The ABA Releases a Book on e-Discovery which has already been cited by Judge Facciola

Last week the ABA released e-Discovery: Current Trends and Cases (2008), the first book to introduce this high-tech field to all readers, not just lawyers. The book discusses the issues and cases in an easy-to-read format that can also be used as a reference. In seven chapters and fifty-eight separate articles, the book introduces electronic discovery and explains the latest trends and cases, in what I think you will find is an interesting manner. It also outlines the new interdisciplinary team approach to solving the unique problems of e-discovery–where the talents of law, IT and management are combined.

This book is intended for all levels of readers, including lawyers, judges, law students, academics, paralegals, IT professionals, e-discovery vendors, business executives and the general reader with an interest in technology and law. It can be ordered online at the American Bar Association website, or by phone from the ABA during business hours at: 1-800-285-2221. The discounted purchase price for ABA members is $79.95; for all others, it’s $99.95. 

If you enjoy reading this blog, then you should like the book, since it is based on the blogs I wrote here from November 2006 to September 2007. You can find more details and background on the book at the ABA website or my own web at FloridaLawFirm.com. 

e-Discovery: Current Trends and Cases is 313 pages in length, including an index. The book is organized and presented by categories in seven chapters:

Chapter One - Introduction to E-Discovery
Chapter Two - New Ethical Standards for E-Discovery;
Chapter Three - New Federal Rules of Civil Procedure;
Chapter Four - Spoliation and Sanctions;
Chapter Five - Metadata;
Chapter Six - Search and Review of ESI;
Chapter Seven - New Technologies.

There is also an Appendix with several useful reference materials, including the new Federal Rules of Civil Procedure on e-discovery.

I met a couple of people I know the other day, lawyers in other fields, and one non-lawyer who just likes techstuff, who have already started reading the book. They told me, all smiles, that they were astonished to find that they actually understood it, a book on electronic discovery! There is no reason a complex subject cannot be explained clearly. The trick is to also keep it interesting, fresh, and true for the experts. That was my goal, and I think I have done that, but do me a favor and buy the book to see for yourself. Feel free to leave me a comment here, or privately, as to what you think. Here is what a few others have already been kind enough to say about the book:

“…a brilliant combination of tales, advice, victories and defeats which brings technology within the easy grasp of lawyers, allows IT staff to understand why their attorneys can’t sleep at night, and explains the whole headache to upper management. (It) captures the pace and wit of the original blog and informs like a text. It is your e-discovery field guide. “
–William F. Hamilton, Partner, Holland & Knight LLP and Adjunct Professor at the University of Florida’s Levin College of Law

“Ralph Losey’s book is an e-discovery tour-de-force. For every litigator who thinks he or she has heard enough about e-discovery already, I suggest that the book will be eye-opening. For every CEO and CIO who hasn’t heard about the e-discovery tsunami engulfing the profession, I recommend that he or she be given a copy as a holiday present this year.”
–Jason R. Baron, Esq., Editor in Chief of The Sedona Best Practices Commentary on The Use of Search and Retrieval Methods in E-Discovery

“By bringing together the law, science and art of e-discovery, Ralph Losey’s book brings the e-discovery discussion back to life - a most welcome accomplishment.”
Anne Kershaw, founder of A. Kershaw, P.C. // Attorneys & Consultants

“All participants in the enormous electronic discovery industry owe it to themselves to read Ralph Losey. His deep knowledge of the field never prevents him from approaching each new event or insight as a passionate, well-informed observer. The net-net is to make e-discovery a good read, and I don’t know of anybody who does that better.”
–Jon Neiditz, Author, Presenter, and Of Counsel, Locke, Lord, Bissell & Liddell LLP

“Ralph’s book is a terrific resource for the litigator about to dive into the seemingly murky waters of electronic discovery. He not only summarizes the key issues in the field, but provides valuable insights based on his practical experience in the area. His writing style is straightforward (and humorous at times). In other words, unlike much lawyer-authored material, it’s actually readable! An excellent tool for the practitioner.”
–W. Lawrence Wescott II, author of the Electronic Discovery Blog

“E-Discovery- Current Trends and Cases is an excellent resource for any professional trying to stay current with the ever-changing world of Electronic Discovery. Mr. Losey tackles a very complex subject and makes it accessible and understandable to a wide spectrum of readers.”
–Keith D. Mobley, Esq., Legal Consultant, Legal Technologies, Kroll Ontrack

“Written in a clear, engaging style, Ralph Losey blends discussion of electronic discovery practice, case law, and issues into a concise and useful work. A must-read for the attorney new to e-discovery seeking a trustworthy mentor as well as to the experienced practioner seeking to deepen their knowledge.”
–Jim Barrick, President & CEO, Control Discovery, Inc.

“Litigation attorneys will increasingly find that courts will impose sanctions on those who do not know their client’s information systems, and who do not understand the e-discovery process and rules. This book is a must read for any litigation attorney who will inevitably have to deal with electronic data.”
–Ben Brush, Society of Corporate Compliance and Ethics; Account Manager, Datum Legal

“…(this book) does an extraordinary job of explaining challenges that frequently arise. Even more importantly, (Ralph Losey) proposes solutions to them. His book suggests ways to make e-discovery more manageable and discusses how new technologies and techniques may be used for e-discovery in the near future.”
–Peter D. Siddoway, Jones Day

Judges are not generally allowed to publicly praise a lawyers book, nor should they be. If they think a book is of any value, then they cite to it in an opinion. To a practicing attorney such as myself, this is really the highest compliment I can receive. For that reason, I was very excited to learn that immediately upon its release my book was both cited and quoted. I have Judge John M. Facciola to thank, who is Magistrate Judge in the hottest federal jurisdiction in the country for e-discovery, Washington D.C. He is one of the hardest working judges around and a true expert in the field of e-discovery. He is known for writing opinions that are not only learned, but also clever and well written.

The cite to my book is found at page 10 of the Memorandum Opinion rendered on January 23, 2008, in D’Onofrio v. SFX Sports Group, Inc., __ FRD __, 2008 WL 189842, or 2008 U.S. Dist. LEXIS 4252, (D.D.C., 2008). This part of the e-discovery order denied the plaintiff’s motion to compel production of metadata largely because the plaintiff did not ask for it in the original production request. Here is the specific cite to the book:

See also RALPH C. LOSEY, E-DISCOVERY, CURRENT TRENDS AND CASES 158-59 (2007) (summarizing recent cases as amounting to a “lesson . . . that in order to obtain metadata you may need, you should specifically ask for it to begin with”).

I am very honored by that. Thank you, Judge Facciola.

So that this blog won’t be all fluff, I want to end with some discussion and analysis of a few interesting points in D’Onofrio. This is a sex discrimination case where the plaintiff moved to compel discovery and impose sanctions against her former employer. Most of the discovery disputes relate to electronically stored information (”ESI”). Plaintiff asked the court to compel production of a business plan document and certain emails in their “original electronic format, with accompanying metadata.” D’Onofrio pg. 5. Plaintiff claimed that “defendants have deliberately caused the spoliation of electronic records and have purposely failed to produce many e-mails and documents.” Apparently, defendants produced the records requested, but they produced the business plan in paper form, and the emails in MSG format. (For more information on the deficiencies of MSG production, and why only PST production includes full metadata, see my prior blog: MSG is Bad for You.)

Rule 34(b) states that a discovery request “may specify the form or forms in which electronically stored information is to be produced.” If it does not, then the responding party must produce the information in a form ”in which it is ordinarily maintained” or is ”reasonably usable.”  Rule 34 also only requires production of the same information in one form. Plaintiff argued that her original request for production specified that the information should be produced in its original form with metadata, and so the paper production was non-compliant. The problem is, her production did not say that; instead, it read as follows:

[F]or any documents that are stored or maintained in files in the normal course of business, such documents shall be produced in such files, or in such a manner as to preserve and identify the file from which such documents were taken.

This is “so last century” boilerplate language. It is quite a stretch for the plaintiff to argue that the above is a request for native production with full metadata. It quite obviously does no such thing. To the contrary, it clearly refers to a paper production, and asks for the paper files to be produced in the paper folders in which they were originally maintained. Judge Facciola was not impressed by this attempt to convert such archaic language into an 21st Century request for native ESI.

It is apparent that this language, when first written, was not meant to encompass electronic data. Instead it addresses a common concern of paper discovery: the identification of a document’s custodian and origination. It is for this reason that the Instruction applies to documents “stored or maintained in files,” and why it seeks to “preserve and identify” the identity of that file. Indeed, the Instruction makes perfect sense when one presumes “file” to refer to a physical file cabinet or folder.

Id. pgs. 7-8. The court properly concluded that plaintiff’s request permitted paper production of the business plan. It is in this context that the court cited and quoted several authorities, including my new book. Here is the full string cite:

Ultimately, then, it does not matter whether the Instruction referred to paper or electronic files - a plain reading leads to the conclusion that plaintiff did not make a request that the Business Plan be produced solely in its original format with accompanying metadata. See Vanston Bondholders Prot. Comm. v. Green, 329 U.S. 156, 170 (1946) (”Putting the wrong question is not likely to beget right answers even in law.”). A motion to compel is appropriate only where an appropriate request is made of the responding party. See Fed. R. Civ. P. 37(a)(1)(B); Raghavan v. Bayer USA, Inc., No. 3:05-cv-682, 2007 WL 2099637, at *4 (D. Conn. July 17, 2007) (”The court will not compel discovery that has not been sought.”).

Because no such request has been made concerning the Business Plan, the Court will not compel the defendant to produce it in its original form with accompanying metadata.9 See, e.g., Ponca Tribe of Indians v. Continental Carbon Co., No. CIV-05-445-C, 2006 WL 2927878, at *6 (W.D. Okla. Oct. 11, 2006) (”The original document requests issued by Plaintiffs failed to specify the manner in which electronic or computer information should be produced. [Defendant] elected to use a commonly accepted means of complying with the request. Nothing in the materials provided by Plaintiffs supports requiring [Defendant] to reproduce the information in a different format. Accordingly, Plaintiffs’ request for reproduction of documents in their native electronic format will be denied.”); Wyeth v. Impax Labs., Inc., No. Civ. A. 06-222-JJF, 2006 WL 3091331, at *1-2 (D. Del. Oct. 26, 2006) (”Since the parties have never agreed that electronic documents would be produced in any particular format, [Plaintiff] complied with its discovery obligation by producing image files”). Cf. Treppel v. Biovail Corp., 233 F.R.D. 363, 374 (S.D.N.Y. 2006) (requiring production in native format where requesting party asked for it and producing party did not object). See also RALPH C. LOSEY, E-DISCOVERY, CURRENT TRENDS AND CASES 158-59 (2007) (summarizing recent cases as amounting to a “lesson . . . that in order to obtain metadata you may need, you should specifically ask for it to begin with”).

Id. pgs. 9-10. The court next considered the defendants’ email production in MSG format, instead of PST format. Here defendants claim they did make production in PST format, and the complaint is ill founded. Defendants submitted an affidavit in opposition to plaintiff’s motion by John Cavender, who is identified as a  “Security Principal.” I am not sure what that is, but he was obviously an IT expert of some kind, probably in charge of IT security. Cavender’s affidavit stated that he was responsible for the “retention and extraction of Clear Channel’s archived email on the Legato system” and that:

he has reviewed the DVDs that were produced to plaintiff and can confirm that they contain defendants’ e-mail production in .PST format, and that the production can be “searched by many criteria.” 

Id. pg. 11. Apparently, plaintiff offered no contradictory testimony, and so there was no real dispute. This appears to be another classic example of law-IT miscommunication which I previously wrote about in Who’s On First?

On the sanctions motion, plaintiff offered additional grounds, including an alleged non-production of relevant emails. Plaintiff alleged that her expert, a representative of Kroll Ontrack, could verify the omission of the emails. Judge Facciola found the record on the missing email issue to be “too thin” to make a ruling, so he ordered an evidentiary hearing to hear testimony on the alleged claim by Kroll.  The last half of the opinion goes on to address other issues that are not too interesting to anyone other than the parties.

The first half of the opinion in D’Onofrio v. SFX Sports Group, Inc. is very interesting and well worth reading. It may become well known as a case which exemplifies what can go wrong when a request for production uses obsolete language. The Electronic Discovery blog has already tagged this case for that proposition. The case thus shows the importance for practitioners to study up on e-discovery and use the correct language. Reading e-Discovery: Current Trends and Cases is one way to do that.

California Proposes e-Discovery Laws that Governor Schwarzenegger will want to Terminate

New e-discovery rules have been proposed in California that are unfair because they do not adequately protect litigants from requests for inaccessible data. The proposal reverses the balance of Federal Rule 26(b)(2)(B), and thereby opens the door for unreasonable, expensive e-discovery.

California law governing discovery is a patchwork of court rules and statutes. The proposal for new laws to govern electronic discovery amends both the rules and statutes. The statutory side of the proposal, §2031.060(a) & (b), contains the imbalanced provisions governing inaccessible ESI. These proposed revisions should be terminated, rather than become law. The proposal is now in its final stages, so if you want to be heard on this issue, you need to act fast. January 25, 2008, is the deadline to submit public comments on this proposal.

Generally State e-Discovery Rules are a Good Thing

I strongly favor enactment of state e-discovery rules. Attorneys and state court judges need the guidance and clarity they can bring. So too do litigants embroiled in state court justice systems. They need to know their e-discovery rights and obligations, and need some modicum of predictability and uniformity in ruling. Plaintiffs need to know they can sue in state court and obtain relevant evidence in defendants’ computers, which is, after all, where most evidence resides today. Conversely, defendants need to know they will be protected from overly burdensome and unrealistic computer requests. Fair rules balance these competing interests, and provide necessary predictability and consistency of adjudication. Fair e-discovery procedure rules thereby significantly further justice in a state court system.

Unfair state e-discovery rules may still provide some certainty and consistency, at least within the state court system, but they do not further justice. Instead, they promote the settlement or adjudication of disputes for reasons other than the merits. Like most attorneys, I would rather have no e-discovery rules at all, than unfair rules that favor one side over the other. Also, since we have a dual federal and state system, state rules that are markedly different from federal may produce inconsistent results for the same party, depending upon which court and set of rules they are under. Unfair rules in state court will also promote a flight to the federal court system, or to private arbitration.

Unfortunately, as I explain in detail below, California is on the brink of enacting of what appears to me, and many others, to be blatantly unfair e-discovery rules. In fact, I know of no other rules anywhere in the country that are potentially as oppressive to business and large organizations as the new rules proposed for California. This is a fast moving train, but it may not be too late to stop. As mentioned, the comment period closes on January 25, 2008, but after that, the California legislature must still approve and enact the enabling statutes. So, even if e-discovery lawyers fail, Governor Schwarzenegger still has plenty of time to play the Terminator role once again, and kill the bill as bad for California business.

Battle Between Two Types of Lawyers

The federal e-discovery rules were years in the making, and everyone had plenty of time to comment on their structure and wording. The federal rules are not perfect, but they represent a thoughtful and fair balance between the diverging interests of the plaintiffs and defense bars, between the requesters and producers of ESI. At the end of the day, both plaintiff and defense lawyers were unhappy with the new federal rules. Each side had some legitimate complaints about the new rules, but both were generally satisfied that they were overall fair and balanced.

Most states in the country are now considering their own e-discovery rules. A few already have done so. As a result, many states are now embroiled in a similar battles between the divergent interests of the plaintiff and defense bars, between the small litigants with few computers and little ESI, and businesses with thousands of computers and terabytes of ESI. If either side in this perennial battle gains the upper hand, the result is unfair rules. For instance, rules that protect ESI producing parties too much, generally businesses and large organizations, encourage more Qualcomm type cases, and so subvert justice. But rules that impose too much burden upon large organizations, and benefit the ESI requesting parties, typically plaintiffs with few computers, can be just as bad. They cause defense settlements driven by the costs and exposure of e-discovery, instead of the merits, if any, of the plaintiffs’ case. Unfair state rules also drive litigants away from state courts and into the federal system, or private adjudication. This so-called “flight to quality” is already occurring for a variety of reasons, including the lack of any state rules on e-discovery. Unfair rules will only accelerate this trend.

The battle between the competing interests of the plaintiff and defense bars has been raging in California too, but here the plaintiffs’ bar is about to score a major victory. The California Judicial Council is poised to ask the state legislature to enact what appears to be the most one-sided rules yet on e-discovery. These rules discard the two-tiered protection provided by Federal Rule 26(b)(2)(B). If enacted, the new law will force thousands of business and other large organizations to apply for a protective order in almost every case. In private, the plaintiffs bar has got to be all smiles and high fives. In public, they will, of course, hide their glee, especially from state court judges, and complain about something in the proposal. But there is no denying that the California proposal represents a substantial departure from the federal rules.

Who is Behind the Proposed California Law?

I will go into detail about the deficiencies of the proposed law, but first it is instructive to try to understand how this proposal came about. By my introduction you might suspect these rules are being proposed by one of the many academies of trial lawyers. Those are exclusive clubs of plaintiffs’ lawyers, where you can only join if you swear you do no defense work. But that is not the case. No, these rules have been written and proposed by an esteemed California judicial institution known as the California Judicial Council. It describes itself as “the policy-making body of the California courts” and is led by the Chief Justice of the California Supreme Court. It has 21 members: 2 justices from the Supreme Court, 3 judges from Courts of Appeal, 10 trial court judges, 2 legislators, and 4 practicing lawyers. Two of the four practicing lawyers on the Council are criminal lawyers, one of whom is a past President of the California Bar. Another of the lawyers is an assistant city attorney for Oakland. The fourth lawyer happens to be one of the most prominent plaintiff’s lawyers in the country, a past president of International Academy of Trial Lawyers.

These are very well respected people with excellent reputations. I mean them no offense and hope that they will forgive my strong opposition to this particular rules proposal. They are all experienced lawyers and judges, but as far as I can see, none have any particular expertise in e-discovery. This means they are getting their advice from other unnamed e-discovery experts, where, I fear, the concerns of business and the defense bar have not been adequately represented. This is the only explanation I have for how and why the California Judicial Council is now, unwittingly I suspect, supporting and recommending the enactment of e-discovery rules so divergent from the federal norm.

A Defense of the Judiciary

I know many will wonder why the judiciary, who make up most of the Judicial Council, would support rules that, to e-discovery insiders at least, obviously seem to favor one segment of the bar over another. A short digression in defense of the judiciary is in order, for I often hear unfounded attacks upon judges, and would like to set the record straight. As a litigation attorney for 28 years, I have appeared before hundreds of judges, and I count several of them as friends. In my experience, it is rare to find a judge that is biased towards either the plaintiff or defense bar, although it does sometimes happen. An attorney may have had an orientation when they were in private practice, but they almost always rise above such a bias once they become a judge. The role of a judge is far different than that of a private attorney advocating for a particular client, or type of client.

I do not think for a moment that the judges behind the California Judicial Counsel have consciously taken a sudden turn to favor one side of the bar over another. The Judicial Counsel members include some of the most distinguished jurists in the state. I am sure they think this is a fair and balanced proposal, otherwise they would not support it.  But the truth is, sitting state court judges, especially senior judges and appellate judges such as those on the Judicial Counsel, are not in the best position to formulate e-discovery rules. They are relatively naive about e-discovery issues and lack practical experience. Unlike almost every other area of the law where judges are called upon to suggest changes to civil rules of procedure, few state court judges have any significant experience as private civil litigators in this new and fast-changing field of law.

In fact, when most of the judges on the bench today were in private practice, including those running the California Judicial Council, there was no such thing as e-discovery. Their only experience with this very complex subject, if any, has come from hearing cases on the bench. For that reason, most do not have a very good picture of what is going on behind the scenes in e-discovery, outside of their courtrooms. Of course, there are some notable exceptions to this rule. For instance, a few federal magistrates by now have extensive experience with e-discovery issues, and are very knowledgeable in this area, despite a lack of prior private practice experience. But most state court judges do not see these issues very often.

The experience problem is compounded for appellate court judges. They are usually more senior and not as involved with technology. Further, appellate courts rarely hear discovery appeals, much less grapple firsthand with e-discovery issues. All too often, their knowledge of e-discovery disputes comes solely from reading about the exceptional disaster case like Qualcomm. These cases tend to create a false impression of everyday e-discovery practice, and little sympathy for the dilemma most large companies face in this area.

Even the trial judges who actually do see and hear e-discovery disputes firsthand see only a small segment of e-discovery practice. The jurists’ view is primarily based on the few cases where e-discovery issues are taken to them for resolution. But the reality is, most e-discovery related activity is behind the scenes, and completely out of sight of the presiding judge. For instance, in federal court, 98% of all cases settle. State courts may try more cases, but still the vast majority of lawsuits, especially commercial cases, settle and are not tried. The judges rarely know the true cause of the settlement of any case, much less the parties’ confidential settlement communications.

This means that most judges are completely unaware of the fact, well known to most e-discovery practitioners, that many cases today settle and/or settle for too much, because of e-discovery concerns. The merits of a case can easily become secondary to the potential exposure and risks of e-discovery expenses. Although some large organizations today are prepared to efficiently respond to e-discovery, many are not and are an easy target for the plaintiffs’ bar that, by and large, is far more aware of this exposure than the judiciary. In short, most judges, especially state court judges and appeals court judges, are not aware of the tremendous leverage and bargaining power that uncontrolled e-discovery, or even the threat of such e-discovery, provides to a plaintiff suing a “Goliath” defendant with tons of computers.

What is Wrong with the Proposed Law? 

In the federal system, and most states, all rules of procedure are promulgated by the supreme courts, and in the federal system, subject only to legislative veto. But, as mentioned, they do things differently in California. The proposed new e-discovery rules are actually made up of both statutes and traditional court rules adopted by the Supreme Court of California. Only two amendments to actual rules of court are included in the California proposal. The bulk of the amendments are contained in statutory proposals. The two rules are Rule 3.724 (Duty to Meet and Confer), and Rule 3.728 (Case Management Order). They mirror the federal rules and are fine as written. These two rule revisions will not, however, be promulgated by the California Supreme Court unless the statutes proposed by the Judicial Council are also adopted by the legislature as written. That should not happen. Here’s why:

One of the biggest e-discovery problems all large organizations face is the huge cost to search, locate and produce so called ”inaccessible” information. In fact, all information is accessible; the questions is, at what cost?  In e-discovery language, “inaccessible” ESI means ESI that is “not reasonably accessible.” It is information that can only be retrieved and produced at disproportionate cost and labor. That typically includes such things as backup tapes, legacy computer systems, slack space on hard drives, and damaged CDs. Many more examples could be provided. 

The proposed state laws are unfair primarily because, unlike the federal rules, they fail to provide meaningful protection against discovery of inaccessible ESI. Instead, they open the door to widespread misuse of requests for this type of information.

This key protection provided in the federal rules is found in Rule 26(b)(2)(B):

 (B) A party need not provide discovery of electronically stored information from sources that the party identifies as not reasonably accessible because of undue burden or cost. On motion to compel discovery or for a protective order, the party from whom discovery is sought must show that the information is not reasonably accessible because of undue burden or cost. If that showing is made, the court may nonetheless order discovery from such sources if the requesting party shows good cause, considering the limitations of Rule 26(b)(2)(C). The court may specify conditions for the discovery.

This rule sets up a two-tiered system wherein not-reasonably-accessible ESI comprises the second tier of discovery. You are protected from the expense and burden of searching and producing such information, which can in fact often cost millions of dollars, unless you are faced with a motion to compel. Even then, if a motion to compel is made, and you must then respond, you need only provide proof of burden at that time. If you prove undue burden and cost, the discovery should be prohibited, unless good cause is shown pursuant to the terms of 26(B)(2)(C), which provides for three types of considerations:

(i) the discovery sought is unreasonably cumulative or duplicative, or is obtainable from some other source that is more convenient, less burdensome, or less expensive; (ii) the party seeking discovery has had ample opportunity by discovery in the action to obtain the information sought; or (iii) the burden or expense of the proposed discovery outweighs its likely benefit, taking into account the needs of the case, the amount in controversy, the parties’ resources, the importance of the issues at stake in the litigation, and the importance of the proposed discovery in resolving the issues.

The FRCP Comentary provides additional important guidance as to seven factors a court should consider in making this “good cause” analysis:

Appropriate considerations may include: (1) the specificity of the discovery request; (2) the quantity of information available from other and more easily accessed sources; (3) the failure to produce relevant information that seems likely to have existed but is no longer available on more easily accessed sources; (4) the likelihood of finding relevant, responsive information that cannot be obtained from other, more easily accessed sources; (5) predictions as to the importance and usefulness of the further information; (6) the importance of the issues at stake in the litigation; and (7) the parties’ resources.

The two tiered system in 26(b)(2)(B) is, in my opinion, and that of many others, the key provision to making the federal rules balanced. Litigants with large computer systems depend upon the carefully worded provisions of this rule for protection from overly burdensome requests. Without this rule, they are vulnerable to ESI requests that exploit the complexity of their systems, and force settlement to avoid exorbitant costs.

The e-discovery statutes proposed in California gut this protection entirely, and for that reason alone they are unfair and imbalanced. As Geoff Howard, an e-discovery attorney in San Francisco, puts it in his recent article on the proposed rules: ”The California proposal reverses the federal court balance.” I agree completely.

Specifically, the new language proposed for California statute §2031.060(a)&(b) requires the production of all ESI requested unless a motion for protective order is filed and granted. This reverses the order and burden in the federal rules, where the requesting party had to file a motion to compel.  You can bet that if these procedural statutes pass there will be a flood of motion practice in California state courts, starting with motions for protective orders in every case to try to prevent the otherwise mandatory search and production of inaccessible ESI. The motions for protection will try to establish undue burden and expense.

Here is the exact language of proposed §2031.060(b) which spells out the respondents (typically large defendants’) new obligations:

(a) When an inspection, copying, testing, or sampling of documents, tangible things, or places, or electronically stored information has been demanded, the party to whom the demand has been directed, and any other party or affected person or organization, may promptly move for a protective order. This motion shall be accompanied by a meet and confer declaration under Section 2016.040.

(b) The party or affected person or organization seeking a protective order regarding the production, inspection, copying, testing, or sampling of electronically stored information on the basis that such information is not reasonably accessible because of undue burden or expense bears the burden of so demonstrating.

Under the proposed California law, the burden of proof does not stop there. If you persuade the state court judge that the ESI requested is “not reasonably accessible because of undue burden or expense,” you will have to produce it anyway “if the requesting party shows good cause.” §2031.060(d). Here is the full language of subsection (d):

If the party or affected person or organization from whom discovery of electronically stored information is sought establishes that the information is from a source that is not reasonably accessible because of undue burden or expense, the court may nonetheless order discovery if the requesting party shows good cause.

That sounds sort of like the federal rules which require production anyway upon a showing of good cause, except for the important, nay critical, difference, that the “good cause” in subsection (d) of the California statute is nowhere defined. There is no reference to the three types of considerations found in 26(b)(2)(C), nor the seven factors found in the federal commentary. Although the proposed statutes do have a provision similar to 26(b)(2)(C), namely §2031.060(f), the good cause provision in subsection (d) is not specifically tied to the considerations in subsection (f), like the federal rules are. Instead, the Judicial Council commentary expressly states that they considered adding a specific balancing test to the good cause analysis, but rejected it. Sensing perhaps the controversiality of this decision, the Judicial Council specifically asks for opinions on that. Tell them it is a big mistake and you do not agree. Here is another link to their questionnaire so that you can easily do that.

As the state commentary shows, the Judicial Council ended up using e-discovery language favoring production that was developed by the National Conference of Commissioners on Uniform State Laws, whose model rules I have previously written about. But the California Judicial Council stripped the other language in the Uniform Laws that tempered this obligation. They eliminated the balancing test the Uniform Commissioners developed to restrain “good cause” and thereby provide a fair approach. This kind of pick-and-choose approach to the Uniform Commissioners’ model rules of e-discovery, which were in turn modeled on the new FRCP rules, results in a California version of 26(b)(2)(B) that is dangerously stripped of any specific considerations of good cause. It creates the illusion of a protective provision for defendants which in reality is no protection at all. Very clever, I must say, and this difference has slipped by many. Perhaps I am over-reacting, but it seems like  proposed Section 2031.060 California Statutes is devoid of all power to protect businesses and other large organizations in California from unfair and exploitative discovery of inaccessible ESI.

This belief is buttressed by what I am told by several California lawyers about existing law in their state concerning “good cause” for discovery. Existing case law provides no clear guidance on good cause. As a result, the vague good cause requirment typically favors the requesting party, especially the small David in any case against a Goliath, meritorious or not. The plaintiffs’ bar does not want a clearly defined good cause for plaintiffs to have to meet to force production of inaccessible ESI, they do not want the Uniform Commissioners balancing test, nor the seven factors of the federal committee commentary. They do not even want the three general considerations of subsection 26(b)(2)(C).

If this push for new imbalanced e-discovery laws is not stopped by strong complaints to the Judicial Council before January 25, 2008, or later by Governor Schwarzenegger and his friends in the legislature, the impact of the new state law e-discovery rules in California could be substantial. Geoff Howard’s article has some good observations on what will likely happen:

Bringing a motion for a protective order in every California state court case (when the party need not follow the same process in federal court) could create a substantial burden on parties with inaccessible sources of electronically stored information. That procedure also has the potential to create significant uncertainty if a party loses a motion for a protective order in a state case, leading to the discovery of the inaccessible data. The resulting discovery of that information could impact the protected nature of that data under the federal rules. Given the substantial consideration over a period of several years that led to the federal rule, most states with separate electronic discovery rules have chosen to follow the federal rules more closely.

 A Few Other Problems with the California Law

There are a couple of other things wrong with the proposed California law. First of all, they try to define “electronically stored evidence” by tracking most of the language used by the Uniform Commissioners. I have previously critiqued the Commissioners’ language. The California version is at least an improvement over the Commissioners’, as California eliminated the qualification that ESI be “retrievable in perceivable form.” The California Judicial Council  correctly recognized that this “perception” requirement was confusing at best, and would only lead to unnecessary litigation. Such litigation would typically not be favorable to plaintiffs, and so it is no surprise this qualification was eliminated.  But the definition they are left with is, in my opinion, still confusing, and I think at least somewhat nonsensical and contra to the normally accepted usage in e-discovery of the phrase “stored in a medium.” Although the defense bar may not like this suggestion, I think the proposed definitions should be rejected entirely, and California should follow the federal approach of no definition at all. 

Here is the proposed California definition statute:

 § 2016.020. As used in this title:

(d) “Electronic” means relating to technology having electrical, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities.

(e) “Electronically stored information” means information that is stored in an electronic medium.

The use of the word “medium” and supposed exhaustive definition of “electronic” bothers me. For instance, why is “wireless” on this list, and why speak in terms of “technology capabilities”?  As to “medium,” why say stored in an electronic medium? Electronic information is stored in physical mediums, not energetical ones. In the digital world of computers, this means information is stored as either a 0 or 1; an electrical switch is either on or off. Thus, for instance, a CD a/k/a optical disk, is said to be the medium on which digital information is stored. It is stored by tiny indentations or pits on the aluminum coating on the surface of a plastic CD. The surface of the CD is read by reflection of laser light. The difference in the laser’s reflection off a pit surface, as opposed to a non-pitted “land” surface, is read as a 1 or 0. There are many other ingenious methods for this kind of  zero-or-one-storage of binary information using various types of physical mediums, such as hard drives that use magnets instead of lasers. It is all essentially derived from Edison’s orginal idea of storing sound energy on phonographic records. As far as I know, no one can yet reliably store information on energy itself without some kind of underlying physical medium, although I suppose it is theoretically possible with energy interference patterns or something like that.

Bottom line, all ESI is stored in or on some kind of material thing that is called the medium on which ESI is stored. That is why I do not like California’s phrase “stored in an electronic medium,” and think it may lead to needless litigation.  The comments by the federal rules committee have it right. The federal comments correctly say that ESI covers information “stored in any medium” as long as “it can be retrieved and examined.” The more technically enlightened federal approach and their comments should be adopted by California.

As I have previously explained, I think the federal committee got it right in not defining ESI. The new technologies of tomorrow are likely to doom any attempts we make today at clarity by definition. In my view, the only revision which may be needed to the federal approach is to clarify that ESI is not intended to include ephemeral data, such as RAM memory. See my blog on the bizarre Columbia Pictures case in California that precipitates this opinion.

There is another change in discovery rules that is unique to California. The current statute allows only for the “inspection” of documents in response to either a request for production of a party, or subpoena of a non-party. The California rules say “inspecting documents, tangible things, and land or other property.” Most state rules, and the federal rules, have for a long time said “inspecting, copying, testing, or sampling . . .” The new rules not only add ESI, but also add “copying, testing and sampling.” Here is the proposed statute: 

§ 2031.010

(a) Any party may obtain discovery within the scope delimited by Chapters 2 (commencing with Section 2017.010) and 3 (commencing with Section 2017.710), and subject to the restrictions set forth in Chapter 5 (commencing with Section 2019.010), by inspecting, copying, testing, or sampling documents, tangible things, and land or other property, and electronically stored information that are in the possession, custody, or control of any other party to the action.

I do not understand the significance, if any, of this addition of “copying, testing or sampling.” I am told that case law has anyway already interpreted “inspection” to also allow for “copying, testing and sampling” of documents and things. Still, some California lawyers worry that the addition of the terms ”copying, testing or sampling” as to ESI creates more uncharted territory, and will inevitably lead to more litigation. Could this revision as applied to ESI be used to justify forensic imaging of hard drives for instance, which is a form of copying and inspection, one that is very expensive? I do not think that was the intent of broadening the definition, but the state comments provide no explanation whatsoever for this change. They should.

What Can You Do About it?

The full text of the proposed rules, and an invitation to comment can be downloaded here. If you do business in California, or have clients that do, you should consider providing a comment. Here is a link to the official comment form. Better hurry, the comments are due January 25, 2008. This proposal was not widely publicized, and most attorneys, myself included, just found out about it last week. If the goal is buy-in of a proposal by the full bar, why keep a proposal like this under the radar and give so little time for comments? Anyway, now you know, and the rest is up to you, the good people of  the state of California, and, of course, The Terminator.

Qualcomm’s “Monumental Discovery Violations” Provokes Only Wimpy Sanctions

The Qualcomm e-discovery saga of lying and cheating finally ended, not with a bang of severe sanctions as most hoped and expected, but with a whimper. The federal court in Qualcomm’s home town talked tough, and spelled out “monumental discovery violations,” including lying and fraud on a grand scale. But in the end it was just empty talk, and, despite the headlines you might have read to the contrary, no serious sanctions were imposed.

The 48 page Sanctions Order dated January 7, 2008, by Magistrate Judge Barbara L. Major does a good job of summarizing the truly incredible litigation misconduct by Qualcomm and its attorneys. Order Granting in Part and Denying in Part Defendant’s Motion for Sanctions and Sanctioning Qualcomm, Incorporated and Individual Lawyers. Most of the malfeasance discussed there had already been described by the trial Judge, Rudi M. Brewster, in his Order on Remedy for Finding of Waiver of August 6, 2007, Qualcomm Inc. v. Broadcom Corp., No. 05-CV-1958-B(BLM) Doc. 593 (S.D. Cal. Aug. 6, 2007). I summarized this order and other prior activity in this case in my two prior blogs: Heavy Sanctions Loom Against Attorneys for e-Discovery and other “Aggravated Litigation Abuses” and Qualcomm Update.  

Although most of the lawyer and litigant misconduct was described in the prior Waiver Order, Judge Major’s Sanctions Order does include a few new and noteworthy facts which reveal the bold enormity of their ways. The Sanctions Order also provides good perspective on how our discovery system of justice depends upon the good faith of the parties and active, honest participation of their attorneys. This dependence on the integrity of lawyers, who are supposed to act advocates for their client, and as officers of the court, underscores the vulnerability of the system is to unethical lawyers:

The Federal Rules of Civil Procedure require parties to respond to discovery in good faith; the rules do not require or anticipate judicial involvement unless or until an actual dispute is discovered. As the Advisory Committee explained, “[i]f primary responsibility for conducting discovery is to continue to rest with the litigants, they must be obliged to act responsibly and avoid abuse.” Fed. R. Civ. P. 26(g) Advisory Committee Notes (1983 Amendment). The Committee’s concerns are heightened in this age of electronic discovery when attorneys may not physically touch and read every document within the client’s custody and control. For the current “good faith” discovery system to function in the electronic age, attorneys and clients must work together to ensure that both understand how and where electronic documents, records and emails are maintained and to determine how best to locate, review, and produce responsive documents. Attorneys must take responsibility for ensuring that their clients conduct a comprehensive and appropriate document search. Producing 1.2 million pages of marginally relevant documents while hiding 46,000 critically important ones does not constitute good faith and does not satisfy either the client’s or attorney’s discovery obligations. Similarly, agreeing to produce certain categories of documents and then not producing all of the documents that fit within such a category is unacceptable. Qualcomm’s conduct warrants sanctions.

Qualcomm had opposed the entry of any sanctions against it, by arguing that it was all their attorneys fault. The nineteen accused attorneys argued just as vigorously that it was all Qualcomm, that they were hoodwinked by their client. The Judge did not believe either side, and decided sanctions were appropriate against both.

The Court’s review of Qualcomm’s declarations, the attorneys’ declarations, and Judge Brewster’s orders leads this Court to the inevitable conclusion that Qualcomm intentionally withheld tens of thousands of decisive documents from its opponent in an effort to win this case and gain a strategic business advantage over Broadcom. Qualcomm could not have achieved this goal without some type of assistance or deliberate ignorance from its retained attorneys. Accordingly, the Court concludes it must sanction both Qualcomm and some of its retained attorneys. 

Qualcomm’s misconduct was fairly obvious, it intentionally withheld  over 46,000 emails and documents that were requested in discovery, and that Qualcomm agreed to produce. Moreover, these 46,000 documents were key to Qualcomm’s entire case, and they knew they would lose if they were discovered by the other side. The court found that Qualcomm, the plaintiff, filed the suit with the intention of secreting this key evidence so that they would have a chance of winning. They did succeed in hiding the 46,000 until trial, which they lost anyway, and then their fraud was discovered. The court called this a “monumental and intentional discovery violation.” I am sure that everyone who litigates for a living, like I do, agrees.

The court could not believe that Qualcomm and its in-house attorneys could have carried out this kind of massive conspiracy to conceal eviedence without the knowledge and participation of its outside counsel. If they truly knew nothing, then it was only because they acted like the three moneys who did not want to know. It was gross negligence on their part not to know.

Qualcomm protected both itself, and its outside counsel, by refusing to waive its attorney client privilege. Since all of the communications between Qualcomm and its attorneys were secret, it was impossible to find direct evidence of outside counsel’s involvement in the conspiracy, and so the evidence against the attorneys was circumstantial.

Neither party nor the attorneys have presented evidence that Qualcomm told one or more of its retained attorneys about the damaging emails or that an attorney learned about the emails and that the knowledgeable attorney(s) then helped Qualcomm hide the emails. While knowledge may be inferred from the attorneys’ conduct, evidence on this issue is limited due to Qualcomm’s assertion of the attorney-client privilege.

Thus, the Court finds it likely that some variation of option four occurred; that is, one or more of the retained lawyers chose not to look in the correct locations for the correct documents, to accept the unsubstantiated assurances of an important client that its search was sufficient, to ignore the warning signs that the document search and production were inadequate, not to press Qualcomm employees for the truth, and/or to encourage employees to provide the information (or lack of information) that Qualcomm needed to assert its non-participation argument and to succeed in this lawsuit. These choices enabled Qualcomm to withhold hundreds of thousands of pages of relevant discovery and to assert numerous false and misleading arguments to the court and jury. This conduct warrants the imposition of sanctions.

The court goes into great detail as to the wrongs committed by each attorney, including intentional lying to the trial Judge, and then summarizes the attorneys’ malfeasance as follows:

. . .  the evidence establishes that Qualcomm intentionally withheld tens of thousands of emails and that the Sanctioned Attorneys assisted, either intentionally or by virtue of acting with reckless disregard for their discovery obligations, in this discovery violation.

You may question how wimpy sanctions could possibly have been entered after reading those quotes. You may also wonder why I say this, if you have read the news headlines saying Qualcomm was sanctioned with an $8,568,633.24 attorney fee award.  That is a pretty stiff sanction you might think. But these headlines, like the sanctions, are smoke and mirrors. In fact, the Sanctions Order imposed no new monetary penalties on anyone. Qualcomm had already been ordered to pay $8,568,633.24 in fees in the underlying case in Judge Brewster’s Order Granting Broadcom Corporation’s Motion for Exceptional Case Finding and for an Award of Attorney’s Fees. All the Sanctions Order did was provide another basis for the same award. The court makes clear that Qualcomm will not have to pay twice. So the real effect is a zero sanctions fee award against Qualcomm. No fines or other penalties were imposed on Qualcomm. So much for hash sanctions against Qualcomm. Judge Major no doubt realized that eyebrows would be raised by this decision, and so she attempted to explain her rationale in footnote 17 as follows:

Because the attorneys’ fees sanction is so large, the Court declines to fine Qualcomm. If the imposition of an $8.5 million dollar sanction does not change Qualcomm’s conduct, the Court doubts that an additional fine would do so.

Hmm, not quite sure I follow that logic, but I am sure Qualcomm and its shareholders were relieved.

But what about their attorneys? Nineteen attorneys had been ordered by Judge Brewster to show cause to Judge Major why severe sanctions should not be imposed for their misconduct in this case. Qualcomm Inc. v. Broadcom Corp., No. 05-CV-1958-B(BLM) Doc. 599 (S.D. Cal. Aug. 13, 2007). The sanctions Judge Brewster asked Judge Moody to consider included requiring “counsel’s formal disclosure of this Court’s findings to all current clients and any courts in which counsel is admitted or has litigation currently pending.” Now that would have been a severe penalty. But it was not imposed by Judge Moody, it was not even discussed. 

Instead, all but six of the nineteen attorneys ordered to show cause got off with no penalties at all. Five attorneys were sanctioned from Day Casebeer, a small IP firm, and only one from Heller Ehrman, a large firm based in San Francisco. The two law firms themselves were not sanctioned at all.

Two of the attorneys in the Heller Ehrman firm successful defended themselves by arguing they were just acting as local counsel. I am surprised this defense was accepted. Yet here are Judge Major’s own words: 

These attorneys primarily monitored the instant case for its impact on separate Qualcomm/Broadcom litigation. However, for logistical reasons, both attorneys signed as local counsel pleadings that contained false statements relating to Qulacomm’s non-participation in the JVT. Given the facts of this case as set forth above and in the declarations, the limitations provided by the referral, and the totality of the circumstances, the Court finds that it was reasonable for these attorneys to sign the pleadings, relying on the work of other attorneys more actively involved in the litigation.

The judge’s words may seem reasonable, but I am surprised because it is completely contrary to anything I have ever previously heard a federal judge say about acting as local counsel. Judge Major again recognizes her unusual leniency and tries to explain it in footnote 14:

The Court is declining to sanction these attorneys for their role in signing and filing false pleadings, but the Court notes that sanctioning local counsel for such conduct is possible and may be imposed in another case under different circumstances. Attorneys must remember that they are required to conduct a reasonable inquiry into the accuracy of the pleadings prior to signing, filing or arguing them.

The sanctions against the six lawyers were, in my opinion, relatively mild. No fees were taxed, nor fines imposed. They were just ordered to provide a copy of the orders to the state Bar for “appropriate investigation.” Of course the Bar in California already knew about this case. Bar investigations were probably inevitable anyway. All this Sanctions Order did was let most of the attorneys off the hook. Moreover, I am told that under the California Bar Ethics Code, a Judge is required to report lawyer misconduct that they witness. So the judge was already required to turn them in. Bar investigations will be conducted, to be sure, and there will be some penalties imposed, but I doubt they will amount to much. They will certainly be far less than the ultimate penalty of disbarment imposed against President Clinton for purportedly failing to understand what “sex” is. It will also be far less that the client and judge letter writing penalties that Judge Brewster suggested.

The final sanction was to order the six outside attorneys, along with five Qualcomm in-house counsel that the court found complicit in the fraud, to participate in what the court called a CREDO program (”Case Review and Enforcement of Discovery Obligations”). It requires the eleven lawyers to meet and prepare a memorandum on how to avoid this kind of incredible e-discovery fraud from reoccurring in the future. Judge Major really seems to think that these discredited attorneys will somehow be redeemed by studying what went wrong and writing a great memo. In her words:

While no one can undo the misconduct in this case, this process, hopefully, will establish a baseline for other cases. Perhaps it also will establish a turning point in what the Court perceives as a decline in and deterioration of civility, professionalism and ethical conduct in the litigation arena. To the extent it does so, everyone benefits - Broadcom, Qualcomm, and all attorneys who engage in, and judges who preside over, complex litigation. If nothing else, it will provide a road map to assist counsel and corporate clients in complying with their ethical and discovery obligations and conducting the requisite “reasonable inquiry.”

Sorry, but I think this is naive. In my opinion, it is like catching the fox in the hen house, and then “punishing” it by asking for a memo on how to improve hen house security. These are not the right attorneys to turn to for advice on how to fix e-discovery. They might as well have been ordered to write “I will not cheat and lie” on the blackboard a thousand times.

The lawyers should have been sanctioned with high monetary fines and ordered to write the client and judge letters a thousand times, not a CREDO memo. Then a strong message would have been sent to the Bar. Then the very small minority of attorneys who commit these types of wrongs might think twice. They might act like the vast majority of lawyers in this country do every day, they might choose honor and integrity over the temptations of the fast buck from an unscrupulous client. This was an opportunity missed.

Water Pipe Burst Excuse Fails To Prevent Costly Order to Restore Backup Tapes, After County Fails to Implement a Litigation Hold and Save Emails

A story of a water pipe burst in a room where backup tapes were kept was one excuse provided for not producing emails in a recent case in New York. Toussie v. County of Suffolk, 2007 WL 4565160 (E.D.N.Y. December 21, 2007). The defendant county offered the pipe burst excuse to try to avoid the expense of backup tape restoration, and side step charges of spoliation. Sanctions were sought based on gross negligence by the county and its attorneys for failing to implement a litigation hold and preserve evidence. The county compounded their errors by making wildly exaggerated claims of the cost and time to restore and search the backup tapes.

The case started when the plaintiffs filed suit in 2001 claiming that their rights had been violated by the county’s refusal to allow them to participate in an auction of several parcels of real estate.  A second action was commenced with more plaintiffs in 2005 and the cases were consolidated. Apparently the plaintiffs in the 2001 case were under a federal criminal investigation at the time the county would not let them participate in the auction. My guess is, the county considered their case frivolous, and that is why they never implemented a litigation hold. That turned out to be a very expensive mistake for everyone, except Kroll Ontrack. 

After five years of litigation, a discovery dispute arose between the parties in 2006 as to the adequacy of the county’s production of emails. It had only produced two emails! The plaintiffs moved to compel.

United States Magistrate Judge Arlene Rosario Lindsay responded by ordering the County to have its Information Technology Department search the County’s servers for responsive emails, and supplement its prior meager production of two emails. The County did not comply, and so on Halloween 2006 the plaintiffs moved for sanctions. The county responded by claiming it “lacked the resources to perform the court ordered search for additional e-mails.” Id.The county CIO further explained in an affidavit that they had no archive system. He claimed that in order to look for emails in that time period they would have to restore and search backup tapes at a costs of $32,000, plus 1,700 man hours of search time.

This affidavit caused the magistrate to schedule a hearing where she expressed her admitted “exasperation” with the County’s position by stating:

You can’t just throw up your hands and say we don’t store [e-mails] in an accessible form and then expect everybody to walk away.

Id. at *2. The court then helped the County out somewhat by narrowing the search to “35 search terms on the servers of five key County departments for the period May, 2001 thru January, 2006.” The County was ordered to prepare a plan to comply and, despite Judge Lindsay’s exasperation, no sanctions were imposed.

Two weeks later the county wrote Judge Lindsay a letter claiming that the narrowed search ordered would require the restoration and search of 470 backup tapes. The letter claimed that the costs for this search was estimated to be $934,000, plus 960 man hours. That is quite a dramatic increase in cost, from $32,000 to $934,000, especially when you consider the scope of discovery was supposedly tightened.

Naturally the court responded by scheduling another hearing.  There Judge Lindsay again expressed her concerns that:

… notwithstanding the County’s clear obligation to preserve relevant e-mails, the County had taken no steps to preserve its e-mails or to store them in a manner which would permit ready access and review.

The court still did not impose sanctions, but instead directed the parties to meet with their respective e-discovery consultants “to discuss how to implement a better, and perhaps less costly plan, for this production” and prepare and submit a joint discovery plan.

The parties and their IT experts met only by phone. In my opinion, they should have met in person on multiple occasions. That, along with a substantial shift to a non-adversarial attitude, by both sides, was the only way the judge’s plan could have possibly worked. Predictably, the phone call approach failed, and no agreements were reached.  Instead of filing a joint plan, the plaintiffs’ again filed a motion to impose sanctions against the county. The motion outlines a list of IT incompetency by the county, including the county’s failure to explain how the cost estimate went from $32,000 to $934,000, and failure to preserve emails after the suit was filed.

The county responded by submitting a search plan, which they again said required exorbitant costs and burden beyond their ability to pay. This time the number of backup tapes they said they would have to search was 412, and not 470. (Judge Lindsay points out that the number of backup tapes changes without explanation in all of the county’s filings with the court.) The County still claimed it would cost $934,000, plus the full time efforts of two of its employees over 450 days just to restore the tapes. Then to really pile it on, they claim that after the restoration work a computer forensic detective from the police department would have to spend another 70 weeks to search through the restored tapes.

This is one of those cases where you need a calculator to understand a party’s truly incredible position. By my calculation the county now claimed that it would take 10,000 hours to restore and search the tapes! It would take 7,200 hours to restore the tapes, and 2,800 of police detective time to search them. The 7,200 hours to restore assumes an 8 hour day, and 2 employees (16 x 450 = 7,200). The 2,800 hour search calculation assumes a 40 hour week (70 x 40).  So, once again the county makes an astronomical increase in its cost estimate, increasing its projected time from 960 hours to 10,000 hours. As the court points out, this represents an estimate of over two and a half years to complete the discovery request. Id. at *3.

Once again, the court responded by scheduling another hearing for February 2, 2007. This time both sides were ordered to bring their IT witnesses with them to answer the court’s questions. At this hearing the county came up with a new excuse for the great expense, claiming that a water pipe had burst in 2004 where the backup tapes were stored. This accident supposedly made 3 out of 4 of the tapes unrecoverable. Apparently the county’s IT department waited quite some time to tell the lawyers about their little accident, and then, as we will see, greatly exaggerated the consequences of the water damage. Id. at *4 and FN3. This is a good example of the failure of IT and Law to communicate. It is also a good example of the common false assumption by IT professionals, that they can bluff their way in court with wild unsubstantiated claims, so long as they dress them up in technical jargon. This may work back in the office, but it will not fly in most federal courts. See: IT Tech’s Fast Talk Had Zero Persuasive Value With Judge.

Magistrate Lindsay responded to the testimony at the hearing by the county’s IT department by telling the county’s lawyers that she was considering the entry of spoliation sanctions. Specifically, she was considering the imposition of an adverse jury instruction, which is usually a fatal blow to a defense. Suddenly the frivolous case looked like it was going to be lost because of e-discovery blunders and IT hubris. This warning from the bench produced what the court called a “sea change” in the county’s attitude. The county then agreed to “solicit bids and hire an outside vendor to recover the e-mails.” The court ended the hearing by making this agreement into an Order.

Next, the county reported to the court that it had received a bid from Kroll Ontrack to do the work at a price range of between  $418,000 to $963,500. The county did not say whether Kroll had actually been retained, and so the court scheduled another hearing on March 22, 2007, and again ordered the IT technicians to appear and answer questions.

At this hearing the county reported it had not yet retained Kroll, but somehow had managed to recover a number of emails from key players on its own. Moreover, the county reported that the water pipe break had only destroyed a few of the backup tapes, and not three quarters as they had previously thought. I certainly would not have wanted to be the lawyer bearing that news to the judge. The county’s CIO also testified at the hearing, testimony which Judge Lindsay called contradictory. Id.

After this hearing the county then notified the court that the county legislature had passed a special bill to pay for Kroll’s services. Id.at *5. The county advised that they would hire Kroll soon. The plaintiffs responded by calling this a delay tactic, and renewed their motion for sanctions. The court then ordered the county to provide a specific time table. The county complied with Kroll’s estimate that they could complete the work in 74 days. Based on that, the court ordered the county to complete production by August 10, 2007. 

In spite of the county’s earlier estimate that it would take two and a half years to restore and search its water logged tapes, Kroll met its deadline. In fact, Kroll is the only one in this case who came out looking good. Here is the court’s description of what Kroll accomplished in 74 days (we are never told the final bill):

Kroll has restored 417 back up tapes and searched for e-mails responsive to the criteria set by the court. 18 of the 417 tapes were damaged and Kroll was required to implement disaster recovery procedures on those tapes. Data from 2 of the 18 damaged tapes was ultimately recovered. Kroll also determined that 20 additional tapes were in “brick format,” meaning they could not be converted into a readable format. Thus, Kroll was unable to recover e-mails from approximately 36 tapes or 9% of the tapes.

In the end, the Kroll process yielded 2403 pages of e-mails and attachments to those e-mails, of which approximately 200 were withheld on the basis of privilege, a far cry from the two e-mails originally produced by the County.

After receiving this production, the plaintiffs complained again that this was inadequate and renewed their motion for sanctions. This motion is the subject of the December 21st order. 

Plaintiffs complained that most of the email produced was not useful, and most of the 2,403 pages consisted of “inane” attachments to e-mails. They refused to believe that all relevant emails had in fact been produced, arguing that in view of the number of people involved, there just had to be more. They argued that email had been destroyed, and asked for a default judgment, or at least an adverse inference. With these long and convoluted facts as background, the court for the first time ruled on plaintiffs’ motion for sanctions.

The court began its legal analysis by holding that the county’s duty to preserve began when suit was filed, and not before, as plaintiffs had argued, when a few of its employees should have reasonably anticipated litigation:

In this case, it is likely that a handful of County employees anticipated that the plaintiffs would sue after they were denied the right to purchase real estate at the 2001 auction, but there is no evidence to suggest that a substantial number of key personnel anticipated litigation prior to October 11, 2001. Accordingly, the duty to preserve arose in October 2001, when the complaint was first filed.

The court held that the county was not under a duty to backup and save every email it generated, but should have saved email in four key departments that concerned the real estate transactions at issue. The county should have implemented a litigation hold to suspend its normal document retention/destruction policies. The county did not do that in this case. In fact, it appears that a litigation hold notice was never provided. For that reason, emails were made inaccessible or destroyed according to county’s usual practices. The court concluded that this was a violation of the county’s obligation to preserve this limited set of highly relevant emails. Id. at *7.

Having found a breach of duty, the court then considered the second prong of the spoliation test, whether there was a culpable state of mind. Unlike some circuits which require proof of actual malice, or at least gross negligence, to prove culpability, the Second Circuit only requires a showing of negligence.  Residential Funding Corp. v. DeGeorge Fin. Corp., 306 F.3d 99, 108 (2d Cir.2002).

The plaintiffs in this case argued that the county had been grossly negligent because the county’s attorneys had never informed key employees of the need to maintain relevant e-mails. Due to this failure, key employees were free to delete e-mails from hard drives, back up procedures were not modified, and highly relevant e-mail exchanges were lost. Notice how the attack at this point is getting personal, and plaintiffs are now pointing their fingers at both the county and their attorneys.

The court agreed with the plaintiffs in part, rejecting their argument on the backup tapes, but still holding that the second culpable state prong of the spoliation test had been met:

Thus, while the County’s failure to implement a litigation hold amounts to gross negligence, its failure to preserve all potentially relevant back up tapes was “merely negligent.” Id. In either case, the second requirement for the imposition of spoliation sanctions is met.

Id. at *8.

The third and final prong of the spoliation claim required the plaintiffs to prove that the missing e-mails were relevant and that they would have been favorable to them. That can be tricky to prove, as many courts have noted, since you “don’t know what you don’t know.” This final prong of the test is usually presumed to be met, absent evidence to the contrary, when the culpability is shown by malice, but requires evidence when culpability is established by gross or simple negligence.

In this case, in spite of the strong facts against the county, the court concluded that plaintiffs failed to prove that the emails destroyed were relevant or helpful. This result was clearly influenced by the great cost and expenses that the county finally incurred with Kroll. Equally as important is the fact that the emails recovered at such great expense proved to be a waste of time. The plaintiffs could not point to a single relevant email that helped their case from the 2,403 pages produced. Plaintiffs attached six emails to their final sanctions motion, but the court pointed out that these emails helped the defense, not the plaintiffs. The emails showed that one reason the county opposed the plaintiffs proposed purchase, is that the county learned the plaintiffs were under criminal investigation by federal authorities. Here is Judge Lindsay’s ruling on this issue:

While the evidence is clear that at least 9% of the back up tapes were destroyed and the plaintiffs may be correct that e-mails have been deleted by users, there is no reason to believe that any of those e-mails would have provided any additional support of plaintiffs’ claims. Accordingly, the plaintiffs have not sufficiently demonstrated that the destroyed/lost emails were favorable or relevant and the motion for a default judgment or an adverse inference instruction is denied.

Still, even though there was insufficient evidence of relevance to justify an adverse inference instruction, the court had witnessed for itself a long series of e-discovery failures. The water pipe burst story, and the widely varying estimates of cost to restore tapes, to name just a few. All this had forced five hearings on the subject and clearly aggravated the judge. Since the county’s e-discovery negligence and IT hubris caused significant unnecessary expenses, the plaintiffs were awarded fees. But for the last minute heroics and sanity of Kroll, the results for the county could have been much worse.