Archive for June 2017

Mandatory Initial Discovery Pilot Project Underway in AZ and IL Federal Courts

A three-year pilot project studying “whether requiring parties in civil cases to respond to a series of standard discovery requests before undertaking other discovery will reduce the cost and delay of civil litigation� is now underway in the District of Arizona and the Northern District of Illinois.  All civil cases in these jurisdictions, except those exempted by the program’s Standing Order, will be subject to the provisions of the program.

As summarized by the N.D. Illinois Users’ Manual (a nearly identifcal summary appears in teh D. Arizona Users’ Manual):

The MDIP Can be described in a nutshell as follows:

(a) The MIDP requires responses to mandatory initial discovery in all civil cases other than those exempted by the Standing Order that implements the MIDP.

(b) The mandatory discovery is framed as court-ordered discovery that must be responded to before the commencement of broader discovery under Rules 26, 30, 31, 33, 34, 35, 36.

(c) The mandatory initial discovery replaces the initial disclosures otherwise required by Rule 26(a)(1).

(d) The parties may not opt out of the requirement to provide the mandatory discovery responses.

(e) The requirement to provide mandatory initial discovery responses includes both favorable and unfavorable information that is relevant to the claims and defenses in the case. This includes claims and defenses asserted by all parties to the litigation, and a responding party must provide relevant information regardless of whether it intends to use the information in presenting its claims or defenses.

(f) Parties must file with the Court a Notice of Service of their initial responses and later supplements, but not the responses or supplements themselves. If there is an unresolved dispute regarding the responses, parties must provide the Court with the responses or supplements at issue to enable the Court to resolve the dispute;

(g) The Court will discuss the mandatory initial discovery with the parties during the case management conference under Rule 16(b)(2), and resolve any disputes regarding compliance with the required discovery; and

(h) MIDP courts will vigorously enforce the requirement to provide mandatory initial discovery responses through the imposition of sanctions if appropriate under the Federal Rules of Civil Procedure.

Notably, the Standing Order includes a provision that directly addresses the production of ESI and mandates, among other things, that the parties confer and attempt to agree “on matters relating to its disclosure and production” including:

i. requirements and limits on the preservation, disclosure, and production of ESI;

ii. appropriate ESI searches, including custodians and search terms, or other use of technology-assisted review; and

iii. the form in which the ESI will be produced.

Explanatory materials are available from both the Federal Judicial Center and the participating jurisdictions, and include the Standing Order, checklists, users’ manuals, and two video presentations that provide additional information.

A further explanation of the program and links to all written and presentation materials are available here.

NY County Addresses Technological Competence

Formal Opinion 749

In February, the NY County Lawyers Association Professional Ethics Committee issued Formal Opinion 749, addressing “[a] lawyer’s ethical duty of technological competence with respect to the duty to protect a client’s confidential information from cybersecurity risk and handling e-discovery when representing clients in a litigation or government investigation.� The committee summarized its detailed analysis as follows:

DIGEST: A lawyer’s ethical duty of competence extends to the manner in which he provides legal services to the client as well as the lawyer’s substantive knowledge of the pertinent areas of law. The duty of competence expands as technological developments become integrated into the practice of law. Lawyers should be aware of the disclosure risks associated with the transmission of client confidential information by electronic means, and should possess the technological knowledge necessary to exercise reasonable care with respect to maintaining client confidentiality and fulfilling e-discovery demands. Further, a lawyer’s duty of competence in a litigation or investigation requires that the lawyer have a sufficient understanding of issues relating to securing, transmitting, and producing electronically stored information (“ESI�). The duty of technological competence required in a specific engagement will vary depending on the nature of the ESI at issue and the level of technological knowledge required. A lawyer fulfills his or her duty of technological competence if the lawyer possesses the requisite knowledge personally, acquires the requisite knowledge before performance is required, or associates with one or more persons who possess the requisite technological knowledge.


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

No Sanctions for Unintentional, Automatic Deletion of Web History and Related Information

Eshelman v. Puma Biotech., Inc., No. 7:16-CV-18-D, 2017 WL 2483800 (E.D.N.C. June 7, 2017)

In this case, the court denied Plaintiff’s motion for an order permitting a jury instruction regarding Defendant’s failure to preserve web browser history and related information for persons responsible for the preparation of an allegedly defamatory presentation where Plaintiff failed to establish that the lost information could not be restored or replaced through additional discovery or that the failure to preserve was prejudicial or intentional.

Plaintiff sought “a jury instruction to help mitigate the harm� caused by Defendant’s failure to preserve web browser information related to the preparation of a widely-disseminated presentation that Plaintiff alleged was defamatory to him. Although Defendant imposed a litigation hold 2 weeks after the relevant complaint was filed, it did not specifically address web browser history.  By the time Plaintiff requested that such information be preserved, it had been deleted pursuant to the default settings on Defendant’s web browser, of which Defendant was previously unaware.

Applying Rule 37(e), the court first reasoned that “[a]s an initial matterâ€� the plaintiff had not established “one of the threshold elements of Rule 37(e) – namely, that the lost ESI ‘cannot be restored or replaced through additional discovery ….’â€� and explained that “while the internet browser search information was automatically deleted and cannot be restored, other avenues of discovery are likely to reveal information about the searches performed in advance of the investor presentation.â€� For example, Plaintiff “could seek information about the internet searches performed by the individuals who prepared the investor presentation through deposition testimony.â€�

The court next explained that “[i]n order to impose a sanction under Rule 37(e)(1), the court must have some evidence regarding the particular nature of the missing ESI in order to evaluate the prejudice it is being requested to mitigate.� The court reasoned that even if Plaintiff had met the “threshold elements� of Rule 37(e), he “failed to make a sufficient showing of prejudice to support relief under Rule 37(e)(1)� where Plaintiff “simply argue[d] in a cursory fashion� that the web browser information was “likely the most important evidence� of Defendant’s alleged disregard for the truth about Plaintiff.  Accordingly, the court concluded that Plaintiff was “not entitled to a sanction pursuant to Rule 37(e)(1).�

Finally, the court concluded that Plaintiff had “also failed to show that Puma acted with the requisite intent to deprive him of the ESI in order to support the imposition of an adverse jury instruction under Rule 37(e)(2)� and that the circumstances did not support such a finding. Specifically, the court noted that Defendant “did not have a document retention/destruction policy to suspend, and it was unaware of the 90-day default retention measures of its internet browser history.�  The court also acknowledged that Defendant had issued a litigation hold, albeit without mention of the browser search information.  At most, the court acknowledged that the failure to preserve web browser information was negligent, which “will not support an award of sanctions under Rule 37(e)(2).�  Thus, the court concluded that Plaintiff was also not entitled to an adverse jury instruction.

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

TX Supreme Court Addresses Format of Production, Applies Proportionality

In re State Farm Lloyds, Nos. 15-0903, 15-0905, 2017 WL 2323099 (Tex. Mar. 26, 2017)

Today, we elucidate the guiding principles informing the exercise of discretion over electronic-discovery disputes, emphasizing that proportionality is the polestar. In doing so, we further a guiding tenet of the Texas Rules of Civil Procedure: that litigants achieve a “just, fair, equitable and impartial adjudication . . . with as great expedition and dispatch and at the least expense . . . as may be practicable.�

In this dispute over the format of production, the Supreme Court of Texas took its opportunity to “(1) clarify that neither the requesting party nor the producing party has a unilateral right to specify the format of discovery under Rule 196.4 and (2) provide guidance regarding the application of Rule 192.4’s proportionality factors in the electronic-discovery context.� In so doing, the court denied the request for mandamus relief without prejudice “to allow the relator to seek reconsideration by the trial court in light of [the] opinion.�  The court summarized its conclusions as follows:

Under our discovery rules, neither party may dictate the form of electronic discovery. The requesting party must specify the desired form of production, but all discovery is subject to the proportionality overlay embedded in our discovery rules and inherent in the reasonableness standard to which our electronic-discovery rule is tethered. The taproot of this discovery dispute is whether production in native format is reasonable given the circumstances of this case. Reasonableness and its bedfellow, proportionality, require a case-by-case balancing of jurisprudential considerations, which is informed by factors the discovery rules identify as limiting the scope of discovery and geared toward the ultimate objective of “obtain[ing] a just, fair, equitable and impartial adjudicationâ€� for the litigants “with as great expedition and dispatch at the least expense … as may be practicable.â€� (Citations omitted.)

In the two cases underlying this opinion, homeowners sued State Farm alleging underpayment of their insurance claims. The parties proposed competing discovery protocols and diverged on the issue of format of production. State Farm proposed production in a searchable static form and “offered evidence that it processes more than 35,000 new claims each day and, in the ordinary course of business, information related to those claims is routinely converted into static format.�  That information was stored in a central repository.  Through its expert, State Farm also represented that production of native files “would require State Farm to engineer a new process that includes determining upstream sources of the data, validating the upstream sources, determining whether native files of the information still exist, and developing an extraction method for the native versions� and that these additional steps would be “an extraordinary and burdensome undertaking.�  Thus, according to a State Farm business analyst, the central repository housing the at-issue information in static form was “the most reasonably available source of claim file information in the ordinary course of business� and was “the most convenient, least burdensome and least expensive means of producing the information plaintiff requested.� Homeowners wanted the metadata and argued both that production in static format would deprive them of valuable information and functionality, thus rendering static format as not “reasonably usable,� and that production in native format would not add any additional steps or duties and was “as simple as handing over native ESI on a ‘thumb drive or on an external hard drive.’�  In both cases, the trial court adopted the homeowners’ position and ordered production in native or “near native� form.  While the protocol did not “require State Farm to convert data stored in another form back to native form or to produce the same information in multiple forms,� it did “require State Farm to produce ESI in native form regardless of whether a more convenient, less expensive, and ‘reasonably usable’ format is readily available.�  The order acknowledged that if native form was “infeasible,� a near-native form could be substituted “if the parties agree[d] on the substituted form.�

State Farm was denied mandamus relief from the court of appeals which “rejected State Farm’s proportionality concerns� as conclusory and lacking data upon which to conclude that the burden of production outweighed its likely benefit. More specifically, the appellate court held that “the responding party is required to produce the information in the form requested unless the party serves timely objections or assertions of privilege.� Thus, State Farm turned to the Supreme Court.

Summarizing broadly, the court began its analysis by reciting Rule 192.4, which identifies the factors relevant to whether discovery should be limited by the court, and declaring, “[t]o put it succinctly, ‘the simple fact that requested information is discoverable . . . does not mean that discovery must be had.’â€� The court further opined, “while metadata may generally be discoverable if relevant and unprivileged, that does not mean production in a metadata-friendly format is necessarily required.â€�   Ultimately, the court rejected the homeowners’ underlying presumption that a requesting party may unilaterally determine the form of production, instructing instead that “if the responding party objects that electronic data cannot be retrieved in the form requested through ‘reasonable efforts’ and asserts that the information is readily ‘obtainable from some other source that is more convenient, less burdensome, or less expensive,’ the trial court is obliged to consider whether production in the form requested should be denied in favor of a ‘reasonably usable’ alternative form.â€�  The court then turned to a factor-by-factor analysis of the application of the principle of proportionality.  Much of the analysis is notable – and quotable – but cannot all be included in this summary.  Reading the full opinion is warranted.  That said, some highlights include:

  • Likely benefit of the requested discovery:
    • If the benefits of the requested form are negligible, nonexistent, or merely speculative, any enhanced efforts or expense attending the requested form of production is undue and sufficient to deny the requested discovery.
    • At the opposite end of the spectrum, a particularized need for the proposed discovery will weigh heavily in favor of allowing discovery as requested but, depending on the force of other prudential concerns, may warrant cost-shifting for any “extraordinary stepsâ€� required.
  • The needs of the case:
    • As a general proposition, metadata may be necessary to the litigation when the who, what, where, when, and why ESI was generated is an actual issue in the case, not merely a helpful or theoretical issue.
  • The parties’ resources:
    • But beyond financial resources, one must also consider whether the requesting party has the technological resources to make proper use of ESI in the form requested. A high-powered luxury sports car is useless to someone who lacks a license to drive it.

The court turned next to discussion of “[p]arity with the Federal Rules of Civil Procedure,� noting that it’s “application of proportionality principles in this context aligns electronic-discovery practice under the Texas Rules of Civil Procedure with electronic-discovery practice under the Federal Rules of Civil Procedure.�

Ultimately, the court recognized that “the trial court and the parties lacked the benefit of [its] views on the matter� when the issues were previously addressed and thus denied State Farm’s “request for mandamus relief without prejudice to allow [it] to seek reconsideration by the trial court in light of this opinion.�

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