In This Issue:

	Recent ESI Court Decisions
	Practice Points: Early Case Assessment Helps Ease Economic & Litigation Woes
	News & Events

Recent ESI Court Decisions

Court Issues "Wake-Up Call" Regarding Need for Cooperation and Effective Searching Techniques
William A. Gross Constr. Assocs., Inc. v. Am. Mfrs. Mut. Ins. Co., 2009 WL 724954 (S.D.N.Y. Mar. 19, 2009). In this multi-million dollar construction litigation, a non-party agreed to produce electronic documents but objected to the search terms both parties proposed. The court issued a "wake-up call" to attorneys about the need to effectively design search terms used in e-discovery. Citing this as the "latest example of lawyers designing keyword searches in the dark, by the seat of the pants," the court referenced a series of recent decisions (Victor Stanley, Inc. v. Creative Pipe, Inc.; United States v. O'Keefe; Equity Analytics, LLC v. Lundin; and In re Seroquel Products Liabilitiy Litig.) as guidance for searching. The court also endorsed the "Cooperation Proclamation" from the Sedona Conference^® and noted that cooperation and transparency in all aspects of preservation and production of ESI is a requirement. Finally, the court stated that counsel must carefully craft appropriate keyword searches with input from pertinent custodians, and concluded by stating, "[I]t is time that the Bar—even those lawyers who did not come of age in the computer era—understand this."

Court Finds Sanctions Appropriate for Party's "More Than Coincidental" Deletion of Computer Files
Technical Sales Assocs., Inc. v. Ohio Star Forge Co., 2009 WL 728520 (E.D.Mich. Mar. 19, 2009). In this sales commission dispute, the plaintiff sought sanctions alleging evidence destruction and the defendant filed a motion for contempt arguing the plaintiff violated a computer forensic examination order by breaching its confidentiality provisions. The motions were premised on a forensic examination of the defendant's computer which revealed the deletion of approximately 70,000 files. Denying the defendant's motion for contempt, the court found that the stipulated order protected the "discovery of actual data, not the absence of data." (Emphasis in original.) Addressing the plaintiff's motion, the court outlined a timeline of events to determine when the duty to preserve arose. Based on this timeline, the court concluded that the timing of the destruction appeared "more than coincidental" since it occurred at about the same time the forensic examination was requested. The court granted the plaintiff's motion in part by determining monetary sanctions for the cost of the forensic examination appeared to be appropriate, but postponed a final determination as to the amount of sanctions and a potential adverse jury instruction until trial when the substantive harm caused by the defendant is known.

Court Denies Sanctions Despite Document Destruction, Finding Other Evidence Sources Available
Port Auth. Police Asian Jade Soc'y of N.Y. & N.J. Inc. v. Port Auth. of N.Y. and N.J., 2009 WL 577665 (S.D.N.Y. Mar. 5, 2009). In this racial discrimination suit, the plaintiffs sought an adverse inference instruction sanction for the defendant's failure to preserve performance evaluations and to issue a litigation hold. The defendant argued that its failure to preserve the evidence was, in part, due to the September 11th 2001 attacks, which destroyed the defendant's executive offices. Accepting the defendant's argument, the court found that the preservation failure was a result of negligence, but not gross negligence. Despite the preservation failure, the court denied the motion for sanction as it determined there were other sources of evidence available to the plaintiffs.

Court Orders Production, Noting Parties' Efforts Demonstrate Refusal to Comply with Rules Requirements
Anthropologie, Inc. v. Forever 21, Inc., 2009 WL 690239 (S.D.N.Y. Mar. 13, 2009). In this copyright infringement litigation, the plaintiff sought production of electronic documents and permission to appoint an expert to copy and inspect the defendants' hard drives. The defendants claimed the requested documents did not exist, but nonetheless provided summaries of the information for "settlement purposes only." Finding it "virtually inconceivable" that the defendants did not retain the data requested, given the scale of the defendants' business, the court determined that the defendants' efforts reflected a "refusal to comply with even the minimal requirements of the governing discovery rules." The court ordered production of the data that was used to create the summaries and all documents that pertained to the plaintiff's request, but delayed consideration of the hard drive copying request until after production.

Court Awards Plaintiffs Additional Sanctions Based on Defendants' Discovery Failures
Keithley v. Homestore.com, Inc., 2009 WL 816429 (N.D.Cal. Mar. 27, 2009). In this ongoing patent infringement litigation, the plaintiffs sought $1,379,410.50 in additional sanctions from the August 12, 2008 order (awarding the plaintiffs over $250,000 in fees and costs). The court awarded $282,970.37 in additional sanctions on the following issues: prevailing on the motion to compel; fees and costs incurred due to the defendants' belated production; and fees and costs in taking discovery on late-produced reports, reducing the amount of requested sanctions by between five to ten percent to account for any inefficiency by the plaintiffs. The court denied the plaintiffs' request for fees and costs incurred in seeking sanctions and ordered the plaintiffs to file a reply brief to the defendants' objections to costs incurred by the plaintiffs' expert.

Court Denies Spoliation Sanctions Despite Being "Troubled" by Parties' Failure to Issue Litigation Hold
United States v. Maxxam, Inc., 2009 WL 817264 (N.D.Cal. Mar. 27, 2009). In this False Claims Act qui tam action, the plaintiffs sought sanctions alleging spoliation of an important document, known as the sustained yield plan, central to their case. The court first determined the defendants were responsible for preserving the evidence despite it being possessed by a third party and then determined that relevant evidence was not preserved. However, the court denied the plaintiffs' motion because they did not satisfy their burden of establishing the evidence was destroyed after the duty to preserve arose, despite being "troubled" by the fact that the defendants did not issue a litigation hold notice to the third party.

Court Sanctions Plaintiffs and Counsel for Discovery Misrepresentations and Misconduct
Bray & Gillespie Mgmt. LLC v. Lexington Ins. Co., 2009 WL 546429 (M.D.Fla. Mar. 4, 2009). In this ongoing insurance dispute, the defendants sought production of electronically stored information in native format with metadata and sanctions for alleged non-compliance with Fed.R.Civ.P. 34 and a prior court order. Prior to this fifth discovery order, the plaintiffs produced the requested evidence as TIFF images without metadata despite the defendants' original production request that explicitly sought native format with metadata. In May 2008, an attorney for the plaintiffs concocted a false explanation for how the ESI was collected; however, days before a hearing, plaintiffs' counsel disclosed that the documents had been converted into TIFF images using a program that selectively excluded metadata. After the defendants provided expert testimony regarding the production, the plaintiffs' counsel admitted metadata existed. Based on several more examples of gamesmanship, the court found that if the plaintiffs (and their counsel) believed the production format was substantially justified, they would not have concealed information and made material misrepresentations. The court ordered the plaintiffs to bear all costs related to the production of a copy of its database (excluding privileged information), which included purchasing any necessary software and hiring professionals. Additionally, the court sanctioned a lead plaintiff attorney, ordering him to pay reasonable attorneys' fees, costs and expenses incurred by the defendants and ordered another plaintiff attorney to show cause why he should not be personally sanctioned. The law firm was also found responsible for the discovery misconduct and was "jointly and severally liable" with the lead attorney to pay the defendants' expenses.

Court Denies Application of Safe Harbor Provision for Preservation Failures
Phillip M. Adams & Assocs., LLC v. Dell, Inc., 2009 WL 910801 (D.Utah Mar. 30, 2009). In this patent infringement litigation, the plaintiff inferred that spoliation occurred based on the defendants' non-production of certain relevant evidence and sought sanctions. The defendants explained that the e-mail servers were not designed for archival purposes and that employees should locally preserve e-mails of long term value (as determined by each individual employee). Agreeing that the defendants should possess far more evidence than was produced, the court considered when the defendants' preservation duty arose. The court determined the duty arose around 1999/2000 based on the litigation environment surrounding the specific subject matter of this patent dispute � not in February 2005 when the defendants learned that the plaintiff may bring a lawsuit. The court also denied application of the safe harbor provision, citing an e-discovery expert's declaration that failed to state the destruction was a result of a "routine, good-faith operation." Finally, the court found that the defendants' "[irresponsible data retention] practices invite the abuse of others" and that prejudice may be considerable. However, the court decided that appropriate sanctions could not be determined until after discovery closed and ordered the parties to provide further briefing on the prejudice suffered.

Court Finds Zubulake Cost-Shifting Argument Does Not Apply to New York's Civil Practice Law and Rules
T.A. Ahern Contractors Corp. v. Dormitory Auth., 2009 WL 806779 (N.Y.Supp. Mar. 19, 2009). In this state contract dispute, the plaintiff moved to compel electronic discovery pursuant to CPLR §3124. The plaintiff sought archived e-mails and other electronic documents, which the defendant claimed amounted to 35 gigabytes of electronic data. Based on this amount of data, the defendant argued it was necessary to hire an e-discovery vendor at cost to the plaintiff. The court found hiring a vendor to be a necessary component of the production process. Addressing the plaintiff's argument that the Zubulake I cost-shifting factors should be considered, the court noted the distinction between the CPLR and the Federal Rules of Civil Procedure and that the plaintiffs did not allege that the defendants had maintained its electronic data in any way that added to the expense of production. The court held it was not empowered to overturn the New York rule that requires the cost of production to fall upon the party seeking discovery, which creates a strong incentive for formulating requests to be as minimally burdensome as possible. Therefore, the court denied the plaintiff's motion to compel unless the plaintiff was willing to bear the costs.

Court Awards Motion Costs Citing Failure to Issue Litigation Hold
Acorn v. County of Nassau, 2009 WL 605859 (E.D.N.Y. Mar. 9, 2009). In this civil rights litigation, the plaintiffs sought sanctions alleging the defendants failed to issue a timely litigation hold or conduct a search for responsive electronic documents. The defendants claimed it issued a "verbal" litigation hold and instructed key individuals to search for responsive documents despite lacking the technical resources to locate and access electronic documents. Finding the defendants had a duty to preserve evidence and were grossly negligent in failing to issue a proper litigation hold, the court granted motion costs and attorneys' fees. However, the court denied an adverse inference instruction citing the plaintiffs' failure to demonstrate the favorability of the lost evidence. Regarding the defendants' searching efforts, the court ordered the defendants to review its prior responses and supplement them if necessary, noting the plaintiffs had not provided any case law suggesting a "manual" search of electronic files was insufficient.

Court Issues E-Discovery Protocol Regarding Mirror Image of Hard Drive
Am. Family Mut. Ins. Co. v. Gustafson, 2009 WL 641297 (D.Colo. Mar. 10, 2009). In this employment contract litigation, the plaintiff sought a court-ordered e-discovery plan for inspection of the mirror image of the defendant's hard drive. Granting the motion, the court set forth the following protocol: the defendant shall redact privileged and confidential data from the mirror image hard drive, and provide a detailed privilege log and the redacted mirror image to the plaintiff; the parties shall then confer and agree on search terms with assistance from their respective forensic experts; the plaintiff shall conduct the forensic search and provide the defendant with a Bates labeled hard copy of relevant ESI which the defendant will then review for responsiveness and privileged data, providing a privilege log as necessary.

Court Compels Production of Non-Privileged E-Mails
Schanfield v. Sojitz Corp. of Am., 2009 WL 577659 (S.D.N.Y. Mar. 6, 2009). In this employment discrimination suit, the defendants sought production of thirty-six purportedly privileged e-mails identified in the plaintiff's privilege log. The defendants argued that these e-mails between the plaintiff and his friends, former colleagues and family members that are attorneys, were not protected by privilege. Addressing each e-mail category, the court held that the e-mails sent to friends were not protected since the plaintiff failed to indicate that they were prepared in anticipation of litigation. The court also found that work product protection was waived with respect to the e-mails with colleagues since the material was disclosed. Finally, the court determined the e-mails sent to family members that are attorneys were not attorney-client privileged because a non-attorney was copied on the e-mails; however, those e-mails constituted work product because they were prepared in anticipation of litigation.

Court Orders Production of E-Mail Attachments and Mailboxes to Determine Resolve Creation Date Discrepancies
White v. Graceland Coll. Ctr. for Prof'l Dev. & Lifelong Learning, Inc., 2009 WL 722056 (D.Kan. Mar. 18, 2009). In this ongoing wrongful termination litigation, the plaintiff sought re-production of electronic and native copies of e-mails with attachments, the mailboxes that sent or received the e-mails, and mirror images of hard drives that created or modified the attachments. The defendants opposed the motion arguing they substantially fulfilled their discovery obligations and that further production was overbroad and irrelevant. Finding native and electronic copies of the e-mails and attachments to be relevant in explaining the discrepancies in creation dates identified by the plaintiff's computer forensic expert, the court ordered their production. The court also ordered production of Outlook mailboxes following a conference between the parties and their experts to agree on a production process. Finally, the court allowed access to the hard drives related to two e-mails, but ordered the parties to confer regarding the location of information relating to the third e-mail's creation.

Court Finds Vendor Error Insufficient Cause to Waive Privilege and Orders Resubmission of Documents in an Organized Fashion
Heriot v. Byrne, 2009 WL 742769 (N.D.Ill. Mar. 20, 2009). In this copyright dispute over the made-for-television documentary, The Secret, the defendants and plaintiffs both sought production of documents. The defendants sought sequestered documents that had been inadvertently produced as a result of mistakes made by the plaintiffs' vendor, arguing the plaintiffs' counsel was "asleep at the switch" by not re-examining the documents received from the vendor. Applying Fed.R.Evid. 502, the court held privilege of certain documents was not waived, finding the plaintiffs took reasonable procedures to prevent inadvertent disclosure and promptly notified the defendants of the disclosure. The court also determined that no duty to re-review exists since it would be against the spirit of Rule 502. Turning to the plaintiffs' motion (which sought production of 132 documents identified in a privilege log), the court reserved its ruling on privilege protection. The court noted that the documents presented were a "befuddling assemblage" and that the party asserting privilege is responsible to organize the documents in a manner that enables efficient review. Accordingly, the court ordered the defendants to submit an amended privilege log and a revised compilation of documents after they are organized chronologically.

Court Awards Monetary Sanctions for Inadequate Production Efforts, but Denies Cost-Shifting for Backup Tape Searches
Adele S.R.L. v. Filene's Basement, Inc., 2009 WL 855955 (S.D.N.Y. Mar. 24, 2009). In this trademark infringement litigation, the plaintiffs moved for monetary sanctions for discovery misfeasance citing the defendants' allegedly inadequate search efforts and false representations that production was complete. The plaintiffs also sought cost-shifting for loading and reviewing backup tapes. Opposing the motion, the defendants argued they acted reasonably under the circumstances. Finding the defendants made impermissibly false representations and did not come "remotely close to meeting" their production responsibilities, the court granted the motion for sanctions. However, the court denied the cost-shifting request, noting the plaintiffs did not meaningfully address the appropriateness of cost-shifting under Fed.R.Civ.P. 26(b)(2) or the reasonable accessibility of the backup tapes under the guidance of recent case law.

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

Practice Points: Early Case Assessment Helps Ease Economic & Litigation Woes

In the current economic climate, every phase of the e-discovery process—and indeed the litigation continuum—presents an opportunity to cut costs. The current dilemma facing organizations today is how to control spending without sacrificing quality. One prime arena that demonstrates how the power of technology can increase economic efficiency is early case assessment.

Early case assessment (ECA) can be a vital first step in an investigation or litigation process. ECA allows one to narrow the scope of potentially relevant data prior to e-discovery processing, which results in cost and time savings. This initial step in the process is particularly helpful in addressing e-mail discoverability and can help counsel decide whether to proceed with a lawsuit or settle based on the existence of a damaging "smoking gun" e-mail.

In addition, early case assessment can also assist counsel in preparing for the Fed.R.Civ.P. 26(f) conference by creating a clearer picture of the data that is at issue. Knowing what data exists will help foster clearer communications between opposing counsel, and may help save time and money by avoiding future discovery disputes. The Federal Rules of Civil Procedure mandate cooperation amongst counsel and courts are beginning to reprimand attorneys who do not successfully collaborate with the opposing parties. For example, in a recent case from the District of Maryland, Mancia v. Mayflower Textile Servs. Co., Chief Magistrate Judge Paul W. Grimm grew frustrated with the irresponsible discovery after the defendants raised "boilerplate, non-particularized objections." Using ECA to gain a clearer picture of the data allows parties to better engage in the e-discovery process, raise specific objections if necessary and help avoid judicial reprimand.

Cutting-edge technology is an essential element to the ECA process and a robust case-assessment tool will allow legal teams to streamline the entire e-discovery process. Some tools even offer advanced features, such as advanced visualization, and powerful keyword searching capabilities. Advanced visualization is a particularly useful method of identifying relevant documents by displaying e-mail messages and documents in a series of charts and graphs to see who is communicating to whom, when the communication occurred and what subjects were discussed. In addition to advanced visualization, a vigorous case-assessment tool will allow users to:

• Search data using complex intelligent searching methods, such as Boolean, proximity and concept searching tools, in addition to topic grouping;
• Identify potential custodians and other data to be loaded into a review database.

Early case assessment technology is particularly effective when one is unsure of facts or the appropriate legal strategy, or when confronted with unfamiliar document set content. Additionally, an ECA tool may ease the strain on internal technical resources (which might already be stretched thin due to budget tightening) by eliminating the need for data evaluation before processing.

Today's weakened economy has placed incredible budgetary pressures on corporations and law firms that must maintain efficiency despite shrunken resources and increased litigation. In addition, recent rule amendments and corresponding case law require early and effective case collaboration. Early case assessment is an additional step that can cut both time and expenses – which are important objectives in responding to today's litigation or investigation.

News & Events

Ontrack Inview Analysis Module Further Streamlines the E-Discovery Process
The Ontrack^® Inview^™ Analysis Module by Kroll Ontrack is an early case assessment tool that helps legal teams streamline e-discovery by providing early visibility into case data before processing and review begins. Use the Ontrack Inview Analysis Module to: investigate your data using concept searching, topic grouping and additional advanced visualization features; identify potential custodians; and decrease the size of your document set by including only the most relevant documents. This service will help you gain control over the e-discovery process and significantly reduce the time and expense associated with e-discovery and litigation. For more information, please visit www.krollontrack.com/ontrack-inview-analysis-module/.

Enhanced E-Discovery Certification Course Propels Litigation Teams to New Heights
Given the current economic condition, corporate clients are being forced to cut back legal and IT budgets, while the threat of sanctions due to improper ESI handling continues to rise. Become e-discovery certified to prevent your firm or corporation from becoming the next headline. Kroll Ontrack's 2009 E-Discovery Certification Course is ideal for legal and technical professionals of all levels, especially in-house counsel, law firm attorneys, litigation support professionals, paralegals, IT staff and members of the judiciary. Upon completion of this program, you will be able to make informed decisions regarding ESI, be prepared to negotiate at the meet and confer and understand the most current e-discovery law. For more information and to register for an upcoming course, visit www.krollontrack.com/certification-courses/.

Meet our representatives at the following events:

Visit www.krollontrack.com/upcoming-events/ for more information on these events and others.

Back To Top

We Request Your Input

This newsletter was written by Kelly Kubacki and Meridith Socha, 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.