Document Custodians

Take Discovery Seriously

The court first directed the defendant to produce the file of the plaintiff’s insurance claim in 2007, and needless to say, even in 2014 the defendant still had not produced everything.  Over one year later, the court granted the plaintiff’s first motion to compel.  When a flood of documents appeared at a deposition in 2011, discovery was reopened and the defendant was sanctioned.  Another motion to compel was granted in 2012, and this time it was for the deposition of a representative of the defendant who could testify about the efforts the defendant had taken to respond to discovery requests.  Yet another flood of documents appeared, and the representative deposed was unable to describe any of the defendant’s discovery efforts.  The plaintiff moved again for sanctions, which were granted in 2013.  At that time, the court also granted the plaintiff the costs and legal fees due to the late production of documents.  As relevant here, before the court in this motion was the assessment of legal fees and another production request.  The defendant did not want to produce more documents because by this time the defendant said the emails were on backup tapes that were purportedly not reasonably accessible because of undue burden or cost.  Can you guess what the court thought of that argument?  We’ll get to that in a moment. Without delving into specifics, the court painstakingly analyzed the plaintiff’s legal bill for the various motions, filings, etc. and awarded $81,997.60 in attorney’s fees.  Some of these costs were attributable to an IT specialist hired by the plaintiff that was to help the attorneys ask proper questions at the defendant’s representative’s deposition so they could ensure protocols were followed during discovery and that sufficient documentation was recovered (and if discovery was delayed because of an honest mistake, the explanation for that could be ascertained).  Even though the individual deposed actually had no knowledge of the defendant’s discovery practices, the defendants couldn’t escape paying for the IT specialist’s and attorney preparation time. On top of the nearly $82,000 awarded in legal fees, the defendant said it would cost $200,000 to recover the backup tapes containing emails.  While the actual cost is unclear, the defendant was ordered to turn over eight weeks of tapes, at its expense, of the thirteen individuals the plaintiff identified.  The judge even left the door open for the the plaintiff to get additional discovery if further exploration is necessary.  However, this isn’t the end. Sometimes, a single well-placed footnote can be unbelievably powerful.  This case illustrates just that, as the judge cleverly observed the defendant’s conduct as such: [c]onsistent with Hartford’s approach to discovery in this case, it has spent more time and resources challenging two entries totaling 1 hour than the amount requested by the plaintiff for those entries.  The court trusts that Hartford’s attorneys will notify their client how much they incurred in attorneys fees on these two entries. So please, take discovery seriously. Samuel is in the Seton Hall University School of Law Class of 2015 pursuing the Intellectual Property concentration. He received his master’s from the Rutgers Graduate School of Biomedical Sciences and became a registered patent agent prior to entering law school. Want to read more articles like this?  Sign up for our post notification newsletter, here.

Search Terms Must Be Arguably Relevant to Stand Judicial Review—Potential Narrowing FRCP 26(b)

Federal Rules of Evidence Rule 401 defines something as relevant if: (a) it has any tendency to make a fact more or less probable than it would be without the evidence; and (b) the fact is of consequence in determining the action. Federal Rules of Civil Procedure  Rule 26(b)(1)-Parties may obtain discovery regarding any matter, not privileged, that is relevant to the claim or defense of any party, including the existence, description, nature, custody, condition, and location of any books, documents, or other tangible things and the identity and location of persons having knowledge of any discoverable matter. In addition, the plaintiff bears the burden of convincing the court that search terms for electronically stored information (ESI) is relevant. In a motion to compel, a court will weigh the relevancy of a plaintiff’s request and justification versus a defendant’s previously produced documents. This is the underlying law that is challenged in McNabb v. City of Overland Park. In McNabb v. City of Overland Park, a police officer alleges claims of sexual harassment and inappropriate workplace behavior and requests electronic mail from a group of individuals from within the police department. The plaintiff during the discovery period submitted a list of 35 search terms to the defendant for document request to support his claim. In response, the defendant, upon discussion with the plaintiff’s counsel, produced over 36,000 documents which were broken up into five categories of search. The defendant produced the following document categories: (1) all emails sent or received by plaintiff; (2) all emails sent or received by Officer Bever, (3) all emails mentioning plaintiff, (4) all emails mentioning Officer Bever, and (5) any emails containing both “McNabb” and “Bever.” In filing the motion to compel discovery, the plaintiff seeks to require the defendant to search the electronic files of 14 custodians for their 35 specific search words. However, the judge held that the plaintiff must present something more than speculation that a search of those 14 custodians’ emails with proposed words would be likely to reveal additional information not included in the initial discovery documents. Specifically, the court noted, the search as required by the plaintiffs was overly broad and it was unlikely that it “could conceivably encompass some information that may arguably be relevant to this litigation…” The court also took note to a significant number of the search terms that were not sexually charged although the plaintiff’s claim in the litigation was sexual harassment. In addition, the court found that the plaintiff included a numerous amount of duplicative and unnecessary search terms (“bullied” and “bully;” “defamation” and “defame;” “discriminate” and “discrimination;” “harass” and “harassment;” “kissed,” “kisses,” and “kissing;” “retaliate” and “retaliation;” and “sex” and “sexual”). In response, the defendant claimed that this measure was to ensure that the discovery search was thorough, but the court held that this measure was a prime example of the overbroad and excessive nature of the search. Therefore, in order for discovery searches to be deemed proper they must be arguably relevant for what they request. Anything that is overbroad will be deemed excessive if the defendant was willing to participate and contribute something toward your discovery goal. The holding in this case attempts to scale back the overbroad reach of FRCP 26(b) and begins to narrow the focus of ESI discovery requests. This is a matter that must be carefully watched because courts could be leaning towards no longer allowing fishing expeditions into Metadata for ESI. Timothy received his B.A. from Rutgers University in 2011. He began his post-college life working in Trenton, New Jersey, at a lobbying and non-profit management organization before attending law school in the fall of 2012. He will receive his J.D. from Seton Hall University School of Law in 2015. Timothy has had a diverse set of experiences during his time in law school and has found his calling in Tax Law.   Want to read more articles like this?  Sign up for our post notification newsletter, here.

When Should A Plaintiff Withdraw Its Motion For A Protective Order?

Communication is key to any joint status report!  Parties should not risk annoying the court by refusing to withdraw a motion when both sides are essentially in agreement.  The court will find a protective order unnecessary when the defendants completely understand their preservation duties, acknowledge their duties, and have made substantial efforts to preserve discoverable evidence.  Under such circumstances, the plaintiff or moving party will both lose the motion and risk wasting the court’s valued time. In McDaniel v. Loyola University Medical Center, McDaniel, the plaintiff, filed a motion seeking a document preservation order after learning that the Loyola University Medical Center, the defendant, planned to change its e-mail system provider.  The defendant was transitioning from GroupWise to Microsoft Office, and the plaintiff feared that relevant e-mails would be erased or lost.  In response, the court directed the parties to confer in an effort to resolve the preservation issue in a mutually agreeable way.  In the submitted joint status report, the defendant demonstrated its belief that it had adequately assured the plaintiff of his spoliation concerns; however the plaintiff was still unwilling to withdraw the motion. As a starting proposition, a party has a duty to preserve evidence if it reasonably knew or could reasonably foresee was material to a potential legal action.  Almost a year before the plaintiff filed his initial complaint in this case, the defendant issued litigation holds and constant reminders to 71 employees who may have information relevant to the litigation.  Furthermore, the defendant took similar precautions with the additional 20 custodians identified by the plaintiff.  Despite the defendant continually recognizing that it was under an obligation to preserve evidence, the plaintiff needlessly insisted that a preservation order was a necessary additional precaution. The court disagreed with the plaintiff and held that a preservation order was unnecessary.  When deciding whether to enter the preservation order, the court considered (1) whether the plaintiff demonstrated that the defendant would destroy evidence, (2) whether the plaintiff would suffer irreparable harm without a preservation order, and (3) the burden that likely would result from granting the protective order.  Here, the defendant was fully apprised of the scope and gravity of its preservation duties, and the plaintiff failed to demonstrate that the defendant would destroy evidence without a preservation order.  The court found that a protective order would be superfluous and needlessly burdensome in this case.  Moreover, the court noted in its decision that the parties appeared to be talking past each other and, in actuality, were in complete agreement regarding the defendant’s preservation duties. Lawyers must avoid submitting superfluous and needlessly burdensome motions to the court.  Do not waste the court’s valuable time with unnecessary motions on issues that have already been mutually agreed on by both parties.  The last thing any lawyer should want to do is to get on a judge’s bad side during the discovery stage of the litigation.     Gary Discovery received a B.S. in Business Administration, with a concentration in Finance from the Bartley School of Business at Villanova University.  He will receive his J.D. from Seton Hall University School of Law in 2015.  After graduation, Gary will clerk for a presiding civil judge in the Superior Court of New Jersey. Want to read more articles like this?  Sign up for our post notification newsletter, here.

How Can One Secure An Order Protecting One From Producing Certain ESI?

This matter came before the court upon Plaintiff Black & Veatch’s Motion for Protective Order and Request for Discovery Conference. B&V entered into a series of agreements wit American Electric Power Services (“AEP”) and other companies (collectively, the “Owners”) to engineer, procure material, and construct wet flue gas desulfurization systems (also known as JBRs). The Owners claimed the JBRs were defective. B&V paid several millions of dollars to repair and replace the JBRs. To recover some of the incurred costs, B&V filed a claim with its professional liability carriers, filed suit against a subcontractor, and filed a breach of contract and declaratory judgment action against various insurance providers relating to the relevant insurance policies. B&V alleged it maintained Electronically Stored Information (“ESI”) relating to the JBRs on Documentum—an electronic document management program, custodian hard drives, and Accounting and Field Management System. B&V produced 448.7 gigabytes of data to the Defendant. However, B&V withheld additional relevant ESI, arguing that the Defendants’ proposed search terms were too board and producing discovery pursuant to those search terms would be unreasonable and excessively expensive. B&V was unable to estimate the cost of producing the ESI. B&V sought a protection from producing this additional relevant information. In the alternative, B&V proposed to shift some of the cost in producing the ESI to the Defendants. Fed. R. Civ. P. 26(c) states, “a court may, for good cause, issue an order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense. The movant bears the burden of establishing good cause by making a particular and specific demonstration of fact. A mere conclusory statement that ESI production would cost a party tens or hundreds of thousands of dollars does satisfy a movants burden to make a specific demonstration of fact in support of a protective order. The court held that B&V’s undue burden and expensive argument to be unsupported and conclusory. B&V failed to provide any hour or cost estimate. Thus, the court denied B&V’s Motion for Protective Order.  Additionally, the court refused to grant the protective order because the Defendants’ search terms were overbroad, noting that Fed. R. Civ. P. 26(c) only allows protective orders when the movant proves the order is necessary to protect the party from annoyance, embarrassment, oppression, or undue burden. Over breadth is not an enumerated category. The court also denied B&V cost shifting proposal. Fed. R. Civ. P. 26(b)(2)(C)(iii) allows the court to impose cost shifting measures when the party from whom discovery is sought demonstrates that the information is reasonably accessible because of undue burden or cost. B&V failed to show that the ESI production was inaccessible because of undue burden or cost because B&V’s only mention of cost to produce ESI was conclusory and unsubstantiated. Furthermore, the court stated that the parties were free to enter into a clawback agreement, which would compel the parties to return inadvertently produced privileged documents. B&V also sought protection from producing ESI from the custodian hard drive, arguing that that data produced pursuant to Defendants’ search terms would be unrelated or duplicative. Moreover, B&V argued that a Defendant’s proposed list of custodians was overly broad. Defendant argues that the proposed list is reasonable on its face given that the case involves a $70 million coverage dispute. The court again denied B&V’s Motion for Protective Order because B&V failed to substantiate its claim that the production of ESI from the custodian hard drives pursuant to proposed search terms will yield unrelated or duplicative data. B&V also failed to substantiate its claim that Defendant’s proposed list of custodian hard drives was unduly burdensome because it was without any information regarding the custodians’ job duties, their involvement with the facts at issue, or whether they had potentially relevant information on their hard drives Finally, B&V sought protection from producing electronic interim accounting reports regarding the cost of the JBR projects, arguing that such production would be wasteful, expensive, and burdensome. B&V stated that only the final accounting costs were necessary to determining damages, and a final cost accounting report was previously produced to the Defendants. The electronic interim accounting reports requested by the Defendants are adjusted monthly, and do not represent final costs needed to determine damages. Defendants argued that the report produced did not include the final cost documents, and the lack of information prevents them from properly assessing damages. The court again denied B&V’s Motion for Protective Order because B&V did not substantiate how producing the electronic interim accounting reports would be unduly burdensome or expensive. B&V’s assertion that monthly-adjusted accounting reports will not provide final cost information was conclusory. Aaron Cohen, a Seton Hall University School of Law student (Class of 2015), focused his studies in the area of Family Law. He participated in the Seton Hall Center for Social Justice’s Family Law Clinic. After graduation, he will clerk for a judge in the Superior Court of New Jersey, Family Division. Prior to law school, he was a 2011 cum laude graduate of The George Washington University Columbian College of Arts and Sciences, where he earned a B.A. in Psychology. Want to read more articles like this?  Sign up for our post notification newsletter, here.

When Is “Discovery On Discovery” Improper?, Part 2

In Freedman v. Weatherford Int’l, Ltd., Weatherford hired law firm Latham & Watkins to review allegations of security fraud made to Weatherford’s whistleblower hotline. Latham found no evidence of fraud. However, a second investigation was conducted by Davis Polk & Wardwell, LLP. Plaintiff’s alleged that Davis’s second investigation reveal that Latham actually discovered evidence of wrongdoing. Plaintiffs sought reports comparing the results of Weatherford’s production with search terms and productions related to the two investigations and search terms proposed by the plaintiff, in order to test the adequacy and reasonableness of Weatherford’s initial production. Weatherford objected, noting that Plaintiff had no legal basis for its request and its requested production was “hugely burdensome.” The District Court for the Southern District of New York held that the plaintiff’s request was “outside the bounds of Rule 26 of the Federal Rules of Civil Procedure . . . [because they did] . . . not proffer an adequate factual basis for their belief that the production [was] deficient.” Plaintiff’s claim that Weatherford’s production was deficient because 85% of the pages produced related to different case was too conclusory. Furthermore, the Court was not surprised that Weatherford used dramatically different search terms here compared to search terms used in the two investigations and a related action, because of the differing class periods and varying false statements. The court also addresses arguments related to Subject matter waiver and the crime-fraud exception of the attorney-client privilege, but these arguments were not related to e-discovery. Aaron Cohen, a Seton Hall University School of Law student (Class of 2015), focused his studies in the area of Family Law. He participated in the Seton Hall Center for Social Justice’s Family Law Clinic. After graduation, he will clerk for a judge in the Superior Court of New Jersey, Family Division. Prior to law school, he was a 2011 cum laude graduate of The George Washington University Columbian College of Arts and Sciences, where he earned a B.A. in Psychology. Want to read more articles like this?  Sign up for our post notification newsletter, here.

To Preserve or Not to Preserve? THAT Is the Question

This dispute stems from Plaintiff Linda Riley’s slip and fall at a Marriott hotel in Hawaii (her husband, James, is another named plaintiff).  As a result of this fall, in simple terms, Riley broke her right leg and sustained permanent nerve damage including sensory motor loss and weakness in her right foot.  Riley contends Marriott was negligent for failing to remove accumulated water (it had been raining that day), provide a non-slip surface, or provide warning signs. The entire accident was recorded on Marriott’s security cameras, and according to the loss prevention manager, the footage is maintained for 30 days.  However, during discovery, instead of being provided with several hours of footage, Riley was only provided with about 7 minutes; the rest was destroyed.  The footage released began about one minute before Riley’s accident, and ended before Riley was even lifted off of the ground! Plaintiff rightfully believed she was prejudiced because:  (1) she is unable to determine how much water was removed from the location and how long it took hotel staff to remove it, and (2) that the loss prevention manager’s testimony regarding the footage cannot be meaningfully challenged because the footage was gone.  This recording was apparently turned over to the Marriott’s liability insurance carrier, but neither Marriott’s investigation into its destruction (if one occurred) nor the results of any such investigation were ever disclosed.  Even maintenance logs—that might have also denoted any water that was removed from the floor or the placement of any signs—were also allegedly destroyed. From this, the court “easily” found Marriott had a duty to preserve both the sweep logs and the video footage from the day of the accident.  Further, the court recognized Marriott’s failure to offer any justification for its failure to preserve the evidence.  For these actions, the court found “at a minimum, gross negligence.”  The question then turned to imposing sanctions. Fortunately for Marriott, their answer was not stricken.  Nonetheless, their failure to preserve evidence still resulted in an adverse inference instruction regarding the video footage, or lack thereof.  This means the absence of a recording can, at trial, corroborate Plaintiffs’ statements that there were no warning signs at the time of the accident and that water had also accumulated on the floor.  Of note here, the jury would not be required to make such an inference.  However, Marriott might not be eager to take that chance.          Samuel is in the Seton Hall University School of Law Class of 2015 pursuing the Intellectual Property concentration. He received his master’s from the Rutgers Graduate School of Biomedical Sciences and became a registered patent agent prior to entering law school.  Want to read more articles like this?  Sign up for our post notification newsletter, here.

What Happens When the Smoking Gun is Thrown in the Recycling Bin?

In January 2014, the Hon. Lawrence E. Kahn in the U.S. District Court for the Northern District of New York granted plaintiff Dataflow, Inc.’s motion for sanctions in a case regarding deleted email correspondence.  Sanctions took the form of the often-case-ending adverse inference, with the judge reserving on the specific language of the adverse inference jury instruction until trial.  Defendant Peerless Insurance Co. might not wait that long, as even the neophyte lawyer can tell when blood is in the water. Dataflow’s claim arose out of a discovery request for production of documents that “targeted, inter alia internal communications and investigations regarding Plaintiffs’ claim.” Dataflow, Inc., v. Peerless Ins. Co., No. 3:11-cv-1127 (LEK/DEP), 2014 WL 148685, *2 (N.D.N.Y. Jan. 13, 2014).   When the defendant failed to produce any internal communications responsive to the document request, the plaintiffs tried again.  After the plaintiffs submitted an even narrower request for production, the defendants still didn’t produce anything responsive. Perhaps smelling something fishy, Dataflow started taking depositions and asking questions about the internal communications at Peerless.  The plaintiffs quickly learned that email was routinely used to communicate about claims.  The emails that Dataflow already asked for.  The emails that Dataflow was told didn’t exist.  The plot thickens. Hon. David E. Peebles, the Magistrate Judge handling discovery in this matter filed a Report and Recommendation urging sanctions be granted and fees shifted.  The District Court, reviewing Judge Peebles’s ruling de novo determined that the Magistrate got it right—and that sanctions are appropriate. The court analyzed the facts of the case under the spoliation framework set forth in Residential Funding Corp. v. DeGeorge Fin. Corp., 306 F.3d 99, 107 (2d Cir. 2002): On a motion for sanctions due to spoliation, the moving party must show that: (1) the party having control of the evidence had an obligation to preserve it at the time it was destroyed; (2) that party had a culpable state of mind; and (3) the destroyed evidence was of a nature that a reasonable trier of fact could find that it would support the moving party’s claim or defense. Dataflow, at *2 (citing Residential Funding Corp, at 107). Here, the duty to preserve for an insurance party was triggered when a claim was submitted.  As such, any internal communication regarding that claim is obviously supposed to be preserved.  The culpable state of mind can be inferred by the gross negligence displayed by email deletion resulting from a “system change.”  A “system change” that also conveniently “changed” the methods of preservation of documents related to paid and unpaid claims.  Finally, since the plaintiff was able to prove that the contents of the internal email conversations likely would have supported the plaintiffs’ theory of the case, sanctions in the form of an adverse inference just make sense. Perhaps it’s time for Peerless to have a “system change” with regards to their general counsel. Kevin received a B.S. in Political Science from the University of Scranton (2009), and will receive his J.D. from Seton Hall University School of Law in 2015.  Prior to joining the Seton Hall community, Kevin worked as an eDiscovery professional at two large “white-shoe” law firms in Manhattan. Want to read more articles like this?  Sign up for our post notification newsletter, here.

Recycling—Helps the Earth, Saves Lives, and Destroys Electronic Evidence

“Recycle,” “conserve,” “waste,” and “pollution” are terms that were implanted into the minds of each of us at a young age and are now they are being instilled into companies worldwide as a measure to reduce operational costs. Companies such as JPC Equestrian, Inc. have begun recycling and reusing “cleaned” electronic devices from former employees, which would normally not be an issue if companies had a company-wide server or cloud-based software that held all of the information stored within the device. However, since JPC Equestrian, Inc. does not have a company-wide server, once an employee leaves, the company has a procedure in place to “scub” the computer and reassign it to another without care for the electronic information within the device. In Kearney v. JPC Equestrian, Inc., Mark Kearney, a former employee, sued JPC Equestrian, Inc. (“JPC”) for the failure to produce emails relevant to the claim he is asserting. Kearney commenced this lawsuit against JPC when they wrongfully terminated his employment, and breached his sales agreements by either failing to pay him sales commissions or by paying reduced commissions that did not satisfy contractual obligations. Kearney through the discovery process received email documentation from numerous employees and executives dating back to 2005. The discovery submission included JPS turning over 250 pages of documents relevant to the parties and situations involved. However, Kearney requested information for "all relevant emails," which in his original discovery requests, were defined as "[a]ll emails that mention, or refer to the Plaintiff, however, marginally, in any way shape or form from 2002 through 2010." Kearney v. JPC Equestrian, Inc., 2014 U.S. Dist. LEXIS 153975, *5 (M.D. Pa. Oct. 30, 2014). Kearney was missing three years of discovery. Kearney only received documentation dating back to 2005 because the information dating back to 2002 did not exist or does not exist anymore and cannot be recovered. JPS claims that the information cannot be recovered because the computers that would have held that data were wiped clean and erased before the device was transitioned to another employee. JPS has found loopholes around document retention and the court agreed. The court held that JPS’ procedure of document retention was acceptable and the court has, “no basis to conclude that the defendants have withheld responsive documents, or that there is any basis to compel a further response regarding potentially relevant email communication.” Id. at *7. Unfortunately, this holding allows companies an avenue to discard potential and relevant information pertaining to potential litigation that otherwise would have been saved if not for the guise of recycling and employee cost saving. This holding should be reversed and JPS should be penalized for its failure to maintain adequate records for an appropriate period of time. The court should not excuse a company, no matter the size or market capitalization, for not maintaining the electronic information of employees who work within the company. Not only is that bad preservation practice, its poor business practice. Recycling and the protection of our planet is important but those ideals should not give rise to loopholes of common electronic document preservation practices, which are becoming as worldwide and important as protecting the planet itself. Timothy received his B.A. from Rutgers University in 2011. He began his post-college life working in Trenton, New Jersey, at a lobbying and non-profit management organization before attending law school in the fall of 2012. He will receive his J.D. from Seton Hall University School of Law in 2015. Timothy has had a diverse set of experiences during his time in law school and has found his calling in Tax Law. Want to read more articles like this?  Sign up for our post notification newsletter, here.

Should I Obstruct Discovery?—A Classic Pyrrhic Victory Problem

A pyrrhic victory is defined by winning an early battle but eventually losing the war because of the costs and expenses of that earlier battle. Everyone has heard the phase, “you may have won this battle but I will win the war.” Victory in life, business, and litigation is achieved by obtaining a favorable outcome in the end, and not defined by winning an early battle over discovery where you exhaust resources by attempting to try to obstruct your opponent. Individuals who fail to comply and purposely try to hide or destroy a document can trigger serious legal consequences and significantly hurt their chances for long term success in the litigation. In Klipsch Group, Inc. v. Big Box Store Ltd., Klipsch Group, Inc. sued Big Box Store (“BBS”) for the spoliation of relevant documents as well as other discovery misdeeds. Klipsch commenced a lawsuit against BBS for infringement of their trademark on a particular headphone in 2012. BBS conceded that they sold some counterfeit headphones but claimed that the sales were innocent and yielded almost no profit. Klipsch’s main claim against BBS is that they failed to hold or preserve relevant documents pertaining to the pending lawsuit when they became aware of the litigation in August 2012 (a requirement by law).    Every litigant has an obligation to take reasonable measures to preserve all potentially relevant documents once it has noticed that a lawsuit has been filed. Specifically, that obligation may arise even prior to litigation being formally filed if "the party 'should have known that the evidence may be relevant to future litigation.'" MASTR Adjustable Rate Mortgages Trust 2006-OA2 v. UBS Real Estate Secs., Inc., 295 F.R.D. 77, 82 (S.D.N.Y. 2013) (quoting Kronisch v. United States, 150 F.3d 112, 126 (2d Cir. 1998)). Here, BBS should have known about the possibility of future litigations since they were knowingly infringing onto Klipsch’s patent by selling counterfeit headphones. Klipsch suspected that BBS’ actions warranted, at a minimum, a forensic investigation into their company for documents that could reveal if a larger quantity of counterfeit headphones were sold. Klipsch, correctly believed, that based on the information they received through discovery it seemed that large quantities of documents (emails, transactional documents, sales reports) were missing or altered. This belief was verified during subsequent depositions of BBS employees. The depositions revealed that BBS employees produced contradicting stories than the information revealed in discovery. In deciding Klipsch Group, Inc. v. Big Box Store Ltd., the court refused to levy a severe punishment against BBS although it was discovered that they had broken numerous discovery laws. Instead, the court took a passive approach and applied “the mildest of available remedies” that allowed the parties leave to pursue additional discovery, except this time with an experienced forensic computer expert. However, the court could have imposed stricter penalties onto BBS, such as, termination, preclusion of testimony, or a mandatory adverse-inference charge after it discovered BBS’s possible attempt to destroy evidence. Instead, the court chose a more cautious route and tabled those actions until the forensic discovery was completed. This ponders the question, if the aim of any remedy is to deter the parties from engaging in spoliation and restore the aggrieved party to the same position then why not have automatic forensic discovery? The answer? Costs. Klipsch suggested that the imposition of costs, including fees should be shifted to BBS. The court disagreed and held that the costs would first be borne by Klipsch and could be reallocated or apportioned based on the findings of the expert’s report. The court could better deter abuse of discovery by always imposing costs for forensic experts onto defendants who are found to have wrongfully withheld information requested in discovery. This action and precedent would cause all parties to become forthcoming with unaltered information due to the fear of additional costs levied in litigation. Ultimately, the expert’s report will produce the information needed for Klipsch to move forward in their litigation against BBS, or it will prove unfruitful and Klipsch will drop their litigation. This entire matter could have been avoided if BBS did not attempt to hide information during discovery. BBS could have avoided a pyrrhic problem by not exhausting valuable resources into possibly altering evidence of the sale of counterfeit headphones. However, this case could be used as future precedent to prevent future companies from pursuing this option as a method of strategy if they automatically shift the costs of forensic experts to the litigant in situations where inaccuracies of discovery occur. Timothy received his B.A. from Rutgers University in 2011. He began his post-college life working in Trenton, New Jersey at a lobbying and non-profit management organization before attending law school in the fall of 2012. He will receive his J.D. from Seton Hall University School of Law in 2015. Timothy has had a diverse set of experiences during his time in law school and has found his calling in Tax Law. Want to read more articles like this?  Sign up for our post notification newsletter, here.

When Is “Discovery On Discovery” Improper?

In Freedman v. Weatherford Int'l Ltd., a putative class action alleging securities fraud, the plaintiff moved for reconsideration of the court’s denial of a motion to compel discovery. The plaintiff sought to compare a document that had been produced by defendant Weatherford International during discovery with documents from two internal investigations conducted by defendant, which had not been produced during discovery. Specifically, the plaintiff secured 18 emails from “‘critical custodians at Weatherford’ that were produced (after briefing on the original motion to compel was complete) . . . by third-party KPMG.” KPMG worked with the defendant on its remediation efforts. The defendant never produced these emails during discovery, thereby—according to the plaintiff—demonstrating significant deficiencies in the defendant’s discovery production. The United States District Court for the Southern District of New York acknowledged that discovery on discovery is proper “where a party makes some showing that a producing party’s production has been incomplete . . . in order to test the sufficient of that party’s discovery efforts.” However, these meta-discovery requests must be “closely scrutinized” to avoid unnecessarily prolonging the “costly and time-consuming discovery process.” The plaintiff argued that KPMG’s production of the 18 emails proved that the defendant’s production was deficient and that providing the plaintiff with the documents of the two internal investigations would lead to the discovery of “additional relevant documents that had not been produced.” Thus, the district court noted that the plaintiff did seek to test the defendant’s discovery efforts. Rather the plaintiff sought to ‘identify the documents missing from [the defendant’s] production.” The district court held that the documents the plaintiff sought would not lead to additional documents not previously produced. The plaintiff admitted that only three of the 18 emails would have been identified had it been able to compare initially produced documents with documents of the two internal investigation. Additionally, the plaintiff never argued that other documents produced by third parties, but not by the defendant, would have been identified by requested document comparison. Moreover, the court stated “the Federal Rules of Civil Procedure do not require perfection.” Further, “it [was] unsurprising that some relevant documents may have fallen through the cracks,” when the defendant “reviewed million of documents and produced hundreds of thousands.” In conclusion, the plaintiff’s requested remedy was not best suited to cure the alleged discovery deficiencies. In order to win a motion to compel discovery on discovery, the plaintiff needed to “proffer[] an adequate factual basis for their belief that the current production [was] deficient.” Given that a party is not subjected to sanctions for failing to produce minimal amounts of documents during a massive discovery production when its production was otherwise lawful, the plaintiff in this case should never have filed the motion for reconsideration of its previous motion to compel discovery. Furthermore, the plaintiff should have assessed the usefulness of the relief they sought. In this case, the motion to compel discovery was unnecessary because only three of the 18 emails were relevant and the proposed document comparison would not have yielded any other documents not produced by the defendant. Aaron Cohen, a Seton Hall University School of Law student (Class of 2015), focuses his studies in the area of family law. He participated in the Seton Hall Center for Social Justice’s Family Law Clinic. After graduation, he will clerk for a judge in the Superior Court of New Jersey, Family Division. Prior to law school, Aaron was a 2011 cum laude graduate of The George Washington University Columbian College of Arts and Sciences, where he earned a B.A. in Psychology.

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    The blog takes a clever approach to [e-discovery]. Each post discusses an e-discovery case that involves an e-discovery mishap, generally by a company employee. It discusses the conduct that constituted the mishap and then offers its ‘e-lesson’ — a suggestion on how to learn from the mistake and avoid it happening to you.

    Robert Ambrogi

    Legal Tech Blogger and creator of LawSites




    Although I may have missed some, yours is the first article that I have seen addressing Zubulake II. It is often the lost opinion amongst the others.

    Laura A. Zubulake

    Plaintiff, Zubulake v. UBS Warburg


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