Qualcomm Attorneys Sanctioned $8.5 Million for Discovery Abuses and False Representations to the Court. "One or more of the retained lawyers chose not to look in the correct locations for the correct documents, to accept the unsubstantiated assurances of an important client that its search was sufficient, to ignore the warning signs that the document search and production were inadequate, not to press Qualcomm employees for the truth, and/or to encourage employees to provide the information (or lack of information) that Qualcomm needed to assert its non-participation argument and to succeed in this lawsuit. These choices enabled Qualcomm to withhold hundreds of thousands of pages of relevant discovery and to assert numerous false and misleading arguments to the court and jury." The matter was referred to the California State Bar for potential ethical violations, and the attorneys along with the client were sanctioned $8.5 million. See Qualcomm v. Broadcom, No.05-1958, 2008 WL 66932 (S.D.Cal. Jan. 7, 2008).

Magistrate Judge in North Carolina Orders Forensic Examination of Plaintiff's Home Computer which She Alleged Had "Crashed". Plaintiff filed a sexual harassment suit, alleging, among other things, that she had received hundreds of "pornographic" and "offensive" e-mails from co-workers on a laptop provided by the defendant. She would then forward those e-mails to her home computer, and, in some cases, to her husbands computer, provided in association with his job at Bendix. Upon receiving notice of termination, the plaintiff brought her company laptop to an IT consultant who "wiped" the hard drive using "Evidence Eliminator." After suit was filed, with very little production, the plaintiff claimed that she was unable to provide further files as her home computer had "crashed". The defendant brought a motion to compel the forensic examination of not only her home computer but her husband's computer at Bendix. Magistrate Horn noted that "it is well settled that a party has a duty to preserve evidence when the party is placed on notice that the evidence is relevant to the litigation or when the party should have known that the evidence may be relevant to future litigation. The duty to preserve encompasses electronic communications and documents, such as emails, or documents created by computer, such as invoices." Further, "the fact that the Plaintiff's home computer allegedly 'crashed' - as opposed to having been 'wiped' as the work laptop was - in no way eliminates the Plaintiff's burden to do all she could under those circumstances to preserve evidence" and Rule 34 "permits a party to 'inspect and copy, test, or sample any tangible things' which are within the scope of discovery." Hence, the defendant was permitted to conduct an examination of the home computer, at the defendant's expense. "Due to the concerns that the Plaintiff raised about the existence of confidential proprietary information on the other subject computers [e.g. at Bendix], the initial forensic examination will be confined to the home computer. Should the ordered examination reveal, however, that there reasonably may be otherwise unavailable responsive information on either of these computers, the Defendant may renew its Motion, giving proper notice to the owner(s). Similarly, if the initial examination reveals evidence of bad faith by the Plaintiff, the Defendant may renew its Motion for costs." See Orrell v. Motorcarparts of America, No.3:06-418, 2007 WL 4287750 (W.D.N.C. Dec. 5, 2007).

Magistrate Judge in Colorado Denies Motion to Allow Access of Forensic Expert and to Compel Restoration of Back-Up Tapes. In ongoing employment dispute, Magistrate Michael Watanabe, sitting in the District of Colorado, noted that the 2006 Amendments "simply clarify that discovery of electronically stored information stands on equal footing with discovery of paper documents. Without a qualifying reason, plaintiff is no more entitled to access to defendant's electronic information storage systems than to defendant's warehouses storing paper documents. Like the other discovery rules, Rule 34 allows the responding party to search his records to produce the required, relevant data" and "does not give the requesting party the right to conduct the actual search.” The court went on to hold that, based on the evidentiary showing made, the plaintiff failed to meet her burden justifying the appointment of a third-party computer forensic expert to examine the defendant's computer system. Finally, the court held that costs of restoring old back-up tapes, which "are not currently accessible by Defendant City of Colorado since they do not have the hardware to access them," outweighs the possible yield of relevant and probative information. See Palgut v. City of Colorado Springs, No.06-01142, 2007 WL 4277564 (D.Colo. Dec. 3, 2007).

District Court Overrules Magistrate's Decision to Compel Restoration of Back-Up Tapes Created in Connection with Prior Litigation. In a dispute between Best Buy and several lessors over the obligation to provide insurance, the magistrate judge concluded that a database prepared by Best Buy in the case of Odom v. Microsoft was reasonably accessible despite a cost of at least $124,000 to restore the data to searchable form, considering the potential breach of contract damages in excess of $800,000, the potential for enhanced damages associated with Best Buy's breach of fiduciary duty and fraud claims, and the potential long-term economic impact of the outcome of the litigation on all parties. Reversing, Judge Doty, sitting in the District of Minnesota, noted the parties' agreement that the information is no longer in a searchable format and that the database would have to be restored at a cost of at least $124,000 with a monthly storage cost of $27,823, and concluded that it was, hence, not "reasonably accessible". As to the argument that Best Buy had a duty to preserve, the court found that: "Because of the vast quantity of information in the Odom database, Best Buy should have been on notice that defendants would seek discovery of some of that information. The database, however, would have been potentially relevant to virtually any litigation involving Best Buy because of the quantity and nature of the information it contained. Absent specific discovery requests or additional facts suggesting that the database was of particular relevance to this litigation, the court determines that Best Buy did not have an obligation to maintain the Odom database at a monthly cost of over $27,000." Finally, as to the good cause exception, the court held that "defendants do not argue that these materials are uniquely available from the Odom database or that Best Buy could not more easily obtain the materials from another source." The focus of defendants' arguments, the court continued, "is that Best Buy haphazardly conducted electronic discovery. Specifically, defendants note concern about the lack of involvement from Best Buy's information technology department to aid in the collection of ESI, the search practices of Best Buy's property management department, Best Buy's failure to preserve and search documents related to departed employees and Best Buy's alleged failure to adequately search e-mail archives. Defendants, however, have failed to connect any of these concerns with the specific discovery ordered by the magistrate judge. In the absence of particularized arguments, the court cannot conclude that defendants have established the good cause." See Best Buy v. Developers Diversified Realty Corp., No.05-2310, 2007 WL 4230806 (D.Minn. Nov. 29, 2007).

Magistrate Judge in Eastern District of Michigan Declines to Order Production of Metadata as Unduly Burdensome. Denying a motion for sanctions for the failure to produce metadata, Magistrate Whalen quotes language in other cases to the effect that “most metadata is of limited evidentiary value, and reviewing it can waste litigation resources"; that “in most cases and for most documents, metadata does not provide relevant information”; and that “emerging standards of electronic discovery appear to articulate a general presumption against the production of metadata." The court goes on to note the plaintiff's concern that "particularly with regard to emails, the metadata might contain relevant information about who composed or received the message that might not appear in the PDF or hard copy." However, the affidavit submitted by defendant states that "APEX was 'custom created' for use by CUMIS for policy and claims management, and does not generate metadata. Thus, with regard to APEX files, the issue is moot: Defendant cannot produce what does not exist. With regard to Lotus Notes email messages, they 'contain only a small amount of metadata. This includes the date and time of the creation of the message file, as well as a long string of characters that serves as a unique identifier for each message.' She has reviewed the screen-shots of the email message produced for Plaintiff, and that 'all metadata pertaining to the individual messages, except for the unique identifier referred to in the above paragraph is visible on these printouts.' Hence, except for an 'identifier' that would have no evidentiary value, the relevant metadata (such as date and time of creation) appears in the PDF copy. Were this not the case, there would be value in producing the metadata. However, since the PDF copies contain all the relevant information that Plaintiff would otherwise glean from the metadata, I agree with Defendant that producing the metadata for the emails would be unduly burdensome." See Michigan First Credit Union v. Cumis, No.05-74423, 2007 WL 4098213 (E.D.Mich. Nov. 16, 2007).

Counsel Has Responsiblity to Retain Competent Experts or Consultants Where Necessary to Respond to Legitimate E-Discovery Requests. In a case involving a DVD full of e-mails requested by defendant, the plaintiff's counsel ran into some software issues in trying to access, print, review, and produce the files in question. After producing only ten e-mail strings, and a relatively limited privilege log, the defendant filed a motion to compel. A U.S. Magistrate Judge sitting in the District of Colorado held that while "perhaps plaintiff's counsel can be heard to plead technical ignorance or mistake in his initial dealings with the DVD, upon the receipt of Ms. Yates' letter, he was on notice of the potential problem and was obligated to seek competent professional assistance to ascertain the truth about the contents of the DVD." See Garcia v. Berkshire Life Ins. Co., No.04-01619, 2007 WL 3407376 (D.Colo. Nov. 13, 2007).

Judge Issues Preservation Order in NSA Spying Case. In the private litigation challenging the NSA's policy of spying on Americans, U.S. District Judge Vaughn Walker in the Northern District of California issued an interim order defining preservation as "taking reasonable steps to prevent the partial or full destruction, alteration, testing, deletion, shredding, incineration, wiping, relocation, migration, theft, or mutation of such material, as well as negligent or intentional handling that would make material incomplete or inaccessible" and directing counsel "to inquire of their respective clients if the business practices of any party involve the routine destruction, recycling, relocation, or mutation of such materials and, if so, direct the party, to the extent practicable for the pendency of this order, either to (1) halt such business processes; (2) sequester or remove such material from the business process; or (3) arrange for the preservation of complete and accurate duplicates or copies of such material, suitable for later discovery if requested." See In re NSA Telecommunications Records Litigation, No.06-1791, 2007 WL 3306579 (N.D.Cal. Nov. 6, 2007).

Court Rejects Notion that Plaintiff Can Compel Documentation of Defendant's Efforts in Responding to Discovery. Rejecting Plaintiff's motion to compel the defendant "to conduct and document, such that it is comprehensible to Plaintiff, a reasonably comprehensive search of its electronic records for documents responsive to Plaintiff's discovery," Judge Bryan, sitting in the Western District of Washington, stated that: "Defendant is already under a duty to conduct a reasonable inquiry regarding relevant documents and to produce such documents. Defendant maintains it has done so. Plaintiff's request is unnecessary and not authorized by the rules of discovery." See Vaughn v. City of Puyallup, No.07-5093, 2007 WL 3306743 (W.D.Wash. Nov. 6, 2007).

Court Orders Production of Deleted E-Mails. Plaintiff, in employment dispute, admitted that she had deleted hundreds of e-mails from her home computer, and objected to production of the hard drive on the basis of overbeadth, privilege, and privacy concerns. Magistrate Rushfelt in the District of Kansas noted that "deleting these e-mails, even if done in good faith and at a time before Plaintiff contemplated her legal action, does not necessarily remove the e-mails from her possession, custody or control." The court observed that "deleted documents should be retrievable from her computer system" and ordered her to produce them within fifteen days, or to produce for inspection the hard drive from which the deleted e-mails were sent. "This will allow Defendants to use the services of a computer forensic specialist, if necessary, to retrieve them." But any such inspection of the hard drive "shall be specifically limited to e-mails Plaintiff sent to her husband that discuss Defendant's alleged retaliation at issue in this action and to her communications with Defendant's paralegal students." See Benton v. Dlorah, Inc., No.06-2488, 2007 WL 2321431 (D.Kan. Oct. 30, 2007).

Judge Denies Motion to Compel, In Part, Because Requesting Party Did Not Raise E-Discovery During Preliminary Conference as Required by Amended Rule 26(f)(3). See RLI Ins. Co. v. Indian River School Dist., No.05-858, 2007 WL 3112417 (D.Del. Oct. 23, 2007).

U.S. Magistrate Orders Employer to Produce Plan E-Data in Third Party’s Possession. Plan participants sought production of electronic pension plan records from the defendant employer, who maintained it could not produce the data because it was in the possession of a third-party plan record-keeper. Magistrate Hegarty, sitting in the District of Colorado, held that the data was in the defendant’s possession, custody or control within the meaning of Rule 26 and ordered production. "When an employer chooses to use electronic means by which to maintain and retain the records required pursuant to ERISA §209" the court found, "the employer has the duty to ensure that the standards advanced in §2520.107-1(b) are met." See Tomlinson v. El Paso Corp., No.04-02686, 2007 WL 2521806 (D.Colo. Aug. 31, 2007).

U.S. Magistrate Orders Non-Party to Produce Documents in Electronic Form. In Hurricane Katrina case, ESI was sought from Rimkus Consulting, who had inspected the subject property. Rimkus sought an order permitting them to produce the documents in paper format to prevent any "compromise in the authenticity or integrity of its engineering reports." Magistrate Judge Wilkinson, sitting in the Eastern District of Louisiana, denied the motion, as the files were stored electronically in the ordinary course of business. "The court is cognizant that Rimkus is a non-party with no direct stake in this litigation and that non-parties in particular are entitled to protection from undue burden and expense. However, Rules 45(d)(1)(D) and 26(c)(5) impose a burden of proof upon Rimkus to show that the requested electronically stored information is unduly burdensome to produce." In response to Rimkus' assertion that the requesting party must show good cause to compel it to produce its electronic files, the court notes that "Rimkus must make an evidentiary showing that the data sought is not reasonably accessible because of undue burden or cost." The statement of a lawyer in a memorandum, the court noted, "is not evidence." The requesting party is "not required to show good cause to overcome Rimkus's unsupported assertions." See Auto Club Family Ins. Co. v. Ahner, No.05-5723, 2007 WL 2480322 (E.D.La. Aug. 29, 2007).

District Court Affirms Magistrate's Order Regarding the Preservation of RAM in TorrentSpy case. The District Court overruled objections to the Magistrate's Order in Columbia Pictures v. Bunnelli, No.06-1093 (C.Cal. May 29, 2007) (posted left and discussed below). Defendants sought to impose on the definition of “stored” in Rule 34 an additional requirement that the information be, not just stored, but stored “for later retrieval.” Judge Cooper agreed with the Magistrate Judge that this was too narrow under the Rule. "In response to amici's concerns over the potentially devastating impact of this decision on the record-keeping obligations of businesses and individuals, the Court notes that this decision does not impose an additional burden on any website operator or party outside of this case. It simply requires that the defendants in this case, as part of this litigation, after the issuance of a court order, and following a careful evaluation of the burden to these defendants of preserving and producing the specific information requested in light of its relevance and the lack of other available means to obtain it, begin preserving and subsequently produce a particular subset of the data in RAM under Defendants' control." See Columbia Pictures v. Bunnelli, 245 F.R.D. 443 (D.Cal. 2007).

U.S. Magistrate Addresses the Implications of Amended Rule 37(f) and the 2007 Amendments to Rule 26(b)(2)(c) in Ongoing E-Discovery Dispute. In ongoing e-discovery dispute, (see Feb. 21, 2007 Order discussed below), a U.S. Magistrate Judge sitting in the District of Columbia looked to the version of Rule 26(b)(2)(c)(iii) which will become effective December 1, 2007, to help analyze a defendant’s responsibility to search for accessible e-mails, in determining whether “the burden or expense of the proposed discovery outweighs its likely benefit, considering [1] the needs of the case, [2] the amount in controversy, [3] the parties’ resources, [4] the importance of the issues at stake in the action, and [5] the importance of the discovery in resolving the issues.” The question before the court, at this point, was whether was time to appoint a forensic analyst who could search the network server and individual hard drives to see if any additional information can be retrieved; (and, of course, who should pay for such a forensic examination). As to the time period commencing after defendant was placed on notice, the court held that “it is a legitimate exercise of discretion to require Faber to participate in a process to ascertain whether a forensic examination can yield emails that were deleted after February 6, 2004, because at that time Faber could reasonably anticipate that Peskoff would sue him” and noted that “Faber’s not turning the automatic deletion feature off once informed of pending litigation may serve as a premise for additional judicial action, including a sanction, without offending amended Rule 37(f).” As to the time period preceding notice or anticipation of litigation, the court stated as follows: “Since I persist in my view that a party must search available electronic systems to answer any discovery request not objected to, and since Faber has never argued that the search is unnecessary or irrelevant but only that Peskoff should pay for it, I am hard pressed to understand why I am required to, sua sponte, balance utility against cost and relieve Faber of searching accessible, relevant data any more than I would have to do the same balancing before I required him to look through the file cabinet outside his office for a paper file.” Or: “In other words, I readily concede that when the argument is made, the search for data, even if accessible, must be justified under the relevancy standard of Rule 26(b)(1). By performing the analysis under Rule 26(b)(2)(C), which assumes the relevancy standard under Rule 26(b)(1) is met, I do not mean to suggest the contrary. The point is that that balancing under Rule 26(b)(2)(C) was not invoked here to oppose the search, and I cannot accept the proposition that Faber may be relieved of searching accessible data when he does not argue that the search is not justified by the potential relevancy of what may be found.” Therefore, the court ordered the parties to collaborate on an RFP from qualified forensic computer technicians to conduct a search, and then “inquire what it will cost to convert the found emails into another readable format such as TIFF or PDF. Then, with that information and the bids received, the Court will permit the parties to brief whether any of the proposals received should be accepted and, if so, who shall bear the cost of doing the search.” See Peskoff v. Faber, No.04-526, 2007 WL 2416119 (D.D.C. Aug. 27, 2007). [See also: 2007 WL 530096 (D.D.C. Feb. 21, 2007)(discussed below).]

Louisiana Legislature Enacts New Code of Civil Procedure Articles on E-Discovery and Privilege Waiver. By Act 140 of 2007, the Louisiana Legislature amended Article 1462 to make it clear that a party may request electronically-stored information, which must be produced in a form in which it is ordinarily maintained or reasonably usable. The amendments also make it clear that, in order to access the computer system of an opposing party, the requesting party must make a showing of good cause. Article 1424(D) is amended to deal with inadvertent disclosure. In addition, Article 1425 has been amended to protect drafts of reports and other communications with experts that would reveal the mental impressions, conclusions, opinions, or trial strategy of an attorney. See generally, La. Code Civ. Pro. arts. 1420-1425 and 1461-1462.

Sample Preservation Order. MDL Court in Eastern District of Missouri enters Agreed Preservation Order, recognizing that the law with respect to preservation efforts is not fully developed, and that such preservation efforts can become unduly burdensome and unreasonably costly, "unless those efforts (a) are targeted to those documents reasonably likely to be relevant or lead to the discovery of relevant evidence related to the issues in this matter; and (b) take account of the unique preservation issues presented by electronically stored information." See In re Genetically Modified Rice Lit., MDL No. 1811, 2007 WL 1655757 (E.D.Mo. June 5, 2007).

U.S. Magistrate Judge Holds that RAM is Electronically Stored Information which Must be Preserved and Produced under the 2006 Amendments to Rule 34. In a copyright infringement action filed by the Motion Picture Association of America (MPAA) against the owners and operators of TorrentSpy on the basis that the website promotes and enables piracy, the plaintiffs sought production of the IP addresses of users, the users' requests for dot-torrent files, and the dates and times of such requests. The defendants argued that such Server Log Data, which is stored in the server's Random Access Memory ("RAM") for a period of about six hours for processing purposes, does not constitute "electronically stored information" under the Rules because the data is never fixed on the website or in any media from which it can be reviewed or examined in any tangible form. Magistrate Judge Chooljian, sitting in the Central District of California, rejected this argument, pointing to several cases describing RAM as "temporary storage" and concluding that the data "is transmitted through and temporarily stored in RAM while the requests of defendants' website users for dot-torrent files are processed." While declining to sanction defendants for spoliation, the court entered a preservation order requiring the defendants to create and maintain a log of the Server Log Data, and concluded, further, that defendants had failed to establish that such data was not "reasonably accessible" due to undue burden or cost under the amended Rule. Citing privacy concerns, the court ordered that the IP address of TorrentSpy users be masked. See Columbia Pictures v. Bunnelli, No.06-1093 (C.Cal. May 29, 2007), [Opinion Posted on Left], aff'd, 245 F.R.D. 443 (D.Cal. 2007).

Magistrate Judge in the District of Maryland Issues Comprehensive Opinion Discussing the Evidentiary Requirements for the Admission of Electronically-Stored Information. Concluding that the failure of counsel for both sides to observe evidence rules concerning electronically stored information rendered summary judgment exhibits inadmissible, a U.S. Magistrate Judge in the District of Maryland set forth the basic requirements for the admission of e-data: It must be (1) relevant, (2) authentic, (3) not hearsay or admissible under an exception to rule barring hearsay evidence, (4) original or duplicate, or admissible as secondary evidence to prove its contents, and (5) probative value must outweigh its prejudicial effect. The court noted that "although courts have recognized that authentication of ESI may require greater scrutiny than that required for the authentication of 'hard copy' documents, they have been quick to reject calls to abandon the existing rules of evidence when doing so. 'In general, electronic documents or records that are merely stored in a computer raise no computer-specific authentication issues. If a computer processes data rather than merely storing it, authentication issues may arise. The need for authentication and an explanation of the computer's processing will depend on the complexity and novelty of the computer processing. There are many states in the development of computer data where error can be introduced, which can adversely affect the accuracy and reliability of the output. Inaccurate results occur most often because of bad or incomplete data inputting, but can also happen when defective software programs are used or stored-data media become corrupted or damaged.' The authentication requirements of Rule 901 are designed to set up a threshold preliminary standard to test the reliability of evidence, subject to later review by an opponent's cross-examination. Factors that should be considered in evaluating the reliability of computer-based evidence include the error rate in data inputting, and the security of the systems. The degree of foundation required to authenticate computer-based evidence depends on the quality and completeness of the data input, the complexity of the computer processing, the routineness of the computer operation, and the ability to test and verify results of the computer processing." In particular, the court describes how "hash marks" or "hash values" can be inserted into original electronic documents to provide them with distinctive characteristics that will permit their authentication under Rule 901(b)(4). As to the original writing Rules 1001-1008, the court states that "when counsel intend to offer electronic evidence at trial or in support of a motion for summary judgment they must determine whether the original writing rule is applicable, and if so, they must be prepared to introduce an original, a duplicate original, or be able to demonstrate that one of the permitted forms of secondary evidence is admissible. In this case, counsel did not address the original writing rule, despite its obvious applicability given that the e-mail exhibits were closely related to a controlling issue and there were proving the contents of the e-mails themselves." See Lorraine v. Markel American Ins., 241 F.R.D. 534 (D.Md. 2007).

Louisiana Law Institute Considers Changes to Address E-Discovery. The Law Institute is considering proposed changes to Louisiana Code of Civil Procedure Articles 1461 and 1462, in order to address issues associated with electronic discovery. Much narrower than the 2006 revisions to the Federal Rules, the proposed amendments in Louisiana are primarily designed to make it clear that electronic data is indeed discoverable, but that direct access to an adversary's computer system is not permitted as of right, and will only be compelled where there is evidence of stonewalling, spoliation, or other undue prejudice to the requesting party.

U.S. Magistrate Judge Indicates that Production of Accessible E-Data is Not Subject to Cost-Shifting, Despite alleged "Burden", under New Rules. A U.S. Magistrate sitting in the District of Columbia revisited an ongoing e-discovery dispute. After noting that even under the old rules a producing party had the obligation to search available electronic systems for the information requested, the court then commented that "under the new pertinent rule, the producing party is relieved of producing specifically identified inaccessible data only upon a showing of undue burden or cost. Even then, the court may order discovery of the data identified as inaccessible 'if the requesting party shows good cause, considering the limitations of Rule 26(b)(2)(C),' i.e., the rule that balances the costs of the discovery demanded against its benefits. The obvious negative corollary of this rule" the court continued, "is that accessible data must be produced at the cost of the producing party; cost-shifting does not even become a possibility unless there is first a showing of inaccessibility. Thus, it cannot be argued that a party should ever be relieved of its obligation to produce accessible data merely because it may take time and effort to find what is necessary." See Peskoff v. Faber, No. 04-526, 2007 WL 530096 (D.D.C. Feb. 21, 2007), [and, later proceeding, 2007 WL 2416119 (D.D.C. Aug. 27, 2007)(above).]

U.S. Magistrate Indicates that 2006 Amendments Do Not Alter Basic "Undue Burden" Analysis. In ERISA case, plaintiffs proposed e-mail discovery protocol with defined time period and subject matter, (including a list of around twenty specific search terms), yet fairly undefined core individuals. A U.S. Magistrate Judge sitting in the District of Kansas notes that, while "Plaintiffs also argue that defendants have failed to show an undue burden because: (1) the number of individuals with e-mail on their individual hard drive is unknown, (2) the number of files is unknown; and (3) the number and size of the e-mail for targeted individuals is unknown.... It is precisely because there are “unknowns” that plaintiffs' request imposes a greater burden on defendants." The court then directs the parties to answer several questions: (1) How many persons are covered by plaintiffs' e-mail search protocol? (2) Although Boeing has estimated the amount of hours to locate and search for e-mail, what is the estimated cost? (3) Exactly what are the “benefits of discovery” that plaintiffs reference? (4) Does the number of search terms materially increase the cost? (5) Should the costs of electronic discovery be borne by plaintiffs? (6) Is there a more efficient method for discovery than electronic searches? (7) What computer resources or expertise did plaintiffs rely on in formulating a search protocol? If the information is produced, how will plaintiffs' process the data? Regarding the 2006 Amendments, the court notes that: "Rule 26(b)(2) was amended effective December 1, 2006 to address electronic discovery. The limitations described in parts (I), (ii), and (iii) remain unchanged." See Apsley v. Boeing Co., No. 05-1368, 2007 WL 163201 (D.Kan. Jan. 18, 2007).

U.S. District Judge Holds that Work Product of Audit Committee is Not Waived by Disclosure to SEC. A U.S. District Judge sitting in the Southern District of New York upheld claims of Work Product over documents shared by the Audit Committee with the SEC. Because the Audit Committee "determined that it and the SEC shared a 'common interest in developing legal theories and analyzing information' concerning potential financial irregularities at Cardinal and authorized sharing of documents with the SEC... the protection of the work product doctrine has not been waived." See In re: Cardinal Health Securities Litigation, No. 04-575, 2007 WL 495150 (S.D.N.Y. Jan. 26, 2007).

U.S. District Judge Develops Three-Step Process for Discovery of "Inaccessible" E-Data under New Rules. In a civil case seeking relief under the Computer Fraud and Abuse Act, (18 U.S.C. 1030), the plaintiff sought a "mirror-image" copy of the defendants' relevant hard drives. Based on affidavits alleging an "undue cost" to copy the drives, recover deleted information, and translate it into searchable and reviewable formats, the court determined that the data was not "reasonably accessible". Concluding, nevertheless, that there was "good cause" to compel production, the court set forth a three-step process: First, plaintiff selects a computer forensics expert, who executes a confidentiality agreement; defendants make available to the expert, at their places of business or residences, all of the relevant computer equipment, for duplication. Then, once the expert has created copies and images of defendants' hard drives, the expert recovers all available word-processing documents, incoming and outgoing emails, PowerPoint presentations, spreadsheets, and other files, including those that were "deleted," and provides the recovered documents in a reasonably convenient and searchable form to defense counsel. Finally, within twenty days of the receipt of the recovered documents and data, defendants' counsel produces all responsive and non-privileged documents, and provides a privilege log. As to cost-shifting, the plaintiff did not object to incurring the costs for creating the mirror images, recovering the information, and translating the information into searchable formats. See Ameriwood Industries v. Liberman, No.4:06-524, 2006 WL 3825291 (E.D.Mo. Dec. 27, 2006).

Third Circuit Finds That Communications Regarding the Obligation to Preserve E-Mail and Other Files May Not Be Protected Under Crime-Fraud Exception. In response to a subpoena served in the course of an ongoing grand jury investigation, the recipient of the subpoena conferred with counsel regarding her preservation obligations. The district court compelled production of the notes taken by the attorney, under the crime-fraud exception, and the U.S. Third Circuit affirmed. "At the time of Jane Doe's January 20, 2005 conversation with Attorney, Jane Doe was committing the crime of obstruction of justice. The Court's finding that the Government met its burden of presenting evidence demonstrating a reasonable basis to suspect the perpetration of a crime, if based on adequate evidence, satisfies the first prong of the crime-fraud exception." As to the second prong, "there are no opinions of which we are aware that apply the crime-fraud exception in precisely these circumstances. However, we see no reason why it does not apply. ...in the course of the communication between Jane Doe and Attorney, Attorney advised Jane Doe of the contents of the most recent subpoena and of the Government's interest in retrieving from Organization's computers emails to or from certain persons, including Jane Doe, who were or are connected with the Organization.... There is no suggestion that Attorney did anything improper in transmitting this communication to Jane Doe.... Nor is there any suggestion that Attorney was aware of either past wrongdoing or potential future wrongdoing." However: "If Jane Doe learned of the Government's interest in certain documents from her conversation with Attorney on January 20, 2005 and subsequently acquiesced in the deletion or destruction of those documents, the second prong of the crime-fraud exception would be satisfied." See In re Grand Jury Investigation, 445 F.3d 266 (3d Cir. 2006).

Louisiana Supreme Court Reverses Nullity of Judgment Based on Fraud or Ill-Practices Associated with Spoliation of Evidence Claims. Plaintiffs sought to nullify a defense verdict in a products liability / highway defect case wherein the automobile involved in the collision had been purchased by defense counsel during the pendency of the litigation. Defense counsel, in the underlying suit, moved to dismiss the claims, and then to limit the testimony of plaintiffs' experts, based upon the fact that plaintiffs had sold the automobile to a third party, without affording the defendants the opportunity to inspect the vehicle and/or otherwise documenting the vehicle's condition. Plaintiffs learned only after trial that the car had been purchased by counsel for the defendants. [It appears that the automobile had already been repaired by the time it was acquired by defense counsel.] The Court held that: "A nullity action based on fraud or ill practice is not intended as a substitute for an appeal or as a second chance to prove a claim that was previously denied for failure of proof. The mere failure to disclose information does not necessarily constitute fraud or ill practice. That determination depends upon the nature of the information and the circumstances surrounding the proceeding. Absent a specific discovery request or 'knowing concealment,' failing to disclose information that might have been helpful to the opposing party's case does not constitute fraud or ill practice if with, reasonable diligence, the party could have ascertained the information himself. While defendants' conduct in purchasing the vehicle unbeknownst to plaintiffs and not disclosing the purchase to the plaintiffs concerns us, we do not find that it deprived plaintiffs of a legal right or render the enforcement of the judgment unconscionable or inequitable. Simply put, nothing defendants did prevented the plaintiffs from locating the car in the 12 years before trial." See Wright v. Louisiana Power & Light, 06-1181 (La. 3/9/07), 951 So.2d 1058.

U.S. District Court Judge in New York Orders Adverse Inference and Imposes Monetary Sanctions for Spoliation of E-Mails and Other Data by Successor Entity in Securities Case. Defendant in securities class action went into Chapter 11. The successor entity (against whom the class action was allowed to proceed to the extent of available insurance coverage) allowed the e-mails of key participants to be destroyed. An adverse inference and monetary sanctions were awarded. See In re NTL Securities Litigation, No. 02-3013, 2007 WL 241344 (S.D.N.Y. Jan. 30, 2007).

Magistrate in the Eastern District of Kentucky Rejects Presumption Favoring Production of Meta-Data. "The Advisory Committee Notes to the newly amended rule make clear that if the information is maintained in a way that makes it 'searchable by electronic means,' then 'the information should not be produced in a form that removes or significantly degrades this feature.' However, as one commentator has observed, 'neither default form is intended to mandate production of metadata or embedded data.' Allman, T., The Impact of the Proposed Federal E-Discovery Rules, 7 Sedona Conf. J. 31 (Fall 2006). The Sedona Principles for Electronic Document Production also suggest that a party should not be required to produce metadata absent a clear agreement or court order. Principle 12, The Sedona Principles.... Having the benefit of the newly amended rules, advisory notes, and commentary of scholars, I respectfully disagree with its conclusion that a producing party 'should produce the electronic documents with their metadata intact, unless that party timely objects..., the parties agree that the metadata should not be produced, or the producing party requests a protective order.' As noted in the more recent Wyeth v. Impax Laboratories, "'emerging standards of electronic discovery appear to articulate a general presumption against the production of metadata.'" Although plaintiff may protest that Delaware has adopted local standards which provide a 'default standard' against the production of metadata, this court is convinced - at least on the facts of this case - that the production of metadata is not warranted." Magistrate Wehrman further indicated that "The issue of whether metadata is relevant or should be produced is one which ordinarily should be addressed by the parties in a Rule 26(f) conference. Here, the parties clearly had no agreement that the electronic files would be produced in any particular format. Plaintiff did not notify defendant ISC that it sought metadata until seven months after ISC had produced both hard copy and electronic copies of its documents. Plaintiff has not made any showing of a particularized need for the metadata. Although plaintiff argues generally that it "needs document custodian information for the prosecution of its case" ... plaintiff does not identify any specific document or documents for which such information would be relevant and is not obtainable through other means. In most cases and for most documents, metadata does not provide relevant information. Metadata may or may not provide the information plaintiff seeks concerning specific documents in this Case. Depending on the format, the metadata may identify the typist but not the document's author, or even just a specific computer from which the document originated or was generated." See Kentucky Speedway v. NASCAR, No.05-138, 2006 U.S.Dist.LEXIS 92028 (E.D.Ky. Dec. 18, 2006).

North Carolina Court Quashes Subpoena for E-Mails on Non-Party. In dispute between bank and insurers, the defendants sought to compel Marsh, a third-party, to "identify, restore, extract, convert, process, and search deleted e-mails from some eight authors and recipients contained on some 350 to 400 backup tapes." The court found it significant to note that "there exists a wealth of information from both Plaintiffs and Defendants. Marsh, as broker, was in the middle of the transaction, and there has been no showing that its correspondence and communications with either Plaintiffs or Defendants are not available in the parties' files. There has been no showing that the Marsh officials involved in brokering the policies are unavailable and no showing that their internal e-mails would show anything contrary to what their communication with the parties shows." See Bank of America v. SR International, No. 05-5564, 2006 WL 3093174 (N.C. Sup. Ct. Nov. 1, 2006).

District Judge in New Jersey Imposes Multiple Sanctions Against Defendant for E-Discovery Spoliation and Abuse. In case where defendant was found to have submitted false and misleading evidence to the court regarding its efforts to make restitution, Health Net was also sanctioned for engaging in widespread discovery abuse, including the failure to search thousands of employees' e-mails for responsive documents as well as the permanent loss of many others due to the defendant's retention/deletion policies. Invoking both Rule 37 and the Inherent Authority of the Court, Judge Hochberg ordered that certain facts would be deemed admitted; precluded some of the defendant's evidence; struck the defendant's privilege assertions in various privilege logs; struck the defendant's late-designated witnesses; and imposed monetary sanctions for costs and fees. See Wachtel v. Health Net, No.01-4183, 2006 U.S.Dist.LEXIS 88563 (D.N.J. Dec. 6, 2006).

New Federal Rules in Effect December 1, 2006. Amended Rules 16, 26, 34 and 45 of the Federal Rules of Civil Procedure relating to E-Discovery go into effect December 1, 2006.

An Effective Presumption Against Causation is Inapplicable Where the Defendant Had Opportunity to Inspect Product. In products liability arising out of a fire loss due caused by a coffee maker, the plaintiffs argued on appeal that the district court's ruling that it would be inequitable to allow plaintiffs to make use of their evidence that ruled out all possible sources of the fire other than the coffee maker, it was, though not characterized as such, a spoliation sanction. The U.S. Second Circuit Court of Appeals addressed the defendant's argument that "there is a broad duty to preserve evidence irrespective of the absence of a request by the opposing party." While, the court noted, an obligation arises when the party knows or should have known that the evidence is or may be relevant to litigation or future litigation, "we did not hold that such an obligation continues indefinitely." In this case, the defendant "affirmatively disclaimed any interest in the evidence. Hamilton Beach did so, moreover, after being provided a full opportunity to inspect the items.... The District Court, therefore, abused its discretion in precluding consideration of Plaintiffs' evidence offered for purposes of eliminating the possible alternate ignition sources." Allstate v. Hamilton Beach, No. 04-6282, 2007 U.S.App.LEXIS 189 (2d Cir. Jan. 5, 2007). [Case further discussed on the "What's New in Product Liability?" page.]

ABA Committee Concludes that an Attorney May Review and Utilize Metadata in Electronic Documents Received from Opposing Counsel. In a Formal Opinion issued by the Standing Committee on Ethics and Responsibility, the ABA indicates that Rule of Professional Conduct 4.4(b) does not require an attorney to return metadata or other embedded information within electronic documents, even where such transmission could be considered "inadvertent". The opinion assumes that the receiving lawyer acted lawfully and ethically in obtaining the electronic documents, and advises that attorneys concerned about providing metadata might be able to "scrub" the document or provide an alternative version, so long as the attorneys are dealing with their own work product and not documents being produced by clients which have evidentiary value. See ABA Formal Opinion 06-442 (Aug. 5, 2006).

Magistrate Recommends Adverse Presumption where Former Employee Cancels Yahoo Account in Order to Delete Files. A hockey equipment company sued one of its competitors, alleging that it had induced a former employee to provide trade secrets and other proprietary information. The evidence established that the former employee downloaded computer information via a Yahoo account, and then canceled the account in order to cover his tracks. Although the former employee was not a defendant, the evidence indicated that some confidential information had been provided to the defendant competitor via CD, and that "a case can be made that [the defendant] should have done more to detect and preserve relevant data under [the former employee's] control." While refusing to strike the defenses and enter a default judgment, the Magistrate recommended allowing the plaintiff to present evidence of the defendant's failure to preserve the electronic data; an instruction to the jury that it may presume, based upon the spoliation, that the evidence destroyed would have been favorable to the plaintiff; and allowing counsel for the plaintiff to argue in favor of the negative inference. See Easton Sports v. Warrior LaCrosse, No. 05-72031, 2006 U.S.Dist.LEXIS 70214 (E.D.Mich. Sept. 28, 2006).

Court Addresses Appropriate Parameters Regarding Destructive Testing. Plaintiffs filed a products liability suit, alleging that a ladder collapsed due to a failure in a hinge, as a result of a defectively designed or manufactured locking bolt. The plaintiffs filed a motion to substantiate their theory by conducting metallurgical and hardness tests on the bolt, which would have irreversibly altered the material. In considering the relevant factors, the magistrate judge determined that (i) the proposed testing was relevant, reasonable, and necessary to proving the case; (ii) the deprivation of the ability to make a live presentation did not outweigh the benefits of allowing the plaintiffs to test the hardness of the bolts; (iii) photography and testing of the end of the bolt were not viable alternatives; and (iv) there were adequate safeguards in place to minimize the potential for prejudice to defendants. See Merchandani v. Home Depot, 235 F.R.D. 611 (D.Md. 2006).

District Court in New York Holds that Employee Working at Home on Laptop Supplied by Employer Does Not Waive Attorney-Client Privilege. Plaintiff worked primarily out of her home office, and was assigned a company-owned Mac laptop computer, until May 2003, when she was told that she would be converting to a Dell. Prior to transfering her work-related files from the Mac to the Dell, the plaintiff deleted her personal files from the Mac, including notes and e-mails she had sent to her attorneys regarding the action. Years later, the defendant hired a forensic consultant, who was able to restore portions of the "deleted" files. Despite the general rule that "an employee has no expectation in workplace computer files where company guidelines and policy explicitly inform the employee that no expectation of privacy exists," the magistrate, affirmed by the district court, concluded that this does not "'end the issue' because the lack of enforcement by MWC of its computer usage policy created a 'false sense of security' which 'lulled' employees into believing that the policy would not be enforced." As distinguished from many of the other cases, the fact that plaintiff was working from a home computer was significant. "Here, Plaintiff's laptops were not connected to MWC's computer server and were not located in MWC's offices; thus, MWC was not able to monitor Plaintiff's activity on her home-based laptops or intercept her e-mails at any time. In fact, in order for MWC to access the documents on Plaintiff's laptops, they would have to be either physically transported to MWC's offices or someone from MWC would have to examine them at Plaintiff's home. When she did have to return her laptop, she deleted all personal files. Thus, it was reasonable for her to believe that the e-mails she sent and the personal documents she stored on her laptops were confidential." See Curto v. Medical World Communications, No.03CV6327, 2006 U.S. Dist. LEXIS 29387 (E.D.N.Y. May 15, 2006).

Connecticut Supreme Court Recognizes Cause of Action for Intentional Spoliation. Plaintiff climbed a ladder manufactured by Davidson while shopping at a Home Depot. The ladder collapsed and the plaintiff filed a product liability action against Davidson and Home Depot, repeatedly asking them to preserve the ladder and to afford plaintiff an opportunity to examine it. The defendants' expert examined the ladder and concluded that it was not defective, and thereafter destroyed the ladder, despite the fact that the plaintiff had never had an opportunity to inspect it. The Connecticut Supreme Court held that the tort of intentional spoliation would be recognized where, as here, "a first-party defendant destroys evidence intentionally with the purpose and effect of precluding a plaintiff from fulfilling his burden of production in a pending or impending case." See Rizzuto v. Davidson Ladders, 905 A.2d 1165 (Conn. 2006).

Magistrate in District of Connecticut Addresses the Appropriate Form of Electronic Production in Unfair Trade Practices Case. The plaintiff complained that the defendant had "dumped" over 300,000 pages of electronic documents onto plaintiff in response to the plaintiff's discovery requests. The plaintiff filed a motion to compel the defendant (a) to supplement its production so as to identify every document which is responsive to each of plaintiff's requests for production; (b) to organize and label each responsive document to correspond to the categories of plaintiff's requests; and (c) to produce the "native" or "original" electronic documents identified as "Personal Folder Files" ("PST" files) which, plaintiff alleges, underlie the thousands of pages of e-mails and accompanying attachments comprising defendant's production "as they are kept in the normal course of business." The court held, with respect to the thousands of pages of unreadable "gibberish" produced by defendant, that any files created or received by defendant in a readable format must be produced for plaintiff in a readable, usable format. The court further held that a party producing documents as kept in the ordinary course of business was not required to specifically identify responsive documents by category. At the same time, however, the defendant was required to provide the plaintiff with information, data, or software needed to match the e-mails to the attachments. Finally, the court denied the plaintiff's request to have the documents re-produced as PST files in order to facilitate their ability to index and use the documents in a working database; while reserving the right of plaintiff to request specific additional relevant files, the court acknowledged the defendant's concerns with an inability to segregate out privileged documents and the susceptibility of files in their native format to be manipulated. See CP Solutions v. General Electric, No. 3:04cv2150, 2006 U.S. Dist. LEXIS 27053 (D. Conn. Feb. 6, 2006).

New York Appellate Division Rejects "Trade Secrets" Claim of Tire Manufacturer, Citing Discovery Abuses in Other Cases. Plaintiffs filed a tread separation case against Cooper Tire. Defendant's non-responsive answers to the plaintiff's discovery requests were part of Cooper's "programmed response" to discovery, as evidenced by five court orders in five different lawsuits against in which both State and Federal courts had held that the company engaged in "wilful disobedience" and "bad faith". Despite the entry of a Protective Order, Cooper argued that its tire formula and ingredients were trade secrets which were "not subject to disclosure under any circumstances." The appellate division found the defendant had failed to meet its burden in proving that the list of ingredients used to make the subject tire 11 years ago were, in fact, "trade secrets", particularly in light of the statements in the California Bridgestone/Firestone litigation to the effect that tire formulation and design is subject to constant evolution and change. Yet, even if the ingredients of the formula for the subject tire were deemed to be a "trade secret", discovery would be permitted. While acknowledging the suitability of an appropriate protective order, the court vacated the "draconian" order which had been requested by Cooper and entered by the motion judge. Finally, the court rejected the notion that the scope of disclosure should be limited to only those tires with the "same green tire specification" as the tire in question. Mann v. Cooper Tire, 816 N.Y.S.2d 45 (N.Y. App. Div. 1st Dept. 2006). [For more discussion, see: "What's New in Product Liability?"]

District Court Refuses to Dismiss Products Case Due to Spoliation Where Airbags Were Removed and Lost by Junkyard. After a fatal accident, the survivors assigned the ownership of the vehicle over to the insurance company. The car was brought to a junkyard, where the airbags were apparently removed and placed in storage. Upon inspecting the vehicle, the plaintiff's counsel advised the junkyard that the airbags needed to be retained for litigation. By the time suit was filed, and the defendants came to inspect the vehicle, the airbags had apparently been lost, sold, or destroyed. While striking the testimony of plaintiff's expert based upon his inspection of the vehicle, the court refused to dismiss the case. "Even though we agree with defendant that there is a duty to preserve relevant evidence, in this particular case it is doubtful that the vehicle's owner had the economic resources to disburse the $4,049.00 required under the insurance policy in exchange for payment of his loss to retain title to the wrecked vehicle. What defendants deem 'nominal expense' is relative to the economic situation of each individual. Accordingly, it is apparent that the plaintiff did not have much choice over the vehicle's assignment to its insurer and the resulting loss of control over the airbags. Defendant further argues that the vehicle was not properly stored and had seriously deteriorated by the time it was inspected. However, neither plaintiffs nor their representatives had control over the vehicle and hence, did not participate in the safeguard mechanism decisions. Plaintiffs did, however, take reasonable steps to alert the junkyard, the legal owner of the vehicle, as to the need to preserve the car." Perez v. Hyundai, 440 F.Supp.2d 57 (D.P.R. 2006). [For further discussion, see "What's New in Product Liability"]

First Circuit Affirms Entry of Default as a Discovery Sanction under Rule 37. A District Court in Puerto Rico entered default against the Commonwealth for repeatedly failing to produce a full and accurate copy of the administrative record, as required by the IDEA. The First Circuit held that: "Although the question is close, we uphold the entry of sanctions against all defendants. The Commonwealth defendants' argument that the IDEA does not specify a schedule for the delivery of the administrative record misses the point. What matters is that the district court twice ordered them to produce the record by a certain date and that they failed both times to come into full compliance with the court's order. As to their argument that they did not act in bad faith, Rule 37(b)(2) allows for sanctions if a party 'fails to obey an order to provide or permit discovery,' and nothing in the rule requires that the failure be on account of bad faith. All of the defendants violated discovery orders either by missing clearly established deadlines or by representing to the court that they had complied fully with their obligations, even when their submissions (timely or otherwise) were incomplete, vague, or evasive. The court's discovery orders explicitly warned defendants that failure to comply fully and on time would result in sanctions, including the striking of pleadings and the entry of default. Under these circumstances, the district court was within its discretion in imposing sanctions." Diaz-Fonseca v. Puerto Rico, 451 F.3d 13 (1st Cir. 2006).

Third Party Has No Standing to Object to Discovery on Behalf of Others who Posted Internet Messages Anonymously on First Amendment Grounds. A pharmaceutical company sued a number of John Does for defamation and related claims after statements critical of the company were posted on Internet message boards. Using information provided by Yahoo!, the plaintiff was able to trace two of the anonymous posters using the aliases "veritasconari" and "gunnallenlies" to a hedge fund, and sought discovery from the fund and its manager to disclose the identity of the parties involved. The deponents argued that Gunnallenlies and Veritasconari have a fundamental First Amendment right to speak anonymously, which cannot be overcome absent a "valid" cause of action, and that, in this case, Matrixx had failed to make a prima facie showing that the targeted postings were defamatory. The appellants also pointed out that Matrixx did not specify that Veritasconari was a Doe defendant or even mention Gunnallenlies in the complaint. The court, however, found that these parties lacked standing to raise a First Amendment objection. "The applicable issue in most cases is whether a plaintiff has standing to bring an action or whether a defendant may challenge an action against him or her - in either case, based on the asserted violation of a nonparty's constitutional rights or the overbreadth of a statute.... Where a third party is brought into the litigation, typically through a discovery order, the anonymous plaintiff or defendant normally steps forward to oppose the disclosure of his or her identity.... The case before us, however, presents a different procedural posture: Here the litigants who are challenging discovery are not parties in the underlying action for which the discovery is sought, but instead are themselves the third parties in a lawsuit that may have nothing to do with them." As distinguished from AOL [No. 40570, 52 Vir. Cir. 26 (Jan. 30, 2000), rev'd on other grounds, 261 Va. 350 (2001)] and Verizon [357 F.Supp.2d 244 (D.D.C. 2003), rev'd on other grounds, 351 F.3d 1229 (D.C. Cir. 2003)], there was not a sufficient showing of a "close relationship" between the deponents and Veritasconari/Gunnallenlies to satisfy the Powers v. Ohio exception. In addition, "Appellants have neither demonstrated nor even suggested that there is some 'hindrance' to the ability of Veritasconari and Gunnallenlies to protect their own interests." Accordingly, the order compelling discovery was affirmed. Matrixx v. Doe, 138 Cal.App.4th. 872 (Cal. App. 6th Dist. 2006).

An Attorney in a Product Liability Suit Was Sanctioned $13,691.50 for Violating a Protective Order. The plaintiff's attorney in a product liability suit admitted that he provided a "confidential" deposition to unauthorized persons under the court's protective order, arguing that the tire company waived confidentiality by voluntarily providing the deposition to plaintiffs' attorneys in another case. The tire company provided portions of the deposition in the other case only after being ordered to do so, and only pursuant to a protective order devoid of any sharing provisions. McDonald v. Cooper Tire & Rubber Co., 186 Fed.Appx. 930, 2006 U.S. App. LEXIS 16537 (11th Cir. June 28, 2006).

Spoliation Counts Rejected in Franchise Dispute on Legal Grounds. "Counts VI and VII of All EMS' complaint asserted that 7-Eleven destroyed records that allegedly were doctored to give the impression that the Wagdys were underreporting retail prices in 1996. The court denied the relief requested in these counts on two grounds: (1) lack of credible evidence that 7-Eleven negligently or intentionally destroyed the records; and (2) lack of prejudice to All EMS because the allegedly destroyed evidence would not have affected the determination of breach. Although the district court found for 7-Eleven without allowing a factual presentation, the court's second, independent ground represented a legal conclusion based on the facts already established at bench trial. This legal conclusion was correct because the allegedly spoliated evidence related to a disputed charge that, as we have mentioned, was reversed for purposes of calculating the Wagdys' net worth balance. The Wagdys would have been in material breach with or without the information contained in the allegedly spoliated evidence. Accordingly, the court's resolution of All EMS' spoliation claims comported with due process." All EMS v. 7-Eleven, 181 Fed.Appx. 551, 2006 U.S.App.LEXIS 11748 (7th Cir. May 9, 2006).

Seventh Circuit Holds that the Computer Fraud and Abuse Act Applies to Employees as Well as Hackers. After the plaintiff lent an employee a laptop to use for work, the employee quit to go into business for himself. Before returning the laptop, the defendant deleted information which would have indicated that he breached his employment agreement by transmitting a secure-erasure program to the computer, which was designed to write over the deleted files in order to prevent their recovery. The district court dismissed the employer's suit, but the U.S. Seventh Circuit Court of Appeals reversed, concluding that a program intended to cause damage was transmitted to the computer electronically, thereby violating the CFAA, 18 U.S.C. §1030(a)(5)(A)(ii), irrespective of whether the program is introduced over the Internet or by disk insertion. The defendant's authorization to access the laptop terminated when he resolved to destroy files that incriminated himself and other files that were also the property of his employer, in violation of his duty of loyalty. The court noted that although the employee's contract authorized him to destroy data, it was unlikely that the provision was intended to authorize him to destroy data that he knew the company would have wanted. See International Airport Centers v. Citrin, 440 F.3d 418 (7th Cir. 2006).

District Court Defers Ruling on Adverse Inference Where Unclear that Destruction Was for Purpose of Depriving Plaintiff of Use in Litigation. Someone offered to download Lemony Snickets on eDonkey, and the activity was traced to the defendant. With the help of a computer forensic specialist, Paramount conducted an inspection of the defendant's hard drive and discovered that he had wiped it clean two weeks after receiving notice of the suit. The defendant claimed that he wiped the hard drive clean because he had an agreement to sell someone else the computer, (which he was enjoined from doing due to the suit). The court was not willing to apply an adverse inference at the summary judgment stage. "Notwithstanding the spoliation inference, there remain genuine issues of material fact as to whether the motion picture and eDonkey network software were on Davis' computer at the time of the alleged infringement and whether Davis intentionally wiped his computer hard drive clean to avoid Paramount discovering his infringing activities. Accordingly, there are three related genuine issues of material fact: whether Davis engaged in any infringing activity; whether he was a first propagator of the motion picture; and whether he was misidentified. My ruling here does not mean that Paramount will not have the benefit of the spoliation inference at trial. I will take Davis' willful destruction of evidence into consideration at the time of trial." See Paramount Pictures v. Davis, 234 F.R.D. 102 (E.D.Pa. 2005).

Southern District of New York Reviews State of the Law Regarding Issuance of Preservation Orders and addresses the propriety of a "Document Retention Questionnaire" and Search Protocol for E-Discovery. In a case brought by a stock analyst against one of the companies he covered for defamation, the defendant, as is common, rejected the plaintiff's suggestion of a stipulated preservation order on the grounds that it was fully aware of its preservation obligations and that such an order was unnecessary given the modest scope of the case. The district court judge commented that "Such reasoning is shortsighted. Even litigation that concerns 'relatively precise issues, statements and timeframes' may nevertheless involve information, including electronic documents, that may be in danger of destruction in the absence of a preservation order. Further, a preservation order protects the producing party by defining clearly the extent of its obligations. In the absence of such an order, that party runs the risk of future sanctions if discoverable information is lost because it has miscalculated." Having said that, the court then acknowledged that the issuance of a protective order is, on the other hand, by no means "automatic" even in a complex case. The court then reviewed the existing standards, and noted that several courts have taken the position that a party seeking a preservation order must meet the standards for obtaining injunctive relief. This approach, however, puts the "cart before the horse" by asking the court to evaluate the merits in advance. Some courts, therefore, have adopted a three-factor balancing test: (1) the level of concern that the court has for the continuing existence and maintenance of the integrity of the evidence in question in the absence of an order directing preservation of the evidence; (2) any irreparable harm likely to result to the party seeking the preservation of evidence absent an order directing preservation; and (3) the capability of an individual, entity, or party to maintain the evidence sought to be preserved, not only as to the evidence's original form, condition, or contents, but also the physical, spatial and financial burdens created by ordering evidence preservation. Other courts, finally, had opted for a more streamlined approach that simply "requires that one seeking a preservation order demonstrate that it is necessary and not unduly burdensome." After noting that the distinction between the 2-part test and the 3-part test was "more apparent than real", the court followed the three-part balancing test, and denied the motion as premature. The court then addressed the issue of the defendant's obligation to respond to Plaintiff's Document Retention Questionnaire, which, the court found, should be treated as Rule 33 Interrogatories, and should be answered, despite the 25 limit. Finally, the court addressed the appropriate scope of production. When it received the requests, the defendant suggested defining the scope of review of electronic records by stipulating which files would be searched and what search terms would be utilized. The plaintiff declined, apparently believing that "the use of search terms has no application to the standard discovery process of locating and producing accessible hard copy and electronic documents." The court noted that the plaintiff's assumption is flawed, as "even in a case involving exclusively hard copy documents, there is no obligation on the part of a responding party to examine every scrap of paper in its potentially voluminous files in order to comply with its discovery obligations. Rather, it must conduct a diligent search, which... might, for example, include identifying key employees and reviewing any of their files that are likely to be relevant to the claims in the litigation." The court further noted that it was "a missed opportunity," as the plaintiff "might have convinced Biovail to broaden its search in ways that would uncover more responsive documents and avoid subsequent disputes. Yet the plaintiff's recalcitrance does not excuse Biovail's failure to produce any responsive documents whatsoever. Biovail suggested a strategy by which it would search the computer files of Mr. Melnyk, Mr. Cancellara, and Kenneth Howling, its director of investor relations, using the search terms: (i) Treppel, (ii) Jerry, (iii) Bank of America, (iv) Banc of America, (v) BAS, and (vi) BofA. Absent agreement with Mr. Treppel about a search strategy, Biovail should have proceeded unilaterally, producing all responsive documents located by its search." In addition, the court ordered the defendant to "provide the plaintiff with a detailed explanation of the search protocol it implements." Treppel v. Biovail Corp. 233 F.R.D. 363 (S.D.N.Y. 2006).

Lucent and Counsel to be Sanctioned for Withholding and Destroying Documents in Patent Infringement Case. Judge Ward in the Eastern District of Texas issued a ruling in November indicating that Lucent and Lucent's counsel would be sanctioned in a patent infringement case. Lucent withheld four critical documents during much of the discovery process, revealing them in the eleventh hour in support of it's expert's rebuttal report. At the same time, deposition testimony made it clear that Lucent allowed relevant documents to be destroyed in the ordinary course of business, even after the company was placed on notice as to the pendency of the litigation. Following Zubulake, the court indicated that Lucent and it's counsel should have suspended its routine retention/destruction policy with a "litigation hold", noting that "failure to retain relevant records during the litigation period allows for a strong adverse inference to be drawn against the party who failed to retain the records." The court indicated that the conduct was sanctionable, and that it would issue an appropriate remedy. Tantivy Communications v. Lucent Technologies, No. 2:04-79, 2005 U.S. Dist. LEXIS 29981 (E.D.Tex. Nov. 1, 2005).

Court Allows Expert Access to Servers. A United States Magistrate Judge sitting in the Southern District of New York ordered the defendants to give the plaintiff's computer forensic expert access to two e-mail servers, ordering the parties to split the costs. See Tilberg v. Next Management Co., No. 04-7373, 2005 U.S. Dist. LEXIS 24892 (S.D.N.Y. Oct. 24, 2005).

Metadata Generally Discoverable with E-Files Produced in the Ordinary Course of Business. Looking to Comment 12 of the Sedona Principles, the Court holds that "when a party is ordered to produce electronic documents as they are maintained in the ordinary course of business, the producing party should produce the electronic documents with their metadata intact, unless that party timely objects to production of metadata, the parties agree that the metadata should not be produced, or the producing party requests a protective order." The court notes that Comment 12 "lists several ways in which routine preservation and production of metadata may be beneficial. The comment balances these potential benefits against the 'reality that most of the metadata has no evidentiary value, and any time (and money) spent reviewing it is a waste of resources.' ... 'Of course, if the producing party knows or should reasonably know that particular metadata is relevant to the dispute, it should be produced.'" Applying these principles, the court indicates that "the initial burden with regard to the disclosure of the metadata would therefore be placed on the party to whom the request or order to produce is directed. The burden to object to the disclosure of metadata is appropriately placed on the party ordered to produce its electronic documents as they are ordinarily maintained because that party already has access to the metadata and is in the best position to determine whether producing it is objectionable. Placing the burden on the producing party is further supported by the fact that metadata is an inherent part of an electronic document, and its removal ordinarily requires an affirmative act by the producing party that alters the electronic document." While declining to sanction the defendant, the court rejected its objections on grounds of privilege, relevancy, and the failure of plaintiffs' to specifically request metadata, and ordered the spreadsheets at issue, with the corresponding metadata, to be produced. Williams v. Sprint/United Management Co., 230 F.R.D. 640 (D.Kan. 2005).

Court Denies Motion for Sanctions Against Employer Accused of Misleading the Court Regarding the Scope and Accessibility of E-Discovery. A United States Magistrate Judge in the Southern District of New York rejected an employee's claim that affidavits executed by the employer's chief information officer and an electronic evidence consultant were incomplete, misleading, and contained outright false statements because they improperly focused on back-up tapes and violated the magistrate's order by not addressing the costs of searching and contents of the database and archives that the consulting firm maintained containing the employer's e-mails. The court found that the employer and its counsel acted appropriately in focusing on back-up tapes as the most complete source for the requested e-mails and they did not mislead the employee or the court as to other available storage systems because the other systems contained far less data. Quinby v. WestLB AG, No. 04-7406, 2005 U.S. Dist. LEXIS 35583 (S.D.N.Y. Dec. 15, 2005).

Louisiana Second Circuit Court of Appeal Affirms Rejection of Spoliation Where Defendant is Not on Notice to Preserve. In a case arising out of damage from a lightning strike, the defendant preserved a transformer which had been damaged by the lightning, but did not preserve the surge arrester, (which, according to a photograph taken shortly after the incident, sustained no apparent damage). An Entergy employee for many years testified that the arrester was probably removed from the transformer and discarded in accordance with standard operating procedures shortly after the apparatus was removed from the scene. The court found no evidence that Entergy intentionally destroyed the arrester to deprive plaintiffs of its use, noting that, "at the time the arrester was discarded, no litigation was pending, and Entergy officials probably were not aware of a potential claim." The trial court further concluded that plaintiffs must bear some responsibility for the loss of the arrester because their own investigator visited the scene prior to Entergy's knowledge of the fire loss claim and took no steps to preserve the arrester; moreover, plaintiff's counsel made no formal request that Entergy preserve the arrester, although it made a request for the transformer. Hence, the trial court's rejection of a claim of spoliation was affirmed. Franks v. Entergy Corp., No. 40,486 (La. App. 2nd Cir. 2/1/06), 921 So.2d 1130.

Sixth Circuit Rejects Claim of Spoliation under State or Federal Law where Destruction Occurs Before Defendant is Placed on Notice of Claim. Plaintiff was a driver for UPS. His daughter suffered physical and emotional problems, which caused plaintiff to miss work; he also became depressed, and took medication which prevented him from operating heavy machinery. UPS alleged that plaintiff shipped six packages without paying for them. Plaintiff challenged the termination through the union's grievance procedure; the termination was upheld. Plaintiff filed suit 18 months later, approximately two years after he was terminated. In the meantime, the notes prepared by the person who investigated the termination, as well as the tracking records, had been destroyed. (Apparently, under the ordinary policies and procedures, such notes were destroyed every 60 days, while tracking records were destroyed every 18 months.) Under Michigan law, spolitation is "the intentional destruction of evidence that is presumed to be unfavorable to the party responsible for the destruction." The court found no evidence of intentional destruction, since the notes were discarded in the ordinary course of business two years prior to Plaintiff's suit. Similarly, under Federal Law, the court noted that while an adverse inference is not entirely dependant on bad faith, it is based on the spoliator's mental state. "Where the spoliator has no notice of pending litigation, the destruction of evidence does not point to consciousness of a weak case." In this case, the notes and the tracking records were destroyed long before the advent of federal court litigation and in the course of regular business practice. "Consequently, UPS was not on notice that Plaintiff would need any evidence, or that the evidence could be used against it, until several months after it destroyed its records. Because UPS could not have known that the evidence would potentially be used against it, there is no basis from which this Court can infer that the records were adverse to UPS." Joostberns v. UPS, No. 04-2370, 2006 U.S. App. LEXIS 533 (6th Cir. Jan. 9, 2006).

The electronic information gathering industry has nearly doubled in the last few years as the need for records on e-mails and other information has increased. High-profile lawsuits and the surge in technological capabilities has spawned sophisticated companies that store large quantities of data. E-discovery is estimated to be a nearly $2 billion industry. See Brian Bergstein, Seattle Post-Intelligencer, Jan. 29, 2006.

Proposed Federal Rule Changes on E-Discovery Approved by Judicial Conference. On September 20th, the Judicial Conference unanimously approved the Proposed Changes recommended by the Advisory Committee. Assuming no changes are made by the Supreme Court or Congress, the new Rules will take effect in December of 2006.

The Eleventh Circuit Rejects Ordinary License Fee for Software as "Costs" When Protective Order Limits the Use of Data to Litigation Purposes. In multiple class actions brought by physicians against the nation's largest HMOs, the American Medical Association, a non-party, was compelled to produce its annual reports regarding physicians' income and medical practices and the underlying data for those reports. The defendants sought that material to defend against the plaintiffs' allegations in the case. The AMA argued that it was entitled to the license fee it ordinarily charges for its reports, even though the district court, by protective order, limited the use of the data to litigation purposes. The U.S. Eleventh Circuit, in a case of first impression, considered the issue of whether the license fee should be recovered as "costs" under Rule 45(c)(3)(B), and determined that the district court did not abuse its discretion when it required the HMOs to pay the AMA only its production costs, because the AMA did not suffer a loss in the value of its property. Klay v. All Defendants, 425 F.3d 977 (11th Cir. 2005).

Tenth Circuit reverses dismissal of action as sanction for failure to preserve electronic data in third party's control. Proctor & Gamble filed a suit against Amway under the Lanham Act in 1995. In order to assess damages, P&G and its experts turned to IRI, which provides on-line market share data to companies such as P&G on a rolling basis. The district court dismissed the action based on P&G's failure to preserve the relevant data, and the Tenth Circuit reversed. The court first ruled that it was an abuse of discretion to dismiss without specifically addressing the Ehrenhaus factors. Then, reviewing the record, the court observed that: "P&G did not possess nor own that data. Although the IRI data in general could be deemed to have fallen within certain of defendants' broadly-worded discovery requests, it is unclear precisely how P&G was to produce that data to defendants. The most reasonable alternatives appear to have been (a) providing defendants with regular online access to the information, (b) attempting to download and archive the information at P&G's facilities, or (c) paying IRI to provide the archived data to defendants. That said, each of these alternatives involved a considerable downside. The first option, providing defendants with regular online access to the information, would not necessarily have satisfied defendants (who) were interested in obtaining a concrete set of IRI-related data (i.e., a set of data with established beginning and ending dates) rather than merely access to the rolling database. As for the second option, the record appears to be uncontroverted that P&G did not have the computer capacity to [download the data] and would, in fact, have had to purchase a mainframe computer to do so. The third option, purchasing archival data from IRI, bore a considerable economic expense... in the neighborhood of thirty million dollars." Hence, the order of dismissal was reversed. P&G v. Haugen, No. 03-4234, 2005 U.S. App. LEXIS 22447 (10th Cir. Oct. 19, 2005).

Ninth Circuit reverses $50,000 sanction where evidence of intent is lacking. In a Lanham Act case, the district court awarded the plaintiff $50,000 for the defendant's breach of its license by failing to preserve all of its records of sales and purchases. The defendant argued that this was an improper award of contractual damages; the plaintiff countered that it could be considered a civil discovery sanction, or a civil penalty under Idaho law. The Ninth Circuit, however, reversed, noting that, "while G&T stipulated that it failed to preserve some of its records, the district court's factual findings contain no indication that G&T intentionally destroyed records with knowledge that those records were relevant to this litigation." The court also rejected the district court's authority to impose a civil penalty under Idaho Code §22-1213. See Idaho Potato Commission v. G&T Terminal Packaging, No. 04-35229, 2005 U.S. App. LEXIS 21702 (9th Cir. Oct. 7, 2005).

Eleventh Circuit finds that adverse inference is insufficient where owner allows vehicle to be sold for salvage in crashworthiness suit. Following an accident in 1996, the plaintiff sent a letter to Daimler Chrysler notifying it of the accident and of the airbag's failure to deploy. Daimler Chrysler replied to the letter, requesting the location of the vehicle for inspection purposes. Flury's counsel never responded to defendant's letter. Around six months later, the vehicle was sold. In 2002, the plaintiff filed suit. Addressing the spoliation issue, the district court determined that, because Daimler Chrysler had several months to follow up on its request to inspect the vehicle, it shared some of the culpability and dismissal was not warranted. Instead, the court instructed the jury to apply a rebuttable presumption that the evidence not preserved was unfavorable to the party responsible for spoliation. Thus, if the jury found that Flury was responsible for spoliation before the defendant had an opportunity to inspect it, the jury should presume that the vehicle was not defective. The Eleventh Circuit reversed. The court initially concluded that the question of an appropriate sanction due to spoliation was a question of Federal Law. The court then determined that the adverse inference was not sufficient. While dismissal represents the most severe sanction, and therefore should only be exercised where there is a showing of bad faith and where lesser sanctions will not suffice, the court determined that: "No lesser sanction will suffice in this case. The record reveals that plaintiff knew the location and condition of the subject vehicle for a considerable amount of time following the accident. Moreover, plaintiff was fully aware that defendant wished to examine the vehicle. Knowing this, plaintiff ignored defendant's request and allowed the vehicle to be sold for salvage without notification to defendant of its planned removal. Even absent defendant's unambiguous request for its location, plaintiff should have known that the vehicle, which was the very subject of his lawsuit, needed to be preserved and examined as evidence central to his case. Plaintiff's failure to preserve the vehicle resulted in extreme prejudice to the defendant, and failure to respond to defendant's letter displayed a clear dereliction of duty." Hence, the judgment was reversed and the case was dismissed. See Flury v. Daimler Chrysler, 2005 U.S. App. LEXIS 21515 (11th Cir. Oct. 5, 2005).

Supreme Court reverses Arthur Andersen's obstruction of justice conviction; troubling dicta regarding document destruction policies. Having advised its Enron team to comply with its document "retention" policy in the face of Government and other investigation, Arthur Andersen was convicted of obstruction of justice, under 18 U.S.C. §1512(b)(2), which makes it unlawful to knowingly use intimidation or physical force, threaten, or corruptly persuade another person withhold testimony, or withhold a record, document, or other object, from an official proceeding, or to alter, destroy, mutilate, or conceal an object with intent to impair the object's integrity or availability for use in an official proceeding. The Court held that the jury instructions - which advised the jury to convict if it found petitioner intended to "subvert, undermine, or impede" governmental factfinding by suggesting to its employees that they enforce the document retention policy, and further instructed that "even if defendant honestly and sincerely believed that its conduct was lawful, you may find defendant guilty" - did not sufficiently compel the scienter requirement that such conduct be "knowingly" or that such persuasion be done "corruptly". While this holding may be warranted, there is dicta in the Court's decision which will undoubtedly be cited by corporations and others to justify spoliation, and/or seeking to avoid responsibility for same. Curiously, Chief Justice Rehnquist, writing for the Court, appears to analogize Arthur Andersen's intentional destruction even after the SEC opened a formal investigation and requested accounting documents with a mother' suggestion that her son invoke his Fifth Amendment rights against self-incrimination. "'Document retention policies,' which are created in part to keep certain information from getting into the hands of others, including the Government" the Court wrote, "are common in business.... It is, of course, not wrongful for a manager to instruct his employees to comply with a valid document retention policy under ordinary circumstances." Arthur Andersen LLP v. United States, No. 04-368, 2005 U.S. LEXIS 4348 (May 31, 2005).

Court orders Navy to search database for information relevant to plaintiff's discrimination claims. After a new trial was granted to allow the plaintiff to present its case using new evidence the defendant claimed it did not have and did not produce during discovery, the court ordered defendant to "provide access to the Facilities Information System (FIS) database for review by plaintiff's counsel or a computer technology consultant hired by plaintiff for the limited purpose of determining whether more information bearing on the workload and staffing at Carderock during the relevant period of plaintiff's employment (January 1, 1997 through October 1, 1999) can be retrieved from the FIS database." For reasons which remain in dispute this did not occur. Yet a deposition confirming the existence of additional evidence was taken. In light of such testimony, the court ordered that "Carney must re-create the process by which she responded to Holleran's requests for what the workload was at the EFACHES field offices (including work in place, number of contract actions, and dollar value of those actions) during the relevant period of plaintiff's employment with the Navy, i.e., January 1, 1997 through October 1, 1999. This process will require Carney to formulate queries and recover information from the FIS database, and it may also entail Carney's consultation with the relevant R26 reports. Because there is no record of how many times Holleran requested such information, except for the fact that it was done, at the very least, when a vacancy needed to be filled and at the end of each year, Carney must provide the information for every quarter, beginning in January 1997 and ending in December 1999. It is the court's intention that Carney do now whatever she did when Holleran asked her for the information that both she and Holleran described in their depositions. Defendant must produce this information to plaintiff within 60 days of the accompanying Order." Jinks-Umstead v. England, 227 F.R.D. 143, 148 (D.D.C. 2005).

Sanctioned Morgan Stanley hit with $1.45 Billion verdict. Florida Circuit Court Judge Elizabeth Maass entered summary judgment in favor of Ronald Perelman in his fraud case against Morgan Stanley as a sanction for refusing to turn over documents, including large numbers of e-mails. Gasparino, "Time to Invest in Some More E-Storage Space" Newsweek, May 30, 2005, p.12; "All That Missing E-Mail ... It's Baaack" New York Times, May 8, 2005.

Magistrate recommends default judgment against PwC for spoliation. The company, according to the court, "failed at the start of discovery to check thoroughly its local servers and its archives for relevant documents, failed to compare the various versions of relevant documents on those databases, failed to produce documents as they were kept in the ordinary course of business, and failed to reproduce thoroughly and accurately all documents and their attachments. Prior to litigation PwC had permitted destruction of documents despite committing to their preservation. Despite these failures, PwC time and time again told the court and the parties that it had made a complete disclosure of all relevant documents and attachments and that it had produced them in the order in which they were stored by PwC. The only conclusion the court can reach is that PwC and/or its counsel engaged in deliberate fraud or was so recklessly indifferent to their responsibilities as a party to the litigation that they failed to take the most basic steps to fulfill those responsibilities." The Magistrate found that PwC's conduct had made it impossible to try the case with any confidence in the outcome, and concluded that any lesser sanction would effectively "unwind" three years of litigation. See In re: Telxon Corp. Securities Litigation, No. 5:98cv2876, 2004 U.S.Dist.LEXIS 27296 (N.D.Ohio July 16, 2004).

Zubulake culminates in a $29 million verdict for plaintiffs. One of the leading E-Discovery cases went to the jury with an adverse inference instruction (i.e. to assume that e-mails discarded by UBS Warburg after plaintiff filed her complaint with the EEOC would have negatively impacted defendant's case) on April 6, 2005, resulting in a $29 million verdict for plaintiffs.

Seventh Circuit rejects tort claim for negligent spoliation in the absence of an express contract or special relationship between the parties, under Indiana law. A contractor suing to be compensated for work performed under a construction contract was counter-sued due to problems with an epoxy that had been purchased from a third-party. The manufacturer had conducted an investigation when the epoxy had stripped away, and the plaintiff ultimately asserted a claim of spoliation against the manufacturer, whose investigation materials would have assisted plaintiff in quickly and decisively defeating the counter-claim. The Seventh Circuit recognized no duty to preserve evidence under Indiana law absent "an independent tort, contract, agreement, or special relationship" and concluded that the purchase of over$100,000 of epoxy by an approved contractor did not constitute a "special relationship" and that there was no duty arising from general principles of foreseeability. See J.S. Sweet v. Sika Chemical Corp., 400 F.3d 1028, 1032-1033 (7th Cir. 2005).

Indiana Court of Appeals finds special relationship between employer and employee in case of intentional spoliation. While recognizing the general rule that an employer is not required to preserve evidence in support of an employee's third-party product liability claim, (see Murphy v. Target Prods., 580 N.E.2d 687 (Ind. Ct. App. 1991)), the court, (apparently influenced by defendant's conduct), concluded that, "under the facts and circumstances, Midwest and Drew had a 'special relationship' to support the recognition of a duty to preserve evidence from the explosion. Not only was Midwest Drew's employer at the time of the explosion, Midwest knew the pump and related items were needed for the IOSHA investigation and had specifically been instructed by an IOSHA officer not to dispose of them. Darling witnessed the explosion and knew that Drew had been gravely injured while working for Midwest. Midwest knew and reasonably should have known that Drew might likely have a claim against the manufacturer of the pump involved in the explosion. A mere seven days after the explosion, and after having been instructed by an IOSHA official to preserve the evidence, Darling instead disposed of all the equipment and debris, as well as Drew's clothing and wallet. Under these facts and circumstances, we conclude that Froman has identified a 'cognizable relationship' with Midwest." See Glotzback v. Froman, 827 N.E.2d 105 (Ind. Ct. App. 2005).

Illinois Court sheds light on appropriate remedies for spoliation. The drastic sanction of dismissal is a last resort, and should only be invoked when spoliation is deliberate, contumacious, or evidence's an unwarranted disregard for the court's authority. When an opponent's negligence leads to the destruction of evidence, the remedy is a claim for damages, which is separate and distinct. Adams v. Bath & Body Works, Inc., 2005 Ill. App. LEXIS 238 (March 17, 2005).

Intercepted electronic communications from husband's computer excluded. Wife, who secretly installed software on husband's computer that copied and stored electronic communications between her husband and another woman, did not get to use the evidence in her divorce proceeding. Because the program copied the communications as they were transmitted, they were "intercepted" and therefore in violation of State Law. The court distinguished between the use of spyware to retrieve information from storage versus the use of a program to make a copy of a communication as it is transmitted and route it to a storage file. O'Brien v. O'Brien, No. 5D03-3484, 2005 Fla. App. LEXIS 1408 (Fla. Ct. App. Feb. 11, 2005).

E-Mail notification of arbitration requirement to employees inadequate, district court rules. General Dynamics attempted to invoke a binding arbitration policy in defense to a claim under the ADA. The court found that sending an e-mail notification of the policy to employees was insufficient, because it is impossible to know whether the employee actually read the communication. The better practice, suggested the court, would be to require employees to acknowledge that they had read the message, by clicking on a link that would provide confirmation. Campbell v. General Dynamics Govt. Systems Corp., 321 F.Supp.2d 142 (D.Mass. 2004).

Union Pacific engages in systematic spoliation. The New York Times found that Union Pacific had been sanctioned at least seven times between July 2001 and January 2003 for spoliation. "Union Pacific's conduct is a stark example of how some railroads, even as they blame motorists, repeatedly side-step their own responsibility in grade-crossing fatalities. Their actions range from destroying, mishandling or simply losing evidence to not reporting the crashes properly in the first place, a seventh month investigation by the New York Times has found." The story also reveals the destruction of dispatch tapes and black-box data by Kansas City Southern, and the falsification of evidence by Burlington Northern. See "In Deaths at Rail Crossings, Missing Evidence and Silence" New York Times, July 11, 2004. [See also, e.g., Johnson v. Missouri Pacific, No. 00-0980 (La. App. 3rd Cir. 7/25/01), 792 So.2d 892, 898, writ denied, 803 So.2d 33 (La. 2001).]


Stephen J. Herman, Esq.

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(Note - The views expressed on this law blog / blawg on spoliation and e-discovery are the personal observations of Stephen J. Herman as a practicing attorney and are not intended to represent the views of Herman Herman Katz & Cotlar, Herman Mathis, LAJ, LTLA, ATLA, the AAJ E-Discovery Litigation Group, Public Justice, TLPJ, Loyola Law School, the Civil Justice Foundation, or any other organization.)

Updated on December 22, 2007[/5][/4][/3][/2][/1]