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Electronic Discovery - Case Law

Anderson v. Crossroads Capital Partners, 2004 WL 256512 (D. Minn.). In a sexual
harassment and whistleblower suit, the defendant requested and obtained access
to the plaintiff’s personal computer. The defendant’s examining expert reported
that the hard drive found in the plaintiff’s computer had been manufactured
more than two years after the alleged events and that the plaintiff had recently installed
and used a file wiping program called “CyberScrub.” The Plaintiff, in response,
claimed that she had been using the same computer for throughout the
litigation despite changing the hard drive and disclaimed any intent to use Cyber-
Scrub to destroy potential evidence. The judge found the while plaintiff’s “exceedingly
tedious and disingenuous claim of naïveté... defies the bounds of reason,”
her behavior was not egregious enough to warrant dismissal. The court instead
would give the jury and adverse inference instruction during trial.

Danis v. USN Communications, 53 Fed. R. Serv. 3d 828 (N. D. Ill. 2000). The
failure to take reasonable steps to preserve data at the outset of discovery resulted
in a personal fine levied against the defendant's CEO.

GTFM v. Wal-Mart Stores, 49 Fed. Rules Serv. 3d 219 (S.D. N.Y., 2000). Defendant
counsel provided inaccurate information to the plaintiffs about computer records
early in discovery, and discoverable computer records were later destroyed.
The court ordered defendant to pay attorney’s fees and costs expended to litigate
the sanction motion and recover the data.

Keir v. UnumProvident, 2003 WL 21997747 (S.D.N.Y. Aug. 22, 2003). In an
ERISA class action suit, the parties agreed to a data preservation order after several
conferences. The order was very narrowly drawn and concentrated on preserving
six days of email records which were contained on the defendant's backup
tapes and hard drives. However, the defendant's upper management did not communicate
the order to its IT staff for nearly two weeks and most of its data management
functions had been outsourced to IBM, which failed to implement the
required preservation. While the court found that the defendant's failure to preserve
was unintentional, it criticized the defendant's poor compliance with the
preservation order. The court recommended that further action be taken to determine
the feasibility of retrieving the lost data and the extent of prejudice to the
plaintiffs in order for the court to fashion a remedy.

Kucala Enterprises, Ltd. v. Auto Wax Company, Inc., 2003 WL 21230605 (N. D.
Ill.) (Report and Recommendation dated May 27, 2003). In a patent infringement
case, the defendant repeatedly requested documents from the plaintiff, including
business records and correspondence from the plaintiff’s computer system. After
three motions to compel production, the defendant was allowed access to the
plaintiff’s computer to conduct an inspection. The computer forensics expert
conducting the inspection discovered that the plaintiff had used a commercially
available disk wiping software, “Evidence Eliminator,” to “clean” approximately
3,000 files three days before the inspection, and another 12,000 on the night before
the inspection between the hours of midnight and 4 a.m. Based on the totality
of the circumstances, the Magistrate Judge found that the spoliation was intentional
and recommended to the trial judge that the plaintiff’s case be dismissed
with prejudice, and that the plaintiff pay the defendant’s attorneys fees and costs
from the time the Evidence Eliminator was first used.

Landmark Legal Foundation v. Environmental Protection Agency, 2003 WL
21715678 (D. D.C.) (“Landmark II,” Memorandum Opinion and Order dated July
24, 2003). In a civil suit stemming from a FOIA request, the court issued a preliminary
injunction ordering that the EPA refrain from “transporting, removing, or
in any way tampering with information responsive” to the Plaintiff’s FOIA request.
Subsequently, the hard drives of several EPA officials were reformatted,
backup tapes were erased and reused, and individual emails were deleted. The
Plaintiff filed a motion for contempt. The court held that under the strict standards
of Rule 65, the order was clear and the data destroyed went “to the heart” of
the plaintiff’s claims. The EPA was found in contempt and ordered to pay attorney’s
fees and costs, but the court declined to hold several individuals and the
United States Attorney’s Office in contempt as well. Cf., Landmark I, under "Records
Management".

Lewy v. Remington Arms, 836 F. 2d 1104 (8th Cir. 1988). In a product liability
suit alleging defective design of rifles, documents concerning past consumer
complaints relevant to the suit were destroyed. The trial court issued an instruction
that the jury could infer that the destroyed documents would have provided
evidence against Remington (a "spoliation instruction"). Remington appealed,
claiming that the document destruction was routine, pursuant to the company's
three-year records retention schedule. The appeals court remanded the case back
to the trial court for a determination of whether a three-year records retention
schedule was reasonable, and whether suspension of the schedule when the lawsuit
was filed should have been required, whether or not the schedule was reasonable
in the ordinary course of business.

Linnen v. A.H. Robins, 10 Mass L. Rptr. 189 (Mass. Sup. Ct., 1999). Counsel
failed to adequately investigate their client's computer records and holdings, and
thereby failed to preserve relevant computer records. In the face of repeated representations
before the court that no relevant records existed, a spoliation inference
would be a reasonable sanction.

McGuire v. Acufex Microsurgical, 175 F.R.D. 149 (D. Mass. 1997). In an employment
case, the human resources director edited a word-processed report of an
internal investigation after a state administrative complaint was filed but before
suit was filed in federal court. While this action could be considered destruction
or alteration of discoverable evidence, it was within the director’s authority to do
so and not misconduct, and no harm occurred, given that an unedited version of
the document was produced from another computer source. However, the facts
surrounding the editing would be admissible.

Metropolitan Opera Association, Inc. v. Local 100, Hotel Employees and Restaurant
Employees International Union, et. al. 212 F.R.D. 178 (S.D. N.Y. 2003).
Contrary to counsel’s representations, the defendant had failed to conduct a reasonable
investigation to response to discovery requests, failed to prevent the de-
struction of documents, failed to adequately instruct the person in charge of
document collection, and shortly before a scheduled on-site inspection, had allowed
computers subject to discovery to be replaced with new computers. The
court found that the defendant’s behavior constituted a “combination of outrages”
and ordered judgment against the defendant with attorneys’ fees.
New York National Organization for Women v. Cuomo, 1998 WL 395320 (S.D.
N.Y.). Counsel have a duty to advise their client to take reasonable steps to preserve
records subject to discovery.

New York Nat’l Org. for Women v. Cuomo, 1998 WL 395320 (S.D.N.Y.). Counsel
have a duty to advise their client to take reasonable steps to preserve records
subject to discovery.

In Re Prudential Insurance Company of America Sales Practice Litigation, 169
F.R.D. 598 (D. N.J. 1997). In a major class action suit alleging deceptive sales
practices by insurance agents, the defendant agreed to suspend its usual records
retention schedule for sales literature nationwide. Each field office had a detailed
records management handbook which was updated often in the usual course of
business, but the order to suspend destruction of sales literature was communicated
by bulk email, routinely ignored by the field agents. This and the defendant's
pattern of failure to prevent unauthorized document destruction warranted
$1 million fine and court-ordered measures to enforce the document preservation
order.

Residential Funding Corp. v. DeGeorge Financial Corp., 306 F. 3d 99 (2d Cir.
2002) Remanding the trial court’s denial of a spoliation inference, the Second
Circuit holds that the trial judge has the discretion to consider “purposeful sluggishness,”
resulting in denial of access to email that may include discoverable
data, as equivalent to spoliation for Rule 37 purposes. Conduct need not be willful
and need not result in the physical destruction of the evidence to be sanctionable.

Strasser v. Yalamanchi, 783 So.2d 1087 (Fla Ct. App. 2001) (“Strasser II”).
While delaying discovery to obtain a protective order, the respondent claimed the
hard rive was damaged and had to be disposed of, circumstances which the court
found suspicious enough to allow a spoliation question to go to the jury. Cf.,
Strasser I, under "Scope of Electronic Discovery".

Thompson v. United States, 2003 WL 22963931 (D. Md.) (Memorandum and Order
dated December 12, 2003). In a suit against the Department of Housing and
Urban Development, the court entered an order under Rule 37(b)(2) precluding
the United States from calling certain witnesses until they either answered certain
outstanding requests for the production of email or demonstrated to the court’s
satisfaction that responsive email did not exist. Later, after the deadline set by the
court and on the eve of trial, the United States produced approximately 80,000 responsive
emails. The court acknowledged that electronic discovery carries burdens
that may trigger Rule 26(b)(2) balancing, when the burdens alleged are supported
by facts. But when no such facts are presented, sanctions for failure to respond
to discovery requests are appropriate. In determining whether evidence
preclusion is an appropriate sanction, the court applied a five-part test:

1. surprise to the party against whom the evidence would be entered
2. ability of that party to cure the surprise
3. extent of possible disruption to the trial
4. importance of the evidence
5. explanation for failure to produce the evidence in discovery.

Applying these factors, the court ordered that the United States be precluded from
entering any of the email into evidence and that United States attorneys be forbidden
from using any of the email in preparing witnesses. The plaintiffs would be
allowed to use the emails as evidence if they so chose, and were invited to move
for costs and attorney’s fees necessitated by last-minute review of the emails for
trial. In addition, if evidence from the trial regarding the non-production of these
emails justified it, the plaintiffs were invited to move for contempt of court
against the United States.

Trigon Insurance v. United States, 204 F.R.D. 277 (E.D. Va., 2001). In a corporate
taxpayer suit against the United States, the United States hired a litigation
support firm, which in turn hired experts to act as consultants and testifying experts.
The litigation support firm had a policy under which all email communications
with experts and draft reports were destroyed. The court held that under the
facts of this case, those communications and drafts would have been discoverable,
and the United States was responsible for its litigation support firm’s intentional
spoliation. Adverse inferences regarding the content of the destroyed electronic
documents were appropriate.

Wiginton v. CB Richard Ellis, Inc., 2003 WL 22439865 (N.D. Ill.). In a putative
class action alleging sexual harassment, plaintiff counsel sent a detailed, fourpage
letter to the defendant’s general counsel, requesting the defendant to halt all
destruction of potential paper and electronic evidence. Several months later the
parties agreed to a joint data preservation order which was endorsed by the court.
However, prior to the entry of the order, the defendant followed its routine document
management program, which resulted in the destruction of some email
backup tapes and employee hard drives, including that of the plaintiff’s former
supervisor. The plaintiff filed a motion for a sanctions for spoliation and a blanket
data preservation order going forward. The magistrate judge held that the plaintiff’s
initial letter did not, in itself, trigger any duty to preserve evidence or even a
duty to respond, but served to inform the defendant of the possible scope of preservation
necessary, which was beyond the action taken by the general counsel at
the time. The judge heard evidence on the nature and extent of the defendant’s IT
system and the cost of routine backups, and took note of the fact that backups
were designed for disaster recovery purposes only. However, the judge held that
simple assertions of burden and cost do not excuse “complete failure to perform
any search” and constitute “willful blindness.” Therefore, the judge found that the
defendant “wilfully and intentionally” violated the duty to preserve evidence.
Turning to sanctions, the judge did not find the requisite degree of bad faith or
fault to support a sanction of default. On the lesser possible sanction of a spoliation
inference, the recommended that the motion be denied without prejudice,
pending further investigation of the extent and nature of the data loss.

William T. Thompson Company v. General Nutrition, 593 F. Supp. 1443 (C. D.
Cal. 1984). The court entered default against the defendant for destroying computer
records subject to discovery.

Bethea v. Comcast, 218 F.R.D. 328 (D.D.C. 2003). In an employment discrimination
suit, the defendant stated that after making a diligent search, it had no documents
responsive to one of the plaintiff’s requests for production. Stating that it
“finds this assertion incredulous,” the plaintiff moved to allow inspection of the
defendant’s computer system and copying of relevant documents. Magistrate
Judge John Facciola denied the plaintiff’s motion, as it was not supported by any
evidence, or even allegation, that the defendant had not produced all the responsive
information in its custody, and was based instead on a vague assertion that a
“qualified person” may be able to retrieve additional responsive information from
the computers.

Byers, et al. v. Illinois State Police, et al., 53 Fed. R. Serv. 3d 740 (N.D. Ill.
2002). Plaintiffs in a sex discrimination case requested discovery of email backup
tapes going back eight years. Citing Rowe Entertainment and McPeek, among
other cases, the court narrowed the request and ordered the plaintiff to assume the
cost of restoring the data, including obtaining the necessary software license.

Anti-Monopoly v. Hasbro, 1995 WL 649934 (S.D. N.Y.). "It is black letter law
that computerized data is discoverable."

Fennell v. First Step Designs, 83 F. 2d 526 (1st Cir. 1996). Discovery of computer
hard drive not justified by mere supposition that relevant evidence might be
found.

In re Ford Motor Company, 2003 WL 22171712 (11th Cir. 2003). In a design defect
suit against Ford Motor Company, the district court granted the plaintiff’s
motion to compel direct access to Ford’s extensive dealer and customer contact
databases without a hearing and before Ford had responded to the motion.
Granting a writ of mandamus to vacate the district court’s discovery order, the
Court of Appeals held that Fed. R. Civ. P. 34(a) allows the requesting party to inspect
and copy data “resulting from the respondent’s translation of data into reasonably
useable form.” This allows the respondent to search its records to produce
the requested information, but does not normally allow the requesting party to
perform the search itself. Absent any finding by the district court that Ford had
failed to comply with the original discovery request, any discussion of Ford’s objections
to the requested discovery, and any protocols or limits on the scope of the
search, the appeals court found that the district court had abused its discretion.

Marcin Engineering v. Founders at Grizzly Ranch, 219 F.R.D. 516 (D. Colo.
2003). In a construction engineering suit, the defendant’s motion for an extension
of time for discovery of the plaintiff expert’s computer drafts and preliminary
work was denied, as the motion came five days before the deadline for expert disclosure
and the defendants had delayed reviewing paper materials originally produced
to them for five months. Delay and carelessness in requesting electronic
discovery are not compatible with the showings of diligence and good cause necessary
to extend discovery deadlines or delay summary judgment under Rule
56(f). Further, the defendant had been repeatedly advised by the Court that its
proposed discovery “when considered in the light of the amounts claimed as damages,
made no economic sense.”

McPeek v. Ashcroft, 202 F.R.D. 31 (D. D.C., 2001). Retrieval of specific records
from computer backup tapes is not within the ordinary and foreseeable course of
business, but the restoration of a small sample of the backup tapes will be ordered
to determine whether the backup tapes contain relevant discoverable information
not available from any other source.

McPeek v. Ashcroft, 212 F.R.D. 33 (D. D.C. 2003) (“McPeek II”) Following up
on a previous ruling in the same case, Magistrate Judge Facciola held that after
ordering “sampling” of a large collection of backup tapes, the resulting data did
not support further discovery of any but one of the tapes. The opinion includes a
detailed description of the sampling methods used to reach the conclusion.

Medical Billing Consultants, Inc. v. Intelligent Medical Objects, Inc., 2003 WL
1809465 (N. D. Ill.) (Memorandum Opinion and Order dated April 4, 2003). In a
copyright and trade secret appropriation case, the defendants moved to allow onsite
inspection of the plaintiff’s computers. The court held that absent any showing
that the plaintiff’s disclosures and responses to prior requests were inadequate
or that more evidence is likely to be discovered, the request would be denied as
unduly burdensome.

Stallings-Daniel v. Northern Trust Company, 52 Fed. R. Serv. 3d 1406 (N.D. Ill.
2002). In line with Fennell v. First Step Designs, the court denied the plaintiff’s
motion for wide-ranging discovery of the defendant’s email system, based solely
on the allegation that the defendant had mishandled email production in a previous,
unrelated case.

Strasser v. Yalamanchi, 669 So.2d 1142 (Fla Ct. App. 1996) (“Strasser I”). Access
to a computer hard drive for the purposes of discovery will be denied when
the requesting party cannot demonstrate the likelihood of retrieving purged information
and cannot show that access is the least intrusive manner to acquire information.
Cf., Strasser II, under “Data Preservation and Spoliation”.

Wright v. AmSouth Bancorporation, 320 F. 3d. 1198 (11th Cir. 2003). In a very
brief opinion, the 11th Circuit held that the trial court did not abuse its discretion
when it held that the plaintiff’s request for discovery of “computer diskette or tape
copy of all word processing files created, modified and/or accessed by, or on behalf”
of five employees of the defendant over a two and one-half year period was
not reasonably related to the plaintiff’s age discrimination claims, overly broad,
and unduly burdensome.

In re Cheyenne Software Securities Litigation, 1997 WL 714891 (E.D. N.Y.).
Routine recycling of computer storage media must be halted during discovery,
when that is the most reasonable means of preserving data available.

Heveafil Sdn. Bhd. v. United States, 2003 WL 1466193 (Fed. Cir.) (slip opinion
not to be cited as authority) The Federal Circuit affirmed the judgment of the
U.S. Court of International Trade in refusing to admit into evidence computerized
business records which, in the trial court’s view, were “at best, an unauthenticated
duplicate of a database which may have been generated in the ordinary course of
business.” The Circuit explained that the manufacturer “did not produce evidence
explaining how the copy was made, such as an affidavit by an employee with
pertinent knowledge verifying the accuracy of the database,” and that key source
documentation was not retained.

Kozlowski v. Sears, Roebuck, 73 F.R.D. 73 (D. Mass. 1976). In the days before
computers, Sears, Roebuck recorded all customer complaints about products on
index cards, which were organized by the name of the complainant with no crossindexing,
making it almost impossible to search across the vast collection for
complaints about the same or similar products. When Sears was sued for selling
children's pajamas made from highly flammable fabric, it argued that discovery of
all complaints about flammable pajamas would be unduly burdensome, and therefore
should not be allowed. The court held that Sears' was under an obligation to
answer the discovery request, stating that "to allow a defendant whose business
generates massive records to frustrate discovery by creating an inadequate filing
system, and then claiming undue burden, would defeat the purposes of the discovery
rules."

Landmark Legal Foundation v. Environmental Protection Agency, 2003 WL
21715677 (D.D.C.) ("Landmark I," Memorandum Opinion dated July 24, 2003).
After news articles appeared nationally claiming that the Environmental Protection
Agency (EPA) was trying to push through regulations before the Bush administration
took office, the plaintiffs filed a FOIA request seeking records about
the EPA's rulemaking activities in the months before January 20, 2001. Dissatisfied
with the response to the FOIA request, the plaintiffs filed suit. In particular,
the plaintiff's claimed that the EPA violated FOIA by not maintaining agency
email in a central file in "readily reproducible" form. The court disagreed, holding
that the EPA practice of printing out email and filing it in various files by subject
matter was a reasonable practice and did not violate FOIA. In addition, the court
held that the EPA's search for responsive documents was reasonable and adequate,
and that the plaintiff cannot require a particular search methodology in its
FOIA request. Finally, the plaintiff complained that the EPA had destroyed
documents subject to its FOIA request. The court held that while this was troubling,
FOIA is not a records management statute, and the document destruction
issue would have to be dealt with as a separate matter. Cf., Landmark II, under
“Data Preservation and Spoliation”.

Renda Marine, Inc. v. United States, 58 Fed. Cl. 57 (2003). In a contract dispute
filed by a marine dredging contractor against the US Army Corps of Engineers,
the plaintiff moved to compel production of backup tapes and for permission to
make a bitstream image of contracting officer’s hard drive, based on admissions
by the Corps that it did not search hard drives or backup tapes to answer previous
discovery requests, and by the contracting officer that he routinely deleted emails
before and after suit was filed. The plaintiff also requested that, as a sanction for
spoliation, the Corps be ordered to pay costs associated with recovery of deleted
emails from the backup tapes and hard drive. The Corps countered that spoliation
could not be found where the Corps followed its records management program,
did not act in bad faith, and where there was no showing that evidence relevant
and material to the defendant’s case had been destroyed. The court found that the
Corps’ records management program was inconsistent with its obligations to preserve
evidence when litigation is reasonably anticipated, which in this case was
two years before suit was filed. The Corps was ordered to produce the backup
tapes at its own expense and to allow creation of the bitstream image of then hard
drive.

Public Citizen v. Carlin, 184 F. 2d 900 (D.C. Cir. 1999). In promulgating the records
management schedule known as GRS 20, the National Archivist determined
that federal agency email could be migrated to archival media, and once migrated,
original messages left in native format on desktop computers and network servers
need not be preserved. The Archivist's migration plan preserved the content of the
records and all necessary information from which the provenance of the records
could be determined, although the archival media selected (in this case, paper) did
not allow for easy searching and sorting. The district court held that GRS 20 violated
the Records Disposal Act, 44 USC Section 3303a(d) (see Public Citizen v.
Carlin, 2 F. Supp. 2d 18 (D. D.C. 1998)). On appeal, the circuit court reversed,
noting that the plaintiff had confused form with substance, and holding that the
Archivist can reasonably "permit agencies to maintain their recordkeeping systems
in the form most appropriate to the business of the agency."

In re Bristol-Myers Squibb Securities Litigation, 205 F.R.D. 437 (D. N.J., 2002).
Early in the litigation, the parties had agreed to paper production and a per-page
price for photocopying. However, the defendant did not disclose that the documents
had been scanned, were being “blown back” in paper form at a cost below
that of photocopying, and were available in electronic form for considerably less
money. The court held the parties to the agreement to produce paper, but at the
lower cost of the “blow backs,” and ordered that the electronic versions also be
produced, at the nominal cost of duplicating compact disks. The court rejected the
defendant’s argument that the plaintiff contribute to the cost of scanning the
documents, as that action was taken unilaterally by the defendant, who didn’t inform
the plaintiff, for its own purposes. Finally, the court lamented that the parties
did not take the “meet and confer” obligations of Fed. R. Civ. Pro. 26(f) seriously
in light of electronic discovery.

In re Honeywell International, Inc. Securities Litig., 2003 WL 22722961
(S.D.N.Y.). In a putative securities class action, the plaintiffs served a subpoena
on non-party PriceWaterhouseCoopers (PWC), the defendant’s auditor. PWC
produced 63,500 pages of financial workpapers in hardcopy form. The plaintiff
moved to compel the production in electronic form, claiming that the data as produced
were in neither business record order nor labeled to correspond to the categories
of the requested, as required by Rule 34. PWC opposed the motion to compel,
stating that it had produced the requested data and provided an index to assist
the plaintiffs in determining how the information was organized. In addition, production
of the information in electronic form would require PWC to either provide
the plaintiffs its proprietary software to access the information or spend more
than $30,000 to convert the data into non-proprietary format, which the plaintiffs
should pay. The court acknowledged that PWC had produced paper versions of
the documents requested, but that PWC had only provided “hieroglyphic indices
that render the workpapers essentially incomprehensible.” PWC would be required
to produce the data in electronic form, and could avoid the $30,000 expense
by also producing the proprietary software to access the data. The plaintiffs
were not competitors and a confidentiality order was already in place, so PWC’s
trade secret interests were adequately protected.

In re Lorazepam & Clorazepate Antitrust Litig., 2004 WL 77921 (D.D.C. 2004).
After discovery generated a “mountain” of electronic documents, one of the parties
complained that they were owed a “meaningful and detailed document index.”
Magistrate Judge John Facciola, noting that “I only have two years left in
my term, and discovery ends in approximately one month,” ordered then parties to
consult with a litigation support firm to ascertain whether the entire collection
could be converted into an accessible database and searched using commercially
available word searching software.

McNally Tunneling v. City of Evanston, 2001 WL 1568879 (N.D. Ill.). Authority
is split on whether a party is entitled to discovery in electronic form as well as paper
form, citing Williams v. Owens-Illinois, 665 F. 2d 918 (9th Cir. 1982) denying
a request for computerized data to supplement paper production; and Anti-
Monopoly, holding that a party is entitled to both hard copy and computerized
data. In this case, the defendant’s request for computer files to supplement the
plaintiff’s paper production is not supported by any demonstration of need.

Physicians Interactive v. Lathian Systems, Inc., 2003 WL 23018270 (E.D. Va.
2003). In a civil suit against alleged hackers for customer list and trade secret
theft, the plaintiff moved for expedited discovery to enter the sites where the defendants’
computers were located and make “mirror” or bitstream images of the
hard drives. Finding that the plaintiffs met the four-part test for a preliminary injunction,
as well as the more specific tests for expedited discovery, the motion
was granted, conditioned that the imaging be done by a computer forensics expert
and that discovery be limited to information related to the alleged attacks.

Gates Rubber v. Bando Chemical Industries, 167 F.R.D. 90 (D. Colo. 1996).
When allowed direct access to the respondent's computer system for the purposes
of discovery, the requesting party's unqualified computer discovery expert de-
stroyed 7-8% of discoverable records and compromised the evidential integrity of
the rest.

Playboy v. Terri Welles, 60 F. Supp. 2d 1050 (S.D. Cal. 1999). To protect privilege,
confidentiality, and the integrity of the evidence, the court will appoint a
qualified neutral expert to conduct discovery of the defendant's computer hard
drive.

Simon Properties v. MySimon, 194 F.R.D. 639 (S.D. Ind. 2000). The court adapts
the Playboy approach to a trademark infringement case involving the hard drives
of several employees of the defendant. The Supplemental Entry following the
Order details the protocol for the expert to follow.

Northwest Airlines v. Local 2000 Teamsters, 00-CV-8 (D. Minn. 2000), discussed
in Michael J. McCarthy, Data Raid: In Airline's Suit, PC Becomes Legal Pawn,
Raising Privacy Issues, Wall Street Journal, May 24, 2000 at A1. In an unreported
case, the court adapts the Playboy approach, but discovers that the time, costs, and
intrusiveness are all greater than originally assumed.

Rowe Entertainment, Inc., et al. v. The William Morris Agency, Inc., et al., 51
Fed. R. Serv. 3d 1106; aff’d. 53 Fed. R. Serv. 3d 296 (S.D. N.Y. 2002). In allowing
the requesting party direct access to the respondent's computer files, the
court adopts a protocol in which the requesting party's expert recovers files and
the requesting party's attorney reviews them for relevance BEFORE the responding
party reviews them for privilege. See also, Rowe Entertainment, under “Costs
and Cost Allocation” .

In re Air Crash Disaster at Detroit Metropolitan Airport, 130 F.R.D. 634 (E.D.
Mich. 1989). The cost of producing data to the requesting party in a specific format
for the purposes of litigation will be borne by the requesting party.

In re Brand Name Prescription Drugs Litigation, 1995 WL 360526 (N.D. Ill.
1995). When a defendant chooses a computer-based business system, the cost of
retrieving information is an ordinary and foreseeable risk.

Computer Associates International, Inc. v. Quests Software, Inc., 2003 WL
21277129 (N.D. Ill. 2003). Plaintiffs in a software copyright and trade secret infringement
case requested that the defendants image the hard drives of six key
employees. After the imaging, the defendant spent between $28,000 and $40,000
to remove privileged emails from the backups and create a privilege log. The defendants
then filed a motion to require the plaintiffs to pay these preparation costs.
The court reviewed the eight Rowe factors, and determined that none of them favored
cost shifting, analogizing these preparation costs to costs for attorney review.

Medtronic Sofamor Danek, Inc. v. Gary Karlin Michelson, M.D., et al. 2003 U.S.
Dist. LEXIS 8587 (W.D. Tenn.). In an intellectual property case involving spinal
fusion medical technology, the defendant sought discovery of information from
996 computer backup tapes and 300 megabytes of data on desktop computers of
the plaintiff’s employees. The plaintiff objected that the proposed discovery
would be unduly costly and burdensome. The court agreed, and applied the eight
Rowe factors with painstaking factual detail to determine that the defendant
should shoulder most of the costs of the proposed discovery. The court then ordered
an equally detailed protocol for the parties to follow in conducting discovery
of the backup tapes and hard drives. Finally, the court rejected as unwarranted
the defendant’s request that a special master be appointed under Fed. R.
Civ. P. 53, and instead ordered the parties to agree on a neutral computer expert to
supervise discovery under the protocol.

Murphy Oil USA v. Fluor Daniel, 52 Fed. R. Serv. 3d 168 (E.D. La. 2002). Following
Rowe, the court offers the defendant two options for proceeding with discovery
of email from the computer hard drives and allocating costs. Under one
option, the defendant may forego prior review of email recovered at the plaintiff’s
expense. Under the second option, the defendant may review, at its own cost, all
documents relevant documents recovered by the expert before production to the
plaintiff.

OpenTV v. Liberate Technologies, N.D. Cal. No. C 02-0655 (Order Re Discovery
dated November 18, 2003). In an intellectual property infringement suit, the
magistrate judge ruled that a portion of the costs of producing relevant computer
source code should be shifted from the responding party to the requesting party.
The plaintiff had requested production of some 100 additional versions of source
code for software products being developed by the defendant. The defendant objected,
stating that locating and duplicating the requested source code would be
unduly burdensome and would yield only marginally relevant results. Instead, the
defendant offered to make its complete source code database available at its facilities,
along with a complete index to the database and a software engineer to
provide technical assistance. The plaintiff rejected the offer, arguing that it essentially
shifted production costs to plaintiff, the requesting party. The court agreed
that the offer effectively shifted costs, yet because extracting the source code
would take the defendant between 125 and 150 hours of work, the court found
that the requested electronic data was inaccessible for purposes of discovery and
that cost-shifting would be appropriate. Applying the Zubulake factors, the court
determined that the costs for extraction should be split evenly although the cost of
duplication should be borne solely by the defendant.

Oppenheimer Fund v. Sanders, 437 U.S. 340 (1978). The cost of creating eight
new computer programs to identify potential class members from responding
party's computer data can reasonably be shifted to the requesting party, when the
need for access to the specific data requested is not foreseeable in the normal
course of business.

Rowe Entertainment, Inc., et al. v. The William Morris Agency, Inc., et al., 205
F.R.D. 421 (S.D. N.Y., 1106). In a class action against talent agencies alleging
racial discrimination in bookings, the plaintiff class requested email from the defendants’
backup media. The four defendants objected, citing the high costs estimated
by electronic discovery consultants to restore the backup media to accessible
form and the legal costs associated with screening for relevance and privilege.
Balancing eight factors derived from the case law, the plaintiffs were required
to pay for the recovery and production of the defendants’ extensive email
backups, except for the cost of screening for relevance and privilege. The eight
“Rowe factors” are:
1. The specificity of the discovery request.
2. The likelihood of discovering material data.
3. The availability of that data from other sources.
4. The purposes for which the responding party maintains that data.
5. The relative benefits to the parties of obtaining that data.
6. The total costs associated with production.
7. The relative ability and incentive for each party to control its own costs.
8. The resources available to each party.

Xpedior Credit Trust v. Credit Suisse First Boston (USA), 2003 WL 22283835
(S.D.N.Y.). A corporation brought putative class action against an investment
banking house alleging breach of contract in an Initial Public Offering (IPO), and
sought discovery of electronic data from two decommissioned computer systems.
The defendant moved for a protective order shifting the costs of restoring the
computer systems to access the data. Applying the seven-part test enunciated in
Zubulake I (below), Judge Shira Scheindlin found that the plaintiff’s request was
narrowly tailored, the information was not available from any other source, and
the cost of the proposed restoration ($400,000), while high, was not extraordinary
in light of the total monetary stake. She also noted that the plaintiff was a bankrupt
corporation with no assets and the defendant was an international firm with
assets of over $5 billion. The final factors—ability to minimize costs, public in-
terest in the issues at stake, and the usefulness of the information to both parties,
were neutral. Therefore, although the information requested was inaccessible
without incurring costs, there was no justification to shift those costs to the requesting
party.

Zubulake v. UBS Warburg LLC, 217 F.R.D. 309 (S.D.N.Y. 2003) (“Zubulake I,”
Opinion and Order dated May 13, 2003). In a sex discrimination suit against a financial
services company, the plaintiff requested email beyond the approximately
100 pages produced by the defendants. She presented substantial evidence that
more responsive email existed, most likely on backup tapes and optical storage
media created and maintained to meet SEC records retention requirements. The
defendants objected to producing email from these sources, which they estimated
would cost $175,000 exclusive of attorney review time. The district judge held
that the plaintiff's request was clearly relevant to her claims, but both parties
raised the question of who would pay for the discovery and urged the court to apply
the Rowe factors. The court held that for data kept in an accessible format, the
usual rules of discovery apply: the responding party should pay the costs of producing
responsive data. A court should consider cost-shifting only when electronic
data is relatively inaccessible, such as in backup tapes. Further, requiring
the responding party to restore and produce responsive documents from a small
sample of the requested backup tapes is a sensible approach in most cases. Finally,
in conducting the cost-shifting analysis, the court rejected the Rowe factors
and substituted a seven-factor test. The “Zubulake factors” are, in order of importance
or weight:

1. The extent to which the request is tailored to discover relevant data.
2. The availability of that data from other sources.
3. The total cost of production, relative to the amount in controversy.
4. The total cost of production, relative to the resources available to each party.
5. The relative ability and incentive for each party to control its own costs.
6. The importance of the issues at stake in the litigation.
7. The relative benefits to the parties in obtaining that data.

Zubulake v. UBS Warburg LLC, 216 F.R.D. 280 (S.D.N.Y. 2003) ("Zubulake III,"
Opinion and Order dated July 24, 2003). Following the May 13, 2003 Order and
Opinion above, the defendants restored and reviewed five backup tapes selected
by the plaintiff at a cost slightly over $19,000. 600 email messages were deemed
to be responsive to the plaintiff's discovery request. The defendant estimated that
the cost for production of the entire 77-tape collection would be $165,954.67 for
restoration and $107,694.72 for review. Analyzing each of the seven factors announced
by the court in the previous decision, the court determined that the balance
tipped slightly against cost shifting, and that requiring the defendant to bear
75% of the costs would be fair. However, the court determined that none of the
costs for attorney review of the data, once it had been made accessible, should be
borne by the requesting party.

Kucala Enterprises, Ltd. v. Auto Wax Co., 2003 WL 21230605 (N.D. Ill.) (Report
and Recommendation dated May 27, 2003). In a patent infringement case, the defendant
repeatedly requested documents from the plaintiff, including business records
and correspondence from the plaintiff’s computer system. After three mo-
tions to compel production, the defendant was allowed access to the plaintiff’s
computer to conduct an inspection. The computer forensics expert conducting the
inspection discovered that the plaintiff had used a commercially available disk
wiping software, “Evidence Eliminator,” to “clean” approximately 3,000 files
three days before the inspection, and another 12,000 on the night before the inspection
between the hours of midnight and 4 a.m. Based on the totality of the
circumstances, the Magistrate Judge found that the spoliation was intentional and
recommended to the trial judge that the plaintiff’s case be dismissed with prejudice,
and that the plaintiff pay the defendant’s attorneys fees and costs from the
time the Evidence Eliminator was first used. On de novo review, the district court
judge rejected the recommendation to dismiss the plaintiff’s case with prejudice,
favoring adjudication of the claims and counterclaims, but upheld the recommendation
that the plaintiff bear attorneys fees and costs. Kucala Enterprises, Ltd. v.
Auto Wax Company, 2003 WL 22433095 (N.D. Ill.) (Rulings on Objections dated
October 27, 2003).

Procter & Gamble Co. v. Haugen, 2003 WL 22080734 (D. Utah) (Order dated
Aug. 19, 2003). Procter & Gamble (“P&G”) sued several independent distributors
of rival Amway products, claiming unfair trade practices for allegedly distributing
email associating P&G with Satanism. P&G immediately informed the defendants
of their duty to preserve computer evidence crucial to the case, but neglected to
impose a similar duty upon itself, resulting in the destruction of email records of
five key P&G employees. Without citing Rule 37, the court granted the defendant’s
motion to dismiss the case on three grounds, each of which the court stated
were sufficient alone to grant dismissal. The three grounds were (1) that the
plaintiff failed to preserve evidence it knew was “critical” to the case, (2) the
plaintiff’s actions rendered an effective defense “basically impossible,” and (3)
the plaintiff destroyed the very evidence it would need to support its proposed expert
testimony on damages, rendering the testimony inadmissible on Daubert
grounds. In a previous decision, the trial court sanctioned the plaintiff $10,000--
$2,000 for each of the five key employees whose files had been destroyed. Procter
& Gamble Co. v. Haugen, 179 F.R.D. 622 (D. Utah 1998), rev'd on other
grounds, 222 F.3d 1262 (10th Cir. 2000).

Sheppard v. River Valley Fitness One, 50 Fed. R. Serv. 3d 1278 (D. N.H. 2001).
Defendant attorney’s failure to produce requested computer records, attributed to
lack of diligence as opposed to intentional obstruction of discovery, warranted a
fine of $500 and a testimonial preclusion order.

Stevenson v. Union Pacific RR, 2003 WL 23104550 (8th Cir.). In a negligence
action arising put of a railroad crossing collision, the trail court granted the plaintiffs
partial summary judgment and imposed the sanction of adverse inference
jury instructions on the defendant for destruction of recorded voice communications
between the train crew and dispatchers, and destruction of track maintenance
records both before and after commencement of litigation. On appeal, the circuit
court looked at the circumstances of each allegation of spoliation and applied the
test of Lewy v. Remington Arms. It held that the trial court did not abuse its discretion
in imposing the adverse jury instruction sanction for destruction of the
tape recordings, as the tape recordings were clearly relevant to reasonably anticipated
litigation, there were no alternative records, and there was evidence that
such recordings had been preserved in other litigation. Likewise, the destruction
of track maintenance records after litigation commenced warranted the sanction.
However, the routine destruction of track maintenance records pursuant to a records
management policy prior to litigation did not give rise to a presumption of
bad faith to justify the adverse jury instruction. And on remand, the trial court was
instructed to allow the defendant to present evidence challenging the rebuttable
presumption that an adverse jury instruction creates.

Theofel v. Farey Jones, 2003 WL 22020268 (9th Cir.). In a commercial lawsuit
the defendant issued a subpoena to the plaintiff’s Internet Service Provider (ISP)
requesting “all copies of e-mail sent or received by anyone” at the plaintiff, with
no limitations of time or scope. The ISP, which was unrepresented by counsel,
complied, producing many privileged and irrelevant messages. The plaintiff
moved to have the subpoena quashed and for sanctions for discovery abuse,
which the Magistrate Judge granted. Individual employees of the plaintiff also
filed civil suits against the defendant under the Stored Communications Act,
Wiretap Act, and Computer Fraud and Abuse Act, which the district court dismissed.
The appellate court reversed the dismissal of the claims under the Stored
Communications Act and Computer Fraud and Abuse Act, stating that the subpoena,
although purporting to be a valid request under Fed. R. Civ. P. 45, so
“transparently and egregiously” violated that standards of Rule 45 that the “defendants
acted in bad faith and with gross negligence in drafting and deploying
it,” negating any argument that the ISP knowingly consented to the request. By
remanding the statutory claims to the district court, the appellate court left open
the possibility of civil penalties against the defendant.

Tulip Computers International B.V. v. Dell Computer Corporation, 52 Fed. R.
Serv. 3d 1420 (D. Del 2002). In a patent infringement case, defendant Dell failed
several times to answer discovery requests, provide any reasonable explanations
for its failures, or provide any witnesses who could answer questions about its records
management systems, paper or computerized. In apparent frustration, the
court granted the plaintiff's request for direct access to the respondent's records
warehouse and computer data.

Zubulake v. UBS Warburg LLC, et al., 2003 U.S. Dist. LEXIS 18771 (S.D.N.Y.)
(“Zubulake IV,” Opinion and Order dated October 22, 2003). [For factual background,
see “Zubulake I” and “Zubulake III” under “Costs and Cost Allocation”.  After restoring
backup tapes to locate missing emails, the defendant ound that certain relevant tapes
were missing. The plaintiff moved for sanctions, including a spoliation inference. The court
found that (a) a duty to preserve the missing tapes existing, (b) that the defendant was
negligent and possibly reckless in failing to preserve the tapes, but (c) the plaintiff failed
to demonstrate a reasonable likelihood that the missing tapes contained evidence that
would have been relevant to the lawsuit. Had the plaintiff shown either that the defendant
had acted with malicious intent or that the missing tapes actually held evidence that
would have been damaging, a spoliation inference would have been appropriate.
In the absence of either of those elements, the appropriate sanction would be limited
to awarding the costs of additional depositions taken pursuant to this discovery.

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