Archive for February 2015

Comprehensive Addiction Treatment Center, Inc. v. Leslea, No. 11-cv-03417-CMA-MJW, 2015 WL 638198 (D. Colo. Feb. 13, 2015)

Plaintiffs brought a “Motion to Review Clerk’s Taxing of Costs Under F.R.C.P. 54(D)(1).” Specifically, Plaintiffs sought review of the clerk’s determination “concerning the costs taxed amount of $55,649.98, which accounts for Defendants contracting with a private consulting company, Cyopsis, to retrieve and convert ESI into a retrievable format to produce information requested by Plaintiffs.” The court held that “[b]ecause Defendants’ costs related to the electronically stored information (“ESI”) are expenses enumerated in 28 U.S.C. § 1920(4), and Plaintiffs were aware that Defendants would have to retain an outside consultant to retrieve and convert the ESI into a retrievable format, Plaintiffs’ Motion is denied.”

Plaintiffs contended that the services provided by Cyopsis did not constitute “copying” under 28 U.S.C. § 1920(4). Defendants argued that “'[ p]roduction costs in collecting, scanning, reviewing, and preparing documents are necessary expenditures that are made for the purpose of advancing the discovery phase of the case and as such, are taxable.’” The court explained that pursuant to Rule 54, a party is entitled to recover expenses enumerated in 28 U.S.C. § 1920(4), which in turn allows a court to “award copy and exemplification fees for copies of any materials necessarily obtained for use in the case.” The court further indicated that “courts have recognized that 28 U.S.C. § 1920(4) includes e-Discovery related costs.”

In the present case, Defendants hired Cyopsis to “retrieve and restore ESI” to produce documents sought by Plaintiffs in discovery. Because of the “complexities and time-intensive efforts” anticipated in responding, the parties entered into three consecutive tolling agreements. Moreover, Defendants wrote to Plaintiffs on three occasions describing the “difficulties and complexities encountered in retrieving and restoring ESI” including the restoration of 83 backup tapes. Thus, the court reasoned, “Plaintiffs were well aware that Defendants required the services of an outside consultant in order to produce the information requested, and they were kept apprised of the difficulties encountered by the vendor, Cyopsis.” Despite this, Plaintiffs did not “initiate discussion aimed at limiting the scope of their request for information or take other measures to limit the costs of the endeavor.” Moreover, based on the discovery produced, Plaintiffs filed a new Complaint alleging several new allegations.

Accordingly the court found that the defendants were entitled to recover the at-issue costs:

The Court finds that Defendants’ costs related to the ESI are expenses enumerated in 28 U.S.C. § 1920(4). The ESI expenses were not merely for the convenience of the parties nor were they materials produced solely for discovery as Plaintiffs filed a new Complaint that included information gleaned from the ESI. Thus, the ESI expenses were reasonably necessary for use in the case. Indeed, Plaintiffs were aware of the monumental effort to retrieve and convert the data into a retrievable format in response to their Interrogatories and Requests for Production. The costs incurred by Defendants, the prevailing party, in responding to Plaintiffs’ requests are expenses that are shifted to Plaintiffs, the losing party. Indeed, Plaintiffs own litigation choices and aggressive course of discovery necessarily resulted in “heightened” defense costs. See In re Williams Sec. Litig–WCG Subclass, 558 F.3d at 1150. Plaintiffs have not demonstrated that these costs are improper. Accordingly, Defendants are entitled to recover their costs in full measure as determined by the Clerk, which it has identified as $57,873.61.

A copy of the court’s full order is available here.

United Corp. v. Tutu Park Ltd., No. ST-2001-CV-361, 2015 WL 457853 (V.I. Jan. 28, 2015)

In December 2012, the court in this case issued a subpoena directing Kmart Corporation (“Kmart”) to produce twenty-one categories of documents and later granted Plaintiff’s motion to compel the same.  Accordingly, Kmart produced responsive documentation, but not to Plaintiff’s satisfaction.  Plaintiff thereafter moved for sanctions and for Kmart to be held in contempt.  Concluding that Kmart made a reasonable attempt to provide responsive documentation, and acknowledging Kmart’s explanations for their inability to provide more, including the destruction of documents pursuant to their document retention policy and changes in technology, the court declined to impose sanctions or to hold Kmart in contempt.

Plaintiff sought Kmart’s production of several categories of information covering a long time span.  Specifically, several of the requests sought production of information “for each year from January 1, 1991 through the present date.”  Although Kmart produced some responsive documentation, some was no longer available.  Kmart explained, for example, that it did not maintain records pertaining to merchandise sales by year prior to 2000.  Kmart also cited “software and program changes, file layout changes, and conversions to new databases,” that rendered some additional responsive data “unreadable” and unable to be “recreated with any certainty.”  Plaintiff sought sanctions and a finding of contempt.

Addressing Plaintiff’s motion, the court acknowledged its prior “clear and unambiguous” order for Kmart to produce the documents requested by subpoena, but declined to hold Kmart in contempt where Kmart made a “diligent attempt to comply:”

Kmart has identified a number of reasonable explanations for the scope of its production under the subpoena. Most notably, Kmart claims that its record retention policy does not provide for the retention of records before the year 2005. The year 2005 was over nine years ago, and as a practical matter, a corporation may be justified if it chooses not to retain records that are over nine years old. Kmart has also alleged that internal changes in sales reporting prohibited it from estimating pre-tax income for certain items. Moreover, Kmart emerged from Chapter 11 bankruptcy protection in May of 2003, and merged with Sears, Roebuck and Co. in 2005. It is reasonable to believe that the disruption caused by bankruptcy and the integration of two companies impacted Kmart’s ability to access records. Finally, Kmart has explained that certain data cannot be recreated due to software and database conversions, among other changes in recordkeeping. Having considered these reasons, the Court believes that Kmart has made a diligent attempt to comply in a reasonable manner with the Court’s March 22, 2013 Order.

The court also rejected Plaintiff’s assertion that Kmart’s position was “not credible” because it is a “multi-national corporation” and its records are “necessarily computerized,” reasoning that:

[I]t does not follow that all multinational corporations that store electronic data retain records for such a length of time. Corporations typically employ data retention policies and dispose of records after a period of time. The Court does not find that Kmart’s use of such a method justifies an order of contempt, especially considering the age of the records requested by the Plaintiff.

Finally, the court addressed Plaintiff’s claim that Kmart provided no ESI and Kmart’s explanation that it was precluded from “recreating responsive ESI with any degree of integrity” in light of “changes in technology over time.”  Specifically, the court reasoned that “[g]iven the fact that, in some cases, Plaintiff seeks records dating back to 1991, in combination with the fact that Kmart has undergone internal reorganizations, Kmart’s internal review constitutes sufficient diligence to avoid an order of contempt from this Court.”

A copy of the court’s full opinion is available here.

Federico v. Lincoln Military Housing, LLC, No. 2:12-cv-80, 2014 WL 7447937 (E.D. Va. Dec. 31, 2014)

In this class action case involving consolidated claims for personal injury and property damage, Plaintiffs’ production of social media posts and other electronically stored information was significantly delayed and allegedly incomplete.  The court declined to dismiss Plaintiffs’ case, however, where “a nearly complete record” was eventually produced, where the information was of “limited relevance” and where there was no showing of Plaintiffs’ bad faith.  Instead, the court declined to allocate the $29,000 Plaintiffs spent for expert assistance and indicated it would award a portion of Defendants’ attorneys’ fees.  For Plaintiffs’ failure to produce text messages, the court invoked Fed. R. Civ. P. 37(e) and declined to impose any sanctions.

Plaintiffs alleged personal injury and property damage resulting from mold in their military housing.  It was widely understood that Plaintiffs were heavy users of email and social media.  Despite that, their initial productions of social media content and other ESI were sparse.  Following a supplemental production in response to Defendants’ motion to compel (and prior admonitions from the court), Plaintiffs “seemed to concede the point” that their production was once again incomplete and indicated their desire to employ an outside expert for assistance and for the defendants to bear the costs.  In response, the court indicated its belief that Plaintiffs could locate the at-issue ESI themselves.  Following Plaintiffs’ subsequent failure to meet the discovery deadline, Defendants sought to have the case dismissed.  The court deferred any ruling on sanctions, however, until after yet another promised production from the plaintiffs, this time assisted by their expert.  Ultimately, the court declined to dismiss the case.  Instead, the court noted that Plaintiffs “did eventually produce a nearly complete record of email and social media posts,” and reasoned that Defendants failed to establish that any Plaintiff acted in bad faith and that “the limited relevance of the voluminous material produced,” suggested that any gaps in production were “not likely intentional” and did not prejudice the defense.  The court’s analysis also included consideration of the cumulative nature of the late-produced ESI and the costs of doing so, in light of the proportionality requirements of Rule 26(b)(2)(C).  Nonetheless, recognizing that “nearly all of the electronic production occurred after the motion to compel,” and that the “parties’ depositions demonstrate that they were either initially poorly instructed or deliberately dilatory in their obligations to search for and produce responsive media,” the court concluded that the costs of the production, including the expert’s assistance, would remain with the plaintiffs and that a portion of Defendants’ attorneys fees would be awarded.

Defendants also contended that sanctions were warranted for Plaintiffs’ failure to produce text messages.  Plaintiffs, in turn, argued that their messages would not have been relevant and that they were irretrievably lost prior to Plaintiffs’ awareness that they would be sought in discovery.  The court agreed, and invoked Fed. R. Civ. P. 37(e) in declining to impose sanctions.  Broadly summarized, the court recognized the automatic alteration and/or deletion of text messages by service providers within a relatively short timeframe (i.e., the “routine, good -faith operation of an electronic information system”) and reasoned that the text messages would have been automatically lost before Plaintiffs became aware of the need to preserve them.  Indeed, the court noted the lack of evidence indicating that “any Plaintiff even sent a relevant, non-privileged text message, much less that all Plaintiffs should have been on notice of an obligation to preserve their texts at a time when their actions would have preserved anything that may have been relevant.” The court went on to reason that,“[t]o hold otherwise would require these individual Plaintiffs to understand, prior to receiving any discovery requests, and in some cases prior to ever conferring with counsel, that their voluminous daily text message content could relate to a claim or defense in future litigation regarding their landlord’s response to complaints about mold.”  In the course of its analysis, the court also recognized that “the fact that Plaintiffs are individuals whose devices are solely for personal use informs what constitutes a ‘routine, good-faith operation.’”

The court also addressed Plaintiffs’ allegedly insufficient production of email, but declined to impose sanctions.

A full copy of the court’s order is available here.