July’s Notable Cases and Events in E-Discovery

[Editor’s Note: This article was first published July 24, 2024 and EDRM is grateful to Tom Paskowitz and Robert Keeling of our Trusted Partner, Sidley, for permission to republish. The opinions and positions are those of the author.]

This Sidley Update addresses the following recent developments and court decisions involving e-discovery issues:

1. An amendment to the Joint Local Rules of the Eastern and Southern Districts of New York effective July 1, 2024, amending Local Rule 26.2(c) to address the potential use in certain circumstances of categorical or metadata privilege logs instead of a document‐by-document log
   
2. A recommendation from a special discovery master for the U.S. District Court for the Eastern District of Pennsylvania, adopted by the District Court, declining to order a party to completely redo its collection and production of electronically stored information (ESI) despite numerous errors in the party’s ESI productions, but requiring the party to outline in detail the process used to collect, search, review, and produce its ESI
   
3. A decision from the U.S. District Court for the District of Utah denying without prejudice a motion for spoliation sanctions where the plaintiff had taken possession of a former employee’s phone without the passcode to access the phone but requiring the plaintiff to produce the phone and secure its passcode
   
4. A ruling from the U.S. District Court for the Western District of Washington finding that the defendants could not rely on the terms of an ESI order to protect them from producing additional ESI not contemplated by the order, where the plaintiff amended its complaint and served additional discovery after the ESI order was entered by the court 
   
5. An opinion from the U.S. District Court for the Northern District of California requiring the plaintiffs to back up smartphones and to preserve potentially relevant ESI on gaming consoles ahead of discovery

1. An amendment to the Joint Local Rules of the Eastern and Southern Districts of New York effective July 1, 2024, amending Local Rule 26.2(c) to address the potential use in certain circumstances of categorical or metadata privilege logs instead of a document‐by-document log.

The Eastern and Southern Districts of New York announced that the two courts had adopted amendments to their Joint Local Rules, effective July 1, 2024, that will govern civil and criminal cases pending or filed on or after that date.

Among the rules amended was Local Civil Rule 26.2 concerning the assertion of claims of privilege. Subsection (c) of this rule was amended to provide that “[w]hen appropriate, parties should consider and discuss the use of a categorical log or a metadata log, instead of a document‐by-document log.”

Subsection (c) was further amended to provide the following four considerations regarding privilege logs, which apply “[u]nless otherwise agreed to by the parties or provided by a judge’s individual practices or by court order”:

1. When a party is asserting privilege on the same basis with respect to multiple documents, it is presumptively proper to provide the information required by this rule by group or category.
2. Where numerous documents are withheld and the party is using review software, preparation of a metadata log may suffice to provide the information required to support the claim of privilege.
3. Where either a categorical log or a metadata log is used, the parties are encouraged to discuss whether to allow the requesting party to request a document-by-document log for a limited number or percentage of the logged documents.
4. A party cannot object to a privilege log solely on the basis that it is a categorical log or a metadata log but may object if the substantive information required by this rule has not been provided in a comprehensible form.

2. A recommendation from a special discovery master for the U.S. District Court for the Eastern District of Pennsylvania, adopted by the District Court, declining to order a party to completely redo its collection and production of electronically stored information (ESI) despite numerous errors in the party’s ESI productions, but requiring the party to outline in detail the process used to collect, search, review, and produce its ESI.

In United States ex rel. Ellsworth Associates, LLP v. CVS Health Corp., No. 2:19-cv-02553, 2024 WL 2972767 (E.D. Pa. May 23, 2024), Special Discovery Master Bruce P. Merenstein addressed whether numerous deficiencies in a party’s production of ESI required a complete re-do of the party’s discovery process.

In this qui tam action, Relator claimed that Defendants’ document production efforts had been “woefully deficient” for a number of reasons, including because Defendants had failed to search a shared drive used by an actuarial team; belatedly produced documents from a former employee shortly before his deposition; redacted certain information from spreadsheets; failed to produce certain audit reports; and failed to produce certain work instructions and related documents referenced in other documents produced by Defendants. Id. at *1. Based on these alleged deficiencies, Relator requested that Defendants be ordered to provide a detailed accounting of all of their non-email data sources, including shared drive files, identifying which ones had been searched and which had not, and that Defendants be required to produce additional documents.

After an initial dispute regarding these deficiencies, Defendants were ordered to provide greater detail on their process for locating and producing ESI from shared drive locations and to produce any additional relevant documents that Relator had identified. In response, Defendants explained that to determine which sources of ESI to review for relevant, responsive documents, they had consulted with relevant employees, in-house counsel, IT personnel, and others, focusing on Relator’s specific requests for production of documents and the allegations in Relator’s complaint. Defendants also stated that they had found certain documents identified by Relator that had been inadvertently omitted from their prior review and production.

Unsatisfied with Defendants’ explanations, Relator renewed its argument that Defendants’ productions were flawed and requested that Defendants be required to rerun their entire document collection and review process at their own expense, using a neutral third-party vendor, and/or that the court impose a sanction. Id. at *2. In support of this request, Relator argued that Defendants’ oversights and belated productions “substantially impair[ed] its ability to prosecute its case.” 

In response, Defendants admitted to certain errors in their productions but argued that these errors were “modest,” did not involve large numbers of documents, and resulted in little or no prejudice to Relator. However, Defendants later informed the Special Master that in the process of assessing the document collection, review, and production efforts of Defendants’ ESI vendor, Defendants learned that approximately 47,000 documents that should have been reviewed had not been, in part because of typographical errors in the search terms applied.

Special Master Merenstein began his recommendation with an overview of the relevant rules, starting with Rule 26 of the Federal Rules of Civil Procedure. Id. at *3. He noted that Rule 26 defines the scope of discovery as “any nonprivileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case” and “provides for liberal and broad discovery.” He further explained that “a party responding to discovery requests is not required to achieve perfection in its efforts to locate and produce every relevant document in its possession.” Rather, its obligation is to “conduct a diligent search, which involves developing a reasonably comprehensive search strategy.”

Special Master Merenstein stated that “the right and responsibility to determine the parameters for searching ESI and other document sources lie initially with the responding party.” Only if the requesting party shows “that the party from whom documents were requested either withheld relevant documents or failed to conduct a reasonable search” may a court require the responding party to take additional steps such as searching new data sources. He further explained that the burden to justify such additional steps “is not trivial” but can be met by “evidence that affirmatively indicates that responsive documents exist,” that is, “some concrete evidence pointing to the existence of missing documents.”

 In this context, Special Master Merenstein noted that discovery is imperfect and that “[t]he collection, review, and production of documents in complex litigation such as this seldom is carried out without a hitch.” He explained that when mistakes are made, the “the primary means of addressing such errors is the meet-and-confer process, i.e., a good-faith attempt by the requesting party to obtain the missing discovery” and that “[c]orrection of such errors during the discovery process mitigates (though does not necessarily eliminate) the potentially prejudicial effect.” 

Applying these standards, Special Master Merenstein found that despite “multiple errors and gaps in defendants’ document production efforts,” the mistakes did not demonstrate that Defendants’ entire document production process was flawed and must be redone from scratch, as requested by Relator. Id. at *4. He explained that not all of the errors were of the same magnitude or equally worrisome, but “as a whole, they paint[ed] a picture of problems that must be addressed and that have caused some prejudice to Relator; they do not demonstrate a large-scale failure severely prejudicing Relator and warranting the drastic relief Relator seeks.”

However, Special Master Merenstein found that Relator had identified “sufficient specific deficiencies to warrant Defendants’ disclosure of additional information regarding the specifics of their process to ensure that they ha[d] conducted a reasonably comprehensive collection, review, and production process and to fill any gaps in their production.” He further found that Defendants “should take all necessary steps to investigate and remedy the specific document production issues that the parties have identified, which they already are doing” and “provide greater transparency regarding their document collection, review, and production process and how it led to the errors that have been identified.”

Accordingly, Special Master Merenstein recommended that Defendants be ordered to provide Relator with “a declaration (or declarations) of a representative (or representatives) of the defendants, outlining in detail the process defendants used to collect, search, review, and produce documents from non-email data sources, providing as much information as possible regarding the process Defendants used.” He further recommended that the declarations provide additional details regarding the audit of Defendants’ vendor’s work as well as descriptions of “any errors, omissions, or other problems identified by the audit.”

Upon review, U.S. District Court Judge John Milton Younge adopted Special Master Merenstein’s recommendation and ordered Defendants to provide “a declaration (or declarations) of a representative (or representatives) of the Defendants, outlining in detail the process Defendants used to collect, search, review, and produce documents from non-email data sources, providing as much information as possible regarding the process Defendants used (without disclosing counsel’s mental impressions, conclusions, opinions, or legal theories concerning this case), including a listing of the share drives or folders, by name or description, from which documents were collected, as well as an indication for each drive or folder (or groups of drives and folders) of the manner in which the files were reviewed.” Judge Younge further ordered that Defendants’ declarations should provide details regarding the audit of Defendants’ vendor’s work as well as descriptions of “any errors, omissions, or other problems identified by the audit.”

See In United States ex rel. Ellsworth Associates, LLP v. CVS Health Corp., No. 2:19-cv-02553, 2024 WL 2959295 (E.D. Pa. June 12, 2024).

3. A decision from the U.S. District Court for the District of Utah denying without prejudice a motion for spoliation sanctions where the plaintiff had taken possession of a former employee’s phone without the passcode to access the phone but requiring the plaintiff to produce the phone and secure its passcode.

In OL Private Counsel, LLC v. Olson, No. 2:21-cv-00455, 2024 WL 1973340 (D. Utah May 3, 2024), U.S. Magistrate Judge Daphne A. Oberg addressed whether the failure to preserve cell phone data, including the password to a cell phone, constituted spoliation requiring the imposition of sanctions.

In this action alleging that Defendant, a former employee of Plaintiff’s, misappropriated Plaintiff’s confidential client documents and shared them with a third party, Plaintiff alleged that Defendant communicated with Timothy Akarapanich, a former employee of a related entity’s, through a messaging app called Telegram. Id. at *1. Defendant sought discovery of Akarapanich’s mobile phone, but Plaintiff did not have the password for the phone and could not access its contents.

Defendant moved for the sanction of dismissal against Plaintiff, arguing that Plaintiff “willfully facilitated the loss of key data from Mr. Akarapanich’s telephone and cloud storage.” In his motion, Defendant claimed that Plaintiff knew Akarapanich had retained access to Plaintiff’s documents through an email application on his phone, and Plaintiff met with Akarapanich in October 2020 to review the contents of the phone and to start collecting evidence against Defendant. Id. at *3. Defendant also claimed that during this meeting, Plaintiff took possession of the phone (without learning the phone’s password) and deleted information from the cloud storage on the phone. Akarapanich later communicated with Plaintiff and said he wished to delete certain personal information from the phone. Plaintiff apparently deleted such data as well as other data related to Plaintiff.

In response to Defendant’s motion, Plaintiff argued that when it met with Akarapanich in October 2020 to collect the phone data, it was not anticipating litigation but was merely “investigating the events surrounding” Akarapanich’s taking of Plaintiff’s confidential information. Plaintiff also argued that it had no duty to preserve Akarapanich’s phone data and password as a third party because 1) both the password and cloud storage were in his control when he voluntarily chose to delete the stored data, and 2) Plaintiff did not think the password would be relevant data to preserve because Plaintiff copied “the entire contents of the phone and preserved the phone itself.”

In 2023, an ESI vendor (Consilio) was retained to perform a forensic review of Akarapanich’s phone, but the resulting log of information regarding the phone’s content lacked information regarding relevant applications such as Facebook, Telegram, or Line. Id. at *2. Consilio reported that because it did not have the phone’s password, it could not perform a comprehensive “Full File System” collection that included application information.

Magistrate Judge Oberg began her analysis by explaining that spoliation is the “destruction or significant alteration of evidence, or the failure to preserve property for another’s use as evidence in pending or reasonably foreseeable litigation.” Id. at *2. She noted that spoliation applies only “where the offending party has a duty to preserve the evidence” and therefore requires the moving party to demonstrate that the nonmovant had a duty to preserve evidence.

Magistrate Judge Oberg further explained that Rule 37(e) governs sanctions for spoliation of ESI, which occurs when 1) a party has a duty to preserve the evidence, 2) the ESI “is lost because a party failed to take reasonable steps to preserve it, and 3) it cannot be restored or replaced through additional discovery.” She stated that if spoliation has prejudiced the moving party, the court “may order measures no greater than necessary to cure the prejudice” and severe sanctions like dismissal may be imposed only if the nonmovant also “acted with the intent to deprive another party of the information’s use in the litigation.”

Turning to the merits of Defendants’ motion, Magistrate Judge Oberg first concluded that Plaintiff had a duty to preserve Akarapanich’s phone and associated cloud data as early as October 2020. She explained that a duty to preserve arises “when a litigant knows, or should know, litigation is imminent,” and courts “consider the extent to which a party was on notice that litigation was likely and that the information would be relevant.” Magistrate Judge Oberg agreed with Defendant that once the ownership of the phone transferred to Plaintiff, the duty to preserve was extended to include preservation of the phone’s password and associated cloud data because Plaintiff “knew litigation was likely and the phone’s data was relevant to it.” Magistrate Judge Oberg relied on the facts that immediately after the October 2020 meeting, Plaintiff “took sole possession of Mr. Akarapanich’s phone . . . thus gaining sole and complete control of the phone” and deleted documents related to Plaintiff from the phone.

Magistrate Judge Oberg rejected Plaintiff’s claim that it did not anticipate litigation when it learned that potentially confidential documents had been accessed by former employees, concluding that “the factual circumstances under which [Plaintiff] gained access to the phone also suggest imminent future litigation was reasonably foreseeable.” Id. at *4.

Magistrate Judge Oberg similarly rejected Plaintiff’s reliance on a prior case, Rains v. Westminster Coll., No. 2:20-CV-00520, 2023 WL 2894506 (D. Utah Apr. 11, 2023), in which the court had concluded that the plaintiff failed to show that the defendant had a duty to preserve information in the possession of a third party at the time it was lost. Magistrate Judge Oberg noted that Plaintiff had “control and possession of Mr. Akarapanich’s phone — it purchased the phone from him clearly for purposes of obtaining and controlling the data it contain[ed].” And, once Plaintiff took physical possession of the phone, “it was reasonable to expect it to also obtain the password from Mr. Akarapanich” because “without the password, the data [could not] be fully accessed.” Accordingly, she concluded that Plaintiff “had a duty to preserve the password (the means for accessing the data) because the password [was] reasonably calculated to lead to the discovery of admissible evidence.”

Finally, Magistrate Judge Oberg rejected Plaintiff’s argument that it could not spoliate the cloud data associated with Akarapanich’s phone because it was “simply a backup of the phone” and “duplicative of the phone’s data.” Id. at *5. She noted that Plaintiff offered no evidence to support its assertion that the data was duplicative and reiterated that Plaintiff had a duty to preserve relevant information, including the phone and its data, the cloud data, and the phone’s password (as the access point for the data).

Turning to Defendant’s request for sanctions, Magistrate Judge Oberg explained that Rule 37(e) dictates that “evidence must be lost and irretrievable before a court can consider the appropriateness of sanctions,” requiring an assessment of “whether the ESI which [Plaintiff] should have preserved can be restored or replaced through additional discovery.” Id. at *6. She concluded that “the answer to that question is not apparent” because “production of the password may cure the access problem such that the ESI which [Plaintiff] should have preserved may be restored.”

 Although the parties disputed who should have the obligation to obtain the password, Magistrate Judge Oberg found there was “no question that the burden of obtaining the password f[ell] on” Plaintiff because Plaintiff “should have preserved that information in the first place.” She noted that production of information outside a party’s actual possession may be required pursuant to Rule 34 if the party has “any right or ability to influence the person in whose possession the documents lie,” and she considered that Plaintiff may have had “the ability to influence or request Mr. Akarapanich to provide the phone’s password, undoubtedly in his possession, to gain access to the phone.”

Accordingly, Magistrate Judge Oberg denied Defendant’s motion for sanctions without prejudice and ordered Plaintiff to produce to Consilio (1) Akarapanich’s phone, (2) the phone’s password, and (3) the full data copy of the phone for further examination.

4. A ruling from the U.S. District Court for the Western District of Washington finding that the defendants could not rely on the terms of an ESI order to protect it from producing additional ESI not contemplated by the order, where the plaintiff amended its complaint and served additional discovery after the ESI order was entered by the court.

In Sectra Communications AB v. Absolute Software, Inc., No. C22-353RSM, 2024 WL 2701960 (W.D. Wash. May 24. 2024), U.S. District Court Judge Ricardo S. Martinez addressed whether an ESI order among the parties protected Defendants from having to search for additional documents based on claims and document requests that postdated the order.

In this action for patent infringement, the parties entered into an order governing discovery of ESI (the ESI Order) and negotiated custodians, data sources, and search terms under the ESI Order. Id. at *1. The parties reflected their agreement on ESI discovery under the ESI Order in emails dated April 14, 2023, including an agreement by Defendants to add a custodian requested by Plaintiffs, and the parties exchanged ESI pursuant to this agreement. On June 12, 2023, Plaintiffs filed an amended complaint adding several new causes of action based on facts Plaintiffs claimed to have discovered in Defendants’ ESI productions. Id. at *2. Plaintiffs also served additional discovery requests for ESI and later moved to compel production when subsequent meet-and-confer discussions regarding the new claims failed to result in agreement.

In their motion to compel, Plaintiffs argued that Defendants did not conduct an adequate search of their ESI because they were “under an affirmative duty to seek . . . information reasonably available to [them] from [their] employees, agents, or others subject to [their] control,” including with respect to the additional requests submitted by Plaintiffs after amending their complaint. Defendants argued that they complied with their discovery obligations by producing documents according to the parties’ agreement and the ESI Order and that “[r]equiring anything more of Defendants at this point would be both fruitless and not proportional to the needs of the case.” Id. at *3.

Judge Martinez began his analysis with a survey of the relevant rules. Under Federal Rule of Civil Procedure 26(b)(1), “[p]arties may obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties’ relative access to relevant information, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit.”

Judge Martinez further explained that under Rule 34, a party must “produce or permit inspection of documents responsive to a request for production of documents when such documents are in the party’s possession, custody or control,” and the party “has an obligation to conduct a reasonable inquiry into the factual basis of his responses to discovery” and to “seek that information reasonably available to it from its employees, agents, or others subject to its control.” (Internal quotation marks omitted).

With respect to ESI, Judge Martinez explained that “parties may use a variety of tools to conduct electronic searches including those identified in this Court’s ESI Agreement” when ESI “is not reasonably accessible – such that data cannot be searched manually.” But he noted that an ESI Order “does not supplant the requirement of Rule 34 that an initial, reasonable search for responsive documents be conducted in the first place.”

Applying these standards, Judge Martinez found that Defendants could not avoid searching for and producing documents in response to Plaintiffs’ additional requests served after amending their complaint. In particular, he found that Defendants relied “too heavily on the ESI Order and have failed to demonstrate a reasonable search for responsive documents under Rule 34 and generally failed to show why the discovery request should be denied, as is their burden.” Judge Martinez noted that the ESI Order and the negotiations regarding the scope of ESI discovery predated the addition of new claims, which “necessarily expanded the scope of discovery and made a larger search more reasonable and proportional to the needs of the case.” Under these circumstances, “Rule 34 does not permit Defendants to use an outdated ESI Order to sidestep the requirement to conduct a reasonable search for responsive documents.”

Accordingly, Judge Martinez granted Plaintiffs’ motion to compel, including ordering Defendants to conduct a reasonable search of the documents in the possession of nine additional custodians implicated by Plaintiffs’ requests.

5. An opinion from the U.S. District Court for the Northern District of California requiring the plaintiffs to back up smartphones and to preserve potentially relevant ESI on gaming consoles ahead of discovery.

In J.T. v. City and County of San Francisco, Case Nos. 23-cv-06524-LJC, 24-cv-00522-LJC, 2024 WL 1973471 (N.D. Cal. May 2, 2024), U.S. Magistrate Judge Lisa J. Cisneros addressed whether Plaintiffs were required to create forensic images of smartphones and gaming consoles to preserve potentially relevant ESI on the devices.

In this case involving claims of unlawful arrest on behalf of a class of plaintiffs, the parties raised several disputes regarding the scope of the parties’ obligations with respect to the preservation and production of ESI. Specifically, although the parties did not dispute their obligations to preserve relevant evidence, they disagreed “as to the specific contours of that obligation.” Id. at *2. Among other disputes, Plaintiffs argued that Defendants failed to preserve relevant Microsoft Teams chat logs, and Defendants argued that Plaintiffs were required to create backup images of Plaintiffs’ smartphones and other devices.

With respect to Defendants’ Microsoft Teams records, Magistrate Judge Cisneros found that they “may be relevant to this case to the extent that any named Defendant or other employee of the San Francisco Police Department discussed the intended or actual police response to the” events at issue, including any discussion of the alleged mass arrest that included Plaintiffs and that “Defendants are therefore obligated to preserve any such messages.” She noted that if any such messages had already been destroyed, Defendants must take all reasonable steps to recover them.

With respect to Plaintiffs’ obligations, Magistrate Judge Cisneros explained that relevant evidence could include Plaintiffs’ “location and activities (which might include location data, photographs, videos, or messages describing such activities)” and “evidence in the form of messages Plaintiffs sent describing . . . conditions or force, either during their confinement or after the fact.”

With these considerations in mind, Magistrate Judge Cisneros first addressed potential evidence on the Plaintiffs’ smartphones. Taking into consideration “the wide variety of potential evidence contained in a smartphone” and “the risks inherent in trusting the retention of such evidence to a small, relatively fragile device carried throughout daily life by a teenager,” Magistrate Judge Cisneros found that some method of backup imaging of each named Plaintiff’s phone to be reasonable and proportional to the needs of the case. Although she had not “reached a conclusion as to whether forensic imaging is necessary or if commercial backup software might be sufficient,” she ordered the parties to meet and confer “to identify a specific process to preserve data from Plaintiffs’ smartphones.”

Magistrate Judge Cisneros also addressed Defendants’ request that Plaintiffs preserve relevant evidence saved through game consoles. She explained that “[m]odern gaming often takes place online, and gaming consoles are used frequently to facilitate social networking and communication through various online gaming platforms,” including Steam, Xbox Live, PlayStation Network, Twitch, YouTube Gaming, and “messaging functions included within specific games available on those and other platforms.” She noted that “the duty to preserve evidence includes an obligation to identify, locate, and maintain information that is relevant to specific, predictable, and identifiable litigation.” Accordingly, she ordered that Plaintiffs’ counsel “ask the individual Plaintiffs if they communicated about the incidents at issue in this case using any gaming console or platform, and if they did, Plaintiffs shall take steps to preserve any messages that may be relevant to the claims and relief sought.” But she noted that such steps need not include complete backup imaging of gaming devices so long as other reliable methods are available to preserve all such messages.

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