e-Discovery Team

This is Part Two of a three part series reviewing, in alphabetical order, some thirty 2008 e-discovery cases. These are particularly interesting and noteworthy cases, but ones not previously featured in this blog. Part One covered ten cases A-J. Here in Part Two, seven more cases are written up, using some 4,150 words, but I only get through two more letters in the alphabet, H-I. That is because there are so many good “In Re” type cases, which are usually complex cases consolidated in a single court. These cases frequently involve important e-discovery issues, as you will soon see.

The first case here is the lone “H” case, Henry v. Quicken Loans, Inc., 2008 WL 474127 (E.D. Mich. Feb. 15, 2008). Henry involves search protocols and a questionable decision to change the agreed-upon, and court-ordered, procedures without telling the other side, or seeking permission from the judge. The not-so-subtle message of Henry is the need for communication and openness in e-discovery, especially when attempting a complex search of a large volume of ESI. The old ways of extreme adversarial discovery conduct do not work anymore in the new world of complex e-discovery. You may think you are helping your client, but, as this first case shows, you are not. More often than not you just end up making a bad situation worse. 

Henry v. Quicken Loans, Inc., 2008 WL 474127 (E.D. Mich. Feb. 15, 2008).

This case was brought by 422 plaintiffs who worked for Quicken Loans as “loan consultants.” They sued under the Fair Labor Standards Act for time and a half overtime pay for all work over 40 hours per week. Plaintiffs’ requested production of emails which they and 32 managers had written during a three month period in 2004. Apparently these emails were only available on backup tapes, and so Defendant objected.

Plaintiffs filed a motion to compel production and establish a protocol for production and clawback type privilege review. The motion was granted and the court compelled production and “a protocol was ordered that was intended to balance the concerns and needs of both sides at what was hoped to be manageable costs.” Id. at *1. The protocol called for Plaintiffs’ computer expert to retrieve email from the tapes under Defendant’s direction, but using search and screening terms agreed to by the parties. Plaintiff’s counsel agreed to pay for the expert’s expense, but “expressed a desire to limit the costs to no more than what was needed and not to be giving defense counsel a “carte blanche” to run up the costs of the screening procedure at Plaintiffs’ expense.” Id. at *2.

Mid-way through the screening process defense counsel directed the computer expert to start using different keywords to screen emails and attachments. This is difficult to understand. If defense counsel found that the search terms the parties had agreed to were not working well, which is certainly possible, if not likely, and felt it was necessary to change the terms, then why not speak with Plaintiffs’ counsel about it, or the court? (Later in the opinion the court stated that it would have agreed with some of the defense changes, but not all, if it had been asked in advance.) This was, after all, the Plaintiff’s expert, and so, defense counsel could not possibly have thought this “departure” from the agreement would pass undetected. So, why did defense counsel make a unilateral decision to change the search terms? By all appearances, it looks like an intentional violation of the parties agreement and court order? Monday morning quarterbacking is always easy, but still, this one looks like a no-brainer. So why did this happen?

Apparently defense counsel did think that this “little mid-course correction” could go by undetected. Yes, it was originally Plaintiffs’ expert, but the court order made clear that the expert would work under the “direction and control” of Defense counsel and would maintain confidentiality. Further, to underscore this point, and develop and extend the order a bit, Defense counsel told the expert that he “would be acting under the ‘direction and control’ of defense counsel and was not to have any contact with Plaintiffs’ counsel regarding his work.” Id. Apparently defense counsel figured they had set it up so that they could make these changes in search protocols without being detected, and so limit the production to Plaintiffs. Alternatively, they figured that if they were caught, there would not be significant adverse consequences. Wrong on both counts.

Here is how they were found out. The expert presented his bill to Plaintiffs’ counsel for payment as the court order provided. It is interesting to note that the bill was originally for $91,191.35, but was subsequently reduced to $79,965.01 due to “inadvertent double billing for certain work.” Id. at *3. (Seems odd – over twelve thousand dollars in inadvertent double billing?)  As soon as Plaintiffs’ counsel got the hefty bill, he sent a copy to Defense counsel, and advised them of his intent to depose the expert “regarding his bill and the protocol he followed.” Id. It seems to me that this should have been expected. But apparently not.

On the day of the noticed deposition, Defense counsel filed a motion for protective order to try to prevent the deposition. This delayed the deposition by several weeks, but after the motion was denied, the deposition eventually went forward. Of course, that is when the truth came out. The expert told all about how Defendant’s attorneys forced him to use new terms and procedures. Not surprisingly, the result of the new terms and procedures was an under-inclusive production of emails. The expert guessed at his deposition that “tens of thousands” of emails were not produced as a result of the change.

Again, as would be expected, Plaintiffs’ counsel responded with motions to the court. In my view, the motions were pretty mild considering the events described in the opinion. I would have expected a motion for sanctions. Instead, Plaintiffs counsel sought only to have the expert costs shifted, asking for the Defendant to pay most, but not all, of the expert’s bill, not Plaintiffs. Here is the court’s explanation:

*5 While there is no suggestion that defense counsel was acting unethically in serving his client’s interest, defense counsel’s actions exceeded the scope of the “direction and control” powers this Court vested in him in his unilateral and unauthorized modification of the “specific parameters” of the July 10, 2007, letter.

If there was a belief before or after the first screening run that there was some ambiguity in the meaning of screening for the names of identified company legal personnel, where those names were listed as a usual combined first and last name, defense counsel should have aired that with Plaintiffs’ counsel. If agreement could not be reached, Plaintiffs’ or Defendants’ counsel could have raised the matter with the Court. Had the issue of screening separately for first names of the 14 attorneys been brought to the Court’s attention, the initial interpretation and recommendation of Mr. Lanterman [the expert] of using both names together would have been adopted, or if separation was to occur, the screening would be done using the last name only of the attorneys. Instead of this, defense counsel unilaterally and secretly resolved any ambiguity, if such exists, in his client’s favor and against the advise of the forensic computer screening expert.FN5 It appears that as a result of this all e-mails screened subsequent to the initial screening were corrupted as being under-inclusive. Thus, it is determined that it is not a reasonable expense to impose the costs of subsequent screening runs on Plaintiffs where the corruption was caused by the acts and omissions of defense counsel, and could have been avoided.

Plaintiffs’ motion was granted and Defendant was ordered to pay the expert fees. Plaintiffs’ have another motion pending to have the court find a waiver of privilege (which may explain the seemingly mild response here to the hidden change). This opinion did not explain the waiver issues, but did state that depending on how it rules on this privilege motion, Defendant may be required to produce all of the emails it screened from the unilateral revision, and then some. The decision not to call Plaintiffs’ counsel, or the court, and instead unilaterally change the search procedure, could indeed have very harsh consequences.

In Re Flash Memory Antitrust Litigation, 2008 WL 1831668 (N.D. Cal. Apr. 22, 2008).

In this case, the court entered a preservation order reminding parties of their duty to preserve all potentially relevant evidence. It appears if as this was done sua sponte as there is no reference to a motion or stipulation. The parties were directed to take reasonable steps to ensure that potentially relevant records are preserved and to notify all parties and non-parties of their duty to preserve.

This is a one page order that simply reminds the parties to do what the law already requires. No explanation was provided for why the court felt it necessary to help the parties with their memory in this way, but I cannot help but notice the irony in view of the title of this case. The Flash Memory opinion concludes with the following:

Until the parties reach agreements on a preservation plan or the Court orders otherwise, each party shall take reasonable steps to preserve all documents, data, and tangible things containing information potentially relevant to the subject mater of this litigation. In addition, counsel shall exercise all reasonable efforts to identify and notify parties and non-parties of their duties, including employees of corporate or institutional parties, to the extent required by the Federal Rules of Civil Procedure.

In Re Honza, 2007 WL 4591917 (Tex. App. Dec. 28, 2007).

Technically this may not be a 2008 case, but it is real close. It is a state appeals court opinion involving real estate litigation. The appellate court upheld a trial court order requiring a forensic examination of Defendants’ computers so that outcome determinative metadata could be discovered.

The main issue in the underlying case is whether Defendants had altered a partial assignment of a real estate contract after the parties finalized the agreement. The trial court ordered a computer expert to create a mirror image of the computer hard drives in Defendants’ office in order to locate all drafts of that assignment, including deleted files. Plaintiffs wanted the documents in their native format with the metadata intact so that they could determine when the drafts were modified. The appeals court found that under these circumstances, the order was not overly broad and was properly crafted to protect disclosure of privileged and confidential information. 

Here is the court’s explanation of why acquisition of the metadata in this case was critical:

A & W seeks the metadata from the Honzas’ hard drives because it wants to identify the points in time when the partial assignment draft was modified in relation to the diary entry. This goes to the issue of whether the Honzas altered the partial assignment after the parties concluded their agreement but before the document was presented for execution.

There is no explanation as to why the Defendants did not simply produce the native files with all metadata. Apparently, the defendants simply refused to do so thus triggering the rationale for the forensic examination. This fact also makes it easy to distinguish this case, because, in most circumstances, the producing party would simply produce the metadata, at least as a fall back position. In a case like this, where only two documents were involved, and the metadata could be outcome determinative, the metadata was obviously relevant and should have been produced voluntarily.

The Texas appeals court opinion is noteworthy for its good review of some of the many state and federal cases addressing the issue of forced forensic examination of a producing party’s computers. This was an issue of first impression in Texas, but has been considered by many other state courts, and dozens of district courts. The opinion also contains a detailed list of the procedures to be followed during the exam to protect the rights of the examined party. It is a good decision to know about, especially in state court cases.

In Re Seroquel Products Liability Litigation, 244 F.R.D. 650 (M.D. Fla. Aug. 21, 2007).

Ok, this is not a 2008 case either, but it is an important case that has a lot to say about search and the need to cooperate in e-discovery. I should have written about Seroquel previously; so, better late than never. This is a well-written decision by Orlando Magistrate Judge David Baker. Judge Baker is not yet one of the “Judicial Rock Stars” of e-discovery, but he has long experience with computers and a good understanding of e-discovery, and could easily join the “e-disco” circuit if he wanted to.

This is a multi-district products liability action. It was filed by 6,500 Plaintiffs who took the drug Seroquel, an anti-psychotic medication that is purported to cause diabetes and other illnesses. I can only imagine the kind of client relations problems the Plaintiffs’ lawyers must have. This opinion addresses Plaintiffs’ motion for sanctions against the Defendant, the drug’s manufacturer, AstraZeneca, due to its failure to timely or properly comply with multiple discovery requests. After a raucous hearing, Judge Baker granted the motion and imposed the sanctions, even though there was no showing of willfulness or bad faith.

There was, however, proof of massive discovery negligence bordering on bad faith that caused unnecessary expenses and delays. Judge Baker characterized Defendant’s response to discovery as “purposeful sluggishness.” Defendant eventually produced 25 million pages of ESI, but of this, over 10 million pages were inaccessible, unsearchable, and unusable. The was at the heart of the sanctions motion. The flat TIFF images produced were not searchable because they were not accompanied with any metadata or other load file. Further, the production included multiple giant “TIFF” images, some over 20,000 pages long, with no page breaks. When plaintiff’s counsel suggested the inclusion of page breaks, defense counsel called it “ingenious,” a fact which Judge Baker pointedly noted in the sanctions opinion.

Judge Baker criticized both sides for their lack of professionalism and over-argumentative approach to electronic discovery. But, the Court found primary responsibility for the breakdown in communication and cooperation on the Defendant whose records were at issue. The following quotes from the opinion are of particular importance, and are starting to appear in other decisions nationwide, including the latest hot opinion on search issues by Judge Grimm, Victor Stanley.

While keyword searching is a recognized method to winnow relevant documents from large repositories, use of this technique must be a cooperative and informed process. Rather than working with Plaintiffs from the outset to reach agreement on appropriate and comprehensive search terms and methods, AZ undertook the task in secret.

Common sense dictates that sampling and other quality assurance techniques must be employed to meet requirements of completeness. If AZ took such steps, it has not identified or validated them.

One day all practitioners will understand and agree that using sampling and other quality assurance techniques in ESI search is just plain common sense. In the meantime, judges like David Baker, Paul Grimm, and many others stand ready to sanction clueless lawyers whose blundering, or adversarial based “purposeful sluggishness,” needlessly drives up the cost of litigation.

In Re Intel Corp. Microprocessor Antitrust Litigation, 2008 WL 2310288 (D. Del. June 4, 2008).

In this antitrust litigation, supposedly the largest in the country, the court found waiver by the defendant Intel of attorney-client privilege and work product protection. By the time this class action is concluded, all parties expect it will involve the largest production of ESI in history:

AMD, the Class Plaintiffs and Intel recognize that this litigation could be the “largest electronic production in history” resulting in Intel’s production of “somewhere in the neighborhood of a pile 137 miles high.” (citations omitted)

Intel discovered some lapses in its retention of potentially relevant documents and disclosed these lapses to the court and the many opposing parties, most notably AMD. This then forced Intel to start to look for these deleted emails on its backup tapes and other locations. It then discovered that some of the backup tapes had also not been preserved. This triggered a full investigation, including interviews by new outside counsel retained for that purpose, Weil Gotshal & Manges, LLC (“Weil”). In what any law firm would consider a dream assignment, Weil was retained to interview each of Intel’s 1,023 identified custodians “for the purpose of determining their e-mail preservation habits and their level of compliance with Intel’s litigation hold notices/instructions.” As part of these remedial efforts, Weil attorneys “spent many hours preparing roughly 400 pages of custodian-specific retention reports which drew upon thousands of pages of attorney notes, as well as other information.”

Plaintiffs sought the production of the Weil attorney notes underlying these retention reports in order to determine whether there was any deliberate destruction of relevant data. Intel opposed production, asserting attorney-client communication privilege and attorney work product privilege to all of the notes. A Special Master was appointed to determine if Intel had waived these privileges. The Special Master found waiver of attorney-client privilege because Intel had asserted to the Plaintiff, and the court, that the deleted information was due to human error and not intentional destruction. Intel waived work product protection when it agreed to produce detailed descriptions of the preservation issues of each custodian. This was waiver of “fact work product” only, and did not include “core work product,” a/k/a “opinion work product” which the decision notes is accorded near absolute protection from discovery. Id. at pg. *15. The court fully adopted the Report and Recommendation of the Special Master and overruled all of Intel’s objections.

The Court felt that waiver was required; otherwise, Intel would be “in the position of being able to use its sword to assert facts while at the same time shield AMD, the Class Plaintiffs and the Court from the accuracy of Intel’s assertion.” This would in effect force AMD and Class Plaintiff’s to either take Intel’s word for everything, or start all over and depose the Intel witnesses themselves. That would have defeated the whole purpose of the original discovery agreement under which the Weil investigation was commenced. As the Court explained:

In the context of the discovery phase of Intel’s preservation issues, Intel, by and through its attorneys, agreed to this form of discovery. Intel agreed to produce, “detailed written description[s] of the preservation issues affecting [every] Intel Custodian, including the nature, scope and duration of any preservation issue(s).” Intel could have left AMD and the Class Plaintiffs to their own devices, forcing them down the path of protracted world-wide preservation depositions. It did not. Rather it trumpeted its willingness to have AMD, the Class Plaintiffs and the Court informed as to fact work-product gathered and provided “a detailed written description of the information provided by each custodian [to Weil] during the interviews.”

CONCLUSION:

*17 The Special Master concludes, therefore, that Intel cannot now mask its agreed to discovery of custodian information by asserting the work-product privilege with respect to fact work-product which, in the Special Master’s view, lies at the heart of Intel’s position on its preservation issues.

So the troubles for Intel in this antitrust case continue. Not only will its mistakes in preservation cost Intel a small fortune to try to correct, but now it will also cost Intel some of its attorney-client secrecy protection. This could in turn lead to more sanction motions by AMD and other class plaintiffs, depending in no small part upon the findings and conclusions of Intel’s own lawyers. 

In Re Subponea Duces Tecum to AOL, 2008 WL 1956266 (April 18, 2008).

In this qui tam action against State Farm Insurance, the court considered a motion objecting to the magistrate judge’s order quashing State Farm’s subpoena of AOL. The filers of the qui tam action (called “relators”) argued that the subpoena to AOL violated the Electronic Communications Privacy Act. State Farm subpoenaed AOL for certain information relating to the email accounts of listed State Farm adjusters. The subpoena also requested all emails and electronic documents sent and received during a six-week period from one of the adjuster’s email accounts. The adjusters were not parties to the underlying litigation.

The court upheld the magistrate judge’s order for two reasons. First, the subpoena was over-broad due to the fact that the request for all emails and electronic documents during the six-week period was not limited to documents relevant to the subject matter of the litigation and it imposed an undue burden on the third party insurance adjusters. The court reasoned that the emails and electronic documents produced from the six-week period would likely contain privileged and personal information that was unrelated to the litigation. Second, the court held that:

[T]he plain language of the Privacy Act prohibits AOL from producing the Rigsbys’ e-mails, and the issuance of a civil discovery subpoena is not an exception to the provisions of the Privacy Act that would allow an internet service provider to disclose the communications at issue here.

This is an important ruling construing the Electronic Communications Privacy Act (“Privacy Act”). 18 U.S.C. §§ 2701-03 (2000). It applies only to civil discovery subpoenas of Internet service providers, and does not apply to civil trial subpoenas, nor to criminal subpoenas. Here is a segment of the Court’s reasoning behind this important ruling:

Protecting privacy interests in personal information stored in computerized systems, while also protecting the Government’s legitimate law enforcement needs, the Privacy Act creates a zone of privacy to protect internet subscribers from having their personal information wrongfully used and publicly disclosed by “unauthorized private parties,” S.REP. NO. 99-541, at 3 (1986), as reprinted in 1986 U.S.C.C.A.N. 3555, 3557.

*4 Applying the clear and unambiguous language of § 2702 to this case, AOL, a corporation that provides electronic communication services to the public, may not divulge the contents of the Rigsbys’ electronic communications to State Farm because the statutory language of the Privacy Act does not include an exception for the disclosure of electronic communications pursuant to civil discovery subpoenas.

[T]he Court holds that “unauthorized private parties” and governmental entities are prohibited from using Rule 45 civil discovery subpoenas to circumvent the Privacy Act’s protections.

This means that if you want to discover email you need to subpoena the subscriber, the person whose email account it is, not the provider. If you receive a court order compelling the individual subscriber to produce the email, then, and only then will the Internet provider cooperate.

In Re World Trade Center Disaster Site Litigation, 2008 WL 793578 (S.D.N.Y. Mar. 24, 2008).

This litigation involves approximately 10,000 cases relating to the respiratory injuries of workers exposed to toxic chemicals in the clean up and rescue efforts after the terrorist attacks of September 11, 2001. The court recognized the massive volume of e-discovery required to fairly resolve the many claims in this important case. For that reason, this opinion accepts and approves the Special Masters recommendation that Technology Concepts & Design, Inc. be hired to build, maintain, and operate a computer database to store “Core Discovery.”

The recommendation was made by the multiple Special Masters previously appointed in these consolidated cases. (By the way, the opinion notes that the Special Masters’ bills average $20,000 per month.) The court accepted the recommendation because, as the court put it, “it is imperative that a means be developed to process and organize the information on a consistent, reliable, and accessible basis.”

The Plaintiffs had opposed the hiring of the expert, and construction of the database, largely on the basis of the additional cost involved. Plaintiffs were keenly concerned with costs because all of the expenses are paid out of a capped recovery fund. The court rejected these arguments, claiming that a source of reliable information was indispensable to the efficient and inexpensive resolution of these 10,000 plus cases. The Court also explained its authority to appoint Special masters and experts to assist courts in complex discovery issues:

The court has ample power to appoint Special Masters, and to support their activities in manners that will create efficiencies and economies. Fed.R.Civ.P. 53; In re Peterson, 253 U.S. 300, 312-13 (1920) (“Courts have … inherent power to provide themselves with appropriate instruments required for the performance of their duties. This power includes authority to appoint persons unconnected with the court to aid judges in the performance of specific judicial duties” including Special Masters); Manual for Complex Litigation §11.52 (4th ed. 2004).

The use of Special Masters in this case is a good example of an emerging trend in e-discovery. Like most people in the field, I predict a significant increase in the use of Special Masters for e-discovery specific issues in the coming years. These issues are frequently too complex and time consuming for district court judges or magistrates to deal with on their own. For consistency, predictability, and quality of ruling, not to mention speed, more and more parties to complex litigation will voluntarily agree to use a special master with special skills and experience to resolve their e-discovery disputes. Even if they do not all agree, the judges may well force it upon them. As this opinion shows, they have ample legal authority to do that, especially in an extraordinary case like this.

This entry was posted on Sunday, July 20th, 2008 at 9:06 pm and is filed under Evidence, Forensic Exam, Lawyers Duties, Metadata, New Rules, Review, Search, Spoliation/Sanctions. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.