The end of the year brought another decision that impacts Bring Your Own Device (BYOD) policies as well as another Court of Appeals decision addressing the recoverability of e-discovery costs under 28 U.S.C. § 1920(4), which permits a court to award “the costs of making copies of any materials where the copies are necessarily obtained for use in the case.” In addition to these decisions, there were key cases in December involving document preservation letters, search terms and clawback provisions.
Bring your own device (BYOD)
In Re Pradaxa (Dabigatran Etexilate) Products Liability Litigation, MDL No. 2385 (S.D. Ill. Dec. 9, 2013). The court fined the defendants $931,500 for various e-discovery failures and ordered them to produce additional documents and ESI, including business-related text messages on their employees’ cell/smart phones. “The defendants raised the issue that some employees use their personal cell phones while on business and utilize the texting feature of those phones for business purposes yet balk at the request of litigation lawyers to examine these personal phones.” The court rejected that concern and made clear that “[t]he litigation hold and the requirement to produce relevant text messages, without question, applies to that space on employees’ cell phones dedicated to the business which is relevant to this litigation.” The court further stated that employees refusing to provide their phones to the defendant-employer would be subject to a show cause order to appear personally before the court to explain why they should not be held in contempt.
CBT Flint Partners, LLC v. Return Path, Inc., No. 2013-1036 (Fed. Cir. Dec. 13, 2013). The Federal Circuit joined the Third and Fourth Circuits in limiting the types of e-discovery costs that a prevailing party can recover under § 1920(4) to “those costs necessary to duplicate an electronic document in as faithful and complete a manner as required by rule, by court order, by agreement of the parties, or otherwise.” This ruling means that costs incurred to organize electronic documents into a database as well as to index, de-duplicate, filter, analyze, search and review them are not recoverable under § 1920(4). The Federal Circuit did split with the Third and Fourth Circuits, however, on the issue of whether “pre-duplication expenses” are recoverable. The Federal Circuit held in a 2-1 decision that a party may recover the costs incurred during the initial imaging of source media and the extraction of metadata. Judge O’Malley dissented from this part of the decision and would have joined the Third and Fourth Circuits in holding that activities which precede the step of making the final produced copies do not constitute “making copies” under § 1920(4).
Worley v. Avanquest North America Inc., No. 12-04391 (N.D. Cal. Dec. 13, 2013). In a putative class action involving the marketing of software products, the defendant offered to preserve ESI during the entire period covered by the applicable statute of limitations, but it objected to the plaintiffs’ request to preserve ESI “from the time the original versions of the software were developed to the present.” Because the plaintiffs’ request would add 10 years to the preservation period, the defendant argued that it would be unduly burdensome to preserve this much information and that the preservation efforts would not be proportional to the litigation (i.e., one of the factors listed in the proposed amendment to Rule 37(e)). The court said that “[r]elevant information from before the limitations period ought to be preserved and produced” and that it did not have sufficient details to evaluate the defendant’s arguments. Before the court would have sufficient context for the dispute, the defendant needed to identify custodians likely to have relevant ESI during the period requested by the plaintiffs and then have a person with expertise (such as an IT employee) specify any undue burden associated with the preservation of such ESI.
International Portfolio, Inc. v. Purplefish, LLC, No. 401 EDA 2013 (Superior Ct. Pa. Dec. 24, 2013). After filing a lawsuit in federal court, the plaintiffs sent document preservation letters to the defendants’ business associates advising them to maintain documents relating to the ongoing federal court action. The defendants reacted by filing a new lawsuit against the plaintiffs in state court alleging defamation and tortious interference with business relations on the basis of the document preservation letters. The state appellate court held that the letters were judicially privileged and affirmed the dismissal of the complaint because the letters were sent in the regular course of judicial proceedings and were pertinent and material to the underlying federal court litigation.
Search terms and parameters
Fort Worth Employees’ Retirement Fund v. J.P. Morgan Chase & Co., No. 09-3701 (S.D.N.Y. Dec. 16, 2013). The plaintiffs challenged the defendants’ search parameters for the discovery of ESI, arguing that the terms, custodians, and time period used were too narrow and would not produce all relevant documents and communications. Though the defendants had used roughly 80,000 search terms to find potentially relevant ESI, the plaintiffs maintained that the defendants should use 116,000 additional search term combinations. The defendants objected because they estimated that the additional search terms would yield more than 11 million additional documents to review. Magistrate Judge Francis found that a “court-ordered middle ground” was “impractical” and “inappropriate” given the nature of the request and the complexities of crafting a search protocol. Accordingly, he urged the parties to reexamine their positions and work together to create a mutually acceptable ESI search protocol. If the parties failed to reach a compromise, the court would “appoint a special master” to recommend a protocol and the parties would share the cost.
Brown v. West Corporation, No. 11-284 (D. Neb. Dec. 4, 2013). The district court judge affirmed an order issued by the magistrate judge which largely denied the plaintiff’s request for additional search terms and custodians. In affirming the order, the court rejected the argument that the defendant bore the burden of proving that it had conducted a proper search for ESI. The court stated: “Though courts have on occasion ordered the responding party to provide evidence of a proper search where there was reason to question whether a proper search was conducted, the Court finds questionable the contention that the law places an independent burden on the responding party to provide such evidence in the regular course of discovery.” Earlier in the case, however, the court did order the defendant to disclose in detail its directions for preservation, the sources identified for search, the terms used for the search, the defendant’s continued efforts to ensure compliance, and “any other information relevant to the scope and depth of the preservation or the search,” so that precise objections could be made to the defendant’s custodian-based searches and the court could effectively review the defendant’s preservation and search efforts.
Clawback provisions and evidence rule 502
RIPL Corp. v. Google Inc., No. 12-2050 (W.D. Wash. Dec. 17, 2013). The parties entered a stipulated protective order with a clawback provision requiring the return of inadvertently produced privileged documents. After privileged documents were produced, the receiving party refused to destroy or return them and argued that the balancing test set forth in Federal Rule of Evidence 502(b) should be applied because the protective order failed to define the terms “inadvertent” and “prompt.” The court rejected this argument and held that the receiving party violated the protective order by failing to destroy or return the protected documents. According to the court, “[t]here is no requirement that, in order to supplant Rule 502(b), an agreement provide adequate detail regarding ‘what constitutes inadvertence, what precautionary measures are required, and what the producing party’s postproduction responsibilities are to escape waiver.’”