Los Angeles E-Discovery Lawyer & Attorney : McBride Law Firm : Electronic Evidence: Santa Monica, California

In US v. Comprehensive Drug Testing, Inc. et al, the Ninth Circuit Court of Appeals addressed a Fourth Amendment issue arising from an IRS seizure of "intermingled computer files" in executing a subpoena related to the steroids investigation of the Bay Area Lab Cooperative ("Balco").

Fans of Major League Baseball will immediately recall that the Balco steroids investigation has implicated numerous MLB players and their trainers in distribution and use of illegal steroids.

A Ninth Circuit panel of three judges addressed the questions of when and under what circumstances the government can seize, retain and use computer records that are "intermingled" with other computer files that fall outside of the scope of a subpoena or search warrant.

The original subpoena was issued to a Long Beach testing Laboratory, Comprehensive Drug Testing, Inc. ("CDT") targeting 10 MLB players who had been clients of Balco.

Intermingled in documents seized from CDT was a computer file referred to as the "Tracey directory" which contained drug testing results of more than 100 MLB players that were not Balco clients, but who had tested positive for steroids.  The government used information from the Tracey directory to the seize specimens and records of these 100 MLB players through issuance of additional subpoenas.

Three US district courts heard objections filed by the Major League Players Association in behalf of the players whose specimens and records had been seized.  All three district judges sided with the MLB Players Association, finding the government's search and seizure illegal under the Fourth Amendment.  These district judges were Florence-Marie Cooper (C.D.Cal.), Susan Illston (N.D.Cal) and James Mahan (D. Nev.). 

The Ninth Circuit, with one dissent, disagreed with each of the district courts' rulings.  The rulings by Judge Illston (N.D.Cal.) and Judge Mahan (D.Nev.) were reversed, and the decision by Judge Cooper (C.D.Cal) was affirmed, but only because the government did not properly perfect its appeal of that ruling.

The Ninth Circuit panel (opinion by Diarmuid O'Scannlain) explained:

Although the Players Association contends that the government behaved unreasonably by copying the entire Tracey directory, an analysis of the difficulty of segregating intermingled electronic data reveals the opposite. The Federal Judicial Center recently explained:

[S]ome computer-based transactions do not result in a conventional document, but instead are represented in integrated databases. Even less-complex ESI [electronically stored information] may be incomprehensible and unusable when separated from the system that created it.

Moreover, the volume and multiple sources of ESI may lead to disputes about the scope of discovery and may make review to identify and segregate privileged information more difficult .

At the risk of losing data, the government ensured that CDT could continue its business activities, thus evidencing the reasonableness and restraint.

 

The subpoena had allowed the government agents to "make an initial review of any computer equipment and storage devices to determine if the search could take place on location."  If the agents determined an on-site search was not feasible, they were authorized to remove the computers and storage equipment to an "appropriate law enforcement testing laboratory for further review."

Because of the breadth of the subpoena, and because the seizure allowed the testing laboratory (CDT) to continue its business activities with minimal constraint, the seizure was deemed by the Ninth Circuit to be a "reasonable" restraint, notwithstanding the lack of logical connection between the Fourth Amendment rights of the MLB players and the business convenience of the third-party testing laboratories.

As a result, government agents were allowed to remove and review the intermingled files, including the "Tracey directory" containing the names of 100 additional MLB players who were not the target of the original investigation.

And because the search itself was not "unlawful," the government was thereafter allowed to use the information provided in the seized Tracey directory to obtain testing specimens and records of 100 additional MLB players.  This was not, according to the Ninth Circuit, "fruit of the poisonous tree."

While civil cases receive the majority of focus of electronic discovery analysis, the sweeping breadth of ESI's potential treatment under the Fourth Amendment is an issue for all attorneys to be aware of, as this Ninth Circuit case demonstrates.

• Print
• Comments
• Trackbacks

In Rico v. Mitsubishi Motors Corp., (2007) 42 Cal.4th 807, the California Supreme Court recognized an affirmative duty of counsel who receive inadvertent productions that are obviously identifiable as confidential or privileged:

When a lawyer who receives materials that obviously appear to be subject to an attorney-client privilege or otherwise clearly appear to be confidential and privileged and where it is reasonably apparent that the materials were provided or made available through inadvertence, the lawyer receiving such materials should refrain from examining the materials any more than is essential to ascertain if the materials are privileged, and shall immediately notify the sender that he or she possesses material that appears to be privileged. 

 

The parties may then proceed to resolve the situation by agreement or may resort to the court for guidance with the benefit of protective orders and other judicial intervention as may be justified.

 

This is a critical requirement for counsel who receive productions that appear to be inadvertent and obviously privileged. 

It is also important to anticipate how this affirmative duty to return obviously privileged documents may be affected by the proposed California Rules governing electronic discovery currently under consideration by the California Judicial Counsel.

 Opinion Highlights:

 1.  The trial court ruled that plaintiff's counsel, Johnson, came into possession of notes taken at the direction of defense counsel, Yukevich, by inadvertence. 

2.  Johnson admitted that he knew within "a minute or two" that Yukevich did not intend to produce the document and that it would be a "powerful impeachment document."

3.  Johnson thereafter gave copies to his co-counsel and to his experts, all of whom studied the document.  Johnson specifically discussed the contents of the document with each expert.

4.  The trial court concluded that the notes were absolutely privileged by the work product rule, and that Johnson had acted unethically by examining the document more closely than was necessary to determine that its contents were confidential by failing to notify defense counsel that he had a copy of the document and by surreptitiously using it to gain maximum adversarial value from it.

6.  There is no distinction between the attorney-client privilege and the work product privilege in this context because the standard applies to documents that are plainly privileged and confidential regardless of whether they are privileged under the attorney-client privilege, the work product privilege, or any other similar doctrine that would preclude discovery based on the confidential nature of the document.

Discussion:

• Print
• Comments
• Trackbacks

How do you confidently identify, preserve and collect documents from your client's computer network--on a budget?

Microsoft has an answer--use Windows SharePoint Services and Search Server Express, which can be downloaded as free add-ons to Windows Server 2003 / 2008.  These products do the following things that are precisely the things attorneys need to manage e-discovery collections:

•  "Crawl" and index all documents on your client's network

• Identify and link to virtually all document types and formats

• Provide a document map for managing discovery

• Impose automated document preservation requirements on potential custodians (without disturbing non-custodians)

• Download documents of interest for more detailed searching

• Conduct updated document crawls (including additional custodians), as needed, over the course of the litigation cycle

• Manage and supervise document review

• Maintain chain of custody

• Audit e-discovery activities for proving compliance

This kind of software has typically been provided by large e-discovery vendors--at a large price.  Microsoft provides all this functionality through free downloads to Windows Server 2003 / 2008.  (If your client still uses Windows Server 2000, it will need to upgrade.)

You will need to pay an e-discovery services provider or IT professional to configure, install and help manage the software and the collection/preservation process.   And depending on how you implement the software, you may need to purchase an additional Windows server license from Microsoft ($600). 

By any measure, Microsoft has lowered the all-in cost for e-discovery, putting powerful e-discovery tools in the hands of small to medium size law firms and their clients.

A well-designed discovery team, including an IT professional, client representative and outside counsel, can use this technology to confidently manage e-discovery--in a cost-effective way.

Core Software Components:

• Print
• Comments
• Trackbacks

Magistrate Judge Frederick F. Mumm (Central District of California) recently issued a case management order in In re: Katz Patent Litigation covering a number of common e-discovery issues:

• document preservation
• document production formats
• meet and confer obligations
• production of audio-video recordings

 Patent litigators will immediately recognize the name Ronald A. Katz.  Mr. Katz obtained a very broad patent covering such diverse activities as customer service, securities trading, merchandising, home shopping, etc.  Mr. Katz, based in Los Angeles, has systematically enforced his patent in lawsuits and licensing initiatives around the country; earning enviable licensing fees, but becoming rather unpopular in some circles in the process.

Magistrate Judge Mumm has been assigned to oversee discovery for several cases brought by Mr. Katz that are consolidated for discovery.  In cases of this magnitude, even trivial matters are often contested.  Indeed, the case management order itself could not be stipulated, requiring argument before Judge Mumm. 

The attached order gives general insight into Judge Mumm's view of electronic discovery obligations.

Discovery Order Highlights:

 1.  The parties' obligation not to destroy documents relevant to the current litigation began upon the filing of suit or the notice of the intent to file suit, whichever came first. 

• Print
• Comments
• Trackbacks

In Hill v. Eddie Bauer, Magistrate Judge Rosalyn M. Chapman (Spring Street Courthouse) required production of alleged "confidential and proprietary" information without a protective order where defendant failed to provide a proper showing that the information was, in fact, confidential.

Attorneys sometimes take for granted that a protective order will be "automatic" and that a wide net can be cast around information that the client asserts is "confidential."  It is not unusual (in my experience) to refuse to produce documents until a protective order is in place--as happened here. 

But Judge Chapman would not condone this approach.  She required Eddie Bauer to prove the confidential information it sought to protect was, in fact, confidential and proprietary.  Because no proof was offered for confidentiality, and no confidentiality order was pre-negotiated in advance of the discovery due date, no protective order was granted. 

On a different subject, Judge Chapman provisionally accepted Eddie Bauer's argument (based on declarations and proof) that production of certain third party information should not occur because of "undue burden."   She allowed, however, a limited sampling of the third-party information (with certain confidential information redacted) to determine if full production should be required.

This ruling is a good reminder for counsel to take nothing for granted in asserting confidentiality; to be prepared with proof and declarations as to why certain information is confidential and/or unduly burdensome; and to negotiate a protective order before the discovery due date, if possible.

Case Highlights:

• Print
• Comments
• Trackbacks

Judge Rudi M. Brewster (Calif. Southern District Court) has remanded part of the sanctions order against Qualcomm's outside counsel in a remand order issued March 5, 2008.

Judge Brewster allowed six of Qualcomm's outside attorneys to raise the federal common law "self-defense" exception to the attorney client privilege.  At the earlier hearing on sanctions, the magistrate judge had disallowed the exception, not permitting the outside attorneys to introduce evidence against their client Qualcomm. 

Judge Brewster reversed and remanded as to the six attorneys (five from Day Casebeer; one from Heller Ehrman), explaining:

Before the first oral hearing on the motion for sanctions, Qualcomm asserted the attorney-client privilege...A careful reading of the Qualcomm brief reveals two salient points: (1) Qualcomm filed no declarations in its defense; and (2) nothing in the Qualcomm brief criticized its counsel, other than two passing unsworn comments...

At the hearing on sanctions before Magistrate Judge Barbara L. Major, Qualcomm introduced, for the first time, accusations against outside counsel assessing responsibility for the failure of discovery that had occurred. 

Judge Brewster found that after Qualcomm introduced accusatory evidence against its outside attorneys, the door was opened for counsel to defend themselves.

Opinion Highlights:

• Print
• Comments
• Trackbacks

In Wingnut Films v. Katja Motion Pictures, CACD Magistrate Judge Steven J. Hillman (Roybal Courthouse) entered findings of fact and conclusions of law against New Line Cinema Corp. for improper discovery conduct. 

Judge Hillman found, among other things, that New Line “did not conduct a reasonably diligent search for emails and other electronic documents” and “did not suspend its document destruction policy or otherwise take adequate steps to preserve documents.”

The  case was filed by Peter Jackson’s production company, Wingnut Films, seeking an audit of product-sales and licensing royalties related to his franchise motion pictures, Lord of the Rings.  Wingnut Films was represented by Irell & Manella. Katja Motion Pictures and New Line Cinema were represented by O’Melveny & Meyers.

Opinion Highlights:

1. Newline “failed to conduct any search of the company’s email servers for email correspondence containing the phrase “Lord of the Rings” or any other keywords. While some individual employees were asked to collect their emails, others were not; and there was little or no guidance on where to search (e.g., inbox, sent items, deleted items, archived folders) or how to conduct their search (e.g., keyword searching).”

2. New Line did not implemented any document retention policy.  It had no policy or guidelines, written or oral, regarding how long paper documents should be kept or maintained.

3. New Line initially refused to produce any documents, claiming that the vast majority of the requests were “simply too objectionable to permit any response.” 

4. Five months later after a series of meet and confers, New Line served supplemental responses and two boxes of documents, but produced no electronic information.

5. Judge Hillman found that “New Line’s counsel represented again and again that a diligent search had been conducted and all responsive documents had been produced.  Whenever Wingnut fortuitously discovered the existence of specific responsive documents that had not been produced, New Line would make disjointed searches, each time coming up with a few more documents, and each time representing that was all they had.  All the while, New Line’s counsel persisted in belittling Wingnut’s concerns as “paranoia” and “harassment.”

6. New Line did not suspend the automatic deletion of emails and other electronic documents as part of a litigation hold; instead, emails continued to be purged from every employee’s email in-box every thirty days, and backup tapes continued to be recycled.

Discussion:

The record in Wingnut Films reveals discovery practices by New Line that Judge Hillman found unacceptable—first failing to produce any documents, then producing paper documents but no electronic documents, and finally failing to diligently search for electronic documents, notwithstanding a court order to do so.

Persistent pressure by Irell & Manella to obtain discovery from New Line undoubtedly made a difference in the outcome of the case.  Without this pressure, discovery may have gone unanswered.  With this pressure, a discovery order was entered by Judge Hillman and the case settled almost immediately thereafter (terms undisclosed).

• Print
• Comments
• Trackbacks

Columbia Pictures v. Bunnell (CACD) is one of the music industry’s noted cases against illegal file sharing of downloaded music.  The opinion was authored by Magistrate Judge Jacqueline Chooljian (Spring Street Courthouse).

The discovery dispute centered around: (a) whether information temporarily recorded in RAM could be defined as “electronically stored information” under FRCP Rule 34(a), (b) whether the court could order activation of the server log functions to record the identity of users, (c) whether Netherlands law prevented discovery, and (d) whether other US laws prevented discovery.

Columbia Pictures et al. were represented locally by Loeb & Loeb (Santa Monica) with Jenner & Block (New York City) as lead counsel.  Defendants were represented by Kirk J. Retz (Torrance).

This case offers an example of the potential reach of electronic discovery in an extraordinary case where a party intentionally makes discovery information inaccessible.

Opinion Highlights:

1. Random access memory (RAM) stored in defendants’ servers constitutes “electronically stored information” within the meaning of FRCP Rule 34(a).

2. Contracting the server maintenance functions to third party did not change the fact that the servers were within the “possession custody and control” of defendants by virtue of the defendants ability to manipulate at will how the data in issue is routed.

3. On the balance of interests, it was appropriate to require defendants to active the server logging function in order to identify and produce pertinent user data (with IP addresses masked) that had been temporarily recorded in the servers’ RAM.

4. Locating the servers in the Netherlands did not put the servers out of reach of a US court‘s discovery order.

Discussion:

Defendant Justin Bunnell and others had created a software program (“BitTorrent”) to facilitate peer-to-peer file sharing, widely used to share music files. Defendants also created an Internet web site search engine that enabled users to locate and download the musical performances (or other “dot-torrent” files) identified on the Internet by the user’s search.

 The servers that facilitated search and download were physically located in the Netherlands.

• Print
• Comments
• Trackbacks

In Housing Rights Center v. Sterling, CACD Judge Dale S. Fischer (Roybal Courthouse) articulated a clear policy requiring document preservation during litigation. Judge Fischer’s opinion largely relies on the landmark case addressing the preservation obligation, Zubulake v. UBS Warburg LLC, 220 F.R.D. 212 (S.D.N.Y. 2003) (“Zubulake IV”).

Plaintiff Housing Rights Center was represented by Howrey, LLP (Los Angeles).  Defendants were represented by Kennick & King (Huntington Beach).

Opinion Highlights:

1. Once a party reasonably anticipates litigation, it must suspend its routine document retention/destruction policy and put in place a ‘litigation hold’ to ensure the preservation of relevant documents. (Citing Zubulake IV). This is a fact-driven question but is effective, at least, at the time of receiving a demand letter.

2. No litigation hold was put in place in this case by defendants. No procedures were established to preserve documents. No document retention policy was adopted. Nothing different was done to maintain documents since the lawsuit was brought as before, and potentially relevant notes continued to be thrown away. This was found unacceptable.

3. "Defense counsel’s apparent attitude that so long as the documents destroyed were not 'smoking gun' issues, 'it’s a big so what' is extremely troublesome in a member of the bar of this court."

4. "Defense counsel’s apparent failure, in this electronic age, to verify with appropriate representatives of their client whether there was an e-mail backup system cannot be countenanced."

5. A party’s discovery obligations do not end with the implementation of a ‘litigation hold’—to the contrary, that’s only the beginning. Counsel must oversee compliance with the litigation hold, monitoring the party’s efforts to retain and produce the relevant documents.

Discussion:

• Print
• Comments
• Trackbacks