Federal Court Decisions Involving Electronic Discovery, December 1 ...

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Federal E-Discovery Decisions, December 1, 2006 – July 31, 2009 documents remained in the producing party’s electronic archives. Additionally, the court believed that the motion, coming very late in the discovery process, might unduly interfere in the producing party’s ability to prepare for trial. However, the court granted the motion, allowing the requesting party to hire an outside vendor to confirm the completeness of the electronic document production. The review was to be paid for by the requesting party and subject to conditions, including a limited number of search terms, a limited number of backup tapes to be searched, and a confidentiality agreement. Kipperman ex rel. Magnatrax Litigation Trust v. Onex Corporation, et al., 2008 WL 4372005 (N.D. Ga. Sept. 19, 2008). The plaintiffs requested production of email from the defendants’ backup tapes based on a search for key words. The defendants initially performed the search but limited the scope to the email boxes of seven named deponents. The plaintiffs requested, and the court granted, that the search be re-run on all email boxes, but the court suggested that the parties negotiate a narrower set of search terms and custodians. The defendant failed to participate in the negotiations and executed the broader search, which resulted in the large collection of “hits.” The defendant then requested relief from reviewing and producing these documents. The court denied the general relief sought, stating that the defendant did not take advantage of the opportunity to reduce the scope of discovery earlier, and “must now lie in the bed that they have made.” However, it granted relief in two clearly identifiable categories of documents involving a transaction and a subsidiary not relevant to the litigation. Kipperman v. Onex Corp., et al., 2009 WL 1473708 (N.D. Ga. May 27, 2009). In a constructive transfer and fraud case with protracted discovery, the requesting party contended that the producing parties had intentionally withheld discovery to prevent it from arguing the case on the merits. The requesting party moved the court to establish a specific schedule for further discovery, or that the court strike the other parties’ answer and enter default judgment. In addition, it asked for an award of attorneys’ fees related to its discovery motions, pursuant to Rule 37(b)(2). In response, the court asked the requesting party to provide it with “a list in chart form of each instance of alleged misconduct on the part of [the producing party] which the court has not yet punished and the financial harm in the form of attorney time and costs to [the requesting party] as a result of this misconduct.” Moving on to the producing parties, the court noted that “rather than seeking a protective order [they] determined themselves that it would be overly burdensome” to produce the discovery in the court-ordered format. The court found that the producing parties’ behavior was sanctionable under Rules 26 and 37, citing their failure to follow court orders pertaining to transfer-related interrogatories, their lack of diligence in discovery, and “for making blatant misrepresentations about the value of e-mail discovery in this case in an effort to influence the court’s ruling.” Although the court refused to enter a default judgment, it awarded attorneys’ fees and other costs to the requesting party. Klayman v. Freedom's Watch, Inc., 2008 WL 4194881 (S.D. Fla. Sept. 12, 2008). At the close of a trademark infringement suit, the prevailing defendant requested reimbursement for $167,535.59 in third-party vendor expenses to collect, preserve, inventory, code, and image electronically stored information pursuant to 28 U.S.C. § Copyright © 2009, The Sedona Conference ® 48 www.thesedonaconference.org
Federal E-Discovery Decisions, December 1, 2006 – July 31, 2009 1920. The costs were not awarded, as the defendant failed to demonstrate that they were necessary due to the complexity of the case of volume of material under 28 U.S.C. § 1920(4). In re Kmart Corporation, 371 B.R. 823, 2007 Bankr. LEXIS 2541 (Bkrtcy. N.D. Ill. July 31, 2007). In Kmart’s Chapter 11 proceedings, creditor Global Property Services filed a claim for unpaid invoices and also for approximately $25 million in damages resulting from breach of contract. Global provided landscaping and outdoor maintenance services to Kmart stores nationwide and claimed that prior to Kmart’s bankruptcy, Kmart management had tried to repudiate Global’s maintenance contracts and contract directly with Global’s subcontractors. During discovery, it was revealed that Kmart had no “litigation hold” procedure and that Kmart’s automatic email deletion function was not suspended until more than two years after Global’s claim had been filed. While characterizing Kmart’s response to its discovery obligations as “woefully insufficient,” the court declined to find the requisite willfulness or bad faith, or prejudice to the claimant, to support spoliation sanctions. The court did order Kmart to produce further electronically stored information and reserved for the end of trial a determination of attorneys’ fees and costs to be awarded to the claimant. Knifesource LLC v. Wachovia Bank, N.A., 2007 U.S. Dist. LEXIS 58829 (D.S.C. Aug. 10, 2007). The plaintiff alleged that a former employee had been stealing checks payable to it, altering them to make herself the payee, and depositing them in a Wachovia Bank account. The plaintiff sued the bank for conversion and moved to compel production the checks and other account documents. The bank objected, citing the privacy provisions of the Gramm-Leach-Bliley Act, 15 U.S.C. § 6801(a). The court rejected the argument based on an exception found within the statute to reply to discovery requests, 15 U.S.C. § 6802(e)(8). The bank also objected that it could not produce requested copies of the former employee’s bank statements, because it does not maintain physical copies, and the request would require the bank to create a statement from its computer records. The court held that since the bank did not demonstrate that the request called for information from sources that are not reasonably accessible, the bank was under an obligation to produce the information. Koch Foods of Alabama LLC v. General Electric Capital Corp., 531 F. Supp. 2d 1318 (M.D. Ala. Jan. 17, 2008). In a business dispute over the ownership of automated poultry processing equipment, plaintiff discovered that one page of a three-page email between the CFO and plaintiff's counsel had been inadvertently included within a 37page document, which was part of a 3758-page document production. The magistrate judge found that the plaintiff had not waived attorney-client privilege, based on a conclusion that "if the Alabama Supreme Court were to confront the issue of inadvertent waiver, it would likely adopt the more comprehensive and sensitive totality-of-thecircumstances analysis." The district judge, in response to the defendant’s objection, affirmed the magistrate judge’s finding. In re Rule 45 Subpoena Issued to Robert K. Kochan, 2007 WL 4208555 (E.D.N.C. Nov. 26, 2007). In an insurance case pending in the Southern District of Mississippi Copyright © 2009, The Sedona Conference ® 49 www.thesedonaconference.org
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