Seventh Circuit’s Electronic Discovery Pilot Program

Recently, the Seventh Circuit announced its Electronic Discovery Pilot Program. The program was developed in response to continuing comments by the business community and practicing attorneys about the need to reform the civil pretrial discovery process. It is an attempt to reduce the cost and burden of ediscovery in litigation. What makes the Seventh Circuit’s pilot program unique is that its results will be reviewed and analyzed during the program’s phases.

A series of Principles Relating to the Discovery of Electronically Stored Information (“ESI”) were developed and codified in a standing order. These principles are intended to serve as supplemental procedural ediscovery guidelines for the parties in selected cases. Individual district court, magistrate, and bankruptcy judges in the Seventh Circuit have agreed to adopt the principles and implement them in selected cases during Phase I of the program, which runs through May 1, 2010.

Kenneth J. Winters, the Managing Director of the Sedona Conference®, and former Colorado Supreme Court Judge Rebecca Kourlis, the Executive Director of the Institute for Advancement of the American Legal System (“IAALS”) at the University of Denver, assisted in the development and review of these principles.

IAALS is developing questionnaires to assess the efficacy of the principles. The questionnaires will be completed by the judges and lawyers participating in Phase I of the program. The results of the IAALS’ questionnaires will be presented to the Seventh Circuit at its annual meeting in May, 2010. At that time, the program’s ediscovery principles will be reviewed and refined as needed. Phase II of the program is scheduled to proceed from June, 2010 through May, 2011. It is contemplated that in May, 2011, Phase II findings will be presented and the Seventh Circuit’s final ediscovery principles announced.

Among other things, the principles require in the event of a dispute during the meet and confer process, the appointment of an ediscovery liaison who should be prepared to participate in ediscovery dispute resolution. These principles also recognize that that Rule 26(b)(2)(C)’s proportionality principles should be applied when formulating a discovery plan; provide that sanctions can be imposed for the failure to cooperate and participate in good faith in the meet and confer process; identify categories of ESI, which are generally not discoverable in most cases; and provides that if a party intends to request the preservation or production of these categories of ESI, that such a request be discussed at the parties’ initial meet and confer session or as soon thereafter as practicable.

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Failing to take prompt reasonable steps once notified of an inadvertent production results in privilege waiver – you’ve now entered the Twilight Zone

United States v. Sensient Colors, Inc., 2009 WL 2905474 (D.N.J. Sept. 9, 2009)

“You’re traveling through another dimension, a dimension not only of sight and sound, but of mind; a journey into a wondrous land whose boundaries are that of imagination – Next stop, the Twilight Zone.”

Any lawyer who inadvertently produces privileged information steps into a legal twilight zone. However, that legal twilight zone is not a “wondrous land,” but one filled with sleepless nights and many questions. How did it happen? When and how do I tell the client? How do I get the materials back? Will I lose the client, my job, my career? With ediscovery, the risk that privileged or confidential information will be inadvertently produced geometrically increases. While the use of clawback or nonwaiver agreements and FRE 502(b) lessen that risk, they do not eliminate it. Sensient Colors establishes that point.

Sensient Colors involved the electronic production of 45,000 documents totaling 135,000 pages or 450 boxes of records by the United States (“government”). Several months after that production was completed, the defendant initially returned a group of documents that were privileged. Over the ensuing months, the defendant continued to identify additional documents that the government had produced but were privileged. Ultimately, the defendant sought a ruling that the government had waived its right to assert privilege over the documents it had produced.

The court in Sensient Colors concluded the privileged documents were inadvertently produced by the government and that the requirements of FRE 502(b) were met as to the first group of documents the defendant returned. However, as to the subsequently identified privileged documents, the court ruled that the government waived its right to assert privilege under Rule 502(b) as to those documents because it had failed to promptly take reasonable steps to rectify its error after being notified of the initial inadvertent production.

The explanatory note to FRE 502 provides: “The Rule does not require the producing party to engage in a post-production review to determine whether any protected communication or information has been produced by mistake.” However, the court in Sensient Colors concluded that once a party has been put on notice that privileged information has been inadvertently produced, Rule 502(b)(3) requires the producing party take “prompt and reasonable steps to reassess its document production.” The court in Sensient Colors concluded the government failed to act reasonably and diligently to correct its error and waived its privilege and work-product protection as a result.

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Concept Searching

(This is a guest post by Rich Turner, Vice President of Content Analyst Company, LLC)

We hear a lot about “concept searching” and “advanced analytics” but very often, the definitions are confusing, and the situations where you would use features like these aren’t often clear.

We’re all familiar with keyword searching – as well as its limitations. Take for a very simplistic example, you’re working on a case involving leases in a 600-unit housing complex. The lease agreements aren’t standardized, so you’ll need to make sure your search terms include lease, leases, leasing, rental, renting, and since there are subleases involved, sublease, sublet, sub-let, and sub-leasing as well. You could use Boolean operatives (like wildcards, if/then statements) but those can be unforgiving.

Will you get all the relevant documents? The answer is maybe, maybe not – there are many ways to lease property. However, you are likely to find many irrelevant documents with any basic keyword search. Say that this building also provided leases for satellite dishes. Your set of keywords will return those as well – hundreds of irrelevant documents.

Few lawsuits present discovery searches which are this simple. This is why concept searching and advanced analytics are so useful. Most concept search engines can work right alongside keyword searches, and give you the ability to make a representative “lease” or even cut-and-paste the relevant paragraphs from that lease into a search window. The search engine, in turn, will find and rank all documents that use similar terminology and talk about similar concepts. Yes, it may also find the documents about satellite dishes – but those will be ranked very low on a scale of relevance because, while they’re definitely leases, they’re not about property.

Defensibility is often a question about keyword searching (in fact, keyword itself is only a de facto standard). Some judges are pushing hard for using advanced techniques, and many have been quick to point out the pitfalls of keyword-only searches. So what do you do?

Consider the use of concept searching as another tool in your arsenal. In the example above, if a document gets returned that is relevant but doesn’t contain any of your variant of keywords, perhaps that’s an indication that your list is too exclusive. If you’re reviewing the ESI that you have received, then a concept search can allow you to quickly sort “responsive” documents based on the keyword searches into truly relevant ones that actually address the issues you’re reviewing.

Most concept search engines also provide a number of other features as well, all driven by concepts. These include categorizing or grouping documents by concepts, and even clustering conceptually-related documents automatically into groups by concept. Properly implemented, these tools can greatly enhance your ability to bring an orderly process to a mountain of ESI and find relevant information more quickly. In today’s economy, speed and efficiency are more important than ever – and concept searching is one tool at your disposal with tremendous benefits.

About the Author:

Headquartered in Reston, Virginia, Content Analyst® is a leader of advanced search tools and technology. Content Analyst’s software known as CAAT, includes patented Latent Semantic Indexing technology, and provides advanced, conceptual-based search and document analysis for a wide range of customers, from highly-classified intelligence installations to world-class publishers to cutting-edge eDiscovery and litigation and support providers. CAAT exponentially reduces the time needed to discern relevant information from large volumes of documents and data. To learn more about how Content Analyst, visit their website at www.contentanalyst.com, or email info@contentanalyst.com.

Conundrum of preserving backup tapes and inaccessible sources of information

Forest Laboratories, Inc. v. Caraco Pharmaceutical Laboratories, Ltd., 2009 WL 998 402 (E.D. Mich. April 14, 2009)

By now, any attorney worth his or her salt knows that the federal rules have set up a two-tier system for the discovery of electronically stored information (“ESI”). Under Rule 26(b)(2)(B), a party need not produce ESI from sources that it “identifies as not reasonably accessible because of undue burden or cost.” The federal rules themselves do not provide any guidance as to what “sources” of ESI should be considered “inaccessible.” Indeed, the Advisory Committee Notes explain: “it is not possible to define in a rule the different types of technological features that may affect the burdens and costs of accessing electronically stored information.”

One of the conundrums created by the federal ediscovery rules is whether there is any duty to preserve ESI from a source that a party has designated as “inaccessible.” The Advisory Committee Notes to Rule 26(b)(2) explain that the identification of a source as inaccessible “does not relieve the party of its common law or statutory duties to preserve evidence.” The Advisory Committee Notes furnish no guidance for counsel in this scenario. The Notes to Rule 26(b)(2) state that whether a party is required to preserve ESI from an inaccessible source “depends on the circumstances of each case.” The Note then observes, “[i]t is often useful for the parties if you discuss this issue early in discovery.”

In Forest Labs, the defendants filed a spoliation motion claiming the plaintiff failed to preserve backup tapes concerning the drug it manufactured which was the focus of the litigation. The district court concluded that the backup tapes in question were inaccessible because they were used solely for disaster recovery purposes. Nonetheless, the court ordered that a hearing be held on the defendant’s spoliation motion. The court also noted that if ESI is destroyed intentionally or willfully, “that fact alone is sufficient to demonstrate [the] relevance” of the lost evidence, and would be sufficient to warrant the entry of sanctions. However, as our last post indicated, the Fifth Amendment’s Due Process Clause can limit the type of sanctions which may be imposed for the loss of ESI, and requires a nexus be demonstrated between the information destroyed, and the plaintiff’s claim or the defendant’s defense.

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Undue burden argument prompts court to shift the cost of reviewing documents to the requesting party subject to a non-waiver order

In re Motor Fuel Temperature Sales Practices Litig., 2009 WL 959493 (D. Kan. April 3, 2009)

In this multi-district litigation, plaintiffs brought claims against the defendants asserting various state law theories because the defendants sold motor fuel at a specific price per gallon without adjusting for temperature expansion. In discovery, plaintiffs sought information concerning the defendants’ activities dating back to 1970. They noted that in 1974, the National Conference on Weights & Measures began considering the issue of temperature adjustments in the retail sale of motor fuel. During this time, the defendants allegedly contributed to industry studies on average fuel temperatures, and lobbied against temperature adjustments. Plaintiffs also claimed that during this time frame, the defendants created documents which acknowledged that when temperatures rise above 60 degrees Fahrenheit, selling motor fuel which has not been temperature adjusted unjustly enriches the seller. Additionally, in the 1990’s, the Canadian government passed legislation permitting the installation of automatic temperature compensation (“ATC”) equipment in retail gas stations.

Defendants initially objected to the plaintiff’s discovery requests about their activities prior to January 1, 2001 on the ground that it was unduly burdensome. The defendants subsequently agreed to provide plaintiffs with responsive, non-privileged pre-2001 documents found in their active files, but resisted searching for pre-2001 data or documents in their archived files.

While the defendants’ undue burden arguments did not convince the court that that the pre-2001 information did not have to be produced, it nonetheless fashioned a remedy attempting to balance the cost of that discovery, given the parties competing interests. While the court never mentioned Rule 26(b)(2)(b) or Fed. R. Evid. 502 in its decision, it essentially allowed the plaintiffs to have a “quick peek” of the requested information subject to a nonwaiver order. The decision provides a good example of the type of factual information that a party needs to provide when making an undue burden argument under Rule 26.

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Fed. R. Civ. P. 1 used to limit Rule 30(b)(6) depositions addressing a party’s email policies and search for responsive emails

Newman v. Borders, Inc., 2009 WL 931545 (D.D.C. April 6, 2009)

In Newman v. Borders, Judge John Fasciola relied upon Rule 1 of the Federal Rules of Civil Procedure to limit a party’s request for an additional 30(b)(6) deposition sought by the plaintiff in a motion to compel. Newman involved a racial discrimination claim where the discovery costs dwarfed the potential recovery. Thus, in order to bring the discovery dispute to “a just and inexpensive conclusion,” rather than allowing another costly 30(b)(6) deposition requested by the plaintiff, Judge Fasciola ordered the defendant to submit an affidavit from a knowledgeable company representative answering a series of nine questions which he outlined, addressing the issues that were the subject of the motion to compel.

In light of the costs of electronic discovery, given Rule 1’s mandate that the Federal Rules should be interpreted to secure the “inexpensive determination of every action and proceeding,” it should be part of any party’s playbook to control ediscovery costs. Frequently however, it seems that court and counsel lose sight of Rule 1’s approach. Perhaps Newman, and other likeminded decisions will signal the way to control the costs of discovery.

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Costs partially shifted to requesting party that delayed providing keywords

Surplus Source Group, LLC v. Mid America Engine, Inc., No. 08-049, 2009 WL 961207 (E.D. Tex. April 8, 2009)

Defendant Mid America Engine ran a keyword search on its electronically stored information and produced responsive documents to plaintiff Surplus Source Group. After Surplus Source complained about shortcomings in the production, Mid America asked for information from Surplus Source that would help Mid America conduct a second search. Six weeks later, Surplus Source’s lawyer responded by email, outlining the purported deficiencies. Mid America’s in house counsel replied that same day, asking for particular keywords with which to search. More than two weeks after that, Surplus Source provided those keywords. By that time, however, Mid America had already conducted the second search.

Surplus Source moved to compel Mid America to run a third keyword search using the terms Surplus Search had proposed. The court found that the additional discovery was warranted, but ordered Surplus Source to pay for the third search, up to the amount that the second search cost. Mid America would be responsible for the rest.

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A practical tip for keyword searching

Wm. A. Gross Constr. Assocs. v. American Mfrs. Mutual Ins. Co., 2009 WL 724954 (S.D.N.Y. March 19, 2009).

When the opening line of an ediscovery decision is: “This Opinion should serve as a wake-up call to the Bar in the District,” visions of another Qualcomn blowup immediately come to mind. When you realize the decision is about “the need for careful thought, quality control testing, and cooperation with opposing counsel in designing search terms or key words,” you guess this is another decision addressing the inadvertent waiver of privilege. Because ediscovery is easier to get wrong than it is to get it right, lawyers – being the cynical lot we are – immediately think the worst.

 Well, luckily for those involved in Gross Construction Associates, the decision’s opening salvo was a reflection of the judge’s frustration over having to design a keyword search when the parties could not agree on the terms to employ. While much of the decision retraces the same ground covered by the Victor Stanley and Equity Analytics decisions, the court does provide several interesting insights, and one practical tip to help prevent keyword searches from disintegrating into a game of Scrabble.

The decision arises out of a construction defects and delay claim involving the development of the Bronx County Hall of Justice. The Dormitory Authority of the State of New York (“DASNY”) was the “owner,” and employed Hill International as its construction manager on the project. Hill was not a party to the lawsuit.

DASNY agreed to produce Hill’s project-related documents and ESI to the other parties in the litigation. The issue confronting counsel, and the court, however, was how to segregate Hill’s project-related e-mails from those that were unrelated. Thus, the parties proposed to use the use of keyword searches to filter out the unrelated e-mails.

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Rhoads decision first to apply FRE 502

Federal Rule of Evidence 502 was recently enacted to address the inadvertent waiver of privilege. Rhoads v. Building Materials Corp. of America, 2008 WL 4916026 (E.D. Pa. Nov.14, 2008) is the first case to address Rule 502 and its application to inadvertently produced electronic data.

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