Maine Evidence and Electronic Discovery

Metadata and ECF Filings

The issue of metadata and a lawyer's ethical duties came to the surface recently in connection with a bankruptcy adversary proceeding in New York.  (New York's ethics opinions on access of metadata were discussed in the article attached to my prior post here.)

In Steinbuch v. Cutler, Adv. Pro. No. 07-50064 (Bankr. E.D.N.Y. June 5, 2009), the court addressed allegations made in a letter by the pro se plaintiff (who happens to be a law professor) that the defendant's counsel violated the New York Code of Professional Responsibility through "observation and commentary on the electronic file name of documents filed as a matter of public record" on plaintiff's behalf in another action pending in U.S. District Court in Washington.  Id.at 3.  Specifically, the plaintiff argued that defense counsel inappropriately mined metadata by referencing the filename of documents publicly filed by plaintiff's counsel through the ECF filing system in the DC lawsuit.

When defense counsel responded to plaintiff's allegation by requesting that plaintiff withdraw his letter complaint or face a demand to reimburse defendant for defendant's fees, plaintiff sent a second letter to the court, complaining that defense counsel was threatening him for reporting violations of the bar rules, itself a violation of the ethical canons. 

After citing the two relevant New York ethics opinions on the access of metadata in materials from opposing counsel, the court quickly brushed aside the plaintiff's complaints.

[Plaintiff's] observation of the original file name was not made possible by use of computer software, nor did such file name come from "behind" the visible document.  Neither was disclosure of the original file name an inadvertent act on behalf of plaintiff.  The original file name of a document filed via a court's ecf system plainly shows on the court-generated Notice of Electronic Filing. This court finds disingenuous plaintiff's suggestion that by reading the notice of Electronic FIling, [defense counsel] invaded plaintiff's relationship with his then counsel, threatened confidentiality, made public a "secret" between plaintiff and his counsel or unethically used metadata.

Id. at 4.

The court also was displeased by what it perceived as plaintiff's attempt "to use a frivolous and factually inaccurate ethics complaint for the purpose of gaining an advantage in a pending civil matter."  Id. 

All in all, not a very convincing case by the plaintiff of the exploitation of metadata.

If Your Discovery Compliance Stinks as Much as Your Case Does, the Ultimate Sanction Is Probably in Order

So we've talked before about the virtual impossibility of getting an electronic discovery-related order overturned on appeal.  Every once in a while, though, a case comes along in which it happens.

The California Court of Appeals recently issued a decision in just such a case.  See Doppes v. Bently Motors, Inc., -- Cal. Rptr. 3d --, 2009 WL 1578384 (Cal. App. 4 Dist. June 8, 2009) (click here).  In Doppes, a consumer brought various breach of warranty claims arising out of a foul odor emanating from his new Bentley automobile. 

The court made the "extraordinary, yet justified, determination that the trial court abused its discretion by failing to impose terminating sanctions against defendant for misuse of the discovery process. The record demonstrates defendant engaged in repeated and egregious violations of the discovery laws that not only impaired plaintiff's rights, but threatened the integrity of the judicial process."  Id. at *1.  The opinion chronicles a lengthy history of ongoing obstruction by the defendant in refusing to produce documents, intentionally moving emails to locations where they would not be captured in the electronic searches, failing to abide by court-ordered discovery, witnesses misrepresenting facts and general cover-up of reams of relevant and discoverable information, including entire file cabinets worth of documents. 

Prior to trial, the trial court appointed a discovery referee to oversee the contentious discovery battles.  The referee ultimately rejected plaintiff's request for entry of default against the defendant based on the electronic discovery abuses, but recommended that the court give an adverse inference instruction at trial.  The trial court did so.  In the midst of trial, the plaintiff was given leave to conduct additional depositions, which disclosed even more discovery violations.  Still the trial court declined to enter the ultimate sanction fo default against the defendant.  The plaintiff ended up prevailing on most of his claims at trial, but lost on a his fraud claims.

On appeal, the court noted that the discovery statutes in California "evince an incremental approach to discovery sanctions, starting with monetary sanctions and ending with the ultimate sanction of termination."  Id. at *17.  The court concluded that, with respect to the trial court's decision to give an adverse inference instruction based on the discovery violations prior to trial, the appellate court "cannot say ... the trial court abused its discretion initially in approving the discovery referee's recommendation ... of imposing the 'more narrow' sanction of giving the jury instruction."  Id. at *18.  Yet by the time of trial, the uncovering of additional serious violations mid-trial demonstrated that the defendant had "flagrantly engaged in such further discovery abuses so as to compel the trial court to impose the next level of sanctions-terminating sanctions."  Id.  Accordingly, "Terminating sanctions against [defendant]were imperative."  Id. Therefore, the court of appeals "reverse[d] the judgment on the fraud cause of action, with directions to the trial court to strike [defendant's] answer, enter a default and default judgment against [defendant] on that cause of action," and directed the trial court to conduct further proceedings to establish plaintiff's entitlement to damages and penalties.  Id. at *20.

Has the Line Shifted More in Favor of Dismissals in Federal Court?

So this isn't directly related to electronic discovery, but in case anyone missed it, practitioners in federal court will want to be sure to give the Supreme Court's recent decision in Ashcroft v. Iqbal, No. 07-1015, a read.

Iqbal involved a Bivens claim for discrimination brought against the former Attorney General and the Director of the FBI, alleging that he was discriminated against while incarcerated due to his race and religion following the September 11th attacks.  The federal officials moved to dismiss on qualified immunity grounds.  Both the district court and court of appeals denied the motions to dismiss, holding that, if true, the allegations included in the complaint could be sufficient to state a cause of action.  The Second CIrcuit acknowledged the Supreme Court's decision in Bell Atlantic Corp. v. Twombly from a couple of years ago, which held in the antitrust context that something more than bald allegations is required even under the generous notice pleadings provisions of Fed. R. Civ. P. 8, but distinguished that case.

The Supreme Court reversed, seemingly stretching the Twombly holding farther than many previously had expected.  The Court rejected out of hand the argument that the Twombly standard was unique to antitrust cases, stating that the Court's prior interpretation of Rule 8 in Twombly applies to all civil actions.

The Court went on to explain that Rule 8 "demands more than an unadorned, the-defendant-unlawfully harmed-me accusation," and that a complaint does not "suffice if it tenders 'naked assertion[s]' devoid of “further factual enhancement.'"  Slip op. at 14. 

Rather, to survive a motion to dismiss, a complaint must contain "sufficient factual matter" ot create a "facial plausibility ... that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Id.  That standard "asks for more than a sheer possibility that a defendant has acted unlawfully."  Id.  "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice."  Id.  Where "the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged — but it has not 'show[n]' — 'that the pleader is entitled to relief.'"  Id. at 15.  Where the allegations in a complaint are conclusory, and "not entitled to be assumed true" and are "disentitle[d] ... to the presumption of truth."  Id. at 17.

The Court also specifically rejected the idea that bare allegations in a complaint should be enough to get to discovery to permit a plaintiff to find the evidence needed to sustain a complaint.  As the Court concluded, bare allegations alone should "not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions."  Id. at 14.  As the Court continued, the possibility that discovery might be limited or tailored in a way to test the conclusory allegations in a complaint is no excuse to permit an unsubstantiated complaint to survive a motion to dismiss, as "the question presented by a motion to dismiss a complaint for insufficient pleadings does not turn on the controls placed upon the discovery process."  Id. at 21.  And where a plaintiff's "complaint is deficient under Rule 8, he is not entitled to discovery, cabined or otherwise."  Id. at 22.

As with many things, the devil is in the details.  Exactly what constitutes enough factual development necessarily will be a case-by-case question.  How interested the district judge is in keeping the case also will play a role behind the scenes.  Only time will tell whether the rate of Rule 12(b)(6) dismissals will increase in the coming years as a result of the Iqbal decision.

The Format and Scope of E-Discovery Productions

A recent case addressed two important issues concerning the format for production of electronic documents and the showing necessary for a party to subject another party to intrusive tests by a third-party vendor to assess the completeness of a prior production.

Ford Motor Co. v. Edgewood Properties, Inc., -- F. Supp. 2d --, 2009 WL 1416223 (D.N.J. May 19, 2009) (click here), arose out of the demolition of an automotive assembly plant and the distribution of contaminated concrete from the plant.  Among other things, the defendant sought an order compelling plaintiff to reproduce its entire ESI production in native format, rather than in the format previously produced.  Defendant also sought to “confirm the adequacy of Ford's manual document collection process by using a third-party vendor to perform keyword searches on documents not in the existing repository of ESI, but instead, documents within the possession of certain ... custodians."  Id. at *1.

With respect to the format of the production, the defendant requested in its initial document request that plaintiff produce documents in native format; however, in responding, the plaintiff stated instead that it would produce electronically stored information in TIFF format with accompanying searchable text, but not in native format.  See id. at *5.  The parties apparently never reached an agreement as to how the documents would be produced, so plaintiff "unilaterally adopted its own objection and produced them in TIFF format."  Id.  Referencing the Sedona Principles, the court looked to the fact that the defendant failed to object to the TIFF format production until about eight months after the production - a delay that the court found "patently unreasonable," particularly in light of the fact that the production was long since complete.  Id. at *7.  The court therefore denied the defendant's request on the grounds that it would be "unduly burdensome to a party months after production to require that party to reconstitute their entire production to appease a late objection."  Id. at *8.

As to the second issue, regarding defendant's desire to require the plaintiff to permit a third-party vendor to perform random searches in various custodian electronic files, the court denied that request, as well.  The defendant argued that there was a suspicious absence of certain types of documents in the production made by the plaintiff, and posited that the document collection method used by the plaintiff must have been flawed.  To test that hypothesis, the defendant proposed having a vendor randomly search through electronic files for various employees of the plaintiff to see if responsive documents existed that were not produced.  Looking again to the Sedona Princples, the court noted that the producing party ordinarily "is the best position to determine the method by which they will collect documents," and that "the choice is clearly within the producing party's sound discretion."  Id.at *9.  Because the defendant's suspicions about missing documents was nothing more than "conclusory allegation premised on nefarious speculation ," id., the court denied the request.  "The notion that a document production is insufficient based on a belief that documents must exist simply is not enough to grant a motion to compel that would require Ford to go back to square one and begin its document collection efforts anew."  Id.  "To countenance such a holding would unreasonably put the shoe on the other foot and require a producing party to go to herculean and costly lengths (especially in a document-heavy case such as this) in the face of mere accusation to rebut a claim of withholding. This scenario is not contemplated by the Federal Rules."  Id.

So the lessons here are (1) if you're going to insist on a particular format for production of documents by the other side, you'd better actually insist upon it from the start, and (2) although the electronic discovery rules typically extend the volume of discovery in many cases, they are not a license to conduct fishing expeditions based on nothing more than a hunch that there's dirt that has not yet been uncovered.

New Blog Look

For all those dedicated readers out there who actually might have noticed that the banner at the top of this blog looks a little different, don't worry - the blog hasn't been hijacked.  The marketing folks here just thought a little updating was in order.

DRI Report on the Future of Litigation

I previously reported in my post on March 13th about a joint report issued by the American College of Trial Lawyers and the Institute for the Advancement of the American Legal System on the burdens of electronic discovery under the current rules.  If you haven't seen it yet, the Defense Research Institute (DRI) issued a report entitled "Future of Litigation" in January 2009 that, among other things, confirmed similar concerns among defense lawyers and some judges.

According to the report, many of the survey respondents and interviewees "pointed to e-discovery as a major factor further driving up the cost of litigation."  Report at 3. 

Interviewees agreed overwhelmingly that e-discovery is having and will have a profound impact on the future of litigation (using terms like “horrible” and “outrageous” to express their concern). Likewise, an overwhelming majority believe that it will be incumbent on judges to bring e-discovery under control – via effective rule enforcement; limiting “fishing expeditions;” imposing meaningful sanctions for abuse; and providing sufficient guidance to both parties regarding appropriate document production (and related processes).

Id.

Survey respondents focused on two separate aspects of e-discovery costs that cause concern. 

First, many are simply concerned that in an attempt to create fast, efficient discovery by requiring production of documents in electronic formats, the process has increased the volume of documents being produced resulting in inordinate costs of production and excessive time to conduct document reviews. Second, many lawyers are concerned that e-discovery requests and some rulings are imposing unreasonable continuing costs on clients by forcing long term document retention that adds costs on a defensive basis.

Id. at 4.  The report observed that some defense practitioners "are concerned that text retrieval technologies are encouraging plaintiffs to use discovery as an end rather than a means (e.g., to fight over discovery issues rather than focus on the merits of the case)."  Id.  "Specifically, many are concerned that e-discovery encourages a search for “needles in a haystack” – particularly as it relates to searching for documents that influence determination of punitive damages, but are not central to the merits of the litigation per se. Some representative quotes can illustrate this concern."  Id.

Those who are involved in electronic discovery in large cases undoubtedly have first-hand experience with some of those same concerns.  Add this report to the growing list of publications that have addressed some of the real costs posed by the e-discovery rules.

Twitter and Electronic Discovery

An interesting article recently was published in the May 2009 issue of the New York State Bar Journal, on issues relate to the use of Twitter both by lawyers and by individuals and employees who eventually become embroiled in litigation.  He touches on some of the potential e-discovery implications of Twitter messages.

As the article explains, Twitter applications typically are not offered by businesses for their employees' use; rather, employees use either their own cell phones or their employer-provided cell phones to send messages outside the parameters of a company's routine IT data retention protocol.  As such, the messages likely are nor being captured and stored by businesses, and indeed the company may have no idea of what is even being sent or received.  In spite of that lack of awareness on the corporate level, that does not necessarily mean that a court will conclude that the messages are beyond the scope of electronic discovery in certain contexts, although there is an argument to be made that the temporary nature of the data is outside the scope of what the rules intended to capture in defining electronically stored information.  And in any event, the fact that such data might be found beyond the scope of e-discovery in certain cases does not mean that the other side won't find it posted on the Internet somewhere and use it to its advantage anyhow.  As with much electronic data, it is the data you don't know about that can be the most damaging.

Yet another challenging issue that courts have only begun to grapple with.

Once Again, Cooperation Helps in the End

Sometimes reason prevails, even in the world of e-discovery. To many parties on the receiving end of electronic discovery requests, it may seem like the requesting side gets whatever they want. Sometimes, though, that isn't the case, particularly where the responder can point to good faith efforts to cooperate with the other side in order to produce the documents most likely to be relevant in an efficient and cost-effective manner.

The recent decision in Surplus Source Group LLC v. Mid America Engine, Inc., Civil Action No. 4:08-cv-049 (E.D. Tex. Apr. 7, 2009), is a good example.  There, the plaintiff initially served a set of document requests in July 2008. The defendants responded in due course, and over the following several months produced about 4,000 pages of documents. The plaintiff alleged that the production was incomplete. The defendants also conducted an initial electronic search for electronically stored information (“ESI”), and produced responsive information. In December 2008, defense counsel requested additional information from the plaintiffs so that the defendants could conduct a second ESI search using terms that plaintiff thought would be most useful. A month later, in January 2009, plaintiffs’ counsel finally responded to defense counsel "summarizing supposed shortcomings of the original ESI search," but without identifying any particular new search terms desired by the plaintiff. Id. at 2. The same day, one of the defendant's in-house counsel responded, "again requesting additional search terms so that a more comprehensive ESI search could be conducted." Id. Several weeks later, plaintiffs’ counsel "for the first time submitted a list of proposed search terms to conduct a second ESI search. By this time, however, the second search had been conducted," and responsive documents from that second search were produced to the plaintiff. Id.

The court began by noting that the defendants "have not complained that the documents sought by the Plaintiffs are irrelevant, and the court’s review of the record indicates that, if found, they would be relevant. The documents are discoverable under Rule 34. The presumption, then, is that the Defendants should bear the cost of obtaining them." Id. at 3.

However, the court found that the evidence of the defendants' cooperation and attempts to craft their searches in a way desired by the plaintiff countered that presumption.

Yet, the Defendants have shown a persistent willingness to aide the Plaintiffs in crafting an ESI search that would yield the documents if they do, in fact, exist. Going back to December of 2008, the Defendants have requested from the Plaintiffs the desired search terms that the Plaintiffs did not disclose until February 5, 2009, after the second ESI search was conducted. It is apparent to the court that, had the Plaintiffs provided the search terms included in their email of February 5, 2009 (see Surreply at Ex. K.) when first requested, the second search would have been conducted on those terms rather than on the terms upon which it was actually conducted. In other words, the second ESI search was only conducted because of the Plaintiffs’ delay in forwarding to the Defendants the search parameters desired by the Plaintiffs.

Because the records sought by the Plaintiffs are indeed critical to the resolution of material issues in this case, their discovery should be allowed. Therefore, the court finds that a third ESI search should be conducted, and that search should be based on the parameters contained in Plaintiffs’ counsel’s email of February 5, 2008. However, the cost of searching for these records is likely to far exceed what it would have had the Plaintiffs been more diligent in communicating their search terms to the Defendants because three searches will have been conducted rather than two. The search is conditioned on the Plaintiffs’ willingness to pay the costs of the third ESI search up to the amount spent by the Defendants in conducting the second ESI search. If the third ESI search costs more than the second ESI search, the Defendants shall pay those expenses.

Id. at 3-4. Note that, subsequent to that decision, the defendants sought reconsideration, and a magistrate judge altered the district court's order slightly to narrow the scope of the third ESI search and to apportion the costs equally between the parties.

But the important lesson from Surplus Source Group is that there is value to a responding party in appearing to be cooperative and in making efforts to facilitate the electronic document production. We had a similar experience several months ago, where the other side initially demanded email searches of scores of custodians using dozens of email search terms. When the parties could not agree upon the proper scope of the email searches, the responding party on its own began to run the search and production using all of the custodians and the broadest handful of search terms identified by the requester. When the requester nevertheless argued to the court that more should be done, the court disagreed, finding the efforts to be more than sufficient. Acting cooperatively is not only consistent with the requirements of the rules, but in the end can lead to a more efficient, cost-effective form of e-discovery, as well.

Should Lawyers Have Their Heads in the Clouds?

So there's been a lot of talk recently about "cloud computing."  What is "cloud computing?"  Essentially it refers to the increased practice of some companies to outsource the provision of hardware, software and human resources to deliver, store and manage digital data offsite.  The idea is that outside service providers can achieve economies of scale, thereby lowering the cost for providing these types of services to their customers.

Not surprisingly, "cloud computing" raises a whole host of challenging electronic discovery issues.  With "cloud computing," a company may be accessing data storage on computers owned and operated by other entities located anywhere in the world.  Although the company likely continues to "own" its own data stored on those computers, there may be issues regarding the company's ability to access information about that data, like information about when the data has been accessed and by whom.  That sort of information can be a critical component of e-discovery.

Also, what about preservation?  I've written before about the importance of litigation holds and effective document retention plans.  But a company's ability effectively to preserve data hosted on computers owned by another entity halfway around the globe may be difficult to coordinate.  Even production of data on those offsite computers likely will add numerous challenges. 

In-house counsel at large companies who either already are outsourcing some of these data functions, or who anticipate doing so in the future, would be well advised to start thinking about some of these logistical issues now.  Ideally they would be addressed in the service agreements between the company and the "cloud computing" entity.

If you are interested in reading more about some of these challenges, here are a couple of links to recent articles on law.com and infoworld.com.

Update on Proposed Amendments to Federal Rules 26 and 56

As a follow up to my posts of November 20 and November 21, 2008, in which I reported on the proposed amendments to Federal Rules of Civil Procedure 26 and 56, the Advisory Committee on Civil Rules has held a series of public hearings on the proposals and the comment period has closed.  The Committee on Rules of Practice and Procedure of the Judicial Conference of the United States reported on the progress of the Advisory Committee in a March meeting of the Judicial Conference, and indicated that the Advisory Committee will be meeting again this month to further consider the testimony and written comments submitted on the proposed amendments.

In addition, the Committee on Rules of Practice and Procedure stated that the Civil Rules Committee plans "to hold a major conference in 2010 with judges, lawyers, and law professors" to address the issues raised in the recent report issued by the American College of Trial Lawyers and the Institute for the Advancement of the American Legal System concerning the "the rising costs of electronic discovery, the public’s deepening disenchantment with federal trial practices and procedures, and the flight of litigants from federal court to state court and alternative dispute organizations."  I discussed that report in my recent post here.  As expected, the report on the growing costs and burdens of e-discovery is reverberating throughout the legal community.  It will be interesting to see what the Civil Rules Committee does with it in 2010.