Post Process

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Archive for the ‘FRCP 34’ Category

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%.

Conclusion:
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: Cammarata; Duty to Preserve

Posted by rjbiii on March 29, 2010

Generally, the duty to preserve arises when a party “‘has notice that the evidence is relevant to litigation or . . . should have known that the evidence may be relevant to future litigation.'” Generally, the duty to preserve extends to documents or tangible things (defined by Federal Rule of Civil Procedure 34) by or to individuals “likely to have discoverable information that the disclosing party may use to support its claims or defenses.”

See case summary here.

Rimkus Consulting Group, Inc. v. Cammarata, 2010 U.S. Dist. LEXIS 14573, at *18-19 (S.D. Tex. Feb. 19, 2010)

Posted in 5th Circuit, Case Blurbs, Duty to Preserve, FRCP 34, Judge Lee H. Rosenthal, S.D. Tex. | Leave a Comment »

Case Blurb: Mformation Technologies; Court discusses document dumps and the meaning of ‘maintained in the usual course of business’

Posted by rjbiii on November 29, 2009

Courts have struggled with the interpretation of Fed. R. Civ. P. 34 which allows production as documents are maintained in the usual course of the producing party’s business. In attempting to define the requirements that should be place on a producing party who chooses to produce documents in the manner they are normally maintained, the courts have attempted to balance the burden on the respective parties. Generally, courts have concluded that simply dumping a mass of documents on the requesting party may not satisfy the rule’s requirements, even though the undifferentiated mass of documents are in the same form as maintained by the producing party.

Espy v. Mformation Techs., 2009 U.S. Dist. LEXIS 81832, 23-24 (D. Kan. Sept. 9, 2009)(citations removed).

Posted in 10th Circuit, Case Blurbs, D. Kan., Data Dump, Form of Production, FRCP 34, Magistrate Judge Donald W. Bostwick | Leave a Comment »

Case Summary: MFormation Technologies; Court looks at how data is ‘Ordinarily maintained’

Posted by rjbiii on November 27, 2009

Espy v. Mformation Techs., 2009 U.S. Dist. LEXIS 81832 (D. Kan. Sept. 9, 2009)

Factual Background: Plaintiff (Brian Espy) brought this action to recover commissions for sales made while in the employ of defendant company (Mformation). Plaintiff resigned from the company because of disagreements over the method of calculating those commissions. There was also a dispute regarding the value of the accounts for which the commissions would be paid.

In late 2007 or early 2008, defendant company was positioning itself for sale. As part of that process, the company established a secure website to which it published much confidential financial information about itself. Items published included such things as articles of incorporation, board and stockholder meeting minutes, past financial statements, and future financial forecasts of revenues. Mformation limited access to this website to companies and individuals who obtained a secure password from Mformation. The website collected information as to who entered the website and when, not only as to the company that was making the contact, but more specifically the individuals who accessed the site.

Plaintiff contends that the company would have had to have include information on the value of the Clearwire account (the largest of Plaintiff’s accounts for which he sought commissions), and he sought to obtain names of prospective purchases who may have been privy to this information. During deposition, Mformation CEO Mark Edwards refused to provide this information, claiming that the information was privileged and confidential, and that the request was not made to lead to the discovery of admissible evidence. Defendants did, however, state that “all of the representations made to all the third parties are contained in a CD of the secure website which Defendants finally located and provided to the court for in camera inspection.”

Before the court were multiple motions by plaintiff to compel production, and a motion that sanctions be imposed for failure to produce documents.


Identity of Third Parties & continuation of Edwards’ deposition

Defendants represented to the court that all information provided to prospective third-party purchasers about the value of the company was located on the secure website, and that no further materials existed from follow-up discussions or meetings. Certain emails which were attached as exhibits convinced the court that these representations were false, despite defendants’ continued assertions that of the accuracy of those statements. In light of this, the court required defendants to produce to Plaintiff the CD containing the contents of the secure website and certain hard copy documents that were previously produced to the court for in camera inspection.

Defendants argued that because these materials were confidential and proprietary, they should be allowed to produce a redacted version of the material, or have a special master appointed at Defendants’ expense to govern this particular dispute. The court disagreed, however, saying that while it was understood that these materials were confidential, they were also dated, as none of the information includes current financial information or projections.

The court also granted Plaintiff the right to depose any prospective third party purchaser had any direct communications with Mformation or its representative. The court accepted defendant’s offer to produce its 30(b)(6) witness for a deposition, scheduled earlier but cancelled due to that witness’s illness. Finally, in light of the fact that it appeared that responsive data associated with third party prospective purchasers had not been produced by defendant, the court ordered defendant to go back and review its files and records and produce anything it missed first time around.


Documents presented to board of directors concerning Clearwire contract

The court noted that it appeared that documents associated with the Clearwire contract not necessarily involving representations to third parties. The court stated that such documents presented to it for in camera review, in the form of a presentation made to the board of directors during a meeting of that group. Defendants argue that they produced any relevant documents in this category, but the judge noted that they presumably did not produce this document, due to its presence in the in camera review. The court ordered the defendants to produce any such documents that might have been missed in previous productions.

Financial records of Mformation and receipt of payments from contracts booked by Plaintiff

Plaintiffs requested that all documents related to the financial condition of Mformation between the months of December 2007 through May 2009. Defendant’s objected that this request was overly broad and burdensome, and not calculated to lead to the discovery of admissible evidence. Plaintiffs argued that it was entitled to the information because of Defendant’s position (either explicit or implied) that it cannot pay certain commissions. The court agreed with Defendants that the request was extremely broad and could encompass a substantial volume of records, and concluded that plaintiffs reason were not sufficient to mandate a production of all documents encompassed in the request. The court decided to require all financial information concerning the receipt of payments from all contracts for which Plaintiff is seeking commissions. The rub here is that Defendant claimed that it had already produced these documents. The court seemed to express its concern about being able to identify these documents within the large document collection already produced to plaintiff.

Plaintiff complained that defendant’s documents were produced in electronic format, without bates stamps and not categorized in response to the specific requests or interrogatories and that this caused Plaintiff difficulty in accessing and reviewing these records. Defendants responded to this complaint by representing that the documents were produced in the manner in which they are stored and kept in the usual course of the business.

The court then discussed the interpretation of FRCP 34, which allows production as documents are maintained in the usual course of the producing party’s business. The court noted that in attempting to define the requirements that should be place on a producing party who chooses to produce documents in the manner they are normally maintained, the courts have attempted to balance the burden on the respective parties. Generally, courts have concluded that simply dumping a mass of documents on the requesting party may not satisfy the rule’s requirements, even though the undifferentiated mass of documents are in the same form as maintained by the producing party. The court concluded that Defendants should be required to specifically identify, by index or otherwise, those specific financial records that relate to receipts of payments from all contracts for which Plaintiff is seeking commissions, and to specify, by index or otherwise, any financial records of Mformation, from December 2007 through May 2009, that specifically relate to treatment of those contracts, specifically including the Clearwire contract. The court also ordered Defendants to produce documents associated with a separated, but related, request to produce certain financial records not previously provided, some of which were unavailable at the time of the request.

Plaintiff’s Request for Sanctions
The court then turned its attention to Plaintiff’s two motions for sanctions. First, Plaintiff requested that he be reimbursed for all costs associated with discovery from Clearwire, including costs for service of a subpoena to Clearwire and the costs for any deposition of Clearwire, including travel to Seattle, court reporter fees and attorneys fees at $ 250 per hour. Plaintiff also sought all expenses associated with the continuation of the depositions of [Mformation CEO] Mark Edwards and the Rule 30(b)(6) deposition of Defendant , including travel to Defendant’s location in New Jersey, court reporter costs and attorneys fees.

In its second motion, Plaintiff repeated its earlier requests, Plaintiff also sought an order striking Defendants’ responsive pleadings and entering judgment in Plaintiff’s favor and the costs associated with the filing of pleadings concerning the discovery dispute.

The court reiterated its determination that that Defendant be required to produce Mark Edwards for the continuation of his deposition and to produce Mformation’s Rule 30(b)(6) witness for deposition, were to be taken at Defendants’ cost, and that all travel and court reporter’s expenses for both of these depositions were the responsibility of Defendants. The court also ordered Defendants to pay attorneys’ fee for the time spent in completing the deposition of Mark Edwards, capped at $1,250.

The court, however, did not grant Plaintiff’s its request for attorneys fee for conducting the Rule 30(b)(6) deposition of Mformation, as this deposition was merely delayed due to the witness’s illness. This is especially true when one considers that Defendants have voluntarily offered to bring the 30(b)(6) witness to Kansas City for deposition. The court also ordered Defendants to pay he costs and attorneys fees required to file such motions. The court denied the request for all other expenses, without prejudice for renewal in the future.

Motions for additional sanctions were denied.

Posted in 10th Circuit, Case Summary, D. Kan., Data Dump, Discovery Requests, FRCP 30(b)(6), FRCP 34, Magistrate Judge Donald W. Bostwick, Objections to Discovery Requests, Overly Broad Request, Relevance, Sanctions | Leave a Comment »

The difference between an archive and a backup

Posted by rjbiii on December 26, 2008

Computer Technology Review has posted an article describing the effect of the FRCP on business and corporate IT departments. The article contains the now familiar refrain to proactively manage your digital resources. One nice blurb, though, discusses the difference between archives and back-ups:

This underscores the difference between an archive and a backup system. An archive in today’s regulatory and litigation preparedness sense is an actively managed set of information kept as a business record when needed and disposed of when not. Backups on the other hand are designed for near term disaster recovery and not long term preservation. But many companies have suspended the rotation of their backup media, sometimes for years, because of a fear of sanctions or even bad press resulting from the improper deletion of this potentially discoverable data. What should have been a disaster recovery mechanism is now functioning as a very inefficient archive of all historical information. This becomes magnified as companies inherit backup media through merger and acquisition. In many instances the current IT staff has no idea what data exists upon those tapes.

Posted in Articles, Back Up Tapes, Best Practices, Compliance, Data Management, Data Retention Practices, FRCP 26, FRCP 34 | Tagged: , , | Leave a Comment »

Case Blurb: R & R Sails; The term ‘document’ includes ESI

Posted by rjbiii on June 17, 2008

[Requesting Party’s] first Request for Production of Documents, served upon [Producing Party] on July 13, 2007, provided a boilerplate definition of “document” which did not provide clear notice that [Requesting Party] sought discovery from electronic sources. However, the discovery of documents “applies to electronic data compilations,” as announced by the Advisory Committee Notes to the 1970 Amendments to Federal Rule of Civil Procedure 34.

R & R Sails Inc. v. Ins. Co. of Pa., 2008 WL 2232640 at *4 (S.D. Cal. Apr. 18, 2008 )

Posted in 9th Circuit, Case Blurbs, FRCP 34, Magistrate Judge Louisa S. Porter, S.D. Cal. | Tagged: , , , , , , | Leave a Comment »

Case Blurb: Perfect Barrier; “native” e-mail format production appropriate

Posted by rjbiii on June 17, 2008

[Producing Party] produced the emails in electronic form on an disc that is computer accessible. Such discovery is clearly considered electronic discovery. Under Fed.R.Civ.P. 34(b)(2)(E)(ii),
[i]f a request does not specify a form for producing electronically stored information, a party must produce it in a form or forms in which it is ordinarily maintained or in a reasonably usable form or forms.
[Requesting Party] did not request that the emails be produced in a particular form, yet [Requesting Party] now asks this Court to force [Producing Party] to produce the electronic emails as Static Images with a bates-number identifier. [Producing Party] objects to this request because it would cost a substantial sum of money to convert the documents from the form in which the documents are normally kept, Native format, to Static Images.

[Producing Party] has already produced the emails on a disc in Native format. [Requesting Party] maintains the email documents in such a format. Fed.R.Civ.P. 34 only requires [them] to submit the emails in the format in which it keeps them, Native format, and nothing more. While it may be more convenient for [Requesting Party] to have the emails as Static Images, Fed.R.Civ.P. 34 does not provide that convenience is a basis for requiring electronic discovery to be produced in a different format than normally maintained. If [Requesting Party] wanted the emails as Static Images, it should have specified this request in its requests for production, which it did not do.

Furthermore, this Court finds that the emails produced on an electronic media such as disc is reasonably usable. [Requesting Party] can access, examine, and even print the communications. While [Requesting Party] may prefer to have them as Static Images, the burden to convert the emails to Static Images remains with [Requesting Party]. [Producing Party] complied with Fed.R.Civ.P. 34(b)(2)(E) and is required to do nothing more.

Perfect Barrier LLC v. Woodsmart Solutions Inc., 2008 WL 2230192 (N.D. Ind. May 27, 2008 )

Posted in 7th Circuit, Case Blurbs, Cost of Discovery, Cost Shifting, Discovery Requests, Duty to Produce, email, Form of Production, FRCP 34, FRCP 34(b), Magistrate Judge Christopher A. Nuechterlein, N.D. Ind. | Tagged: , | Leave a Comment »

Guideline (D. Kan): Form of Production

Posted by rjbiii on August 29, 2007

Parties and counsel are reminded that, under Fed. R. Civ. P. 34, if the requesting party has not designated a form of production in its request, or if the responding party objects to the designated form, then the responding party must state in its written response the form it intends to use for producing electronically stored information. U.S. Dist. Cts. (Kan), Guidelines for Discovery of Electronically Stored Information.

Posted in 10th Circuit, D. Kan., Discovery Requests, Form of Production, FRCP 34 | Leave a Comment »