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Case Summary: Calixto; Court Analyzes Preservation Methodology

Posted by rjbiii on April 16, 2010

Calixto v. Watson Bowman Acme Corp., 2009 U.S. Dist. LEXIS 111659 (S.D. Fla. Nov. 16, 2009)

Case Background: Plaintiff Calixto brought this action against defendants CRT and Watson Bowman Acme Corp. (WABO), alleging infringement of patent and trademark, breach of contract, and tortious interference of an agreement between plaintiff and another party. CRT had signed an Asset Purchase Agreement and was negotiating with Calixto on a licensing agreement for the Asian territory, for use of a patented system for joining concrete slabs that may be used in the construction of parking garages or vehicular roadways and an associated trademark. WABO was to be a sub-licensee of CRT’s rights.

Procedural History: The court addresses a motion to compel by Calixto.

Basic Points:

  • Restoration of 30 back-up apes was found to be unnecessary when moving party failed to establih a reasonable expection that doing so would yeild relevant documents not already produced.
  • Restoration of a single back-up tape was ordered because of sufficient possibility that new information would be found
  • Failing to object to search methodology might be a factor in losing your motion to compel
  • Failing to counter expert opinion on pricing might be a factor in losing your motion to compel
  • When sending a deman letter to trigger the duty of preservation, make sure it explicitly cites all possible causes of action and directly addresses every potential litigant.

Factual Background: During a deposition, WABO’s former CEO discussed a document retention policy that included measures to ensure the retention of e-mails on offsite storage for, as best as he could recall, a minimum of ten years. In a 30(b)(6) deposition, WABO’s witness implied that there was a systematic data purge for e-mails older than six months that was implemented when BASF AC acquired WABO. However, the deponee was unable to say whether such a purge had been in place prior to the acquisition. Based on this testimony, however, Calixto filed a motion to compel, requesting the court find spoliation had occurred in the face of ongoing litigation.

During the hearing on the motion to compel, Calixito challenged WABO’s actions on two grounds:
1. the destruction of former CEO Burri’s e-mails on his hard drive after Burri left WABO; and
2. WABO’s refusal to restore monthly back-up tapes.

WABO argued that its policy was to destroy ESI from the hard drives of separated employees, and that Mr. Burri left prior to December 1, 2004, which was the earliest date from which it still retained data on back-up tapes. Therefore, no record of Burri’s e-mails existed, and WABO could not recover the e-mails from anywhere.

With respect to the second issue, WABO claimed that nothing relevant that existed on the back-up tapes had not already been produced to Calixto.

The Court ordered WABO to produce an affidavit explaining, among other matters,
(1) how WABO conducted its search for documents responsive to the deposition notice and discovery obligations;
(2) what, if any, documents had been deleted from WABO’s IT system, and the circumstances surrounding any such deletions; and (3) what, if any, options existed for recovery of any deleted documents.

Subsequently, WABO filed the affidavit with the court.

Process Used for Conducting a Search and Collection of Relevant ESI:
WABO first identified and contacted all WABO employees who:
1. had any possible contact with Plaintiff;
2. Who had any possible knowledge of the Trademarks or Patent at issue; or
3. Who possibly had any information relating to the Lawsuit or to Plaintiff’s document requests.

WABO instructed these individuals to search their personal electronic records, including their personal hard drives and computer files, and their personal hard copy records for any responsive documents or information. WABO searched the Lotus Notes mailboxes of the selected group of custodians.

WABO IT searched the server house directories, the shared drives, and the individual files (including archive files) for the identified individuals for keywords and terms, including the terms “Degussa,” “BASF,” “CORTE,” 4 “Calixto, “Asset Purchase Agreement,” “‘381 Patent,” “JEENE,” and “ALADIN.” WABO also directed the identified individuals to search their local hard drives and Lotus Notes mailboxes for the same search terms. WABO officers also made personal inquiries of those identified as possibly having responsive information or documents, asking about their knowledge and the location of any pertinent information.

WABO made available to its counsel all documents obtained through the efforts outlined above. Counsel then provided relevant documents to Calixto and listed privileged documents on a log.

The court observed that testimony in the declaration implicitly suggested that reconfiguring the back-up tapes into a searchable format and then searching the reformatted version would not yield additional responsive documents because everything reasonably anticipated to be relevant to the litigation was preserved via the litigation hold and searched pursuant to the procedures articulated above.

WABO stated that the it was a routine business practice to delete a former employee’s email upon separation, although no written policy existed. No documentation recording the deletion operation was generated, and the exact date of deletion could not be recalled, although WABO insisted that the deletion did occur prior to receiving a letter from Plaintiffs threatening litigation.

Back-up Tapes:
Because back-up tapes used a compressed format that rendered data contained by them inaccessible, WABO claimed that the data must be restored in order to render it accessible. Because of the tape rotation schedule, WABO only held data for approximately 30 months, meaning that WABO now only retained tapes containing data from December of 2004. WABO has preserved data from that time forward in order to comply with its discovery obligations.

In reviewing WABO’s IT representative’s testimony, the court noted that IT felt they needed to deleted data to increase performance and liberate memory and disk space. IT generated the policy of deleting emails of departed employees at its own initiative, although it did communicate the fact that it was engaged in this practice to executives at the time. BASF’s newly implemented automatic deletion program exempts those custodians on a litigation hold.

WABO (and BASF) Counsel:

Senior counsel at BASF, who also had a history with WABO also testified on the existence of two letters and their effects on the litigation hold process. The first, dated March 1, 2004, was sent to WABO president Burri, described negotiations with respect to licensing at an impasse, and concluded that no further discussions would occur. The “re” block was “Proposed Exclusive License Agreement Between Jorge Calixto and Shanghai Master Builders Co., Ltd.” It reminded WABO that they were prohibited from making, distributing, or selling any product using the process set forth in the Patent and from using the JEENE trademark in the Asia/Pacific Territory. It warned that Calixto would enforce his rights and remedies under an earlier signed Asset Purchase Agreement, as well as any common law and/or statutory rights in the relevant jurisdiction.

Counsel claimed never to have seen that letter, but contended that he did not view it as threatening imminent litigation against WABO because:
(1) he saw the letter as a demand letter for royalty payments; and
(2) WABO is not a signatory to the Asset Purchase Agreement discussed in the letter

The second letter was dated September 9, 2004. The “re” block on this letter reads, “Breach of Asset Purchase Agreement dated November 17, 2003 by and Between [CRT] and . . . Calixto.” the letter alleges that CRT was engaging in precisely these activities within the Asia/Pacific Territory. Among other instances, Plaintiff’s counsel cited a WABO announcement that it had “changed the name of the ‘JEENE’ system to ‘Aladin’ as of 1st January 2004.'” The letter concluded by demanding that CRT:

cease and desist from engaging in [such] activities. Furthermore, . . . Calixto is entitled to damages as a result of the breach of the Agreement, including the attorneys’ fees and costs he has incurred pursuant to Section 10.2 of the Agreement. Unless we receive a written response from [CRT] within ten (10) days of your receipt of this notice detailing its intended actions for addressing these matters and compensating . . . Calixto, . . . Calixto has authorized us to pursue all rights and remedies available to him under the Agreement and in accordance with applicable law.

Senior counsel testified that he remembered receiving this letter, but he did not view it as triggering document retention requirements at WABO because:
(1) the letter was about CRT’s alleged breach of the Agreement, and WABO was not a party to that Agreement,
(2) it did not appear to him as though litigation was imminent, based on this letter, and
(3) even had it appeared so, because CRT is a German entity and Calixto is a citizen of Brazil, Pendergast did not anticipate that litigation in the United States would occur, and document preservation and discovery requirements in other countries can differ substantially from those in the United States.

Counsel stated he did not consider that WABO might be sued until Calixto actually filed suit against WABO and others in Florida Circuit Court and served it on WABO. More specifically, Pendergast stated, on March 30 or 31, 2005, after learning of the lawsuit, he put a litigation hold in place.

As mentioned above, Calixto sought to obtain letters of request enabling service of subpoenas duces tecum to proceed against BASF SE Construction Chemicals Division, in Germany; BASF Construction Chemicals Asia Pacific in Shanghai, China; Sanfield Industries Ltd. in Hong Kong; and Vispack Co., Ltd., in Thailand. WABO objected, asserting that it had already provided Calixto with documents in its possession regarding all sales during the relevant time frame.

Analysis:

The court observed that it must address two issues in resolving Plaintiff’s Motion to Compel:
(1) Whether WABO’s alleged destruction of the Burri e-mails or its process of searching for documents relevant to this litigation and responsive to Calixto’s requests was so deficient as to justify an order from the Court directing WABO to engage in sampling or some other methodology requiring WABO to reconfigure any or all of its back-up tapes and conduct a search of them; and
(2) Whether WABO’s destruction of the Burri e-mails in 2004 constituted spoliation warranting some type of sanction.

Sufficiency of WABO’s Search:
The court began this part of its analysis by citing FRCP 26(b)(2)(B):

Specific Limitations on Electronically Stored Information. A party need not provide discovery of electronically stored information from sources that the party identifies as not reasonably accessible because of undue burden or cost. On motion to compel discovery or for a protective order, the party from whom discovery is sought must show that the information is not reasonably accessible because of undue burden or cost. If that showing is made, the court may nonetheless order discovery from such sources if the requesting party shows good cause, considering the limitations of Rule 26(b)(2)(C). The court may specify conditions for the discovery.

Rule 26(b)(2)(C), in turn, directs the court to limit discovery when it finds that the discovery sought is, as relevant to the analysis in this case, unreasonably cumulative or duplicative. The burden fell on WABO to demonstrate that the information that Calixto seeks is not reasonably accessible because of undue burden or cost.

WABO submitted an estimate from e-discovery vendor Kroll Ontrack, stating the cost to restore these back-up tapes to a searchable format would be approximately $ 40,000.00. WABO would then have to spend further funds for a review for relevance and privilege any documents resulting from this endeavor. The Court concluded that WABO satisfied its initial burden of showing that the materials that Calixto seeks from the back-up tapes are not reasonably accessible because of undue burden or cost. The court then concluded that Calixto has not established good cause for the Court to require WABO to restore and search the back-up tapes, despite the cost and burden.

The court continued by finding that Calixto has failed to establish a reasonable expectation that restoring and searching all of the back-up tapes will yield relevant documents that WABO’s other search methods have not. Calixto raised no objections to the adequacy of WABO’s search methods, including, among other procedures, the keywords that WABO chose to use in performing its search for relevant and responsive material from its electronic databases. Moreover, the Court’s independent review of WABO’s specified search methodology revealed that it appeared to have been designed to find relevant information, and no obvious significant gaps in the methodology.

The court did find, however, that the very earliest back-up tape should be restored and searched, because of doubts about the actual date of the deletion of former CEO Burri’s email. The court stated that it was possible that such a search would not return merely duplicative data, and the court was not persuaded that searching a single back-up tape would constitute an undue burden.

Spoliation Sanctions:
Spoliation sanctions constitute an evidentiary matter, and in diversity cases, the Federal Rules of Evidence govern the admissibility of evidence in federal courts. The key to unlocking a court’s inherent power requires a finding of bad faith.

Where no direct evidence of bad intent exists, in this Circuit, bad faith may be found on circumstantial evidence where all of the following hallmarks are present:
(1) evidence once existed that could fairly be supposed to have been material to the proof or defense of a claim at issue in the case;
(2) the spoliating party engaged in an affirmative act causing the evidence to be lost;
(3) the spoliating party did so while it knew or should have known of its duty to preserve the evidence; and
(4) the affirmative act causing the loss cannot be credibly explained as not involving bad faith by the reason proffered by the spoliator.

In applying these factors to the deleted emails, it first concluded that it was likely that Burri’s email store contained relevant documents. There was no doubt that WABO affirmatively caused the data to be destroyed. However, the court was not convinced that a duty to preserve attached at the time of destruction, as it decided that neither of the letters discussed above triggered that duty. The court emphasized that WABO was not a signatory of the Asset Purchase Agreement cited in the letters, and that it appeared that WABO was not a proper defendant for a breach of contract claim based on that document.

WABO IT’s representative credibly testified that, as a senior information systems analyst, her primary job was to ensure the security and proper functioning of WABO’s computer system, something that too much information storage threatened. Therefore, no deliberate act of destruction of evidence occurred.

Ultimately, the court agreed to require the restoration and search of a single back-up tape while denying the other requests discussed here.

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Posted in 11th Circuit, Case Summary, Demand Letter, Document Retention, Duty to Preserve, FRCP 26(b), FRCP 28(b), Litigation Hold, Magistrate Judge Robin S. Rosenbaum, Reasonable Anticipation of Litigation, S.D. Fla., Spoliation, Undue burden or cost, Unreasonably Cumulative | Leave a Comment »

Case Summary: Phillip M. Adams & Assocs., On Spoliation and Info. Management

Posted by rjbiii on July 5, 2009

Phillip M. Adams & Assocs., L.L.C. v. Dell, Inc., 2009 U.S. Dist. LEXIS 26964 (D. Utah Mar. 27, 2009)

FACTS: Plaintiffs, and requesting party, Philip M. Adams & Associates, alleged infringement of their patents for technology that detected and resolved defects in the most widely used floppy disk controller, thus preventing data from being destroyed. The patents in question were purportedly assigned to plaintiffs by the original inventor. FDC-related defects gave rise to multiple lawsuits, culminating with the settlement of a class action suit against Toshiba in October of 1999.
Requesting party accused producing party of spoliation, as stated in the opinion:

…first, that ASUS has illegally used Adams’ patented software; and second, that ASUS has destroyed evidence of that use. The first assertion is identical to the liability issue in this case. The second assertion is premised on the first: Assuming ASUS used Adams’ software, ASUS’ failure to produce evidence of that use is sanctionable spoliation. Adams has no direct proof of destruction of evidence but is inferring destruction or withholding of evidence. Since Adams is convinced that ASUS infringed, Adams is also convinced that failure to produce evidence of infringement is sanctionable.

Issues we examine:

  1. When did the producing party’s duty to preserve attach?
  2. How does the Safe Harbor provision (FRCP 37(e)) factor into the determination of sanctions in this case?
  3. What role does producing party’s information management system play in the sanctions calculus?
  4. How does the producing party’s lack of produced data on certain subjects in the aggregate balanced against the absence of specific evidence of wrong-doing by requesting party?

Issue 1: Court’s reasoning:
Producing party acknowledges receiving a letter from requesting party’s counsel asserting infringement on February 23, 2005. It does not acknowledge receiving an earlier letter dated October 4, 2004. Thus, Producing Party dates the beginning of its duty to preserve from the date of the February letter, and states that it has complied with that duty from that time forward. Producing party takes the position that a delay in giving notice and bringing suit by requesting party is the reason for the lack of available data from the years 2000 and 2001.
The court noted that both parties agreed that “a litigant’s duty to preserve evidence arises when ‘he knows or should know [it] is relevant to imminent or ongoing litigation.'” The court acknowledged the producing party’s stance that this trigger occurred upon receiving counsel’s letter, but stated that this was “not the inviolable benchmark.” The court cited 103 Investors I, L.P. v. Square D Co., 470 F.3d 985 (10th Cir. 2006) to buttress its argument.
In 103 Investors, the defendant disposed of 50 to 60 feet of “busway” material after a fire had occurred, destroying all but four feet of the busway, and eliminating any of the busway that should have contained a warning label. The court concluded that in that instance, the defendant should have known that litigation was imminent, although the material had been disposed of long before the complaint was filed.
The court described the history of this defect. In 1999 Toshiba paid a large sum to settle a class action related to the floppy drive error in play in the instant matter. That same year, a class action suit was filed against HP for the same defect. In 2000, producing party was working on correcting the issue. Sony became embroiled in a class action in 2000. The court stated that the industry had (or should have become) “sensitized” to the possibility of litigation on this issue.

It appears that this extends the duty to preserve, which is already among the more difficult and costly issues in e-discovery today. By extending the duty’s trigger to occur prior to any direct or specific action against defendants, the court is asking too much of any IT department. It may be that the lack of documents produced by the defendants (this is discussed below) puts the court in the position of trying to fashion a rationale for punishment. But taken literally, the effects of the opinion could set a difficult, perhaps impossible, standards for compliance with the duty.

Issue 2: Safe Harbor?

The court, to the dismay of many commentators, dismisses the effects of the safe harbor provision in FRCP 37(e). Ralph Losey claims the court “mines” the rule into oblivion. I think what is in play here is that the court feels that the producing party would use Safe Harbor as a rationale for not producing data that it should have. Nevertheless, Safe Harbor’s reach, already attenuated, appears to weaken further in this opinion.


Issue 3: What role does producing party’s information management system play in the sanctions calculus?

The court comes down hard on the IG practices of the producing party. It stated that the system’s architecture, possessed of questionable reliability, should not be excused, though it evolved, rather than was deliberately designed to operate as it does. The result is that it operated to deprive the requesting party of access to evidence.
Traits of this system are described thusly:
[Producing Party] extensively describes its email management and storage practices, to explain the nearly complete absence of emails related to the subject of this litigation.

First, [Producing Party] says its email servers are not designed for archival purposes, and employees are instructed to locally preserve any emails of long term value.

[Producing Party] employees send and receive email via company email servers.

Storage on [Producing Party’s] email servers is limited, and the company directs employees to download those emails they deem important or necessary to perform their job function from the company email server to their individual company issued computer.

[Producing Party] informs its employees that any email not downloaded to an employee’s computer are automatically overwritten to make room for additional email storage on ASUSTeK ‘s servers.

It is [Producing Party’s] routine practice that its employees download to their individual computer those emails the employee deems important or necessary to perform his or her job function or comply with legal or statutory obligations.

Second, ASUS employee computers are periodically replaced, at which time ASUS places all archiving responsibility for email and other documents on its employees. During the course of their employment, ASUSTeK employees return their individual company issued computers in exchange for newer replacement computers.

40. The hard drives of all computers returned to or exchanged with the company are formatted to erase all electronic information stored on these computers before they are recycled, reused or given to charity.

41. During a computer exchange, it is [Producing Party’s] practice to direct its employees to download those emails and electronic documents from the employee’s individual computer to the employee’s newly issued computer that the employee deems important or necessary to perform his or her job function or comply with legal or statutory obligations.

The court stated that descriptions these data management practices may explain why relevant e-mails were not produced, but it did not establish the Producing Party’s good faith in managing its data. It calls the information management practices of the producing party “questionable” and that although an organization may design its systems to suit its business purposes, the information management practices are still accountable to such third parties as adversaries in litigation. The court opines that: “[a] court – and more importantly, a litigant – is not required to simply accept whatever information management practices a party may have. A practice may be unreasonable, given responsibilities to third parties.

Furthermore, while the court accepts that the Producing Party’s system “evolved” rather than was purposefully designed with the goal of hiding data needed for litigation, it nevertheless quoted the Sedona Conference: “An organization should have reasonable policies and procedures for managing its information and records.”

Finally, the court took aim at the practice of allowing individual users to drive retention practices, when it stated: “[Producing Party’s]’ practices invite the abuse of rights of others, because the practices tend toward loss of data. The practices place operations-level employees in the position of deciding what information is relevant to the enterprise and its data retention needs.”

Issue 4: How does the producing party’s lack of produced data on certain subjects in the aggregate balanced against the absence of specific evidence of wrong-doing by requesting party?

Producing Party turned over executable files of their own invention, but failed to surrender the source code for those executables. They also failed to produce other relevant executables and related source code, or “a single document” relating to the development of the applications under scrutiny. The court expressed concern over the absence of certain types of documents from the production:

[Producing Party’s] only response is that it has produced a large volume of documents. That may be the case; but, it has not produced the most critical documents – those that relate to its misappropriation, its copying, and its willful behavior. The only conclusion after all this time is that [Producing Party] has destroyed critical evidence that it simply cannot show did not exist.

By this expression, the court adopted Requesting Party’s argument that Producing Party had “‘spoliated the most critical evidence in this case, e.g., test programs and related source code’ “[S]ince [Producing Party] has not produced it, the only conclusion is that [they have destroyed it.”

The court also noted, in its analysis of Producing Party’s objection to the admissibility of data produced by third parties on grounds of authentication, that the Producing Party, while claiming “a near total absence of evidence…[sought] to eliminate the only evidence available. The court concluded that such tactics should not prevail to “prevent consideration of the best evidence available.”

Requesting Party listed types of documentation that they would expect Producing Party to possess, but never received during production. Communications and documentation from outside sources contributed to a suspicion that such documentation once existed. Indeed, as the court examines the Producing Party’s duty to preserve, it leads off by stating: “[t]he universe of materials we are missing is very large. Indisputably, we have very little evidence compared to what would be expected.”

In dismissing arguments that destruction of the data in question was covered by the “Safe Harbor” provision under FRCP 37(e), the court stated: “[o]ther than the patent application and the executable file, it does not appear [Producing Party] has produced any significant tangible discovery on the topics where information is conspicuously lacking.”

Ultimately the court found that Producing Party had breached its duty to preserve relevant data. It appears from the information above that the dearth of critical documentation from the Defendant’s productions was a significant contributor to the ruling, but the court does not explain the weight to which it assigned this as an element in its ruling.

Posted in 10th Circuit, Best Practices, Case Summary, D. Utah, Data Custodians, Data Management, Data Retention Practices, Document Retention, Duty to Preserve, FRCP 37(e), Good Faith, Information Governance, Magistrate Judge David Nuffer, Reasonable Anticipation of Litigation, Safe Harbor, Source Code, Spoliation | 1 Comment »

Case Blurb: Bright; Court Discusses Company’s Retention Practices of Surveillance Tapes and Spoliation

Posted by rjbiii on September 9, 2008

This appeal concerns a slip and fall accident that took place at the Plaza Extra supermarket in Estate Sion Farm, St. Croix on June 20, 2004. […]

The Superior Court granted summary judgment in favor of Plaza, holding that, because [Plaintiff] Bright failed to provide any evidence that Plaza knew or should have known about the substance on the floor, no reasonable jury could find that Plaza had breached its duty to Bright as a matter of law. The instant appeal followed. […]

Bright’s fall was captured on Plaza’s closed-circuit video surveillance system, which is comprised of both a digital hard drive that records only a finite amount of data before reusing itself and a video recorder. The digital footage is automatically recorded over every few weeks unless it is manually copied from the digital hard drive to the video recorder. At his June 2005 deposition, Plaza’s manager testified that he examined the footage of Bright’s fall immediately after being notified of her fall, the video failed to show anything visible on the floor at the time of the fall. Concluding that Bright “probably tripped on herself,” the manager testified that he elected not to review or copy any of the footage prior to or after the fall. He also testified that the store had no set procedure for retaining video footage of slip and fall accidents and that the store simply retained the footage of the actual fall in Bright’s particular circumstance. […]

Therefore, the record contains no video evidence indicating when or if someone spilled anything on the floor prior to Bright’s fall. The only evidence in the record which indicates length of time is Bright’s deposition testimony. When asked if anything indicated how long the substance had been there, she testified that there was a little dust on the drops which indicated to her that it had to be there “for a little while.” […]

Plaza filed a motion for summary judgment asking the trial court to find that Bright had failed to establish that Plaza had actual or constructive notice of any substance on the floor that may have caused Bright’s injuries. Bright opposed the motion arguing she was entitled to a spoliation inference because Plaza had intentionally erased the video footage depicting what had transpired prior to and after her fall. Plaza replied to the opposition by contending that Bright failed to show that the store had engaged in bad faith, malicious, or fraudulent conduct, which is a prerequisite to the application of a spoliation inference. In a Memorandum Opinion, dated June 11, 2007, the Superior Court granted summary judgment in favor of Plaza, holding that Bright failed to provide sufficient evidence that Plaza knew or should have known of the substance on the floor and failed to demonstrate fraud or deceit that would permit deliberation on the availability of the spoliation inference. Bright timely filed her Notice of Appeal… […]

On appeal, Bright contends that Plaza’s destruction of the surveillance video establishes constructive notice because it permits a jury to infer that the video would have shown that the liquid was on the floor long enough for Plaza to have discovered it prior to her fall. According to Bright, the adverse inference created by Plaza’s destruction of the tape defeats summary judgment. Plaza contends that Bright is not entitled to a spoliation inference, and that even if she was, common law precludes the use of a spoliation inference to substitute for actual evidence supporting constructive notice. According to Plaza, a spoliation inference is improper where the evidentiary destruction was a matter of routine and was devoid of any fraudulent intent, and the inference cannot be utilized to establish an essential element of a negligence claim. […]

There is no dispute in this matter that the recorded surveillance footage was at all times within the exclusive possession and control of Plaza. The parties dispute, however, whether there was an actual suppression or withholding of evidence. Bright argues that Plaza intentionally destroyed the recorded surveillance footage in order to conceal evidence which was unfavorable to Plaza. Plaza argues that as a regular course of business, the store only maintains the relevant footage of any recorded fall. Therefore, according to Plaza, the failure to retain footage of the time preceding and following the fall was neither fraudulent nor intentional. The trial court found that “Bright offer[ed] no evidence that Plaza … attempted to perpetrate a fraud or that Plaza’s conduct was anything other than a matter of routine.” (App. at 12-13.) The evidence, however, belies the trial court’s determination. […]

During his deposition, Plaza’s manager testified that he retained only the portion of the surveillance footage which captured Bright’s fall. (App.211-12.) The manager’s conscious and intentional choice not to review or retain the recorded footage prior to or after the fall resulted in the destruction of relevant evidence. […]

We find this case to be very analogous to Stevenson v. Union Pacific R.R. Co., 354 F.3d 739 (8th Cir.2004). In analyzing a routine document retention policy, the Eighth Circuit Court of Appeals applied the Gumbs test and held that the trial court did not abuse it discretion in permitting a spoliation inference as a sanction for the defendant’s pre-litigation destruction of a voice recording. Id. at 747-48. Similar to Plaza, the Stevenson defendant learned of the accident shortly after it occurred and began his investigation immediately thereafter, but failed to take the steps necessary to preserve the recorded evidence. Also like Plaza, the Stevenson defendant had previously been involved in several accidents and knew that such recorded evidence would be relevant to any potential litigation. FN1 Additionally, Bright, like the Stevenson plaintiff, was prejudiced by the destruction of the evidence because there is virtually no other evidence establishing the dispositive issue. In concluding that fraudulent intent was present, the Eighth Circuit Court of Appeals recognized that the case “tests the limits of what [the court is] able to uphold as a bad faith determination.” Id. Nevertheless, the particular circumstances present in that case, which were similar to those present in the case before this Court, warranted a spoliation inference.

FN1:Remarkably, in another case currently before this Court, Plaza’s management applied a different procedure in determining what portion of a recorded slip and fall accident to retain. In Williams v. Plaza Extra, S.Ct. Civ. No.2007/118, where the recorded surveillance footage appeared to vindicate Plaza, management retained a large portion of the footage, including footage from depicting a custodian cleaning the area twelve minutes prior to the fall and several minutes of footage after the fall. The fall in Williams occurred in the same store on April 8, 2002, nearly two years before the fall at issue in this case. […]

While this Court does not find any statutory or case law indicating precisely what portion of surveillance footage capturing a slip and fall accident should be retained, common sense dictates the retention of comprehensive surveillance footage of any accident, including a reasonable period of time preceding and following the accident.

Bright v. United Corp., 2008 WL 2971769 (V.I. July 22, 2008).

Posted in 3d Circuit, Adverse Inference, Case Blurbs, Data Retention Practices, Data Sources, Document Retention, Justice Edgar D. Ross, Sup. Ct. Virgin Islands, Video Files | Leave a Comment »

Blogging LegalTech West 2008: Litigation Holds

Posted by rjbiii on June 29, 2008

The second, and for me last, presentation of the day was “Ready…Set…Preserve: Navigating the Legal Hold Process and Technology. The panel consisted of Patrick Oot of Verizon, Kraft’s Chief Counsel Theodore Banks, and American Electric Power’s Kamal Kamara.

The rule of thumb that triggers a legal hold is (say it with me class), the date when litigation may be reasonably anticipated. The very last date that can be justified for the issuance of a legal hold is the date the complaint is actually filed. The first step to implementing a legal hold is to determine the identity of the key players. However, before the hold is even necessary, some preemptive actions should have been addressed. Litigation readiness best practices suggest that record management training for all employees is important. These rules apply:

  1. The guidelines employees study must be related to their jobs.
  2. Information on how to comply with relevant policies should be easy to find. They should have access to manuals, or intranet web sites with the necessary guidelines.
  3. Training should be consistent, and reinforced periodically.

The purpose of the legal hold is to stop destruction of potentially responsive information, identify that data, and save it. Employees should understand the consequences of failing to comply, and where to get help when they have questions.

Mr. Banks explained that for Kraft, the legal hold was triggered later than would be appropriate for some others, because of the nature of the complaints his company confronted, and the design of its information system. Much of the data needed was historical information that was preserved anyway, often for reasons of compliance with federal retention laws.

Mr. Kamara described his company’s home-built lit hold solution as being similar to e-vite. All three companies used custom built solutions rather than “off the shelf” products.

Some important points: acknowledgment by recipients is an essential component to a lit hold system; audit trails and the availability of reports is important.

I enjoyed this presentation more than the previous session. The panelists were good, but I also got to see screenshots of various systems, which I found interesting. The next step now is to see how technology can be used not only to issue notice of a hold, but to also take action to prevent actual destruction of information.

Posted in Best Practices, Data Custodians, Document Retention, Duty to Preserve, Industry Events, Litigation Hold, Trends | 1 Comment »

Case Blurb: Benefirst; Good Cause Analysis-Seventh Factor

Posted by rjbiii on February 28, 2008

[Ed.-The court found that medical claim forms, requested by Plaintiff, would not be reasonably accessible. It then launched into an analysis to determine whether plaintiffs proved that “good cause” existed to compel production notwithstanding the accessibility issue. This blurb is from the analysis of seven factors. These are factors four and five: The likelihood of finding relevant, responsive information that cannot be obtained from other, more easily accessed sources; and Predictions as to the importance and usefulness of the further information;]

The parties resources.

While the Defendant has understandably engaged in a lengthy discussion of the cost of production, neither party has provided the court with any information about their resources. BeneFirst does represent that they no longer have a full time staff and that in order to retrieve the images that they would have to hire temporary help. At the same time, as previously noted, the Plaintiffs have significantly narrowed the breadth of their request and therefore, the time and cost for BeneFirst to produce the requested information should be significantly reduced.

Given the lack of information available to the Court, this factor is neutral.

W.E. Aubuchon Co., Inc. v. BeneFirst, LLC, 245 F.R.D. 38 (D. Mass. 2007)

Posted in 1st Circuit, Case Blurbs, Cost of Discovery, Cost Shifting, D. Mass., Discovery Requests, Document Retention, Duty to Disclose, Duty to Produce, FRCP 26(b), Good Cause, Magistrate Judge Timothy S. Hillman | Leave a Comment »

Case Blurb: Benefirst; Good Cause Analysis-Two factors on redundancy and availability of data

Posted by rjbiii on December 28, 2007

[Ed.-The court found that medical claim forms, requested by Plaintiff, would not be reasonably accessible. It then launched into an analysis to determine whether plaintiffs proved that “good cause” existed to compel production notwithstanding the accessibility issue. This blurb is from the analysis of seven factors. These are factors two and three: The quantity of information available from other and more easily accessed sources; and The failure to produce relevant information that seems likely to have existed but is no longer available on more easily accessed sources.]

The gravamen of the Plaintiffs’ Amended Complaint is that BeneFirst mishandled their employees’ medical claims by failing to determine eligibility for payment, the availability of co-payment and co-insurance, and subrogation. The processing of the claim forms was presumably the mechanism for making these determinations. While the Amended Complaint and subsequent pleadings are silent, the relevant time period appears to be from 2001 to 2004.*

*I so find because this litigation was commenced in 2005 and it seems safe to assume that none of the original claim forms and medical bills were still in existence at that time (if they were, BeneFirst presumably would have retained them).

According to BeneFirst, the original claim forms and medical bills were processed by hand, kept for 60 days, converted to a digital image and then destroyed. Therefore, digital images which constitute the information requested by the Plaintiffs are in the custody and control of BeneFirst and are not available through any other source.

These factors favor the Plaintiffs.

W.E. Aubuchon Co., Inc. v. BeneFirst, LLC, 245 F.R.D. 38 (D. Mass. 2007)

Posted in 1st Circuit, Case Blurbs, D. Mass., Discovery Requests, Document Retention, Duty to Preserve, Duty to Produce, FRCP 26(b), Good Cause, Magistrate Judge Timothy S. Hillman, Unreasonably Cumulative | Leave a Comment »

PC World article discusses data management

Posted by rjbiii on November 21, 2007

Although the main theme of the story is about the challenges of data management, it begins with the statement that many don’t trust the technology behind EDD and document management:

But Robert Eisenberg, vice president of e-discovery consulting at Capital Legal Solutions of Falls Church, Virginia, raised concerns about technologies such as software that manages document retention and litigation workflow. “I don’t want to sound like a Luddite, but I actually think there’s a danger on relying on tools that are supposed to be doing things that you’re not monitoring,” he said.
Many companies are looking for the Holy Grail of technology that takes care of e-discovery issues without much human intervention, but often what’s needed when a company is facing a lawsuit and needs to track down information is face-to-face contact, Eisenberg said. “The convergence we need is a convergence of grey matter, the way people think of an existing technology, rather than looking for that Holy Grail,” he said. “There’s a danger in even looking for it.”

There are a couple of points I’d like to make here. First, I agree that automating the process as much as possible is an important goal, but I don’t consider it the holy grail. That title, in my humble opinion, is reserved for actually processing files (all file types, thank you) correctly. I’ve seen applications that can’t reach embedded files, I’ve seen some that can’t handle contained files (files within zip files, for example); I’ve seen databases dismissed without being searched; etc…etc…etc…

Get the processing down while you’re traveling the yellow brick road to automation.

There are those progressives who think that the Mr. Eisenbergs of the world need to get with the program:

[Orca Tech co-founder Herbert] Roitblat also made a pitch for tools that search and group documents when corporations are required by courts to save information. “The days of going through page by page by page … those days are gone,” he said. “Nobody can afford it.”

It is true that so-called linear review is often unmanageable in many cases, but I am, nevertheless, sympathetic to those attorneys who want their eyes on every document…after all, they are dealing with the very evidence from which they will build their case in court.

[HT: Information Governance Engagement Area]

Posted in Articles, Data Management, Document Retention | Leave a Comment »

New U.K. anti-terror law used to demand encryption keys

Posted by rjbiii on November 15, 2007

A law billed by the British government as a tool for fighting terrorism has been turned against an animal rights activist, who has been informed that she must provide encryption keys so that police may decrypt files on her computer. If she fails to comply, she could face two years in jail. The twist in this story is that she claims that she never stored any encrypted files on her computer:

The contentious measure, introduced after years of consultation, was sold to Parliament as a necessary tool for law enforcement in the fight against organised crime and terrorism.

But an animal rights activist is one of the first people at the receiving end of a notice to give up encryption keys. Her computer was seized by police in May, and she has been given 12 days to hand over a pass-phrase to unlock encrypted data held on the drive – or face the consequences.

The woman, who claims to have not used encryption, relates her experiences in an anonymous posting on Indymedia.

[HT: Slashdot]

Posted in Articles, Document Retention, Encryption, Privacy | Tagged: , | Leave a Comment »

Case Blurb: APC Filtration; Court explains why disposal of a computer containing discoverable information was improper

Posted by rjbiii on October 23, 2007

In order for [the] duty [to preserve the computer] to exist, the computer and its contents must have been discoverable under Rule 26 and [possessors of the computer] Becker and SourceOne must have had reasonable notice that the computer or its contents could be the subject of future discovery requests. In this case, both conditions are met.

Under the liberal standard of discovery relevance, material is discoverable if it is admissible or “reasonably calculated to lead to admissible evidence.” Fed. R. Civ. P. 26(b)(1). In this case, the allegations that support APC’s claims center on Becker’s conduct in communicating with various suppliers and customers within the vacuum filter and bag industry as well as his alleged misappropriation of proprietary information that was stored in computerized form. Becker stated in his affidavit that he used the computer for both business and personal reasons. Given the nature of the allegations and Becker’s use of the computer for business purposes, the contents of the computer were clearly discoverable.

Furthermore, Becker and SourceOne had reasonable notice that the computer could become the subject of discovery requests at the time that Becker threw the computer away. APC’s complaint was filed on March 15, 2007, and counsel for Defendants made his initial appearance on March 19, 2007. Becker admits to throwing the computer away sometime after March 21, 2007. As discussed above, notice of a complaint can put a litigant on notice that evidence is likely to be requested, triggering the duty to preserve. Cohn, 1995 WL 519968 at *5. In this case, Becker had notice based on the nature of APC’s allegations that the computer could become part of the discovery process. Because the computer’s contents were discoverable and Becker had reasonable notice that the computer could become the subject of a discovery request, Becker had a duty to preserve the computer as evidence prior to the date on which he discarded it. Therefore, this Court may impose sanctions pursuant to its inherent power.

APC Filtration, Inc. v. Becker, 2007 U.S. Dist. LEXIS 76221 (N.D. Ill. Oct. 12, 2007)

Posted in 7th Circuit, Case Blurbs, Data Management, Document Retention, Duty to Preserve, FRCP 26(b), Magistrate Judge Martin C. Ashman, N.D. Ill. | Tagged: , | Leave a Comment »

Kroll Ontrack has new tool for erasing data

Posted by rjbiii on October 16, 2007

Kroll Ontrack has issued a press release saying that the company has developed a new, “enterprise-wide erasing” product.

Helping companies protect against security breaches and comply with laws and regulations regarding data retention and privacy, Ontrack Eraser deletes all traces of information stored on targeted media, making recovery impossible.

If it does all the press release claims, it will be a highly useful tool.

Posted in Articles, Data Management, Document Retention, Tools | Tagged: | Leave a Comment »