E-Discovery Law Review : Electronic Discovery Lawyers & Attorneys : Cozen O'Connor Law Firm : Data Preservation & E-Discovery Disputes

            As we bid adieu to 2011, the news and entertainment world is a flurry with the year’s greatest hits and most memorable, or un-memorable, moments. In the spirit of the season, and with homage to the great David Letterman, here are our Top Ten E-Discovery Lessons as addressed by the courts – and this Blog – this past year:

10.       Know Your Responsibilities

            In-house and outside counsel have a duty to ensure that their clients comply with e-discovery obligations. In- house counsel’s failure to give notice to preserve documents; provide criteria as to what should be saved; review documents being discarded; and failure to review existing document retention policies led to e-discovery sanctions. See “I’m Responsible To Do What?” posted On Aug. 18, 2011.

9.         Know When The Duty To Preserve Arises

            The duty to preserve electronic evidence arises once a party “reasonably anticipates litigation.” Whether and when a party reasonably anticipates litigation depends on many factors, including but not limited to, who within the defendant organization anticipates the litigation, the clarity of the threat, and when privileged documents are created and labeled as such. See “When Does The Duty To Preserve Electronic Evidence Arise,” posted on Aug. 10, 2011.

8.         Know When To Issue A Litigation Hold

             A litigation hold should be issued when a party is reasonably aware that it will be a party to litigation. For a plaintiff, triggers could include filing a complaint, seeking advice of counsel, or sending a cease and desist letter. For a defendant, triggers could include receiving a summons or complaint, receiving official notice of a government investigation, or receiving notice of an accident, or receiving discovery requests. See “Litigation Holds, Take 1,” posted on Aug. 12, 2011.

7.         Know What A Litigation Hold Should Cover

             A Litigation Hold should describe the litigation in general terms with understandable language, and avoid legal terms at all costs.  It should broadly state where relevant data and information could be located and it should provide instructions on how to preserve relevant information. The consequences of non-compliance and the importance of not destroying or altering relevant information should be discussed.  See “Litigation Holds, Take 2,” posted on Aug. 16, 2011.

6.         Know Your Sources Of Potentially Relevant Information

             Explore all types of data. For example, this year, courts in Pennsylvania ruled that text messages and Facebook posts are discoverable. See “When Are Text Messages Admissible,” posted on Oct. 7, 2011; “Post At Your Own Risk,” posted on Dec. 5, 2011. See also When An Employee Tweets, posted on Sept. 7, 2011.

5.         Know The Standards Governing Production And How They Are Applied

            Courts have applied the proportionality standard with much variation in 2011. For example, in Pippins v. KPMG, the court ordered the defense, who had already spent over $1,500,000 in preservation costs, to preserve the hard drives of over 7500 potential class members. The court reasoned that there were too many unknowns, such as the ultimate length and cost of preservation, the relevance of the information on the hard drives, and the outcome of the motion for class certification to allow the hard drives to be destroyed. See “Weighing Burdens And Benefits In Hard Drive Preservation Dispute,” posted on Oct. 31, 2011.

              In I-Med Pharma Inc v. Biomatrix, Inc., by contrast, the court did not require the plaintiff to produce documents from “unallocated space” (i.e., the area where deleted files and temporary data are stored) because of the overwhelming cost in terms of time and money to do so and because the requesting party failed to show a likelihood that relevant and non-duplicative information would be recovered.  See “The Importance Of Negotiating With Your Adversaries,” posted on Dec. 23, 2011.

4.         Know The Consequences Of Non-Compliance

Sanctions in the form of adverse inferences, admitted facts, default judgment and fines continued to be levied in 2011. For example, the deliberate destruction of evidence despite knowledge of a Litigation Hold provided grounds for a default judgment. See “Document Preservation: Spoliation And The Ultimate Sanction,” posted on Nov. 14, 2011.

Another court, faced with defendants who were “unsophisticated in the requirements of litigation and preservation” rather than willfully destructive and who produced 7 computers, 10 hard drives, and 23 CDs of documents, concluded that the plaintiff had “plenty of information upon which to pursue their claims” and required a stronger showing of bad faith before granting a default judgment. See “Document Preservation: Spoliation And The Ultimate Sanction,” posted on Nov. 14, 2011.

A defendant’s refusal to disseminate a Court Order to preserve electronic evidence led to an adverse inference and a presumption of relevance when electronic discovery is willfully destroyed. See “E-Discovery Abuses Result In Permissive Adverse Inference Instruction,” posted on Dec. 23, 2011.

A defendant who failed to: issue a litigation hold; conduct any email search; or seek its IT department’s assistance; and, instead, instructed employees to delete electronic documents at least ten times during the litigation was fined and ordered to file a copy of the court’s memorandum and order with its first pleading or filing in every case in which the defendant was involved for the next five years. See “Ensuring Discovery Compliance: Sanctions Relating To Past, Present And Future Adverse Parties,” posted on Sept. 22, 2011.

3.         Know The Electronic Discovery Obligations of Non-Parties

            In Tender v. Cremer, New York’s Appellate Division ruled that while a non-party need not provide discovery of ESI from sources that are not reasonably accessible because of undue burden or cost except upon a showing of good cause, such good cause exists when the information at issue goes directly to the plaintiff’s claim. Under Tender, nonparties served with subpoenas for deleted ESI may not rely on the fact that the data has been deleted in the course of its normal business as a means for avoiding the costs of complying with the subpoena. Instead, the nonparty should undertake an active investigation into whether the data can be retrieved, the difficulty of such retrieval and the concomitant costs. See “Cost-Benefit Analysis Adopted By The New York Supreme Court For Determining When A Nonparty Must Undertake The Burden And Expense Of Recovering Deleted ESI,” posted on Sept. 27, 2011.

2.         Know When Electronic Discovery Costs Can Be Recovered

            Over $500,000 in costs related to processing native files, restoring back-up tape files, hosting and storing documents in electronic databases, scanning hard copy documents, de-duplicating documents, and filtering documents to capture the documents containing the agreed-upon search terms were awarded to prevailing defendants. See “Prevailing Parties May Recover E-Discovery Costs Under The Federal Rules,” posted on Aug. 30, 2011.

            Under 35 U.S.C. § 285 (which allows the court to award a prevailing party in a patent dispute reasonable attorney’s fees in “exceptional cases”), a plaintiff was sanctioned nearly $500,000 for litigation misconduct after adopting a policy that it would not retain relevant documents. See “Cost Recovery Toolbox: Exceptional Cases under 35 U.S.C. § 285,” posted on Aug. 19, 2011.

             28 U.S.C. § 1920, similarly, was used to reimburse successful defendants for over $367,000 in e-discovery costs. These costs included those incurred by third-party vendors to produce the requested electronic documents. The court deemed these services to be “an indispensable part of the discovery process” and their costs to be recoverable. See “Recovering E-Discovery Costs In Federal Court,” posted on June 16, 2011.

1.           Know Thyself

              Know the rules, your obligations, and when they are triggered. Know your company and the types of ESI you produce and store. Know how to be flexible and transparent with the E-Discovery process to comply with the rules in a manner that is reasonable, proportional, and cost effective.

              It has been our pleasure to bring you this E-Discovery Law Review this year and we look forward to continuing to keep you up to date in 2012. Please accept our best wishes for a happy and healthy New Year and, as always, Happy Reading!
 

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We live in a digital world where smartphones are the norm and email access is seemingly as important as food and water. This increase in usage of email and the amount of electronic data requires companies to develop ways to collect and store a significant amount of data. Inevitably, this data will have to be searched, reviewed, and produced to opposing parties in the event of litigation and often at great cost to the producing party. Fortunately for one plaintiff, however, this is a cost that it will not have to incur.

In I-Med Pharma Inc. v. Biomatrix, Inc., 2011 U.S. Dist. LEXIS 141614 (D. N.J. Dec. 9, 2011), Judge Debevoise was asked to consider whether the plaintiff was required to produce documents from so-called “unallocated space” areas on its computers, namely, the area of the computer where deleted files and temporary data are stored. The parties stipulated that the defendants would hire an expert to conduct a “forensic investigation” and keyword search of the plaintiff’s entire computer system, using over 50 search terms. This search was not limited to specific custodians or time periods and, in the unallocated space alone, the search terms yielded an estimated 65 million “hits,” or 95 million pages of files. In light of this, the Magistrate Judge modified a previous order, which required the plaintiff to produce the results of the forensic investigation and allowed the plaintiff to exclude data from the unallocated space.

In reviewing the Magistrate Judge’s modification, the Court acknowledged the overwhelming burden to the plaintiff if it had to review the documents from the unallocated space. The Court further explained that a “privilege review of 65 million documents is no small undertaking” and that “[e]ven if junior attorneys are engaged, heavily discounted rates are negotiated, and all parties work diligently and efficiently, even a cursory review of that many documents will consume large amounts of attorney time and cost millions of dollars.”

The Court also recognized that the defendants did not show the likelihood that relevant and non-duplicative information was stored in the unallocated space. Additionally, the Court found that the money the defendants spent to obtain the data “pale[d] in comparison” to the cost the plaintiff would incur to review the data.

Finally, the Court addressed the proposed search terms and discussed five factors to consider when analyzing whether those terms were reasonable: “(1) the scope of documents searched and whether the search is restricted to specific computers, file systems, or document custodians; (2) any date restrictions imposed on the search; (3) whether the search terms contain proper names, uncommon abbreviations, or other terms unlikely to occur in irrelevant documents; (4) whether operators such as ‘and’, ‘not’, or ‘near’ are used to restrict the universe of possible results; [and] (5) whether the number of results obtained could be practically reviewed given the economics of the case and the amount of money at issue.” The Court examined all of these factors and stated that although the plaintiff should have “known better than to agree to the search terms . . . the interest of justice and basic fairness are little served by forcing Plaintiff to undertake an enormously expensive privilege review of material that is unlikely to contain non-duplicative evidence.”

The plaintiff in I-Med Pharma Inc. was fortunate in that the Court did not force it to review and produce all of the data in the unallocated space. Not all parties, however, will always be as fortunate. When negotiating with the adverse party regarding the search terms to be utilized for a document production, the following steps may avoid situations similar to those facing the parties in I-Med Pharma Inc.:

·         Know your client’s data system. This may be the most obvious, but most important, advice. To negotiate effectively, you must know certain aspects of the data storage system, such as how much data is contained there, how many potential custodians exist, how long is data retained, and where potentially duplicative data resides.

·         Negotiate for the use of restricting terms. This is especially true with frequently used words. For example, in I-Med Pharma Inc., one of the search terms was the word “return.” Negotiate for the use of search operators, such as “and,” “not,” or “near” in an attempt to further limit your results.

·         Do a sampling first. If possible, run a search with proposed terms to determine what types of “false positives” may result. This will enable the parties to further analyze the negotiated search terms and their effectiveness.

·         Determine relevant time periods and custodians. Limit searches to only those individuals who had a role in the subject matter of the litigation and to only that time period in which relevant documents may exist.

·         Be willing to seek the Court’s assistance. I-Med Pharma demonstrates the efficacy of seeking the Court’s involvement early on to limit the costs associated with e-discovery. When doing so, however, make sure you have done your proverbial homework and are able to educate the Court as to your client’s data systems and what the search proposed by the opposing side truly entails.

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At 3:40 on the morning of April 3, 2003, Tamara Greene, an exotic dancer, was shot multiple times and killed while sitting in a car at the intersection of Roselawn and West Outer Drive in Detroit. According to the complaint filed by Greene’s next of kin in Flagg v. City of Detroit and Kwame Kilpatrick, (E.D. Mi. Nov. 7, 2005), the head of the Internal Affairs Department of the Detroit Police Department was fired a mere nine days following Ms. Greene’s murder. It is alleged he was dismissed for investigating a party at the Mayor’s mansion, known as the Manoogian Mansion, during which exotic dancers, including Ms. Greene, performed. As a result of this firing, the Flagg complaint alleged that members of the Detroit Homicide Department refused to investigate the Greene murder case for fear of losing their jobs. The Flagg complaint further alleged that the case was labeled “cold” only eleven months following the crime, which falls well short of the two-year period typically required by the cold case squad.  Most shockingly, plaintiffs contend that the Police Department deliberately avoided sending the spent casings and bullets collected from the crime scene to the appropriate agency to determine if they came from the gun of a Detroit Police Officer. Against this backdrop, we examine the decision rendered by Chief Judge Rosen in this case on October 5, 2011 in which he finds that the defendants deliberately deleted relevant emails in bad faith and failed to disseminate a Court Order to preserve evidence to the appropriate city departments. 2011 U.S. Dist. LEXIS 114772 (E.D. Mi. Oct. 5, 2011). Judge Rosen’s searing opinion highlights several key electronic discovery issues, including the presumption of relevance that will attach where discovery is destroyed willfully and the parameters of the permissive adverse inference sanction.

Judge Rosen initially adopted the Report and Recommendation of Magistrate Judge R. Steven Whalen recommending that the Court give a permissive adverse inference instruction at any eventual trial to sanction the electronic discovery abuses of defendants, including the destruction of incoming and outgoing emails to and from the accounts of former Mayor Kwame Kilpatrick, his Chief of Staff, former “corporation counsel” and the former Chief of Police. The Report also found that the City failed to advise the appropriate City Departments of the Court’s Order to preserve relevant evidence. Id. at *5. Both Plaintiffs and Defendants objected to the Report. 

Defendants “express[ed] confusion” as to the basis for the Magistrate’s conclusion that the lost emails were relevant – a finding necessary for an adverse inference instruction – given that the four individuals whose accounts were deleted testified that they did not send any emails concerning the homicide investigation. Id. at *6. Judge Rosen agreed with the Magistrate that “the law expressly dictates a finding of relevance where, as here, it is determined that evidence has been ‘destroyed in bad faith (i.e. intentionally or willfully”).”  Id. 

Next Defendants argued that the evidence did not support the Magistrate’s finding that the City and its counsel failed to take action to disseminate to the appropriate City Departments the Court’s March 5, 2008 Order to preserve evidence. Defendants pointed to the Chief of Staff’s knowledge of the Order as evidence that the Order was distributed. The Court concluded, however, that there was nothing to suggest her knowledge was a result of any action by the City or its in-house counsel. Defendants also relied on the testimony of the former Police Chief that she was advised of the Order and prepared a memo to the Detroit Police Department advising them of it. The Court, however, discredited the Chief’s testimony given that she was unable to recall the date of the memo and whether it was actually based on the March 5, 2008 preservation Order. The Court also found suspect the fact that the Chief testified that her outside counsel was involved in preparation of the memo despite the fact that he did not enter an appearance on her behalf until April 7, 2008. Id. at 9.

The City argued its “corporation counsel” disseminated the March 5, 2008 Order with the assistance of an outside law firm that was acting as its co-counsel at the time. However, the testimony of the “corporation counsel” contradicted this argument. He testified that he never discussed the order with the Mayor, did not communicate with outside counsel regarding the Plaintiffs’ motion to preserve evidence, believed that the outside law firm would have been responsible for handling the requirement to preserve, and that he did not know what the City might have done in response to the Order. According to the Court, this testimony “disproves” the position that the March 5^th Order was disseminated by its corporation counsel.

The City then attempted to prove that the March 5^th Order was disseminated because it was able to produce some emails from the Police Chief and two police officers. The Court held that “if the City’s in-house attorneys stood idly by as emails were deliberately destroyed in contravention of this Court’s express order – to say nothing of the more general duty of all parties to preserve evidence that is relevant to pending litigation – they should hardly pat themselves on the back for any emails that were overlooked or otherwise survived this effort.” Id. at 14.

Next, the City challenged the appropriateness of the imposition of a permissive adverse inference instruction, essentially claiming the punishment did not fit the crime. The City argued that the sanction was too steep given that the reason for the lost emails was unknown. The Court reasoned that the “short answer to this, as Plaintiffs recognize, is that the City, through its attorney Mr. Schapka, filed papers in this case affirmatively stating that ‘upon their resignations during February of 2008, Beatty and Kilpatrick’s email accounts and collected emails whether in-coming or out going, were deleted and purged from the electronic storage system.” Id. Thus, the finding of willfulness and bad faith of the defendants was based on the evidence. The Court reasoned that “it is difficult to read the City’s present objections as anything other than a continuation of the persistent effort by the City and its in-house counsel to avoid taking responsibility for egregious conduct that has seriously undermined the truth-seeking mission of civil litigation.” Id. at 18. 

Plaintiffs similarly objected to the adverse inference instruction claiming that a more severe  sanction, such as entry of a default judgment or a mandatory adverse inference instruction, were warranted. But the Court agreed with the Magistrate’s conclusion that these sanctions would “give the Plaintiffs an undeserved evidentiary windfall.” Id. It further reasoned that, given the lengthy discovery period and the voluminous records produced therein, it would be difficult to conclude that the deleted emails from the 10 month period at issue were likely to provide information not otherwise available. Id. at 27.

In connection with the adverse inference instruction, the City further complained that a permissive adverse inference instruction will permit a jury to engage in “speculation and conjecture.” Id. at 18. While the Court acknowledged that it prefers that factual findings made by a trier of fact be based on the record, it reasoned that the City’s destruction of the emails “thwarted this goal.” Id. It reminded the City that the permissive adverse inference instruction allowed the City to argue that the “inferences proposed by Plaintiffs are implausible and should be rejected.” Id. 

In sum, this opinion offers guidance concerning the imposition of the adverse inference instruction as a sanction for the deliberate destruction of electronic discovery and the refusal to properly disseminate a Court Order to preserve evidence.

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New technologies have meant new crimes and new civil liability.  Although forgeries, forensic analysis, and criminal cover-ups are as familiar as Sherlock Holmes, electronic data has created an entirely new means of falsifying evidence and necessitated specialized investigative methods.  In response, government agencies have started entirely new investigative divisions and companies involved in their own private investigations or litigation have been forced to hire special experts. 

The United States District Court for the Southern District of Florida recently ruled on the reliability of a digital forensic expert’s report.  In Coqina Investments v. Rothstein and TD Bank, 2011 U.S. Dist. LEXIS 120267 (S.D. Fla. Oct. 18, 2011),  the court was presented with allegations of electronic forgery in a civil case.  As part of the litigation, the court was asked to rule on several traditional Daubert motions seeking to exclude the testimony of various traditional types of experts, rendering opinions on financial damages and accounting practices.  The plaintiff also sought to exclude a new type of expert, who was offering an opinion in support of defendants’ claims that certain electronic documents were e-forgeries. 

Plaintiff argued that defendants’ expert’s opinion was unreliable and should be excluded because the expert reviewed only a sample of plaintiff’s data set. After reviewing the expert’s methodology and report, the Coquina Court ruled that defendants’ expert had “employed a sound metadata analysis” and, therefore, would be permitted to testify about the emails that he identified as forgeries.  The fact that the metadata expert did not review every document in the large dataset went to the weight of the evidence and did not undermine the reliability of the expert’s conclusion that the emails that he analyzed were e-forgeries.

The Coquina Court’s commonsense approach to this complex issue sets an important precedent in metadata analysis.  Electronic discovery and document productions often easily encompass hundreds of thousands, if not millions, of documents.  Metadata analysis is a very complex area of science, requiring experts to interpret facts for fact-finders.  Requiring a metadata expert to analyze every document is not only unnecessary, it would be paralyzing.  Allowing metadata experts to testify based on their analysis of a sample of documents strikes an appropriate balance in allowing the expert to assist the trier of fact while also allowing the opposing party to question the weight to be given to that expert’s testimony.

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A Pennsylvania court recently decided that information posted by a party on their personal Facebook page is discoverable.  Largent v. Reed, Case No. 2009-1823 (C.P. Franklin Nov. 8, 2011) arose out of a chain-reaction automobile accident in which the plaintiffs, who were riding a motorcycle, were hit by a minivan that was hit by the defendant.  Plaintiffs claimed serious and permanent physical and mental injuries, pain, and suffering as a result of the accident. 

During the deposition of one of the plaintiffs, defense counsel discovered that the  plaintiff/deponent had a Facebook profile that she regularly accessed.  The defendant then accessed Plaintiff’s public profile and saw posts that contradicted her claims of serious injury.  Specifically, Defendant claimed that Plaintiff posted several photographs that showed her enjoying life with her family and a status update about going to the gym.  Defense counsel requested access to Plaintiff’s Facebook page, but Plaintiff refused to voluntarily disclose any information about her profile.  In response, Defendant moved to compel Plaintiff to disclose her Facebook username and password.  Plaintiff  opposed the Motion, arguing that the information sought was irrelevant, did not meet the threshold under Pennsylvania Rule of Civil Procedure 4003.1, and that access to her information would cause unreasonable embarrassment and annoyance.    

Court of Common Pleas Judge Richard J. Walsh began his opinion with a lengthy description of Facebook as the site that “helps you connect and share with the people in your life.”  Judge Walsh pointed out that the site has more than 800 million active users, 50% of whom are active on the site daily.  Although he acknowledged that Facebook has privacy settings, Judge Walsh emphasized that users must take “affirmative steps” in order to prevent their information from being shared with the public. 

The Court then turned to the issue at hand - whether and to what extent such “private” information is discoverable in a civil case.  With respect to relevancy, the Court pointed out that Pennsylvania has a “slight” relevancy threshold pursuant to Pennsylvania Rule of Civil Procedure 4003.1.  Under this standard, the photographs depicting Plaintiff with her family and status updates about exercising at the gym are “clearly relevant” because they might prove that Plaintiff’s injuries do not exist or that they are exaggerated.

The Court found that Plaintiff’s Facebook information is not privileged.  Information on Facebook is shared with third parties and, thus, there is no reasonable expectation of privacy in such information.  In addition, Pennsylvania law does not recognize a confidential social networking privilege.  As Judge Walsh explained, “[o]nly the uninitiated or foolish could believe that Facebook is an online lockbox of secrets.”  Further, Plaintiff’s information was not protected by the Stored Communications Act, which prevents the government from compelling Internet Service Providers (ISP) from disclosing information about their users because the information was sought directly from Plaintiff, who is not an ISP. 

Finally, the Court concluded that Defendant’s request was not unreasonably embarrassing or annoying and disagreed with the claim that Defendant’s request is akin to asking Plaintiff to produce all of her personal mail.  Since Plaintiff’s postings were never truly private, there could not be any unreasonable embarrassment in producing the postings in litigation.  The Court also determined that the request would not cause unreasonable annoyance, because Defendant would bear the entire cost of investigating Plaintiff’s Facebook information. 

As Judge Walsh points out, social networking is a recent phenomenon and these issues are just beginning to infiltrate the courts.  Although relatively few courts have spoken on this issue, the standard is becoming clear: Post at your own risk. 

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Although the Federal Rules of Civil Procedure set the stage for electronic discovery in civil cases, there is no such express regime in the criminal context. 

The absence of such a standard became evident in a recent case in the Western District of New York.  In United States v. Briggs, 2011 WL 4017886 (W.D.N.Y. Sept. 8, 2011), defendants were charged with several counts related to the distribution of cocaine.  The criminal investigation leading to these charges involved court-authorized interceptions of cellular telephone communications indicating that the defendants were allegedly engaged in drug trafficking. 

In its voluntary discovery, the Government furnished defense counsel with disks containing thousands of pages of documents relating to these communications using the IPRO program routinely used by the U.S. Attorney’s Office in cases involving multiple defendants.  Defendants claimed this reported data had problems with omissions and inaccuracies resulting from the collection and management system used. The defendants also objected to the Government’s failure to provide the data in the “most useful form that is readily available” and claimed the “.tiff” files received could not be sorted or searched.  The appropriate format, according to the defendants, was either the “.pdf” or native format.  The Government, in response, refused to provide the files in these formats arguing that the cost of reproduction was prohibitive, that it had already produced the particular data requested by defendants, and that it should not bear the burden of reproduction merely because it would be more helpful or useful to the defendants. 

Examining this issue, the court began by pointing out the absence of a standard in criminal cases for the production of ESI.  While Rule 16(d)(1) of the Federal Rules of Criminal Procedure, the general authority ordering the manner of production in criminal cases, provides that, “[a]t any time the court may, for good cause, deny, restrict, or defer discovery or inspection, or grant other appropriate relief,”  it does not specify the manner in which such production should be made.  The court, therefore, turned to two other jurisdictions addressing criminal prosecutions involving extensive document production.  In United States v. O’Keefe, 537 F. Supp. 2d 14 (D.D.C. 2008), the United States District Court of the District of Columbia, conceded that there was no  criminal equivalent to, and, thus, applied, Federal Rule of Civil Procedure 34.  In United States v. Warshak, 631 F.3d 266 (6th Cir. 2010), the Sixth Circuit refused to require the Government to reproduce electronic materials in the format requested by the defendant because the defendants had ready access to the information and documents as they were kept in the usual course of business.

Applying these rules, the court determined that the Government was the party “better able to bear the burden of organizing these records for over twenty defendants in a manner useful to all.”  The court mandated that the Government must reproduce its disclosure in a searchable format (PDF), or in the native format.  The court based its decision on the rationale that the Government is in the better position to organize the mass of information in a manner that is searchable by the defense because: (1) the Government already compiled this electronic information from its various native forms into a common electronic database and; (2) rather than have each defendant compile the data involving that party or repeat the expense of reproducing the entire Government production, the Government should bear this burden.  In making this decision, the court made it clear that it was not adopting Rule 34 of the Federal Rules of Civil Procedure in all criminal cases, as in O’Keefe, rather it was applying it in only this case.    

Briggs is a clear example of the need for a more uniform regime for ESI in criminal cases.  According to the court, the Justice Department appears to have at least one working group considering the “best practices” for ESI in criminal cases.  Until then, each court faced with a motion to compel criminal discovery with ESI data will have to devise its own scheme for ESI discovery based on the limited rules governing the criminal context at this time.  Defendants, then, are best advised to be prepared and willing to seek the court’s involvement early on to ensure that the production of ESI is reasonable, proportionate, and manageable so as not to cripple their efforts in defending against criminal liability. 

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The proper preservation of electronic data for discovery has become an increasing source of contention between parties. Two recent cases illustrate the importance of mindfully preserving electronic data during discovery. 

In Gentex Corp. v. Sutter, No. 3:07-CV-1269, 2011 U.S. Dist. LEXIS 122831 (M.D. Pa. Oct. 24, 2011), the district court granted default judgment to the plaintiffs in a spoliation action. Gentex Corporation sued two of its former employees, Brad Sutter and Patrick Walko, for violating non-disclosure agreements. Gentex claimed that Sutter and Walko copied proprietary files when they left the company and shared them with a rival company, Armor. 

In response to the suit, Armor implemented a litigation hold and instructed employees to preserve “all paper documents and electronically stored information concerning the Company’s relationship with Brad Sutter and his work while at the Company.” Armor also obtained a consulting firm to help preserve documents relevant to the litigation. 

Sutter, however, began destroying evidence despite knowledge of the litigation hold. Sutter scrubbed his computer, explaining that he did so “because he was scared because Gentex had sued him.” Sutter destroyed all CD-ROMs containing Gentex information that he possessed and purposely destroyed a thumb drive after his deposition. Sutter also deleted numerous email messages when he was printing them for production to Gentex. 

Similarly, Walko knowingly deleted documents relating to Gentex files on his computer. Walko claimed that various supervisors, including Sutter, instructed him, “Do what you have to do to clean up. If you need to clean up, clean up.” 

Gentex’s expert concluded that the deletions were “intentional and coordinated and designed to circumvent the duty to preserve documents.” The district court agreed and found that Gentex had presented sufficient evidence to show that Sutter and Walko engaged in willful spoliation. The court ultimately determined that granting default judgment to Gentex was the “least onerous” sanction corresponding to the willfulness of the spoliation, given Sutter and Walko’s “unabashedly intentional destruction of relevant, irretrievable evidence.”

By contrast, another court facing similar facts refused to levy the ultimate sanction. In Cedar Rapids Lodge & Suites, LLC v. JFS Dev., Inc., No. C09-0175, 2011 U.S. Dist. LEXIS 110671 (N.D. Iowa Sept. 27, 2011), the court determined that “a stronger showing of bad faith [was] required” before it would grant default judgment to the plaintiffs. In that case, plaintiff investors sued the developers of a proposed hotel for fraudulent inducement. Following a protracted discovery dispute, plaintiffs sought default judgment against one of the defendants for failure to comply with discovery requests and for intentional destruction of evidence. 

The defendant previously produced seven computers, ten hard drives, and 23 CDs for inspection and copying. Although the plaintiffs’ expert extracted over 34,000 relevant documents from these sources, the expert concluded that external drives that had been connected to the laptop were missing. Additionally, the expert contended that a large number of relevant documents, folders, files, and emails had been targeted for strategic deletion. The expert, however, conceded that several innocent explanations existed for the deletions and missing drives. 

Citing an Eighth Circuit decision, the district court determined that there was no proof that the defendant intentionally engaged in spoliation. As an initial matter, the court seemed impressed by the sheer volume of documents that plaintiffs had already recovered from the defendants. The defendant had initially produced 875 documents followed by an additional 2,700 pages, not to mention the 34,000 documents extracted from various hard drives and computers. 

Additionally, the court found that plaintiffs had not met the relevant legal standard. To warrant any sanction, much less a default judgment, the court had to find: 1) intentional destruction indicative of a desire to suppress the truth; and 2) actual prejudice to the other party resulting from the spoliation. Here, the court deemed the defendant to be merely “unsophisticated in the requirements of litigation and preservation of documents” rather than willfully destructive. Further, the plaintiffs suffered no prejudice, as “[i]t would seem that Plaintiffs have plenty of information upon which to pursue their claims.” In denying the motion for sanctions, the court simply stated, “I believe a stronger showing of bad faith is required.” 

While a default judgment represents the ultimate sanction in spoliation cases, destruction of electronic evidence can result in sanctions running the gamut from claim dismissal and suppression of evidence to an adverse inference and attorneys’ fees and costs. As the district court judge in Gentex observed, “I am especially conscious of the deterrence value of harsh sanctions in cases like this where the crucial evidence exists in electronic form, and a party may destroy its opponent’s case with the mere click of a button.” These two cases teach us to beware the fine line that distinguishes behavior worthy of a default judgment and behavior that is merely vexatious.

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Although deleted data can be recovered – perhaps at significant cost – destroyed data is likely gone forever. Perhaps it is for this reason that a recent federal court was reluctant to apply a strict proportionality test to a preservation dispute.

In Pippins v. KPMG LLP, 2011 U.S. Dist. LEXIS 116427 (S.D.N.Y. Oct 7, 2011), the court denied the defendant’s request for a protective order to limit its preservation obligations. A group of plaintiff sued their former employer alleging that the employer deprived them of overtime pay by purposefully misclassifying them as exempt employees under federal and state employment laws. These plaintiffs moved for class certification, causing the court to stay discovery until it ruled on the certification question. This stay necessitated that the employer indefinitely preserve the hard drives of over 7,500 potential class members.

After racking up over $1,500,000 in preservation costs, the employer sought a protective order, arguing that the burden of preserving the hard drives was disproportionate to the benefit they might provide and that there were less burdensome methods of preserving any relevant information on the hard drives. While cautioning against the application of a proportionality test in preservation disputes, the court assessed three factors in evaluating the employer’s duty to preserve the drives.

First, the court looked to see if the material was relevant. The former employees believed that the drives contained information relevant to the dispute, such as job responsibilities and hours worked. The employer, on the other hand, argued that similar information was contained in sources such as human resources files and time records. It was not entirely clear exactly what information was on the drives, however, because the employer had not allowed anyone to inspect them. This uncertainty, along with the extremely broad concept of relevance, led the court to conclude that the employer could not establish that the material was not relevant.

Second, the court looked to see if the material on the hard drives was created by or for “key players,” namely, people likely to have relevant information. The employer argued that only the named plaintiffs were key players because they purported to represent the entire class. The court disagreed. It reasoned that not only was every former employee a potential plaintiff in the class action, but also that the employer was on notice that the hard drives could contain material relevant to future litigation even if the class was not certified and, thus, had a duty to preserve the hard drives in either situation.

Finally, the court considered whether the continuing preservation merely maintained information that was available from other, less burdensome, sources. The employer argued that the information was duplicative because it also was contained in a variety of other sources, and because the former employees could testify to their job responsibilities. Nevertheless, the court found that the unofficial information on the hard drives could supplement the official information in the employer’s records. As a result, the information on the hard drives was deemed to be not duplicative.

On balance, the court ruled that the employer had to continue to preserve the hard drives. In the end, there were too many unknowns, such as, the ultimate length and cost of preservation, the relevance of the information on the hard drives, and the outcome of the motion for class certification, for the court to weigh the benefits and burdens in a satisfactory manner. The finality of the destruction that would have accompanied the protective order likely led the court to err on the side of preservation.

Note that the duty to preserve potentially relevant information is much broader, and arises much earlier, than the duty to produce information that is relevant and responsive to discovery requests in pending litigation. The Pippins decision speaks only to the preservation phase of electronic discovery and does not address the scenario where additional potentially relevant information continues to be created and stored on various hard drives after initial preservation efforts are complete (or, stated another way, the issue of the ongoing creation and preservation of electronic data). Businesses may be able to avoid these costs and potential pitfalls by encouraging, if not requiring, employees to save data, not on their individual hard drives, but in a central location that is backed-up on a daily basis. In an ideal scenario, any potentially relevant information would be stored on a back-up and shared server and, at most, duplicate that which is contained on individual hard drives. This may eliminate, or provide strong arguments in favor of eliminating, the need to, and cost of, preserving multiple hard drives multiple times.

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 In today’s electronic age where text messages, instant messages and e-mails have, to a large degree, supplanted traditional written correspondence, courts are increasingly called upon to apply longstanding evidentiary rules to society’s newer methods of communication. A recent opinion, however, from the Pennsylvania Superior Court, Commonwealth v. Koch, No.1669-MDA-2010, 2011 Pa. Super. LEXIS 2716 (Sept. 16, 2011), suggests that the more things change, the more they stay the same.

According to Koch, a party seeking to admit a text message as evidence at trial faces authentication requirements similar to those of a party seeking to admit a handwritten letter. A letter, for example, may bear Mr. Smith’s signature, or be printed on Mr. Smith’s stationery, but that signature may be forged, or the letterhead copied. Typically, some further authentication is needed to show that the letter is what it purports to be – i.e., a statement made by Mr. Smith. Under Koch, the same principle applies to text messages: the mere fact that a text message came from Mr. Smith’s cell phone number is an insufficient basis to admit that text message as a statement made by Mr. Smith. Additional evidence of the sender’s identity is needed.

In Koch, the trial court admitted testimony and a transcript of thirteen drug-related text messages obtained from a cell phone that the defendant admitted belonged to her. The defendant objected, claiming there was no evidence substantiating that she was the author of the text messages, nor was there evidence that the drug-related texts were directed at her, because Commonwealth witnesses testified that another person was using the defendant’s cell phone at least some of the time. At trial, a police detective further conceded that: the author of the drug-related text messages could not be ascertained; that some of the messages referred to the defendant in the third person and, thus, were not written by the defendant; and that some text messages had been deleted. The defendant was ultimately convicted on two drug-possession charges.

The Pennsylvania Superior Court reversed, holding that the trial court erred in admitting the text messages because the messages were improperly authenticated. In determining the standard for the authentication of text messages, the Superior Court looked to several recent appellate opinions from around the country, as well as its own opinion in In the Interest of F.P., a Minor, 878 A.2d 91 (2005), a case that addressed authentication of instant messages.   From these cases, the court concluded that “e-mails and text messages are documents and subject to the same requirements for authenticity as non-electronic documents generally.”

Establishing authorship of an e-mail or text message, the court observed, can be difficult because e-mail accounts and cell phones are not always exclusively used by the person to whom the e-mail account or cell phone belongs. In the light of this, the court held that “authentication of electronic communications, like documents, requires more than mere confirmation that the number or address belonged to a particular person. Circumstantial evidence, which tends to corroborate the identity of the sender, is required.”

Turning to the facts of the case, the court found that evidence showing that the defendant had written the text messages found on her phone was “[g]laringly absent.” The court noted that there was no confirming testimony from the senders or recipients of the disputed messages and no contextual clues within the messages themselves that revealed the identity of the sender. The court also rejected the idea that the defendant’s physical proximity to the cell phone when it was seized was probative of the defendant’s authorship of the text messages made days or weeks earlier. Under these circumstances, the court concluded that the admission of the text messages was an abuse of the trial court’s discretion.   

With Koch, the Pennsylvania Superior Court has made clear that an individual’s mere association with an e-mail account or cell phone number is an insufficient evidentiary basis for admission of a text message, e-mail, or instant message. A party seeking to introduce electronic communications at trial should be prepared to produce circumstantial evidence that corroborates the identity of the supposed sender. Koch provides some guidance as to what that circumstantial evidence might be: testimony from the sender or recipients, or contextual clues within the message itself. Merely identifying the phone or account from which the message came, however, is not enough.

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