Showing 6 posts from July 2009.

On Project Management and Redskins Fans

I wanted to finish the "The State of eDiscovery in Delaware series before moving on to other subjects, but I've found it difficult (there's so many meaty issues to discuss) and finally cracked.  Please indulge this short diversion.

First, a warm and fuzzy congratulations to Gabe Acevedo, author of Gabe's Guide to the e-Discovery Universe, for being invited to regularly contribute to the excellent EDD Update blog.  Do yourself a favor and take a look at Gabe's first contribution.  He'll be a great addition to EDD Update.  I love reading Gabe's posts for his creativity and humor.  (Want proof?  Take a look at the title of his post announcing the launch of this blog.)  Congrats Gabe!  [UPDATE: I forgot to mention, I first found Gabe on Twitter (@GabeAcevedo) where you can follow him too.  Also look for me on Twitter (@cspizzirri).]

Second reason for breaking the series: project management.  "Of course," you say, "what lawyer wouldn't be excited about project management?"  Well, only a few of us geeky types who like workflows and metric and statistics and whatnot, but that will change.  There's a growing recognition of the importance of incorporating project management and other related techniques into the eDiscovery process to help control costs and reduce risks.

I began applying these techniques to our internal eDiscovery processes at Morris James several months ago and took up Six Sigma—with the guidance of a master black belt, mind you—more recently. Project management, quality control, sampling, etc. have been percolating to the top of the eDiscovery discussions, but when I saw a post about EDD and Six Sigma, well, I just couldn't contain myself anymore.  Remember:

What you do not measure, you cannot control. -Tom Peters

We'll resume the regularly scheduled programming shortly.

The State of eDiscovery in Delaware, Pt. V

In Part IV, we saw the District Court decide issues with production of unsearchable data, the Court of Chancery comment on the efficacy of printing out electronic documents en mass, and the Superior Court award fees as a sanction for a party’s efforts to frustrate discovery. Let's finish up 2006 then look at 2007.

In late October 2006, the District Court decided Wyeth v. Impax Laboratories, Inc., 248 F.R.D. 169 (Oct. 26, 2006), declining to order a native production. Wyeth had made production in TIFF format. Impax filed a motion to compel production in native format. Because the parties did not agree on a native production at the pre-discovery meeting, and defendant could not demonstrate a need for native files, the Court did not think plaintiff should be made to make an additional production. Relying on its Default Standard for Discovery of Electronic Documents (“E-Discovery”)—adopted after The Sedona Principles were published in 2004 but prior to the 2006 FRCP amendments—the Court declared that, in the absence of prior agreement of the parties, imaged files would be the default format.  Contrast with Sedona Principle 12, revised in 2006, which states that, absent agreement of the parties, "production should be made in the form or forms in which the information is ordinarily maintained or in a reasonably usable form."

The next day, in In re Quintus Corp., 2006 WL 3072982 (Oct. 27, 2006), the Delaware Bankruptcy Court issued a default judgment as a sanction for deleted ledgers. The Trustee alleged that the purchasers of debtor’s assets, Avaya, intentionally destroyed some of the debtor’s ledgers that would have shown what liabilities were assumed by Avaya and, of those, which remained unpaid. Avaya argued that the destruction came well before it could have reasonably anticipated litigation. The Court found that Avaya should have reasonably anticipated litigation because Avaya had not paid all the liabilities it assumed as of the time of the hearing. Concluding that Avaya’s willful destruction was overwhelmingly prejudicial to the Trustee, the Court granted summary judgment in favor of the Trustee.

Shortly after these decisions, on December 1, 2006, the FRCP eDiscovery amendments became effective. The changes were covered quite succinctly by K&L Gates on their Electronic Discovery Law blog.

In the winter of 2007, in Empire Financial Services, Inc. v. The Bank of New York, 2007 WL 625899 (Feb. 20, 2007), the Superior Court ruled that a spoliation claim requires showing of intent to suppress truth, not mere negligence. Empire sought and the Court ordered production of certain accounts in 2001, but Empire did not follow up on production of the remaining accounts. In 2005, Empire sought production of the remaining accounts, but the Bank had, by that time, archived them, making retrieval onerous. Empire alleged spoliation, but the Court found that it was reasonable for the Bank to assume Empire had abandoned its desire for the account data so lacked any intent to make the data inaccessible.

Almost a year later, in the fall of 2007, in RLI Ins. Co. v. Indian River Sch. Dist., 2007 WL 3112417 (D.Del. Oct. 23, 2007), the District Court decline to require adherence with its Default Standard for E-Discovery (“Default Standard”). RLI complained that it did not receive enough ESI(!) from defendants, so, seven months after document discovery had ended, filed a motion to compel defendants to comply with the Default Standard. The Court found, inter alia, that RLI had "depicted no specific instances where any of the defendants actually failed to produce relevant, discoverable email communications” and denied the motion.

About a month later, in Ryan v. Gifford, 2007 WL 4259557 (Nov. 30, 2007), the Court of Chancery, in line with the District Court’s ruling a year earlier in Wyeth, declares that native or OCR production is not required “without a particularized showing of need.” As with everything in eDiscovery, the standard is reasonableness. If you can’t articulate a reason for a discovery demand, you should reconsider. Don’t ask for backup tapes, metadata, or certain forms of production if you can say why you want them.

In the Part VI, we’ll cover seven cases from 2008. In the meantime, if you know of significant Delaware eDiscovery cases from 2007 that you think I should have included, please post a comment to let us know.

The State of eDiscovery in Delaware, Pt. IV

In Part III, we saw the Superior Court deal with instant messages, the Court of Chancery issues sanctions for failure to produce and dealt with issues of commingled data, and the District Court sets a fine example of wisdom and humility by reversing its prior order and deftly applying the principle of proportionality.  We pick up where we left off, in fall 2005.

A few days after the Rockwell decision, the District Court decided Fenster Family Patent Holdings, Inc., Elscint Ltd. v. Siemens Medical Solutions USA, Inc., 2005 WL 2304190 (Sept. 20, 2005).  In this patent infringement suit, the Fenster renewed a motion access to Siemens’ corporate Intranet.  The Court previously denied the motion, because Siemens represented that it would produce the requested data in a searchable electronic format.  Fenster claimed Siemens did not make good on their representation because they produced over one million pages in hard copy, requiring document-by-document review without the benefit of electronic search.  Fenster also claimed Siemens produced other large batches of documents in a non-searchable electronic format.  Siemens responded that it would re-produce the unsearchable electronic documents and that other documents were produced in the format in which they had been maintained.  The Court found that Fenster had not demonstrated a change in circumstances warranting a different outcome and denied the motion.

In late 2005, the Court of Chancery decided In re Instinet Group, Inc. Shareholders Litig., 2005 WL 3501708 (Dec. 14, 2005).  After settling a class action shareholder lawsuit, plaintiffs sought $1,450,000 in fees and more than $173,000 in costs.  Although agreeing plaintiffs were entitled to some fees and expenses, Instinet objected to the amount requested claiming plaintiffs' attorneys' inefficiently managed the discovery process.  In considering the award, the Court noted that prior to settlement plaintiffs obtained several hundred thousand pages of documents and devoted a substantial amount of time to document review.  The court issued a total award of only $450,000, stating,

[T]he obvious inefficiencies involved in this case, highlighted by the plaintiffs' decision to pay nearly $125,000 to convert documents produced in a digital format into a paper format.  Rather than simply copying the electronic media to permit the plaintiffs' lawyers working on the case to search and review the document production on a computer screen, the plaintiffs spewed the digital production onto paper and, then, copied the paper for review.  This approach both added unnecessary expense and greatly increased the number of hours required to search and review the document production.  In fact, the time records submitted include a large number of hours, by multiple attorneys, spent reviewing the documents… Additionally, it would be inappropriate to award the full amount of out-of-pocket expenses, as the very costly decision to “blow back” the digitized document discovery onto paper lacks justification.

I have had several vendors tell me they still periodically get requests to print out everything in a production.  To their credit, despite the fact that printing everything would have generated enormous of revenue, the vendors had mostly managed to talk their clients out of these ill-conceived decisions.  Please resist all automatic urges to print out entire productions, and consider In re Instinet a cautionary tale.

In early 2006, in Barker Capital LLC v. Rebus LLC, 2006 WL 247114 (Jan. 12, 2006), the Superior Court issues sanction for obstruction in discovery.  Barker Capital sued for, inter alia, breach of contract and unjust enrichment.  Defendants provided non-responsive interrogatories, offered an unprepared (and ‘obstructionist, arrogant, rude, insolent, sarcastic, and condescending’) 30(b)(6) witness, and, contrary to an affidavit from its general counsel, had failed to disclose various e-mails and other electronic documents.  The Court ordered production of all relevant documents, and simply asked Barker Capital to submit an affidavit setting forth all costs related to defendants’ efforts to frustrate discovery.

On April 12, 2006, without comment or dissent, the US Supreme Court approved the entire package of proposed FRCP amendments concerning discovery of electronically stored information.  The package included revisions and additions to Rules 16, 26, 33, 34, 37, and 45, as well as Form 35.

In June 2006, the Committee on Rules of Practice and Procedure adopted the recommendations of the Advisory Committee on Evidence Rules, approving proposed Evidence Rule 502 (Attorney-Client Privilege and Work Product; Limitations on Waiver) for publishing for public comment.

There are five more cases in 2006, four in 2007, and seven in 2008.  We’ll pick up with those case in Part V.  In the meantime, if you know of significant Delaware eDiscovery cases from 2005 or the first half of 2006 that you think I should have included, please post a comment to let everyone know.

The State of eDiscovery in Delaware, Pt. II

In Part I of this series, we looked at two cases from the 1990's dealing with Attorney/Client Privilege and Work-Product protection.  The next significant case doesn't appear until 2002, when the Court of Chancery tangles with the issue of backup tape restoration.

In Kaufman v. Kinko's Inc., 2002 WL 32123851 (Apr. 16, 2002), in slight contrast to the current view of backup tape restoration, the Court was unmoved by Kinko’s “cost and convenience arguments” explaining that restoration of the backup tapes would be cumulative and cost up to $100,000.  Plaintiffs sued over stock valuation in a merger and sought emails between December 1999 and April 2002.  They argued that no less burdensome means of discovery exists for the information sought.  Kinko’s argued that the information was not readily accessible and that the burden of production outweighed the potential evidentiary benefit.  The Court didn’t agree, explaining that,

Upon installing a data storage system, it must be assumed that at some point in the future one may need to retrieve the information previously stored. That there may be deficiencies in the retrieval system (or inconvenience and cost associated with the actual retrieval) cannot be sufficient to defeat an otherwise good faith request to examine the relevant information.

The current view on this issue is to consider the principles of proportionality in such situations.  When a party claims that meeting a discovery request would cause an undue burden and excessive cost, courts now typically employ a balancing test to weigh the burden against the benefit.  In Kaufman, the Court of Chancery summarily dismissed Kinko's undue burden pleas.  The Court has since modified its view, adopting the principle of proportionality.  Even if the Court had used a balancing test, it may not have changed the outcome in Kaufman, but it would have changed the analysis.

 

Just days later, in Tulip Computers Int'l v. Dell Computer Corp., 2002 WL 818061 (Apr. 30, 2002), the Delaware District Court approves the Tulip’s proposal to use keyword searching to identify potentially responsive emails of Dell executives.  In a patent infringement case, Tulip sought, inter alia, to compel production of certain emails from Dell executives.  Dell argued that none of the executives from who Tulip sought emails would have responsive information.  Tulip proposed running mutually agreed upon search terms to identify responsive emails then allow Dell to review for privilege and confidentiality.  The Court found that “the procedure that Tulip has suggested for the discovery of email documents seems fair, efficient, and reasonable.” 

 

In late 2002, in Liafail, Inc. v. Learning 2000, Inc., 2002 WL 31954396 (Dec. 23, 2002), the District Court addresses defendant’s allegations of ESI spoliation by plaintiff.  In this consolidated contract action, defendant, Learning 2000, Inc. (“L2K”), alleges that Liafail intentionally destroyed relevant, even incriminating, documents from one employee laptop and failed to disclose the inadvertent destruction of data on two other employee laptops.  Liafail, although previously asserting that the documents had been destroyed and were not available, claimed the documents had been backed up and were available for production.  The Court said Liafail’s contradicting stories indicated it “may have engaged in questionable discovery tactics.”  But the Court declined to sanction Liafail, opting instead to allow them to produce the documents they claimed were available.  The Court then went to great lengths to warn Liafail that, if they did not produce the documents, the Court would issue an adverse inference jury instruction.

 

Almost a year later, in Rhodia Chimie v. PPG Industries, Inc., 218 F.R.D. 416 (Oct. 8, 2003), the District Court again deals with issues caused by large ESI volumes, this time considering the expense of production and declaring it a relevant consideration.  Rhodia sued PPG for willful patent infringement.  Rhodia requests documents from PPG back to 1981 that “substantially” pre-dates the existence of the patent and PPG’s knowledge of the patent.  The Court orders the production but recognizes the “magnitude of the labor” and that production would be a “daunting task.”  The Court then cites Zubulake v. UBS Warburg LLC, 216 F.R.D. 280, for the proposition that a cost-shifting analysis may be warranted.

 

In August 2004, the Advisory Committee on Civil Rules published proposed FRCP amendments designed to address growing issues in the discovery of ESI.  (Of course, a modified version of the Committee’s proposal was eventually adopted and became effective December 1, 2006.)  In November 2004, the Superior Court dealt with instant messaging issues in Smoot v. Comcast Cablevision, 2004 WL 2914287.  We’ll pick up with that case in Part III.  In the meantime, if you know of significant Delaware eDiscovery cases between 2002 and 2004 that you think I should have included, please post a comment to let everyone know.

The State of eDiscovery in Delaware, Pt. III

In Part II of this series, we looked at four cases from 2002 and 2003 in which the Court of Chancery and the District Court each got into the eDiscovery thicket, addressing issues with backup tape restoration, keyword searching, allegations of spoliation, and cost-shifting.  The next significant case isn’t until 2004 when the Superior Court steps back into the eDiscovery realm.

In late 2004, the Superior Court faces instant messaging issues in Smoot v. Comcast Cablevision, 2004 WL 2914287 (Nov. 16, 2004).  Smoot was fired by Comcast for engaging in a “four-hour ‘instant message’ conversation with two of her co-workers on her company laptop. The conversation included numerous sexual references and allusions as well as racially derogatory remarks and instances of profanity.”  Smoot applied for unemployment benefits and was denied.  She appealed to an Appeals Referee who upheld the denial of benefits.  She then appealed to the Unemployment Insurance Appeal Board who also upheld the denial.  She then appealed to Superior Court.  The Court affirmed the Board’s decision.  Comcast caught Smoot because the instant message conversation created a 24-page transcript on her company-owned laptop.  This case shows us that ESI isn’t just Word documents and emails; it’s created in myriad ways.

In early 2005, in Beck v. Atlantic Coast PLC, 868 A.2d 840 (Feb. 11, 2005), the Court of Chancery sanctioned plaintiff and plaintiff’s counsel for failure to disclose relevant material from the plaintiff’s web site.  In an attempted class action, Beck sought to be class representative in a suit against Atlantic Coast for breach of warranty and fraud related to Atlantic Coast’s software.  Unfortunately, Beck never purchased or used the software at the heart of the allegation.  Atlantic Coast’s counsel found Beck’s web site where he posted his belief that the software did not work and emails exchanged with the developer in which he posed as potential buyer.  The Court dismissed the case with prejudice and ordered Beck and his counsel to pay Atlantic Coast $25,000 and $2,500 to the Court.  This is comparatively minor in a post-Qualcomm world, but significant at the time.  As the case above, this case also expanded the horizon of discoverable ESI.

 

Less than a month later, in TIG Insurance Company v. Premier Parks, Inc., 2005 WL 468300 (Mar. 1, 2005), the Superior Court reconsiders its own discovery order after misapprehending just how difficult it is to find needles in haystacks of ESI.  TIG insured Premier Parks (“Six Flags”) who was being sued in a class action.  The Court ordered TIG to produce information regarding law firms it had chosen to defend class actions against other insureds over the previous five years.  TIG tried to comply but had no way to sort by matters which resulted in defending a certified class action so they proposed searching for matters with similar expenditure levels (more than $750,000).  Six Flags rejected that proposal.  TIG proposed to broaden the search to matters with $500,000 in expenditures.  Six Flags again rejected, and proposed sending its expert in to TIG’s systems to search for the information.  TIG filed for reargument, asking the Court to refine its discovery order.  Six Flags, using language very similar to the Court’s in Kinko’s, argued that “TIG may not use its inadequate computer system as an excuse to avoid valid discovery obligations.”  The Superior Court did not agree and amended its prior order to require TIG to search its system for matters with $500,000 in expenditures.  This is an excellent example of a court employing the principle of proportionality, principle number two of The Sedona Principles.


In the fall of 2005, in Rockwell Automation, Inc. v. Kall, 2005 WL 2266592 (Sept. 9, 2005), the Court of Chancery deals with commingled personal and proprietary data.  The defendant had been terminated by the plaintiff.  The plaintiff sought recovery of proprietary materials in defendant’s possession.  Defendant returned “computer hardware” to the plaintiff containing the proprietary materials and defendant’s personal and privileged information.  The Court ordered that plaintiff “retain, at its expense, a third-party service provider to retrieve and review all documents.”  The service provider was to identify plaintiff’s proprietary or confidential documents from the corpus and return them to plaintiff.  The Court did not provide any guidance on what method the service provider should use to find plaintiff’s proprietary or confidential documents.


We’ll finish up 2005 in Part IV.  In the meantime, if you know of significant Delaware eDiscovery cases from 2005 that you think I should have included, please post a comment to let everyone know.  If you do it soon enough, you may make it into the next post!

The State of eDiscovery in Delaware, Pt. I

Hello and welcome to the Delaware eDiscovery Report!  We will be tracking all manner of developments in the realm of eDiscovery, including federal and state case law and rule developments, emerging trends and discussions from groups like The Sedona Conference® and EDRM, vendor technology developments, and project management techniques.  Besides tracking eDiscovery developments generally, this blog will pay particular attention to eDiscovery developments under Delaware law.

With an increasing number of states adopting eDiscovery rules (mostly mirroring the Federal Rules), it may surprise many of you to know that Delaware has not adopted any such rules.  There is, of course, case law on the subject, and I'd like to kick off the Delaware eDiscovery Report with a chronological development of the significant EDD cases I could find, bringing us all up to speed on the state of eDiscovery in the First State.

Here's the first of multiple installments:

The earliest cases I could find are from way back in the dark ages of eDiscovery—1992 and 1997.  The decisions are from the days before ESI volumes were unwieldy, so the courts are dealing with applying long-standing legal principles of privilege to the newly prevalent electronic medium and the electronic documents it creates.

In March 1992, the Delaware Superior Court decided IBM v. Comdisco, Inc., 1992 WL 52143, finding a portion of an email was privileged in a suit over equipment leasing.  IBM produced an email then asked for its return, because they asserted it contained information protected by the attorney/client privilege.  Comdisco argued the email was not privileged, because it contained business advice, not legal advice.  The Court found a small portion of the email “was clearly intended to be disclosed to persons outside the circle of confidentiality” so not privileged, but found the remainder of the communication privileged and confidential legal advice.

Five years later, in Wesley College v. Pitts, 1997 WL 557554 (Aug. 11, 1997), the Delaware District Court found that an email sent to multiple third parties and introduced into the public record is not protected work-product.  One of the Defendants sought relief from a protective order restricting use of documents marked Confidential to the instant matter and no other; Defendant sought to use, in a related state case, an email marked Confidential by plaintiff in this case.  Plaintiff claimed, inter alia, that the email was protected work-product.  The Court noted that one of plaintiff’s employees sent the email to several other employees and his wife, and plaintiff introduced the email into the record in a hearing on a Motion for Summary Judgment in this case, all of which amounted to removing the possibility of work-product protection.

There doesn't seem to be anything significant for another five years when the vaunted Court of Chancery plunges into the eDiscovery morass by tangling with the issue of backup tape restoration.  We’ll pick up with that case in Part II.  In the meantime, if you know of significant Delaware eDiscovery cases prior to 2002 that you think I should have included, please post a comment to let everyone know.