Case Law Relevant to E-Discovery

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01Jul2009

Case Law Relevant to E-Discovery

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By Dennis Kiker

courtroomCase law continues to evolve regarding how electronically stored information (ESI) is identified, preserved, collected, processed, reviewed and produced. Findings on accessibility, admissibility, chain of custody, cost sharing and shifting, data production, good faith, legal hold, metadata, privilege, 26(f) meet and confer conferences and spoliation impact the IT, legal and business processes of law firms and their clients.

Accessibility

Under the “two-tier rule” established under FRCP 26(b)(2)(B), parties need not provide discovery of ESI from sources that the party identifies as not reasonably accessible because of undue burden or cost; on motion to compel discovery or for a protective order, the party from whom discovery is sought must show that the information is not reasonably accessible because of undue burden or cost.

The following cases represent a selection of decisions following the 2006 amendments to the Federal Rules of Civil Procedure:

  • Ameriwood Industries v. Liberman, 2007 WL 496716 (E.D. Mo. Feb. 13, 2007).
  • Auto Club Family Ins. Co. v. Ahner, 2007 U.S. Dist. LEXIS 63809 (E.D. La. Aug. 29, 2007).
  • Best Buy Stores, L.P. v. Developers Diversified Realty Corporation, 2007 U.S. Dist. LEXIS 7580 (D. Minn. Feb. 1, 2007).
  • Disability Rights Council of Greater Washington, et al., v. Washington Metropolitan Transit Authority, et al., 2007 U.S. Dist. LEXIS 39605 (D.D.C. June 1, 2007)
  • Guy Chemical Co. Inc. v. Romaco AG, et al. 2007 WL 1521468 (N.D. Ind. May 22, 2007).
  • Haka v. Lincoln County, 2007 U.S. Dist. LEXIS 64480 (W.D. Wis. Aug. 29, 2007)
  • In re Vecco Instruments. Inc. Securities Litigation, 2007 WL 983987 (S.D. N.Y. April 2, 2007).
  • Knifesource LLC v. Wachovia Bank, N.A., 2007 U.S. Dist. LEXIS 58829 (D.S.C. Aug. 10, 2007).
  • Peskoff v. Faber, 2007 WL 530096 (D.D.C. Feb. 21, 2007).
  • Pipefitters Local No. 636 Pension Fund v. Mercer Human Res. Consulting, Inc., 2007 WL 2080365 (E.D. Mich. July 19, 2007).
  • Thielen v. Buongiorno, Case No. 06-16 (W.D. Mich. Feb. 8, 2007).
  • W.E. Aubuchon Co. v. Benefirst, LLC, 2007 WL 1765610 (D. Mass. 2007).

Admissibility

The admissibility of electronic records is still evolving as most organizations strive to move from paper to paperless records. However, the admissibility of electronic information is somewhat more complex, raising issues as to the methodology used in data collection and the chain of custody of the electronic data once it has been collected.

The following cases represent a selection of decisions following the 2006 amendments to the Federal Rules of Civil Procedure:

  • In re eBay Seller Antitrust Litigation, 2007 WL 2852364 (N.D. Cal. Oct. 2, 2007)
  • In re Vee Vinhnee, 336 B.R. 437 (B.A.P. 9th Cir. 2005)
  • Lorraine v. Markel American Ins. Co., 241 F.R.D. 534, 538 (D. Md. 2007)

Chain of Custody

Failure to maintain a complete chain of custody may result in the inadmissibility of electronic information. The discovery process can be complex with a large number of steps, resulting in a long and winding chain of custody. Should the collection be forensic or non-forensic? Do you need a third party to perform and document the process, or can it be done internally with well-considered policies and procedures? The admissibility of ESI will hinge, in part, on laying a proper foundation for the electronic evidence, based on documented, defensible procedures.

The following case represents a decision relevant to “Chain of Custody” following the 2006 amendments to the Federal Rules of Civil Procedure:

  • In re NTL, Inc. Securities Litigation, 2007 U.S. Dist. LEXIS 6198 (S.D.N.Y. Jan. 30, 2007)

Cost Sharing/Shifting

Understanding where your information lives and the the information governance policies and procedures in place within your organization are critical to successful arguments for cost shifting and cost sharing. Discovery requests may include email, databases, voicemail, instant messaging systems and other proprietary applications. These systems are rapidly evolving and do not represent the same burden for all companies when making arguments for cost shifting. Implementing legal holds or producing records from traditional voicemail systems take considerable time and money; newer unified messaging systems often make responding to the same request relatively easy. Similarly, restoring records from traditional tape backup systems can be time and cost intensive; near-line storage, by contrast, does not present the same challenges.

  • AAB Joint Venture v. United States, 75 Fed. Cl. 432 (Fed. Cl. 2007)
  • Aebischer v. Stryker Corp., 2006 U.S. Dist. LEXIS 87810 (C.D. Ill. Dec. 5,2006)
  • Apsley v. Boeing Co., 2007 U.S. Dist. LEXIS 5144 (D. Kan. Jan. 17, 2007)
  • Guy Chemical Co. Inc. v. Romaco AG, et al. 2007 WL 1521468 (N.D. Ind. May 22, 2007).
  • Haka v. Lincoln County, 2007 U.S. Dist. LEXIS 64480 (W.D. Wis. Aug. 29, 2007)
  • In re Vecco Instruments. Inc. Securities Litigation, 2007 WL 983987 (S.D. N.Y. April 2, 2007).
  • John B. v. Goetz, 2007WL 3012808 (M.D. Tenn. Oct. 10, 2007).
  • Peskoff v. Faber, 2007 WL 530096 (D.D.C. Feb. 21, 2007).
  • Pipefitters Local No. 636 Pension Fund v. Mercer Human Res. Consulting, Inc., 2007 WL 2080365 (E.D. Mich. July 19, 2007).
  • Zubulake v. UBS Warburg, 217 F.R.D. 309 (S.D.N.Y. 2003)

data center

Data Production

Electronic evidence must be delivered to multiple parties involved in the legal matter, including opposing counsel, partner firms, requesting government agencies, or others. Depending on the recipients, you may require different delivery formats.

  • Ameriwood Industries, Inc. v. Liberman, 2006 U.S. Dist. LEXIS 93380 (E.D. Mo. Dec. 27, 2006)
  • APC Filtration, Inc. v. Becker, 2007 U.S. Dist. LEXIS 76221 (N.D. Ill. Oct. 12, 2007)
  • Benton v. Dlorah, Inc., 2007 WL 2225946 (D. Kan. Oct. 30, 2007)
  • Best Buy Stores, L.P. v. Developers Diversified Realty Corporation, 2007 U.S. Dist. LEXIS 7580 (D. Minn. Feb. 1, 2007)
  • Christopher v. Tulsa Ambassador Hotel, L.L.C., 2006 U.S. Dist. LEXIS 89796 (N.D. Okla. Dec. 11, 2006)
  • Claredi Corp. v. SeeBeyond Tech. Corp., 2007 WL 735018 (E.D. Mo. Mar. 8, 2007)
  • Cobb v. Dawson, 2007 U.S. Dist. LEXIS 4632 (M.D. Ga. Jan. 22, 2007)
  • DE Technologies, Inc. v. Dell, Inc., 2007 WL 128966 (W.D. Va. Jan. 12, 2007)
  • In re ATM Fee Antitrust Litigation, 2007 U.S. Dist. LEXIS 47943 (N.D. Cal. June 25, 2007)
  • In re Claims for Vaccine Injuries Resulting in Autism Spectrum Disorder, 2007 WL 1983780 (Fed. Cl. May 25, 2007)

Good Faith

A showing of good faith has always been necessary when responding to discovery or in response to any other court-ordered instruction; however, the burden of showing good faith is now significantly greater on the part of the responding party. Counsel can’t claim that they didn’t know about those backup tapes stored in a closet or that they didn’t have proper access to IT personnel. Counsel must have proactive conversations with ESI custodians and IT stewards to create and maintain documentation regarding what preservation actions were taken when the obligation arose, how chain of custody was assured, and how both custodians and relevant ESI repositories were systematically identified.

  • APC Filtration, Inc. v. Becker, 2007 U.S. Dist. LEXIS 76221 (N.D. Ill. Oct. 12, 2007).
  • Baker & Hostetler LLP v. United States Department of Commerce, 2006 U.S. App. LEXIS 31454 (D.C. Cir. Dec. 22, 2006)
  • Butler v. Kmart Corp., 2007 WL 2406982 (N.D. Miss. Aug. 20, 2007)
  • Emmerick v. S&K Famous Brands, Inc., 2007 U.S. Dist. LEXIS 59147 (E.D. Tenn. Aug. 6, 2007)
  • In re Seroquel Products Liability Litigation MDL Docket No. 1769, 2007 WL 2412946 (M.D. Fla. Aug. 21, 2007).
  • United Medical Supply Co. v. United States, 2007 U.S. Claims LEXIS 207 (Fed. Cl. June 27, 2007).

International

The convergence of globalization, technology proliferation and evolving e-discovery rules create challenges for organizations with internationally dispersed operations.  Demands from U.S. courts and government agencies often conflict with foreign privacy and data protection laws, leaving the corporation and its outside counsel uncertain of their rights and obligations. The following cases represent a selection of decisions that address cross-border e-discovery.

  • In re Advocat Christopher X:, Cour de Cassation, Appeal No.: 07-83228 (Supreme Court, France, Dec. 12, 2007): French Supreme Court affirmed a criminal conviction under France’s Blocking Statute. The first reported conviction under this statute, the case arose from a discovery order in Straus v. Credit Lyonais,242 F.R.D. 199 (E.D.N.Y. 2007). It may lead U.S. courts to reconsider the effect of non-U.S. privacy and data protection laws on a party’s ability to produce data from outside the U.S.
  • Societe Nationale Industrielle Aerospatiale v. U.S. District Court for the Southern District of Iowa,482 U.S. 522 (1987): U.S. Supreme Court held that federal courts are not bound to follow dictates of the Hague Convention on Evidence with regard to production of evidence from outside the U.S., but are to apply a five-factor balancing test.
  • Reino de Espana v. Am. Board of Shipping, 2006 WL 3208579 (S.D.N.Y. 2006): Spanish government brought suit in U.S. District Court, later objected to discovery remands on ground of Spanish Privacy law.  Court ordered compliance, holding that plaintiff chose to sue in U.S. court and must follow U.S. procedures.
  • Lynondell-Citgo Refining, LP v. Petroleos de Venezuela, SA, 2005 WL 1026461 (S.D.N.Y. 2005): Defendant chose to accept an adverse inference instruction rather than produce corporate minutes in criminal violation of Venezuelan law.
  • Dietrich v. Bauer, 2000 WL 1171132 (S.D.N.Y. 2000): Test to be utilized in analysis of production of documents is control, not locations.
  • eBay Canada v. Minister of National Revenue, 2007 FC 930: In a case involving Canada’s attempt to tax eBay transactions by Canadian citizens,  court held, in a jurisdictional analysis, that data may be in more than one location at the same time.
  • In Re Rivistagmine Litigation, 237 F.R.D. 69 (S.D.N.Y. 2006): Privilege objections for data outside the U.S. requires proof of the law of privilege in the pertinent countries.
  • Columbia Pictures v. Bunnell, 245 F.R.D. 443 (C.D. Cal. 2007):  Privacy law objections with regard to production of data from Netherlands rejected where data was in The Netherlands specifically to take advantage of such laws to avoid disclosure of said data.
  • In Re Vitamins Antitrust Litigation: 2001 WL 1049473 (D.D.C. 2001): Court directed that merits discovery take place under FRCP, but limited discovery by granting defendants’ request to file a privacy log as to German and Swiss laws. Court would then balance relevance and harm to plaintiffs in precluding discovery versus burden and harm to defendants in production.
  • Digicel (St. Lucia) Ltd & Ors v Cable & Wireless Plc & Ors [2008] EWHC 2522 (Ch) (23 October 2008): The UK’s Zubulake equivalent. This case addresses document definitions, reasonable search, labor and cost shifting, proportionality and many other issues.

courts of justiceLegal Hold/Preservation

A legal hold is an essential element of a company’s overall records management program, particularly when it comes to electronic information. It needs to be issued to demonstrate a company’s good faith and reasonable effort to comply with its discovery obligations. The reality, however, is that the full implications of the legal hold process may not be fully understood by all parties, particularly outside the legal department. Proactive coordination and planning among corporate counsel, outside counsel, IT and other key stakeholders is imperative to ensure good faith compliance in the face of anticipated litigation.

  • Acorn v. Co. of Nassau, 2009 WL 605859, (EDNY March 9, 2009)
  • Cache La Poudre Feed, LLC v. Land O’ Lakes Inc., 2007 WL 684001 (D. Colo. March 2, 2007)
  • Columbia Pictures Indus., et al. v. Bunnell, 2007 U.S. Dist. LEXIS 63620 (C.D. Cal. Aug. 24, 2007)
  • Disability Rights Council of Greater Washington, et al., v. Washington Metropolitan Transit Authority, et al., 2007 U.S. Dist. LEXIS 39605 (D.D.C. June 1, 2007)
  • Doctor John’s, Inc. v. City of Sioux City, 2007 WL 1447851 (N.D. Iowa May 17, 2007)
  • Doe v. Norwalk Community College, 2007 U.S. Dist. LEXIS 51084 (D. Conn. Jul. 16, 2007).
  • EEOC v. Boeing Co., 2007 WL 1146446 (D. Ariz. Apr. 18, 2007) (Not for publication).
  • Gibson v. Ford Motor Co., 2007 WL 41954 (N.D. Ga. Jan. 4, 2007).
  • In re Kmart Corporation, 371 B.R. 823, 2007 Bankr. LEXIS 2541 (Bkrtcy. N.D. Ill. July 31, 2007).
  • Lockheed Martin Corp. v. L-3 Communications Corp., 2007 U.S. Dist. LEXIS 79572 (M.D. Fla. Oct. 25, 2007).
  • Miller v. Holzmann, 2007 U.S. Dist. LEXIS 2987 (D.D.C. Jan. 17, 2007).
  • School-Link Technologies, Inc.. v. Applied Res., Inc., 2007 WL 677647 (D. Kan. Feb. 28, 2007).
  • Valdez v. Town of Brookhaven, 2007 WL 1988792 (E.D.N.Y. July 5, 2007).
  • Zubulake v. UBS Warburg, 217 F.R.D. 309 (S.D.N.Y. 2003)

Meet and Confer 26(f) Conference

The “meet and confer” conference for electronic discovery has moved from a nice-to-have to a requirement under the amended Federal Rules of Civil Procedure. A major component of preparing for a 26(f) meet and confer conference is a “map” of the litigant’s ESI content: where it is, what it is, how to preserve it, how to collect it, etc. This defensive requirement can be turned into a strategic advantage when counsel is well informed as to the location and nature of ESI, as well as the costs necessary to produce it.

  • Emmerick v. S&K Famous Brands, Inc., 2007 U.S. Dist. LEXIS 59147 (E.D. Tenn. Aug. 6, 2007)
  • O’Bar v. Lowe’s Home Centers, Inc., 2007 WL 1299180 (W.D. N.C. May 2, 2007).

Metadata

Handling and processing electronic evidence presents new and unique challenges that are vastly different from working with traditional printed documents. Unique among these is the handling of metadata – document attributes as to creation, modification, authorship, and potentially more based on the application used to create the electronic documents. Metadata may be used for admissibility purposes, demonstrating the chain of custody for a particular piece of ESI. It may also be used in the preservation and review processes, identifying information to be held and facilitating the culling of duplicate documents respectively. Simply opening a file or copying it to another location may modify the hidden metadata. In order to prevent spoliation, proper methods must be used in the collection and review of electronic documents. Similarly, metadata that represents privileged information must be carefully removed prior to production. This can be a complex process requiring deep technical expertise and experience.

  • Amersham Biosciences Corp. v. PerkinElmer, Inc., 2007 U.S. Dist. LEXIS 6841 (D.N.J. Jan. 31, 2007)
  • Autotech Techs. Ltd. P’ship v. Automationdirect.com, Inc., 2008 WL 902957 (N.D.Ill. April 2, 2008).
  • In re Payment Card Interchange Fee & Merchant Discount Antitrust Litigation, 2007 U.S. Dist. LEXIS 2650 (E.D.N.Y. Jan. 12, 2007).
  • In re Seroquel Products Liability Litigation MDL Docket No. 1769, 2007 WL 2412946 (M.D. Fla. Aug. 21, 2007).
  • Kentucky Speedway, LLC v. NASCAR, Inc., 2006 U.S. Dist. LEXIS 92028 (E.D. Ky. Dec. 18, 2006).
  • Peacock v. Merrill, 2008 WL 176375 (S.D.Ala. Jan. 17, 2008).
  • United States v. Hamilton, 413 F. 3d 1138 (10th Cir. 2005)

Privilege

Technology, when properly applied, has the ability to rapidly increase the rate of productivity exponentially. When technology is improperly utilized, however, small mistakes can have large scale effects – particularly when dealing with the inadvertent disclosure of privileged documents. Clawback and quick-peek agreements may help buffer the risk, but are only partially effective. And without proper steps to maintain privilege, courts may find it has been unintentionally waived.

  • Amersham Biosciences Corp. v. PerkinElmer, Inc., 2007 U.S. Dist. LEXIS 6841 (D.N.J. Jan. 31, 2007)
  • Gail v. New England Gas Co., 243 F.R.D. 28 (D. R.I. June 27, 2007).
  • In re eBay Seller Antitrust Litigation, 2007 WL 2852364 (N.D. Cal. Oct. 2, 2007)
  • Marrer Hernadez v. Esso Standard Oil Company, 2006 WL 1967364 (D. P.R. July 11, 2006).
  • Muro v. Target Corporation, 243 F.R.D. 301 (N.D. Ill. June 7, 2007).
  • Victor Stanley, Inc. v. Creative Pipe, Inc., 2008 WL 2221841 (D. Md. May 29, 2008)

Sanctions

The preservation of ESI can be costly for many large organizations. Over-preservation may result in escalating costs as information is produced at an exponential rate. Failure to preserve enough can result in a wide range of possible penalties, including monetary, issue, expert and case-related sanctions. Companies need to develop defensible processes that strike the balance between preservation and business needs. Such policies must also be effective, supportive of good faith efforts to identify and preserve potentially responsive ESI.

  • Claredi Corp. v. SeeBeyond Tech. Corp., 2007 WL 735018 (E.D. Mo. Mar. 8, 2007)
  • Cache La Poudre Feed, LLC v. Land O’ Lakes Inc., 2007 WL 684001 (D. Colo. March 2, 2007)
  • Doctor John’s, Inc. v. City of Sioux City, 2007 WL 1447851 (N.D. Iowa May 17, 2007).
  • Greyhound Lines, Inc. v. Wade, 2007 WL 1189451 (8th Cir. 2007).
  • In re Kmart Corporation, 371 B.R. 823, 2007 Bankr. LEXIS 2541 (Bkrtcy. N.D. Ill. July 31, 2007).
  • Marketfare Annunciation, LLC v. United Fire & Casualty Ins. Co., 2007 U.S. Dist.
  • LEXIS 81830 (E.D. La. Nov. 5, 2007).
  • May v. Pilot Travel Centers LLC, 2006 U.S. Dist. LEXIS 94507 (S.D. Ohio Dec. 28, 2006).
  • Padgett v. City of Monte Sereno, 2007 U.S. Dist. LEXIS 24301 (N.D. Cal. Mar. 20, 2007).
  • School-Link Technologies, Inc.. v. Applied Res., Inc., 2007 WL 677647 (D. Kan. Feb. 28, 2007).
  • United Medical Supply Co. v. United States, 2007 U.S. Claims LEXIS 207 (Fed. Cl. June 27, 2007).

Spoliation

While FRCP 37(f) provides a safe harbor for routine, good-faith deletion of e-discovery, FRCP 37 also provides for sanctions where the producing party fails to provide e-discovery outside of the safe harbor. In addition to sanctions, spoliation of ESI may result not only in an adverse inference, an award of attorneys’ fees, and possibly an adverse judgment. These risks can be mitigated through documented good faith efforts to preserve potentially responsive ESI.

  • Anadarko Petroleum Corp. v. Davis, 2006 U.S. Dist. LEXIS 93594 (S.D. Tex. Dec. 28, 2006)
  • Benton v. Dlorah, Inc., 2007 WL 2225946 (D. Kan. Oct. 30, 2007)
  • Padgett v. City of Monte Sereno, 2007 U.S. Dist. LEXIS 24301 (N.D. Cal. Mar. 20, 2007).
  • PML North America v. Hartford Underwriters Ins. Co., 2006 U.S. Dist. LEXIS 94456 (E.D. Mich. Dec. 20, 2006).
  • Qualcomm Inc. v. Broadcom Corp., 2007 U.S. Dist. LEXIS 57136 (S.D. Cal. Aug. 6, 2007).
  • Zubulake v. UBS Warburg, 217 F.R.D. 309 (S.D.N.Y. 2003)

About the Author

Dennis brings together in-house counsel, business personnel and outside counsel to develop formalized response plans to lower the cost, time and risk of discovery response. He served as national e-discovery counsel for some of the largest manufacturing companies in the country prior to joining Fios.

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