Claim of attorney work product will not support disorganized electronic data dump

January 21st, 2009 | By Steve Puiszis

Securities and Exchange Comm’n v. Collins & Aikman Corp., 2009 WL 94311 (S.D.N.Y. Jan. 13, 2008)

Did you know that the art and science of hiding messages or information within other forms of data is called is called steganography. Wikipedia describes it as “a form of security through obscurity.” In today’s digital world, it includes the concealment of electronic information within other computer files.

Many lawyers practice steganography without knowing its name. Frequently they attempt to bury critical or key documents in a voluminous document production in response to an opponent’s discovery requests. The potential for this type of “gamesmanship” has grown with the advent of ediscovery. Collins addressed and rejected several arguments commonly used to justify this type of steganographic discovery response. The Collins decision was written by District Judge Shira Scheindlin who authored the Zubulake decisions which addressed litigation-hold requirements. So on several different levels, the decision merits your attention.

Collins involved a securities fraud case brought by the SEC. One of the defendants issued a Request for Production of Documents which contained twenty-five requests for documents that supported specific factual allegations in the complaint. In response, the SEC produced 1.7 million documents (10.6 million pages) in 36 Concordance databases, many of which used different metadata protocols. While the SEC provided the location within those databases of documents identified in its complaint, it otherwise made no attempt to identify which documents in those various databases responded to the various paragraphs of the defendant’s production request even though its attorneys had organized documents into 175 electronic file folders which purportedly correlated to the specific factual allegations of its complaint.

The defendant challenged the SEC’s discovery response as an “impermissible document dump” that buried relevant information. The SEC offered two reasons justifying it discovery response. It argued that the compilation of documents into file folders was attorney work product and that its production would reveal the mental impressions, conclusions and legal theories of its counsel. The SEC contended that the defendant could electronically search the databases it produced and find substantially the same set of documents compiled by its attorneys in their attorney’s electronic file folders without impinging on the thought process of its attorneys. The SEC also claimed that its production comported with the manner in which its documents were maintained in the usual course of business, and thus complied with Fed. R. Civ. P 34′s mandate.

The district court initially noted that the selection and compilation of documents may fall within the protection afforded by attorney work product, but explained that it is a “‘narrow exception’ aimed at preventing requests with ‘the precise goal of learning what the opposing attorney’s thinking or strategy may be.’” It noted that several decisions had found a compilation of documents subject to work-product protection where they were compiled to assist witnesses and focused on an attorney’s thought processes concerning witness preparation and strategy rather than on the broader facts of the case. The court explained that “core” work product typically involves “legal documents drafted by an attorney-her mental impressions, conclusions, opinions and legal theories.” It then concluded that the “selection of documents according to facts alleged in a pleading does not elevate the compilation to core work product” and that ” producing the compilations of documents that support the factual allegations of a complaint reveals no more than that already revealed by the filing of the complaint.”

The court then responded to the notion that the SEC’s compilation constituted work product because it “was prepared in anticipation of litigation.” Under Rule 26(b)(3), ordinarily a party cannot obtain its opponent’s work product absent a showing that “it has a substantial need for the materials” and “cannot, without undue hardship obtain their substantial equivalent by other means.” The court concluded that the “need for the material” was obvious and that the defendant had demonstrated a “substantial need for the material” as required under Rule 26(b)(3). It then turned to the Rule’s requirement that the defendant cannot obtain the substantial equivalent to the materials in question by other means without “undue hardship.” In response to the SEC’s argument that the defendant could electronically search the databases it produced and obtain substantially the same information, the court noted that such an approach would not only result in significant expense and delay, but would also likely prove to be futile because “the inaccuracy of such searches is well known.” The court cited a study which found that Boolean searching only found 57% of known relevant documents and noted that an electronic search would be further compromised by the differing metadata protocols in the SEC’s Concordance databases. The court had little difficulty concluding that a page-by-page manual review of a document production of the size involved “constitutes ‘undue hardship’ by any definition.” The court also felt that it was “patently inequitable” to require the defendant to search a voluminous set of documents already identified by the plaintiff “as supporting the allegations of the complaint.” Thus, the electronic file folders prepared by the SEC’s counsel were not protected by work product.

Judge Scheindlin then turned to the SEC’s argument that it produced the records as they were kept in the ordinary course of business. Rule 34 requires that documents be produced as they are kept in the usual course of business or organized by the subjects of the production request. The court noted that Rule 34 is based on the assumption “that records kept in the usual course of business would not be maintained in a haphazard fashion” so that whatever method of production is chosen, “the production will be useful to the requesting party, and neither choice will inject unnecessary time and cost into the litigation.” Noting that the term “usual course of business” is neither defined in Rule 34 nor explained in the accompanying advisory committee notes, the court concluded that Fed. R. Evid. 803 (6) which employs the term “regularly conducted business activity” was instructive. The district court in Collins then concluded that Rule 34′s option to produce documents “as they are kept in the usual course of business” requires the producing party meet two tests:

First the option is available to commercial enterprises or entities that function in the manner of commercial enterprises. Second, this option may also apply to records resulting from ‘regularly conducted business activity.’ Where the producing party’s activities are ‘not routine andrepetitive’ such as to require a well-organized record-keeping system-in other words when the records do not result from an ‘ordinary course of business’-the party must produce the documents according to the sole remaining option under Rule 34: ‘orgainze[d] and label[ed] … to correspond to the categories in the request.

The court concluded that “the logic of Rule 34 supports this limitation” and that it was “reasonable to require litigants who do not create records in a ‘routine and repetitive’ manner to organize the records in a useable fashion before producing them.” Because conducting an investigation which in the court’s view was not routine or repetitive, the documents generated by that investigation could not fall within the scope to Rule 34′s usual course of business exception. Thus, the SEC could not produce the documents it collected in its investigation “in large disorderly databases” and was obligated to produce them to correspond to each paragraph of the defendant’s production request.

While the district court in Collins purportedly addressed “questions concerning the Government’s discovery obligations in civil litigation,” it is doubtful that the decision will be cabined to governmental entities. The issues addressed and the points raised in the court’s opinion are encountered in all varieties of civil litigation. Whether Judge Scheindlin’s Collins opinion ultimately garners the same type of wide-spread following as her Zubulake opinions remains to be seen. However, the opinion does raise several provocative arguments against steganographic discovery responses.

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