This update addresses the following recent developments and court decisions involving e-discovery issues:
- A Second Circuit Court of Appeals decision that a permissive adverse inference instruction was not a sanction and that the district court did not need to make any factual findings before giving an instruction that merely informed the jury of its fact-finding responsibilities;
- An Eastern District of New York decision denying defendant’s broad social media discovery requests and ordering the plaintiff to produce her social media posts that referenced the emotional distress for which she sought damages, treatment relating to that distress, possible “stressors” that might have caused her distress other than the defendant’s conduct, and the events alleged in the complaint;
- An Eastern District of California ruling denying defendant’s motion to quash a subpoena to a law firm for a hard drive produced by defendant to that firm in other litigation, finding that the defendant had control over the hard drive and should have produced the hard drive to plaintiffs in the current litigation; and
- A Special Master’s report in an Idaho federal court case involving review of plaintiffs’ privileged documents identified with search terms and recommending use of a correlation threshold of search term precision as a test for privilege and the release of documents falling below that correlation threshold, subject to the presence of a clawback agreement and plaintiffs’ opportunity to review and designate less correlated documents as privileged.
1. In Mali v. Federal Insurance Co., 2013 WL 2631369 (2d Cir. June 13, 2013), the Second Circuit Court of Appeals held that a permissive adverse inference instruction was not a sanction and that the district court did not need to make any factual findings before giving an instruction that merely informed the jury of its fact-finding responsibilities.
Plaintiffs brought an action against their insurance company for indemnification under their insurance policy relating to the destruction of their barn by fire. The insurance company had denied some of plaintiffs’ claims relating to the layout of the barn and its contents. At trial, there was a discrepancy in testimony as to whether a photograph existed of the barn prior to its destruction. The defendant moved for an adverse inference instruction based on this discrepancy as a sanction for plaintiffs’ failure to produce the photograph. Id. at *1-*2.
The trial court stated that an adverse inference instruction was appropriate because there was evidence that, if believed by the jury, would show that plaintiffs failed to produce the photograph. The court instructed the jury:
“If you find that the Defendant has proven by a preponderance of the evidence, one, that this photograph exists or existed, two, that the photograph was in the exclusive possession of the Plaintiffs, and, three, that the non-production of the photograph has not been satisfactorily explained, then you may infer, though you are not required to do so, that if the photograph had been produced in court, it would have been unfavorable to the Plaintiffs. You may give any such inference, whatever force or effect as you think is appropriate under all the facts and circumstances.” Id. at *3.
The jury subsequently ruled in favor of the defendant. On appeal, the plaintiffs claimed that the adverse inference instruction was a sanction imposed by the court without first making the findings necessary to justify the sanction. Id.
The Second Circuit held that the district court’s instruction was not a sanction but merely an explanation of the inferences the jury was permitted to make based on its findings of fact. The Second Circuit contrasted this type of instruction with that in Residential Funding Corp. v. DeGeorge Financial Corp., 306 F.3d 99 (2d Cir. 2002), in which the Second Circuit held that a trial court may not impose a sanction as a punishment for misconduct without first making a finding that supports the propriety of the punishment. Mali, 2013 WL 2631369, at *4. In Residential Funding, the trial court stated that the jury should draw an adverse inference if it found certain facts, whereas in Mali, the trial court merely instructed the jury that it could draw an adverse inference if it found certain facts. “The court need not find any facts to justify such an instruction,” stated the Second Circuit about the latter form of instruction, “which leaves all the fact finding to the jury without encroachment by the court.” Id. at *5 (citations omitted). Indeed, the Second Circuit noted that the district court did not direct the jury to accept any facts as true, nor did it instruct the jury to draw any inferences. Id.
2. In Giacchetto v. Patchogue-Medford Union Free School District, No. 11-6323, 2013 WL 2897054 (E.D.N.Y. May 6, 2013), Magistrate Judge Kathleen Tomlinson denied defendant’s broad social media discovery requests and ordered plaintiff to produce social media posts that referenced emotional distress for which plaintiff sought damages, treatment relating to that distress, possible “stressors” that might have caused plaintiff’s distress other than the defendant’s conduct, and the events alleged in the complaint.
The dispute arose after plaintiff Theresa Giacchetto told her employer, the Patchogue-Medford Union Free School District, that she suffered from a learning disorder. Thereafter, another School District employee allegedly mocked plaintiff for her disorder, the School District also allegedly “issued [plaintiff] numerous counseling letters,” and transferred her to “a different classroom and grade level against her will,” both actions purportedly based on plaintiff’s disorder. Id. at *1. The plaintiff thereafter sued the school district for violations of the Americans with Disabilities Act, seeking damages for, among other things, emotional and physical injuries.
In discovery, the defendant sought certain postings from plaintiff’s social network accounts about plaintiff’s “emotional and psychological well-being,” her “physical damages,” and “any accounts of the events alleged in [the] Amended Complaint.” Id. at *2. According to the defendant, those records were relevant to plaintiff’s request for emotional and physical damages because the records would “reflect her levels of social interaction and daily function and her emotional and psychological state.” Id. (internal quotations omitted). The plaintiff objected that the requests were “designed to harass” her and would “unnecessarily impinge on her privacy.” Id. at *1 (internal quotations omitted).
The Magistrate Judge first addressed the request for posts about plaintiff’s “emotional and psychological well-being.” The Magistrate Judge acknowledged that some courts have allowed “broad discovery” of social network posts in cases in which the plaintiff seeks emotional distress damages. Id. at *2. The Magistrate Judge, however, agreed with a different line of reasoning in other court decisions that social network postings about “joy, happiness, or sociability on certain occasions shed little light on the issue of whether [a plaintiff] is actually suffering emotional distress.” Id. Moreover, the Magistrate Judge added, allowing “broad discovery of [a] Plaintiff’s social networking postings” in emotional distress cases might invite discovery “into every other personal communication the Plaintiff had or sent since [the] alleged incident.” Id. Thus, the Magistrate Judge ordered plaintiff to produce only two kinds of posts that related to her emotional state: first, posts about “the emotional distress she claim[ed] she suffered or treatment she received in connection with the incidents” alleged in the complaint; and second, posts about “potential stressor[s],” other than the defendant’s conduct, that might explain her emotional problems. Id. at *4.
Next, the Magistrate Judge addressed the request for posts about plaintiff’s physical abilities. The Magistrate Judge agreed with other courts that posts about a plaintiff’s physical abilities are discoverable when a plaintiff alleges physical injuries. In this case, however, the Magistrate Judge was unable to specify the scope of the permissible discovery because plaintiff had not described any specific physical injuries in her complaint. The Magistrate Judge therefore ordered the plaintiff to specify those injuries in a letter to opposing counsel, and the Magistrate Judge would then address the scope of permissible social networking discovery relating to physical injuries. Plaintiff’s counsel subsequently stipulated that she would not be seeking physical injury damages in this case. Id. at *4 & n.3.
The Magistrate Judge also held that posts were relevant if they related to events alleged in the complaint and ordered plaintiff to produce such posts.
Finally, the Magistrate Judge addressed the method of production. The defendant sought “authorizations for the release of records from [plaintiff’s] accounts” so that the defendant could obtain the posts directly from the companies that hosted plaintiff’s social network accounts. Id. at *5. The Magistrate Judge ruled instead that the plaintiff should produce the posts herself, as she already had access to them. The defendant also asked that plaintiff’s counsel review the posts for relevance, rather than “rely on the Plaintiff’s conclusion that there is no relevant information in the account.” Id. The Magistrate Judge held that plaintiff’s counsel should review the posts for relevance, “keeping in mind the broad scope of discovery contemplated under Rule 26.” Id.
3. In California Land Valley Co. v. Ross Systems, Inc., 2013 WL 1819909 (E.D. Cal. Apr. 30, 2013), Magistrate Judge Sandra Snyder denied defendant Ross Systems' motion to quash a subpoena to a law firm for a hard drive produced by Ross Systems to that law firm in prior litigation, finding that the defendant had possession, custody, and control over the hard drive under the terms of the protective order in the prior litigation and should already have produced the hard drive to the plaintiffs in the current litigation.
Plaintiffs served a subpoena on the law firm of Lightfoot, Franklin & White, seeking a hard drive from the computer of a former Ross executive. Id. at *1. The law firm had obtained the hard drive through discovery in a prior lawsuit against Ross in Alabama. Id.
Ross challenged the subpoena in this case on the grounds that production would violate the protective order governing the Alabama lawsuit. Id. The Magistrate Judge disagreed, stating that principles of "comity, courtesy and . . . federalism" are "not at stake here." Id. The Alabama litigation had been concluded, and under the terms of the Alabama protective order, Ross had "the right to retrieve all the materials subject to [the order]," and therefore had "possession, custody, or control" over the materials. Id. Based on these facts, the Magistrate Judge stated that the defendants should already have provided the hard drive to the plaintiffs through discovery in the present case.
Defendants argued that they were not in possession of the documents when the plaintiffs had first requested them, as several million documents were produced in the Alabama litigation, defense counsel changed several times, and "everyone was not sure what they had," a position with which the court sympathized. Id. (internal quotation omitted). Once the defendants had learned of this subpoena and that the hard drive was under their control, however, they were bound to remedy their error and retrieve the drive from Lightfoot. Id. at *2. Having failed to exercise their power under the Alabama protective order, the defendants then attempted to "wield the protective order to hinder discovery of [the] material in the hands of a third party," giving rise to the appearance of "exploiting the protective order to make the material discovery-proof." Id.
Based on these findings, the Magistrate Judge ruled that the defendants were to given written notice to Lightfoot to deliver the drive directly to the plaintiffs within seven days. Id. The Magistrate Judge ordered that the plaintiffs were "in no way to view or access its contents until they have supplied a copy to defendants." Id. The Magistrate Judge reasoned that this approach "roughly conforms to what Defendants agreed to in the Alabama case." Id.
4. In Dornoch Holdings International, LLC v. Conagra Foods Lamb Weston, Inc., 2013 WL 2384235 (D. Idaho May 1, 2013), Special Master Deborah A. Ferguson reviewed a statistically representative sample of privileged documents identified with search terms and recommended use of a correlation threshold of search term precision for documents to be considered privileged and the release of documents falling below the correlation threshold, subject to plaintiffs’ opportunity to review and designate less correlated documents as privileged and the presence of a clawback agreement.
U.S. District Judge Terry J. Hatter, Jr., adopted the Special Master’s recommendations in their entirety but dismissed the case with prejudice as a sanction for plaintiffs’ misrepresentations to the Court. Dornoch Holdings International, LLC v. Conagra Foods Lamb Weston, Inc., 2013 WL 2384103 (D. Idaho May 24, 2013).
In a dispute between plaintiff Dornoch Holdings and defendant Conagra Foods, the court appointed a Special Master to assist with discovery associated with plaintiff from a bankruptcy trustee, and the Special Master developed a privilege log consisting of over forty thousand documents out of a total set of 1.3 million documents from the plaintiffs’ electronically stored information (“ESI”). Id. at *1. The Special Master created the privilege log by running a series of search terms developed in conjunction with the plaintiffs. The defendant challenged the privilege log and raised three objections that were then referred by the district court to the Special Master for a recommendation. The defendant argued: (1) the documents on the privilege log had not been established by plaintiffs to be privileged, except for certain communications between plaintiffs and their outside counsel; (2) the privilege log was created using overly broad search terms and had not been substantively reviewed; and (3) non-correspondence documents listed on the log should not be privileged. Id. The district court recommended that the Special Master review a statistically significant random selection of documents from the privilege log to confirm that the screening method used to create the log was accurate. Id.
The Special Master recommended that defendants’ first objection be sustained because the plaintiffs have the burden to assert privilege. After the Special Master had run the privilege log and produced the non-privileged documents to defendants, plaintiffs were given access to the entire database of privileged and non-privileged documents. The defendants argued that plaintiffs bear the burden of demonstrating that documents withheld from production were privileged, and Special Master Ferguson agreed that the burden of demonstrating that the documents were privileged remained with the plaintiffs. Id. at *2.
With respect to defendants’ second objection, Special Master Ferguson conducted a review of the purportedly privileged documents and provided a series of recommendations. The Special Master first conducted a review of a “statistically significant number of randomly selected documents from the privilege log to test the accuracy of the screening method employed to create it.” Id. at *2. From a statistically significant sample of approximately 1800 documents, Special Master Ferguson determined that 564 were properly marked as privileged, and 1,249 were not. Id. Next, based on this sample, the Special Master assessed the accuracy of the search terms used to identify privileged documents and made recommendations to remove various search terms that had a low correlation with privileged documents. The Special Master’s found that “that those terms which identified a correlation with actual privilege of 59% or greater . . . showed a strong correlation with privilege.” Id. at *4. “Once the documents below this threshold have been excluded, the effectiveness of the screen increases to 87%.” Id. Specifically, the Special Master recommended that the district court:
(a) “concur with the selection of a 59% or greater correlation of search term precision for a document to remain withheld as privileged;” (b) allow the defendants to challenge the assertion of privilege of documents above this threshold by requesting the Special Master to conduct a further targeted review or a review across the whole population, a process for which defendants would bear the cost; (c) release documents that fall below the 59 percent correlation threshold and remove them from the privilege log; and (d) prior to any document production, allow plaintiffs to conduct a review of all or a portion of the documents to be released, and prepare a supplemental privilege log for “additional documents selected as privileged below the 59% threshold,” a process whose costs would be borne by plaintiffs. Id. at *5-*6.
Special Master Ferguson acknowledged that use of the 59% correlation threshold “will result in a known release of some privileged documents” but noted that documents released under this process would be subject to the terms of a clawback agreement between the parties and Federal Rule of Evidence 502(b)(3), which provides protection for inadvertently disclosed documents.
With respect to defendants’ third objection, the Special Master recommended that the district court overrule the objection because “privilege cannot be determined simply by whether the document is ‘correspondence’ or ‘non-correspondence.’” Id. at *5. Documents such as charts, photographic evidence, and numeric data summaries can qualify as work product or be protected by the attorney-client privilege, and the correspondence/non-correspondence distinction was not helpful in making privilege determinations.
The District Judge adopted Special Master Ferguson’s recommendations in full, Dornoch Holdings International, LLC v. Conagra Foods Lamb Weston, Inc., 2013 WL 2384103, at *1 (D. Idaho May 24, 2013), but in the same order, the Court determined that the plaintiffs had made ongoing misrepresentations to the Court regarding the status of an agreement at issue in the case and various discovery matters. As “Plaintiffs willfully deceived the Court and engaged in conduct utterly inconsistent with the orderly administration of justice,” the Court dismissed the case with prejudice. Id. at *2.
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The E-Discovery Task Force of Sidley Austin LLP
The legal framework in litigation for addressing the explosion in electronic communications has been in flux for a number of years. Sidley Austin LLP has established an “E-Discovery Task Force” to stay abreast of and advise clients on this shifting legal landscape. An inter-disciplinary group of more than 25 lawyers across all our domestic offices, the Task Force monitors and examines issues and developments in the law regarding electronic discovery. The Task Force works seamlessly with our firm’s Litigators who regularly defend and prosecute all types of litigation matters in trial and appellate courts, federal and state agencies, arbitrations, and mediations throughout the country. The co-chairs of the E-Discovery Task Force are Alan C. Geolot (+1.202.736.8250, email@example.com), Colleen M. Kenney (+1.312.853.4166, firstname.lastname@example.org), and Joel M. Mitnick (+1.212.839.5871, ).
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