This update addresses the following recent developments and court decisions involving e-discovery issues:
- A U.S. Supreme Court decision holding that police officers generally must obtain a warrant to search the cell phones of an individual who has been arrested;
- A Nevada decision denying a party’s request to use predictive coding after it had unilaterally withdrawn from an agreed electronic discovery protocol and implemented predictive coding methods without consulting the opposing party;
- An Eastern District of Pennsylvania order denying defendant’s request for a protective order to require that plaintiffs share equally the costs of defendant’s production of electronically-stored information (ESI); and
- A New York state court order adopting Rule 11-b of the Rules of Practice for the Commercial Division, which expresses a “preference” for the use of “categorical designations” in privilege logs prepared during document discovery.
1. In Riley v. California, 134 S. Ct. 2473 (2014), a unanimous U.S. Supreme Court held that police officers generally must obtain warrants to search cell phones of arrested individuals, finding that the recognized exceptions to the warrant requirement do not apply and that such searches pose privacy risks to the arrested individual above and beyond the permissible physical searches attendant to lawful arrests.
The Riley decision involved two underlying cases that raised a common question: “whether the police may, without a warrant, search digital information on a cell phone seized from an individual who has been arrested.” Id. at *2480. In the first case, a police officer stopped the defendant for having expired registration tags and arrested him after finding that he illegally possessed, concealed and loaded firearms. Id. The police subsequently searched his smart phone, found evidence of gang activity, and ultimately charged the defendant with attempted murder (among other charges) in connection with an earlier shooting. Following a trial at which police officers testified, over the defendant’s objections, “about . . . photographs and videos found on the [defendant’s] phone,” the defendant was convicted and sentenced to 15 years to life in prison. Id. at *2481. The California Court of Appeals affirmed, and the California Supreme Court denied certiorari. Id.
In the second case, a police officer conducting “routine surveillance” observed the defendant making “an apparent drug sale from a car.” Id. The police officer arrested the defendant, and at the police station two cell phones were seized from the defendant’s person. Id. Police used information from the defendant’s cell phones to obtain a warrant to search property identified as “my house” on the defendant’s cell phones and conducted a search of the house that uncovered drugs, drug-related paraphernalia, firearms, ammunition and cash. Id. The defendant was charged with possessing and distributing/intending to distribute illegal drugs and being a felon in possession of a firearm. Id. at *2482. At trial, the defendant was convicted and given a 262-month prison sentence, after unsuccessfully seeking to suppress the evidence obtained from his home as the “fruit of an unconstitutional search of his cell phone.” Id. The U.S. Court of Appeals for the First Circuit reversed the denial of the defendant’s motion to suppress, holding that cell phones are different from other physical possessions because of the amount of personal data they contain and the negligible threat they pose to law enforcement interests. The Supreme Court granted certiorari to address the permissibility of warrantless cell phone searches incident to lawful arrests. Id.
Chief Justice Roberts, writing for the Court, analyzed this issue under the Fourth Amendment to the United States Constitution. He noted that “reasonableness” is the “ultimate touchstone” of the Fourth Amendment when assessing searches “undertaken by law enforcement officials to discover evidence of criminal wrongdoing.” Id (quotations and citation omitted). In such cases, “reasonableness generally requires the obtaining of a judicial warrant,” which “ensures that the inferences to support a search are drawn by a neutral and detached magistrate instead of being judged by the officer engaged in the often competitive enterprise of ferreting out crime.” Id. (quotations and citations omitted). Although courts have long recognized an exception to the warrant requirement for searches incident to lawful arrests, such searches generally must be “needed to protect officer safety or to preserve evidence.” Id. at *2483 (citations omitted). Additionally, an arrestee’s personal property may be searched as long as it is “immediately associated with the person of the arrestee.” Id. at *2484 (quotations and citations omitted).
With this background, the Court considered the application of the search incident to arrest doctrine to “modern cell phones,” which required the Supreme Court to “assess[ ], on the one hand, the degree to which it intrudes upon an individual’s privacy and, on the other hand, the degree to which it is needed for the promotion of legitimate governmental interests.” Id. (quotations and citation omitted).
The Court determined that the exception to the warrant requirement for searches incident to lawful arrests did not extend to cell phones. First, Chief Justice Roberts explained that the two risks traditionally used to support such warrantless searches (i.e., “harm of officers and destruction of evidence”) did not apply “when the search is of digital data.” Id. at *2484-85 Indeed, “[d]igital data stored on a cell phone cannot itself be used as a weapon to harm an arresting officer or to effectuate the arrestee’s escape,” id. at *2485, and there is “little reason to believe” that evidence on a cell phone is in danger of destruction while the arrestee is in custody. Id. at *2486. Additionally, the “vast quantities of personal data” contained in cell phones means that searching cell phones “significantly diminish[es]” the privacy expectations of an arrestee above and beyond a “brief physical search” of the arrestee’s person. Id. at *2484. In those respects, “[c]ell phones differ in both a quantitative and a qualitative sense from other objects that might be kept on an arrestee’s person.” Id. at *2489. The Court observed that cell phones were in fact minicomputers with “immense storage capacity,” which often contain “many distinct types of information—an address, a note, a prescription, a bank statement, a video—that reveal much more in combination than any isolated record.” Id. at *2489.
The Court also noted the “element of pervasiveness that characterizes cell phones but not physical records,” as “many of the more than 90% of American adults who own a cell phone keep on their persons a digital record of nearly every aspect of their lives – from the mundane to the intimate.” Id. at *2490. The Court indicated that “[a]llowing the police to scrutinize such records on a routine basis is quite different from allowing them to search a personal item or two in the occasional case.” Id.
The Court also recognized another privacy issue involving the data that a user views on a cell phone, which may not be stored on the device itself but rather located on remote servers. Calling the Government’s proposed solutions “unclear, ” the Court cited this issue as another privacy concern that needed to be considered. Id. at *2491.
Taking into account all these issues, the Supreme Court held that “[police] officers must generally secure a warrant before conducting . . . a search” of an arrestee’s cell phone. Id. at *2485.
2. In Progressive Casualty Ins. Co. v. Delaney, 2014 WL 2112927 (D. Nev. May 19, 2014), Magistrate Judge Peggy A. Leen denied a party’s request to use predictive coding after it had unilaterally withdrawn from an agreed electronic discovery protocol and implemented predictive coding methods without consulting the opposing party.
Progressive Casualty Insurance Co. filed a declaratory judgment action asserting that its policy did not provide coverage with respect to the Federal Deposit Insurance Corporation (FDIC) actions as a receiver against former bank directors. The parties submitted a joint proposed ESI protocol approved by the court that established a procedure to develop search terms and produce documents to the FDIC. Progressive started with 1.8 million documents, and the search terms returned 565,000 documents, referred to as the “hit” documents. Progressive then used contract attorneys to review 125,000 of the hit documents. Without consulting the FDIC, however, Progressive then used predictive coding to review the remaining 440,000 documents and identified 90,575 potentially responsive documents. Id. at *1-*2.
Progressive filed a motion to modify the ESI protocol, proposing production of 63,000 documents identified by predictive coding as relevant and “less-likely-to-be-privileged” without manual review. If any privileged documents in this group were produced, Progressive asserted that it could seek return of such documents pursuant to clawback provisions. For documents identified as “more-likely-privileged,” Progressive proposed manual review with production of a privilege log of redacted or withheld documents. Id. at *3.
FDIC objected to Progressive’s proposed modifications and requested that Progressive instead produce all 565,000 of the hit documents subject to a clawback for privileged documents. The FDIC noted that the parties had agreed to the same template protocol in five other related lawsuits involving the FDIC as receiver. In the alternative, if the court agreed that predictive coding could be used, the FDIC proposed modifications that, among other things, would involve its application to all 1.8 million documents, as opposed to its limited application to the hit documents.
Magistrate Judge Leen ruled that Progressive should not be permitted to use predictive coding to produce documents to the FDIC. The Magistrate Judge did not deem predictive coding to be unreliable and indeed noted that “[p]redictive coding has emerged as a far more accurate means of producing responsive ESI in discovery.” Id. at *8. In this case, however, Magistrate Judge Leen denied its use because Progressive had failed to consult with the FDIC or to work cooperatively to implement predictive coding methods. “Had the parties worked with their e-discovery consultants and agreed at the onset of this case to a predictive coding based ESI protocol,” Magistrate Judge Leen noted, “the court would not hesitate to approve a transparent mutually agreed upon ESI protocol.” Id. at *9.
The court faulted Progressive for its lack of cooperation and consultation with the FDIC. Progressive gave its counsel “exclusive responsibility for training the predictive coding software” and lacked transparency in the methods used to identify relevant documents and train the predictive coding software. Id. at *10. Where predictive coding has been approved, courts have “required an unprecedented degree of transparency and cooperation.” Id. Here, the court stated, “Progressive is unwilling to engage in the type of cooperation and transparency that its own e-discovery consultant has so comprehensively and persuasively explained is needed for a predictive coding protocol to be accepted by the court or opposing counsel as a reasonable method to search for and produce responsive ESI.” Id. at *11. The Magistrate Judge did not further specify what degree or form of cooperation would be required.
Magistrate Judge Leen ordered Progressive to produce all 565,000 of the hit documents “within fourteen days without further review.” Id. at *11. The court permitted Progressive to apply privilege filters and withhold documents identified as likely privileged and provide privilege logs for documents withheld or redacted at thirty, sixty and ninety day intervals. Id.
3. In Cochran v. Caldera Medical, Inc., 2014 WL 1608664 (E.D. Pa. April 22, 2014), Magistrate Judge Thomas J. Rueter denied defendant’s request for a protective order seeking to require plaintiffs to bear half of defendant’s ESI production costs.
In this products liability case involving implantable surgical mesh products, Caldera Medical, Inc. sought a protective order requiring plaintiffs to share the costs of discovery. The Magistrate Judge first addressed defendant’s motion under Rule 26(b)(2)(B), pursuant to which the court has the discretion to grant cost sharing and other relief if the producing party shows “that the information is not reasonably accessible because of undue burden or cost.” Id. at *2 (quoting rule). Magistrate Judge Rueter noted that electronic data is considered accessible if it is “stored in a readily usable format,” and is considered inaccessible if, for example, the data has been erased or is damaged, or is stored on a backup tape. Cochran, 2014 WL 1608664, at *2 (citations and internal quotations omitted). The defendant did not claim that the ESI was not “active online or near-line data,” nor did defendant represent (with one exception) that any of the ESI sought “needs to be restored or otherwise manipulated to be usable.” Id. Instead, the defendant asserted that it would cost $500,000 to collect and review the ESI necessary to comply with plaintiffs’ discovery request. Id. The defendant did not provide any documentation in support of its estimate or identify what portion of this estimate was attributable to retrieving accessible information or reviewing documents for privilege, “both of which tasks are typically not subject to cost-sharing.” Id. Without such information, Magistrate Judge Rueter held that Defendant had failed to show that the ESI sought was not reasonably accessible, as required to grant cost sharing under Rule 26(b)(2)(B).
Magistrate Judge Rueter then considered defendant’s motion in accordance with Rule 26(b)(2)(C)(iii), which permits cost sharing if the court determines that “the burden or expense of the proposed discovery outweighs its likely benefit.” Id. at *3 (quoting rule). The defendant argued that producing the requested ESI was overly burdensome because it had limited resources and insurance coverage and faced over 1700 nationwide claims relating to its pelvic mesh products. Cochran, 2014 WL 1608664, at *3. Magistrate Judge Rueter disagreed, citing favorably plaintiffs’ argument that their requests “are narrowly tailored to generate relevant and material information specific to Plaintiffs’ claims regarding Defendant’s pelvic mesh products.” Id. The Magistrate Judge also noted that, “given the volume of the litigation against it, defendant inevitably will need to gather the information sought by plaintiffs.” Id.
4. On July 8, 2014, New York’s Chief Administrative Judge A. Gail Prudenti signed an administrative order adopting Rule 11-b of the Rules of Practice for the Commercial Division, which expresses a “preference” for the use of “categorical designations” in privilege logs prepared in the course of document discovery. The new rule, which becomes effective September 2, 2014, will make New York the first jurisdiction to explicitly indicate a preference for categorical privilege logs.
The Commercial Division Advisory Council had proposed the changes and published them for comment on April 3, 2014, indicating that the rule seeks “to promote more efficient, cost-effective pretrial disclosure . . .” See April 3, 2014 Memorandum re Proposed adoption of a new Rule of the Commercial Division at 1. The new rule requires parties to meet and confer at the outset of a case regarding the scope of privilege review and “to agree, where possible, to employ a categorical approach to privilege designations.” July 8 Administrative Order at 1. The rule further “encourage[s]” parties “to utilize any reasoned method of organizing the documents that will facilitate an orderly assessment as to the appropriateness of withholding documents in the specified category.” Id. For each category of withheld documents, the producing party must “provide a certification . . . setting forth with specificity those facts supporting the privileged or protected status of the information included within the category” and also must “describe the steps taken to identify the documents so categorized.” Id.
Because the new rule indicates only a “preference” for categorical privilege logs, parties may still insist on a document-by-document logging. In such cases, the new rule now formalizes the procedures contemplated by CPLR 3122 with respect to such individual logging. Notably, however, where a party insists on a document-by-document log, the producing party “may apply to the court for the allocation of costs, including attorneys’ fees, incurred with respect to preparing the document-by-document log,” which costs may be allocated for good cause shown. Id. at 1-2. Finally, the new rule states that “[a]greements and protocols agreed upon by parties should be memorialized in a court order.” Id. at 2.