Owners/Executives

Greater Rights in Contract Mean Greater Obligations in Discovery

In Haskins v. First Am. Title Ins. Co., the court was asked whether a title insurance company (the "Insurer") is in "control" of documents that are in not in the Insurer's possession, but where the Insurer has the contractual right to direct those with possession to produce the documents.  The district court found in the affirmative, demonstrating that in some circumstances, the more extensive one's contractual rights, the more extensive its obligations in discovery. The plaintiffs sought class certification, which defined the class as all New Jersey consumers who paid premiums in excess of regulated title insurance refinance rates during the class period.  The plaintiffs alleged that the Insurer had overcharged for title insurance over a period of several years.  During discovery, plaintiffs sought certain documents in the possession of certain independent title agents, who were not employees of the Insurer, but with whom the Insurer had a contractual relationship.  The representative contracts made all documents "available for inspection and examination by [the Insurer] at any reasonable time."  The court inquired as to whether such documents are in the "control" of the Insurer, because pursuant to Fed. R. Civ. P. 34(a), a party may request another party to produce documents within that party's "possession, custody, or control."  Thus, if such documents were in the "control" of the Insurer, the plaintiffs could properly request that they be produced in discovery. The Insurer argued that it should not be required to produce documents in the physical possession of its agents because it does not possess or control the requested documents.  However, the court did not struggle to conclude that the Insurer's agency contracts plainly indicate that it has control over and access to the documents.  It drew this conclusion based on the premise that there is control if a party “has the legal right or ability to obtain the documents from another source upon demand.” Haskins demonstrates the potential for increased discovery obligations for those that have negotiated extensive rights in contract.  That is, the greater rights in contract, the potential for broader obligations in discovery.  While this factor may not drive the decision making for those negotiating contracts, contract parties should at least be aware of this consequence Adam L. Peterson 2014 graduate of Seton Hall University School of Law.  While at Seton Hall, Adam was a member of the Seton Hall Law Review and prior to law school Adam was an Environmental Analyst with the New York State Department of Environmental Conservation. 

Independent Contractors Beware, You’re Not Protected

Richard Fraser was an independent contractor working for Nationwide Mutual Insurance Company when he was fired in 1998. Although Fraser argued that he was fired for reporting illegal policies that Nationwide had implemented, Nationwide stated he was fired because he was disloyal to the company. Nationwide found that plaintiff had drafted (but not sent) two letters to two Nationwide competitors, Erie Insurance Company and Zurich American Insurance, expressing Contractors Association members' dissatisfaction with Nationwide and seeking to determine whether Erie and Zurich would be interested in acquiring the policyholders of the agents in the Contractors Association. After discovering the letters, Nationwide also searched its mail file server and found e-mails revealing company trade secrets. Fraser filed a wrongful termination suit against Nationwide, arguing that Nationwide’s accessing Fraser’s e-mail account without permission violated the Electronic Communication Privacy Act and a parallel Pennsylvania statute. The trial court granted Nationwide’s motion for summary judgment and Fraser appealed. The Third Circuit Court of Appeals affirmed the trial court’s ruling that Nationwide had access to the independent contractor’s emails. Nationwide was found to not have violated the ECPA because Nationwide had provided the independent contractor with the e-mail account, the e-mail was hosted on Nationwide’s servers, and the e-mails were acquired after transmission of the e-mails. Therefore, the court held that the e-mails were not intercepted by Nationwide. Title 1 of the ECPA prohibits the interception of e-mails, but Nationwide argued that since the e-mails were reviewed after the transmission of the e-mail, that no interception had occurred. The court agreed and found that for one to intercept e-mail, he must occur contemporaneously, at the time of the transmission. Therefore, as long as the seizure of e-mail occurs after the e-mail is transmitted, a company does not need permission to access the independent contractor’s e-mails. Salim received his B.A. in Applied Communications, with a minor in Legal Studies, from Monmouth University. He received his J.D. from Seton Hall University School of Law in 2014. Salim’s past experiences include interning for a personal injury law firm prior to attending law school, as well as judicial internships in the Civil and Family Divisions.

To Shred or Not To Shred

“Follow the document policy!” Those were the words repeated many a time by Arthur Anderson to Enron’s employees during the pending SEC investigation. Those simple words led to a jury’s finding Anderson guilty of witness tampering through the act of persuading his employees to destroy relevant documents. The jury found Anderson guilty of violating 18 U.S.C. §§ 1512(b)(2)(A) and (B), which makes it a crime to “knowingly us[e] intimidation or physical force, threate[n], or corruptly persuad[e] another person . . . with intent to . . . cause . . . ” that person to “withhold” documents from, or “alter” documents for use in, an “official proceeding.” The Fifth Circuit Court of Appeals upheld this decision. However, the Supreme Court reversed this decision determining that the jury instructions were improper. The Court focused on “what it means to ‘knowingly . . . corruptly persuad[e]’ another person ‘with intent to ... cause’ that person to ‘withhold’ documents from, or ‘alter’ documents for use in, an ‘official proceeding.’” The Court held that this language required a proof of consciousness of wrongdoing. The Court additionally found that the jury instructions provided by the district court did not adequately outline the requirement for the consciousness of wrongdoing. Besides not including the proper intent, the district court also misapplied the “corruptly” definition by leaving out the word “dishonestly” and inputting “impede” in place of “subvert or undermine.” “These changes were significant. No longer was any type of “dishonest[y]” necessary to a finding of guilt, and it was enough for petitioner to have simply “impede[d] the Government's fact-finding ability.” In addition, the Court noted that jury instructions did not require any finding of a nexus between the “‘persua[sion]’ to destroy documents and any particular proceeding.” Even though it is illegal to directly persuade someone to destroy documents in the face of a pending litigation, the Court wanted to emphasize that there is a requirement of knowledge about both a pending proceeding and the materiality of the documents to be found guilty of violating the witness tampering statute. Overall, because of the inaccurate jury instructions, the Court here reversed the decision so another jury could hear the evidence along with proper instructions in making their decision. Though this decision seems to make some room to get out of the witness tampering statute, it is always best to have a proper document retention policy and to not persuade any form of destruction.

Defendant’s “Hands-Off” Approach Insufficient; Sanctions Ordered

In this case, Peerless Industries, Inc.  sued defendants Crimson AV, LLC claiming patent infringement and design patent infringement arising out of defendant’s manufacture and sale of certain TV mounts. While not a defending party, Sycamore Manufacturing Co., Ltd. (“Sycamore”) is plaintiff's former supplier of these TV mounts and played a vital role in the alleged infringement. Sycamore is located in China, while Peerless and Crimson are both located in the United States. Plaintiffs filed two motions: (1) a motion to compel the deposition of the Sycamore’s president, Tony Jin, and (2) a renewed motion for sanctions, both of which were granted. It was also determined in a previous case that Jin exercised managerial control over both Sycamore and Crimson. Therefore, plaintiff satisfied that Mr. Jin is a managing agent of Crimson. The court stated, “Plaintiff must simply show ‘that there is at least a close question as to whether the witness is a managing agent.’ We already found this to be the case. Furthermore, Mr. Jin clearly satisfies the ‘paramount test,’ which is whether the individual identifies with the corporation's interests as opposed to an adversary's.” The court further ordered that without any showing of hardship, Jin’s deposition would have to take place in the United States and not in China. As for the plaintiff’s renewed motion for sanctions, this motion marked the third time the plaintiff filed a motion regarding the same set of documents. The plaintiff argued that at the deposition of Crimson’s managing director, “it became clear that defendant did not conduct a reasonable investigation regarding Sycamore’s document production or Sycamore’s document retention for purposes of this litigation.” The plaintiff then filed a renewed motion for sanctions. The defendant and Sycamore asserted that certain documents in Sycamore’s possession had been produced. The plaintiff noted, that defendants did not represent that all requested documents were produced or that they were searched for but no longer existed. The plaintiff argued that the defendant wanted to rely on the same declarations as opposed to issuing more specific responses. The court stated that since it had determined Jin was principal of both Crimson and Sycamore and that he exercised a considerable amount of control over both corporations, that he was able to obtain all relevant documents from Sycamore. However, the court found that defendant took a “back seat” approach and instead used a third-party vendor to collect the documents. Finding that neither Crimson nor Jin had apart in the process of obtaining the requested discovery, the court granted the plaintiff’s motion for sanctions. The court held that this “hands-off’ approach is insufficient. “Defendants cannot place the burden of compliance on an outside vendor and have no knowledge, or claim no control, over the process. Finally, the court held that defendants must show that they in fact searched for the requested documents and, if those documents no longer exist or cannot be located, they must specifically verify that it is they who cannot produce. Salim received his B.A. in Applied Communications, with a minor in Legal Studies, from Monmouth University. He received his J.D. from Seton Hall University School of Law in 2014. Salim’s past experiences include interning for a personal injury law firm prior to attending law school, as well as judicial internships in the Civil and Family Divisions. Currently, Salim is taking part in the Immigrants’ Rights/International Human Rights Clinic at Seton Hall Law.

Does a Litigation Hold Require the Preservation of Employee Text Messages? Big Problems in Little Packages: Lost Cell Phone Leads to Spoliation Sanctions

Big things can often come in small packages, especially in the field of eDiscovery.  In Christou v. Beatport, LLC, the defendants learned that something as small as a text message on a lost cell phone can lead to a bevy of headache-inducing preservation issues, even without proof that the lost texts actually contained relevant information. Originally, the two parties worked together to create Beatport, an online marketplace dedicated to promoting and selling electronic dance music.  When that relationship eventually fell apart, the plaintiff, a prominent nightclub owner, brought suit against Beatport and his former employee who, as a “talent buyer,” was responsible for attracting DJs to perform at the plaintiff’s venues.  The plaintiff claimed that since the falling-out, the former talent broker had been strong-arming DJs against performing at the plaintiff’s nightclubs by threatening to drop them from his now high-profile website. Soon after the case was filed, the plaintiff issued a litigation hold letter to the defendants seeking the preservation of electronically stored information.  Despite the fact that this letter specifically referenced text messages, the defendants made no effort whatsoever to preserve the text messages on the former employee’s cell phone.  Of course the phone was then lost, about a year and a half after the hold should have been instituted. The plaintiff sought spoliation sanctions in the form of an adverse jury instruction.  The defendants attempted to shelter themselves from punishment behind testimony that the former talent broker did not use texts to contact clients and no proof was offered that there was relevant evidence anywhere in the phone.  Thus, the defendants felt the plaintiff’s motion was entirely speculative. Given the disappearance of the phone, the court recognized that there was simply no way to know whether it contained any relevant evidence.  There was also no evidence that the defense had done their due diligence by reviewing the text messages to determine whether any were responsive to the plaintiff’s discovery requests. The court explained that spoliation sanctions are appropriate when “(1) a party has a duty to preserve evidence because it knew, or should have known that litigation was imminent, and (2) the adverse party was prejudiced by the destruction of the evidence.”  Here, there was no question that the defendants neglected their duties by failing to make any effort whatsoever to preserve the text messages. Because the loss of the phone was an accident, or at the most the result of negligence, an adverse jury instruction was unwarranted because it would be too harsh a punishment.   Instead, the court permitted the plaintiffs to present evidence at trial about the litigation hold and the defendant’s failure to abide by it.  Despite finding no foul play by the defendants, sanctions were necessary because “[a] commercial party represented by experienced and highly sophisticated counsel cannot disregard the duty to preserve potentially relevant documents when a case like this is filed.” The previous sentence best sums up the defendants’ actions.  They completely shirked all responsibility by failing to turn over the requested text messages or securing the phone itself.  Even though the phone was lost accidentally, spoliation sanctions were warranted because of the defendants’ complete disregard of their preservation duties.  The time and money spent belaboring this eDiscovery dispute could have  been completely avoided if the defendants simply preserved all of its electronically stored information, especially those documents specifically mentioned in a litigation hold.  Instead, the defendants suffered what probably turned out to be significant financial consequences fighting the motion and were left to combat incredibly damaging evidence at trial. Jeffrey, a Seton Hall University School of Law graduate (Class of 2014), focused his studies primarily in the area of civil practice but has also completed significant coursework concerning the interplay between technology and the legal profession.  He was a cum laude graduate of the University of Connecticut in 2011, where he received a B.S. in Business Administration with a concentration in Entrepreneurial Management. 

Federal Judge Sanctions Corporate Defendant and Its Counsel for Gross Negligence, Bad Faith, and Failure to Comply With Discovery Requests and Court Order

In Brown v. Tellermate Holdings Ltd., Tellermate Holdings, the defendant company, terminated two employees for allegedly failing to meet sales targets over several years.  The employees, feeling that they were wrongfully terminated due to their age, filed an employment discrimination action against the company as well as other entities and individuals associated with Tellermate. Throughout pre-trial proceedings, the case was plagued with numerous discovery mishaps.  The plaintiffs requested from the defendant company data stored and maintained by Salesforce.com,[1] which would, in theory, evidence plaintiffs’ sales records over the last few years in addition to allowing the plaintiffs to compare their sales figures with other (younger) employees.  However, even though numerous discovery conferences were held, numerous discovery motions filed with the court, and several discovery orders issued by the court, the defendant corporation failed to produce the requested data and documents.  Ultimately, the plaintiffs filed for judgment and sanctions under Federal Rule 37(b)(2); the court held a three-day evidentiary hearing on the matter. The presiding judge, United States Magistrate Judge Terence P. Kemp, identified three areas in which the defendant company or its counsel failed in its obligations to the plaintiffs and the court in relation to production of documents and data: Defendant’s counsel failed to understand how Tellermate’s data stored with Salesforce.com could be obtained and produced to plaintiffs, which resulted in counsel making false statements to the plaintiffs’ counsel and the court; By failing to understand how the defendant’s data was stored and maintained, defendant’s counsel took no steps to preserve the integrity of the information in Tellermate’s database located with Salesforce.com; Defendant’s counsel failed to learn of the existence of documents relating to a prior age discrimination charge until almost a year after plaintiffs requested the documents; Defendant’s counsel produced a “document dump” resulting from counsel’s use of an overly-broad keyword search that yielded around 50,000 irrelevant documents, which plaintiffs’ counsel could not review within the time period ordered by the court. The Salesforce.com Data Judge Kemp found that Tellermate’s failure to preserve and produce the data logged on Salesforce.com’s website irreparably deprived the plaintiffs of reliable information necessary in supporting their claims.  Although defendant’s counsel initially stated that Tellermate “does not maintain salesforce.com information in hard copy format,” “cannot print out accurate historical records from salesforce.com,” and that “discovery of salesforce.com information should be directed at salesforce.com, not Tellermate,” the court found such statements to be on their face false.  In fact, Tellermate did have access to the information sought by the plaintiffs as one, and sometimes two, of Tellermate's employees enjoyed the highest level of access to the Salesforce.com information.  The court determined that the information eventually produced by the defendants could not be trusted as “even a forensic computer expert has no way to detect hat changes, deletions[,] or additions were made to the database on an historical basis.”  Because of Tellermate’s failure to preserve the Salesforce.com data, Judge Kamp precluded Tellermate from providing evidence showing that the plaintiff-employees were terminated for their alleged underperformance. Counsel’s Obligations With Respect to ESI The court found that the defense’s counsel fell short of their well-established obligations[2] to critically examine the documents and data Tellermate provided to them.  Tellermate made false representations to its counsel about the data’s availability and therefore caused undue delay in document production as well as false and misleading arguments to be made to plaintiffs’ counsel and to the court.  Subsequently, the plaintiffs were forced to file discovery motions before the court to address these discovery issues which produced the Salesforce.com data that was never properly preserved albeit its significance to the plaintiffs’ case. Judge Kemp ultimately determined that counsel for the defendant conducted an inadequate investigation of Tellermate’s electronic data while simultaneously failing to understand the most basic concepts of cloud computing and cloud storage, which led to counsel’s failing to preserve key electronic data. Control of Data Stored in the Cloud As mentioned above, Tellermate and its counsel repeatedly represented to the plaintiffs and to the court that it did not possess and could not produce any of the Salesforce.com data requested by plaintiffs.  Additionally, the defendants asserted that in light of those facts, the defendants could not preserve the data stored on Salesforce.com’s databases at any point prior to litigation. Judge Kemp dismissed these claims.  The court concluded that, without any factual basis whatsoever, no substantive argument could be made that Tellermate was prohibited from accessing the information stored on the Salesforce.com databases or that Salesforce.com was responsible for preserving Tellermate’s information and data as it was the entity that maintained possession and control of the data. In reality, Tellermate was the custodian of the data stored on the Salesforce.com databases.  While information can be stored in locations outside the immediate control of the corporate entity by third party providers, it can still be under the legal control of the owner of the data and therefore must be produced by the owner under Federal Rule 34(a)(1)(A).  Additionally, had Tellermate’s counsel critically examined the agreement between Tellermate and Salesforce.com, it would have realized that Tellermate was the owner of all data created by its employees and that Tellermate could, at any time, download the data stored on the Salesforce.com databases for preservation and production purposes. Limitations on Document Production to Avoid “Document Dumps” Tellermate produced to the plaintiffs 50,000 pages of irrelevant documents, classified by Judge Kemp as a “document dump.”  Tellermate’s counsel refused to disclose which search terms it used in deciding which documents to produce to the plaintiffs, claiming that the search terms were privileged.  In actuality, the court discovered, Tellermate’s counsel only used the full names and nicknames of employees as its search terms, which obviously yielded irrelevant documents.  Without reviewing the returned documents, and because the court’s deadline for producing relevant documents was rapidly approaching, Tellermate’s counsel produced to the plaintiffs the documents as “Attorney’s Eyes Only.” The court recognized that a protective order was permitted only when counsel held a good faith belief that such information constituted a “trade secret or other confidential research, development, or proprietary business information, and that such material was entitled to a higher level of protection than otherwise provided in the protective order.”  Tellermate could not demonstrate entitlement to this level of protection with respect to the search terms used in procuring documentation for discovery: The alleged burden imposed by a high volume production does not provide the producing party or its counsel free reign to choose a given designation and ignore the Court’s order pertaining to that designation. First, the court looked to whether competitive harm would result from the disclosure of the types of documents produced by Tellermate to a competitor; however, Tellermate’s memorandum on the issue did not contain any evidence about the harm which might result if the plaintiffs were permitted to review any particular document that was labeled “Attorney’s Eyes Only.” Second, Tellermate’s argument as to the harm it would experience was entirely conclusory and was not supported by evidence: Apart from the general concept that disclosure of some types of sensitive information to a competitor may result in harm, it contains no particularized argument which is specific to [the plaintiff], the way in which he was competing with Tellermate, and how the disclosure of any one of the 50,000 pages marked as attorneys-eyes-only would harm Tellermate’s interests. The court was astounded that Tellermate continually failed to meet the burden required to designate the documents as “Attorney’s Eyes Only” and, up until the hearing date, made no effort the redesignate a single page of the 50,000 produced in order to permit the plaintiffs from viewing the documents. Sanctions The court had absolutely no qualms with an award of attorneys’ fees for all motion practice connected to the preservation and production of the Salesforce.com data.  “Had Tellermate and its counsel simply fulfilled their basic discovery obligations, neither of these matters would have come before the Court, or at least not in the posture they did.”  The court took great concern to the extraordinary lengths the plaintiffs had to go to in order to obtain the documents maintained by the defendant and, even after several rounds of motions, were not able to obtain all of them.  The “Attorney’s Eyes Only” designation on the 50,000 documents produced was also unfounded, the court held, and unduly precluded plaintiffs from necessary evidence that supported their case, which warranted fees under Federal Rule 37(a)(5)(A). Conclusion Tellermate provides a warning to all attorneys that the realm of technology in which their clients are constantly interact with is always changing.  Therefore, so does the practice of electronic discovery.  Counsel must always meet its duties with respect to ESI by engaging in discussions with its clients and opposing counsel about ESI; being aware, and perhaps even knowledgeable, of new and emerging technologies; and investigating and assessing with its clients the sources and status of potentially relevant ESI.  By forgoing these practices, counsel opens itself and its clients to easily avoided and costly sanctions. Daniel is the Editor-in-Chief of eLessions Learned and a third-year law student at Duquesne University.  To read more about him, click here. [1]       Salesforce.com is a cloud-based customer relationship management system with more than 100,000 corporate customers around the world.  Tellermate and its employees used Salesforce.com to track their sales and other interaction with customers.  The court recognized that each sales person using the Salesforce.com management system could add, remove, or otherwise change data on their sales account. [2]       See Zubulake v. UBS Warburg LLC, 382 F.Supp.2d 536 (S.D.N.Y. 2005) (counsel had an affirmative duty to monitor preservation an d ensure all sources of discovery information were identified).

You Might Want to Rethink Your Next Fishing Expedition in Tennessee

The scope of discovery, as stated in Federal Rule 26, has been construed very broadly in its relevancy standard.  Any and all requesting parties can seek production of documents and information as long as “the discovery appears reasonably calculated to lead to the discovery of admissible evidence.”  And while this standard has the tendency of having the producing parties provide all requested, non-privileged documents within their control, some courts have determined there are exceptions. In Potts v. Dollar Tree Stores, Inc., the Middle District of Tennessee determined that requests for private Facebook pages require the rquesting party must meet a threshold showing that the information sought is likely to be found on the social media site and lead to admissible evidence. In Potts, the plaintiff filed suit against her former employer, Dollar Tree Stores, Inc., claiming harassment and discrimination based on the plaintiff’s race, a hostile work environment, and retaliation.  After discovery disputes, the defendant filed a motion to compel claiming that the plaintiff did not produce a number of requested items and documents, including: Facebook data, any and all computer and storage devices used during and after the plaintiff’s employment, tax returns, any relevant documents in online email accounts, as well as other items.  The plaintiff’s response to the defendant’s request asserted that she produced what documents were in her possession, that the defendant’s request for the physical production of her computer was unduly burdensome, and that the defendant is not entitled to access to her private Facebook account due to other court holdings requiring a threshold showing that the Facebook page would undermine the producing party’s claim(s). Since, the Sixth Circuit Court of Appeals had not yet ruled on requesting parties’ access to private Facebook pages, the Middle District of Tennessee relied on outside court rulings in Thompkins v. Detroit Metro. Airport, 278 F.R.D. 387, 388 (E.D. Mich. 2012) and McCann v. Harleysville Ins. Co. of N.Y., 910 N.Y.S.2d 614 (N.Y.App. Div. 2010).  Courts in Michigan and New York held that, while Facebook accounts are not considered privileged or necessarily protected by notions of privacy, requesting parties should not be allowed to go on fishing expeditions in hopes of finding relevant information to their case.  In resolving the issue of rummaging for information, the courts held that a requesting party seeking access to private Facebook accounts must meet a threshold showing that the social media page will likely lead to admissible evidence.  Adopting the idea of a “threshold showing,” the Potts court determined that the defendant fell short in showing that the information it gathered from the plaintiff’s public Facebook page would lead to admissible evidence if the plaintiff had given more access. The court determined that the defendant was entitled to certain documents in the defendant’s motion to compel that Plaintiff had not yet produced in discovery, but accepted the plaintiff’s assertion that she no longer had certain requested documents that would not have been relevant to the case.  When dealing with the physical production of the plaintiff’s computer, the court resolved that an agreed neutral party would search for relevant documents on the plaintiff’s computer, using both parties’ agreed-upon word search.  As for the the defendant seeking attorneys’ fees incurred in preparing the motion to compel, the court ruled that Federal Rule 26(b)(2) gives discretion to the court in relieving any undue burdens on responding parties during discovery.  The court did not require the plaintiff to pay the defendant’s attorneys’ fees due to the plaintiff having reasonable objections to the defendant’s discovery requests.

No such thing as Plain Language in E-Disco—Court Called on to Define “Making Copies.”

Phillips v. WellPoint, Inc., involved an application for costs by the prevailing defendant, WellPoint.  Among the costs sought to be recovered by WellPoint were $83,642.83 for "the process of scanning hard copy documents so that they could be produced in electronic format" and for services “for the preparation of native electronic files and documents for production in electronic format.”   WellPoint sought to recover these as costs of "making copies." Federal Rule of Civil Procedure 54(d)(1) provides that “[u]nless a federal statute, these rules, or a court order provides otherwise, costs—other than attorney's fees—should be allowed to the prevailing party.”  Those costs may include: (1) Fees of the clerk and marshal; (2) Fees for printed and electronically recorded transcripts necessarily obtained for use in the case; (3) Fees and disbursements for printing and witnesses; (4) Fees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case; (5) Docket fees under section 1923 of this title; (6) Compensation of court appointed experts, compensation of interpreters, and salaries, fees, expenses, and costs of special interpretation services under section 1828 of this title. 28 U.S.C. § 1920 (emphasis added). In evaluating the extent to which costs associated with producing electronically stored information ("ESI") are recoverable, the court, with no in circuit precedent on point, analyzed and ultimately adopted the Third Circuit's reasoning from Race Tires America, Inc. v. Hoosier Racing Tire Corp., 674 F.3d 158 (3d Cir. 2012).  In Race Tires, the Third Circuit found that the scanning of hard copy documents and the conversion of native files to TIFF were costs recoverable within the statutory meaning of “making copies.”  However, the Third Circuit further found that although “extensive ‘processing’” may be “essential to make a comprehensive and intelligible production” of ESI, not all costs of producing ESI—such as the preliminary steps in the discovery process, such as locating documents, travelling to the location of the documents, or screening potentially relevant documents for privilege—are recoverable. Applying these principles, the court found the majority of costs sought by WellPoint to be non-recoverable.  Only costs for imaging of hard copy files and conversion of documents into single TIFF images were recoverable.  Conversely, the following costs were not recoverable:  the extraction of document text; the process of rehabilitating documents in which the metadata fields and document text were damaged; applying bates stamp numbers; creating an image load file; creating a concordance-ready data load file; working with the clients in establishing production requirements; conducting quality control.  The result was WellPoint only recovered $26,711.00 of the $83,642.83 sought. Adam L. Peterson is a student Seton Hall University School of Law, Class of 2014 graudate.  At Seton Hall, Adam was a member of the Seton Hall Law Review and prior to law school Adam was an Environmental Analyst with the New York State Department of Environmental Conservation. 

Preserve Immediately or be Sanctioned!

In this case, the plaintiff, an inmate at Rikers Island, brought a motion for spoliation of evidence and alleged the defendants breached their duty to preserve evidence. The evidence in question is video footage relevant to the litigation regarding the assault on the plaintiff which occurred on May 24, 2011, by other prison inmates in a holding cell at the Bronx Criminal Courthouse. The defendants claim that they do not have a duty to preserve the surveillance footage because by the time they were given notice, the footage had been deleted. The defense states that even if they had a duty to preserve, they met this obligation by saving eight minutes of surveillance that they deemed to be relevant. On the day of the assault, the holding cell in which the plaintiff was placed in with approximately sixteen to seventeen other inmates was under twenty-four hour video surveillance.  That same day, Jacqueline Brantley, the former Assistant Deputy Warden Executive Officer at the Bronx Criminal Courthouse, reviewed the video footage to determine the course of events specifically for a period of three hours.  Brantley was the only person to view the three hours of footage and therefore she was the only one who could testify in court regarding this evidence. The three hours of video footage is extremely relevant to the case. The footage included evidence of not only the plaintiff’s injuries, but also how the Department of Corrections protected the inmates and how they responded to the incident. The tapes also show the presence and identity of possible witnesses to the assault and help create a visual timeline of events in the holding cell. The Southern District of New York stated that the defendants should have known within a week of the assault that the surveillance footage would be relevant to a future lawsuit. While the Department of Corrections destroyed the footage pursuant to the Department’s automatic video recycling procedures, prior to the filing of the claim by Taylor, the Department did manage to save eight minutes of footage. This begs the following question to be asked:  Why did the department not preserve the entire three hours of footage? As a result, the plaintiff in this case sought sanctions for spoliation of evidence with the deletion of the footage. A party seeking sanctions for the spoliation of evidence must establish the following three elements: The party having control over the evidence had an obligation to preserve it at the time it was destroyed; The records were destroyed with a culpable state of mind; and The destroyed evidence was relevant to the party’s claim… such that a reasonable trier of fact could find that it would support that claim. Residential Funding Corp. v. DeGeorge  Fin. Corp., 306 F.3d 99, 107 (2d. Cir. 2002). If the moving party can establish these three elements, then the court has the ability to impose sanctions under Rule 37 of the Federal Rules of Civil Procedure. The defendants here should have anticipated that the plaintiff would file a lawsuit against the Department for its failure for protect the plaintiff in the holding cell. Therefore, the defendants should have reasonably known that any evidence depicting the plaintiff’s treatment in the holding cell would be relevant to the litigation. The obligation to preserve the video footage in this case attached at the time of the assault due to its relevance. The defendants should have known that the entire three hours of footage would be relevant and that two four minute video clips would be insufficient. Since the entire footage has been destroyed, the defendants breached their preservation duty. The destruction of evidence by the defendants was done in a culpable state of mind and destroyed knowingly. Therefore, the defendants were negligent in allowing the footage to be deleted. However, the defendants were not grossly negligent in their failure to preserve, as no relevant evidence here has been claimed to have been destroyed after the plaintiff filed his Notice of Claim, approximately sixty-five days after the assault occurred. Additionally, the destroyed evidence would have been favorable and relevant to the plaintiff’s claims and defenses in this case. This evidence would have shown the three hour period of time the plaintiff was left injured in the holding cell as well as the failure of the Corrections Officers to protect him and remove him from the cell when he was covered in blood after the assault. The Court found that for these reasons the destruction of evidence prejudiced the plaintiff. Therefore, the following sanctions were ordered by the court: 1) the preclusion of Brantley from testifying about what she saw when she reviewed the deleted footage; 2) the use of an adverse inference jury instruction; and 3) the award of attorney’s fees and costs to the plaintiff. To avoid having a similar outcome, potential defendants should immediately preserve any relevant evidence in matters that they know or should reasonably know will give rise to litigation. Jennifer Whritenour received her B.S. in Political Science and History in 2011 from the University of Scranton. She is received her J.D. from Seton Hall University School of Law in May 2014. 

Court Denies Motion to Compel Forensic Computer Examination Based on Proportionality Grounds

A common problem in e-Discovery is what to do when your adversary is withholding relevant information.  An even worse problem is when you know your adversary is withholding relevant information, but you are not precisely certain what that information is.  This was the problem for the defendant in NOLA Spice Designs, LLC v. Haydel Enterprises, Inc. who sought—but was ultimately denied—a forensic examination of the plaintiff’s computers. In NOLA Spice Designs, a trademark infringement case, the defendant filed a motion to compel the plaintiff to submit its computers to forensic examinations.[1]  The plaintiff challenged the motion by arguing that the forensic examinations failed the proportionality requirement of Federal Rule of Civil Procedure 26(b)(2).  This rule prevents a party from requesting discovery when “the burden or expense of the proposed discovery outweighs its likely benefit.”  In the context of forensic computer examinations, the court explained such an examination will not be permitted when the request is overly broad and the connection between the computer and claims are “unduly vague or unsubstantiated in nature.”  Although the court noted that forensic computer examinations are not uncommon in civil discovery, the court clarified that a mere suspicion that your adversary is dishonestly withholding information is an insufficient basis to order a forensic computer examination. The defendant in NOLA Spice Designs requested the forensic computer examination on the basis that it “has good reasons to believe that something in Plaintiff’s statements is not true” and “that is has suspected all along that its opponents have records that they refuse to produce.”  The court characterized the defendant’s reasons as the precise type of skepticism and unwarranted suspicion of dishonesty that are insufficient to warrant an invasive computer forensic examination. Moving forward, litigants should be mindful that courts may be sensitive to confidentiality and privacy concerns when overly broad discovery is requested.  Although electronic discovery permits litigants to exchange massive amount of information, that exchange is still subject to the traditional rules of discovery, such as proportionality.  In order to combat the hurdle of proportionality, a party who is suspicious that an opponent is withholding information should limit its discovery requests to the specific information that is suspected of being withheld.[2]  If the requesting party obtains some information, then it will at least have a reasonable basis to proceed with broader discovery requests because the party can prove to the court that the opposing party has not been forthright.  This puts the requesting party in a far greater position than merely seeking an intrusive computer forensic examination with no basis other than mere suspicion of dishonest activity. Helvidius Priscus, a Seton Hall University School of Law graduate (class of 2014), served on the executive board of the Seton Hall Law Review and was a member of the Interscholastic Moot Court Board.  Helvidius now clerks for a Justice on the Supreme Court of New Jersey.  [1] “Computer forensics is the practice of collecting, analyzing and reporting on digital information in a way that is legally admissible.”  Forensic ctrl, Introduction to Computer Forensics, http://forensiccontrol.com/resources/beginners-guide-computer-forensics/ (last visited Feb. 12, 2014). [2] Of course, it is difficult to ask for something if you are not sure what exactly you are missing.  Nonetheless, the court in NOLA Spice Designs made clear that asking for everything is not the way to go.  Starting with small and specific discovery requests (even if they are shots in the dark) may be the better choice because a court is unlikely to find that such requests fail the proportionality requirement.