In This Issue:

	RECENT E-DISCOVERY AND COMPUTER FORENSIC COURT DECISIONS
	PRACTICE POINTS: FRCP AMENDMENTS TAKE EFFECT — DO THEY APPLY TO PENDING CASES?
	KROLL ONTRACK NEWS & EVENTS

Court Refuses to Order Native Format Production
Wyeth v. Impax Lab. Inc., 2006 WL 3091331 (D. Del. Oct. 26, 2006).  In a patent infringement claim, the defendant filed a motion to compel electronic documents from the plaintiff in their native file format with complete metadata instead of in the already produced TIFF format.  The defendant argued it was entitled to an entire electronic database of documents in its natural state, but the plaintiff argued there was no particular need for the native files.  Agreeing with the plaintiff, the court found the parties did not agree to produce native files at the pre-discovery conference.  The court also noted the defendant could not show a need for the native file documents.  The court used Delaware’s Default Standard for Electronic Discovery as authority and stated if parties cannot agree to a file format before discovery occurs, imaged files shall be the default format.  The plaintiff also argued in favor of shifting half of the discovery costs to the defendant, which included imaging a large amount of documents for a litigation database.  The court denied the cost-shifting claim because the defendant “is not the only party benefiting [sic] from the organization of these documents” into the database.  It held the plaintiff was “also a beneficiary of its imaged files” and it was not equitable to force the defendant to pay for the electronic organization of the opposing party’s database.   

Party Ordered to Restore and Search Back-Up Tape Data
Analog Devices Inc. v. Michalski, 2006 WL 3287382 (N.C. Super. Nov. 1, 2006).  In a misappropriation of trade secrets matter, the defendant compelled the court to order the production of inaccessible e-mails from over 400 back-up tapes held by the plaintiff.  The plaintiff objected because the production would require an undue burden and cost and would not likely uncover any probative e-mail evidence.  The court examined five factors using a straightforward application of North Carolina Rule 26.  It also noted the “Guidelines from the Conference of Chief Justices” would provide the proper legal guidance for e-discovery issues.  The court analyzed and balanced the following factors: (1) the burden and expense of production; (2) the needs of the case; (3) the amount in controversy; (4) any limitations on the parties' resources; and (5) the importance of the issues at stake.  The court found the potential for discovery of probative evidence was “too great to deny Defendants’ motion” and the evidence central to the defendants’ case may be uncovered by the inquiry.  However, the court noted the discovery costs were unknown and reserved the right to re-examine any cost-shifting issues until the final costs were determined by the plaintiff.  The court required the parties to equally split the costs of restoration. 

Note: This case is the companion case to Bank of Amer. Corp. v. SR Int’l Bus. Ins. Co., 2006 WL 3093174 (N.C. Super. Nov. 1, 2006), which the court filed concurrently. 

Non-Party Not Required to Produce Inaccessible Back-Up Tape Data
Bank of Amer. Corp. v. SR Int’l Bus. Ins. Co., 2006 WL 3093174 (N.C. Super. Nov. 1, 2006).  The defendants sought deleted e-mails from 400 backup tapes of Marsh, Inc., a broker of the plaintiff and non-party to the litigation.  Marsh previously produced over 50,000 e-mail documents for the litigation but the defendants argued all relevant e-mails may not have been produced.  Marsh argued, as a non-party, the defendant’s request would impose an undue burden and expense.  Marsh’s expert from Kroll Ontrack stated such recovery and organization could cost as much as $1.4 million.  The defendants argued Marsh may have only produced e-mails responsive to the subpoena and none that related to the claims and defenses of the case.  The court denied the defendants’ motion because “such a low level of marginal utility does not justify imposing a heavy burden on a nonparty … nonparties should not be penalized for having a backup system by making them produce inaccessible backup data without good cause.”  Additionally, the court found no evidence that Marsh had failed to produce responsive documents or that the requested e-mails would show anything contrary to the e-mails already produced. 

Note: The court listed this as the companion case to Analog Devices Inc. v. Michalski, 2006 WL 3287382 (N.C. Super. Nov. 1, 2006), which was filed concurrently by the court.

Court Issues Sanctions for Failure to Preserve
In Re Napster, Inc. Copyright Litigation, 2006 WL 3050864 (N.D. Cal. Oct. 25, 2006).  In a copyright infringement matter, the plaintiffs alleged a Napster investor willfully deleted relevant e-mail so the court should issue an adverse inference instruction and default judgment on some of the claims.  The investor argued they did not have a duty to preserve the e-mails in question because they were not a named party to any Napster litigation at the time nor did they reasonably expect to be a part of any litigation related to Napster.  The court disagreed and determined that as investors, the president of the company knew prior to the commencement of this litigation, they could be named as a party in the suit and be required to produce documents.  Although the court did not find the investor willfully destroyed e-mail, it determined that it was grossly deficient in its attempt to preserve any evidence.  Default judgment was not ordered; however, adverse inferences and monetary sanctions were awarded.

A current and comprehensive archive of case law summaries pertaining to electronic discovery and computer forensics is available at http://www.krollontrack.com/case-summaries/.

On December 1st, 2006, the way we handle computer documents in discovery changed dramatically.  After several years and countless hours of work by Advisory Committee members, proposed changes relating to electronically stored information (ESI) in the Federal Rules of Civil Procedure took affect.  The changes to Rules 16, 26, 33, 34, 37 and 45 offer guidelines for legal teams as they make decisions about the relevance, discoverability, production, and costs associated with e-mail, word processing documents, spreadsheets, databases and more.  These changes will impact every case in federal court and a vast majority of state court cases, as state legislatures adopt the new FRCP provisions in full or in part.

However, to which cases do the new Rules apply?  Will the new Rules only cover cases in federal court filed after December 1, 2006 or will they apply to cases already pending?  The clearest answer comes from the Supreme Court’s Order amending the FRCP.  Paragraph three of the Order states:

That the foregoing amendments to the Federal Rules of Civil Procedure … shall take effect on December 1, 2006, and shall govern in all proceedings thereafter commenced and, insofar as just and practicable, all proceedings then pending. http://www.supremecourtus.gov/orders/courtorders/frcv06p.pdf

This clause makes it clear all cases filed on or after December 1, 2006 are subject to the new amendments.  It also asserts any cases filed before this date may be subject to the new rules if the governing court determines the new rules can be applied without too much burden on the parties or delay to a case.  If a particular court determines it is impractical or unjust to use the new rule, the old rule will apply. 

Wasting no time, some courts started to cite and follow the proposed amendments and advisory committee comments long before December 1st.  See Wyeth v. Impax Lab. Co., 2006 WL 3091331 (D. Del. Oct. 26, 2006); Powers v. Thomas M. Cooley Law School, 2006 WL 2711512 (W.D. Mich. Sept. 21, 2006); Shirley Williams, et al., v. Sprint/United Management Co., 230 F.R.D. 640, 646 (D. Kan. 2005); Hopson v. Mayor and City Council of Baltimore, 232 F.R.D. 228 (D. Md. 2005); Williams v. Massachusetts Mut.. Life Ins. Co., 226 F.R.D. 144 (D. Mass. 2005).  Other courts will certainly follow suit, as judges deem fair and practicable.     

As with all litigation strategy, the best approach is to be prepared.  Knowing the implications of the amended FRCP rules and following best practices for any electronic data issues may be the most beneficial strategy in your pending cases.  E-discovery is no longer a best practice; it is the required practice and could lead to malpractice for incorrect application of the new Rules.  The new Federal Rules of Civil Procedure are here.  Are you ready?

New Sample Agreement

KROLL ONTRACK NEWS & EVENTS

Attention Ontrack® Inview™ Users!
Kroll Ontrack is pleased to introduce a new quarterly newsletter for Ontrack Inview users. Ontrack Inview User News is a free e-mail newsletter dedicated to keeping the Ontrack Inview user community in touch with online review innovation and developments. Subscribers can expect useful technical tips, examples of how other customers are using Ontrack Inview, product news, and company announcements.  The newsletter is a valuable resource for Ontrack Inview administrators and reviewers, helping them become more productive when conducting document review or gathering data for production. Click here now to subscribe: http://www.krollontrack.com/newsletters/.

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KROLL ONTRACK REQUESTS YOUR INPUT

This newsletter is written by Michele C.S. Lange, staff attorney with Kroll Ontrack. Ms. Lange has published numerous articles and speaks regularly on the topics of electronic discovery, computer forensics, and technology's role in the law. She can be contacted by writing to mlange@krollontrack.com.

For more information about electronic discovery and computer forensics services, contact Kroll Ontrack at 1-800-347-6105 or http://www.krollontrack.com