The new year is off to a fast start with a number of decisions addressing key e-discovery issues, including a decision from the Seventh Circuit regarding the Dec. 9, 2013 sanctions order issued by the district court in the In Re Pradaxa multi-district products liability litigation and a spoliation finding against the defendants in the In Re Actos multi-district products liability litigation. There also were decisions regarding the violation of the protective order in the long-running Apple v. Samsung “big-ticket patent litigation,” the recovery of e-discovery costs, undue burden and the form of production.


In Re Actos (Pioglitazone) Products Liability Litigation, No. 11-md-2299 (W.D. La. Jan. 27, 2014). The court sanctioned the defendants for spoliation after 46 custodial files and the ESI in those files were lost, destroyed or otherwise rendered inaccessible. The deleted files belonged to high-ranking officials heavily involved in the development, sales, marketing and promotion of the drug Actos® as well as sales representatives whose day-to-day work involved marketing and distributing Actos in the marketplace. The defendants argued that they did not have a duty to preserve these files because the duty to preserve documents relating to “bladder cancer” did not arise until the summer of 2011. The court rejected that argument and pointed to a “sweeping” litigation hold that the defendants issued back in 2002 in connection with other Actos-related personal injury claims which broadly covered “any and all documents and electronic data” relating to Actos. In ruling on the plaintiffs’ motion for sanctions, the court separated the request into one made under Rule 37 and one made under the court’s inherent powers, and it deferred ruling on the Rule 37 request against the defendants’ counsel until the close of evidence at trial. The court declined to enter a default judgment against the defendants, but it ordered that all evidence of the defendants’ conduct as to the destruction of ESI and other documents would go before the jury. Thereafter, the court would determine the appropriate instruction to give to the jury and consider the plaintiffs’ request for attorneys’ fees and costs.

In Re Pradaxa (Dabigatran Etexilate) Products Liability Litigation, No. 13-3898 (7th Cir. Jan. 24, 2014). The defendants sought a writ of mandamus from the Seventh Circuit as a result of the district court’s Dec. 9, 2013 sanctions order previously discussed here and here. The Seventh Circuit granted the writ to the extent the district court ordered 13 of the defendants’ employees living in Germany (10 of whom are German citizens) to come to the United States to be deposed. The Seventh Circuit denied the petition for a writ of mandamus in all other respects, including the defendants’ failure to impose a litigation hold on employees’ text messages and monetary sanctions of $931,500. In accordance with the Seventh Circuit’s order, the district court has rescinded the Dec. 9, 2013 order. It intends to issue an amended order without the language directing the German employees to appear for depositions in the United States.

Polo-Calderon v. Corporacion Puertorriqueña de Salud, No. 12-1006 (D.P.R. Jan. 16, 2014). The court sanctioned one of the plaintiffs for spoliation for failing to preserve text messages sent and received by him. Through records subpoenaed from T-Mobile, the defendants demonstrated that the plaintiff received 38 relevant text messages and sent numerous additional messages in response, but it did not produce any of these messages. As a result, the court held that it would give an adverse inference at trial against the plaintiff regarding the more than 38 missing text messages.

U.S. Legal Support, Inc. v. Hofioni, No. 13-cv-1770 (E.D. Cal. Jan. 15, 2014). The court declined to find that spoliation occurred after the defendants did not immediately quarantine or image their personal electronic devices (iPhones and an iPad) after the lawsuit was filed and instead continued using their devices. The defendants argued that their duty to preserve did not require them to quarantine or image their devices. Although the plaintiff had two experts discuss the memory capabilities of the devices and what could potentially be lost through continued use, they did not identify any actual loss of data or provide any forensic analysis of the devices. Accordingly, the court found that it could not conclude that there had been any loss of data, let alone any loss of relevant evidence.

Apple, Inc. v. Samsung Electronics Co., Ltd., 11-CV-1846 (N.D. Cal. Jan. 29, 2014). As widely reported, the court sanctioned Samsung and its counsel for disclosing highly confidential information that was in a report prepared by one of Apple’s experts. The report included the terms of several of Apple’s confidential license agreements, including those with Nokia and Ericsson. The disclosure resulted from the posting of an insufficiently redacted copy of the report to an FTP site and its subsequent distribution and alleged use within Samsung. More than 200 people not authorized by the protective order received the report. The court put together a timeline of the disclosures and concluded that the protective order was repeatedly violated, and at least some of these violations warranted sanctions. Accordingly, the court ordered Samsung’s counsel to reimburse Apple and Nokia and their counsel for any and all costs and fees incurred in litigating the sanctions motion, seek prior approval from Apple’s counsel before distributing or filing any redacted documents, and ensure that all copies of the expert report were deleted, erased, wiped or otherwise permanently removed from Samsung’s control within 14 days of the order. The court rejected other proposed sanctions as “ludicrously overbroad,” including a 10-year ban against Samsung’s counsel from representing any party adverse to Nokia.

E-discovery costs

Chicago Board Options Exchange, Inc. v. Int’l Securities Exchange, LLC, No. 0-CV-623 (N.D. Ill. Jan. 14, 2014). The plaintiff sought an award of their e-discovery costs pursuant to 28 U.S.C. § 1920(4). After noting that the Seventh Circuit had not yet provided guidance as to which services related to the production of ESI are taxable under § 1920(4), the court was persuaded by the Third Circuit’s reasoning in Race Tires Am., Inc. v. Hoosier Racing Tire Corp., 674 F.3d 158 (3d Cir. 2012), and held that “not all expenses associated with the production of ESI are recoverable by the prevailing party.” Accordingly, the court held that the plaintiff could recover “all of its conversion costs and associated costs (making files readable through optical character recognition, scanning, creating CD-Roms and associated activities)” and its costs for Bates labeling. It could not recover its costs for “creating a litigation database, electronic data hosting or other steps (such as analyzing metadata or deduplication) leading up to making copies of materials.” “[G]athering, preserving, processing, searching, culling and extracting ESI simply ‘do not amount to making copies.’”

Massuda v. Panda Express, Inc., No. 12-CV-9683 (N.D. Ill. Jan. 15, 2014). A day after the decision in Chicago Board Options Exchange, another court noted that the Seventh Circuit had not answered whether a prevailing party could rely on § 1920(4) to recover its e-discovery costs for hosting ESI. This court also agreed with the Third Circuit’s decision in Race Tires and likewise held that “costs related to the gathering, preserving, processing, searching, culling and extracting ESI simply ‘do not amount to making copies’” and are not recoverable. E-discovery costs “associated with the conversion of ESI into a readable format, such as scanning or otherwise converting a paper version to an electronic version or converting native files to TIFF” are recoverable, however. Based on this reasoning, the court held that the hosting costs did not constitute “copying” and were not recoverable.

Undue burden

Energy Intelligence Group, Inc. v. Canal Barge Company, Inc., No. 12-2107 (E.D. La. Jan. 17, 2014). In a copyright infringement case, the district court judge affirmed the magistrate judge’s denial of the plaintiff’s motion to compel the production of backup tapes of employee emails from 1999 through 2006 and the production of all the defendant’s .NSF files. The plaintiff contended that they needed all the .NSF files and the backup tapes to determine how many times the defendant’s employees infringed its copyrights by retrieving or storing the plaintiff’s electronic newsletters. The defendant argued that it searched its .NSF files for all activity related to the mailbox in which it received the plaintiff’s newsletters and produced that information, and that this information was sufficient. If the defendant had not limited its search, it would have had to produce 316GB of data revealing every time any user accessed any mailbox. The court held that the plaintiff’s requested discovery was unduly burdensome and cumulative in light of the extensive discovery already conducted and the cost of producing the discovery sought.

Form of production

XL Specialty Insurance Co. v. Bollinger Shipyards, Inc., No. 12-2071 (E.D. La. Jan. 27, 2014). The court denied the plaintiff’s motion regarding the form in which the defendant produced its documents. According to the plaintiff, the defendant produced a largely unsearchable database of more than 808,000 documents, many of which had been entered as scanned documents or lacked elements of metadata that usually accompany native files. The defendant responded that the documents it produced are OCR-recognized and can be searched electronically. The court stated that a requesting party is not automatically entitled to receive documents in a particular electronically stored form and that under Civil Rule 34(b)(2)(B) the plaintiff was required to specify the form of ESI it wanted. Even if the plaintiff had made such a specification, however, the court stated that “the question of whether production in some particular electronic form or format, including native format with useable metadata, would have been open to debate.” Because the plaintiff failed to specify the form of production, the defendant only had an obligation to “produce it in a form or forms in which it is ordinarily maintained or in a reasonably useable form or forms.” According to the court, the defendant did so for the most part. “Either paper or OCR readable disc is reasonably useable form.” “Whatever burden [the plaintiff] and its counsel face in reviewing these materials that they themselves have requested is rightfully borne by them.”