About This Blog
Summaries, news and resources relating to eDiscovery in Delaware and beyond.
Showing 15 posts in Cooperation.
Case Spotlight: Terramar Retail Ctrs., LLC v. Marion #2-Seaport Tr. U/A/D June 21, 2002, 2018 WL 6331622 (Del. Ch. Dec. 4, 2018) (Laster, V.C.)
Defendant (the “Trust”) is an investment vehicle affiliated with non-party Michael Cohen. The Trust holds a 25% member interest in Seaport Village Operating Company, LLC, a Delaware limited liability company, which operates a specialty shopping center and tourist attraction in San Diego, California. Plaintiff holds a 75% interest in the Company. After forming the Company in Delaware, the parties entered into an operating agreement that named plaintiff as the sole manager of the Company and gave plaintiff the right to request that the other members buy out its member interest at fair market value (the “Put Right”). Plaintiff also had the right to dissolve the Company and receive a contractually determined payout if the other members did not purchase plaintiff’s interest within six months of exercising the Put Right. In 2015, plaintiff exercised its Put Right. After more than six months had passed and its membership interest had not been bought out, plaintiff filed this action seeking declarations that it properly exercised the buy-out provision of the operating agreement and that it has the right to dissolve the Company and sell the Company’s property and assets. More ›
Case Spotlight: Cumming v. Edens, C.A. No. 13007-VCS (Del. Ch. July 12, 2018) (Slights, V.C.) (TRANSCRIPT)
In this transcript ruling deciding the plaintiff’s motion to compel production of documents, the Court of Chancery provided some noteworthy guidance regarding discovery from third party financial advisors. In response to the plaintiff’s subpoena, the financial advisor here had initially asserted boilerplate general objections and offered to meet and confer with respect to each request, without expressly agreeing to produce any documents. Months later, the financial advisor had still only produced its deal file and limited other documents and had failed to agree to any proposal for the collection, review, and production of its responsive email data. More ›
Case Spotlight: In Re ExamWorks Group, Inc. Stockholder Appraisal Litig., 2018 WL 1008439 (Del. Ch. Feb. 21, 2018) (Laster, V.C.)
ExamWorks Group, Inc. (the “Company”) is a Delaware corporation with its principal place of business in Atlanta, Georgia. In 2010, the Company completed an initial public offering. In 2016, it entered into a merger agreement with affiliates of Leonard Green & Partners, L.P. After the announcement of the merger, petitioners perfected their appraisal rights seeking a judicial determination of the fair value of their interest in the Company. During the proceedings, the Court of Chancery appointed two firms as Co-Lead Counsel. The parties agreed on a schedule for the action, which included discovery, and the Court approved the schedule by order. More ›
This is the fourth in a series of posts summarizing the six most important eDiscovery cases in Delaware in 2015.
Medicalgorithmics S.A. v. AMI Monitoring, Inc., C.A. No. 10948-CB, Oral Argument on Defendants’ Motion Regarding Plaintiff’s Improper Document Production, Plaintiff’s Cross-Motion for Defendants to Supplement Their Deficient Document Production, Discovery Issue Regarding Location of Depositions and Rulings of the Court, July 15, 2015.
This case dealt with cross-motions regarding deficient document productions in which the Plaintiff argued Defendants produced too few documents and Defendants argued Plaintiff produced too many. More ›
This is the third in a series of posts summarizing the 6 most important eDiscovery cases in Delaware in 2015.
Pfizer, Inc. v. Amgen Fremont Inc., C.A. No. 10667-VCL, Hearing on Cross Motions to Compel and Rulings of the Court, July 6, 2015. More ›
The first Delaware opinion that has been issued that addresses either sanctions or proportionality under the new Federal Rules is GN Netcom, Inc. v. Plantronics, Inc. Plaintiff GN Netcom, Inc. (“GN”) filed a motion for sanctions against defendant Plantronics, Inc. (“Plantronics”) after a long discovery dispute that centered around the “intentional and admitted deletion of emails” by one of Plantronics’s senior executives and his directives to other members of his team to delete emails. More ›
This is the first in a series of posts summarizing the 6 most important eDiscovery cases in Delaware in 2015.
In re: ISN Software Corporation Appraisal Litigation, C.A. No. 8388–VCG, Oral Argument on Petitioners Motion to Compel and Partial Rulings of the Court, April 27, 2015. More ›
2015 saw continued interest by the Delaware courts in various aspects of eDiscovery. The courts dealt with broad issues, such as spoliation and general discovery misconduct, while also focusing on narrower issues, such as document review and redactions.
This blog will be summarizing these 6 cases in more depth throughout the rest of 2016. The 6 cases that will be summarized are below: More ›
This is the third in a series of posts summarizing the 7 most important eDiscovery cases in Delaware in 2014.
Herbert Chen and Derek Sheeler v. Robert Howard-Anderson, Steven Krausz, Robert Abbott, Robert Bylin, Thomas Pardun, Brian Strom, Albert Moyer, Jeanne Seeley, and Occam Networks, Inc., C.A. No. 5878–VCL, Oral Argument on Plaintiffs' Motion to Compel Production of Documents by Defendants and Jefferies and for Sanctions Against Defendants and the Court's Rulings, September 4, 2014.
While the Chen v. Howard-Anderson case has been discussed in the corporate arena as an important case relating to Delaware fiduciary law, 102(b)(7) exculpatory provisions, and Revlon duties, the case also highlights the importance of transparency in the discovery process. Chen is a reminder of how seriously the Courts in Delaware treat counsel’s discovery obligations. More ›
This is the second in a series of posts summarizing the 7 most important eDiscovery cases in Delaware in 2014.
The second case is 112359 Factor Fund, LLC and Five Nine Group, LLC v. Flux Carbon Starter Fund, LLC, Mary Carroll, Kevin Kreisler, and James L. Sonageri, C.A. No. 9568–VCL, Telephonic Oral Argument on Plaintiffs' Motion to Compel and Rulings of the Court, 06/20/2014.
In response to Plaintiffs' Motion to Compel, the Defendants claimed they did not have sufficient time or resources to review all 73,000 documents yielded by the search terms used. Vice Chancellor Laster was not swayed by these arguments. An Order had been entered earlier in the case requiring the parties to not only meet and confer regarding search terms, but to also "do more than the standard" and "confer regarding the use of an early data assessment tool…to focus on the custodians and time periods most likely to have responsive electronic documents”. Defendants’ reasons for missing the production deadline included delays in collecting the documents from their clients and insufficient manpower to properly review them. The Vice Chancellor found these explanations to be insufficient. The Court explained that in an expedited case, the parties need to think about approaches other than the “old school attorney-by-attorney review”. Had an early data assessment tool been appropriately used, as instructed, the number of search hits would not have come as a surprise and counsel could have thought ahead and planned appropriately to meet the discovery deadlines. The Court ordered that a copy of the transcript be given to Defendants clients, to help them understand that not complying with a discovery order will have serious consequences. More ›
The Court of Chancery continued to focus on eDiscovery throughout 2014. During the next few weeks we will be recapping 7 cases that covered various topics including preservation, designation of confidential material and the drafting of privilege logs. We will cover the cases in chronological order.
The first case is Sustainable Biofuels Solutions, LLC v. Tekgar, LLC and Michael Catto, C.A. No. 8741--VCP, Oral Argument on Plaintiff’s Motion to Compel and for Sanctions, Defendants’ Motion to Dismiss, and Rulings of the Court, 01/28/2014
In this dispute between a joint venture entity and one of its founding members, Plaintiff filed a Motion to Compel based on Defendants’ untimely production of emails, their blanket designation of 21,000 produced documents as Attorneys’ Eyes Only in violation of a Confidentiality Order, and lack of transparency throughout the eDiscovery process.
Before addressing the Motion to Compel, Vice Chancellor Parsons first reminded the parties of the Supreme Court case Christian v. Counseling Resources Associates, where the Supreme Court put litigants on notice that if they act without Court approval in modifying a scheduling order, they do so at their own risk. By choosing not to involve the Court, the party waives its right to dispute the opposing party’s late filings going forward. The Supreme Court advised that the best way to still “avoid motion practice and ill-will by agreeing to reasonable extension requests…[is to] promptly file a proposed amended scheduling order for the trial court’s signature.”
The court next found that the Defendants had failed to comply with their obligations under the confidentiality order by designating over 21,000 documents as Attorneys' Eyes Only. Under the order, designation required review by an attorney and a good faith basis for such designation. The court stated that "there is no way that an attorney could have looked at these documents and made a reasonable determination that there was a good faith basis for designating them as Confidential - Attorneys' Eyes Only..." The Defendants stated that they received the documents from their client at a late date and thus were rushed in their review. This necessitated the overdesignation of the documents.
Given that Vice Chancellor Parsons felt the Plaintiff had notified the Court “pretty promptly” of the discovery issues and that the Defendants had failed to comply with their obligations under the Confidentiality Order, the Court imposed sanctions of $10,000 in attorneys’ fees against the Defendants and gave them a strict deadline to complete any necessary dedesignations. The Defendants were further ordered to answer the Plaintiff’s questions regarding how they unilaterally refined the agreed-upon search terms and exactly what files were searched and to generally operate with a greater degree of transparency.
Three key takeaways can be taken from this case. First, if an attorney is unsure of who to proceed on eDiscovery issues, he or she should reach out to a colleague or vendor for guidance and assistance. The Vice Chancellor wrote that “It’s not unusual in cases of this type and in many, probably the majority, of the cases in the Court of Chancery that electronic discovery is proceeding by way of search terms and searches of custodians. That’s the way it’s usually done. If it’s a surprise to any attorney…then that attorney needs to associate himself or herself with people who know what they’re doing and are more familiar with it.”
The second takeaway is that the court should be promptly informed of any agreement regarding changes to a CMO.
Finally, parties need to factor in the time it takes to actually review documents in order to avoid situations such as confidentiality or privilege overdesignations. Parties should give themselves more than enough time to factor in the perhaps most important step between collection and production...attorney review of documents.
The entire transcript can be found here: Transcript of Sustainable Biofuels v. Tekgar
I hate to say I told you so, but...wait, no I don't.
Yesterday, the Delaware Supreme Court issued its opinion in this matter affirming the Court of Chancery's spoliation finding. The Court held the spoliation finding proper, because Genger took affirmative steps to overwrite unallocated space, saying:
We do not read the Court of Chancery’s Spoliation Opinion to hold that as a matter of routine document-retention procedures, a computer hard drive’s unallocated free space must always be preserved. The trial court rested its spoliation and contempt findings on more specific and narrow factual grounds—that Genger, despite knowing he had a duty to preserve documents, intentionally took affirmative actions to destroy several relevant documents on his work computer. These actions prevented the Trump Group from recovering those deleted documents for use in the Section 225…
Compare with my statements below that
The [Court of Chancery] opinion in this case does not require preservation of all unallocated space in every case. Genger was sanctioned because he took affirmative steps to overwrite unallocated space, in violation of the Court's order... [T]here is nothing in this opinion that creates any requirement to preserve unallocated space. Rather, the opinion only says you shouldn't go out of your way to destroy it.
I feel quite vindicated in my defense, considering there were some persons and organizations of import in the eDiscovery community lined up on the other side. Obviously, reasonable minds can disagree, especially in interpreting court decisions. Ultimately, I am thankful that the Supreme Court's decision should allay any fears created by certain interpretations of the Court of Chancery's spoliation decision.
ORIGINAL POST (2011-03-11 13:20:45):
I had almost given up on writing this post considering how long it has been since I posted In Defense of Genger, Part I and (more importantly) how long it has been since the publication of the posts I am taking issue with. However, the ongoing confusion about this case has prompted me to action.
If you have read Part I, you are familiar with the Court of Chancery's decision in TR Investors LLC v. Genger, C.A. 3994-VCS (December 9, 2009) and with the allegations made by Leonard Deutchman, General Counsel at LDiscovery LLC, in a two-part post hosted by Law.com. <!--You also understand why there's a picture of Austin Powers.--> For those who are not familiar, Mr. Deutchman asserts that the Court got the decision wrong because it (1) does not understand the technology involved (Part 1) and (2) does not understand the law of eDiscovery (Part 2).
It's sufficient to say that I respectfully disagree with Mr. Deutchman on both charges. Rebutting his posts was a fun, interesting exercise for me, but it didn't seem terribly important. I saw it as an esoteric debate between eDiscovery geeks. That has changed, because, today, a prominent media outlet has published a post that elevates the confusion about this opinion and will cause unnecessary fear among corporate counsel.
The latest case of hand-wringing and confusion over this decision comes to us from none other than Forbes by way of Daniel Fisher's post "Delaware Ruling Would Require Massive Data Backups." Mr. Fisher opens his post stating that:
A little-noticed decision by a Delaware court has the potential to impose huge costs on companies unless it is reversed, computer-security experts say...[e]xperts say retaining such data would be prohibitively expensive since the unallocated space is essentially a trash bin that is altered each time a key is tapped.
Despite the fact that Mr. Fisher twice refers to "experts" (plural) as the source for these hyper-ventilations, his lone identified source for the post is Daniel Garrie, a lawyer and managing director at Focused Solution Recourse Delivery Group LLC , a computer consulting firm in Seattle. <!--Garrie and Deutchman are both lawyers with eDiscovery vendors. Is there anything to that?--> Mr. Fisher's post continues:
“It’s almost impossible for large companies with massive amounts of equipment to comply,” said Garrie... “I don’t even know if it’s possible,” said Garrie. “I mean, anything’s possible with enough money,” but companies would have to take bit-level images of their hard drives on a regular basis and store them somewhere, to be retrieved each time they are sued. That means all the time for most large companies. The costs would be “exponentially larger,” than current electronic discovery measures. “Several large global companies,” clients he declined to name, “have expressed concern.”
Let me clear up the confusion: The opinion in this case does not require preservation of all unallocated space in every case. Genger was sanctioned because he took affirmative steps to overwrite unallocated space, in violation of the Court's order and without first telling anyone. The routine, passive overwriting of unallocated space was NOT the cause for any sanctions here, so there is nothing in this opinion that creates any requirement to preserve unallocated space. Rather, the opinion only says you shouldn't go out of your way to destroy it. Big, BIG difference. <!--If there are doubts about the Court of Chancery's understanding of eDiscovery, please see their recently released "Guidelines for Preservation of Electronically Stored Information" that clearly embraces the principles of cooperation, reasonableness, and proportionality.-->
To Mr. Garrie's credit, he is consistent—he is co-author of an article in the Northwestern Journal of Technology and Intellectual Property that makes the same mistaken arguments, and he filed a brief with the Delaware Supreme Court arguing for reversal of the Genger opinion. I obviously disagree with Mr. Garrie's opinions on this matter, but I am here to help, so I say:
Mr. Garrie, for the “[s]everal large global companies [that] have expressed concern,” please send them a link to this post and tell them not to worry.
I don't actually expect Mr. Garrie will do that, but perhaps some of his clients will stumble upon this post, in which case here is my advice to them:
If you act cooperatively and transparently, you will be fine. If you find yourself in a similar position to Mr. Genger's, share your concerns with opposing counsel and the court before you do anything. Don't take matters into your own hands and violate a court order by wiping a hard drive in the middle of the night—it's bad form and will only get you in trouble.
Stayed tuned for the decision of the Delaware Supreme Court—
I may have a lot of words to eat...
<!--Thanks to flickr user cliff1066™ for the Austin Powers pic.-->
No doubt jealous of all the attention our beloved Judge Shira Scheindlin receives, two days ago U.S. Court of Appeals for the Tenth Circuit Judge Neil M. Gorsuch issued an order in Lee v. Max International, LLC affirming a terminating sanction in discovery. Woo hoo!
In one fell swoop, Judge Gorsuch does the following:
1) Establishes a "3 Strikes and You're Out!" rule:
How many times can a litigant ignore his discovery obligations before his misconduct catches up with him? The plaintiffs in this case failed to produce documents in response to a discovery request. Then they proceeded to violate not one but two judicial orders compelling production of the requested materials.
After patiently affording the plaintiffs chance after chance, the district court eventually found the intransigence intolerable and dismissed the case as sanction. We affirm. Our justice system has a strong preference for resolving cases on their merits whenever possible, but no one... should count on more than three chances to make good a discovery obligation. (emphasis added)
2) Enlightens us on the karma of discovery:
[T]here is such thing as discovery karma. Discovery misconduct often may be seen as tactically advantageous at first. But just as our good and bad deeds eventually tend to catch up with us, so do discovery machinations.
3) Establishes the "gimlet eye" standard of review:
We view challenges to a district court’s discovery sanctions order with a gimlet eye.
The lesson: Don't mess with District Judges and Magistrates in discovery.
Read the coverage at Above the Law where ALL YOUR DOCS ARE BELONG TO US.
<!--Thanks to flickr user Andrew Scott for the Gimlet Eye pic (to the left).-->
UPDATE: Now I'm ticked! The video below, and all other Hitler "Downfall" parodies, have been pulled from YouTube. The removal comes per a takedown demand issued by the film's owner Constantin Films, claiming the videos infringed on the copyright. Boo! Hiss!
I am not an IP attorney, so this is not legal advice, but it seems to me that these videos are fair use of copyrighted material. What's more, Constantin Films clearly does not understand social media—I added Downfall to my Netflix queue because of these parodies. I otherwise never would have heard of the film. Constantin Films: THESE VIDEOS ARE HELPING YOU! DUH.
Then again, this takedown dustup is creating even more publicity...hmmm...
ORIGINAL POST: Yesterday, on the e-Disclosure Information Project blog, Chris Dale's post Hitler and Cloud Computing Security gives us a super discovery-related entry in the crowded and growing "Hitler and..." series of spoofs. I can't get enough of these videos and was giddy <!-- That's right, I said giddy. I'm easily amused. --> to find a related gem on YouTube just days ago, in which Hitler laments the exclusion of records management from the discovery process. Brilliant.
In a case squarely pitting cooperation against adversarial discovery practices, a unanimous three-judge panel of the 3rd Circuit was not amused by defense counsels' obstructionism. Two of the three judges on the panel are members of the Delaware Bar: Judges Thomas L. Ambro and Kent A. Jordan.
[T]he defense lawyers walk away unsanctioned, but their victory didn't come without a price. Having taken the appeal to remove any smudge on their reputations, they succeeded in their two key legal arguments, but were made to endure a lecture on ethics and civility from the 3rd Circuit panel in a reported decision.
In the opening paragraphs of her 50-page opinion, Judge Dolores K. Sloviter set a tone of disappointment and finger-wagging. And she directed her ire at both defense counsel and the plaintiffs attorneys.
"It would be reasonable to expect ... that experienced attorneys, especially those who have handled major litigation, would be able to proceed through the discovery and pretrial stages with a conciliatory attitude and a minimum of obstruction, and that, under the guiding hand of the district court, the path to ultimate disposition would be a relatively smooth one," Sloviter wrote.
But the Grider case, Sloviter said, "shows exactly the opposite."
Joined by Judges Thomas L. Ambro and Kent A. Jordan, Sloviter found that "the spirit of the discovery disputes was hostile. At the very least, it lacked the civility and professionalism one expects from such experienced attorneys." The parties, Sloviter said, "were unable to reach agreement on even minor matters and the discovery was noncompliant, delayed, or protracted" and the "bickering among the parties ensured that the deadlines would not be met."
Magicians and (some) lawyers say: "Have ball, will hide."