In Hsueh v. N.Y. State Dep’t of Fin. Servs., (No. 15 Civ. 3401 [PAC], 2017 WL 1194706 [S.D.N.Y. Mar. 31, 2017]) the Southern District imposed spoliation sanctions (specifically, an adverse inference) on the plaintiff in a sexual harassment case, because of her intentional deletion of a recorded conversation relevant to her allegations.  While the court deemed the recording ESI, it ultimately concluded the Rule 37(e) applied only to situations where a party failed to take reasonable steps to preserve ESI; not to situations where, as here, a party intentionally deleted relevant information.

Factual Background

Hsueh filed her sexual harassment complaint on May 1, 2015. During her deposition almost a year later (April 20, 2016), plaintiff stated she did not believe she had any recorded conversations relevant to her lawsuit, but it was possible she may have such recordings.  As the deposition continued, however, Hsueh eventually revealed that she had recorded one conversation with a Human Resources representative but later deleted the recording because it was not “worth keeping” and “was not very clear.” She testified she deleted that recording in either December 2015 or January 2016.

A few weeks after Hsueh’s deposition, defendants filed a letter with the Court requesting a pre-motion conference on a proposed motion for spoliation sanctions in connection with Hsueh’s intentional deletion of the recording. Immediately before Plaintiff’s response was to be filed, Plaintiff’s counsel informed the Court that Hsueh provided him with a recording of the deleted conversation, which Plaintiff was able to recover with the help of her husband.  The result – discovery was reopened for 90 days so that Defendants could depose (again) Plaintiff and her husband.  The Court also reserved the right to impose upon Plaintiff the attorney’s fees and the costs incurred by Defendant’s in connection with reopening discovery.

Notwithstanding the additional discovery and depositions, Defendants proceeded with their sanctions motion.

Relying upon the plain language of Rule 37(e), the Court found the Rule 37 inapplicable in the present instance. The Court continued:

“Because Rule 37(e) does not apply, the Court may rely on its inherent power to control litigation in imposing spoliation sanctions. A party seeking an adverse inference instruction based on the destruction of evidence must establish (1) that the party having control over the evidence had an obligation to preserve it at the time it was destroyed; (2) that the records were destroyed with a culpable state of mind; and (3) that the destroyed evidence was relevant to the party’s claim or defense such that a reasonable trier of fact could find that it would support that claim or defense. If these elements are established, a district court may, at its discretion, grant an adverse inference jury instruction insofar as such a sanction would serve the threefold purpose of (1) deterring parties from destroying evidence; (2) placing the risk of an erroneous evaluation of the content of the destroyed evidence on the party responsible for its destruction; and (3) restoring the party harmed by the loss of evidence helpful to its case to where the party would have been in the absence of spoliation.”

The Court also rejected Plaintiff’s argument that sanctions were not appropriate because the recording in issue was ultimately produced.*

Thus, having concluded Hsueh’s actions were the result of a culpable mind, rather than inadvertence, the Court exercised its inherent powers, imposed an adverse inference on Plainiff and granted to Defendants its attorneys’ fees and costs incurred in bringing the spoliation motion and in reopening discovery.

*Specifically, the Court concluded the produced recording was incomplete due to a number of factors including the length of the recording, that it cut off in mid-sentence, and Plaintiff’s husband’s concession that he could not be sure the recording was complete.

Electronic discovery (a/k/a ediscovery and e-discovery) is the process of identifying, preserving, collecting, preparing, reviewing and producing electronically stored information (“ESI”) in the context of a legal or investigative process.   In order that counsel may bring discovery issues (including e-discovery issues) to the forefront early on in the development of a case, the Federal Rules of Civil Procedure impose on counsel certain obligations.  These obligations include, but are not limited to, requiring counsel to participate in a Rule 26(f) conference, and requiring counsel to making certain initial disclosures pursuant to Rule 26(a).  Note that these obligations are imposed upon counsel irrespective of whether there is ESI relevant to the dispute.  However, competent counsel should be prepared to attend the 26(f) conference educated as to their client’s electronic data content and infrastructure, including any data that may be difficult or costly to produce, and should be further prepared to discuss issues like inadvertent production of privileged materials and phasing of discovery.

Rule 26(f) Conference

While the precise timing of the conference will depend on the individual Court’s scheduling orders and local practice, the 26(f) conference will inevitably give rise to one of the earliest opportunities for the parties to engage in comprehensive discussions regarding discovery, including issues relating to ESI.  Moreover, there is an expectation that the parties will exchange certain information, and reach agreement on many discovery-related topics.  Thus, it is critical that the attorney attending this conference be knowledgeable about his/her the client’s data, electronic storage systems and data retention.  

At the conference, counsel should discuss, among other things, the subjects on which discovery may be needed, when discovery will be completed, and whether discovery can and should be phased or limited to particular issues.  For example, as it relates to ESI, it may be most efficient to start with a discrete list of ESI sources (i.e., 5 custodians rather than 50), review fully that material, and agree to include additional sources at a later date if necessary. 

Relatedly, it is highly advisable to discuss the format of the eventual production(s) at this early stage. Even though production may not occur for many weeks / months, the ultimate format will aid in creating processing and review plans.  For example, without knowing the production format, one party may convert or otherwise manipulate its ESI in a way that is incompatible with the ultimately required production format.

Additionally, claw back agreements or protective orders dealing with inadvertent productions of privileged materials should be addressed at the 26(f) conference.  In almost all cases, the parties should agree to a process by which each side would have the right to identify and request the return of such material without the production resulting in a waiver. This agreement — commonly referred to as a claw back agreement—should always be incorporated into a court Order, either as part of the protective order or through another type of routine court order. The issuance of such an order should always precede any production in the case. Under Federal Rule of Evidence 502, if a court orders this kind of agreement, the order will protect the parties from claims of waiver if, among other things, the disclosure is inadvertent.  And, by creating this framework to resolve a potential inadvertent disclosure issue early on, it will inevitably reduce the potential for a dispute.

ESI and Rule 26(a) Disclosures

Rule 26 also imposes certain disclosure obligations on litigants.  Specifically, Rule 26(a)(1) requires each litigant to disclose to its opponent various types of information before any formal discovery requests are served in the case. The idea behind this “initial disclosure” is to require parties to be forthcoming with information relevant to the matter and to streamline the discovery process.  According to subsection (A)(ii) of the rule, each party must provide a copy — or a description by category and location — of all documents, ESI, and tangible things that the disclosing party has in its possession, custody, or control and may use to support its claims or defenses. Identifying specific custodians and non-custodial sources of ESI (i.e., departmental share drives or database programs) that are expected to be searched for relevant data should also occur at this stage.  It is critical to note that if you plan to argue that certain data is  not reasonably accessible for production due to the burden and/or expense of restoring/producing that data (i.e., legacy data or backup media), it must be disclosed to your adversary.   In fact, Rule 26(b)(2)(B) includes a provision related to “not reasonably accessible” ESI, which anticipates possible cost-shifting under particular circumstances. Under this provision, a party need not produce any ESI from sources that it deems to be not reasonably accessible so long as the party identifies the source with particularity to its opponent.  A source can be considered not reasonably accessible on the basis of “undue burden or cost.”*

Notwithstanding the obligations Rule 26 imposes, many lawyers enter a lawsuit (specifically as it relates to ediscovery) without a detailed understanding of their client’s ESI or a specific execution plan in mind. That’s a mistake that often proves to be costly.  Educating one’s self as to one’s clients’ ESI will inevitably result in a more efficient process, and may also help reduce discovery disputes and—most importantly—get parties to the litigation’s most relevant information faster.

* Note, however, once the source is identified as “not reasonably accessible,” the requesting party may nevertheless move to compel production from the identified source, but will need to make a showing of “good cause” to require it. If the court determines that good cause has been shown, it may in addition require the requesting party to bear the reasonable costs of production under the proportionality rule.

 

In connection with a declaratory judgment lawsuit wherein the Harleysville Insurance Company sought a ruling that it did not have to pay a loss claim for an October 2014 fire at a funeral home, United States Magistrate Judge Pamela Meade Sargent ruled, in a February 9, 2017 decision, that the Harleysville Insurance Company waived any claim of privilege to materials uploaded to an unprotected file-sharing site, which anyone with a hyperlink to the site was able to access.  Specifically, Harleysville’s privilege problems stemmed from an investigator for its parent company, Nationwide Insurance, who wanted to share information electronically.  The investigator uploaded video surveillance footage of the fire scene to Box Inc. and sent a hyperlink to an employee at the National Insurance Crime Bureau (“NICB”). Later, the senior investigator uploaded the insurance claims file and investigation file to the same Box site, and sent the same hyperlink to Harleysville’s lawyers. Defense lawyers for the funeral home obtained the link from the NICB after they sought the file related to the fire. The NICB forwarded the email from the Nationwide investigator with the hyperlink, which also included a confidentiality notice that the email included privileged and confidential information. When the funeral home lawyers used the hyperlink, they gained access to the entire claim file. They proceeded to download the file – ignoring the confidentiality notice – and reviewed the file without notifying Harleysville or Harleysville’s counsel.

In reaching her decision, Judge Sargent wrote, “[I]n essence, Harleysville has conceded that its actions were the cyber world equivalent of leaving its claims file on a bench in the public square and telling its counsel where they could find it. It is hard to imagine an act that would be more contrary to protecting the confidentiality of information than to post that information to the world wide web.”

According to the American Bar Association BNA’s Lawyers’ Manual on Professional Conduct, Judge Sargent’s decision “should make lawyers think twice before putting confidential documents in a file-sharing site without password protection.”

Importantly, Harleysville was not the only litigant criticized in Judge Sargent’s opinion.  Judge Sargent scolded defense counsel for its improper and potentially unethical decision to access the  materials and use them without notifying lawyers for Harleysville.  In fact, Harleysville only learned that opposing counsel had the claims file only when they received a thumb drive of documents from the defense lawyers, which in turn caused Harleysville to file a motion to disqualify the defense lawyers.

Sargent, however, declined to disqualify defense counsel because of her decision on the privilege waiver. Instead, she said, defense counsel would have to pay the parties’ cost of obtaining her ruling on the matter.

This decision serves as an important reminder of the potential pitfalls inherent in our ever-growing digital world.   As attorneys, we should internalize the important lesson of properly securing documents before utilizing document sharing repositories and data rooms even those hosted by law firms, accounting firms and other trusted professionals.  It is critically important that we take the necessary precautions (i.e., encrypting documents, applying password protections, requiring double sign-on credentials) when we are handling and sharing documents that contain privileged information and other sensitive data (for example, personal identifying information).

In Fulton v. Livingston Financial LLC, 2016 WL 3976558 (W.D. Wash. July 25, 2016), U.S. District Judge James L. Robart sanctioned a defense lawyer who “inexcusabl[y]” relied on outdated case law and pre-2015 amendments to Federal Rule of Civil Procedure 26(b) in motion practice before the court.

On April 13, 2015, Plaintiff (Richard Fulton) filed suit against Defendants for allegedly violating the Fair Debt Collection Practice Act (“FDCPA”) 15 U.S.C. § 1692, et seq., and several Washington statutes.

On March 17, 2016 (after the Federal Rules were amended), Defendants moved to either compel discovery or exclude medical evidence presented by Mr. Fulton. Specifically, Defendants argued that Fulton “stated on numerous times since the beginning of this case that he was not seeking recovery for any medical condition, so his medical records and treatment were not in issue.”* Judge Robart found defense counsel’s inference “so unreasonable as to constitute a misrepresentation to the court,” as the plaintiff did seek recovery for emotional distress. Id. at *6, *8. More important to this Blog post, however, was Judge Robart’s finding that defendant’s counsel had “misstate[d] the law” regarding discovery by citing cases analyzing pre-amendment Rule 26. Id. at *7. And further finding, defense counsel proceeded to misstate the law in their reply brief continuing to rely upon case law that existed before the highly publicized amendments that took effect December 1, 2015. Judge Robart declared that such citations to outdated case law were “inexcusable” and “inexplicable.” Id. at *7, *8.

Judge Robart then proceeded to sanction defense counsel in an oral ruling. In addition to awarding Fulton his fees and costs incurred in litigating the motion, Judge Robart ordered defense counsel to provide a copy of his offending motion to the supervising members of his firm, with the explanation that the court had entered sanctions against him “for quoting provisions of the civil rules that are badly out of date, and also making direct misrepresentations to the court.” Id. at *8. Judge Robart also threatened an additional sanction of requiring defense counsel to report this sanction on future pro hac vice applications. Id.

Before determining whether to require counsel to report the sanction on future pro hac applications, defense counsel filed a supplemental memorandum in response to the court’s oral ruling, stating that he had acted in good faith and noting that his conduct did not affect the administration of justice in the case. For these reasons, defense counsel requested that the court exercise its discretion in not taking disciplinary action or, in the alternative, limiting the disciplinary action to an informal, private admonition that would not need to be reported on future pro hac vice applications. Id. As the defense counsel’s memorandum was not denominated a motion for reconsideration, Judge Robart declined to reconsider his oral ruling and instead considered only whether to impose the additional pro hac vice reporting sanction. Id. at *8.

Judge Robart rejected as “post hoc speculation” defense counsel’s claim that because pre-amendment Rule 26 could have applied “insofar as just and practicable,” his citation to pre-amendment cases was in good faith. Id. The court held that by relying on pre-amendment cases in an argument on discoverability and making “no reference to the proportionality requirement,” counsel “misrepresented the scope of discoverable information in a motion to compel or exclude evidence” and then failed to “own[] up to his misrepresentation,” which was “tantamount to bad faith.” Id.

In conclusion, Judge Robart noted that despite [defense counsel’s] flawed efforts to excuse his comportment, the previously issued sanctions (i.e., providing a copy of offending motion to supervising members of firm and awarding plaintiff his fees and costs in litigating this motion) “nearly suffice” to deter counsel from misrepresenting facts or the law in the future and thus decided that counsel did not need to report the sanctions on future pro hac vice applications. Id. Judge Robart did add, however, an additional sanction, requiring counsel to disclose the sanctions imposed if, at any point in the next five years, a federal court threatened or imposed sanctions on him. Id. In Judge Robart’s view, “[t]his requirement will alert courts presiding over future cases that [defense counsel’s] misrepresentations in this case constitute strikes one and two against him. Future courts will then be sufficiently informed to properly sanction any further bad faith by [defense counsel].” Id.

This case serves as an important reminder of our obligations to remain current with and conversant in an organic and evolving body of rules and decisions.

*This conclusion was based on Fulton’s statements that “he did not seek formal medical treatment for stress, worry and inconvenience brought on by Defendants’ conduct.”

 

The Federal Rules are undergoing more changes!  And, effective December 1, 2017, there will be two new Federal Rules of Evidence (Rules 902[13], [14]) that will directly impact e-discovery in the federal courts.  These Rule changes are critical because, as aptly put by recently retired Magistrate Judge John Facciola, “[t]he Federal Rules of Evidence were…established to create uniformity in evidence law by providing guidance for every evidentiary problem that could be reasonably expected to occur at trial…But, as our tangible world has grown increasingly virtual, so too has the evidence,…[which] the [existing federal] rules are ill-designed to accommodate.”  Thus, the new rules deal directly with e-discovery and forensic collection processes and the authentication of same in federal litigation. The proposed Rules are designed to bridge this gap and demonstrate an important step toward updating the FRE to be more in sync with the increasingly digital world in which we live.

Specifically, Rule 902(13) provides for a certification process for ESI, produced by a computer system or computer process (analogous to Rule 902[11]’s certification of business records).

And, FRE 902(14) provides that electronic data recovered “by a process of digital identification” is to be self-authenticating, thereby not routinely necessitating the trial testimony of a forensic or technical expert where best practices are employed, as certified through a written affidavit by a “qualified person.”   Here, the authentication of the file would be established using the file’s hash value (i.e., the digital fingerprint).

Familiarity with the proposed changes are important for a number of reasons.

First, although the Rules aren’t expected to take effect for almost a year, ESI collected in a Rule 902(14) compliant manner any time prior to the Rule’s effective date (i.e., today) can be subject to the new Rule’s provisions once the Rule goes into effect. This is important, because digital evidence is routinely collected well in advance of trial.  So, practitioners need to understand and account for Rule 902(14) immediately given that electronic evidence that is collected today may not be used at trial until sometime after December 1, 2017.

Second, the expectation is that the new Rules will provide a streamlined and efficient process to establish a foundation for ESI collected in a Rule 902(14) compliant manner. This will increase predictability by eliminating surprise challenges, and will encourage the use of  ESI practitioners by allowing written certifications in the place of expensive and time-intensive in-person testimony.  Indeed, the ability to eliminate foundational testimony will undeniably result in significant cost savings to one’s client and help promote judicial efficiency.  (However, this necessarily presupposes that practitioners in the federal courts will understand what a 902(14) compliant collection means.)

For anyone who has interest in reading a very educating and comprehensive Law Review article about the proposed Rule 902(13) and (14), check out, “Law of the Foal:  Careful Steps Towards Digital Competence in Proposed Rules 902(13) and 902 (14),” 1 GEO. L. TECH. REV. 6 (2016), written by Hon. John M. Facciola & Lindsey Barrett.

Armstrong Pump, Inc. v. Hartman, No. 10-CV-446S, 2016 WL 7208753 (W.D.N.Y. Dec. 13, 2016)

In this case, pending before the Court was a motion by Armstrong Pump Inc. (“Armstrong”) to compel formal production of certain documents that defendant Optimum Energy LLC (“Optimum”) considered the functional equivalent of its proprietary source code.  This “formal production” Armstrong sought to compel consisted of 46 documents (305 pages) that Armstrong previously viewed during a “document and source code review” conducted pursuant to a strict protocol.  During that review Armstrong was permitted to attend with two outside counsel and two experts.  Moreover, Armstrong was able to print – also under strict protocol – certain of those documents.

In support of its motion to compel, Armstrong now argues that the reviewed documents did not contain “actual programming” and thus were able to be produced under the parties’ protective order for discovery without any additional protections designed to protect source code. Optimum argued in response that the documents were “functionally equivalent to source code” and should not be subject to production.  Specifically, Optimum contended that the documents contained enough technical information including (in detail) the functions, logic and algorithms implemented in Optimum’s products to “allow a software engineer to build its proprietary source code based on that information.”

Ultimately, the Court reasoned that discovery had “reached the point of diminishing returns” and declined to compel production, with limited exceptions.

In reaching this conclusion, the court first addressed the effects of the 2015 amendments to Federal Rule 26, reasoning that “proportionality has assumed greater importance in discovery disputes” and that the amended rule is intended to encourage more aggressive efforts from the judiciary to discourage discovery overuse. The court continued:

Discouraging discovery overuse does not end with the early stages of a case, however. Implicit in both the language and the spirit of the 2015 Amendments is the obligation, at any stage of a case, to prevent parties from expending increasing time and energy pursuing diminishing returns. Calling a halt to the pursuit of diminishing returns often will overlap with an assessment of duplicate or cumulative discovery. Sometimes the additional discovery sought technically would provide nominally probative information not yet in the parties’ hands. Either way, when adding a few more pages of documents requires five or six inches of motion papers, and when those few more pages would be added to over one million pages of total discovery, numerous pages of expert reports, and transcripts from depositions of all of the relevant players, there exists a point beyond which courts have to tell the parties that if they cannot yet prove their claims then they probably never will. See Alaska Elec. Pension Fund v. Bank of Am. Corp., No. 14-CV-7126 (JMF), 2016 WL 6779901, at *3 (S.D.N.Y. Nov. 16, 2016) (“Rule 26(b)(1)’s proportionality requirement means [that a document’s] ‘marginal utility’ must also be considered.”) (citations omitted); Updike v. Clackamas County, No. 3:15-CV-00723-SI, 2016 WL 111424, at *1 (D. Or. Jan. 11, 2016) (“There is a tension, however, among the objectives of Rule 1. As more discovery is obtained, more is learned. But at some point, discovery yields only diminishing returns and increasing expenses. In addition, as more discovery is taken, the greater the delay in resolving the dispute. Finding a just and appropriate balance is the goal, and it is one of the key responsibilities of the court in managing a case before trial to assist the parties in achieving that balance.”).

The court then turned to the discovery specifics in the underlying case and concluded that discovery had “reached the point of diminishing returns.” Indeed, discovery had been ongoing for six years and the parties exchanged more than 1,600,000 pages of documents.  The Court listed a litany of critical case development failures along the 6 year discovery path and concluded it hard to believe that 150 pages of already reviewed but not printed documents would definitively prove what six years of discovery could not.

This case serves as a further reminder that discovery is not limitless.  Indeed, there is little tolerance for cumulative discovery and proportionality is the key inquiry under new federal landscape.

It is the beginning of a new year and I thought it the ideal time to list out those steps that are absolutely critical when an attorney is confronting his/her obligation to produce e-discovery in connection with a litigation.  Bear in mind, the below list is not exhaustive and each step is replete with technical and tactical sub-steps and decisions.  However, the nine steps below are a useful road map to get started.

  • Assess whether your case involves e-discovery. In today’s technology-laden world where emails are ubiquitous and many of us interface daily with the internet of things, chances are your case will involve e-discovery.
  • Implement (or cause to be implemented) a comprehensive and appropriate ESI preservation protocol.  Remember, it is wise to cast a large net when it comes to preserving data.  That strategy likely changes when it comes time to collect/process data.  Make sure to familiarize yourself with the client’s deletion policies, backup tapes, and shredding procedures.  See next step.  The scope of your hold notice is necessarily informed by your client’s data including its location.
  • Understand the client’s ESI systems and storage.  Remember, data maps can be helpful but are often out of date.
  • Understand (and educate your client about) the various options available for collecting ESI (i.e., self-collection vs retaining a vendor; targeted collection vs robust collection).
  • Identify the various custodians (and meet with/conduct collection interviews of live custodians) who may have potentially relevant ESI and understand the various media on which that ESI resides.
  • Meet and confer with opposing counsel to develop a mutually agreeable discovery plan that addresses common ESI issues including production costs and deduplication methods.
  • Collect ESI (ideally using a vendor especially when the custodians include complex or dynamic databases or servers) in a manner that is defensible and preserves the integrity of the data (for example, do not forensically image the hard drive of a Mac using a tool designed for Windows or run the risk of overwriting the hard drive’s boot sector).
  • Explore ways to minimize the review costs associated with reviewing for production the collected documents.
  • Finally, produce responsive non-privileged ESI in a recognized and appropriate manner.

As discussed in past blog posts, it is critically important for counsel to be involved in each step of the process as the recent case law makes plain that Courts expect counsel to be actively involved in collection/review and production.  Indeed, we have seen a spate of case law from 2016 where the Court imputes a client’s failures on counsel and sanctions both!  Finally, if you feel incapable of handling any of the above steps, get help!  Various ethics opinions (not yet adopted in New York) suggest an attorneys’ duty of competence owed to one’s client includes being competent in matters of ESI.

When collecting electronically stored information (“ESI”) from multiple custodians (i.e., various individuals/ different sources), there will necessarily be duplicative documents collected in the process.  In company-wide e-mail chains, for example, a message is sent to multiple recipients and stored within each recipient’s mailbox.  Consider the following: I send an email to two colleagues; a copy of the very same email now exists in each colleague’s mailbox.  Depending on the company’s data retention policies, copies of that same e-mail file may also reside on the employee’s (or employees’) hard drive(s), the company’s file server, and/or the company’s backup system.

For the attorney tasked with identifying, collecting and reviewing ESI in response to an actual or threatened litigation, an exhaustive review of a “document set” that is replete with duplicates threatens the cost effectiveness and efficiency of the project. These efficiency concerns intensify during document review, where duplicate documents increase the overall review time.  And, duplicates pose the added risk of the review team applying inconsistent privilege and responsiveness decisions on identical documents.  As a result, it is a wise decision to de-duplicate one’s collection of ESI at the processing stage.

And so, practitioners should consult with their vendors and educate themselves about the various de-duplication technologies available.  When used effectively, de-duplication reduces the number of documents to be reviewed by, on average, 30 or 40 percent.

To determine whether two files are identical, each file’s binary stream is hashed with an algorithm to get a digest value.  The most common algorithms used for this purpose are MD5, SHA-1 and SHA-256. The digest value is then considered as the file’s fingerprint.   The resultant fingerprints are measured against one another to determine which documents are exact duplicates.

What are my de-duplication options and the effect of each?

  • No de-duplication: All documents, irrespective of duplicates, are provided for attorney review.  This will result in producing the largest number of documents for review. This method is strongly discouraged for cases involving voluminous amounts of data.  Choosing not to de-duplicate also increases the likelihood that inconsistent coding among identical documents.
  • Global or horizontal de-duplication: As each file is uploaded, it is compared to the entire data set for the project. Typically, you rank the custodians (i.e., Senior VP, VP, Junior Analysts, Admin).  Then, only the first instance of each unique document is provided for review and categorization, resulting in the fewest number of documents for review.  For example, if both the Senior VP and the Junior Analyst have the same document, the iteration of the document that resides in the SVP’s files will be the unique document reviewed.
  • Per custodian or vertical de-duplication: Each file is uploaded and compared to a limited set of documents from the same document custodian, time period, or other data slice segment of documents. Only the first instance of each unique document per custodian or data slice will be provided for review. However, the same document may exist in other custodians or data slices and may then be provided for independent review. This type of de-duplication is particularly useful when processing multiple sources for the same custodians over time.

The deduplication options above are applied to documents as they are processed. Additionally, as documents are reviewed, they can be identified for relative similarity, called “near dupes,” which ascertains similar documents that differ by simple formatting, document type or other semantic differences. These documents are often identified and grouped by one document—the “core” of the group. All related near-duplicate documents are compared to this core document. Near duplicate identification can help the reviewer better understand the relationship between the documents, allowing for group coding/decisions based upon observed similarities.

Regardless of the method chosen, de-duplication can result in tremendous savings when properly leveraged to meet the needs of a project. However, it can also be wrought with complexity and pitfalls if improperly utilized.

In Arrowhead Capital Fin. Ltd. v. Seven Arts Entertainment, Inc. 2016 U.S. Dist. LEXIS 126545 (S.D.N.Y. Sept. 16, 2016), District Judge Katherine Polk Failla imposed significant sanctions upon both the Chief Executive Officer (“CEO”) and the lawyer for defendant Seven Arts Entertainment Inc. (“SAE”).

Background

Arrowhead Capital Finance, Ltd. (“Arrowhead”) sued SAE in 2014 seeking to enforce a judgment it had little ability to enforce because all of the assets held by the debtor had been sold to SAE.  SAE filed a motion to dismiss, arguing the Court lacked personal jurisdiction.  The Court denied the motion pending discovery.

In a letter dated September 21, 2015, Plaintiff claimed SAE and its counsel had engaged in various misconduct during discovery.  The violations alleged to have been undertaken to slow down discovery included:

  • SAE inflated their document productions with nonresponsive documents;
  • SAE refused to produce critical responsive documents;
  • SAE’s discovery responses were incomplete and replete with improper objections; and
  • SAE refused to produce key witnesses for deposition.

The Court held a conference to address Arrowhead’s complaints.  During that conference, SAE’s counsel acknowledged he had not reviewed the discovery responses interposed by his client and merely forwarded to his attorney the materials he received from SAE’s CEO.

As a result of this admission, the Court stated it had no confidence SAE would meet its discovery obligations and ordered SAE’s CEO to personally appear to testify concerning the alleged misconduct.  The Court also ordered SAE to produce the responsive documents Arrowhead requested but never received.

Notwithstanding the Court’s various orders, SAE refused to produce witnesses for deposition or produce the required documents.

Because the Court deemed SAE’s CEO to be directing counsel not to comply with the Court’s orders, Arrowhead moved for sanctions.  In response, the CEO testified his offices were “paperless” and the third-party server upon which documents were maintained was destroyed as a result of SAE’s failure to pay its bills (which he claimed was unintentional).  The CEO also cast blame on various staff people to whom he had purportedly delegated the task of complying with the Court’s orders.

The Court concluded SAE was willfully making misrepresentations to the Court and showed “flagrant disregard for” Court orders for the purpose of withholding information from Arrowhead.  As a result, the Court held SAE forfeited its jurisdictional arguments due to non-compliance with Court orders.  The Court further determined a spoliation instruction would be provided in connection with any claims ultimately submitted to the jury.  Defendants’ CEO also was ordered to pay Arrowhead’s costs in association with bringing its various motions and was ordered to retain separate legal counsel to conduct a thorough review of SAE’s files to assess whether additional responsive information remained to be produced.  Defendants’ counsel, who was deemed complicit in the violations,  was ordered to pay a portion of Plaintiff’s costs.

Conclusion

This decision reinforces that counsel may not turn a blind eye to a client’s behavior nor may counsel simply follow the instructions of clients.  Rather, counsel has a duty to ensure that good faith efforts are taken to comply with discovery obligations.  This case also reminds us that the amended Rule 37(e) does not lessen punishments for willful or intentional e-discovery misconduct.  Rather, bad faith behavior will be met with sanctions, not only for the party, but for counsel as well.

A key word search is a basic search technique that involves searching for one or more words within or across a collection of documents/files. Typically, the purpose of a key word search in a litigation is to limit the universe of potentially responsive data that one must process and review in order to prosecute/defend a lawsuit.  (Note, this blog relates to processing and reviewing data.  It presupposes counsel has preserved data in a robust and comprehensive manner).   Limiting the volume of data you process and review can result in tremendous cost savings to one’s client.  However, it must be done well so as to avoid pitfalls and resulting costs.   Below are some tips that can be helpful when thinking about key word search terms.   For example, one wants to give thought to their key words so as to avoid – to the greatest extent possible – “false hits” (a search term “hit” within a document, but not for the meaning that was intended).  For example, the term “comp*” would return “compensation” and “comp” (the intended terms), but would also return “computer” (not intended). Computer would be the “false hit.”

1. Terms of four or fewer characters often result in false hits.  Consider, for example, if one were to use “IT” as a search term hoping for hits relevant to information technology.  However, “IT” appears in so many other words the results of such a search would include many false hits.  This in turn, would increase the cost/time to review the hits to assess same for responsiveness.  

2. Searching for numbers can return unwanted results. This can be relevant if a patent is in issue or zip codes are being searched, etc.  If the numerical term is not quoted properly, the result may be skewed. Also, like (1) supra, searching for 1,000 will also return 1,000,000.

3. Avoid using wildcards. If you want to find “contract” or “contracts” then don’t use “contract*” as a search term. Simply provide both variations of the word. If you must use a wildcard, refrain from leading with a wildcard character. You may get the result you are looking for, but you will also bring a lot of unwanted hits with it.

4. Searching for custodian names is ill advised especially if that individual is part of the collection. Think about it – if you search for John Doe and all of John’s emails were collected as part of the process, you are going to get “hits” on ALL OF John’s documents. 

5. Sample documents with the proposed terms. Before deciding on search terms with the opposing party, try to actually sample documents with the proposed terms.

6. Give some thought to your search hit expectations. For example, did you expect a 20% return rate and you are getting 90%, or vice versa? If so, reconsider your terms.

7. Always consider a “file type exclusion” list.  For example, if there are no audio files or photos at issue in the lawsuit, then eliminate .wav and .jpegs.  Other files types to consider excluding are EXE, DLL, and system files.

8. Use the “w/2” proximity search between the first and last names of persons.  (John w/2 Doe) will pull back John Doe; Doe, John; John P. Doe; Doe, John P.

9. Suggest expanding first names with known nicknames. “Bill Johnson” could be searched with ((Bill OR William OR Will) w/2 Johnson). You will obviously need to gather any special nicknames from the client (this would be true of project names or code names assigned to different contracts, too etc).

10. Use domain names when searching for/identifying potentially privileged documents. The term (“farrellfritz.com”) for example would pick up all email addresses from that domain. Great search to identify communications with outside counsel.

Developing effective key words is very much an iterative and thought intensive process.  These tips will be helpful but I strongly advise sampling “hits” before committing to search terms.