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Electronic Discovery - Case Law

December 2006 to July 31 2009 - Annotated Federal Case Law

Data Preservation and Spoilation


ACS Consultant Co., Inc. v. Williams, 2006 WL 897559 (E.D. Mich. Apr. 6, 2006).
In a suit against former employees for employment contract violations and theft of proprietary
business information, the plaintiff sought and obtained a preliminary injunction
enjoining the defendants from destroying any information of the plaintiff, including taking
any action to delete data or “wipe” any computer hard drive, laptop, or Blackberry
issued by the plaintiff to the former employees.

Adams v. Gateway, Inc., Case No. 2:02-CV-106 TS (D. Utah Mar. 6, 2006) (unsealed
by order denying defendant’s motion to maintain seal, Mar. 22, 2006). In a
patent infringement suit in which there were allegations of spoliation of e-mail evidence,
the district judge upheld the magistrate judge’s report and recommendation that
the defendant be prohibited from asserting attorney–client privilege or work-product
protection, that a negative inference be imposed, that a warning be issued that any further
withheld or tardy disclosure may result in judgment against the defendant, and that
attorneys’ fees and costs associated with the defendant’s spoliation of evidence be
awarded to the plaintiff. The defendant objected that the magistrate judge’s report failed
to conclude that defendant had engaged in bad-faith activity resulting in the loss of evidence
and failed to take into account the defendant’s remedial actions. The district
judge found that there was ample circumstantial evidence to support a finding of intentional,
bad-faith destruction of e-mail messages central to the facts of the case (later
produced in hard copy form), and that the defendant offered no alternative explanation
for their loss. Acknowledging that the decision was a “close call,” the court chose not to
impose a “terminating sanction,” as the defendant did not have prior warning of such a
sanction, and that the evidential inference and award of attorneys’ fees and costs were
adequate.

AdvantageCare Health Partners, LP v. Access IV, Inc., 2005 WL 1398641 (N.D.
Cal. June 14, 2005). In a trade secrets appropriation case, the defendants were found to
have deleted files from their hard drives to conceal their activities shortly after entry of
a temporary restraining order and were fined $20,000 as a sanction. One of the defendants
moved for reconsideration on the grounds that she had not actually participated in
the sanctionable activity. The court denied the motion, as the court’s original order extended
to all the defendants and the moving defendant presented no new material evidence
that would distinguish her conduct from that of any of the other defendants.

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.

Scope of Electronic Discovery

Anti-Monopoly, Inc. v. Hasbro, Inc., No. 94CIV.2120, 1995 WL 649934 (S.D.N.Y.
Nov. 3, 1995). The plaintiff made a motion to compel the defendants to provide certain
data-processing files. The defendants contended that they had provided duplicate information
in hard copy and that the motion would force the company to create new documents.
Relying on National Union Electric Corp. v. Matsushita Electric Corp., 494 F.
Supp. 1257 (E.D. Pa. 1980), the court rejected both of the defendants’ arguments. The
court stated that the plaintiff was not precluded from asking for electronic data that it
already had in hard copy or electronic documents that would have to be created. However,
the reasonableness of creating new documents may depend on the plaintiff’s willingness
to pay the costs to do so.

Bethea v. Comcast, 218 F.R.D. 328 (D.D.C. 2003) (mem.). 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. Dissatisfied with
the result, the plaintiff made a motion to allow it to inspect the defendants’ computer
systems believing relevant data existed on them. The court rejected the motion because
the plaintiff was relying on mere speculation and could not demonstrate the relevance of
compelling discovery.

Bob Barker Co. v. Ferguson Safety Prods., Inc., 2006 WL 648674 (N.D. Cal. Mar.
9, 2006). In a Lanham Act lawsuit, the plaintiff requested that the defendant produce all
“financial software databases utilized in the operation of the business.” The court observed
that this request was unclear, in that a “database” is a dynamic collection of data.
While the defendant would not be required to produce the database in response to this
request, it would still be required to produce any information in the database and documents
generated using the database responsive to other requests.

Bullis v. Nichols, 2005 WL 1838634 (W.D. Wash. Aug. 1, 2005). In a civil rights suit,
the plaintiff issued a subpoena duces tecum under Fed. R. Civ. P. 45, requesting that the
non-party City of DuPont produce employee e-mail related to plaintiff’s claims. The
city objected, claiming that the request would require the production of an estimated
166,000 messages. The court denied the plaintiff’s motion to compel production and
instructed the plaintiff to follow established federal and local rules requiring her to meet
and confer with opposing counsel.

Byers v. Illinois State Police, 53 Fed. R. Serv. 3d (West) 740 (N.D. Ill. June 3, 2002)
(mem.). The plaintiffs in a sex discrimination case requested discovery of e-mail
backup tapes going back eight years. The court distinguished paper discovery from
electronic discovery, noting the sheer volume of electronic documents available. Given
the substantial cost in retrieving electronic documents, a cost-benefit analysis was necessary.
The plaintiffs failed to prove that any of the e-mails from the past eight years
would support their case. The court held that if the plaintiffs wanted to retrieve the emails
they would have to bear the costs of licensing the defendant’s old e-mail program.
Commodity Futures Trading Comm. v. Equity Fin. Group LLC, 2005 WL 225789
(D.N.J. Sept. 9, 2005). In an enforcement action alleging trading fraud, the government
requested production of a backup tape of data from the home office computers of one of
the named defendants, created while he was employed by a non-party claimant companies
for the purpose of parallel proceedings. At the time of the request, the backup tape
was in the possession of the CEO of the claimant company in the Bahamas. The court
ordered that the backup tape belonged to the named defendant, as it was created by him
from his own computers, and that the claimant company, although a non-party to the
instant action, had filed an appearance, was therefore subject to this court’s jurisdiction,
and must produce the backup tape.

Compuware Corp. v. Moody’s Investors Services, Inc., No. Civ. 03-70247, 2004
WL 2931401 (E.D. Mich. Dec. 15, 2004). The defendant in this unfair trade practices
case requested “[a]ll documents, including but not limited to internal memoranda, internal
e-mails, and correspondence with [IBM] or any other entity or person, referring or
relating to actual or potential effects on Compuware’s business of any past, present, future,
or contemplated conduct by IBM.” After initially objecting that the request was
overbroad, the defendant responded by producing all of the requested documents, estimated
in the “tens of millions,” on compact disks. Arguing that the production was
overbroad, the defendant asked the judge to narrow the scope of its own request and or Annotated
under the plaintiff to index the documents on the CDs and designate those that were relevant
to the subject matter of the dispute. The court denied the request.

Cumis Insurance Co. v. Diebold, Inc., No. Civ.A.02-7346, 2004 WL 1126173 (E.D.
Pa. May 20, 2004). In an insurance recovery action against an armored car operator
stemming from the misappropriation of funds intended to be used to replenish the cash
of the insured credit union’s automated teller machines, the court ordered the defendant
to produce requested computer data. The plaintiff sought additional electronic documents
from the defendant. The court briefly touched on the relative burdens of the parties
in discovery—the requesting party’s burden of demonstrating relevance, and the
responding party’s burden of demonstrating why the requested discovery should not be
permitted. The requesting party in this case went beyond showing relevance and countered
the defendant’s argument that it had already produced all relevant computer data
by bringing into court relevant electronic documents and e-mails obtained from other
sources that the defendant had not produced.

Electrolux Home Prods., Inc. v. Whitesell Corp., 2006 WL 355453 (S.D. Ohio Feb.
15, 2006). In a commercial dispute, the defendant issued subpoenas under Fed. R. Civ.
P. 45 to non-parties for the production of electronically stored information. The magistrate
judge in the case entered a “Decision and Order Enforcing Subpoenas” to compel
production. The non-parties did not appeal the magistrate judge’s order to the district
judge assigned to the case. Instead, they moved for a stay of the order pending consideration
of their application for interlocutory appeal. This motion was considered by the
chief magistrate judge, who found that the questions raised by the non-parties were unlikely
to be certified by the Sixth Circuit and that the non-parties did not face irreparable
harm or undue burden by enforcement of the subpoenas. The chief magistrate judge
noted that (1) the costs will be borne by the party issuing the subpoena, (2) all discovery
will be on an “attorneys eyes only” basis to protect trade secrets, and (3) the attorneys
for the non-parties will have an opportunity to review the production and assert any
claims of privilege before production.

Fennell v. First Step Designs, Ltd., 83 F.3d 526 (1st Cir. 1996). In a lawsuit alleging
wrongful termination, the district court denied the plaintiff’s motion for further discovery
under Fed. R. Civ. P. 56(f) and granted the defendant summary judgment. On appeal,
the court held that the district court had not abused its discretion. The court noted
there would be great costs involved if it granted the plaintiff discovery of the defendant’s
hard drive without any demonstrable benefit. Also, the plaintiff’s motion was not
sufficiently specific, giving the district court reasonable concern that further discovery
would be a “fishing expedition.”

Fenster Family Patent Holdings, Inc. v. Siemens Medical Solutions USA, Inc., 2005
WL 2304190 (D. Del. Sept. 20, 2005). In a patent infringement suit, the plaintiff moved
for access to the defendant’s Intranet site. The court denied the motion, stating that the
plaintiff had failed to demonstrate that the defendant was not producing documents as
requested, in either electronically searchable form or as kept in the ordinary course of
business.

Fischer v. UPS, 2006 WL 1046973 (E.D. Mich. Apr. 19, 2006). In an employment
termination suit, the defendant produced e-mail, missing an attachment which it claimed
it could not locate. The magistrate judge ordered further discovery in the form of a telephone
interview of an employee of the defendant involved in the effort to find the missing
attachment. The defendant objected, stating that the missing attachment was immaterial
and irrelevant, being only a draft of proposed salary decisions. Upon review of the
magistrate judge’s order, the district judge found that while perhaps not admissible at
trial, the document being sought was within the legitimate scope of discovery, and the
interview would proceed.

In re Ford Motor Co., 345 F.3d 1315 (11th Cir. 2003). In a design-defect suit against
Ford, 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 the district court had abused its discretion.
No findings were made that Ford had failed to comply with previous discovery orders,
and the district court did not offer an explanation for its order. Further, the district court
granted access to Ford’s entire database, much of which was beyond the scope of discovery.
Hagemeyer North America Inc. v. Gateway Data Sciences Corp., 222 F.R.D. 594
(E.D. Wis. 2004). In a commercial dispute between two corporations, deposition testimony
of one of the defendant’s “top executives” indicated that computer backup tapes
might contain e-mail files and accounting records. The plaintiff moved for production
of the backup tapes, which had already been made available as part of a larger production
of all of the defendant’s business records, and upon which the plaintiff had already
performed some cursory searches, resulting in no relevant documents. The court refused
to compel production of all the backup tapes without a more substantial showing of a
likelihood that responsive documents would be found. Adopting the approach of
McPeek v. Ashcroft, 202 F.R.D. 31 (D.D.C. 2001), the court ordered the defendant to
restore three sample backup tapes and for the parties to make additional submissions on
the benefits and burdens of the proposed discovery, based on the results. The court also
announced that it would adopt the factors set out in Zubulake v. UBS Warburg, 217
F.R.D. 309 (S.D.N.Y. 2003), to consider whether costs for any further production
should be shifted to the plaintiff.

Marcin Engineering, LLC v. Founders at Grizzly Ranch, LLC, 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. The motion came five days before the deadline for expert disclosure and the defendants
had for five months delayed reviewing paper materials originally produced to
them. The court stated that 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 Fed. R. Civ. P. 56(f). Furthermore,
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 (“McPeek I”), 202 F.R.D. 31 (D.D.C. 2001). In a sexual harassment
lawsuit, the plaintiff sought a motion to compel discovery of backup tapes that
might contain deleted e-mails. The court noted electronic discovery can be prohibitively
expensive if left unchecked, and only discovery that justified the cost of retrieving electronic
data should be granted. To determine the costs and possible benefits of allowing
discovery for backup tapes, the court granted limited discovery of a sample time period
where the defendant would retrieve e-mails for one year and document the costs associated
with the retrieval process. Then the court would be able to properly assess the appropriate
level of discovery based on the costs and whether discoverable information
was uncovered.

McPeek v. Ashcroft (“McPeek II”), 212 F.R.D. 33 (D.D.C. 2003). Following up on a
previous ruling in the same case, the court held that after ordering the “sampling” of a
large collection of backup tapes, the resulting data supported further discovery of only
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., No. 01 C
9148, 2003 WL 1809465 (N.D. Ill. Apr. 4, 2003) (mem.). In a copyright and trade secret
appropriation case, the defendants moved to allow on-site 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 was likely to be
discovered, the request would be denied as unduly burdensome.

Miller v. IBM, 2006 WL 995160 (N.D. Cal. Apr. 14, 2006). In a contract and business
fraud case, the defendant moved for sanctions against the plaintiff for failure to follow a
court order requiring that e-mails and attachments be produced together and failure to
provide a court-ordered affidavit explaining his failure to produce other requested electronically
stored information altogether. The court repeated its earlier order, warning the
plaintiff that failure to comply will result in preclusion from using any of the improperly
identified e-mails or attachments, or any of the other electronic documents not already
produced, in its case-in-chief or defense, and “in the imposition of other sanctions, including
the potential termination of this case.”

Nicholas v. Wyndham International, Inc., 373 F.3d 537 (4th Cir. 2004). In a personal
injury suit brought by the parents of a minor child alleging that an employee of
the defendant resort hotel had molested the child, the defendant sought discovery of
computer information from the parents’ non-party family business in another district
under Fed. R. Civ. P. 45. The family business filed a motion for a protective order in its
home district. After consultation with the judge presiding in the original litigation, the
judge in the home district granted the protective order, finding that the requested discovery
was cumulative, unduly burdensome, and harassing. The defendant appealed the
district court’s order. The Fourth Circuit found that the order denying discovery, unlike
an order granting discovery, was not interlocutory, but final and ripe for appeal. That
finding allowed the court to decide the issue of discovery. The appellate court applied
the “abuse of discretion” standard and upheld the district court’s findings and order.
Nova Measuring Instruments Ltd. v. Nanometrics, Inc., 417 F. Supp. 2d 1121 (N.D.
Cal. 2006). In a patent infringement suit, the defendant failed to produced electronically
stored information in native format with original metadata, contrary to an agreement
between the parties. The magistrate judge noted that the defendant offered no reason
why it did not follow the agreed-upon form of production, and cited In re Verisign,
2004 WL 2445243 (N.D. Cal. Mar. 10, 2004) and In re Honeywell International, Ltd.,
230 F.R.D. 293 (S.D.N.Y. 2003) as examples of courts upholding orders requiring native
format production with metadata.

Procter & Gamble Co. v. Haugen, 2005 WL 2660487 (10th Cir. Oct. 19, 2005). In
an unfair trade practices case with a long history and many reported decisions related to
electronic discovery, the Tenth Circuit reversed the trial court’s dismissal of the plaintiff’s
Lanham Act claims, based on the plaintiff’s failure to produce a database maintained
by a non-party contractor. The trial court’s order compelling production failed to
take into account the logistical difficulties of complying with the order, which would
have involved the purchase of a mainframe computer or paying the non-party an estimated
$30 million to maintain an archived version of the database. As the violation of
the order was not willful, and the prejudice to the defendant not clearly established, the
extreme sanction was not justified.

Quinby v. WestLB LG (“Quinby I”), 2005 WL 3453908 (S.D.N.Y. Dec. 15, 2005).
In a sex discrimination suit, the defendant objected to the production of certain e-mail
based on the cost and burden of recovering the e-mail from backup tapes. The plaintiff
objected, not to the defendant’s calculation of the potential costs and burdens, but to the
need for resorting to backup tapes before exhausting its search of more accessible data
sources. The court found that the defendant had acted appropriately in focusing on
backup tapes as the primary source for the production of the requested e-mails.
Quinby v. WestLB LG (“Quinby II”), 2006 WL 59521 (S.D.N.Y. Jan. 11, 2006). In
a sex discrimination suit, the defendant subpoenaed the plaintiff’s internet service provider
(ISP), seeking all non-privileged e-mails sent from or received by her personal email
account for a period of two years. The court held that the subpoena was overbroad
and would yield vast amounts of irrelevant information. The fact that the information
may be innocuous does not make it subject to discovery.

Rozell v. Ross-Holst, 2006 WL 163143 (S.D.N.Y. Jan. 30, 2006). In a lawsuit for sexual
harassment, retaliatory discharge, and violation of the Electronic Communications
Privacy Act, the plaintiff alleged that her former employer had intercepted approximately
400 e-mail messages from her private America Online account. The defendant
employer countered that they were entitled to the e-mails, as they paid for the plaintiff’s
AOL account during her employment and it was used for business purposes. In the alternative,
they were entitled to the e-mails in discovery, as they were likely relevant to
her claims. Over the plaintiff’s objection, the disputed e-mails were submitted to the
judge for in camera review. Prior to submission, the plaintiff’s counsel redacted the entire
contents of the e-mails, leaving only the header information. The court found that
while the header information was clearly relevant in determining whether or not the emails
had been diverted, the redacted contents, if relevant, were necessary for a determination
of the defendant’s position that the e-mails were relevant to the claims of harassment
or retaliation, as well as the possible damages to which the plaintiff herself may
be entitled. However, the court rejected the defendant’s position that all the plaintiff’s emails
should be produced regardless of her counsel’s relevance determination, as
“counsel for the producing party is the judge of relevance in the first instance.” The
court went on to say that it would not hold an in camera inspection of the nonintercepted
e-mail to determine relevance, as in camera review is a rare procedure and
should be reserved for genuine disputes over privilege, not relevance.

SEC v. Beacon Hill Asset Management LLC, No. 02-CIV-8855, 2004 WL 1746790
(S.D.N.Y. Aug. 3, 2004). In an enforcement action by the Securities and Exchange
Commission (SEC) against a hedge fund management company, the defendant listed a
number of documents on a privilege log, which it produced to the SEC in a timely manner.
Absent from the privilege log was a printout of customer contacts from the defendant’s
marketing management software. The printout appeared on a supplemental privilege
log three weeks after the court-imposed deadline. The SEC moved to compel production
of the printout, claiming that privilege was waived by the defendant’s deliberate
failure to list the printout on its privilege log. The defendant argued that it generated the
printout only after it submitted the timely privilege log, and therefore the printout did
not exist at that time. The court held that the defendant failed to list the database from
which the printout was derived on its privilege log in a timely manner, and therefore the
printout should be produced.

Shank v. Kitsap County, 2005 WL 2099793 (W.D. Wash. Aug. 30, 2005). In an employment
suit, the plaintiff possessed several recordings of relevant conversations, the
existence of which were revealed in deposition testimony and belated answers to interrogatories.
The recordings were produced after discovery had closed. The plaintiff argued
that the recordings were on his computer in a format he could not easily access.
The court rejected the plaintiff’s explanation, noting that “much of present day discovery
is contained on computers,” and sanctioned the plaintiff by excluding the recording
from evidence.

Stallings-Daniel v. Northern Trust Co., 52 Fed. R. Serv. 3d (West) 1406 (N.D. Ill.
2002). In an employment discrimination case, the plaintiff moved to allow her to use an
expert to analyze the defendant’s e-mail system. The plaintiff asked the court to reconsider
a prior denial of a similar motion based on the “new” information that in another
case the defendant may have tampered with documents. The court denied the plaintiff’s
motion because it was based on speculation as to the defendant’s actions in an unrelated
case.

Strasser v. Yalamanchi (“Strasser I”), 669 So. 2d 1142 (Fla. Dist. Ct. App. 1996). In
a lawsuit involving the dissolution of a medical partnership, the plaintiff made a motion
to access the computer system of the defendant. The court overruled the trial court and
denied the plaintiff access. Some of the information in the system was privileged and
“once confidential information is disclosed, it cannot be ‘taken back.’” If the plaintiff
could establish a strong likelihood that purged information would be relevant to the case
and that the suggested means was the least intrusive method, then discovery might be
appropriate. Cf. Strasser II, under “I. Data Preservation and Spoliation.”
Thompson, et al. v. Jiffy Lube International, Inc., 2006 WL 1174040 (D. Kan. May
1, 2006). In a putative class action involving nationally advertised auto maintenance and
repair services, the plaintiff requested several broad categories of electronically stored
information, including all vehicle service records going back to January 1, 1997; “any
and all information related to e-mail . . . including messages,” all “electronic databases
that state the name, telephone number, amount charged, amount paid, and services rendered
for all customers . . . at any Jiffy Lube location”; and “any and all documents, including
electronic databases, regarding any customer complaints received by the defendant
during the relevant time period.” The defendant had responded to these requests
with blanket objections containing conclusory statements regarding cost and burden,
including an unsupported assertion that producing the vehicle history reports would require
creating the TIFF imagebase at a cost of $10 million. The court determined that
both the plaintiffs and defendant had failed to meet their respective burdens to make
reasonably specific requests and to present reasonably specific facts to support objections.
The parties were ordered to meet and confer and to provide the court with a report
within three weeks.

Tilberg v. Next Management Co., 2005 WL 2759860 (S.D.N.Y. Oct. 24, 2005). In a
dispute between a fashion model and her agency alleging underreporting of the model’s
earnings, statements by the defendant that requested documents did not exist warranted
an expansion of the scope of electronic discovery, when those statements appeared to be
erroneous.

Treppel v. Biovail Corp., 2006 WL 278170 (S.D.N.Y. Feb. 6, 2006). In a suit for
defamation, the defendant suggested that before producing electronic information, it
enter into a stipulation defining the scope of electronic discovery by identifying sources
and agreeing on a set of search terms. The plaintiff refused to enter into a stipulation,
taking the position that the use of search terms has no application in standard discovery
of accessible electronic records. The court disagreed, citing case law precedent and The
Sedona Principles for the proposition that a defined search strategy, including the use of
search terms, is appropriate in electronic discovery. Nevertheless, the refusal of the
plaintiff to enter into a stipulation establishing a search methodology, while perhaps a
“missed opportunity,” did not relieve the defendant from the duty to respond to the
plaintiff’s discovery request.

Williams v. Massachusetts Mutual Life Insurance Co., 226 F.R.D. 144 (D. Mass.
2005). In an employment discrimination case, the plaintiff alleged that there was a discriminatory
e-mail, but could not produce a copy of it. The defendants reported that
they had no such e-mail and the plaintiff moved for appointment of a special master to
conduct a forensic examination of the defendant’s computer system. The defendant objected.
The court rejected the motion noting that the plaintiff’s belief of the existence of
the e-mail was “at best [a] highly speculative conjecture.” Without “some reliable information
that the opposing party’s representations are misleading or substantively inAnnotated
accurate,” the court was unwilling to grant the plaintiff access to the defendant’s information
system.

Wright v. AmSouth Bancorporation, 320 F.3d 1198 (11th Cir. 2003). In an age discrimination
lawsuit, the Eleventh Circuit held that the trial court did not abuse its discretion
when it denied the plaintiff’s request for discovery of “[a] 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. The request
was not reasonably related to the plaintiff’s age discrimination claims, and the
court found that the request was overly broad and unduly burdensome.

Records Management

Arthur Andersen, LLP v. United States, 544 U.S. 696 (2005). In the conclusion to the
famous criminal action against the Arthur Andersen accounting firm stemming from the
collapse of Enron, the Supreme Court overturned Arthur Andersen’s conviction for
criminal obstruction of justice for shredding documents prior to receiving a subpoena
from the SEC. While the holding was based on inadequate jury instructions (see “I.
Data Preservation and Spoliation,” above), the Court stated in dicta, “‘[d]ocument retention
policies,’ which are created in part to keep certain information from getting into the
hands of others, including the Government, are common in business. [citation omitted]
It is, of course, not wrongful for a manager to instruct his employees to comply with a
valid document retention policy under ordinary circumstances.”
In re Cheyenne Software, Inc., Securities Litigation, No. CV-94-2771, 1997 WL
714891 (E.D.N.Y. Aug. 18, 1997) (mem.). In a securities litigation lawsuit, the court
held that routine recycling of computer storage media must be halted during discovery
when that is the most reasonable means of preserving available data. But the court refused
to give an adverse jury instruction, because the plaintiff had not proved prejudice—
instead the court ordered the defendant to pay $15,000 in fees and fines.
Heveafil Sendirian (Sdn.) Berhad (Bhd.) v. United States, Nos. 02-1085, 021086, 02-
1087, 2003 WL 1466193 (Fed. Cir. Mar. 19, 2003) (order not to be cited as precedent).
The Federal Circuit affirmed the judgment of the U.S. Court of International
Trade in refusing to admit into evidence computerized business records that, 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 Federal 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. The court stated, “[w]hile
Commerce could have taken Heveafil’s word for the authenticity of the diskette copy
. . . we cannot conclude that Commerce abused its discretion in rejecting the diskette
copy when the authenticity of that purported copy was not established.”

Hynix Semiconductor, Inc. v. Rambus, Inc., No. C-00-20905 RMW (N.D. Cal. Jan.
4, 2006). In a patent declaratory judgment action, Hynix charged Rambus with “unclean
hands,” claiming that Rambus’s records-management program, instituted immediately
prior to filing patent infringement claims against companies other than Hynix, constituted
unlawful destruction of evidence. The circumstances of the document destruction
were the same as those chronicled in Rambus, Inc. v. Infineon Technologies AG, 220
F.R.D. 264 (E.D. Va. 2004). Unlike the court in Virginia, however, the court in this case
found that the records-management program that resulted in document destruction was
not performed in anticipation of particular litigation with this particular party. Rambus
therefore lacked the bad faith necessary to support Hynix’s “unclean hands” claim. In
addition, Hynix failed to establish that the documents destroyed had any nexus to the
facts of their case, and there was no showing of prejudice to Hynix as a result of the
document destruction.

Kozlowski v. Sears, Roebuck & Co., 73 F.R.D. 73 (D. Mass. 1976). Before the widespread
use of computers, Sears, Roebuck recorded all customer complaints about products
on index cards, which were organized by the name of the complainant and with no
cross-indexing, making it almost impossible to search 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. EPA (“Landmark I”), 272 F. Supp. 2d 59 (D.D.C.
2003) (mem.). 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 plaintiff filed a Freedom of Information Act (FOIA) request
seeking records about the EPA’s rule-making activities in the months before
January 20, 2001. Dissatisfied with the response to the FOIA request, the plaintiff filed
suit. In particular, the plaintiff claimed that the EPA violated FOIA by not maintaining
agency e-mail in a central file in “readily reproducible” form. The court disagreed,
holding that the EPA practice of printing out e-mail 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 although this was troubling, FOIA is not a records
management statute, and the document destruction issue would be dealt with as a separate
matter. Cf. Landmark II, under “Data Preservation and Spoliation” at I.
Public Citizen v. Carlin, 184 F.3d 900 (D.C. Cir. 1999). In a case disputing the validity
of the records management schedule known as GRS 20, the National Archivist stated
that federal agency e-mail 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 U.S.C. § 3303a(d) (see Public Citizen v. Carlin, 2 F. Supp. 2d 18
(D.D.C. 1998)). On appeal, the circuit court reversed the decision, 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.”

Rambus, Inc. v. Infineon Technologies AG, 220 F.R.D. 264 (E.D. Va. 2004). In a
complex patent infringement suit involving counterclaims of fraud, the defendant
sought discovery of documents, including attorney–client communications, relating to
the plaintiff’s document retention program, on the theories that (1) the document retention
program resulted in the intentional spoliation of relevant documents (as found by
the court in a previous proceeding), and therefore the crime/fraud exception to the attorney–
client privilege applied; and (2) by disclosing details of the document retention
program in discovery, the plaintiff had waived any privilege. The document retention
program featured a “Shred Day,” on which employees of the plaintiff were rewarded
with pizza and beer after destroying an estimated 2 million pages of documents. While
there was no Fourth Circuit precedent for the court to rely on, the court held that “the
crime/fraud exception extends to materials or communication created for planning, or in
furtherance of, spoliation.” The court found that the plaintiff’s document retention program
was developed at approximately the same time as plans to file this lawsuit. The
plaintiff alleged that it instituted the program as a result of concerns over the cost of
discovery. The court held that even if the plaintiff “did not institute its policy in bad
faith, if it reasonably anticipated litigation when it did so, it is guilty of spoliation.” The
court ordered an in camera review of the documents on the plaintiff’s privilege log to
determine the extent to which both the crime/fraud exception and the subject-matter
waiver applied.

Renda Marine, Inc. v. United States, 58 Fed. Cl. 57 (Fed. Cl. 2003). In a contract
dispute filed by a marine dredging contractor against the U.S. Army Corps of Engineers,
the plaintiff moved to compel production of backup tapes and for permission to
access the contracting officer’s computer hard drive. The policy of the corps was that
after an e-mail was read, it was either deleted or moved to a personal folder immediately.
The court found that this practice continued after the defendant had been put on
notice that litigation might be pending, thereby breaching a duty to preserve documents.
Thus, the court granted the plaintiff’s motion to compel the defendant to produce the
backup tapes at its own expense and to provide access to the contracting officer’s computer
hard drive.

United States v. Quattrone, No. 04-5007-cr (2d Cir. Mar. 20, 2006). In the appeal of
the second trial and conviction of Frank Quattrone, investment banker with Credit Suisse
First Boston (“CSFB”), the circuit court vacated the judgment and remanded the
case to a different trial judge for further proceedings. The case stemmed from an SEC
investigation into CSFB’s practices as underwriter of several initial public offerings in
2003. The facts established that Quattrone endorsed and forwarded an e-mail to key
CSFB employees reminding them of the firm’s e-mail and document management policy,
and urging them to “clean up those files” just a few hours after discussing the likelihood
that he would be called as a witness in the SEC and grand jury investigations
with a CSFB attorney. Quattrone challenged his conviction on two primary grounds:
first, that the evidence was insufficient to establish violations of 18 U.S.C. §§ 1503,
1505 (obstruction of grand jury and SEC proceedings), and 1512 (witness tampering);
and second, that the jury instructions on the scienter requirement under all three counts
were erroneous. The appeals court, applying the standard of deference normally given
to jury findings, affirmed that the evidence was sufficient for a reasonable jury to
choose among conflicting accounts and explanations of the defendant’s behavior and
find the defendant guilty on all three counts. However, applying the stricter standard of
de novo review normally given to challenges of jury instructions, the appeals court
found that the judge failed to properly instruct the jury. The jury should have been instructed
that it must find that the defendant acted with the specific intent to obstruct justice
by destroying relevant records or instructing other to do so, as required by the Supreme
Court’s recent decision in Arthur Andersen LLP v. United States, 544 U.S. 696
(2005). Because the appeals court could not find—beyond a reasonable doubt—that the
jury would have come to the same conclusion based on the evidence with the correct
instruction, the case was remanded for a third trial.

Form of Production
Ayers v. SGS Control Services, 2006 WL 618786 (S.D.N.Y. Mar. 9, 2006). In a suit
for unpaid overtime wages under the Fair Labor Standards Act, plaintiff employees requested
that the defendant supplement its production of payroll and timekeeping data in
hard copy form with the mathematical formulae used to tabulate the results. The defendant
objected to producing the formulae on work product grounds, but failed to list the
formulae on any privilege log. The court rejected the defendant’s work product claim.
Citing Fed. R. Civ. P. 1, the court ordered production of the formulae and that the production
be made in electronic format to allow the plaintiffs to adequately analyze the
data.

Bergersen v. Shelter Mutual Insurance Co., 2006 WL 334675 (D. Kan. Feb. 14,
2006). In a wrongful termination lawsuit, the defendant produced 7,253 documents on
three CDs in no “perceivable sequential order” and without any index. When challenged,
the defendant stated that the documents had been produced as they were maintained
in the ordinary course of business. The court rejected the defendant’s characterization
of the production as meeting the requirements of Fed. R. Civ. P. 34 and noted
that the parties should have entered into an agreement regarding the form of production,
including consideration of document identification and order. However, the court denied
the plaintiff’s motion to compel as inappropriately filed more than 30 days after the
defendant’s document production.

Bob Barker Co. v. Ferguson Safety Prods., Inc., 2006 WL 648674 (N.D. Cal. Mar.
9, 2006). In a Lanham Act lawsuit, the plaintiff requested direct access to the defendant’s
computer databases. The court declined to order such access until a showing of
good cause was made and a protocol proposed to protect the defendant from undue
business disruption, and to protect the defendant’s privileged and proprietary information.
In re Bristol-Myers Squibb, 205 F.R.D. 437 (D.N.J. 2002). Early in the litigation of a
securities fraud suit 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” to 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, for its own purposes, didn’t inform the plaintiff. Finally, the court lamented that the
parties did not take the “meet and confer” obligations of Fed. R. Civ. P.
26(f) seriously in light of electronic discovery.

CP Solutions PTE, Inc. v. General Electric Co., 2006 WL 1272615 (D. Conn. Feb.
6, 2006). In a contract case involving the procurement of electronic components, the
plaintiff objected to the defendant’s production of 301,539 pages of documents in
tagged image file format (TIFF), in response to its 131 requests, as being an overbroad
“dump truck” production designed to hide the “needle in the haystack.” It requested the
court to order the defendant to organize and identify the documents and to produce electronic
personal folder files (“PST files”) in native format. Finding that the defendant’s
form of production satisfied the “usual course of business” requirement of Fed. R. Civ.
P. 34, the court nevertheless ordered the defendant to produce the documents in “a readable,
useable format” and to provide additional data to match e-mails with attachments.
The court declined to order production of PST files without a further showing of need,
as production of PST files in native format would require considerable burden and expense
in separating out privileged and non-responsive matter.

Floeter v. City of Orlando, 2006 WL 1000306 (M.D. Fla. Apr. 14, 2006). In an employment-
related lawsuit against the City of Orlando Police Department, the plaintiff
requested “entry upon land” under Fed. R. Civ. P. 34 for the purposes of inspecting
computer hard drives for relevant documents, to which the defendant police department
objected. In denying the plaintiff’s motion to compel, the court noted that a request under
Rule 34 for documents or inspection does not extend to conducting a general search
for documents, and such an on-site inspection would not be considered unless there was
a showing that documents had been requested which the police department had failed to
produce.

Gilliam v. Addicts Rehab. Ctr. Fund, Inc., 2006 WL 228874 (S.D.N.Y. Jan. 26,
2006). In an employment class action, the defendants identified 148 compact disks containing
payroll and personnel information of 150 employees as responsive to the plaintiffs’
request for production. Citing the personal nature of much of the data, however,
the defendant refused to produce the disks themselves, offering instead to produce
36,000 hard copy pages for inspection only at the defendant’s premises. The plaintiffs
moved to compel production of the disks themselves. Citing Rule 1 of the Federal Rules
of Civil Procedure, the non-privileged nature of the data, and the availability of a protective
order, the court ordered the production of the information in computerized form.
Hagemeyer North America, Inc. v. Gateway Data Sciences Corp., 222 F.R.D. 594
(E.D. Wis. 2004). In a dispute between two corporations, the plaintiff requested that the
defendant search its backup tapes and identify responsive e-mails. The defendant objected,
citing undue burden, because of the significant cost involved. The court, relying
on the test in Zubulake v. UBS Warburg, 217 F.R.D. 309 (S.D.N.Y. 2003), ordered that
information from a sample of backup tapes be taken to help determine “whether the
burden or expense of satisfying the entire request is proportionate to the likely benefit.”
Hagenbuch v. 3B6 Sistemi Elettronici Industriali S.R.L., 2006 WL 665005 (N.D. Ill.
Mar. 8, 2006). In a patent infringement suit, the defendant objected to the plaintiff’s
initial document request on grounds of burden and overbreadth, stating that it would
simply make relevant documents available for inspection and copying at its premises.
The plaintiff accepted the offer, inspected the documents on site, and designated numerous
paper and electronic documents for copying, including CDs and DVDs. The defendant
refused to copy and produce the CDs and DVDs, stating that it would only produce
hard copies at the plaintiff’s expense. The defendant later modified its objection,
stating that it would produce TIFF images of the electronically stored information. The
plaintiff objected, stating that production of the TIFF images would not be adequate under
Fed. R. Civ. P. 34. The defendant conceded that the TIFF images were fundamentally
different from the electronic files they represented and made no claim of privilege
justifying the redaction of the missing information, stating only that the TIFF images
were a “reasonably useable form” and that its obligations were therefore satisfied under
Rule 34. The magistrate judge disagreed and ordered the defendant to produce copies of
the CDs and DVDs themselves, distinguishing this situation from In re Ford Motor Co.,
345 F.3d 1315 (11th Cir. 2003), in which the trial court gave the responding party no
opportunity to raise bona fide objections of privilege, relevance, and burden to production
of a database.

In re Honeywell International, Inc., No. M8-85 WHP, 2003 WL 22722961
(S.D.N.Y. Nov. 18, 2003). 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 work papers in hard-copy form. The plaintiff moved
to compel the production in electronic form, claiming that the data as produced were
neither in business record order nor labeled to correspond to the categories of the request,
as required by Fed. R. Civ. P. 34. PWC opposed the motion to compel because it
had produced the information sought in paper form and recreating it electronically
would cost $30,000. The court acknowledged that PWC had produced paper versions
but stated it was “insufficient because they were not produced as kept in the usual
course of business.” The court required that PWC produce the data in electronic form
and said that PWC could avoid the $30,000 expense by also producing the proprietary
software to access the data. The court noted that the plaintiffs were not competitors and
a confidentiality order was already in place, so PWC’s trade-secret interests would be
adequately protected.

Jackson v. City of San Antonio, 2006 WL 487862 (W.D. Tex. Jan. 31, 2006). In an
employment class action, the defendant elected to answer several interrogatories seeking
wage and hour information with computerized records. The plaintiffs objected to the
purported Fed. R. Civ. P. 33(d) response, claiming it was a “data dump.” After the
defendant supplemented its answer with more detailed explanations of the data
structure, the court found that the burden of extracting the requested information was
essentially the same for the plaintiffs as for the defendants, and allowed the response.
In re Lorazepam & Clorazepate, 300 F. Supp. 2d 43 (D.D.C. 2004). In an antitrust
lawsuit, the plaintiff sought to compel the defendant to provide a searchable index of
the “mountain” of electronic documents that had been provided. The defendant had previously
given the plaintiff CD-ROMs with the material, but they proved unreadable and
unsearchable. The court held that the plaintiff must have a company that specializes in
computer forensics determine if the CD-ROMs were salvageable.

McNally Tunneling Corp. v. City of Evanston, No. 00 C 6979, 2001 WL 1568879
(N.D. Ill. Dec. 10, 2001). In a lawsuit for breach of contract, the plaintiff made a motion
to compel delivery of electronic documents, which it already had in hard copy. The
court noted that case law was 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), which denied a request for computerized data to supplement paper production,
and Anti-Monopoly, Inc. v. Hasbro, Inc., No. 94CIV.2120, 1995 WL 649934
(S.D.N.Y. Nov. 3, 1995), which held that a party is entitled to both hard-copy and computerized
data. Since the motion was not supported by controlling case law, however,
the court denied the defendant’s motion because it “failed to demonstrate that it is entitled
to both [a] hard copy and an electronic version[ ].”

Northern Crossarm Co. v. Chemical Specialties, Inc., No. 03-C-415-C, 2004 WL
635606 (W.D. Wis. Mar. 3, 2004). The plaintiff filed a motion to compel the production
of 65,000 e-mail messages in electronic form after the defendant had produced the
requested e-mails in paper form. The court held that the plaintiff was not entitled to its
preferred form of production under Fed. R. Civ. P. 34. Absent a specific request for the
production to be in electronic form, and absent any showing that the form chosen by the
producing party constituted a “sharp tactic” or “gamesmanship,” the court refused to
grant the plaintiff’s motion based only on “an unfortunate failure to communicate adequately.”
Nova Measuring Instruments, Ltd. v. Nanometrics, Inc., 2006 WL 524708 (N.D.
Cal. Mar. 6, 2006). In a patent infringement suit, the plaintiff moved to compel the
production of electronic records in native file format. Citing In re Verisign, 2004 WL
2445243 (N.D. Cal. 2004), and that the defendant offered no explanation as to why it
objected to production in native file format, the judge ordered that the defendant do so,
with original metadata.

Physicians Interactive v. Lathian Systems, Inc., No. CA 03-1193-A, 2003 WL
23018270 (E.D. Va. Dec. 5, 2003) (mem.). In a civil suit against alleged hackers for
theft of customer lists and trade secrets, 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. The court stated the plaintiff must meet the four-part
test from Blackwelder Furniture Co. v. Selig Manufacturing Co., 550 F.2d 189 (4th Cir.
1977), for a preliminary injunction which requires consideration of (1) the likelihood of
irreparable harm to the plaintiff if the preliminary injunction is denied; (2) the likelihood
of harm to the defendant if the requested relief is granted; (3) the likelihood that
the plaintiff will succeed on the merits; and (4) the public interest, as well as the test for
expedited discovery requiring “unusual circumstance . . . that would likely prejudice the
party if they were required to wait the normal time.” The court held that the plaintiff
withstood the Blackwelder test and that “[e]lectronic evidence can easily be erased and
manipulated,” which met the requirement for expedited discovery. Therefore, the court
granted the plaintiff’s motion, with the condition that the imaging be done by a computer
forensics expert and that discovery be limited to information related to the alleged
attacks.

In re Plastics Additives, No. Civ. A. 03-2038, 2004 WL 2743591 (E.D. Pa. Nov. 29,
2004). In a complex antitrust class action, the plaintiffs made a motion to compel the
defendants to “provide data in electronic format . . . and . . . provide technical assistance
to the plaintiffs in understanding [the] data.” The defendant objected to being compelled
to provide technical assistance because the plaintiff did not carry the same burden.
Agreeing with the defendant, the court found that “[b]oth parties must provide all transactional
data in electronic format,” however, the defendant was not required to provide
technical assistance.

Powerhouse Marks, LLC. v. Chi Hsin Inpex, Inc., 2006 WL 83477 (E.D. Mich. Jan.
12, 2006). In a trademark infringement suit, the plaintiff served interrogatories for purchase
and sales information. The responding party, Wal-Mart Stores, Inc., answered by
reference to 1,771 pages of computer printouts. The plaintiff filed a motion to compel,
claiming that the database printouts were indecipherable. The court agreed, stating that
it was unable to ascertain the information sought by the interrogatories from the raw
data produced. Citing Fed. R. Civ. P. 33(d) and the 1970 Advisory Committee Notes to
Rule 34, the court held that in order for the burden of deriving the information to be the
same for both sides, the defendant should produce computer data in the computerreadable
form available to the defendant and more useable by the plaintiff.

In re Priceline.com, Inc. Securities Litigation, 2005 WL 3465942 (D. Conn. Dec. 8,
2005). In a securities class action litigation, the court set out a detailed order regarding
the forms of production for a variety of electronic information sources. The court rejected
“native format” as a default form of production, stating a preference for static
TIFF or PDF images with Bates numbering, accompanied by a searchable database of
relevant metadata, but with all relevant data preserved in native format. The court also
signaled its willingness to entertain cost-shifting or cost-sharing, citing the proposed
amendments to the Federal Rules of Civil Procedure.

Static Control Components, Inc. v. Lexmark International, Inc., 2006 WL 897218
(E.D. Ky. Apr. 5, 2006). In a patent infringement action, the plaintiff moved to compel
production of the defendant’s “presale customer inquiry database,” consisting of approximately
60,000 records, offering to extract responsive information from the database
at its own expense. The defendant argued that the motion to compel was moot, as it
made the database available at its premises for inspection and copying, and plaintiff had
not done so. The defendant had offered what was essentially a “quick peek” review of
the database, allowing the plaintiff access to the unreviewed database to perform its
own searches (without waiving privilege), print out what it considered responsive information,
and leave those pages with the defendant to review for privilege before producing
them. The plaintiff countered by saying that the database as offered was useless,
as it only accepted inquiries based on customer name, phone number, or reference number—
information that the plaintiff did not have. The court stated that it would “not
permit Lexmark to hide behind its peculiar computer system as an excuse for not producing
information to SCC,” and ordered that the defendant produce the database in
reasonably useable form under the terms of an existing protective order.
Super Film of America, Inc. v. UCB Films, Inc., 219 F.R.D. 649 (D. Kan. 2004). In a
contract dispute over the sale of $115,000 worth of transparent film, the defendant
sought discovery of e-mails, documents, databases, and spreadsheets that the plaintiff
claimed were beyond its “knowledge or expertise” to retrieve and produce. The plaintiff
offered to make computers available to the defendant so the defendant could retrieve the
requested data. The defendant objected, and the court agreed that the offer was an unreasonable
attempt to shift discovery costs to the requesting party. Noting that the plaintiff’s
claim that producing the documents would create an undue burden was conclusory
and unsupported, the court granted the defendant’s motion for discovery.

In re Verisign, Inc., No. C 02-02270, 2004 WL 2445243 (N.D. Cal. Mar. 10, 2004).
In a class action securities suit, the defendants were ordered by the magistrate judge to
produce all documents in electronic form. The order further stated that “[p]roduction of
TIFF version alone is not sufficient,” and that “[t]he electronic version must include
metadata as well as be searchable.” The defendants objected that the order required
them to produce irrelevant material and to convert TIFF images already prepared for
production into some other form. The district judge interpreted the order as essentially
an order to produce in native format, but found that the order was neither “clearly erroneous
[n]or contrary to law.”

Williams v. Sprint/United Management Co., 2005 WL 2401626 (D. Kan. Sept. 29,
2005). In an employment class action suit alleging age discrimination in layoffs, the defendant
produced Excel spreadsheets showing reduction-in-force calculations in a static
image format, which eliminated the mathematical formulae behind the spreadsheets,
text that exceeded cell size, and metadata. Referring to The Sedona Principles, the judge
determined that the defendant should have preserved and produced the spreadsheets “as
they are kept in the ordinary course of business”—that is, in native format—or taken
other measures to preserve and produce non-apparent information contained within the
electronic files, as it was reasonable to assume that the calculations, text, and metadata
would be relevant and material to the claims raised in the lawsuit.

Zakre v. Norddeutsche Landesbank Girozentrale, No. 03 Civ. 0257, 2004 WL
764895 (S.D.N.Y. Apr. 9, 2004). The defendant produced over 200,000 e-mail messages
on two CDs in a word-searchable electronic format. The plaintiff filed a motion to
compel the additional production of “a meaningful and detailed document index.” The
court held that the defendant produced the e-mail messages “in as close a form as possible
as they are kept in the usual course of business,” and would not be required to produce
an index or be “further obligated to organize and label them to correspond with
Zakre’s requests.”

Use of Experts
Balboa Threadwork, Inc. v. Stucky, 2006 WL 763668 (D. Kan. Mar. 24, 2006). In a
Lanham Act case alleging infringement of digital embroidery designs, the plaintiff
sought an order allowing it to image the defendant’s computer hard drives at the plaintiff’s
expense. The defendant objected, stating that it owned several computers, some of
which were used in its home-based business and some of which were not. There was,
however, no agreement over which computers were more likely to contain relevant evidence.
The plaintiff proffered no evidence that data had been or was about to be deleted
by the defendant and submitted only a broad and general affidavit by its expert that imaging
was an appropriate action. Attempts to reach agreement through the meet-andconcur
process proved fruitless, and the court ordered that the imaging be done at the
plaintiff’s expense, but under a protocol that would protect the defendant’s personal,
privileged, and non-responsive information. The court ordered that the imaging not be
performed until the parties had agreed on an appropriate protocol to be designed and
executed by the parties’ experts.

Gates Rubber Co. v. Bando Chemical Industries, Ltd., 167 F.R.D. 90 (D. Colo.
1996). In a lawsuit over allegedly stolen trade secrets, one of the defendants deleted certain
word processing files from his computer, claiming the files were unrelated to the
litigation. The plaintiff obtained permission to utilize its own technician to recover the
missing files. The technician installed a commercial data-recovery program, “Norton
Unerase,” on the defendant’s computer, and in the process destroyed additional files
estimated to be 7% to 8% of the remaining discoverable data. While acknowledging that
the defendant’s original intentional deletion of computer files warranted a sanction, the
court noted the plaintiff’s negligence in attempting to recover the files offset the potential
sanction. The court stated that parties to judicial proceedings have “a duty to utilize
the method which would yield the most complete and accurate results” to recover and
preserve computer evidence. Despite the plaintiff’s negligence, the court awarded the
plaintiff 10% of the fees and costs related to bringing the sanctions motion, an unusual
reprimand stemming from the unique difficulty of isolating the cost of one discovery
motion among many.

Harbuck v. Teets, 2005 WL 2510229 (11th Cir. 2005). In an employment discrimination
suit, the plaintiff moved to compel production of e-mails that it claimed the defendant
had willfully deleted. The court ordered the defendant to submit to an inspection of
its computer by the court’s own IT personnel, who were able to retrieve the requested
data. The court then closed discovery and rendered summary judgment for the defendant.
On appeal, the Eleventh Circuit found no abuse of discretion in the use of the
court’s own IT personnel, nor any reasonable basis for believing the defendant was hiding
information.

Northwest Airlines v. Local 2000, No. Civ. A.00-08 (D. Minn. Jan. 11, 2000), discussed
in Michael J. McCarthy, Data Raid: In Airline’s Suit, PC Becomes Legal
Pawn, Raising Privacy Issues, Wall Street J., May 24, 2000, at A1. In an unreported
case, an airline sued a flight attendants’ union, alleging that certain union activists attempted
an illegal “sick out” to coincide with the millennium holiday. The airline
sought discovery of the home computers of two of the most vocal union leaders, claiming
that these individuals used their personal e-mail accounts to organize the job action.
The magistrate judge granted the airline’s discovery request, ordering inspections of the
two home computers under protocols similar to the one adopted in Playboy Enterprises,
Inc. v. Welles. However, the representations made by the airline and its computer experts
regarding the amount of time and level of intrusiveness the inspection would involve
turned out to be wildly inaccurate, and the neutrality of the experts came into
question, leading to accusations in the public press that the requested discovery was an
unwarranted invasion of privacy and amounted to harassment of the defendants. After
more than 30 days of inspection, no significant relevant evidence was found and the
case was dismissed.

Playboy Enterprises, Inc. v. Welles, 60 F. Supp. 2d 1050 (S.D. Cal. 1999). In a lawsuit
for trademark infringement and dilution, the plaintiff sought discovery for the defendant’s
hard drive, which may have contained deleted e-mails. The defendant objected,
citing concerns that some of the e-mails were privileged. To protect privilege,
confidentiality, and the integrity of the evidence, the court appointed a qualified neutral
expert to conduct discovery of the defendant’s computer hard drive and approved a detailed
protocol for the expert to follow.

Rowe Entertainment, Inc. v. William Morris Agency, Inc., 51 Fed. R. Serv. 3d
(West) 1106, aff’d, 53 Fed. R. Serv. 3d (West) 296 (S.D.N.Y. 2002). In allowing the
requesting party direct access to the respondent’s computer files, the court adopted a
protocol in which the requesting party’s expert recovered files and the requesting
party’s attorney reviewed them for relevance before the responding party reviewed
them for privilege. See also Rowe, under “VI. Costs and Cost Allocation.”
Simon Property Group, L.P. v. mySimon Inc., 194 F.R.D. 639 (S.D. Ind. 2000). In a
trademark infringement lawsuit, the plaintiff sought to compel discovery of the defendant’s
hard drive to access deleted documents. The court adapted a similar approach as
that used in Playboy Enterprises v. Welles, 60 F. Supp. 2d 1050 (S.D. Cal. 1999). The
plaintiff was to choose an expert to create a “mirror image” of the hard drive and the
expert was to furnish it to the defendant’s counsel to identify and redact any documents
that were privileged. The plaintiff would then have access to all material that was not
privileged.

Tempo Electric Heater Corp. v. Temperature Engineering Co., No. 02 C 3572,
2004 WL 1254134 (N.D. Ill. June 3, 2004). In a suit concerning theft of trade secrets,
the defendant moved for summary judgment, stating that the plaintiff had failed to produce
key evidence to support its claim. In particular, the plaintiff failed to show by direct
evidence that any unauthorized files existed on the defendant’s computers. The circumstantial
evidence offered by the plaintiff was that the defendant did not return several
“access keys” and proprietary programs at the end of the parties’ working relationship.
The direct evidence offered in rebuttal was that the defendant hired an independent
service bureau to inspect all of its computers for remnants of the plaintiff’s proprietary
software, and the service bureau reported that none were found. The court held that the
plaintiff ultimately has the burden of proof, and that mere circumstantial evidence and
failure to conduct its own investigation of the defendant’s computers did not meet that
burden.

Wild v. Alster, 377 F. Supp. 2d 186 (D.D.C. 2005). In a medical malpractice case, the
jury found for the defendant doctor, and the plaintiff moved for a new trial, citing prejudice
resulting from the inability to have a computer forensics expert determine the dates
of various medical records. However, because of routine migration of the records from
one computer to another, the dates would not likely be determined accurately through
metadata, and the plaintiff had requested the expert examination discovery 18 months
after discovery had closed. Therefore, the court found no abuse of discretion and denied
the motion for a retrial.

YCA, LLC v. Berry, No. 03 C 3116, 2004 WL 1093385 (N.D. Ill. May 7, 2004). In a
lawsuit for breach of an employee non-solicitation, non-disclosure, and non-recruitment
agreement, the defendant Berry moved to strike the testimony of the plaintiff YCA’s
computer forensics expert on the grounds that YCA had failed to identify the expert and
the nature of the evidence the expert would offer in a timely manner. The expert had
recovered a “plethora” of documents apparently deleted by Berry from his companyissued
computer. The court denied the motion on the grounds that Berry had deliberately
misled YCA during discovery by denying that he had used his company-issued
computer to further his plans to establish a competing business. YCA could not be
faulted for relying on Berry’s representations and making a rational cost-benefit decision
to not hire an expert. YCA’s analysis changed at the close of discovery when Berry
admitted that his previous statements were false.

Costs and Cost Allocation
In re Air Crash Disaster at Detroit Metropolitan Airport, 130 F.R.D. 634 (E.D.
Mich. 1989). In a lawsuit stemming from the crash of a passenger jet, the defendant
made a motion to compel the plaintiff to produce a nine-track tape with simulation runs
on it. The plaintiff opposed the motion because it stated that the Federal Rules of Civil
Procedure do not require it to create new documents it does not already have. Relying
on National Union Electric Corp. v. Matsushita Electric Co. Ltd., 494 F. Supp. 1257
(E.D. Pa. 1980), the court granted the defendant’s motion. However, since the plaintiff
did not already have the tapes, the court allocated the cost of generating them to the defendant.

In re Brand Name Prescription Drugs Antitrust Litig., Nos. 94 C 897, MDL 997,
1995 WL 360526 (N.D. Ill. June 15, 1995) (mem.). In an antitrust lawsuit, the plaintiff
made a motion to compel the defendant to retrieve deleted e-mails at the defendant’s
expense. The defendant contended the request for discovery was overly broad and the
expense of retrieval, $50,000 to $75,000, made the request overly burdensome. The
court held that the defendant must bear the cost of retrieval since the plaintiff had no
control over the type of record-keeping the defendant maintained. However, the plaintiff
was required to narrow the scope of discovery to limit costs and to pay $.21 for each
page of the e-mails that were to be copied.

Computer Associates International, Inc. v. Quest Software, Inc., 56 Fed. R. Serv.
3d (West) 401 (N.D. Ill. 2003). The plaintiff in a software copyright and trade secret
infringement case requested that the defendant image the computer hard drives of six
key employees. After the imaging, the defendant spent between $28,000 and $40,000 to
remove privileged e-mails from the backups and create a privilege log. The defendant
then filed a motion to require the plaintiff to pay these preparation costs. The court reviewed
the eight factors articulated in Rowe Entertainment, Inc. v. William Morris
Agency, Inc., 205 F.R.D. 421 (S.D.N.Y. 2002), and determined that none of them favored
cost shifting, analogizing these preparation costs to costs for attorney review.
Cook v. Deloitte Touche LLP, 2005 WL 2429422 (S.D.N.Y. Sept. 30, 2005). In an
employment discrimination suit, the plaintiff moved for an extension of time to conduct
electronic discovery prior to the court’s ruling on a summary judgment motion. The
court denied the extension, saying that the plaintiff had failed to show that the defendant
had withheld any relevant electronic records. Although the plaintiff claimed to have
copies of “smoking gun” e-mails, the court was not convinced that any further evidence
would justify the cost of further discovery, “nor has he [the plaintiff] volunteered to foot
the bill for doing so.”

Federal Trade Commission v. U.S. Grant Resources, LLC, No. Civ.A.04-596, 2004
WL 1396315 (E.D. La. June 18, 2004). The defendant is this civil fraud action was
also defending a related criminal fraud action brought by the State of Louisiana. The
defendant in this case served a subpoena under Fed. R. Civ. P. 45 for hard-copy records
the state seized from it in the criminal action. The state’s attorney filed a motion to
quash the subpoena on the basis that it was overbroad and duplicative, and that the defendant
should pay the costs of copying the documents. The federal court denied the
motion, stating that although the defendant already had computer files representing the
alleged fraudulent transactions, it was entitled to hard copies of its own documents held
by the state, and that under the three-part test established by In re Exxon Valdez, 142
F.R.D. 380 (D.D.C. 1992), the cost of photocopying the documents was not an undue
burden that entitled the state to reimbursement, even though it was not a party to this
action.

J.C. Associates v. Fidelity & Guaranty Insurance Co., 2006 WL 1445173 (D.D.C.
May 25, 2006). In a suit for denial of insurance coverage for damages caused by pesticide
use, plaintiff requested documents relevant to the way defendant had interpreted
the “pollution exclusion” cause of past insurance contracts. The defendant conducted an
electronic search, based on file codes, of 1.4 million active and inactive claim files and
identified 454 potentially responsive claim files. The next step would be to review all
454 claim files for responsiveness and privilege, a process that would likely cost far
more than the $124,000 claim at issue. To reduce costs, the magistrate judge ordered the
plaintiff to supply the defendant with document conversion software that would allow
the defendant to scan and convert 25 randomly selected files from the 454 and search
for four key words. The resulting “hits” would then be reviewed by the defendant for
responsiveness and privilege, and the defendant would produce those documents for the
plaintiff and submit an affidavit detailing the time and cost of the search and review.
The magistrate judge would then determine, based on the “marginal utility” concept articulated
in McPeek v. Ashcroft, 202 F.R.D. 31 (D.D.C. 2001), whether further discovery
is warranted and who should bear the costs.

Laurin v. Pokoik, No. 02 Civ. 1938, 2004 U.S. Dist. LEXIS 24010 (S.D.N.Y. Nov.
30, 2004). In a hostile work environment case, the defendant alleged that the plaintiff
made a particular entry in the defendant’s computer system shortly before she was terminated.
The plaintiff requested any document that would prove the date the entry was
actually made. The court directed the plaintiff to file a motion to compel inspection of
the defendant’s computer system if and when she was willing to retain a forensic computer
expert at her own expense.

Medtronic Sofamor Danek, Inc. v. Michelson, 56 Fed. R. Serv. 3d (West) 1159
(W.D. Tenn. 2003). 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 the 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 factors articulated in Rowe Entertainment,
Inc. v. William Morris Agency, Inc., 205 F.R.D. 421 (S.D.N.Y. 2002) (see below), to
determine that the defendant should shoulder most of the costs of the proposed discovery.
The court then ordered a detailed protocol for the parties to follow in conducting
discovery of the backup tapes and hard drives. Finally, the court granted the defendant’s
request that a special master be appointed under Fed. R. Civ. P. 53, with the costs to be
borne equally by the parties.

Multitechnology Services, L.P. v. Verizon Southwest, No. 4:02-CV-702-Y, 2004
WL 1553480 (N.D. Tex. July 12, 2004). In a commercial lawsuit involving allegations
of unfair trade practices, the plaintiff propounded interrogatories seeking information
from the defendant’s customer databases. The defendant sought a protective order shifting
the cost of the database searches, but the plaintiff objected, stating that cost shifting
would not be appropriate under the factors announced in Zubulake v. UBS Warburg,
217 F.R.D. 309 (S.D.N.Y. 2003), because the requested data were “accessible.” The
court held that Zubulake was neither controlling nor exactly applicable to the situation.
However, applying the Zubulake cost-shifting factors, the court found that an even sharing
of the cost would accommodate the plaintiff’s need for the information while balancing
the defendant’s desire to control the costs. In addition, the court classified the
expenditures as “court costs,” rendering them recoverable by the prevailing party.
Murphy Oil USA, Inc. v. Fluor Daniel, Inc., 52 Fed. R. Serv. 3d (West) 168 (E.D.
La. 2002). In a lawsuit for breach of contract, the plaintiff made a motion to compel the
defendant to reproduce e-mails from its backup tapes. Following Rowe Entertainment,
Inc. v. William Morris Agency, Inc., 205 F.R.D. 421 (S.D.N.Y. 2002), the court offered
the defendant two options for proceeding with discovery of e-mail from the backup
tapes. Under option one, the plaintiff would pay the cost of recovering the e-mails and
would assess whether any of the documents were relevant, then the defendant could review
those documents to determine whether any were privileged. Under the second option,
the defendant could review, at its own cost, all relevant documents recovered by
the expert and produce only the non-privileged documents to the plaintiff.
OpenTV v. Liberate Technologies, 219 F.R.D. 474 (N.D. Cal. Nov. 18, 2003) (order
re discovery). 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 the plaintiff, the requesting party. The court
agreed that the offer effectively shifted costs, yet because extracting the source code
would take the defendant 125 to 150 hours, the court found that the requested electronic
data were inaccessible for purposes of discovery and that cost-shifting would be appropriate.
Applying the Zubulake factors (see Zubulake I in this section), 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, Inc. v. Sanders, 437 U.S. 340 (1978). In a class action before the
Supreme Court, the issue was whether the defendant would have to pay the cost of extracting
information to certify the class. The Court held that the request fell under Fed.
R. Civ. P. 23(d), governing class actions, not Fed. R. Civ. P. 26, governing general discovery,
because the issue was notifying a class, and not “to define or clarify issues of
the case.” Also, either party would require the services of a third-party to extract the
information, negating any potential cost saving were the defendant to do it. Therefore,
the court held it was inappropriate to shift the burden of costs to the defendant.
Rowe Entertainment, Inc. v. William Morris Agency, Inc., 205 F.R.D. 421
(S.D.N.Y. 2002). In an action against talent agencies alleging racial discrimination in
bookings, the plaintiffs requested e-mail 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 the e-mails for relevance and privilege. Balancing eight factors derived from
the case law, the court required the plaintiffs to pay for the recovery and production of
the defendants’ extensive e-mail 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 those data from other sources;
4. the purposes for which the responding party maintains those data;
5. the relative benefits to the parties of obtaining those data;
6. the total costs associated with production;
7. the relative ability and incentive for each party to control its own costs; and
8. the resources available to each party.
Toshiba America Electronic Components, Inc. v. Superior Court of Santa Clara
County, 21 Cal. Rptr. 3d 532 (Cal. Ct. App. 2004). A California state court judge
found that California’s Code of Civil Procedure, section 2031(g)(1), was fundamentally
different from Fed. R. Civ. P. 26(b)(2), in that it clearly placed the responsibility for the
reasonable expense of translation of computer data, if necessary, on the requesting
party. Although this litigation was in state court, neither party actually cited the California
rule, basing their arguments for and against cost shifting on federal practice. The
court found these arguments by both sides misplaced, stating that the parties should
have relied on California’s statute.

United States v. Amerigroup, 2005 WL 3111972 (N.D. Ill. Oct. 21, 2005). In a qui
tam action against a government contractor, the Illinois Department of Healthcare and
Family Services (HFS), not a party to the suit, was served with a subpoena duces tecum
under Fed. R. Civ. P. 45, requesting it to search for and produce e-mails of named employees
based on a list of search terms. HFS objected, submitting a detailed affidavit of
the cost and burden of restoring the e-mails from backup tapes before the searches could
be performed. Citing the significant factor of HFS’s non-party status, and the differences
between Fed. R. Civ. P. 26 and 45 relating to protecting producing parties from
undue burden and cost, the court granted HFS’s motion to quash the subpoena.
Wiginton v. CB Richard Ellis Inc. (“Wiginton II”), N. 02-C-6832, 2004 U.S. Dist.
LEXIS 15722 (N.D. Ill. Aug. 9, 2004). In a class action lawsuit alleging sexual harassment
and a hostile work environment, the plaintiffs requested a search through the
defendant’s e-mail backup tapes for pornographic images and sexually suggestive messages.
By agreement, the plaintiffs’ computer discovery expert was provided with 94
selected backup tapes and with a set of search terms to use. The expert identified between
142 and 567 arguably responsive documents at a cost of $249,000. The plaintiffs
filed a motion for costs. Considering the cost-shifting factors announced in Rowe Entertainment,
Inc. v. William Morris Agency, Inc., 205 F.R.D. 421 (S.D.N.Y. 2002), and
Zubulake v. UBS Warburg, 217 F.R.D. 309 (S.D.N.Y. 2003), the court opted to modify
the Zubulake factors to emphasize the proportionality test of Fed. R. Civ. P.
26(b)(2)(iii). The factors the court considered were
1. the likelihood of discovering critical information;
2. the availability of such information from other sources;
3. the amount in controversy as compared to the total cost of production;
4. the parties’ resources as compared to the total cost of production;
5. the relative ability of each party to control costs and its incentive to do so;
6. the importance of the issues at stake in the litigation;
7. the importance of the requested discovery in resolving the issues at stake in
the litigation; and
8. the relative benefits to the parties of obtaining the information.
Finding that while most of the factors weighed in favor of cost shifting, the court stated
the plaintiff had not entirely overcome the presumption that the responding party bears
its own costs. Therefore the court ordered that the plaintiffs should bear 75% of the
costs and the defendant only 25%.

Xpedior Creditor Trust v. Credit Suisse First Boston (USA), Inc., 58 Fed. R. Serv.
3d (West) 855 (S.D.N.Y. 2003). A corporation brought a 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 that would shift to the plaintiff the
costs of restoring the computer systems to access the data. Applying the seven-part test
enunciated in Zubulake v. UBS Warburg LLC (“Zubulake I”), 217 F.R.D. 309
(S.D.N.Y. 2003), the judge 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 interest 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.

Zenith Electronics Corp. v. WH-TV Broadcasting Corp., 2004 WL 1631676 (N.D.
Ill. July 19, 2004). In a breach of contract action, the court entered judgment against the
defendant in favor of two third-party defendants. The third-party defendants then filed a
bill of costs for $357,618.82, naming both Zenith and WHTV Broadcasting as jointly
liable. Zenith challenged the bill of costs, which included several items related to electronic
discovery. The court reviewed the items in light of 28 U.S.C. § 1920. It found
that the considerable cost ($109,627.46) of printing documents originally in electronic
format, including consulting time for the conversion of documents from electronic to
print formats, was incurred for the convenience of the parties and was not recoverable
under the statute, nor was the cost ($182,595.47) of hiring an independent computer
consultant to review the electronic documents for privilege and relevance under a courtordered
protocol.

Zubulake v. UBS Warburg LLC (“Zubulake I”), 217 F.R.D. 309 (S.D.N.Y. 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 e-mail existed, most likely on backup tapes
and optical storage media created and maintained to meet SEC records-retention requirements.
The defendants objected to producing e-mail from these sources, which
they estimated would cost $175,000 exclusive of attorney review time. The 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 are relatively inaccessible,
such as on backup tapes. Furthermore, 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 those 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; and
7. the relative benefits to the parties in obtaining those data.
Zubulake v. UBS Warburg LLC (“Zubulake III”), 216 F.R.D. 280 (S.D.N.Y. 2003).
Following the May 13, 2003, opinion and order above, the defendants restored and reviewed
five backup tapes selected by the plaintiff at a cost slightly over $19,000. Six
hundred e-mail messages were deemed to be responsive to the plaintiff’s discovery request.
The defendants 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 defendants
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 they had been made accessible, should
be borne by the requesting party.

Privilege and Privilege Waiver

Biby v. Board of Regents of University of Nebraska at Lincoln, 419 F.3d 845 (8th
Cir. 2005). A public university employee has no reasonable expectation of privacy in
the data on his university computer when the university’s computer use policy states
that computer files may be searched in litigation.

Collaboration Properties, Inc. v. Polycom, Inc., 224 F.R.D. 473 (N.D. Cal. 2004). In
a lawsuit over patent infringement, a dispute arose over privilege for 58 e-mails between
non-attorneys of the defendant that were forwarded to attorneys. The plaintiff
argued that the defendant should provide redacted copies of the 58 e-mails, because the
defendant had not demonstrated that all portions of the 58 e-mails were privileged. The
defendant complied, but, according to the plaintiff, the redactions were still overbroad.
In particular, the defendant redacted information showing the author and recipient of
each withheld e-mail. The court ordered the defendant’s counsel to show to the plaintiff’s
counsel nonredacted copies of the e-mails, with the defendant reserving its right to
assert any applicable privilege, in order to discuss more meaningfully the scope of any
privilege and correlative redactions. Over the defendant’s objections, the court concluded
that the limited disclosure in the context of a mandated meeting of counsel did
not waive the attorney–client privilege.

Crossroads Systems (Texas), Inc. v. Dot Hill Systems Corp., Case No. A-03-CA-
754-SS (W.D. Tex. May 31, 2006). In a patent infringement suit, the defendant produced
an e-mail authored by its Director of Intellectual Property and sent to its outside
patent counsel. The address was evident on the e-mail, and the attachments to the e-mail
were marked “Confidential – Attorneys Eyes Only.” The e-mail was then used as the
basis of questioning in a deposition of the defendant under Fed. R. Civ. P. 30(b)(6) at
which no objection was made regarding the e-mail, and again some 18 months later at a
deposition of the Director of Intellectual Property himself. At that second deposition,
defendant counsel raised the claim of attorney–client privilege regarding the e-mail and
its attachments and demanded return of the documents. The court, applying the Fifth
Circuit’s five-part balancing test, found that any claim of privilege over the produced
documents had been waived. But because a motion to compel further deposition testimony
of the Director of Intellectual Property regarding the subject matter of the documents
was not filed until after the discovery deadline, further discovery was denied.
In re Currency Conversion Fee, No. MDL 1409, M 21-95, 2003 WL 22389169
(S.D.N.Y. Oct. 21, 2003). Under the “functional equivalent” exception to the corporate
attorney–client privilege, the privilege is maintained even though the communications
are disclosed to a third party, if that third party is the functional equivalent of a corporate
employee. The court held that the exception did not apply to otherwise privileged
documents processed by an outsourced computer data-processing firm.

Curto v. Medical World Communications, Inc., 2006 WL 1318387 (E.D.N.Y. May
15, 2006). In an employment suit, the defendant hired a computer forensic consultant to
restored files and e-mails that had been deleted by the plaintiff from her companyissued
laptops before she returned them to her employer upon her termination. The defendant
then produced them to the plaintiff. The plaintiff asserted that several of these
files were protected by attorney–client privilege and work product immunity. The defendant
cited its computer use policy, which it said put employees on notice that they
had no privacy expectation in files created or stored on company equipment, for the
proposition that no privilege attached to these documents or, in the alternative, any
privilege had been waived. Applying the Second Circuit’s four-part test, the magistrate
judge found that the privilege had not been waived, as the plaintiff (1) took reasonable
steps to protect confidentiality, (2) the documents represented a tiny percentage of the
data on the computers, (3) counsel’s demand for the return of the documents was
prompt, and (4) fairness demanded that the documents be protected from disclosure.
The magistrate judge considered the company’s computer use policy to be a “subfactor,”
finding that the company’s history of lax or selective enforcement of the policy
created a “false sense of security,” particularly in the context of laptop computers issued
for the purpose of employees working from home. On review, the district judge upheld
the magistrate judge’s findings, distinguishing the home-office computer situation from
“reasonable expectation of privacy” cases involving computers in the workplace.
Fraser v. Nationwide Mutual Insurance Co., 352 F.3d 107 (3d Cir. 2003). In a
wrongful discharge suit, the Third Circuit upheld the district court’s ruling that an employer’s
search for e-mails of an employee found on the workplace computer network
did not violate the Electronic Communications Privacy Act (ECPA), 18 U.S.C. §§ 2510,
2701. Title I of the ECPA prohibits “interceptions,” which are universally defined as
searches of messages during transmission, not searches of messages that have reached
their destination and are being stored. Title II of the ECPA prohibits “seizure” of stored
e-mails, but exempts actions taken by the “person or entity providing the wire or electronic
communications service,” in this case the employer.

Haynes v. Kline, 298 F. Supp. 2d 1154 (D. Kan. 2003). In a suit by a former employee
of the Kansas State attorney general, the plaintiff moved for a preliminary injunction
prohibiting the attorney general’s office from further accessing his private files on his
former work computer. The court granted the injunction, holding that the employee
demonstrated a Fourth Amendment right in the privacy of his personal computer files.
The court found that although the employer stated, as part of the employee orientation,
that there was “no expectation of privacy in using this [computer] system,” the orientation
went on to distinguish between “public” and “private” files and to warn that access
to any other employee’s files without permission was forbidden. Passwords were issued
to each employee to prevent unauthorized access, and prior to this litigation there had
been no evidence that any other employee’s personal computer files had been monitored
or viewed by supervisors. The defendant offered no evidence to justify its search of the
employee’s personal computer files. The court held that given the totality of the circumstances,
the plaintiff’s expectation of privacy was both subjectively and objectively reasonable.
Henry v. IAC/Interactive Group, 2006 WL 354971 (W.D. Wash. Feb. 14, 2006).
After complaining of bias at her job, defendant was placed on paid leave of absence for
a year, during which time she was allowed to keep and use a defendant-issued laptop
computer and access to the defendant’s network, including the e-mail server. She was
terminated at the end of the year but was not asked to return the laptop. After retaining
counsel and filing suit, she delivered the laptop and other computers to her counsel, who
disclosed to defendant that she had them and intended to search the hard drives for
privileged and relevant information. Several months later, defendant demanded return
of the documents found, the laptop, and two of plaintiff’s personal computers, which
plaintiff’s counsel turned over to a neutral computer forensics firm. Defendant then
moved for a temporary restraining order and preliminary injunction disqualifying plaintiff’s
attorney and noticed depositions of plaintiff’s attorney and any legal assistants involved
in the electronic document search and review process, on the basis that plaintiff
had violated her employment contract by sharing the electronic files with her attorney.
Finding that the elements required to support injunctive relief had been met, the court
ordered the computer forensics firm to return the laptop computer and all non-privileged
electronic documents to defendant and restrained plaintiff counsel from using any of the
data she had obtained.

Holland v. GMAC Mortgage Corp., No. 03-2666-CM, 2004 WL 1534179 (D. Kan.
June 30, 2004). The parties in this civil suit stipulated to a broad protective order,
which they offered to the court. The order provided that categories of documents, including
“computer records or other confidential electronic information,” be designated
as “confidential,” and that any confidential material to be filed with the court would be
filed under seal. The court refused to endorse the order, stating that “[t]he mere fact that
a document is a computer record or an electronic document does not warrant protection
from disclosure,” and that “the fact that the parties may agree to a protective order
which provides for the filing of confidential materials under seal does not dispense with
the requirement that the parties establish a harm sufficient to overcome the public’s
right of access to judicial records.”
Hopson v. The Mayor and City Council of Baltimore, 232 F.R.D. 238 (D. Md.
2005). In a putative class action lawsuit alleging race discrimination in the Baltimore
Fire Department, discovery was bogged down over a number of procedural issues, one
of which was the time and cost of reviewing the defendant’s voluminous document collection
for privilege prior to production. Citing the proposed amendments to Fed. R.
Civ. P. 26(b)(5), the magistrate judge encouraged the parties to enter into a “claw back”
agreement. Recognizing that “claw back” agreements raise difficult issues of privilege
waiver, the judge stated that the agreement would be framed as a court order, bolstering
the argument that no waiver was taking place and offering some privilege protection
against parties in parallel or future litigation. However, the court noted, such an order
would not relieve the parties of the duty to perform a reasonably thorough privilege review,
as time and resources allow, nor would it act as an ironclad protection against a
“privilege waiver” claim being raised in another jurisdiction, particularly one that takes
a strict view of waiver.

Jicarilla Apache Nation v. United States, 60 Fed. Cl. 413 (Fed. Cl. 2004). In one of
the many Indian land trust fund mismanagement cases, the Court of Federal Claims
found that good cause existed to issue a protective order to facilitate discovery while
meeting the requirements of a number of federal confidentiality laws. However, the
court excluded “attorney–client privilege, the deliberative process privilege, and the attorney
work product doctrine” as applicable laws. (The complete text of the order and a
list of the applicable laws are published with this decision.)

Kaufman v. SunGard Investment System, 2006 WL 1307882 (D.N.J. May 10,
2006). In a breach of contract lawsuit, assets of the plaintiff’s software development
company had been purchased by the defendant, who was at the same time a senior executive
of the defendant. Both before and after the sale of her company to the defendant,
the plaintiff had used two laptops to communicate with her attorney regarding the
sale. These laptops became assets of the defendant upon the sale of the plaintiff’s company,
although she retained custody of them. When she left the defendant’s employ, she
surrendered the laptops, but the defendant used a computer forensics technician to determine
that several files had been copied prior to the laptops being returned by plaintiff.
Defendant sought an order to show cause to establish, inter alia, that the copied
files were not protected by attorney–client privilege. The magistrate judge determined,
and the district judge affirmed, that both the letter of the acquisition agreement and the
defendant’s computer use policy put the plaintiff on notice that the information on the
laptops belonged to the defendant upon the transfer of assets, and that the plaintiff
knowingly relinquished any claim of attorney–client privilege by surrendering the laptops
when she left the company.

Navigant Consulting, Inc. v. Wilkinson, 220 F.R.D. 467 (N.D. Tex. 2004). In a suit
by a corporation against a group of former employees for trade secret theft, the defendants
moved to compel the production of e-mails and other documents related to the
corporation’s internal investigation of the defendants and other employees. The corporation
objected, claiming attorney–client privilege and work product protection. Among
the documents withheld was a detailed forensic analysis of one employee’s laptop computer,
including a printout of data contained therein. Applying Texas law, the court held
that the attorney–client privilege applies only to communications “made for the purposes
of facilitating the rendition of professional legal services” and does not apply
when the attorney is “functioning in some other capacity—such as an accountant, investigator,
or business advisor.” The mere fact that the corporation was contemplating litigation
did not turn the attorneys’ business assistance and advice into privileged attorney–
client communications.

Portis v. City of Chicago, No. 02 C 3139, 2004 WL 1535854 (N.D. Ill. July 7, 2004).
In a class action suit brought by citizens who claimed unlawful detention by city police
for nonviolent ordinance violations that carry no jail time, attorneys for the plaintiff
class obtained approximately 20,000 relevant arrest records from the city. They proceeded
to create a computerized database from the arrest records at a cost of approximately
$90,000. The city then filed a motion to compel the plaintiffs to produce the database,
stating that although the database is attorney work product, it is not “opinion”
work product, and that the city has a “substantial need” for the database, which it cannot
recreate itself from the available information without “undue hardship.” The court
found that the database was a hybrid of “fact” and “opinion” work product, but that disclosure
to the city would not reveal the plaintiffs’ legal strategy or counsels’ mental impressions.
The court went on to find that the database, as distinct from the individual
arrest records, was an essential piece of evidence. The crux of the lawsuit was the claim
that there was a pattern of unlawful detention, and such a pattern could only be established
through computer analysis using the database. The court concluded that ordering
the plaintiff to share the database would advance the interests of the litigation as a
whole and would not violate the attorney work product doctrine, but that the parties
must split the database development costs.

Tessera, Inc. v. Micron Technologies, Inc., 2006 WL 7339848 (N.D. Cal. Mar. 22,
2006). In a patent infringement suit involving semiconductor technology, the plaintiff
sought discovery from non-party Hynix Semiconductor Industries, Inc. (“Hynix”),
which had been the subject of a U.S. Department of Justice investigation into DRAM
chip price fixing. In the course of the investigation, Hynix compiled an extensive electronic
database of documents obtained from a number of sources under a protective order
in that investigation. The court set out a procedure under which the plaintiff would
have access to the database and use specific search terms to identify potentially responsive
documents. While Hynix would inform the various contributors generally that the
database was subject to discovery in this litigation, the plaintiff would assume the responsibility
and cost of contacting each contributor to obtain permission to use responsive
documents or of challenging the confidentiality designation of any document it
wished to use over a contributor’s objection.

United States v. Rigas, 281 F. Supp. 2d 733 (S.D.N.Y. 2003). In a criminal case involving
executives of the Adelphia Communication Corporation, the government issued
grand jury subpoenas to Adelphia, pursuant to which Adelphia created twenty-six bitstream
images of employee computer hard drives. The government accidentally provided
privileged information along with the material required for discovery. Upon realizing
the mistake, the government petitioned to have the file returned, but the defendants
responded that the government had waived its privilege. Declining to adopt a
bright line rule that inadvertently volunteering privileged material always or never constituted
a waiver, the court adopted a four-part test to gauge the fairness of waiving
privilege. The test balances
1. the reasonableness of the precautions taken to prevent inadvertent disclosure
of privileged documents;
2. the volume of the discovery versus the extent of the specific discovery at issue;
3. the length of time taken by the producing party to rectify the disclosure; and
4. the overarching issue of fairness.
Applying the test to this case, the court held that the government had taken reasonable
precautions, the documents relinquished were only a small portion of the total discovery,
the government promptly notified the court of the mistake, and finally the court
found it would not prejudice the defendants counsel to not have the material. The court
held that defendants were required to return the documents to the government.
United States v. Stewart, 287 F. Supp. 2d 461 (S.D.N.Y. 2003). A year before her indictment
on charges related to securities fraud, but after the investigation had been
made public, Martha Stewart prepared a detailed e-mail relating her side of the facts and
sent it to her attorney. The next day she accessed the e-mail and forwarded it to her
daughter, without alteration. Later, attorneys for Martha Stewart Living Omnimedia
(MSLO) produced documents and computer files in response to a grand jury subpoena.
Both e-mails appeared on MSLO’s privilege log; however, only the e-mail to the attorney
was removed from the actual production. An assistant U.S. attorney later found the
copy sent to the daughter. Stewart objected to MSLO’s production of the e-mail on the
basis that it was privileged. The court held that the e-mail to the attorney would have
been privileged as attorney–client communication, but that Stewart waived the privilege
when she forwarded the e-mail to her daughter. However, the court found that the work
product protections offered by Fed. R. Civ. P. 26(b)(3) and Fed. R. Crim. P. 16(b) are
broader than the attorney–client communication privilege, and that sharing factual work
product with a family member did not waive those protections.
United States Fidelity & Guaranty Co. v. Braspetro Oil Services Co., 53 Fed. R.
Serv. 3d (West) 60 (S.D.N.Y 2002). In a surety action, the defendants provided their
testifying experts with more than 50 CD-ROM disks containing 1.1 million documents,
including many attorney–client communications and work product documents. The
plaintiffs claimed that by providing the experts with unfettered access to the entire litigation
support database, the defendants had waived any privileges and were required to
produce the database under Fed. R. Civ. P. 26(a)(2) as material “considered” by the experts.
The court acknowledged that while the scope of what is “considered” by an expert
is unclear in the case law, the burden is on the party resisting discovery to clearly
identify for the court the material that the expert did not “consider” out of the mass provided.
Finding that the defendant provided no such guidance, the court held that the entire
litigation support database was discoverable, as was the index and OCR-created text
files the experts used in searching the database.

In re Universal Service Fund Billing Practices Litig., 232 F.R.D. 669 (D. Kan.
2005). In complex multidistrict class action litigation, the plaintiffs moved to compel
the production of e-mails that defendant (AT&T) withheld on the basis of attorney–
client privilege. The withheld e-mails were characterized as “strands,” containing many
messages strung together in dialogue fashion, as is common with e-mail communication.
The court rejected AT&T’s position that each strand should be considered one
message, analogous to the minutes of a meeting, in which any privileged element rendered
the entire strand as privileged. The court required that each message within any
strand be separately identified and entered into the privilege log, and that the log set out
nine fields of information for each document.

Wachtel v. Guardian Life Insurance Co., 2006 WL 1286189 (D.N.J. May 8, 2006).
In a nationwide insurance fraud case, the district judge found sufficient evidence from
the record to support a prima facie showing that the defendants used their counsel to
delay discovery and facilitate the destruction of e-mails subject to discovery, clearing
the way for the court to conduct an in camera inspection of attorney–client communications
under the crime-fraud exception to the privilege. Specifically, the magistrate judge
found, after issuing several discovery orders regarding e-mail over a three-year discovery
period, that the defendants and their counsel had not disclosed that all e-mails were
migrated to backup media 90 days after creation and only four of “scores” of backup
tapes were subjected to any search or preservation efforts; and that any e-mail messages
deleted by employees within 30 days would be lost permanently. In a separate motion,
defendants sought reconsideration of the magistrate judge’s order that it produce all responsive
e-mails, stating that the magistrate judge failed to consider their arguments of
undue cost and burden under Fed. R. Civ. P. 26(b). The district judge affirmed the magistrate
judge’s order, acknowledging that “a significant amount of time and expense is
required to comply. However, defendants’ predicament is due largely to their own repeated
failures to respond in a timely manner to discovery requests and to court orders.
. . . The huge costs now being complained of could have been minimized by timely
compliance when the e-mails were more current.” The district judge also affirmed the
magistrate judge’s grant of an adverse inference instruction regarding e-mails admittedly
deleted by an executive of the defendants and an award of attorneys’ fees and
costs to the plaintiff.
New York State Bar Association, Committee on Professional Ethics, Opinion 749
(December 14, 2001). Topic: Use of computer software to surreptitiously examine and
trace e-mail and other electronic documents (found at http://www.nysba.org/Content/
NavigationMenu/Attorney_Resources/Ethics_Opinions/Committee_on_Professional_
Ethics_Opinion_749.htm). The receipt by an attorney of an electronic file does not constitute
permission to open and read the metadata or imbedded data that file might contain.
Opening and viewing such data is presumptively unauthorized and unethical. Similarly,
placing a tracer “bug” in an e-mail to track the distribution and modification of the
message after it has left the attorney’s computer system is unethical. For a short analysis
of this ethics opinion and useful links to background technical information, see David
Hricik, The Transmission and Receipt of Invisible Confidential Information, E-Ethics,
vol. 2, no. 3, October 2003 (found at http://www.hricik.com/eethics/2.3.html).


Rule 37 sanctions (Federal Code)

See also “I. Data Preservation and Spoliation.”
Aero Products International, Inc. v. Intex Recreation Corp., No. 02 C 2590, 2004
WL 417193 (N.D. Ill. Jan. 30, 2004). In a patent infringement suit involving the manufacture
and sale of air mattresses, the defendant was found to have been routinely deleting
all its e-mail every thirty days during the first year of the litigation. The court entered
an order requiring the defendant to recover as much destroyed electronic data as
possible and authorizing the plaintiff to petition the court for appointment of a computer
forensics expert at the defendant’s expense. The defendant engaged its own expert, who
submitted a report and forty-five pages of recovered data. The plaintiff stated that the
production was inadequate, but never petitioned the court for appointment of an expert
or filed any other motion to compel further production. Instead, the plaintiff filed a motion
under Fed. R. Civ. P. 37 for sanctions amounting to a default judgment against the
defendant. The court denied the sanctions as inappropriate and unwarranted, given the
plaintiff’s failure to pursue the discovery opportunities offered to it.

Invision Media Communications, Inc. v. Federal Insurance Co., No. 02 Civ. 5461,
2004 WL 396037 (S.D.N.Y. Mar. 2, 2004). In an insurance suit stemming from business
disruption caused by the 9/11 attacks, the plaintiff and the defendant filed crossmotions
to compel discovery and for sanctions. Two of the many incidents alleged involved
electronic discovery. In the first incident, the plaintiff’s general counsel testified
that as the company’s offices were closed and employees laid off, she directed that hard
drives of those employees’ computers be “wiped.” The defendant requested sanctions
for spoliation, which were denied by the court in the absence of any showing that the
wiped hard drives would have rendered relevant evidence. In the second incident, the
defendant requested e-mails from a three-month period around September 2001. The
plaintiff initially responded that there were no responsive e-mails, as the policy had
been to delete all e-mails after two weeks. However, the e-mails were eventually found
and produced. The court found that a “reasonable inquiry by the plaintiff’s counsel prior
to responding to [the defendant’s] document request . . . would have alerted counsel that
the plaintiff possessed electronic mail that fell within the scope of [the defendant’s]
document request.” The plaintiff was directed to pay costs and reasonable attorneys’
fees resulting from the additional discovery required.

Kucala Enterprises, Ltd. v. Auto Wax Co., 56 Fed. R. Serv. 3d (West) 487 (N.D. Ill.
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 4:00 a.m. The magistrate judge found that,
based on the totality of the circumstances, 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 Co., No. 02 C 1403, 2003
WL 22433095 (N.D. Ill. Oct. 27, 2003) (rulings on objections dated October 27, 2003).
Martin v. Northwestern Mutual Life Ins. Co., 2006 WL 148991 (M.D. Fla. Jan. 19,
2006). In a lawsuit for disability benefits, the defendant subpoenaed the plaintiff lawyer’s
bookkeeper and fiancé for computerized records showing the plaintiff’s income
and expenses from his law practice. After relevant records were produced pursuant to
the subpoenas, the plaintiff conceded that he should have produced these records in response
to prior document requests, but claimed “computer illiteracy” rendered him incapable
of fully responding. The defendant moved for dismissal of the suit. The court
found the plaintiff’s excuse for non-production “frankly ludicrous” but declined to impose
the ultimate sanction, instead ordering the plaintiff to pay expenses and attorneys’
fees.

McDowell v. District of Columbia, 2006 WL 302643 (D.D.C. Feb. 9, 2006). In a suit
against the District of Columbia police department alleging unlawful strip searches, the
plaintiff sought computerized arrest records that would establish patterns of police conduct.
After repeated failures over several months to produce complete information from
the defendant’s criminal justice information system resulting in eleven motions to compel,
the judge ordered the defendant to set a date certain for compliance or face an adverse
inference jury instruction. The court explained that any consideration of a “litigation-
ending” sanction must consider three factors – prejudice to the moving party,
prejudice to the judicial system, and the need to deter such behavior in the future — and
the defendant’s conduct to date, “while exasperating” and prejudicial to the plaintiff,
had not yet resulted in significant prejudice to the judicial system. Finding that the defendant’s
failure to produce the requested information was the result of shortages of
funding and staffing rather than willfulness or gross negligence, an extreme sanction at
this point would also serve no deterrence objective.

Procter & Gamble Co. v. Haugen, 2003 WL 22080734 (D. Utah Aug. 19, 2003) (order).
Procter & Gamble (P&G) sued several independent distributors of rival Amway
products, claiming unfair trade practices for allegedly distributing e-mail 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 e-mail records of five key P&G employees.
Without citing Fed. R. Civ. P. 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) 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–$20,000 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).

Serra Chevrolet, Inc. v. General Motors Corp., CV-01-VEH-2682-S (N.D. Ala.
May 20, 2005). In a disparate treatment lawsuit brought by an automobile dealer, General
Motors (GM) was ordered to produce records relating to satellite dealerships and
allocations within 14 days or face $50,000 per day in penalties. GM conducted the
search of its files initially by computer, but toward the end of that process discovered
that it was not adequate. Two months after the deadline and immediately prior to a hearing
on the sanctions, GM hired 14 paralegals to conduct an exhaustive manual search,
which resulted in additional records being produced. Based on the court’s original order,
the sanction would come close to $5 million. The court reduced the amount to
$700,000, but also struck three of GM’s affirmative defenses.

Sheppard v. River Valley Fitness One, L.P., 203 F.R.D. 56 (D.N.H. 2001). The
plaintiff made a motion for sanctions against the defendants’ counsel for abuses of discovery.
Numerous times the plaintiff requested electronic documents, but was only
given information from floppy discs in the defendants’ counsel’s office. The court at
tributed the defendant attorney’s failure to produce requested computer records to lack
of diligence as opposed to intentional obstruction of discovery, hence he was fined $500
and Aubin, a third party, was precluded from testifying at trial.

Stevenson v. Union Pacific Railroad Co., 354 F.3d 739 (8th Cir. 2004). In a negligence
action arising out of a railroad crossing collision, the trial court granted the plaintiff
partial summary judgment and imposed an adverse inference instruction on the defendant
as a sanction for the 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,
836 F.2d 1104 (8th Cir. 1988), to determine the extent of the duty of preservation. It
held that the trial court did not abuse its discretion in imposing the adverse inference
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 inference instruction. And on remand, the trial
court was instructed to allow the defendant to present evidence challenging the rebuttable
presumption that an adverse inference instruction creates.

Theofel v. Farey-Jones, 341 F.3d 978 (9th Cir. 2003). 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” employed by the plaintiff, with no
limitations of time or scope. The ISP, which was not represented 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 although the subpoena was purported to be a valid request under Fed. R. Civ. P.
45, it “transparently and egregiously” violated the standards of Rule 45 and the “defendants
acted in bad faith and with gross negligence in drafting and deploying it.” In so
ruling, the appellate court negated 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.

Tracy v. Financial Insurance Management Corp., 2005 WL 2100261 (Aug. 22,
2005). In an employment suit, the defendant produced requested e-mails late in discovery,
after depositions had begun, citing difficulties stemming from two upgrades of its
computer system. The court held that the defendant had not breached any duty of preservation
and had been complete in its production, but was tardy, and could be presumed
to be aware of its own computer system’s configuration and history. The court allowed
re-deposition of key witnesses and shifted some costs of that discovery to the defendant.

Tulip Computers International B.V. v. Dell Computer Corp., 52 Fed. R. Serv. 3d
(West) 1420 (D. Del. 2002). In a patent infringement case, the 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. The parties resolved the dispute regarding paper
documents themselves, agreeing on Tulip’s request for access to a document warehouse.
For the computer records, the court ordered that Tulip could search a hard drive
with e-mails from Dell executives, other than Michael Dell, using agreed upon search
terms. Then Dell would be permitted to look through the e-mails derived from the queries
to filter the privileged documents.

Zubulake v. UBS Warburg LLC (“Zubulake IV”), 220 F.R.D. 212 (S.D.N.Y. 2003)
(opinion and order dated Oct. 22, 2003). (For factual background, see Zubulake I and
Zubulake III under “VI. Costs and Cost Allocation” above.) After restoring backup
tapes to locate missing e-mails, the defendant found that certain relevant tapes were
missing. The plaintiff moved for sanctions, including a spoliation-inference instruction.
The court found that (1) a duty to preserve the missing tapes existed; (2) the defendant
was negligent and possibly reckless in failing to preserve the tapes; but (3) 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 instruction would have been appropriate.
In the absence of either of those elements, the appropriate sanction was limited
to awarding the costs of additional depositions taken pursuant to the discovery. Cf.
Zubulake V, under “I. Data Preservation and Spoliation,” in which the adverse inference
jury instruction was granted after further discovery revealed intentional deletion of email.


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