In This Issue:

	Recent ESI Court Decisions
	Practice Points: E-Mail Software Solutions – Technology's Remedy for Data Management Headaches
	News & Events

Recent ESI Court Decisions

Court Finds Burden to Foreign Discovery Less Than Overwhelming
Lluerma v. Owens Ill. Inc., 2009 WL 1638629 ((Del. Super. June 11, 2009). In this toxic tort action brought by the plaintiffs (Spanish citizens who worked abroad on U.S. warships), the defendant filed a motion to dismiss based on forum non conveniens grounds. Among the defendant's contentions for Spain as the proper forum was that the alleged injury occurred in Spanish territory, most of the discovery was located in Spain and that Spain had advised the Hague Conference that it would not grant requests for pretrial discovery of documents. The plaintiffs countered that Spain was not an adequate forum as many of the defendant's employees and corporate records were in Delaware or were easily accessible to the defendant's Delaware counsel. Recognizing there were burdens to the defendant's procurement of evidence in Spain, the court nonetheless found that the defendant did not establish either an overwhelming hardship or the complete inability to procure discovery in Delaware and thus denied the defendant's motion.

Court Determines Attorney-Client Privilege Outweighs Corporate Internet Communications Policy
Stengart v. Loving Care Agency, Inc., 2009 WL 1811064 (N.J. Super. A.D. June 26, 2009). In this ongoing discrimination litigation, the plaintiff appealed the lower court's denial of her motion to require the defendant to return all e-mail copies sent by her to her attorneys on work-issued laptops through her personal, web-based e-mail account. The defendant alleged its electronic communications policy mandated the conversion of e-mails and other Internet use and communication into company business records. The plaintiff maintained that the defendant had never officially adopted the policy or enforced it. The court noted the lack of certainty about the exact meaning and scope of the policy's language created by multiple versions of the policy and stated that any company policy must reasonably relate to a legitimate business interest. Balancing the enforceability of the company's policy with the delicacy of attorney-client privilege, the court determined the policy must give way. Thus, the court reversed the lower court's decision and concluded the e-mails sent over the plaintiff's personal Yahoo! account remained privilege protected. The court also remanded the case to determine whether the defendant's counsel should be disqualified from further representation.

Court Orders Preclusion Sanctions Citing Consistent Failure to Comply with Discovery Requests
Am. Friends of Yeshivat Ohr Yerushalayim, Inc. v. United States, 2009 WL 1617773 (E.D.N.Y. June 9, 2009). In this tax penalties litigation, the U.S. government sought an order to strike the appellant's opposition papers, or the exhibits that were not previously produced during discovery that were filed in response to the government's motion for judgment on the pleadings. Previously, the appellant failed to respond to the government's discovery demands for four months during which it received three extensions, until responding that it was not in possession of the requested financial records and that the accountant was to blame for not conducting a thorough search for the documents. In considering whether sanctions were appropriate, the court found that the appellant's attorney's failure to ask the appellant's accountant for the financial records was "beyond comprehension," as was his filing of the documents without notice to the government. The court noted that filing the documents without notice prejudiced the government in a way that, absent a preclusion order, could only be remedied by the court reopening discovery. Concluding the case had "languished long enough," the court granted the government's motion for sanctions, precluding the financial records from evidence. The court also denied the appellant's cross-motion for preclusion sanctions.

Court Orders Additional Production of ESI Limited to Fourteen Search Terms
In re Zurn Pex Plumbing Prods. Liab. Litig., 2009 WL 1606653 (D. Minn. June 5, 2009). In this property damage litigation, the plaintiffs requested a search using 26 keywords of the e-mail accounts belonging to the defendants' employees who had received litigation hold notices, and also requested a search of two shared drives and DVDs. The defendants argued that the information was not necessary for the plaintiffs' class certification and that the requested production would be overly broad and costly as it would consist of nearly 27 million pages, take approximately 17 weeks and cost $1,150,000 to process. Using its own calculation, the court determined the production would consist of roughly 3.6 million pages and found the defendants' attorney's affidavit regarding burden unpersuasive. The court did recognize the high burden imposed by the proposed search terms and limited the search to 14 specific terms based on the likelihood they would produce relevant information. The court allowed the parties to decide on a different set of search terms and reserved the defendant's right to renew its objection if the production proved to be too costly or overly burdensome.

Court Denies Motion for Additional ESI Production, Compels Search of DVDs Responsive to Earlier Request
Kay Beer Distrib., Inc. v. Energy Brands, Inc., 2009 WL 1649592 (E.D. Wis. June 10, 2009). In this dispute involving an alleged breach of an oral agreement, the plaintiff sought access to five DVDs containing the defendant's e-mails and other ESI that pertained to three specified search terms from the five-year period in which the parties did business and beyond. The defendant argued that the DVDs contained privileged material and that the costs were unduly burdensome given the narrow issues remaining. The plaintiff countered that the cost of attorney review for privileged material could be diminished through a "claw back" policy and the use of targeted keyword searches. Denying the plaintiff's request, the court determined production would be unduly burdensome as it would contain approximately 650,000 to 975,000 pages of material responsive to the plaintiff's search terms. However, the court ordered the defendant to conduct a search of the DVDs using terms reasonably likely to locate relevant information in response to the plaintiff's previous production request. Finally, the court denied the plaintiff's request for native format production upholding the agreement reached at the Fed.R.Civ.P. 26(f) conference that allowed the defendant to choose the format depending on cost-effectiveness, because metadata was not material to the dispute.

Court Awards Default Judgment Sanctions for "Mockery" of Discovery Process
1100 West, LLC v. Red Spot Paint & Varnish Co., Inc., No. 1:05-CV-1670 (S.D. Ind. June 5, 2009). In this environmental litigation, the plaintiff requested default judgment sanctions alleging that the defendant purposefully withheld responsive documents and that the witnesses lied or misrepresented material truths. The defendant argued that it relied on its attorneys for discovery advice and therefore any error was the attorneys' responsibility. The defendant's attorneys claimed the defendant failed to provide accurate and complete information, and that once potential attorney misconduct was discovered, the firm took prompt steps to remove the offending attorneys. Determining the case was "replete with examples of violations of discovery rules" that contributed to the lengthy litigation, the court noted that the defendant "made a mockery of the discovery process and [has] subjected the truth to ridicule." In addition, the court stated that the defendant could "not hide behind [its] own failure to organize its records then rely upon its lawyer to straighten up its mess." The court also found the defendant's attorneys had enough "knowledge of its client's apparent disregard" for the Federal Rules of Civil Procedure and thus must be held accountable. Accordingly, the court granted the plaintiff's motion for default judgment sanctions and ordered the defendant and its attorneys each pay one-half of the plaintiff's reasonable attorneys' fees and costs.

Court Orders Production of Transaction Database Responsive to Additional Search Terms
Flying J Inc. v. Pilot Travel Ctrs. LLC, 2009 WL 1834998 (D. Utah June 25, 2009). In this litigation, the defendants filed a motion to compel production of the plaintiffs' credit card transaction database and e-mails responsive to 28 new search terms. While the plaintiffs were initially willing to comply with the transaction database request, they conditioned production seeking a comparable database from the defendants and restriction of database use from other cases where the plaintiffs are not a party. Denying the plaintiffs' arguments, the court determined the production of a comparable database and restricting the plaintiffs' database were not issues for the court to determine in the present motion. The court also found the plaintiffs' claims that production would be overly burdensome unpersuasive, determining the database to be relevant and accessible. Regarding the additional search terms request, the court again found the plaintiffs' arguments unpersuasive, holding that the defendants' request was timely made and was not overly burdensome as the terms were likely to produce relevant material. However, the court ordered the defendants to justify each of the chosen additional terms.

Court Denies Cost Shifting and Production of Metadata
Dahl v. Bain Capital Partners, LLC, 2009 WL 1748526 (D. Mass. June 22, 2009). In this antitrust litigation, the plaintiffs moved for entry of an order governing discovery regarding costs, metadata and production format. After making clear that electronic discovery must proceed in an organized and managed fashion, the court first ordered the defendants to pay their own costs in producing electronic documents to the plaintiffs, as they did not demonstrate the data's inaccessibility. Second, the court held the defendants did not have to incur costs to change the production format of already produced documents, because the plaintiffs did not show that translating the documents to another production format was necessary to make the documents "reasonably usable" under Fed.R.Civ.P. 34. Third, the court refused to compel the defendant to produce "all metadata," citing wariness that metadata may not lead to admissible evidence and that requests for metadata should be tailored to specific documents. Finally, the court ordered the defendants to produce their spreadsheets and privilege logs in native format pursuant to Fed.R.Civ.P. 34's requirement that documents be produced as they are kept in the "usual course of business."

Court Denies Request for Further Organization of Data Produced in Compliance with Fed.R.Civ.P. 34
Valeo Elec. Sys., Inc. v. Cleveland Die & Mfg. Co., 2009 WL 1803216 (E.D. Mich. June 17, 2009). In this contract dispute, the defendant moved to compel the plaintiff to organize the data it produced into the 28 specific categories of the document production request. The plaintiff had produced more than 270,000 pages of documents in the order that they were found on the hard drive of each document custodian along with two indices to aid in interpreting and sorting the documents. The defendant asserted that the plaintiff's production required it to manually open and review each file and that the plaintiff had given each file "innocuous" names in order to frustrate the defendant's review. Finding the plaintiff had produced the documents as they were kept in the ordinary course of business, the court determined there was no indication that the documents or file names were modified by the plaintiff. Accordingly, the court found the plaintiff's production satisfied Fed.R.Civ.P. 34 and denied the defendant's motion, noting that to require more would impose an unfair burden on the producing party.

Court Allows Additional Discovery Limited to Certain Keywords and Sources
Kilpatrick v. Breg, Inc., 2009 WL 1764829 (S.D. Fla. June 22, 2009). In this medical tort action, the plaintiff moved to compel discovery, asserting that recently discovered e-mails and purported irregularities in the defendant's production warranted additional discovery. The defendant argued that any additional e-mails were in backup storage and not reasonably accessible. While the court recognized that there may be responsive documents that had not been produced, it questioned the relevance of the potential evidence and noted that the "eleventh hour" timing of the request—two weeks before trial—made it impossible to complete the searches before the start of trial and might interfere with the defendant's trial preparations. Accordingly, the court granted the plaintiff limited discovery, holding the plaintiff may hire an outside vendor at its own expense to search at most five of the defendant's backup tapes; the search would contain a limited number of search terms; the search would include the e-mail records of seven key employees; and the results would be subject to a confidentiality agreement.

Court Orders Defendant to Organize E-Mail Messages Into a "Reasonably Usable Format"
Quinstreet, Inc. v. Ferguson, 2009 WL 1789433 (W.D. Wash. June 22, 2009). In this defamation and interference with contractual relations litigation, the plaintiff moved to compel production of electronically stored information in a reasonably usable format. In response to the plaintiff's request for all documents and communications supporting the defendant's claim and certain communications, the defendant provided the plaintiff with an Internet link. The plaintiff asserted the link contained more than 7,000 pages of raw code listing e-mails messages, and that it was impossible to separate one e-mail from another or to know which e-mails were responsive to which requests. Finding that the e-mails were not produced in a "reasonably usable format" and that the defendant's lack of cooperation did not help the parties to reach the merits of the case, the court determined the defendant's behavior was the kind that the Federal Rules of Civil Procedure specifically caution against. Accordingly, the court ordered the defendant to produce the e-mails in a readable format, number them individually and indicate which e-mails respond to the plaintiff's specific requests for production.

Court of Appeals Finds Trial Court Abused Its Discretion in Failing to Issue Terminating Sanctions
Doppes v. Bentley Motors, Inc., 94 Cal. Rptr. 3d 802 (Cal. App. 4 Dist. June 2009). In this warranties and consumer fraud case, the plaintiff appealed a jury verdict, arguing the trial court abused its discretion by choosing to impose an adverse jury instruction and monetary sanctions instead of terminating sanctions against the defendant for discovery abuses. Prior to trial, the defendant failed to produce documents by the initial court-ordered production date and violated four discovery orders. After trial began, the plaintiff's attorney reviewed e-mails produced by the defendant and renewed its prior motion for terminating sanctions, asserting that the defendant had failed to locate, withheld or destroyed relevant electronic documents. The court of appeals determined the defendant had stonewalled in producing highly relevant documents resulting in severe prejudice to the plaintiff, and that the defendant's repeated and egregious violations of discovery laws threatened the integrity of the judicial process. While the court of appeals held that the trial court did not initially abuse its discretion in denying the plaintiff's request for terminating sanctions, the duty to impose the severe sanctions arose when the trial court learned during trial that the defendant had failed miserably to comply with the discovery orders. Accordingly, the court of appeals reversed the trial court judgment and remanded with directions to enter a default judgment against the defendant. The court also awarded attorneys' fees to the plaintiff in the amount of $402,187 in connection with discovery proceedings.

Court Stops Short of Terminating Sanctions, Awards Precluding Sanctions for Repeated Abuse of Discovery Process
Arista Records LLC v. Usenet.com, Inc., 2009 WL 1873589 (S.D.N.Y. June 30, 2009). In this copyright infringement litigation, the plaintiffs sought terminating sanctions alleging the defendants were continuingly unwilling to cooperate in discovery, refused to produce virtually any internal documents and had destroyed evidence. The plaintiffs' computer forensic expert determined that four hard drives had been intentionally wiped, the contents of three hard drives had been primarily deleted and that recovered fragments indicated incriminating documents had been stored on the drives. The defendants offered conflicting explanations for the spoliation, finally claiming that the drives only appeared wiped because of a recently installed upgrade, but that all files had been backed up on a server. However, there were significant and unexplained gaps in the server and in production of the defendants' e-mail records. Finding the spoliation of evidence was intentional and done in bad faith, and that the defendants engaged in evasive discovery tactics, the court issued a sanction precluding the defendant from asserting its affirmative defense on the merits of a good-faith non-infringement policy. The court declined to award terminating sanctions despite the "strong evidence of extreme wrongdoing," noting that case-dispositive sanctions should only be imposed in extreme circumstances after considering less drastic alternative sanctions.

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

Practice Points: E-Mail Software Solutions – Technology's Remedy for Data Management Headaches

E-mail is now the overwhelmingly dominant form of communication in most business environments, creating the need to effectively manage swelling inboxes and servers. The litigation process—particularly electronic discovery—raises a complex set of issues that make proper management of e-mail accounts, and the recovery of lost or deleted e-mails, crucially important. Searching through voluminous stores of sent e-mail for relevant messages or dealing with an inefficient e-mail recovery protocol can be a considerable burden on an organization's resources and may significantly raise expenses that result from litigation.

According to a recent survey conducted by Kroll Ontrack, 72% of e-mail administrators who manage 250 or more mailboxes have limits on mailbox capacity, with 25% requiring employees to delete messages when their mailboxes reach the limit. In considering these statistics, it becomes clear that typical e-mail procedures can be an obstacle for anyone trying to manage or search sent messages, or restore e-mails that an employee was obligated to delete. Technological advancements now provide a remedy to relieve the headache caused by these issues. These innovations allow law firms and corporations to quickly and efficiently manage e-mail storage and restoration.

Prior to these advancements, a discovery request that required production of certain e-mails for litigation purposes would force the e-mail server administrator to painstakingly sift through a large number of individual messages. However, the powerful search technology that accompanies effective e-mail storage management programs allows the administrator to find pertinent messages quickly. The benefits of this technology permit organizations to quickly respond to a tight litigation timeline, make early and accurate assessments of case theory and save money that would otherwise be spent on a lengthier search process involving attorneys and IT professionals.

Advancements in storage management technology are coupled with developments in e-mail restoration software. This software permits organizations to retrieve all e-mails stored since the last backup in the event of a server outage, or to find important e-mails that were accidentally deleted by an employee. Thus, e-mail restoration technology offers an efficient solution to what used to be an expensive and time-consuming problem.

The issues that might make e-mail restoration a complex process vary wildly and could include the need to restore a single e-mail, entire mailbox or a lengthy e-mail chain between numerous custodians. E-mail recovery software provides the nimble approach necessary to the practice of e-mail restoration, by allowing targets to be as broadly or as narrowly formed as the situation requires. The software also provides organizations with the ability to restore e-mails of a specific employee or those relating to a certain customer. This flexibility is essential to implementing more efficient and cost-effective data retention policies. Additionally, this technology allows companies to easily restore such data as attachment files, contacts and calendar items – not just e-mails.

Given the current economic climate, the stress of litigation and the need to confront it as cost effectively as possible are greater than ever. Law firms and corporations are relying on the collection of electronic communications to an increasing extent, as this data is essential to the successful navigation of the e-discovery process. Thus, the importance of effective data management and restoration is clear. Implementing these technological innovations to e-mail management and restoration is absolutely vital for any organization that is looking for a more efficient litigation response solution, saving time and money that may be dedicated elsewhere.

News & Events

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 an e-discovery expert 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.

Download Kroll Ontrack's Recent Podcast, "Federal Rule of Evidence 502, Privilege Review Strategies & Textbook Discovery Abuse"
In this edition of the ESI Report, host Gina Jytyla, Managing Staff Attorney in the Legal Technologies division at Kroll Ontrack welcomes Patrick Oot, Senior Counsel & Director of Electronic Discovery for Verizon and Gina Day, Legal Consultant for Kroll Ontrack, to discuss the recent developments and impact of Federal Rule of Evidence 502 since its enactment. Included in this discussion is a look at effective strategies for controlling costs during privilege review. In the Bits & Bytes Legal Analysis segment, Kroll Ontrack Legal Correspondent Meridith Socha will look at the discovery order issued in Kipperman v. Onex Corp. To listen to the podcast, visit www.krollontrack.com/legal-technologies-podcasts.

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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.