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.

 

Lawyers often worry about their obligation to preserve relevant information.  As a result, one may direct their client to collect all potentially responsive information.  However, over-collecting is a significant cause of costly e-discovery.  So, what is a lawyer to do?

It is critical not to conflate preservation and collecting. 

While collecting is one way to preserve information, it is a very costly and inefficient preservation strategy.  Think of preservation as a means to ensure potentially relevant information is not deleted or discarded. This is a process driven exercise (i.e., suspend auto-deletion, cease recycling backup systems).   Collection, on the other hand, is a much more active exercise and should be thought of as the first link in a chain toward producing documents to your adversary.   In other words, collection involves “collecting” data from the universe of what has been preserved but it does not necessarily mean you will collect everything you preserved.   And, remember, not every document collected will be produced.  Rather, collected material must be processed, and then reviewed for responsiveness and privilege.   

The amendment to Federal Rule of Civil Procedure 26(b)(1) (which defines the scope of permissible discovery) did away with the timeworn “reasonably calculated to lead to the discovery of admissible evidence” standard.  In its place is now the “proportionality standard,” which explicitly imposes a responsibility on litigants to tailor their discovery requests to account for the significance of the information requested, and the cost of gathering responsive information:

Parties may obtain discovery regarding any non-privileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties’ relative access to relevant information, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit. Information within this scope of discovery need not be admissible in evidence to be discoverable.

Fed. R. Civ. P. 26(b)(1). (emphasis added)

Although many courts have applied the revised Rule 26 during 2016, the District Court in the Eastern District of Pennsylvania recently reminded practitioners that proportionality is a critical factor.  In First Niagara Risk Mgmt. v. Folino, 2016 U.S. Dist. LEXIS 106094 (E.D. Pa. Aug. 11, 2016), which involved the purported violation of a non-compete agreement, the plaintiff moved the Court to compel a discovery request. Specifically, the plaintiff requested that the Court allow its e-discovery vendor to search the defendant’s personal electronic devices and email accounts for a particular set of agreed upon search terms. The defendant objected stating that “the request is overly-broad, costly, and burdensome.”  Although the Court agreed with defendant that the “request was rather broad,” the Court found the request “proportional to the needs of this case.” After verifying that the information requested by the plaintiff was relevant to the case, the Court considered the individual factors in FRCP 26(b)(1).

Specifically, using the factors set forth above, the Court found the issues were “of grave importance” to the plaintiff, the defendant is the sole source of access to the important information, and the plaintiff “needs to conduct broad discovery to uncover the scope of [defendant’s] misdeeds.” The Court granted the motion to compel, and explained that, “[w]eighing these factors makes it clear that the potential harm [plaintiff’s] discovery requests may impose on [defendant] does not outweigh the presumption for disclosure of these requests.”

On October 4, 2016, District Judge Jon S. Tigar issued an opinion every federal court practitioner should read (Rodman v Safeway, Inc., [11-cv-03003] [N.D. Ca.] [JST]).  The decision serves as an important reminder that counsel has an obligation to assist their client when identifying and collecting  electronic documents responsive to discovery demands.  Indeed, it is not sufficient or defensible to have a non-IT savvy individual search electronic media for responsive materials and to do so without meaningful oversight and involvement of counsel.

The Rodman case is a certified class action for breach of contract.   Defendant, Safeway, Inc. (“Safeway”), entered with customers an online contract that determined pricing and delivery fees associated with online grocery shopping.  The essence of the allegations before the Court were that Safeway breached the contract by charging prices on Safeway.com that were materially different than those charged (for the same items) in the physical store from which the groceries were selected and delivered.

After multiple summary judgment motions, one issue remained for trial: whether class members who registered for the delivery service prior to 2006 agreed to the same contract as class members who registered after 2006?    As a result of this remaining issue, class representative Rodman requested documents showing the terms and conditions and registration process in effect from 2001 through 2005 (“Special Terms”).  On March 9, 2015, Safeway responded to this discovery demand advising that it did not have access to the Special Terms and subsequently reported (on April 7, 2015) that it could not locate any documents responsive to this request.

Seven days before trial, Safeway produced 10 highly responsive documents related to Safeway’s Special Terms.  These documents were found on a “legacy” hard drive and were found by Safeway’s Director of Marketing – Steve Guthrie – when he was prepping for the trial (more than 5 months after discovery closed).   Guthrie – who was designated to testify concerning all steps taken to locate documents and persons knowledgeable about the pre-2006 processes and Special Terms, previously testified that he had searched the legacy hard drive using “key word searches” and did not locate any responsive documents.    

Given the highly relevant nature of the documents produced, the Court continued trial for two months and permitted Plaintiff to take additional discovery.  Eventually, a judgment was entered against Safeway. That judgment is now on appeal before the Ninth Circuit.  

On April 6, 2016, however, and as is relevant to this blog, Rodman filed a motion for discovery sanctions.  Judge Tigar’s decision, granting in part and denying in part the sanction motion, entered on October 4, 2016, imposed a sanction in the amount of $516,484.00 against Safeway.

LEGAL STANDARD FOR DISCOVERY

In reaching its decision, the Court began by reciting the standard under FRCP 26(g) – that a “signing attorney [must] certify that a reasonable inquiry has been made with respect to the factual and legal basis for any discovery request or response.”  The Court further found that when an attorney makes a certification that violates this rule and does so without “substantial justification,” the Court “must impose an appropriate sanction on the signer, the party on whose behalf the signer was acting, or both.” (Rule 26(g)(3)). (emphasis added).

Plaintiff moved for sanctions based upon Safeway’s false statement that no documents responsive to his demand for the pre ’06 Special Terms existed.  Safeway responded that sanctions were not warranted because it made a reasonable inquiry into the basis for its response, including interviewing individuals, and searching the legacy drive for documents.  Safeway argued these steps were comprehensive and thus reasonable.

The Court disagreed and concluded that Safeway’s initial search of the legacy drive was unreasonable for at least three reasons.

First, the Court found “there [was] no indication that Safeway’s counsel guided or monitored Mr. Guthrie’s search of the legacy drive in any significant way.”  Rather, counsel relied on Guthrie’s own determination and seems not to have questioned the thoroughness of Guthrie’s search.  The Court found this “lack of guidance and oversight sufficient to “support” a finding of unreasonableness.”

Second, because there is no evidence that Guthrie had any experience in conducting searches of large document repositories, such as the approximately 300 GB legacy drive, the search was unreasonable.  Indeed, the Court found that Safeway’s counsel could have, but failed to, request a member of Safeway’s IT department (or anyone else familiar with modern e-discovery) conduct the search.

Third, the evidence indicates the search was objectively unreasonable. For example, this was not the case of Safeway being asked to locate the proverbial needle in a haystack.  Rather, many of the electronic file folders (now known to contain the responsive documents) had names like, “Special Terms,”  and “OldSiteDesign” – names that should have signaled to anyone conducting an adequate search that the folder was likely target rich.  Instead, Mr. Guthrie searched for the key words only in a file’s name (rather than in the body of, or content of the file or folder).  This too, shows counsel failed to guide, monitor or inform what Guthrie did.

Clearly if we are to internalize any lesson from this decision it is the obligation of counsel to actively participate in the discovery process.  We cannot allow our client(s)/clients’ employees to collect responsive information in a vacuum.  Rather, we must actively participate in the process and we must secure the expertise of individuals steeped in modern e-discovery when we or client lacks the expertise.  In fashioning the one half-million dollar sanction, the Court found it telling that a substantial part of the legal work Plaintiff sought the cost of performing (additional discovery, unnecessary trial preparation.) would have been avoided had a reasonable search – meaningfully informed by counsel – been conducted on the legacy drive.

 

In Hyles v. New York City et. al., (Case No. 10-3119, 2016 U.S. Dist. LEXIS 100390 [S.D.N.Y. Aug. 1, 2016], the plaintiff, an African-American female employed by the City of New York, was demoted.  Specifically, she was replaced by a white male and demoted to a different position with a lesser salary.  Ultimately, plaintiff sued the City for discrimination and a hostile work environment under various federal statutes.

Discovery in the case was unnecessarily protracted for a number of reasons including a temporary stay and attendant delays due to mediation, motion practice, and what the Court called, a “lack of effort by counsel.” Eventually, a discovery conference was held before Magistrate Judge Andrew Peck after counsel for both parties jointly requested the Court resolve various discovery disputes.  As is relevant to this blog, the parties requested the Judge determine the scope of electronic discovery regarding: (a) custodians, (b) the date range to be searched, and (c) search methodology to be utilized.  Regarding the issue of search methodology, the City sought to use keyword searches designed to identify potentially responsive materials.  Plaintiff, on the other hand, requested the Court compel the City to use a form of technology assisted review (“TAR”) to perform the City’s search for potentially responsive materials.  In seeking to compel the City, plaintiff asserted that TAR is the more cost effective and efficient way to obtain discovery.   The City, in opposition, argued that the cost of TAR was too much and, because the parties failed to collaborate well in the past they “would not be able to collaborate to develop the seed set for a TAR process.”

In response to the plaintiff’s argument that the use of TAR would be the most efficient and cost effective, Judge Peck agreed stating “the Court believes that for most cases today, TAR is the best and most efficient search tool,” finding it “superior” to key word searching and noting, “[t]he Court would have liked the City to use TAR in this case”.  However, citing Sedona Conference Principle 6, Judge Peck held that “the responding party is best situated to evaluate the procedures, methodologies, and technologies appropriate for preserving and producing their own [ESI].”

Judge Peck noted that someday, the law may be at the point where “it might be unreasonable for a party to decline to use TAR… [but,] [w]e are not there yet.” Hyles, supra, 2016 U.S. Dist. LEXIS 100390 . at *9-*10.  Therefore, the Court denied plaintiff’s application to force defendant to use  predictive coding.

It is interesting to note the ever-growing trend among federal judges to embrace TAR as an effective way to contain costs and engage in an efficient discovery process.  While it is true that the state of the law currently allows the responding party to determine how best to identify potentially responsive data such that the party can comply with its discovery obligations, I predict (no pun intended) that more and more parties – when faced with the potentially tremendous financial costs attendant to e-discovery – may soon turn to various TAR methodologies if only as a means to control costs.

This case (Heller’s Gas, Inc. v. Int’l Ins. Co. of Hannover Ltd., 2016 U.S. Dist. LEXIS 71069 [M.D. Pa. June 1, 2016]), arises from an insurance claim filed by Heller’s Gas Inc. (“Heller”).  Heller was issued a commercial output insurance program property insurance policy by defendants International Insurance Company of Hannover LTD and International Insurance Company of Hannover  SE (“Defendants”). Heller’s used this policy to insure property that housed six 30,000 gallon tanks filled with approximately 136,800 gallons of liquid propane. On October 11, 2013, Plaintiffs found evidence of a sinkhole beneath the tanks, which allegedly damaged the tanks. Heller removed the liquid propane from the tanks, transported the liquid propane to other facilities, disassembled the tanks, and moved the tanks to stable ground at considerable expense. Defendants denied coverage for the loss, aside from $5,000 under emergency removal expense coverage. Heller’s subsequently filed a lawsuit alleging breach of contract and statutory bad faith.

During discovery, Defendants received information from various third parties through subpoenas.  After receipt of that information, Defendants discovered that Heller failed to produce relevant and discoverable information. For example, Defendants received an email from a records custodian who admitted in the email that there was no physical damage to the propane tanks. This email was discovered, not through documents produced by Plaintiff, but from documents produced from a third party. Thus, Defendants brought a motion to compel Heller to produce more complete responses to discovery.

The Court, in granting Defendants’ motion noted that recently amended Federal Rule of Civil Procedure 26(b)(1) provides that “[p]arties may obtain discovery regarding any non-privileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case . . .” And, evidence is relevant if it has “any tendency to make a fact more or less probable than it would be without the evidence” and if it “is of consequence in determining the action.” The Court then noted that the party objecting to discovery must state the grounds for the objection with specificity and the party requesting the discovery then bears the burden to prove that the requested discovery falls within the bounds of Rule 26.  Finally, the Court noted that if this burden is met, the objecting party must then “convince the court why discovery should not be had.”

Applying these discovery principles to the motion at hand, the Court determined that Heller failed to put forth specific objections to the requested discovery.  Rather, Heller objected to the motion on the grounds that it already produced four hundred and thirty-one pages of documents at Defendants’ request and that Defendants have suffered no prejudice, as they received the disputed documents, albeit from third parties. Heller’s counsel also stated that he was “amenable to revisiting the issue with Plaintiff and issuing an appropriate discovery certification.”  Latching on to Plaintiff’s counsel’s good intentions, the Court found “the Plaintiff offers no objection to ‘revisiting the issue,’ ” and granted Defendants’ motion to compel.

The lesson here is that any discovery objections interposed must be done with specificity especially where, as in Heller, the requested discovery falls within the bounds of Rule 26.

In Sunderland v. Suffolk Cty., 2016 U.S. Dist. LEXIS 77212 (E.D.N.Y. June 14, 2016) Magistrate Judge A. Kathleen Tomlinson granted plaintiff’s motion to compel defendants to search for and produce certain documents from their personal computers.

Specifically, plaintiff – a transgender inmate incarcerated at Suffolk County Correctional Facility (“SCCF”) – brought a civil rights case against the County of Suffolk and also three individuals in both their individual and official capacities. The gist of the complaint, as against the individual defendants, was that they knew of plaintiff’s gender dysphoria but were dismissive of the condition and refused to continue plaintiff’s hormone therapy while incarcerated at SCCF.

While the parties agreed on the relevant time period and search terms for purposes of identifying relevant information, the parties disagreed as to whether the individual defendants were required to search their personal emails and computers.  The defendants argued that while their electronic work devices and accounts can be searched, their personal items are not discoverable.  Plaintiff moved to compel production of personal emails.

The court granted the plaintiff’s motion to compel, explaining that the personal documents are relevant under FRCP 26(b)(1), even after the December 2015 amendments. The court elaborated that the nature of the case made it likely that information relevant to claims of bias, deliberate indifference or state of mind, would have been kept on a personal device or account rather than a work one. In its reasoning, the court further explained that such a search is not overly burdensome because the parties already agreed to the terms to be used, the searches had a limited temporal scope, and the plaintiff insisted that the defendants’ computers would not have to undergo forensic inspection.

While this decision is important for a number of e-discovery principles, it is also a good reminder that one should limit personal devices to personal emails and, likewise refrain from using work computers/emails for personal purposes.

Federal Rule of Civil Procedure 37 (along with others — Rules 1, 16, 26 and 34) was amended, effective December 1, 2015.

The amendment to Rule 37(e) was intended, in part, to ensure practitioners/litigants were fully aware of their preservation obligations, to ensure a uniformity of sanctions imposed upon parties and practitioners who failed to preserve discoverable electronically stored information (“ESI”), and to make adequate preservation a realistic goal, requiring that only “reasonable steps” be taken to preserve information. Indeed, the amendment requires a finding of intent or bad faith before sanctions can be imposed based upon spoliated information. (*)  Now, nearly a year after the enactment, it appears, from a review of the case law, that the amendment to Rule 37 (e) is effective in achieving its intended purposes.

Not only have federal court decisions involving sanctions declined since Rule 37’s amendment but, practitioners appear to be in better compliance with their preservation obligations since the amendment.

What Do the 2016 Statistics Look Like
Forty-nine federal decisions have cited Rule 37(e) since the Rule was amended. (**) Of these 49 decisions (20 of which did not apply Rule 37), thirteen decisions granted sanctions and sixteen decisions denied sanctions and/or reserved imposing sanctions. And so, sanctions were issued by courts approximately 40% of the time. Interestingly, the nature of the sanctions imposed spanned the gamut and included financial sanctions, adverse inferences, evidence preclusion, or a combination of sanctions. However, the most common sanction issued was an adverse inference.

Indeed, of the 13 decisions that granted sanctions:

• one decision entered a default judgment,
• three decisions precluded reliance upon certain evidence,
• seven decisions imposed monetary sanctions, and
• eight decisions imposed sanctions in the form of adverse inference sanctions. (***)

NB: some decisions imposed more than one type of sanction pursuant to 37(e).

Additionally, there was a variety of “lost” ESI at issue in the various decisions. Specifically,

• Twelve decisions involved unpreserved email data,
• Four decisions involved unpreserved text messages,
• Three decisions involved unpreserved portable device data,
• Two decisions involved unpreserved videos,
• Two decisions involved unpreserved phone call recordings,
• Two decisions involved unpreserved Internet browsing history,
• One decision involved unpreserved social media,
• Twelve decisions involved unpreserved non-email business data.

While 49 federal court decisions, in less than a year, have referenced Rule 37(e), that number is far fewer than in years past. In fact, according to research sources, the number of sanction decisions in 2011 totalled 150; and in 2012 that number was 120. Thus, it would appear that sanction decisions are on the decline. Moreover, given that there are 900 sitting federal judges, one could argue that sanctions have not lightly been sought since the Federal Rules amendments.

FOOTNOTES:

* Although Judge Scheindlin’s Zubulake opinions (which made it explicit that parties have a duty to preserve evidence when litigation is imminent) were authored many years ago, lawyers and parties nonetheless continued to fail to preserve evidence.

** Those 49 cases are:
CAT3, LLC v. Black Lineage, Inc., 2016 WL 154116 (S.D.N.Y. 2016)
O’Berry v. Turner, 2016 WL 1700403 (M.D. Ga., Valdosta Div. 2016)
Matthew Enterprise, Inc. v. Chrysler Group LLC, 2016 WL 2957133 (N.D. Cal. 2016)
GN Netcom, Inc. v. Plantronics, Inc., 2016 WL 3792833 (D. Del. 2016)
Learning Care Group, Inc. v. Armetta, 2016 WL 4191251 (D. Conn. 2016)
Best Payphones, Inc. v. City of New York, 2016 WL 792396 (E.D.N.Y. 2016)
Nuvasive, Inc. v. Madsen Medical, Inc., 2015 WL 305096 (S.D. Cal. 2016)
Thomas v. Butkiewicus, 2016 WL 1718368 (D. Conn 2016)
Ericksen v. Kaplan Higher Education, LLC, 2016 WL 695789 (D. Md. 2016)
BMG Rights Mgmt. (US) LLC v. Cox Comms., Inc., 2016 WL 4224964 (E.D. Va., Alexandria Div., 2016)
Brown Jordan Int’l, Inc. v. Carmicle, 2016 WL 815827 (S.D. Fl. 2016)
Core Laboratories LP v. Spectrum Tracer Services, L.L.C., 2016 WL 879324 (W.D. Okl. 2016)
Internmatch, Inc. v. Nxtbigthing, LLC, 2016 WL 491483 (N.D. Cal. 2016)
Living Color Enterprises, Inc. v. New Era Aquaculture, Ltd., 2016 WL 1105297 (S.D. Fl. 2016)
Marshall v. Dentfirst, P.C., 313 F.R.D. 691 (N.D. Ga., Atl. Div.)
Marten Transport, Ltd. v. Plattform Advertising, Inc., 2016 WL 492743 (D. Kansas 2016)
Saller v. QVC, Inc., 2016 WL 4063411 (E.D. Penn. 2016)
Martinez v. City of Chicago, 2016 WL 3538823 (N.D. Ill., Eastern Div. 2016)
Fiteq Inc. v. Venture Corporation, 2016 WL 1701794 (N.D. Cal. 2016)
Accurso v. Infra-Red Services, Inc., 2016 WL 930686 (E.D. Penn 2016)
United States v. Woodley, 2016 WL 1553583 (E.D. Mich., Southern Div. 2016)
Marquette Transportation Co. Gulf Island, LLC v. Chembulk Westport M/V, 2016 WL 930946 (E.D. La. 2016)
Orchestratehr, Inc. v. Trombetta, 2016 WL 1555784 (N.D. Tex., Dallas Div. 2016)
Thurmond v. Bowman, 2016 WL 1295957 (W.D.N.Y. 2016)
Mazzei v. Money Store, 2016 WL 3902256 (2d Cir. 2016)
Brackett v. Stellar Recovery, Inc., 2016 WL 1321415 (E.D. Tenn., Knoxville 2016)
Bagley v. Yale Univ., 2016 WL 3264141 (D. Conn 2016)
Thomley v. Bennett, 2016 WL 498436 (S.D. Ga., Waycross Div., 2016)
Granados v. Traffic Bar and Restaurant, Inc., 2015 WL 9582430 (S.D.N.Y. 2015)
Dr Distributors, LLC v. 21 Century Smoking, Inc., 2016 WL 4077107 (N.D. Ill., Western Div. 2016)
Henry Schein, Inc. v. Cook, 2016 WL 3212457 (N.D. Cal. 2016)
Bruner v. American Honda Motor Co., 2016 WL 2757401 (S.D. Al., Southern Div. 2016)
In re Bridge Construction Services of Florida, Inc., 2016 WL 2755877 (S.D.N.Y. 2016)
Markey v. Lapolla Industries, Inc., 2015 WL 5027522 (E.D.N.Y. 2015) (Tomlinson, U.S.M.J.)
Dao v. Liberty Life Assurance Co. of Boston, 2016 WL 796095 (N.D. Cal. 2016)
Zbylski v. Douglas County School District, 2015 WL 9583380 (D. Colo. 2016)
Redwind v. Western Union, LLC, 2016 WL 1732871 (D. Or. 2016)
Stinson v. City of New York, 2016 WL 54684 (S.D.N.Y. 2016)
Whitesell Corp. v. Electrolux Home Products, Inc., 2016 WL 1317673 (S.D. Ga., Augusta Div. 2016)
Vay v. Huston, 2016 WL 1408116 (W.D. Penn. 2016)
Hammad v. Dynamo Stadium, LLC, 2015 WL 6965215 (S.D. Tex., Houston Div. 2015)
Official Committee of Unsecured Creditors of Exeter Holdings, Ltd. v. Haltman, 2015 WL 5027899 (E.D.N.Y. 2015) (Tomlinson, U.S.M.J.)
United States v. Woodley, 2016 WL 2731186 (E.D. Mich., Southern Div.)
Grove City Veterinary Service, LLC v. Charter Practices Inter., LLC, 2015 WL 4937393 (D. Or. 2015)
United States v. Safeco Ins. Co. of America, 2016 WL 901608 (D. Idaho 2016)
Coale v. Metro-North Railroad Co., 2016 WL 1441790 (D. Conn. 2016)
Fleming v. Escort, Inc., 2015 WL 5611576 (D. Idaho 2015)
Kissing Camels Surgery Center, LLC v. Centura Health Corp., 2016 WL 277721 (D. Colo. 2016)
McIntosh v. United States, 2016 WL 1274585 (S.D.N.Y. 2016)

*** Of the 19 cases in which sanctions were not granted, the reasons for denying sanctions varied. Indeed, courts declined to impose sanctions because the party “took reasonable steps” to preserve data; party was not harmed by the fact the ESI was missing; there was insufficient evidence of bad faith; and the missing data was “restored through other methods.”

Production of documents in their “native file format” is gaining traction in litigation.  But, what exactly is a native file? And why should I care about it?

Native format is the file structure of an electronic document as defined by the application that created that electronic document.

So, for example, if a spreadsheet was created using Microsoft Excel, then that document’s native format is its original Excel format (.xls).  Insofar as litigation is concerned, when producing documents, the producing party has to consider whether to produce a responsive document in its native format (the .xls) or to convert the document to another electronic format (i.e., PDF).   The format (i.e., native or something other) is something that should be carefully considered for a number or reasons.  First, the format in which a document is produced can affect the costs of production.  Second, the format in which a document is produced can affect the utility of the document itself.  Finally, the format in which a document is produced can affect one’s ability to redact the document (or inadvertently modify the document).

Consider a Microsoft Excel document.  First, producing the document in Excel format is less costly in that one does not need to convert the document to a .tiff or .PDF.  Similarly, the producing party does not need to expend the money (albeit minimal) in branding the native file with confidentiality legends or bates stamps.  Thus, production in a native file format can be more cost efficient.  Additionally, an Excel document can often have embedded formulas (or at least allow the end user to embed formulas to make the document more user-friendly).  These features are lost when the document is converted to another electronic format prior to production.  If the document is converted prior to production, the receiving party may be at a disadvantage should they have desired to “slice and dice” the data in the spreadsheet, for example.   Finally, what if the .xls spreadsheet needs to be redacted?  Redacting the native file can be quite difficult.  For example, a native file Excel spreadsheet may have multiple worksheets, formulas, pivot tables and macros.  Thus it can become a very complex process as each change can trigger a number of unforeseen additional changes in different parts of the worksheet.  Moreover, redacting the native file would, by definition, cause the file data and metadata of that file to be changed.  Therefore, counsel would need to track the redacted version alongside the clean version of the native file.  Quite the undertaking! Consequently, a common compromise is to produce an .xls that requires redaction in a PDF format.

There are numerous arguments for and against native file productions.  The main benefit of a native production is that the electronic evidence can be produced without degradation.  That said, it is critical to assess the potential benefits and drawbacks of a native production on a case by case basis before committing to a production format.

 

Recently, two separate New York courts (the First Department and the Southern District) issued decisions imposing sanctions upon litigants who failed to comply with preservation obligations.  While a summary of those decisions and hyperlinks to the full decisions follow, attorneys should take heed that it is critical to timely and properly issue litigation hold notices when litigation is reasonably anticipated.   Irrespective of whether we are practicing in State or Federal court, our obligations to preserve potentially relevant information are not to be taken lightly.

Appellate Division, First Department Upholds (and Modifies) Sanctions Imposed by Trial Court Because of Plaintiff’s Failure to Timely Issue Litigation Hold.

This decision, issued on June 28, 2016, by the Appellate Division, First Department discusses what sanctions are appropriate when a party fails to comply with its preservation obligations.  Specifically, before the First Department was an Order of the Supreme Court, New York County (Carol R. Edmead, J.), which granted defendant’s renewed motion for spoliation sanctions, and dismissed plaintiff’s complaint.  The First Department unanimously modified the trial court’s decision to dismiss the complaint and instead awarded defendant an adverse inference charge at trial as to the spoliated evidence.

The factual underpinnings of the lawsuit involve allegations of legal malpractice against defendant Herrick, Feinstein LLP (Herrick) in connection with Herrick’s representation of plaintiff in negotiating a high rise construction loan with a developer.  The loan closed on May 8, 2007.  After a series of mishaps, including permit revocations and a crane collapse at the construction site, plaintiff retained counsel in June 2008 in connection with its potential claims against Herrick.  Thus, plaintiff’s obligation to preserve evidence arose at least as early as June 2008 (i.e., when it reasonably anticipated litigation).  In May 2010 – almost two years later –plaintiff finally issued a litigation hold.  As a result of this 23 month delay, plaintiff’s record destruction policies (including recycling of backup tapes, routine deletion of emails, and erasure of hard drives/email accounts upon an employee’s departure from the firm), went unsuspended until May 2010.  Plaintiff ultimately commenced its malpractice suit in 2011.

In or about June 2014, Herrick filed a motion seeking dismissal of plaintiff’s complaint as a sanction for plaintiff’s failure to preserve evidence. The trial court found plaintiff’s failures constituted ordinary negligence, and granted Herrick’s motion only to the extent of directing that Herrick be entitled to an adverse inference at trial.  Later that summer, plaintiff produced additional documents that identified various other custodians who likely had information relevant to the lawsuit.  Plaintiff claimed that its failure to produce these materials earlier was inadvertent.  In or about January 2015, Herrick moved to renew its spoliation motion, based on the new documents, including the identification of additional custodians, much of whose electronic records had been destroyed by plaintiff, either due to its failure to timely institute a litigation hold, or deliberately.  Plaintiff cross moved for fees.   Upon renewal, the trial court dismissed the complaint, and denied plaintiff’s cross motion for attorneys’ fees and costs.  This appeal ensued.

The First Department found that the motion court properly granted defendant’s renewal motion but held the trial court’s decision to dismiss the complaint as a spoliation sanction was an abuse of discretion.

The Court noted,“[F]ailures which support a finding of gross negligence, when the duty to preserve electronic data has been triggered, include: (1) the failure to issue a written litigation hold []; (2) the failure to identify all of the key players and to ensure that their electronic and other records are preserved; and (3) the failure to cease the deletion of e-mail” (VOOM HD Holdings LLC v EchoStar Satellite, LLC, 93 AD3d 33, 45 [1st Dept 2012]).  Thus, per prior decisional law, the trial court’s determination that plaintiff’s destruction was grossly negligent was upheld.  However, the First Department found dismissal of the complaint an improper sanction.  Specifically, the Court noted dismissal is warranted only where the spoliated evidence constitutes “the sole means” by which the defendant can establish its defense (Alleva v United Parcel Serv., Inc., 112 AD3d 543, 544 [1st Dept 2013]), or where the defense was otherwise “fatally compromised” (Jackson v Whitson’s Food Corp., 130 AD3d 461, 463 [1st Dept 2015]) or defendant is rendered “prejudicially bereft” of its ability to defend as a result of the spoliation (Suazo v Linden Plaza Assoc., L.P., 102 AD3d 570, 571 [1st Dept 2013] [internal quotation marks omitted]).  Because the record before the Appellate Division demonstrated a massive document production and many key witnesses available to testify, an adverse inference charge was appropriate.

The full decision of the First Department can be accessed here: http://www.courts.state.ny.us/reporter/3dseries/2016/2016_05065.htm

The Southern District of New York Imposes Severe Sanctions Upon Village Due to Village’s Failing to Issue a Litigation Hold

In a separate decision from the Southern District, Judge Karas similarly imposed severe sanctions – an adverse inference and more than $40,000 in attorneys’ fees – against the Village of Ponoma for failing to timely issue a litigation hold.  That decision, and my colleagues’ blog about that decision can be read here:

For more on this topic See Facebook Posts And Text Messages Result In Monetary And Other Sanctions Being Imposed Against A Municipality