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Case Summary: Publicis Groupe; Recusal Motion Found Meritless

Posted by rjbiii on October 10, 2012

Plaintiff moved for the recusal of a magistrate judge under  28 U.S.C. § 455 in a dispute involving the propriety of using predictive coding.  Prior to the case being referred to U.S. Magistrate Judge Andrew Peck, plaitiffs resisted the idea of predictive coding as a component in the e-discovery workflow. 

Plaintiffs did not base their claim on actual incidents of bias, but rather “an appearance of partiality.”  U.S. Magistrate Judge Andrew Peck was asked to recuse himself for

  1. “Public comments concerning the case”;
  2. His “participation on pro-predictive coding panels with defense counsel Ralph Losey while presiding over the parties’ dispute on predictive coding”;
  3. His “numerous speaking engagements in favor of predictive coding, which were at least indirectly sponsored and funded by Recommind and other e-discovery vendors”
  4. His  “failure to disclose [his] activities [which] enhances the appearance of impropriety”

The court began its analysis by declaring that the motion itself was untimely.  Although 28 U.S.C. § 455 doesn’t explicitly address timeliness as a requirement, the issue has manifested itself in prior analyses in two forms: First, judicial resources should not be wasted; and, second, a movant may not hold back and wait to hedge its bets against the eventual outcome.

In deciding whether a recusal motion is timely, a court looks to a number of factors, including whether:

  1. the movant has participated in a substantial manner in trial or pre-trial proceedings;
  2. granting the motion would represent a waste of judicial resources;
  3. the motion was made after the entry of judgment; and
  4. the movant can demonstrate good cause for delay.

The court concluded the movants had been active participants in pre-trial proceedings, and that recusal would require a significant duplication of efforts already expended by the court.  While movants didn’t wait until entry of judgment, they did wait until the court adopted opposing party’s proposed predictive coding protocol.  Although the court didn’t say it plainly, the quotes from cited cases might be seen to imply that movants look to be trying to take a mulligan…or a “second bite at the apple.”  The court not convinced by movant’s statement that they had promptly filed the recusal motion.  The court stated:

Despite plaintiffs’ knowledge as of December 2, 2011 of my views on predicative [sic] coding, and by January 4, 2012 as to my relationship with Losey and my speaking at LegalTech, plaintiffs did not request my recusal until March 28, 2012 by letter and did not file their formal recusal motion until April 13, 2012.  The movant “is charged with knowledge of all facts ‘known or knowable, if true, with due diligence from the public record or otherwise.'” I have made no efforts to hide my views, relationships or affiliations. If plaintiffs truly believed that any of these issues, individually or collectively, created a bias or the appearance of partiality, they should have promptly moved for my recusal.

Accordingly, plaintiffs’ recusal motion is untimely.

Beyond this, the court also declared that plaintiff’s motion was “meritless.”  Judge Peck noted that he had never referred to the substance of this case.  His general comments on predictive coding would not alarm a reasonable observer, and were compatible with movant’s own expert.  Although Judge Peck did participate in panels alongside noted attorney Ralph Losey, whose firm represented movant’s adversary, there had been no ex-parte communication between the two men.  Merely serving on the same panel is not a basis for recusal.  The court also examined the chilling effect for judges and speaking engagements should their motion be successful:

There are probably fewer than a dozen federal judges nationally who regularly speak at ediscovery conferences. Plaintiffs’ argument that a judge’s public support for computer-assisted review is a recusable offense would preclude judges who know the most about ediscovery  in general (and computer-assisted review in particular) from presiding over any case where the use of predictive coding was an option, or would preclude those judges from speaking at CLE programs. Plaintiffs’ position also would discourage lawyers from participating in CLE programs with judges about ediscovery issues, for fear of subsequent motions to recuse the judge (or disqualify counsel).  Taken further, it would preclude any judge who speaks at a CLE conference about any ediscovery subject from handling future cases involving ediscovery. Such a position defies logic and is inconsistent with the Code of Conduct for United States Judges.

Finally, the court defended Judge Peck’s remarks with counsel when things got a bit…testy.  Some of the excerpts included show that the court’s relationship with plaintiffs was far from harmonious.  In previous posts I’ve warned readers about the dangers of unnecessarily provoking the court’s wrath.  Rarely does it end well for the folks stirring the pot.  Below, I’ve listed some of the exchanges between the court and movant’s counsel:

THE COURT: . . . How soon can you [move for class and collective action certification]?

[Pls. Counsel] MS. WIPPER: Your Honor, we would object to moving the briefing schedule to an earlier period given the discovery disputes in this case.

THE COURT: That wasn’t my question. My question is, how soon can you do it? Democracy ends very quickly here, meaning you don’t want to give me a date other than no later than April 1, 2013. I get to pick the date and you get to whine to Judge Carter. [emphasis added].

The court then allowed that it could have chosen [its]words more carefully.  Another discussion ended with this expression of frustration:

“I’ve seen many a big case in this court go a lot more smoothly than this. As I say, I cannot speak to what happened before I inherited the case, but I expect cooperation. Stop the whining and stop the sandbagging. This goes for both sides. Get along.” [emphasis added].

The court noted that movants claimed that the Judge had attempted to dissuade them from objecting to his rulings.  The court disagreed, using the following passage to demonstrate that nothing could have been further from the truth.

[…]at the April 25, 2012 conference I said, “And you have the right to take objections to Judge Carter, which you’re not shy about, so take your objections. Stop arguing with me.”

The court also recalled its own remarks made while discussing a [at that time] potential recusal motion:

“If plaintiffs were to prevail [on recusal], it would serve to discourage judges . . . from speaking on educational panels about ediscovery (or any other subject for that matter). The Court suspects this will fall on deaf ears, but I strongly suggest that plaintiffs rethink their ‘scorched earth’ approach to this litigation.”

Courts often use the phrase “scorched earth” to describe hardball litigation tactics designed to complicate and prolong litigation and drive up litigation costs. My “scorched earth” comment provides no basis for recusal. [emphasis added].

These are a few of the myraid of quotes and exchanges listed in the opinion.  The reader of an opinion has, of course, the benefit of hindsight.  The ruling on a motion, or on the conduct of a case, is included in the very document. It is easy to be critical of unsuccessful parties at that stage (pending appeal, at least).  That said, provoking an already irritated Judge and then submitting a motion for recusal based on what appears to be a weak platform seems like a recipe guaranteed to produce a bitter and unfulfilling dish.

Moore v. Publicis Groupe, 2012 U.S. Dist. LEXIS 83659 (S.D.N.Y. June 15, 2012)

Posted in 2nd Circuit, Case Summary, Document Review, Magistrate Judge Andrew J. Peck, S.D.N.Y, Technology Assisted Review | Tagged: , , | Leave a Comment »

Case Summary; Nat’l Day Laborer Org; 2nd Cir.; Adequacy of Searches under FOIA

Posted by rjbiii on September 18, 2012

Context: Three entities, the National Day Laborer Organizing Network; the Center for Constitutional Rights; and the Immigration Justice Clinic for the Benjamin N. Cardozo School of Law filed a lawsuit seeking compliance of targeted agencies to earlier Freedom of Information Act (FOIA) requests.  Requests were sent to: Immigration and Customs Enforcement (ICE); the Federal Bureau of Investigations (FBI); the Department of Homeland Security (DHS); and the Office of Legal Counsel (OLC).  The plaintiffs were seeking information related to “Secure Communities,” a federal program launched in 2008.  It has long been the practice for local law enforcement agencies to send fingerprints of individuals they’ve arrested to the FBI to be checked against those in the national criminal history database. 

 Under Secure Communities, those prints were also sent to DHS to be compared to immigration records.  Plaintiffs also requested information associated with the issue of whether and how local agencies could “opt-out” of the participation in Secure Communities. After the agencies conducted extensive searches involving thousands of hours and resulting in tens of thousands of records produced, Defendants and Plaintiffs cross-moved for summary judgment on the adequacy of the searches.

 Issues:  Requesting parties lodged two main criticisms of the agencies search protocols. 

 First, they contended that the agencies failed to conduct any searches over records of certain custodians who were likely to possess records. 

 Next, they argued that the producing parties failed to establish that those searches they did conduct were adequate. In elaborating on their second criticism, plaintiffs contended that many of the submitted affidavits were insufficiently detailed to permit a finding by the court of adequacy; and that where searches were described sufficiently, those searches were inadequate.

Legal Standard: A FOIA request at Summary judgment has different standards and burdens than would be the case for a litigant in a civil matter.  The burden to “prove” the adequacy of a search protocol is much heavier for the agency in this situation. That said, one must wonder in which circumstances listed below the heightened the standard makes a difference.  I’ll sprinkle commentary on this and other subjects throughout my summary of the court’s analysis below (always in italics).  A general point should be made on this, however.  FOIA cases are such that they invite analyses of search protocols and methodologies.  After all, the entire case centers around what was, or should be, produced. In a civil matter, litigants are likely to be granted greater levels of deference.  However, once the issue of e-discovery methodologies arises, the standards might not vary as greatly as one might imagine.  This is especially true if the court is presented with evidence that relevant documents were omitted from production.

 Another item to note is that the searches discussed here are associated with collection, rather than downstream processes occurring during processing or review.  Search protocols for collections deserve a heightened level of scrutiny.  If the protocol is deficient, data remains uncollected, and becomes susceptible to deletion or loss.  Narrowly tailored collection methodologies must be well designed.

 In order to win summary judgment under FOIA, an agency must show beyond material doubt that it has conducted a search reasonably calculated to uncover all relevant documents. The agency must conduct a search reasonably designed to identify and locate the requested documents, but is not expected to take extraordinary methods to find the records. At summary judgment, an agency bears the burden of showing that its search was adequate.  It may do so by submitting affidavits or declarations containing facts illustrating the sufficiency of the search.

 Summary judgment is inappropriate where the agency’s response raises serious doubts as to the completeness of the search, where the response is patently incomplete, or where the agency’s response is for some other reason unsatisfactory.  A showing of tangible evidence that defendants have not met their burden may defeat a summary judgment motion.  A showing of bad faith is not necessary to defeat a motion for summary judgment.

 Defendant’s affidavits must identify the files searched and provide a general description of the agency’s file system, and articulate reasons why further searching would be unlikely to disclose additional relevant information.  Agencies must establish that they search all custodians who were reasonably likely to possess responsive documents, while setting forth search terms and “the type of search performed.”  The methods used during the search, and not the fruits of the search, are the primary determinants of a search protocol’s validity. However, evidence that relevant records were not released may influence any such analysis.



Decisions on Whose Records Should be Searched

Failure to search an obvious custodian’s records for a year and a half is unreasonable and inadequate as a matter of law, perhaps especially in light of the 56 documents returned by a subsequent search.  However, no sanctions were applied for this failure, due to the rigorous search that the agency eventually did conduct.  Failure to search a leader’s records for a subset of the records associated with a specified time period is not justified when the leader is known to have been involved with the issue at hand outside of the targeted time period and the agency did not specify at what point in time the leader became involved in the matter in its affidavit.

An agency fails to meet its burden in establishing an adequate search when it determines an office was unlikely to possess relevant records despite the office having at least one employee involved in discussions on relevant matters, the office playing a direct role in the matter at issue, and the office being tasked with providing updates on the program at issue in the case. It also fails to meet its burden if the office only searches two custodians’ records while other custodians were intimately involved in the program at issue. 

An agency’s response that an office was not likely to have records is not rendered unreasonable by the fact that the head of that office appeared at a single meeting discussing the program at issue. 

An agency may not simply assume that an office or organization does not have relevant records merely because that office never responded to the agency’s request to search. An agency fails to meet its burden when it does not conduct a search of an office or organization known to have been involved in the program at issue, yet does not explain the lack of a search or declare that the office is unlikely to possess relevant records.

An agency is required to re-draft an affidavit when the initial document failed to relate in sufficient detail search methodologies used to investigate records held by outside contractors. Upon reviewing the revised affidavit, requesting party then may decide whether or not to continue to press their complaints on this item.

An agency meets its burden when an office searches its records and claims in an affidavit to have no relevant records where no evidence exists to suggest otherwise. Although requesting party’s to initial conclusion was reasonable that the office might possess relevant data given the offices’ work and a statement from one employee that he had been “tracking” the matter for some time, some degree of deference is granted to the producing party because they are more familiar with their work and record systems than are the court or requesting parties.

An agency fails to meet its burden when an office known to have significant amounts of responsive documents searches 22 of its active employees’ files, but fails to search the records of seven departed employees. 

Datasets of departed employees are often overlooked.  In those environments where everything associated with projects is stored on network shares, some of the more burdensome measures may be avoided.  However, those archives that are exclusive to that custodian and might contain relevant documents, such as e-mail, should be properly maintained and available for collection.  Similar issues arise with hardware or software application retirements.

An agency meets its burden when an office searches paper and electronic correspondence of a leader whose role likely doesn’t require that leader to generate her own documents that wouldn’t be shared with others.  The search over correspondence examined a universe of documents reasonably calculated to uncover all responsive documents.

An agency has the responsibility of following up on obvious leads, such as recipients of emails that discuss issues relevant to the matter.

Analysis of Search Methodologies 

In earlier times, custodians and searchers were responsible for becoming familiar with the scope of requests and examining documents individually to determine their responsiveness. Now, custodians use computers to do the searching, and knowing the precise instructions that custodians give their computers is crucial to determining the adequacy of a search.

In the past, a court largely relied on the discretion of the searching parties to determine whether a document was responsive; but at least in that era, courts knew that the searching parties were actually looking at the documents with their eyes. With most electronic searches, custodians never actually look at the universe of documents they are searching. Instead, they rely on their search terms and the computer to produce a subset of potentially responsive records that they then examine for responsiveness.

Defendants argue they need not disclose with meticulous documentation the details of an “epic search,” and that custodians should be trusted to execute searches correctly because they use the necessary skill set in their daily work.  The court disagreed, giving two rationales.

First, custodians cannot “be trusted to run effective searches,” without providing a detailed description of those searches, because FOIA places a burden on defendants to establish that they have conducted adequate searches; FOIA permits agencies to do so by submitting affidavits that “contain reasonable specificity of detail rather than merely conclusory statements.”

Second, most custodians cannot be “trusted” to run effective searches because designing legally sufficient electronic searches in the discovery or FOIA contexts is not part of their daily responsibilities. Searching for an answer on Google (or Westlaw or Lexis) is very different from searching for all responsive documents in the FOIA or e-discovery context. Simple keyword searching is often not enough.

There is a “need for careful thought, quality control, testing, and cooperation with opposing counsel in designing search terms or ‘keywords’ to be used to produce emails or other electronically stored information.” And beyond the use of keyword search, parties can (and frequently should) rely on latent semantic indexing, statistical probability models, and machine learning tools to find responsive documents. Through iterative learning, these methods (known as “computer-assisted” or “predictive” coding) allow humans to teach computers what documents are and are not responsive to a particular FOIA or discovery request and they can significantly increase the effectiveness and efficiency of searches. In short, a review of the literature makes it abundantly clear that a court cannot simply trust the defendant agencies’ unsupported assertions that their lay custodians have designed and conducted a reasonable search.

When custodians do track and report their search protocol properly, the court’s determination of adequacy is highly context-specific.  Often, analysis of the effectiveness of criteria used to execute the search and an iterative process of criteria modification and re-execution of queries may be necessary to assure that a search is reasonably calculated to uncover all responsive material.

The involvement of custodians is instrumental to an effective collection protocol.  Custodians associated with the project or incident in question will often be able to identify the most significant sources of relevant data.  However, a search methodology which relies on custodians to execute complex technology-based searches is an inviting target for criticism.  The greater the number of custodians involved, the greater number of “searchers” exist who can be scrutinized.  Consistency may become an issue.  Did all custodians run the protocol with identical (or nearly identical) effort, attention to detail, and methods? Were all custodians sufficiently proficient with the technology used?  Was the documentation generated the same way in each collection? Finally, would any custodian have a motive to omit particular records from the collection?  A skilled, knowledgeable, and objective individual who would execute queries in consistent fashion would deflect many of the obvious criticisms that could be leveled at “self-collecting” custodians.

Plaintiff’s e-discovery expert argued that “there is no indication that [the agencies] undertook any analysis” to review the effectiveness of their criteria, and there is an “absence of any evidence of a thoughtful process in selecting and testing search terms.”  The court agreed that many of the searches weren’t “perfect.” In the absence of evidence showing the efficacy of the terms used, it is impossible to determine the adequacy the search protocol. While repeating “vast swaths” of the search to ensure adequacy is a waste of resources, and the costs to all parties would surely outweigh the benefits to plaintiffs, FOIA requires the government to respond adequately to requests.  Rather than revisit old searches, the parties must cooperate to design and execute a small number of new, targeted searches.

Here, the court continues the march towards numbers-based analyses. An iterative process that provides solid data to validate the initial search criteria, subsequent modifications, and decisions to omit certain data sources has become something of a Holy Grail.  But does a court really want to set a numerical threshold exempting data sources from further consideration? How does one calculate the proper number that triggers the determination that although some relevant documents may exist in a particular repository, the effort of collecting, processing, reviewing, and producing from an archive is not reasonable? Proportionality is a touchstone of the current process, but it is not clearly defined, and is generally tethered closely to the circumstances of individual matters.  Coming up with an “reasonableness quotient” may be beyond the abilities of the average court.

Custodians who should have searched their records must now do so.  A sample of the custodians who conducted searches but failed to provide the Court with appropriate details regarding the methodologies behind those searches must conduct new, fully-documented searches.  A smaller group of the custodians who listed the search terms but did not provide evidence on the efficacy of those terms must repeat the searches to allow the court to efficiently evaluate whether the initial searches were adequate.  The parties will need to agree on search terms and protocols, and might need to conduct testing in order to evaluate and refine those terms.

The parties may also agree to use innovative methods, such as predictive coding techniques, if desired.  The court then listed specific custodians that would be required to conduct new searches.

Here we see a court not only accepting predictive coding, but nearly recommending its use on its own volition.  In the opinion, at least, there is no reference to plaintiffs or defendants proposing “innovative methods.”  It is possible that the significant time, effort, and cost already associated with document searches—many of which must now be repeated—led the court to make the offer.

Posted in 2nd Circuit, Case Summary, FOIA, Judge Shira A. Scheindlin, S.D.N.Y, Search Protocols | Leave a Comment »

Case Summary: Genworth Fin. Wealth Mgmt.; Court Mandates Forensic Imaging and Imposes Sanctions

Posted by rjbiii on December 12, 2010

The case: Defendants were former employees of Plaintiff company, and were alleged to have misused plaintiff’s proprietary client information, including a database, after leaving. Defendants, according to Plaintiff, used this information to solicit clients of their ex-employer in violation of the Computer Fraud and Abuse Act, the Connecticut Uniform Trade Secrets Act, the Stored Communications Act, and Connecticut common law’s prohibition of tortious interference with business relationships. Defendants asserted that they identified client information for solicitation through permissible means including internet searches and memory.
At Issue Here: Plaintiff filed a motion to compel defendants to submit their computers and media for production and inspection. Plaintiff further requested reasonable attorney’s fees and costs associated with its motion.
Discussion: Defendants productions in response to Plaintiff’s discovery requests, failed to include any e-mail, TJT’s Junxure client management database, or the Portfolio Center client invoicing database (allegedly stolen by Defendants). The Plaintiff sought the Defendants’ assurance that forensic imaging had been undertaken, noting concerns that relevant data was at risk of being erased through automatic deletion of temporary and inactive files. Defendants’ counsel conceded that the Defendants had no intention of imaging any of their computer devices, causing Plaintiff to file the motion to compel. After the Plaintiff filed its motion, Onsite IT Consulting performed imaging of TJT Financial’s computer devices and business laptops used by Defendants McMullan, Cook, and McFadden.
Pursuant to a subpoena, the Charles Shwabb Corp., a custodian of assets for TJT Financial, produced email correspondence from Defendant McMullan and Cook’s personal email account and computer that was not produced as part of the Defendants’ response to Genworth’s discovery requests. The correspondence reflects the Defendants’ submission of Genworth client data and information to Schwab, while still employed by Genworth, as part of efforts to establish TJT Capital and secure Genworth clients for the new entity.
During the proceeding, Defendant McMullan testified that, prior to the start of the instant litigation, he discarded the personal computer onto which he downloaded ACT client information and from which he conducted correspondence with Schwab in anticipation of his departure from Genworth and the formation of TJT Financial. Testimony further reflected however, that the disposal of the personal computer may have occurred after Genworth submitted letters to the Defendants to preserve all relevant documents in anticipation of litigation.

Court’s Analysis: The court began by noting that Rule 34 and Rule 26(b)(2)(B) “strongly suggested” that on such requests is discretionary and should take into account substantive considerations of the burden and expense of the request. . . . and that such relief is entirely within the discretion of the Court to grant or deny.
Defendants contended that the Plaintiffs have “not proffered a sufficient basis with which to justify its demands.” The court referred to FRCP 26(b)(1), however, to quote the rule that a party is entitled to discover any unprivileged matter relevant to a party’s claim or defense, where the discovery “appears reasonably calculated to lead to the discovery of admissible evidence.”

Referring to Rule 34(a) the court noted that a party is required to “produce and permit the party making the request . . . to inspect, copy, test, or sample any . . . electronically stored information.” This right is counter-balanced, however, by a responding party’s confidentiality or privacy interests. A party is therefore not entitled to “a routine right of direct access to a party’s electronic information system, although such access might be justified in some circumstances.”
In defining the extent of discovery to afford to a party, a court should: consider the relationship between the plaintiff’s claims and the defendants’ computers and, in some cases, whether the defendant has fully complied with discovery requests, in determining how the requested electronic discovery should proceed. Even in cases where courts have nonetheless adopted procedures to protect privilege and privacy concerns (quoting Calyon v. Mizuho Securities USA Inc., No. 07 CIV0224IRODF, 2007 U.S. Dist. LEXIS 36961, 2007 WL 1468889, at *3 (S.D.N.Y., May 18, 2007).
The court found persuasive the opinion from Ameriwood Industries, Inc. v. Liberman, No. 4:06 CV 524-DJS, 2006 U.S. Dist. LEXIS 93380, 2006 WL 3825291, at *3, *6 (E.D. Mo. Dec. 27, 2006), amended by 2007 U.S. Dist. LEXIS 98267, 2006 WL 685623 (E.D. Mo. Feb. 23, 2007).

Courts have been cautious in requiring the mirror imaging of computers where the request is extremely broad in nature and the connection between the computers and the claims in the lawsuit are unduly vague or unsubstantiated in nature. For example, a party may not inspect the physical hard drives of a computer merely because the party wants to search for additional documents responsive to the party’s document requests. [A court has previously] declined to allow the examination of any ESI other than the information that had been deleted because the requesting party had not demonstrated that the producing party was unwilling to produce relevant evidence. [Evidence] raises the question of whether defendants have in fact produced all documents responsive to plaintiff’s discovery requests. Furthermore, in cases where a defendant allegedly used the computer itself to commit the wrong that is the subject of the lawsuit, certain items on the hard drive may be discoverable. Particularly, allegations that a defendant downloaded trade secrets onto a computer provide a sufficient nexus between the plaintiff’s claims and the need to obtain a mirror image of the computer’s hard drive.

The Ameriwood court therefore concluded that because the defendants were accused of using “the computers, which [were] the subject of the discovery request, to secrete and distribute plaintiff’s confidential information. How and whether defendants handled those documents and what defendants did with the documents [were] certainly at issue.” The court then adopted the Ameriwood three step protocol for imaging, discovery, and disclosure for hard drives.

Ameriwood Imaging and Production Protocol:

  • Imaging:The parties select a computer forensic expert who, operating pursuant to a confidentiality agreement, inspects, copies and images the targeted computer systems at a “non-disruptive” time. The expert provides a detailed report of the “equipment produced and expected.”
  • Recovery:The expert recovers, from the mirrored images, all available targeted file types. In Ameriwood, these consisted of word-processing documents, incoming and outgoing email messages, presentations, and files, including “deleted” files. The expert provides the recovered documents in a reasonably convenient and searchable form to the producing party’s counsel, with notice to the requesting party.
  • Disclosure:Producing party’s counsel reviews the recovered files for privilege and relevance, supplements earlier responses, creates or appends to a privilege log, and produces relevant non-privileged documents to opposing counsel.

Post Process Note: The court is merely describing a micro version of any e-discovery review project, in which data must first be collected, filtered, reviewed, and finally produced. While the court describes the process as three steps, we prefer to break it down a little differently, as visually depicted in the figure below. Even with the slight increase in granularity below, we note that the process can continue be visually depicted in far more detail than we choose to do.

Neutral Forensics Expert Needed:

The court reasoned that the instant case was sufficiently analogous to Ameriwood to warrant using the imaging protocol. Factors present mandating the use of a neutral forensics expert included:

  • One of the defendants used his personal computer and personal e-mail address to download, access, and transmit the Plaintiff’s proprietary information without a scintilla of a reasonable expectation to his entitlement thereto.
  • One of the defendants admitted that he spoliated evidence when he discarded a personal computer after having been advised by counsel that he had no right to the data that he had downloaded whille employed by Plaintiff;
  • Defendants’ testimony on handling electronic media and on how they had obtained the information at issue in the case had been impeached, indicating inaccuracy or deception on the part of defendant.

Cost-Shifting Analysis:

Producing party contended that they should not be forced to pay for the forensics expert, because they had already hired an expert (although they did not image the drives of the systems at issue here). They also claimed that they were unable to pay. The court was unconvinced by their arguments. The court noted that producing party had initially refused to image any of their systems, and only relented once the motion to compel had already been filed with the court. The motion to compel was only filed once producing party admitted they did not intend to image any of their systems. Their initial refusal was “wholly unjustified” as they “tacitly admitted” by their belated engagement of an expert. The court assigned the producing party 80% of the costs, and the requesting party 20%.

The court ordered the following:

  1. Granted the Plaintiff’s motion to compel forensic imaging to be performed by a neutral court-appointed expert.
  2. Producing party was required to submit the targeted systems for inspection by a specific date.
  3. The expert is to format the targeted data types in an appropriate structure and provide producing party’s counsel access for privilege and responsiveness review.
  4. Cost is distributed, as described above, 80% for producing party, 20% for requesting party.
  5. Reasonable attorney fees awarded to requesting party, pending a detailed accounting of those costs.
  6. Further sanctions will be imposed should producing party again fail in their obligations.

Genworth Fin. Wealth Mgmt. v. McMullan, 267 F.R.D. 443 (D. Conn. 2010)

Posted in 2nd Circuit, Case Summary, Computer Fraud and Abuse Act, Connecticut Uniform Trades Secrets Act, D. Conn., FRCP 26(b), FRCP 34, FRCP 37(a), Judge Vanessa L. Bryant, Motion to Compel, Neutral Third Party, Stored Communications Act | 3 Comments »

Case Blurb: Pension Comm. of the Univ. of Montreal Pension Plan; New Burden Shifting Test Articulated

Posted by rjbiii on March 1, 2010

To ensure that no party’s task is too onerous or too lenient, I am employing the following burden shifting test: When the spoliating party’s conduct is sufficiently egregious to justify a court’s imposition of a presumption of relevance and prejudice, or when the spoliating party’s conduct warrants permitting the jury to make such a presumption, the burden then shifts to the spoliating party to rebut that presumption. The spoliating party can do so, for example, by demonstrating that the innocent party had access to the evidence alleged to have been destroyed or that the evidence would not support the innocent party’s claims or defenses. If the spoliating party demonstrates to a court’s satisfaction that there could not have been any prejudice to the innocent party, then no jury instruction will be warranted, although a lesser sanction might still be required.

Pension Comm. of the Univ. of Montreal Pension Plan v. Banc of Am. Secs, LLC, 2010 U.S. Dist. LEXIS 4546, at *23-24 (S.D.N.Y. Jan. 15, 2010)

The case summary is here.

Posted in 2nd Circuit, Burden of Proof, Case Blurbs, Judge Shira A. Scheindlin, Relevance, Spoliation | Leave a Comment »

Case Blurb: Pension Comm. of the Univ. of Montreal Pension Plan; Gross Negligence Defined

Posted by rjbiii on March 1, 2010

“Gross negligence has been described as a failure to exercise even that care which a careless person would use.” According to a leading treatise — Prosser & Keeton on Torts — most courts find that gross negligence is something more than negligence “and differs from ordinary negligence only in degree, and not in kind.”

Pension Comm. of the Univ. of Montreal Pension Plan v. Banc of Am. Secs, LLC, 2010 U.S. Dist. LEXIS 4546 at *9 (S.D.N.Y. Jan. 15, 2010)

Case Summary is here.

Posted in 2nd Circuit, Case Blurbs, Judge Shira A. Scheindlin | Tagged: | Leave a Comment »

Case Blurb: Pension Comm. of the Univ. of Montreal Pension Plan; Negligence Defined

Posted by rjbiii on March 1, 2010

It is useful to begin with standard definitions of each term and then to explore the conduct, in the discovery context, that causes certain conduct to fall in one category or another.

[Negligence] is conduct “which falls below the standard established by for the protection of others against unreasonable risk of harm.” [Negligence] is caused by heedlessness or inadvertence, by which the negligent party is unaware of the results which may follow from [its] act. But it may also arise where the negligent party has considered the possible consequences carefully, and has exercised [its] own best judgment.

Pension Comm. of the Univ. of Montreal Pension Plan v. Banc of Am. Secs, LLC, 2010 U.S. Dist. LEXIS 4546 (S.D.N.Y. Jan. 15, 2010)

Case Summary is here.

Posted in 2nd Circuit, Case Blurbs, Judge Shira A. Scheindlin, S.D.N.Y | Tagged: | Leave a Comment »

Case Summary: Pension Comm. of the Univ. of Montreal; Importance of Litigation Hold Notices

Posted by rjbiii on March 1, 2010

Pension Comm. of the Univ. of Montreal Pension Plan v. Banc of Am. Secs, LLC, 2010 U.S. Dist. LEXIS 4546 (S.D.N.Y. Jan. 15, 2010)

Background: Action brought by investors to recover funds lost upon the liquidation of two hedge funds based in the British Virgin Islands. The court examines the litigation holds practice of the plaintiffs.

Basic Points:

  • Spoliation sanctions imposed despite no “egregious behavior.”
  • Lit Hold for Plaintiffs often (usually?) occur earlier than or Defendants.
  • New Balancing Test for Burden of Proof
  • Inefficiencies greatly increased legal fees
  • Defendant’s attack mode was effective
  • Collection methods placing “total reliance” on the custodian criticized.
  • Zubulake a watershed for this case’s participants.

The court begins by noting that we live in an era where there are vast amounts of ESI available for review, causing the discovery process to be complex and expensive. The opinion expresses the consoling thought that courts do not hold parties to a standard of perfection, but follows that with the warning that parties must preserve relevant records once litigation is reasonably anticipated, and must collect, review and produce those records to the other side. Failing to do so damages the integrity of the judicial system.

The Court continues by setting up the basic framework:

From the outset, it is important to recognize what this case involves and what it does not. This case does not present any egregious examples of litigants purposefully destroying evidence. This is a case where plaintiffs failed to timely institute written litigation holds and engaged in careless and indifferent collection efforts after the duty to preserve arose. As a result, there can be little doubt that some documents were lost or destroyed.

The question, then, is whether plaintiffs’ conduct requires this Court to impose a sanction for the spoliation of evidence. To answer this question, there are several concepts that must be carefully reviewed and analyzed. The first is plaintiffs’ level of culpability — that is, was their conduct of discovery acceptable or was it negligent, grossly negligent, or willful. The second is the interplay between the duty to preserve evidence and the spoliation of evidence. The third is which party should bear the burden of proving that evidence has been lost or destroyed and the consequences resulting from that loss. And the fourth is the appropriate remedy for the harm caused by the spoliation.

First, the court provided basic definitions for negligence and gross negligence. The court then discussed culpability (willfulness, gross negligence, and negligence) in the context of electronic discovery. The chart below summarizes the analysis.

Degree of Culpability for Specific Acts

The court qualified its judgments by stating that each case will turn on its own facts.

The court continued by noting that the common law duty to preserve evidence was well-recognized, that the breach of this duty invited sanctions from the court, and that the duty attached at the time a party reasonably anticipates litigation. Because Plaintiff’s control the timing of the litigation, their duty is often triggered before litigation commences. In this case, the court reasoned that by April of 2003, Lancer (one defendant hedge fund) had already filed for bankruptcy; Plaintiff UM had filed a complaint; at least two other plaintiffs (Hunicutt & Chagnon) had retained counsel, and plaintiff Chagnon had been in contact with other plaintiffs. With these facts listed, the court decided that by April 2003, therefore, plaintiffs, all sophisticated investors, should have been aware of pending collapse and litigation. Below, is a table that shows the steps plaintiffs took to preserve data, and the court’s analysis of those steps:

Court Analyzes Plaintiffs' Collections Methods

Interesting, the court describes two attacks on Plaintiffs’ process by Defendants that proved to be successful. By cross-referencing productions from other plaintiffs, former co-defendants, and the receiver in a related SEC action, Defendants identified 311 documents unaccountably absent from production. This, in turn, led to the discovery that almost all declarations were false and misleading or executed by declarants without personal knowledge of its contents.

Next, Defendants were able to convince the court that certain records had to missing, via logic, over plaintiffs’ objection. Defendants argued that:

  • All plaintiffs had a fiduciary duty to conduct due diligence before making significant investments in the funds.
  • Records must have existed documenting the due diligence, investments and subsequent monitoring of these investments.
  • The paucity of records produced by some plaintiffs and the admitted failure to preserve some records or search at all for others by all plaintiffs leads inexorably to the conclusion that relevant records have been lost or destroyed.

Here, then, the attack for defendants worked on two fronts: the technical and the legal.

The court then analyzed sanctions and their relative magnitudes of The discussion of sanctions and severity is summarized below.

Sanctions in Order of Severity

For less severe sanctions, the inquiry focuses more on the conduct of the spoliating party than on whether documents were lost, and, if so, whether those documents were relevant and resulted in prejudice to the innocent party. For severe sanctions, the innocent party must prove the following three elements: that the spoliating party:
(1) had control over the evidence and an obligation to preserve it at the time of destruction or loss;
(2) acted with a culpable state of mind upon destroying or losing the evidence; and that
(3) the missing evidence is relevant to the innocent party’s claim or defense.

Relevance and prejudice may be presumed when the spoliating party acts in bad faith or in a grossly negligent manner. The application of this presumption is at the discretion of the court. Typically, the innocent party must present intrinsic evidence that tends to show that the destroyed evidence was favorable to its case. No matter what level of culpability is found, any presumption is rebuttable. In order to strike a balance, the court crafted a new test:

When the spoliating party’s conduct is sufficiently egregious to justify a court’s imposition of a presumption of relevance and prejudice, or when the spoliating party’s conduct warrants permitting the jury to make such a presumption, the burden then shifts to the spoliating party to rebut that presumption. The spoliating party can do so, for example, by demonstrating that the innocent party had access to the evidence alleged to have been destroyed or that the evidence would not support the innocent party’s claims or defenses. If the spoliating party demonstrates to a court’s satisfaction that there could not have been any prejudice to the innocent party, then no jury instruction will be warranted, although a lesser sanction might still be required.

The court next reviewed the calculus used for the imposition of sanctions. First, it noted that a court has broad discretion to determine the approprate sanction in the event of a breach of a discovery obligation. Sanctions should:

  1. deter parties from engaging in spoliation
  2. place the risk of an erroneous judgment on the arty who wrongfully created the risk; and
  3. restore the prejudiced party to the same position in which it would have been absent the wrongful destruction of evidence

A court should always impose the least harsh sanction that can provide an adequate remedy. Therefore, terminating sanctions are justified only in the most egregious cases, such as:

  1. Perjury;
  2. Tampering with evidence;
  3. Intentional destruction-burning, shredding or “wiping out” computer hard drives;

The court then articulated the standards for various jury instruction types, and this analysis is re-produced in the chart below:

Adverse Instruction Types

The court ultimately imposed monetary fines and the following instruction to the jury:

The Citco Defendants have argued that 2M, Hunnicutt, Coronation, the Chagnon Plaintiffs, Bombardier Trusts, and the Bombardier Foundation destroyed relevant evidence, or failed to prevent the destruction of relevant evidence. This is known as the “spoliation of evidence.”

Spoliation is the destruction of evidence or the failure to preserve property for another’s use as evidence in pending or reasonably foreseeable litigation. To demonstrate that spoliation occurred, the Citco Defendants bear the burden of proving the following two elements by a preponderance of the evidence:

First, that relevant evidence was destroyed after the duty to preserve arose. Evidence is relevant if it would have clarified a fact at issue in the trial and otherwise would naturally have been introduced into evidence; and

Second, that if relevant evidence was destroyed after the duty to preserve arose, the loss of such evidence would have been favorable to the Citco Defendants.

I instruct you, as a matter of law, that each of these plaintiffs failed to preserve evidence after its duty to preserve arose. This failure resulted from their gross negligence in performing their discovery obligations. As a result, you may presume, if you so choose, that such lost evidence was relevant, and that it would have been favorable to the Citco Defendants. In deciding whether to adopt this presumption, you may take into account the egregiousness of the plaintiffs’ conduct in failing to preserve the evidence.

However, each of these plaintiffs has offered evidence that (1) no evidence was lost; (2) if evidence was lost, it was not relevant; and (3) if evidence was lost and it was relevant, it would not have been favorable to the Citco Defendants.

If you decline to presume that the lost evidence was relevant or would have been favorable to the Citco Defendants, then your consideration of the lost evidence is at an end, and you will not draw any inference arising from the lost evidence.

However, if you decide to presume that the lost evidence was relevant and would have been unfavorable to the Citco Defendants, you must next decide whether any of the following plaintiffs have rebutted that presumption: 2M, Hunnicutt, Coronation, the Chagnon Plaintiffs, Bombardier Trusts, or the Bombardier Foundation. If you determine that a plaintiff has rebutted the presumption that the lost evidence was either relevant or favorable to the Citco Defendants, you will not draw any inference arising from the lost evidence against that plaintiff. If, on the other hand, you determine that a plaintiff has not rebutted the presumption that the lost evidence was both relevant and favorable to the Citco Defendants, you may draw an inference against that plaintiff and in favor of the Citco Defendants — namely that the lost evidence would have been favorable to the Citco Defendants.

Each plaintiff is entitled to your separate consideration. The question as to whether the Citco Defendants have proven spoliation is personal to each plaintiff and must be decided by you as to each plaintiff individually.

Posted in 2nd Circuit, Case Summary, Judge Shira A. Scheindlin, Litigation Hold, S.D.N.Y, Sanctions, Spoliation | 6 Comments »

Case Blurb: Seeley; Court Denies Motion for Sanctions under “Elementary Fairness” Doctrine

Posted by rjbiii on December 17, 2009

Factual Background: Plaintiff, a worker at a Wal-Mart distribution center, was trained on and operated a conveyor belt machine manufactured by Defendant company. During the operation of the equipment, an accident occurred resulting in severe injuries to Plaintiff’s hand. Plaintiff brought this action for products liability and negligence.

Procedural History: Before the court was, inter alia, a motion by Defendants to impose sanctions on Plaintiff, evidently for the destruction of a part of the conveyor belt machine, known as a roller. Plaintiff’s hand was stuck in the machinery, and the roller was primarily responsible for this. The roller was either destroyed or missing, and Defendants asked the court to sanction Plaintiff for the (presumably destroyed) roller.

Sanctions for spoliation can be imposed for either intentional or negligent destruction of evidence. Hartford Fire Ins. Co. v. Regenerative Bldg. Constr. Inc., 271 A.D.2d 862, 863, 706 N.Y.S.2d 236 (N.Y. App. Div. 3d Dep’t 2000). In either case, a litigant must have been responsible for the destruction. Id. A court considers what is necessary for “‘elementary fairness'” when deciding to impose or reject sanctions. Id. (quoting Puccia v. Farley, 261 A.D.2d 83, 85, 699 N.Y.S.2d 576 (N.Y. App. Div. 3d Dep’t 1999). In Hartford Fire Ins., none of the parties knew the location of the unavailable evidence. Id. at 864. The record did not demonstrate who destroyed the evidence or when it was destroyed. Id. The court stated “[u]nder the circumstances . . . it cannot be presumed that plaintiff is the party responsible for the disappearance of such evidence, or, more importantly, that it was discarded by plaintiff in an effort to frustrate discovery.” Id. Accordingly, denial of the defendant’s motion for sanctions was upheld. Id.

Seeley presents a nearly identical situation to that in Hartford Fire Ins. She did not intentionally or negligently destroy the roller that caught her hand. The Wal-Mart facility possessed the roller at all times. The record is unclear as to who destroyed the roller and to when it was destroyed. Nothing suggests plaintiff discarded the roller to impede discovery. Thus, under Hartford Fire Ins., sanctions against Seeley are inappropriate as both situations present a lack of information on the actual destruction but some indication plaintiff was uninvolved. Defendant’s motion to dismiss all claims based on spoliation must be denied.

Seeley v. Logistex, 2009 U.S. Dist. LEXIS 79549 at *12-13 (N.D.N.Y Sept. 3, 2009)(emphasis added)

Posted in 2nd Circuit, Case Blurbs, Judge David Hurd, N.D.N.Y., Sanctions, Spoliation | Leave a Comment »

Case Blurb: Scalera; Inherent Authority of a Federal Court to Impose Sanctions

Posted by rjbiii on December 16, 2009

The court has the inherent power to impose sanctions for the spoliation of evidence, even where there has been no explicit order requiring the production of the missing evidence.

Scalera v. Electrograph Sys., 2009 U.S. Dist. LEXIS 91572 (E.D.N.Y. Sept. 29, 2009)(citing Residential Funding Corp. v. DeGeorge Fin. Corp., 306 F.3d 99, 107 (2d Cir. 2002))

See Case Summary here.

Posted in 2nd Circuit, Case Blurbs, E.D.N.Y., Magistrate Judge A. Kathleen Tomlinson, Sanctions, Spoliation | Leave a Comment »

Case Blurb: Scalera; Definition of Spoliation

Posted by rjbiii on December 16, 2009

“Spoliation is ‘the destruction or significant alteration of evidence, or the failure to preserve property for another’s use as evidence in pending or reasonably foreseeable litigation.'”

Scalera v. Electrograph Sys., 2009 U.S. Dist. LEXIS 91572 (E.D.N.Y. Sept. 29, 2009)

See the Case Summary here.

Posted in 2nd Circuit, Case Blurbs, E.D.N.Y., Magistrate Judge A. Kathleen Tomlinson, Spoliation | Leave a Comment »