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Summaries, news and resources relating to eDiscovery in Delaware and beyond.
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Showing 5 posts in Federal Rules.
According to Bloomberg BNA, the proposed amendments to the Federal Rules of Civil Procedure have been approved by the Judicial Conference of the United States and have been forwarded to the Supreme Court for consideration. Rule 37(e) has received the most attention to date, as it focuses on sanctions as well as remedies for the failure to preserve data.
These amendments promise to change the eDiscovery landscape, though debate will continue as to what degree.
Henry Kelston of the Legal Intelligencer provides a useful summary of the amendments to the FRCP that were recently proposed by the United States Courts’ Advisory Committee on Civil Rules.
The rules would seek to create uniformity on a variety of issues including scope and proportionality of discovery, sanctions for failure to preserve discoverable information and limits on written discovery and depositions. More ›
As readers of this blog likely know, there's a mini-trend in eDiscovery to recover vendor costs in Federal courts as "taxable" under 28 U.S.C. §1920(4). That section allows courts to require losing parties to reimburse prevailing parties for "fees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case." There recently have been several cases around the country where prevailing parties have successfully recovered costs this way. (See footnote 2 here for a short list of cases.)
In Race Tires America Inc. v. Hoosier Racing Tire Corp, the Western District of Pennsylvania awarded over $367,000 of "taxable costs" to the prevailing defendants for eDiscovery services like hard drive imaging, data processing, keyword searching, and file format conversion. However, the 3rd U.S. Circuit Court of Appeals vacated the award, defining copies as only scanning and file-format conversion, drawing a sharp distinction between "exemplification" and "making copies" in §1920(4).
In Delaware District Court recently, in Cordance Corp. v. Amazon.com, Inc., C.A. No. 06-491-MPT (D. Del. Apr. 11, 2012), Amazon prevailed and requested $447,694.69 reimbursement for electronic discovery costs under D. DEL. LR54.1(b)(11). According to Magistrate Judge Thynge
D. DEL. LR54.1(b)(11) provides “Other costs: Claims for costs other than those specifically mentioned in the preceding paragraphs of subpart (b) of this rule ordinarily will not be allowed, unless the party claiming such costs substantiates the claim by reference to a statute or binding decision.” Discovery or ediscovery expenses are not specifically itemized under LR 54.1(b)
Applying Race Tires, Judge Thynge approved just $1,729.28 as taxable, and requires Amazon to "produce documents that distinguish the costs for converting documents, which were recoverable, from costs for processing, which were not" in order to recover any other eDiscovery costs.
Clearly §1920(4) still has some value to prevailing parties in Delaware District Court (and elsewhere in the 3rd Circuit), just not as much as it once appeared.
In a recent Court of Chancery letter opinion in Dawson v. Pittco Capital Partners, CA No. 3148-CC, at page 2 in footnote 3, Chancellor Chandler wrote:
Federal Court decisions are “of great persuasive weight in the construction of parallel Delaware rules” due to the analogous nature of the Court of Chancery Rules and the Federal Rules of Civil Procedure. Cede & Co. v. Technicolor, Inc., 542 A.2d 1182, 1191 n.11 (Del. 1988).
Interesting. Or, as Jimmy Stewart would say, "Well, that's very in'resting."
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.