This Sidley Update addresses the following recent developments and court decisions involving e-discovery issues:
- a U.S. District Court for the Northern District of Florida opinion concluding that individual and corporate communications were governed by the same privilege standards and ruling that the work-product protection applied to documents created because of the prospect of litigation, not merely the smaller group of documents whose primary motivating purpose was the anticipation of litigation
- a U.S. District Court for the District of New Jersey ruling that a special master did not abuse his discretion in conducting an international comity analysis and concluding that defendant was required to comply with U.S. discovery in connection with a production involving documents subject to the European Union’s General Data Protection Regulation (GDPR)
- a U.S. District Court for the Southern District of Florida order granting plaintiff’s motion for reconsideration and ordering defendant to pay reasonable attorneys’ fees to the plaintiff after failing to produce information responsive to discovery requests, even though the information was available to defendant
- a U.S. District Court for the Southern District of Texas order overruling defendant’s objections to plaintiffs’ expert reports premised on purported violations of state statutory requirements because the relevant expert disclosure requirements were procedural and, therefore, governed by the Federal Rules of Civil Procedure and not Texas state law
1. In In Re: 3M Combat Arms Earplug Products Liability Litig., 2020 WL 1321522 (N.D. Fla. Mar. 20, 2020), a multidistrict litigation, Magistrate Judge Gary R. Jones of the Northern District of Florida applied the “most significant relationship” test in concluding that individual and corporate communications were governed by the same privilege standards and ruled that the work-product protection applied to documents created “because of” the prospect of litigation, not merely the smaller group of documents whose “primary motivating purpose” was the anticipation of litigation.
In this products liability action, plaintiffs alleged that defendants “were negligent in their design, testing, and labeling of the nonlinear dual-ended Combat Arms Earplug Version 2.” Id. at *1. In the course of discovery, plaintiffs challenged both the inclusion of certain categories of documents on the defendants’ privilege log and the adequacy of certain privilege log entries.
Plaintiffs challenged the adequacy of the privilege log on the basis that it failed “to state the length of each document in a privilege entry and [failed to] separate email threads or ‘strings’ into discrete privilege entries.” Id. at *2. Magistrate Judge Jones opened his analysis by noting that Fed. R. Civ. P. 26 governed the dispute and that his pretrial order set forth the required contents of the parties’ privilege logs. In rejecting plaintiffs’ challenge to the adequacy of the privilege log entries, Magistrate Judge Jones pointed out that the local rules did not require a party to indicate the length of a withheld document and noted that plaintiffs had cited to no legal authority or compelling basis to require such a disclosure. Id. at *3. He also rejected plaintiffs’ request that the privilege log itemize each email in a thread because the rules did not require such an undertaking and doing so “pose[d] a risk of revealing privileged information.”
Plaintiffs also challenged the adequacy of privilege log entries associated with the work-product protection, arguing that the defendants had to identify the anticipated litigation underlying the work-product claim. Magistrate Judge Jones disagreed, explaining that “[p]laintiffs should be able to surmise the subject of anticipated litigation from the date of the entry and the limited litigation concerning defendants relevant to this action,” but he did allow plaintiffs to request such information for particular privilege log entries.
In addition to challenging the adequacy of the privilege log entries, plaintiffs argued that a heightened level of scrutiny applies to claims of attorney-client privilege for corporate communications. Florida state courts apply this heightened scrutiny as a matter of state law, but federal common law does not provide for such heightened scrutiny to attorney-client claims for corporate communications. In determining whether to apply Florida, federal common or some other law, Magistrate Judge Jones noted that federal common law rules of attorney-client privilege apply to claims or defenses arising under federal law, “while a state’s evidentiary privilege applies only in diversity cases.” Id. at *4. For multidistrict litigation, however, the choice of law inquiry is not resolved simply because state law “supplies the rule of decision.” In this proceeding, the federal contractor defense, a federal common law principle, had “been at the forefront of the litigation” and would be affected by resolution of the privilege law issue. Stating that he was not persuaded that Florida privilege law should apply, the magistrate judge observed that federal courts have tended to apply a “most significant relationship” test to determine “the state with the most significant relationship with the privileged communication — such as the law of the state where the communication is centered.” Id. (quoting In re Yasmin and Yaz (Drospirenone) Mktg., Sales Practices and Prods. Liab. Litig., 2011 WL 1375011, at *8 (S.D. Ill. Apr. 12, 2011)). Under the “most significant relationship” choice of law analysis, a court examines where the communications at issue took place, where the relationship between the speakers was centered and where the subject matter of the communication was centered. Magistrate Judge Jones noted that “[p]laintiffs do not contest defendants’ assertion that Florida has no significant relationship to the privileged communications” and concluded that the court should apply “the law of the state with the most significant relationship to the communication.”
Magistrate Judge Jones rejected plaintiffs’ argument that the attorney-client privilege did not extend to corporate communications where neither the sender nor recipient of the communication is an attorney. He explained that “[c]orporate employees within complex organizations, such as defendants, may discuss legal advice sought and given without losing the privilege, even when an attorney is not an author or recipient of the communication.” Id. at *5. “The same protections afforded to communications between counsel and client extend to communications between corporate employees who are working together to compile facts for in-house counsel to use in rendering legal advice to the company.” Id. (quoting Fed. Trade Comm’n v. Boehringer Ingelheim Pharm., Inc., 180 F. Supp. 3d 1, 34 (D.D.C. 2016)). Magistrate Judge Jones also noted that “the fact that a corporate communication is addressed to numerous employees and only “carbon copies” in-house counsel is not dispositive of whether the attorney-client privilege applies.” The ultimate question for application of the attorney-client privilege is “whether the attorney is providing legal advice even though the attorney may be a copyee of an email that also contains business advice.” Id. (quoting In re Abilify (Aripipazole) Prods. Liab. Litig., 2017 WL 6757558, at *7 (N.D. Fla. Dec. 29, 2017)).
Plaintiffs argued that the work-product protection applies only to documents whose “primary motivating purpose” was anticipation of litigation. Defendants advanced a broader test, arguing that the work-product protection applies to any document created or obtained “because of” the prospect of litigation. Magistrate Judge Jones noted that the proper standard by which to judge the work-product protection is an open question in the Eleventh Circuit and endorsed the “because of” standard, noting that “the key determinations in assessing the applicability of the work-product privilege are when and why the document or thing was created.” Id. at *6.
Plaintiffs also argued that the work product protection should “be limited to litigation ‘closely related’ to [the instant] action.” Magistrate Judge Jones rejected this argument because “[b]y its express terms, work product protection applies to any litigation.” Magistrate Judge Jones went on to note that “most federal courts have held work product protection survives the termination of litigation.”
Following these rulings, Magistrate Judge Jones set forth the results of his in camera review of 84 challenged documents and issued rulings on whether those documents were protected by the work product protection or attorney-client privilege, finding that 73 documents were privileged and overturning privilege claims on 11 documents. Id. at *7.
2. In In re Mercedes-Benz Emissions Litig., 2020 WL 487288 (D.N.J. Jan. 30, 2020), U.S. Magistrate Judge Joseph A. Dickson affirmed prior discovery rulings of the special master, finding that he did not abuse his discretion in conducting an international comity analysis and concluding that defendant was required to comply with U.S. discovery in connection with a production involving documents subject to the European Union’s General Data Protection Regulation (GDPR).
This case involved appeals from three of the special master’s opinions by defendants Daimler AG (Daimler) and Mercedes-Benz USA (Mercedes) (collectively, defendants). These appeals were the “culmination of an ongoing and overarching dispute over the balancing of plaintiffs’ discovery needs pursuant to Federal Rule of Civil Procedure 26 and [defendants’] compliance with privacy regulations pursuant to the GDPR.” Id. at *1 (internal brackets omitted). The GDPR, adopted by the European Parliament in 2016, establishes rules governing data protection and the privacy of citizens of the European Union (EU). As relevant to this dispute, the GDPR contains regulations concerning the transfer of EU citizens’ personal data outside EU member states. Under the GDPR, personal data is broadly defined as “any information relating to an identified or identifiable natural person.” As a German company, Daimler is subject to the GDPR.
During the proceedings, the parties were able to agree to a stipulated order governing the confidentiality and disclosure of U.S. data and documents but were not able to agree on an order governing the confidentiality and disclosure of foreign data subject to certain GDRP provisions. Id. at *2. The parties thereafter provided competing data privacy orders to the special master that contained their recommended approaches for addressing discovery in light of the GDPR data and privacy provisions.
After briefing and oral argument, the special master selected plaintiffs’ proposed order. While the parties were briefing the GDPR dispute, plaintiffs asked the special master to enter an order compelling defendants to produce “basic information about their custodial and non-custodial sources that have responsive documents and electronically stored information.” In particular, plaintiffs sought information “such as organization charts and the names, titles, and dates of employment for certain groups of employees.” Defendants objected to plaintiffs’ request as “premature, unduly burdensome, and improperly leapfrogging the special master’s ruling on the GDPR dispute.” Id. (internal quotation marks omitted). The special master disagreed, issuing an opinion directing defendants to provide a variety of the custodial information plaintiffs requested, which would allow plaintiffs “to evaluate and engage in a meaningful meet and confer with respect to the  defendants’ proposed custodians.” Id. (internal quotation marks omitted).
Defendants appealed the special master’s order, arguing that “(1) the special master’s ... ruling failed to consider Daimler’s GDPR obligations and failed to conduct the international comity analysis required by Société Nationale Industrielle Aérospatiale v. U.S. Dist. Court for S. Dist. of Iowa, 482 U.S. 522 (1987), and (2) even if the GDPR were not a barrier to production, the compelled information was irrelevant, overbroad, and outside the scope of permissible discovery under the Federal Rules of Civil Procedure.” While the appeal was pending, the parties submitted a joint letter “narrow[ing] the issue on the first appeal down to one: ‘whether the names of certain current and former Daimler AG employees who are European Union citizens should be produced subject to the Discovery Confidentiality Order or redacted.’ ” Id. at *3.
Separately, the special master entered plaintiffs’ proposed discovery privacy order and issued a GDPR ruling setting forth the legal basis for adopting plaintiffs’ proposed order. He carried out the Société Nationale international comity analysis and determined that the factors weighed in favor of disclosing, unredacted, “the names, titles or professional contact information of relevant current or former employees of any defendant or third parties identified in relevant, responsive documents, data or information produced in discovery in this Action.” The special master also specified that “[t]he parties will not be prohibited from redacting irrelevant personal information of an intimate or private nature, or private data that is objectively irrelevant to this Action.” Defendants subsequently appealed the special master’s GDPR ruling, arguing “that providing such information unredacted, even with the Discovery Confidentiality Order in place, renders EU citizens’ private data unprotected and is contrary to EU law and U.S. principles of international comity. Id. at *4.
At the outset of his analysis, Magistrate Judge Dickson framed the primary issue on appeal as “whether, given ... defendants’ obligation under U.S. law to produce ... documents in unredacted form, ... considerations of international comity relieve the ... defendants of [their] obligation in light of the purportedly conflicting GDPR.” Id. at *5 (citation omitted). Under Société Nationale, courts conduct an international comity analysis by considering the following five factors:
(1) the importance to the litigation of the documents or other information requested; (2) the degree of specificity of the request; (3) whether the information originated in the United States; (4) the availability of alternative means of securing the information; and (5) the extent to which noncompliance with the request would undermine important interests of the United States, or compliance with the request would undermine important interest of the state where the information is located. Id. at *6.
As to the first factor, defendants argued that the special master conflated the comity analysis’s “importance of information,” a heightened standard, with Fed. R. Civ. P. 26’s general relevance standard. Magistrate Judge Dickson disagreed, concluding that the special master did apply the heightened standard and correctly considered whether the information sought was “directly relevant and necessary to the parties’ claims and defenses.” Defendants also argued that all the names, positions, titles, and professional contact information in relevant documents could not possibly be directly relevant to the claims and defenses in this action, but Magistrate Judge Dickson concluded that plaintiffs were entitled to such information to carry out their own relevance determination. Id. at *7. Moreover, defendants could designate documents they produced as “Highly Confidential,” thus addressing their privacy concerns.
On the second factor, which concerned the request’s specificity, defendants argued that plaintiffs’ “seventy-plus document requests — seeking millions of pages of emails and other documents from numerous EU citizens” were “extremely broad and [would] require production of voluminous documents containing vast amounts of personal data.” Id. (internal quotation marks omitted). Magistrate Judge Dickson disagreed, determining that the special master’s ruling did not require production of irrelevant, sensitive personal information but rather business records of the kind commonly produced in U.S. litigation.
With respect to the third factor, plaintiffs asserted that at least some of the documents with relevant information originated in the U.S. But given that Daimler is a German company, Magistrate Judge Dickson ultimately agreed with the special master’s assumption that the majority of documents to be produced from Daimler originated in the EU. As such, he agreed with the special master that the third factor weighed against compelling production.
On the fourth factor, the availability of alternative means for securing the requested information, Magistrate Judge Dickson held that the special master correctly concluded that there was not an alternative means for plaintiffs to obtain the information in question. Notably, he stated that defendants failed to propose any workable alternative to redacting the requested information and offering a “layered” production approach, under which Daimler would first “produce responsive documents and data from Germany with redactions of names and other identifiers that Daimler believe[d] in good faith [were] protected by the GDPR.” Id. (internal quotation marks omitted). Defendants proposed that the parties would then meet and confer on any disputes over the propriety of the redactions. But “[o]ther than reiterating the same arguments they made to the special master, ... defendants present[ed] no evidence” to the court and, because the special master duly considered defendants’ proposed approach to discovery, Magistrate Judge Dickson upheld the special master’s ruling that the fourth factor favored the production of the requested information.
Finally, under the fifth factor, which Magistrate Judge Dickson identified as “the most important factor in determining whether to compel production,” the special master was required to “assess the interests of each nation in requiring or prohibiting disclosure, and determine whether disclosure would affect important substantive policies or interests of either the United States or Germany.” Id. at *8 (internal quotation marks and brackets omitted). Defendants argued that the special master failed to properly consider the EU’s “weighty interest in protecting its citizens’ privacy” and that Daimler risked legal jeopardy, severe reputational harm and damage to the morale of Daimler’s work force if it produced unredacted data. In defendants’ view, the discovery confidentiality order was insufficient to protect these interests and did not eliminate the need for redactions. Magistrate Judge Dickson found these arguments “unavailing,” finding the special master properly weighed the relevant national interests, did not bypass the GDPR’s requirements and simply found that “on balance, the U.S. had a stronger interest in protecting its consumers than the EU did in protecting its citizens’ private data, particularly with a Discovery Confidentiality order provision allowing producing parties to designate and protect foreign private data as ‘Highly Confidential.’ ” Accordingly, Magistrate Judge Dickson agreed with the special master that the fifth factor also weighed in favor of compelling production.
Having concluded that the special master properly weighed the five factors of the international comity test, Magistrate Judge Dickson affirmed the special master’s rulings, ordering defendants to produce unredacted versions of the data plaintiff requested.
3. In Smith v. Forest River, Inc., 2020 WL 1666764 (S.D. Fla. Apr. 3, 2020), Magistrate Judge Shaniek M. Maynard granted plaintiff’s motion for reconsideration and ordered defendant to pay reasonable attorneys’ fees to the plaintiff after the defendant failed to produce information responsive to discovery requests, even though the information was available to defendant.
The plaintiff, who had recently purchased a “fifth wheel” travel trailer, sued defendants, the trailer’s manufacturer and the authorized dealer, alleging product defects and fraud. During discovery, the plaintiff sent defendant requests for production, including a request for “complaints received by defendant from any person or entity about towable recreational vehicles commonly known as ‘fifth wheel’ travel trailers, including but not limited to, those of the same model as the camper, from January 1, 2017 to the date of your response.” The plaintiff sought such information to prove that Forest River’s “alleged fraudulent representations induced other consumers to purchase fifth wheel campers who then also complained of defects.” Id. at *1.
After the defendant produced a number of responsive documents, the plaintiff moved to sanction the defendant for failing to produce additional responsive information the plaintiff himself had identified from public sources, including recalls filed with the National Highway Transportation Safety Administration (NHTSA) and complaints filed with the Better Business Bureau (BBB). The defendant responded with a counsel’s affidavit explaining the methodology behind its search, which involved a review of Forest River’s email and communications database. The attorney stated that the defendant did not have databases available that logged direct consumer, NHTSA, or BBB complaints. Id. at *1–*2. Agreeing that the production was deficient, Magistrate Judge Maynard granted the plaintiff’s motion, but only to the extent that it ordered the defendant to supplement its production with further information. The court declined to award sanctions. Id. at *2.
The plaintiff filed a motion for reconsideration, proffering additional information, including defendant’s deposition testimony discussing how the defendant tracked BBB complaints and NHTSA information. This testimony established that the tracking systems involved spreadsheets of BBB complaints, a warranty process that handled all customer complaints and an Office of Corporate Compliance that handled NHTSA reporting requirements. All of the information in these databases could have been made searchable by VIN numbers and digits thereof to locate relevant information. Additionally, the plaintiff located a separate database in which dealers reported warranty claims, which included a report of the VIN of the vehicle. Id. at *3.
Furthermore, pursuant to a consent order the defendant had previously entered into with the NHTSA, the defendant was obligated to comply with certain recordkeeping and reporting obligations, including compiling and reporting information, such as property damage claims, consumer complaints, warranty claims and field reports. Moreover, the counsel who represented the defendant in that enforcement action was the same counsel representing the defendant in this lawsuit.
Magistrate Judge Maynard determined that the additional information showed that the defendant had multiple “databases” or equivalent sources of information containing consumer complaints that could have been searched for responsive information with reasonable effort, but the defendant failed to make these searches and provided “no clear explanation for why its search for responsive information was limited to its email database.”
Magistrate Judge Maynard found that the plaintiff met its burden for reconsideration based on newly discovered evidence and the need to correct error. She sought to determine “why the defendant did not produce that additional responsive information” and noted that plaintiff had to undertake the effort of locating the additional information and litigating the issue. Id. at *4 (emphasis in original). She declined to impose sanctions because (1) the sources the defendant failed to search were not “so obvious” that the failure rose to the level of willful inaction, (2) willful noncompliance was not sufficiently established to support the imposition of severe sanctions, and (3) the information sought only had a “tangential benefit” to the lawsuit.
The plaintiff’s motion for reconsideration was granted, and the plaintiff was awarded $3,000 in reasonable attorneys’ fees for its efforts. Id. at *4–*5.
4. In Walker v. CVS Pharmacy, Inc., 2020 WL 1227404 (S.D. Tex. Mar. 13, 2020), Magistrate Judge Dena Palermo overruled defendant’s objections to plaintiffs’ expert reports premised on purported violations of state statutory requirements because the relevant expert disclosure requirements were procedural and thereby governed by the Federal Rules of Civil Procedure and not Texas state law.
Plaintiffs, a husband and wife, filed suit in Texas state court, alleging defendant’s medical negligence by improperly filling the husband’s prescription, causing him permanent damage. His wife also sought damages for loss of consortium. Defendant subsequently removed the case to the U.S. District Court for the Southern District of Texas on diversity of citizenship grounds.
Once in federal court, plaintiffs filed notices of two expert reports pursuant to Chapter 74 of the Texas Medical Liability Act (the Act). In response, defendant filed objections, arguing that the reports did not support the viability of plaintiffs’ claims as required under the Act. In its submission, defendant asked the court to sustain its objections, dismiss the case with prejudice and award it attorneys’ fees. Plaintiffs countered by contending that the reports complied with § 74.351 of the Act, but, in the alternative, plaintiffs requested an extension to cure any deficiency in the reports.
Magistrate Judge Palermo began her analysis by outlining plaintiffs’ expert report obligations under the Act. Specifically, the Act “requires a plaintiff in a medical negligence case to provide a defendant with an expert report and curriculum vitae within 120 days of the defendant’s answer,” and provides for a stay of most discovery until the plaintiff has filed the expert report and mandates dismissal with prejudice if the plaintiff fails to file it.
The magistrate judge stated that “[f]ederal courts sitting in diversity must apply state substantive law and federal procedural law.” Magistrate Judge Palermo noted that discovery is procedural and therefore determined by the Federal Rules of Civil Procedure. Fed. R. Civ. P. 26 governs the duty to disclose experts, the timing of disclosure, and the disclosure’s contents, and Rule 37 sets the applicable sanctions for failure to comply with Rule 26. Relying, in part, on Fifth Circuit precedent, Magistrate Judge Palermo concluded that § 74.351 of the Act conflicts with the controlling Federal Rules. Id. at *2 (citing Passmore v. Baylor Health Care Syst., 823 F.3d 292, 296-97 (5th Cir. 2016)). Accordingly, Magistrate Judge Palermo overruled defendant’s objections premised on the requirements under § 74.351 and ordered the parties to “proceed with discovery and disclosure in accordance with the Court’s scheduling order and the requirements of the Federal Rules of Civil Procedure.”
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