, Inc. v. Bunnell, 2007 WL 2702062 (C.D.Cal. Aug. 24, 2007) and Disability Rights Council of Greater Wash. v. Wash. Metro. Transit Auth., 2007 WL 1585452 (D.D.C. June 1, 2007).

Technology Trends

In addition to case law and rules developments, 2007 also resulted in new technologies to help the legal community manage varying types and sizes of ESI to be preserved, searched and produced in litigation. Specifically, three new areas from 2007 captured the legal technology headlines: e-mail analytics software, intranet and extranet portals, and audio discovery technology.

In conclusion, e-discovery continues to impact almost every aspect of the law and is an area which savvy practitioners must continue to closely monitor. 2008 promises to be another exciting year in the area of ESI discovery with additional state law action, additional common law guidance and cutting edge technological advancements.

News & Events

Kroll Ontrack Launches Hosted Tool for Case Collaboration

On November 7, 2007, Kroll Ontrack announced the launch of Ontrack® Shareview™, a customizable online portal built on Microsoft® Office SharePoint™ Server 2007 that enables legal professionals to upload and share case-related information in one central repository. The tool provides seamless linkage among documents and individuals thereby reducing the time spent locating legal documents, coordinating calendars and tasks and managing key case contacts. This product aims to decrease the costs associated with litigation while maintaining a high level of effective representation. The portal is an easy-to-use online intranet or extranet that:

• Centralizes all case-related information in one place, enabling attorneys, paralegals and litigation support to share work product, documents and correspondence.
• Automates administrative tasks, reducing the time spent organizing, locating, editing and distributing legal documents, calendar items and contact information.
• Facilitates better coordination and collaboration internally among law firms or externally with client's in-house counsel, third party counsel or experts.

For more information on Ontrack® Shareview™ please visit: www.krollontrack.com/ontrackshareview or call 1-800-347-6105.

Kroll Ontrack Issues Another "ESI Report" on the Legal Talk Network

Recently, Kroll Ontrack partnered with the Legal Talk Network to discuss cutting-edge issues and judicial opinions relating to electronically stored information. Michele Lange, Director of the Legal Technologies product line for Kroll Ontrack, hosts the radio show entitled "The ESI Report." The show is split into three segments: the Spotlight, the Buzz and Bits and Bytes Legal Analysis. The Spotlight and Buzz sections concentrate on hot topics in the area of electronic discovery and give listeners a snapshot into important issues facing practitioners. Former guests include Ken Withers, Ralph Losey, Judge James Francis and others discussing data accessibility, the revised Sedona principles and a law school course focused on teaching electronic discovery to future lawyers. The Bits and Bytes Legal Analysis segment focuses on late-breaking cases, including Columbia Pictures v. Bunnell, Qualcomm v. Broadcom, and the Citizens for Responsibility and Ethics in Washington v. The Executive Office of the President. With thousands of listeners to date, be sure to listen and stay up to date by visiting: http://legaltalknetwork.com/modules.php?name=News&new_topic=17

Meet our representatives at the following events:

Visit http://www.krollontrack.com/upcomingevents/ for more information on these events and others.

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WE REQUEST YOUR INPUT

This newsletter is written by Joni Shogren, a Kroll Ontrack staff attorney with assistance from Gina Jytyla, also a Kroll Ontrack staff attorney. Ms. Shogren can be contacted by writing to jshogren@krollontrack.com.

For more information about electronic discovery and computer forensics services, contact Kroll Ontrack at 800 347 6105 or visit http://www.krollontrack.com.