photograph by Brian Cohen
qubit - bit-x-bit's E-Discovery Newsletter
Published approximately ten times each year, qubit is our publication on computer forensic and e-discovery issues. Covering such diverse topics as “Discovering the Identity of Anonymous Internet Posters; Balancing the First Amendment against the Right to Sue for Defamation” (May 2009) “Closing the Barn Door after the Animals Have Run Away? Recovering Protected Electronic Communications” (August 2008) and “Mining for Metadata: Ethical Considerations” (October 2007).
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In a much anticipated decision, the Third Circuit in Race Tires America, Inc. v. Hoosier Racing Tire Corp., __F.3d __(3d Cir. (Pa.) March 16, 2012 (No. 11-2316), held that most expenses associated with the collection, processing and production of electronically stored information (ESI) were not taxable as costs under 28 U.S.C. §1920(4) because they were not expenses incurred for “exemplification” or “copying.” In a 31-page opinion, which the Third Circuit characterized as providing “definitive guidance” on the taxation of ESI costs, the Third Circuit reversed the district court’s taxation of more than $365,000 in ESI related expenses against the plaintiff which included costs for the creation of forensic images, data culling and key word searching, and held that only approximately $30,000 for scanning and TIFFing charges were the “making of copies” and taxable as costs under Section 1920(4).
The Federal Circuit recently held in In re Ricoh Company, Ltd. Patent Litigation, 661 F.3d 1361 (Fed. Cir. 2011) that the prevailing party in a patent case was not entitled to $550,000 of expenses related to electronically stored information (ESI) which had been “taxed” as “costs” under 28 U.S.C. Section 1920(4) by the district court. First, the appellate court disallowed more than $234,000 of taxed costs because the parties had entered into a cost-sharing agreement during litigation.
The United States District Court for the Middle District of Pennsylvania recently held that the defendant had a duty to preserve electronically stored information (ESI) more than five years before the plaintiff filed his complaint for age discrimination and retaliation in 2009. In Culler v. Erick K. Shinseki, Secretary of the United States Veterans Affairs, Civil Action No. 3:09-0305 (Aug. 26, 2011), citing Zubalake v. USB Warburg, LLC, 220 F.R.D. 212 (S.D.N.Y. 2004), the court held that the filing of the plaintiff’s first EEOC complaint in 2004, claiming that his position “downgrade” was the result of age discrimination, triggered the defendant's duty to preserve...
Counsel, are you emailing your client at work? Or does your client access the email you send to her personal account from her office computer or BlackBerry? Addressing the possibility that the confidentiality of these communications may be “jeopardized” in such situations, on August 4, 2011, the ABA’s Standing Committee on Ethics and Professional Responsibility issued Formal Opinion 11-459...
In a trade secret case, the defendant testified that he conducted a “clean-up” of his Dell computer follow-ing the issuance of a TRO and preliminary injunction against him. The defendant’s housekeeping activities on his computer included the deletion of certain financial information and evidence of his subsequent contacts with the plaintiff’s customers in violation of the TRO and preliminary injunction. Armed with this information, the plaintiff in AMG National Trust Bank v. Reis, 2011 WL 3099629 (E.D. Pa. July 22, 2011) moved for contempt and for sanctions based on the defendant’s spoliation of evidence. Commenting on the defendant’s conduct, the AMG court concluded that “the evidence strongly suggests that his purpose in deleting the files was to pre-vent their discovery.”
Authenticating electronic evidence such as email, text messages and Facebook postings offer unique challenges for parties and the courts. Recently, in State v. Eleck, 2011 WL 3278663 (Conn.App. August 9, 2011), the court held that authentication requires more than simply printing out a copy of the proffered Facebook postings.
The court in In Re Scientific-Atlanta, Inc. Securities Litigation, 2011 WL 2771296 (N.D. Ga. July 6, 2011) recently joined the overwhelming majority of courts that have disallowed, under 28 U.S.C. Section 1920, substantial ESI processing and searching costs to a prevailing party.
Lawyers, litigators and corporate counsel alike are charged with the ethical obligation to maintain and safeguard the confidentiality of their clients’ information. A casual survey of the deluge of legal articles on “cloud computing” would reveal that “protecting client confidences” is the topic that is discussed most frequently. But sometimes the relatively straightforward ethical issue is being “clouded” by “the sky is falling” commentary.
With more than 500 million active Facebook users sharing photos and posting information about significant (or insignificant) events on Facebook walls, one of those users may include the Magistrate Judge in Barnes v. CUS Nashville, LLC dba Coyote Ugly Saloon, 2010 WL 2265668 (M.D. Tenn. June 3, 2010). In a novel approach to resolving an electronic discovery dispute, the Court offered to create a Facebook account in order to friend” two witnesses for an in camera review of their Facebook profiles which purportedly contained photographs of them and the plaintiff dancing on top of the defendant’s bar.
When faced with company manuals providing that employees have “no right of privacy” in personal communications created on company computers, courts in California and Illinois in the past month sided with employers. Rejecting the employee’s claim of privilege in Holmes v. Petrovich Development Company, LLC, et al, 2011 WL 117230 (Cal. Ct. of App. Jan. 13, 2011), the court pointedly stated that “emails sent via company computer…were akin to consulting her lawyer in her employer’s conference room, in a loud voice, with the door open….” Similarly, in Shefts v. Petrakis, 2010 WL 5125739 (D.C. Ill. Dec. 8, 2010), the court held that the president of a telecommunications company “did not have a reasonable expectation of privacy in his communications” after the company’s employee manual went into effect.
Phasing or sequencing electronic discovery is one solution that can appeal to both sides in litigation. While this option has always been availa-ble, recent case law and commentary suggest that its use is likely to increase as parties look for ways to handle the ever growing volume of potentially rele-vant electronic evidence and the costs associated with its preservation, review and production. Re-cently, the court in Tamburo v. Dworkin, 2010 WL 4867346 (Nov. 17, 2010) refused to issue a stay of all electronic discovery requested by the defendants, and instead ordered the parties to conduct electron-ic discovery in phases. Citing recent commentary from the Sedona Conference, the Tamburo court directed the parties to “actively engage in coopera-tive discussions to facilitate a logical discovery flow.”
Effective December 1, 2010, the drafts of an expert’s report and certain communications between counsel and an expert will no longer be discoverable by opposing parties in federal court under the new amendments to Rule 26 of the Federal Rules of Civil Procedure.
The epic e-discovery case, Qualcomm v. Broadcom Corp., 2010 WL 1336937 (S.D.Cal. 2010), culminated in April 2010, after a post-trial sanction phase which lasted over a year and involved the production of over 1.6 million documents, a dozen depositions, and a three day evidentiary hearing. The facts of this well-known case will not be repeated here, except to remind the reader that the court imposed $8.5 million in sanctions against the plaintiff, Qualcomm, due to the company's conduct during discovery. Qualcomm failed to produce thousands of electronic documents which undermined Qualcomm's patent infringement case.
Should a party be precluded from seeking a protective order under Federal Rule Civil Procedure 26(b)(2)(B) on the ground that the requested electronically stored information is inaccessible where the cause of the inaccessibility was the party’s failure to issue a timely litigation hold? This was the issue before the court in Major Tours, Inc. v. Colorel et al. 2010 WL 255727250 (D.N.J. June 22, 2010). Rejecting the “bright line rule” urged by the plaintiff, the Major Tours court refused to hold as a matter of law that a protective order cannot be granted under Rule 26(b)(2)(B) “when the evidence is inaccessible because of that party's failure to institute a litigation hold.” According to the court, “nothing in the plain language of Rule 26(b)(2)(B) requires such a threshold determination of who is at fault for the data having become inaccessible.” Accordingly, the court held, similar to a request for sanctions based on spoliation of evidence, a case-by-case review under Rule 26(b)(2)(B) is required. The court additionally held that the Magistrate did not abuse his discretion when he refused to order the State of New Jersey “to perform over a million dollars worth of discovery on the off chance that it might add to the five year’s worth of discovery already obtained, just because there is some risk that relevant emails were not preserved.”
Acknowledging the “division” of authority, the court in CBT Flint Partners, LLC v. Return Path, Inc., 676 F. Supp. 2d 1376 (N.D. Ga. 2009) awarded under 28 U.S.C. §1920(4) a successful defendant in a patent infringement case nearly $250,000 for the costs incurred in the collection and processing of more than 1.4 million electronic documents and six versions of its source code requested by the plaintiff. In the recently published opinion, the court reasoned that the services provided by the defendant’s electronic discovery consultant, which included the preservation, collection and production of all relevant electronic documents, decryption, as well as extraction of proprietary data and statistical and keyword analysis, were “highly technical” and “not the type of services that attorneys or paralegals are trained for or are capable of providing.” According to the court, the e-discovery consultant’s services are the “21st Century equivalent of making copies.” The court further stated that “[t]axation of these costs will encourage litigants to exercise restraint in burdening the opposing party with the huge cost of unlimited demands for electronic discovery.”