March's Notable Cases and Events in E-Discovery

1. In Forman v. Henkin, 2018 WL 828101 (N.Y. Feb. 13, 2018), the New York Court of Appeals affirmed a motion to compel production of privately posted social media records and held that an intermediate court had erred by applying a heightened threshold for production of social media records.

In this personal injury litigation, plaintiff alleged that she fell from a horse owned by defendant and, as a result, suffered spinal and traumatic brain injuries, including cognitive deficits, memory loss, difficulties with communication and social isolation. Id. at *1. At her deposition, plaintiff stated that she had a Facebook account and posted “a lot” of photographs to the account before the accident but had deactivated the account six months after the accident.

Defendant issued a discovery request for the entire contents of plaintiff’s “private” Facebook account — photos and postings visible to plaintiff’s friends on Facebook but not the public at large — and moved to compel after plaintiff failed to produce the private records. Defendant argued that plaintiff’s private Facebook records were relevant to the scope of her injuries and her credibility, citing, for example, plaintiff’s allegation that she could no longer engage in various activities after the accident and that the accident made it difficult for her to read, write and use a computer. Defendant argued that photos documenting plaintiff’s activities and timestamps showing how long it took plaintiff to write a post would thus be relevant to plaintiff’s claims.

The New York Supreme Court (the trial court in this instance) granted the motion to compel in part, ordering plaintiff to produce (1) all photographs of plaintiff privately posted on Facebook prior to the accident that she intended to introduce at trial, (2) all photographs of plaintiff privately posted on Facebook after the accident that did not depict nudity or romantic encounters, and (3) an authorization for Facebook records showing each time plaintiff posted a private message after the accident and the number of characters or words in the messages. Id. at *2. Plaintiff appealed, and the Appellate Division restricted the discovery order to disclosure of photographs that plaintiff intended to introduce at trial (whether from before or after the accident). It was then defendant’s turn to appeal to the Court of Appeals of New York, which reinstated the original discovery order.

Writing for the unanimous court, Chief Judge Janet DiFiore first concluded that the Appellate Division had erred in using a heightened threshold for the production of private social media records. The Appellate Division had conditioned discovery of private social media records on defendant’s ability to identify material in public social media records that contradicted plaintiff’s allegations. Id. at *4. Because defendant had not identified photographs or postings on plaintiff’s public Facebook page that contradicted her claims, the Appellate Division had limited plaintiff’s obligation to disclose her private Facebook page to those photographs that plaintiff intended to introduce at trial.

The Court of Appeals found that the approach adopted by the Appellate Division was erroneous because conditioning discovery of private social media would allow a party to “unilaterally obstruct” disclosure of materials by manipulating the privacy settings on a social media account. For example, an injured party could shield her Facebook page from discovery by ensuring that photos contradicting her claims of injury were kept in the private portion of the Facebook page. This result was inconsistent with New York discovery rules, which “do not condition a party’s receipt of disclosure on a showing that the items the party seeks actually exist; rather, the request need only be appropriately tailored and reasonably calculated to yield relevant information.”

The court next defined the scope of discovery of private social media accounts, rejecting at the outset “the notion that commencement of a personal injury action renders a party’s entire Facebook account automatically discoverable.” Id. at *4. Rather, courts addressing disputes over social media discovery should use “well-established rules” of discovery. Id. at *5. First, the court should “consider the nature of the event giving rise to the litigation and the injuries claimed, as well as any other information specific to the case, to assess whether relevant material is likely to be found on the Facebook account.” Second, the court should “balanc[e] the potential utility of the information sought against any specific ‘privacy’ or other concerns” and “issue an order tailored to the particular controversy that identifies the types of materials that must be disclosed while avoiding disclosure of nonrelevant materials.” Such tailoring might include limitations on the timeframe of the requested information and exempting from disclosure “sensitive or embarrassing materials of marginal relevance.”

Applying these principles to this case, Chief Judge DiFiore reinstated the original discovery order, which required plaintiff, among other things, to produce post-accident photos from her private Facebook page along with Facebook records documenting the time and length of her postings. Id. at *5. Because defendant had not appealed the original Supreme Court order, the Court of Appeals’ review was limited to reinstating the original order and did not consider, for example, whether the contents of plaintiff’s postings were likewise discoverable. Chief Judge DiFiore concluded that the request for photographs was “likely to yield relevant evidence” because it was “reasonably calculated to yield evidence relevant to plaintiff’s assertion that she could no longer engage in the activities she enjoyed before the accident and that she had become reclusive.” In addition, the request for data about postings was “relevant to plaintiff’s claim that she suffered cognitive injuries that caused her to have difficulty writing and using the computer, particularly her claim that she is painstakingly slow in crafting messages.” Id. at *6.

2. In Industrial Quick Search, Inc. v. Miller, Rosado & Algois, LLP, 2018 WL 264111 (S.D.N.Y. Jan. 2, 2018), Judge Edgardo Ramos ordered the parties to trial on plaintiffs’ legal malpractice claims that litigation counsel had failed to institute a litigation hold in a copyright infringement action or to advise the plaintiffs on their preservation obligations, resulting in the destruction of documents and the entry of default judgment against plaintiffs.

In this legal malpractice and breach of contract action, defendants had represented plaintiffs in a prior copyright infringement action. Id. at *4. Plaintiffs operated a web-based directory of industrial products and services and collected advertising revenue from manufacturers who wished to list their products and services in the directory. Id. at *2. In setting up the directory, however, plaintiffs had taken copyrighted material from a competitor with the help of an independent sales manager who had access to the competitor’s information.

In November 2001, the aggrieved competitor sent plaintiffs a cease-and-desist letter. Id. at *3. Plaintiffs initially agreed to revise their listings but, after the competitor uncovered the role of the independent sales manager, the competitor filed suit against plaintiffs in April 2002 in the Southern District of New York. In January 2003, plaintiffs retained defendants, a local law firm, to represent them in the copyright infringement suit. Discovery began in April 2003, with plaintiffs receiving discovery requests related to the creation of its directory. Id. at *4.

In the course of responding to the discovery requests, plaintiffs destroyed relevant documents, including documents related to the creation of its website. Defendants were not present at plaintiffs’ offices at the time, but plaintiffs alleged that they had asked defendants repeatedly for advice on how to prepare and respond to the discovery requests, including advice regarding retention of documents. Plaintiffs alleged that such advice was never provided. Defendants alleged that they had issued an “oral litigation hold” sometime in early 2003 and had general discussions with plaintiffs about what documents were responsive to the discovery requests.

In November 2003, a former employee of plaintiffs informed the competitor that she and her colleagues had removed relevant documents from plaintiffs’ files. Id. at *5. The competitor moved in the copyright infringement suit for an order to show cause pursuant to Rule 37 to strike plaintiffs’ pleadings on the ground that plaintiffs had intentionally destroyed relevant documents. After a spoliation hearing at which plaintiffs’ employees were examined about conversations with counsel, the court found that plaintiffs had committed copyright infringement and had intentionally destroyed relevant information. Id. at *6. In light of the destruction of evidence, the court struck plaintiffs’ pleadings and entered default judgment on liability against plaintiffs. Before a scheduled damages hearing, the parties settled, with plaintiffs agreeing to pay $2.5 million to the competitor. 

Following the settlement of the copyright infringement suit, plaintiffs filed suit against defendants alleging malpractice claims. Id. at *7. Plaintiffs asserted that defendants negligently failed to render competent legal services by (1) failing to advise plaintiffs regarding the 2003 discovery process and (2) failing to offer an adequate defense at the 2006 spoliation hearing. On cross-motions for summary judgment, Judge Ramos granted portions of defendants’ summary judgment motion but ordered the parties to trial on the remaining claims.

More specifically, Judge Ramos concluded that genuine issues of material fact existed regarding claims of defendants’ negligence in overseeing and advising plaintiffs with respect to the 2003 discovery responses. Id. at *9. Plaintiffs alleged that defendants had failed to issue a litigation hold, inform plaintiffs that destroying relevant documents was improper, or otherwise monitor compliance with the discovery requests. Id. at *10. Plaintiffs failed to cite any cases holding that the failure to institute a hold or monitor discovery compliance constituted attorney negligence, but Judge Ramos concluded that this conduct would constitute attorney negligence and falls below “the ordinary and reasonable skill possessed by members of the legal bar.”

Defendants argued as a matter of law they had no duty to advise plaintiffs of their obligation to preserve documents because plaintiffs retained defendants two years after the original cease-and-desist letter, which would have triggered the duty to preserve. In essence, defendants argued that “attorneys do not owe their clients a duty to institute a litigation hold or oversee compliance with preservation obligations once a client has been made aware of potential litigation.” Judge Ramos rejected this argument as inconsistent with counsel’s obligation to preserve relevant evidence and to explain to the client its obligations to retain relevant evidence. That professional obligation had attached in this case because defendants were counsel of record in the lawsuit and throughout the discovery process.

Defendants next argued as a matter of fact they were not negligent because they had issued an “oral litigation hold” at some point in early 2003 and had advised plaintiffs about responding to the discovery requests. Id. at *11. Because plaintiffs introduced evidence claiming that defendants had failed to provide any legal advice on discovery procedures, Judge Ramos concluded that there was a factual dispute as to whether defendants had issued the litigation hold or properly advised plaintiffs during the discovery process. Plaintiffs had further alleged in an affidavit that they informed defendants of the plan to destroy documents, but Judge Ramos concluded that this affidavit was contradicted by prior testimony and insufficient to create a disputed issued of fact.

As to claims regarding the 2006 spoliation hearing, Judge Ramos entered judgment as a matter of law in favor of defendants. Id. at *12-*14. Plaintiffs had alleged that defendants’ representation at the spoliation hearing was deficient, but Judge Ramos concluded that these allegations were either irrelevant or merely second-guessed counsel’s strategy.

Rejecting various other claims, Judge Ramos found that there were genuine issues of material fact regarding the malpractice claims relating to the 2003 discovery, denied the cross motions for summary judgment on that issue and set a pretrial status conference.

3. In Nelson v. Schultz, 878 F.3d 236 (7th Cir. Dec. 21, 2017), the Seventh Circuit held that dismissal was an appropriate remedy for plaintiff’s failure to respond to discovery requests and to prosecute his case.

In this breach of contract and tort suit, plaintiff claimed that in 2005 the defendants forced him out of a limited liability partnership created to develop a Ritz Carlton property on Chicago’s Magnificent Mile. Defendants justified the decision on the ground that plaintiff had a negative net worth of $15 million that prevented the LLC from getting financing, but plaintiff claimed that defendants were seeking to enrich themselves, causing plaintiff to suffer losses of over a million dollars. Id. at 237.

Ten years later, plaintiff sued, and in discovery, defendants asked plaintiff to produce his and his company’s tax returns and financial statements for the relevant time periods. Plaintiff refused, and defendants filed a motion to compel, which the district court granted.

In response, plaintiff claimed that he “believed” that he had produced the requested documents and he was “not in possession” of them. Defendants argued that this response was “non-responsive and evasive” and moved for dismissal as a discovery sanction under Federal Rule of Civil Procedure 37(b)(2)(A)(v). On the day prior to the sanctions hearing, plaintiff provided some tax transcripts (partial records of his tax returns) but not the returns themselves. The judge at the hearing stated he would give plaintiff “one more chance” to produce the documents or else he “was going to probably dismiss [the case] for want of prosecution.” If plaintiff no longer had the documents, then plaintiff had to provide “a crystal-clear affidavit” stating the actions he and his counsel had taken to locate them.

More rounds of briefing and hearings ensued, during which time plaintiff failed to produce documents and was evasive and dilatory in his responses, stating that he had produced documents and that he was not in possession of them. After the third sanctions hearing, the district court agreed that dismissal was warranted. The court’s decision alluded to both Rules 37(b) and 41(b) but did not specify whether it was dismissing the case as a discovery sanction under Rule 37(b) or for plaintiff’s failure to prosecute the case pursuant to Rule 41(b). Plaintiff moved for reconsideration, arguing that the court should have considered lesser sanctions prior to ordering dismissal. The court denied the request, and plaintiff appealed. Id. at 238.

The Seventh Circuit affirmed, holding that the district court had not abused its discretion regardless of whether its opinion was based on Rule 37(b) or Rule 41(b). It explained that the district court had properly considered dismissal under Rule 37(b) given plaintiff’s noncompliance with discovery orders and his “pattern of dilatory conduct despite two warnings.” Id. at 238-39 (internal quotations omitted). Similarly, under Rule 41(b), the district court did not abuse its discretion in concluding that plaintiff’s “neglect in pursuing his case” justified dismissal. Id. (quoting McInnis v. Duncan, 697 F.3d 661, 664 (7th Cir. 2012)).

The Seventh Circuit did note that the district court had not explicitly considered factors that might have weighed in plaintiff’s favor. It concluded that this was ultimately irrelevant, however, as the trial court was not bound to consider them expressly. Id. at 239. Further, while plaintiff was correct that the district court should have expressly evaluated the appropriateness of lesser sanctions, this did not require reversal: “Given that the district judge permissibly concluded that [plaintiff’s] misconduct warranted dismissal, it did not matter that the judge did not consider lesser sanctions first.” The Seventh Circuit therefore affirmed the district court’s ruling.

Sidley Austin represented the defendants with respect to the proposed development prior to the litigation.

4. In United States v. New Mexico State University, 2017 WL 4386358 (D.N.M. Sept. 29, 2017), Magistrate Judge Laura Fashing required that deficient search terms be supplemented using terms designed to capture relevant data and urged cooperation between counsel in addressing search term issues.

In this Title VII lawsuit alleging that New Mexico State University (NMSU) paid a female employee in the athletics department less than her male counterparts for performing similar work, the government filed a motion to compel more complete responses from defendant. The magistrate judge granted the request, holding that defendant had to provide the government a description of the document searches performed, specifying the email accounts searched and the search terms used. If the government objected to the adequacy of any of defendant’s searches, then the parties were to meet and confer regarding what, if any, additional searches should be conducted.

Defendant provided the requested information to the government, which responded that three of defendant’s search terms were inadequate to produce responsive documents. Defendant disagreed and, after discussions between the parties, filed a motion for a protective order regarding the government’s additional search requests, arguing that the government’s demands were not proportional to the needs of the case and that NMSU had produced over 14,000 pages of documents and conducted more than 20 searches. Id. at *1.

In discussing the obligations of the parties regarding search terms, the magistrate judge noted the importance of “proper selection and implementation” of search terms, pointing out that parties “must be prepared to explain the rationale for the method chosen to the court, demonstrate that it is appropriate for the task, and show that it was properly implemented.” Id. at *2 (citing Victor Stanley, Inc. v. Creative Pipe, Inc., 250 F.R.D. 260, 262 (D. Md. 2008)).

Magistrate Judge Fashing then considered each of the three disputes. In the first request at issue, the government had asked for “any and all documents that reflect communications between any NMSU employees relating to the compensation paid to” certain employees at issue in the case. In response, defendant had searched for emails using the following search terms:

(1) “track and coach (salary and pay and contract and applicants)”; (2) “cross-country” and (coach and salary or pay or contract or applicants)”; (3) “track and coach and salary or pay or contract or applicants”; and (4) “cross-country and coach and salary or pay or contract or applicants.”

Magistrate Judge Fashing agreed with the government that these searches were “not reasonably tailored to uncover the information sought.” The government proposed instead that defendant search for the email addresses of the relevant individuals in charge of setting salaries along with the names of the relevant employees. The magistrate judge agreed, noting that NMSU’s contention that this approach would “return a greater number of non-responsive documents than responsive documents” was “a conclusory argument.” Magistrate Judge Fashing therefore ordered defendant to perform a search along the lines requested by the government. If voluminous nonresponsive documents were identified, she stated that, after consultation with the government, further search terms such as “compensation,” “salary” and “pay” could be used to narrow the search.

In the second request at issue, the government had requested “documents related to any questions, concerns or complaints” made by the allegedly aggrieved employee to NMSU as well as all documents relating to the school’s responses to such complaints. Defendant had performed searches for “athletics,” “team” and “equal pay.” Again, Magistrate Judge Fashing agreed with the government that these terms were not sufficient, ordering NMSU to add the name of the allegedly aggrieved employee to the search and requiring that the search be performed on the email accounts of NMSU personnel working in the office responsible for review of discrimination claims as well as the NMSU employees interviewed by the U.S. Department of Justice.

In the third request at issue, the government asked for all documents relating to complaints of pay discrimination made by any coach, trainer or graduate assistant in the athletics department. Defendant had again used the search terms “athletics,” “team” and “equal pay,” which Magistrate Judge Fashing found to be insufficient. She ordered defendant to search the email accounts and databases of the specified authorities within the school using the relevant names as well as the search terms “(pay or compensate! or salary) and (discriminat! or fair! or unfair!).” Id. at *3.

The magistrate judge concluded by noting the need for cooperation between counsel and competence in conducting electronic discovery:

“ ‘Electronic discovery requires cooperation between opposing counsel and transparency in all aspects of preservation and production of ESI. Moreover, where counsel are using keyword searches for retrieval of ESI, they at a minimum must carefully craft the appropriate keywords, with input from the ESI’s custodians as to the words and abbreviations they use, and the proposed methodology must be quality control tested to assure accuracy in retrieval and elimination of ‘false positives.’ It is time that the Bar — even those lawyers who did not come of age in the computer era — understand this. ’ ” Id. at *4 (quoting William A. Gross Const. Assocs., Inc. v. Am. Mfrs. Mut. Ins. Co., 256 F.R.D. 134, 136 (S.D.N.Y. 2009)).