The newest feature of our Electronic Discovery Update, “Spotlight on the Judiciary,” highlights the body of work of a judge who has made a significant impact on the development of e-discovery law. Selection for the spotlight is based on the judge’s recognized interest in the topic, as well as the effect of the judge’s decisions and other writings on the subject of e-discovery. This month, “Spotlight on the Judiciary” has chosen to recognize the Honorable James C. Francis IV, a magistrate judge for the Southern District of New York. Judge Francis received his Bachelor’s degree from Yale College and his Juris Doctor degree from Yale Law School. He also holds a Masters of Public Policy from Harvard College. He ascended to the bench in 1985 in the Southern District of New York.

Recent News: Attorney Sanctioned for Preservation Failure

Judge Francis has made a significant impact on the growing body of case law regarding e-discovery issues. In his most recent e-discovery opinion, Greene v. McClendon, Judge Francis addressed the issue of sanctions as a remedial measure for inadequate preservation procedures. 2009 WL 2496275 (S.D.N.Y. Aug. 13, 2009). Judge Francis imposed sanctions on a defendant and her attorney for failing to properly preserve electronic documents for litigation, even though there was no evidence that the documents in question would have operated in the plaintiff’s favor and it was “uncertain whether the plaintiff has actually been deprived of any information.” Id. at *6.

The plaintiff, an art dealer, sued the defendants for breach of contract in October 2008, alleging that they had failed to complete their purchase of a painting from his gallery. After commencing suit, the plaintiff requested that the defendants produce all documents relevant to the alleged sale. Mrs. McClendon and her attorney asserted that they had thoroughly searched Mrs. McClendon’s files and produced all relevant, non-privileged materials. Id. at *1-2. Months later, Mrs. McClendon produced an Excel spreadsheet from her home computer that related to her purchases of many works of art, including the painting in question. The plaintiff requested additional information about the file and was provided with three electronic documents, each of which was accompanied by a partial electronic history. The electronic files differed from the hard copy in several respects, including that the hard copy listed a price for the work in question whereas the electronic versions did not. Id. at *2. The plaintiff sought a motion ordering an examination of the defendant’s computer, as well as sanctions. Mrs. McClendon then disclosed that the son of one of her friends had reinstalled her operating system in January 2009, three months after the litigation commenced. The plaintiff withdrew his request for an examination of the computer, but continued to request sanctions, including costs and attorney’s fees as well as an adverse inference that the defendants recognized that they had agreed to purchase the painting. Id. at *3.

Judge Francis denied the plaintiff’s request for an adverse inference, as the plaintiffs failed to establish that the destroyed information was relevant. Id. at *6. However, he ruled that the plaintiffs were entitled to receive costs and attorneys fees from the defendant and her lawyer for their failure to preserve the evidence in question. As the data was deleted after the litigation was commenced, Mrs. McClendon clearly had a preservation obligation. Id. at *4. Furthermore, Judge Francis found that both she and her counsel were “at least negligent in failing to implement a litigation hold, properly search for responsive documents, and supplement discovery responses in a timely and thorough manner.” Id. at *6. Judge Francis emphasized that the obligation of preservation first falls on the attorney, who then has the obligation of advising his or her client of its preservation duties. Id. at *5. In this case, “Mrs. McClendon’s counsel failed to meet these discovery obligations. Unless Mrs. McClendon brazenly ignored her attorney’s instructions, counsel apparently neglected to explain to her what types of information would be relevant and failed to institute a litigation hold to protect relevant information from destruction. Moreover, despite numerous representations to the contrary, it is highly unlikely that counsel actually conducted a thorough search for relevant pagedocuments in Mrs. McClendon’s possession.” Id. Thus, sanctions were appropriate. As the relative culpability of Mrs. McClendon and her counsel was not yet clear at the time of the ruling, Judge Francis ordered that they should first attempt to work out an agreement for sharing costs on their own, and if they could not, he would determine this issue at a later date. Id. at *8.

Cost Shifting

Judge Francis is perhaps best known in the e-discovery realm for his decision in Rowe Entertainment, Inc. v. William Morris Agency, Inc., in which he developed an eight factor balancing test to determine when discovery costs should be shifted to the plaintiff. 205 F.R.D. 421 (S.D.N.Y. 2002). In Rowe, an African-American concert promoter brought a suit against booking agencies and promoters for allegedly attempting to freeze him out of the market through discriminatory and anti-competitive practices. During discovery, Rowe made extensive document production requests, including some for materials that were only available through the defendants’ email retention systems. The defendants refused to produce the documents, alleging that the burden of restoration would far outweigh any potential benefits to the plaintiff. Id. at 424. Applying an eight factor balancing test, Judge Francis decided to shift the costs of production to the plaintiff, weighing considerations such as the specificity of the discovery requests, the likelihood of a successful search, the availability of the material from other sources, and the relative ability of each party to control costs and its incentive to do so. Id. at 429. Though he shifted the cost of production, Judge Francis decided that the defendants would continue to bear the financial responsibility of reviewing the documents for privilege and confidentiality. Id. at 432.1

In 2007, Judge Francis spoke at the Philip D. Reed Lecture Series at Fordham Law School, where he reflected on cost shifting in e-discovery cases. He explained that cost shifting is a valuable tool because it allows judges to make more nuanced and ultimately more satisfying determinations about what information is discoverable. He said, “We do not have the information that the attorneys have regarding discovery. . . [a]nd yet, we are asked to make determinations about whether the information is discoverable. Without cost shifting, that is a binary determination.” Cost shifting allows judges to transfer a portion of the burden based on the likelihood that the information in question will be useful. “That I think, is a more satisfying result than having to make a black-or-white, yes-or-no determination,” explained Judge Francis. See Hon. Lee H. Rosenthal & Hon. James C. Francis IV, Managing Electronic Discovery: Views From The Judges, Panel Discussion, 76 Fordham L. Rev. 1, 26 (2007).

Electronically Stored Information (ESI) Preservation

In addition to his contributions to cost shifting analysis, Judge Francis has been active in drafting helpful guidelines for ESI preservation orders. In the same Fordham Law School lecture, Judge Francis noted that such preservation orders are markedly different from traditional “paper” orders in that they are inherently more detailed, specifying relevant individuals and document locations. Id. at 19. Judge Francis opined that such preservation orders should not be imposed unless there is a showing of need, which in turn “requires some showing of danger that there is specific information which, absent the order, will disappear.” Id. This comment echoes Judge Francis’s decision in Treppel v. Biovail Corp., in which he employed a balancing test to determine whether an ESI preservation order was necessary. 233 F.R.D. 363 (S.D.N.Y 2006).

In Treppel, the plaintiff Jerry Treppel, a securities research analyst, brought suit against Biovail Corp., a pharmaceutical corporation, alleging that the company was liable for defamation, tortious interference with prospective economic advantage, and civil conspiracy. Id. According to Mr. Treppel, the company had engaged in a smear campaign against him after he had given them an unfavorable report, causing the company’s stock value to decrease. Id. at 366.

In February 2005, Mr. Treppel’s counsel sent Biovail a proposed e-discovery order, requesting that the company preserve and produce all accessible paper and electronic data in its original format. Id. at 368. The order also asked Biovail to answer a number of questions regarding their internal retention policies and general management process for the storage of electronic data. Id. Biovail did not comply with the proposed order, alleging that it was “unnecessarily onerous in light of the relatively narrow issues presented” in the case. Id. Mr. Treppel then filed a motion to compel the defendants to comply with the proposed order.

In a February 2006 decision, Judge Francis granted Mr. Treppel’s motion in part, but denied his request for compliance with the preservation order. After considering several approaches to the issue, Judge Francis employed a balancing test to determine whether to require the preservation of the evidence in question. In doing so, he considered the danger of destruction, the content of the destroyed documents, and the burden of preservation. Id. at 371. In his opinion, Judge Francis acknowledged that while Biovail’s initial document retention process was inadequate, Mr. Treppel could not show that specific evidence was lost, or that current procedures were insufficient. “It would be enough to demonstrate that certain types of relevant documents existed and that they were necessarily destroyed by the operation of the autodelete function on Biovail’s computers or by other features of its routine document retention program. But the plaintiff has not yet made even the most basic showing that any documents potentially relevant to this litigation were lost.” Id. at *372. Since Mr. Treppel could not prove the actual loss of data and Biovail had taken steps to improve its retention program beginning in 2003, Judge Francis held that the circumstances were insufficient to compel the proposed preservation order. Id.

In Convolve Inc. v. Compaq Computer Corp., Judge Francis tackled the topic of a company’s obligation to preserve ephemeral data or data of a short-lived or transitory nature. 223 F.R.D. 162 (S.D.N.Y. 2004). Initiating the suit, Convolve Inc. and the Massachusetts Institute of Technology brought a claim against Compaq Computer Corp. and Seagate Technology, alleging that both parties were liable for patent infringement and theft of trade secrets with regard to certain disk drive technology. One of the many discovery disputes that arose during the case centered on Convolve’s contention that Seagate should have preserved certain emails and data relating to its technology known as TOME. Convolve alleged that Seagate should be required to produce the requested information, and should be sanctioned to the extent it was not preserved. Id. at 164.

In his August 2004 decision, Judge Francis noted that “in the world of electronic data, the preservation obligation is not limited simply to avoiding affirmative acts of destruction. Since computer systems generally have automatic deletion features that periodically purge electronic documents such as e-mail, it is necessary for a party facing litigation to take active steps to halt that process.” Id. at 175-176.

Ultimately, Judge Francis ordered that while certain emails relating to the TOME technology should have been retained, sanctions were not appropriate because Convolve had not made any showing that the destroyed documents would have operated in their favor, nor was there any evidence of bad faith to justify an adverse inference. Id. at 176. Moreover, Judge Francis rejected Convolve’s argument that the defendants should be sanctioned for failing to preserve for litigation the wave patterns developed by their engineers. He explained that in contrast to emails, which “normally have some semi-permanent existence...the data at issue here are ephemeral. They exist only until the tuning engineer makes the next adjustment, and then the document changes. No business purpose ever dictated that they be retained, even briefly.” Id. at 177. Their preservation “would have required heroic efforts far beyond those consistent with Seagate’s regular course of business.” Id. Thus, since no preservation order was violated, sanctions would be inappropriate. Id.


In the burgeoning and rapidly changing area of e-discovery, the thoughtful insight of the judiciary provides crucial direction to practitioners and their clients. As the above cases demonstrate, Judge Francis has proven instrumental in the development of e-discovery case law in the Southern District of New York, specifically in the area of cost-shifting, and more recently, ESI preservation. Judge Francis is helping to create a robust set of e-discovery guidelines for practitioners and corporations alike. As such, we are pleased to highlight the wealth of guidance Judge Francis has provided