Plaintiff sued her former employer for violation of the Family and Medical Leave Act. She requested defendant produce emails from 2007 and 2008 concerning her FMLA leave and termination. Defendant produced only those emails that someone had printed out and which had not been deleted under defendant’s email retention policy. Plaintiff moved to compel defendant to restore backup tapes to get the deleted email messages. The court denied the motion, based on proportionality.

The court looked to Fed. R. Civ. P. 26(b)(2)(C)(iii), which provides that a court is required to limit discovery if “the burden or expense of the proposed discovery outweighs its likely benefit, considering the needs of the case, the amount in controversy, the parties’ resources, the importance of the issues at stake in the action, and the importance of the discovery in resolving the issues.”

The parties presented conflicting expert declarations concerning the cost to restore the backup tapes. Defendant’s expert claimed it would cost $270,000, while plaintiff’s expert said it would cost less.

The court declined to resolve the conflicting expert assertions. It noted that the amount of controversy in the matter was much less than $270,000, and found that “even if the actual cost of restoring the backup tapes was only a fraction of that amount, it would still outweigh the amount [plaintiff sought] to recover.”

The unwillingness to order production from backup tapes showed the court’s preference for efficient ediscovery, especially in relation to the technological feasibility of the work to be done and the amount in controversy. Though the court does not cite to the Sedona Principles [PDF], the decision comports with the philosophy contained therein.

Sedona Principle no. 2 provides that:

When balancing the cost, burden, and need for electronically stored information, courts and parties should apply the proportionality standard embodied in Fed. R. Civ. P. 26(b)(2)(C) and its state equivalents, which require consideration of the technological feasibility and realistic costs of preserving, retrieving, reviewing, and producing electronically stored information, as well as the nature of the litigation and the amount in controversy.

Sedona Principle no. 8 expresses a disdain for going to backup tapes:

The primary source of electronically stored information for production should be active data and information. Resort to disaster recovery backup tapes and other sources of electronically stored information that are not reasonably accessible requires the requesting party to demonstrate need and relevance that outweigh the costs and burdens of retrieving and processing the electronically stored information from such sources, including the disruption of business and information management activities.

The decision likewise comports with several principles set forth in the Seventh Circuit’s Electronic Discovery Pilot Program [PDF]. First, Principle 1.03 provides that “[t]he proportionality standard set forth in Fed. R. Civ. P. 26(b)(2)(C) should be applied in each case when formulating a discovery plan.” Principle 2.04(d) further provides that backup data that is substantially duplicative of data that is more accessible elsewhere is generally not discoverable in most cases.

For other posts on proportionality from Practical Ediscovery, see:

• Court orders phased discovery under Rule 26′s proportionality principles pending resolution of dismissal motion
• Proportionality — don’t overlook Rule 26(b)(2)(C) when attempting to control your e-discovery costs
• Rule 26(b)(2)(c)’s proportionality standard triggers protective order

In September 2011, the Federal Circuit promulgated a model order for courts to use in managing the high costs of ediscovery in patent cases. A key feature of the model order is restrictions on email production: requests to produce email must focus on particular issues. And the requesting party must further limit the requests by using a limited set of search terms, with production coming from a limited set of people (custodians).

Defendant Checkpoint asked the court to enter a version of the model order. (The proposed version differed from the model order in the number of keywords and custodians and on an issue of metadata.) The court granted defendant’s motion.

Plaintiff DCG objected to the entry of the order. It argued that since this was a case between competitors, and not a case brought by a nonpracticing entity (an “NPE,” or sometimes called a “patent troll”), the discovery would be improperly impeded by the model order’s limitations on email discovery.

NPE or patent troll cases often involve asymmetrical discovery – the plaintiff has few documents but the defendant has many. And some commentators have proposed that the model ediscovery order seeks to reduce the ill-effects of this asymmetry. In this case plaintiff argued that it would need discovery on legitimate issues that may have arisen with an actual competitor, e.g., whether defendant copied plaintiff’s technology and whether plaintiff was entitled to an injunction. Plaintiff’s argument presupposed that the model order’s limitations would cut into the scope of that purported legitimate discovery.

The court rejected plaintiff’s arguments. It found that: (1) nothing in the model order or the Chief Judge of the Federal Circuit’s speech unveiling the order suggested that it was intended only for NPE cases, and (2) there was no reason to believe that non-NPE (competitor) cases presented less compelling circumstances in which to impose reasonable restrictions on the timing and scope of email discovery.

The court also addressed the notion that the model order would help only in NPE cases or cases involving asymmetrical ediscovery. It observed that the model order could have double the benefit in competitor cases. If using the model order to relieve the burden on the producing party in an NPE case was a good thing, then using it in a suit between competitors benefit both sides and be twice as good.

Proving once again that it is a “dog-eat-dog world,” plaintiffs’ lawsuit stemmed from a dispute involving a dog-pedigree software program. Plaintiffs developed the software program from information found on the defendants’ web-sites, which plaintiffs claimed was in the public domain. Plaintiffs claimed that defendants subsequently “engaged in a concerted campaign of blast emails and postings on their websites,” which accused plaintiffs of stealing their information and “urging dog enthusiasts to boycott plaintiffs’ products.”

Over six years after plaintiffs filed their original complaint (that is more than 40 years in dog years), defendants filed a motion to dismiss plaintiffs’ seventh amended complaint and sought a stay of discovery. While the court recognized that motions to stay discovery may be appropriate when a claim is patently frivolous, a party raises a potentially dispositive threshold issue such as standing, pending resolution of the defense of qualified immunity, or in some antitrust actions, it refused to enter a discovery stay when the defendants’12(b)(6) motion did not involve or raise those types of issues. The court further observed that because plaintiffs’ claims had been pending for over six years, the motion to stay was unlikely to significantly expedite the ultimate resolution of those claims.

While the court rejected the requested discovery stay, it did explain that the proportionality principles set forth in Rule 26(b)(2)(C)(iii) provide judges with significant flexibility and discretion to limit discovery to insure that the “scope and duration” of discovery is “reasonably proportional” to the needs of the case. The court observed that when a lawsuit “is in its early stages,” phased discovery may be warranted beginning with “relevant information located in the most accessible and least expensive sources.” The court noted that phasing the discovery in this fashion could allow the parties to later determine if more burdensome or expensive discovery is actually required.

Noting that plaintiffs’ claims “have been in constant flux” and that the pending motion to dismiss could alter or limit the scope of discovery, the court directed the parties to engage in a “phased approach” to discovery. The court allowed only written discovery to be served on the named parties and directed that non-party discovery be postponed until a later phase of the case. The parties were further directed to focus their efforts on completing or updating their Rule 26(a) disclosures before proceeding to any other written discovery. The parties were also directed to identify those claims that were most likely to survive the pending motion to dismiss and to concentrate their discovery efforts on those claims. Finally, the court directed the parties to prioritize their efforts by focusing on discovery which was less expensive and burdensome.

To ensure that a phased discovery approach was followed, the parties were directed to meet in person and prepare such a discovery schedule, consistent with the case management procedures outlined in the Seventh Circuit’s Electronic Discovery Pilot Program Principles. The parties were also directed to become familiar with the Sedona Conference Cooperation Proclamation, and to “actively engage in cooperative discussions to facilitate a logical discovery flow.” The court reiterated that under Sedona’s Cooperation Proclamation “[c]ooperation [between attorneys] does not conflict with the advancement of their clients’ interests – it enhances them. Only when lawyers confuse advocacy with adversarial conduct are these twin duties in conflict.”

While Tamburo presents a unique fact pattern, the decision demonstrates how the use of Rule 26(b)’s proportionality principles can potentially limit ediscovery costs. The phased discovery approach taken by the court in Tamburo is one that should be considered when bringing a Rule 12(b)(6) motion to dismiss.

And, when it comes to dogs, always remember: “Never judge a dog’s pedigree by the books he does not chew.” Anonymous.

Court rules that under the Stored Communications Act, account holder consent is required to obtain copies of emails in Google’s possession. Before you issue a subpoena seeking copies of emails, read Beluga Shipping.

Suzlon is the third largest wind turbine manufacturer in the world. In an action pending in the Federal Court in New South Wales Australia, Suzlon brought cross claims for fraud and breach of fiduciary duty against several of its former employees who were imprisoned in India.

Suzlon believed that its former employees used internet mail accounts hosted by Google to perpetrate their fraud. Therefore, it filed a petition under 28 U.S.C. §1782 to obtain discovery from Google. 28 U.S.C. §1782 provides the means by which parties to a foreign proceeding can obtain discovery in the United States for use in that proceeding. The Federal Rules of Civil Procedure apply in §1782 proceedings unless the court prescribes a different procedure to follow. In Beluga Shipping, the district court applied the Federal Rules of Civil Procedure.

In its §1782 petition, Suzlon sought leave to issue subpoenas to Google to obtain all emails sent or received by its former employees using specific Gmail accounts. Suzlon also sought any records establishing when those Gmail accounts were created, the name provided to Google by the user of each account during the account creation process, the country in which each account was created, how Google stores or saves emails in its Gmail accounts and how information regarding when emails sent to and from a Gmail account is recorded and stored.

The district court permitted Google to intervene and oppose Suzlon’s petition. Google argued that under the Stored Communications Act, 18 U.S.C. §§2701-2712, consent of the individual account holders is required, and that unless their consent is obtained, it could not lawfully comply with Suzlon’s subpoena.

In response, Suzlon cited Zheng v. Yahoo, Inc., 2009 U.S. Dist. LEXIS 111886 (N.D. Cal., Dec. 2, 2009), and argued that the Stored Communications Act does not apply to foreign citizens. Therefore, Suzlon argued that Google was obligated to comply with its subpoena. However, the district court found Zheng inapplicable because “the email interceptions and disclosures occurred outside of the United States by a company whose servers were located outside the United States.” In the court’s view, these factors led to Zheng’s conclusion that the Stored Communications Act does not apply to foreign nationals. However, because Google and its servers are located in the United States, the district court concluded that the Stored Communications Act was applicable in the case before it.

Because Suzlon had not obtained the consent of its former employees, the district court denied, its petition to subpoena the emails of those employees, without prejudice to a renewed showing that the account holders’ consent had been obtained. The court did direct Google to produce documents which established when the specific Gmail accounts in question were created, the actual names of the email account holders provided to Google during the account creation process and the countries from which the specific Gmail accounts were created. The court further directed Google to continue to preserve the emails contained in the specific Gmail accounts in question pending a showing of consent by the account holders.

Despite the unusual procedural context in which this decision arose, the Beluga Shipping decision is significant for any litigant who seeks information from a provider of internet email service such as Google, Yahoo or Hotmail. Without the consent of the account holder, parties may be unable to obtain by subpoena emails that were sent or received by the account holder. So, first seek the consent of the account holder and if that fails, consider a motion asking the court to compel the account holder’s assent. Additionally, when communications occur through applications found in the “cloud,” the Stored Communications Act can raise a similar impediment to obtaining communications stored in the cloud.

The comments to Model Rule 1.6 explain that a lawyer “must act competently to safeguard” client information against the inadvertent or unauthorized disclosure by a lawyer or anyone who is subject to the lawyer’s supervision. The use of clawback agreements in electronic discovery has become commonplace given the exponentially greater volume of information typically involved and the heightened risk that privileged or protected information will be inadvertently disclosed. While the terms of clawback agreements can widely vary, under a typical clawback, the parties agree that if privileged or protected information is disclosed, it will be returned pursuant to that agreement.

The problem with clawback agreements is that they are not enforceable against third parties. If your client is involved in related litigation involving similar issues, should the parties involved in that litigation learn of the disclosure of privileged information in your case, they could seek its production, irrespective of your clawback, by arguing they were not parties to your agreement and that the privilege was waived by your disclosure. Indeed, that limitation is codified in Fed. R. Evid. 502(e) which provides: “[a]n agreement on the effect of disclosure in a federal proceeding is binding only on the parties to the agreement.” So while clawback agreements serve a worthwhile purpose, they are not risk free. Better protection against third-party waivers in a federal proceeding can be obtained if a federal court enters a nonwaiver order under Fed. R. Evid. 502(d). However, many states have not adopted the equivalent of Rule 502(d), and it remains an open question whether a non-waiver order entered in one state-court proceeding is enforceable in other state-court proceedings. See Hopson v. City of Baltimore, 232 F.R.D. 228 (D.Md. 2005).

Thus, there is a continuing need for clawback agreements, especially in state-court litigation. But before entering into a clawback agreement with your opponent, also consider protecting yourself against potential criticism over its use. In document intensive cases, or suits where a significant amount of ediscovery will be sought, discuss the use of a clawback agreement with your client, including its risks and benefits. Obtain your client’s consent before using a clawback. A best practices approach would involve written consent from the client to the use of a clawback agreement before it is entered into with opposing counsel. This can avoid any after-the-fact controversy over the nature of your discussions with the client or the decision to use a clawback to protect the confidentiality of your client’s information.

Some lawyers take a “Turkish Bazaar” approach to discovery requests, seeking more than they really need while willing to negotiate down to what they want. Other lawyers lace their otherwise reasonable discovery requests with magnifying terms such as “any and all,” “touching upon,” or “relating to” a particular topic or subject matter.

Lawyers responding to these types of requests will typically, and rightfully, object to the requests as being overbroad and unduly burdensome. Principle 1.03 of the Seventh Circuit’s Electronic Discovery Pilot Program further provides that requests for production of electronic information should be “reasonably targeted, clear and as specific as practicable.” That principle provides another basis to object to burdensome discovery requests.

But how many lawyers think to raise Rule 26(b)(2)(C)’s proportionality standard when addressing a burdensome discovery request? Rule 26 applies to all discovery, not just to inaccessible information. Attorneys who fail to consider Rule 26’s proportionality standard are overlooking an important tool in controlling ediscovery costs, as the decision in today’s post explains.

Bellinger involved a Title VII claim in which plaintiff alleged that she was denied a promotion and received unequal pay because of her gender. In discovery, plaintiff sought “detailed information about the job status and career histories” of various groups of other employees. The district court sustained the defendant’s objection, noting that the burden of complying with the interrogatory seeking this information was “substantial” and that “[t]he likely benefit of the discovery . . . is slight or non-existent, particularly in light of the narrow scope of plaintiff’s claims and the broad range of discovery that has already been produced.”

Additionally, plaintiff in Bellinger sought “detailed and technically complex” information about the defendant’s electronically stored information. Again, notions of proportionality prevailed. The court concluded that responding to those interrogatories would be “extremely burdensome” and that the information sought in those interrogatories was “unlikely to be of significant value, especially in light of the discovery that the defendant has already provided.”

Practical tips for asserting Rule 26(b)’s proportionality standard

Rule 26(b)(2)(C) provides:

On motion or on its own, the court must limit the frequency or extent of discovery otherwise allowed by these rules or by local rule if it determines that:

(i) the discovery sought is unreasonably cumulative or duplicative, or can be obtained from some other source that is more convenient, less burdensome or less expensive;

(ii) the party seeking discovery has had ample opportunity to obtain the information by discovery in the action; or

(iii) the burden of expense of the proposed discovery outweighs its likely benefit, considering the needs of the case, the amount in controversy, the parties’ resources, the importance of the issues at stake in the action, and the importance of the discovery in resolving the issues.

Bellinger is one example of how Rule 26(b)’s proportionality standard can be applied to supplemental discovery requests. When raising a proportionality objection to a supplemental discovery request, counsel should endeavor to provide the court with specific information as to the costs and burdens of the discovery that has already been provided as well as the anticipated costs of the supplemental discovery response. Be specific, do not provide the court with broad generalizations as to the costs and burdens involved. In addition to the anticipated cost of responding to this supplemental discovery, provide the court with information as to the number of pages or documents produced in discovery, the number of depositions that have been taken and the actual expense the client has already incurred in preserving and producing information in connection with your opponent’s prior discovery requests.

Raising a proportionality objection during the early stages of a case when the client may incur significant costs responding to the initial discovery requests can be more complicated. One of the factors that a court is required to take into consideration under Rule 26(b)(2)(C)(iii) is “the amount in controversy.” Frequently, that is unknown to defense counsel. There is no amount-in-controversy requirement with federal question jurisdiction, Arbaugh v. Y& H Corp., 546 U.S. 500 (2006), and diversity jurisdiction only requires pleading that the amount in controversy exceeds $75,000, exclusive of interest and costs under 28 U.S.C. §1332. However, there are options available when raising a proportionality objection.

One option is to borrow a page from Judge Paul Grimm’s playbook in Mancia v. Mayflower Textile Servs. Co., 253 F.R.D. 354 (E.Md. 2008). Judge Grimm in Mancia noted that the record before him lacked the type of factual information he needed to make a proportionality determination. Therefore, he ordered counsel to meet and confer as to the likely range of provable damages that could be foreseeably awarded to the plaintiffs if they prevailed at trial. 253 F.R.D. at 364. Because your opponent is likely to provide an inflated value as to a case’s worth at the outset of any lawsuit, try thinking outside the box when considering this option.

Many district judges are more than willing to provide as much case management to a given matter that the parties request. Consider asking the court to require each side to provide the same type of information ordered by Judge Grimm in Mancia. Also, review 15 U.S.C. §6607 for specific guidance. There, Congress required a party provide “specific information as to the nature and amount of each element of damages [being claimed] and the factual basis for the damages calculation” in a statement that accompanied any pleading in a Y2K action. Such a paper, signed by counsel after having been ordered by the court is more likely to contain a realistic evaluation of the amount in controversy than if you simply solicited a settlement demand from opposing counsel.

Should a district court be unwilling to supplement its typical case management procedures and require the provision of this type of information, provide the court with information about verdicts and settlements in similar cases. In the absence of reported verdict or settlement information, provide your considered opinion as to the recoverable damages when arguing your opponent’s discovery requests are not proportional. Don’t forget to address the other Rule 26 factors that a court must consider, including the needs of the case, the importance of the issues at stake in the litigation, and the importance of the discovery in resolving those questions.

Years earlier, Judge Easterbrook of the Seventh Circuit Court of Appeals foresaw the very problem confronting Judge Grimm in Mancia. Judge Easterbrook then wrote:

The plaintiff files a sketchy complaint . . . and discovery is launched. A judicial officer does not know the details of the case the parties will present and in theory cannot know the details. Discovery is used to find the details. The judicial officer always knows less then the parties, and the parties themselves may not know very well where they are going or what they expect to find. . . . Judicial officers cannot measure the costs and benefits to the requestor and so cannot isolate impositional requests. Requestors have no reason to disclose their own estimates because they gain from imposing costs on rivals (and may lose from an improvement in accuracy). The portions of the Rules of Civil Procedure calling on judges to trim back excessive demands, therefore, have been, and are doomed to be, hollow. We cannot prevent what we cannot detect; we cannot detect what we cannot define; we cannot define “abusive” discovery except in theory, because in practice, we lack essential information.

Frank H. Easterbrook, Discovery As Abuse, 69 B.U.L.Rev. 635, 638-39 (1989).

Until some obvious gaps in the Rules are filled, it is up to counsel to seek creative approaches to provide the court with information relevant to a proportionality analysis. Putting the time and effort at the front end should certainly save your client significant costs, especially when addressing the costs and burdens of electronically stored information.

Unlike attempting to buy a rug at a Turkish Bazaar, in federal court you cannot simply walk away from your opponent’s unreasonable demands. Be sure not to overlook the important tool Rule 26(b)(’s) proportionality standard provides in attempting to control the burdens and costs of ediscovery in your cases.

Petitioner Irwin noticed that a local government agency used a picture of Irwin in an email “news blast.” He claimed the agency used the photo without his permission, and sought modest compensation for the use of the photo. When the agency refused, Irwin sought information about the agency’s collection of digital images under New York’s Freedom of Information Law (“FOIL”).

The request sought “[a]ll computer records that are associated with published [photographs] in all [of the agency's] publications, including [Web site] and e-mail activities, for the years 2005, 2006, and 2007.” The agency produced some photos that were of reduced quality and “bereft” of metadata.

Irwin filed a court action to compel, among other things, the disclosure of the metadata associated with the requested records. The trial court denied Irwin’s petition, and Irwin sought review with the appellate court. On appeal, the court amended the judgment to order the production of the metadata.

The court emphasized that the decision was limited to its facts. But the case is worth reading because of its concise yet thorough explanation of the various types of metadata and their discoverability.

In this case, the court found that the scope of the petitioner’s request included “system metadata,” which are things such as file names and extensions, sizes, creation dates and latest modification dates. The court noted that FOIL’s scope generally includes electronic records. It then compared system metadata to the notes on a file folder describing attributes of the documents stored in that folder. Drawing on these notions, the court found that the agency should disclose system metadata associated with the requested computer files.

The disclosure of metadata appears, at a superficial level, to present a paradox. Some courts, such as the ones in Kentucky Speedway, LLC v. NASCAR, Inc., 2006 U.S. Dist LEXIS 92028 (E.D. Ky.2006) and Michigan First Credit Union v. CUMIS Insurance Society, 2007 WL 4098213 (E.D. Mich. Nov. 16, 2007) have essentially found a presumption that metadata is not subject to disclosure because of the likelihood of its irrelevance.

But a look at emerging technologies such as those underlying the “semantic web” — an aspect of the World Wide Web in which data are encoded so that the various machines on the network can “understand” the data and thereby undertake the more mundane tasks of finding, sharing and combining information – underscore the potential importance of metadata.

Insightful counsel can break this paradox by remaining mindful of the need for metadata based on the claims and defenses raised in the matter. Hopefully the days of blanket requests for metadata, without a principled basis for such requests are over. Just like any other sort of information that pertains to a case, metadata has no inherent relevancy. Instead, the question of whether it should become a part of the record depends on its meaning. Metadata’s discoverability (or amenability to disclosure under freedom of information laws) should depend not on the fact that it is “metadata,” but on how it can serve to explain the scenario underlying the dispute.

Interested readers should also be aware of related opinions from other states. For example, the Arizona Supreme Court has held in (Lake v. City of Phoenix) that metadata is subject to disclosure under the state’s open records statute. Given the burden to governmental agencies tasked with responding to public requests, the issue of metadata’s discoverability is unlikely to disappear soon.

AccessData is a software developer that entered into an agreement with ALSTE to sell its software products. AccessData brought a breach of contract action against ALSTE involving the sale of its forensic software. ALSTE claimed that the software was defective and filed a counterclaim asserting a breach of a technical support agreement. In discovery, AccessData sought production of information concerning customer complaints and any damages flowing from that counterclaim. ALSTE objected, arguing that the discovery requests were overbroad and the disclosure of information about the identities of third parties who voiced the complaints would violate German law. AccessData brought a motion to compel that information and also sought the reproduction of emails in their native format.

Failing to follow Rule 34’s requirements triggers order to reproduce ESI in a reasonably useable form.

In several of our prior blog posts which you can read here and here, we discussed Rule 34’s process for addressing the format of ESI production. Rule 34(b)(2)(D) requires the party responding to a production request to inform the requesting party of the format in which it proposes to produce its ESI in two scenarios – when the producing party objects to the requested production format specified in the production request or if no form is specified in that request. That is precisely what occurred here. AccessData did not specify a format in its Rule 34 production request. ALSTE scanned hard copy printouts of emails and other documents rather than produce them in their original electronic format. Apparently, Optical Character Recognition (“OCR”) was not added to the PDF images because AccessData argued that the documents were not reasonably usable because they were not “searchable.”

ALSTE argued that it would be unnecessarily burdensome and expensive to now extract specific information to make the emails text searchable and pointed to Rule 34(b)(2)(E)(iii) which provides that a party is not obligated to produce the same ESI in more than one form.

The court was not persuaded by these arguments. It noted that ALSTE failed to follow Rule 34’s requirements by failing to notify the plaintiff of the format it intended to use in producing the requested discovery. As the Advisory Committee Notes to the 2006 Amendment to Rule 34 explains:

Stating the intended form before the production occurs may permit the parties to identify and seek to resolve disputes before the expense and work of the production occurs. A party that responds to a discovery request by simply producing electronically stored information in a form of its choice, without identifying the form in advance of the production and the response required by Rule 34(b), runs the risk that the requesting party can show that the produced form is not reasonably usable and that it is entitled to production of some or all of the information in an additional form.

Fed.R.Civ.P.34(b) Advisory Comm. Notes to 2006 Amendment

Rejecting ALSTE’s argument, the court pointed to another statement appearing in the Advisory Committee Notes to Rule 34 that warns:

If the responding party ordinarily maintains the information it is producing in a way that makes it searchable by electronic means, the information should not be produced in a form that removes or significantly degrades this feature.

Id. The court in AccessData concluded that the scanned PDF’s were not reasonably usable and ordered the defendant to reproduce the electronic discovery in its native format or in a reasonably usable form.

German Data Protection Act and Hague Convention did not bar disclosure of personal third-party information.

ALSTE argued that German law prohibited the production of third-party personal information and suggested that if it complied with the plaintiff’s discovery requests, it would be subject to civil and criminal penalties. The district court rejected that argument and noted that one provision of the German Data Protection Act specifically provides that transfers of “personal information to countries that do not have the same level of data protection ‘shall be lawful, if … the data subject has given his/her consent [or] … the transfers are necessary or legally required… for the establishment, exercise or defense of legal claims.’”

Additionally, the court observed that in Societe Nationale Industrielle Aerospatiale v. United States District Court, 482 U.S. 522, 544 n.29 (1987), the Supreme Court held: “It is well settled that such [blocking] statutes do not deprive an American court of the power to order a party subject to its jurisdiction to produce evidence even though the act of production may violate the statute.” Moreover, the Supreme Court cited the American Law Institute’s Restatement which explains:

When a state has jurisdiction to prescribe and its courts have jurisdiction to adjudicate, adjudication should (subject to generally applicable rules of evidence) take place on the basis of the best information available …. [Blocking] statutes that frustrate this goal need not be given the same deference by courts of the United States as substantive rules of law at variance with the laws of the United States.

Id. (quoting Restatement of Foreign Relations Law of the United States (Revised) § 437, Reporter’s Note 5 (1986)).

ALSTE suggested that plaintiff must comply with the rules set forth in the Hague Convention for Taking Evidence Abroad with respect to the private information about the defendants’ customers. The district court summarily rejected that argument by again pointing to the Supreme Court’s Societe Nationale decision where the Court held “we cannot accept petitioners’ invitation to announce a new rule of law that would require first resort to [Hague] Convention procedures whenever discovery is sought for my foreign litigant.” Id.

Under the holding of Societe Nationale, parties might have to comply with Hague Convention procedures where suits involve foreign states or if “the additional cost of transportation of documents or witnesses to or from foreign locations … increase[s] the danger that discovery [is] sought for [an] improper purpose.” Id. at 546. Because neither scenario was presented by the plaintiff’s breach of contract action, the district court in AccessData ruled that the Hague Convention procedures were inapplicable.

Laptop photo courtesy Flickr user Mike Licht under this Creative Commons license.

If you were looking for an ediscovery opinion to lift your spirits during this wintery holiday season, stop, Callan is not the decision for which you’ve been waiting. After reading the opinion, Santa reportedly decided to deliver coal to lawyers who fail to follow Fed. R. Evid 502. The court’s decision in Callan focused on the issue of inadvertent waiver of privilege, and Rule 502(b). However, as we originally explained in one of our blog posts several months ago, the time and effort expended in addressing the issue of inadvertent waiver in Callan could have been avoided had the protective order been drafted in accordance with Fed. R. Evid. 502(d).

The proper framework for analyzing the inadvertent waiver of attorney-client privilege under Fed. R. Evid. 502(b) was discussed in one of our recent blog posts. In that post, we warned that when a party seeks the return of inadvertently produced privileged material under Fed R. Civ. P. 26(b)(5)(B), the failure to explain what steps the party took to prevent the disclosure of privileged information from occurring could result in a finding of waiver under Rule 502(b), no matter how inadvertent the disclosure. Unfortunately, defense counsel made that same mistake in Callan. The court noted that defendants failed to establish the documents in question were privileged and even failed to identify “what privileges purportedly apply to the documents [that were] allegedly inadvertently produced.” As a result, the court awarded attorney’s fees to the plaintiff under Rule 37(a)(5)(B) for responding to the motion. Thus, the failure to meet Rule 502(b)’s elements not only can result in a finding of waiver, it can also result in having to pay your opponent’s attorney’s fees for responding to such a motion. Obviously, care must be taken when seeking the return of inadvertently produced information under Rule 502(b).

The district court in Callan had entered a protective order under Fed. R. Civ. P. 26(c) that included a clawback provision which provided: “The inadvertent production of any discovery material by any party shall be without prejudice to any subsequent claim by the producing party that such discovery material is privileged or attorney-work product and shall not be deemed a waiver of any such privilege or protection.” So, what went wrong? The protective order was limited to the “inadvertent” production of discovery materials and defendants failed to show the materials were inadvertently produced or were privileged. More importantly however, the first misstep occurred in drafting that protective order. As explained below, the real lesson to be learned is that nonwaiver orders under Fed. R. Evid. 502(d) need not be limited to the “inadvertent” production of privileged or protected materials as in Callan.

Nonwaiver orders under Fed. R. Evid. 502(d) should not be limited to the “inadvertent” production of privileged information or attorney work product.

Before drafting your next protective or nonwaiver order, take another look at Subdivision (d) of Rule 502. It provides:

A Federal court may order that the privilege or protection is not waived by disclosure connected with the litigation pending before the court—in which event the disclosure is also not a waiver in any other Federal or State proceeding.

Note that unlike Subdivision (b) of the Rule, which is specifically restricted to the “inadvertent” disclosure of privileged information and requires a showing of reasonable care, Rule 502(d) is not so limited. The word “inadvertent” appears nowhere in the text of Rule 502(d). Also, Rule 502(d), unlike Rule 502(b), does not require that reasonable care be exercised when a production occurs pursuant to this part of the Rule.

The primary rule of statutory construction is to apply the plain language of a statute as written. See, e.g., United States v. Ron Pair Entrers. Inc., 489 U.S. 235, 242 (1989)(explaining the “plain meaning of legislation should [generally] be conclusive” on the issue of legislative intent). Rule 502(d) simply does not require that a court order mandate that reasonable care be taken before it can be entered. Another recognized rule of statutory construction is that the inclusion of a requirement in one section of a statute but not in another section of the same statute signals a different result was intended. Duncan v. Walker, 533 U.S. 167, 173 (2001) (observing “where Congress includes particular language in one section of a statue but omits it in another section of the same Act, it is generally presumed that Congress. acts intentionally and purposely in the disparate inclusion or exclusion”) (internal quotation omitted).

Had the drafters of Subdivision (d) intended to limit Rule 502(d) nonwaiver orders to only the inadvertent production of privileged material or to only those instances where reasonable care was taken, they could have easily mimicked the requirements found in Subdivision (b) of the Rule. Because they did not do so, Rule 502(d) orders are not limited by Rule 502(b)’s requirements. This conclusion is borne out by the Explanatory Note to Subdivision (d) of Rule 502 which explains “the court order may provide for return of documents without waiver irrespective of the care taken by the disclosing party” (emphasis added).

So, take advantage of Rule 502(d). When drafting a nonwaiver order, make it applicable to any production of any discovery material and do not limit it to merely an inadvertent production like the parties in Callan.

It is not uncommon, when drafting nonwaiver orders, to seek the approval of your opponent to the proposed language of the order. Some may even suggest such collaboration is required in light of various “cooperation proclamations.” However, the Explanatory Note to Subdivision (d) provides your opponent’s agreement is not a precondition to the entry of a Rule 502 nonwaiver order. The Note unequivocally states:

Under the rule, a confidentiality order is enforceable whether or not it memorializes the an agreement between the parties to the litigation. Party agreement should not be a condition of enforceability of a federal court’s order.

In theory, given a district court’s inherent authority to control its docket and the scope of discovery in matters pending before it, a court should be able to enter a Rule 502(d) nonwaiver order sua sponte without even requiring a motion from the parties. Nevertheless, it would be a wise to endeavor to gain your opponent’s agreement to the entry of such an order. Should your opponent object to the breadth of your proposed order, explain that it will ultimately benefit both parties and point to the quoted provisions from Rule 502(d)’s Explanatory Note.

Protective/nonwaiver orders are controlling.

The court in Callan made an important point that also merits your attention. The court noted that the defendants, as the moving party, bore the burden of proving they inadvertently disclosed privileged documents to the plaintiff within the meaning of the court’s protective order. The court observed that because the protective order did not address the parties’ burden of proof regarding the alleged inadvertent disclosure, it adopted the “standard practice” which is to place the burden on the party claiming inadvertent disclosure.

Implicit in that ruling is that if the protective order had not been limited to the inadvertent production of discovery materials, the party that bore the burden of proof would not be an issue. More importantly, Callan explains that the terms of the protective order are controlling as to which party bears the burden of proof and suggests that the parties are free to allocate that burden as they see fit. Accordingly, should a court in exercising its discretion limit the entry of a Rule 502(d) nonwaiver order to only the inadvertent production of privileged information, then you should endeavor to address the burden of proof issue in the order. Nothing prevents the parties from shifting the burden to the receiving party to demonstrate that reasonable precautions were not taken.

Accordingly, broadly draft your Rule 502(d) nonwaiver orders so that you can avoid the type of outcome that occurred in Callan and hopefully next year you can avoid Santa delivering coal to your stocking.

Because the production of electronically stored information (ESI) can occur in various formats, Rule 34 sets up a process through which the parties are supposed to resolve their disputes over the format of production. Rule 34(b)(1)(C) permits the requesting party to specify the format in which to produce the requested ESI. The producing party can either agree to produce the ESI in the requested form or can object to the proposed format. Rule 34(b)(2)(D) specifies that when either the requesting party fails to specify a production format in its request for documents or when the producing party objects to a specified format, the producing party is obligated to identify the format in which it proposes to produce the requested ESI. If the parties are unable to agree on a format, the Rule contemplates that a court will then resolve the issue, but is not bound by either party’s proposed production formats.

Rule 34 contemplates that the parties will resolve their disputes over the format of production before any production occurs. Indeed, the Advisory Committee Note to Rule 34 explains: “Stating the intended form before production occurs may permit the parties to identify and seek to resolve disputes before the expense and work of the production occurs.”

When a party unilaterally produces ESI in a format of its choice without providing the prior notice contemplated by Rule 34(b)(2)(D), the Advisory Committee Note to the Rule further explains that the producing party runs the risk that a court may conclude the ESI was produced in a format that was not reasonably usable and may order that it be reproduced in a different form. That very nightmare occurred in both of today’s featured decisions and the Covad Communications decision provides a textbook example of the type of problem that can occur when a party has to produce its ESI a second time in a different format.

Requests for production in “native format” are unambiguous

In Cenveo, the defendants requested that the plaintiff produce its electronic documents in their native format. Plaintiff produced their documents as Adobe portable document format (.pdf) images, which was not the native format of the documents. In its response to the defendant’s motion to compel, plaintiff raised an argument that can best be described as “Clintonesque.” Plaintiff argued that the defendants did not define the term “native format” in their production request, and therefore, the .pdf format was an acceptable form of production.

The court in Cenveo summarily rejected that argument finding the term “native format,” as used in the defendants’ production request, was unambiguous. The court observed that the term “native format” has been frequently used in various reported decisions and “the term is frequently used in secondary materials that are readily available and familiar to attorneys.” For example, in Aguilar v. Immigration & Customs Enforcement Div. of U.S. Dept. of Homeland Sec., 255 F.R.D. 350, 353 n.4 (S.D.N.Y. 2008), the term “native format” was defined as the “default format of a file,” which is “provided through the software program on which it was created.”

Because plaintiff in Cenveo: (1) failed to object to producing documents in their native format; (2) failed to notify the defendants of the production format plaintiff intended to use before producing its ESI, and (3) because the plaintiff failed to present any argument explaining why it could not comply with the production format specified in defendants’ original discovery request, the court concluded that production in its native format was warranted. Therefore, it ordered the plaintiff to reproduce complete, non privileged documents responsive to the defendants’ production request in their native format.

A party should preserve the integrity of its ESI once a production has occurred

In Covad Communications, defendants made 35,000 pages of emails available to the plaintiff in hard copy and the court directed that they be produced in their native format. Subsequently, plaintiff filed a motion to compel arguing the defendant failed to produce all of those emails in their native format. The defendant explained that the database platform which it originally used to search for documents was only capable of exporting them into an HTML format. Therefore, the defendant had to use a different platform to produce the emails in their native state, as .pst files. Therefore, the defendant could not exactly rerun the original search. In response to plaintiff’s motion to compel, defendant argued it would be too burdensome for it to cross reference its electronic production against the hard copies of the emails to determine how many and which emails were missing.

While the court in Covad recognized the difficulty in identifying which emails had not been produced in their native state, the court also noted it was a burden of the defendant’s own making. It concluded that the plaintiff should not be penalized for the defendant’s “failure to maintain its discovery materials in some sort of organized fashion or keep some records of its own actions in this lawsuit.” The court observed that Wyeth v. Impax Labs, Inc., 248 F.R.D. 169, 171 (D.Del. 2006), similarly held the “producing party must preserve the integrity of the electronic documents it produces. Failure to do so will not support a contention that production of documents in [its] native state is overly burdensome.”

The production format may not degrade the data’s searchability”

In Covad, the defendant produced 2,832 pages of spreadsheets as paper printouts. Plaintiff contended that spreadsheet printouts were useless because they run horizontally across several sheets of paper “resulting in a sea of seemingly random numbers and data” with no column headings or identifying information. Defendant advised that plaintiff “could paste these hundreds of pages together.” The court noted that Rule 34 requires that documents that were originally created in an electronic format must be produced in the form in which they are “ordinarily maintained or a reasonably useable form.” The court recognized that the spreadsheets were not ordinarily maintained in a paper format, and concluded that their production in a paper format was not a reasonably useable form of production.

The court in Covad noted that the Advisory Committee Note to Rule 34 provides that if a party maintains its ESI in a format that is electronically searchable, it may not produce that ESI in a form that removes or significantly degrades this feature. The defendant’s spreadsheet production clearly violated that principle and the court aptly summarized its feelings about this production format dispute:

Understandably, taking an electronic document such as a spreadsheet, printing it, cutting it up, and telling one’s opponent to paste it together again, when the electronic document can be produced with a keystroke is madness in the world in which we live.

Should the production format really make a difference?

While Rule 34’s procedures are not difficult to understand and apply, many parties and their counsel simply aren’t following them. At an ediscovery seminar earlier this year, an audience member asked me why should the production format make a difference. I explained that there are pros and cons to various production formats and that in the minds of many, the production format does make a difference.

Typically, parties objecting to the production of ESI in its native state argue that documents cannot be bates numbered or redacted without altering the original, they can be altered after production occurs, they contain metadata and may also contain embedded comments. Additionally, when a document is created in a unique or proprietary format, specialized software may be needed or the data may have to be translated into a different format simply to view it. While none of these issues are insurmountable, they do require discussion and agreement between the parties to resolve these difficulties.

Parties who object to a native production will explain that these issues are not presented when ESI is produced in an imaged format – as a .pdf or in a Tagged Imaged File Format (TIFF). However, objections to production of documents in an imaged format are that the images lack any metadata and cannot be electronically searched. These hurdles can be overcome by the addition of a load file containing agreed upon fields of metadata and extracted text or optical character recognition (OCR), which makes the imaged documents electronically searchable. Aguilar, 255 F.R.D. at 353, 356. However, producing ESI in an imaged format is more expensive and can take longer to complete. Again, these points require discussion between the parties, which is why Rule 34 requires the parties attempt to agree on a format before production occurs.

Typically fights over production formats boil down to production of metadata. Obviously, metadata may be discoverable “if it is relevant to the claim or defense of any party and is not privileged.” Aguilar, 255 F.R.D. at 355. Thus, it is subject to litigation hold requirements. Williams v. Sprint/United Mgmt. Co.,230 F.R.D. 640 (D.Kan. 2005). The discovery of metadata is also subject to Rule 26(b)(2)(C)’s proportionality standard. Aguilar, 255 F.R.D. at 355. Some forms of metadata may provide relevant information in litigation, such as when “the authenticity of a document is questioned or if establishing ‘who received what information and when’ is important to the claims or defenses of a party.” Aguilar, 255 F.R.D. at 354, quoting Hagenbuch v. 3B6 Sistemi Elettronici Industriali S.R.L., 2006 WL 665005 at *3 (N.D.Ill. Mar. 8, 2006). However, there are different types of metadata which vary in their potential importance to litigation, and thus, their discoverability.

System metadata identifies the author of a document, the date it was created or modified, its title, subject and size, as well as the names of the persons who revised and/or who last accessed the document. Application metadata, “reflects modifications to a document such as prior edits or editorial comments, and includes data that instructs a computer how to display” a document. Embedded metadata “include spreadsheet formulas, hidden columns, externally or internally linked files (such as sound files), hyperlinks references and fields, and database information.” Aguilar, 255 F.R.D. at 354-55 (discussing when and under what circumstances, application metadata, system metadata and embedded metadata may be discoverable). They are not treated the same by courts. “[T]he more interactive the application, the more important the metadata is to understanding the application’s output.” Williams, 230 F.R.D. at 647.

A number of district courts have questioned the need for metadata in litigation. In Wyeth v. Impax Laboratories, Inc., 248 F.R.D. 169 (D.Del. 2006), one court observed: “Emerging standards of electronic discovery appear to articulate a general presumption against the production of metadata.” Another district court noted “[i]n most cases and for most documents, metadata does not provide relevant information.” Kentucky Speedway, LLC v. NASCAR, 2006 U.S. Dist. LEXIS 92028 at *24 (E.D.Ky. Dec. 28, 2006). In Michigan First Credit Union v. Cumis Ins. Society, Inc., 2007 WL 4098213 at*3 (E.D.Mich. Nov. 16, 2007) a court refused to order production of metadata because it would be overly burdensome with no corresponding evidentiary value. While these decisions were impacted by the timing of the request for metadata, they do reflect the concern of some courts over the need for its production.

So, a party and its counsel should address their preferred format of production before the initial discovery conference with opposing counsel. Be prepared to discuss these issues with opposing counsel and provide notice of your proposed production format before producing any ESI. If metadata is the sticking point, consider the type of metadata that is being sought, whether its value to the case is proportional to the amount in controversy, and whether it is worth fighting over. By taking those steps, you can avoid the unnecessary expense of potentially having to produce ESI a second time to your opponent.