Electronic Discovery Law Firm : K&L Gates : Electronic Discovery Law

Rosenthal Collins Group, LLC v. Trading Techs. Int’l, No. 05 C 4088, 2011 WL 722467 (N.D. Ill. Feb. 23, 2011)

In this case, the court ordered default judgment, ordered plaintiff to pay $1,000,000 in monetary sanctions, and ordered counsel to pay “the costs and attorneys fees incurred in litigating this motion” where plaintiff’s agent modified metadata related to relevant source code and wiped several relevant disks and devices prior to their production and where the court found counsel participated in “presenting misleading, false information, materially altered evidence and willful non-compliance with the Court’s orders.”

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Philips Elecs. N. Am. Corp. v. BC Tech., No. 2:08-CV-639-CW-SA, 2010 WL 5838993 (D. Utah July 28, 2010);  Philips Elecs. N. Am. Corp. v. BC Tech., No. 2:08-CV-639-CW-SA, 2011 WL 677462 (D. Utah Feb. 16, 2011)

In this case, the court imposed terminating sanctions against defendant after finding that five employees had destroyed “thousands of computer files” in bad faith prior to the production of their laptops for examination and that defendant had attempted to hide those deletions from plaintiffs and the court.

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Fed. Trade Comm’n v. First Univ. Lending, LLC, No. 09-82322-CIV, 2011 WL 673879 (S.D. Fla. Feb. 17, 2011)

Relevant data was lost when a group of computers was scrubbed and sold by defendants with the permission of the court-appointed Receiver.  The permission was given, on the condition that the computers were scrubbed, because of the Receiver’s mistaken belief that all relevant computers had been imaged.  As a result of the loss of data, defendants filed a motion for spoliation sanctions for what they described as “the FTC’s bad-faith destruction of Defendants’ computer systems.”  For the reasons discussed below, defendants’ motion was denied.

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Moreno v. Ostly, No. A127780, 2011 WL 598931 (Cal. Ct. App. Feb. 22, 2011)

After initially resisting discovery, plaintiff produced a laptop and cellular phone for examination.  Upon inspection, it was discovered that neither device was in use during the relevant time period.  Moreover, the relevant devices were no longer in plaintiff’s possession.  When challenged as to why this was not disclosed initially, counsel explained that he was torn between his “competing duties” of protecting his client and candor to the court.  Rejecting plaintiff’s and her counsel’s explanations, the court entered monetary sanctions against them.  On appeal, the sanctions were affirmed.

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Daynight, LLC v. Mobilight, Inc., 2011 WL 241084 (Utah Ct. App. Jan. 27, 2011)

Appellants appealed the district court’s decision to enter default judgment against a third-party defendant for the destruction of evidence.  Appellants argued that the sanction was excessive and unduly harsh and that the Utah Rules of Civil Procedure require a finding of willfulness, bad faith or persistent dilatory tactics in order to impose sanctions.  Rejecting appellants’ reliance on Utah R. Civ. P. 37(b)(2), a rule “which typically pertains only to a delay in the production of evidence,” the Court of Appeals established that the appropriately applied rule, Utah R. Civ. P. 37(g), did “not require a showing of ‘willfulness, bad faith, or dilatory tactics’ or the violation of court order before a court may sanction a party” – including by ordering default judgment.  Moreover, the court noted that even if such a showing were necessary, the district court concluded that the third-party “chose to willfully and in bad faith destroy the laptop” as evidenced by employees’ recorded comments about “their destruction of ‘potential[ly] harmful evidence that might link [them] to any sort of lawsuit.'”  The Court of Appeals further concluded that the there could be no reliance on Rule 37(g)’s good faith exception (which is identical to the safe harbor provision in Fed. R. Civ. P. 37(e)) in light of certain “actions and words attributable to the third-party defendant after it filed suit, including throwing the laptop off the building; running over the laptop with a vehicle; and stating ‘[I]f this gets us into trouble, I hope we’re prison buddies'” – activities which “unquestionably demonstrate bad faith and a general disregard for the judicial process.”  Acknowledging that an order of default judgment was an “extreme” sanction, the court nonetheless found no abuse of discretion in light of the third-party defendant’s behavior and affirmed the order of the district court.

A full copy of the opinion is available here.

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The Knowledge Congress - Is Your Head in the Clouds? Best Policies, Practices, and Risk Management for Cloud Computing and ASP Services (Live Webcast)

March 15, 2011
3 PM - 5 PM EST

K&L Gates Partner David Cohen will present at this in-depth discussion of the rise of cloud computing and its impact on records retention compliance, e-discovery, and other business considerations and the steps companies can take to manage the risks of cloud computing and ASP services.

To learn more or to register, click here.

Pennsylvania Bar Institute - Halfway There: Beyond the Basics of Electronic Data Discovery

March 22, 2011
PBI Professional Development Conference Center
Heinz 57 Center
339 Sixth Ave., 7th Floor
Pittsburgh, PA
9:00 AM – 1:15 PM

K&L Gates Partner David Cohen will present on the topic of “The Complexities of E-Discovery Processing: New Pricing, Methodologies and Technologies.”

To learn more or to register, click here.

Washington State Bar Association – New Trends, Tools & Tips: Keeping Your Practice Current

March 24, 2011
WSBA CLE Conference Center
1501 4th Ave., Ste. 308
Seattle, WA 98101

K&L Gates attorney John Olson will present a discussion entitled, “Can you Keep a Secret? Maintaining Client Confidentiality in a Wired (and Wireless) World?” Topics to be addressed include ethical duties and technology habits; the web, the cloud, and metadata; and e-discovery and privilege in litigation.

To learn more or to register, click here.

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Nat'l Day Laborer Org. Network v. United States Immigration and Customs Enforcement Agency, 2011 WL 381625 (S.D.N.Y. Feb. 7, 2011)

In this Freedom of Information Act (“FOIA”) action, a dispute arose regarding the proper format of production and, in particular, whether metadata was subject to production pursuant to plaintiffs’ FOIA requests.  Following substantial analysis of the issue, the court held that “certain metadata is an integral or intrinsic part of an electronic record” and, as such, is “‘readily reproducible’ in the FOIA context.”  (FOIA provides that “[i]n making any record available to a person under this paragraph, an agency shall provide the record in any form or format requested by the person if the record is readily reproducible by the agency in that form or format.”  (Emphasis added.))  Addressing the question of which types of metadata are an intrinsic part of an electronic record, the court acknowledged that the answer “depends, in part, on the type of electronic record at issue . . . and on how the agency maintains its records” and determined that “the best way I can answer the question is that metadata maintained by an agency as part of an electronic record is presumptively producible under FOIA, unless the agency demonstrates that such metadata is not ‘readily reproducible.’”

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Océ N. Am., Inc. v. MCS Servs., Inc., 2011 WL 197976 (D. Md. Jan. 20, 2011)

In this case, plaintiff sought to compel the production of forensic images of certain “flash” or “thumb” drives.  The images were created by a neutral third-party expert upon agreement of the parties following defendant’s refusal to produce the drives for inspection.  The original drives were then destroyed.  Defendant objected to production, arguing that plaintiff had previously requested access to the thumb drives, but not the forensic images, thus attempting to draw a distinction between the two.  The court rejected defendant’s argument reasoning that “if the original thumb drives were discoverable, Capsicum’s forensic images of the thumb drives must also be discoverable, and Océ need not propound a new discovery request for what amounts to the exact same information.”

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The U.S. Court of Appeals for the Seventh Circuit recently ruled that a party in a lawsuit pending in Germany could be subjected to American discovery rules, even though the Court assumed that the discovery sought would not be allowed by the German court in which the case was pending.

To view the complete alert online, click here.

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Victor Stanley, Inc. v. Creative Pipe, Inc., No. MJG-06-2662 (D. Md. Jan. 24, 2011)

On January 24, 2011, Magistrate Judge Grimm entered an order awarding $1,049,850.04 in attorney’s fees and costs as a sanction for discovery abuse, as discussed in Victor Stanley II.  The amount addressed “attorney’s fees and costs associated with all discovery that would not have been un[der]taken but for Defendants' spoliation, as well as the briefings and hearings regarding Plaintiff’s Motion for Sanctions.”  As the court explained, “[t]his is because the effects of spoliation are not limited to a party’s efforts to discover and to prove the spoliation and its scope.  Rather, the willful loss or destruction of relevant evidence taints the entire discovery and motions practice.”  In this case specifically, the court found that “Defendants’ first spoliation efforts corresponded with the beginning of litigation” and that “Defendants’ misconduct affected the entire discovery process since the commencement of this case.”

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Last week the Delaware Court of Chancery issued new guidelines addressing the preservation of electronically stored information.  The guidelines are intended to “remind all counsel … of their common law duty to their clients and the court with respect to the preservation of electronically stored information.”  Although less than two pages long, the guidelines offer a straightforward discussion of the preservation obligation that arises upon anticipation of litigation and address specific topics including the need for attorney oversight in preservation, steps to be taken in “most cases,” “potential problem areas,” and the possibility of limiting or even eliminating the discovery of ESI upon agreement with opposing parties and their counsel, among other things.

A full copy of the guidelines are available here.

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Holmes v. Petrovich Dev. Co., LLC, 119 Cal. Rptr. 3d 878 (Cal. Ct. App. 2011)

Where plaintiff used her company’s computer to communicate with her attorney despite knowledge of policies prohibiting such use and establishing that employees had no right of privacy as to such materials, the court found that the emails “did not constitute ‘confidential communication between client and lawyer’ within the meaning of Evidence Code section 952” and thus were not privileged and affirmed the holdings of the trial court.

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In re Fontainebleau Las Vegas Contract Litig., 2011 WL 65760 (S.D. Fla. Jan 7, 2011)

In this case, the court found that privilege had been waived as a result of a third party’s voluntary production of servers believed to contain privileged materials without review.

The Term Lenders sought production of documents related to the financing of the construction of the Fontainebleau Resort and Casino in Las Vegas from the third-party parent of Fontainebleau Las Vegas, Fontainebleau Resort, LLC (“FBR”).  FBR resisted production of its documents, albeit without formal motions, until approximately six months after receipt of the subpoena.  During that time, FBR initially alleged that production would be delayed because of the shared status of the servers on which its information was stored and the need to separate its documents from those of other entities by allowing those entities to review all documents stored thereon to determine ownership, privileged status, etc.  FBR had previously raised this issue in the context of an unsuccessful motion to quash similar subpoenas from other banks.  The court’s footnote regarding the shared servers is illuminating:

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As a way of continuing to enhance the value of Electronic Discovery Law, we recently embarked on a project with the e-Discovery Reference Model (EDRM) to classify the more than 1,800 cases in our case database according to the EDRM standards.  These cases will retain their existing searchable tags in addition to the new EDRM classification.  To accomplish this, several EDRM member organizations will soon participate in an “EDRM Coding Challenge” to determine how to most efficiently and accurately identify the EDRM phrases to be associated with each case in the database.  Thanks to George Socha, Tom Gelbmann, and the challenge participants from EDRM for their contributions to this project so far and special thanks to LexisNexis and Applied Discovery for supplying the full text of the first 200 case opinions to be coded.  Please watch our blog for updates on this exciting collaboration.

In the meantime, our case database remains available for your e-discovery research needs.

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