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

Federal E-Discovery Decisions, December 1, 2006 – July 31, 2009
applied to “Rules of Engagement” and documents regarding bargaining strategy. The
NLRB privilege log contained several hundred email strings, and it asserted the
deliberative process privilege, often in combination with other privileges, for over 320
messages. The court held that many of the descriptions of such emails in the privilege log
inadequately indicated whether a document was deliberative in nature, and it ordered the
messages be produced for an in camera inspection. Additionally, the court ordered both
parties to confer, draft a protective order, and present it with a proposed schedule going
forward.
In re Novellus Systems, Inc. Derivative Litigation, 2007 WL 46076 (N.D. Cal. Jan. 2,
2007). In a securities fraud case involving alleged backdating of stock options grants, the
defendants produced 10,000 documents in .tif (Tagged Image File) format as part of their
initial Rule 26(a) disclosure. The plaintiffs moved for an inspection of the original
documents and for an order compelling production of all relevant, non-privileged
documents reviewed by the defendants in preparation for the disclosure. The court
granted the motion in part, allowing inspection of originals where the .tif images were
illegible or obscure, but denied the motion to compel production of additional documents
as part of the defendants’ initial disclosure.
In re NTL, Inc. Securities Litigation, 244 FRD 179 (S.D.N.Y. 2007). In this securities
class action, the defendants included entities that had gone through bankruptcy and
reorganization, resulting in new entities that were not parties to the litigation. As part of
the bankruptcies and reorganizations, various agreements were executed allocating
custody of business records to the new entities entities, but maintaining the defendants’
access to these records. The court held that so long as the defendants still had access to
the records, they were under an obligation to take reasonable steps to preserve those
records relevant to the litigation, even though the records were in the physical custody of
non-party entities. The defendants’ failure to take any steps to preserve documents
resulted in the destruction of email of 44 key employees. The court held that the prejudice
to the plaintiffs and the culpable state of mind of the defendants warranted the sanction of
an adverse inference jury instruction and payment of the attorneys’ fees and costs of the
plaintiffs who sought production of the email.
Nursing Home Pension Fund, et al. v. Oracle Corp., et. al, No. C 01-00988 SI (N.D.
Cal. Sept. 2, 2008). In this securities class action, the plaintiffs alleged that the
defendants failed to preserve interviews with the defendant Larry Ellison, founder and
CEO of Oracle, taken by a free-lance writer. It appears from the record that the writer
discarded the laptop computer containing 135 hours of transcripts and audio files after he
learned of the plaintiffs’ motion to compel production of “any interview notes, transcripts
or tape recordings relating to the book.” The court concluded that although Ellison and
Oracle did not have physical possession of the laptop, they exercise sufficient control
over the transcripts and recording by their contract with the writer and as evidenced by
statements made by Ellison to the writer to give rise to a duty of preservation and
disclosure. In response to other discovery requests, the defendants produced only 15
emails from Ellison’s own email files, but over 1,650 of Ellison’s emails from the files of
other Oracle employees. The court held that these two discovery failures rose to a level of
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