Top 10 Electronic Discovery Opinions

United States Supreme Court Building
Listen to the former United States Magistrate Judge in the United States District Court for the District of New Jersey, and well know electronic discovery speaker Ron Hedges identify his top 10 electronic discovery opinions of all time (to date). Ron is an active member of The Sedona Conference® and was the conference Co-Chair on the Planning Committee of Georgetown University Law Center’s Advanced E-Discovery Institute in November 2007. He was also the Co-Chair of the E-Discovery Certification Program Steering Committee of the Georgetown University Law Center. He is also currently a Member of the International ARMA Records Destruction Task Force.

[DDET Click here to read the transcript]
Karl Schieneman, JurInnov -Interviewer

Ron Hedges, E-Discovery Consultant -Guest

K: Hello everyone. Welcome to another addition of the ESI Bytes show. We have an interesting show today. These shows are focused on trying to get the information related to electronic discovery as seen through the eyes of experts. It’s accessible to virtually anyone for a price anyone can afford, which is free. My name is Karl Schieneman and I’m with JurInnov. Today we have with us Ron Hedges. Ron has an impressive background. He served as a United States Magistrate Judge in the District of New Jersey from 1986-2007. He’s a member of the Sedona Conference’s Advisory Board. He participates in Sedona working groups on e-discovery and records, international e-discovery, confidentiality, public access…those are very interesting committees. Ron’s also a member of the Advisory Boards of Advanced E-Discovery Corporate Counsel Initiatives at Georgetown University’s Law Center, where he teaches E-Discovery and Evidence as an adjunct faculty member. He has numerous publications. He’s a consultant on e-discovery and records management issues and can be reached at: Ron thanks for joining us today.

R: You’re welcome. Thank you for having me.

K: One of the things I ask everyone when starting-off (because I think it’s interesting in this new field) is how did you first become interested in electronic discovery?

R: It actually came to me through a dispute that two parties were having in a patent infringement action where there was a question about preservation of email and the like. I had not surprisingly, e-discovery decisions and issues before me before that. This matter came out around 2004 and it involved questions about preservation of email, or really, failure to preserve email. It led me to impose an adverse inference instruction and cost. After that, I became involved with the Sedona Conference. Ever since then, I have spent a lot of time dealing with e-discovery and evidence issues.

K: Okay. Let’s talk about your Top 10 List, which is the topic today – “The Top 10 E-Discovery Decisions”. I want to mention that you covered this in an article you wrote for an excellent publication – Digital Discovery and E-Evidence, which is published by BNA, Inc. This article was published on January 1, 2009, so there’s a New Year’s type of feel to it. It’s a good publication. Carol Eoannou is a good friend of mine. So, starting- off with the article, why did you decide to write this article?

R: I really decided to write it because it was coming towards the end of the year. We were several years into the e-discovery amendments to the Federal Rules, and I speak on e-discovery often. I speak on e-discovery in the context of trends and development. This article was a way for me to focus on where I thought e-discovery was going and what I saw to be some major decisions that had come out in the area.

K: Is there any particular criteria you used to come up with the list?

R: First, I wanted decisions that came out after the rule amendments went into effect, which was December 1, 2006. Then, I concentrated on federal courts, because obviously only the federal courts are going to be bound by the federal rules. Having said that, there are exceptions as we go through this one way or the other that I think will make sense. It’s really not Top 10, it’s 14 or so. There are a lot of issues going on in the world of e-discovery.

K: I have the list in front of me, so a quick question. I saw (that) the Zubalake decision didn’t make the list. Judge Scheindlein’s doing a podcast tomorrow, and as you know, I had my 4th C wine based on Zubalake. I’m curious first. Did my labeling of wine cheapen the decision and hurt its chances of getting on the list?

R: No. Zuabalake actually was decided before the rule amendments went into effect. So, it didn’t make the list for that matter. In any event, Zubalake is so well known and everyone cites Zubalake for one reason or another. I just didn’t see that it should be going on the list.

K: Okay. Well, let’s go through the list in order of the article. I’m going to omit some cites, but when we do the transcripts, I’m going to ask for the cites of the article you can find as well. Cache La Poudre Feeds, LLC v. Land O’Lakes Inc, 244 F.R.D. 614 (D. Colo. 2007).

R: It’s a lot easier just to talk about it in terms of it being Land O’Lakes.

K: Okay.

R: Having said that, this is written by Craig Schaffer. The audience should be aware, that in the area of electronic discovery, magistrate judges really do a lot of the work because the magistrate judges do case management and the like. This decision is written by Craig Schaffer, a magistrate judge in Denver. It talks about the nature of when a litigation hold should be considered to be needed. Interestingly there, looks at some equivocal letters that had been sent in by counsel (to what would be the defendant), and concluded that the nature of these letters were equivocal and didn’t give rise to the whole first instance. Also, it’s interesting because it talks about the obligation to see what happens to electronically stored information that ex-employees may have had. Actually, it addresses a failure to preserve that type of information. This is then, because it talks about preservation, when the trigger for litigation happens. Also because it talks about what has to be done when you’re putting litigation together to make it effective.

K: I should mention Tom French was one of lawyers on that case who appeared on the first podcast we did with Judge Facciola. It was a very interesting case. Columbia Pictures, Inc. v. Bunnell, 245 F.R.D. 443 (C.D. Cal. 2007).

R: Well, this is the case that started everyone being concerned 2 years ago, or so, about the preservation of what you could call “ephermal” information. Ephermal information was Random Access Memory (RAM). Those people on the podcast may understand what the concept is. It’s that that can come in and out of a computer in an incredibly short period of time and is not stored. The information was highly relevant there. Actually, the duty to preserve attached (if you read the opinion when the court ordered it as oppose to being in the first instance), talks about the scope of what electronically stored information is. It really includes Random Access Memory and also talks about what happens when this information is relevant and whether or not a party has an obligation to keep it.

K: Okay. The next case is Doe v. Norwalk Comm. College, 2007 U.S. Dist. LEXIS 51084 (D. Conn. July 16, 2007).

R: I should back up for second and talk about Columbia Pictures. It’s the first civil decision I’ve seen that really implies, or that talks about the European Privacy Directive that was enacted in the Netherlands in order for production.

K: What’s your stand on that? What’s the European Privacy Directive about?

R: The European Privacy Directive was enacted by the European Parliament in the 1990’s. Its intent is to protect, more than anything else, personal information of individuals. What happens is that once the E.U. has the Directive enforced, the E.U. countries move to enact national legislation the follows the Directive. The simplest thing to describe this as is it illegal to process and export data outside the E.U. or a company in the E.U. without specific permission. That creates problems when data is in Europe and is needed in the United States for litigation.

K: I should also mention that we did a podcast last week with Jim Daley on navigating the international rules of e-discovery. Next case is Doe v. Norwalk Comm. College, 2007 U.S. Dist. LEXIS 51084 (D. Conn. July 16, 2007).

R: Doe v. Norwalk talks about the imposition of sanctions. I put it in particularly because it has discussion of Fed. R. Civ. P. 37(e) – the so-called “safe harbor” rule. Effectively what happened in Doe is that there was no type of controls put over preservation holds or routine deletion of information. Rule 37(e) was not applicable because of that. 37(e) I think is fair to say has been a great disappointment for those who first proposed it. Doe is one of the decisions that rejects the application of 37(e).

K: Interesting. I think that was the rule, well, you were at the Georgetown Conference a couple of years ago, where we were all talking about how it’s a speed-bump as oppose to a safe harbor.

R: It originally was started to be called the “safe harbor”. After there were criticisms about that, I think Jon Redgrave who I understand is going to be speaking today…

K: In about an hour.

R: Came up with the concept of it being a lighthouse because it points away to be safe. I wrote an article and said it was an “unchartered minefield” because you didn’t know it was going to be like when you got into it. There are so many if’s and conditions on the applications of 37(e), I really think it’s more of a problem than it is a solution.

K: Okay. The next case is In re eBay Seller Antitrust Litigation 2007 WL 2852364

(N.D. Cal. Oct. 2, 2007).

R: eBay was put in because it was an excellent discussion of the privileged nature of retention hold notices that might be sent out within some type of an organization once litigation becomes reasonably contemplated. Those notices (as a general proposition) are subject to attorney-client and work product with the understanding though, of course, the steps taken to secure data, maintain data and the like are discoverable. I should also point out that Paul Grimm was the co-author of an article in the University of Baltimore Review last year that really talks about the detail.

K: Okay. Maybe he’ll do a future podcast. Haka v. Lincoln County 246 F.R.D. 577 (W.D. Wisc. 2007).

R: Lincoln County – This is my number one decision. It’s interesting because it’s what you would call a small case – it’s a pro se plaintiff, as a matter of fact. The judge makes an eminently sensible statement that you really don’t know what’s in ESI until you find it, which is true of anything of course. I think it needs to put ESI into perspective. It also talks about the need to taking incremental steps to secure ESI as oppose to cost shifting. Whenever I speak, I talk to people and tell them, in my thought, (that) the judges are not very happy with doing cost shifting. This is an alternative to cost shifting – the concept of the incremental approach to doing discovery. Haka’s a very important case, I think.

K: I’ve talked to Laura Zubalake, and she hates the concept of cost shifting.

R: Well, she should. Because she had 25% of the cost shifted to her, I believe in the Zubalake case, I believe.

K: Okay, the next case is John B. v. Goetz, 531 F.3d 448 (6th Cir. 2008).

R: John B. v. Goetz, an interesting matter that I was appointed as Special Monitor in. The judge in that case, a district judge, had become “frustrated” I suppose is the word, with the steps taken by the State of Tennessee to turn information over to an adversary. He ordered very intrusive review of adversary systems, including personal computer systems by an expert. It went up on a mandamus to the Court of Appeals. Putting the Constitutional issues aside (of federal and state commode), the decision basically said, look, you can’t get access to adversary systems unless you really show something has been done wrong in the production. The case was remanded, and there was a plethora of case law coming out of it. Still, addressing this concept of when you get access to an adversary’s data system and the answer is, you really need to have some demonstration of relevance as well as some kind of conduct by the responding party that provokes the court to allow access.

K: Okay. The next case is Knifesource LLC v. Wachovia Bank 2007 U.S. Dist.

LEXIS 58829 (D. S.C. Aug. 10, 2007),

R: My number 2 opinion. This just says that because you paper and convert it into an electronic format doesn’t make it not reasonably accessible. This is one of the first decisions that really came out and talked about what not reasonably accessible means. You need to more than just saying, “I’ve got it in a certain format” to fall within the scope of non-production under Rule 34, I’m sorry, Rule 26(b) (2) (B).

K: Okay. The next case is a Rule 26 decision also. Mancia v. Mayflower Textile Services Co. 2008 WL 4595275 (D. Md. Oct. 15, 2008). Maybe you can talk about Rule 26 as well.

R: Rule 26 imposes certification obligation on attorneys, both when they serve discovery requests and when they respond to discovery requests. It effectively ducktails with part of the rules of professional responsibility, the rules of professional conduct that require you to act reasonably in litigation so as not to be oppressive and the like. In this opinion written again by Judge Grimm, what we see is the court admonishing the parties to comply with Rule 26(g) – be specific in your requests, be appropriate in your responses, and live up to the obligation you have opposed on you both by the rules as well by your ethical responsibilities in making discovery requests and responding to discovery requests. It’s the first decision that really talked about 26(g) in this context. There were one or two earlier decisions, but this concentrates on 26(g).

K: That also, Ron, whatever, your cough is coming to me.

R: I apologize. I’ve been trying to get rid of a cough for a couple of weeks now and I can’t do it.

K: This is a sympathy cough. Anyway, I mentioned Richard Braman from the Sedona Conference is doing a show in a few weeks on Cooperation Proclamation, which I think ties into this.

R: The Cooperation Proclamation is actually one of my other key developments that’s listed in the article. We can skip to that now if you want. There is a concern that the cost of discovery and the need to engage in what I call “satellite discovery”, which is discovery about discovery is swallowing up the merit’s process and is also starting to cost an incredible amount of money, both for parties and resources. The Cooperation Proclamation was issued by Sedona as well as the decision in Mancia, which says, “Look, you can be adversaries, but you can do it in appropriate ways and there are a number of areas where Proclamation should be looked on between the parties. Where going to come to another decision in a little while where there’s a discussion about that.

K: McPeek v. Ashcroft 202 F.R.D. 31 (D.D.C. 2001).

R: McPeek v. Ashcroft is written by another magistrate judge who’s one of the leaders in this area – Judge Facciola from the District of Columbia. This is not a case that’s decided after December 1, 2006. This was decided actually in 2001. This is the first real decision that came out about the need for sampling. It’s in here because as far as I’m concerned, it is the leading decision on sampling that’s been issued talking about the need to do that as oppose to getting to the question of cost-shifting to some degree and also getting into the question of restoration of enormous amounts of data when you’re not quite sure what the data’s going to say.

K: Okay. The next one’s the scary decision – Qualcomm Inc. v. Broadcom Corp 2008 WL 638108 (S.D. Ca. Mar. 5, 2008.

R: Interestingly, there is a new scary decision that came out not that long ago. That one talks about responsibility from inside counsel and outside counsel and the like. This is called Bray and Gillespie Management v. Lexington Insurance Co. It was just decided within the last few months out of Florida. Qualcomm is a quintessential case of a dispute between inside and outside counsel as to who did what, or more likely, who did not do what they were suppose to in litigation. The problem here was, in the course of a trial, through cross-examination of a witness, it was learned that there was a lot of email traffic involving a party and a third party. The upshot of non-production of all that was that there were severe sanctions imposed both monetary and case dispositive sanctions. In addition, there was a referral for attorneys to a magistrate judge. For consideration of additional sanctions, the magistrate judge recommended, among other things, referrals of them for discipline to the California State Bar. The matter went up to the District Court, and was reversed effectively. The District Court saying that the hands of the outside attorneys were tied in front of the magistrate judge because of confidentiality concerns, they could not talk about what happened between them and inside counsel. The district judge reversed what the magistrate judge remanded, saying that the attorney-client privilege had been abrogated because of the allegations. That happened a while ago, and there it sits. I think everyone is waiting to see if anything comes out of that decision in whatever hearing that’s going to be conducted in front of the magistrate judge.

K: The Cooperation Proclamation goes internally also to people on the same side, right?

R: One of the concerns that John Facciola has expressed, and this is a theme of John’s now when he speaks, is that he is concerned that the complexities and problems of e-discovery may be going towards creating some type of animosity between inside and outside counsel, which is obviously something our system can’t have. Now whether or not there’s such erosion, I really can’t say for a fact. Certainly when you read some cases including the Bray decision, which I may have mentioned before, there are problems that can arise if there isn’t proper coordination inside one party.

K: Yeah, I should mention the honorable John Facciola as one of the inspirations of the ESI Bytes Show. We did the first show with him earlier on another one of his concerns, which is the fact that many small law firms and solo practitioners are not making much of an effort to learn this field, and that’s deeply troubling.

R: Well, one of my themes when I speak is that I unfortunately also see it coming to divide between federal and state practice in this area. Primarily because the state courts really don’t have the resources, which of course, they should have to be able to educate judges enough on the issues and complexities that happen in this area.

K: Next decision is Quon v. Arch Wireless Operating Co. ___ F.3d ___ (9th Cir. June 18, 2008).

R: Quan came out of the 9th Circuit. As a matter of fact, a relatively short time ago the 9th Circuit denied a hearing en banc in this issue. This is a couple of things. First, it’s the question of employee use of an employer system for some reason, whether or not there is a right of privacy or an expectation of privacy if you do that. Second, it implied something call the “Stored Communications Act (SCA)”, which generally speaking prohibits ISP’s from disclosing the content is the easiest way to describe it. This is in there because again it talks about expectations of privacies that individuals might have as well as a discussion of the SCA.

K: It’s almost like a European decision, huh?

R: There is a lot of case law that’s risen now in the use of employer systems by employees. It generally comes down to saying, if the employer puts the employee on notice that there is no right of privacy, if the employer more or less polices it, there is no expectation of privacy. Usually it comes up in a context, or it’s come up in several times in a context of an employee communicating with an outside attorney and the attorney-client privilege has been lost because it’s using an employer system. I think as we’re going forward, in fact I just read an article today about the use of cloud computing. You’re going to see a lot more problems with employees whether they’re government employees or private employees making use of third-party systems and the like to communicate and having loss of privacy and privilege.

K: Absolutely. Every Microsoft commercial out these days talks about the cloud. It’s growing. There’s no doubt about it.

R: Someone showed me this diagram she had done that has an umbrella with the clouds over it. I suggested that she put under the umbrella all the water leaking through to go down to the corporate systems or government systems and see where we go from that.

K: Completely unrelated, but I ran a virtual law firm I had created out of my own mind for a couple of years. I did everything online with client access or a network of lawyers accessing. It’s out there. It works, from an operations standpoint, but my God, what an e-discovery nightmare.

R: Well, not only are there e-discovery nightmares, but we really are not going to be talking about confidentiality here or data security. When you’re going outside and using these common systems of the like, or we can call them that, you really have to give a serious degree of consideration to how confidential that information is in the hands of a third party or the like. In addition to that, what are the data security problems and the concern about data brief issues you might have?

K: I just couldn’t make any money doing it. Anyway, Smith v. Café Asia 246 F.R.D. 19 (D. D.C. 2007).

R: Great little case. This talks about preserving images effectively on cell phones. It’s in here, another decision by Judge Facciola. It talks about electronically stored information. The answer is yes, but also because of the personal nature of that information, it’s not allowed to be disclosed in the course of discovery. It’s going to be held on for a later time when we’re concerned about trial. Great decision talking about the scope of ESI – what ESI can consist of and the duty to preserve what we can call “exotic” information.

K: Okay, we’re on to the last three here. State of Texas v. City of Frisco, 2008 WL 828055 (E.D. Tex. Mar. 27, 2008)

R: This was a novel attempt by the Texas D.O.T. to deal with what it might have had in the nature of a preservation obligation. D.O.T. receives a letter from the municipality and rather than implement a hold, at least as far as we know, it files its declaratory judgment action. Trying to get a federal court to declare (even before litigation is commenced) what its duties were to preserve. The court found that there wasn’t sufficient case or controversy and did not let it proceed, but it’s an interesting way that someone might conceive up to try to resolve the question of a preservation duty, again, before litigation commences.

K: I think we’re going to do a podcast on that with David Ries here in Pittsburgh. That’s one of the big issues that lawyers get into e-discovery cases (sometimes rue), and they look back and didn’t take the right steps in preservation and now it’s too late.

R: Well, that’s one reason why Rule 26 is so important. I have an article that’s coming out in the next month or so on the centrality of 26 to the whole scheme of electronic discovery now. I do think it’s fair to say if you read the law behind the Declaratory Judgment Act, even if there is a case or controversy application of the activity is discretionary, I have serious doubts you’re going to see many federal judges wanting to entertain this, but we’ll see. I can listen to the podcast and we can hear what is said then.

K: You can get on and chat – chat questions if you want.

R: I would love to do that.

K: We’ll get to that later. Victor Stanley, Inc. v. CretivePipe Inc., 250 F.R.D. 251

(D. Md. 2008), The often-quoted “Victor Stanley” case.

R: It’s interesting now because there are consultants out there who are saying that they’re Victor Stanley compliant – whatever that means. This was a case where the need to cooperate was stressed by Judge Grimm throughout the opinion, noting that the defendant in this case just did not enter into a non-waivered agreement even though he had a lot of opportunities to do it. The defendant produced information, claimed privilege, tried to get back, and Judge Grimm said, “You haven’t proven your processes. You haven’t shown that you’ve been reasonable in doing privilege review,” and held the privilege was waived. This is also very important because it talks about what might be the need for experts to press these issues that pick up on the decisions that Judge Facciola wrote in U.S. v. O’Keefe and another case – “Equity Analytics”, where he talked about the need for some type of expert assistance, when you’re coming in for example, to create search terms and the like.

K: Boy, if I had an unlimited fun budget, I’d do my follow-up to the 4th C Discovery Wine with an “I’m Victor Stanley Compliant” t-shirt, or something like that.

R: I’ve heard consultants say, “I am Victor Stanley compliant.” I’ve also heard consultants say, “I am 37(e) compliant,” and that “I am Federal Rule of Civil Procedure compliant.”

K: You get the whole range of marketing ability and inability out of those statements, but anyway…

R: No, that’s pretty strange, but that’s another issue.

K: All right, the last case here that Jim Daley touched upon a little bit in the international context is In re Advocat “Christopher X, ” Cour de Cassation, Appeal n 07-83228 (French Supreme Court, Dec. 12, 2007).

R: This is a mistake on my part, because the criminal prosecution in France did not arise out of a discovery request made in a court in New York. It arose out of a discovery request made in a court in California. The principle is the same. United States courts, as a general proposition, are going to exercise their discression, are going to apply the rules of civil procedure, and require parties to produce information, even if it is in another country. Unfortunately, for this poor attorney in France, he was complying with some court orders or requests in the United States, and he wound up being prosecuted for violating the French blocking statute. He was convicted of that, and the conviction was affirmed. There’s a little solitary warning who are seeking discovery overseas, or are thinking it’s easy to get discovery overseas.

K: Yeah, I joked that the objective if we can’t solve the distinctions between the two systems is to find a lawyer who will take the fall for you in another country.

R: Unfortunately, that’s what happened to this poor guy. It’s a major issue and Jim is very knowledgeable on the subject and does a lot of work and a lot of speaking on it. I expect that it’s only going to get worse as we move forward because there are discussions now in Asia to have some type of a counterpart of the privacy directive. Certainly we’re going to be seeing more litigation Asia centric or Pacific centric as time goes on. I suspect this is only going to get more complex and more difficult.

K: Okay, now the last point you wanted to make and that you made in the article was key developments that aren’t tied into case law. We talked about the Sedona Conference Cooperation Proclamation. You also cited the Federal Rule of Evidence 502 as being a significant seam. What do you mean by that?

R: Well, I see it being significant based on what it intends to do, which is to allow a judge to enter a non-waiver order in federal court. For example here, I am in New Jersey and have that order binding across the United States both in state and federal courts. In a sense, what you see here is Congress federalizing the law of privilege to some degree and also attempting to create uniform standards to look at privilege waiver issues. It’s come up really in the context of waiver so far. I have not seen any orders arising out of this 502 Rule yet that really have this non-waiver provision in it. Again, I expect that it’s something we’re going to see over time and it’s also a question to me whether it is going to spur quick peak agreements in an attempt cut-down privilege review costs. We’ll see…it’s a new rule since September.

K: Yeah, September of 2008. All right, last sort of question. Something interesting in our pre-podcast conversation. You talked about your sense about whether there’d be a future Top 10 List at the end of this year maybe. What are your thoughts on that?

R: Well, I think that the broad contours of e-discovery are starting to settle. We’re starting to see a willingness to have native production, or courts to order production in native if there is a need for it. On the other hand, something new seems to come up everyday that may cause me to change it. I see that we’re going to have a continuing evolution under the rules as amended now. I think one of the areas that courts and parties are going to have to be very careful about is how you’re going to relate the new technologies used to the rules. The rules are intended to be technology neutral, but we still- as attorneys and judges, need to consider what exactly the technology is, what it preserves and not preserves, and the costs when parties start making arguments in court-issued decisions on new technologies. A perfect example for this is now there is a big outcry, well not an outcry, but a big area of interest in a decision out of Australia a little while ago that allowed service of process by Facebook. An interesting question- how are we as a society under the Federal Rules going to allow service of process or other service by non-traditional means? So, I think there’s a lot of growth.

K: My kids would love it! Technology creates a lot of novel applications, as it should. We’re all trying to be more efficient, and that’s what this technology offers, but it keeps us all on our toes.

R: There’s an article that came out in the February issue of Digital Discovery. I co-authored it. It talks about that decision a little bit and calls it “virtual jurisdiction”, although we didn’t invent the term. The court did some time ago.

K: Okay, well that’s about it. Ron thanks so much for joining us on this presentation, which really was more about themes and trends in e-discovery through some decisions. I think this was a really good podcast and I appreciate you joining us for this.

R: I apologize for coughing; I just cannot get rid of this cold or whatever I have. Maybe when the weather turns warm I will. Thank you for having me.

K: We look forward to having you on future shows. Thanks again, Ron.

Recorded 03/17/2009


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