Generally, a litigation hold letter* will issue to preserve documents and information potentially relevant to a reasonably anticipated lawsuit. However, when does one’s duty to preserve potentially relevant documents end?  Unfortunately, the answer is not necessarily when the litigation ends.  Indeed, a recent decision out of California reminds us there may be instances when one’s preservation obligations are ongoing, even after a litigation is dismissed (Thomas v. Cricket Wireless, LLC, 2021 WL 1017114 [N.D. Cal. Mar 16, 2021]).

Factual Background:

In 2015, a false-advertising lawsuit was filed against Cricket Wireless LLC (“Defendant”) alleged Defendant marketed unlimited 4G/LTE services, but did not have the capability to provide these services (see Barraza v. Cricket Wireless LLC, 2015 WL 6689396 [N.D. Cal. Nov. 3, 2015]).  Defendant moved to compel arbitration, which was denied.  Ultimately, Defendant made a Rule 68 offer of judgment, which plaintiff accepted.

At a hearing before dismissal of the case, the Court inquired “if there was any scenario under which the merits of the case could come back to life?”  Plaintiffs’ counsel responded there was not.**  Critically, however, at the time Barraza was voluntarily dismissed with prejudice, “the statute of limitations had not run on the hundreds of thousands of other putative class members’ claims against [the Defendant].”  And so, there was very much a chance that the merits of the case could “come back to life,” albeit with different plaintiffs.

And, come back to life it did.  Approximately one year later, a second lawsuit was filed against Defendant in Missouri, based on the same allegations as those in Barraza (see Thomas v. Cricket Wireless, LLC, No. 16-cv-1065 (W.D. Mo. Apr. 7, 2017) (“Thomas I”).  Defendant again moved to compel arbitration, but the parties stipulated to a dismissal before a decision on the motion.  The voluntary dismissal, which was without prejudice, was subject to a tolling agreement that expired on November 4, 2019.

And, like a cat with nine lives, the merits of the case came back to life a third time.  In fact, after the tolling agreement expired, a putative class action lawsuit was filed (“Thomas II ”), in which the class (the “Plaintiffs”) alleged that Defendant engaged in a fraudulent marketing scheme surrounding the 4G/LTE devices.

These various iterations of the merits are worth mention because during discovery in Thomas II, Plaintiffs learned Defendant had discarded after Barraza several key documents and accounts.  Specifically, Defendant (i) deleted the custodial accounts of key decision makers; (ii) failed to preserve any custodial accounts from the Sales & Operations Planning Committee; (iii) failed to preserve critical sales data related to 4G phone sales; and (iv) failed to preserve any 4G advertisements from the relevant time.  Defendant was unapologetic because “it was entitled to stop preserving documents after Barraza” and had “been transparent about what documents were not retained.”

And so, Plaintiffs noticed a deposition regarding Defendant’s document retention.  Just prior to that deposition, Plaintiffs moved to compel production of Defendant’s litigation hold letters from related lawsuits, including Barraza, arguing any presumptive privilege had been overcome by Plaintiff’s preliminary showing of spoliation.  Defendant responded that compelled production prior to the depositions was premature.  The Court denied Plaintiffs’ motion without prejudice to renew “if warranted after [the] completion of the upcoming deposition[s] … on document retention.”

The depositions were unhelpful substantively.  Indeed, they demonstrated that Defendant’s witnesses either did not know or were counseled not to answer questions regarding the content of the litigation hold letters.  And so, according to Plaintiffs, the only remaining mechanism to obtain the necessary information was to renew their motions to compel, which Defendant opposed on the ground “it had every right to dispose of the disputed documents and databases” and therefore no basis to compel the production of privileged hold letters.

The Court granted Plaintiffs’ motion to compel the production of Defendant’s litigation hold letters in Barraza and Thomas II, finding Defendant’s admissions about what it had destroyed or failed to preserve raised enough questions about its document retention and preservation efforts to allow Plaintiffs to take the initial step of discovering the content of Defendant’s litigation hold notices as necessary to investigate spoliation.  In reaching its decision, the Court acknowledged several instances during the two depositions where the witnesses either “could not or would not answer questions specifically seeking information about basic details” surrounding the litigation hold letters.

Conclusion:

The Thomas II decision reminds us that the duty to preserve relevant documents may continue following the dismissal, settlement, and/or final judgment of a case depending on the facts and circumstances at issue.  Where, as here, for example, it could be reasonably anticipated that additional plaintiffs would file suit, one’s obligation to preserve documents may be continuing. In addition, while a litigation hold letter is considered generally a privileged document, it is not immune from discovery, even in a subsequent lawsuit.

*See prior litigation hold blogs

**A statement that the Thomas II court later deemed specific to the two plaintiffs in the Barraza case – not the hundreds of prospective other class members.

Thank you to second year associate, James Maguire in the Firm’s Uniondale office, for his research assistance related to today’s blog.

Have questions?  Please contact me at kcole@farrellfritz.com.

My February 17th blog, “Judges Make the Case for TAR” discussed the widespread acceptance by federal courts of technology assisted review (“TAR”), which is acknowledged as cost effective, efficient, and likely superior to the tried and true keyword searching methodology.  Continuing with the theme of TAR, the District Court of New Jersey recently addressed the critical importance of the meet and confer process (ideally steeped in cooperation and collaboration) when parties decide to implement TAR.

In the In Re: Valsartan, Losartan, and Irbesartan Products Liability Litigation, Judge Schneider of the District of New Jersey addressed several issues unique to the discovery of Electronically Stored Information (“ESI”) (2020 WL 7054283 [D.N.J. Dec. 2, 2020]).  Valsartan is a complex litigation involving allegations that the prescription medication, Valsartan, contained cancer causing chemicals.  Given the complexity and scope of the litigation, the Court and parties were well aware that the costs of ESI discovery would be significant and, as such, TAR should have been contemplated at the outset of the litigation.

And so, on June 18, 2019, the Court ordered the parties’ stipulated ESI protocol which required that the parties “cooperate in good faith regarding the disclosure and formulation of appropriate search methodology, search terms and protocols, and any TAR/predictive coding prior to using any such technology to narrow the pool of collected documents to a set to undergo review for possible production” (Id. at 2).  Subsequently, the parties negotiated custodians and search terms, which the Court ordered on December 23, 2019 (the “ESI Protocol Order”).  Prior to the ESI Protocol Order,  defendant Teva refused to sample the hits generated by the agreed upon search terms.  Despite their refusal, Teva later complained the search terms were unduly burdensome.  Over the objection of Plaintiffs, on June 24, 2020, the Court ordered the use of narrower search terms, with the first production to be made on July 15, 2020 and all productions to be complete by November of 2020.

One year after negotiating custodians and search terms, six months after those terms were originally So Ordered by the Court, and two weeks after the Court narrowed the search terms, Teva declared, for the first time, that it planned to incorporate Continuous Multi-Modal Learning (“CMML”), a form of TAR using little human input, for its review.

As Teva’s declaration was contrary to the ESI Protocol Order, it did not sit well with either Plaintiffs or the Court.

Upon Teva’s unilateral declaration, Plaintiffs objected on the grounds that had they known Teva intended to use TAR all along, the past year of negotiations and concessions on their part would have been handled much differently.   Additionally, Plaintiffs requested that they be allowed to review 5,000 of Teva’s potentially non-responsive documents manually to validate Teva’s CMML review results.  Teva refused to cooperate.

In his decision, Judge Schneider, relying on Hyles v New York City, agreed that the use of TAR is acceptable so long as a party is transparent and timely in disclosing its use.  The Judge further observed these technologies work and layering them onto search terms is acceptable (10 CIV 3119ATAJP, 2016 WL 4077114 [SDNY Aug. 1, 2016]).  The Court disagreed, however, with Teva’s contentions that it had complied with meet and confer obligations identified in the ESI Protocol and had disclosed timely and cooperatively its intention to use TAR.  Importantly, the Court noted that given the volume of ESI at issue, Teva, who was already consulting with its ESI vendor regarding the use of TAR prior to the ESI Protocol Order, should have disclosed its intended use of TAR during the meet and confer process.  Ultimately, while Judge Schneider allowed Teva’s use of TAR, he granted Plaintiffs’ request to validate a set of 5,000 purportedly non-responsive documents.

In re Valsartan offers us two important reminders.  First, litigants are free to choose their ESI production methodologies. Relatedly, a party has an obligation to participate in the meet and confer process and to be cooperative and collaborative during the process.  Adversaries – and courts alike – have little patience for delay tactics and failures to disclose timely information relevant to discovery.

A special thanks to Jay Sawczak, an associate in our Commercial Litigation Department, for his contributions to today’s blog.

Have questions?  Please contact me at kcole@farrellfritz.com.

Employing search terms to identify documents relevant to a lawsuit is a commonly accepted practice.  However, issues inevitably arise during the process of crafting search terms.  For example, how are search terms agreed upon?  What is the proper scope of search terms? Are the proposed terms appropriate for identifying different types of electronically stored information (“ESI”)?  A decision out of Michigan is a useful read for anyone seeking guidance on these, and other issues involving ESI (McMaster v. Kohl’s Dep’t Stores, Inc., 2020 WL 4251342 [E.D. Mich. July 24, 2020]) .

In McMaster, a lawsuit involving an American with Disabilities Act (“ADA”) claim, plaintiff made a motion to compel documents arising out of two disputes: (i) the time periods and scope of ESI searches; and (ii) the actual search terms to be used to identify potentially relevant documents.

Regarding the relevant time period for purposes of identifying potentially responsive ESI, Plaintiff argued that July 2014 – approximately six months prior to plaintiff’s leave of absence – was an appropriate start date.  In opposition, Defendants argued that September 2016 was more appropriate because that is when human resources began discussing Plaintiff’s performance issues.   To resolve this dispute, the Court relied upon the “broad scope of discovery standard” set forth in Rule 26(b).  Ultimately, the Court concluded Defendant’s proposed date range was too narrow, and selected January 25, 2015 – the date when plaintiff took a leave of absence – as the relevant start date for purposes of ESI searches.

However, when the Court addressed the parties’ dispute about competing search terms, the Court opted not to resolve the dispute.  Relying upon United States v O’Keefe, (537 FSupp2d 14, 23–24 [D.D.C. 2008]), which observed that for “judges to dare opine that a certain search term or terms would be more likely to produce information than the terms that were used is truly to go where angels fear to tread.”  And so, the Court determined that “if the parties cannot agree on appropriately limited search terms, they will share the cost of retaining an expert to assist them.”

This case is a good reminder that while judges understand the complexity surrounding the e-discovery process, and will resolve related disputes when appropriate, courts are loathe to resolve issues better addressed by the parties during what is expected to be a cooperative and collaborative discovery process.

Thank you to second year associate, James Maguire in the Firm’s Uniondale office, for his research assistance related to today’s blog.

Have questions?  Please contact me at kcole@farrellfritz.com.

There is an ever-increasing volume of data generated by businesses.  In an effort to reduce storage costs and ameliorate privacy concerns, companies have embraced ephemeral, or self-destructing messaging.  And, while ephemeral messaging may solve one set of problems, it has the potential to create preservation issues when legal matters arise.

Recently, the Sedona Conference released the “Commentary on Ephemeral Messaging” (the “Commentary”). The Commentary analyzes the benefits and risks attendant to ephemeral messaging and provides several guidelines intended to tailor ephemeral messaging applications to comply with preservation obligations.

Although courts and attorneys are wary that the use of an ephemeral messaging application allows a party to conceal misconduct and may protect a party in a litigation setting, the authors of the Commentary opine that with the proper application, the benefits of ephemeral messaging are substantial.  For example, there is significant business value attendant to ephemeral messaging, including the elimination of costly storage and retention of data that lacks any business value.

Additionally, many ephemeral messaging applications have legal-hold capabilities.  And so, companies that opt to implement these applications can incorporate a customized legal hold policy that sets retention periods for documents, and allows one to disable the deletion functionality for communications related to a litigation hold.  That said, while ephemeral messaging can save businesses from expenses associated with storage and data, and applications with legal hold capabilities exist, these applications leave many a litigator thinking the applications do little more than facilitate the deletion of otherwise relevant data.

Looking forward for those companies who will embrace ephemeral messaging applications, it is critical to implement best practices relating to document retention to mitigate any potential spoliation or preservation risks.  These practices include, but are not limited to, (i) implementing clear and robust document retention policies; (ii) selecting an application that allows for legal-holds to be implemented and customized; (iii) training relevant employees on the proper uses of ephemeral messaging applications; and (iv) monitoring the use of the applications.  Therefore, as noted by the Commentary, “[i]n the absence of contrary circumstances, courts may consider a litigant’s use of ephemeral messaging that accords with [the guidelines] as being reasonable and executed in good faith.”

Thank you to second year associate, James Maguire in the Firm’s Uniondale office, for his research assistance related to today’s blog.

Have questions?  Please contact me at kcole@farrellfritz.com.

Litigants often disagree about which method of identifying potentially responsive electronically stored information (“ESI”) is best.  Specifically, the use of keywords versus technology assisted review (“TAR”)* is typically the topic of the debate.  In deciding these disputes, Judges have seemingly embraced TAR as preferable, but stop short of mandating TAR’s use, citing to Principle 6 of The Sedona Principles (“Principle 6”) (“[r]esponding parties are best situated to evaluate the procedures, methodologies, and technologies appropriate for preserving and producing their own [ESI]”).

Three federal decisions addressing the topic of a litigant’s methodology for determining responsiveness are worth discussion.**

In Hyles v New York City, Judge Peck of the Southern District of New York addressed the use of keywords versus TAR for identifying potentially responsive documents (10CIV3119ATAJP, 2016 WL 4077114 [SDNY Aug. 1, 2016]).  Judge Peck acknowledged that, “TAR is cheaper, more efficient and superior to keyword searching,” but, in line with Principle 6 stopped short of ordering counsel to use TAR, and allowed the litigants to choose their own methodology.   Despite Judge Peck’s view of TAR as superior to keyword searches, he stated that, “the standard is not perfection, or using the ‘best’ tool, but whether the search results are reasonable and proportional” (citing to FRCP 26(g)(1)(B)).

Four years later, Judge Cavanaugh of the New Jersey District Court, made similar observations in In re Mercedes-Benz Emissions Litigation (Case No.: 2:16-cv-881 (KM) (ESK) [D.N.J. Jan. 8, 2020]).  In the Mercedes-Benz Litigation, Plaintiffs requested the Court compel Defendants to use TAR rather than search terms to identify potentially responsive documents.  Defendants argued the use of TAR was not appropriate due to “unique issues” that would adversely affect “an appropriate and effective seed set.”  Judge Cavanaugh, citing Hyles, noted TAR’s superiority to keyword searching but, like Judge Peck and Principle 6, recognized the responding party is in the best position to determine its own responsiveness methodology.

However, Judge Cavanaugh’s allowance came with two distinct caveats to Defendants.  First, if Defendants chose to utilize the keyword approach, the Court noted it would “not look favorably on any future arguments related to burden of discovery requests, specifically cost and proportionality” due to the “wide acceptance that TAR is cheaper, more efficient and superior to keyword searching.”  Second, that his denial was “without prejudice to revisiting [the] issue if Plaintiffs contend[ed] that Defendants’ actual production [was] deficient.”  Although Judge Cavanaugh did not compel Defendants’ use of TAR, he provided two incentives for its use.

Most recently, in Livingston v City of Chicago, (16 CV 10156, 2020 WL 5253848 [N.D. Ill. Sept. 3, 2020]), the Plaintiffs sought to compel the Defendant to use “keyword searches to identify responsive ESI” or, in the alternative for use of TAR on the entire collection.***  In support of their position Plaintiffs argued that, “TAR is a culling tool rather than a method of responsiveness review” and “attorney reviewers [would] improperly train the TAR tool by making incorrect responsiveness determinations.” Judge Kim was not persuaded.  Rather, the Judge noted that the use of TAR was both reasonable and proportional to the needs of the case satisfying FRCP 26 and, citing to Principle 6, followed the trend among federal Judges that the responding party is best situated to decide the best methodology for determining responsiveness.

While Judges may be reluctant to order the use of TAR, recent decisions demonstrate judicial support, economic benefits, and efficiency of TAR.  And so, litigants should consider learning about TAR and employing TAR in their e-discovery workflows.

*https://www.allaboutediscovery.com/2020/11/tar-1-0-vs-tar-2-0-is-the-newer-version-the-better-version/

**https://www.allaboutediscovery.com/2016/10/the-southern-district-of-new-york-has-ruled-that-it-cannot-force-a-responding-party-to-use-technology-assisted-review-when-searching-for-documents/

***https://www.allaboutediscovery.com/2020/10/the-city-of-chicago-employs-tar-to-facilitate-review-but-doing-so-is-not-without-issue/

A special thanks to Jay Sawczak, an associate in our Commercial Litigation Department, for his contributions to today’s blog.

Have questions?  Please contact me at kcole@farrellfritz.com.

Historically, the legal profession has been reluctant to embrace technology and electronic discovery in the practice of law.  Indeed, practitioners often still exchange discovery in paper format or ignore, altogether, medium, like text messages, that may be repositories of relevant information.  A recent case — In DR Distributors, LLC v 21 Century Smoking, Inc. – is an example supporting the belief of judges “that too many attorneys pay too little heed to both the spirit and the letter of procedural rules addressing e-discovery.”  This decision, which focuses on the basic duties and fundamentals of handling electronically stored information (“ESI”) during all stages of litigation, is a must read for litigators appearing in Federal courts.

Background:

In DR Distributors, LLC v 21 Century Smoking, Inc. is a trademark dispute involving electronic cigarettes branded under similar marks. In late 2012, Brent Duke (“Duke”), one of the defendants and the principal of defendant 21 Century Smoking (“21 Century” and with Duke “Defendants”) met with his attorneys to draft initial disclosures.  During the meeting, Duke explained he used two email accounts (Yahoo! and GoDaddy) and chat applications for business and personal purposes.

Although Defendants’ attorneys purportedly advised Duke to preserve all potentially relevant emails from both of his accounts, they failed to issue a litigation hold or to instruct Duke to disable automated deletion features on the account that would auto-delete emails or chats.  Further, Defendants’ attorneys were under the mistaken assumption that they could obtain all necessary emails from Defendants’ computer servers, when in reality, these “web-based emails and messages” were stored online.

Adding insult to injury, Defendants’ attorneys then allowed Duke to self-collect emails and communications relevant to the litigation.  At no time did Defendants’ attorneys monitor or supervise the searches performed by Duke.  And so, three years later, after the close of fact discovery and various allegations that Defendants withheld relevant communications, Defendants’ reengaged an ESI vendor, who found over 15,000 responsive documents that were never collected or produced.  And, Defendants were unable to recover additionally potentially relevant emails because many had been deleted by the automated deletion feature that was never disabled.

Ultimately, Plaintiff filed a motion for sanctions based on Defendants’ failures and the failures of their former counsel to timely produce ESI and for spoliation of ESI.  As part of its motion, Plaintiff requested a wide range of sanctions, including civil contempt and monetary sanctions.

The Court was deeply troubled that Defendants’ former counsel lacked the basic knowledge, training, and skills to handle properly ESI.  Specifically, Judge Johnston detailed the myriad mistakes made by defense counsel including counsel’s: (1) argument that “because this is a trademark case, ESI was unimportant;” (2) failure to provide a litigation hold; and (3) allowing unsupervised self-collection of relevant documents by Duke.  Notably, the Court was particularly annoyed with counsel’s attempt to shift blame to the ESI vendor for failing to properly identify and produce relevant emails and communications.  According to the Court, it is a lawyer’s responsibility to have “a reasonable understanding of the[ir] client’s information systems” and that such “ understanding of the client’s information systems allows counsel to create a systematic process and plan for responding to discovery requests.”

In sum, the Court granted Plaintiff’s motion and imposed several sanctions including pursuant to Rule 26(g) and 37 of the Federal Rules of Civil Procedure, monetary sanctions, and required Defendants’ former counsel to attend “at least eight hours of continuing legal education.(CLE) on ESI.”

Conclusion:

As noted by Judge Johnson, “[i]t is no longer amateur hour. It is way too late in the day for lawyers to expect to catch a break on e-discovery compliance because it is technically complex and resource-demanding.”  And so, let this case serve as an important reminder to all lawyers of their obligation to be competent in ESI or to engage an attorney who is.

Have questions?  Please contact me at kcole@farrellfritz.com.

Thank you to second year associate, James Maguire in the Firm’s Uniondale office, for his research assistance related to today’s blog.

As the pandemic continues and businesses adapt to the realities of virtual workforces, the “Zoom-Bombing” pranks housemates played on one another are a thing of the past.*  Rather, we now must confront the discovery implications this virtual shift presents.  For example, the increased use of virtual platforms, replete with recording features, may expose a litigant to discovery obligations beyond what it cares to share.

Virtual meeting platforms such as Zoom and Microsoft Teams allow for the recording of meetings.  However, does the recording of a meeting necessarily mean the recording must be produced during discovery in a legal action?  The answer seemingly is, no.  Rather, the typical rules of discovery apply: is the recording relevant to the claims at issue in the litigation? Would producing such things be proportional given the allegations?   And so, recordings of virtual meetings are subject to the same discovery rules as would apply to any electronically stored information (“ESI”).

But, what about the duty to preserve the recordings?  In New York, the duty to preserve is triggered when a lawsuit is reasonably foreseeable.  And so, whether a Company must preserve such recordings may require a case by case analysis.  In other words, if a virtual meeting is recorded and, during that meeting the termination of an employee who likely may file suit for wrongful termination or discrimination is discussed, one could argue there is a duty to preserve that recording.     The same conclusion may not be reached if the recording captures a meeting where nothing of substance or concern is addressed.

Given the potential for such recordings to be relevant, and the desire to avoid discovery failures, entities should revisit existing document retention policies to account for the realities of the last 10 months generally, and recordings of virtual meetings, specifically.  Entities should consider whether virtual meetings may be recorded; if so, under what circumstances; and whether, or for how long, such recordings will be retained.**

*https://www.boredpanda.com/husband-zoom-trolling-quarantine-carafields/?utm_source=google&utm_medium=organic&utm_campaign=organic

*https://www.dailymail.co.uk/femail/article-8297963/Husband-pranks-wife-wearing-funny-costumes-background-Zoom-calls.html

**https://www.theverge.com/2020/4/3/21207134/zoom-recordings-exposed-thousands-identical-naming-search

***A special thanks to Jay Sawczak, an associate in our Commercial Litigation Department, for his contributions to today’s blog.

Pursuant to 28 U.S.C. § 1920, a prevailing party may have a right to recover certain costs associated with the litigation.  Many prevailing parties seek to recoup costs attendant to e-discovery, given the expense associated with collecting, processing and producing electronically stored information (“ESI”).  However, most federal courts confronting the issue have determined that e-discovery costs are recoverable only in very limited circumstances.

A recent decision out of the Circuit Court in Washington, D.C., provides guidance into which e-discovery costs may be recoverable under 28 U.S.C. § 1920 (See U.S. v Halliburton Co., 954 F3d 307 [D.C. Cir. 2020]).

Factual Background of Halliburton

Harry Barko (“Barko”) brought a lawsuit against his former employer, Kellogg Brown & Root Services (“KBR”), alleging that KBR and various subcontractors defrauded the U.S. Government by inflating costs and accepting kickbacks while administering military contracts in wartime Iraq, whereby violating the False Claims Act.  During discovery, KBR collected for review more than 2.4 million documents.  Eventually, KBR produced 171,000 documents to Barko.

KBR then moved successfully for summary judgment and filed a bill of costs seeking in excess of $100,000 ($65,000 of which was for expenses attributable to e-discovery, copying and printing).  Subsequently, the clerk taxed the full bill of costs for KBR.  Barko appealed arguing that the costs were not recoverable within the meaning § 1920 because some of the e-discovery costs did not qualify as “making copies” and/or were not “necessarily obtained for use in the case.”  In response, KBR argued that Congress amended the statute in 2008 to “make allowable both the costs of copies themselves (whether hard copy or electronic) and the costs incurred in the process of making copies.”

On appeal, the D.C. Circuit determined that scope of what was recoverable within the meaning of § 1920 was narrow and rejected recovery of the following e-discovery costs: (i) the initial conversion of the documents; (ii) subscribing to a hosting platform; (iii) processing documents (e.g., organizing and keyword-searching); and (iv) production processing.  In reaching this decision, the Court examined the meaning of 28 U.S.C. § 1920, particularly section four, which authorizes a district court to award “the costs of making copies of any materials where the copies are necessarily obtained for use in the case.”

The Court noted that the authors of the 2008 amendment “intended the amendment to have limited effect” and permitted “taxing the costs associated with copying materials whether or not they are in paper form.”  In remanding the case to the District Court, the Circuit Court compared KBR’s requested e-discovery costs to those of the pre-digital era, and reasoned they were:

[C]omparable to the steps that law-firm associates took in the pre-digital era in the course of “doc review”—identifying stacks of potentially relevant materials, culling those materials for documents containing specific keywords, screening those culled documents for potential privilege issues, Bates-stamping each screened document, and mailing discovery materials to opposing counsel.  Because “[n]one of the steps that preceded [or followed] the actual act of making copies in the pre-digital era would have been considered taxable,” such tasks are untaxable now, whether performed by law-firm associate or algorithm.

Conclusion:

The Halliburton decision is consistent with other recent decisions that have addressed the issue of what costs a prevailing party may recover when it comes to ESI (See, e.g., Peterson v Nelnet Diversified Solutions, LLC, (2020 WL 3978756 [D. Colo. May 20, 2020] [permitting certain e-discovery costs associated with the costs of making copies]).  And, the general view among the federal courts is that 28 U.S.C. § 1920  is of a “limited nature.”  As a result, practitioners are encouraged to continue to work cooperatively to keep discovery proportional to the needs of a case.  Moreover, litigants are strongly encouraged not to anticipate recovering e-discovery costs even as a prevailing party.

*Thank you to second year associate, James Maguire in the Firm’s Uniondale office, for his research assistance related to today’s blog.

Have questions?  Please contact me at kcole@farrellfritz.com.

 

Technology-assisted review (“TAR”) is a powerful tool used to streamline document review.  Because data volume is constantly increasing, TAR was designed to leverage human categorization of documents (i.e., responsive/not responsive) to educate software, that would, in turn, categorize additional documents based upon what the computer had “learned.”

The original TAR (commonly known as TAR 1.0) was a welcomed advancement as it redefined the way electronically stored information (“ESI”) potentially relevant to a litigation was reviewed.  TAR’s ultimate purpose was to implement various advances intended to increase review throughput.  These advances included predictive coding clustering, and concept analytics. And, while TAR 1.0 promoted efficiency and increased throughput, TAR 2.0 has improved the review process even more.  Indeed, good news for weary document reviewers – TAR 2.0 makes for an even more efficient, more precise (and therefore, less costly) review process.  TAR 2.0 is also known as Continuous Active Learning (CAL).  This means that as human reviewers make decisions about a document’s relevance, importance, confidentiality and other categories the TAR engine is actively internalizing these decisions and continuously learning so that it can re-prioritize documents yet to be reviewed so that those documents most likely to be relevant are prioritized in the queue.  At some point, there are diminishing returns and only non-relevant documents remain.  And so, one of the benefits of TAR 2.0 is that an attorney reviews all relevant documents without non-relevant documents intermixed among the materials.

An additional benefit of TAR 2.0 is that the process is as accurate as a full manual review (albeit less expensive).  Indeed, because the entire population of relevant documents is eventually reviewed by human reviewers, the coding designations are as accurate as humanly possible. From there, simple quality control methods can be used to catch any outliers.

Another advantage of TAR 2.0 is that because it is a prioritization tool, it can be used on a dataset with as little as 500 documents, whereas TAR 1.0 required a data set of 50,000 documents minimally.  This means TAR 2.0 can be leveraged in a wide variety of cases.*

And so, the next time you are beginning a document review project, consider using TAR 2.0, which allows for a meaningful way to reduce the volume of documents in the review queue while increasing efficiency, and throughput of a review project.

*Moreover, TAR 2.0 has been deemed user friendly as compared to TAR 1.0, which required complicated metrics to validate results.

**Thank you to first year associate, Jaclyn Ruggirello in the Firm’s Uniondale office, for her research assistance related to today’s blog.

Have questions?  Please contact me at kcole@farrellfritz.com.

 

The duty to preserve potentially relevant evidence – documentary or electronic – arises when a lawsuit is reasonably anticipated.  Although this is a subjective standard,  Parlux Fragrances, LLC et al v. S. Carter Enterprises, LLC et al.  illustrates a recent decision where a court imposed  sanctions and an adverse inference because the defendants failed to preserve information after receipt of a letter warning of a potential litigation.

Factual Background:

On or about April 18, 2012, defendants S. Carter Enterprises (“Carter Enterprises”) and Shawn Carter (“Jay-Z”) (collectively, the “Defendants”) entered a license agreement (“License Agreement”) with Artistic Brands Development, LLC (“ABD”), granting ABD the exclusive right to license and trademark the likeness of Jay-Z for a fragrance line.  The parties also entered a sub-license agreement (“Sub-License Agreement”) with Parlux Fragrances, LLC (“Parlux”) and Perfumania Holdings, Inc. (“Perfumania”) (collectively, the “Plaintiffs”), allowing Parlux and Perfumania the exclusive right to promote and distribute Jay-Z branded fragrances, including the Gold Jay-Z fragrance.

From October 2013 to July 2015, Parlux contended that Carter Enterprises and Jay-Z continuously failed to meet their obligations pursuant to the Sub-License Agreement by: (i) refusing to make personal and/or public appearances in support of the Gold Jay-Z fragrance; and (ii) failing to assist in the development of additional fragrances for the Gold Jay-Z brand.  As a result, on July 31, 2015, Plaintiffs sent Defendants a letter (the “Breach Letter”) detailing Defendants’ breaches under the various agreements, urging Defendants’ compliance with their obligations and advising Defendants should be guided accordingly or Plaintiffs would take all necessary action, including legal action.  Defendants effectively ignored the Breach Letter.  Approximately 6 months later, on January 25, 2016, Plaintiffs commenced a lawsuit against Carter Enterprises and Jay-Z alleging various breaches.

As is relevant here, Plaintiffs had to file a motion for sanctions predicated upon Defendants destruction of Jay-Z’s emails months after receipt of the Breach Letter.  Specifically, Plaintiffs claimed Defendants were on notice of a potential litigation on July 31, 2015, when Plaintiffs sent the Breach Letter.  In response, Defendants claimed the emails were deleted pursuant to a documented deletion policy governing Jay-Z’s emails.  Defendants also argued the emails deleted were not relevant and no deletions occurred after the action was commenced on January 25, 2016.

Analysis:

To prevail on a motion for sanctions for failure to preserve evidence, the Court noted the moving party must establish that: (1) the party having control over the evidence possessed an obligation to preserve it at the time of its destruction, (2) the evidence was destroyed with a “culpable state of mind,” and (3) “the destroyed evidence was relevant to the party’s claim or defense such that the trier of fact could find that the evidence would support that claim or defense” (Pegasus Aviation I, Inc. v Varig Logistica S.A., 26 NY3d 543, 547 [2015], quoting VOOM HD Holdings LLC v EchoStar Satellite L.L.C., 93 AD3d 33, 45 [1st Dept 2012]).  The Court further observed that one’s duty to preserve potentially relevant information occurs “once a party reasonably anticipates litigation, [at which time] it must suspend its routine document retention/destruction policy and put in place a litigation hold” (VOOM, 93 AD3d at 41; quoting Zubulake v UBS Warburg LLC, 220 FRD 212 [SD NY 2003]).

Here, the Court concluded Defendants should have “reasonably anticipated litigation” when it received around July 31, 2015, the Breach Letter, which advised “Parlux intends to take whatever action it deems necessary and appropriate to recover all of the losses it has sustained as a consequence of [Carter Enterprises] and [Jay-Z’s] failure to comply with the terms of the License Agreement.”  According to the Court, Defendants’ failure to implement a litigation hold and the deletion of emails in January 2016 (days before the litigation was filed) “after they reasonably anticipated litigation and had an obligation to preserve evidence” was, at a minimum, grossly negligent.  And so, because Defendants failed to preserve relevant evidence when a litigation was reasonably anticipated, Plaintiffs’ motion for sanctions and to impose an adverse inference against the Defendants at trial was granted.

Conclusion:

This case is an important reminder that preserving evidence as soon as litigation is reasonably anticipated is critical. While the standard is a subjective one, a letter threatening legal action, as here, is sufficiently objective that litigation should have been anticipated, and one’s duty to preserve triggered.  Thus, litigants and potential litigants should consult with an attorney prior to destroying or disposing of any potential evidence.

Have questions?  Please contact me at kcole@farrellfritz.com.

*Thank you to first year associate, James Maguire in the Firm’s Uniondale office, for his research assistance related to today’s blog.