The State of eDiscovery in Delaware, Pt. V

Posted on July 24, 2009 by Christopher Spizzirri

In Part IV, we saw the District Court decide issues with production of unsearchable data, the Court of Chancery comment on the efficacy of printing out electronic documents en mass, and the Superior Court award fees as a sanction for a party’s efforts to frustrate discovery. Let's finish up 2006 then look at 2007.

In late October 2006, the District Court decided Wyeth v. Impax Laboratories, Inc., 248 F.R.D. 169 (Oct. 26, 2006), declining to order a native production. Wyeth had made production in TIFF format. Impax filed a motion to compel production in native format. Because the parties did not agree on a native production at the pre-discovery meeting, and defendant could not demonstrate a need for native files, the Court did not think plaintiff should be made to make an additional production. Relying on its Default Standard for Discovery of Electronic Documents (“E-Discovery”)—adopted after The Sedona Principles were published in 2004 but prior to the 2006 FRCP amendments—the Court declared that, in the absence of prior agreement of the parties, imaged files would be the default format.  Contrast with Sedona Principle 12, revised in 2006, which states that, absent agreement of the parties, "production should be made in the form or forms in which the information is ordinarily maintained or in a reasonably usable form."

The next day, in In re Quintus Corp., 2006 WL 3072982 (Oct. 27, 2006), the Delaware Bankruptcy Court issued a default judgment as a sanction for deleted ledgers. The Trustee alleged that the purchasers of debtor’s assets, Avaya, intentionally destroyed some of the debtor’s ledgers that would have shown what liabilities were assumed by Avaya and, of those, which remained unpaid. Avaya argued that the destruction came well before it could have reasonably anticipated litigation. The Court found that Avaya should have reasonably anticipated litigation because Avaya had not paid all the liabilities it assumed as of the time of the hearing. Concluding that Avaya’s willful destruction was overwhelmingly prejudicial to the Trustee, the Court granted summary judgment in favor of the Trustee.

Shortly after these decisions, on December 1, 2006, the FRCP eDiscovery amendments became effective. The changes were covered quite succinctly by K&L Gates on their Electronic Discovery Law blog.

In the winter of 2007, in Empire Financial Services, Inc. v. The Bank of New York, 2007 WL 625899 (Feb. 20, 2007), the Superior Court ruled that a spoliation claim requires showing of intent to suppress truth, not mere negligence. Empire sought and the Court ordered production of certain accounts in 2001, but Empire did not follow up on production of the remaining accounts. In 2005, Empire sought production of the remaining accounts, but the Bank had, by that time, archived them, making retrieval onerous. Empire alleged spoliation, but the Court found that it was reasonable for the Bank to assume Empire had abandoned its desire for the account data so lacked any intent to make the data inaccessible.

Almost a year later, in the fall of 2007, in RLI Ins. Co. v. Indian River Sch. Dist., 2007 WL 3112417 (D.Del. Oct. 23, 2007), the District Court decline to require adherence with its Default Standard for E-Discovery (“Default Standard”). RLI complained that it did not receive enough ESI(!) from defendants, so, seven months after document discovery had ended, filed a motion to compel defendants to comply with the Default Standard. The Court found, inter alia, that RLI had "depicted no specific instances where any of the defendants actually failed to produce relevant, discoverable email communications” and denied the motion.

About a month later, in Ryan v. Gifford, 2007 WL 4259557 (Nov. 30, 2007), the Court of Chancery, in line with the District Court’s ruling a year earlier in Wyeth, declares that native or OCR production is not required “without a particularized showing of need.” As with everything in eDiscovery, the standard is reasonableness. If you can’t articulate a reason for a discovery demand, you should reconsider. Don’t ask for backup tapes, metadata, or certain forms of production if you can say why you want them.

In the Part VI, we’ll cover seven cases from 2008. In the meantime, if you know of significant Delaware eDiscovery cases from 2007 that you think I should have included, please post a comment to let us know.

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The State of eDiscovery in Delaware, Pt. II

Posted on July 13, 2009 by Christopher Spizzirri

In Part I of this series, we looked at two cases from the 1990's dealing with Attorney/Client Privilege and Work-Product protection.  The next significant case doesn't appear until 2002, when the Court of Chancery tangles with the issue of backup tape restoration.

In Kaufman v. Kinko's Inc., 2002 WL 32123851 (Apr. 16, 2002), in slight contrast to the current view of backup tape restoration, the Court was unmoved by Kinko’s “cost and convenience arguments” explaining that restoration of the backup tapes would be cumulative and cost up to $100,000.  Plaintiffs sued over stock valuation in a merger and sought emails between December 1999 and April 2002.  They argued that no less burdensome means of discovery exists for the information sought.  Kinko’s argued that the information was not readily accessible and that the burden of production outweighed the potential evidentiary benefit.  The Court didn’t agree, explaining that,
Upon installing a data storage system, it must be assumed that at some point in the future one may need to retrieve the information previously stored. That there may be deficiencies in the retrieval system (or inconvenience and cost associated with the actual retrieval) cannot be sufficient to defeat an otherwise good faith request to examine the relevant information.
The current view on this issue is to consider the principles of proportionality in such situations.  When a party claims that meeting a discovery request would cause an undue burden and excessive cost, courts now typically employ a balancing test to weigh the burden against the benefit.  In Kaufman, the Court of Chancery summarily dismissed Kinko's undue burden pleas.  The Court has since modified its view, adopting the principle of proportionality.  Even if the Court had used a balancing test, it may not have changed the outcome in Kaufman, but it would have changed the analysis.
 
Just days later, in Tulip Computers Int'l v. Dell Computer Corp., 2002 WL 818061 (Apr. 30, 2002), the Delaware District Court approves the Tulip’s proposal to use keyword searching to identify potentially responsive emails of Dell executives.  In a patent infringement case, Tulip sought, inter alia, to compel production of certain emails from Dell executives.  Dell argued that none of the executives from who Tulip sought emails would have responsive information.  Tulip proposed running mutually agreed upon search terms to identify responsive emails then allow Dell to review for privilege and confidentiality.  The Court found that “the procedure that Tulip has suggested for the discovery of email documents seems fair, efficient, and reasonable.” 
 
In late 2002, in Liafail, Inc. v. Learning 2000, Inc., 2002 WL 31954396 (Dec. 23, 2002), the District Court addresses defendant’s allegations of ESI spoliation by plaintiff.  In this consolidated contract action, defendant, Learning 2000, Inc. (“L2K”), alleges that Liafail intentionally destroyed relevant, even incriminating, documents from one employee laptop and failed to disclose the inadvertent destruction of data on two other employee laptops.  Liafail, although previously asserting that the documents had been destroyed and were not available, claimed the documents had been backed up and were available for production.  The Court said Liafail’s contradicting stories indicated it “may have engaged in questionable discovery tactics.”  But the Court declined to sanction Liafail, opting instead to allow them to produce the documents they claimed were available.  The Court then went to great lengths to warn Liafail that, if they did not produce the documents, the Court would issue an adverse inference jury instruction.
 
Almost a year later, in Rhodia Chimie v. PPG Industries, Inc., 218 F.R.D. 416 (Oct. 8, 2003), the District Court again deals with issues caused by large ESI volumes, this time considering the expense of production and declaring it a relevant consideration.  Rhodia sued PPG for willful patent infringement.  Rhodia requests documents from PPG back to 1981 that “substantially” pre-dates the existence of the patent and PPG’s knowledge of the patent.  The Court orders the production but recognizes the “magnitude of the labor” and that production would be a “daunting task.”  The Court then cites Zubulake v. UBS Warburg LLC, 216 F.R.D. 280, for the proposition that a cost-shifting analysis may be warranted.
 
In August 2004, the Advisory Committee on Civil Rules published proposed FRCP amendments designed to address growing issues in the discovery of ESI.  (Of course, a modified version of the Committee’s proposal was eventually adopted and became effective December 1, 2006.)  In November 2004, the Superior Court dealt with instant messaging issues in Smoot v. Comcast Cablevision, 2004 WL 2914287.  We’ll pick up with that case in Part III.  In the meantime, if you know of significant Delaware eDiscovery cases between 2002 and 2004 that you think I should have included, please post a comment to let everyone know.
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