The first quarter of 2016 has been a busy one for courts adjudicating matters relating to eDiscovery. Across the pond, the English High Court approved the use of technology-assisted review, while U.S. courts have been busy interpreting the newly amended Federal Rules of Civil Procedure, which went into effect in December 2015.
Here is a sampling of cases from the first three months of the year that illustrate how the rule amendments are already making an impact.
Proportionality Under Rule 26(b)(1)
“A change in the legal culture that embraces the leave no stone unturned and scorched earth approach to discovery is long overdue. Discovery is more often than not too expensive and time consuming to result in an efficient and just result.” This remark, from Roberts v. Clark County School District, shows how courts are reinforcing the concept of proportionality. Here, the court answered “the call to actively manage and engineer a change in this legal culture” and denied a request to compel the production of the plaintiff’s social media, education, and tax records as “grossly out of proportion” to what was needed to defend against the plaintiff’s discrimination claims.
Likewise, in the patent infringement lawsuit involving two major pharmaceutical companies, the court denied the defendant’s motion to compel because the defendant claimed, without having concrete evidence, that the plaintiff’s compounds mentioned in a related case were similar to the ones at issue. The court explained that to establish relevance, it is “no longer good enough to hope that the information sought might lead to the discovery of admissible evidence.” Here, the defendant had “no real evidence” to contradict the plaintiff’s assertions that the compounds were not the same, and “without more specific information triggering some reason for doubt,” the court was forced to accept the plaintiff at its word. In short, the defendant’s request was “precisely the kind of disproportionate discovery that Rule 26—old or new—was intended to preclude.”
Sanctions Under Amended Rule 37(e)
In one intellectual property case, CAT3, LLC v. Black Lineage, Inc., the plaintiffs, which claimed the defendants infringed on their trademark, were found to have produced altered versions of their e-mails. The court found that remedies were available under both subsections of the amended Rule 37(e) because the existence of the altered e-mails prejudiced the defendant and because the alteration was intentional. But instead of dismissing the lawsuit or imposing an adverse inference, the court precluded the plaintiffs from relying on the altered e-mails and ordered them to pay the costs and attorneys’ fees for the motions relating to the issue.
Courts are also revisiting prior decisions under the amended rule. For instance, in a recent case involving medical device companies, the court reversed its earlier decision on sanctions given the updated rules. The plaintiff had failed to preserve potentially relevant text messages, and the court had granted the defendant a permissive adverse inference instruction. However, in 2016, relying on the amended rule, the court found the plaintiff’s spoliation was not intentional, so the court vacated its order but would allow the plaintiff to introduce evidence of spoliation at trial.
Similarly, in SEC v. CKB168 Holdings, Ltd., the court ordered an adverse inference instruction in November 2015 because the defendants’ failure to preserve all data on a hard drive relating to their intent to pursue an initial public offering amounted to gross negligence, or, in the alternative, if the information had never existed and the defendants simply failed to admit that, they had engaged in bad faith. However, in February 2016, the court changed its stance and denied the SEC’s amended motion for sanctions because it had not established evidence of the defendants’ intent to deprive the agency of the information. The court did agree to allow the SEC to renew the motion at trial if it could show intent.
Savvy parties and their counsel are addressing the proportionality amendment by considering ways technology can reduce the burdens of discovery as well as give them an early look into their document collections so they can approach discovery conferences better informed about the potential burdens and costs of producing their data. In addition, parties also are regularly evaluating their information governance programs to ensure that their efforts to preserve information are defensible and consistent for two reasons: to avoid the harsh penalties for the intentional spoliation of evidence and to avoid the need to explain their preservation efforts to a jury.