In This Issue:

	Recent ESI Court Decisions
	Practice Points: Update – Has Federal Rule of Evidence 502 Healed the Heartache of Inadvertent Disclosure?
	News & Events

Recent ESI Court Decisions

Court Denies Demand for Paper Production of Electronic Documents
In re the Account of Tamer, 2009 WL 1058594 (N.Y.Sur. Apr. 20, 2009). In this contested accounting of a revocable trust, the objectant sought authorization to produce approximately 6,000 documents electronically on CD-ROMs and DVDs, while the trustees filed a cross-motion seeking paper production. Noting the relevant state statute neither authorizes nor prohibits electronic production, the court stated, "It is implicit that where a party seeks electronic discovery, the responding party will produce the information sought by some form of electronic means." Accordingly, the court held the objectant may produce documents electronically, provided the production is accompanied by an index identifying each document's file location and responsiveness to a discovery demand. The court concluded that the index would prevent the imposition of an undue burden on the trustees who would otherwise need to read through 6,000 documents.

Court Denies Party Access to Opponents' Attorney Notes Citing Difficulty to "Unlearn" Once Learned
D'Onofrio v. SFX Sports Group, Inc., 2009 WL 859293 (D.D.C. Apr. 1, 2009). In this ongoing wrongful termination litigation, the defendants agreed to provide the plaintiff's counsel with attorney notes taken by the defendants under certain conditions. Taking exception to these conditions, the plaintiff's counsel argued the plaintiff should be granted access to the attorney notes for relevancy determinations. Magistrate Judge John M. Facciola granted the motion in part, finding the defendants were allowing access to these documents for efficiency's sake � not because the plaintiff was entitled to the documents. The court also noted that it is "difficult to unlearn something once it is learned," and therefore the plaintiff should not be allowed access to the privileged documents. Finally, the court agreed with the plaintiff that there is no need for the plaintiff's expert to confer with the defendants' expert regarding methodology prior to conducting sampling of the documents.

Court "Very Troubled" by Defendant's Efforts to Thwart Court Resolution
Hohider v. United Parcel Serv., Inc., 2009 WL 1163931 (W.D.Pa. Apr. 28, 2009). In this litigation, the defendant filed an emergency motion to stay the court's order requiring in camera review of alleged work product documents withheld by the defendant. Noting it was "very troubled by defendant's efforts to delay or stop the court's resolution" of the defendant's potential preservation failures, the court determined an in camera review was necessary. The court was also troubled by the defendant's request to the court of appeals to stay the special master's investigative actions and believed this action raised suspicions about the defendant's motives. Accordingly, the court denied the defendant's motion and directed the special master to submit his report and recommendation regarding the privilege assertions. The court also noted that an argument against in camera review by a trial court was unprecedented because this review is often the only way to determine whether documents are privileged.

Court Denies Sanction Request Citing Party's Routine Deletion Policy
Patterson v. Goodyear Tire & Rubber Co., 2009 WL 1107740 (D.Kan. Apr. 23, 2009). In this employment litigation, the plaintiff sought production of various electronic employee records and policies, and an adverse inference instruction alleging spoliation of attendance records. The defendant argued electronic copies no longer existed due to the routine document deletion every 12 months, but that all records were preserved and produced in hard copy. Denying the motion to compel as untimely, the court noted "both parties neglected the issue of ESI from the outset of this litigation" in violation of their obligations under Rule 26 of Kansas' Guidelines for Discovery of Electronically Stored Information. Because many of the documents sought were contained on backup tapes, if available at all, the court was hesitant to intervene at the late time, but ordered the defendant to search two backup tapes pursuant to its offer to do so. The court denied the adverse inference instruction request, determining there was no evidence the attendance records were intentionally destroyed given the defendant's routine deletion system.

Court Permits Testimony of Forensic Expert Regarding Alleged Evidence Destruction
Mintel Int'l Group, Ltd. v. Neergheen, 2009 WL 1033357 (N.D.Ill. Apr. 17, 2009). In this ongoing misappropriation of trade secrets litigation, both parties offered testimony from qualified computer forensics and electronic discovery experts. The defendant sought exclusion of the plaintiff's expert from testifying, alleging the expert failed to meet the appropriate standards, and requested exclusion of evidence regarding spoliation allegations claiming the evidence was irrelevant and prejudicial. The plaintiff objected to the magistrate judge's order denying production of a mirror image from a third party. Granting the defendant's motion to exclude in part, the court ordered preclusion of the expert's legal conclusions regarding whether the defendant's conduct constituted spoliation, but otherwise allowed testimony. The court noted the expert must be able to technically explain the conclusion reached regarding whether the defendant used a "defrag" program and not simply speculate "to please the side that hired him." Turning to the spoliation issue, the court denied the defendant's motion, concluding the experts' views on whether evidence was deleted would be "extremely helpful given the complexity of the electronic evidence issues." Finally, the court upheld the magistrate judge's recommendation to deny production of the third party's mirror image given the magistrate judge's previous analysis of the conflicting expert testimony and evidence presented by the plaintiff.

Court Grants Motion for Hearing on Spoliation Citing Possible Application of Zubulake Exception
Forest Labs., Inc. v. Caraco Pharm. Labs., Ltd., 2009 WL 998402 (E.D. Mich. Apr. 14, 2009). In this patent litigation, the defendants moved for a hearing on sanctions for spoliation alleging the plaintiffs intentionally or recklessly destroyed backup tapes. Opposing the motion, the plaintiffs denied misconduct claiming they preserved electronic records pursuant to their standard operating procedures but admitted they did not halt all backup tape recycling. Thus, the court determined that potentially relevant evidence was destroyed after the duty to preserve arose. However, the court also determined the backup tapes were inaccessible and there is no duty to preserve inaccessible backup tapes beyond a company's normal retention period unless the Zubulake exception applies. The Zubulake exception requires the preservation of backup tapes containing documents of "key players" if the information is not otherwise available. Zubulake v. UBS Warburg, LLC, 220 F.R.D. 212 (S.D.N.Y. 2003). The court granted the defendants' motion and ordered a hearing to determine whether the Zubulake exception applies and, if so, whether the plaintiffs acted with the requisite culpability and whether the spoliated evidence was relevant.

Court of Appeals Affirms Trial Court's Award of Monetary Sanctions and Admission of Expert Forensic Testimony
Oz Optics Ltd. v. Hakimoglu, 2009 WL 1017042 (Cal. App. 1 Dist. Apr. 15, 2009). In this employment dispute, both parties appealed the denial of their respective motions for judgment notwithstanding the verdict (JNOV). The defendant argued that the court improperly allowed expert forensic testimony alleging it was "devoid of substance" and improperly awarded $90,000 in monetary sanctions based on the defendant's hard drive file scrubbing. The plaintiff argued that the court abused its discretion by limiting sanctions to $90,000. The court of appeals affirmed the trial court on all grounds. First, the court rejected the defendant's argument that the forensic testimony was prejudicial, citing the defendant's inability to demonstrate why the testimony was inappropriate. Second, the court affirmed the sanctions as reasonable compensation for attorney's fees, costs and expenses incurred as a result of the defendant's discovery misconduct. In affirming, the court rejected the defendant's argument that the spoliation was unintentional, determining that intent is not required for monetary sanctions under the California Code of Civil Procedure. The court also rejected the plaintiff's argument that the monetary sanctions did not provide full compensation for reasonable expenses, finding the plaintiffs failed to establish the amount awarded was "arbitrary, capricious or whimsical."

Court Denies Adverse Inference Despite Metadata Destruction, Finding Lack of Bad Faith
Cont'l Group, Inc. v. KW Prop. Mgmt., LLC, 2009 WL 1098461 (S.D.Fla. Apr. 22, 2009). In this Computer Fraud and Abuse Act litigation, the plaintiff claimed a former employee downloaded proprietary information prior to leaving the company. Among the plaintiff's numerous motions was its request for an adverse inference sanction. The plaintiff alleged that the computer files were taken with the intention to use the information in the former employee's new employment, they were accessed after notice of litigation and the related metadata was destroyed. Finding the plaintiff failed to demonstrate bad faith on the part of the former employee, the court denied the adverse inference request noting the conduct did not rise to the requisite level for a finding of evidence spoliation.

Court Orders Further Discovery and Forensic Examination, Finding Party's Discovery Conduct Grossly Negligent
Preferred Care Partners Holding Corp. v. Humana, Inc., 2009 WL 982460 (S.D.Fla. Apr. 9, 2009). In this litigation alleging a confidentiality agreement breach, the plaintiffs sought sanctions based on the defendant's "document dump" of 10,000 documents two months after the close of discovery and deletion of documents pursuant to a "print and purge" directive from defense counsel. Finding the defendant clearly failed to carry out its discovery obligations by acting in a grossly negligent manner, the court imposed sanctions. First, the court ordered further depositions regarding several categories of documents at cost to the defendant. The court then ordered additional limited discovery in relation to several document categories. According to the court, these sanctions were intended to compensate the plaintiffs as well as to punish and deter any further breaches of discovery obligations. The court also determined the defendant's counsel's decision to print and purge electronic documents without consulting opposing counsel or the court was an exercise in bad judgment constituting a breach of the defendant's duty to preserve. Accordingly, the court ordered that the plaintiffs shall be permitted to conduct a forensic examination of the defendant's electronic data backup system to verify all e-mails were produced. In addition, the court ordered that the plaintiffs shall be permitted to conduct a forensic examination to ensure the reduction of the 60,000 data set to 35 documents (produced in a supplemental production) was appropriate. Finally, the court determined default judgment sanctions were not appropriate because the plaintiffs failed to demonstrate severe prejudice and the defendant did not act in bad faith.

Court Denies Direct Access to Electronic Devices
Henderson v. U.S. Bank, 2009 WL 1152019 (E.D.Wis. Apr. 29, 2009). In this confidential information misappropriation suit, the defendant sought production of electronic devices from the counter-defendant. The counter-defendant objected to providing direct access to their electronic devices and argued the defendant's request was the equivalent of requesting all of their filing cabinets. Finding the defendant's request for direct access premature as the counter-defendant had not had the opportunity to search their electronic devices, the court denied the motion to compel; however, the court ordered the counter-defendant to perform a search and disclose all responsive documents.

Court Orders Additional Keyword Search but Notes the Inadequacy of this Searching Method
Asarco, Inc. v. United States Envtl. Prot. Agency, 2009 WL 1138830 (D.D.C. Apr. 28, 2009). In this environmental litigation, the plaintiff filed a motion to take discovery. The plaintiff contended that the defendant's keyword search was conducted in bad faith, as evidenced by the fact it used only one search term. Finding the plaintiff's argument persuasive, the court ordered an additional keyword search utilizing four additional key terms. Notably, the court stated that "keyword searches are no longer the favored methodology." The court concluded by recommending summary judgment on the merits in favor of the defendant after the second search is completed, determining that there is no genuine issue of material fact whether additional defendant data exist.

Court Orders Affidavit Addressing Party's Document Retention Policy and Search Efforts
Newman v. Borders, Inc., 2009 WL 931545 (D.D.C. Apr. 6, 2009). In this racial discrimination litigation, the plaintiff requested an additional Fed.R.Civ.P. 30(b)(6) deposition seeking information about the defendant's e-mail retention policy. Frustrated with the high costs and time spent on discovery that the court determined "will dwarf the potential recovery," the court denied the plaintiff's request and ordered the submission of an affidavit after determining a party's document retention policy was discoverable. The affidavit was to address the defendant's e-mail systems, deletion policies and search efforts.

Court Orders Retrieval of Deleted Responsive Files Following Parties' Discovery Shortcomings
Bank of Mongolia v. M & P Global Fin. Servs., Inc., 2009 WL 117312 (S.D.Fla. Apr. 24, 2009). In this RICO action, the plaintiff sought a production response from the defendants after a previous motion to compel proved fruitless. The plaintiff also requested sanctions in the form of direct access to the defendants' computer hardware and electronic information. Finding the defendants failed to present a sufficient reason for the discovery inadequacies, the court determined an independent computer expert should be appointed to retrieve deleted responsive files from the defendants' computers. The court ordered the plaintiff to submit search terms and bear the expert's costs unless future evidence of discovery misconduct necessitated cost allocation to the defendants, but awarded attorneys' fees to the plaintiff. The court also afforded the defendants the right to review the search terms and determine privilege and responsiveness.

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

Practice Points: Update – Has Federal Rule of Evidence 502 Healed the Heartache of Inadvertent Disclosure?

Preventing inadvertent disclosure of privileged documents has long been a priority for counsel. However, the proliferation of technology has led to a rapid increase in the amount of electronically stored information and increased the probability that privileged documents will be accidently produced. To combat this growing phenomenon, Federal Rule of Evidence 502 was signed into law on September 19, 2008. Since that time, several cases have addressed and applied this much anticipated rule. However, does Fed. R. Evid. 502 really provide sufficient protection against inadvertent disclosure?

Fed. R. Evid. 502 is titled "Attorney-Client Privilege and Work Product, Limitations on Waiver" and is intended to govern the disclosure of information that is protected by privilege. In other words, Rule 502 provides waiver protection when parties take "reasonable steps" to prevent the inadvertent disclosure of privileged information. The application of this rule also makes determinations and orders regarding privilege binding on state courts and, in some cases, state court decisions binding on federal courts. The two main objectives of Rule 502's enactment are the reduction of costs and predictability.

Reducing Costs
According to the Judicial Conference Rules Committee, the primary purpose of Rule 502 is to control the rising costs of e-discovery, particularly during document review. The rule aims to achieve this goal by narrowing the circumstances under which subject matter waiver can occur, in addition to prohibiting the automatic waiver that formally occurred in certain jurisdictions. In Spieker v. Quest Cherokee, 2008 WL 4758604 (D. Kan. Oct. 30, 2008), the defendant objected to the plaintiffs' request for production of ESI claiming the costs would equal $375,000, while the plaintiffs' claim allegedly amounted to $100,000 or less. Although the court denied the plaintiffs' motion, it left open the possibility for the plaintiffs to refile the motion to compel. In so doing, the court advised the parties to consider Rule 502 in future discussions, noting the rule was enacted "to reduce the costs of exhaustive privilege reviews of ESI."

Predictability
Another intention of Rule 502 is to provide predictability by creating a previously nonexistent federal standard to govern privilege waiver. The rule aims to achieve this goal by regulating the scope of waiver, when inadvertent disclosure justifies waiver and the effect of protective orders. Federal courts now analyze privilege waiver under Rule 502(b) which provides that disclosure is not a waiver if: (1) the disclosure was inadvertent, (2) reasonable steps were taken to prevent disclosure and (3) reasonable steps were taken to rectify the error. Additionally, the rule is intended to focus on the disclosure of privileged information � not discovery abuses. See Laethem Equipment Co. v. Deer and Co., 2008 WL 4997932 (E.D. Mich. Nov. 21, 2008).

Courts may still look to other factors outside of Rule 502 in determining whether a waiver of privilege is appropriate. In Rhoads Indus. Inc. v. Bldg. Materials Corp. of America, 2008 WL 4916026 (E.D. Pa. Nov. 14, 2008), the Eastern District of Pennsylvania held that the traditional five-factor common law test to determine waiver should be applied in cases where the reasonableness remains disputed. These five factors are: (1) reasonableness of precautions taken to prevent, (2) number of inadvertent disclosures, (3) extent of disclosure, (4) delay and measures taken to rectify disclosure and (5) whether overriding interests of justice would be served. The Rhoads court found the first four factors to be in favor of the defendants and the fifth factor to strongly favor the plaintiff and held there was no waiver of privilege of the remaining documents. This case supports the notion that when precautionary reasonableness is in dispute, courts may look to interests of justice and other factors in determining whether privilege is waived.

As the above cases illustrate, in the past six months the application of Rule 502 has already gained traction in federal courts across the country. Attorneys are using this rule in an effort to defend against discovery mishaps that may cost their client dearly. Courts' application of this rule is creating a more uniform standard in determining whether waiver is appropriate. Despite the many protections Rule 502 may provide, the Rule does not erase the uncomfortable reality that inadvertent disclosure provides the opponent with potentially case-damaging information. As U.S. Magistrate Judge John M. Facciola stated in a recent case, it is "difficult to unlearn something once it is learned." D'Onofrio v. SFX Sports Group, Inc., 2009 WL 859293 (D.D.C. Apr. 1, 2009). Preparing for e-discovery and employing smart technologies throughout the process can potentially help counsel prevent inadvertent disclosures, in turn decreasing reliance on a rule that may not provide absolute protection in circumstances where privileged documents are accidently produced.

News & Events

Join Kroll Ontrack at LegalTech West 2009 Litigation Technology Workshop and Earn an ESI Technology Certificate
Kroll Ontrack will be exhibiting at LegalTech West 2009 – June 24 & 25 in Los Angeles, California. We invite you to the conference and our booth #104 to learn about our discovery, computer forensics, electronically stored information consulting services and trial services.

While at the event, don't miss the Litigation Technology Workshop hosted by Kroll Ontrack. Today's volatile economic climate challenges corporations and law firms to do less with more; budgets are shrinking while data proliferation and the threat of sanctions due to improper ESI handling are rising. From preservation duties to cutting-edge search tools, become a skilled member of the litigation team in just one day. Attend one, two or all three courses; however, attendees to all three courses will earn the Kroll Ontrack ESI Technology Certificate. The following targeted tracks are presented by a panel of ESI experts:

• Track 1: An Ounce of ESI Preservation is Worth a Pound of ESI Cure
• Track 2: Skilled Data Management: Processing, Review and Production Practices
• Track 3: Document Review: Establishing the Team & Utilizing the Technology

For more information on the show or for tickets, please visit www.krollontrack.com/redir/ltw-clu_060909.asp.

Download Kroll Ontrack's Recent Podcast, "Jury Expectations, Courtroom Impact & Personal E-Mail in the Workplace"
What kind of impact has a weakened economy had on jury profiling and juror deliberations? In this edition of the ESI Report, host Michele Lange, Attorney and Director of Legal Technologies at Kroll Ontrack welcomes Dr. Laurie Kuslansky, Senior Jury Consultant for Kroll Ontrack/TrialGraphix and Fred Whitmer, partner at Kilpatrick Stockton, to discuss current juror trends, altered expectations and changing priorities in light of the recent economic downturn. In the Bits & Bytes segment, Kroll Ontrack Legal Correspondent, Meridith Socha, takes a look at the facts surrounding the recent discovery order issued in Stengart v. Loving Care Agency. To listen to the podcast, visit www.krollontrack.com/redir/juryprofilingpodcast-clu_060909.asp.

Upcoming Webinar: E-Discovery Challenges – Global Disputes & Investigations
Join us on Wednesday, June 17, 2009 at 1:00pm EDT/12:00pm CDT to hear from experts during a one-hour webinar focused on issues arising from cross-border litigation. Global disputes make challenging electronic discovery projects even more difficult. Complicating this scenario further is the global financial crisis which is tightening legal budgets and impacting the way companies manage litigation. This presentation will provide a perspective from the UK on issues involved in global litigation and regulatory investigations, and will present solutions that can help ensure an organization's success in these financially trying times. For more information and to register, please visit www.krollontrack.com/redir/junewebinar-clu_060909.asp.

Meet our representatives at the following events:

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

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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.