Archive for the “e-Lawyering” Category

Court Imposes Adverse Inference for Failure to Preserve Non-Party’s Text Messages within Defendants’ “Control”

Ronnie Van Zant, Inc. v. Pyle, No. 17 Civ. 3360 (RWS), 2017 WL 3721777 (S.D.N.Y. Aug. 28, 2017)

In this case, the court imposed an adverse inference against certain defendants for their failure to preserve text messages in the possession of a non-party, where the court found that the defendants had control of the non-party’s text messages, citing the non-party’s close working relationship with the defendants, his prior participation in the litigation (e.g., by providing documents, etc.), and his financial interest in the at-issue film (and thus the outcome of the litigation).

This case arises from potentially well-known facts. In 1977, two members of the Southern rock band Lynyrd Skynyrd and several other passengers were tragically killed in a plane crash.  In subsequent years, disagreement arose between a widow of one of the deceased and surviving band members regarding the use of the band’s name, resulting in the entry of a Consent Order which controlled the circumstances under which surviving band members could use the name Lynyrd Skynyrd, or the names and images or likenesses of the deceased, among other things.  Artimus Pyle, the drummer for Lynyrd Skynyrd and a survivor of the 1977 crash was a signatory to the Consent Order (notably signing “under protest”).

In 2016, Defendant Cleopatra Records, through one of its affiliate divisions (both “Cleopatra”), decided to make a film about the crash. Jared Cohn was hired as the director and screenwriter.  Cohn was paid by Cleopatra and reported to its founder, but was not an employee.  In the course of his work on the film, Cohn worked closely with Artimus Pyle, relying substantially on phone calls and text messages to communicate.  When Plaintiffs learned of the film, they sent a cease and desist letter.  When they discovered many months later that Cleopatra had continued with production, they initiated the present action alleging violation of the Consent Order.

Weeks after Plaintiffs filed suit and following the end of filming of the disputed movie, Cohn—a non-party— switched cell phone providers and acquired a new phone.  “Although certain data on Cohn’s old phone was backed-up, such as pictures, other data was not preserved, such as Cohn’s text messages, including those sent and received from Pyle.”  As a result, Plaintiffs sought an adverse inference sanction.

In response to Plaintiffs’ motion, Cleopatra argued that it could not be sanctioned for a non-party’s actions and that the phone was not within its control. The court disagreed, reasoning that the “concept of control”—pursuant to which documents are considered to be under a party’s control “if the party has the practical ability to obtain the documents from another, irrespective of his legal entitlement”— “has been construed broadly.”  The court continued:

Here, while Cohn is a non-party, his text messages were, practically speaking, under Cleopatra’s control. Cohn was contracted by Cleopatra to work on the Film, and the evidence has establishes [sic] that he worked closely with Cleopatra for over the past year. Over the course of the instant litigation, Cohn has participated by providing documents and took a deposition sought by Plaintiffs during discovery. As has been found relevant in other cases determining the relationship between a party and non-parties, Cohn also has a financial interest in the outcome of this litigation, since he is entitled to a percentage of the Film’s net receipts, which would be zero should Plaintiffs prevail. In sum, while determining practical control is not an exact science, “common sense” indicates that Cohn’s texts with Pyle were within Cleopatra’s control, and in the face of pending litigation over Pyle’s role in the Film, should have been preserved.

(Citations omitted.) The court went on to reject Cleopatra’s arguments regarding the lack of a valid subpoena.

The court also considered the prejudice arising from the loss, accepting Plaintiffs’ claim that they sought Pyle’s text messages “to no avail” and reasoning that despite Cleopatra’s production of other documents, “none sp[oke] directly to an important piece of this puzzle that would have been covered by the texts: the quality of interaction between Pyle, the Consent Order’s signatory, and Cohn, the principal writer and singular director of the Film, a relationship that evidence established was principally developed through text messages.”  Finally, the court considered Cohn’s actions as to the lost text messages reasoning that “getting a new phone after Plaintiffs brought the instant action and managing to back-up pictures but, somehow, not text messages,—evince the kind of deliberate behavior that sanctions are intended to prevent and weigh in favor of an adverse inference.”

Ultimately, the court concluded that an adverse inference would be presumed against the Cleopatra Defendants as to the missing text messages.

A full copy of the court’s opinion and order (ultimately resulting in a permanent injunction against the Cleopatra Defendants and an order that they pay reasonable attorneys fees and costs) is available here.

Court: Production of Hard Copy Versions of Documents Also Kept As ESI Does Not “Run Afoul” of Rule 34

Ortega v. Mgmt. & Training Corp., NO. 16-cv-0665 MV/SMV, 2017 WL 3588818 (D.N.M. Jan. 1, 2017)

In this case, Plaintiff sought to compel native/electronic production of documents previously produced in hard copy. Defendant claimed that the documents in question were “ordinarily kept by Defendant both electronically and in hard copy” and produced only the hard copy format.  The court found that Defendant’s production did not “run afoul of Rule 34.”

Rule 34 does not require the producing party to produce documents in multiple formats. Fed. R. Civ. P. 34(b)(2)(E)(iii). Nor does Rule 34 require the producing party to produce electronically stored documents in the form in which they are ordinarily maintained. Fed. R. Civ. P. 34(b) advisory committee’s note to 2006 amendment. Rather, the producing party is required only to produce such documents in a “reasonably usable form”; it cannot convert electronically stored information “to a different form that makes it more difficult or burdensome for the requesting party” to use the documents. Id. Defendant’s production of hard copy versions of documents kept both electronically and in hard copy does not run afoul of Rule 34.

In footnote, the court “encourage[d]” the defendant to produce the documents electronically, “to the extent it [could] do so without incurring significant expense.”

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

Supervision Trumps Speculation: Court Denies Motion to Compel Additional Search

Mirmina v. Genpact LLC, No. 3:16CV00614, 2017 WL 3189027 (D. Conn. July 27, 2017)

In this case, Plaintiff sought to compel Defendant to conduct an additional search for ESI.  Plaintiff asserted that he was “concerned” that responsive communications were withheld from production and argued “in essence, that defendant’s search for ESI was insufficient because counsel relied upon an employee directly involved in the underlying claims of the suit to search her own emails for responsive documents.” Defendant opposed the motion and argued that Plaintiff’s concerns were “unfounded because the search for responsive records was coordinated and overseen by counsel.”  In support of that position, Defendant’s in-house counsel provided an affidavit outlining the approach:

In-house counsel: (1) issued a timely and detailed litigation hold to potential custodians of ESI, directing the preservation of any records and documents that might pertain to plaintiff’s claims; (2) gave instructions to the ESI custodians regarding searches and specific search parameters; (3) explained the importance of a thorough search to the ESI custodians; and (4) provided guidance when questions arose during the search. See id. In-house counsel affirms that he forwarded the results of the searches to outside counsel, who in turn conducted a review for processing and production. See id. Counsel for defendant has represented that a comprehensive search was conducted for all documents subject to production under the Initial Discovery Protocols, and all responsive documents have been disclosed.

In light of these representations, the Court was “satisfied that proper steps were taken and that counsel ha[d] appropriately assumed responsibility for ensuring that a comprehensive search was conducted.” The Court further reasoned that Plaintiff’s concerns appeared to be “based on nothing but speculation” and concluded that “[w]ithout any evidence to support plaintiff’s contention that defendant has ‘deliberately or by neglect, withheld communications[,]’ the Court [would] not require defendant to conduct an additional search for ESI.”

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

“Reckless” Production, Inadequate Clawback Agreement Result in Waiver of Privilege

Irth Sols. LLC v. Windstream Commc’ns LLC, No. 2:16-CV-219, 2017 WL 3276021 (S.D. Ohio Aug. 2, 2017)

In this case, despite the existence of a clawback agreement (not an order) indicating that “[i]nadvertent production of privileged documents does not operate as a waiver of that privilege,” the court found that privilege was waived by the inadvertent but “completely reckless” production of privileged materials … twice. In so concluding, the court rejected the notion that a clawback agreement always protects against waiver, regardless of its terms, and instead indicated its support for courts that have precluded protection from a clawback agreement when the disclosure was “completely reckless” and for a framework that allows a court to rely on Fed. R. Evid. 502(b) when a clawback agreement fails to provide sufficiently concrete terms.

The parties in this case “agreed that a formal court order under Fed. R. Evid. 502(d) was not necessary based on the scale of the case” but nonetheless entered into a short clawback agreement, which included a provision that “[i]nadvertent production of privileged documents does not operate as a waiver of that privilege.”

Despite defense counsel’s assertion that the documents were subjected to two levels of attorney review prior to production, Defendant made a late production of 2200 hundred pages which inadvertently included 43 privileged documents totaling 146 pages. 12 days later, while preparing a privilege log, defense counsel realized the mistake and immediately sought to claw the documents back. Plaintiff’s counsel challenged the request and disputed the inadvertence of the production, among other things.

At the hearing on the issue, the court noted that many of the documents contained clear indicia of possible privilege (e.g., 14 of the 43 documents contained the word “legal” and several identified a previously unknown attorney as such, including by way of her signature block: “Counsel to Director of Government Contract Compliance”).  Nonetheless, defense counsel reaffirmed that the documents had been reviewed for privilege.

Unfortunately, “even as the dispute ensued,” Defendant produced the at-issue privileged documents a second time. In that instance, defense counsel claimed the production was the result of an attempt to re-produce the prior set in a searchable form and that a mistake by her litigation support team resulted in the re-production of the privileged materials, despite her efforts to ensure they were withheld, including conducting a “spot check” of the production prior to transmission.

Taking up the issue, the court discussed the question of what constitutes inadvertence and ultimately indicated that in this instance it would assume arguendo that Defendant had established inadvertence.  The court then turned to the “impact” of the parties’ clawback agreement on the question of waiver, citing three frameworks applied by other courts: “(1) if a clawback is in place, it always trumps Rule 502(b); (2) a clawback agreement trumps Rule 502(b) unless the document production itself was completely reckless; and (3) a clawback agreement trumps Rule 502(b) only if the agreement provides concrete directives regarding each prong of Rule 502(b)” otherwise, Rule 502(b) fills “the silent gaps.”

Summarizing broadly, the court rejected the first approach, reasoning in part that to approve it “would undermine the lawyer’s responsibility to protect the sanctity of the attorney-client privilege” and “runs the risk of undermining contract principles.”  Turning to frameworks two and three, the court reasoned it “need not choose” between them because “when taking into account the careless privilege review, coupled with the brief and perfunctory clawback agreement, following either approach leads to the same result: Defendant has waived the privilege.”  Under the second framework, the court ultimately concluded that the number of privileged documents produced (more than 10% of the total production), the time taken for the review (“Defendant had months to produce the first production”), and the fact that the mistake was not “the result of a technical error or mistake born from hours and hours of review” (rather the attorneys “reviewed a limited number of documents and made critical and reckless mistakes”) demonstrated a level of recklessness that supported waiver.  The court explained:

Make no mistake, the Court is sympathetic that in this day and age privileged documents will inevitably fall through the cracks and be produced inadvertently. Yet, as the “guardian” of the attorney-client privilege, it is a lawyer’s responsibility to minimize the cracks through which privileged material might slip. The Court believes the second approach adequately recognizes an attorney’s responsibility to guard that privilege, and holds an attorney accountable when normal cracks become chasms—as was the case here. (Citation omitted.)

Under the third framework, which the court viewed as “appreciating the power of clawback agreements but providing an analytical mechanism for the court to revert back to 502(b)’s requirements if an agreement is so perfunctory that its intentions are not clear,” the court characterized the parties’ agreement as “cursory” and assessed the reasonableness of Defendant’s steps to prevent disclosure—the focus of Rule 502(b)(2)—and found that reasonable steps were not taken and that privilege protections were therefore waived.

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

Court Compels Production of Documents Withheld as Nonresponsive, Orders Requesting Party to Bear Costs of Re-Review

Nachurs Alpine Sols. Corp. v. Banks, No. 15-CV-4015-LTS, 2017 WL 2918979 (N.D. Iowa July 7, 2017)

In this case, Defendants identified a number of potentially responsive documents by conducting a search with court-approved terms. Upon review of those documents, many were withheld from production as nonresponsive.  When Plaintiff sought to compel production of additional documents it suspected were relevant, the court granted the request, but shifted the burden of reviewing the withheld documents to Plaintiff, including cost.

In this case, Defendants used search terms approved in the court’s ESI order to identify potentially responsive documents and then reviewed those documents for privilege, duplication and relevance. Many thousands of documents were withheld from production as not responsive.  When Plaintiff “took issue,” Defendants eventually produced a log of all documents withheld as nonresponsive and also agreed to produce a number of those documents with conditions, including that they be designated Attorneys Eyes Only and that production “would not serve as an admission that the documents were responsive.”  However, Defendants refused to produce all nonresponsive documents.

Based on the log provided, Plaintiff identified four categories of documents it believed were relevant and sought to compel Defendants to produce them, “with defendants to bear the costs of sifting through the withheld documents.” Alternatively, Plaintiff requested that Defendants be ordered to produce all withheld documents and to pay the attorneys fees for Plaintiff’s costs to review them.  In support of its motion, Plaintiff provided a number of examples that it believed would be relevant based on the information contained in the log.  As to each, Defendants demonstrated that the document was either irrelevant or had already been produced.  Defendants also argued that Plaintiff’s motion amounted to a request for a second review and that the request was disproportional to the needs of the case.  In reply, Plaintiff argued, among other things, that the “only logical reason” for Defendants’ refusal to provide Plaintiff with the nonresponisve documents to review was that there was something they did not want Plaintiff to find.

Taking up the motion, the court acknowledged the need to assess the proportionality of the request and that Plaintiff needed to make a threshold showing that the information sought was within the scope of discovery before the burden shifted to Defendants to resist the motion. Turning to the facts before it, the court reasoned that there was “at least a colorable prima facie showing” that the documents fell within the scope of discovery because they contained one of the court-approved search terms, but acknowledged that “Plaintiff has not made a strong showing, other than this, that the withheld documents are relevant.”  While the court accepted that Defense counsel made a “good faith” determination of nonresponsiveness, the court went on to reason that its “confidence in defendants’ response [was] colored” by Defendants’ prior failure to comply with discovery obligations (which the court did not explicitly discuss beyond reference to a prior order).  Ultimately, the court found that it would be disproportional to require Defendants to re-review the documents and also disagreed with Plaintiff’s assumption that Defendants had something to hide.  Nonetheless, the court found that “the appropriate resolution” was to require Defendants to produce all of the at-issue documents under the conditions of the prior production, with Plaintiff to bear the costs for the review.  The court further instructed that if Plaintiff identified documents that were wrongfully withheld, it could bring a motion for sanctions to recover attorneys’ fees.

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