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

1.  In response to almost each and every request for production, defendants objected on, inter alia, the following grounds: "seeks confidential proprietary information prior to issuance of a protective order" ; "constitutes an unwarranted invasion of [third party''s] constitutional, statutory and common-law right of privacy in confidentiality.

2.  Defendant admits withholding documents from plaintiff based upon its claim of confidential proprietary information and has refused to turn over these documents without a protective order.

3.  Here, defendant has failed to provide any declarations or other evidence to support its claim that the documents requested are confidential information and that their "disclosure would be harmful to the party's interest in the property."

 4.  Moreover, if defendant truly believes it has "confidential proprietary information" it should have entered into a stipulated protective order with plaintiff or filed a motion for protective order before the date by which it was to respond to the requests.

5.  In addition, defendant also object to nearly all production requests as: "overly broad, unduly burdensome, and seeks information not reasonably calculated to lead to the discovery of admissible evidence." 

6.  Although defendant has made a general or boilerplate relevancy objection to plaintiff's document request, defendant has not provided any explanation at all why these requests are not relevant.

7.  In light of the declarations submitted by defendant which establish that much of the information plaintiff seeks is available in electronic format, it appears to the Court that counsel for the parties, and particularly plaintiff, must address electronic discovery.

Plaintiffs in this case were represented by Initiative Legal Group (Century City); defendants were represented by Akin Gump (Los Angeles office).

Discussion:

In addition to the discussion about confidential information, this case also highlights the risk of relying on "boilerplate" objections.  We all use boilerplate objections, often without much thought or analysis. 

This case reminds that even boilerplate objections need to be defensible, and should be more carefully analyzed at the time discovery is answered.

The question of "undue burden" is also highlighted in this case.  Defendants' declarations asserted that response to certain of the plaintiff's requests would consume 3,900 hours of work--the equivalent of two full work years.  Based on this Judge Chapman found an undue burden.  However, defendant had offered to provide sampling of this data; an offer that plaintiff refused. 

Judge Chapman ruled that because the information was largely in electronic format, sampling was an appropriate interim step. 

Not discussed in the opinion, however, was the apparent fact that the estimate of 3,900 hours of work for full production was based on manual printing and review of documents--a questionable approach to review of information contained in electronic format. 

It is a good idea for requesting parties to probe the underling assumptions of "undue burden" raised in response to a document request.  Make sure that declarations asserting the burden of review are based on electronic review procedures, not manual review procedures. 

Although Judge Hillman had ordered production of electronic documents, one document custodian testified in deposition that he “was not aware of any search for electronic documents on New Line’s servers, on any individual’s desktop or laptop computer, or otherwise.”

Another custodian testified that he had undertaken a search specifically related to merchandising agreements, but his search “consisted of little more than clicking through various folders on the only two server drives he could personally access.” He did not conduct or arrange for a server-wide search for documents containing the phrase “Lord of the Rings” or any other keywords; indeed, he did not even search for documents with “Lord of the Rings” in the title. 

Newline likewise “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 even those employees who did collect emails were given 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).”

As a result, Judge Hillman found that “New Line still has not performed any meaningful search for emails and other electronic documents. [one custodian] has performed no more than a haphazard search for electronic documents…and only on the servers to which he happened to have access. And no witness can say with any degree of certainty what individuals searched their own email files or how any of those searches were conducted. The most New Line’s custodians can say is that any emails or electronic documents that happened to have been printed in the ordinary course of business and placed in the paper files would have been captured in the document collection. However, a search for printouts is not a search for electronic documents; it is a search for paper documents.”

Judge Hillman continued, “[a]t the very least, New Line should have charged its in-house information technology professionals with responsibility to ensure that all of the company’s servers and individual computers were searched, and that they were searched in a manner that was reasonably calculated to capture all responsive documents (e.g., keyword searches of electronic documents and emails).

New Line’s discovery issues did not stop with its failure to diligently search and respond to electronic discovery request.  Magistrate Judge Hillman also found that New Line failed to suspend the automatic deletion of electronic documents after the dispute arose.

Apparently it was New Line’s practice at the time the case arose to purge every employee’s email in-box every 30 days, and to wipe clean email backup tapes on a weekly basis. Backup tapes for other electronic documents such as word processing files were recycled after one year. Judge Hillman found that “New Line did not suspend the automatic deletion of emails and other electronic documents as part of a litigation hold; instead, to this day, emails continue to be purged from every employee’s email in-box every thirty days, and backup tapes continue to be recycled every week (for emails) or year (for other electronic documents).

As a result of New Line’s failure to suspend its automatic document destruction procedures, the only email correspondence that has possibly been preserved is that which an individual employee moved from his or her in-box into a saved folder.

As a result of finding these discovery violations, Judge Hillman ordered New Line to retain an outside vendor (jointly selected by the parties) to collect electronic documents and email correspondence that were within the scope of the Court’s discovery orders.

The vendor was granted access to New Line’s servers, including email servers, for the purpose of conducting keyword searches for responsive documents; and access to hard drives from the desktop and laptop computers of specified employees connected with the dispute for the purpose of conducting keyword searches.

New Line was ordered to bear all costs and expenses of the outside vendor. In addition, the court awarded $125,000 of Wingnut’s $191,000 fee request.

Judge Hillman’s minute entry granting sanctions was entered October 4, 2007. The case was settled promptly thereafter on undisclosed terms and a stipulated dismissal was entered on December 20, 2007.

Judge Hillman's detailed opinion provides guidance on what not to do in electronic discovery.

Defendants did not keep records of the identity of users who searched and downloaded music files from its Netherlands-based servers. In addition, defendants disabled the server logging functions that would have recorded the IP address of persons accessing its servers. Finally, the job of managing the servers facilitating music downloads was outsourced to a third party.

 It would seem that these management decisions were designed, at least in part, to protect the identity of users who were downloading music without paying for it.

The plaintiff music companies sought to discover the IP addresses of persons who had used the BitTorrent software and website to show the number of downloads that originated within the United States, and therefore were illegally downloaded. Defendants claimed that it had no such information since no login files were maintained; and that discovery was beyond the reach of US law since the servers were located in the Netherlands.

 The music companies countered, explaining in an evidentiary hearing that identity of users could be determined by activating the server log function in the website servers and recording login activity available from the servers’ random access memory (RAM). (RAM is temporary computer memory that remains active for about 6 hours—long enough to be logged.) 

After evaluating the interests for and against activation of server log data to record the information sought in production, Judge Chooljian agreed with the music companies and ordered defendants to activate server log functions to record data stored in RAM.

 Judge Chooljian’s order in this case has been criticized by technology companies and their counsel who fear that RAM will now become an ordinary part of discovery in all cases and that routine preservation RAM will be mandatory. I don’t read the order that broadly. In fact, Judge Chooljian went out of her way to comment in footnote 31 that:

The court emphasizes that its ruling should not be read to require litigants in all cases to preserve and produce electronically stored information that is temporarily stored only in RAM. The court’s decision in this case to require the retention and production of data which otherwise would be temporarily stored only in RAM is based in significant part on the nature of this case, the key and potentially dispositive nature of the Server Log Data which would otherwise be unavailable, and defendants’ failure to provide what this court views as credible evidence of undue burden and cost.

Thus, Judge Chooljian’s order was because the Server Log Data was potentially dispositive to the case, it was the key evidence in the case, the evidence would otherwise be unavailable, and defendants could not show undue burden or cost of requiring the data to be logged and produced.

 There was really no other way of getting at this critical information. Server activation logs had been disabled. Servers were located outside the United States. A third party company was retained to manage server accounts. This was seemingly done to prevent any kind of discovery into the identity of the BitTorrent file sharing users. Judge Chooljian would not reward these efforts to avoid potential legal responsibility through a front of anonymity.

First, the judge addressed a threshold issue of whether RAM data could even be categorized as “ESI” under FRCP Rule 34(a).  Judge Chooljian cited the Advisory Committee Notes that explain Rule 34(a)(1) “is expansive and includes any type of information that is stored electronically,” and that it “is intended to be broad enough to cover all current types of computer-based information, and flexible enough to encompass future changes and development.”

 She then cited a Ninth Circuit case, MAI Systems Corp. v. Peak Computer, Inc., 991 F.2d 511, 518-19 (9th Cir. 1993) which determined that RAM was “fixed” in a tangible medium and “was sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than a transient duration.”

 With these two steps, she concluded that RAM can be defined as ESI for the purposes of FRCP Rule 34(a).

Second, she ruled that defendants maintained “possession, custody and control” over the information, even though it was technically in the hands of third parties, reasoning that “[f]ederal courts have consistently held that documents are deemed to be within a party’s possession, custody and control for purposes of Rule 34 if the party…has the legal right to obtain the documents on demand.” In re Bankers Trust Co., 61 F.3d 465, 469 (6th Cir. 1995).

 Because the defendants retained the right to modify server routing information, Judge Chooljian concluded that defendants factually and contractually had possession custody and control over the servers.

Third, Judge Chooljian dealt with the unusual circumstance of requiring defendants to activate server log functions in order to preserve server log data for production. Defendants had correctly argued that a party “cannot be compelled to create, or cause to be created, new documents solely for their production.” Paramount Pictures Corp. v. Replay TV, 2002 WL 32151632, *2 (C.D.Cal. 2002)(Judge Florence-Marie Cooper), citing Alexander v. FBI, 194 F.R.D. 305, 310 (D.D.C. 2000).  

 But in rejecting defendants argument, Judge Chooljian reasoned that because the server log data already exists, is temporarily stored in RAM, and is controlled by defendants, an order requiring defendants to preserve and produce such data is not tantamount to ordering the creation of new data.

 Judge Chooljian explained that in determining whether to issue a preservation order in these circumstances, courts balance at least three factors: (1) the level of concern the court has for the continuing existence and maintenance of the integrity of the evidence in the absence of an order directing preservation; (2) any irreparable harm likely to result to the party seeking the preservation of the evidence absent an order directing preservation; and (3) the capability of the 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. Capricorn Power Co. v. Siemens Westinghouse Power Corp., 220 F.R.D. 429, 432-33 (W.D.Pa. 2004).

 In undertaking this balancing test, Judge Chooljian noted that defendants had conceded that the activation of a logging function to enable the retention of server log data in RAM would not be difficult. Thus, she found there was no undue burden. She expressed a high degree of concern for continuing existence of the evidence since, in fact, there would be no evidence of the identity of users absent activation of the logging function. On balance, Judge Chooljian found the test weighed to ordering this specific preservation order.

 Fourth, Judge Chooljian rejected the conflicts of laws arguments raised by defendants arising from the fact that physical location of most of the servers was in the Netherlands. She pointed out that defendants had retained the ability to manipulate the routing of the server log data from the US and also that the party resisting discovery has the burden of proving a foreign statute should be read to bar discovery in an issue, United states v. Vetco, 691 F.2d 1281, 1289 (9th Cir. 1981)—a burden not met in this case. She also relied on case law holding that foreign blocking statues do not deprive an American court of the power to order a party subject to its jurisdiction to produce (let alone produce) evidence even though the act of production may violate that statute. Richmark Corp. v. Timber Falling Consultants, 959 F.2d 1468 (9th Cir. 1992).

Defendants objected to the magistrate judge’s order and moved for review, but District Judge Florence-Marie Cooper denied the motion. Judge Cooper noted that amici briefs had been filed in opposition to the finding that RAM could constitute electronically stored information for the purposes of FRCP 34(a). Defendants (and the amici briefs) argued that information in RAM was temporary and therefore not “stored” information.  Judge Cooper rejected this argument, pointing out, inter alia, that Merriam-Webster’s Collegiate Dictionary (Frederick C. Mish et al eds., 10th ed. 1993) defined the word “store” to mean “to lay away, to accumulate or to place or leave in a location (as a warehouse, library, or computer memory) for preservation or later use or disposal.” (Emphasis by the court.)

 Judge Cooper also turned to the definition of “RAM” itself for support: RAM is defined as a storage unit and, due to its speed relative to hard disk drives, is typically used as the computer’s primary storage.” Judge Cooper then reasoned that “Rule 34 requires no greater degree of permanency from a medium than that which makes obtaining the data possible.

 As information can be obtained from RAM, it is within the scope of Rule 34 and subject to discovery under the appropriate circumstances.” In response to the amici’s concerns over the “potentially devastating impact of this decision on the record-keeping obligations of businesses and individuals,”

 Judge Cooper noted (as did Magistrate Judge Chooljian before her) that “this decision does not impose an additional burden on any website operator or party outside of this case.”

The decision cites heavily to the well-known Zubulake IV decision from the Southern District of New York. While the decision on this motion occurred prior to adoption of FRCP ESI rules on Dec. 1, 2006, the preservation obligation does not directly flow from the new FRCP rules, but arises as a matter of state and common law.

Judge Fischer issued a stern admonition that a cavalier approach to preservation obligations “will not be countenanced.” Judge Fischer also instructed that litigation counsel’s duty does not end with issuing a “litigation hold,” but instead extends to overseeing compliance by the client and monitoring the party’s efforts to retain and produce relevant documents.

The ruling in this case is on the order of a “wake up call” to litigation practitioners. Courts do not tolerate ignorance of electronic discovery or a cavalier approach to document preservation. Document preservation must begin at the moment the potential for litigation becomes known.

Existing preservation policies must be reviewed and new “litigation hold” policies put into place with respect to information that may be relevant and document custodians that may have relevant information. The counsel must monitor compliance with preservation orders throughout the life of the case. This is an entirely new set of obligations that have not traditionally been part of litigation.

 A reality of litigation under the federal "two-tier" approach is that responding parties sometimes provide vague or slanted summary information about their electronic data when responding to document productions, with the result that documents are not available for critical depositions or hearings.   This seems an almost unavoidable consequence of allowing a party to define its own discovery scope in adversarial system that has become increasingly competitive and demanding. 

The proposed  California rules avoid the potential unfairness of this two-tier system, placing instead an inherent burden on the responding party to accurately account for its electronic data at the initial moment of its responses. 

However, to be an effective discovery tool, the California rules will need to prevent undisciplined and over-reaching document requests from plaintiff's attorneys.  The system will become burdened if hearings on protective orders become the norm rather than the exception.

Will the California rules work efficiently?  I believe the answer is almost certainly “yes”—if courts require mandatory meet and confer obligations and strong case management orders.

Early meet and confer sessions can be used to mutually identify sources of electronic information, "litigation hold" procedures and basic discovery plans.   Exchange of this information will provide proper context to all subsequent discovery requests and will provide a center of gravity at the beginning of the case to facilitate discovery and resolve disputes.  Responding parties will have less power to unilaterally shape responses, while requesting parties will have less leeway to serve over-reaching or irresponsible requests.  Arguments for and against discovery should be inherently constrained by the limitations of the case management order.

The substance of the federal rules and proposed California rules have many similarities.   By requiring effective case management procedures to balance interests of requesting and producing parties, the proposed California rules promise to be workable and efficient.

We have reached the point where the vast majority of business deals and personal communications involve email. Nowadays, you can usually know what someone is thinking through access to his or her emails. Are these emails properly treated as party admissions at trial? 

Nowadays, most documents are stored in computers, not filing cabinets. Are you entitled to access those computer files in discovery? All California courts say “yes,” but endless battles are now being fought over the scope of access. 

Even before adoption of electronic discovery rules by the legislature, ad hoc practices are developing all around California by Superior court judges.   If you practice in Superior Court, you need to be aware of these trends.

How are FRCP e-discovery rules being applied in the Central District of California?

Discovery rules under FRCP were amended effective December 1, 2006 to formally implement electronic discovery in federal courts.  There are currently so many e-discovery cases in US district courts across the country that it is difficult to effectively track all of them. Therefore, this blog focuses on the cases of greatest practical value to Los Angeles-area practitioners—those decisions by CACD judges, decisions from the Ninth Circuit and decisions from other California US District Court judges and magistrate judges.

So far, in some cases main-stream decisions have been followed.  For example, Judge Dale Fischer followed the landmark case of Zubulake v. UBS Warburg  IV in her ruling in Housing Rights Center v. Sterling, defining the "litigation hold" obligation.  But in another case, Columbia Pictures v. Bunnell, new ground was developed by a CACD judge in e-discovery law, when Magistrate Judge Jacqueline Chooljian defined computer "random access memory" (RAM) as “electronically stored information" (ESI) under FRCP 34(a). 

This blog will closely follow all CACD decisions to help identify trends and practice tips for particular judges in the Central District.

How can I make practical use of this blog?

This blog addresses the core problems of electronic discovery, topic by topic, as defined by statutes, rules and case law in California state courts and in federal courts. Where pertinent, differences between California and federal law and practices are addressed and discussed. 

Where available, analysis of rulings by specific judges currently on the bench in US California Central District Court or Los Angeles Superior Court are discussed. Hopefully this will provide useful information to practitioners to better understand and deal with new and evolving electronic discovery rules, arguments and practices.

If you have cases involving electronic discovery in the Central District Court or Los Angeles Superior Court and would like to share your insights and observations, please post!