EARLY NEUTRAL EVALUATION: Can a Stitch In Time Save Nine? – Part Two

August 1, 2022

Conclusion to a two part Blog on Experiments by the US District Courts, in both the Southern and Northern Districts of California, with a type of Alternative Dispute Resolution procedure called Early Neutral Evaluation (ENE).

Losey continues to ponder the “stitch in time” savings possible from ENE

This is the conclusion of the blog, EARLY NEUTRAL EVALUATION: Can a Stitch In Time Save Nine? See here for Part 1. This blog considers the Early Neutral Evaluation rules of the United States District Court, Northern District of California. In this part two the EDRM Metrics Model is considered, so is the all important Rule 1 FRCP. Other jurisdictions that have adopted ENE rules are mentioned in this part before the blog concludes with the dangerous, but interesting task of mixing idioms, Stitch in Time and of Whole Cloth. I will prove that the Whole Cloth idiom is a clear favorite in the law and conclude with one-sentence quotes from some of the more interesting cases that bench slap lawyers and other judges with this time honored insult.

ENE Session Procedures

United States District Court, Northern District of California, Rule 5-11 specifies the procedures to be followed in a ENE Session. Here we get to the meat of the process. It is what I would expect and looks well thought out. ENE Rule 5-11:

(a) Components of ENE Session. The Evaluator shall:

(1) Permit each party (through counsel or otherwise), orally and through documents or other media, to present its claims or defenses and to describe the principal evidence on which they are based;
(2) Help the parties identify areas of agreement and, where feasible, enter stipulations;
(3) Assess the relative strengths and weaknesses of the parties’ contentions and evidence, and explain carefully the reasoning that supports these assessments;
(4) Estimate, where feasible, the likelihood of liability and the dollar range of damages;
(5) Help the parties devise a plan for sharing the important information and/or conducting the key discovery that will equip them as expeditiously as possible to enter meaningful settlement discussions or to position the case for disposition by other means;
(6) Help the parties assess litigation costs realistically;
(7) If the parties are interested, help them, through private caucusing or otherwise, explore the possibility of settling the case; and
(8) Determine whether some form of follow up to the session would contribute to the case development process or to settlement.

(b) Process Rules. The session shall be informal. Rules of evidence shall not apply. There shall be no formal examination or cross-examination of witnesses and no recording of the presentations or discussion shall be made.

(c) Evaluation and Settlement Discussions. If all parties agree, they may proceed to discuss settlement after the evaluation has been written but before it is presented. The evaluation must be presented orally on demand by any party. Copies of the written evaluation may be provided to the parties at the discretion of the Evaluator. The parties also may agree to discuss settlement after the evaluation has been presented.

EDRM Metrics Model

I hope the ENE and attorneys involved have the expertise required to analyze and control discovery costs, since that is the primary activity in litigation. If so, these ENE Sessions could be of tremendous benefits to achieving the just, speedy and inexpensive goals of Rule 1, Federal Rules of Civil Procedure.

The analysis of the attorneys and Experts leading the ENE Sessions would benefit significantly by using the EDRM’s Metrics Model. It helps guide the measurements, the metrics, needed to manage the costs and time required for discovery and other complex litigation tasks. The EDRM Metrics Model shown here provides a good tool to improve the dynamics of a ENE Session. The experts should at least have some passing familiarity with the analytics and planning activities involved, especially the seven outside elements identifying the tasks of discovery: Custodians, Systems, Media, Status, Formats, Q&A, and Activities.

Additional Rules and Practices

Moving on, Rule 5-12 governs confidentiality, Rule 5-13 addresses follow up with the Evaluator, typically last minute attempts to settle (after the parties have cooled off, and seen their attorney fee bills), and Rule 5-14 Certification of Session. In that final certification “the Evaluator must report to the ADR Unit: the date of the session, whether any follow up is scheduled, and whether the case settled in whole or in part.”

The next rules, after rule five in the Northern Districts ADR rules, govern mediation. The ENE local ADR rules are completely separate.

Also interesting to see that in the McCormack v. Sterling Jewelers Inc., case in the Southern District the Magistrate appointed himself as the Evaluator. The judge also specified that the required ENE sessions were to be by video conference. McCormack v. Sterling Jewelers Inc., No. 22-cv-00525-AJB-BGS, 2022 U.S. Dist. LEXIS 106345 (S.D. Cal. June 14, 2022). I assume this is a common practice in both Northern and Southern Districts. By the way, I should mention that in the Northern District, Early Neutral Evaluation procedures and rules have been in effect since 1989. See eg.: EEOC v. Sears, Roebuck, & Co., No. C-89-0928 TEH, 1989 U.S. Dist. LEXIS 14298 (N.D. Cal. Aug. 18, 1989). It is just their use that has been ramped up recently.

ENE and Rule 1

I applaud the efforts of the Northern and Southern California courts to experiment with creative approaches to effectuate the goal of Rule 1, Federal Rules of Civil Procedure. This may be our most important rule in the federal system and bears repetition:

Rule 1. Scope and Purpose

These rules govern the procedure in all civil actions and proceedings in the United States district courts, except as stated in Rule 81. They should be construed, administered, and employed by the court and the parties to secure the just, speedy, and inexpensive determination of every action and proceeding.

Just, speedy, and inexpensive, that should always be our goal in litigation. Again also see: 23 U.S.C., Chapter 23, Civil justice expense and delay reduction plans (§§ 471 — 482).

Other Courts and ENE

Other courts and Bar Associations, including the Federal Rules Committee, may well want to copy the complete and well written Northern Districts ENE Rules. It looks like a very good set of rules to me, but I would want to hear what parties and attorneys using the rules in California think about them. Feel free to leave attributed or anonymous comments below.

In theory, it all looks good. Individual parties outside of California or other courts with ENE local rules could always stipulate to it. I expect that most judges in any jurisdiction would Adopt, Order and Approve such a procedure. For an appropriate Order, again see McCormack v. Sterling Jewelers Inc., No. 22-cv-00525-AJB-BGS, 2022 U.S. Dist. LEXIS 106345 (S.D. Cal. June 14, 2022).

Of course, also see Rule 5, cited and quoted above for the United States District Court for the Northern District of California. Also, in the Southern District, see Rule 16.1., as well as local judge rules, including those of Magistrate Judge Bernard G. Skomal in the McCormack case. They are called Chambers Rules and the ENE provisions are found in Section II at pages 2-3. The Central District of California ADR programs do not appear to have an ENE program, just mediation.

The Eastern District Court has what they call a Voluntary Dispute Resolution Program (VDRP). They do not appears to have specific rules for mediation, much less Early Neutral Evaluation, just some general encouragement shown below that mentions ENE (emphasis added):

It is the Court’s intention that the VDRP shall allow the participants to take advantage of a wide variety of alternative dispute resolution methods. These methods may include, but are not limited to, mediation, negotiation, early neutral evaluation and settlement facilitation. The specific method or methods employed will be determined by the Neutral and the parties.

I know that a few other courts around the country have different types of early neutral evaluation, including the always progressive Minnesota. Minnesota’s State Supreme Court Rule 114 defines ENE as:

“…a forum in which attorneys present the core of the dispute to a neutral evaluator in the presence of the parties. This occurs after the case is filed but before discovery is conducted. The neutral then gives an assessment of the strengths and weaknesses of the case. If settlement does not result, the neutral helps narrow the dispute and suggests guidelines for managing discovery.”

Also see (and this is by not an exhaustive, nor properly cited list, so, as always, do your own due diligence): Ohio Fed. Dist. Ct. (N.D.), Civ. LR 16.5; Local Rules of Practice of the United States District Court for the District of Nevada, Part II, Civil Practice, Part II LR II 16-6, Early Neutral Evaluation; U.S. Dist. Ct. (Vt.) LR 16.1;  South Carolina State & Federal Court Rules 14-16, SC ADR; E.D. Mo. L.R. 6.01; WD Penn.; Rule 4.8 of the ADR Policies and Procedures; D.C.COLO.LCivR 16.6(a).

If your court, state or federal, has adopted detailed rules for a Early Neutral Evaluation program, please let me know. I’m especially interested in what practitioners and litigants think of it after having gone through the process a few times. Send me an email or leave a comment below.

What Happens if a Stitch in Time Reveals a Case Made Out of Whole Cloth?

My linguistic curiosity, which I assume most lawyers have, forces me to examine the mixed idioms of stitch in time and whole cloth. They go together seamlessly don’t you think? (Sorry, could not resist.)

First, it should be noted that these idioms, although both referencing sewing and fabric in some way, have very different meanings. The “Stitch it Time” idiom preaches the common wisdom of expert proactivity and the dangers of prognostication. That is why I picked it to identify this article on EARLY Neutral Evacuation. According to Webster’s Dictionary, the idiom is commonly used to mean “that it is better to fix a problem when it is small than to wait and let it become a bigger problem.” Webster’s also says it is among the top 2% of word popularity. The British Phrase Finder web explains:

This proverbial expression was obviously meant as an incentive to the lazy. It’s especially gratifying that ‘a stitch in time saves nine’ is an anagram for ‘this is meant as incentive’!

The Anglo Saxon work ethic is being called on here. Many English proverbs encourage immediate effort as superior to putting things off until later; for example, ‘one year’s seeds, seven year’s weeds‘, ‘procrastination is the thief of time‘ and ‘the early bird catches the worm‘.

The ‘stitch in time’ notion has been current in English for a very long time and is first recorded in Thomas Fuller’s Gnomologia: A Collection of the Proverbs, Maxims and Adages That Inspired Benjamin Franklin and Poor Richard’s Almanack, 1732: “A Stitch in Time May save nine.”

Now as to the idiom concerning whole cloth. Websters defines “whole cloth” as a pure fabrication — usually used in the phrase out of whole cloth. It is in the top 5% of popular words.

According to the Grammarist website:

Out of whole cloth is an American idiom that entered the English language in the early 1800s. . . .

Out of whole cloth describes something that is untrue and has no grounding in the facts. The expression is generally used in the phrases made out of whole cloth, make out of whole cloth, makes out of whole cloth, making out of whole cloth. Whole cloth is a piece of fabric that has not been cut into pieces. The literal meaning of the term whole cloth goes back to the 1400s, but the idiomatic expressions pertaining to whole cloth first appeared in America in the early 1800s. The idea behind the meaning of the phrase out of whole cloth is that a lie is a completely new fabrication, as is a piece of whole cloth.

Perhaps because fraud is a much more likely topic of judicial consideration that proactivity, U.S. courts seem to love the “made out of whole clothe” idiom, usually as in “your argument is made out of whole cloth.” To prove my point, and show that it too is not made up out of whole cloth, according to Lexis the “Stitch in Time” idiom has been referenced in thirty different cases, whereas the “Whole Cloth” idiom has been used four-thousand, six-hundred and three times. Obviously, Whole Cloth is a clear favorite of our Judges. Here are a few representative samples of its use. Note, the recent cases where the expression is used are interesting in their own right.

  • “On the newly minted undue burden test, the Chief Justice criticized it as made “out of whole cloth” instead of a product of stare decisis.” Planned Parenthood of the Heartland, Inc. v. Reynolds, No. 21-0856, 2022 Iowa Sup. LEXIS 80, at *160 (June 17, 2022) (Christensen, Chief Justice, concurring in part and dissenting in part).
  • “The Supreme Court of Utah does not make pure policy out of whole cloth.” In re Sex Change of Childers-Gray, 2021 UT 13, ¶ 1, 487 P.3d 96, 99.
  • “Thus, it can be argued that Defendants Yang and Wu fashioned fraudulent submissions, the stock ledger and the Form 1099, out of whole cloth.” United States v. Yang, No. 16-CR-00334-LHK, 2020 U.S. Dist. LEXIS 95702, at *53 (N.D. Cal. May 29, 2020).
  • “.. the vocational expert’s numbers appeared to be spun out of whole cloth.” Gracz v. Berryhill, No. 16 cv 4099, 2017 U.S. Dist. LEXIS 55683 (N.D. Ill. Apr. 12, 2017).
  • “… Tukes’s costs being less than they would have been had her arguments been drawn from whole cloth.” Tukes v. Richard, Nos. B307242, B308337, B312086, 2022 Cal. App. LEXIS 604, at *18 (Ct. App. July 12, 2022).

I suggest this last reference as to a lawyers’ arguments being made out of “whole cloth” is the most common one you will see in trial courts. It is a judicial slap as to an unsupported argument, with a hint that the argument was so bad, to the point of almost being a fraud. One has only to think of recent law suits seeking to overturn election results without any factual basis to do so. It is also a very popular idiom with appellate courts too, again used as a disparagement, but often against other judges or opinions.

Our beloved Supreme Court, since 1947 when the phrase was first used, really loves the “whole cloth” insult. Typically it is a bomb used in a dissent against the victorious majority of other judges in the court, not against an attorney. (Although you probably hear it often in oral arguments.) The “whole cloth” idiom has been used in at least fifty-nine different cases since 1947, typically in a dissent. Before that the justices would use other barbs in their dissents. A few opinions using whole cloth language of interest are:

  • “The plurality’s equating of “in opposition to” with “targeting” is seemingly woven out of whole cloth. Borden v. United States, 141 S. Ct. 1817, 1846 n.13 (2021) (J. Kavanaugh’s dissent).
  • “But those decisions created the right to abortion out of whole cloth, without a shred of support from the Constitution’s text.” June Med. Servs. L.L.C. v. Russo, 140 S. Ct. 2103, 2142 (2020) (J. Thomas dissent).
  • “And, an examination of the highly reticulated immigration regime makes clear that DHS has no implicit discretion to create new classes of lawful presence or to grant relief from removal out of whole cloth.” Dep’t of Homeland Sec. v. Regents of the Univ. of Cal., 140 S. Ct. 1891, 1922 (2020) (J. Thomas).
  • “Not one of the cases on which the Court relies today supports the extraordinary premise that courts can create out of whole cloth an exception to a statutory bar to relief.” McQuiggin v. Perkins, 569 U.S. 383, 404, 133 S. Ct. 1924, 1938 (2013) (Dissent J. Scalia).
  • “As will be noted, the one gloss is contradicted by the facts of record and the other is of whole cloth with  [***745]  the “public function” argument’s excision of the religious factor. Everson v. Bd. of Educ., 330 U.S. 1, 57, 67 S. Ct. 504, 531 (1947) (Dissent J. Rutledge).
  • “The Court appears intent upon creating out of whole cloth new constitutionally mandated warrant procedures carefully tailored to make eavesdrop warrants unobtainable. Berger v. New York, 388 U.S. 41, 111, 87 S. Ct. 1873, 1911 (1967) (Dissent J. Harlan).

So getting back to the question and ENE, What Happens if a Stitch in Time reveals a Case Made Out of Whole Cloth? It usually means that one side is happy and another very disappointed. The neutral has found that one or more arguments, claims or defense are spurious. It is actually a good thing to both sides, even if it is used against one of your many claims, as opposed to your whole case. Depending on the experience and wisdom of counsel, and circumstances of the case, both sides could be happy when this phrase is used. The phrase indicates the outside neutral expert thinks that parts of your case are very poor and should be dropped. A good mediator often does the same thing. That is how issues are narrowed and cases are settled.

Such input is common in ADR, or should be, even without use of the strong language of whole cloth, suggesting as it does, fraud. If I ever used that kind of inflammatory language when serving a a Special Master or Arbitrator, watch out. It means I feel pretty strongly about the point. It is more than a subtle hint that you should reconsider your argument while you still can.

It is very common for parties to make multiple alternative pleadings, causes of action, only to drop one or more of them before trial. The same applies to defenses. Everybody is concerned regarding waiver, and for that reasons, all kinds of semi-bogus pleadings are made. Why not save time and money and drop them early?

Two other popular idioms come to mind that are often used by lawyers when explaining their lengthy alternative pleadings, such as throw against a wall and see if it sticks, or run it up the flagpole and see if anyone salutes it. Who knows, you may think one or more of you arguments, claims or defenses stink, but that the judge, or an outside neutral, might buy it, might salute the flag. Long ago I used that flag salute expression quite often. You or your client did not want to waive an argument, so you kept it in. The realistic critical input of an Early Neutral Evaluation can save the parties time and money that might otherwise be wasted on borderline claims. An outside, neutral expert telling the parties that a particular claim is not going to be saluted by this judge can be very valuable input.

Conclusion

Ralph Losey, Attorney, Special Master, Mediator of Computer Law disputes, AAA Arbitrator and ENE for eDiscovery

To close with a quick plug, ENE sounds similar to the kind of services I can provide in my role as Special Master, although that role is limited to discovery issues. Often the role is strictly adjudicative, but it can, if the parties agree, also include guided settlement discussions. I can also do that for general technology cases under my 1991 Bar certification as a Mediator of Computer Law disputes. (Bet you have not heard of that certification before.)

Can an ENE or other ADR process help the parties save 90%? If the whole case settles early, sure. But if it is just a narrowing of the discovery issues, probably not that much. Despite the old adage about a stitch in time saves nine, the savings will not be that big, not a 90% savings. Certainly not in all cases. Still, the early input of any ediscovery expert should help the parties save substantial time and money in most cases. And that, my friends, is not an argument spun from whole cloth, but rather from more years of experience than I care to remember.


EARLY NEUTRAL EVALUATION: Can a Stitch in Time Save Nine? – Part One

July 18, 2022

First of a two part blog on experiments by the US District Courts, in both the Southern and Northern Districts of California, with a type of Alternative Dispute Resolution procedure called Early Neutral Evaluation (ENE).

Losey ponders and tests whether a stitch in time can save nine?

ENE is different than mediation and special mastery assignments, somewhat of a hybrid, but with an emphasis on expert input. The basic idea behind this alternative dispute resolution tool can be found in the old adage: A stitch in time saves nine. As applied to ediscovery, I have seen many cases where early input of an authoritative discovery expert can be beneficial. If the expert input is provided very early, and if it is followed, it can save the parties both time and money. But can an timely expert stitch really save 90% as the adage suggests?

Common wisdom aside, a ninety percent savings is incredibly high and likely impossible to attain in all but a few cases. Still, in all cases, based on my experience, early expert input can save the parties substantial time and money. Maybe a ninety percent savings is possible in some rare, big cases, where the expert is good and carries a big stick. One has only to think of the savings possible from one expert suggestion, the use of AI instead of armies of attorneys doing linear review. Maybe an overall 90% savings could be reached in a case like that. What is important is that ENE should result in savings, far more than the cost of the exercise, in almost very case. Hopefully, the experiments with ENE now going on in California and elsewhere will confirm my experience.

The current ENE procedures in California are shown in McCormack v. Sterling Jewelers Inc., No. 22-cv-00525-AJB-BGS, 2022 U.S. Dist. LEXIS 106345 (S.D. Cal. June 14, 2022). The order granted the parties a continuance of a mandatory ENE Conference, a continuance that Magistrate Judge Bernard G. Skomal referred to as rare and would not to be repeated. After all, one of the main points of ENE is to be early. The stitch can only save nine if done early, and, if done by an expert.

ENE Has Been Around a Long Time

ENE is not a new idea, although the California Courts pushing the procedure is relatively new. The ABA has long had a one paragraph article explaining ENE: Early Neutral Evaluation. Here is how the ABA introduces practitioners to this form of Alternative Dispute Resolution (ADR):

Early neutral evaluation is a process that may take place soon after a case has been filed in court. The case is referred to an expert, usually an attorney, who is asked to provide a balanced and unbiased evaluation of the dispute. The parties either submit written comments or meet in person with the expert. The expert identifies each side’s strengths and weaknesses and provides an evaluation of the likely outcome of a trial. This evaluation can assist the parties in assessing their case and may propel them towards a settlement.

As a practitioner in District Courts since 1980, I personally think ENE is a very good idea. So too did Congress in 1990 when it first enacted the Civil Justice Expense and Delay Reduction Plans Act (CJRA), which included Early Neutral Evaluation as one of many recommended ideas. 28 U.S.C.S. § 473(a)(3), (b)(1) & (b)(4). Ironically, it has taken more that thirty years for this type of early intervention ADR to catch on, but I’m reminded of another old saying I believe in – Better late than never.

The California District Courts recent ENE rules are an implementation of this initiative to reduce federal litigation expense and delay. This is a longstanding problem. This article provides citations at the end to other federal courts with active Early Neutral Evaluation programs. I urge all attorneys and judges to give ENE a try. It may not save ninety percent in all cases, but, if done with a good expert, it should certainly help effectuate the goals of Rule 1, Federal Rules of Civil Procedure.

ENE in the United States District Court for the Northern District of California.

Different forms of the ENE Rule have been adopted by the Southern and Northern Districts in California. This blog article will focus on the much more detailed ENE rule found in the United States District Court for the Northern District of California.

The rule is identified in the Northern District as Local Rule 5 governing Alternative Dispute Resolution, ADR Local Rule 5. Here is the Local Rule’s description.

5-1. Description

In Early Neutral Evaluation (ENE) the parties and their counsel, in a confidential session, make compact presentations of their claims and defenses, including key evidence as developed at that juncture, and receive a non-binding evaluation by an experienced neutral lawyer with subject matter expertise. The Evaluator also helps identify areas of agreement, offers case-planning suggestions and, if requested by the parties, settlement assistance.

The Rule goes on to describe eligibility, which I interpret to mean it is available in any case where at least one party wants it, and may be required anyway, if the judge wants it. Most judges would want any complex cases to try such an early case settlement with the help of an expert neutral. Note the rules requirement as to availability of requisite expert. This shows there is a need for Neutrals with special skills and experience, including technology, to play a role much like that of a special master, but with settlement tasks within the scope of their assignment.

5-2. Eligible Cases

Subject to the availability of administrative resources and of an Evaluator with subject matter expertise, appropriate civil cases may be referred to ENE by order of the assigned Judge following a stipulation by all parties, on motion by a party under Civil L.R. 7, or on the Judge’s initiative.

Here is how the next Rule 5-3 on Evaluators begins. See the full rule for many remaining details.

5-3. Evaluators (a) Appointment. After entry of an order referring a case to ENE, the ADR Unit will appoint from the Court’s panel an Evaluator who has expertise in the subject matter of the lawsuit, is available during the appropriate period and has no apparent conflict of interest. . . .

It is interesting to note that under 5-6, much like situations where special masters are appointed, and unlike mediation appointments, ex parte communications are strictly controlled.

5-6. Ex Parte Contact Prohibited

Except with respect to scheduling matters, there shall be no ex parte communications between parties or counsel and the Evaluator, including private caucuses to discuss settlement, until after the Evaluator has committed his or her evaluation to writing and all parties have agreed that ex parte communications with the Evaluator may occur.

The timing component here is very important. First you get the written opinion, then settlement discussions can begin. The Evaluator has no adjudicatory power, so this is just a peek into how the court itself will probably rule. But this kind of neutral evaluation can often have a very sobering impact onto one or both sides.

At least seven days before the first Early Neutral Evaluation meeting with the Evaluator, the parties have to serve on the Evaluator, and each other, an ENE Statement. ADR ENE Rule 8. These are not to be filed with the court and so would be outside of Pacer and the public disclosure that goes with Pacer. Subsection c. sets out the contents of the ENE Statement. Note its similarity with a typical mediation statement.

(c) Content of Statement. The statements must be concise, may include any information that may be useful to the Evaluator, and must, unless otherwise directed by the Evaluator:

(1) Identify, by name and title or status:

(A) The person(s) with decision-making authority, who, in addition to counsel, will attend the ENE session as representative(s) of the party, and

(B) Persons connected with a party opponent (including an insurer representative) whose presence might substantially improve the utility of the ENE session or the prospects for settlement; Describe briefly the substance of the suit, addressing the party’s views of the key liability issues and damages and discussing the key evidence;

(3) Address whether there are legal or factual issues whose early resolution would reduce significantly the scope of the dispute or contribute to settlement negotiations;

(4) Identify the discovery that is necessary to equip the parties for meaningful settlement negotiations; and

(5) Include copies of documents out of which the suit arose (e.g., contracts), or whose availability would materially advance the purposes of the Evaluation session, (e.g., medical reports or documents by which special damages might be determined).

This is what you would expect and follows typical mediation rules.

As a big believer of the rights of litigants to protect their trade secrets, I was pleased to see Rule “5-9. Special Provisions for Patent, Copyright, or Trademark Cases.” Has what parties need to protect their confidential data.

Rule 5-10 governs attendance at the ENE hearing with the Evaluator. All parties and their counsel are required to appear with a few exceptions allowed. The reason provided in Rule 5-10 for these stringent attendance requirements is instructive:

This requirement reflects the Court’s view that the principal values of ENE include affording litigants opportunities to articulate directly to other parties and a neutral their positions and interests and to hear, first hand, both their opponent’s version of the matters in dispute and a neutral assessment of the merits of the case and the relative strengths of each party’s legal positions.

Again, much like mediation.


Surprise, it’s whole cloth!

To be continued . . . Part Two of this Blog will examine the Procedures to be followed in an ENE Session, the suggested helpful input of the EDRM’s often overlooked, Metrics Model, ENE and Rule 1, ENE Experiments in Other Courts and, as always, my Conclusion. As a bonus, I’ll also consider the crazy idea of mixed idiots, um, I mean mixed idioms. What happens if a stitch in time reveals a case made out of whole cloth? Surprise!


Examining a Leaked Criminal Warrant for Apple iCloud Data in a High Profile Case – Part 3

July 5, 2022

Inadvertently Disclosed Warrant Application Against Apple in a Criminal Investigation Against Retired Marine General Reveals Latest DOJ Search Procedures, the Dangers of Pacer and Too Much Court Record Transparency, and Much More – Part Three

This article is Part Three of the blog Examining a Leaked Criminal Warrant for Apple iCloud Data in a High Profile Case. See here for Part 1 and Part 2. This last part of this blog will conclude the Application review, focus on the dangers of too much information, the dangers of Pacer, suggestions for its reform, the complex transparency of online court records, privacy rights and speculation on how the leak to the API in this case could have happened. That’s a lot to cover, so let’s get going and move fast.

Information To Be Seized by the Government

In Attachment B to the Application, Section III, paragraph 11, entitled Information to the Seized by the Government, the DOJ describes what its search team will be permitted to seize from the three iCloud accounts. It refers back to prior Information To Be Disclosed by the Provider Section II, and states.

All information described above in Section II.10.a. that constitutes evidence, contraband, fruits, or instrumentalities of violations of the Foreign Agents Registration Act , 22 U.S.C. 611, et seq., restrictions on former officers of the Executive Branch, 18 U.S.C. 207(f), obstruction of justice , 18 U.S.C. 1512(c), aiding and abetting, 18 U.S.C. 2(a), and conspiracy, 18 U.S.C. 371, namely:

i. Information relating to who created, accessed, or used the SUBJECT ACCOUNT, including records about their identities and whereabouts.

ii. Information relating to meetings, messages, conversations, or other interactions with:

– foreign governments or any agency of a foreign government, and their officials, representatives, or agents;

– U.S. government officials or members of Congress;

– Imaad Zuberi, Richard Olson, Ahmed Al-Rumaihi, John Sandweg, or Martin Van Valkenburg; and

– employees or agents of Spark Cognition, Fifth Dimension, or any overseas business entities.

Then, just to be safe and clear, they add to the seizure list all of the items listed previously in Section II, Information to be Disclosed by the Provider.

Fifth Dimension – A Predictive Analytics Company

Although I’m rushing along here, a slight diversion is warranted. Don’t you just love the names of these businesses in the alleged bribery money flow: Spark Cognition and Fifth Dimension? I did a little digging into that last one, for the solid reason of liking the thought and sounds of the Fifth Dimension (three dimensions are so confining for explaining reality). It is an Tel Aviv, Israel, based software security company that seems interesting to me. CTech describes them as a predictive analytics company and that recently closed down.

Sound familiar? The predictive analytics part. Many of the best companies in ediscovery, very solid and honest ones indeed, would describe themselves in a similar fashion. Eh, Sherlock?

Although the Fifth Dimension website is closed, http://www.5dimension.com, and, as far as I know, has nothing to do with ediscovery, their LinkedIn description is still up and explains who they say they are, or were:

Fifth Dimension, founded by a group of former intelligence executives and data scientists, helps Law enforcement agencies to make the utmost use of their mass scale data. Leveraging advanced big data, AI and deep learning technologies, Fifth Dimension created an investigation and insight-driven platform for transforming customers’ data and challenges into true value.

With advance deep learning technologies such as text analysis, speaker recognition, computer vision, classification, pattern recognition and more, Fifth Dimension goes beyond solving specific business challenges- reaching core issues and creating game-changing value for its customers. Fifth Dimension empowers various customers across verticals including: intelligence agencies, border control organizations, law enforcement agencies and more.

Apparently these are the kind of things our defendants were hustling to Qatar and others. Would have loved to have heard our defendants’ pitch for their AI based service. According to News Net Daily’s interpretation of the facts in sworn Application by the FBI agent:

The record suggests that General Allen also sought other forms of payment. An Israeli security firm, Fifth Dimension, had agreed to pay him $10,000 a month plus a 1.5% commission on any new business he generated, and he credited himself for persuading Qatar to sign a $72 million contract with the company over the same weekend. trip – potentially earning him a fee of over a million dollars.

News Net daily

Not bad for a weekend’s work at Rick’s Cafe. A lot better pay than ediscovery and honest lawyering. Although, personally, I kind of doubt the general ever got paid. I’m sure that’s one of the key things the FBI is now using predictive analytics and other search tools to try to find out. Data trails are everywhere, not just in Apple’s cloud. There are lots of good ESI sniffing, AI-based blood hounds can help smart people to find them. Even if the trail leads to a fictional cafe in Hollywood’s version of WWII Casablanca.

Provider Procedures

The last thing we are going to look at in the Application is Section IV, Provider Procedures, set out in paragraphs 12 and 13. The provider, here Apple, is given only a ten day deadline. Ten days to deliver all of the information requested, which pretty much means forensic copies of the entire contents of these three iCloud accounts. We do not know what happened after Apple was served, whether they found anything and met the deadline.

After providing the deadline, warrant orders Apple to provide the name and contact information for all employees who conduct the search and produce the records responsive to this warrant. The Application goes on to order Apple, including of course all of these Apple employees, to keep this Application secret.

The PROVIDER shall not notify any person , including the subscriber(s) of each account identified in Attachment A, of the existence of the warrant, until further order of the Court, until written notice is provided by the United States Attorney’s Office that nondisclosure is no longer required, or until one
year from the date this warrant is signed by the magistrate judge or such later date as may be set by the Court upon application for an extension by the United States. Upon expiration of this order, at least ten business days prior to disclosing the existence of the warrant, the PROVIDER shall notify the agent identified in paragraph 12 above o f its intent to so notify .

Application, para 13

There is no reason to think that Apple did not fully comply with this confidentiality restriction. Instead, it looks like the DOJ itself, or the District Court Clerk for the Central District of California, did not keep the Application sealed when it was filed on April 15, 2022 in Case No. 2:22-MJ-1530. The style of this case, by the way, is:

In the Matter of the Search of: Information stored within the iCloud Account associated with DSID/Apple Account Number 1338547227 and/or email address rickscafedxb@yahoo.comat, Apple Inc., One Apple Parkway, Cupertino, CA 95014

Application at page 1 of 77

To understand this further we need to turn to the case itself, filed in the most populated United States District Court area in the country, the Central District of California.

Speculation That the Secret Application Was Disclosed Due to Limited Court Technology, Inevitable Human Error in Any Complex System, and the Novelty and Complexity of E-Filing Court Documents, Especially Criminal Warrants

The U.S. Magistrate Judge assigned to this case, In the Matter of the Search of: Information stored within the iCloud Account, Case No. 2:22-MJ-1530, is Margo A. Rocconi. She is located in Los Angeles, the Court’s Western Division of the Central District. Judge Rocconi was appointed on March 19, 2021. She previously served for over 25 years with distinction as a Deputy Federal Public Defender. First of all, let me say right away, that there is no reason to believe that Judge Rocconi, or any other judge, was in any way involved in the disclosure of this Application to API. There is nothing political about Judge Margo Rocconi at all, she is a hardworking, dedicated attorney and scholar. She has a terrific reputation. There is no reason to think that any of the judges here made any mistake at all, much less intentionally leaked the Application to the press.

Judge Rocconi’s local rules guidance, Judge’s Procedures, which are the rules that all attorneys are required to follow to the letter, including especially DOJ attorneys in criminal matters, at paragraph 17, states:

17. Law Enforcement Submissions: Federal law enforcement agents and the U.S. Attorney’s Office are encouraged to advise the CRD in advance of the anticipated submission of warrants, criminal complaints, and other applications for the Court’s review.

Honorable Margo A. Rocconi, Central District of California, official web page.

The abbreviation CRD stands for the Courtroom Deputy Clerk assigned to assist the judge. I am also not saying this rule was not followed, that an AUSA attorney or FBI did not contact the CRD. I do not know. I am noting here that this “encouragement” – not an rule exactly – is included for good reason. It is a type of quality control suggestion to try prevent mistakes, to prevent leaks of confidential information. Mistakes that may have happened in this case. Whenever humans are involved in following complex instructions, errors are possible, even among the best of us. To err is human, to forgive is divine.

What I do know is that the attorneys, clerks and other courtroom professionals, including the CRDs, Baliffs, USAs, AUSAs and Judges, all of them involved in the judicial process, are a cut far above average. They are top notch professionals, well known in the Bar for their integrity and honesty. I do not think that any of them would intentionally leak the secret warrant in this case to the API, or anyone. That would be a blatant violation of their duties.

Instead, I suspect human error is to blame, a simple, but unfortunate accident. Aside from the universal good character and honesty of these persons, consider the complexity of the combined paper and e-filing tasks. Although filing an application for a warrant is a daily occurrence in most every federal court, especially one as busy as the court in Los Angeles, it is still very complex. In any complicated system like this, especially one equipped with lowest-bid technology, far from state of the art, it is easy to happen. It is often just too complicated for people having to act fast under a lot of pressure. Mistakes happen. That is why pilots and surgeons all use checklists. Lives are at stake.

Federal court technology has always been underfunded, so has staffing. The technology has relatively few built in computer quality controls to prevent or catch mistakes like this. Mistakes can only be reduced and controlled, in any system, never eliminated entirely. Even with the best controls and unlimited budges, mistakes happen when high volumes of complex tasks are involved. Again, LA District Court is one of the busiest courts in the country.

To better understand the complexity and potential confusion, consider Paragraph 19 of Judge Rocconi’s procedures on point to this discussion, which states:

Document Duty E-Filing Requirements: In accordance with General Order 19-01, counsel, after receiving the necessary notification email from the Clerk’s office, shall inform chambers that a criminal duty matter has been filed and is ready for review by sending an email to the appropriate criminal duty email address MAR_CrimDuty@cacd.uscourts.gov (link sends e-mail), which is different from Judge Rocconi’s Chambers email address. Counsel should follow the procedures outlined below:

a. Title and Content of Counsel’s email: The title of the email should include the case number(s), and the email should also include the contact information for the AUSA and agent. If you are sending an agent with documents filed in more than one case, the title of your email must identify the case number for each case e.g., “U.S. v. Search Warrant, 99-MJ-99999 and 88-MJ-88888”. The Judge is not aware of cases that are filed unless you identify the case number assigned to those cases in the title of your email(s) to her criminal duty email address.

b. Attachments: Courtesy copies in .pdf format of all documents for the Judge’s review.

c. Timing: Do not email chambers before being notified by the Clerk’s Office that access has been granted to the sealed docket.

d. Sending the Agent: If an e-filed matter requires an agent’s signature, chambers’ staff will notify the AUSA and/or agent when the agent should come to chambers. If conformed copies are needed, the agent should bring the necessary copies. Further instructions may be obtained by downloading the Criminal Duty Matters Electronic Filing Pilot Project User Manual located on the Clerk’s Office website under E-filing.

Honorable Margo A. Rocconi, Central District of California, official web page.

Other rules apply here as well, not only Judge Rocconi’s, but also the rules of the Central District Court of California. See for instance the Court’s Rules on Sealed Documents. Consider especially this portion of the original that is in bold.

If you believe you have e-filed a document incorrectly, resulting in a confidential document being publicly filed, please contact both the Court Room Deputy and the Help Desk (213-894-0242 or ecf-helpdesk@cacd.uscourts.gov (link sends e-mail)), explaining the error.  Then, if you have not already done so, e-file an Application for Leave to File Under Seal pursuant to Local Rule 79-5.2.2.

There are many other rules in the court that can apply. One in particular is instructive, E-Filing Criminal Duty Matters. E-filing is a challenge for everyone. These instructions for Criminal Duty matters is just one of many e-filing instructions. This is complex and mistakes are easy to make with even simple e-filing tasks. There are seventeen Q&As regarding technical compliance included on the court page for Criminal Matters. Here is one, for example:

Question: For a search warrant application, should the notification email include a Word cover sheet and affidavit in one attachment?

Answer: No. Under General Order No. 19-01, it is generally not necessary to attach any documents to the notice email. However, you should check your judge’s Procedures and Schedules. If your judge requires that copies be emailed, the warrant and application should be emailed to chambers as flattened, single PDF documents. First, you would send one flattened (not fillable) PDF document that includes the warrant, attachments A and B, and the affidavit, if appropriate. Second, you would send one that has the application, attachments A & B, and the affidavit. This would be done instead of sending chambers the face page as one document and the affidavit as a different one. A sealing application and proposed order must also be sent as flattened PDF documents.

This should make apparent to most anyone the complexity of the e-filing system and how easily mistakes can happen. Reform to make the system easier would, I suspect, require significant expenditures in money for improved technology and for more personnel, including the hiring of many more Assistant United States Attorneys. It would also require greater educational efforts, perhaps requirements, of training for the whole Bar. Maybe someday robots will take over these perfunctory, technical filing tasks. See: my article on Robophobia.

Pacer Is Too Transparent And Does Not Do Enough to Protect Litigants’ Privacy Rights

I conclude the Application was filed online by accident, but that still does not explain how the API got it. My guess is a chance encounter, or perhaps the result of diligent research. Someone outside of the government, maybe the API directly, happened to see a new matter popped up on Pacer, saw it was hot, and downloaded or printed it. See: PACER: How Journalists Mine Records (National Press Foundation, 3/7/22.) Also see: Data in the Court: Judicial analytics in practice (Harvard Law School, Center on the Legal Profession) (Interview with Robert Ambrogi and others).

If it was not the API themselves who found the court information, then perhaps another entity, maybe one politically motivated found it, and they told API about it. The mentioned National Press Foundation page on Pacer is filled with Pacer related information, including reference to Lexis and West, and one tool I had not heard of, Sqoop. It supposedly allows journalists to track when new suits are filed. Does not look like it to me, but that’s what the Press Foundation says.

I have personally looked for this Allen case, or a related case, on Pacer via Lexis in a number of ways. I could find no trace. But that just shows it was later removed from Pacer, not that it was never on Pacer and thereby Lexis. So unless API comes forward and volunteers this information, highly unlikely, this will probably remain a mystery.

False Claims Act Case Have Sealed Records Too – My Story With Clerk Confidentiality Errors

Although I am not a criminal lawyer, I am, in addition to ediscovery, a False Claims Act lawyer. See eg. my website, FraudIsBad.com. Government fraud whistleblower complaints are filed under seal. Sometimes, if the government intervenes on a private relator filed case, criminal subpoenas, Grand Juries and criminal indictments happen. Fraudulent billing of the government is a crime.

Like all Qui Tam lawyers, I understand the importance of secrecy to fraud investigations. That is one reason the law permits us to sue someone for fraudulent billing under the False Claims Act, and not serve the complaint against the defendants. It is kept secret so that the government can evaluate the private relator’s evidence, and gather its own, if they deem warranted, and decide to take the case over, or not. They do this without any input from the defendants or even notice to them. They do this before the fraudsters have a chance to cover it up.

I have personal experience with mistakes in sealing documents in these types of cases and with keeping them off of Pacer entirely, which they should be, at first at least. Most Qui Tam lawyers probably do. One experience is from many years ago and another this year, 2022. The first one was back in the day when all District Court clerks in Florida were not too familiar with Qui Tam actions (they are now). One clerk simply decided, quite erroneously, to unseal it. They had never seen a False Claims Act case before and still were in the paper records sealing mindset. Not bad faith or anything, but a significant mistake none the less. The judge was not involved.

Wax Sealed Official Record

I found out about it very soon thereafter, and after a few curse words yelled loudly for stress release, I immediately prepared and filed a motion to have it resealed. When the motion finally got to the judge to decide a few days later, my motion was immediately granted. No harm no fowl. My relator client’s case, and my secret complaint against a major corporation, were sealed back up again, nice and tidy. Yet for almost a week anyone who cared to snoop around Pacer, and that was much harder to do back then, could have seen it. Someone could have been a hero to the big business I had sued by telling them about it. But nobody saw it, the odds of that happening back then were very remote. Not now.

Pacer was much less transparent and harder to access just a few years ago. So I was lucky. When the complaint was later unsealed after the government intervened, this big company was unpleasantly surprised. We had the evidence we needed to get them. A few years later (these cases move slowly), my client and I were paid handsomely, a share of the government’s recovery, for reporting the fraudulent billing. That happy ending could have been crushed by the Clerk’s Pacer blooper.

Pacer as an Information Governance Challenge

Pacer is now much more accessible than ever before. There are many more people just snooping around Pacer in certain topic areas. Some for legitimate reasons, some are probably just digging for dirt, sensational stories like we see in this case against General Allen. Using the language of the EDRM standard Risk and Security Reduction Model, the current Pacer system has far too much built in risk of exposure. This is especially true for confidential, supposedly sealed, electronic documents. The system is in need of reform, both policies and procedures. The current court system needs better, less complex, quality controls.

Looking at this problem from the information governance perspective, where another excellent EDRM model applies, there is a high risk of accidental disclosures in Pacer. The security protections, again both policies (court rules and Pacer rules) and procedures, need to be improved. Pacer and the federal court system need to improve their information governance. There needs to be a fair balance between judicial disclosure and privacy. Who will make these decisions? Who is in charge? Too many cooks, I suspect.

Like many law firms today, I have several standing searches where Lexis alerts me whenever certain kinds of cases are filed, or even whenever certain word patterns are used in any Pacer filing. See eg. LexisNexis, Search Court Dockets Online With Lexis Courtlink. That’s how I found out about the Seinfeld case. Many firms use this kind of Pacer watch service to compete with other firms for new cases when one of their past or current clients are sued. Kind of old hat marketing by now, since everybody does it. But it was once quite flashy and effective.

By accident in the past year I came across two new Qui Tam cases that had not been properly sealed. Had they been against one of my firm’s clients, I am not so sure what I would have done. (That’s not why I was searching. I just wanted to stay current on the latest developments in False Claims Act law.) If that did find an oops like that, involving a secret suit against a firm client, that would raise some challenging ethics questions. I will research that if and when the time ever comes (I hope never). In the two cases I’ve seen so far, which I talked to Lexis about, no clients were involved, and I did virtually nothing. All I did was look again later and see that the mistakes were quickly corrected, as I had hoped they would. If not, I probably would have informed the listed attorneys of the error. It’s the right thing to do.

That kind of ad hoc, random, review by individual attorneys and researchers is obviously an inadequate privacy risk protection system under any model of information governance. It is the opposite of governance. Can we afford that kind of chaos in online court filings and disclosures?

Pacer Needs to Be Tightened up To Protect Legitimate Privacy Rights

I can easily imagine that something like what happened to me in False Claims cases is what happened here in this criminal case. Maybe it was a chance discovery, or maybe it was discovered by some news corporation digging for a story. They and other organizations, some nefarious, perhaps foreign intelligence, must also have all kinds of standing searches of Pacer. Spies have always been digging for dirt against enemies to use against them or disrupt their society. Perhaps that is what happened here? Who knows, for instance, what portfolios Putin has on world leaders. You can bet the KGB has multiple standing searches on Pacer. They are other intelligence services are happy to exploit our open society, something not possible under totalitarian regimes.

Conclusion

I know this goes against the grain, but this case suggests that we should tighten up and reform Pacer. We should, at least, impose more quality controls with confidential documents. We should also give more leeway, more time, for the quality controls and correction of human errors to kick in before Pacer publication. Otherwise, as this case shows, unexpected, harmful consequences can all too easily follow. But see: Lynn Lopucki, Court System Transparency (Sept. 2007 Iowa Law Review 94(2)). This is out of balance right now and should be corrected. I am all for Pacer and judicial transparency, but this needs to be balanced against privacy rights. We need to guard the legitimate privacy rights of all litigants, including alleged criminals and fraud investigators, both public and private.

Pacer leaks can cause real damage. For instance, if the retired general, ex-President of Brookings is found innocent, or worse, is found to have been framed, then this error and Pacer openness could have ruined his life. Any person’s honor and integrity is priceless, especially that of a Four Star Marine General hero, one who put his life on the line for all of us many times. We need military heroes right now to defend our Constitution. In the United States of America we don’t swear an oath to an individual or a political party. General Allen swore an oath to “defend the Constitution against all enemies, foreign and domestic.” In our country, alone among all others, we swear an oath to a document, one guaranteeing our freedom, our life, liberty and justice. For me and the vast majority of Americans, that includes the right to government by the people, not despots, and privacy rights of all kinds.

All lawyers who are members of the Bar, and, of course, all judges too, make a similar, solemn oath of allegiance to uphold and protect the Constitution. We all take that seriously, well, almost all. Sometimes this means we have to keep our technology under control to protect our waning privacy rights. Even Superman needed privacy to change outfits. For us today, where there are no phone booths, no wax seals, and where so much is online, this means reform and better controls of online information, including Pacer, to protect our rights.

To bring this full circle, back to the Casablanca movie theme of nefarious government agents and allegiances, check out this stamp and recall the famous line, “Here’s looking at you, kid.” Pacer is a gold mine of public information, but litigants have privacy rights too, including the right to obtain lawful criminal warrants and do so, as the law provides, in secret. Criminal investigations have to start in private, so long as they are transparent when concluded. Then, they need to be looked at. The prosecution has strict disclosure duties at that time. Many other litigants have legitimate privacy rights that should be protected too. For example, this includes the rights of corporations to sue each other for trade secrecy violations without losing those secrets. They should be able to file trade secret information under seal to prove their case with confidence that foreign agents, or others, won’t be able to look at them. This means outside of the watchful eyes of Pacer. Don’t kid yourself Pacer. The bad guys, foreign governments and others with nefarious intent, are looking at you. Let’s do the right thing here and tighten up Pacer.



%d bloggers like this: