Now, think to yourself: What happens one day when your company winds up on the wrong end of a lawsuit?  Perhaps even a completely bogus, frivolous lawsuit.  Even if you know that you’ll end up victorious in the end, you might find yourself bogged down in an eDiscovery quagmire once you have to turn over all of your “documents” during discovery.  While you might have nothing to hide and you might want to turn over every piece of potentially relevant data possible in order to clear your name, you might not want to be the one to actually go through the effort or sifting and sorting through megabytes upon gigabytes upon terabytes of word documents, excel spreadsheets, emails, gmails, tweets, and the like.

One possible solution to the time-consuming document review process is to contract with an independent vendor who will cull through your electronically stored information (ESI) in order to satisfy your adversary’s demands.  While hiring an e-discovery vendor can sometimes be the least burdensome solution, as we will soon see, it is by no means a perfect solution.

In T.A. Ahern Contrs. Corp. v. Dormitory Auth. of State of New York, the Supreme Court of New York (i.e., the trial court) expressed that hiring a vendor to sift through eDiscovery is acceptable because it is often the least burdensome, and occasionally the only practicable, way in which to satisfy a party’s complicated discovery demands.  Even though hiring a vendor may seem like the best solution, you may still be thinking: “But, how much is this going to cost me?”  Costs of vendors willing to provide these services can amount in the tens of thousands of dollars, and sometimes more.  However, if you’re going to state court in New York, you’d probably be pleased to find out that it might not cost you a dime.

The general rule followed by the New York court system is that the party seeking discovery should incur the costs of production.  (P.S. There is authority in New York for requesting parties to seek protective orders aimed at shifting all or part of the ESI costs to the producing party).  Thus, feel free to let your adversary make as complicated and exhaustive an eDiscovery request as imaginable.  You can rest easy knowing that it’s likely that they’ll have to foot the bill for it.

An independent vendor, however, is far from a perfect solution to your eDiscovery woes.  In Heriot v. Byrne, a mistake by plaintiffs’ eDiscovery vendor led to the production of plaintiffs’ documents that were protected by the attorney-client privilege.  In the end, the court determined that it would be unfair for plaintiffs to be penalized for a mistake that they themselves neither caused nor anticipated.  As a result, the defendants were ordered to destroy any remaining copies of documents wrongly provided to them or to return them to the plaintiffs.  This case serves as a reminder that if you want things done right, sometimes you might want to just do it yourself.

In support of this argument, Reynolds submitted to the court the declaration of David J. Farber, a professor of computer science at Carnegie Mellon University.  Professor Farber’s declaration concerned Usenet technology, the Usenet network, and the defendants’ system, in particular. Although the plaintiffs did not deny Professor Farber’s qualifications as an expert, they strongly objected to the basis for his “findings.”

By his own admission, Professor Farber had done little to substantiate the substance of the statements that he made in his declaration. In preparation, he had received, but only “scanned,” notes from Mr. Reynolds concerning the defendants’ computer system. He also reviewed the operations manuals for the software used by the defendants in operating their system and performed internet research on that software. Finally, Professor Farber discussed with Reynolds the Usenet.com system, the software, and the age of their servers. Rather than verify the information that Reynolds provided, however, Professor Farber elected to accept the information as reasonable based on his own experience.

The plaintiffs argued that “without any independent review or analysis of his own—and without any familiarity with [the defendants’] system—Prof[essor] Farber simply accepted conclusions from Reynolds and, without verification, presented them as his own expert conclusions.” In response, the defendants conceded what the plaintiffs said was more or less true, but argued that Professor Farber had relied on information supplied by Reynolds only where his experience suggested it was appropriate.

In ruling on the plaintiffs’ motion to strike Dr. Farber’s declaration from the record, the court cited Fed. R. Evid. 702, which permits a qualified expert to testify in the form of an opinion if (1) the testimony is based upon sufficient facts or data and is the product of reliable principles and methods, and (2) the witness applies the principles and methods reliably to the facts of the case. Essentially, the court explained, this requires the court to “make certain that an expert, whether basing testimony upon professional studies or personal experience, employs in the courtroom the same level of intellectual rigor that characterizes the practice of an expert in the relevant field.”

Noting Professor Farber’s declaration was filled with opinions and conclusions that were “nothing more than information supplied to Professor Farber by Defendant Reynolds,” the court granted the plaintiffs’ motion to strike it from the record. “An expert who simply repeats the hearsay of the client who retained him,” the court explained, “without any independent investigation or analysis, does not assist the trier of fact in understanding matters that require specialized knowledge.” Such expert testimony, the court concluded, fails to serve its purpose.

Patrick J. Ryan has since graduated from Seton Hall University School of Law. He has focused much of his training and legal education on bankruptcy and state law insolvency proceedings.

While filing six different motions to mirror image a third party’s computer may make the senior partners at your firm really happy that you are bringing in the big bucks, unless you have discovered something that there was absolutely no way of knowing about previously, you should probably cut your losses and move on. The plaintiff in this case alleged that prior to Meesham Neergheen leaving Mintel; he emailed himself Mintel documents via his personal email account and was using these documents at his current employer Datamonitor.

The original complaint was filed on July 11, 2008. Subsequently on August 28, 2008 the first of six motions to mirror image the computers of Datamonitor was filed. Like each of the following motions, this motion was denied without prejudice. The current motion, filed on December 23, 2008, asserted that the analysis by Mintel’s forensic expert of the USB drives turned over by Datamonitor in mid-September resulted in evidence supporting the mirroring of Datamonitor’s computers. This evidence included that Neergheen’s resignation letter was printed from one of the USB drives onto a Datamonitor printer server “Thames” and that a “wiping” program had been used to overwrite some of the material on the USB drives due to the “FF” values found in the unallocated space on the drives.

The Magistrate Judge first made clear that on motions for reconsideration based on newly discovered evidence, the orders would only be overturned based on evidence that based on reasonable diligence could not have been discovered in time to have been presented previously. Here, the Court notes that Mintel should have known of the Mintel documents on the USB drives before the order, which was entered on December 23, 2008. While, Mintel claims that this was not possible because Datamonitor did not turn over information required to complete the analysis until December 31, 2008, the discovery order placed a deadline on discovery for November 30, 2008. Therefore, Mintel’s expert should have concluded his analysis by November 30^th at the very latest.

Although the lack of diligence by Mintel presents enough reason to deny the motion, the Court further analyzed the presence of new evidence asserted by Mintel. Looking at the claims of new evidence the Court noted first that both parties admit that the only document connecting the USB drives with Datamonitor is the resignation letter printed by Neergheen on Datamonitor’s printer. Next, the Court acknowledged that two fragile Mintel documents were found on the USB drives, however, observed that there was no connection between them and Datamonitor. Lastly, the Court looked at the conflicting opinions of the experts, which contradict regarding the presence of “FF” values found on the unallocated space of the drives. Since Mintel’s expert was unable to state which program was used to wipe the drives or whether any other wiping program results in a “FF” hexadecimal pattern upon wiping, the Court concluded that this evidence was insufficient to result in an overturning of the previous order.

Thus, while Mintel certainly had reasons for desiring to mirror Datamonitor’s computers, mere postulating was insufficient evidence to allow their motions. Even after they had secured information from Datamonitor that may have allowed them to secure a motion to mirror the computers, the diligence by the party was inadequate to persuade the court. Also, because Datamonitor was a third party in this action, it is likely that anything which came close to being “on the line” in terms of influencing the court’s decision was decided in favor of protecting Datamonitor.

Courtney is a graduate from UCLA and is currently a third year student at Seton Hall Law School with a concentration in intellectual property law.

In a recent law review article, The Honorable Shira A. Scheindlin, U.S.D.J. (Southern District of New York) and Jonathan M. Redgrave address the recent revisions to Rule 53 and discovery rules, and articulate appropriate uses of special masters in the growing world of e-discovery. They predict eDiscovery Special Masters to be the next big thing in e-discovery.

Revisions to the Rule

Judge Scheindlin begins the article by addressing the changes to Federal Rule of Civil Procedure 53 (governing the appointment of masters). The article notes that this rule revision was “undoubtedly intended to expand the use of masters in new directions in order to assist courts in coping with ever-increasing caseloads and in addressing difficult issues that require disproportionate judicial attention and expertise not otherwise available to the court.” In contrast to the original Rule 53, which allowed only a limited role for masters, the revised rule allows for the use of special masters on an as-needed basis with the parties’ consent, or, by court order in exceptional circumstances.

The article also discusses the 2006 revisions to federal discovery Rules 26 through 37 and Rule 45. Judge Scheindlin observes that these revisions took into account the digital revolution that has resulted in a substantial amount of records being generated and stored in an electronic format. The article articulates that both these revisions have a collaborative effect in expanding the role of special masters in e-discovery.

Trends in Special Master Appointments in E-Discovery

Next, the article examines reported and unreported cases regarding the appointment of special masters and discusses trends based on these cases as well as on other sources.

Specifically, the article identifies four roles that a special master can play effectively in the context of e-discovery:

(1) facilitate the e-discovery process;

(2) monitor discovery compliance related to ESI;

(3) adjudicate legal disputes related to ESI; and

(4) adjudicate technical disputes and assist with compliance on technical matters, such as conducting computer and system inspections.

Despite the increase in the appointments of special masters to address e-discovery issues, the article acknowledges that a number of courts have declined to make such appointments. These courts cite the following reasons for declining to appoint special masters: (1) the master’s responsibilities can be handled by the parties’ experts or by the court itself; (2) computer searches by special masters are intrusive and only necessary when the contents of the computer may go to the “heart of the case,” and not when the party is simply looking for “impeachment” material; and (3) the failure of a plaintiff to substantiate a claim in a way that would justify an intrusive review by a special master.

Because courts use their discretion for such appointments, the article asserts that if a party deems it advantageous to seek appointment of a special master, they may need to provide some justification for that appointment and convince the court that an appointment will facilitate smooth case advancement. Specifically, the article notes that a special master appointment is more likely where the parties have: (1) clearly identified the proposed special master’s purpose and tasks, and (2) persuaded the court that the special master’s role will reduce the burden on the judicial officer and expedite the judicial proceedings at hand.

Thus, the article advocates that since all “judges are not and cannot be experts on electronic hardware and software that enable people to create, store, retrieve, and search ESI,” it would be more effective and efficient to appoint court adjuncts with specialized knowledge in cases with substantial amount of ESI. “The appointment of a special master may make it possible to accomplish in days what would otherwise consume months of litigation and require both sides to incur substantial costs.”

What This Means For You

Although requesting a special master may not be cost-effective or feasible for some cases, for cases involving multiple parties, extensive records, or complex or technical issues, there may be an increase in the number of such appointments in the near future. The successful and regular use of special masters in e-discovery also depends on parties’ mutual agreement about the significance and effectiveness for such masters in complex e-discovery cases. Thus, litigants should be open to the benefits of having special masters; and if deemed appropriate, diligently make an effort secure one by clearly identifying the proposed master’s tasks and persuading the court to make such an appointment. The article appends sample orders appointing eDiscovery Special Masters as well.

Fernando M. Pinguelo, a partner of Norris McLaughlin & Marcus and Co-Chair of its Electronic Discovery Group, devotes his practice to complex litigation and eDiscovery. Fernando teaches an eDiscovery course at Seton Hall Law School.

Sheetal Patel is a third year student at Seton Hall Law School and an Associate Editor of the Seton Hall Circuit Review.

Antioch asked the Court to start discovery early because it believed that Scrapbook was destroying incriminating documents.  Before the Court reached the Plaintiff’s motions, it denied the Defendant’s motion to stop the litigation because of the Soldiers’ and Sailors’ Civil Relief Act of 1940.  The Court found that although one of the defendant’s was in active service, he was deployed in the United States, and served only 2 out of every 4 weeks.

The Court then addressed the electronic discovery demands.  Antioch first asked the Court to order Scrapbook to preserve all documents relevant to the action.  Antioch was concerned that Scrapbook might go out of business and lose or destroy relevant information in the process. Also, on an occasion where the Antioch lawyer visited Scrapbook, she was concerned that the file for one of Scrapbook’s largest customers was only 2 or 3 pages thick, while other files were much larger.

Interestingly, the owners of the Defendant Scrapbook Inc. appeared pro se, which the Court noted wasn’t entirely acceptable since a corporation must be represented by council. Antioch claimed that because of this decision, the Court should grant the order because the Defendants may not “appreciate the nature of the discovery process.”  In other words, Antioch believed the Defendant’s were going to try and destroy every ounce of evidence.  The Court granted the motion.

Next, Antioch asked the Court to allow discovery to begin, even though the parties did not previously confer as the Federal Rules of Civil Procedure suggest.  The Court stated that although the Defendant’s did not even have time to respond to Antioch’s allegation, discovery was proper because there was a risk that evidence would be lost.

Finally, Antioch proposed a formal discovery schedule and asked that a neutral expert be used for electronic discovery data recovery.  The Court agreed that an expert should be used, especially since Antioch proved that Scrapbook used e-mail as a form of business communication.

Then the Court outlined a fabulous proposal to recover and discover the information from the Defendant’s.  The Court concluded that Scrapbook may have information on its computers that through normal use could be lost or deleted.  Since Rule 34 of the Federal Rules of Civil Procedure applies to electronic data, the documents are included in discovery so long as they are obtainable.  Since deleted emails can be recovered, this information was discoverable.

Finally, the Court outlined the discovery schedule.  Antioch was to select an expert in the field of computer forensics, and Scrapbook had to allow the expert to examine the computer equipment.  The Court made it clear that only the expert and his employees could handle Scrapbook’s computer equipment during the process.

The expert had 10 days to copy the information and provide a report to both parties and the Court as to what was discovered.  The report had to be very detailed and organized so that each party knew exactly where each piece of information was produced from.  Scrapbook was allowed to view the information first, and remove any documents it believed were privileged.  A “privilege log” would then be given to the Court for review.

The detailed process set up by the Court was an exemplary way to deal with the electronic discovery issues.

Brett is a third year student at Seton Hall University School of Law.

Qualcomm held two digital video compression patents integral to the development of a high quality video standard H.246, a.k.a. MPEG-4 AVC, which was being developed by the Joint Video Team (JVT). The JVT comprised members from a range of digital media corporations, and required that these companies disclose any intellectual property rights (IPR) concerns to ensure that proper licensing could be arranged for development. H.264 was published in May 2003.

Qualcomm had been involved with the JVT since December 2001 but withheld its patents from the group, seemingly with the thought that its IPR would be more valuable in litigation than in the form of a license. And in 2005, Qualcomm filed a patent infringement suit against Broadcom, who had introduced an H.264-compliant product. The key to the suit was Qualcomm’s claim that it was not involved with the JVT until after H.246 was released.

Broadcom sought to uncover documents that linked Qualcomm to the JVT prior to the publication of H.246, but Qualcomm maintained throughout discovery and the trial that its relationship with the JVT began after May 2003. However, in January 2007, towards the end of the district court trial, Qualcomm discovered that one of its witnesses had, since August 2002, been a member of an email group, “avc_ce,” related to the development of H.264. A quick search in the employee’s email account found 21 emails relating to the group, none of which had been produced during discovery. Although Qualcomm eventually produced these emails, it conducted no follow-up searches for other documents.

In April 2007, Qualcomm admitted that it had uncovered thousands of relevant documents that were not produced at trial. By June 2007, that number had grown to over 46,000 requested but undisclosed documents, totaling over 300,000 pages.

So here’s what happened: Qualcomm happened to find all the helpful documents dated after September 2003, but failed to find the entire e-paper trail that showed its relationship with the JVT before that date. The reason? Willfully poor document and email searching.

As a company assisting attorneys to search for electronic documents in this case, what terms would you identify as relevant? How about: JVT, H.246, avc_ce, and MPEG-4. And guess what? Qualcomm searched for none of these terms until after the district court concluded its inquiry. The magistrate who heard Qualcomm’s appeal from sanctions determined that “[t]he fact that Qualcomm did not perform these basic searches at any time before the completion of trial indicates that Qualcomm intentionally withheld the documents.”

The magistrate characterized the situation as an “incredible discovery violation,” and concluded with her own mini e-lesson:

“For the current ‘good faith’ discovery system to function in the electronic age, attorneys and clients must work together to ensure that both understand how and where electronic documents, records and emails are maintained and to determine how best to locate, review, and produce responsive documents.”

The result? The court determined that Qualcomm’s plan to shield the patents from the JVT was underhanded and illegal, and its substantial withholding of relevant documents was damages-worthy. For its iniquities, Qualcomm lost its rights to the two relevant patents and was ordered to pay over $8.5 million to Broadcom.

Qualcomm counted the $$$ its patents would earn it through litigation without taking proper care to ensure that its behavior was within the bounds of the law. If it hadn’t deliberately misled the court during electronic discovery and had been more forthcoming overall, Qualcomm might not have gotten the golden goose, but at least it could have had a nice omelet.

Daniel is a third-year evening student at Rutgers School of Law – Newark and is a member of Rutgers Law Review.