In a matter involving misappropriation of trade secrets, an appellate court in Georgia has upheld an order sanctioning the defendants for identifying more than 80% of the documents produced as “Highly Confidential – Attorneys’ Eyes Only.”  Hull v. WTI, Inc., Ga. Ct. App., No. A13A0003 (06/18/13).  The defendants must reimburse the plaintiff $7,500 in attorneys’ fees.

The appellate court also upheld the trial court’s order compelling the defendants to identify the specific document request to which each of the documents they produced responded.  This was unusual because parties typically are not required to designate which documents are responsive to one or more document requests.  This is especially true since most ESI (electronically stored information) is located using search terms and other technologies designed to identify documents generally relevant to the claims in the matter and not in response to a specific document request.

In this case, the defendants produced 156,000 pages of electronic documents in response to the plaintiff’s document requests, with approximately 95% of them initially designated as “highly confidential.”  Under the parties’ confidentiality order, the plaintiff’s counsel was precluded from reviewing those documents with its client.  The plaintiff moved to compel the defendants to identify which documents responded to each of the plaintiff’s requests and to withdraw the “highly confidential” designation from those that did not truly qualify for that special status.  The plaintiff argued the defendants did not produce the documents in the manner in which they were maintained in the ordinary course of business (as permitted under the Georgia Civil Practice Act) nor did the manner in which the documents were produced permit the plaintiff to determine, for example, which were being relied upon by the defendants in support of their counterclaims.

The defendants opposed the motion, maintaining that all paper documents were scanned in the same order and form as they were found in the filing cabinets.  As to e-mails and electronic documents, they created Bates-numbered images in the order in which they were found.  Moreover, the defendants also provided “load files” (i.e., files containing metadata or information regarding each of the documents, such as, sender, recipient, date sent, file name, etc.) which enabled the documents to be searched electronically.

The plaintiff, however, complained the text of the documents could not be searched and, therefore, the opportunity for meaningful searches was limited.

The trial court granted the plaintiff’s motion. It found “the production of over 156,000 pages of documents with insufficient organization, coupled with the failure of defendants to identify which documents are responsive to which of the plaintiff’s requests for production of documents, is inconsistent with defendants’ obligations under the Civil Practice Act.”  It ordered the defendants to designate by Bates-stamp number each document responsive to each request for production.  It also held the defendants had failed to comply with the court’s protective order that “only those” documents meeting certain criteria be designated as “highly confidential.”  Even though the defendants’ counsel maintained the documents were reviewed by his office to determine the confidentiality designation, the court found the defendants “[had] not acted in good faith” and ordered them to properly re-label the documents.  Lastly, the trial court awarded the plaintiff $7,500 attorney fees, approximately half of the sum sought.

On appeal, the trial court’s ruling was upheld.  Although the appellate court agreed with the defendants that the Georgia Civil Practice Act did not prohibit a party from responding to a document request by producing documents as they are maintained in the ordinary course of business, it found that the trial court was well within its discretion to find the manner of production was not sufficient.  The appellate court also found the trial court did not abuse its discretion in awarding sanctions based on the over-designation of documents as highly confidential.

This case highlights the importance of communicating with one’s adversary regarding the format of production.  Here, the defendants likely could have avoided the sanctions with an early agreement to provide fully searchable documents.  Then it would have been much more difficult for the plaintiff to argue the production was not sufficiently organized.  Similarly, this case reminds counsel of the dangers of being too aggressive when identifying documents as confidential or attorneys’ eyes only.