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In This Issue:
 Recent ESI Court Decisions
Court Sanctions Defendant for E-Mail Preservation Failure
Connor v. Sun Trust Bank, 2008 WL 623027 (N.D.Ga. Mar. 5, 2008). In this litigation alleging interference and retaliation claims under FMLA, the plaintiff filed a motion for sanctions based on the defendant's failure to produce a highly relevant e-mail during discovery. The plaintiff located, through other means, a relevant e-mail that explained her dismissal to other employees. The defendant moved for summary judgment relying on their 30-day e-mail destruction policy which automatically deleted e-mails that were thirty days old, unless they were first archived by the user. The court, un-persuaded by the defendant's reasoning, granted the plaintiff's motion for sanctions and issued an adverse jury instruction.
Court Declines to Issue Default Judgment Sanction Due to Lack of Prior Warning
ClearOne Communications, Inc. v. Chiang, 2008 WL 704228 (D.Utah Mar. 10, 2008). In this litigation involving trade secret misappropriation, the plaintiff filed a motion for sanctions alleging the defendants misrepresented material facts during discovery and withheld a "smoking gun" e-mail. The defendants claimed the misrepresentation was merely a misunderstanding by their Fed.R.Civ.P. 30(b)(6) witness, who spoke English only as his third language. Further, the defendants argued they were not in possession of the e-mail in question as their computer system was not programmed to save sent e-mails. Suspicious of the defendants' computer system but unable to locate the e-mail in question, the court found the defendant's actions sanctionable. The court was unwilling to enter default judgment as it had not previously issued a warning and instead issued an adverse jury instruction relating to the misrepresentation of the 30(b)(6) witness, allowing the jury to consider the misrepresentation when determining the witness' credibility.
Court Grants Motion to Amend Complaint to Include a Spoliation Claim
Ed Schmidt Pontiac-GMC Truck, Inc. v. DaimlerChrysler Motors Co., 2008 WL 668267 (N.D.Ohio Mar. 11, 2008). In this suit alleging breach of a settlement agreement, the plaintiff sought to amend the complaint to include a claim for spoliation following two years of discovery. The plaintiff alleged the defendant knowingly destroyed relevant evidence – specifically the defendant replaced employees' hard drives days before the plaintiff could make forensic images of those drives. The defendant argued that a spoliation claim would be futile and cause undue prejudice. Applying state law for spoliation and appropriate sanctions, the court granted the plaintiff's motion and allowed the plaintiff to add a claim of spoliation.
Court Declines to Order Party to Comply with Rule 45 Subpoena
Thomas v. IEM, 2008 WL 695230 (M.D.La. Mar. 12, 2008). In this discrimination suit, the plaintiff served a Fed.R.Civ.P. 45 subpoena on the defendant (her former employer) seeking production of a complete electronic copy of the e-mail boxes of nine named individuals as they appeared on a specified date. Rather than responding to the subpoena, the defendant served formal objections to the plaintiff who then filed this motion to compel a response to the subpoena. The defendant objected to the use of a Rule 45 subpoena on a party as well as the limited response time and argued that the information sought was irrelevant, confidential, duplicative and unduly burdensome. Agreeing with the defendant, the court denied the plaintiff's motion as the information sought constituted discovery within the meaning of Fed.R.Civ.P. 26 and 34 and the request was not limited in time or subject matter. Court Affirms Default Judgment Based on Discovery Misconduct
Grange Mut. Cas. Co. v. Mack, 2008 WL 744723 (6th Cir. Mar. 17, 2008). In this suit alleging fraud, the defendant appealed a default judgment and liability award of damages plus attorney's costs and fees, arguing abuse of judicial discretion. The defendant purposely delayed discovery, ignored court discovery deadlines and orders to compel, instructed employees to ignore court orders and ignored a serious warning from the district judge relating to his continued discovery misconduct. Based on the defendant's willful bad faith and the resulting prejudice suffered by the plaintiffs, the court affirmed the default judgment, "[B]oth to punish the defendant for his egregious conduct and to deter other litigants who might be tempted to make a mockery of the discovery process."
Court Limits Production Requirements by Scope and Privilege Considerations
Bro-Tech Corp. v. Thermax, Inc., 2008 WL 724627 (E.D.Pa. Mar. 17, 2008). In this trade secret misappropriation suit, the defendants objected to a magistrate judge's order requiring disclosure of forensically sound images of data storage devices without any scope or privilege filtering. The plaintiffs sought production without limitation, claiming review of the entire record was necessary to determine defendant's compliance with an earlier order. Additionally, the plaintiffs asserted the defendants waived privilege upon disclosure of the servers' contents to a third party. Finding the defendants satisfied an exception to the privilege waiver rule since the content disclosed to a third party was necessary for informed legal advice, the court overruled a portion of the magistrate's order, and limited the production in scope and privilege.
Court Issues Protocol for Text Message Review and Production
Flagg v. City of Detroit, 2008 WL 787061 (E.D.Mich. Mar. 20, 2008). In this suit, the plaintiff sought production of text messages to support his claim that the defendants' lax investigation prevented the filing of a wrongful death lawsuit. After determining that certain text messages were discoverable, the court set forth a detailed set of parameters for the review and production of the text messages. The defendant was ordered to provide the third party service provider with names and related PIN numbers for the relevant individuals, thereby allowing the service provider to willingly produce the text messages to the court under seal for privilege review. Due to the time consuming nature of this task, the court appointed two magistrate judges to collect and review the text messages and make the initial determination as to discoverability.
Court Appoints Third Party to Build, Maintain and Operate a Database of Discovery Documents
In re World Trade Center Disaster Site Litig., 2008 WL 793578 (S.D.N.Y. Mar. 24, 2008). In this ongoing multi-district litigation, the plaintiffs objected to the court-appointed special master's recommendation that a third party be hired to build, maintain and operate a database of "Core Discovery." The plaintiffs' objection focused on the great expense and claimed lack of necessity associated with creating such a large database. The court, sensitive to the costs of the litigation, approved the recommendation due to the necessity of a common core of reliable information in this important litigation.
Court Declines to Issue Sanctions Where Production Complies with Search as Requested by Opposing Party
Autotech Technologies, Ltd. v. Automationdirect.com, Inc., 2008 WL 783301 (N.D.Ill. Mar. 25, 2008). In this trademark infringement litigation, the defendant moved for sanctions claiming inadequate discovery production due to missing information. Finding the plaintiff complied with the defendant's discovery request, the court declined to issue sanctions. The court further ordered the parties to meet to resolve how the specific information sought by the defendant may be obtained, with the defendant bearing the costs unless able to demonstrate the information should have been produced by the original search.
Court Declined to Consider Cost Shifting Analysis Due to Inadequately Detailed Search Record
Barker v. Gerould, 2008 WL 850236 (W.D.N.Y. Mar. 27, 2008). In this employment litigation, the plaintiff initially filed a motion to compel production of e-mail among and between the parties. In response, the defendants produced some e-mail; however, the plaintiff claimed the production was inadequate and renewed its motion to compel. In an effort to ascertain the adequacy of the defendants' search, the court ordered the parties to submit an affidavit describing the procedures undertaken, but the submitted affidavit merely described the additional work required to restore the deleted data from backup tapes. Finding the record pertaining to the defendants' search of the requested e-mail from accessible sources incomplete, the court declined to compel production and instead ordered the defendants to identify individuals with knowledge of the steps taken during collection and allowed time for the plaintiff to depose those individuals.
Court Declines to Issue E-Discovery Advisory Opinion
Texas v. City of Frisco, 2008 WL 828055 (E.D.Tex. Mar. 27, 2008). In this case, the State of Texas sought a declaratory judgment and protection from a litigation hold request previously sent by the City of Frisco seeking preservation of all electronic data related to a potential environmental litigation. The defendant filed a motion to dismiss, arguing that the plaintiff was seeking an advisory opinion concerning the proper method of preservation without pleading all necessary elements of a viable claim. Agreeing with the defendant and dismissing the case, the court determined the issues were not yet ripe and encouraged both parties to make a good faith effort in preservation and production of documents in the absence of court intervention.
Court Refuses to Issue Sanctions Where Party Fails to Establish Relevance of Destroyed Evidence, but Orders Restoration and Search of Additional Backup Tapes
Treppel v. Biovail Corp., 2008 WL 866594 (S.D.N.Y. April 2, 2008). In this defamation suit involving numerous ongoing discovery conflicts, the plaintiff moved the court to compel production of additional electronic information and for sanctions for failure to preserve evidence. The plaintiff sought restoration and search of all backup tapes from two servers and one employee's laptop, arguing that the defendant's search was insufficient and possibly overlooked relevant data. The defendant argued its recovery and search of the December 2003 and March 2005 backups was sufficient as the events giving rise to the litigation occurred in the spring of 2002 and the complaint was filed in May 2003. For the most part, the court agreed with the defendant that the likelihood of finding additional relevant documents was exceedingly remote and therefore held that the burden outweighed the likely benefit. However, the court ordered restoration and search of one e-mail server for three specific days as well as two separate backups of another file server and e-mail server.
To view additional case summaries visit: http://www.krollontrack.com/case-summaries.aspx
Practice Points: Treppel v. Biovail, Inc.: The Next Zubulake?
The number of judicial opinions involving electronically stored information (ESI) is increasing month over month, with no signs of slowing down. Issues addressed vary from the admissibility of ESI to sanctions for spoliation of relevant information; of particular interest has been evolving case law surrounding the issue of sanctions for spoliation of electronic data.
The issue of ESI spoliation first came into the spotlight five years ago in the landmark case Zubulake v. UBS Warburg, where the plaintiff filed suit against her former employer alleging gender discrimination. When her discovery requests were not fulfilled, Ms. Zubulake sought e-mail from archival media, at which point the court was called on to consider cost-shifting analysis. The court integrated the Rowe Entertainment, Inc. v. William Morris Agency, Inc. eight-factor test into the Zubulake seven-factor test and placed the costs of production on the defendant.
A recent and ongoing case also from the Southern District of New York is notably similar to the Zubulake case, prompting legal scholars to compare and contrast the facts and holdings of both cases. In Treppel v. Biovail, the plaintiff's claim alleged defamation, tortious interference with prospective economic advantage and civil conspiracy. Like Ms. Zubulake, the plaintiff in Treppel sought additional production of ESI from backup tapes and sanctions for failing to preserve evidence.
In both cases, the plaintiffs sought an adverse jury instruction related to the defendant's alleged failure to preserve relevant electronic information. Both requests were initially denied due to the plaintiff's inability to demonstrate the relevancy of the destroyed information. While it may, at first glance, seem impossible to prove a negative (i.e., prove what information was contained in sources no longer available), the plaintiff in Zubulake succeeded in this endeavor and the plaintiff in Treppel expects to follow suit.
Treppel will be held to a similar legal standard as Zubulake when seeking to obtain the adverse jury instruction. In fact, citing Zubulake, the Treppel court defined the plaintiff's burden of proof on the sanctions motion as a three-fold test requiring evidence of the following: (1) the defendant's obligation to preserve the information, (2) destruction with a culpable state of mind and (3) relevancy. As discussed in the latest Treppel opinion, the plaintiff was easily able to establish the preservation obligation based on the date the claim was filed as well as the oral preservation instruction. In the Southern District of New York, a culpable state of mind in relation to a claim for sanctions includes ordinary negligence. Therefore, the second prong is also expected to be satisfied by the defendant's failure to prevent the destruction of relevant backup tapes.
In considering this second prong, it is noteworthy to mention that both Treppel and Zubulake share the same timeframe in which the underlying facts giving rise to the dispute occurred – 2003. And while current case law establishes a duty to preserve relevant backup tapes, the same duty was not necessarily owed in 2003. Over the past five years, computing systems as well as data and preservation best practices have become better established. Therefore what is currently considered gross negligence today was at best merely considered negligent in 2003. In any event, ordinary negligence is sufficient and the plaintiff in Treppel is expected to establish the second prong of the sanction test.
The third prong of the sanctions test is relevancy. Only in instances where the conduct rises to an egregious level will the relevancy of the information be determined as a matter of law. However, when the destruction is negligent, the plaintiff must prove relevance. As in this matter where the destruction was merely negligent, the plaintiff may prove relevancy either through evidence of deletion of e-mails that should have been preserved or evidence of missing e-mails. The first step in establishing either of these will be restoration of the backup tapes, followed by review of the information contained on them.
Practitioners and legal scholars will keep a close watch on the developments occurring in Treppel, as the parties have been given time to propose a schedule for this additional discovery. This case not only establishes the continued importance to preserve relevant information, but also goes to show that a court will not take destruction lightly, not even when the destruction is negligent as opposed to willful. If the Treppel backup tapes contain relevant information, the next Zubulake may be on the horizon.
News & Events
Kroll Ontrack Offers Redesigned Certification Course for 2008
The industry's legal technology thought leader has revamped its E-Discovery Certification Course for 2008 with updated topics, additional speakers, and dual track, customizable sessions to appeal to beginner, intermediate and advanced learners. The redesigned course curriculum is ideal for legal and technical professionals of all levels, including in-house counsel, law firm attorneys, litigation support professionals, paralegals and IT staff. For more information and to register for an upcoming course, visit: http://www.krollontrack.com/certification-courses/.
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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.
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