In addition to the posting of the proposed discovery amendments to the Federal Rules of Civil Procedure for public comment, August was packed with a number of interesting e-discovery decisions. Here are my thoughts on key e-discovery cases decided last month, including another spoliation blockbuster from Judge Shira Scheindlin and rulings on e-discovery costs, search terms, proportionality and privacy.
Sekisui American Corp. v. Hart, No. 12 Civ. 3479 (S.D.N.Y. Aug. 15, 2013). Judge Scheindlin considered the “appropriate penalty for a party that — with full knowledge of the likelihood of litigation — intentionally and permanently destroyed the email files of several key players.” Based on Judge Scheindlin’s analysis of the facts, she reversed the magistrate judge’s order declining to award sanctions and instead ordered that an adverse jury instruction be given at trial.
The most notable part of the decision was that it was issued on the same day the public comment period opened for the proposed discovery amendments and Judge Scheindlin included a footnote openly disagreeing with the proposed changes to Rule 37(e). She stated: “I do not agree that the burden to prove prejudice from missing evidence lost as a result of willful or intentional misconduct should fall on the innocent party. Furthermore, imposing sanctions only where evidence is destroyed willfully or in bad faith creates perverse incentives and encourages sloppy behavior. Under the proposed rule, parties who destroy evidence cannot be sanctioned (although they can be subject to ‘remedial curative measures’) even if they were negligent, grossly negligence, or reckless in doing so.” This was not the first time that Judge Scheindlin has publicly criticized the rulemaking effort that began with the Duke Conference in 2010. Ralph Losey reported last year on Judge Scheindlin’s comments at the Georgetown Advanced eDiscovery Institute CLE expressing disappointment in the amendments being proposed.
If you want to weigh in on the proposed amendments, the public comment period for them runs until Feb. 15, 2014.
Barrette Outdoor Living, Inc. v. Michigan Resin Representatives, No. 11-13335 (E.D. Mich. April 26, 2013), report and recommendation adopted on Aug. 1, 2013. The court sanctioned a former employee of Plaintiff Barrette Outdoor Living because the former employee-defendant got rid of his cell phone after he received a “Notice to Store Electronically Stored Information” from Barrette and used “data wiping” software to permanently delete 270,000 files from his personal laptop computer after Barrette filed suit and sought his computer in discovery. The sanctions included monetary sanctions and an adverse jury instruction. The court declined to enter a default judgment against the defendant because the court was not convinced that the destruction of evidence would deprive Barrette of its day in court.
Interestingly, the court did not sanction the defendant for deleting files from his work computer on the same day Barrette terminated his employment. The court noted that there was no lawsuit pending against him at that time and Barrette had not provided him with any notice of suit. The court also concluded that the defendant would not have reasonably anticipated at the time of his termination that Barrette would bring suit against him. The court’s reasoning illustrates how the determination of when the duty to preserve attaches is highly factual and why providing written notice of a party’s duty to preserve ESI before filing suit can be a good idea.
Ellis v. Toshiba America Information Systems, Inc., Nos. B220286, B227078, 2013 Cal. App. LEXIS 624 (Cal. Ct. App. Aug. 7, 2013). A California appellate court affirmed the imposition of monetary sanctions of $165,000 against an attorney who disobeyed a court order to allow forensic examinations of her computers. In connection with the attorney’s request for fees in the amount of $24 million as part of a class action settlement, Toshiba sought searchable electronic versions of the attorney’s time records. After the trial court ordered the production of the records in “native format,” the attorney converted the records into PDF and deleted the original Word documents. The trial court then ordered the forensic examination of the attorney’s computers, which the attorney refused to allow to proceed. At one point during the discovery dispute, counsel representing the attorney and the court had the following exchange at a hearing:
“I don’t even know what ‘native format’ means.” The court responded: “You’ll have to find out. I know. Apparently [Toshiba’s counsel] knows. You’re going to have to get educated in the world of … electronic discovery. ESI is here to stay, and these are terms you’re just going to have to learn.”
Ancora Technologies, Inc. v. Apple, Inc., No. 11-CV-6357 (N.D. Cal. Aug. 26, 2013). The court ordered the reduction of e-discovery costs taxed under 28 U.S.C. § 1920(4) for “exemplification and the costs of making copies.” The court permitted $3,471.61 in costs for the processing and conversion of documents into “text searchable” files, but it denied $71,611.52 in costs incurred for online hosting costs and $5,375.46 in costs for “replacing corrupted electronic documents and resolving technical issues during the processing of documents for production.” This was another decision this year limiting the types of e-discovery costs that a “prevailing party” can recover under § 1920(4).
Scentsy, Inc. v. B.R. Chase, LLC, No. 11-CV-249 (D. Idaho Aug., 26, 2013). Although courts continue to limit the scope of taxable e-discovery costs under § 1920(4), there have been a few cases this year where a court has awarded non-taxable e-discovery costs based on a cost-shifting provision in a federal substantive statute. See, e.g., Gabriel Technologies Corp. v. Qualcomm Inc., No. 08 CV 1992 (S.D. Cal. Feb. 1, 2013), which we previously discussed here; United States ex rel. Becker v. Tools & Metals, Inc., No. 05-CV-627 (N.D. Tex. March 31, 2013). In Scentsy, the court added to this line of cases by awarding e-discovery costs to the prevailing party because “[t]he Lanham Act and the Copyright Act allow recovery of reasonable costs that are otherwise non-taxable under 28 U.S.C. § 1920(4).”
Uelian de Abadia-Peixoto v. U.S. Dept. of Homeland Security, No. 11-4001 (N.D. Cal. Aug. 23, 2013). The court ordered the defendants to provide in writing to the plaintiffs the “search parameters” (i.e., custodians, sources, and search terms) used to respond to the plaintiffs’ document requests. The defendants had declined to provide their search parameters and claimed that they had produced all responsive documents in their possession. Because it appeared that the defendants had not met their discovery obligations, the court rejected the defendants’ argument that the disclosure of the search parameters would lead to a “new round of discovery.” The court also declined the defendants’ request to review the search parameters in camera because the court was “not in a position to accurately assess the reasonableness of the search conducted nor advise on alternative search terms, sources, or custodians,” and no issues of privilege were raised.
This was another decision in which the discoverability of search terms was litigated this year, see, e.g., Apple Inc. v. Samsung Electronics Co. Ltd., No. 12-CV-630 (N.D. Cal. May 9, 2013), and this issue has been topic of discussion throughout the year. The current issue of the newsletter for the E-Discovery and Digital Evidence Committee of the ABA Section of Science & Technology has a good article discussing the “trend” of requiring parties to disclose search terms and whether parties should likewise have to disclose their internal processes when they use predictive coding.
NOL Spice-Designs, LLC v. Haydel Enterprises, Inc. d/b/a Haydel’s Bakery, No. 12-2515 (E.D. La. Aug. 2, 2013). In a trademark infringement case under the Lanham Act, the defendant requested that the plaintiff and its principal produce their “passwords and user names to all online web sites related to the issues in this litigation, including social media, weblogs, financial information and records,” and to submit their computers to forensic examination. Although the court noted case law holding that “there is no protectable privacy or confidentiality interest in material posted or published on social media,” it denied the defendant’s “ultra broad request” because it went far beyond the issues in the case and would permit the defendant “to roam freely through all manner of personal and financial data in cyberspace.” The court also denied the defendant’s request for a forensic examination of the plaintiff’s computers even though it recognized that such a request was “within the scope of ESI discovery contemplated by Fed. R. Civ. P. 34(a)(1)(A).” Importantly, the court applied the proportionality limits imposed by Rule 26(b)(2)(C) to hold that the requested forensic examination was not justified under the circumstances.
Chevron Corp v. Donziger, No. 12-mc-80237 (N.D. Cal. Aug. 22, 2013). As discussed in more detail here, a federal court held that subpoenas served on Google and Yahoo! seeking the subscriber and usage information associated with 68 email addresses did not violate the Stored Communications Act (SCA), did not infringe on the subscribers’ First Amendment rights, and did not violate the subscribers’ right to privacy. Accordingly, the court largely denied the pending motions to quash by drawing a line between subpoenas that seek the content of emails and subpoenas that seek the metadata associated with those emails and identifying information about the email account holders.
In The Matter of Applications for Search Warrants for Information Associated with Target Email Accounts/Skype Accounts, 13-MJ-8163 (Aug. 27, 2013). The line between content and metadata was addressed by Magistrate Judge David Waxse in the criminal context when the Government submitted five applications for search warrants seeking to require Google, GoDaddy, Verizon Internet Services, Yahoo! and Skype to disclose the contents of all emails, instant messages, and chat logs/sessions for certain accounts. Magistrate Judge Waxse applied the Sixth Circuit’s reasoning in United States v. Warshak, 631 F.3d 266 (6th Cir. 2010), and concluded that an individual has a reasonable expectation of privacy in emails stored with, sent to or received through an electronic communications service provider. Accordingly, Magistrate Judge Waxse held that the proposed warrants violated the Fourth Amendment because they were too broad and too general and failed to “create a nexus between the suspected crime and the email communications and related account information to be obtained and searched.” The proposed warrants would have given “the government virtual carte blanche to review the content of all electronic communications associated with the accounts and fail[ed] to adequately limit the discretion of the government-authorized agents executing the warrants.”