BLLAWG » Sanctions

AT&T Antitrust On Hold

admin — Wed, 14 Dec 2011 15:52:58 +0000

Last Friday we wrote an update on whether or not AT&T was still pursuing its merger with T-Mobile. The Department of Justice judge overseeing the lawsuit, Ellen Huvelle, has granted requests from both parties which will delay the antitrust case scheduled to begin February 13. AT&T will have until January 12 to file a report on its intentions to proceed with the current transaction or to pursue a separate transaction against T-Mobile.

Honeywell Continues to Seek Sanctions against US Justice Department

admin — Wed, 30 Nov 2011 20:54:22 +0000

WASHINGTON DC: Honeywell International continues in its legal battle against the US Justice Department for allegedly selling defective body armor to law enforcement and military agencies. Honeywell is now pushing for sanctions against the DOJ on a case which began in 2008, accusing the Deptarment of failed litigation holds for their continued lawsuit.

Honeywell has been making a slew of e-discovery abuse allegations about the Justice Department which the DOJ blames on their e-discovery vendor and on a lack of communication among government agencies working on the case. Honeywell explains that the Department used litigation holds on their company from separate, unrelated cases instead of information pertinent to the current case. As a result, the company says that exculpatory documents were produced belatedly, or not at all, which has caused the case file to be irreparably distorted.

And so the mess begins to reveal itself. With a production of over 2.9 million pages received from 77 custodians in over 40 agencies, government witnesses maintain that they were completely unaware of Honeywell’s pertinence in the data during preservation and collection. Notices sent to witnesses supposedly never included the company’s name during this process.

Former government assistant attorney, Andrew Grosso, recently relayed to reporters that the government’s litigation processes are much more complex than those of companies in the private sector. He adds that there have been several nightmarish cases in which government attorneys were unable to locate essential information. (ACEDS) “I find it amusing when somebody says the government has unlimited resources.” Grosso adds that he believes the government is currently becoming out-resourced with e-discovery technology in this case. (ACEDS)

Unfeeling to the government’s claims of hardships during the discovery process, Honeywell continues its quest to push for sanctions saying that the DOJ’s suppressed records have distorted the truth. The company adds that they will accept no less than an immediate production of all relevant information and a monetary compensation fee. Agreeing with the government’s position would only allow the government to “abuse the discovery rules and impose costs on others without consequence,” says the company.

Robert Hilson of the Association of Certified E-Discovery Specialists writes that this case will put a “bright spotlight” on the government’s ability to handle electronically stored information (ESI) that may come into play during future civil and criminal cases.

The pressure is on for government agencies to work together between departments and with their e-discovery vendor. Litigation is expected to increase over the next year, and some say that hiring more attorneys to work for the DOJ might avoid all of the current problems they are encountering. Seeing the country’s obvious need for a better, more efficient system in addition to a desperate need to create new jobs, could the e-discovery and legal industries end up becoming the answer to our prayers?

Best Practices, Best Solution?

admin — Fri, 04 Nov 2011 18:17:32 +0000

The New York State Bar Association (NYSBA) published their “Best Practices in eDiscovery in New York State and Federal Courts” this week in hopes to influence some sort of standardization in eDiscovery collection and preservation. It is no secret that those involved in eDiscovery, from counsel to vendors, have been searching for a universal document to reference on best practice regarding electronically stored information (ESI) . While NYSBA’s document may not be the end-all solution, many critics have already positively responded to its “common sense, easy-to-follow guidelines for beginning to get one’s eDiscovery house in order.”

Included in the 45-page document are an ESI glossary and fourteen guidelines that, as stated in the introduction, are intended “to provide New York practitioners with practical, concise advice in managing electronic discovery.” However, we feel that practitioners from any state can benefit from reading this document. Here are some of the more salient points:

Preserve as much ESI as possible. When in doubt on whether to save information or not, be conservative and keep your spectrum broad. The hassle of over-preservation is better than being sanctioned for spoliation.
Create proactive programs to help contain the cost of eDiscovery. For example, implement document retention policies, hold and collection procedures, and user education.
Become familiar with your client’s information technology as soon as litigation is anticipated. Counsel should give themselves an in-depth look into their client’s information technology, sources of ESI, etc.
Prohibit destruction and monitor preservation efforts through written legal hold notices issued by counsel.
Make sure that the cost and type of production demanded is not unreasonable — transforming native ESI can become pricey.

The “Best Practices” guide gives any eDiscovery professional an attractive, pragmatic guide to refer to for ESI solutions. The New York State Bar Association has also announced a plan to host a series of CLE events on its document’s guidelines – check their website for updates.

Long Lost Facebook Owner?: Ceglia’s Discovery Evasion Raises Doubts

admin — Wed, 26 Oct 2011 21:56:17 +0000

One year and four months after his case was filed Paul Ceglia lost his third legal team. The case revolves around Mark Zuckerberg and an alleged contract that would entitle Ceglia to at least half of the now multi-billion dollar company, Facebook, Inc.

Sanctions on Ceglia’s attorneys for not complying with court discovery orders could very well be the main cause of this third rupture. Jeffrey Lake, one of Ceglia’s former attorneys, swore under oath that Mr. Ceglia explicitly told him not to comply with discovery requests on more than one occasion. Ceglia counters that his privacy had been breached and moved on to a new team at DLA Piper. The latest firm has asked for a three week break in order to get the new legal team in shape.

Just as we saw in our post on the fight over the Steve Jobs icon, it is no secret that when an idea gains in popularity everyone wants a piece of the pie. In this case, Ceglia wants at least half. If the court rules that this contract did exist, Facebook will soon have to cough up what could be billions of dollars. If not, Ceglia will be spending a long time in jail for creating fraudulent documents and emails.

Doing Justice to Justice: e-Discovery Reform Part 3

admin — Mon, 26 Sep 2011 23:04:16 +0000

The group Lawyers for Civil Justice published their opinions on current attempts at e-discovery reform and did not hold back their frustration. LCJ insists that the scope of required discovery must be greatly narrowed in order to start solving today’s extensive discovery problems. The Girard Proposals have proffered certain amendments, but for LCJ these changes will only make things worse.

The biggest problem in the eyes of the non-profit is over-discovery, which then leads to astronomical costs. The Girard Proposals do not suggest enough of a sweeping reform. These sorts of minute amendments have not worked in the past and, according to LCJ, will only impede true reform from progressing. In addition, the Proposals do not take discovery request reform into account, allowing responses to be equally broad. Their wording also promotes the misunderstanding that a party must produce all responsive documents in order to avoid being sanctioned, and thereby encourages overproduction.

Lawyers for Civil Justice has proposed four ideas that they feel would greatly help the dire state of today’s e-discovery standards.
1. Limit the scope of discovery to non-privileged data that gives clear proof of a claim or defense.
2. Define categories and sources of electronically stored information (ESI) that can be exempted from discovery or considered “not reasonably accessible.”
3. Explicitly state discovery requirements in the proportionality rule.
4. Limit requests to 25 productions, 10 custodians, and a two year period prior to the complaint.

The group predicts that by making these changes there will be less non-responsive data to review and therefore a lower cost. These ideas are not new, yet have never been tested. We can all agree that better defined discovery guidelines are in great need, but are 25 productions and two years of data enough to do all matters justice?

_____________________________________

previous e-discovery reform posts:
Highlights: Gibson Dunn 2011 Mid-Year e-Discovery Update
Advisory Committee Makes No Progress with Data Preservation Reform

Advisory Committee Makes No Progress with Data Preservation Reform

admin — Thu, 15 Sep 2011 22:33:20 +0000

As we mentioned in our September 9^th BLLAWG, the Civil Rules Advisory Committee had a mini-conference in Dallas to discuss changes to data preservation rules. The current standards are very vague and tend to vary, and as electronic evidence gains importance there is an increasing need to make sure no crucial information is “thrown away.” In our post on e-discovery negligence we stressed the importance that all parties involved in litigation, vendors included, have a strong understanding of the scope of preservation necessary in today’s world, here’s how the rest of the litigation community is responding:

Small companies complain that they do not have the resources for extensive preservation, and large companies lament yearly preservation costs in the millions with little of the data ever being produced. Thus small companies would prefer fewer requirements and large companies more requirements in order to cull down information without fearing sanctions.

One suggestion was to expand on Rule 26(f) which requires pre-trial e-discovery conferences, but some argue these discussions happen too late in the litigation cycle to be of any use. In addition, the committee considered three different amendments — yet no decisions were reached except that more research needs to be done.

The three amendment options are:
1) Create specific rules on how to preserve electronic evidence and to what extent.
2) Provide only a general preservation rule.
3) Provide a sanctions-based rule, no preservation rules.

Interestingly, judges present at the conference said that less than 1% of their cases had preservation conflicts. So would a specific rule cause more trouble than its worth, particularly for small companies and individuals?

But isn’t it time for better defined guidelines, anyway? Whether this takes the form of a specific rule or a required conference (e.g. Rule 26(f)), it is high time we all have an improved knowledge of e-discovery and proper preservation methods. A clearer understanding of e-discovery is the start to more prudent data preservation, after all.

Thanks to Fulbright & Jaworski for the meeting recap.

Highlights: Gibson Dunn 2011 Mid-Year E-Discovery Update

admin — Fri, 09 Sep 2011 17:33:03 +0000

Gibson Dunn has released its 2011 Mid-Year E-Discovery Update and reports that cases involving e-discovery are on the rise. In fact, e-discovery decisions have gone up by a remarkable 82% percent since mid-year 2010. Because litigation is increasingly widespread, more parties are seeking sanctions against opposing counsel for e-discovery negligence than ever before, for example the Thorncreek Apartments III, LLC v. Village of Park Forest case we wrote on last week. Another reason for the doubling of sanctions sought is that parties are more aware that they can benefit from opposing counsel’s mistakes and are taking advantage of this opportunity. Despite this upward swing courts are still awarding sanctions at a rate a little over 50 percent.

Legal holds are also being debated on many levels. There are varying opinions on whether the notice can be oral or must be written and if the promptness of issue affects data preservation. Perhaps the most interesting questions being posed are those regarding hold protocol for social media. For example, should traditional privacy rights apply when collecting data from social media sources? So far most courts have held that they do not.

Gibson Dunn also brought up one of the year’s most interesting cases: National Day Laborer Organization Network v. U.S. Immigration & Customs Enforcement Agency. In response to a Freedom of Information Act (FOIA), Judge Scheindlin stated the government was obligated to preserve and produce metadata. Four months later she reneged on her decision. Gibson Dunn speculates that, despite Judge Scheindlin’s change of mind, when dealing with ESI both courts and litigants will reference her rulings on metadata’s importance in all productions.

In conclusion, the Mid-Year Update says that it is too early to tell whether there will be much conclusive e-discovery reform in 2011, but today the Civil Rules Advisory Committee meets in Dallas to discuss potential changes. We will keep you posted.

Wisconsin Court Denies Sanctions in Failure to Preserve Claim

admin — Fri, 30 Jul 2010 21:11:03 +0000

On August 26, 2009, Mindy Olson brought a suit against Michael Sax and Goodwill Industries, claiming that Goodwill violated Title VII of the Civil Rights Act of 1964 “by discriminating against her based on gender and pregnancy when it terminated her employment.” Goodwill fired Olson on the grounds that she had submitted inaccurate credit slips. Olson also called for sanctions against her former employer due to its “failure to preserve a…video tape recording of Olson’s alleged theft of property from Goodwill.” As Goodwill’s video surveillance system only retains records for 29 days, they referenced Rule 37(e), which states that “sanctions may not be imposed…where electronically stored evidence is lost as the result of routine, good faith operation of an electronic information system.”

The courts considered Burlington N. & Santa Fe Ry. Co. v Grant and Silvestri v Gen. Motors Corp in deciding whether the Defendants’ actions merited sanctions. In these previous cases, “spoliation sanctions” were awarded only where a party destroyed evidence because of knowledge of impending litigation and when “evidence was destroyed intentionally.” Even though the Defendant had a “duty to preserve evidence,” Olson’s motion for sanctions was ultimately denied because the court could find no “evidence that Goodwill engaged in ‘bad faith’ destruction of evidence.”

Florida Court Orders Party to Pay for Discovery Error

admin — Wed, 16 Jun 2010 18:38:56 +0000

In this case, the District Court considered Lexington Insurance Company’s motion for sanctions and reviewed the magistrate judge’s previous recommendation of dismissal sanctions and reimbursement costs. Bray & Gillespie Management, LLC, after it was discovered that it failed to produce records, claimed it was unaware of an automatic function of the business’s computerized account management system that archived records after six months. During the Evidentiary Hearing, the Plaintiff acknowledged the missing documents and stated that the documents could be produced if “discovery [was]…reopened and extended for another four to six week period.” The Court denied the plaintiff’s request to be allowed to cure the production defect, citing that the archived files were “likely retrievable with minimal effort and at minimal expense…” The Court stated that the “[d]efendant’s demand for full production of all Treasure Island room folios [had] been clear, unambiguous, and frequent.” The order further states that the Plaintiff had “evidenced a pattern of inexcusable disregards for the authority of [the] Court and the larger civil discovery process.” Ultimately, “to insure the integrity of the discovery process,” the Court ordered Bray & Gillespie Management, LLC to pay Lexington Insurance Company $75K in expenses and costs.

Are E-Discovery Services Taxable?

admin — Fri, 21 May 2010 16:08:35 +0000

In this IP case, Return Path Inc., et al. filed a motion to tax the costs related to using CBT Flint Partners, LLC to assist with the production of 1.4 million electronic documents and 6 versions of source code. CBT Flint Partners, LLC argued that fees associated with the collection of documents for production are not taxable under 28 U.S.C. § 1920. Justice Thomas Thrash acknowledged the differing opinions as to whether or not U.S.C § 1920 allows recovery. In the end, the court cited the “highly technical” nature and necessity of e-discovery services in the electronic age [see page 11] to overrule the plaintiff’s objection and hold the $268, 311.22 in costs to be recoverable. The court supported its findings by reasoning that the “[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.”

Computer Infections: The Cure Can Kill

admin — Mon, 24 Aug 2009 17:41:16 +0000

I must admit, I like the title that the editors at the National Law Journal came up with for Fabio Celeita’s and my article: “Computer infections are bad enough, but the cure can kill” (premium subscription required). Our article provides a basic overview of the threats to electronically-stored information, let alone to a legal team’s computer infrastructure, caused by viruses, worms and other types of “malware”.

We’re frankly surprised that no one had written on this topic before, and we will have more to say on it in the future …

Failure to Dedupe: Unethical?

admin — Thu, 06 Aug 2009 20:30:43 +0000

Anne Kershaw and Joe Howie write on the Law Technology News website about the results of their survey among eDiscovery providers. The gist of their article – and it’s a good one – is that failure to deduplicate e-mails across custodians may be at best sloppy, and at worst unethical:

We asked several judges to review this article and all quickly grasped the benefits of deduping across custodians. When asked if deduping practices should be considered when deciding attorneys fees, most indicated it would be appropriate.

Said U.S. Magistrate Judge John Facciola [author of U.S. v. O'Keefe, asserting that most lawyers are not qualified to write effective keyword searches], “Certainly. I already look for … over-lawyering, having too many people doing the same thing, or having overqualified people do what the more junior people should do. … Failing to dedupe is the electronic version of the same problem.”

I’ve stayed out of the dedupe-yay-or-nay argument until now, since LLM’s mission as a service provider is to do what our clients ask of us, not to promote ESI processing options that (let’s be honest) make us money. However, while I agree that more lawyers should de-dupe across custodians wherever possible (if for no other reason than to cut down their own review costs), I have to disagree with the necessary implication that there’s something inherently unethical about the failure to do so.

What Anne and Joe fail to note is that deduplication is itself a primitive process, especially where e-mail is concerned. All deduplication is performed by comparing “hash values” - numerical “fingerprints” calculated by examining the file and its wrapper on the storage medium. The computer calculates the hash value by factoring in every character and pixel in the file (visible and invisible), all of the metadata, the file size, and in some cases even the location of the file on the storage medium. Like human fingerprints, it’s rare (though not impossible) to find different files with the same hash; for nearly all purposes, therefore, each hash value is unique unless the files are exact copies. The processing software then compares hash values and, where it finds a match, flags or discards the duplicate.

This process works fine for files. It doesn’t work so well for e-mails. Because there are so many different formats in which e-mails can be stored, exported, attached, nested, etc., e-mail hash values are calculated based on content properties such as the subject, body text, attachment count and attachment names, and the e-mail date. The e-mail hash can also be calculated by including addressee information: sender, recipients, CC and BCC. The problem is that, depending upon which properties are used to calculate the hash, the same e-mail on two different platforms (say, Microsoft Outlook and Lotus Notes) may end up with very different hash values.

Outlook and Lotus Notes, the two most popular desktop e-mail systems, have different ways of storing addressee information. As a result, it has been our experience that, if addressee properties are included in calculating the hash values, the exact same e-mail will usually have a different hash value for each platform. Different hash values mean duplicates go unrecognized.

There are many, many companies that use some flavor of both Outlook and Lotus Notes for some, if not all, of their custodians. The upshot is that it’s quite easy to attempt and fail to deduplicate e-mails across custodians under such circumstances. I’m therefore leery of buying into the blanket statement that overproduction of e-mails, by producing too many copies of the same e-mail, is necessarily an ethical violation.

Clowns To The Left Of Me, Partners To The Right

admin — Mon, 03 Aug 2009 18:42:41 +0000

Wendy Akbar of Quarles & Brady blogs about how e-discovery practice is turning the traditional partner-associate dynamic on its ear. The wizened (and aged) partners end up being rank newbies where e-discovery is concerned, while the baby associates tend to have a much greater grasp of the technology behind the ESI. (The analogy of associates to “clowns” is Wendy’s analogy, not mine … read her blog post to find out why it’s not an insult.)

Wendy points out that the in the recent case of Chen v. Dougherty, the prevailing party’s counsel was not allowed to collect her usual hourly rate as attorneys’ fees for time spent on e-discovery, because “her inhibited ability to participate meaningfully in electronic discovery tells the Court that she has novice skills in this area and cannot command the rate of experienced counsel” (quoting the opinion).

Negotiate Those Keyword Search Terms, Or Else

admin — Thu, 26 Feb 2009 19:36:56 +0000

What if I were to tell you that you had to spend $6 million — nine percent of your annual operating budget — to comply with an e-discovery subpoena? And what if you were a non-party to that particular dispute? The D.C. Circuit has upheld just such a cost in In re Fannie Mae Securities Litigation, 552 F.3d 814 (2009).

This case highlights the importance of counsel understanding issues related to e-discovery, and the potential scope of that discovery, before entering into any type of agreement governing the future conduct of discovery in the case. Executive summary: Agreements should be carefully negotiated and counsel should not agree to unmitigated keyword searches, without reserving the right to negotiate search terms and without waiving the right to pursue cost shifting.

The New York Law Journal has published an article analyzing the Fannie Mae decision, which can be found here.

Thorough Searches Are Hard For Everyone

admin — Mon, 16 Feb 2009 19:35:00 +0000

From the Associated Press: Guidance Software Inc. bills itself as the leading provider of technology that helps companies dig up old e-mails and other electronic documents that might be evidence in a lawsuit. Yet when Guidance itself had to face a judge, it was accused of bumbling its internal digital search.

Whether Guidance intentionally hid documents or just couldn’t find them is a matter of dispute. The company said it did all that was required. But its inability to cough up certain e-mails, even over several months, led an arbitrator to accuse it of gross negligence and proceeding in bad faith.

At the very least, the case shows how thorny electronic evidence searches can be, even for a specialist.

Electronic evidence firm grilled over absent memos

Being Right and Still Losing

admin — Thu, 15 Jan 2009 19:29:43 +0000

Leonard Deutchman is one of my favorite EDD columnists. In this article for the Pennsylvania Law Weekly, he observes how courts have made it clear that e-discovery misconduct can result in severe monetary sanctions, even when the offending party prevails on the merits. (In other words, no matter whether victory is assured or not, play by the rules …)