In This Issue:

	Recent ESI Court Decisions
	Practice Points: 2009 Year in Review – Courts Continue Imposing Sanctions for E-Discovery Shortcomings
	News & Events

Recent ESI Court Decisions

Court Finds Privilege Waived Due to Communication Using Company E-Mail Address and Computer
Alamar Ranch, LLC v. County of Boise, 2009 WL 3669741 (D. Idaho Nov. 2, 2009). In this Fair Housing Act lawsuit, the non-party's attorney requested the return of privileged documents obtained through the plaintiff's previous subpoena. The privileged information included e-mails sent to the non-party attorney from one of his clients via her work e-mail address. The plaintiff argued that any privilege was waived on account of the company's privacy policy, which included the right to review and disclose all electronic messages created. Using a four-part balancing test that balanced the expectation of privacy against the lack of confidentiality, the court found that the company placed all employees on notice that e-mails would become the employer's property. The court also noted that the client's apparent lack of awareness of the privacy policy was unreasonable "in this technological age" and that the client's e-mail address itself clearly put the non-party attorney on notice of a potential issue of confidentiality. Thus, the court determined privilege was waived with respect to the e-mails sent using the client's work e-mail account.

Court Determines Voluntary Disclosure of Work Product Constitutes Subject Matter Waiver Under Fed.R.Evid. 502
Chick-Fil-A and CFA-NC Townridge Square, LLC v. ExxonMobil Corp., 2009 WL 3763032 (S.D. Fla. Nov. 10, 2009). In this environmental litigation, the plaintiffs sought production of all work product-protected documents related to the subject matter of a privileged memorandum that the defendant voluntarily produced. Following the court's determination that the defendant's intentional, voluntary disclosure to the plaintiffs waived the work product protection, the defendants argued that the waiver's scope should be limited to the information actually disclosed. Turning to Fed.R.Evid. 502(a), the court determined that disclosure of work product results in a subject matter waiver only if the additional materials "ought in fairness to be considered together" with the memorandum. Finding a subject matter waiver to be warranted, the court relied on federal case law, interpreting Rule 502(a) to determine that subject matter waiver was limited to fact work product. Therefore, the court granted the plaintiffs' motion in this respect and ordered the defendant to produce fact work product materials.

Court Orders Restoration of One Backup Tape Following Evidence Destruction
Calixto v. Watson Bowman Acme Corp., 2009 WL 3823390 (S.D. Fla. Nov. 16, 2009). In this tortious interference of a contract suit, the plaintiff alleged the defendant "spoliated electronic documents in the face of ongoing litigation." As such, the plaintiff sought an order requiring the defendant to obtain and fund a restoration and search of its 37 backup tapes. The defendant argued the backup tapes were not reasonably accessible and that no further relevant evidence existed on the tapes as a litigation hold was in effect. Finding the plaintiff failed to establish a reasonable expectation that the benefit of restoring the backup tapes would outweigh the burden, the court declined to impose the significant costs to restore, search and review the tapes on the defendant. The court also declined to impose sanctions because no bad faith existed regarding the defendant's IT employee's deletion of an e-mail box as part of a regular practice. However, the court concluded one of the backup tapes may contain discoverable records because it was unclear when the e-mail box deletion occurred and ordered the tape's restoration and search.

Court Finds Term "Native Format" Unambiguous and Orders Reproduction of Electronic Documents
Cenveo Corp. v. S. Graphic Sys., 2009 WL 4042898 (D. Minn. Nov. 18, 2009). In this discovery dispute, the defendants filed an amended motion to compel disclosure following the plaintiff's failure to produce electronic files in native format. The plaintiff argued that its production of the documents in PDF format fulfilled Fed.R.Civ.P. 34(b)'s "reasonably usable" requirement because the defendants failed to define "native format." Citing numerous cases, the court found that "native format" is not an ambiguous term. Although some native format production requests may be "overbroad and unduly burdensome," the responding party must object and specify the alternative form it intends to use. Because the plaintiff failed to make an objection, the court granted the defendants' motion and ordered the plaintiff to reproduce electronic documents in native form.

Failure to Preserve Maintenance Log Does Not Warrant Spoliation Sanctions
Mohrmeyer v. Wal-Mart Stores E., L.P., 2009 WL 4166996 (E.D. Ky. Nov. 20, 2009). In this "slip and fall" personal injury action, the plaintiff sought sanctions against the defendant based on alleged spoliation of certain materials including surveillance video and a restroom maintenance log. The defendant argued the log was destroyed in the routine course of business long before it was made aware of the possibility of litigation. Relying on Fed.R.Civ.P. 37(e), the court found imposing sanctions on the defendant would be inappropriate because the evidence was destroyed as a result of routine, good-faith records management practices long before the defendant received any notice of the likelihood of litigation. Thus, the court denied the plaintiff�s motion for sanctions and admonished the plaintiff's lack of inquiry of relevant facts prior to seeking such serious sanctions.

Court Holds Inadvertent Disclosure of Privileged E-Mail via "Autofill" Feature Does Not Constitute Waiver
Multiquip, Inc. v. Water Mgmt. Sys. LLC, 2009 WL 4261214 (D. Idaho Nov. 23, 2009). In this dispute, the defendants moved to exclude the plaintiff's use of a privileged e-mail obtained after one defendant inadvertently included a third party via the "autofill" feature. The third party then passed the e-mail chain to the plaintiff's counsel. After discovering the mistake, the defendants requested return of the e-mail, which the plaintiff denied claiming Fed.R.Civ.P. 26(b)(5)(B) only applied to documents turned over in discovery. Using Fed.R.Evid. 502(b) to determine whether disclosure constituted a waiver, the court determined that the disclosure was inadvertent, that the defendants took reasonable steps to prevent disclosure because reliance on the "autofill" feature was not unreasonable and that the defendants acted promptly to rectify the error. Based on this analysis, the court found privilege was not waived and granted the defendants' motion to exclude the privileged information.

Court Orders Production of Forensic Copies of Hard Drives Citing Defendants' Previous Defiance and "Lackadaisical" Approach to Discovery
Bennett v. Martin, II, 2009 WL 4048111 (Ohio App. 10 Dist. Nov. 24, 2009). In this employment dispute, the defendants appealed the trial court's judgment requiring production of forensic copies of their computer hard drives to the plaintiff. The trial court concluded that the forensic imaging was a reasonable solution �given defendants� consistent intransigence to providing discovery materials.� On appeal, the court noted privacy and confidentiality concerns must be weighed, but the "scales tip in favor" of compelling forensic imaging when the requesting party can demonstrate discovery failures or discrepancies. The court found the defendants engaged in outright defiance of court orders and "adopted a lackadaisical and dilatory approach to providing discovery." Based on the defendants' misrepresentations, willful disregard of discovery rules and history of noncompliance with court-ordered discovery requests, the court determined the trial court did not abuse its discretion in ordering production of forensic copies.

Court Finds Defendants "Forfeited" Forensic Examination Opportunity by Engaging in Ex Parte Communication with Independent Expert
G.K. Las Vegas L.P. v. Simon Prop. Group, Inc., 2009 WL 4283086 (D. Nev. Nov. 30, 2009). 2009 WL 4283086 (D. Nev. Nov. 30, 2009). In this business litigation, the defendants previously requested case dismissal and sanctions based on the plaintiffs' alleged spoliation of evidence. Due to the defendants' failure to demonstrate that electronic evidence was destroyed and no longer available, the motion was dismissed without prejudice. However, the court ordered a forensic examination of the plaintiffs' computer equipment by a court-appointed independent computer forensics expert. Upon learning of the defendants' ex parte communications with the independent expert during the imaging process, the plaintiffs moved to have the forensic examination order vacated and the spoliation motion modified to dismissal with prejudice. The defendants claimed that the expert was not court-appointed but was instead a "party retained independent expert." Finding the intent to enlist a court-appointed, independent expert blatantly clear in the record and subsequent agreement, the court determined the defendants "forfeited their opportunity to obtain an independent forensic examination" and granted the plaintiffs' motions.

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

Practice Points: 2009 Year in Review – Courts Continue Imposing Sanctions for E-Discovery Shortcomings

In 2008, the most significant trend in cases where electronic discovery was at issue was an increase in judicial unwillingness to tolerate electronic discovery blunders. In 2009, that trend continued to grow as courts increasingly held parties and lawyers accountable for electronic discovery failures. Other dominant topics in 2009 were the importance of cooperation and transparency in the e-discovery process, and the increased application of new privilege protections (namely Federal Rule of Evidence 502).

From Jan. 1 to Oct. 31, 2009, 108 significant opinions representing e-discovery rulings were analyzed. The breakdown of the major issues involved in these cases is as follows:

• 39 percent of cases addressed sanctions
• 66.67 percent of sanctions involved preservation and spoliation issues
• 16.67 percent of sanctions involved production disputes
• 16.67 percent of sanctions involved other discovery abuses
• 27 percent of cases addressed various production considerations
• 12 percent of cases addressed privilege considerations and waivers
• 12 percent of cases addressed various procedural issues (such as searching protocol)
• 4 percent of cases addressed cost considerations
• 4 percent of cases addressed computer forensics protocols and experts
• 2 percent of cases addressed preservation and spoliation issues (but not sanctions)
• 1 percent of cases addressed discoverability and admissibility issues

The topic of sanctions was again the clear front-runner for issues addressed in e-discovery opinions, increasing from 25 percent in 2008 to 39 percent in 2009. Of the 42 sanctions cases, 29 opinions (69 percent) awarded sanctions fully or in part, 10 opinions (24 percent) denied sanctions and three opinions (7 percent) stayed action pending further hearings or documentation. These statistics should leave no doubt that now is the time for organizations to proactively invest in ESI readiness policies to help avoid costly and damaging consequences.

Five notable e-discovery cases from 2009 that summarized these issues included:

Although three years have passed since amendments to the Federal Rules of Civil Procedure were adopted, organizations still show signs of struggle regarding proper preparation for and compliance with e-discovery obligations. The economic downturn that took center stage in 2009 further complicated matters by forcing corporations to control costs and do more with less. Companies began utilizing such technologies as early case assessment, and working with outside counsel to create alternative pricing arrangements that provide increased flexibility and predictability. In 2010, companies should continue investing in advancing technologies and engage in proactive data management policies. After all, upfront preparedness is a valuable cost-saving and risk-mitigating strategy.

News & Events

Upcoming Webinar: Year in Review – Lessons Learned in 2009
In 2009, the trend of judicial intolerance for e-discovery blunders continued as courts increasingly held parties and lawyers accountable. From Jan. 1 to Oct. 31, 2009, Kroll Ontrack analyzed 108 significant opinions addressing e-discovery related matters and claims. Join us at 1 p.m. EST on Wednesday, Jan. 20, for an online seminar discussing the breakdown of major issues involved in these cases, along with hot topics that emerged in 2009. This presentation will also predict and explore trends for 2010. For more information or to register visit www.krollontrack.com/webinar-012010.

Download Kroll Ontrack's Recent Podcast, "Third Annual ESI Trends Report, ESI Management & Workplace Privilege"
In this edition of the ESI Report, host Gina Jytyla, Managing Staff Attorney in the Legal Technologies division at Kroll Ontrack, welcomes Jason Straight, Senior Managing Director for the Computer Forensics and ESI Consulting Group at Kroll Ontrack, and Rob Jones, Legal Consultant for Kroll Ontrack in the U.K. office, to discuss the results and core themes that emerged from Kroll Ontrack's Third Annual ESI Trends Report. They will also explore important lessons learned with regard to corporate management of electronically stored information and e-discovery best practices. In the Bits & Bytes Legal Analysis segment, Kroll Ontrack Legal Correspondent Kelly Kubacki will take a look at the discovery order issued in Alamar Ranch, LLC v. County of Boise. To listen to the podcast, visit www.krollontrack.com/redir/1209ESITrendsPodcast-CLU.asp.

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This newsletter was written by Kelly Kubacki and Kelly Runkle, Kroll Ontrack law clerks, with assistance from Regina Jytyla, Kroll Ontrack Managing Staff Attorney. Ms. Kubacki can be contacted by writing to kkubacki@krollontrack.com.

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