This Sidley Update addresses the following recent developments and court decisions involving e-discovery issues:
- A ruling from the U.S. District Court for the Northern District of California finding that the Defendant failed to preserve relevant evidence that was lost through an automatic deletion process and concluding that the jury could draw an adverse inference if it found the failure intentional
- An order from the U.S. District Court for the District of Maryland finding that the Defendants’ boilerplate objections to discovery requests were insufficiently particularized to preserve their objections but permitting Defendants to supplement their objections rather than finding the objections waived
- A decision from the U.S. District Court for the Southern District of New York denying as overbroad the Defendant’s request to require the Plaintiff to search the files of all its employees for relevant documents and addressing certain disputes as to search terms
- An opinion from the U.S. District Court for the District of New Jersey quashing subpoenas seeking broad categories of documents and testimony, including copies of the Petitioner’s laptop and cellphone, but permitting the Plaintiff leave to re-serve a more narrowly tailored subpoena
1. A ruling from the U.S. District Court for the Northern District of California finding that the Defendant failed to preserve relevant evidence that was lost through an automatic deletion process and concluding that the jury could draw an adverse inference if it found the failure intentional.
In Meta Platforms, Inc. v. BrandTotal Ltd., 2022 WL 1990225 (N.D. Cal. June 6, 2022), Chief U.S. Magistrate Judge Joseph C. Spero found that Defendant at least negligently failed to preserve relevant evidence and that the jury would be instructed that Defendant failed to preserve evidence regarding a relevant issue and may draw an adverse inference if it found that failure was intentional. He ordered Defendant to reimburse 75% of Plaintiff’s fees and costs for bringing its sanctions motion.
Plaintiff in this action alleged that the Defendant impermissibly accessed and collected user and other data, such as access tokens and cookies, from Plaintiff’s social media platforms. During discovery, Plaintiff learned that Defendant had permitted deletion on a regular schedule of data from a “debugging log” called Rapid7, including after the action commenced and, purportedly, even after learning that it was relevant. Defendant used Rapid7 as a tool to track the operation of Defendant’s various software products, storing information about processes executed by Defendant’s software for 30 days, after which time the information was deleted automatically. Id. at *3. Defendant represented that the Rapid7 log was used only for troubleshooting and debugging rather than for its normal business.
As of October 2020, when Plaintiff filed its complaint, at least some developers that used Defendant’s products knew that access tokens and cookies from users of certain of Defendant’s products had been sent to the Rapid7 log, but the company took no steps to preserve those logs and prevent their automatic deletion prior to the Defendant’s 30(b)(6) deposition in November 2021, over a year later. At that time, Plaintiff knew that Defendant collected these access tokens and cookies but did not know how Defendant stored that data. Defendant, in its Rule 30(b)(6) deposition, stated that Plaintiff could have determined the information sent to Rapid7 from Defendant’s source code. While Defendant modified some products to cease collecting user access credentials after the complaint was filed, it did not do so with Rapid7 or take steps to prevent the automatic deletion.
During a January 2021 Rule 30(b)(6) deposition, Defendant testified that its products had never transmitted user session tokens or session IDs to Defendant’s servers. However, in its November 2021 deposition, taken by a different company representative, Defendant conceded that the January 2021 testimony was inaccurate and did not reflect what Defendant knew at that time. During a March 2022 deposition, the first 30(b)(6) representative stated that he did not recall whether Defendant used Rapid7 and that he did not have a technical enough role to have “connected to these logs” during his employment.
Defendant produced excerpts of Rapid7 data after Plaintiff learned that data was stored in Rapid7 logs in September 2021. Id. at *4. Plaintiff confirmed in the November 2021 Rule 30(b)(6) deposition that older Rapid7 logs had been lost due to the 30-day retention and automatic deletion process. After that point, Defendant produced all available Rapid7 data and agreed to make ongoing weekly productions.
Plaintiff sought an order imposing an adverse inference presumption against Defendant to the effect that the court would treat certain facts as established for purposes of adjudicating Plaintiff’s summary judgment motion (filed alongside its motion for sanctions). The facts that Plaintiff sought to have decided in its favor included that Defendant was obligated to preserve Rapid7 data beginning in October 2020 but intentionally failed to do so because the data was unfavorable and that the deleted data would have demonstrated various information relevant to Plaintiff’s substantive claims. Plaintiff also sought to preclude Defendant from relying on testimony from the January 2021 Rule 30(b)(6) deposition and to recover its fees and costs, including expert costs, incurred in connection with bringing this motion. Defendant argued that it did not intentionally or affirmatively delete anything and that Plaintiff was not prejudiced because other evidence showed the conduct at issue.
Chief Magistrate Judge Spero laid out the legal standard for the court’s authority under Rule 37(e) of the Federal Rules of Civil Procedure and its inherent authority to sanction litigants for discovery abuses. He specifically listed Rule 16(f), allowing courts to order sanctions when a party or its attorney fails to obey a pretrial order, and Rule 37(b)(2)(A), which allows sanctions on parties that have failed to comply with a discovery order.
Chief Magistrate Judge Spero went on to provide the three factors courts consider, once a finding of spoliation has been made, to determine whether and what type of sanctions to issue: “(1) the degree of fault of the party who altered or destroyed the evidence; (2) the degree of prejudice suffered by the opposing party; and (3) whether there is a lesser sanction that will avoid substantial unfairness to the opposing party.” Id. at *5. He stated that courts have the discretion to permit juries to draw an adverse inference against the responsible party “so long as the party responsible had simple notice of potential relevance to the litigation, with no requirement to prove bad faith.” Id. (internal quotations omitted).
Chief Magistrate Judge Spero criticized Plaintiff for asking the court to treat certain facts as established for the purpose of its summary judgment motion while also seeking a trial instruction “only that the jury may presume such facts to be true,” finding this to be in tension with the usual rules for summary judgment. Id. (emphasis in original). He stated that he would evaluate the motion without regard to the phase of the litigation.
Chief Magistrate Judge Spero had “little trouble concluding that the Rapid7 database … included information relevant to the case, that Defendant knew it included that information, and that Defendant should have taken steps to preserve it once litigation was contemplated, i.e., no later than when Plaintiff filed its first complaint against Defendant in state court.” Id. at *6. He further concluded that the loss of at least some of Defendant’s data collection prejudiced Plaintiff’s ability to understand and prove the scope and nature of Defendant’s conduct. Additionally, there was no dispute that the deleted data could not be replaced or recovered through additional discovery. As a result, he concluded that Plaintiff had established the basic elements of spoliation for the purpose of Rule 37(e).
However, Chief Magistrate Judge Spero found that Plaintiff had not established the requisite intent under Rule 37(e)(2) necessary for an adverse inference presumption or instruction. He found it plausible that while Defendant should have recognized its obligation to preserve the Rapid7 records, Defendant might have overlooked this log as a source of relevant and discoverable information while it took steps to preserve more obvious sources of relevant information. Such negligence was insufficient to support an adverse inference instruction, and Plaintiff had not provided evidence that intentional failure to collect this information was the most likely explanation.
But Chief Magistrate Judge Spero found that Defendant’s negligence could potentially support an adverse inference instruction under the court’s inherent authority, even if not under Rule 37(e). Id. at *7. He rejected the specific instruction Plaintiff proposed, that is, to accept as proven that the deleted Rapid7 logs would have revealed a yearlong practice of exfiltrating users’ access credentials and using that information to pose as those users and scrape data, because there was no evidence of this except for the absence of the logs. Therefore these inferences were best left to the jury or for resolution after trial. Chief Magistrate Judge Spero modified the instruction such that a jury would be told “that [Defendant] had a duty to preserve its Rapid7 logs from October of 2020 through October of 2021 but failed to do so.” Id. at *8. Further, the jury may consider whether one party intentionally concealed or destroyed, or allowed to be lost, certain evidence and, if so, that the evidence would have been unfavorable to that party.
Chief Magistrate Judge Spero then found that an award of attorneys’ fees was appropriate to cure the prejudice to Plaintiff resulting from spoliation. Id. at *9. However, because Plaintiff overreached in seeking a more extreme remedy under Rule 37(e)(2), he found not all of the fees were reasonably incurred and therefore ordered Defendant to reimburse only 75% of the fees and costs Plaintiff incurred in bringing its motion for sanctions. He ordered the parties to meet and confer and file either a stipulation as to the amount of such fees and costs or a joint letter brief laying out their respective positions on the value of fees and costs to be awarded.
2. An order from the U.S. District Court for the District of Maryland finding that the Defendants’ boilerplate objections to discovery requests were insufficiently particularized to preserve their objections but permitting Defendants to supplement their objections rather than finding the objections waived.
In Doma Title Insurance, Inc. v. Avance Title, LLC, 2022 WL 2668530 (D. Md. July 11, 2022), U.S. Magistrate Judge Ajmel A. Quereshi found that Defendants’ boilerplate objections to discovery requests were insufficient to preserve their objections but declined to find that Defendants waived their objections and permitted Defendants to supplement their objections rather than finding the objections waived.
In discovery, Plaintiff requested from Defendant all documents and communications between Defendants and any party that “concern the allegations in the Complaint.” Id. at *5. Defendants responded that the requests were overly broad and disproportionate to the needs of the case but did not provide any further detail regarding the burden the requests imposed. Likewise, the interrogatories in dispute requested descriptions of all communications Defendants had with any party concerning the allegations in the complaint. Defendants responded with the same objections regarding burden and scope given in response to document requests.
Magistrate Judge Quereshi explained that Rule 33(b)(4), which pertains to interrogatories, requires that all grounds for objections to interrogatories be stated with specificity and that any ground not so stated in a timely objection is waived unless excused by the court for good cause. Although there is no similar provision in Rule 34 governing requests for the production of documents, the rule has been interpreted similarly. Citing to Hall v. Sullivan, 231 F.R.D. 468, 474 (D. Md. 2005), Magistrate Judge Quereshi explained that “implicit within Rule 34 is the requirement that objections to document production requests must be stated with particularity in a timely answer, and that a failure to do so may constitute a waiver of grounds not properly raised, including privilege or work product immunity, unless the court excuses this failure for good cause shown.”
Quoting further from Hall v. Sullivan, Magistrate Judge Quereshi went on to explain that “there are strong policy reasons favoring a requirement that a party raise all existing objections to document production requests with particularity and at the time of answering the request, so that counsel may meet and confer once to try to resolve the objections and, if unsuccessful, present the dispute to the court for prompt resolution. No benefit is achieved by allowing piecemeal objections to producing requested discovery, as this adds unnecessary expense to the parties and unjustified burden on the court.”
Magistrate Judge Quereshi concluded that “failure to state an objection with particularity in response to an interrogatory or a request for production of documents may result in a waiver of that objection.” He found that the Defendants’ objections in this case were “boilerplate” because Defendants objected to the contested document requests and interrogatories by simply stating that the requests were overly broad and not proportionally tailored to the needs of the case. Id. at *6.
Magistrate Judge Quereshi next addressed whether to excuse the failure to state an objection with particularity, if doing so would be supported by “good cause.” He explained that whether good cause exists may depend on (1) the length of the delay or failure to particularize, (2) the reason for the delay or failure to particularize, (3) whether there was any dilatory or bad faith action on the part of the party that failed to raise the objection properly, (4) whether the party seeking discovery has been prejudiced by the failure, (5) whether the document production request was properly framed and not excessively burdensome, and (6) whether waiver would impose an excessively harsh result on the defaulting party.
Magistrate Judge Quereshi concluded that Defendants had not waived the opportunity to object to the contested requests for two reasons. First, he noted that the parties had agreed to an extension of the period for fact discovery, and, therefore, ample time remained for Defendants to file amended objections and produce additional documents. Second, the wide scope of the requests was arguably apparent from the face of the requests. Plaintiff demanded information related to “all allegations in the Complaint” without any effort to either limit the individuals to which the request applies, identify the specific subject matters at issue, or provide search terms Defendants could use to collect relevant communications. Magistrate Judge Quereshi therefore found good cause existed to allow Defendants to supplement their objections.
3. A decision from the U.S. District Court for the Southern District of New York denying as overbroad the Defendant’s request to require the Plaintiff to search the files of all its employees for relevant documents and addressing certain disputes as to search terms.
In The Raine Group LLC v. Reign Capital, LLC, 2022 WL 538336 (S.D.N.Y. Feb. 22, 2022), U.S. Magistrate Judge Katharine H. Parker denied the Defendant’s request to mandate search parameters on the Plaintiff as part of the parties’ electronically stored information (ESI) protocol governing discovery in the case and addressed certain disputes as to search terms.
Magistrate Judge Parker first surveyed the relevant Federal Rules of Civil Procedure, including Rules 26 and 34, that require parties to conduct a reasonable search for documents that are relevant to the claims and defenses. She noted that parties have an affirmative obligation to search for documents they may use to support their claims or defenses unless the use would be solely for impeachment. Id. at *1 (citing Fed. R. Civ. P. 26(a)(1)). She further noted that “[t]he duty to make a ‘reasonable inquiry’ is satisfied if the investigation undertaken by the attorney and the conclusions drawn therefrom are reasonable under the circumstances. It is an objective standard similar to the one imposed by Rule 11.” Id. (quoting Fed. R. Civ. P. 26 advisory committee’s note to 1983 amendment). Finally, she noted that Rule 26(g) requires that responses to document requests be signed, certifying that the disclosures made are complete and correct as of the time of the disclosure after a reasonable search.
Magistrate Judge Parker next addressed the interplay between a party’s affirmative duty to search for documents and a party’s obligation to respond to discovery requests from the opposing party. She noted a party may choose to conduct a fulsome ESI search for both categories of documents after an agreement on search terms, but, if so, “the producing party must include and utilize search terms it believes are needed to fulfill its obligations under Rule 26 in addition to considering additional search terms requested by the requesting party.” In other words, the producing party must search custodians and locations it identifies on its own as sources for relevant information as part of its obligations under Rules 26 and 34. But the party should also cooperate with the requesting party to the extent the requesting party believes that other search terms, custodians, or locations may have relevant information when fashioning an ESI protocol, subject to Rule 26(b)’s limitations. Id. (citing Fed. R. Civ. P. 26(b)(1)).
Magistrate Judge Parker explained that “an ESI protocol and search terms work in tandem with the parties’ obligations under the Federal Rules and do not replace a party’s independent obligation to produce electronic (or paper) documents that are reasonably accessible, relevant, and responsive within the meaning of Rule 34.”
Among the disputes between the parties was Defendant’s request that certain language regarding the parties’ search obligations be included in the parties’ ESI protocol, in particular a provision requiring Plaintiff to have all its employees search for responsive documents, because (in Defendant’s view) both parties have an independent obligation to search all files from all employees that could reasonably contain responsive documents to the parties’ document requests. Id. at *2. Defendant did not agree that Plaintiff could limit its search to certain custodians and sought inclusion in the ESI protocol of language affirming the parties’ obligations to search all files for responsive documents.
Magistrate Judge Parker found that the language proposed by Defendants was unnecessary given applicable discovery rules and overbroad as proposed. As noted above, each party must sign its disclosures and certify that it has conducted a reasonable search, and she found this rule sufficient to address Defendant’s concerns about Plaintiff complying with its discovery obligations. In particular, Magistrate Judge Parker noted that Defendant’s language suggesting that the parties must search “all company files” or “all files from all employees” was overbroad. She explained that it is up to the parties to determine the contours of a reasonable search, which may mean “eliminating custodians or locations with redundant information, eliminating sources that are inaccessible, or culling electronic information by date.” She further explained that the relative size of the parties may affect the inquiry, noting that Plaintiff was a merchant bank with over 100 employees that sued a two-person real estate development and management firm.
As to the custodians, Magistrate Judge Parker held that Plaintiff would not be required to search all files of all its employees because that would be overbroad. She noted that Plaintiff identified six employees as custodians whose emails and personal files likely contain relevant information, and Defendant had not identified any additional custodians likely to have relevant emails nor explained why other employees of a bank would have relevant email or personal files. However, Magistrate Judge Parker advised Plaintiff that there may be other sources of data such as shared drives that are not particular to a specific custodian that should be searched as part of Plaintiff's obligations under Rule 26, and she expected Plaintiff to conduct a reasonable search of such noncustodial sources likely to have relevant information.
With respect to search terms, the parties sought to have the court order the use of certain terms and modifiers. Magistrate Judge Parker explained that the court’s “broad discretion to manage the discovery process includes determinations regarding which search terms a party should apply.” Id. (internal quotations omitted). She noted that search terms, while helpful, must be carefully crafted. Poorly crafted terms may return thousands of irrelevant documents and increase, rather than minimize, the burden of locating relevant and responsive ESI. Search terms also can miss documents containing a word that has the same meaning or that is misspelled. Magistrate Judge Parker noted that broad, general search terms such as the ones the parties proposed in this case typically are not sufficiently targeted to find relevant documents, and modifiers are often needed to hone in on truly relevant documents. However, what modifiers are appropriate is often best left to specialists who can interpret “hit” reports and suggest refinements — not to the court.
In this case, Magistrate Judge Parker found that it was appropriate for her to adjudicate the search term dispute because the parties could not agree on search terms. She found that certain terms, such as “real estate,” were overbroad and that Plaintiff would not be required to use them, even with the modifiers. Id. at *4. With respect to other terms, such as “sophisticated” and “trademark,” Magistrate Judge Parker found that Defendant’s proposed modifiers made sense, as they appeared to be more focused on the issues relevant to this case.
4. An opinion from the U.S. District Court for the District of New Jersey quashing subpoenas seeking broad categories of documents and testimony, including copies of the Petitioner’s laptop and cellphone, but permitting the Plaintiff leave to re-serve a more narrowly tailored subpoena.
In Korotki v. Cooper Levenson, April Niedelman & Wagenheim, P.A., 2022 WL 2191519 (D.N.J. June 17, 2022), U.S. Magistrate Judge Matthew J. Skahill addressed a motion by Plaintiff’s ex-husband (Petitioner) to quash Plaintiff’s third-party subpoena duces tecum requesting documents and ESI, granting Petitioner’s motion to quash and denying Plaintiff’s cross-motion to compel compliance while permitting Plaintiff leave to re-serve a “more narrowly tailored third-party subpoena.”
In this proceeding for legal malpractice, Plaintiff alleged that Defendant induced her to sign documents related to her marriage with Petitioner that were adverse to her interests, enabling Petitioner to divert all of their marital assets to Petitioner’s sole and exclusive use and benefit and enabling Petitioner to obtain a divorce from Plaintiff without her knowledge or consent as well as prevent her from receiving alimony or other support. Id. at *1. Plaintiff issued and served two subpoenas under Fed. R. Civ. P. 45 upon Petitioner, one subpoena duces tecum containing 88 demands for Petitioner to produce documents and ESI (including demands to produce Petitioner’s laptop and cellphone for imaging), and one subpoena ad testificandum demanding that Petitioner appear for a deposition with the 88 items sought in the subpoena duces tecum. Petitioner moved to quash both subpoenas.
Magistrate Judge Skahill first laid out the rules governing the issuance, service, and enforcement of third-party subpoenas under Rule 45, which permits parties to serve subpoenas seeking documents. Id. at *2. However, upon a timely motion by the person served, courts have the authority to quash or modify subpoenas that require disclosure of privileged or other protected matter, subject a person to undue burden, or that fall outside the scope of permissible discovery (which is the same under Rule 45 as under Rule 26(b)). He further explained that under Rule 45(d), parties issuing and serving a subpoena must take reasonable steps to “avoid imposing undue burden or expense on a person subject to the subpoena,” and courts may enforce this duty through sanctions. Id. at *3 (quoting Fed. R. Civ. P. 45(d)(1)).
Magistrate Judge Skahill explained that discovery from a third party to a litigation requires a “stronger showing of relevance than for simple party discovery.” Korotki, 2022 WL 2191519, at *3 (internal quotations omitted). Further, courts analyze proportionality under Rule 26(b)(1) differently for third parties, particularly when the material sought is available from a party. He explained that resolving the dispute lies “within the Court’s sound discretion” and involves striking a “delicate balance” between the relevant factors. Id. at *4.
Magistrate Judge Skahill then turned to examining Petitioner’s argument that Plaintiff’s subpoenas imposed an undue burden and fell outside the scope of permissible discovery because the materials sought could have been requested from Defendant or were already in her possession, custody, or control. Magistrate Judge Skahill found the subpoenas “generally calculated to yield [relevant] information,” and while some demands related to matters of liability, a majority were relevant to Plaintiff’s potential damages. However, noting the requirement under Rule 45 that courts quash overbroad subpoenas even if relevant, Magistrate Judge Skahill stated he could “readily conclude that the Subpoenas are overbroad as drafted.” Id. at *5. He stated that the “demands are vast, in many instances are temporally unrestrained, and would wield an undue burden on the Petitioner to the extent they would require the Petitioner to reproduce materials already provided to the Plaintiff or materials that can be more readily obtained from the Defendants.”
Magistrate Judge Skahill stated that the demands “to wholesale produce [Petitioner’s] lap top computer … and cell phone” illustrated the requests’ overbreadth. Magistrate Judge Skahill stated that courts generally “guard against undue intrusiveness and [are] cautious in requiring the inspection of electronic devices, in order to protect privacy interests.” He stated that “[i]n defining the extent of discovery to afford a party, a court should consider the relationship between the plaintiff’s claims and the electronic devices.” “Mere suspicion or speculation that a party may be withholding discoverable information is insufficient to support an intrusive examination of the opposing party’s electronic devices or information systems.” Id. (internal quotations omitted). Caution is particularly important where “the connection between the party’s claims and the [electronic device] is vague and unproven.” Id. at *6.
Magistrate Judge Skahill stated that although the subpoenas could uncover relevant material, they also “threaten[ed] to sweep in substantial irrelevant information,” and with respect to proportionality, they were “not commensurate to the needs of the case and appear[ed] overbroad.” Magistrate Judge Skahill stated that he would “not permit such extraordinary and uniquely invasive access” considering that the information was available from other sources and no evidence showed that Petitioner had improperly withheld information that should already have been turned over.
Magistrate Judge Skahill described the requests for the laptop and cellphone as “patently overbroad” and criticized the demands as “seek[ing] materials duplicative of those already produced and exchanged in the state matrimonial matter.” Id. at *7. He agreed with Petitioner that a large number of demands in the subpoena were “identical or virtually identical” to certain requests for production from the matrimonial matter, although he noted as a caveat that the subpoenas and requests for production were issued three years apart. He also found that Plaintiff “took no steps to avoid imposing an undue burden or expense as required under Rule 45(d)(1)” and had not made a “precise showing” of what materials she alleged Petitioner did not initially produce in response to the requests for production.
Magistrate Judge Skahill concluded that demands concerning Petitioner’s dealings with Defendant likely were in Plaintiff’s possession, custody, or control or could have been sought from Defendant, though he acknowledged that certain materials might be unattainable due to attorney-client privilege and work product. He also determined that a Rule 34 request might yield discovery from the underlying matrimonial case. Accordingly, he found that Plaintiff could either submit a discovery request to Defendant or find the documents on her own accord.
Magistrate Judge Skahill then quashed the subpoenas due to Plaintiff’s failure to demonstrate any efforts to obtain the discovery on her own. He based this holding on the subpoena’s lack of proportionality and Rule 45(d)(1)’s requirement for parties to “take reasonable steps to avoid imposing undue burden and expense.” Id. (quoting Fed. R. Civ. P. 45(d)(1)).
After quashing the subpoenas in their entirety, Magistrate Judge Skahill stated that he would “permit Plaintiff to serve a more narrowly drawn version consistent with” this opinion. Id. at *8. He decided not to modify the subpoena himself, noting that it is within the court’s discretion to require the Plaintiff to modify the subpoena.
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